2009 LEGISLATIVE SESSION MEMO #17

On Monday, the House and Senate returned to Jones Street, but they did not have any bills on their calendars, having cleared all of them off last week. The House also came back ready to begin to their work on the House budget, again. The subcommittees had been working on and off and it was rumored they would begin reviewing their budget proposals later in the week.

On Tuesday, the Senate Economic Recovery Committee met to hear a presentation on the American Recovery Reinvestment Act and the Education Budget. Staff presented more than 47 slides of information. Of note was the fact that Governor Perdue has already spent $400 million, in the past few weeks, of the funds slated for NC to cover the budget shortfall. This leaves a balance of $935 million in non-recurring funds, to be used either all at once or over the next two years as part of the education budget. There are competitive funds of $4.5 billion available to states who implement strategies to help struggling students close the achievement gap. They reviewed Title I funding to the LEAs, maintenance of effort, supplement not supplant and how the requirement for the LEAs to implement new and innovative strategies and serve more students using the federal funds. The 2009-2010 targets for Education total $10.5 billion and in 2010-2011 they drop to $10.3 billion, with lower revenue anticipated. The State is required to fund the three education groups above the 2005-2006 funding level. In 2005-2006, K-12 funding totaled $6.95 billion. The State can direct how the federal stabilization funds can be spent by the Community Colleges and Universities, but not the public schools.

On Wednesday, the Chairs of the House Education subcommittee met to hear a presentation on the federal stabilization fund and to present their recommendations for education funding in 2009-2010 and 2010-2011. Their budget plan proposes an 11.1 percent reduction in spending ($917,194,957) for public schools, Community Colleges ($119,310,621) and the Universities ($336,626,657) in 2009-2010 and 14 percent ($1.17 billion cut) in 2010-2011. With State funding projected to be lower next year they had to plan on deeper cuts for the second year of the Biennium.

The Chairs presented education cuts for public schools to include the following: Increase Class Size by 2 per grade (6,005 teachers), Shorten the School year by 5 days in 2009-2010 and 5 more in 2010-2011, Eliminate teacher assistants in grade 3 (4,663 TAs), Reduce Instructional Support (354 counselors, media, social workers), Reduce School Building Administration (Assistant Principals 1:890-187 APs), Central Office at LEAs face a reduction of $6.5 million, a Reduction to Non-Instructional support (clerical and custodians), Eliminate Learn and Earn Online, Eliminate funding for National Board program, Eliminate Literacy Coaches, Eliminate Improving Student Accountability, a 10 percent reduction to At-Risk Student Services, and a 5 percent Reduction to Transportation. There is also $60.5 million in a non-recurring cut to school construction funds for each of the next two years. In addition, there will be a reduction in the Low Wealth Supplemental funding to counties at or below 90 percent, eliminating 13 LEAs, Small County Supplemental funding reduced by $4.5 million, and a ten percent cut to More at Four. DPI is recommended for an 11 percent reduction for 2009-2010 and an additional four percent (total 15 percent) for 2010-2011. This equates to the elimination of 52 positions in 2009-2010 and 19 more (71 total) for 2010-2011. The proposal does not include any changes to salaries and the additional non-recurring fund reduction related to the federal stabilization funds. The Chairs also included expansion funds of almost $48 million between the three education funds. Public schools had $22 million most of which was in the Dropout Prevention Grants program. It was our understanding there would be “No Expansion” funds and that was part of the direction to all subcommittees, however education still included some of these funds in their proposal.

On Thursday, the House Education subcommittee met to finish their budget review and hear questions from members. Most of the questions were simply what are we going to do with all these cuts.  The Chairs told committee members they were planning to work Friday to complete drafting the special provisions for the budget. They asked the members to return on Tuesday with suggestions and ideas for changes they may want to consider to the education budget plan.  They also told the committee their plan is to vote on the education proposal on Wednesday and give it to the big Chairs on Thursday. The big Chairs are responsible for salaries, benefits and capital as well as balancing the whole budget and agreeing to the subcommittee recommendations.  The House budget calendar calls for the big Chairs to work on the budget the following week, June 1-5, and then begin rolling it out the week of June 8th. Final House approval should occur by June 18th. That only leaves two weeks for the House and Senate to come to an agreement on the final budget before the end of the 2008-2009 fiscal year (June 30). Meanwhile, the Finance Chairs are responsible for putting together the funding package for the budget. Everything we are hearing right now indicates the House will not do anything to increase revenue for the state, but will focus on only making cuts.

Tough choices and decisions await the House and then how will the Senate respond to these deep cuts, especially in Education. The Senate has yet to present the revenue plan for the spending in their budget proposal. The Public Schools, Community Colleges and Universities are working very hard to assess the impact of this initial education budget. It’s hard to say right now with the limited funding how some if not all of these cuts can be avoided. As you look at the K-12 budget plan the interesting part is not where the cuts were made, but what funding allotments were not cut, like Special Education, Vocational Education, Academically Gifted, Supplies and Materials and Learn and Earn. These programs appeared to be spared in Round 1. Guess we will have to wait and see next week where this is headed. Education has made great progress in North Carolina over the past twenty-five years, but we may be headed backwards with an increasing student population and a decrease in funding. Public schools in North Carolina have continued to improve nationally in the rankings, but can these be academic gains be sustained with a decrease in per pupil funding? A decrease that may be here to stay for the next three to five years!

Senate Committees:

Education/Higher Education

HB 65 Students Under 16 May Attend Community College Favorable Report

HB 316 Assignment of Multiples to Charter Schools Favorable Report to Proposed Committee Substitute.

Finance:

HB 1508 Tech Corrections – 2/3rd Bonds Act of 2008-Favorable Report

Judiciary II:

HB 9 No Texting While Driving Favorable Report and re-referred to Appropriations.

Mental Health & Youth Services Meeting Cancelled.

HB 88  Healthy Youth Act The Democrats caucused about possible changes to the bill to get enough votes for passage, but they were unable to finish so they postponed the meeting.

State and Local Government:

HB 220 Write-In Candidate Rule Favorable Report and sent to the Floor.

Senate Floor:

HB 220 Write-In Candidate Rule Passed second and third reading and Ratified.

HB 65 Students Under 16 May Attend Community College Passed second and third reading and Ratified.

HB 316 Assignment of Multiples to Charter Schools Calendared 5/26

Bills in Committee Next Week:

HB 42 Science Safety in the Public Schools

HB 43 School Board Members/Failure to Discharge Duty

HB 96 Local Government Surplus Property Donations

HB 218 Parent and Student Educational Involvement Act

HB 223 No High School Graduation Project Required

HB 364 SBOE Confirmations

HB 440 The Nicolas Adkins School Bus Safety Act

HB 589 Insurance/Cover Hearing Aids

HB 1031 Building Standards/Pre-K Classes in Public Schools

HB 1327 Schools Notified of Criminal Intelligence Information

SB 427 Restore Contract Rights to State& Local

SB 526 School Violence Prevention Act

SB 689 Modify DPI/SBE Reporting Requirements

SB 708 Amend the Compulsory School Attendance Law

SB 957 Special Enrollment Period/Group Health Insurance

SB 1030 After-School Child Care Programs

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