Tuesday, March 5, 2024

School funding overhaul bill concerns state groups, school districts remain cautious

Senate Bill 670 would tear down the current method of school funding and build it up again with a different weighted-student model. (Courtesy Bradley Pearce/UNCW)

NEW HANOVER COUNTY — A Cape Fear senator introduced a bill to restructure the way the state funds school districts earlier this month, but some leaders of state organizations are wary of the proposed plan.

Senate Bill 670, sponsored by Michael Lee (R-New Hanover), Amy Galey (R-Alamance, Randolph) and Lisa Barnes (R-Franklin, Nash, Vance), would tear down the current method of school funding and build it up again with a different weighted-student model already used in other states. 

READ MORE: New Hanover rep sponsors bill to overhaul state education funding

The new model could simplify funding and give more flexibility to school districts in fund usage, however, critics argue Lee’s initial proposal is too rudimentary and needs additional work before it goes into effect. 

A weighted student funding model aims to allocate funding based on individual student needs. It specifies a base number of funding for each student in a district, then tacks on “weights” for certain groups, such as students with disabilities or economic disadvantages.

S.B. 670 does not establish a base amount, which Sen. Lee told Port City Daily earlier this month will be determined as the bill receives more input from legislators, but it does specify the weighted categories and their amounts. Populations receiving additional funds include kindergarten through grade 5, grades 8 through 12, economically disadvantaged students, small county school administrative units and exceptional children. 

The state uses a resource-allocation method in two parts, the first being designations based on staff count and operations per student. The other is categorical allotment; the state funds specific services, such as salaries, textbooks, or AIG students. If the money is specified in one category, for the most part it cannot be used for another purpose — which Lee’s bill changes. 

School districts would be given “maximum flexibility” to use the allocated funds for their goals, provided they do not violate federal guidelines if the bill passes. 

Earlier this month, Lee said his decision to introduce the bill came from a 2020 report from the Hunt-Lee Commission, a group of bipartisan legislators exploring how to improve student outcomes. 

“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 April 10. “And that is essentially the weighted student formula which most states use.” 

However, Kris Nordstrom, senior policy analyst at the North Carolina Justice Center, told Port City Daily that is not justification to refurbish the entire state funding model. He described it as a red herring for the real problem — the state’s underfunding of public education. 

“It overhauls our school funding system for no good reason,” Nordstrom said. “It’s really weird to think that one versus the other makes a difference versus the policy choices that are made within that model.” 

Nordstrom’s statement is supported by findings from a North Carolina Association of School Administrators 2017 report that stated the “existence of a weighted student funding model does not prevent a state’s finance system from becoming inadequate, inequitable, or overly complicated.” 

By adding up each allotment and dividing the total by the number of the students, would output a base amount to be used in a weighted model — two different ways to say the same thing.

“There’s no new funding associated with a bill, it’s just changing the distribution with an existing fund,” Nordstrom said. “Even though you know, our school funding efforts are last in the country.” 

According to EdNC, the state’s per-pupil funding level in 2022 was $10,791 — $4,695 below the national average and ranking it 48th for funding level in the United States. North Carolina’s funding levels have decreased by approximately 10% since 2008, when adjusted for inflation.

In an email to PCD on Tuesday, Lee said it was impossible to know whether the weighted model will generate more funding until the assembly establishes a base per capita amount and the additional weights.

As for the goals of the model change, Lee pointed to a 2015 report from 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 a task force — co-chaired by Lee — to address the PED report’s findings and explore weighted student formula funding models. With their last meeting in 2018, there was not a clear path forward. 

Nordstrom, who was part of the General Assembly’s fiscal research division at the time, said the PED “always wrote their reports to conform to the biases of their chairs.” 

“They never were able to identify what their goals were,” Nordstrom said. “They were never able to identify what the problems were. There was no consensus.”

Nordstrom also points out there is no wealth equalization component worked into the bill to ensure the funding is distributed equally between larger, often wealthier, school districts and rural communities. 

On Tuesday, Lee disputed this, stating the economically disadvantaged student weight is intended to prevent as much. For each economically burdened student, as defined by a public school unit, the district would receive 38% more than the base amount. 

Under the current model, the state includes a base amount in an allotment, plus additional funding for certain groups in another allotment. On top of that, it distributes supplemental funding for low-wealth and small counties, plus the opportunity for state grants.

Lee’s bill establishes a base amount and weights for certain groups, but does not stipulate additional funding outside of that model, although many states with weighted formulas do.

According to Nordstrom’s research, both Charlotte-Mecklenburg and Wake counties would see their state funding increase 3.5%and 4.5%, respectively. Meanwhile, Hyde and Tyrell counties’ funding would decrease 50%and 43%, respectively. 

“It becomes less equitable for Black students, less equitable for economically disadvantaged students, less equitable for students with disabilities,” Nordstrom said. 

A 2019 study done in Texas showed the transfer of nearly $3.4 billion from wealthy to poor school districts did not result in lower academic achievement among the students of rich school districts. It did result in modest performance improvement in poor districts. 

“There’s no state in the country that fully distributes all of its money via a weight to the formula,” Nordstrom said.

Bruce Mildwurf, director of government relations at the North Carolina School Boards Association, said some district leader have started to panic over the bill’s potential changes, but in his opinion it’s not time to ring the alarm bells yet. 

“My first thought was that it’s an attention-grabber,” Mildwurf said. “This bill, I don’t see as the end game, and I don’t think [Lee] does either because there’s just so much that goes into this.”

Tuesday, Lee described the bill as a “good framework and starting point” for a broad discussion with stakeholders on how to move forward.

Mildwurf said it is too early to debate its components because it isn’t in “workable” condition yet. But he has seen broad support for more flexibility in fund usage from districts across the state, which the bill allows. 

“There are so many restrictions, so many regulations,” Mildwurf said. “If the administration wants to move money, if they see a weakness that they want to address, — if there are certain mental health issues in a specific school where they want to hire a certain position — in many cases they can’t.” 

He noted charter schools — also public institutions receiving state funding — have the latitude to move their money around. 

The bill curbs pitfalls of that privilege — using funds intended to boost one group for another purpose — by mandating certain teacher-to-student ratios and requiring districts to submit biannual reports on that data. 

According to a 2019 report from the U.S. Department of Education, districts that used a weighted model reported 53% of their total operational spending was under school discretion, compared with 8% in districts that used another model. By having the money “follow the child” rather than faculty and staff, districts will be able to fit their funding to their need to educate a child, instead of trying to make do with cookie-cutter molds. 

Under the current model, an allotment for a teacher with a master’s degree is the same as a teacher fresh out of school; the district is limited in using that excess funding from the latter for another need.

Mildwurf said now that the bill was on the table, stakeholders could collect their thoughts and, hopefully, local districts could be brought to the table to discuss them. He said the NCSBA has been seeking feedback from its 115 representatives of the state’s school districts. 

“I think it’s fair to say that what we’re hearing goes along with what I’ve said, is that we’re not going to jump to conclusions,” Mildwurf said. “We’re going to see how this develops because we recognize where this is in the process.”

If passed this session, Lee’s bill is set to take effect next school year — a feat Mildwurf said was concerning. However, Lee told PCD earlier this month the timeline would be sacrificed to get the legislation right for everyone involved. With its initial roll out, it would most likely only be through a small group of districts, he added.

New Hanover County school board member Josie Barnhart told Port City Daily she does think the allotments at the state level are “messed up” and would be open to discussing participation in the pilot with district staff. 

Fellow board member Stephanie Walker has researched the funding model a little, but said she cannot yet give a solid opinion on if it’s right for NHCS. 

“I have asked for further research to be had through the NCSBA and will ask legal to give an analysis,” she said. “Until there’s greater clarity, we won’t know for sure.”

In its report, the North Carolina Association of School Administrators notes there are innumerable pros and cons to the weighted student funding model. As observed in other states, none have implemented a clean simple version, and a successful plan involves frequent reevaluation. 

According to Nordstrom, the Leandro plan already outlines a path to a equitable weighted student funding model. 

In September 2020, a judge ordered the state to develop and submit to a remedial plan to be fully implemented by the end 2028. This was determined after several court rulings, beginning with 1997’s Leandro v. State of North Carolina, that found the state was not funding public schools in alignment with the state Constitution’s guarantee of a right to a sound, basic education. 

The plan calls for the state to fund a study to determine how to phase-in a weighted student funding formula that retains position allotments. It also mandates the state  increase in investment in overall spending and give budgetary flexibility by lifting restrictions on several critical allotments, among other financial and nonfinancial obligations. 

Though commanded by the courts, there have been additioinal litigation over whether the judicial system has the authority to order the legislature to fund anything. 

In November, the North Carolina Supreme Court upheld that the legislature must fund years two and three of the remedial plan, calling for $5.6 billion in new annual education funds to be spent by 2028.

The plan awaits funding in the General Assembly budget. 

Reach journalist Brenna Flanagan at brenna@localdailymedia.com 

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