The stats that really matter in assessing K-12 education funding
Published May 9, 2024
When I was a kid, I would sometimes ask my parents for money. Call me crazy, but I didn’t really care how much came from my mom versus how much came from my dad. I cared about whether or not I could afford to buy the latest Tribe Called Quest tape and whether I was being treated fairly compared to my sisters.
Schools aren’t too different. They want to know whether they have enough resources to allow all students to reach state standards. They also want to be treated fairly compared to other school districts. Whether their money comes from state or county taxes is almost entirely irrelevant.
Legislative leaders, however, disagree. They care little about whether our schools have enough resources to help all students meet state standards. Nor do they much care whether districts are treated fairly, with funding aligning with students’ needs. What matters most to these policy iconoclasts is the share of funding coming from state versus local sources.
Understanding funding sources
North Carolina ranks 48th in per-pupil funding ($4,655 below the national average) and dead last when it comes to school funding effort.
Legislative leaders, however, continue to insist that North Carolina actually ranks 13th for school funding. What they find important is not North Carolina’s funding level, effort, nor distribution. No, what they value most of all is the share of revenues coming from state sources.
Of course, there’s no virtue to having a higher or lower share of funding from state sources. These percentages simply reflect the unique legal framework in each state. In some states, responsibility for funding is placed largely on counties. In other states, like North Carolina with its strong constitutional provisions supporting public education, it’s the state’s responsibility to provide school funding. So of course, we rank highly in terms of the share of school funding coming from state sources. But that tells us nothing about whether our schools have enough money or whether that money is distributed fairly.
It’s important to remember that the primary, consensus goal of a school finance system is to provide sufficient resources so that all children have an equal opportunity to meet state standards, regardless of where they live or attend school. A state’s share of funding from state sources has no impact on this goal one way or the other.
Case study: New Hanover County
A simple example proves this point. In the 2022 school year, New Hanover County Schools received $93 million in operating funds from their county government. Would these students be better off if this revenue source were eliminated? Their share of funding from state funds would be tops in the state. But of course, New Hanover’s students would be much worse off if their schools lost 30% of their funding.
Even if we accept this false premise that there’s something that makes state revenue inherently better, the data still show that North Carolina’s school funding from state sources is quite low. North Carolina’s per-pupil revenue from state sources ranks 32nd at $6,648, 14 percent below the 50-state average of $7,556.
Of course, there’s nothing magical about state revenue versus local revenue. Money is fungible. From the school district’s perspective, a dollar from the state is worth as much as a dollar from their county government. If anything, the county dollar is valued slightly higher because districts tend to have more flexibility in how they spend their local dollars versus their state dollars.
Which school funding metrics really matter?
When it comes to ranking states’ school finance systems, what really matters are two factors:
- Adequacy: Is there enough money to allow all students to meet state standards?; and
- Equity: Is that money distributed in accordance with student need so that all students have the same chances for success no matter where they live?
Along these measures, North Carolina has nothing to brag about. Researchers from the University of Miami and Rutgers rank North Carolina’s school funding system 47th out of the 48 states with a possible rating. National experts from the Education Law Center give North Carolina’s school funding system an “F” for funding level, an “F” for funding effort, and a “C” for funding distribution.
What you won’t find in any of these reports are rankings on the share of funding from state sources, since that is an irrelevant metric. What you will find is a broad consensus that North Carolina’s school funding system—a system that has been systematically defunded over the past decade—is failing dramatically in achieving the goal of allowing all children the equal opportunity to meet state standards.
The solution: Fully fund the Leandro Plan
The good news is that North Carolina is sitting on a plan to dramatically improve both the adequacy and equity of North Carolina’s failing school finance system. The Leandro Comprehensive Remedial Plan offers policymakers a ready-made solution that’s based on research, overwhelmingly supported by North Carolinians, and readily affordable.
And as a bonus for legislative leaders, the Plan’s 40 percent increase in state funding will shoot North Carolina upwards in the rankings for the share of funding from state sources.
Kris Nordstrom is a Senior Policy Analyst with the North Carolina Justice Center's Education & Law Project
