John Locke Update / Research Brief

Overview of the New N.C. Public Education Budget

posted on in Education, Education (PreK-12)
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The $23 billion state budget has passed in time for the start of a new fiscal year, and the largest part of that budget – over $9 billion – will be spent on public education.  While Democrats, advocacy groups, and the mainstream media have been (and will continue to be) critical of the education budget, it is the kind of prudent and thoughtful spending plan that we have come to expect from Republican lawmakers.

Budget writers included a 9.6 percent increase in teacher pay over the next two years.  In the coming year, teacher pay will increase by an average of 3.3 percent with $385 bonuses going to teachers with 25 or more years of experience.  This will be the fourth consecutive year of salary increases for teachers.  Starting in 2014, teachers have received average salary increases of 7.0 percent, 3.8 percent, and 4.7 percent.  At the same time, lawmakers have boosted funding for health insurance and retirement benefits, implemented pay incentives for certain teachers, and have expanded and diversified teacher recruitment and retention efforts.  If our goal is to raise student achievement, then targeted investments in our teacher workforce are a worthwhile pursuit.

The state budget is also attentive to the need to raise and restructure salaries for principals and assistant principals.  As lawmakers continue to address pay for school-based administrators, they should also begin to think about ways to assess and reward their performance.  This budget begins that process by funding performance bonuses for principals, but there is much more to be done to improve principal and assistant principal pay.

The new state budget also aims to reduce the public school bureaucracy by mandating cuts to central office administration and the N.C. Department of Public Instruction.  Overall, the budget cuts funding for central offices by 7.4 percent and reduces the appropriation to our state education agency by 6.2 percent.  At the same time, budget writers committed $19 million to modernize Department of Public Instruction business systems, eventually replacing a computer system that is a few steps removed from vacuum tubes.

Classroom textbooks and digital materials receive an additional $11.3 million.  Next year, school districts will receive close to $67 million to spend on instructional materials that they mostly purchase from for-profit companies and multinational corporations.  The budget also includes a $2.4 million bump for implementation of the Digital Learning Plan.  The recurring $6.4 million appropriations will fund professional development and, more importantly, cybersecurity and risk management services.

The policy wonk in me is stoked about the creation of a Joint Legislative Task Force on Education Finance Reform.  As I have written previously, North Carolina’s current allotment system is confusing and lacks transparency.  A student-based funding formula, which the task force will consider, would ensure that parents and other taxpayers know how many state dollars are allocated to each of our public schools.  More importantly, attaching the funding to the student may accelerate the expansion of public and private school choice by making the child, not the institution or its employees, the focus of the state’s education funding system.

Speaking of school choice, perhaps the crown jewel of the education budget is the creation of the “Personal Education Savings Account” program for children with disabilities.  Unlike a voucher that must be used for tuition and fees at a single private school, the $9,000 education savings account (ESA) will allow parents to customize the education that their children receive.  The ESA may be used to pay for one or more qualifying education expenses, including private school tuition, instructional materials, online courses, and other specified educational services.  Parents must sign an agreement to comply with all program requirements, and the state or a designated financial institution monitors all expenditures.

In 2017, over 11,000 children in three states, Arizona, Florida, and Mississippi, received an ESA.  Florida’s Gardiner Scholarship Program is the largest.  Two additional states, Nevada and Tennessee, have ESA programs.  Nevada’s program is on-hold due to litigation and Tennessee launched their Individualized Education Account Program this year.  Over the next year, the N.C. State Education Assistance Authority will set up the program and will begin awarding Personal Education Savings Accounts for the 2018-19 school year.

Increases to pass-through grants to specific nonprofit entities represent some less-desirable aspects of the budget.  All may do marvelous work, but a better approach would be to establish a competitive education grant fund that awards taxpayer money based on documented need, performance, and capacity or utilize Pay for Success contracts.  Fortunately, most of these grants are small, and all are funded with nonrecurring dollars.  Additionally, lawmakers should have been more mindful of salary increases for our most experienced teachers.

Budgets, whether created by lawmakers or families, are the negotiated allocation of limited resources to needs, wants, and obligations.  Budgets are never perfect, and certainly, the state’s biennial budget is no exception.  But it is sensible.  And I’d take sensibility over recklessness every time.

Terry Stoops is the Vice President for Research and Director of Education Studies at the John Locke Foundation. Before joining the Locke Foundation, he worked as the program assistant for the Child Welfare Education Programs at the University of Pittsburgh. ...

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