Presentation - Alabama School Connection

Better policy for less poverty.
Robyn Hyden, Organizer
[email protected] 205-432-9436
Principles of a Sound Budget
Adequate
Transparent
Forward-thinking
Values-based
Total Funding Sources =
$29.1 Billion
Other
5%
Taxes
46%
Federal Grants &
Reimbursements
43%
Fines,
Forfeitures
& Court
Settlement
s
Investment
Income
Licenses,
Permits &
Fees
State Taxes = $8.9 billion
Insurance
Premium Tax
3%
Property Tax
4%
Alcohol/Tobacco
Tax
3%
Utilities Tax
8%
Gasoline/Fuel
Tax
6%
Other
Taxes
11%
Sales/Use Tax
26%
Income Tax
39%
In 2014, the ETF spent $6.1 billion
0
K-12 schools
Universities
2-year colleges
All other
1,000
2,000
3,000
4,000
Millions
5,000
Real $ and Current $
• Real dollars have been adjusted for inflation.
• Current dollars are exactly that. Today’s
dollars.
• Alabama is funding education at the 2002
level.
Historical Split B/T K-12,Higher Ed, Other
$7,000,000,000
$6,000,000,000
$5,000,000,000
$4,000,000,000
Other
Higher Ed
$3,000,000,000
K-12
$2,000,000,000
$1,000,000,000
$FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
Source: Legislative Fiscal Office, budget spreadsheets
FY13
FY14
FY15
FY16
Percentage Split b/t All
Fiscal Year
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
K-12
68.13%
68.54%
68.63%
67.71%
68.44%
65.23%
64.56%
66.91%
68.47%
68.70%
69.59%
69.21%
70.01%
66.18%
69.17%
69.36%
Higher Ed
26.91%
26.93%
27.26%
27.10%
26.20%
26.05%
27.42%
29.02%
27.60%
27.24%
26.44%
26.52%
25.27%
23.81%
25.12%
25.52%
Source: Legislative Fiscal Office, budget spreadsheets
Other
4.96%
4.53%
4.11%
5.16%
5.35%
8.72%
8.02%
4.07%
3.93%
4.06%
3.97%
4.27%
4.73%
10.01%
5.71%
5.12%
Other Expenditures from the ETF
$700,000,000
FY14
$600,000,000
FY07
FY06
FY12
$400,000,000
FY15
FY05
FY04
FY10
FY02 FY01
FY03
$300,000,000
$200,000,000
$100,000,000
FY16
FY08
FY13
FY09
FY11
Total Appropriations
Source: Legislative Fiscal Office, budget spreadsheets
7,000,000,000
6,000,000,000
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
$0
"Other" Expenditures
$500,000,000
Some Stuff to Look At
• Locals paying more into Foundation Program
• How much state, local, and federal money is
being spent on Alabama’s schoolchildren?
• Parents are paying fees
• The Foundation Program is underfunded
(More about this in coming weeks)
Education Trust Fund = $5.8 billion
Sales Tax
27%
Income Tax
61%
Use Tax
4%
Other
1%
Utility Tax
7%
Rolling Reserve Act
• Passed in 2011, went into effect in 2013
• Limits appropriations (money going out) to
average over past 15 years.
• Initially used money to payback Rainy Day
Fund
• Fully paid back by September 30
• What to do with “excess” money?
• Further Reading
Rolling Reserve Numbers
Rolling Reserve
Cap
Amount over
Cap
FY13
$5,422,907,537
$260,388,971
FY14
$6,014,101,843
$70,000,000
FY15
$92,718,463
$5,908,224,878 Rainy Day Fund
fully paid back
FY16
$5,961,953,929
Source: Legislative Fiscal Office presentations
$286,896,071
Stressors on Education Funding
Divisors were raised in FY12, resulting in loss of:
– 2100 classroom teachers
– 1700 support personnel
Enrollment stayed the same
More Stressors on Ed Funding
Average Per Pupil Expenditure (PPE)
Type of System
FY08
FY14
Statewide Average
9,103
8,979
City Systems Average
9,604
9,502
County Systems
Average
8,847
8,687
Source: Alabama State Department of Education
And More Stressors
• In FY07, added 5 days to the school year at a
cost of $94 million
• Now districts can use 180-day “equivalent”
• Districts applying this differently
• Technology costs skyrocketed
Teachers?
• No meaningful raise since FY07 FY08
• 2% raise in FY14 didn’t cover increased costs
for insurance and retirement from FY12
• Talks of “teacher shortages”, though not
confirmed
• Teacher prep programs being asked to do
more, raise quality of prep
Is there a Surplus in the ETF?
• Simply put, no.
• Money going out of ETF has been artificially
depressed because of Rolling Reserve.
• Schools are making do with less.
• All school districts are struggling.
In 2014, the GF spent an
unearmarked $1.8 billion
Legislature
Public Safety
Public Health
DHR
ADMH
Courts
Medicaid
Prisons
Other
0
200
400
600
800
Millions
General Fund = $1.7 billion
One-Time
Receipts
5%
All Other
24%
Oil and Gas
Severance Taxs
5%
Lease Tax
4%
Property Tax
8%
Alcoholic
Beverage Taxes
5%
Insurance Tax
15%
Use Tax
5%
Sales Tax
5%
Court Costs
4%
Cigarette Tax
6%
Alabama Trust
Fund Transfers
15%
Examples of Earmarks
• Agricultural fees earmarked to Dept. of
Agriculture
• Whiskey tax earmarked to Human Resources
• Cigarette taxes earmarked to DHR, Mental
Health, Public Health
• Hospital and nursing home taxes earmarked to
Medicaid.
• Marriage license fees earmarked to domestic
violence shelters.
Principles of a Sound Tax System
Adequate
Simple
Transparent
Fair
Percent of Household Income Paid in
Alabama Taxes in 2014
12.0%
10.0%
Sales & Excise Taxes
Property Taxes
Income Taxes
8.0%
6.0%
4.0%
2.0%
—
Lowest 20% Second 20% Middle 20% Fourth 20% Next 15%
Next 4%
TOP 1%
1935-present: progress and regression
Income Tax
Tax Threshold:
The income level where one begins to pay income
tax after removing deductions and exemptions.
Alabama’s are very low.
Sales Tax
Property Tax
Property Tax As a Share of Total Taxes
Alabama
Kentucky
Louisiana
North Carolina
Tennessee
Mississippi
Georgia
Virginia
South Carolina
Florida
0.00%
5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
What Taxes Do Businesses Pay?
Licenses and
other taxes,
$0.90
Unemployment
Insurance, $0.50
Property Tax,
$1.90
Corporate
Income, $0.40
Excise/Utility/In
surance Taxes,
$1.60
Sales Tax, $1.50
Alabama Business Income and
Property Taxes Are Low
Alabama
U.S.
Is the Blanket Big Enough?
The blanket is tax revenue.
The bed is needed services.
Solutions on the Table
Any solutions are likely to change.
Series of changes likely, not just one or two in
isolation.
Anyone recommending changes should
SHOW THEIR WORK.
Questions?
Robyn Hyden
Alabama Arise
205-432-9436
[email protected]
Trisha Powell Crain
Alabama School Connection
205.527.0904
[email protected]
Next Meeting
• Sunday, September 27, 2:30 p.m.
Hoover Public Library
Topic for Discussion?