SOUTHEASTERN N.C. — Local districts have been left out of a large pot of state money for facilities despite massive capital needs.
Brunswick and Pender counties both applied for $40-million grants to help pay for upcoming middle school construction projects, but after two rounds of funding this year the districts came up empty handed. New Hanover County did not qualify to apply.
Every year the North Carolina Department of Public Instruction takes millions in state education lottery funds and gives it to a handful of districts to help them build schools.
The program, dubbed the Needs-Based Public School Capital Fund, was started in 2017 by the N.C. General Assembly, in a bid to increase the percentage of lottery proceeds going to schools from 16.9% to 40%. None of the Cape Fear school districts qualified for the program at the time because it was restricted to poor counties that fell into the North Carolina Department of Commerce’s “Tier 1” designation, indicating they are the most economically distressed in the state.
The department bases the rankings on the average unemployment rate, median household income, population growth and property tax base. New Hanover, Brunswick and Pender counties all fall into Tier 3, or least-distressed category.
DPI awarded four grants in 2017, totaling about $30 million. Of those awards, the vast majority went to two districts. In 2018,the state opened up the grants to Tier 2 counties and distributed $140.5 million, but all the grants still went to Tier 1 counties.
Fast-forward to a memo from DPI sent to districts in December 2021 and the new state budget made massive changes to the program. The grant award limit went from $15 million to up to $50 million to build a new high school. The state expanded how the grants can be used to include additions and repairs, the local match on the grant was cut, and 95 of the state’s 100 counties were made eligible. The program used to have some strings attached as well.
Prior to the 2021 budget, districts awarded a grant would not receive regular annual lottery distributions for five years and could not reapply five years thereafter as well. The pandemic delayed last year’s grants, so two rounds were awarded under the new rules this year: $400 million in May and $300 million in September, respectively.
Why did the Cape Fear districts get passed over?
This year’s awards heavily favored school districts in poor counties. Of the grantees, 20 awards went to districts in Tier 1 counties, 14 went to districts in Tier 2, and only three went to Tier 3. No Tier 3 districts were awarded money in the latest round in September.
New Hanover County Schools did not qualify this year. Any county with a tax base of more than $40 billion was already out. The county’s latest tax assessment in April took the base from $30 billion in 2017 to more than $43 billion in 2021.
PCD requested a list of every district that applied this year and a copy of Pender County’s application. The NCDPI provided a list, but advised to reach out to the district directly because some applications contain “what could possibly be viewed as proprietary material.” In total, 69 districts applied, some with multiple submissions for collections of smaller projects.
NCDPI spokesperson Blair Rhodes said because of the amount of interest in the program this year, the department offered webinars to cover other frequent questions, like eligibility and the valuation process. She pointed to the criteria outlined in the application itself.
This is what the department favored in this year’s program, per the application:
- Counties which received money in the past but have not begun construction on their project
- Tier 1 counties
- Counties with a lower amount of revenue generated by each cent on the tax rate
- Debt and revenue
- How much impact a project will have
- New construction or total renovations
- Consolidating more than one school into a single new facility
- Not receiving a grant in the past three years
Pender’s submission hit on a number of those points, noting all seven of its eastern schools are overcrowded. It also has hundreds of millions in upcoming capital needs, according to a report produced in 2020 ,and its “student space crisis” has forced the district to move the fifth grade at Topsail Elementary School to Topsail Middle, effectively making it a 5-8 school.
“Without immediate attention Pender County Schools will struggle and/or fail to meet housing needs for incoming students, as well as fulfill legal class size mandates,” the application denotes.
The district is experiencing rapid enrollment growth. In 2019 it had 9,640 students, and barely took a hit when the Covid-19 pandemic began in 2020, dropping to 9,539. In 2021 its enrollment climbed to 10,104, and this year the district is estimating 10,800 students, though that number is subject to change.
The district is trying to push through a $178 million bond referendum in November that would pay for two new schools, additions, renovations, construction of a new central office, and maintenance building.
“It always seems that it goes to places that are not necessarily having some of the growth issues we are,” Pender County school board member Don Hall said at the Oct. 11 meeting.
Administration attributed the issue to the large number of districts that applied for the grant.
Hall said he plans to sue to get more information on why the district did not get funding, despite its continuing capital challenges and growth at the meeting. The district currently teaches fifth graders at Topsail Middle because of overcrowding at Topsail Elementary.
Hall said he submitted a public records request to the state to get a copy of every application submitted for the program this year and did not hear back.
“So far they have not responded, so it is my plan to probably file a lawsuit against them so we can see what the rest of the stuff looks like and use that to compare for next time,” Hall said at the meeting.
Hall declined to comment for this story last week, noting he would share more of his thoughts once he reviews the applications. He did not respond to a follow up on Tuesday.
Brunswick County Schools, meanwhile, is estimating $290 million of its own capital needs through 2027 and is experiencing rapid enrollment growth as well, albeit at a slower pace than Pender. From 2022-2023, Brunswick’s enrollment jumped from 12,519 to 12,844. Brunswick applied for money to build a new K-8.
Spokesperson Gordon Burnette said the district did not receive any feedback on its application other than being made aware high-need counties had priority.
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