Volume 34, No. 6
March 14, 2008
Click here for a look at a list of education-related bills.
Spring Break: Time to Prioritize K-12
Preserve Governor’s Proposed “Split”
As every economic indicator declines, a harsh scenario looms for the education budget and intensifies the impact of the proposed budget split between K-12 and higher education. With 500 million fewer state dollars available next year than this year, every part of public education will feel the pinch. The budget is expected in the House Education Appropriation Committee April 9 and may be before the full House April 15.
Some school systems rely on state funds for up to 80 percent of their budgets because public K-12 schools are a state program. Higher education only depends on state funding for up to 20 percent of their budgets. The governor’s proposal protects K-12 teachers and basic operating expenses (Other Current Expense or OCE) at 2008 levels by directing 69 percent of the proposed budget to K-12’s 77 percent of total public students.
But the K-12 portion may be in jeopardy in two ways:
1) Holding K-12 allocations at 69 percent of the ETF will be challenged as higher education pushes for a larger share; and
2) Holding at 69 percent may still result in fewer dollars for K-12 as the ETF pot shrinks from the economy’s downturn.
K-12’s Dilemma:
Consequences of One Percent Less
If the governor’s proposal for K-12 decreases just one percent, the state Department of Education outlines three tough choices:
1) Cut some $64 million from Other Current Expense (OCE) which translates to cutting 2,400 state-funded education support employees statewide.
2) Cut all classroom instructional support which includes funding for textbooks, teacher materials, technology, libraries, professional development, and common purchase funds.
3) Decrease funding for middle school teachers (grade 4-8) by 950 teachers by increasing the divisors used in the foundation formula.
For local K-12 schools, trimming local expenses is the first cost-saving step. Since the average school system budget is approximately 75 percent salaries, the most effective cost-saving measure is reducing locally funded units. At an approximate $60,000 savings per teacher, reducing local units may go far in trimming the local school budget but has a negative impact for student achievement.
Every K-12 program will be closely evaluated because the shortfall means operating only bare bones basics. For Alabama, it is a painful step after recent success with investments in K-12 programs.
House Votes 97-0 to Update Bid Law
The full House approved a bill Tuesday to raise the minimum threshold for requiring the competitive bid process from $7,500 to $15,000.
H.442, sponsored by Rep. Jeremy Oden, adjusts the threshold for inflation after nearly 15 years being held at 1994 levels.
The $7,500 bid threshold is simply too low in 2008 dollars. In addition, the bill would allow school systems statewide to participate in joint purchasing agreements.
Thanks to House members for their unanimous support to help school boards save money and ensure top quality goods and services! H.442 next moves to the Senate. School board members and superintendents should urge their state senators to act quickly following spring break on H.442.
School board members and superintendents:
Please contact your state senator to
vote YES on H.442
H.442/S.364 would:
- Increase the bid threshold from $7,500 to $15,000;
- Make the bid bond requirement optional;
- Exempt local school boards from bids when using certain joint purchase agreements;
- Allow for life cycle costing in determining lowest responsible bidder; and
- Allow school boards to award contracts to the second lowest responsible bidder if the lowest bidder defaults.
Education Rainy Day Fund Change Proposed
To Increase “Line of Credit”
A constitutional amendment to increase the Education Trust Fund’s credit limit against Alabama’s oil and gas royalties passed the House Education Appropriations Committee Wednesday. H.208, sponsored by Rep. Greg Wren, would change the current “line of credit” limit of $248 million (set at 6 percent of the 2002 fiscal year budget) to a sliding scale set to 10 percent of the prior year’s budget. If in place now, this would translate to an extra $382 million in borrowing capacity for the current year for a total of $633 million (10 percent of the 2007 budget). It also would expand the timeframe to pay back the loan from five to ten years.
To safeguard against a temptation to overbudget and rely on the line-of-credit, the available amount in any year is limited to the halfway point between revenue estimates as certified by the Legislative Fiscal Office (LFO) and state Finance Director. Dr. Joyce Bigbee told committee members, “As your mother would have said, it is for your own good.”
For example, the full $248 million is currently available and untouched in the Rainy Day Fund. The LFO and finance director’s projection of available revenue for 2009 was certified as required by the third legislative day of the regular session. Those numbers provide the constraints and safeguards for crafting next year’s budget. The LFO certified $6.155 billion and the finance director certified $6.33 billion. The constitutional amendment provides access to the line of credit to reach some $6.2 billion, the halfway point between the two estimates. If lawmakers appropriate beyond that mark and proration is called for a greater amount, the Rainy Day Fund could NOT fully protect public education from proration.
Education Savings Has $64 Million Question
Under the stewardship of Chairman Richard Lindsey and Chairman Hank Sanders in surplus years, the committees have directed some 70 percent of unanticipated revenues to an education savings account: the statutory Proration Prevention Account. That savings account has accumulated $440 million.
Today, if no savings were available, local schools would be facing 7 percent proration in the current fiscal year. However, the governor has already transferred some $175 million from the savings account, and LFO estimates that most if not all of the $440 million in savings will be needed to meet current year budget appropriations. Local boards are most grateful for the nest egg. Few could have anticipated that the savings would be depleted in a single year.
But the governor’s proposed budget for FY09 assumes that $64 million would be left in the education savings account (PPA) for use next year. If LFO projections prove true, that $64 million could not provide a cushion for next year’s budget. It is an additional factor lawmakers are weighing as they wait for March revenue figures before crafting final numbers for the budget.
Offsetting Federal Incentive Proposal
Makes Plan an ETF Wash
If state lawmakers do nothing, the federal economic stimulus package would be a virtual wash: offsetting loss from state business depreciation with a gain in state taxes from federal rebates. However, the House Education Appropriations Committee Wednesday turned the equation around with the same result. H.455 would waive state
taxes for individuals who receive the federal rebates and uncouple the state’s business depreciation schedule from the federal schedule to offset the impact on the ETF. Several committee members took issue with the approach saying it countered the purpose of the federal package to have businesses spur the economy. Strong public support for the state waiver is the impetus for the bill. H.455 next moves to the full House.
Mandatory P.E. Minimums Costly
H.83 would require weekly minimums for PE for elementary and high school students, and for high schools alone would cost an estimated $46.8 million to implement. The legislation is a costly proposition, especially in the face of budget shortfalls. In addition, the requirement would significantly compromise courses available to high school students. H.83 is pending full House action.
Legislation Pending After Spring Break:
H.317/S.55 School Nurse Law Update - would provide authority for school systems to employ licensed nurse practitioners under the supervision of registered nurses. The bill is necessary to comply with current practice and serve student health needs. Each is pending full action in its respective House.
H.251 Dietitian requirement for local schools – would require each school system to employ dietitians. Local boards are concerned that the criteria would be difficult to meet, the cost would be prohibitive, and small rural systems would have the most difficulty with compliance. The state Department of Education is working with the bill sponsor to address local school system concerns. It is pending in House Education Appropriations committee.
H.54 School Safety – would require a comprehensive system-wide safety plan. H.54 is pending on the House floor.
S.91 One-month Reserve Access – would outline specified circumstances when a local school system may access its one-month reserve. The bill is pending in Senate Committee.
S.20/S.329/H.334 Homeschool Access a.k.a.
“Tim Tebow Act” – would allow homeschool students to participate in public school extracurricular activities without being enrolled in public school. Pending in committees.
Property Reappraisals – would prohibit annual assessment of property. This would deeply affect local schools’ ability to collect appropriate revenue in a timely manner to serve students. A variety of these bills are pending in committees.
For education-related bills & information
www.alabamaschoolboards.org
On education funding and policy decisions,
local perspective can make a BIG difference.
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Legislative Spring Break: March 17-21
17 Days remain in the
Regular Legislative Session
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