Published Online: February 2, 2009

Ala. Finance Officials Say School Revenues Down

State officials received more bad economic news on the eve of the Legislature's session convening — a report of school revenues down sharply while Gov. Bob Riley said the state needs a federal economic stimulus package to avoid widespread layoffs in public education.

"States alone cannot stimulate the national economy," Riley told high school students Monday in a live interactive video exchange with students at several high schools across the state. It was a warmup for his State of the State speech to the Legislature on its opening day Tuesday.

Riley told the students their schools depend on Congress passing a stimulus package. He did not mention that Alabama's delegation in the U.S. House cast one vote for the package and six against it. It is now pending in the U.S. Senate, where both Alabama senators oppose the House plan.

After Riley's speech to the students, the state Finance Department released a report showing state sales tax collections for October through January — the first one-third of the state's fiscal year — were down nearly 9 percent from the same period a year ago. Income tax collections were down 8 percent over the same period.

Those two taxes are the main ingredients in Alabama's $6.3 billion education budget, which Riley has already trimmed to about $6 billion due to the recession. For October through January, total revenue for education was down about 9 percent from the same period a year ago.

Riley, a former congressman, said the economic stimulus plan passed by the U.S. House last week would provide Alabama about $1 billion for education over two years. If the U.S. Senate retains that amount, Alabama should avoid widespread teacher layoffs and maintain class sizes, he said.

Without it, spending on education could drop to $5.6 billion for the next school year and the average class size would increase by about six students, Riley said.

State Superintendent of Education Joe Morton, who joined Riley for the program, said that will mean "tremendous layoffs," although he didn't predict a number.

Riley will send a recommended education budget for fiscal 2010 to the Legislature this week, but he said he expects the Legislature and the administration to make adjustments in the coming weeks, depending on what happens with the federal stimulus package.

Riley said he wants to maintain programs that have improved student performance, including the Alabama Reading Initiative and pre-kindergarten programs, even if there is no stimulus package.

But he said that no matter what happens in Washington, the state will probably have to cut spending on school buses and textbooks. The state currently tries to replace school buses after 10 years and textbooks after six.

"The difference in a 10-year-old bus and an 11-year-old bus is not going to be dramatic," Riley said.

Alabama has been affected by the unemployment rate nearly doubling over the last year to 6.7 percent and by families cutting spending due to layoffs and declining values in retirement accounts, Riley said.

"There is a paranoia in America today," he said.

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