For Your Information

Vol. 20, No. 18
September 26, 2008

Click here for past issues of the For Your Information newsletter.

SUPERINTENDENT: 9/11 TRAGEDY
A REMINDER TO 'PULL TOGETHER'

With proration lurking on the horizon, the state Board of Education forged ahead with 2010 education budget talks at its K-12 work session Thursday in northeast Alabama at Pell City High School.

Even in tough economic times, the board discussed possibly seeking more than $329 million in funding increases for 2010 over the lethargic 2009 education budget. The amount includes restoration of $123 million in K-12 and state Department of Education funding that was trimmed from the ’09 budget.

State Superintendent of Education Dr. Joe Morton said there is no question that across the board budget cuts will be necessary in 2010. And yet, he explained, funding is key to continuing the success of such programs as the Alabama Reading Initiative and the Alabama Math, Science and Technology Initiative.

“That $329 million sounds like a lot, especially in times of proration,” he said, “But we’re putting forth to discuss today and again in October, some items that – at least on paper – highlight the fact that we need funds to continue to make these initiatives successful.”

The proposal includes an estimated 7.65 percent increase for the SDE’s share of Social Security and Medicare taxes, as well as $53 per month more – or $31 million – for the Public Education Employees’ Health Insurance Plan. Also included is an approximate $6.7 million increase for Teachers’ Retirement System benefits.

Proposed per unit increases include:

• $1,336 per bus for transportation fleet renewal (about $10 million);
• $250 per unit for technology (about $12.3 million);
• $200 per unit for student materials (about $11 million);
• $175 per unit for the Common Purchase Fund (about $8.6 million);
• $125 per unit for library enhancement (about $6 million);
• $85 per unit for professional development (about $4 million);
• $22.50 per ADM, average daily membership, for textbooks (about $16.7 million); and
• $15 per unit for substitute pay (about $5 million).

The big ticket items on the list of suggested increases include:

• $33 million to expand the reading initiative to more adolescent readers;
  
• $22.6 million for approximately 370 additional middle school teachers;
• $29.8 million for Other Current Expense;
• $28 million for transportation operations;
• $19.2 million to expand the math, science and technology initiative into more schools;
• $15.2 million for the second year of a three-year phase-in of instructional support units;
• $13 million for dropout prevention measures, including graduation coaches for at-risk students;
• $10 million for school nurses;
• $5.6 million in rewards for schools;
• Nearly $5 million for state Department of Education operation and maintenance;
• $3.9 million for the High Hopes program;
• $3.8 million for gifted education;
• $3 million to add physical science to the Science in Motion program;
• Nearly $2.7 million for at-risk student programs;
• $2.5 million for the Career Technology Initiative;
• Nearly $2.5 million for preschool special education;
• $2 million for the state’s distance learning initiative;
• $2 million for the new Alabama History Education Initiative;
• $1.99 million for teacher/student testing;
• $1.95 million for technology coordinators;
• $1.5 million for English as a Second Language;
• $1.5 million for Home Instruction for Parents of Preschool Youngsters;
• $1.3 million for National Board Professional Teaching Standards;
• $1.25 million for 21st Century After School Programs;
• $1 million for the Principal Leadership and Preparation Redesign Program;
• $1 million for advanced placement/dual enrollment;
• $1 million to add autistic education specialists; and
• $1 million for teacher mentoring.
  

There is also $200,000 each for teacher professional technology training and online professional development, as well as $12,380 for the School Bus Seat Belts Pilot Program.

The proposal would level fund arts education, in-service centers, the Jobs for Alabama’s Graduates program, the Board of Adjustment, capital purchase (Public School Fund) and eye screening. There would be no funds for the Engineering Academy Initiative or interpreters program.

In other business, Deputy state Superintendent Dr. Eddie Johnson discussed existing and expanded efforts to infuse ARI and AMSTI training into university and college teacher education programs. AMSTI and ARI representatives will work with the committees charged with revising the content area standards for early childhood, elementary education, mathematics, the sciences, English language arts, collaborative teachers and reading specialists. Those revisions could go before the state Board of Education in May 2009.

Board members Ella Bell of District V, David Byers Jr. of District VI, Sandra Ray of District VII and board president Gov. Bob Riley did not attend Thursday’s work session. The board’s regular K-12 meeting is set for Oct. 9.

— Denise L. Berkhalter

ETF Outlook Gloomy for 2010

The Education Trust Fund, which funds local school boards, is experiencing a dramatic decline in growth rate due to the slowing national economy. The fund is comprised mostly of “growth” taxes, primarily sales and income tax, which are very sensitive to the economy. The 2008 fiscal year ETF budget of $6.7 billion relied upon a projected growth rate of 2.7 percent. The actual, adjusted projected growth rate is now 1.5 percent. That means $64 million in funds won’t materialize for FY09.

Also, in an attempt to avoid current year proration, certain tax payment deferrals and early tax receipts were affected, which could have an estimated $33 million negative impact on 2009 projections. In summary, ’09 starts with an approximate $97 million hole in the budget – a deficit that is approximately 1.5 percent of the total 2009 ETF budget.

The Legislature used a projected 3.75 percent growth rate for FY09. Current expectations are that Alabama will fall short by another $232 million in FY09.

With increased debt service of $82 million due to the Public School & College Authority bond issue, the total projected deficit for FY 2009 could approach or even exceed $400 million.

What does all of this mean?

Alabama currently has approximately $248 million in borrowing capacity from the constitutional Rainy Day Fund, which is essentially a line of credit that has to be repaid. That would increase to approximately $437 million of borrowing capacity for the 2009 fiscal year if voters pass Amendment 1 in November. The constitutional amendment would repeal the existing ETF Rainy Day Fund and reestablish it as a fund capped at no more than 6.5 percent of the prior year’s education appropriation and would require repayment of borrowed money within six years.

In comparison, the current Rainy Day Fund is capped at 6 percent of the 2002 ETF appropriation and has to be repaid in five years. The effect of the constitutional amendment is to create additional borrowing capacity with a longer payback period, thus providing added — though limited — protection to school boards during lean economic times.

If the amendment fails, proration is likely to be approximately 2.5 percent in addition to tapping the entire Rainy Day Fund.

Even if the amendment passes, the state could borrow the entire amount from the Rainy Day Fund and still experience proration in 2009. Under both scenarios, unless the economy undertakes an unlikely quick rebound, the 2010 fiscal year looks particularly gloomy, with no savings and/or rainy day accounts to soften the blow.

Budget cuts could be in the $253 million to $380 million range in 2010, depending upon the economy, though projecting that far out has a fairly large margin for error.

What can local school boards do? Monitor the effect of the November referendum on local school board operations in 2009. Vigilantly prepare for a potentially tough 2010. And, find out what is happening at the state level to minimize the impact of proration on local school boards.

— Ken Roberts, AASB Chief Operations Officer

Student Performing Groups wanted for the 2008 Annual Convention

A select number of public school performance and ROTC groups will be chosen to appear at the 2008 AASB Convention Dec. 4-6 at The Wynfrey Hotel in Hoover. Groups must represent a public school or group of public schools and have school board approval to represent their system. The ROTC group will present the colors. For details, contact AASB Meeting/Marketing Coordinator Mandy Fernandez at 800/562-0601.

— Denise L. Berkhalter
publicrelations@alabamaschoolboards.org