Gov. Roy Cooper’s $25.2 billion budget proposal would add nearly $1.3 billion in new spending over last year – an increase of 5.4 percent. Moreover, it would mark a whopping $4.1 billion increase in the state budget over just five years ago – an alarming increase of 20 percent.
Perhaps most troubling is that $1 billion of Cooper’s proposed new spending would be recurring obligations. His own document warns of recession in the near future, yet he insists on ratcheting up unsustainable, permanent spending levels.
Payroll Costs. Dominating expenditures in the state budget is payroll costs. A total of $16.27 billion of the $25 billion budget is dedicated to state worker salaries and benefits. Salaries under Cooper’s plan are expected to rise by $418 million from last year to $12.5 billion. The cost of benefits like pension fund payments and the State Health Plan are rising quickly. Cooper’s proposal includes $2.2 billion in taxpayer funds for state worker pension funds, up $200 million from last year and a stunning $1.4 billion from FY 2012-13. Taxpayer funding for the State Health Plan is projected to come in at $1.57 billion, a $61 million increase over last year.
State Bond. The increased spending, however, does not nearly satisfy Cooper’s appetite for more spending. His budget plan includes a massive $3.9 billion bond proposal, with most of the spending directed to education-related projects. This plan is virtually twice as much as plans floated by the House and Senate and would come with at least an additional $1.5 billion in interest payments. Such a move would strap future budgets with sizeable debt payments for decades to come.
Debt. Receiving much less attention is Cooper’s proposed $288 million in additional debt. That debt would be issued without voter approval. Most of this borrowed money would fund the moving of HHS offices.
Medicaid Expansion. Cooper’s plan to expand Medicaid would cost health care providers at least an additional $410 million a year in new taxes – a cost that is sure to be passed on to patients already struggling to pay their rising premiums. The expansion would crowd half a million more people into the already strained Medicaid system, leaving many needy people with a Medicaid card but little access to actual care.
Rainy Day Funds. While Cooper sets aside $400 million over the biennium into the rainy day fund and $250 million into repairs and renovations, those amounts fall short of the more aggressive savings strategy of conservative budget writers the last several years. His lackluster $10 million set aside into the State Emergency Response and Disaster Relief Fund are especially disappointing given how depleted those funds are in wake of the costly and significant disasters that hit North Carolina last year.
K-12 Education. Cooper saves some of his largest spending increases for the public schools, calling for hefty spending increases of 5.9 percent for 2019-20 and 8.7 percent for 2020-21. Cooper’s first budget recommended K-12 budget increases of 6 percent and 9.9 percent. While the new budget totals are slightly less than the 2017-19 levels, they are significantly higher than the general budget increases Republican legislators have approved in recent years, which have been largely in the range of 2.1-2.3 percent.
Teacher Pay Raises. Cooper spends $600 million over the next two years to raise teacher pay by 9.1 percent and to make teacher and administrator compensation “the highest average salary in the Southeast by 2023.” Cooper’s proposals reverse recent changes by restoring masters pay and longevity pay for teachers and by developing a principal pay proposal based on experience and school size. Moreover, Cooper’s proposal provides $9 million for professional development and to expand the Teaching Fellows Program, a program Republican legislator voted to abolish just a few years earlier.
Back to the Future. Fighting for higher salaries and pro-union policies like tying pay to seniority endears the governor to teacher unions and administrators. After all, they are some of his most loyal constituencies. However, doing so is also asking the legislature to refight a war from several years ago. It may also explain why Republican legislators are dismissive of Cooper’s budget proposals.
K-12 education is the single largest item in the state budget. Since 2011 the K-12 education budget has experienced eight consecutive budget increases. After five consecutive pay raises, average teacher compensation has increased from $46,605 to $53,975. Proposing $600 million for teacher and administrator salaries is as ambitious as it is telling. It will also be a hard sell for a majority party who has spent the last eight years decoupling teacher pay from years of experience – a variable that has little influence on student achievement – and tying it to academic performance. The lines are drawn.
Authored by Bob Luebke and Brian Balfour