The John Locke Foundation’s top budget analysts offer this response to the N.C. Senate’s $21.2 billion General Fund budget plan for 2014-15.
RALEIGH — The proposed N.C. Senate budget plan would shift money away from lower priorities to meet the goal of raising public school teacher pay across the state. John Locke Foundation experts reviewing the $21.2 billion plan for 2014-15 like the Senate’s focus on spending existing revenue more efficiently.
“In the not-too-distant past, a plan to raise teacher pay or fund another major government initiative would have been tied to a plan to raise taxes for all North Carolinians,” said Sarah Curry, JLF Director of Fiscal Policy Studies. “We have seen a different approach since fiscal conservatives took over writing the state budget in 2011. As with the budget plans the General Assembly has crafted over the past three years, this one looks at using existing revenue to fund the highest priorities first.”
Compared to Gov. Pat McCrory’s budget plan, which would increase state General Fund spending by 1.7 percent from 2013-14 to the new budget year that starts July 1, the Senate would increase spending by 2.5 percent.
While setting priorities and spending existing taxpayer dollars wisely is important, JLF analysts would have approached the teacher pay issue in a different way.
“There is no greater predictor of student performance than the quality of the classroom teacher,” said Dr. Terry Stoops, JLF Director of Research and Education Studies. “The Senate budget would make a historic investment in classroom teachers with the goal of ensuring that North Carolina’s public schoolchildren receive the best education possible.”
“The Senate achieved its short-term goal of raising the base pay of classroom teachers significantly,” Stoops added. “This budget lays the groundwork for senators’ long-term goal — implementing and refining policies that will ensure that those higher-paid teachers are also the best ones.”
The Senate plan devotes $468 million to a plan that would provide substantial pay raises for teachers who agree to give up tenure, officially known as career status. “Encouraging teachers to abandon the antiquated tenure system in return for the chance to earn much higher pay makes sense,” Stoops said. “But the pay increases could have been distributed differently.”
“Senate leaders may be doing too much too soon with the plan to raise teacher pay by an average of 11.2 percent,” Stoops added. “It would be more prudent to approve a somewhat-smaller across-the-board raise now and devote the remaining funds to larger increases in teacher pay for classroom performance, teaching challenging subjects, and working with at-risk students.”
Speaking of the future, Stoops cautions against a budget proposal involving North Carolina’s smallest public school districts. “Senate leaders should reconsider plans to examine the divisive issue of school district consolidation,” he said. “School districts should be free to pool their resources or consolidate voluntarily, but the state legislature should not compel them to do so.”
Other areas targeted for savings win praise from JLF analysts. That includes plans to reduce state support for the N.C. Department of Public Instruction and to transfer the State Bureau of Investigation and the State Crime Lab from the N.C. Department of Justice to the N.C. Department of Public Safety. “Consolidating state law enforcement functions within a single Cabinet department is an idea the John Locke Foundation has advocated for years,” Curry said.
Curry and her colleagues also like plans to reduce Medicaid rates and optional services to bring North Carolina’s benefits in line with those in its peer states. That shift comes as senators also plan to add nearly $200 million to the Medicaid program, which has been plagued with chronic budget shortfalls.
The Senate’s decision to divert money from targeted tax incentive programs makes sense. “We would recommend zeroing out any uncommitted dollars in the One North Carolina Fund or Job Development Investment Grants,” Curry said. “The Senate’s decision to reduce the budgets of those two incentive programs by more than $22 million is a step in the right direction.”
Curry cautions against relying too heavily on federal grants and reserve funds to meet state government’s obligations. “Gov. McCrory’s budget plan devoted more money to building up state reserves, which should be a high priority in a fiscally conservative budget,” she said. “It’s also important to avoid maximizing the state’s reliance on federal grants, mainly in the Department of Health and Human Services. If there is a revenue shortfall, another Medicaid shortfall, or some sort of pullback from the federal government, that could create a tough budget situation next year.”
Senate budget writers, their House counterparts, and the McCrory administration will continue to work on a plan in the weeks ahead. “There are plenty of good elements in this Senate plan, along with good ideas Gov. Pat McCrory put forward in his budget,” Curry said. “Now it’s the House turn to put those ideas together with others that ensure that North Carolina state government continues to move down the path of long-term fiscal health while promoting long-term growth in the state’s economy.”