Legislative Task Force Begins to Consider Education Finance Reform

Nov 2, 2017

A legislative task force is poised to lead in making big changes to the way the state allocates funding to North Carolina's public schools.

The Joint Task Force on Education Finance Reform is just beginning a long process. That journey started this week with the task force gathering to hear an evaluation of the formulas that the state uses to allot resources to public school districts and charter schools.

Currently, the amount of money each district receives is determined by a complex formula comprised of 37 different allotments – including one to pay for classroom teachers, another for textbooks, and others to pay for programs for disadvantaged students or ESL learners, and so on.

Evaluators from the legislature's Program Evaluation Division looked closely at all those allotments and concluded some are not equitable and that the system overall is too complex.

Findings: There Are Issues with Individual Allotments

The program evaluators identified these issues with individual allotments:

  • The classroom teacher allotment, which pays for a certain number of teachers per students at those teachers' earning levels, favors wealthy counties that attract more experienced and highly educated staff.
  • The children with disabilities allotment doesn't take into account the severity of a student's disability. It also includes a funding cap, which leaves the districts with the most disabled students with fewer resources.
  • The allotment for limited English proficiency students does not provide for schools with fewer than 20 English language learners. Also, because it's not based solely on head count of ESL students, it results in inequities in per-pupil funding for those English language learners.
  • The allotment for small counties is not tied to evidence on costs of operating small districts.
  • The allotment for low wealth counties doesn't accurately assess the county's ability to generate revenue by taking into account the property tax base per student.
  • The allotment for disadvantaged students is disproportionate across districts because counties that were among the first to receive the allotment have continued to be funded at a level almost five times as much as other districts.
  • The central office administration allotment does not take into account the size of the student population.

Findings: The Funding System is Too Complex

Moreover, principal evaluator Sean Hamel reported the current system is too complex overall – even too much for the people who handle school districts' budgets.

"We surveyed all LEA [district-level] business officers to gain a better understanding of just how challenging navigating the allotment system can be. Less than 1 percent believe that learning the system can be done within a year," Hamel said.

Most said it takes about four years to learn to navigate the system to ensure their schools get as much state funding as they are eligible for. Meanwhile, almost a quarter of school business officers have held their jobs for less than four years. Evaluators also argued the complexity made it difficult to translate the funding model for charter schools, which are also publicly funded.

Final Recommendation

The evaluation's final recommendation was for the state to either overhaul the current allotments or to move to a weighted student funding model, like some other states use.

"In a weighted student formula, students – rather than positions, districts or schools – serve as the starting point for education finance," Hamel said. "Weighted categories are then established to provide additional funding for certain student characteristics."

Under that system, disadvantaged students would be weighted for additional funding according to their learning needs. Schools, then, would receive money not based on the number and qualifications of their teachers – the largest factor in the current system – but on the number and needs of the students in the district.

Members of the task force expressed agreement that the current finance system is flawed, but suggested the weighted student system may not be the only option. Senator Jerry Tillman (R-Randolph) called the current allotment formula "totally antiquated" and called for a simplified allotment system with block grants to cover schools' other costs.

The joint legislative task force meets again November 15.