Issue: Budgets

Four things to know about Alabama’s 2016 funding challenges

By Chris Sanders

It’s the latest verse of a decades-old song: Alabama faces yet another funding shortfall next year for vital services like Medicaid, mental health care and corrections. Here are four things to know about the budget challenges facing the Legislature during the 2015 regular session that began Tuesday.

(1) Alabama’s revenues for the budgets that fund education, health care and other services still haven’t returned to pre-recession levels.

Alabama has two major state budgets: the Education Trust Fund (ETF), which pays for K-12 and higher education, and the General Fund (GF), which provides a major chunk of the support for vital non-education services, including Medicaid, mental health care, corrections and public safety. The picture that revenue officials painted for each on Tuesday was bleak.

Economic struggles during and after the Great Recession hammered both budgets, and neither has seen revenues return to pre-recession levels. GF receipts last year were down 15.5 percent since 2008, according to the Legislative Fiscal Office (LFO), and ETF appropriations this year are down 12.2 percent from their 2008 level. Alabama’s K-12 cuts since 2008 are the nation’s second worst, while our higher education cuts are the nation’s fifth worst. Alabama’s unemployment rate is improving, but revenues still aren’t growing nearly enough to undo the damage wrought by the Great Recession.

(2) The General Fund shortfall is persistent, and it’s not going away on its own.

The picture is especially bleak for the GF. Alabama’s education budget draws most of its money from state sales taxes and individual income taxes, which grow as the economy improves. But the GF relies on a hodgepodge of other revenue sources, most of which are slow to grow even during boom times.

That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth for vital services like Medicaid, mental health care and corrections. Without new GF revenue, these services continually will remain at risk of massive cuts.

(3) Alabama needs new revenue to avoid devastating cuts to vital services like Medicaid, mental health care and corrections.

How bad could the cuts for Medicaid, mental health care and other GF services get without new revenue? Perhaps most dramatically, failure to address the GF shortfall could spell disaster for Medicaid, which provides health coverage for one in five Alabamians and already has been cut to the bone of federally required coverage provisions. Even small further cuts could endanger lives.

GF cuts could mean even shorter staffing for the state’s overcrowded prison system, which operates at nearly twice its designed capacity. It also could mean fewer state troopers on the highways, more trial delays, longer lines to renew a driver’s license, or long waiting periods for many families seeking ALL Kids health coverage for their children.

Next year’s GF shortfall will be $264 million, according to Executive Budget Office (EBO) estimates. That would be a 14 percent drop in a perennially underfunded budget that already struggles to fund barebones service levels.

But the funding challenges don’t end there. EBO’s Bill Newton said Tuesday that Alabama also needs an additional:

  • $155 million to maintain current service levels for Medicaid and corrections,
  • $63.5 million to cover public safety costs that now are being covered by a transfer from the state’s road and bridge money,
  • $26 million to pay for expanded community corrections and other recommendations of the state’s Prison Reform Task Force, and
  • $32.5 million to begin repaying the $161.6 million that the state borrowed from the GF’s rainy day account and must restore by 2020. (So far, Alabama hasn’t repaid a dime.)

Add it all up and it comes to $541 million in new GF revenue needs. That’s the amount that Gov. Robert Bentley proposes to raise with a mix of tax increases and loophole closures. “We must break the cycle of budget shortfalls year after year after year,” Bentley said Tuesday night during his State of the State address. “We must have adequate means.”

(4) Taxing low-income Alabama families deeper into poverty is not the way to cure our funding woes.

Alabama’s tax system is upside down. Low- and middle-income families pay twice as much of their income in state and local taxes as the top 1 percent of earners do. It’s an imbalanced structure that makes it harder for low-income families to escape poverty and leaves them with less money for the consumer spending that fuels economic growth. The main driver of this upside-down tax system? High sales taxes, especially on groceries and other necessities that account for a big share of low-income families’ household budgets.

Significantly, Bentley’s plan would not increase taxes on food, clothing or over-the-counter drugs. Instead, the governor proposes to raise more than $400 million by increasing the state’s cigarette tax and sales tax on automobiles. Bentley’s proposal would boost the cigarette tax from 42.5 cents per pack to $1.25 per pack and would increase the state sales tax rate on automobiles (now 2 percent) to match the 4 percent rate that applies to other consumer goods.

The rest of the new revenue would come from a mix of business tax increases and loophole closures. (One proposal is for Alabama to adopt combined reporting, which would treat corporations and their subsidiaries as one corporation for tax purposes. You can learn more about combined reporting here.)

Strong investments in services like education, Medicaid and public safety promote economic growth and improve our state’s quality of life. By funding those investments without raising taxes on necessities like food and clothing, Alabama can give everyone a better opportunity to get ahead in life.

By Chris Sanders, communications director. Posted March 4, 2015.

General Fund budget, changes to Alabama’s landlord-tenant law enacted

By Chris Sanders

Next year’s General Fund (GF) budget became law Thursday night when the Alabama House ended the 2014 regular session without considering Gov. Robert Bentley’s proposed amendment to it. Bentley’s changes to the $1.8 billion GF budget were enacted automatically when the House adjourned. Check out AL.com’s report to learn more about Thursday’s action.

Bentley still must decide whether to sign the Education Trust Fund (ETF) budget or veto it and order the Legislature to return for a special session. Bentley urged lawmakers to approve a 2 percent pay raise for K-12 teachers next year, but the ETF budget sent to him did not include a teacher raise or bonus. Click here to learn more about the ETF budget.

GF support for the Department of Corrections would fall by about $2 million, or 0.5 percent, next year under the budget, even though Alabama’s prison system is operating at nearly twice its designed capacity. The budget includes $3.5 million for an overflow facility to help house some inmates from the overcrowded Julia Tutwiler women’s prison in Wetumpka. The spending plan also includes $250,000 for a new ombudsman program for Tutwiler prisoners who report mistreatment.

State employees would receive a one-time $400 bonus next year under lawmakers’ GF budget. Bentley’s amendment changed the funding source for those bonuses but did not eliminate them. Medicaid funding would increase by 11.4 percent next year, though the amount would fall short of what State Health Officer Don Williamson said the agency needs from the GF. Williamson said earlier this year that Medicaid could endure at the proposed funding level by cutting costs in the prescription drug program and other areas. Click here to learn more about the GF budget.

Landlord-tenant law revisions, AHIP bill among other enacted legislation

Alabama landlords will have more time to refund a security deposit or give notice of why they are keeping some or all of it under a new law enacted last month. SB 291, sponsored by Senate President Pro Tem Del Marsh, R-Anniston, will increase that window from 35 days to 60 days. The law also will allow landlords to treat a property as abandoned if electrical service is cut off for at least a week.

In addition, landlords will have to provide only a seven-day written notice if they plan to terminate the lease for a violation that does not involve failure to pay rent. That’s down from the previous 14-day timetable. SB 291 gives renters four chances every 12 months to correct problems cited as a lease violation without getting the landlord’s written consent. The measure passed 28-0 in the Senate and 98-0 in the House.

The Alabama Health Insurance Program (AHIP) will come to an end under another law enacted last month. SB 123, sponsored by Sen. Slade Blackwell, R-Mountain Brook, will transfer any remaining unused and unobligated program funds to the GF. Supporters said AHIP, which offers “guaranteed-issue” health coverage, is no longer needed because the Affordable Care Act (ACA) requires insurers to offer coverage regardless of a person’s health history. Blackwell’s bill passed 21-0 in the Senate and 90-0 in the House.

Before the ACA, applicants with pre-existing conditions like cancer often struggled to find coverage. Alabama created AHIP as a high-risk pool to cover certain residents who were turned down by other insurers after Congress passed the Health Insurance Portability and Accountability Act (HIPAA) in 1996.

By Chris Sanders, communications director, and M.J. Ellington, health policy analyst. Posted April 4, 2014.

Alabama Legislature passes ETF budget, goes home without approving bills on payday lending, execution drug secrecy

By Chris Sanders

Alabama lawmakers passed a $5.9 billion Education Trust Fund (ETF) budget without a pay raise for K-12 teachers just before the 2014 regular session ended Thursday night. The House voted 54-45 to agree to the compromise budget that the Senate approved Tuesday. That leaves Gov. Robert Bentley, who urged the Legislature to approve a 2 percent raise for teachers next year, to decide whether to sign the ETF budget or veto it and order lawmakers to return for a special session. Check out AL.com’s report to learn more.

Many other proposals cleared one chamber but did not win final legislative approval before the regular session ended Thursday. Among the subjects of bills that lawmakers did not send to Bentley were:

  • Payday lending. HB 145 would have created a statewide database of payday loans. The bill, sponsored by Rep. Patricia Todd, D-Birmingham, would have made it easier to enforce a current state law that prohibits borrowers from taking out more than $500 in payday loans at any one time.
  • Death penalty drug secrecy. HB 379 would have kept the identities of people involved in carrying out state-sanctioned executions confidential. The bill, sponsored by Rep. Lynn Greer, R-Rogersville, also would have shielded the identities of companies that manufacture or supply death penalty drugs. Sen. Cam Ward, R-Alabaster, sought to amend the bill to allow disclosure of such information under certain circumstances.
  • HIV drug redistribution. HB 138 would have allowed pharmacists at or affiliated with HIV clinics to redistribute unused HIV medications originally prescribed for other patients. The bill, sponsored by Todd, would have set controls on handling and oversight of the drugs.
  • Accountability Act changes. HB 558 would have made it easier for wealthy Alabamians to contribute more money to groups that grant scholarships to help parents of children in “failing” schools pay for private school tuition under the Alabama Accountability Act. The bill, sponsored by Rep. Chad Fincher, R-Semmes, would have removed the act’s $7,500 annual cap on the tax credit that individuals or married couples can claim for contributions to such organizations. The bill would not have changed current law allowing Alabama to provide a total of no more than $25 million of scholarship credits annually.
  • Lifetime SNAP and TANF bans. SB 303 would have ended Alabama’s policy of forever barring people convicted of a felony drug offense from regaining eligibility for food assistance or cash welfare benefits. The bill, sponsored by Sen. Linda Coleman, D-Birmingham, would have allowed otherwise eligible people with a past felony drug conviction to receive benefits under the Supplemental Nutrition Assistance Program (SNAP) or the Temporary Assistance for Needy Families (TANF) program if they have completed their sentence or are complying with their probation terms.

Much discussion, no Senate passage of payday loan database, execution drug secrecy bills

The payday loan database bill reached the Senate floor twice Thursday afternoon. Senators initially delayed action on HB 145 after Sen. Bobby Singleton, D-Greensboro, expressed concern about the security of borrowers’ information in the database. About an hour later, the Senate returned to the measure and added three amendments to it.

One amendment, offered by Sen. Shadrack McGill, R-Woodville, would have doubled the bill’s payday loan cap from $500 to $1,000. Two other amendments came from Sens. Roger Bedford, D-Russellville, and Paul Sanford, R-Huntsville. Immediately after adopting the amendments, senators agreed to postpone action on HB 145, and the chamber did not take it up again before adjournment.

Senators debated the death penalty drug secrecy bill three separate times Thursday afternoon but ultimately did not vote on it. Ward tried to amend HB 379 to allow people injured while handling such drugs to sue, but the Senate did not accept that proposal. “No one in the state of Alabama should ever be granted absolute immunity for negligence or gross negligence they commit against somebody else,” Ward said while arguing for his amendment.

The failure to pass HB 379 could bring lethal injections to a halt in Alabama by making it impossible for the state to buy the drugs used in the process, Ward said. “By opposing this bill and killing this bill, what we’re doing is ensuring is this state will go back to the system of the electric chair,” he said. Alabama began using lethal injection in executions after the state retired “Yellow Mama,” the electric chair used from 1927 to 2002.

The three other bills listed above did not reach the House or Senate floor Thursday. The HIV drug redistribution bill, HB 138, passed 99-0 in the House last month and was on the Senate’s final special-order calendar Thursday, but senators adjourned with several measures still lined up ahead of it. Arise and other consumer advocates last year urged Bentley to support this policy change as his Medicaid Pharmacy Study Commission met to consider ways to reduce costs in the state’s Medicaid drug assistance programs.

By Chris Sanders, communications director. Posted April 3, 2014.

Alabama House sends tight General Fund budget to Bentley; ETF plan wins Senate approval, awaits House vote

By Chris Sanders

The Alabama House voted 76-25 Tuesday night to agree to the Senate version of the General Fund (GF) budget and send it to Gov. Robert Bentley for his consideration.

GF support for the Department of Corrections would fall by about $2 million, or 0.5 percent, next year under the budget, even though Alabama’s prison system is operating at nearly twice its designed capacity. The $1.8 billion GF budget includes $3.5 million for an overflow facility to help house some inmates from the overcrowded Julia Tutwiler women’s prison in Wetumpka. The spending plan also includes $250,000 for a new ombudsman program for Tutwiler prisoners who report mistreatment.

State employees would receive a one-time $400 bonus next year under lawmakers’ GF budget. Medicaid funding would increase by 11.4 percent next year, though the amount would fall short of what State Health Officer Don Williamson said the agency needs from the GF. Williamson said earlier this year that Medicaid could endure at the proposed funding level by cutting costs in the prescription drug program and other areas. Click here to learn more about the Legislature’s GF budget.

Alabama Senate narrowly passes education budget

The Alabama Senate voted 18-16 Tuesday for a compromise Education Trust Fund (ETF) budget that would boost state funding for K-12 teachers’ health insurance but would not give them a pay raise next year. The budget awaits House consideration.

The $5.9 billion plan would include money to hire 70 additional middle school teachers, according to the Montgomery Advertiser. That would be down from 400 in the House-passed budget and 200 in the version that a House-Senate conference committee proposed last month. Check out the Advertiser’s report to learn more about the ETF budget.

If the House accepts the Senate’s latest changes, the ETF budget will go to Bentley. The education budget will be one of many bills still pending when lawmakers return Wednesday afternoon for the 29th of 30 meeting days during the 2014 regular session, which is expected to end Thursday.

By Chris Sanders, communications director. Posted April 1, 2014.

Final shape of General Fund, education budgets unclear as plans advance in Alabama Legislature

By Carol Gundlach

Alabama’s prison system would get slightly less money next year under a General Fund (GF) budget that cleared the Senate’s GF budget committee 9-1 Wednesday. Even though the committee’s budget includes more prison funding than the House-passed version, total GF support for the Department of Corrections next year still would fall by about $2 million, or 0.5 percent. The full Senate could consider the budget as soon as Thursday.

The committee’s budget would provide $4.8 million more to the overcrowded Alabama prison system than the House version would. Of that amount, $3.5 million would be earmarked for a facility to house some inmates from the Julia Tutwiler women’s prison in Wetumpka. For the last year, Tutwiler has been the subject of a federal investigation into reported sexual assaults of prisoners by corrections officers. The money would be spent to renovate an overflow facility for Tutwiler, which operates at more than twice its designed capacity.

Corrections also received an additional $1.3 million to improve security systems in male maximum-security prisons. In addition to the new women’s facility, the Senate committee approved $250,000 for a new ombudsman program for women prisoners who report mistreatment by corrections officers.

Sen. Cam Ward, R-Alabaster, who chairs the Joint Legislative Prison Committee, praised the GF budget committee’s efforts to address the problems at Tutwiler but said more changes will be needed. “There is only so much we can rely on in the budget to fund prisons and to hope these problems will go away,” Ward said. “Until we get serious about overcrowding, we cannot build our way out of this problem. We cannot budget from crisis to crisis. Leadership will be needed in 2015 to support corrections.”

The Senate committee’s $1.8 billion GF budget is nearly $15 million larger than the House-passed version. The committee’s budget includes $4.5 million to provide a state employee bonus of $400 per state employee. HB 367, sponsored by Rep. Steve Clouse, R-Ozark, would provide that bonus, as well as a conditional cost-of-living increase for state employees if revenues become available.

The Department of Public Health would receive an extra $1.25 million for research of cancer, neurodegenerative diseases and psychiatric disorders. The committee also boosted public health funding by $150,000 to establish a grant program for free health clinics across Alabama. The Department of Mental Health’s appropriation would increase by $1 million, of which about $23,000 would be earmarked to help improve autism services.

Medicaid funding would increase by 11.4 percent next year under the committee’s GF budget. That amount, unchanged from the House-passed budget, still would fall short of what State Health Officer Don Williamson said the agency needs from the GF. Williamson said Medicaid could survive next year at that funding level by finding more ways to trim costs in the prescription drug program and other areas.

Tight education budget wins House approval by narrow margin

A deeply divided Alabama House voted 51-47 Tuesday for a $5.9 billion Education Trust Fund (ETF) budget that does not include Gov. Robert Bentley’s requested 2 percent teacher pay raise or the Senate-passed 1 percent teacher bonus. Instead, the House version would increase state funding for K-12 teachers’ health insurance, though not by as much as Bentley requested. The ETF budget, which the Senate passed last month, has gone to a conference committee to resolve the differences between the two versions.

House members answered Bentley’s call to expand ETF support for early childhood education programs, giving the state’s pre-Kand Home Instruction for Parents of Preschool Youngsters (HIPPY) initiatives an additional $11.6 million. The K-12 Foundation Program, the largest source of state K-12 support, would receive $19.6 million more next year under the House version than from the Senate’s budget, for a total increase of $80.7 million, or 2.2 percent.

The House also responded to state school Superintendent Tommy Bice’s request for more money for buses and new middle school teachers. The House budget includes $8.7 million in additional transportation money and more funding to hire another 400 middle school teachers.

Two-year colleges and four-year universities would see slight ETF funding increases next year under the House’s budget. Lawmakers reversed a $10 million funding cut for Alabama State University (ASU) that cleared the Senate. The cut angered many members of the Legislative Black Caucus and encouraged many ASU students to come to the State House this month to support their school.

ETF support for the Department of Human Resources (DHR) would more than double next year to help offset a proposed cut to its GF support. The departments of Mental Health and Public Health would see little change to their ETF funding next year.

The House-passed budget alsohas a number of other line items for non-education programs, including a $2.6 million increase for the Department of Commerce, giving the agency a total appropriation from the education budget of $54.2 million. Rep. Patricia Todd, D-Birmingham, criticized the Legislature for using education dollars for non-classroom purposes. “There are a lot of things in the budget that don’t focus on children, like the Veterans Affairs Department and the Department of Commerce,” Todd said. “I’d like the budget to be entirely about public education.”

State law places a spending cap, informally called the rolling reserve, on the amount that can be spent from the ETF in any given year. The House’s budget would exceed this cap by $24 million while budgeting $27.6 million to repay money borrowed from the Alabama Trust Fund (ATF) in prior years. The ATF, which receives royalties from offshore oil and gas drilling in Alabama’s coastal waters, is the funding source for the state’s ETF rainy day account.

Lawmakers will return Thursday for the 27th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Carol Gundlach, policy analyst. Posted March 19, 2014.

Alabama House committee votes to lift individuals’ scholarship credit cap under Accountability Act

By M.J. Ellington

An Alabama House committee Wednesday approved a bill to erase a size limit on the state income tax credit that an individual can claim for contributions to groups that grant scholarships under the Alabama Accountability Act. HB 558, sponsored by Rep. Chad Fincher, R-Semmes, moves to the House.

The Accountability Act, enacted last year, provides state income tax credits to help parents of children in “failing” schools pay for private school tuition or a transfer to a non-failing public school. The law also provides tax credits for contributions to scholarship programs to help those students’ parents cover remaining costs.

Fincher’s bill would remove the Accountability Act’s current $7,500 annual cap on the tax credit that individuals or married couples can claim for contributions to organizations that grant scholarships under the act. Alabama still could provide a total of no more than $25 million of scholarship credits annually. Individuals and corporations also still could claim credits only for contributions up to 50 percent of their state income tax liability.

Susan Kennedy of the Alabama Education Association questioned Wednesday whether the state should pass a bill whose tax benefits would flow largely to Alabamians with extremely high incomes. Among those speaking in favor of the bill were Toby Roth, who represents an online education corporation, and Sharon Lewis, principal of the Oakwood Adventist Academy in Huntsville. Lewis said the Accountability Act has given children educational opportunities they otherwise would not have had.

Another portion of HB 558 would allow owners of S corporations and Subchapter K entities to claim tax credits for their share of the companies’ scholarship contributions. The bill also would revise the Accountability Act’s definition of “failing” schools. Click here to read the Montgomery Advertiser’s report on the committee’s action for more details.

Lawmakers will return Thursday for the 24th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By M.J. Ellington, health policy analyst. Posted March 12, 2014.

Alabama Senate passes education budget; changes likely in House

By Chris Sanders

State K-12 and higher education funding next year would remain far lower than it was before the recession under the Education Trust Fund (ETF) budget that the Alabama Senate passed 21-10 Thursday. The $5.9 billion budget is identical to the version that cleared a Senate committee Wednesday, but changes likely are ahead in the House.

K-12 schools and two-year colleges would get slightly more ETF support next year under the budget, while universities would receive slightly less. The Senate plan includes money to hire more middle school teachers and give all K-12 teachers a one-time 1 percent bonus next year.

Alabama State University (ASU) would lose about one-fourth, or $10.8 million, of its ETF support next year under the budget, accounting for almost the entire overall funding cut to universities. The budget would include $10 million for ASU as a “first-priority conditional,” meaning Gov. Robert Bentley could release the money to the university if ETF revenue collections exceed budgeted spending next year.

Bentley has said he does not support the proposed ASU cut. Sen. Trip Pittman, R-Montrose, who chairs the Senate’s ETF budget committee, said after Thursday’s vote that he will work with a House colleague to restore ASU’s funding, according to AL.com.

Senators rejected a proposed amendment by Sen. Quinton Ross, D-Montgomery, to shift $3 million from state-funded teacher liability insurance to ASU. The chamber also refused a proposal by Sen. Roger Bedford, D-Russellville, to use that money to help K-12 schools buy toilet paper and paper towels instead.

Pittman said he tried not to overestimate future economic growth while working on the ETF budget. “Revenue doesn’t just happen,” Pittman said. “The reality is that we’re in a very difficult financial situation.”

Lawmakers will return Tuesday for the 20th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Chris Sanders, communications director. Posted Feb. 27, 2014.

Legacies of recession, chronic shortfalls linger in Alabama’s budgets

By Chris Sanders

State support for education and other public services under the Education Trust Fund (ETF) and General Fund (GF) next year would not come close to its pre-recession level under the budgets that advanced in the Alabama Legislature on Wednesday. Both budgets are built on the assumption that the state will see no major revenue increases next year.

One-time teacher bonus, Alabama State funding cut in Senate committee’s ETF budget

Alabama would allocate $113.9 million, or 1.9 percent, less from the ETF next year under the $5.9 billion budget that won approval Wednesday in the Senate’s ETF budget committee. (By contrast, K-12 and higher education officials had requested $474 million more support next year.) If the budget becomes law, ETF funding in 2015 would be 18.5 percent less than it was in 2008, adjusted for inflation. The full Senate could consider the plan as soon as Thursday.

K-12 teachers would receive a one-time 1 percent bonus next year under the committee’s budget. Gov. Robert Bentley had recommended a 2 percent pay raise, but committee chairman Sen. Trip Pittman, R-Montrose, said he isn’t sure revenues will grow enough to sustain that pay increase. “You can’t spend optimism,” Pittman said. The committee rejected an attempt by Sen. Hank Sanders, D-Selma, to provide a 6 percent teacher raise.

K-12 schools and two-year colleges would receive slightly more ETF money next year under the committee’s budget, while universities would receive slightly less. The budget would include money to hire more middle school teachers and increase support for the Alabama Math, Science and Technology Initiative (AMSTI). Funding for the Alabama Reading Initiative would be flat.

Alabama State University (ASU) would lose about one-fourth, or $10.8 million, of its ETF support next year under the budget, accounting for almost the entire overall funding cut to universities. The budget would include $10 million for ASU as a “first-priority conditional,” meaning Bentley could release the money to the university if ETF revenue collections exceed budgeted spending next year.

Flat funding abounds for General Fund services

The House voted 80-20 Wednesday night to approve a GF budget that would be about the same size it was last year and is little different than the one that cleared a House committee last week. The $1.8 billion budget now goes to the Senate.

Medicaid, prisons, mental health care and other public services could struggle to maintain current services at the funding levels in the House’s GF budget. Overall GF support for those and other non-education services would be 8.3 percent lower next year than it was in 2008, adjusted for inflation, despite higher costs and population growth since then.

The House budget would cut GF support for Alabama’s prison system, which operates at nearly twice its designed capacity. Rep. Steve Clouse, R-Ozark, who chairs the House’s GF budget committee, said last week that he wants to work with House and Senate leaders to find more money for corrections.

Medicaid would see an 11.4 percent GF increase, though that amount still would fall short of what State Health Officer Don Williamson said the agency needs from the GF. Williamson said Medicaid could survive next year at the House’s proposed funding level by looking for more ways to trim costs in the prescription drug program and other areas.

Mental health services would receive the same amount of GF money next year, despite the increased demand for community-based mental health services following the closure of several state mental health hospitals. State courts, which have cut hundreds of jobs in recent years, would receive far less GF funding than they requested.

ALL Kids, which insures Alabama children whose low- and middle-income families do not qualify for Medicaid, would receive 28.3 percent more from the GF to help cover higher enrollment. A $13.9 million ETF boost for the Department of Human Resources (DHR) would help the agency offset an $11.8 million GF reduction. DHR provides child welfare, child support collection and elder abuse services. The agency also administers the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) program in Alabama.

Rep. Chris England, D-Tuscaloosa, said lawmakers have missed several opportunities to ease the burden on state budgets in recent years. Instead, England said, the Legislature has declined to increase the state cigarette tax, reform the state’s criminal sentencing system, or expand Medicaid eligibility under the Affordable Care Act.

The GF draws its revenues from a variety of sources that do not grow quickly enough to keep pace with cost increases. That leaves the budget with a structural deficit, meaning it often is strapped for cash even when the economy is doing well.

Rep. John Knight, D-Montgomery, said lawmakers eventually must solve Alabama’s perennial GF shortfalls. “At some point, we’re going to have to figure out how to say, ‘We’re going to do better,’” Knight said. “We can’t take care of the basic things we’re supposed to do.”

Time is getting shorter for the Legislature to finalize the budgets. Lawmakers will return Thursday for the 19th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Chris Sanders, communications director. Posted Feb. 26, 2014.

Medicaid, prison funding challenges remain as Alabama House committee OKs barebones General Fund budget

By Carol Gundlach

Medicaid, mental health and other human services in Alabama would face yet another year of tight funding under the General Fund (GF) budget that cleared a state House committee Wednesday. The committee’s version was virtually identical to the one that Gov. Robert Bentley recommended last month.

The committee approved next year’s proposed $1.8 billion operating budget for Medicaid, public safety and other non-education services after little discussion or debate. The budget now goes to the full House, which could consider it as soon as next week.

Big challenges ahead for Medicaid, prisons

Medicaid and state prisons would get nearly half of the GF’s money next year under the House GF budget committee’s plan, continuing the recent trend of those agencies consuming an increasingly larger share of the budget’s dollars. Medicaid would receive a $70 million, or 11.4 percent, increase, while the Department of Corrections would face a cut of $6.8 million, or 1.7 percent.

The committee’s proposed funding level could make it a challenge for Medicaid to maintain current services. Medicaid would remain $15 million short of the $700 million that State Health Officer Don Williamson said last month that it needs from the GF. The agency, which insures about one in five Alabamians, already has cut reimbursements for dental services, dialysis and services from non-primary care doctors. Williamson said the agency could survive next year by looking for more ways to trim costs in the prescription drug program and other areas.

Funding challenges also would remain for the state’s prison system. The corrections cut would come even as state prisons face a shortage of guards and run at nearly twice their designed capacity. Alabama also faces growing demands to hire more female guards, install more cameras and make other prison infrastructure improvements. Rep. Steve Clouse, R-Ozark, who chairs the House’s GF budget committee, said he wants to work with lawmakers to find more money for corrections.

Flat funding the norm for many other services

Other critical social services would receive essentially the same amount of GF money next year under the committee’s plan. The Department of Mental Health would be funded at the 2014 level despite the increased demand for community-based mental health services following the closing of several state mental health hospitals.

The Department of Senior Services, which provides Meals on Wheels nutritional assistance to the homebound elderly, was similarly level-funded. State courts, which have cut hundreds of jobs in recent years, also would get much less money than they requested.

The Department of Human Resources (DHR) would receive 16.8 percent, or $11.8 million, less from the GF next year. DHR’s allocation in Bentley’s recommended Education Trust Fund (ETF) budget would nearly double to offset that loss. Between the two budgets, Bentley recommended about a 2 percent increase for DHR. Because the ETF budget has not yet won committee approval, it remains to be seen whether the Legislature will support this increase. DHR provides child welfare, child support collection and elder abuse services. The agency also administers the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance for Needy Families (TANF) program in Alabama.

A children’s health insurance program would get a substantial funding boost next year to help cover higher enrollment. ALL Kids, which insures Alabama children whose low- and middle-income families do not qualify for Medicaid, would receive 28.3 percent more from the GF.

General Fund’s long-term structural deficit remains

Alabama is one of the only states with two major state operating budgets. The ETF budget funds K-12 schools, two-year colleges and public universities, as well as other state and local services related to education. The General Fund budget provides support for all other state services, including public health, public safety and child welfare.

Alabama has the highest rate of “earmarked” revenue in the nation. That earmarking forces lawmakers to spend certain tax proceeds only for very limited purposes. For example, individual income taxes and sales taxes are set aside for the ETF and can be spent only on education. Revenues from sales taxes and income taxes tend to rise and fall with the economy, allowing the education budget to make up for bad years during good years and to save some money for years when the economy is not doing as well.

The GF budget lacks this flexibility because it is funded from a variety of revenues that are not as responsive to economic changes and that do not grow quickly enough to keep pace with cost increases. That leaves the GF with a structural deficit, meaning it often is strapped for cash even when the economy is doing well. Next year’s proposed budget once again illustrates Alabama’s chronically inadequate funding for core services, ACPP executive director Kimble Forrister said.

Time is getting shorter for the Legislature to pass GF and ETF budgets for next year. Lawmakers will return Tuesday for the 17th of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.

By Carol Gundlach, policy analyst. Communications director Chris Sanders contributed to this report. Posted Feb. 20, 2014.

ETF increase not enough to restore Alabama schools to pre-recession funding

By Carol Gundlach

Alabama’s education funding is expected to increase next year, but K-12 and higher education need a far larger increase to meet students’ needs adequately, lawmakers heard Tuesday during the second day of state budget hearings in Montgomery.

Spending in the Education Trust Fund (ETF) budget will be $134 million, or 2.3 percent, higher next year, according to the Legislative Fiscal Office. But that amount is far less than the total $474 million in increases that K-12 and higher education officials have requested. It is also 18.7 percent less than Alabama spent through the ETF in 2008, adjusted for inflation. Next year’s projected gains will not come close to offsetting recession-era declines.

Poverty, hunger remain challenges for K-12 schools, superintendent says

K-12 schools need $245 million, or 6 percent, more money next year, state school Superintendent Tommy Bice said. That increase would allow the state to hire an additional 450 middle school teachers to help reduce the dropout rate by keeping students engaged in school at a critical age, Bice said. The money also would help the state address other education needs, Bice said, by boosting support for:

  • School bus services, allowing systems to replace older buses and shorten routes that have some children getting on a bus before 6 a.m.;
  • A competitive grant program to allow schools in lower-income areas to offer music and other arts programs;
  • More teachers in expanding career and technical programs;
  • Family Resource Centers that serve the families of public schoolchildren;
  • Distance learning and the Alabama Math, Science and Technology Initiative;
  • An expansion of the successful Alabama Reading Initiative beyond the third grade; and
  • Libraries, technology, counselors, school nurses and continuing education for teachers.

Poverty remains the greatest barrier to education in Alabama, Bice said. “Education is the only way to end intergenerational poverty,” he said. Nearly every local school superintendent in the state attended in support of Bice’s presentation.

Child hunger is a major problem for Alabama’s schools, Bice said, and recent reductions in federal food assistance through the Supplemental Nutrition Assistance Program (formerly known as food stamps) have made the problem even more serious. Nearly two-thirds of Alabama schoolchildren now qualify for free lunches, Bice said, a 4 percent increase in only one year. All but two school systems in the state provide breakfast, and more than four out of five children who eat breakfast at school qualify for free breakfasts, Bice said. The prevalence of hunger increasingly is leading schools to provide meals for children in the summer, as well as during the school year.

Alabama’s K-12 schools still are finding success despite chronic underfunding, Bice said. The state’s graduation rate has climbed to 80 percent for the first time ever, he said, an increase of 5 percentage points in one year. High schools also are expanding their collaborations with nearby community colleges, Bice said.

Pre-K, 2-year colleges, universities also request funding increases

Other presenters made the case Tuesday for more money for early childhood education and higher education in Alabama next year. Jenna Ross, director of the Office of School Readiness, asked for more support for the state’s highly touted pre-K programs. High-quality pre-K education closes the achievement gap for low-income students, Ross said. It also increases reading and math scores, decreases school absences, and reduces referrals to special education services, she said.

Mark Heinrich, chancellor of the state’s two-year college system, requested legislative support to expand a GED preparation program to help educate the 479,000 Alabama workers who do not have a high school degree or GED. Another priority for the system is to expand dual enrollment programs between high schools and community colleges, Heinrich said. He also urged an expansion of prison education programs, which he said have been shown to reduce recidivism rates significantly.

Lawmakers should try to restore universities to their 2008 state funding levels next year, said Robert Witt, chancellor of the University of Alabama System. Median tuition at the state’s public universities has increased sharply in recent years amid declining state funding.

The Legislature began the 2014 regular session Tuesday. Lawmakers will return Wednesday for the second meeting day of the session, which is expected to last until early April.

By Carol Gundlach, policy analyst. Communications director Chris Sanders contributed to this report. Posted Jan. 14, 2014.