The New Hanover County school district went into this budget season well prepared, according to Superintendent Dr. Chris Barnes, who said he had several meetings with the public to avoid communication issues that plagued the prior season.
Those issues, which include the need to cut 300 positions to cover a $20 million shortfall, caused havoc, and the district struggled to explain the situation to the public and to county politicians, who ultimately control a significant portion of the school budget.
For the 2024-2025 school year, the district lost $7 million in federal Covid-relief funding, faced $13 million in rising costs of benefits, retirement, and state-mandated raises – and years of draining their fund balance to cover those increases to salaries and benefits.
This year, Barnes wanted to do better. Now, though, he’s been hit with a number of sudden budget shortfalls, including millions of dollars from the state and county. The district is also facing potential funding freezes from the federal government. And, on top of all that, potential raises for state-funded employees could leave the district on the hook for upward of $2 million to support locally and federally funded employees.
Barnes said the situation over the past two budget cycles has gotten dire.
“It's a concern that it was $13 million last year, $5 million this year. Are we done? Have we hit bottom? Is there another bottom coming?” he said. “We have emergent, significant needs that aren't getting funded because I have to argue about every single dollar. I shouldn't be having to make choices between different essential services for kids, and that's what I'm doing: ‘Well, maybe I don't need a social worker so that I can have a media coordinator.’”
Barnes has consistently stated that the bulk of the district’s budget, 83%, goes toward salaries and benefits. Another important note is that the school district does not raise the funds for their expenses – that’s the job of state legislators, county commissioners, and U.S representatives. Last year, the state provided 61% of its operating budget, county funding supported 32%, and federal money supported 6%.
Republican school board member Pat Bradford, who’s the chair of the finance committee and a member of the legislative committee, said she feels like the school system has to “beg” for what they need and wants to see more “champions” emerge for public education.
On top of the $5 million loss for this year, the district could also see an additional $1.6 million from the federal government evaporate. That’s due to the Trump administration’s order to freeze funding tied to Title II, III, and IV funds. Officials say they’re reviewing whether school districts around the country are complying with executive orders surrounding diversity, equity, and inclusion.
Barnes said he doesn’t know when this money will be released – but he is planning on having access to those funds. New Hanover County’s Congressional representative, Republican David Rouzer, did not respond to a request for comment about the $1.6 million freeze.
On Monday, NC Attorney General Jeff Jackson announced that he would be joining 22 states in suing the Trump administration over the funding.
What happened to the local funds?
Last month, Republican New Hanover County Commissioners Dane Scalise, Bill Rivenbark, and LeAnn Pierce voted to pass a budget with significant cuts compared to proposals advanced earlier in the budget discussion process. The final budget came together very quickly, and was released less than 24 hours before it was passed – with some details being worked out during or even after the final discussion. Democrats Stephanie Walker and Rob Zapple said they only learned about some details of the budget shortly before the final vote.
This capped off several twists and turns in the budget cycle – starting with the scheduled evaluation year which saw a significant increase in property values, approximately around $80 billion collectively. This provided the case made by Democratic commissioners that services could be maintained or even expanded because of the increase in wealth, though Republican commissioners like Scalise said increasing the tax rate would hurt New Hanover families. This was then followed by staff’s recommendation of a 35-cent rate per $100 property valuation, followed by a potential compromise of 33.9 cents, and then the final 30.6-cent rate passed by the three commissioners.
For reference, each tenth of a cent up or down represented about $800,000 in spending or saving for the county. For a taxpayer with a $500,000 home, each tenth of a cent of the tax rate means about 42 cents more or less on their monthly tax bill (the median home in the county is around $580,000). The school district’s $5 million shortfall represents just over 6/10 of a cent, meaning a tax rate of 31.2 would roughly cover it – meaning about $2.63 more per month for the owner of that hypothetical $500,000 home.
This budget also cut $975,000 which would have continued funding for six preschool classrooms; during the pandemic, the county used federal Covid-relief money to double the number of pre-K classrooms, but that federal funding ran out this past year. The additional six classrooms included a teacher and a teacher’s assistant, and served 108 children. The district found a way to keep pre-K spots it has already promised by using $700,000 Title I federal funds to cover the local shortfall. But, as of right now, this is only a one-year stop gap and Barnes is looking for a longer-term solution.
In this budget, the county also cut $1.6 million that funded 14 school nurses.
According to a county spokesperson, they are moving from the previous support for one nurse per school to one nurse per 750 students, adding that “some smaller schools will share coverage but no full-time nurse is being converted to part-time. NHCS is finalizing the assignments now.”
WHQR asked which schools will be sharing a nurse — a spokesperson responded they’re still working on that plan.
What happened to the state funds?
The North Carolina legislature has yet to pass their budget, which also leaves the district in limbo, but on this front, Barnes is worried about another wrench coming his way.
The district budgeted for providing employees with a 3% raise, which was in the state Senate budget, but the final compromise budget between the state House and Senate could be higher – possibly 5%. While Barnes maintains that staff should get the highest possible raise, %5 raises could spell another $2 million hole in the district’s budget.
That’s because the state funds those raises for the employees that they pay for – not for locally or federally funded positions. And with the district receiving less money from the New Hanover County commissioners, it’s going to be harder to provide that for staff.
Last budget cycle, the state provided for 2,283 positions, the county provided 580, and federal funds supported 17. Additionally, restricted funds like grants supported 75. Thus, the state only provides for raises and benefit increases for 74% of the district’s total positions, meaning the district would have to find the funds for about 20% of its employees.
Barnes said ensuring raises are given across the board is not written in policy anywhere, but it’s a common practice for districts across the state to make sure locally- or federally-funded positions keep pace when the legislature gives raises.
While the state raise issue is still up in the air, a loss of $2.3 million in state funds for local teacher supplements has already happened. Since the county did a reevaluation of property values, according to the state’s calculations, the county is wealthy enough to pay for the total cost of the local supplement. Earlier this year, county staff said that since 2021, median sales prices have increased 60%.
Another state allocation reduction was $401,208 for at-risk students – this was because New Hanover County Schools had fewer 5-17 year-olds living in poverty.
However, Barnes put this into context, “Just because our number of students in poverty has gone down doesn't mean that the number of kids that are in poverty aren't in worse poverty than they were before,” meaning the district still needs those funds to take care of their most vulnerable students.
This funding was previously used to support things like staff positions and other needed resources in lower-performing schools, which typically have higher concentrations of families with low incomes.
According to Barnes, he had shared this information with county manager Chris Coudriet about two months ago. He had asked for about $4 million to cover this and other supplemental needs.
“I said, if you give us this extra $4 million, we're going to figure out a way to cover this $2.7 ourselves [includes decrease in supplement pay and reduction of New Hanover’s poverty rate], so that was what we had planned on doing,” he said.
Another common refrain from some local and state leaders is that the district is losing student numbers and doesn’t need as much funding.
There is a significant decrease from 2020 to 2021 of 1,315 students (25,617 to 24,302); however, the district has been averaging about 24,600 over the last three years (2022 to 2024, which are the latest average daily membership (ADM) numbers from the North Carolina Department of Public Instruction).
Bradford said one of the main ways to fix the district’s budgetary woes, which is part of Barnes’ long-term plan, is to get students back to the school system.
“Everyone kick in and help us bring students back to public education. That's the long term fix for this problem. Then all of our formulas change and go back up, and then we can fund everything, but we need to make the schools excellent in order to attract those kids,” she said.
Both Barnes and Bradford shared concerns about the county not wanting to change their Memorandum of Understanding to include unexpected repair costs outside of event-specific emergencies or disasters. The district wanted the county to take on these sudden repair costs that exceed $500,000, to a maximum of $10 million.
The district has also had to spend down its fund balance over the years, partly at the direction of the commission and partly to account for those state raises and the increased cost of benefits. The balance is currently at $2.2 million, and school officials worry that they won’t be able to act quickly when they need to pay for damages or unforeseen events.
Democrat Stephanie Walker, who was elected to the county board of commissioners after serving on the school board from 2020 to 2024, said the district should ask them for help if they need it.
“The schools are such an important part of our county, our community, and we should be supporting them. If they need to come to us, they should come back to us before cutting anything. I just don't see how they can cut more,” she said.
Policy makers in the political minority decry cuts; those in power didn't comment
While Zapple and Walker spoke to WHQR, Scalise, Rivenbark, and Pierce did not respond to requests for comment on proposed solutions.
Zapple wrote to WHQR to say that he thought the county budget vote was a “deliberate underfunding” of services and that it was “politically motivated.”
Walker saw it this way, too, since the budget was only released the night before, “so there was really nothing I or the community could do about it, and we didn’t have knowledge about it before it got voted on. And so people are scrambling all over the county trying to figure out what they're going to do.”
She said it’s unlikely that the commission could revisit the tax rate now that the fiscal year has passed — and it would take a supermajority of at least four out of five commissioners to tap into the $300 million revenue stabilization fund from the sale of NHRMC to Novant, which is also doubtful. And with the county already tapping $8 million of their fund balance to offset the tax rate further, she doesn’t know what other revenue sources there are.
The Democratic commissioners are also concerned that about half of the district’s schools will have to share a school nurse, especially for those students who have major medical issues. Zapple mentioned the examples of Type I diabetes, asthma, and seizures.
Bradford said once the public better understands the impact of the cut to nursing staff, they won’t be happy, but said she supported the county’s ‘revenue neutral’ tax rate. She also said she doesn’t think the federal government should have a role in education, believing that the money should go directly to the states.
But Bradford added that there is still time for the commissioners to find solutions to the shortfall affecting nurses and preschool, as she doesn’t think they quite understood what they were cutting at the time.
“It's not a good way to run the school district by winging it. And right now, that feels like what we're doing. We don't know if, in a matter of months, if we can sustain what we're starting with,” she said.
Barnes said in response to a comment Scalise made about ripping the Band-Aid off when it comes to cutting funding and positions for NHCS, “Yeah, but that Band-Aid was holding my arm on.”
Pre-K classrooms are supported by a patchwork of federal, state, and local funds. As Scalise noted during the budget debate, prior administrations, including those under Democratic majorities on the commission, did not make additional county funding for pre-K a priority — until Covid funding made it financially viable. However, with Covid-relief funding expiring, and the loss of a multi-million dollar federal Head Start grant last year, there’s been additional pressure for the county to step in.
Zapple said he wanted the county to maintain its commitment to those preschool classrooms and said that data consistently shows that supporting these students creates better academic and professional outcomes later in life.
NC House Representative Deb Butler agrees.
“If you have a generation of children who grow up and don't feel as though they have opportunity, and don't feel as though they are a priority, and they don't feel vested in this society, then what happens? Well, they become desperate, and they become desperate people who do desperate things, so the failure to invest in early childhood education and public education in general, is so short-sighted because it will come back to bite you in the end if you don't,” she said.
Butler sees this as a strategic underfunding of public education at all levels — county, state, and federal. The top policy change she would make would be to start with dismantling the state’s school voucher system.
“The voucher scheme that they have got going right now is siphoning almost a billion dollars annually out of public education. So that's where we need to start, and we need to direct our righteous indignation toward Raleigh, for starters, because if we had those funds, if we had robustly and properly funded public education, as our Constitution mandates, we wouldn't be in this predicament,” she said.
She said she supports larger investments in public education like increasing teacher salaries, especially veteran ones, and changing allotment formulas so that the schools get more state funding for positions.
Butler added, though, “I have one vote in the minority, and I have a loud voice. And so, I use the tools that are at my disposal,” but made mention that the GOP controls much of the decisions on public school funding and that those legislators should be available to have those discussions with constituents.
As for the budget vote, Butler said they return on July 29, but she surmises it might be to override Governor Josh Stein’s recent vetoes, but they could restart budget negotiations as the GOP-controlled House and Senate had “desperately different” proposals.
Besides Butler, state legislators representing parts of New Hanover County did not respond to requests for comment on solutions for NHCS. They are Republican Senators Michael Lee and Bill Rabon, and Republican Representatives Charlie Miller and Ted Davis.
What about The Endowment?
WHQR asked an Endowment spokesperson about the optics of delivering $1.6 million quite quickly to cover the requests of the Republican county commissioners that they take on non-profit funding.
A spokesperson evaded the question and wrote, “Education is a core pillar of our work, and we believe every child in New Hanover County deserves access to a strong and supportive educational system. We are actively engaged with organizations and community leaders to explore how we can best support solutions that help build a stronger, more resilient educational system for all students in our county.”
The spokesperson directed WHQR to The Endowment’s Asset Purchase Agreement, which states they are “specifically forbidden from substituting public funds for core government services.”
However, over the years, the definition of those ‘core services,’ has gotten somewhat fuzzier. The Endowment has funded $7.5 million to help build a state aquarium facility and spent $22 million between three government entities, NHCS ($1.6 million), CFCC ($10.1 million), and UNCW ($10.2 million) to support the nursing pipeline. They also funded $8.7 million for 26 literacy coaches, mainly in the district’s elementary schools.
Some have argued that The Endowment could help fill gaps for the school district as a supplement, not a substitute, for government funding. There are, for example, some school nurses covered by local funding, and some preschool classes covered by NC Pre-K.
NHCS also has a request out to The Endowment of about $4.2 million to let each school choose a position that would best support them; so far, The Endowment hasn’t made any announcements on it. The request initially went to the county, but staff reviewed it unfavorably and recommended it go to The Endowment (Republican commissioners declined Walker’s request that the county write a letter of support for the application).
According to Barnes, if the $4.2 million for specialists is funded, then that would give them the data to show to the legislature how to best change what’s known as the allotment formula, which is how the General Assembly decides how many positions to fund. Barnes has consistently said that this formula has not changed in over a decade and needs to be revised to fit the evolving needs of students
It’s unclear how the recent resignation of Endowment CEO Dan Winslow will impact the consideration of the request.
What will happen next?
If Barnes can’t find other sources of revenue to cover the $5 million shortfall (which, again, doesn’t include potential reductions to federal funding), he’ll have to cut between 50 and 100 positions, which include certified staff like teachers, counselors, and administrators and classified staff like secretarial, janitorial, and other positions. Other potential solutions are not using lapse salaries, instituting a hiring freeze, and limiting travel costs and other supply spending.
Walker said, in addition to the schools, there were broad cuts to other county services like social workers (a loss of $1.1 million), and is worried about the impacts that are coming the community’s way.
“So we're kind of in this middle space where we don't know the effects entirely, when we'll find out probably in the next six months to a year, what that means for across the county, but especially for the schools. They are in dire need of funding and they cannot take any more cuts,” she said.
[Disclosure notice: Commissioner Zapple is a WHQR Board of Directors member, which has no role in editorial decisions.]
Below: New Hanover County Schools' original budget request sent to the county.
NHCS FY 25-26 Requests by Ben Schachtman on Scribd
