I often wonder what it is about human nature that allows people to convince themselves certain things are true when, in fact, they are not. That’s what is happening in North Carolina as liberals and Democrats continue to push the message that Republicans, under the leadership of House Speaker Thom Tillis, cut education spending by $500 million.
There are plenty of important and consequential issues to be debated in this race: health insurance/health care, transportation, ISIS and terrorism, $17 trillion in debt, the growing entitlement burden as the Baby Boomers retire in droves. All of these would make for a legitimate, instructive debate between the three candidates: Kay Hagan, Thom Tillis, and Sean Haugh.
So where does the $500 million figure come from? Until a change enacted with this year’s state budget plan, each year’s budget process has produced a so-called “continuation budget.” This is not a real spending figure. Rather, it is simply a calculated amount based upon prior year actual spending, requested increases from state agencies, adjustments for inflation, mandatory rate increases, and expected operation costs of new facilities.
The $500 million figure represents the continuation budget minus the enacted budget voted on in the legislature.
The problem with this calculation is that these two budget figures do not measure the same thing. The state’s budget law mandates a transfer of funds to occur after the budget is signed into law, and this transferred money pays for salary increases, retirement benefits, and health care benefits for state employees. The enacted budget at the agency level does not include the whole amount spent, because it doesn’t include those elements.
Since the continuation budget includes the previous year’s actual spending amount, it does include all of those pieces. This causes the continuation budget figure to be inflated by the reserve transfer amount when compared to the enacted budget. A historical evaluation shows that the continuation budget has been higher than actual spending for all three areas of education (K-12, UNC system, and community colleges) during the last four years.
The simple explanation is that the $500 million figure is essentially an apples-to-oranges comparison. I have collected the enacted budget figures from the last seven years. I chose this timeframe to include data from the last recession. The state budget had to be cut during this time to reflect a decrease in tax revenue to the state, so I thought this would give a truer picture of what has happened with education spending in North Carolina.
Sarah’s explanation continues here.