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One late entry in the list of contentious items in the state budget plan passed by the N.C. General Assembly last week was a change in local finance law that critics say would open the floodgates for city-run charter schools and supercharge local fights over education funding.
A special provision inserted in the budget changes current state law to allow municipalities to use their taxing authority to finance public schools, including charter schools.
The provision, requested by proponents of new municipal charter school legislation, appears to alleviate a conflict with local government finance law that critics of that legislation raised. The measure would allow four towns in Mecklenburg County to build their own charter schools.
As the House wrapped up budget debate last Friday, Rep. Graig Meyer, D-Orange, said the budget provision does far more than clear the way for the four towns. He asked members to go over the provision with local government and school officials and see how they react.
“It’s such a fundamental change to the way we have done education funding in North Carolina,” Meyer said in closing remarks on the House floor Friday. “I’m afraid it’s going to have the kind of unintended consequences that happen when a provision is stuck into a bill that we really haven’t had time to vet.
“If cities are going to be able to fund schools along with counties and the state, school boards in every single county in the state are going to play city and county commissioners off of one another on whose job it is to fund schools.”
The situation would result in funding inequalities among schools even within the same school district, while also fueling political battles, Meyer said.
“So then your city council races become about school board funding just like the county commissioner races have become in so many places in the state,” he said.
Rep. Becky Carney, D-Mecklenburg, a longtime member of the House Finance Committee, said she would like to see the provision removed when the legislature considers its technical corrections bill later in the session. The provision, she said, should be fully reviewed and go through the proper committees.
She said that neither the North Carolina League of Municipalities nor the North Carolina Association of County Commissioners participated in the legislative review process.
“I think it’s a major issue,” Carney said. “This is changing our taxing structure and authorizing structure within local governments.”
Scott Mooneyham, spokesman for the League of Municipalities, said the change is significant and could lead to greater school inequalities.
“This is a monumental policy shift in North Carolina that has received very little vetting,” Mooneyham said in a statement to Carolina Public Press.
“It is of enormous consequence because, over time, it has the potential to shift more of the cost of public education onto the property-tax base and property-tax payers, shifting it away from the statewide income tax.
“That would obviously exacerbate the difference in educational opportunities between wealthier communities and those communities that are less wealthy and have less property tax base from which to raise revenue.”
He said the state has already faced decades of litigation over unconstitutional decisions that involve education funding, and the new provision risks more lawsuits.
Meanwhile, the municipal charter school bill the provision would assist moved close to passage in the Senate, which has held up the bill since it passed the House last year.
The bill, which would apply only to Cornelius, Huntersville, Matthews and Mint Hill, passed the Senate on second reading Thursday 30-20. The vote was mostly along party lines, but five GOP senators voted against it. The bill is due to be taken up again on Tuesday.
Since the Senate added Cornelius and Huntersville to the bill, if passed, it would go back to the House for a concurrence vote on the changes.
As a local bill, the governor cannot veto it.
Although the legislation easily passed a Senate committee on Thursday, even some of those voting yes had reservations.
Sen. Jerry Tillman, R-Randolph, a former school administrator, said cities didn’t know how to run schools but agreed not to get in the way if the four towns “wanted to screw themselves up.”
Rep. Bill Brawley, R-Mecklenburg, the bill’s main sponsor, said the intent of the legislation is to open up more options for school choice and give those communities that want to increase funding a way to do so.
He told senators that it is likely that only Matthews would consider moving ahead with a charter school and that it would represent only a fraction of the students in the district.
“I do not see how this would have the sweeping effect that people fear,” he said.
The finance change in the budget fixes one of several pitfalls in the charter-school legislation detailed in a report released late last month at the legislature by a delegation from Charlotte-Mecklenburg Schools.
The report, authored by former General Assembly special counsel Gerry Cohen, detailed financing, governance and employee retirement and benefit challenges that municipalities would face in setting up their own schools.
Cohen said the schools would effectively become town departments.
With so many questions, former Rep. Charles Jeter, legislative liaison for Charlotte-Mecklenburg Schools, said he was disappointed to see the budget provision pass and the Senate move ahead with the local bill.
He said the towns are not being open about the costs and liabilities they would incur, which include larger pension obligations, likely requiring higher taxes.
“The tax implications for them are enormous,” he said, disagreeing with proponents who say a charter school won’t require higher taxes. The change in the budget bill, he said, only proves the point that it will.
“They wouldn’t have done it in the budget like they did unless they knew these towns were going to use their tax revenue,” he said.
Several technical issues with the plan still exist, Jeter said, especially taking on debt, which would be prohibited for municipal charter schools.
Overall, he said, the question comes down to why the towns feel the charter schools are needed in the first place. “What problem are we trying to fix?” he said.
Although opponents of the move in the legislature are focusing on the public financing changes in the bill, others are saying the bill is a rapid path back to less diverse schools.
In a Friday essay in the News & Observer, attorneys Mark Dorosin and Elizabeth Haddix of the Julius I. Chambers Center for Civil Rights, who are lead counsel in a challenge over inequalities among Halifax County’s three school districts, said “the tactic of legislatively creating white enclave districts to avoid integration” has a long history in North Carolina.
“HB514 is part of an ongoing campaign by the General Assembly to undermine public education in general and racially diversity in schools in particular,” the two wrote.
- House Bill 514 — Permit Municipal Charter School in Certain Town information page
- Appropriations Act of 2018 text
- Base and Expansion Budget committee report
- Gerry Cohen’s report on HB 514.
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