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Carolina Journal Radio No. 813: Legislators loosen restriction on N.C. tax incentives

Carolina Journal Radio / Donna Martinez and Mitch Kokai
The Truth Network Radio
December 17, 2018 8:00 am

Carolina Journal Radio No. 813: Legislators loosen restriction on N.C. tax incentives

Carolina Journal Radio / Donna Martinez and Mitch Kokai

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December 17, 2018 8:00 am

Legislators recently loosened restrictions on North Carolina’s targeted tax incentive program, allowing companies to claim as much as $16,000 for every job created in connection with a Job Development Investment Grant. That’s a 246 percent increase from the old cap of $6,500 per job. The change passed without much opposition in the General Assembly. But Jon Sanders, John Locke Foundation director of regulatory studies, explains why an increased reliance on targeted tax incentives means bad news for state taxpayers. Progressives argue that their policies are designed to help disadvantaged groups, including minorities and the poor. But Michael Jacobs, professor at UNC-Chapel Hill’s Kenan-Flagler Business School, has conducted research demonstrating how policies adopted by North Carolina’s most progressive local governments have ended up hurting the groups progressives say they want to help. Hurricanes Florence and Michael caused substantial damage in North Carolina, including the state’s agriculture and agribusiness. State Agriculture Commissioner Steve Troxler delivered a recent status report to state lawmakers. After 55 percent of N.C. voters supported a constitutional amendment requiring people to present photo identification when they head to their polling place, state lawmakers sought input about translating that new constitutional requirement into law. You’ll hear highlights from a public comment session tied to the debate over implementing North Carolina’s new voter ID requirement. Prospective charter school operators face a number of challenges as they try to set up their publicly funded, privately operated K-12 schools. Terry Stoops, John Locke Foundation vice president for research and director of education studies, has seen many of those challenges firsthand. Stoops and his wife are leading efforts to establish a new charter school in Wake County. Now that the school has reached its groundbreaking, Stoops reflects on the charter school development process.

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From Cherokee to current attack from the largest city to the smallest town and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most public policy events and issues welcome to Carolina Journal radio why Mitch Coe got during the next hour, Donna Martinez and I will explore some major issues affecting our state. This week's edition of Carolina Journal radio was brought to you by Blue Cross and Blue Shield of North Carolina working every day to transform the health system for North Carolinians. More information available at today. progressive's say their policies are designed to help disadvantaged groups, minorities, the poor will check with the University of North Carolina business professor whose research points in the opposite direction. Hurricanes Florence and Michael dealt catastrophic damage to North Carolina farmers you hear at assessment from the state agriculture Commissioner, North Carolina voters have added a voter ID requirement to the state constitution. You'll hear ideas for translating that new requirement into law and coherent education experts, first-hand account of the process of starting a new charter school in North Carolina. Those topics are just ahead. First, Donna Martinez joins us with the Carolina Journal headline Honeywell recently announced that it will be moving its headquarters to Charlotte leaving New Jersey behind the announcement came very shortly after the North Carolina Gen. assembly passed a bill that increase the amount per job that the state can offer in tax incentives to a company that meets certain criteria, the state Commerce Department that reporting that the agreement for Honeywell authorizes the potential reimbursement to the company about 42 1/2 million dollars over 12 years. John Sanders is the director of regulatory studies for the John Locke foundation. He is closely monitoring. Not only that Honeywell deal itself, but the issue of tax incentives in general. John joins us now walk back to the program. Thanks thanks for having me start with your reaction.

In general, to what we know about the Honeywell deal.

So guess what we know about the Honeywell villas.

Honeywell wouldn't come here because our tax burden on Honeywell was too high so Honeywell got a deal with the legislators to cut their cut got their taxes but just their taxes so that they got $42 million less and then they're willing to come here what that tells me is that maybe we should be cutting corporate taxes even more. Maybe we should be cutting the tax burden is even more.

Why do we play special favors for just one guy unless we just want to have special ceremonies, a ribbon-cutting ceremony saying hey look what we have done we as politicians and and and business leaders have brought to the community and paint not paying attention anybody else that John is you know supporters of this type of tax incentives will come back at you and say look these deals. Over time, or a net gain. You got the jobs and the people who move here. They're paying taxes they're buying things and so they're creating economic activity and that over the long term.

This has more benefits than costs right since over creating visible economic activity in this one area that were watching with a very big employer is able to put out press releases as opposed to 99% of the employers in North Carolina are small businesses.

These are guys who when they expand, they just expand her when they add jobs. They just add jobs because they can afford to do all of these other things but we want to make the situation better for them as well as for the big guys and by doing that what we do is we lower corporate tax rates. We lower government spending, we we hold costs down and we provide a better overall environment for them. In effect, North Carolina lawmakers over the past 1/2 dozen years or so have been doing exactly what you are describing North Carolina a lot of attention. Give us a sense of what has taken place on that's what's kind of frustrating to me as a policy analyst is for the last few years North Carolina has been doing it right. We've been cutting regulations we've been reducing towards we've been reducing taxes so we we've been providing that the business climate in the forces named us the number one state to do business in and in.

Now we want to look and say were not doing enough. I think were doing fine. But if were not happy with it, then let's continue to to to cut above across the board.

That is a curious thing since the EM all of the reforms the tax reforms that have taken place in corporate tax rates. One of the rates that have been cut so I guess I'm back to the same question, then why in it, then, is North Carolina engaging in this. I think it just makes everybody happy, especially the politicians, especially the local community leaders to say, look what we have done in us are like when Obama says you didn't build that we want to say as politicians is as local leaders. A we've built that we can't look at each and every aspect within the economy. Where were local mom-and-pop's and small entrepreneurs have have created and have taken the risk and expanded. We can't monitor that we can see the visible hand of government going to the big guys which is what they were looking for here what are other states doing are they in this game as well.

All their all their all playing the game, and that's one of the one of the real reasons why North Carolina says it will one of the justifications for this bill that just passed was will look South Carolina's beating us that this game were killing South Carolina and all the measures when it comes to business climate. So if there if they're able to offer bigger incentive packages is because they have much further to cut as far as local taxes and state taxes and I think in the case of Honeywell, correct me if I'm wrong, but didn't they EM have an incentive deal with the state of New Jersey which they're now leaving yet when it ran out they came here so how long do we have a moment what 12 years and then what are we going to do the next state the comes calling you already like. I think sabotage, but it will be renting Honeywell for the next 12 years. It's a curious question. I know that tab you look at this broad question of tax incentives you write about this, including the specific issue of film and television incentives. A lot of Inc. John is given to the state of Georgia. People saying what they are, they are attracting all of these productions whether it's commercials or television programs or now on Netflix productions all sorts of things, but they are heavy into incentives oh state of Georgia. Is that why they're getting all this business well when you you would put the money out there that some of them are going to chase it but still is for especially me.

Felt a little bit different because those are those are short-term productions there here and then they're gone. Businesses are known, essentially laying down roots for a few years so it's it's not quite the same. And if if there come in here it's because they made a business decision to come here most the time it's not the incentive that's the that's the game changer for them that's that's sweetening the pot, but there here for other reasons.

Research in 2015. Looked at North Carolina companies that were getting incentives and talk to them and asked him what what would make the business climate better give him a list of 19 things. One of them being or two of them being state and local incentives, they ranked 15th and 16th.

Out of that list of 19 number one was having having this highly skilled workforce. Number two was regulatory policy and of the state regulatory burden to look. Then came the taxes or the state tax burden is too low, so Dennis things are more important. That list is very interesting and you wrote about this actually in the locker room blog and you the list is is amazing highways and housing costs, land prices, major airports, all sorts of theology or hesitation of living those all figured much more prominently than then access to incentives which make sense. It's a business moved to come here we've seen in North Carolina that this has bipartisan support in the Gen. assembly. This approach to trying to lure businesses. What would be your recommendation to lawmakers if they decide they want to rethink this.

My recommendation is if you think that we can get these big guys because of our tax situation. Then changed tax situation changes regulatory session situation.

New York, for example, said the reason they didn't get Amazon was because over the reason they got Amazon as they had. They offer such a huge package because it can compete with Texas because Texas has much lower taxes we've been talking with John Sanders. He's director of regulatory studies for the John Locke foundation and he is right about this issue on a regular basis. You can find all of that at John Locke.Gordon, John, thank you very same with this much more Carolina journal radio to come in just a moment. This week's edition of Carolina journal radio was brought to you by Blue Cross and Blue Shield of North Carolina working every day to transform the health system from North Carolinians.

More information available at today. voters have spoken in North Carolina. How can you make sense of what they said about the legislature Congress, the courts, the Constitution, Carolina journal has you covered in print each month. Online every day. Carolina journal is your source for up-to-the-minute information about North Carolina state government policies and their impact on you Carolina journal offers in-depth analysis of the election's aftermath, then looks ahead to 2019.

How will elections affect your family, your wallet, your schools, your business find out in the free Carolina journal newspaper Carolina journal your number one source for government news that affects you visit Carolina today will go back to Carolina journal radio and co-guy politicians and activists who label themselves progressives take pride in putting forward policies that help poor people and minorities. Our next guest is take a look at those policies in reached an interesting conclusion.

He recently spoke to the John Locke foundation. The theme how progressive policies hurt poor people and minorities. Michael Jacobs is professor at UNC Chapel Hill's Kenan Flagler business school. Thanks for joining us. Glad to be here so this it is sort eventually conclusion we we know because they tell us so that progressive politicians support policies that help the poor help disadvantaged help minorities how to go about looking at it and reaching a different conclusion.

Well I looked at something different.

Everybody looks at income and everybody talks about poverty in terms of income, poverty is an issue that should be looked at from two sides. One is income the other is cost-of-living. So the question is really how much can you buy with your income and so what I looked at was how progressive policies have increased the cost of life's necessities for poor people, and as a result of its reduce their lifestyle so you can give them a little bit more money but if you raise the cost of water or housing or other necessities. Power, for example, then you've negated that and in the case of progressive policies they actually increase the costs more than they increase the benefits and I understand that in looking at this you took a very specific look at some communities here in North Carolina yeah what we did. I actually Inc. this sort of discussion into a course that I was teaching it was a unique class of never been taught before at UNC. It was the first class and only class that I know of that's been taught jointly between the law school in the business school is called business and politics and so we got the students in terms of understanding how issues like this affect communities to do a lot of data analysis, and so they looked at the top 30 counties across the state of North Carolina looked at the cost of water. The cost of housing. The cost of taxes all sorts of issues like that and they came to their own conclusions, and this was the conclusion they came to and the conclusion was that these policies do end up creating more harm than good. Yeah, that was a conclusion to one of the most interesting data points was that there are only two counties in North Carolina. Of the 30 that we looked at, which were the 30 most significant counties that lost black population in the last decade and those two counties are Orange County owned Chapel Hill and Buncombe County home to Asheville, which are the two most progressive counties in the state of North Carolina. They're the only ones that lost black population and the implication is probably because of the progressive policies. Well it is is because the cost of living, and also because the education system.

Something else that we found is very interesting is if you look at the performance gap between white and black students in public schools in North Carolina. The two public school systems that have the largest performance gap between Blacks and whites are Chapel Hill and Asheville. Very interesting.

We are chatting with Michael Jacobs. He is professor at UNC Chapel Hill's Kenan Flagler business school.

When were talking about progressive policies.

What are some of the types of policies that lead to this downturn or loss of the cost well. For example, in Chapel Hill there's there's a lot of them I couldn't. I could give you a laundry list but one example is in Chapel Hill there's no Walmart store that's the number one place the low income people shop for groceries. If you go to Chapel Hill you'll notice that 100 yards outside of Chapel Hill on one side there's a Walmart and 100 yards outside of Chapel Hill. On the other side there's a Walmart because the good people of Chapel Hill didn't feel like Walmart was an appropriate company to be building in their community. So they basically excluded local people from shopping at Walmart but at the same time.

The irony is all the tax dollars at those Walmarts are coming from Chapel Hill and they're going to Durham County and the Chatham County and so Chapel Hill has the highest percentage of its tax base coming from property taxes because they excluded retailer like a retailer like Walmart.

There's there's housing issues so there's there's what's there's there's an area outside of Chapel Hill.

There's there's a ring around Chapel Hill where you basically are prohibited from building any kind of density whatsoever. Interestingly enough, that's the least expensive property so you can't build inexpensive homes anywhere near Chapel Hill. If you want to get an inexpensive home you have to leave the Chapel Hill area to buy a piece of property to build in an expensive home and so the development policies also have a big impact. Chapel Hill has the highest sales tax rate but the lowest percentage of its tax revenues coming from sales tax. And it's because of what we're talking about earlier regarding excluding virtually all big-box retailers. If you want to go to Home Depot. All you have to do is cross the Chapel Hill border by about 100 yards and you get to Home Depot you mentioned that one of the outcomes of this is the fact that Chapel Hill has such a high percentage of its tax revenue coming from the property to ask. So it makes it more expensive for people live there, which I assume also fits in with the whole thing that you hear about occasionally of the gentrification that these old African-American neighborhoods are no longer African-American because they can't afford to live there, but people really want to live in Chapel Hill can exactly if you give if you can't build low cost housing anywhere near the community. The logical thing to do is to redevelop the lowest-cost properties within the community and there's a word for that is called gentrification and that's exactly what's happening and it's not just property taxes that are so high in Chapel Hill.

They are the highest, but it's the fact that housing is the highest so you know when I moved to Chapel Hill.

What I heard was housing is so expensive because everybody wants to live in Chapel Hill and when I found out is that isn't why it's so expensive because in Econ 101, you learn there's a supply curve and a demand curve, and it's not the demand curve that's driving up the cost housing in Chapel Hill. It's a supply curve, and it's because there's so little housing in Chapel Hill that the price is so high, it's not because the demand is so high. So if you look at the construction of new homes anywhere in any county contiguous to orange county you'll see some pretty start differences now. I'm guessing you're not making an argument that these progressive politicians and activists are trying to make life more difficult for the poor and for the minorities to the do they understand their policies have this effect well they sure didn't. When I started publishing about it. I don't guy don't consider this to be intentional abuse.

I think it's just they are clueless. I think they are really clueless about the impact that these policies have and when I first pointed out, I wrote an article, maybe six or seven years ago called a paler shade of orange talking about the decline in the black population in Orange County and frankly it shocked every elected official in town that I know they didn't have any clue that there policies about Walmart about construction about property taxes. The water even. I mean water rates in Chapel Hill are higher than anywhere else that does affect people who are middle class and lower income households now that this information is out there what you hope happens. I hope somebody starts to pay attention to it. I really do because if you if you look at all of the narrative.

It's on poverty at least 95% of it at least relates to how much money do we give to people who have needs and half of it should be focused on the costs. If you look at poverty correctly, you should index income to the cost of living in the local community not on a national basis, Michael Jacobs, he is professor at UNC Chapel Hill's Kenan Flagler business school thanks and much regarding my blood level North Carolina journal radio just about did you know you can now advance freedom and free markets just by shopping with Amazon it's true online shopping is now a great way to support the John Locke foundation just shot using the Amazon smile program and designate as the work foundation to receive a portion of your purchase amount that's right you shop and Amazon donates money to ask the John Locke foundation. So here's how it works a lot time to Amazon smile. It's the same Amazon you know same products same prices is much better. Amazon donates .5% of the price of your eligible purchases to pass the John Locke foundation to try it.

Be sure to designate the Locke foundation is a nonprofit, you want to support. It's that easy. So now not only will you enjoy what you buy will also support freedom.

Don't forget log on to today by something nice and help defend freedom. Support the John Locke foundation voters have spoken in North Carolina. How can you make sense of what they said about the legislature Congress, the courts, the Constitution, Carolina journal has you covered in print each month. Online every day.

Carolina journal is your source for up-to-the-minute information about North Carolina state government policies and their impact on you Carolina journal offers in-depth analysis of the election's aftermath, then looks ahead to 2019. How will elections affect your family, your wallet, your schools, your business find out in the free Carolina journal newspaper Carolina journal your number one source for government news that affects you visit Carolina today.

If you have freedom we got great news to share with you now. You can find the latest news, views, and research from conservative groups across North Carolina all in one place North Carolina it's one stop shopping for North Carolina's freedom movement and North Carolina You'll find links to John Locke foundation blogs on the days news Carolina reporting and quick takes Carolina journal radio interviews TV interviews featuring CJ reporters and let foundation analysts, opinion pieces and reports on higher education from the James Dean Martin, Center for academic renewal, commentary and polling data from the scimitar's Institute and news and views from the North Carolina family policy Council.

That's right, all in one place North Carolina that's North Carolina spelled out North Carolina Try it today. This week's edition of Carolina radio was brought to you by Blue Cross and Blue Shield of North Carolina working every day to transform the health system from North Carolinians. More information available at today. welcome back to Carolina journal radio why Michiko got among those hit hardest by hurricanes Florence and Michael North Carolina's farmers State agriculture Commissioner Steve Troxler delivered a recent update. We talked about all looking forward for so many years and have structured that it had most recently been fulfilled. So we talk about Matthew. But now mobile show that Florence had an economic impact that will loiter them both and all Matthew put the go all God yes that four-minute same $17 billion, what grandpa Joe from mom for slowing them. The thing that's happened to agricultural before we had the disasters that we had that wiped out the collapse of holders Tom we already had some clothes born knowing that will motivate really really talking family floor number you on offshore clear locomotive we been through toward war then would you through something like real simple dog of Joe Schmoe will, therefore families will have access for hurricanes Florence and Michael dealt North Carolina farmers a major blow them comfortable likely to listen to flaming.

I don't know how you describe all but I do know for the first, mostly families eligible for home impairment. In short, think about that a little bit about what that suits what that sales to me going so bad that the wall moves having the food that is that by about their coping, what's happened to them in Matthew mouth Lawrence to Google and to three years move both bimbo will go all the production calls for already paid for. So we would need some help to slow the economic engine running and I think 1 Good Way to go to the gasoline in this tank.

While all this economic engine with 2.410 would join in the warm rabble with the various back and decided to be good woman. Troxler tries to put the flood damage from hurricanes Florence and Michael into perspective little over 10 million people, 780,000 gallons of water for every single cement North Carolina for lobster.

So I think that puts a damper foot all went their way would be through fitted with Bluetooth where you will literally say well we got to go to work. That's North Carolina agriculture Commissioner Steve Troxler. He's discussing the damage associated with hurricanes, Florence and Michael will return with more Carolina journal radio would a moment, a commitment to truth and transparency in government. That is the mission of Carolina journal and we are proud to deliver and now proud to tell you the North Carolina press Association has honored to members of our team with awards for reporting and writing, that's right, we really do deliver award-winning journalism we shine the light on government spending, reveal the truth about boondoggles and dig deep into programs paid for with your tax money. We keep you in the know in a way other media outlets don't in our reach and influence are growing to all of our outlets. We reach more than 1 million N. Carolinians each month so make sure you're one of them. Our monthly print edition arrives in your mailbox every month. Our online daily news site Carolina has fresh stories, opinion pieces, and more.

The award-winning Carolina journal team I reporters make government accountable to you. Call 1866 JL FINFO for your free subscription will go back to Carolina journal radio why Michiko guy now that North Carolina has chosen to place a voter ID requirement in the state constitution. There's no shortage of ideas about how to make that work. People offered their thoughts during a recent legislative meeting Andrew Karas emphasized the importance of a secure vote. I'm here to make sure that we keep things simple. We had a a lot of of our soldiers over the years who have given their life for the very fact of our citizenship and the boat. It it goes along with that citizenship. The only thing I can tell you is you do mean anything when you don't protect the vote.

Anything that you do as far as the identification has to be very simple test to be very easy to process as far as the devoted concern. Joshua peters suggested a change to the voter registration process. I would like the committee to consider automatic voter registration and preregistration for citizens coming of age to vote. I think with that you can address a lot of different factors so such a site checking the veracity of your data based on the fact that you have automatic voter registration and use that information to kind of use matching algorithm to verify what was registered from the part of our prior voting elections and to mess it up to DMV record source, things of that nature. Kim Coley emphasized educating voters about the states new rules. The key is taking the time to educate the voters in time for implementing the proper acquired ID elections will be here before we know it. My parents recently moved here from Missouri. They both made it a priority to get there and see drivers license in order to be able to vote in this past November election, because in Missouri it's required. Please make sure the bill drafted is drawn in a way that doesn't discourage anyone eligible from voting while at the same time ensuring only those eligible to vote.

Charles dingy once the process to be as simple as possible think it's important that we make sure that we ensure elderly folks, those who are in rural areas and the poor able have access to these various IDs that have been suggested.

I think we also make sure that we keep it simple. Using the KISS method sure everybody here knows what that is. We want to make sure that instead of having 6070 and in some cases even 80 IDs, which it seems like summer, possibly suggesting that we have. We keep it simple. I attended a school here in North Carolina private institution, a great college and I know that my status my ID from there does not have an expiration date on it and it was simply issued to me on the first day that I showed up when they took my picture. I think that we want to make sure that we prevent any type of voter fraud from occurring. Keep it as easy as possible for our poll workers working to be there. We want to make sure as part of this legislation that we address three issues, one to make sure that we make sure that this is accessible to everybody in the state of North Carolina to attend and's and get a voter ID to we want to make sure the accessibility of the education is there nobody understands what type of IDs are needed and three. We want to make sure we hold accountable.

Our poll officials and make sure we provide them with the resources necessary to make sure that we don't have any issues on election day.

Darrell Mitchell of Johnston County reminded his audience about facts surrounding voter ID as a civil person read polls now see a list of your and over 60 not over will they govern the lease. One was 68% of support will voter ID and also get a list of of simple everyday tasks. We have to have a variety for open a bank account apply for food stamps, blood for welfare, Medicaid, Social Security, unemployment, a job, rent a house by house, apply for mortgage rubber car rental car buyer core deploying get married purchase a gun.the pit with a hotel room hunting license fishing license by cell phone pick up a prescription donate blood, take a rally or exit hold a rally or protest by a videogame purchase nail polish spray paint cold medicine and return stuffed Walmart. So, in 34 states around us already hell of voter ID in place. I haven't heard much of any problems with these 34 states.

Dillard of Greensboro offered some firsthand voting experience. I have worked inside the polls as paid worker and my experience has been that most people want to show me and ID and I have to tell them know you don't need to show that in the year that they didn't have to show on it did not impede anyone, or the process and in cause any time issues most common question I have for people is that they are asking if their deceased spouse is still on the list, and many times it's been three or four years and the person still on the list to the bigger issue here is that this concern about updating our database on that's really critical if we can't purge the deceased people after they or their spouse is tried repeated times then that's an issue and I also have a concern about what constitutes this legal ID. I do believe that there are people that can get a drivers license and register to vote, that are not citizens. J Delancey of a watchdog group called the voter integrity project shared his concerns in 2008 criminal enterprise, formally known as acorn was called rigging voter rolls in Louisiana, Nevada, Pennsylvania, Missouri, Ohio and North Carolina right here and see the stupid ones were caught using the same minor changes, a middle name and maybe date of birth, but the smarter ones were not caught in our research suggests that a large number of them are actively voting North Carolina. These ID cards are not a stock they're not up there not optimal for a citizen to have that we need to use these as a means to finding people who really need a state issued ID card and spend our efforts getting them ID cards rather than just giving them an eight-year card and saying go away, come back and vote tomorrow. Let's get them a real ID, 1982 grand jury reports indicted 65 people for conspiracy vote fraud grand jury was so shocked. They wrote a report very rare in that business and they recommend, among other things, a fingerprint as we do too little five dollar device here that banks require people to cash checks.

We recommend this for anyone who can't vote with the state issued ID card high school student.

Joshua Frazier made a case for voter ID. Thomas Jefferson said to friends, while different in 1795. It is to secure our rights that we resort to government at all. That is the governments only job US Supreme Court even upheld the Indiana voter ID law in 2008 x 63 the therefore the government has complete legitimacy to enact this legislation. Secondly, this law is a needed regulation of the right of the many will say that the right to vote is sacred and should not be regulated at all and it is already regulated. In fact, let me remind you that what some may consider is the most important minutes in the Constitution, the first and the second RD are severely regulated first for the First Amendment.

Citizens must abide by time, place and manner restrictions when protesting the hot topic now is this debate of the Second Amendment. Some view the laws in place now regulating that are too much while others, especially those who hypocritically oppose this legislation on the floor today want more regulation on the Second Amendment but not on voting last. This legislation does not hinder minorities from voting, but in fact makes their vote count more than listening to highlights from recent public comments there about North Carolina's efforts to finalize a voter ID requirement it's been added to the state constitution overture with North Carolina journal radio in a moment this week's edition of Carolina journal radio is brought to you by Blue Cross and Blue Shield of North Carolina working every day to transform the health system from North Carolinians. More information available at today. voters have spoken in North Carolina.

How can you make sense of what they said about the legislature Congress, the courts, the Constitution, Carolina journal has you covered in print each month. Online every day.

Carolina journal is your source for up-to-the-minute information about North Carolina state government policies and their impact on you Carolina journal offers in-depth analysis of the election's aftermath, then looks ahead to 2019. How will elections affect your family, your wallet, your schools, your business find out in the free Carolina journal newspaper Carolina journal your number one source for government news that affects you visit Carolina today.

Welcome back to Carolina journal radio I'm Donna Martines.

Are you interested, perhaps in starting a public charter school on number of people are in right now the state of North Carolina is reviewing some of those applications one person who knows just what it takes to start a public charter school is our own Dr. Terry stoops. He is the John Locke foundation's vice president for research.

Also, the director of education studies. He is the founder of a new public charter school in wake County Terry, welcome to the show you first of all, tell us a little bit about your school and why you decided to get into this venture sure.

Well, my wife and I decided four years ago to look into opening a charter school mainly for kids. We found our children's needs were being met in the traditional system and we were in wake County so was wake County schools and so we thought that we would look into trying to apply for charter and we got some parents together and we went through about two dozen board members because one of the challenges of of getting charter school together is having a shared vision, although my wife and I had a very clear sense. What we wanted for our children what we wanted for children like them there so much disagreement about those things. It took a little while for us to get a board that had a unified vision together and once we did, we applied for a charter in 2017 and we were accepted and we had to wait a year for facility issue and then will be opening in the fall 2019 will congratulations and all that's quite an undertaking for anyone and let's talk a little bit about the process you mentioned that you decided to do this four years ago so first of all let's talk about the timing on this, let's say someone does want to do this.

This is a multi-year process and why is it take that long. Well it is a multiyear process and most of that is due to having to get a solid board together were asking people to volunteer a tremendous amount of time to come together to try to develop the idea of a charter school. There is no magical company for profit, nonprofit out there that's going to suddenly just come out of the blue and whip up a charter school application. It takes dedicated volunteers a significant amount of time to come together and write a charter school application that can easily get into one or 200 pages because the state wants to make sure the taxpayer money is being spent properly and to do so. They want to see every part of your plan for your school from from beginning to end, from admission of students to the curriculum to staffing issues to human resources issues. So it is a that is a long process in the process of actually getting charter school approved is even longer. Terry mentioned a couple things I want to get into number one taxpayer funds that charter schools are public schools there, just a different kind of school. The other thing is hundred to 200 pages on the application. Essentially what you're describing to me is a business plan and this is a rigorous exercise.

That's a great way of putting it. Because when you look at charter school applications, they usually get rejected for one of two reasons. Either there is an insufficient attention to the academic program doing something innovative or doing something that maybe the traditional public school is not doing or an insufficient business plan and they look at both of the charter school advisory board looks at both very carefully because either one of those can undermine a school. If you don't have a good plan going forward for how you're going to teach the kids and obviously not to learn anything. Schools not to be academically successful, but were talking about what is typically millions of dollars in taxpayer funding both from the federal, state level, but also the local level contributes money as well. Being able to manage that effectively and efficiently is is difficult, especially given the charter schools don't receive the level funding the traditional schools do because they don't receive funding for their building. So instead of magical money coming from County commissioners for school buildings. Charter schools have to use the money that they're given for their operational funds their educational funds for facilities and sometimes that leaves charter school stretched pretty thin. So for example, in your case and you had to actually find a building or is the other option to build a building.

We had to build a building because we can find a building unit in wake County. We have interesting problem is that were growing quickly and a lot of the real estate is being sucked up by private enterprise, and so finding a building that can accommodate students finding a building. We would need about 35,000 ft. for four school was very very difficult in a market like wake County so we had to build a building and we had to find private financing because unlike the traditional system which gets their facilities. Funding County commissioners who put bonds or other sorts of assorted debt instruments in play, so that they can get funds for their schools. We have to do it through the private sector. So does that mean that anyone who is in this endeavor. Like Mike, you and your wife are you have to go to a bank knock on the door and say hello Mr. or Ms. banker. I want to get a loan to start a school that's right. And there are nonprofits out there like the Durham-based self-help which will give low interest loans to charter schools for facilities, but it's very difficult because you have to convince them that you are going to have a sustainable enterprise and that you are going to be able to not only use the taxpayer money you get to be successful educationally, but also use that money to pay back the substantial amount of money that it takes to build a school building and in our case, around $9 million, so it it is difficult now let's contrast this with with what happens in rural communities sonar a situation where able to build a school we know that were going to have plenty of students want to come to the school, but we can find the space in rural communities in the opposite problem.

They often have trouble finding the students to be able to come to the school building there on the five buildings in a lot of different places and in school buildings and other facilities because they don't have the type of growth and demand on property that we would see in wake County so facilities problems vary from county to county from region to region. It snow by no means unique to us that we had to find private financing to build a school building. You see the same thing happened in Charlotte Mecklenburg and many other growing counties.

But you would not see the same phenomenon and Say Rd., Robeson County or some rule County like that. What about accountability Terry.

There are taxpayer dollars on the line and certainly that is a big issue for people wanting to make sure that it that that those funds are being used appropriately and efficiently, but also you want children to do well in this new type of school. What standards do you have to meet with to meet the state standards of charter schools are required to take state tests them only talk about accountability. That is one of the big accountability mechanisms that are in place. Most people don't realize is that charter schools can't just teach whatever they want. They have to be mindful that those students at the end of the year have to take the state tests. We also have to be accountable to parents and their usually a tougher standard than the test system because parents can easily pull their kid out of that school, and with that kid goes there funding as well. So we have to make sure. Not only do we make the parents satisfied, but we have to make the state satisfied that were doing a good job academically. We also have to conduct audits every year that have to be sent to the state so that our financial records are are open to everyone. The various information about teacher pay about how we spend the money about the number of students attend those all public record and that's all. The type of information we have to sense of the state so accountability on multiple levels, which is what we would expect from any school that have especially one that is not part of the district system and has some flexibility in the use of taxpayer money.

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