Report Critical of State School Funding (NC)

November 18, 2010

A recently released report has North Carolina near the bottom of the barrel in terms of K-12 education spending, and is sharply critical of the formula it uses to determine who gets the money.

State educators are bracing for the impact of an estimated $3.5 billion to $4 billion budget shortfall next year, but this report puts the state already in the bottom tenth of states in per-pupil spending on public education.

The North Carolina Justice Center’s N.C. Education and Law Project published the information Monday, which is based on data collected in the latest U.S. Census.

The report was released a day before Gov. Bev Perdue told school board members to brace for more cuts at a meeting of the North Carolina School Boards Association in Gree nsboro.

Report author Matthew Ellinwood said Wednesday that cuts will most likely have to come from education in the next budget the General Assembly writes, but state legislators should bear in mind the real world impact of those cuts.

“What they really need to keep in mind is these cuts are going to come from their own schools,” Ellinwood said. “This is not something imaginary they’re cutting in Raleigh – these cuts are going to affect the number of teachers in the state’s classrooms and the way our children are educated. There will be a direct impact.”

The census data puts North Carolina behind other southern states like Virginia, Georgia, South Carolina and Kentucky in terms of spending per student on public education – 45th nationally – and 43rd nationally in per-pupil expenditure as a share of personal income.

Furthermore, the national magazine Education Week puts North Carolina 46th in the nation in terms of funding adequacy and equity – earning a sub-par mark of D-plus.

About 60 percent of the state’s budget is spent on public education in K-12, community colleges and the university system. About 70 percent of the state’s K-12 education funding for 2009-2010 was spent on teachers, teacher assistants, instructional support and administration.

“While money may not be everything in the world of education, it is difficult to imagine how to make cuts to an already insufficiently funded public school system,” the report reads. “Adequate funding is prerequisite to most education reforms that can improve the achievement of all of North Carolina’s students and prepare them for success in life after school.”

In addition to a lack of funding, the report goes on to criticize the state’s school funding formula as “complicated, opaque and inequitable.”

“The confusing nature of the funding system makes it difficult to tell where money is really going and leads to unfair results, particularly for high-poverty urban and rural districts, districts with large numbers of at-risk students and districts with large proportions of special-education students.”

Whereas most states use a “foundation system” to fund schools, which is based on real property values and adds extra funding for extenuating circumstances like large groups of students with special needs, North Carolina uses a “teacher allocation” based on an array of complex funding formulas that do not take into account the number of special-needs students in a particular school district.

“The net effect of North Carolina’s system is that higher-performing school districts receive more state money from the classroom teacher allotment than struggling districts,” the report reads. “Teachers in high-poverty districts with more at-risk children are less likely to be National Board-certified, are less likely to be state-certified and are less experienced. They are paid less than their more experienced and credentialed counterparts, so districts that are unable to attract as many high quality teachers actually receive less funding for teachers than districts with the most highly qualified teachers.”

It also notes the funding formula fails to account for local salary supplements granted by counties, which increases the motivation for highly qualified teachers to take a job in a wealthy district.

“In short, North Carolina tells districts to hire whoever they can on the basis of student/staff ratios and the state will cover the bill, without considering what factors may make it difficult for certain distri cts to hire highly qualified teachers,” the report continues. “Other states take these factors into account and give districts enough money to ensure they are not at a disadvantage in hiring compared to other districts.”

It goes on to discuss both capped and non-capped special needs allotments in the state, as well as supplements to low-wealth and smaller districts, concluding the concessions are inadequate to make up for the larger systemic flaws.

The North Carolina legislature commissioned a report on public school spending by the same company that did a recent study for Pennsylvania, the report states, where funding is based on the cost of educating a student to proficiency level.

In Pennsylvania, four factors go into school allotments. They are enrollment changes over time, district size, regional cost differences and the educating students with disabilities, students living in poverty, English-language learners and gifted students.

“In addition to being one of the worst-funded systems in the country by any measure, North Carolina’s school funding formula is one of the most complex and least effective at aiding needy students,” the report concludes. “An increase in overall funding and a change to the complicated system of allotments to a foundation system with weights would improve student performance by ensuring students receive the funding needed to attain a high-quality education.”