John Locke Update / Research Brief

Time for Constructive Dialogue about District School Facilities

posted on in City & County Government, Education, Education (PreK-12), Spending & Taxes
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Earlier this week, I participated in the first of three Hometown Debates, a debate series sponsored by The N.C. Institute of Political Leadership (NCIOPL).  The event featured yours truly, Senator Erica Smith-Ingram (D – Bertie, Chowan, Edgecombe, Hertford, Martin, Northampton, Tyrrell, Washington), Senator Rick Horner (R – Johnston, Nash, Wilson), and Matt Ellinwood, Director of the Education & Law Project at the N.C. Justice Center.

The question before us on Tuesday was: “should North Carolina increase the state’s role in financing local school construction?”  It is a critical question.  Unfortunately, few issues get less attention in the public debate about education policy than school facilities.

There appears to be a consensus that the facility needs of the state’s districts schools are not being met.  A recent report published by the N.C. Department of Public Instruction estimated that the state has over $8 billion in school facility needs over the next five years.  But there is little agreement about what to do to meet those needs.

Historically, the construction and renovation of school buildings have been the responsibility of local governments, and it remains that way today.  According to this arrangement, the county commission would coordinate the financing of capital needs based on the ability of the county to repay the debt using local option sales taxes and other sources of revenue.  School boards and district personnel would plan and oversee the completion of the projects.

That is not to say that the state does not play a role.  Lawmakers have authorized five statewide facilities bonds, the first in 1949.  The most recent was a $1.8 billion bond in 1996.  Since 1987, the state has also directed around $1 billion in corporate income tax revenue to a school construction fund.  In addition, since the start of the North Carolina Education Lottery in 2006, lawmakers have distributed a portion of lottery revenue to fund school facility needs.  This year, $100 million in lottery revenue will be divided and distributed to all school districts for school facilities.  Another $30 million in lottery revenue will be used for a new Needs-Based Public School Capital Fund.  The fund, which is scheduled to increase to $75 million next year, will be used exclusively for districts in counties that have a weak tax base due to a high concentration of poverty.

In terms of the state role in school capital outlay, only six states cover at least half of their public school capital expenditures.  Twelve provided no state-level funding.  North Carolina is typical of the Southeastern states.  According to the most recent “State of Our Schools” report, which is published annually by the 21st Century Schools Fund, the state share of total capital expenditures in North Carolina between 1994 and 2013 was 8 percent.  Alabama, Florida, Georgia, and Kentucky had higher state shares, although none that exceeded Kentucky’s 33 percent.  Louisiana, Mississippi, Tennessee, and Virginia had lower percentages.  South Carolina matched our 8 percent because they want to be like us.

While total spending on school capital approached $540 million in 2016, it is down significantly since 2009.  The drop in spending is one of the more striking effects of the Great Recession.  In 2009, districts spent nearly $1.3 billion on school facility projects.  A year later, it dropped to $430 million and bottomed out at $282 million in 2014 before rebounding to its current level.

There are no “set it and forget it” solutions to meeting our state’s school facility needs.  Even states that take a more active role in funding school capital expenditures have unmet needs.  Data from the “State of Our Schools” report suggests that there is no relationship between state-level funding and various types of capital needs.  So, it’s not a matter of simply asking lawmakers to pick up a greater share of the expense.

A better approach would be to actively engage with the state’s construction and development industries to find ways to leverage private resources for the benefit of public schools.  While several public-private arrangements have been proposed by lawmakers over the years, none has been satisfactory.  We will not be able to address all facility needs using public-private partnerships, but, surely, there is more that could be done.

Much of this discussion has focused on revenue.  But we need to mindful of spending.  Specifically, as the average cost of new school buildings climbs above $200 per square foot, we need to temper the expectations of parents, school personnel, and members of the community when it comes to the amenities included in (and outside) the school building.  Charter schools do not receive capital funds from the state or local governments and have demonstrated that students can thrive in a nondescript or “bare bones” facility.  Certainly, the same would be true of their district school counterparts.

Finally, county commissions need to do a better job of prioritizing expenditures.  Local government projects that promise big economic returns – sports stadiums, convention centers, theaters, public transportation, etc. – seldom deliver on those promises.  Although the construction and renovation of school buildings lack the allure of large-scale economic development projects, they are critical to the sustainability of the school systems that commissioners use tax dollars to fund.

I hope that the NCIOPL debate is the first of many discussions of this important topic.  Addressing our facility needs will require the cooperation of Republicans and Democrats, state and local governments, school boards and the N.C. General Assembly, and, most importantly, citizens that are invested in the betterment of their schools and local communities.

 

Terry Stoops is the Vice President of 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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