With school systems across Alabama facing significant challenges due to state budget cuts in recent years, The Times is taking a look at exactly how local schools are funded.

The major source of revenue for local schools is the Education Trust Fund, aka the Foundation program, which is funded by the State of Alabama. Those monies are mostly accrued via state income tax and state sales tax.

The Foundation funding level for each school system in Alabama varies, and is based on the amount of students enrolled in that particular system. The rubric takes into account the amount of students in different grades to determine how many teachers each school earns.

Locally, enrollment for the county school system has been dipping in recent years, while the city school system is experiencing significant growth.

“Basically, if the enrollment goes up, you earn more teacher units and more money,” Cullman County Board of Education finance director Randy Dunlap said. “If enrollment goes down, you lose teacher units and money.”

For the county schools, Foundation monies account for approximately 82 percent — or $53 million — of the general fund budget. The brunt of Foundation funds cover personnel costs, such as salaries. The county schools spend approximately 80 percent of the total budget on personnel and benefits, while the city school system spends approximately 75.8 percent on personnel and benefits.

Local revenue accounts for a smaller percentage of overall funding, about 18 percent or $11 million for the county schools, and is generated mostly by local property and sales tax. In the city system, local revenue accounts for approximately 35 percent of overall revenue, or $9.4 million. The city system receives a half-cent sales tax in the city limits, which officials cite as a major factor that fueled the turnaround from some financial struggles faced in the early 2000s.

Both systems also receive some local funds from property tax, with the county being awarded the state-minimum 10 mills. By comparison, the city school system receives 17.5 mills. A mill is $1 for each $1,000 of assessed property value, and residential property is assessed at 10 percent of market value. Property tax in the city was raised in 2001, and any potential property tax increases must be by public vote and/or legislative action.

In regards to local sales tax, both local school systems split about 1.2 percent of the 8.5 percent sales tax revenue collected in the City of Cullman.

The Cullman County Board of Education receives the majority of that total with 0.7 percent, or about $3.2 million annually, going to the CCBOE general fund.

Though the county system does receive more funding  from sales tax, that money is spread over a much larger area — with 29 schools compared to the city system’s five campuses.

It should be noted the city schools received no local sales tax revenue until the early 2000s, and had instead been appropriated different amounts at the discretion of the Cullman city council each year. But, in 2003, the city council approved a 0.5 percent sales tax for the city system, now worth about $2.3 million annually. The tax was approved after another citywide increase in property tax was voted down by the public.

For the county system to match the amount of local money spent per-student, Dunlap said it would take a significant increase from the current funding structure. According to calculations from the county central office, the CCBOE spends approximately $1,175 per student from local revenue, while the city spends $2,697 per student from local revenue.

“Basically, it would take an additional $10 million per year in local revenue for the county system to match the amount the city system spends per-student,” he said.

County school officials pursued a countywide half-cent sales tax in 2009-2010 to benefit the county system, though it was voted down by a public referendum last year.

* Trent Moore can be reached by e-mail at trentm@cullmantimes.com, or by telephone at 734-2131, ext. 220.

Editor’s note: This is the second installment in a three-part series looking at the challenges faced by educators in Cullman County due to the current recession and state budget cuts. See Wednesday’s edition of The Times to learn how area schools plan to absorb and handle the problems in the coming years.