Democrats challenge education spending, substantive law changes as House GOP rolls out proposed budget

House Democrats during a committee meeting Tuesday questioned the lack of full funding for programs needed to comply with a consent order in the long-running court case on public education.  

The questions arose as the House budget committee went through details of the $25.7 billion proposal unveiled by the body’s Republican majority. More debate is expected Wednesday and Thursday before the House votes on the plan. The Senate has already passed a version of the budget. House and Senate negotiators will work on a compromise. 

The House budget provides raises for teachers, but not much else from the court-mandated education action plan. 

Superior Court Judge David Lee signed the consent order last year in the court case over education funding and quality. The lawsuit, Leandro vs. North Carolina, was filed in 1994 when a handful of low-wealth school districts sued the state. Large school districts later intervened in the suit.  

The state Supreme Court in 1997 ruled that the state’s schoolchildren have the constitutional right to a “sound basic education.” Most proposed remedies cover the entire state.  

Rep. Julie von Haefen, a Wake County Democrat, said the legislature’s fiscal staff estimated the cost of compliance with the court order at $650 million in the first year and $850 million in the second year. 

“This money doesn’t even come close to doing what the first two years of the remedial plan required,” she said in an interview.  

Von Haefen filed a bill that included items from the remedial plan. “Most of them are either not included in this budget or not funded at the that are required by the remedial plan.” 

Legislators have resisted directives from judges on state education spending. 

In response to questions about Leandro, State Rep. Jeff Elmore, a North Wilkesboro Republican, raised a question about separation of powers.  

Senate leader Phil Berger’s office posted a statement last year saying the judge was signing the consent order “without any input or coordination whatsoever from the only branch of government authorized to appropriate funds.” 

Flush with funds

One explanation unavailable to GOP lawmakers in the debate over Leandro and other potential spending priorities is a lack of resources. North Carolina is in strong financial shape. The state accumulated more than $6 billion in unspent money by the beginning of this year, largely because Republican legislative leaders and Democratic Gov. Roy Cooper failed to agree on a comprehensive state budget for two years. 

In mid-June, economists in the state budget office and the legislature projected the state will take in $6.5 billion more than expected in tax revenue through fiscal year 2023. The federal American Rescue Plan is pumping more than $4 billion into the state.  

The House budget includes corporate income tax and personal income tax deductions. The corporate income tax rate would drop from 2.5% to 2.25% in 2024 and to 1.99% in 2025. The personal income tax rate would drop next year from 5.25% to 4.99%. 

The House budget includes average teacher raises of 5.5% over two years, with the larger increases going to veteran teachers.  

The House is using some of the American Rescue Plan money to allow 1,000 more people with intellectual or developmental disabilities to use a special Medicaid program that allows them to live outside institutions. The current waiting list for services, however, is estimated at around 15,000.

The additional slots in the Medicaid program are an example of the expanded health and human services spending in the House proposal that comes from using one-time federal money.  

The House is creating a $274.8 million home and community-based services fund with the help of federal money, Policy Watch reported.  

There’s no guarantee those programs will continue when the federal money runs out, said Rep. Wayne Sasser, an Albemarle Republican and a chairman of the Health and Human Services budget subcommittee. “Future legislatures will have to determine whether there is funding to continue those programs,” he said.  

A bevy of substantive law changes

Though Democrats questioned spending priorities, many of the proposed changes on Tuesday came from Republicans requesting language clarifications or changes to state policies.  

The budget is full of so-called “special provisions” that are unconnected to spending. One provision would require local school districts to set up advisory committees to hear complaints about classroom materials.  

Another would make the virtual public schools operating in the state permanent. The two online schools started as a pilot project. 

Rep. Susan Fisher, an Asheville Democrat, asked why there is “page after page of policy in this budget.”

Rep. John Torbett, a Gaston County Republican and a chairman of the education budget committee, said items each chamber thinks are important are being embedded in the budget.  

People who use Medicaid, the government health insurance plan for some low-income residents, would pay more out of pocket when they see doctors. Starting next July, Medicaid copayments would go up to $4, an increase of $1. The increase would save the state $5 million.  

Rep. Larry Potts, a Lexington Republican who is one of the health and human services budget subcommittee chairmen, said the increase was used to help hit budget targets.  

Rep. Gale Adcock, a Wake County Democrat, said she’d prefer the $5 million come from somewhere else.  “I can only imagine the tough decisions you had to make,” she said. “This is an unfortunate one.”