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Carolina Journal Radio No. 707: Wallace couple gets federal prison time for tax fraud

Carolina Journal Radio / Donna Martinez and Mitch Kokai
The Truth Network Radio
December 5, 2016 12:00 am

Carolina Journal Radio No. 707: Wallace couple gets federal prison time for tax fraud

Carolina Journal Radio / Donna Martinez and Mitch Kokai

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December 5, 2016 12:00 am

A Wallace couple is heading to federal prison for its role in defrauding the federal government of millions of dollars in phony tax refunds. Carolina Journal has been documenting the tax fraud story of Perfecto Ruano and Walda Luna in a series of articles dating back to February. Editor-in-chief Rick Henderson assesses the resolution of the case, which involved charges of $12 million in refund fraud. People from across the political spectrum want to see improvement in North Carolina’s public schools. Former state Rep. Marcus Brandon approaches that goal now as executive director of the education advocacy group Carolina CAN. Brandon says one key component of the effort to improve N.C. schools involves shifting away from a top-down approach emphasizing state government. Now that North Carolina has paid off a more than $2.5 billion debt to the federal government for unemployment benefits, state leaders are trying to decide how much money to keep in the state’s unemployment reserve fund. That fund holds more than $2 billion now. You’ll hear highlights from a recent legislative debate about the issue. Colleges and universities have touted the value of academic freedom for centuries. But the concept of academic freedom takes on a new dimension during the age of political correctness on campus. The John W. Pope Center for Higher Education Policy recently released a report on the topic, then invited experts from inside and outside academia to debate its merits in New York City. You’ll hear highlights from the program. Few people understand the details of North Carolina’s multibillion-dollar public education budget. The General Assembly’s Program Evaluation Division released a recent report highlighting the lack of transparency in school funding. It also suggested that wealthier school systems are likely to take a higher share of the state’s education funds than their poorer counterparts. Terry Stoops, John Locke Foundation director of research and education studies, analyzes the report’s key findings and offers his own recommendations for the best way for lawmakers to address future funding.

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From Cherokee to Currituck and the largest city to the smallest and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most of public policy events and issues welcome to Carolina Journal radio why Muskoka during the next hour, Donna Martinez and I will explore some major issues affecting our state people across the political spectrum want to improve public schools of North Carolina will hear from a former Democratic state legislator who recommends that the state abandon its top-down approach toward that goal.

Now that North Carolina has paid back its multibillion-dollar debt to the federal government for unemployment insurance benefits. Lawmakers are now debating how much of the reserve fund. They need to avoid debt in the future. Universities have touted the value of academic freedom for centuries was that freedom mean age of political correctness experts inside and outside the Academy will weigh in on that question and will discuss a recent review of North Carolina's complicated system of sending state tax dollars to local school systems.

Some people want to see a major change in that system. Those topics are just ahead.

First, Donna Martinez joins us with the Carolina Journal headline to residents of Wallace North Carolina, who were featured in three Carolina Journal stories earlier this year are now heading to prison. A federal judge has sentenced the couple for operating a scheme to collect fraudulent federal income tax refunds but prison is just the beginning for the couple Carolina Journal's editor in chief Rick Henderson is here with the story.

Rick welcome back. Thank you so the these folks are going to the federal Pokey as we put in for how long the husband. Perfect. Perfect. Everyone owes his name's going to prison for 57 months resid 57 month term, and his wife.

All Waldo Luna has an 81 month these are serious prison sentences. Yes, they are the racers prison sentences. Also there's a financial penalty involved. They have been ordered to forfeit more than $1.8 million in cash that was discovered in their car when they were involved in a traffic stop in Arkansas this very moment. Plus more parcels of property that they own the Duplin County and $3 million of restitution and the US attorney's office personally wasn't clear if that $3 million also encompasses that cash and property or that's in addition to the cash and property. It sounds as if they are wealthy people and obviously some of this set according to the court coming from this scheme that they were involved in did they appear to be a wealthy couple in Wallace North Carolina really lived in a very standard class home little little little country subdivision there in Wallace. It was they own a small convenience store but no, they were not wealthy at all.

They generated their wealth by defrauding the text for states Carolina Journal has been reporting on this type of fraud for a number of months will have more than a year now, and in fact this couple from Wallace North Carolina was featured in three stories why what got Carolina Journal onto this couple we heard about that. We will learn about the couple because of action that was filed that involved a large number of fraudulent tax returns that were done, what was once notice stolen identity, refund fraud, which was reported about from the for couple years now. CJ still called taxpayer identity fraud is what now the IRS returns as it is a multibillion dollar your problem and we learned about this about this couple, from from information that there was about to be an indictment of the couple that what they had essentially done was fill out fake tax forms.

Income tax returns from people who did not exist.

They had invented taxpayer identification numbers or Social Security numbers for these people had filed out, filled out returns claiming that they were own earned income tax credits and then used five post office boxes in Wallace to collect several thousand checks and the then they also in the convenience store happen to have a license to be a check-cashing service is you really giving a very convenient store so they were able to launder that money effectively through their own convenience store and also take off of the share of that is a fee so that became instant cash for them and I will.

The IRS learned about this and they immediately took care of this with the IRS found out about it from the traffic stop. Interesting.

Now tell us about the traffic stop that. That ended up now this couple going to prison.

They were driving toward Los Angeles to apparently deliver some cash to relatives there and they were purged a routine traffic stop in Arkansas and guessing the you bundles of currency must visible in the backseat or something is the only way I can figure that there was a well yeah I guess August, $2 million in cash because it would be though class has to be in your small and large bills because if you think about it if you're dealing with the banking system and you make deposits of several thousand dollars. If the deposits more than 10,000 has to be reported but even if you make series of deposits of several thousand dollars that will draw you banking officials attention and so they probably had to make sure that these transactions were done spaced apart and done in smaller amounts and normal and so that problem.

If they did carry large amount of cash with you. We chuckle about this but obviously it's very serious and you talk about someone being tipped off. What was this traffic stop at Rick for example, the post office think something was amiss if people were getting all sorts of of checks from the Internal Revenue Service or wouldn't the bank be tipped off if there were all of these deposits or fake ID numbers.

It seems like all sorts of different government agencies should've been tipped off well right now we don't know what the post office had to say about this because the post office basically is this goodbye.

We don't really haven't had any kind of information from the post office there measuring they don't get a large volume of mail that's at the end I Wallace but what we do know is that the IRS is under an incredible amount of pressure to issue a refund checks as quickly as possible because people like to get their money back when they when they fill out their tax returns and so the IRS has not required to be verification that a person who is requesting a tax refund have any kind of record of filing. In previous years for instant there, so there's no third-party verification that a person who is filing for income tax refund actually exists.

That's an incredible statement so and I think many of our listeners will be surprised that that's why this that's why the taxpayer identity fraud is such a big deal because what happens is people file their tax returns they get they file tax returns. As soon as I get their W-2 forms, which is pastored by the end of January I go to the eye of a file electronically related mail in their tax return and refund usually comes with a matter of a few weeks and it's only in at the end of March that these think these things are to be cross checked so by then.

If you're running a scheme like this and you're doing it, not on such a large scale on a smaller scale quite possible to collect tens of thousands of dollars in fraudulent refunds in the disappear.

For anybody can actually verify that this is happening. People often do this sate with companies that deal with a lot of temporary labor such as construction firms. Things like this to find a company that hires lots of seasonal or temporary workers will get that up companies, taxpayer identification number and then use that as the basis for filing fraudulent return to the company quite often is complete.

Yes, it in this case about the in the instance of of a will of Long Island and Luna of Ronald Luna. This particular instance.

This was a scheme that was set up in a whole cloth just by the let's presume that they're going to be serving their federal prison sentence Seth complete their terms. What happens to them when they get out of prison well is Luna is not a legal resident of the United States and so she will be subject to be reported at the time that her prison term is over. Mr. 10 is legal resident but but as I said, and they also have children as well in the US but the others likely to be a deportation hearing and sentencing. At that point to which we have any idea how prevalent this type of theft is the irises called it the number one tax fraud problem in the country and there are estimates of anywhere from five to $10 billion a year worth of fraud that takes place like this. As I say most of these are small time operations involving the dozen or so, but this was a massive one involving hundreds if not thousands of fraudulent returns $12 million was the total that was found by the iris that you discovered just incredible.

And of course you can read the story about the federal prison sentence and the stories are there as well. We've linked them for you if you want to read the background on how Carolina journal has been reporting not only on this couple and the allegations against them going back to months and months and months, but this problem in general. You can read it on the Carolina very much like you say when this much more Carolina journal radio to come in just a moment, North Carolina is changing not just day-to-day but outward to our minute to minute and 2nd to 2nd, how can you keep up with the changes, especially the ones that affect you, your family, your home, your job, make the John Locke foundation and Carolina journal part of your social media diet on Facebook like the John Locke foundation like Carolina.

Journal follow us on Twitter at John Locke in C and at Carolina journal news, insights and analysis you'll find nowhere else.

Thanks to the experts at the John Locke foundation and thanks to the first-class investigative reporting of Carolina journal. Don't wait for the morning newspaper. Don't wait for the evening news if it's happening now it's happening here the John Locke foundation and Carolina journal.

Have you covered with up to the second information like us on Facebook the John Locke foundation and Carolina journal follow us on Twitter at John Locke in C and at Carolina journal will go back to Carolina journal radio I Michiko Gipe, there's plenty of disagreement about how to do it, but most everyone wants to see North Carolina's public schools perform better. Our next guest is approach that challenge from a number of perspectives. Marcus Brandon has been a state legislator and now he serves as Executive Director of Carolina can. It's a nonprofit education policy and advocacy organization. He recently addressed the John Locke foundation's Shaftesbury society on this thing. Poverty policy and participation path to better public schools.

I don't think I pop my piece to my thanks for joining us in the program.

Thank you for having me. So first of all, before we get into what Carolina can is doing in the perspective you want to share with folks given your background as a legislator as someone who's worked on public school issues. What you see is the big challenges I do see as the big challenges. One of the things that you read of policy or politics or participation. But I do think that participation is a big problem that we haven't worked on in terms of like building capacity always say that you can make policy and have certainly been involved in that policy for me is a place where we have access for people to participate. To make things better than we can take for example we have a charter school policy underneath the charter school policy.

We have great charter schools and we have schools that are not so great is all under the same policy is the people that make those charter schools great interest to people that make our voucher program right and and and and private schools are not just great because we have a policy that it now accepts low income students is great because of the people that make it work for those low income students and so that to me is something that we come together, North Carolina, and we've done an excellent job of the last six years of creating more choice in an environment that's more free market around education but we still lack the participation to make sure that those kids that we were talking about when we were doing with these bills are actually actually performing at the levels that we think that is sufficient in their actually getting a high quality education and that goes beyond policy and when you're talking about participation. Are you talking about parents participating in the schools. The policymakers themselves and be believing this was everyone participating together pretty much as what it is that you can see that everybody has a space and you know 40 years ago we had a participation rate in the PTA at around 90%. Now it's around 5 to 10% and you see in my thing is that you see here in wake County Mecklenburg County and some the others were local elected officials and local governments has been trying to participate. You see private business trying to participate and then you see that the local community is also participating marble issue with is that how do we bring all that together to make sure that recreating them the best capacity how can the state government influence the local governments and local governments influence regular everyday people or even businesses that everybody has a space whether it's giving $1 million as a corporation or computers already here that that person in a community that can only afford to give a dollar to make sure that someone has a book in your library or bring a lunch buddy or be a tutor. Everybody has a space that they can operate in this, and it's gonna take everybody because we have massive massive problems even though we see numbers coming different ways we see that we dealt with teacher pay a little bit we see that our our graduation rates are coming up a little bit doesn't mean the cancer college and career ready at that at that point so we still have a massive operation that were tried some massive operation to try to take care of every single student in the entire and entire state from any other Murphy that's a big operation and 90/100 years ago we decided that in the state of North Anna. We wanted little Anson County like Guilford County. So what we did was is that we create an environment of a top heavy down approach where the state was going to take care of most of these needs and now we see as time has developed and and and we got a lot more technology and a lot more things out there that the state simply just cannot does not have the capacity to do that the longer we've got to be able to figure out a way that we can bring you more folks to be able to help participate in braille bigger capacity.

We are chatting with Marcus Brandon. He is Executive Director of Carolina can also a former state legislator who dealt with the these public school in charter school and school choice issues quite a bit. It sounds as if in some respects what you're talking about is making sure that that people don't just sit back and say well states can take care of this or my school boards gonna take care of this someone else is gonna take care this, but getting more people involved in actually being part of the solution to improving school of we've got great policy but when people what people don't understand is when they talk about what the state is made by mistake North Carolina in the state of North life.

Actually, eighth, and what we produce in terms of terms of financial output to our state schools.

We are eighth in the country were not 45th and 49th and what people say we have that number because of lack of local participation in what I was talking about earlier about how the culture that we have in the state is going to take care of everything. So, for example, in the state of Connecticut.

They pay their teachers $28,000 a year there legislator.

We out out far paste that and even though their teachers are number one in the country so we we have to look at the fact that the state is doing pretty much all it can do in terms of in terms of financial output whenever your atheism is only seven states doing it better than we are and so I think that we should be proud of what the state of North Carolina is producing for its public education and we need to really take a look at where the other parts are missing and and and and that's from local level, local businesses and local people right so we have a limited amount of time left but I'll get to get to the tough question you've identified the problem we do about it now. Well the thing is that we have some solutions at the state level.

I do believe it's a coming up on the state since we created a culture that we actually kinda release that culture by and I know what environment they were and I don't believe that we that we need tax hikes or even allowing other folks to have taxing authority to be able to meet that's what I do believe that the state of North Anna can incentivize public-private partnerships much like you see project lifting Charlotte much like you see the wake County schools and how they decided they would get their teachers to national average.

You see, local governments trying to participate and I think that if we can find a way through existing dollars that we have that.

I know because I've been in the legislature that that doesn't necessarily do that work when it's carved out for that work how we can make sure that those people are receiving those incentives to make sure that we build bigger capacities. I think that that's one place to start than the other places to just make sure. Basically we start talking about a different culture in a different mindset about how we view and how we approach education is part of this. Also ensuring that a lot more decisions as many as possible get made locally get made by parents or by individual school and that's what you see, the lack of participation because we've abdicated that responsibility to state. A lot of people have not participated. A lot of parents are not even encouraged to pursue this more last week define quality education and drop my kid off at school. You are given to lodges and drop them off about in front of my house and we doing that quality education and they just abdicate that role.

While they've got to do is change that culture that no still, just as responsible for making sure that your child has a high quality education is the state and local government doesn't leave and that that's just going to local leaders are making sure that we allow space for their participation. Right now they're not even really asked and I really asked that really stay away so many senses with participation. If you don't allow them to choose their schools and if you don't allow them to choose their course of education and why would they come.

Well, it's very interesting topic and certainly an interesting perspective, one which would like to get to as many people as possible involved in making sure that kids are doing as well as they can in the schools. Our guest is been Marcus Brandon. He is Executive Director of Carolina can think so much for joining us for pleasure.

Thank you so much, will have more on Carolina journal radio just a moment at the John Locke foundation where leading the effort to clean up the mess left behind by big government liberals for decades.

The powerful left in our state had piled on rule after rule, regulation after regulation never really caring about the people whose lives are caught in the nightmare of complying. In other words, you their handiwork had made it tougher to get a job even increase the legal risk of operating a business. We say enough is enough.

It's just not fair to you.

That's why reform minded lawmakers have turned to the Locke foundation for answers and acted to lighten your burden were proud that our intellectual firepower has improved lives. You can count on the John Locke foundation to watch out for your interest. The special interests. We would be honored to have your help in this fight. John and make a tax-deductible donation.

Right now the John Locke foundation where fighting for you where fighting for freedom 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 event set Carolina 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 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 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 long 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 and 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. Welcome back to Carolina journal radio why Michiko got after paying off the debt of more than 2 1/2 in dollars to the federal government for unemployment benefits. North Carolina is building up its unemployment reserves six editor Bob Rubio recently reminded colleagues that businesses are footing the bill, which is an employer-based system and they are there to pay the cost backstop. The system and to be able to to make sure that this benefit is available for North Koreans in need. This ritual also mentioned safeguards now built into the system when the system hits below the billion dollars, a red flag goes up there is a new charge so that the employer's are contributing to make sure that there is a continuous source. A backstop to the fact that there is going to be sufficient resources available to be able to pay those benefits as need be.

The funds grown to about $2 billion.

Sen. Randy Wells wonders whether that's enough. Thankfully we've got $2 billion, that's perfect. It appears that from 2012 2014 trust fund balance drop 2.1 billion and at the same time. The food for a penalty in the pseudo-collections were going up 150 million each of the 300 million so we effectively went through $2.4 billion in two years so it's conceivable that billions not enough Brynn of the state division of employment security responded.

You never know it is an amount that will absolutely positively be enough for every possible scenario, but when you get to a certain amount, 3.3 to $3.4 billion relates to the formula. During that time are also getting tax money coming in for that particular year. So is not just a 2.3, or $4 billion is insulating us against having the barn were continuing to collect money all during that year from employers is adding to that 2.3 or 3.4 million. The combination of those two dynamics is our best chance of weathering storms through what would last 20 years since reserves of $2 billion should put North Carolina in a good position. We can better project the kind of revenue coming in each year so at any one time.

If we're expecting to collect on or about $1 billion of tax revenue.

Maybe a little list some years, more over year plus have our baseline of 3.3 2.4 billion.

That's about 3.3 billion from thinking right available to help us with our risk and only we could have 5 billion in the trust fund in and then feel very very safe but the I expect will be conversations about when enough is enough to make decisions based on you been listening to debate about North Carolina's reserve fund for unemployment benefits will return with more Carolina journal radio.

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 St. movement 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 why Michiko got a recent article from the Pope Center for higher education policy targeted the topic academic freedom in the age of political correctness. The article spurred a discussion among experts on the topic among them Emory University English professor Mark Bauer line. He says little correctness is been a problem for more than 25 years why a large in the public sphere, political correctness of the academic mind. What is proven, demonstrated, shown to be an illiberal code where civic bullying condition and it was generally deplored in the public sphere. Since then on college campuses we call political correctness is only gotten worse, my colleagues, running them. Most of them for the centerleft moderate liberals are themselves actually never been so fearful saying the wrong thing doing the wrong thing. You never know when you're gonna be recorded or filmed, and if you are caught doing the wrong thing or just alleged to have been done the wrong thing you going to what lawyers will call the system all right suddenly it's turned over to a whole other machinery federal regulations.

Title VII title IX issues in the lawyers it's in their hands now nobody wants to go there and it only takes one case to make everyone else nervous. So this is where we are where we are today kind of paradox. Everyone knows how bad this is. But it just keeps rising.

The Pope Center's J shell and highlighted key themes from his report on academic freedom and political correctness are sort of a great conundrum of academic freedom and that is that if the absence of academic freedom tends to stifle knowledge and learning sodas. Total freedom because you end up with a problem of activism and activists deny the spirit of opening they. Their goal is political.

They start with a set of they start with a political goal and accept or deny evidence, according to whether it serves their needs to forward that goal.

Peter Ward of the national Association of scholars has identified seven elements of politically correct suppression of intellectual freedom. He ties those elements to the word outrage over ostracize you usurp people training or repress a first certified G4 group.

Each result, outrage, ostracize those who dissent from political orthodoxy. George will being sent your no longer welcome your note from the president of Scripps College were numerous other distant petitions of our time on usurp usurp what usurp the curriculum.

Get rid of courses that no longer serve the purpose of the day so the feminists at Springfield College in Massachusetts have decided that six or seven courses on women in literature a perfectly good one on men in literature has to go man wants to teach.

It is no teaching or sessions of expository writing to freshman at 8 AM in the morning usurpation of the curriculum is not normally what we think of first when we talk about political correctness, but it is the 7/10 of the iceberg below the water. That's where the stuff is really happening with not being taught, what is being taught. That's Peter Wood at the national Association of scholars discussing a recent report on academic freedom. The age of political correctness. He continued with his list T train train students to be activists to become community organizers a major transformation of higher education is underway were about to release a report on this clip hold making citizens make citizens no moment freshman arrived first years as Arnold called arrival on campus.

They are sent out to be volunteers. Students have a term for the cold volunteering at Boeing Cherney is replacing the curriculum and the people who supported make no bones about it much more important to go to college to learn to be an activist and that curricular stuff on the side, nevermind then it is to go there to become a learned person, or for, repress, repress, refers to those topics through rule unfit for discussion know their important but they are unwilling to talk about them when you are holding back your knowledge. The earth is heating up quite so much. The apocalypse that was promised for your 2000 and is been delayed a year ever since hasn't happened.

You're engaged psychological product process of repressing troop Peter Wood continued his list of politically correct elements based on the letters of the word outrage up to a variable area came up with a citified but which I mean that transformation of the campus and replace the people are really sour Since 04 of my colleague, Michelle Peterson is called nudging every moment of the day you're being nudged to follow a particular path, even if it's removing the trays from the cafeteria so you have to juggle five or six plates so you can think about sustainability while you try to eat your banana on God is the that's what you citified is it's making the campus a safe place for the ideologues unsafe place for everybody else.

G stands for group and it stands for the: turning people into categories defined by race, sex and ethnicity, especially on the rationalization of campus into groups not only to find that are defined in terms of their resentments that dynamic has become a key part of the reign of political correctness. When you go to college are no longer an individual may have thought you were you made for your there to cultivate your individuality in some sense know that's off the table now or we tell you you are and if you happen to be a white male while your job is to atone for the next for five years. What about the last letter in outrage, E is for exalt exalting certain ideas and beliefs so that they are exempt from questioning or critical examination expressions of dissent can be suppressed, therefore, is ask of malignity Brooklyn college history professor Casey Johnson noted disturbing recent trends in political correctness of the faculty are the primary thrust in terms of this internal threat to academic freedom. Joined by administrators increasingly powerful administrators in the student life diversity and title IX bureaucracies and more troublingly there increasingly joined by student bodies. The opening session of the Brown student government this year was declared a safe space and as a result, the media were expelled from the deliberations.

So the idea that uncomfortable ideas cannot only not be discussed. But whenever ideas are discussed that you don't want people to hear about outsiders can be excluded on grounds of safe space suggests that the problem is more than just the faculty it requires to some extent outside intervention.

It certainly requires more aggressive oversight from trustees and alumni who are and stay within the system are the groups that need to be far more active you been listening to highlights from a recent debate about a report from the Pope Center for higher education policy.

It's titled academic freedom in the age of political correctness will return with more Carolina journal radio at the John Lott foundation where leading the effort to clean up the mess left behind by big government liberals for decades. The powerful left in our state had piled on rule after rule, regulation after regulation never really caring about the people whose lives are caught in the nightmare of complying.

In other words, you their handiwork had made it tougher to get a job even increase the legal risk of operating a business. We say enough is enough. It's just not fair to you. That's why reform minded lawmakers have turned to the lock foundation for answers and acted to lighten your burden were proud that our intellectual firepower has improved lives. You can count on the John Locke foundation to watch out for your interests.

The special interests. We would be honored to have your help in this fight. John and make a tax-deductible donation. Right now the John Locke foundation where fighting for you where fighting for freedom, welcome back to Carolina journal radio Donna Martinez whether or not North Carolina spent enough money on each child in public school is the subject of an ongoing debate, but there are also questions over how the amount we spend is actually determined that was the subject of a recent legislative committee meeting which looked at a new study compiled by the Gen. assembly's program evaluation division Dr. Terry stoops is here to talk about that. He of course is the director of research and education studies for the lock foundation Terry welcome back. Thank you. You taken a look at this report. What you make of it.

This is an excellent report. This is a report by the program evaluation division of the North Carolina Gen. assembly and they were asked by the Gen. assembly to look at the way we fund public schools in North Carolina now this certainly isn't the first time we've looked at this issue in 2010 there was a report that was also commissioned by the Gen. assembly. The look that many of the same issues, and came to some of the same conclusions about how the way we fund our public schools in North Carolina doesn't always make the best sense. What jumped out at you about this report and conclusion. Well, I mean one of the conclusions that we've known for some time, is that the way we fund schools is not very transparent.

It's not very clear to a casual observer, how schools get their money.

One of the more interesting points that they made was that even the business personnel for the school districts need around four or five years to learn the system and if you have a system that that Scott is that complicated. That takes that much time to learn, then obviously there's a problem in the compound. That problem is that most business professionals that school districts don't spend don't stay at the school district that long so it takes a great deal time to learn the system and then by the time you learned those people of probably moved on. Okay, this is a head scratcher for me because I when I think about how the school system is funded and I think about per-pupil allotments. We hear that phrase a lot. It seems to me that it would be kind of simple math. Here's the amount of money that is appropriated from from the state and their other dollars that come into this as well from federal and local, but from the state and then you divided by the number of kids. And while you've got yourself an amount of money not that simple.

I wish you were just to put in perspective the state spends about in 2014, 15, around 8 1/2 billion dollars and the way that that money is sent to school districts is in the form of 37 allotments and these are little pots of money for various things. Weatherby, classroom teachers, school supplies, any number of things. 37 pots of money that get sent to school district based on formulas that are created and maintained by the Department of Public instruction. So if Carolyn would like to have a 37 part series that I where I can explain how we fund our public schools in North Carolina be happy to do so, but suffice it to say that's a very complicated system that only a handful of people really really understand. Give us a couple of examples of what some of those little buckets of money are well. For example, there is a bucket of money for special needs students, and this is one bucket that has been under scrutiny recently because it is.

It's a set dollar amount that school districts receive per child who has an individualized education plan.

The problem is is that it's capped at 12 1/2% so if you're in a school system that has a particularly high percentage of students that are special needs. You can't get money for the students only up to 12 1/2%. When you receive the 3 1/2 thousand dollars or so per student for special needs students. There's a pot of money for English as a second language students. Again, there are various pots of money.

Some are much larger than others, such as the pot for special needs students tends to be much higher than some of the other pots of money such as the money for small school districts were high need school districts tend to be a little smaller than there are people then whose job it is. I guess in every school district to figure out what they qualify for, and sounds like then there you have to some have a pretty detailed profile of each of their kids, that's for sure. Not only that, you know you have districts with school finance personnel that are much more experience than another districts and they know how to game the system if they know everything is 37 exactly rights, and you know it's because it's so difficult and complement complex, they are able to maximize the amount of dollars at their school system receives some of the other school districts are that pertinent and so receive much less money for around the same populations and and that's really one of the things that stood out to me is that there are school districts with similar populations to get vastly different amounts of money from the state and most of that is because there are school district personnel, the better know how to handle the system another's one of the headlines from this report is that wealthier counties are receiving more money than other counties. How is that possible if we have all of these different buckets of money for kids who have particular characteristics. Well, one of the buckets of money is for teachers and wealthier school districts tend to have teachers that are more experience and have advanced degrees and those are two factors that go into determine how much money for classroom teachers. The school districts get so if you have a more experienced teacher workforce, or you have a more credentialed teacher workforce are going to get more money per teacher than one that has less and according to statistics of the wealthier school systems tend to have the more credentialed, more experienced teachers and therefore receive more money now that what particular finding was something that angered a lot of those from rural school districts that don't tend to get as much money but arguably need more money because of the way that their school system maintains its student population or or some of the needs of the rural school systems are necessarily addressed so you know this was one of the major findings that I think is going to propel changes in the way that we fund our school system will based on your description it sounds like something Tess need to be done, so it's a good thing that the legislature is looking at this time to actually thrilled that they're looking at this, we've been talking about the 2010 report, the recommended changes since 2010, to urge the Gen. assembly to go ahead and look at this issue, but because of the great recession because the change from a Democratic to Republican legislator and then Democratic to Republican governor. There hasn't been a whole lot of urgency to look at our school funding system. Now there is and I think that legislators are going to be motivated to do so is there any low hanging fruit so to speak in this whole complex system. Terry I change or two that could be made fairly easily. That would at least start the process of doing something about this. While I think we need to look at what other states are doing and increasingly they're looking at weighted student funding the very few states use and allotment system like we do here in North Carolina and instead they're going to weighted student funding which basically works like this. Each student's in the state would receive a base amount of money, sort of like a starter fund and based on their characteristics. There will be an additional amount of money laid on top of that base amount. So if there are special needs students.

If there for coming from a low income family than those students would receive an additional amount of money so very easy and transparent way to go. It looks at what the student saw how many students you have the characteristics of those those students and then funds the school system. Accordingly, lots more to come on this issue of how much we spend on public education and how those formulas work out to determine what the school districts are receiving. We been talking with Dr. Terry stoops. He can read all of his analysis of this type of and John Terry, thank you very much. Thank you.

That's all the time we have for Carolina journal radio this week. Thank you for listening on behalf of my cohost Mitch. Okay I'm Donna Martinez. Join us again next week for another edition.

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