Alabama

Funding priorities for p-12 and/or higher education

In June 2019, the Alabama legislature passed and Governor Kay Ivey signed the largest education budget in the history of Alabama for fiscal year FY2020. The budget, which runs October 1 through September 30, totals $7.1 billion and includes a 4% raise for education employees working in PK-12 public schools and community colleges. Revenue continues to increase as the state economy is strong and unemployment numbers remain low. Universities received increases in state funding of approximately 5.5% to 6%. The budget provides increased funding for the fleet renewal program for school buses, a one-time appropriation to modernize school libraries, increased funding for the Alabama Reading Initiative, which provides reading specialists and professional development and technical assistance to schools, and increased funding for the English Language Learner (ELL) Program by providing a 1.5 pupil weighting for school districts where the percentage of ELL students exceeds 10% of the total enrollment.¹ The Governor has prioritized the expansion of the state's PreK program, which will now serve approximately 40% of the state's 4-year-olds.

Pressing state issues affecting p-12 and/or higher education funding

Two issues greatly impacting P-12 and higher education funding in Alabama are insurance and retirement funding for employees. Both are reoccurring topics for the legislature:

1. 1. Alabama provides the Public Education Employee's Health Insurance Plan (PEEHIP) that covers all employees of P-12, community colleges, certain four-year colleges, and all education retirees. In 2019, the legislature allocated $800 per month per employee to fund PEEHIP (an annual total of $9600 per employee). This is in addition to the premiums and copays of participants. In 2016 the PEEHIP Board, which is responsible for establishing premiums and ensuring the financial solvency of the plan, passed a "spousal surcharge" of $100 per month to include a spouse on a family plan which was collected beginning in 2017. This was a painful hit on the pocketbooks of employees since it was, essentially, a $1,200 annual rate increase on family policy premiums for those with a spouse. The Alabama Education Association (AEA) challenged the increase by filing a lawsuit against the PEEHIP Board arguing that the board had violated the state's Open Meetings Act. The trial judge granted summary judgement to AEA and instructed that the $100 per month spousal surcharge be refunded to PEEHIP members. However, the PEEHIP board, which is composed of 15 members including 12 elected by PEEHIP participants, appealed the case to the Alabama Supreme Court. In March 2019 the Alabama Supreme Court ruled that the PEEHIP Board violated the state's Open Meeting Act by discussing this increase in a private meeting and therefore the surcharge is illegal.² Monies have been returned to PEEHIP participants.

2. 2. Participation in Alabama's Teachers' Retirement System, the state managed retirement system for all public education employees, is mandatory for all public education employees. Employees hired prior to January 1, 2013, are Tier 1 employees and are required by state law to contribute 7.5% of their income to the plan. Tier 1 employees qualify for retirement after 25 years of service at any age or with a minimum of 10 years of service at age 60. Tier 2 employees are those hired after January 1, 2013. They are required by state law to contribute 6% of their income to the plan and they will not qualify for retirement benefits until age 62 with 10 or more years of service. The extended service time for Tier employees and lower contribution rates have resulted in a decrease of approximately 20% in potential retirement income for education employees and has made it increasingly difficult to recruit and retain education employees. Legislation was proposed for a new Tier 3 category for future employees that would have enabled them to retire after 30 years of service at any age or a minimum of 10 years of service at age 62. Tier 2 employees would have automatically been converted to Tier 3 employees unless they chose to opt out. However, legislation died...