Budget divide: looking up at the school funding gap

State law requires public school districts to produce by May 1 each year something called a planning budget. It’s a best-guess sort of budget, one that school boards approve — as the Lenoir County Board of Education did this past Monday — with the hope that their benefactors in local, state and federal government are in on the plan.

There is, simply put, more than a little uncertainty. For instance, state funds account for more than 60 percent of this district’s total revenue, but LCPS probably won’t know for months how much money the N.C. General Assembly will allocate for fiscal 2017 or how legislators might earmark it.

One thing’s for sure, though. LCPS, like a lot of school systems in North Carolina counties where growth is slow and the economy is sluggish, will head into the next school year with a significantly tighter budget, fewer teaching slots and a greater reliance on its savings account to make ends meet. http://tinyurl.com/hn8eclu There’s also no doubt as to why.

You don’t have to be a financial wizard to understand that a funding system built on county property valuations and ad valorem taxes will benefit bigger, richer — i.e., urban — counties and will leave less prosperous counties — i.e., most of eastern North Carolina — at a disadvantage. The difference is as stark as its cause is apparent. Consider the numbers from the 2013-14 school year. Orange County, which tops the list for local school funding, spent about as much per pupil as the bottom six counties combined. It spent 11 times as much as the county at the bottom of the list. The 10 top counties spent more than four times as much per pupil as the 10 lowest counties. Twenty-eight counties spent at least $400 less per pupil than the state average of $1,500.

Do these lagging counties just not care? Sure they do. Mostly, they just can’t afford to do more. In fact, some are already stretching to do what they’re doing for public schools. The recently released Public School Finance Study, an annual report from the Public School Forum of North Carolina, compares a county’s “actual effort,” or what a county actually allocates to public schools, with “relative effort,” which considers “actual effort” in light of a county’s “ability to pay,” which is a measure of revenue generated from property valuations. (Here’s the study http://tinyurl.com/hsm6rts). Lenoir is one of those county’s that ranks low in actual spending per pupil but considerably higher when the value of the tax base is factored into the comparison.

From the 2016 Local School Finance Study, a publication of the Public School Forum of North Carolina

From the 2016 Local School Finance Study, a publication of the Public School Forum of North Carolina

Again, these are 2013-14 figures. Local funding — that is, the money allocated by the county to LCPS — was $1,062 per pupil, which ranked the county 78th among the state’s 100. But with that same per-pupil amount the county ranked 52nd in relative effort. Because of their relatively small tax base compared to richer counties and despite they fact they are taxing residents at a higher rate, counties like Lenoir still generate less revenue overall and, consequently, have less to spend on public schools.

The state has tried to narrow the gap between rich and poor with two supplemental funds — one for small counties with public school systems of fewer than 4,000 students and another for so-called low-wealth counties. Lenoir doesn’t qualify for the former, but does for the latter. In 2013-14, the low-wealth supplement from the state boosted per-pupil spending here to $1,449 — which left the county more than $500 below average and 85th in the state when all supplements were included.

It gets worse. A change in the formula the state uses to calculate low-wealth allocations could actually widen the gap between rich and poor. There’s more money now going into the low-wealth account but, due to the formula change, more counties are getting a cut of it. The result, as Kerry Crutchfield points out in the latest in a series of columns on school finance on EdNC http://tinyurl.com/z2d79wc, is that the low-wealth supplement doesn’t move the needle much, if at all. “(M)any of the lowest wealth counties remain the lowest funded counties after receiving low wealth funds,” Crutchfield writes.

LCPS lost $235,176 in low-wealth funds this fiscal year and will lose another $312,130 in fiscal 2017, in part because enrollment dropped this year by 247 students but primarily because the distribution formula changed. That’s the biggest reason LCPS stands to lose 18.5 teaching positions for next school year and needs to pull $870,00 from savings to salvage hours and positions that otherwise would be lost.

On Monday, Lenoir County commissioners are scheduled to hear a budget presentation from Superintendent Brent Williams that will ask the county to increase the $9.9 million it sent to LCPS this year by $200,000. That money would restore four of the teaching jobs in jeopardy. Craig Hill, chair of the board of commissioners, has said he knows the county needs to stretch to help the schools; an allocation to save teaching jobs seems to us like a good way to limber up.

Unfortunately, the state’s century-old system for funding public education creates problems that even the most sympathetic county commissioners can’t solve. Relying on property tax revenue in a state with such a wide disparity in real estate wealth guarantees a landscape of peaks and valleys. Counties on top can pay teachers more and build better schools and hatch new programs  while counties on bottom have to innovate like crazy to keep the quality of a child’s education from becoming mostly a matter of geography.