Earlier this summer, Republican Gov. Pat McCrory said at the N.C. Chamber of Commerce’s Education Summit, “at $7.8 billion, this is the largest K-12 budget in North Carolina’s history.”
The line item appropriation for the Department of Public Instruction enacted by the legislature in its 2013-14 budget is $7,867,960,649. The Governor didn’t even round up.
In our analysis of budget numbers, the center uses the General Fund’s enacted budget appropriations. These numbers are reported in Joint Committee Conference Reports issued each year by the Fiscal Research Division in the N.C. General Assembly during the budget process, and they are available for the public to view online.
Note that subsequent legislation -- usually technical corrections bills, but sometimes other bills -- can change the budget numbers originally enacted, and the difficulty involved in tracking down those modifications adds to the confusion surrounding final budget numbers. For example, the 2013-14 line item appropriation to DPI was changed to $7,865,960,649 by Session Law 2013-363, which moved the Education and Workforce Innovation Commission and $2 million from DPI to the Office of the Governor.
The pivotal comparison year in the argument over whether education funding is up or down is 2008-09, before the recession and when Democrats were in power. In that year, there was an appropriation to DPI of $7,802,046,538 -- $63,914,111 less than in 2013-14. That comparison supports McCrory’s contention that more money was appropriated this year for K-12 spending than ever before. Democrats argue those numbers should be adjusted for inflation. But, in terms of raw dollars, this comparison is a way for the public to see year-to-year appropriations on different line items in the budget.
This comparison, though, does not tell the whole story. The discussion over funding, especially education funding, has become extremely political because people choose numbers based on which ones support their respective conclusions.
The News & Observer reported recently that “Actually, spending for secondary and elementary schools is less than it was five years ago, despite an increase in enrollment. The legislature appropriated $7.8 billion for the public schools this summer, less than the $7.9 billion that was appropriated during the 2008-2009 school year.”
Again, that 2008-09 year is key to the comparison. In the appendix at the end of McCrory’s 2013-2015 Recommended Budget, there is a table that presents the General Fund operating appropriations for public schools, community colleges and higher education back to 1981-82. This table indicates the 2008-09 appropriation to public schools was $7.9 million. Why is this figure higher than the enacted budget appropriation found in the Joint Committee Conference Report? Because the higher figure – $7,993,668,839 – includes reserves for pay raises that year.
This is not the first time people in this state have disagreed about which budget numbers offer the most appropriate or best comparisons. In 2011-12, many decried a $1 billion cut in education spending. This included spending for community colleges, the K-12 system and the university system. The complaint was based on a comparison between the continuation budget of $11,913,511,629 and the enacted appropriation for 2011-12 of $10,989,867,189. However, if you compare that second number -- the enacted appropriation for 2011-12 -- to the enacted appropriation for 2010-11 of $10,807,660,079, there was a $182,207,110 increase in spending on education from 2010-11 to 2011-12.
Getting complicated? Wait, there’s more.
Until now, there has been no statutory definition for the continuation budget so the formula varied year-to-year. The common concept of a continuation budget is the amount of money it would take to offer the current level of government services in the next year. But North Carolina is a growing state. What if you know state health care costs will increase by 5 percent? Do you include it? What if you know more kids are going to show up to attend public schools in August? Do you include it? The 2011-13 budget did not include enrollment projections for public schools and universities, but the 2013-15 budget did.
This year, the legislature enacted a statutory definition of continuation budget to make clear what will and will not be included in the continuation budget calculation going forward. According to the new statute, the continuation budget is “part of the Recommended State Budget necessary to continue the same level of services in the next biennium as is provided in the current fiscal year, including (i) mandated Social Security rate adjustment; (ii) annualization of programs and positions; (iii) enrollment adjustments for public school and Medicaid; (iv) reductions to adjust for items with nonrecurring funds during the prior fiscal biennium; (v) increases to adjust for nonrecurring reductions during the prior fiscal biennium; and (vi) if deemed necessary by the Director, other adjustments such as inflation, building reserves, and equipment replacement.” This definition will allow the public to compare year-to-year the continuation budget numbers.
According to staff at the Office of State Budget and Management (OSBM) and the Fiscal Research Division, the issue of which budget numbers to compare year-to-year is a perennial debate. The enacted budget is available as soon as the legislature passes and the governor signs the budget. It is possible for the public to access and make their own comparisons of the budget documents. However, these numbers do not include statewide reserve distributions (such as retirement and health benefits), which are allocated by OSBM in October/November, and other internal agency changes. Another possible point of comparison occurs after those reserves are distributed. And yet another possible point of comparison is when the certified budget is issued reporting actual dollars spent, but that is not available until the end of the fiscal year.
No one is going to win this debate any time soon. In the meantime, the public deserves to be informed which numbers are being used in the comparisons, and then they can draw their own conclusions.
The numbers used and the comparisons made frame the discussion for the public in important ways politically. However, the more important policy discussion is how the money should be spent. All citizens should weigh in on that debate – Republicans, Democrats and Independents.
Mebane Rash and Paige Worsham are attorneys with the nonpartisan N.C. Center for Public Policy Research.