Public School Finance

Will Rogers said, "Lord, the money we do spend on Government and it's not one bit better than the government we got for one-third the money twenty years ago." This is especially true for money that we spend on public education. Despite a 260 percent increase in inflation-adjusted per-pupil spending since 1970, it has become clear that more money alone will not yield better results.

Key Facts

  • North Carolina spent approximately $8,500 per K-12 student in federal, state, and local operating funds in 2012. When average spending for buildings and other capital costs are included, the total cost of public education in our state exceeds $9,000 per student.
  • Local public school funding has posted a 33 percent ($662 million) increase since 2001. Federal funding to North Carolina public schools has nearly tripled during the same period, thanks to significant increases in No Child Left Behind, special education (IDEA), and stimulus (American Recovery & Reinvestment Act) funding.
  • State public school funding has increased by approximately 32 percent, from $5.7 billion in 2001 to $7.5 billion in 2012.
  • As in most states hit hard by the Great Recession, North Carolina's state education funding remains lower than 2007-09 levels. Nevertheless, total funding in 2011-2012 was higher than that of the two preceding school years.
  • Between 2006 and 2009, the N.C. General Assembly added over $800 million to the state public school budget but failed to maintain that level of funding between 2009 and 2011. By the time the 2010-2011 school year arrived, the legislature had reduced the public school budget to pre-2006 levels. In 2011, the General Assembly increased total state education funding to $7.5 billion, which was higher than the 2006 appropriation of $7.37 billion.
  • According to Rankings of the States 2011 and Estimates of School Statistics 2012, an annual publication of the National Education Association (NEA), North Carolina ranks 42nd in total per-pupil expenditure (state, local, and federal funding) for the 2011-2012 school year. The 2011-2012 ranking is higher than the state’s rankings for the 2010-2011 (45th) and 2009-2010 (43rd) school years.
  • State funding is not distributed to all public school children equally. State and federal agencies allocate funds based on the needs, circumstances, and grade level of each student. During the 2011-2012 school year, for example, small, low-wealth school systems received $11,401 in state funds for each special-needs elementary school student with limited English proficiency from a low-income family. If the same child lived in a higher-income district, the state provided the school an allotment of $10,416. Federal funding may add up to an additional $7,095 per elementary student, depending on program eligibility.
  • The state has contributed over $2 billion for capital expenditures since 1995. School districts, which are responsible for financing their own capital programs, have spent almost $12 billion during the same period. Taking into account all sources of revenue, school districts have spent nearly $14 billion for school capital expenditures since 1995.

Recommendations

  1. Require school districts to post budgets, check registers, contracts, and other public documents online. In addition, districts should be required to report per-pupil expenditures by school and grade level.
  2. Discontinue the confusing practice of allocating funds to each school district using various funding formulas. Give school districts the freedom to allocate education funding according to the unique needs and circumstances of the district. This could be achieved by utilizing a block grant funding system to distribute state funds to school districts.
  3. Alternatively, change the way that North Carolina funds public education by attaching funding to the student. Coupled with open enrollment for schools statewide, student-centered funding will ensure that schools of parents' choosing receive funds necessary to educate each child — nothing more, nothing less.

Analyst: Dr. Terry Stoops
Director of Education Studies
919-828-3876 • tstoops@johnlocke.org

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