Child care aid, private school vouchers, state worker raises in new NC House budget proposal

State taxpayers would pick up most of the bill for federal child care aid that’s expiring at the end of June, a new budget plan from House Republican leaders proposed when it was unveiled Monday night.

The state has a $1 billion budget surplus, and the budget plan would spend nearly $500 million on extra funding for private school tuition vouchers. The proposal also includes hundreds of millions more to give state workers higher raises, to boost road construction associated with a massive Toyota factory being built outside of Greensboro and to address a shortfall in the state’s Medicaid program — one that officials have blamed on rule changes in placed during the Covid-19 pandemic that made more people eligible for government health care.

But it’s a different change, also associated with pandemic-era rules, that has drawn bipartisan attention at the legislature while also putting many parents of young children on edge: Child care funding shortfalls.

The federal government has long given states aid for child care subsidies, but Congress boosted that aid substantially during the Covid-19 pandemic. That pandemic-era funding expires July 1, however, causing concerns for parents and business owners alike.

Many child care centers had used those federal funds to give their employees a raise, as they tried to compete in a booming economy and competitive labor market where even fast food jobs now regularly pay as much as $15 per hour.

But with child care already costing an average of more than $9,000 a year in North Carolina, many child care centers predicted that they couldn’t expect to make up for losing that federal funding by raising rates on parents even higher. Because of that, as many as one in every three child care centers might go out of business if the state doesn’t replace the federal funding, some reports have concluded.

House Republicans proposed spending $135 million to cover that gap in their new budget plan. Officials said that wouldn’t replace all of the federal funding, but it would take care of most of it.

“One thing has remained clear: We cannot leave Raleigh without addressing the childcare crisis,” Republican Rep. Donny Lambeth, a top budget writer, said in a statement. “The House budget continues 75% of current stabilization grants to keep childcare centers open and parents can remain in the workforce, while giving the state time to develop a more sustainable model for childcare costs.”

It’s not just Lambeth and House Speaker Tim Moore who have called for addressing the gap; legislative Democrats and Democratic Gov. Roy Cooper have also made it a top priority of theirs to draw attention to this year. And the North Carolina Chamber of Commerce, a conservative pro-business lobbying group, also considers it a top priority — since if hundreds of child care centers start closing down, thousands of working parents could be forced to quit their jobs or reduce their hours.

But a major obstacle stands in the way: Senate leader Phil Berger, who has said repeatedly he doesn’t consider the child care subsidies an appropriate use of state tax dollars. Berger is especially critical of the plan the House is putting forward — to take money from this year’s $1 billion budget surplus, which won’t necessarily be guaranteed in the future, and tie it to costs that will recur into the future such as child care subsidies and higher salaries for state workers.

The Senate is unlikely to sign off on the budget plan the House proposed Monday night with no changes; what’s less clear is whether the two chambers will be able to reach a budget deal at all. If not, all $1 billion of the surplus would roll into savings — a resolution Berger has said he’d be fine with.

Details of the House plan

Some other highlights of the spending plan include hundreds of million on raises, private school vouchers, road construction tied to a major economic development project and renovations to a building at N.C. State University where dozens of former employees and students claim they were routinely exposed to potentially cancerous chemicals.

Raises: Teachers and state employees would receive modest additional raises.

Under the current state budget, most state workers and the average teacher will receive a 3% raise. The House budget proposal unveiled Monday seeks to boost that to 4% for most state workers, and 9% raises for probation and corrections officers. It would also boost raises from 3% to to 4.4% for the average teacher — with higher raises teachers for in the first few years of their career, and lower raises for more experienced teachers.

Starting annual teacher pay is already scheduled to increase from $39,000 to $41,000 when the new school year begins. Monday’s proposal from House Republicans would boost that to $44,000 a year. Teachers would make $50,000 a year after a decade in the classroom, not counting the local supplements that most districts pay on top of that base salary.

The budget plan would also restore a master’s degree pay program for teachers that GOP leaders controversially slashed a decade ago; it would set aside an additional $8 million per year to boost the salaries of teachers who have an advanced degree in the subject they teach. Senate Republicans have killed similar proposals from the House in the past, however, and it’s likely to face opposition again this year.

Vouchers: While the raises would cost about $225 million, the budget would spend twice that much on boosting the private school tuition voucher program.

The funding would eliminate a wait list that began this year, when lawmakers opened up the voucher program to wealthy families and others who didn’t previously qualify for the tuition aid. Cooper has slammed the legislature’s voucher plan as “shockingly irresponsible” and certain to take money away from public schools. But Moore said in a statement Monday it’s possible for the state to help both public and private schools.

“Parents must be empowered to make the best education choices for their families regardless of income status, but school choice is not a zero-sum game,” Moore said. “Therefore, the House budget also raises starting teacher pay to $44,000 and restores masters pay for teachers, ensuring every public school classroom has a qualified teacher who is compensated like the professional that he or she is.”

Spending from savings: In addition to spending most of the billion-dollar surplus, the House budget plan also takes an additional $500 million out of savings for two big-ticket spending lines. That’s a tactic Berger strongly opposes and could lead to opposition in the Senate.

House leaders say they hope they can get the Senate on board because they didn’t dip into the state’s main savings fund, but rather found the money in two smaller reserves that are set aside for specific issues: health care and economic development.

The budget proposes taking $350 million from a Medicaid reserve to fund cost overruns in that program; officials blame the override on Covid-era rules that allowed more people than normal to remain eligible for Medicaid.

It would also take $150 million out of an economic development savings reserve to fund a highway interchange and other road work on U.S. Route 421 in Randolph County, part of a deal for an enormous Toyota factory under construction nearby.