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Carolina Journal Radio No. 746: Politically active CEOs can hurt shareholder value

Carolina Journal Radio / Donna Martinez and Mitch Kokai
The Truth Network Radio
September 4, 2017 12:00 am

Carolina Journal Radio No. 746: Politically active CEOs can hurt shareholder value

Carolina Journal Radio / Donna Martinez and Mitch Kokai

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September 4, 2017 12:00 am

Politically active corporate CEOs have been making news in recent months. In some cases, the political activism could mean bad news for the corporate bottom line. Jon Pritchett, John Locke Foundation senior vice president, argues in a recent co-authored Wall Street Journal column that corporate shareholders negatively affected by a CEO’s activism should be able to take legal action. He explains why. Critics have been pointing to Kansas in recent years as the poster child for the pitfalls of state-level tax reform. But Patrick Gleason, director of state affairs at Americans for Tax Reform, contends that North Carolina serves as a better model for other states to emulate. Gleason says the Tar Heel State succeeded where the Sunflower State failed because N.C. lawmakers curbed government spending growth at the same time they enacted tax rate cuts. The newest member of North Carolina’s congressional delegation hasn’t shied away from high-profile issues. U.S. Rep. Ted Budd, R-13th District, has focused recent efforts on repealing the Davis-Bacon Act, which forces contractors working on government-funded projects to pay workers a certain level of wages. Budd also supports a measure to set a new national strategy for fighting terrorism and illicit finance. You’ll hear highlights from his remarks. Another North Carolina congressman, U.S. Rep. Mark Meadows, R-11th District, heads the conservative House Freedom Caucus. During a recent address at the National Press Club, Meadows discussed the group’s goals and explained how it operates as a counterweight against the formal caucus structure within the U.S. House of Representatives. Public school enrollment declined across North Carolina in 2016-17. District school enrollment has been stagnant for five years. Terry Stoops, the John Locke Foundation’s vice president for research, analyzes the latest numbers and assesses their implications. Stoops discusses the impact of the growing school choice movement and the future of traditional public schools.

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From charity to Currituck 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 public policy events and issues welcome to Carolina Journal radio what kind during the next hour, Donna Martinez and I will explore some major issues affecting our state. North Carolina.Kansas should serve as the national model for state-level tax reform to hear why a key staffer at the group, Americans for tax reform makes that argument in his troops across the country. Members of North Carolina's congressional delegation continue to make news you learn why the newest member of that delegation is supporting bills to scrap the so-called Davis-Bacon act and to step up the fight against financial aid for terrorists. You'll also hear from the head of the influential House freedom caucus. What's that group all about send why is he leaving it plus will discuss a decrease in the latest North Carolina public school enrollment numbers. Those topics are just ahead. First, Donna Martinez joins us with the Carolina Journal headline when CEOs choose to publicly engage in political debates can their shareholders take them to court that CEOs action hurt the value of the stock that is a key question addressed in a Wall Street Journal piece co-authored by the John Locke foundation's senior vice president John Pritchett, John joins us now to talk about this interesting subject, go back to the show, first of all congratulations you co-authored this with Ed teriyaki and who is a Duke University economics professor. I'm quite an honor to be published in the Wall Street Journal.

First of all check off my bucket list every 30 years. Nice to see her own name there to why the world did you decide to start writing about this issue of politics and shareholder value.

Well I like to look at the liberty and freedom and free markets and the looms of my experience like anyone else, and while my experience been business. And I'm also investor and also shareholder value is an important part of business and the same time also very interested in for the culture warfare that's going on, and so Ed and I have been talking about the subject. In our view, it's sort of can do some of the other things that we've talked about and written about.

Like for example how the left is trying to use sports as a weapon in sort of a CEOs social activism is along the same lines, so it just so happens that we can work on the story for little while and then last week we had all the resignations from the White House counsel manufacturing wizard and what that's pretty good time for us to tighten up the story and submitted to the Journal and they agreed in your PC, make an interesting point about one of the CEOs in particular who resigned from that business Council those councils.

By the way present trumpets is shut down.

But this CEO had an opportunity to be face-to-face with the president of the United States and one would think that that would be something valuable for that organization. Even if the CEO disagreed completely with the president either what he said or didn't say about Charlottesville or any other policy. One would think SEL would want to keep that seat yet so that that's particularly agitating for me. If you think about the Godfather some personal business CEO of a publicly traded company in and to be clear and make the distinction difference between a CEO of a private company and the CEO of a publicly traded company.

There is a fiduciary responsibility of their something called shareholder primacy where your your your job as CEO in your paid well for it is, is to take care long-term shareholder value is to increase market share is to create profits. That is your job and by the way, that's a really good job. An important job because we think about it.

That's how the market works and so you know that should be enough. Sort of. Right. Your your you have the opportunity to create opportunity for employment jobs and wealth creation and then people can decide what they want to do with that wealth creation when all of a sudden becomes a personal issue and you see people resign from.

In this case you talk to Ken Fraser at Merck who is the head of one of the largest companies in the Pharma industry.

He is sitting amongst the leaders of the government who regulated industry and industry.

By the way, which has been my view, overly regulated and is in need of some sort of serious regular reform which could be helpful to the business can be helpful to the. The economy should be helpful to all of us and to resign from that opportunity to be setting the agenda to be with policymakers and with the door closed. Having these sorts of conversations that we all know, many times how you were able to get your ideas across to those who regulate industry seems to me if you had a personal problem with that either one. Put on your big boy pants and get over that issue because you're doing something greater than representing yourself. You are representing your company and therefore shareholders and to make it personal. Perhaps it's a personal conviction and the CEO. In this case may be, Ken Fraser felt so it was so important for him that he could not be in these meetings them. My suggestion would be okay. Have your CFO go have your CO logo have a General Counsel cup you want the company files are in the middle of this regulatory debate heat. He took the company out of my view that such an overreaction to this media hysteria and and so again back to the Godfather right it's business is not personal. What is a shareholder to do if they take a look at their investment and say hey, wait a second to this activist, CEO made this public decision, and it appears that the stock price is falling because of that you have recourse so that Thierry Aachen and I looked at this issue and we said what is history say about recourse for shareholders and there's a lot of legal history. One of the landmark cases we reference in the article 1919 case, which was Dodge the Fort Henry Ford had created a very valuable company was generating lots of money and decided at a certain point that rather than dividends to shareholders he was going to give money away for good causes. As you might imagine some the shareholders had a different idea about that admirable and I believe is my billionaire shareholders.

They were saying basically let us decide we want to give away the money shareholders right that should be your personal decision and the courts upheld now. What a lot of legal scholars will say in their correct is that there is a business judgment rule. There is latitude and even in that case there was latitude given to the chief executive about the rationale of making decisions, but that is not to say is without limits, you still have this primacy of shareholder you still have this process you go through you get information you deliberate is this in the best long interest long-term interest of the company and the shareholders, and that's where we suggest when shareholders board will hold CEOs accountable for the sort of CEO social activism, then there is the ability to go to court and it's not as difficult as one might think to give your small shareholder lots of people say well all these companies have institutional shareholders and those are big companies but there made up of small retirees, teachers, and other folks who have pension and retirement programs where they may own several shares of the stock and therefore they have standing to sue and in our view, when we can't get an answer to the something through the governance of corporate governance. We have to turn to the courts. Some of those people you mentioned may not even realize all the different stocks that they own through mutual funds and things like that just average folks who were invest a little bit in the market for retirement and this could be happening and they would know in our final minutes with you Jon, I like to talk to you briefly about the situation with target, which you reference in the Wall Street Journal piece we know in North Carolina we went through the situation with House Bill two target CEO strongly opposed house bill to which is since been repealed, but he came out with the what he termed a an inclusive bathroom policy. Tell us what happened after that.

Yes, so the interview again. This is a social activism piece that from a shareholder standpoint you get upset about because you realize that you talk about Brian Cornell when he made the decision to issue this program really always he didn't consider. This is the business rationale process were talking I didn't really consider the implications of customers. For example, and made the decision because he felt for whatever reason, this was something he was interested in my view, is to be better off doing that was on personal money if that's what his interests and not necessarily target because as you know, a lot of the customs of target decided to boycott and as result we saw $20 billion drop in market John Pritchett who is senior vice president at with the John Locke foundation. He cowrote this with Ed Thierry Aachen who is at Duke University. You can read this and also of course at the Wall Street Journal's website and save as much North Carolina Journal radiata, just a moment government plays a key role in your life affecting your paycheck the way you educate your kids the way you do business.

How can you tell if government is doing a good job making the right choices. Spending tax dollars wisely. Carolina tackles those questions every day. The John Locke foundation publishes Carolina journal in print each month and on the web each you'll find exclusive investigative reports on topics. No one else is covering what else a rundown of the best new stories, editorials and opinion columns in North Carolina. John Hood's daily Journal news stories and important public and the voices of the newsmakers themselves. Carolina journal radio in print on the air and on the web.

You can find the information you welcome back Carolina journal radio I Michiko got critics of conservative tax reforms like to point to Kansas. They say that states recent budget struggles prove that tax cuts create too many problems, but our next guest offers an alternative view. Patrick Gleason is director of state affairs at Americans for tax reform. His recent column for Forbes has the headline forget Kansas. North Carolina is the national model for conservative tax report Patrick thanks for joining us push beer matched so well.

You took a look at tax reform as part of your job. You take a look at the effective tax reform and tax burdens across the country.

You say This is it really the model. North Carolina is the model. Why is that yes you see a lot of national media coverage about Kansas in recent years, and in recent months particularly about.

They've done on taxes and tax reform and what's been happening with her budget and a lot of focus has been on how Kansas had budget deficits following the tax cuts passed in 2012 and and there is a concerted strategy on the part of the national Democratic Party and left left of center pundits and folks in the media to hold up Kansas as what they claim is the model of conservative tax relief tax reform and that and then they say they claim this is led to the budget disaster challenges that Kansas is faced what I could be farther from the truth for number of reasons as to what happened in Kansas but I will. I point to North Carolina is actually the model for what conservative limited government, free market oriented tax reform looks like. So there's a lot of focus on Kansas but actually North Carolina both in terms of population and the economy is three times the size of Kansas much more economically and clinically important state and and but it has gotten although it's three times the size Kansas got a fraction the attention and that's unfortunate because it really deserves. Frankly, more attention, Kansas, and certainly more than it's been getting and and when I point out is where where Kansas made mistakes and went wrong and made bad decisions, North Carolina month. The other way and made the right decision. So going back to 2012 Kansas cut taxes while at the same time they cut taxes they failed to rein in spending what when you're cutting taxes are going to have a reduction in government revenues. That's the whole purpose of cutting taxes and but they did not make the adjustment and they do not cut spending for case in point, 2012, the year that they cut taxes by $4.5 billion.

That same year, they increase spending by over 430 million, which represent a 7% increase in spending. That's a recipe for disaster that precipitated and led to ultimately work repeated budget shortfalls now so they did not keep spending check. Let's contrast that with North Carolina which had the landmark just one year for Kansas tax cuts North Carolina enacted landmark a 2013 tax reform, significantly reducing personal and corporate tax rates, which for before that had been the highest in the southeast, so they brought those rates down about this in the top rate from 7.75% down to now where it is today blow five and half percent going down further. Based on recent actions in the corporate rate as well, from 6.9 down to three points 3% where is today, and it set to go further down to 2.5% to 19 but where can't wear North Carolina contrast with Kansas is North Carolina Spending in check. They budget conservatively. Unlike Kansas after North Carolina cut taxes. They kept the growth in spending below the rate of growth in population inflation. So what is we see North Carolina at the same time, the divert return billions of dollars to taxpayers to employers to families across the state. The same time they've done that state has experienced perennial budget surpluses, which is about have allowed them enact subsequent rounds of tax relief, including this most recent recent budget just a few weeks ago now only does estate have surpluses inside the state to build the largest rainy day fund in state history and has a AAA credit ratings of North Carolina show is is it shows what a model for successful progrowth tax reform and spending restraint looks like and that's where Kansas missed the mark cut taxes they failed to rein in spending. As a result they came back in a X ended up raising taxes.

We are chatting with Patrick Gleason. He is the director of state affairs at Americans for tax reform and the obviously your talking about a contrast here between Kansas and North Carolina. Other states are looking at the potential tax reform they ought to be looking at the way that North Carolina does it, shouldn't they, and not only looking at the tax side, but also that spending side yet and so North Carolina is really a national model for what smart conservative responsible progrowth tax relief looks like. As I mentioned while they were cutting rates there cutting some of the most economically damaging taxes personal income tax which also had small businesses.

The corporate rate also getting rid of the death tax, but all but it is important and this is what Kansas did not do the Spending in check and I would say you know the obsession with Kansas. We see in the media and also for eight would scan up to the national level where we are having a federal tax reform debate in Washington DC right now and Nancy Pelosi and and Chuck Schumer and national Democrats are referencing Kansas and saying all this is a cautionary tale why we can't cut taxes. Well it's a diversionary tactic, and frankly especially Kansas and the misdirection by wanting to focus on Kansas shows what a let what a weak hand Democrats in the left has to plan fiscal policy because they have to hold up this one small state which made a number of mistakes and was know in no way is a model of conservative tax and spending reform that the whole that stayed up because the DA more of a broader sampling of all 50 states and does not does not it debunks what they're trying to claim and shows that all other things being equal, lower rates of taxation are lead to higher rates become growth. Population growth and encumbrance of the especially Kansas shows what we can, they have to play there is North Carolina which is a counter example that shows what to do and and and the good that can, that is also other counterexamples, Texas, Florida. Our neighbors took to the west of here in Tennessee have been cutting taxes repeatedly in recent years like North Carolina have had repeated budget surpluses so there's a number of case studies that counter Kansas and and robotics.

But then there's also the aggregate social science and for actually I John John Locke foundation chairman John Hood has done a great job compiling all the academic research on on fiscal policy and finding that by and large, most studies find that lower rates of taxation and spending are more conducive to economic growth and prosperity, know the Democrats obviously have been focusing on Kansas, but as part of your job you talk to people who are dealing with tax issues at the state level across the country are other states who are looking at tax reform do they get it they see that if we do it the way North Carolina does work to be in better shape yet. So, actually, so III spend my time and working state capitals around the country. In my role as head of Americans for tax reform state department and what's interesting is there's a number states looking at doing tax reform they wanted to write, reducing tax reform because were at this time of great competition between states and states need to make their fiscal policies and tax codes conducive to economic growth and competitive as possible so as a number. States are looking at tax reform, both later this year and into 2018 and as we saw earlier this year. States are looking at that. The side that want to oppose tax cuts. They all kept talking about Kansas well luckily North Carolina and the example of the base that was there because if that were not the case that that Kansas a cautionary a scare tactic might work but we were able to highlight North Carolina and say no. Here's an example of a state that did a right so the tax and the reproducing texture from that North Carolina has enacted has been great for the state in its own right, you know, for economic growth in the state for job creation for attracting investment new residents, but it's also had a national effect. So as other states that are looking to do rate reducing tax reform and also at the federal level and Congress have looked to them been discussing what North Carolina is done and when the other side tries to scare folks in other states from reducing tax rates by pointing to Kansas real to point North Carolina and say no. There is a way to do it right.

North Carolina is done and should look to what they've done to the target state has really been a national leader in tax reform one of the people who's going to be watching these issues very closely, as states and the federal government continue to focus on tax reform issues is Patrick Gleason. He is director of state affairs at Americans for tax reform. Patrick thanks much for joining us think Mitch will have North Carolina journal radio just about full color throughout every issue more visual storytelling. We've revamped Carolina journal to make it easier to read a new look and a new feel.

But one thing hasn't changed and it never will. That is our commitment to truth and transparency in government, you can still count on Carolina journal for investigations into government spending revelations about boondoggles and vetting of corruption. No permission to shine the light on what North Carolina government and the bureaucrats who run it are doing in your name and with your money will never wane and because of that I reach and influence are growing to all of our distribution outlets we reach more than 1 million N. Carolinians every month so make sure you stay informed. Read the monthly print edition of Carolina journal. Then check in several times a day, Carolina that's where you'll find fresh stories, opinion pieces and updates on government politics and your money.

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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 will get back Carolina journal radio why Michiko got the newest member of North Carolina's congressional delegation is taking on some high profile issues in his first term Republican Ted Bud represents the 13th district. He recently discussed a proposal to end something called the Davis Bacon act, the Davis-Bacon act hinders economic growth and increases the federal deficit. It imposes enormous burdens and stifles contractor productivity ignores skill differences for different jobs and imposes rigid craftwork rules.

The Congressional Budget Office has estimated that the Davis-Bacon act will raise federal construction cost by $13 billion between 2015 and 2023. No wages are often set at or above the union scale. Despite the fact that only 13% of the private construction workforce is even unionized, nationwide, with German the Davis Davis-Bacon wage determinations of also been known to be lower than the current market rate, which is equally problematic and especially detrimental for local contractors. It's it's just erratic. Now the GAO, the Government accountability office has repeatedly criticized DOLs Davis-Bacon bacon wage determination process for its lack of transparency in how the published wage rates and its tendency to gather erroneous data through unscientific weight wage surveys that were peeling the DBA would allow the government to build more infrastructure and create hundred and 55,000 new construction related jobs at the very same cost to the taxpayers. In fact, repealing the Davis-Bacon would've say the federal government $10.9 billion and that was back in 2011. This amendment would uphold the government's responsibility to deliver quality infrastructure improvements at the best possible price. Taxpayers, which is certainly what we owe them in another recent speech on Capitol Hill. Congressman Ted Bud supported a bill to set a new national strategy for fighting terrorism and illicit finance the financing of terrorism and related forms of illicit finance present a direct threat to our particular national security and financial system so it is critical for the government to create and maintain a unified strategy to fight financial crime both to accommodate new and developing threats and help Congress develop legislative and funding priorities now and in the future.

Additionally, a national strategy should seek to enhance intergovernmental cooperation and to identify illicit financing trends and to encourage federal agencies to work with the private financial sector to do the same. This bill does these things and will go a long way, making sure we are keeping pace with the ever-changing terror finance landscape that's first year North Carolina Congressman Ted Bud Republican representing the 13th district. He's tackling some high profile issues during his first term on Capitol Hill will return with more Carolina journal radio in a moment really influence you either have it or you don't and at the John Locke foundation. We do, and that's not bluster in a private survey of more than 250 North Carolina political insiders 87% said we influence them either a great deal a good amount. So while others talk and complain. We get to work providing research solutions and help our team analyzes the pressing issues of the day jobs, healthcare, education, and more.

We look for effective ways to give you more freedom, more options, more control. Our goal is to transform North Carolina into a growing, thriving economic powerhouse that is the envy of every other state. Our research is actually help policymakers make decisions that ensure you keep more of what you earn. Expand your choice of schools for your kids.

Widen your job opportunities and improve your access to doctors. The recipe for stability and a bright future.

The John Locke foundation were dedicated to making North Carolina first and freedom were dedicated to you look back Carolina journal radio why Michiko got a North Carolinian leads one of the most high-profile conservative groups on Capitol Hill, U.S. House freedom caucus representative Mark Meadows of the 11th district recently described the caucuses work during a speech at the National press club first Meadows set the record straight about the group's origins. I had one Democrat calling the other day who would say well for six years you have been out there trying to make sure that things don't get done in Washington DC as well. That's really interesting because actually we created a little over two years ago I got on the phone after a very frustrating time. We had some of the conservative members voting one way more conservative bent members voting. Another way I got on the phone with Jim Jordan. I said we got actually reorganized. If were going to carry forward a message for the millions of American people who think that Washington DC has forgotten we need to be organized. Meadows also addressed the notion that house freedom caucus members hold identical views on all topics. Many of them think that we are exactly alike, and yet is some of the best debate that you'll find on Capitol Hill because as we come together, the three dozen plus members come together, we actually have debate on some of the policies that we should be having debates on the floor. The house each and every day, and yet what we found is this so many times there are speeches that get made on the floor.

The house but there's not a whole lot of debate.

There's not a whole lot of going back and forth and so as you look at it. Some of our members. They are very different. We have libertarians and what you would say traditional conservatives, we have some who were more aligned with leadership and some who would never vote for leadership. And yet here we are. I believe that we needed to take a business approach to what we do is conservatives and so as we embark on setting things up. We actually the freedom caucus has a set of bylaws, we will realize that as we came together we said we need a structure some rules so we actually have a set of bylaws in that structure actually provides for a good foundation to make sure that were member driven one of the complaints we have is that is not right for just a few members of Congress would be super members of Congress and get to decide everything that happens on Capitol Hill, we believe that it needs to be a bottom up approach and the same goes for the freedom caucus.

So as we look at that. We said that everybody who brings an idea there gets to take that idea that's US representative Mark Meadows of North Carolina's Western 11th district. He chairs the conservative house freedom caucus Meadows says the caucuses been looking for ways to apply congressional rules to boost conservative causes a whole and will actually was nonexistent since 1983 we put it back in as a way to cut down on some of the federal bureaucracy because it gives us the tools actually go in and cut the funding without cutting an entire agency. Now you can tell that of a number of us have been very critical of the Congressional Budget Office. In fact, I think they're the one group that makes a weatherman's 10 day forecast look accurate and so as we see that we believe that we needed to address. So this amendment will actually go in using the home and rule that says that were going to reduce their employees by 89 some $15 million.

Not a big targeted selection, but in doing that what we said is is they ought to be aggregators. There's plenty of think tanks that are out there and so we ought to take a score from heritage from ADI from Brookings from the urban Institute and bring them together for a composite score that would represent a very wide swath of actually think tanks and their abilities and so we think that that's a pragmatic way to use the private sector and let yet Congress depend on a score that Zach Meadows addressed another myth about the house freedom caucus. The other thing that is a misnomer is that we all vote in lockstep together. Now we have been part of our bylaws that if we get to an 80% threshold. We will take a position now I say that because getting three dozen people to agree on anything, is almost impossible getting to 80% is extremely difficult, but we have made the decision that if we get to 80%. We will take an official position which means that we will all vote together with one exception. You get two passes a year. I made two passes a Congress to vote. So let's say you had some that was very critical to your district and as we taken that position and you. Let's take the export import Bank and you said well I got going in my district. I need to be supporting them, you would be able to get a pass up to twice during a congressional calendar and not be kicked out of the group, but outside of that you have to actually vote with the group know what the power of this is. Is it gives us the power of negation.

Now, when when I say that is when you can stop things from happening.

A gives you great power on what things might happen. So it's the power of no but is just as critical for us to have the power of yes Meadows suffered some examples of stances.

The house freedom caucus is taken. One involved the federal debt ceiling the debt ceiling is coming. It is time that we get it done. It is like a florist being surprised by Valentine's Day we know it's coming. Let's go ahead and deal with it and let's make sure that we do that and so as we start to look at that you will find the freedom caucus is pushing more and more and more to make critical decisions even if there decisions that we don't line so there is no structure but there's also great flexibility Meadows offered another example from the summer we call for us to cancel the recess we said if there's no results. There should be no recess that happened one particular night at a meeting where we were there that all of a sudden we were having this meeting in the notice came that we were canceling our Friday votes.

Well, we couldn't figure out why we were canceling our private boat since we had plenty to do and so the comment was made. You know, should we shouldn't be canceling Friday votes.

In fact, if anything, we should be staying here in August so from one comment that was started by a member within the caucus.

We took an official position that particular night, actually said let's stay in August. You know what I bet more than 80% of Americans agree that we should stay in August and get things done and when you look at that. That's what we're all about is giving that forgotten man that forgotten woman of voice on Capitol Hill. Congressman Mark Meadows shared thoughts about the house freedom caucuses communication strategy. We decided to go on a communication strategy to take our message to where our power really comes from in a power comes from the people themselves, who think that Washington DC has forgotten them and they're just they're just begging for someone to stand up on their behalf. There begging for people to say I'm tired of the political correctness just get something done. We have embarked and tried to say that on any given situation. We will offer two solutions because we been accused of saying it's our way or the highway.

And so, whether it's with the debt ceiling, or whether it is with the budget or anything else.

We are trying to make sure that we give at least two alternatives for solution.

So when you hear that it is our way or the highway know that today you heard this, I would challenge the reporters here in the room asked what are your two ways to solve this particular situation and if you we can't articulate that I would let you remind me of this conversation will make sure that we have two results. That's US representative Mark Meadows Republican from North Carolina's 11th district, he's chairman of the house freedom caucus. One of the most conservative groups on Capitol Hill will return with more Carolina drone radio and a moment if you love freedom we got great news to share with you now. You can find the latest news, views, and research from conservative groups all across the state. All in one place North Carolina one-stop shopping for North Carolina's freedom movement had 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 Locke foundation analyst plus opinion pieces and reports on higher education. All of that from the Pope Center for higher education policy commentary and polling data from the Cintas Institute and news and views from the North Carolina family policy Council. That's right, all of that, all in one place North Carolina that's North Carolina spelled out North Carolina Log on today. Welcome back to Carolina Journal radio Donna Martinez ensuring that all North Carolina kids get the education that best meets their needs. That's the goal for many policymakers advocate 10 tanks as well. We get there.

That really creates the interesting discussion and sometimes debate new data released by the state's Department of Public instruction could help inform this discussion about where the needs and where the demands really are. Dr. Terry stoops is vice president for research. Also, the director of education studies for the John Locke foundation Terry welcome back. Thank you. It's interesting that we know of course North Carolina is growing in population is the school age population also growing and are we seeing that in the enrollment numbers well were seeing yet, but in an unconventional way of the district. School enrollments actually dropped over the last year and this was something that was hasn't happened for for several decades.

In the end. One factor that stands out for this producing the sort of drop is the charter school enrollment. So when you say district school help us understand what you mean. I mean the 115 school districts in North Carolina that are the conventional what made me be called traditional public schools and these of the desk.

These of the places where most people equates public schools, but we also now have this growing number of public charter schools so it sounds like we may have a shift of students from those traditional schools to the charter schools in such numbers that now are really seeing the differential. That's right where you have about 173 public charter schools in the upcoming school year and what we saw year-over-year changes that there was a shift of about 9800 students that entered the charter school sector.

So while we had a loss of the number of students that were in the district school sector. We saw an increase in the number of charter school students and I would be surprised if in the upcoming year will see over 100,000 students educated in public charter school that some of the regional trends where we seeing the largest decreases in the traditional enrollment and where we seeing the gains well sink decreases mainly in the rule areas and for those who live in places like Charlotte Mecklenburg or in wake County or in Raleigh were so used to having large increases in students that we might forget that in many areas of the state they're losing significant numbers of students, and this is especially true in the northeastern part of the state that's lost anywhere between 10 and 25% of their student population so you know, if you look around the states and over the last five years. Basically, enrollment has been stagnant in North Carolina as far as the district schools are concerned, I think I calculated that there was only about 770,000 student increase in a total population being around 1.4 million students so very minor increase in students considering the size of the district systems in some of those counties in the more rural areas where there losing the student numbers one might think well perhaps it's it's because of charter school enrollment in those areas but also could it just be just general population decreases.

People are moving out of those areas and and moving to more urban centers for jobs primarily as a pretty complicated picture because charter schools are moving into those areas where in the past they have not been sober seeing an increase in charter schools northeastern part of the state.

Some of our rule communities, but because the manufacturing industries have left those areas were seeing a puppy population decline just don't have a job that they used to have and so people are going to where the jobs are which are mainly in our urban and suburban counties and a few other areas and state Terry one of the things that you do and in do so well here at the John Locke foundation is to analyze the data and trends, and when the data changes then the potential for policy changes takes place in you been looking at at those questions based on the newest enrollment data.

So what does this mean to us what what trends might we see that we perhaps wouldn't have predicted, five, 10 years ago will. Parents now have a number of options that they never had in the past and they are taking advantage of those options. Homeschooling has become easier. They're allowed to have more cooperative, more cooperative experiences with other families private schools. We now have vouchers allow low income and special needs students to enter private school with some state assistance and charter schools have increased significantly the number of charter schools and the enrollment allowances for existing charter schools are allowing parents to finally vote with their feet.

Where's in the past. They really have options unless they were wealthy and they could pay for the private school tuition or wealthy in the sense that they can forgo a parents financial contribution to educate the child at home. You mentioned earlier about to wake County and met Mecklenburg County and folks who live in those areas of the state. That's kind of they may be scratching their heads saying what you know with fewer people, fewer kids enrolled in school all we hear about is growth. Those are two monster school districts in Charlotte and and wake County. Would there be maybe some folks are now starting to say you know what they're perhaps too big in the general assembly is going to look at this issue and they have a task force set up that's going to examine asked that question of these districts too big and are there ways to break them up that might be beneficial to students because that's really neat that really needs to be the focus here is a district approaching 150,000 students really good for the students in that district or the teachers that teach minutes and so there are going to consider whether there are ways that we could break up those districts or whether there are ways we can go about approaching the problem that would make it easier for parents make it easier for kids to have a more responsive school district one that really truly meets their needs. What about on the other end of the spectrum.

We now have a handful of school districts that are quite quite small. Anyway that we could somehow perhaps get those districts to work together.

Are there really any benefits that would come to the parents the kids the teachers I think. So I were seeing some shrinking school districts, some hovering around the thousand students and I think it's important to note that I would never advocate for the state to force them to merge. I think there is a movement afoot that some people want to for some of the smaller school districts to merge or some of the city school districts to merge with their counties.

I don't know that that's a solution I would like to see the school districts themselves come up with a solution and perhaps look at ways of sharing resources, or perhaps even consolidating those districts. I know that's tough because a lot of pride.

These communities have in their schools but we have to realize too that we need to benefit the students in a school district that small can provide the types of courses that a larger school district can or services of the larger school district can so it might be good for these districts to start at least exploring the idea of merging Terry. We mentioned charter schools and I wanted to inner remaining moment with you. Talk about the issue of homeschooling because that his grown astronomically over the past few years. Why well, it's become easier.

There are numerous websites that are will help any homeschool parents plus the cooperative arrangements of minis home schools have are certainly a way for homeschoolers to make it much easier for them. We have around 127,000 kids in home schools. It's continues to increase every year and I think that so because the state has made it easier to homeschooling on the Internet will continue to see that rise. Thank you. Thank you. That's all the time we have for the program.

Thanks for listening on behalf of my cohost Mitch. Okay I'm Donna Martines hope you'll join us again next week for another edition of Carolina Journal radio Carolina Journal radio is a program of the John Locke to learn more about the John Locke foundation, including donations that support programs like Carolina Journal radio send email to development John Locke call 66 GLM info 166-553-4636 Journal radio nation airline is all opinions expressed on this program nearly mentioned about the show or other program foundation is any airline sponsored Carolina radio again

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