School funds ‘OK’
Published 8:20 pm Thursday, October 30, 2008
Some state schools will have to borrow money to make payroll today, but local superintendents said they will be able to pick up the slack – at least for now.
With the state Education Trust Fund falling short this month, Gov. Bob Riley announced this week all K-12 school systems will receive only 75 percent of their monthly allocations and universities will get none.
Bill Newton, assistant finance director with the state department, said while the state doesn’t have the funding now, plans are to pay schools the extra 25 percent and universities all their allocations in November.
“Most years we start the fiscal year with a beginning balance,” Newton said. “… (But) the state of Alabama started this year with zero balance.”
Both local school systems – Pike County and Troy City — will be able to make today’s payroll without dipping into reserve funds, officials said.
“Troy City Schools are able to pay the 25 percent so all employees will receive their checks today,” said Troy City Schools Superintendent Linda Felton-Smith. “We do not have to dip into the reserves.”
Felton-Smith said the system will pay close to $300,000 out of pocket this month.
Pike County Schools Superintendent Mark Bazzell said while his system will be able to pay the money also, he initially didn’t think it would.
“We maintain all of our reserves in CDs, and we thought initially we might have to cash in one of those CDs to deal with the cash flow issue,” Bazzell said. “But as it turns out, we will be fine.”
Bazzell said this is the first time in about five years school systems have faced delays in state funding allocations, and if it happens next month, things might not be OK.
“If it happened two months in a row, we certainly would have to dip into reserves, but right now, we’re OK,” Bazzell said. “We are keeping our fingers crossed (that) we will be getting that money shortly.”
Felton-Smith said the Education Trust Fund shortfall this month is just another reason why voters should support Amendment 1, which will give legislators authority to borrow money for schools from a state trust fund. The measure will be on the Nov. 4 ballot.
“This is another reason because the Education Trust Fund is funded on sales tax and income taxes, and with the slowdown in the economy it means there may not be as many dollars collected in sales tax revenues,” Felton-Smith said. “We hope economic activity will pick up, and we also hope the amendment will pass so money will be borrowed from the rainy day fund.”