Orange Beach City Schools, this year charting its own path, does not owe the state the $4.6 million Alabama education leaders said it did last year in connection with a Foundation Program funding discrepancy.

“First, let me tell you I told you so,” Mayor Tony Kennon said Tuesday morning at a press conference with the Orange Beach Board of Education and superintendent.

The difference in state funding came in a June 2022 letter from State Superintendent Eric Mackey. In it, he wrote that the money was owed because of a shortfall in the state foundation’s $10 million match funding program.

The program works by assessing how much money the state sends to school districts based largely on enrollment. Once that figure is determined, the state deducts 10 mills of property tax from the total, and the school district gets what’s left.

According to reporting originally published in Gulf Coast Media in November 2022, the newly formed city school district, which finished its first year as a system separate from Baldwin County Public Schools, may have less students enrolled than the countywide district it used to be a part it, but many live in homes with higher property values than nearby districts.

Because of their smaller size, the district qualified for $7 million in foundation funding, but 10 mills of property taxes in the resort city was $11.7 million.

“Because, as stated in your letter, the required match exceeds the total Foundation Program allocation earned by OBCS and in order to keep the Foundation Program funding balance for statewide school funding solvent, OBCS will need to remit $4,679,674 to the state," read the 2022 correspondence from Mackey to the school system.

According to the letter, the money would have been due by Oct. 1.

In front of a crowd Tuesday, Orange Beach Superintendent Randy Wilkes confirmed the board does not owe “any money to the state in any forms as a match for the foundation,” to which he was met with applause from the audience.

He said a new letter from Mackey denotes “there will be no future requests made to Orange Beach Board of Education relative to the foundation program.”

He thanked Kennon and Orange Beach City Council for “their vision in forming” the city school district and their financial support.

“As a result of their stewardship, our school system is in excellent financial shape,” he said. “Due to their reverence, Orange Beach City Schools can continue its focus on proving a safe learning environment and academic excellence, reducing student and teacher rations, developing character and citizenship and constructing state-of-the-art-type facilities.”

Kennon said it was a “tedious, long journey working through a difficult and complicated system. Something that has never happened before and will probably never happen again.”

This story will be updated. Stay tuned to Gulf Coast Media for more.