Financial Capacity Study

BROUGHT TO YOU BY

2020/21 FINANCIAL CAPACITY STUDY A comprehensive, by-the-numbers look at the status of the City of Greensboro and Guilford County.

ACTION GREENSBORO CHAPTER X

2020/21 FINANCIAL CAPACITY STUDY

CONTENTS INTRODUCTION

02

It’s Our Home: How Can We Build a Stronger Community for Everyone?

We want our City and County to be a great place for everyone — and together, we can make it happen.

CHAPTER 1

06

Our Community Architecture: People and Local Government

CHAPTER 3

44

Inspecting the Structure: County and City Fiscal Condition and Capacity

Learn about who lives here — including our increasingly diverse community — and how our local government works.

Public budgets are the blueprints for communities. How are our local governments spending public funds?

What are the challenges?

CHAPTER 2

CHAPTER 4

18

The Foundation for Collective Action: Jobs, Economy, and Talent

A rising tide lifts all boats. Building a local economy that benefits everyone is the key to long-term success.

Cover photo courtesy of Paul Byun Illustrations by Ugne Gumenikovaite

70

From Spreadsheets to Blueprints: Solutions for the Common Good

Our considerations for action for building a stronger, more prosperous future for our community.

ACTION GREENSBORO INTRODUCTION

IT'S OUR HOME How Can We Build a Stronger Community for Everyone?

W

e all want our community to be a great place to live and work for everyone. To be that place, we need a strong economy, high-quality public services, and a commitment to the common good. Local government — in our case the City of Greensboro and Guilford County — plays a critical role in making this vision a reality.

When we think about local government, we often focus on resources, particularly financial resources — how they are generated and how they are allocated. Are service levels adequate?

Are taxes reasonable? Who benefits and who

Terry Akin

Larry Davis

Chester Brown

Derek Ellington

Former CEO Cone Health President Brown Investment Properties

Brent Christensen

President & CEO Greensboro Chamber of Commerce

Lawrence Czarda President Greensboro College

Frankie Jones

Harold Martin

Former Mid-South Region Executive Bank of America / Merrill Lynch

Denny Kelly

Mindy Oakley

Michelle Gethers-Clark

Former County Manager Guilford County

Assistant City Manager City of Greensboro

Former President & CEO United Way of Greater Greensboro

Michael Halford County Manager Guilford County

Vice President & Managing Director Lincoln Financial Group Retired President Bouvier Kelly

Marty Lawing

Wilson Lester

Managing Director Partners in Equity

Chancellor North Carolina A&T State University Executive Director The Edward M. Armfield, Sr. Foundation

David Parrish

Former City Manager City of Greensboro

Mildred O. Poole

Community Volunteer

Photo courtesy of Cassie Bustamante

2021 FINANCIAL CAPACITY STUDY ADVISORS

2020/21 FINANCIAL CAPACITY STUDY

pays? We often overlook the interdependence of local economic conditions and local government financial capacity in our thinking. This report is aimed at enhancing the community’s knowledge of our financial conditions and capacity as well as what we might do to enhance our capacity.

In 2019, leaders of the Greensboro area’s business, civic, and education communities gathered under the sponsorship of Action Greensboro, with a common goal: to produce a data-driven report that would better inform our citizens on our local government's financial health and inspire our citizens to use the data to make well-informed decisions for the common good.

We believe the community could use a higher level of knowledge about local government. To understand our interdependence, we need to know how the City and County are organized, what they are responsible for, and how their finances work.

With this understanding, we can branch out to consider the whole community system.

José Sandoval

AVP, Financial Center Manager American National Bank & Trust

Susan Shore Schwartz Executive Director The Cemala Foundation

Terri Shelton

Vice Chancellor for Research & Engagement, UNCG

Jill White

Attorney, Womble Bond Dickinson

Eric Wiseman

Retired Chairman & CEO VF Corporation

ACTION GREENSBORO ADVISORY GROUP Catherine Burnett Chief Impact Officer Phillips Foundation

Brent Christensen

President & CEO Greensboro Chamber of Commerce

Deborah Hooper

Chief Operating Officer Greensboro Chamber of Commerce

Ed Kitchen

Walker Sanders

Bob Klepfer

Susan Shore Schwartz

Chief Operating Officer Joseph M. Bryan Foundation President TannenbaumSternberger Foundation

Jim Melvin

President Joseph M. Bryan Foundation

President Community Foundation of Greater Greensboro Executive Director The Cemala Foundation

Susan Shumaker

President Cone Health Foundation

ACTION GREENSBORO INTRODUCTION

As you digest the data we present, we hope you will be asking yourself some key questions: How can we grow our economy more quickly and equitably to provide the governmental resources needed to thrive and meet our needs and desires?

How can we leverage our considerable strengths and mitigate our weaknesses?

What systemic and policy changes might be considered to enhance the common good?

What can we learn from financial conditions in other communities?

What regional, national, and global changes should we be thinking about that can impact our future success?

What role can you play?

The data and context in this report has two overarching considerations for our future well-being:

1

Greensboro and Guilford County’s per capita income and median family income are not adequately supporting all our residents' needs and the needs of local government. Our economic conditions constrict our ability to meet community needs and aspirations. It is largely due to our comparatively slow economic growth and our mix of jobs, and it inhibits tax base growth. We will do better for all if we find ways to enhance our economic conditions for everyone.

2

Despite our rich history of civil rights movements, our community remains burdened by racial disparities. These disparities are even more troublesome when we consider that our demographic trends demonstrate our

population and talent pipeline is becoming increasingly diverse. We can capitalize on diversity as a strength and become known as a preeminent community for the cultivation and retention of diverse talent.

The final chapter of the report will provide key considerations to help you think critically about potential action steps. We encourage you to read, reflect, and discuss this information with fellow members of our community.

If we use fact-based, data-driven information to inform our efforts, we can successfully raise the bar for everyone in the community!

— Financial Study Advisors and Action Greensboro Advisory Group

2020/21 FINANCIAL CAPACITY STUDY

Campus Greensboro Summer Fellows

HOW THE COMPARISON COMMUNITIES WERE CHOSEN Choosing communities to benchmark against is always difficult as most communities are different in significant ways. We chose the major urban areas of NC for the following reasons: • Only three counties in North Carolina have populations of over 500,000 (Wake, Mecklenburg, and Guilford), and only three other counties (Forsyth, Cumberland and Durham) have populations between 300,000 and 500,000.

• Greensboro is the third largest city in North Carolina and is in a group of only six cities in North Carolina with populations over 200,000.

• The only other county/city with a population that meets these criteria is Cumberland/Fayetteville.

However, they were not selected for this study due to the impact of the military base on that area's economy and population.

We believe the community could use a higher level of knowledge about local government. With this understanding, we can branch out to consider the whole community system.

• Many people in our community make comparisons to Charlotte and Raleigh (and the Triangle) when they talk about how other communities are doing. We also often refer to Greenville, South Carolina, when we make comparisons. However, we did not include data on cities outside North Carolina because there are legal and legislative differences that make “apples to apples” analysis difficult.

• While we don’t offer the comparisons because we feel we need to (or realistically can) compete with the largest North Carolina urban centers, we can learn from their conditions and the resulting local government resources they have to meet common needs and aspirations.

ACTION GREENSBORO

CHAPTER 1

OUR COMMUNITY ARCHITECTURE

HIGHLIGHTS

Our community and schools are becoming increasingly diverse, and we can leverage our changing demographics to strengthen our economy.

Property and sales taxes, user fees, and intergovernmental revenues are the main sources of revenue for the City of Greensboro and Guilford County. The County relies more on property taxes, while the City relies more on user fees. Types of expenditures are different for the County and City.

Revaluation of property values significantly impacts the tax base and currently occurs every five years in Guilford County.

Counties and cities with stronger economies have higher governmental revenues.

The County and City have distinct service responsibilities, but common payers for those services are residents who are citizens of both.

Photo courtesy of Paul Byun

Public school funding is Guilford County’s largest expenditure, but the largest source of revenue for Guilford County Schools (GCS) comes from the State. GCS’s enrollment has been flat for the last decade, while charter school enrollment has increased substantially.

For too long, too many members of our community have faced barriers resulting from structural inequities that have inhibited engagement, which hurts our economy and our society. It is essential to design and redesign our systems to ensure that we create the ability for everyone to contribute to our economy and have access to the resources we all need to thrive.

FPO OUR COMMUNITY ARCHITECTURE PEOPLE AND LOCAL GOVERNMENT

2020/21 FINANCIAL CAPACITY STUDY

1.1

PEOPLE

A

t the heart of Greensboro and Guilford County’s economy are people. We are the workers, consumers, caregivers, patients, students, taxpayers, and residents of this community. Before we evaluate our economy, we must gain a better understanding of our people — who they are and what they need — so we can design systems that truly work to support their ability to thrive.

WE ARE GROWING, BUT NOT VERY FAST Guilford County has shown slow and steady population growth over the last 10 years. Between 2010 and 2020, the county population grew around 11 percent (see graphic below). While the growth has been steady, higher rates of growth in other North Carolina metros are an indicator that workers are moving to (and staying in) those communities at a faster rate.

10-YEAR POPULATION GROWTH: 2010 TO 2020

25.4%

Photo courtesy of Images by Autumn

Wake County Durham County

21.4%

Mecklenburg County

21.3%

Guilford County Forsyth County Piedmont Triad

10.8% 9.1% 6.5%

2020 POPULATION:

541,299 +11% GROWTH SINCE 2010

Source: U.S. Census Bureau

ACTION GREENSBORO CHAPTER 1

OUR COMMUNITY IS GETTING OLDER Much like most of the nation, Greensboro continues to shift toward an older population. Between 2010 and 2019, the percentage of the population 65 and older increased, while the percentage of the population younger than 45 remained stable.

Guilford County also shifted towards an older population. In that same time period, the populations between 35–54 decreased and ages 65–69 increased. The number of children between the ages of 5–18 in Guilford County increased 2.6 percent in the same time frame.

The graphic below outlines the change in age distribution in Greensboro and Guilford County from 2010 to 2019.

2010–2019 CHANGE BY AGE GROUP Greensboro

2019 AGE GROUP % OF TOTAL POPULATION

Guilford County

2%

1.8%

1.6%

1.5%

.6%

-.4% -1.0%

.2%

-.1% -.5%

15.2%

10–19

15.1%

16.2%

20–29

13.9%

30–39

12.5%

13.3%

-1.0%

12.4%

-1.6%

-2%

11.4%

-.3%

-.5%

Age (in years) Source: U.S. Census Bureau 2019

80+

70 to 79

60 to 69

50 to 59

10 to 19

Under 10

-2.0%

40 to 49

-1%

-.2%

30 to 39

0%

Under 10

.5%

.3%

20 to 29

Percent Change

1.2%

1%

12%

40–49

12.8%

50–59

13%

10.4%

60–69

10.8%

5.6% 3.4%

70–79

6.8%

11.5%

80+

3.8%

2020/21 FINANCIAL CAPACITY STUDY

CHANGE IN ETHNIC DISTRIBUTION 2010

48.4% White

40.6% Black or African American

The face of our community is changing.

We can leverage this opportunity and turn our diversity into a strength. Between 2010 and 2020, Greensboro’s white population dropped below 50 percent.

Photo courtesy of Paul Byun

The graphic to the right breaks down the change in race/ethnic distribution in Greensboro and Guilford County from 2010 to 2020.

-8.4%

+1.4%

7.5%

+2.5%

11.0%

+7.0%

Hispanic or Latino

WE ARE BECOMING MORE DIVERSE

GREENSBORO

Other

2010

57.0% White

33.0% Black or African American

White

42.0% Black or African American

10.0% Hispanic or Latino

18.0%

GUILFORD COUNTY

-8.0%

+1.0%

+3.0%

10.0%

+8.0%

Other

40.0%

Other

7.0%

Hispanic or Latino

2020

2020

49.0% White

34.0% Black or African American

10.0% Hispanic or Latino

18.0% Other

Source: U.S. Census Bureau

ACTION GREENSBORO CHAPTER 1

1.2

LOCAL GOVERNMENT

T

Photo courtesy of Paul Byun

hose who live in Greensboro vote for elected officials and bond referenda in both Greensboro and Guilford County, pay taxes to both, and receive services from both. There are other municipalities in Guilford County (a total of eight outside of Greensboro), but each has separate geographic boundaries, elected officials, budget and financial systems, regulatory jurisdiction, and service levels. Accordingly, the financial condition and capacity of the other eight units are not addressed in this study. Greensboro is the largest municipality in the County, accounting for 55 percent of Guilford’s population and a similar share of its tax base. It is also important to note that unlike the activities of local governments, economic development occurs without regard to specific geographic boundaries.

2020/21 FINANCIAL CAPACITY STUDY

THE FUNDAMENTALS: REVENUES, EXPENSES, AND SERVICES The City and County have clear differences in their service areas. It is important to note that counties in North Carolina have more specific responsibilities designated by the State than cities, particularly regarding education and health and human services.

WHAT ARE THE BIGGEST REVENUE SOURCES? GUILFORD COUNTY Property Tax Sales Tax Intergovernmental

61% of revenues 14% 11%

GUILFORD COUNTY

CITY OF GREENSBORO User Fees Property Tax Sales Tax Intergovernmental

WHAT ARE THE BUDGET DRIVERS?

33%

CURRENT Education Support (GCS & GTCC) County Detention & Sheriff Social Services Public Health Emergency Services

9%

FUTURE School Construction & Operations Community Poverty Behavioral Health

35% of revenues 10%

WHAT ARE THE MAIN SERVICE AREAS? GUILFORD COUNTY

CITY OF GREENSBORO

% of Budget

% of Budget

8% General Government

19% Human Services 50% Education

87% OF EXPENSES

18% Public Safety

27% Public Safety

52% Infrastructure

CITY OF GREENSBORO

CURRENT Water Resources Police Fire Field Operations Transit Greensboro Coliseum Complex FUTURE Environmental Compliance Infrastructure Needs Affordable Housing

City / County FY 2019–2020 Source: City of Greensboro / Guilford County Budget Offices

ACTION GREENSBORO CHAPTER 1

KEY SOURCES OF CITY AND COUNTY REVENUE Property tax, sales tax, user fees (water bills, recreation fees, etc.), and intergovernmental revenue (federal and state) are the four main sources of revenue for the City of Greensboro and Guilford County. The percentage of total revenues these four sources account for varies between the City and County, with the County more reliant on property taxes and the City having a much larger base of user fees. Where real estate markets are stronger and incomes are higher, tax revenues tend to be higher.

PROPERTY TAX BASE & RATE

Local economic conditions strongly influence the base upon which taxes are applied. Property tax base is the total assessed value of all real and personal property within a jurisdiction. North Carolina requires each county to revalue its real property based on local market/economic conditions at least every eight years1. Guilford County currently revalues every five years. A shorter revaluation interval allows counties to capture increasing market values more quickly, thereby enhancing the base (the reverse can be true during severe economic downturns).

Revaluation determines the total local tax base or total assessed value for the entire County and each of its municipalities.

A property tax rate is applied to the market value of real estate and personal property such as homes, apartments, offices, and businesses and equipment.

Tax rates typically get the most attention when people talk about government budgets. The amount you actually pay is determined by multiplying the rate by the value of your property divided by 100. In its simplest form, the same rate applied to a house worth $150,000 is going to result in one-half the payment of a house worth $300,000. The same equation applies at the community-wide or local government level. A slow-growing tax base generates less money than a faster-growing base, given the same rate.

Vehicle values and business personal property are valued annually based on standard depreciation schedules and can offset some gains in real property value

1

2020/21 FINANCIAL CAPACITY STUDY

SALES TAX

Sales taxes are applied to the purchase of goods and services according to a rate set by the County. Sales tax in North Carolina is tightly regulated by the State. In fact, many people may not know that the majority of sales tax proceeds actually go to the State.

Currently, when you purchase goods or services in Guilford County, you generally pay a sales tax of 6.75 percent added to the price of the goods (e.g. clothes) or services (e.g. car maintenance). Food purchased at grocery stores is an important exception and is taxed at two percent. Gasoline is also taxed at a different rate. Communities with higher incomes generally purchase more goods and services, resulting in higher sales tax revenue.

USER FEES

User fees, unlike taxes, are charged according to the amount of service utilized as opposed to a rate being applied to a certain value. Examples include water bills, recreation fees, Coliseum event charges, inspection fees, etc. The City relies on user fees to a far greater extent than the County.

OTHER KEY REVENUE SOURCES While we have covered the key revenue sources, there are a couple others worth noting:

INTERGOVERNMENTAL REVENUES

Intergovernmental revenues are particularly important for counties. For the 2021 fiscal year, they total about $72 million for Guilford (this amount does not include the unusual influx of federal funding due to the pandemic). The County does not have a lot of control over what those funds are used for. The State provides funds to support mandated programs, but the funds do not typically cover the full cost of those mandates and most of the mandated programs have a matching component that the County must cover.

OCCUPANCY TAXES

Occupancy taxes are particularly important for cities. Three percent is added to hotel bills in Guilford County with an additional three percent (total of six percent) for hotels in Greensboro and High Point. The County’s three percent goes directly to the two Convention and Visitors Bureaus in Greensboro and High Point for use in promoting tourism.

Greensboro has chosen to dedicate most (80%) of its additional three percent to longterm Coliseum debt. This has become a significant issue during the pandemic with major decreases in hotel business (Estimated revenue in FY 20/21 is approximately 50 percent less than the amount collected in FY 18/19). Coupled with the significant loss of operating revenue at the Coliseum and the delay in opening Steven Tanger Center, the Coliseum fund is experiencing great stress. However, Greensboro recently received approximately $10 million dollars of federal funds for the Coliseum as a part of pandemic relief.

ACTION GREENSBORO CHAPTER 1

PUBLIC SCHOOL FUNDING

While elected school boards set certain policies for school systems, they do not control the amount of funding they recieve from the state, federal or county sources. Fifty percent of Guilford County expenditures are budgeted for education, including Guilford County Schools and Guilford Technical Community College. Funding of K-12, including debt service, represents approximately 44 percent of the County budget.

Photo courtesy of Paul Byun

Public school funding is the largest expenditure in Guilford County's budget. Funding public schools (including charter schools) and community colleges (primarily buildings and related expenses) is a State-mandated function of North Carolina Counties.

2020/21 FINANCIAL CAPACITY STUDY

GUILFORD COUNTY SCHOOLS 2020/21 OPERATING BUDGET REVENUES/SOURCES WHERE THE MONEY COMES FROM

9.6% Federal

$220,038,051

29.8%

$447,890,181

60.6% State

TOTAL = $738,499,043 EXPENDITURES/USES WHERE THE MONEY GOES $63,149,812

8.6%

Purchased Services

$37,834,561

5.1%

Supplies & Materials

$22,443,990

3.0%

Transfers for Charter Schools

$614,474,688 $595,992

0.0%

Population and demographic growth trends do not match Guilford County School enrollment trends.

Total for additional school enrollment has been essentially flat over the last decade, going from 70,710 in 2010 to 71,029 in 2020.

However, the population of school age children increased over that period of time. In 2019, the population of children between the ages of 5–18 in Guilford County was 93,536,

$70,570,811

Local

ENROLLMENT TRENDS

83.3% Salaries & Benefits

Equipment

TOTAL = $738,499,043 Source: Guilford County Schools

meaning that approximately 22,000 children were enrolled in private, homeschool, or publicly funded charter schools. The County is responsible for providing funding to charter schools on the same per pupil bases as traditional public schools.

The 10-year change in racial and ethnic distribution of Guilford County School students is not reflective of the County’s racial and ethnic population change.

2010–2019 Change in Guilford County School enrollment and total Guilford County population: The percentage of White students decreased from 38.5% to 30.3% (8.2 points) while the total White population decreased from 58.1% to 53.7% (4.4 points).

The percentage of Hispanic students increased from 9.6% to 16.9% (7.3 points) while the total Hispanic population increased from 7.2% to 8.4% (1.2 points).

The percentage of Black students stayed approximately the same (40.4% v. 39.9%) while the total Black population increased from 32% to 34.3% (2.3 points).

Source: Guilford County Schools

ACTION GREENSBORO

CHAPTER 2

THE FOUNDATION FOR COLLECTIVE ACTION: JOBS, ECONOMY and TALENT HIGHLIGHTS

Our job mix has a direct impact on our wages and per capita income. Wages and per capita income are not meeting the needs of all of our community’s residents and are creating hurdles to tax base growth. Lower incomes also place additional demands on County services like public health and social services.

As our economy has changed in recent decades, we have witnessed less growth in higher-paying jobs, particularly compared to other major urban areas of the State.

Local economic disparities are significantly impacting people of color and perpetuating challenges to economic mobility.

Photo courtesy of Paul Byun

Talent and workforce development are keys to job growth and higher incomes.

To understand the financial capacity of the City of Greensboro and Guilford County, we must look closer to understand the connectivity between the conditions of the local economy, its impact on the community’s residents, and the level and quality of service(s) from local government.

When jobs, wages, salaries, and real estate values are increasing, the economic conditions favor our community’s residents.

When poverty levels and unemployment decreases, residents are generally healthier and generational wealth is accumulated. In addition to the impact on our people, strong economic conditions enhance the tax base. The revenue generated from the tax base provides the resources needed for local governments to provide a high level of quality services at a reasonable cost.

Communities that have strong economies are usually in a position to provide a higher level of services, reasonable/ stable tax rates, or both.

Communities which have less robust economies face greater challenges in providing desired services and stable tax rates.

THE FOUNDATION FOR COLLECTIVE ACTION JOBS, ECONOMY, AND TALENT

2020/21 FINANCIAL CAPACITY STUDY

2.1

JOB GROWTH

W

hen people are able to work, they make a contribution that affects their families, their neighborhoods, and their communities in which they live. Not only is it the foundation for people’s sense of self-worth and well-being, good jobs enable more members to connect to our community, and this interconnectedness returns benefits in many ways.

This exploration is designed to help equip our community in making decisions that will shape the future of work in our community. By understanding what has been working and what hasn’t, we can come together around solutions that will move all of us forward.

KEEPING PACE Our job growth is steady but not keeping pace with peer North Carolina metros. Guilford County had 26,000 more jobs in 2019 than 2010, a net increase of 10 percent. This gain lags behind other North Carolina counties, including Durham County (30 percent), Mecklenburg County (45 percent), and Wake County (56 percent), and exceeds only Forsyth County (8.5 percent).

Photo courtesy of Paul Byun

10-YEAR JOB GROWTH Geography

2009

2019

2009–2019 Change

2009–2019 Change (%)

Guilford County

259,866

285,872

26,006

10.0%

Durham County

179,338

211,634

32,296

18.0%

Forsyth County

176,004

191,005

15,001

8.5%

Mecklenburg County

537,679

715,297

177,618

33.0%

Wake County

432,044

575,410

143,366

33.2%

North Carolina

3,823,299

4,498,572

675,273

17.7%

United States

128,607,842

148,105,092

19,497,250

15.2%

Source: Bureau of Labor Statistics, QCEW Series & Jobs EQ

ACTION GREENSBORO CHAPTER 2

20-YEAR JOB GROWTH: 1999–2019 When we look at the job growth between 1999 and 2019 as a percentage of total jobs in 1999, we see that Guilford County gained only 2.4 percent and Forsyth County 7.5 percent overall.

Forsyth County

Guilford County

+2.4%

+7.5%

Durham County

+29.5%

Wake County

Mecklenburg County

+55.9%

+45.3%

North Carolina

+18.5%

United States

+16.6%

Source: Bureau of Labor Statistics, QCEW Series

2020/21 FINANCIAL CAPACITY STUDY

JOB MIX Our job mix is somewhat homogeneous and skews toward lower and mid-range wages and salaries. Governmental and other nonprofit (education, healthcare, etc.) organizations are often the largest employers in many North Carolina counties. Guilford’s largest employers include nonprofit Cone Health, Guilford County Schools, UNCG, NCA&T, and city and county governments.

But those counties who have a stronger mix of private sector employers, particularly in higher-paying sectors, are generally more economically prosperous.

JOB MIX — PERCENT OF TOTAL EMPLOYMENT, 2019 Guilford County

Durham County

Forsyth County

Mecklenburg County

Wake County

North Carolina

United States

Trade, transportation & utilities

22.2%

11.9%

17.5%

19.6%

17.6%

18.8%

18.8%

Professional & business services

15.1%

18.4%

15.2%

21.4%

20.4%

14.4%

14.3%

Education & health services

14.8%

27.1%

24.3%

9.4%

12.6%

13.4%

15.5%

Manufacturing

12.1%

11.2%

8.5%

4.9%

4.7%

10.8%

8.7%

Government

11.0%

10.0%

10.3%

10.9%

14.4%

15.9%

14.8%

Leisure & hospitality

10.6%

8.8%

11.4%

11.5%

11.5%

11.4%

11.1%

Financial activities

5.8%

5.9%

6.1%

11.2%

5.4%

5.3%

5.6%

Construction

4.2%

2.5%

3.5%

4.9%

6.2%

5.0%

4.9%

Other services

2.4%

2.5%

2.3%

2.6%

3.0%

2.5%

3.1%

Information

1.5%

1.6%

0.8%

3.4%

3.9%

1.8%

1.9%

Industry

Source: Bureau of Labor Statistics, QCEW Series

ACTION GREENSBORO CHAPTER 2

CHANGE IN EMPLOYMENT Between 2009 and 2019, Guilford County’s industry sector jobs shifted. Guilford County gained over 19,000 healthcare and education, hospitality, and transportation jobs. At the same time, we lost nearly 3,000 financial and information jobs. The jobs lost in that time period have significantly higher average salaries than the jobs gained. This is more clear in the chart below, including average salary.

GUILFORD COUNTY 10-YEAR CHANGE IN EMPLOYMENT 2009–2019 RANKED BY HIGHEST AVERAGE WAGE Information Financial activities

Manufacturing Construction Profession & business services Government Education & health services Trade, transportation & utilities Other services Natural resources & mining Leisure & hospitality

$76,560 $72,777

$65,589 $59,125 $53,167 $50,496 $50,185 $46,325 $36,295 $32,088 $17,931

-883 -2,049

1,475 1,519

5,772

-348

6,307 6,783

505 224

6,541

GUILFORD COUNTY 20-YEAR CHANGE IN EMPLOYMENT 1999–2019 RANKED BY HIGHEST AVERAGE WAGE Information Financial activities

Manufacturing Construction Profession & business services Government Education & health services Trade, transportation & utilities Other services Natural resources & mining Leisure & hospitality

$76,544 $72,800

$65,156 $59,124 $53,196 $51,002 $50,596 $45,864 $36,296 $32,084 $17,940

-3,964

-188 -17,677 -2,224

3,236

-563

-727

16,408

1,997 139

10,211

Source: Bureau of Labor Statistics, QCEW Series

2020/21 FINANCIAL CAPACITY STUDY

WAGES 2019 In 2019, Guilford County’s average wage was $49,724, compared to Wake ($61,425), Mecklenburg ($68,421) and Durham ($71,555) counties.

Durham County’s wages are impacted by its job mix as high-end manufacturing, pharma, and tech have grown substantially.

The recent addition of 1000 jobs from the location of Publix’s major distribution center in the area is a real plus for overall job growth for Greensboro / Guilford County. The jobs are good mid-level jobs and much needed. However, the average salary of the majority of these jobs is in the mid-range rather than higher paying. Our community needs to develop new strategies to compete more effectively for higher-paying jobs in order to drive income levels and greater tax base growth. The success of Qorvo, a high-tech company in Guilford is an example of the mix of higher-paying private sector employers that are driving incomes in more prosperous counties. The recent retention of Syngenta in Guilford — a high paying, high tech agribusiness employer — was a win, but other communities are adding higher-paying jobs at a faster pace.

AVERAGE WAGES 2019 Durham County Mecklenburg County Wake County

Photo courtesy of Martin Kane / UNCG

United States

$71,555 $68,421 $61,425 $59,219

Forsyth County

$52,322

North Carolina

$52,384

Guilford County

$49,724

Average wages are sourced from the Bureau of Labor Statistics Quarterly Census of Employment and Wages. These figures represent the calculated average wage per covered employee working within the geography. A covered employee is a person who was working during the period noted and one that would be eligible for unemployment insurance benefits via state and federal insurance programs.

Source: Bureau of Labor Statistics, QCEW Series

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PER CAPITA INCOME Our per capita income is not adequately meeting the needs of our community. Per capita income is driven by a community’s mix of jobs and wage rates. Guilford County’s per capita income was $30,877 in 2018. This compares to Wake County ($41,022), Mecklenburg ($38,367), Durham County ($34,502), and Forsyth ($30,131).

Guilford County’s per capita income grew 15.9 percent from 2008 to 2018, lagging behind peer North Carolina metros. This is reflected in the job mix and wage rates data, showing that other North Carolina metros have gained more higher-paying jobs at a faster pace.

2018 PER CAPITA INCOME $33,831

United States

$34,502

Durham

$30,737

North Carolina

$41,022

Wake County

$30,877

Guilford County

$30,131

Forsyth County Mecklenburg County Greensboro

$38,367 $28,502

% CHANGE 2008–2018 22.6%

United States

22.3%

Durham

21.9%

North Carolina

21.3%

Wake County

15.9%

Guilford County

15.6%

Forsyth County Mecklenburg County Greensboro

15.4% 11.5% Source: U.S. Census Bureau

2020/21 FINANCIAL CAPACITY STUDY

2018 PER CAPITA INCOME BY RACE While Guilford County has made some progress in

increasing per capita income, there are still wide disparities

when broken down by race. In order to grow the community equitably, we must focus on

eliminating these disparities.

$42,068 WHITE

$21,075

AFRICAN AMERICAN

$16,256 Photo courtesy of Guilford Apprenticeship Partners / GCEDA

HISPANIC OR LATINO

Source: U.S. Census Bureau

Per capita income is the average income earned per working-aged person in a given area in a specified year. It is calculated by dividing the area's total income by its total population.

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2.2

GROWING EQUITABLE COMMUNITIES

D

ue to the history of racial segregation, financial disparities are also seen in our geography. Greensboro’s lowest income areas are found in the southern and eastern quadrants of the city limits where the majority of residents are African American. It is important to note that there are low-income populations in all city districts.

Photo courtesy of Paul Byun

Per capita income and median family income levels are drastically different in the southeastern areas of Guilford County. Additionally, it is important to note that owner-occupied housing values are lower in these areas, too, as home values can contribute to wealth accumulation, particularly for lower-income and minority families who own homes. These compounded disparities increase the challenge of upward economic mobility.

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MEDIAN FAMILY INCOME Guilford County: Census Tracts

Estimate $0 to $52,800

$52,800 to $78,800

$78,800 to $105,000

$105,000 to $148,000

$148,000 to $212,000 Greensboro city boundary

MEDIAN VALUE (Owner-Occupied Housing Units) Guilford County: Census Tracts

Estimate $0 to $121,000

$121,000 to $202,000

$202,000 to $283,000

$283,000 to $366,000

$366,000 to $577,000 Greensboro city boundary

Source: U.S. Census Bureau, American Community Survey (ACS). Author: Jason Jones

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POVERTY AND ITS ROOT CAUSES Because reducing poverty is daunting, there can be a tendency to think it is inevitable or to rationalize it by blaming those experiencing it. While the greatest impact of poverty is on those experiencing it, the long-term outcomes of poverty impact all of us. A better approach is to seek out the root causes of poverty and marshall community resources to mitigate the associated problems. We can and should do better as doing so is in all of our interests.

Unemployment rates and wage rates directly correlate with the financial disparities in our community. Greensboro and Guilford County’s financial disparities have worsened over the last 10 years, particularly our poverty levels.

POVERTY LEVELS IN 2018 In 2018, 15.6 percent of Guilford County’s population and 18.5 percent of Greensboro’s population was living under the federal poverty level, an increase of 2.3 percent in Guilford County and 2.4 percent in Greensboro from 2008. The percentage of children under 18 experiencing poverty was even higher and increased at a higher rate for both Greensboro and Guilford, as seen in the chart below.

POVERTY LEVELS, 2008–2018 Greensboro

Guilford County

2008 Percent below poverty Percent below poverty: Under 18 years 2018 Percent below poverty

2.4% Increase, 2008–2018 Source: U.S. Census Bureau

6.2% Increase, 2008–2018

2.3% Increase, 2008–2018

5.4% Increase, 2008–2018

The federal poverty threshold is an annual income of $12,760 for an individual or $26,200 for a family of four.

25%

20%

15%

10%

5%

0%

30%

25%

20%

15%

10%

5%

0%

Percent below poverty: Under 18 years

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Medicaid and CHIP Clients Enrollment Counts by Year and County Year 2013 2014 2015 2016 2017 2018 2019 July 2013–July 2019 Change % Change % Population

Guilford 86,257 93,465 100,512 104,799 114,911 120,649 123,916 37,659 43.7% 15%

Mecklenburg 155,974 169,022 192,724 192,626 210,327 211,834 205,773 49,799 31.9% 10.3%

Wake 101,489 107,908 119,658 127,157 134,541 140,708 142,920 41,431 40.8% 8%

Forsyth 64,644 66,847 68,178 73,233 78,258 82,516 83,632 18,988 29.4% 15.2%

Durham 48,141 49,709 46,722 50,257 55,181 57,771 59,094 10,953 22.8% 14%

Source: Guilford County Budget Office

Medicaid and Children’s Health Insurance Program (CHIP) enrollment in Guilford County increased 43.7 percent between 2013 to 2019.

This compares to Durham (22.8 percent), Forsyth (29.4 percent), Mecklenburg (31.9 percent) and Wake (40.8 percent) Counties.

The percentage of students in GCS receiving free/reduced meals has increased from 49 percent to 66 percent. (Part of this dramatic increase may be attributable to changes in thresholds and formulas for who is eligible).

tract’s rate is 20 percent or greater, or the median family income is less than 80 percent of the area) where at least 33 percent of the population is greater than one-half mile from the nearest supermarket, supercenter, or grocery store.

GUILFORD COUNTY FOOD DESERTS Low-income and low-access tracts are measured at one-half mile for urban areas and 10 miles for rural areas.

Over 15,500 Guilford County School children and their families live in geographic areas with poor or no internet access; or where commodity internet services exist, they are not affordable for students’ families. The majority of these students and families live in the southern and eastern quadrants of Greensboro’s city limits, where our lowest per capita income residents live.

According to the USDA, Guilford County has 52 census tracts in defined food deserts.

This represents approximately 207,816 residents. The USDA calculates food desert census tracts using the poverty rate (census

Food deserts

Source: USDA / US Census Bureau

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ABOUT THE OFFICIAL POVERTY MEASURE Federal poverty statistics may not tell the real story of those struggling the most.

The official poverty measure (OPM) used by the federal government to determine who is deemed “poor” was developed decades ago. While it is updated for inflation, many scholars and policy analysts consider it outdated for the current economy. The Center for Women’s Welfare (CWW) at the University of Washington has created an alternative methodology that many believe is a more realistic model. It determines the income required for working families to meet basic needs at a minimally adequate level, taking into consideration family composition, ages of children, and geographic differences.

In 2020, the United Way of North Carolina commissioned the CWW to calculate the “Self-Sufficiency Standard” for the State and its counties. The results for Guilford County are shown at right, including a story about a hypothetical family here and what they would need to earn to meet the minimal standard. Additionally, MIT commissioned a similar analysis, The Living Wage Calculator, in 2004, reflecting similar considerations for family units and expense factors.

While the OPM remains the key methodology for determining eligibility for a number of support programs as well as statistics regarding poverty, the SelfSufficiency Standard and MIT analysis can be practical ways to look at the real story regarding those in our community who struggle the most.

SSS STUDY

HOME OWNERSHIP ON THE HORIZON Looking at success outcomes in regards to a single family’s economic health as it relates to improvement, growth, and stability, through the eyes of an actual case.

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H

Photo courtesy of Paul Byun

ousing is a key piece of the puzzle for families and our community. When people can put down roots in Guilford County, they are better able to connect with all the things that make our community great: our schools, services, and parks.

The Family Success Center (FSC) is an innovative model designed to strengthen our community by enabling more people to realize the dream of buying a house.

The approach is structured by a strong supportive relationship with a mentor who cultivates and nurtures a family’s ability to build a strong foundation of financial well-being. Take the case of Anthony and Tabitha Simpson. If you had asked them four years ago about their plans to purchase a house, you would have been informed that their house-hunting prospects were bleak and their timeline to achieve the "American Dream" unknown.

Anticipating their needs as a growing family, the Simpsons joined the FSC in 2017, when their family included two children and only one wage earner.

The family's annual income was $31,680 (or about $16.25/hour), which equates to roughly half of the necessary SelfSufficiency Standard (SSS) for Guilford County. In other words, the family was earning less than half of what they needed to meet its basic needs.

In the three years since joining the FSC, despite unpredictable factors

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like a global pandemic, the family of five is now earning 74 percent of their SSS. Together with the community support that the FSC has plugged them into, The Simpsons are now thinking about buying a house.

We can do more to support initiatives like FSC coaching, increase financial wellness that continue to enable community members to identify financial opportunities, and strategically capitalize by cutting down on payments that can be leveraged towards residents' efforts to become homeowners. At the same time, we as a community need to do more to make the dream of a house possible for more of us by shaping the conditions that ensure that wages outpace housing costs and not the other way around.

We must focus on specific programs assisting in alleviating poverty and also address the system at large.

Resources are often not readily available in communities of low-median household incomes. To promote economic mobility, there is the need to redesign the system. All structural barriers to economic mobility must be addressed simultaneously. Removal of these barriers would promote quality early childhood development and education, better health outcomes, employment, and career advancement, as well as financial stability.2 https://www.unitedwaygso.org/wp-content/ uploads/2020/08/2020-Guilford-SSS-Final.pdf 2 https://www.unitedwaygso.org/wp-content/ uploads/2020/09/2020-The-Barriers-to-EconomicMobility_United-Way-of-Greater-Greensboro.pdf 1

We as a community need to do more to make the dream of a house possible for more of us by shaping the conditions that ensure that wages outpace housing costs and not the other way around.

Photo courtesy of City of Greensboro

ECONOMIC MOBILITY

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FAMILY FUNDS BY THE NUMBERS Anthony and Tabitha work full time and part time, respectively, for a large financial institution. Their annual income is more than $20,000 short of the Self-Sufficiency Standard for a family with two school-aged children and a preschooler: Each adult would need to earn $18.04 on a full-time basis to make self-sufficiency wages, for a combined total of $76,187 per year.1

Self-Sufficiency Wage Hourly (per adult)

Monthly Costs Housing

Miscellaneous

$18.04 Monthly

$1,149

$518

$6,349

$1,885

$1,253

$76,187

$920

$0

Child Care (2 after-school, 1 full day)

Taxes

Food

Earned Income Tax Credit (-)

Transportation

Child Care Tax Credit (-)

$540 Health Care

$684

($100 ) Child Tax Credit (-)

($500 )

Annual

Emergency Savings Fund (Monthly Contribution)

$61

Recent child tax credit within the American Rescue Plan will impact these numbers.

1

Source: United Way of Greater Greensboro SSS Study

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2.3

TALENT AND WORKORCE

C

A “Fourth Industrial Revolution” is occurring and is being driven by technology.

Sometimes referred to as the “knowledge” economy, the trends are disrupting existing industries and jobs and calling for new skills. Competencies in technology and computers, digital literacy, knowledge of tech-enabled tools, and critical/ analytical thinking will increasingly determine career success, even in jobs historically considered “blue collar.” Robots and artificial intelligence will increasingly impact job mix. Our community needs to embrace these trends and focus our abundant educational assets for success. Given the rich academic history of our community, we are uniquely poised to meet this opportunity, and we have adopted a “cradle-tocareer” approach. This lifetime approach to learning begins with getting our youngest children (prenatal to three) prepared for success in school, investing in and adjusting our K-12 system, capitalizing on our diverse higher education assets, and retraining/ lifelong learning strategies to position us for better outcomes.2 Our community has invested significantly in institutions, programs, and systems to enhance the cradle-to-career pipeline of talent to fill today’s jobs and those of the future (see graphic on page 38). We are making headway with a number of these initiatives, but need to scale them to meet employer needs. The start of the pipeline involves early childhood development from birth (even prenatal) to kindergarten age, where the vast majority of brain development occurs, then moves to K-12 success.

Post-secondary opportunities (certificate, associate, bachelor, and advanced degrees) and career training and retraining complete this critical talent pipeline.

1

See Forbes magazine 4/29/19 article "The 10 Vital Skills You Will Need for The Future of Work" by Bernard Marr

2

See McKinsey Global Institute “The Future of Work in America” July 2019 report, Harvard Division of Continuing Education 4/12/19 article, and Brookings 2/25/20 article on “3 ways cities can redefine their economic trajectories”

Photos courtesy of (from top): LSOphoto / iStock; Paul Byun (2); Martin Kane / UNCG

hanging demographics have implications for the vital skills needed for the future of work. Greensboro/Guilford is becoming increasingly diverse.

Several of the most critical “soft” skills needed for future work are particularly impacted by this diversity, including interpersonal communication skills, diversity and cultural intelligence, leadership skills, emotional intelligence, and embracing change.1 Our community can utilize our growing diversity as an advantage.

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GROW IN GREENSBORO Guilford County is committed to strengthening talent and workforce development through Cradle thru Career continuum.

EARLY CHILDHOOD DEVELOPMENT

IO CAT U D E K-12ACCESS

N

EARLY / MIDDLE COLLEGES • The STEM Early College at N.C. A&T is a National Blue Ribbon School.

EARLY CHILDHOOD EDUCATION Guilford Child Development is the largest single county Head Start program in North Carolina.

Ready for School, Ready for Life is a collaborative effort to build a connected, innovative system of care for Guilford County’s youngest children and their families.

• The Early College at Guilford was ranked 37th in the nation in 2018 and first in the state by U.S. News & World Report. Weaver Academy, the STEM Early College at N.C. A&T and Penn-Griffin School for the Arts were also in the top 10 for the state.

• The Middle College at UNCG received the 2018 GOLD award as one of America’s Best Urban Schools.

• The GCS Career and Technical Education program has 15 high-skill, high-wage or in-demand career clusters.

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DEGREES & COMPLETION

EIGHT COLLEGES & UNIVERSITIES

CAREER ADVANCEMENT

APPRENTICESHIPS & WORKFORCE DEVELOPMENT Guilford Apprenticeship Partners is a statewide model for youth apprenticeships through the Eastern Triad Workforce Development Initiative.

Campus Greensboro serves as a national model for preparing college students to enter the workforce and experience the city as young professionals.

• Bennett College, Elon Law School, Greensboro College, Guilford College, Guilford Technical Community College, High Point University, N.C. A&T and UNCG • Guilford County’s two public UNC system institutions make up the majority of college students. In Fall 2020, UNCG and N.C. A&T had a total enrollment of 32,517. That combined enrollment rivals enrollment at the system’s largest institutions.

• N.C. A&T is the largest Historically Black College and University in the country and the largest producer of African American engineers in the nation.

Family Success Center is a nationally recognized model for empowering and equipping people and families to become financially stable.

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WORKFORCE GROWTH Growing our workforce is critical to economic success.

Labor force or workforce is the total sum of working-aged employed and unemployed persons. Between 2009–2019, Guilford County’s labor force has grown just 6.3 percent, right above the US growth at 6.1 percent and far below the growth of other North Carolina metro counties. Mecklenburg County’s labor force has grown five times the amount of Guilford County in the same time period.

LABOR FORCE CHANGE 2009–2019 Labor Force Labor Force Change (#) Change (%) 34.6%

Mecklenburg 160,994

30.9%

Wake 141,769

20.0%

Durham 28,677 North Carolina

11.2%

509,655

Guilford 15,634

6.3%

United States

9,397,000

6.1%

Forsyth 10,615

5.9% Source: Bureau of Labor Statistics, LAUS series

Photo courtesy of Paul Byun

County

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ROOT CAUSES IMPACTING OUR FUTURE LABOR FORCE Racial and socioeconomic disparities greatly impact our ability to strengthen our labor force. When we look at the pipeline, it is important to start with the youngest population.

Kindergarten readiness decreased between 2016 and 2019 and disproportionately affected children of color in Guilford County.

The percentage of third grade students reading proficiently has decreased during the period from 63.6 percent to 53.1 percent.

The percentage of students that met the composite benchmark on the ACT has been relatively stable, varying between 54 percent and 61 percent in any given year.

Source: Beginning of year text reading and comprehension, Guilford County Schools

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As seen in the chart below, kindergarten readiness continues to decrease overall but disproportionately affects children of color in Guilford County.

CURRENT REALITY: SIGNIFICANT DISPARITIES Kindergarten Beginning of Year

English Language / Communication Proficiency (Proficient or Above Proficient)

Year

All Students

White

Black

Hispanic

2016–2017 46%

62% 42% 28%

2017–2018

45%

62%

40%

29%

2018–2019

40%

52%

37%

24%

Source: Beginning of Year Test Reading and Comprehension, Guilford County Schools

Photo courtesy of Paul Byun

2020/21 FINANCIAL CAPACITY STUDY

Post-secondary degree completion is often reflected in labor force participation.

In addition, an educated workforce is a key driver in attracting and retaining highpaying jobs.

In 2018, 46 percent of Guilford County residents over the age of 25 had at least an associate’s degree. We have made steady growth in educational attainment over the last decade however we have a less educated workforce than Mecklenburg (53.5 percent), Wake (62.6 percent) and Durham (55.2 percent).

Investing in the cradle-to-career pipeline strengthens the lives of Guilford County residents. What is good for people is good for our economy.

GUILFORD COUNTY POST-SECONDARY DEGREE COMPLETION (2018) EA Level

Number

Percentage

Less than High School

37,763

10.6%

High School Diploma

80,307

22.5%

Some College

74,668

20.9%

Associate's Degree

33,197

9.3%

Bachelor’s Degree

84,371

23.6%

Advanced Degree

46,491

13.0%

Total

356,797 100.0%

% Associate's Degree or higher American Community Survey, 1-year estimates Source: Census Bureau

46.0%

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CHAPTER 3

INSPECTING THE STRUCTURE

HIGHLIGHTS

If Guilford County’s property tax base does not grow faster, it will result in increasing pressure to raise tax rates to maintain desired levels of service and funding for education. Property tax base growth has been steady but slow and is below other major urban areas of North Carolina outside of the Triad. This is a particular issue for the County as property taxes are by far the largest source of revenue.

Due to lower per capita income and the rate applied to sales of goods and services, Guilford County’s sales tax growth is lagging other major urban areas. Sales taxes are seeing steady growth, but again lag the growth occurring in other areas. This is due in part to less disposable income as well as the lower sales tax rate.

While other North Carolina communities have increased their sales tax rate to fund schools and transportation, Guilford has not, with voter referenda failing multiple times.

When it comes to governmental services, Greensboro and Guilford County charges for services (taxes and fees) are middle of the road.

Overall, when you compare the total amount citizens pay for government services (taxes and user fees), Greensboro and Guilford are about average when compared to other areas.

Overall increases in spending for general government purposes (those primarily funded

by taxes as opposed to user fees) by both the City and County have been modest over the last decade. Adjusted for inflation, increases have actually been rather low. Employee headcounts (the largest expense of both units) have seen modest growth and are actually lower than a decade ago based on the number of employees per 1000 population.

Due to much higher increased expenditures for “enterprise” services than for general government services, total rate of increase of expenditures for the City have been higher than the County. For example, spending for water resources and the Coliseum have increased at higher rates but have been largely offset by higher user fees.

Per capita debt for both the City and County is below other comparison communities and well within State fiscal guidelines. However, our ability to issue and pay for debt without raising tax rates is constrained by our tax base growth.

Greensboro and Guilford County have periodically dipped into their emergency savings funds at a concerning rate. Fund balances (the amount held in reserve for emergency and unanticipated conditions) are modest for both units. A potentially unhealthy pattern has developed in both units of using these funds for ongoing annual operations due to a shortfall between revenues and planned expenditures. Both units are taking steps to address this.

Public school needs are exceeding public funding. Funding of Guilford County Schools has been below what’s needed to maintain school facilities and below what other communities are contributing to operating costs. The condition of school facilities and operating issues like teacher compensation are problematic.

Photo courtesy of Paul Byun

If Greensboro and Guilford County were individuals, they would have excellent credit scores. Both Greensboro and Guilford County enjoy AAA ratings from independent credit rating agencies, indicating both are prudent in their management of resources within their means, are generally healthy fiscally, and can borrow money at low interest rates.

Public budgets are local governments’ blueprint for building and sustaining the social and economic structures that support a community. Just as a building’s blueprint reveals the choices and constraints of the builder, this chapter reviews current and past budget data for the City of Greensboro and Guilford County, highlighting important features, limitations, and trends in order to contextualize the City and County’s fiscal health/capacity. The data shared here provide an overview of City and County revenue and spending and offer comparisons to other North Carolina metro regions.

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2020/21 FINANCIAL CAPACITY STUDY

Photo courtesy of Greensboro Chamber of Commerce

A NOTE ON COVID'S IMPACT This chapter summarizes Greensboro and Guilford County’s fiscal health over the past decade. Most of the data shown, including comparisons with other communities, is for fiscal years prior to the onset of the COVID pandemic which began in spring 2020. The pandemic caused major economic stress across the nation as well as locally. However, unprecedented federal financial support mitigated some of the impacts for both individuals and local government finances. For example, direct payments to individuals and businesses resulted in consumer spending that largely negated original dire projections on lost sales tax revenues. Property values appear to have held steady (or increased), thereby sustaining planned property tax revenues. In addition, Guilford County received or will receive approximately $200 million in unplanned revenues from the Cares Act and American Rescue Plan ACT (ARPA), while the City of Greensboro will receive approximately $60 million. It also appears that GCS will be eligible for approximately $300 million. These amounts do not include other funds the City and County may be eligible for in areas such as transportation, education stabilization, event venue losses, FEMA reimbursement, etc. This unprecedented federal support is welcome and can help with the considerable downsides of the pandemic.

But the large infusion of cash can also

camouflage the underlying structural financial issues the County, City, and schools are facing.

Dollars for cities and counties from ARPA also present a unique opportunity for our community. ARPA appears to provide significant flexibility to local governments in how the funds are utilized. While they cannot be used to directly or indirectly offset tax reductions or delay a tax increase, they can be used for broadband expansion, infrastructure improvements, and addressing health disparities and economic challenges. ARPA dollars present a unique opportunity for collaboration between the County, its municipalities (including Greensboro), and the school system to address challenges common to its citizens and the overall economic well-being of the area. If used strategically with a view to the longer term, the funds could make a difference regarding the structural issues/ trends identified in this report (see some of the suggested actions for consideration in Chapter 4).

The Government Finance Officers Association and other respected sources such as Ernst & Young have recently issued suggested principles for allocating these funds that could be useful for elected officials and staff.

INSPECTING THE STRUCTURE COUNTY AND CITY FISCAL CONDITION AND CAPACITY

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3.1

TAXES

PROPERTY TAX Guilford County’s property tax base has grown over the last decade but more slowly than in other North Carolina metro areas outside of the Piedmont Triad.

ASSESSED VALUE (TAX BASE) GROWTH 2010–2019: Mecklenburg Co. +30.0% (3.3%/yr) Durham Co. 28.6% (3.2%/yr) Wake Co. 24.7% (2.7%/yr)

Guilford Co. Forsyth Co.

14.4% (1.6%/yr) 8.2% (0.9%/yr)

Source: Comprehensive Annual Financial Reports for each unit

The average value of taxable property in Guilford County is lower than in other comparable metro regions in the state, meaning the amount of property tax collected per capita in Guilford is lower, too.

TOTAL TAXABLE PROPERTY PER CAPITA: Mecklenburg Wake Durham Forsyth Guilford

$165,463 140,079 136,887 98,157 97,523

Photo courtesy of Betsy Stein

Source: NC Assn. of County Commissioners 2020 County Mapbook

TOTAL TAX COLLECTED PER CAPITA: Mecklenburg Wake Durham Forsyth Guilford

$1,021 1,010 975 740 712

Source: NC Assn. of County Commissioners 2020 County Mapbook

Property valuation is driven by a number of factors: the amount of available housing stock, whether more people are moving to or out of an area, the types and average wages of the jobs available in that area, the presence or absence of desirable amenities nearby, tax rates and other living costs compared to other regions, and overall market conditions (such as whether the country is experiencing an economic boom or downturn). These relationships are mutually dependent. For example, because property taxes help fund education, higher property values can contribute to more school funding, which can lead to a stronger school system, which can encourage more people to move to the area, thereby driving up property values.

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INDEPENDENT BOND RATINGS Greensboro and Guilford County’s independent bond ratings are a point of pride.

Based on independent assessments, both Guilford County and the City of Greensboro are managing their overall finances effectively within their means. Of course, like individuals and families, some communities have greater or lesser means than others. Independent credit rating agencies like Moody’s, Standard & Poors, and Fitch all give the City and County their highest ratings — AAA — regarding general obligation debt. While North Carolina has a number of AAA-rated units of local government, these high ratings are relatively rare nationally. For both the County and City, this means that borrowing costs for long-term debt are relatively low, saving citizens considerable dollars in interest.1 In low interest rate periods, the differences between rating levels are not as significant as they are during higher interest rate periods.

1

2020/21 FINANCIAL CAPACITY STUDY

TAX RATES Tax rates on real and personal property values are set each year by elected bodies.

Rates are applied to the base using a formula that multiplies the rate in cents by each $100 of value.

In the year after revaluation, if a local government desires to maintain similar tax revenue from the previous year, the tax rate can be adjusted up or down with a “revenue neutral” tax rate. For example, Guilford County lowered the tax rate in FY 17/18 after the revaluation using a revenue neutral tax rate. In most cases where growth has occurred in the base due to real estate values appreciating, the “revenue neutral” rate is less than the existing rate because applying the existing rate to a higher base provides additional revenue above the pre-revaluation year.

Local governments also have the option of leaving the rate the same or increasing it. If overall growth has occurred in the base, leaving the rate the same results in additional revenue for the city or county and results in higher taxes for property owners whose property has appreciated. The City of Greensboro did this in FY 17/18.

Photo ccourtesy City of Greensboro

For transparency, all local governments in North Carolina are required to publish a “revenue neutral” rate in years after revaluation. Local governments are not required to adopt the “revenue neutral” rate, only to make the public aware of it.

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COMPARING TAX RATES Our tax rates are on the high end, but that's not the total picture.

Comparing property tax rates between governments is one way to evaluate whether local tax rates are “reasonable.” Generating “fair” comparisons requires consideration of when revaluation occurs in the various units. It is also important to understand the various services that each local government includes as a part of its tax rate. For example, in a few communities (Greensboro is one), cities provide library services while most library services are provided by counties. People who live in cities are probably most interested in the combined taxes they pay to both the city and county. So let’s look at what has occurred regarding tax rates over the last decade in major urban centers in North Carolina.

TAX RATES AND CHANGES, 2010–2020 Highest to lowest combined County/City tax rate.

County/City

2010

2020

Reval Year(s)

Guilford Co. Greensboro Comb.

.7374 .7305 2012 & 2017 .6350 .6625 1.3724 1.3930

Forsyth Co. Winston-Sal. Comb.

.6740 .7535 2013 & 2017 .4675 .6374 1.1415 1.3909

Durham Co. Durham Comb.

.7081 .7122 2016 & 2019 .5400 .5317 1.2481 1.2439

Wake Co. Raleigh Comb.

.5340 .7207 2016 .3735 .4382 .9075 1.1589

Mecklenburg Co. Charlotte Comb.

.8387 .6169 2011 & 2019 .4586 .3481 1.2973 .9650

Source: Unit Budgets and CAFR’s

2020/21 FINANCIAL CAPACITY STUDY

The data above indicate that the combined Greensboro and Guilford tax rates are the highest among large metro areas in our comparisons. But people pay more than property taxes for local government services. For a more complete picture, property tax rates should be considered alongside user fees, which we will do later in this chapter when we look at user fee data and trends. In addition, adjustments to property tax rates can be significantly impacted by revaluations. Greensboro and Guilford's lower tax values also contribute to higher tax rates.

Photo courtesy of Paul Byun

These comparisons show the problems associated with only comparing tax rates. It is important to look more deeply at the numbers and policy decisions to understand what is going on. For example, Mecklenburg County’s significant drop in rates between 2010 and 2020 does not mean that they had less revenue or cut services. In fact, actual revenue from property taxes went up and services were enhanced. The county saw a substantial increase (nearly 50 percent) in real property values between 2011 and 2019. Accordingly, it published a revenue neutral tax rate (59.70) to adjust for this increase but adopted a rate above that amount (61.69). Taking this change into account as well as other revenue increases, the county made significant additional investments in selected services, including an additional $50M for schools as well as additional investments in affordable housing and small business loans.

ACTION GREENSBORO CHAPTER 3

SALES TAX Our county sales tax rate has remained the same for many years at 6.75 percent.

4.75 percent of the 6.75 percent sales tax rate in Guilford goes directly to the State.

We receive some of this money back in the form of intergovernmental revenue (monies apportioned to us by the state) and in State-provided services. In addition to helping pay for state-level services, this system ensures greater equity in public services across North Carolina by pooling public funds, so that regions with smaller consumer populations and fewer visitors can still support their residents’ needs. The other two percent can only be enacted by counties (municipalities cannot do this on their own) and is shared between local governments, including the County and municipalities within its borders (e.g. Greensboro), plus County fire districts. All counties in North Carolina have adopted at least the additional two percent. Counties are required to allocate a portion of that amount to school capital, including debt.

There are additional sales tax options and restrictions authorized by articles of the State statute governing sales tax, including: North Carolina Counties may receive authorization from the State to adopt additional amounts of sales tax in 0.25 percent increments up to a maximum of 0.75 percent. (Note: these increments are frequently referred to as “quarter cents” but are actually percentages.)

For Guilford County, based on current sales volumes, an additional 0.25 percent would generate approximately $19–20M in annual revenue.

All counties have been granted authority by the State to adopt the first 0.25 percent increment, subject to voter approval via a referendum. Guilford has this authority but voters have not approved the addition despite multiple attempts.

Beyond the first 0.25 percent addition, the State must specifically authorize the sales tax increase. To date, Guilford County has not been authorized, while other North Carolina counties have. Any additional increment also can have specific designated uses with state authorization. The most common designations are for capital improvements such as transit or school facilities. (Guilford did not have authority to designate the proposed additional 0.25 percent for school construction in the recent 2020 referendum but is pursuing it for future referenda.)

2020/21 FINANCIAL CAPACITY STUDY

COUNTIES LEVYING ADDITIONAL SALES TAX

This map reflects counties that passed a referendum to levy the half-cent Article 43 local option sales and use tax, which is dedicated to financing public transportation; the quarter-cent Article 46 tax, which is general purpose use; or both, as of March 2020.

Source: NC Association of County Commissioners

Neither 43 or 46 Article 43 Article 43 & 46 Article 46

NORTH CAROLINA LARGE METRO COUNTIES WITH ADDITIONAL SALES TAX INCREMENTS Durham Co. Wake Co. Mecklenburg Co. Forsyth Co. Guilford Co.

7.5% 7.25% 7.25% 7.0% 6.75%

(4.75 to State/2.25 local/0.50 for transit) (4.75 to State/2.00 local/0.50 for transit) (4.75 to State/2.00 local/0.50 for transit) (4.75 to State/2.00 local/0.25 for teacher salaries) (4.75 to State/2.00 local)

As the map and data above show, roughly half of North Carolina counties have been authorized and voted to increase their sales tax. Every revenue-generating decision has pros and cons, and communities often struggle with deciding how to best generate revenue and which options will best serve their residents. Here are some considerations regarding sales tax: Unlike property tax, sales taxes by themselves are generally considered “regressive,” because lower-income individuals and families pay a greater proportion of their income for sales taxes than wealthier families. This is in contrast to income taxes (federal and state) that are considered progressive because families with higher incomes generally pay progressively higher taxes (at least nominally).

Sales tax revenue is potentially volatile depending on significant general economic swings.

Greensboro and Guilford County are generally economically stable, having an urban center that draws consumers and a relatively diverse economy.

Greensboro and Guilford County benefit from visitors who shop and pay local sales tax, thus generating revenue from non-residents. However, shopping/retail patterns are changing (online and regional shopping centers), potentially lessening the value of non-resident revenue.

ACTION GREENSBORO CHAPTER 3

RETAIL SALES Guilford County’s retail sales have increased over the past decade but more slowly than in other metro areas. This table shows the growth of County Retail Sales (the base upon which the tax rate is applied) for the period between 2009 and 2019.

COUNTY RETAIL SALES, 2009–2019 County

10-Yr. % Change

Durham 114.1% Mecklenburg 90.8% Wake 89.9% Forsyth 49.2% Guilford 42.0%

Avg. Annual % Change 11.4% 9.1% 9.0% 4.9% 4.2%

Source: NC Dept. of Revenue

Factors other than the sales tax rate, such as the number of businesses, variety of retail offerings, and purchasing power of residents and visitors, affect total sales tax revenue. During that same 10-year period, the county's share of the North Carolina total taxable retail sales (all sales tax collected statewide) has decreased from 5.59 percent of that total to 5.09 percent. This is largely due to the higher rates of increase in the other major urban centers (both sales growth and higher rates).

Photo courtesy of Paul Byun

It’s important to note that during this 10-year period, the applicability of sales tax to services in particular has changed, with a lot more services required to apply sales tax. Accordingly, the increases shown above are not all pure growth or increased cost of goods or services — some of the increase is due to a broader base of what is taxed.

ACTION GREENSBORO CHAPTER 3

USER FEES Our user fees are lower than most, balancing our higher combined property tax rates. What people pay for government services is really a combination of several forms of payment. In addition to property and sales tax, fees for selected services are important to consider regarding “total cost.” These fees are typically referred to as “user fees,” because unlike property or sales tax, they are often based on the quantity of the service consumed as opposed to a percentage amount of the value or the cost of goods and services.

The City of Greensboro relies on “user fees” for a substantial (35 percent) portion of its total revenue. Guilford County’s budget relies less on user fees than the City — roughly seven percent of total revenues or about $43M. The largest user fee for Greensboro is for the Water Resources Fund that provides water and sewer to City residents and selected areas outside the City. The Water Resources Fund is operated like a business, with revenues received for service expected to cover expenses including debt. Greensboro’s other major user fees are for stormwater control, commercial trash collection and disposal, transit, Coliseum charges, and motor vehicle license fees (flat rate regardless of the value of the vehicle). Different local governments handle user fees for services in different ways, so it is helpful to look at combined taxes and fees when comparing with peers.

The charts at right show a comparison of Guilford/Greensboro’s combined tax and fee charges to those combined amounts for other urban areas of North Carolina.

These two charts again point out the deficiency of simply comparing tax rates. First, a higher tax base allows for a lower rate to generate a similar amount of revenue.

Second, fee structures for the most common governmental services should be taken into consideration in assessing total cost to citizens for services. As the charts at right demonstrate, Guilford County and Greensboro are not out of line with other urban areas regarding “total taxes and fees.”

2020/21 FINANCIAL CAPACITY STUDY

CITY/COUNTY COMBINED ANNUAL TAX AND FEE DETAILS, FY 19–20 Charlotte/ Durham/ Greensboro/ Raleigh/ WinstonMecklenburg Durham Co. Guilford Wake Salem/Forsyth R ank (1=Most Expensive)

4

M edian Home Value

$187,300

^

Total Taxes and Fees

2

3

$195,000

1

5

$152,300 $225,000 $142,200

$2,724

$3,149

$2,735

$3,674

$2,605

Property Tax Rate (City)

0.3481

0.5317

0.6625

0.4382

0.6374

Property Tax Rate (County)

0.6169

0.7122

0.7305

0.7207

0.7535

Combined Tax Rate (per $100 value)

0.9650

1.2439

1.3930

1.1589

1.3909

Combined Property Taxes

$1,807

$2,426

$2,122

$2,608

$1,977

Taxes

Fees County Fees1

$42

$0

$0 $20 $0

Average Annual Water/Sewer Bill $642

$612

$491

Other City Fees and Charges

$111

$122 $325

2

3,4,5

$233

Total Fees

$917

$723

$613

$721 $1,066

$544 $84 $628

Source: City of Greensboro / Guilford County Budget Offices All calculations are based on median residential home values for their location; ACS, US Census Bureau.

County fees include: $27.50 Solid Waste/Meckenburg; $14.40 Stormwater/Mecklenburg; $20 Recycling/Wake.

2 Rates from NCLM/UNC Environmental Finance Center report in March 2019, rates are based on an average monthly bill for 4,000 gallons. Rates exclude any additional fixed fees which may be charged by municipalities.

3 Includes curbside solid waste and recycling fees; excludes optional curbside-container yard waste fee of $65/annually in Winston-Salem, and $90/annually in Durham.

4 Stormwater fee based on 2,001 sq ft of impervious surface, typically a "Tier II." 5 Vehicle Registration fee based on assumption of two vehichles per household. ^ 1

Note: The chart above is based on taxes and fees applicable to residents inside the city limits of Greensboro. The City of Greensboro charges water users outside the city limits additional amounts for water and wastewater services.

THE CITY/COUNTY FEES Bill for Median 3-Bedroom Home

$4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

Charlotte / Mecklenburg

Durham / Durham

FY 2014

FY 2015

Raleigh / Wake

FY 2016

FY 2017

Winston-Salem / Forsyth

FY 2018

Greensboro / Guilford

FY 2019

ACTION GREENSBORO CHAPTER 3

3.2

EXPENDITURES

T

hus far we have looked primarily at revenue sources and trends. Let’s look at spending. If we look at expenditure trends in dollar amounts, adjusted for inflation, we can learn more about our changing needs and priorities over the past decade.

For example, the table below shows our county population has increased by 10 percent in that time, but our overall spending and spending per resident have declined.

GUILFORD COUNTY EXPENDITURE TRENDS Adopted Budgets — Adjusted for Inflation (in 2020 Q1 Dollars)

Fiscal Year General Co. Services

2013–2014

$ 313,748,842

$ 215,833,820

2014–2015

$ 308,740,097

2017–2018

$ 313,887,707

$ 108,072,808

$ 225,071,215

$ 359,556,741

$ 321,243,759

$ 222,443,212

$ 361,826,846

2015–2016

Debt Repayment

2011–2012

2012–2013

Education

2016–2017

$ 328,690,001

2018–2019

$ 305,291,288

2020–2021

$ 313,467,382

2019–2020

10-Yr Change

$ 306,800,721 -13.4%

$ 219,222,199

$ 226,225,194 $ 233,063,666

$ 234,474,324

$ 234,475,888 $ 234,082,139

$ 230,376,926 2.4%

Total

$ 105,751,781

$ 692,649,842

$

$ 632,697,153

103,114,491

$ 100,716,048

$ 102,099,549 $ 103,191,964

$ 107,502,989

$ 98,924,082 $ 97,624,929

$ 90,790,986 -14.1%

$ 690,072,761 $ 628,678,343

$ 649,568,503

Population Per Resident 494,662

$ 1,400

507,150

$ 1,248

501,638 511,729

516,644

$ 664,945,631

523,973

$ 638,691,258

533,213

$ 655,865,020

$ 638,507,789

527,922

538,851

$ 634,635,294

545,348

-8.4%

10.2%

$ 1,376 $ 1,229

$ 1,257 $ 1,269

$ 1,242 $ 1,198

$ 1,185

$ 1,164 -16.9%

After controlling for inflation, since FY 2011–12 the county's total General Fund budget has declined eight percent and its spending per resident has declined 17 percent.

CITY OF GREENSBORO EXPENDITURE TRENDS Adopted Budgets — Adjusted for Inflation

Fiscal Year

General Fund

Enterprise Funds

2011–2012 $ 297,935,571 $ 201,618,227

Debt Service Fund

Total

Population Per Resident

$ 30,815,230 $ 524,177,709 269,587 $ 1,944

2012–2013 $ 298,566,221 $ 204,215,705

$ 25,986,603 $ 529,989,313 272,396 $ 1,946

2014–2015 $ 2 89,033,044 $ 203,857,900

$ 21,633,600 $ 523,599,441 279,244 $ 1,875

2013–2014 $ 288,603,042 $ 202,128,499

2015–2016 $ 294,726,936 $ 221,046,949

2016–2017 $ 306,608,551 $ 222,713,139

2017–2018 $ 310,143,348 $ 225,806,096

2018–2019 $ 304,128,283 $ 225,709,133

2019–2020 $ 311,762,595 $ 232,181,377

2020–2021 $ 307,398,887 $ 256,677,737 10-Yr Change

4.6%

15.2%

$ 25,148,243 $ 520,093,105 276,024 $ 1,884 $ 21,490,751 $ 540,572,736 282,275 $ 1,915 $ 25,910,167 $ 575,346,666 284,808 $ 2,020 $ 29,626,166 $ 576,339,050 289,597 $ 1,990

$ 30,494,875 $ 563,200,817 292,306 $ 1,927 $ 35,498,692 $ 575,698,967 293,726 $ 1,960

$ 37,197,195 $ 602,444,406 297,878 $ 2,022 15.2%

9.8%

9.0%

0.8%

Source: City of Greensboro / Guilford County Budget Offices

2020/21 FINANCIAL CAPACITY STUDY

The charts below also show that the number of employees in both units (the largest cost center for both) has been tightly managed and actually declined per 1000 population.

PERMANENT POSITIONS PER 1,000 RESIDENTS 2,700 2,600

Guilford County 5.15 4.86

2,500

4.67

4.65

4.69

4.76

4.80

4.82

2013–14

2014–15

2015–16

2016–17

2017–18

2018–19

4.83

4.86

2,400 2,300 2,200 2,100 2,000

2011–12

2012–13

Permanent Positions

2019–20 2020–21

Positions per 1,000 Residents

PERMANENT POSITIONS PER 1,000 RESIDENTS

3,200 3,180

11.43

City of Greensboro

11.53 11.33

3,160

11.28 11.14

3,140

11.09 10.90

3,120 3,100

10.85

3,080

10.79

10.71

3,060 3,040 3,020

2011–12

2012–13

2013–14

2014–15

Permanent Positions

Source: City of Greensboro / Guilford County Budget Offices

2015–16

2016–17

2017–18

2018–19

Positions per 1,000 Residents

2019–20 2020–21

ACTION GREENSBORO CHAPTER 3

LONG-TERM OBLIGATIONS/DEBT CAPACITY Both the County and City finance major capital projects over time, typically by issuing debt that is payable over 20 years. For general government purposes, they usually issue what is referred to as General Obligation (GO) debt that requires approval of voters via referenda because the “full faith and credit” or taxing authority of the unit is pledged to pay the debt. For “enterprise” purposes, like water resources for the City, they typically issue Revenue Bonds, where the user fees associated with consumption of the commodity are pledged to pay the debt.

Both the County and City have existing debt obligations for projects that have been approved and executed but not yet paid off — much like a mortgage on a house. The resources to pay off or “service” these debts are calculated into annual budgets and impact the tax revenues needed to do so. These amounts are in addition to annual operating expenses associated with capital improvements. When the County or City contemplates issuing debt for new capital projects, they must project the debt service costs based on the amounts involved, interest rates, and a schedule for issuing the debt based on design and construction schedules. As debt is paid off over time, the capacity to service new debt without impacting budgets and tax rates increases (for example, the ability of the County to service debt on the recently approved $300M for school facilities). Both the County and City are currently contemplating referenda in the next few years for additional new debt.

Each unit's capacity to service long-term obligations is influenced by the growth trends of its major revenue sources (tax bases) and the rates which the community is willing to pay. We have already shown the trends for revenue growth and rates above.

As a reference point, below are some comparisons of per capita debt for other urban areas of the State.

PER CAPITA DEBT AS OF 6/30/20 (EXCLUSIVE OF ENTERPRISE DEBT):

Wake Co. $3,083 Mecklenburg Co. 2,038 Forsyth Co. 2,036 Durham Co. 1,174 Guilford Co. 1,194

Source: NC State Treasurer's Office

Raleigh Charlotte Winston-Salem Durham Greensboro

$2,049 1,720 1,568 1,156 1,083

2020/21 FINANCIAL CAPACITY STUDY

As part of sound financial management practices, the County and City adopt policies regarding debt management to serve as guidelines for planning and decision-making.

Greensboro’s debt service indicators are largely in line with goals the City has set (per capita debt of less than $1,000, debt service at less than 10 percent of overall expenditures, and outstanding debt at less than two percent of assessed values) and are generally below peers.

Guilford County’s debt service indicators are also generally in line with goals it has set (GO debt service not to exceed 15 percent of operating budget, debt per capita not to exceed $3,000, and debt as a percentage of assessed value not to exceed three percent). Given the County’s revenue and tax rate trends in recent years, servicing existing debt has constricted its ability to meet operating needs for county departments and Guilford County Schools.

The following quote from the FY 20/21 County adopted budget summarizes concern over debt management:

"Over the last several years, the County has reduced department operating budgets to offset the impact of higher debt repayment expense. The additional debt repayment requirements have limited the County’s ability to expand programs to meet growing community demands and will continue to do so in the future as the County considers additional debt issuances for school capital needs."

As the County makes decisions about funding debt anticipated with the significant documented facility needs of Guilford County Schools (estimated at $2B-plus), additional sources of revenue will take center stage.

This is why there is current discussion about utilizing additional sales and property tax revenue to service debt associated with school construction. There are also noneducation capital needs documented in County projections (public safety, fleet, etc.) that will exacerbate this situation.

ACTION GREENSBORO CHAPTER 3

LOCAL GOVERNMENT FUND BALANCE In the context of financial reporting, the term fund balance is used to describe the net position (difference between assets and liabilities) of a governmental fund (i.e. the General Fund for both the City and County). For a governmental fund, fund balance is considered a measure of liquidity and sometimes referred to as working capital in the private sector.

Fund balance is divided into various subcategories based on whether or not the use of the funds is in any way restricted or restrained. Unrestricted fund balance represents the portion of overall fund balance that a local government may use at any point of the fiscal year with elected board approval.

The North Carolina Local Government Commission recommends that North Carolina local governments adopt by resolution a fund balance policy stating a minimum unrestricted fund balance goal for each locality that should be at least eight percent (roughly the equivalent of one month’s operating expenses) of the adopted General Fund expenditures. The chart at right shows a comparison of fund balances for both unrestricted and restricted uses.

Unit

MUNICIPALITIES Winston-Salem Durham Greensboro Raleigh Charlotte COUNTIES Forsyth Durham Guilford Wake Mecklenburg

Population 243,447 265,060 292,306 464,453 852,992

FY 2018

FY 2019

21.76% 44.75% 22.33% 45.51% 44.78%

22.76% 40.51% 23.02% 51.71% 43.52%

376,309 29.31% 311,163 42.41% 534,346 23.01% 1,070,197 26.55% 1,088,350 41.14%

29.58% 44.47% 20.12% 26.96% 35.97%

AVERAGE 34.16% 33.86% Source: CAFR’s of each unit/City Finance Department. These percentages include debt service funds. They also represent the methodology typically used by rating agencies for review.

Photo ccourtesy City of Greensboro

FUND BALANCE COMPARISON TO PEERS

2020/21 FINANCIAL CAPACITY STUDY

While beyond the scope of this report, several service areas for the City and County deserve mention based on their current financial conditions. Given the overall financial issues outlined above, solving these problems will be a challenge.

The following service areas are experiencing revenue/expenditure challenges.

For the City, these include: Transit/Bus System, Affordable Housing, and Occupancy Tax revenues lost during COVID that support the Coliseum Complex. For the County, these include: non-education capital/facility maintenance needs, Emergency Services, Behavioral Health Services, and Rural Fire District funding.

Areas that involve both the County and City that are problematic include: access and affordability of broadband/high speed internet services, library funding, and water and sewer availability.

ACTION GREENSBORO CHAPTER X

2020/21 FINANCIAL CAPACITY STUDY

3.3

SCHOOL FUNDING

A

detailed analysis of the budget and finances of Guilford County Public Schools is beyond the scope of this project.

But because education expenditures make up such a large portion (46%) of the County’s budget, and school funding is such a critical issue in our community, we provide some highlights below.

(The County combines GCS funding and GTCC funding under “Education” expenses in its budget. By adding GTCC, total education expenses are approximately 51%)

Photo ccourtesy synerG Young Professionals

Although public education is primarily a responsibility of the State, counties in North Carolina are required to fund capital construction and maintenance expenses for local school systems. Guilford County Schools (GCS) is required by the State to share County dollars for operating funding with charter schools on a per pupil basis. The County does not have to provide funding for charters beyond the per pupil formula, nor does it have to share capital dollars with charters.

Charter schools do not operate under the same policies and regulations that govern traditional public schools. For example, they are not required to provide transportation for students, free or reduced lunch, serve all students regardless of disabilities or Englishspeaking proficiency, or have all teachers licensed. They do not have restrictions on class size nor detailed curriculum requirements.

Some charter schools may choose to offer some of these services. However, they are not required to provide the services like public schools.

ACTION GREENSBORO CHAPTER 3

Recently, capital needs of GCS have been much in the news and of significant community interest. A school facilities study commissioned by both the County and GCS recently identified approximately $2 billion of needs. In November 2020, the voters of Guilford County approved a bond referendum amounting to $300 million to begin funding those needs. County Commissioners are expected to deliberate if and how to fund the remaining amounts over the next 12–18 months. The financial capacity of Guilford County to fund these needs is a matter for serious consideration and calls for informed decision-making. That decision-making should take into account other findings of this report, including tax base growth, fund balance policies and actions, overall County debt service projections, sources of revenue to service debt including property and sales taxes, and how to pay for needed increases in operating costs.

Some GCS highlights for the period 2010–2019: Enrollment in GCS has been essentially flat over the last decade, going from 70,710 students in 2010 to 71,029 in 2019.

At the same time, charter school enrollment has increased substantially by nearly 8,000 students, making the combined enrollment in County-funded schools nearly 80,000.

GCS’ per pupil funding for charters has increased 219 percent. It should be noted that all students — both at GCS and charter schools — are Guilford County residents.

Total operating expenses for GCS increased by 9.9 percent for the period (1.1 percent/yr).

Photo courtesy of Paul Byun

Total County operating revenues to GCS increased 15.7 percent.

2020/21 FINANCIAL CAPACITY STUDY

For several reasons (community priority placed on education, competition for talent, etc.), it is useful to look at selected comparisons with other North Carolina urban counties:

COUNTY EXPENDITURES PER STUDENT Durham Mecklenburg Wake Guilford Forsyth

$3,617 3,014 2,885 2,572 2,180

Source: NC Assn. of County Commissioners 2020 County Mapbook

AVERAGE TEACHER LOCAL SALARY SUPPLEMENT Mecklenburg Wake Durham Guilford Forsyth

$8,782 8,569 7,487 4,929 4,3091

Forsyth County apprvoved a .25% sales tax increase dedicated to teacher salary supplements. This change, which went into effect FY 2021, results in a approximately 2,000 increase.

1

Source: NC Assn. of County Commissioners 2020 County Mapbook

% STUDENTS ENROLLED IN CHARTER SCHOOLS Durham Mecklenburg Guilford Wake Forsyth

19% 11% 10% 9% 6%

Source: NC Assn. of County Commissioners 2020 County Mapbook

The condition and perceptions of our public school system are contributing factors to the appeal of a municipality or county and can have a significant impact on our attractiveness to current and future residents and employers. Since school funding accounts for nearly half of the County’s budget, serious consideration and longterm strategy development makes sense.

FROM SPREADSHEETS TO BLUEPRINTS SOLUTIONS FOR THE COMMON GOOD

2020/21 FINANCIAL CAPACITY STUDY

W

e believe Greensboro and Guilford County have the ability to tackle challenging circumstances by collaboratively working towards solutions for the common good. While some of the data in the report may have been discouraging, it was important to provide a candid assessment of current conditions impacting local government resources as a foundation for collaborative action to equitably enhance quality of life for everyone.

THE PATH AHEAD CAN BE BUILT UPON OUR COMMUNITY’S MANY STRENGTHS From an economic development perspective, we are in a great location in an attractive state.

Our transportation network and traffic conditions are better than most of our peer communities.

We are doing well with logistics, aviation, distribution, and certain manufacturing sectors.

We have an unusually large presence of higher education institutions in the County, including the nation’s largest HBCU and the largest producer of African American engineers in the country.

We have assets and resources like the High Point Market, Center for Creative Leadership, and International Civil Rights Center and Museum that others cannot claim.

Photo courtesy Martin Kane / UNCG

Guilford County is one of only two places in the nation selected for a multimillion-dollar investment by national investors for building an innovative system of early childhood support.

And there is much more good news…

ACTION GREENSBORO

As community leaders working together through Action Greensboro, we believe the data calls for action that changes the trends outlined in the data. Accordingly, we are offering some possible actions and investments for the community’s consideration. The suggested actions require our community working together, including organizations like the Greensboro Chamber of Commerce and other business organizations, civic leaders, City and County elected bodies, School Board, and professional staff. It will also require an informed, engaged base of active residents who are willing to roll up their sleeves to advocate, vote, or even run for office.

In order to build a community that works for everyone, we must all commit to working together to make strategic, data-informed investments. On the following pages are some recommendations we offer for consideration that we believe could make a difference and change our collective trajectory.

Photos courtesy of (clockwise from top left) City of Greensboro; Campus Greensboro; David Caton; Paul Byun (2); synerG Young Professionals; Martin Kane / UNCG

CHAPTER 4

ACTION GREENSBORO CHAPTER 4

TAX BASE GROWTH Guilford County and the City of Greensboro can stimulate additional tax base growth by strategic policy adjustments and investments.

Consider reducing the interval between revaluation years in order to capture market-based real estate value growth more quickly. Recent sales of apartment complexes well above tax value in the County and surges in single-family home values are examples.

Consider developing a strategic plan to invest in infrastructure (water, sewer, roads, etc.) in areas of the County that are undeveloped or underdeveloped.

Such a plan should be carefully crafted to address long-term supply capacity, source vulnerability, system maintenance and expansion, and reasonable cost sharing among those who benefit. A judiciously executed plan could significantly enhance tax base growth.

The Greensboro-Randolph Megasite is a strategic economic development investment that can pay off for the area in terms of jobs and property value.

For tax base purposes, the actual site is located in Randolph County. Given the scope of a likely employer for the site, considerable development (commercial and housing) will likely follow in Guilford/Greensboro. Appropriate infrastructure and development planning needs to be in place, particularly in southern Guilford County, in order to capitalize on this growth once a client is secured.1 While a disproportionate share of tax base growth is likely to occur outside of the City limits, growth throughout the County benefits all citizens and places the County is a better position to fund critical community needs including schools.

This study tells the true story of where we stand as a community and some of the key choices we face going forward. Talent will define our destiny, and we must capitalize on the diversity of our population to build the pipeline for economic prosperity for all.

— HAROLD MARTIN, CHANCELLOR, NORTH CAROLINA A&T STATE UNIVERSITY

Photo courtesy City of Greensboro

1

I learned so much about Greensboro and Guilford County by serving as an advisor to this report. I hope others will take the time to learn and take to heart the work we need to do together.

— MILDRED O. POOLE COMMUNITY VOLUNTEER

Our community can utilize this report as a springboard for so many other amazing outcomes. Our local nonprofit community should utilize this data to build its impact.

— MINDY OAKLEY, EXECUTIVE DIRECTOR, THE EDWARD M. ARMFIELD, SR. FOUNDATION

2020/21 FINANCIAL CAPACITY STUDY

ALLEVIATING POVERTY By focusing on the common good, we can work towards alleviating poverty and building equitable economic growth for everyone. While the greatest impact of poverty is on those experiencing it, poverty and its long-term outcomes affects all of us.

The availability of safe and affordable homes is critical to helping households achieve greater financial stability and access economic opportunity. The City of Greensboro’s 10-year Housing GSO Plan is aimed at improving access to and affordability of housing and could be considered for investment. Given the County’s responsibility for health and human services, consideration should be given towards closer collaboration on housing between the City and County.

Higher wages resulting from more and better jobs and policy changes can reduce Guilford County’s federal poverty rates and increase the number of residents who can meet their basic needs. Two of our largest employers, the City of Greensboro and Cone Health, recently adopted higher minimum wages for all full-time and part-time employees; other large organizations should be encouraged to do the same.

Studies indicate that the average cost of childcare-based center care for a preschooler consumes 40 percent of the median income for a single-parent family and over 12 percent for a two-parent family. Local businesses can play a role in better equipping employees with family-friendly workplace practices such as parental leave and childcare subsidies.

Photo courtesy of Martin Kane / UNCG

Our community should think critically about the impact of the trend toward increased enrollment of K-12 students in charter and private schools. This shift has started a strain on public school resources, including operating funds and critical programs supporting children with the greatest needs in our community. We need to work together to make our public schools a more desired option. Investing more in teachers, technology, career readiness training, and modern facilities should become a priority.

Economic mobility in Greensboro continues to be less attainable for people of color. Bold and innovative commitment is the only effort that will create system changes and outcomes that will benefit people now and for generations to come.

— WILSON LESTER, MANAGING DIRECTOR, PARTNERS IN EQUITY

ACTION GREENSBORO CHAPTER 4

A NATIONAL MODEL FOR TALENT DEVELOPMENT Our community can become a national model for education, workforce, and talent development from “cradle through career,” using our diversity as a strength to become known as a preeminent center for production and retention of diverse talent.

Invest in greater high speed broadband access and affordability throughout the County.

"Ready for School, Ready for Life," Guilford County has been fortunate to have been selected for a major investment by The Duke Endowment and Blue Meridian Partners to build a supportive system of early childhood development.

Sound development in the early years is the foundation for future success in school and career. Local investments in such a system could pay dividends for talent development and overall economic development.

Invest corporate and philanthropic resources into STEM-related curricula and internships at our universities, such as NC A&T’s engineering and tech programs and UNCG’s data analytics offerings.

Support the modernization of Guilford County School facilities via dedicated sales and property taxes.

Support programs that advance college readiness, such as Say Yes, and expand efforts to increase degree completion.

Invest more in strategic experiential learning programs such as the GAP Apprentice program and Campus Greensboro internship program.

We can all collaborate, city and county, public and private sectors, to maximize opportunties and investments.

— SUSAN SHORE SCHWARTZ, EXECUTIVE DIRECTOR, THE CEMALA FOUNDATION

Photo courtesy of Guilford Apprenticeship Partners / GCEDA

Support, through appropriate operational funding, Guilford County Schools' plans to greatly expand Career Technical Education offerings.

I hope this report inspires a new generation of leadership for Greensboro and Guilford County.

Young leaders should use the data to drive change so we build on our strengths and thoughtfully address our challenges.

— JILL WHITE ATTORNEY, WOMBLE BOND DICKINSON

It is crucial that we work together to recruit and create high-wage jobs. This report will be a tool for the Greensboro Chamber of Commerce as we develop our next five-year economic development plan.

— BRENT CHRISTENSEN PRESIDENT & CEO, GREENSBORO CHAMBER OF COMMERCE

2020/21 FINANCIAL CAPACITY STUDY

JOB GROWTH To continue our success attracting and retaining good mid-level jobs in sectors such as logistics, distribution, aviation, and advanced manufacturing, we should pay attention to national and international trends in technology and the knowledge-based economy. Strategic attention today will position our community to compete in the future for selected aspects of this megatrend.

Dedicate private, philanthropic and governmental (perhaps ARPA) resources to create a metric-driven analysis and strategic plan focused on attracting and creating high-wage jobs and increasing our competitiveness for high-tech employers in niche sectors.

Consider creating unique niche education and career advancement opportunities within burgeoning healthcare fields like telehealth and population health initiatives. UNCG, High Point University, N.C. A&T, and GTCC, along with our local health foundations, can create innovation opportunities in this space.

Invest additional resources in the growth of small, entrepreneurial businesses, particularly those in high-tech sectors and those owned and operated by people of color.

Photo courtesy of Martin Kane / UNCG

The significant infusion of federal American Rescue Plan Act funds to the County, Guilford County Schools, and the City, noted in Chapter 3, can help address some of our structural issues. We encourage the County, City, and school system to use this historic opportunity to deploy these funds strategically to address our fundamental economic growth and disparity issues outlined in this report.

This report gives us the opportunity to set targets for where we want Guilford County to be in five years. I encourage every business leader to study this report and lean into the community. Engage, make a difference, and be a giver!

— ERIC WISEMAN, RETIRED CHAIRMAN & CEO, VF CORPORATION

ACTION GREENSBORO

2020/21 FINANCIAL CAPACITY STUDY

FINAL AFFIRMATIONS Going back to our original questions, we ask that you affirm: We can grow our economy more quickly and equitably and provide the governmental resources needed to thrive and meet our needs and desires.

We can leverage our considerable strengths and mitigate our weaknesses.

We can implement strategic policy changes to enhance the common good.

We can continue to learn from financial conditions in other communities to implement best practices.

We can be forward thinking.

Photo courtesy of Martin Kane / UNCG

We can all play a role.

This report is rooted in the values of citizenship and stewardship. COVID-19 shed light on the need to focus on the common good. We have an opportunity as we come out of the pandemic to bring that spirit forward to focus on the whole community.

— TERRI SHELTON VICE CHANCELLOR FOR RESEARCH & ENGAGEMENT, UNCG

ACTION GREENSBORO CONTRIBUTORS

LEAD WRITERS

RESEARCH

Ed Kitchen

Cyndi Dancy

Cecelia Thompson

Larry Davis

Sarah McGuire

Jon Decker

Executive Director Action Greensboro

synerG Young Professionals Director Action Greensboro

Principal Dancy Research

Assistant City Manager City of Greensboro

Budget Director City of Greensboro

Michael Halford County Manager Guilford County

Jason Jones

Assistant County Manager Guilford County

Ed Kitchen

Chief Operating Officer Joseph M. Bryan Foundation Former Greensboro City Manager

Alex Smith

Budget Director Guilford County Photo courtesy of City of Greensboro

Chief Operating Officer Joseph M. Bryan Foundation

greensboro.org/actiongreensboro