I’ve been to cocktail parties; I know from experience how uninteresting school finance policy is to other people. However, it seems a lot of people are thinking about how the state funds public education and that is a good thing: public education consumes almost 40 percent of the state budget and provides for economic productivity, democratic participation, and a higher quality of life for North Carolina residents. As citizens we should care about how our public schools are funded.
Currently, a legislative committee of the General Assembly is considering changes to the school funding formula. The Governor has empaneled his own commission to examine resource distribution in the state. As a scholar who has studied school finance formulas in North Carolina, Georgia, Maryland, Tennessee, and Mississippi as well as national trends, I observe that the General Assembly and governor are right. North Carolina’s school funding formula is bad for poor and minority children, and it needs to be fixed.
Since providing public education is a state-level responsibility, there are 50 different state funding models. At its core, North Carolina’s model is called “position-based” and, depending on the source you consult, it is either completely unique or one of only seven similar models across the nation. Suffice it to say, most states don’t fund public education like North Carolina does. In a position-based system, teachers are allocated to districts based on the number of students in each grade level.
Over time, the state has been challenged on the fairness of this basic model and it has responded by adding additional funding programs to the existing core. Hence there are 37 categories of additional funding to the basic model. The funding levels provided by the categories are often not adequate to the task. Special education funding, for example, is capped at a certain percentage of students; any special education student over that cap is unfunded. Funding streams for children in poverty only add about a 6 percent to 11 percent addition for districts when research indicates that additional funding for economically disadvantaged students should be in the range of 80 percent to 100 percent. Does this seem confusing and inadequate? It does to many school district officials as well, as indicated in an external review released in 2010 in which respondents labeled aspects of the formula as “overly complex.”
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Perhaps the biggest flaw with the current funding model is that districts can raise additional educational funding off of their local tax bases. Since property values vary widely across districts, the current system allows wealthier districts to raise much more money than poorer ones. This creates the potential for systematic and unequal distribution of resources that will harm students in higher needs districts.
How do other states tackle these issues? Many use a pupil weighting system to allocate dollars instead of teachers. Pupil weights are funding categories that are focused at the student level so that students with additional needs are counted as more than one student. Some variation of this approach was recommended by a 2010 review of school funding commissioned by the General Assembly.
To address the inequality brought on by local district funding, other states provide tax subsidies to poorer districts. Sometimes called “guaranteed tax base” provisions, policies such as these link state funding not only to local taxing ability but also to local taxing effort.
School funding is often political but it does not have to be partisan; weighted funding models and guaranteed tax base provisions are in place in both red and blue states. Pundits are rightly concerned, however, about how current or future legislatures might utilize such a weighted student funding system. Future legislatures could implement a “follow-the-child” policy whereby weighted pupil funding amounts flow out of the traditional public system into public charters, homeschools, or even into the private system via weighted student vouchers, breaking the relationship between the public and its’ schools.
However, concerns about how legislators might abuse a revamped funding model for the state is not a reason to keep the current system in place. The current system is rife with its own winners and losers: winners who have a vested interest in maintaining the status quo and losers, typically poorer and overburdened with student needs, who have less voice with which to influence the process. A revamped funding model could be more transparent and therefore easier to improve in the future.
Experience shows that states change their school funding models infrequently; therefore, this opportunity is an important one for the state and should not be squandered. The conversation now occurring between the legislative task force on funding and the Governor’s Leandro commission is an important and timely one. It will profit the state to pay attention to this conversation, and improve or revamp the North Carolina school funding model.
Eric A. Houck is an associate professor of Educational Leadership and Policy in the UNC School of Education.