McCrory administration asks schools to submit plans for $173 million budget cut

Request comes despite large state surplus and big unmet education needs

After years of complaints of paltry spending on public education in North Carolina, public school leaders say they may soon be facing another round of devastating cuts.

School officials say a late August memo from Gov. Pat McCrory’s chief budget officer signals that all state departments, including the public schools, must soon present options for a 2 percent cut in their 2017-2019 budget, roughly a $173 million loss for North Carolina schools.

All departments are required to present their proposals for cuts to the state budget office by the end of this month, according to the memo from Andrew Heath, state budget director for McCrory.

“The budget development process is an opportunity to review the use of public funds entrusted to the state,” wrote Heath in the memo. “Agencies are encouraged to look for opportunities to improve program delivery and agency operational efficiency.”

The reduction, according to the state’s top school leaders, could have drastic implications for the state’s teaching force, classroom supplies and teaching assistants, as well as funding for special needs and at-risk children, low-wealth counties, transportation and career and technical education—practically every major component of the state’s public school system.

If the cut was made solely to the teaching force, the state would be forced to jettison nearly 3,000 teaching positions, according to one proposal before the State Board of Education. Other proposals could spread the reduction across line items, or direct local school systems to find equivalent reductions in their local budget.

For the state’s largest districts, Wake County Public School System and Charlotte-Mecklenburg Schools, it could amount to staggering losses of $17.8 million and $16.6 million, respectively.

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Additionally, the budget directive from McCrory’s office comes at a surprising time, school officials say, pointing out the state reported expecting a $425 million surplus this year.

“Why do we have to make cuts when we know we need to fund public education in our state?” said June Atkinson, superintendent of the N.C. Department of Public Instruction, in an interview with Policy Watch this week.

North Carolina is currently ranked 44th in the nation in per-pupil spending, and school advocates like Atkinson have long argued that, even with increased North Carolina spending on schools in recent years, the state’s school budget has failed to keep pace with schools’ growth and inflation.

“Based on my information, over 38 years, it is very unusual in a year that we are not facing a budget deficit that we are asked to make a cut,” DPI Finance Director Philip Price told Policy Watch.

Heath could not be reached for a phone interview this week, citing the ongoing cleanup from Hurricane Matthew, but he told Policy Watch in an email that the Aug. 26 memo is simply following “longstanding and prudent budget development process employed by” his Office of State Budget Management, or OSBM.

Heath added in the email that he would “anticipate continued education budget increases.” However, the memo issued to all departments indicates that any expansion requests in their budget proposals must be combined with reductions to create a revenue neutral budget or savings.

That means any additional funding provided to the schools for a specific purpose must be offset by cuts elsewhere in the schools’ budget plan.

Heath’s memo adds that the request marks a “starting point” for creation of McCrory’s 2017-2019 budget recommendations to the N.C. General Assembly. It’s worth noting that legislative leaders have frequently discarded many of the governor’s proposals in developing their own final budget.

Still, Mark Jewell, president of the N.C. Association of Educators (NCAE), which represents the state’s teachers in Raleigh, blasted the governor’s office this week over the news.

“Our school districts are actually starving now,” Jewell said. “This will only inflict further damage to those who are in the classroom.”

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Despite the enormous implications for the state’s schools, the behind-the-scenes budget wrangling has passed largely without public attention in recent weeks.

That may be partially because members of the N.C. State Board of Education were expected to consider proposals for the cuts on Oct. 5, but a prepared presentation was removed from the agenda shortly before the meeting.

Price, DPI’s finance director, tells Policy Watch that’s because he was told that the directive from McCrory’s office may not apply to the state’s schools, indicating there had been a “change of heart.”

However, after the meeting, Price said he was told that the reduction requirement would indeed apply to the schools. This week, Price said it now seems like shelving the presentation was a “ploy” to avoid a public discussion of the matter with the election in a matter of weeks.

Price said he can’t recall who asked him to drop the presentation from the Oct. 5 agenda. However, that meeting was led by the board’s vice chairman, A.L. “Buddy” Collins, a GOP appointee of McCrory. Policy Watch covered Collins’ controversial appointment in 2013. Collins did not respond to a Policy Watch interview request this week.

Nevertheless, school leaders say they expect to convene a special session of the state board to discuss the budget issue in the coming weeks.

Among the choices, school board members could confine the cuts to a single spending category or spread it across the department’s spending plan. Either would have major ramifications for the state’s educators, forcing the state to possibly shed thousands of teaching positions, career and technical educators or teacher assistants.

Both proposals would also drain millions from funds designated to benefit at-risk students, special needs children and low-wealth counties in the state, according to Price.

Atkinson said she believes axing teaching positions will ultimately be one of the final options, pointing out state leaders have opted to weather past cuts by asking local districts to find the savings.

“We let local school districts decide where to make the cuts rather than making the decision for 115 school districts at one time,” Atkinson said. “That would probably be an option that would be more accepted.”

Atkinson added that state board members could also decline to put forth any cuts in preparing their budget, which would require vetting by the governor’s office and the N.C. General Assembly anyway before approval.

“In the past, the board has said, ‘We’re sorry, we can’t make this cut because the needs are too great at this time,’” said Atkinson. “But I can’t predict what the state board will do.”

For his part, Price said he’s confused by the request, given the state’s recent surplus, and disputes assertions from the governor’s office that this is a “routine event.”

“To come into this year and outline a cut, certainly they’re not telling me that the tax changes they created last year are going to create a deficit, are they?” said Price. “It’s very odd.”

In an email to Policy Watch, Heath said that’s not the case.

“Under Governor McCrory and in prior administrations, OSBM has consistently asked for agencies to identify efficiencies so that we are responsibly spending taxpayer money,” wrote Heath. “The 8/26 memo is reflective of sound budget practice which has enabled Governor McCrory to target spending in priority areas such as education, teacher pay and savings reserve. Given that North Carolina has one of the best, if not the best, performing economies in the nation and the world, the 8/26 memo was not made with the expectation that the state will be facing a deficit.”

State budget leaders were expected to meet with departments during September and early October, at which time top state officials would present their key budget priorities. Atkinson said it will be her job to lobby for the schools’ needs.

That will be key, says NCAE President Jewell, because the state’s public schools “just can’t sustain any more cuts.”

“This is continuing to be an administration that wants to focus on austerity rather than move us forward,” said Jewell. “It’s very troublesome to look at a proposal that would take additional resources.”