Proration hits our schools hard

By By Rep. Ronald Grantland, Guest Columnist
This week the governor declared proration and he will institute spending cuts for education that will be ugly and inherently hurtful to children and young people.
Proration is an ugly but familiar word for Alabama. Since 1980, Alabama’s schools have gone into proration seven times, and this time will make it eight. Over the past three decades, approximately one out of every four years the state declares proration and schools are cut mid-year.
As we begin to grapple with how to best protect schools during this crisis time, it is important to understand why our state has something like proration when others don’t, and why our education budget seems to be at the mercy of economic downturns more so than other states. Let’s start with the basics.
Each year, the Legislature sets the education budget based on estimates of what revenue will come into the state over the next year. Last year, we recognized that problems were on the horizon and we made some steep education cuts, slashing 3 percent from K-12 and 10 percent from higher education. Even steep cuts like that were not enough.
Proration is declared when revenue collected is less than what was budgeted. Revenue comes from two earmarked sources: the state sales tax and the state income tax. Unlike the federal budget, Alabama does not allow deficit spending.
Every penny collected from the state sales and income taxes goes to the Education Trust Fund, making up about 60 percent of all school spending. Alabama is often criticized by national groups about earmarking taxes more than almost any other state. But polls and common sense show that Alabamians like to know exactly what their taxes are being collected for.
Most states fund education through property taxes; they are relatively stable and not subject to sharp drops. Alabama has by far the lowest property taxes in the nation, making us rely on income and sales taxes for the bulk of school funding.
The problem is these taxes are the most vulnerable to economic downturns. When the economy sputters, people spend less and unemployment goes up. When there is a big drop in economic activity, like the recession we are now experiencing, money for education plummets and proration is declared.
We are looking at one of the most difficult economic times since the Great Depression. Car sales have fallen off a cliff. Car factories in Alabama have reduced shifts and production. Retail is way off. Incomes are down, and unemployment has increased more than two percentage points in the past year. America is looking to the next administration to get things going again, but even they are saying things will get worse before they get better.
In order to reduce the impact of big swings in education revenue and limit the damage of proration, state voters approved the education rainy day fund in 2002 and expanded it this past November. It allows the state to borrow up to 6.5 percent of the education budget from the Alabama Trust Fund, the state oil and gas account, to limit cuts. The fund must be paid back within six years.
But the drop off in revenue may be much greater than what the rainy day fund covers because of the severity and length of this recession. Not only do we have problems in this year, but it looks like those problems will continue into the next.
The bottom line is cutting education is not smart. It hurts children, and it hurts Alabama’s economic growth in the future. We have made huge progress over the past five years with wise investments in our schools: student achievement is way up, drop out rates are down, and at the same time we’ve made sure that every dollar is used more and more effectively.
But student progress is in jeopardy with the looming budget crisis. Slashing the Reading Initiative or the Math and Science program, laying off teachers and increasing class sizes, or killing the improvements in technology in order to fill the budget hole is something nobody wants.
Education funding is one of the most important, and most difficult, issues facing our state in the coming year. Proration is a clear warning that the education budget crisis has arrived, and tough work lies ahead to solve it.