How are Public Schools Funded in North Carolina?
Under North Carolina’s school finance system, established nearly nine decades ago, it is the state’s responsibility to fund instructional expenses (including personnel) while county governments are responsible for the cost of capital expenses (buildings and maintenance). While the state bears responsibility for fulfilling its constitutional obligation of providing a sound basic education to every child, North Carolina schools have three sources of funding. In the 2019-20 school year, North Carolina public schools spent nearly $14.1 billion on instructional expenses, using a combination of state, federal, and local resources. State funding accounted for 67 percent of expenditures, federal funding accounted for 10 percent, and local funding accounted for 23 percent of spending.
The nearly century-old division of state and local responsibility for school funding still shapes the way North Carolina pays for public education today, with approximately 65 percent of instructional expenditures coming from the state and over 97 percent of capital expenses paid at the local level. However, this division has eroded somewhat in recent years. In 2019-2020, counties funded 17.7 percent of principal and assistant principal positions, 6.9 percent of teachers, 8.8 percent of teacher assistants, and 23 percent of professional instructional support personnel; and the state funded 2.5 percent of capital expenses.
State funding for school operations has increased from $3.44 billion in 1992-93 and represents the largest part of the state’s budget. But while the level of funding has increased over time due to enrollment and cost increases, the percentage of the state’s General Fund dedicated to education has declined sharply since 1970. In 2019-20, 41 percent of the state’s General Fund was appropriated for K-12 public education, a significant drop from 1970, when it was 52.5 percent. According to the Department of Public Instruction, if public education were funded at the same percentage of the General Fund as in 1970, districts and schools would have an additional $3 billion to educate our students.