From reading the decision, the chunk of granite with the 10 Commandments on it (I don't find it particularly attractive) was paid for with private funds. Moore's legal fees are being paid for with funds from the Coral Ridge Ministries, according to the decision. However, some state funds are probably involved indirectly (one example was the deposition of a Courthouse employee--the decision doesn't say whether he was drawing his salary while he was being deposed, however).
Yes. Once again Alabama is an embarrasement.