Commentary, Education

At time of glaring education needs, state voucher program remains wastefully overfunded

In a year with no budget, one program for K-12 students was guaranteed a funding increase of more than 30%: the Opportunity Scholarship voucher program. And once again, that funding will substantially outpace demand for vouchers. As a result, the state is on pace to waste more than $26 million that could otherwise be used to help students in public schools.

Since its inception, funding for the Opportunity Scholarship voucher program has exceeded demand for vouchers. Nonetheless, lawmakers decided in 2016 that the program should receive automatic funding increases of $10 million per year through FY 2027-28 when total appropriations for the program will reach $144.8 million.

Additionally, the 2016 changes caused the program to become “forward-funded.” That means next year’s $10 million funding increase is sitting unused in a state bank account this year, unavailable for other functional purposes.

The chart above shows the trend in unused funds in each year of the voucher program’s existence. Unused funds are defined as fiscal year appropriation, plus funds carried over from the prior year, less expenditures on administration and voucher awards.

The out-sized amount of unused funds in FY 2016-17 were largely the result of the decision to begin forward-funding the program that year. Subsequent increases have been driven by voucher demand falling further behind available funding.

Without even getting into the merits of an unregulated voucher program (the merits are few), the continued over-funding of this program is indefensible. As documented in the Leandro consultant’s report published this past December, North Carolina’s school budget is $3.7 billion short (about 35%) of what’s needed to meet the bare minimum of what the state constitution says is required. It’s perverse to leave millions of dollars sitting needlessly idle each year when lawmakers are failing to meet their constitutional obligations to children.

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