Alabama state government employs 4,923 fewer people than it did in 2008, according to the figures provided by the Alabama State Personnel Department. With the exception of 2013, the total number of state government employees in 2014 was the lowest it’s been since at least 1996, according to State Department of Personnel annual reports.
 

From 2013 to 2014, state employment edged up slightly with a net increase of 140 employees across all departments, yielding a final total of 30,611 employees. The state employed 35,534 in 2008, before the financial crisis and the years of budget cutting that followed.

The biggest employment declines came in Mental Health (down by 1,593 employees). Much of that decline can be attributed to the closing of three mental health institutions in the state, Partlow, Greil, and Searcy. Bryce Hospital in Tuscaloosa was replaced by a new hospital and its patient capacity was lowered from 350 to 268. To make up for lost capacity in mental hospitals, the state shifted funding to community-based care operations. The moves were designed to provide care closer to home and family.

The State Health Department also saw a substantial decline in employees. The largest reason for the drop in employment was due to a transfer of a program serving to the elderly and the disabled to the Office of Senior Services. The Department of Senior Services restructured the program with those home care services now being administered by local Area Agencies on Aging. Those agencies, in turn, contract with home health services companies to provide the services to recipients.

A state hiring freeze was in effect for much of the period between 2008-2014, so when employees retired or left for other jobs those positions went unfilled. Some employment changes in various departments reflect other program transfers and consolidations.

Speaking before a sell-out crowd of more than 400 at the Harbert Center on Friday, Feb. 13, Gov. Robert Bentley said he will propose bold solutions in the face of a steep budget shortfall.

In his luncheon address, Bentley said that during his first term he had held the line on spending, shrunk the state workforce, and encouraged efficiency and reform. While efforts along those lines will continue in his second term, Bentley has concluded that additional tax revenue is needed for the state to balance its budgets. The state faces a shortfall in the general fund budget of more than $250 million. The state’s spending on education is still below its pre-recession levels.

Bentley’s remarks followed a morning of presentations on major areas of state spending: Corrections, Medicaid, and education. In each of those areas, leaders have examined the current situation, set goals for improvement, and devised strategies to pursue those goals.

In all three cases, investments in reforms should avert higher costs in the future and produce better outcomes for citizens.  PARCA Executive Director Jim Williams said the careful analysis and goal-oriented thinking in these departments should be an inspiration to the rest of state government. It points toward a better approach to management and budgeting, which is vitally important in a state that collects less tax revenue per capita than any other.

The morning featured the following presentations:

State Sen. Cam Ward and Alabama Sentencing Commission Executive Director Bennet Wright spoke on solutions to the state’s prison overcrowding problem. Wright outlined proposed changes to sentencing, prisons, and community supervision.

Alabama State Health Officer Don Williamson explained plans to move more beneficiaries of the Alabama Medicaid System away from fee-for-service system into managed care.

Care Network of East Alabama Executive Director Kim Eason and Chronic Care Coordinator Julie Wells explained how a pilot version of Medicaid’s new approach is working to improve patient outcomes and decrease use of costly hospital care.

And finally, Alabama State Superintendent of Schools Tommy Bice presented an update on the progress of Plan 2020. The high school graduation rate is climbing, but schools have serious challenges ahead in closing the achievement gap between low income students and their middle class peers and in making sure high school graduates are ready for college and career.  Some of those challenges are illustrated in graphics from Jim Williams’ presentation, on Producing College and Career Ready Graduates.

According to a new poll of public opinion commissioned by the Public Affairs Research Council of Alabama, state residents would be willing to pay more in taxes to avoid budget cuts in key areas like education, health care, and public safety. However, the public remains distrustful of government’s ability to spend tax dollars wisely.

The results serve as a backdrop to PARCA’s annual meeting, Feb. 13 at the Harbert Center in Birmingham. The meeting will focus on initiatives by leaders in those key areas to improve public trust through goal-oriented planning, targeted investment, and the transparent tracking and reporting of results.  The poll results are also relevant to lawmakers as they consider how to close a budget shortfall and improve budgeting practices.

The survey of almost 600 Alabamians was conducted between January 5 and January 21. Each year, The Public Affairs Research Council of Alabama commissions a survey of public opinion to gauge Alabamian’s attitudes toward government and the issues facing the state. Randolph Horn, Samford University Professor of Political Science and Samford’s Director of Strategic and Applied Analysis, collaborated with PARCA on the design of the survey and directed the polling operation. The results were weighted to reflect the demographic makeup of the state. Text of the questions and results of the survey can be accessed here. You can find the survey results presented graphically here.

The PARCA poll found strong support for increased spending on a variety of educational priorities. It also found public support for more investment in rehabilitation of prisoners in the interest of cutting down on criminal recidivism. Also, a majority of those polled said they support expanding Medicaid to cover more low-income individuals, including childless adults.

One of the most striking things about poll results is that, on a host of issues, there is broadly-based public consensus, a set of shared opinions that  cut across demographic and partisan lines. The one exception to that in this year’s poll, Medicaid expansion, is discussed below.

The poll results contrast with the perception that voters are deeply divided along ideological lines. This year’s results are similar to the findings of PARCA polls in previous years, which have consistently found widely shared priorities.

This year’s poll finds that among the four top areas of state expenditure — education, health care, public safety and highways —  Alabamians rank education spending are the state’s most important area of investment. Health care comes in second. Public safety comes in third, with highways ranked fourth.

A strong majority of respondents said they’d be willing to pay more in taxes to avoid cuts in public education (63 percent) and health care (57 percent). A majority said they would be willing to pay more in taxes to avoid cuts in public safety.

Focusing on education, the poll found that 79 percent of Alabamians believe that the level of funding in schools does make a difference in the quality of education provided. And 67 percent believe that too little is being spent on public education in Alabama. However, 63 percent of those polled said they thought that the money that currently goes to education is not being spent properly. Some of that sentiment may reflect Alabamian’s general distrust of government. However, in past PARCA surveys, further questioning on this subject revealed that some of that perception of improper spending stems from factors linked to inadequate spending. For instance, respondents pointed to old and tattered textbooks or parents having to pay for classroom supplies as evidence that money in education was not being properly spent. Strong majorities of those polled believed that more money should be spent in schools in a variety of categories and that the state should play a role in equalizing funding for school systems that lack resources.

Turning to corrections, the poll indicates the public believes we should be doing a better job of rehabilitating prisoners than we are currently doing. As the state grapples with a prison overcrowding problem, public support for increased investment in rehabilitation and treatment is stronger than support for simply building more prison space.

On Medicaid, there was almost universal agreement (95 percent of those polled) that the state should provide a medical safety net for low-income children, pregnant mothers, and seniors. A majority of those polled said they supported expanding Medicaid by taking advantage of federal incentives to help pay for the extension of health coverage to low-income adults, who are currently not covered.

However, it should be noted that this was the one question in the survey that produced a division along party lines.   Nearly 76 percent of those identifying themselves as Democrats favored expansion, and expansion was supported by 53 percent of those who classified themselves as either independents or as having no partisan affiliation.  However, among Republicans, 54 percent supported keeping Alabama Medicaid as it currently is, rather than expanding it.

The PARCA Quarterly Winter 2015 edition provides perspective on Alabama’s budget challenges and reform efforts in education, Medicaid, and the state prison system.

The Quarterly provides background for our upcoming annual meeting, which is February 13 at the Harbert Center in downtown Birmingham.

The meeting will feature:

       State Sen. Cam Ward and Alabama Sentencing Commission Executive Director Bennet Wright presenting proposals under consideration by the Prison Reform Task Force.

       State Health Officer Donald Williamson and Kim Eason and Julie Wells of the Patient Care Network of East Alabama discussing changing approaches in the Medicaid program.

       State Superintendent of Schools Tommy Bice providing an update on the progress of Plan 2020.

       Gov. Robert Bentley delivering the luncheon address.

Friday, February 6 is the deadline for registration. Until then, you can get more details and register online.

In tough budget years, lawmakers have often looked for alternative ways to bring in revenue to support state government operations. In the case of the judicial branch of government, the Legislature has repeatedly raised the charges, fees and fines charged to the users of the court system, shifting much of the cost burden for court operations to the courts themselves.

However, court cost collections have proven to be a less than reliable source of revenue. In 2014, total criminal and civil court collections were down by $8.5 million to 2013, a drop of 6 percent. Compared to 2011, total court cost collections are down $17 million, or 10 percent. That’s a decline in collections even through the Legislature raised fee amounts during that same time period.

About 2/3 of court costs are collected through the criminal courts, amounting to just over $96 million in collections in 2014. The biggest component of that is traffic court collections. And that’s where the steepest drop in collections has come. In 2014, the state court system collected $54 million through traffic courts across the state, compared to $72 million in 2011. That’s an $18 million decline, or a 25 percent drop, over that time period.

This decline could be linked to problems in other departments. The Department of Public Safety reports that currently it has only 289 Troopers assigned to Highway Patrol statewide, far short of past staffing levels. According to figures provided by the State Personnel Department, DPS, as a whole, had 276 fewer employees in FY 2014 than it did in 2008, which amounts to an overall decrease in employees of nearly 20 percent. According to DPS, troopers issued  792,860 citations in 2012. That number fell to 690,323 citations in 2013. From January to November of 2014, troopers had issued 663,414 tickets. Beginning in 2015, DPS will be folded into the new Alabama Law Enforcement Agency. LEA director Spencer Collier has said he plans to put a priority on putting more troopers on the road.

Collections in the civil courts make up the remaining 1/3 of collections, totaling $48 million in 2014.That total is roughly the same amount collected in 2011.

The Alabama Department of Education this week released statewide results of its Grades 3-8 assessment tests, broadly known as the ACT Aspire.

The Aspire tests, which were taken statewide for the first time last spring, replace the Alabama Reading and Math Test which had been used to measure student and school performance.

The Aspire offers several advantages. Devised by the well-known national testing company, ACT, the Aspire is more closely aligned with national performance measurements. It includes a benchmark scoring system designed to show whether a student is on track academically to graduate from high school ready for college.  You can read more about the Aspire and Alabama’s new assessments from the A Plus Education Partnership. And here you can find the State Department of Education’s discussion of statewide Aspire results.

PARCA uses test data from the Aspire and other sources as well as available financial data to help school systems identify their strengths and the areas in need of improvement.

As this is the first year the state is using Aspire as a performance measure, the results set a baseline from which future improvement and growth can be measured.  As expected though, the results establish a tougher, and likely more accurate, benchmark for academic proficiency. On the ARMT, the percentage of students scoring above proficient ranged between 68 and 93 percent, depending on the grade and subject tested. On the Aspire results, the highest percentage of proficiency could be found in 3rd grade math where just over half the students (52 percent) were deemed to have met or exceeded the proficiency level for that grade. On the other hand, only 29 percent of 8th graders scored at or above the readiness benchmark in math.

Enlarge to explore.

It’s now official. In 2014, Alabama added 12 more amendments to its constitution, bringing the total number to 892. The State Elections Canvassing Board met the final week in November and certified the election results.

The additions include amendments restating, in stronger term,s the right to hunt, fish, and bear arms. The Alabama Constitution of 1901 also now allows a sewer authority in Franklin County to provide broadband internet and requires a $1 per bale assessment on each bale of cotton to be used for cotton promotion (With the latest amendment, you can’t ask for a rebate on that assessment).

The additional verbiage added this year will allow Alabama to continue padding its lead in constitutional length. Alabama not only has longest state constitution in the U.S, it is perhaps the longest constitutional document in the world.

By comparison, the U.S. Constitution is more than twice as old and has only been amended 26 times. State constitutions do tend to be more detailed and amended more often. But the average number of amendments across the states is 150. The next closest state to Alabama is California with 527 amendments.

According to a tally kept by the Council of State Governments, Alabama’s Constitution, at more than 376,000 words (without the 12 new amendments) is more than four times as long as the Texas Constitution. That’s the second longest state constitution, at just under 87,000 words.

That makes from interesting trivia, but does it matter?

If you want clarity, efficiency, and effectiveness, it does matter. If you want responsibility and accountability, Alabama’s constitution is indeed a problem.

Typically, constitutions describe principles and fundamental philosophy, set out a framework for government structure, and divide state powers among the branches and between state and local governments.

The Alabama Constitution, by contrast, goes into tedious detail. While the constitution may have started by laying out general statewide principles, its accumulation of amendments is due in to the exceptions to those principles and special cases made for specific localities. It is estimated that 70 percent of the amendments are local in nature. Which begs the question: Why are they in the state constitution?

The framers of the Alabama Constitution of 1901 wanted to set limits on government. In particular, they wanted strict limitations on what local governments could do. So, they set up a system in which many local decisions have to flow through state government for approval. The local amendments to the Constitution are only the top layer of complexity. Below that, the state legislature has passed over 36,000 local laws which apply to specific counties or municipalities.

The heavy involvement of state legislators in local affairs tends to create confusion about who is responsible for decision-making. It also blurs the lines of accountability when things go wrong. And finally, it also interferes with the development of a culture of statewide planning and policy making, which the state needs the Legislature to play.

Despite the energy put into constitutional reform efforts over the decades, the issue of granting local governments more independence has been one of the most intractable.  The latest Constitutional Reform Commission finished its work earlier this year, and its final round of proposals included an amendment that would have granted counties limited home rule in some aspects of their operations. That proposed amendment failed to pass the Legislature.

Budget discussion, State Board of Education, Nov. 12

With the General Fund facing an acute shortfall and the education budget still struggling to recover to pre-Great Recession levels, there are beginning to be conversations about new approaches to budgeting.

At a recent State Board of Education meeting, State School Superintendent Tommy Bice told board members he was in discussion with the governor’s office and representatives of the legislative leadership about formulating a budget request that was strategic and deliberate rather than “shooting the moon.”

That would be unusual. This is the season when state agencies draw up their budget requests and submit them to the governor’s office, an annual ritual that bears some resemblance to making up lists for Santa Claus. Budget requests are typically an expression of wishes or needs, without regard to what Santa can realistically deliver, and without a clear link to achievable, measurable goals.

But in this case, the State Board of Education does have goals and will have a system of measuring progress toward those goals. The current wish list is well beyond currently available resources but it does step back from an immediate demand for a full restoration of pre-Recession spending levels.

In his presentation to the Board, Bice described conversations with the governor’s office and the Legislature under which the parties would pursue a three-year plan to fully fund the Foundation Program, the mechanism the state uses to distribute most of its support to local school systems.  He also listed items requested by the State Department that would support the goals of Plan 2020, the state’s plan to raise the quantity and quality of graduates from Alabama K-12 schools. State Board Member Mary Scott Hunter said she was encouraged in her conversations with legislators who’d said they wanted to pursue an education budget built on planning and goals.

“I think it highlights the need to be deliberate and strategic,” Hunter said, “and to be working with our colleagues across the street.”

Still, there is a wide gulf between the money available and the Department’s aspirations for K-12 schools.

Under the current controls on education spending growth, the Department of Education estimates that K-12 education could have an additional $35-40 million to spend in 2016.

But the department’s draft budget request, envisions asking for an additional $228 million for K-12 education in 2016.

The largest portion of that request is $175 million to begin the process of restoring full-funding for the Foundation Program. The Foundation Program is supposed to provide enough for an adequate and equitable education at schools across the state. Since the budget problems developed, various components of the Foundation Program — operating support, technology, textbooks, professional development, classroom and library supplies, and transportation — have been cut or zeroed out. The $175 million portion of the request also includes a one percent pay increase for employees and the first installment of a plan to restore 1,066 teaching positions lost to budget reductions.

Beyond that money for local systems, the State Department is proposing an increase of $51 million in various state-level initiatives that support the strategic priorities of Plan 2020.

Those include:

1. $10 million to pay for the new suite of assessments that measure student and school academic progress.
2. $5.1 million to expand the Alabama Math and Science Initiative.
3. $5 million to meet the demand for distance learning and to establish a virtual high school.
4. $5 million for an initiative to recruit new teachers into the profession and for creating alternative routes for career advancement other than moving into administration.
5. $5 million for expanding the network of Family Resource Centers to better connect schools and students to community resources.
6. $5 million for further Career Tech expansion.
7. $5 million for a competitive grant pool to support innovation in schools.
8. $4.8 million increase needed to support systems’ assessment of learning needs in special populations of students.
9. $3.8 million for a system of online, formative assessments provided to school systems.
10. $1 million to complete the planned expansion of Advanced Placement courses.
11. $1 million to establish a competitive grant program to help schools pay for arts education with an emphasis on those systems that currently can’t afford it.

While the looming shortfall in Alabama’s ailing General Fund has received much attention, the state’s Education Trust Fund (ETF) isn’t exactly enjoying robust growth, according the recently published year-end report on receipts to the fund.

The ETF, which pays for public K-12 and higher education plus an assortment of other smaller agencies, grew just 2.1 percent over 2013. And revenue from Alabama’s income tax was practically flat in FY 2014 as compared to 2013.

The income tax provided 60 percent of the Education Trust Fund’s $5.8 billion in revenue in 2014. Sales and use taxes provided another 32 percent. A public utility tax provided 7 percent of the total. A handful of other taxes made up the remaining 3 percent.

Since it contains the income tax and most proceeds from the state sales tax, the ETF tends to grow with the economy. For example, sales tax receipts to the Education Trust Fund increased by 5 percent.

However, that number is somewhat inflated. In 2013, lawmakers sent $52 million straight to K-12 schools rather than depositing it in the Education Trust Fund first. This year, that $52 million drops into the ETF, creating the appearance of extra growth. Growth in sales tax collections were more like 2 percent.

According to analysts, this year’s income tax receipts, at least as they compare to 2013, are also skewed. Income tax collections jumped more than expected in 2013, thanks to some selling of stocks and the end of 2012. Those moves, made in anticipation of higher tax rates, produced a one-time jump in revenues in 2013. Looking at wage income alone, taxes collected through withholding increased about 2 percent in 2014 over 2013. But thanks to the inflated 2013 number, overall income receipts to the General Fund increased just 0.8 percent.

During the current fiscal year, the state is anticipated to make its final repayment of the $437 million borrowed for education from the Rainy Day Fund during the economic downtown. The state still owes $92 million that is due by Sept. 15, 2015.

All in all, the Education Trust Fund has still not recovered enough to provide the level of funding for schools it provided in 2008, before the Great Recession. The final repayment and a pickup in job growth in recent months should allow for some improvement in the 2016 budget year.

The final tallies are in for fiscal year 2014 collections to the state’s General Fund. The results are, as usual, lackluster.

Collections from the assortment of taxes that feed the Fund grew by just 1.03 percent over 2013.

That’s pretty typical performance for the General Fund, and that anemic growth is the root cause of an impending problem the new Legislature will face when it convenes next year.

The General Fund supports the operation of the state’s non-education agencies. The cost to operate General Fund agencies exceeds the revenue available. The shortfall in 2016 is expected to be over $200 million.

According to the Legislative Fiscal Office, from FY 2008 to FY 2013, the Legislature has used over $1 billion of “intermittent” or temporary revenues used in balancing the General Fund.

Beyond that, the State has borrowed $599 million from the Alabama Trust Fund since 2010 to support the General Fund budget. And the law requires that this borrowing must be repaid.

For a more extensive discussion of the General Fund’s situation, see the PARCA’s October update on Alabama’s Ailing General Fund.

At the end of each month, the state publishes a report that tracks the revenue received by the General Fund from its various sources. The report generated at the end of September, the end of the fiscal year, allows you to compare yearend totals to those in the previous years. Results of a PARCA analysis of that report are presented in the table below. Below the table is a discussion of some of the major taxes and some notes on quirks you might detect in the data.

Notes on top sources of receipts

The table lists the amount from each tax that is credited to the General Fund. In many cases, that is not the total amount collected from the tax or fee. For many of the taxes and fees, the General Fund receives only a portion of the tax collected with the rest going to other state or local government accounts.

Insurance company licenses and premium tax: 16 percent of receipts in 2014, up 4 percent from 2013. These are taxes collected on the activities of insurance companies. This tax saw some growth this year. However, in both 2013 and 2014, these receipts have been supplemented by extra payments from the insurance guarantee fund, a pool that holds funds to be used in the event of insurance company failures. That extra support, which amounted to $12 million in 2014, isn’t expected to recur in 2015 or in the next couple of years.

Subtotal of sales, use, and lease taxes: 16 percent of the total for 2014, up 7 percent over 2013. This is a category of receipts PARCA created by combining sales, use, and lease taxes. This is by no means total state sales tax collections because most sales taxes are deposited in the Education Trust Fund. However, some components of sales and use taxes have been assigned to the General Fund. Individual taxes that make up this subtotal are listed individually as well. A couple of points on those: The large percentage increase in the remote sales tax (a tax on sales over the Internet) is explained by the fact that the 2013 figure is not a full year’s collection. In other words, the increase is not a huge jump in the overall collections. Instead, the 2014 total represents a full year’s collections. Also, lease tax receipts were boosted as a result of an audit that caused a taxpayer to shift payments into that category.

Alabama Trust Fund: 15 percent of receipts in 2014, down 4 percent over 2013. This revenue comes from the Alabama Trust Fund, the account that holds royalties from the oil and gas production. As in 2013, there was extra money coming from the Trust Fund, $146 million extra in 2014. That same borrowing will recur in 2015, but won’t be available going forward. Consequently, Trust Fund receipts will account for a smaller share of General Fund revenue in subsequent years. Additionally, that borrowing, plus an earlier instance of borrowing from the fund, will have to be repaid in the coming years.

Ad valorem tax: 9 percent of General Fund receipts in 2014, up 3 percent in 2014. These receipts come from 2.5 mills of the 6.5 mill state property tax.

Cigarette tax: 6 percent of General Fund receipts in 2014, down almost 3 percent in 2014. These are taxes on cigarettes, and the decline is part of a continuing downward trend in collections thanks to declining smoking rates.

ABC board taxes and profits: 5 percent of General Fund in 2014, down 5 percent. These taxes include a portion of the various taxes on alcoholic beverages, plus the profits from ABC board stores and licenses.  The main reason for the decline is that the previous year’s total was inflated thanks to extra distribution in 2013.

Oil and gas production tax: 5 percent of the General Fund in 2014, down 2.3 percent from 2013. This is a tax on the oil and gas that is produced in the state. This source of revenue has been gradually declining, primarily due to the aging of Gulf Coast gas wells.

Corporation tax: 4 percent of the General Fund in 2014, up 48 percent in 2014. This is the replacement tax for Alabama’s old franchise tax, which was ruled unconstitutional in 1999. The large increase is partially attributable to decline in the portion of this tax that has been used to pay corporations refunds on the franchise tax.

Court costs: 4 percent of the General Fund in 2014, down 7 percent. Charges collected by the courts continued to decline in 2014.

Cellular phone taxes: 3 percent of the General Fund in 2014, down 14 percent over 2013. Revenue from taxes on cellular phone calling plans dropped. Analysts say this is attributable to changes in the way cell phone service is structured and how it is taxed. Pre-paid cellular service taxed by sales tax and more customers are moving away from service plan to the pre-paid minutes. Also, the state cannot tax data service. As cellular plans charge less for voice phone service and more for data, the proceeds from this tax decline.