Agenda - 09-20-2007-2b - Laserfiche WebLink

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Message Page 2 of 7 The' budget appropriates $350 million of anticipated lottery proceeds to education, with 40% or $140 million set aside for school construction (no change in allocation to school construction or formula for allocation to school districts). A slight wording change in the lottery legislation allows additional monies to be provided in prizes, thereby generating greater sales (Sec. 5.2). (The actual 2006-07 lottery proceeds for school construction totaled $130 million.) The budget makes permanent the'/4 state sales tax which was set to expire this fiscal .year but sunsets the upper income tax bracket as scheduled. To provide tax relief for the working poor, the budget authorizes a 3.5% refundable earned income tax credit in the 2008 tax year. Additional tax credits are provided for long-term care insurance, adoption, and a number of economic development tax adjustments. In compiling the budget plan, the House and Senate contemplated eliminating state positions vacant 6 months or more to free up recurring dollars through lapsed salaries. As adopted, the state's budget office must eliminate enough vacant positions to save $10 million, excluding UNC; community college, and school positions from consideration. Sec. 6.18 does require a study of the uses of lapsed salaries. Teachers receive salary increases averaging five percent, with a step increase plus a flat $1,240, to bring their salaries above the national average by 2008-09. New teachers paid at step 0 are eligible for $250 bonus, an additional step is added to the teacher salary schedule, and teacher assistants must be paid at salary grade 56. School administrators receive ah average 4.44 percent increase. UNC and Community college faculty and professional staff receive 5 percent. State employees see a 4 percent increase in their salaries. All told, state salary enhancements consume $500 million in recurring expenses. State retirees were bumped up to a 2.2 percent COLA, requiring a $35.7 million appropriation. No mention is made to the local retiree's 2.2 percent increase, since this is an action of the board of trustees absent action by the General Assembly. State employer contributions for employee and retiree health costs would cost $233 million, including hefty co-payments and deductible increases. Employer contribution rates for retirement and other benefits are set at 7.83 percent, while annual contributions for health coverage are $4,183 for indemnity and $4,052 for ppo. The budget eliminates the state's health indemnity plan in 2008-09. The General Assembly agrees to a capital appropriation of $231 million with an additional $436 million in COPS, principally for prisons and university facilities. The following highlights those budget items of interest to counties. Education Much of the new funding is targeted to education initiatives and increased enrollment in public schools, community colleges and universities. Additional moneys are provided for More at Four, the Governor's educational initiative, drop out prevention grants, the House's educational initiative, and a focused education reform pilot program, the Senate's educational initiative. The budget also contains greater public school allotment funding in the academically gifted and talented, children with disabilities, instructional supplies, and small LEA allotments, with additional non-recurring funding for low wealth. No additional funding is provided for school resource officers. The governor's plans for Learn and Earn expansion moves forward with the budget providing $4,000 in college tuition grants to eligible students. General funds for the scholarship program of $27.6 million in 2007-08 and $60 million in 2008-09 is supplemented by $40 million from the Escheats Fund in 2008-09. Sec. 7.16 in the special provisions sets forth six objectives by which the state board of education is to evaluate charter schools and Sec. 7.31 creates the Joint Legislative Study Committee on Public School Funding Formulas. Public Schools 2007-08 • Fully fund enrollment increase of 26,265 additional students or 1.83 ercent increase in enrollment • Continuation • Full fund ABC teacher bonuses at current incentive levels $70 million nr • Maintain k at 18:1 teacher/student ratio; replaces lottery funds not realized in 2006-07 • $37.5 million nr 8/28/2007