Several weeks ago, the N.C. House rolled out their preliminary options for balancing the biennium budget. Included in their options were sweeping structural and monetary changes for a significant number of state programs, including some common-sense reforms for Smart Start, North Carolina’s non-profit childcare vehicle.
The original proposal for Smart Start included a series of important changes to Smart Start’s administrative structure—a system renowned for encumbering overhead— by reducing overhead expenditures and allowing the program to be more locally funded.
Since its debut, however, the Smart Start reform package has incrementally lost most of the arrows in its quiver, leaving the final product a shell of its former self. Noteworthy reforms not making it into the House’s final budget plan include a change that would more strictly limit Smart Start administrative expenses, and a mandate for Smart Start to double its reliance on private support.
The House’s original proposal made positive in-roads toward curbing excessive administrative costs from the Smart Start organization—including removing childcare subsidy funds from counting under Smart Start’s eight percent administrative formula. That provision would have prevented millions of dollars of critical funding from being tied up in administrative costs, allowing more funding to be delivered to needy children. This provision was cut from the final version of the House’s budget bill.
Smart Start routinely receives money from the state government and returns that money to the state government’s Departments of Social Services (DSS) to administer childcare subsidies, enabling Smart Start to take more than eight percent of that funding as overhead. The local DSS administers identical childcare subsidies at a considerably lower administrative rate (5.33 percent compared to Smart Start’s 8 percent).
Curiously, while Smart Start’s eight percent administrative formula was maintained, the county Departments of Social Services had their administrative budget reduced from 5 to 4 percent, saving over $3 million.
Another provision in the original House budget proposal included increasing Smart Start’s private matching component by 10 percent. Currently, Smart Start gets 90 percent of their funding from the government and 10 percent from private donations. The original proposal would have increased the private donations match to 20 percent of the Smart Start budget, allowing Smart Start to become less reliant on the government and get local organizations more involved in its funding. The final budget proposal, however, reduced the private matching increase down to just 13 percent.
A seemingly positive reform that was included in the House’s final budget is a salary cap of state funding of $80,000 for North Carolina Partnership for Children administrators and $60,000 for Local Partnership administrators. However, Smart Start administrators will still be able to supplement their funding with private contributions, making it relatively easy for these salary caps to be circumvented.
Overall Smart Start would receive a 20 percent reduction in funding under the final House budget plan, a reduction amounting to about $36 million for FY11-12.
From the time I was first elected to the N C Senate in Nov. 1994
based upon my experience of a career spent in the executive branch of N C state government primarly in the dept of human resouces I opposed this strictly political program whic at that time was the brainchild of Governor Hunt to dilute and hide from public scrutiny an extension of the Democrat County Key Political Patronage System developed and implemented by Gov. Hunt
and advisors during his term as Lt. Governor. Smart Start in my
opinion took the system to an entirely new level to include the minority party members including some legislators willing to take the Democrat political patronage system to a new low down to the precinct levelto bring into the fold Rinos.
With all due respect, recognizing that Civitas certainly has the right to promote its own agenda on its own website, the Smart Start system seems to be mischaracterized and inaccurately described in this article. In the interest of full disclosure and to bolster the accuracy of my allegations, I have been affiliated with Smart Start for 17 years, first as a volunteer, then as a paid staff member.
According to Mr. Henson¸ “The original proposal for Smart Start included a series of important changes to Smart Start’s administrative structure—a system renowned for encumbering overhead— by reducing overhead expenditures and allowing the program to be more locally funded.” Furthermore, he writes, “The House’s original proposal made positive in-roads toward curbing excessive administrative costs from the Smart Start organization…”
Smart Start, having been replicated across the country and having received national awards, research validation, and consistently clean audits, is certainly ‘renowned’ but there’s little evidence that it is because of its ‘encumbering overhead’ or ‘excessive administrative costs.’ In fact, the Office of the State Auditor conducted a comprehensive performance audit (in addition to biannual compliance and financial audits) which concluded that Smart Start’s operations are both efficient and effective. The overhead is fixed at 8%; 92 cents on every dollar is spent on services. While the actual overhead varies from service-to-service and county-to-county, the cumulative cap is still a reasonable 8%.
Mr. Henson also states that by reducing overhead expenditures, an increase in local funding would then be allowed. There is currently no prohibition on local funding. Smart Start is required to raise a minimum of a 10% match. Local contributions are already being maximized.
And then, “Smart Start routinely receives money from the state government and returns that money to the state government’s Departments of Social Services (DSS) to administer childcare subsidies, enabling Smart Start to take more than eight percent of that funding as overhead. The local DSS administers identical childcare subsidies at a considerably lower administrative rate (5.33 percent compared to Smart Start’s 8 percent).”
The subsidy administration models vary. In some counties, subsidy is operated by Smart Start. Other local partnerships might find it most efficient to contract with another community service provider. In many, the local purchasing agency – which might be the DSS or another contractor – receives the funds and incurs the overhead. The services are not necessarily identical. A few real-life exceptions are the single father pursuing his teaching degree full time or the single mom who works while going to school and takes more than two years to complete her nursing degree. Neither of these families is served by DSS, but both are inarguably worthy of assistance.
In most counties, Smart Start and DSS work in tandem to close gaps and maximize diminishing resources. Astute DSS administrators are acutely aware that Smart Start doesn’t compete with, but instead it supplements their operations to sustain employment and elevate the quality of early education. Many would also argue that if DSS had been fulfilling the need, there would have been no need for Smart Start to begin with.
Frankly, despite all the indisputable evidence that validates the value of Smart Start, it seems that Mr. Henson (and now I see, Mr. Clark) wants to provoke that debate. If that’s true, he should revisit the pre-Smart Start data on early health, child care quality and school achievement and try to make the case. And in the process, try to justify to hard-working parents why the security of their families’ economies and children’s success aren’t worth ¾ of a cent. According to the public polling I’ve seen, the majority of North Carolinians would gladly make that small sacrifice to invest in our future.