Facing budget crunch, some NC school districts contemplate closures, cuts

As the Wake County Public School System contemplates tightening its budget next school year, it'll do so alongside thousands of other school systems wrestling with rising costs and dwindling enrollment.

The Wake school system's enrollment has declined, though it remains better off than most of North Carolina and even the nation. At the same time, the district — like others across the country — is facing the loss of temporary federal pandemic stimulus dollars, an increase in ongoing costs tied to staffing to keep once-temporary hires and other rising operating costs — all without a new state budget to help fund additional costs.

Other area districts — including those overseeing schools in Durham and Chapel Hill — are facing a similar squeeze, causing some to consider closing schools and making other cuts. 

After projecting more than $60 million in cost increases, the Wake board voted last year to cut more than $18 million from its budget and ask the county for more than $40 million in new funding, which it received. 

Last month, Wake’s superintendent issued notices to educators that the district would cut 130 special education teachers in an effort to save $18 million. Superintendent Robert Taylor told the school board he planned to ask them to ask county commissioners for a $25 million funding increase, far below what he said the district needed. School board members said they didn’t support the ideas, and Taylor said he’d come back with other solutions. He’s scheduled to present his proposed budget on Tuesday. The school board approves budget proposals. County commissioners, state lawmakers and the U.S. Department of Education determine how much money the district will actually receive.

District officials told the school board during a December retreat that difficult financial decisions must be made, and that budget cuts are expected. 

Complicating the calculus: flat enrollment in Wake County and declining enrollment in most other North Carolina school districts. Headcount largely determines how much funding schools receive. But many North Carolina school districts have seen declining enrollment with increase competition with public charter and private schools, as well as dropping birth rates and outmigration in more rural counties. And a school building that may have once held 1,000 students generally costs as much to operate with just 800 students. The same goes for buses and other operations. 

"Districts, while they have less students, they still have fixed costs, so they still have to pay for keeping up their building, they still have to pay for transportation, they still have to pay for all of the administration," said Tara Moon, a policy analyst at FutureEd at Georgetown University, an education think tank.

Already, school districts across North Carolina are making cuts — proposing school consolidation or cutting entire language and arts programs or significantly shrinking them.

While districts must face long-term realities, there are also some short-term challenges. State lawmakers are at an impasse over a new state budget, meaning no new spending — beyond previously approved funding levels — is available. 

That's made budgeting a relatively unpredictable process, said Eric Houck, associate professor of leadership and policy in the University of North Carolina at Chapel Hill School of Education. Counties don't know if state-funded teachers will get a raise, so they don't know if they need to save local dollars to match those raises for locally funded school employees, for example, he said.

Rising Costs

The cost of operating a school system is rising. Supplies cost more. Construction and repairs cost more. Enrollment has dropped faster than schools have cut staffing — and staffing comprise nearly all of school funding. Teachers and other employees are earning more after school boards raised pay to improve hiring. Meanwhile, those pay increases still haven’t helped teacher pay, which is mostly funded by the state, keep up with inflation.

The state’s Opportunity Scholarship program, which provides subsidies for private school tuition, initially moved tens of thousands of public school students into private schools of their choice, though its more recent expansion to make all students eligible has by and large benefitted existing private school students.

Wake County Public School System enrollment dropped by about 800 students this year, to 160,500 students. That's still up about 750 students from the 2016-17 school year.

For decades, some enrollment growth could be expected in every school type. Now, growth is virtually nonexistent in traditional public schools and slowing in public charter schools. Only seven of the state's 115 school districts grew this year, and only 15 are larger today than they were during the 2016-17 school year.

Wake’s projected increase in operating costs is largely because of the surging costs of benefits, insurance and salaries. They have expected state lawmakers to raise pay, requiring the county to raise pay for employees who weren't funded by state dollars.

School funding hasn't kept up with inflation since 2021, though it mostly had for decades before that, state data shows. That isn't to say everything within a school has been funded accordingly. State base teacher salaries haven't kept up with inflation since at least the late 1990s. The percentage of North Carolina’s revenue that goes to K-12 schools has dropped to the lowest in the nation, according to the Education Law Center.

And some educational expenses are simply far costlier. The cost of school supplies and infrastructure have both risen much faster than inflation, according to schools and federal analyses. The products used to build new schools are at an all-time high, according to federal data, having more than doubled in the past 20 years.

Plus, the number of special education students has risen, but without an increase in the number of students the state is willing to fund. That means the district either needs to come up with more local funding to pay for those students’ needs, or effectively reduce how much it spends on each student. The state pays a flat amount per student but only up to 13% of a district's or charter school's student population. While Wake remains about at that percentage, the vast majority of districts and charter schools are above that, and about 14% of the state's public school students are in special education.

"That's a nontrivial expense that directly impacts kids, and that can put a squeeze on district budgets, as well," Houck said.

On top of that, schools have increased expenses by making permanent some positions that had been funded by temporary federal stimulus dollars.

Wake increased behavior support professional staffing by about three dozen people, using local dollars to cover what disappearing stimulus dollars no longer would, beginning during the 2024-25 school year. Wake employed about 19,850 people during the 2024-25 school year — up 5% in the past six years, while enrollment has stayed flat during that span, despite the recent year-over-year drop.

The district has created more jobs, largely in an effort, they say, to better serve students. Those included support professionals, administrators and, to a lesser extent, teachers and teaching assistants.

System officials and school board members have long argued that schools have lacked the funding to do everything they believe will help students learn better.

That has put pressure on county budgets in recent years.

State data shows counties are making up a greater share of education spending than they used to, while the state’s share of education spending is down.

The influx of federal pandemic stimulus dollars gave leaders a chance to see what else they could do at a time when student achievement, including test scores, had plummeted and students’ behavioral needs — such as discipline and mental health issues — were continuing to rise.

Creating more jobs with stimulus dollars was a big mistake in school districts that can't sustain those increased costs amid stagnant or declining enrollment, said Marguerite Roza, director of the Edunomics Lab at Georgetown University.

Winston-Salem/Forsyth County Schools failed to decrease spending to account for enrollment declines for years. That, and other financial decisions, resulted in a deficit of about $46 million, layoffs of hundreds of employees, leadership overhauls and audits. Most employees let go were teachers in special education, a program education experts nationwide have long accused Congress of underfunding.

Wake might be better off than other large school systems that have closed schools already — including Cleveland and San Antonio. Nearby Granville County has also closed schools in an effort to cut costs, even as the county's population grows. Durham Public Schools is weighing the benefits of closing older elementary schools. Chapel Hill-Carrboro City Schools is contemplating closing at least one elementary school, as its enrollment has dropped by about 1,500 students in the past decade. Cumberland County Schools is considering closing schools as its enrollment declines and needed upgrades to other facilities. Warren County Schools has been working for a few years on consolidating its elementary schools.

Other school districts told WRAL News they plan to make budget cuts next year but haven’t yet proposed a budget to their school boards and thus haven’t finalized what they plan to cut.

It's relatively new territory for most superintendents, Roza said.

"When your enrollments are shrinking because of declining birth rates, then you have to shrink your system," Roza said. "And so and now we also have a set of leaders who haven't in any recent time dealt with like budgets that were tightening. So many of them don't have the skill set to do that."

The loss of federal pandemic stimulus dollars in 2024 gave school districts practice in making cuts in lean years, Houck said. School districts should be talking with lawmakers and the state Department of Public Instruction about how to adjust for enrollment declines in a way that keeps education strong, Houck says.

“The number-one factor in student learning is teacher quality," Houck said. "And so as school districts go through these challenges, you know, keeping a laser focus on the nature and quality of the teacher workforce, and protecting that at sort of all costs would be, I would humbly suggest, a priority."

Houck said investing in teacher training and support, targeted to meet specific teachers' needs, would be ways to keep teachers around and prepared. That could be accompanied by smaller class sizes, or by larger class sizes with more teachers.

‘There’s just fewer people’ 

Schools often eliminate positions through attrition or cutting expenses here or there, such as eliminating an assistant principal position when an elementary school gets too small, Roza said. That's not a strategic approach, she said. It’s just a decision that's easier for everyone to swallow.

Roza noted that North Carolina schools, which are mostly funded by the state, are funded at much lower rates than most of the rest of the country. “So the districts are going to have to really carefully manage their resources," she said.

Roza suggested increasing class sizes, particularly in classrooms where data shows the teacher is high quality and then paying those teachers to take on more students, eliminating other teaching positions. But that isn’t possible in North Carolina, where kindergarten through third grade classes have student limits, with exceptions only for non-core classes and dual-language immersion.

Making strategic cuts is part of the future for North Carolina schools, absent major funding increases, given the changing population and school choice dynamics.

The Congressional Budget Office adjusted its population forecast in September downward by 4.5 million people by 2035, due in part to lower projections for immigration and birth rates.

The numbers don't look favorable for public schools, said Nathan Dollar, director of Carolina Demography at the University of North Carolina at Chapel Hill.

Charter school and private school enrollment has increased significantly in the past 15 years, and today they comprise their highest percentages of the Wake student-age market share, Dollar said.

Most growth in North Carolina — like other growing U.S. states Texas and Florida — is coming from migration into the state, not from births, Dollar said. And migration is the hardest element to predict.

Birth rates are going down worldwide and are below replacement level in developed nations, Dollar noted, adding: "There's just fewer people."