Volume 36, No. 12
April 9, 2010
Governor Expected to Sign ETF Budget
Following Swift Legislative Passage Thursday
The Senate Thursday approved H.274, the $5.48 billion education budget by a 31-0 vote. In perhaps record time, Sen. Hank Sanders handled the education budget and accompanying bills on the Senate floor and thanked his colleagues for their cooperative spirit in helping pass a “miracle” budget. The House then concurred with the Senate version by a 102-0 vote and sent the budget to the governor for his signature.
As expected, there were minimal changes to the education budget through the process. Line items are funded at the prorated-level, 7.5 percent less than appropriated for 2010. The exception is the K-12 Foundation Program to preserve state-funded K-12 teacher units and save some 3,700 teaching jobs that were at risk of being lost.
Sen. Larry Dixon emphasized that the education budget still leaves a shortage in K-12’s Other Current Expense (OCE). Dixon recognized that the shortfall translates to loss of support personnel jobs and little to no funding for operations and maintenance. Sen. Dixon’s statement is a reality check because for school systems, the loss of OCE dollars means a loss of jobs will be avoidable.
Sen. Pro Tem Rodger Smitherman likened this budget to finding a way to feed a family by emptying the fridge and freezer. There isn’t enough of any one thing for everybody, but by finding a little here and a little there, the family is fed.
The education budget and other accompanying appropriations bills results:
K-12 $3.8 billion 69.70%
Higher Ed $1.5 billion 26.39%
Other $214 million 3.91%
As Alabama experiences its toughest recession since the Great Depression, the Legislature was able to somewhat shield public education from the deepest cuts with several strategies:
$298 million Making available half of the federal ARRA funds released last year stored to use in the 2011 budget;
$66 million Issuing a Public School Construction Funds bond issue to allow fleet renewal funds to be used in salaries & benefits. The bonds will NOT be issued if Congress enacts job funding;
$48 million Revising retirement systems accrued liability rates timeline from 20 to 30 years;
$30 million Estimating revenue gains from the hiring of state auditors to recoup uncollected corporate income taxes;
$34 million Collecting a legal award from the state’s Kimberly Clark case; and
$10 million Anticipating revenues from revamped tax preparer fraud laws.
An estimated $248 million increase to the PEEHIP program is not covered by the ETF budget. The PEEHIP board will have to use a variety of tools, including potential changes to premiums, copays and/or benefits, to absorb costs.
To work, the education budget relies on an estimated revenue growth projection of 1.175 percent . Local school boards must plan local budgets using state projections, although many conservatively hoped to use a zero growth projection to stave off any threat of proration in 2011. School boards are grateful to lawmakers for ensuring the ETF budget’s passage in time to make personnel decisions before the end of the current school year. Thank you!
Education-Related Bills
PACT Solvency: S.162 would provide $236 million from the ETF (money currently earmarked for debt service) to guarantee student tuition will be paid for PACT participants. The House approved the bill Thursday after challenges to remove the cap on tuition increases by higher education failed. K-12 supports the cap because without assurance that tuition increases will be minimal, the ETF liability could be a much deeper black hole than projected. The bill now goes to a joint House-Senate conference committee to work out details to be approved by both chambers.
PSF Flexibility - H.724: would allow local school boards the authority to use unencumbered Public School Fund dollars for operating expenses in 2011 only. H.724 is pending the governor’s signature.
PSCA Bond Issue - H.743: would authorize a $66.5 million PSCA bond issue. Dollars would flow to fleet renewal to free up revenue for salaries and benefits. It would be issued only in the event no federal job relief comes. The likelihood of Congressional action is waning. H.743 is pending the governor’s signature.
Alternative ADM - H.43: would permit an alternative method to calculate teacher units in cases of emergencies. H.43 is pending the governor’s signature.
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Local school boards work with legislative leaders to accomplish the public’s highest priority –
educating our children.
The Legislature meets 30 days within a 105 day period. The session began January 12, 2010 with the final possible legislative day being April 26, 2010.
The Legislature has adopted a calendar for the
Remaining legislative days as follows:
April 13, 14
April 21, 22
4 Days remain in the
Regular Legislative Session
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