Legacies of recession, chronic shortfalls linger in Alabama’s budgets

State support for education and other public services under the Education Trust Fund (ETF) and General Fund (GF) next year would not come close to its pre-recession level under the budgets that advanced in the Alabama Legislature on Wednesday. Both budgets are built on the assumption that the state will see no major revenue increases next year.

One-time teacher bonus, Alabama State funding cut in Senate committee’s ETF budget

Alabama would allocate $113.9 million, or 1.9 percent, less from the ETF next year under the $5.9 billion budget that won approval Wednesday in the Senate’s ETF budget committee. (By contrast, K-12 and higher education officials had requested $474 million more support next year.) If the budget becomes law, ETF funding in 2015 would be 18.5 percent less than it was in 2008, adjusted for inflation. The full Senate could consider the plan as soon as Thursday.

K-12 teachers would receive a one-time 1 percent bonus next year under the committee’s budget. Gov. Robert Bentley had recommended a 2 percent pay raise, but committee chairman Sen. Trip Pittman, R-Montrose, said he isn’t sure revenues will grow enough to sustain that pay increase. “You can’t spend optimism,” Pittman said. The committee rejected an attempt by Sen. Hank Sanders, D-Selma, to provide a 6 percent teacher raise.

K-12 schools and two-year colleges would receive slightly more ETF money next year under the committee’s budget, while universities would receive slightly less. The budget would include money to hire more middle school teachers and increase support for the Alabama Math, Science and Technology Initiative (AMSTI). Funding for the Alabama Reading Initiative would be flat.

Alabama State University (ASU) would lose about one-fourth, or $10.8 million, of its ETF support next year under the budget, accounting for almost the entire overall funding cut to universities. The budget would include $10 million for ASU as a “first-priority conditional,” meaning Bentley could release the money to the university if ETF revenue collections exceed budgeted spending next year.

Flat funding abounds for General Fund services

The House voted 80-20 Wednesday night to approve a GF budget that would be about the same size it was last year and is little different than the one that cleared a House committee last week. The $1.8 billion budget now goes to the Senate.

Medicaid, prisons, mental health care and other public services could struggle to maintain current services at the funding levels in the House’s GF budget. Overall GF support for those and other non-education services would be 8.3 percent lower next year than it was in 2008, adjusted for inflation, despite higher costs and population growth since then.

The House budget would cut GF support for Alabama’s prison system, which operates at nearly twice its designed capacity. Rep. Steve Clouse, R-Ozark, who chairs the House’s GF budget committee, said last week that he wants to work with House and Senate leaders to find more money for corrections.

Medicaid would see an 11.4 percent GF increase, though that amount still would fall short of what State Health Officer Don Williamson said the agency needs from the GF. Williamson said Medicaid could survive next year at the House’s proposed funding level by looking for more ways to trim costs in the prescription drug program and other areas.

Mental health services would receive the same amount of GF money next year, despite the increased demand for community-based mental health services following the closure of several state mental health hospitals. State courts, which have cut hundreds of jobs in recent years, would receive far less GF funding than they requested.

ALL Kids, which insures Alabama children whose low- and middle-income families do not qualify for Medicaid, would receive 28.3 percent more from the GF to help cover higher enrollment. A $13.9 million ETF boost for the Department of Human Resources (DHR) would help the agency offset an $11.8 million GF reduction. DHR provides child welfare, child support collection and elder abuse services. The agency also administers the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) program in Alabama.

Rep. Chris England, D-Tuscaloosa, said lawmakers have missed several opportunities to ease the burden on state budgets in recent years. Instead, England said, the Legislature has declined to increase the state cigarette tax, reform the state’s criminal sentencing system, or expand Medicaid eligibility under the Affordable Care Act.

The GF draws its revenues from a variety of sources that do not grow quickly enough to keep pace with cost increases. That leaves the budget with a structural deficit, meaning it often is strapped for cash even when the economy is doing well.

Rep. John Knight, D-Montgomery, said lawmakers eventually must solve Alabama’s perennial GF shortfalls. “At some point, we’re going to have to figure out how to say, ‘We’re going to do better,’” Knight said. “We can’t take care of the basic things we’re supposed to do.”

Time is getting shorter for the Legislature to finalize the budgets. Lawmakers will return Thursday for the 19th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Chris Sanders, communications director. Posted Feb. 26, 2014.