North Carolina pays for education using three basic allotments: position, dollar, and categorical. The position allotments serve as a foundation formula because the number of teaching positions required is statutorily mandated. Teacher positions are distributed based on legislated student-to-teacher ratios for each grade level. For example, the student-to-teacher ratio required for grades K-2 is 18-to-1. The dollar-allotment portion of state aid provides money for local districts to hire employees or buy materials for a specific purpose. No other adjustments or weights are included in the formula, aside from the different student-to-teacher ratios for different grade levels. North Carolina provides more than a quarter of state education dollars through the third allotment—categorical aid. Total spending on categorical programs for fiscal 2004 was more than $1.6 billion. North Carolina lost its school finance battle in Hoke County Board of Education v. State. Last summer, the state supreme court affirmed a lower court’s decision that the state had failed in its constitutional duty to provide students in Hoke County with the opportunity to obtain a “sound basic education.” In addition, the high court affirmed the trial court’s ruling that the state must act to correct the deficiency.