SB277 Alabama 2010 Session

Summary

Primary Sponsor

Steve French

Republican

Session

Regular Session 2010

Title

Education Trust Fund, fiscal year appropriation cap, Budget Stabilization Fund, Capital Fund, Pension Liability Fund, and Retiree Health Benefits Liability Fund, established, Education Trust Fund Rolling Reserve Act, Sec. 40-1-32.1 repealed

Summary

SB277 creates a capped Education Trust Fund with four new reserve funds to manage revenues and liabilities, and sets rules for how any excess funds are saved and allocated.

What This Bill Does

It establishes a cap on annual Education Trust Fund appropriations starting with the fiscal year ending September 30, 2012. The cap is calculated from last year's recurring revenues, adjusted by the 15-year average change in recurring revenues, plus specific growth add-ons for certain years and handling for new or removed recurring revenue and nonrecurring revenue. It creates four funds (Budget Stabilization Fund, Capital Fund, Pension Liability Fund, Retiree Health Benefits Liability Fund) and outlines how any excess above the cap is handled, including transfers to a Rainy Day account and then to Stabilization up to 20% of current-year appropriations, with the remainder split 35% to Capital, 35% to Pension Liability, and 30% to Retiree Health Benefits. It also directs how the Pension Liability Fund and Retiree Health Benefits Liability Fund are used to offset unfunded liabilities, repeals conflicting laws, and becomes effective immediately.

Who It Affects

• Public education agencies and programs funded by the Education Trust Fund, who would be subject to the annual appropriation cap and the new funding allocations.
• Teachers' Retirement System and Public Education Employees' Health Insurance Plan (via the Pension Liability Fund and Retiree Health Benefits Liability Fund), which would receive transfers to offset unfunded actuarial liabilities.

Key Provisions

• Creates the Education Trust Fund Rolling Reserve Act and four new funds: Budget Stabilization Fund, Capital Fund, Pension Liability Fund, and Retiree Health Benefits Liability Fund.
• Implements a Fiscal Year Appropriation Cap (Cap) for the Education Trust Fund, with the Cap base equal to last year's recurring revenues and adjustments for average annual change in recurring revenues over the previous 15 years, plus specific growth additions for certain years and considerations for new or removed recurring/nonrecurring revenue.
• Excess Education Trust Fund revenue above the Cap is first transferred to the Education Trust Fund Rainy Day Account, then to the Budget Stabilization Fund up to 20% of current-year appropriations; the remainder is distributed 35% to the Capital Fund, 35% to the Pension Liability Fund, and 30% to the Retiree Health Benefits Liability Fund.
• Pension Liability Fund transfers to the Teachers' Retirement System to offset unfunded actuarial accrued liability; if no unfunded liability exists, funds revert to the Capital Fund. Retiree Health Benefits Liability Fund transfers to the Alabama Retired Education Employees' Health Care Trust to offset unfunded liabilities; if none, revert to Capital Fund.
• Budget Stabilization Fund withdrawals may only be used to prevent proration; the Governor must certify and notify that proration would occur before withdrawals, and withdrawals are limited to the amount necessary to avoid proration.
• Capital Fund money may only be used for capital improvements in public education.
• Repeals conflicting laws and Section 40-1-32.1; any remaining Proration Prevention funds revert to the Budget Stabilization Fund when appropriate.
• Effective immediately upon passage and approval by the Governor.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Education Trust Fund