Prosperity Watch Issue 30

Prosperity Watch Issue 30, No. 1: Growing Costs Make Attending College More Challenging for Low-income Students

Over the last 10 years, college costs have skyrocketed, just as critical grant-based financial aid has covered less and less of these costs. Paying for college has often raised significant barriers for many of those wishing to attend. The need to work and make money is the number one reason students leave school before earning a degree or certificate. North Carolina students and their families have seen the cost of a college education increase during a time when a postsecondary education credential is becoming a necessity for an increasing number of jobs. As state funding for higher education has declined, and tuition and fees have increased in turn, attending college has become an increasingly costly proposition for students and their families.

Low-income students face considerable financial challenges in paying for college, and key grant aid programs such as the federal Pell grant help these students pay for their education. Many students who rely on Pell grants come from very poor families and this financial aid reduces the amount of loan debt these students incur. However, the ability of the Pell grant to make college more affordable has declined over time. In 1980, the maximum Pell grant fully covered the average in-state tuition and fees at public four-year colleges nationally. However, for the 2011-12 school year, the grant covered only 72 percent of such costs. For North Carolina, the average Pell grant covered just 67 percent of average tuition and fees for public colleges and universities within the state’s public university system.

Rising college costs and the declining impact of key grant aid programs are important issues for North Carolina. Since the 1999-2000 academic year, the share of total undergraduates in the state’s public colleges and universities who rely on Pell grants nearly doubled, while average tuition and fees more than doubled when adjusted for inflation.

Given these disturbing trends, it is critical that policymakers at both the state and federal levels confront the growing cost of postsecondary education in order to ensure that all qualified students are able to go to college without having to incur large amounts of student loan debt. At the federal level, policymakers can show their commitment to making college affordable by protecting the Pell grant program from further cuts. State lawmakers can demonstrate the same commitment by reversing the deep cuts made to the UNC System and the state’s community colleges made in recent budgets, which only serve to increase the cost of higher education for too many students.

Prosperity Watch Issue 30, No. 2: Prosperity Zones not equally prosperous

As the Department of Commerce launches its listening tour to develop 10-year economic development goals, it is critical to remember that different parts of the state are facing dramatically different economic conditions, and as a result, many of these regions are failing to experience the benefits of a growing economy. 

This is perhaps most obvious when comparing the economic performance of the state’s eight Prosperity Zones—new administrative regions established by the Department of Commerce to help coordinate economic development activities across a number of state agencies and geographic regions.  It is clear that not all of the new Prosperity Zones in the state are doing well economically. In fact, half of the eight zones have actually lost employment from August 2007 to August 2013. For example, while the Southwest Zone—which includes the fast-growing Charlotte-Mecklenburg metro area—experienced almost 5-percent employment growth, the rural Northeastern Zone saw the number of employed persons decline over the period more than 5 percent. 

A closer look at intra-state migration patterns is needed but this cursory look suggests that rural regions are losing employment at high rates and urban areas continue to grow which raises important questions for the types of strategies that can drive improved employment in more geographically dispersed communities. 

Understanding these trends is critical to developing policies that not only create jobs and grow the economy, but do so in a way that produces broadly shared prosperity across all regions in the state. Any ten-year economic development plan must recognize this fundamental reality—prosperity that is concentrated in a handful of counties but does not penetrate communities across the state is not real prosperity at all. As a result, the new economic development plan must incorporate strategies directed at promoting prosperity in all regions of the state.

Prosperity Watch Issue 30, No. 3: Shutdown forcing suspension of child care subsidies

Funding is running out for the programs that give low-income parents subsidies to afford the high costs of child care due to the federal government shutdown. Child care assistance supports family-economic security by helping low-income families stay attached to the labor force. This assistance also supports the healthy development of young children who consistently rank as the state’s poorest Tar Heels, yielding significant returns for the state in future years.

In August 2013, more than 72,000 children participated in North Carolina’s child care subsidy program. Participation rates that month varied county to county, ranging from 26 subsidies in Camden County to 6,445 subsidies in Mecklenburg County. Given their overall larger population sizes, the largest number of subsidies went to the state’s largest urban counties—Mecklenburg, Guilford, and Wake. While a sizeable number of families participated in child care subsidy programs, more than 36,000 families remained on the waiting list.

Funding for child care assistance is running out at different times for North Carolina’s 100 counties. Last Friday, 484 low-income children in Lee County were already turned away from their child care centers due to the lapse in funding. Not too far away, funding is slated to end on October 25, 2013 in Edgecombe County. And as these and other counties run out of funding, families, child care centers, and the parents’ employers will begin to feel the economic pain and pinch.

Vulnerable North Carolinians were already dealing with deep across-the-board sequestration cuts to social programs—including child care subsidies—in March. The longer the shutdown lasts, the more harm it causes to vulnerable children, families, and our economy. As such, The U.S. House should pass a spending plan for 2014, without conditions, that includes a responsible mix of new revenue and smart spending cuts that supports the economy and does not grow poverty.

Prosperity Watch Issue 30, No. 4: North Carolinians Lack of Access to Food is State & Local Issue

North Carolina ranks 4th among states for its high level of food insecurity, nearly 1 in 6 North Carolinians has difficulty putting food on the table. For these families, the Supplemental Assistance for Needy Families (SNAP) program and the Women, Infant and Children (WIC) program provide an important support to help address hunger.

During the federal government shutdown, WIC was one of the programs that Governor McCrory’s Administration chose to stop for a brief period before contingency funds were applied.  In July 2013, 261,000 North Carolinians received WIC. This program provides pregnant women, mothers, infants and children with vouchers to purchase food and formula as well as delivers counseling on healthy eating and health care referrals.  Its positive results in improving birth outcomes and maternal health are well-documented.

Its economic impact is less discussed but important to local economies. WIC vouchers are spent locally at stores and farmers markets that are authorized to accept them.

As is clear from the map above, it is actually the more rural and persistently poor areas of the state where the ratio of WIC authorized stores to total county population is highest while urban areas have some of the lowest ratios.  A lack of income is clearly just one barrier to accessing food, in some communities the geographic distance to food stores can represent another.

Prosperity Watch Issue 30, No. 5: Increase in low-income public school students creates challenges for NC's future economic health

As North Carolina continues to recover from the Great Recession, attracting more good-paying jobs to the state will require a skilled and educated workforce. An increasing number of jobs are expected to require some level of postsecondary training and meeting this workforce demand means that a growing number of the state’s public school students must exit the state’s education pipeline prepared to compete in a 21st century economy. And nowhere is this more important than among North Carolina’s neediest public school students.

For the first time in modern history, the majority of students in public schools in the South are from low-income families. For North Carolina, 56 percent of all students in public schools were eligible for free or reduced school lunch during the 2011-12 school year – the income threshold for a family of four is $30,615 to qualify for free lunch for the current school year. A closer look at participation in North Carolina’s subsidized school lunch program reveals that the state’s neediest students are not confined to any particular geographic region within the state. Instead, in nearly three out of every four public schools that serve grades Pre-K thorough 8, the majority of students came from low-income families during the 2011-12 school year. In fact, the majority of students in more than half of public high schools were from low-income families. The pervasiveness and high concentration of low-income students in public schools has increased significantly since the 2006-07 school year.


Many students within this new low-income majority require extra learning supports, as they lag their peers in core learning areas such as reading, math, and English. As a result, meeting the educational needs of these students typically require additional resources, such as extended instructional learning time in math and reading. Targeted spending in areas proven to have the greatest impact—teacher development and smaller classes, for example—help reduce the achievement gap between at-risk students and their peers. In North Carolina, when the state increased funding for the most academically disadvantaged school districts through the Disadvantaged Student Supplement Fund (DSSF) beginning with the 2004-05 school year, middle and high school students in DSSF districts at the greatest risk of failing did better academically than their peers in other districts in the state.

A skilled workforce that can compete for good-paying jobs is a necessity if North Carolina is to become a more competitive state in a 21st century economy. Success or failure in ensuring that all North Carolina students receive a quality education will ultimately determine the state’s economic prospects. Ensuring that public schools have the resources and support needed to meet this challenge should be a state-level priority. The FY2014 budget signed by Governor McCrory cuts funding in many of the areas found to help boost student achievement – classroom teachers, teacher assistants, instructional support, and teacher pay supplements, among other areas. These funding cuts have meant fewer classroom teachers, teacher assistants, instructional support, and instructional supplies, among other areas. North Carolina has taken a reverse course away from what works and this makes the challenge at hand difficult to meet.