Alabama education revenue slowing

By Bayne Hughes
hughes@decaturdaily.com · 340-2432

MUSCLE SHOALS — State school officials didn't want to say the "p" word Thursday at the state Board of Education work session, but they don't think it will be necessary.

Proration is a dirty word in education, but, unfortunately, it tends to come up when revenue isn't coming into the Education Trust Fund as projected.

Craig Pouncey, assistant superintendent for Finance and Administration, said at the meeting at Muscle Shoals High School that the state's economy has slowed.

The state projected 8 percent growth in fiscal 2007, but revenue growth is only 6.32 percent.

"We're expecting 2008 revenues to slow even more," Pouncey said. "And then we're going to have to determine some real priorities for the 2009 budget."

Since education budget revenue comes from sales and income taxes, it tends to be cyclical.

Revenue bottomed out at -2.41 percent in 2001, and the state went through widespread proration.

The economy then improved, peaking in 2005 at 11.52 percent growth, followed by 10.65 percent in 2006.

Those two good years led to unprecedented education spending in Alabama. Pouncey said the state Legislature did have the forethought to set up a proration prevention account that's up to $265 million.

Pouncey said he is hoping that industrial recruitment, with at least two companies moving to the state, will help stop the downward trend.

State Superintendent Joe Morton said the good news is that while revenue is down, it's not bad enough to worry about proration.

"We've had great growth, but revenue is beginning to slow down," Morton said. "When you're not growing as fast, there are consequences."

The two gave the state board the update as a precursor toward starting work on the fiscal 2009 Education Trust Fund budget it will send to Gov. Bob Riley. The governor will then send the budget to the Legislature for consideration during its spring regular session.

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