Strengthen the NC School Funding System

Summary of Report by APA Associates

December 17, 2010


The General Assembly interim committee on Funding Formulas has met over the past two years and contracted with APA Associates to review the State’s funding formulas for K-12 education. The report was presented in early December 2010 to the committee.


APA was asked to: 1) Conduct a comprehensive review of the state education funding; 2) Evaluate the funding structure for education to determine whether it encourages efficient use of resources and determine if the funding system is too complex to be transparent and understandable,  and 3) Provide the strengths and weaknesses of the current education funding formulas.

APA conducted their research over the course of 7 months – from March to September of this year (2010) –  resulting in the following series of fiscally neutral modifications for consideration:

  1. Combine all allotments that are distributed on the basis of total enrollment in to a single per student allotment and give LEAs flexibility to use the funding as needed.
  2. Modify the Special Education Allotment by setting three different payment rates based on the severity of the disability and cost of each group.
  3. Modify the Low-Wealth County Allotment to create two distinct allotments on a simple formula basis or create a single formula similar to other states.
  4. Modify the At-Risk Student Allotment and the Disadvantaged Student Supplemental Fund Allotment by combining them and adjust distribution based on number of low-performing students or the number of Title I eligible students or eligible free and reduced lunch children.
  5. Modify the Small County Supplemental fund to focus exclusively on size of the LEA not the county.
  6. Change the way the Lottery Funds are distributed to support school buildings, to primarily wealth equalize paying for facilities.
  7. Modify Teacher allotment to change the way the number of state-paid teachers (allotted to each district) are calculated. Recommend using a student-weighted count, not ADM. Weighting for categories such as Special Education, At-Risk, LEP, Gifted students, and CTE students should be considered in the weighting.
  8. Modify Teacher Salary Schedule by adding other factors that impact teacher salary such as cost-of-living issues in various counties and incentives for teachers to work in districts that struggle to attract the best and brightest teachers.
  9. Modify the way Teacher Allotment Salaries are applied-The current system might be changed if the state were to pay a total amount to each district to cover the cost of teachers based on the number of eligible teachers multiplied by the statewide average  teacher salary with some specific adjustments based on factors in recommendation # 8.
  10. Modify the Teacher Salary Schedule Structure-Nationally changes are being considered for teacher salary schedules to include replacing education level with professional development plans, limiting experience, adding multiple responsibilities, leadership, days of work, student performance.
  11. Create a “Foundation” Formula- Set a base cost with adjustments for student and district characteristics.

The above recommendations are separate and distinct from one another and could be implemented individually, or simultaneously.  The final recommendations in the list subsume others that precede them. Further work will need to be completed to ensure that the cost of implementation would be fiscally neutral. The State’s current system could incorporate some or all of the recommended changes listed in this report to allow it to continue to evolve and improve.


Follow the link below for the complete report posted on the Committee website:


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