Alabama Educational Technology ConferenceSeptember 30, 2008

Lisa A. WoodardSchool Superintendents of AlabamaDirector, Research and Legislation

Education Laws and Resolutions

Education Budget

HR 564 -- Examiners of Public Accounts sent into school to collect data currently on file with SDE: list of each public school system; salary of the superintendent; number of individuals employed within the central office; and the total payroll for the individuals employed within the central office of each public school system.

ACT 2008-281-- Provisional Certificates: expands opportunities for obtaining a provisional teaching certificate (ABC) to include middle school; extends the time from 3 to 4 years; raises the fee to $30; and allows three paths for admission to the program.

ACT 2008-379 – Competitive Bid Bill: increases the minimum amount for which competitive bidding is required from $7500 to $15,000, and includes city and county boards of education in the list of awarding authorities that may establish local preference zones for contracts that will be competitively bid. Exempts purchases made by boards under joint purchasing agreements; allows school boards to enter into regional purchasing consortiums with county and city governments; allows local authority to make purchases or contracts through a reverse auction procedure; and allows for consideration of life cycle costs in competitive bidding.

ACT 2008-543 – Add Back Bill: provides for the collections of certain corporate income taxes not previously collected. Over the next two years, it is estimated to produce an additional $74M for the ETF.

ACT 2008-508 – Education/General Fund Rainy Day Account: repeals and reestablishes an Education Trust Fund Rainy Day Account (ETFRDA) within the Alabama Trust Fund and creates a General Fund Rainy Day Account (GFRDA).

Purpose: Increase the quality of and obtain the best price for goods and services Raises the threshold to $15,000

▪ Pest Control Optional bid bond

▪ Lawn care Joint purchasing, expanded options

▪ School boards may join any joint purchasing agreement as long as certain conditions are met

▪ Can use U.S. Communities Joint Purchase Agreement Online bidding (reverse auction)

▪ “eBay” Lifecycle Option

▪ Allowed in situations where the life cycle costs can be “reasonably ascertained” using “industry recognized and accepted sources.”

Talk to your CFO

ActualFY 07

ActualFY 08

Regular SessionFY 09 PROPOSED

Special SessionFY 09PASSED

K-12 64.56% 66.91% 68.70% 68.78%*

Higher Ed

27.42% 29.02% 27.58% 27.50%

Other 8.02% 4.07% 3.72% 3.72%

K-12 $4,032,216,518

$4,502,588,651

$4,368,827,342

$4,373,827,342

*By increasing the percentage of the split for K-12 we were able to prevent an additional $118,652,400 in cuts.

Negative numbers are actual decreases from FY08. BLUE numbers were presented to SBE on 09/25/08 as a Proposed Draft of FY10 Budget and will be discussed further next month.

High HopesESLAdvanced PlacementPre-School Special EdCareer TechTechnology Coordinators (-

$950,000) SBE Proposed Draft (+$1.95M)

Rewards to SchoolsTeacher RecruitmentTeacher Mentoring

2003 2.82% 2004 9.5% 2005 11.5% 2006 10.6% 2007 6.5%

FY07 budget was based on 8.62% growth

$118M less than lawmakers expected2008 1.29% (9/23/08)

FY08 budget was based on 5.04% growth Current growth rate is 1.29% (09/15/08)

* Source: Alabama Finance Department

Possible revenue: $90M remaining in PPA $30M in unpaid income tax refunds

not refunded until Oct. 1 $40M in early collection of tax

payments from corporations $10M from AIDT (Workforce

Development Funds not used because of Air Tanker rebid)

FY08 Revenue @ 1.5% Growth (optimistic)

$5,941,795,638

FY08 Expenditures ($6,729,089,636)

FY08 Budget Imbalance ($ 787,293,998)

Source: Legislative Fiscal Office

FY09 assumes trust fund growth of 4.9% and $64M from the Proration Prevention Account LFO projected growth estimate is 2.77% Current growth rate is 1.29% (09/23/08)

$134M ETF FY09 budget shortage on 10/01/08 $64M from the proration prevention

account $30M for FY 08 Income taxes not paid $40M for early collections of corporate

taxes (4th Qtr. FY08 paid in Sept. 08 instead of Dec. 08)

Rainy Day Fund --$248M▪ Alabama Trust Fund earmark▪ “Credit Card”▪ Must be repaid in 5 years

▪ Withdrawals limited to the average of the estimated available revenue certified by the Finance Director and the LFO

▪ Alabama Constitution Amendment 709▪ Proration must be declared by the Governor to access▪ 25% of what is borrowed goes to County and Municipal

Improvement Trust Fund and is NEVER paid back to the Alabama Trust Fund.

Proration Prevention Account-$0▪ More flexible▪ Savings Account▪ Legislature repays at its discretion…up to $75M▪ Alabama Code: 40-1-32.1▪ Act No. 2008-544 passed in the 2008 Session:

▪ Removes the $75M minimum for the account ▪ Does not require repayment to account during years of proration▪ Requires that 75% (up from 20%) of the ending balance in the ETF from the

preceding fiscal year of “unanticipated and unappropriated revenue” be appropriated to the PPA

Existing Account Proposed Amendment

Finance Director Revenue Estimate for FY09

$6.360billioncertification dated 5/16/08

Finance Director Revenue Estimate for FY09

$6.334 billion

LFO Officer Revenue Estimate for FY09

$6.155 billion Legislative Fiscal Officer Revenue Estimate for FY09

$6.155 billion

Average of the Two Estimates

$6.258B Highest of the Two Estimates

$6.334B

Estimated Available Revenue for FY09

$6.030B* Estimated Revenue Available for FY09

$6.030B*

Amendment 709 Cap (limited to FY02 Appropriations)

$248 million Amendment 1 Cap (6.5% of Prior Year Appropriations)—see next slide

$437 million

Projected Proration: 3.21% Projected Proration: .23%

Sources: Dr. Henry Mabry, AEA Financial Consultant and Dr. Ira Harvey, SSA Financial Consultant

*FY07actual=$5,854,027,193 x 1.015 (FY08) x 1.015 (FY09)=$6,030,965,000

Amount withdrawn in a fiscal year may not exceed 6.5% of the previous fiscal year’s ETF appropriations

Impact of Amendment 709 on ETF for FY10

ETF Appropriations for FY08ETF RDA PercentageETF RDA for FY09

$6,729,089.6566.5%

$437,390,828

ETF Appropriations for FY009

ETF RDA PercentageETF RDA for FY10

$6,359,550,000 6.5

% $413,370,750

Years to Payback

Amount Fiscal Year

6 $ 72,898,471 2010

5 $ 87,478,166 2011

4 $109,347,707 2012

3 $145,796,943 2013

2 $218,695,414 2014

1 $437,390,828 2015

1% ETF growth = $60M

Student Based Funding 72% of the total ETF for K-12

Teaching and Learning Restore $37M lost from FY08

OCE Actual costs for operations and support salaries

Fuel Costs Must be based on current price at the pump

Technology Funding Maintenance, upgrades and replacement ($125 per student) Information Technology Services Program ($125,000 per system)

Additional Units for Middle and High Schools Flexibility in how and where assigned

School Nurses Actual costs based on required salary matrix

Assess what is essential to the operation of your technology program Hardware Software Humans Other

Schedule a meeting with your superintendent to discuss this.

SDE submits the agency budget to the State Finance Department on or before Nov. 1 Must be approved by the SBE before that

dateGovernor uses 95% of this

recommendation in his budget that he submits to the Legislature.

You need to make sure that what is important to you is in the SDE budget.

Playing Well with Others

Discussions that focus on funding alone will not be successful.

Must address larger issues: Maintenance of the technology investment Accuracy of data Staffing to support the investment 21st Century Skills Workforce Development College Preparation Technical Literacy

1. Become Familiar With the Environment Who else has the same interests as you? Who else benefits from your agenda?

2. Establish Organizational and Personal Credibility

Do elected officials know who you are? How can you strengthen name recognition? Can you utilize the strength of your business

members?3. Build Consensus

Compromise and balance4. Mobilize and Engage Your Membership

Identify friends Governor Riley Dr. Morton, Mr. Pouncey, Dr. Bice Superintendents State School Board members Business members AEA

Meet with your friends during the month of October

Listen to what your friends say Revisit your priorities

Look at revenue projections Compile the data from your friends Establish your priorities

Talk to your superintendent.Talk to your legislator.

Make your message important to your elected official.

Provide a one page fact sheet or platform. ASK for support. Follow up with your legislator between now

and February 2009 (Legislative Session).Talk to the Governor.

Share reports of legislative meetings on your listserve.

Identify advocates/neutralize opponents.

Designate a subgroup of your members that will attend budget hearings and key committee meetings in Montgomery. Can AETA have someone in the State

House every Wednesday?

A man of character finds a special attractiveness in difficulty, since it is only by coming to grips with difficulty that he can realize his potentialities. Charles de Gaulle

There is no education like adversity.Benjamin Disraeli

Obstacles are those frightful things you see when you take your eyes off your goal.Henry Ford

Lisa A. Woodardlisa@ssaonline.org334-262-0014 work334-235-3553 cellhttp://www.ssaonline.org

ETF Rainy Day Fund 546,738,535$

General Fund Rainy Day Fund 230,762,776$

Total 777,501,310$

TOTAL REDUCTION IN ALABAMA TRUST FUND

FY09 Revenue Growth @1.5% (Estimated available funds of $6.03B less increased debt service of $60M for PSCA)

$5,970,965,164

FY09 Budgeted ($6,360,000,000)

FY09 Budget Imbalance ($ 389,034,836)

FY09 Amendment 709 Funds ($248,000,000)

FY09 Amendment 1 funds authorization cap (if passed by voters in November)

($141,034,836)*

FY09 Proration Amount $0

FY09 Proration Percentage 0%

*FY09 Budgeted less (projected growth +PSCA debt service)-Amendment 709 funds

FY10 Revenue Growth @ 1.5% $6,060,529,641

FY09 Level Funding for FY10 ($6,360,000,000)

FY10 Additional Benefit Costs ($150,000,000) SWAG

FY10 Minimal Spending ($6,510,000,000)

FY10 Budget Imbalance—Required Cuts

($449,470,359)

FY10 Amendment 1 Balance (cap moves year to year, lower in FY10 because funding in FY09 was lower)

$24,365,164*

Amendment 1 level of proration ???

*(FY09 level funding x 6.5% = $413,400,000 cap for borrowing) less $389,034,836 borrowed in FY09

9/30/2007 9/30/2006ASSETS:Current Cash/Cash Equivalents 210,334,585.55$ 239,369,533.97$

Total Current Assets 210,334,585.55$ 239,369,533.97$

Long Term Investments Equities 933,936,136.45$ 811,629,872.67$ Fixed Income Securities 1,902,203,870.00$ 1,778,860,005.58$ Land 82,832,280.90$ 76,660,212.50$ Land Partially Donated 808,027.29$ 808,027.29$

Total Long Term Investments 2,919,780,314.64$ 2,667,958,118.04$

TOTAL ASSETS 3,130,114,900.19$ 2,907,327,652.01$

YEAR ENDED

ALABAMA TRUST FUNDBALANCE SHEET STATEMENT OF ASSETS