Student-centered funding would unlock school leaders’ potential, report says

While lawmakers debate how much money to give to North Carolina public schools, the way state education dollars are allocated and spent has gained new scrutiny. 

A recent report from Terry Stoops, the vice president of research and director of education studies at the John Locke Foundation, and Aaron Garth Smith, an education policy analyst at Reason Foundation, outlines how N.C.’s school finance system could be revamped. 

Smith and Stoops’ report calls for a school finance task force with a goal of shifting the state toward a student-centered approach to funding public schools. 

“While there’s no such thing as a ‘silver bullet’ education reform that guarantees improved outcomes, overhauling the state’s funding system would provide the foundation needed to unlock the potential of school leaders to maximize how and where education dollars are deployed,” Smith and Stoops said. 

The education policy experts identified three problems with the state’s school finance system: staff-based allocations, restricted funding allotments, and other methodological flaws in the school finance formula. 

North Carolina is one of the few states funding schools with a staff-based allocation system. Districts are alloted a certain number of positions, such as full-time teachers, instead of receiving dollars from the state based on enrollment or other formulas. The allotment formula leads to unfair distribution of spending, Smith and Stoops explain in the report, and lacks flexibility for districts to make spending decisions based on unique circumstances. 

“A better approach would be to allow districts with less expensive staffs to allocate saved dollars toward things that benefit their students rather than subsidizing districts with more expensive payrolls,” the report reads.

Instead of funding allotments, Smith and Stoops suggest a school finance system in which dollars follow the student. The formula would be weighted so students with higher needs would go with more dollars to the district or charter school they attend. 

The General Assembly has taken an interest in how public schools are funded. The Joint Legislative Task Force on Education Finance Reform met several times in 2018 to discuss whether the school funding formula should be reformed. 

The points made during the task force meetings were similar to those reported in a November 2016 study from the Program Evaluation Division. The 2016 study suggested a student-centric approach to correct uneven and arbitrary funding amounts. The study also called for more funding flexibility and to give principals more authority over financial decisions. 

It’s unclear if lawmakers will try to revamp the school finance system. The General Assembly and Gov. Roy Cooper are locked in a stalemate over Cooper’s veto of the 2019-20 General Fund Budget. The $24 billion budget includes around $9.7 billion for public schools, but Cooper vetoed the budget bill June 28.