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State Capitol Week in Review – October 4, 2013

BY SENATOR LARRY TEAGUE –

LITTLE ROCK – Federal funding accounts for an average of about 15 percent of the revenue of Arkansas public schools.

Most federal grants to local schools have been distributed for this school year, the state Education Commissioner said, therefore the threat of having to furlough school employees is minimal unless the partial shutdown of the federal government lasts beyond December.

The Education Commissioner said that Arkansas schools receive federal grants for teaching children with special needs and children with disabilities.  Also, the federal government provides some grants for teaching children from disadvantaged homes.  The United States Department of Agriculture pays for many food services provided by school cafeterias.

Federal grants have already come in so the state has sufficient money until the end of the school year for programs that benefit children with special needs, the commissioner said.  Federal funding for cafeteria and food services should last until December, he said. The commissioner was interviewed by the press immediately after news broke about the partial shutdown of the federal government.

According to the annual statistical report of the state Education Department, the vast majority of revenue for Arkansas public schools comes from local property taxes (about 32 percent) and state aid (about 48 percent).

School funding is the largest single spending category in state’s general revenue fund. Because public education in Arkansas relies so greatly on state and local sources of revenue, and so little on federal money that has already been allocated, for now schools will be shielded from the effects of the partial shutdown of the federal government.

Initial news reports indicated that about 685 state employees would be furloughed because of the partial shutdown.  Most of those are in the state Military Department, the Human Services Department and the Department of Environmental Quality.

The Human Services Department administers numerous programs that are federally funded.  Because of the partial shutdown, National Guard drills were postponed because of furloughs of federal employees in the Guard and state Military Department employees whose jobs are tied to federal funding.  The Department of Environmental Quality regulates clean air and water standards.

Revenue Report

State revenue in September was up 6.5 percent from the same month last year, in part because of increases in sales tax and income tax collections.

For the first three months of the current fiscal year, which began July 1, net available revenue is up 4.2 percent for the first three months of last year.  This year’s collections are 2.3 percent above the amount forecast by budget officials.

While expressing confidence that the revenue report showed a solid trend in the Arkansas economy, budget officials cautioned that state revenue could drop below forecasts if the partial shutdown of the federal government continued for an extended period.

Sales tax collections in September were 0.7 percent above forecast. Individual income taxes were 4 percent above forecast and corporate income taxes were 12.3 percent above forecast.