A new Republican proposal would create a work group to study whether North Carolina should overhaul how it funds public schools, and whether another state agency should take over distributing billions in K-12 education dollars now managed by the state’s Department of Public Instruction.
Senate Bill 990 cleared the Senate Education/Higher Education Committee on Wednesday, but not before Democrats questioned why lawmakers were considering shifting school funding responsibilities to the State Education Assistance Authority, an agency that oversees private school vouchers and financial aid programs.
The shift is politically significant because of who leads the two agencies. DPI is headed by Democratic Superintendent Mo Green. SEAA is governed by a board largely appointed by the Republican-led legislature.
Sen. Sophia Chitlik (D-Durham) questioned the logic of the move, noting that SEAA has little experience in handling public K-12 education funds. “Can you help me understand why that entity is best qualified to do this work?” she asked.
Sen. Mike Lee (R-New Hanover), one of the bill’s sponsors, defended the proposal, saying SEAA is a more efficient “fund distribution entity” that already manages scholarship programs. Lee also described the current allotment system at DPI as “incredibly complicated” and suggested that shifting the accounting work to SEAA could save money.
“They don’t decide policy. They’re strictly a fund distribution entity,” Lee said of SEAA. “If SEAA can do this more efficiently, why wouldn’t we have them distribute the funds just like they do opportunity scholarships?”
Chitlik questioned why lawmakers would study a proposal that may not even be constitutional, pointing to language in the state constitution saying the State Board of Education shall “supervise and administer” the public school system.
“Why would we even explore something that might not even be constitutional?” Chitlik asked.
Legislative staff attorney Drupti Chauhan responded that the bill only creates a study group and does not transfer authority away from DPI or the State Board of Education.
“Acts of the General Assembly are not inherently considered unconstitutional until a court opines that they’re unconstitutional,” Chauhan said.
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Sen. Amy Galey (R-Alamance) defended the proposal and said the state constitution also gives lawmakers authority over education funding.
“It’s very clear in the constitution that the General Assembly ultimately controls the flow of the money through the public school system,” Galey said.
SEAA said it could not comment on the bill at this time. DPI did not respond to a request for comment by press time.
The bill would also task the work group with studying transitioning North Carolina to a “weighted student” funding model, which would distribute money based on individual student needs rather than the state’s current allotment system.
Lee said the current funding system lacks transparency and is difficult for most people to understand.
“No one can figure out how the current formula works,” Lee said. “It’s hard to know if we are funding enough or not.”
Another section of the bill would create a one-year “educational wallet” pilot program for one public school unit during the 2027-28 school year. Eligible high school students could receive up to $395 in public funds for approved educational activities outside school that could count for academic credit.
Lee said the idea came from the Rowan-Salisbury School System, where students were allowed to earn physical education credit through a local karate studio after the district struggled to hire a PE teacher.
The bill also includes a provision that would exempt personally identifiable student disciplinary records at public colleges and universities from public records laws, even in cases where federal law allows disclosure.
Lee said he has faced criticism in the past for proposing this exemption, but he said Wednesday it’s intended to protect campus sexual assault survivors from having investigative records publicly released.
The committee approved the bill Wednesday and sent it to the Senate Appropriations/Base Budget Committee.
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