Federal Stimulus Bill and the Education Budget

from the NC Fiscal Research Division

February 24, 2009

The entire presentation is available HERE or by going to the on the Fiscal Research Website:

http://www.ncga.state.nc.us/fiscalresearch/frd_reports/frd_reports_pdfs/2009-02-24_Fed%20Stimulus%20Overview.pdf

Fiscal Stabilization Fund Overview

·      Up to $1.4 billion available over 2-year period

Use Fiscal Stabilization money to partially restore cuts in State funding to public schools and higher education or reduce state funding for education.  Funding will be released as early as March and April. Governor submits an application from the state to acquire funds. Still unknown is who will determine how the funds will be used.

                                                                                               2009                                2010

Fiscal Stabilization Education (81%)                         $1,161,931,564               $0

Fiscal Stabilization Other (19%)                                  $258,522,671                 $0                       

Eligibility Requirements

·      Maintenance of Effort: (State must fund education at 2006 levels ($6,721,053,466-2005-2006 public schools), (amount undetermined, could use 2006-2007 funding allotments as the base).

·      Teacher Effectiveness: Address inequities between distribution of teachers between high-poverty and low-poverty schools.

·      P-16 data system: Establish a longitudinal data system.

·      Standards and Assessment plan: Comply with ESEA provisions related to assessments for CWD and LEP students.

·      Require Expenditures of Funds: Restore public schools and higher education budgets to FY 2008-09 levels, can be used for operations or capital.

Scenarios

·      Worst Case: State could cut budget to 2005-2006 levels equals an $869 million cut to public schools or 10.9 percent. Total funding $7,125,045,932

·      Best Case: State support stays at 2008-2009 levels, use stabilization to expand funding meaning an increase to public schools of 7.3 percent or an additional $581 million. Total funding $8,574,634,621.

·      Middle of the Road: State support falls 8 percent, fiscal stabilization partially restores cuts (net cut of 3 percent for public schools for 2009-2010)  Possible Funding Post-Stimulus for State Public Schools based on this scenario- $7,750,727,592.

Categorical Funding                2009                    2010

Title I                                          $128,728,180         $128,728,180

·      Funds would supplement State and local funding for low-achieving and high poverty children with 38 percent of stimulus money allotted for targeted grants, 38 percent for concentrated grants and 23 percent for school improvement. Must provide Maintenance of Effort, State and Local expenditures for education cannot be less the 90 percent of prior year expenditures.

IDEA                                     2009                               2010           

                                               $157,205,020               $157,205,020           

IDEA Preschool            $6,035,571                  $6,035,571

·      To be eligible all LEAs  must submit application to State and get approval prior to receiving funds. The formula is based on 75 percent of the December 1998 allocation and 15 percent based on Title I headcount.  Must provide Maintenance of Effort, State and local expenditures for special education and related services cannot be less than prior year expenditures.

Educational Technology       2009               2010     

                                                          $8,179,529            $8,179,529

·      All LEAs receiving Title I funds are eligible. The distribution formula is 50 percent allocated based on the LEAs proportional share of Title I funds and 50 percent competitive or for 2009-2010 states can make the distribution 100% competitive.

Competitive Funds (are available to all States) Total 6.1 Billion

State Incentive Fund                                        $5 Billion

Innovative Fund                                                $650 Million

Teacher Incentive Fund                                  $2 Million

Statewide Data Systems                                  $250 million

School Construction Bonds:

QZAB’s-$1.4 Billion increase of $1 Billion

School Construction Bonds-$275.5 Billion-NC availability-$551 million over the next two years. Distribution of 40 percent to seven LEAs (Wake, Charlotte, Robeson, Durham, Guilford, Forsyth, and Cumberland). Sixty percent to SEAs.

 

 

 

SUBJECT: 2009 LEGISLATIVE SESSION MEMO #4

House Speaker, Joe Hackney, held a press conference on Tuesday to discuss the State’s dropout figures. The dropout rate has declined for the first time in three years, but on average 30 percent of students still drop out of school. He stated the importance of listening to educators about what is needed and to provide them with the tools to help students stay in school. Lawmakers stressed the importance of recovery programs and alternative learning options for suspended and At-Risk students. In addition, innovative learning programs such as the 9th grade Academies, Early College Initiative, and Learn and Earn Programs were also credited with the decline in the dropout rate.

     Governor Perdue appointed Dempsey Benton to oversee the Federal stimulus funds just approved, in the American Recovery Act, by Congress. The funds for public schools/education in this federal legislation were discussed in a Joint meeting of the Appropriations members on Wednesday (provided in a separate document).

     House and Senate Appropriations Chairs have had several meetings this week to determine where to begin on the budget process. They will hear from various agencies over the next two weeks to receive information on possible proposed cuts.

     On Wednesday this week the House Energy and Energy Efficiency Committee met to look at the funding from the Federal Stimulus package. There are funds that can be accessed for public school construction and renovation to increase energy efficiency of buildings. Also, the Joint Committee on Employee Hospital and Medical Benefits met to discuss the State Health Plan and possible options to cover the financial shortfall. A draft bill was presented to the committee with changes to the plan. The bill will be introduced in both Chambers and needs to pass by April for the bill to become effective by July 1, 2009. The members were told $250 million will be moved from the Rainy Day Fund to the General Fund to cover the projected shortfall through June 30, 2009. Some of the details of the bill include: Premium rates for contributory coverage increased 7.3 percent, the elimination of the 90/10 plan effective July 1, 2009, raising the deductible for the Basic Plan (70/30) and the Standard Plan (80/20), increasing family coverage premium to between $530 and $580, no plans to require payment on individual coverage for basic plan, increasing co-pays for visits and medication, dropping vision component, requiring documentation to get 80/20 plan in the future (proof individuals are not obese and do not smoke). The members were given a great deal of information on the escalating costs of the health plan, the average age of members, the percent of acutely ill versus chronically ill and more.

     On Thursday, Senate and House Leadership and Appropriations Chairs met with Governor Perdue to discuss budget planning. Governor Perdue hopes to have her budget prepared and sent to the General Assembly by mid-March. The Senate who had plans to complete their budget shortly after the Governor and then it will be up to the House.

     Treasurer, Janet Cowell, held a press conference on Thursday to announce the financial status of the State Retirement Plan. The State Employee Retirement System will need an additional $29 million infusion of cash in 2009-2010 and nearly $330 million in 2010-2011 to keep the system stable. This will require significant increases in the employer contribution to the retirement system in future years.

     Additional bills being discussed among education advocates include: Deaf Students, Suspensions and Expulsions, Professional Leave Days, Child Nutrition, ABC Bonuses, School Construction, and much more. Please check the list the bills being heard next week.

 

Bills Introduced:

House

HB 173 Kids Voting Funds

HB 175 State Minimum Wage/Inflation Increases

HB 177 Healthy Families and Healthy Workplaces Act

HB 184 Funding for Learn and Earn

HB 185 Communities in Schools Funds

HB 187 Encourage Policies to Facilitate Graduation

HB 188 Study Raising Compulsory Attendance Age

HB 191 General Statutes Commission Technical Corrections

HB 193 Electronic Notice of Public Hearings

HB 205 Lottery Act Changes

HB 209 Sex Offender Registry/Liberties with Student

HB 212 Health Insurance Pool Pilot Program

HB 213 State Personnel Act (SPA) Sick Leave Transfers

HB 218 Parent & Student Educational Involvement Act

HB 223 No High School Graduation Project Required

HB 229 Retired Teachers Return to Work

HB 231Positive Behavior Support Position Funds

HB 232 Scholarship Loan for Rural Social Workers

HB 235 North Carolina Youth Advancement Program

HB 241 Apply ABC Funds to Teacher Salary Increases

HB 242 No ABC Bonuses for Expected Growth

HB 261 State Board of Education/Membership Restrictions

 

Senate

SB 178 Repeal Ban G. S. 95-98-(Collective Bargaining)

SB 202 Appropriations Act of 2009

SB 204 Retired Nurses Return to Work

SB 205 Prohibit Smoking in Public & Work Places

SB 206 Kids Voting Funds

SB 218 Neighborhood Schools & Teacher Merit Pay

SB 221 Healthy Youth Act

SB 229 Scholarship Loan for Rural Social Workers

SB 238 Study State Contract with Minority Businesses

SB 239 Renewable Energy and Energy Efficiency Credit

SB 240 Fund High Priority Public Health Initiatives

SB 241 Alt. Testimony/Children and Adults with Disabilities

SB 248 Conform County School Board Vacancy Statute

SB 259 Interscholastic Sports Open to All Students

 

Senate Committees:

Finance Committee Brent Lane, Executive Director, UNC Center for Competitive Economies, presented to members “North Carolina’s Economy: Past & Current Market Trends”. North Carolina’s economy is big, 23rd largest in the nation with a workforce of 4.6 million. The job growth rate is slowing and shifting to a service economy from a manufacturing economy. The main problem with this shift is that manufacturing jobs pay approximately $44,000 annually while service jobs only pay $36,890. This means less income, less taxes, less state revenue. Jobs are shifting to Metro areas and bringing in new residents. The increase in new residents imposes higher public service costs and impacts capacity limits. North Carolina’s economic development strategies must adapt to changing economic conditions in order to have balanced growth.

Education/Higher Education

SB 198 State Board of Education/Membership RestrictionsFavorable Report to the Bill as Amended. Amends the bill to increase from one to two the number of State Board members who can be public school employees (paid with state or local funds).The Committee also amended the bill to reinserts the prohibition of a spouse of a DPI employee serving on the State Board, which was errantly allowed (through a deletion of language) when the bill was initially drafted. Also, existing law prohibits certain contracts between public officers and the agencies they serve, but this law does not apply to employment contracts between the SBE and its chief executive officer.

 

Senate Floor

SB 198 State Board of Education/Membership Restrictions Committee Substitute Passed second and third readings, sent to House and assigned to House Education.

 

Bills in Committee Next Week

HB 18 Speech Language Pathologist Qualifications

HB 65 Students Under 16 May Attend Community College

HB 43 School Board Members Failure to Discharge Duty

HB 79 Extend School Formula Study Committee

SB 198 State Board of Education/Membership Restrictions

HB 205 Lottery Act Changes

 

2009 Deadlines

Drafts                                                              To Bill Drafting                                                Filed

House Local Bills                                    Wednesday, March 18                                    Wednesday, April 1

Senate Local Bills                                    Tuesday, March 3                                    Wednesday, March 11

House Public Bills                                    Thursday, March 26                                    Wednesday, April 8

Senate Public Bills                                    Friday, March 13                                    Wednesday, March 25

House Appropriations/Finance            Wednesday, April 22                                    Wednesday, May 6

Crossover Deadline Thursday, May 14

 

 

AMERICAN RECOVERY AND REINVESTMENT ACT: THE IMPACT ON NORTH CAROLINA

-COURTESY OF SENATOR RICHARD BURR’S OFFICE-

The American Recovery and Reinvestment Act is a nationwide effort to create jobs, jumpstart growth and transform our economy for the 21st century. Across the country, this package will help businesses create jobs and families afford their bills while laying a foundation for future economic growth in key areas like health care, clean energy, education and a 21st century infrastructure. In North Carolina, this package will deliver immediate, tangible impacts, including:

·      Creating or saving 105,000 jobs over the next two years. Jobs created will be in a range of industries from clean energy to health care, with over 90% in the private sector. [Source: White House Estimate based on Romer and Bernstein, “The Job Impact of the American Recovery and Reinvestment Plan.” January 9, 2009.]

·      Providing a making work pay tax cut of up to $800 for 3,230,000 workers and their families. The plan will make a down payment on the President’s Making Work Pay tax cut for 95% of workers and their families, designed to pay out immediately into workers’ paychecks. [Source: White House Estimate based on IRS Statistics of Income]

·      Making 118,000 families eligible for a new American Opportunity Tax Credit to make college affordable. By creating a new $2,500 partially refundable tax credit for four years of college, this plan will give 3.8 million families nationwide – and 118,000 families in North Carolina – new assistance to put college within their reach. [Source: Center on Budget and Policy Priorities analysis of U.S. Census data]

·      Offering an additional $100 per month in unemployment insurance benefits to 604,000 workers in North Carolina who have lost their jobs in this recession, and providing extended unemployment benefits to an additional 128,000 laid-off workers. [Source: National Employment Law Project]   

·      Providing funding sufficient to modernize at least 263 schools in North Carolina so our children have the labs, classrooms and libraries they need to compete in the 21st century economy. [Source: White House Estimate]

In addition to this immediate assistance for North Carolina, the American Recovery and Reinvestment Act will help transform our economy by:

·      Doubling renewable energy generating capacity over three years, creating enough renewable energy to power 6 million American homes.

·      Computerizing every American’s health record in five years, reducing medical errors and saving billions of dollars in health care costs.

·      Enact the most significant expansion in tax cuts for low- and moderate-income households ever:

·      Enacting the largest investment increase in our nation’s roads, bridges and mass transit systems since the creation of the national highway system in the 1950s.


Fiscal Research Division Report: Public School Funding Overview and Update

February 18, 2009

A report on public school funding was presented by Brian Matteson and Kris Nordstrom.  The complete power point presentation can be access at:

http://www.ncga.state.nc.us/fiscalresearch/frd_reports/frd_reports_pdfs/Session%20Briefings/Pub%20School%20Overview_web_2009_02_18.pdf

The report was directed at answering five major questions: how are public schools funded, how are funds spent, what are the biggest budget issues, how are public schools doing and what are the issues for the next biennium. Public schools receive 64.8 percent of their funds from the State and these funds are distributed to Local Education Agencies by way of allotments. Allotments are distributed by formulas, mostly by the Average Daily Membership (ADM) formula, and the allotments consist of three types: position allotments (63 percent of state funds), dollar allotments (15 percent), and categorical allotments (22 percent). State funding has increased 42.6 percent from $5.59 billion in 2000-2001 to $8.19 billion in 2008-2009, and the State funding per ADM has also increased by 24.6 percent to $5,549/per pupil during this same timeframe.  Salary and benefits in 2007-2008 were 90.1 percent of the state funding, on average. Other major expenditures were transportation, supplies and materials, school technology and staff development. The revenue from the education lottery and the cap to the ABC bonuses was discussed. The lottery funded $154.2 million for school construction, $108.1 million for class size reduction, $84.6 million for More At Four, and $38.5 million for college scholarships. The ABC bonuses were capped at $94.2 million though they needed $134.1 million to fully fund them last year. They reviewed the academic performance of students for 2007-2008. In conclusion, the staff discussed the education budget shortfall and the possible 3, 5, or 7 percent reduction to public education in the continuation budget.  One way to manage the shortfall would be to increase class size. For every student added to a class the state could save $170 million on funding. It was noted that because of the change in Kindergarten eligibility for students in 2009-2010 the state will save $50 million in funding (avoided cost) this year. There was a brief mention of the federal stimulus package. Preliminary figures show the distribution to Education in NC would be approximately $1,142.8 billion in the first part of the Fiscal Stabilization funds. These funds are restricted in that they can be used for education funding to increase the allotment from a minimum allocation distributed in 2005-2006 budget to reach to the funding allocated in the 2007-2008 budget. Other funding includes: High Priority Fiscal Stabilization $254.3 million, Title I $169.2 million 2009 and the same amount in 2010, Special Education $162.5 million in 2009 and 2010, Education Technology $8.2 million and Homeless Assistance $0.6 million. Members were cautioned regarding these figures as they were only estimated amounts.


Whose schools work better?

Wake disperses low-income students with busing; Charlotte gives high poverty schools extra money:   

                                                        

Click Here for Link

written by T. Keung Hui, Staff Writer for the News and Observer

North Carolina‘s two largest school systems have taken vastly different approaches to two thorny issues — student reassignment and educating low-income students with hefty academic deficiencies.

Wake County, the state’s largest district, has used buses instead of greenbacks to address the academic needs of low-income students.

To meet the demands of growth and support a diversity policy aimed at reducing the number of high-poverty schools, Wake’s system moves thousands of students each year to different schools, sometimes sending kids on bus rides of more than 20 miles.

Charlotte-Mecklenburg Schools, the second-largest district in North Carolina, has shifted to a system of largely neighborhood schools, resulting in a stratified mix of affluent schools in the suburbs and high-poverty schools near downtown Charlotte.

Instead of busing kids to balance out the level of low-income students at each school, the district pours millions of dollars into these high-poverty schools each year to boost the performance of academically disadvantaged students.

More after the jump….

 

2009 LEGISLATIVE SESSION MEMO: WEEK 3

 nc leg front

The Fiscal Research Division Briefing on Major Budget Drivers was held on Tuesday. The presentation outlined the State Budget and General Fund and the growth trends in the areas of education and Medicaid.  In 2000-2001 the state budget was $13.81 billion with $7.58 billion dedicated to education. In 2008-2009, the state budget totaled $20.96 billion with $11.42 billion for education. This shows a growth rate of 5.3 percent for education, which is equal to the overall growth in the state budget. Areas of major growth were Debt Service 13.1 percent and Medicaid, which has grown at 9.3 percent annually. Medicaid funding will continue to be a challenge in the future. During the past 8 years teacher salaries have increased by 76.7 percent, while the increase to state employees was 45.2 percent and the Consumer Price Index was 43 percent. Three major factors are responsible for the increase in funding to public schools, student enrollment, teacher salaries and class size. Public schools represent 37 percent of the General Fund Budget. The fastest growing part of the education budget is the Universities. State per pupil allotment for public schools is $5,414, community colleges, $4,903 and universities $12,897. http://www.ncga.state.nc.us/fiscalresearch/frd_reports/frd_reports_pdfs/Session%20Briefings/Major%20Budget%20Drivers%20FER%202009.pdf

 

On Wednesday, fiscal staff reviewed higher education. The topics for discussion included governance, budget and funding for 2008 and 2009.  Richard Bostic presented for the Universities and Andrea Poole on behalf of the Community Colleges. The major funding issue for 2009-2010 will be the $47 million needed to fund enrollment growth for the universities. Of note was the UNC graduation rate for the constituent institutions: 4 years-35.1 percent, 5 years-54.2 percent, 6 years-58.7 percent. http://www.ncga.state.nc.us/fiscalresearch/frd_reports/frd_reports_pdfs/Session%20Briefings/Total%20Ed%20Overview%20Presentation%20-%20Feb%2011%20-%20FOR%20WEB-%202009_02_10.pdf

 

On Wednesday, Speaker Hackney announced the Committee chairs. Appropriations members are:  Representatives Mickey Michaux-Senior Chair, Alma Adams, Martha Alexander, James Crawford, Phillip Haire, Maggie Jeffus, Joe Tolson, and Doug Yongue.  Education Appropriations members are: Representatives Rick Glazier, Marian McLawhorn, and Ray Rapp. Education policy members are:  Representative Larry Bell and Marvin Lucas.

 

On Tuesday, February 17th the staff will review public schools.

 

The Federal Stimulus Package was passed by the Senate 61-37 this week. The Senate made several changes to the House plan. Those include cuts to the following items: School Construction $16 billion, Child Nutrition $98 million, Title 1 $600 million, and State Fiscal Stabilization Funds $40 billion. On Wednesday, House and Senate conferees reached agreement on a $789 billion package. The bill has gone to House Rules and is expected to be voted on Friday/Saturday. The details of the funding for NC public schools will be provided once that information is available. Preliminary information is as follows: State Fiscal Stabilization Funds include $53.6 billion, of which $39.5 billion may be used to prevent cuts in education funding, $5 billion to states as bonus grants for meeting key education performance measures, and $8.8 billion for high priority needs such as public safety, modernization and renovation of schools and institutions of higher education. In addition, there are funds for Title 1, $13 billion and Special Education/IDEA, $12.2 billion. Other education funding includes: $15.6 billion to increase the maximum Pell Grants by $500.00 to aid seven million students pursuing higher education, and $3.95 billion for job training to help the displaced adult worker.

 

Bills Introduced:

House

HB 92 North Carolina Science Olympiad Funds

HB 94 Clarify Definition of Retirement

HB 125 Raise Cap on Charter Schools

HB 126 Eliminate the Cap on Charter Schools

HB 149 Require Arts Education Credit for Graduation

HB 154 Appoint State Superintendent

HB 155 Appoint State School Superintendent

HB 160 Teacher Assistants in Special Education Classes/Personal Leave

HB 161 Require Six-Year-Olds to Attend School

 

Senate

SB 96 No “Texting” While Driving

SB 100 Study Innovations/Incentives in Education

SB 122 Students Under 16 May Attend Community College

SB 137 Military Death/In-State Tuition/Dependant

SB 149 Lapsed Salaries Revert

SB 156 Session Limits

SB 157 Eminent Domain

SB 160 Students Under 16 May Attend Community College

SB 172 Allow Charter Schools in 100 Counties

 

The Stimulus Plans: How They Differ – Wall Street Journal

 

“The Senate passed an economic stimulus plan with a price tag of around $840 billion on Tuesday, 13 days after the House passed its own version of the plan with an estimated cost of approximately $820 billion. Now, lawmakers must meet to reconcile the two bills–and multiple competing factions—before the plan can be sent to the White House. 

House and Senate Democrats are likely to fight over spending items ignored by the other chamber. Moderate Republicans and Democrats who pushed to cut the size of the original Senate package will be unwilling to see its price rise. The White House wants to restore some funding already cut by those moderates. And Senate Democrats may also go after tax breaks inserted by Senate Republicans.

The article details both the House and the Senate versions as well as how and where they contradict. 

To view the complete Wall Street Journal article, click the following link:

WSJ STIMULUS COMPARISON

or

http://online.wsj.com/public/resources/documents/st_STIMULUS_STATIC_20090210.html

%d bloggers like this: