# Funding North Carolina s Public Schools

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1 Funding North Carolina s Public Schools Brian Matteson Fiscal Research Division

2 Key Takeaways State Public Schools funding is distributed to Local Education Agencies (LEAs) through allotments Allotments are distributed based on funding formulas that typically utilize student headcount and other targeted factors Most State support is directed at all types of districts and students, but certain allotments address disparate student and district characteristics 2

3 Average Daily Membership 3

4 Average Daily Membership Most allotments are provided to LEAs on the basis of allotted Average Daily Membership (ADM) Membership = being on the current roll at a school ( expected to be there ) Not the same as attendance ADM = daily sum of all students in membership for a month total days in month 4

5 Determining Allotted ADM Each winter, DPI follows these 5 steps for determining total allotted ADM for the next year: 1) For each LEA, compare current year actual ADM in month 1 and month 2 of school year (example: for building FY budget, look first at FY ADM) 2) Identify the higher figure ( Best 1 of 2 ) September 2013: 20,417 Vs. October 2013: 20,520 5

6 Determining Allotted ADM-Part 2 3) Compare the figure from step 2 to a statistical projection of ADM for the coming year October 2013: 20,520 Vs. Projected : 20,249 4) The higher number is the allotted ADM for that LEA in the coming year. (note: an LEA s budgeted ADM can be no lower than the prior-year actual) 6

7 Determining Allotted ADM-Part 3 5) Sum the allotted ADM figures for all of the LEAs: Statewide Total Allotted ADM Allotted ADM: 1,520,305 7

8 Allotments 8

9 Basis for Public Schools Funding Allotments Allotments The way the money goes out the door to the LEAs Each allotment is driven by a formula There are 20+ major State allotments Instead of funding specific programs, creates pool of funds from which the LEA can deliver a range of services 9

10 State Funding Allotments Largely three types of allotments Base allotments: go to all LEAs, predominantly on the basis of ADM Allotments addressing student characteristics: funding based on relative populations of certain student characteristics Allotments addressing LEA characteristics: funding based on LEA size or wealth 10

11 Base Allotments 11

12 State Funding Base Allotments Base allotments represent 79% of State allocations Base allotments provide a foundation of public school operational support Funds flow to all 115 LEAs ADM is the primary determinant of fund allocation Most Base allotments support positions Instead of dollar allocations, LEAs receive months of employment or 10- and 12-month positions State pays the salary and benefits of employee regardless of person s placement on salary schedule 12

13 Base Allotments Guaranteed Positions 13

14 Classroom Teachers % of Budget Budget Allotments 2,758,250,828 3,017,215, % Purpose: Provides LEAs guaranteed funding (salaries & benefits) to cover 10-month positions for classroom teachers Formula: LEAs provided positions based on the allotted ADM by grade spans Note: Other allotments also support teachers. Partially supported by Lottery funds (2014: \$255M) 14

15 Grade Spans Classroom Teachers Class-size Ratios Teacher Allotment Ratio Class-Size Average Ratio for the LEA Individual Class-Size Maximum K 1:18 1:21 1: :17 1:21 1: : : : : Average class-size and individual class-size limits in grades 4-12 were eliminated in

16 Classroom Teachers Statewide Salary Schedule Teacher must be paid at least the amount called for by her/his placement on Statewide schedule Annual salary based on 10-month schedule 16

17 Classroom Teachers Statewide Salary Schedule LEAs may supplement pay from local funds State supplements base salary for Master s (10%) and NBPTS certification (12%) 17

18 Classroom Teachers Statewide Salary Schedule Also get supplement for advanced degrees and PhDs 18

19 Classroom Teachers How Does NC Budget Guaranteed Positions? Guaranteed positions don t have known fixed cost Use 6 th pay period actual for estimating next fiscal year s projected costs Classroom Teaching Positions Required: 69,156.5 X th PP Avg. Salary (& Leg Inc.): \$43,515 = Budget: \$3,017,215,584 19

20 Classroom Teachers What is the Rationale for Guaranteed Positions? LEAs can hire best candidate regardless of salary Eliminates possible incentives to: Discourage teachers from securing advanced degrees or certification Replace effective, experienced teachers with unproven, initially licensed teachers 20

21 Classroom Teachers Major Changes in Prior Biennium Modified Allotment Ratios 2013: All ratios increased to eliminate LEA Adjustment 2014: K-1 ratios reduced by 1 student per teacher Revised Salary Schedule Collapsed from 30+ steps to 6 tiers Average 7% raise provided in 2014 Longevity eliminated 21

22 Classroom Teachers Major Changes in Prior Biennium Master s supplement eliminated, except for teachers that : Received it prior to the school year, or Completed at least one class towards a Master s program as of 8/1/

23 Instructional Support % of Budget Budget Allotments 327,218, ,645, % Purpose: Supports 10-month positions for counselors, social workers and other instructional support personnel Formula: 1 position per every in ADM 23

24 Career and Technical Education % of Budget Budget Allotments 296,431, ,278, % Purpose: Provides guaranteed months of employment to fund CTE teacher salaries and benefits Formula: 50 months of employment per LEA with remaining funds distributed based on grade 8-12 ADM 24

25 School Building Administration % of Budget Budget Allotments 236,288, ,206, % Purpose: Provides guaranteed funding to support 12-month positions for principals, and months of employment for assistant principals Formula: Principals: 1 position for each school where ADM > 100 or 7+ state-paid teachers/inst. support (until 2011) Assistant Principals: 1 month of employment per every in ADM 25

26 Personnel Benefits ALLOTMENT Budget Budget % of Allotments SOCIAL SECURITY 276,791, ,677, % STATE RETIREMENT 531,912, ,254, % MEDICAL INSURANCE 449,265, ,898, % SHORT TERM DISABILITY 7,077,920 7,077, % LONGEVITY 85,817,204 50,699, % ANNUAL LEAVE 47,211,431 47,211, % WORKERS COMP 48,205,026 48,205, % UNEMPLOYMENT 19,339,358 19,339, % Personnel benefits are provided based on the number of positions, and the requirements of the specific benefit 26

27 Base Dollar Allotments 27

28 Teacher Assistants % of Budget Budget Allotments 453,579, ,107, % Purpose: Provides funding for teacher assistants salaries and benefits Formula: \$727 per K-3 ADM 2014 LEGISLATIVE ACTION: Funding reduced by \$110M R (partially offset by \$25 M nonrecurring appropriation) Lottery receipts now provide \$113M of total funding 28

29 Central Office Administration % of Budget Budget Allotments 95,461,616 94,386, % Purpose: Provides funding for central office personnel salaries and benefits Formula: Base formula has changed so many times over last 20 years that this position allotment now functions as a dollar allotment 29

30 Noninstructional Support Personnel % of Budget Budget Allotments 357,078, ,330, % Purpose: Supports clerical, custodians, substitute teachers, and other personnel or purposes Formula: \$ per ADM NOTE: Partially supported by Civil Fines and Forfeitures (FY : \$132 million) 30

31 Instructional Supplies/Classroom Materials % of Budget Budget Allotments 43,813,919 43,815, % Purpose: Provides funds for classroom supplies and materials Formula: \$28.38 per ADM plus \$2.69 per ADM in grades 8 and 9 for PSAT Testing 31

32 Career and Technical Education: Pgm. Supp % of Budget Budget Allotments 20,284,738 20,664, % Purpose: Provides funding to assist LEAs in expanding, improving, modernizing, and developing quality CTE programs Formula: Base of \$10,000 per LEA with remaining funds distributed based on grade 8-12 ADM (\$33.97 per ADM) 32

33 Textbooks % of Budget Budget Allotments 23,169,585 24,265, % Purpose: Provides funds for textbooks and instructional content in paper and digital form Formula: \$14.86 per ADM in grades K-12 33

34 Transportation % of Budget Budget Allotments 443,107, ,864, % Purpose: Provides funds for transportation to and from school Bus drivers and other personnel Fuel Maintenance Contract Transportation Formula: Based on pupils transported and budget rating 34

35 School Buses % of Budget Budget Allotments 38,448,088 43,567, % Purpose: Supports yellow school bus replacement for the existing bus fleet (not for growth) Formula: Subject to availability of funds, policy is to replace all yellow buses exceeding 20 years or 250,000 miles of service, with certain exceptions: May not replace with less than 150,000 miles Only replace less than 15 years old if over 300,000 miles 35

36 School Buses Major Changes in Prior Biennium Formula Revision (Sec 8.11, S.L ) Prior to 2013, buses were previously replaced at either 20 years or 200,000 miles in service New process provides opportunity for LEAs to derive benefit from keep vehicles in service \$2,000 bonus payment for retention during initial eligibility, up to 23 years in service Funding adjusted to meet lower costs of new replacement requirements 36

37 Allotments Addressing Student Characteristics 37

38 Allotments Addressing Student Characteristics These allotments represent 16% of State allocations They are intended to enhance service delivery to specific populations of students Resources are provided solely through dollar allotments 38

39 Children with Disabilities School-aged % of Budget Budget Allotments 652,938, ,603, % Purpose: Provide a program of support to benefit students with identified disabilities in public schools from ages 5-21 Formula: \$3,927 per identified student up to a 12.5% maximum identified LEA student cap 39

40 Children with Disabilities Other Programs ALLOTMENT Budget Budget % of Allotments Preschool Children 52,520,194 54,627, % Behavioral Support 11,389,915 11,808, % Group Homes 4,439,538 4,700, % Developmental Day Care 19,449,417 20,593, % Community Residency Ctrs 4,571,640 4,840, % Preschool Children Purpose: Support local programs which address unique needs of this population Formula: Dollar equivalent of classroom teacher plus \$3,117 per 3, 4 and pre-k5 year-old identified student Other Programs (available by LEA application) 40

41 Academically or Intellectually Gifted % of Budget Budget Allotments 74,737,262 77,880, % Purpose: Supports differentiated services to students with outstanding capability Formula: Total LEA Funding = 4% of LEA s ADM X Per-Pupil Funding Factor (FY : \$1,281) 41

42 At-Risk Student Services % of Budget Budget Allotments 283,726, ,183, % Purpose: Provide services/positions such as: alternative instruction dropout prevention school safety officers (SSOs) summer school instruction remediation alcohol/drug prevention 42

43 At-Risk Student Services Formula Formula: Every LEA receives the following: 1. Funding equivalent to an School Safety Officer salary (\$37,838) per high school 2. Remaining funds allocated based 50% on Federal Title I headcount (\$329.77/pupil) and 50% on allotted ADM (\$88.37/pupil) NOTE: Each LEA must receive at least the equivalent of two teachers and two instructional support personnel (\$249,288). 43

44 At-Risk Student Services Major Changes in Prior Biennium After School Program (Sec 8.19, S.L ) Set-aside \$5 million from At-Risk allotment Created new competitive grant activity intended to improve after school quality Available to LEAs and non-profits partnering with LEAs Maximum award is \$500,000 Student population served must be 70% Free or Reduced Lunch-eligible 44

45 Disadvantaged Student Supplemental Funding % of Budget Budget Allotments 81,704,803 85,488, % Purpose: Provides supplemental funding to LEAs to enhance capacity to address the needs of disadvantaged students Formula: Distributed to all LEAs on a per-student basis, factoring in certain student characteristics and the relative wealth of the county 45

46 Limited English Proficiency % of Budget Budget Allotments 75,741,495 77,647, % Purpose: Provides funding to LEAs to serve students not proficient in English Formula: Funding provided for up to 10.6% of total LEA ADM. Each LEA receives dollar equivalent of a teacher assistant position, with remaining funds allocated 50% on 3-year weighted average LEP headcount and 50% on LEP concentration. 46

47 Excellent Public Schools Act % of Budget Budget Allotments 33,513,559 36,617, % Purpose: Funds support multiple activities authorized by S.L (2012 Approps Act) Major Activities Include: Reading Camps for students not demonstrating proficiency Formative Diagnostic Assessment for all K-3 students Kindergarten Entry Assessment for all entering Kindergarteners 47

48 Allotments Addressing District Characteristics 48

49 Allotments Addressing District Characteristics These allotments represent 3% of State allocations They are intended to address economic and geographic conditions of school districts Resources are provided solely through dollar allotments 49

50 Low Wealth Supplemental Funding % of Budget Budget Allotments 212,464, ,621, % Purpose: Provides funding for counties that have below State-average ability to generate local revenue to support public schools Formula: Only LEAs with wealth of less than the State average qualify. Qualifying LEAs can receive up to the amount required to bring that LEA up to the Statewide average local revenue per student; dependent on LEA funding effort 50

51 Small County Supplemental Funding % of Budget Budget Allotments 44,815,205 47,543, % Purpose: Provides additional support for small LEAs to compensate for diseconomies of scale Formula: Funds are provided to County LEAs based on ADM 51

52 Small County Supplemental Funding Small County Funding Parameters ADM Range Funding ADM Range Funding Less than 600 \$1,710,000 2,001-2,300 \$1,560, ,300 \$1,820,000 2,301-2,600 \$1,470,000 1,301-1,700 \$1,548,700 2,601-2,800 \$1,498,000 1,701-2,000 \$1,600,000 2,801-3,200 \$1,548,000 52

53 Small County Supplemental Funding Major Changes in Prior Biennium 2 Formula Revisions 2013: Phased out antecedent formula that provided funding based on 7 different factors in favor of formula recommended by independent consultants 2014: Revised 2013 formula change to provide specific dollar amount tied to district size Implications of Changes LEAs with more than 3,200 students no longer eligible 5 year graduated phase-out provided to newly ineligible districts 53

54 Child and Family Support Teams % of Budget Budget Allotments 9,523,985 10,051, % Purpose: A combination of positions (nurses) and dollars (social workers) to coordinate services among educational and human service agencies working with at-risk children and their families. Formula: Positions and dollars distributed between the 79 designated schools 54

55 Miscellaneous Programs 55

56 Cooperative and Innovative Programs ALLOTMENT Budget Budget % of Allotments Cooperative & Innovative HS 23,111,478 25,402, % C & I Virtual HS 1,000,000 1,000, % This program provides high school students the opportunity to earn college credit while in high school There are 79 CIHSs that receive direct supplemental appropriations from the NCGA, with 6 opening in FY

57 Technology Programs ALLOTMENT Budget Budget % of Allotments School Technology Fund 18,000,000 24,000, % Connectivity 19,919,762 19,919, % School Technology Fund Allocated on \$/ADM Basis (FY : \$15.79/ADM) Supported by Civil Fines & Forfeitures (\$18m) and Indian Gaming Education Revenue Fund (\$6m) Used for hardware, software but not personnel Connectivity Funds support the enhancement of school technology infrastructure and internet service costs 57

58 FY Newly Authorized Activities ALLOTMENT Budget Budget % of Allotments Middle School Safety Officers 7,000,000 7,000, % Panic Alarms 2,000, , % NC Advanced Placement (AP) Partnership 1,500,000 1,500, % AP/International Baccalaureate Test Fees - 10,831, % Career Technical Education Testing Fees 1,252,157 1,302, % Psychiatric Residential Treatment Facilities - 3,200, % 58

59 Miscellaneous Programs ALLOTMENT Budget Budget % of Allotments Driver Education* 26,056,736 26,461, % EVAAS 2,995,000 2,795, % Liability Insurance 3,145,000 3,145, % Reserve ADM Contingency 2,618,500 2,618, % School Breakfast 2,017,761 2,017, % Small Speciality High Schools 4,017,304 4,017, % Testing 15,862,981 15,994, % Tort Claims 5,211,964 5,211, % Uniform Education Reporting System 10,258,861 10,258, % *Driver Training funding was made non-recurring in the 2014 Appropriations Act. Without legislative action, there will be no State support for this activity in FY

60 Directed Grants ALLOTMENT Budget Budget % of Allotments Teach for America 6,000,000 6,000, % Communities in Schools 1,446,750 2,446, % Beginnings for Parents 919, , % 60

61 Charter School Funding Charter Schools are entitled to both State and local K-12 funding per G.S. 115C State funding Charter school receives same per-pupil share of State operational funding as its co-located LEA EXCEPTION: 1 st yr. of operations, allotments are reduced from student s prior LEA to fund charter Local funding LEA must provide to the charter, on behalf of each charter school student from the LEA, an amount equal to the LEA s per pupil local current expense appropriation 61

62 Charter School Funding State Charter School Funding: Fiscal Year Funded ADM State Funding \$/ADM ,266 \$169,192,779 \$5, ,870 \$190,593,495 \$5, ,449 \$187,726,898 \$5, ,716 \$201,748,380 \$5, ,094 \$228,291,552 \$5, ,245 \$256,417,175 \$5, ,192 \$301,899,873 \$5,188 Source: Department of Public Instruction (Highlights),

63 Charter and Traditional School Comparison ISSUE CHARTERS TRADITIONALS Governance Board of directors Local board of education Funding Allocations Funds for Facilities Direct Appropriations from County Funding Flexibility State, federal and local dollars allocated to the school based on the domicile of the student and the location of the school. State and local funds may be used for operational or financing leases for real property, but not to obtain any other interest in real property. No separate State funds for capital. Not authorized. Funds are pooled at the school and generally are not required to be spent according to the specific purpose for which allocated. Allocations are made to the LEA which then decides how to distribute funds across its schools. Separate capital funds available at local level. Allowed. Funds may be transferred between allotment categories, subject to some limitations, including limits set by federal law, limits on transfers into Central Office and out of Read to Achieve funds. Teacher Tenure Law Does not apply. Applies, but is being phased out. Effective 2018, all teachers will be hired on definite term contracts. Teacher Licensure 50% of teachers must hold teaching license. All teachers must be college graduates if teach math, science, social studies or language arts. All teachers must be licensed or eligible to be licensed within specific time period. 63

64 Charter and Traditional School Comparison ISSUE CHARTERS TRADITIONALS Teacher/Principal Salaries Negotiated. Based on State salary schedules. Retirement/Health Plan One-time opportunity to opt to participate Must participate. School Calendar Accountability At least 185 days or 1025 hours of instruction. SBE has authority to terminate, not renew or have charter assumed if charter has had charter for 5 years and has had 1) no growth and, 2) annual performance composites below 60% in any 2 out of 3 year period. SBE also has ability to terminate, not renew or allow charter assumption if specific grounds occur, including failure to meet the student performance requirements contained in the charter. At least 185 days or 1025 hours of instructions, additional requirements including mandatory start and end dates. SBE can dismiss teachers, principals and suspend the local board of education for continually lowperforming schools. SBE can also authorize local board of education to operate a low performing school as a charter school with employees still being employed by the local board of education or close the school and re-assign students to higher achieving schools in the school system. State Testing Required. Required. Standard Course of Study Not required. Required. 64

66 Opportunity Scholarships Authorized in 2013, supports scholarships of up to \$4,200 for attending private school Student eligibility is determined by: Prior attendance in a NC public school Family income at or below 185% of the federal poverty guidelines (increasing to 250% in FY 15-16) Program administered by the NC State Educational Assistance Authority (NCSEAA) \$10.8 M provided in the UNC section of the budget \$2.2 M dispersed on behalf of 1,103 students attending 192 schools for the fall semester 66

67 Other State Fund Sources 67

68 NC Lottery Proceeds for Education Lottery Act no longer proscribes program-level distributions: 2013 Appropriations Act change NCGA had overridden distributions since FY Funds support education programs in all sectors Program/Allotment Enacted Budget \$ % Total Classroom Teachers 254,586,185 44% Teacher Assistants 113,318,880 19% NC Pre-K 75,535,709 13% School Capital 100,000,000 17% Scholarships (Needy Students) 30,450,000 5% UNC Need-Based Aid 10,744,733 2% Total, Lottery 584,635, % 68

69 Other Major State Funding Sources Fines and Forfeitures Constitutional requirement for Revenue, Transportation and other penalties to be used to support Public Schools Proceeds (14-15 Budget: \$150 m) directed to School Technology Fund and Noninstructional Personnel Support Department of Revenue Transfer Budget: \$53 million Implemented in FY to offset elimination of LEA s refund eligibility for the State portion of Sales and Use Tax Highway Fund Transfer Budget: \$27 million Only State source of Driver Training funding 69

70 State Public School Capital Fund Pub. Sch. Building Capital Fund Includes annual Lottery (\$100M) and prior Corporate Income Tax allocations for school capital Corporate Income Tax (ADM Fund) set-aside (7.25% of tax) eliminated in the 2013 Appropriations Act While funds are held at county level, proceeds may not support charter school real property acquisition 70

71 Federal Fund Sources 71

72 Federal K-12 Fund Sources Most programs are included in State budget, but General Assembly lacks authority to modify program requirements Federal grants may be spent over a 27-month period, so expenditures best measure of impact Federal funds are typically 10% of a LEA s current expense budget 72

73 Federal K-12 Fund Sources State Federal Funding Received Voc Ed 2% Other 9% IDEA 24% Child Nutrition 36% Title I 29% Most federal funds are targeted towards a specific population such as Low Income Children or Children with Special Needs. These funds must be used for the purposes allotted and cannot be transferred. Source: Department of Public Instruction (Highlights), Feb

74 FY Federal K-12 Fund Sources 74

75 FY Federal K-12 Fund Sources 75

76 Questions? 76

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