Budget deal trims spending on social programs, boosts teacher pay

The budget state lawmakers will vote on this week boosts teacher salaries but trims eligibility for several key public aid programs, such as child care subsidies.

Posted Updated
State budget
Mark Binker
Laura Leslie
RALEIGH, N.C. — Four days after announcing a "budget framework," lawmakers publicly filed a $21.1 billion budget late Wednesday night, showing how they boosted teachers salaries and trimmed social welfare programs.
The state's fiscal year began on July 1, but a stalemate between the House and the Senate over teacher salaries and how much would be needed for the Medicaid health insurance program for the poor and disabled delayed a final deal.

Because lawmakers passed a two-year budget in 2013, government operations continued, but not without consternation, as local governments, state workers and others waited for word of how this year's plan would reorder their world. 

Both the House and the Senate will have to vote on the bill twice before it goes to Gov. Pat McCrory for his signature or veto. The Senate is scheduled to take the first of two votes Thursday. House members are scheduled to vote on Friday. 

Overall, the state's general fund budget – those programs supported by income and sales taxes – grew by a little more than $83 million over the prior year. That doesn't count massive swaths of federal spending overseen by the state. 

The budget includes a $1,000 raise for most rank-and-file state workers. Teachers will get a raise that legislative leaders say amounts, on average, to 7 percent, although actual raises will range from less than 1 percent to more than 18 percent depending on how long a teacher has been in the profession.

The budget also factors in a 12 percent supplement for board-certified teachers and continues a pay bump for teachers with master's degrees and those who began work toward an advanced degree by Aug. 1, 2013. 

State retirees will receive a 1 percent cost-of-living increase.


In addition to teacher salaries, key changes to education budgets include the following: 

  • Orders the State Board of Education to authorize two virtual charter schools to serve students in K-12. Although the state has more than 100 brick-and-mortar charter schools, virtual charters have been controversial because of concerns about quality and oversight. 
  • Sets aside $1 million for the initial phases of a differentiated pay plan that would let some local school districts pay more to teachers who staff challenging schools or teach in-demand subjects such as science and math. 
  • Sets up an education endowment fund proposed by Lt. Gov. Dan Forest. Money would come to the fund through private donations and license plate fees and could go to boost teacher pay or other education priorities. 
  • Sets aside $41.9 million to decrease class sizes in kindergarten and first grade. 
  • Warns that the General Assembly plans to phase out taxpayer support for driver's education classes beginning in the 2015 school year. The same provision allows school districts to raise their driver's ed fees from the current maximum of $55 per student to $65 per student. 
  • Orders school districts to keep a supply of epinephrine injectors, commonly known as EpiPens, on hand in case a student or staff member has an extreme allergic reaction.
  • Orders a study of Elizabeth City State University and ways to put the historically black school on more sound financial footing. 
  • Requires the University of North Carolina system to return $76 million in "management flexibility cuts."
  • Orders the UNC Board of Governors to turn over $29 million per year to support the biotechnology research center in Kannapolis. 

Health and Human Services

The budget calls for a November 2014 special session to discuss long-term Medicaid reform plans. Other changes to the Department of Health and Human Services budget include the following: 
  • Keeps in place a 3 percent provider rate cut for those serving Medicaid patients and adds another 1 percent cut to it. 
  • Reduces spending on child care subsidies by changing the definition of who is eligible. 
  • Switches more than a dozen programs from being supported by state tax dollars to federal grant funding.
  • Changes the income eligibility rules for "state-county special assistance" that goes to aged, blind and disabled. Although the budget grandfathers in current participants in the program, it lowers the income threshold for future participants.
  • Provides $2 million to once again support those in group home settings who were in danger of losing their placements due to changes in how the Medicaid program pays providers.  
  • Saves $1.8 million by reducing the number of local mental health agencies in the state from nine to seven or fewer. 
  • Orders DHHS to more tightly control mental health drugs issued through Medicaid and achieve $6 million in savings. 

Public Safety

The budget moves the State Bureau of Investigation from the Department of Justice, which is overseen by Attorney General Roy Cooper, to the Department of Public Safety, which is overseen by a McCrory appointee. However, Cooper will retain oversight of the State Crime Lab. 

Other changes in the public safety arena include the following: 

  • Moving the state Alcoholic Beverage Control Commission to the Department of Public Safety.
  • Moving Division of Alcohol Law Enforcement offices into locations already owned by the SBI. 
  • Saves $2.7 million by moving those convicted of misdemeanor crimes, including drunken driving offenses, out of state prisons and into county jails. 
  • Eliminates four special Superior Court judges when their terms expire. It also requires the governor to submit all future nominees for special Superior Court judgeships to the General Assembly for confirmation. 
  • Requires a three-judge panel, rather than a single Superior Court judge, to hear challenges to the constitutionality of state statutes. 

Capital Spending

The budget uses two-thirds bonds to fund several capital programs. Such bonds are debt the state can incur by virtue of having paid down general obligation bonds. These bonds will be spent on projects ranging from building protection for the Battleship North Carolina to renovating the Albemarle Building in downtown Raleigh. The bonds would also be used to retire $206 million of non-voter-authorized debt. 

Other capital items include the following:

  • $1.5 million to begin a North Carolina Museum of History expansion.
  • $5.8 million for water resources projects.

The budget also orders the Department of Administration to begin buying up land around the Oregon Inlet, with the aim of creating Oregon Inlet State Park.


Other provisions in the budget include the following:

  • Extending a ban on drone use by state or local governments through from July 1, 2015, until Dec. 31, 2015. The bill also includes a full suite of regulations for managing the use of drones in the state
  • Orders the state chief information officer to study how much money the state could earn by selling geographic information systems data. 
  • Provides $201,000 for "three new positions to investigate fraud in elections, discrepancies in voter registration information, including duplicate registrations, and to pursue prosecution for violations of election law."
  • Gives $10 million to the Housing Trust Fund to create a low-income housing loan program aimed at creating low-income housing units throughout the state. 
  • Cuts $3.3 million from various transportation programs in aviation, rail, ferry, bicycle and pedestrian programs. 
  • The budget gives the legislative leaders further power and more standing to hire their own lawyers to defend state laws that face constitutional challenges. The budget also reduces funding for legal services in the Attorney General's Office by $300,000, transferring that money to a legislative litigation account. Cooper has clashed with lawmakers over bills that face such challenges, most recently saying he would no longer defend North Carolina's constitutional ban on same-sex marriage.
  • Caps annual state support for an individual county library system at $400,000. The measure would mainly affect Wake and Mecklenburg counties, which account for 23 percent of the state's registered library users.
  • Allows for the remote renewal of driver's licenses.
  • Requires a third-party audit of the state pension fund.
  • Orders the state Department of Transportation to sell North Carolina's Sikorsky helicopter and a Cessna plane "as expeditiously as possible." McCrory tried, and failed, to sell the state plane on eBay this year.
  • Gives drivers a choice between license plates with the "First in Flight" slogan or a "First in Freedom" slogan. 
  • Provides $250,000 to the Earl Scruggs Center to support activities related to the history and tradition of Cleveland County.


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