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The Endowment grant: As we predicted, The Endowment dropped news about a major grant to help bankroll the projects in the $320 million school bond on the ballot in November, during a hastily announced press conference at the government center on Thursday.
The reaction was largely positive, at least from the people there: School board members, county commissioners, the Chamber of Commerce, basically everyone who has worked to make the school bond a reality and push it towards the ballot. Most thought The Endowment’s grant, which will significantly lower the tax impact of the school bond from 1.75 cents to around half a penny, would cushion people’s financial agita when it comes time to vote. I even heard someone quote Joe Biden’s infamous hot-mic moment, if you know what I’m talking about.
I happen to agree, and, as I wrote on social media earlier this week, I think this represents a big swing investment from The Endowment for something that a lot of people, across the political spectrum, have asked them to support: public schools. I’ve heard concerns that this doesn’t directly support teachers or facility needs not included on the list of bond projects, and that’s fair. But, as I’ve also noted before, money is fungible – look at all the wild maneuvering that takes place during budget negotiations – so taking debt off the county’s balance sheet means it can do more elsewhere. (No, it’s not a guarantee, but it’s a financial reality advocates can point to.) Personally, I am cautiously optimistic that this paves the way for more big swings from The Endowment, after a period of more sedate offerings.
There were, of course, questions about how and when The Endowment did this. Why not get involved earlier, and make the discussion about how much the bond could take on more flexible? (Many pointed to the fact that the bond only covers $60 million of $230 million in planned work for New Hanover High School.)
But some also suggested The Endowment should have waited.
That’s because of The Endowment’s adamant insistence that the grant is not ‘supporting the bond,’ as I had written originally. I had a lively but friendly back-and-forth with their spokesperson, trying to find language that was accurate but not obsequious. We landed on something to the tune of ‘the grant supports the projects identified in the bond.’
That’s not, for them, a distinction without a difference. I’m told The Endowment cannot support any ballot measure, including a bond. I’m working on whether this rule is internal or external, or both, but it certainly seems like a good idea to keep The Endomwent out of politics.
But, as several of my colleagues have noted, aren’t the basic terms of The Endowment’s grant – $116 million delivered to the county if and only if the ballot passes – a form of support? Isn’t it, in essence, telling the community: we’ll give you a nine-figure grant, but you have to vote for this ballot measure? Imagine any other ballot measure paired with the same grant offer, and it would sound a little crazy. (What if, for example, The Endowment offered a massive annual loan to the county, but only if the state passed the constitutional amendment to cap property taxes?)
I suspect The Endowment would say that’s an unfair comparison. But they’re also simply solving the problem by fiat. The Endowment can’t ‘support’ the bond, so it’s simply insisting that it’s not, even as many public officials breathe a sigh of relief that this grant will help the bond pass.
The insistence against the obvious puts us in some strange semantic waters. For example, The Endowment’s MOU with the county prohibits any mention of The Endowment or its grant in the ballot language for the school bond, even though that language does cite the lower expected tax rate increase, which is lower only because of The Endowment’s proposed grant.
The language actually creates something of a temporal paradox, because the grant hasn’t been issued yet, and is conditional on the bond passing – so at the time of voting, you’re really voting for a 1.75 increase, in the hopes that it passes, which triggers the grant … you get the point. It’s a moot point if the bond doesn’t pass, and a retroactive change if it does, but it’s confusing. Some would say needlessly confusing.
All of that to say, why not simply wait until after the bond passes, and then step in? The grant doesn’t actually start paying out (if the bond passes) until early 2028, so there’s no financial need to get it out the door this year or next. The Endowment’s CEO Sophie Dagenais didn’t really give an answer, saying that it was complicated, and offering only a neat tautology: “We were involved when we needed to be involved.”
The most cynically partisan suggestion has been that this is a campaign season “gift” to Republicans, who get to have their cake – supporting the school bond – and eat it, too – lowering the tax rate. Or, more broadly, that the powers that be have found a way to bend The Endowment’s purpose from social philanthropy to financial conservatism, from funding non-profits to paying down the debt.
To evaluate that, I think you have to see what comes next. Yes, if The Endowment shrinks from the nonprofit sector in favor of partnering with the local government, and continues to find ways to offer vicarious debt service to the county, and that doesn’t lead to the county reinvesting its debt capacity in the schools and other public goods, I think the analysis might be valid. But I don’t think you can make that call yet (others will, of course, disagree).
Another question was whether The Endowment was changing its own rules when it came to the difference between ‘supplementing’ and ‘supplanting’ government funding. Its bylaws allow the former but not the latter, although there’s no formal definition for the terms, and no public calculus for where the line between the two might be.
I asked Board Chair Shannon Winslow about this, noting that last December, during The Endowment’s public meeting, the first audience question was about whether The Endowment could pick up the whole tab for the school bond. Winslow said the founding documents prohibit that as ‘supplanting.’
“It's the semantics of the question, and how I answered it, which was factual,” Winslow told me, which is true, if The Endowment considers paying the whole nut to be ‘supplanting.’ Notably, in December, she did not follow up by saying $116 million might be acceptable as ‘supplementing.’ One wonders if there’s a golden ratio, perhaps posted on The Endowment’s wall, that demarcates one from the other.
In any case, in both The Endowment’s public comments and the MOU, the issue is again solved by fiat: The Endowment says, ‘we are not supplanting county funding, only supplementing it.’ Problem solved.
The truth is, this kind of language is probably enough to satisfy the strictures of The Endowment’s bylaws, so I don’t think it’s so much of a legal issue as a perceptual one. The Endowment could flood the county with merch, branded t-shirts, hats, and coozies with “supplement not supplant” emblazed on them, and the general public would still come away from this with the impression that major funding for government projects is now on the table.
Put another way, if there’s significant public demand for other governmental projects – universal pre-K, expanded micro-transit, a workforce housing trust, small business loans through the county – it will still be effectively The Endowment’s choice. They can gesture to their bylaws, but they’ve proven they’re willing and able to make big investments. Critics might say they’ll find workarounds for their own rules when they want, and supporters might say they’re finding innovative ways to invest. But the bylaws, and the doctrine of ‘supplement not supplant,’ probably won’t be a bulwark against criticism.
A quick historical note: Last week, I wrote about the comparisons between funding for public safety and public education, and mentioned the 2024 budget crisis, where New Hanover County Schools faced a $20 million shortfall.
My point, which I think stands, is that the school board and then-superintendent Dr. Charles Foust had gotten into such a financial bind that there was considerable public discussion of layoffs (some candidates in the 2024 school board primary made considerable hay out of the issue).
That said, a few folks noted that I didn’t mention how much pressure that put on top NHCS staff to try to avoid actual layoffs. And I think that’s a fair point. As is often the case when elected officials are clashing over tough decisions, the media’s focus can be on the clash, not the impact. Or, as one reader put it, ‘when elephants and donkeys fight, the grass gets trampled.’
So, let me say that I’ve heard plenty of quiet appreciation for current superintendent Dr. Chris Barnes, who was leading HR during the 2024 crisis. He reportedly put a lot of work into preventing layoffs and making sure that if people were moved, it was to a comparable position. In cases where an employee couldn’t be kept in a position with equal or better pay, the HR team was able to maintain salaries for a year, to give people a cushion – and a chance to find a better job. None of that, I’ve heard, was ideal, but given that staff were handed a "shit sandwich of a budget," as one employee called it, I think they probably did their level best.
