The state’s education budget is in trouble. The Legislature authorized $6.7 billion in education spending for fiscal 2008, but the supporting tax receipts are expected to be under $6.1 billion. Fiscal 2007 was no different: spending exceeded receipts by around $400 million. The budget in these two years was balanced with money set aside earlier, which likely will be gone by the end of 2008.
The outlook for fiscal 2009 is bleak since education tax receipts are expected to be around $6.3 billion, or $400 million below the current spending level. The governor’s budget recommends reducing appropriations to universities, two-year colleges and public schools. The Legislature has yet to decide.
The state faces such a dilemma every few years. It results from looking ahead only one year at a time in creating the education budget, ignoring the regular economic cycles that include years of both rapid growth and slowdown.
Education appropriations often increase by large percentages in the “good” years (for example, 13 percent in 2006 and 17 percent in 2007). The funding level that results cannot be maintained when the inevitable slowdown follows, leading to cutbacks in the budget or by proration. Education spending has been prorated in midyear eight times in the past 30 years, mainly during economic slowdowns that have occurred at roughly 10-year intervals and lasted two or three years. The current period seems to follow this pattern.
The estimated growth rate for education tax receipts from 2003 to 2009 is more than 7 percent a year, which is above the long-term average. Even that is not adequate to support the spending level of $6.7 billion that was reached in 2008. Spending cannot expand faster than the long-term growth of the revenues supporting it.
Great success in economic development has given Alabama a strong foundation for progress, but only an effective public education system will enable Alabamians to compete for the jobs being produced.
Continuing to inflate the education funding level in good economic times, followed inevitably by having to cut it back a few years later, detracts from this crucial task.
EDITOR’S NOTE — Jim Williams is executive director for the nonprofit, nonpartisan Public Affairs Research Council of Alabama.
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