Sign of Fiscal Times? Bama Ed. Fund Avoids Ax for First Time in 4 Years

By Andrew Ujifusa — October 25, 2012 2 min read
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Back in the spring, I wrote a story about a wrap-up of state legislative sessions, and I included a comment from Education Commission of the States’ Mike Griffith that next year nearly all states are projected to have revenues that exceed those from before the Great Recession. As the year has progressed, as stories from Reuters to the Huffington Post discuss, the general theme seems to be that state budgets are on a recovery march, albeit one attached to adjectives like “slow” and “uneven.”

A September study for the Washington-based Center on Budget and Policy Priorities, for example, showed that from fiscal 2008 to fiscal 2013, only 13 boosted their per-student spending, adjusted for inflation.

But here’s one more piece of state-based evidence that finances are lurching ahead: Alabama’s Education Trust Fund, the largest operating fund in the entire state, reported a $14.4 million surplus, Brian Lyman at the Montgomery Advertiser reported Oct. 24. This means that the trust fund, which supports K-12 schools in Alabama as well as two- and four-year colleges, will not face “proration” (cuts) for the first time in four years. About 85 percent of the fund is tied to income and sales taxes collected by the state.

And in addition to the surplus, the good news for Alabama is that it can now begin paying back a debt to the rainy day fund that was used in fiscal 2009 when the economy, as Lyman puts it, looked ready to “crash to Earth without a parachute.” The surplus will go back to paying that debt, and while $14.4 million may not seem like a lot of cash in the grand scheme of Alabama school funding, the state expects another $200 million to be repaid to the rainy day fund next year based on improving numbers. Again, that fits the narrative that the early recovery for state budgets may have small returns right now, but could pick up the pace over the next year.

By the way, Alabama, according to the CBPP study, had the second-largest cut (21.7 percent) in per-pupil spending of any state from 2008 to 2013, smaller only than Arizona, although the latter has disputed CBPP’s figure.

And notice at the end of the story what legislators are considering doing once the trust fund starts humming along again: Pay raises for teachers! Educators in Alabama haven’t seen a pay raise since 2008, although the legislature, controlled by Republicans, appears to want to proceed cautiously on that front.

Compare this to 20 months ago, when Gov. Robert Bentley, a Republican, had to announce a 3 percent mid-year cut to the trust fund in fiscal 2011, with the fund facing a $165 million shortfall. In addition to the cut, Bentley resorted to excoriating the estimates that had led the trust fund to that shortfall. Does he feel better about the $200 million that his colleagues are projecting in terms of the rainy day payback for fiscal year 2014?

A version of this news article first appeared in the State EdWatch blog.