As school districts prepare for another school year, a recent survey found that two concerns top the list for superintendents: budget shortfalls and declining enrollment. Both have significant implications for school systems, and while North Carolina’s recently enacted budget addresses some of these challenges, many underlying issues remain unresolved.
Budget Shortfalls
District leaders report that rising operating costs, employee salaries, and benefits are creating budget pressures they cannot sustain without additional support. A critical concern in North Carolina is funding for students with disabilities. North Carolina state law limits Exceptional Children funding to the equivalent of 13% of district enrollment, even though many districts serve substantially higher percentages. According to the Public School Forum’s analysis of DPI data, 93% of North Carolina school districts exceed that cap requiring districts to absorb the additional costs locally. Some districts have sufficient fund balances to do so, while others are already operating with budget deficits.
At the same time, the budget increases funding for the Opportunity Scholarship Program to $705 million for this school year, with planned appropriations exceeding $800 million annually by 2030. Unlike public schools, private schools are not required to comply with the Individuals with Disabilities Act (IDEA), the federal law guaranteeing a free appropriate public education for students with disabilities. As a result, public school districts remain the primary, and in many cases the only, providers of specialized services for these students.
Declining Enrollment
Traditional public school enrollment in NC has fallen nearly 6% since its peak in 2014-15. Enrollment across the nation is projected to continue declining through at least 2030. Declining birth rates remain the primary driver of enrollment loss, while expanded school choice options and homeschooling have also contributed to enrollment shifts in some communities. As enrollment declines, many districts are serving smaller but increasingly higher-need student populations. Because many school costs remain fixed regardless of enrollment, and services for students with disabilities and English learners require additional resources, districts face growing financial pressure even as they educate fewer students.
The budget directs the state to continue exploring a weighted student funding model, which could better align funding with student needs and help address some challenges created by the current funding formula. Separately, the Public School Forum convened a statewide stakeholder group to evaluate this approach, with recommendations expected later this summer. Stakeholders consistently emphasized that while improving the funding formula is important, changing how dollars are distributed cannot substitute for sufficient overall investment.
The budget also redirects approximately $35.8 million in enrollment-related savings toward one-time education investments, including bonuses for school nutrition and custodial staff, middle school literacy professional development, and a new K-8 math curriculum. These investments may help address specific needs, but they do not offset the long-term fiscal pressures associated with declining enrollment and rising costs.
The Policy Challenge Ahead
Public schools remain the only educational option legally required to enroll and serve every student who walks through the door. As enrollment patterns shift and district needs become more complex, the central policy question is no longer simply how much North Carolina spends on public education, but whether its funding system is designed to respond to the realities schools now face. Ensuring that districts have both adequate resources and the flexibility to meet students’ evolving needs will remain one of the state’s defining education policy challenges.
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