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On K-12 education: demystifying the “LEA adjustment” and the federal funding cliff

The state K-12 education budget is massive and a bit convoluted – especially with one of the largest budget pressures on state public schools unaccounted for in the state budget (the loss of federal recovery dollars) and the other just plain weird accounting (the LEA Adjustment). Both topics have come up in the news, so here are the basics on what these things are and why addressing them is such a big deal for North Carolina’s schools.

This talk of an LEA Adjustment is driving me crazy. What is it, how big is it, and how does it work?

The LEA adjustment requires North Carolina school districts to identify and implement a cut to their share of state funding on a recurring (yearly) basis. The size of each LEA’s adjustment is determined based on their average daily membership, or ADM. When deciding how to cut their budgets each year, LEAs have maximum flexibility but must maintain class size requirements in grades K-3. Rather than writing a dull history of how this cut has grown deeper and deeper over the course of the Great Recession and recovery, here’s the history of the LEA Adjustment in one chart:

The most confusing thing about the LEA Adjustment is the way it’s talked about. Cutting the LEA Adjustment actually means putting money back into the public school budget, or in the case of the House budget, simply not cutting the public school budget much further than it was cut last year.

Did the House budget eliminate the LEA Adjustment?

No, and not by a long shot. Under the budget passed in 2011, the LEA Adjustment is set to increase from $429 million to $503 million starting next year. What the House budget did was strike that increase – an new $74 million in cuts – which would leave the LEA Adjustment at $429 million, which is the same as schools are dealing with this year (see above).

What about the money the House found to fill in the loss of federal dollars in the schools next year?

The $229 million in one-time money appropriated by the House is intended to offset the loss of federal funding through the EduJobs program. That budget gap for the schools comes on top of the LEA Adjustment – because the House offset for the loss of that federal money is about $30 million short of the $259 million schools are set to lose.

Why is the fact that it’s one-time money so important?

Because it’s a temporary fix – nothing more. If the House budget became law, North Carolina’s public schools would have some short-term relief from their budget pressures, but they would still be facing a $688 million budget gap in FY2013-14 – and that doesn’t even include enrollment growth. ($429 million LEA Adjustment + $259 million EduJobs loss = $688 million).

But didn’t ARRA spending on public education raise North Carolina way above its historic average?

In a nutshell, no. Federal funds for public education were intentionally used to supplant state General Fund appropriations from FY2008-09 through FY2011-12 in order to reduce the impact of the business cycle on the classroom and educational experience. Federal law allowed local educational authorities a great deal of flexibility in how the lion’s share of K-12 education recovery dollars could be used. BTC analysis of North Carolina ARRA expenditure data for K-12 education from FY2008-09 through February 2012 shows that 92 percent of these federal recovery funds for public education – a total of $1.47 billion – were used to pay public school salaries and benefits for thousands of teachers and other classroom personnel.

One Comment


  1. Doug

    May 31, 2012 at 4:39 pm

    I don’t think Brenna understands the LEA adjustment !

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