Operating Funds - Description
The government for the State of Alabama operates primarily from six major funds--State General Fund, Education Trust Fund, Public Road and Bridge Fund, Alabama Medicaid Fund, Mental Health Fund, and Public Welfare Trust Fund. Revenues from various sources, including taxes, interest, federal government, and profits, are deposited into the proper fund and used to provide services to the citizens of the state and for the operating expenses of state government.
Monies in the funds are appropriated on an annual basis by the State Legislature through the two major appropriation bills - General Appropriation and Education Trust Fund - and by separate appropriation bills. (Links to these sites may be found on the State Government Finances home page.) Descriptions of these six funds, including a contact person from the Executive Budget Office, and a note on other state operating funds follow.
State General Fund - Revenues credited to the GF are used for the ordinary expenses of the executive, legislative, and judicial departments of state government, for other functions of government, for debt service on certain general obligation bond issues, and for capital outlay. The GF supports state programs such as child development and protection, criminal justice, conservation efforts, economic development, public health and safety, mental health, Medicaid, legislative activities, and the court system. Taxes from over 40 sources are deposited into the GF, with the largest sources being the insurance company premium tax, interest on the Alabama Trust Fund and other state deposits, oil and gas lease and production tax, cigarette tax, ad valorem tax, and Alabama Alcoholic Beverage Control Board profits.
Education Trust Fund - The ETF is the largest operating fund of the State. Revenues credited to the ETF are used for the support, maintenance and development of public education in Alabama, debt service and capital improvements relating to educational facilities, and other functions related to educating the state's citizens. Programs and agencies supported by the ETF include K-12 education, public library services, performing and fine arts, various scholarship programs, the state's education regulatory departments, and two- and four-year colleges and universities. Funding from the ETF is also provided to non-state agencies that provide educational services to the people of Alabama, including the arts, disease counseling and education, and youth development. Nine tax sources are allocated to the ETF, the largest of which are the income tax, sales tax, utility tax, and use tax.
Public Road and Bridge Fund - The PRBF is the general operating fund for the Department of Transportation and receives all state revenues for that Department, all federal aid reimbursements, and all miscellaneous receipts. Amendment No. 93 (as amended by Amendment No. 354) to the Constitution of Alabama provides that monies derived from any fee, excise or license taxes levied by the State on motor fuels shall be expended for the cost of construction, reconstruction, maintenance and repair of public highways and bridges; the cost of highway rights-of-way; the payment of highway obligations; the cost of traffic regulations; and the expense of enforcing state traffic and motor vehicle laws.
Alabama Medicaid Fund - This is the major operating fund of the Alabama Medicaid Agency. Funding sources for this fund include tobacco settlement funds, intergovernmental transfers from other state agencies providing services to Medicaid eligible clients, public hospital transfers, nursing home and pharmacy provider taxes and federal matching funds.
Mental Health Fund - This is the major operating fund of the Department of Mental Health. It is funded by the Special Mental Health Trust Fund, a special fund that is comprised of receipts from certain public utilities taxes, contractors gross receipts tax, distillers and whiskey tax profits, insurance premium taxes, as well as federal funds. The Mental Health Operating Fund also receives annual appropriations from the State General Fund and the Education Trust Fund.
Public Welfare Trust Fund - This is the major operating fund of the Department of Human Resources. It is mainly funded by the whiskey tax and the Alabama Alcoholic Beverage Control Board profits, sales tax, franchise tax, beer tax, as well as federal funds. The PWTF also receives annual appropriations from the State General Fund and the Education Trust Fund.
Other Operating Funds - There are numerous smaller funds within the State Treasury out of which certain agencies operate. Agencies whose primary function is to license and regulate certain types of professions generally operate from their own funds (e.g. licensing, registration, and examination fees) and may not receive funding from the either the State General Fund or Education Trust Fund. Examples of such agencies include the Board of Public Accountancy, Licensing Board for General Contractors, and Board of Social Work Examiners. Some agencies that receive funding from the GF or ETF have other funds from which operating money is received. Examples of these are the Department of Agriculture and Industries (Shipping Point Inspection Fund); Department of Conservation and Natural Resources (Parks Fund, Game and Fish Fund, et al); and Board of Nursing (Board of Nursing Trust Fund).