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Future NC budgets won’t automatically pay for growing public school enrollment

By Lynn Bonner and T. Keung Hui
lbonner@newsobserver.com khui@newsobserver.com

RALEIGH A little-noticed addition to the state budget may have far-reaching consequences for education spending.

As future budgets are constructed, the state will no longer automatically pay for growth in public school enrollment.

It’s a major policy change that was added to the compromise budget that was passed in the waning days of the session without debate. Two leading House Republicans said they learned of the provision after they voted for the budget.

Without enrollment growth as a cornerstone for future public school budgets, districts won’t know until legislators pass a budget how much more money they’ll have to hire teachers, provide special services for at-risk or gifted students, or pay for other needs.

Rep. Nelson Dollar, a Cary Republican and chief budget writer for the state House, said eliminating the “average daily membership” calculation, as it’s called, will make the budget clearer for the public. In recent years, statewide enrollment growth has been lower than projected and when legislators subtract money from their proposed budgets, it looks like a funding cut when the change is just accounting for money not needed, he said.

“Clearly, the General Assembly will always fund growth in average daily membership,” Dollar said. “We want the public to know what the real budget is, what’s being spent from one year to the next.”

But the provision makes fully funding enrollment growth optional. The legislature could say they want to fund certain items partially or not at all.

The change has Democrats speculating that it may be a backdoor way to increase class sizes. The baseline education budget is built on formulas – the amount districts expect to receive for teacher assistants and teachers is based on the estimated enrollment for the next school year.

Removing the enrollment estimate, called average daily membership, or ADM, from the baseline budget is a way for budget writers to ignore those formulas that determine class size, Democrats contend.

“There is built into this budget the probability that class sizes will increase when you don’t fully fund new students,” Sen. Dan Blue, Senate minority leader of Raleigh, said at a news conference Wednesday.

No. 1 budget concern

Philip Price, chief financial officer for the state Department of Public Instruction, called the provision “the largest change in the budget in my lifetime.” The state has had a law since 1933 that builds student enrollment estimates into the foundation of state education budgets.

Since paying for student growth will no longer be automatic, funds that schools use to help pay for more students will have to compete with other ongoing costs.

“It’s the No. 1 concern in the budget,” Price said. “It opens the possibility they won’t fund total enrollment growth. They’re going to have limited funding and you’re going to be competing with every other priority.”

DPI in March of each year sends local districts planning documents letting them know what they’ll have to spend based on enrollment numbers plugged into formulas. Those numbers come with the caveat that the legislature may make changes, but districts use them as a basis for their own budgets and to start hiring teachers.

The school districts will now be flying without instruments as they prepare their local budgets.

DPI won’t send out planning documents next year, Price said.

Surprise for Wake

The budget change surprised Wake County school leaders, who said it would have a significant impact on them and other growing school systems. Wake, the largest school district in the state with 153,000 students, grows by more than 3,000 students annually.

“There are a lot of HR issues wrapped up in this,” David Neter, Wake’s chief business officer, told the school board on Tuesday. “This is huge.”

In the best-case scenario, administrators said they’ll get state funding for new students months later than normal, hurting their ability to plan for each new school year. This could particularly impact the year-round schools that begin in early July.

“It simply looks like they’re trying to make all districts front-load their growth and then the check will be in the mail later – or not,” said Wake Superintendent Jim Merrill. “It’s one more thumbscrew that very much limits our planning.”

In the worst case, Wake school leaders said they’re worried that they won’t get any funding for growth. School board members said they’d lobby legislators to eliminate the budget change.

Read about it in the paper

On Wednesday, House Speaker Pro Tem Paul “Skip” Stam said he didn’t know the budget he supported included the change in how future student growth is funded.

“The first I read about that was in today’s paper,” he said. “But we always fund based upon student growth. Obviously the number of students you have will be an important factor in what you appropriate.”

Rep. Marilyn Avila, a Raleigh Republican who helps write the health sections of the budget, said Wednesday she didn’t know about the provision on education funding.

But Stam, an Apex Republican, said he is not concerned with the policy shift.

“I have never seen so much squealing about getting more money,” he said. Staff writer John Frank and Insider editor Patrick Gannon contributed.

Bonner: 919-829-4821; Twitter: @Lynn_Bonner
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