Alabama Lawmakers Discuss Proposed Changes to School Funding Model

As Alabama legislators wrap up one session and gear up for the next in about eight months, they are now mulling over the possibility of revamping the existing school funding formula.

Both the House and Senate committees responsible for overseeing the Education Trust Fund (ETF), Alabama’s educational budget, convened on Tuesday for a joint session to kickstart deliberations on potential adjustments to the current K-12 public education funding model.

“It has been three decades since we last updated our education funding formula, and a lot has evolved in that time,” remarked Rep. Danny Garrett, R-Trussville, chair of the House Ways and Means Education Committee, in a post-meeting interview. “As one of only six states that still funds education in the same way we have been doing, we are exploring alternative models that may be more suitable.”

The meeting marks the beginning of a series aimed at educating members on how Alabama’s Foundation Program, a $4.6 billion program within the ETF supporting schools statewide, operates.

Unlike many other states that adopt a student-based funding approach, which factors in not just the student numbers but also their characteristics like English language proficiency or special needs, Alabama’s current formula, in effect since 1995, primarily hinges on the number of students to determine teacher units, shaping much of the allocation.

Superintendent Eric Mackey recently characterized the current program during a State Board of Education session as a “hybrid program” due to its reliance on teacher units for funding.

“You receive funds based on the number of units,” Mackey noted.

Allovue cites Connecticut, Kansas, California, Tennessee, Maryland, and Texas as states that have transitioned to a weighted student funding formula in the past ten years.

While delving into the funding formula, legislators also discussed the underfunding of schools in economically challenged areas with sizable minority communities, the impact of economic incentives on school financing, and the lack of adequate funding for special education students.

Kirk Fulford, deputy director of the Legislative Services Agency, provided a comprehensive overview of the Foundation Program to lawmakers.

Under the current system, schools receive funds based on a unit count determined by the average student enrollment in the 20 days following Labor Day, divided by a specific divisor set by the Legislature for each grade level range.

For instance, if a school with 100 students falls within the K-3 grade range with a divisor of 14.25, it would have a unit count of 7.01 for K-3 grade teachers, converted to monetary figures following the salary schedule.

The allocation for principals, assistant principals, and counselors is also calculated based on units, and the Foundation Program funding for each school is computed by multiplying the unit count by the legislated per-unit amount.

Additional funding streams supplement the Foundation Program allocation, spanning from transportation costs to earmarked funds for math, science, and special education teachers.

The expenditure to be borne by each district is a shared responsibility between local governments and the state, with a funding model that mandates more affluent areas to contribute a larger share compared to lower-income regions.

Local authorities must maintain property taxes at a minimum of 10 mills to qualify for Foundation Program funds.

For the upcoming year, the state’s allocation in the ETF for K-12 schools, encompassing the Foundation Program, transportation, and programs under the Alabama State Department of Education, stands at approximately $5.5 billion, while the local funding amounts to around $831.5 million.

The local property tax revenue hinges on the property valuation within the school district, with wealthier areas generating higher tax proceeds than financially disadvantaged regions.

For instance, Lowndes County, a lower-income locale, contributed roughly $1.3 million to the Foundation program, while Mountain Brook, an affluent suburb of Birmingham, allocated about $7.3 million to the Foundation Program.

Citing an analysis based on FY21-22 spending and School Year 2022-23 scores from the Edunomics Lab at Georgetown, school districts in affluent areas typically log higher standardized test scores.

Lawmakers have raised concerns about the local allocation, especially in cases where efforts to boost economic development inadvertently lead to a reduction in state funds, rendering the net impact neutral.

Rep. Troy Stubbs, R-Wetumpka, formerly on the Elmore County Commission, expressed disappointment, “We always thought that, by attracting industry and generating significant property tax revenue for our schools, we were enhancing our local education system. However, since Elmore County solely relies on our participation in the Foundation Program with our 10 mills, we essentially reduced the state’s contribution without securing local funds.”

Tennessee’s shift to a weighted student funding formula necessitated districts to maintain prior funding levels, as reported by the Commercial Appeal. Despite a lower share from the state, the overall increase in education budget led to more funds allocated to districts.

Rep. Garrett had previously hinted at the potential use of the Educational Opportunities Reserve Fund, established during the 2022 regular legislative session, in potential funding formula alterations.

Under the Foundation Program, schools receive additional funding for specific student categories, like special needs students, with the formula factoring in 5% of students as special needs and weighting their unit count up to 2.5 to allocate more resources.

Unlike the current headcount-dependent formula, which fails to account for individual student needs, a more personalized model tailored to each student could potentially better address varying educational requirements.

Sen. Arthur Orr, R-Decatur, chair of the Senate’s education budget committee, emphasized the importance of considering different student types for funding, noting the higher costs associated with educating special needs or English Language Learner students compared to the average student.

The committees intend to resume this dialogue at an August meeting.

This story includes contributions from reporter Jemma Stephenson.

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