AL Legislative Session 101: The Education Trust Fund Budget

Alabama’s Legislative Session typically begins on the second Tuesday in February. Every four years, Session begins on the second Tuesday in January to allow for legislators enough time to return back to their counties prior to election season – These years include 2026, 2030, 2034, and so on. Education policy is always a huge priority. Here’s what you need to know about the Legislature’s process for passing the education budget.

THE EDUCATION TRUST FUND PROCESS

One of the only constitutionally-mandated actions the legislature must take while in session is to pass two budgets: the Education Trust Fund and the State General Fund. The Education Trust Fund budget, or ETF, is the larger of the two. It funds all public schools in the state, including K-12 school systems, two-year colleges, and public four-year colleges and universities. Historically, the ETF grows about 3-4% each year. For Fiscal Year 2026, the ETF budget was about $10 billion.

When we think about the ETF, the current session year always funds the next year’s school budget. For example, the 2026 Legislative Session will fund Fiscal Year 2027, impacting the 2026-2027 School Year. The budget process and timeline typically looks like this:

  • STEP 1: State departments, such as the Alabama State Department of Education and the Alabama Department of Early Childhood Education submit their requests to the State Finance Director’s office in the fall.
  • STEP 2: The State Finance Director works with the Governor’s team to develop the Governor’s budget and policy priorities. This recommended budget is proposed by the Governor when Legislative Session begins in January or February.
  • STEP 3: The Governor’s Budget is introduced as a bill in the House and Senate. The legislative committees responsible for the budget (Finance and Taxation Education in the Senate, or Ways and Means Education in the House of Representatives) take that budget and align it with their priorities.
  • STEP 4: The budget follows the regular legislative process of becoming law, and goes into effect after the Governor signs it. This process takes most of the Legislative Session, and typically concludes in April or May. For more information on how legislation is passed in Alabama, check out this blog post.
  • STEP 5: Funds are distributed to their respective entities, including colleges, universities, local school systems, state departments, and other organizations.

 

 

WHAT IS THE EDUCATION TRUST FUND?

The Education Trust Fund includes funding for public higher education and public PreK-12 education. It covers the funding that goes to local school districts directly, funding for the Alabama State Department of Education (ALSDE) and other state agencies, and various educational programs offered by nongovernmental organizations. 

A significant part of the ETF is called the Foundation Program. This pot of money is allocated on a formula basis to school systems every year for the core functions of running K-12 schools: teacher salaries, instructional materials, transportation, and other necessary resources for educating Alabama’s students. Foundation Program funding is allocated to districts based on the number of resources they need, which is estimated from the number of students they have. Out of the total ETF budget, about 60% is allocated through the foundation program.

On top of the Foundation Program, the RAISE Act allocates additional funding to public school districts based on their students’ unique needs. As of 2025, funding for the RAISE Act comes partially from the Foundation Program, and partially from the Education Opportunities Reserve Fund. For more information on the RAISE Act, check out our one pager. 

Beyond the hybrid model Alabama uses to fund the basic needs of schools and students, local school systems also receive funding through the ALSDE for specific uses, such as mental health service coordinators, special education, reading coaches to support the Alabama Literacy Act, and much more. Each year, the Legislative Services Agency publishes a spreadsheet on the ETF, which lays out all of the line items and their amounts.

WHAT ELSE IS FUNDED?

School funding moves through the legislature like bills. In a normal year, the legislature will pass the main ETF budget as well as other budget bills that impact school funding. These bills include:

  • Education Trust Fund Budget – Funds schools and programs for the following school year.
  • Education Trust Fund Supplemental – Distributes leftover money from last year’s budget to schools and programs in the current year. 
  • Advancement and Technology Fund – Funds for one-time expenses, such as repairs to facilities, distributed to schools based on a preexisting formula.
  • Education Opportunities Reserve Fund – Savings account used for transformative education programs. 2025 was the first year that a bill pulled funds from this account.
  • Any other education legislation that requires funding will have language within it on where funding will come from, and will be cross-referenced in one of the above budgets.

WHAT’S NEXT?

A+ will be keeping you up to date throughout Session with everything you need to know regarding bills and budgets moving through the Legislature. To stay connected, sign up for the Gist and follow the Budget Watch!

Back to Posts