Microbial growth: a state/county apparatus in North Carolina
In my attempt to understand school facilities finance better from a socialist perspective I peruse headlines in American Schools & Universities pretty frequently to see what's happening in districts across the country. If I find something interesting I look into it more carefully. A headline from North Carolina the other day caught my eye: officials had to close a middle school and go to remote learning because a "microbial growth" was detected in its ventilation system. Kids were getting sick. At first parents thought it was COVID, since the rates were increasing. But then one parent recognized the symptoms of mold exposure.
For the week ending Aug. 6, Rowan County reported 34 COVID cases in children ages 5-17, state data show. That number increased to 41 the following week, according to the most recent figures available. “Back to school time often ushers in illness, as students are in close contact during the school day,” Harris said in an email. A concerned West Rowan Middle School parent “did the right thing” by contacting the county health department on Aug. 17 about what the parent thought was mold in the school, Harris said.
School officials at Rowan Middle got tests results back showing that there wasn't mold, but rather "microbial growth"--a cryptic way to put it, but that's what all the reports say. They decided to close the school and fix the HVAC system.
Most reporting and research on problems like this focus on health outcomes, parent reaction, school official announcements, and maybe the costs associated with fixing the problem. They rarely dig into the revenue side: was this school and its school district getting enough money to take care of the buildings? I realized I didn't know anything about how North Carolina school facilities finance works. I've looked into Pennsylvania, Virginia, New York, Wyoming, Massachusetts, New Jersey and some others, so here was an opportunity to learn something new--and find a few surprises.
Superintendent serendipity
The first thing I do when trying to understand local school terrains is to go to the National Center of Educational Statistics map and find at the district's profiles. It gives me a sense of where the district is, how much money they spend per pupil, the mixture of state/local/federal grant revenues, and also demographics. Rowan Middle is located in Rowan-Salisbury School System, in the dead center of North Carolina, including the city of Salisbury. According to NCES it spends about $10,289 per student--not that much, but it's hard to tell based on the context. It's 73% white, 16% Black. There are about 18,000 students total.
Something interesting I noticed in the NCES profile is that the district's debt per pupil is only $80. That's pretty low. Combine that with a pretty low percentage of local revenues at 24% (compared to 63% state revenue) and the picture got even more interesting. I'll get to what this means in a moment.
Another source I like to use is EdBuild's Dividing Lines map. It runs on 2018 data, but there's no other source like it to give you a sense of the surrounding race/class dynamics in the region around a district. The map also reports median property value, which is such a key measure that basically no other map provides. RSSS has a $154,500 property value average, which isn't too bad, though the median household income is around $50,000--sort of low. So we're looking at a district with some property value, some race/class diversity, and a sizable but not out-of-control student population surrounded by both poorer and richer neighbors.
When I tried to get a sense of the district's finances using the Electronic Municipal Market Access engine, I ran into a dead end. Neither the district nor the county had any helpful entries. I found an issuance from the County of Rowan from 2005, but nothing more recent. I found a 2020 issuance from the City of Salisbury, but almost no information about the school system. When this happens, I look at the district on google maps to get county-level information, which can be particularly important in the South, where county governments took on some of the work of integration both during Reconstruction and the Civil Rights era more recently.
When I found the district’s Wikipedia page through maps, I was shocked: this was Tony Watlington’s old school district! Watlington is now the superintendent of Philadelphia’s schools, where I live. But immediately before coming to Philly to replace William H. Hite, he was the head of RSSS. There was a ton of reporting on this transition to a much bigger, poorer, and fraught school district. But I still didn’t make the connection until I saw the wikipedia page hadn’t been updated. So I wasn’t just looking into how a state’s school facilities financing works. I was digging into the apparatus from which my new superintendent came. It felt like a political-educational-ontological kind of microbial growth happening between myself and Rowan Middle.
When I encounter all these dead ends, I search for how the state’s school finance system works and see what comes up. It’s usually a confusing grab bag of links that are hard to decipher, but I found a helpful one-pager from 2016 that breaks everything down in North Carolina.
Interesting interfaces
A bunch of rad economics geographers wrote an essay recently about racial capitalism and municipal finance. They were trying to set out some terms and frameworks for thinking about the latter with the former. One of the concepts that I keep coming back to is their idea of “interfaces” between public entities and private entities. This helpful one-pager describes, in down-to-earth detail, the interfaces in North Carolina school facilities finance.
The county is super important in North Carolina: everything goes through it. Indeed, “public school facilities requirements will be met by county governments,” and so the county is designated “statutorily as the local taxing authorities for independently elected school boards, meaning the Board of County Commissioners is the tax-levying authority on behalf of the local school administrative unit.” This is unique because in most places in the US, the district is a tax-levying entity. In NC, it’s the county. Districts can actually sue the county government for insufficient funds, but they can’t sue the state or federal governments for this infraction. That’s kind of messed up, particularly because the state is responsible for funding operating expenditures. So you can’t really have a statewide lawsuit in North Carolina we’ve had throughout the country (and in PA most recently) to fix funding formulas.
This explains why the percentage of state revenue is so high for Rowan-Salisbury. And also why the local revenue is relatively low. For most yearly expenditures, this is a state/federal cocktail. But why is the debt service so low? And why couldn’t I find anything in EMMA for bond issuances, either at the local or state level?
When it comes to school facilities, the county gets its funding from a few places. As of 2016, it’s almost entirely locally sourced (98%). 2% came from the state and effectively zero came from the federal government. The document I’m seeing reports $4,400 to North Carolina for school facilities. Wonder how that drip got there? It’s a shame the state is so absent because North Carolina used to have a corporate income tax that funded a Public School Building Capital Fund, c. 1987. The state got rid of that in 2013, apparently, but judging from the state’s Department of Public Instruction website, these programs still exist in some form. Take a look at Rowan’s most recent statement from the Public School Building Capital Fund, which it lists as ADM - Corporate Tax Progam. You can see there’s some funds coming from different lottery funds, totaling $280,000.
So we have a receding state government that used to tax corporate income and devote more of its lottery revenues to school facilities. How do counties take care of school facilities then? Property and sales taxes. "Counties are required to set aside a portion of county-levied sales taxes, more than $390 million in 2015, for school capital needs. Property tax revenues are also an important source of county funding for school facilities. Counties are increasingly relying on property taxes, though counties differ in their capacity to increase property tax rates and raise revenue through this source."
But first, to set all this up, the district has to submit facilities needs every five years. According to Rowan-Salisbury’s most recent documentation of expenditures as of 2018, they spent nothing on facilities. Their capital outlay was devoted to buying computers and cars. That’s not even .3% of their expenditures. So I guess I’d ask, why wasn’t the HVAC system at Rowan Middle on anyone’s radar in the last round of facilities needs assessments? Did this take them by surprise?
But when I look at the Public School Building Fund report from 2022, I see Rowan got approved for a $20 million project which, if we look from the documents above, seems like it’s being paid entirely from county tax revenues. That makes sense given the 2016 numbers from the one-pager. The district needs $20 million but the state gives $280,000. Although it’s difficult to know, because in some spreadsheets, it looks like the lottery is giving Rowan $1.4 million. In others, less? Maybe it has $6.9 million in unallocated money it can use? I can’t tell. In any case, hopefully that $20 million project is Rowan Middle’s microbial growth. And from what I can see, the county and state have the district’s back in tackling that problem. Though we should also keep in mind that the ASCE reports a $660 million expenditure gap in the state's school infrastructure, which is on the high side. The state is still not doing enough.
In any case, the reason why the district itself has so little debt per pupil is because the county is covering it using tax grants, which are buoyed by the state. And the reason why the county doesn’t have records in the municipal market access search engine is because it uses its property taxes for these kinds of capital outlays directly and, backed up by the state, perhaps it doesn’t have to take on debt to much debt to handle this. But it’s also true that the district hasn’t been asking for much over the last few years, so...
Overall, like Virginia, the State of North Carolina appears to have some state-level financial programs that draw from various sources (corporate taxes, lotteries) to support county efforts in providing resources for school facilities at the district level. They also keep track of every county’s needs, which get assessed every five years. Based on all this, I think the microbial growth at Rowan Middle didn’t get picked up in the most recent needs assessment process c. 2017, but it did in the most recent one, and I think it’s getting what it needs from the state/county apparatus.
As a coda, I certainly hope Tony Watlington is aware that Pennsylvania is a much different, less supportive, regime than his previous district!