North Carolina has one of the most confusing school funding formulas in the nation. Unfortunately, the bizarre complexities of North Carolina’s funding formula fall hardest on students with disabilities. Anyone who has worked in education has seen cases or heard stories of maltreatment and lack of access to a meaningful education involving special education students that make one’s blood run cold. These stories have their root in the state’s special education funding scheme.
Other states have conducted “costing out” studies to determine precisely how much money each district needs to educate children to the proficiency level. The best systems then use a “weighted” funding formula that takes into account regional cost variations, the need for specialized teachers for students who have disabilities and Limited English Proficient students, and other factors that may increase or decrease the cost of education in a given district. In other words, they figure out how much it costs to educate each student in a given district and they give each district that amount of money.
North Carolina, however, employs a convoluted system involving numerous pots of money that have been added over time in response to certain needs. There are allotments for students with disabilities, Limited English Proficient students, students who are at risk of failing, small counties, low wealth counties, and many more. They are nearly impossible to keep track of, and each has its own complex formula allocating how funds are disbursed to school districts.
Even the most renowned experts in the field of education funding cannot figure it out. In 2010, the legislature hired the prominent national research firm of Augenblick, Palaich and Associates (APA) to conduct a nonpartisan study of North Carolina’s funding system. The firm has studied the funding systems of almost every state and created the funding formulas employed in many. In North Carolina, however, APA met its match. It reported that “[i]t is difficult to count the number of formulas that are actually used to allocate state funds.” In other words, a group of consultants who study education funding for a living cannot even tell how many different formulas and pots of money are involved.
APA’s Number One recommendation was to simplify our funding scheme by combining all the allotments into a single per student allotment. Sadly, that recommendation has not been seriously considered.
For students with disabilities, there are serious inequities hidden within the impenetrable school funding formula. Funding for special education is vital because special education teachers are very highly skilled specialists. The number of students classified as eligible for special education services has increased over the years, but funding for more teachers to teach them has not kept pace.
The most obvious problem is that the special education funds that districts receive bear no relation to the cost of actually educating students with disabilities. Districts receive about $3,500 extra for each child with an identified disability. However, the actual cost of educating each student varies dramatically depending on factors such as the severity of a given student’s disability and the additional cost of learning aids, devices, and services needed to provide an appropriate education.
APA’s second key recommendation was to modify the “Special Education Allotment” by setting three different payment rates for students with disabilities based on disability severity and the expected cost of educating each group. That would make the special education funds have some relation to the cost of educating students with disabilities, but this recommendation has also been ignored.
Finally, there is an arbitrary cap on the amount of funding that districts can receive for special education students. Funds for special education students are currently capped at 12.5% of a district’s average daily membership. In other words, districts that have far more than 12.5% of their total student body receiving special education services still will only receive funding as if 12.5% of their students were receiving these services!
Out of the 114 districts for which data is available for 2011, 73 (or 64%) had a percentage of students receiving special education services that exceeded this cap. That means that more than half of North Carolina’s districts are being shortchanged on special education funding in comparison with districts that have fewer students classified as in need of special education services. Smaller, rural districts that already have greater trouble funding their schools are the hardest hit. Stokes, Tyrell, Pamlico, and Mt. Airy school districts all have over 18% of their students enrolled in special education, but only receive funding as if 12.5% of these students were enrolled.
All can agree this system needs modernizing. The only argument against fixing it is that it will not be free. For children facing greater obstacles to education through no fault of their own, this justification is not comforting. The legislature has a moral and legal obligation under the Individuals with Disabilities Education Act to reform this system before more districts and disadvantaged students slip through the cracks of North Carolina’s convoluted funding system.
Matt Ellinwood is a Policy Advocate at the North Carolina Justice Center’s Education and Law Project.