Carolina Journal Radio No. 849: Reform needed for broken N.C. school financing model

From Cherokee to current attack from the largest city to the smallest and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most of public policy events and issues welcome to Carolina Journal radio why Michiko guy during the next hour, Donna Martinez and I will explore some major issues affecting our state when we talk about markets.

Most of us think about products or services. What if we apply the concept of markets to neighborhoods researcher offers his ideas. The North Carolina Constitution bans felons from running for sheriff. What if a potential sheriff had a felony expunged from his record. Lawmakers recently debated the rules of that situation. Legislators have spent years debating billboard regulations. The latest debate involves billboards that must be moved when local government condemns property that will focus on what economists have to say about a proposed $15 per hour minimum wage. Those topics are just ahead.

First, Donna Martinez joins us with the Carolina Journal headline next year. Legislative leaders are expected to begin restructuring the state's public school finance system.

Their challenge is huge, but necessary. According to an analysis of the current funding system from the John Mott foundation's education expert Dr. Terry stoops in his report co-authored with Aaron Garth Smith of the reason foundation. Dr. stoops lays out a plan for revamping the broken system. He joins us now. Terry welcome back to the program.

Thank you. You write in your report that the current way that we fund public schools in North Carolina is unfair, outdated, complex house, so well. It's complex in the sense that it takes on average a finance leader around two years to understand how it works and if you think about the fact we have a system that takes of financial experts two years to learn the ins and outs that should raise some alarms about the complexity of the system, but with the way that it set up in North Carolina and it's difficult really to to explain. You really have to see its inaction to understand just how confusing it could be a session with the state does is save the provide categories of funding for teachers for schoolbooks and for various other functions of the school and they give you have formulas that establish how much each district would receive for each of these areas, there are rules that govern whether you can take money from one area given to another.

There are some laws that prohibit moving money from one area to another and and so that we have this complex system where money getting from the states. The districts how is governed by all of these formulas and governed by all of these categories that are established for the for the system and and what the system's needs are mainly personnel you write a very interesting example in the report of what actually happens on the ground.

Based on all those formulas that you're talking about. Tell us what happens when it comes to the classroom teacher allotment and how the determination is made of hammy teachers.

A school receives sure and and this is one that's tinkered with often so so the way that this works is that the state will give a district money based on the number of students in certain grades and the ratio of students to teacher. So for example one teacher for every 16 or 17 students. The school district would receive money for a teacher position that the money that they receive is based on the average pay for the teachers in the district. So that's the money that they get for that position, regardless of how much it would cost to employ that teacher and once that allotment gets to the county they can do various things with it now. This raises the question, what if it turns out that you have less than one teacher per every 16 students and say second grade what happens. Well, you're not going to get the allotment for that one teacher you have to have have it break down to having a certain number of students per teacher and that means that the remainder would not get the teacher allotment that they may need. So our listeners can tell even high this conversation that this really is like a a web of formulas of rules and it's very very complicated and complex. You write in your report that we really should not only modernize this, but we got to make this a lot easier for people and give them much more flexibility because you say principal needs to be able to control these dollars and move dollars around in and be able to allocate dollars to what is actually happening in that local district and in the schools give us a sense of your recommendations for policymakers. As I mentioned at the top of this interview next year. They are going to start really restructuring this absolutely. Our recommendation is what's called backpack funding or student based funding in this essentially looking at what the students needs are and funding schools that way. So here's a perfect example. You have a student of the special-needs child in a low income community, they would receive a base dollar amount that every student in the state would receive. And then there will be additional amounts added to that base amount based on the fact that their special needs students and their low income students and you would basically build these funding system based on the demographics and the needs of the students rather than the system like it's currently structured. This is a recommendation that would do a couple things for the state.

First, do it. I think it would give some fairness to the system that we have in place now. It would definitely be more fair to some economy to those teachers and principals and superintendents that run school districts. It would be transparent suite would be very apparent how much show a school or a district gets based on the students that they have, but I think that the best feature of this system is that in the future. It can be portable and so if the funding is attached is based on the student.

It could also be attached to the student and when you attach the funding to the students. The next step is to give parents the power to be able to determine where that money goes and that's the system that I would hope that one day that North Carolina would go to were a long way from that we have a lot of work to do to fix the system that's been in place for decades. The confusing complex system that only few people really truly understand the state of what I feel confident that the Republicans in the Gen. assembly are going to move forward in some the initial proposals that they have had for reforming the system, are there any other states that are moving towards this student centered and student waited approach absolutely look at states like Hawaii and Texas really have great system set up for determining how that funding is allocated but to state that I like to talk about is California because as we know California does very little right. I mean California is not a city known for getting having good policy, but they got there student funding above system right and it was easy for them to get to that point. Of course, it required an increase in funding but they were really great, student based funding system and so we have examples around the nation. We have states that are using this right now. We can learn from their experiences with the system take the best features of what's out there and incorporate that into what's happening in North Carolina and I think that there's an appetite and bipartisan appetite to do that here in our state. I'm so glad you use the word bipartisan because just mentioning the three states that that you did here were talking about California obviously very blue state Hawaii a blue state.

Texas a red state so really this does cross political lines here to do this absolutely and and it should be noted that this whole effort to look at the funding system and to consider ways to reform it was a Democratic proposal in 2009, when the Democrats had control the general assembly. They commissioned a report to look at North Carolina school funding model and to consider alternatives. They receive the report in 2010 and unfortunately that's the year when the great recession started so became difficult to implement really any kind of changes but it was a bipartisan effort then and fortunately we have Republicans in the Gen. assembly like Craig Korn, who are mindful of that report and thinking about ways to incorporate that when we have a budget that's stable like we we currently have and thinking about ways to use what that report told us should be done in North Carolina and could be done to improve our current system. Dr. Terry stoops with the John Locke foundation. He's VP of research. Also, the director of education studies Terry, thank you, thank you. Say with as much North Carolina general radio to come in just a moment tired of fake names tired of reporters with political axes to grind. What you need to be reading Carolina Journal honest, uncompromising, old-school journalism, you expect and you need even better, the monthly Carolina Journal is free to subscribers sign up at Carolina. Journal.com.

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The market for neighborhoods.

Celine Firth is a senior research fellow at the Makeda Center at George Mason University, welcome to the program. Thanks Romeo match so you are applying a principal economics to neighborhoods which is something that I think most people probably don't think about how should people consider neighborhoods in the context of economics. So yeah I I came to this question because I wanted to think about areas where we can get outside of the free market versus government fight right so it's very clear that governments can't make a neighborhood good is also very clear that the market doesn't work in the sense of creating community the way that it works in creating rulers or bananas or cars right there is a just a corporation that produces neighborhoods and you the Truman show. Maybe, maybe, is exception to that. If you are settled movie but so how do we as citizens create, produce together these community goods that we really value what people know they want to pay more to live in a good neighborhood that a bad neighborhood but how we produce that and how much do we value and I think those are both good questions. As such, I'm trying to explore in today's talk and so basically people who think about this. Apply economics to neighborhoods.

There are a lot of different factors in their it's not just trying to buy a banana picking among them are tried by carpeting. Among those options. There a lot of different factors that go into neighborhoods yet.

It's very hard to know really how much do we value neighborhood in the community sentence right so you can't unbundle location right so any house that you buyer any place you go is that places stuck in two-dimensional space on the face of the earth somewhere and so when you think of buying a house you think about okay the commute distance to one job to distance another job. The traffic on your street. The relative ease of getting to the highway.

Can you walk to school is the drive to the grocery store far and then one of those many factors is are you embedded inside of this positive social space and I think one of the interesting factors. Here is from the buyers perspective of a potential buyer. It's really hard to know before you've lived somewhere. Whether it is a vibrant neighborhood where people know each other and take care of each other or if it's kind of become a place where people is minor in business and will talk to you. We are chatting with Celine Firth. He is senior research fellow at the Makeda Center at George Mason University. When you put on the economics To look at neighborhoods did you find that there were some things about it that you hadn't thought of before, that you thought about the price of the house whether they were looks good. Whether neighbor seemed friendly to the economics piece at a new dimension you had really thought of before. Yeah so neighborhoods are definitely a public good and I think we make a mistake when we think about public goods that we think public means government provided and what public means is that anybody can use it right that it's just there so if you build a building with beautiful architecture anybody walking past is the right to look at your building and enjoy the beautiful architecture you made so that we use the city, one class is this a wealth beautiful architecture is under provided because people don't get all the benefits themselves. The investors and get all the benefits of building beautifully. So we have too few beautiful buildings in the sense relative to what we might and neighborhoods of the same way. And once you figure it is a negative that we have less community than we might want because it takes you know people like you know, store, proprietors and volunteers and pastors who invest a lot in their community but they don't really get all the benefits of benefits kind of scattered to other people.

So, may we have too little of it.

That's the negative side, the positive side is that if you look at any really high functioning neighborhood you find a few people who are really investing in making that place great and you can if you if you values you can choose to be one of those people you can be the kind of busy positively busy neighborhoods. Volunteering is cleaning up who's making sure people know about the raffle and you are doing time at your your local club and you can have a really big outsize influence in making where you live one of those strong, socially tight neighborhoods.

What is your research tell you about the government's role in all of this so government has I think two really big roles to play, and again this is a place where I think we can talk about the free market because were so far removed we've never had a modern city that was built in anarchic fashion rights as long as the government builds roads. For example, or decides where the sewers are going to go that has massive influence on the shape of our communities. So I think there's two really big things the government can do so. One is zoning which is right now the way that cities in North Carolina around the country decide how land is to be used is that they set you know basically take a map and select SimCity for play that when you were younger. The sale calla commercials can go here and all residential can go here and it turns out the generally from a neighborhood perspective that were really poor job of so they tend to over zone for retail, especially out along main roads and what that does is it creates artificially cheap prices for retail cheaper than residential or or other uses, and they often on top of that gift tax benefits to bring in a big box store to put on the main road and not cannibalize as their own downtowns. So if you're kind of a traditional like railroad stopped on North Carolina's a lot of these around which the bigger suburbs are built probably are city government is actively undermining your historic business district by artificially cheapening land along the main roads and giving tax breaks and big box stores a minute runs as well. It's just the market, you know, mom-and-pop shops can survive today. It's well Panera got a tax break and you know so-and-so's bar and Grill has been there for four years and did an and now we wonder why the barn girls going out of business in Paris exceeding that's not the free market.

So that's one of the things the other thing is, government facilities, we had breakfast out and when Dell this morning. Delightful shop and out on the middle of the elementary schools right in the center of town causal congestion Memorial becomes a ghost walk your kid to school if you will your kids old enough to walk themselves to school. However, the nations for the middle school which is 3 miles out of town on the main road, so there's no chance for your kid to kind of grow up in that community and with the safety of they know their neighbors and they can walk themselves to school I met this government decision of what working to build the middle school with a lot of parking and cheap land instead of Billy and with it integrates into an existing community of your policymaker. That's one of the most inferential things you do is you build the school's post offices.

Other facilities that can be anchors or can pull people away from the communities that they live. So the brief time that we have left the policy implications would be. Stop doing that. Yeah, stop doing that on the zoning side be a lot more flexible, and I understand nobody wants to have a paper mill in their inner subdivision or Walmart on their side street bring a ton of traffic.

This is reasonable things for the government to regulate in land use, but when you're talking about stores going into a nutritional downtime. Stores can belong there, or maybe a traditional do not downtown needs to transition to more residential use rights retail with the innate of Amazon. We don't need as much retail space with over zone four, so allowing uses to transition to other reasonable uses in that sphere is a really positive step in being cognizant when you make a community decision about the location of a public facility, put it somewhere that people want to be and that helps grow your community and and supports your local businesses instead of undermining Celine Firth. He is a senior research fellow at the Mercator Center at George Mason University.

Thanks much for joining us. Thank you much on Carolina journal radio just a moment. If you have freedom we got great news to share with you now.

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2000 Constitution was amended to school and convicted felons from being able to service your things really really relate to that amendment only clarifies inspections of individual who has been convicted of a felony regardless of an expungement expungement is ineligible for the office of sheriff this makes is that is consistent with the Constitution also sets up a procedure requiring a candidate one appointee for golf the ship to file a disclosure statement prepared by the sheer standards commission verifying that they are not a convicted felon, the sheriff candidate appointee would just merely sign things not they would actually thought to verify about by the sponsor for House Democratic leader Darren Jackson objected. I don't think that this situation about an expungement was what we were talking about. I don't think anybody ever thought about it and now what were saying is we're clarifying a constitutional amendment.

The people of the state put all and so I have a concern about that. I have a concern about a 16-year-old who gets short under current existing law got charged with a felony would be tried in adult court and get a conviction after they turned 18 years old they can get it expunged. They go off to college to go to medical school. Whatever the whole life of themselves and then when they decide they will share and then they can't be a shift because I have a charging sponsor when they were 16 years of age Republican representative Alan McNeil pushed back against the Democrat Jackson says this in the constitution and the north carolina constitution was amended in 2010 on the ballot and this is the last sentence of this is that constitution it says whether or not that person has been restored to the rights of citizenship in the manner prescribed by law, not an attorney, so it seems to me that there was some discussion or some fault during that time.

as to the fact that a person might have been convicted of a felony and their rights restored to citizenship. now that might not technically be the same thing as an expungement would leave that for the legal minds in the room to to debate the think probably have an speaking against this. if you want to change it. you need to go back and change more, constitution, the issue of felons running for sheriff continues to divide state lawmakers will return with more carolina journal radio in a moment where doubling down on freedom at carolina journal radio were proud to bring you stories that impact your life and your wallet. and now get twice as much freedom when you also listen to our podcast headlock available on itunes and@johnlot.org/podcast headlock is a little bit different. It's a no holds barred discussion that challenges softheaded ideas from the left and the right, like Carolina journal radio headlock is smart and timely but with headlock you'll hear more about the culture wars get some more humor as well.

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There has however been a bit of an injustice placed on this industry. In cases of eminent domain, and use the example of a shoe store for shoe store is condemned. For example, that the property owner has the right to move up and down the road and relocate that's not necessarily the case when it comes to a billboard, particularly when you consider that any boards placed in its precise spot to advertise to very specific market billboard owner might be allowed to relocate by the look local government and then they might not. It's true that one of the options in that case would be for a billboard owner to receive some compensation, but in many cases, the owner of that board had rather have the ability to continue to operate Edwardsville spells out the circumstances when an existing billboard could move to a new location nearby.

The proposal prompted questions from colleagues like Democrat Mike glittered of Durham when a billboard is condemned as I read the bill it could be right relocated anywhere within a 2 mile radius.

I would argue that would necessarily also.

This would allow a billboard currently existing in a regular light onto wooden poles to be raised to a height of 50 feet on the metal monopole that is correct. That is not correct.

What this bill would allow that sign to be billboard to be relocated to the saw his current height and size and believe that the language that you referring to is that if it were required to be relocated behind a sound barrier, then it would the global company would have the option to raise that sign 50 feet above that sound barrier if if if that were necessary to get the visibility, but it would only be 50 feet above the sound barrier water remains unconvinced. There are a lot of questions about this bill so it was correct that it has gone through a number of iterations and those of us have been here while remember that this is that an industry we spent a lot of time on even if bills didn't necessarily get to the floor.

They certainly made it through our various offices in various committees.

I think there's still a lot of questions that I have about this bill is speaking with attorneys just in the last hour or so. I still have a lot of questions that I may disagree about that and I still think this bill needs a little bit of work or at least further exclamation another Democratic Sen. Riley Nichol of wake County explain why he was willing to go along with the proposal. It makes it cheaper to build roads so when we have combination of signs in the taxpayers will have to pay for that if we relocate them so that is important. Bill does not allow for new signs in North Carolina Democratic Sen. Natasha Marcus of Mecklenburg County was not willing to support the proposal I'm opposed to this bill.

I represent four small towns that don't have an already established view corridor and they did they see this is that further moved by heavy-handed Gen. assembly to control what they with their towns look like and feel like and they have sent me resolutions from their towns to please oppose this bill.

I've also heard from many constituents who are post for similar reasons, and I know that the league is not endorsing the bill but is neutral, which is not to say that they are in favor of it. I further know that environmental groups are opposed because of the they will result in the removal of additional vegetation and so bill that out that overrules local control allows higher and larger billboards and we had before in opposition to what localities wish to have happen.

And I'm not at all sure that the language is adequate to say that nondigital billboards can be converted to digital. And I understand that attempts to amend the bill to clarify that local ordinances will be in place and not overruled by this bill were rejected. So for those reasons, I would ask you to vote against this Senate Republican leader Harry Brown countered some of the criticism of billboards that we keep forgetting is in order to build a billboard to start with a city or county had to give somebody a permanent and allow them to build a billboard in the first place and an effort to build our made investment built billboard type property tax on epic billboard for who knows how many years and then through a process without billboard could be condemned.

All of a sudden a city or county says will too bad to this particular business is in a don't want you to go to no one but there's just something totally unfair about that today because you gave him the permit to start with and then all of a sudden you don't like it anymore. Nugent decided to bad we don't just take this investment away from you and that ability to make money so is just totally unfair as a fairness issue at all and allows a lot of flexibility think that they can work with the city or county to find out appropriate place was to go to find a property owner will allow me to do it on top of it. Republican Sen. Jerry Tillman reminded his colleagues that the billboard debate is nothing new. I'm over 18 years. We talk about billboard Barber Brown and nobody is perfect billboards that much commerce, and many many other business ventures take place and it broke the commerce and business to our state and I don't know how many times I have and you have look for a Cracker Barrel or a Chick-fil-A Colonels convective chicken you want to know. These places are how you go find out Democratic Sen. Harper Peterson of New Hanover County shared his concerns about limits on local control over billboards coming from a small county and district New Hanover will you have transitions from urban suburban to rural areas.

2 miles is a distance we taken great care over the years and placing billboards and zoning can transition very quickly and that's why local oversight thing is so important for us not to have a disappointed statewide to wardens.

I think we need to have that local oversight final approval Chuck Edwards. The bill sponsor reminded colleagues why he supports the measure. I think that it's a perfectly fair scenario to tell somebody that if a look at the local government condemns their property. And that's that's what would have to happen for this statute to you to be activated local government would have to come in and take their property that the owner of that property should have the right to relocate that Agnes also consider that it's very unlikely that a billboard be relocated behind the sound bear because that means that it would be into a residential neighborhood and an extremely unlikely that any residence owner or homeowners Association will allow a billboard and in circumstances like that you been listening to highlights from the North Carolina Gen. assembly's latest debate over restrictions linked up billboards will return with more Carolina journal radio involvement really influence you either have it or you don't and at the John Mott foundation we have it, you'll find our guiding principles in many of the freedom forward reforms of the past decade here in North Carolina. So while others talk or complain or name call.

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Widen your job opportunities improve your access to doctors. The recipe for stability and a bright future for truth for freedom for the future of North Carolina. We are the John Locke foundation. Welcome back to Carolina journal radio I'm Donna Martinez $15 an hour. That is the amount that activists for raising the federal minimum wage seem to have settled on as the so-called right amount to pay people. The minimum wage currently sits at 725 and our supporters say this is an issue of economic justice. The question is what do economists think of this idea and what would the impact really be that is the issue that John Sanders has been analyzing. He is director of regulatory studies for the John lock foundation. He joined us now in writing a lot about this. It's a fascinating piece available@johnlock.org John, welcome back to the show thanks to you when you talk to people about raising the minimum wage and we've all been there. Our first job at an entry-level job in your work and your trying to impress the boss then you get the paycheck.

And it's not very much money and so in some cases it sounds sort of mean in fact to say well I don't want somebody and make more money before we look at the economics of it just kind of address that you write about this a lot. Do people say to you, John Sanders, you're a mean guy you don't want people to make more money. Well, at least not to my faith maybe on Twitter or something like that yeah but it is a common refrain that people will say we want people to make more money and those businesses are making money.

So why not pay them more in this part of the issue is people look at it from their perspective and think will I would want to be working for that amount of money but when you drill down into who actually makes the minimal waste there usually first-time workers started workers needing startup notetaking start of jobs in the start of wages, lots of our teenagers. Most of our teenagers to young 20s and most of her single and consummate their part-time work and people also not intending to stay forever and an entry-level job running right to their learning lab means to have a job and learning those soft skills of being an employee. John the city of Seattle major city in this country has been engaging in raising the minimum wage, and it's getting a lot of attention. Tell us what Seattle has done and what has occurred.

Seattle decided to raise their rates to the 15 Illinois stepwise in the first round of of races went through in and there weren't great effects when the second round went through the raised white squeezing rights to a $13. Economists were noticing some fairly significant results. One that it didn't affect all workers didn't improve the loss of all minimum-wage workers. Only the more skilled workers were doing better in fact a major reason why was they were also able to find work outside the city to supplement some of the hours that they lost inside the city. The other workers who remained employed. It was pretty much a push for them. But it also kept a lot of other workers from coming in. And so it decreased employment for for low-wage workers yet.

That's a key point because you put yourself in the shoes of the person who is owning or managing whatever business it is.

If you are required to pay people a lot more and that would be a lot more if you're going up to that 13 an hour or 15 an hour range for an entry-level person in in some businesses that does put a crimp in your budget.

If you'd been to you about hiring someone else or increasing someone's hours. You don't have that pot of money anymore right in.

A lot of people in thinking about this on the outside. Think of it as those big corporations they can afford it but we forget that over 99% of businesses are small businesses in this nation. A lot of mom-and-pop shops and you know if you cut if you raise their labor costs by more than double their really going to struggle for going to have to find ways to to economize the cut hours they might not make expansions of their thinking about it. They may cut other other kinds of benefits, or they may just stop hiring one of the things I think is so important about your writing on this issue. John is that you are always telling people look, don't just look at the benefits of a policy that people who would benefit in the short run is certainly someone is making 725 an hour right now if there to get a bump to 10, 13, $15 an hour that persons get a benefit in their paycheck but your point is you have to look long term and look at the costs and the consequences not just of the people who are benefiting.

When that occurs that leads me to something you wrote about this pretty fascinating economists and a new study that came out that that doubt looks at what economists are thinking about raising the minimum wage give us a sense of of what this out report found this report pulled close to 200 economists, most of them labor economists so they are the most expert in this field. Most of them were Democrats or Independents only.

I think 12% were Republican, so this is not skewed in terms of any one political party and what they found in. This is been borne out over several studies that they've done is economists by and large, think that the minimum wage than hiking the minimal wage would have overall negative results on employment on on businesses on youth employment, especially, but also an adult employment and it would generally have negative net costs and I would think John the some of the folks listening to us right now might be very surprised by that because again you typically when you hear or read about this issue.

It focuses on the people who are receiving the benefit right away bit more about some of those negative consequences and what economists are looking at.

Well, it makes it more expensive to hire people who never held a job before, so it makes it very hard to to hire teenagers.

For example, but getting that first job is very important as a teenager.

You learn how to how to be an employee, you learn what it means to hold a job, your lifetime earnings take an increase because you've learned the skills earlier on in life and makes it harder to to take a risk on someone who may be the low skilled worker or in a salon that you would like to help, but at 725, or eight dollars an hour.

$10 and are you can do it. $15 an hour as an employer. That's a big risk. Well, it really is and you also looked at this and said well what are economists thinking that this will not do, and very, very high percentages of this you wrote 90% do not think it will create jobs, 97% don't think it will increase youth employment. 93% don't think it will increase adult employment and that is a shockingly high number seems very clear on the economics here. Yes, so if you're wanting to make the case for doubling the minimum wage and saying it's going to do good for the economy. The best you're going get from economists as well. It might not be bad so John then what do we do. I mean, I think we can all agree that someone who is just starting out and making minimum wage. You want them to do well. You want to be able to make more money.

Be self-sufficient and and all that. If raising the minimum wage isn't the answer than what is keeping freedom of keeping these rates available for to take a risk on people if raising them in wages bad keeping it where it is, is not going to have the same negative affects it's going to allow employers to take that chance. The current federal minimum wage is 725. You can read all of John Sanders analysis of this issue that John lock.org John, thank you very much that's all the time we have for the program this week. Appreciate you listening on behalf of my cohost Michiko guy Donna Martines hope you'll join us again next week for more Carolina journal radio Carolina journal radio is a program of the job. To learn more about the John Locke foundation donations that support programs like Carolina radio send email to development John Locke done. Call 66 JL left 166-553-4636 Carolina journal radio is the John line foundation, Carolina's free-market think tank and Carolina broadcasting system, Inc. all opinions expressed on this program are selling those did not merely station for more information about the show. Other programs and services of the foundation. John Locke toll-free at 866 JL would like to thank our wonderful radio affiliates across Carolina and our sponsors.

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