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Alabama's Education Trust Fund Budget FY 2020

By: Exec. Dir. Gordon Stone

The public education offerings in the State of Alabama range from the Pre-K programs associated with elementary schools to doctoral programs at universities. This broad range touches all 67 counties and every municipality in the state. Every household and each business operation in Alabama is impacted by public education. Therefore, when the state can boast of a good Education Trust Fund (ETF) Budget, it has a positive impact on all the citizens. In 2019, Alabama had more than $7.1 billion available for appropriations. This is the largest pool of available resources in the state’s history.

While the recent economic success found in Alabama has driven revenue up and has allowed for every segment of education to receive more funding, the total amount of funding for higher education continues to lag behind the 2008 level by approximately 10 percent. In 2019, the state’s universities were pleased to receive an average appropriation increase of more than six percent. While this is a significant improvement, the progress of this year must be a first step to even more progress in the future.

A pattern of positive economic activity occurs when unemployment is low and jobs are being created. New jobs mean more hiring and typically result in improved salaries for workers. These two achievements are welcome because as the income capacity of the residents increases, people buy more items and invest more. As additional goods and services are engaged in the economy, the level of revenue for education improves. At the state level in Alabama, 86 percent of the funds in public education are from sales and income tax collected. More transactions mean additional educational funding.

Growth in educational funding is good news for all residents because the revenue invested in education produces fruitful outcomes for both today and tomorrow. With every cup of coffee sold, each pair of new shoes bought, every car driven off a lot, each purchase at a home improvement store and other similar actions, the students of Alabama gain access to more Pre-K preparation, additional reading coaches, more STEM academies, improved facilities, additional workforce training and improved access to the instructional and research-based opportunities found at four –year universities. These are investments in the future of the state!

There are other, not quite as obvious yet extremely important, benefits that are generated from investing in education, specifically higher education. Improved funding means more applied research and direct engagement in health care, social services, entrepreneurship, finance, agriculture, engineering, business, etc.

The building blocks of the economy are certainly strengthened when higher education funding improves. Investing more resources in universities allows for the citizens from all 67 counties to have better access to earning a four-year degree. More state funding takes the pressure off tuition and fees for providing the general operational dollars for a university. Over the past 25 years, Alabama’s public universities have seen their level of state support drop into the teens from nearly 50 percent. This means that the overwhelming majority of the universities’ funding is coming from students and their families. The shift in state support has resulted in a greater dependency on student loans and is a contributing factor to discouraging young people from pursuing a four-year degree. This pattern of behavior can be adjusted by continuing to improve state funding for public universities.

Growing the number of four-year degrees means more residents will benefit from an advanced pay scale. The State of Alabama currently has only 24 percent of the workforce with four-year degrees, when the national average is 30 percent. The lack of a competitive number of four-year degrees in the workforce restricts the state’s ability to generate top jobs and ultimately limits per capita income. The improvement in the average annual pay as educational level increases is dramatic. The following illustration from the U.S. Census is telling:

Note what happens when the average pay is attached to the highest level of educational attainment:

$37,000 - high school diploma

$48,000 - associate’s degree

$67,000 - bachelor’s degree

$80,000 - master’s degree

$110,000 - Doctoral Degree

It is certainly good news when Alabama’s educational resources are growing. Moreover, it is vital that the state continues to invest in all levels of public education. It is also crucial to encourage young people to maximize their learning at every level so more students ultimately achieve a college education. As more young people are encouraged to achieve advanced levels of education, the citizens will earn more and investments will grow. This cycle will help the economy to continue to expand and improve the educational capacity for the next generation.


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