Agenda - Item 1B - Public School Forum Local School Finance Study

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> WHAT’S NEW IN THE 2018 LOCAL SCHOOL FINANCE STUDY? Long-time readers of the annual Local School Finance Study noticed a new look beginning with the 2014 study, which continues this year. “Under the hood,” however, the study is largely the same as in 2013 and previous years, with a few notable exceptions. Most significantly, since 2014, the study has included charter school enrollment in each county’s total Average Daily Membership (ADM). Charter schools receive funding based on their ADM, just as district schools do. The change reflects that each county’s funding for instructional expenses is divided approximately equally among all district and charter school students residing in the county. When the new calculation including charter enrollment was first introduced into the Local School Finance Study in 2014, there was little change to the study data. Most counties saw little change in their rankings, while some counties with the largest percentages of students attending charter schools did see more substantial shifts. In this year’s study, more counties have seen larger changes in their rankings as charter enrollment has increased across the state. Counties like Orange and Hyde that have traditionally ranked highest in the tables continue to do so, and counties like Swain and Robeson continue to rank lower. Most other counties, however, have seen larger changes in their rankings on tables reflecting Actual Effort (Tables 2 and 3) as charter enrollments have increased across the state. Rankings of property value (Table 1) and Ability to Pay (Table 4) have remained more static. Also new since 2014, the state average per capita income used in Table 4 is the statewide average from the U.S. Bureau of Economic Analysis. Aside from this and the inclusion of charter school enrollments, the study’s methodology is unchanged. The five main data tables included in past years’ studies appear again in this year’s study as appendices. The tables appear in the same order as in past years, to facilitate comparison with previous studies. The capital outlay and debt service averages, which appeared in Tables 2 and 5 prior to the 2014 study, and did not factor into the rankings, now appear as a separate Table 2A, with counties ranked to mirror the order in Table 2 to facilitate comparison with previous studies. Also since 2014, several redundant table columns have been omitted and others reordered to facilitate readability. Finally, the 2014 Local School Finance Study pioneered a new summary table, which we include again this year: Local School Finance Study Rankings-at-a-Glance, which collects the rankings from Tables 1-5 in a single table, ordered by the Table 5 Relative Effort rank. The table is accompanied by a brief explanation of the rankings, which also serves as an introduction to the more detailed tables included in the appendices. The rankings in these five columns are calculated in the five tables included in the appendices to this report. Property Value Rank: The first column shows county rankings based on the real estate wealth available in each county. Most local funding for schools comes from property taxes. Counties ranked higher on this measure have more property available for potential taxation to support education. (See Table 1) Actual Effort Rank: Rankings in the second column reflect the actual dollar effort of counties to fund schools, without taking into account property wealth. Counties that spend the most per student rank highest on this measure. (See Table 2) Actual Effort Rank II: The rankings in the third column serve the same purpose as the second column but take into account supplemental state funding provided for low-wealth and small counties. Counties that spend the most per student based on county spending combined with low-wealth and small county supplemental state funding rank highest on this measure. This column can be analyzed alongside the second column to show the impact of supplemental funding on counties’ relative rankings. (See Table 3) Ability to Pay Rank: The fourth column’s rankings reflect an analysis of each county’s fiscal capacity to support public schools, taking into account property values (from the first column, adjusted using the state’s average effective property tax rate) and non- property tax revenues. Large, urban counties that combine high adjusted property valuations with broad-based economic activity and high per capita incomes tend to receive high rankings on this measure. (See Table 4) Relative Effort Rank: The final column compares Actual Effort (from Table 2) and Ability to Pay (from Table 4). Low-wealth counties with comparatively high spending levels tend to rank highest in this measure. (See Table 5) > 4