Several weeks ago, the N.C. House rolled out their preliminary options for balancing the biennium budget. Included in their options were sweeping structural and monetary changes for a significant number of state programs, including some common-sense reforms for Smart Start, North Carolina’s non-profit childcare vehicle.
The original proposal for Smart Start included a series of important changes to Smart Start’s administrative structure—a system renowned for encumbering overhead— by reducing overhead expenditures and allowing the program to be more locally funded.
Since its debut, however, the Smart Start reform package has incrementally lost most of the arrows in its quiver, leaving the final product a shell of its former self. Noteworthy reforms not making it into the House’s final budget plan include a change that would more strictly limit Smart Start administrative expenses, and a mandate for Smart Start to double its reliance on private support.
The House’s original proposal made positive in-roads toward curbing excessive administrative costs from the Smart Start organization—including removing childcare subsidy funds from counting under Smart Start’s eight percent administrative formula. That provision would have prevented millions of dollars of critical funding from being tied up in administrative costs, allowing more funding to be delivered to needy children. This provision was cut from the final version of the House’s budget bill.
Smart Start routinely receives money from the state government and returns that money to the state government’s Departments of Social Services (DSS) to administer childcare subsidies, enabling Smart Start to take more than eight percent of that funding as overhead. The local DSS administers identical childcare subsidies at a considerably lower administrative rate (5.33 percent compared to Smart Start’s 8 percent).
Curiously, while Smart Start’s eight percent administrative formula was maintained, the county Departments of Social Services had their administrative budget reduced from 5 to 4 percent, saving over $3 million.
Another provision in the original House budget proposal included increasing Smart Start’s private matching component by 10 percent. Currently, Smart Start gets 90 percent of their funding from the government and 10 percent from private donations. The original proposal would have increased the private donations match to 20 percent of the Smart Start budget, allowing Smart Start to become less reliant on the government and get local organizations more involved in its funding. The final budget proposal, however, reduced the private matching increase down to just 13 percent.
A seemingly positive reform that was included in the House’s final budget is a salary cap of state funding of $80,000 for North Carolina Partnership for Children administrators and $60,000 for Local Partnership administrators. However, Smart Start administrators will still be able to supplement their funding with private contributions, making it relatively easy for these salary caps to be circumvented.
Overall Smart Start would receive a 20 percent reduction in funding under the final House budget plan, a reduction amounting to about $36 million for FY11-12.