Plan to write ETF spending limit into state constitution wins Alabama Senate panel’s approval

The Rolling Reserve Act’s education spending limit would be written into the Alabama Constitution under a measure that the state Senate’s education budget committee approved 8-4 Wednesday. SB 248, sponsored by Sen. Trip Pittman, R-Montrose, now awaits action by the full Senate.

Pittman, who chairs the Senate’s education budget committee, defended his proposal from criticism of the decision to seek to enshrine the Rolling Reserve Act as a constitutional amendment. Pittman said he wants a hard spending cap that the Legislature has to follow. The act, which is already a statute, limits education funding even though Alabama has yet to restore state support for K-12 schools and higher education to the pre-recession levels of 2008.

The current Rolling Reserve Act caps spending growth in the Education Trust Fund (ETF) using a formula based on the average ETF revenue growth in the previous 15 years. SB 248 would modify the cap to disregard the year with the lowest revenue growth during those years. The bill would need to pass the House and Senate and be approved in a statewide referendum to become law.

House committee weighs other Rolling Reserve changes

The House’s education budget committee Wednesday held a public hearing on a bill that would change how ETF revenues exceeding the Rolling Reserve cap are used. HB 322, sponsored by Rep. Bill Poole, R-Tuscaloosa, would direct more of that money to capital expenses like bus purchases and school building repairs. The bill would not change the cap formula.

Current law requires ETF revenues above the spending cap to be used first to repay the ETF’s rainy day account and then to boost the Budget Stabilization Fund until it reaches 20 percent of the size of current-year ETF spending. HB 322 would change that arrangement. After ETF funding is set and the rainy day account is repaid, Poole’s bill would use remaining revenues to send an amount equal to 1 percent of the previous year’s spending to the Budget Stabilization Fund. Any money left after that would go toward buses, school maintenance and other capital expenses.

Gov. Robert Bentley supports another proposal for amending the Rolling Reserve Act. That plan is found in both HB 330, sponsored by Rep. Alan Boothe, R-Troy, and SB 281, sponsored by Sen. Jimmy Holley, R-Elba. Bentley’s plan would put more money into the classroom by moving it back into the ETF for operating expenses, acting Finance Director Bill Newton said.

Poole and Newton agreed to talk further and seek common ground. Poole, who chairs the House’s education budget committee, said he plans to bring his bill for a committee vote next Wednesday.

By Kimble Forrister, executive director. Posted April 1, 2015.