CARY, N.C. — In front of rows of solar panels, Governor Perdue announced Thursday she is working to change the way North Carolina thinks about energy.”We intend to transform state energy policy making by providing strong leadership and creating vital links between energy policy, economic development and workforce development,” Perdue said.

One of her first moves will be to transfer the State Energy Office under the Department of Commerce, Perdue announced.

The governor also plans to name a new energy advisor who will help develop and implement policy across the state.

Also, Perdue plans to invest $18 million for an energy investment revolving loan fund, which will go towards no and low interest loans for businesses, non-profit organizations, state agencies and local governments to become more energy efficient.

Another $10 million will go to expand North Carolina’s green business fund, Perdue said.

RALEIGH, N.C. – Lawmakers are delaying a decision on legislation that could let North Carolina cities and towns choose whether to use taxpayer money to fund some local elections.

The House tentatively approved the measure last week and scheduled another vote on Thursday. But the vote was postponed to Tuesday. If the bill passes, it moves on to the state Senate.

Supporters said using local taxpayer money for candidates would balance the power of big money in local campaigns. Proponents said taxpayers could be forced to support candidates they might dislike. Chapel Hill will allow public financing in local elections this year.

Statewide candidates for appellate judges and three other posts now get public funding.

RALEIGH, N.C. — Gov. Perdue announced Wednesday in connection with North Carolina’s increasing unemployment rate and declining national economic climate that she has seized the corpus of North Carolina’s Rainy Day Fund as a precautionary measure to further manage the state’s cash flow and budgetary requirements

“The sharp rise in unemployment combined with a significant decrease in state revenue has required me to take certain steps to responsibly manage the state’s cash flow,” said Perdue. “Securing the rainy day fund is necessary for the continuance of day-to-day government operations. Put simply, this move makes sure we will have the cash to pay the bills.”

The state’s Rainy Day Fund totals approximately $787 million. Of that, Gov. Perdue will use $250 million to stabilize the State Health Plan for state employees.  When necessary, the  remaining funds are being used to manage cash flow.

Winston-Salem Journal
The General Assembly’s aggressive spending this decade may cost North Carolina college students important financial aid in coming years.

That is the assessment of Treasurer Janet Cowell, and her calculations look pretty sound.

After the recession early in this decade, legislators raced to catch up on all the spending they’d missed. They freed money for new spending by shifting it among accounts.

One switch took scholarship money out of the General Fund for use elsewhere. Then the scholarship programs were restored with principal from the state’s Escheats Fund, The Associated Press reported.

The Escheats Fund is a repository for money about which North Carolina residents have forgotten. Two common sources are insurance policies that were never cashed and utility deposits that were left behind.
The fund now contains $584 million, and the state constitution says its proceeds must be used to help needy students attend public colleges. But that balance will fall quickly, Cowell said recently, because the General Assembly has been using its principal.

During this fiscal year, the Escheats Fund is expected to provide $210 million in financial aid, some $60 million of that going toward the state’s new EARN Scholars initiative. Low-income students in that program get $4,000 annual grants that, along with other funding, often allow them to graduate from college debt free. It is very possible that every dime involved in the legislature’s money switch went to very worthwhile causes. EARN is a laudable program that, by helping low-income youngsters to attend college, will prove a long-term investment winner for North Carolina.

But sound long-term investments are not built upon spending plans that involve the figurative eating of one’s seed corn. That is what the state is doing here by taking principal from the Escheats Fund. If the fund drops as much as Cowell predicts, it will contain only $83 million in 2011. That will end an awful lot of financial aid.

House Speaker Joe Hackney reacted to Cowell’s warnings by telling the AP that the legislature has the entire legislative session to figure out what to do with scholarships. But “we’ll think of something” is not a reassuring answer when the numbers are so compelling.

That’s especially true when we see record numbers of families applying for financial aid, when the College Foundation of North Carolina reports that parents are withdrawing college savings for non-college reasons and when enrollment at the state’s public universities and community colleges are all rising rapidly.
When the General Assembly figures out what to do, one component should be the return to the policy of using only earnings, and not principal, from the Escheats Fund. To do otherwise is foolish.

RALEIGH, N.C. – A little-known state fund flush for years with forgotten insurance policies and utility deposits soon will get lots of attention with projections its open spigot for college scholarships will run dry.

The Escheats Fund, now with $584 million, could go broke in 2012 if the Legislature doesn’t find another way to pay for student financial aid that’s drawing down its balance rapidly.

The fund is expected to provide at least $210 million in financial aid to college students this fiscal year, helping, among others, 54,000 students at University of North Carolina system campuses.

Lawmakers “need to sort of make a decision: either they find other sources for scholarships or reduce the rate that they’re paying out,” said new State Treasurer Janet Cowell, whose office manages the fund. Otherwise, Cowell said, future students won’t have as much access to grants and loans.

Lawmakers have tapped into the fund’s balance with increasing frequency in recent years. They’re aware of the trend, although fixing it is not as urgent as this year’s budget troubles.

“It was done to help more kids go to college, very simply,” said House Speaker Joe Hackney, D-Orange. “We have an entire session to figure out what we’re going to do about scholarships this year, and we re-examine that every single year.”

Cowell’s office estimates that without changes, the fund’s value will drop to $297 million by mid-2010 and fall to $83 million in 2011.

The demand for scholarships will only grow as the UNC system projects student enrollment to grow by 50,000 students, or more than 20 percent, in the next decade. At least one Republican said the dwindling Escheats Fund is a symptom of a larger problem with legislative budget-writers, most of whom have been Democrats.

“The creative financing that’s been used in recent years is catching up with us,” said Rep. Nelson Dollar, R-Wake, vice chairman of the House education university subcommittee.

The Escheats Fund is a pot of money where property unclaimed or forgotten by its previous owners are sent to Cowell’s office by banks, utilities, government agencies or insurance companies.

The treasurer tries to return held funds to their rightful owners and invests the rest of the money. The state constitution requires proceeds go toward aid for needy students attending public higher education institutions, including community colleges.

Valued at $184 million in 1998, the fund’s size has soared as companies sent more held cash. The additional money outpaced efforts by then-Treasurer Richard Moore to promote an online database that helped return up to $41 million annually to their owners.

Lawmakers historically used interest earned on the escheats for financial aid. But this decade, they have eaten into the fund’s principal, swapping out scholarship money paid through the state’s general operating funds.

The Escheats Fund transferred $101 million in principal to scholarship programs for the 12 months ending last June 30, according to the treasurer’s office.

This fiscal year, the principal will be doubled, mostly due to a $60 million requirement through Gov. Mike Easley’s EARN Scholars initiative, which funds $4,000 grants to students in low-income families so they can obtain a college degree debt-free.

“It’s a way that can really cut back on the amount they borrowed for college,” said Steven Brooks, executive director of the N.C. State Education Assistance Authority, which distributes student aid. “It’s a wonderful public policy.”

Easley had wanted to use taxpayer money for the program when he introduced it in 2007. But the General Assembly decided last year to earmark escheats for more than half the grants in part due to worsening budget numbers, said Sen. Tony Rand, D-Cumberland.

“The revenue estimate went down and the amount of money available,” Rand said. “It was simply a matter of trying to find available funds to allow this to happen.”

Budget-writers now must decide whether to spend another $40 million on the EARN Scholars program next year. Gov. Beverly Perdue is promoting college affordability. And the UNC system is seeking $23.4 million more for financial aid.

“We understand that we must protect the integrity of the Escheats Fund,” said Rob Nelson, the UNC system’s vice president for finance. “But we also know that we want to have enough need-based grant money so that every student … who is eligible receives those funds.”

A state law that says the Escheats Fund can’t fall below $400 million can be changed. Shifting scholarships more to taxpayer money may be difficult in a year when lawmakers may have to narrow a $3 billion spending gap.

Cutting scholarship aid would seem to be a bad political move.

Hackney and Rand said they understand that the fund’s faucet can’t be a torrent forever.

“This fund has existed for a long time to help students,” Rand said. “We really have to be careful.”