Riley declares 9-percent proration
Published 11:10 pm Monday, December 15, 2008
Gov. Bob Riley announced on Monday a 12.5-percent proration rate for the school year, brought down to 9 percent after using $218 million from the Rainy Day Fund, approved by voters last month as a stopgap measure, should proration be declared.
This marks the eighth time since 1980 that Alabama has declared proration, the process of cutting spending when revenues fall short of expectations.
Riley said that he wanted to save half of the rainy day fund to be distributed in the remainder of the fiscal year.
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“Based on all the economic forecasts I have, I believe this is the wisest course of action,” Riley said. “Doing this allows us to responsibly manage the disbursement of the Rainy Day Fund and meet the needs of our schools.”
The proration was a part of an overall deficit prevention plan announced by Riley on Monday that included a hiring freeze on state workers, a freeze on state employee merit pay raises and stopping the purchase of new state vehicles.
Riley also reduced state spending by 10 percent for those state agencies operating out of the general fund, cutting about $200 million.
Demopolis City Schools superintendent Dr. L. Wayne Vickers said that 80 percent of the school system’s budget deals with salaries and benefits and cannot be cut to appease the prorated budget, meaning that the 9 percent will have to come out of the remaining 20 percent, cutting that money — used to pay utility bills, purchase textbooks and pay for everything else — almost in half.
“We usually get $1,088,699 per month from the state,” he said. “Now, we will get $971,119.51 each month. We’re looking at $117,580 a month less on our state allocations, and that’s if we receive the full allocation from the state this month.
“We made some adjustments at the end of the last school year to try to absorb the possibility of proration. I don’t think anyone anticipated it being 9 percent. But, we are a strong school system with good financial support. This budget reduction is a concern, and it’s something that we’ll have to look at as a school system to conserve our expenses, to make sure that we do not overextend ourselves. The bottom line is: We have to protect the classroom.”
Vickers said that the total cut to Demopolis City Schools was $1,175,794.92 for the current school year.
“What a lot of people don’t understand is that, when they declare proration, what you’ve already been given is a wash,” he said. “They take that full amount out of what you have left to get. Right now, we’re still waiting on the rest of our allocation for the month of November.”
The state provided only 75 percent of its November allocations to school systems statewide earlier this month. The remaining 25 percent has not yet been received, but chief financial officer Linda Agee mentioned at the school board meeting Monday night that it should come in this week.
“We’re going to have to look at things,” Vickers said. “We’re going to be making adjustments where we see fit. It’s just a tough thing to work through, but we’re going to make it. We’re very fortunate to have a little more than two months’ operating expenses in reserve, which is a credit to this board and this school system and its employees. We owe it to them to do everything we can to deal with this shortfall.
“We have not had to touch our reserve so far, and we want to go as long as we can without having to do that, but that may become a possibility. The state only requires you to have one month in reserve, so we are a lot better off than some schools. Some schools didn’t even have the one month in reserve.”
Agee said that the governor has allowed school systems to take a 20-percent flexibility in line items in the state budget, such as textbooks and capital outlay.
“That’s the first thing we are going to do, is look at the 20-percent things that we do not have to spend,” she said.
For example, in a budget line item for textbooks, if Demopolis were allotted $1,000, the school system can use only $800 and count that $200 towards proration.
“We don’t want to get into textbooks, but if you don’t have it, you don’t have it,” Agee said.
Vickers said the governor may later change the proration amount, depending on how schools handle the current proration.
“We’re going to work with what we have,” Vickers said. “We’ll still have school, and we’ll still be very successful in our school system. I don’t want us to lose sight of what’s most important, and that’s being the best school system we can be.”