June 19, 2015 Legislative Update

In This Issue…

  1. Senate Rewrites House Budget
  2. Agreement Reached on Collection of Teacher Attrition Data

Senate Rewrites House Budget

Next Stop – Conference Committee with House

On a near party-line vote, the Senate approved a rewrite of H97, 2015 Appropriations Act, in separate votes on June 17 and 18. The accompanying money report can be seen here.

The Senate’s budget eclipsed the House’s version by more than 200 pages, because the Senate included sweeping policy changes; some of which were not vetted in any committee meetings. Those policy changes include tax reforms, H117, NC Competes Actandthe Senate’s version of Medicaid reform.

The Senate budget may be larger in terms of policy changes, but it is smaller in terms of spending. The $21.5 billion Senate budget – which increases spending by only about 2 percent – departs from the way the House addressed the projected $400 million surplus – by increasing spending by about 4.5 percent. While teachers and state employees would get pay raises, they would be targeted raises rather than across-the-board. Raises for educators in the Senate budget come at a big cost – the loss of more teacher assistants, almost 2/3 of the current number. The $57.5 million dollar shift will cost 5,200 TA slots in the 15-16 school year and another 8,500 slots in the 16-17 school year. Senators stated that their aim is to have more highly qualified teachers teaching as many students as possible. Others stated that LEAs were provided the funding for TAs, but shifted the funds for other purposes. If the Senate’s version prevails, the funding for teachers will be harder to shift toward other purposes. Consequently, LEAs objections about teacher assistant funding may be as much about losing this pot of money and its associated flexibility as it is about the loss of actual teacher assistant jobs.

The Senate budgeted for significant investments to be made into North Carolina’s Rainy Day Fund and into the Repairs and Renovations Fund. Some of those surplus dollars will be returned to some taxpayers because of the tax changes included in the budget. Other taxpayers, such as consumers who use some of the new services to which a sales tax will be applied, will pay more. Nonprofit organizations have begun to voice their objections to the roll-back of sales tax exemptions included in the tax reforms. While profitable, nonprofit hospitals are the target of that measure, other nonprofits are swept into those changes. WRAL-TV has a story on that here.

Proposed Senate Educators’ and Administrators’ Salary Schedules and Compensation Changes

The Senate budget contained salary schedules that reflected an average 4 percent increase for educators. Those schedules are included with this update and can be seen here. Concerns were raised about the apparent lack of increase for educators at the top end of the pay scale – 25+. The Senate provides those educators with a $1000 bonus.

Please note – the House and Senate budgets are very  different and must be negotiated in a Conference Committee – a process expected to last many weeks.  This information is provided simply for PENC members’ reference. While PENC is optimistic about salary increases for educators, we cannot predict what they will be.

What the salary schedules do not reflect is the change in funding sources for compensation. The Senate budget proposes all educators’ salaries to be paid with General Fund dollars. Lottery proceeds, which have been used in the past, would go toward non-instructional personnel,  NC PreK, public school buildings capital fund, scholarships for needy students and UNC need-based financial aid.

In addition to the provisions that would raise educators’ pay, the Senate’s budget addresses the State Health Plan and retirees’ plans. Like the House budget, the Senate budget would include a provision to allow retirees who return to work temporarily to retain SHP coverage options, but use a different source of funding to pay for those benefits. The Senate budget includes a provision that would cease retiree health benefits from the State Health Plan for persons who are hired after Jan. 1, 2016.

The Senate’s budget would provide no cost of living increase for retirees.  It would require the Board of Trustees that oversees the retirement system to use an interest rate assumption of 7.20% for calculating the employer contribution rate in the December 31, 2013 valuations, which determines the contributions for FY 15-16. The current assumption is 7.25%. The Board would be directed to further reduce the interest rate assumption by 0.05% in each subsequent annual valuation. The Board would retain any existing authority to set interest rate assumptions for purposes other than calculating the employer contribution rate.

The Senate’s budget also includes a provision that would restrict the ability of educators who take educational leaves of absences to purchase credit in the retirement system for the leave. The statute governing service credit for educational leave in the retirement system would impose the following conditions for granting educational leave credit when the member is not working in a charter school:

  • During the period of leave the member must be enrolled in a full-time degree program at an accredited institution of higher education, and
  • The member cannot be paid for the activity that qualifies for educational leave, and
  • During any month in which retirement credit is granted, the member may not perform services for any organization listed in G.S. 135-27(a) or (f), including NCAE and the NC School Boards Association, or a successor to those organizations. The organizations listed in these statutes are non-governmental organizations that once participated in the retirement system, but are not currently allowed to participate in a governmental plan under federal tax law.

Other Senate Budget Ecucation Funding Changes

  • Department of Public Instruction – would decrease the department’s annual funding by 10% in each year, a loss of more than $4.7 million in each year of the biennium.
  • Opportunity Scholarships – would increase by $6.8 million in FY 15-16 and in FY 16-17. Total annual funding would be $17.6 million.
  • Textbooks and Digital Resources – would provide $29 million in each year, raising the total funding to $59.6 million in FY 15-16 and to $59.9 million in FY 16-17.
  • Excellent Public Schools Act – would provide funds to address elements contained in legislation enacted in prior legislative sessions, $3.8 million more in FY 15-16 and $8.5 million more in FY 16-17.
  • EVAAS – would add more than $871,000 in each year of the biennium to expand EVAAS capacities to support Read to Achieve and student and teacher performance measurement. Total State Support for EVAAS would be $3.7 million annually.

Senate Budget’s Education Policy Changes

The Senate’s budget is not only leaner in spending, but it is also leaner in the number and scope of Education policy changes. While the Senate rejected many of the House budget’s policy proposals – including the Elevating Educators Act – it addressed a number of others.

  • Codifying the Reduction in Force policies – Sections 8.38.(a) – 8.38.(c) would direct local boards of education to adopt specific criteria in their policies for implementing a reduction in force. LEAs would be required to consider specific factors, including work performance and teacher evaluations. This would basically codify language that has been used since 2011 and is the same as the language contained in S95, Performance-Based RIF/School Policy, which passed the Senate April 29.
  • Driver Education Training – Sections 8.39.(a) – 8.39.(l) would shift the onus for the provision of driver education programs to NC community colleges, away from DPI. In an amendment sponsored by Sen. Ralph Hise (R-Mitchell),  Sections 29.39.(a) – 29.39.(i) would establish, for certain persons, an alternate way of satisfying the drivers’ education requirement through increased supervised driving time and passing the exam with a higher score.
  • Transfer Educator Licensure – Sections 8.40.(a) – 8.40.(c) would separate the functions of licensing educators into a separate office that reports directly to the State Board of Education. Currently, the office is a part of DPI.
  • Modify Educator Preparation Program Approval Process – Sections 8.41.(a) – 8.41.(k) would designate the SBE as the lead agency in establishing standards for educator preparation programs and require the SBE to work with the UNC Board of Governors, the State Board of Community Colleges and the NC Independent Colleges and Universities Association. The provisions further designate the process for lateral entry teachers’ preparation.
  • Access for Teachers to EVAAS Data – Sections 8.42.(a) – 8.42.(b) would clarify that LEAs must give teachers access to EVAAS data. Principals would have to inform educators when those data are updated.
  • Eliminate Mandatory Annual Training for Local Boards of Education – Sections 8.44 would eliminate this requirement.
  • Codifying the judicial decisions of Leandro case – Sections 8A.1. (a) – 8A.2. would codify the State’s requirement to provide a sound public education. If enacted, the provisions would state the General Assembly’s sentiment that some LEAs are not complying with that duty because of bureaucratic interference, failure to properly administer schools and to provide high quality teachers and principals. The provisions would state directives and tools provided by the General Assembly and the duties with which LEAs were bound to comply.
  • Reductions in Class Size K-3 – Section 8A.3.(a) – 8A.3.(c) would reduce class sizes in Kindergarten to 1 teacher to 18 students and in grades 1-3 to 1 teacher to 15 students in the 15-16 school year. There would be a further reduction in the 16-17 school year in Kindergarten to 1 teacher to 17 students and in grades 1-3 to 1 teacher to 15 students. The provisions also limit the awarding of waivers from those ratios. Legislative staff estimates the need for more than 3,000 new teachers to fulfill those requirements.
  • Change how low-performing schools are identified – Sections 8A.4. (a) – 8A.4.(d) would identify low performing schools as those schools that receive a school performance grade of D or F. Parents would have to be notified of those identifications. Low performing LEAs would also be identified and parents would be required to be notified of those grades. The section also set out procedures to improving low performing school administration.
  • Limit SBE waivers to local board of education– Sections 8A.6.(a) – 8A.6.(b) would limit waivers only to class size changes and school calendar changes.

Agreement Reached on Collection of Teacher Attrition Data

The Senate and House have agreed to a compromise on S333, Teacher Attrition Data. The House approved the measure by a vote of 115 to 0 on June 18. The Senate is expected to vote on the compromise during the week of June 22.

The bill adds to the data collected by State Board of Education about why teachers leave their jobs to include, among other reasons, hard to staff schools, whether they left the profession entirely or went to a teaching job in another district. These reports have been confidential to allow for their honest completion. The compromise includes that teacher effectiveness data must be included, but it cannot be disaggregated by LEA. This change does somewhat address PENC’s concern about educators confidentiality. PENC thanks Sen. Dan Soucek (R-Watauga) and Rep. Jeffrey Elmore (R-Wilkes) for taking PENC’s concerns into account.

What do you think?

If you have questions or concerns, please share your thoughts and ideas with us.
Contact us at penc@pencweb.org.

Submitted by Evelyn Hawthorne

For more information about the North Carolina General Assembly, click here.
To identify and contact your legislators, click here.

For information about specific issues, please contact PENC government relations consultant Evelyn Hawthorne at lobbyist@pencweb.org.