8. SO, WHAT ABOUT THIS YEAR?
• We need to stay behind constitutional reform
to keep it moving (I talk with Bob McCurley
and Mike Waters regularly)
• We need to stay behind campaign finance
reform to keep it moving (Ashley’s
involvement)
• We need to follow up on implementation of
education accountability bill (single letter
grade)
9. But there are three big areas that will
require a rethought/renewed effort
• #1. Economic Development
• #2. Education Reform
• #3. Government Reorganization
10. The Alabama Economy
• “The economic news is not good.”
- Greg Canfield, Alabama Secretary of Commerce
June 27, 2012 Economic Development
Association of Alabama Summer Conference
• Alabama’s unemployment rate is down but
only because 30-40,000 people have dropped
out of the labor force
11. The Alabama Economy
• Alabama is only producing 1,000 jobs per
month – must produce over 20,000 jobs a year
to truly shrink unemployment Dr. Keivan
Deravi, AUM June 25, 2012 EDAA Summer
Conference
• Total Non-Farm payroll has increased by only
21,000 jobs or 1% over the last two years
12. The Alabama Economy
• The Alabama labor force has actually shrunk
by 42,000 people during this time
-U. S. Bureau of Labor Statistics
• “But many Alabamians continue to need work.
Combined, nearly 633,000 Alabamians are
either unemployed or under employed . . .
roughly one out of every four individuals in
Alabama’s labor force.”
- Al.com, Alex Walsh
January 16, 2013
13. The Alabama Economy
• Known negative effects of long term
unemployment
• The Shattered American Dream: Unemployed
Workers Lose Ground, Hope and Faith in
Their Futures, J. Golofsky, et al., Rutgers
(December 2010)
• Alabama actually showed negative growth in
its 2011 GDP - U. S. Bureau of Economic
Analysis
14. The Alabama Economy
• Alabama’s economy is growing but at a slower
rate than the slow national economy.Dr.
Andrea Rauterkaus, UAB BBJ 2013 Forecast,
January 9, 2013
• The Alabama economy was ranked the worst
in the southeast in 2011 and 2012 -Federal
Reserve Bank of Philadelphia
• “The number of jobs in Alabama has stabilized
near Recession lows, Atlanta Fed says”
15. The Alabama Economy
• “Low incomes, lack of job growth put
Alabama near bottom of new state-by-stay
fiscal rankings”- Al.com, Alex Walsh November
13, 2012
• South Carolina beating Alabama on job growth
- Al.com, Alex Walsh
November 20, 2012
16. The Alabama Economy
• “Russell Athletic Mill to start new year by
laying off nearly half its workforce” - WSFA,
January 7, 2013
• “Alabama loses more construction jobs in
December” - Birmingham Business Journal, Ryan
Poe, January 18, 2013
17. The Alabama Economy
• But, there is also some good news
• Manufacturing is improving, particularly
automotive
• “It’s Official: Alabama Automakers Set
Production Record in 2012,” Al.com, Dawn
Kent, January 8, 2013
18. The Alabama Economy
• Tourism is making a comeback
• Airbus
• Philadelphia Fed thinks this year will be better
for Alabama
19. The Alabama Economy
• Alabama’s economy will grow 1.9% in 2013,
and add 12,000 jobs - Dr. Keivan Deravi, AUM
BBJ 2013 Forecast, January 9, 2013
• Alabama’s economy will grow 1.7-1.9% in
2013 and add 18,500 jobs according to CBER
- Birmingham Business Journal, Antrenise Cole,
January 18, 2013
20. What we should focus on?
#1 Education, education, education (next section)
#2 Workforce Development (next section)
#3 Infrastructure Development
Action Item: New Funding Source for Roads
and Bridges
#4 Economic Development – Accelerate
Alabama Strategic Plan January, 2012
22. The Alabama Economy
• Action Item: Increased Funding for
Department of Commerce and cash incentives
• Action Item: New statutory incentives
• Action Item: Taxpayer Bill of Rights
24. The Alabama Education System
• 1499 Schools 132 Local school systems
741,057 Students 46,074 Teachers
• High school graduation rate: 72% (SREB
average is 75%)
25. Alabama State Department of
Education Quick Facts 2011-12
• Four year olds in state pre-school program:
4%
• While Alabama has made great strides on
NAEP exam, particularly in reading, we still
trail national averages in 4th and 8th grade
reading and math
26. Alabama State Department of
Education Quick Facts 2011-12
• 6-year college graduation rate: 47.5%
• College Remedial Education among Alabama
public high school graduates: 35% 17.5% for
4 year colleges 50% for 2 year colleges. Most
drop out after first year.
27. Alabama State Department of
Education Quick Facts 2011-12
• A+ Education Partnership, The Case for an
Education Investment Council in Alabama,
August 2012
• The devastation of budget cut-backs: 2008-
2013
28. What should we focus on?
• Action Item: Oppose taking money away
from education to solve other budget issues
• Action Item: Oppose hurting teachers further
with increased cost to them for benefits
• Action Item: Be creative and increase teacher
compensation by 10% over time
29. What should we focus on?
• Action Item: Increase access to pre-
school/increase ETF Funding over time
• Action Item: Insure 8th grade level
proficiency before a child goes to high school
• Action Item: Increase graduation rate at high
school level to 90% by 2020
30. What should we focus on?
• Action Item: Increase high school dual
enrollment in technical programs to 50% of all
high school students by increasing funding for
same over time
• Action Item: Align curriculum and standards
for college bound students to college level
academics
31. What should we focus on?
• Action Item: Rethink funding to higher
education: fund performance
• Action Item: Rethink school choice
32. The Alabama Budgets And The
Need To Reorganize All Of State
Government
(All data from Legislative Fiscal Office, unless
otherwise attributed)
33. Education Trust Fund (in billions)
FY ’08 FY ’09 FY ’10 FY ’11 FY ’12 FY ’13*
$6.7 $5.7 $5.2 $5.3 $5.6 $5.4
*(Actual projected revenue is 5.6 billion but Rolling
Reserve Budget Act caps spending and the difference
(@ $200 million) goes to pay down $437 million owed
to the Rainy Day Account)
34. • Real spending is down $1.3 billion from FY
’08 high – 20% drop in revenue
• Assuming the current slow rate of economic
recovery, it will be several years before ETF
revenues climb back to FY ’08 levels.
• Meanwhile Pressure to raise education
employee pay by 10% -- will cost $300 million
• Pension and health insurance costs go up
• Difficult to rehire reduced personnel
35. The Alabama Education System
• Colleges and universities continue to raise
tuition
• And economic development depends on
significant upgrade of education
• So, as we seek to implement our education
action items, we need to incrementally
increase funding for them over time as the
education budget repairs itself. PATIENCE.
36. The General Fund (in billions)
FY ’08 FY ’09 FY ’10 FY ’11 FY ’12 FY ’13
$1.8 $1.7 $1.5 $1.5 $1.9 $1.7
• While this appears to be only a $100 million decline from FY
’08, the FY ’12 and FY ’13 revenue numbers are artificially
inflated by non-recurring revenues
• FY ’12: ATF and other one-time transfers - ………..$373
million
• FY ’13: More one time transfers, reallocation of 25% of
the Use Tax ($68 million) and $146 million from the ATF as
per recent constitutional amendment
37. The General Fund (in billions)
• General Fund revenues are not recovering from recession
• Medicaid has doubled in cost to the General Fund in three
years and, in addition to prisons, now equals 55% of the
General Fund, up from 35% ten years ago.
• No savings from Governor’s Medicaid Task Force before 2015
and in fact they have discovered they will need at least $30
million more for FY ’14 even with the second year of $147
million transfer from the ATF.
• Medicaid enrollment has grown from 750,000 to 900,000
people in just three years.- Anniston Star, January 7, 2013
38. • Not only will the money taken from the ATF
not be paid back but Medicaid will continue to
increase at a rate faster than the General Fund
can grow. Medicaid and the prison system are
on track to take up all General Fund revenue
by the end of this decade.
• “You’re basically dealing with an impossible
situation.” - Dr. Keivan Deravi - Anniston Star,
January 7, 2013
40. PUBLIC DOES NOT SUPPORT
MORE TAXES.
• Action Item: Improve economy (reduces
Medicaid enrollment)
• Action Item: Reform Medicaid – no, really
reform it
• Action Item: Drive efficiencies through the
other General Fund agencies
41. Solutions
• Public safety is underway but bigger savings will
have to come from elimination of agencies, more
consolidations, and greater administrative efficiency.
• This can be done. Senator Marsh’s process
• Alternative to #1 and #2 is a gradual breakdown in
delivery of essential services, detrimental to the state.
• Example: Mental Health (Reduced from $144
million in 2008 to $104 million this year, a 28%
reduction)
