Gov. Perdue’s Budget Proposal Highlights

Hoping to read Gov. Perdue’s 2011-2012 Budget Proposal in it’s entirety? If so….

CLICK HERE

 

For everyone else,  here are the highlights of the Gov’s $19.9 billion budget:

Taxes, Reserves or Salaries:

• extend 0.75 cents of the temporary penny sales tax for another two years: $827 million.
• reduce corporate income tax rate from 6.9 percent to 4.9 percent: -$115 million.
• repeal law giving portion of corporate income tax for public school construction: $72 million.
• provide unemployment insurance tax credit for 135,000 small businesses: -$65 million.
• no salary increases for state employees, teachers.
• cover expected 7.1 percent premium increase for state employee health insurance plan: $117.1 million.
• require state employees on more generous health insurance plan to pay $21.50-per-month premium for individual coverage: -$89 million.
• provide $10,000-$20,000 incentive bonus for eligible workers to retire, allocated in limited amounts throughout state government.
• set aside $75 million from year-end credit balance for repairs, renovations of government buildings.
• contribute more to state retirement system: $115 million.
• severance reserve for laid-off state workers: $30 million.
• rainy-day reserve fund: $150 million.
• set aside $25 million from year-end credit balance to help local governments and nonprofits interested in consolidating or regionalizing services.

Public Education (K-12):

• require local school district to pay for workers’ compensation claims: -$34.7 million.
• make payments of tort claims a local responsibility: -$4.6 million.
• reduce allotment for local central office staff by 10 percent, potentially eliminating 140 positions: -$10.8 million.
• reduce instructional support allotment by 5 percent, potentially eliminating 290 positions: -$23 million.
• reduce school building administration funds by 7.5 percent, potentially eliminating 380 positions: -$24.6 million.
• 35 percent allotment reduction for textbooks: -$40 million.
• reduce allotment to districts for custodial and clerical positions by 15 percent, or 1,700 positions: -$59.6 million.
• reduce school bus transportation allotment by 10 percent, or potentially 1,900 positions: -$40.3 million.
• make school bus replacement a local responsibility: -$56.9 million.
• direct 10 percent reduction in Department of Public Instruction, or 40 positions: -$4.4 million.
• eliminate dropout prevention grants: -$13 million.
• pay for instruction supplies and positions to teach an extra 5,323 students in 2011-12 school year: $38.3 million.

University of North Carolina System:

• direct University of North Carolina system to reduce combined spending in operating budget by 9.5 percent, with 1,900 positions to be eliminated, partially offset by tuition increases: -$252.6 million.
• reduce legislative aid to residents who attend private college by 6.5 percent: -$12.2 million.
• reduce 25 percent charity care subsidy to UNC Hospitals: -$11 million.
• operation and maintenance of new system building coming online next year, including 283 positions: $18.5 million.
• pay for instruction of additional 2,337 students in 2011-12 school year: $23.3 million.
• consolidate research stations and farms at N.C. State University: $8.7 million.
• use N.C. Education Lottery Funds to help pay for need-based financial aid: $34.9 million.

Community Colleges:

• eliminate eight specialized centers and programs: -$3.8 million.
• raise tuition by $5.50 per credit hour, or $176 per year: -$25.3 million.
• direct 3 percent reduction in state aid budget to community college system, with as many as 620 position eliminated: -$32.3 million.
• pay for instruction of additional 9,712 full-time equivalent students in 2011-12 school year: $17.9 million.

Health and Human Services:

• find efficiencies in department budget to reduce 25 positions: -$1 million.
• reduce Smart Start early childhood initiative by 10 percent: -$9.4 million.
• create up to 5.5 percent assessment on hospital and other Medicaid providers as a way to draw down more federal funds: -$60.2 million.
• adjusting Medicaid provide reimbursement rates, for private duty nursing, imaging and ultrasounds: -$8.4 million.
• modify Medicaid pharmacy services to find efficiencies: -$15.9 million.
• modify optional and mandatory Medicaid services: -$16.5 million.
• set aside $75 million in year-end credit balance for mental health trust fund.
• reduce administrative funds to operate local mental health management offices: -$3.3 million.

Justice and Public Safety:

• consolidate Departments of Juvenile Justice, Correction and Crime Control and Public Safety into one Department of Public Safety. Sixty positions would be eliminated.
• reduce administrative functions in judicial branch by 16 percent, or 54 positions: -$9.1 million.
• reduce funds for family and drug treatment courts, dispute resolution and other programs: -$1.9 million.
• reduce courthouse operations expenses by 1 percent, or 71 positions: -$3.3 million.
• shift requirement that sheriffs check whereabouts of registered sex offenders by first-class mail, not certified mail: -$93,000.
• close Woodson Wilderness Camp for juvenile offenders, eliminate 20 positions: -$970,000.
• close Swannanoa Youth Development Center, affecting 26 positions: -$1.4 million.
• eliminate 77 correction positions: -$2.9 million.
• find $12.4 million in savings, eliminate 237 positions from Justice Reinvestment recommendations.
• fund operations and staffing for four new prisons, including 280 positions: $10 million.

Natural and Economic Resources:

• merge Employment Security Commission into Department of Commerce, resulting in 53 position eliminations.
• close welcome centers two days a week, privatize them in 2012-13 fiscal year: -$600,000
• One North Carolina Fund economic incentives initiative: $10 million.
• Job Maintenance and Capital Development Program: $8.5 million.
• direct reductions at Department of Agriculture at agency’s discretion: -$5.2 million.
• reduce Department of Environment and Natural Resources by 68 positions, largely in permitting offices: -$418,000.
• close Rendezvous and Turnbull Creek educational state forests due to low attendance: -$131,000.
• reduce Division of Parks and Recreation budget by 10 percent, requiring most parks to close two days a week: -$3.1 million.
• matching money for clean and drinking water revolving funds: $14.5 million.
• Clean Water Management Trust Fund: -$50 million.

Transportation:

• reduce public transportation, aviation and ferry funds: -$6.9 million.
• repair, replace and maintain ferry vessels: -$2.1 million.

Other state agencies:

• consolidate Department of Administration, State Controller’s Office, Office of Information Technology Services and Office of State Personnel into a new Department of Administration and Management, reducing 21 positions and other human resources jobs.
• delay filling intern positions at the General Assembly: -$1.25 million.
• eliminate four positions from the Officer of the Governor: -$433,000.
• purchase land buffers for military installations: $1 million.
• reduce six positions in State Auditor’s Office: -$784,000.
• increase Department of Insurance company and insurance adjuster licensing fees: -$4.5 million.
• pay for new Department of Revenue tax computer system: $3 million.
• reduce grants for arts, libraries, NC Symphony by 10 percent: -$2.3 million.
• consolidate, reduce management layers at North Carolina State Library, eliminating nine positions: -$500,000.
• centralize human resources functions, cutting 92 positions: -$2.8 million.

___

Source: Office of State Budget and Management.

The Governor wants you to “Balance the Budget with Charlie”

—–

ACCEPT HER CHALLENGE HERE

 

 

Also….

Under the Dome put together the Education highlights from the Gov’s ‘State of the State’…

Check It Out Here

Reader Submission: Appalachian State University Budget Update

Though this is outside the normal purview of this blog, the following letter was forwarded to me by a reader….  Many thanks for submitting.

–

MESSAGE FROM THE CHANCELLOR – JANUARY 18th, 2011  2011-12 BUDGET UPDATE Dear Members of the Appalachian Family: The new year brings unprecedented fiscal challenges for the State of North Carolina. Beginning in 2008, states across the nation struggled with high unemployment, decreased revenue, and increased spending requirements. North Carolina was able to avoid some of the devastating budgetary shortfalls that other states faced, in part, because of an infusion of Federal Recovery dollars and a temporary sales tax increase. Even though Appalachian has lost more than $11 million of permanent state funding over the past three years, we have successfully protected both jobs and academic offerings. Only through campus-based tuition increases, enrollment growth, and budget management flexibility have we been able to minimize the impact of reductions on instruction. Compared to many state higher education systems around the nation, the University of North Carolina system has weathered the storm better than most. There is no additional Federal Recovery money. The temporary state sales taxes are slated to end June 30, 2011, and our economy remains sluggish with growth less than predicted. North Carolina is now facing a projected $3.7 billion shortfall for the 2011-12 year. According to the Office of State Budget and Management, this deficit translates to a 19.5 percent decrease across the board to all state agencies. Not since the Great Depression has North Carolina faced a budget deficit of this magnitude. On December 20, I received a memorandum from then President Erskine Bowles and incoming President Tom Ross describing the severity of this shortfall. They asked each of the chancellors to submit details on how we would reduce our current budget by 2.5 percent and realize a 15 percent permanent reduction for the 2011-12 fiscal year that begins July 1, 2011. Reductions beyond the 10 percent range coupled with our already permanent loss of over $11 million in state appropriations will dramatically alter Appalachian State University. A 15 percent budget reduction would result in a $21.3 million cut to Appalachian. In a recent phone conversation, President Ross said, “We cannot do everything in the future that we have done in the past.” He is right. If we have a 15 or 20 percent reduction, then our core functions and the quality of academic programs will be impacted. While in recent years we have grappled with the implications of potential budget cuts, this year is different. The deficit is real and neither the Governor nor the legislature plans to increase tax revenue to reduce the shortfall. Come July 1, 2011, the actual deficit may be less than projected and the impact on education may be less than a 19.5 percent reduction; however, if we do not begin serious and thoughtful discussions now about how to reduce our fiscal obligations, we run a great risk of making uninformed and reactionary decisions. That is a risk I am unwilling to take. I met with members of my Cabinet to begin identifying and discussing options for reducing our state budget requirements. We have met with newly elected members of the General Assembly and shared with them the impact additional reductions in our state appropriations will have on our university, our region and our state. Interim Provost Lorin Baumhover and I have met with the college deans for a similar conversation. As a result, they and the Academic Affairs vice provosts and associate vice chancellors are consulting with each department to identify 2.5 percent savings from this year’s budget as well as an additional 20 percent savings from the 2011-12 budget. Like the other state agencies, we must be prepared in case our state appropriation is reduced by 20 percent. Please share your ideas for reducing our budgetary obligations with your division or department head and deans, as appropriate. As you consider budget reductions, use the University Strategic Plan as a guide for your recommendations. Honestly assess what we do best, and what we can sustain. Consider what Appalachian State University will look like in future. No reduction is simple and each has a dramatic cost – financial, social, moral, and political. As always, I need your help in guiding our fine institution forward and appreciate your careful evaluations and suggestions. At the Spring Faculty Meeting on Friday, January 28, Interim Provost Baumhover and I will discuss more specifics of the university budget, including how we have managed past cuts, current funding allocations, and potential sources for future reductions. I encourage all faculty and staff to attend this important meeting that begins at 3:00 p.m. in Rosen Concert Hall. This past week, I attended the UNC Board of Governors’ meeting under the leadership of our new president. We continue to gather information about how our university should prepare for these reductions and share with our elected and appointed leaders the impact these cuts will have on our state’s future. Appalachian has faced significant challenges in the past and I am confident in our ability to meet this current challenge in the best way possible through thoughtful and strategic action. I stand firm in the knowledge that the entire university community will once again demonstrate the creativity, engagement and commitment necessary to make difficult decisions that will ensure a strong and vibrant future for Appalachian. With Appalachian Pride, Kenneth E. Peacock Chancellor

NC Economic Forecast: January

Barry Boardman’s been at it again…..

Thats right, the great minds over in the Fiscal Research of the NCGA has put together another great presentation, now available in PDF format.

This series — a ‘state of the State’s economy’ of sorts — have proven very useful in months past.

Moreover, this is required reading for those of you interested in the ongoings of the upcoming session.

Print it out and pass it around…..

GENERAL FUND REVENUE REPORT & ECONOMIC OUTLOOK

-or-

http://www.ncga.state.nc.us/fiscalresearch/generalfund_outlook/generalfund_outlook_pdfs/2010%20Outlooks/General_Fund_Revenue_Outlook_2011_01_12%20January.pdf

Civitas Poll: Voters Urge General Assembly to Cut Spending, Not Raise Taxes

Jan. 13, 2011

FOR IMMEDIATE RELEASE

CONTACT: Francis De Luca (919) 834-2099

Francis.DeLuca@NCCivitas.org

Raleigh, N.C. – North Carolina voters strongly support the General Assembly and Gov. Bev Perdue cutting spending to balance the $3.7 billion state budget shortfall, according to a new poll released today by the Civitas Institute.

Eighty-three percent said they would rather the Governor and state Legislature cut spending than raise taxes.  Fourteen percent of voters said they want taxes raised, and 2 percent said they do not know.

This approach to dealing with North Carolina’s massive budget crisis has the support of voters of all political affiliations.  Republican (95 percent-5 percent) and Democratic voters (79 percent-17 percent) both said the Governor and state Legislature should cut spending instead of raising taxes.  Unaffiliated voters also support spending cuts over raising taxes by a 77 percent-17 percent margin.

“Regardless of political party, voters support spending cuts, not increased taxes, in order to reconcile a record budget deficit in the midst of a weakened economy and continuing high unemployment,” said Civitas Institute President Francis De Luca.

Even when given the choice of cutting education spending instead of raising taxes, 49 percent of voters said they would rather the Governor and state Legislature cut spending even if it meant cutting funds for education and other government programs.  Forty percent said they would rather raise taxes to avoid such cuts.  Seven percent of voters said they do not have an opinion.

Furthermore, voters said the General Assembly should eliminate any government program that has not been shown to produce positive results by an 85 percent-9 percent margin.  Six percent said they do not have an opinion.

The Civitas Poll is the only monthly live-caller poll of critical issues facing North Carolina.  For more information on Civitas polling seewww.nccivitas.org/media/poll-results/.

Full text of questions:

“As you may know, North Carolina is facing an estimated $3.7 billion dollar state budget shortfall next year. Thinking about this, would you rather the Governor and state Legislature cut spending or raise your taxes?”

Cut Spending – 83%

Raise Taxes – 14%

Don’t Know – 2%

“As you may know, North Carolina is facing an estimated three point seven billion dollar state budget shortfall next year. Thinking about this, would you rather the Governor and state Legislature cut spending even if it meant cutting funds for education and other government programs, or raise your taxes to avoid these cuts?”

Cutting Funds for Education and Other Government Programs – 49%

Raise Taxes to Avoid Cuts – 40%

Don’t Know – 7%

“And should the North Carolina General Assembly eliminate any government program that has not been shown to produce results?”

 

Yes – 85%

No – 9%

Don’t Know – 6%

Click here for full results and crosstabs.

 

This poll of 600 registered voters in North Carolina was conducted December 15-16, 2010 by Public Opinion Strategies of Alexandria, Virginia.  This survey has a margin of error of +4.0% in 95 out of 100 cases.  To ensure a representative sample, interviews were conducted proportional to voter registration figures for each county in the state based on the most recent figures compiled by the State Board of Elections.

###

 

Summaries of 2010 North Carolina substantive legislation online

From Drafting Musings – a blog by Gerry Cohen, the Director of Bill Drafting for the North Carolina General Assembly since 1981. This blog presents some unofficial news from him.

Walker Reagan, the North Carolina General Assembly’s Research Division Director:

“I am pleased to announce that the Summaries of Substantive Ratified Legislation – 2010 is available on the General Assembly’s web site. The direct link is provided below. It can also be accessed from the General Assembly’s homepage.

Check out Gerry’s Blog at:

http://ncbilldrafting.wordpress.com/

Strengthen the NC School Funding System

Summary of Report by APA Associates

December 17, 2010

 

The General Assembly interim committee on Funding Formulas has met over the past two years and contracted with APA Associates to review the State’s funding formulas for K-12 education. The report was presented in early December 2010 to the committee.

 

APA was asked to: 1) Conduct a comprehensive review of the state education funding; 2) Evaluate the funding structure for education to determine whether it encourages efficient use of resources and determine if the funding system is too complex to be transparent and understandable,  and 3) Provide the strengths and weaknesses of the current education funding formulas.

APA conducted their research over the course of 7 months – from March to September of this year (2010) –  resulting in the following series of fiscally neutral modifications for consideration:

1. Combine all allotments that are distributed on the basis of total enrollment in to a single per student allotment and give LEAs flexibility to use the funding as needed.
2. Modify the Special Education Allotment by setting three different payment rates based on the severity of the disability and cost of each group.
3. Modify the Low-Wealth County Allotment to create two distinct allotments on a simple formula basis or create a single formula similar to other states.
4. Modify the At-Risk Student Allotment and the Disadvantaged Student Supplemental Fund Allotment by combining them and adjust distribution based on number of low-performing students or the number of Title I eligible students or eligible free and reduced lunch children.
5. Modify the Small County Supplemental fund to focus exclusively on size of the LEA not the county.
6. Change the way the Lottery Funds are distributed to support school buildings, to primarily wealth equalize paying for facilities.
7. Modify Teacher allotment to change the way the number of state-paid teachers (allotted to each district) are calculated. Recommend using a student-weighted count, not ADM. Weighting for categories such as Special Education, At-Risk, LEP, Gifted students, and CTE students should be considered in the weighting.
8. Modify Teacher Salary Schedule by adding other factors that impact teacher salary such as cost-of-living issues in various counties and incentives for teachers to work in districts that struggle to attract the best and brightest teachers.
9. Modify the way Teacher Allotment Salaries are applied-The current system might be changed if the state were to pay a total amount to each district to cover the cost of teachers based on the number of eligible teachers multiplied by the statewide average  teacher salary with some specific adjustments based on factors in recommendation # 8.
10. Modify the Teacher Salary Schedule Structure-Nationally changes are being considered for teacher salary schedules to include replacing education level with professional development plans, limiting experience, adding multiple responsibilities, leadership, days of work, student performance.
11. Create a “Foundation” Formula- Set a base cost with adjustments for student and district characteristics.

The above recommendations are separate and distinct from one another and could be implemented individually, or simultaneously.  The final recommendations in the list subsume others that precede them. Further work will need to be completed to ensure that the cost of implementation would be fiscally neutral. The State’s current system could incorporate some or all of the recommended changes listed in this report to allow it to continue to evolve and improve.

 

Follow the link below for the complete report posted on the Committee website:

APA REPORT

http://www.ncleg.net/documentsites/committees/JLSCPSFF/Final%20Report/APA_PSFFFinalReport.pdf

NC Fiscal Research Division Budget Forecast Summary

December 16, 2010

On December 15, Dr. Barry Boardman and Richard Bostic, fiscal analysts, presented to members of the General Assembly on the state of the NC Budget. Collections through the end of November are meeting the $7.5 billion, 2010-2011 budget target. In March 2010, fiscal staff had projected a growth of 3.5 percent, but this was revised downward and right now the growth is projected at 2.7 percent for 2010-2011. Growth projections for 2011-2012 are projected to reach 5 percent at this time, but it is still too early to count on that number. Unemployment in NC is still an issue. The job losses have ended, but there are less job opportunities available in the public and private sector. Private employment numbers are still down. Home sales are showing some improvement, but they are moving up and down. Eighty seven percent of the general fund is based on the following collections: personal income tax, sales tax, and corporate tax, all of which are showing growth numbers: Personal-3.0 percent, Sales-1.5 percent, and Corporate-3.6 percent. Last year personal income was down 2.8 percent, while the number so far this year has shown a modest increase of 0.8 percent and withholding is up 1 percent.

State Budget Gap – The Federal Recovery Funds are gone for 2011-2012 and nationally there are 35 states with projected budget gaps. Twenty-one states, including NC, will have a budget gap exceeding 10 percent ($3.7 billion). Nationally, in 2010, 15 states have budget gaps, while 43 of the states cut higher education, 34 states cut K-12, 29 states cut the disabled and elderly, and 11 states instated or increased Medicaid provider assessments. North Carolina closed a budget gap in 2009-2010 of $4.6 billion and will need to find $5.8 billion in 2010-2011. The budget gap is caused by the following funding losses and requirements: $2.4 billion budget adjustments, $1.6 billion ARRA (Federal)) funds, $1.2 billion in temporary taxes, $0.1 billion in fees, $0.5 billion in other availability. Estimated budget availability for 2010-2011 is $18.2 billion. The projected funding needed for the budget is $21.9 billion, leaving a gap of $3.7 billion. Education accounts for 57 percent of the budget in 2010-2011 ($10.8 billion) with Health and Human Services, and Justice receiving the next two largest percentages of state funding. The top three individual funding programs are K-12-37 percent, higher education-20 percent, and Medicaid-12 percent. Suggested budget changes in public schools include: adjust class sizes, eliminate optional spending (salary supplements and capital), and review the role of non-instructional staff. In addition to the spending requirements in the budget, there are other funding pressures for economic development, the rainy day fund, transportation, and debt. NC has borrowed more than $2.35 billion from the Federal government to pay unemployment claims and the interest on the borrowed funds begins in January 2011, with final payment due September 2011. These and other funding concerns will challenge the Republican majority with reduced revenue and funding requirements. The power point can be viewed by clicking the link below:

GENERAL FUND REVENUE AND BUDGET OUTLOOK FY  2011-2012

-or-

http://www.ncga.state.nc.us/fiscalresearch/frd_reports/frd_reports_pdfs/Session%20Briefings/2010_House%20Briefing_12-14-10FINAL.pdf

Lottery Money?

The NC Education Lottery collections are expected to be $17 million below projections. The lottery funds were used in 2010-2011 budget to fill some of the funding gap.

What will this mean for K-12 education, which requires lottery proceeds for teacher salaries and was being used for general fund revenue in the 2010-2011 budget?

Perhaps the  2010-2011 possible reversions from public schools may be short a portion of the $17 million lottery proceeds shortfall, to cover the K-12 operational budget requirements.

NC Education State Budget Cuts Proposed to the Governor (Updated)

November 27, 2010

http://www.ncpublicschools.org/newsroom/news/2010-11/20101122-01

NC DPI has posted their budget cuts recommended to Governor Perdue and they are deep in some areas, while other areas are cut significantly less, and some are completely untouched. In an effort to reach the 5 percent cut requested, 17 funding allotments to the districts, were cut they are as follows in order of size:

Teachers ($238,935,844), Teacher Assistants ($201,870,219), Instructional Support ($29,700,530), Non-instructional Support ($39,700,530), Children with Special  needs ($23,694,707), AT-Risk ($23,587,331), CTE months of employment ($18,875,990), School Building Administration ($15,450,498), Staff  Development ($12,555,269), Textbooks ($11,541,004), School Technology ($10,000,000), Mentor Pay ($9,214,190), Classroom Materials/Supplies ($9,090,176), Limited English ($7,653,681), Central Office ($5,372,529), Academically Gifted ($3,520,675), CTE Program Support ($969,722).

The 10 percent recommended cut increases some of these 17 cuts and adds another 7 funding allotment areas to be cut.  Six areas not recommend to be cut at any level are the following: DSSF, Child and Family Support Teams, Small Specialty High Schools, ADM Contingency Reserve, School Breakfast, Finance Officer Staff Development. DPI has also added in the funding cut of $304 million, LEA adjustment, to restore this discretionary cuts funding to the districts. The DPI recommended cuts are based on continuation funding allotments for 2011-2012, where funding for non-recurring cuts in 2009-2011 will be added back in to the public school’s funding (i.e. Textbooks) and certain allotments have built-in increases as part of the law.

Other cuts in the chart are for non-profits and programs where funding flows through DPI to various programs and organizations (i.e. More at Four), with cuts totaling $19,451,173, as part of the 5 percent reduction recommendation. DPI is recommending a $136,766 cut to the agency (0.32 percent) under the 5 percent cut and $2,560,484 (5.96 percent) under the 10 percent cut request. Potential job losses for teachers (5,313) and teacher assistants (13,259) were the only personnel noted in the DPI recommendations. This information is included in the spreadsheets provided through the DPI link listed at the top of this document.

Please remember these are only suggestions to the Governor as requested to assist her in preparing her budget recommendations to the 2011 General Assembly. There is a great deal of work to be done and the new Republican majority has said they plan to look at every line item and to determine how much funding is needed or even if the program is needed at all.

This is the beginning of what is expected to be a long budget winter for the new leadership in the NC House and Senate as they struggle with a serious $3.5 billion HOLE in the State budget