With books closing on the 2013 fiscal year, Gov. Robert Bentley’s office Friday announced that the state would pay back about $260.3 million to a $437 million savings account emptied in 2009 to offset the effects of proration.
Friday’s payment means the state has put $274.4 million back into the account, which must be fully repaid by 2015.
In a statement, Bentley credited to payment to “conservative budgeting and an improving economy.”
“More people are going back to work,” the statement said. “Unemployment is down. Revenues are stronger than projected for the year. We are committed to building on these improvements and fully restoring the Rainy Day Account.”
In 2011, the Legislature passed the Rolling Reserve Act, which caps growth in the Education Trust Fund to a percentage based on a 15-year average of growth, plus 40 percent of the increase in recurring revenues for the preceding fiscal year, should that year exceed the cap. Any revenues above the cap go toward paying off Rainy Day Accounts; after the Rainy Day Account is paid, excess revenues will go to an a second proration prevention account, funded up to 20 percent of the total value of the Education Trust Fund.
After that, excess funds would go to an Education Trust Fund Capital Fund, used for education construction and retirement of debt associated with it.
The legislation was a priority for Republicans, who took over the Legislature in 2011.
“By living within the state’s means, not only are we able to pay down this debt incurred by the previous majority, but we’ve also avoided devastating mid-year budget cuts for schools, and were able to reward our hard-working teachers with their first pay raise since 2007,” Senate President Pro Tem Del Marsh, R-Anniston, said in a statement.
Democrats have opposed the measure, saying it prevents the state from fully investing in education. The projected cap for the 2014 fiscal year, which officially begins Tuesday, was higher than projected revenues for the year; lawmakers have budgeted an absolute payment of $35 million to the Rainy Day Account for the coming fiscal year, with up to $215 million available in conditional spending for repayment, should those funds become available.
The Rainy Day Account repayment is separate from a $437 million transfer of money from the Alabama Trust Fund into the state’s General Fund, which funds most non-education services in the state. Voters approved the three-year transfer of funds last year; last spring, the Legislature approved legislation that would require the full amount to be paid back by 2026. The 2014 General Fund budget includes a payment of $5 million back to the Trust Fund.
– posted by Brian Lyman