2015 Fiscal Year State Budget, NC Budget and Tax Center

North Carolina’s waning commitment to public education nothing to write home about

North Carolina is among 14 states that have cut per-student state funding by more than 10 percent for the current school year compared to before the Great Recession, a new report by the Center on Budget and Policy Priorities (CBPP) highlights. This waning commitment to public education by state lawmakers in recent years has heightened the challenge of public schools having to do more with fewer resources.

K12_CBPP Ed Report 2014

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2015 Fiscal Year State Budget, NC Budget and Tax Center

Public University an Anchor for Economic Development and an Educated, Engaged Citizenry

Numerous researchers have pointed to the benefits of a strong public university system. First and foremost, we often think of the individual benefits of providing an affordable education to the state’s citizens so that more can join the middle class. North Carolina took this role so seriously for its public university system that the idea of an education that is “free as far as practicable” is inscribed in the state constitution. But there are other broader benefits of a public university system that are equally important: universities serve as a hub for research & development that can spark private sector innovation and improve the quality of life for millions, they also support community economic development by serving as an anchor around which private and public investments can take hold and revitalization can be planned.

Some have said that the successive cuts to the UNC system have had no measurable impact on the quality of its education or its ability to serve these additional goals of supporting local economies. The reality, however, is that the state’s investment continues to remain far below pre-recession levels by 9.4 percent. Since the recession ended, lawmakers have ordered the Board of Governor to cut $1.1 billion through management flexibility, nearly equivalent to the operating state budget of the entire community college system. And North Carolina is one of just four states that made additional cuts to higher education this year, while other states began to reverse cuts made during and after the recession. The reductions to the UNC system have had an immediate harmful impact and will hamper the state’s future economic potential.

Here are three reasons why continued cuts to the UNC system will harm us all. Read more

2015 Fiscal Year State Budget, NC Budget and Tax Center

State budget takes wrong turn on economic development

The 2015 state budget for creating jobs and growing the economy doubles down on the wrong turn taken by the legislature on economic issues over the last year. First it was the decision to continue to last year’s ill-advised tax cuts for the wealthy instead of investing in job training and education—the real building blocks of sustainable economic growth. Then it was the decision to privatize the business recruiting activities of the Department of Commerce—despite evidence from other states these initiatives produce more scandals than jobs—and eliminate regional planning initiatives that helped small communities coordinate their economic development efforts.

And now the state budget completes this trifecta of poor choices for economic development by spending more of our state’s limited resources on programs that are both ineffective at creating jobs and are overwhelmingly targeted to the wealthiest urban areas of the state instead of the more distressed areas in rural North Carolina.

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2015 Fiscal Year State Budget, NC Budget and Tax Center

Lawmakers retreat from investing in early childhood in final state budget

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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2015 Fiscal Year State Budget, Falling Behind in NC, NC Budget and Tax Center

New state budget continues to underfund crucial public investments

This week the Budget & Tax Center released a new report on North Carolina’s 2015 fiscal year budget. While other states across the country are beginning to reverse the worst cuts made during the Great Recession, North Carolina continues to underfund crucial public investments in order to pay for tax cuts that took effect this year. Lawmakers failed to provide a high-quality education for all children, protect natural resources, support community-based economic development, or provide adequate health and human services to North Carolina residents.

Under the final budget, state investments are 6.6 percent below pre-recession levels five years into the official economic recovery. The new budget for the 2015 fiscal year is the 7th budget enacted since the Great Recession hit, and North Carolina has yet to bounce back to its pre-recession investment level. This is in contrast to spending during previous economic recoveries – spending did not dip after the 1981 and 2001 recoveries and state lawmakers restored investments to the levels that were in place when the 1990 recession hit within three years. Read more