1. Understanding School Finance Meck Ed – February 12, 2009 www.ncforum.org

2. A.School Finance Overview B.Impact of the Lottery C.School Finance Litigation

3. School Finance Overview

4. 2007-08 Sources of School Funding Source: DPI, Financial & Business Services, Highlights of the NC Public School Budget, February 2008

5. Who Pays For What? 2007-08 Federal Funds Provide ($2.84 B) Title I – all programs ($328.6 m) Child Nutrition ($325.0 m) Children w/ Special Needs ($297.0 m) Teacher Quality ($62.4 m) Vocational Education ($21.8 m) Technology Grants ($5.8 m) After School Programs ($20.9 m) Safe & Drug Free Schools ($5.8 m)

6. 2007-08 Local Funds Provide ($1.16 B) Additional teachers, instructional support & teacher assistants (11,432 positions) Central Office Administrators (33.6% of total) Salary Supplements (4 @ $5,000+, Average=$1,993, 5 @ $0) School Construction, Maintenance & Debt Service Utilities, Housekeeping, Technology, & Garage Costs

7. Who Pays For What? 2007-08 State Funds Provide ($7.37 B) Instructional Personnel ($4.1 B) At-Risk Student Services ($220.3 m) Children w/ Special Needs ($663.3 m) Transportation ($360.6 m) Low-Wealth supplemental funds ($195.4 m) ABCs Bonus ($70 m) Limited English Proficient ($61.2 m)

8. Largest Expense in the State Budget (37.3%) Enormous Business ($7.91 B) Largest Employers in the State Charlotte Mecklenburg Schools is among top 10 employers Half of all districts have 1,000+ employees Transportation (13,696 buses178,297,253 miles) Counseling (4,380 counselors & psychologists) Food Provider (186,564,780 breakfasts & lunches) Maintenance staff (26,748 service workers, drivers & other laborers ) Just the Facts...

9. NC History and how we got here… Article IX: Education Sec. 2. Uniform system of schools. (1) General and uniform system: term. The General Assembly shall provide by taxation and otherwise for a general and uniform system of free public schools, which shall be maintained at least nine months in every year, and wherein equal opportunities shall be provided for all students.

10. School Funding Responsibility School Budget and Fiscal Control Act (1975) “To insure a quality education for every child in North Carolina, and to assure that the necessary resources are provided, it is the policy of the State of North Carolina to provide from State revenue sources the instructional expenses for current operations of the public school system as defined in the standard course of study. It is the policy of the State of North Carolina that the facilities requirements for a public education system will be met by county governments.”

15. 2008 Local School Finance Study

18. Note: Reserve fund (5% of original total) is fully funded and requires no additional contributions. * The General Assembly gave additional flexibility to raise prize amounts over 50% of the total IF that will increase the absolute amount available for education transfers.

19. Lottery Revenue Realities Original estimates of $1.2 B in revenues But even if projections had been right… 82 years to finance the $9.7 B construction backlog (based on 2007-08 projected funding levels) 49 districts would still have gotten less than $500,000 ProjectedActual (2006-07) Off by… Scholarships$40.4 m$32.6 m-$7.8 m Class Size/ More at Four $201.9 m$162.7 m-$39.2 m Construction$161.5 m$130.2 m-$31.3 m TOTAL$403.8 m$325.5 m-$78.3 m

20. North Carolina Education Lottery A Comparison of the Models shows: 87 LEAS received LESS money under the Lottery Act model 1996 School Bond2005 Lottery Act 25% high growth 35% ability to pay 40% ADM 35% ability to pay 65% ADM

21. Counties’ “Ability to Pay” Qualifies Them for Approximately $49 M in Extra Lottery Revenue (35% of Available Construction Funds) 57 shaded counties qualify for the extra revenue based upon an ability to pay component SOURCE: NCGA, Fiscal Research Division

22. School Finance Litigation

23. Red=Low Wealth Plaintiffs Blue=Urban Plaintiff-Intervenors School Finance Litigation…

24. Changing Needs of Students & Adequate Resources Every classroom be staffed with a competent, certified, well-trained teacher… Every school be led by a well-trained competent Principal… Every school be provided, in the most cost effective manner, the resources necessary… -Leandro mandates

25. School Finance Case ISN’T Over State Responsibility: “The State must step in with an iron hand and get the mess straight. If it takes removing an ineffective Superintendent, Principal, teacher, or group of teachers and putting effective, competent ones in their place, so be it…The State of North Carolina cannot shirk or delegate its ultimate responsibility.” Judge Howard E. Manning, Jr.—4/4/02 memorandum

26. DSSF Resources Then… Started with 16 pilot districts Funded at $22.5 million New model approved by plaintiffs, defendants & judge And now… Covers all 115 LEAs Funded at $191.6 million for 2007-08 school year

27. Kendall Jordan kjordan@ncforum.org 919-781-6833 x 102 www.ncforum.org