API highlights Rep. Canfield’s Rolling Reserve Budget Act
From Michael Ciamarra’s blog on Alabama Policy Institute’s website:
With the 2009 legislative session nearly half over, the early award to the most innovative and thoughtful reform proposal has to go to the Rolling Reserve Budget Act sponsored by Rep. Greg Canfield. If adopted, it would dramatically change the way the state’s education dollars are budgeted, save taxpayers money, ensure quality educational outcomes, meet future capital needs for construction and renovation of schools and be a simple end to proration.
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Rolling Reserve Budgeting is based on averaging the growth rate in the ETF revenues over a 15 -year period of time. The revenues that fund education are in the economy and annual revenue growth rates. As Rep. Canfield points out, revenues can vary as much as -3.1 percent reported in Fiscal Year (FY) 1982 to +13.7 percent reported in FY 1983. There’s no question, as many reformers over the years have observed, these extreme revenue fluctuations make forecasting ETF revenues difficult on a yearly basis.
Rep. Canfield’s idea would be to model Rolling Reserve Budgeting from FY 1996 through FY 2009. His model shows that the Rolling Reserve would have produced annual ETF revenues that would have grown in a range of 4.2 percent to almost 7 percent while setting aside built-in reserves and ensuring proration did not occur.
Read the rest for yourself. Here is a copy of Canfield’s bill (HB 509).
Although Rep. Canfield is only in his first term, he is an impressive legislator.