A CLOSER LOOK: Golden LEAF funds at risk

Published 12:42 am Sunday, March 31, 2013

The rebuilding of the Aurora town library after the devastation of Hurricane Irene; the expansion of the Beaufort County Community College nursing program; cutting-edge technology to fight cancer at the Marion L. Shepard Cancer Center. What they, and many other projects like them, have in common are grants from the Golden LEAF Foundation, an entity tasked with spurring economic development, and creating jobs, in rural places where a declining tobacco industry left behind a void where jobs once existed.
Now that money is at risk.
A recommended budget released Earlier this month by Gov. Pat McCrory diverts all funds Golden LEAF would normally receive into the state’s general fund beginning in April 2014. Some view the diversion as an attempt to balance the state budget. Others, like Golden LEAF Foundation President Dan Gerlach, believe it will dramatically hinder the stated No. 1 public policy to facilitate the creation of jobs and private investment, especially in the places where those jobs are most needed.
“This money was set aside for a purpose,” Gerlach explained. “We have not made enough progress in counties like Beaufort to make an (economic) recovery. We need to get jobs. We need economic development activity. So why are we taking arrows out of the quiver now?”
The Golden LEAF Foundation was organized for the express purpose of using half the funds from North Carolina’s share of the 1998 Tobacco Master Settlement Agreement to advance the economic well being of the state. In partnership with local governments, educational institutions, economic development organizations, nonprofits and other public agencies, grants made by Golden LEAF have helped create or retain almost 48,000 jobs, resulted in private investment of $2.9 billion, added almost $300 million in new payroll per year and directly assisted over 1.1 million North Carolinians, according to Golden LEAF statistics.
“This is not tax money. The cigarette manufacturers have had to pay money over time to the state,” Gerlach said. “Half of the money goes to the foundation to help the decline of rural tobacco communities — that was part of the agreement and to walk away from the agreement now doesn’t make sense.”
Policymakers have cited the need for transparency and to better coordinate economic development efforts as part of the reasoning behind the diversion of funds — reasoning that Gerlach believes to be unfounded.
“I think the arguments have been that (economic development) will be more transparent if this money is to go to general fund,” Gerlach said. “You send the money to us, I can tell you where every dime of the Master Settlement is. They cannot do that.”
As an example of its transparency, Gerlach used Beaufort County’s participation last year in Golden LEAF’s Community Assistance Initiative, in which community leaders volunteered to meet over a period of months to determine Beaufort County’s economic strengths and weaknesses, and ultimately come to consensus on how and where $2 million of grants were needed in the county.
“There’s no more transparent process than that community initiative,” Gerlach said.
While those grants are not at risk, the lack of new money coming into the foundation will be to the detriment of communities across the state, places like Beaufort County that have limited resources, higher unemployment and face declining populations, according to Gerlach.
“If you look at the type of things we have done in your readership area — it’s a very diverse thing. There’s no one entity that’s able to do this other than an agency with the flexibility and the nimbleness to do it — and that’s us,” he said.
A wholesale diversion of Master Settlement funds into state coffers would not inhibit Golden LEAF’s ability to fulfill its stated mission, but Gerlach estimates, long-term, it will decrease Golden LEAF grants by a third. Should the Governor’s recommendation go through, over the next 10 years, the Foundation would be denied $650 million in payments and the opportunity to earn $250 million more in investment earnings, for a total loss of almost $900 million.
In the interim, Gerlach and the foundation board will be working to educate legislators about Golden LEAF’s mission of economic advancement of rural, economically distressed communities
“This money is the trust of the people. It’s not about me, my staff or my board. Communities have seen the work we’ve done. … We’ve been prudent, we’ve been good stewards and because of that some are saying we don’t want to do that anymore,” Gerlach said. “That’s just not good North Carolina common sense to me.”