South By North Strategies, Ltd.

Analyzing The NC House Budget

The N.C. Budget and Tax Center recently released its detailed analysis of the budget legislation recently passed by the state House of Representatives. From the section discussing the budget of the N.C. Community College System …

The 10 percent in cuts would be primarily delivered through a management flexibility reduction ($44 million), changes to the formula by which funding for curriculum and continuing education programs is determined ($22.6 million), cuts to institutional and academic support ($8.5 million) and cuts to customized training programs ($7.6 million). In contrast to the governor’s proposal to eliminate a number of specialized centers and programs, the House budget reduces investment in these connectors to the regional economy by 10 percent. The NC Community College System estimates it would lose 1,000faculty positions.
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The House budget nearly doubles the tuition increase proposed by the governor ($5.50 per credit hour) to $10 per credit hour, making post-secondary education less affordable,especially to low-income students. The budget bill also diverts lottery funds away from the NC Community College Grant program, directly impacting an estimated 15,000 students who receive financial aid to get skills training and education. The budget also cuts funding for critical student supports like the male minority mentoring program and institutional and academic support. All together, these cuts would undermine the system’s goal of ensuring access and successful completion of education and skills training so students can succeed in the labor market.

The budget also would make extensive changes to the system’s adult literacy programs.

Nearly 500,000 North Carolinians between ages 25 and 54 do not have a high school diploma. Increasingly, these working-age adults will need diplomas so they can get ahead in the labor market and earn enough to support their families. Despite the widespread need for the critical education and skills training that community colleges provide, the House budget proposes a cut of $10 million, or 12.4 percent, to adult basic education funding. This cut could jeopardize the N.C. Community College System’s ability to fully implement Basic Skills Plus, a nationally recognized effort that would connect students enrolled in adult basic education with accelerated job training.
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The House budget would also shift entirely to receipts the General Education Development (GED) testing administration, which is critical to the completion of adult basic education and a milestone in the education and career pathway. The fee for individuals taking the GED exam could increase by 100 percent to $75. In combination,these changes in the House budget to investment in adult basic education could make it more difficult to students with the greatest need for education and skills training to complete their program.

Around The Dial – May 26, 2011

Economic policy reports, blog postings, and media stories of interest:

• Citizen Cohn notes that Americans like Medicaid too.
• Jared Bernstein says no to “cut and grow.”
• Simon Johnson points out the flaw in the Eurozone.
• Naked Capitalism asks why the GOP hates Elizabeth Warren.
• TaxVox compares six rival budget plans.

The State Of The NC Workforce

From The News & Observer’s story on the new “State of the Workforce” report issued by the N.C. Commission on Workforce Development …

The commission said that North Carolina’s economic future depends on public officials developing smart policies. Such policies include steering more students to get marketable skills in the sciences and expanding programs that provide midlife retraining for veteran workers displaced by layoffs.
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Much of this was laid out in the commission’s 2007 report, but the transformation has been intensified by the recession, the new report said.
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Indeed, legions of the displaced workers are not in obsolete blue-collar jobs but instead have been disgorged by the flagship employers in the intelligence-based economy. Companies like IBM, Nortel Networks, Tekelec, Sony Ericsson – and most recently, Cisco Systems – have collectively announced thousands of job cuts in the Triangle in the past few years, some staffing up in India and other parts of the world with cheaper labor and cheaper production.

NC Unemployment Claims: Week of 5/7/11

For the benefit week ending on May 7th, 11,721 North Carolinians filed initial claims for state unemployment insurance benefits, and 107,646 individuals applied for state-funded continuing benefits. Compared to the prior week, there were fewer initial and continuing claims. These figures come from data released by the U.S. Department of Labor.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of  11,810 initial claims were filed over the previous four weeks, along with an average of 109,916 continuing claims. Compared to the previous four-week period, there were more initial and fewer continuing claims.

One year ago, the four-week average for initial claims stood at 12,595 and the four-week average of continuing claims equaled 171,981.

While the number of claims has dropped over the past year so has covered employment. Last week, covered employment totaled 3.7 million, down from 3.8 million a year ago.

The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

Service Activity In the South Atlantic: May

From the Federal Reserve Bank of Richmond’s latest survey of service-sector activity in the South Atlantic (District of Columbia, Maryland, North Carolina, South Carolina, Virginia and West Virginia):

Service sector activity slowed in May, according to the latest survey by the Federal Reserve Bank of Richmond. Retail sales dwindled as shopper traffic dropped sharply; big ticket sales remained in decline. Revenues also weakened at non-retail services firms. Looking ahead six months, retail merchants pulled back from their optimism of a month ago. Non-retail services providers maintained a positive outlook, but were less upbeat than in April.
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In service sector labor markets, retailers made few changes, while hiring rose solidly at non-retail firms, albeit more slowly than a month earlier. Average wages were nearly unchanged at retail establishments, but spiked at services firms.
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Price change in the sector was contained; retail price growth remained at last month’s pace, while services firms’ prices advanced a bit more slowly in May. Services providers’ expectations for price change in the months ahead moderated from their outlook of a month ago, while merchants anticipated an uptick from their previous estimates.