Alabama families can apply for CHOOSE Act funding beginning January 2nd. The CHOOSE Act, signed by Gov. Kay Ivey in March, allows families to receive $7,000 per student enrolled in a participating private school or $2,000 per student in a homeschool program.
Currently, the program receives $100 million in state funding annually, and the text of the bill suggests that lawmakers will not be reluctant to increase that number if enough families want to participate in the program. In July, Alabama Arise senior policy analyst Carol Gundlach told APR that she believed this funding was “money that comes from the Education Trust Fund, money that could go to our public schools.”
But a recent report from the Economic Policy Institute suggests that the CHOOSE Act could cost Alabama public schools far more than the sticker price alone suggests.
The report's author, economist Hilary Wething, said that “vouchers undermine efforts to make an excellent public education available to all children by straining the financial resources of public schools.”
“These external effects are not just a problem for public budgets,” she explained. “Students risk losing their potential educational achievements if funding for schools is cut.”
Wething's recent work attempts to quantify how much of an impact enrollment declines caused by school choice programs could have on school budgets.
In Alabama, public schools receive state funding based primarily on average attendance, which determines the number of “teaching units” in a school. Teacher units are then used as the primary determinant of state funding decisions. (However, the state parliament is currently considering changes to this formula.)
Under the current system, students who leave public schools and move to homeschool programs or private schools because of CHOOSE Act subsidies would see the amount of state funding for their former schools reduced. Of course, if schools could reduce their expenses proportionately by reducing attendance, this would be manageable. But as the report says, and as Gundlach told APR back in July, not all costs can simply be cut.
The report points out that “many education costs, such as ongoing construction contracts, heating and utilities, curriculum development and principals’ offices, cannot be changed in the early years of an enrollment decline.”
The most inflexible are the capital costs, i.e. the costs associated with construction, maintenance, operation and outstanding debts. In other words, their adjustment rate—the “rate at which costs can be reduced relative to enrollment changes”—is the highest.
If a school loses some state funding due to a decline in enrollment and is left with essentially the same capital costs, it would have to make up the difference by reducing spending on instruction or, if possible, other services.
The report also includes a downloadable table that allows users to select different values for public school enrollment declines and adjustment rates for instruction, services and capital costs.
Using the EPI's standard adjustment rates, Alabama schools would see an average decline in per-pupil education spending of $411 following a 5 percent decline in enrollment.
However, given the uncertainty about what formula Alabama will use to calculate school funding in the near future and how popular the CHOOSE Act programs will be, the actual impact of the CHOOSE Act on the state's public schools could very easily vary greatly Estimate.
The number of families participating in the first year of the CHOOSE Act likely will not be available until the application deadline for the 2025-2026 school year ends in April.