State lawmakers are taking the first steps in what could be the first major overhaul of public school funding in nearly 30 years.
After about a year of informal discussions, the Legislature will this year formally study changing the K-12 funding structure to one based on system and student population needs, according to resolutions filed last week by Sen. Arthur Orr, R-Decatur, and Rep. Danny Garrett, R-Trussville.
“There are more improved methods of funding education that have been trending across the nation that are based on student needs rather than head counts and it’s time to consider moving Alabama to such a model,” Orr told Alabama Daily News.
“The Foundation Program treats all students the same, and they are not, as far as the cost to educate them,” Orr said.
The Foundation Program funds basic school school functions, including teacher salaries, on a per-pupil basis and based on anticipated costs of expenses.
Whether students have special needs, are English language learners, come from high-poverty homes, or are gifted learners, the educational resources they need are greater than that of other students and aren’t accounted for in the current per-pupil funding model, Orr said.
The Foundation Program doesn’t allow lawmakers to easily address the “changing needs of students and school districts and no clear way to link state funding priorities to local spending decisions and the outcomes of various student groups,” the resolution says.
Alabama is one of six states that funds schools based on the amount of available money divided by school populations.
“Right now, we fund basically on headcount and don’t necessarily take into account the specific needs of systems,” Garrett said recently on Alabama Public Television’s Capitol Journal. “A lot has changed in the years since we adopted that formula.”
House just passed a resolution from Education Budget Chairman Danny Garrett calling for a study on Alabama’s school funding formula. Will be a big topic over the summer & next year. Garrett spoke about the need for it on the last @CapitolJournal…#alpolitics pic.twitter.com/E4qLYil3YK
— Todd Stacy (@toddcstacy) April 23, 2024
He also said the formula change could give systems more flexibility and discretion over spending.
The A+ Education Partnership is one of the organizations providing input on the potential change.
“Research shows that how we fund our schools makes a difference for students,” A+ President Mark Dixon told Alabama Daily News. “Not just for test scores, but for long-term earnings and educational attainment. By investing in student needs and giving schools the flexibility to address them, we can prepare every child for success in a competitive, fast-changing workforce.”
In 2022, Tennessee switched to a student-based formula. It allocates a “base amount” of per-student funding, followed by weighted funding based on population characteristics, including poverty or special education needs. There’s also “direct funding” for learning opportunities beyond everyday instructions. At the top of the funding pyramid is outcomes funding that incentivizes student achievement.
Orr and Garrett chair their respective chambers’ education budget committees. They’re considering a $9.3 billion education budget in 2025, about 68% of which is for K-12 education. The Foundation Program currently spends about $7,000 in state dollars per student.
Per-pupil funding in Alabama has increased by more than $800 per student between 2007-2008 and 2020-2021, but still ranks 41st nationally in total per-pupil funding, Orr said. It was $13,180 in fiscal 2021. But when adjusted for inflation state per-pupil funding actually decreased by more than $700 in the same period, the senator said.
Orr and Garrett will likely lead the task force and a plan for composition in the next few weeks.
Orr told ADN the conversations will include local school funding and current discrepancies created by the required 10-mill local match.
“That will also be on the table because there is a sense of resentment under the Foundation Program that the 10 mils is insufficient and you’ve got some areas of the state not contributing to education at the local level as they should,” Orr said.
Findings will be delivered to the governor and legislative leadership by Feb. 1, 2025. That’s right before the start of next year’s legislative session and Orr expects to have legislation developed by then.
In 2023, lawmakers created a new education savings account, the Educational Opportunities Reserve Fund. Orr on Friday said next year that account will have about $1 billion in it and at least some of that money could be used to transition the state to a new allocation model.
But he said the process will be slow and deliberate. In Tennessee, some systems were caught off guard, causing confusion.
“We realize that it is a monumental change in how we’ve been doing business for the last 30 years,” Orr said.
And any changes will be weighed against fiscal conditions. Revenue growth in the ETF is now flat. If it were negative, Orr said the state would likely pause any significant changes to the distribution model.
A request for comment from the Alabama State Department of Education about the resolutions was not returned.