The Intersection

Making Sense of NC School Funding: North Carolina’s Resource Allocation Model

April 15, 2020


In Part 4 of our Making Sense of NC School Funding blog series we will look specifically at North Carolina’s Resource Allocation Model of school funding and will explain the largest categories of allotments.

North Carolina is one of eight states to utilize a Resource Allocation Model to provide funds to local districts. Utilizing nearly 40 allotment categories, the state distributes school funding directly to Local Education Agencies (LEAs). Most of the time, “LEA” is used to refer to a school district, but charter schools, regional schools, and lab schools are also considered LEAs in North Carolina.

In this system, expenses are funded through either dollar allotments or position allotments.

Dollar Allotments: LEAs are given a specified dollar amount that they can use for things like textbooks and teacher assistants, and local school systems have discretion when it comes to buying materials or hiring employees as long as they stay under that specific amount.

Position Allotments: Each LEA gets a certain number of positions allotted based on their average daily membership (ADM) (i.e., average number of students in membership on a given day), and local school systems can hire any certified professional to fill that position without needing to stay under a certain dollar amount. This allows schools to hire the most-qualified candidates for any open position, regardless of what it will cost to employ them. Examples of position allotments include teachers, principals, and assistant principals.

The three largest allotment categories include base allotments, student characteristic allotments, and LEA characteristic allotments.

Base allotments fund basic education costs and are generally available to all LEAs. This is the largest allotment category, with 20 different allotments accounting for approximately 80 percent of state education spending annually. The three largest base allotments in 2017–18 were:

  • Position allotments for classroom teachers. Positions are granted to LEAs based on the ADM in different grade levels. For example, LEAs are given funds for one teacher per 18 students in kindergarten but only one teacher per 29 students in 12th The state paid almost $4 billion for this allotment in 2017–18.
  • Dollar allotments for charter schools. Any charter school approved by the State Board of Education is eligible for this funding, and the total dollar amount is based on the funding of the district in which the charter school is located. This allotment cost the state approximately $585 million in 2017–18.
  • Position allotments for instructional support personnel. This allotment provides funding for certified staff who serve at-risk student populations. These positions must be used first for school counselors, then for social workers, and finally for other personnel with direct instructional relationships to students and teachers. LEAs are entitled to one position per 218.6 students, and the state paid $467 million for this allotment in 2017–18.

Student characteristic allotments provide funding to LEAs depending on whether students have specific characteristics. This is the second-largest allotment category, with five allotments making up approximately 13 percent of the annual education budget. These allotments include funding for:

  • Children with special needs. This funding helps districts provide special education and related services to eligible students. Funding is distributed based on the number of children ages 5 through 21 with disabilities in each LEA, but it is capped at 12.5 percent of ADM. This was the second-largest state allotment in 2017–18, with the state granting more than $785 million to provide special education services.
  • At-risk student services/alternative schools. This funding helps districts identify and support students who are at risk of dropping out of school. LEAs can use the funding to provide alternative instructional programs, summer school instruction, remediation, and alcohol and drug prevention services. LEAs must receive at least enough funding for two teachers and two instructional support personnel, and the state spent more than $285 million on this allotment in 2017–18.
  • Limited English proficiency. These funds support students who are not yet proficient in English. Funding can only be spent on classroom teachers, teacher assistants, textbooks, tutors, classroom materials, transportation costs, and staff development needed to effectively serve students who are limited English proficient (LEP). LEAs are eligible for this funding if they have at least 20 LEP students or if at least 2.5 percent of the student population is LEP, and the funding is capped at 10.6 percent of ADM. The state spent almost $80 million on this allotment in 2017–18.

LEA characteristic allotments provide funding to LEAs depending on whether the LEA itself meets certain characteristics. This is the third-largest category, accounting for 3 percent of the annual state budget for education. There are only two allotments in this category:

  • Low wealth supplemental funding. All LEAs located in counties where the county wealth is less than 100 percent of the state average are eligible for this funding. The money can only be used for certain types of expenses and the state uses a formula based on anticipated county revenue, tax base per square mile, and per capita income to determine how much assistance each county is eligible for. In 2017–18, the state distributed more than $232 million in low wealth funding to 77 districts.
  • Small county supplemental funding. This funding supports school districts that are particularly small, meaning that they have an ADM of 3,300 students or fewer. There are eight different steps on the funding scale, with funding amounts ranging from $1.47 million per LEA to $1.82 million per LEA (depending on ADM). The funds can be used for almost any expense, but districts are encouraged to use at least 20 percent of what they receive to support children who are underperforming on end-of-grade math and reading tests. Twenty-seven counties received $42 million in small-county funding in 2017–18.


Next week on the Making Sense of NC School Funding blog series you’ll hear from leaders from two North Carolina school districts who share their perspectives on school funding.

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