News: CJ Exclusives

Education finance workshop floats student-based funding model for schools

The North Carolina education finance system, often described as complicated and inequitable, could use an overhaul, several education finance experts said.

On Tuesday, Jan. 29, the John Locke Foundation co-hosted an education finance workshop with the Reason Foundation, a libertarian think tank, and Allovue, a K-12 budget and financing software company. The workshop focused on ways of improving the state’s public education funding system to ensure a more equitable, effective, and transparent process.

The bulk of K-12 public education funding in North Carolina comes from the state and goes to each local school district through position and category allotments — spending formulas for items such as teachers, principals, textbooks, and transportation. Districts receive additional money from the General Assembly for students with disabilities, English language learners, and economically disadvantaged students.

Aaron Smith, education policy analyst at Reason Foundation, said the importance of school finance can be explained using a football metaphor.

“Teachers and principals are the most important factors in education, but just as a weak offensive line inhibits a quarterback, an ineffective school finance system restricts those closest to the kids,” Smith said. “An effective school finance system provides the foundation for student success.”

North Carolina’s education funding model is unfair, opaque, and restrictive, Smith said. The state’s funding model — based on staffing and categorical allotments — restricts local school district autonomy; forces district to focus more on compliance than outcomes; leads to unfair allocations; and erects barriers to school choice.

Smith said an improved funding model would be student-based, instead of a system based on teacher allotments. This style of funding would focus more on student needs, be more transparent by using a simpler formula, promote funding flexibility, and allow money to follow the student.

Another reform would see more local control over school budgets with school leaders taking on a greater role in funding decisions. Brenda Berg, CEO of BEST NC, a nonprofit education organization, said student success is realized when responsibility for school governance is localized.

Making these kinds of reforms won’t be easy.

“There would be a few challenges,” Smith said. “It could be a tough sell for the central offices.”

Principals would probably have to get some sort of training on finances and budgeting. But, Smith said, training on these subjects shouldn’t take long. Berg said school leaders could be eased into taking on these new responsibilities, but sometimes the best way to learn is by doing.

A handful of lawmakers attended the workshop, including Rep. John Fraley, R-Iredell; Sen. Rick Horner, R-Johnston; Rep. Larry Strickland, R-Harnett; and Sen. Norman Sanderson, R-Carteret.

Sanderson said reforming the state’s education finance system would require a consensus among lawmakers, which could take time.

“This is going to be a big lift,” Sanderson said.