Volume 36, No. 2
January 22, 2010
Toto, I don’t think we are in Alabama anymore
Is there a way to magically infuse the education budget with $469 million of increased revenue? Maybe in Oz, but in Montgomery, we are being asked to pay no mind to the proverbial man behind the curtain. The wizard has few gadgets with which to work: 345 million federal dollars that must pass a polarized Congress and $125 million in projected revenue growth when the Legislative Fiscal Office projects zero growth. Few illusions will convince local school leaders the picture is rosy when harsh budget realities greet them daily.
Local school boards and superintendents implore state leadership in Montgomery to “watch their backs.” The hopes that the governor’s budget would provide real numbers were dashed last week. Just before the session convened, legislators from education and budget committees attended an education legislative symposium that had a single request. Give us a budget that will not be prorated. That remains local school boards’ utmost request.
Sounds odd, doesn’t it? Local boards REQUESTING fewer dollars for an ETF budget? But the truth is, once the budget is drawn, school boards are required to spend at state-set levels. School boards can’t be fiscally conservative with those dollars if the state isn’t. Painfully, few cuts can be made during the actual school year. Particularly, no cuts can be made to salaries which comprise up to 80 percent of local budgets.
Local board members and superintendents will have to shoulder the state shortfall and either raid shrinking reserves or go to the bank for additional loans and lines of credit. Not the governor. Not the state Department of Education. That’s why legislators feel the pressure facing their local school systems. That’s why lawmakers are shaking their heads reviewing optimistic projections during tight economic times.
Local school leaders are not pessimists. They hold a vision of promise and success for each of their students and work darn hard to provide a pathway through public education. Despite optimism in budget projections last year, today more and more school systems have tapped the last of their reserves. The only recourse is to go to the local bank, hat in hand, for a line of credit so that payroll and other obligations can be met. And it’s only January. There are 8 months left in the current fiscal year. The latest numbers reflect that over 60 school systems have established lines of credit so far this year. That number will grow as local reserves are depleted. Schools pay for today’s teachers with tomorrow’s coin, plus interest. They need to know what tomorrow’s coin will be, no room for error.
Local education leaders must share their budget status with their local representatives and senators. Show them the very critical need for an education budget that is REAL and can be met.
Education Employee Health Care
& Retirement Cliffhanger
In the last six years, school boards’ cost to provide health insurance for an employee has skyrocketed. The cost rose from $483/month per employee to $752/month per employee. For the ETF that translates to a $300 million increase annually. The PEEHIP board has tried to address the astounding rise in costs, and the state Legislature generously continued to completely cover the rapidly escalating price increases. Meanwhile, individual employees pay $2/month for their health care and $134/month for family coverage.
In the 2011 budget that legislators must craft, the PEEHIP cost will rise to $995/month per employee for school boards! The Education Trust Fund can no longer absorb the exorbitant cost increase. The alternative must be a combination of fixes to be decided by the PEEHIP board, including using reserve dollars, changing some coverage benefits and increasing co-pays and contribution levels of employees. What the PEEHIP board needs is a bottom line from the state Legislature of available funding, so it can adjust its program accordingly, just as you do. AASB supports funding benefits at 2010 appropriation levels and allowing the PEEHIP board to make needed adjustments.
The local boards’ cost to fund employee retirement is a similar story. In the last six years, that cost has increased by nearly $500 million or over 250 percent. Several bills are being considered, including S.244 by Sen. Hank Sanders and H.275 by Rep. Richard Lindsey, that would extend the maximum funding period used in calculating the contribution rate required to liquidate the unfunded retirement liability. The bill would increase that funding period from 20 years to 30 years. Other changes being discussed behind the scenes, applicable to new employees, include increasing the employee contribution rate from 5 percent to 6 percent and increasing the minimum retirement service period from 25 to 30 years.
Uncertain Times Call for Flexibility
When Roll Call Numbers Determine Funding
H.43, sponsored by Rep. Richard Lindsey, would provide an alternate attendance measurement period to allocate foundation program funds in cases of extreme or extenuating circumstances, as determined by the state superintendent of education. The current measurement period is the 20 school days after Labor Day.
For example, if the swine flu epidemic struck as the school year began; empty classrooms during the 20-day period would translate into a dramatic underfunding the following year. The measurement provides funding in arrears. H.43/S.26 would enable the state superintendent of education to allow alternate measurement periods for health-related and other natural occurrence-related reasons on a case-by-case basis.
The House Education Appropriations Committee approved H.43 Wednesday. It is eligible to be considered by the full House next week.
PACT Solutions Considered
Few Alabamians are untouched in some way by the failure of the PACT program. Instituted in the early 1990s, the opportunity to pay up front for a child’s college education was embraced by citizens. PACT participants showed up in force this week at the state house and legislators heard heartfelt testimony about the impact the program’s failure is having on Alabama families.
Sen. Ted Little is sponsoring S.162, a bill that would provide approximately $236 million for eight years beginning in the 2014 fiscal year to fully fund the program for current contract holders. The bill is funded from ETF debt service. A substitute bill was introduced to include a provision capping annual college tuition increases to 2.5 percent for PACT students, as well as specific stipulations concerning the investment of the PACT trust funds. If PACT does not see at least 5 percent growth in a given year, its management would automatically be turned over to the Board of Control of the Teachers’ Retirement System. S.162 will be considered by the Senate Fiscal Responsibility and Accountability Committee Tuesday.
Charter Schools Remain ‘No Go’ Proposal
School boards hosted a meeting of education leaders, governor’s staff and the state superintendent of education last week. The meeting involved open conversation about the shortfalls in the proposed legislation as a venue to air educators’ concerns. Alabama’s state education laws are unique and intricate. A national model or other states’ models simply cannot be pasted together to apply.
Public education advocates remain steadfastly opposed to the charter schools proposal. Reflecting yet another disconnect from local school boards, the state Department of Education approved a resolution favoring “charter schools.” AASB adopted a specific resolution that outlines its position on charter schools, limited to a pilot program with specific requirements. The discussions to date remain far from those criteria.
The bills have substantial problems. The structure places potential financial and legal liability on the local board of education and allows charters within a school system even if the board has not authorized it. The bill is also problematic in that it gives charter schools a share of state funds that local boards have committed to long-term debt (PSF and fleet renewal) and per-student transportation funding, when funds are not allocated that way. The provisions in the bill relating to special education leaves the financial and legal responsibilities with the local board of education. These are just a few of the flaws of the financial impact to local boards which are not detailed in the bill and left to the discretion of the state department of education. Despite the bill’s intent to prohibit it, the proposal does not prevent the possibility of a current private school from dissolving and reapplying as a charter school.
H.189 by Rep. McClurkin is pending in the House Education Finance Appropriations Committee, and S.202 by Sen. French is pending in the Senate Finance and Taxation Education Committee. School boards have strong feelings on this issue. It’s not too early to let your lawmakers know your position on charter schools.
Stop Forcing Schools To Pay
Terminated Employees
Nearly every local school system has experienced nonsensical results of the tenure law revised in 2004. School systems spend hundreds of thousands of dollars as terminated teachers and other employees take full advantage of the payroll loophole in the law. It’s like a payroll lottery win every time!
School boards must have immediate relief from the technical flaw that drains education dollars. AASB recognizes that until the necessary overhaul of the tenure law takes place, a common sense fix must do. AASB is working with lawmakers to craft legislation targeting the payroll loophole. Local school boards and superintendents should share their stories with lawmakers about how the flaw in the tenure process is hurting local schools.
H.37, sponsored by Rep. Chad Fincher, and S. 161, sponsored by Sen. Mark Keahy, are bills targeting the infamous case in Washington County that forced the school system to keep a convicted teacher on the payroll as she served time in prison. AASB does not believe the bills as drafted would relieve any school system from withholding pay from teachers upon conviction until due process is given. The bill instructs the state to revoke the teaching license of any person convicted of a felony or sex offense. H.37 will be considered by the House Education Policy Committee Wednesday. Contact your lawmaker and ask them to support a solution that closes the payroll loophole and provides relief to all school systems soon!
K-8 Daily P.E. Bill Sprints (Jogs) Through House
The House Thursday approved H.105 by a 93-3 vote. The bill requires grades K-8 to take thirty minutes of P.E. daily. A committee substitute softened the bill, somewhat, to allow P.E. to include marching band, junior ROTC or activities approved in a student’s Individualized Education Plan (IEP). H.105 next moves to the Senate for consideration.
Bill Requires Slow Down in School Zones
Thursday, the House approved H.100, sponsored by Rep. Greg Canfield, by a vote of 96-0. The bill would authorize county commissions to establish reduced speed school zones for schools located outside the corporate limits of a municipality. A fine of double the amount prescribed by law would be assessed to those who exceed the limit in the reduced speed school zone and be paid into the public road and bridge fund of the county or the treasury of the municipality in which the offense occurred. AASB supports H.100 which next moves to the Senate for consideration.
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Local school boards work with legislative leaders to accomplish the public’s highest priority -- educating our children.
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Regular Legislative Session.
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