SOUTH UNION STREET

Education budget, General Fund head in different directions

Brian Lyman
Montgomery Advertiser

General Fund budget hearings took place on the second floor of the Alabama State House on Tuesday. An update on the state’s Education Trust Fund budget took place on the sixth.

The Alabama Senate has approved changes aimed at strengthening the state’s Open Meetings Act following decisions from the Alabama Supreme Court that critics say weakened it.

But the ETF’s more elevated position wasn’t entirely due to the physical location. Downstairs, agencies made their cases for funds just to maintain current services. Upstairs, legislators heard the ETF might have more funding available in 2017.

Downstairs

Legislators warned last month that the General Fund, which pays for most non-education programs in Alabama, could face further cuts amid rising costs. The budget’s woes last year required cuts in funding in many state agencies, some by double-digit percentages. Even agencies that received level funding, like the Alabama Department of Corrections, paid a penalty due to mandated costs.

“That level funding did create a $12 million operational deficit in our budget,” DOC commissioner Jeff Dunn told legislators Tuesday afternoon.

To make up the gap, Dunn said, the department had to end bed leasing contracts with counties and postpone some capital projects, including projects to upgrades doors and locks and add security cameras.

Dunn also said the shortfall required Corrections to divert a $4.5 million increase for community corrections to other needs.

Alabama's prisons stood at 182 percent of their designed capacity in September, and there are 9.5 inmates to every correctional officer. The commissioner praised Corrections employees, calling them the “unsung heroes” of law enforcement due to the dangerous environment in which they work. But Dunn said the system struggled to keep up with the demands placed on it.

“This is a department under great stress, and it has been under great stress for a considerable amount of time,” he said. “I hope as we go forward we will be able to relieve the stress, because if we stress the system too much, at some point it will break.”

Corrections will seek an $18 million increase to maintain its current level of services. The state’s court system will seek $1.9 million to maintain its services and address mandated costs.

“We’re trying to get back to this adequate and reasonable budget we asked for,” said Rich Hobson, director of the Alabama Administrative Office of Courts. “We’re not asking for fluff in our budget.”

Alabama Chief Justice Roy Moore, who attended the meeting, told legislators that trial court personnel had only one pay raise since 2008, and that it had become difficult to hold onto employees. Asked by House Ways and Means General Fund committee chairman Steve Clouse, R-Ozark, whether they could use an unencumbered balance in the system to provide those, Moore and Hobson said the money address deficits at the end of each year. Without that money, they said, they might have to push for additional reductions in court personnel; the system has lost about 300 employees since 2008.

Moore also said cuts might force him to look at reducing the number of drug courts in the state, which he said “save lives.” He also opposed making up projected deficits by increasing court fees.

“We don’t want to lay any more burdens on the people of Alabama for fees and costs in the court system,” he said. “They’re too high now.”

Budget hearings on the General Fund will continue Wednesday and Thursday. Clouse said the Department of Finance will give an overview of the General Fund’s revenue picture Wednesday.

Most of the General Fund budget’s three dozen revenue sources post flat growth year-to-year, and the budget has continued to struggle to meet rising costs, particularly in Medicaid and Corrections.

Upstairs

The Education Trust Fund budget, which gets its funds from income and sales taxes, looks better. Legislators will have an extra $22 million to appropriate in the $6 billion 2016 budget this year.

Kirk Fulford, deputy director of the Legislative Fiscal Office, also told the committee the Rolling Reserve cap, which limits spending in the ETF based on a 15-year average of revenues, would rise to about $6.4 billion in fiscal year 2017. That would be about $475 million over the current year’s budget.

But Fulford was quick to warn legislators that ETF revenues – mostly income and sales taxes – might not grow to that level.

“We’d have to have growth of roughly five percent to get to that cap number,” he said. “I’m not going to tell you it can’t happen. We don’t want to be too cautious based on revenue estimates, but we have to be cautious based on what the economy tells us.”

LFO has yet to certify its revenue projections for 2017 and the actual forecast is not known. House Ways and Means Education chairman Bill Poole, R-Tuscaloosa, noted that the situation was “somewhat atypical” and said legislators should be cautious.

“The important thing to watch is not what the cap calculation is determined to be than what our revenue estimates show us,” he said. “We anticipate revenue estimates will fall below our caps.”

Poole said after the meeting there were limits on spending the extra  $22 million in the current year. As a non-recurring source of revenue, he said, it could only go to a non-recurring purposes.

Looking at 2017, Poole said items like a teacher pay raise and increased pre-K funding “were certainly possibilities,” but that he had not made his list of priorities.

“It’s not hard to identify priorities but it’s hard to identify how many of those you can reach and how effectively until we have our revenue estimates,” he said.

Portions of the state use tax transferred from the ETF to the General Fund last year. Poole sounded reluctant to see any more money head that way.

“I believe it’s important we invest in the solution to state’s problems, which is getting people out of poverty, getting people educated, having economic growth, workforce development and jobs,” he said. “That’s how you get folks out of prisons and off Medicaid rolls, out of (the Department of Human Resources) and out of the court system.”