BIRMINGHAM, Ala. – Lawmakers will begin negotiations Wednesday on Gov. Kay Ivey’s $10.5 billion Education Trust Fund spending proposal as they try to balance competing financial pressures across the state’s education system.
The House Ways and Means Education Committee will take up the governor’s proposed education budget package at 9 a.m. Wednesday. The meeting will be livestreamed.
The proposal includes the $10.5 billion for the regular Education Trust Fund budget, along with a $520 million supplemental appropriation for the current fiscal year and a $1 billion Advancement and Technology Fund appropriation for capital and other projects.
Ivey’s proposal also includes a $500 million transfer from the Education Opportunities Reserve Fund. Of that amount, $362.5 million would go to the RAISE Fund, with the remainder distributed among higher education institutions.
The governor’s proposal would also provide a 2% pay raise for state-funded education employees, estimated to cost about $100 million.
If approved, it would mark the seventh teacher pay raise since Ivey’s FY2019 budget, the first she proposed as governor.
Lawmakers are expected to begin adjusting those proposals as they try to address multiple demands on the education budget, including rising health insurance costs, employee pay raises and funding increases for schools and colleges.
The committee will consider the following bills Wednesday:
- House Bill 235 – $520 million supplemental appropriation
- House Bill 236 – $1 billion Advancement and Technology Fund
- House Bill 565 – Higher education performance program creation
- House Bill 237 – $500 million Educational Opportunities Reserve Fund transfer
- House Bill 238 – $10.5 billion Education Trust Fund appropriations (regular budget)
- House Bill 239 – $100 million education employee pay raise
- House Bill 240 – $16 million Tuskegee University appropriation
- House Bill 241 – $1.4 million Talladega College appropriation
- House Bill 242 – $640,000 Southern Preparatory Academy appropriation
Bills numbered 236 through 242 would allocate funding beginning Oct. 1, the start of fiscal year 2027. Funds in HB235, the supplemental appropriation bill, could be spent during the current fiscal year. The bills currently reflect Ivey’s proposed spending, but lawmakers are expected to make changes, at least in the main budget bill.
House Bill 565 creates a performance bonus program for eligible colleges and universities. It does not appropriate any funding.
Lawmakers will also have to decide how to address rising costs in the Public Education Employees Health Insurance Plan, known as PEEHIP.
The PEEHIP board has projected a $380 million shortfall for fiscal year 2027 due to rising medical and pharmaceutical costs. Ivey’s proposal includes $210 million in additional funding for the program, leaving a significant gap that lawmakers may need to address during negotiations.
At the same time, schools and colleges are hoping for continued funding increases after several years of strong education revenue growth.
Under Ivey’s proposal:
- K-12 funding would total $7.1 billion, a 5.8% increase over the current $6.7 billion budget.
- Higher education funding would total $2.7 billion, also a 5.8% increase over the current year’s $2.6 billion budget.
- Funding for other agencies and education-related programs would total $646 million, a 5.2% increase over the current $615 million budget.
Increases for individual higher education institutions range from 4.2% to 8.4%.
Outside of educational institutions, Ivey’s proposal has few increases over last year.
Education revenues remain positive for now, though growth has slowed compared with the strong collections the state saw in recent years.
As of March 1, year-to-date Education Trust Fund receipts totaled $4.1 billion, up 1.05% from the same point last year. The fund returned to positive territory in February after spending three of the previous four months in the red.
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