Most of the General Assembly”s meetings were cancelled last week due to winter weather, but the legislative calendar is busy again as the long session ramps up. Already, committees are hearing briefings and policy proposals, and taking up preliminary bills that may later become part of the 2025-27 budget.
Here’s what you need to know about the budget process and education policies on the docket.
Overview of the budget process
At the beginning of the budget process, the House and Senate education appropriations committees meet as one joint committee for broad discussions of upcoming budget items. The joint committee also receives up-to-date information from various state agencies and groups.
Both committees are responsible for developing the state budget for public K-12 schools, community colleges, and the University of North Carolina (UNC) System.
The budget work of each committee is supported by the nonpartisan Fiscal Research Division (FRD), a General Assembly agency. When they General Assembly is in session, FRD staffers write fiscal notes and memos, staff appropriations committees, and respond to legislators’ requests for more information.
Base budget and budget timeline
Legislators start each long session with a base budget provided by the Office of State Budget and Management (OSBM). The base budget consists of funds that are already authorized for the current biennium (2023-25), with small adjustments from OSBM. Those adjustments may include removing non-recurring allocations, for example.
Committee reports modify base budget expenditures in long session years, like this year, and then make adjustments to it in subsequent short session years.
In February, joint committees start hearing briefings from FRD and various state agencies. In March, the governor typically presents their budget to the General Assembly. In April and May, the Senate and House each draft, present, and vote on their proposed budgets, respectively.
The goal is to pass a conference budget at some point before the start of the next fiscal year, on July 1.
Some key points about funding
- In state government, appropriations are when the General Assembly authorizes money to be withdrawn from the State Treasury. Sometimes, the General Assembly also allocates additional funds from state receipts, which include fees, licenses, federal funds, grants, fines, penalties, and tuitions generated by state agencies.
- Most government entities receive their money from the general fund. Unused money reverts back to the general fund at the end of the fiscal year unless otherwise noted.
- Legislators can allocate either recurring or non-recurring funds. Recurring funds are annual expenses, like teacher salaries. Non-recurring funds could go toward grants, bonuses, or money for pilot programs.
The education budget
“The education budget is by far the largest component of net general fund appropriations,” Stephen Bailey, a representative from FRD, said in a presentation to legislators.
According to FRD, education allocations make up 55% — $18.2 billion — of the net general fund appropriations in Fiscal Year (FY) 2024-25.
Education funding is distributed differently to public universities, community colleges, and public K-12 schools. K-12 schools largely receive funding based on ADM, or average daily membership, which is the expected number of students per day in a school or district.
North Carolina has 115 local education agencies (LEAs), also called school districts. While most LEAs represent their entire county, there are 11 counties that split into smaller county or city districts.
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Historically, LEAs and their counties have been responsible for most capital funding, while the state government provides funds for the operational costs of education. For example, a district will usually pay to build or repair a school building, whereas the state pays most teacher salaries.
However, there are exceptions, such as the lottery-funded Needs-Based Public School Capital Fund (NBPSCF), which provides grant money to low-income districts for the construction of new school buildings and repairs and renovations of existing buildings.
Locally allocated funds are generally most flexible and districts use them differently, according to the FRD presentation, whereas state-allocated funds often go toward specific purposes and have limits on being transferred for other uses.
Federal dollars generally make up about 10% of education funding, according to the FRD presentation, and are usually based on specific student characteristics — for example, child nutrition or special education programs.
The majority of education funding for districts comes from the state, per the FRD, and state allocations primarily support personnel.
Guaranteed positions
Guaranteed positions are unique to North Carolina. In essence, instead of receiving dollars to pay educators and staff, LEAs are “guaranteed positions” by the state that the LEAs then fill themselves. From there, DPI “covers the cost of each position and manages the budget statewide,” according to FRD’s presentation.
For example, the legislature may determine, based on the number of first graders in a district, to allot ten first grade teachers. From there, the district can hire ten teachers who will receive their salaries from DPI.
According to FRD, this system comes with advantages when combined with the state salary schedule, which pays teachers based on experience and qualifications. If a district is allocated ten first grade teachers, for example, they are free to hire the most highly qualified teachers they can find regardless of their cost, because the state pays their salaries.
Theoretically, this removes incentives for schools to replace veteran teachers with cheaper and unexperienced teachers, or for teachers to move from district to district in search of better compensation, according to the presentation.
However, local district funds are often used to supplement teacher salaries, so districts with the means to do so can attract teachers with bonuses. Some federal funding sources can also be used toward teacher salaries.
Not all teaching positions in North Carolina are currently funded through the guaranteed positions system — 6,574 of 90,481 positions statewide are funded through local funds, according to Amanda Fratrik of FRD.
That’s something Sen. Kevin Corbin, R-Macon — who co-chairs both Senate education committees — expressed interest in changing in a Joint Education Appropriations Committee meeting on Wednesday.
“I think we ought to look at possibly doing something to help pay for those locally paid teachers,” he said.
You can view part one of the FRD’s presentation on public school funding here, and part two here.
Mo Green visits the General Assembly to outline budget proposals
On Thursday, state Superintendent of Public Instruction Mo Green attended the Joint Education Appropriations meeting to present policy proposals and take questions. EdNC has previously reported on Green’s budget proposals, which he first introduced earlier this month.
A few proposals presented before the committee by Geoff Coltrane, Green’s senior director of government and strategy, included a moratorium on expansion of the private school voucher program, an increase in School Resource Officer (SRO) funding, and an updated formula to provide funding for students with disabilities.
Meanwhile, on Wednesday, House and Senate committees both advanced separate versions of a bill that would restrict cellphone use in classrooms.
Bills also advanced that would put all community colleges on the same learning management system (LMS) and reorganize Chapter 115D of the General Statutes (without substantial changes).
The Joint Education Appropriations Committee will meet at 8:30 a.m. on Tuesdays, Wednesdays, and Thursdays for the next few weeks, in Room 423 of the Legislative Office Building. You can also stream those meetings on the General Assembly’s website.
The committee’s next meeting is Tuesday, March 4.
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