Education, NC Budget and Tax Center

New report: Legislation to address NC’s school building crisis would only begin to address school facility needs

North Carolina lawmakers are debating two proposals that would direct state money to fund long overdue public school construction needs, but both fall short of offering sustainable solutions for the state, according to a new report from the NC Justice Center. Ultimately, rolling back tax cuts made in the last several years could completely address the state’s school building needs without undermining funding for education.

“Where students learn matters for their educational outcomes,” said Kris Nordstrom, Senior Policy Analyst with the Justice Center’s Education & Law Project and co-author of the report. “Leaving children to learn in unhealthy, unsafe environments will have a negative impact on their well-being now and in the future as well as our state’s educational goals.”

North Carolina has a massive backlog in needed investments such as school construction and repairs, the report said, across a range of projects in communities facing very different demographic and fiscal challenges. Rapidly growing populations in some urban parts of the state drive needs for construction, while economically struggling communities lack the tax base to fix aging and dilapidated school buildings.

Moreover, the state of our schools is a self-inflicted wound, the report said, due to tax cuts passed by lawmakers since 2013, which have reduced state revenues by approximately $3.6 billion per year. Between changes to the corporate income tax and failures to deliver on promised education lottery funding, lawmakers have diverted nearly $2.5 billion from school construction funding since 2006.

“Even compared to the depths of the Recession, North Carolina schools today have fewer teachers, assistant principals, instructional support personnel, teacher assistants, and supplies,” Nordstrom said. “Had leaders chosen a different path that did not undermine state funding, we could have kept pace with both school construction and operating needs.”

Read the full report.

The new legislation proposed to help close these gaps – House Bill 241 (which would issue bonds to fund school capital needs) and Senate Bill 5 (which earmarks General Fund revenue to public school capital) – differ in how they would pay for increased school construction but share two common features:

  • Both plans would reduce funding for state needs other than school construction. Neither plan raises additional revenue, so paying for school construction necessarily means reductions in other areas of the budget, including funding for K-12 education.
  • While potentially making an important contribution, neither option will meet all of the needs facing our public schools nor address school building needs beyond the next decade.

The bonds proposed by H.B. 241 would likely provide public schools with the greatest benefit, but neither of the current proposals would raise additional revenue to pay for school construction needs and therefore ensure an ongoing solution to the challenge of financing capital needs, the report said. Without raising additional revenues, servicing the debt on a school bond or increasing General Fund earmarks for school building appropriations will force more cuts in other areas, including education.

Returning to the pre-2013 corporate income tax arrangement would generate far more funding for school construction over the next few decades than either of the plans currently being debated and would do so without undermining funding for education and other state services, the report said. If lawmakers rolled back the tax cuts phased in this year, and those funds devoted to school construction, North Carolina would erase its school building backlog within the next decade. If all of the personal and corporate income tax cuts passed since 2013 were rescinded and those funds reallocated to school construction, we could address North Carolina’s needs in just over two years.

“North Carolina can afford safe and inspiring schools if the most fortunate North Carolinians invest more in our children’s shared future,” said Patrick McHugh, Senior Policy Analyst with the Justice Center’s Budget & Tax Center and co-author of the report. “The only question is whether leaders in Raleigh have the will to fund schools without undermining other important educational needs.”

Click here to read the full report.

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