House Budget Plan Moves Closer to Governor’s Plan on Teacher Pay, Medicaid Reform

The North Carolina House released its budget plan for FY 2014-15, which would spend $21.09 billion. The total would be a 2.3 percent increase over the current fiscal year’s budget. The total also would be $98 million more than what was approved in last year’s biennial budget.

The House budget plan’s total spending falls about midway between Gov. McCrory’s plan ($20.99B) and the Senate’s proposal ($21.16B).

Teacher pay is once again front and center in the House budget, and the House budget resembles Gov. McCrory’s plan while distancing itself from the Senate’s plan. The House’s budget includes an increase in starting salaries for teachers to $33,000 and provides an overall pay raise to teachers averaging 5 percent.  There would be no trade-off with tenure to gain the raises, as included in the Senate budget.

Additional salary supplements for teachers with master’s degrees and professional credentials are funded in the House plan. Contrary to the Senate plan, teacher assistants would be fully funded as would McCrory’s “Career Pathways” pilot program for teacher pay. Furthermore, the House budget plan would not fund the merit pay program approved in last year’s budget.

Non-teaching state employees would receive a $1,000 pay increase, including UNC faculty and Community College employees, while State Health Plan premiums and benefits remain unchanged.

State retirees would receive a 1.44 percent cost of living increase in their pension payouts, requiring an additional $60.3 million.

Other notable items in the House budget proposal include:

K-12 Education

• $178 million to fund salary increases for teachers, including raising beginning teachers salaries to $33,000
• $65 million for raises to non-certified and central office personnel in K-12 education
• $1.5 million to fund raises for DPI personnel. The Senate budget cut funding for DPI by 30%, or $15 million
• $160 million reduction due to projected increased receipts from lottery funds
• $43 million in savings by foregoing effort to reduce grades 2 and 3 class sizes from 18 to 17, as originally included in budget passed last year
• $18.7 million to fund salary supplements for teachers with advanced degrees
• $10.2 million in savings by eliminating appropriation for merit pay program included in last year’s budget
• $9.8 million to finance “Career Pathways” pilot program which provides supplements to teachers in hard-to-staff subjects or who take on additional leadership roles

Community Colleges

• $15 million for “closing the skills gap” initiative to target health care and technical education programs
• $2.1 million in savings due to proposed tuition increase of 50 cents per credit hour

UNC System

• $4.8 million to help pay tuition costs for military vets
• $20.8 million additional “management flexibility reduction,” which reduces the appropriation to the UNC system, leaving the Board of Governors discretion on where to find the cuts

Health and Human Services

• $8 million reduction to be achieved by eliminating vacant positions still on the books
• $65 million reduction in state allocation to the state’s Pre-K program to be replaced by temporary federal grant funds and additional lottery receipts
• $14 million reduction in state funding for child care subsidy program, to be replaced with temporary reliance on federal funding
• $16.6 million reduction in expenditures this year due to the delayed opening of the new Broughton Hospital. This funding will be required in next year’s budget.
• $75.3 million to cover Medicaid shortfalls occurring in FY 2013-14
• $1 million for funding of Medicaid reform plan. House leaders have said they favor Gov. McCrory’s reform plan to rely on the Accountable Care Organization (ACO) model.

Natural & Economic Resources

• $1.8 million allocated for coal ash management
• $3.6 million in additional funding for the Biotechnology Center, bringing total state funding to $16.2 million
• $1 million in funding for The Support Center, formerly the Minority Support Center – a former member of Blueprint NC

Justice & Public Safety

• Transfers the State Bureau of Investigation from the Department of Justice to Department of Public Safety. This move is part of a broader effort to consolidate the state’s major law enforcement agencies into one department to generate savings and efficiencies.

General Government

• $400,000 to continue state support of Tryon Palace
• $202,000 to fund three new positions in the State Board of Elections to investigate voter fraud
• $500,000 to fund a study measuring the impact of state health insurance mandates
• $10 million to the Housing Trust Fund to create a new low-income housing loan program to assist in the development of low-income housing units in NC

Statewide Reserves

• $56.4 million is taken from the Reserve for Future Benefit Needs, eliminating the fund
• $22 million taken from the State Health Plan reserve, funds established to help cover part of the billions of unfunded liabilities for state retiree health benefits
• $117.8 million allocated to the Medicaid Risk Reserve to cover potential future shortfalls