News: CJ Exclusives

Easley Has Plans for New Money

Education budget writers will have new money to spend when the General Assembly opens its short session May 9. Increased tax revenue — and the first fruits of the state’s new education lottery — would appear to give lawmakers breathing room in revising the second year of the state’s two-year budget passed last session.

But Gov. Mike Easley already has plans for most of that money, and he usually gets his way with the current legislative leadership.

The centerpiece of the governor’s agenda is his plan to raise teacher salaries by about 5 percent. In November, after the budget had been passed with a modest 0.35 percent raise in the teacher pay scale, Easley exercised the special authority written into the budget to shift $85 million into teachers’ salaries, giving all state-paid teachers an extra $75 a month for the remaining seven months of the school year. At the time, he announced that this was the first step in a five-year plan to raise teachers’ salaries in North Carolina to the national average.

But this year’s installment on the plan will be more expensive. The state will need to hire more than 1,800 teachers this year just to handle the projected increase in student enrollment. Add to that the 884 new hires the State School Board has recommended in order to provide full-time mentors, and another 932 to provide increased planning time, and new money will have to be found for up to 3,620 new teachers, in addition to the raises.

Despite the concerns over cost, most legislators contacted for this story expressed the view that raising teacher salaries is an important step in attracting and keeping a competent, qualified teacher workforce. Expect the salary increase, along with more money for the governor’s signature More at Four pre-school plan, to be approved.

Inspired by the prospect of new money, the State Board of Education recently weighed in with a costly supplemental budget request‚ totaling $473 million. The board’s other top priorities are to restore $44 million in discretionary cuts, which last year’s budget imposed on local districts, $11 million for high school reform, $4 million for reading coaches, and more than $5 million to help students with limited proficiency in English. The board made a point of aligning its monetary requests with programs the governor is known to support, so many of the top priority items stand a good chance of becoming law.

Relief from the state-mandated discretionary cuts is also a top priority for local school boards. Their lobbyists also will seek restoration of the sales tax rebate, which districts had been receiving until it was eliminated by the legislature last year. While there is broad support among legislators for these efforts, it’s not yet clear how the governor will come down on the issue.

Another issue of concern to local boards is the formula for distributing the school construction portion of lottery funds, which rewards districts with high tax rates. For example, under the current law, high-tax Durham County is scheduled to receive almost twice as much lottery money for construction ($4.57 million) as fast-growing, low-tax Union County ($2.33 million), despite having virtually the same number of students. Several legislators are eager to reconsider the funding formula.

One idea that ranks as a long shot, at least for now, is a statewide bond for school construction that would be repaid using lottery money. The Department of Public Instruction is due to release a study that could show a backlog of construction needs totaling as much as $14 billion.

In the background of all discussions about schools and money are the ramifications of the Leandro school-funding equity case. Judge Howard Manning recently threatened to close chronically low-performing high schools, and no one yet knows what he might require from the legislature in terms of school funding.

However, not all the controversy this session will involve money. A provision that was slipped into last year’s budget bill requiring that every child starting school this year receive a full eye exam has caused consternation for lawmakers. Legislators contacted for this story agreed that no child should be kept out of school because of lack of an eye exam, and all indicated that the law needs another look. Expect that by the time the legislature reconvenes in May, a deal to rescind or drastically revamp this law will have been made.

Another returning policy issue involves rehiring teachers who have retired. Educators have been trying for years to get the state to allow retired teachers to be rehired on a case-by-case basis to address the perceived teacher shortage. However, the IRS has warned that allowing immediate rehires could jeopardize the special tax status of the state employees’ retirement system. Current policy calls for a six-month break in service before rehiring, and some lawmakers are considering shortening that time period to as little as two months, as is done in some other states.

One issue that probably won’t make it onto the agenda is the school calendar law. Local school districts lost most of their power to set the school calendar in 2004, and districts now have a full year’s experience with the state-mandated start and end dates. Some local boards will seek changes, but the same interests (travel & tourism industry, real estate) that won passage of the law two years ago still hold sway over the leadership of both houses.

Jim Stegall is a contributing editor for Carolina Journal.