Governor increases proration by two percent

Published 1:46 pm Friday, July 24, 2009

With state tax revenues earmarked for education continuing to decline as a result of the recession, on Friday Governor Bob Riley said the level of proration in the Education Trust Fund must be increased to 11 percent for the 2009 fiscal year, which ends September 30.

Proration is the process of cutting appropriations when revenues fall short of projections.

Tax collections earmarked for the Education Trust Fund have dropped 10 percent since December, when Governor Riley declared proration and released $221 million from the education Rainy Day Fund to lessen proration’s impact to 9 percent.

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Earlier this month, the Governor released an additional $100 million from the Rainy Day Fund and on Friday released the remaining $116 million in the fund.

“No one is pleased that the economic situation requires further reductions in education, but they must be made in order for Alabama to meet its obligation to taxpayers to have a balanced budget,” said Governor Riley.

Alabama is certainly not alone in its budget problems. “So far, 42 states were forced to reduce enacted budgets in fiscal year 2009 by $31.6 billion,” a June report from the National Governors Association and the National Association of State Budget Officers said.

With 11 percent proration and release of the rainy day funds, education spending by the state is $5.7 billion.

To put that in context, education spending by the state was $4.2 billion in 2003 and reached a record high of $6.7 billion in 2008.

As the severe national recession continues, it is likely that tax revenues will remain lower than expected during the first quarter of Fiscal Year 2010. Governor Riley and some state legislators said last week that means they expect more proration in the coming fiscal year.

But Governor Riley on Friday urged lawmakers to remember that funding for school initiatives such as the Alabama Reading Initiative, the Alabama Math, Science and Technology Initiative (AMSTI), ACCESS Distance Learning and the state’s First Class Pre-K program must remain a priority even in difficult budget times. The initiatives have gotten results.

“We have made great progress in education during the past few years. Our students lead the nation in reading improvement because of the Alabama Reading Initiative. The increase in their scores in math is double the nation’s thanks to AMSTI. Our students have more learning opportunities than ever before because we’ve expanded Advanced Placement courses, put ACCESS in every high school and brought First Class Pre-K to more communities. While economic reality compels us to reduce spending now, Alabama must not abandon our commitment to these nationally renowned initiatives that have improved our schools and helped our children,” said Governor Riley.

The Governor said instead of cutting school programs, legislators must take a serious look at controlling education workers’ health care and pension costs.

“These costs are spiraling out of control. Their growth is unsustainable, and Dr. Bronner and I have warned them about it before,” Governor Riley said.

Costs of the health and retirement benefits for education workers have skyrocketed. In 2009, health insurance costs for education workers were more than $1.135 billion – an increase of 72 percent since 2003 when the state paid $660 million. Retirement benefit costs for education employees have also increased significantly, from $977 million in 2003 to more than $1.6 billion in 2009 – an increase of 65 percent.