State Revenue Forecast
An updated State revenue forecast released on Tuesday shows overcollections for this fiscal year ending on June 30 to be $1.91 billion greater than anticipated in February. Total revenue overcollections for the 2020-2021 fiscal year are now estimated at $6 billion. The June forecast also projects an additional $4.6 billion more revenue for the 2021-2023 fiscal biennium than was previously predicted in February. The joint forecast released by the Legislative Fiscal Research Division and the Office of State Budget and Management now expects a total of $60.4 billion over the next biennium, with $29.7 billion in fiscal year 2021-2022 and $30.7 billion in fiscal year 2022-2023. This surplus can be attributed to several factors, including:
- Higher individual and corporate taxes collected by the State, as the economy continues to recover from COVID-19
- A major economic boost from the federal American Rescue Plan Act (stimulus payments and unemployment payments to individuals and loans and grants to businesses)
- $1 billion in tax payments were moved from the 2019-2020 fiscal year to the 2020-2021 fiscal year when the tax filing deadline was moved from April 2020 to July 2020
In a press release, Governor Roy Cooper explained that this new revenue forecast would cover his entire proposed budget and the Senate’s proposed tax cuts, even with some money left over. Senate leader Phil Berger released a statement saying that “A huge surplus does not mean we’re spending too little. It means we’re taxing too much.” House Speaker Tim Moore said in a press release that “North Carolina’s overall fiscal policy has set the stage for a commitment to conservative tax policies and we will continue to work collaboratively with the Governor and the Senate to keep our state on an upward trajectory of economic growth.”
These newly improved revenue numbers come as we are expecting to see the first version of the State budget from the Senate next week. According to a news source, the Senate plans to release its proposed budget on Monday, followed by committee hearings on Tuesday and Wednesday, and floor votes on Thursday and Friday. Then the House can be expected to release its own version of the budget in July, with a compromise budget being sent to the Governor in August. It is unknown if the legislature will adjust their agreed spending target based on this new revenue forecast.
Education-Related Bills with Action This Week
HB 159: Education Law Changes (primary sponsors: Representatives John Torbett, R-Gaston; Hugh Blackwell, R-Burke) was modified and approved by the Senate Education/Higher Education Committee and referred to the Senate Finance Committee. For several months NCSBA, the NC Association of School Business Officials, and the NC School Superintendents Association have expressed our concerns about Section 3, which prohibits public school units (PSUs) from getting reimbursed for costs incurred while operating and administering a school nutrition program, unless the program has a minimum of two month’s operating balance. (The original bill called for a minimum of three month’s operating balance, and current law calls for one month.) Section 3 also caps the rate at which PSUs can get reimbursed for these costs at 8% of a school nutrition program’s annual budget (the current average is around 14%). Costs incurred by PSUs include Human Resources functions, bookkeeping, insurance, space, electricity, and water.
Attempts were made to resolve this issue with DPI without the need for legislation, but unfortunately, we could not come to an agreement. During the Senate Education/Higher Education Committee meeting, NCSBA testified and called for the removal of Section 3 because we do not believe that it achieves the long-term goal of strengthening school nutrition programs, and it also creates an unfunded mandate. NCSBA will continue to work with legislators, DPI, and school administrators to improve the bill. Our goal is to create strong, sustainable school nutrition programs across the State, as we recognize how critical school nutrition is for student success.
Additionally, HB 159 does the following:
- Allows LEAs to use a payroll deduction plan to pay eligible school personnel in 12 monthly installments
- Requires the State Board of Education to follow the rulemaking process (S.150B) when adopting course standards
Click here for an official bill summary.
HB 335: Timely Local Payments to Charter Schools (primary sponsors: Representatives John Bradford, R-Mecklenburg; Dennis Riddell, R-Alamance; Jon Hardister, R-Guilford; Jason Saine, R-Lincoln) was modified (at NCSBA’s request) and approved by the Senate Education/Higher Education Committee and referred to the Senate Rules Committee. Changes to the bill include:
- Adds date of charter enrollment, date of charter withdrawal, and district of residence to the list of student information that a charter school is required to submit to a LEA
- If a LEA disputes payment for any student whose information submitted by a charter school is incorrect, late fees or interest are not applied to the payment for that student
Additionally, HB 335 does the following:
- Requires that the 30-day clock for a LEA to submit payment to a charter school begin after the LEA is in receipt of both a charter school invoice and the monies from the county into the local current expense fund (originally the 30-day clock started after the LEA received a charter school invoice)
- Requires a LEA to submit payment to a charter school for the undisputed amount within the 30-day period
- Requires a LEA to pay a 5% late fee only if both of the following occur:
- A charter school provides written notice to the LEA’s superintendent and school finance officer after the 30-day period stating that the payment was not received
- Electronic payment is not transferred within 15 days of that notice, or if mailed, not postmarked within 15 days of that notice (originally the bill included an 8% late fee on day 31)
- If the late fee is triggered, requires interest to accrue at a rate of 8% annually until the payment is received by the charter school
- Requires the State Superintendent, in consultation with LEAs and charter schools, to create:
- A standardized enrollment verification and transfer request document used by charter schools to request the per pupil share of the local current expense fund
- A standardized procedure that LEAs must use when transferring the per pupil share of the local current expense fund
When presenting HB 335 to the committee, Representative Bradford applauded the efforts of NCSBA and the NC Coalition for Charter Schools to negotiate and come to a compromise. NCSBA does not support a late fee for LEAs but given the procedures and timeframes in the compromised bill, it is our hope that the penalty will never come into play. Click here for an official bill summary.
SB 654: K-12 COVID-19 Provisions (primary sponsors: Senators Deanna Ballard, R-Watauga; Don Davis, D-Pitt; Michael Lee, R-New Hanover) failed concurrence in the Senate and a Conference Committee was appointed. The following is included in both chambers’ versions of the bill:
- PSUs with good-cause waivers can use up to 15 days or 90 hours of remote instruction for severe weather and other emergencies
- All other PSUs can use up to 5 days or 30 hours
- PSUs can provide remote instruction to address health and safety concerns related to COVID-19 during the upcoming school year
- Waives school performance grades, report cards, and low-performing school identification for the upcoming school year based on 2020-2021 school year data
- Continues the principal recruitment supplement for the 2021-2022 school year
- Allows seniors to graduate in 2021 without completing CPR instruction
- Extends exam requirements for teachers seeking a continuing professional license from June 30, 2021, to September 30, 2021
- Adds another definition of a year-round school: allows a single-track school to operate on the same multi-track schedule of another school in that LEA (only impacts Wake County)
The following are provisions passed by the Senate and removed by the House:
- Requires PSUs to submit a virtual instruction plan to DPI by June 1, 2021, in order to provide virtual instruction to students (with consent of parent or guardian) during the upcoming school year
- Requires the State Superintendent to create a Working Group on Virtual Academies to make recommendations by January 15, 2022
The following are provisions added by the House:
- Allows no more than 10% of total student enrollment in a LEA to be enrolled in a virtual academy, beginning in the 2021-2022 school year
- Delays the implementation of social studies standard course of study changes by one year
- Modifies the implementation of kindergarten class size requirements for the 2021-2022 school year
- Allows individuals to receive a residency teacher license if they have a bachelor’s or advanced degree, or both (current law only includes bachelor’s degree)
- Modifies one of the definitions of a year-round school by requiring students to attend four quarters of between 43 and 47 instructional days (was 45) each school year, with 14 to 18 vacation days (was 15) between each quarter (requested by NCSBA)
- Directs the use of the $360 million 10% DPI reserve in Elementary and Secondary School Emergency Relief III (ESSER III) funds
- DPI’s response to these allocations is in the SBE Called Meeting section below
Click here for an official bill summary.
HB 64: Government Transparency Act of 2021 passed the Senate 28-19, and failed concurrence in the House. This bill requires local boards of education (as well as counties, municipalities, community colleges, State agencies, etc.) to not only maintain the date and general description of the reasons for each promotion, but also for each demotion, transfer, suspension, separation, or dismissal. An employee can appeal to not have the date and description of their promotion, demotion, etc. disclosed if the information is protected by an applicable confidentiality law, like the Health Insurance Portability and Accountability Act (HIPAA) or the American with Disabilities Act. Click here for an official bill summary. As a reminder, HB 64’s bill language was taken from SB 355, which did not make the crossover deadline. NCSBA continues to work with Senator Norm Sanderson, R-Pamlico, who is the primary sponsor of SB 355, to address our concerns.
SB 668: Anti-Pension Spiking Amds & Litig. Moratorium (primary sponsor: Senator Jim Burgin, R-Harnett) passed the House 102-2 and was sent to the Senate for concurrence with House changes requested by NCSBA. This bill does the following:
- Adds another payment option: 12 years with no early pay-off penalty
- In certain situations, two or more employers will share the liability
- Creates a working group consisting of NCSBA and the State Treasurer’s office to develop recommendations to the General Assembly that will reduce the number of pension spiking cases and lawsuits
- Requires a pause on pension-spiking litigation until June 30, 2022, during which the working group will create its recommendations
- As a result of this pause, the statute of limitations will be extended
- During this pause, the Treasurer’s office is not allowed to intercept funds that would have otherwise been directed to a LEA
Click here for an official bill summary.
HB 812: Clarify Remote Meetings During Emergencies (primary sponsors: Representatives Dean Arp, R-Union; Bobby Hanig, R-Currituck; Erin Pare, R-Wake; William Richardson, D-Cumberland) was signed by the Governor into SL 2021-35. This bill clarifies the authorization of remote open meetings during emergencies. It allows a public body to change a meeting notice to be a remote meeting at least six hours before the start of the meeting and include how the public can access the remote meeting. Click here for an official bill summary.
SB 722: Revise Local Gov’t Redistricting/Census (primary sponsors: Senators Warren Daniel, R-Burke; Paul Newton, R-Cabarrus; Ralph Hise, R-Mitchell) received vote for concurrence in the Senate 33-14 and was sent to the Governor. Because of the delay in receiving 2020 census data and limited time for municipalities to redraw districts, this bill delays affected 2021 municipal elections, as well as 2021 Charlotte-Mecklenburg and Lexington City boards of education elections. Click here for an official bill summary.
HB 160: Retirement Service Purchase Rewrite Part 11.-AB (primary sponsors: Representatives Allen McNeill, R-Randolph; Carson Smith, R-Pender) passed the Senate and was sent to the Governor.
HB 168: Retirement Administrative Changes Act of 2021.-AB (primary sponsors: Representatives Carson Smith, R-Pender; Keith Kidwell, R-Beaufort; Allen McNeill, R-Randolph) passed the Senate and was sent to the House for concurrence with Senate changes.
SB 288: Rutherford College/Bd. of Ed. Burke/Caldwell (primary sponsor: Senator Warren Daniel, R-Burke) passed the House and was sent to the Senate for concurrence with House changes.
The State Board of Education (SBE) met for a called meeting on Thursday to approve the following:
K-12 social studies supporting documents: The Board voted 7-3 to approve the following supporting documents:
- K-12 glossary – definitions of primary terms and concepts that teachers need to know and understand to effectively teach the standards (now includes citations)
- K-12 crosswalks – reference tool that compares changes/differences between two sets of standards (previous standards vs. newly adopted standards)
- K-12 strand maps – help ensure vertical progression of major concepts that students are expected to know by the end of each grade/course
- K-5 unpacking documents (K, 1, 2, 3, 4, 5) – enhance teacher understanding of how to engage students with the standards
Prior to the vote State Superintendent Catherine Truitt stated that she personally reviewed every page of the supporting documents and endorses their approval. Additionally, Board Chair Eric Davis stated that the SBE is not seeking a delay in the implementation of these new standards. This contrasts with a recent House addition to SB 654, which delays the implementation of the new standards by one year. Board member opposition came from three Republican-appointed members, including Dr. Olivia Oxendine who expressed concerns about lack of expansiveness and lack of inclusion of certain historic figures in the supporting documents. As a reminder, these supporting documents are not requirements but rather resources and ideas to help teachers comprehensively address the required standards in their classroom curriculum. Additionally, the grades 6-12 unpacking documents are still being developed and will be presented for approval at the Board’s July monthly meeting. Click here for an article on the discussion and approval, as well as other statewide education action this week.
ESSER III State application: The SBE approved the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) fund State application. NC has received two-thirds of its $3.6 billion in ESSER III funds, with the last third subject to an application process. The application template was required to stay open for a 30-day public comment period, which closed on June 14 with a total of 230 comments. The presentation to the Board includes a slide reviewing the different types of comments submitted. 88% of the public comments were about critical race theory, which presenters explained is not part of the ARP ESSER application, but Board Vice Chair Alan Duncan stated the importance of knowing what the public is concerned about. A modified version of the application (based on Board feedback) will be submitted to the US Department of Education by June 21. DPI staff explained that this application plan is not a comprehensive spending plan, which is being developed and will be presented at the next Board meeting. Additionally, DPI staff expressed concern about House modifications to SB 654 that direct the use of the 10% DPI reserve of the ESSER III funds, which would prevent DPI from administering the funds according to their spending plan. Click here to view the ARP ESSER fund State application.
Click here to access all meeting materials.
This week the US Department of Education’s Office for Civil Rights affirmed that Title IX protects students from discrimination based on sexual orientation and gender identity. The Department’s interpretation is based on the US Supreme Court decision in Bostock v. Clayton County last year, in which “the Supreme Court recognized that it is impossible to discriminate against a person based on their sexual orientation or gender identity without discriminating against that person based on sex.” Click here for the Department’s press release and click here for an article.
On Friday, June 11, Governor Cooper extended a variety of COVID-19 prevention measures until July 30, including the mask mandate in schools. Click here for the press release.
Monday, June 21
5:30 pm – Senate Rules – Legislative Building, rm 1027/1128 (live stream)
Tuesday, June 22
8:30 am – Senate Appropriations/Base Budget – Legislative Offices Building, rm 643 (live stream)
1:00 pm – House Education K-12 – Legislative Offices Building, rm 544 (live stream)
Director of Governmental Relations
N.C. School Boards Association
Assistant Director of Governmental Relations
N.C. School Boards Association
Governmental Relations Research Specialist
N.C. School Boards Association