Tuesday, April 12, 2005
On this day:

Big Increase in Education Budget Could Mean Large Cuts Down the Road

From the Birmingham News:

State education spending as proposed by lawmakers would jump 12.3 percent
next year, prompting hopes for the year starting Oct. 1 but also fears that too
much spending could trigger cuts a year later.

Some officials worry that the Legislature has gone overboard. They say promising so much more money in the 2005-06 budget year could risk cuts of $100 million to $200 million in classroom programs and higher education the following year...

Next year's budget as now written would spend $5.164 billion from the state Education Trust Fund, an increase of $565.7 million, or 12.3 percent, from this year. That would be the biggest percentage increase since a 17.5-percent jump in 1989.
But more than two-thirds of the increase would come from balances carried over from earlier years and other non-recurring money.

State officials have warned for months that spending too much of that windfall next year on recurring expenses, such as salaries, could create spending demands the following year that would outpace the natural growth in tax collections. Then lawmakers would have to cut spending or raise taxes.

We've been down this road before. The education budget is based on projected revenues. If actual revenues fall short of the projections, state law requires across-the-board cuts known as proration. Employee salaries, including those of teachers, are exempt from proration. (I'm not sure if there are different rules for "nonrecurring" revenues.)

Of the proposed growth in trust fund spending next year, $179 million would come from projected growth in state tax collections. The remaining $386.7 million would come from one-time money.

Joyce Bigbee, director of the Legislative Fiscal Office, said that if the Senate panel's budget for 2005-06 were approved, the trust fund would have to grow by between 6.02 percent and 7.67 percent the following year just to maintain level funding...

The median growth in trust fund revenue was 4.74 percent for the 15 years through 2004.

Bigbee has estimated that trust fund revenue will grow by 4.15 percent next year. She hasn't made an estimate for 2006-07.

Sounds to me like legislators are asking for trouble.