Income tax cut costs will rise to more than $1 billion by 2016, raising serious concerns about whether the current budget negotiations are putting forward a fiscally responsible path to meet the priorities of our state. Before the budget is finalized, legislative leadership must consider this newly available information that the tax cuts will cost more than originally estimated and move immediately to stop further revenue losses in 2015.

Fiscal Research Division revised estimates this week based on new data just released from the Internal Revenue Service on the incomes and taxes paid by North Carolinians through the personal income tax in 2012.

The higher cost of the tax plan is likely the result of the greater benefit that the tax plan has for high wealth taxpayers who have seen their incomes recover more quickly out of the Great Recession. Prior estimates by Fiscal Research Division were based on IRS data from earlier years thus not accounting for this income growth and the latest available information on the costs of deductions and credits.  It is clear not only that the rate reductions are having a larger than anticipated effect but also that we should not expect that base-broadening impacts will be sufficient to hold those revenue losses in check.

The fundamental issue is that the income tax cuts cost more than originally projected and require policymakers to take immediate steps towards stopping further revenue losses with rate reductions automatically scheduled to go into effect in 2015.

House lawmakers approved legislation Friday that allows private, for-profit management companies that run charter schools to keep their employees’ salaries secret, even though they are paid with public funds.

The bill also fails to provide protections for LGBT students, even though an earlier version did.

While the bill, SB 793, or Charter School Modifications, clarifies that the salaries of charter school teachers and non-profit boards of directors are subject to public disclosure, employees of for-profit companies that are contracted to manage the operations of charter schools would not be subject to those rules.

In a prior version of the bill, language simply required charter schools to publicly disclose all employees’ salaries.

The change comes at a time when one prominent Wilmington-based charter school operator, Baker A. Mitchell Jr., has been fighting media requests for months that have asked him to fully disclose the salaries of all employees associated with his charter schools – teachers as well as those who work for his for-profit education management organization (EMO), Roger Bacon Academy.

Mitchell, who also sits on the N.C. Charter School Advisory Board that is tasked with approving and monitoring charter schools, operates four charter schools in southeastern North Carolina through his for-profit company.

Roger Bacon Academy has raked in millions of dollars in profits that consist of public funds since 1999 – and Mitchell himself has profited to the tune of at least $16 million in management fees over the past several years. Read More

Buried deep in a House technical corrections bill unveiled yesterday is a provision to allow staff of for-profit charter school management groups to serve on the boards of the public charters schools that contract with them.

The N.C. House of Representatives is expected to vote on the 55-page technical corrections bill today. The legislation would also have to gain approval in the Senate. (UPDATE: The House voted and passed the bill Friday, and it is now headed to the Senate.)

Baker Mitchell of Roger Bacon Adademies

Baker Mitchell of Roger Bacon Academy, Inc. (Photo by Sarah Ovaska)

The technical corrections bill unveiled Thursday is supposed to be way for lawmakers to tweak laws but it often becomes an under-the-radar way to push through controversial changes and “asks” from powerful lobbying groups.

The one-sentence addition to charter school rules would prohibit the State Board of Education from dictating who can and can’t sit on the board of the publicly-funded charter schools.

That issue popped up last year when the N.C. Department of Public Instruction told a politically-connected charter school operator he couldn’t sit on the board of the school he works for.

“The State Board of Education shall no impose any terms and conditions that restrict membership of the board of directors of the nonprofit corporation operating the charter school, but shall require the board of directors to adopt a conflict of interest policy,” the new language in the technical corrections bill states. (Click here to view the corrections bill, charter school language on page 39.)

Baker Mitchell, who founded Charter Day School in Brunswick County, owns an education management company called Roger Bacon Academy that is contracted to run four charter schools in the southeastern part of the state.  Last year, the State Board of Education told Mitchell that neither he nor other Roger Bacon staff could be voting board members of the charter schools, a decision that bothered both Mitchell and the charter school board members.

Read More

This morning’s Greensboro News & Record makes some sound points in assessing the split in the federal courts over the Affordable Care Act and the availability of subsidies in states without state-based exchanges.

While the editorial (which is entitled “Save the subsidies”) acknowledges the ambiguity of some of the language in the statute, it also rightfully calls for judges and lawmakers to apply common sense in interpreting and applying it.

As it notes:

“Yet, it [the inartfully crafted statute] could be fixed easily. Congress could pass a technical correction, making plain its original intent that subsidies should be made available across the country. Republicans won’t agree to that, preferring to see the program collapse.

North Carolina could provide a remedy for its residents, creating a state exchange and allowing them to sign up again for coverage. Our state’s Republicans won’t do that, for the same reason. They would rather stick to their opposition, even if more than 300,000 residents lose their medical coverage. It’s all about politics.

For now, after Tuesday’s contradictory rulings, the legal question is still open. Politics seems to influence the courts as well. The three judges on the Richmond panel were appointed by Democratic presidents. The two who produced the majority opinion in Washington were nominated by Republican presidents. If the full D.C. court hears the case on appeal, a reversal is expected because most of the court’s judges are Democratic appointees.

It would be refreshing to see a ruling made on the legal merits of a case, rather than politics.

Also helpful would be consideration for what’s really best for the public. The ACA intends to improve access to medical care. Whether the enrollment mechanism is a federal or state exchange shouldn’t matter, and judges should apply common sense to their final decision.

Read the entire editorial by clicking here.

 

 

 

MedicaidNorth Carolina doctors pulled no punches in their review of the Medicaid “reform” (i.e. privatization) plan adopted by the state Senate today. This is the official statement from the NC Medical Society:

“Today the Senate had a clear choice between the health of our state’s most vulnerable citizens and the health of Wall Street corporations, and they chose the corporations. Despite strong alternative proposals from the North Carolina House, Governor McCrory and the health care community on the best way to improve patient care and quality and provide budget predictability, Senators voted against this consensus. These outside managed care companies have a dismal history of success (see the examples below). The Medical Society would like to recognize and appreciates the bipartisan support for the consensus plan of the health care community, the House and the Governor today on the Senate floor. It appears that the 28 senators who voted for managed care are not aware or don’t care about the negative history of managed care and are welcoming them to North Carolina.”

For instance,

• Kentucky moved 550,000 of its Medicaid patients to three national managed care corporations in 2011. Since then, a 2012 evaluation by the Urban Institute found that patients faced delays in getting care, and there was an adversarial relationship between the managed care plans and the medical community. State legislators continue to be flooded with complaints and passed a bill to set up an appeals process at the Department of Insurance to mediate disputes between the medical community and the plans. One of the managed care plans pulled out of the state last year, suing the state saying it lost money and forcing 125,000 patients into the other two plans.
• In Illinois, a federal judge awarded over $334 million in a fraud lawsuit against the Medicaid HMO Amerigroup Illinois and its parent company, Amerigroup Corporation, for systematic and extensive fraud for discriminating against pregnant women and those with expensive medical conditions.
• In Georgia, their Medicaid program was fined $3.7 million for consistently refusing to pay for authorized care.