N.C. budget changes worry some Cabarrus school leaders

A change in the way North Carolina distributes funding for public schools is creating a challenge for the Cabarrus County Schools as it budgets for its school year.

Last summer, the N.C. General Assembly replaced the funding model that had been in place for decades, which was an automatic continuation of the budget at the previous year’s levels and the number of students projected for the coming year.

School districts used that figure to budget everything from hiring teachers to buying textbooks. As a local school district’s enrollment increased or decreased, the system could request an increase for additional students or refund a portion of its projected funding if enrollment was fewer students than expected.

Under the new system, the state will commit each spring to base funding for the number of students enrolled at that time. Systems may then apply for additional money depending on fall enrollment; that would be approved with the next year’s budget.

Kelly Kluttz, chief financial officer for Cabarrus County Schools, said she heard about the change at an education budget session of the N.C. Department of Public Instruction.

“This could absolutely not only be a problem for Cabarrus, but it will be a problem for all school systems, especially those that are considered growing,” Kluttz said.

The Cabarrus County district averages growth of 800 more students each year.

“That amounts to a couple of million dollars that we don’t have to hire those teachers, until we get an allotment for those,” Kluttz said. “Now we’ll have classrooms that will be full or over the (size) limit, and we won’t have the ability to put teachers in that classroom until the budget has passed and they decide whether or not they want to help fund continuation and growth.

“It creates havoc in classrooms to disrupt and add teachers in October,” she said.

This school year, the state projected Cabarrus County Schools would serve 30,505 students, but actual enrollment is 30,796. Kluttz said the district will apply for more money to cover enrollment growth this year.

“The reason behind it was that we start budgeting in January, and we don’t know the actual numbers until October,” said N.C. Rep. Linda Johnson, R-Cabarrus, the House Education Appropriations chairwoman. “Every month they update it, but it’s still always overestimated. Continuation budgets may contain programs that are no longer there.

“All the growth is funded. It’s just that it’s not pre-funded,” said Johnson of the new model.

School systems always may enter a bill for additional students, Johnson said. The budgets, she said, are funded by line items such as growth, teacher salaries and technology, and legislators can choose to pass a portion of the budget. “There’s nothing that would stop it from being on time,” Johnson said.

“All the money is there. It’s just the process that’s changed,” she said.

Philip Price, chief financial officer of the state Department of Instruction, said, “It depends on how you’re looking at the state’s situation. If you’re looking at it as a way to build a budget and trying to minimize the amount of revenue that’s obligated prior to budget discussions, then this action would benefit that process.

“From my perspective, I’m looking at trying to make sure that the public schools funding is kept whole with what formulas are in place, based on the new population in students.

“I look at it as a problem because it’s not building it into the budget up front,” Price said.

Another of Kluttz’s concerns is that the state continues to cut funds for public education overall.

“We didn’t gain ground in public education. In Cabarrus County Schools, the state cut $3.9 million,” Kluttz said. “I pulled that out of my fund balance (a kind of reserve account normally used to ensure positive cash flow), so that we did not have to cut teacher assistants or teachers, but surrounding systems had to cut.”

“It certainly seems like the state is pushing the responsibility back to the local level,” Kluttz said. “We will be a year behind in funding growth, because the state’s not going to tell you until you’re into the year, and you can’t make those hiring decisions unless the local (government) or somebody fronts that money.

“We can’t operate on money that we don’t know that we have,” she said.