Twenty-five more Alabama schools may have to borrow to maintain school operations, according to reports. But it might not be for the reasons you think.  

By Jon Miltimore

Alabama made national headlines this week when 25 more schools reported they will likely have to extend lines of credit to remain open, in addition to the five schools that borrowed from banks last year.

According to a CNN report, Alabama schools suffer from a “combination of having the lowest per capita property tax collections in the nation … a constitution that prohibits local governments from independently increasing taxes, and a state-funded education system with funds that stem almost exclusively from income and sales tax revenues.”

Namely, Alabama schools are ailing due to inadequate funding. The reporter buttressed the thesis by pointing to the 20 percent cut in the state’s education budget over the last three years.

"We're suffering. We are on a decline,” Joe Morton, Alabama's state superintendent of education, told CNN.

But what Morton failed to note is that state education spending tripled in the decade-and-a-half preceding the economic downturn.

According to U.S. Census records, state education spending increased from $3.57 billion in 1992 to $10.65 billion in 2008.

Inflation was about 52 percent over the same period.

Alabama’s population rose from 4.1 million to 4.7 million, 14.6 percent, during the period, but public school enrollment increased less, according to one expert. 

Education spending has consumed a larger-and-larger percentage of Alabama’s budget over the last decade-and-a-half.

In 1992 education claimed 37 cents of every dollar the state spent, according to Census data. By 2008 that figure had risen to 43 cents on the dollar, outpacing expenditures on public welfare, health, hospitals, infrastructure, police protection and corrections.

Dr. John Hill, Research Fellow at the Alabama Policy Institute, said when costs are adjusted for cost-of-living, Alabama education systems compare quite favorably to other states.

“Money is not Alabama’s issue,” Hill said. “In inputs we rank quite well; it’s in the outputs we stink.”

Asked where in the Alabama school systems the money went, Hill said it’s difficult to say.

“Is it technology, is it administration? I’m not sure,” Hill said. “The nut of it is that the enrollment has remained relatively flat but we are spending more and more.”

David Myslinski, director of the education task force for the American Legislative Exchange Council, said Alabama is not unique. He said in the 1990s states began to shrink class-sizes in an effort to increase student achievement, a strategy that has proven neither cost-efficient nor effective.

“Decreasing the class size has been a big issue for the last 20 years or so,” Myslinski said. “Our prior report cards we show it’s not classroom size that determines the score. The class size has no impact.”

Msylinski said while the focus on class-size has tapered somewhat recently, school system administrative costs have begun to swell.

Pension law changes in the 1990s which increased the benefits of retirees also likely claimed a significant portion of revenues, Hill said.

“We have very generous pensions.”

Though generous, the Teachers’ Retirement System of Alabama, which currently pays nearly 70,000 retirees and has nearly 140,000 active members, is severely under funded.

The pension’s actuarial funding-ratio stands at 74.7 percent, according to the most recent data, well below the 80 percent funding-ratio actuaries recommend as a minimum. When valuing assets at current market rates, the funding-ratio drops below sixty percent.

Experts say those unfunded obligations will have to be paid by someone, most likely future generations.  

Joe Morton, state superintendent of education, and David Stout, spokesman for the Alabama Education Association, did not return several calls seeking comment Tuesday. Messages left to Morton and Stout today also were unsuccessful.  

Jonathan Miltimore is a national reporter for The Franklin Center for Government and Public Integrity. jonathan.miltimore@franklincenterhq.org