Budget Watch: Tracking the 2025 Education Trust Fund Budget

House Passes $9.3 Billion FY2025 Education Trust Fund Budget

Today, the full House of Representatives voted to pass their version of the FY 2025 Education Trust Fund (ETF) budget package. It now goes to the Senate F&TE committee. 

The FY 2025 ETF budget is a record $9.3 billion, a $550 million (6.25%) increase over last year. There was one minor technical change to the substitute bill approved by the House Ways & Means Education committee on April 9th (see our previous updates below for more detail). The House voted 102-1 to pass it, with the only no vote coming from Rep. Marilyn Lands (D-Huntsville/Madison) who was just elected in a special election two weeks ago.

The full House passed the FY 2024 Supplemental Appropriation unanimously. The only significant change reallocated $15 million from the Lt. Governor’s K-12 Capital Grant program to the Community Services Grant line item. Through Community Service Grants, House members are able to select projects to receive funding, such as a school in their district.

Here are the updated versions of the budget bills passed by the House that now go to the Senate: the FY 2025 Education Trust Fund (ETF) budget (HB145 and the Budget Spreadsheet), the FY 2024 Supplemental Appropriation (HB144), the Advancement & Technology fund (HB147), and a 2% pay raise for public education employees (HB146).

House Committee Approves the FY2025 Education Trust Fund Budget

Today, the House Ways & Means Education Committee voted to approve their version of the FY 2025 Education Trust Fund Budget. It now goes to the full House of Representatives for a vote that is expected as early as next Tuesday, April 16th. Chairman Danny Garrett held a hearing on the House’s proposed substitute budget bill on April 4th, which contained changes to the Governor’s proposed budgets you can read about in our previous update below. Today, there were only minor technical changes made to the House substitute. Here are the updated versions of the budget bills that the House will vote on next week: the FY2025 Education Trust Fund (ETF) budget (HB145), the supplemental appropriation (HB144), the Advancement & Technology fund (HB147), and a 2% pay raise for public education employees (HB146).

House Hearing on the FY2025 Education Trust Fund Budget 

Today, House Ways & Means Education Chairman Danny Garrett held a hearing with his committee about the House’s proposed budget substitute bill, which contained several changes to the Governor’s proposed budgets. As always, the budget package includes multiple bills: the FY2025 Education Trust Fund (ETF) budget (HB145), the supplemental appropriation (HB144), the Advancement & Technology fund (HB147), a pay raise for public education employees (HB146), and funding for certain higher education institutions. The public will get to see the updated versions of these bills next Tuesday. The links above are for the Governor’s proposal.

Here is a summary of some of the changes that the House made to the Governor’s proposed budget, based on what the Chairman read to the committee:

Local Boards:

• Foundation Program: $4.67 billion for the Foundation Program, a 3.69% increase over FY24. 
  • Assistant Principals: $10.8 million to hire APs in schools with at least 300 students, down from 500 students.
  • Starting Salary Increase: $19.2 million was maintained for a starting salary increase. This would bring Alabama’s starting teacher salary to $47,600, the highest in the southeast. Both teachers and education support personnel at K-12 schools would receive a 2% pay raise. 
  • Classroom Supplies: Removed $8 million to account for an overage in this number last year, when the legislature provided additional money for classroom supplies in the Supplemental budget so teachers could receive this money when the schools year starts instead of having to wait to October, when the Education Trust Fund budget year begins. Teachers will still received $1,000 each for their classroom supplies.
• Unmet Needs Grant Program: Added $5 million for the Unmet Needs grant program, which is geared towards districts that need facility improvements, especially if they are coming up short on funding in a contract. A district could receive from $50,000 to $250,000 in a single year.

Alabama State Department of Education:

• Innovation Grant Program: In response to the CHOOSE Act, the House added a new $5 million Innovation Grant Program, where public schools can apply for grants to pilot new innovative approaches, like offering year-round school or transportation. 
• Struggling Readers Beyond Grade 3: Maintained the Governor’s recommendation of $0 for struggling readers beyond grade 3 in ETF, but Chairman Garrett added $5 million for this in the Supplemental budget. This line item received no funding in FY24. The department’s request was $22 million.
• Turnaround Schools: The House decreased the additional $1 million request from the Governor’s budget, bringing the total back to $10 million for Turnaround Schools.

Other Funding Adjustments:

• Rural Broadband Grant Program: Removes the $25 million increase suggested by the Governor. Chairman Garrett explained that this was zeroed out because hundreds of millions of dollars have been invested across the state in rural broadband in recent years.
• Alabama Library Service: Removes $750K, which is redirected to Dolly Parton’s Imagination Library and Better Basics
• Saban Center: Removed $500K 
• McWane Center: Removed $500K 
• Alabama Humanities Alliance: Removed $100k increase to from last year’s budget, to bring total of $200k
• Autism Evaluation Services: Added $800K to expand statewide
• Helping Families Initiative: Added $500K 
• Feminine Hygiene Grant Program: Added $200K for the feminine hygiene program they added last year.
• Conflict Resolution: Added $200K for a new conflict resolution program in Birmingham City & Jefferson County Schools.

Governor Ivey’s Recommended FY2025 ETF Budget

Last week, the Governor’s proposed budgets were released. As always, the budget package includes multiple bills: the FY2025 Education Trust Fund (ETF) budget (HB145), the supplemental appropriation (HB144), the Advancement & Technology fund (HB147), a pay raise for public education employees (HB146), and funding for certain higher education institutions. Here’s what’s included:

Alabama Public Charter School Commission:

• $1.5 million for the Commission, increased from $400,000 in FY2024 and moved to its own line item.

Local Boards:

• $4.67 billion for the Foundation Program, a 3.69% increase over FY24. 
  • $19.2 million of this would be for a starting salary increase. This would bring Alabama’s starting teacher salary to $47,600, the highest in the southeast. Both teachers and education support personnel at K-12 schools would receive a 2% pay raise. 
• $21.2 for the At-Risk program, which provides funding to school districts based on the number of students in poverty and the number of students not proficient on ACAP exams. This comes out to less than $50 per student. (This is separate from the At Risk funding allocated to the ALSDE.)
• $80 million for the TEAMS program, level funded from FY24, which was the ALSDE request. 
• $16.3 million for Special Education teacher stipends, providing a $1,200 stipend to each special education classroom teacher. This is $11.6 million higher than the FY24 allocation, but less than the $34 million ALSDE request.
• $2 million for Current Units to be used for the start-up or conversion of charter schools.

Alabama State Department of Education:

• $142.8 million for the Alabama Reading Initiative (ARI), a $48 million increase over FY24. 
  • $36.8 million is earmarked for Reading Coaches, level funded from FY24. The department requested $61.6 million for this specific expense. 
• $68 million for implementing the Alabama Numeracy Act through the ALSDE Office of Math Improvement. This was higher than the FY24 allocation of $40 million and the department’s request of $63.8 million.
• $30.9 million to continue implementation of the 2023 Principal Leadership and Mentoring Act. This matches the request from the ALSDE for the program, of which: 
  • $3.5 million will be for the ALSDE to run the program
  • $16.5 million will be for principal stipends
  • $8.5 million will be for assistant principal stipends
  • $2.3 million will be for additional stipends for both principals and assistant principals in hard-to-staff schools
• $17.5 million for English Language Learners, a $1.3 million increase from FY24. 
  • This includes a $2 million earmark for regional English Language specialists, level funded from F24. 
• $0 recommended for struggling readers beyond grade 3. This line item received no funding in FY24. The Board had a significant discussion about this request and how they could support older students struggling to read. The department’s request was $22 million. 
•  $13.5 million for Advanced Placement, a 2 million dollar increase over FY24
• $6 million for Computer Science, level funded from FY24, which was the ALSDE request.
• $2.8 million for the Alabama Summer and Afterschool Program, which is level funded from FY2024 
• $19.4 million for Student Assessment, level funded from FY24. This is less than the $23.3 million requested by the ALSDE. 
• $1.85 million for the Office of School Improvement, an increase from FY24’s $950,000. 
• $11 million for Turnaround Schools, an increase of $1 million over FY24. 
• $0 for the College and Career Readiness Grants line item. Funding was allocated for this in the supplemental budget instead (see below). FY24 appropriation was $15 million, and the request for FY25 was $20 million.
• $2.6 million for a new Data Literacy line item to be spent in collaboration with Innovate Alabama 
• $2.75 million for Early Childhood Classroom Assessment. 
• $11.2 million for school safety, security, and climate. 
  • $4.7 million of this would be for Mental Health Service Coordinators, level funded from FY24. This is less than the department’s request of $9.2 million for this line item.

Supplemental Budget:

The supplemental budget totals $651 million, of which almost $400 million is for K-12 schools and programs. Here’s the breakdown:

Local Boards of Education:

• $50 million for new school busses
• $28.8 million for core subject textbooks
• $8.1 million for the Foundation Program
• $2 million for the opening of new charter schools through current units

State Department of Education:

• $15 million for summer reading camps
• $100 million for school safety grants (Gov. Ivey stated this as a priority in her State of the State address – read our recap here)
• $35 million to replace student tablets or computers through a matching grant program
• $17 million for College and Career Readiness grants
• $50 million for Education Savings Accounts through the CHOOSE Act (HB129/SB61)
  • There is an additional $1 million for the Department of Revenue to administer the CHOOSE Act program

Other Funding:

• $30 million for the Alabama School of Healthcare Sciences in Demopolis, another priority of Gov. Ivey’s from her State of the State address
• $2.5 million for Ed Farm
• $2,450,000 for the Talent Triad, a new initiative helping to connect job seekers with industry through the use of Learning & Employment Records (LERs). This work has been led by Governor Ivey’s Office of Education and Workforce Transformation.

Dr. Eric Mackey, Superintendent of Education – ALSDE Budget Request 

State Superintendent Dr. Mackey presented the ALSDE’s budget request for FY2025 and shared some updates on the department’s work.

• Advanced Placement: $13.5 million for AP, an increase of $2 million over FY24.
• Alabama Numeracy Act: $63.8 million, a $23.8 million increase.
• Alabama Reading Initiative: A total of $158 million, including $61.6 million for K-3 reading coaches and $2.75 million for early childhood classroom assessment.
• Struggling Readers Beyond Grade 3: $22 million for a line item that received no funding in FY24, despite a $3 million request.
• Computer Science: Level funded at $6 million. 
• Mental Health Service Coordinators: $9.2 million, an increase of $4.5 million. 
• Student Assessment: $23.4 million, an increase of $4 million.
• Principal Leadership & Mentoring Act: A total of $30.8 million, including $16.5 million for principal stipends, $8.4 million for assistant principal stipends, and $2.3 million for additional stipends for those working in hard-to-staff schools.

The State Board of Education voted to send this request to the Governor at their October meeting. To see the full budget request spreadsheet from the ALSDE, click here.

State Budget Projections 

Kirk Fulford of the Legislative Fiscal Office (LFO) presented on the tax revenues that go into the Education Trust Fund budget. Due to federal funding during the pandemic, state tax revenue has been unusually high for the past several years. 

• In FY2021, revenue was $8.6 billion
• In FY2022, revenue was $10.4 billion
• In FY2023, revenue was $10.4 billion

FY23 ended in September 2023. With another year of strong revenues, more tax revenue came in than the Legislature appropriated, leaving a balance of $2.5 billion. In years past, some of this money would have been available for a supplemental bill. However, most of that money is required to be allocated to specific funds and savings accounts, including the following:

• Budget Stabilization Fund:A savings account created by the Rolling Reserve Act that the legislature can draw from if proration is declared: $111 million. 
• Educational Opportunities Reserve Fund: A new savings account established last year that the Legislature can use to bolster spending if revenue drops, but does not require proration: $412 million. 
• Advancement & Technology Fund: A savings account with a formula-based distribution to local school districts and colleges for one-time projects such as equipment, technology, instructional support, maintenance, etc.: $1 billion. 
• Reversions Available for Reappropriation (unspent funding from state education agencies that will be reappropriated to them): $343 million

That leaves, at most, $651 million that legislators can appropriate in a supplemental budget this year. This is significantly lower than the $2.8 billion the legislature appropriated in last year’s supplemental budget, and will likely continue to decrease in the coming years.