State Budget Process Primer
In North Carolina, two-year budgets are created in odd years. The process begins early in an odd-numbered year, when the governor, as the director of the state budget, develops a set of spending priorities based on state agency requests and recommendations. This is presented to the General Assembly.
Legislators consider this roadmap and present their own budget priorities in the spring. The House and Senate alternate being the first chamber to introduce a budget plan for the biennium. A budget plan has two parts, a budget bill and a money report.
After the first chamber produces and passes a budget, the second may either take that bill up or introduce and pass its own budget bill. That is usually the case. Also usually, the first chamber does not pass the second chamber’s bill, so the differences between the two budgets are reconciled in a conference committee consisting of both House and Senate members. Finally, each chamber agrees to the conference budget and sends it to the governor.
The General Assembly’s budget is theoretically presented to the governor by the end of the fiscal year on June 30th, but in reality often later in the summer. The governor may sign the budget into law; ignore it, in which case it becomes law after 10 days; or veto it and send it back to the General Assembly.
In the second year of the biennium – in other words, in even years – the governor proposes budget adjustment recommendations. The legislative budget process then continues in much the same manner with both chambers making their own budget plans, but it is usually shorter, hence our General Assembly’s Long and Short Sessions.
2017-19 Biennium Budget
This is the Senate’s turn to create the first legislative biennium budget, so Senate leaders released their plan at midnight on Wednesday, May 10, 2017, less than 12 hours before the Senate Appropriations, Base Budget Committee met to discuss it. The full chamber passed the bill at 3:08AM on May 12. The Senate budget bill, SB257, and the money report form the budget. The specifics of the Senate’s Education budget are available at the link.
The House made the Appropriations bill available on the night of May 30, the money report and special provisions are also online, and it passed the Appropriations Committee late in the afternoon of May 31. The full chamber passed the bill at 12:29 AM on June 2. You can read the details of the House Education budget.
The Department of Public Instruction has a useful spreadsheet available for download that compares Gov. Cooper’s proposal with the Senate’s adopted budget, including comparisons of the salary and benefit packages and pay schedules for teachers and principals.
Here are the budget bill and the money report proposed by the conference committee and released just before midnight on Monday, June 19. The Senate held the first vote on the 983-page plan the very next day, and House leaders followed over the next two days. Although Gov. Cooper vetoed the bill, his veto was overridden on Wednesday, June 28.
You can read about the impact of the budget, and these are some high-/low-lights:
Compensation and benefits
- Average 3.3% teacher pay raise, with raises for almost every step and an increase & bonuses of $385 for 25+ years in 2017-18 and 2018-19
- Retirees will get 1% COLA (this is recurring, not one-time)
- Non-teaching state employees with receive $1,000 raises (not bonuses)
- Raises for assistant principals (avg 13.4% over 2 years) and principals (avg 8.6%). More here.
- Makes 3 teacher bonus programs permanent: Third Grade Read to Achieve Teacher Bonuses, Advanced Placement/International Baccalaureate/Cambridge AICE Teacher Bonuses, and the Career and Technical Education Teacher Bonuses
- Adds funding for $2,150 math performance bonuses for grades 4-8 teachers and the same for reading performance bonuses for grades 4-5 , to go to the top 25% statewide and within LEAs in 2017-18 only
- Eliminates retirement health benefits for state employees hired after Jan. 21, 2021. More here.
- Expands teacher assistant tuition assistance program in several counties.
- Funds reimbursing initial teacher license application fees for graduates of an approved NC educator preparation program
Per Pupil Spending
- Per pupil spending, adjusted for inflation, 6.7% below pre-Recession level
- Adds 3,525 new pre-K slots over 2 years, BUT 2/3 of the funding comes from a federal block grant (Temporary Assistance for Needy Families, or TANF) that is threatened by federal budget cuts
- Does not include funding for specials (Art/Music/PE/world language) teachers when class size restrictions take effect
- Adds $11.2M in non-recurring funds for textbooks
- Increases funding cap for children with disabilities to 12.75%
- Provides an additional $2.4 M recurring for the state’s digital learning plan
- Creates grants for LEAs to expand CTE programs to grades 6 and 7
- Adds $363M to rainy day fund
- Includes Raise the Age language & funding for ADAs
- Cuts personal income tax rate from 5.49% to 5.25% and corporate tax rate from 3% to 2.5% in 2019
- Does not cut Governor’s School or Wright School
- Restores middle-of-the-night Eastern NC STEM summer program cut made in Senate
- Cuts central office administration (LEAs) by 7.4% in first year and 11.6% in the second
- Allows K-3 class size flexibility pilot program ending in 2019-20 for dual language immersion classes and certain schools in Chapel Hill-Carrboro, CMS, Edgecombe, Pitt, Vance, and Washington counties
- Creates Education Savings Accounts for students with disabilities. This will take the form of a taxpayer-funded $9,000 debit card given directly to parents for educational expenses. Parents of students with serious disabilities can receive these funds even if their children are already receiving Disabilities Grants. Management may be contracted to a private financial management firm. Kindergartners will be eligible for this program.
- Adds $10M per year to voucher program until 2027-28 when it will plateau at $144.8M annually; also makes that funding part of the base budget going forward
- Creates a task force to study accountability within the voucher program, with guaranteed representation for: private schools that accept voucher students and associations that represent those schools; organizations “representing parental school choice, such as Parents for Educational Freedom in North Carolina”; independent organizations that evaluate K12 education; and public school leaders.
Department of Public Instruction/State Board of Education
- Cuts NCDPI by 13.9% over the next 2 years. More here.
- Gives the Superintendent of Public Instruction $1,000,000 to pay for an audit of NCDPI
- Gives the superintendent $700,000 for up to 10 new exempt positions within his office, with no approval from the State Board
- Also gives the superintendent $300,000 for his lawsuit against the State Board and…
- Prohibits the State Board from using any state funds for private counsel in litigation
- Terminated for political reasons the State Board’s Executive Director and employees of NCDPI. Three NCDPI staffers whose firings are written into the budget worked in their spare time on former superintendent’s campaign, and the State Board director represents the GOP-led Board at the legislature.
- Creates Joint Legislative Task Force on education funding reform, with 9 members appointed by each chamber’s leaders by Sept. 1, 2017, to complete a report with proposed legislation by Oct. 1, 2018
- Transfers Education and Workforce Innovation Commission from the governor’s office to NCDPI
- Establishes B-3 Interagency Council between NCDPI and the Department of Health and Human Services, including 2 positions, for “the development and implementation of an interagency plan for a coordinated system of early care, education, and child development services with a focus on program outcomes in satisfying the developmental and educational needs of all children from birth to eight years of age”
- Changes the Achievement School District’s name to the Innovative School District (ISD)
- Creates new, less generous form of the Teaching Fellows program that was axed in 2011. This plan favors STEM/special ed teachers and offers incentives for teaching in low-wealth schools. Contrast the original program with Gov. Cooper’s proposal and the legislative proposal that’s included in the budget here.
- Keeps school performance grade formula at 80% achievement, 20% growth, and switches to 10-point grading scale beginning with 2019-20 school year
The budget devised by House and Senate negotiators to reconcile the differences between their respective chamber plans was released late on Monday, June 27. The Senate passed the measure Wednesday, June 29, and the House on Friday, July 1. The budget comprises two documents: the conference budget bill and the conference money report.
Here are some highlights:
- Raises teacher salary by an average of 4.7%. The teacher salary schedule will restore annual step increases for teachers in years 0-14, at year 15 salary will stay the same for next 10 years.
- Raises average teacher salaries to over $50,000 in 2016-17 and $55,000 over the next three years.
- School administrators receive step increase and a 1.5% increase to base salaries
- Non-certified school personnel receive a 1.5% salary increase.
- School administrators and noncertified personnel will also receive a one-time 0.5% bonus.
- There is a pilot program for rewarding third grade teachers. Teachers who are in the top 25% in the state for EVAAS student growth index scores in reading will share $5 million. Teachers who are in the top 25% of their LEAs for the same score will share $5 million, and teachers who fall in both categories will receive both bonuses.
- The state’s voucher program will expand by an extra $10 million and 2,000 students every year until 2027-2028 when spending will plateau at $144.8 million per year. The budget also expands the percentage of money that can go to Kindergarten and 1st grade recipients, from 35% to 40% of what remains after prior recipients are enrolled.
- The school performance grade formula will not change from 80% test scores, 20% growth to 50/50 as the House proposed, and the 15-point scale will remain for the next three years.
- The budget codifies maximum class sizes for the earliest grades. The funded class size ratios are: Kindergarten 1:18; 1st grade 1:16; and 2nd and 3rd grade 1:17.
- A provision in the Senate budget that would have changed the schedules of year-round schools was omitted.
- The budget funds 260 new pre-K slots at a cost of $1.325 million. For reference, there are more than 7,000 children on the state’s pre-K waiting list. The governor and the House both proposed spending $4 million to fill 800 spots.
- The percentage of virtual charter school teachers who must live in state decreases from 90% to 80%. The budget also changes the way students who withdraw are counted under the withdrawal rate cap of 25%, creating four new exceptions. For instance a student who withdraws for “a family, personal, or medical reason” and who notifies the school would not count as a withdrawal under the cap.
The NC Senate released its $22.2 billion budget plan just before midnight on Tuesday, May 31. Chamber leaders were, as planned, able to pass the 187-page bill that features faster tax cuts than the House plan just over 48 hours later, at 12:05 Friday, June 3. Read the full measure here and the Appropriations Committee report on it here.
The Senate budget proposal includes teacher raises, which the News & Observer compared to the House plan:
HOW THE TEACHER PAY PLANS COMPARE
Starting salary: Remains at $35,000 in both the House and Senate plans
Five years of experience: 4.1 percent raise in House plan; 4.8 percent raise in Senate plan
10 years of experience: 5 percent raise in House plan; 6.25 percent raise in Senate plan
15 years of experience: 3.4 percent raise in House plan; 7.5 percent raise in Senate plan
20 years of experience: 3.2 percent raise in House plan; 3.8 percent raise in Senate plan
25 years of experience: 2 percent raise in House plan; no raise in Senate plan
The Senate budget provides $27.1 million to reduce second grade class size to 1:16 ratio, which is just one fewer student per classroom. At the same time, the upper chamber followed the House’s lead in making lottery money the sole source of non-instructional support funds. Senate budget writers also put almost double the money in the state’s rainy day fund, just about $600 million, while cutting DPI’s budget by $2.2 million and LEA central office funding by $5 million. In addition – or subtraction, really – the budget eliminates $10 million for school connectivity and $4.8 million for at-risk students. The Senate slightly increased textbook funding (to $9.25 million) but uses one-time, rather than recurring, funds to do so. All told, funding for K-12 public education would remain 8% below pre-Recession levels, adjusted for inflation.
Oddly, the Senate budget incorporates SB862’s “forward funding” for the voucher program into the budget itself. It creates the proposed reserve and funds it based on the program’s expansion of 2,000 additional students per year. NC Policy Watch calculates that would entail giving 112,892 vouchers out annually in just ten years. The reserve provision will cost $170 million more than current voucher funding plans would in just the next 5 years.
The House budget includes small teacher pay raises. They average 3% but are structured so that teachers in the middle of their careers get more than new or veteran teachers. Those teachers would get bonuses of $1,000, paid throughout the year, rather than salary increases. Those bonuses would however, count toward retirement. The main budget writer for the House, Rep. Nelson Dollar (R-Wake) stated that “the House’s goal is to see us be at or above the average teacher salary for the Southeast.” This is a lower goal than seeking to reach the national average, and we are currently 9th out of the 12 Southeastern states.
The NCAE has more highlights of the education budget:
- Provides $46.8 million for enrollment growth of nearly 5,900 students.
- Replaces $57.3 million in General Fund dollars with lottery money to pay for non-instructional support personnel. This area is now fully-supported by lottery funds, which should be used to enhance education funding, not supplant current General Fund spending on schools.
- Provides $25 million for literacy coaches to support Read to Achieve, but would mean elimination of the first-grade class size reduction passed last year and reduction in reading camp funds.
- Provides $11.6 million in one-time funds for textbooks and digital materials. We would remain about 34 percent below pre-recession levels.
- Provides $5 million in one-time funds for instructional supplies. We would remain about 50 percent below pre-recession levels.
- Provides $1.3 million to reinstate funding for salary supplements to instructional coaches who have earned National Board Certification.
- Provides $5.8 million in additional private school voucher funds for Special Education Scholarship grants.
- Provides $1.1 million for a differentiated pay pilot similar to Project LIFT in Charlotte.
- Provides $4.3 million for $50 dollar bonuses for Advanced Placement/International Baccalaureate teachers for each student who scores highly on exams or CTE teachers whose students pass industry certifications.
- Provides $2 million in the university budget for a N.C. Scholarship for Teacher Advancement and Retention program similar to the N.C. Teaching Fellows program previously eliminated.
- Modifies A-F letter grading system of schools from 80 percent performance and 20 percent growth to 50-50. It would also keep the 15-point system in place.
- In addition, Health & Human Services budget writers approved spending $4 million more to fund an additional 800 pre-K slots.
You can also see NC DPI’s comparison of the governor’s proposal and the House budget here.
2016-17 Budget Proposals
The State Board of Education released a set of budget priorities in March 2016 that aim to make NC number one for teacher pay in the Southeast. Currently, we are 9th out of the 12 states.
Gov. McCrory’s budget proposal, released in April, is too modest to achieve that. It includes some teacher pay raises, however those largely come in the form of one-time bonuses for teachers rather than permanent pay raises. It also continues per pupil funding below pre-Recession levels when adjusted for inflation.
The NC House Education Appropriations subcommittee released its budget report and special provisions proposal on May 12, 2016. It does not include funding for teacher pay increases as the writers say they will add that to the budget further along in the process. It increases reliance on lottery funds rather than paying expenses out of the General Fund. It also cuts funds for smaller first grade class sizes in order to add money for literacy coaches, and the extra money it provides for textbooks and digital learning resources is in the form of one-time only payments.
The Senate budget proposal, released just before midnight on Tuesday May 31, is described above.
Don’t forget, you can keep up with the status of all of the bills that affect our public schools here!
2015-17 Biennium Budget
After enacting two continuing budget resolutions, House and Senate leaders reached a final budget agreement on September 18, shortly after midnight. Governor McCrory signed the budget bill (House 97) later the same day. The budget includes a total spending amount of $21.735 billion, which is a 3.1 percent increase over the previous budget.
Over all the budgets keeps recession-era levels of investment in education while our student population and costs are increasing. Further cuts to state revenue were also implemented this session.
Earning potential is low for teachers because their salaries are capped at about $50,000 (an increase of only $15,000 over their entire career). The national average ending salary, according to the National Council on Teacher Quality is around $76,000.
- Read our fact sheet, The Impact of the 2015-17 State Budget or our Quick Facts for additional information and links to other budget resources.
- Access a presentation from the General Assembly’s Fiscal Research Division to understand how public schools are funded.
- The NC DPI presented a list of the 2015 Relevant Laws Passed. (Here)
- Historical per pupil funding: 2008-09 to 2015-16. (Here)
|Teacher Pay||25th in U.S.||41st in U.S.|
|Teacher Career Status||Yes||No (except for those who have already earned it)|
|Salary Supplement for Master’s Degree||Yes||No|
|NC Teaching Fellows Program||Yes||No|
|Class Size Capped (grades 4-12)||Yes||No|
|Per Pupil Expenditure||$5,896||$5,744|
|Total Education Budget||$8.706 B||$8.878 B|
The new biennial budget highlights are below (see budget bill here). It is also helpful to review the results of the 2013-15 budget below to better understand the national rankings assigned NC for teacher pay and per pupil funding.
- Increases school vouchers by $6.8 million in 2015-16 and $14 million in 2016-17, a total increase of 129% over 2014-15 funding level. Total dollars available for 2015-16 is $17.6 million and $24.8 million for 2016-17.
- New beginning teachers will be paid $35,000 (an increase from $33,000).
- All State employees/school personnel receive a one-time $750 bonus (includes central office staff). The salary steps (tiers) are the same as 2014-15 and will be funded for teachers and principals/assistant principals.
- There is no change to master’s and other advanced degree pay. If you had a master’s or other advanced degree or had completed one class prior to August 1, 2013, you are grandfathered under rules in place prior to that date. Master’s and other advanced degree pay will always be allowed if your job requires it.
- Teacher Assistants are funded at the 2014-15 levels, but funds must be used for teacher assistants only with all flexibility for the funds being eliminated effective this school year. Funds 15,300 TA positions, about 7,000 less than 2008.
- Teacher support will now be funded from general funds (not lottery funds) and non-instructional support personnel funded from lottery funds (no longer from general funds).
- Class size for first grade classes is reduced to 1:16 for 2016-17; an additional $27 million is allocated for additional teachers.
- Textbook and digital resources increased by $21.8 million for 2015-16 and by $31 million for next year (currently funded at ~$24 million).
- Funds driver’s education for 2015-2016 (general fund) and 2016-2017 (civil penalty and forfeiture fund). School districts can charge up to $65 per student to fund driver’s education. School districts must reduce fee for students who prove economic hardship.
- A decrease of 5,400 Pre-K slots since 2008; a waiting list remains.
2013-15 Biennium Budget
The passage of the 2013-15 state budget dealt a powerful and immediate blow to North Carolina’s public schools. It is helpful to see the funding levels and staff cuts made two years ago as you consider the new biennial budget’s allocations. Some increases this year are restoring monies lost two years ago and many funding cuts have been restored. Some of the key actions are below.
- Teacher career status was terminated by legislators but a June 2015 ruling from the NC Appeals Court said that ending teacher career status for educators who have already earned that status was unconstitutional. Career status protects teachers from being fired arbitrarily (without due process). Yet, teachers who have yet to earn career status are effectively temporary employees and are given only one-year contracts. Beginning in 2016, teachers without career status can be offered one, three or four-year contracts.
- Caps annual teacher salaries at $50,000. A certified teacher with a bachelor’s degree would earn $50,000 at 25 years of service. The U.S. average public school teacher salary is $58,000.
- Eliminated 5,184.5 teachers and 272 support personnel (guidance counselors, psychologists, social workers, etc.) in 2013-14.
- Cut teacher assistant positions: 3,850 positions in 2013-14 and an additional 3,300 in 2014-15.