Economic Outlook - April 2006

School forum can't put a price on performance.

All public school systems aren’t created equal, nor are they endowed by their creator with enough money to provide a sound education for all students, according to the Public School Forum of North Carolina, a Raleigh-based think tank. The gap in per-student spending between the 10 richest counties and the 10 poorest has grown 62% since 1997. About 65% of funding for kindergarten through 12th grade comes from the state, about 25% from the counties through property taxes and the rest from the feds. John Dornan is the forum’s executive director.

BNC: Why is the gap growing?

Dornan: It really comes down to the difference between those counties that are adding jobs and growing their economies and those that are stagnant or slipping. It’s gotten exaggerated recently because in our smaller counties, we’ve had so many plant closings, job losses and reductions in real-estate value.

Declining property values are shrinking county tax bases?

The property-tax rates in our poorer counties are considerably higher than the rates in our wealthier counties. The irony is that even when they tax themselves at a high rate, there simply isn’t much to tax. A county like Wake can have a low tax rate, but it can generate a huge amount of money because it has so much real-estate wealth.

Why should a big-city businessman worry that rural counties spend so little on students?

Those children in poor counties in eastern and western North Carolina are tomorrow’s work force. Many of those counties are losing population because people are moving to urban areas for jobs and opportunities. Will they have the basic skills they need, or are businesses going to have to invest in training them?

What evidence do we have that less money equals worse performance?

It isn’t that cut-and-dried. The factors that appear to make a huge difference, though, include teacher-turnover rates. Can counties attract and keep people who are qualified to teach? There are a lot of studies that show if a student is unlucky enough to get a poorly qualified teacher two years in a row while they’re in elementary school, they will be scarred for the rest of their life. And it’s our poorest counties that are hav- ing the toughest time hiring and keeping qualified teachers.

Why?

We’ve done surveys on this with teachers. What is really huge are quality-of-life issues, availability of housing, shopping, colleges to get graduate degrees, social life on weekends. The counties that have among the highest turnover rates are those where people typically have to drive 50 or 60 miles to a city to find those things.

Most school funding comes from the state, not the counties.

But we’re still a low-spending state. In 2004-05, when you look at all sources, we spent $7,350 per child. The average state spends $8,618. So we’re spending about $1,300 less per child than the average.

How much money does it takes to provide a good education?

I wish I had an easy answer to that. That’s part of the Leandro suit, in which the state Supreme Court found that the state isn’t meeting its obligation but didn’t go on to say what it would take to meet the obligation. Just as all counties aren’t created equal in wealth, neither are they created equal in the kinds of students they have to educate.

The court said county funding disparities are permissible, so what’s the point of harping on them?

The state is going to have to intervene. That same court ruling found that the state is responsible for the quality of education, that the state can’t blame it on local school officials, that if there’s a problem, it’s the state’s responsibility to do something about it.

Don’t some counties receive supplements from the state?

There’s a supplemental low-wealth fund and supplemental small-school fund. Both came into being in the mid-’90s and were the result of studies done by the forum. We had been doing these annual finance studies, and the gap kept getting larger. One year, we proposed these supplemental funds to try to equalize the scales. That amounts now to a little over $125 million per year.

Like the court, you suggest that we’re not spending enough but don’t say what is enough.

Everyone is looking for a number. It frustrates policymakers to no end, but it is really difficult to say, ‘Here’s the magic bullet for all systems,’ because they vary so much. The amount needed varies depending on what kind of kids are being taught and how much the county is putting in. We spend a lot of money on driving class sizes down, but in Cary, a suburb, we can have kids doing fine with class sizes of 35 or 40. At an inner-city school in Charlotte, it isn’t necessarily so.

What would make the forum happy? Leading the U.S. in per-student spending?

I’ll tell you what would make us ecstatic: if we merely got to average. The state has to get qualified teachers in all classrooms. And that may take financial incentives.