Alabama Tax Revenues Remarkably Resilient in 2020

Tax revenue flowing into Alabama’s General Fund and Education Trust Fund held up surprisingly well in 2020 fiscal year in spite of the Coronavirus pandemic, thanks to an extremely strong state economy preceding the pandemic and a flood of federal aid that followed the pandemic’s arrival.

Remarkably, both Alabama’s General Fund and its ETF grew substantially in 2020, meeting and exceeding budget expectations. The ETF took in an additional $209 million in 2020 compared to 2019, a 3% increase. The General Fund received 7% or $147 million more in 2020 than it did in 2019.

How is that possible considering the spike in unemployment that began in March and still has not completely abated? What about the mandatory business closures in March and April and the restrictions still in place to protect against the spread of the Coronavirus?

Several factors combined to dampen the blow to tax revenues.   

  1. A very strong economy going into the pandemic. Unemployment was at a historic low between October and March. That makes up the first half of the fiscal year. Prior to the pandemic, income tax receipts were up around 7% over the same period in 2019. Collections dropped drastically but then began to recover. Taking the whole year into consideration, income tax collections were up 2.4%.
  2. Unprecedented levels of federal aid to businesses and individuals. into the economy. According to USASpending.gov, individuals and governments in Alabama have received commitments of $4.1 billion in grants, loans, director payments, or contracts related to Covid-19 relief.
  3. Sustained consumer spending. With the Paycheck Protection Program preserving payrolls, and unemployed workers receiving $600 per week in a supplement to unemployment insurance, spending shifted but didn’t contract to the extent it could have. Sales taxes dropped, then recovered and have been up and down in the months since. At the same time though, tax on internet purchases surged, offsetting the erosion in sales tax. Unlike some other states, Alabama’s sales taxes apply to groceries and medicine and thus it tends to be more stable.
  4. Thus far, a relatively quick recovery. By August, Alabama’s unemployment rate was 5.6%, down from 13.8% in April. That’s better than the national rate of 8.4%. September 2020 results on income and sales taxes trailed September 2019 results but not dramatically.

The overall stability of the budget masks some major shifts in some revenue sources. Some of the changes were pandemic related, some not. Here are some highlights.

General Fund Revenue Sources

The General Fund is supported by a myriad of tax sources. Traditionally, most of those sources saw little in growth from year to year, and the General Fund struggled to keep up with rising expenses in non-education expenses.

However, in recent years, some growth taxes have been added to the General Fund and support for general fund agencies has become more stable.

Big gainers

Simplified Sellers Use Tax: Revenue from this tax on online sales nearly doubled, up $69 million to $139 million. There are two reasons. First, this is a relatively new tax, and some new retailers joined the program for the first time. So, prior to the pandemic, the tax was already up significantly. When the pandemic set in, people shifted more spending to online purchases. While this tax, a portion of which also goes to the ETF, is expected to continue to grow, it is not expected to grow at nearly this rate in the future.

Transfers and Reversions: This boost of $44 million to the General Fund was inflated by a transfer from the Revenue Department. The department transferred $22 million in fees related to drivers who didn’t have Mandatory Auto Liability Insurance.

Insurance Premium Taxes: An additional $27 million flowed in from this tax on insurance premiums. This can be the result of more policies issued or a rise in the cost of insurance. This is the largest source of revenue in the General Fund contributing $412 million in 2020.

ABC Board: With bars closed and people stuck at home, Alabamians apparently flocked to liquor stores contributing an extra $17 million to the General Fund, an increase of 14%. Most of the jump occurred in April and May, which were record months for the ABC board.

Mortgage Record Tax: An additional $12 million flowed into the General Fund from this percentage tax charged on both refinances and home purchases. Revenues from this source accelerated in the June, July, August, and September as interest rates plunged and refinancing surged. For the year, the tax was up 38% over 2019.

Interest on the Alabama Trust Fund: A 10% jump came from the proceeds off the investments in the State’s savings account, the Alabama Trust Fund. The savings account is back at full strength now since Alabama repaid its previous borrowing from the fund that occurred during the Great Recession.  That and a strong stock market helped it generate $11 million more in 2020 than it did in 2019.

Big losers

Oil and Gas Production Tax: Thanks to the collapse in the oil market, this tax dropped by $13 million, down 41% from 2019.

Interest on State Deposits: The state earns interest on the cash it holds but because of dropping interest rates this source of revenue declined $11 million or 18%.

Lodging Tax: This tax on hotels and vacation rentals was down 15% for the year, collecting almost $9 million less for the General Fund. According to Finance officials, the drop would have been even more precipitous, but the Gulf Coast beaches saw a surge of business during the summer. The continued depression of convention and hotel traffic will continue to weigh on this revenue source, which is important for cities and for the state tourism agency. Hurricane Sally will also take a toll.

Court Costs: With the courts closed or severely limited in operation, the costs assessed to participants in the court system dropped by $5.4 million or 9%.

Education Trust Fund

The ETF supports K-12 schools and colleges and Universities. Flowing into it are the state’s two largest revenue sources: the income tax and the sales tax.

Big Gainers

Benefiting from growth taxes, the ETF has traditionally seen the strongest ups and downs: rapid growth in good times and jarring contractions with the economy falters. However, more recently the Legislature has spread some of the growth taxes and has imposed rules on how fast spending can grow. These restraints have thus far prevented mid-year budget cuts and have allowed the accumulation of reserve funds.

Income Tax: Income tax receipts to the Education Trust Fund totaled almost $4.7 billion in 2020, $109 million more than 2019, an increase of 2%. Pre-pandemic this tax was trending toward an astounding 7% increase.

Sales Taxes: The state received over $2 billion in sales tax revenue in 2020, $71 million more than last year was sent to the General Fund. In actuality, sales tax revenue increased 2.25%, solid growth, that didn’t fall off significantly during the pandemic. Smaller retailers did suffer during the closures, but grocery and hardware stores saw strong sales. With the enhancement unemployment compensation ended and continued uncertainty in the labor market, budget forecasters are keeping a close eye on this revenue source. However, so far, spending levels have held up. Revenues from September 2020 were 2.9% higher than in September 2019.

Simplified Sellers Use Tax: As in the General Fund, the contribution of this tax nearly doubled, bringing in an additional $23 million to the ETF. The proceeds of the tax are divided, with the ETF receiving 25% and the General Fund 75%.

Use Tax: A 14% increase in the Use Tax is not all because of growth. More than half the “increase” stems from the fact that the state had to pay a $12 million refund out of this tax source last year.

Biggest losers:

The Utility Tax: Down 3% or $13 million, this tax was lower because of lower energy use thanks to a cooler summer.

Mobile Telecom Tax: A dying tax, this tax applied to phone plans that sold talk time. For the most part, cellular plans now provide unlimited talk time at no charge but charge for data, which is not covered by this tax. Revenue continues to decline, down another $2 million or 18% lower than last year.

From the Year’s End Looking Forward

According to Finance Department officials, Alabama ended 2020 with $330 million balance in the ETF and a $315 million balance in the General Fund. That was result both of revenues that exceeded the budgeted amounts and expenditures that were lower than what was appropriated.

For the current fiscal year, FY 2021, Finance officials are relatively confident that revenues will more than cover the budgets. Lawmaker scaled back spending plans in light of the pandemic. As long as there aren’t additional unforeseen shocks to the economic system, the Alabama economy should generate the revenue needed to make the budgets as adopted this spring.

ETF

  • ETF 2020 budgeted: 7,125,895,252
  • ETF 2020 Receipts: 7,423,906,758.89
  • ETF 2021 budgeted 7,217,422,487

General Fund

  • General Fund 2020 budgeted: 2,192,379,876
  • General Fund 2020 receipts: 2,299,176,800
  • General Fund 2021 budgeted; 2,393,272,863

And if things were to falter, Alabama still has reserves to tap under extreme circumstances. Rainy Day Funds for both budgets have been repaid and additional budget stabilization funds are also available. As of now, none of those emergency measures have been employed.

RESERVE FUND BALANCES

  • ETF Budget Stabilization Fund – $373,269,077
  • ETF Rainy Day Account – $465,421,670
  • GF Budget Stabilization Fund – $27,297,483
  • GF Budget Rainy Day Account – $232,939,781

Alabama’s Third Century

Governor Kay Ivey delivers the keynote at Governor Albert P. Brewer Legacy Lunch at PARCA’s 2020 Annual Meeting.

Alabama spent 2019 looking back at its first 200 years of statehood. In 2020, it seems appropriate to look forward to the next 100.

PARCA’s annual meeting, held Friday at Birmingham’s Harbert Center, was inspired by that theme: Taking lessons from the past in order to chart the way to a better future.

Along with a detailed look at the demographics shaping our state, it also included a series of experts discussing what the future holds for education, corrections, health and opportunity in Alabama.

The meeting featured Governor Kay Ivey describing her administration’s strategic efforts to raise educational achievement and to improve access to and the effectiveness of workforce training to meet the increased demands of the 21st-century economy.

The face of America and Alabama is changing

UNC-Chapel Hill Business professor Jim Johnson points out demographic trends that will reshape the country in the coming century.

James H. Johnson Jr., professor of business and director of the Urban Investment Strategies Center at the University of North Carolina at Chapel Hill, spoke of the demographic changes that are already reshaping the state and the nation. Both Alabama and the nation as a whole are undergoing seismic shifts that will change the country.

  • Population is flowing to the South.
  • The country is becoming more diverse.
  • Marriage across racial and ethnic lines is increasingly common.
  • The country is aging.
  • Men’s share of the higher education population and the workforce is declining, while women’s share is rising.
  • Grandparents are increasingly involved in or responsible for the raising of their grandchildren.

Recognizing and preparing for these changes will be essential if Alabama is going to be competitive in coming decades. A fuller discussion of Johnson’s observations can be found in a paper Johnson published last year in Business Officer, a publication of The National Association of College and University Business Officers

Though Alabama has not grown as rapidly as magnet Texas and the Southern states on the East Coast, it will feel the same shifts. The native-born white population is not reproducing fast enough to replace itself, much less grow in numbers. Meanwhile, Hispanics, blacks and other minorities are younger on average and will constitute a greater share of the population over time.

Technology is pushing the frontiers of education

Neil Lamb of the HudsonAlpha Institute for Biotechnology discusses the future of education at the PARCA 2020 Annual Meeting.

Neil Lamb, the Vice-President for Educational Outreach at Huntsville’s HudsonAlpha Institute for Biotechnology, highlighted factors that will shape education over the next 100 years: the ease of information access, advances in the science of learning, the rise of personalized learning, and the development of data-driven classrooms that allow for in-the-moment shifts in teaching strategy.

Lamb said these innovations offer great promise but they can’t be deployed haphazardly or without adequate support for the teachers that will need to use the tools to help children succeed. There must be attention paid to equity in spreading technology and adequately resourced professional development to support its implementation. Lamb, who served on the Governor’s Advisory Council for Excellence in STEM, pointed the audience to that Council’s recently released report: Alabama’s Roadmap to STEM Success.

Among its first step recommendations is a proposal that is now before the Alabama Legislature: The State Department of Education proposes to hire a team of 220 math coaches to provide statewide support for improving math instruction.

The STEM Success report includes the recommendation that an evaluation process be built into the math coach initiative so policymakers will be able to measure its impact and adjust the strategy in pursuit of success.

Alabama’s crisis in corrections must be addressed now

Bennet Wright, executive director of Alabama’s Sentencing Commission, speaks on the criminal justice and corrections.

Bennet Wright, Executive Director of the Alabama Sentencing Commission and past President of the National Association of Sentencing Commissions, challenged the audience to think differently about prevailing but largely unexamined assumptions about crime and punishment.

Wright said Alabama has created one of the most complex systems of criminal justice and corrections in the United States. New laws are laid on top of old, but the old are not repealed. A multitude of different agencies and players operating with distinct motivations keep the institutions from functioning together as a system. Wright’s presentation materials can be accessed here.

Governor Kay Ivey’s Study Group on Criminal Justice Policy, chaired by Justice Champ Lyons, released a report and reform recommendations just last week. A letter with recommendations can be accessed here.

The Study Group’s report can be accessed here

An ounce of prevention saves lives and money

Monica Baskin, a professor in the Preventive Medicine Division of the University of Alabama at Birmingham School of Medicine, discusses Alabama’s health challenges and possible promising approaches to improving health.

Monica L. Baskin, Professor of Preventive Medicine and director for Community Outreach and Engagement at the O’Neal Comprehensive Cancer Center at UAB, described the tremendous cost borne by Alabama as a consequence of poor health and pointed to opportunities to address health problems and health disparities before they become issues.

According to estimates by the Milken Institute, the direct and indirect costs of chronic disease in Alabama total more than $60 billion a year, more per capita than any other state except West Virginia.

In her presentation, Baskin cited several promising initiatives aimed at preventing the development of chronic disease, and encouraged partners statewide to increase innovation, collaboration, and equitable dissemination in order to get information to the people and places that need it most.

Time to speed up innovation in pursuit of opportunity

University of South Alabama Associate Vice President of Research Michael Chambers urges the state to adopt a more nimble and rapid approach to innovation and problem-solving.

And Michael Chambers, Associate Vice President of Research at the University of South Alabama, argued that we, as a state, need to speed up our pace of experimentation and change. Chambers, an experienced businessman, entrepreneur, and attorney, said businesses have had to learn to act quickly, be flexible, be competitive, to avoid complacency, and to plan on change. If Alabama’s leadership and citizens expect to be competitive, Chambers said, we should do the same.

Looking back to look forward

In preparation for the program, PARCA produced a series of charts that present key indicators of the economy, health, education, and criminal justice over a long time span. Interactive versions of those charts are available below. The charts compare Alabama to the U.S. average or to other Southeastern states. In the interactive version, you can change comparison states.


ACT WorkKeys – An Assessment of Workforce Readiness Among High School Graduates in Alabama

The WorkKeys Assessment is a standardized test given to 12th graders in Alabama public schools. The assessment is meant to measure skills relevant to many of today’s work environments.

In 2018:

  • 64 percent of Alabama high school graduates in 2018 were deemed workforce ready as measured by the ACT WorkKeys assessment, a year over year improvement of a half percent.
  • At 94 percent, Hartselle had the highest percentage of workforce ready graduates, as measured by WorkKeys.
  • High fluctuations occurred among the different certificate levels, with Platinum (highest level) and Gold dramatically increasing, but Silver decreasing. Bronze (below workforce ready) increased, though the percent not earning a certificate decreased.

What is WorkKeys?

The WorkKeys assessments are meant to provide a meaningful assessment of applied cognitive skills useful in contemporary work settings. It is also one of the components of Alabama’s College and Career Ready measure.

The assessments do not measure a student’s attitudes about work, dependability, interpersonal skills, teamwork, communication skills, or instincts for creativity, innovation, or leadership. They also do not provide insight about a student’s competency for a job requiring specialized knowledge and skills.

The Assessments. The assessments consist of three tests of applied cognitive skills which are relevant, according to ACT’s research, to over 20,000 occupations:

  • The Applied Math test measures critical thinking, mathematical reasoning, and problem-solving techniques for situations in today’s workplace.
  • The Graphic Literacy test measures the skill needed to locate, synthesize, and use information from charts and graphs. 
  • The Workplace Documents test measures the skills needed to read and understand written text such as memos, letters, directions, signs, notices, bulletins, policies, and regulations on the job.

Students are awarded a National Career Readiness Certification in they score a Platinum, Gold, Silver, or Bronze score on the WorkKeys.

Platinum: These are students with the highest level of applied cognitive skills.  According to ACT, students at this level have demonstrated applied foundational skills for 96 percent of the occupations in the ACT jobs dataset.

Gold: Those earning a Gold level certificate should have the applied foundational skills for 90 percent of jobs in the database.

Silver: Students scoring at the Silver level should have the applied foundational skills for 71 percent of jobs in the ACT database.

Bronze: Students earning a Bronze certificate are judged to be ready for 16 percent of jobs.

In Alabama students earning a Silver certificate or above are considered career ready.

2018 Assessment Results

The following charts show the percent of graduates in Alabama who demonstrated workforce readiness on WorkKeys assessments at the state, local system, and school level.

Percent Workforce Ready Remained the Same. The first chart shows that in 2018 64 percent of high school graduates in the state were deemed workforce ready as measured by WorkKeys. The percent steadily increased from 58.8 percent in 2015 to 60.8 percent in 2016 and 63.5 percent in 2017. The increase from 2017 to 2018 was comparatively small, with both years rounding at 64 percent workforce ready.

Workforce Ready at the System Level  

Listed below are the top ranked systems based on workforce readiness assessed through WorkKeys:

  • Hartselle City – 94 percent of students
  • Mountain Brook – 91 percent of students
  • Cullman – 88 percent of students
  • Oneonta – 86 percent of students
  • Guntersville -85 percent of students

There does appear to be some correlation between performance on the WorkKeys and the ACT exam, but not an exact one-to-one match. For example, some systems achieved a comparable state ranking on both sets of assessments:

  • Mountain Brook was number 1 on the ACT and 2 on WorkKeys
  • Shelby County was 8th on the ACT and 8th on WorkKeys.

However, other systems saw a larger separation.

  • Vestavia Hills was 2nd on the ACT and 16th on WorkKeys.
  • Madison City ranked 4th on the ACT and 18th on WorkKeys.
  • Trussville was 6 and 25, respectively.

All of the systems in the top 10 on the ACT are in the top 25 on WorkKeys, except Auburn.

At the same time, a number of less affluent systems demonstrated progress on the WorkKeys assessment over the previous year. Those systems showing the most improvement over 2017 included:

  • Perry County – 28 percent increase
  • Elba – 27 percent increase
  • Alexander City – 25 percent increase
  • Thomasville – 21 percent increase
  • Sheffield – 18 percent increase

Change in Certificate Levels

Significant Growth in Platinum and Gold Certificates. Students are deemed workforce ready if they achieve certification at the Platinum, Gold, or Silver levels. The charts show that the percent at each of these levels from 2015 through 2017 increased moderately each year and the distribution of students across the different levels remained about the same.  However, ACT’s decision to change one of the tests for a new one apparently led to dramatic changes in the scoring of the WorkKeys test, producing far more Gold and Platinum level certificates:

  • Platinum certificates dramatically increased from essentially zero percent all three previous years to 10 percent of students in 2018. 
  • Gold certificates, remaining fairly stable around 15 percent in the previous three years also showed a more significant increase to 19 percent in 2018.
  • Silver certificates dropped to 35 percent in 2018 after increasing to from 43 percent in 2015 to 48 percent in 2017.

Overall, this resulted in roughly the same percent workforce ready, but with a positive trend toward higher certification levels.  Furthermore, while the percent of Bronze certificates increased, the percent with no certificate decreased. This is a positive trend with more students edging toward the readiness threshold.  

Change in Certificate Levels at the System Level

Platinum: None of the systems decreased at the Platinum level. While a fair number showed no growth, the vast majority increased. In 2017, Sheffield generated the highest percent of Platinum level students of any system in the state at only two percent of its students. All other systems were at zero or one percent. In 2018, Mountain Brook increased from one percent to 41 percent, followed by Homewood, which increased from one percent to 29 percent.  Each of the remaining schools in the 2018 top ten increased from one percent or less to 20-29 percent.  Sheffield increased from two to 11 percent. 

Gold: Cullman generated the highest percentage of Gold Certificates, followed by Hartselle. The percentage receiving Gold increased for most systems, though not at the level of change experienced for Platinum. Fourteen systems generated fewer Gold Certificates in 2018, including some of the top academic systems. Supposedly more of their high performing students moved into the Platinum level. Statewide, Thomasville generated the highest increase in Gold Certificates, moving them into the top five in overall state rankings.

Silver: Finally, most systems decreased in the percentage of students receiving Silver Certificates, the threshold for being considered workforce ready. The highest gains were in Perry County and Elba.  The highest decreases were in Mountain Brook, Jasper, Cullman, Marion County, and Brewton. Rounding this out, the percent of students receiving Bronze Certificates increased in the majority of systems, while the majority of systems have a lower percentage of students who did not receive a certificate.

Possible Causes for the Change

A variety of explanations can be considered for the changes in WorkKeys results:

  • Changes in the WorkKeys assessments;
  • Stronger alignment between WorkKeys teacher training, test preparation, and test questions; and
  • Stronger concerted efforts in schools to prepare students for the assessments.

In 2018 WorkKeys underwent a number of changes, though the only test section that involved significant content change was the Locating Information test, which is now called Graphic Literacy. The names used for the other two assessments were changed to their current titles, Applied Math and Workplace Documents, though apparently no significant content changes occurred in these assessments. 

Changes in an assessment often lead to scoring changes and other issues that can affect results. The new Graphic Literacy test may account for the leap in higher certificates at the Platinum and Gold levels, but the new test is supposed to be more rigorous. While higher rigor would usually not be associated with higher scores, higher relevance in an improved test could produce better scores.

Aligned with the changes in the actual assessments are changes in teacher training and student prep tools, including practice exams. These are potentially a better fit with the formal assessments being rolled out than was available in preparation for the prior assessment.

More systems may also be using the ACT WorkKeys Curriculum, which is aligned with the WorkKeys assessments. The courses are delivered through a mobile-based learning management system. It provides students and teachers with a customized study schedule and detailed instructional content. While the curriculum can improve test performance, it is primarily designed to develop workplace-ready skills in students.

Subgroup Analysis

Analysis of WorkKeys results for student subgroup performance shows continuing disparity between subgroups. Use the filters to see how systems differ in subgroup performance. Some schools may be better at assisting struggling groups than others.

In looking at trends, all racial groups are showing progress from year to year, especially Asians, Native Americans, and black students. The gap between Asian students and all other races is growing. The gap between white and Hispanic students is also growing, while the gap between white and black students has remained about the same – but not closing. Black students are gradually closing the gap with Hispanic students.


College and Career Readiness in Alabama

In 2012, the Alabama State Board of Education adopted Plan 2020, which embraced a vision for the state education system led by the motto: “Every child a graduate. Every graduate prepared.” The plan called for raising Alabama’s high school graduation rate to 90 percent, while at the same time producing graduates who are better prepared for college and the workplace. Since that time, significant progress occurred in raising the graduation rate from 72 percent in 2011 to 90 percent in 2018.

While the high graduation rate is laudable, state education leaders have raised concerns about the gap between the percent graduating and the percent prepared for college or work. The other half of the motto — “Every graduate prepared” — came under question.

The following chart shows Alabama high schools are closing the gap between the percentage of students graduating and the percentage of seniors demonstrating they are ready for college and the workforce.

According to yet-to-be finalized data from the Alabama State Department of Education, significant progress has been made over the past three years. Final and complete data are expected to be published later this year:

  • In 2016, Alabama graduated 87 percent of its students, though only 66 percent were college and career ready. 
  • In 2017, the gap closed, with 89 percent graduating and 71 percent college and career ready. 
  • In 2018, improvement continued with 90 percent graduating and 75 percent college and career ready. 

Though the gap is still large, it is improving.

Continuing to close that gap is vital. The state has a goal of adding 500,000 highly-skilled workers to the workforce by 2025. To meet that goal, virtually all high school graduates will need to be prepared for education beyond high school or prepared to enter the workforce directly after high school.

The 2018 CCR data shows:

  • Career Technical Education (CTE) certificates are the fastest-growing means for classifying students as college and career ready.
  • Qualifying scores on the ACT and WorkKeys assessments are the two most common measures used to classify students as college and career ready.
  • Systems and schools leverage different strategies for preparing students – reflecting varying strengths, resources, and goals for education.
  • Some systems are very strong in particular areas and weak in others, which may not meet the needs of all students.
  • Disparities in performance exist across schools and student subgroups that may go beyond poverty.

Alabama’s College and Career Readiness Measure

The Alabama College and Career Strategic Plan (a component of Plan 2020) articulated a vision in which all Alabama students graduate high school college and career ready. The plan defines college and career readiness as:  

“…a high school graduate [that] has the English and mathematics knowledge and skills necessary to either (1) qualify for and succeed in entry-level, credit-bearing college courses without the need for remedial coursework, or (2) qualify for and succeed in the postsecondary job training and/or education necessary for their chosen career (i.e. technical/vocational program, community college, apprenticeship or significant on-the-job training).”

High school graduates are classified as college and career ready (CCR) if they meet at least one of the following criteria.

  1. Score college ready in at least one subject on the ACT
  2. Score at the silver level or above on the 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 Education credential
  5. Earn dual enrollment credit at a college or university
  6. Successfully enlist in the military

Some of these measures are more aligned with college preparation and others with career preparation.

The state now provides data on the overall CCR rate and data on the individual metrics that create the measure. Detailed analysis is found in the interactive charts below, which allow users to explore college and career readiness percentages for high school seniors in 2018 at the state, school system, and high school level.

Graduation and CCR Rates

The first chart shows the percentage of students graduating, followed by the percentage of seniors who are college and career ready, followed by the percentage achieving readiness on the various performance measures that compose the CCR rate.  While preset for the state in 2018, the filters can be used to produce the same chart for individual school systems in 2017.

Statewide, the percentage of seniors testing “ready” is highest for the WorkKeys assessment, followed closely by ACT. Those are the two main channels through which a CCR rating is achieved, though a growing number of students are deemed CCR by earning a credential in a Career Technical Education (CTE) field.  Earning college credit or a qualifying score on an AP exam are also used by a smaller percentage of students. A very low percentage of seniors achieve a CCR rating by getting a passing score on an International Baccalaureate exam or successfully enlisting in the military.  Exploring these measures at the system and school level suggests the use of different strategies across school systems reflects different goals for education, local needs and strengths, and characteristics of the community.  

Graduation – CCR Gap by Local System

Chart 2 shows the graduation rate, CCR rate, and gap between these two rates in each system. They are listed in the order of CCR rate from highest to lowest. The Piedmont City School System is No. 1 in the state for CCR — the only system where 100 percent of seniors are classified as college and career ready. The system also graduates close to 100 percent of its students.

Some systems actually have negative gaps where the percent of seniors who are college and career ready exceeds the percent who graduate after four years in high school. This includes the Coffee County System, and city systems in Opp, Arab, Satsuma, and Piedmont. 

On the other end of the spectrum, systems with the lowest CCR rates tend to have the highest gaps between graduation and CCR rates, though not always. 

Graduation – CCR Gap by School

Individual schools are showing similar trends, with wide disparity between high and low performing schools.

  • Keith Middle-High School in Dallas County graduates 90 percent of its students, matching the state average, but only 19 percent of its seniors are measured to be college and career ready.
  • Barbour County High School graduates 77 percent of its students, but only 12.5 percent of seniors are measured as college and career ready.

Having both high graduation rates and CCR rates indicates that the diplomas issued by those schools have credibility and value. Where graduation rates are high but CCR rates are low, there is cause for concern.

Individual Components of CCR by System and School

The remaining charts in this section display individual components of college and career readiness by system and school. The final chart shows the percent change in CCR rates from 2017 to 2018.

Overall for the state, the largest change occurred in the percent of students earning career technical education credentials, increasing from 22 to 29 percent. The state and individual systems have put an increased focus on providing career-related coursework in high school, and the increases here may reflect that emphasis. At the same time, it is important for policy-makers to monitor what career credentials students are earning. For this to be a meaningful measure of career readiness, those credentials need to be recognized and valued by employers and should be in a field in which a student is likely to obtain work or more advanced training.

Other increases occurred in students earning college credit (10% to 13%), and in WorkKeys readiness (55% to 57%).

As cited earlier, when looking at individual systems and schools, it becomes apparent that different places achieve college and career readiness through different strategies.

  • Mountain Brook is No. 1 in ACT, WorkKeys, and AP, but lower on college credit and career technical credentials.
  • Vestavia is second on ACT readiness, among the top schools on the AP exam, and in the top 25 percent in career technical credentials, but much lower on WorkKeys and dual enrollment.
  • Opp City exceeds the state average on all measures of CCR but is especially high-achieving in students earning college credit, where they are No. 1 in the state, and in career technical credentials, where they are No. 5. 
  • The system with the highest CCR rating, Piedmont City Schools, is at the state average on ACT and WorkKeys, but far and above other systems in credentials.

Are schools meeting the needs of all students? One concern this analysis raises is that some systems may not be meeting the varying needs of all students. Those systems scoring high or at least moderately high on a balance of college and career measures are providing a breadth of services that can help students shine where they show interest and potential. The lack of balance in some systems or schools may reflect an intentional emphasis on what they value most: college preparation or career readiness. It is important for schools to assess whether they are providing options that fit the needs and interests of the diverse array of students they serve.

Conclusion

As a composite of various academic and career indicators, Alabama’s College and Career Ready metric reflects three important concepts.

  • Every student needs either a post-secondary education or credible career-focused training in high school.
  • Post-secondary education need not be a traditional four-year college degree.
  • There are many different pathways for students.

The gap between Alabama’s graduation rate and the number of graduates deemed college and career ready has been a concern, but one with optimism given progress in closing that gap.

Career Technical Education certificates are the fastest-growing measure through which students are earning the CCR marker. These credentialing programs are meant to prepare students for workforce opportunities in high-demand fields right out of high school.  They combine academics with work-based learning as a strategy to address the widening gap between job applicants’ skills and the skills employers need. The state will need to continuously ensure that all courses and concentrations are of high quality and relevant to the workforce needs in the state and in local communities.  

Beyond preparing students with skills for specific jobs, an array of academic, extracurricular, and work-based learning opportunities can develop the student as a whole person capable of thoughtful decision-making and meet the unique needs and preferences of each student. Academics, career training, life skills, and the cultivation of passions and interests can all come together to support college, career, and life readiness.

Alabama is assessing progress on part of this, but not all. The state has made a good faith effort to evaluate college and career readiness through a variety of measures such as the ACT, college dual enrollment, WorkKeys, and Career and Technical Education (CTE) certification. Still, this is a changing and growing field. Skills and attributes needed in various careers are continually changing. Alabama should remain alert to more rigorous and authentic measures of college and career readiness that may emerge.