School Districts and County Governments: Helping Each Other Protect the Economic Vitality of North Carolina Counties

Michael D. Priddy, EdD School Operations Specialists Senior Consultant and Public School Forum of NC Board Member

Historical Context

North Carolina’s traditional public schools are represented by 115 county and city school districts. For almost 100 years since the Great Depression and the Machinery Acts of 1931 and 1933, the State of North Carolina has provided the preponderance of financial support for most of the public school employees in these school districts. During the past 50+ years, the Federal government has provided significant financial support to ensure that special education services, vocational education programs, and school lunches (and breakfasts) are available to all students. These services ensure essential personnel investments in each district and county to carry out the mission and work required.

The revenue for the salaries and benefits afforded to the employees, which includes teachers, principals, administrative and support staff, custodians, food service workers, teacher assistants, bus drivers, and others, comes primarily from the State. These fund sources represent approximately 75 percent of the current expense budgets for our traditional school districts. Approximately 90 percent of these funds are then directed towards salaries and benefits for the employees.

For approximately one-third of our counties, the school districts are currently the largest employer in the county. For more than two-thirds of our counties, the school districts are the second or third largest employer. And, when you consider all 100 counties, school districts are in the top five employers for all counties.

The economic impacts of the salaries and benefits for the public schools’ workforce are significant. Given the state pays public school employees on legislative adopted schedules, as well State Board of Education schedules, salaries and benefits accrue equally across the state to each county.

Current Trends and Issues

Since 2000, our traditional public school districts have seen a leveling off of the rate at which students enter the school system (referred to as ADM, average daily membership).This is the case for both rural and urban school districts, but it is more pronounced for the rural counties. One of the factors is a declining fertility rate among women in their childbearing years. For some rural counties, out-migration has impacted county populations, especially among the younger generations.  

Between 2010 and 2024 over 40 of the 115 local education agencies (LEAs) lost over 15 percent of their student ADM. Some of the greatest losses in the northeastern rural counties. In fact, only 27 of the 115 LEAs gained students during this period, and in most cases, the increases were modest given the factors identified above.

For our rural counties, these two trends, a declining fertility rate and out-migration, have resulted in significant impacts on the K12 education workforce which has traditionally provided stable, predictable state dollars flowing into those counties that support the local economies, like the grocery stores, the retail and entertainment venues, and the medical facilities. 

We have also seen some shifts in what is known as K12 market share.  For families who choose options other than the traditional public schools, there are some predictable reductions, especially state and federal revenues that support the transportation system, the food service program, the special education programs, and many more.  Private and parochial schools do not necessarily provide the same levels of compensation and benefits for their employees that the traditional public schools do. 

These reductions and shifts in public tax dollars are already having significant impacts on local county economies. Given the trend lines, these decreases in state and federal revenues for nearly three-fourths of NC counties will require reductions in public services, including for the public schools, and/or increases in the local property tax rates.

During this same time frame, the urban/suburban counties have experienced significant increases in overall population due to in-migration to North Carolina.  In fact, 43 percent of the current residents of North Carolina have moved into our state since the 1990s.  These folks who are relatively new to North Carolina may or may not understand and appreciate the critical role that the state and federal governments play in supporting our local school districts and the economies of most counties.

These factors are incremental in many counties, but they are cumulative and longterm.  In the short term, we are seeing school districts having to ask County Commissioners to provide more local funds to replace the losses in state and federal funds. The light bills are not less, cafeteria workers and janitors are still needed, schools still need maintenance, and more. Some counties have tried to backfill the loss by increasing the property tax rates to offset the loss of market share and to offer needed support so that school buildings can remain open and transportation routes can be maintained, but it is hard for all involved. 

This is even more difficult for the upcoming school year, given the end in September of the special federal allocations referred to as Elementary and Secondary School Emergency Relief (ESSER) funds which were provided to school districts to assist with the impacts and the recovery strategies related to the COVID pandemic. These funds have allowed districts to make some infrastructure improvements, such as ventilation system upgrades, but in many cases the infusion of pandemic-related federal funds has allowed school districts to employ more counselors, social workers, nurses, and school psychologists who have been critical to the full recovery of student life and learning.

Finally, school districts, like some counties, struggle to hire, train, and maintain finance officers. Given the complexity of the public school finance model, the level of professionalism and training required limits the pool of qualified candidates for vacancies which seem to be occurring with greater rapidity.  

What We Can Do Now

For the near future, school districts need highly specialized and experienced consultative help with ensuring that every state and federal dollar that flows into a school district is used to its maximum within legal requirements  Also, steps must be taken throughout the State to properly train the school finance officers who are currently in place, and to create an aggressive recruitment program to help the struggling districts employ and retain effective personnel. The smaller rural districts may need to partner with each other to employ a single highly trained school finance officer to oversee and lead staff in each cooperating district.

The annual budget request cycle that school districts and county governments experience is often fraught with tension, uncertainty, and even finger pointing. Given the uncertainties described above, it is an especially appropriate time for School Boards, County Commissions, School Superintendents, and County Managers to look toward a collegial relationship that is built on common understandings and shared goals. One of those very important goals is economic stability based on a stable workforce that is paid from fund sources outside the county’s property tax. It’s important that the decision-makers in each county seek out and foster the collegial partnerships that are keys to the future vitality of our counties and our State.

The time is now for action at the State and local levels. It is especially important in these financially uncertain times for our school districts and county governments to work in harmony with each other to protect the educational and economic vitality of our one hundred counties, especially the rural ones with less property wealth.

Bio: Dr. Michael D. Priddy served as Superintendent of the Pitt County Schools and as Interim Superintendent for the Guilford County Schools, the Bertie County Schools, the Pamlico County Schools, and the Wayne County Public Schools.  He also served as Chairman and Interim President of The Public School Forum of NC and now serves as an emeritus board member. Among his recognitions and honors are The Old North State Award and The Order of the Long Leaf Pine, both bestowed upon him by Governors of North Carolina for his exemplary contributions to our public schools and our State. Dr. Priddy earned his three degrees from the University of North Carolina at Chapel Hill.