Shifts in Public School Enrollment Seen in the 2023-2024 Fall Attendance Data

Alabama’s public school enrollment is down slightly for the 2023-2024 school year, with a decline in the number of white students enrolled, partially offset by a growing enrollment of Hispanic students. Just over half of public school students, 51% are white, 32% Black, and 11% Hispanic. This year’s enrollment continues a long-term trend. In 2000, 62% of students were white, and the percentage of Hispanic students barely registered.

The percentage of students identified as economically disadvantaged is at an all-time high, with 60% of enrolled students directly qualifying for a free lunch under the National School Lunch program. Qualification is based on having a household income that qualifies for federal benefits like housing, food, or health care support. The percentage of children identified rose substantially after Alabama’s Medicaid program began working with the Department of Education to identify students who qualified for Medicaid and related benefits. Coming out of the Covid pandemic, the number of families and children is elevated. Federal law prohibits states from removing patients from Medicaid rolls during a public health emergency. With the public health emergency now over, Medicaid is reassessing which households remain eligible.

The school systems seeing enrollment gains are generally found in places where the population is growing: north Alabama systems in and around Huntsville and to the south in Baldwin County. Growth in enrollment is also occurring at public charter schools that are starting up or adding grades. School systems offering online or virtual school programs have also shown gains. Read Al.com’s reporting on trends in school populations.

Rural systems saw the largest declines in percentage terms. Large county and city systems in Mobile, Montgomery, Shelby County, and Birmingham accounted for the larger numeric declines in enrollment.

Use the tabs to explore data, for your local schools and systems.


Alabama’s Population Growth Accelerating

Alabama’s population increased by 34,000 last year to 5.1 million, driven by increased domestic migration and a decreasing number of deaths, according to the latest population estimates published by the U.S. Census Bureau, covering the period between July 1, 2022 and July 1, 2023.

That’s the 15th fastest rate of growth among U.S. states and ranks 11th in terms of the number of people added. Still, Alabama’s growth rate trails other Sunbelt and Mountain West states, including Southeastern neighbors like Florida, Georgia, Tennessee, and South and North Carolina.

Alabama’s death rate fell from the third-highest in 2021 to the sixth-highest in 2023. Still, more people died in Alabama than were born here, according to the 2023 estimates. But the gap narrowed. Births were up by about 150, and the estimated number of deaths in 2023 was down by almost 10,000 from the 2021 peak of the Covid-19 pandemic.

Most of the population change resulted from people moving in from other states. The state received 30,744 domestic migrants, 2,000 more than moved in the year before. International migration into Alabama increased to 5,364 net new arrivals, or about 1,000 more than the year before.

In 2023, Alabama’s rate of domestic immigration was the 10th highest in the U.S. However, Alabama still has one of the lowest rates of international immigration among states, ranking No. 45.

Texas and Florida added the most people. New York, Illinois, and California saw the biggest declines. All the Southeastern states, with the exception of Louisiana and Mississippi, recorded population increases. That pattern has been consistent since 2020.

Census population and change estimates for counties, metro areas, and cities will be released later in the year. Use the tabs and menus in the visualizations to explore the data.


Data Collection for Hispanic and Latino Alabamians with HICA

According to the 2020 Census, Alabama’s Hispanic and Latino community represented just 5% of Alabama’s population, but between 2010 and 2020, the growth in that demographic accounted for 32% of the state’s total population growth. That’s according to a new analysis prepared by PARCA for the Hispanic Interest Coalition of Alabama (HICA).

With or without immigration, Alabama’s Hispanic population is poised to become an increasingly important part of the state’s tapestry: 10% of students enrolled in Alabama public schools are of Hispanic descent, as is almost 10% of the population under 25. According to the Census Bureau’s 2021 estimates, 65% of Alabama Hispanics were born in the U.S., an increase from the 50% native-born percentage in 2010.

HICA is a non-profit organization that was founded in 1999 to serve Latino immigrant communities across Alabama. HICA works for Hispanic and Latino families in a myriad of ways: family services, legal advice about citizenship and immigration, financial literacy programs, workforce development, small business lending, civic engagement, and more. 

HICA, having long understood the importance of data in advocacy and planning, reached out to PARCA to do a wide-net study on Hispanic and Latino Alabamians. The goal was to generate a collection of data that would inform not just their organization’s strategy but inform policy and encourage further research into ethnicity and outcomes. This data collection includes metrics relating to finances, education, demographics, and more. PARCA used a wide variety of trusted sources with the most relevant authority and recency. 

The data tells many interesting stories, not all of which are extenuated in our presentation of it. With the help of HICA, we have outlined what we think are the most relevant and interesting trends. The data is broken into three major categories: Education, Finance, and Population Characteristics. 

About HICA

Education

It is critical to understand educational outcomes and their correlation to ethnicity. To understand education and how demographic groups experience and succeed differently, we must look at a variety of ages and lenses. Our data includes four focuses: ACT, Education Attainment, Graduation Rate and Career Readiness, and School Enrollment.

Alabama Comprehensive Assessment Program

Source: Alabama Department of Education

ACT

Source: ACT for years 2015-2022.

Education Attainment

Source: Census Bureau’s 2021 American Community Survey 5-Year Detailed Tables. 

Graduation Rate and Career Readiness

Source: Alabama Department of Education. 

School Enrollment

Source: Alabama Department of Education

Finance

The financial situation of Hispanics and Latinos can only be gleaned by combining many metrics. It requires both personal measures like poverty and income, but also instances of interaction with financial institutions.

Sources: Metrics on unemployment, labor force participation rate, poverty, and median household income are from the Census Bureau’s 2021 American Community Survey 5-Year Detailed Tables. Data on business ownership are from the Census Bureau’s Annual Business Survey 2020. Data on unbanked is from the Federal Deposit Insurance Corporation. Data on home loan denial is from the Federal Financial Institutions Examination Council. 

Population Characteristics

The Census Bureau collects an abundant amount of demographic data through multiple surveys on different geographic levels. This data set uses three of them to maximize recency and locality. Through this data, we can glean much about Hispanic and Latino communities. Where they are, how the group is aging, access to health care, etc. There are three dashboards with different aims to display the data: decennial census by age, decennial census’s change over the years, and a broader dashboard of characteristics.

2020 Census by Age

Source: 2020 Decennial Census

2020 Census by Change

Source: 2020 Decennial Census

Population Characteristics

Sources: Data on broadband access, home ownership, occupation, and health insurance come from 2021 ACS 5 Years Detailed Tables. Data on occupation comes from 2021 ACS 1-Year Detailed Tables.


Changes to the State Standardized Test and its Scoring

The Alabama State Board of Education voted on Thursday to change the test score students must earn to be considered reading on grade level by the end of third grade. The change was recommended by testing experts due to changes made in the content of the 2023 test and shifts in results.

Using the score the state had in place, 24% percent of third graders who took the state standardized test in the spring of 2023 would have scored below the grade level reading mark. Using the target adopted by the board on Thursday, 17% of those students would have scored below grade level.

The grade-level reading target will take on increased importance this spring when the retention provision of the Alabama Literacy Act takes effect. At that point, students testing below grade level by the end of third grade could be held back. (Students will have a chance to get up to grade level during an intensive summer literacy camp. Other exemptions and methods of evaluation are also available).

The second and third-grade reading cut score changes received the most attention because of the implications. However, the changes to the state standardized tests of English Language Arts (ELA) were made across all grades in 2023. Along with changes in test content, the test scale was shifted, and proficiency cut scores adjusted. The changes make performance comparisons and trends across years difficult to interpret.

The Alabama Comprehensive Assessment Program (ACAP) is a series of standardized tests specifically built for Alabama, designed to test students at each grade level as they progress through the Alabama’s courses of study in English Language Arts, Math, and Science.

The original ACAP reflected the course of study in place in 2020. However, in 2021, the state adopted a revised ELA course of study. That revised course of study included a heightened focus on reading skills as called for by the Alabama Literacy Act. Changes to the course of study included:

  • phonemic awareness and fluency added in grades 2-3;
  • phonics added in grades 2-5
  • listening skills added in grades 2-8
  • text-dependent writing added to grades 2-3
  • Recognizing and producing writing in different modes: narrative, informational, and opinion writing added in grades 2-8

Thus, with new concepts and points of emphasis added to the test, the test results were re-examined in light of the changes. Cut scores for the four achievement levels were adjusted. As a result, the test score a student needed to be considered proficient, i.e. scoring at either level 3 or level 4, was changed.

Comparing 2023 and 2022 results, average numeric scores in 2023 were lower in every grade but 6th. However, since the tests were changed and the scales were changed, the state department recommends against comparing scores from year to year.

While mean scores were down, proficiency rates were generally up. The percentage of students earning a score in the proficient range increased in all grades except third and eighth, where proficiency declined by 1% and 3%, respectively. The biggest jump in proficiency was in fifth grade, where the percentage of students scoring proficient jumped 9 percentage points. That is despite a large decline in the numeric mean score in 5th grade.

Because the tested material changed and the test scale was shifted, it is difficult to say if the score changes and proficiency changes were due to changes in student performance, changes in the scoring, or a combination of those and other factors.

Three of eight State Board of Education members voted against lowering the cut score that determines which students are reading below grade level. Those members expressed concern that students who weren’t prepared for the next academic level would be promoted and find themselves far behind and without the literacy support available in the early grades.

However, the majority of board members expressed support for following the advice of testing experts, recognizing that students this year were essentially taking a new test that required a new evaluation of results. Even with the lower cut scores, education officials are expecting a sharp increase in the number of students being required to repeat third grade in order to catch up in reading.

About half the states have some sort of retention provision. Alabama’s approach is modeled after Florida and Mississippi efforts. Both those states have seen large gains in reading on national assessment after implementing a systematic approach to literacy instruction.

Like those states, Alabama has dramatically increased funding and professional development for reading instruction and has especially targeted schools and systems with high concentrations of struggling readers.


Alabama Standardized Test Scores Rise in 2023

Alabama public school students improved their performance on statewide standardized tests in 2023, with the percentage of students testing proficient rising across most of the tested grades (3-8) and subjects (English Language Arts (ELA), math, and science).

Printable PDF version available here.

Figure 1. Trends in Proficiency by Subject

Just over half of Alabama students, 52%, were proficient in English Language Arts across all grades, and only 31% demonstrated grade-level proficiency in math. Fourth and eighth graders were tested in science, with 41% scoring proficient.

Figure 2. Trends by Subject and Grade Level

English Language Arts

The broad-based improvement comes as a relief since earlier this summer, a subset of the test, 3rd-grade reading results, showed a decline in the percentage of students reading on grade level. Those third graders also showed a slight decline on the broader test of English Language Arts, with the percentage of students proficient declining from 54% to 53%. Eighth graders’ ELA proficiency rates declined by almost 3%, to 50%. However, for students in grades 4-7, the percentage of students scoring proficient in ELA improved. The 2023 ELA test was adjusted to reflect updates to the ELA course of study. It is unclear how those changes might have impacted scores.

But across all grades in English Language Arts, a curious pattern is present. The percentage of students scoring at the highest level of proficiency is growing but the percentage of students scoring at the lowest level of proficiency is also growing.

The test groups students into four levels:

  • Level 1: Minimal understanding of grade-level standards
  • Level 2: Partial understanding of grade-level standards
  • Level 3 Strong understanding of grade-level standards
  • Level 4: Advanced understanding of grade-level standards

Figure 3. ELA Results, by Percentage of Students at Each Level of Proficiency

Across all grades on the ELA test, more students are testing at Level 4, while at the same time, more students are scoring at Level 1, the lowest level.

Math

The math results are different. Math proficiency has long been Alabama’s Achilles heel, with our students scoring consistently at or near the bottom on national tests. While proficiency is still low overall, math results on the ACAP are improving. As in ELA, more students are testing at Level 4 in math. But unlike ELA, the percentage of students scoring at the lowest level is also shrinking.

Figure 4. Math Results, by Percentage of Students at Each Level of Proficiency

In math, students in every grade improved their proficiency rates. However, another long-running problem for Alabama’s math proficiency is that it declines steeply as children move into middle school. In 3rd grade, 44% of students are proficient, but by 8th grade, only 21% are.

The Challenge of Poverty

One constant about standardized test scores is that the socioeconomic composition of a school correlates with performance on standardized tests like the ACAP. In schools and systems where rates of economic disadvantage are low, a higher percentage of students achieve proficiency. Schools and systems where economic disadvantage is concentrated, standardized test performance is lower.

Figure 5 allows the presentation of both factors at the school system level. Systems in dark red and on the left of the chart have higher concentrations of economic disadvantage. Systems that are dark green are on the right side of the chart. Systems high on the chart have high rates of student proficiency. Systems lower on the chart have lower rates of proficiency. The line slopes up and to the right to reveal the pattern in the data: a lower percentage of students in poverty, the higher the percentage of students achieving proficiency.

Figure 5. Percent of Economically Disadvantaged Students vs. Proficiency Percentage

A similar array, but looking at performance at the school level, is also available. While this pattern recurs across datasets, these charts highlight the fact that some schools with high levels of economic disadvantage outperform peer schools with similar levels of poverty.

Another encouraging note is that the widespread improvement observed in the results, across grades and subjects, was not restricted to one race or ethnicity, or to a socioeconomic subgroup. Performance gaps between groups remain. But almost all economic and demographic subgroups improved their overall rates of proficiency in the three subjects. In both 4th and 8th grade, the declines in English Language Arts proficiency declines were also distributed across all subgroups.  

Figure 6. Trends among Student Subgroups

Alabama students and faculty continue to recover from time and learning lost during the Covid 19 pandemic. Results indicate that teachers are becoming more successful at teaching learning standards, and students are mastering those standards at higher rates. On all fronts, Alabama has a long way to go if it is going to provide a nationally competitive education. Proficiency in math is a long-running concern; in nearly 20 districts, 10% or less of students are scoring proficient. In English Language Arts, the rising percentage of students scoring at the highest level is a cause for celebration. However, the growing number of students scoring at the lowest level is a particular concern as Alabama emphasizes literacy.

Record education budgets, supplemented by pandemic-related federal aid, have allowed for higher levels of education spending than ever. The Legislature has invested in more systematic approaches to literacy and math instruction. It is imperative that schools, systems, the state, the Legislature, the Governor, and the general public identify money being spent that is producing positive results. Successful approaches should be maintained when the inevitable constriction of revenue arrives. Ineffective spending should also be identified and reprogrammed.


New Reading Scores Released As Schools Head Toward Full Literacy Act Implementation

About one-quarter of Alabama third graders were not reading on grade level by the end of third grade, leaving them vulnerable to academic struggles as they progress in school, according to data from the reading subsection of the Alabama Comprehensive Assessment Program released Thursday.

Printable PDF version available here.

Among second graders, 11,622 or 22% of students statewide were below grade level at the end of second grade. Parents and educators have a year to get those struggling readers caught up to grade level. Next year, the final piece of the Literacy Act is set to go into effect. Third graders who haven’t caught up to grade level by next spring could be vulnerable to being held back.

Since the Literacy Act was passed in 2019, the State Legislature has provided major increases in funding for reading instruction and services, re-energizing the Alabama Reading Initiative (ARI) and school-based reading coaches. Teachers from Kindergarten to third grade across the state have received intensive professional development designed to improve the teaching of reading, an instructional approach based in the science of reading.

ARI has deployed extra support to high-needs schools. Alabama’s Literacy Act was based on similar legislation in Mississippi and Florida. Both those states have seen significant gains in early grades literacy after implementing reforms.

This year, 24% of Alabama third graders tested below grade level. That’s up from 22% in 2022. State Education officials pointed out that the 2023 test was updated to reflect the state’s new course of study and differed from the 2022 test. (See information from the Department). Also, this year’s third graders were in kindergarten when schools closed in Spring of 2020 due to the Covid-19 pandemic. Their first-grade year was, in many cases, disrupted by continuing complications of the pandemic, including remote learning during a critical period for their reading instruction.

Not all students reading below grade level would be retained under the act. The Literacy Act contains good cause exceptions for students who are receiving services for diagnosed learning disabilities. The Act also provides alternative methods of measuring a child’s literacy level. However, the goal of the Act is to encourage parents and schools to identify struggling readers early and provide needed interventions so they are ready for the educational pivot that occurs in fourth grade.

Alabama Reading Initiative Director Bonnie Short told State Board of Education members Thursday that initial analysis indicates systems where more teachers were trained in and fully implemented the research-based approaches to instruction gains in reading performance were higher.

By fourth grade, students are expected to know how to read and to use reading to learn. According to research:

  • A child not reading proficiently by the end of 3rd grade is four times more likely to fail to graduate from high school. Among students who failed to complete high school, 2/3 were not reading on grade level by the end of third grade.
  • A struggling reader who is also poor is three times more likely to fail to graduate than a struggling reader who isn’t living in poverty.
    • Source: Jeopardy: How Third Grade Reading Skills and Poverty Influence High School Graduation

All students from kindergarten through third grade who aren’t reading at grade level are provided literacy boot camps in the summer. In high-need schools, all students are offered the opportunity. According to Alabama State Superintendent Eric Mackey, about half the students who take advantage of the summer program test at grade level by the end of the summer. However, not all of the identified children attend the summer literacy programs, as they are not required to. The state department and school systems are trying to encourage attendance and remove barriers. This summer, the state has authorized the use of transportation support for the literacy camps.

The highest concentration of students testing below grade level tend to be found in school systems where the poverty level is highest. The graphic below shows that correlation.

But demographics are not destiny. At the school level, there is a wide variation in the percentage of students reading below grade level. Thus, school-based leadership, teaching, training, culture, and resources make a difference.

You can explore your local system and compare results to peer systems, systems with similar economics and demographics.

Results are also available at the school level.


2022 City and MSA Population Estimates

Huntsville continued to surge ahead as Alabama’s three other largest cities lost population to surrounding suburbs. However, the pace of decline slowed in Birmingham and Montgomery, as it did in many cities nationwide that were hit hard by pandemic-driven change.

That’s from the latest estimates produced by U.S. Census Bureau. The estimates cover the period between July 1, 2021, and July 1, 2022, a period during which the effects of the Covid-19 pandemic continued to echo.

Since the outbreak of the Covid-19 pandemic, many urban centers have seen an erosion in population, both from heightened death rates and outward migration due to changes in work and commuting patterns. In 2022, some central cities began to bounce back, particularly in the South. Nashville and Atlanta returned to population growth.

Meanwhile, other Southeastern cities barely slowed during the pandemic and have since accelerated. Charlotte, N.C., and Jacksonville, Florida, landed in the Top 10 for growth in 2022, along with Florida and Texas cities.

Alabama’s Four Large Cities

As the 2020 Census approached, the state’s four largest cities had converged at about 200,000 residents each. As the cities have changed ranks, population trends have become increasingly closely watched. (Coverage by Al.com).

Long the state’s largest city, Birmingham’s population peaked in 1960 at 340,000. After 1960, almost all Birmingham-area residential growth occurred in surrounding suburbs rather than the city. A downtown urban residential renaissance in recent years hasn’t been enough to offset the shift to newer housing farther from the city center. According to the estimates, Birmingham is now the third largest city, behind Huntsville and Montgomery. However, Birmingham’s urban core remains larger, and its metro area is more than twice as large as Huntsville.

Meanwhile, Huntsville’s population growth has been spurred by both private and public defense and technology investment, as well as by the successful recruitment of manufacturers like Mazda-Toyota and Polaris. And unlike Birmingham, Huntsville has been able to add population because it strategically annexed land where residential and job growth is taking place. Instead of being surrounded by a ring of suburbs, Huntsville now encircles its largest suburb, Madison.

Mobile has seen steady population loss but is pursuing an annexation campaign to boost its population above Birmingham and Montgomery.

Metropolitan Statistical Areas

When looking at groupings of urban counties known as metropolitan statistical areas (MSAs), the state’s largest MSA, Birmingham-Hoover, saw a population decline according to the estimates. Data released earlier showed that growth in Shelby and St. Clair County didn’t offset the larger out-migration from Jefferson County and the elevated rate of death rate experienced in Jefferson County. In the new 2022 estimates, most of the inner ring of Birmingham suburbs also showed a population decline, with the growth concentrated farther from the city center. Mobile, Gadsden, and Columbus, GA-AL MSAs also saw declines. The rest of the state’s MSAs posted population gains.

A cluster of north Alabama MSAs — Huntsville (Limestone and Madison County), Decatur (Morgan County), and the Shoals (Colbert and Lauderdale Counties) — saw the most growth. In percentage terms, Baldwin County MSA grew the fastest.

Growth in Smaller Cities

Most of the population growth occurred outside of the big four cities. Tuscaloosa and Auburn-Opelika continued to see population increases. Tuscaloosa has seen Alabama’s most significant bump in its total population since the 2020 Census. Part of the rise in the numbers was due to what amounted to a recount. Tuscaloosa successfully argued that the 2020 Census undercounted the city’s population since most students had left for home during those early days of the pandemic. After considering new data, the Census Bureau now counts Tuscaloosa’s population at over 110,000, more than 10,000 residents higher than the 2020 estimates base.

Huntsville neighbors Madison and Athens were among the big gainers, as were more distant neighbors in its orbit like Cullman, Florence, and Muscle Shoals.

Baldwin County’s growth is widespread to the south, with several cities — Foley, Daphne, Fairhope, Gulf Shores, and Loxley — among the top 20 for growth in Alabama cities.

The most recent estimates showed close-in Birmingham suburbs Vestavia Hills, Homewood, Mountain Brook, and even Hoover as declining in population. The high cost of houses and short supply in the already-developed suburbs has likely affected the trajectory of population levels in those communities. Meanwhile, newer suburbs farther afield, like Helena, Chelsea, and Calera, continue to see growth.

Montgomery, which was long the only sizeable city in Montgomery County, is seeing population growth in its relatively new neighbor, Pike Road, which has added more than 1,000 new residents since 2020. Prattville is seeing similar growth levels.

The population is growing modestly in Wiregrass communities, the biggest gainer being Enterprise which has added about 1,000 residents since 2020.

Cities surrounding Anniston and Gadsden have continued to see very modest population changes.

Across Alabama, about 55% of cities lost population in the most recent year. Wide swaths of rural Alabama, particularly in the west and central part of the state, are experiencing population decline. Only 50 cities statewide out of 460 added 100 people or more between July 1, 2021, and July 1, 2022, according to the estimates.


E-Commerce and Taxation: Questions of Efficiency and Equal Treatment

PARCA’s new report, titled E-Commerce and Taxation: Questions of Efficiency and Equal Treatment, questions whether changes are needed to the state’s Simplified Sellers Use Tax (SSUT).

Executive Summary

Alabama’s tax on online goods sold by out-of-state sellers, the Simplified Sellers Use Tax (SSUT), has been a boost to state budgets but a mixed blessing for local governments and schools. As online commerce continues to grow, the assessment and distribution of the tax is increasingly important and potentially problematic.  

At the state level, the SSUT is the equivalent of the state sales tax, a 4% levy on online sales, the same rate that is applied to sales in Alabama stores. In terms of state taxes, the SSUT creates a level playing field between online vendors and brick-and-mortar stores. But at the local level, the tax creates winners and losers.

  • Online retailers benefit from a simple system, paying a total of 8% on all purchases made by Alabamians. The proceeds are divided in half between the state and local governments.
  • Brick-and-mortar stores are put at a competitive price disadvantage. The weighted average sales tax is 9.25%[1] across the state, and thus, most in-person sales are subject to higher taxes than online purchases.
  • Communities with less commercial activity and lower wealth benefit from the distribution formula of the SSUT because the proceeds are distributed on the basis of population, not where the purchase occurs.
  • Big cities and counties, which tend to have higher sales volume and local sales tax rates higher than 4%, receive less from online purchases made by their residents than if those same purchases were made in person.
  • In 2021, 120 school systems received revenue from county sales tax (totaling $665 million), and 40 school systems received revenue from city sales taxes (totaling $176 million). Some systems receive both city and county sales taxes. In total, 131 school systems received sales taxes from a county, a city, or both.

Considering the divergent interests involved, no one policy solution satisfies all parties. Options include:

  • Raise SSUT’s rate to match the prevailing local sales tax rate.

  • Join the 24 other states participating in the streamlined sales tax, which would allow a unified system for applying and remitting sales taxes for online and in-person sales. The local tax rates could be applied, but only one entity would collect state and local taxes, eliminating local oversight.

  • Build our own system for online retailers to look up and submit sales taxes based on where the purchase is made.

Since state and local coffers are full at the moment, immediate action on the SSUT is not expected. However, the issue will become more central with the continued shift toward online sales.


[1] Janelle Fritts, “State and Local Sales Tax Rates,” Tax Foundation (blog), accessed March 22, 2023, https://taxfoundation.org/publications/state-and-local-sales-tax-rates/.

Introduction

The SSUT is Alabama’s tax on goods sold by online, out-of-state sellers. Since its adoption in 2015, more and more consumers have chosen online shopping carts over their metal counterparts.

According to the US Census Bureau’s Retail E-Commerce Sales Report, online sales accounted for less than 1% of sales in the fourth quarter of 1999 compared to 15% of all retail sales—more than $260 billion—in the fourth quarter of 2022.     

Figure 1. Total E-Commerce by Quarter and E-Commerce at a % of Overall Retail Sales, U.S. Census

The changes in the way we buy also affect the way we pay for state and local government. Shifts between traditional and online sales alter the flow of revenue with important consequences for the General Fund and Education Trust Fund, counties and municipalities, and schools across Alabama.

Although the SSUT was initially celebrated for capturing an elusive revenue stream, its distribution formula has led to debates about fairness. The SSUT’s rate is lower than the rate for in-person purchases in most large cities, creating an advantage for online retailers at the expense of brick-and-mortar stores. The growing volume of commerce the tax applies to has sparked fears that the traditional sales tax will diminish in favor of the online alternative. That, in turn, would diminish the revenue that cities and schools depend on.

Figure 2. Estimated Growth in E-Commerce Activity, based on collections of the Simplified Sellers Use Tax

This report aims to explain the SSUT’s origin, describe how it works, analyze its implications, and discuss alternative policies so that Alabamians are equipped for the conversation on the SSUT.

The Origin of the Simplified Sellers Use Tax

Traditionally, states were limited to applying sales tax only to transactions within their borders. That norm was challenged in the 1990s by Quill Company, which sold office equipment and stationery over the phone and through mail-order catalogs. A Delaware corporation, Quill shipped goods all over the country. Those sales went untaxed until the North Dakota State Tax Commissioner tried to force the company to collect and pay taxes on their sales in that state.

Supreme Court Decision Blocks Taxation on Certain Interstate Sales

The Supreme Court ruled in Quill’s favor and struck down the North Dakota tax. From 1992 to 2018, a company without a “physical nexus” (an existing retail outlet) in a state would not be subject to any taxation from that state. The decision, which revolved around mail-order catalogs, helped make way for the unforeseen boom in online retail sales.

In 2000, e-commerce retail sales made up less than 1% ($6 billion) of total sales in the U.S. By 2010, that percentage had climbed to nearly 5%, representing $45 billion in sales. That commerce went largely untaxed. Alabamians were expected to report their online spending when they filed their tax returns and to pay taxes on those items purchased. That is known as a consumer use tax, a companion to the sales tax, but it applies to purchases made in another state. The use tax is generally paid by the buyer rather than the seller.

But relying on consumers to self-report online purchases and pay taxes through the income tax system was ineffective. As states recognized they were missing out on an increasing share of revenue, they began to develop policies to capture it and lobbied for a national solution to the problem.

SSUT Initially Established as an Optional System for Online Sellers

Initially, states created voluntary tax schemes, like Alabama’s SSUT, for sellers to collect and remit online sales taxes. By 2018, 45 states had 45 policies with different qualifications, thresholds, and expectations for compliance. Alabama’s was called the Simplified Sellers Use Tax: “simple” because of its statewide flat rate of 8%, “sellers” because it put the burden of remitting on the out-of-state vendors.

Established by Act 2015-448, Alabama’s SSUT went into effect in January 2016. Its simple state-level rate of 8% made it easy for online vendors to collect a flat rate on sales statewide and submit the proceeds to the state rather than collecting and remitting sales taxes to each municipality and county where they sold items.

Meanwhile, pressure continued to build to allow states to tax online sales, particularly as it became increasingly clear that online retailers were benefiting from an advantage over brick-and-mortar stores located in local communities.

Supreme Court Reversal Allows States to Tax Online Sales

In 2018, the U.S. Supreme Court reversed the Quill decision, and in South Dakota v. Wayfair upheld a South Dakota law that required online sellers to collect and remit taxes on their sales in the state. The Wayfair decision led states, including Alabama, to amend and mandate their respective tax policies. The ruling stipulated, though, that state tax schemes should not put an undue burden on sellers.

Alabama’s SSUT Laws and Amendments

Since its establishment as a voluntary tax, the SSUT has been revised multiple times to conform to the changing environment. Highlights include:

Act 2015-448

Established SSUT. Allowed vendors with no physical nexus in the state to collect and remit an 8% tax on all online purchases destined from Alabama. The amount and its distribution proportions aim to mimic sales tax: a 4% tax levied by the state and 4% meant to represent local sales taxes. 

Act 2016-110

A business in the program may remain unless they establish a storefront or an affiliate business has a physical nexus.

Act 2018-539

Mandates marketplace facilitators with revenue of more than $250,000 to collect and remit. Additionally, a 2% discount (of the tax collected, not a reduction of the 8% SSUT rate) will be allowed on the first $400,000 remitted if remitted in a timely manner.

Updated the distribution formula to its current formation:

  • State of Alabama takes half (4 cents on every SSUT-eligible dollar spent)
    • General Fund = 75% of the state share
    • Education Trust Fund = 25% of the state share
  • Local Governments receive the other half of the revenue (4 cents on every SSUT-eligible dollar spent)
  • 40% to counties
    • Individual county share based on the county’s share of the state population
  • 60% to municipalities
    • Individual city share based on the city’s share of the total municipal population

Act 2019-382

Updates the amnesty and class action provisions for eligible sellers.

Figure 3. Growth in total collections of the Simplified Sellers Use Tax

How Has the SSUT Worked for State Government?

Alabama has an unusual approach when it comes to taxes and spending, an approach that has led to perpetual problems with budgeting. In most states, a mixture of taxes is levied, collected, and deposited into a General Fund. Then a budget reflecting the state’s priorities is created, and the funds flow out accordingly.

In Alabama, the bulk of taxes are earmarked by law, collected, and spent for a specific purpose. The largest sources of state revenue, the income tax and the state sales tax, are earmarked for education.  

That has been good for education in good economic times because those taxes grow with the economy. In bad economic times, that has been a problem because revenues contract and cuts have to be made. For the rest of the government, earmarking creates a problem. There is not enough money to pay for needs, and what revenue there is does not grow enough to keep up with inflation.

In recent years, the Legislature took steps on both the budgeting and the revenue side to improve the situation. On the budget side, they set up a system that keeps from overspending during periods of growth.

On the revenue side, the SSUT was one of a handful of enhancements that injected much-needed growth into the General Fund.

Historically, the General Fund, which pays for non-education functions of state government, has been slow growing. The addition of the SSUT has helped change that equation, adding a rapidly growing revenue source to the General Fund.

The General Fund receives 75% of the state share of the SSUT ($233 million in 2022), providing 8% of the fund’s total. The remaining 25% of the state share of the SSUT flows into the Education Trust Fund.

Figure 4. The SSUT’s Contribution to the Education Trust Fund and General Fund, 2015-2022

SSUT collections as a percentage of the funds have grown as well. In addition to the SSUT growth, the General Fund has benefited from adjustments to and growth in the traditional sales and use taxes.

In 2015, the General Fund (GF) received a total of $1.9 billion, and the Education Trust Fund (ETF) received a total of $6 billion. At the time, the SSUT contributed nothing to either. Meanwhile, sales and use taxes made up 9% ($168 million) of the GF and 32% ($1.9 billion) of the ETF.

In 2022, the GF received $2.8 billion, and the ETF received $10.4 billion. The SSUT contributed 8% ($233 million) and 1% ($78 million) of the GF and ETF, respectively. Meanwhile, traditional sales and use taxes made up 15% ($418 million) of the GF and 26% ($2.7 billion) of the ETF.

Figure 5. Change in Contribution of the SSUT and Sales and Use Tax to the Education Trust Fund and General Fund

While the SSUT arguably shifts revenue from the Education Trust Fund that would have been collected as sales tax, the rise of online sales has occurred at a time when the traditional sales tax and income tax have grown rapidly.

Thus, despite the change in flow, the ETF has seen healthy growth as well. Sales tax collections rose more than 40% from 2015 to 2022, but other revenue—principally the income tax—rose even more. Revenue from income taxes nearly doubled, from $3.9 billion to $7.4 billion in 2022.

Figure 6. Overall Growth in Alabama Education Trust Fund and General Fund, 2012-2022

How Has the SSUT Worked for Local Governments?

At the state level, the SSUT closely parallels the state’s general sales tax, except in its division of proceeds between the General Fund and the Education Trust Fund. At the local level, though, the revenue produced by SSUT and distributed to local governments does not match local sales tax rates or activity level.

Whether or not the SSUT should closely resemble local sales tax is a policy decision. Presumably, online sales compete with local brick-and-mortar sales. Those local brick-and-mortar stores must collect a higher sales tax rate than online retailers. Brick-and-mortar stores also pay property taxes and employ more local residents than are supported by delivery services linked to online retailers.  

At the same time, sales tax collections tend to be concentrated in larger communities. Those larger communities benefit from not only the sales taxes paid by residents but also from sales taxes paid by people from other towns and unincorporated areas who drive in to shop.

With the rise of online sales, should the taxes paid on goods purchased on the Internet and delivered to doorsteps reflect the existing shopping patterns? Or should the proceeds of online sales taxes be equally distributed according to where people live?

Currently, the SSUT reflects a simplified collection and distribution system with a flat rate and a distribution by population. Cities, counties, and school systems that benefit from taxes generated under the local sales tax system see the online option as a competitive threat, with a competitive advantage created by the SSUT.

At the same time, cities and counties without a strong commercial base may be benefiting from an online delivery system that decreases their residents’ need to travel to commercial centers while generating taxes that would otherwise have flowed to commercial centers.

Figure 7. Distribution of the Simplified Sellers Use Tax, as divided between state and local governments, 2022

Counties

Counties are now receiving 20% of total SSUT collections.

For those counties with little income from sales tax, the money from the SSUT represents new revenue. But counties that generate significant sales tax revenue might be missing out on revenue due to purchases moving online. That is because the tax rate for the SSUT is lower than the sales tax in most large jurisdictions. Additionally, the revenue from online transactions is being dispersed across the state on a per capita basis with no adjustment for where the order and delivery are occurring.  

The loss of revenue to a particular county can be estimated by first taking a county’s sales tax collections and estimating that county’s proportion of Alabama’s total sales tax collections.[1]

That proportion applied to an estimate for total online sales can be used to estimate that county’s portion of all SSUT-eligible spending. Finally, the county’s sales tax rate is applied to find the revenue the county would have received if the county’s tax rate was applied to online sales.

In fiscal year 2021 (FY 2021), Jefferson County received $14.2 million from the state from SSUT collections. That year, $6.4 billion was spent statewide on SSUT-eligible goods. According to PARCA calculations, in 2021, Jefferson County accounted for about 17% of the state’s total in-state sales tax collections. If Jefferson County accounted for 17% of SSUT-eligible spending as well, Jefferson County would have had more than $1 billion in taxable online sales. If Jefferson County’s countywide sales tax was applied to that total, the county would have collected $28 million in revenue from that online commerce.[2]

In FY 2021, Greene Country received $195,000 in remitted SSUT collections. Using the same approach applied to Jefferson, PARCA estimates that Greene County would have collected only $66,000 if it applied the county’s 3% rate to its estimated level of SSUT-eligible sales.

Another way to compare SSUT distributions and local sales tax is to take income into consideration. The current per capita distribution assumes that every person in every county spends similarly online. Since higher income is correlated with higher levels of spending, an income-weighted distribution might more closely approximate actual local spending patterns.

For instance, in FY 2021, Madison County received $7.2 million in SSUT remittance. If SSUT was distributed by income and population, PARCA estimates the county would have received $10 million in disbursements.

Figure 8. Top 5 Counties in SSUT Distributions

Cities

Questions about the SSUT’s distribution formula are most pressing for municipalities where brick-and-mortar stores tend to be concentrated. Higher sales tax rates and dependence on sales tax revenue make the issue especially contentious.

Since 2018, all municipalities have enjoyed this new revenue from online sales, with the amount received based on city population. However, municipalities with large populations and high sales tax contend they are losing out on revenue they would have received if the purchases had been subject to a local sales tax instead.

In FY 2021, Tuscaloosa received $4.8 million from the estimated $6.4 billion in SSUT-eligible statewide spending. PARCA estimates Tuscaloosa’s 3% tax on its portion of statewide sales would have yielded upward of $6.6 million.

In FY 2021, Hueytown received $860,000 from SSUT disbursements. That year, it accounted for roughly 0.33% of the state’s sales. If Hueytown had received their 4% tax on that proportion of the SSUT sales, it is estimated they would have received a slightly lower amount: $856,778.

Hueytown represents a middle ground of municipalities that receive similar collections in both methods. The smaller the sales tax collections, the greater the difference between what they would have collected and what they received.

Many municipalities have less sales tax revenue than Hueytown, and many are probably receiving twice what they would have collected from sales tax.

While this distribution method might seem inequitable, it is worth considering the flaws of traditional sales tax.

Sales taxes are paid at the point of sale. This means that the Alabamians flocking to cities with high sales tax for retail are not only paying above their dwelling municipality’s sales tax, but they are also paying into the budgets of a different municipality altogether.

Figure 9. Top 11 Cities for SSUT Distributions

School

The SSUT and its distribution system also have an impact on school budgets. School systems receive sales tax money, collected and distributed according to local law or flowing through the county or municipal government. Presumably, as sales shift online, that revenue is diminished. The taxes from those online transactions, collected through the SSUT, are distributed to cities and counties. Unlike sales taxes, local governments are not obligated to pass along a portion to the schools.    

In 2021, 120 school systems received revenue from county sales tax (totaling $665 million), and 40 school systems received revenue from city sales taxes (totaling $176 million). Some systems receive both city and county sales taxes. In total, 131 school systems received sales taxes from a county, a city, or both.

Some cities treat the SSUT as if it were sales tax and distribute it to the schools in the same proportion as the traditional sales tax. Some school systems have negotiated agreements to receive a portion of the SSUT. Many have not.

The Alabama Department of Education asks school systems to report local sources of revenue. This reporting may not completely capture whether or not SSUT funding is flowing to the systems, but far fewer systems report receiving SSUT funding than report receiving traditional sales taxes. As of December 2022, only eight school systems reported receiving funding from their county’s SSUT revenue, and only seven school systems reported receiving funding from their city’s SSUT revenue, according to Alabama Department of Education records.

SSUT’s Unintended Consequences in the Marketplace

SSUT decisions also impact brick-and-mortar businesses. The SSUT’s low rate of 8% allows out-of-state vendors to charge lower prices than their in-state competitors.

Brick-and-mortar businesses employ more people and contribute to the local economy in various ways, including through the payment of rent or property tax. And yet they are compelled to collect a higher combined sale and local sales tax rate than an online seller.

Small businesses in Alabama are obligated to collect and remit sales taxes, whatever their sales volume. Out-of-state online businesses that sell less than $250,000 to Alabama customers are not obligated to participate in SSUT.

There are also situations in which local businesses could find an advantage in selling through a third-party, online marketplace facilitator and thus avoid paying local taxes. The online transaction could be facilitated through an online marketplace, assessed the 8%. The customer can then pick up the item at the store or have it delivered to the home, circumventing local sales taxes.  

Alternatively, some Alabama residents are, at least in theory, overpaying sales taxes on online transactions—Alabama residents who live in jurisdictions where the sales tax is lower than the 8% SSUT.

The Alabama Department of Revenue does have a process in place to reimburse residents living in these jurisdictions. The process involves filing a claim with documentation of purchases. The Department does not report how much has been claimed through that process.  

Still, even if a rural resident pays the SSUT on a transaction, it is not necessarily true that they are suffering an injustice. If that rural individual were to instead purchase the same item in a physical store, that store would likely be located in a jurisdiction that collects 8 cents or more in local taxes, since most retail stores are located in cities with sales taxes.

If Alabama wanted the SSUT to match the local sales tax, it would need to make sure a replacement system doesn’t impose an “undue burden on interstate commerce.” The opinion of the court gave little detail about what is burdensome, but it expressed that what South Dakota had set up “appear(s) designed to prevent…undue burdens upon interstate commerce” and that it would be up to Congress to decide. Despite this, there are cases going on in Louisiana and Colorado that might force the courts to give more guidance.

It is currently unknown what constitutes an undue burden, but it gets even harder to anticipate what that will look like as new technology emerges. In the Quill era, finding local rates in different states and remitting the correct amount was a huge burden. Nowadays, it has been made much simpler by the creation of easy-to-use databases and automated processes.

Currently, Alabama’s SSUT is less burdensome than most other policies. This means that our policy will not likely conflict with a future ruling. The implication for Alabama is that we could probably afford a more complex and demanding policy that might fix some of the problems discussed in this report.

Policy Alternatives

Alabama Simplified Sellers Use Tax has plenty of fans, and, for the time being, it will likely remain as it is.

It is simple—one uniform rate statewide, collected by one entity, the State of Alabama. This simplicity decreases the cost of compliance for businesses and the cost of collection for the state. It also encourages participation in the system, which otherwise could be difficult to enforce.

For smaller jurisdictions that lack commercial activity, it has created a revenue stream where none existed. For counties, always cash-strapped and lacking independent authority to levy a tax, the SSUT has been a boon.

But if the concerns of brick-and-mortar retailers and larger cities and counties are to be addressed, there are policy options.

Option 1: Level the playing field between online sellers and brick-and-mortar stores

The current SSUT rate of 8% online purchases is lower than the state average sales tax of 9.24%.[3]

That gives online vendors an advantage over brick-and-mortar stores. The difference is even more significant in some of the larger municipalities, with sales tax rates on in-person purchases reaching 10% in Birmingham, Montgomery, Mobile, and Tuscaloosa.

Table 1. Sales tax rates for top 10 cities, sorted by combined sales tax rate

Argument for: This option would maintain the simplicity of the SSUT for online sellers while leveling the playing field. This approach is the simplest to achieve politically and would benefit all the recipients of the SSUT. It would lower the incentive for companies to remain out-of-state or migrate transactions to an online third party.

Argument against: Raising the rate does not address objections to the current distribution system, which does not align with the level of commercial activity or wealth in a community. As currently structured, the SSUT is more of a statewide revenue-sharing mechanism than a local tax. Additionally, for residents of low-tax jurisdictions, the tax on online goods would be much higher than in their home jurisdictions. Raising the rate also does not address the plight of school systems losing out on local sales tax.

Option 2: Equalize other terms between online and in-person sales   

Currently, a remote business that generates less than $250,000 in revenue annually does not have to collect and remit SSUT. Notably, this threshold is more than double the typical threshold of $100,000 in force in other states. More importantly, there is no similar threshold for brick-and-mortar stores subject to normal sales tax. This gives small online retailers a considerable advantage over their local competitors.

Argument for: An adjusted threshold would bring Alabama more in line with the majority of states in terms of capturing sales taxes from online transactions, and changes could level the playing field with Alabama-based sellers. The amount of SSUT collections would increase, and all the recipients of it would benefit.

Argument against: The adjustments would impose a burden on smaller Internet-based companies in terms of compliance. It would not address the disbursement method for those who want it changed. It doesn’t help local schools that lose out on local sales tax.

Option 3: Apply to all purchases, online or in-person, the appropriate state and local taxes for the jurisdiction

Alabama could require online sellers to calculate and pay the sales tax based on where the order is being delivered. That would require that Alabama provide a system for cataloging, geocoding, and communicating the appropriate rates. And it would likely require localities to give up control of the tax collection and administration process.    

Perhaps, the easiest route would be to join the 24 states, including Georgia, North Carolina, Kentucky, and Tennessee, in adopting the Streamlined Sales Tax, a multistate cooperative system for simplifying the assessment and payment of sales taxes. The participating states agree to a set of common rules and definitions and provide up-to-date information on sales tax rates and the precise geographic areas where those rates apply.

The simplification effort was launched after the original Quill decision, which prohibited taxation across state lines because of the overwhelming complexity of determining local sales tax rates and rules in the multitudes of jurisdictions across the country. Since then, cooperating states have been supported by businesses interested in simplifying compliance and payment. Like the SSUT, the Streamlined Sales Tax initially offered a simplified and voluntary way to pay taxes on online sales.  

The drive to simplify and the evolution of technology helped pave the way for the Wayfair decision, which allowed states to require online vendors to collect sales tax. In the Wayfair case, the Supreme Court reversed Quill, recognizing that South Dakota, a participant in the Streamlined Sales Tax effort, had created a system in which Wayfair was no longer facing an “undue burden” complying with the taxes state and local governments levied.

Remote companies who want to sell to participating states must register with the Streamlined Sales Tax Governing Board Companies and then can use the database (provided by the state to the Streamlined Sales Tax Governing Board) of locations and tax rates. The collections are sent directly to a single state entity and then distributed to the areas from which they were collected.

Alabama has traditionally been resistant to having one entity, presumably the State Department of Revenue, administer taxes on behalf of all local governments. In fact, Alabama, Alaska, Arizona, Colorado, and Louisiana are the only states that allow complete home rule over sales taxes.[4]

That resistance to state collection and distribution is one of the reasons why Alabama has not joined the Streamlined Sales Tax organization. If Alabama joined, municipalities could still set their own sales tax rates, but they would lose control of aspects of tax administration. A centralized system for filing and payment of sales taxes would be required. Cities require returns submitted to individual jurisdictions or audit businesses they suspect are not paying their fair share. Certain definitions and schedules would need to be uniform.

Alabama’s SSUT avoids the complexities that would have resulted if Alabama allowed municipalities to tax online sales. Louisiana and Colorado both have notoriously complex home rule local sales tax systems. Both states are facing lawsuits from companies that claim the complex system is too hard to comply with and places an undue burden on remote sellers. If Alabama were to adopt a system in which local sales tax rates were assessed on online transactions, the state would be wise to adopt a unified and simplified system for administering it.

Argument for: Bringing local sales tax rates and online sales tax rates into conformity would create a level playing field and would allow local communities to set rates and benefit from the economic activity within their borders. Local transactions would support local priorities.

Argument against: Alabama would need to have a sole entity collect sales taxes and oversee sales tax auditing. Local governments would lose some aspects of control. Alabama would need to create and maintain a centralized database of all the sales tax rates and their respective boundaries. Compliance would be more complex for online sellers. The equalized distribution of tax resources produced by the SSUT would be eliminated and replaced with a system that perpetuates the concentration of wealth and economic activity.

Conclusion

The Simplified Sellers Use Tax was a good step in a direction many states still have not attempted. Its simplicity and low-rate prioritized compliance did not require much coordination. It enticed online sellers to participate, providing advantages at a time when collection and payment of online taxes were voluntary.

Since the SSUT was adopted, remittance is now mandated. The amount of money spent online has exploded, and with it, the consequences of the SSUT’s setup.

Currently, many brick-and-mortar stores must charge higher prices to cover higher tax rates. Large municipalities and counties miss out on critical sales tax revenue, and schools lose out on local sales tax revenue. Meanwhile, smaller counties and municipalities are receiving a substantial amount of money from SSUT distributions. The effects of this policy are somewhat hidden behind our recent windfall of federal money and general economic surge, but they will become more pronounced when we are strapped for cash.

Whether a change to the Simplified Sellers Use Tax comes this session or in the next few years, it will likely come. It could come as a small rate change, an adjustment of distribution, or perhaps a major overhaul of sales tax as we know it. Even after such a step, the Wayfair decision set in motion a technological and political conundrum that will not soon be solved. Ongoing litigation will more clearly establish what constitutes an undue burden in the collection of Internet sales taxes. This will change how much governments can ask of businesses, but evolving technology will also make that mark a continually moving target.


[1] A certain portion of the sales tax is not attributable to a particular county. That pool of sales tax revenue is not considered in this calculation.

[2] Jefferson County’s traditional countywide sales taxes flow not just to the county commission but to multiple agencies as designated by law. As in other counties, the SSUT distributions in Jefferson are sent to the county commission.

[3] Fritts, “State and Local Sales Tax Rates,” accessed March 22, 2023, https://taxfoundation.org/publications/state-and-local-sales-tax-rates/.

[4] Gail Cole, “Economic Nexus, Home Rule, and Sales Tax: What Businesses Need to Know,” Avalara, Inc., accessed April 11, 2023, https://www.avalara.com/blog/en/north-america/2022/07/economic-nexus-home-rule-sales-tax-what-businesses-need-to-know.html.


Grad Rate Dipped, but Career Readiness Climbed for Class 2022

As graduation approaches for the Class of 2023, there’s new data available allowing us to look back on last spring’s graduates.

The Class of 2022 faced particular challenges due to the Covid-19 pandemic, which struck when they were sophomores and persisted through their junior year. In both those years, the number of kids who dropped out was elevated: over 1,000 juniors from the Class of 2022 cohort dropped out, more than double the number of juniors that dropped out in the Class of 2021.

In the end, 89% of seniors graduated, compared to 92% in 2011, but those that persisted were more likely to finish college- and career-ready (CCR).

The Class of 2022 posted a significant jump in the percentage of CCR seniors, thanks to a jump in the percentage of students earning workforce-related credentials and an increase in dual enrollment.

In 2022, 79% of seniors were certified as CCR, up from 76% in 2021. That gain was despite a large drop in the percentage of seniors testing college ready on the ACT. (See PARCA’s previous analysis on the ACT results).

Fig1. Trends in High School Graduation and College and Career Readiness

The Class of 2022 broke a trend of smaller graduating classes, and despite the elevated dropout rate, more students graduated.

State leaders had been calling on schools to close the gap between graduation and career-ready rates.

A lower graduation rate combined with college-and-career readiness means that the gap between graduation and readiness narrowed to 10 percentage points, compared with 15 percentage points the previous year.

Shifts in Readiness

High school students can demonstrate college and career readiness in several different ways. Figure 1. allows you to explore trends on each measure. Diving below the surface on these measures presents a mixed picture of the Class of 2022.

Fig. 2 College and Career Readiness Measures, by Percentage of Seniors Earning

College and career readiness can be demonstrated by one or more of the following: 

  1. Earn an Industry Recognized Credential through Career Technical Education: 39% of students earned an industry-recognized credential through career technical education in 2022, the highest rate for any class. These credentials result from taking work-oriented courses offered at high schools or K-12 career tech centers. Credentials must be tied to a student’s course of study and should be valued in a career field that is in demand in the regional job market. According to State Department of Education data, in 2022, the biggest jump in credentials earned was in certifications in the use of Microsoft software. Big gains were also posted in the number of students earning Certified Guest Professional credentials, a credential associated with the hospitality industry, and in Adult Beef Quality Assurance, an ag-related credential. Also posting gains were credentials associated with healthcare, construction, forestry, and the military’s ROTC programs. Across all grades, the 2021-2022 academic year saw more students earning CTE credentials than ever before: 33,535 compared to the pre-pandemic peak of 31,062 in 2019. While the growth is laudable, attention should continue to be focused on the quality and value of the credentials available.
  2. Earn Credit Through a College: a higher percentage of students earned college credit while in high school in 2022 than ever before: 18%. That’s up from 17% in 2020. These courses, also known as dual enrollment, tend to be taken through a local community college but can also be through a university. The student must successfully complete the course and earn credit to qualify as CCR.
  3. Earn a Qualifying Score through College-level Courses Taught in High Schools: Advanced Placement (AP) courses are taught in a high school but have the rigor and approach of college courses. In 2022, 12% of students qualified as CCR through AP, which is tied for the highest percentage ever. To count as CCR, a student has to score three or higher (out of 5) on the national end-of-course test, a level at which a college might award college credit. The number of students qualifying through success in International Baccalaureate (IB) classes also increased. IB is similar in rigor to AP, though less widely used.
  4. Earn a qualifying score on WorkKeys: 39% of seniors demonstrated college readiness by performing well on ACT’s WorkKeys test. This marked a recovery in the number and percentage of students qualifying by this measure. After dropping from 2019 to 2021, 2022 saw a recovery of 5 percentage points in 2022. WorkKeys is a standardized test designed to measure whether students have the math and communication skills expected in workplaces. WorkKeys is no longer required, and, in many systems, students who have already demonstrated college and career readiness by another means opt out. (More on WorkKeys results below)
  5. Earn a benchmark score in a subject test on the ACT: The percentage of students scoring at or above the college-ready benchmark on the ACT was down by 8 percentage points in 2022, to 37%. This rate has been dipping consistently every year and is now down 14% from 2018.  A student scoring above the benchmark has a 50% chance of earning a B or above and a 75% chance of making a C or above in that course in college. Covid disruptions may have had some bearing on students’ ability to prepare for and take the ACT, which tests readiness for success in college. Alabama’s drop in performance coincides with a national drop that began before Covid but appears to have been exacerbated by the pandemic.
  6. Successfully enlist in the U.S. Military: The same percentage of students gained admission to the military, but that represents an increase of from 519 in 2021 to 590 in 2022. However, that total is less than half of what it was in 2018 when 1,129 seniors entered the military after high school.
Fig. 3 College and Career Ready, by Number of Seniors Earning

The Class of 2022 deviates from recent trends. Over the past few years, fewer students have been progressing through Alabama public schools. From 2018-2021, class sizes were down 7%. During that time, we saw a 6% decrease in graduates and a 5% decrease in career or college-ready students. In 2022 however, we saw a class size increase of 5%, a 2% rise in graduates, and an 8% rise in career or college-ready students. This symbolizes a return to pre-pandemic numbers. However, the new generation of students is known to be smaller. In light of this and the ongoing elevated demand for skilled workers, Alabama must focus on graduating every student with the skills needed to succeed in higher education and/or the workplace.

School and System Results

Last year, one system and twenty-four schools reported a 100% on-time graduation rate. This year, one system, Magic City Acceptance Academy, and only fourteen high schools reported a 100% on-time graduation rate. Fourteen high schools reported both 100% graduation and 100% CCR rate. In some schools, a higher percentage of seniors demonstrated college and career readiness than graduated.

Fig. 4 CCR and Graduation Rates by System, 2022

On the other hand, fifteen schools had graduation rates below 75%. Nineteen high schools had CCR rates below 50%. Only nine school systems had a gap greater than 25% between their graduation rate and the college and career readiness rate. In those systems, more than a quarter of students receiving diplomas hadn’t demonstrated their readiness for college or work, despite having met Alabama’s requirements for obtaining a high school diploma.

In the visualizations below, school systems and schools can be sorted by either graduation rate or college and career readiness rate. The solid-colored horizontal bar represents the graduation rate; the short vertical bar represents the CCR rate. Through the tabs above the visualization, other data is accessible, including a graph of the gap between the graduation and CCR rate by system.

The same set of sortable data is available by school. In order to protect student privacy, results for small subpopulations of students are not presented.

Fig. 5 CCR and Graduation Rates by School, 2022

Gaps Between Subgroups

Historically, there have been gaps in the high school graduation rate between students of different races. In 2022, the gaps in graduation got slightly bigger, and the gap in overall CCR was slightly reduced. Some trends seen in past years are continued or even exaggerated. CCR rates for economically disadvantaged students are well behind those of non-economically disadvantaged students. Examining the subcomponents of CCR, the gap is widest on the ACT despite everyone achieving lower numbers from years past.

Only 18% of Blacks and 22% of Hispanics benchmarked in a subject on the ACT, compared to 47% of whites. Asians are much further ahead, with 68%. By contrast, there is almost no racial gap in college and career readiness rates in career technical education: 38% of Black students earned an industry-recognized credential through CTE compared to 40% of whites and 40% of Hispanics.

Fig. 6 CCR and Graduation Rates by Subgroup, 2022

WorkKeys

The number of high school seniors taking ACT’s WorkKeys Assessment increased by almost 4,000 in 2022, a major reversal in a downward trend in the use of the test.

Along with higher participation, a higher percentage (60%) and a greater number of students (2,833) qualified as college and career ready as a result of their scores.

Fig. 7 WorkKeys Results, Statewide Trends

WorkKeys is given to seniors and is designed to measure practical math, reading, and graphical literacy skills as they are employed in the workplace. That’s different than the ACT, which tests for knowledge and skills needed in a college classroom.

WorkKeys was given to all seniors through 2019, but the State Department of Education stopped mandating the test in 2019. While some systems still test all seniors, some systems make the test an option for students who haven’t demonstrated college and career readiness by another measure.  

Some businesses, particularly industrial employers, build WorkKeys into their hiring practices. They have determined what level of proficiency, as measured by WorkKeys, is needed in particular jobs. Depending on their test performance, students earn a platinum, gold, silver, or bronze National Career Readiness Certificate. A student scoring Silver or above is considered college and career ready.

Jefferson, Mobile, Montgomery, Limestone, and Lauderdale County systems, as well as city systems in Huntsville, Birmingham, Florence, and Madison recorded large increases in the number of students taking WorkKeys and successfully earning credentials.

Fig. 8. Number of Students Workforce Ready 2022 and Change from 2021

The visualizations that follow present WorkKeys results statewide and in systems where more than 90% of seniors took the test. The percentage of students scoring workforce ready are those that score Silver or above.

Fig. 9. Percentage Workforce Ready by System, 2022

The visualization below presents the results in a more detailed fashion. Each color represents the percentage of tested students scoring at each level: platinum, gold, silver, bronze, and no certificate earned.

Fig. 10. WorkKeys Results, by Level of Certification, 2022

Most Alabama Counties Grew in 2022, Reversing Trend

People are moving to Alabama, and according to most recent population estimates, the growth is more widespread than it has been. Out of 67 counties, 36 saw population growth between July 1, 2021, and July 1, 2022, the period covered in the latest Census Bureau release. In the prior year, only 29 counties saw positive growth. Throughout the 2010s, only 24 counties grew.

Fig. 1. Numeric Change 2021-2022

The growth is particularly noteworthy because four factors were putting downward pressure on population growth:

  • Death rates were still elevated in the wake of the Covid-19 pandemic
  • The large Baby Boom generation is entering years of increased mortality
  • Smaller succeeding generations have lower birthrates
  • International immigration is still lower than historical norms

Printable PDF available here.

But in the counties that grew, and for the state as a whole, domestic migration — a net positive number of U.S. residents moving into the state — overcame the headwinds.

Fig. 2 Domestic Migration 2021-2022

The strongest growth was among the usual suspects: Baldwin County in the south and Madison and Limestone counties in the north, with Lee, Shelby, and Tuscaloosa counties also continuing positive growth trends. The Huntsville area’s growth continues to spread across North Alabama, with population growth accelerating in The Shoals (Lauderdale and Colbert), Cullman, Morgan, and Marshall counties.

The Wiregrass and Northeast Alabama counties also grew, including Calhoun County, which had been on an extended population losing streak. Calhoun added over 600 new residents through domestic migration for a net population gain of 111. Etowah County attracted 524 new residents, but since deaths exceeded births, the population total declined slightly, down just 55 residents.

In percentage terms, Limestone County grew the fastest. That’s likely growth not only in Athens, the county seat, but also from Huntsville and Madison, which have spread from Madison County into Limestone. Generally, counties along the Interstate corridors are growing, as well as counties bordering Tennessee, Georgia, and Florida. On the western border with Mississippi, most counties are losing population.

Urban losses

Alabama’s traditional urban centers — Jefferson, Montgomery, and Mobile — lost population, primarily due to domestic outmigration.

That population loss parallels national trends among urban counties: in the wake of the pandemic, most population centers lost population. According to the estimates, Jefferson County’s population decreased 4,588 in 2022. Since the 2020 Census, Jefferson County’s population has decreased by almost 9,000.

Rate of Domestic Migration, 2021-2022

There are signs of a turnaround, though. Nationally, large urban centers began seeing population recovery in 2022. Jefferson County’s population loss was lower in 2022 than in 2021. International immigration and natural increase helped fuel population growth in urban centers elsewhere, including among Southern neighbors. Alabama’s big cities saw some population growth through international immigration. However, Alabama generally sees much lower rates of international in-migration.

Rate of International Migration, 2021-2022

Divergent Rates of Change

Alabama’s Black Belt and other more remote rural counties continued to lose population through residents moving away and through higher death rates. According to the estimates, Lowndes, Perry, and Greene Counties are each now below 10,000 in population, with Greene being the least populous at 7,422. Bullock, Coosa, and Wilcox are close to 10,000. Nationally, about 1,000 of the more than 3,000 counties in the U.S. have 10,000 or fewer residents.

Population Estimates, 2022, U.S. Census Bureau

In addition to outmigration, rural counties tend to have negative rates of natural change: in other words, more deaths than births. Those counties tend to have a higher median age, with a higher share of the population over 60. That’s a population that has an increased risk of death from natural causes.

Rate of Death, 2021-2021

On the opposite end of the spectrum are counties with a higher proportion of the population who are young adults or in their child-bearing years. In only eight counties have births outnumbered deaths since 2020: Lee, Shelby, Madison, Montgomery, Tuscaloosa, Limestone, Marshall, and Autauga.

Rate of Natural Increase, 2021-2022

The tabs above the images allow you to explore statistics for individual counties for births and deaths, and domestic and international migration, as well as numeric change over time.

The National Picture

Alabama’s population change is occurring in the context of national trends that are visible when zoomed out to the national level. Population losses in Alabama’s Black Belt are connected to patterns along the Mississippi River from Mississippi and Louisiana, Arkansas, Missouri, and even Illinois. Baldwin County’s growth rate has echoes along the coasts of Florida, Georgia, and North and South Carolina coasts. Huntsville’s growth sits at the edge of the mountain interior southern region stretching across Tennessee, North and South Carolina, and Northern and Central Georgia.