NewsThe state budget finally passed. See North Carolina passes 2023 state budget - EducationNC (ednc.org). One program receiving a lot of attention is the expanded Opportunity Scholarship program, initially called the "Choose Your School, Choose Your Future" Act. In a nutshell – NC families at all income levels may be able to access a portion (between 45% and 90%, depending on income) of the state's per pupil allocation for education and spend that money at a private school. Private schools will have challenges anticipating and meeting increased demand on a short timeline. There’s an opportunity for churches to help and that opportunity aligns well with many churches’ goals for stewardship and evangelism. Churches can support religious education and raise revenue using existing resources. How will private schools meet the new demand? Will new students try private school and decide to go back to public school? Statewide NC can look to the 10 other states with school choice programs to predict what will happen in the aggregate. But, broad trends won’t determine what happens in a particular community or school. How can private school leaders be ready to absorb extra demand and take this opportunity to serve more students, without time or certainty to undertake a building campaign? Start a school? Lease space to an existing school? Maybe it’s the right time for your church to start an affiliated school? That’s a big undertaking, but if its been a consideration, this new revenue source & demand for religious private school education could be a once-in-a-generation opportunity. Or, perhaps supporting expansion of existing affiliated private schools is a more straight forward step with similar advantages and less risk.
Challenges for Private Schools. Timing, Space, Flexibility.
- Timing. Next August – 8 months from now, voucher-holding students will be in class at their new private school. GS_115C-562.2.pdf (ncleg.gov) [1] Beginning March 15, students will start receiving scholarship grants.
- Space. Building new schools is a costly long-term endeavor. Churches are best positioned to address the physical space need on a short timeline: classroom style space, HVAC systems, parking, and most importantly - availability between 7am-5pm M-F.
- Flexibility. Some private schools will grow significantly, some not much, and others will probably spike and then level out. Heads-of-school will continue to grapple with this issue. After a couple years, perhaps it will become clear whether a particular private school needs a building campaign or can manage with existing facilities.
Solutions & Opportunities for Churches. Stewardship, Evangelism, Support Religious Education, Raise Revenue
- Stewardship. Many churches have great facilities that sit idle for 80%+ of the week. This is an opportunity to use those resources to serve children and families. Perhaps there is a double benefit for churches with static or declining attendance, or ageing populations, to involve children and families on campus and in church life.
- Evangelism. There are some people who would not visit your church on Sunday morning, but who are very interested in a good education for their kids. Having families on campus could be an opportunity to demonstrate a faithful witness of service to the community.
- Support Religious Education. Most private schools are religiously affiliated. Supporting those schools when they have an opportunity to expand is a once-in-a-generation opportunity to facilitate the growth of religious education.
- Raise Revenue. Churches already budgeted/paid for classroom space. Any additional revenue is, in a sense, “found money” for the church budget, and churches can likely offer classroom space at a much lower price and more favorable terms than other options the school may have for flex space. If ever there was an example of a “win/win” situation.
What are the legal issues and solutions? Below are key issues to consider for starting a school or leasing space to an existing school.
- School and church mission alignment.
- Separate legal entity or program within the church.
- Integrated auxiliary status.
- Lease, facilities use agreement, or something else.
- Unrelated Business Income Tax (“UBIT”).
- UBIT rental exception requirements.
- Reporting (Form 990) requirements.
- Insurance coverage.
- After-hours access.
[1] See NCGS 115C-562.2, which states, in part, "...make available no later than February 1 annually applications to eligible students...[b]eginning March 15....shall begin awarding scholarship grants..."
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