Charter school funding change wins Senate approval

Under current law, charters are entitled to the same per-pupil state and local funding as traditional public schools. But the law offers school districts a list of types of revenue they can put into different funds to keep them out of the pot of money they must divide proportionally between traditional schools and charters.

That law, passed in 2010, allows local school districts to hold nine types of revenue out of the shared pot, which is known as the "local current expense fund." One type of funding that can be held out is sales tax revenue that is distributed ad valorem, or according to property value, rather than per capita.

Counties can choose whether to use the ad valorem or the per capita method to distribute local sales tax revenue to cities. If the county uses ad valorem, the school district could hold all of that money out of the shared pot.

Senate Bill 456 would force school districts to share all local tax revenue proportionally by striking the ad valorem exception.

Sponsor Sen. Jerry Tillman, R-Randolph, said the bill "puts the funding back where the courts say it should be."

"Your ad valorem and sales taxes will go where the kids go," he told the Senate. "They’ve been getting about 75 percent of the funding that public school students do."

However, the bill also strikes the law's exceptions for "sales tax refunds, gifts and grants restricted as to use, and trust funds." That means donations, from school PTA fundraising dollars to booster revenues for bands or sports teams, would all go into the shared pot unless the school district sets up a separate account for those dollars and unless donors specify that their contribution is for that particular account.

Sen. Mike Woodard, D-Durham, said the change will force districts to give charter schools a share of money that donors intended to go to specific projects at specific traditional schools.

"That’s money raised within that school for the purpose of that school," Woodard argued. "It opens up funds that were approved by the General Assembly, litigated and upheld by the Court of Appeals, and it’s going to allow these charters to get money for nothing."

Tillman insisted that districts could still set up special accounts for boosters and fundraisers, saying that charters "don't want your band booster money."

"That will not be touched," he said. "We just want a fair share of the money to go where the student is."

The proposal passed on a 35-14 vote. It now goes to the House.