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Committee moves one step closer to study on school funding formula changes

Amidst the chaos of the multiple special sessions called, and being called, for the General Assembly before 2016 is out, an important change to education policy is being considered.

Last week on Monday, December 12, the Joint Legislative Program Evaluation Oversight Committee continued with its plan to create a joint task force that will explore the possibility of moving the state to a weighted-student formula when it comes to its process for appropriating money for local school districts.

The committee first met in November, unveiling its intent to explore the idea of changing the funding formula.

According to presentations during the November committee meeting, in fiscal year 2014-15, the public school system was funded at about $12 billion, $8.4 billion of which was strictly state money.

Presently, the state doles out the state funds using a series of allotments — 37 in total. The allotments are essentially line items. X amount of money for classroom teachers, Y amount of money for school building administration, etc… This is called the resource allocation model.

Under a weighted-student formula, the money would be based on the student. Basically, the state would allot a base amount of money for each student in the state. The arbitrary example given at the November meeting was $7,500 (note: that is not the funding number being proposed, simply a number picked to use in an example).

Now, the distribution of funds changes depending on the type of student. A normal student with no special needs affords the school $7,500. But let’s say you have a student who is K-3. Well that student would get an additional .19, or $1,425, of that base of $7,500. If that student has disabilities, he or she would get an additional .98 or $7,350 of that initial $7,500. When all the numbers are added up on that student, the school gets a total of $16,275 for that one student.

So basically, schools get funded based on the number of students. Normal students get the base $7,500, and extra money is allotted depending on any extra needs students might have.

Check out our earlier coverage to get a better understanding of how a weighted-student formula would work.

At December’s meeting, the Committee only discussed the weighted-student formula plan lightly. It considered a preliminary draft of legislation that would create a task force to investigate the feasibility of adopting a weighted-student formula. See that draft legislation here.

The Committee approved the draft, which would then be introduced at the upcoming long session of the General Assembly for the consideration of lawmakers.

At the November meeting, Sean Hamel, principal program evaluator of the General Assembly’s Program Evaluation Division (PED), presented multiple issues created by the current system of education appropriations. The issues were divided into two groups — allotment-specific issues and system-level issues.

Here is a breakdown of the issues:

Allotment-Specific Issues

Finding 1: The structure of the Classroom Teacher allotment results in a distribution of resources across LEAs that favors wealthy counties

Finding 2. The Children with Disabilities allotment fails to differentiate funding based on the instructional arrangements or setting required and contains a funding cap that results in disproportionately fewer resources going to LEAs with the most students to serve

Finding 3. The allotment for Limited English Proficiency (LEP) contradicts the principles of economies of scale and contains a minimum funding threshold that results in some LEAs serving LEP students without funding

Finding 4. The allotment for small counties is duplicative and not tied to evidence regarding costs of operating small districts

Finding 5. The Low Wealth allotment formula relies on a factor that does not accurately assess a county’s ability to generate local funding

Finding 6. The allotment for disadvantaged students provides disproportionate funding across LEAs

Finding 7. Funding for central office administration has been decoupled from changes in student membership, creating an imbalance in the distribution of funds

System-Level Issues

Finding 8. North Carolina’s allotment system is opaque, overly complex, and difficult to comprehend, resulting in limited transparency

Finding 9. Problems with complexity and transparency are exacerbated by a patchwork of laws and documented policies and procedures that seek to explain the system

Finding 10. Allotment transfers—a system feature intended to promote LEA flexibility—hinder accountability for resources targeted at disadvantaged, at-risk, and limited English proficiency students

Finding 11. Translating the allotment system for funding LEAs into a method for providing per-pupil funding to charter schools creates several challenges

Finding 12. Using a weighted student formula is feasible and offers some advantages over the present allotment system, but implementation would require time and careful deliberation

Kristopher Nordstrom is a policy analyst with the North Carolina Justice Center’s Education and Law ProjectHe was previously an analyst in the Fiscal Research Division of the North Carolina General Assembly. He argues that the analysis of the current formula North Carolina uses fails to recognize that the allotments work together to create a fair funding formula for North Carolina schools.

And his main issue with the PED’s report is that it doesn’t address whether or not North Carolina’s funding of public schools is adequate.

“An effective, equitable school finance system should provide different levels of resources based on the different needs of its students,” he wrote in a November post at NC Policy Watch. “Ideally, such a system will provide students an equal opportunity for success, regardless of where they were born.  Unfortunately, the PED report never addresses the extent to which North Carolina’s school finance system is meeting (or failing to meet) these goals.”

He also said that a weighted-student formula wouldn’t necessarily be better.

“There’s nothing inherent about a weighted student formula that’s more equitable, more transparent, or easier to understand,” he said in an interview.

He said he’s been studying formulas in other states, most of which use a weighted-student formula, and he says they’re just as complicated, if not more, than North Carolina’s is now.

Nevertheless, the General Assembly committee will be studying the possible funding change. But even while they’re studying it, the General Assembly could, potentially, push legislation to change the funding formula, irrespective of the committee’s wishes.

At the December meeting, Senator Ralph Hise, R-Mitchell, said that the Senate Appropriations Committee could decide to take up the legislation on its own.

But, Representative Craig Horn, R-Union, co-chair of the committee, says that’s unlikely.

“I think the legislature wants to do a deep dive. There are going to be folks…who think it’s a great idea, and folks that want to protect how we’re doing it now,” he said in an interview. “They think it’s reflective of our current needs. I think it’s important that we take that deep dive.”

Still, he thinks that the PED report makes clear that the change deserves serious reflection from the General Assembly.

“Fundamentally, I believe there has been a shift in our economy, a shift in how we deliver education. There needs to be shift in how we fund education,” he said. “Is the PED recommendation the correct way to go? I don’t know. It kind of makes sense to me. But, what other alternatives are there?”

Perhaps there are changes to the current formula that would correct matters, he said. But he’s not sure, and more research is necessary. And he also said that there is always opportunity in the state’s General Assembly for the unexpected.

“In the legislature, I’m never surprised,” he said. “I’m often disappointed, but I’m never surprised.”

Alex Granados

Alex Granados was the senior reporter for EducationNC from December 2014-March 2023.