Back-to-school season is upon us, and although many charter schools are seeing increased enrollments, some aren’t receiving a corresponding increase in funding.

In 2023, the North Carolina General Assembly passed a budget that set aside $11.5 billion for K–12 education in 2023–24 and $11.8 billion in 2024–25. Those amounts covered many education-related spending items, including pay raises for teachers and other school personnel, money for the North Carolina Education Lottery Fund, and grants for school safety.

The 2023 budget also created a new method for funding public district and charter schools: the “funding in arrears” model. Under this model, schools receive funding based on the prior year’s actual enrollment numbers, rather than on enrollment projections for the upcoming academic year. Schools experiencing an uptick in enrollment are supposed to receive additional funding from an “ADM Contingency Reserve” to account for the added costs of educating more students.

The model works in theory, but not in fact.

In 2024, a budget stalemate is preventing lawmakers from making adjustments to the prior year’s budget, meaning that lawmakers have not transferred more funding to the ADM Contingency Reserve. As a result, there is not enough money in the account, and the North Carolina Department of Public Instruction (DPI) will not transfer additional state funding to charter schools that are now serving more students.

This will harm charter schools and the students who attend them for any number of reasons. Delayed funding could adversely affect charter schools by causing them to:

  • Fail to make payroll
  • Miss lease payments, potentially incurring late fees or defaulting on leases
  • Incur disciplinary consequences with DPI for failure to meet financial obligations
  • Receive a shorter charter renewal
  • Scrap plans to build or expand facilities
  • Borrow funds at high interest rates to meet financial obligations
  • Lay off teachers or other school personnel
  • Turn away students

Even as charter schools face this budgetary challenge, they continue to grow in number, type, and popularity. In fact, charter schools have become the fastest-growing sector of K–12 enrollment, according to recent state data. As reported in the News & Observer, enrollment in charter schools grew by nearly 5 percent from 2022–23 to 2023–24. Meanwhile, private-school enrollment grew by 3.5 percent and homeschool enrollment grew by 3.2 percent, while enrollment in traditional public schools declined by 0.4 percent.

Charter schools’ popularity is also reflected in the fact that more than 85,000 students were on charter school waitlists at the beginning of the 2023–24 school year.

The North Carolina House and Senate already agree on the amount of money ($95 million) that should be allocated to the reserve to cover growing public school units, but because of the ongoing budget stalemate, many charter schools across the state face a concerning financial challenge. To support charter schools and the students who attend them, policymakers should put aside their differences and come together to address the problem.