STAFF REPORT TO: FROM: Eric Hardy, Deputy Finance Director Tony McDowell, Budget Manager John Sanchez,

Budget Analyst Teacher Pay in Asheville City School System Date: August 19, 2013

SUBJECT:

This memo is written in response to the request from a councilmember to research how the Asheville City School System (ACS) is funded; who is responsible for setting teacher salaries and does the City has any latitude to influence the funding of these salaries. How are Asheville City Schools funded? North Carolina General Statute (NCGS) 115C, Elementary and Secondary Education, establishes a system of NC tuition free public schools. Administrative units of the public school system may be designated as either County or City, and there is no difference in funding sources between these two designations. NCGS 115C-408 directs that the State will provide from State revenue sources the instructional expenses for current operations of the public school system. The statute further directs that the facilities requirements for a public education system will be met by county governments. To meet this need, NCGS 153A-149, Property taxes; Authorized Purposes; and Rate limitation for Counties, provides counties with the power to levy property taxes for various services, including schools. In addition to county governments responsibility to provide capital funding to local school systems, counties may supplement State funding for current operating expenses of the public school system (NCGS 115C-426(e)). General Statutes, however, do not include schools as one of the purposes for which cities may levy property taxes (NCGS 160A-209). Consequently, most of the budget and financial decisions for local school districts in North Carolina are made at the state or county level with little direct municipal involvement.

FY2012ACSFundingSources

($52.6 million) The most recent audited financial statements (June 30, 2012), $2.4 $2.2 report ACS funding by source, as depicted in this graph. The State largest source of revenue - 43% $8.1 of total revenue, or $22.4 million Federal $22.4 came from the State, while County Buncombe County funded 20%, ACSadval tax or 10.7 million. ACS is authorized to levy its own Salestax property tax (adopted tax rate of $10.7 Other 15 cents per $100 of assessed valuation), which generated 15% of total revenue, or $8.1 million. $6.8 Also, because Buncombe County distributes sales taxes based on ad valorem levy, and because ACS is a tax district within the County, ACS receives a share of sales tax revenue, totaling $2.2 million in FY 2012.

Who sets salaries at Asheville City Schools? The North Carolina General Assembly is the body responsible for determining annual increases to teachers salaries in North Carolina. The State also sets the salary ranges for all positions in local school districts, including administrative (non-teaching) positions. The specific salary levels in school districts across the state vary based on each districts ability to offer a local salary supplement. This local salary supplement is determined each year as part of the budget process and is funded as part of the County budget appropriation. Attached to this memorandum is a copy of the FY 2014 budget request from ACS to Buncombe County Board of Commissioners, which must approve ACS annual budget. The proposed salary supplement is shown on page L-2 of the attached document.

Does the City have the latitude to provide additional educational funding? In general, a city does not have the authority to provide a direct supplement to state and county school funding without the approval of a local act to levy taxes for city schools. There may, however, be certain school functions for which cities are authorized to spend money, such as arts programs and libraries.