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Foundation Law
Funding Public Education
Legislative Districts
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code to get your state legislators' contact information.
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This is a general discussion of the Alabama Foundation Program that was first established for the 1995-96 school year. This program replaced a previous funding process known as the Alabama Minimum Program.
This article is not meant to be detailed nor definitive on the topic. The reader should seek details in the Alabama Code (lawful statutes), the Administrative Code under Education (policies passed by the Alabama State Board of Education), and court cases. The reader should also recognize that changes have occurred since first enactment and future changes are likely. Specific appropriation amounts that are attached to requirements in the Foundation Program are also subject to change. The reader should reference the most recent Education Appropriation Act passed by the legislature and signed by the governor to gain knowledge of the exact appropriations for the fiscal year.
Beginning with the 1995-96 school year, the funding process for public education in Alabama took a dramatic turn from the previous process known as the State Minimum Program. The new process – the Foundation Program – was largely prompted by an equity lawsuit brought to the state courts by a number of poorer school districts in the state. The courts ruled in favor of the plaintiff party and focused on the equity question. Adequacy of funding was not directly addressed and remains an outstanding concern to date. Excerpts from the March 1993 liability order of the court include:
"It is the responsibility of the state to establish, organize, and maintain the system of public schools; the system of public schools shall extend throughout the state; the public schools shall be free and open to all schoolchildren on equal terms; equitable and adequate educational opportunities shall be provided to all schoolchildren regardless of the wealth of the communities in which the schoolchildren reside." The court order also outlined a listing of adequate educational opportunities that included:
For decades public education in Alabama had always been largely funded at the state level. In fact, Alabama always ranked somewhere between 4th and 6th in the nation in the percent of state support for education. In this aspect the state was “way ahead of its time” on the equity question. The state Minimum Program was driven by an Average Daily Attendance (ADA) of students formula that was equity driven. A local school system generally received 70% to 80% of its total budget from the state legislature. Initially, disparities in state dollars sent to local systems only occurred on “attendance factors” during the first four months of enrollment. Some systems reported at or near 100% attendance while others reported 8% to 10% less than perfect attendance. For large systems, this could mean millions of dollars of “reduced” state funding. Nonetheless, the Minimum Program was based on the attendance of students in the district. The ability or inability to produce local dollars in the local budget drove other inequities of funding. Property or ad valorem taxes were the primary focus of most districts to raise additional revenues at the local level. This remains largely true to the present time. The ability to raise local revenue through property taxes was based mainly on millage rates and the assessed value of property. These factors were quite different across the state – from school district to school district. There is a long history of trying to produce equity on the value of property assessment throughout the state (compelled by the federal courts), millage rates, and caps on how much a property owner (public and private) would have to pay. Efforts to increase local revenues through property taxes have been mostly unsuccessful through the legislature and only minimally successful when put to the vote of the people at the local level.
As the state Minimum Program developed historically, a change in the “equity” process also occurred. Systems that enjoyed significant enhancement of their local budget through local funding could also hire more teachers and other staff above that which would have been possible by only using state funds. As the Legislature developed a state budget for each year, political pressures mounted to provide state funds for all teachers and educational staff regardless of whether the source of funds was state or local. Thus, for example, when the Legislature passed a mandated pay raise for all education employees, the richer school systems used their political prowess to include language in the legislation that covered all teachers – including those that had been hired locally with local funds. This spilled over into other employee benefits such as medical insurance premiums, Social Security, and retirement. As the years passed, “richer” systems were getting many more dollars from the state on a per student basis compared to the “poorer” systems. The Equity Lawsuit arose from this state funding disparity that was only worsening as time moved forward.
Major revisions in state laws affecting public education were enacted by the 1995 Alabama State Legislature. The state budget reflected these changes and produced a totally new state funding process.
(One should note that the State of Alabama has two major state budgets – The Education Trust Fund (ETF) and the General Budget. The ETF is the larger. Certain taxes are “earmarked” for these funds, and although there have been attempts to legislatively produce one common fund, such efforts have been unsuccessful. The ETF has enjoyed the benefit of having many of its “earmarked” revenue sources come from areas that are economically growth sensitive. These include the state income tax (corporate and individual), sales tax (4% for the state), and utility taxes. Thus, over the years, the ETF grows on an annual basis without any new taxes based on economic growth that has ranged from approximately 4% to around 10% or more. Basically, the ETF is a reflection of the economy of the state and has a built-in inflation (or deflation) adjustment.
One should further note that the state ETF and the annual state budget includes funding for K-12, state two year institutions, state four year institutions (colleges and universities), and a category of institutions and enterprises which are non-public. Each year the legislature wrestles with “dividing the pie” among these categories. The new Foundation Program enacted in 1995 only applies to K-12 state funding.)