A Student-Centered Approach to School Finance That Benefits Every Child In North Carolina
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Policy Brief

A Student-Centered Approach to School Finance That Benefits Every Child In North Carolina

Overhauling the state’s funding system would provide the foundation needed to unlock the potential of school leaders to maximize how and where education dollars are deployed.

North Carolina’s K-12 public school finance system is broken. And efforts to fix it have been at least a decade in the making. This paper highlights the problems with North Carolina’s current school finance system and provides recommendations for reform, modernization, and funding strategies that are student-centered.

In 2009, the North Carolina General Assembly commissioned an evaluation of North Carolina’s school finance system, which dates back to the Great Depression era’s School Machinery Act. The firm selected for the project, Denver-based consulting firm Augenblick, Palaich and Associates (APA), submitted its final report to lawmakers in September 2010. While acknowledging that the system addressed “almost all of the cost factors associated with providing education services,” APA experts concluded that North Carolina’s school finance system “could benefit from several potential changes.”

These changes ranged from basic modifications to the existing allotment system, to full-scale adoption of a “foundation” type formula that would set a base cost with adjustments for student and district characteristics. While there was bipartisan support for pursuing school finance reform, lawmakers tabled all considerations of the APA report recommendations until post-recession revenues stabilized.

Five years later, the General Assembly directed its Program Evaluation Division (PED) to conduct a comprehensive report that detailed structural flaws with North Carolina’s funding formula. The final report was submitted- ted to state legislators in November 2016 and led to the creation of the Joint Legislative Task Force on Education Finance Reform, which convened between November 2017 and April 2018. Lawmakers created the task force to receive input on the school finance system from district, state, and national school finance experts. After seven meetings of the task force, the consensus was that the PED report accurately described the defects of North Carolina’s piecemeal school finance system.

In 2020, legislative leaders are expected to introduce legislation to begin the process of restructuring North Carolina’s school finance system.

Parents, educators, and policymakers should welcome these efforts. School finance policy is more than just a collection of complex formulas that few understand; it directly affects how classrooms and schools operate. Fundamental reforms are needed to ensure that dollars are delivered to districts in a fair and transparent manner that allows educators to align spending with the needs of North Carolina’s 1.5 million public school students.

While there’s no such thing as a “silver bullet” education reform that guarantees improved outcomes, overhauling the state’s funding system would provide the foundation needed to unlock the potential of school leaders to maximize how and where education dollars are deployed.

Full Policy Brief: North Carolina Public School Finance

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

Dr. Terry Stoops is vice president for research at the John Locke Foundation, where oversees the research team’s writing and analysis across the spectrum of public policy issues. He specializes in pre- K-12 education.