Lawmakers retreat from investing in early childhood in final state budget

Despite the fact that almost three-quarters of North Carolina voters support expanding NC Pre-K and Smart Start, state lawmakers continued a pattern of underinvestment in key early childhood education services in the state budget they passed this year. NC Pre-K is a proven program which helps prepare children for later success in life, yet lawmakers failed to keep up with the needs of young children in the budget. They provided a one-time $5 million increase for NC Pre-K, but these are not recurring dollars and most of the money goes to increase teacher salaries. While improving teacher pay is critical, there is little left over to provide additional Pre-K slots. This education program currently is not able to serve thousands of children on a waiting list and thousands more who would otherwise be eligible. This is just one example of the many trade-offs state legislators made due to their choice to prioritize tax cuts primarily for those at the top over needed investments in our children, families and workforce.

Child care subsidies, another effective program which helps lower income families afford quality child care and serves as a work support, also took a hit in this year’s budget. Like NC Pre-K, the child care subsidy program helps make sure young children have access to quality early education, and it also has a waiting list of thousands. Lawmakers did little to address the shortage of services and actually made it harder for some low-income families to access this support. They lowered the income eligibility requirements for children under five years old to 200 percent of the federal poverty level (about $39,000 for a family of three). The program used to be available to young children in families earning up to 75 percent of the state median income (about $42,000 for a family of three). The changes were even worse for school-age children using subsidies for after school care. One positive change lawmakers made in this year’s budget was to how much child care providers are reimbursed for serving children who get subsidies, bringing the cost per child closer to the market rate and helping providers recoup more of their expenses. However, providers still are not paid the full market rate, making it hard for many child care settings to accept children who receive subsidies.

One little-known change lawmakers made was to shift financial support for NC Pre-K and the Child Care Subsidy Program from state funding to federal and lottery funding. This budget gimmick raises serious questions about the stability of these programs and their ability to meet future needs.

In addition to underinvestment in this year’s budget, lawmakers failed to restore a $10 million cut to the state’s Children’s Developmental Services Agencies and opted not to overturn a directive to eliminate 160 jobs made as part of last year’s budget agreement. These agencies provide physical therapy and speech therapy and other services for young children with special needs. Lawmakers did make a change to allow the Department of Health and Human Services to decide how to implement the cuts, removing the previous directive to close four of sixteen offices. However these strapped programs aren’t able to meet current needs of children with developmental delays and are now forced to shave even more from an already tight budget.

Despite legislators’ lagging commitments to early education, business leaders in North Carolina have expressed support for deeper investments and an understanding of the evidence: investments in early education programs like Pre-K and Smart Start mean more children are ready when they start kindergarten and are successful readers by the third grade. These programs also provide more bang for the buck than many other types of spending. For example, every dollar invested in early education produces a 7 to 10 percent return through increased achievement and productivity. Further, because investments provide wages to early care workers and allow more parents to work, about $12.5 billion is generated annually from the early care and education industry for North Carolina’s economy. The evidence is clear that investing in early education has great potential to improve the economic conditions in North Carolina, far more so than lopsided tax cuts, which only serve to hamper our ability to invest in the real engines of our economy.

This is the second post in a series that takes a detailed look at the final budget passed by North Carolina lawmakers during the 2014 legislative session. The first post provided an overview and examined how North Carolina’s investments post-recession have not bounced back nearly as much when compared to previous recessions. See the rest of the series here.