SB101INTRODUCED
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XQ8T7E-1
By Senator Orr
RFD: Finance and Taxation Education
First Read: 21-Mar-23
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5 XQ8T7E-1 3/20/2023 KHF (F) KHF 2022-5382
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SYNOPSIS:
This bill amends the Education Trust Fund
Rolling Reserve Act of 2011 to provide additional
definitions, to provide further for annual Education
Trust Fund appropriations, to provide further for the
distribution of revenues received in excess of
appropriations, to create the Educational Opportunities
Reserve Fund and provide for the funding and
appropriations from the fund, and to delete obsolete
provisions.
A BILL
TO BE ENTITLED
AN ACT
To amend Sections 29-9-2, 29-9-3, and 29-9-4, Code of
Alabama 1975, as last amended by Acts 2022-139 and 2022-358 of
the 2022 Regular Session, relating to the Education Trust Fund
Rolling Reserve Act, to provide additional definitions; to
provide further for annual Education Trust Fund
appropriations; to provide further for the distribution of
revenues received in excess of appropriations; to create the
Educational Opportunities Reserve Fund and provide for the
funding and appropriations from the fund; and to repeal
obsolete Section 29-9-2.1 of the Code of Alabama of 1975.
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BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 29-9-2, 29-9-3, and 29-9-4, Code of
Alabama 1975, as last amended by Acts 2022-139 and 2022-538 of
the 2022 Regular Session, are hereby amended to read as
follows:
"§29-9-2
For the purposes of this chapter, the following terms
have the following meanings:
(1) ALABAMA TRUST FUND. The Alabama Trust Fund created
by Amendment No. 450 to the Constitution of Alabama of 1901.
(2) EDUCATION TRUST FUND. An account in the State
Treasury into which are deposited certain revenues paid to the
State of Alabama that are earmarked or set aside for
appropriation for public educational purposes.
(3) EDUCATION TRUST FUND BASE APPROPRIATIONS. The
Education Trust Fund appropriations for the current fiscal
year that were enacted in a prior legislative session,
excluding reversions reappropriated and any supplemental
appropriations.
(3)(4) EDUCATION TRUST FUND RAINY DAY ACCOUNT. The
special account created within the Alabama Trust Fund by
Amendment No. 803 to the Constitution of Alabama of 1901
Section 260.02 of the Constitution of Alabama of 2022 .
(5) EDUCATION TRUST FUND TOTAL APPROPRIATIONS. The
total amount of funds appropriated from the Education Trust
Fund for a fiscal year, including reversions reappropriated
and supplemental appropriations.
(6) EXCESS REVENUES. The difference in the total amount
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of revenue deposited in the Education Trust Fund in the
immediately preceding fiscal year, including nonrecurring
revenue, less the Education Trust Fund Total Appropriations
for the same fiscal year.
(4)(7) FISCAL YEAR. The fiscal year of the State of
Alabama that begins on October 1 and ends on September 30.
(5)(8) FISCAL YEAR APPROPRIATION CAP. The maximum
amount of appropriations that may be made from the Education
Trust Fund for any fiscal year under certain conditions
pursuant to this chapter.
(6)(9) NEW RECURRING REVENUE. Revenue of any kind or
type constituting a new annual source of money that has been
enacted, established, or provided for prior to the first day
of the fiscal year of which it is to first be included in the
calculation of the Fiscal Year Appropriation Cap for the
Education Trust Fund.
(7)(10) NONRECURRING REVENUE. Revenue of any kind or
type that is deposited into or causes one-time abnormal
revenue impacts on the Education Trust Fund and that is not
recurring revenue, including one-time enhancements to revenues
resulting from one-time assistance to individuals or
businesses provided by the federal government. Any balance
remaining in the Education Trust Fund at the end of any fiscal
year, and transfers from the Education Trust Fund Proration
Prevention Account , the Education Trust Fund Rainy Day
Account, and the Education Trust Fund Budget Stabilization
Fund shall be nonrecurring revenue.
(8)(11) RECURRING REVENUE. Any permanent and continuing
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source of revenue of any kind or type that has been enacted,
established, or provided for in fiscal years prior to the
fiscal year for which it is to be included in the calculation
of the fiscal year appropriation cap for the Education Trust
Fund. Recurring revenue shall not include any balance
remaining in the Education Trust Fund at the end of any fiscal
year. Once a new recurring revenue produces a source of
revenue for one complete fiscal year, it becomes a recurring
revenue.
(12) SECONDARY SPENDING LIMIT. An amount equal to 106.5
percent of the Education Trust Fund Base Appropriations for
the fiscal year ending September 30, 2024; 106 percent of
Education Trust Fund Base Appropriations for the fiscal year
ending September 30, 2025; 105.5 percent of the Education
Trust Fund Base Appropriations for the fiscal year ending
September 30, 2026; and 105 percent of the Education Trust
Fund Base Appropriations for the fiscal year ending September
30, 2027 and each fiscal year thereafter. "
"§29-9-3
(a) Notwithstanding any other provision of law to the
contrary, beginning with appropriations made for the fiscal
year ending September 30, 20132024, appropriations from the
Education Trust Fund shall not exceed the fiscal year
appropriation cap , or the secondary spending limit, whichever
is less.
(b) The fiscal year appropriation cap for the Education
Trust Fund shall be equal to the sum of all of the following:
(1) The total of recurring revenues deposited into the
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Education Trust Fund in the last completed fiscal year
preceding the date on which the fiscal year appropriation cap
is calculated.
(2) An amount equal to the amount in subdivision (1)
multiplied by the average annual percent of change in the
recurring revenues deposited into the Education Trust Fund for
the 14 highest of the 15 most recently completed fiscal years
preceding the date on which the fiscal year appropriation cap
is calculated, excluding the highest and lowest years from the
calculation.
(3) If new recurring revenue measures are enacted that
will be deposited into the Education Trust Fund, or if
existing revenue sources are amended to increase the amount of
money deposited into the Education Trust Fund, for the first
time during the year for which the fiscal year appropriation
cap is being calculated, then 95 percent of the amount
projected in the enacted fiscal note accompanying the
legislative act creating the new recurring revenue shall be
added or subtracted as a part of the fiscal year appropriation
cap. If a recurring revenue source to the Education Trust Fund
is removed or reduced during the year for which the fiscal
year appropriation cap is being calculated, the negative
impact, based on the enacted fiscal note, of the removal or
reduction of the recurring revenue shall be included in the
calculation of the fiscal year appropriation cap.
(4) Nonrecurring revenue shall be added or subtracted
as a part of the fiscal year appropriation cap for the fiscal
year in which the nonrecurring revenue is deposited into the
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Education Trust Fund.
(c) The Director of Finance and the Legislative Fiscal
Officer shall certify their computation of the fiscal year
appropriation cap and secondary spending limit at the same
time as the certification required by Amendment No. 803 to the
Constitution of Alabama of 1901 Section 260.02 of the
Constitution of Alabama of 2022 . If the computation results in
a fiscal year appropriation cap that is less than the total
appropriations from the Education Trust Fund for the fiscal
year immediately preceding the fiscal year for which the
fiscal year appropriation cap is being calculated, the
Legislature may appropriate from the Education Trust Fund
Budget Stabilization Fund created in this chapter an amount
equal to the difference between the preceding fiscal year's
total appropriations from the Education Trust Fund and the
fiscal year appropriation cap, provided that any such amount
shall be in the determination of the Legislature not to
compromise the fiscal integrity of the fund to offset any
future proration of the Education Trust Fund.
(d) Amendment No. 803 to the Constitution of 1901
Section 260.02 of the Constitution of Alabama of 2022 ,
requires an estimate of available revenue for the Education
Trust Fund which is to be certified by the Finance Director
and the Legislative Fiscal Officer prior to the third
legislative day of each regular session. If, however, the
average of the estimated available revenue is less than the
fiscal year appropriation cap calculated in subsection (b) or
the secondary spending limit , the Legislature shall
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appropriate no more than the lesser amount of the average of
the estimated available revenue or the fiscal year
appropriation cap or secondary spending limit as required to
be determined by this section."
"§29-9-4
(a) There is hereby created in the State Treasury an
Education Trust Fund Budget Stabilization Fund and an
Education Trust Fund Advancement and Technology Fund. Any
monetary interest which accrues in the Education Trust Fund
Budget Stabilization Fund shall be retained in the fund from
year to year and shall be subject only to the provisions of
this chapter. If total revenues deposited into the Education
Trust Fund during the immediately preceding fiscal year exceed
the fiscal year appropriation cap for the immediately
preceding fiscal year, and total Education Trust Fund
appropriations for the immediately preceding fiscal year are
less than the fiscal year appropriation cap for the
immediately preceding fiscal year, the excess revenues shall
remain in the Education Trust Fund as nonrecurring revenue. On
or before May 31 of each fiscal year through the fiscal year
ending September 30, 2023 , if the total revenues deposited
into the Education Trust Fund during the immediately preceding
fiscal year exceed the fiscal year appropriation cap for the
immediately preceding fiscal year, and Education Trust Fund
appropriations for the immediately preceding fiscal year were
equal to the fiscal year appropriation cap, the excess
revenues shall be transferred to the Education Trust Fund
Rainy Day Account until the account has been repaid in full.
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If the account has been repaid in full, any excess revenues
remaining shall be transferred to the Education Trust Fund
Budget Stabilization Fund and the Education Trust Fund
Advancement and Technology Fund created in this chapter. The
transfers to the Education Trust Fund Budget Stabilization
Fund and the Education Trust Fund Advancement and Technology
Fund shall be made annually as follows:
(1) Any excess revenues remaining for any fiscal year
shall be transferred to To the Education Trust Fund Budget
Stabilization Fund in an amount up to one percent of the
previous year's Education Trust Fund total appropriations
until the fund reaches seven and one-half percent of the
previous year's appropriations from the Education Trust Fund.
(2) Revenues a. Any excess revenues remaining after in
excess of those transferred in subdivision (1) shall be
transferred to the Education Trust Fund Advancement and
Technology Fund each year. Any amount of the available balance
in the Education Trust Fund Advancement and Technology Fund
may be available for appropriation only by and through an
independent supplemental appropriation bill for the following
nonrecurring expenses: repairs or deferred maintenance of
facilities for public education purposes in the state, capital
outlay, for classroom instructional support as provided in
Section 16-13-231(b)(2)c. and Section 16-13-231.3, for
insuring facilities, for transportation as provided in Section
16-13-233, for school security measures, and for the
acquisition or purchase of education technology and equipment,
or both. These funds, however, shall not be used as a pledge
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for the issuance or payment of debt service. No funds shall be
appropriated in years when the balance of the Education Trust
Fund Advancement and Technology Fund at the end of the
previous fiscal year is less than ten million dollars
($10,000,000). Amounts in the Education Trust Fund Advancement
and Technology Fund shall be budgeted and allotted in
accordance with Sections 41-4-80 through 41-4-96 and Sections
41-19-1 through 41-19-12, but shall not be limited by the
fiscal year appropriation cap.
(3)b. The annual appropriation of these funds from the
Education Trust Fund Advancement and Technology Fund shall be
divided between the public schools and institutions of higher
education in the state in accordance with the percentage
split, based on the fiscal year in which an appropriation is
made, between these two sectors of education as certified by
the Legislative Fiscal Officer at the end of the preceding
fiscal year. Public schools shall be interpreted to include
any public school in operation for the current fiscal year,
the Alabama School of Math and Science, the Alabama School of
Fine Arts, the Alabama School of Cyber Technology and
Engineering, the portion of the Alabama Institute for Deaf and
Blind providing appropriate elementary/secondary instruction,
and may include the Department of Youth Services School
District.
(b) There is hereby created within the State Treasury
the Educational Opportunities Reserve Fund into which monies
shall be deposited as provided in this chapter and as
appropriated by the Legislature. Any monetary interest that
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accrues to the Educational Opportunities Reserve Fund shall be
retained in the fund from year to year and shall be subject
only to this chapter.
(c) On or before May 31 of each fiscal year beginning
with the fiscal year ending September 30, 2024, if the total
available revenues in the Education Trust Fund during the
immediately preceding fiscal year exceed Education Trust Fund
total appropriations for the immediately preceding fiscal
year, and there is an unpaid balance owed to the Education
Trust Fund Rainy Day Account, the excess revenues shall be
transferred to the Education Trust Fund Rainy Day Account
until the account has been repaid in full. If the account has
been repaid in full, any excess revenues remaining shall be
transferred to the Education Trust Fund Budget Stabilization
Fund, the Education Trust Fund Advancement and Technology
Fund, and the Educational Opportunities Reserve Fund created
in this chapter. The transfers to the Education Trust Fund
Budget Stabilization Fund, the Education Trust Fund
Advancement and Technology Fund, and the Educational
Opportunities Reserve Fund shall be made annually as follows:
(1) To the Education Trust Fund Budget Stabilization
Fund in an amount up to one percent of the previous year's
Education Trust Fund total appropriations until the fund
reaches 10 percent of the previous year's appropriations from
the Education Trust Fund.
(2)a. Fifty percent of the excess revenues remaining
after those transferred in subdivision (1) shall be
transferred to the Education Trust Fund Advancement and
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Technology Fund each year, not to exceed one billion dollars
in any fiscal year. Any amount of the available balance in the
Education Trust Fund Advancement and Technology Fund may be
available for appropriation only by and through an independent
supplemental appropriation bill for the following nonrecurring
expenses: repairs or deferred maintenance of facilities for
public education purposes in the state, capital outlay, for
classroom instructional support as provided in Section
16-13-231(b)(2)c. and Section 16-13-231.3, for insuring
facilities, for transportation as provided in Section
16-13-233, for school security measures, and for the
acquisition or purchase of education technology and equipment,
or both. These funds, however, shall not be used as a pledge
for the issuance or payment of debt service. No funds shall be
appropriated in years when the balance of the Education Trust
Fund Advancement and Technology Fund at the end of the
previous fiscal year is less than ten million dollars
($10,000,000). Amounts in the Education Trust Fund Advancement
and Technology Fund shall be budgeted and allotted in
accordance with Sections 41-4-80 through 41-4-96 and Sections
41-19-1 through 41-19-12, but shall not be limited by the
fiscal year appropriation cap.
b. The annual appropriation of funds from the Education
Trust Fund Advancement and Technology Fund shall be divided
between the public schools and institutions of higher
education in the state in accordance with the percentage
split, based on the fiscal year in which an appropriation is
made, between these two sectors of education as certified by
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the Legislative Fiscal Officer at the end of the preceding
fiscal year. Public schools shall be interpreted to include
any public school in operation for the current fiscal year,
the Alabama School of Math and Science, the Alabama School of
Fine Arts, the Alabama School of Cyber Technology and
Engineering, the portion of the Alabama Institute for Deaf and
Blind providing appropriate elementary/secondary instruction,
and may include the Department of Youth Services School
District.
(3) a. Twenty percent of the excess revenues remaining
after those transferred in subdivision (1) shall be
transferred to the Educational Opportunities Reserve Fund.
Amounts in the Educational Opportunities Reserve Fund may be
withdrawn by and through an independent supplemental
appropriation bill to provide one-time funding for the
following purposes only: to offset a reduction in estimated
revenues of at least 2 percent to the Education Trust Fund for
the current fiscal year as certified by the Director of
Finance and the Legislative Fiscal Officer, to provide funding
for unanticipated obligations, and for start-up or
transitional support for initiatives that provide access to
enhanced educational opportunities to all public K-12 or
higher education students in the state, or both. Amounts in
the Educational Opportunities Reserve Fund shall not be
appropriated for any of the following purposes: repairs or
deferred maintenance for facilities, capital outlay, pay
raises or bonuses for educational personnel or retirees, or to
provide additional support or supplant existing funding for
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ongoing expenditures.
b. No funds may be appropriated until the balance of
the Educational Opportunities Reserve Fund at the end of the
previous fiscal year equals or exceeds three hundred million
dollars ($300,000,000). Once this threshold is attained, any
amount of the available balance may be appropriated for the
purposes specified in this subsection. Amounts in the
Educational Opportunities Reserve Fund shall be budgeted and
allotted in accordance with Sections 41-4-80 through 41-4-96
and Sections 41-19-1 through 41-19-12.
(4) Any remaining excess revenues after the transfers
in subdivisions (1) through (3) shall remain in the Education
Trust Fund as nonrecurring revenue. "
Section 2. Section 29-9-2.1, Code of Alabama 1975, is
hereby repealed.
Section 3. This act shall become effective on the first
day of the third month following its passage and approval by
the Governor, or its otherwise becoming law.
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