Lawmakers consider new Alabama school funding model

Rep. Danny Garrett, R-Trussville, stands on the floor of the Alabama House of Representatives on May 8, 2024 at the Alabama Statehouse in Montgomery, Alabama. (Brian Lyman/Alabama Reflector)

With one legislative session finished and the next about eight months away, Alabama legislators will spend the time in-between deciding whether to develop an entirely new school funding formula.

The House and Senate committees that oversee the Education Trust Fund (ETF), the state’s education budget, held a joint meeting Tuesday to begin discussions about potential changes to the current public K-12 education funding formula.

“It has been 30 years since we changed our funding formula for education, and a lot has changed in the past 30 years,” said Rep. Danny Garrett, R-Trussville, the chair of the House Ways and Means Education Committee, in an interview after the meeting. “We are one of six states out of 50 that continues to fund the way we are funding, on a resource-model basis, so we are looking at what other options we have that would be better suited to that.”

It is the first in a series of meetings aimed at providing members an education on the workings of Alabama’s Foundation Program, the $4.6 billion program in the ETF which provides funding for schools around the state.

Many states fund their schools using a student-based model, one that takes into greater account not only the number of students within a given school system, but also the students’ composition, such as whether they are English Language learners or someone with special needs.

Under Alabama’s current formula, in place since 1995, the number of students creates a certain number of teacher units. That number of teacher units then becomes the basis of much of the funding.

At a recent State Board of Education work session, State Superintendent Eric Mackey had defined the school as a “hybrid program” rather than a true foundation program because those units are the basis of funding.

“You get what you get based on the number of units,” he said.

According to Allovue, Connecticut, Kansas, California, Tennessee, Maryland and Texas have all moved to a weighted student funding formula in the last decade.

Members discussed not only the funding formula, but also underfunding of schools in lower-income communities with significant minority populations; the role of economic development incentives and their effect on school funding, and the lack of funding for special needs students.

Kirk Fulford, deputy director of the Legislative Services Agency, provided lawmakers with an overview of the Foundation Program.

The amount that schools receive is based on a unit count. The state takes the average number of students enrolled in the school or school system for the 20 days following Labor Day. The number is then divided by the divisor, set by the Legislature for the number of students within a set of grade levels.

If a school has 100 students, and the divisor for K-3 grades is 14.25, the school or school district has a unit count for K-3 grade teachers of 7.01. That is then converted to dollars based on the salary schedule that is set.

The number of principals, assistant principals and counselors for a school is also calculated based on units, and the amount of Foundation Program funding for the school is converted by multiplying that unit count by the money per unit decided by legislators.

Other types of funding are added to the Foundation Program allocation for schools, from transportation expenses to additional money specifically for math and science teachers along with special education.

Money to fund the cost determined for each district is shared between municipalities and the state. The formula is designed so that more affluent locations pay a greater share of the cost than those whose residents are lower income.

Local governments must set property taxes at a minimum of 10 mills in order to receive money from the Foundation Program.

For the coming year, the state portion of the ETF for K-12 schools, including the Foundation Program; transportation, and programs run through the Alabama State Department of Education, is about $5.5 billion. The local fund portion is about $831.5 million.

The amount in local property taxes collected for the school system will vary by the assessed value of the properties within the school system’s boundaries. Poorer areas will generate less tax revenues than more prosperous ones.

Lowndes County, for example, an area with a significantly lower-income population, paid roughly $1.3 million into the Foundation program. Mountain Brook, a wealthy suburb of Birmingham, paid about $7.3 million to the Foundation Program.

School districts with wealthier populations tend to record higher scores on standardized tests, according to an analysis based on FY21-22 spending and School Year 2022-23 scores from the Edunomics Lab based at Georgetown.

The local allocation has irritated some lawmakers who work to increase their economic development to increase school funding, only to have their state allocation reduced, leaving them net neutral.

“We always were under the impression that, ‘Wow, we bring in industry, and they pay $200,000 of property taxes to our schools,’” said Rep. Troy Stubbs, R-Wetumpka, who used to be on the Elmore County Commission. “We felt like we were improving our local schools because we were bringing in more money. However, Elmore County is only a participant in our Foundation Program with our 10 mills. We do not have any local funding. Because of that, all we were really doing was lowering the amount that the state contributed to Elmore County.”

In Tennessee, which moved to a weighted student funding formula in recent years, school districts were required to keep funding at previous levels, according to the Commercial Appeal. The state provided overall more funding to the education budget so that districts received more money by numbers, even if the share they received from the state lowered.

Garrett previously told the Reflector that the Educational Opportunities Reserve Fund, created in the 2022 regular legislative session, could be used in shifting the funding formula.

Schools receive additional funding for specific students, such as those with special needs, from the Foundation Program. The formula automatically factors in the number of students who have special needs at 5%. The unit count is then weighted up to 2.5 for those students to give schools additional dollars for more resources.

Currently, the sole adaptation in the formula is headcount, and doesn’t incorporate the specific needs of some in schools, one that is based on each student, might.

“We know the cost to educate a special needs child is, far and away, more than the average child,” said Sen. Arthur Orr, R-Decatur, the chair of the Senate’s education budget committee. “The cost to educate an English Language Learner is much more than an average Alabama child. Following the trend, or at least looking at the other states who have gone down this road, seeing if we want to consider changing our funding model, how we fund based on a type of student instead of just a student.”

The committees plan to resume the discussions at an August meeting.

Reporter Jemma Stephenson contributed to this story.

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