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Thursday, May 23, 2024

New Hanover rep sponsors bill to overhaul state education funding

Local districts could choose to participate in pilot

The North Carolina General Assembly in Raleigh. (Port City Daily photo/Courtesy NCGA)
New Hanover County’s Sen. Michael Lee introduced his education funding overhaul bill in the North Carolina General Assembly on Monday. (Courtesy NCGA)

NEW HANOVER COUNTY — Budget season persists at the local and state level; top of mind for many leaders is education funding. 

Sen. Michael Lee (R-New Hanover) introduced several education bills that reduce the barriers to school building and university enrollment; however, the bill with the most implications involves a complete overhaul of the way the state funds local school districts. 

READ MORE: More staff reductions, divisions to shave off $1M to balance NHCS budget

Senate Bill 670 would eliminate the state’s current resource-allocation method. North Carolina uses a hybrid system with two parts, the first being allocations based on staff count and operations per student. The other is categorical allotment, of which the state has around 50 pots of money dedicated to specific services, such as salaries, textbooks, or AIG students.

In its place would be a weighted student model. The General Assembly would agree on a base level of funding for each student, then tack on additional funding for certain groups, such as students with disabilities or economic disadvantages.

The origins of Senate Bill 670 began more than seven years ago with the Program Evaluation Division, a now-defunct unit of the state’s Legislative Services Commission. The division found issues with the state’s 2014-2015 allotments — “unintended consequences” from the current procedures and a “lack of rationale” in determining how resources are distributed.

The problems extended beyond that school year; the division found deficiencies were present in the overall system, resulting from its complex makeup and lapses in oversight. 

In 2017, the General Assembly put together the Joint Legislative Task Force on Education Finance Reform; Lee was then the co-chair. The bipartisan group was charged with exploring weighted student formula funding models and developing one for North Carolina. The task force’s final meeting was in 2018 with no decisive action to move forward. 

Lee told Port City Daily he decided to pick the issue back up when he was reelected in 2020. Co-chairing the Hunt-Lee Commission, Lee and a group of bipartisan legislators explored how to improve student outcomes; the commission’s final report included 16 recommendations.

“And as a part of that report, we kind of went back and said, OK, we’re one of only a handful of states to still use this resource allocation method, we should use a different method,’” Lee said. “And that is essentially the weighted student formula which most states use.” 


According to data compiled by Georgetown professor Marguerite Roza for the task force, most states have moved to that model. As of 2018, Delaware, Idaho, Washington, and Tennessee, along with North Carolina, were the last holdouts still funding their schools based on staff counts rather than students. 

According to Roza, North Carolina’s current system creates inequitable spending across students and schools, limits district flexibility in use of resources, and inhibits innovations that make tradeoffs between staff and other purchased resources.

Senate Bill 670 stipulates school districts will receive a base amount for every student it enrolls.

On top of the base amount, districts will receive more money for based on the following non-exclusive factors: 

  • Average daily membership in grades K-5 will get an additional 31% of the base level
  • ADM in grades 8-12 will get an additional 29% of the base level
  • Economically disadvantaged students will get an additional 38% of the base level
  • ADM in small county school administrative units will get an additional 32% of the base level
  • Student headcount of exceptional children will get an additional 130% of the base level
  • Student headcount of academically or intellectually gifted students will get an additional 4% of the base level
  • Student headcount of limited English proficient students will get an additional 10% of the base level

The bill also grants large latitude in how the district spends its state allocations. Instead of designating funds for specific purposes — i.e. AIG students — the bill states: “the local board shall provide maximum flexibility to schools in the use of funds to enable the schools to accomplish their goals.” 

Yet to be determined though: the base number. 

“That’s the question,” Lee said. “So the glaring thing that’s missing from here is how do we get to that base number? And so the reason for introducing this bill was so that we could start working through this process.”

Lee added it doesn’t make sense for just the senators sponsoring the bill — Sen. Amy Galey (R-Alamance, Randolph) and Sen. Lisa Barnes (R-Franklin, Nash, Vance) — to decide an adequate base amount without discussing with the legislature.

In the 2018 data from Roza, North Carolina’s average basic per-pupil allocation was estimated at $4,370. 

PCD asked Lee whether the new allocation model will result in increased state funding for school districts. He said it was hard to tell at this early stage.

“In order to know what is adequate, you have to know how much you’re spending today for these various populations,” Lee said. “And the way that the distribution works right now, it makes it really difficult to determine that.” 

Lee cited an example, of learning funding for children with disabilities was placed elsewhere: 

“We found out that allotment was being moved into other areas, the allotment for limited English proficiency or English as a second language.”

Another important component of the bill addresses how school administrators will spend state allocations and track them. The bill requires biannual reports on how teachers are paid and on student-teacher ratios.

“With flexibility, you need to have some accountability so that you can make sure that the funds are being distributed in a way that’s consistent with the policies of the state,” Lee said. 

The bill mandates schools must maintain certain teacher-student ratios for kindergarten, through third grade, unless otherwise granted by the state. For kindergarten, one teacher is required per 18 students, first grade mandates one teacher per 16 students, second grade requires one teacher per 17 students, and third grade calls for one teacher per 17 students.

According to Lee, the reports will prevent the bill’s freedom to use funds for different purposes from resulting a lack of funding for certain groups or services.

On Monday, the bill was referred to the rules committee. Lee said he hopes to pass the legislation this session but won’t rush it to be ready in time. 

If and when it does pass, Lee’s said most likely only a few local districts will try out the model first. He said the route would be to let districts elect whether to participate in the initial rollout, with an incentive of increased flexibility with funds. 

As the bill moves through the General Assembly, Lee said he is confident of its bipartisan support. 

“I have spoken with several legislators and several legislators on the other side of the aisle — I think that they are also supportive of the weighted student formula,” Lee said. “The one thing that we don’t have in this legislation that will be necessary is to make sure that we have the appropriate transition funds in place as we transition to a new model.” 

In the meantime, the Republican-controlled state legislature will continue to draft its budget for the next two fiscal years with education dollars following the same pattern.


Reach journalist Brenna Flanagan at brenna@localdailymedia.com 

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