By Trisha Powell Crain 

Governor Kay Ivey gave remarks during a press conference to Celebrate National School Choice Week at the Alabama State Capitol Monday January 22, 2024 in Montgomery, Ala.  (Governor’s Office /Hal Yeager)

Gov. Kay Ivey and supporting senators unveiled a plan Tuesday to funnel $100 million of state money into a new form of school choice.

Thirteen states currently have some form of education savings accounts, or ESAs. If SB61 becomes law, ESAs could be available to some Alabama families by the start of the 2025-26 school year.

Money would cover as much as $7,000 in educational expenses for families who don’t want to send students to their local, zoned public school. The state would prioritize support for low-income families and students with disabilities first, and then gradually phase in options for eligible families.

“Passing an education savings account bill that works for families and for Alabama is my number one legislative priority,” Ivey said during her State of the State address Tuesday evening.

“My goal is to put us on a trajectory to make our [ESA] program fully universal, while also maintaining our full and total support for public education.”

In recent years, Ivey has backed increased state support for charter schools and increased numbers of students eligible for the Alabama Accountability Act tax credit scholarship program.

Ivey’s education budget proposal is expected to be $9.35 billion and will be released Wednesday. She is asking for $50 million for the CHOOSE Act to be funded as part of a $2.5 billion supplemental education allocation, according to a news release Tuesday.

The bill establishes ESAs in the form of refundable state income tax credits – meaning parents of eligible students will tap into an advance on their state income tax credit of up to $7,000 for each student enrolled in a participating school. Alabama would be one of few states with an ESA based on refundable state income tax credits.

Starting with the FY26 budget, the legislature would set aside a minimum of $100 million – which would fully fund about 14,300 ESAs for students attending participating schools – to fund the tax credit ESAs.

Parents are responsible for expenditures beyond $7,000.

Parents of homeschoolers could access $2,000 per student to fund eligible expenses, up to $4,000 per family.

For the first two years of the program, eligibility would be limited to families whose adjusted gross income did not exceed 300% of the federal poverty level, which would currently set the family income cap for 2025 at $93,600 for a family of four.

he first 500 tax credit ESAs would be reserved for families of eligible students with special needs.

Beginning in 2027, all students meeting the age guidelines will be eligible for an ESA. Students who receive tax credit scholarships or tax credits through the Alabama Accountability Act are not eligible for an ESA.

Eligible expenditures

Qualifying expenditures through the CHOOSE Act would include:

  • Tuition and fees at a participating school,
  • Tuition and fees for online learning programs,
  • Private tutoring,
  • Afterschool or summer education program fees that are held by participating schools,
  • Educational software and applications,
  • Textbooks,
  • Instructional materials,
  • Fees for standardized tests, including college admission tests,
  • Education services for students with disabilities from eligible providers,
  • Services contracted from a public school district.

Parents won’t handle any money

The proposal differs from most other states’ ESAs in that parents would never handle any money nor would they be issued a debit card.

Instead, participating vendors and schools would bill the Alabama Department of Revenue – the agency that would handle payments under the proposal – for the amount the parent needed, whether it’s $1,000 for a computer or $7,000 for tuition.

Participating providers receive money directly

Education service providers – which could be a participating school, organization, vendor or individual (but not the parent of the student) – would have to agree to certain conditions and be approved by ADOR in order to receive payments.

Participating providers cannot share any portion of funds the ESA pays for with a parent or student.

In order to participate, a school would need to be accredited or be in the process of accreditation.

Participating providers will be subjected to audits and must file quarterly reports regarding services, number of students participating and other information ADOR requests.

Testing

All participating students must take a standardized test that is either aligned to the academic standards of the school, a national norm-referenced test, or a nationally recognized aptitude test. Students with disabilities will be exempt from testing where appropriate.

A separate proposed bill, HB88, from Rep. Ernie Yarbrough, does not include the testing requirement.

Education Budget Chairs Danny Garrett, R-Trussville, and Arthur Orr, R-Decatur, are sponsoring the bill in the House and Senate, respectively.

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