Adequacy of school financing still ‘a problem’

RALEIGH, N.C. — North Carolina’s system for financing schools is “relatively equitable, stable and flexible,” but its adequacy “most likely remains a problem” for its public schools, a new report says.

Enrollment has grown steadily to about 1.5 million students, including nearly 90,000 at 167 charter schools, while spending per pupil overall, as well as personnel per student in traditional schools, both have declined, says Financing Education in North Carolina, a report from the North Carolina Justice Center.

Per-pupil spending

In fiscal 2016, the state ranked 44th in the U.S. on spending per pupil, down one spot from before fiscal 2009, when budget cuts were made in the face of the recession, the report says.

Per-pupil spending has grown just over two percent since fiscal 2009, but has declined over eight percent when adjusted for inflation, the report says.

In fiscal 2016, per-pupil spending in North Carolina was $3,182 below the national average of about $12,000, the report says.

In fiscal 2009, it says, per-pupil spending in North Carolina had been $1,552 below the national average of over $10,000.

Enrollment and personnel

Enrollment in the state’s public schools has grown 18.6 percent over the past 15 years, driven in recent years by the number of students enrolled in charter schools, the report says.

Yet the number of personnel per student in the state’s traditional public schools has fallen 10.4 percent since fiscal 2009, including six percent fewer teachers and 31 percent fewer teacher assistants, the report says.

Urban school districts continue to attract students, while most rural districts are losing students, with only 28 districts growing in fiscal 2017, and 87 districts losing students.

Diverse districts

North Carolina is home to 115 school districts, including 89 that share their borders with counties, and multiple school districts in 11 counties.

The state is home to nearly 2,600 schools, including charter schools, and they represent diverse populations and student demographics.

The school districts in Wake County and Charlotte-Mecklenburg, for example, are among the 20 largest school districts in the U.S., with each enrolling about 150,000 students, while 40 districts in the state enroll fewer than 4,000 students.

The number of students in Wake, the biggest district in the state, is about the same as the combined total of the state’s 54 smallest districts.

Nearly 18 percent of students in Asheboro City Schools speak English as a second language, compared to fewer than one percent of students in Weldon City Schools.

And 28 percent of students in Chapel Hill-Carrboro schools qualify for lunch that is free or at a reduced price, compared to 88 percent of students in Lexington City Schools.

And 19 percent of students in Stokes County have an identified disability, compared to seven percent in Clinton City Schools.

Funding sources

State law requires that the state pay for instructional expenses for current operations of public schools, and that counties pay for public-education facilities.

In North Carolina, the state historically has accounted for about 65 percent of school district funding.

Local funding —  including appropriations from county governments, as well as private donations — accounts for about 25 percent, and federal funding accounts for about 10 percent.

In fiscal 2014, throughout the U.S., states on average accounted for 46 percent of public school revenue, while local funding accounted for 45 percent and the federal government accounted for nine percent.

State funding

In North Carolina, most state funding for public schools — a total $9.4 billion in fiscal 2017 — is based on student “headcount,” which is measured by the number of students enrolled each day divided by the number of days in the month.

The 10 largest funding categories — such as classroom teachers; children with special needs; transportation; and teacher assistants — represent 90 percent of all state funding distributed to the schools.

Federal funding

In fiscal 2016, child nutrition accounted for 37 percent of federal funds North Carolina received for public schools, while funding to help children from low-income families account for 31 percent and funds for services for students with disabilities accounted for 22 percent.

Local funding

Local spending on schools varies dramatically among school districts, both in amount and share of funds, the report says.

In the fiscal 2016, local spending per pupil in the Chapel Hill/Carrboro City Schools totaled $5,710, for example, compared to $415 in Swain County.

And local sources accounted for half of total spending by the Chapel Hill/Carrboro Schools, compared to only eight percent for Robeson County.

North Carolina is one of 18 states with a funding system that, on average, directs more resources to poor districts than wealthy districts, yet local wealth allows some individual school districts to supplement funding for schools to levels most districts cannot afford, the report says.

Lottery

Revenue from the North Carolina Lottery allocated to support education — less than 35 percent of total Lottery revenue since fiscal 2008 — has grown to $592 million from $325 million 10 years ago, yet accounts for only five percent of total state support for public schools, the report says

Much of the funding from the Lottery, it says, now supports programs previously supported by spending from the  state’s General Fund, allowing state lawmakers to “shift” General Fund spending to programs outside the education budget.

The state is not responsible for capital spending but sometimes issues bonds support school construction, while the Lottery, currently $100 million, supports construction projects.

School districts in the state project their facility needs will total $8.1 billion over the next five years.

Charter schools and vouchers

State funding for charter schools — public schools given additional operating flexibility and overseen by independent nonprofit boards of directors rather than locally-elected school boards — exceeded $461 million in fiscal 2017.

Two voucher programs — which provide state funding to families of students who attend a private schools — provided scholarships for over 5,000 students in low-income families in fiscal 2017, and grants for over 800 students with disabilities.

Salaries and benefits

Ninety-four percent of state spending for public schools, and 84 percent of total spending for schools, supports salaries and benefits of state employees, the report says.

Over time, it says, common measures of inflation, such as the Consumer Price Index, “underestimate the actual budget pressures faced by public schools.”

That’s because schools spend most of their money on college-educated professionals, such as teachers and principals, the report says, and wages and benefits for college-educated workers tend to rise faster than the cost of goods, which often can become less expensive as a result of technological advances.

So public schools “face cost pressures above those reflected by traditional inflation measures,” the report says.

— Todd Cohen

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