Volume 36, No. 3
January 29, 2010
“Zero is the new up”
Local school boards plead for a conservative budget to avoid proration in the 2011 fiscal year as the battle over the amount of dollars to budget rages. The Governor’s proposed $5.8 billion budget includes $345 million from the “Jobs for Main Street” Act currently being debated in Congress and 2.35 percent growth ($124 million) in revenues earmarked for the ETF. However, the Legislative Fiscal Office is projecting no growth in the ETF and key education budget committee members appear reluctant to include funds that would be generated from federal legislation, passage of which is uncertain.
How do you define a Funding Crisis?
Alabama is in the midst of a funding crisis unrivaled in its history. State funding for education experienced an unprecedented 10 percent decline in revenue in one year, fiscal year 2009, which has led to over one billion dollar drop in education budget over the last two years. The dramatic drop forced the governor to declare 18.5 percent proration over the last two fiscal years, after using over a billion in emergency funding and making cuts at the state-level.
State’s savings and lines-of-credit are tapped out. Statutory savings account and constitutional rainy day funds have been expended. With Alabama school system’s heavy reliance on state funding (on average 70 percent but in some systems up to 85 percent), the impact on local financial operations has been dramatic and grows more critical by the day.
Local reserves are dwindling; local schools must borrow to meet payroll. The latest data indicates that 56 school districts (42 percent) have less than one month of operating expenses in reserve. Five systems borrowed money to finish the last fiscal year, and so far, 9 have borrowed money this year. Local reserves statewide plummeted 28 percent in one year and by September are projected to have fallen almost 50 percent.
Our school boards are using short-term lines of credit to borrow for basic operating expenses, including personnel. Specifically, 43 school boards (32 percent) have established lines of credit in anticipation of borrowing to meet their need. Already, 28 know they will be going to bank and paying interest just to keep the doors open. These problems are not restricted to rural areas or high-poverty districts. At least five of our larger, relatively affluent districts near major metropolitan areas (Tuscaloosa County, Baldwin County, Shelby County, Mobile County and Madison County) have established lines of credit, with two of them (Tuscaloosa and Baldwin) recently borrowing against the line of credit to meet payroll. For some systems, this starts a cycle of “pay day” loans which could take up to a decade for school boards to recover. It makes no sense to take a loan to pay for today’s English teacher and yesterday’s power bill.
Can School Systems Become Insolvent?
AASB anticipates that more boards will be forced to borrow funds to meet operating expenses in the current year as the cumulative result of two years of budget cuts and flat state funding projections take its toll over the remainder of the current fiscal year and fiscal year 2011. Current data support the belief that some districts will become essentially insolvent as their reserves are full depleted and their borrowing capacity is liquidated.
Already, 14 school systems have been forced to borrow to pay operating expenses. Those numbers are expected to increase during the summer and in to the next fiscal year when the cumulative effect of the state funding shortfall fully depletes the reserves of numerous districts.
AASB’s priority is to provide a realistic state budget for education to remove the threat of proration in 2011. Local school systems have no capacity to absorb cuts during the fiscal year so must rely on lawmakers to appropriate accurately and conservatively.
Charter Schools & Race to the Top:
Myths Commonly Mis-answered
Questions buzz about the fourth quarter attempt to bring charter schools to Alabama. Here are some facts to help answer the common misperceptions.
Would the Race to the Top Funds (RTTT) be used for charter schools? No.
Could the federal funds be used to make up the shortfall in Alabama’s public education budget? No.
Are RTTT funds guaranteed for Alabama? No. It’s a competitive process between states.
Does the research support students making higher achievement in charter schools versus traditional public schools? No. In fact, the research indicates that on the whole, charter students perform nominally poorer than traditional public students.
Does the proposal prohibit current private schools from converting to charter schools? No. Although described as intent, the bill does not prohibit a private school from dissolving and reorganizing as a charter school.
Can a local school board decide whether or not to authorize a charter school? Yes and No. Under the governor’s proposal, local school boards can choose whether or not to authorize a charter. However, if the local board chooses not to authorize, the state department of education may still authorize a charter if it is a system with poorly performing schools.
Would a local school board be protected from financial and legal liability of an independent charter school? No. The bill does not provide that
protection, in fact, the liability flows directly to the local school system.
Would special education students be served by a charter school? Unclear. The bill would not prevent a special education student from attending the charter school, however the responsibility and cost for that student practically remains in the hands of the local school system.
Would charter schools be legally and financially accountable? Only on paper. School boards remain liable due to Alabama’s unique funding, statutes and administrative rules for public education. The boiler plate language from charter school advocates can not easily be transposed to apply in Alabama. The attempt would create many levels of implementation problems, not to mention the philosophical ones.
There will be a joint House and Senate hearing on the charter school legislation on Wednesday, Feb. 3. The public hearing is scheduled in the state Archives building to allow use of interactive broadcast technology.
H.189 by Rep. McClurkin is pending in the House Education Appropriations Committee, and S.202 by Sen. French is pending in the Senate Finance and Taxation Education Committee. School leaders must let lawmakers know their opposition to the charter schools bills.
Please urge your lawmaker to vote NO to charter schools! Members on the committees include: Senators Sanders, Poole, Denton, Ross, Bedford, Butler, Coleman, Dixon, Figures, Holley, Little, (T), Marsh, Means, Smith, Smitherman, Little (Z), and Waggoner; Representatives Lindsey, Rogers, Gipson, Bentley, Boothe, Buskey, Graham, Greeson, Kennedy, McClurkin, McLaughlin, Oden, Spicer, Taylor, and Thomas.
Bill Attempts to Fix Criminal Pay Loophole
Scope must widen to Help ALL Local Systems
Ask your local school system if dollars are flowing to terminated teachers due to the payroll loophole in the tenure law. The accounts from superintendents are hard to believe, but true. As local schools find creative ways to buy cleaning supplies and copy paper, full salaries and benefit costs are being paid for terminated employees.
It’s a crime, or it should be. It took the example of a convicted teacher serving in prison staying on the payroll to fully demonstrate the nonsensical flaw in the tenure process. 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 is working with bill sponsors to ensure the bills address technical loopholes. These bills are a minimum fix to an outrageous problem and need to go farther. They simply instruct the state to revoke the teaching license of any person convicted of a felony or sex offense and cancel their employment contract.
What really needs to be fixed is the financial incentive to appeal each and every proposed termination. Urge lawmakers to find a true fix so all school systems can stop the bleeding of public dollars to terminated employees in every school!
Senate Overrides Riley’s Veto
On Educator Ethics
By a 22-10 vote Thursday, the Senate briefly halted its second week of filibuster to override Gov. Riley’s veto. The veto next must go to the House. If the House also overrides the veto, which is expected, the state Board of Education’s attempt to codify the Teacher Code of Ethics in the Alabama Administrative Code fails.
A legislative council had offered amended language to address concerns of vague terms. If the veto is overridden by the House next week, the code of ethics for educators would not become part of the Administrative Code.
PACT Program Proposals
in State of Flux
Several bills propose different strategies to solve the PACT program insolvency. These strategies include a plan for funding the program for current participants, while others are aimed at establishing controls to streamline program operations and provide for more accountability and transparency. S.162, sponsored by Sen. Ted Little, is primarily a funding mechanism for the program and passed out of committee this week and now goes to the full Senate for debate. In the House, H.228, sponsored by Rep. Craig Ford, is the companion bill. H.122, H.123 and H.124, sponsored by Rep. Greg Wren, involve establishing financial and operational controls aimed at increasing fiscal and operational accountability and transparency. Language is included to establish performance goals for the PACT board in the investment of PACT funds and plans if those goals are not met.
“Hybrid” solutions containing the best elements of each plan are being discussed by a senate subcommittee set up for that purpose. The details of the proposed funding solution involve a commitment of future ETF dollars and tuition cost control, as well as, minimum investment earnings to fully fund the program. The proposed solution would require a collaborative effort between K-12, higher education, and the PACT board to ensure its success. AASB continues to monitor the legislation to ensure the PACT solution is not borne solely out of the already beleaguered ETF.
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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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24 Days remain in the
Regular Legislative Session.
A 3-day Legislative Work Week
is expected
Feb. 2, 3 and 4
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