Yesterday afternoon, special provisions attached to the NC House biennium budget proposal were disclosed to the public, revealing a positive, yet incomplete, reorganization of the Smart Start administrative structure. This administrative reform – in tandem with a $37 million budget reduction – includes increasing a private funds matching requirement, removing the availability of certain funds to be used to grow administrative budgets, and setting a state salary cap for Smart Start administrators.
Overall, administrative cuts will total around $10 million.
As stated in previous articles, Smart Start is the vehicle for a small portion of North Carolina’s childcare subsidies. However, it typically contracts oversight over those subsidies out to the local Department of Social Services (DSS) – only 20 DSS branches across the state do not administer Smart Start subsidy.
Currently, Smart Start local partnerships are legally restrained to administrative costs of 8 percent of their budget. Curiously, however, even the millions of childcare subsidy dollars actually administered by local DSS branches are counted as part of their budget. Such a formula allows for extra administrative costs to be factored in to the actual administration Smart Start performs.
The House proposal would remove subsidy funding from Smart Start’s administrative cost formula. Combined with the proposed $37 million Smart Start reduction, total administrative costs for Smart Start would be lowered by around $10 million.
Another provision, which caps North Carolina Partnership for Children (NCPC) salaries at $80,000 and local partnership salaries at $60,000, does little to curb large salaries paid to Smart Start employees due to the following passage in the special provision:
“Nothing in this subsection shall be construed to prohibit the North Carolina Partnership for Children, Inc. or a local partnership from using non-State funds to supplement the salary of any employee.”
It is regular practice for Smart Start employees to supplement their salaries using non-state funding. This provision would merely require Smart Start administrators to reshuffle their funding streams so they can continue to receive the same level of salaries.
While the House’s recommendations are headed down the right track, they fall short of realizing the full extent of reforms possible (such as consolidating Smart Start’s childcare subsidy into the Division of Child Development) in a way that could increase childcare subsidies while simultaneously saving millions of taxpayer dollars.