Many school systems in Alabama are closing out the fiscal year, planning for the next one and bracing for worst-case budget scenarios.

While the recession has hammered school systems across the country, Alabama schools have been hit particularly hard and face more tough times ahead. The state’s schools face a unique budget challenge because Alabama touts the lowest property taxes in the country.

Local school systems recently approved slimmed down budgets for the new fiscal year, which begins Oct. 1, and are thinking about future cuts. Most education officials believe another round of proration in the new fiscal year is all but certain.

In Alabama, the state creates budgets based on anticipated tax revenue. If revenue comes up short, state funding for local agencies is prorated to balance the budget, which is required by law.

“We like to poke our chests out as a badge of honor, we pay the lowest property taxes in country, but what people don’t understand is you get what you pay for,” Phenix City Schools Superintendent Larry DiChiara said.

With low property taxes, education funding relies on income and sales taxes that can tumble in a bad economy. The formula makes school system budgets particularly susceptible to major cuts and area officials are now trying to figure out how to handle such deficits.

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