Senator Doug Berger Message: Education Funding Shortfall Addressed

Education Funding Shortfall Addressed

My endorsement last week of Gov. Perdue’s proposal to reinstate a three-quarter-cent sales tax cut for public education has garnered both positive and negative responses.  Only one writer supported tax cuts that would result in corresponding cuts in public education.   

Most citizens who oppose reinstatement of the three-quarter cent sales tax want to alternatively preserve public education without raising taxes.  They invariably propose two solutions:

 Cut administration and other waste in public education; and

Use revenues from the North Carolina lottery.

Neither of the two alternatives will close the education budget shortfall and preserve public education. The stark facts below explain why.

First, the letters urging use of North Carolina lottery funds instead of increasing the sales tax are based upon a serious misperception about the state lottery that must be corrected.  That misperception is the belief that appreciable amounts of lottery proceeds are used for government functions other than education.

Since the inception of the lottery, these revenues have been generated:

Oct. 2006: $50 million (retail sales began March, 2006)

June 2008: $350 million

July 2009: $410.9 million

June 2010: $419.5 million

June 2011: $446.9 million

Of the approximately $1.6 billion lottery dollars raised to date, one allocation of $26.6 million was made to Medicaid funding in 2011 to prevent citizens from losing health care.  This one-time allocation represents about 1.5 percent of all lottery funds generated to date.

With the exception noted above, proceeds from the North Carolina Education Lottery in 2011 have been allocated according to a formula originally adopted by the General Assembly in 2005 and altered minimally since that time:

50%: teachers’ salaries and prekindergarten

40%: school construction (traditionally funded entirely by local property tax)

10%: need-based scholarships for college

This formula represented a compromise between two views of how lottery proceeds should be spent.  One view was that lottery proceeds should not be used to supplant tax dollars for public education, but should be used to expand educational opportunities.  A proposal was fashioned to spend all lottery proceeds on college scholarships for our children, requiring that the state sales tax and property tax continue to fund primary, secondary and college education. (Georgia’s Hope Scholarships exemplify this view.)

Another view was to use lottery funds to promote primary education in grades K–3; and fund a new initiative, “More at Four,” which was a pre-kindergarten program to prepare all 4-year-olds for public school.

The ultimate compromise that was enacted into law is the 50%, 40%, and 10% formula that was used in through 2011. 

The 2009 legislature altered the law so that local school boards could use lottery funds earmarked for school construction to supplant teacher salaries in an effort to curtail teacher cuts.  The one-cent sales tax increase in 2009 would have been much higher or deeper cuts in teacher positions would have occurred if supplanting lottery money had not occurred.  The objective of the compromise was to use lottery funds to expand and improve public education in North Carolina and to supplant some tax dollars, particularly supplanting revenues from local property taxes. 

As an example, some years ago, a group of citizens wanted to expand the amount of money to purchase books at a local library.  They raised private funds for the library for that purpose.  When the county commissioners learned of the donation, they cut local funding to the library equal to the private funds the library received.  Supplanting citizens’ traditional commitment to the library resulted in no net improvement in the library.  NC Education Lottery allocations have supplanted some tax revenues but the long term emphasis remains on using lottery proceeds to improve education in North Carolina. 

In 2011, the $446.9 million paid for:

3,731 teachers’ salaries paid in K-3

32,750 college scholarships

30,767 additional 4-year-olds attended More at Four

$100 million to 100 counties for school construction

Clearly, lottery funds are already being used for public education.  Gov. Perdue, in her second month in office, announced she was going to redistribute the March 2009 quarterly distributions to the county ADM Fund ($5 million) and the Lottery School Construction Fund ($37.6 million) to help offset declining state revenues for the fiscal year 2009.   A number of legislators, including myself, and public leaders opposed the redirection of lottery funds and the money was restored and never spent on anything else other than public education.

The statutory distribution for 2012 lottery proceeds:

51.9%: teachers’ salaries

23.5%: school construction

14.8%: prekindergarten

7.2%: need-based college scholarships

2.5%: UNC need-based financial aid

The facts simply exclude lottery funds as a solution to the current crisis we face.

Second, cutting government administration and waste are not an immediate answer to the emergency need for education funding.  Cutting $863 million is more than the equivalent of cutting the Judicial Branch of government ($438.9 million), the Department of Agriculture ($65.5 million), the Department of Commerce ($50.8 million), the Department of Labor ($15.8 million), the Department of Cultural Resources ($63.7 million) and the Department of Environment and Natural Resources ($165.8 million).   I fully support cutting waste in government spending wherever it exists.  Those of you have been reading these newsletters will recall the millions of dollars in wasteful spending in some of the Medicaid services that I successfully led the fight to cut in the General Assembly.  You will also remember the entrenched special interests fought vehemently to keep the wasteful funds in the budget.

I believe the most important expenditure of tax dollars in a democratic system is in support of public education. It is my obligation as your elected leader to support funding of public education even when doing so requires unpopular tax increases in order to maintain appropriate levels of funding for a good education for every North Carolina child who wants to learn.  The reinstatement of the three-quarter-cent sales tax would generate the $863 million needed statewide, and I support the temporary reinstatement of the tax until regular levels of tax revenue rebound from this recession.    

I want to share with you two letters received in response to last week’s e-mail.  The first letter is from a 39-year veteran of public schools in North Carolina.  The second letter is from a second- grade teacher.  I think their concerns summarize my reasons to join Gov. Perdue in taking the necessary steps to maintain public education in North Carolina:

“I can give you a very personal example of the shortchanging that is now taking place in education in North Carolina.  When I retired, my position as a middle school English teacher was eliminated.  At my school, before I retired, we had two teams of four teachers to serve the 8th grade.  Each team had an English teacher, a social studies teacher, a math teacher, and a science teacher.  My team normally served those students who were behind grade level in one or more areas, as well as those students who had been identified as having learning disabilities–the poorer students and a majority of the black students.  This division came about because of our success, as measured by these students’ improved test scores.  The more academically advanced students (and yes, the more affluent students) were served by the other team.  We all know that financial resources and academic achievement are definitely linked.

“Here’s the situation now on my former team.  The social studies teacher became the English teacher, and the social studies classes were divided up among these three teachers.  In other words, those students who are most at risk are now being served by three teachers instead of four.  Their English teacher is certified in English by virtue of a praxis test that he took this year. The other team has experienced no change in their teaching load, and each person is an “expert” in the area where he/she is teaching.  In other words, those that need the most help are now getting the least amount of help, and those teachers serving those students are disproportionately overworked.  This is not an isolated situation, and I am appalled.  All the gains in education that I saw take place over my career seem to be evaporating.”

Mary Susan Heath

As always I welcome your comments on this newsletter or anything else that concerns you.  My office is here to help in whatever manner we can.  It is an honor to serve as your Senator, and I will do everything in my power to live up to that honor.

Sincerely,
Doug Berger