Alabama’s Tax Bargain

Tax Foundation Tax Freedom MapApril is traditionally the month we think about taxes. National tax comparisons are published, and we were reminded again this year that Alabama has among the lowest taxes in the U.S.

In this month’s edition of The Alabama Baptist, PARCA executive director Jim Williams points out that while our state’s taxes are low, we may not be getting a great bargain.

The questions we should be asking are these:  Are we getting our money’s worth? Are the tax dollars we send to Montgomery being spent efficiently and effectively? Unfortunately, Alabama’s budgeting and management process doesn’t ask those questions.  And until it does, we won’t know the answer.

Each year, The Tax Foundation, a Washington-based think tank, calculates what it calls “Tax Freedom Day.” This is the calendar day when total personal income is sufficient to pay all taxes – federal, state, and local, freeing the balance of the year for other pursuits. This year’s Tax Freedom Day came on April 21st for the nation as a whole.

In Alabama it arrived two weeks earlier, on April 7th, due to our low tax burden. Only four other states finished paying for their taxes sooner.

The latest figures from the U.S. Census Bureau show that Alabama’s state and local governments collected $2,904 in taxes per resident for fiscal 2011, a lower amount than in any other state. South Carolina ranked second-lowest. Alabama’s taxes were $324 million lower than they would have been if collected at the same per-capita rate as in South Carolina.

However, taxes are a bargain only when taxpayers get more than their money’s worth from the services produced. This can’t happen without control over the use of revenue and budget procedures that focus on performance. The State of Alabama, which spends over 10 billion taxpayer dollars each year, has neither.

Most of that money flowing into Montgomery is earmarked. It will be spent for a specific-purpose, whether or not that purpose is determined to be an important priority or pressing need. About 88 percent of Alabama tax revenue is earmarked, a proportion far higher than in any other state. That’s a problem: guaranteed budgets provide no incentive to efficiency.

As a result, there is relatively little effort put toward measuring the performance of state agencies. Instead of being a careful examination of spending and the results of that spending, budgeting in Alabama is largely a matter of determining how much is available to spend and then spreading it out among the various agencies.  Alabama has a sound Budget Management Act that has been on the books for many years, but in current practice, Alabama has no systematic process for linking appropriations to performance measures or budgeting according to priorities.

Compare the budget documents produced in Alabama with those produced in other Southeastern states. Look at what Georgia and Tennessee do when it comes to making budgets and evaluating the performance of agencies. Compare the budget produced by South Carolina’s Governor  or by Mississippi’s executive budget and performance measures 

As every shopper knows, low prices are only half of what makes a bargain. We also need to know why we’re spending, if we are spending wisely, and whether we are getting quality government services in return.

 


Challenges Facing Children

Alabama children face steeper obstacles to opportunity than children in the rest of the nation, and that is particularly the case for black and Hispanic children, according to Race for Results, a new report from the Annie E. Casey Foundation.

Race for Results focuses on 12 conditions that either create advantage or disadvantage for children on the journey to success and prosperity. Those include the percent of children born at normal birthweight, the percent of children in two parent homes, the education and economic conditions of the surrounding neighborhood, and academic and employment levels at various stages in life.

On virtually all the indicators, Alabama children face an uphill climb compared to children in the country at large. That is particularly true of minority children in Alabama.

Race for Results is a new publication for the Annie E. Casey Foundation, the child advocacy organization that publishes the Kids Count Databook and also maintains an online data center that tracks a host of statistics on child well-being. In Alabama, VOICES for Alabama’s Children is Casey’s partner in the collection and distribution of information.

Economic and educational disparities between blacks, whites, and Hispanics are a stubborn public policy challenge. The online version of the Race for Results report allows you to explore the data and build your own charts and graphs. Here is a PDF document that contains results on the indicators comparing Alabama to the U.S. Those charts can also be viewed online at the link below. Click on the bottom right hand corner of the chart below for a full screen version.


2013 School System Performance on the Alabama Math and Reading Test

In the spring of 2013, Alabama students in grades 3-8 took the Alabama Reading and Math Test (ARMT) for the final time. This spring, new tests developed by the ACT testing company will be given in place of the ARMT and will serve as a measure of student and school performance in these grades.

For the past several years, PARCA has worked with local school foundations and school systems to help them understand their test results. The ARMT has provided a lot of data. Test results are presented in terms of the percentages of students scoring at four levels of mastery, with Level IV in effect being an “A.” Results are available by grade and subject and can be broken down by demographic and economic subgroups within the school population. But the results don’t make much sense unless you have something to compare them with.

So, PARCA developed a system for comparing school and system performance to the state averages, focusing on the percentage of students scoring at Level IV, which best correlates to mastery in national terms. To help make the results more comprehensible at a glance, PARCA color-coded them: dark green to indicate results 10 points or more above average, light green for above average, gray for average, light red for below average and dark red for 10 points or more below the state average.

The chart below presents a summary of the ARMT results for every school system from spring 2013. It shows the percentage of results for white, black, non-poverty, and poverty students that beat or trail the state average, color-coded as described above. The school systems are ranked according to the percentage of green, or above-average results.  In the highest-ranking systems, virtually all results are green; in the lowest-ranking systems, virtually all are red. As you follow the bars down the chart, fewer and fewer results are above average (green); more and more are below average (red).

At the bottom of the chart on the far right side of the bar, you can follow a link for a full screen version of the chart. From there, you can also download the chart in PDF format, for closer examination.

This link takes you to a large PDF file that contains system level 2013 results for all school system in the state.

Separate PDF documents provide a look at trends in performance from 2005 through 2013 for white students, black students, non-poverty and poverty students. 

The table below contains the data used in the chart above. The numbers represent the percentage of student ARMT results within the schools that are either exceeding, meeting, or trailing the state average.


Remediation: The High School to College Handoff

A smaller percentage of students graduating from Alabama high schools went to Alabama’s public colleges immediately after high school in 2013, but, among those enrolling, the percentage of students requiring remedial classes was lower. That’s according to new figures on remedial education from the Alabama Commission on Higher Education (ACHE).

Each year, ACHE publishes what is known as the High School Feedback Report. Colleges report to ACHE the number of Alabama students that enroll, what high schools they went to, and whether those students were required to take additional classes in math or English in order to get them up to college standards. This map produced by PARCA, allows you to explore that data for high schools throughout the state. The map also includes information from the Alabama Department of Education on high school graduation rates for schools and systems. To use the map, navigate to the school you’re interested in and click on the button representing the high school for results.

In 2013, the remediation rate for entering freshman decreased slightly.  Over the past 10 years, the percentage of students assigned to remedial classes has ranged from a low of 26 percent in 2005 to a high of 35 percent needing remediation in 2011. In the fall of 2013, 32 percent of entering freshmen needed remedial coursework in at least one subject.


Higher Education Enrollment Down Slightly in 2013

Enrollment at Alabama colleges and universities was down slightly this fall, according to data released this month by the Alabama Commission on High Education. Full-time four-year college enrollment was up by 664 students, but two-year colleges saw an overall drop of 1,415 students, resulting in a net decline of 751 students.

Enrollment, particularly at community colleges, reacts to changes in the economy. When jobs are scarce, people tend to enroll at a higher rate. When jobs conditions improve, they return to the workforce, hopefully having acquired a higher level of skill. Other factors are at work too, said Alabama System Chancellor Mark Heinrich. In 2012, Congress made changes to Pell Grants, the federal program that helps low income students pay for college. Starting in the fall of 2012, a student faced a new limitation of 12 semesters for Pell Grants, down from a prior total of 18. The income threshold for qualifying for a full Pell Grant was also lowered.

The University of Alabama’s Education Policy Center has studied the effect of changes in the Pell Grant program, and it concluded the changes were having a negative impact on enrollment. According to the report, 63 percent of full-time two-year college students in Alabama received a Pell Grant in 2011. Heinrich also pointed out that the cost of tuition at Alabama Community Colleges, which is higher than in most other states, can be a barrier for students.

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On the other hand, enrollment at four-year institutions continued to increase. By far, the largest enrollment growth has been at the University of Alabama, which has added 12,579 since 2003. With a full-time enrollment of 30,200 students this fall, UA has increased its enrollment 70 percent over the past 10 years.

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