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State funding flexibility – fact or fiction?

The answer is…yes! There is little doubt that North Carolina has the most categorical public education funding system of any state in the nation. I have always attributed that to the fact that North Carolina provides a higher percentage of total public education funding than most other states and to the old saying, “He who has the gold makes the rules.”

If your school district is eligible, two state funding categories are very flexible, the Low Wealth allotment and the Small County allotment. Each can be spent for almost anything except central office administration and maintenance.

Flexibility with these sources of funds is important, in that the Low Wealth allotment is intended to help make up for a lower than average ability of the County to provide local public education funding and the Small County allotment recognizes that “smallness” prevents economies of scale in most every area of public schooling, from student transportation to classroom and other school-based staffing.

On the other hand, it makes little sense to include the restrictions against central office administration and maintenance, in that those are two categories that higher wealth school districts are better able to fund with their local dollars and also cannot be provided as efficiently in smaller school districts.

A few other categorical state allotments, such as Non-instructional Support, are somewhat flexible in the types of positions/costs that can be paid for, with this allotment usable for substitute teachers, school custodians, school clerical, and certain central office clerical positions. Comparatively, the Teacher Assistant allotment can only be used for – you guessed it! – teacher assistant positions.

Certain other state allotments, such as Exceptional Children, can be used for a wide range of services to eligible students, including dozens of different types of staffing (school-based and central office), contracted services, and most any type of necessary supply, material, software, furniture, or equipment. Conversely, the Classroom Materials/Instructional Supplies and Equipment allotment can be used only for items fitting the definition of things listed in the allotment title.

Then to complicate things even further, The State Board of Education and the General Assembly have passed regulations or laws allowing funds to be transferred into and out of some allotment categories, only into some allotment categories, only out of some allotment categories, and neither into nor out of some allotment categories. And sometimes they change the regulations or laws on transfers on an annual basis.

Prior to 2015-16, Teacher Assistant funding could be transferred out to allow for additional classroom teachers to be employed. Starting with 2015-16, no transfers out of Teacher Assistant funding are allowed. The most difficult part of this change was that no notice to school districts was provided until after the school year started and school staff members were already hired.

Some of the restrictions on transferring funds make sense logically, until you fully understand the allotment funding sources or other regulations. For example, in only some years/cases, and then only in small amounts can you transfer funds out of Career and Technical Education Months of Employment (CTE MOE) to pay for things other than CTE-related instructional needs. The logic is that CTE is partially funded with federal funds which can only be used to provide CTE student instruction and that a certain amount of state funding must be spent on CTE as a required federal match.

The illogic in the restriction is that transfers are almost always restricted to 5 percent or less while the amount of state funding required for the federal match would be preserved if many times that amount were allowed to be transferred. This is an allotment transfer restriction that The State Board of Education could (and should!) change.

The complexity of what can and cannot be funded from each allotment category and the complexity of what can and cannot be transferred into and/or out of each allotment category ensures that an experienced and knowledgeable school finance officer is needed in every school district (even if one was not required by law). An experienced and knowledgeable finance officer can navigate through all of the complexity and nearly always find enough flexibility to fund the school district’s highest priorities.

However, so much unnecessary time and effort is expended statewide in these processes that could be more profitably spent helping schools maximize their use of resources. Additionally, as experienced school finance officers leave our school districts, it takes time for their replacements to learn these complexities.

Since I retired in 2010, I have returned to Winston-Salem/Forsyth County Schools part-time to primarily budget, manage, and monitor the various allotments and funding sources for our school district. I spend approximately 20 hours per week, most every week of the year, assigning various positions and costs to the various state and federal allotments, deciding and communicating state allotment transfers needed, managing the monthly payroll transactions against the state position allotments, and managing the monthly expenditures against the dollar allotments.

With the state funding flexibility provided by many states, such as Virginia, the time spent on those processes could be reduced by at least 75 percent. Then, I could spend my time doing what I really enjoy doing — helping principals maximize the use of the funds and positions allocated to their schools.

Kerry Crutchfield

Kerry Crutchfield has been the budget director for the Winston-Salem/Forsyth County Schools since 1981.