Alabama Faces Serious Budgetary Woes

Last Updated: December 21, 2010

This article appeared in the December 2010 Rural Policy Matters.

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Alabama schools are hoping to avoid further “proration” this school year. During proration the state makes across-the-board cuts in school funding after the state’s budget has been passed and, consequently, after districts have made funding commitments and hiring decisions.

During the 2010 fiscal year (which runs October 1–September 30 in Alabama), districts were prorated a total of 9.5%, with 2% of that proration announced in the middle of September. That left some districts scrambling to make payroll and having to access credit lines to keep schools running. Almost half of the state’s 132 school districts started the school year in violation of a state law that requires every district to hold one month of operating expenses in reserve.

Earlier this month, the Legislative Fiscal Office announced that 2.5% may be cut from education and 8.5% from other agencies during the current (2011) fiscal year. The education budget for Fiscal Year 2011 already represents a reduction of 20% ($1.5 billion) over the past four years.

Despite dismal revenue predictions, State Superintendent of Education Joe Morton submitted two budget plans to the State Board of Education. Both include small increases in spending and attempt to preserve 5,000 education jobs currently funded by federal stimulus dollars that will run out in September of next year. Morton is hopeful that Alabama’s tourist industry, paralyzed by this year’s devastating oil spill in the Gulf of Mexico, will rebound in the coming year and produce improved revenues for schools.

Another unknown variable in the state’s fiscal outlook is the potential reimbursement to the state by the BP Oil Company, owner of the well that spilled. Alabama sought $148 million from BP to make up for revenue lost as a result of the spill. This would include $116 million for the state’s schools and colleges. So far, no payment has been made pending resolution of a lawsuit filed against BP by Alabama Attorney General Troy King.

Read more:

Coverage on Superintendent Morton’s budget:
Legislative Fiscal Office Projections:
Editorial calling for changes to the state budgeting process:
Coverage including impact of the Gulf spill on the budget:

Read more from the December 2010 Rural Policy Matters.