Funded: State Policy Analysis

A Detailed Look at Each State's Funding Policies

Below, see summaries of the state’s education funding policy in each issue area. Click the Expand icon next to any summary to see more detail, if available, about that state’s policy regarding that issue area. Click the Citation icon
next to any summary to see the sources of the information regarding that issue area.
North Carolina
Funding Basics
Formula Type

North Carolina as a hybrid funding formula incorporating both resource-based calculations and extensive use of program-based allocations.  

It determines the cost of delivering education in a district based on the cost of the resources, such as staff salaries and course materials, required to do so.  It also allocates funding for a large number of programs and services for particular categories of students.

Services for students with disabilities and students identified as gifted are funded through supplemental allocations distributed on a per-pupil basis.  Some per-pupil funding is also distributed for the education of English language learners, though services for these students are funded primarily through considerations in the allocation of funding for staff costs. The state also provides funding to support the education of students in especially low-wealth districts and districts serving a high concentration of low-income students.  Both career and technical education programs and specific grade levels are considered in the allocation of funding for staff costs.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research Division. North
Carolina General Assembly, March 3, 2015.
Public Schools of North Carolina. (2015). Per Child Allocations. Raleigh, NC: Public Schools of North
Carolina, 2015.
Public Schools of North Carolina. 2013-14 Allotment Policy Manual. Raleigh, NC: Public Schools of North
Carolina, May 23, 2014.
Base Amount

The state of North Carolina uses a resource-based funding formula and therefore does not use a base per-student amount as the basis for its funding.

Expected Local Share

North Carolina does not expect districts to contribute revenue to their public schools’ instructional and operational expenses. However, all facilities expenses are the responsibility of county governments.

In calculating the total amount of funding necessary to educate students within a district, the state considers only instructional and operational expenses. The state provides this entire amount in state education aid. Separate from this calculation, county governments are expected to raise all revenue necessary for their school districts’ school facilities, including long-term capital investments and day-to-day maintenance costs. The amount counties must is dependent only on local expenses, and not on any measure of the local ability to pay.

References:
N.C. Gen. Stat. Ann. § 115C-408
Researcher. Fiscal Research Division. North Carolina General Assembly. Email message to EdBuild. April 6, 2016.
Student Characteristics
Grade Level

North Carolina provides different levels of funding for students in different grade levels.  It does so through its resource-based formula by specifying different student-to-teacher ratios for six different grade spans, and providing funding for teacher positions accordingly.

The state assigns a student-to-teacher ratio of 18 to 1 for kindergarten; 17 to 1 for grades 1-3; 24 to 1 for grades 4-6; 23 to 1 for grades 7-8; 26.5 to 1 for grade 9; and 29 to 1 for grades 10-12. These ratios determine the number of teaching units to which a district is entitled. The state provides funding for these teachers in accordance with the state salary schedule.

The state also provides certain program-based allocations only for students in grades K-3. These include funding in the amount of $727 per student for teacher assistants and support for certain academic activities under the Excellent Public Schools Act of 2012, for which $36.6 million was appropriated in FY2015.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research DIvision. North
Carolina General Assembly, March 3, 2015.
English Language Learner

North Carolina provides increased funding for English language learners (ELLs).  It does so through the resource-based aspect of its formula by providing funding for ELL staff positions, and through the program-based aspect of its formula through a distribution based on the number and concentration of ELLs in the district.

The state automatically provides each school district with the dollar-value equivalent of one teacher assistant position. Other distributions are based on the three-year weighted average count of ELLs in the district, in which the data from the most recent available year are weighted at 50% and the data from the prior two years are each weighted at 25%. Half of the funds available for this purpose are distributed based on this count, while half are distributed based on the concentration of ELL students in the district.

In order to be eligible for the student-based distribution, school districts must have at least 20 ELLs, or ELLs must make up at least 2.5% of the district’s enrollment. No more than 10.6% of enrollment may be included in the ELL count for funding. This funding may be spent on the staff salaries, classroom materials and equipment, and staff professional development needed to serve ELLs.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research Division. North
Carolina General Assembly, March 3, 2015.
Public Schools of North Carolina. 2013-14 Allotment Policy Manual. Raleigh, NC: Public Schools of North
Carolina, May 23, 2014.
Student Poverty

North Carolina does not provide increased funding for students from low-income households.  However, increased funding is provided on a sliding scale based on the concentration of low-income students in the district.  See “District Poverty” for a description of this allocation.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research Division. North
Carolina General Assembly, March 3, 2015.
Special Education

North Carolina funds special education using a single student weight system, providing the same amount of state funding for each student with disabilities, regardless of the severity of those disabilities.

It does so in the form of a flat allocation in the amount of $3,926.97 for each student with disabilities.

The remainder of state special education funding is distributed through specific program-based allocations, including funding for group homes and other out-of-district placements, developmental day centers, community residential centers, behavioral support grants, and support for districts serving children with extraordinary needs who transfer into those districts after other funds have been allocated. There is a separate Disabilities Grant Program, created by the state but not administered by the Department of Education, that provides scholarships of up to $3,000 for disabled students who attend private schools.

References:
North Carolina State Education Assistance Authority. Special Education Scholarship Grants for Children with Disabilities Program Overview. Research Triangle Park, NC: North Carolina State Education Assistance Authority, n.d.
Public Schools of North Carolina. (2015). Per Child Allocations. Raleigh, NC: Public Schools of North
Carolina, 2015.
Gifted

North Carolina provides additional revenue to schools for gifted students. It does so through a flat per-student allocation that is provided for a set proportion of students assumed to be gifted and talented.

North Carolina assumes that gifted students make up 4% of the overall population in schools. The state provides a flat per-student allocation, which equaled $1,281 in FY2015, for that proportion of students in order to provide for gifted and talented education.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research Division. North
Carolina General Assembly, March 3, 2015.
Career and Technical Education

North Carolina provides specific funding for career and technical education (CTE) programs. It does so through its resource-based formula, by allocating funding for the salaries of CTE teachers, and through a program-based allocation.

The state guarantees each school district funding for five full-time-equivalent CTE teachers; the state covers the full salary of the teachers hired in accordance with the state salary schedule. Any remaining funding in the state appropriation for these salaries is distributed to districts in proportion to their enrollment in grades 8-12. The state also provides CTE Program Support Funding, which is intended to help districts develop, expand, or improve CTE programs.

CTE Program Support Funding is distributed first at a flat rate of $10,000 per district, with any remaining funding in the state appropriation distributed to districts in proportion to their enrollment in grades 8-12. In FY2015, this remaining funding generated $33.97 per student in those grades.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research Division. NorthCarolina General Assembly, March 3, 2015.
Community Characteristics
District Poverty

North Carolina provides increased funding to certain districts based on their communities’ levels of wealth and need. It does so in the form of two allocations: one that is intended to improve districts’ capacity to serve low-income students, and one intended to support districts with lower-than-average ability to raise local revenues for education.

For both allocations, the state uses a measure of wealth based on the district’s anticipated property tax revenue, its tax base per square mile, and its average per capita income. The first allocation is designed to allow school districts to reduce class size in low-wealth districts. The second provides revenue to supplement districts’ local receipts with the amount required to bring that district the statewide average level of local revenue per student.

Both of these allocations must supplement, rather than supplant, local funds and are limited to particular uses.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research Division. North
Carolina General Assembly, March 3, 2015.
Public Schools of North Carolina. 2013-14 Allotment Policy Manual. Raleigh, NC: Public Schools of North
Carolina, May 23, 2014.
Sparsity and/or Small Size

North Carolina provides increased funding for small school districts. It does so through a formula that provides additional funding for teacher salaries.

Small school districts receive a supplement equivalent to the average teacher salary for additional regular teachers; the number of teacher positions funded depends on the number of students per square mile and the total enrollment in the school district. Small school districts also receive a flat allocation of funding for classroom materials and instructional supplies.

Only school districts with fewer than 3,200 students are eligible to receive additional funding.

References:
Matteson, Brian. Funding North Carolina’s Public Schools. Raleigh, NC: Fiscal Research Division. North
Carolina General Assembly, March 3, 2015.
Public Schools of North Carolina. 2013-14 Allotment Policy Manual. Raleigh, NC: Public Schools of North
Carolina, May 23, 2014.