2015 Fiscal Year State Budget, NC Budget and Tax Center

Despite the fact that almost three-quarters of North Carolina voters support expanding NC Pre-K and Smart Start, state lawmakers continued a pattern of underinvestment in key early childhood education services in the state budget they passed this year. NC Pre-K is a proven program which helps prepare children for later success in life, yet lawmakers failed to keep up with the needs of young children in the budget. They provided a one-time $5 million increase for NC Pre-K, but these are not recurring dollars and most of the money goes to increase teacher salaries. While improving teacher pay is critical, there is little left over to provide additional Pre-K slots. This education program currently is not able to serve thousands of children on a waiting list and thousands more who would otherwise be eligible. This is just one example of the many trade-offs state legislators made due to their choice to prioritize tax cuts primarily for those at the top over needed investments in our children, families and workforce.

Child care subsidies, another effective program which helps lower income families afford quality child care and serves as a work support, also took a hit in this year’s budget. Like NC Pre-K, the child care subsidy program helps make sure young children have access to quality early education, and it also has a waiting list of thousands. Lawmakers did little to address the shortage of services and actually made it harder for some low-income families to access this support. They lowered the income eligibility requirements for children under five years old to 200 percent of the federal poverty level (about $39,000 for a family of three). The program used to be available to young children in families earning up to 75 percent of the state median income (about $42,000 for a family of three). The changes were even worse for school-age children using subsidies for after school care. One positive change lawmakers made in this year’s budget was to how much child care providers are reimbursed for serving children who get subsidies, bringing the cost per child closer to the market rate and helping providers recoup more of their expenses. However, providers still are not paid the full market rate, making it hard for many child care settings to accept children who receive subsidies.

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NC Budget and Tax Center, Poverty and Income Data 2013, Poverty and Policy Matters

Children face the highest poverty rate in North Carolina compared to other age groups according to data released last week by the US Census Bureau. After more than five years into an economic recovery, one in four children (25.2%) in North Carolina remained in poverty in 2013 –unchanged from 2012 and higher than the national child poverty rate (22%). At a time when we are experiencing an economic recovery, it is troubling that our state’s child poverty rate is not declining and remains significantly higher than the national average.

The numbers become even more meaningful when considering the disadvantages children in poverty face: less access to early education programs and high quality schools, food insecurity, higher stress levels and higher dropout rates, among other risk factors. Recent findings in brain development research also warn of the impact of toxic stress associated with poverty on a young child’s developing brain. Toxic stress can weaken the architecture of a child’s brain, creating long-term challenges that make it hard for one to be economically secure as an adult. Other numbers are rising for children across the nation and in North Carolina that we certainly don’t want to see on the rise. Infant mortality and child mortality has increased in North Carolina. There has also been a rise in the number of homeless school children, according to recently released national data. Both are indicators of poverty’s tight grasp on America’s and North Carolina’s children.

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NC Budget and Tax Center

In case you’ve missed it, there has been a phenomenal film series going on this summer throughout North Carolina, which concludes this month with screenings of “Inequality for All” in nine cities from July 22nd – July 31st. The Moral Movies film series, which also included showings of American Teacher, American Winter and Freedom Summer, is sponsored by Working Films, NC NAACP, NCAE, Tar Heel Alliance of Classroom Teachers, Democracy NC, NC State AFL-CIO, NC Justice Center and a number of local partners.

The films offer a way for North Carolinians to see informative documentaries on multiple issues such as education, poverty, workers’ rights, voting rights, civil rights and inequality, and discuss their implications in the context of our state’s current policy environment and the continuing march towards social and economic justice. Following each film, attendees are provided opportunities to take action to improve the lives of all North Carolinians through improving investments in education, raising wages for workers, ensuring broader access to voting rights, or decreasing a widening income and wealth gap. Hundreds have attended one or more of the films in the series around the state, which kicked off in April with American Teacher.

The last film in the series, Inequality for All, features Robert Reich – professor, best-selling author, and Clinton cabinet member – as he demonstrates how the widening income gap is having a devastating impact on the American economy. Reich suggests that the massive consolidation of wealth by a precious few threatens the viability of the American workforce and the foundation of democracy itself. The film unfortunately resonates clearly with North Carolina’s experience given that recent legislative developments such as continued underinvestment in education and economic development, a lopsided tax plan giving big breaks to wealthy taxpayers and corporations while increasing taxes on the majority of working families, limitations to living wage policy and inaction to move towards a living wage has contributed to growing inequality.

Don’t miss your last chance to participate in Moral Movies and register to attend a screening near you this month:

Schedule of Screenings:

Winston Salem: Tuesday July 22, 6 p.m. (RSVP)

Green Street United Methodist Church, 639 S Green St, Winston-Salem, NC 27101

Fayetteville: Tuesday July 22, 6 p.m. (RSVP)

The Main Library, 300 Maiden Lane, Fayetteville, NC, 28301

Asheville: Friday July 25, 7 p.m. (RSVP)

Ferguson Auditorium at AB Tech, 340 Victoria Rd. Asheville NC 28801

Greenville: Tuesday July 29, 7 p.m. (RSVP)

Unitarian Universalist Congregation, 131 Oakmont Dr. Greenville, NC 27858

Raleigh: Tuesday, July 29, 7 p.m. (RSVP)

Community UCC, 814 Dixie Trail, Raleigh, NC 27607

Durham: Thursday July 31, 6:30 p.m. (RSVP)

Durham County Public Library Auditorium, 300 N Roxboro St. Durham, NC 27701

Greensboro: Thursday, July 31, 7 p.m. (RSVP)

Central Library Nussbaum Room, 219 N Church St. Greensboro, NC 27405

Wilmington: Thursday, July 31, 7 p.m. (RSVP)

Cameron Art Museum, 3201 S. 17th St. Wilmington, NC 28412

Charlotte: Thursday, July 31, 7 p.m. (RSVP)

Unitarian Universalist Church of Charlotte 234 N Sharon Amity Rd, Charlotte, NC, 28211

 

Uncategorized

Both the Senate and House Budget proposals leave much to be desired when it comes to ensuring that young children’s needs are supported and that they are in safe, enriching learning environments. Both proposals require cuts to four of North Carolina’s 16 child development agencies and fail to make up for lost ground in funding pre-K slots. While both the House and Senate Budget proposals add $5 million for additional pre-k slots, the funding is one time money meaning the slots expire after one year. It’s important to remember as well, that it doesn’t make up for the 2,400 slots that were lost in the budget passed last year.

In each proposal, troubling changes are also recommended to the income eligibility for the state’s child care subsidy program, which means about 12,000 children served last year would no longer be eligible according to legislative fiscal staff. The Child Care Subsidy program serves a two-fold purpose by both acting as a work support so parents can maintain employment and provide for their family, and to help families afford access to high quality child care so their children receive the early education they need to succeed in life.

The high cost of child care makes it difficult for many parents who work to obtain good quality care. In fact, child care is often the highest monthly expense for a family, with an average annual cost of full-time center care for one child at about $8,500 a year. Currently, the child care subsidy program provides families who earn less than 75% of the state median income (SMI; $42,201 for a family of three) the opportunity to ensure a safe, quality child care setting for their children while they work. Given the high cost of care, the federal government allows for states to qualify families up to 85% of the SMI, although most states, including North Carolina fall below this benchmark.

Instead of maintaining eligibility levels, and even increasing them as the federal directive allows, both the Senate and House budget proposals go in the opposite direction by reducing eligibility to 200% of the Federal Poverty Level (FPL; $39,060 for a family of three) for children 0-5 years old. Both proposals reduce eligibility even further for children 6-13 years old to 133% of FPL ($25,975 for a family of three). This means that to qualify to receive subsidies you have to earn less, even though families who earn up to 75% of the SMI still often can’t afford child care. As a result, fewer families will be able to access this critical support to help parents maintain work and help children be safe and successful in school. The impact on school age children is particularly damaging where the most drastic eligibility reduction is implemented. School age children with working parents still need before and after school care, as well as care during summer to ensure their safety and provide enrichment. When families can’t afford this care they are faced with leaving children home alone or in unsafe settings, missing work and potentially losing a job.

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NC Budget and Tax Center

This is the third post of a Budget and Tax Center blog series on public services and programs that face cuts in the budget process or have been underfunded in past years. See the other posts here and here.

The Senate Budget proposal makes significant changes to North Carolina’s child care subsidy program, and not in a good way. In fact it kicks some families off the program. Essentially the Senate eliminates many of the best practices in child care subsidy policy, which results in making it more difficult for working families to access child care. The Child Care Subsidy program provides an opportunity for low-income working parents to access affordable and safe child care while they are supporting their family. As many parents know, child care is often the highest monthly expense for a family, with an average annual cost of full-time center care for one child at about $8,500 a year. The high cost of child care prices many low and middle income families out of the market, which could make it difficult for a parent to get and keep a job, or be forced to choose an unsafe care setting.

Enter the child care subsidy program, which currently provides families who earn less than 75% of the state median income (SMI; about 50,000 a year for a family of four) the opportunity to ensure a safe, quality child care setting for their children while they work. For some parents, the current system also provides a sliding scale for co-payments that decreases as the family size increases. While the program is extremely beneficial both in ensuring healthy early childhood development and allowing parents to work and sustain their family, the funding has been inadequate over the years, leaving over 15,000 eligible North Carolina families on a waiting list as of May, 2014, for months and even years. Read about Lex’s story from Western North Carolina whose children languished on the waiting list for over three years.

A magnifying glass is indeed needed to understand how the Senate budget changes the program because it claims to be revenue neutral and to reduce the number of children on the waiting list. So let’s take a look. The Senate changes eligibility for the program from 75% of the SMI to 200% of the Federal Poverty Level ($47,700 for a family of four) for children ages 0-5 years. This means that to qualify to receive subsidies you have to earn less, even though families who earn up to 75% of the SMI still often can’t afford child care. The Senate further reduces eligibility for families with children ages 6-13 years to 133% of the Federal Poverty Level (about $32,000 for a family of four). The sliding scale is also eliminated, meaning that families with larger family sizes, and thus expenses, have to pay the same copay as families with smaller family sizes. Co-payments are also no longer reduced for partial day care. For some families, the changes in co-payment will price them out of the market, meaning parents could lose jobs or kids could go to unsafe care settings.

The Senate’s proposed changes to the child care subsidy program are just another example of robbing Peter to pay Paul. While they may keep the program revenue neutral, they’re kicking families out by changing eligibility and co-pay levels to do it. And the only way they’re reducing the waiting list is by eliminating those families on the waiting list who are eligible at the current levels that will no longer be eligible with a lower income eligibility threshold. They’re also decreasing state dollars by relying on more federal dollars available through block grants. It’s unclear what the associated impact will be to other block grant-funded programs. A better way forward would be to ensure that all North Carolina’s families who can’t afford care (which according to federal standards could be families earning up to 85% SMI) receive help to support their ability to work and their children’s ability to learn in the critical early years.