With state lawmakers still considering Alabama’s Education Trust Fund (ETF) as a solution to a General Fund shortfall, the Mobile County School Board is taking what members call a “conservative” approach to the system’s 2016 budget despite $713 million in planned expenditures.

Board members got a peek at the budget Aug. 31 during one of the multiple budget hearings the system has planned over the next month. There Dinish Simpson, the system’s chief financial officer, offered a comparative analysis to the previous year’s budget.

Students take college courses in the university center at Murphy High School. (Jason Johnson)

Students take college courses in the university center at Murphy High School. (Jason Johnson)

According to Simpson, the system is expecting to end the current fiscal year with $26 million in its general fund before any new revenue is received — a figure down more than 10 percent from last year.

General fund revenues, which come from local, state and federal taxes, are trending down this year, with the exception of a 1 percent increase in ad valorem revenue derived from local property taxes.

At the state level, the school system is planning for a $665,200 reduction in funding through the state’s education foundation and a $1.8 million reduction in funding due to a reduction in the number of Mobile County students.

Superintendent Martha Peek said since 2014 Mobile County Public Schools has more than 700 fewer students for a “variety of reasons.”

“Some of that is attributed to the impact of the Alabama Accountability Act, but some of it is simply people moving out of the area for other employment and taking their children with them,” Peek said. “We’re also looking at Mobile County population that is aging a little bit, which we’re investigating.”

The Alabama Accountability Act, which cleared its final legal hurdle in March, allows students in “failing schools” to use public education funds to transfer to private schools or other non-failing public schools.

According to the law, a failing school is defined as one having scored in the bottom 6 percent on state reading and math tests three or more times during the last six years. That formula produced a list of 72 failing schools in Alabama, six of which were in Mobile County.

As of last August, 155 MCPSS students had transferred to other schools within the district and nine had left the system to attend private schools — second in the number of total transfers behind Montgomery County Schools. Updated 2015 numbers were not available for this report.

The loss of state revenue this year was reflected in a reduction of salary costs, which was down $5.8 million from 2015. Still, with a price tag of $250 million, the cost of salaries for the system’s teachers and support staff is by far the largest expense.

Despite fewer teacher units, Peek said there were no layoffs because of reduction in salary costs. Instead, as teachers retired or went through attrition naturally, the school system simply left their position vacant.

Based on the projections for the year’s budget, the system is planning to end this coming year with $63 million sitting in all of its combined fund sources, which includes the general fund, special revenue funds, debt service accounts, capital project allocations and expendable trust funds.

However, in the general fund an ending balance is only expected at $16 million, less than half of what the school system is required to maintain by the state — the equivalent of one month’s operating expense, which for Mobile County is about $36 million.

“We keep working toward that number, but not we’re not there yet,” Peek said. “With revenues just beginning to pick up, we’ll be at about the same level we were last year, but not at a one-month’s operating level. It’s a big system. It takes a lot of money to keep our programs in place.”

But with a second special session to address the state’s $200 million budget shortfall, the school system is bracing itself for possible cuts on the state level — as education is often on the cutting block when Alabama’s bills start piling up.

Board member Don Stringfellow, who led the first budget hearing, said “the budget was going to be tight, as it always is.”

“Any change or reduction from the state would have a detrimental impact,” he said.

Some lawmakers have already noticed the $225 million balance sitting currently in the Education Trust Fund, but Peek said following Monday’s meeting that the system would be keeping its eye on the state legislature as they return for a second special session in September.

“Some people like to say it’s a surplus, but it’s not actually surplus because we’ve never been totally funded to the level we were even in 2008,” Peek said. “We’ve gotten a moderate increase in some of the funds they give us, but we still don’t get full funding for textbooks, transportation, library services or any funding for professional development.”

As he has in previous years, Jessie McDaniel, who represents Mobile County’s teachers in the Alabama Education Association (AEA), addressed some possible changes to the current salary schedule, but kept his comments brief because the meeting was the first time the new budget has been presented publicly.

“Obviously, the main expense in your school’s system is always your delivery of instruction and the support services that support the teacher in the classroom. That’s the most important thing that we do,” McDaniel said. “We’re going to continue to advocate for making Mobile the most attractive place to work in the state. We want to continue to attract the best and brightest teachers to the classrooms.”

McDaniel suggesting doing that by revisiting the salary schedule and possibly considering additional personal days for school system employees, if the budget allows. McDaniel said the AEA would review the current budget and provide more feedback during upcoming budget hearings.