A new Joint Task Force on Education Finance Reform met for the first time on Wednesday, November 1st. It’s charged to study various weighted student formula funding models and develop a new funding model for the elementary and secondary public schools of North Carolina based on a weighted student formula. What follows is a summary of key issues identified during the presentation and discussion:

Senator Lee Chairing

Rep. Horn (Co-Chair): Doesn’t expect to get everything done during the committee time- encourages legislators to talk to people in their school district(s). Issue of what funds we have and when we have them- and how we distribute them. If we don’t distribute the funds properly, we are wasting the money.

Senator Lee: Purpose of today’s meeting- delve into PED report.

Sean Hamel: Program Evaluation Division Report – Presentation

Click to View Presentation: Allotment-Specific and System-Level Issues Adversely Affect North Carolina’s Distribution of K-12 Resources

  • Directive: Examine formulas the State uses to allocate resources to Local Education Agencies (LEAs) & charter schools for operation of K-12 public schools
  • Stakeholders: Department of Public Instruction (DPI), LEAs, Charter Schools
  • Twelve findings across two sections
  • Overview for each section’s findings

Recommendation to General Assembly:

The General Assembly should choose between

  1. Overhauling the allotment system by transitioning to a student-based model, or
  2. Reforming and modifying the current system

Many charts and graphs in slides, explaining allotments and other distribution and analysis (slide 5-8)

Findings of Report –

Section I: Allotment-specific issues (1-7)

Finding 1: Structure of classroom teacher allotment results in distribution of resources across LEAs that favors wealthy counties –>Resources follow the teachers

  • Salary schedule determines the amount allotted to LEAs: (See graph on slide 21)
  • High quality teachers are not evenly distributed
    • Teacher sorting –>more experiences and qualified teachers are more concentrated in wealthy districts
  • Structure of classroom teacher allotment results in more funding for wealthier LEAs à allotment does not cause teacher sorting, but structure of allotment results in more resources going to wealthier LEAs

Finding 2: Children with Disabilities allotment fails to differentiate based on instructional arrangements or setting required and contains a funding cap that results in disproportionately fewer resources going to LEAs with the most students to serve

  • Funding fails to obverse differences among students with disabilities –>funded at flat rate that doesn’t distinguish severity or setting
  • Children with disabilities are not uniformly distributed across state

Finding 3: allotment for Limited English Proficiency (LEP) students contradicts the principles of economies of scale and contains a minimum funding threshold that results in some LEAs serving LEP students without funding

  • Distorts funding
  • The concentration factor results in funding disparities across districts (see examples in graphic)
  • Minimum funding threshold leaves many LEAs unfunded for LEP students

Finding 4: Allotment for small counties is duplicative and is not tied to evidence regarding costs of operating small districts

  • Funding for small counties is unsubstantiated by formal cost analysis (see chart-slide 35)
  • Cost per student declines and flattens out as districts reach 2,000 students
  • Small county supplemental funding is duplicative –> Allotments with base funding disproportionately benefit smaller LEAs

Finding 5: Low Wealth allotment formula does not rely on the most previse means of calculating an LEA’s ability to generate local funding

  • Low wealth supplemental funding: provides supplemental funding to counties that don’t have ability to generate sufficient local revenue on their own to support public education
  • Adjusted property tax base per square mile –> Inaccurately assesses a county’s ability to generate revenue for education (see Hyde v. Gaston counties example, slide 40)

Finding 6: Allotment for disadvantaged students provides disproportionate funding across LEAs

  • Disadvantaged Student Supplemental Funding (DSSF) –> Indented to address capacity of LEAs to meet the needs of disadvantaged students
  • Began as a pilot in 2004 across 16 LEAs –> Results in disproportionate funding

Finding 7: Funding for central office administration has been decoupled from changes in student membership, creating an imbalance in distribution of funds

  • Decoupling the formula from changes in average daily membership (ADM) results in funding disparities

Section II: System-level issues (8-12)

Finding 8: NC’s allotment system is opaque, overly complex, and difficult to comprehend, resulting in limited transparency

  • Complexity can harm or help LEAs

Finding 9: Problems with complexity and transparency are exacerbated by a patchwork of laws and documented policies and procedures that seek to explain the system

  •  Policies and procedures are insufficient –> creates challenges with validating and understanding allotments

Finding 10: Allotment transfers –a system feature intended to promote LEA flexibility – hinder accountability for resources targeted at disadvantaged, at-risk, and limited English proficiency students

  • Transfers ensure flexibility –> Transfers can blur accountability
  • Transfers can challenge accountability

Finding 11: Translating the allotment system for funding LEAs into a method for providing per-pupil funding to charter schools creates several challenges

  • Translating funding for charter schools
    • Resource allocation model designed to provide funds to LEAs
    • Allotments are calculated on a per-pupil amount (lists factors on slide 57)
  • Several allotments translate poorly –> small county funding is designed to supplement for diseconomies of scale at district level, not the school level
  • Providing transportation is optional for charter schools – as a result, 49% of charters receive funds for services they don’t provide
  • Using first 20 days of ADM can result in decreased funding for charter schools (shows example on slide 59)

Finding 12: Using a weighted student formula is feasible and offers some advantages over the present allotment system, but implementation would require time and careful deliberation

  • Few states still use a resource allocation model
  • Weighted student formula –> four core characteristics (lists on slide 62)
  • Core components of weighted student formula –> Base amount & Weights
  • Benefits of using weighted student formula –> Adaptability, Efficiency, Transparency
  • Caution related to using weighted student formula –> the model is no panacea to solve all policy problems, shifts more control and flexibility to LEAs, and there is no plus and play model

Recommendations: Given current state of allotment system…

  • Option 1: Implement and funding system based on the weighted student funding model, or
  • Option 2: Reform the current allotment system


Senator Tillman- Current allotment system we have is totally antiquated. Let them have flexibility- they know what they need to do with the funds. Give them flexibility and dollars, rather than positions. How far away are we from doing something like that, and why can’t we simplify that and go toward more flexibility? It’s all about trust. Who are you going to trust – the school board and superintendent?

Hamel: Response to question regarding ADM for charter schools – info collected at the time showed two different procedures for charter schools and non-charter schools

Senator Lee: Reminder that a lot will be covered in committee, and point is to establish a baseline of education for committee – focus on where we are heading, rather than where we have been.

Rep. Johnson – Question about federal money and local money

Hamel – Scope of report is just state funding and allotments that are in your control

Rep. Johnson – Does that mean we cannot change the scope of this?

Senator Lee – The scope is broad enough

Rep. Blackwell – Agrees with Senator Tillman. Try to maximize flexibility with LEAs and let them make decisions based on local needs. As the same time, committee should give thought on how we set standards so flexibility doesn’t become an opportunity for LEAs to fail to meet the needs to the students. Also, would be advantageous for us to understand role of federal and local dollars so we know what they can and cannot do with utilizing those funds. Regarding other states that have gotten away from position alignments- how are their localities involved in establishing the payment schedules?

Rep. Lambeth – We should strive for flexibility, but should also be cautious. We can trust, but also need to verify. Weights is critical piece if we transition to that structure – would be helpful to know how other states have done it. Hold harmless is also important to include during transition period. Another key piece is transportation and how that’s handled in other states.

Hamel: Remember that all weights rely on the base. Transportation is typically carved out of base amount.

Rep. Horn – Will be a heavy lift, and it’s a very complex issue. Three questions:

  1. DPI revises allocations throughout year – who makes and approves that decision, and what’s that interaction between DPI and that person?
  2. Cap on children with disabilities – based on what data is this established?
  3. On federal funds, what do we know about federal mandates for those funds that they provide? Is there an overlap between federal and state funds, and how do those relate to flexibility?

Hamel – (Responding to questions, respectively)

  1. Alexa (w/ DPI) – Revisions to initial allotments – info is available after budget is passed, but timing and revenue necessitates adjustments. Initial allotments must be given within 10 days of budget passing.
  2. It was raised after looking at averages, which fluctuate. 12.5% isn’t uniformly distributed across all LEAs, so capping it across state is emphasized.
  3. This is just mechanics of state allotments (this will be addressed at a later meeting)

Senator Brown – Agree with flexibility, but we cannot manage what we cannot measure. We need to be sure we continue to measure and stay on top of the results. Also, there are some counties that pay no supplements, and others that pay a lot of supplements. It will continue to be an issue, especially as we work toward putting weights in place and as we try to get teachers to fill certain areas – particularly the poorly performing areas. Wealthy counties can afford the lobbyists, and you will be lobbied hard on this. You need to think about that as you work toward this process. Some of these small counties have no lobbying representation.

Presentation: Adam Levinson (CFO, NC DPI)

Click to View Presentation: Improving Public Education Finance in NC


  • Partnership for Continuous Improvement
  • Perspective/Context
  • Suggestions for Moving Forward

PED Study raises valid concerns – in agreement that system should be and can be improved (working with people in state and out of state, to see what makes the most sense)

Focus of work together should follow this pattern: Why –> What –> How

  • As a starting point, need to have clarity and alignment on the WHY (will force us to ask a lot of questions)
  • Framing the choices: Clarity, alignment on guiding principles –> policy decisions (words and terms we use will be important)
  • Getting technical: the WHAT (allotments, weights, mechanisms, requirements, etc.) will flow logically from guiding principles
    • Guiding principles to consider:
      • Equity
      • Stability/Predictability
      • Objectivity (based on research and evidence)
      • Transparency (based on clear logic, simple and practical/feasible)

…presentation was cut short due to misunderstanding of intended presentation.

Ending comments: NC DPI looks forward to working with NCGA and other partners, and stands ready to focus on moving forward, rather than looking back.

To view all documents & reports from committee meeting, click here.

Next Meeting: November 15th @ 9:30AM – Mike Griffith will be speaking about what’s going on around the country and what kind of results they’ve had, as well as unintended consequences.