NC Budget Compromise: What You Need to Know

June 27th, 2019 by NCTP Feed Categories: Feed, News No Responses

by Leah Byers and Brian Balfour

This spring, the North Carolina House and Senate have been working on their budget proposals. After weeks of negotiation, the two chambers unveiled the compromise budget that, if passed by both chambers, would be presented to Gov. Roy Cooper for final approval or veto.

The two budget plans were relatively similar, and the final version has its strengths and weaknesses. The overall spending for year one of the budget is $24 billion, with year two spending approximately $24.8 billion. First year spending is slightly higher than the originally agreed upon $23.9 billion and represents around a 3 percent spending increase from the current year. This figure, due to some recent changes, however, is not quite an apples-to-apples comparison. These changes are described more below.

Here are some of the key provisions. As a reminder, North Carolina, like many other states, budgets on a two-year basis. This two-year period is known as the biennium. This biennial budget is for July 2019 through June 2021.

Budget Highlights

Education –

  • Provides a 3.9 percent average teacher raise over two years.
  • Provides veteran teachers with over 25 years of experience a $500 annual bonus for each year of the biennium.
  • Increases principal pay schedule and merit-based bonuses.
  • Creates new program to recruit principals to low-performing schools.
  • Creates a financial literacy class for high school students and provides $1 million for professional development related to the introduction of the new course.
  • Increase school lunch funding by $3 million, allowing students who qualify for federally reduced-price lunches to receive free lunches.
  • Preserves scheduled funding increases for the state’s Opportunity Scholarship program.
  • Provides funding for K-12 education capital facilities through a pay-as-you-go system.

 

Taxes and General Government –

  • Replenishes $710 million of the state’s Rainy-Day Fund over 2 years.
  • Raises the state’s annual standard deduction from $20,000 to $21,000 for married filing jointly and from $10,000 to $10,500 for single filings.
  • Reduces the state’s franchise tax rate.
  • Provides most state employees with an average five percent salary increase over the biennium.
  • Provides higher salaries to recruit and retain prison employees in high-need facilities.

Health and Human Services –

  • Funds 1,000 additional NC Innovation Waiver slots, a product of the state’s Medicaid program that provides home or community-based care services for individuals with intellectual or developmental disabilities.
  • Appropriates funding for the state Medicaid program’s transition to managed care.
  • Fills the $140 million funding gap of the state’s Medicaid program for children, NC Health Choice, caused by the federal government’s reduced reimbursement rate.

 

Justice and Public Safety –

  • Provides $70 million to help implement “Raise the Age” legislation.
  • Provides funding to clear the state’s rape kit backlog.
  • Approves hiring of 8 new SBI agents to assess threats against schools and churches.
  • Allocates $2 million for new prison security measures.
  • Develops Quick Response Team to help address the needs of opiate and heroin overdose victims who don’t get the help they need.
  • Provides $1 million to help reintegrate non-violent offenders into society.

Agriculture and the Environment –

  • Allocates $43 million over two years for the creation of new state and local parks and to preserve North Carolina’s natural resources.
  • Provides $39 million over two years for the Clean Water Management Trust Fund.
  • Provides $10 million for a new Ag Sciences Center.

Transportation –

  • Increases funding for Strategic Transportation Initiative by $20.9 million in 2019-20 and $109.5 million in 2020-21. Net appropriation is almost $3 billion over two years.
  • Provides $530 million to help maintain, repair and replace bridges.
  • Increases Highway fund by more than $165 million to improve DOT response to storm events and other maintenance needs.

Other notable provisions –

  • Approves $15 million for the next two years to help expand rural broadband.
  • Provides $1.1 million for implementation of the state’s Voter ID constitutional amendment approved in November 2018.
  • Allocates $20 million over the biennium for building multi-family affordable housing units across North Carolina.

Some good provisions that were present in one version of the budget but did not make it into the final proposal.

  • Expansion of the state’s Opportunity Scholarship eligibility – present in the Senate’s proposal. This provision would have increased income eligibility requirements for the program, which provides tuition scholarships for low-income students to attend private schools of their choice.
  • Repeal of some of the state’s restrictive Certificate of Need laws – the Senate proposal repealed several certificate of need (CON) requirements. These burdensome laws require medical providers to obtain a government permission slip to open or expand their practices. North Carolina has the fourth most restrictive CON laws in the country, driving up healthcare prices and reducing access to care.

Budget Perspective

It’s important not to get lost in all the numbers and be able to compare this budget with others.

However, when we do so, right away we notice differences. The reported and “legal” spending amount for the proposed FY 2019-20 General Fund budget is $24 billion. But this figure excludes debt service payments and capital expenditures paid for via the new State Capital and Infrastructure Fund (SCIF) – amounts that were regularly included in General Fund spending totals prior to last year. During the budgeting process, these funds are set aside into the SCIF and never technically made available for General Fund expenses, but the money is still spent nevertheless.

To make an apples-to-apples comparison to previous budgets, we can add on the debt service and capital expenditures to the $24 billion total and reach a total spending amount of $26.26 billion. The new total represents a 9.3 percent increase over last year’s budget expenditures (also adjusted for the SCIF change).

Much of the $2.2 billion annual increase is attributed to an aggressive investment in capital projects which total $1.5 billion, paid for on a pay-as-you go basis. This sensible approach enables the state to avoid adding to its already sizable debt.

Roughly $1.4 billion in surplus and unspent money from the current fiscal year helps to finance the bulk of these capital investments. About $281 million of the capital expenditures is directed toward counties for public school projects, with close to another $100 million for UNC capital projects, including $15 million for a new Brody School of Medicine at ECU. The rest of the money goes largely for a variety of state offices, research facilities, cultural attractions and public safety facilities.

Despite the sizable year-over-year increase of the total General Fund appropriations, this year’s budget plan would mark a 34.7 percent aggregate increase in apples-to-apples spending amounts over FY 2010-11, the last year Democrats held majorities in the General Assembly.

Compare this to the nine-year period leading up to the great recession under Democrat control, in which spending exploded by 52.9 percent from FY 1998-99 to FY 2007-08.

Budget Bottom Line

All budgets are a product of compromise and competing priorities and will never be perfect documents.  That said, even though the comparison above shows it represents a significant increase, a majority of the spending increase in this proposal is tied to addressing capital needs in a prudent manner and committing additional funding to the state’s reserve fund, which had been depleted due to hurricane recovery efforts.

The income tax relief and reduction of the franchise tax rate are steps in the right direction. However, there was a missed opportunity to eliminate the state’s corporate income tax. School facility spending, now financed on a pay-as-you-go method, is more fiscally responsible than a bond. However, doing so does nothing to address the long-term issue of localities not meeting their facility obligations, which will be topics for future discussions.

It’s not perfect, but it’s still a pretty good budget. If approved by both chambers, the bill will be presented to the governor for final approval or veto. If Cooper vetoes the budget and there is no budget for the start of the new fiscal year on July 1, the state will revert to the last year’s budget until a new budget is passed.

Senator Tillis’ primary challenger, the student loan crisis, and drag queen story hour

May 13th, 2019 by NCTP Feed Categories: Feed, News One Response

Tis the season for graduations! Join the conversation as we talk about the student loan crisis affecting many young Americans. We’re also discussing the big announcement of a primary challenger that has put the Tillis campaign on high alert. Finally, we’ll delve into a story out of Durham that has to do with a disturbing “Drag Queen Story Hour” for young children, hosted by a taxpayer-funded charter school.

Watch a live recording of this episode here.

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No, students would not be covered under Medicaid expansion

May 9th, 2019 by NCTP Feed Categories: Feed, News No Responses
  • Medicaid expansion was the third-highest policy priority for last week’s NCAE teacher strike.
  • Despite misleading rhetoric from the NCAE, no children would be newly eligible for Medicaid under expansion.
  • Medicaid expansion would flood an already overcrowded system with able-bodied working age adults, 78 percent of whom are childless.

Leading up to their May 1 teacher strike, the North Carolina Association of Educators (NCAE) released their top five policy priorities. The third-ranked priority was the expansion of the state’s Medicaid program. For the NCAE, expanding government welfare to working age able-bodied adults, most of whom have no dependent children, comes before nearly all other legitimate reforms needed in the state’s public education system.

In a post published before the announcement of the NCAE priorities, I pointed out that no children would become newly eligible for Medicaid under expansion.

Each proposed Medicaid expansion plan explicitly states it would expand Medicaid to adults ages 19 through 64 or 65. No K-12 aged student would be newly eligible for Medicaid under expansion.

In fact, children ages 6 through 18 currently qualify for full Medicaid up to 133 percent of the federal poverty level and for NC Health Choice (a Medicaid insurance product) up to 211 percent of the federal poverty level.

During the NCAE rally, protesters held signs reading “sick kids can’t learn.” Members of the state legislature also promoted similar messages. Expansion proponents continue to exploit children as political props in the ongoing debate.

Having been called out on their deception, Left-leaning groups scrambled to find justification for the policy in the days leading up to the rally. One policy paper by the North Carolina Justice Center cited a phenomenon known as the “welcome mat effect” – when those who were eligible before expansion sign up afterwards due to new awareness of their eligibility.

For students, this may happen when their parents become eligible for Medicaid under expansion. Unlike their children, some parents would become newly eligible under expansion in North Carolina. Medicaid currently covers the lowest-income parents, but not all the way up to 133 percent of the federal poverty line.

However, 78 percent of those that would be newly eligible for Medicaid under expansion would have no dependent children. And, at the end of the day, is it wise to further tie our state to a federal government that is $22 trillion in debt for the sake of a public information campaign to raise awareness of existing benefits for children?

As featured in a recent video from the Justice Center promoting Medicaid expansion, a protestor pointed out that, “every single child deserves access to the best healthcare…there’s no reason in this beautiful state of ours that kids should be denied healthcare because of a legislature’s vote.”

The irony is that Medicaid expansion would threaten access to care for children who are currently enrolled in Medicaid by adding an estimated half a million new enrollees to an already overcrowded system.

So, it seems North Carolina’s left-leaning cohort of organizations – including the Justice Center and the NCAE– have developed a new strategy to push their progressive policy agenda: if a policy can’t be passed on its merits, find any way that it remotely connects to children. Then claim that anyone that opposes the policy is heartless.

Okay, this is not actually a “new” strategy for an ideology that uses emotion over sound logic at every turn. But it has rarely been more on display than in the advocacy for Medicaid expansion conveniently making its way onto the NCAE’s latest policy priority list.

It is not compassionate to flood an already overcrowded system and limit access to care for current Medicaid recipients. It is arguably immoral to use children to advocate for a policy that would harm current children on Medicaid.

Featured image photo credit: https://www.youtube.com/watch?v=KF-hMdlgt8o

Teacher Pay or Teacher Compensation?

April 29th, 2019 by NCTP Feed Categories: Feed, News No Responses

Teacher salary is a subject that seems to never goes away in North Carolina. One of the reasons why this is so is because of how we talk about it. Our discussions are frequently focused on state and national average salaries, but often fail to include total teacher compensation which includes the cost of benefits such as health insurance, retirement benefits and social security.

Because teacher compensation provides a more comprehensive view of what teachers receive for their services, it’s a better figure to use in this discussion.  The problem, however, is data on teacher compensation is often missing from the discussions. A look at the average teacher compensation figures for 2009 and 2019 is illuminating.

                                                                               NC Average Teacher Compensation 2009 and 2019
Salary Benefits Compensation
Year Ave. NC Teacher Salary Health Insurance Retirement Benefits Social Security Total Benefits Total Comp. Benefits as a % of Total Comp.
2009 $48,454 $4,157 $3,944 $3,706 $11,807 $60,261 19.5%
2019 $53,975 $6,104 $10,179 $4,129 $20,412 $74,837 27.4%
Source: Highlights of the North Carolina Public School Budget (for specific years), published by the North Carolina Department of Public Instruction. Available online at: http://www.ncpublicschools.org/fbs/resources/data/#statistical-profile.  Figures for health insurance and retirement benefits represent cost per employee. The cost of social security per employee has remained the same, 7.65 percent of salary.

All the figures in the above table are from Highlights of the NC Public School Budget, for appropriate years and use current dollars. The comparison shows the real impact of rising healthcare and retirement costs on teacher compensation. For example, in 2009, the cost of total benefits (health insurance, retirement benefits and social security) for the average teacher was $11,807. By 2019, that cost had risen to $20,412.  Over the same period, total compensation (salary + the cost of benefits) increased from $60,261 in 2009 to $74,387 in 2019. Over the same period, benefits as a percentage of total  compensation increased from 19.5 percent (2009) to 27.4 percent (2019). The most dramatic increases over the time has been the cost of teacher retirement. As a percentage of salary, the cost has increased from 8.1 percent (2009) to 18.8 percent (2019).

The discussion over how to pay teachers rages on. It’s true that teachers in North Carolina  have received five consecutive annual pay increases. The fact is while North Carolina teachers have received pay increases for five consecutive years, a larger percentage of funding has been going to pay the cost of benefits.

It’s a reality that needs to be injected into the discussion.

 

 

 

 

Biden’s makes it official, the gender pay gap, and the politics of Cooper’s infanticide veto

April 29th, 2019 by NCTP Feed Categories: Feed, News No Responses

With former Vice President Joe Biden making it official, the Democratic field is now brimming over, with 20 candidates in all. Polling indicates that Biden is the clear front runner, but Sen. Bernie Sanders, Kamala Harris, and several other candidates are still popular enough to shape many of the policy discussions among progressives.

Although it’s clear that there is a gender wage gap, the contributing factors to this disparity or less well known. We delve into the causes of this imbalance and why it’s not always a bad thing.

Finally, will there be any political fallout for Gov. Roy Cooper’s decision to veto the Born-Alive Abortion Survivor’s Protection Act?

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Unmasking progressives and their “commitment” to educational opportunity

April 12th, 2019 by NCTP Feed Categories: Feed, News No Responses
  • Progressive Democrats have introduced numerous bills in North Carolina to limit or end school choice programs.
  • Progressives pride themselves on working to end racial discrimination, inequity and limited educational opportunity.
  • Efforts by Progressives to limit or end programs that directly address those problems confirm they are more concerned with power than with people.

Progressive Democrats continue their war on educational freedom. Last week three freshman Democratic Senators – Natasha Marcus, (D-Mecklenburg), Sam Searcy (D-Wake) and Wiley Nickel (D-Wake) – filed a bill (SB 583 to freeze current funding and to eliminate future funding for the Opportunity Scholarship Program (OSP).  The bill is similar to a provision in Gov. Roy Cooper’s budget which freezes scholarships at current levels, and eventually ends the opportunity for other low-income families to receive a scholarship.

So, what is so harmful about OSP that it would generate several proposals to terminate the popular program? The OSP program provides low-income students with scholarships of up to $4,200 to attend a non-public school that best fits their needs. This year, according to the State Education Assistance Authority, the agency that administers OSP, there were over 11,900 new applicants and over 9,600 recipients of the scholarship. Enrollment in OSP has grown 16 percent in the last year. In addition, a recent survey by Parents for Educational Freedom in North Carolina found 97 percent of OSP parents were happy with their academic progress and 97 percent of parents were satisfied or very satisfied with the school of their choice.[i]

Such high levels of satisfaction are unheard of among government programs. Senators Marcus, Searcy and Nickel want to not only end the Opportunity Scholarship Program but also transfer scholarship dollars to local school districts to hire more staff and distribute unused funds for capital costs. Because of the way the formula is written, most of the funding for capital costs would go not to small rural districts where the need is greatest, but to larger school districts like Wake County or Charlotte-Mecklenburg Schools.

Such ideas come right out of the Progressive playbook. Lawmakers like Marcus, Searcy and Nickel talk frequently about the importance of education, about helping the less fortunate and ensuring children get a good education. However, introducing legislation to end a program that provides children the opportunity to access a quality education is at odds with all those stated ideals.

Bills like Senate Bill 583 show that Marcus, Searcy and Nickel are not committed to helping disadvantaged children but only to maintaining the viability of a public-school system that more and more families are choosing to leave – even if it means eliminating educational opportunity for low- income children.

While this hypocrisy may sound surprising, it shouldn’t be. Civitas has written extensively about how many Democrats and Progressives have been vocal in their opposition to school choice (see here and here). Many lawmakers on the Progressive Left frequently tell us about their concern for inequity, racial discrimination, disparities in academic achievement and student discipline and the sad plight of minority and low-income students. However, the fact is, when Progressives are confronted with evidence that shows how many low-income and minority students benefit greatly from charter schools and other school choice programs, they only obsess about the program’s impact on the public schools.

Democrats rationalize such a position by saying school choice programs use money that would have normally gone to the public schools. That is, the assumption is school choice programs siphon money and resources from the public schools. Senators Marcus, Searcy and Nickel want to correct that alleged problem.

Under Senate Bill 583, OSP money can be diverted to hire additional staff in the public schools and unused money would be redirected to help fund school capital costs. The problem is; the assumption. School choice programs do not siphon money from the public schools. When the North Carolina Supreme Court upheld the Opportunity Scholarship Program in 2015 it ruled that public funds could be spent on other types of education besides the public schools. The court noted that the creation of OSP provided additional educational opportunities, served a public purpose and moreover did not create an alternate system of publicly-funded private schools.

Rather than thinking school choice programs siphon money from the public schools, some basic calculations reveal just the opposite. In the case of OSP, the state can spend up to $4,200 per student per year to educate a student. If the student was in a traditional public school the state would be spending $6,153 per student.[iii]  That’s an actual savings of $1,953 per student. Since that calculation reflects the maximum scholarship offer ($4,200) – there are many recipients who are awarded less than the $4,200 maximum — the savings per student is larger. But back to SB 583. Clearly, Senators Marcus, Searcy and Wiley believe they have support for their actions. However, a strong case can be made that such ideas are outside the mainstream in North Carolina. The Opportunity Scholarship Program remains a very popular program. A found that 85 percent of respondents support the program. That includes 93 percent of African-Americans, 87 percent of Republicans, 85 percent of Democrats and 85 percent of Unaffiliated voters.[iv] Lest one think this is an aberration, Civitas has been polling on Opportunity Scholarships since 2013 and support for the program hasn’t dropped below 60 percent. In 2017 it polled at 71 percent.[v]  Such numbers speak to the depth to which parents want to be able to determine how and where their child is educated.

The Progressive war on educational freedom is real. Last month Gov. Cooper submitted a budget that froze and eventually eliminated the Opportunity Scholarship Program. Earlier this month, Senator Dan Blue and Jay Chaudhuri introduced legislation (SB 247) to place a moratorium on charter school growth pending further study by the legislature. Senate Bill 583 is yet more evidence of the same. Progressives don’t want parents controlling how and where their children are educated. Many Democratic lawmakers certainly talk a good game about a personal commitment to the poor, ending discrimination and giving endless lip service to expanding opportunity. The fact is; however, they don’t want parents controlling how and where children are educated. You soon find out that what matters most to such lawmakers is not expanding educational opportunity to the poor and disadvantaged, – but controlling and preserving the hierarchy of the establishment public-school system. Legislators who support Senate Bill 583 and other proposals to end school choice programs have the same outlook. They value a system of power over parents and students. It’s something we would do well to never forget.

[i] Parent Survey, Opportunity Scholarship Program, Survey was conducted by Parents for Educational Freedom North Carolina, between November 25 and December 12 with a total of 1,448 families participating in the survey. For additional information see:  https://www.pefnc.org/ospsurvey. Accessed April 9, 2019

[ii] Hart et al v. State of North Carolina and North Carolina State Education Assistance Authority. Case number 372A14, Filed July 23, 2015. Available online at: https://appellate.nccourts.org/opinions/?c=1&pdf=33175. Accessed April 9, 2019.

[iii] Statistical Profile Public Schools of North Carolina published by the North Carolina Department of Public Instruction. See Table 22. Available online at: onhttp://apps.schools.nc.gov/ords/f?p=145:32:::NO:::Accessed on April 10, 2019

[iv] Civitas Poll, January 2019. Access full results at: https://1ttd918ylvt17775r1u6ng1adc-wpengine.netdna-ssl.com/wp-content/uploads/2019/01/SCWPoll2019.pdf

[v] For additional information on Civitas Poll results, see: https://www.nccivitas.org/polling/