The Good, The Bad, and The Ugly

RALEIGH – Early Friday morning, while many in North Carolina were sound asleep, state House members approved a $20.3 billion budget that keeps in place temporary taxes that were scheduled to end and provides more than $11 billion in funding for education in the state.

The budget process now moves to the state Senate, where leaders there are expected to make significant changes to the House budget document.

Included in the House budget is $2.5 billion in funding for the University of North Carolina system and $926 million for community colleges. The remainder of the education budget, more than $7.6 billion, goes to the Department of Public Instruction.

As with any state budget, the House budget is filled with a combination of both sound and poor fiscal policy decisions. The budget for the state’s higher education institutions is no different.

Here is a look at some of the good, bad, and ugly decisions, from the perspective of a fiscal conservative:

The Good

Efficiency Reductions – The House budget makes good on policy decisions by the UNC Board of Governors and President Erskine Bowles to make the system more efficient. High administrative costs, in the past, have troubled some legislators. In all, more than $23 million was trimmed. The majority ($18.6 million) will come from a 10 percent reduction in middle management positions that will eliminate 188 positions across the system. The remainder comes from efficiency reductions recommended by the President’s Advisory Committee on Effectiveness (PACE) and the elimination of the N.C. Progress Board.

Part-Time Tuition Grant – Legislators added part-time students to the state’s legislative tuition grant program for private colleges and raised the grant by $50 per student. North Carolina Independent Colleges and University President Hope Williams had requested the addition, which will cost $1.5 million. House Appropriations Subcommittee on Education Co-Chairman Rep. Ray Rapp, D-Madison, warned, however, that the program would need another $2 million to cover the full costs. Full-time students who attend private colleges in the state will each receive $1,950 per year. Part-time students, who must take at least six hours of classes to qualify, will split the remaining funds after full-time students have been serviced and will be awarded funds on a pro rata basis.

Faculty Workload Study – Included in the budget provisions is a request from legislators for the UNC to study faculty workload. The study must include faculty workload information compared to the UNC enrollment model, workload compared to the student credit hours per instructional position, and faculty workload of regional and peer institutions as compared to each institution’s faculty average and the UNC faculty workload average. That report must be submitted to the Joint Legislative Education Oversight Committee by March 1.

The Bad

EARN Scholars – Legislators funded what was a major aspect of Gov. Mike Easley’s budget request in the Education Access Rewards North Carolina program. The program gives $4,000 per academic year, for two years, to students from families making 200 percent of the poverty level or less. (For a family of four, 200 percent of the poverty level is $41,300 annually). Legislators used $50 million from the Escheat Fund, comprised of unclaimed property, for fiscal year 2008, to fund the program. Though it may look good on paper, with the vast amount of financial aid available on the state and federal level, as well as the heavily subsidized nature of higher education, this appears to be an entitlement program in the making. A concern is that similar statewide efforts to award merit, rather than need, have faced funding problems because of demand. It’s possible for the same problem to occur with this program.

Principal’s Executive Program – The Principal Executive Program was created in 1984 to provide better training to school administrators. Legislators smartly moved the program’s $1.5 million in recurring funds into non-recurring money while asking program leaders to demonstrate if the program makes “a positive measurable impact on conditions for teaching and learning in schools.” If members were truly concerned about the program’s quality, funding could have been moved into a reserve fund until a study could be conducted.

The Ugly

Hunt Institute – Former Gov. Jim Hunt’s nonprofit organization, received $500,000 in recurring funds for operational support and research. The program works with governors and legislators to achieve education reform. Legislators could have taken the same approach they did with nonprofit groups in the DPI budget by having the UNC contract with the Hunt Institute using its own funds. This is simply a gift to a popular former governor, who could easily raise the money in the private sector.

UNC-TV – Legislators approved $239,952 in recurring funds to support “North Carolina Now,” “North Carolina Legislative Review,” and “Legislative Week in Review.” These three programs often feature legislators discussing their personal initiatives throughout the session. Funding for the program could have come from the private sector during one of UNC-TV’s many fundraising efforts.