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As the school year begins, we’ve paused to reflect on state budget actions taken on K-12 education this year that will affect what children across North Carolina find – and don’t find – when they return to their classrooms next week. To a large extent, many of the key elements that will shape these children’s educational experience over the next 9 months will be a result of what was provided by the state’s public education budget – and what was taken away.

First and foremost, all remaining federal EduJobs money must be expended by the end of next month. These funds employed 5,449 school personnel as of December 2011, as reported by the Department of Public Instruction here. DPI’s Recovery Act funding tracker shows approximately $34 million remaining as of June 29th, but since these numbers are both unaudited and missing data for the months of July and August, it’s likely the state’s $297 total award has been almost entirely expended on schedule. State lawmakers did not “fill in” the schools’ funding gap resulting from the expiration of these funds. However, they did reduce the large, recurring state cut to public education called the LEA Adjustment by $143.3 million in this year’s budget, to about $360 million – down from its budgeted increase to $503 million. The total “flexibility” cut now stands at about $55 million deeper it was three years ago, in FY2010-11. DPI has helpfully provided an estimate of what this particular cut means on a district-by-district basis, which is available here. Read More

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An eight-year court battle between the NC Department of Revenue and Food Lion’s parent company, Delhaize America, has come to a close, affirming the state’s right to require large multistate corporations to report and pay taxes on business income earned here in North Carolina. In a unanimous ruling, the State Court of Appeals ruled in favor of the Department of Revenue in Delhaize America, Inc. v. Hoyle, awarding the state nearly $10 million in back taxes, including the restoration of a $1.2 million penalty for negligence. The Triangle Business Journal provides an excellent summary of the ruling, which reverses in part a ruling by a North Carolina business court earlier this year. Read More

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Today’s AP article on school budget cuts minimizes the impact of K-12 education spending cuts by cherry-picking the wealthiest districts and using a flawed methodology to estimate school-level employment losses over the last several years.

The article cites four school districts as examples, three of which are higher-wealth and more urban than the rest of the state  – Wake, Durham, and Charlotte-Mecklenberg – as examples of how school districts have responded to state budget cuts. Unfortunately, the impact of state budget cuts to education is not accurately reflected by the response of a handful of school districts that are not representative of an “average” North Carolina school district. Read More

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The General Assembly is preparing for any number of possible budget end games this year, including passage of a budget of last resort – Senate Bill 866, a bare-bones modification to the 2011 Appropriations Act (a.k.a. the continuation budget) that would take effect if the recently passed legislative budget (House Bill 950) is vetoed by Governor Perdue and the General Assembly is unable to override. This bare-bones budget would leave the state’s $479 million credit balance unappropriated – meaning, no new one-time money for any purpose – and would effectively let the second year of the continuation budget passed in 2011 stand as guidance for the upcoming year. The bill would also authorize the following budget actions:

  • Appropriation of federal block grant funding
  • Appropriation of state education lottery proceeds similar to, though not exactly as set forth in, the House budget* Read More
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Speaker Tillis and President Pro Tem Berger held a joint press conference this morning where they indicated a few changes to the K-12 budget might be forthcoming, even though it’s already been delivered to the governor’s desk. Notably, Sen. Berger said that there may be a technical change that would grant LEAs flexibility in how they actually spend the $85 million salary increase for school employees that was included in the budget. This would lessen the effective cut to K-12 schools from $190 to $105 million. However, it would still fall short of holding schools harmless from cuts in the upcoming year. At the same press conference, they also defended the $336 million business tax giveaway included in the 2011 budget – a tax expenditure that is costly, available to large businesses as well as small ones, unlikely to create jobs, and frankly not worth enough to improve a struggling business’s bottom line. Read More