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FISCAL NOTE
Senate Bill 263
Committee: Ways and Means Education Sponsor: Senator Donnie Chesteen
Analyst: John Friedenreich Date: 05/25/2023
Senate Bill 263 as passed the Senate would reduce income tax receipts to the Education Trust
Fund by increasing the cumulative amount of tax credits that may be claimed by taxpayers
annually pursuant to the Alabama Accountability Act (AAA) from $30 million to $40 million,
beginning in fiscal year 2025 and assuming that the maximum amount of tax credits that could
be claimed annually would be claimed. This bill further provides that the cap would
automatically increase by $10 million annually, if the cumulative amount of tax credits issued
exceed 90% of the cap in three out of four years, until reaching a cumulative cap amount of $60
million annually.
Additionally, this bill amends the AAA as follows: (1) caps the amount of the educational
scholarship that may be awarded to an eligible student for an academic year by $10,000, which
could decrease the amount of scholarship funding a system receives for an out-of-system
elementary or middle school student by a minimum of $2,000 per year and up to a maximum of
$4,000 per year; (2) raises the income threshold for a family of an eligible student from 185% to
250% of the federal poverty level, and increases the maximum family income threshold from
275% of the federal poverty level to 350% of the federal poverty level, which could increase the
number of students eligible to participate in the program by an undetermined amount. For the
2022-2023 school year over 450,000 students met the current 185% threshold; (3) changes the
definition of a "failing" school to a "priority" school which would be further defined as a school
receiving a grade of "D" or "F" on the most recent state report card; (4) provides that a local
school system be reimbursed by a Scholarship Granting Organization (SGO) for contracted
services provided to a student with unique needs; (5) requires SGO's to maintain a 10% reserve
in available funds; and (6) requires the Alabama Department of Revenue to bar any school or
educational service provider that fails to comply with the accountability standards of the AAA. FN-1A4Q3Z-2
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Pursuant to the provisions of the ETF Rolling Reserve Act contained in Section 29-9-3(b)(3),
Code of Alabama 1975, the provisions of this act would reduce the ETF fiscal year
appropriation cap for fiscal year 2025 by $10 million.