Other wealthy school systems will look closely at how O.B. resolves funding issues with state

Other wealthy school systems will look closely at how O.B. resolves funding issues with state
By John Mullen
If the normal rules that are applied to state funding for education are followed, the Orange Beach Board of Education instead of getting money from the state could owe as much as $7 million, according to Baldwin County School System Chief Financial Officer John Wilson.
During a budget presentation at a special meeting on Aug. 30, Wilson stated that a school’s state funding each year is determined by average daily enrollment and other factors to determine how much money goes to each system.
After that number is determined, the state deducts whatever the average in the district is for 10 mills in property taxes. That amount is deducted from the original number and the state sends the rest.
With Baldwin County for 2023-24, based on average daily enrollments and many other factors, the district number was just under $200 million at $198 million. The 10-mill match was about $34 million so the county will receive $164 million in state funding.
Enrollment in Orange Beach schools is expected to increase dramatically over the next 10 years, continuing a trend which saw the city double its population between 2010-2020.
But based on current enrollment, Wilson said the 10-mill match in Orange Beach is $11.7 million but they only qualify for about $5 million leaving a deficit of $6.7 million. Wilson said these numbers were “verified by the state on Friday (Aug. 26).”
But no one knows how it is really going to work or if Orange Beach will be required to pay the difference. But these are the numbers based on how the Alabama Schools Foundation funding in Alabama works today.
“One of the interesting things is that we don’t have an answer from the state department is that with Orange Beach with just a little over 1,000 students they are due about $5 million and they have transportation and some other supplemental state funding,” Wilson said. “So, there is about a $6 million or $7 million deficit. That’s a very interesting question and it’s a situation that’s never occurred in any school system in Alabama.”
Orange Beach and the state have been meeting on school funding since the council voted for the school split on March 15 and no official announcement has been made on how it’s to be handled.
“This school year’s enrollment has no effect on Foundation Funds for FY23,” Orange Beach Schools Superintendent Randy Wilkes in s statement. “To determine the funds to be received from the Foundation Program for an Alabama School System, one must subtract the local match from the State’s derived Foundation Program. The local match from Orange Beach is $11.7 million. If there is a reduction of the local match of Baldwin County’s assessed value from funding formulas relative to FY22 versus FY23, and there is not a proportionate decrease in the average daily membership from FY22, the results would be an increase in foundation funds for Baldwin County.’’
Wilson said other school systems, especially donor systems, or those “systems that have a substantially higher 10 mill match requirement than the average Alabama school district” will be interested to see how it is resolved, Wilson said.
“If they give them special treatment, Gulf Shores has a very high 10-mill match, too,” Wilson said in the meeting. “I’m sure they’re not going to be very happy about that as well as some of the other 12 donor systems as they refer to them throughout the state.”
And, Wilson said Orange Beach’s situation is not going to get any better as land values go up and the student population remains somewhat stable.
“That division is going to get wider and wider from what their property values are based on their student enrollment,” Wilson said. “They are kind of landlocked and it’s kind of expensive to raise a family down there so there are going to be challenges.”
The breaking away of Orange Beach, taking with it its 10-mill match of $11.7 meant more money in the coffers of Baldwin County Schools.
“The $20 million increase in our foundation funding is due to salary changes and our massive drop in our 10-mill match,” Wilson said.
The Orange Beach City Council on March 15 split from the county system without discussion by council members or any public meetings or citizen comment on the prospect of residents taking on the responsibility of a new school system.
Since that time, the city has spent nearly $45 million for various public education expenses, the most being to buy the schools and pay for an expansion started by the county at Orange Beach Elementary School.
The council has also made separate appropriations of $1 million for day-to-day operations.
To fund the schools, city Schools Chief Financial Officer Ford Handley said in May the city plans to utilize $50 million it is borrowing for school improvements. The majority, about $42.5 million will pay Baldwin County for the current facilities in Orange Beach and the elementary school expansion.
Here’s how the facility aquisition and will be broken down: $32.4 million for the middle and high school building; $3 million for the elementary school; $2.37 million in debt picked up from Baldwin County; $6.5 million for elementary school expansion.
Also in April, the city council voted to raise the lodging tax by 3 percent with the estimated $4.1 million revenue increase earmarked for schools.