USA State Funding Outlook Brightens

Everyone loves getting money from the government, and USA is no exception. In fact, USA depends on it. Every year, the Alabama government decides how much money to give to all the publicly funded schools in the state from the Education Trust Fund (ETF). In April, the Alabama Legislature enacted next year's ETF appropriations. USA is expected to receive nearly $119 million next year, which includes $10 million from the American Reinvestment and Recovery Act (ARRA), popularly known as the stimulus bill, which President Barack Obama signed into law in February. The ARRA funds won't last though, as USA is only receiving another $10 million next year. For the University of South Alabama, the state appropriation is the largest single source of income. In 2008-09, tuition accounted for about $79 million of the total budget, while the ETF brought in $110 million. The biggest enemy of state appropriations is proration, which is when appropriations to universities must be cut mid-year because the state receives less money from taxes than they anticipated. Since the ETF relies on sales and income-tax revenues, the fund loses money when those tax revenues decline. Last year the ETF had to be prorated 9 percent. USA was originally appropriated $121 million, but that dropped significantly to $110 million. Further proration this year, though, is not expected. "I've been at this University 31 years," V.P. of Financial Affairs Wayne Davis said. "I've only seen proration nine times." The governor still has access to about $218 million in reserve funds from the Rainy Day Fund to make up for lower tax revenues. The governor's office believes this fund should prevent further proration this year. This year's budget was decided with last year's proration and the current economic situation in mind, Davis said. Even with $119 million, USA is getting less money than it previously did. Every year since 2005, USA received nearly $20 million more than the previous year, reaching its peak at $139 million in 2008. The fear is that staff or programs might be cut, salaries might be frozen, or any number of things might happen. So far USA has dealt with the downturn with relatively painless measures, such as leaving vacant positions open and limiting faculty travel. The Board of Trustees will be meeting and discussing the school's budget and future plans in the coming weeks. The real ramifications of the appropriations shortfall will become clear when USA's final budget is published in September. Though it may seem hopeless, Davis isn't too worried about it. "We have a very conservatively managed board," Davis said. "We don't do any wild and crazy things, we're managed very responsibly. I think we can manage our way through this."