June 19, 2015 Legislative Update
In This Issue…
Next Stop – Conference Committee with House
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 Act, andthe 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:
Other Senate Budget Ecucation Funding Changes
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.
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.
Submitted by Evelyn Hawthorne
For information about specific issues, please contact PENC government relations consultant Evelyn Hawthorne at email@example.com.
June 19, 2015 Legislative Updatepenc-admin2019-04-10T04:29:41+00:00