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Tuition2For years, the denizens of the think tanks funded by right-wing power broker Art Pope have been making two rather remarkable arguments with respect to higher education: 1) that too many North Carolinians go to college and 2) that tuition and fees should be much higher in order to place more of the cost of attendance directly on students and their families.

It’s essentially the Ebeneezer Scrooge, no-free-lunch, pick-yourself-up-by-your-own-bootstraps  argument. Indeed, if you tilt your head and cup your ear you can almost hear a gaggle of grumpy old white guys sitting around and lamenting how today’s younger generation has no respect and doesn’t have to sacrifice like they did when they went to college.

All of this would be easy to dismiss as so much absurd, conservative blather except for the unfortunate fact that these people and their buddies are, for the time being, running the state. Hence the rapid increases in college fees and tuition in North Carolina in recent years and the disturbing moves to downsize the UNC system.

Fortunately, more and more people are catching on to what these folks are up to and are pushing back. The lead editorial in yesterday’s Greensboro News & Record did a good job of giving voice to the views of those who believe that widespread higher education is a necessity for any state that wants to thrive in the 21st Century. Here’s the N&R:

“Last year, a solidly Republican state launched the Tennessee Promise, which provides last-dollar scholarships for first-time students at community and technical colleges.

North Carolina, meanwhile, is moving in the opposite direction. It’s raising tuition for community colleges and may add significant surcharges decided on a campus-by-campus basis. The surcharge, up to 10 percent of tuition, would generate revenue strictly for needs on the individual campus where the money was raised.”

After highlighting the fact that many conservative states (besides Tennessee) are actually following President Obama’s urging by pushing to lower costs (and lamenting North Carolina’s move in the opposite direction) the editorial puts it this way:

“North Carolina should make it easier for students to attend community college, not more expensive.

The Tennessee Promise, when implemented last year, immediately boosted enrollment by 6 percent.

Other states, including Indiana, Missouri, Texas and Oklahoma, are considering similar plans….

Which makes it frustrating that North Carolina wants to shift more costs to the students, at both community college and state university campuses.

A 10 percent tuition surcharge would yield more than $2 million a year for Guilford Technical Community College, according to system estimates. The money could be well spent, providing better educational experiences. But putting more state resources into community colleges would be a wiser strategy.

The $2 billion bond proposal is a sound investment in a state that has fallen behind in building 21st century infrastructure. But human capital is lagging, too. Providing community college training at less cost to students, not more, could pay big dividends.

If North Carolina doesn’t, competing states will leave us behind.”

NC Budget and Tax Center

The Connect NC Bond Act does not appear to be driven by a single coherent vision of how to use state investments to support economic growth. As can be seen below, the House and Senate versions put out over the last month have varied enormously over the total size of the bond and the type of projects to be funded. Concerns over cutting taxes while going farther into debt aside, the bond act shows that there is no single guiding star by which the legislature is sailing.

BOND PROPOSAL - pie charts2-LAND

To be fair, some of this is just the legislative process in action. When you’re making a multi-billion dollar sausage, there’s going to be lots of back and forth on the ingredients. Still, while the bond bill outlines how important investments are to our economic future, it reveals relatively little consensus on what those investments are or how to make them.

Here are a few of the major changes to the bill compared to what the House presented last month (For a complete breakdown of how the bond package has changed, see the document below): Read More

Commentary

As rumors continue to swirl on Jones Street about a deal reached Friday night on the FY2015-2017 budget (details to be released Monday), investments in North Carolina’s community colleges and workforce development programs remain an area of critical concern. These programs are essential for improving the skills and competitiveness of our labor force and ensuring that low-income workers have accesses to the training resources they need to achieve long-term upward mobility in their careers and lifetime earnings.

Job training and basic adult education are critical investments that give workers—especially those at the bottom of the income scale—the tools they need to enter higher-wage occupations. For many, these programs can mean the difference between a life trapped in poverty-wage jobs and a life with opportunities to climb the career ladder and enter the middle class. Career pathway programs in particular create avenues for workers to build occupation-specific skills consecutively over the course of a career, creating stepping stones for long-term advancement within that occupation.

As a result, these programs provide a powerful policy-level antidote to income inequality and wage stagnation. As the recent State of Working North Carolina report points out, wages remained largely flat in decade prior to Great Recession and then experienced significant decline in years since the recession. This is largely the result of policies that allowed corporate executives and investors to earn the lion’s share of increased productivity achieved by technological advancements.

Building skills through job training and workforce development is an important tool for returning these productivity gains to workers—both by strengthening the ability of individual workers to bargain for better wages and by improving the overall recognized skills of the state’s workforce, a key competitive advantage that will create more quality jobs in North Carolina.

Given this reality, all eyes are on the emerging final budget deal to see how legislators treat these important programs. Thus far in the budget debate, the Senate has cut more funding for these investments than the House in its proposal. In the House proposal passed earlier this summer, the Community College System received a $52 million cut compared to the $59 million cut served up by the Senate. Similarly, the House provides $15 in new money for instructional equipment at the community colleges, while the Senate provides just $5 million. And while the House provides $1.9 million for job training in economically struggling areas, the Senate does not, instead opting to invest $1.5 million to put community college “coaches” in high schools with the goal of helping high school students transition into vocational training programs upon graduation.

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NC Budget and Tax Center

As North Carolina students embark upon a new school year, lots of media coverage has focused on waning state-level support for public schools. This waning support extends beyond public schools to both ends of the education pipeline – early childhood and higher education. Whereas North Carolina should be boosting investments in its entire education pipeline in order to become a more competitive and attractive state, we have taken a different path.

Early childhood programs, like NC Pre-K and the Child Care Subsidy Program, are crucial to promoting the healthy development of North Carolina children. Although child poverty has worsened since the Great Recession, state investments in early childhood programs remain woefully inadequate while waiting lists persist. Today, the NC Pre-K program serves approximately 8,000 fewer four-year olds compared to 2009 peak levels during the recession (see chart below).

Chart 1

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NC Budget and Tax Center

The North Carolina House just passed HB 943, which would put a $2.86 billion bond referendum before the voters this fall. This move is based on a growing consensus that investing in our schools, roads, state facilities, parks, and local infrastructure is an economic must.

Issuing new debt should be pared with a few pragmatic fiscal steps. First, we should not cut taxes again, which would undermine the flexibility we will need to repay the debt. Second, we should use regular appropriations to pay for most repairs, and keep the bond finances for transformative projects that move North Carolina’s economy forward.

If we are going to issue more debt, we cannot afford another round of tax cuts. If we borrow to improve the state’s infrastructure, the state will need strong future revenue growth to repay borrowers; more tax cuts or limits on revenue growth are bad fiscal policy. Moreover, reducing taxes even further could jeopardize North Carolina’s AAA rating, and force us to pay higher interest rates. The bond rating agencies are very sensitive to states’ long-term fiscal stability and states with lower credit scores have to pay higher interest rates. Other states that have cut taxes even more dramatically than North Carolina (e.g. Kansas) have been downgraded by the credit rating agencies, not an example that we should follow if we are about to purchase new debt.

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