More than a dozen years after the Great Recession forced painful cuts across Alabama’s schools, state lawmakers determined not to repeat them have built up what will soon be $3 billion in reserves to protect against another downturn.
Some education officials, though, say the same discipline that filled those accounts is now making it harder for schools to meet today’s needs.
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The Rolling Reserve Act governs how Alabama budgets education spending. Under the law, the state can grow the Education Trust Fund budget only by a set amount each year. Lawmakers approved a 6% increase for the current budget. Next year, that cap tightens to 5.75% – a level many educators say won’t cover inflation, higher health care costs or pay raises.
“We were early and ardent supporters of the Rolling Reserve Act. It’s worked well,” Sally Smith, executive director of the Alabama Association of School Boards said. “But with unprecedented growth (in revenue) in recent years, we may need to take another look at those caps.”
Senate Education Budget Chairman Arthur Orr, R-Decatur, defends the limits and the state’s conservative approach. He remembers the years before 2011, when the state declared proration four years in a row.
“Before the Rolling Reserve Act, before we had fiscal discipline, we rode the roller coaster,” Orr said. “We rode up great years, and then when the bottom fell out … everyone, figuratively, was caught with their pants down, and we wound up in the proration situation.”
‘Not just sitting on a hoard of cash’
Orr said lawmakers aren’t simply stashing cash, adding that they regularly appropriate money from reserve funds.
Last year, lawmakers transferred $375 million from the Educational Opportunities Reserve Fund to pay for the RAISE Act, the new K-12 funding formula tied to student needs.
“We’ll pull a good chunk out again this year,” Orr said. “So we’re not just sitting on a hoard of cash, and the amount we’re sitting on is not excessive.”
Smith said she agrees with lawmakers’ goal of avoiding proration — the across-the-board cuts that hit schools and colleges mid-year — but worries the new limit may be too restrictive.
Lawmakers will take up the fiscal year 2027 ETF budget during the next session, which starts Jan. 13. That budget will be capped around $10.5 billion – 5.75% higher than the current year’s $9.9 billion budget. That means there’ll be $570 million in new money to spend.
EDITOR’S NOTE — This story was written by Trisha Powell Crain and originally published by Alabama Daily News.
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