Surging economy boosts Alabama 2018 General Fund and ETF Revenues

Thanks to a booming economy, Alabama saw significantly increased revenue to both the General Fund and the Education Trust Fund (ETF) in 2018, with collections far exceeding expectations.

By the September 30 end of the 2018 fiscal year, collections for the state General Fund were up 4 percent or $76 million over FY2017, bringing in just under $2 billion. Revenue to the ETF grew by 6.7 percent, up $426 million over 2017, for a total of $6.7 billion in 2018.

Both funds ended the year with a balance, with revenues exceeding expenditures by $80 million in the General Fund and $336 million in the ETF. The balance in the General Fund will be available to fund either supplemental appropriations or to pad to the 2020 budget. A portion of the ETF balance, $64 million, will be shifted into what’s called the budget stabilization fund, which was set up as an auxiliary savings account which can be tapped if the economy contracts. The remaining $272 million of surplus will be shifted into the advancement and technology fund. The Legislature can spend that fund for certain purposes including the purchase of education technology and equipment.

Strong growth in the General Fund can be credited to the growing economy, but also to decisions by the Legislature in recent years. The General Fund traditionally saw little growth even when the economy was expanding because growth taxes, principally income and sales taxes, were all deposited in the ETF. However, the Legislature shifted some sales taxes, particularly a portion of the sales taxes on goods sold over the internet, to the General Fund. Strong growth in those taxes padded the General Fund’s bottom line.

The effects of the federal tax cut also had something to do with the increased revenue. When federal taxes go down, Alabama collections go up since federal income taxes are deductible from state income taxes. When individuals and corporations pay less in federal taxes, a greater share of earnings is subject to the Alabama income tax. Budget officials in Montgomery have estimated that the difference in the federal tax law will mean an annual boost to Alabama receipts in the $30 to $40 million range.

The rosy revenue picture is not clouded by huge impending financial needs as it has been in the past. Cost growth in Medicaid has slowed, and Congress has extended federal support for the Children’s Health Insurance Program, which was an uncertainty earlier this year. The one area of persisting uncertainty is the amount that will be needed to comply with a federal court order to improve conditions in prisons.

The General Fund

The General Fund grew robustly even though it didn’t receive the $50 million per year deposit it had been receiving from a settlement resulting from the BP Oil Spill. The fund also paid out $11 million in a settlement to AT&T. AT&T had collected and paid to Alabama taxes on wireless data plans. Under federal law, internet access is exempt from taxation. Cellular voice service is subject to taxation, and the mobile telecommunications tax used to be a major revenue source. However, wireless companies have lowered their charges to customers for voice calling and shifted much of the cost of service to data plans, which aren’t supposed to be taxed. Proceeds from the tax are now about half what they were in 2013.

Another declining tax source for the General Fund is the tobacco tax. The tax brought in $155 million in 2018, almost $9 million less than the year before.

But those and other declines were more than offset by growing revenue from other sources. Insurance company taxes and corporate taxes were up by $30 million and $21 million respectively. Bringing in $349 million in 2018, the tax on insurance policies is the largest individual source of revenue to the General Fund.

Thanks to rising interest rates, the revenue from interest on state deposits increased by $18 million. Revenues from the Alcoholic Beverage Control Board were up by $15 million. The portion of the Use tax that goes to the General Fund increased $14 million. The Simplified Seller’s Use Tax, a sales tax on online purchases, was up $10 million. Revenue disbursed from the state’s abandoned property fund was up by $9 million.


The Education Trust Fund

The biggest boost to the state bottom line came through collections of the income tax, which were up 8.2 percent, as more people were working and earning more money.

Sales taxes increased 5.34 percent as consumers spent more. These are the highest growth rates since before the great recession, and the overall 6.7 percent growth in the fund during 2018 is the highest growth rate seen since prior to the Great Recession.

The strong performance in 2018 indicates the state should not have a problem meeting the spending levels set in the 2019 budgets. The Legislature budgeted spending $2 billion from the General Fund and $6.6 billion from the Education Trust Fund in 2019.


Alabama Class of 2017 High School Graduation, College and Career, ACT and WorkKeys Results

In this graduation season, we take a look back at some encouraging educational statistics for last year’s graduating class, the Class of 2017.

For the Class of 2017, the final tally for the state high school graduation rate and college and career readiness rate both improved over the Class of 2016’s rates.

However, there is still a troubling gap between the percentage of high school seniors graduating and the percentage of those seniors graduating college and career ready, as measured by the state.

For the seniors in the Class of 2017, 89 percent graduated with a diploma, but only 71 percent of seniors earned the college and career ready designation.

The statewide results for the ACT and WorkKeys assessments also both showed improvement for the Class of 2017.

The ACT is the widely used assessment test designed to measure college readiness. The test is given to all 11th graders in Alabama’s public schools. WorkKeys is a separate test, also developed by the ACT organization, designed to measure workforce readiness. The test, given to all 12-grade students annually, measures students’ skills on the math and reading skills as they might be applied in the workplace.

The state uses both as measures of the college and career readiness of graduates. High school seniors are considered college and career ready if they meet one of the following criteria.

  1. Score college ready in at least one subject on the ACT
  2. Score at the silver level on ACT’s WorkKeys Assessment
  3. Earn a passing score on an Advanced Placement or International Baccalaureate Exam (college-level courses delivered in high schools)
  4. Successfully earn a career technical credential
  5. Earn dual enrollment credit at a college or university
  6. Successfully enlist in the military

Graduation and College and Career Readiness Percentages

The interactive chart below allows users to explore the graduation and college and career readiness percentages for high school seniors in 2017 at the state level and by school system, and high school. When comparing results on individual measures, bear in mind that some schools and systems vary on which route to college and career readiness they emphasize. Some may invest heavily in providing AP classes or preparation for the ACT while others concentrate on dual enrollment or career technical education.


As Alabama’s graduation rate has soared, so has the concern that some students who are receiving high school diplomas haven’t been adequately prepared for the next step after high school.

In March, then-State Superintendent Ed Richardson pointed out the disparity between Alabama’s high school graduation rate (87 percent in 2016) with the Class of 2016’s College and Career Readiness rate (66 percent). Richardson called the 21-percentage point gap between the graduation rate and the career readiness rate “unacceptable.”

“Some schools have a gap approaching 60 percentage points,” Richardson noted. “In fact, a few high schools only have one in four graduates who accomplish one of the six College- and Career-Ready Standards.”

The final tallies for the Class of 2017 showed that the gap between high school graduation and college and career readiness narrowed to 18 percentage points.

Richardson declared the gap between graduation and college and career readiness one of the “most serious issues facing our schools.”

“Failure to address this issue immediately,” Richardson said, “will only result in more high school graduates and their families being led to believe they are ready for the next step in their lives when they are not—harm public education and depress our state’s economic growth.”


For those students who plan to continue at a four-year college, the ACT is designed to measure their readiness for college.

In 2017, 18 percent of high school seniors met or exceeded the benchmark score in all four subjects tested, English, Reading (Social Studies), Math, and Science. That’s up from 17 percent in 2015, according to the most recent data provided by the Alabama State Department of Education.

Success rates vary by subject: 53 percent of high school seniors scored college-ready in English, 37 percent in reading; 28 percent in science; 24 percent in math. The percentage of students scoring above the college-ready benchmark for each subject has increased in all subjects, except for English. In English, 53.1 percent of students met the college-ready benchmark in 2015 compared to 52.6 percent in 2017.

ACT scores are most commonly reported as scale scores, a number on a 36-point scale (a 36 in a perfect score)

The average scale score on the ACT for Alabama was 19.2 in 2017, up from 19 in 2015. While Alabama trails the national average scale score of 21, it is important to keep in mind that Alabama is one of 18 states in which 100 percent of public school students take the test. The state pays for one administration of the test for students in their junior year.  In most other states, only those applying for college take the test. Students can take the test multiple times. Their best score is the one counted in the statistics.

Among the 18 states where 100 percent of students take the test, Alabama’s composite score ranks behind 13 states and is tied with North Carolina. Alabama’s average composite score ranks ahead of South Carolina, Mississippi, and Nevada.



Over the past three years, the average composite score has increased for every subgroup of students, except for nonpoverty students. The average composite for nonpoverty students was 20.8 in 2015 and 20.7 in 2017.


On the WorkKeys assessment, 64 percent of graduates in 2017 earned a Silver certification or higher, the level needed to be considered college or career ready by the state. That’s up from 61 percent in 2016.

ACT has identified the foundational skills needed to be successful in thousands of different occupations.  ACT predicts that students who score at the Silver level have the skills needed for 67 percent of the occupations in their database. Those scoring at the Gold level have the foundational skills needed for 93 percent of jobs profiled. A platinum level certification indicates that a candidate has the skills needed in 99 percent of jobs ACT has profiled.


Thank God For Mississippi: They’re Leading the Way on Educational Progress

At least in terms of education, it’s time to retire the old Alabama catchphrase, “Thank God for Mississippi.”

It’s an easy response when the latest list comes out that finds Alabama and Mississippi at the bottom of the rankings.

Frequently, Alabama bests Mississippi, and, in so doing, stays out of last place.

However, a review of the latest results on the National Assessment of Education Progress (NAEP) shows Mississippi students now outscore Alabama students on almost every measure.

In 4th and 8th grade math, Mississippi continued its multi-year rise in performance. Comparing all students in each state, Mississippi has a higher average scale score at both grade levels and higher percentages of students scoring proficient.

In reading, Alabama still outscores Mississippi when all students’ scores are averaged together, though the gap between the two states continues to close.

But looking deeper in the data, in every major subgroup measured, Mississippi students are outscoring Alabama students. When comparing Alabama’s white students to Mississippi whites, Alabama black students to Mississippi black students, Alabama Hispanic students to Mississippi Hispanics, Alabama poverty and nonpoverty students with their counterparts in Mississippi, on all those measures, Mississippi comes out on top.

Comparing the different subgroups with their peers in other states provides some assurance for Alabama. Both Alabama and Mississippi tend to show up poorly on “all students” rankings on standardized tests. That is due in part to the fact that historically disadvantaged groups — students from low-income households, blacks, and Hispanics — tend to score lower on standardized tests than whites and students from nonpoverty households. Alabama and Mississippi both have higher percentages of students in poverty and higher minority percentages than most states.

Breaking out the scores by subgroup allows a more nuanced comparison. When comparing subgroups, Alabama’s performance is better in some instances than the overall ranking might suggest. For instance, in 4th-grade math, Alabama’s “all students” rank is fourth from the bottom among U.S. states. However, when directly comparing black students, Alabama black 4th graders outscore black students in 14 other states.  A deeper examination of subgroups brings to light some important points.

  1. It is certainly not the case that Alabama’s lackluster performance on the NAEP can be blamed on black students or poor students. On some measures, blacks and poverty students in Alabama earn a higher national ranking in their respective categories than whites and nonpoverty students.  It is weak performance across all subgroups — black and white, poverty and nonpoverty — that weighs on Alabama’s competitive position.
  2. There is one subgroup that is especially in need of increased attention from Alabama educators: Hispanics. In both grades and both subjects, the average scale score for Alabama Hispanics was lower than the average scale score for Hispanics in any other state.

In the rank table below, you can explore the average scale score of each Alabama subgroup ranking nationally. Bear in mind that the rank for white students, poverty and nonpoverty students includes all 50 states. For Hispanics, there are 47 states in the comparison group, because in three states there weren’t enough Hispanic students tested to generate a statistically valid sample. For black students, the rank is among 40 states on all measures except 4th-grade math. In 4th-grade math, the comparison group includes 42 states.

Looking more broadly,

  1. Alabama has focused attention on instruction in the early grades and evidence from NAEP shows that has provided benefits. In 2011, Alabama tied the national average in 4th-grade reading. Despite some erosion since then, 4th-grade reading remains stronger than other subjects. In math, Alabama 4th graders improved from No. 50 in 2015 to No. 48 in 2017. Obviously, sustained focus on the early grades remains important.
  2. However, Alabama’s NAEP results in 8th grade remain consistently poor in both reading and math. Middle grades instruction also deserved concerted focus and investment.
  3. Alabama should study Mississippi’s approach to see if that state’s progress can provide lessons. While more in-depth analysis is needed, Mississippi education officials credit that state’s progress to continuity of leadership and a sustained, systematic approach to supporting its school districts. The current superintendent, Carey M. Wright, took office in 2013, recruited from the District of Columbia where she was Chief Academic Officer. Mississippi adopted new higher academic standards and set up a system of professional development to help Mississippi teachers teach to the new standards. Mississippi also implemented a literacy initiative similar to the Alabama Reading Initiative but targeted the initiative primarily at high need schools. On the surface, Mississippi’s efforts mirror Alabama’s, a deeper look might reveal ways in which Alabama’s approach can be adjusted in order to produce similar results.

ACT Aspire: 2017 Results and a Final Look Back

The ACT Aspire, a suite of standardized tests given statewide to students in grades 3-8 and 10, has been the State of Alabama’s primary tool for measuring the academic progress of Alabama public schools since the 2013-2014 school year.

Over the course of four administrations of the Aspire, students showed progress on most measures. By 2017, the percentage of children scoring proficient on the Aspire had improved in most grades and subjects, in some cases significantly. (To explore the data on your own, including views that allow for interactive comparisons between selected schools and systems, follow this link. To view the visualization in full screen, click the button on the bottom right corner).

The gains in math were the strongest. All grades saw steady improvements, except for 10th grade where the percentage proficient was basically flat. The implementation of Aspire roughly coincided with the adoption of new state standards in mathematics, which were intended to increase students’ depth of understanding of mathematical concepts. Though the Aspire has now been replaced by a different standardized testing system developed by Scantron, math proficiency levels will continue to be of crucial interest. On the National Assessment of Educational Progress (NAEP), the national benchmark testing system, Alabama students have been at or near the bottom of the country. On the 2017 NAEP, Alabama students posted slight gains (Click here for Alabama 2017 NAEP Results). Continued improvement in mathematics instruction is needed.


In reading, the percentage of children scoring proficient improved modestly in grades 3-6, but results for grades 7, 8 and 10 were mixed. Alabama had made significant progress in reading achievement, progress that coincided with investment in and deployment of the Alabama Reading Initiative (ARI). In the wake of the Great Recession, funding for the program was cut and school systems were given the flexibility in their use of ARI funds. The most recent state budget included a $4 million increase for ARI but stipulated that the program return to its initial focus on early grade reading.


Aspire tests for science were not uniformly administered for all grades in all years, but in the years and grades available, gains were also made in that subject.


In Alabama and across the country, the differences in the proficiency rates among various subgroups of students remains a concern. In both the state and the nation, the percentage of students from poverty backgrounds scoring proficient is about 25-30 percentage points lower than the percentage of nonpoverty students scoring proficient. Similar gaps between whites and blacks, and whites and Hispanic students.



As a result of those gaps, the percentage of the student body in a school system tends to predict the overall proficiency levels achieved by the students on these standardized tests. The scatterplot chart below shows this general correlation between proficiency levels and poverty levels. A school system’s proficiency rate determines its vertical position on the chart (higher on the chart, the higher the proficiency rate). A system’s poverty percentage, based on the percentage of students directly qualifying for free meals under the National School Lunch Program, determines the system’s position on the horizontal axis, with higher poverty districts to the left of the chart and lower poverty districts progressing to the right.

Though the correlation is obvious, it is also obvious that systems with similar poverty levels often show very different proficiency levels. In other words, the school systems can and do exceed expectations, through effective teaching, resources, and organization.

As a testing tool, Aspire had both fans and detractors. Critics complained that resources for preparing for the test were lacking and that results were not provided quickly. They also questioned whether the tests were properly aligned with the state’s course of study. Fans appreciated the fact that Aspire results were aligned with the ACT, the widely used college entrance exam. Thus, a student’s score on the Aspire tests served as a predictor for eventual performance on the ACT.

The test’s results, which showed lower proficiency rates than the previous state test, the Alabama Reading and Math Test, were also considered by many a more accurate reflection of students’ performance. Aspire proficiency levels for Alabama students were closer to the results Alabama students produced on the National Assessment of Educational Progress, though Aspire proficiency percentages were still higher than Alabama NAEP proficiency levels. Here is a comparison of Aspire and NAEP results for Alabama, with the proficiency levels for national public schools included for comparison.

 JurisdictionTest% of students at or above Proficient
4th Grade MathNational publicNAEP40%
4th Grade ReadingNational publicNAEP35%
8th Grade MathNational publicNAEP33%
8th Grade ReadingNational publicNAEP35%

Population Change in Alabama Counties and Metro Areas

As a follow-up to PARCA’s previous post on estimated changes to Alabama’s population in comparison to other states, we now present recent U.S. Census estimates of population change in Alabama counties and metro areas.

As a state, Alabama’s population has increased 2 percent since 2010, a faster rate of growth than Mississippi, but slower than other Southeastern states. A closer look, examining population change at the county level, reveals a wide disparity between the population growth rates within the state, with 45 of Alabama’s 67 counties experiencing population loss between 2010 and 2017, according to the Census estimates.

Rural counties in Central Alabama, particularly in Alabama’s Black Belt have experienced the greatest losses in percentage terms. The steepest loss was Macon County, which has experienced a 12.6 percent population decline since 2010, according to the estimates. Dallas County has lost the greatest number of residents over the time period, with the estimated population dropping by 4,605.

Meanwhile, in percentage terms, the strongest growth over the course of the decade is occurring in coastal Baldwin County and in Lee County, home to Auburn University.

The Huntsville area counties of Madison and Limestone counties are continuing to grow at a rapid pace, as are the suburban counties around Birmingham. Tuscaloosa County also continues to grow. Suburban counties around Montgomery are growing but at a slightly slower pace. Houston and Coffee counties, in the Wiregrass region, are also seeing moderate growth.

As for the state’s largest counties, Jefferson County and Mobile counties are seeing minimal growth while Montgomery County is losing population, according to the estimates.
Looking at the estimates for the most recent year, 2016-2017, there appears to have been positive population growth in most of the counties bordering Georgia.

Examining the components of change, the central counties of the three largest metro areas, Jefferson, Montgomery, and Mobile, are losing large numbers of residents through domestic migration. Residents of the central counties moving to suburban counties or elsewhere in the U.S.

That population loss in the central counties is offset by the natural increase in those counties and by international in-migration. Tuscaloosa, Lee, and Madison counties are also seeing population gains through international in-migration. Much of the rest of the state, particularly rural counties, have received little in terms of international in-migration.

In 40 out of the 67 Alabama counties, the number of deaths outnumbers the number of births, leading to a negative rate of natural increase. Counties where deaths outnumber births tend to have an aging population and low levels of population in-flow. Poorer health in those counties may also contribute to higher rates of death.

When looking at population change at the metropolitan level, the Birmingham-Hoover metro area is seeing modest growth. Mobile County, which is its own metro area, has grown only slightly since 2010, but neighboring Baldwin County, a separate MSA officially called the Daphne-Fairhope-Foley MSA, is the Alabama’s fastest growing in percentage terms (16.7 percent growth since 2010) and is second to the Huntsville MSA in numeric growth over the period.

Looking at the bigger picture, the visualization below allows you to compare rates of population change across all the metropolitan statistical areas in the U.S. It is worth noting that despite, Alabama’s slow growth overall, the Auburn-Opelika and Daphne-Fairhope-Foley MSA rank in the top 20 of the U.S. in terms of percentage growth. With the exception of Huntsville, which ranks 75th in terms of percentage growth since 2010, Alabama’s major metros, Birmingham, Mobile, and Montgomery, are growing more slowly than major MSAs in Florida, Georgia, and the Carolinas.

Alabama Grows, but Slowly, Weighed Down by High Death Rate and Low Rate of International Migration

Alabama’s pace of population growth increased in 2017, but the state remains slow-growing compared to most of its Southeastern neighbors, according to the latest estimates from the U.S. Census Bureau.

Two factors holding down growth: Alabama has the nation’s second-highest death rate and one of the lowest rates of immigration from other countries.

Domestic in-migration

For the first time in several years, Alabama had a positive rate of domestic in-migration — more people moving to the state than leavingvfor other states, according to PARCA’s analysis of the recently released data.

For most of the past decade, more U.S. residents have left Alabama than moved into the state. While the new Census estimates show Alabama with a net positive in domestic migration, most other Southeastern states have much higher rates of domestic in-migration. That’s been true since 2010.

A case in point is South Carolina. In 2010, Alabama’s population was greater than South Carolina’s: 4,785,579 vs. 4,635,834. But since 2010 South Carolina has added almost 400,000 new residents with the strongest source of growth being through domestic in-migration. Alabama has added fewer than 100,000 residents over the same period. According to the estimates, South Carolina’s population now exceeds Alabama’s, with 5,024,369 residents to Alabama’s 4,874,747.

After the next Census, due to its relatively sluggish population growth, Alabama is expected to lose a seat in the U.S. House of Representatives. North Carolina is expected to gain a seat and Florida is expected to gain two.

A high death rate

Though Alabama may be beginning to attract residents from other states, our state residents are dying faster and earlier than residents of other states.

Alabama has the country’s second highest death rate in 2017, according to Census estimates (only West Virginia’s is higher). Over 52,000 Alabamians died in 2012, yielding a death rate of 10.8 per 1,000 population. That’s twice the rate of death rate of the leading state, Idaho, which has a death rate of 5.4. And 2017 is not an anomaly: Alabama has been No. 2 every year of this decade, except for 2012 when our death rate ranked No. 3.

Alabama’s high death rate isn’t just noted in Census estimates. The Centers for Disease Control consistently ranks Alabama’s death rate from a variety of leading causes of death in the country’s top 10.

In 2016, Alabama had the fourth highest death rate from heart disease, the nation’s leading cause of death. Alabama also had the country’s highest death rate from stroke, ranked No. 7 from deaths from cancer and Chronic Lower Respiratory Diseases.

In 2016 Alabama had the country’s highest infant mortality rate and the second highest rate of deaths from firearms.

The more than 58,000 births in Alabama, a rate of 12 per 1,000, more than offset the number of deaths, resulting in a net positive natural increase in the population of approximately 6,000. Alabama’s birth rate ranked 30th among the US states, slightly below the U.S. average of 12.16.

International immigration

A final factor in population change is international migration and relatively few migrants from other countries are moving to Alabama. In 2017, Alabama ranked No. 46 among U.S. states in its rate of international in-migration. Five states attracted less than 1 foreign immigrant for every 1,000 residents: Alabama, Mississippi, West Virginia, Montana and Wyoming.

Overall picture

Most states added population in 2017, according to the estimates. Only, Illinois, West Virginia, Wyoming, Louisiana, Alaska, Mississippi, and Hawaii lost population.

Alabama had a net addition of 14,202 residents from July 1, 2016 to July 1, 2017, a 0.3 percent increase in the state’s population. Alabama’s percentage population increase ranked 33rd.

Since 2010, Alabama’s population has increased by 94,612, or 2 percent, ranking 38th among the states in percentage population growth during that period.

College-Going Rates for Alabama High Schools

With population growth and a rising high school graduation rate, Alabama’s high schools are producing more graduates and they are sending more graduates, in absolute numbers, to higher education. However, at the same time, a slightly smaller percentage of graduates are moving directly into higher education. In 2016, 63 percent of high school graduates enrolled in college in the year after their graduation. That compares to a 65 percent enrollment rate in 2014.

That’s according to new data released by the Alabama Commission on High Education (ACHE). The data from the report is drawn from the National Student Clearinghouse, which tracks student entry and progress through higher education. College-going rates and college destination statistics for the state, for systems and for individual Alabama high schools can be found on PARCA’s Data Dashboard.

The findings in the most recent report are similar to patterns identified in another recently released dataset from ACHE, its high school feedback report. PARCA’s analysis of that data shows that though a slightly lower percentage of graduates are enrolling in higher education, those enrolling appear to be better prepared since a smaller percentage of those enrolled students are placed in remedial education after graduation.

Where are we now?

Alabama trails most U.S. states when it comes to educational attainment, with a smaller percentage of Alabama’s population aged 25-64 holding a college degree. Higher levels of educational attainment produce higher incomes and more job stability in an economy which increasingly demands education beyond high school. To close the gap with other states, Alabama needs a greater share of its population obtaining higher education credentials. But, according to the most recent comparative data, Alabama trails the national average and lags behind all other Southeastern states in the percentage of high school graduates going directly into college.

According to the new ACHE data, approximately 63 percent of Alabama high school graduates are enrolling in college the year after graduating from high school:

  • 32 percent of high school graduates in the state of Alabama enrolled in two-year colleges
  • 31 percent enrolled at a four-year college
  • 37 did not continue into higher education in the year after graduating from high school

Of those Alabama high school graduates enrolling in higher education:

  • 91 percent went to college in-state
  • 9 percent went to college in another state
  • 93 percent went to a public college
  • 7 percent enrolled at a private college

Variation by System

A deeper dive in the data shows how diverse the state’s educational eco-system is. Across the state, systems vary widely in the percentage of graduates who go on to higher education. Some patterns are predictable: affluent suburban districts tend to send most of their graduates to college at four-year colleges and universities. In general, high schools where more students are affluent have a greater share of students going on to higher education. In schools where poverty rates are higher, a smaller share of students go on to higher education (See this chart that compares college-going rates with the proportion of poverty students at a high school). However, a greater variance appears when the percentage of students going to two-year colleges is considered in the mix.

So, it’s not a surprise to find the Mountain Brook City School System topping the college-going list, with the highest percentage of graduates going on to higher education. Over 90 percent of Mountain Brook’s 2016 graduates enrolled in college, with the vast majority of them (86 percent of the graduates) entering a 4-year college. Only 5 percent of graduates enrolled in a two-year college.

More unexpected is the system that finished third on the college-going list. Brewton City Schools also had an impressive college-going rate of 85 percent, but the destination of Brewton’s graduates was different from Mountain Brook’s. In that system, 48 percent of graduates enrolled in a two-year college, while 37 percent went to four-year schools.

Those varying paths toward achieving a high college-going rate continue throughout the rankings.

Among the top 20 systems, 9 systems lean heavily toward 4-year college-going and 11 lean more heavily toward 2-year college going.

Variance by High Schools and Within Systems

When examining the college-going rates at individual high schools, the same contrasting picture of college destination is apparent. Some high schools achieve a high college-going rate by sending most graduates to four-year schools, while others send a high proportion of students to two-year colleges and thereby have high college-going rates.

In some systems, there is a significant variance among the high schools within the same school system. This is particularly true in systems that have magnet high schools (schools where students from throughout the district can apply to pursue advanced academic options).

This is most readily apparent in Montgomery County. Three magnet high schools in the Montgomery County system, Brewbaker Technology Magnet High School, Loveless Academic Magnet Program, and Booker T. Washington Magnet High Schools rank in the top 10 among high schools for the percentage of students enrolling in college the year after graduation. All three send close to 90 percent or more of their graduates to college, and most of them to four-year schools. By contrast, of the 2016 graduates of Lanier Senior High School, only 34 percent enrolled in higher education, according to the Clearinghouse data.

Where do we want to go?

In terms of national comparisons, Alabama has historically ranked low in educational attainment. The U.S. Census Bureau estimates 34 percent of Alabama’s population between the ages of 25 and 64 have an associate’s degree or higher. That ranks Alabama 9th lowest among U.S. states.

In order to increase Alabama competitiveness, Alabama high schools need to:

  • Continue increasing preparation levels of high school graduates
  • Identify and employ effective approaches for connecting students to higher education enrollment and financing opportunities

Colleges and universities need to:

  • Increase outreach to Alabama high school students
  • Address problems of access and affordability
  • And once in college, schools need to work with students to increase student persistence and graduation rates

Better Revenue in 2017 Means Easier Budgeting in the New Year

As the Alabama Legislature returns to Montgomery today, it faces an unusual situation: a relatively stable financial picture.

Both the state’s main checking accounts, the General Fund and the Education Trust Fund (ETF), grew at a relatively healthy pace in FY 2017, both up about 4 percent over FY 2016. The traditionally anemic General Fund ended with an $80 million surplus, significantly exceeding estimates. The ETF met estimates and ended with a $1 million surplus.

Since the current year budget (FY 2018) set spending levels at virtually the same level as 2017, budget writers can anticipate additional surplus funds by the end of 2018, creating a favorable climate for writing the 2019 General Fund budget.

On the spending side, Medicaid finished FY 2017 with lower than anticipated costs. Rolling that surplus forward into the FY 2018 budget also should make budgeting for 2019 easier.

And while the implications are yet to be calculated, the tax cut at the federal level will also be good for revenue collection in Alabama. When federal taxes are cut, Alabama tax revenue goes up. That’s because federal income taxes are deductible when calculating Alabama taxes. Thus the money individuals and corporations won’t be sending to Washington will be taxable at the state level, increasing revenue.

While the Legislature won’t be facing a budget crisis this year, there will be struggles. Unless Congress restores federal funding for the Children’s Health Insurance Program, lawmakers will have to scramble to find money to pay for the program or curtail insurance coverage for the 77,000 low-income children enrolled in the program.

Also, the perennial problem of funding for prisons will be front and center. The Alabama Department of Corrections has requested a $90 million increase in funding to help it comply with court-ordered improvements to mental health services as well as paying for basic improvements to facilities and increases in operating costs.

A Closer Look at the Final Numbers for 2017

Traditionally, the ETF has grown faster than the General Fund, since it draws on income and sales taxes. Those taxes tend to grow when the economy is healthy. The General Fund relies on a hodgepodge of other taxes, which haven’t tended to grow with the economy. However, in recent years, legislators have shifted some sales and use taxes into the General Fund, allowing that fund to benefit from growth.

Legislators can take cheer in the fact that changes they’ve made in recent years to shift growth taxes into the General Fund helped that fund grow at a rate about even with the education budget.

However, some of the 2017 increases are not likely to be sustained over time. For example, a new tax, the Simplified Sellers Use Tax, a voluntary 8 percent tax on sales paid by Internet retailers without a physical presence in the state, was a new revenue source. Overall, for 2017, the tax, referred to the “Amazon tax,” brought in $25 million to the state in its first year of collection. Of that total, 75 percent, or almost $19 million, went to the General Fund, while the remaining 25 percent, or $6 million, went to the ETF.

That $25 million actually represents half of what the tax brought in. The other half of the tax is distributed to cities and counties, 25 percent to cities and 25 percent to counties, based on population. The tax will likely continue to grow but won’t grow as fast since the increase this year results from the fact that it is a new tax.

The shift of some of those growth taxes away from the ETF has led to slower growth in that fund. In comparison to other states, Alabama has lost ground on per-pupil spending on K-12 education in recent years.


Education Fund

Receipts to the ETF in 2017 were up by 4.19 percent compared to 2016. But that increase comes with a caveat. In 2016, $34 million was deducted from overall sales tax receipts and diverted to the Alabama Prepaid College Tuition Program (PACT). In 2017, there will be no diversion and the allocation to PACT will be paid out of the ETF. Accounting for that difference, the actual growth in the revenue flowing to the ETF is more like 3.6 percent.

While the bulk of the increase in the ETF was provided by income and sales tax growth, the addition of the Simplified Sellers Use Tax provided a $6.5 million boost to the ETF. The Mobile Telecom Tax continued a multi-year decline as cell phone companies categorize a greater portion of billing to data services rather than calling. Data plans aren’t subject to the tax.

Revenue SourceFY 2016FY 2017Change% Change
Income Tax$3,722,129,992$3,892,525,501$170,395,5094.58%
Sales Tax$1,744,468,414$1,811,657,811$67,189,3973.85%
Utility Tax$376,625,096$387,966,309$11,341,2133.01%
Simplified Sellers Use Tax$0$6,545,297$6,545,297NA
Use Tax - Remote$4,985,996$6,913,726$1,927,73038.66%
Transfers & Reversions$402,865$404,672$1,8070.45%
Insurance Premium Tax$30,993,346$30,993,296-$500.00%
Privilege License Tax$129,773$112,337-$17,436-13.44%
Hydroelectric KWH Tax$508,723$473,797-$34,926-6.87%
Use Tax$152,082,201$151,598,885-$483,317-0.32%
Beer Tax$22,909,170$22,231,590-$677,580-2.96%
Mobile Telecom Tax$17,700,484$15,904,023-$1,796,461-10.15%

Income Tax Detail

Looking more closely at the details of income tax collections, individual income tax gross receipts were up 3.31 percent, or $135 million. Corporate income taxes were up more than 10 percent, or $42 million. When refunds are factored in the net receipts to the ETF from income taxes were up 4.58 percent, or $170 million.

Income Tax DetailFY 2016FY 2017Change% Change
Individual Receipts$4,071,791,983$4,206,538,511$134,746,5283.31%
Corporate Receipts$416,975,401$459,875,408$42,900,00710.29%
Total Receipts$4,488,767,384$4,666,413,918$177,646,5343.96%
Individual Refunds$582,735,210$594,871,933$12,136,7232.08%
Corporate Refunds$84,470,852$78,221,972-$6,248,880-7.40%
Total Refunds$667,206,062$673,093,905$5,887,8430.88%
Revenue Dept Admin$49,046,548$49,046,547-$10.00%
Property Tax Relief$50,384,782$51,705,847$1,321,0652.62%
Political Party Contributions$0$42,118$42,118
Total Deductions$99,431,330$100,794,512$1,363,1821.37%
Net Income Tax to ETF$3,722,129,992$3,892,525,501$170,395,5094.58%

Sales Tax Detail

Gross receipts from the sales tax were up just 1.84 percent, but the net distribution of the sales tax to the ETF was up 3.85 percent over 2016. That higher net distribution is due mainly to two factors. First is the change to how that PACT money is accounted for. The second is a reduction in the amount refunded to the Department of Human Resources for sales taxes paid by the Supplemental Nutrition Assistance Program (SNAP). Since less was spent on SNAP this year, the state refunded $5 million less to DHR.

Sales Tax DetailFY 2016FY 2017Change% Change
Gross Receipts$2,230,184,536$2,271,145,936$40,961,4001.84%
Revenue Dept Admin$61,445,499$67,731,645$6,286,14610.23%
County Payments$378,000$378,000$00.00%
PSCA Debt Service$202,832,582$204,735,005$1,902,4230.94%
Auto Sales - SGF$96,478,391$100,823,695$4,345,3044.50%
GF Excess Discount$11,526,149$12,032,478$506,3294.39%
SGF Parks Bonds$8,206,200$8,206,200$00.00%
AAC School Tax Credits$374,704$356,394-$18,310-4.89%
PACT Sales Tax$33,952,000$0-$33,952,000-100.00%
Total Deductions$485,716,122$459,488,125-$26,227,997-5.40%
Net Sales Tax to ETF$1,744,468,414$1,811,657,811$67,189,3973.85%

General Fund

The biggest contributor to the gains in the General Fund in 2017 was the tax on insurance company licenses. According to budget analysts, this revenue source saw a drop during the Great Recession indicating that in tight financial times, people were forgoing life insurance coverage. In FY 2017, it appears that incomes had recovered enough that more people were restoring coverage. Also, premiums on property insurance have increased due to natural disasters.

The corporation tax, which is levied on out-of-state businesses licensed to do business in Alabama, saw a $19 million increase. That’s thanks not only to an increase in corporate profits but also to the dwindling amount paid out in funds from the tax set aside to pay claims on a business privilege tax that was ruled unconstitutional. With those claims mostly paid out, the full proceeds of the tax are available.

The $7 million increase in proceeds from the unclaimed property fund results from efforts by the Alabama Treasurer’s office to disperse excess money built up in that fund. The growth in the proceeds from this source is unlikely to continue.

The Use Tax, paid by companies buying materials from out-of-state, also increased with the pick up in economic activity. Bank profits appear to be up, producing a boost in the Financial Institutions Excise tax. Taxes on oil and gas production were up as prices rose. Auto sales taxes continued healthy growth, as did the lodging tax, spurred by growth in tourism. As the Federal Reserve increased interest rates, interest income on state deposits also increased.

The biggest loss in revenue came in the miscellaneous category. In 2016 that category was inflated due to settlements from TransOcean and BP related to the BP Oil spill. In 2017, a $50 million payout from BP made up most of the miscellaneous revenue. In 2018, that miscellaneous revenue will drop further because the remaining payouts from BP starting in 2018 are pledged to pay off bonds. Also affecting the bottom line, in 2017, the Legislature chose to decrease the amount transferred into the General Fund through transfers and diversions. During tougher budget years, the Legislature required some agencies to transfer fees and other revenue collected by the agency into the General Fund. In 2017, the Legislature decreased those required transfers by about $13 million dollars.

 FY 2016FY 2017Change% Change
Insurance Company Licenses$293,534,706$319,814,875$26,280,1708.95%
Simplified Sellers Use Tax$841,382$19,635,891$18,794,5092,233.77%
Corporation Tax$56,831,934$75,499,764$18,667,83032.85%
Abandoned Property$45,000,000$52,000,000$7,000,00015.56%
Use Tax$178,951,918$184,790,861$5,838,9433.26%
Use Tax - Remote$14,958,062$20,741,255$5,783,19338.66%
Financial Institution Excise Tax$22,246,274$27,633,823$5,387,54924.22%
Oil and Gas Production$29,481,805$33,943,406$4,461,60115.13%
Sales Tax$97,844,307$102,230,663$4,386,3574.48%
Interest on State Deposits$9,533,292$13,550,218$4,016,92642.14%
Ad Valorem Tax$150,853,517$154,429,888$3,576,3712.37%
Lodgings Tax$46,869,544$49,851,286$2,981,7426.36%
Mortgage Tax$28,292,880$29,886,763$1,593,8835.63%
Motor Vehicle Licenses$44,210,293$45,143,979$933,6862.11%
Freight Line Equipment$4,028,577$4,749,814$721,23717.90%
Lease Tangible Personal Property$76,634,471$77,297,544$663,0730.87%
Court Costs$61,282,678$61,860,771$578,0930.94%
Sales Tax Discount-Parks Bonds$19,732,349$20,238,678$506,3292.57%
Deed Record Tax$9,478,709$9,978,359$499,6505.27%
Tobacco Tax$8,739,383$9,220,768$481,3855.51%
Oil Company Licenses$8,026,984$8,383,195$356,2114.44%
Use Tax Discount$2,940,282$3,216,163$275,8819.38%
Vapor Products$1,147,675$1,361,915$214,23918.67%
Auto Title Tax$23,026,791$23,116,469$89,6780.39%
Tobacco Settlement$2,004,710$2,070,858$66,1483.30%
Securities Commission$9,420,790$9,457,109$36,3190.39%
Public Safety$17,561,609$17,587,450$25,8410.15%
Judicial Administration$102,779$99,655-$3,123-3.04%
Manufactured Homes Registration Fee$553,107$544,840-$8,267-1.49%
Privilege Licences$5,067,963$4,955,113-$112,850-2.23%
Pari-Mutuel Betting$1,400,662$1,226,025-$174,637-12.47%
Hazardous Waste$208,997$34,219-$174,778-83.63%
ABC Board$100,816,514$100,623,508-$193,006-0.19%
Driver License$17,443,036$16,642,064-$800,972-4.59%
Public Utility$24,169,859$23,198,681-$971,178-4.02%
Cigarette Tax$164,746,858$163,313,105-$1,433,753-0.87%
Mobile Telecommunications Tax$30,900,967$27,308,041-$3,592,926-11.63%
Interest Alabama Trust$103,310,045$98,040,084-$5,269,961-5.10%
Total From Tax Sources$1,787,375,258$1,875,730,902$88,355,6444.94%
Transfers and Reversions$57,951,577$44,102,869-$13,848,708-23.90%
Bottom Line Total for General Fund$1,845,326,835$1,919,833,772$74,506,9374.04%





Progress Made on Remedial Education

The latest statistics from the Alabama Commission on Higher Education (ACHE) show that Alabama high schools are making progress in producing graduates who are ready for college-level coursework.

According to the new report from ACHE, the percentage of high school graduates who had to take remedial courses upon entering Alabama colleges decreased to 28.8 percent for the graduating class of 2016, down from 30.4 percent in 2015 and 34.6 percent in 2011.

Why is remediation an issue?

In a perfect world, any student graduating from an Alabama high school who wishes to enter college would receive a level of education in high school that would prepare them for college-level courses.

However, that is often not the case. When colleges assess incoming students, the colleges often find that the students are in need of a catch-up course at college before they’re ready to tackle college-level work.

These remedial courses don’t count toward attainment of a college degree. They impose an expense on the students and the colleges, an expense that adds to the time and cost of attaining a college degree.

Alabama’s strategic plan for improving K-12 education, Plan 2020, set a goal of decreasing the remediation rate. When high schools do a better job of preparing students for college-level work, it produces savings for the student, their parents, and the education system in general.

While the goal set in Plan 2020 to reduce the remediation rate by approximately 3 percent a year has not been attained, K-12 schools have made progress.

To explore the statics for remediation and college going for local systems, follow this link. Bear in mind that the ACHE report only captures high school graduates who enrolled in the fall after their graduation in Alabama public colleges. The college-going and remediation rates for schools that send significant numbers of students to private colleges or to out-of-state colleges will not necessarily reflect the outcomes for the entire graduating class.

Progress Being Made

According to the ACHE data, the number of high school graduates in Alabama increased from 44,086 in 2011 to 49,953 in 2016, as the population has grown, and the graduation rate has improved.

The number of high school students enrolling at in-state public colleges has increased as well, though in 2016 the total enrollment number was down slightly in comparison to 2015.

However, the percentage of high school graduates enrolling in Alabama public colleges in the fall after graduation has declined slightly.  In 2016, 48 percent of high school graduates enrolled in Alabama higher education the following fall, compared to 53.4 percent in 2011. Data from other sources indicates that the total post-high school college-going rate for Alabama is around 62 percent (Unlike this set of ACHE statistics, those statistics capture students who go to private colleges or who go to college out-of-state).

In 2016, about half of the enrollees went to a two-year college and the other half to four-year colleges.

Remediation rates are calculated for two subjects: math and English.

The most progress has been made in decreasing the percentage of students having to take remedial English. In 2016, the percentage of students needing remedial courses in English dropped to 13 percent, down from 17 percent in 2013.

The percentage of enrolled students taking remedial math also declined to 24 percent in 2016, compared to 26 percent in 2013.

High School Graduation Rates

Remedial rates and college-going rates are affected by changes in Alabama’s high school graduation rate.  At the same time that the remediation rate has gone down, Alabama high schools have improved the high school graduation rate. In 2011, only 72 percent of students in Alabama high schools graduated on time. In 2016, the most recent year available, 89 percent of students graduated on time according to Alabama’s definition of graduation. To see PARCA’s presentation of 2016 high school graduation rates for the state and local schools, follow this link. 

The rapid rise in Alabama’s graduation rate has sparked some concern about whether Alabama’s rate had become inflated, that Alabama schools had lowered their standards for awarding high school diplomas. In trying to improve graduation rates, the state and local schools had made several changes. Alabama instituted a credit recovery system that allowed students who had failed the class to take targeted instruction to improve their areas of weakness rather than having them repeat the entire course. Alabama also dropped its high school exit exam, which had, in the past, prevented some students from graduating. Finally, the state also changed the way it defined who was eligible to receive a diploma and began allowing special education students taking “Essentials” courses (courses not fully aligned with Alabama academic standards) to count those courses toward graduation.

In 2016, the U.S. Department of Education launched an inquiry into Alabama’s standards for granting high school diplomas. As a result of the investigation and an audit of records, some of the students who took the Essentials classes should not have been counted as graduates under the federal definition of a graduate. After a thorough audit of student records, the 2016 graduation was recalculated removing some of those students in the Essentials pathways from the total counted as graduates. In the end, the graduation rate re-calculated for federal reporting was two percentage points lower than Alabama’s definition of who is a graduate.

The 2016 graduation rate report now includes both a state graduation rate and a federal graduation rate.  The most significant difference between the two rates is found among special education students. According to Alabama’s definition, 72 percent of special education students were counted as high school graduates in 2016. Under the federal definition which excludes the Essentials courses, only 54 percent of special education students were counted as graduates. That’s 1,106 fewer special education students counted as graduates under the federal definition.

Despite the concerns about the graduation rate, the new improved, lower remediation rate reported in the ACHE reports provides evidence that Alabama high schools are providing higher levels of preparation for graduates headed into higher education. However, the decline in the college-going rate also bears watching. The lower Alabama public college-going rate may indicate that some students are going straight into the workforce thanks to improvements in the economy.  It may also indicate some graduates don’t feel adequately prepared to immediately enter college. The cost of college has also continued to rise which may discourage some high school graduates from entering college.

Where do we go from here?

Alabama high schools should continue to increase the quality of education delivered in high school so that students enter college prepared for college-level work. High schools and colleges should also continue to improve efforts to help students apply for and finance a college education. According to the latest available statistics from the National Center for Higher Education Management Systems (NCHEMS), Alabama’s rate for college going immediately after high school is 62.1 percent, slightly behind the national average of 62.6 percent. However, Alabama’s rate is lower than any other Southeastern state, indicating room for improvement.



Remembering PARCA Founder Former Governor Albert Brewer

We at the Public Affairs Research Council of Alabama remember our founder, Governor Albert P. Brewer, who died January 2, 2017, at the age of 88. Gov. Brewer was a lifelong champion of equitable, efficient and effective government for Alabama.

Brewer, who had been elected Lieutenant Governor in 1966, took over as governor in 1968 upon the death of Gov. Lurleen Wallace. In an abbreviated term, Brewer gave the state a tantalizing taste of New South leadership, turning away from confrontational racial politics that had dominated the Wallace years and instead championing reform of state government and the improvement of education.

Brewer established by executive order the first state code of ethics. He declined to fill cabinet positions that had been previously occupied by political operatives. He established a state motor pool, cutting the use of personal vehicles for state business, saving $500,000 a year. He centralized the state’s computer systems saving $1 million.

A former Speaker of the Alabama House of Representatives, Brewer took a hands-on approach to legislating, pushing through one of the most consequential education reform packages ever passed in Alabama. It equalized educational appropriations and raised them by over $100 million, increasing teacher salaries more than 20 percent over two years.  He launched a Constitutional reform effort, established the Alabama Commission on Higher Education, and launched the operations of the state’s Medicaid program.

Despite the dynamism of his administration and the surge of hope and optimism it inspired among his supporters, Brewer was defeated in the 1970 election by George Wallace. Wallace unleashed what is widely considered one of the dirtiest campaigns in American political history against Brewer, featuring overtly racist appeals, altered photos, and false personal attacks on Brewer family members. Brewer’s defeat represents one of the great lost opportunities in Alabama history, according to former Decatur Daily Publisher Barrett Shelton, a lifelong friend of Brewer’s.

“Albert Brewer put a face on Alabama that other people respected, governors around the Southeast,” Shelton said. “Had he been elected governor this would have a different state today, far more advanced than it is today.”

After retiring from politics, Brewer remained committed to improving his native state. As an elder statesman, Brewer was often called upon to chair state government reform commissions, including his most recent service on the Constitutional Revision Commission. This November, voters approved four amendments to the Constitution based on recommendations by Commission. The amendments improved procedures for voting on local constitutional amendments, clarified the impeachment process, granted counties the ability to exercise some limited home rule powers, and replaced outdated language in some articles.

Joining the faculty of Samford University’s Cumberland School of Law in 1987, Brewer led the establishment of PARCA, the Public Affairs Research Council of Alabama; a good government think tank dedicated to the improvement of Alabama state and local government. Gov. Brewer envisioned that PARCA would become a trusted source of objective information for state and local leaders. He gave his time and passion to make that vision a reality, serving as the PARCA Chairman until 2013 and as Chairman Emeritus until his death.

Gov. Brewer’s death is an enormous loss for the people of Alabama. He was one of the greatest leaders and finest people our state has known. We will miss him and we will honor him by continuing the legacy he left for us.