Many bills in this legislative session include funding from the state’s Education Trust Fund, like reducing the state’s sales tax on groceries which funds the ETF, and school choice legislation that converts funds from the ETF to savings accounts, scholarships, and tax credits for students homeschooled or attending private school.
There’s concern the ETF won’t be able to sustain all the new initiatives and public education.
“We have a surplus of education revenue from last year and we’ve had tremendous growth. We applaud our state legislatures for looking at some innovative programs but I think it’s important to look long-term. It’s very concerning to us in the education community because there are a lot of moving pieces,” said Sally Smith, Executive Director of the Alabama Association of School Boards. “All of those things have various merits and in some cases concerns but they all impact the bottom line.”
Bills like the Parental Rights in Children’s Education Act would put $6,900 per eligible student in an education savings account. The first three years of the program would utilize $150 million from the ETF and up to $650 million after three years.
Reducing the sales tax on groceries overtime by 2% could result in a $300 million cut to the ETF. That’s 3.5% of the state’s $9 billion education budget. A complete cut would be $600 million.
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“We know we aren’t where we need to be in terms of performance, but taking money away is not going to help. More importantly, the people who would benefit from the Choice programs are already sending their children to private schools. They’ve already abandoned the public school system so we really aren’t helping any other student. Truly, our most at-risk students don’t have Choice options. Either there aren’t schools around, they are lacking transportation or they don’t offer the services they need,” said Smith. “This is a time when the legislature has to look long term and weigh the difference. Certainly, we can’t afford to do everything on the table right now, so it looks like the legislature and governor are still going to have some hard choices.”
Smith liked the idea of putting excess funds from the ETF in a savings account in case the economy sours. Senate Bill 101 amends the Rolling Reserve Act and includes provisions for the savings account called the Educational Oppurtunities Reserve Fund.
That bill also caps the excess revenue deposited annually into the ETF Advancement and Technology Fund at $1 billion. Smith believed too much funding is being diverted to the savings account that should go to the A and T Fund.
“The Advancement and Technology Fund is very important to local boards of education because we can spend it on our local needs. It is approved for about seven different purposes, not generally recurring revenue but things like safety, capital outlay, and deferred maintenance. All of the things that get shorted in the other budgeting process” said Smith. “We want to make sure we aren’t taking too much money off the top of the ETF to make sure we can get the money into our schools.”
Chairman of the Senate’s Education Finance and Taxation Committee, Arthur Orr, is a sponsor of SB 101. He said the savings account would ensure programs put in place by the Literacy Act and Numeracy Act are rolled out entirely across the state even during hard times.
“Today the amount for the Numeracy Act for example is around $30 million. The end result will be around $100 million. What we don’t want to do if our revenues are flat is to push the pause button and say ‘We’re just not going to grow it anymore.’ That leaves parts of our state, children not receiving the education improvement help they need,” said Orr. “We want to make sure we keep moving education forward instead of having to push pause. What does that do to children in the system at that time? They don’t get the services, attention, or educational support that they need and we just say ‘Sorry, the adults made a mistake and didn’t save any money during the good times.'”
Orr is a sponsor of a grocery tax reduction bill but believed lawmakers needed to be cautious in the final days of the legislative session.
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“We’ve got a lot of bills moving around. A lot of those are expenditure-type bills such as the School Choice bill. We’ve got others that cut taxes. There’s a good bill that cuts taxes on overtime when you’re paid overtime. We’ve got the grocery tax legislation out there that’s very popular around the state. Then the question becomes, at what cost?” said Orr. “We’re the lowest taxed state per capita in the country for state taxes. Are we investing sufficiently in…
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