State Education Budget Cuts: Which Ox to Gore?

August is the month state agencies normally present and work on budgets for the next legislative cycle. The governor, who is the chief budget officer in the state, gathers the input from the many departments and, along with revenue estimates from the economists and revenue collection data from the Department of Revenue, prepares the amended budget for the current fiscal year and the full-year budget for the following fiscal year.

The Aug. 1 announcement that the budgets would have to be cut even more than previously thought because the tax collections were down 1 percent over last year in the same month has caused a lot of “revisitation” to agency budget drafts.

The agencies could make cuts across the board, at 6 percent or could be selective about programs in which to make cuts so that other programs could be left untouched or be hit with a lesser impact.

The governor may accept the agency recommendations in his proposal to the General Assembly, or not. The General Assembly can accept, amend, or reject the governor’s recommendations. And then the governor can line item veto what the General Assembly passes.

Bottom line: changes will not exceed the revenue generated (FY09) or estimated (FY10), but the particulars of the specific oxen to be gored will not be finalized until at least March and maybe as late as May of 2009.

In the meantime, the money transferred from the treasury to the state agencies is being cut 6 percent, and agencies will apply those cuts to their recommendations until there is guidance or enacted appropriations to change that.

The state board of Education, SBOE, presented its recommendations this week.

While the agency funds are to be cut 6 percent, with plans submitted for an 8 percent and 10 percent cut, the money going directly to local school districts are to be cut 2 percent in FY09 and 3 percent in FY10.

For more specific information, go to www.doe.k12.ga.us under Finance and Budget Operations for a copy of the proposed budgets. And find a magnifying glass to read the numbers.

The governor has also recommended that the Homeowner Tax Relief Grants, HTRGs, be eliminated.

HTRGs are $428 million in grants to county, city, and school district budgets to reimburse those taxing authorities for the grants provided to owners of property with a homestead exemption. If the General Assembly does not eliminate these grants from the FY09 budget, somewhere in the state budget additional cuts will have to be made up to this $428 million. Speculate what might be the impact on K-12 educational expenditures, both state and local, as K-12 is the largest component of the state budget, about 38 percent.

Tax bills are being mailed in many counties this week that include the HTRG.

If the General Assembly decides to support the governor’s recommendations and eliminate these grants, then the county commissions, city councils, and local boards of education will have to decide whether to ‘eat’ the reduction in expected revenues because the state grant will not materialize, or to have the tax commissioner send a second bill in the spring to homeowners to pay what was originally credited to their total bill. Neither option is pleasant to contemplate.

As of mid-week, the capital projects funded in the FY09 budget have not been adjusted, and the $10 per square foot increase provided by the State Board of Education earlier this year continues to hold. If more cuts are required, that protection may disappear.

FitzGerald is the Education Policy Specialist for the Georgia PTA. You can reach her at sallyfitz@bellsouth.net.

Ed. Note: Due to Web formatting, budget numbers could not be listed in this story. However, the proposed educational budget cuts can be found at www.doe.k12.ga.us. Go the Finance and Budget Operation tab.