Middle-class Welfare: The House Budget and Education

Remember this number: $10.7 billion. This figure represents how much North Carolina expects to spend on education in the $20.1 billion state budget currently under consideration in the House. While state residents have always been willing to dig deep to support the basic costs associated with K-12 and higher education, recent history suggests that politicians in Raleigh are asking taxpayers to pay for more than reading and writing. Indeed, the long-term impact of some of these programs will be to institutionalize the expansion of government services to a larger, wealthier segment of the population.

Included in this year’s House budget (HB 1473) is $20 million to expand the Disadvantaged Students Supplemental Funding program (DSSF). The program, begun in 2003-04 with 16 school districts, distributes money to Local Education Agencies (LEAs) to assist students who have failed to achieve grade-level proficiency. The program has since expanded to all 115 school districts in the state. Funds are appropriated to local administrative units according to the eligible DSSF population and a formula that disburses funds based on the difference between county and statewide wealth averages. Simply stated, poorer districts will likely receive more aid.

Disadvantaged Student funds can be used for just about anything, including: the hiring of instructional or support personnel, school counselors and nurses; developing after-school remediation assistance programs; and even purchasing software and progress monitoring tools. In reality, DSSF is just another expansion of an array of government social service programs under the mantle of education funding. Instead of going to individual recipients, however, the money goes to LEAs and school districts. Moreover, the DSSF initiatives often duplicate a number of programs that already exist, such as those currently being implemented in at-risk schools, alternative schools and low-wealth schools.

The proposed expansion of the Learn and Earn program (hereafter L&E) is another initiative that should concern taxpayers. The House budget includes $3.26 million to expand L&E to 12 more schools. Briefly, the L&E program enables high school students to concurrently enroll and take courses in the University of North Carolina or community college systems and to take their high school courses in an integrated program on a college campus. Students are able to earn either an associates degree or up to two years of college credit by the conclusion of the year following their senior year of high school (grade 13). The program pays for enrollment fees, tuition, laboratory fees, and textbook fees for students attending L&E high schools. Learn and Earn courses are supposed to be structured to give high school students job skills they can use to obtain employment after they graduate.

During its brief existence (L&E is only a few years old), the program has expanded rapidly with little time for review or evaluation. L&E proponents say the program helps to develop the workforce for the new economy. Critics of the program argue that L&E schools have already strayed from that original goal and are actually attracting students who will attend college anyway. A better alternative could be to revitalize career-oriented high school programs; yet the governor is directing high schools to move further and further away from vocational education. Critics also note that high school students are already eligible to take community college courses for free. In fact, because L&E programs cap student enrollment, they are actually more restrictive than other available options. In reality, inefficiencies and subsidized tuition for college students are likely to be the real outcome of Learn and Earn.

Finally, the proposed House budget includes a new initiative from Governor Mike Easley: the EARN (Education Access Awards North Carolina) Scholars program. Under this program, $75 million ($25 million in FY2008 and $50 million in FY2009) would be taken from the Escheat Fund to provide scholarships to students from families that earn up to 200 percent of federal poverty level (FPL). The scholarships will be worth up to $4,000 per academic year.

While the importance of education to individuals and society is not disputed, how education is financed is an important public policy question. A proposal to extend tuition subsidies to what, in effect, is the lower middle class (a family of four earning $41,300) will have a significant fiscal impact. According to estimates by the U.S. Census Bureau, approximately 800,000 families in North Carolina earn below 200 percent FPL. Proponents of the program estimate that some 12,500 students will receive scholarships under EARN by its second year of operation. As such, the EARN initiative has the potential to become a major new entitlement for middle- and lower-class families. Federal student aid programs, such as Pell grants, student loans, work-study, and Plus Loans for parents, already exist to help defray college costs. The House budget’s expansion of educational assistance to middle-class families unduly burdens taxpayers, replicates programs, and adds to an already high tax burden.

This article was posted in Budget & Taxes, Education by Bob Luebke on May 10, 2007 at 12:00 AM.

© 2011 The Civitas Institute. Visit us on the web at www.nccivitas.org.
This article can be found at http://www.nccivitas.org/2007/middle-class-welfare-house-budget-and-education/

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