North Carolina needs to fix its education funding formula
ID 54054292 © Sean Pavone |


North Carolina needs to fix its education funding formula

North Carolina’s education funding formula is confusing for everyone and prioritizes funding for school districts that least need it. 

Throughout North Carolina’s long-running Leandro school finance lawsuit, multiple judges have ordered legislators to invest more in a “sound basic education,” as the state constitution requires. While much of this battle is about how much money is spent on K-12 education, more attention should be focused on how the state distributes the money it spends. North Carolina’s education funding formula is mired in red tape that confuses and frustrates local leaders and often prioritizes funding for school districts that least need it. 

However, a proposed state bill would replace the old education funding system with a streamlined formula that allocates education dollars based on individual student needs. Reforms like those in Senate Bill 670 would be monumental for North Carolina students. The state’s education funding system needs to move away from rigid staffing and programmatic prescriptions and toward greater local flexibility and fairer funding.

The North Carolina General Assembly Program Evaluation Division’s 2016 report on the school finance system found 37 separate state-funded allotments for schools, all of which can be thought of as taxpayer-funded gift cards, each with strict restrictions on how schools can spend them. That number is now a whopping 49 separate allotments. The state grants range from a general classroom teacher allotment to specified funding for items like driver training programs and feminine hygiene products.

The state’s largest allocations for teachers, school administrators, and instructional support personnel are based on rigid student-to-staff ratios. The state allocations manual spells out restrictions, and state law often forbids transfers of education funds between separate designated appropriations or requires complicated reporting when permitted.

North Carolina’s single largest K-12 allocation is for classroom teachers. But this funding varies significantly by school district, based on each district’s average monthly salary plus benefits. In other words, the current funding system allocates full-time equivalents to school districts, but not all full-time equivalents are funded equally. School districts with more experienced, higher-paid staff—often in more affluent areas—receive higher dollar-value full-time equivalents.

For example, Department of Public Instruction data shows Durham Public Schools received $90,355 per classroom teacher. Meanwhile, Onslow County Schools received $76,329 per classroom teacher in the 2022-2023 school year, $14,000 less per teacher than Durham’s. Each school district employs over 1,000 classroom teachers, so this disparity results in a funding gap of millions of dollars between district budgets solely due to differences in staffing experience rather than student needs.

To be sure, North Carolina does have supplements and allocations intended to equalize funding between districts. But even when local revenues are factored in, problematic disparities persist, and the relationship between student needs and education funding levels is almost nonexistent. 

Many of the state’s public school districts are arbitrarily short-changed because they’re in areas without local property wealth that can be taxed, unlike wealthier neighborhoods. When local and state revenues are factored in, high-poverty school districts like Duplin County Schools and Wayne County spend less than $9,000 per student. Wealthier districts like Orange County and Chapel Hill-Carrboro County spend over $12,000 per student, 33 percent more.

The proposed North Carolina legislation would’ve addressed these unfair funding disparities by directing more education funding to higher-need students rather than rewarding the school districts with more experienced staff. Under SB 670, schools would’ve received an equal dollar amount for each student, and weights of 38 percent and 130 percent would be added for each economically disadvantaged and special education student, respectively, to account for the additional costs of educating higher-need students. 

The new education funding formula would’ve also been more transparent for schools and policymakers. The current system is a costly headache. A 2016 General Assembly report showed districts spent as much as $1.5 million on consultants just trying to understand the state’s formula and education allocations. North Carolina Public Radio reported that $9.7 million in education funds were actually returned to the state’s general fund in 2017—districts simply couldn’t navigate the bureaucracy and red tape and were required to leave the money unspent. North Carolina’s complex web of education funding restrictions would have been essentially wiped clean by Senate Bill 670. In fact, the bill would have eliminated more language from the education funding law than it added.

But the bill, which wasn’t included in the most recent State Senate budget and seems unlikely to pass this year. EdNC reported the Senate bill “does not include enactment of a weighted student funding model, which was proposed last month to overhaul the state’s current funding system,” so for the next proposal state legislators should fill in some more critical details. For example, specifying a per-student amount would allow stakeholders to evaluate the economic effects on schools and students concretely. Since eliminating the low-wealth supplements would impact overall funding fairness, the law should detail how that will be dealt with. 

For decades, the Leandro lawsuit has been tied up in the courts and has been the focal point of North Carolina’s K-12 funding policy debates. State courts and legislators continue to dispute who decides how much money is spent on K-12 education and what is needed.

Simplifying North Carolina’s education funding formula with a fair per-student amount for all kids, regardless of where they live, and removing some of the bureaucracy handcuffing public schools would be important steps forward.