The Pulse

Two new reports confirm gross inadequacy of North Carolina’s public school funding

By: - December 15, 2022 1:30 pm

North Carolina’s school funding system is among the worst in the nation, according to two new reports from the nation’s leading school finance experts. New reports from the Albert Shanker Institute (ASI) and the Education Law Center (ELC) assess every state’s school funding systems across multiple quality measures. Both reports reach the same conclusion: North Carolina’s legislators are failing students by spending so little, and not doing nearly enough to ensure that all students across the state have equal opportunity to thrive.

The ASI report, “The Adequacy and Fairness of State School Finance Systems,” assesses states’ school funding systems along three criteria:

  1. Statewide adequacy compares how much a state spends on public schools against the estimated amount a state would need to spend to reach U.S. average test scores. North Carolina ranks dead last among the 49 states assessed on this measure. The authors’ estimates show that 92% of North Carolina students attend underfunded districts and that closing North Carolina’s funding gap would require $5.4 billion in new funding.
  2. Fiscal effort assesses the extent to which states leverage their ability to raise school revenue by comparing total state and local school expenditures against each state’s gross state product (GSP). North Carolina ranks 46th on this measure. As the authors note, “low effort states with widely inadequate funding, such as…North Carolina, are essentially choosing to underfund their schools, as they have the capacity to raise more revenue.”
  3. Equal opportunity measures the degree to which adequacy varies between districts in each state by comparing adequacy in states’ highest-poverty districts with that in their lowest-poverty districts. North Carolina’s educational opportunity is deemed moderately unequal.

ASI ranks North Carolina’s school funding system 47th out of the 48 states with a possible rating.

Similarly, ELC’s report, “Making the Grade 2022,” ranks each state across three measures:

  1. Funding level is the amount each state spends on schools, adjusted for regional labor cost differences. North Carolina ranks 47th out of 50 states on this measure. Meeting the national average would require a 43% increase in funding.
  2. Funding distribution examines how funding in high-poverty districts compares to funding in low-poverty districts. North Carolina’s funding distribution is moderately progressive, with per-student funding in high-poverty districts about 5% higher than funding in low-poverty districts. 18 states have a more progressive funding structure than North Carolina.
  3. Funding effort is, like the API report, looks at school funding relative to a state’s GSP. Per the numbers used by ELC, North Carolina’s school funding effort ranks dead last in the nation. This ignominious position was reached by having one of the largest funding effort reductions since 2008. If North Carolina had maintained its 2008 funding effort, per-student funding in 2020 would have been $2,775 (29%) above actual funding levels.
ELC’s grades for North Carolina’s school funding system

It is important to remember that these dismal grades are a result of the deliberate policy decisions of North Carolina legislators.

There is nothing preventing legislators from modifying funding formulas to ensure that students in high-poverty districts receive the same opportunities as students in low-poverty districts. Denying disproportionately Black and brown students the same opportunities as predominantly white students is a deliberate (and racist) policy choice of the North Carolina General Assembly.

Similarly, our inadequately low funding level is also a deliberate policy choice. Our rock bottom effort levels show that we can afford to dramatically increase school spending to the levels seen in other states. Unfortunately, General Assembly leadership has prioritized tax cuts for the donor class over providing adequate funding in our schools.

The good news is that North Carolina has a detailed plan to address these issues. The Leandro Comprehensive Remedial Plan provides lawmakers with a step-by-step guide to dramatically improve North Carolina’s funding level and distribution by 2028. The Plan aligns almost exactly with what ELC estimates is necessary to meet national average spending levels and with what API estimates is necessary to ensure all districts have adequate funding. November’s North Carolina Supreme Court ruling should ensure that this plan is implemented unless legislators take the extraordinary step of ignoring both the constitution and the Supreme Court.

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Kris Nordstrom
Kris Nordstrom

Kris Nordstrom is a Senior Policy Analyst with the North Carolina Justice Center's Education & Law Project. He previously spent nine years with the North Carolina General Assembly’s nonpartisan Fiscal Research Division.