Who’s Deciding How Education Funding Is Spent at North Carolina’s Schools?
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Who’s Deciding How Education Funding Is Spent at North Carolina’s Schools?

Education dollars are largely spent using one-size-fits-all formulas, leaving principals with little say over how money is spent at their schools.

With the new school year underway for North Carolina’s 1.5 million students, policymakers in Raleigh are facing a pressing question: Who should decide how to spend the state’s education funding?

Most of us assume that individual principals have control over their schools’ slices of the state’s $16 billion education revenue pie, but that isn’t the case. Education dollars are largely spent using one-size-fits-all formulas, leaving principals with little say over how money is spent. In fact, even North Carolina’s school district officials don’t have the same level of financial autonomy that’s common in other states.

So who’s deciding what spending is best for students?

It’s no secret that North Carolina’s school finance system is in bad shape. A 2016 report to lawmakers by the state’s Program Evaluation Division found education funding rules to be “redundant” and “counterintuitive” and that they “obscure transparency and accountability.” These findings were affirmed by last year’s Joint Legislative Task Force on Education Finance Reform. The primary issue is that the state’s funding formula doles out staffing positions and restricted grants rather than dollars that can be spent flexibly. In total, the state has 37 different funding allotments, many of which come with strings attached and must be used on specific programs, such as summer reading camps and driver training.

The result of this tangled web of rules and regulations is predictable: the state’s education dollars aren’t always spent productively and there’s little transparency. The system is so convoluted that in 2017, school districts actually had to return $9.7 million to the state’s general fund because they didn’t navigate the red tape needed to spend it. A survey of school district business officers revealed that 77% of respondents believe that it takes at least two years just to understand how the education funding system works.

This top-down approach to school funding is a problem that ends up affecting every classroom. Research suggests that limiting school-level control over spending decisions creates inefficiencies, which should come as no surprise since distant bureaucrats can’t possibly know what’s best for diverse kids in all corners of the state. It also means nobody is held accountable for spending decisions or student results. Accountability requires giving teachers and principals autonomy, and right now local education officials are essentially middle managers following state directives.

Fortunately, lawmakers can fix these problems. The first step is to overhaul the funding formula. It’ll probably surprise North Carolinians to learn that California is one of the states that’s learned to give local districts and schools control over education money. But in 2013, California eliminated more than 50 categorical funding allotments and moved its dollars into a weighted-student formula that gives districts discretion over how funds are spent. Several research studies have given California’s Local Control Funding Formula reforms high marks, including a survey of superintendents that showed 82% say the new formula allows them to better align funding with student goals, school strategies, and resource needs.

Local school district officials also have a role to play. If state lawmakers fix the funding formula, they should push some of the financial decisions down to the school level. School districts in cities such as Boston, Denver, and Indianapolis have adopted weighted-student funding models that based funding on individual student needs and give schools the money for each student so that the school can put it to the best uses. Not only does this promote fairness, but it also puts principals, who are in the best position to know what their school’s students need, in the driver’s seat on how to spend money.

To ensure local officials are spending money fairly and wisely, robust financial transparency and accountability for student outcomes can be implemented. Teachers and principals are much more likely to accept being held accountable for their students’ results when they’re able to spend resources on things they need and want.

There isn’t just one “right” way to spend education money. Kids are unique, so the education professionals closest to students should be empowered to align spending with students’ needs. It’s time for North Carolina lawmakers to finally put education leaders in charge.

This column originally appeared on EDNC.org.

Aaron Garth Smith is the director of education reform at Reason Foundation, a nonprofit think tank advancing free minds and free markets.