School systems make up shortfall

By Barrett Welch (Contact) | Selma Times-Journal

Published Thursday, October 30, 2008

The Alabama Department of Education has cut October’s funding by 25 percent due to a cash shortage in the Education Trust Fund.

According to State Superintendent Joe Morton, the fund — comprised of state income and sales taxes — only has enough funds available to pay 75 percent of the amount allocated for payroll. The additional funds are to be made available by electronic deposit on Nov. 7.

The blow should be temporary and not too severe for both the Dallas County and Selma City Schools systems.

“Luckily for us, there will be no adverse effect because our general and local funds will offset this shortage of funds,” said Selma City Schools Superintendent Austin Obasohan. “Every school system is required by the state to have at least one month of operating budget in reserve. We meet those guidelines and should be able to offset this shortage without any problem.”

Selma City Schools took $450,000 out of its reserve fund to offset the impact of the budget cut. Once the missing 25 percent is allocated on Nov. 7, those funds will be used to replace the money taken from reserve.

“We’re just glad that we don’t have anything to worry about now because Selma City Schools is really in good shape financially,” said Obasohan. “No one wants to exert their reserve. There would be adverse effects on us if, in fact, it occurs again. But we’re taking all the measures we can to make sure we are fiscally sound and prepared for an eventuality like this.”

Dallas County was forced to pull money out of its reserve as well. Fortunately, the school system has almost three months worth of budget money available. The $548,483 pulled from reserve should not hamper the district.

“We have enough money in reserve to cover that 25 percent until the money comes in,” said Dallas County Superintendent Fannie Major-McKenzie. “Our people will be paid in full and on time.”

But there is worry that October’s shortage will not be the last time unexpected cuts are seen. Morton said that there is no guarantee this will not happen again.

“We’re just hoping that there’s an upswing in the economy,” said McKenzie. “I’m just going to hope for the best. We don’t want to, but if necessary, if we had to, we could get a loan from one of the banks.”

One program that could come in handy for both districts — and other schools around the state — is one both McKenzie and Obasohan are proponents of.

The Rainy Day Amendment, also known as Amendment One, allows the Alabama Department of Education to borrow up to 6 percent of its annual budget from the state’s Oil and Gas Trust Fund to cover its budget if the governor declares proration.

The money is not a grant and must be repaid with interest.

If Amendment One passes Tuesday, it would theoretically prevent budget cuts and thus prevent schools from fund deprivation or reliance on bank loans.

The Associated Press contributed to this story.

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