Education
Recommendation
Local government appropriations to school districts should be tied to performance-based measures and innovative practices that ensure sound expenditure of local tax dollars.
Background
According to state law, local governments have two primary responsibilities related to the public school districts within their jurisdiction. First, local officials must examine all information bearing on the financial operation of the local school district to determine how much local tax revenue to appropriate to the district. Approximately 24 percent of total spending on public education in North Carolina comes from local sources.
Second, county commissions have the right to acquire property lawfully on behalf of a board of education, as well as construct, equip, expand, improve, or renovate property for use by a local school system. They also have the power to allow school systems to build schools on property owned in fee simple by the county or to purchase or lease property from the board of education. Local government officials typically empower the school district to manage the school facilities program, while school districts rely on county commissioners to approve debt in the form of certificates of participation (do not require voter approval) or general obligation bonds (require voter approval).
The state also permits local governments to impose local optional sales taxes, land transfer taxes, and other supplementary taxes to pay for school facilities. In addition to taxing authority, the state provides lottery and corporate income tax revenue to counties for their school capital needs. North Carolina's local governments spend an average of $900 million every year on school facilities, which represents nearly 80 percent of all public school capital expenditures in the state.
General principles
While school boards control much of the educational, organizational, and financial operations of school districts, local governments can guide districts toward maintaining an efficient, responsive, and high-performing public school system.
Principle No. 1. Local governments should closely monitor county appropriations to school districts and measure the effectiveness of the funding. For the 2006-2007 school year, local governments in North Carolina allocated nearly $2.7 billion, or an average of $1,934 per pupil, in county appropriations, supplemental taxes, and other revenue sources for public schools. Given the amount of money involved, local government officials have the responsibility to monitor and hold school boards accountable for the use or misuse of local tax dollars allocated to school districts.
Principle No. 2. Local governments should pay special attention to spending on school district personnel. Salary and benefits for school personnel represent the largest single category of expenditure by local government in North Carolina. Last year, local governments spent $1.67 billion on salary and benefits for school personnel, accounting for approximately 62 percent of their total expenditures on public education. The use of local funds for the salary and benefits of teachers, administrators, and other personnel should be closely tied to various performance measures, as well as adjusted to reflect yearly enrollment changes. Specifically, school systems should use outcome-based measures, including test scores, to reward the efforts of successful teachers and administrators. Local funds should also be used to attract highly qualified science, mathematics, and special education teachers to low-performing schools.
Principle No. 3. Local governments should minimize the amount of debt incurred for school capital expenses by offering incentives to school districts to use proven, cost-efficient solutions that do not burden county taxpayers and enhance educational opportunities for students. Last year, local government debt service for school facilities reached $588 million, the result of debt financed to maintain costly school construction programs. Charter schools, public-private partnerships, adaptive reuse buildings, ninth-grade centers, satellite campuses, and virtual schools allow school districts to increase school building capacity faster and cheaper than conventional school construction and renovation methods permit.
Taking the guessswork out of the budget process
Local governments should revise the budget process to include a host of quantifiable or measurable goals and specific strategies used to achieve those goals. The state and federal government provide several measures of student achievement, but they do not provide enough information to anyone attempting to determine whether a school district uses its local funding to increase student performance.
Thus, local governments should require school districts to supplement state and federal data with annual studies, audits, and surveys, providing a comprehensive assessment of school district performance. This data would provide measurable goals that form the basis of a sound budget process that ultimately determines whether school districts spend local tax dollars wisely.
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