Alabama’s $10 billion education budget won’t include raises for teachers this year, but lawmakers are covering a few new benefits for educators.

State teachers will get paid parental leave and worker’s compensation for the first time. They also will not have to pay higher health insurance premiums. All in all, advocates say the package is a win for teachers.

“When we started this session, if someone would have told me that we would have PEEHIP fully funded, parental leave and a new workers’ comp program for Alabama educators, I would have never thought it was possible,” Amy Marlowe, executive director of the Alabama Education Association, told AL.com. “So I just give kudos to Governor Ivey and to the legislature for a session that’s been one of the best on record for Alabama educators.”

The Alabama House approved a nearly final version of the budget package Thursday. But the Senate must approve changes – which include $80 million more for a school choice program – before the governor can sign off.

Other big-ticket items include a $375 million school funding overhaul, new regional career tech centers, and increases to literacy, math and afterschool programs.

Colleges and universities will get a smaller share of the budget at $2.5 billion, a 6.6% increase from last year. K-12 schools will get $6.7 billion, a jump of about 5.9%.

The full $12.1 billion package is made up of four buckets:

• $9.9 billion to the main education budget, called the Education Trust Fund, which supports higher education and K-12 funding,
• $1.25 billion for the Advancement and Technology fund, which will include a new $100 million career tech effort,
• $524 million in supplemental funds, and
• $455 million to the Educational Opportunities Reserve Fund to support the CHOOSE Act and a new public school funding formula.

New benefits for teachers

The Foundation Program, which funds teacher salaries and other operational expenses, increased by $143 million this year – but many of those funds will go toward the state health insurance program, PEEHIP.

The insurance program told members in 2024 that changes to federal programs and increases in prescription drug costs might require rate increases.

“Going into the session, we were looking at the numbers and we had some very disturbing news from PEEHIP that member premiums were going to have to go up $104 a month, and that money was going to have to come out of educator and retiree pockets,” Marlowe said.

Lawmakers chose to fund the insurance program instead of teacher raises this year. Teacher pay has risen in the last few years, to an overall statewide average of $61,213, though there are large variations across districts.

The newly funded amount, Marlowe said, is nearly equivalent to a 3% raise for most active educators.

“It’s a balancing act,” she said. “In a 2% raise, if you go off the average teacher salary, most educators would not have received as much as $104 a month in take home pay, plus that would have been taxed. So those are all the things that we look at when we balance the monies available.”

School choice and a new funding formula

The state will begin the transition to a student-based school funding formula, which would fund schools based on student need rather than headcount alone. The program, called the RAISE Act, passed unanimously and now heads to the governor’s office. The legislature is beginning the shift by putting $375 million into a new reserve fund.

If signed, Alabama schools could get as much as $158 million more in funding starting in the 2025-26 school year. Lawmakers want to focus on high-poverty districts, charter schools and schools with large populations of English learners, students with disabilities and gifted students.

The House also authorized the state to draw up to $80 million from the same fund to help meet increased demand for the new CHOOSE Act, which provides families with tax credits to spend on private education. Nearly 37,000 students applied for the program this year, far outpacing its current capacity of an estimated 14,000 accounts.

Any of the leftover funds will go back to the reserve account, Garrett said.

“This will make sure that we’ve got the funds to cover the initial year, and in the budget we’ll be looking at future years,” he said, noting that the state “had twice as many applications as we thought they were going to have.”

Marlowe, however, said she’s disappointed to see so much money go toward students who aren’t in public school. About two-thirds of this year’s applicants are already in private school or homeschooled.

“As we warned legislators when that bill was originally passed, the kids that were going to benefit the most were the ones that were already in private school,” she said. “So all of that’s coming true, and the very idea that we would give them even more money before the program started, just anticipating what might happen, is not something that we support at AEA.”

She said she’s grateful, however, to see bigger investments in low-income public schools. She also commended lawmakers for fully funding the Literacy Act and the Numeracy Act – which require interventions that some districts may struggle to pay for themselves.

“With the resources that we had, the budget chairs and the legislature have done the very, very best job possible that they could have to help schools that need improvement,” she said.

Future budget outlooks

Recent economic windfalls have generated millions of dollars for Alabama schools. But that “sugar high” could be over soon, state finance experts have warned.

Garrett told reporters earlier this week that he is confident the state has enough reserves built up to weather any financial storms. The state’s education budget, however, is only allowed to grow so much – and that cap will decrease next year from 6% to 5.75%.

Marlowe said she will continue to keep a close watch on financial reports.

“With everything going on in Washington right now, it’s impossible to predict the road ahead,” she said. “We actually did better this year than we thought we were going to do. So who knows what next year’s fiscal forecast will look like?”