(a) Should the purpose for which a chair established pursuant to this part become unlawful, impracticable, impossible to achieve or wasteful, the designated purpose for which the chair was created may be modified pursuant to this section. It is the legislative intent that in such situations, institutions strive to redesignate the field of study supported by a chair, such that income from the chair of excellence be used by the institution to retain professors of regional and, preferably, national eminence in a given field of study in furtherance of the original legislative intent. However, under extraordinary circumstances, the purpose for an existing chair may be redesignated to support a scholarship program, when it is shown that redesignating the field of study supported by a chair will not serve to promote the best interest of the institution. Factors considered in making such a determination may include the existence of extensive periods of time during which the chair remains unfilled or the fulfillment of the academic purpose for which the chair was created has become impractical or unachievable.

(b) In order for the purpose of a chair to be modified, the following criteria must be satisfied:

(1) The new purpose of the chair must satisfy criteria established by either the governing board of the University of Tennessee or respective state university listed in § 49-7-501(c)(7)(A) that has established the chair of excellence, whichever is appropriate;

(2) The institution must submit a proposal regarding the chair to the appropriate governing body and the Tennessee higher education commission. The proposal shall specify:

(A) The factors supporting a conclusion that the purpose for which a chair established pursuant to this part has become unlawful, impracticable, impossible to achieve or wasteful;

(B) The intended purpose for the redesignated use of income from the chair;

(C) If possible, a statement from the donor of private funds shall be included that indicates support or opposition to the proposed change;

(D) The institution's observations on how the proposed change will assist the institution in achieving that institution's mission; and

(E) Any other information as the appropriate governing board may direct; and

(3) The appropriate governing body must agree to the modification in purpose of the chair; provided, that, if the proposal is to use chair income for scholarships, approval must be unanimous. The appropriate governing body shall not act on a proposal submitted pursuant to this part until the comments of the higher education commission have been received;

(c) No funds shall be expended for the proposed new purpose of a chair of excellence authorized by this section, unless the proposal is submitted to the education committee of the senate and the education committee of the house of representatives for review and recommendation and is approved by resolutions of the senate and the house of representatives; provided, however, that the approval shall be on the complete plan or revision and shall not be subject to amendment of the plan or revision. In submitting a specific chair for review by the general assembly and its committees, the appropriate governing board shall:

(1) Estimate the annual funding required, by source, to support operation of the chair or scholarship program;

(2) Describe the general qualifications of individuals that the institution intends to recruit to fill the chair or, if a scholarship program, provide a description of the program, including the purpose and qualifications that students must meet to be eligible for the scholarships;

(3) Comment on how establishment of the chair or scholarship program will assist the institution in achieving that institution's mission; and

(4) Comment on the impact the establishment of the chair or scholarship program will have on any other institutional programs.

(d) The corpus that was allocated to the chair shall not be expended for any purpose. Income from the corpus shall be expended for the sole purpose of funding the scholarship program created pursuant to subsection (b); provided, that investment expenses may be deducted from the income. The corpus and the income from the corpus shall remain, and be invested as, a part of the chairs of excellence endowment fund.

(e) The state treasurer is directed to modify the terms of the trust instrument to reflect this section. The modified terms shall be approved by the attorney general and reporter.