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Finally… a budget. Is it in the best interests of students? You decide

Editor’s Note: This article was updated at 10:28am on September 16, 2015.


The conference committee bill and report on the state budget released this week gives the state the opportunity to think about our priorities as we head into an election year. We know more about lawmakers spending priorities, especially on education. Think about the budget process, the policy changes, and the appropriations. Take a look, and let us know what you think in the comments below.

Context

Context is important when thinking about the state budget.

Each session there is a budget bill, and there is also a companion conference committee report, which provides details on the increases and decreases to the budget.

Here is the most recent version of the budget bill. Here is the most recent version of the conference committee report. Go ahead and open both in a separate tab in your browser so you can take a look as we walk you through the appropriations.

Changes to the education budget can be found in the conference committee report. The education budget starts on page F-1. Recurring (R) means the dollars will be included in the budget going forward. Nonrecurring (NR) means it is a one-time appropriation. If the dollar amount is in parens, then the funds were reduced. 

When you look at budget numbers, the first question is what do the numbers include? Is it a total number for public education, community colleges, and the university system? Or just public education?

Here are the revised appropriations for public education (K-12) from 2005 through 2015. (Figures are not adjusted for inflation.)

2005-06

$6,607,998,945

2006-07

  6,719,751,118

2007-08

  7,714,429,569

2008-09

  7,802,046,538

2009-10

  7,456,261,240

2010-11

  7,085,588,912

2011-12 

  7,464,492,057

2012-13

  7,506,553,067

2013-14

  7,867,960,649

2014-15

  8,104,976,608

 

However, it is important to note that North Carolina is using a base budget instead of a continuation budget for the first time this biennium. Historically, the continuation budget included appropriation increases for the public school funding formulas (teachers, instructional supplies, textbooks, instructional support personnel, teacher assistants, etc.) due to projected increases in average daily membership (ADM). 

Comparisons to prior revised appropriations going forward may be unintentionally misleading because those amounts did not reflect distributions for salary, retirement, and medical insurance reserves. This fiscal year is the first year where those allocations are fully allocated in the various sections of the budget as opposed to being provided in a lump sum for later distribution by the Office of State Budget and Management as part of their budget certification process.

For historical comparisons, this chart is instructive:

The revised appropriation in the budget bill for K12 education is $8,516,769,297.

budgetrevised appropriation

The revised appropriation goes down to $8,419,444,621 in 2016-17, but it appears that is because $107,000,000 is included in 2016-17 reserves for public schools average daily membership. See line item 9 on page L-2 of the conference committee report. That would bring the total appropriation in 2016-17 to $8,526,444,621. The state projects having an additional 17,338 students in 2015-16 and an additional 17,701 students in 2016-17.

Teachers are quick to remind us as we travel across the state that how the additional dollars are spent — and whether the changes are felt in the classroom — matters.

The budget process

In March 2015, facing a projected $271 million shortfall, the Governor recommended a $21.5 billion general fund budget for 2015-16 and $22.2 billion general fund budget for 2016-17. Spending on K-12 would have been $8.4 billion in 2015-16 and 2016-17.

On May 6, 2015, the Fiscal Research Division and the Office of State Budget and Management reached consensus on the revenue forecast, projecting a surplus of then-$400 million, often referred to as the “April surprise.” The extra money ultimately added up to $445 million.

In May, the House proposed a general fund budget of $22.2 billion in 2015-16 and $22.4 billion in 2016-17. Spending on K-12 would have been $8.6 billion in 2015-16 and $8.7 billion in 2016-17.

In June, the Senate proposed a general fund budget of $21.5 billion in 2015-16 and $21.7 billion in 2016-17. Spending on K-12 would have been $8.3 billion in 2015-16 and $8.4 billion in 2016-17.

In this EdNC article, we compared the budgets proposed by the Governor and the House of Representatives.

In this EdNC article, we presented the Senate’s proposed budget.

The differences between the budgets were hashed out by a conference committee. Here are the legislators that were on the conference committee. Of the 50 members of the Senate, 32 of 34 Republicans were designated as conferees. Of the 120 members of the House, 82 were appointed to be conferees, including 19 Democrats and one unaffiliated.

Overview of the Conference Committee Report

House Speaker Tim Moore and Senate President Pro Tempore Phil Berger revealed the broad strokes of their final budget agreement at a press conference Monday. But the public had to wait until nearly midnight to actually see the 429-page bill and the 207-page committee report. And senators not in the know about the details — mainly Democrats — had only hours to get familiar with it before a 2:00 p.m. Senate session to vote on it. 

During Tuesday’s Senate hearing on the budget, some Democrats took to the floor to criticize the short amount of time they had to read the budget before having to vote on it. Sen. Jeff Jackson (D-Mecklenburg) said he was up all night reading it.

“Today is the biggest legislative day of the year. It’s budget day,” he said. “Here’s the budget. It’s about 400 pages. Spends $21 billion. And members of the minority party, along with the rest of the state, saw it at midnight last night.” 

He went on to tell the room of senators that “the only part of this process that you’ve rushed is transparency.” 

Sen. Dan Blue (D-Wake) echoed those sentiments when he spoke, saying the haste would make it harder for senators to answer constituent questions about the budget, since they hadn’t had enough time to thoroughly study it.

“Why the rush to keep us from seeing what’s good, what’s bad, so that we can respond to constituents when they ask?,” he asked.

Sen. Erica Smith-Ingram (D-Northampton) asked for the budget vote to be delayed a day so that senators could have more time to review the document.

“It would be negligent for me to vote for this budget and not have had ample opportunity to have poured through it page by page, line by line,” she said.

Earlier in the hearing, Sen. Bob Rucho (R-Mecklenburg) countered claims that senators didn’t have enough time to know what was in the budget. 

“I have to think that everything that was in this budget has already been discussed in a finance committee or an appropriations committee,” he said. 

What’s notable about this conference committee budget is the policy choices embedded in how the funds are allocated. 

Yesterday was the 125th legislative day the House has been in session. The House K-12 education committee has met 10 times, according to an archive of House calendars cross referenced with the legislative calendar. It was the 127th legislative day the Senate has been in session. The Senate education committee has met 11 times, according to an archive of Senate calendars cross referenced with the legislative calendar. Many important policy choices were made as part of the budget process.

Funding for TAs and driver’s ed drive the ed budget

Two proposed cuts — funding for 8,500 teacher assistants over two years and an end to driver’s education money that would have ultimately moved the program into the hands of community colleges — were sharply debated in the halls of the General Assembly and criticized extensively outside of them. Both are funded.

In line item 16 on page F-3 of the conference committee report, you can see $377.1 million is available for TAs in 2015-16 and 2016-17. The compromise on TAs came with a caveat: money for TAs now has to be used on TAs. Districts have lost the flexibility they had in the past to use those funds in other educational areas.

“The House budget, of course, maintained the flexibility,” Moore said in Monday’s press conference. “But after looking at it and seeing how the money is used, we felt comfortable that TA money there could take care of the issue with the TAs, and if there were any other issues, there is plenty of extra money to deal with that.” 

The budget compromise does manage to keep a piece of the Senate’s plan to reduce class sizes. First grade will go down to a ratio of 1-to-16 over two years if the budget compromise plan is passed. See line item 17 on page F-3 of the conference committee report. 

That is a move “research has repeatedly shown is a key to academic success,” Moore said at the press conference. 

The reduction in funding for teacher assistants was originally meant to open up resources for reduced class sizes in grades K-3. In the original Senate plan, first graders would have dropped down to a 1-to-15 ratio in the second year of the budget. Total funding for guaranteed classroom teacher positions, including salaries and benefits, is $4.31 billion in 2016-17.

Driver’s education is also funded with a nonrecurring appropriation of $24,120,000 for 2015-16; thereafter, state support will be provided by civil fines and forfeitures. See line item 27 on page F-5 of the conference committee report. The budget includes a provision to collect data and study the driver’s education program. See section 8.39 on page 86 of the budget bill. Senate Majority Leader Harry Brown (R-Onslow) challenged the efficacy of driver’s education in June during discussion of the Senate’s budget plan. He said that in investigating the program, he discovered that it only had a 40 percent success rate. EdNC columnist Ann McColl will explore driver’s ed in more depth in her column tomorrow. 

Salaries for educators

When it comes to salaries, the news was good and bad for state educators.

Legislative leaders were able to keep their promise to increase starting teacher pay to $35,000, but veteran teachers were left with only a one-time bonus of $750. Beginning teachers will also get that bonus, in addition to their salary increase, according to an email to EdNC from Rep. Craig Horn (R-Union).

Watch the short video below to see Senator Berger’s response to a question on veteran teacher pay. 

In January, EdNC reported on problems with the principal salary schedule. The House budget initially had a provision to study the issue, but it didn’t make it into the final bill. 

Opportunity Scholarships for private schools

Another measure that was hotly debated in and out of the legislature — increased funding for opportunity scholarships (also called vouchers) — survived House and Senate negotiations. The program — which allows low-income parents to apply for $4,200 from the state each year to help pay for private school tuition– gets a 129 percent boost in the budget compromise. The total program funding will be $17.6 million in FY 2015-16 and $24.8 million in FY 2016-17. The state Supreme Court took up the issue of opportunity scholarships but ultimately ruled in July that they were constitutional. 

The expansion of the opportunity scholarship program was welcome news to Darrell Allison, the president of Parents for Educational Freedom, an organization that advocates for opportunity scholarships.

“When you consider that the first year of the Opportunity Scholarship Program was only able to utilize roughly $5 million dollars of what had been allotted due to legal challenges, and then note that the final budget ends with nearly $25 million by 2016, this is … a major win for the thousands of low-income families who’ve desired this Program,” he said in an email to EdNC.

He went on to praise the legislature for its budget and its work on education over the years. “There is no denying that our legislative leaders have worked to improve public education in meaningful ways,” he said.

Special provisions

There are several special provisions in the budget regarding education worth noting. The nonpartisan N.C. Center for Public Policy Research has conducted research on special provisions and the appropriateness, or lack thereof, of using special provisions to pass legislation for almost three decades. According to an NCCPPR report, “[T]he practice of special provisions began as a legitimate way to explain the purposes of an appropriation or limit the use of funds.” The Center considers special provisions in the budget inappropriate if they are unrelated to the budget and amend other state laws. 

Section 8.A.2 on page 98 of the budget bill extends the constitutional burden on the state to provide students with the opportunity for a sound, basic education to local school boards.

Section 8A.5 on page 101 of the budget bill gives the State Board of Education the “authority to consolidate local school administrative units in contiguous counties as necessary to ensure that all school systems have the size, expertise, and other resources necessary to provide their students with the opportunity to receive a sound basic education.” A provision allows legislative disapproval of a proposed merger.

Section 8.12 on page 73 of the budget bill says, “It is the intent of the General Assembly to transition to a system of testing and assessments applicable for all elementary and secondary public school students that utilizes competency-based learning assessments to measure student performance and student growth, whenever practicable.” 

The State Board has already moved forward with a proof of concept study to examine the impact of testing changes suggested by a task force it created. These changes would get rid of end-of-grade tests and replace them with smaller tests throughout the year that could help teachers better inform their instruction. Superintendent June Atkinson said that the budget’s provision doesn’t clash at all with the State Board’s testing proposal. In fact, she said the testing changes being studied by the Board are a first step to a system geared toward competency-based education.

Section 8.41 on page 88 of the budget bill modifies more than six pages of the educator preparation approval process. Rep. Graig Meyer (D-Durham) posted this on Twitter:

Graig Meyer on Twitter

What’s missing?

Missing from the budget are portions of a House package of legislation, championed by Rep. Horn, that sought to transform the state’s educational landscape and elevate educators. These bills included a teacher recruitment and scholarship program, a program that would develop new methods of compensation for effective teachers or for teachers who took on extra responsibilities, and a grant program to train effective school principals. 

Of those three, only the principal training program remains. See section 11.9, p. 115 of the bill, and line item 71, p. F-11 of the conference committee report. 

A fourth bill in that package, meant to aid the state in its transition to digital learning, would have expanded school connectivity, established collaborative procurement for digital resources, expanded access to digital learning resources, and provided professional development for school leaders. A piece of that fourth bill remains in the budget. See line item 19, p. F-3 of the conference committee report. 

“Connectivity (H660) was funded in both years of the budget to a sufficient extent to allow North Carolina to leverage federal E-Rate money that will continue to expand wireless broadband into every classroom in our state,” Horn said in an email to EdNC. State funding for school connectivity will be $21.9 million in FY 2015-16 and $31.9 million in FY 2016-17.

Neither principal training nor connectivity received the full amount of funds asked for in the House budget proposal. 

This budget does not include money for district and school transformation, professional development, or the principal leadership academies — all previously funded with federal dollars through Race to the Top.

Tax changes

The budget includes changes to the state tax laws cutting the personal income tax to 5.499 from 5.75 percent in 2017, increasing the individual exemption by $500 so that married couples who file jointly don’t pay personal income tax on the first $15,500 of their income, dropping the corporate tax rate from 5 to 3 percent, and restoring full medical expense tax deductions.

The budget expands the sales tax base, which would help education in the state, said Senate President Pro Tempore Phil Berger (R-Rockingham) in the Carolina Journal. The expansion covers some businesses that do repair and service work. 
 

Alexandra Sirota, director of the NC Budget & Tax Center at the North Carolina Justice Center, called the tax changes a missed opportunity. 

“Rather than making the truly tough choices that reflect the priorities of North Carolinians, policymakers have once again decided to cut taxes and forgo critical investments that boost the economy,” she said in the Progressive Pulse

She went on to say that the tax cuts “shift the tax load onto average North Carolinians and push costs down the road.”

Policymakers pitch the budget to the public

Overall, Moore said the budget increases spending on K-12 education by $410 million. 

“We feel very, very comfortable and very proud of the progress that we’ve made on educational funding in this budget,” he said at the press conference. 

But, on the Senate floor Tuesday during the discussion of the budget, Sen. Josh Stein (D-Wake) said that it didn’t do enough. 

“The fundamental problem with this budget is that it does not invest in the most important service that our state provides,” he said. 

He said that educating children, paying teachers, and creating a competitive environment were key duties of the state, but that the final budget agreement had abandoned those priorities in favor of tax giveaways for corporations and their shareholders — most of whom live out of state.

“When will we value our teachers, our school kids, the middle class, more than we value the well-to-do and well connected?” 

Sen. Tom Apodaca (R-Henderson) said on the Senate floor that more funding wasn’t the answer to all the challenges facing the state. 

“Money doesn’t fix problems,” he said. “People fix problems, and we are blessed to have some of the best teachers in the country.”

At the Monday press conference, reporters queried Moore and Berger on the delay in reaching a budget compromise and the haste with which Governor Pat McCrory will have to sign the budget if it passes both chambers. A continuing resolution to fund state government ends Friday, and if the budget passes, the governor will have to sign it by then to avoid another continuing resolution.

“One of the complicated issues is that we had extra money this year,” Berger said, adding that lawmakers have also been taking on big issues — like Medicaid and tax reform issues — that the legislature has been trying to deal with for years. 

“We’re concerned about the length of time, but the more important thing is that we get it right,” he said. 

Moore said that another reason for the delay was a desire from lawmakers in the House to provide time for public input on the various budget plans. 

“That’s one thing that we’ve really tried to highlight in this budget: transparency and openness and input.” 

Moore said details of the budget had already been shared with the governor prior to the public release of the document, and that legislative leaders are optimistic.

“We’re hopeful that the governor…will very quickly embrace it and sign it,” Moore said. “We believe there is adequate time.” 

The House cannot vote on the budget until it’s been available to the public for three legislative days, so the representatives will take it up on Thursday. The Senate voted in favor of the budget plan Tuesday along party lines: 33-16. The third reading will take place today when the Senate convenes at 2:00 p.m.     


Other notes on the budget:

Students with disabilities get a boost from the budget in section 8.1 on page 67 of the budget bill — $3,926.97 in additional funding per student up from $3,743.48, but see this EdNC article on why it may not be enough since those dollars are limited to 12.5 percent of the average daily membership in each school district. The budget also directs DPI to study and come up with policy changes that will help improve academic results, including raising graduation rates, increasing digital learning options, and providing better transition services for elementary and secondary students with disabilities. See section 8.30 on page 83.

The budget increases support for textbooks and digital resources to $52.4 million in 2015-16 and $62 million in 2016-17. See line item 18 on page F-3 of the conference committee report.

The budget expands Read to Achieve reading camps to first and second graders — right now limited to third graders — at a cost of $20 million in 2015-16 and $20 million in 2016-17. See line item 24 on page F-4 of the conference committee report.

The budget includes additional funding for the Excellent Public Schools Act, increasing funding to $41.8 million in 2015-16 and $46.5 million in 2016-17. See line item 25 on page F-4 of the conference committee report. The Excellent Public Schools Act was passed as part of the budget bill in 2013 (page 79 of Senate Bill 402, Session Law 2013-360).

The state appropriation for the Department of Public Instruction is cut by 5.2 percent — $2.5 million in 2015-16 and 2016-17. The total appropriation to support DPI operations is now $45.3 million. See this EdNC article for additional information about cuts to DPI between 2011-15.

Funding for pre-K is increased and can be found in the health and human services budget. Total availability is $144.2 million. See line item 24 on page G-5 of the conference committee report.


Other advocates begin to weigh in

Rodney Ellis, the president of the N.C. Association of Educators (NCAE), issued this statement:

The General Assembly’s budget doesn’t come close to meeting the needs of our students and public schools.  North Carolina can’t afford to lose a generation of students by disregarding the resources they need to be successful. With a per-pupil spending ranking of 46th and an average teacher pay ranking of 42nd, state lawmakers wasted an opportunity to invest a nearly $450 million surplus in our students.

While we appreciate that no further cuts are being made to teacher assistants, since more than 7,000 positions have already been eliminated, other parts of this budget go in the wrong direction. The disrespect for educators continues by failing to provide a professional pay increase and by tucking a provision in the back of the budget that would limit an educator’s ability to be a leader in their association and advocate for what’s best for our students. It also harms students by draining even more money away from public schools and into a private voucher scheme, which continues a strategic dismantling of public education by some in the General Assembly.

North Carolina is so much better than this.  Our students, parents, public schools and state deserve a bold plan that will elevate North Carolina into the forefront of public education, not relegate us to the back of the pack.  


Here are articles on EdNC.org about the budget.

Alex Granados

Alex Granados is senior reporter for EducationNC.

Mebane Rash

Mebane Rash is the CEO and editor-in-chief of EducationNC.