State Government

2015 legislative update: Mental health, DHR, courts would face cuts under Alabama House's General Fund budget

Mental health care, trial courts and the Department of Human Resources (DHR) would be among the vital services suffering cuts next year under the General Fund (GF) budget that the Alabama House passed 59-37 Friday. A Senate committee is set to consider the GF budget Monday.

The House’s budget would fund new reforms of Medicaid and corrections and would prevent the closure of National Guard armories across Alabama. But mental health, public health, DHR and courts – which were funded at their 2015 GF levels under the plan that cleared a House committee Wednesday – would face 2.5 percent cuts under the House’s budget. Many other services would lose 10 percent or more of their support next year.

No business privilege tax bill means deeper service cuts

Cuts to mental health care, DHR and other services emerged Friday when lawmakers retooled the committee’s budget to account for the House’s failure to pass business privilege tax changes Thursday. The measure would have raised an additional $22.5 million a year by cutting taxes for tens of thousands of small businesses while increasing the tax for the largest corporations. The Alabama Farmers Federation opposed the bill, the Montgomery Advertiser reported Thursday.

Narrow majorities in the House voted Thursday for several other revenue measures, including a 25-cent-per-pack increase in the cigarette tax, two provider taxes dedicated to Medicaid, and tax increases on automobile titles and rentals. Together, these taxes would bring in an additional $107 million for GF services next year. But the package falls short of the amount needed to address the GF shortfall without cuts. It’s also well short of the $300 million in new GF revenue that Alabama Arise and more than 200 other organizations have urged.

The provider tax bills won approval from the Senate’s GF budget committee Friday. So did the cigarette tax bill, along with an amendment to dedicate the revenue to Medicaid. But committee members did not vote on the auto title and car rental tax proposals, and those bills’ future is unclear.

Bills would move revenue, expenses from education budget to General Fund

Senate committee members Friday also approved bills to revise the Rolling Reserve Act, which caps annual education spending, and transfer use tax revenues from the Education Trust Fund (ETF) to the GF. But Sen. Arthur Orr, R-Decatur, who chairs the committee, said he expects the bills will be “heavily amended” before a Senate vote.

The use tax measure would shift use tax revenue from the ETF to the GF starting in 2017, accompanied by a transfer of education budget obligations for traditional GF agencies. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of Internet sales and equipment purchases.

Many lawmakers strongly oppose moving money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Without significant new revenue, Alabama will not have enough money to continue investing in vital services that make the state a better place to live and work.

By Chris Sanders, communications director. Posted Sept. 11, 2015.

2015 legislative update: Alabama House passes cigarette tax increase; business privilege tax measure stalls

The Alabama House voted by narrow margins Thursday to pass several bills to raise revenue for the General Fund (GF) budget that supports Medicaid, mental health care, public safety and other vital services. The House did not vote on the budget but is expected to consider it Friday.

The measures included a 25-cent-per-pack increase in the cigarette tax, two provider taxes dedicated to Medicaid, and tax increases on automobile titles and rentals. Together, these taxes would bring in an additional $107 million for GF services next year. The package falls short of the amount needed to address the GF shortfall without cuts. It’s also well short of the $300 million in new GF revenue that Alabama Arise and more than 200 other organizations have urged.

Rep. Connie Rowe, R-Jasper, who sponsored the cigarette tax bill, was particularly passionate in her call for new revenue. She recalled a time when, as Jasper’s police chief, she personally had to stop traffic on Interstate 22 because of an accident, while waiting for backup from a state trooper who had to serve five counties. “I’ve been in law enforcement for 25 years,” Rowe said. “We need district attorneys, judges and court clerks.”

Additional cuts may be ahead after inaction on business privilege tax bill

A potentially significant roadblock to passage of the GF budget emerged Thursday when the House failed to vote on a business privilege tax bill. The measure would cut taxes for tens of thousands of small businesses while increasing the tax for the largest corporations. The Alabama Farmers Federation opposed the bill, the Montgomery Advertiser reported Thursday.

The GF budget that won House committee approval Wednesday depends on a carefully balanced combination of tax increases and transfers from the Education Trust Fund (ETF) budget. Without the business privilege tax increase, the committee’s budget would be $22 million short, forcing lawmakers to approve a substitute revenue source or make additional cuts.

Major reforms of Medicaid and criminal justice system would receive the money needed to move forward under the committee’s GF budget. Other major services – including courts, mental health and the Department of Human Resources (DHR) – would be funded at their 2015 GF levels.

But many other state services would fare far worse under the proposed budget. The Department of Senior Services would be cut by $2.4 million, with most of that money coming from home-based services for seniors who otherwise might have to enter nursing homes. The Department of Youth Services would be cut by nearly 75 percent, and the Department of Archives and History by almost a fourth.

Bills would move revenues, expenses from education budget to General Fund

The House passed two bills Thursday to revise the Rolling Reserve Act, which imposes an artificial cap on ETF spending. One measure would free up education revenue for infrastructure improvements in local schools. The plan also would loan $50 million from the education budget to the GF budget, while protecting education in case of failure to repay the loan.

The other bill would transfer use tax revenue from the ETF to the GF starting in 2017, accompanied by a transfer of education budget obligations for traditional GF agencies. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of Internet sales and equipment purchases.

Many lawmakers strongly oppose shifting money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Without significant new revenue, Alabama will not have enough money to continue investing in vital services that make the state a better place to live and work.

By Carol Gundlach, policy analyst. Posted Sept. 10, 2015.

2015 legislative update: Committee breakthrough: Alabama House panel OKs General Fund budget, tax increases

An Alabama House budget committee Wednesday approved a set of tax increases worth approximately $130 million – and a General Fund (GF) budget that would cut $55 million from many core state services. The full House is set to consider the budget and many revenue measures Thursday.

The total revenue package falls far short of the amount needed to address the GF shortfall without cuts. Tax measures that cleared the House’s GF budget committee include:

  • a cigarette tax increase of 25 cents per pack;
  • an increase in the business privilege tax for large corporations, accompanied by a tax cut for small businesses; and
  • tax increases on automobile rentals and titles.

The House’s education budget committee Wednesday approved a one-time transfer of about $50 million from the Education Trust Fund (ETF) to the GF. The transfer would have to be repaid by 2018 and would come from revenues above next year’s ETF spending cap under the Rolling Reserve Act. The committee also OK’d a plan to shift some use tax revenues from the ETF to the GF starting in 2017.

Winners and losers under proposed GF budget

There were clear winners and losers in the GF committee’s budget. Major reforms of Medicaid and criminal justice system would receive the funds needed to move forward. Other major services – including courts, mental health and the Department of Human Resources (DHR) – would be funded at their 2015 GF levels.

Many other state services would fare far worse under the committee’s GF budget. The Department of Senior Services would be cut by $2.4 million, with most of that money coming from home-based services for seniors who otherwise might have to enter nursing homes. The Department of Youth Services would be cut by nearly 75 percent, and the Department of Archives and History by almost a fourth.

Before the second special session began this week, Alabama Arise requested public hearings on all revenue and budget bills. Representatives of Arise, Voices for Alabama’s Children, the Children First Foundation and several state agencies testified before the House committee Wednesday in favor of new GF revenue.

Arise state coordinator Kimble Forrister told lawmakers that more than 200 advocacy groups, churches, hospitals and other organizations had signed an open letter to the Legislature calling for $300 million in new tax revenue to prevent drastic cuts to health care, child care, public safety and other vital services. “Our most vulnerable people depend on General Fund agencies to help them take care of their families,” Forrister said.

Forrister testified in favor of the business privilege tax changes. He also told lawmakers that failing to increase the price of a pack of cigarettes by at least 10 percent may not result in reduced smoking and improved health benefits for Alabama.

Senate committee doesn’t approve combined reporting bill

Not all tax proposals made it out of committee Wednesday. The Senate’s ETF budget committee did not approve a bill to required “combined reporting” on state corporate income tax returns.

The bill’s sponsor – Sen. Linda Coleman, D-Birmingham – urged her fellow committee members to consider the consequences of “nickeling and diming” the average Alabamian while enabling many large corporations and businesses to do business in Alabama while paying few or no taxes here. Closing corporate tax loopholes could bring an additional $30 million to the ETF each year, Coleman estimated.

Sens. Jim McClendon, R-Springville, and Jabo Waggoner, R-Vestavia Hills, were among committee members who said they were concerned about combined reporting’s potential impact on businesses and industrial recruitment.

Combined reporting would treat corporations and their subsidiaries as one entity for tax purposes. Most states have adopted such laws, and “combined reporting states are well-represented among the most economically successful states in the country,” the Center on Budget and Policy Priorities found.

By Carol Gundlach and M.J. Ellington, policy analysts. Posted Sept. 9, 2015.

2015 legislative update: Alabama Senate committee eases Medicaid cuts, approves budget that Bentley already vetoed

Update: The Alabama Senate passed a no-new-revenue General Fund budget 19-15 Monday, but the House swiftly rejected it 92-2. The first special session ended without a budget, meaning Gov. Robert Bentley will have to call the Legislature back for a second special session.

Get ready for another special session. That seems to be the takeaway from Friday’s action at the State House, where an Alabama Senate committee rejected the House’s Medicaid cuts and voted 9-4 for a General Fund (GF) budget identical to the one that Gov. Robert Bentley already vetoed in June.

The budget, which includes no new revenue, would slash child care and mental health care. It also would end promising new reforms of Medicaid and corrections before they could get started. The full Senate likely will consider the budget Monday. Sen. Arthur Orr, R-Decatur, who chairs the Senate’s GF budget committee, urged lawmakers to amend the plan on the floor to prioritize funding for prison reform. (Read more about the Senate budget’s effects here.)

Lawmakers appear no closer to an answer on the GF than they were two months ago. With just two meeting days left before the current special session ends Tuesday, Bentley could reject any budget without giving the Legislature a chance to override his veto. Another special session would be needed to approve a GF budget before Alabama’s 2016 budget year begins Oct. 1, 2015.

‘Replacing a sorry budget with a crappy budget’

Senators gave a cold shoulder to the House’s budget, which would have gutted Medicaid with a 23 percent cut. A cut that deep could force Alabama to end its Medicaid program, State Health Officer Don Williamson said this week.

One in five Alabamians – mostly children, seniors, and people with disabilities – would lose health coverage if the state ended Medicaid. The effects also would be devastating for hospitals, nursing homes, pharmacies and the state’s entire economy. (Learn more about what the end of Medicaid would mean for Alabama here.)

Several committee members spoke passionately in favor of protecting Medicaid. Sen. Billy Beasley, D-Clayton, said Alabama must fund the program fully to protect the state’s entire health care infrastructure. “Without Medicaid, Children’s Hospital may have to close,” Beasley said. “Without Medicaid, doctors’ offices may have to close.”

Sen. Priscilla Dunn, D-Bessemer, asked lawmakers to ease the fears of Medicaid patients who are “scared to death” of losing coverage. “We need to put more of our hearts into Medicaid,” Dunn said.

Perhaps the bluntest assessment came from Sen. Cam Ward, R-Alabaster, who sponsored the prison reform law that needs funding before it can take effect. “We’re replacing a sorry budget with a crappy budget,” Ward said.

Revenue measures still face an uphill battle

The budget deadlock intensified when key parts of Bentley’s plan to raise new revenue to prevent massive GF cuts went nowhere in the House’s GF budget committee. The panel voted 8-7 Tuesday to reject a plan to increase the state cigarette tax by 25 cents per pack (from 42.5 cents to 67.5 cents). A bill to increase the business privilege tax on large corporations was on the agenda Tuesday but did not come up for a vote.

House and Senate committees have approved bills to transfer use tax revenues from the Education Trust Fund to the GF, but the measures face stiff opposition from many legislators. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of equipment purchases and Internet sales.

Many lawmakers strongly oppose shifting money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Without significant new revenue, Alabama will not have enough money to continue investing in vital services that make the state a better place to live and work.

By Chris Sanders, communications director. Posted Aug. 7, 2015. Updated Aug. 11, 2015.

2015 legislative update: Alabama House passes budget that could end Medicaid in state

Medicaid could end in Alabama under a General Fund (GF) budget that the Alabama House passed Wednesday. Medicaid would lose 23 percent of its state funding, or $156 million, next year under the plan. Lost federal matching money would increase those cuts significantly. Cuts that large could end the Medicaid program in Alabama, State Health Officer Don Williamson said Tuesday.

The House initially voted 46-45 to reject a budget amendment cutting Medicaid. But then, on a second vote, it approved the amendment 46-44. The House then passed the GF budget 53-40, sending it to the Senate. Several key senators have said they strongly oppose deep Medicaid cuts, but their solution to the GF shortfall remains unclear.

Medicaid is ‘health care infrastructure in this state’

If the Medicaid cut remains, about one in five Alabamians would lose their health coverage, including nearly half of Alabama’s children and about 60 percent of the state’s seniors in nursing homes. Those cuts likely would lead to the closure of Children’s Hospital in Birmingham, as well as dozens of other hospitals and nursing homes across the state. The results would be devastating for Alabama’s economy and quality of life.

During four hours of debate on the budget, House members decried the impact that the Medicaid cuts would have on their constituents and communities. Rep. April Weaver, R-Brierfield, said it was “shocking” to see lawmakers considering such cuts to Medicaid. “If anyone thinks that Medicaid is an entitlement, come see me,” Weaver said. “It’s the health care infrastructure in this state.”

Rep. Mike Jones, R-Andalusia, also spoke of the huge toll that a Medicaid shutdown could take on communities. Jones said the end of Medicaid could mean 600 job losses in his district and put two hospitals and several local nursing homes at risk of closing.

Without new revenue, the path forward is uncertain

The budget passed after key parts of Gov. Robert Bentley’s plan to raise new revenue to prevent massive GF cuts went nowhere in the House’s GF budget committee. The panel voted 8-7 Tuesday to reject a plan to increase the state cigarette tax by 25 cents per pack (from 42.5 cents to 67.5 cents). A bill to increase the business privilege tax on large corporations was on the agenda Tuesday but did not come up for a vote.

House and Senate committees have approved bills to transfer use tax revenues from the Education Trust Fund to the GF, but the measures face stiff opposition from many legislators. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of Internet or mail-order purchases.

Many lawmakers strongly oppose shifting money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth.

If lawmakers do not approve a substantial source of new GF revenue in the coming days, it will be impossible for them to pass a budget that avoids devastating cuts to Medicaid or other vital services during this special session. Alabama’s 2016 budget year begins Oct. 1, 2015, and the prospect of another special session before then looms ever larger by the day.

By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Aug. 5, 2015.

2015 legislative update: Medicaid could end under Alabama House committee's budget

Medicaid could end in Alabama under devastating cuts in a proposed General Fund (GF) budget that the Alabama House’s GF budget committee approved Tuesday, State Health Officer Don Williamson said. About one in five Alabamians would lose their health coverage, including nearly half of Alabama’s children and about 60 percent of the state’s seniors in nursing homes.

Medicaid would lose 23 percent of its state funding, or $156 million, next year under the budget that the committee approved Tuesday. Lost federal matching money would increase the loss significantly.

Those cuts likely would lead to the closure of Children’s Hospital in Birmingham, as well as dozens of other hospitals and nursing homes across the state. “If Alabama chooses not to have a Medicaid program, you will see an impact on the health care system that you can only begin to imagine,” Williamson said Tuesday.

Cigarette tax increase, other revenue bills fail to gain traction

The vote came after key parts of Gov. Robert Bentley’s plan to raise new revenue to prevent massive GF cuts went nowhere during a tense day in the House’s GF budget committee. The panel voted 8-7 Tuesday to reject a plan to increase the state cigarette tax by 25 cents per pack (from 42.5 cents to 67.5 cents). A bill to increase the business privilege tax on large corporations was on the agenda but did not come up for a vote.

The committee recessed for several hours after the cigarette tax vote. When it returned late Tuesday afternoon, a frustrated Rep. Steve Clouse, R-Ozark, who chairs the committee, offered an amendment to concentrate GF budget cuts in the Medicaid program. Committee members approved the change 10-4 and then OK’d the budget on a voice vote. The GF budget now awaits action in the full House.

Democratic committee members strongly condemned the proposed Medicaid cuts. “To take and use Medicaid as a pawn, I think is totally unfair,” said Rep. John Knight, D-Montgomery. “Other agencies should be on the chopping block.”

Knight urged legislators to be honest with the public about the need for new GF revenue to support vital services like health care, child care and public safety. The Legislative Black Caucus will not vote for tax increases without adequate long-term GF revenues, Knight told the Montgomery Advertiser.

Clouse criticized several Democratic lawmakers’ votes against the cigarette tax bill, telling the Advertiser that Democrats had supported a tobacco tax increase during the regular session. “I came with a fair budget that level-funded Medicaid,” he said. Clouse said he does not support deep Medicaid cuts but said Alabama needs to have a debate about the program’s future.

Lawmakers OK transfer of education revenues to shore up General Fund

Both the House and Senate’s GF budget committees approved bills Tuesday to transfer use tax revenues from the Education Trust Fund (ETF) to the GF. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of Internet or mail-order purchases.

The House committee voted to transfer both use tax revenues and some funding obligations to the GF, resulting in a net loss of $50 million to education and a net GF gain of the same amount. The Senate bill would transfer use tax revenues but not the accompanying obligations. That would reduce education revenue (and increase GF revenue) by more than $200 million.

Alabama’s education funding is still well below pre-recession levels. The state’s per-pupil K-12 spending in 2015 was 18 percent lower than in 2008, the second worst decline in the nation, according to the Center on Budget and Policy Priorities (CBPP). Alabama’s per-student higher education cuts from 2008 to 2016 are also the nation’s second worst, the CBPP found.

Bentley has proposed to “backfill” the ETF’s revenue loss by ending the state income tax deduction for FICA taxes paid to support Social Security and Medicare. But this bill has not yet been set for a committee vote, and many press reports suggest it is unlikely to pass.

Bill to ‘un-earmark’ mental health, DHR money advances in House committee

The House’s GF budget committee also approved a bill Tuesday to “un-earmark” revenues dedicated to five state agencies and shift the revenues into the GF. Nearly 90 percent of the transfers under HB 46, sponsored by Rep. Allen Farley, R-McCalla, would come from mental health and the Department of Human Resources (DHR). Other services affected would be public health, veterans’ affairs and forestry.

Bentley’s budget plan would provide additional GF money to help the agencies cover the un-earmarked amounts. But neither the current Legislature nor future ones would be obligated to do so under HB 46. Advocates for children and for people with mental illness are deeply concerned about this idea.

By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Aug. 4, 2015.

New revenue for a stronger Alabama

What makes a state strong? We likely all could agree on a few answers: healthy people, a dependable workforce, a stable government, safe streets and vibrant communities. But without new revenue to address a huge General Fund budget shortfall, Alabama will face devastating cuts to education, health care, public safety and other vital services that make shared prosperity possible.

If the Legislature can’t agree on new revenue to avoid these cuts, Alabamians would see thousands of lost jobs, a sharp decline in our state’s quality of life and a weaker future for years to come. Here’s a snapshot of what Alabama would look like if the cuts in a no-new-revenue General Fund budget become reality.

2015 legislative update: What went well in 2015 -- and the challenges that remain for Alabama

It’s over! But it’s not over yet. After approving a wholly inadequate General Fund budget that would jeopardize our state’s future, the Alabama Legislature ended the 2015 regular session Thursday. But Gov. Robert Bentley vetoed that budget, and he will call lawmakers back for a special session on the budget later this summer.

Arise members celebrated some big victories this year, but major challenges still remain. Here’s a quick review of how Arise issues fared:

Budgets and taxes: None of Bentley’s revenue bills passed. Without new revenue, vital services like Medicaid and public safety face devastating cuts that would hurt Alabama’s quality of life for years to come. Just a few examples:

  • Thousands of Alabamians would lose community-based mental health care services.
  • Medicaid would end coverage of crucial services like outpatient dialysis and prosthetics.
  • State prisons would be even more overcrowded and at greater risk of federal takeover.

But there was some good news, too. Lawmakers overwhelmingly approved a bill to save money and give Alabamians more choices in Medicaid long-term care services. The state will have a powerful new tool – a “tax expenditure report” – to determine if tax breaks are worth the cost. And a new prison reform law will help save money and reduce overcrowding – but it only takes effect if the state funds it.

Ending Alabama’s lifetime SNAP ban: Alabamians can celebrate a big win for second chances! The prison reform bill includes language ending the state’s lifetime SNAP and TANF eligibility bans for people with a past felony drug conviction. Thousands of people can regain SNAP eligibility on Jan. 30, 2016, if the prison reform law gets the money required for it to take effect.

Alabama Accountability Act: The Legislature approved major changes to the act. The new version allows more money that would have supported public education to go to private schools instead – but it also includes some of Arise’s recommendations for greater accountability and transparency.

Housing Trust Fund: A bill to fund affordable housing in Alabama encountered powerful opposition and did not emerge from committee. Supporters plan to meet with opponents to seek agreement before the 2016 session.

Payday and title lending reform: In a big win for consumers, the Alabama Supreme Court ruled the state Banking Department can create a single statewide database of payday loans. But much work remains in the drive for a 36 percent interest rate cap: No bills to regulate payday or auto title loans passed, but public pressure for reform continues to grow.

The regular session is over, but Arise’s work continues. Stay tuned for updates as we prepare for this summer’s crucial debates over our state’s future. Together, we can build a better Alabama for all!

By Kimble Forrister, executive director. Posted June 4, 2015. Updated June 12, 2015.

2015 legislative update: HIV medication redistribution bill clears Alabama Legislature

New information: Gov. Robert Bentley will not sign the bill, his health policy adviser Dave White said Friday, June 12. White attributed the decision to a technical error in the committee amendment and said Bentley supports the bill's intent.

 

Pharmacies that distribute HIV medications in or for HIV clinics could redistribute certain unopened drugs under a bill that won final approval Thursday in the Alabama Legislature and was sent to Gov. Robert Bentley.

HB 247, sponsored by Rep. Patricia Todd, D-Birmingham, passed both the House and Senate without a single “no” vote. The bill includes a Senate committee amendment protecting drug manufacturers from liability in the event of improper re-dispensing and excluding drugs that require patient registration with the drug’s manufacturer. Pharmacies serving correctional facilities and nursing homes already have the authority to redistribute unopened drugs.

Under current law, HIV clinics must destroy unopened medications if patients do not show up for treatment. Todd’s bill, if signed by Bentley, will allow pharmacies to redistribute those drugs to other patients and set controls on handling and oversight of the drugs. Arise recommended this policy change in 2013 to the governor’s Medicaid Pharmacy Study Commission, which sought ways to reduce costs in the state’s Medicaid drug assistance programs.

By Jim Carnes, policy director. Posted June 4, 2015. Updated June 12, 2015.

2015 legislative update: Alabama Accountability Act changes receive final legislative approval

A bill that would expand tax credits under the Alabama Accountability Act (AAA) received final legislative approval Wednesday and went to Gov. Robert Bentley. SB 71, sponsored by Senate President Pro Tem Del Marsh, R-Anniston, is not the total repeal that Arise supported. But the bill would make significant improvements to the existing law (including some that Arise recommended), even as it allows more money that would have supported public education to go to private schools instead. Here are six changes to the AAA under SB 71:

(1) More tax credits would be available. Businesses and individuals can get tax credits for donations to organizations that grant scholarships to help eligible students attend private schools under the AAA. The original law capped the total amount of such credits at $25 million a year, but SB 71 would raise the cap to $30 million. The bill also would raise the current $7,500 annual limit on scholarship tax credits for individuals to $50,000 and let taxpayers claim credits against their 2014 taxes for donations made in 2015.

(2) Scholarship sizes would be limited. SB 71 would limit AAA scholarships to no more than $6,000 a year for elementary school students, $8,000 a year for middle school students and $10,000 a year for high school students.

(3) The income limit for scholarship eligibility would be lower. SB 71 would reduce the income eligibility limit for AAA scholarships from its prior level – 150 percent of the median household income, or nearly $65,000 in Alabama – to 185 percent of the federal poverty level (FPL), or about $44,000 for a family of four. Scholarship-granting organizations (SGOs) would have to re-evaluate students’ eligibility every other year. Students with existing scholarships could continue to receive them as long as their family income is no more than 275 percent FPL, or nearly $67,000 for a family of four.

(4) The definition of “failing school” would change. Another big difference under SB 71 is a change in the AAA’s definition of “failing school.” The bill would deem a public school to be “failing” if it is “listed in the lowest 6 percent of public K-12 schools based on the state standardized assessment in reading and math” or if the state school superintendent designates it as one. Schools that serve students with special needs are excluded from the act’s definition of “failing” schools. Students zoned for “failing” schools would have first priority for AAA scholarships until July 31 of each year, when any remaining scholarship money could go to eligible students living anywhere in Alabama.

(5) Participating schools and groups that grant AAA scholarships would face additional requirements. SB 71 would require SGOs to report quarterly on how many scholarships they give, as well as how many of them go to students who were zoned for “failing” schools or who already attended private schools. Participating schools now would have to give state achievement tests, be accredited within three years and disclose tuition rates online before each semester begins. The bill also would require an independent comparison of the test scores of students participating in the AAA scholarship program and similar students in public schools. A SGO now could be audited by the Alabama Department of Revenue (ADOR), and the ADOR would have the authority to bar a SGO or private school from participating in the tax credit scholarship program. All required annual and quarterly SGO reports would have to be made available to the public on the ADOR’s website.

(6) Unspent scholarship money must be returned to public education. SGOs would have to use any scholarship funds on hand at the start of a calendar year by the end of the following school year. Any such money not spent on AAA scholarships by then would go to the state Department of Education to help support “underperforming” schools.

By Carol Gundlach, policy analyst. Posted June 4, 2015.

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