A BILL TO BE ENTITLED
AN ACT to repeal all existing school funding allotments and TO change the school funding model to a weighted student funding model.
The General Assembly of North Carolina enacts:

PART I. REPEAL CURRENT FUNDS, GRANTS, AND ALLOTMENTS
SECTION 1.  All funds, grants, allotments, and other sources of funding that expend their funds from the State Public School Fund that are in effect prior to the effective date of this act are abolished.

PART II. NEW WEIGHTED STUDENT FUNDING MODEL
SECTION 2.(a)  Chapter 115C of the General Statutes is amended by adding a new Article to read:
"Article 3A.
"North Carolina Weighted Student Funding Model.
"§ 115C‑25.1.  Definitions.
The following definitions apply in this Article:
(1)	Academically or intellectually gifted student. – A student who participates in plans developed pursuant to Article 9B of this Chapter.
(2)	Average daily membership (ADM). – The sum of the total number of days in a month a student is enrolled divided by the total number of school days in that month.
(3)	Base funding amount. – The uniform dollar amount that each student generates toward the student's funding allocation in a given school year.
(4)	Economically disadvantaged student. – Any student identified by a public school unit (PSU), meeting the criteria of Directly Certified, Categorically Eligible, or a method consistent with State or federal guidance for financial assistance regardless of participation or eligibility in the National School Lunch Program (NSLP).
a.	"Directly Certified" means students who are eligible for free meals through data matching of Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or Food Distribution Program on Indian Reservations (FDPIR) which includes Extended Eligible students and those found in the Direct Certification system.
b.	"Categorically Eligible" means students who qualify as economically disadvantaged based on their classification as homeless, runaway, migrant, foster, Medicaid recipient, or being enrolled in Head Start or a comparable State‑funded Head Start or pre‑kindergarten program.
(5)	Economically disadvantaged student factor. – The headcount of economically disadvantaged students in a public school unit multiplied by the percentage of students in the unit who are identified as economically disadvantaged.
(6)	Exceptional children. – Students who receive services provided pursuant to Article 9 of this Chapter.
(7)	Limited English proficient student. – A student who receives services for students learning English as a second language.
(8)	Small county school administrative unit. – A local school administrative unit that has an ADM of fewer than 3,300.
"§ 115C‑25.2.  Base funding; weighted categories.
(a)	The base funding amount for each student shall be allotted to each public school unit on the basis of the ADM for the unit.
(b)	Additional weighted allocations, none of which are mutually exclusive, shall be provided to public school units for each student in the following categories:
(1)	ADM in grades K‑5.
(2)	ADM in grades 8‑12.
(3)	Economically disadvantaged student factor.
(4)	ADM in small county school administrative units.
(5)	Student headcount of exceptional children.
(6)	Student headcount of academically or intellectually gifted students.
(7)	Student headcount of limited English proficient students.
"§ 115C‑25.3.  Biannual reports.
(a)	At the end of October and end of February of each school year, each local board of education, through the superintendent, shall file a report, based on information provided by the principal, for each school within the local school administrative unit with the Superintendent of Public Instruction. The report shall be filed in a format prescribed by the Superintendent of Public Instruction and shall include the organization for each school in the local school administrative unit, including the following information:
(1)	For each class in each grade level at each school, the following:
a.	The primary teaching subject of the teacher.
b.	The source of funds used to pay for the teacher, disaggregated by State, local, and federal funds.
c.	The number of students assigned to the class, including all exceptions to student‑teacher ratios in kindergarten through grade 12 that exist at that time.
(2)	For each school, the following:
a.	The number of program enhancement teachers.
b.	The source of funds used to pay each program enhancement teacher.
(3)	The student‑teacher ratio for each grade from kindergarten through third grade in the local school administrative unit.
(4)	Any other information the Superintendent of Public Instruction may require.
The Superintendent of Public Instruction shall conduct periodic audits of the information reported by the local superintendent under this subsection to confirm the accuracy of reporting at the local school administrative unit and school level of the average and individual student‑teacher ratio for students in kindergarten through third grade. If the Superintendent of Public Instruction finds that a local board of education is exceeding student‑teacher ratio requirements without application to the State Board for funding adjustment or a waiver of those student‑teacher ratio requirements, the State Board may impose the penalty set forth in subsection (j) of G.S. 115C‑301 until such time the local board of education receives a waiver or the schools in the unit meet the student‑teacher ratio requirements for kindergarten through grade 12.
(b)	By July 15 of each school year that reports are received by the Superintendent of Public Instruction, the Superintendent shall report to the Joint Legislative Education Oversight Committee (i) a summary of the reports filed by the local school administrative units and (ii) the results of any audits conducted by the Superintendent."
SECTION 2.(b)  For the 2023‑2025 fiscal biennium, the following additional weighted allocations will apply for the categories enumerated in G.S. 115C‑25.2, as enacted by this section:
(1)	ADM in kindergarten through grade five is thirty‑one percent (31%).
(2)	ADM in grades eight through 12 is twenty‑nine percent (29%).
(3)	Economically disadvantaged student factor is thirty‑eight percent (38%).
(4)	ADM in small county school administrative units is thirty‑two percent (32%).
(5)	Student headcount of exceptional children is one hundred thirty percent (130%).
(6)	Student headcount of academically or intellectually gifted students is four percent (4%).
(7)	Student headcount of limited English proficient students is ten percent (10%).

PART III. CONFORMING CHANGES
SECTION 3.(a)  G.S. 115C‑105.25 reads as rewritten:
"§ 115C‑105.25.  Budget flexibility.
(a)	Consistent with improving student performance, a local board shall provide maximum flexibility to schools in the use of funds to enable the schools to accomplish their goals, so long as the local board does not violate rules associated with the receipt of federal funds or conditions of federal grants.
	
(1)	Repealed by Session Laws 2013‑360, s. 8.14, effective July 1, 2013.

(2),	(2a) Repealed by Session Laws 2013‑360, s. 8.14, effective July 1, 2013.

	
(4), (5) Repealed by Session Laws 2013‑360, s. 8.14, effective July 1, 2013.

	
	
(6)	through (9) Repealed by Session Laws 2013‑360, s. 8.14, effective July 1, 2013.

	

(c)	To ensure that parents, educators, and the general public are informed on how State, local, and federal funds have been used to address local educational priorities, each local school administrative unit shall publish the following information from the prior fiscal year on its website by October 15 of each year:
(1)	A description of each program report code, written in plain English, and a summary of the prior fiscal year's expenditure of State, local, and federal funds within each program report code.
(2)	A description of each object code within a program report code, written in plain English, and a summary of the prior fiscal year's expenditure of State, local, and federal funds for each object code.

	

	
(4)	Repealed by Session Laws 2017‑57, s. 7.13(b), effective July 1, 2018.
(5)	A chart that clearly reflects how the local school administrative unit spent State, local, and federal funds.
(d)	The local school administrative unit shall maintain information published pursuant to subsection (c) of this section on its website for at least three years after it is published.
(e)	No later than December 1 of each year, the Department of Public Instruction shall collect the information reported by local school administrative units pursuant to subsection (c) of this section and report the aggregated information, including available data from the two previous fiscal years, to the Joint Legislative Education Oversight Committee and the Fiscal Research Division."
SECTION 3.(b)  G.S. 115C‑238.82 reads as rewritten:
"§ 115C‑238.82.  Allotment formula; adjustments to other allotments; enrollment reserve.
(a)	The State Board of Education shall implement a funding formula for NCVPS as follows:
(1)	Project NCVPS student enrollment by semester and year‑long course types for each public school unit.
(2)	Establish a per‑student, per‑course teacher payment structure for the instructional costs of NCVPS. In establishing this payment structure, the State Board of Education shall consider the following:
a.	The payment structure shall be based on a total compensation analysis to ensure NCVPS teacher pay has parity with similar programs. The total compensation analysis shall take into account salaries, benefits, and work effort to ensure valid comparisons between occupations.
b.	The effects any change in NCVPS teacher payments may have on the attraction and retention of NCVPS teachers.
(3)	Develop a per‑student, per‑course fee structure that is based on the per‑student, per‑course teacher pay structure. The per‑student, per‑course fee structure shall ensure that the projected cost for public school units equals the projected instructional cost for NCVPS courses. The State Board of Education shall consider recommendations from the NCVPS Advisory Council in establishing a per‑student, per‑course fee structure.
(4)	Multiply the per‑student, per‑course fees by the projected enrollment by course type to determine the total instructional cost for each public school unit.
(5)	Transfer a dollar amount equal to seventy‑five percent (75%) of the public school unit's projected instructional cost to NCVPS.
(6)	No later than February 28 of each year, calculate the actual instructional cost for each public school unit based upon actual NCVPS enrollment as of that date.
(7)	Subtract the amount transferred pursuant to subdivision (5) of this subsection from the actual instructional cost for each public school unit and transfer the remaining dollar amount owed, up to a maximum of one hundred percent (100%) of the projected cost.
(8)	Develop and implement a policy regarding returning funds to public school units in cases where the amount transferred pursuant to subdivision (5) of this subsection exceeds the actual instructional cost.
(b)	The State Board of Education shall reduce each public school unit's funding, as determined by the State Board of Education, on the basis of ADM in grades six through 12 to support the State‑level operations and administration of NCVPS. The funding reduction to support the State‑level operations and administration of NCVPS shall be based on the reduction taken from the prior fiscal year but shall be adjusted annually based upon the percentage growth in NCVPS enrollment to ensure the expansion of services due to increased student enrollment in NCVPS courses.
(c)	An NCVPS enrollment reserve fund shall be maintained in an amount of at least two million dollars ($2,000,000). For each fiscal year, the State Board of Education shall reduce each public school unit's funding as determined by the State Board of Education, on the basis of ADM in grades six through 12 by an amount that is the difference between two million dollars ($2,000,000) and the balance of the NCVPS enrollment reserve. The funds in the NCVPS enrollment reserve fund shall not revert and shall be used to cover the NCVPS instructional cost of students enrolled in (i) public school units with enrollments exceeding projected NCVPS enrollment, (ii) Department of Defense schools, and (iii) schools operated by the Bureau of Indian Affairs.
(d)	Only the following funds shall be used to cover the instructional costs of NCVPS:
(1)	Funds provided through the NCVPS funding formula, as established by subsection (a) of this section.
(2)	Funds provided through the NCVPS enrollment reserve, as set forth in subsection (c) of this section.
(3)	Funds from the sale of courses to out‑of‑state educational entities, pursuant to G.S. 115C‑238.81(d).
(4)	Local funds, including funds from private sources.
(5)	Federal funds.
(6)	The Special State Reserve Funds for Children and Youth with Disabilities.
(7)	The ADM Contingency Reserve."
SECTION 3.(c)  G.S. 115C‑301 reads as rewritten:
"§ 115C‑301.  Allocation of teachers;student‑teacher ratio.

	

(c)	Student‑Teacher Ratios for Kindergarten Through Third Grade. – At the end of the second school month and for the remainder of the school year, the size of an average class in kindergarten through third grade shall not exceed the student to teacher ratio by more than three students. The student to teacher ratio for kindergarten through third grade shall be as follows:
(1)	For kindergarten, one teacher per 18 students.
(2)	For first grade, one teacher per 16 students.
(3)	For second grade, one teacher per 17 students.
(4)	For third grade, one teacher per 17 students.

(c1)	Student‑Teacher Ratio Exceptions for Kindergarten Through Third Grade. – Student‑teacher ratio requirements for kindergarten through third grade provided in subsection (c) of this section shall not apply to the following classes:
(1)	Dual language immersion classes. For the purposes of this subsection, dual language immersion classes are classes in which (i) at least one‑third of the students' dominant language is English and (ii) instruction involves both English and a target foreign language with a minimum of fifty percent (50%) of core content taught in the target foreign language in order to promote dual language proficiency for all students.
(2)	Program enhancement classes. For the purposes of this section, "program enhancement" refers to any of the following disciplines:
a.	Arts disciplines, including dance, music, theater, and the visual arts.
b.	Physical education and health programs.
c.	World languages.
d.	Other supplemental classes as defined by the State Board of Education.

	

	

	

	

(d),	(e) Repealed by Session Laws 2013‑363, s. 3.3(a), effective July 1, 2013.

	

	

	

(g)	Waivers. – Local boards of education shall report exceptions to the student‑teacher ratio requirements set out for kindergarten through third grade and significant increases in student‑teacher ratio at other grade levels to the State Board and shall request waivers from the requirements for kindergarten through third grade, or both. The State Board shall not grant waivers for excess student‑teacher ratio in kindergarten through third grade, except under the following circumstances:
(1)	Emergencies or acts of God that impact the availability of classroom space or facilities.
(2)	An unanticipated increase in student population of an individual school in excess of two percent (2%) of the average daily membership of that school.
(3)	Organizational problems in geographically isolated local school administrative units in which the average daily membership is less than one and one‑half per square mile.
(4)	Classes organized for a solitary curricular area.
(5)	A charter school closure.
The State Board shall report on all waivers to the Joint Legislative Commission on Governmental Operations within 30 days of the grant of the waiver. The report shall include the local school administrative unit, school, and class or classes for which the waiver was granted, the statutory grounds for the waiver, and the terms of the waiver. A waiver for excess student‑teacher ratio in kindergarten through third grade shall not become effective until the State Board submits the report to the Joint Legislative Commission on Governmental Operations.
Upon notification from the State Board that the reported exception does not qualify for a funding adjustment or a waiver, the local board of education shall take action to correct the exception within 30 days. Within 60 days of notification by the State Board, the Superintendent of Public Instruction shall request an updated report from the local board of education on the size of each class in kindergarten through third grade for each school within the local school administrative unit. If the Superintendent of Public Instruction finds that a local board of education is continuing to exceed student‑teacher ratio requirements, the State Board may impose the penalty set forth in subsection (j) of this section until such time the schools in the unit meet the student‑teacher ratio requirements for kindergarten through third grade.

	

(h)	State Board Rules. – The State Board of Education shall adopt rules necessary for the implementation of this section.
(i)	Repealed by Session Laws 2013‑363, s. 3.3(a), effective July 1, 2013.
(j)	Penalty for Noncompliance. – A local superintendent shall complete a sworn affidavit attesting that the superintendent has complied with the requirements of subsections (c) through (g) of this section and include that affidavit with the biannual reports on student‑teacher ratio required by G.S. 115C‑25.3. If the State Board of Education determines that a local superintendent has willfully failed to comply with the requirements of this section, no State funds shall be allocated to pay the superintendent's salary for the period of time the superintendent is in noncompliance. The local board of education shall continue to be responsible for complying with the terms of the superintendent's employment contract."
SECTION 3.(d)  G.S. 115C‑375.5(b)(1) reads as rewritten:
"(1)	Local school administrative units shall use, as needed, funds to support programs for pregnant and parenting students."
SECTION 3.(e)  G.S. 115C‑105.30 reads as rewritten:
"§ 115C‑105.30.  Distribution of staff development funds.
Any funds the local board of education makes available to an individual school building to implement the school improvement plan at that school shall be used in accordance with that plan.
By October 1 of each year, the principal shall disclose to all affected personnel the total allocation of all funds available to the school for staff development and the superintendent shall disclose to all affected personnel the total allocation of all funds available at the system level for staff development. At the end of the fiscal year, the principal shall make available to all affected personnel a report of all disbursements from the building‑level staff development funds, and the superintendent shall make available to all affected personnel a report of all disbursements at the system level of staff development funds."
SECTION 3.(f)  G.S. 115C‑528(g) reads as rewritten:
"(g)	Subsections (e) and (f) of this section shall not apply to contracts entered into under this section so long as the term of each contract does not exceed three years and the total amount financed during any three‑year period is no greater than two hundred fifty thousand dollars ($250,000) or is no greater than three times the amount of funds used for classroom materials, equipment, and instructional supplies during the prior school year, whichever is less. The local board shall submit information, including the principal and interest paid and the amount of outstanding obligation, concerning these contracts as part of the annual budget it submits to its board of county commissioners under Article 31 of this Chapter."
SECTION 3.(g)  G.S. 115C‑238.50A(1b) is repealed.
SECTION 3.(h)  G.S. 115C‑238.54(a) reads as rewritten:
"(a)	The Department of Public Instruction shall assign a school code for each cooperative innovative high school that is approved under this Part."
SECTION 3.(i)  G.S. 115C‑316.5 is repealed.
SECTION 3.(j)  G.S. 115C‑218.42 is repealed.
SECTION 3.(k)  Section 7.8 of S.L. 2007‑107, as amended by Section 1(b) of S.L. 2009‑305 and Section 3 of S.L. 2013‑226, is repealed.
SECTION 3.(l)  Article 6C of Chapter 115C of the General Statutes is repealed.
SECTION 3.(m)  G.S. 115C‑105.60 is repealed.
SECTION 3.(n)  G.S. 115C‑311 is repealed.
SECTION 3.(o)  G.S. 115C‑377 is repealed.
SECTION 3.(p)  Section 7.12 of S.L. 2021‑180 is repealed.
SECTION 3.(q)  G.S. 115C‑111.3(b) is repealed.
SECTION 3.(r)  G.S. 115C‑156 reads as rewritten:
"§ 115C‑156.  State funds for career and technical education.
It is the intent of the General Assembly of North Carolina to appropriate funds for each fiscal year to support the purposes of career and technical education as set forth in G.S. 115C‑151. From funds appropriated, the State Board of Education shall establish a sum of money for State administration of career and technical education. In the administration of State funds, the State Board of Education shall adopt such policies and procedures as necessary to ensure that the funds appropriated are used for the purpose stated in this Part and consistent with the policy set forth in the Master Plan for Career and Technical Education."
SECTION 3.(s)  G.S. 115C‑238.70 reads as rewritten:
"§ 115C‑238.70.  State and local funds.
(a)	The State Board of Education shall allocate to a regional school the amount of funding determined for each student pursuant to G.S. 115C‑25.2.

	

(c)	For each child who enrolls in the regional school, the participating unit in which the child resides shall transfer to the regional school an amount equal to the per pupil amount of all money appropriated to the local current expense fund for the participating unit for the fiscal year. The amount transferred under this subsection that consists of revenue derived from supplemental taxes shall be transferred only if the child enrolled in the regional school resides in that tax district.
(d)	A regional school may request appropriations directly from a city, as authorized by G.S. 160A‑700.
(e)	With respect to the receipt, deposit, and disbursement of moneys (i) required by law to be deposited with the State Treasurer or (ii) made available for expenditure by warrants drawn on the State Treasurer, regional schools are subject to Article 6A of Chapter 147 of the General Statutes."
SECTION 3.(t)  G.S. 115C‑218.15(f) reads as rewritten:
"(f)	Funds received by a charter school may be deposited by the board of directors with the State Treasurer for investment under G.S. 147‑69.2(b8), to the extent permitted by the Internal Revenue Code, as amended. The deposit and investment of such funds under this subsection are deemed essential to the provision of public education by the State and the income from such investment shall accrue solely to the charter school for the provision of public education pursuant to this Article."
SECTION 3.(u)  G.S. 115C‑218.100(a) reads as rewritten:
"(a)	Funds Reserved for Closure Proceedings. – A charter school that has elected to participate in the North Carolina Retirement System pursuant to G.S. 135‑5.3 shall, for as long as the charter school continues to participate in the North Carolina Retirement System, maintain for the purposes of ensuring payment of expenses related to closure proceedings in the event of a voluntary or involuntary dissolution of the charter school, one or more of the options set forth in this subsection. The minimum aggregate value of the options chosen by the charter school shall be fifty thousand dollars ($50,000). The State Board of Education shall not provide funds to a charter school unless the school has provided documentation to the State Board that the charter school has met the requirements of this subsection. Permissible options to satisfy the requirements of this subsection include one or more of the following:
…."
SECTION 3.(v)  G.S. 115C‑218.105 reads as rewritten:
"§ 115C‑218.105.  State and local funds for a charter school.
(a)	The State Board of Education shall allocate to each charter school the amount of funding determined for each student pursuant to G.S. 115C‑25.2.

	

(b)	Funds provided by the State Board of Education may be used to enter into operational and financing leases for real property or mobile classroom units for use as school facilities for charter schools and may be used for payments on loans made to charter schools for facilities, equipment, or operations. However, State funds shall not be used to obtain any other interest in real property or mobile classroom units. The school also may own land and buildings it obtains through non‑State sources. No indebtedness of any kind incurred or created by the charter school shall constitute an indebtedness of the State or its political subdivisions, and no indebtedness of the charter school shall involve or be secured by the faith, credit, or taxing power of the State or its political subdivisions. Every contract or lease into which a charter school enters shall include the previous sentence.
…."

PART IV. TIMING OF FUNDING DETERMINATION
SECTION 4.(a)  Beginning with the 2023‑2024 school year, the Department of Public Instruction shall distribute funds to public school units whose funding is determined by the model enumerated in Article 3A of Chapter 115C of the General Statutes based on the ADM and ADM and headcount within weighted groups during the prior school year in accordance with the model enumerated in Article 3A of Chapter 115C of the General Statutes. The Department shall provide funds from the ADM Contingency Reserve to fund public school units whose funding as determined at the conclusion of the second month of the school year by the formula enumerated in Article 3A of Chapter 115C of the General Statutes, as enacted by this act, for the current school year exceeds the amount determined at the time of the initial funding determinations, based on changes in ADM and ADM and headcount within weighted groups.
SECTION 4.(b)  Section 7.15 of S.L. 2007‑232 is repealed.
SECTION 4.(c)  Article 3A of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑25.4.  Funding contingency.
The State Board of Education shall maintain an ADM Contingency Reserve to provide for public school units whose needed funding for a given school year exceeds their initially funded amount. If the State Board of Education does not have sufficient resources in the ADM Contingency Reserve to make funding adjustments in accordance with changes in weighted student headcount growth, the State Board of Education may use funds appropriated to State Aid for Public Schools for this purpose."
SECTION 4.(d)  This section is effective when it becomes law.

PART V. EFFECTIVE DATE
SECTION 5.  Except as otherwise provided, this act becomes effective July 1, 2023, and applies beginning with the 2023‑2024 fiscal year.