The Alabama Association of School Boards

Issue Briefs

On the November ballot, voters will be asked to approve Amendment 1…

It is a constitutional amendment that repeals the current constitutional Education Trust Fund Rainy Day Account.
It creates a General Fund Rainy Day Fund and recreates a new ETF Rainy Day Account.
The intent is to increase the amount that can be borrowed from the Alabama Oil & Gas state fund when the ETF is in proration. The current borrowing limit is fixed to a 2002 figure or $248 million.
The proposal would increase the borrowing limit to 6.5 percent of the prior year budget (allowing the limit to be flexible based on actual appropriations.) In 2009, borrowing capacity would be limited to the highest of the two revenue estimates by the Governor and Legislature’s fiscal officers for the fiscal year. In following years, the amendment would limit borrowing capacity to reach the average of the two estimates.
It would increase the time to repay funds borrowed from five to six years.

THE BOTTOM LINE:

Amendment 1 would provide relief to local school boards for 2009...an estimated $120 million in additional borrowing power, which apparently will be needed.
Even with Amendment 1, proration may occur in 2009, but to a much lesser degree. (The education savings account was emptied (over $400 million) to keep 2008 afloat.)
The state Department of Education fully supports the amendment as does Gov. Riley. Dr. David Bonner, Chief of the Alabama Retirement Systems also supports Amendment 1.
The amendment provides limited relief for one year, but the payback could further erode the grim 2010 fiscal scenario.
In no sense should Amendment 1 be perceived as a “fix” to the depth of ETF troubles.
AASB gives qualified support to Amendment 1. Local boards need the extra borrowing capacity for 2009, period. However, more prudent budgeting by the legislature is a necessity because this borrowing trend cannot continue.

IN THE NEWS

Amendment One Offers Short-term Help
Ken Roberts, AASB Chief Operations Officer

How People Vote on Nov. 4 Will Affect the Future
Mobile Press Register, guest column
State Superintendent of Education Dr. Joe Morton

FIND OUT MORE

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Revised October 2008