In the 2022–23 fiscal year, North Carolina allocated a substantial $10.4 billion to educate 1.5 million public school students, highlighting the state’s commitment to public education as mandated by its constitution. Despite this significant investment, the current funding system, characterized by a Resource Allocation Model, is facing growing criticism for its complexity and inefficiency.
The Current Funding Model
North Carolina’s funding approach is centralized, relying on approximately 50 distinct allotments, each with specific formulas and purposes. These allotments are categorized into four types:
- Dollar allotments for specific funding amounts.
- Position allotments for funding personnel, such as teachers.
- Categorical allotments for targeted programs.
- Grants for specific projects or initiatives.
Reports over the last 15 years have highlighted the model’s inadequacies, citing issues like a lack of transparency and accountability, as well as unfair treatment of students and districts. The complexity of the system is so profound that some school business officials reportedly need two or more years to fully understand it.
K–12 public education stands as the largest single expenditure in North Carolina’s state budget, underscoring the critical nature of effective funding. With evolving educational options and demands, the efficiency and effectiveness of funding allocation have become more crucial than ever.
Key Questions for Funding Reform
The John Locke Foundation’s Center for Effective Education has posed essential questions regarding the current financing system:
- Does the system ensure fair treatment of students and schools while providing necessary resources?
- Are resources delivered effectively to children in need?
- Is the system transparent, accountable, and respectful of diverse educational options?
To address these questions, the report examines North Carolina’s constitutional obligations for education, the Leandro school funding case, and various aspects of public education funding, including federal and local contributions.
Current Funding Landscape
In 2022–23, the state provided $10.4 billion out of a total $17.3 billion in public education funding, which includes $3.0 billion in federal and $3.8 billion in local funds. The report evaluates whether the existing system serves the needs of schools, students, and staff effectively and fairly.
Three key allotments are scrutinized for systemic issues: funding for classroom teachers, support for children with disabilities, and low wealth supplemental allotments. Findings indicate significant problems such as:
- Complexity and lack of transparency.
- Unaccountability and inflexibility.
- Unfair treatment of schools, undermining the effectiveness of public education.
The Need for Change
North Carolina’s hybrid funding formula is unique compared to other states, where most utilize student-based funding formulas. According to the report, 30 states and the District of Columbia rely primarily on student needs, while 10 others incorporate student-based elements into their formulas.
Recognizing the urgent need for reform, the report discusses successful student-based funding initiatives in other states, including:
- Tennessee’s Investment in Student Achievement formula.
- California’s Local Control Funding Formula.
- Indiana’s State Tuition Support Formula.
These models provide valuable lessons for North Carolina, illustrating how student-based funding can meet individual needs and simplify the funding process.
Steps Toward Student-Based Funding
The report advocates for a transition to a student-based funding system that ensures:
- Needs are met fairly.
- The funding process is easy to understand.
- Local leaders are empowered to make decisions.
To achieve this, five key recommendations are proposed:
- Learn from Successful Models: Study other states’ successful funding reforms.
- Publicize Benefits: Communicate how student-based funding improves outcomes for all.
- Secure a Champion: Identify a strong advocate for the funding reform.
- Correct Inequities: Address existing disparities in funding allocations.
- Be Transparent: Maintain openness in the funding process to build trust and accountability.
Conclusion
Transitioning to a student-based funding model in North Carolina is vital for ensuring equitable, transparent, and effective public education. By focusing on the individual needs of students and simplifying the funding process, North Carolina can better meet its educational obligations and improve outcomes for all students. The proposed reforms represent a crucial step toward enhancing the state’s educational system and ensuring that every student receives the resources necessary for success.
