Schools: Amendment 1 needed

Published 11:16 pm Wednesday, October 22, 2008

Key figures in legislature and local education are saying the proposed “Rainy Day” amendment on the ballot in November is a “must” for education in Alabama.

Amendment 1, or the “Rainy Day” amendment, is a proposed change to the state’s constitution that would enhance a rainy day fund for education, which is already on the books and helps public education manage through years of proration.

Alabama has two rainy day accounts for the Education Trust Fund used to prevent proration, or across-the-board budget cuts — the Proration Prevention Account, which works like a savings account, and the Rainy Day Account, which acts like a credit line.

The Proration Prevention Account is funded with tax revenues; the Rainy Day Account gives the state the power to borrow money from the $3.2 billion Alabama Trust Fund, funded by the sales of drilling rights and oil and gas leases.

To cover revenue shortfalls for the 2008 fiscal year budget, the state emptied the $440 million Proration Prevention Account to cover revenue shortfalls in the fiscal 2008 budget.

Currently, the state can borrow up to $248 million from the Alabama Trust Fund to cover Education Trust Fund shortfalls. That money must be repaid within five years.

If the state has to tap into the $3 billion Alabama Trust Fund to protect school and government spending this year, the fund’s value would drop at least $771 million — or 26 percent — overnight.

To prevent that from happening, Gov. Bob Riley has proposed Amendment 1.

House Speaker Seth Hammett, D-Andalusia, said the proposed amendment would allow for a continuation of services for Alabama’s students and citizens.

“I support passage of Amendment 1 in the 2008 general election because it will allow our state to continue to educate our students and provide essential services to our state’s citizens during those inevitable times when our tax revenues are lower than expected,” Hammett said. “I am glad that, unlike our federal government, Alabama cannot spend more than it receives in revenue.”

Hammett said the amendment would essentially give the state a line of credit from the Oil and Gas Trust Fund “to smooth out the peaks and valleys in our economy.”

“Remember, this is money that we would be borrowing from ourselves as a state and must be repaid,” he said. “Just like families who borrow for college tuition or other worthwhile purposes, our state needs to use this financial resource to ensure that our schools can operate and that our most vulnerable citizens – the elderly and the poor – continue to receive help.”

Andalusia City School Superintendent Dr. Beverly McAnulty agreed the money that would be generated by the passage of Amendment 1 is a “must” for education.

“We must have this amendment,” she said. “We have a 2009 budget which is very tight because of the cuts we have already made. Without the Rainy Day Amendment, we could be forced to find ways to cut this budget up to an additional $300,000 this year.”

Additionally, McAnulty said the next year’s budget would be even tighter.

“The 2010 budget is going to be even worse because of the economy,” she said. “The public needs to understand this is not a tax, it simply gives the Department of Education the ability to borrow from the more than $3 billion Trust Fund. It is a loan and will be paid back when the Education Trust Fund funding resources improve.”

McAnulty said the situation in Andalusia would be dire if the amendment is not passed.

“The impact to Andalusia City Schools will be tremendous if it does not pass,” she said. “It will certainly mean releasing personnel because we will have no choice.”