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AlabamaSB622026 Regular SessionSenateWALLET

Alabama Charter School Finance Authority, bonding authority established, legislative findings, board membership, powers, contracts, investments

Sponsored By: Arthur Orr (Republican)

Enacted

Education

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Bill Overview

Analyzed Economic Effects

7 provisions identified: 5 benefits, 1 costs, 1 mixed.

Bondholder protections without Alabama repayment liability

Beginning October 1, 2026, authority bonds are payable only from pledged sources, not general authority funds or state appropriations. They do not create an Alabama state debt. While bonds remain outstanding, the state cannot weaken the authority’s powers, duties, or existence in ways that harm bondholders. The law and bond agreements create enforceable contracts, and bondholders can ask courts to enforce the authority’s duties. Money received under the law must be held in trust for the respective bondholders and used as legally directed.

Charter school bonds can be refinanced

Beginning October 1, 2026, the authority can issue new bonds or other obligations to refinance outstanding bonds. Repayment can come from the same or different sources. Refinancing can cover principal, early repayment premiums, accrued or future interest, and refinancing expenses. Bondholders cannot be forced to surrender bonds without consent unless the bonds are properly called for repayment under their terms.

More investors can buy school authority bonds

Beginning October 1, 2026, the State Treasurer, counties, and municipalities can invest idle or surplus money in authority bonds. Savings banks and Alabama-organized insurance companies can also invest. Executors, administrators, trustees, and other fiduciaries can invest unless a governing document or court direction forbids it. The law does not guarantee returns or specify investment amounts.

New facility loans for Alabama charter schools

Beginning October 1, 2026, the law creates Alabama’s charter school finance authority, governed by state finance and education leaders. It can sell bonds to fund facility loans for eligible Alabama public charter schools. Loans can finance or refinance land, buildings, equipment, furnishings, and related project costs. Projects mainly changing current operations are excluded. These provisions specify no total bond limit or loan amount.

Alabama tax breaks for school authority bonds

Beginning October 1, 2026, Alabama taxation does not apply to the authority’s property, income, bonds, or bond income. Exemptions also cover specified profits, property transfers, leases, mortgages, and deeds of trust involving the authority. License or excise taxes cannot be imposed on activities under this law. The authority also avoids fees, taxes, and costs payable to the Secretary of State or county probate judges.

Repayment rules and fees for borrowing schools

Beginning October 1, 2026, borrowing charter schools must dedicate a revenue source to repay their loans. Required revenue coverage is set by the authority at 110%–125% of the highest annual bond principal and interest payments. Schools must keep collecting revenues, fees, charges, and taxes at that level. Public funding, other school revenue, and facility mortgages can secure repayment; legally allowed intercepts can route eligible revenue to debt payments before school operations. The authority can charge reasonable financing fees and divide administrative costs among participating schools; no fee amounts are set.

Lawsuit protections for school finance officials

Beginning October 1, 2026, authority members, officers, employees, and representatives gain protection from personal and official-capacity lawsuits and liability. This covers acts, errors, or omissions within their duties, or reasonably believed to be within their duties. The protection does not cover intentional, willful, or wanton misconduct. These rules limit claims against covered personnel for their authority work.

Sponsors & Cosponsors

Sponsor

  • Arthur Orr

    Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 292 • No: 5

House vote • 4/8/2026

Motion to Read a Third Time and Pass - Adopted Roll Call 1295

Yes: 94 • No: 3 • Other: 5

House vote • 4/8/2026

Third Reading in Second House

Yes: 96 • No: 2 • Other: 3

Senate vote • 2/5/2026

Orr motion to Adopt - Adopted Roll Call 257

Yes: 34 • No: 0

Senate vote • 2/5/2026

Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 258

Yes: 34 • No: 0

Senate vote • 2/5/2026

Third Reading in House of Origin

Yes: 34 • No: 0

Actions Timeline

  1. Enacted

    4/17/2026Senate

  2. Third Reading in Second House

    4/8/2026House

  3. Motion to Read a Third Time and Pass - Adopted Roll Call 1295

    4/8/2026House

  4. Ready to Enroll

    4/8/2026Senate

  5. Enrolled

    4/8/2026Senate

  6. Signature Requested

    4/8/2026House

  7. Delivered to Governor

    4/8/2026Senate

  8. Reported Out of Committee Second House

    2/19/2026House

  9. Read for the Second Time and placed on the Calendar

    2/19/2026House

  10. Third Reading in House of Origin

    2/5/2026Senate

  11. Finance and Taxation Education 1st Amendment Offered

    2/5/2026Senate

  12. Orr motion to Adopt - Adopted Roll Call 257

    2/5/2026Senate

  13. Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 258

    2/5/2026Senate

  14. Engrossed

    2/5/2026Senate

  15. Read for the first time and referred to the House Committee on Ways and Means Education

    2/5/2026House

  16. Pending Committee Action in Second House

    2/5/2026House

  17. Read for the Second Time and placed on the Calendar

    1/29/2026Senate

  18. Finance and Taxation Education 1st Amendment

    1/28/2026Senate

  19. Reported Out of Committee House of Origin

    1/28/2026Senate

  20. Read for the first time and referred to the Senate Committee on Finance and Taxation Education

    1/13/2026Senate

  21. Pending Committee Action in House of Origin

    1/13/2026Senate

Bill Text

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