How Are Charter Schools Funded in North Carolina?

---

Written by

22Beacon (Formerly Charter Schools Development Corporation) | Real Estate Development Team

Charter schools play a growing role in North Carolina’s public education system, offering families public school options with greater flexibility in curriculum, staffing, and governance. These schools operate under a state-approved charter and are held accountable for academic outcomes and financial management, while maintaining autonomy from many district-level regulations.

By definition, charter schools in North Carolina are public schools. They receive public funding and are tuition-free for students. However, their operational model differs significantly from traditional district schools, especially when it comes to how they are funded and supported.

The demand for alternative public education continues to rise. As of the 2025 school year, there are 231 charter public schools in North Carolina, serving approximately 146,602 students. This marks an increase from previous years, reflecting the ongoing growth of charter schools in the state. This growth highlights the importance of understanding how these schools are financed and what funding mechanisms they rely on to remain viable and effective.

In the following resource, we’ll explore how North Carolina charter schools are funded, where the money comes from, and how 22Beacon supports schools with the resources they need to grow and succeed.

Primary Funding Sources for Charter Schools in North Carolina

State and Local Funding

Like traditional public schools, charter schools in North Carolina receive public funding from both state and local sources. However, the mechanisms for distributing those funds differ in important ways. Funding levels are tied to student enrollment, but charter schools do not have taxing authority and often face limitations in accessing certain revenue streams. Understanding how these schools receive state and local dollars sheds light on the unique challenges they navigate to stay operational.

State Funding

The majority of operational funding for charter schools in North Carolina comes from the state. These funds are distributed based on a per-pupil allocation model, calculated using Average Daily Membership (ADM), a measurement of the average number of students enrolled over a specific period. The ADM figure helps ensure that funding corresponds to actual student attendance rather than projected enrollment.

State funds cover core operating expenses, including:

• Teacher and staff salaries

• Classroom materials and supplies

• Instructional programs and student services

However, these funds are strictly limited to operational costs. North Carolina law prohibits the use of state funds for acquiring land, constructing buildings, or making significant capital improvements. This restriction can place growing charter schools in a challenging position when trying to secure adequate facilities.

Local Funding

In addition to state dollars, charter schools in North Carolina receive local funding tied to the local current expense fund of the Local Education Agency (LEA) where a student resides. This funding is also calculated on a per-pupil basis. When a student enrolls in a charter school, their respective LEA is required to transfer a share of its local current expense per-pupil allocation to that school.

These funds are intended to cover standard operating costs and are transferred periodically throughout the academic year. However, they exclude revenues from certain restricted or earmarked local sources, such as capital improvement funds or voter-approved tax increases, which are often reserved solely for traditional district schools. This difference can result in funding disparities, particularly in areas where local support heavily supplements school budgets.

Legislative Update (House Bill 259)

In 2023, North Carolina passed House Bill 259 (Session Law 2023-134), which introduced a new model for how state funds are distributed to public schools, including charter schools.

Historically, state education funding was based on projected enrollment figures provided ahead of each school year. While this method allowed new and expanding schools to receive upfront funding aligned with anticipated growth, it sometimes resulted in over- or under-funding when actual enrollment deviated from projections.

Starting with the 2024–2025 school year, the state will shift to a funding model based on prior-year Average Daily Membership (ADM) instead of projected enrollment. ADM reflects the average number of students enrolled during the previous year and is used to calculate per-pupil state funding.

This change is expected to create greater predictability and accuracy in the budgeting process for the state. However, it may also pose serious challenges for newly established or fast-growing charter schools, which by definition lack a full year of enrollment data. These schools may receive reduced or delayed funding, especially during their first few years of operation or during periods of significant expansion. Without upfront state funds aligned with current enrollment, charter operators may need to seek temporary financing or scale back planned programs until their funding catches up in the following year.

This shift underscores the importance of proactive financial planning for charter schools, particularly those in growth phases. It also highlights the need for external partners like us that can help schools bridge facility or operating gaps as they adjust to the new funding timeline.

Federal Funding and Grants

Charter schools in North Carolina are also eligible to receive federal education funding, though access to these funds is typically more restricted than state or local dollars. Federal funds are usually targeted toward specific student groups or programs, and are not guaranteed to every school in equal amounts.

Some of the main federal funding sources available to charter schools include:

• Title I funding for low-income students: Intended for schools serving a high percentage of students from low-income households. These funds help support supplemental instruction, reading and math intervention, additional staff, afterschool programs, and efforts to increase family engagement.

• IDEA funding for students with disabilities: Provides funding for schools to deliver special education services, individualized instruction, and required accommodations for eligible students with disabilities. Charter schools must meet the same federal requirements as traditional public schools when serving these students.

• Charter Schools Program (CSP) grants: A competitive federal grant that supports the planning, opening, and expansion of high-quality charter schools. CSP grants can be used for staffing, professional development, curriculum planning, and other start-up costs, but not for purchasing buildings or land.

While these programs offer meaningful support, federal dollars represent a small portion of overall charter school funding and often come with compliance requirements that may be challenging for newer or smaller schools to navigate. Most notably, federal funds cannot be used for facilities, including construction, renovation, or leasehold improvements. This restriction presents a significant hurdle for charter operators looking to grow or improve their physical campuses.

As a result, charter schools must often rely on private loans, philanthropic support, or partnerships to cover facility costs. At 22Beacon, we play a critical role in helping schools overcome this funding gap by offering strategic financial guidance and development support tailored specifically to the charter sector.

Facility Funding Challenges for North Carolina Charter Schools

Lack of Direct Access to Local Tax Revenue

One of the most persistent challenges charter schools in North Carolina face is the lack of direct access to local tax revenues for facility development and improvement. Unlike traditional public schools, which can rely on local bonds, property tax levies, and voter-approved funding initiatives to build and maintain school infrastructure, charter schools are excluded from these funding mechanisms.

Instead, charter schools must often secure their own funding for buildings through private loans, grants, philanthropic support, or lease arrangements. This adds significant financial pressure, especially for schools operating in areas with high construction or rental costs. Because a large portion of a charter school's budget is already dedicated to operations, teacher salaries, instructional programs, and student services, diverting limited resources toward facility expenses can undermine the quality and stability of educational offerings.

The result is a systemic disadvantage: while traditional district schools benefit from a steady flow of capital funding for buildings and renovations, charter schools must continually search for creative and often high-risk ways to secure the space they need to serve their communities.

High Demand and Facility Constraints

North Carolina charter schools continue to see rising enrollment demand, but inadequate facility funding makes it difficult to meet that demand. According to the 2023 Annual Charter Schools Report, more than 85,000 students were on waitlists for charter schools across the state. This figure reflects not only growing public interest in charter education but also the constraints many operators face in expanding their physical capacity.

Without access to public capital funding or local tax revenue, charter schools often struggle to build new campuses, lease additional space, or renovate existing buildings. In fast-growing regions, the gap between demand and capacity can be especially severe, forcing some families to wait years for a spot or turn to other educational options altogether.

This combination of high demand and limited facility access underscores the importance of strategic facility planning and external support. We help charter schools navigate these constraints by providing financing tools, real estate guidance, and long-term solutions that enable growth without compromising instructional quality.

The Role of 22Beacon in Supporting North Carolina Charter Schools

Navigating the complexities of charter school funding, especially when it comes to securing adequate facilities, can be a major barrier for school leaders. That’s where 22Beacon steps in. Formerly known as the CSDC, we are a mission-driven partner dedicated to helping North Carolina charter schools grow through innovative financial solutions and real estate development expertise.  22Beacon has worked directly with 10 North Carolina schools, providing tailored solutions to meet their unique needs.

With decades of experience supporting public charter schools across the country, we play a vital role in helping North Carolina charter operators overcome capital limitations, expand their campuses, and create high-quality learning environments tailored to the needs of their students and communities.

22Beacon’s Lease-to-Own and Turnkey Development Programs

One of 22Beacon’s most impactful offerings is our lease-to-own program, designed specifically for charter schools that need space but lack the upfront capital to purchase property. This model allows schools to occupy newly developed or renovated facilities while leasing them over time with a clear path to ownership.

Flexible lease terms are structured to align with a school’s enrollment projections, budget constraints, and long-term plans, making it easier for school leaders to focus on delivering educational outcomes without being overwhelmed by real estate burdens. By the end of the lease period, schools can take full ownership of the property, often at below-market rates, ensuring long-term stability and control over their learning environment.

In addition to lease-to-own arrangements, we also offer turnkey development services, guiding schools through every step of the facility development process, from site selection and design to financing, construction, and project management.

Credit Enhancement and Financial Solutions through 22Beacon

Charter schools often face barriers when seeking traditional financing, especially during early stages or periods of rapid growth. To address this, we offer credit enhancement solutions that help schools access the capital they need to build or expand their facilities.

Through tools like the Building Block Fund™, we provide financial backing that enables charter schools to qualify for loans, improve lending terms, and reduce upfront capital requirements. This added layer of security gives lenders greater confidence and makes it possible for schools to pursue projects that might otherwise be out of reach.

These credit enhancements are particularly valuable for schools in underserved communities, where access to affordable capital is limited and funding gaps can delay or derail critical infrastructure projects.

Commitment to Sustainable and Healthy Learning Environments

Beyond financing and construction, 22Beacon is deeply committed to sustainability and creating a healthy learning environments.  

By incorporating features like natural lighting, efficient HVAC systems, and renewable energy sources, 22Beacon-designed facilities help schools reduce their long-term operating costs while creating spaces that support student wellness and academic performance.

This commitment to sustainability is about more than just lowering utility bills, it’s about ensuring that every student, regardless of ZIP code, has access to a safe, modern, and future-ready school environment. As North Carolina’s charter school sector continues to grow, these types of forward-thinking investments will be essential for long-term success.

Conclusion

Charter schools in North Carolina operate within a funding system that presents both opportunities and challenges. While state and federal dollars support day-to-day operations, access to facility funding remains limited, particularly in the absence of local tax revenue or public capital support. As enrollment demand continues to grow, charter school leaders must find creative ways to secure the resources and infrastructure needed to serve their communities.

That’s where 22Beacon can make a meaningful difference. With a proven track record in charter school development, financing, and long-term planning, we help schools overcome financial roadblocks and build environments where students can thrive.

To support the future of charter education in North Carolina, now is the time to explore partnerships with 22Beacon. Whether you're starting a new school or expanding an existing one, our team can provide the strategic guidance, funding tools, and facility expertise to turn your vision into a reality.