Guest post by John Hood
It’s the journey, not the destination, that matters most — or so we have been assured by deep thinkers ranging from Ralph Waldo Emerson to Steven Tyler. When it comes to North Carolina’s revised 2014-15 state budget, however, the journey proved to be less an idyllic journey through the countryside than a drive through rush-hour traffic with a station wagon full of cranky kids.
It took longer than expected for the House and Senate to resolve their differences (although not particularly long by historical standards). The dialogue among conferees got heated on more than one occasion. Other legislators fidgeted in the backseat and repeatedly asked “Are we there yet?”
Still, I must say that the destination was worth it. The 2014-15 revised budget continues to implement the crucial tax reforms and reductions approved in 2013. At $21.25 billion, the General Fund will grow by just over 3 percent, less than inflation and population growth. The budget contains both structural reforms and sizable enhancements to teacher compensation, while giving other public school staff and state employees smaller but welcome raises. It also makes significant additions to the state’s savings accounts (a wise precaution given that the current national economic “recovery” is, again by historical standards, getting long in the tooth).
The provision attracting the lion’s share of attention is an average teacher pay raise of 7 percent, which will cost about $282 million. It works out to roughly $3,500 per teacher, on average. Under different circumstances, I and other fiscal conservatives might have questioned the wisdom of such a large hike in a single year. In the past, politicians have oversold the premise of North Carolina’s underpaid teachers — using national rankings without any attempt to adjust for variances in cost of living, years of experience, and the value of non-wage benefits. They’ve also tended to pour more money into a broken compensation system that put too much emphasis on longevity-based salary schedules at the expense of offering competitive starting salaries and paying teachers more for high performance or challenging jobs.
But in 2014, the circumstances are different. During the lean budget years of the Great Recession and its aftermath, teachers received only a single across-the-board pay raise (in 2012). Even after adjusting for relevant factors, North Carolina’s compensation package has clearly become less competitive. It needed attention this year.