Alabama educators prep to start 2009 in deficit
MONTGOMERY – It’s an equation even the smallest of students would understand: More expenses plus less money equals big trouble.
That’s the problem Alabama education officials are facing. They say the state’s school systems will likely enter the 2009 fiscal year — that begins in two weeks — in the red.
“This school year doesn’t start until Oct. 1, but we know based on where we are today that we’re not growing at the rate we need to make the ’09 budget be whole without some help,” state Superintendent Joe Morton said recently.
“If we have 7 percent proration, you can’t cut salaries, so there’s not much to cut other than bus fuel, cut the heater back and everybody’s cold in the winter and don’t buy textbooks and not clean the building, but none of those are good options,” he said. “It’s a real critical point.”
State legislators passed a reduced budget in May, cutting it to $6.36 billion in Fiscal Year 2009, down from the current $6.73 billion. The cuts have been blamed on the economic slowdown that’s being felt nationwide.
Losing $370 million means a 3 percent cut for K-12 schools, an 8 percent cut for two-year colleges, and an 11 percent cut for universities.
“We stopped short of raising class size and we stopped short of cutting any programs that are changing Alabama: the reading initiative” and math, science and distance learning programs, Morton said.
He said he was not upset that pre-kindergarten funding was raised by $10 million because it saves money in the long run.
“We’re not in this shape because of $10 million for pre-K. We’re talking hundreds of millions of dollars,” he said.
Officials in both the K-12 and community college systems are bracing for the proration possibility, which Gov. Bob Riley could declare and allow across-the-board cuts to reign in spending.
Riley said Friday he was not ready to concede that the 2009 budget would end up in proration, but didn’t rule it out, saying the state would “adapt one way or the other.”
“A lot of that depends on what the economy does over the next year,” he said.
Riley said state collections of sales and income taxes, which are the main sources of revenue for the education budget, had remained “fairly stable” in recent months.
But the returns have been much lower than the 4 percent rate of increase the 2009 budget was based upon, assistant finance superintendent Craig Pouncey said.
As of Friday, the rate was 1.29 percent, he said.
Riley has already emptied a $440 million proration prevention account to complete FY 2008 and officials are now looking to voters to approve a constitutional amendment Nov. 4 that would allow them to draw more money from another Rainy Day fund.
“We used that $440 million to kind of keep our head above water,” Pouncey said. “Beginning Oct. 1, the legislature has made commitments of $6.3 billion to be funded. So if we take the same rate of growth and project it over 12 months, we’re going to have a $357 million shortfall.”
Two-year chancellor Bradley Byrne told school board members last week there were increases in the system’s revenue — but it’s not big enough to pay for what’s been spent.
“It’s like a freight train without a brake on it,” he said.
Officials had anticipated carrying $64 million into the new fiscal year, but that money was spent along with the $440 million reserve fund.
“We’re beginning this year very much in the hole,” said Gene Murphy, who heads the two-year system’s financial services. “We anticipated not having to dip into the rainy day fund and we had anticipated a growth rate that’s just not going to be there. The economy is not recovering as rapidly or as anticipated by a lot of people.”
“It will be a tough year,” he said.
However, Murphy said a bright spot is that colleges made their budgets not anticipating enrollment increases but many of the schools did see growth in that area. Also, he said, administrators forewarned about lean times have been putting aside extra reserves.