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Leading budget writers offer details on $20.6 billion plan

By Lynn Bonner and Jane Stancill
lbonner@newsobserver.com

RALEIGH The state Senate’s $20.6 billion budget signals a fundamental remake of state government in which some health care providers who treat poor people will be paid based on efficiency, teacher pay will be based on merit, and low-income people receiving medical care at no or low cost will have to pay more.

The state legislature, in Republican hands since 2011, started a transformation of a state government and public education in the last two years by shuffling state departments and cutting budgets. And now, the legislative majority has an accommodating partner in a new Republican governor, rather than the veto-wielding Democrat it faced previously.

While the new Senate budget proposal would increase state spending 2.3 percent, it includes significant changes in how schools, the government health insurance program for the poor, and even rural economic development programs work.

“I think it follows the general philosophy of holding the line on spending, doesn’t create brand new programs, and narrowly tailors programs to help the disadvantaged,” said Dallas Woodhouse, Americans for Prosperity North Carolina state director.

Where Woodhouse sees a narrow tailoring, Senate Minority Leader Martin Nesbitt, an Asheville Democrat, sees gutting and underfunding.

“They’re doing things I’ve never ever heard mentioned,” Nesbitt said. “I just see it in program after program after program. We’re defunding programs that work.”

Major changes in the two-year budget include closing the state’s three treatment centers for drug abusers and alcoholics, eliminating all dental hygienists from the state Division of Public Health, and dissolving rural economic development partnerships while shifting the job to Raleigh state offices.

Some of the money spent on the state addiction treatment centers and state dental hygienists will be sent to communities to do the work there, said Sen. Ralph Hise, a Spruce Pine Republican.

Hise said beds in the addiction treatment centers are expensive, and there’s no evidence that they work any better than community treatment.

5,600 positions eliminated

In advance of Gov. Pat McCrory’s plan to change the state Medicaid program to privatized managed care, the Senate proposal would withhold 4 percent of payments for some health services to create a pool of money to reward providers who meet efficiency and performance criteria.

These weighty changes come with reductions in state jobs, more than 1,600 in all. That’s not counting about 4,000 teacher assistant jobs to be lost with a change in how classrooms are staffed.

Unlike McCrory’s budget, the Senate proposal includes no broad raises for state employees or teachers.

The State Employees Association of North Carolina said the budget does wrong by state employees and devalues public services.

Natalie Beyer was disheartened to read the education budget, and sees no end to the slide in the state’s ranking for teacher pay or per pupil spending.

Beyer, a volunteer board member with Public Schools First NC, said too many big policy issues that should be debated by parents, school officials and others are being pushed through a budget process. The nonpartisan group is a statewide advocacy organization.

“North Carolina is 48th in per-pupil funding for education. We were hopeful that we would advance, not retreat,” said Beyer, also a Durham school board member. “I’m afraid this budget is a retreat from our commitment to our students.

“I think teacher morale is at an all-time low,” she added. “It’s becoming more and more challenging to retain experienced teachers. NCAE reported it takes 15 years for a teacher in North Carolina to finally make $40,000. We can choose to invest in people, and our teaching professionals deserve our investment.”

UNC system happier

UNC leaders were happier with the Senate proposal than McCrory’s, which had a bigger overall cut and a 12 percent tuition increase for out-of-state students at some campuses. The Senate budget proposes no tuition increases beyond those already approved by the UNC Board of Governors.

“It’s far better financially than the governor’s budget,” said Charles Perusse, chief operating officer of the UNC system.

The UNC system had proposed its own efficiency savings in recent months as part of a new strategic plan. Both McCrory and the Senate incorporated those savings, and added cuts to UNC on top of that.

In coming up with efficiencies, Perusse said, “the goal going forward was to redirect savings into things that would improve student outcomes and grow the economy.”

Changes would be in store for the state’s youngest students too. The proposal moves 2,500 spaces in the N.C. Pre-K program, state preschool for 4-year-olds, to the child care subsidy program. Parents do not pay for N.C. Pre-K, but they do pay some of the costs of child care when they use a subsidy.

Shifting costs

The budget includes changes for some pregnant women on Medicaid, taking those whose incomes are between 133 and 185 percent of the federal poverty level and purchasing insurance for them on the new health care exchange required under the new federal law. The state will pay the premiums, and women’s out-of-pocket expenses will be capped, Hise said.

Adam Linker, a policy analyst with the N.C. Health Access Coalition, said shifting low-income pregnant women to the insurance exchange is part of the legislature’s pattern of privatizing services.

“It shifts costs to low-income people and makes health care more difficult to obtain,” he said.

Bonner: 919-829-4821
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