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Alabama state budget

The Alabama state general fund for FY2012 spends $1,769,103,104, which is an increase of 11.44% over FY2011.^[1] Alabama's fiscal year begins in October and ends in September.^[2] Alabama's budget is unique in that 84% of tax revenue is set aside by the state constitution or state law for specific purposes, which is the highest percentage of any state budget in the nation.^[3]

Alabama has a total state debt of $60,412,502,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and current budget gap. ^[4]

See also: The Alabama State Budget on State Budget Solutions

[edit] Fiscal Year 2013 State Budget

Lawmakers approved both a General Fund budget and a $5.4 billion education budget for FY2013 on May 17, 2012. Gov. Bentley said that he would sign both budgets.^[7]

Education Budget

The education budget was $5.4 billion that reduces spending for public schools and universities by $208 million, but it does not include teacher layoffs and it does not increase class sizes.^[7] The spending reduction comes in part from the Legislature shifting $67 million of the state's use tax collections from the state education budget to the General Fund budget.^[7]

Legislative proposed budget

After negotiating with the General Assembly passed the general fund state budget at 11:45 p.m. on May 16, 2012, with 15 minutes left in the regular session. The Senate’s very brief debate period allowed only two senators to speak on the legislation, and House members were critical of the lack of time to ask questions. The FY2013 state budget spends $66.7 million less than the state spent in FY2012.^[8]

Highlights of the budget include:

• Medicaid receives $603 million;
• The Department of Corrections will get $365 million, $16 million less than the prior year;

The legislature began holding budget hearings when it returned to session starting Feb. 7, 2012.^[9]

The House passed a budget on April 10, 2012 by a vote of 56-47. It reduces general fund spending by $345 million, 19.9 percent, from FY2012. General fund spending in FY2013 under the House budget would be $1.39 billion^[10]

Under the House budget, agencies cuts include:

• 32 percent from the Department of Public Health,^[11]
• 24 percent from the Department of Human Resources,^[11]
• 30.5 percent from Medicaid, reducing funding by $175.4 million.^[10]
• no funding for the Attorney General's office because it is expecting mortgage settlement funds.^[11]

Governor's proposed budget

The governor's proposed FY2013 state budget diverts funds from the Education Trust Fund, the main source of state tax dollars for public schools and colleges, to the $1.4 billion General Fund, which supports Medicaid, prisons, courts, etc. He also proposed shifting $185 million in Medicaid costs for children from the General Fund budget to the state education budget.^[12]

Gov. Bentley's proposed budget for FY2013 includes many cuts:^[13]

In October 2011, Gov. Robert Bentley said of the FY2013 budget, "[O]ur education budget is going to be OK," but a new law intended to promote fiscal responsibility will require lawmakers to spend $108 million less on education in 2013 than was available in FY2012. The law uses a 15-year rolling average to cap how much lawmakers can spend on education.

The governor also said that he hopes for a constitutional amendment that would combine the states two budgets, one for education and a separate General Fund budget for non-education programs including Medicaid, prisons and state troopers into one comprehensive budget. He proposes that tax revenue from state income tax and and state sales tax that is set aside for education by state law must be made available for other uses.^[14]

[edit] Fiscal Year 2012 State Budget

• See past state budgets

Cuts Ordered March 2012

Gov. Bentley ordered 10.6 percent cut of General Fund spending on March 16, 2012, in response to revenue growth that was less than lawmakers anticipated when drafting the budget. The proration could be made much worse by $85 million in overestimated sav­ings in the Medicaid budget.^[15] The Legislative Fiscal Office projected in Feb. 2012 a shortfall of $170 million in the FY2012 Gener­al Fund budget. The $5.6 billion Education Trust Fund, which pays for most education funding in the state, is projected to be off by $23 million by the end of the year.^[16]

After the governor's 10.6 percent cut to agencies was announced, the Senate passed an appropriations bill that would give the Department of Corrections an extra $45 million so that a larger number of prisoners were not released. When the budget was originally passed, the the Department of Corrections' budget was $378 million. The governor's cuts would have meant losing approximately $40 million, and the appropriations bill restored that cut and then some.^[17]

Budget as Passed

The Alabama state budget for FY2012, and a comparison of that budget to the governor's proposed budget and the FY2011 and FY2010 budgets can be found here.

The state general fund for FY2012 spends $1,769,103,104, which is an increase of 11.44% over FY2011.^[18] Medicaid and Corrections are the two largest line items in the General Fund,^[19] which funds most non-education programs in the state.^[15] Lawmakers relied on $263 million in one-time money from the Alabama Trust Fund "to fill a hole" in the General Fund and that money will not be available in FY2013.^[19]

State education officials advised local school administrators to expect 3-5% funding cuts in FY2012.^[20]

[edit] Legislative Budgets

The Senate approved the $1.76 billion General Fund budget, which provides appropriations for all non-education entities. This budget moved to the House for consideration at an increase of $177.5 million, or 11.2%, from FY2011. Under the budget, prisons would receive see $62.6 million more in funding and Medicaid would receive an additional $247 million to maintain services that had been previously provided due to federal stimulus funds. The judiciary and the Department of Public Health agencies will see the largest cuts under the Senate budget, of 18% and 37%, respectively.^[21]

The House passed a $5.58 billion dollar education budget that means 1,100 fewer teachers in the state, but no lay offs due to retirement and attrition. It now goes to the Alabama Senate.^[22]

[edit] Budget transparency

• See also: Evaluation of Alabama state website
• See also: Constitutional provisions regarding reading of bills
• See sample transparency legislation at the Sunshine Standard

On February 11, 2009, Governor Bob Riley signed an Executive Order to create a state spending database.^[23] The order mandated that the site, to be operated by the state Department of Finance, be up by March 1, 2009. The site can be found here. ^[24]

Source	Sponsor	Data year	Searchable	Grants	Contracts	Line Item Expenditures	Dept/Agency budgets	Salaries/Pensions
Open Alabama	Government	2008-2012	Y	Y	Y	Y	Y	Y

• Line item expenditures are viewable when searching expenditures by agency.^[25]
• Budget requests and performance metrics are available by viewing agency planning and performance reports.^[26]
• Salary and benefit details can be found under the personnel costs expenditures category.^[27]

Alabama does not have a constitutional provision providing a legislative review period.

[edit] Transparency legislation

Main article: Alabama transparency legislation and transparency headlines

[edit] 2011

• The Alabama House of Representatives passed a bill that would require elected officials and candidates for office to disclose contracts with state agencies by a vote of 96-0. The bill was sponsored by Rep. Mike Ball.^[28]

• The House also voted to require monthly reports on the condition of the General Fund and Education Budget by a vote of 97-0. The bill was sponsored by Rep. Paul DeMarco.^[29]

[edit] Fiscal Year 2011 State Budget

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

In Dec. 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $65 million, which represents 3.9% of the FY2011 state budget.^[30]

The state has about $17 million left in a rainy day fund for the General Fund budget.^[31] In early December 2010, Joyce Bigbee, the director of the Legislative Fiscal Office, estimate that the governor may have to eliminate 2.3% from the education budget and 8.5% from the General Fund budget for non-education agencies.^[32]

[edit] Medicaid

Alabama's Medicaid program covers health care for nearly 1 million people in the state, with the total program including state and federal funds costing more than $5 billion, three-quarters of which is covered by federal funds.^[33]

[edit] Education

The education portion of the FY2011 budget totals $5.5 billion.^[34] The represents a decline of 20% over the past three years.^[20] With 2 weeks left in the fiscal year, the governor declared an additional 2% proration, bringing the total for the fiscal year to 9.5%.^[35] School leaders have criticized the state Legislature for passing overly optimistic school budgets and then, when revenue falls short, the state declares a proration, cutting money local school systems may already have spent or committed.^[35] The cuts announced in September 17, 2010 amounted to $113 million.^[35]

The governor blamed the cuts Attorney General Troy King and the suit he filed against BP as a result of the oil spill because the claim was mostly for sales and income taxes, which support the state education budget.^[35][34] The claim was for $148 million, the equivalent of 3.3% of the education budget.^[34] School officials, however, said that they had expected budget cuts, regardless of efforts to collect damages related to the oil spill.^[35]

The federal funds were not enough to keep schools from seeking loans, with five school districts have already borrowed against lines of credit they have with local banks to fund basic school operations, and 25 additional districts are planning to follow suit in the next few months, which would represent 20% of the state's districts.^[20] Other districts have enough money in their reserve accounts to cover the loss, but using it will leave them with fewer funds for 2011.^[35]

[edit] Budget Background

Constitution of 1901 has numerous amendments addressing the call for a balanced budget. Amendment No. 26, ratified in 1993, calls for a proration of state funds when the revenues actually received are less than the obligations appropriated by the Legislature and approved by the Governor.^[36]

Alabama's fiscal year begins October 1 and ends September 30 of the following year. Each year the state's agencies submit budget requests along with expenditures, an estimated condition of funds and a planning summary. All agencies must submit their requests by December 1 to the Governor. On December 8 the revenue projections for the following fiscal year are finalized. At the beginning of each regular legislative session, the Governor submits a two-part budget proposal for lawmakers to consider.^[37]

The following is an example of a budget preparation calendar typical of the second and third years of a legislative quadrennium. During the first and fourth years, the Legislature comes into session in March and January, respectively; therefore, time frames are somewhat different for those two years.^[37]

• August 31 Budget instructions and forms mailed
• October 15 - December 20 Executive budget hearings
• November 1 Budget requests due
• December 1 Preliminary budget information to Governor
• December 8 Revenue projections finalized
• January 8 Governor's budget recommendations finalized
• January 21-31 Appropriations bills prepared and printed
• February 4 Governor presents budgets to Legislature
• February 4 - May 18 Regular Session of the Legislature

See Alabama state budget (2008-2009) for more details.

[edit] Accounting Principles

Main article: Alabama government accounting principles

Created in 1947, The Department of Examiners of Public Accounts is responsible for auditing the books, accounts, and records of all state and county offices, officers, bureaus, boards, commissions, corporations, departments, and agencies and reporting on expenditures, contracts, or other audit findings found to be in violation of law.^[38]

The rules under which the Department operates are found in Title 41, Chapter 5 of the Code Of Alabama. The majority of audit work performed by the Department consists of traditional financial and compliance audits, including Federal compliance. These audits focus on two areas: reliability and accuracy of financial statements; and compliance with laws, ordinances, regulations, and other requirements. In addition, the Department performs "operational audits" and sunset reviews that go beyond the traditional audits and address economy, efficiency and effectiveness of operations. Such audits have been developed because the performance of governmental entities is not generally measured by profit and cannot therefore be determined through analysis of financial transactions alone. Operational audits and sunset reviews are not normally comprehensive, but focus on particular aspects of operations.^[38] The Department’s audit reports are published on their Web site.

[edit] Stimulus

Alabama has received $2.2 billion in federal funding.^[40]

[edit] Public Employees

Main article: Alabama public employee salaries

Main article: Alabama public pensions

According to 2008 Census data, the state of Alabama and local governments in the state employed a total of 324,365 people.^[41] Of those employees, 266,786 were full-time employees receiving a net pay of $908,100,454 per month and 57,579 were part-time employees paid $56,199,051 per month.^[41] More than 52% of those employees, or 169,824 employees, were in education or higher education.^[41]

[edit] See Also

• Alabama taxpayer-funded lobbying
• Alabama public pensions
• Alabama state government salary
• Government budgets

[edit] External links

[edit] Additional reading

• Alabama 2011 Executive Budget
• Gov. Bob Riley,"The 2010 State of the State Address," January 12, 2010
• Gov. Bob Riley,"The 2009 State of the State Address," February 3,2009

[edit] References

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