I know I’ve been writing a lot in this space about school funding and theLeandro case, but folks in state government are talking about it a lot and the financial stakes are huge. A reference in yesterday’s Daily Journal about some new numbers the John Locke Foundation has generated on the matter resulted in a number of calls and emails asking for more information. So the following is an advance and truncated version of a piece that I’ll be releasing soon on the research. Feel free to read, discuss, and dispute.
RALEIGH – There are hundreds of policymakers in Raleigh, thousands of local officials, and hundreds of thousands or even millions of citizens under the impression that North Carolina school spending varies widely depending on the wealth of local communities.
That’s the often-assumed premise behind the Leandro school-funding lawsuit that’s been in the courts since 1994. It’s been the theme of hundreds of newspaper editorials over the years calling for more state aid to help North Carolina’s poor and/or rural school districts. And it is utterly wrong.
North Carolina does not feature wildly dissimilar investments in public schooling, for the obvious reason that an average of three-quarters of the operating budget comes from state and federal dollars, not from local taxes. In other states where local dollars predominate, I can understand why there are lingering debates about school-finance equity. But in North Carolina, this debate was really settled decades ago when state government became the primary source of school funding.
Why do so many persist in believing that huge gaps remain? In part because they’ve been fed a diet of problematic statistics, and in part because of a sort of reverse “Lake Wobegon” effect where every community believes its education funding to be sub-par.
Regarding the statistics, I should say that I have a lot of respect for my friends at the Public School Forum of North Carolina, which has been alleging funding disparities for 17 years. I don’t doubt their good intentions, but I do doubt the usefulness of their numbers. Their 2004 “Local School Finance Study” concluded that the gap between the 10 highest-spending and 10 lowest-spending districts was the largest ever, that it had grown dramatically since the Leandro case was filed in 1994, and that this gap is mostly related to differences in wealth.
No, no, and no. The Public School Forum looks only at the quarter of school spending that’s local. But what’s educationally meaningful is the total investment in schooling, not just the local component. And their approach grossly exaggerates proportional differences among systems. Indeed, if the state were further to increase its share of total funding, disparities in the correspondingly smaller local share would persist or even look bigger.
Furthermore, the Forum study confuses top-spending districts and wealthy districts. The two groups are not the same. A closer look at per-pupil expenditures reveals that the top spenders are mainly districts with tiny total enrollments. They have an economy-of-scale problem: they must spread fixed costs over a small caseload. A few of these districts are “wealthy” in taxable property and income, but most are actually lower-income, rural districts themselves.
Finally, the Forum admits that it hasn’t considered the possibility that differences in local supplements are a rational outgrowth of differences in living costs across the state. Obviously, a higher salary is required to buy a given standard of living in a community where housing, land, and other goods are more expensive. This is just as true for educational personnel (the main school expenditure) as it is for other workers.
My colleague Kamen Nikolaev and I did our own analysis of the most recent data on school enrollment and finances in North Carolina. First, we found that about half of the gap in local funding between the top-10 and bottom-10 spenders disappeared when we adjusted just for average home prices. Second, and more importantly, we clarified matters by grouping school districts by their type and then comparing the group averages. Very-small districts (enrollments below 2,000) had an average total operating expenditure of about $9,000 per student, with small districts (2,000-5,000) at $7,400. Urban districts, including high-income counties such as Mecklenburg and Wake, had slightly below-average total spending at $7,050, as did the five Leandro counties (Hoke, Halifax, Vance, Robeson, and Cumberland) at $6,700. Other groups, such as suburban counties, had still smaller spending averages.
As you can see, the gap between the “rich” counties and the Leandro counties is modest (the former spent about 5 percent more) and entirely disappears if you adjust the local supplement for housing costs. Furthermore, because of massive increases in state and federal spending, the Leandro counties are better funded today in inflation-adjusted dollars than the “rich” counties were in 1994 when the litigation began. Unless rich counties were unconstitutionally funded then, “problem” solved.
In short, if you are worried about wealth-based disparities in education funding in North Carolina, I think you’re worried about the wrong issue. The real one is whether schools are effectively spending the large amount of money they already receive, and perhaps whether the state funding formula ought to be more weighted to poverty and other forms of disadvantage.
There’s still a lot of room for disagreement here. But let’s agree to stop watching the wrong statistics.
Hood is publisher of Carolina Journal.