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Alabama’s education windfall: How lawmakers split $6.5 billion in supplemental funding

BIRMINGHAM, Ala. – When Alabama lawmakers convene for the 2025 legislative session on Feb. 4, they’ll have $525 million in surplus Education Trust Fund tax revenue to allocate. This marks the fourth consecutive year legislators will distribute billions in leftover funds, thanks to conservative budgeting of record tax collections.

But an Alabama Daily News analysis of the past four years of supplemental allocations shows K-12 education received only a fraction of this windfall, while higher education and reserve funds have benefited significantly.

Between 2021 and 2024, lawmakers allocated nearly $6.5 billion in supplemental tax revenue from the ETF. Here’s how it was distributed:

  • K-12 schools: $980 million (15%)
  • Higher education: $1.5 billion (22%)
  • Other entities: $1.2 billion (18%)
  • Reserve funds: $2.9 billion (45%)

By contrast, the regular ETF budget typically gives K-12 schools 68% of available funds, leaving higher education with 26% and other programs 6%. The supplemental allocations deviate sharply from this norm, raising concerns among K-12 education leaders about whether Alabama’s youngest learners are being shortchanged, especially as schools continue to grapple with rising costs and post-pandemic academic recovery.

While caps on spending in the ETF have long been in place, the supplemental appropriations have only become a major focus recently, as record tax revenues created record surpluses. Advocates for K-12 schools argue that without the caps, what is now supplemental spending would follow the regular budget 68/26 split between K-12 and higher education.

“We had a couple of years where we obviously did not feel like we received our share,” said Ryan Hollingsworth, Executive Director of School Superintendents of Alabama.

“In the budget, we would have received a whole lot more money than with it being in the supplemental,” he said. “Because we’d have followed the historical division with K-12 and higher ed. So by being in the form of the supplemental, we didn’t get what we would have if it had been in the normal budget process.”

Alabama Superintendent Eric Mackey echoed this perspective.

“As a matter of principle, we always advocate for K-12 schools to be treated equally whenever public funds are available and that includes supplemental budgets,” Mackey wrote in a statement to ADN. “For FY26, as in past years, we are requesting supplemental funds be made available to K-12 and higher education closely following the split of the regular budget.”

A breakdown of amounts of supplemental revenue is shown in the chart below. Click here if you are unable to see the chart.  

Supplemental revenue was invested strategically, Garrett says

House Education Budget Chair Danny Garrett, R-Trussville, said legislative leadership prioritized strategic, one-time investments to address the state’s pressing needs. 

“We certainly do consider how much of it's going to higher ed, how much is going to K-12, how much is going to community college, how much is for other workforce development type projects,” Garrett explained. “We do look at all of that. But we don't really have any hard rule that a certain percent has to go to a particular bucket.”

Garrett emphasized that supplemental funds were invested in ways designed to improve the state's future.

"At the end of the day, we’re trying to look at how we can best spend the money to have the best impact on improving, moving the state forward," he said. "Whether that be in the workforce, whether that be in educational outcomes or whether that be in (school) security.”

Some priorities included addressing workforce challenges. 

“We have the lowest labor participation rate in the country," Garrett said. "What can we do to have job training, skills training - things like that." 

In 2023, Garrett noted lawmakers returned $393 million in rebates to taxpayers to Alabamians from supplemental funds, highlighting the complexity of balancing competing priorities.

Discussions are already underway about how to allocate the $525 million in supplemental funding during the next legislative session, but no priorities have emerged, Garrett said.

The table below lists each allocations in the four supplemental bills in 2021, 2022, 2023 and 2024. Click here if you are unable to see the table.

Why is there so much money leftover?

Alabama’s budgeting rules cap annual spending increases, creating a surplus when tax revenues exceed the education budget cap. Lawmakers then decide how to allocate the extra funds, typically for one-time expenses like capital improvements or pilot programs.

Higher education got much needed capital funding

A significant portion of the $1.5 billion in higher education supplemental funding went to deferred maintenance on campus facilities, including ADA compliance and health/safety upgrades. Alabama Commission on Higher Education Executive Director Jim Purcell said deferred maintenance needs still total $4.1 billion over the next five years.

“We’re still trying to catch up from 2008,” Purcell told ADN. Deep cuts to higher education funding during the Great Recession were only partially offset by tuition increases, he added, but they’re getting close to getting back to 2008 levels. 

Alabama doesn’t provide state funding for capital expenses for higher education, he said, making upkeep for buildings - things like keeping roofs in good shape and updating HVAC systems - difficult. 

“In our deferred maintenance funds, our target was for academic and research buildings, and the priority was given for ADA compliance and health and safety,” Purcell said. Why buildings are not fully ADA-compliant is “problematic,” but having the funds to address those projects is helpful. 

“It sort of fills the gap,” he said. 

The ADN analysis found lawmakers allocated nearly $1 billion in funding for 100-plus capital or maintenance projects for two- and four-year colleges statewide, and another $220 million for 21 workforce training programs across the state. 

The largest single allocation for higher education was $177 million to shore up the Prepaid Affordable College Tuition program in 2022.

K-12 leaders call for fairer allocations

Alabama Education Association Government Relations Manager Allison King said her organization would like to see supplemental revenue allocated according to the historical ETF percentages.

"We'd like to see the supplemental mirror the ETF allocations in order to best serve the 700,000-plus students in Alabama's public K-12 schools," King said.

For comparison, there were 261,000 students enrolled in public higher education institutions in Alabama in 2023.

Had the supplemental allocations followed the historical split of 68/26, K-12 schools could have received $2.4 billion - nearly three times what K-12 schools actually received.

ADN’s analysis revealed that K-12’s $980 million allocation over the four-year period included:

  • $680 million for capital projects, including $210 million from the Lt. Governor’s Capital Grant program.
  • $40 million for school safety grants.
  • $39 million for summer reading and math camps required under the Alabama Literacy and Numeracy Acts.
  • $25 million for new core subject textbooks.

Costs have risen, Hollingsworth said, and even with federal pandemic relief money - which is gone now - the additional funding would have been a boost to schools helping K-12 students recover academically. He also noted that state transportation funding only covers 81% of costs, leaving districts to make up the difference.

“We can talk about record budgets. We can talk about record supplementals, but go back to the most basic thing, right? We’re only giving our school districts 81% of the money that it costs to run transportation - which is not counting buying buses.”

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