2020 has been a tough year for North Carolina public schools. Gov. Roy Cooper’s response to the Coronavirus has closed many public schools or morphed them into virtual learning centers. K-12 enrollment is down 5 percent, fueled in part by a nagging concern that academic achievement is lagging. Throw in increased competition for limited tax dollars and rising parental dissatisfaction with online learning and you have a minefield of issues that will compete for the attention of policymakers.
How will lawmakers address these issues? Voters opted not to make huge changes to the political landscape. Cooper was re-elected for another four-year term. Likewise, Republicans retained their majorities in the state House and Senate. To the surprise of many political pundits, Republicans picked up four additional seats in the House, a stunning development in a year when some Democratic strategists floated the strong possibility of flipping the House. The biggest surprise of the election may be the outcome of state Supreme Court judicial races. Republicans will pick up a minimum of two additional seats and — pending a recount on the race for chief justice – could pick up a third seat if Justice Paul Newby’s 400 vote lead holds up. Republicans also swept all five statewide judicial races for the NC Court of Appeals.
The courts tilting to the right could impact how the Leandro school finance case is resolved as well as influence the outcome of current litigation to stop the Opportunity Scholarship Program. The decision by voters to re-elect the governor and retain Republican majorities in each House will impact not only what gets done – and not done – in the state legislature, but how things get done. The political realities mean parties will have to compromise and be more accommodating. Not always a bad thing. Let’s look at three major issues likely to be considered in the upcoming legislative session.
School Finance. The way North Carolina funds public schools is overly complicated, little understood and ineffective. No one is happy with the 37 different formulas the state uses to distribute funds. Two studies seven years apart (see here and here ) came to similar conclusions. The system is too complex, outdated, and fails to ensure that resources get to where they are needed.
Most lawmakers agree we need a better way to fund schools. The disagreement comes in how you answer that question.
North Carolina is one of only a handful of states that distributes resources via a resource allocation model (RAMs). Dollars are distributed via three types of allotments: dollar, position or categorical. Proponents say RAMs are helpful from a budgetary perspective because they give policymakers a good view of what is being funded and how. Unfortunately, RAMs have significant shortcomings. For starters, most RAMs are highly centralized, controlled by decisionmakers (in this case policymakers or administrators) and lack transparency. Because RAMs are restricted to a specific purpose, they work to limit the autonomy and flexibility of districts to meet budget challenges. Moreover, the scope and complexity of RAMs makes it difficult to track how money was spent and if goals were accomplished. As such, RAMs impede accountability and innovation.
Despite the current shortcomings, North Carolina can work to improve the current system. Adopting a system where funding is distributed not centrally to fund staff or programs but to students – according to need – would be a good first step. Weighted Student Funding (WSF) is one such model. WSF uses a student-based formula to allocate a fixed base sum of support to students in each LEA. Additional funding is targeted to help meet other student needs like special needs, limited English proficiency, or at-risk students. These needs are given a weight to reflect the amount of additional funding.
WSF stands in marked contrast to the current highly centralized system of how public schools are funded. Instead, the money follows the student. Because WSF is more transparent and pushes discretion and decision making down to the local level, policymakers should seriously consider WSF as a funding alternative to the current system.
Teacher Pay. Teacher pay is the issue that never goes away in North Carolina. Despite the never-ending public debate over teacher pay, it’s hard to ignore average teacher pay in the state has risen significantly over the past decade. Since 2011, average teacher salary has increased from $46,514 to $54,612. North Carolina’s ranking among the states has also risen from 46 to 30. That number would be higher if Gov. Cooper had not vetoed several teacher pay proposals over the past several years from Republican lawmakers. Despite the progress, we should start with the realization that throwing more dollars at teachers won’t solve the issue. Much of the problem is tied up in how we pay teachers. North Carolina teachers use a teacher salary schedule to determine pay levels. Salary schedules have perverse incentives in that they reward teachers for time in the job and credentials — not performance. That must change.
Republicans managed to make small improvements to the salary schedule and win bonus pay for teachers in various positions, yet the basic structure remains the same and pay is still largely tied to time in job and credentials. Eliminating the teacher salary schedule and letting local school officials pay teachers based on local markets and wage demands would be a big step to solving this issue. Principals are best equipped to know the value of teachers and how they perform in the classroom. Principals have the responsibility for educating children. Shouldn’t they also have the authority to set pay levels to ensure quality faculty are in the classroom and fairly compensated?
Changing how teachers are paid is just one component of resolving the teacher pay issue. The other involves discussing a topic no one wants to talk about when discussing teacher pay: the rising costs of benefits.
The value of benefits for teachers has risen dramatically over the past decade. In 2011, the total value of benefits including healthcare, retirement and social security was $13,376. By 2020, that total had increased to $21,242. In 2011, benefits comprised 28.7 percent of the average teacher compensation package. Today that figure has risen to 38.8 percent. Increases in healthcare and retirement costs have helped to drive up staffing costs. In 2011, the average teacher health insurance cost was $4,929 per employee. Today it’s $6,306 per employee. In 2011, employee retirement benefits were 10.5 percent of employee salaries. By 2020, that number has reached 19.7 percent of employee salary. These increases have fueled significant increases in payroll. In 2020, total compensation (salary and benefits) for teachers came to almost $76,000.
These increases provide teachers and staff with healthcare and retirement benefits. However, they also work to limit the amount of money North Carolina can allot to salary increases. Working to curb these benefit increases is one of the best ways to raise teacher pay. Benefit costs can be slowed by asking individuals who have had lower than average insurance costs to pay higher premiums. In addition, the pool of those eligible for retirement should be reviewed annually. Steps should also be taken to give individuals more ability to manage their own retirement funds.
School Choice. A third and final topic on a 2021 education agenda is school choice. Coronavirus has underscored the reality that few public schools are up to the challenge of meeting the needs of a changing population. Recent declines in public school enrollment have been attributed to parental dissatisfaction over online learning. Parents have always wanted to be able to secure the best educational options for children. School choice has provided parents a mechanism to make that a reality.
North Carolina can take several steps to expand those options for parents. If parents are dissatisfied with their local public school, they can choose from one of about 130 local charters. North Carolina needs to guarantee charter and public schools are treated equally with regards to finances. The law says charter schools must receive the same share of local funds. Because there is a myriad of ways to circumvent the laws, that doesn’t happen. Legislation should be approved to eliminate amendments that reduce the charter school share of local funds and allow local government or commissions the opportunity to assist charters with capital expenditures.
Parents looking to improve their child’s educational options, should consider the Opportunity Scholarship Program (OSP) . OSP provides vouchers for over 12,000 eligible low income and moderate income families to attend a private school of their choice. While the program is popular and is experiencing dramatic growth, scholarship funding has been capped at $4,200 since the program began in 2013 Rising educational costs have made it increasingly difficult for parents – even with scholarships – to meet the full costs of education. To provide a long term solution, lawmakers should consider linking OSP vouchers to a percentage of state per pupil expenditure.
North Carolina currently has a limited ESA plan for special needs students. That program has proved very popular and was recently expanded.North Carolina should consider scaling a wider Education Savings Account plan for K-12 students. A recent Civitas-Reason study found that development of a statewide ESA program in North Carolina could produce $19 billion in higher lifetime earnings because of increased academic achievement, $790 million in economic benefits from higher high school graduation rates and $12 million from reductions in social costs associated with lower crime rates. These changes can go a long way in strengthening existing programs and giving parents expanded educational options.
