BIRMINGHAM, Ala. — An Alabama lawmaker is asking questions about whether public schools should be allowed to receive education savings account funds and charge unlimited tuition amounts for out-of-district students or if new rules are needed.
Senate Education Budget Chairman Arthur Orr, R-Decatur, said he is concerned that public schools can collect both ESA funds and regular state education funding for the same student. Lawmakers approved ESAs in Alabama last year, allowing parents to access $7,000 per year through a refundable tax credit to use toward tuition and other education expenses at private schools. In some cases, ESAs can be used at public schools, too.
“I would term that as double-dipping, more or less,” Orr said. “Because not only do (schools) get the tuition, they get the (average daily membership funds),” he explained. A school district receives state education funding based on the previous school year’s ADM over the first 20 days of school.
He’s unsure whether this was the law’s intent, but it is currently allowed.
Under the CHOOSE Act, eligible students can use ESA funds for tuition and other education expenses at participating schools. A public school may accept ESA payments only if it is outside a student’s attendance zone and charges that student tuition.
Alabama is the only state that explicitly allows public schools to receive ESA funds for students enrolled full-time in a public school.
Not all public schools accept out-of-district students, but Alabama Association of School Boards Executive Director Sally Smith said school boards should have made a decision on whether they do.
“The second question is if you do that, do you charge tuition?” Smith said.
A review of districts statewide found out-of-district tuition ranging from $400 per year in Madison City schools to $2,000 in Jacksonville City and $7,000 in Lee County. However, no central database tracks tuition rates.
About 32,850 public school students attend a school outside of their zoned district, including up to 13,000 full-time virtual students, according to data from the Alabama Department of Education. Virtual students don’t pay tuition, according to state officials. The state does not track tuition amounts or out-of-district policies, as those are determined by local boards of education.
Beyond whether schools receive ESA funds in addition to regular state funding, lawmakers are questioning whether districts should face limits on tuition charges.
Orr became concerned after Lee County set its tuition at $7,000 –– the full value of an ESA set in the 2024 law.
“As a sponsor of the (CHOOSE Act), tuition was not contemplated at that level,” he said. “The $7,000 (tuition charge) is not acceptable policy.”
Currently, no state law limits how much a district can charge for out-of-district tuition. However, Orr pointed to a 1979 Alabama Attorney General opinion that says while public school districts can charge tuition, it shouldn’t exceed the local tax revenue collected and allocated per student:
“…local boards of education are not authorized to charge unlimited fees or tuition…. It is our opinion that a local board of education may charge and require a pupil who lives outside its jurisdiction, to pay a tuition fee not to exceed the sum of the local tax effort devoted to school purposes divided by the number of students attending school within the jurisdiction of the board.
“In other words the amount of tuition that may be charged is limited by the amount of local financial support a school system receives.”
Lawmakers are considering adding student-based funding to the state’s current public school funding formula but there’s nothing in the formula that impacts out-of-district tuition policies.
Orr said there are two possible ways to address excessive tuition charges: limit tuition through state law or allow the Alabama Department of Revenue to set restrictions through rulemaking.
“More conversation is needed as to whether any CHOOSE Act funds should be used for out-of-district fees like that,” Orr said. “If the answer is yes, then (tuition) needs to be limited to the local tax contribution amount.”
Lee County Superintendent Mike Howard told Alabama Daily News on Monday that the district will drop its out-of-district policy altogether before the start of next school year.
This story was updated at 12:25 p.m. to include the number of public school out-of-district students.
This story was updated on 3/14/2025 at 12:30 p.m. to clarify: Alabama is the only state that explicitly allows public schools to receive ESA funds for students enrolled full-time in a public school.