September 18, 2015 Legislative Update

In This Issue…

  1. Budget Agreement Will Become Law
  2. Personal Education Plans’ Repeal Debate Continues – In the Press

Budget Agreement Will Become Law

After a stalemate that lasted about 76 days, House and Senate Budget writers reached an agreement on the state budget, H97, 2015 Appropriations Act, during the weekend of September 12. Votes followed soon after. During interviews with media representatives on September 17, Gov. Pat McCrory indicated that he would sign the budget on September 18.

Bonuses for All, Real Raises for Some

The $21.7 billion budget provides all teachers and state employees who are on the payroll by November 1, 2015 with a $750 bonus payable in December, 2015. The bonus will not count toward retirement calculations. The budget provides no cost of living adjustment (COLA) for state retirees. While the budget provides funding to support the employer’s contributions to the State Health Plan, earlier action by the State Health Plan (SHP) Board of Trustees approved an average 2.83 percent increase in employee premiums. While individuals must calculate how the SHP changes will affect them based upon their personal circumstances, it is clear that the $750 bonus will be quickly eaten away by SHP increases.Additionally, tax changes, including the extension of the sales tax to repairs and service contracts as well as the raising of DMV fees will disproportionately affect folks like teachers. Corporate income taxes were reduced and, in a bit of good news, the medical deduction was restored for all filers. In addition, the standard deduction was raised by $500.

The education budget provides basic funding. It does not address several high priority issues for which PENC has long fought, such as a cost of living increases for all educators and state employees or restoration of Master’s pay for those educators who were not already “grandfathered.” As in any budget, no legislator agrees with every provision. While many Democrats spoke passionately against the budget, especially the education provisions, the overwhelming vote of approval included all House Republicans and nine House Democrats. You can see who voted for and against the budget here.

Information obtained by the Department of Public Instruction reveals that 68 percent of educators will only receive the $750 one-time bonus. While all educators will move up a step on the salary schedule, only those going into a new salary band and beginning teachers – whose salary is being raised to $35,000 – will receive a raise.

PENC has spent a lot of time and effort reminding lawmakers that the new salary schedule means that educators will only receive an increase when they move from one band to another – meaning once every 4 years or so (provided that the General Assembly funds the salary schedule), unless lawmakers provide a cost of living increase that will compensate for the multi-year freeze on the salary schedule. The salary schedule for all School Personnel can be seen here.

Other concerns were also addressed. A provision that addresses health benefits for retired educators who return to work clarifies that school districts must cover the employer health care premiums (Section 30.25. (a) on p. 396 of H97). Other provisions repeal the extracurricular duties restrictions for teachers with 27 or more years of service and add continuing education requirements for retired teachers with at least 30 years of service who serve as substitute teachers (Section 8.45 and 8.46.(a) and 8.46.(b), respectively beginning on p. 94 of H97).

While the cross-chamber negotiations – fights, really – over Teacher Assistant funds garnered “full funding” for TAs; the devil is in the details. The lack of flexibility will cause staffing conundrums across North Carolina. The flexibility was primarily used by school systems to hire teachers. Funding flexibility with the TA line item is not allowed in this budget, so systems are scrambling to figure out how to move money around to prevent layoffs.

Additional Budget Items

The education budget provides basic program funding with few areas of expansion.

Drivers’ Education is fully funded for one year. Future funding support will come from Civil Fines and Forefeitures. A study will be conducted to determine how well the program is working and what changes need to be made.

The floodgates for private school vouchers were opened when the NC State Supreme Court found “Opportunity Scholarships” to be a constitutional use of public tax dollars. Predictably, the line item for vouchers was increased by 129 percent in 2016-2017. See provisions 72 and 74 for details on the voucher expansions here.

The only hopeful item in the budget is that additional funds were put toward textbooks and digital resources, which were woefully funded for many years. While it is not enough to make up for the lost funds, the addition is welcome and it is definitely a good start.

“The Money Report” accompanies the budget bill’s text. We thought you should see the funding items first-hand. We are still in the process of digesting the provisions, which can be read here. There are numerous changes to education policy that could still be changed while the General Assembly concludes its deliberations. House members were told September 17 that committee and floor activity would continue from September 21 until September 30, when the General Assembly is expected to adjourn its long session.

Personal Education Plans’ Repeal Debate Continues – In the Press

As a reminder, PENC’s push to repeal PEPs was successful. Our success has been met with some pushback. As seen in this op-ed, folks that have long used the PEP requirement as a basis for suing school systems bemoan its repeal. PENC Board Member, Tammy Beach, responded to the op-ed correcting the misinformation provided by the previous article and defending our position. You can read Tammy Beach’s article here.

What do you think?

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Submitted by Evelyn Hawthorne

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For information about specific issues, please contact PENC government relations consultant Evelyn Hawthorne at