Due to a new higher standard, the number and percentage of third graders who failed to meet the grade-level reading benchmark rose in 2025. However, taking the higher standard into account, this year’s third graders showed continued improvement, indicating that the state’s focus on improving early grades literacy is continuing to pay dividends.

This spring, 11.6% of students failed to reach the benchmark on the Reading portion of the state’s standardized test, the Alabama Comprehensive Assessment Program (ACAP). Had the higher bar been in place in 2024, 13.7% of 3rd graders would have scored below the cut. In 2023, 20.8% of 3rd Graders would have scored below the cut.

Printable PDF available here.

In 2025, more students, 49,460, cleared the bar despite the higher standard. At the same time, more students, 6,470, fell below the reading sufficiency benchmark. The 2025 cohort of third graders is larger than previous years. That could mean more students will be required to repeat third grade. However, students who scored below the benchmark are offered intensive summer instruction, retesting, and alternative ways to qualify for promotion.

Improved performance

For the second year, the biggest gains in the percentage of third graders clearing the reading benchmark have occurred predominantly in rural school systems in the Black Belt. Those systems have high rates of economic disadvantage among students and have traditionally trailed other systems on various academic measures, but they have been making gains in reading.

This year, only 4% of Wilcox County students scored below grade level. That puts the system in the top 20 for performance, even though 91% of students in Wilcox County are economically disadvantaged.

Two systems, Orange Beach and Satsuma, had all their tested third graders reading on grade.

Breaking the Connection Between Poverty and Poor Reading Performance

While there is still a correlation between higher levels of economic disadvantage and high rates of reading struggles, the relationship has gotten weaker over time, with more high-poverty systems, particularly in rural areas, improving performance.

Other high-poverty systems, often in urban areas, are still struggling to close the gap. Large urban systems like Montgomery County and Birmingham City have higher concentrations and larger numbers of students testing below grade level. However, those systems also have magnet schools where all students achieved the reading benchmark. Within larger school systems, schools with similar demographics vary significantly when it comes to reading results.

The scatterplot chart below compares the percentage of students in the school who are below grade level on reading to the percentage of students from economically disadvantaged households. The higher on the chart a system is, the better its reading performance. The systems shaded green and lying to the right are schools with lower economic disadvantage. The size of the system’s circle corresponds to the number of third graders who failed to achieve the reading benchmark.

Schools

Despite the higher bar, in 42 schools, all third graders who were tested passed the reading benchmark. That included Princeton Elementary in the Birmingham system and three schools in the Montgomery County System: Bear Exploration Center, Macmillan International at McKee, and Forest Avenue Elementary School. The schools where all third graders met the benchmark ranged from Georgiana, where 86% of students are from economically disadvantaged households, to Mountain Brook and Crestline elementary schools, where only 2% of students are economically disadvantaged.

The two schools with the largest number of third graders who are below grade level in reading are virtual schools: the Alabama Virtual Academy at Eufaula City Schools, where 421 students, or 37%, failed to make the benchmark, and the Alabama Connections Academy of Limestone County, where 290 students, or 32% scored under the benchmark.

For Students Who Failed to Score At or Above the Benchmark

The 6,480 students who failed to reach the benchmark are in jeopardy of being required to repeat 3^rd grade, under the terms of the Alabama Literacy Act. However, there are several routes for promotion to the fourth grade.

Students who failed to clear the new reading sufficiency benchmark have access to intensive summer literacy camps sponsored by local school systems. After the intervention, they will be able to retest.

If they still fail to clear the bar, teachers and school officials have alternative means for evaluating the students’ reading skills. Other good-faith exemptions exist. In 2024, 4,808 students failed to pass the reading sufficiency benchmark. After retesting and applying exemptions, only 452 students were retained due to the Literacy Act, according to the Alabama Daily News reporting.

Second Grade Results

Also included in the data release were second-grade results. The cut score also went up for second grade. The second-grade score is intentionally set at a higher threshold so that more students who might be encountering reading struggles can be identified and receive intervention. Due to the higher bar, more students failed to meet the grade level sufficiency benchmark, 19% in 2025 compared to 17% in 2024. The 10,423 second-grade students who scored below the benchmark were encouraged to attend summer literacy camps and should receive special attention throughout their third-grade year.

Background

The intense interest in 3rd-grade reading is the result of the 2019 Literacy Act. The Act was modeled on similar legislation enacted in Florida and Mississippi. Both of those states saw large gains in reading performance on national standardized tests. The laws are based on the premise that students have to be reading on grade level by fourth grade. Students are taught to read from Kindergarten through third grade. In fourth grade, students are expected to read material to learn.

Numerous studies have found that students who aren’t reading on grade level by fourth grade are more likely to struggle academically and fail to complete high school. Low literacy skills are associated with difficulties in the job market and poor health outcomes.

While the Literacy Act’s grade retention provision received attention, the more consequential portions of the bill were its increased investment in improving literacy instruction, early screening for reading difficulties, and requirements for interventions and communication with parents. The Act re-energized the Alabama Reading Initiative and led to statewide training of teachers in techniques grounded in the science of reading.

Since implementation, Alabama has seen various measures of reading performance rise. Alabama is one of only two states (Louisiana is the other) in which 4th-grade students are performing better in reading than before the COVID-19 pandemic, according to the 2024 National Assessment of Education Progress (NAEP).  

Alabama’s public high school graduation rate tied its all-time high in 2024, while the Class of 2024 also set a new record for the percentage of graduates designated ready for college and career, according to new data released by the Alabama Department of Education.

Among 2024’s senior class, 88% had earned a college and career-ready (CCR) designation, a jump of 4 percentage points over the rate for the Class of 2023. That progress also narrows the gap between the graduation and CCR rates to 4 percentage points, the smallest gap ever.

Printable PDF available here.

Alabama’s high school graduation rate has been rising since 2012, when the state set a goal that 90% of ninth graders would persist and graduate four years later. As the state’s public schools made progress toward and ultimately achieved that goal, policymakers focused on the gap between the graduation and CCR rates. Though more students were graduating, many weren’t leaving with the credentials to prove they were ready to enter college or the workforce.

In 2023, the Alabama Legislature passed a law requiring that by Spring of 2026, all graduates will have to have earned a CCR designation in order to receive a diploma. Schools have been moving toward that goal. In 2024, over 50 high schools reported a 100% graduation rate, and more than 40 reported a 100% college and career readiness rate.

Multiple Ways to Demonstrate College and Career Readiness

The Class of 2024 produced a jump in the on-time graduation rate and in multiple categories of college and career readiness.

School systems and high schools have different approaches to providing students with pathways to the CCR designation. Academic magnet schools and affluent suburban systems have higher percentages of students scoring college-ready on the ACT or by earning a qualifying score (3 or above) on an Advanced Placement test. Advanced Placement (AP) courses are college-level courses taught by high school faculty. International Baccalaureate (IB) courses are similar and also count toward CCR. Other schools, usually cooperating with the local community college, may give most students access to college courses. Many schools encourage enrollment in career technical education courses and reach over 90 percent of students through such offerings. Successful entry into the military and completing an approved youth apprenticeship is also an option.

Career Technical Education

More students are participating in career technical education courses, high school courses linked to career skills and training. The number and percentage of students demonstrating college and career readiness through completing a course in career technical education and earning an industry-recognized credential rose to 24,535, up from 21,640 in 2023. In the class of 2024, 47% of students earned a credential that should be recognized as valuable to a prospective employer, a 6-percentage point increase. 

Dual Enrollment

The number and percentage of students earning college credit, mostly through dual enrollment at a community college, also rose substantially from 21% of students in 2023 to 26% for the Class of 2024. Statewide, 13,891 students had earned credit through successfully completing a college course during high school, an increase of over 2,500 from the Class of 2023.

ACT

The percentage of Alabama public high school graduates earning a benchmark score on the ACT rose to 42%, up from 40% in 2023. ACT, the standardized test that predicts student readiness for college-level coursework, is given to all high school juniors. Scores in Alabama and nationwide dropped during and following the pandemic. In Alabama, performance is improving, though still below pre-pandemic highs. A full exploration of the Alabama ACT scores can be accessed in PARCA’s previous post, Alabama High School Class of 2024 Improves on ACT.

WorkKeys

ACT also produces a second standardized test, WorkKeys, through which students can demonstrate college and career readiness. WorkKeys is designed to test reading and math skills as they are applied in the workplace. WorkKeys is given to seniors and is optional. Students who score high enough on WorkKeys to earn a silver, gold, or platinum certification are considered adequately prepared to enter the workforce.

Some employers use WorkKeys as a factor in hiring decisions. The visualization below allows you to explore WorkKeys results in terms of certificates earned and trends in the number of students tested. However, bear in mind that different schools use the test differently and give it selectively, so comparisons between schools and systems can be misleading.

Explore Further

Using the tabs and menus in the visualization tools, you can explore results for your local system or school. For best results, use the full screen option to display the visualization. That button can be found on the bottom right of the visualization, next to the share button.

Bear in mind that some schools may have college—and career-ready rates that exceed graduation rates. This occurs when more seniors achieve one of the measures of college and career readiness than earn a diploma.

Passage of the One Big Beautiful Bill Act (H.R. 1) in the U.S. House has sparked discussions about the impact of reductions in federal funding across the U.S. KFF, a nonprofit policy analysis organization formerly known as Kaiser Family Foundation, estimates that the House Budget Committee’s reconciliation bill would reduce federal Medicaid spending by $791 billion without accounting for interactions that would lower estimates to $723 billion. Almost 85% of the total savings derived from five features:

• Mandating work and reporting requirements ($280 billion),
• Repealing rules simplifying Medicaid eligibility and renewal ($167 billion),
• Creating a moratorium on new or increased provider taxes ($89 billion),
• Revising state-directed payment limitations ($73 billion), and
• Increasing the frequency of eligibility re-determinations for the ACA expansion group ($53 billion).

Approximately $357 billion of the reductions would only apply to states that adopted ACA expansion.

Printable PDF available here.

Federal cuts to states of $723 billion over 10 years would represent 11% of federal spending on Medicaid over the period. KFF estimates that the cuts range from 5% in Alabama, Wisconsin, and Wyoming to 15% in Washington, Louisiana, and Illinois.

Congressional Budget Office estimates a 10.3 million loss of Medicaid enrollment by 2034, representing 12% of projected enrollment in that year. At the state level, the largest reductions in Medicaid enrollment would be in Washington and Virginia, decreasing by 25% and 20%, respectively. In Alabama, that would be about 4% or approximately 47,000 people.

As described in a previous post, Alabama receives more than $60 billion in federal transfer payments to individuals from Social Security, unemployment benefits, educational benefits such as Pell Grants, or as payments on behalf of individuals in Medicare or Medicaid, etc.

As the Economic Innovation Group noted in its report, The Great Transfer-mation: How American Communities Became Reliant on Income from Government, the main reason federal transfers have increased is the increase in the percentage of the population over the age of 65. Other economic factors have contributed to a reliance on federal transfers, particularly in rural areas with declining economic conditions.

Currently, among the transfer payments are approximately $15.5 billion (2022) to medical providers on behalf of Medicare recipients and another $7.6 billion (2022) on behalf of Medicaid patients, including covering approximately 44.7% of births in Alabama in 2023. Rates vary dramatically across counties, with 78.6% of births in Wilcox County covered by Medicaid to a low of 23.3% in Shelby County. Georgetown University’s McCourt School for Public Policy found that many small towns are dependent on Medicaid/CHIP funding. With 48.6% of children in rural areas of Alabama enrolled in 2023, the state ranks 12^th in the nation on that metric.

This past legislative session, the Alabama Legislature passed Senate Bill 102, expanding Medicaid benefits for pregnant women “with an estimated addition of $1 million annually for fiscal years 2026, 2027, and 2028, consisting of $726,300 in federal funds and $273,700 in state funds, by providing certain prenatal coverage to women found presumptively eligible by a qualified provider.” Governor Kay Ivey signed the bill on May 1.

Many medical facilities in Alabama depend on federal funding from Medicaid and Medicare patients. According to KFF, Medicare covered 63% of certified nursing facility residents in Alabama, while Medicaid covered approximately 13%, with only 24% covered by other private funding sources.

For the 80 hospitals in Alabama, operating margins were approximately 2.9% in 2023. However, they are generally thinner in poorer rural areas of the state. Nationwide, operating margins in rural hospitals are notoriously thin, with 44% of rural hospitals operating in the red. According to KFF, “As of July 2024, Medicaid was the primary payer for 63% of nursing facility residents; Medicare for 13% of residents; and the remaining 24% of residents had another primary payer (ex. private insurance, out-of-pocket, etc.) Medicare does not generally cover long-term care but does cover up to 100 days of skilled nursing facility care following a qualifying hospital stay.” 

In states without Medicaid expansion, just over half (53%) of rural hospitals operate in the red. Reductions in Medicaid or Medicare could have a significant impact on rural hospitals. KFF reports that rural hospitals had an average operating margin of 1.7% in 2023. Reductions in these amounts, whether direct payments to individuals or payments on behalf of recipients, as in the case of Medicaid and Medicare, would reduce, dollar for dollar, the purchasing power in those communities.

Using the slider and program selector in the visualization below, estimates of how a percentage decrease for each kind of transfer can be adjusted to find dollar amounts for hypothetical decreases:

Alabama is not alone. The same kind of dependence can be seen across the country.

There are common patterns across the places where economic activity has been challenging, including the Texas Valley, the Mississippi Delta, Appalachia, and tribal territories. Still, many communities have aging populations, with high percentages of transfer payments compared to earned personal income, as shown below:

For details on the calculation of personal income and transfer payments, see this post on Github:
https://github.com/EIG-Research/EIG-Great-Transfer-Mation