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- Before the economic supernova of the Trump administration's US tariff proposals, one of the next biggest challenges was how a dramatically reworked US Department of Education or not would impact the state's ability to deliver education.

Welcome again, and thank you for supporting the longest running and the most widely watched dialogue on Carolina business policy and public affairs.

I am Chris William, and later on this dialogue, we will welcome again the North Carolina State Board of Education Chairman, Eric Davis, but before we get to that, there are a few other things going on, and as always, and each week, we will discuss those issues as well.

We hope you stay with us because we will start right now.

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(upbeat music) On this edition of "Carolina Business Review," Sara Fawcett from United Way of the Midlands, Brenda Berg of Best NC, and special guest, Eric Davis, Chairman of the North Carolina State Board of Education.

- Hello, welcome to our program.

Sara, good to have you here.

Brenda, welcome back.

- Thank you.

- What are you two talking about that you're laughing about over there?

- Just a lot in common.

- Do we want to know that?

- We have a lot in common, a lot of people in common.

- Thank you for joining us.

It's hard to see past the glare of all of the rhetoric around Trump's tariffs and the proposal around tariffs.

Is it showing up in education?

Are there things now that are stopping because nobody wants, everyone wants to wait for whatever the fallout of, and this is not good or bad, but just the gravitational pull of this proposal around tariffs is going to stop people in their tracks.

Is that what you're seeing?

- Well, there's going to be an impact on the economy, and we're sitting here looking at a possible second year deficit in the North Carolina state budget.

- [Chris] Because of that, you think?

- No, no, that's just from current trend data.

So everything matters when you're working on the budgets for the next two years.

We're at the beginning of a two year cycle, that affects it.

And as you mentioned, the conversations about the Department of Education and eliminating research, that's actually the biggest impact we're going to have over time is just do we have data, do we have information?

So there's a lot there, a lot of residual effects.

- To that point about state budgets, Sara, is this gonna blow through South Carolina's proposed surplus?

- Well, that's a really good question, Chris, and we don't know yet.

I mean, the discussion in South Carolina to this point has actually been around, for example, the possibility of lowering the income tax.

Will the tariffs have an effect on that long-term?

Has yet to be seen, but we're hoping, we've been in a very fortunate situation where we have had those surpluses, and wanna be able to put those things, would rather put the surpluses towards things like lowering taxes towards education, towards other things like that, we'll see what happens.

- Yeah, so I don't want to keep, I don't wanna go down this rabbit hole too far, but I mean how long does this uncertainty last?

As long as the tariffs last, or whatever that looks like?

- I think it lasts until we have some of the answers.

Like when I think about in the nonprofit world and some of the federal funding that is being paused for now, in our world, we will feel better once we know one way or another, is it a pause, will it be reinstated, or is it going away?

Because as long as it's a pause, we don't know which way to go.

Once we know, then we'll know which way to go.

It's the uncertainty.

We can deal, we're a resilient country, we're a resilient economy.

The nonprofit world is resilient, but we need that uncertainty to be resolved.

- So we're gonna ask our guests this too, Brenda, but the Department of Education on the federal level, whatever that looks like ultimately, will those dollars though, and I'm not trying to minimize this, so the dollars end up coming directly from Congress to the states?

- Well, this is an interesting discussion.

So the idea that the Department of Education will be dissolved, that actually requires a vote of Congress, the two thirds vote of Congress.

So most people don't think that the actual agency is going away.

And when you look at the executive order, it was kind of as practicable language and without limiting operations.

And so how do you do the things you do, whether it's Title I funding or FAFSA without limiting operations?

So a lot of businesses as usual.

There were a lot of people who were laid off at the department, they were administrative people, they were important, they had jobs.

But the greater education world is not going to feel an immediate impact.

As I mentioned before, the research part of it was sort of almost collapsed.

And that's a concern.

There are a lot of people advocating to kind of bring back that research piece of the department.

So kind to your point, there's a lot of wait and see, we don't know, are there going to be more cuts?

But a lot of things are actually expected to stay as usual.

Title I, Title II, FAFSA, Pell, They were all mentioned even in the announcement as staying and continuing.

There were actually some grants that were canceled, some really big grants that were funding really big projects.

They were completely canceled with one day's notice or not even, but those funds are determined by statute.

They have to be dispensed.

So they will, my understanding is, reissue those grants, maybe not to the same people, but there will be grants coming forward.

So there's a lot of wait and see to see.

One I heard the other day is also like Smart Start, Smart Start funding I would anticipate will continue forward.

But the organizations that support them around the country, there are 10 I think organizations, five of them were shuttered.

So it may not be the big pieces, but it might be the little pieces that you're gonna feel as well.

- Sara, your cohorts in nonprofit NGOs, let's zoom out.

Are you thinking about the broader economy?

Do you think that that's going to be an issue this year for South Carolina?

- We think about it all the time because- - Is it more acute now?

- I'm sorry?

- [Chris] If you need to take some water- - I'm good, thank you.

- Because it legitimately is fresh water.

- It's okay.

- It's okay.

But I mean, is there modeling going on?

Are you all a little bit more acute about okay, this may be a serious thing, we need to get our heads here.

- Oh, absolutely.

Sure, sure.

Especially those of us that have partnerships in the corporate world that are a good part of our revenue.

We are absolutely trying to make sure that we're looking at, okay, what industries are some of our biggest funders, and what do we think the economic impact is going to be on them so that we can then have a realistic idea of what our partnerships with them can look like.

Because the work that they do with us is really important.

It's really impactful.

And we want to use every dollar as efficiently as we can, but we also have to recognize we're one of a number of priorities that these organizations have.

- Brenda, you're gonna get the last question here.

It's a little bit of a leading question.

Best NC does a lot of work, talk about partnership.

This is a startling statistic.

I don't wanna read this because I'm probably not gonna get this right, but the idea that 41% of all new teachers enter the classroom with no teaching preparation requirement.

So they're not teachers.

- I have worse news for you.

The new report just came out, and it's now 43%.

So when it was 41%, 3,700 new teachers last year came into the classroom.

Not to say they didn't have any training or any experience, but they were not required to.

And so most didn't.

And they left at rates of 47, 49%.

So they're not staying long enough to learn their practice.

One thing we know is if you go through traditional education prep, sort of like hiring an accountant that hasn't taken an accounting class, right?

You have to take some core coursework to become a teacher.

That's really, can we find some teachers sort of out of the blue?

Absolutely, we have some astounding teachers of the year who came in lateral entry.

But generally speaking, you need to take certain coursework, and you need to have student teaching.

And we don't have enough of the teachers that are coming in with that.

And when you leave that fast, you're actually doing damage to students.

- I'm sorry, excuse me.

Are you nodding because you agree with that or you know that number in South Carolina?

- Well, I mean, we have similar numbers in South Carolina.

What we are finding is that particularly, and we've got the same situation that North Carolina does too, where you've got very concentrated urban areas that you have to serve.

And then you've got a lot of rural territory that you have to serve.

And from an education standpoint, teacher attraction, teacher recruitment, teacher retention, as hard as it is in our urban areas, it's three times as hard in the rural areas.

So how can we identify, train, and retain teachers that are in these harder communities to serve?

And doing that through taking a creative look at it.

Can you do two years at your local community college and then finish the four year education degree remotely?

We've got lots of opportunity for that in South Carolina.

It's linking those two things together so that you're recruiting a teacher locally, giving them a low cost option that's within their grasp.

And then making a four year solution available to them without them having the cost, the expense of relocating, and then how do you attract them back?

It solves a lot of issues, but it's an amazing idea there.

- And I wish we had more time.

We're gonna bring our guest in because he knows a little something about education, might be able to ask him that, but thank you.

Thank you both, stay with us.

Next week, or coming up on this program, South Carolina Attorney General Alan Wilson will return, as well as, North Carolina has a new Secretary of Commerce.

His name is Lee Lilley, he's been appointed by the new Governor of North Carolina, Josh Stein, Lee Lilley will be joining us also on this program.

North Carolina is unique in many ways, as both Carolinas are, but the state has a state Board of Education and then it has a Department of Public Instruction.

It's unique in that that the Tarheel State's constitutions divides these responsibilities and the governance between two substantially related, but not completely connected entities.

The board has supervision and administration of the schools while the DPI or the Department of Public Instruction under Superintendent Mo Green, who is new, by the way, is more operational and day-to-day, more hand-to-hand combat, if you will, in the management of schools themselves.

As you can imagine, not everything goes as smooth as making policy around education as well.

So joining us again is the Chairman of the State Board of Education.

We welcome back Eric Davis.

Mr. Chairman, welcome.

Thank you.

- Thanks for having me, Chris.

Good to see you.

- So how do these dynamics play out for you?

We've got the possibility of, you've got a new superintendent of education in North Carolina, plus as we talked about earlier with Brenda and Sara, the Department of Education on the federal level is clearly going to look different.

So how do you model, Mr. Chairman, what that looks like to states like North Carolina?

- Sure, well first off, we're delighted to have Mo Green as our superintendent.

He's a proven leader of education, having served as superintendent in Guilford County.

He just brings a positive, optimistic, can-do spirit, and he's hired a terrific team of professional educators to serve with him in DPI.

DPI's role is to implement the policy that the state board, as prescribed in the constitution, the state board is a constitutionally-enabled entity of our state.

So we're delighted to partner with Mo Green, and he's been traveling across our state listening and learning.

And we'll soon develop a strategic plan together.

As far as the federal level, my colleagues on on this panel answered the questions perfectly, in my opinion, about Congress has to approve a change in the Department of Education.

Congress by law has authorized and mandated the use of funds, but it's great uncertainty that's being caused.

And to what benefit?

There's no clear benefit that's gonna come of any of this uncertainty.

And yet the impact on North Carolina is real.

We've had millions of dollars canceled in grants that go towards recruiting, retaining, and training teachers.

And those will have a real impact on our students in the coming year.

And so this uncertainty is unnecessary in my opinion, and it will harm our students' education.

- North Carolina legislative leadership you interact with quite a bit.

What are the dialogues you're having with them on this same issue about how do you model what some of the grants going away mean?

Are they going to be reinstated?

Can the North Carolina General Assembly step in to have some type of effect to help smooth that out?

- Well, as Brenda mentioned, the path we're on in terms of our state's budget is not promising.

We authorized hundreds of millions of dollars in vouchers to private schools without giving teachers a pay raise.

And at the same time, our budget forecast shows that we're running of black, moving into the red.

So I think our state's gonna be limited unless something significantly changes in being able to fill the gap.

At the same time, it's not clear that the federal money will actually not come because it's mandated by Congress.

So again, worthy questions that don't have answers at this point and that are creating a lot of unnecessary anxiety and confusion.

- [Chris] Brenda, question?

- Yeah, well, we talked about the lateral entry teachers or residency emergency teachers, the situation we had 3,700 last year, and we've been talking about, with your state board, with Superintendent Green's team about teacher apprenticeship and how this concept that's generally been applied to private industry might apply to teaching.

You wanna talk a little bit about how that can help break that vicious cycle?

- Well, I will, Brenda, thanks to you and Best NC for all the things y'all have done for our students and teachers over the years.

We are incredibly grateful and we appreciate the partnership.

And your current proposal around teacher apprenticeship has a lot of very positive and needed attributes about it.

And having such a program will certainly help us get through at least this part of the crisis.

But we need to go further.

We need to examine what are the conditions and what are the decisions that have led us to this situation that we're in?

And I'd offer for our business readers, maybe we'll put a business spin on this situation.

Consider that we're all managers and leaders in the North Carolina public education system incorporated business, and we were facing this problem.

What would we do?

Well I think the first thing we do is we realize that the most important asset we have in our company are those employees, particularly those who serve on the front line serving our customers.

And that we need to do everything we can to not only keep the ones we have, but attract new ones.

And what are we doing that's getting in the way of that?

And clearly, our compensation system is not competitive.

With all the other industries that we're competing for talent, it's a talent issue.

So we need a better compensation system.

Second, our working conditions work against us.

I mean, our teachers are burdened with unnecessary requirements, a lot of which stem from the huge volume of reports that we have to pass on to senior management.

And then third, this incentive that our Board of Directors is providing to parents, to our very customers to go buy their services from someone else, from a competitor, as well as investing in our competition, does not send the message to young North Carolinians that hey, you ought to come to work for us.

What we need, and business leaders know this, change starts at the top.

We need senior leaders in the North Carolina public education system incorporated business to come out positively and affirmatively about our business.

That they believe in it, they think it should grow, we should invest in it, and that they value our employees.

I mean, the number one thing after pay of recruiting someone to join your business or nonprofit is how are you treating your current employees?

And so we need to tackle those issues head-on.

And you know, recently, I got some advice from a group of business leaders that perhaps we should borrow from the ROTC program in terms of educating- - Did you go through Army ROTC?

- I did, well not ROTC, but another path.

But I don't think those business leaders meant for our teacher candidates to learn how to wear a uniform and salute and march, although I think those are pretty good skills.

But I think what they meant is that given the positive track record that the ROTC program has provided this nation along with the service academies of providing the officers that our military needs, we should borrow from that model.

I think what they meant is let's elevate the profession of teaching, just like we've elevated public service in the military to one of the highest, most respected, and valued callings.

And do so by encouraging young North Carolinians to come to our schools of education, we'll pay for your education.

You'll not only get a great one, but you'll learn terrific leadership skills, character development, things you can't get anywhere else, just like the ROTC program does.

And in return, we've got a job for you.

Come work in our schools for six, seven years, however long.

I think that type of thinking from a business leader is exactly the thing we need.

And you know, when I served in the Army, it was just after Vietnam and it was a lot of struggles.

We were having a hard time getting people to join the Army, and there was also the Army didn't have really that positive a view in society.

Look at it now.

We can do the same thing in North Carolina about teaching, and we must do that.

And so we would love to partner with business leaders across the state, nonprofits, and other groups like Best NC in making this change, getting our shareholders to understand that what they own stock in in the public education system is a stock that's going up and get our senior management leaders to understand the value of their employees and take these steps to address the needed change in our education system.

- [Chris] Sara, question.

- So along those same lines, Eric, I think about you've got your students are definitely consumers, customers of that business model.

So are the parents.

One of the things that we find as a challenge is we're working in our own programming at our United way around education is a lot of times when you have a child who is struggling in school, they've got a fantastic teacher, but they come from a family where the parent or parents also had difficulties in school, they had challenges in school, they may not know how to help their student.

They may not be motivated necessarily to help their student.

And so taking as much as a school can, because the school has to focus on the student, but taking as much of a look as they can at kind of a whole family approach.

Or how do you... We can't forget we've got those parents out there who play a huge role in their student success.

They're one of many characters in that production of that that great student.

But how do you approach families in that business?

- Well, you described it perfectly, Sara, and in my opinion, the first teacher of every child is their parent.

And parents come to us from just like the students, from a variety of circumstances, a variety of American experiences, and a variety of needs.

And we try to capture all of that and work on it in a strategy called whole child, whole school, whole community.

And it gets at the very issues you're describing as well as the need to realize we're not just teaching children how to read and write.

We're teaching them how to work with each other.

We're teaching them what values and other lifelong skills that are sorely needed.

And what we realize is that our teachers can do a better job the better prepared our students come, every day.

We got a report this past week about our positive trends in literacy.

Unfortunately, that same report showed that more than 50% of our kindergarten students are coming to us not prepared.

The answer to that, in my opinion, is investment, investment in North Carolinians.

We should be educating our children earlier.

We should be providing wraparound services to help families take care of their children as well as to overcome whatever circumstances that they're faced with.

And one of the biggest ways of doing that is providing an economy that provides jobs that pay a living wage, particularly in our rural areas where, as you mentioned, those challenges are the greatest.

So it shows how education is one, it's owned by itself.

It's one element of a growing, robust, stable, and prosperous society that we want to have in North Carolina.

And one reason why we have consistently asked for funding for school support professionals, psychologists, social workers, counselors, because that's what our students need.

If you can get those needs met, then you can educate a child.

- We have about two minutes left.

I do wanna bring up one more dynamic that's happened, and that's the rapid advent of a new immigration policy in the United States.

Clearly, we've all watched the headlines, how much disruption distress does that cause in rural communities, urban communities, families, schools?

Do you see it bubbling to the top?

Are you seeing anecdotal or even reportable evidence?

- Yeah, unfortunately, we are, Chris.

Parents are keeping their children out of our schools.

They're keeping them at home out of fear.

- Out of fear?

- Unnecessary fear.

And so what's that doing to the child's education?

One of our points, if we can't get them into school, it's hard to educate them.

And so again, it's another self-inflicted uncertainty that's having real effect on our students.

We are charged with educating every child regardless of background exactly where they are.

And we welcome that.

We just don't need anything getting in the way.

- How do you argue the balance of immigration needing to do what immigration does, but still being compassionate and sensitive to what you just said?

- Well I'm not an immigration expert, nor expert in how to deal with just those policy issues.

But I do know that we need our children in our schools, and that we are charged with educating them.

And regardless of that background, we will do so despite whatever obstacles come in our way, et's not diminish the next generation of North Carolinians' future by this unnecessary tactic.

- Does the General Assembly have your back?

- Remains to be seen.

- We're just about out of time.

And I do wanna take one exception.

As an Air Force veteran, we like our friends in the Army, guys are great.

We appreciate it.

- You like pushing us out of your planes.

Sometimes with parachutes.

- Sorry, I couldn't help.

Sometimes without a parachute?

Not as far as you know.

- Yeah, that's right, I always had a parachute, and was grateful to those pilots who were clean and were going back to an old club and I was spending the next month out in the jungle.

- Yeah, my friends in the Army and friends in the Marine Corps used to call us the Chair Force.

- There you go.

- But Eric, and I call you Eric because of your service, and we appreciate what you did in the military.

Thank you very much.

Thank you.

And please come back to the program, more to uncover here.

- I appreciate it, and I thank your viewers who support our public schools in both Carolinas.

We need you.

- Sara, nice to see you.

Please come back.

- Thanks Chris.

- Hope we didn't scare you off again.

- Nope.

- We keep asking you, we don't do that.

- I'm hard to scare.

- Brenda, always nice to see you.

Good luck over at Best NC, you're doing good work.

- Thank you so much.

- Yeah, thank you.

- Always fun.

Enjoyed the conversation.

Thank you, Chairman Davis.

- Thank you for joining us.

Until next week, I'm Chris William.

If you have any questions or comments, you can go to carolinabusinessreview.org and watch programs.

Good night.

Have a good weekend.

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