SB263 Alabama 2023 Session

Summary

Primary Sponsor

Donnie ChesteenSenator

Republican

Session

Regular Session 2023

Title

Relating to the Alabama Accountability Act of 2013; to amend Sections 16-6D-3, 16-6D-4, 16-6D-6, 16-6D-8, and 16-6D-9, Code of Alabama 1975; to change the terms failing school and nonfailing school to priority school and qualifying school, respectively; to revise and add definitions; to expand scholarships for eligible students attending nonfailing or qualifying schools; to revise the poverty threshold for determining the qualifications of an eligible student; to provide for the qualifying expenses of eligible students with unique needs; to revise the method of determining the amount of educational scholarship awards; to increase the maximum cumulative amount of tax credits that may be issued each year; to require a scholarship granting organization to maintain a reserve balance and to verify the qualifications of an eligible student with unique needs; and to authorize the Department of Revenue to bar qualifying schools or educational service providers from participating in the program under certain circumstances.

Summary

SB263 rewrites and expands Alabama's educational tax credit program by renaming the main school categories, broadening scholarship eligibility and expenses, increasing tax credits, and tightening oversight and accountability for participating schools and organizations.

What This Bill Does

It changes the terms failed and nonfailing schools to priority and qualifying schools, expands who can receive scholarships and what costs are covered (including for students with unique needs), and updates eligibility rules based on federal poverty levels. It raises the annual cap on tax credits, requires scholarship organizations to keep a 10% reserve, and to verify unique-need qualifications, with the Department of Revenue able to bar noncompliant schools or providers. It also adds extensive reporting, testing, and accountability requirements to monitor academic impact and program transparency.

Who It Affects

• Families and students who may receive educational scholarships, including those with unique needs, by expanding qualification criteria and allowable expenses and enabling transfers to priority or qualifying schools.
• Parents and guardians of eligible students, who may claim an income tax credit to offset costs of transferring to a qualifying school or nonpublic school.
• Scholarship granting organizations, which must maintain a 10% reserve, verify eligibility (especially for unique needs), ensure financial accountability, report annually and quarterly, and adhere to governance and anti-discrimination rules.
• Qualifying schools (public priority schools and participating nonpublic schools), which must meet accreditation, governance, health/safety, and reporting requirements to participate and may be barred for noncompliance.
• Local school systems and the Department of Revenue, which oversee eligibility determinations, funding flows, transportation rules, testing administration, and enforcement actions (including revoking participation).

Key Provisions

• Terminology changes: 'failing priority schools' become 'priority schools' and 'nonfailing qualifying schools' become 'qualifying schools'.
• Expanded eligibility and expenses: eligible students include those meeting revised poverty thresholds and those with unique needs; qualifying expenses for unique needs include tuition/fees, textbooks, qualified tutoring, curriculum, online programs, and vendor services; transportation costs may be covered under certain conditions.
• Scholarship amounts and schools: annual educational scholarships cover tuition and mandatory fees for qualifying schools with caps by student level (elementary, middle, high school) per academic year.
• Poverty and eligibility thresholds: income eligibility tied to federal poverty level with phased or tiered thresholds for continued eligibility; eligibility depends on prior public school attendance and Alabama residency.
• Annual tax credits and funding cap: credits issued to qualifying parents are funded from the Education Trust Fund; initial cap and potential automatic increases keep the total credits within defined annual limits, with an escalation mechanism up to a higher cap if near the limit for several years.
• 10% reserve and financial accountability: scholarship granting organizations must maintain a 10% reserve balance and annually report financial information; an external auditor must certify the reports.
• Eligibility verification for unique needs: scholarship organizations must verify eligibility of eligible students with unique needs before each eligible instructional year.
• Bar and sanctions authority: the Department of Revenue can bar certain qualifying schools or educational service providers from participating in the program for noncompliance or failure to provide funded services; affected parties must be notified.
• Reporting and transparency: organizations must provide annual and quarterly reports, receipts, and test results (when applicable) to the Department of Revenue and publicly disclose summarized information; testing data may be used for independent analyses every other year.
• Testing and accountability requirements: qualifying schools must administer appropriate tests or exemptions for students with unique needs; test costs may be covered by scholarships; results must be shared with parents and the Revenue Department; a biennial independent study will compare scholarship student gains to public-school benchmarks.
• Qualifications of qualifying/nonpublic schools: nonpublic schools seeking to participate must be accredited within a grace period or meet governance and performance standards; safety, nondiscrimination, and background checks are required for staff and board members.
• Transportation and enrollment rules: local systems may provide or arrange transportation; if cross-system enrollment occurs, transportation may be the parent’s responsibility; priority is given to students zoned for priority schools.
• No creation of charter schools: the act does not authorize charter schools, though it allows flexible arrangements under the innovation and flexibility contracts with oversight.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.