Joint School Funding

Legislative
Commission Meeting

Tuesday, November 12
 Meeting Objectives

1) Re-visit the challenges of the current system and

how a student weighted formula could address
these challenges.
2) Present examples of what an Alabama-specific
student weighted model could look like and get
feedback from commission members.
 Agenda

1) Challenges: What are the challenges with our current

formula? Chairman Arthur Orr and Chairman Danny Garrett

2) How could we address these challenges? A Student

Weighted Formula - Jennifer Schiess, Bellwether

3) Can Alabama afford to transition to a new formula? Kirk

Fulford, LSA

4) Models: What could a new Alabama student weighted

formula look like? Alex Spurrier, Bellwether

5) Accountability - Jennifer Schiess, Bellwether

 Overview of Process

● No decisions have been made. The models you will see

today are a starting point for discussion.

● Today is about learning more about what’s possible.

● The Legislative Commission will help us think through

the decision-making process.
Commission
Commission
Commission Meeting 2
Meeting 3 Commission
Meeting 1 August 15, 11-1 pm
November 12, 11-1 pm Meeting 4
May 21 , 11-1 pm Overview of
Present example TBD
Overview of Challenges with FP
models to
Foundation & Benefits of a
Commission & Review Report
Program Student Weighted
request feedback
Formula
What are the challenges with
our current system?

Chairman Arthur Orr and

Chairman Danny Garrett
Alabama’s current school funding system creates
challenges for school districts and policymakers.

● Outdated: We haven’t changed our formula in over 30

years.

○ We need to adjust our formula to address 21st century

needs and to keep up with the rest of the country.

● Doesn’t address student needs: Our current formula does

not sufficiently address student needs.

○ Research shows that students that have greater

educational needs (i.e. ELL, students with disabilities,
students in poverty) require more support to meet
academic goals, requiring greater investment of
resources.
Alabama’s current school funding system creates
challenges for school districts and policymakers.

• Under-resourced: Alabama’s current approach to school funding lags

behind most states; peer states have acted to address similar
shortcomings.

• Inefficient: The Foundation Program and At-Risk funding do not

effectively target funding to meet student needs.
o Current state funding through the Foundation Program is poorly correlated with student
need.
o At-Risk funding per-pupil is correlated with poverty rates, but funding levels are minimal –
the equivalent of less than a 1% weight for poverty.

• Inflexible: The Foundation Program is highly prescriptive and limits the

ability of local leaders to direct funding to best meet student needs.

7
 Under-Resourced
In raw dollars, state funding in Alabama increased by
more than $1,100 per student from 2007-08 to 2021-22

8
Source: U.S Census Bureau
 Under-Resourced
But after adjusting for inflation, Alabama’s state funding
decreased by $860 per student from 2007-08 to 2020-22

9
Source: U.S Census Bureau; All calculations have been adjusted for inflation using the Consumer Price Index and converted into constant 2021 U.S. dollars.​
Inefficient

Alabama’s current school funding system directs

relatively little funding to support student needs

Only 1.2% of $5.3 billion of

funding for Alabama schools in
FY24 was targeted to address
specific student learning needs.

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Inefficient

Alabama’s current school funding system does not

drive meaningfully different funding by student needs

As poverty rates increase, funding remains flat, indicating that

the current system does not differentiate funding substantially
based on student poverty – the result of a system that does not
meaningfully drive funding based on student needs, including
poverty, special education, and English learner status.

Amounts represent total per-pupil funding through

the Foundation Program, School Nurses, and
Technology Coordinator line items, plus At-Risk
funding.

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Inflexible
Alabama’s current funding system significantly
influences how districts build their budgets

One-Size-Fits-All Constraints on Local

Budget Influence Leadership

The current foundation Line items for student

program’s calculations for staff materials, technology, library
“units” significantly influences enhancement, professional
how local districts allocate the development, and textbooks
largest part of their budget: are directed by state funding
personnel. allocations, not local district
priorities.

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A student-weighted
formula would help
us to address each of
these challenges.
 Policy Goals

If we decide to move forward, we would want a new student-

weighted formula to accomplish the following:

1) We want to provide more funding to better meet the needs

of students.

2) We want all districts to see increased per-pupil funding.

3) We want school systems to receive more flexibility in

allocating the funding they receive through the state’s
funding formula.

4) We want systems to retain discretion over local funding.

Model 1 does a better job of targeting funding as student
poverty increases, but doesn't vary much from the
current system for many districts

SWF Model 1 shown in color

Current funding per-pupil

shown in empty circles

15
By increasing the base and the low-income and special
education weights, Model 2 produces greater gains for
more districts compared to the current system

SWF Model 2 shown in color

Current funding per-pupil

shown in empty circles

16
With the greatest investment through the highest base
and weights, Model 3 shows the greatest change in
funding compared to the current system

SWF Model 3 shown in color

Current funding per-pupil

shown in empty circles

17
These three SWF models illustrate what is possible
under different revenue scenarios

Each set of colored points

represents potential funding
under Models 1, 2, and 3

Current funding per-pupil

shown in empty circles

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 What is the best way to
address these challenges?
A Student Weighted Formula

Jennifer Schiess,
Bellwether
Money matters: Multiple academic studies link
increased state formula funding with positive student
outcomes
● After 10 years, NAEP scores in low-income districts improved by
School Finance Reform 0.1 standard deviation, roughly equivalent to 72 additional
and the Distribution of days of learning
Student Achievement, ● Spending $1,000 more per student in low-income districts
LaFortune et al, 2016 closed roughly one-third to one-half of the test score gap
between low-income and high-income districts

A 10% increase in spending over all 12 years of schooling resulted in:

The Effects of School
● 0.27 more years of completed education for all students, 0.43
Spending on Educational
years for low-income children
and Economic Outcomes, ● 7.25% increase in adult wages for all students; 9.5% increase for
Jackson et al, 2015 low-income students

A $1,000 increase in per-pupil spending over 4 years leads to:

The Distribution of
● increased test scores (0.0352 standard deviations)
School Spending Impacts,
● increased graduation rates (1.92 percentage points)
Jackson et al 2021 ● increased college going rates (2.65 percentage points)

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La Fortune (2016), Jackson (2015), Jackson (2021)
In our work, we assess school funding formulas
according to four principles:

ADEQUACY
• Is there enough funding in the system to enable schools to meet the state’s educational mandate?
• Does the policy fulfill and protect the state’s constitutional responsibilities to oversee an education system
that can serve every child?

STUDENT NEED
• Does the policy allocate greater resources toward students with greater educational needs?
• Does it factor in local funding capacity in ways that enable the efficient use of limited state dollars to target
the greatest needs?

RESPONSIBILITY
• Does the policy make clear the locus of decision-making for funding and budgeting, and split local and state
responsibilities appropriately?

TRANSPARENCY
• Are policies clear and understandable on how funding is calculated and distributed? Are formulas only as
complex as they need to be?
• Does reporting of revenue and expenditures create a feedback loop between student needs and state
funding?
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 Every funding formula type has tradeoffs, but student-weighted
formulas are best-aligned with all four principles

Unlike other formula types, student-weighted formulas specifically and directly anchor
on student needs associated with increased educational cost

Principle Student-weighted Resource-based Program-based

Lower potential to ensure funding

High potential to ensure funding
Straightforward mechanisms to matches costs or needs
matches costs
Adequacy adjust funding to match student
needs Programs have to map both to costs to
Depends on costs mapping to needs
deliver and to needs

Highest potential to target funding Lower potential to target funding to

Lowest potential to target funding to
Student Need to students in need of additional students in need of additional
need at the student level
resources/supports resources/supports

Most opportunity for flexibility in

spending decisions
Flexibility can be hampered by cost
Responsibility assumptions or spending limitations
Least flexible for local decision-making
Clearest throughline for
accountability

Requires clear reporting Often simplest to understand

structures/requirements Often intuitive from a financial
Transparency planning POV, but can be Revenues and expenditures likely to
Clearest connection to student disconnected from student needs track, but potentially not with need or
needs outcomes

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Student weighted funding formulas allocate additional
funding for students with greater needs

At a high level, SWF follow a relatively simple structure beginning with a “base” amount
to applies to every student enrolled and supplemented with “weights” that provide
additional funding as a percentage of the base.

$$$$ $ $ $
Economic
Student Weighted Base Amount Disadvantage ELL Weight
Funding Amount Weight

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Building a student weighted funding formula requires
making several key decisions…

States may need or want to address

additional policy priorities, such as
community characteristics like geographic
sparsity (i.e. Rural) or concentrated poverty,
Other through targeted weights and funding
weights streams.

Student poverty, special education status,

and English learner status are the most
Essential weights for common characteristics represented by
student needs weights in a student-based funding formula
and account for associated need for
resource-intensive learning supports.

A base represents the cost of educating of a

student without additional needs and is the
Base amount foundational building block for the rest of the
formula.

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 Can Alabama afford to
transition to a new formula?

Kirk Fulford,
Legislative Service Agency
 EOY ETF
Beginning Balance $2,518,997,462
Total Receipts (w/Projected September) $10,660,548,592
Total Available $13,179,546,054

Condition LESS:

FY 2024 Base Appropriations

Reappropriation of Reversions
$9,480,295,192
$312,059,145
Transfer to Budget Stabilization Fund $111,698,094
Transfer to Advancement and Technology Fund $1,000,000,000
Transfer to Educational Opportunities Reserve
Fund $412,800,727
Total Obligations $11,316,853,158

Ending Balance Before Reversions and

Adjustments $1,862,692,896

Projected Allocation of FY 2024 Ending Balance

in FY 2025:

Transfer to Budget Stabilization Fund $113,168,532

Transfer to Advancement and Technology Fund $873,794,314
Transfer to Educational Opportunities Reserve
Fund $349,517,726
Remaining in ETF (Available for Supplemental
Appropriation) $524,276,588

Total Fund Balances After FY 2025 Transfers:

Budget Stabilization Fund $823,023,626
Advancement and Technology Fund $1,659,238,380
Educational Opportunities Reserve Fund $1,116,293,453
 Allowed ETF Base Appropriations - FYs 2025-
2030

Allowed Growth Over K-12 Portion

Fiscal Spending Allowed Base Prior Year Based on FY Additional K-
Year Growth Appropriations ($) 2025 Splits* 12 ($)
2025 6.25% $9,348,506,169 $549,912,128 $6,362,647,327 $373,435,340

2026 6.00% $9,909,416,539 $560,910,370 $6,744,348,896 $381,701,569

2027 5.75% $10,479,207,990 $569,791,451 $7,132,148,958 $387,800,062

2028 5.75% $11,081,762,449 $602,554,459 $7,542,247,523 $410,098,565

2029 5.75% $11,718,963,790 $637,201,341 $7,975,926,755 $433,679,233

2030 5.75% $12,392,804,208 $673,840,418 $8,434,542,544 $458,615,788

*Represents 68.06% of total base appropriations.

Total Projected ETF Receipts and Expenditures –
FYs 2024 – 2030

Projected Total Projected

Available ETF Projected Total Ending ETF
Fiscal Year Funds* ETF Expenditures Balance
2024 $13,179,546,054 $11,316,853,158 $1,862,692,896

2025 $13,245,600,699 $11,660,553,224 $1,585,047,474

2026* $13,079,272,008 $11,794,464,013 $1,284,807,995

2027 $13,170,830,387 $12,064,015,985 $1,106,814,403

2028 $13,398,347,579 $12,488,576,852 $909,770,727

2029 $13,621,007,564 $12,928,734,517 $692,273,047

2030 $13,837,903,174 $13,385,077,255 $452,825,919

*Assumes resumption of normal growth pattern with beginning balances included. Also assumes 1%
reduction in sales tax on food in FY 2026.
FY 2025 Appropriations for Selected Programs

Program Appropriation
High Needs Special
Education Grant $17,400,000

At-Risk:

Local Boards $21,217,734

Local School Financial
Support $14,715,633

High Hopes $11,980,287

English Learner $18,500,000

Gifted Students $12,350,000

TOTAL $96,163,654
Student Weighted
Formula:
Modeling Options
Today we are discussing three sample models of what
a SWF structure could look like for Alabama

● All of these models are illustrations, not recommendations. They are

intended to support discussion, questions, and feedback to support
future decisions on whether and how to revise Alabama’s school
funding structure

● Each model includes a base amount and weights for five student groups:
○ low-income students,
○ students with disabilities,
○ English language learners,
○ gifted students, and
○ charter school students

● Models vary in the size of the base and each of the weights, and they
vary in their total estimated cost

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Each model for discussion illustrates what policy
options are possible under different revenue scenarios

To illustrate the differences between policy options in different SWF models,

we will look at three models that use varying revenue growth assumptions.

Revenue Growth Assumption Simulated SWF Model

+ $112 million per year for 5 years Model 1

+ $150 million per year for 5 years Model 2

+ $200 million per year for 5 years Model 3

As we move across models, consider what inputs change, how those changes translate
into different funding projections for LEAs, and how the results do (or don’t) align with
priorities among key stakeholders in Alabama.

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Caution: Introducing a gifted weight based on current
gifted identification rates may pose challenges in
implementation

Currently, as district poverty increases,

the percent of student identified as
gifted declines.

Several districts and charters currently

identify very few students as gifted

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Each model changes different parts of the formula to
illustrate different revenue assumptions and priorities

Formula
Model 1 Model 2 Model 3
Component
Base $7,150 $7,200 $7,300

Poverty Weight 17% (dir. cert.) 21% (dir. cert.) 26% (dir. cert.)
Tier 1: 10% Tier 1: 15% Tier 1: 15%
Special Education
Tier 2: 20% Tier 2: 30% Tier 2: 30%
Weights Tier 3: 80% Tier 3: 100% Tier 3: 100%
English Learner
10% 10% 15%
Weight

Gifted Weight 5% 5% 5%

Charter Weight 5% 5% 5%

Cost +$112m per yr. +$150m per yr. +$200m per yr.

34
 Each model changes different parts of the formula to
illustrate different revenue assumptions and priorities
Formula
Current System Model 1 Model 2 Model 3
Component

These funding Foundation + Nurses +

streams are used as Tech Coord., FY24 $5,159,632,550 $5,195,713,896 $5,267,876,589
Base
a conservative $5,267,475,927 $7,150 per-pupil $7,200 per-pupil $7,300 per-pupil
comparison point $7,270 per-pupil
for these SWF
models; further At-Risk, FY24
Poverty $498,472,615 $620,066,306 $778,363,656
$21,208,032
analysis will lead to Weight $1,216 per-pupil $1,520 per-pupil $1,898 per-pupil
$50 per-pupil
more precise
comparisons. Special High-Needs Special Ed. $128,331,466 $164,608,002 $166,894,224
Education Grant, FY24 $1,377 per-pupil $1,766 per-pupil $1,791 per-pupil
Weights $17,400,000 (avg.) (avg.) (avg.)
These funding
streams are not English Learners line
included as English
item, FY24 $27,764,740 $27,958,899 $42,520,826
Learner
comparison points $14,155,334 $715 per-pupil $720 per-pupil (avg.) $1,095 per-pupil
Weight
for models; some $365 per-pupil
may make sense to
fold in future Gifted line item, FY24
$20,313,946 $20,456,002 $20,740,113
iterations; others Gifted Weight $10,925,000
$357 per-pupil $360 per-pupil (avg.) $365 per-pupil (avg.)
may make more $192 per-pupil
sense outside of a
potential SWF. Charter $2,042,308 $2,056,590 $2,085,154
N/A 35 (avg.)
Weight $357 per-pupil $360 per-pupil (avg.) $365 per-pupil
These three SWF models illustrate what is possible
under different revenue scenarios

Each set of colored points

represents potential funding
under Models 1, 2, and 3

Current funding per-pupil

shown in empty circles

36
For each model, we will share the same analysis to
demonstrate its impact

1. Comparison of funding per student under the current system

1
and under the model. Districts above the black line gain funding
under the model.

2. A map showing the relative change in funding per student for

2
each district across a range of categories. Darker green signals
larger gains.

3. An comparison of funding per student under the model (in color)

3
and under current law (in empty circles) for districts based on
their percentage of low-income students.

4. A summary table breaking down funding by the base and

4
weights, compared to similar funding items in current law.
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 Model 1:
+$112 million per year
Under Model 1, LEAs would see an average increase of
$693 per-pupil, but 1 district would receive less

Districts above the line gain

funding per student under the
model

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Under Model 1, districts would see an average increase
of $693 per-pupil, with most districts gaining between
+$32 to +$1,153 per-pupil

Linden City

40
Model 1 does a better job of targeting funding as student
poverty increases, but doesn't vary much from the
current system for many districts

SWF Model 1 shown in color

Current funding per-pupil

shown in empty circles

42
 Model 1 directs $498M for low-income students and
$128M for special education students through weights

Model 1 Total
Funding Stream Current Total Funding Students
Funding
Foundation + Nurses +
Technology Coord., FY24 $5,159,632,550
Base $5,267,475,927 $7,150 per-pupil
721,627
$7,270 per-pupil
At-Risk, FY24
$498,472,615
Low Income $21,208,032
$1,216 per-pupil
410,097
$50 per-pupil
High-Needs Special Ed. Grant,
$128,331,466
Special Education FY24
$1,377 per-pupil (avg.)
93,183
$17,400,000

English Learners line item, FY24

$27,764,740
English Learner $14,155,334
$715 per-pupil
38,832
$365 per-pupil

Gifted line item, FY24

$20,313,946
Gifted $10,925,000
$357 per-pupil
56,822
$192 per-pupil
$2,042,308
Charter N/A
$357 per-pupil
5,713 43
 Model 2:
+$150 million per year
Under Model 2, LEAs would see an average increase
of $1,045 per-pupil, with all districts receiving more

Model 2 achieves the commitment to ensure that

every district receives increased funding per student

45
Under Model 2, LEAs would see an average increase
of $1,045 per-pupil, with most districts gaining
between +$260 to +$1,492 per-pupil

46
By increasing the base and the low-income and special
education weights, Model 2 produces greater gains for
more districts compared to the current system

SWF Model 2 shown in color

Current funding per-pupil

shown in empty circles

48
 Model 2 directs $620M for low-income students and
$165 for special education students through weights

Model 2 Total
Funding Stream Current Total Funding Students
Funding
Foundation + Nurses +
Technology Coord., FY24 $5,195,713,896
Base $5,267,475,927 $7,200 per-pupil
721,627
$7,270 per-pupil
At-Risk, FY24
$620,066,306
Low Income $21,208,032
$1,520 per-pupil
410,097
$50 per-pupil
High-Needs Special Ed. Grant,
$164,608,002
Special Education FY24
$1,766 per-pupil (avg.)
93,183
$17,400,000
English Learners line item, FY24
$27,958,899
English Learner $14,155,334
$720 per-pupil (avg.)
38,832
$365 per-pupil
Gifted line item, FY24
$20,456,002
Gifted $10,925,000
$360 per-pupil (avg.)
56,822
$192 per-pupil
$2,056,590
Charter N/A
$360 per-pupil (avg.)
5,713
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 Model 3:
+$200 million per year
Under Model 3, LEAs would see an average increase
of $1,388 per-pupil, with all districts receiving more

Model 3 achieves the working group’s commitment to

ensure that every traditional district would receive higher
Model
levels of3per-pupil
achievesfunding
the commitment to ensure that
every district receives increased funding per student

51
Under Model 3, LEAs would see an average increase
of $1,388 per-pupil, with most districts gaining
between +$523 to +$1,935 per-pupil

52
With the greatest investment through the highest base
and weights, Model 3 shows the greatest change in
funding compared to the current system

SWF Model 3 shown in color

Current funding per-pupil

shown in empty circles

54
 Model 3 directs $778M for low-income students and
$167M for special education students through weights

Model 3 Total
Funding Stream Current Total Funding Students
Funding
Foundation + Nurses +
Technology Coord., FY24 $5,267,876,589
Base $5,267,475,927 $7,300 per-pupil
721,627
$7,270 per-pupil
At-Risk, FY24
$778,363,656
Low Income $21,208,032
$1,898 per-pupil
410,097
$50 per-pupil
High-Needs Special Ed. Grant,
$166,894,224
Special Education FY24
$1,791 per-pupil (avg.)
93,183
$17,400,000
English Learners line item, FY24
$42,520,826
English Learner $14,155,334
$1,095 per-pupil
38,832
$365 per-pupil
Gifted line item, FY24
$20,740,113
Gifted $10,925,000
$365 per-pupil (avg.)
56,822
$192 per-pupil
$2,085,154
Charter N/A
$365 per-pupil (avg.)
5,713
55
These three SWF models illustrate what is possible
under different revenue scenarios

Each set of colored points

represents potential funding
under Models 1, 2, and 3

Current funding per-pupil

shown in empty circles

56
Accountability
 A new funding formula can be supported with a mix of
accountability and flexibility

Student weighted funding formulas provide districts with more flexible state
dollars than resource-based systems
District leaders o Unlike resource-based funding systems that provide a “template” for how
need support to districts allocate dollars, SWF systems enable more flexible and strategic
leverage flexible
spending at the district level.
dollars to meet
student needs o During the transition to a SWF, technical assistance for superintendents,
budget officers, and school boards can help them rethink how they can
strategically deploy state dollars to support student success.
Accountability mechanisms can provide safeguards for fiscal responsibility and
Flexibility maintain focus on student outcomes
should be o The way dollars flow through a SWF to address particular student needs
paired with can establish a baseline of accountability through transparency.
accountability
mechanisms to o Additional mechanisms of accountability can be established through state
ensure policy, including hearings for under-performing districts that can lead to
responsible use audits or other corrective action.
of state dollars

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 Accountability for funding can take many different
forms; which approach is right for Alabama?

Accountability How this mechanism could compliment

Key considerations
mechanism funding reform
Less formal • Clarify what funding is intended to support
accountability specific student needs
• Require districts to report how they are using • Requires engagement to apply
Transparency
weighted funding to support particular needs in pressure and drive change
alignment with district and state strategic
priorities.

• As districts demonstrate student growth, they • Criteria for earned flexibility need to
Outcomes-based can earn additional flexibility; stagnant or be clearly established and
flexibility declining performance could lead to greater communicated before
state oversight/intervention implementation

• SEAs should provide technical

• Empower policymakers to examine whether assistance, resources, and training
new funds are being spent in alignment with to LEAs to support strategic
Audits + hearings
goals and provide public transparency into how budgeting of new funding
local spending and outcomes align • New reporting requirements and
systems may be needed

State ESSA • Funding reform could be formally linked to • Revising state ESSA plans can be
accountability mechanisms used in the state’s accountability technically and politically complex
More formal system system • Likely requires federal approval
accountability

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 Maryland and Tennessee offer examples of innovative
accountability approaches, 1/2

The Blueprint for Maryland's Future, 2021, is comprehensive

education reform legislation focused on five pillars including:
1. Early Childhood Education
2. High Quality and Diverse Teachers and Leaders
3. College and Career Readiness
4. More Resources for Students to Be Successful
5. Governance and Accountability
The Blueprint combines increased state funding and other policy changes with new,
independent support and accountability structures.

● The Accountability and Implementation Board (AIB) is charged with developing the
10-year implementation plan for the Blueprint and holding state and local education
agencies accountable

● Expert review teams regularly review district and school performance, recommend
strategies for improvement, and recommend actions to the AIB, which (after 2025)
can include withholding of up to 25% of new state funds for continued
underperformance
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 Maryland and Tennessee offer examples of innovative
accountability approaches, 2/2

The Tennessee Investment in Student Achievement, 2022,

overhauled the state’s school finance system and added $1B in new
money. TISA also created a financial accountability hearing structure

Beginning in the 2025-26 school year, the State Board of Education will hold hearings with
districts operating low-performing schools.

● Hearings will be supported by data, largely drawn from existing required

improvement plans and other resources

● Hearings will focus on how local decisions and strategies leverage each of seven areas
linked by research to successful school improvement

1. School Finances 5. Attendance

2. Climate and Culture 6. Instructional Programming
3. Staffing 7. Data-driven Decision Making
4. Community Engagement
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