The Alabama Senate passed a $10.5 billion Education Trust Fund budget for fiscal year 2027 on Thursday, sending it back to the House of Representatives for final approval. The budget represents a roughly $570 million increase, or about 5.7 percent, over the current fiscal year.

The Senate version maintains a 2 percent pay raise for public education employees and adds a one-time bonus for retirees of the Teachers’ Retirement System. State Sen. Arthur Orr (R-Decatur), who chairs the Senate Finance and Taxation Education Committee, carried the budget on the floor.

The retiree bonus, added by Orr in a substitute, appropriates $32.9 million subject to available revenue and pays $1 for every month of service. A retiree who worked 30 years in public schools would receive $360. Retirees have not received a cost-of-living adjustment since 2007.

Orr’s substitute also increased funding weights for the Renewing Alabama’s Investment in Student Excellence program for students in poverty, Tier 1 special education students, and gifted students, distributing an additional $25 million across those categories.

The budget includes $251.2 million for the CHOOSE Act, a 38 percent increase over fiscal year 2026, providing $7,000 to qualifying families for non-public education expenses including private school tuition. Beginning with January applications, income restrictions on eligibility will be removed, with appropriations serving as the effective cap on participation.

The Public Education Employees Health Insurance Plan will be funded at approximately half of what the program’s board requested to avoid premium increases for education employees.

The Senate passed the budget 32-0. It returns to the House for concurrence or a conference committee.

Thursday was day 27 of the legislative session. There are three legislative days remaining.

Sawyer Knowles is a capitol reporter for Yellowhammer News. You may contact him at [email protected].