Weighted Student Funding in North Carolina: Opportunities, Challenges, and Recommendations

For over 90 years, North Carolina has funded its schools primarily through a resource-allocation model, which determines the total cost of education based on the cost of resources, such as educators and administration. For at least a decade, policymakers and other education leaders have floated the possibility of transitioning the state instead to a weighted student funding model, which would provide a base amount of funding for each student, with additional funding allocated based on their specific needs.

Recognizing that our school funding model is in need of improvement and that any changes to the model require careful consideration and input from diverse perspectives in education, the Public School Forum of North Carolina launched a comprehensive, two-year study to better understand the implications of switching to a weighted student funding model (WSF) and to gather insight from representatives across the education sector.

Weighted Student Funding in North Carolina: Opportunities, Challenges, and Recommendations

Read the full report based on the work of our diverse working group made up of educators and bipartisan policymakers.

Executive Summary

What is Weighted Student Funding?

Weighted student funding is an approach to state school finance that allocates dollars to districts based on student population and need. A weighted student funding formula provides a base amount of funding to all students with additional funding stacked on top for defined characteristics through both student and community weights. Students can receive multiple weights, provided that they are eligible for each category.

For example, under a weighted student funding system, a low-income student with a disability would receive a baseline dollar amount plus additional funding (a percentage of the base amount) to provide supplementary learning supports through both a low-income and disability weight. The weights account for higher operational costs required to serve students with unique needs.

Nationally, states with weighted student funding formulas commonly implement specific weights for students with disabilities, those who are economically disadvantaged, multilingual learners, and children living in areas of concentrated poverty or sparse populations.

The Study Group

Beginning in the spring of 2024, the Forum convened a statewide group of over 100 education leaders, elected officials, and school finance experts to identify needs and opportunities for strengthening North Carolina’s school funding system and to better understand and evaluate the potential impact of transitioning to a weighted student funding model in North Carolina.

In partnership with national experts from Bellwether, the Forum used current state education data to build several model prototypes and an interactive simulator to allow study group members to examine how different funding formulas would impact funding levels and allocations for students’ needs in each district across the state. Study group members engaged in rich discussion and collaboratively developed a set of guiding principles, non-negotiables, and recommendations to inform next steps as state leaders continue discussions around how to fund our public schools.

Study group participants included district superintendents, school finance officers, school board members, principals, teachers, business leaders, members of the General Assembly, representatives from the Department of Public Instruction, the Governor’s Office, and the State Board of Education, and leaders from statewide organizations representing a wide range of education stakeholder groups.

While these challenges drive calls for funding reform, the study group agreed that it was equally important to envision the possibilities of a modernized system. To establish a clear, collective vision, the study group developed an opportunity statement alongside its problem statement to frame what stakeholders hoped to achieve in a revised state funding model.

Problem Statement

North Carolina’s current school funding formula is antiquated, complex, and restrictive, which inhibits local control and limits the ability of school and district leaders to implement innovative learning strategies. The current formula does not provide adequate resources and structures needed to ensure all students have the opportunity to be successful in school and life.

Opportunity Statement

North Carolina needs a new, modern, fully-funded school finance system that is transparent, accountable, predictable, student-centered, and responsive – one that empowers local educators to implement innovative learning strategies, addresses the differentiated needs of students and communities, and provides every student with the resources necessary for lifelong success.

Together, the group developed the following guiding principles and non-negotiables to guide model prototypes and analysis of any change to North Carolina’s funding model:

Guiding Principles

The model ensures adequate and robust funding to provide the academic and non-academic supports needed for all children to achieve excellence, including having access to high-quality, effective educators and support personnel and incentivizing college and career pathways for all public school units.

The model provides tailored supports based on each student’s unique needs; with additional/differentiated funding for students based on economic disadvantage, disability status, multilingual learner status, and other unique needs and for districts in sparsely populated areas and with high concentration of poverty. All policy mandates from the state (eg. class size requirements) should be fully funded to ensure student needs are met.

The model is clear and easy to understand for parents/caregivers, community members, and district/school staff. Data on funding levels, including base amounts and weights should be reported publicly.

The model is predictable year to year so districts can plan for future funding easily to ensure student needs are met.

The State Board of Education establishes and maintains comprehensive plans for implementation, monitoring, data collection/reporting, and continuous improvement to ensure funds are addressing student needs as intended.

The model provides adequate flexibility to enable local leaders to be responsive to the unique needs of students and the community.

Non-Negotiables

Sustained, increased investment for North Carolina’s schools is needed to ensure that no districts lose funding that could compromise their ability to meet students’ needs.

Base amounts should be reviewed annually and increased, at a minimum, to keep pace with inflation, mandated salary and benefit increases, and emerging needs. The State Board of Education should conduct an inclusive, comprehensive, and regular evaluation of the model every two years to address the adequacy of funding levels and the extent to which funds are addressing the needs of student subgroups. The Assessment should involve gathering stakeholder input, including public comment. Any recommendations emerging from the Assessment should be delivered to the General Assembly prior to the start of the long legislative session in odd-numbered years. In addition to the model Assessment, the state should share detailed and user-friendly public data about district funding.

During at least the first two years of model implementation, DPI should provide comprehensive training for district, county, and school-based leaders and staff using a change management plan for the whole community. The change management plan should go beyond compliance and incorporate innovation to encourage flexibility in local districts. Any transition process will require allocation of state funds and resources to DPI to support implementation, research, and innovation at the district level.

Recommendations

Align Any Formula with the Study Group’s Guiding Principles and Non-negotiables

The study group’s guiding principles and non-negotiables should inform the design and evaluation of any future weighted student funding formula proposals for North Carolina. These frameworks represent consensus from a diverse and representative group of education leaders and experts across North Carolina. Together, they represent a foundation that any funding system in our state should reflect.

Significantly Increase Investment for Public Schools

Inadequate state investment in public education remains a primary challenge for districts in meeting students’ needs, and this must be addressed regardless of how funds are distributed. North Carolina continues to rank at the bottom nationally in both funding effort and per-pupil spending. If the state aims to drive long-term economic growth and remain a top destination for families and businesses, it must make substantial and intentional investments in its public school students.

As the modeling presented in this report clearly demonstrates, implementing a cost-neutral model would result in untenable funding losses for the majority of the state’s school districts and charter schools. Transitioning to a weighted student funding formula will require significant, sustained new state investment and a guarantee that no districts or charter schools will be harmed as a result of the transition. This recommendation aligns with the study group’s guiding principles of ensuring our finance model is robust and supportive.

Target Investment to the Students and Communities Who Need it Most

The study group agreed on the importance of targeting investment to students and communities most in need, including low-income students, students with disabilities, multilingual learners, rural districts, and districts with low wealth. A shift to a weighted student model should reflect the actual needs and costs of effectively serving unique students and districts across the state through the specific weights used and the amounts of each weight. This recommendation aligns with the study group’s guiding principles of supportive and transparent.

Continuously Evaluate and Improve the State’s School Funding Formula

Ensuring the state’s funding model remains responsive to actual costs and student needs will require regular re-evaluation. Student populations, economic conditions, and revenue evolve continuously and regardless of the underlying structure, funding models should be flexible to adapt to predictable and unforeseen changes. Routine evaluation should be built directly into the policy along with statutory, scheduled adjustments to keep up with inflation.

Model evaluations should assess both how effectively the formula directs funding to intended student populations and how local districts are utilizing funds to address student needs. Clear reporting and evaluation is necessary to ensure that targeted funding is reaching the students who need it most and contributing to student success. Public reporting should include allocation, spending, and student outcomes broken down by subgroups.

Moreover, the state should ensure that district leaders are present at every step of the way and should continue input-gathering before, during, and after implementation. This recommendation aligns with the study group’s guiding principles of flexible/sustainable and the non-negotiables of evaluation for change and implementation support.

Implement Low-Cost Adjustments to the Current Formula in the Short-Term

In the absence of a full-scale weighted student funding model that meets each of the study group’s guiding principles, there are steps that lawmakers can take in the near-term to target support to the students who need it most without a complete overhaul of the funding formula.

Increasing flexibility and the ability to transfer funds between allotments would empower local district leaders to address the challenges specific to their communities. The state could provide this flexibility by combining the Disadvantaged Student Supplemental Funding and At-Risk Student Services into one allotment and all other dollar allotments into a single allotment with greater flexibility.

Additionally, DPI’s proposed weighted Exceptional Children (EC) model would be an impactful first step, increasing support for high-needs students and tying funding more closely to need through service hours rather than diagnosis. Similar adjustments can be made to other allotments directed toward low-income students and multilingual learners.