Education budget shocker could alter the fundamentals of NC school funding

When GOP leaders in the General Assembly unveiled their privately-crafted $23.9 billion budget Monday night, the biggest surprise wasn’t its proposals for teacher pay or another round of tax cuts.

No, the real stunner came in a three-page provision starting on page 257 that authorizes North Carolina municipalities to spend property tax revenues on any public school that “benefits the residents of the city,” including charter schools. It’s a massive, and little debated, overhaul of the state’s longtime funding method that has the potential to drastically alter K-12 funding, and not for the better, advocates say.

“This is a monumental policy shift in North Carolina,” says Scott Mooneyham of the N.C. League of Municipalities, an organization that advocates for nearly all of North Carolina’s 552 cities, towns and villages.

Currently, the state’s 115 school districts rely on county and state government to fund their needs. But the surprise budget provision—which Mooneyham says was never discussed with his organization—would allow willing municipalities to supplement those funds for certain schools. It’s a controversial change tied inextricably to a push from some leaders in suburban Matthews to form their own municipal charter school apart from the county system, Charlotte-Mecklenburg Schools (CMS).

And in a state that’s long-struggled to reconcile major K-12 funding differences between its wealthier and poorer counties, it may only make matters worse, experts say.

“You’re likely to see more battles between the ‘haves’ and the ‘have-nots.’ And if history tells us anything, the ‘have-nots’ usually lose,” said Keith Poston, president and executive director of the Public School Forum of North Carolina. Every year, Poston’s organization publishes a report on the growing gaps in K-12 funding between affluent and poor districts.

The statewide policy change comes in the midst of the still-roiling Leandro court case, a pivotal N.C. Supreme Court decision that, in 1997, found the state had failed to provide a “sound, basic education” to all, regardless of locale.

It’s unclear who authored the budget provision. The 267-page document was created behind closed doors by Republican leaders in the House and Senate. It’s almost certain to pass too, given the GOP issued the spending plan as a conference report on a bill previously approved by both chambers, meaning lawmakers cannot offer amendments to the plan. They may only vote for or against the proposal, an unprecedented move that’s angered many in the legislature.

Rep. Bill Brawley, the Matthews Republican who’s spearheading a simultaneous push for House Bill 514 to clear municipal charters outside of Charlotte, did not respond to Policy Watch interview requests Wednesday.

But lawmakers say House Bill 514—which passed two Senate committees Wednesday over fierce Democratic objections—and the statewide budget policy are deeply connected. The latter comes days after a report produced at the request of Charlotte school system leaders suggested that municipalities like Matthews might lack the statutory power to finance their own charters.

House Bill 514, as approved Wednesday by the Senate’s education and rules committees, applies to the Charlotte suburbs of Matthews, Huntersville, Cornelius and Mint Hill. The “local bill” passed the state House last year on partisan lines, and while supporters insisted the measure addressed Charlotte only, critics said it may only spur similar efforts in the suburbs of other large school systems.

But the new budget policy would allow cities across North Carolina to spend on any public school located within their borders, clearing spending on charters, UNC laboratory schools, and schools under the control of a local board of education. Municipalities could fund school operating expenses or lease school facilities.

But the proposal has spurred criticism from some Democrats and advocates who say the idea’s fraught with complications.

“Both of these are terrible ideas for North Carolina,” said Poston.

Rep. Becky Carney, an eight-term Democrat from Charlotte, said it may only pass along schools’ needs to cities.

“This is a drastic move without enough of debate and input,” said Carney. “And I’m saying this in all sincerity, this is a big move. We all ought to be thinking about this.”

Indeed, Mooneyham said his organization worries that the shift would only place a greater burden on municipalities, creating a “cascading effect” whereby local school districts would now pass on their needs to municipal governments rather than relying solely on the state and counties.

And while counties differ widely in their size and tax bases, Mooneyham says counties are still more “uniform” in their capacity to fund schools than municipalities.

“This state has over 550 municipalities in it, ranging from Charlotte and Raleigh to ones with two or three employees operating on shoestring budgets,” he said. “There’s not an apples to apples comparison.”

Mooneyham also questioned whether the policy change would run afoul of the state’s constitutional obligation to provide an equal opportunity for all students. “Would it exacerbate these issues related to inequities between poor and wealthy counties?”

Michael Griffith is an expert in states’ K-12 funding models with the nonpartisan Education Commission of the States.

This week, Griffith said he was not aware of the new North Carolina budget provision, although he noted it wouldn’t be unprecedented, pointing to similar proposals for school reforms in some affluent cities in Florida, which also relies on countywide school districts much like North Carolina.

“Cities within those districts want to use their own money,” he said. “They don’t want to share it. They want to keep it, and it tends to be the wealthier suburbs.”

Griffith said that such proposals are likely to generate “pushback” over the implications for the equality of school districts.

“What you can see happening is when you talk about separation, you usually talk about separation of the wealthy part of the district from the poor part,” he said. “It becomes racial pretty quickly. It becomes divided on class lines and on racial lines.”

Racial and class divisions play a key part in the debate over House Bill 514 too, which passed two committee votes in the Senate Wednesday and is still due for a vote in a Senate pension committee. Leaders in the Charlotte suburbs say they want more control of their schools, and may even look to “secede” from CMS, the state’s second-largest school system.

Yet critics point out any municipal charters established in the Charlotte suburbs would serve predominantly white and affluent families, particularly in comparison to the more diverse enrollment found in schools inside Charlotte city limits.

“We have tried so hard to get rid of segregation in this state,” Sen. Joyce Waddell, a Charlotte Democrat, told lawmakers Wednesday.

“It’s going to be very much unequal,” added Sen. Erica Smith, a Democrat representing counties in eastern North Carolina, who argued that the move would only set back integration efforts ordered in the U.S. Supreme Court’s 1954 Brown v. Board of Education decision.

Smith’s comments prompted a sharp response from Sen. Bill Cook, a Republican representing several coastal districts. “Nobody’s trying to bring back segregation,” snapped Cook. “That’s ridiculous.”

Yet it wasn’t just Democrats who blasted the municipal charter bill Wednesday.

Sen. Rick Horner, a Wilson Republican, called the proposal a “vast departure” from current charter law, which allows residents to attend charters regardless of attendance lines. Brawley’s bill would allow a municipal charter in Mecklenburg to give enrollment priority to residents of Matthews, Mint Hill, Cornelius or Huntersville.

Sen. Jerry Tillman, a Randolph County Republican and former school administrator, also questioned the idea, arguing that “cities don’t know a damn thing about running charters.”

Tillman, however, said he would ultimately vote for the bill. “If these four cities want to screw themselves, I’ll vote for it,” he said.

Brawley dismissed many of the concerns as criticism of a “mythical” bill. “I don’t see how it has the sweeping effects people fear,” he said, adding that no parents or municipalities will be forced to take action.

Meanwhile, lobbyists for both the N.C. School Boards Association (NCSBA) and the N.C. Association of School Administrators called on legislators to step back, lest they risk touching off similar battles in districts across North Carolina.

“We do not typically get involved in local bills unless they are precedent-setting,” said Leanne Winner, NCSBA director of governmental affairs. “And today, you have before you a bill that is definitely precedent-setting.”

Winner said her organization has not taken a position yet on the statewide budget provision relating to municipal school funding, although she too acknowledged the significant impact such a change would have in North Carolina.

And to Poston, that impact would not be positive for North Carolina’s poor districts.

“Our country put the idea of ‘separate but equal’ to bed a long time ago,” he said. “Except for, it seems, in North Carolina. It’s sad.”

Senate lawmakers were in the midst of discussing the budget conference report at press time Wednesday. House legislators were expected to discuss the budget plan Thursday and Friday.