Austerity with an Asterisk

In Oregon they cut short the school year, and in Kentucky they

let inmates go free. But as the budget crunch continues for a

third year in North Carolina, class size is shrinking, more

officers are guarding prison inmates, and a waiting list for

children’s health coverage has dwindled to nothing.

From schools to prisons to services for the disabled, many

state functions have remained intact since the first

billion-dollar budget shortfall nearly three years ago, state

officials say. Gov. Mike Easley has demanded that classrooms not

be compromised. He and the legislature have agreed to raise some

taxes each year. And in many areas of government, officials

report that good management has allowed them to preserve their

primary functions.

“So far, we have been able to rearrange the way we do things,

to work harder, smarter, and not let the reductions that we’ve

had over the past biennial budget destroy our core mission,” said

Carmen Hooker Odom, secretary of health and human services. She

oversees $ 3.7 billion in state spending, the second-largest

budget after public education.

Not everyone agrees. Some point to specific programs, such as

child abuse prevention or historic sites, that have been nibbled

at. Others say that although spending has not decreased broadly,

it also has not kept pace with demand, which in some cases has

risen substantially as the economy has fallen.

Even those who think the effect has been minimal say that will

not be the case in the coming year, when more cuts are likely.

“We’ve had a huge deficit of services, like tens of thousands

of people not beng served, long before this budget crunch,” said

Beth Melcher, who lobbies for the North Carolina office of the

National Alliance for the Mentally Ill. “Now, you have more

people needing services, because that’s what happens when you

have an economic downturn, and you’ve cut all these rates for

providers, so they’re seeing fewer people. So even if you can

look at a budget number and say, ‘We’re not reducing that

number,’ there’s a bigger story underneath it.”

Still, there are plenty of examples just in the Department of

Health and Human Services where programs have not been cut and,

in some cases, are serving more people than ever.

Medicaid, the enormous health-insurance program for the poor,

elderly and disabled, has reduced payments to providers but has

suffered no reductions in benefits or eligibility over the past

three years.

A longer wait for aid

The waiting list for child-care subsidies has declined from

about 15,000 to 10,308 over the past year, and funding has ticked

up slightly.

Even Health Choice, the health program for low-income children

that was frozen with a waiting list of 34,000 in an early round

of budget cuts two years ago, is now open to all eligible

children and serves nearly 100,000 children.

“There’s been some cost-cutting, but it hasn’t been so huge

that it’s starting to drastically affect people yet,” said Adam

Searing, a public-interest lobbyist who works on health issues

for the poor.

In state prisons, officials say they have maintained the ratio

of three inmates per guard, even as the number of inmates has

grown. The Attorney General’s Office is keeping up with a steady

increase in appeals of criminal convictions without adding more

people, Chief Deputy Edwin Speas said.

The state budget itself demonstrates why many services have

managed to go on. It has continued to grow through the crisis,

from $ 13.22 billion in spending three years ago to an estimated

$ 13.95 billion now. Personnel records show that the number of

state employees as of April 30 — 91,186 — is about 1,100 less

than three years ago. The figure, which excludes teachers and

professors, amounts to a 1 percent reduction in the work force.

Those numbers are possible in part because in each year of the

crisis, the legislature has drummed up new money. Two years ago,

at Easley’s prodding, the General Assembly raised the general

sales tax. Last year, it allowed local governments to raise taxes

in exchange for taking state aid to local governments.

“It’s the same story,” said Jonathan Hill, state director of

Citizens for a Sound Economy, a national antitax organization.

“We seem to be looking for more revenue, and the first place we

should be looking is cutting the size of government. And that’s

been the big failure.”

Whether education has emerged unscathed depends on who is

talking. Easley has demanded extra money for More at Four, his

academic pre-kindergarten program, and to lower class size in

elementary school. He has pledged that he will not allow the

budget crunch to harm the classroom, whether public schools,

community colleges or public universities.

Still, education officials say budget cuts have made it hard

to keep up with growing numbers of students. Services outside the

classroom such as financial aid and career counseling are

suffering. Guilford Technical Community College used to evaluate

an application into the college’s health services programs in one

week. It now takes a month.

“It’s not that the governor and the General Assembly have not

worked with community colleges — they have,” said Kennon Briggs,

the system’s vice president for business and finance. “But

through the process of having to revert funds this year and last

year, the places we have been hurt are in student services and in

expanding offerings to meet the demand.”

Beyond education, there are more obvious examples of programs

reduced or eliminated over the past three years, notably those

for troubled youths.

The Department of Juvenile Justice and Delinquency Prevention

cut $ 20 million over the past two years by returning nearly half

of the youths in detention centers back to the counties, which

finance group homes, counseling and other services. But the

counties got no additional money for those youths.

In Wake County, the waiting list can be as long as three

months for group homes and family counseling. Almost all the

money serves juveniles already in the criminal justice system,

and little is left for prevention. That’s troubling to advocates

who argue that the state will pay more in the long run, when

troubled youths become prison inmates.

Down the road

“We need to take a longer-term view of this,” said Mike Rieder

of Haven House Services of Wake County, which runs two group

homes, a runaway shelter and a counseling program. “If we don’t

provide resources to adequately serve these kids, the population

that will grow is the prison population.”

Many smaller services scattered across state government also

have taken hits. A sampling:

– The SBI has lost lab technicians, expanding the backlog of

evidence awaiting analysis. Cuts also led the SBI to cancel its

academy last year, just as many agents retired. The SBI is now

down about 30 agents, said Director Robin Pendergraft, forcing it

to forgo investigating lesser crimes and to turn down some crime

scene investigation work for municipal police. Last year, SBI

agents opened 3,699 cases, 392 fewer than the previous year.

“We’re having to be creative, and we’re having to prioritize

so that the most violent crimes are addressed,” Pendergraft said.

– State parks have lost 13 positions this year, forcing

rangers to do maintenance work and to cancel some wildlife

education tours for schools. Last week, ranger David Brown was

the sole guide for 54 second-grade students on a nature walk

through Raven Rock State Park in Harnett County. Usually, the

park would assign a second ranger for such a large group.

“It knocks out pointing out smaller things like spiders,

lizards and beetles and stuff,” Brown said.

– At the Division of Archives and History, six positions

responsible for reviewing applications to the National Register

of Historic Places have been eliminated, causing the review time

for such applications to grow from three months in 1997 to 15

months in 2002.

– At the Department of Environment and Natural Resources,

backlogs for permits have grown — although officials say the

budget crisis is only partly to blame for the attrition that has

left offices short-staffed. The backlog for permits for

wastewater and industrial discharges has risen from 111

applications two years ago to 239 now.

Hidden costs

There also is the cost of not expanding programs.

Division TEACCH, a program at UNC-Chapel Hill to treat

autistic children, absorbed a 7 percent cut this year, while

demand for its services rose 25 percent. Now, families wait an

average of six or seven months for a diagnosis, up from four or

five months, said program director Gary Mesibov.

Similarly, a broad reform of mental-health services is

supposed to begin July 1. But the state has not invested the

money in the community-based services that are supposed to help

move the mentally ill out of institutions, said Melcher, the

lobbyist for the National Alliance for the Mentally Ill.

“There’s nowhere for them to go,” Melcher said. “Any savings,

the folks suck it right up to plug a budget hole. So any of the

money that was supposed to be saved at the institutions and

reinvested in the communities, that just hasn’t happened.”

There is the alternate view that the state cannot afford to

provide all the services under the sun, even if they have value.

“There is always more that one would want to spend on than you

have available,” said John Hood, president of the John Locke

Foundation. “So it gets a little bit tiresome to hear about state

government having unmet needs. Even wealthy families have unmet


Still, even those agency chiefs who say they have suffered few

ill effects of the budget crisis warn that they cannot absorb

further spending reductions without harming services. Lawmakers

are considering freezing Health Choice, narrowing eligibility for

Medicaid and laying off teaching assistants, among other options.

“There comes a time when you can no longer continue to

fine-tune,” said Philip Price, an associate state superintendent

with the Department of Public Instruction.