NCGA looking at funding schools based on students, not employees

North Carolina’s current method for funding public schools favors wealthy counties over low-income areas, according to a new study from the state legislature’s Program Evaluation Division. The study recommends shifting the state’s funding formula toward one that puts students first.

The 135-page report, which was commissioned during the 2016 legislative session by Rep. Craig Horn, R-Union, chairman of the House Committee on Education Appropriations, looked at how the Department of Public Instruction distributes dollars to Local Education Agencies, aka school districts. The report was discussed at Nov. 16 meeting of the Joint Legislative Program Evaluation Oversight Committee.

In addition to finding imbalances in allotments between wealthy and low-income counties, researchers also discovered that funding for children with disabilities is largely directed away from those areas with the highest number of students who would qualify for that assistance.

Allocations for students with limited English proficiency are also illogically and unevenly distributed, researchers found.

Given the findings, the PED recommended that the state overhaul its system and allocate funds per student — instead of assigning dollar amounts to each LEA, or paying LEAs according to the number of job positions within a district.

The concept of basing funding on the number of students a district enrolls rather than the number of teachers and staff members it employs, also called “student-based budgeting,” has been used by several large metropolitan school districts dating back to the 1990s. Under this model, students with disabilities, language issues, or other special needs would get a bigger, “weighted” allocation, and districts that have large bureaucracies could be forced to spend more money in classrooms.

The PED study is not the first of its kind to be commissioned by the legislature. In 2010, a similar report was completed by Augenblick, Palaich and Associates Inc., a private company with experience in analyzing education systems.

That study cost nearly $350,000, but largely was overlooked when Republicans took over the General Assembly in 2010 and began their work in 2011.

“We had the great recession, so funding was way down and no one wanted to talk about changing the funding system. Lawmakers were struggling with the amount of revenue the state was receiving in the first place,” said Terry Stoops, director of research and education studies at the John Locke Foundation.

“Their priorities were to raise teacher pay and work on literacy in the early grades, as well as to promote charter schools and school choice,” Stoops added. “The design of the school funding system did not make the cut.”

The lawmakers’ oversight was not intentional, but is still inexcusable given the costs of the Augenblick study and the serious problems that exist within the school funding process, said Horn, who wasn’t made aware of the Augenblick report until 2013.

Legislators must form a task force that will take a “deeper dive” into the PED’s findings, he continued, adding that he would like to see the General Assembly tackle the issue during the 2017 legislative session.

“The student-based model — as I understood it based on the presentation by the PED —seems to make fundamental sense. But like a lot of things in life, that has to be put into perspective,” Horn said.

“Some of the things that PED pointed out, such as low-wealth counties, have been a fight since I’ve been involved in education appropriations,” he continued. “Legislators have been out to protect their jurisdictions, and when their counties are for some reason or another moved out of specific categories and are therefore no longer eligible for certain funds, those legislators fight to keep those funds.”

That political reality will make revamping the state’s school funding system a tough task, said Horn, also noting that there is a limited amount of money to work with, and that not all districts would be happy about a funding shuffle.

“The major metropolitan areas are going to be screaming — you can bet on it,” he said.

“Because of the complexity of this, it would take a task force or advisory board a significant amount of time to come up with a system that corrects the problems of the allotment method,” Stoops said.

Any discussion about changing public school funding formulas also will affect charter school finances, though those impacts are hard to predict, Stoops added.

Horn agreed, pointing to findings within the PED study that indicate the state’s current funding process complicates dollar distribution to charter schools.

“We need a better way to ensure that the kids are being funded fairly,” Horn said. “Kids are not being funded fairly — no matter which school they go to.”

“This issue is going to be hard on the legislators,” he concluded. “We’re going to be pulled in multiple directions at the same time. But that’s the job. And I’m looking forward to it.”