News

NC Treasurer: Court’s ruling in favor of retired workers, teachers could have ‘severe’ implications

North Carolina Treasurer Dale Folwell warned legislators Friday that the state may be on the hook to pay more than $100 million to retired workers and teachers if a judge’s ruling stands that they were wrongfully required to pay heath insurance premiums.

“It is my duty as North Carolina State Treasurer to call your attention to a matter that may have severe financial and practical implications for the State of North Carolina,” the letter states.

Retired teachers and state employees, including former Chief Justice I. Beverly Lake, filed suit in Gaston County Superior Court in April 2012. The lawsuit became class certified and now exceeds 220,000 retirees, according to Folwell’s letter — all of whom will be entitled to premium-free health insurance for the duration of their retirement, according to a court order also issued last week.

Judge Edwin Wilson Jr. ruled that retirement health benefits are contractual and that the defendants breached that contract when class members began to be charged premiums for standard health insurance in Sept. 2011.

He ordered that they be reimbursed for the premiums they’ve already paid over the years, which grew from $21.62 per month for non-Medicare plans in 2011 to over $105 per month beginning in January.

The State Health Plan provides health care coverage to more than 714,000 teachers, state employees, retirees, current and former lawmakers, state university and community college personnel, and their dependents, according to its website.

The Associated Press reported the 2011 law that required class members to pay premiums was approved to rein in hemorrhaging expenses at the Health Plan. A retiree who still wanted to avoid premiums could get covered under a plan with less-generous benefits, the report states.

The court’s remedy will be on hold until all appeals are exhausted, according to the order.

Folwell said in his letter that the $100 million figure does not include what it would cost for the state to comply with giving retirees benefits moving forward. Folwell estimates that could add billions to the already $42 billion unfunded liability for retiree health coverage, and “would also considerably limit the State’s flexibility to reform the State Health Plan.”

“Should the Plaintiffs ultimately prevail, our current liability could increase dramatically, reaching an unsustainable level in the very near future,” he added.

Folwell says the situation calls for legislative action.

Commentary

Simple solutions department: How lawmakers ought to respond to yesterday’s Supreme Court ruling

The lead editorial in this morning’s Greensboro News & Record offers a simple and logical solution for state lawmakers as they ponder yesterday’s Supreme Court ruling on redistricting: end partisan gerrymandering now.

As the N&R editorial concludes:

“While justices argue among themselves, the rest of us can hope Monday’s ruling will lead to fairer elections. Politically, North Carolina is a closely divided state. Yet, not one of the 13 U.S. House races last year was competitive. The districts are stacked — 10 favoring Republicans and three heavily tilted for Democrats. The court’s majority found the legislature used race as the primary factor in creating two of those districts. It also recognized the link between race and partisan politics.

Bob Phillips, executive director of Common Cause NC, a plaintiff in the case coming up, believes the court fashioned a legal bridge. ‘Partisan gerrymandering is just as wrong as racial gerrymandering,’ he said Monday. His group supports nonpartisan redistricting. It’s past time to give that a try.

Amen. To learn more about the fight Phillips and his friends are waging, check out http://endgerrymanderingnow.org/.

NC Budget and Tax Center, Trump Administration

Analysis: “Significant positive impacts” under ‘The People’s Budget’ proposed by the Congressional Progressive Caucus

The White House plans to unveil President Trump’s detailed 2018 budget tomorrow. While the people wait for its release it is worth noting that earlier this month the Congressional Progressive Caucus (CPC) released ‘The People’s Budget: A Roadmap for the Resistance’, which contains their plan for what the U.S. budget should be. Their budget was the first release in the 2018 fiscal year budget season, coming before either the President’s budget or any proposal from the Budget Committees.

“It’s one thing to oppose President Trump and expose his broken promises to workers, but it’s also important to lay out a positive path forward,” said Rep. Pocan. “The Congressional Progressive Caucus’s budget is a plan to actually help working Americans who have felt left behind by an economy rigged against them. Our budget is a roadmap for the resistance, investing in the progressive priorities and economic, kitchen table issues that matter to real people: infrastructure to create jobs; education to help our kids reach their full potential; and access to affordable health care.”

Here’s what two prominent organizations had to say after they assessed CPC’s ‘The People’s Budget’.

The Committee for a Responsible Federal Budget, a nonpartisan, non-profit organization committed to educating the public on issues with significant fiscal policy impact, stated: “The [CPC] budget certainly contains a lot of tax and spending increases, but we welcome budget alternatives that improve the debt situation.” According to Committee’s analysis, ‘The People’s Budget’ “would represent a substantial improvement over our current debt trajectory.

The Economic Policy Institute analyzed and scored CPC’s budget and stated: “We find The People’s Budget would have significant positive impacts.” Specifically, the Economic Policy Institute found The People’s Budget would:

  • Improve the economic well-being of low- and middle-income families. The People’s Budget would boost gross domestic product (GDP) by 2 percent and employment by 2.4 million jobs in the near term. This would both close the output gap as measured by the Congressional Budget Office (CBO) and further push unemployment down, to 4 percent.
  • Smartly cut spending. The budget focuses on modern security needs by repealing sequestration cuts and spending caps that affect the Defense Department but replacing them with similarly sized funding reductions that are less front-loaded and will allow more considered cuts.
  • Make necessary public investments. The budget finances roughly $281 billion in job-creation and public-investment measures in calendar year 2017 alone and roughly $710 billion over calendar years 2017–2018.
  • Facilitate economic opportunity for all. By expanding tax credits and other programs for low- and middle-wage workers, boosting public employment, and offering incentives for employers to create new jobs, The People’s Budget aims to boost economic opportunity for all segments of the population.
  • Strengthen the social safety net. The People’s Budget strengthens the social safety net and proposes no benefit reductions to social insurance programs.
  • Increase tax progressivity and adequacy. The budget restores adequate revenue and pushes back against income inequality by adding higher marginal tax rates for millionaires and billionaires, equalizing the tax treatment of capital income and labor income, restoring a more progressive estate tax, eliminating inefficient corporate tax loopholes, among other tax policies.
  • Reduce the deficit in the medium term. The budget increases near-term deficits to boost job creation, but it reduces the deficit in FY2019 and beyond relative to CBO’s current law baseline.

Given the fact that where our leaders decide to invest matters to our well-being, it is vital that Congress develop a 2018 fiscal year budget that is grounded with a goal of serving and protecting all people.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

News, Trump Administration

Trump budget, as expected, to roll out massive school choice expansion

President Trump and U.S. Education Secretary Betsy DeVos

In the midst of last week’s near-constant stream of Russia-Trump news, you could be forgiven if you’ve forgotten President Trump has plans to announce the details of his federal budget plan Tuesday.

Already dubbed a “caricature of conservative cruelty” by The Daily Beast, Trump’s plan is expected to include major cuts to programs for the poor as well as a promised expansion of federal school choice support.

Of course, a president’s budget is truly subject to the machinations of Congress, so it remains to be seen whether Trump’s plans will come to fruition, particularly at a time when the Russia scandal seems to have engulfed his legislative agenda.

For the moment, though, those expecting a truly enormous ballooning of federal school choice support for charters and private school vouchers will not be surprised. The most comprehensive coverage, thus far, comes from The Washington Post.

From the Post:

Funding for college work-study programs would be cut in half, public-service loan forgiveness would end and hundreds of millions of dollars that public schools could use for mental health, advanced coursework and other services would vanish under a Trump administration plan to cut $10.6 billion from federal education initiatives, according to budget documents obtained by The Washington Post.

The administration would channel part of the savings into its top priority: school choice. It seeks to spend about $400 million to expand charter schools and vouchers for private and religious schools, and another $1 billion to push public schools to adopt choice-friendly policies.

President Trump and Education Secretary Betsy DeVos have repeatedly said they want to shrink the federal role in education and give parents more opportunity to choose their children’s schools.

The documents — described by an Education Department employee as a near-final version of the budget expected to be released next week — offer the clearest picture yet of how the administration intends to accomplish that goal.

Though Trump and DeVos are proponents of local control, their proposal to use federal dollars to entice districts to adopt school-choice policies is reminiscent of the way the Obama administration offered federal money to states that agreed to adopt its preferred education policies through a program called Race to the Top.

The proposed cuts in long-standing programs — and the simultaneous new investment in alternatives to traditional public schools — are a sign of the Trump administration’s belief that federal efforts to improve education have failed. DeVos, who has previously derided government, is now leading an agency she views as an impediment to progress.

“It’s time for us to break out of the confines of the federal government’s arcane approach to education,” DeVos said this month in Salt Lake City. “Washington has been in the driver’s seat for over 50 years with very little to show for its efforts.”

Read more

NC Budget and Tax Center, Trump Administration

What to expect in Trump’s 2018 budget tomorrow (and what it means to North Carolina)

The White House plans to unveil President Trump’s detailed 2018 budget tomorrow.

Ever since the administration released their 2018 budget blueprint (skinny budget) back in March, we have conducted analysis that shows various ways in which North Carolinians would be harmed under Trump’s proposed budget. In case you missed this analysis, below are links to the recent posts in our ‘Federal Budget Blog Series’ (and also a preview of what’s to come): Read more