GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2013

S                                                                                                                                                     5

SENATE BILL 402

Appropriations/Base Budget Committee Substitute Adopted 5/21/13

Finance Committee Substitute Adopted 5/21/13

Third Edition Engrossed 5/23/13

House Committee Substitute Favorable 6/11/13
Fifth Edition Engrossed 6/13/13

 

Short Title:        Appropriations Act of 2013.

(Public)

Sponsors:

 

Referred to:

 

March 26, 2013

 

A BILL TO BE ENTITLED

AN ACT TO MAKE BASE BUDGET APPROPRIATIONS FOR CURRENT OPERATIONS OF STATE DEPARTMENTS, INSTITUTIONS, AND AGENCIES, AND FOR OTHER PURPOSES.

The General Assembly of North Carolina enacts:

 

PART I. INTRODUCTION AND TITLE OF ACT

 

TITLE

SECTION 1.1.  This act shall be known as the "Current Operations and Capital Improvements Appropriations Act of 2013."

 

INTRODUCTION

SECTION 1.2.  The appropriations made in this act are for maximum amounts necessary to provide the services and accomplish the purposes described in the budget. Savings shall be effected where the total amounts appropriated are not required to perform these services and accomplish these purposes and, except as allowed by the State Budget Act or this act, the savings shall revert to the appropriate fund at the end of each fiscal year.

 

PART II. CURRENT OPERATIONS AND EXPANSION GENERAL FUND

 

CURRENT OPERATIONS AND EXPANSION/GENERAL FUND

SECTION 2.1.  Appropriations from the General Fund of the State for the maintenance of the State departments, institutions, and agencies, and for other purposes as enumerated, are made for the fiscal biennium ending June 30, 2015, according to the following schedule:

 

Current Operations - General Fund                                          2013-2014                2014-2015

 

EDUCATION

 

Community Colleges System Office                                       $   1,012,637,467     $   1,009,089,167

 

Department of Public Instruction                                                7,905,610,301          8,044,189,900

 

University of North Carolina - Board of Governors

      Appalachian State University                                                   127,908,903             127,908,903

      East Carolina University

            Academic Affairs                                                              220,012,450             220,615,626

            Health Affairs                                                                     64,841,247               64,841,247

      Elizabeth City State University                                                   35,363,212               35,385,057

      Fayetteville State University                                                      49,336,186               49,336,186

      North Carolina A & T State University                                      96,882,428               96,882,428

      North Carolina Central University                                             84,084,488               84,084,488

      North Carolina State University

            Academic Affairs                                                              389,976,973             390,045,059

            Agricultural Extension                                                         39,859,682               39,859,682

            Agricultural Research                                                          54,911,053               54,911,053

      University of North Carolina at Asheville                                   37,465,299               37,465,299

      University of North Carolina at Chapel Hill

            Academic Affairs                                                              274,632,544             274,515,010

            Health Affairs                                                                   187,260,403             190,741,444

            Area Health Education Centers                                           42,418,348               42,418,348

      University of North Carolina at Charlotte                                 192,697,970             192,683,456

      University of North Carolina at Greensboro                             153,838,192             153,783,960

      University of North Carolina at Pembroke                                 54,175,566               54,175,566

      University of North Carolina School of the Arts                         31,547,460               29,146,203

      University of North Carolina at Wilmington                                96,484,692               96,484,692

      Western Carolina University                                                      82,441,237               82,441,237

      Winston-Salem State University                                                68,957,656               68,980,084

      General Administration                                                              34,752,475               34,752,475

      University Institutional Programs                                              (74,467,788)             (48,026,500)

      Related Educational Programs                                                 109,160,148             107,918,501

      Aid to Private Colleges                                                             86,351,588               86,351,588

      North Carolina School of Science and Mathematics                  19,126,182               19,126,182

Total University of North Carolina -

      Board of Governors                                                          $ 2,560,018,594       $ 2,586,827,274

 

HEALTH AND HUMAN SERVICES

 

Department of Health and Human Services

      Division of Central Management and Support                    $      76,814,729       $      66,454,794

      Division of Aging and Adult Services                                         54,142,341               54,342,341

      Divisions of Services to the Blind, Deaf, and

            Hard of Hearing                                                                    8,178,618                 8,178,618

      Division of Child Development and Early Education                 255,163,458             255,039,269

      Division of Health Service Regulation                                        16,461,992               16,461,992

      Division of Medical Assistance                                             3,480,934,464          3,686,420,040

      Division of Mental Health, Developmental Disabilities,

            and Substance Abuse Services                                          704,703,959             710,154,345

      NC Health Choice                                                                    68,146,401               57,830,737

      Division of Public Health                                                         142,616,502             140,616,502

      Division of Social Services                                                      174,650,157             174,951,486

      Division of Vocation Rehabilitation                                            38,773,169               38,773,169

Total Health and Human Services                                            $ 5,020,585,790       $ 5,209,223,293

 

NATURAL AND ECONOMIC RESOURCES

 

Department of Agriculture and Consumer Services                   $   114,348,472        $   112,547,672

 

Department of Commerce

      Commerce                                                                               39,979,793               41,316,766

      Commerce State-Aid                                                                43,192,758               43,018,126

 

Wildlife Resources Commission                                                      14,476,588               16,476,588

 

Department of Environment and Natural Resources                       129,455,064             137,092,904

 

Department of Labor                                                                      16,696,339               16,696,339

 

JUSTICE AND PUBLIC SAFETY

 

Department of Public Safety                                                    $ 1,704,408,481       $ 1,686,128,353

 

Judicial Department                                                                      457,653,356             457,153,356

 

Judicial Department - Indigent Defense                                         116,160,223             112,016,064

 

Department of Justice                                                                     76,774,782               79,663,358

 

GENERAL GOVERNMENT

 

Department of Administration                                                   $     57,278,879          $   60,815,588

 

Office of Administrative Hearings                                                      4,522,469                 4,457,894

 

Department of State Auditor                                                           10,964,547               10,964,547

 

Office of State Controller                                                                28,710,691               28,710,691

 

Department of Cultural Resources

      Cultural Resources                                                                    63,309,602               62,859,605

      Roanoke Island Commission                                                          450,000                    450,000

 

State Board of Elections                                                                   3,308,273                 6,521,644

 

General Assembly                                                                           52,010,818               51,572,599

 

Office of the Governor                                                                      5,170,050                 5,172,132

 

Office of State Budget and Management

      Office of State Budget and Management                                     8,397,899                 8,480,410

      OSBM - Reserve for Special Appropriations                              3,049,000                 1,549,000

 

Housing Finance Agency                                                                   8,411,632                 6,704,921

 

Department of Insurance

      Insurance                                                                                  37,994,004               38,003,624

      Insurance - Volunteer Safety Workers' Compensation                              0                               0

 

Office of Lieutenant Governor                                                              681,089                    675,089

 

Department of Revenue                                                                  80,055,417               80,042,072

 

Department of Secretary of State                                                    11,575,183               11,575,183

 

Department of State Treasurer

      State Treasurer                                                                           8,137,890                 7,026,305

      State Treasurer -

            Retirement for Fire and Rescue Squad Workers                  23,179,042               23,179,042

 

RESERVES, ADJUSTMENTS AND DEBT SERVICE

 

Statewide Compensation Study                                                  $     1,000,000          $                   0

 

Severance Expenditure Reserve                                                        7,500,000                               0

 

Salary Adjustment Fund                                                                  10,000,000               10,000,000

 

Reserve for Teachers' and

      State Employees' Retirement Contribution                                 36,000,000               36,000,000

 

Reserve for Judicial Retirement Contribution                                      1,000,000                 1,000,000

 

Firemen's and Rescue Squad Workers' Pension Fund                         (820,000)                  (820,000)

 

Reserve for Future Benefit Needs                                                                   0               56,400,000

 

Compensation Adjustment Reserve                                                                 0             160,000,000

 

Reserve for State Health Plan                                                          33,000,000             101,000,000

 

Unemployment Insurance Reserve                                                   23,800,000               13,600,000

 

Reserve for Job Development Investment Grants (JDIG)                 51,823,772               63,045,357

 

NC Government Efficiency and Reform Project (NC GEAR)            2,000,000                 2,000,000

 

One North Carolina Fund                                                                 9,000,000                 9,000,000

 

Information Technology Fund                                                            6,053,142                 6,053,142

 

Information Technology Reserve Fund                                            27,000,000               32,000,000

 

Contingency and Emergency Fund                                                    5,000,000                 5,000,000

 

Disaster Relief Reserve                                                                   10,000,000                               0

 

Eugenics Sterilization Compensation Fund                                       10,000,000                               0

 

Reserve for NC Back to Work Program                                         10,000,000                               0

 

Reserve for Pending Legislation                                                         9,320,500               11,641,000

 

Debt Service

      General Debt Service                                                              672,130,634             688,431,555

      Federal Reimbursement                                                              1,616,380                 1,616,380

 

TOTAL CURRENT OPERATIONS -

      GENERAL FUND                                                      $  20,544,628,921    $  21,156,166,940

 

GENERAL FUND AVAILABILITY STATEMENT

SECTION 2.2.(a)  The General Fund availability used in developing the 2013-2015 biennial budget is shown below.

                                                                                                  FY 2013-2014          FY 2014-2015

Unappropriated Balance Remaining from Previous Year          $    213,432,877       $    143,097,273

Anticipated Over Collections FY 2012-2013                                405,700,000                               0

Overcollections Due to MSA Disputed Payments                            51,510,749                               0

Anticipated Reversions FY 2012-2013                                         200,000,000                               0

Net Supplemental Medicaid Appropriation (S.L. 2013-56)          (308,100,000)                              0

Less Earmarkings of Year End Fund Balance

      Savings Reserve Account                                                      (200,000,000)                              0

      Repairs and Renovations                                                       (200,000,000)                              0

Beginning Unreserved Fund Balance                               $      162,543,626     $      143,097,273

 

Revenues Based on Existing Tax Structure                    $ 19,628,100,000     $ 20,549,000,000

 

Nontax Revenues

      Investment Income                                                          $        13,700,000      $       14,100,000

      Judicial Fees                                                                           250,200,000             251,400,000

      Disproportionate Share                                                           110,000,000             109,000,000

      Insurance                                                                                  72,500,000               73,400,000

      Other Nontax Revenues                                                          173,000,000             175,000,000

      Highway Trust Fund Transfer                                                                    0                               0

      Highway Fund Transfer                                                           218,100,000             215,900,000

            Subtotal Nontax Revenues                                           837,500,000             838,800,000

 

Total General Fund Availability                                        $ 20,628,143,626     $ 21,530,897,273

 

Adjustments to Availability:  2013 Session

      Reserve for Tax Credit for

            DOL Apprentice Hires (HB 341)                              $        (2,700,000)       $      (6,000,000)

      Reserve for Tax Simplification and

            Reduction Act (HB 998):

                  Net Tax Code Changes                                               (38,500,000)           (381,100,000)

                  Repeal Corporate Income Tax Earmark

                        (Public School Construction)                                   85,800,000               84,700,000

      Reserve for Repeal Estate Tax (HB 101)                                 (52,000,000)             (57,000,000)

      Reserve for Workers' Comp Fund/

            Safety Workers Allocation (HB 27)                                     (3,000,000)               (3,000,000)

      Reserve for Repeal of Education

            Expenses Credit (HB 269)                                                                  0                 1,500,000

      Sales Tax Refund Application

            for Passenger Air Carriers                                                   (3,186,000)                              0

      Tobacco Master Settlement Agreement (MSA) Funds              46,889,357               22,250,000

      Diversion of Golden L.E.A.F.                                                   68,750,000               68,750,000

      Transfer from E-Commerce Reserve Fund Balance                     1,111,585                               0

      Increase Lobbyist Fees                                                                  400,000                    400,000

      Adjust Transfer from Insurance Regulatory Fund                           (560,589)                  (560,589)

      Adjust Transfer from Treasurer's Office                                          175,215                    175,215

      Extend Local Government Hold Harmless                                (15,700,000)                              0

 

Subtotal Adjustments to Availability:  2013 Session      $         87,479,568    $      (269,885,374)

 

Revised General Fund Availability                                  $  20,715,623,194   $   21,261,011,899

 

Less: General Fund Appropriations                                $ (20,572,525,921)   $ (21,166,589,940)

 

Unappropriated Balance Remaining                                $       143,097,273   $          94,421,959

 

SECTION 2.2.(b)  In addition to funds transferred pursuant to G.S. 105-164.44D, the sum of one hundred ninety-six million five hundred eighty-two thousand nine hundred eighty-one dollars ($196,582,981) for the 2013-2014 fiscal year and the sum of one hundred ninety-six million five hundred eighty-two thousand nine hundred eighty-one dollars ($196,582,981) for the 2014-2015 fiscal year shall be transferred from the Highway Fund to the General Fund.

SECTION 2.2.(c)  Notwithstanding the provisions of G.S. 143C-4-3, the State Controller shall transfer a total of two hundred million dollars ($200,000,000) from the unreserved fund balance to the Repairs and Renovations Reserve on June 30, 2013. This subsection becomes effective June 30, 2013. Funds transferred under this section to the Repairs and Renovations Reserve are appropriated for the 2013-2014 fiscal year and shall be used in accordance with G.S. 143C-4-3.

SECTION 2.2.(d)  Notwithstanding G.S. 143C-4-2, the State Controller shall transfer a total of two hundred million dollars ($200,000,000) from the unreserved fund balance to the Savings Reserve Account on June 30, 2013. Neither of these transfers is an "appropriation made by law," as that phrase is used in Section 7(1) of Article V of the North Carolina Constitution. This subsection becomes effective June 30, 2013.

SECTION 2.2.(e)  Notwithstanding the provisions of Article 6 of Chapter 143C of the General Statutes or any other law to the contrary, the sum of one million one hundred eleven thousand five hundred eighty-five dollars ($1,111,585) for the 2013-2014 fiscal year from the E-Commerce Reserve, Budget Code 24100, shall be transferred to the State Controller to be deposited in the appropriate budget code.

SECTION 2.2.(f)  Effective June 30, 2013, notwithstanding any other provision of law to the contrary, the State Controller shall transfer the sum of ten million dollars ($10,000,000) from the unreserved fund balance to the Department of Public Safety (DPS) for the purchase and implementation of an enterprise resource planning (ERP) system. The funds transferred under this section shall be placed in a separate information technology fund within the DPS and are appropriated for the 2013-2014 fiscal year. The ERP system is subject to approval of the State Chief Information Officer and shall be consistent with a statewide ERP initiative.

SECTION 2.2.(g)  Of the annual installment payments to the North Carolina State Specific Account that would have been transferred to The Golden L.E.A.F. (Long-Term Economic Advancement Foundation), Inc., pursuant to Section 2(b) of S.L. 1999-2 for the 2013-2014 and 2014-2015 fiscal years, the sum of sixty-eight million seven hundred fifty thousand dollars ($68,750,000) for the 2013-2014 fiscal year and the sum of sixty-eight million seven hundred fifty thousand dollars ($68,750,000) for the 2014-2015 fiscal year is transferred to the General Fund. Annual installment payments to the North Carolina State Specific Account in excess of the amounts specified in this section shall be transferred to the Settlement Reserve Fund (G.S. 143C-9-2).

SECTION 2.2.(h)  The Attorney General shall take all necessary actions to notify the court in the action entitled State of North Carolina v. Philip Morris Incorporated, et al., 98 CVS 14377, in the General Court of Justice, Superior Court Division, Wake County, North Carolina, and the administrators of the State Specific Account established under the Master Settlement Agreement of this action by the General Assembly regarding redirection of payments set forth in this subsection.

 

PART III. CURRENT OPERATIONS/HIGHWAY FUND

 

CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND

SECTION 3.1.  Appropriations from the State Highway Fund for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are made for the fiscal biennium ending June 30, 2015, according to the following schedule:

 

Current Operations - Highway Fund                                        2013-2014                2014-2015

 

Department of Transportation

Administration                                                                      $     91,798,787        $     96,765,187

 

Division of Highways                                                                                                                        

Administration                                                                             35,139,990               35,139,990

Construction                                                                                70,169,922               48,859,878

Maintenance                                                                           1,119,962,054          1,013,401,542

Planning and Research                                                                   4,055,402                 4,055,402

OSHA Program                                                                               365,337                    365,337

 

Ferry Operations                                                                            38,435,538               37,285,538

 

State Aid to Municipalities                                                            142,293,840             136,874,010

 

Intermodal Divisions

Public Transportation                                                                   85,244,235               85,244,235

Aviation                                                                                       22,244,510               22,244,510

Rail                                                                                             43,074,586               27,624,586

Bicycle and Pedestrian                                                                      501,066                    501,066

 

Governor's Highway Safety                                                                  284,932                    284,932

Division of Motor Vehicles                                                            117,169,443             117,813,980

 

Other State Agencies, Reserves, Transfers                                    261,772,657             269,792,607

 

Capital Improvements                                                                     18,055,500               19,937,700

 

Total Highway Fund Appropriations                                  $  2,050,567,799      $  1,916,190,500

 

HIGHWAY FUND/AVAILABILITY STATEMENT

SECTION 3.2.  The Highway Fund availability used in developing the 2013-2015 fiscal biennial budget is shown below:

 

Highway Fund Availability Statement                                       2013-2014                2014-2015

Unreserved Fund Balance                                                  $           72,214,149     $                        0

Estimated Revenue                                                                    1,937,200,000          1,892,400,000

Adjustment to Revenue Availability:

Adjustment to Emission Inspection Fees                                          23,600,000               21,600,000

Adjustment to Technology Improvement Account Fees                        634,000                    634,000

Motor Fuel Tax

      (Shallow Draft Navigation Channel Dredging Fund)                    (2,280,350)               (2,193,500)

North Carolina Railroad Company Dividend Payments                    19,200,000                 3,750,000

Total Highway Fund Availability                                     $     2,050,567,799     $   1,916,190,500

 

Unappropriated Balance                                                     $                          0     $                        0

 

PART IV. HIGHWAY TRUST FUND APPROPRIATIONS

 

HIGHWAY TRUST FUND APPROPRIATIONS

SECTION 4.1.  Appropriations from the State Highway Trust Fund for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are made for the fiscal biennium ending June 30, 2015, according to the following schedule:

 

Current Operations - Highway Trust Fund                              2013-2014                2014-2015

Program Administration                                                       $     45,590,880           $       45,590,880

Aid to Municipalities                                                                                   0                                    0

Intrastate                                                                                                    0                                    0

Secondary Roads                                                                                       0                                    0

Urban Loops                                                                                             0                                    0

Mobility Fund                                                                                            0                                    0

Turnpike Authority                                                                     49,000,000                    49,000,000

Transfer to General Fund                                                                            0                                    0

Transfer to Highway Fund                                                               400,000                         400,000

Debt Service                                                                              79,170,090                    60,307,448

Strategic Prioritization Funding Plan

for Transportation Investments                                            931,539,030                  950,101,672

Total Highway Trust Fund Appropriations                    $ 1,105,700,000            $ 1,105,400,000

 

HIGHWAY TRUST FUND AVAILABILITY STATEMENT

SECTION 4.2.  The Highway Trust Fund availability used in developing the 2013-2015 fiscal biennial budget is shown below:

 

Highway Trust Fund Availability                                               2013-2014                2014-2015

Unreserved Fund Balance                                                 $                       0           $                       0

Estimated Revenue                                                                1,105,700,000               1,105,400,000

Adjustment to Revenue Availability                                                             0                                    0

Total Highway Trust Fund Availability                         $  1,105,700,000           $  1,105,400,000

 

Unappropriated Balance                                                    $                       0           $                       0

 

PART V. OTHER APPROPRIATIONS

 

APPROPRIATION OF OTHER FUNDS

SECTION 5.1.(a)  Expenditures of cash balances, federal funds, departmental receipts, grants, and gifts from the General Fund, Special Revenue Fund, Enterprise Fund, Internal Service Fund, and Trust and Agency Fund are appropriated and authorized for the 2013-2015 fiscal biennium as follows:

(1)        For all budget codes listed in "The State of North Carolina Recommended Continuation Budget and Fund Purpose Statements, 2013-2015" and in the Budget Support Document, cash balances and receipts are appropriated up to the amounts specified, as adjusted by the General Assembly, for the 2013-2014 fiscal year and the 2014-2015 fiscal year. Funds may be expended only for the programs, purposes, objects, and line items or as otherwise authorized by the General Assembly. Expansion budget funds listed in those documents are appropriated only as otherwise provided in this act.

(2)        Notwithstanding the provisions of subdivision (1) of this subsection:

a.         Any receipts that are required to be used to pay debt service requirements for various outstanding bond issues and certificates of participation are appropriated up to the actual amounts received for the 2013-2014 fiscal year and the 2014-2015 fiscal year and shall be used only to pay debt service requirements.

b.         Other funds, cash balances, and receipts of funds that meet the definition issued by the Governmental Accounting Standards Board of a trust or agency fund are appropriated for and in the amounts required to meet the legal requirements of the trust agreement for the 2013-2014 fiscal year and the 2014-2015 fiscal year.

SECTION 5.1.(b)  Receipts collected in a fiscal year in excess of the amounts authorized by this section shall remain unexpended and unencumbered until appropriated by the General Assembly in a subsequent fiscal year, unless the expenditure of overrealized receipts in the fiscal year in which the receipts were collected is authorized by the State Budget Act. Overrealized receipts are appropriated up to the amounts necessary to implement this subsection.

SECTION 5.1.(c)  Notwithstanding subsections (a) and (b) of this section, there is appropriated from the Reserve for Reimbursements to Local Governments and Shared Tax Revenues for each fiscal year an amount equal to the amount of the distributions required by law to be made from that reserve for that fiscal year.

SECTION 5.1.(d)  The Office of State Budget and Management, the Office of the State Controller, the Department of Revenue, and the Fiscal Research Division shall jointly study the Reserve for Reimbursements to Local Governments and Shared Tax Revenues (Budget Code 24705) within the Department of Revenue and shall determine the best manner in which to budget the funds deposited into and expended from this fund. When conducting this study, the Office of State Budget and Management, the Office of the State Controller, the Department of Revenue, and the Fiscal Research Division shall jointly determine if any statutory or other changes are needed in order to ensure that these funds are properly accounted for and budgeted in a manner consistent with the North Carolina Constitution. No later than May 1, 2014, the Office of State Budget and Management, the Office of the State Controller, the Department of Revenue, and the Fiscal Research Division shall report the results of this study, including their findings, recommendations, and any legislative proposals, to the Chairs of the Senate Appropriations/Base Budget Committee and of the House Appropriations Committee.

SECTION 5.1.(e)  Subdivisions (2) through (4) of subsection (d) of Section 5.1 of S.L. 2011-145, as enacted by Section 5.1 of S.L. 2012-142, are repealed. This subsection becomes effective on June 30, 2013.

 

OTHER RECEIPTS FROM PENDING GRANT AWARDS

SECTION 5.2.(a)  Notwithstanding G.S. 143C-6-4, State agencies may, with approval of the Director of the Budget, spend funds received from grants awarded subsequent to the enactment of this act for grant awards that are for less than two million five hundred thousand dollars ($2,500,000), do not require State matching funds, and will not be used for a capital project. State agencies shall report to the Joint Legislative Commission on Governmental Operations within 30 days of receipt of such funds.

State agencies may spend all other funds from grants awarded after the enactment of this act only with approval of the Director of the Budget and after consultation with the Joint Legislative Commission on Governmental Operations.

SECTION 5.2.(b)  The Office of State Budget and Management shall work with the recipient State agencies to budget grant awards according to the annual program needs and within the parameters of the respective granting entities. Depending on the nature of the award, additional State personnel may be employed on a time-limited basis. Funds received from such grants are hereby appropriated and shall be incorporated into the authorized budget of the recipient State agency.

SECTION 5.2.(c)  Notwithstanding the provisions of this section, no State agency may accept a grant not anticipated in this act if acceptance of the grant would obligate the State to make future expenditures relating to the program receiving the grant or would otherwise result in a financial obligation as a consequence of accepting the grant funds.

SECTION 5.2.(d)  Notwithstanding G.S. 143C-6-4 and subsection (b) of this section, State agencies may spend funds received from the following grants for the 2013-2014 fiscal year and 2014-2015 fiscal year awarded subsequent to the enactment of this act for up to the specified amounts:

 

                                                                                                  2013-2014           2014-2015

Department of Public Instruction

               The New Venture Fund                                                    $75,000                       $0

               Promoting Adolescent Health through

               School-Based HIV/STD Prevention                               $290,000            $400,000

 

Neither the approval of the Director of the Budget nor consultation with the Joint Legislative Commission on Governmental Operations is required prior to the expenditure of these funds.

 

CIVIL PENALTY AND FORFEITURE FUND

SECTION 5.3.(a)  Appropriations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2015, as follows:

                                                             FY 2013-2014                                    FY 2014-2015

School Technology Fund                        $  18,000,000                                   $  18,000,000

State Public School Fund                        $146,313,464                                   $120,362,790

Total Appropriation                                $164,313,464                                   $138,362,790

SECTION 5.3.(b)  Excess receipts realized in the Civil Penalty and Forfeiture Fund in the 2012-2013 fiscal year are hereby appropriated to the State Public School Fund for the 2013-2014 fiscal year.

SECTION 5.3.(c)  Excess receipts realized in the Civil Penalty and Forfeiture Fund in the 2013-2014 fiscal year shall be allocated to the School Technology Fund for the 2014-2015 fiscal year.

 

INDIAN GAMING EDUCATION REVENUE FUND

SECTION 5.4.(a)  There is appropriated from the Indian Gaming Education Revenue Fund to the Department of Public Instruction, School Technology Fund, the sum of three million dollars ($3,000,000) for the 2013-2014 fiscal year and the sum of three million five hundred thousand dollars ($3,500,000) for the 2014-2015 fiscal year.

SECTION 5.4.(b)  G.S. 143C-9-7 does not apply to the use of these funds for the 2013-2015 fiscal biennium.

 

Education Lottery

SECTION 5.5.(a)  G.S. 18C-162(c)(2) reads as rewritten:

"(c)       Unclaimed prize money shall be held separate and apart from the other revenues and allocated as follows:

(2)        Fifty percent (50%) to the Education Lottery Fund to be allocated in accordance with G.S. 18C-164(c).held in reserve for future appropriation by the General Assembly."

SECTION 5.5.(d)  G.S. 115C-546.2 reads as rewritten:

" 115C-546.2.  Allocations from the Fund; uses; expenditures; reversion to General Fund; matching requirements.

(d)        When funds are appropriated from the Education Lottery Fund to the Public School Building Capital Fund, such funds shall be allocated for school capital construction projects on a per average daily membership basis according to the average daily membership for the budget year as determined and certified by the State Board of Education.Monies transferred into the Fund in accordance with Chapter 18C of the General Statutes shall be allocated for capital projects for school construction projects as follows:

(1)        A sum equal to sixty-five percent (65%) of those monies transferred in accordance with G.S. 18C-164 shall be allocated on a per average daily membership basis according to the average daily membership for the budget year as determined and certified by the State Board of Education.

(2)        A sum equal to thirty-five percent (35%) of those monies transferred in accordance with G.S. 18C-164 shall be allocated to those local school administrative units located in whole or part in counties in which the effective county tax rate as a percentage of the State average effective tax rate is greater than one hundred percent (100%), with the following definitions applying to this subdivision:

a.         "Effective county tax rate" means the actual county rate for the previous fiscal year, including any countywide supplemental taxes levied for the benefit of public schools, multiplied by a three-year weighted average of the most recent annual sales assessment ratio studies.

b.         "State average effective tax rate" means the average effective county tax rates for all counties.

c.         "Sales assessment ratio studies" means sales assessment ratio studies performed by the Department of Revenue under G.S. 105-289(h).

(3)        No county shall have to provide matching funds required under subsection (c) of this section.

(4)        A county may use monies in this Fund to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects.

(5)        A county may not use monies in this Fund to pay for school technology needs.

(e)        The State Board of Education may use up to one million five hundred thousand dollars ($1,500,000) each year of monies in the Fund to support positions in the Department of Public Instruction's Support Services Division."

SECTION 5.5.(e)  Notwithstanding G.S. 18C-164, the revenue used to support appropriations made in this act is transferred from the State Lottery Fund in the amount of four hundred sixty-one million eight hundred two thousand two hundred fifty dollars ($461,802,250) for the 2013-2014 fiscal year.

SECTION 5.5.(e1)  Notwithstanding G.S. 18C-164(f) or any other provision of law, excess lottery receipts realized in the 2012-2013 fiscal year in the amount of eighteen million three hundred thousand dollars ($18,300,000) shall be allocated for digital learning.

SECTION 5.5.(e2)  Notwithstanding G.S. 18C-164, the appropriations made from the Education Lottery Fund for the 2013-2014 fiscal year and 2014-2015 fiscal year are as follows:

                                                                                                  FY 2013-2014          FY 2014-2015

 

Classroom Teachers                                                                  $ 220,643,188          $ 220,643,188

Prekindergarten Program                                                           $   87,935,709          $   87,935,709

Public School Building Capital Fund                                           $ 100,000,000          $ 100,000,000

Scholarships for Needy Students                                                $   30,450,000          $   30,450,000

UNC Need-Based Financial Aid                                               $   10,744,733          $   10,744,733

Digital Learning                                                                          $   26,144,985          $   17,068,441

Classroom Materials & Supplies                                                $     4,183,635          $     1,591,022

 

TOTAL APPROPRIATION                                                  $ 480,102,250          $ 468,433,093

SECTION 5.5.(f)  Notwithstanding G.S. 18C-164, the Office of State Budget and Management shall not transfer funds to the Education Lottery Reserve Fund for the 2013-2015 fiscal biennium.

SECTION 5.5.(f1)  Funds appropriated for Digital Learning pursuant to subsection (e) of this section shall be used to support grants to local education agencies (LEAs) for (i) delivering educator professional development focused on using digital and other instructional technologies to provide high-quality, integrated digital teaching and learning to all students and (ii) acquiring quality digital content to enhance instruction.

Up to one million dollars ($1,000,000) may be used by the Department of Public Instruction to (i) develop a plan to transition from funding for textbooks, both traditional and digital, to funding for digital materials, including textbooks and instructional resources and (ii) provide educational resources that remain current, are aligned with curriculum, and are effective for all learners by 2017.  The plan shall also include an inventory of the infrastructure needed to support robust digital learning in public schools.

SECTION 5.5.(g)  Subsections (a) and (b) of this section become effective June 30, 2013.

 

PART VI. GENERAL PROVISIONS

 

CONTINGENCY AND EMERGENCY FUND LIMITATION

SECTION 6.1.  For the 2013-2015 fiscal biennium and notwithstanding the provisions of G.S. 143C-4-4(b), funds appropriated to the Contingency and Emergency Fund may be used only for expenditures required (i) by a court or Industrial Commission order or (ii) to respond to events as authorized under G.S. 166A-19.40(a) of the North Carolina Emergency Management Act. These funds shall not be used for other statutorily authorized purposes or for any other contingencies and emergencies.

 

ESTABLISHING OR INCREASING FEES UNDER THIS ACT

SECTION 6.2.(a)  Notwithstanding G.S. 12-3.1, an agency is not required to consult with the Joint Legislative Commission on Governmental Operations prior to establishing or increasing a fee to the level authorized or anticipated in this act.

SECTION 6.2.(b)  Notwithstanding G.S. 150B-21.1A(a), an agency may adopt an emergency rule in accordance with G.S. 150B-21.1A to establish or increase a fee as authorized by this act if the adoption of a rule would otherwise be required under Article 2A of Chapter 150B of the General Statutes.

 

tobacco Master Settlement Agreement/PAYMENTS

SECTION 6.4.  G.S. 116-29.1(b) reads as rewritten:

"(b)      Effective July 1 of each calendar year, the funds remitted to the University Cancer Research Fund by the Secretary of Revenue from the tax on tobacco products other than cigarettes pursuant to G.S. 105-113.40A are appropriated for this purpose.The General Assembly finds that it is imperative that the State provide a minimum of fifty million dollars ($50,000,000) each calendar year to the University Cancer Research Fund; therefore, effective July 1 of each calendar year:

(1)        Of the funds credited to Budget Code 69430 in the Department of State Treasurer, the sum of eight million dollars ($8,000,000) is transferred from Budget Code 69430 to the University Cancer Research Fund and appropriated for this purpose.

(2)        The funds remitted to the University Cancer Research Fund by the Secretary of Revenue from the tax on tobacco products other than cigarettes pursuant to G.S. 105-113.40A is appropriated for this purpose.

(3)        An amount equal to the difference between (i) fifty million dollars ($50,000,000) and (ii) the amounts appropriated pursuant to subdivisions (1) and (2) of this subsection is appropriated from the General Fund for this purpose."

 

GOVERNMENT EFFICIENCY AND REFORM

SECTION 6.5.(a)  The Office of State Budget and Management shall contract for a Government Efficiency and Reform review and analysis of the executive branch of State government, which shall be known as NC GEAR. The purpose of the review and analysis is to evaluate the efficiency and effectiveness of State government and to identify specific strategies for making State government more efficient and effective. The review and analysis may examine entire departments, agencies, institutions, or similar programs in different departments. The review and analysis shall include an examination of the efficiency and effectiveness of major management policies, practices, and functions pertaining to the following areas:

(1)        The statutory authority, funding sources, and functions of each department, agency, institution, or program.

(2)        The organizational structure and staffing patterns in place to perform these functions and whether they are appropriate based on comparative data and other reasonable staffing criteria.

(3)        The measurement of each reviewed program's outcomes, overall performance, and success in accomplishing its mandated or stated mission and subsequent goals, considering the resources provided to the program.

(4)        State and local responsibilities for providing government services and funding for those services, and whether these responsibilities should be reallocated.

(5)        Personnel systems operations and management.

(6)        State purchasing operations and management.

(7)        Information technology and telecommunications systems policy, organization, and management.

(8)        The identification of opportunities to reduce fragmentation, duplication, and related or overlapping services or activities through restructuring of departmental organizations and streamlining programs.

SECTION 6.5.(b)  All executive branch departments, agencies, boards, commissions, authorities, and institutions in the executive branch of State government, including receipt-supported agencies, and all non-State entities receiving State funds shall be subject to review and analysis. The chief administrative officer of each entity shall ensure full cooperation with the Office of State Budget and Management and provide timely responses to the Office of State Budget and Management's request for information under the provisions of G.S. 143C-2-1(b).

SECTION 6.5.(c)  The Office of State Budget and Management will work collaboratively with the Office of State Auditor to develop the review, analysis, and findings needed to produce a final report and recommendations to the Governor and General Assembly.

SECTION 6.5.(d)  The contracting provisions of Chapter 143 of the General Statutes and related State purchasing and budget regulations do not apply to NC GEAR; however, the Office of State Budget and Management shall report all external contracts for consultants or professional services within 30 days of their execution to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives.

SECTION 6.5.(e)  The Office of State Budget and Management shall submit an interim report of the NC GEAR's analysis, findings, and recommendations to the Governor, the President Pro Tempore of the Senate, the Speaker of the House of Representatives, the Fiscal Research Division, and the Program Evaluation Division by February 15, 2014, and a final report by February 15, 2015.

SECTION 6.5.(f)  Funds appropriated for NC GEAR shall be used to contract with consultants and other experts and to pay for travel, postage, printing, planning, and other related costs as needed to accomplish the objectives specified for the project. Funds appropriated for the 2013-2015 fiscal biennium for NC GEAR shall not revert at the end of each fiscal year but shall remain available for expenditure for the project.

 

EXPENDITURES OF FUNDS IN RESERVES LIMITED

SECTION 6.6.  All funds appropriated by this act into reserves may be expended only for the purposes for which the reserves were established.

 

BUDGET CODE CONSOLIDATIONS

SECTION 6.7.  Notwithstanding G.S. 143C-6-4, the Office of State Budget and Management may, after reporting to the Fiscal Research Division, adjust the authorized budget by making transfers among purposes or programs for the purpose of consolidating budget and fund codes or eliminating inactive budget and fund codes. The Office of State Budget and Management shall change the authorized budget to reflect these adjustments.

 

North Carolina Education Lottery

SECTION 6.8.  G.S. 18C-151(a) reads as rewritten:

"(a)       Except as otherwise specifically provided in this subsection for contracts for the purchase of services, apparatus, supplies, materials, or equipment, Article 8 of Chapter 143 of the General Statutes, including the provisions relating to minority participation goals, shall apply to contracts entered into by the Commission. If this subsection and Article 8 of Chapter 143 are in conflict, the provisions of this subsection shall control. In recognition of the particularly sensitive nature of the Lottery and the competence, quality of product, experience, and timeliness, fairness, and integrity in the operation and administration of the Lottery and maximization of the objective of raising revenues, a contract for the purchase of services, apparatus, supplies, materials, or equipment requiring an estimated aggregate expenditure of ninety thousand dollars ($90,000)three hundred thousand dollars ($300,000) or more may be awarded by the Commission only after the following have occurred:

."

 

PROVISION OF ANONYMOUS TAX RETURN DATA TO STATE BUDGET DIRECTOR

SECTION 6.9.  G.S. 105-259(b) is amended by adding the following new subdivision to read:

"(b)      Disclosure Prohibited. - An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the information to any other person except as provided in this subsection. Standards used or to be used for the selection of returns for examination and data used or to be used for determining the standards may not be disclosed for any purpose. All other tax information may be disclosed only if the disclosure is made for one of the following purposes:

(44)      To furnish the State Budget Director or the Director's designee a sample of tax returns or other tax information from which taxpayers' names and identification numbers have been removed that is suitable in character, composition, and size for statistical analyses by the Office of State Budget and Management."

 

EXEMPTIONS FROM MANAGEMENT FLEXIBILITY REDUCTIONS

SECTION 6.10.  Notwithstanding G.S. 143C-6-4, expansion funds appropriated for the 2013-2015 fiscal biennium to State agencies as defined by G.S. 143C-1-1(d)(24) shall not be used to offset management flexibility adjustments in this act.

 

state budget act amendmeNts

SECTION 6.12.(a)  G.S. 143C-1-1(d)(19) reads as rewritten:

"(19)    Nontax revenue. - Revenue that is not a tax proceed or a departmental receipt and that is required by statute to be credited to the General Fund.a fund."

SECTION 6.12.(b)  G.S. 143C-1-1(d)(30) reads as rewritten:

"(30)    Unreserved fund balance. - The available General Fund cash balance effective June 30 after excluding documented encumbrances, unearned revenue, federal grants, statutory requirements, and other legal obligations to General Fund a fund's cash balance as determined by the State Controller. Beginning unreserved fund balance equals ending unreserved fund balance from the prior fiscal year."

SECTION 6.12.(c)  G.S. 143C-1-3(c) reads as rewritten:

"(c)       Notwithstanding subsections (a) and (b) of this section, funds established for The University of North Carolina and its constituent institutions pursuant to the following statutes are exempt from Chapter 143C of the General Statutes and shall be accounted for as provided by those statutes, except that the provisions of Article 8 of Chapter 143C of the General Statutes shall apply to the funds: G.S. 116-35, 116-36, 116-36.1, 116-36.2, 116-36.4, 116-36.5, 116-36.6, 116-44.4, 116-68, 116-220, 116-235, 116-238.116-235."

SECTION 6.12.(d)  Article 1 of Chapter 143C of the General Statutes is amended by adding a new section to read:

" 143C-1-5.  Chapter is applicable to The University of North Carolina.

Except as expressly provided in G.S. 143C-1-3(c) or otherwise expressly provided by law, The University of North Carolina shall be subject to the provisions of this Chapter in the same manner and to the same degree as other State agencies."

SECTION 6.12.(e)  G.S. 143C-3-5(e) reads as rewritten:

"(e)       Revenue Availability Estimates. - The recommended Current Operations Appropriations Act shall contain a statement showing the estimates of General Fund availability, Highway Fund availability, and Highway Trust Fund availability upon which the Recommended State Budget is based."

SECTION 6.12.(f)  G.S. 143C-9-6 reads as rewritten:

" 143C-9-6.  JDIG Reserve Fund.Reserve.

(a)        The State Controller shall establish a reserve in the General Fund to be known as the JDIG Reserve. Funds from the JDIG Reserve shall not be expended or transferred except in accordance with G.S. 143B-437.63.

(b)        It is the intent of the General Assembly to appropriate funds annually to the JDIG Reserve established in this section in amounts sufficient to meet the anticipated cash requirements for each fiscal year of the Job Development Investment Grant Program established pursuant to G.S. 143B-437.52."

SECTION 6.12.(g)  G.S. 143C-9-8(a) reads as rewritten:

"(a)       The State Controller shall establish a reserve in the General Fund to be known as the One North Carolina Fund Reserve. Funds from the One North Carolina Fund Reserve shall not be expended or transferred except in accordance with G.S. 143B-437.75."

 

SUBSTANTIVE CHANGES

SECTION 6.12.(h)  G.S. 143C-1-1(d) is amended by adding the following new subdivisions to read:

"(1a)     Authorized budget. - The certified budget with changes authorized by the Director of the Budget through authority granted in G.S. 143C-6-4 or other statutes.

(1b)      Availability. - The total anticipated cash available within a fund for appropriation purposes, including unreserved fund balance and all revenue and receipts anticipated in a fiscal year.

."

SECTION 6.12.(i)  G.S. 143C-1-1(d)(7) reads as rewritten:

"(7)      Certified budget. - The budget as enacted by the General Assembly including adjustments made for (i) distributions to State agencies from statewide reserves appropriated by the General Assembly, (ii) distributions of reserves appropriated to a specific agency by the General Assembly, and (iii) organizational or budget changes directed mandated by the General Assembly but left to the Director to carry out.Assembly."

SECTION 6.12.(j)  G.S. 143C-3-3 reads as rewritten:

" 143C-3-3.  Budget requests from State agencies in the executive branch.

(b)        University of North Carolina System Request. - Notwithstanding subsections (c), (d), and (e) of this section, pursuant to the requirement in G.S. 116-11 that the Board of Governors shall prepare a unified budget request for all of the constituent institutions of The University of North Carolina, including repairs and renovations, capital fund requests, and information technology.technology requests shall comply with subsections (c), (d), and (e) of this section.

(e)        Information Technology Request. - In addition to any other information requested by the Director, any State agency requesting significant State resources, as defined by the Director, for the purpose of acquiring or maintaining information technology shall accompany that request with all of the following:

(1)        A statement of its needs for information technology and related resources, including expected improvements to programmatic or business operations, together with a review and evaluation of that statement prepared by the State Chief Information Officer.

(2)        A statement setting forth the requirements for State resources, together with an evaluation of those requirements by the State Chief Information Officer that takes into consideration the State's current technology, the opportunities for technology sharing, the requirements of Article 3D of Chapter 147 of the General Statutes, and any other factors relevant to the analysis.

(3)        A statement by the State Chief Information Officer that sets forth viable alternatives, if any, for meeting the agency needs in an economical and efficient manner.

(4)        In the case of an acquisition, an explanation of the method by which the acquisition is to be financed.

This subsection shall not apply to requests submitted by the General Assembly,Assembly or the Administrative Office of the Courts, or The University of North Carolina.Courts."

SECTION 6.12.(k)  G.S. 143C-3-5 reads as rewritten:

" 143C-3-5.  Budget recommendations and budget message.

(b)        Odd-Numbered Fiscal Years. - In odd-numbered years the budget recommendations shall include the following components:

(1)        A Recommended State Budget setting forth goals for improving the State with recommended expenditure requirements, funding sources, and performance information for each State government program and for each proposed capital improvement. The Recommended State Budget may be presented in a format chosen by the Director, except that the Recommended State Budget shall clearly distinguish program continuation requirements, program reductions, program eliminations, program expansions, and new programs, and shall explain all proposed capital improvements in the context of the Six-Year Capital Improvements Plan and as required by G.S. 143C-8-6. The Director shall include as continuation requirements the amounts the Director proposes to fund for the enrollment increases in public schools, community colleges, and the university system.

(1a)      The Governor's Recommended State Budget shall include a continuation budget, which shall be presented in the budget support document pursuant to subdivision (2) of this subsection.

(5)        A list of budget adjustments made during the prior fiscal year pursuant to G.S. 143C-6-4 that are included in the proposed continuation budget for the upcoming fiscal year.

(c)        Even-Numbered Fiscal Years. - In even-numbered years, the Governor may recommend changes in the enacted budget for the second year of the biennium. These recommendations shall be presented as amendments to the enacted budget and shall be incorporated in a recommended Current Operations Appropriation Act and a recommended Capital Improvements Appropriations Act as necessary. Any recommended changes shall clearly distinguish program reductions, program eliminations, program expansions, and new programs, and shall explain all proposed capital improvements in the context of the Six-Year Capital Improvements Plan and as required by G.S. 143C-8-6. The Governor shall provide sufficient supporting documentation and accounting detail, consistent with that required by G.S. 143C-3-5(b), corresponding to the recommended amendments to the enacted budget.

(d)        Funds Included in Budget. - Consistent with requirements of the North Carolina Constitution, Article 5, Section 7(1), the Governor's Recommended State Budget, together with the Budget Support Document, shall include recommended expenditures of State funds from all Governmental and Proprietary Funds, as those funds are described in G.S. 143C-1-3. G.S. 143C-1-3, and all funds established for The University of North Carolina and its constituent institutions that are subject to this Chapter. Except where provided otherwise by federal law, funds received from the federal government become State funds when deposited in the State treasury and shall be classified and accounted for in the Governor's budget recommendations no differently than funds from other sources.

."

SECTION 6.12.(l)  G.S. 143C-4-3 reads as rewritten:

" 143C-4-3.  Repairs and Renovations Reserve Account.Reserve.

(a)        Creation and Source of Funds. - The Repairs and Renovations Reserve Account is established as a reserve in the General Fund. The State Controller shall reserve to the Repairs and Renovations Reserve Account one-fourth of any unreserved fund balance, as determined on a cash basis, remaining in the General Fund at the end of each fiscal year.

(b)        Use of Funds. - The funds in the Repairs and Renovations Reserve Account shall be used only for the repair and renovation of State facilities and related infrastructure that are supported from the General Fund. Funds from the Repairs and Renovations Reserve Account shall be used only for the following types of projects:

(1)        Roof repairs and replacements;

(2)        Structural repairs;

(3)        Repairs and renovations to meet federal and State standards;

(4)        Repairs to electrical, plumbing, and heating, ventilating, and air-conditioning systems;

(5)        Improvements to meet the requirements of the Americans with Disabilities Act, 42 U.S.C. 12101, et seq., as amended;

(6)        Improvements to meet fire safety needs;

(7)        Improvements to existing facilities for energy efficiency;

(8)        Improvements to remove asbestos, lead paint, and other contaminants, including the removal and replacement of underground storage tanks;

(9)        Improvements and renovations to improve use of existing space;

(10)      Historical restoration;

(11)      Improvements to roads, walks, drives, utilities infrastructure; and

(12)      Drainage and landscape improvements.

Funds from the Repairs and Renovations Reserve Account shall not be used for new construction or the expansion of the building area (sq. ft.) of an existing facility unless required in order to comply with federal or State codes or standards.

(c)        Use of Funds. - Funds Available Only Upon Appropriation. - Funds reserved to the Repairs and Renovations Reserve Account shall be available for expenditure only upon an act of appropriation by the General Assembly.

(d)        Board of Governors May Allocate Allocation and Reallocation of Funds to for Particular Projects. - Any funds in the Reserve for Repairs and Renovations Reserve that are allocated to the Board of Governors of The University of North Carolina or to the Office of State Budget and Management may be allocated or reallocated by the Board those agencies for repairs and renovations projects so long as (i) any project that receives an allocation or reallocation satisfies the requirements of subsection (b) of this section unless the Board determines that sufficient funds are not available from other sources and that conditions warrant General Fund assistance and (ii) the allocation or reallocation is in accordance with guidelines developed in The University of North Carolina Funding Allocation Model for Reserve for Repairs and Renovations, as approved by the Board of Governors of The University of North Carolina. The Board of Governors shall report to the Joint Legislative Commission on Governmental Operations on the allocation or reallocation of funds pursuant to this section within 60 days of any allocation or reallocation under this subsection.all of the following conditions are satisfied:

(1)        Any project that receives an allocation or reallocation satisfies the requirements of subsection (b) of this section.

(2)        If the allocation or reallocation of funds from one project to another under this section is two million five hundred thousand dollars ($2,500,000) or more for a particular project, the Office of State Budget and Management or the Board of Governors, as appropriate, consults with the Joint Legislative Commission on Governmental Operations prior to the expenditure or reallocation.(3)      If the allocation or reallocation of funds from one project to another under this section is less than two million five hundred thousand dollars ($2,500,000) for a particular project, the allocation or reallocation of funds is reported to the Joint Legislative Commission on Governmental Operations within 60 days of the expenditure or reallocation.

(e)        Office of State Budget and Management May Allocate Funds to Particular Projects. - Any funds in the Reserve for Repairs and Renovations that are allocated to the Office of State Budget and Management may be allocated or reallocated by the State Budget Office for repairs and renovations projects so long as any project that receives an allocation or reallocation satisfies the requirements of subsection (b) of this section. The Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations prior to the allocation of these funds. The State Budget Office shall report to the Joint Legislative Commission on Governmental Operations on the reallocation of funds pursuant to this section within 60 days of any reallocation under this subsection."

SECTION 6.12.(m)  G.S. 143C-6-1 reads as rewritten:

" 143C-6-1.  Budget enacted by the General Assembly; certified budgets of State agencies.

(b)        Departmental Receipts. - Departmental receipts collected to support a program or purpose shall be credited to the fund from which appropriations have been made to support that program or purpose. A State agency shall expend departmental receipts first, including receipts in excess of the amount of receipts budgeted in the certified budget for the program or purpose, and shall expend other funds appropriated for the purpose or program only to the extent that receipts are insufficient to meet the costs anticipated in the certified budget.

Except as authorized in G.S. 143C-6-4, excess departmental receipts shall not be used to increase expenditures for a purpose or program.

(c)        Certification of the Budget. - The Director of the Budget shall certify to each State agency the amount appropriated to it for each program and each object from all governmental and proprietary funds. funds included in the budget as defined in G.S. 143C-3-5(d). The certified budget for each State agency shall reflect the total of all appropriations enacted for each State agency by the General Assembly in the Current Operations Appropriations Act, the Capital Improvements Appropriations Act, and any other act affecting the State budget. The certified budget for each State agency shall follow the format of the Budget Support Document as modified to reflect changes enacted by the General Assembly."

SECTION 6.12.(n)  G.S. 143C-6-4 reads as rewritten:

" 143C-6-4.  Budget Adjustments Authorized.

(a)        Findings. - The General Assembly recognizes that even the most thorough budget deliberations may be affected by unforeseeable events. Underevents; therefore, under the limited circumstances set forth in this section, the Director may is authorized to adjust the enacted budget by making transfers among lines of expenditure, purposes, or programs or by increasing expenditures funded by departmental receipts. Under no circumstances, however, shall total General Fund expenditures for a State department exceed the amount appropriated to that department from the General Fund for the fiscal year.

(b)        Adjustments to the Certified Budget.Budget Adjustments. - Notwithstanding the provisions of G.S. 143C-6-1, a State agency may, with approval of the Director of the Budget, spend more than was authorized appropriated in the certified budget by adjusting the authorized budget for all of the following:

(1)        Line items within programs. - An object or line item within a purpose or program so long as the total amount expended for the purpose or program is no more than was authorized in the certified budget for the purpose or program.

(2)        Responses to extraordinary events. - A purpose or program if the overexpenditure of the purpose or program is:

a.         Required by a court or Industrial Commission order;

b.         Authorized under G.S. 166A-19.40(a) of the North Carolina Emergency Management Act; or

c.         Required to call out the North Carolina National Guard.

(3)        Responses to unforeseen circumstances. - A purpose or program not subject to the provisions of subdivision (b)(2) of this subsection, but only in accord with the following restrictions: (i) the subsection, if each of the following conditions is satisfied:

a.         The overexpenditure is required to continue the purpose or programs due to complications or changes in circumstances that could not have been foreseen when the budget for the fiscal period was enacted, (ii) the enacted.b.       The scope of the purpose or program is not increased, (iii) theincreased.

c.         The overexpenditure is authorized on a nonrecurring basis, and (iv) under no circumstances shall the total requirements for a State department exceed the department's certified budget for the fiscal year by more than three percent (3%) without prior consultation with the Joint Legislative Commission on Governmental Operations one-time nonrecurring basis for one year only, unless the overexpenditure is the result of (i) salary adjustments authorized by law or (ii) the establishment of time-limited positions funded with agency receipts.

(b1)      If the overexpenditure would cause a department's total requirements for a fund to exceed the department's certified budget for a fiscal year for that fund by more than three percent (3%), the Director shall consult with the Joint Legislative Commission on Governmental Operations prior to authorizing the overexpenditure.

(b2)      Subsection (b) of this section shall not be construed to authorize budget adjustments that cause General Fund expenditures, excluding expenditures from General Fund receipts, to exceed General Fund appropriations for a department.

."

SECTION 6.12.(o)  G.S. 143C-6-21 reads as rewritten:

" 143C-6-21.  Payments to nonprofits.

Except as otherwise provided by law, an annual appropriation of one hundred thousand dollars ($100,000) or less to or for the use of a nonprofit corporation shall may be made in a single annual payment. payment, in the discretion of the Director of the Budget. An annual appropriation of more than one hundred thousand dollars ($100,000) to or for the use of a nonprofit corporation shall be made in quarterly or monthly payments, in the discretion of the Director of the Budget."

SECTION 6.12.(p)  G.S. 143C-7-2(a) reads as rewritten:

"(a)       Plans Submitted and Reviewed. - The Secretary of each State agency that receives and administers federal Block Grant funds shall prepare and submit the agency's Block Grant plans to the Director of the Budget. The Director of the Budget shall submit the Block Grant plans to the Fiscal Research Division of the General Assembly not later than February 28 of each odd-numbered calendar year and not later than April 30 of each even-numbered calendar year.the General Assembly as part of the Recommended State Budget submitted pursuant to G.S. 143C-3-5."

SECTION 6.12.(q)  G.S. 143C-8-2 reads as rewritten:

" 143C-8-2.  Capital facilities inventory.

(a)        The Department of Administration shall develop and maintain an automated inventory of all facilities owned by State agencies pursuant to G.S. 143-341(4). The inventory shall include the location, occupying agency, ownership, size, description, condition assessment, maintenance record, parking and employee facilities, and other information to determine maintenance needs and prepare life-cycle cost evaluations of each facility listed in the inventory. The Department of Administration shall update and publish the inventory at least once every three years. The Department shall also record in the inventory acquisitions of new facilities and significant changes in existing facilities as they occur.

(b)        No later than October 1 of each even-numbered year, the Department of Administration shall provide a summary of the information maintained in the inventory described in subsection (a) of this section to the Fiscal Research Division of the Legislative Services Commission. This summary shall include all of the following:

(1)        A summary of the number, type, square footage or acreage, and condition of facilities allocated to or owned by each State agency.

(2)        A summary of the geographical distribution of State facilities.

(3)        An estimate of the percentage increase or decrease of square footage or acreage allocated to or owned by each State agency since the last report was submitted pursuant to this subsection.

(4)        Any other information requested by the Fiscal Research Division."

SECTION 6.12.(r)  G.S. 143C-9-7(b) reads as rewritten:

"(b)      Funds Upon appropriation by the General Assembly, funds received in the Indian Gaming Education Revenue Fund are hereby appropriated as received to the State Public School Fund for quarterly allotmentshall be allocated quarterly by the State Board of Education to local school administrative units, charter schools, and regional schools on the basis of allotted average daily membership. The funds allotted by the State Board of Education pursuant to this section shall be nonreverting. Funds received pursuant to this section by local school administrative units shall be expended for classroom teachers, teacher assistants, classroom materials or supplies, or textbooks."

 

State Agency Legal Positions RESERVE

SECTION 6.13.(a)  Notwithstanding any other provision of law, all legal positions within the Department of Justice that serve or otherwise provide State agencies with representation by an attorney, paralegal, or other employee are transferred to the Office of State Budget and Management (OSBM) and shall be placed in a position reserve for future allocation as determined by the OSBM and the heads of the respective State agencies.

SECTION 6.13.(b)  The OSBM may transfer legal positions to State agencies from the position reserve established in subsection (a) of this section, as deemed necessary by the OSBM in consultation with the heads of the respective State agencies. Any person employed in a legal position transferred pursuant to the authority of this section shall report to the appropriate head of the State agency to which the position is transferred.

 

cap State Funded portion of nonprofit Salaries

SECTION 6.14.  No more than one hundred twenty thousand dollars ($120,000) in State funds may be used for the annual salary of any individual employee of a nonprofit organization receiving State funds. For the purposes of this section, the term "State funds" means funds as defined in G.S. 143C-1-1(d)(25) and any interest earnings that accrue from those funds.

 

no State Funds for Lobbying

SECTION 6.15.(a)  No State funds shall be used by a non-State entity to pay for lobbying or lobbyists.

SECTION 6.15.(b)  For the purposes of this section, the following definitions apply:

(1)        Lobbying. - As defined by G.S. 120C-100(a)(9).

(2)        Lobbyist. - As defined by G.S. 120C-100(a)(10).

(3)        Non-State entity. - As defined by G.S. 143C-1-1(d)(18).

(4)        State funds. - As defined by G.S. 143C-1-1(d)(25) and interest earnings that accrue from those funds.

 

Aviation Fuel Tax

SECTION 6.16.  Section 3(b) of S.L. 2012-74 reads as rewritten:

"SECTION 3.(b)  An interstate passenger air carrier is allowed a refund of the sales and use tax paid by it on fuel in excess of one million two hundred fifty thousand dollars ($1,250,000) for the period January 1, 2011, through June 30, 2011. The State portion of the refund is payable in two installments. The first installment, payable in fiscal year 2012-2013, may not exceed three million one hundred fifty thousand dollars ($3,150,000). The remainder of the refund is payable in fiscal year 2013-2014. The amount of sales and use tax paid does not include a refund allowed to the interstate passenger air carrier under G.S. 105-164.14(a). A request for a refund must be in writing and must include any information and documentation required by the Secretary. The request for a refund is due before October 1, 2012. A refund applied for after the due date is barred."

 

restore local government Hold Harmless for repealed reimbursements

SECTION 6.17.  G.S. 105-521 reads as rewritten:

" 105-521.  Transitional local government hold harmless for repealed reimbursements.

(a)        Definitions. - The following definitions apply in this section:

(1)        Local government. - A county or municipality that received a distribution of local sales taxes in the most recent fiscal year for which a local sales tax share has been calculated.

(2)        Local sales tax share. - A local government's percentage share of the two-cent (2) sales taxes distributed during the most recent fiscal year for which data are available.

(3)        Repealed reimbursement amount. - The total amount a local government would have been entitled to receive during the 2002-2003 fiscal year under G.S. 105-164.44C, 105-275.1, 105-275.2, 105-277.001, and 105-277.1A, if the Governor had not withheld any distributions under those sections.

(3a)      Replacement revenue. - The sum of the following:

a.         Fifty percent (50%) of the amount of sales and use tax revenue distributed under Article 40 of this Chapter, other than revenue from the sale of food that is subject to local tax but is exempt from State tax under G.S. 105-164.13B.

b.         Twenty-five percent (25%) of the amount of sales and use tax revenue distributed under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws, other than revenue from the sale of food that is subject to local tax but is exempt from State tax under G.S. 105-164.13B.

(4)        Two-cent (2) sales taxes. - The first one-cent (1) sales and use tax authorized in Article 39 of this Chapter and in Chapter 1096 of the 1967 Session Laws, the first one-half cent (1/2) local sales and use tax authorized in Article 40 of this Chapter, and the second one-half cent (1/2) local sales and use tax authorized in Article 42 of this Chapter.

(b)        Distributions. - On or before August 15, 2008, and every August 15 through August 15, 2012, August 15, 2013, the Secretary must multiply each local government's local sales tax share by the estimated amount of replacement revenue that all local governments are expected to receive during the current fiscal year. If the resulting amount is less than one hundred percent (100%) of the local government's repealed reimbursement amount, the Secretary must pay the local government the difference, but not less than one hundred dollars ($100.00).

On or before May 1 of each fiscal year through May 1, 2012, May 1, 2013, the Department of Revenue and the Fiscal Research Division of the General Assembly must each submit to the Secretary and to the General Assembly a final projection of the estimated amount of replacement revenue that all local governments would be expected to receive during the upcoming fiscal year. If, after May 1 and before a distribution is made, a law is enacted that would affect the projection, an updated projection must be submitted as soon as practicable. If the Secretary does not use the lower of the two final projections to make the calculation required by this subsection, the Secretary must report the reasons for this decision to the Joint Legislative Commission on Governmental Operations within 60 days after receiving the projections.

(c)        Source of Funds. - The Secretary must draw the funds distributed under this section from sales and use tax collections under Article 5 of this Chapter.

(d)        Reports. - The Secretary must report to the Revenue Laws Study Committee by January 31, 2004, and each January 31 through January 31, 2013, January 31, 2014, the amount distributed under this section for the current fiscal year."

 

Eugenics Compensation Program

SECTION 6.18.(a)  Article 9 of Chapter 143B of the General Statutes is amended by adding a new Part to read:

"Part 30. Eugenics Asexualization and Sterilization Compensation Program.

" 143B-426.50.  Definitions.

As used in this Part, the following definitions apply:

(1)        Claimant. - An individual on whose behalf a claim is made for compensation as a qualified recipient under this Part.

(2)        Commission. - The North Carolina Industrial Commission.

(3)        Involuntarily. - In the case of:

a.         A minor child, either with or without the consent of the minor child's parent, guardian, or other person standing in loco parentis.

b.         An incompetent adult, with or without the consent of the incompetent adult's guardian or pursuant to a valid court order.

c.         A competent adult, without the adult's informed consent, with the presumption being that the adult gave informed consent.

(4)        Office. - The Office of Justice for Sterilization Victims.

(5)        Qualified recipient. - An individual who was asexualized involuntarily or sterilized involuntarily under the authority of the Eugenics Board of North Carolina in accordance with Chapter 224 of the Public Laws of 1933 or Chapter 221 of the Public Laws of 1937.

" 143B-426.51.  Compensation payments.

(a)        A claimant determined to be a qualified recipient under this Part shall receive lump-sum compensation in the amount of fifty thousand dollars ($50,000) from funds appropriated to the Department of State Treasurer for these purposes.

(b)        A qualified recipient may assign compensation received pursuant to subsection (a) of this section to a trust established for the benefit of the qualified recipient.

" 143B-426.52.  Claims for compensation for asexualization or sterilization.

(a)        An individual shall be entitled to compensation as provided for in this Part if a claim is submitted on behalf of that individual in accordance with this Part on or before June 30, 2014, and that individual is subsequently determined by a preponderance of the evidence to be a qualified recipient, except that any competent adult who gave consent is not a qualified recipient unless that individual can show by a preponderance of the evidence that the consent was not informed.

(b)        A claim under this section shall be submitted to the Office. The claim shall be in a form, and supported by appropriate documentation and information, as required by the Commission. A claim may be submitted on behalf of a claimant by a person lawfully authorized to act on the individual's behalf.

(c)        The Commission shall determine the eligibility of a claimant to receive the compensation authorized by this Part in accordance with G.S. 143B-426.53. The Commission shall notify the claimant in writing of the Commission's determination regarding the claimant's eligibility.

(d)        The Commission shall adopt rules for the determination of eligibility and the processing of claims.

" 143B-426.53.  Industrial Commission determination.

(a)        The Commission shall determine whether a claimant is eligible for compensation as a qualified recipient under this Part. The Commission shall have all powers and authority granted under Article 31 of Chapter 143 of the General Statutes with regard to claims filed pursuant to this Part.

(b)        A deputy commissioner shall be assigned by the Commission to make initial determinations of eligibility for compensation under this Part. The deputy commissioner shall review the claim and supporting documentation submitted on behalf of a claimant and shall make a determination of eligibility. In any case where the claimant was a competent adult when asexualized or sterilized, the burden is on the claimant to rebut the presumption that the claimant gave informed consent. If the claim is not approved, the deputy commissioner shall set forth in writing the reasons for the disapproval and notify the claimant.

(c)        A claimant whose claim is not approved under subsection (b) of this section may submit to the Commission additional documentation in support of the individual's claim and request a redetermination by the deputy commissioner.

(d)        A claimant whose claim is not approved under subsection (b) or (c) of this section shall have the right to request a hearing before the deputy commissioner. The hearing shall be conducted in accordance with rules of the Commission. For claimants who are residents of this State, at the request of the claimant, the hearing shall be held in the county of residence of the claimant. For claimants who are not residents of this State, the hearing shall be held in Wake County or at a location of mutual convenience as determined by the deputy commissioner. The claimant shall have the right to be represented, including the right to be represented by counsel, present evidence, and call witnesses. The deputy commissioner who hears the claim shall issue a written decision of eligibility which shall be sent to the claimant.

(e)        Upon the issuance of a decision by the deputy commissioner under subsection (d) of this section, the claimant may file notice of appeal with the Commission within 30 days of the date notice of the deputy commissioner's decision is given. Such appeal shall be heard by the Commission, sitting as the full Commission, on the basis of the record in the matter and upon oral argument. The full Commission may amend, set aside, or strike out the decision of the deputy commissioner and may issue its own findings of fact, conclusions of law, and decision. The Commission shall notify all parties concerned in writing of its decision.

(f)         A claimant may appeal the decision of the full Commission to the Court of Appeals within 30 days of the date notice of the decision of the full Commission is given. Appeals under this section shall be in accordance with the procedures set forth in G.S. 143-293 and G.S. 143-294.

(g)        If at any stage of the proceedings the claimant is determined to be a qualified recipient, the Commission shall give notice to the claimant and to the Office of the State Treasurer and the State Treasurer shall make payment of compensation to the qualified recipient or a trust specified under G.S. 143B-426.51(b).

(h)        Decisions and determinations by the Commission favorable to the claimant shall be final and not subject to appeal by the State.

(i)         Costs under this section shall be taxed to the State.

" 143B-426.54.  Office of Justice for Sterilization Victims.

(a)        There is created in the Department of Administration the Office of Justice for Sterilization Victims.

(b)        At the request of a claimant or a claimant's legal representative, the Office shall assist an individual who may be a qualified recipient to determine whether the individual qualifies for compensation under this Part. The Office may assist an individual filing a claim under this Part and collect documentation in support of the claim. With the claimant's consent, the Office may represent and advocate for the claimant before the Commission and may assist the claimant with any good-faith further appeal of an adverse decision on a claim.

(c)        The Office shall plan and implement an outreach program to attempt to notify individuals who may be possible qualified recipients.

" 143B-426.55.  Confidentiality.

Records of all inquiries of eligibility, claims, and payments under this Part shall be confidential and not public records under Chapter 132 of the General Statutes.

" 143B-426.56.  Compensation excluded as income, resources, or assets.

(a)        Any payment made under this section is not subject to income tax as provided in G.S. 105-134.6(b)(22) nor to be considered income or assets for purposes of determining the eligibility for, or the amount of, any benefits or assistance under any State or local program financed in whole or in part with State funds.

(b)        Pursuant to G.S. 108A-26.1, the Department of Health and Human Services shall do the following:

(1)        Provide income, resource, and asset disregard to an applicant for, or recipient of, public assistance who receives compensation under this Part. The amount of the income, resource, and asset disregard shall be equal to the total compensation paid to the individual from the Eugenics Sterilization Compensation Fund.

(2)        Provide resource protection by reducing any subsequent recovery by the State under G.S. 108A-70.5 from a deceased recipient's estate for payment of Medicaid-paid services by the amount of resource disregard given under subdivision (1) of this subsection.

(3)        Adopt rules to implement the provisions of subdivisions (1) and (2) of this subsection.

" 143B-426.57.  Limitation of liability.

Nothing in this Part shall revive or extend any statute of limitations that may otherwise have expired prior to July 1, 2013. The State's liability arising from any cause of action related to any asexualization or sterilization performed pursuant to an order of the Eugenics Board of North Carolina shall be limited to the compensation authorized by this Part."

SECTION 6.18.(b)  G.S. 105-134.6(b) is amended by adding a new subdivision to read:

"(22)    The amount paid to the taxpayer during the taxable year from the Eugenics Sterilization Compensation Fund in the Office of the State Treasurer as compensation to a qualified recipient under the Eugenics Asexualization and Sterilization Compensation Program under Part 30 of Article 9 of Chapter 143B of the General Statutes."

SECTION 6.18.(c)  Part 1 of Article 2 of Chapter 108A of the General Statutes is amended by adding a new section to read:

" 108A-26.1.  Exclude compensation from the Eugenics Sterilization Compensation Fund from income, resources, and assets for public assistance programs.

With regard to compensation received pursuant to Part 30 of Article 9 of Chapter 143B of the General Statutes, the provisions of G.S. 143B-426.56(b) shall apply to the Department."

SECTION 6.18.(d)  G.S. 132-1.23 reads as rewritten:

" 132-1.23.  Eugenics program records.

(a)        Records in the custody of the State, including those in the custody of the North CarolinaOffice of Justice for Sterilization FoundationVictims, concerning the North CarolinaEugenics Board of North Carolina's program are confidential and are not public records to the extent they concern:records, including the records identifying (i) persons individuals impacted by the program, (ii) persons individuals, or their guardians or authorized agents agents, inquiring about the impact of the program on them,the individuals, or (iii) persons individuals, or their guardians or authorized agents agents, inquiring about the potential impact of the program on others.

(b)        Notwithstanding subsection (a) of this section, a person an individual impacted by the program may obtain that person's individual records under the program, and a guardian or authorized agent of that person may also obtain them.program, or a guardian or authorized agent of that individual, may obtain that individual's records under the program upon execution of a proper release authorization.

(c)        Notwithstanding subsections (a) and (b) of this section, minutes or reports of the Eugenics Board of North Carolina, for which identifying information of the individuals impacted by the program have been redacted, may be released to any person. As used in this subsection, "identifying information" shall include the name, street address, birth day and month, and any other information the State believes may lead to the identity of any individual impacted by the program, or of any relative of an individual impacted by the program."

SECTION 6.18.(e)  There is established the Eugenics Sterilization Compensation Fund. The Fund shall be designated a special fund and shall be used to pay the compensation authorized under Part 30 of Article 9 of Chapter 143B of the General Statutes. The Fund shall be administered by the Office of Justice for Sterilization Victims established in G.S. 143B-426.54. Monies in the Fund shall not be expended or transferred except in accordance with Part 30 of Article 9 of Chapter 143B of the General Statutes. Monies in the Fund shall remain until all claims timely filed with the Industrial Commission as prescribed in this act have been finally adjudicated and all qualified recipients who timely submit claims are paid. The Office of Justice for Sterilization Victims and the Fund are subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes. Funds remaining after all qualified recipients are paid shall revert to the General Fund.

SECTION 6.18.(f)  The Department of Health and Human Services shall submit to the Centers for Medicare and Medicaid Services by July 1, 2013, a State Plan Amendment for the Medical Assistance Program and a State Plan Amendment for the Children's Health Insurance Program to allow for income, resource, and asset disregard for compensation payments under Part 30 of Article 9 of Chapter 143B of the General Statutes, the Eugenics Asexualization and Sterilization Compensation Program, as enacted by this act.

SECTION 6.18.(g)  Of the funds appropriated to the Eugenics Sterilization Compensation Fund, the sum of one hundred twenty-three thousand seven hundred forty-eight dollars ($123,748) shall be transferred to the Office of Justice for Sterilization Victims to pay the continued operations of the Justice for Sterilization Victims Foundation for the 2013-2014 fiscal year.

SECTION 6.18.(h)  Subsection (c) of this section is effective for taxes imposed for taxable years beginning on or after January 1, 2013. Subsections (f) and (h) of this section are effective when this act becomes law. The remainder of this section becomes effective July 1, 2013. Except for the provisions of subsections (b), (c), and (d) of this section, this section expires June 30, 2015.

 

NC Back-to-Work funds

SECTION 6.19.  Of the funds appropriated in this act to the Community Colleges System Office for the 2013-2014 fiscal year, the sum of ten million dollars ($10,000,000) shall be used for the North Carolina Back-to-Work Program, a retraining program focused on unemployed and underemployed North Carolinians, military veterans, and North Carolina National Guard members. The program shall provide students with occupational skills, employability skills, including a Career Readiness Certificate, and opportunities to earn third-party, industry recognized credentials. Funds may only be allocated to community colleges whose training plans include support for one or more of the following: (i) employers who have committed to assist colleges with the design and implementation of their training plans and to interview program completers for available jobs; (ii) companies with registered apprenticeship programs with the North Carolina Department of Labor; (iii) coordinated projects among two or more colleges that focus on serving the needs of an industry cluster; or (iv) programs developed in collaboration with the North Carolina National Guard or veterans' organizations. Funds may only be used for the following activities: student instruction, student support and coaching, and targeted financial assistance for students, including assistance with tuition, registration fees, books, and certification costs.

 

SECTION 6.20.  Notwithstanding any other provision of law, the funds allocated for House Bill 998 for the 2013-2014 fiscal year shall be reduced by the sum of one hundred forty-five thousand dollars ($145,000) if House Bill 392 becomes law. Of the funds appropriated in this act for pending legislation for the 2013-2014 fiscal year, the sum of one hundred forty-five thousand dollars ($145,000) is allocated for the purposes of House Bill 392.

 

PART VII. INFORMATION TECHNOLOGY

 

INFORMATION TECHNOLOGY INTERNAL SERVICE FUND

SECTION 7.2.(a)  G.S. 147-33.88 reads as rewritten:

" 147-33.88.  Information technology budget development and reports.

(a)        The Office shall develop an annual budget for review and approval by the Office of State Budget and Management prior to April 1 of each year.The Office of Information Technology Services (ITS) shall develop an annual budget for review and approval by the Office of State Budget and Management (OSBM) in accordance with a schedule prescribed by the Director of the Office of State Budget and Management. The approved Information Technology Internal Service Fund budget shall be included in the Governor's budget recommendations to the General Assembly.

The Office of State Budget and Management shall ensure that State agencies have an opportunity to adjust their budgets based on any rate changes proposed by the Office of Information Technology Services and approved by the Office of State Budget and Management.

(b)        The Office shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the Office's Internal Service Fund on a quarterly basis, no later than the first day of the second month following the end of the quarter. The report shall include current cash balances, line-item detail on expenditures from the previous quarter, and anticipated expenditures and revenues. The Office shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on expenditures for the upcoming quarter, projected year-end balance, and the status report on personnel position changes including new positions created and existing positions eliminated. The Office spending reports shall comply with the State Accounting System object codes."

SECTION 7.2.(b)  IT Internal Service Fund. - For each year of the 2013-2015 fiscal biennium, receipts for the IT Internal Service Fund shall not exceed one hundred ninety million dollars ($190,000,000), excluding a 60-day balance for contingencies. Rates approved by the Office of State Budget and Management (OSBM) to support the IT Internal Service Fund shall be based on this fund limit. In the event the Fund exceeds the required limit, rates shall be adjusted within 30 days. In the event that an increase in receipts for the IT Internal Service Fund is required, the Office of Information Technology services may only implement the increase after consultation with the Joint Legislative Commission on Governmental Operations.

SECTION 7.2.(c)  Rate Setting. - By October 31, 2013, the State Chief Information Officer shall establish consistent, fully transparent, easily understandable rates that reflect industry standards for each service for which any agency is charged. A report explaining the rate structure shall be submitted to the Joint Legislative Commission on Governmental Operations, the Chairs of the Joint Legislative Oversight Committee on Information Technology, the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division. An interim report shall be submitted by July 30, 2013. Overhead charges to agencies shall be consistently applied and shall reflect industry standards for the particular service. Rate increases shall require the approval of OSBM and consultation with the Joint Legislative Commission on Governmental Operations. Rate reductions may be implemented following notification of OSBM.

SECTION 7.2.(d)  Agency Billing and Payments. - The State Chief Information Officer shall ensure that bills from the Office of Information Technology Services are easily understandable and fully transparent. If a State agency fails to pay its IT Internal Service Fund bill within 30 days of receipt, the Office of State Budget and Management may transfer funds from the agency to fully or partially cover the cost of the bill from that agency to the IT Internal Service Fund, following notification of the affected agency.

SECTION 7.2.(e)  Unspecified Uses. - Any uses of the IT Internal Service Fund not specifically related to the operation of the Office of Information Technology Services, to include any transfers to other State agencies, shall immediately be reported to the Office of State Budget and Management and the Fiscal Research Division with a detailed explanation as to why it was necessary to use the Fund. The State Chief Information Officer may use the IT Internal Service Fund, and any other available resources, to accelerate desktop remediation and associated software upgrades, if it is in the State's best interest.

 

INFORMATION TECHNOLOGY OPERATIONS/FUNDING

SECTION 7.4.(a)  The Office of the State Chief Information Officer (CIO) shall develop an inventory of servers and server locations in State agencies. Based on this inventory, the State CIO shall develop a plan to consolidate agency servers in State-owned data centers. By November 1, 2013, the State CIO shall provide a written plan for accomplishing this to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

SECTION 7.4.(b)  The Office of the State CIO shall identify information technology applications that are hosted by vendors that are not backed up on State-owned infrastructure. The State CIO shall work with impacted State agencies to develop a plan to ensure that any State agency application hosted by a vendor is backed up on State-owned infrastructure. By January 1, 2014, the State CIO shall provide a plan for accomplishing this to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

SECTION 7.4.(c)  Unless a change is approved by the State Chief Information Officer after consultation with the Office of State Budget and Management, funds appropriated to the Information Technology Fund shall be spent only as specified by the General Assembly. Changes shall not result in any degradation to the information technology operations or projects for which the funds were originally appropriated.

Any changes to the specified uses shall be reported in writing to the Chairs of the Joint Legislative Oversight Committee on Information Technology, the Chair and Cochair of the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division.

SECTION 7.4.(d)  The Information Technology Reserve Fund shall be established in the Office of the State Chief Information Officer (CIO). It shall be interest-bearing and nonreverting. The State CIO shall follow established procedures for project approval. By August 1, 2013, the State Chief Information Officer shall provide a time line for completing initiatives included in the IT Reserve Fund to the Joint Legislative Oversight Committee on Information Technology, the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division. The time line shall include the dates for completion of a strategic plan, an enterprise architecture, a new business case methodology, and implementation of a new project management process. Not later than the dates specified in the time line, each of these documents shall be submitted to the Joint Legislative Oversight Committee on Information Technology, the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division.

 

STATEWIDE INFORMATION TECHNOLOGY PROCUREMENT

SECTION 7.5.  Statewide information technology procurement shall be funded through fees charged to agencies using the services of the Statewide Information Technology Procurement Office. The Office of the State Chief Information Officer (CIO) shall provide to the Office of State Budget and Management (OSBM) a fee schedule to allow cost recovery. If an agency fails to pay for services within 30 days of billing, OSBM shall transfer the unpaid amount to the State Information Technology Procurement Office, following notification of the affected agency.

 

PUBLIC SCHOOL PROCUREMENT OF INFORMATION TECHNOLOGY

SECTION 7.6.(a)  The State Chief Information Officer (CIO) shall work with the North Carolina Department of Public Instruction (DPI) and the Governor's Education Council to implement public school cooperative purchasing agreements for the procurement of information technology (IT) goods and services to support public schools. For purposes of this section, the phrase "public school cooperative purchasing agreement" means an agreement implemented pursuant to this section and available for local school administrative units, regional schools, charter schools, or some combination thereof, providing for collaborative or collective purchases of information technology goods and services in order to leverage economies of scale and to reduce costs.

SECTION 7.6.(b)  Each public school cooperative purchasing agreement shall be based on a defined statewide information technology need to support education in the public schools. Each public school cooperative purchasing agreement shall allow for equal access to technology tools and services and shall provide a standard competitive cost throughout North Carolina for each tool or service. Public school cooperative purchasing agreements shall follow State information technology procurement laws, rules, and procedures.

SECTION 7.6.(c)  By October 1, 2013, and quarterly thereafter, the Office of the State CIO and DPI shall report on the establishment of public school cooperative purchasing agreements, savings resulting from the establishment of the agreements, and any issues impacting the establishment of the agreements. The reports shall be made to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Education Oversight Committee, and the Fiscal Research Division.

 

INFORMATION TECHNOLOGY CONTRACTS

SECTION 7.7.(a)  SCIO Review. - The State Chief Information Officer (CIO) shall review all State information technology (IT) contracts and shall develop a plan to consolidate duplicate IT contracts and multiple IT contracts with the same vendor.

SECTION 7.7.(b)  The State CIO shall develop a plan to modify bulk purchasing contracts, while maintaining economies of scale, to provide agencies with the option of purchasing equipment on an "as-needed" basis. By September 15, 2013, the State CIO shall provide the plan to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division. The State CIO may modify the plan based upon input from the Joint Legislative Oversight Committee on Information Technology and, following the review, shall begin implementation of the plan.

SECTION 7.7.(c)  Enterprise Contracts. - The State Chief Information Officer shall consult participating agency chief information officers and obtain approval from the Office of State Budget and Management prior to the initiation of any enterprise project or contract and shall ensure that enterprise project and contract costs are allocated to participating agencies in an equitable manner. Enterprise agreements shall not exceed the participating State agencies' ability to financially support the contracts.

The State CIO shall not enter into any enterprise information technology contracts without obtaining written agreements from participating State agencies regarding the apportionment of the contract cost. State agencies agreeing to participate in a contract shall:

(1)        Ensure that sufficient funds are budgeted to support their agreed shares of enterprise contracts throughout the life of the contract.

(2)        Transfer the required funding to the Information Technology Internal Service Fund in sufficient time for the Office of Information Technology Services to meet vendor contract requirements.

SECTION 7.7.(d)  Three-Year Contracts. - Notwithstanding the cash management provisions of G.S. 147-86.11, the Office of Information Technology Services (ITS) may procure information technology goods and services for periods up to a total of three years where the terms of the procurement contracts require payment of all or a portion of the contract price at the beginning of the contract agreement. All of the following conditions shall be met before payment for these agreements may be disbursed:

(1)        Any advance payment can be accomplished within the IT Internal Service Fund budget.

(2)        The State Controller receives conclusive evidence that the proposed agreement would be more cost-effective than a multiyear agreement that complies with G.S. 147-86.11.

(3)        The procurement complies in all other aspects with applicable statutes and rules.

(4)        The proposed agreement contains contract terms that protect the financial interest of the State against contractor nonperformance or insolvency through the creation of escrow accounts for funds, source codes, or both, or by any other reasonable means that have legally binding effect.

The Office of State Budget and Management shall ensure the savings from any authorized agreement shall be included in the IT Internal Service Fund rate calculations before approving annual proposed rates. Any savings resulting from the agreements shall be returned to agencies included in the contract in the form of reduced rates. Beginning October 1, 2013, ITS shall submit a quarterly written report of any authorizations granted under this section to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

 

INFORMATION TECHNOLOGY PERSONAL SERVICES CONTRACT REQUIREMENTS

SECTION 7.8.  Notwithstanding any provision of law to the contrary, no contract for information technology personal services, or that provides personnel to perform information technology functions, may be established or renewed without written approval from the Statewide Information Technology Procurement Office and the Office of State Budget and Management. To facilitate compliance with this requirement, the Statewide Information Technology Procurement Office shall develop and document the following:

(1)        Standards for determining whether it is more appropriate for an agency to hire an employee or use the services of a vendor.

(2)        A process to monitor all State agency personal services contracts, as well as any other State contracts providing personnel to perform information technology functions.

(3)        A process for obtaining approval of contractor positions.

The Statewide Information Technology Procurement Office shall review current personal services contracts and determine if each contractor is performing a function that could more appropriately be performed by a State employee. Where the determination is made that a State employee should be performing the function, the Statewide Information Technology Procurement Office shall work with the impacted agency and the Office of State Personnel to identify or create the position.

Beginning October 1, 2013, the Statewide Information Technology Procurement Office shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on its progress toward standardizing information technology personal services contracts. In addition, the report shall include detailed information on the number of personal service contractors in each State agency, the cost for each, and the comparable cost (including benefits) of a State employee serving in that capacity rather than a contractor.

 

PREVENT DUPLICATION OF INFORMATION TECHNOLOGY CAPABILITIES

SECTION 7.9.(a)  The Office of the State Chief Information Officer (CIO) shall develop a plan and adopt measures to prevent the duplication of information technology capabilities and resources across State agencies. When multiple agencies require the same, or substantially similar, information technology capabilities, the State CIO shall designate one State agency as the lead to coordinate and manage the capability for all State agencies, with the State CIO maintaining oversight of the effort. By October 1, 2013, the State CIO shall provide this plan to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

SECTION 7.9.(b)  The Office of the State Chief Information Officer shall do all of the following to carry out the purposes of this section:

(1)        Review all current and future information technology projects to determine whether the capabilities required for each project already exist in a planned, ongoing, or completed information technology project developed by another State agency. For projects where the capability already exists, the Office of the State CIO shall assist the agency with implementing the existing capability.

(2)        Identify existing projects that can best support a specific information technology capability for multiple agencies and work to transition all agencies requiring the specific capability to the identified projects.

(3)        When State agencies request approval for new projects, determine if the information technology project can be implemented using an existing application, or if the new project has the potential to support multiple agencies' requirements.

(4)        Provide quarterly reports on progress toward eliminating duplication to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

(5)        Ensure that contracts for information technology allow the addition of other agencies' requirements within the terms of the existing contracts.

SECTION 7.9.(c)  The Office of the State Chief Information Officer shall include The University of North Carolina in the plan to prevent the duplication of information technology capabilities and resources, and the University shall provide all information requested to identify information technology capabilities and resources for the plan. Notwithstanding G.S. 147-33.80, the University shall participate in enterprise projects and initiatives conducted pursuant to G.S. 143-135.9 involving the same, or substantially similar, information technology capabilities or provide common information technology infrastructure among Executive Branch agencies, including Enterprise Resource Planning.

SECTION 7.9.(d)  G.S. 147-33.72C(e) reads as rewritten:

"(e)       Performance Contracting. - All contracts between a State agency and a private party for information technology projects shall include provisions for vendor performance review and accountability. The State CIO may require that these contract provisions require a performance bond, include monetary penalties penalties, or require other performance assurance measures for projects that are not completed or performed within the specified time period or that involve costs in excess of those specified in the contract. The State CIO may utilize cost savings realized on government vendor partnerships, as defined in G.S. 143-135.9, as performance incentives for an information technology project vendor.require contract provisions requiring a vendor to provide a performance bond."

SECTION 7.9.(e)  All State agencies shall coordinate any Geographic Information System (GIS) initiatives through the Center for Geographic Information and Analysis (CGIA) in the Office of Information Technology Services, as well as the Office of the State CIO, to ensure that existing capabilities are not being duplicated. The CGIA shall monitor and approve all new GIS-related information technology projects and expansion budget requests. By January 1 of each year, the CGIA shall submit a written report on GIS duplication to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

The CGIA shall conduct a review of all GIS applications in State agencies, identify instances of duplication for existing applications, and develop a plan for consolidating duplicative projects. By November 1, 2013, the CGIA shall provide a report on the review to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

 

STATE INFORMATION TECHNOLOGY DATA ARCHIVING

SECTION 7.11.(a)  The State Chief Information Officer (CIO) shall investigate the feasibility of creating an enterprise data archiving system for State agencies that will (i) allow for the effective management of data from multiple sources; (ii) provide for efficient, timely responses to discovery requests and investigations; and (iii) ensure real time State agency access to and use of archived files. The system shall be financed only by savings accrued as a result of the project.

SECTION 7.11.(b)  By December 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the results of the feasibility assessment.

SECTION 7.11.(c)  Subsequent to making the report required by this section, and only if the State CIO has developed a business case that is validated by the Office of State Budget and Management, then the State CIO may initiate the development of an enterprise data archiving system.

 

INFORMATION TECHNOLOGY/PRIVACY PROTECTION OF CITIZEN DATA

SECTION 7.12.  The Joint Legislative Oversight Committee on Information Technology (the Committee), in collaboration with the State Chief Information Officer (CIO), shall study establishing State requirements to safeguard the personal data of individuals collected and managed by all branches of State government. The study shall be conducted with the participation and assistance of agency CIOs selected jointly by the Committee and State CIO. The Committee may report any legislative proposals to the 2014 Regular Session of the 2013 General Assembly.

 

STATE INFORMATION TECHNOLOGY INNOVATION CENTER

SECTION 7.13.  The State Chief Information Officer (CIO) may operate a State Information Technology Innovation Center (Center) to develop and demonstrate technology solutions with potential benefit to the State and its citizens. The Center may facilitate the piloting of potential solutions to State technology requirements. In operating the Center, the State CIO shall ensure that all State laws, rules, and policies are followed. Vendor participation in the Center shall not be construed to (i) create any type of preferred status for vendors or (ii) abrogate the requirement that the State CIO ensure that agency and statewide requirements for information technology support (including those for the Office of the State CIO and the Office of Information Technology Services) are awarded based on a competitive process that follows information technology procurement guidelines. Beginning July 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology on a quarterly basis on initiatives being developed and implemented within the Center, as well as on the sources and amounts of resources used to support the Center.

 

ENTERPRISE GRANTS MANAGEMENT

SECTION 7.14.(a)  Effective August 1, 2013, the State Chief Information Officer (CIO) shall oversee the development and implementation of the enterprise grants management system. The State CIO shall review progress on the implementation of the enterprise grants management system and update the plan for its development and implementation. This plan shall include an updated inventory of current agency grants management systems and a detailed process for consolidating grants management within the State, to include a timeline for implementation. By October 1, 2013, the State CIO shall provide the updated plan to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

SECTION 7.14.(b)  There is established a Grants Management Oversight Committee to coordinate the development of an enterprise grants management system. The Committee shall be chaired by the State Chief Information Officer. Committee membership shall include the Director of the Office of State Budget and Management, the State Auditor, the Department of Transportation Chief Information Officer, and the State Controller. The State Auditor shall serve as a nonvoting member. The Committee shall:

(1)        Establish priorities for moving agencies to the enterprise system.

(2)        Establish priorities for development and implementation of system capabilities.

(3)        Define system requirements.

(4)        Approve plans associated with system development and implementation.

(5)        Review costs and approve funding sources for system development and implementation.

(6)        Ensure any system benefits are realistic and realized.

SECTION 7.14.(c)  Beginning September 1, 2013, the Office of the State CIO shall report quarterly to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the status of the system, including the following information:

(1)        Agencies currently participating in the system.

(2)        Specific requirements for each agency project included in the system development.

(3)        Cost and funding sources for each agency participating in the system.

(4)        Status of each agency project included in the system.

(5)        Comparison of the status of each project to the project's time line, with an explanation of any differences.

(6)        Detailed descriptions of milestones completed that quarter and to be completed the next quarter.

(7)        Any changes in project cost for any participating agency, the reason for the change, and the source of funding, if there is a cost increase.

(8)        Actual project expenditures by agency, to date, and during that quarter.

(9)        Any potential funding shortfalls, and their impact.

(10)      Any issues identified during the quarter, with a corrective action plan and a time line for resolving each issue.

(11)      Impact of any issues on schedule or cost.

(12)      Any changes to agency projects, or the system as a whole.

(13)      Any change requests and their costs.

 

ENTERPRISE ELECTRONIC FORMS AND DIGITAL SIGNATURES

SECTION 7.15.(a)  The State's enterprise electronic forms and digital signatures project shall be transferred from the Office of the State Controller to the Office of the State Chief Information Officer (CIO) as a Type I transfer, as defined in G.S. 143A-6. The State CIO shall continue the planning, development, and implementation of a coordinated enterprise electronic forms and digital signatures capability, as well as the use of digital certificates. As part of the process, the Office of the State CIO shall include the capability to allow one-time data entry for multiple applications.

SECTION 7.15.(b)  The State CIO shall continue to integrate executive branch agencies developing, or identifying the need to develop, electronic forms or digital signatures projects, or both. The State CIO shall also review existing electronic forms and digital signatures capabilities and develop a plan to consolidate them. The State CIO may consolidate current agency electronic forms and digital signature capabilities, and cancel ongoing projects, and may redirect the resources associated with the capabilities and projects to the enterprise electronic forms and digital signatures project. Beginning November 1, 2013, the State CIO shall submit quarterly reports on the status of the project to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

 

VEHICLE MANAGEMENT

SECTION 7.16.(a)  The Office of the State Chief Information Officer (CIO) shall develop an implementation plan for establishing a statewide motor fleet management system. The plan shall consider consolidating individual agency and institution motor fleet management systems and include an implementation time line, a cost estimate, and a continuing funding strategy to create and operate a statewide fleet management information system to which all State agencies and institutions would be required to provide vehicle identification, utilization, and direct cost data. In formulating an implementation plan, the Office of the State Chief Information Officer shall do the following:

(1)        Consult with State agencies that own vehicles.

(2)        Review the existing fleet management information systems used by State agencies.

(3)        Examine fleet management information systems used by other state governments.

(4)        Determine whether the State should (i) expand a fleet management information system currently used by a State agency for statewide use, (ii) develop a new in-house system, or (iii) purchase a new system from an outside vendor.

(5)        Determine fees or other methods to pay the initial and ongoing costs for the system.

SECTION 7.16.(b)  The Office of State Budget and Management shall assist and advise the Office of the State Chief Information Officer in developing the implementation plan and work with State agencies and institutions to identify funding from current and proposed projects and applications that could be used to support the development and implementation of the statewide motor fleet management system. The Office of State Controller shall assist and advise the Office of the State Chief Information Officer in developing the implementation plan for the statewide motor fleet management information system, including how the system interfaces with the statewide accounting system.

SECTION 7.16.(c)  Beginning October 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the implementation plan for the statewide motor fleet management information system including progress toward the development of the enterprise system, the associated costs, identified sources of funding, and any issues associated with the project.

SECTION 7.16.(d)  The State CIO shall also study the feasibility of implementing a tracking system for State vehicles, based on recommendations from the Program Evaluation Division, and report the results of the study to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Program Evaluation Oversight Committee, and the Fiscal Research Division by November 15, 2013.

SECTION 7.16.(e)  Until July 1, 2015, no State or local governmental entity or officer may procure or operate an unmanned aircraft system or disclose personal information about any person acquired through the operation of an unmanned aircraft system unless the State CIO approves an exception specifically granting disclosure, use, or purchase. Any exceptions to the prohibition in this subsection shall be reported immediately to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division. The following definitions apply in this section:

(1)        "Unmanned aircraft" means an aircraft that is operated without the possibility of human intervention from within or on the aircraft.

(2)        "Unmanned aircraft system" means an unmanned aircraft and associated elements, including communication links and components that control the unmanned aircraft that are required for the pilot in command to operate safely and efficiently in the national airspace system.

SECTION 7.16.(f)  If the State Chief Information Officer determines that there is a requirement for unmanned aircraft systems for use by State or local agencies, planning may begin for the possible development, implementation, and operation of an unmanned aircraft system program within the State of North Carolina. This planning effort shall be accomplished in coordination with the Chief Information Officer for the Department of Transportation and the DOT Aviation Division Director. If the State CIO decides to plan for an unmanned aircraft system program, a proposal for the implementation of the program shall be provided by March 1, 2014, to the Joint Legislative Oversight Committee on Information Technology, the Joint Transportation Legislative Oversight Committee, and the Fiscal Research Division. At a minimum, the proposal shall include the following:

(1)        Governance structure to include the appropriate use at each level of government.

(2)        Guidelines for program implementation to include limitations on unmanned aircraft system use.

(3)        Potential participants.

(4)        Costs associated with establishing a program.

(5)        Potential sources of funding.

(6)        Issues associated with establishing a program to include limitations on entities that may already have purchased unmanned aircraft systems.

(7)        Recommendations for legislative proposals.

 

TAX INFORMATION MANAGEMENT SYSTEM/ADDITIONAL PUBLIC-PRIVATE PARTNERSHIP AUTHORIZED

SECTION 7.17.(a)  Additional Public-Private Partnership. - The Secretary of Revenue may enter into an additional public-private arrangement in order to expand the implementation of the Tax Information Management System (TIMS). All such arrangements will terminate June 30, 2018. The public-private arrangement may include terms necessary to implement additional revenue-increasing or cost-savings components if all of the following conditions are met:

(1)        The funding of the project under the arrangement comes from revenue generated by or cost savings resulting from the project.

(2)        The funding of the project is dependent on increased-revenue or cost-savings streams that are different from the existing benefits stream for the implementation of TIMS.

(3)        The project involves additional identified initiatives that will be integrated into the TIMS solution.

SECTION 7.17.(b)  Contracts. - Work under an additional public-private arrangement that is authorized by this section may be contracted by requests for proposals, modifications to the existing contracts, purchases using existing contracts, or other related contract vehicles.

SECTION 7.17.(c)  Management/Performance Measurement. - The Secretary of Revenue shall follow the existing model for public-private arrangement oversight and shall establish a measurement process to determine the increased revenue or cost savings attributed to the additional public-private arrangement authorized by this section. To accomplish this, the Secretary shall consult subject matter experts in the Department of Revenue, in other governmental units, and in the private sector, as necessary. At a minimum, the measurement process shall include all of the following:

(1)        Calculation of a revenue baseline against which the increased revenue attributable to the project is measured and a cost-basis baseline against which the cost savings resulting from the project are measured.

(2)        Periodic evaluation to determine whether the baselines need to be modified based on significant measurable changes in the economic environment.

(3)        Monthly calculation of increased revenue and cost savings attributable to contracts executed under this section.

SECTION 7.17.(d)  Funding. - Of funds generated from increased revenues or cost savings, as compared to the baselines established by subdivision (1) of subsection (c) of this section, in the General Fund, the Highway Fund, and that State portion of the Unauthorized Substance Tax collections of the Special Revenue Fund, the sum of up to a total of sixteen million dollars ($16,000,000) may be authorized by the Office of State Budget and Management to make purchases related to the implementation of the additional public-private arrangement authorized by this section, including payments for services from non-State entities.

SECTION 7.17.(e)  Internal Costs. - For the 2013-2015 fiscal biennium the Department of Revenue may retain an additional sum of eight million eight hundred seventy-four thousand three hundred nineteen dollars ($8,874,319) from benefits generated for the General Fund since the beginning of the public-private partnership described under Section 6A.5(a) of S.L. 2011-145. These funds shall be used as payment of internal costs for the fiscal biennium, and such funds are hereby appropriated for this purpose.

SECTION 7.17.(f)  Expert Counsel Required. - Notwithstanding G.S. 114-2.3, the Department of Revenue shall engage the services of private counsel with the pertinent information technology and computer law expertise to negotiate and review contracts associated with an additional public-private arrangement authorized under this section.

SECTION 7.17.(g)  Oversight Committee. - The Oversight Committee established under Section 6A.5(c) of S.L. 2011-145 shall have the same responsibilities and duties with respect to an additional public-private arrangement authorized by this section as it does with respect to public-private arrangements to implement TIMS and the additional Planning and Design Project (PDP) components.

SECTION 7.17.(h)  Reporting. - Beginning August 1, 2013, and quarterly thereafter, the Department of Revenue shall submit detailed written reports to the Chairs of the House of Representatives Appropriations Committee, to the Chairs of the Senate Committee on Appropriations/Base Budget, to the Joint Legislative Oversight Committee on Information Technology, and to the Fiscal Research Division of the General Assembly. The report shall include an explanation of all of the following:

(1)        Details of each public-private contract.

(2)        The benefits from each contract.

(3)        A comprehensive forecast of the benefits of using public-private agreements to implement TIMS, the additional PDP components, and additional components authorized by this section, including cost savings and the acceleration of the project time line.

(4)        Any issues associated with the operation of the public-private partnership.

SECTION 7.17.(i)  Information Technology Project Oversight. - In addition to the oversight provided by the Oversight Committee established in Section 6A.5(c) of S.L. 2011-145, the additional public-private arrangement authorized by this section shall be subject to existing State information technology project oversight laws and statutes, and the project management shall comply with all statutory requirements and other criteria established by the State Chief Information Officer and the Office of State Budget and Management for information technology projects. The State Chief Information Officer and the Office of State Budget and Management shall immediately report any failure to do so to the Joint Legislative Oversight Committee on Information Technology, the Chairs of the House of Representatives and Senate Committees on Appropriations, and the Fiscal Research Division.

SECTION 7.17.(j)  Section 6A.5(c) of S.L. 2011-145, as amended by Section 6A.3(j) of S.L.. 2012-142 reads as rewritten:

"SECTION 6A.5.(c)  There is established within the Department of Revenue the Oversight Committee for reviewing and approving the benefits measurement methodology and calculation process. The Oversight Committee shall review and approve in writing all contracts, including change orders, amendments to contracts, and addendums to contracts, before they are executed under this section. This shall include (i) details of each public-private contract, (ii) the benefits from each contract, and (iii) a comprehensive forecast of the benefits of using public-private agreements to implement TIMS and the additional PDP components, including the measurement process established for the Secretary of Revenue. The Oversight Committee shall approve all of the fund transfers for this project. Within five days of entering into a contract, the Department shall provide copies of each contract and all associated information to the Joint Legislative Oversight Committee on Information Technology, the Chairs of the House of Representatives and Senate Committees on Appropriations, and the Fiscal Research Division.

The members of the Committee shall include the following:

(1)        The State Budget Director;Director of the Office of State Budget and Management;

(2)        The Secretary of the Department of Revenue;

(3)        The State Chief Information Officer;

(4)        Two persons appointed by the Governor;

(5)        One member of the general public having expertise in information technology appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives; and

(6)        One member of the general public having expertise in economic and revenue forecasting appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate.

The State Budget Director shall serve as chair of the Committee. The Committee shall set its meeting schedule and adopt its rules of operation by majority vote. A majority of the members constitutes a quorum. Vacancies shall be filled by the appointing authority. Administrative support staff shall be provided by the Department of Revenue. Members of the Committee shall receive reimbursements for subsistence and travel expenses as provided by Chapter 138 of the General Statutes. The Committee shall terminate on June 30, 2018.

The Department shall provide copies of the minutes of each meeting and all associated information to the Joint Legislative Oversight Committee on Information Technology, the Chairs of the House of Representatives Appropriations Committee, the Chairs of the Senate Committee on Appropriations/Base Budget, and the Fiscal Research Division."

 

USE OF MOBILE COMMUNICATIONS DEVICES

SECTION 7.18.(a)  By October 1, 2013, every State agency shall submit to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division a copy of the agency policy on the use of mobile communications devices. This reporting requirement is continuous such that any time a change is made to an existing policy, the agency shall submit an update immediately.

SECTION 7.18.(b)  Beginning October 1, 2013, each State agency shall submit a quarterly report to the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of the State Chief Information Officer (CIO) on the use of mobile electronic communications devices within the agency. The report shall include the following information:

(1)        The total number of devices issued by the agency.

(2)        The total cost of mobile devices issued by the agency.

(3)        The number and cost of new devices issued since the last report.

(4)        The contracts used to obtain the devices.

SECTION 7.18.(c)  The Office of the State Chief Information Officer shall review current enterprise, and any individual agency mobile electronic communications contracts, to develop a plan to consolidate the contracts. By October 1, 2013, the Office of the State CIO shall submit a report on progress toward consolidating State agency mobile communications device contracts to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

SECTION 7.18.(d)  The Office of the State CIO shall develop a policy for implementing a "bring your own device" plan for State employees. By September 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on how the plan is to be implemented, as well as on potential issues and costs. Following consultation with the Joint Legislative Oversight Committee on Information Technology, the State CIO may implement the "bring your own device" plan.

 

NEXT GENERATION SECURE DRIVER LICENSE SYSTEM

SECTION 7.19.(a)  By August 1, 2013, the Chief Information Officer of the Department of Transportation shall provide a detailed report on the status of the Next Generation Secure Driver License System (NGSDLS) to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division. At a minimum, the report on the NGSDLS shall include the following information:

(1)        Original project scope, deliverables, and milestones, including descriptions of any subsequent modifications and basis for each.

(2)        Contractual status and amendments.

(3)        Initial and current estimated costs for system development, implementation, and maintenance.

(4)        Remaining deliverables and cost to complete by phase.

(5)        Any issues, including vendor performance, identified during project development and implementation and planned corrective actions for each issue.

(6)        Programmatic impacts for Division of Motor Vehicles driver license services.

(7)        Requirements and costs to implement a process to allow persons who are homebound to apply for or renew a special photo identification card, with a color photo, and similar in size, shape, design, and background to a drivers license, by means other than personal appearance.

SECTION 7.19.(b)  In the event of any changes in the NGSDLS project status occurring after submission of the report required by subsection (a) of this section, the Chief Information Officer of the Department of Transportation shall ensure that the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division are notified immediately of the changes.

 

STATE TITLING AND REGISTRATION SYSTEM/STATE AUTOMATED DRIVER LICENSE SYSTEM/LIABILITY INSURANCE TRACKING AND ENFORCEMENT SYSTEM

SECTION 7.20.(a)  The Chief Information Officer of the Department of Transportation shall continue the replacement of the State Titling and Registration System (STARS), the State Automated Driver License System (SADLS), and the Liability Insurance Tracking and Enforcement System (LITES).

SECTION 7.20.(b)  By August 1, 2013, and quarterly thereafter, the Chief Information Officer of the Department of Transportation shall report to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division on the status of each of the projects listed in subsection (a) of this section. At a minimum, the report shall include the following information for each project:

(1)        Project scope, milestones, and anticipated business process improvements.

(2)        Estimated development, implementation, and maintenance costs.

(3)        Project status, including any modifications to the project scope or revisions to baseline cost estimates.

(4)        Project accomplishments and changes in status for the previous quarter.

(5)        Actual costs incurred, by purpose and funding source, for the previous quarter.

(6)        Remaining cost to complete by project phase for the next two fiscal years.

(7)        Any issues, including vendor performance, identified during project development and implementation and planned corrective actions.

 

State Portal

SECTION 7.22.  The State Chief Information Officer (SCIO) shall develop a plan to implement an electronic portal that makes obtaining information, conducting online transactions, and communicating with State agencies more convenient for members of the public. The plan shall contain all of the following:

(1)        A detailed description for development and implementation of the portal, to include a list of anticipated applications to be implemented during the State fiscal years of 2013-2017.

(2)        A description of how the portal will be implemented, including the use of outside vendors, detailed information on vendor participation, and potential costs.

(3)        Detailed information on the anticipated total cost of ownership of the portal and any applications proposed for implementation during the State fiscal years of 2013-2017, including the amount of any payments to be made to any vendors supporting the project for each application and the portal as a whole.

(4)        A self-funding model for the implementation that does not increase the costs to the State.

(5)        If outsourced, a detailed, fully executable plan to return portal operations to the State, with associated costs and a detailed analysis that demonstrates that it is more cost-effective to use a vendor than to develop an application internally.

The SCIO shall report the plan to the House Appropriations Subcommittee on Information Technology, to the Senate Appropriations Committee on General Government and Information Technology, and to the Joint Legislative Oversight Committee on Information Technology prior to implementation. Participation by State agencies is voluntary, and the project shall meet all requirements for project management established by the Office of the State Chief Information Officer as well as other applicable State law and policies. No fees to support the operation of the portal may be charged by a vendor to a State agency without the express approval of the head of the agency.

 

PART VIII. PUBLIC SCHOOLS

 

FUNDS FOR CHILDREN WITH DISABILITIES

SECTION 8.1.  The State Board of Education shall allocate additional funds for children with disabilities on the basis of three thousand seven hundred forty-three dollars and forty-eight cents ($3,743.48) per child. Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities or (ii) twelve and one-half percent (12.5%) of its 2013-2014 allocated average daily membership in the local school administrative unit. The dollar amounts allocated under this section for children with disabilities shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve children with disabilities.

 

FUNDS FOR ACADEMICALLY GIFTED CHILDREN

SECTION 8.2.  The State Board of Education shall allocate additional funds for academically or intellectually gifted children on the basis of one thousand two hundred thirty-three dollars and one cent ($1,233.01) per child for fiscal year 2013-2014 and 2014-2015. A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2013-2014 allocated average daily membership, regardless of the number of children identified as academically or intellectually gifted in the unit. The dollar amounts allocated under this section for academically or intellectually gifted children shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve academically or intellectually gifted children.

 

USE OF SUPPLEMENTAL FUNDING IN LOW-WEALTH COUNTIES

SECTION 8.3.(a)  Use of Funds for Supplemental Funding. - All funds received pursuant to this section shall be used only (i) to provide instructional positions, instructional support positions, teacher assistant positions, clerical positions, school computer technicians, instructional supplies and equipment, staff development, and textbooks and (ii) for salary supplements for instructional personnel and instructional support personnel. Local boards of education are encouraged to use at least twenty-five percent (25%) of the funds received pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end-of-grade tests in grades three through eight.

SECTION 8.3.(b)  Definitions. - As used in this section, the following definitions apply:

(1)        "Anticipated county property tax revenue availability" means the county-adjusted property tax base multiplied by the effective State average tax rate.

(2)        "Anticipated total county revenue availability" means the sum of the following:

a.         Anticipated county property tax revenue availability.

b.         Local sales and use taxes received by the county that are levied under Chapter 1096 of the 1967 Session Laws or under Subchapter VIII of Chapter 105 of the General Statutes.

c.         Sales tax hold harmless reimbursement received by the county under G.S. 105-521.

d.         Fines and forfeitures deposited in the county school fund for the most recent year for which data are available.

(3)        "Anticipated total county revenue availability per student" means the anticipated total county revenue availability for the county divided by the average daily membership of the county.

(4)        "Anticipated State average revenue availability per student" means the sum of all anticipated total county revenue availability divided by the average daily membership for the State.

(5)        "Average daily membership" means average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual, adopted by the State Board of Education. If a county contains only part of a local school administrative unit, the average daily membership of that county includes all students who reside within the county and attend that local school administrative unit.

(6)        "County-adjusted property tax base" shall be computed as follows:

a.         Subtract the present-use value of agricultural land, horticultural land, and forestland in the county, as defined in G.S. 105-277.2, from the total assessed real property valuation of the county.

b.         Adjust the resulting amount by multiplying by a weighted average of the three most recent annual sales assessment ratio studies.

c.         Add to the resulting amount the following:

1.         Present-use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105-277.2.

2.         Value of property of public service companies, determined in accordance with Article 23 of Chapter 105 of the General Statutes.

3.         Personal property value for the county.

(7)        "County-adjusted property tax base per square mile" means the county-adjusted property tax base divided by the number of square miles of land area in the county.

(8)        "County wealth as a percentage of State average wealth" shall be computed as follows:

a.         Compute the percentage that the county per capita income is of the State per capita income and weight the resulting percentage by a factor of five-tenths.

b.         Compute the percentage that the anticipated total county revenue availability per student is of the anticipated State average revenue availability per student and weight the resulting percentage by a factor of four-tenths.

c.         Compute the percentage that the county-adjusted property tax base per square mile is of the State-adjusted property tax base per square mile and weight the resulting percentage by a factor of one-tenth.

d.         Add the three weighted percentages to derive the county wealth as a percentage of the State average wealth.

(9)        "Effective county tax rate" means the actual county tax rate multiplied by a weighted average of the three most recent annual sales assessment ratio studies.

(10)      "Effective State average tax rate" means the average of effective county tax rates for all counties.

(11)      "Local current expense funds" means the most recent county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C-447.

(12)      "Per capita income" means the average for the most recent three years for which data are available of the per capita income according to the most recent report of the United States Department of Commerce, Bureau of Economic Analysis, including any reported modifications for prior years as outlined in the most recent report.

(13)      "Sales assessment ratio studies" means sales assessment ratio studies performed by the Department of Revenue under G.S. 105-289(h).

(14)      "State average current expense appropriations per student" means the most recent State total of county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C-447.

(15)      "State average adjusted property tax base per square mile" means the sum of the county-adjusted property tax bases for all counties divided by the number of square miles of land area in the State.

(16)      "Supplant" means to decrease local per student current expense appropriations from one fiscal year to the next fiscal year.

(17)      "Weighted average of the three most recent annual sales assessment ratio studies" means the weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available. If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used. If property has been revalued the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used.

SECTION 8.3.(c)  Eligibility for Funds. - Except as provided in subsection (g) of this section, the State Board of Education shall allocate these funds to local school administrative units located in whole or in part in counties in which the county wealth as a percentage of the State average wealth is less than one hundred percent (100%).

SECTION 8.3.(d)  Allocation of Funds. - Except as provided in subsection (f) of this section, the amount received per average daily membership for a county shall be the difference between the State average current expense appropriations per student and the current expense appropriations per student that the county could provide given the county's wealth and an average effort to fund public schools. (To derive the current expense appropriations per student that the county could be able to provide given the county's wealth and an average effort to fund public schools, multiply the county's wealth as a percentage of State average wealth by the State average current expense appropriations per student.) The funds for the local school administrative units located in whole or in part in the county shall be allocated to each local school administrative unit located in whole or in part in the county based on the average daily membership of the county's students in the school units. If the funds appropriated for supplemental funding are not adequate to fund the formula fully, each local school administrative unit shall receive a pro rata share of the funds appropriated for supplemental funding.

SECTION 8.3.(e)  Formula for Distribution of Supplemental Funding Pursuant to This Section Only. - The formula in this section is solely a basis for distribution of supplemental funding for low-wealth counties and is not intended to reflect any measure of the adequacy of the educational program or funding for public schools. The formula is also not intended to reflect any commitment by the General Assembly to appropriate any additional supplemental funds for low-wealth counties.

SECTION 8.3.(f)  Minimum Effort Required. - A county that (i) maintains an effective county tax rate that is at least one hundred percent (100%) of the effective State average tax rate in the most recent year for which data are available or (ii) maintains a county appropriation per student to the school local current expense fund of at least one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools shall receive full funding under this section. A county that maintains a county appropriation per student to the school local current expense fund of less than one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools shall receive funding under this section at the same percentage that the county's appropriation per student to the school local current expense fund is of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools.

SECTION 8.3.(g)  Nonsupplant Requirement. - A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2013-2015 fiscal biennium, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply:

(1)        The current expense appropriation per student of the county for the current year is less than ninety-five percent (95%) of the average of local expenditures per student for the three prior fiscal years.

(2)        The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section.

The State Board of Education shall adopt rules to implement the requirements of this subsection.

SECTION 8.3.(h)  Funds for EVAAS Data. - Notwithstanding the requirements of subsection (a) of this section, local school administrative units may utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value-Added Assessment System (EVAAS).

SECTION 8.3.(i)  Reports. - For the 2013-2015 fiscal biennium, the State Board of Education shall report to the Fiscal Research Division prior to May 1 of each year if it determines that counties have supplanted funds.

SECTION 8.3.(j)  Department of Revenue Reports. - The Department of Revenue shall provide to the Department of Public Instruction a preliminary report for the current fiscal year of the assessed value of the property tax base for each county prior to March 1 of each year and a final report prior to May 1 of each year. The reports shall include for each county the annual sales assessment ratio and the taxable values of (i) total real property, (ii) the portion of total real property represented by the present-use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105-277.2, (iii) property of public service companies determined in accordance with Article 23 of Chapter 105 of the General Statutes, and (iv) personal property.

 

small school system supplemental funding - 2013-2014

SECTION 8.3A.(a)  Funds for Small School Systems. - Except as provided in subsection (b) of this section, the State Board of Education shall allocate funds appropriated for small school system supplemental funding for the 2013-2014 fiscal year (i) to each county school administrative unit with an average daily membership of fewer than 3,175 students and (ii) to each county school administrative unit with an average daily membership from 3,175 to 4,000 students if the county in which the local school administrative unit is located has a county-adjusted property tax base per student that is below the State-adjusted property tax base per student and if the total average daily membership of all local school administrative units located within the county is from 3,239 to 4,080 students. The allocation formula shall do all of the following:

(1)        Round all fractions of positions to the next whole position.

(2)        Provide five and one-half additional regular classroom teachers in counties in which the average daily membership per square mile is greater than four and provide seven additional regular classroom teachers in counties in which the average daily membership per square mile is four or fewer.

(3)        Provide additional program enhancement teachers adequate to offer the standard course of study.

(4)        Change the duty-free period allocation to one teacher assistant per 400 average daily membership.

(5)        Provide a base for the consolidated funds allotment of at least six hundred ninety-three thousand nine hundred fifty-four dollars ($693,954), excluding textbooks, for the 2013-2014 fiscal year.

(6)        Allot vocational education funds for grade six as well as for grades seven through 12. If funds appropriated for each fiscal year for small school system supplemental funding are not adequate to fully fund the program, the State Board of Education shall reduce the amount allocated to each county school administrative unit on a pro rata basis. This formula is solely a basis for distribution of supplemental funding for certain county school administrative units and is not intended to reflect any measure of the adequacy of the educational program or funding for public schools. The formula also is not intended to reflect any commitment by the General Assembly to appropriate any additional supplemental funds for such county administrative units.

SECTION 8.3A.(b)  Nonsupplant Requirement. - A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2013-2014 fiscal year, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply:

(1)        The current expense appropriation per student of the county for the current year is less than ninety-five percent (95%) of the average of the local expenditures per student for the three prior fiscal years.

(2)        The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section.

The State Board of Education shall adopt rules to implement the requirements of this subsection.

SECTION 8.3A.(c)  Phase-Out Provisions. - If a local school administrative unit becomes ineligible for funding under this formula because of (i) an increase in the population of the county in which the local school administrative unit is located or (ii) an increase in the county-adjusted property tax base per student of the county in which the local school administrative unit is located, funding for that unit shall be continued for three years after the unit becomes ineligible.

SECTION 8.3A.(d)  Definitions. - As used in this section, the following definitions apply:

(1)        "Average daily membership" means within two percent (2%) of the average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual adopted by the State Board of Education.

(2)        "County-adjusted property tax base per student" means the total assessed property valuation for each county, adjusted using a weighted average of the three most recent annual sales assessment ratio studies, divided by the total number of students in average daily membership who reside within the county.

(3)        "Local current expense funds" means the most recent county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C-447.

(4)        "Sales assessment ratio studies" means sales assessment ratio studies performed by the Department of Revenue under G.S. 105-289(h).

(5)        "State-adjusted property tax base per student" means the sum of all county-adjusted property tax bases divided by the total number of students in average daily membership who reside within the State.

(6)        "Supplant" means to decrease local per student current expense appropriations from one fiscal year to the next fiscal year.

(7)        "Weighted average of the three most recent annual sales assessment ratio studies" means the weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available. If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used. If property has been revalued during the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used.

SECTION 8.3A.(e)  Reports. - For the 2013-2014 fiscal year, the State Board of Education shall report to the Fiscal Research Division prior to May 1, 2014, if it determines that counties have supplanted funds.

SECTION 8.3A.(f)  Use of Funds. - Local boards of education are encouraged to use at least twenty percent (20%) of the funds they receive pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end-of-grade tests in grades three through six.

Local school administrative units may also utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value-Added Assessment System (EVAAS).

 

SMALL SCHOOL SYSTEM SUPPLEMENTAL FUNDING - 2014-2015

SECTION 8.4.(a)  Eligibility. - If the total average daily membership of all local school administrative units located in the county is less than 3,200, the county school administrative unit within that county shall be eligible for small school system supplemental funding for the 2014-2015 fiscal year.

SECTION 8.4.(b)  Allotment. - Each eligible county school administrative unit shall receive a dollar allotment equal to the product of the following:

(1)        A per student funding factor, equal to the product of the following:

a.         One, minus the local school administrative unit's average daily membership divided by the maximum small school system average daily membership.

b.         The maximum small school system dollars per student.

(2)        The average daily membership of the eligible county school administrative unit.

For the 2013-2014 and 2014-2015 fiscal years, the maximum small school system dollars per student shall be two thousand ninety-four dollars ($2,094).

SECTION 8.4.(c)  Phase-Out Provisions. - If a local school administrative unit becomes ineligible for funding under this formula, funding for that unit shall be phased out over a five-year period. Funding for such local administrative units shall be reduced in equal increments in each of the five years after the local administrative unit becomes ineligible. Funding shall be eliminated in the fifth fiscal year after the local administrative unit becomes ineligible.

Allotments for eligible local school administrative units shall not be reduced by more than twenty percent (20%) of the amount received in fiscal year 2012-2013 in any fiscal year.

SECTION 8.4.(d)  Nonsupplant Requirement. - A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2014-2015 fiscal year, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply:

(1)        The current expense appropriation per student of the county for the current year is less than ninety-five percent (95%) of the average of local expenditures per student for the three prior fiscal years.

(2)        The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section.

The State Board of Education shall adopt rules to implement the requirements of this subsection.

SECTION 8.4.(e)  Reports. - For the 2013-2014 fiscal year, the State Board of Education shall report to the Fiscal Research Division prior to May 1, 2015, if it determines that counties have supplanted funds.

SECTION 8.4.(f)  Use of Funds. - Local boards of education are encouraged to use at least twenty percent (20%) of the funds they receive pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end-of-grade tests in grades three through eight.

Local school administrative units may also utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value-Added Assessment System (EVAAS).

 

DISADVANTAGED STUDENT SUPPLEMENTAL FUNDING (DSSF)

SECTION 8.5.(a)  Funds appropriated for disadvantaged student supplemental funding shall be used, consistent with the policies and procedures adopted by the State Board of Education, only to:

(1)        Provide instructional positions or instructional support positions and/or professional development;

(2)        Provide intensive in-school and/or after-school remediation;

(3)        Purchase diagnostic software and progress-monitoring tools; and

(4)        Provide funds for teacher bonuses and supplements. The State Board of Education shall set a maximum percentage of the funds that may be used for this purpose.

The State Board of Education may require local school administrative units receiving funding under the Disadvantaged Student Supplemental Fund to purchase the Education Value-Added Assessment System (EVAAS) in order to provide in-depth analysis of student performance and help identify strategies for improving student achievement. This data shall be used exclusively for instructional and curriculum decisions made in the best interest of children and for professional development for their teachers and administrators.

SECTION 8.5.(b)  Funds appropriated to a local school administrative unit for disadvantaged student supplemental funding (DSSF) shall be allotted based on (i) the unit's eligible DSSF population and (ii) the difference between a teacher-to-student ratio of 1:21 and the following teacher-to-student ratios:

(1)        For counties with wealth greater than ninety percent (90%) of the statewide average, a ratio of 1:19.9.

(2)        For counties with wealth not less than eighty percent (80%) and not greater than ninety percent (90%) of the statewide average, a ratio of 1:19.4.

(3)        For counties with wealth less than eighty percent (80%) of the statewide average, a ratio of 1:19.1.

(4)        For local school administrative units receiving DSSF funds in fiscal year 2005-2006, a ratio of 1:16. These local school administrative units shall receive no less than the DSSF amount allotted in fiscal year 2006-2007.

For the purpose of this subsection, wealth shall be calculated under the low-wealth supplemental formula as provided for in this act.

SECTION 8.5.(c)  If a local school administrative unit's wealth increases to a level that adversely affects the unit's disadvantaged student supplemental funding (DSSF) allotment ratio, the DSSF allotment for that unit shall be maintained at the prior year level for one additional fiscal year.

 

BUDGET REDUCTIONS/DEPARTMENT OF PUBLIC INSTRUCTION

SECTION 8.6.  Notwithstanding G.S. 143C-6-4, the Department of Public Instruction may, after consultation with the Office of State Budget and Management and the Fiscal Research Division, reorganize, if necessary, to implement the budget reductions set out in this act. Consultation shall occur prior to requesting budgetary and personnel changes through the budget revision process. The Department shall provide a current organization chart in the consultation process and shall report to the Joint Legislative Commission on Governmental Operations on any reorganization.

 

LITIGATION RESERVE FUNDS

SECTION 8.7.  The State Board of Education may expend up to five hundred thousand dollars ($500,000) each year for the 2013-2014 and 2014-2015 fiscal years from unexpended funds for licensed employees' salaries to pay expenses related to litigation.

 

UNIFORM EDUCATION REPORTING SYSTEM (UERS) FUNDS

SECTION 8.8.(a)  Funds appropriated for the Uniform Education Reporting System (UERS) shall not revert at the end of the 2012-2013 fiscal year. Funds appropriated for UERS for the 2013-2015 fiscal biennium shall not revert at the end of each fiscal year but shall remain available until expended.

SECTION 8.8.(b)  This section becomes effective June 30, 2013.

 

REVISE NC VIRTUAL PUBLIC SCHOOLS (NCVPS) COST CALCULATION DATE

SECTION 8.9.(a)  Section 7.22(d)(6) of S.L. 2011-145 is repealed.

SECTION 8.9.(b)  In implementing the allotment formula for the North Carolina Virtual Public Schools (NCVPS) program, the State Board of Education shall calculate, no later than February 28 of each year, the actual instructional cost for each local school administrative unit and charter school based upon actual NCVPS enrollment as of that date.

 

SCHOOL BUS REPLACEMENT

SECTION 8.11.(a)  G.S. 115C-249 reads as rewritten:

" 115C-249.  Purchase and maintenance of school buses, materials and supplies.

(a)        To the extent that the funds shall be made available to it for such purpose, a local board of education is authorized to purchase from time to time such additional school buses and service vehicles or replacements for school buses and service vehicles, as may be deemed by such board to be necessary for the safe and efficient transportation of pupils enrolled in the schools within such local school administrative unit. Any school bus so purchased shall be constructed and equipped as prescribed by the provisions of this Article and by the regulations of the State Board of Education issued pursuant thereto. Any school bus so purchased that is capable of operating on diesel fuel shall be capable of operating on diesel fuel with a minimum biodiesel concentration of B-20, as defined in G.S. 143-58.4. At least two percent (2%) of the total volume of fuel purchased annually by local school districts statewide for use in school bus diesel engine motor vehicles shall be biodiesel fuel of a minimum blend of B-20, to the extent that biodiesel blend is available and compatible with the technology of the vehicles or equipment used.

(b)        The tax-levying authorities of any county are hereby authorized to make provision from time to time in the capital outlay budget of the county for the purchase of such school buses or service vehicles.

(c)        Any funds appropriated from time to time by the General Assembly for the purchase of school buses or service vehicles shall be allocated by the State Board of Education to the respective local boards of education in accordance with the requirements of such boards as determined by the State Board of Education, and thereupon shall be paid over to the respective local boards of education in accordance with such allocation.

(c1)      In determining which school buses in the statewide fleet are to be replaced with State funds in a given year, the State Board of Education shall give highest priority to safety concerns.

A bus is eligible for replacement with State funds based on its age and mileage when it is either 20 years old by model year or has been operated for 250,000 miles, except as follows:

(1)        A bus that has been operated for less than 150,000 miles is not eligible for replacement regardless of its model year.

(2)        A bus that is less than 15 years old by model year is not eligible for replacement until the bus has been operated for 300,000 miles.

(c2)      The State Board of Education may authorize the replacement of up to 30 buses each year due to safety concerns regarding the bus or mechanical or structural problems that would place an undue burden on a local school administrative unit.

(c3)      A local school administrative unit shall receive an incentive payment of two thousand dollars ($2,000) at the beginning of each school year for each bus that it continues to operate although the bus is eligible for replacement, until the bus is 23 years old by model year. The local school administrative unit may use these bonus funds for the additional maintenance costs of operating buses with higher mileage or for any other school purpose.

(d)        The title to any additional or replacement school bus or service vehicle purchased pursuant to the provisions of this section, shall be taken in the name of the board of education of such local school administrative unit, and such bus shall in all respects be maintained and operated pursuant to the provisions of this Article in the same manner as any other public school bus.

(e)        It shall be the duty of the county board of education to provide adequate buildings and equipment for the storage and maintenance of all school buses and service vehicles owned or operated by the board of education of any local school administrative unit in such county. It shall be the duty of the tax-levying authorities of such county to provide in its capital outlay budget for the construction or acquisition of such buildings and equipment as may be required for this purpose.

(f)         In the event of the damage or destruction of any school bus or service vehicle by fire, collision, or otherwise, the board of education of the local school administrative unit which shall own or operate such bus or service vehicle may apply to the State Board of Education for funds with which to replace it. If the State Board of Education finds that such bus or service vehicle has been destroyed or damaged to the extent that it cannot be made suitable for further use, and if the State Board of Education finds that the replacement of such bus or service vehicle is necessary in order to enable such local school administrative unit to operate properly its school bus transportation system, the State Board of Education shall allot to the board of education of such local school administrative unit from the funds now held by the State Board of Education for the replacement of school buses or service vehicles, or from funds hereafter appropriated by the General Assembly for that purpose, a sum sufficient to purchase a new school bus or service vehicle to be used as a replacement for such damaged or destroyed bus or service vehicle and upon such allocation such sum shall be paid over to or for the account of the board of education of such local school administrative unit for such purpose.

(g)        Repealed by Session Laws 2003-147, s. 3, effective for a local school administrative unit when the unit is certified as being E-Procurement compliant, or April 1, 2004, whichever occurs first.

(h)        Appropriations by the General Assembly for the purchase of public school buses shall not revert to the General Fund. Any unexpended portion of those appropriations shall at the end of each fiscal year be transferred to a reserve account and be held, together with any other funds appropriated for the purpose, for the purchase of public school buses."

SECTION 8.11.(b)  For the 2013-2015 fiscal biennium only, State funds shall be used, at the request of the local school administrative unit, to replace (i) all buses that are 20 years old by model year and (ii) all other buses eligible for replacement under G.S. 115C-249, as rewritten by subsection (a) of this section.

 

SCHOOL PERFORMANCE GRADES/EVAAS

SECTION 8.13.(a)  Section 7A.3(e) of S.L. 2012-142 is repealed.

SECTION 8.13.(b)  Article 8 of Chapter 115C of the General Statutes is amended by adding a new Part to read:

"Part 1B. School Performance.

" 115C-83.11.  School performance scores and grades.

(a)        The State Board of Education shall award school performance scores, grades, and an indicator of student growth as required by G.S. 115C-12(9)c1., calculated as provided in this section.

(b)        For schools serving students in any combination of grades three through eight, the school performance score shall be calculated based on the performance composite comprised of the following:

(1)        Percent of students who score at or above proficient on annual assessments for reading in grades three through eight.

(2)        Percent of students who score at or above proficient on annual assessments for mathematics in grades three through eight.

(3)        Percent of students who score at or above proficient on annual assessments for science in grades five and eight.

(4)        Percent of proficient scores in Algebra I/Integrated I, English II, and Biology end-of-course tests.

(c)        For schools serving students in any combination of grades nine through 12, the school performance score shall be the average of the following five indicators:

(1)        Percent of proficient scores in Algebra I/Integrated I, English II, and Biology end-of-course tests.

(2)        Percent of students who complete a higher level mathematics class with a passing grade.

(3)        Percent of college readiness benchmarks met on a nationally normed test of college readiness.

(4)        Percent of students who graduate within four years of entering high school.

(5)        Percent of students who demonstrate workplace readiness on a nationally normed test of workplace readiness.

(d)        The State Board of Education shall calculate school performance scores using the State mean to set the criteria for each indicator. Each indicator will be translated to a common scale and averaged for the reporting of one school performance letter grade for each school.

(e)        For schools that meet or exceed growth as determined by the Education Value-Added Assessment System (EVAAS), the final letter grade shall be increased by one grade.

(f)         For schools serving students in third through eighth grade, their final letter grade shall be increased by one letter grade if the performance composite, comprising of the percent of proficient scores for reading, mathematics, and science, is at or above eighty percent (80%) for the current year and the two prior school years.

(g)        For schools serving students in ninth through 12th grade, their final letter grade shall be increased by one letter grade if the performance composite, comprising of the percent of proficient scores for Algebra I/Integrated I, English II, and Biology end-of-course tests, is at or above eighty percent (80%) for the current year and the two prior school years.(h) In calculating the overall school performance score earned by schools, the State Board of Education shall proportionally adjust the scale to account for the absence of a school performance element for award of scores to a school that does not have a measure of one of the school performance elements annually assessed for the grades taught at that school.

(i)         The State Board of Education shall report to the Joint Legislative Education Oversight Committee annually by January 15 on any adjustments to the calculation and the distribution of the school performance grades."

SECTION 8.13.(c)  G.S. 115C-12(9)c1 reads as rewritten:

"c1.      To issue an annual "report card" for the State and for each local school administrative unit, assessing each unit's efforts to improve student performance based on the growth in performance of the students in each school and taking into account progress over the previous years' level of performance and the State's performance in comparison with other states. This assessment shall take into account factors that have been shown to affect student performance and that the State Board considers relevant to assess the State's efforts to improve student performance. As a part of the annual "report card" for each local school administrative unit, the State Board shall awardaward, in accordance with G.S. 115C-83.11, an overall numerical school performance score on a scale of zero to 100 and a corresponding letter grade of A, B, C, D, or F earned by each school within the local school administrative unit. The school performance score and grade shall reflect student performance on annual subject-specific assessments, college and workplace readiness measures, and graduation rates. For schools serving students in any grade from kindergarten to eighth grade, separate performance scores and grades shall also be awarded based on the school performance in reading and mathematics respectively. The annual "report card" for schools serving students in third grade also shall include the number and percentage of third grade students who (i) take and pass the alternative assessment of reading comprehension; (ii) were retained in third grade for not demonstrating reading proficiency as indicated in G.S. 115C-83.7(a); and (iii) were exempt from mandatory third grade retention by category of exemption as listed in G.S. 115C-83.7(b)."

SECTION 8.13.(d)  G.S. 115C-47(58) reads as rewritten:

"(58)    To Inform the Public About the North Carolina School Report Cards Issued by the State Board of Education. - Each local board of education shall ensure that the report card issued for it by the State Board of Education receives wide distribution to the local press or is otherwise provided to the public. Each local board of education shall ensure that the overall school performance score and grade calculated in accordance with G.S. 115C-83.11 and earned by each school in the local school administrative unit for the current and previous four school years is prominently displayed on the Web site of the local school administrative unit. If any school in the local school administrative unit is awarded a grade of D or F, the local board of education shall provide notice of the grade in writing to the parent or guardian of all students enrolled in that school."

SECTION 8.13.(e)  G.S. 115C-238.29F(l) reads as rewritten:

"(l)        North Carolina School Report Cards. - A charter school shall ensure that the report card issued for it by the State Board of Education receives wide distribution to the local press or is otherwise provided to the public. A charter school shall ensure that the overall school performance score and grade calculated in accordance with G.S. 115C-83.11 and earned by the charter school for the current and previous four school years is prominently displayed on the school Web site. If a charter school is awarded a grade of D or F, the charter school shall provide notice of the grade in writing to the parent or guardian of all students enrolled in that school."

SECTION 8.13.(f)  G.S. 115C-238.66(11) reads as rewritten:

"(11)    North Carolina School Report Cards. - A regional school shall ensure that the report card issued for it by the State Board of Education receives wide distribution to the local press or is otherwise provided to the public. A regional school shall ensure that the overall school performance score and grade calculated in accordance with G.S. 115C-83.11 and earned by the regional school for the current and previous four school years is prominently displayed on the school Web site. If a regional school is awarded a grade of D or F, the regional school shall provide notice of the grade in writing to the parent or guardian of all students enrolled in that school."

SECTION 8.13.(g)  G.S. 115C-12(24) reads as rewritten:

"(24)    Duty to Develop Standards for Alternative Learning Programs, Provide Technical Assistance on Implementation of Programs, and Evaluate Programs. - The State Board of Education shall adopt standards for assigning students to alternative learning programs. These standards shall include (i) a description of the programs and services that are recommended to be provided in alternative learning programs and (ii) a process for ensuring that an assignment is appropriate for the student and that the student's parents are involved in the decision. The State Board also shall adopt policies that define what constitutes an alternative school and an alternative learning program.

The State Board of Education shall also adopt standards to require that local school administrative units shall use (i) the teachers allocated for students assigned to alternative learning programs pursuant to the regular teacher allotment and (ii) the teachers allocated for students assigned to alternative learning programs only to serve the needs of these students.

The State Board of Education shall provide technical support to local school administrative units to assist them in developing and implementing plans and proposals for alternative learning programs.

The State Board shall evaluate the effectiveness of alternative learning programs and, in its discretion, of any other programs funded from the Alternative Schools/At-Risk Student allotment. Local school administrative units shall report to the State Board of Education on how funds in the Alternative Schools/At-Risk Student allotment are spent and shall otherwise cooperate with the State Board of Education in evaluating the alternative learning programs. As part of its evaluation of the effectiveness of these programs, the State Board shall, through the application of the accountability system developed under G.S. 115C-83.11 and G.S. 115C-105.35, measure the educational performance and growth of students placed in alternative schools and alternative programs. If appropriate, the Board may modify this system to adapt to the specific characteristics of these schools. Also as part of its evaluation, the State Board shall evaluate its standards adopted under this subdivision and make any necessary changes to those standards based on strategies that have been proven successful in improving student achievement and shall report to the Joint Legislative Education Oversight Committee by April 15, 2006 to determine if any changes are necessary to improve the implementation of successful alternative learning programs and alternative schools."

SECTION 8.13.(h)  The State Board of Education shall issue the first annual report cards under G.S. 115C-12(9)c1, as amended by this section, no earlier than August 1, 2014.

SECTION 8.13.(i)  The State Board of Education shall not be subject to the requirements of Section 7.7(b) of this act for the development of school performance scores and grades in accordance with G.S. 115C-12(9)c1, as amended by this section.

SECTION 8.13.(j)  This section applies beginning with the 2013-2014 school year.

 

LEA BUDGETARY FLEXIBILITY

SECTION 8.14.  G.S. 115C-105.25 reads as rewritten:

" 115C-105.25.  Budget flexibility.

(a)        Consistent with improving student performance, a local board shall provide maximum flexibility to schools in the use of funds to enable the schools to accomplish their goals.

(b)        Subject to the following limitations, local boards of education may transfer and may approve transfers of funds between funding allotment categories:

(1)        In accordance with a school improvement plan accepted under G.S. 115C-105.27, State funds allocated for teacher assistants may be transferred only for personnel (i) to serve students only in kindergarten through third grade, or (ii) to serve students primarily in kindergarten through third grade when the personnel are assigned to an elementary school to serve the whole school. Funds allocated for teacher assistants may be transferred to reduce class size or to reduce the student-teacher ratio in kindergarten through third grade so long as the affected teacher assistant positions are not filled when the plan is amended or approved by the building-level staff entitled to vote on the plan or the affected teacher assistant positions are not expected to be filled on the date the plan is to be implemented. Any State funds appropriated for teacher assistants that were converted to certificated teachers before July 1, 1995, in accordance with Section 1 of Chapter 986 of the 1991 Session Laws, as rewritten by Chapter 103 of the 1993 Session Laws, may continue to be used for certificated teachers.

(1a)      Funds for children with disabilities, career and technical education, and other purposes may be transferred only as permitted by federal law and the conditions of federal grants or as provided through any rules that the State Board of Education adopts to ensure compliance with federal regulations.

(2)        In accordance with a school improvement plan accepted under G.S. 115C-105.27, (i) State funds allocated for classroom materials/instructional supplies/equipment may be transferred only for the purchase of textbooks; (ii) State funds allocated for textbooks may be transferred only for the purchase of instructional supplies, instructional equipment, or other classroom materials; and (iii) State funds allocated for noninstructional support personnel may be transferred only for teacher positions.

(2a)      Up to three percent (3%) of State funds allocated for noninstructional support personnel may be transferred for staff development.

(3)        No funds shall be transferred into the central office administration allotment category.

(4)        Funds allocated for children with disabilities, for students with limited English proficiency, and for driver's education shall not be transferred.

(5)        Funds allocated for classroom teachers may be transferred only for teachers of exceptional children, for teachers of at-risk students, and for authorized purposes under the textbooks allotment category and the classroom materials/instructional supplies/equipment allotment category.

(5a)      Positions allocated for classroom teachers may be converted to dollar equivalents to contract for visiting international exchange teachers. These positions shall be converted at the statewide average salary for classroom teachers, including benefits. The converted funds shall be used only to cover the costs associated with bringing visiting international exchange teachers to the local school administrative unit through a State-approved visiting international exchange teacher program and supporting the visiting exchange teachers.

(5b)      Except as provided in subdivision (5a) of this subsection, positions allocated for classroom teachers and instructional support personnel may be converted to dollar equivalents for any purpose authorized by the policies of the State Board of Education. These positions shall be converted at the salary on the first step of the "A" Teachers Salary Schedule. Certified position allotments shall not be transferred to dollars to hire the same type of position.

(5c)      Funds allocated for school building administration may be converted for any purpose authorized by the policies of the State Board of Education. For funds related to principal positions, the salary transferred shall be based on the first step of the Principal III Salary Schedule. For funds related to assistant principal months of employment, the salary transferred shall be based on the first step of the Assistant Principal Salary Schedule. Certified position allotments shall not be transferred to dollars to hire the same type of position.

(6)        Funds allocated for vocational education may be transferred only in accordance with any rules that the State Board of Education considers appropriate to ensure compliance with federal regulations.

(7)        Funds allocated for career development shall be used in accordance with Section 17.3 of Chapter 324 of the 1995 Session Laws.

(8)        Funds allocated for academically or intellectually gifted students may be used only (i) for academically or intellectually gifted students; (ii) to implement the plan developed under G.S. 115C-150.7; or (iii) in accordance with an accepted school improvement plan, for any purpose so long as that school demonstrates it is providing appropriate services to academically or intellectually gifted students assigned to that school in accordance with the local plan developed under G.S. 115C-150.7.

(9)        Funds allocated in the Alternative Schools/At-Risk Student allotment shall be spent only for alternative learning programs, at-risk students, and school safety programs.

(c)        To ensure that parents, educators, and the general public are informed on how State funds have been used to address local educational priorities, each local school administrative unit shall publish the following information on its Web site by October 15 of each year:

(1)        A description of each program report code, written in plain English, and a summary of the prior fiscal year's expenditure of State funds within each program report code.

(2)        A description of each object code within a program report code, written in plain English, and a summary of the prior fiscal year's expenditure of State funds for each object code.

(3)        A description of each allotment transfer that increased or decreased the initial allotment amount by more than five percent (5%) and the educational priorities that necessitated the transfer."

 

RESIDENTIAL SCHOOLS

SECTION 8.15.(a)  The Department of Public Instruction shall not transfer any school-based personnel from the State's residential schools to central office administrative positions.

SECTION 8.15.(b)  Notwithstanding G.S. 146-30 or any other provision of law, the Department of Public Instruction shall retain all proceeds generated from the rental of building space on the residential school campuses. The Department of Public Instruction shall use all receipts generated from these leases to staff and operate the North Carolina School for the Deaf, the Eastern North Carolina School for the Deaf, and the Governor Morehead School. These receipts shall not be used to support administrative functions within the Department.

 

EXCELLENT PUBLIC SCHOOLS ACT/SUMMER READING CAMPS

SECTION 8.16.  Funds appropriated for the 2013-2015 fiscal biennium for summer reading camps as defined in G.S. 115C-83.3(9) shall not revert at the end of each fiscal year but shall remain available until expended.

 

PARTICIPATION IN COMMUNITIES IN SCHOOLS LEARNING INITIATIVE

SECTION 8.17.(a)  The purpose of the Harvard University Reads for Summer Learning Initiative, which is conducted in concert with Communities In Schools of North Carolina, Inc. (CISNC), is to help at-risk children in grades two through four read at grade level by the fourth grade and to maintain their reading competency. Students who are enrolled in this initiative shall be exempt from mandatory retention requirements set out in G.S. 115C-83.7 and G.S. 115C-238.29F. Any student participating in this initiative and in need of more intensive intervention shall, however, be placed in a summer reading program as determined by the local school administrative unit and as approved by the child's parent or guardian.

SECTION 8.17.(b)  CISNC shall report to the Joint Legislative Education Oversight Committee on the initiative by November 1, 2015. This report shall include reading competency outcome data for all participating students.

SECTION 8.17.(c)  Subsection (a) of this section expires at the end of the 2014-2015 school year.

 

INSTRUCTIONAL IMPROVEMENT SYSTEM

SECTION 8.18.(a)  It is the intent of the General Assembly that the optional portions of the Home Base Instructional Improvement System (System) shall be receipt-supported. The State Board of Education shall establish a cost not to exceed four dollars ($4.00) per average daily membership for local school administrative units and charter schools that elect to participate in the optional portions of the System. A local school administrative unit or charter school may identify budget reductions to State Public School Fund allotments to cover the required payment.

SECTION 8.18.(b)  If funds collected pursuant to subsection (a) of this section are not sufficient to cover the cost of the optional portions of the System, the State Board of Education may use funds appropriated to the Department of Public Instruction or State Aid for Public Schools for this purpose.

SECTION 8.18.(c)  If funds collected pursuant to subsection (a) of this section exceed the cost of the optional portions of the System, such funds shall not revert and shall be used to reduce the per-student cost in the subsequent fiscal years.

SECTION 8.18.(d)  This section becomes effective July 1, 2014.

 

PHASE OUT CERTAIN TEACHER SALARY SUPPLEMENTS

SECTION 8.22.  Notwithstanding Section 35.11 of this act, no teachers or instructional support personnel, except for certified school nurses and instructional support personnel in positions for which a master's degree is required for licensure, shall be paid on the "M" salary schedule or receive a salary supplement for academic preparation at the six-year degree level or at the doctoral degree level for the 2014-2015 school year, unless they were paid on that salary schedule or received that salary supplement prior to the 2014-2015 school year.

 

competitive grants to improve after school services

SECTION 8.24.(a)  Of the funds appropriated for the At-Risk Student Services Alternative School Allotment, the State Board of Education shall use up to five million dollars ($5,000,000) for the 2014-2015 fiscal year for a three-year After School Quality Improvement Grant Program administered by the North Carolina Department of Public Instruction. Of these funds, the Department of Public Instruction may use up to two hundred thousand dollars ($200,000) to administer the program. The purpose of the program is to pilot after school learning programs for at-risk students that raise standards for student academic outcomes and that:

(1)        Use an evidence-based model with a proven track record of success.

(2)        Include rigorous, quantitative performance measures to confirm their effectiveness during the grant cycle and at the end end-of-grant cycle.

(3)        Are fully integrated with State performance measures and student academic goals.

(4)        Can be expanded for wider use in North Carolina.

(5)        Prioritize science, technology, engineering, and mathematics (STEM) learning opportunities.

(6)        Expand student access to learning activities and academic support that strengthen student engagement and leverage community-based resources, including private sector employer involvement.

Local school administrative units and nonprofits working in collaboration with local school administrative units are eligible to receive two-year grants of up to five hundred thousand dollars ($500,000) a year, based on proposed number of students served, with an option for a third year of funding. At least seventy percent (70%) of students served by the program must qualify for free or reduced-price meals.

Grants shall be matched on the basis of three dollars ($3.00) in grant funds for every one dollar ($1.00) in nongrant funds. Matching funds shall not include other State funds. Matching funds may include in-kind contributions.

SECTION 8.24.(b)  Grant recipients shall report to the Department of Public Instruction after the first year of funding on the progress of the grant, including alignment with Common Core Standards, data collection for reporting student progress, and other measures, before receiving funding for the next fiscal year. Grant recipients shall report after the second year of funding on key performance data, including statewide test results, attendance rates, and promotion rates. Grant allocations for the third year shall be based on student performance.

SECTION 8.24.(c)  The Department of Public Instruction shall provide progress reports on the grant program to the Joint Legislative Education Oversight Committee by September 15, 2015, and September 15, 2016. The Department shall provide a final report on the program by September 15, 2017. The final report shall include the final results of the program and recommendations regarding effective after school program models, standards and performance measures, based on the experience of the grant recipients.

 

INVESTING IN INNOVATION GRANT

SECTION 8.25.(a)  Section 7.17 of S.L. 2012-142 is repealed.

SECTION 8.25.(b)  The federal Investing in Innovation Fund Grant: Validating Early College Strategies for Traditional Comprehensive High Schools awarded to the North Carolina New Schools Project for 2012-2017 requires students to enroll in a community college course in the tenth grade. Notwithstanding any other provision of law, specified local school administrative units may offer one community college course to participating sophomore (tenth grade) students. Participating local school administrative units are Alleghany, Beaufort, Hertford, Jones, Madison, Richmond, Rutherford, Surry, Warren, Wilkes, and Yancey County Schools.

SECTION 8.25.(c)  Grant funds shall be used to pay for all costs incurred by the local school administrative units and the community college partners to implement the grant, including community college FTE. Community colleges shall not earn budget FTE for student course enrollments supported with this grant.

SECTION 8.25.(d)  Research for the project shall address the effects of early college strategies in preparing students for college completion. The North Carolina New Schools Project shall report on the implementation of the grant to the State Board of Education, State Board of Community Colleges, Office of the Governor, and the Joint Legislative Education Oversight Committee no later than March 15, 2014, and annually thereafter until the end of the grant period.

 

Local school administrative unit budget adjustment

SECTION 8.26.(a)  Within 14 days of the date this act becomes law, the State Board of Education shall notify each local school administrative unit and charter school of the amount the unit or charter school must reduce from the State General Fund appropriations. The State Board shall determine the amount of the reduction for each unit and charter school on the basis of average daily membership.

SECTION 8.26.(b)  Local school administrative units and charter schools shall report to the Department of Public Instruction on the flexibility budget reductions they have identified within 30 days of the date this act becomes law.

 

Broaden Successful Participation in Advanced Courses

SECTION 8.27.(a)  G.S. 115C-12(9)c1. reads as rewritten:

"c1.      To issue an annual "report card" for the State and for each local school administrative unit, assessing each unit's efforts to improve student performance based on the growth in performance of the students in each school and taking into account progress over the previous years' level of performance and the State's performance in comparison with other states. This assessment shall take into account factors that have been shown to affect student performance and that the State Board considers relevant to assess the State's efforts to improve student performance. As a part of the annual "report card" for each local school administrative unit, the State Board shall award an overall numerical school performance score on a scale of zero to 100 and a corresponding letter grade of A, B, C, D, or F earned by each school within the local school administrative unit. The school performance score and grade shall reflect student performance on annual subject-specific assessments, college and workplace readiness measures, and graduation rates. For schools serving students in any grade from kindergarten to eighth grade, separate performance scores and grades shall also be awarded based on the school performance in reading and mathematics respectively. The annual "report card" for schools serving students in third grade also shall include the number and percentage of third grade students who (i) take and pass the alternative assessment of reading comprehension; (ii) were retained in third grade for not demonstrating reading proficiency as indicated in G.S. 115C-83.7(a); and (iii) were exempt from mandatory third grade retention by category of exemption as listed in G.S. 115C-83.7(b). The annual "report card" for high schools shall also include measures of Advanced Placement course participation and International Baccalaureate Diploma Programme participation and Advanced Placement and International Baccalaureate examination participation and performance."

SECTION 8.27.(b)  Article 8 of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-83.4A.  Advanced courses.

(a)        It is the intent of the State to enhance accessibility and encourage students to enroll in and successfully complete more rigorous advanced courses to enable success in postsecondary education for all students. For the purposes of this section, an advanced course is an Advanced Placement or International Baccalaureate Diploma Programme course. To attain this goal, to the extent funds are made available for this purpose, the following shall be provided:

(1)        Students enrolled in public schools shall be exempt from paying any fees for administration of examinations for advanced courses and registration fees for advanced courses in which the student is enrolled regardless of the score the student achieves on an examination.

(2)        Bonuses shall be awarded to teachers of Advanced Placement courses for students who earn scores of three or higher on Advanced Placement examinations and to teachers of International Baccalaureate Diploma Programme courses for students who score four or higher on International Baccalaureate examinations.

(b)        Eligible secondary students shall be encouraged to enroll in advanced courses to expose them to more rigorous coursework while still in secondary school. Successfully completing advanced courses will increase the quality and level of students' preparation for postsecondary career paths and their pursuit of higher education.

(c)        The results of student diagnostic tests administered pursuant to G.S. 115C-174.18 and G.S. 115C-174.22, such as the Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQT) and ACT, shall be used to identify students who are prepared or who need additional work to be prepared to enroll and be successful in advanced courses. Students may also be identified for potential enrollment in advanced courses based on other criteria established by schools to increase access to those courses for their students.

(d)        Local boards of education shall provide information to students and parents on available opportunities and the enrollment process for students to take advanced courses. The information shall explain the value of advanced courses in preparing students for postsecondary level coursework, enabling students to gain access to postsecondary opportunities, and qualifying for scholarships and other financial aid opportunities.

(e)        Local boards of education shall ensure that all high school students have access to advanced courses in language arts, mathematics, science, and social studies. Such access may be provided through enrollment in courses offered through or approved by the North Carolina Virtual Public School.

(f)         The State Board of Education shall seek a partner, such as the College Board, to form the North Carolina Advanced Placement Partnership, hereinafter referred to as Partnership, to assist in improving college readiness of secondary students and to assist secondary schools to ensure that students have access to high-quality, rigorous academics with a focus on access to Advanced Placement courses.

In order to implement its responsibilities under this section, the partner selected by the State Board of Education shall provide staff to do the following:

(1)        Provide professional development in the form of support and training to enable teachers of Advanced Placement courses to have the necessary content knowledge, instructional skills, and materials to prepare students for success in Advanced Placement courses and examinations and mastery of postsecondary course content.

(2)        Provide administrators, including principals and counselors, with professional development that will enable them to create strong and effective Advanced Placement courses in their schools.

(3)        Provide teachers of students in grades seven through 12 with preadvanced course professional development and materials that prepare students for success in Advanced Placement courses.

(4)        Provide consulting expertise and technical assistance to support implementation.

(5)        Prioritize assistance to schools designated as low-performing by the State Board of Education and provide for frequent visits to the schools targeted by the Partnership.

(g)        The Partnership shall report annually to the Department of Public Instruction on the Partnership's implementation of its responsibilities under subsection (f) of this section.

(h)        Beginning October 1, 2014, the State Board of Education shall report annually to the Joint Legislative Education Oversight Committee on advanced courses in North Carolina. The report shall include, at a minimum, the following information:

(1)        The North Carolina Advanced Placement Partnership's report to the Department of Public Instruction as required by subsection (g) of this section and the State Board's assessment of that report.

(2)        Number of students enrolled in advanced courses and participating in advanced course examinations, including demographic information by gender, race, and free and reduced-price lunch status.

(3)        Student performance on advanced course examinations, including information by course, local school administrative unit, and school.

(4)        Number of students participating in 10th grade PSAT/NMSQT testing.

(5)        Number of teachers attending summer institutes offered by the North Carolina Advanced Placement Partnership.

(6)        Number and distribution of teachers awarded bonuses for student advanced course examination performance.

(7)        Distribution of funding appropriated for advanced course testing fees, bonuses, and professional development by local school administrative unit and school.

(8)        Status and efforts of the North Carolina Advanced Placement Partnership.

(9)        Other trends in advanced courses and examinations."

SECTION 8.27.(c)  G.S. 115C-174.18 reads as rewritten:

" 115C-174.18.  Opportunity to take Preliminary Scholastic Aptitude Test.Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQT).

Every student in the eighth through tenth grades who has completed Algebra I or who is in the last month of Algebra I shall be given an opportunity to take a version of the Preliminary Scholastic Aptitude Test (PSAT) either the Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQT) or the ACT, at the discretion of the local school administrative unit, one time at State expense.no cost to the student. The maximum amount of State funds used for this purpose shall be the cost of the PSAT/NMSQT."

SECTION 8.27.(d)  Of the funds appropriated to the Department of Public Instruction to implement the requirements of this section, ten million eight hundred thirty-one thousand one hundred eighty-four dollars ($10,831,184) for the 2014-2015 fiscal year shall be used to fund fees for testing in advanced courses and three million four hundred seventy-one thousand six hundred sixteen dollars ($3,471,616) for the 2014-2015 fiscal year shall be used for teacher bonuses, and one million five hundred thousand dollars ($1,500,000) for each fiscal year shall be used by the North Carolina Advanced Placement Partnership to carry out its responsibilities as set forth in this section. Funding appropriated for professional development may be used by the State Board of Education to contract with an independent evaluator to assess the implementation and impact of advanced course programs in North Carolina. For the purposes this of section, the term "advanced courses" means an Advanced Placement or International Baccalaureate Diploma Programme course.

SECTION 8.27.(e)  Beginning with the 2014-2015 school year, the State Board of Education shall use funds allocated in subsection (d) of this section to do all of the following:

(1)        Provide incentive funding to local school administrative units to be distributed to teachers of advanced courses as follows:

a.         A bonus in the amount of fifty dollars ($50.00) for each student taught by an advanced course teacher in each advanced course who receives the following score:

1.         For Advanced Placement courses, a score of three or higher on the College Board Advanced Placement Examination.

2.         For International Baccalaureate Diploma Programme courses, a score of four or higher on the International Baccalaureate course examination.

b.         An additional bonus of five hundred dollars ($500.00) to each advanced course teacher who teaches in a school identified as low-performing under G.S. 115C-105.37 by the State Board of Education and who is eligible to receive a bonus under sub-subdivision a. of this subdivision. The teacher shall be eligible to receive the additional bonus regardless of the number of classes taught or the number of students receiving scores which make the teacher eligible to receive a bonus under sub-subdivision a. of this subdivision.

c.         No teacher shall be awarded a bonus pursuant to this subdivision that exceeds two thousand dollars ($2,000) in any given school year. The bonus awarded to a teacher pursuant to this subdivision shall be in addition to any regular wage or other bonus the teacher receives or is scheduled to receive.

(2)        Provide funds to local school administrative units to pay testing fees for advanced courses for all students.

(3)        Provide funds to the North Carolina Advanced Placement Partnership for professional development for teachers of Advanced Placement courses.

SECTION 8.27.(f)  Except as otherwise provided in this section, this section applies beginning with the 2013-2014 school year.

 

Increase successful career and technical education (CTE) participation

SECTION 8.28.(a)  G.S. 115C-12 is amended by adding a new subdivision to read:

"(41)    To Establish Career and Technical Education Incentives. - The State Board of Education shall establish, implement, and determine the impact of a career and technical education incentive program as provided under G.S. 115C-156.2."

SECTION 8.28.(b)  Article 10 of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-156.2.  Industry certifications and credentials program; bonus funds program.

(a)        It is the intent of the State to encourage students to enroll in and successfully complete rigorous coursework and credentialing processes in career and technical education to enable success in the workplace. To attain this goal, to the extent funds are made available for this purpose, students shall be supported to earn approved industry certifications and credentials, and local school administrative units shall receive bonuses for each student who earns an approved industry certification or credential.

(1)        Students enrolled in public schools and in career and technical education courses shall be exempt from paying any fees for one administration of examinations leading to industry certifications and credentials pursuant to rules adopted by the State Board of Education.

(2)        Bonus funds shall be awarded to local school administrative units in amounts provided under subdivision (4) of this section, pursuant to rules adopted by the State Board of Education under this section. Each school year the State Board of Education shall make an award to those local school administrative units who have at least one student in one school having earned an industry-recognized certification or credential that has been identified by the State Board of Education, in consultation with the State Department of Commerce, as an occupation in high need of additional skilled employees at the time the student enrolled in a career and technical education course that leads to an industry certification or credential.

(3)        Bonus funds shall be used by local school administrative units to (i) collaborate with local industries and employers to meet workforce needs and (ii) award bonuses to teachers of students earning approved industry certifications or credentials. No teacher shall be awarded a bonus pursuant to this subdivision that exceeds two thousand dollars ($2,000) in any given school year. Direct instruction personnel bonuses shall be distributed as follows:

a.         A bonus in the amount of twenty-five dollars ($25.00) for each student taught by a teacher who provided instruction in a course that led to the attainment of an industry certification with a two hundred fifty dollar ($250.00) value ranking.

b.         A bonus in the amount of fifty dollars ($50.00) for each student taught by a teacher who provided instruction in a course that led to the attainment of an industry certification with a five hundred dollar ($500.00) value ranking.

(4)        The State Board of Education, in consultation with the State Department of Commerce, shall rank each industry certification based on academic rigor and employment value and award five hundred dollars ($500.00) or two hundred fifty dollars ($250.00) to the local school administrative unit per student completing the industry certification based upon ranking. If funds appropriated from the General Assembly for this purpose are insufficient to provide bonuses for each industry certification that has been achieved, then the State Board of Education shall prorate the bonus award amounts. Fifty percent (50%) of the ranking shall be based on academic rigor and the remaining fifty percent (50%) on employment value. Academic rigor and employment value shall be based on the following elements:

a.         Academic rigor shall be based on the number of instructional hours, including work experience or internship hours, required to earn the industry certification or credential, with a bonus given for coursework that also provides community college credit.

b.         Employment value shall be based on the entry wage, growth rate in employment for each occupational category, and average annual openings for the primary occupation linked with the industry certification or credential.

(5)        Each school year, at such time as agreed to by the Department of Commerce and the State Board of Education, the Department of Commerce shall provide the State Board of Education with a list of those occupations in high need of additional skilled employees. If the occupations identified in such list are not substantially the same as those occupations identified in the list from the prior year, reasonable notice of such changes shall be provided to local school administrative units.

(6)        Local school administrative units shall consult with their local industries, employers, and workforce development boards to identify industry certification and credentials that the local school administrative unit may offer to best meet State and local workforce needs.

(b)        Beginning in 2014, the State Board of Education shall report to the Joint Legislative Education Oversight Committee by September 1 of each year on the number of students in career and technical education courses who earned (i) community college credit and (ii) related industry certifications and credentials. Beginning in 2015, the annual report shall also include the names of local school administrative units receiving bonus funds and the amount of bonus funds received by each local school administrative unit."

SECTION 8.28.(c)  This section applies beginning with the 2013-2014 school year.

 

Opportunity Scholarships

SECTION 8.29.(a)  Article 39 of Chapter 115C of the General Statutes is amended by adding a new Part to read:

"Part 2A. Scholarship Grants.

" 115C-562.1.  Definitions.

The following definitions apply in this Part:

(1)        Authority. - The State Education Assistance Authority.

(2)        Eligible students. - A student who has not yet received a high school diploma and who meets all of the following requirements:

a.         Meets one of the following criteria:

1.         Was a full-time student assigned to and attending a public school pursuant to G.S. 115C-366 during the previous semester.

2.         Received a scholarship grant during the previous school year.

3.         Is entering either kindergarten or the first grade.

4.         Is a child in foster care as defined in G.S. 131D-10.2(9).

5.         Is a child whose adoption decree was entered not more than one year prior to submission of the scholarship grant application.

b.         Resides in a household with an income level not in excess of one hundred thirty-three percent (133%) of the amount required for the student to qualify for the federal free or reduced-price lunch program.

(3)        Division. - The Division of Nonpublic Education, Department of Administration.

(4)        Local school administrative unit. - A local school administrative unit, charter school, or regional school.

(5)        Nonpublic school. - A school that meets the requirements of Part 1 or Part 2 of this Article as identified by the Division.

(6)        Scholarship grants. - Grants awarded annually by the Authority to eligible students.

" 115C-562.2.  Scholarship grants.

(a)        The Authority shall make available no later than February 1 annually applications to eligible students for the award of scholarship grants to attend any nonpublic school. Information about scholarship grants and the application process shall be made available on the Authority's Web site. Beginning March 1, the Authority shall begin awarding scholarship grants according to the following criteria:

(1)        First priority shall be given to eligible students who received a scholarship grant during the previous school year if those students have applied by March 1.

(2)        After scholarship grants have been awarded to prior recipients as provided in subdivision (1) of this subsection, scholarships shall be awarded with remaining funds as follows:

a.         At least fifty percent (50%) of the remaining funds shall be used to award scholarship grants to eligible students residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced-price lunch program.

b.         No more than thirty-five percent (35%) of the remaining funds shall be used to award scholarship grants to eligible students entering either kindergarten or first grade.

c.         Any remaining funds shall be used to award scholarship grants to all other eligible students.

(b)        Scholarship grants awarded to eligible students residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced-price lunch program shall be for amounts of up to four thousand two hundred dollars ($4,200) per year. Scholarship grants awarded to eligible students residing in households with an income level in excess of the amount required for the student to qualify for the federal free or reduced-price lunch program shall be for amounts of not more than ninety percent (90%) of the required tuition and fees for the nonpublic school the eligible child will attend. Tuition and fees for a nonpublic school may include tuition and fees for books, transportation, equipment, or other items required by the nonpublic school. No scholarship grant shall exceed four thousand two hundred dollars ($4,200) per year per eligible student, and no scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.

(c)        The Authority shall permit an eligible student receiving a scholarship grant to enroll in a different nonpublic school and remain eligible. An eligible student receiving a scholarship grant who transfers to another nonpublic school during the year may be eligible to receive a pro rata share of any unexpended portion of the scholarship grant for tuition and fees at the nonpublic school to which the student transfers.

(d)        The Authority shall establish rules and regulations for the administration and awarding of scholarship grants and may include in those rules a lottery process for selection of scholarship grant recipients within the criteria established by this section.

" 115C-562.3.  Verification of eligibility.

(a)        The Authority may seek verification of information on any application for scholarship grants from eligible students. The Authority shall select and verify a random sample of no less than six percent (6%) of applications annually. The Authority shall establish rules for the verification process and may use the federal verification requirements process for free and reduced-price lunch applications as guidance for those rules. If a household fails to cooperate with verification efforts, the Authority shall revoke the award of the scholarship grant to the eligible student.

(b)        Household members of applicants for scholarship grants shall authorize the Authority to access information needed for verification efforts held by other State agencies, including the Department of Revenue, the Department of Health and Human Services, and the Department of Public Instruction.

" 115C-562.4.  Identification of nonpublic schools and distribution of scholarship grant information.

(a)        The Division shall provide annually by February 1 to the Authority a list of all nonpublic schools operating in the State that meet the requirements of Part 1 or Part 2 of this Article. The Division shall notify the Authority of any schools included in the list that the Division has determined to be ineligible within five business days of the determination of ineligibility.

(b)        The Authority shall provide information about the scholarship grant program to the Division, including applications and the obligations of nonpublic schools accepting eligible students receiving scholarship grants. The Division shall ensure that information about the scholarship grant program is provided to all qualified nonpublic schools on an annual basis.

" 115C-562.5.  Obligations of nonpublic schools accepting eligible students receiving scholarship grants.

(a)        A nonpublic school that accepts eligible students receiving scholarship grants shall comply with the following:

(1)        Provide to the Authority documentation for required tuition and fees charged to the student by the nonpublic school.

(2)        Conduct a criminal background check for the staff member with the highest decision-making authority, as defined by the bylaws, articles of incorporation, or other governing document to ensure that person has not been convicted of any crime listed in G.S. 115C-238.29K.

(3)        Provide to the parent or guardian of an eligible student, whose tuition and fees are paid in whole or in part with a scholarship grant, an annual written explanation of the student's progress, including the student's scores on standardized achievement tests.

(4)        Administer, at least once in each school year, a nationally standardized test or other nationally standardized equivalent measurement selected by the chief administrative officer of the nonpublic school to all eligible students whose tuition and fees are paid in whole or in part with a scholarship grant enrolled in grades three and higher. The nationally standardized test or other equivalent measurement selected must measure achievement in the areas of English grammar, reading, spelling, and mathematics. Test performance data shall be submitted to the Authority by July 15 of each year. Test performance data reported to the Authority under this subdivision is not a public record under Chapter 132 of the General Statutes.

(5)        Provide to the Authority graduation rates of the students receiving scholarship grants in a manner consistent with nationally recognized standards.

(6)        Contract with a certified public accountant to perform a financial review, consistent with generally accepted accounting principles, for each school year in which the school accepts students receiving more than three hundred thousand dollars ($300,000) in scholarship grants awarded under this Part.

(b)        A nonpublic school that accepts students receiving scholarship grants shall not require any additional fees based on the status of the student as a scholarship grant recipient.

(c)        A nonpublic school enrolling more than 25 students whose tuition and fees are paid in whole or in part with a scholarship grant shall report to the Authority on the aggregate standardized test performance of eligible students. Aggregate test performance data reported to the Authority which does not contain personally identifiable student data shall be a public record under Chapter 132 of the General Statutes. Test performance data may be shared with public or private institutions of higher education located in North Carolina and shall be provided to an independent research organization selected by the Authority for research purposes as permitted by the Federal Education Rights and Privacy Act, 20 U.S.C. 1232g.

(d)        A nonpublic school accepting students receiving scholarship grants that fails to comply with the requirements of this section shall be ineligible to receive future scholarship grants if the Authority determines that the nonpublic school is not in compliance with the requirements of this section. The nonpublic school shall notify the parent or guardian of any enrolled student receiving a scholarship grant that the nonpublic school is no longer eligible to receive future scholarship grants. A nonpublic school may appeal for reconsideration of eligibility after one year.

" 115C-562.6.  Scholarship endorsement.

The Authority shall remit, at least two times each school year, scholarship grant funds awarded to eligible students to the nonpublic school for endorsement by at least one of the student's parents or guardians. The parent or guardian shall restrictively endorse the scholarship grant funds awarded to the eligible student to the nonpublic school for deposit into the account of the nonpublic school. The parent or guardian shall not designate any entity or individual associated with the nonpublic school as the parent's attorney-in-fact to endorse the scholarship grant funds but shall endorse the scholarship grant funds in person at the site of the nonpublic school. A parent's or guardian's failure to comply with this section shall result in forfeit of the scholarship grant. A scholarship grant forfeited for failure to comply with this section shall be returned to the Authority to be awarded to another student.

" 115C-562.7.  Authority reporting requirements.

(a)        The Authority shall report to the Department of Public Instruction annually, no later than August 1, the number of students who have received scholarship grants for the current school year and who were enrolled the prior semester in a local school administrative unit or charter school by the previously attended local school administrative unit or charter school. The Department of Public Instruction shall adjust the allotments of local school administrative units and charter schools based on the number of students awarded a scholarship grant who attended a local school administrative unit or charter school during the prior semester. The amount of the adjustment shall equal the average per pupil allocation for average daily membership from the local school administrative unit or charter school.

(b)        The Authority shall report annually, no later than March 1, to the Joint Legislative Education Oversight Committee on the following:

(1)        Total number, grade level, race, ethnicity, and sex of eligible students receiving scholarship grants.

(2)        Total amount of scholarship grant funding awarded.

(3)        Number of students previously enrolled in local school administrative units or charter schools in the prior semester by the previously attended local school administrative unit or charter school.

(4)        Nonpublic schools in which scholarship grant recipients are enrolled, including numbers of scholarship grant students at each nonpublic school.

(5)        Nonpublic schools deemed ineligible to receive scholarships.

(c)        The Authority shall report annually, no later than December 1, to the Department of Public Instruction and the Joint Legislative Education Oversight Committee on the following:

(1)        Learning gains or losses of students receiving scholarship grants. The report shall include learning gains of participating students on a statewide basis and shall compare, to the extent possible, the learning gains or losses of eligible students by nonpublic school to the statewide learning gains or losses of public school students with similar socioeconomic backgrounds, using aggregate standardized test performance data provided to the Authority by nonpublic schools and by the Department of Public Instruction.

(2)        Competitive effects on public school performance on standardized tests as a result of the scholarship grant program. The report shall analyze the impact of the availability of scholarship grants on public school performance on standardized tests by local school administrative units to the extent possible, and shall provide comparisons of the impact by geographic region and between rural and urban local school administrative units.

This report shall be conducted by an independent research organization to be selected by the Authority, which may be a public or private entity or university. The independent research organization shall report to the Authority on the results of its research. The Joint Legislative Education Oversight Committee shall review reports from the Authority and shall make ongoing recommendations to the General Assembly as needed regarding improving administration and accountability for nonpublic schools accepting students receiving scholarship grants."

SECTION 8.29.(b)  G.S. 110-86(2) reads as rewritten:

"(2)      Child care. - A program or arrangement where three or more children less than 13 years old, who do not reside where the care is provided, receive care on a regular basis of at least once per week for more than four hours but less than 24 hours per day from persons other than their guardians or full-time custodians, or from persons not related to them by birth, marriage, or adoption. Child care does not include the following:

f.          Nonpublic schools described in Part 2 of Article 39 of Chapter 115C of the General Statutes that are accredited by national or regional accrediting agencies with early childhood standards the Southern Association of Colleges and Schools and that operate a child care facility as defined in subdivision (3) of this section for less than six and one-half hours per day either on or off the school site;

."

SECTION 8.29.(c)  G.S. 115C-555 reads as rewritten:

" 115C-555.  Qualification of nonpublic schools.

The provisions of this Part shall apply to any nonpublic school which has one or more of the following characteristics:

(1)        It is accredited by the State Board of Education.

(2)        It is accredited by the Southern Association of Colleges and  Schools.a national or regional accrediting agency.

(3)        It is an active member of the North Carolina Association of Independent Schools.

(4)        It receives no funding from the State of North Carolina. For the purposes of this Article, scholarship grant funds awarded pursuant to Part 2A of this Article to eligible students attending a nonpublic school shall not be considered funding from the State of North Carolina."

SECTION 8.29.(d)  G.S. 116-204 reads as rewritten:

" 116-204.  Powers of Authority.

The Authority is hereby authorized and empowered:

(11)      To administer the awarding of scholarship grants to students attending nonpublic schools as provided in Part 2A of Article 39 of Chapter 115 of the General Statutes."

SECTION 8.29.(e)  For the 2013-2014 school year, the State Education Assistance Authority (Authority) shall award scholarship grants to eligible students to attend nonpublic schools that meet the requirements of Article 39 of Chapter 115C of the General Statutes, as identified by the Division of Nonpublic Education, Department of Administration. The Authority shall make applications available no later than August 1, 2013, and shall begin awarding grants no later than August 15, 2013. Information about scholarship grants and the application process shall be made available on the Authority's Web site. The Division of Nonpublic Education, Department of Administration, shall make available to the Authority a list of all nonpublic schools operating in the State that meet the requirements of Part 1 or Part 2 of Article 39 of Chapter 115C of the General Statutes no later than August 1, 2013.

SECTION 8.29.(f)  For the 2013-2014 school year, to be eligible to receive a scholarship grant, a student shall meet both of the following criteria:

(1)        Reside in a household with an income level not in excess of the amount required for the student to qualify for the federal free or reduced-price lunch program.

(2)        Be a full-time student who has not yet received a high school diploma and was assigned to and attending a public school pursuant to G.S. 115C-366 during the 2013 spring semester.

SECTION 8.29.(g)  Scholarship grants for 2013-2014 shall be for amounts of up to four thousand two hundred dollars ($4,200) for required tuition and fees for the nonpublic school the eligible child will attend. Tuition and fees for a nonpublic school may include tuition and fees for books, transportation, equipment, or other items required by the nonpublic school. No scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.

SECTION 8.29.(h)  The Authority shall permit an eligible student receiving a scholarship grant in 2013-2014 to enroll in a different nonpublic school and remain eligible. An eligible student receiving a scholarship grant who transfers to another nonpublic school during the year may be eligible to receive a pro rata share of any unexpended portion of the scholarship grant for tuition and fees at the nonpublic school to which the student transfers.

SECTION 8.29.(i)  The Authority shall establish temporary rules and regulations for the administration and awarding of scholarship grants in 2013-2014, which may include a process for awarding grants using a random lottery system.

SECTION 8.29.(j)  G.S. 115C-562.3 through G.S. 115C-562.7, as enacted by this section, shall apply to any scholarship grant awarded for the 2013-2014 school year.

SECTION 8.29.(k)  It is the intent of the General Assembly to appropriate fifty million dollars ($50,000,000) in recurring funds beginning in the 2015-2016 fiscal year to be awarded to eligible students as scholarship grants. The Authority may retain up to four hundred thousand dollars ($400,000) annually for administrative costs associated with the scholarship grant program. Beginning in the 2014-2015 fiscal year, funds shall be appropriated to the public schools for assistance to at-risk students and to community organizations serving the educational needs of at-risk students still enrolled in public schools in an amount equal to the cost-savings created by the award of opportunity scholarship grants.

SECTION 8.29.(l)  The Authority shall select an independent research organization, as required by G.S. 115C-562.7, as enacted by this section, beginning with the 2016-2017 school year. The first learning gains report required by G.S. 115C-562.7, as enacted by this section, shall not be due until December 1, 2017. The first financial review for a nonpublic school that accepts scholarship grant funds, as required by G.S. 115C-562.5(a)(6), as enacted by this section, shall not be required until the 2014-2015 school year.

SECTION 8.29.(m)  This section applies beginning with the 2013-2014 school year. For the 2013-2014 school year, scholarship grants shall be awarded as provided in subsections (e) through (j) of this section. Beginning with the 2014-2015 school year and thereafter, scholarship grants shall be awarded in accordance with Part 2A of Article 39 of Chapter 115C of the General Statutes, as enacted by this section.

 

repeal requirement that schools provide reading workshops for parents of students who have been retained

SECTION 8.30.  G.S. 115C-83.8(d) is repealed.

 

TASK FORCE TO STUDY TEACHER AND SCHOOL ADMINISTRATOR EFFECTIVENESS AND COMPENSATION

SECTION 8.31.(a)  Establishment. - The North Carolina Educator Effectiveness and Compensation Task Force is established.

SECTION 8.31.(b)  Membership. - The Task Force shall be composed of 18 members as follows:

(1)        Nine members appointed by the Speaker of the House of Representatives as follows:

a.         Four persons who are members of the House of Representatives at the time of appointment, at least two of whom represent the minority party.

b.         A representative of the Department of Public Instruction.

c.         A classroom teacher, as recommended by the North Carolina Association of Educators.

d.         A school principal, as recommended by the North Carolina Association of School Administrators.

e.         A representative of a North Carolina institution of higher education that offers a teacher education program and a master's degree program in education or school administration.

f.          A representative from the Professional Educators of North Carolina.

(2)        Nine members appointed by the President Pro Tempore of the Senate as follows:

a.         Four persons who are members of the Senate at the time of appointment, at least two of whom represent the minority party.

b.         A representative of the State Board of Education.

c.         A classroom teacher, as recommended by the North Carolina Association of Educators.

d.         A school system superintendent, as recommended by the North Carolina Association of School Administrators.

e.         A local school board member, as recommended by the North Carolina School Boards Association.

f.          A representative from the Professional Educators of North Carolina.

The Task Force shall have two cochairs, one designated by the President Pro Tempore of the Senate and one designated by the Speaker of the House of Representatives from among their appointees. The Task Force shall meet upon the call of the cochairs. Vacancies shall be filled by the appointing authority. A quorum of the Task Force shall be a majority of the members.

SECTION 8.31.(c)  Duties. - The Task Force shall make recommendations on whether to create a statewide model of incentives to encourage the recruitment and retention of highly effective educators and to consider the transition to an alternative compensation system for educators. In developing recommendations, the Task Force shall consider at least the following factors:

(1)        Alternatives to or simplification of the current teacher and school principal salary schedules, including the need for "hold harmless" options or a choice in compensation structure to avoid reduction in pay for current educators.

(2)        Incorporating the feedback of educators in order to maximize buy-in.

(3)        The integration of school-level performance measures in an alternative compensation system.

(4)        Whether local school administrative units may create their own customized alternative compensation systems in lieu of or in addition to a statewide system, including necessary parameters such as funding flexibility and guidelines for local boards of education.

(5)        The use of incentive pay to recruit and retain educators to teach in hard to staff areas.

(6)        The recognition of educator responsibilities and leadership roles such as mentoring of beginning teachers and instructional coaching.

(7)        Methods for identifying effective teaching and its relationship to an alternative compensation system, including:

a.         The correlation of student outcomes with effective teaching.

b.         The use of multiple teacher evaluation measures and feedback methods to recognize effective teaching such as classroom observations, student surveys, video training for teachers, and standard measures of student achievement.

c.         The use of multiple teacher observations, including at least one observer from outside of the teacher's school.

d.         The correlation to annual student growth and performance data, evaluations, effectiveness levels, and a three-year average of student growth.

(8)        Barriers to the implementation of alternative compensation systems.

(9)        Educator compensation reform in other states and North Carolina pilot programs currently utilizing alternative compensation.

(10)      Effective strategies for retaining effective teachers.

SECTION 8.31.(d)  Compensation; Administration. - Members of the Task Force shall receive subsistence and travel allowances at the rates set forth in G.S. 120-3.1, 138-5, or 138-6, as appropriate. With the prior approval of the Legislative Services Commission, the Legislative Services Officer shall assign professional and clerical staff to assist in the work of the Task Force. With the prior approval of the Legislative Services Commission, the Task Force may hold its meetings in the State Legislative Building or the Legislative Office Building. The Task Force may also meet at various locations around the State in order to promote greater public participation in its deliberations. The Task Force, while in the discharge of its official duties, may exercise all the powers provided under the provisions of G.S. 120-19 and G.S. 120-19.1 through G.S. 120-19.4, including the power to request all officers, agents, agencies, and departments of the State to provide any information, data, or documents within their possession, ascertainable from their records or otherwise available to them, and the power to subpoena witnesses.

SECTION 8.31.(e)  Report. - The Task Force shall report its findings and recommendations to the 2014 Regular Session of the 2013 General Assembly no later than April 15, 2014. The Task Force shall terminate on April 15, 2014, or upon the filing of its final report, whichever occurs first.

 

Restore Teaching Fellows Program

SECTION 8.32.  Section 1.38 of S.L. 2011-266 is repealed.

 

Rural Charter School Development Pilot program

SECTION 8.33.(a)  Parents for Educational Freedom in North Carolina, Inc. (PEFNC) shall use up to four hundred sixty-four thousand one hundred dollars ($464,100) in recurring funds made available to it under this act for each fiscal year of the 2013-2015 fiscal biennium to develop and administer a pilot program that provides grant funding to participants for the development of up to 12 charter schools in counties with currently less than a sixty-five percent (65%) average passage rate on end-of-grade and end-of-course tests.

SECTION 8.33.(b)  PEFNC shall match State funds available to it under this act on the basis of one dollar ($1.00) in grant funds for every one dollar ($1.00) in nongrant funds. Matching funds shall not include other State funds. Matching funds may include in-kind contributions. PEFNC may carry forward any amount in excess of the required match for a fiscal year in order to meet the match requirement of the subsequent fiscal year. Failure to obtain a one hundred percent (100%) match by June 30 of each fiscal year shall result in a dollar-for-dollar reduction in the appropriation for the pilot program for the subsequent fiscal year.

SECTION 8.33.(c)  PEFNC shall require that grant recipients participating in the pilot program to meet at least all of the following conditions:

(1)        The recipient has been approved by the State Board of Education to operate a charter school.

(2)        The charter school shall be located in a county with less than a sixty-five percent (65%) average passage rate on end-of-grade and end-of-course tests.

(3)        The recipient charter school shall be subject to audit oversight by the State Auditor.

SECTION 8.33.(d)  PEFNC may provide grants of up to one hundred thousand dollars ($100,000) to recipients for an initial planning year.

SECTION 8.33.(e)  By March 15, 2014, and annually thereafter, PEFNC shall submit a report on the progress of the pilot program, an accounting of expenditures, and the status of grant recipients to the Joint Legislative Education Oversight Committee.

 

Education and Workforce Innovation Program

SECTION 8.34.(a)  Chapter 115C of the General Statutes is amended by adding a new Article to read:

"Article 6C.

"Education and Workforce Innovation Program.

" 115C-64.10.  North Carolina Education and Workforce Innovation Commission.

(a)        There is created the North Carolina Education and Workforce Innovation Commission (Commission). The Commission shall be located administratively in the Department of Public Instruction but shall exercise all its prescribed powers independently of the Department of Public Instruction. Of the funds appropriated for the Education and Workforce Innovation Program established under G.S. 115C-64.11, up to two hundred thousand dollars ($200,000) each fiscal year may be used by the Department of Public Instruction to provide technical assistance and administrative assistance, including staff, to the Commission and reimbursements and expenses for the Commission.

(b)        The Commission shall consist of the following 11 members:

(1)        The Secretary of Commerce.

(2)        The State Superintendent of Public Instruction.

(3)        The Chair of the State Board of Education.

(4)        The President of The University of North Carolina.

(5)        The President of the North Carolina Community College System.

(6)        Two members appointed by the Governor who have experience in education.

(7)        Two members appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives, as provided in G.S. 120-121, who have experience in businesses operating in North Carolina.

(8)        Two members appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, as provided in G.S. 120-121, who have experience in businesses operating in North Carolina.

(c)        The Commission members shall elect a chair from the membership of the Commission. The Commission shall meet at least three times annually on the call of the Chair or as additionally provided by the Commission. A quorum is six members of the Commission. Members may not send designees to Commission meetings nor may they vote by proxy.

(d)        The Commission shall develop and administer the Education and Workforce Innovation Program, as established under G.S. 115C-64.11, and make awards of grants under the Program. The Commission shall work closely with the North Carolina New Schools in administering the program.

(e)        The Commission shall publish a report on the Education and Workforce Innovation Program on or before April 30 of each year. The report shall be submitted to the Joint Legislative Education Oversight Committee, the State Board of Education, the State Board of Community Colleges, and the Board of Governors of The University of North Carolina. The report shall include at least all of the following information:

(1)        An accounting of how funds and personnel resources were utilized and their impact on student achievement, retention, and employability.

(2)        Recommended statutory and policy changes.

(3)        Recommendations for improvement of the program.

" 115C-64.11.  The Education and Workforce Innovation Program.

(a)        Program Establishment. - There is established the Education and Workforce Innovation Program (Program) to foster innovation in education that will lead to more students graduating career and college ready. Funds appropriated to the Program shall be used to award competitive grants to an individual school, a local school administrative unit, or a regional partnership of more than one local school administrative unit to advance comprehensive, high-quality education that equips teachers with the knowledge and skill required to succeed with all students. Before receiving a grant, applicants must meet all of the following conditions:

(1)        Form a partnership, for the purposes of the grant, with either a public or private university or a community college.

(2)        Form a partnership, for the purposes of the grant, with regional businesses and business leaders.

(3)        Demonstrate the ability to sustain innovation once grant funding ends.

(b)        Applicant Categories and Specific Requirements. -

(1)        Individual schools. - Individual public schools must demonstrate all of the following in their applications:

a.         Partnerships with business and industry to determine the skills and competencies needed for students' transition into growth sectors of the regional economy.

b.         Aligned pathways to employment, including students' acquisition of college credit or industry recognized credentials.

c.         Development of systems, infrastructure, capacity, and culture to enable teachers and school leaders to continuously focus on improving individual student achievement.

(2)        Local school administrative units. - Local school administrative units must demonstrate all of the following in their applications:

a.         Implementation of comprehensive reform and innovation.

b.         Appointment of a senior leader to manage and sustain the change process with a specific focus on providing parents with a portfolio of meaningful options among schools.

(3)        Regional partnerships of two or more local school administrative units. - Partnerships of two or more local school administrative units must demonstrate all of the following in their applications:

a.         Implementation of resources of partnered local school administrative units in creating a tailored workforce development system for the regional economy and fostering innovation in each of the partnered local school administrative units.

b.         Promotion of the development of knowledge and skills in career clusters of critical importance to the region.

c.         Benefits of the shared strengths of local businesses and higher education.

d.         Usage of technology to deliver instruction over large geographic regions and build networks with industry.

e.         Implementation of comprehensive reform and innovation that can be replicated in other local school administrative units.

(c)        Consideration of Factors in Awarding of Grants. - All applications must include information on at least the following in order to be considered for a grant:

(1)        Describe the aligned pathways from school to high-growth careers in regional economies.

(2)        Leverage technology to efficiently and effectively drive teacher and principal development, connect students and teachers to online courses and resources, and foster virtual learning communities among faculty, higher education partners, and business partners.

(3)        Establish a comprehensive approach to enhancing the knowledge and skills of teachers and administrators to successfully implement the proposed innovative program and to graduate all students ready for work and college.

(4)        Link to a proven provider of professional development services for teachers and administrators capable of providing evidence-based training and tools aligned with the goals of the proposed innovative program.

(5)        Form explicit partnerships with businesses and industry, which may include business advisory councils, internship programs, and other customized projects aligned with relevant workforce skills.

(6)        Partner with community colleges or public or private universities to enable communities to challenge every student to graduate with workplace credentials or college credit.

(7)        Align K-12 and post-secondary instruction and performance expectations to reduce the need for college remediation courses.

(8)        Secure input from parents to foster broad ownership for school choice options and to foster greater understanding of the need for continued education beyond high school.

(9)        Provide a description of the funds that will be used and a proposed budget for five years.

(10)      Describe the source of matching funds required in subsection (d) of this section.

(11)      Establish a strategy to achieve meaningful analysis of program outcomes due to the receipt of grant funds under this section.

(d)        Matching Private and Local Funds. - All funds appropriated by the State must be matched by a combination of private and local funds. All grant applicants must fund twenty-five percent (25%) of program costs through local funds. An additional twenty-five percent (25%) of program costs must be raised by private funds.

(e)        Grants. - Any grants awarded by the Commission may be spent over a five-year period from the initial award.

(f)         Reporting Requirements. - No later than March 1 of each year, a grant recipient shall submit to the Commission an annual report for the preceding grant year that describes the academic progress made by the students and the implementation of program initiatives."

SECTION 8.34.(b)  The North Carolina Education and Workforce Innovation Commission (Commission), as established by G.S. 115C-64.10, as enacted by this section, shall conduct a study to determine the most efficient way to fund dual enrollment for high school students in college coursework. The Commission shall report the results of this study to the Joint Legislative Education Oversight Committee by October 1, 2014.

SECTION 8.34.(c)  The appointments to the Commission as set forth in G.S. 115C-64.10, as enacted by this section, shall be made by the appointing entities no later than September 1, 2013. The Commission shall hold its first meeting no later than October 1, 2013.

 

SCHOOL PSYCHOLOGISTS, SCHOOL COUNSELORS, AND School SOCIAL WORKERS

SECTION 8.35.(a)  Grants to local school administrative units, regional schools, and charter schools for additional school psychologists, school counselors, and school social workers shall be matched on the basis of one dollar ($1.00) in State funds for every one dollar ($1.00) in local funds and shall be used to supplement and not to supplant State, local, and federal funds expended for school psychologists, school counselors, and school social workers.

The State Board of Education shall include need-based considerations in its criteria for awarding these grants to local school administrative units, regional schools, and charter schools. The State Board shall also give lower priority to local school administrative units, regional schools, and charter schools that have received a grant for school resource officers pursuant to Section 8.36 of this act.

SECTION 8.35.(b)  Article 21 of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-316.1.  Duties of school counselors.

(a)        School counselors shall implement a comprehensive developmental school counseling program in their schools. Counselors shall spend at least eighty percent (80%) of their work time providing direct services to students. Direct services do not include the coordination of standardized testing. Direct services shall consist of:

(1)        Delivering the school guidance curriculum through large group guidance, interdisciplinary curriculum development, group activities, and parent workshops;

(2)        Guiding individual student planning through individual or small group assistance and individual or small group advisement;

(3)        Providing responsive services through consultation with students, families, and staff; individual and small group counseling; crisis counseling; referrals; and peer facilitation; and

(4)        Performing other student services listed in the Department of Public Instruction school counselor job description that has been approved by the State Board of Education.

(b)        During the remainder of their work time, counselors shall spend adequate time on school counseling program support activities that consist of professional development; consultation, collaboration, and training; and program management and operations. School counseling program support activities do not include the coordination of standardized testing. However, school counselors may assist other staff with the coordination of standardized testing."

SECTION 8.35.(c)  Prior to the 2013-2014 school year, each local board of education shall develop a transition plan for implementing subsection (b) of this section within existing resources by reassigning duties within its schools.

The State Board of Education shall distribute guidelines to all local school administrative units on the implementation of subsection (b) of this section.

 

grants for school resource officers in elementary and middle schools

SECTION 8.36.  Grants to local school administrative units, regional schools, and charter schools for school resource officers in elementary and middle schools shall be matched on the basis of two dollars ($2.00) in State funds for every one dollar ($1.00) in local funds and shall be used to supplement and not to supplant State, local, and federal funds for school resource officers.

The State Board of Education shall include need-based considerations in its criteria for awarding these grants to local school administrative units, regional schools, and charter schools. The State Board shall also give lower priority to local school administrative units, regional schools, and charter schools that have received a grant for additional school psychologists, school counselors, and school social workers pursuant to Section 8.35 of this act.

Local school administrative units, regional schools, and charter schools may use these funds to employ school resource officers in elementary and middle schools, to train them, or both. Any such training shall include instruction on research into the social and cognitive development of elementary school and middle school children.

 

panic alarm systems

SECTION 8.37.(a)  G.S. 115C-47(40) reads as rewritten:

"(40)    To adopt emergency response plans. - Local boards of education mayshall, in coordination with local law enforcement agencies, adopt emergency response plans relating to incidents of school violence. These plans are not a public record as the term "public record" is defined under G.S. 132-1 and shall not be subject to inspection and examination under G.S. 132-6."

SECTION 8.37.(b)  Grants to local school administrative units, regional schools, and charter schools for panic alarm systems in schools shall be matched on the basis of one dollar ($1.00) in State funds for every one dollar ($1.00) in local funds and shall be used to supplement and not to supplant State, local, and federal funds for panic alarm systems.

The State Board of Education shall include need-based considerations in its criteria for awarding these grants to local school administrative units, regional schools, and charter schools.

SECTION 8.37.(c)  Effective July 1, 2015, every public school shall have a panic alarm system that connects with the nearest local law enforcement agency in the local board of education's emergency response plan.

 

school safety exercises

SECTION 8.38.(a)  Article 8C of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-105.49.  School safety exercises.

(a)        At least every two years each local school administrative unit shall hold a full systemwide school safety and school lockdown exercise with the local law enforcement agencies that are part of the local board of education's emergency response plan. The purpose of the exercise shall be to permit participants to (i) discuss simulated emergency situations in a low-stress environment, (ii) clarify their roles and responsibilities and the overall logistics of dealing with an emergency, and (iii) identify areas in which the emergency response plan needs to be modified.

(b)        At least once a year each school shall hold a full school-wide school safety and lockdown exercise with the local law enforcement agencies that are part of the local board of education's emergency response plan."

SECTION 8.38.(b)  This section applies beginning with the 2013-2014 school year.

 

Schematic diagrams of school facilities

SECTION 8.39.(a)  Article 8C of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-105.50.  Schematic diagram of school facilities.

(a)        Each local school administrative unit shall prepare schematic diagrams of its school facilities and provide (i) the schematic diagrams and (ii) keys to the main entrance of all school facilities to local law enforcement agencies. Each local school administrative unit shall provide updates of the schematic diagrams to local law enforcement agencies when substantial modifications such as new facilities or modifications to doors and windows are made to school facilities.

(b)        The Department of Public Instruction, in consultation with the Department of Public Safety, shall develop standards and guidelines for the preparation and content of schematic diagrams and necessary updates.

(c)        The schematic diagrams are not public records under Chapter 132 of the General Statutes."

SECTION 8.39.(b)  The schematic diagrams and keys to the main entrance of all school facilities referenced in this section shall be provided to local law enforcement prior to January 1, 2014.

SECTION 8.39.(c)  This section applies beginning with the 2013-2014 school year.

 

anonymous tip line

SECTION 8.40.(a)  Article 8C of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-105.51.  Anonymous tip lines.

(a)        Each local school administrative unit shall develop and operate an anonymous tip line, in coordination with local law enforcement and social services agencies, to receive anonymous information on internal or external risks to school buildings and school-related activities.

(b)        The Department of Public Instruction, in consultation with the Department of Public Safety, shall develop standards and guidelines for the development, operation, and staffing of tip lines.

(c)        The Department of Public Instruction shall provide information to local school administrative units on federal, State, local, and private grants available for this purpose."

SECTION 8.40.(b)  This section applies beginning with the 2013-2014 school year.

 

school safety component of school improvement plans

SECTION 8.41.(a)  G.S. 115C-105.27 reads as rewritten:

" 115C-105.27.  Development and approval of school improvement plans.

(a)        School Improvement Team. - In order to improve student performance, each school shall develop a school improvement plan that takes into consideration the annual performance goal for that school that is set by the State Board under G.S. 115C-105.35 and the goals set out in the mission statement for the public schools adopted by the State Board of Education. The principal of each school, representatives of the assistant principals, instructional personnel, instructional support personnel, and teacher assistants assigned to the school building, and parents of children enrolled in the school shall constitute a school improvement team to team. The team shall develop a school improvement plan to improve student performance.

Representatives of the assistant principals, instructional personnel, instructional support personnel, and teacher assistants shall be elected by their respective groups by secret ballot.

Unless the local board of education has adopted an election policy, parents shall be elected by parents of children enrolled in the school in an election conducted by the parent and teacher organization of the school or, if none exists, by the largest organization of parents formed for this purpose. Parents serving on school improvement teams shall reflect the racial and socioeconomic composition of the students enrolled in that school and shall not be members of the building-level staff.

Parental involvement is a critical component of school success and positive student achievement; therefore, it is the intent of the General Assembly that parents, along with teachers, have a substantial role in developing school improvement plans. To this end, school improvement team meetings shall be held at a convenient time to assure substantial parent participation.

All school improvement plans shall be, to the greatest extent possible, data-driven. School improvement teams shall use the Education Value Added Assessment System (EVAAS) or a compatible and comparable system approved by the State Board of Education, to analyze student data to identify root causes for problems, to determine actions to address them, and to appropriately place students in courses such as Algebra I. School improvement plans shall contain clear, unambiguous targets, explicit indicators and actual measures, and expeditious time frames for meeting the measurement standards.

(a1)      Open Meetings. - School improvement team meetings are subject to the open meetings requirements of Article 33C of Chapter 143 of the General Statutes. Deliberations on the school safety components of the plan shall be in closed session in accordance with G.S. 143-318.11(a)(8). The principal shall ensure that these requirements are met.

(a2)      Public Records. - The school improvement plan, except for the school safety components of the plan, is a public record subject to Chapter 132 of the General Statutes and shall be posted on the school Web site. The names of the members of the school improvement team, their positions, and the date of their election to the school improvement team shall also be posted on the Web site.

The school safety components of the plan are not public records subject to Chapter 132 of the General Statutes.

(b)        School Improvement Plan. - In order to improve student performance, the school improvement team at each school shall develop a school improvement plan that takes into consideration the annual performance goal for that school that is set by the State Board under G.S. 115C-105.35 and the goals set out in the mission statement for the public schools adopted by the State Board of Education. All school improvement plans shall be, to the greatest extent possible, data-driven. School improvement teams shall use the Education Value-Added Assessment System (EVAAS) or a compatible and comparable system approved by the State Board of Education to (i) analyze student data and identify root causes for problems, (ii) determine actions to address them, and (iii) appropriately place students in courses such as Algebra I. School improvement plans shall contain clear, unambiguous targets, explicit indicators and actual measures, and expeditious time frames for meeting the measurement standards.

The strategies for improving student performance:

(1)        Shall include a plan for the use of staff development funds that may be made available to the school by the local board of education to implement the school improvement plan. The plan may provide that a portion of these funds is used for mentor training and for release time and substitute teachers while mentors and teachers mentored are meeting;

(1a)      Repealed by Session Laws 2012-142, s. 7A.1(c), effective July 2, 2012.

(2)        Shall include a plan to address school safety and discipline concerns;

(3)        May include a decision to use State funds in accordance with G.S. 115C-105.25;

(4)        Shall include a plan that specifies the effective instructional practices and methods to be used to improve the academic performance of students identified as at risk of academic failure or at risk of dropping out of school;

(5)        May include requests for waivers of State laws, rules, or policies for that school. A request for a waiver shall meet the requirements of G.S. 115C-105.26;

(6)        Shall include a plan to provide a duty-free lunch period for every teacher on a daily basis or as otherwise approved by the school improvement team; and

(7)        Shall include a plan to provide duty-free instructional planning time for every teacher under G.S. 115C-301.1, with the goal of providing an average of at least five hours of planning time per week.

(c)        School Vote on the Plan. - Support among affected staff members is essential to successful implementation of a school improvement plan to address improved student performance at that school. The principal of the school shall present the proposed school improvement plan to all of the principals, assistant principals, instructional personnel, instructional support personnel, and teacher assistants assigned to the school building for their review and vote. The vote shall be by secret ballot. The principal shall submit the school improvement plan to the local board of education only if the proposed school improvement plan has the approval of a majority of the staff who voted on the plan.

(c1)      Consideration of the School Safety Components of the Plan. - The superintendent shall review the school safety components of the school improvement plans and make written recommendations on them to the local board of education. Prior to a vote to accept a school's improvement plan in accordance with G.S. 115C-105.25(d), the local board of education shall review the school safety components of the plan for that school in closed session. The board shall make findings on the safety components of the plan. Neither the safety components of the plan nor the board's findings on the safety components of the plan shall be set out in the minutes of the board.

(d)        Adoption of the Plan. - The local board of education shall accept or reject the school improvement plan. The local board shall not make any substantive changes in any school improvement plan that it accepts. If the local board rejects a school improvement plan, the local board shall state with specificity its reasons for rejecting the plan; the school improvement team may then prepare another plan, present it to the principals, assistant principals, instructional personnel, instructional support personnel, and teacher assistants assigned to the school building for a vote, and submit it to the local board to accept or reject. If no school improvement plan is accepted for a school within 60 days after its initial submission to the local board, the school or the local board may ask to use the process to resolve disagreements recommended in the guidelines developed by the State Board under G.S. 115C-105.20(b)(5). If this request is made, both the school and local board shall participate in the process to resolve disagreements. If there is no request to use that process, then the local board may develop a school improvement plan for the school. The General Assembly urges the local board to utilize the school's proposed school improvement plan to the maximum extent possible when developing such a plan.

(e)        Effective Period of the Plan. - A school improvement plan shall remain in effect for no more than two years; however, the school improvement team may amend the plan as often as is necessary or appropriate. If, at any time, any part of a school improvement plan becomes unlawful or the local board finds that a school improvement plan is impeding student performance at a school, the local board may vacate the relevant portion of the plan and may direct the school to revise that portion. The procedures set out in this subsection shall apply to amendments and revisions to school improvement plans.

(f)         Elimination of Other Unnecessary Plans. - If a local board of education finds that a school improvement plan adequately covers another plan that the local school administrative unit is otherwise required to prepare, the local school administrative unit shall not be required to prepare an additional plan on the matter.

(g)        Compliance With Requirements. - Any employee, parent, or other interested individual or organization is encouraged to notify the principal of any concerns regarding compliance with this section. In addition, any employee, parent, or other interested individual or organization may submit in writing to the superintendent concerns regarding compliance with this section. The superintendent shall make a good-faith effort to investigate the concern. The superintendent shall upon request provide a written response to the concern."

SECTION 8.41.(b)  G.S. 143-318.11(a)(8) reads as rewritten:

"(a)       Permitted Purposes. - It is the policy of this State that closed sessions shall be held only when required to permit a public body to act in the public interest as permitted in this section. A public body may hold a closed session and exclude the public only when a closed session is required:

(8)        To formulate plans by a local board of education relating to emergency response to incidents of school violence or to formulate and adopt the school safety components of school improvement plans by a local board of education or a school improvement team."

SECTION 8.41.(c)  This section applies beginning with the 2013-2014 school year.

 

Crisis kits

SECTION 8.42.(a)  Article 8C of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-105.52.  School crisis kits.

The Department of Public Instruction, in consultation with the Department of Public Safety through the North Carolina Center for Safer Schools, shall adopt policies on the placement of school crisis kits in schools and on the contents of those kits. The kits shall include, at a minimum, basic first-aid supplies, communications devices, and other items recommended by the International Association of Chiefs of Police.

The principal of each school, in coordination with the law enforcement agencies that are part of the local board of education's emergency response plan, shall place one or more crisis kits at appropriate locations in the school."

SECTION 8.42.(b)  This section applies beginning with the 2013-2014 school year.

 

school safety/CONFORMING CHANGES FOR charter schools and regional schools

SECTION 8.43.(a)  G.S. 115C-238.29F is amended by adding a new subsection to read:

"(a1)     Emergency Response Plan. - A charter school shall, in coordination with local law enforcement agencies, adopt an emergency response plan relating to incidents of school violence. These plans are not a public record as the term "public record" is defined under G.S. 132-1 and shall not be subject to inspection and examination under G.S. 132-6.

Charter schools shall also comply with the provisions in G.S. 115C-105.49(b), 115C-105.50, and 115C-105.52."

SECTION 8.43.(b)  G.S. 115C-238.66 is amended by adding a new subdivision to read:

"(7a)     Emergency Response Plan. - A regional school shall, in coordination with local law enforcement agencies, adopt an emergency response plan relating to incidents of school violence. These plans are not a public record as the term "public record" is defined under G.S. 132-1 and shall not be subject to inspection and examination under G.S. 132-6. Regional schools shall also comply with the provisions in G.S. 115C-105.49(b), 115C-105.50, and 115C-105.52."

SECTION 8.43.(c)  This section applies beginning with the 2013-2014 school year.

 

emergency and crisis training

SECTION 8.44.  The Department of Public Safety, through the North Carolina Center for Safer Schools and in conjunction with the Department of Justice and the Department of Public Instruction, shall develop school emergency and crisis training modules for school employees and provide them to schools as soon as practicable.

 

volunteer school safety resource officer program

SECTION 8.45.(a)  G.S. 14-269.2(a) is amended by adding a new subdivision to read:

"(3a)     Volunteer school safety resource officer. - A person who volunteers as a school safety resource officer as provided by G.S. 162-26 or G.S. 160A-288.4."

SECTION 8.45.(b)  G.S. 14-269.2(g) is amended by adding a new subdivision to read:

"(g)       This section shall not apply to any of the following:

(7)        A volunteer school safety resource officer providing security at a school pursuant to an agreement as provided in G.S. 115C-47(61) and either G.S. 162-26 or G.S. 160A-288.4, provided that the volunteer school safety resource officer is acting in the discharge of the person's official duties and is on the educational property of the school that the officer was assigned to by the head of the appropriate local law enforcement agency."

SECTION 8.45.(c)  G.S. 115C-47 is amended by adding a new subdivision to read:

" 115C-47.  Powers and duties generally.

In addition to the powers and duties designated in G.S. 115C-36, local boards of education shall have the power or duty:

(61)      To Provide a Safe School Environment. - Local boards of education may enter into an agreement with the sheriff, chief of police of a local police department, or chief of police of a county police department to provide security at the schools by assigning volunteer school safety resource officers who meet the selection standards and criteria developed by the head of the appropriate local law enforcement agency and the criteria set out in G.S. 162-26 or G.S. 160A-288.4, as appropriate."

SECTION 8.45.(d)  G.S. 160A-282(c) reads as rewritten:

"(c)       The board of commissioners of any county may provide that persons who are deputized by the sheriff of the county as special deputy sheriffs or persons who are serving as volunteer law-enforcement officers at the request of the sheriff and under his authority, while undergoing official training and while performing duties on behalf of the county pursuant to orders or instructions of the sheriff, shall be entitled to benefits under the North Carolina Workers' Compensation Act and to any fringe benefits for which such persons qualify.

This subsection shall not apply to volunteer school safety resource officers as described in G.S. 162-26."

SECTION 8.45.(e)  Article 3 of Chapter 162 of the General Statutes is amended by adding a new section to read:

" 162-26.  Sheriff may establish volunteer school safety resource officer program.

(a)        The sheriff may establish a volunteer school safety resource officer program to provide nonsalaried special deputies to serve as school safety resource officers in public schools. To be a volunteer in the program, a person must have prior experience as either (i) a sworn law enforcement officer or (ii) a military police officer with a minimum of two years' service. If a person with experience as a military police officer is no longer in the armed services, the person must also have an honorable discharge. A program volunteer must receive training on research into the social and cognitive development of elementary, middle, and high school children and must also meet the selection standards and any additional criteria established by the sheriff.

(b)        Each volunteer shall report to the sheriff and shall work under the direction and supervision of the sheriff or the sheriff's designee when carrying out the volunteer's duties as a school safety resource officer. No volunteer may be assigned to a school as a school safety resource officer until the volunteer has updated or renewed the volunteer's law enforcement training and has been certified by the North Carolina Sheriff's Education and Training Standards Commission as meeting the educational and firearms proficiency standards required of persons serving as special deputy sheriffs. A volunteer is not required to meet the physical standards required by the North Carolina Sheriff's Education and Training Standards Commission but must have a standard medical exam to ensure the volunteer is in good health. A person selected by the sheriff to serve as a volunteer under this section shall have the power of arrest while performing official duties as a volunteer school safety resource officer.

(c)        The sheriff may enter into an agreement with the local board of education to provide volunteer school safety resource officers who meet both the criteria established by this section and the selection and training requirements set by the sheriff of the county for the schools. The sheriff shall be responsible for the assignment of any volunteer school safety resource officer assigned to a public school and for the supervision of the officer.

(d)        There shall be no liability on the part of and no cause of action shall arise against a volunteer school safety resource officer, the Sheriff or employees of the sheriff supervising a volunteer school safety officer, or the public school system or its employees for any good-faith action taken by them in the performance of their duties with regard to the volunteer school safety resource officer program established pursuant to this section."

SECTION 8.45.(f)  Article 13 of Chapter 160A of the General Statutes is amended by adding a new section to read:

" 160A-288.4.  Police chief may establish volunteer school safety resource officer program.

(a)        The chief of police of a local police department or of a county police department may establish a volunteer school safety resource officer program to provide nonsalaried special law enforcement officers to serve as school safety resource officers in public schools. To be a volunteer in the program, a person must have prior experience as either (i) a sworn law enforcement officer or (ii) a military police officer with a minimum of two years' service. If a person with experience as a military police officer is no longer in the armed services, the person must also have an honorable discharge. A program volunteer must receive training on research into the social and cognitive development of elementary, middle, and high school children and must also meet the selection standards and any additional criteria established by the chief of police.

(b)        Each volunteer shall report to the chief of police and shall work under the direction and supervision of the chief of police or the chief's designee when carrying out the volunteer's duties as a school safety resource officer. No volunteer may be assigned to a school as a school safety resource officer until the volunteer has updated or renewed the volunteer's law enforcement training and has been certified by the North Carolina Criminal Justice Education and Training Standards Commission as meeting the educational and firearms proficiency standards required of persons serving as criminal justice officers. A volunteer is not required to meet the physical standards required by the North Carolina Criminal Justice Education and Training Standards Commission but must have a standard medical exam to ensure the volunteer is in good health. A person selected by the chief of police to serve as a volunteer under this section shall have the power of arrest while performing official duties as a volunteer school safety resource officer.

(c)        The chief of police may enter into an agreement with the local board of education to provide volunteer school safety resource officers who meet both the criteria established by this section and the selection and training requirements set by the chief of police of the municipality or county in which the schools are located. The chief of police shall be responsible for the assignment of any volunteer school safety resource officer assigned to a public school and for the supervision of the officer.

(d)        There shall be no liability on the part of and no cause of action shall arise against a volunteer school safety resource officer, the chief of police or employees of the local law enforcement agency supervising a volunteer school safety officer, or the public school system or its employees for any good-faith action taken by them in the performance of their duties with regard to the volunteer school safety resource officer program established pursuant to this section."

SECTION 8.45.(g)  This section becomes effective December 1, 2013.

 

Information Technology Oversight Capacity

SECTION 8.46.  Notwithstanding G.S. 143C-6-4 and subject to the direction, control, and approval of the State Board of Education, the State Superintendent of Public Instruction shall realign existing resources within the Department of Public Instruction to increase the information technology oversight capacity of the Department. The Superintendent shall identify two positions for this purpose in order to establish a Chief Information Officer and a Project Management Officer. The realignment of the positions and resources is subject to the approval of the Office of State Budget and Management.

 

Pilot Program/Sports for students with disabilities

SECTION 8.47.  Of the funds appropriated to the Department of Public Instruction or State Aid for Public Schools for the 2013-2015 fiscal biennium, the Department may use up to three hundred thousand dollars ($300,000) each fiscal year to develop and implement a pilot program for an integrated community-based adapted sports program for students with disabilities in grades kindergarten through 12. If the Department uses funds for this purpose, the pilot program shall be consistent with the "Dear Colleague" letter addressing equal access to extracurricular athletics for students with disabilities released by the U.S. Department of Education, Office for Civil Rights, on January 25, 2013. The pilot program shall also include specific strategies to overcome barriers to the participation of students with disabilities in extracurricular athletics and incorporate a philosophy of personal empowerment for those students. The pilot program may be conducted in one or more local school administrative units and provide for collaboration with universities and community colleges and other community organizations to achieve the purposes of the program.

 

Study Virtual Charter Schools

SECTION 8.48.  The State Board of Education shall study and determine needed modifications for authorization and oversight of virtual charter schools, including application requirements, enrollment growth, and funding allocations, and shall prepare these recommendations in the form of draft rules and proposed statutory changes. The State Board shall present the draft rules and the proposed statutory changes to the Joint Legislative Education Oversight Committee by February 1, 2014.

This section shall not be construed to affect litigation pending as of the date of the enactment of this section.

 

Pilot program to raise the high school dropout age from sixteen to eighteen

SECTION 8.49.(a)  Notwithstanding G.S. 7B-1501(27), 115C-378, 115C-238.66(3), 116-235(b)(2), and 143B-805(20), the State Board of Education shall authorize the Hickory Public Schools and the Newton-Conover City Schools to establish and implement a pilot program to increase the high school dropout age from 16 years of age to the completion of the school year coinciding with the calendar year in which a student reaches 18 years of age, unless the student has previously graduated from high school.

SECTION 8.49.(b)  There is appropriated from the General Fund to the State Board of Education ten thousand dollars ($10,000) for the 2013-2014 fiscal year to allocate funds to the Hickory Public Schools and the Newton-Conover City Schools for a planning year to establish and implement a pilot program to increase the dropout age for high school in accordance with this section. The State Board may allocate up to five thousand dollars ($5,000) to each local school administrative unit for this purpose.

SECTION 8.49.(c)  Notwithstanding any other provision of this act, the funds appropriated for the At-Risk Student Services Alternative School Allotment shall be decreased in the amount of ten thousand dollars ($10,000) for the 2013-2014 fiscal year.

SECTION 8.49.(d)  Each local school administrative unit may also use any other funds available to it to implement the pilot program to (i) employ up to three additional teachers and (ii) fund additional student-related costs, such as transportation and technology costs, including additional computers, to serve a greater number of students as a result of the pilot program. Each local school administrative unit may use any funds available to it to operate a night school program for students at risk of dropping out of high school. The local school administrative units shall partner with Catawba Valley Community College on the pilot program to the extent possible.

SECTION 8.49.(e)  The participating local school administrative units, in collaboration with the State Board of Education, shall report to the Joint Legislative Education Oversight Committee, the House Appropriations Subcommittee on Education, and the Senate Appropriations Committee on Education/Higher Education on or before January 1, 2016. The report shall include at least all of the following information:

(1)        An analysis of the graduation rate in each local school administrative unit and the impact of the pilot program on the graduation rate.

(2)        The teen crime statistics for Catawba County.

(3)        The number of reported cases of violations of compulsory attendance laws in Catawba County and the disposition of those cases.

(4)        The number of at-risk students served in any night programs established as part of the pilot program and student graduation and performance outcomes for those students.

(5)        All relevant data to assist in determining the effectiveness of the program and specific legislative recommendations, including the continuation, modification, or expansion of the program statewide.

SECTION 8.49.(f)  The State Board of Education shall not allocate the funds provided under subsection (b) of this section except upon receipt of a copy of a joint resolution adopted by the boards of education for the Hickory Public Schools and the Newton-Conover City Schools setting forth a date to begin establishment and implementation of the pilot program authorized by this section.

 

PART IX. THE EXCELLENT PUBLIC SCHOOLS ACT OF 2013

 

MODIFY Teacher LICENSURE FEES

SECTION 9.3.(a)  G.S. 115C-296 reads as rewritten:

" 115C-296.  Board sets licensure requirements; reports; lateral entry and mentor programs.

(a2)      The State Board of Education shall impose the following establish a schedule of fees for teacher licensure and administrative changes:changes. The fees established under this subsection shall not exceed the actual cost of providing the service. The schedule may include fees for any of the following services:

(1)        Application for demographic or administrative changes to a license, $30.00.license.

(2)        Application for a duplicate license or for copies of documents in the licensure files, $30.00.files.

(3)        Application for a renewal, extension, addition, upgrade, reinstatement, and variation to a license, $55.00.license.

(4)        Initial application for a New, In-State Approved Program Graduate, $55.00.Graduate.

(5)        Initial application for an Out-of-State license, $85.00.license.

(6)        All other applications, $85.00.applications.

TheAn applicant must pay the feeany nonrefundable service fees at the time thean application is submitted.

(a3)      The State Board of Education shall report to the Joint Legislative Education Oversight Committee by March 15 in any year that the amount of fees in the fee schedule established under subsection (a2) of this section has been modified during the previous 12 months. The report shall include the number of personnel paid from licensure receipts, any change in personnel paid from receipts, other related costs covered by the receipts, and the estimated unexpended receipts as of June 30 of the year reported.

."

SECTION 9.3.(b)  For the 2013-2014 fiscal year only and notwithstanding Article 2A of Chapter 150B of the General Statutes, the State Board of Education shall be exempt from rule making in establishing a schedule of fees for teacher licensure and administrative changes pursuant to G.S. 115C-296(a2), as amended by this section.

 

PART X. COMMUNITY COLLEGES

 

REORGANIZATION OF THE COMMUNITY COLLEGES SYSTEM OFFICE

SECTION 10.1.(a)  Notwithstanding any other provision of law, and consistent with the authority established in G.S. 115D-3, the President of the North Carolina Community College System may reorganize the System Office in accordance with recommendations and plans submitted to and approved by the State Board of Community Colleges.

SECTION 10.1.(b)  This section expires June 30, 2014.

 

CARRYFORWARD OF COLLEGE INFORMATION SYSTEM FUNDS

SECTION 10.2.  Of the funds appropriated to the Community Colleges System Office for the 2013-2015 fiscal biennium for the College Information System, up to one million two hundred fifty thousand dollars ($1,250,000) shall not revert at the end of each fiscal year but shall remain available until expended. These funds may be used only to purchase periodic system upgrades.

 

BASIC SKILLS PLUS

SECTION 10.3.(a)  Notwithstanding any other provision of law, the State Board of Community Colleges may authorize a local community college to use up to twenty percent (20%) of the State Literacy Funds allocated to it to provide employability skills, job-specific occupational and technical skills, and developmental education instruction to students concurrently enrolled in a community college course leading to a high school diploma or equivalent certificate.

SECTION 10.3.(b)  Notwithstanding any other provision of law, if a community college is authorized by the State Board to provide employability skills, job-specific occupational or technical skills, or developmental education instruction to students concurrently enrolled in a community college course leading to a high school diploma or equivalent certificate, the college may waive the tuition and registration fees associated with this instruction.

 

ENROLLMENT FUNDING

SECTION 10.4.(a)  Beginning with the 2013-2015 fiscal biennium, community colleges shall receive funding based on the number of full-time equivalent (FTE) students enrolled in curriculum, continuing education, and Basic Skills courses, by tiered funding level. Community colleges shall calculate this enrollment as the higher of the current year's total enrollment or the average enrollment of the last two academic years.

The State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee by February 1, 2014, on the use of nonrecurring funds appropriated to it to phase in this new enrollment funding model.

SECTION 10.4.(b)  G.S. 115D-5 is amended by adding a new subsection to read:

"(v)       Community colleges may teach technical education, health care, developmental education, and STEM-related courses at any time during the year, including the summer term. Student membership hours from these courses shall be counted when computing full-time equivalent students (FTE) for use in budget funding formulas at the State level."

SECTION 10.4.(c)  The State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee by October 1, 2014, on FTE for the 2014 summer term.

SECTION 10.4.(d)  Subsection (b) of this section is effective when it becomes law and applies beginning with the summer 2014 term.

 

Tiered enrollment funding

SECTION 10.4A.(a)  Beginning with the 2014-2015 fiscal year, the State Board of Community Colleges shall implement a fourth tier in the Tiered Funding Formula adopted by the State Board to allocate funds to community colleges based on the number of full-time equivalent (FTE) students enrolled in curriculum, continuing education, and Basic Skills courses in order to fund curriculum programs leading to immediate employment at the highest available funding level.

SECTION 10.4A.(b)  By March 15, 2014, the State Board of Community Colleges shall report to the House Appropriations Committee, Senate Appropriations/Base Budget Committee, the House Appropriations Subcommittee on Education, and the Senate Appropriations on Education/Higher Education on a plan for implementation of the additional funding level for curriculum programs leading to immediate employment as required by subsection (a) of this section.

 

PERFORMANCE FUNDING

SECTION 10.5.(a)  G.S. 115D-31.3 reads as rewritten:

" 115D-31.3.  Institutional performance accountability.

(a)        CreationImplementation of Accountability Measures and Performance Standards. - The State Board of Community Colleges shall create new adopt and implement a system of accountability measures and performance standards for the Community College System. TheAt least once every three years, the State Board of Community Colleges shall review review, and revise if necessary, annually the accountability measures and performance standards to ensure that they are appropriate for use in recognition of successful institutional performance. If the State Board determines that accountability measures and performance standards must be revised following a review required by this subsection, the State Board shall report to the Joint Legislative Education Oversight Committee prior to the implementation of any proposed revisions.

(b) through (d) Repealed by Session Laws 2000-67, s. 9.7, effective July 1, 2000.

(e)        Mandatory Performance Measures. - The State Board of Community Colleges shall evaluate each college on the following eight performance measures:

(1)        Progress of basic skills students.

(2)        Passing rate forAttainment of General Educational Development (GED) diploma examinations.diplomas by students.

(3)        Performance of students who transfer to a four-year institution.

(4)        Success rates of developmental students in subsequent college-level English courses.

(5)        Success rates of developmental students in subsequent college-level math courses.

(5a)      Progress of first-year curriculum students.

(6)        Repealed by Session Laws 2012-142, s. 8.5, effective July 1, 2012.

(7)        Curriculum student retention and graduation.

(8)        Repealed by Session Laws 2012-142, s. 8.5, effective July 1, 2012.

(9)        Passing rate for Attainment of licensure and certification examinations.certifications by students.

The State Board may also evaluate each college on additional performance measures.

(f)         Publication of Performance Ratings. - Each college shall publish its performance on the eight measures set out in subsection (e) of this section (i) annually in its electronic catalog or on the Internet and (ii) in its printed catalog each time the catalog is reprinted.

The Community Colleges System Office shall publish the performance of all colleges on all eight measures.

(g)        Recognition for of Successful Institutional Performance. - For the purpose of recognition for of successful institutional performance, the State Board of Community Colleges shall evaluate each college on the eight performance measures. measures set out in subsection (e) of this section. For each of these eight performance measures on which a college performs successfully, the college may retain and carry forward into the next fiscal year one-fourth of one percent (1/4 of 1%) of its final fiscal year General Fund appropriations.Subject to the availability of funds, the State Board may allocate funds among colleges based on the evaluation of each institution's performance, including at least the following components:

(1)        Program quality evaluated by determining a college's rate of student success on each measure as compared to a systemwide performance baseline and goal.

(2)        Program impact on student outcomes evaluated by the number of students succeeding on each measure.

(g1)      Carryforward of Funds Allocated Based on Performance. - A college that receives funds under subsection (g) of this section may retain and carry forward an amount up to or equal to its performance-based funding allocation for that year into the next fiscal year.

(h)        Recognition for Exceptional Institutional Performance. - Funds not allocated to colleges in accordance with subsection (g) of this section shall be used to reward exceptional institutional performance. A college is deemed to have achieved exceptional institutional performance if it succeeds on all eight performance measures. After all State aid budget obligations have been met, the State Board of Community Colleges shall distribute the remainder of these funds to colleges that achieve exceptional institutional performance status based on the pro rata share of total full time equivalent (FTE) students served at each college. The State Board may withhold the portion of funds for which a college may qualify as an exceptional institution while the college is under investigation by a State or federal agency or if its performance does not meet the standards established by the Southern Association of Colleges and Schools, the State Auditor's Office, or the State Board of Community Colleges. The State Board may release the funds at such time as the investigations are complete and the issues are resolved.

(i)         Permissible Uses of Funds. - Funds retained by colleges or distributed to colleges pursuant to this section shall be used for the purchase of equipment, initial program start-up costs including faculty salaries for the first year of a program, and one-time faculty and staff bonuses. These funds shall not be used for continuing salary increases or for other obligations beyond the fiscal year into which they were carried forward. These funds shall be encumbered within 12 months of the fiscal year into which they were carried forward.

(j)         Use of funds in low-wealth counties. - Funds retained by colleges or distributed to colleges pursuant to this section may be used to supplement local funding for maintenance of plant if the college does not receive maintenance of plant funds pursuant to G.S. 115D-31.2, and if the county in which the main campus of the community college is located meets all of the following:

(1)        Is designated as a Tier 1 county in accordance with G.S. 143B-437.08.

(2)        Had an unemployment rate of at least two percent (2%) above the State average or greater than seven percent (7%), whichever is higher, in the prior calendar year.

(3)        Is a county whose wealth, as calculated under the formula for distributing supplemental funding for schools in low-wealth counties, is eighty percent (80%) or less of the State average.

Funds may be used for this purpose only after all local funds appropriated for maintenance of plant have been expended."

SECTION 10.5.(b)  Section 9.2(b) of S.L. 1999-237 is repealed.

SECTION 10.5.(c)  Section 8.6 of S.L. 2012-142 is repealed.

SECTION 10.5.(d)  Effective only for the 2011-2012 reporting year, and notwithstanding G.S. 115D-31.3, the State Board of Community Colleges shall not require a college to report its performance on the progress of basic skills students as part of the mandatory performance standards prescribed by G.S. 115D-31.3(e), as amended by this section. In distributing performance-based funding allocations for the 2013-2014 fiscal year, notwithstanding G.S. 115D-31.3, the State Board of Community Colleges shall not consider the progress of basic skills students or the attainment of GED diplomas for the purpose of recognizing successful institutional performance. However, the State Board of Community Colleges shall distribute a portion of the Basic Skills block grant appropriated under this act for the 2013-2014 fiscal year based on the number of GED diplomas awarded by each college.

SECTION 10.5.(e)  Beginning with the 2012-2013 reporting year, the State Board of Community Colleges shall require a college to report its performance on all eight of the mandatory performance standards prescribed by G.S. 115D-31.3(e), as amended by this section.

 

REPEAL OF SENIOR CITIZEN TUITION WAIVER

SECTION 10.6.  G.S. 115D-5(b)(11) is repealed.

 

STUDY OF THE APPROVAL PROCESS FOR MULTICAMPUS CENTERS

SECTION 10.7.  The State Board of Community Colleges shall develop a process for approval of community college multicampus centers. The Board shall report to the Joint Legislative Education Oversight Committee by January 1, 2014, on its plan for a multicampus approval process and any statutory changes necessary to implement the plan.

 

CLARIFY EMPLOYEE ACADEMIC ASSISTANCE

SECTION 10.12.  G.S. 115D-5(b1) reads as rewritten:

"(b1)    The State Board of Community Colleges shall not waive tuition and registration fees for community college faculty or staff members. Community colleges may, however, use State or local funds to pay tuition and registration fees for one course per semester for full-time community college faculty or staff members employed for a nine-, ten-, eleven-, or twelve-month term. Community colleges may also use State and local funds to pay tuition and registration fees for professional development courses and for other courses consistent with the academic assistance program authorized by the State Personnel Commission."

 

REVISE TARGETED ASSISTANCE CRITERIA

SECTION 10.13.  G.S. 115D-40.1(b) reads as rewritten:

"(b)      Targeted Assistance. - Notwithstanding subsection (a) of this section, the State Board may allocate no more than up to ten percent (10%) of the funds appropriated for Financial Assistance for Community College Students to:to the following students:

(1)        Students who do not qualify for need-based assistance but who enroll in low-enrollment programs that prepare students for high-demand occupations, andoccupations.

(2)        Students with disabilities who have been referred by the Department of Health and Human Services, Division of Vocational Rehabilitation Rehabilitation, and are enrolled in a community college."

 

REPURPOSE OF FUNDS

SECTION 10.14.(a)  Of the funds appropriated to Forsyth Technical Community College in fiscal year 2005-2006 for the construction of the Center for Emerging Technologies at Forsyth Technical Community College, the sum of three million dollars ($3,000,000) for fiscal year 2013-2014 shall be transferred by the Office of State Budget and Management to Budget Code 26800 to be administered by the North Carolina Community Colleges System Office. The Community Colleges System Office shall allocate up to three hundred thousand dollars ($300,000) of these funds each fiscal year to Forsyth Technical Community College for the operating costs and lease expenses for the community college's biotechnology, nanotechnology, design, and advanced information technology programs; Small Business Center; and Corporate and Industrial Training programs. The Community Colleges System Office shall continue to allocate these funds to Forsyth Technical Community College for this purpose until those funds are expended. No additional State funds shall be made available to Forsyth Technical Community College to be used for the purposes described in this section.

SECTION 10.14.(b)  The Office of State Budget and Management shall transfer all funds in Budget Codes 40520 and 40620 that are unencumbered as of July 1, 2013, except those funds to be transferred in accordance with subsection (a) of this section, to Budget Code 16800. Of the funds transferred to Budget Code 16800 under this subsection, the State Board of Community Colleges shall allocate those funds to the community colleges to which the funds were appropriated. These funds shall be used for community college equipment.

 

clarify community college audits

SECTION 10.15.(a)  Effective July 1, 2015, G.S. 115D-5(m) is repealed.

SECTION 10.15.(b)  G.S. 115D-58.16 reads as rewritten:

" 115D-58.16.  Audits.

(a)        Each community college shall be auditedsubject to a financial audit a minimum of once every two years. Community colleges may use State funds to contract with the State Auditor or with a certified public accountant to perform the audits. The colleges shall submit the results of the audits to the State Board of Community Colleges.

The State Board of Community Colleges shall ensure that all colleges are audited in accordance with this section.

(b)        Notwithstanding the provisions of Chapter 143D of the General Statutes, a community college shall not be subject to the EAGLE program administered by the Office of the State Controller unless (i) there is a finding of internal control problems in the most recent financial audit of the college or (ii) the State Board of Community Colleges determines that a college should be subject to the program."

SECTION 10.15.(c)  A study of the program audit function under G.S. 115D-5(m) shall be conducted by a committee, located administratively in the Community Colleges System Office, composed of the following 12 members:

(1)        The Community Colleges System Office Chief Financial Officer.

(2)        Three State Board of Community College members appointed by the chair of the State Board of Community Colleges.

(3)        Three college presidents appointed by the North Carolina Association of Community College Presidents.

(4)        Three college board of trustee members appointed by the chair of the North Carolina Association of Community College Trustees.

(5)        The State Auditor or designee.

(6)        The State Chief Information Officer or designee.

The Community Colleges System Office Chief Financial Officer shall chair the committee. The committee shall meet upon the call of the chair. A quorum of the committee shall be a majority of the members.

The committee shall determine how program audit procedures may be streamlined to minimize the administrative burden on the institutions being audited and how funding mechanisms may be changed to reduce reliance on contact hours. The committee shall seek input from community college staff members who are responsible for assistance with the program audits to study the problems associated with the program audit function and potential resolutions for those issues. The committee shall report the results of its study and recommendations to the Joint Legislative Education Oversight Committee by January 1, 2015.

 

PART XI. UNIVERSITIES

 

USE OF ESCHEAT FUND FOR NEED-BASED FINANCIAL AID PROGRAMS/Study Scholarships for children of war veteran's program

SECTION 11.1.(a)  There is appropriated from the Escheat Fund income to the Board of Governors of The University of North Carolina the sum of thirty-seven million two hundred eighty-seven thousand two hundred forty-two dollars ($37,287,242) for the 2013-2014 fiscal year and the sum of thirty-seven million two hundred eighty-seven thousand two hundred forty-two dollars ($37,287,242) for the 2014-2015 fiscal year to be used for The University of North Carolina Need-Based Financial Aid Program.

SECTION 11.1.(b)  There is appropriated from the Escheat Fund income to the State Board of Community Colleges the sum of fifteen million two hundred forty-six thousand three hundred seventy-three dollars ($15,246,373) for the 2013-2014 fiscal year and the sum of sixteen million three hundred thirty-five thousand dollars ($16,335,000) for the 2014-2015 fiscal year to be used for community college grants.

SECTION 11.1.(c)  There is appropriated from the Escheat Fund income to the Department of Administration, Division of Veterans Affairs, the sum of six million five hundred twenty thousand nine hundred sixty-four dollars ($6,520,964) for the 2013-2014 fiscal year and the sum of six million five hundred twenty thousand nine hundred sixty-four dollars ($6,520,964) for the 2014-2015 fiscal year to be used for need-based student financial aid.

SECTION 11.1.(d)  The funds appropriated by this section shall be allocated by the State Education Assistance Authority (SEAA) for need-based student financial aid in accordance with G.S. 116B-7. If the interest income generated from the Escheat Fund is less than the amounts referenced in this section, the difference may be taken from the Escheat Fund principal to reach the appropriations referenced in this section; however, under no circumstances shall the Escheat Fund principal be reduced below the sum required in G.S. 116B-6(f). If any funds appropriated under this section remain uncommitted for need-based financial aid as of the end of a fiscal year, the funds shall be returned to the Escheat Fund, but only to the extent the funds exceed the amount of the Escheat Fund income for that fiscal year.

SECTION 11.1.(e)  The State Education Assistance Authority shall perform all of the administrative functions necessary to implement this program of financial aid. The SEAA shall conduct periodic evaluations of expenditures of the scholarship programs to determine if allocations are utilized to ensure access to institutions of higher learning and to meet the goals of the respective programs. SEAA may make recommendations for redistribution of funds to The University of North Carolina, Department of Administration, and the President of the Community College System regarding their respective scholarship programs, who then may authorize redistribution of unutilized funds for a particular fiscal year.

SECTION 11.1.(f)  G.S. 116B-7(a) reads as rewritten:

"(a)       The income derived from the investment or deposit of the Escheat Fund shall be distributed annually on or before July 15 August 15 to the State Education Assistance Authority for grants and loans to aid worthy and needy students who are residents of this State and are enrolled in public institutions of higher education in this State. Such grants and loans shall be made upon terms, consistent with the provisions of this Chapter, pursuant to which the State Education Assistance Authority makes grants and loans to other students under G.S. 116-201 to 116-209.23, Article 23 of Chapter 116 of the General Statutes, policies of the Board of Governors of The University of North Carolina regarding need-based grants for students of The University of North Carolina, and policies of the State Board of Community Colleges regarding need-based grants for students of the community colleges."

SECTION 11.1.(g)  The Joint Legislative Education Oversight Committee shall study the Scholarships for Children of War Veterans Program in the Department of Administration and no later than March 1, 2014, shall report its findings to the Chairs of the House of Representatives Appropriations Subcommittee on General Government, to the Chairs of the Senate Appropriations Committee on General Government and Information Technology, and to the General Assembly. The report shall include findings and recommendations regarding all of the following:

(1)        Which State agency is the appropriate entity to administer the program.

(2)        Ways in which the Program could be redesigned so as to increase cost predictability. This part of the report shall specifically include recommendations regarding the desirability of imposing time limits and scholarship award maximums on scholarships made available under the Program.

(3)        Methods of coordinating with other scholarship programs so as to ensure that non-State resources are maximized before Program resources are used.

 

UNC NEED-BASED FINANCIAL AID FORWARD FUNDING RESERVE/PROVIDE FUNDS FOR UNC NEED-BASED GRANTS

SECTION 11.2.(a)  It is the intent of the General Assembly to move the UNC Need-Based Financial Aid Program grant funding into a reserve in the North Carolina Student Loan Fund designated for that purpose so that funds appropriated for grants in a fiscal year are awarded to students for the following academic year. This change will provide additional program stability.

SECTION 11.2.(b)  The UNC Need-Based Financial Aid Forward Funding Reserve is established as a reserve in the North Carolina Student Loan Fund. The funds in the UNC Need-Based Financial Aid Forward Funding Reserve shall be held in reserve until the sum in reserve is sufficient to implement the forward funding of grants awarded to students in accordance with the intent set out in subsection (a) of this section.

SECTION 11.2.(c)  The following funds shall be transferred to the UNC Need-Based Financial Aid Forward Funding Reserve (Reserve):

(1)        The sum of fifty-nine million eight hundred fifty-nine thousand five hundred sixty-two dollars ($59,859,562) shall be transferred from the North Carolina Student Loan Fund to the Reserve.

(2)        Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2013-2015 fiscal biennium, the sum of three million four hundred seventy-five thousand five hundred thirty-eight dollars ($3,475,538) for the 2013-2014 fiscal year and the sum of three million four hundred fifty-four thousand six hundred fifty-six dollars ($3,454,656) for the 2014-2015 fiscal year shall be transferred to the Reserve.

(3)        Notwithstanding G.S. 115C-296.2, the sum of three million five hundred twenty-five thousand dollars ($3,525,000) shall be transferred from the fund balance of the National Board Certification Loan program to the Reserve.

(4)        The sum of five hundred thousand dollars ($500,000) shall be transferred from the John B. McLendon Scholarship Fund established in G.S. 116-209.40 to the Reserve.

SECTION 11.2.(d)  There is appropriated from the Escheat Fund for the 2013-2014 fiscal year to the UNC Need-Based Financial Aid Forward Funding Reserve the sum of one million eighty-eight thousand six hundred twenty-seven dollars ($1,088,627).

SECTION 11.2.(e)  G.S. 116-209.40 is repealed.

 

COORDINATED RESIDENCY DETERMINATION PROCESS

SECTION 11.3.(a)  The General Assembly finds that it is in the best interest of the State for the University System, the Community College System, and the State Education Assistance Authority to apply the criteria in G.S. 116-143.1 to determine residency for tuition purposes in a coordinated and similar manner. Therefore, The University of North Carolina, the North Carolina Community College System, and the State Education Assistance Authority shall jointly develop and implement a coordinated and centralized process to be used by those three entities when determining the residency for tuition purposes of students who apply for admission and are admitted to a constituent institution of The University of North Carolina or a community college under the jurisdiction of the State Board of Community Colleges and for private college students receiving State-funded financial aid. In developing a centralized residency determination process, The University of North Carolina General Administration, the North Carolina Community College System, and the State Education Assistance Authority shall consult with the North Carolina Independent Colleges and Universities.

SECTION 11.3.(b)  No later than January 1, 2014, The University of North Carolina, the North Carolina Community College System, and the State Education Assistance Authority shall report to the Joint Legislative Education Oversight Committee regarding the progress in developing and implementing a coordinated and centralized process and any necessary statutory changes.

 

IMPLEMENT TUITION SURCHARGE STUDY RECOMMENDATIONS

SECTION 11.4.(a)  G.S. 116-143.7 is amended by adding a new subsection to read:

"(d)      Each constituent institution shall implement procedures to notify students and parents regarding the tuition surcharge and to provide appropriate advance notice to a student when the student is approaching the credit hour limit regarding the tuition surcharge. The procedures shall comply with the tuition surcharge notification principles established by the Board of Governors."

SECTION 11.4.(b)  G.S. 116-11 is amended by adding a new subdivision to read:

"(7a)     The Board of Governors shall develop a uniform core set of notification principles regarding the tuition surcharge, including a process for each campus to notify students and parents at orientation and through each semester's tuition statements and a process to provide appropriate advance notification to a student when the student is approaching the credit hour limit regarding the tuition surcharge. The Board of Governors shall direct each constituent institution to implement these procedures."

SECTION 11.4.(c)  Notwithstanding G.S. 116-143.7, courses and credit hours transferred from an institution of higher education that is not a constituent institution or a community college established pursuant to G.S. 115D-4, that are accepted by a constituent institution prior to July 1, 2013, shall not count toward the tuition surcharge. General Administration of The University of North Carolina shall report by March 1, 2014, to the Joint Legislative Education Oversight Committee on the number of courses exempted from the tuition surcharge pursuant to this subsection.

SECTION 11.4.(d)  Subsections (a) and (b) of this section apply to the 2013 fall academic semester and to each subsequent academic semester.

 

UNC MANAGEMENT FLEXIBILITY REDUCTION

SECTION 11.5.(a)  The management flexibility reduction for The University of North Carolina shall not be allocated by the Board of Governors to the constituent institutions and affiliated entities using an across-the-board method but in a manner that recognizes the importance of the academic missions and differences among The University of North Carolina entities.

Before taking reductions in instructional budgets, the Board of Governors and the campuses of the constituent institutions shall consider all of the following:

(1)        Reducing State funding for centers and institutes, speaker series, and other nonacademic activities.

(2)        Faculty workload adjustments.

(3)        Restructuring of research activities.

(4)        Implementing cost-saving span of control measures.

(5)        Reducing the number of senior and middle management positions.

(6)        Eliminating low-performing, redundant, or low-enrollment programs.

(7)        Using alternative funding sources.

(8)        Protecting direct classroom services.

The Board of Governors and the campuses of the constituent institutions also shall review the institutional trust funds and the special funds held by or on behalf of The University of North Carolina and its constituent institutions to determine whether there are monies available in those funds that can be used to assist with operating costs. In addition, the campuses of the constituent institutions also shall require their faculty to have a teaching workload equal to the national average in their Carnegie classification.

SECTION 11.5.(b)  In allocating the management flexibility reduction, no reduction in State funds shall be allocated in either fiscal year of the 2013-2015 biennium to any of the following:

(1)        UNC Need-Based Financial Aid.

(2)        North Carolina Need-Based Scholarship.

SECTION 11.5.(c)  The University of North Carolina shall report on the implementation of the management flexibility reduction in subsection (a) of this section to the Office of State Budget and Management and the Fiscal Research Division no later than October 1, 2013. This report shall identify both of the following by campus:

(1)        The total number of positions eliminated by type (faculty/nonfaculty).

(2)        The low-performing, redundant, and low-enrollment programs that were eliminated.

 

UNC BOARD OF GOVERNORS REPORT ON OVERHEAD RECEIPTS

SECTION 11.6.(a)  G.S. 116-11 is amended by adding a new subdivision to read:

"(9a)     The Board of Governors shall report to the Joint Legislative Education Oversight Committee and the Office of State Budget and Management by March 1 of each year regarding the sum of facilities and administrative fees and overhead receipts for The University of North Carolina that are collected and expended by each constituent institution. The report shall include all of the following information:

a.         The collection of facilities and administrative fees and overhead receipts by grant or program.

b.         The use of facilities and administrative fees and overhead receipts showing expenditures by grant or program.

c.         The sum of facilities and administrative fees and overhead receipts collected or expended by each constituent institution for maintenance and operation of facilities that were constructed with or at any time operated by funds from the General Fund."

SECTION 11.6.(b)  Section 31.14 of S.L. 2001-424 is repealed.

 

STUDENT CHARGES AT THE NORTH CAROLINA SCHOOL OF SCIENCE AND MATH

SECTION 11.7.(a)  G.S. 116-40.22 reads as rewritten:

" 116-40.22.  Management flexibility.

(c)        Tuition and Fees. - Notwithstanding any provision in Chapter 116 of the General Statutes to the contrary, in addition to any tuition and fees set by the Board of Governors pursuant to G.S. 116-11(7), the Board of Trustees of the institution may recommend to the Board of Governors tuition and fees for program-specific and institution-specific needs at that institution without regard to whether an emergency situation exists and not inconsistent with the actions of the General Assembly. Any tuition and fees set pursuant to this subsection are appropriated for use by the institution. Notwithstanding this subsection, neither the Board of Governors of The University of North Carolina nor its Board of Trustees shall impose any tuition or mandatory fee at the North Carolina School of Science and Mathematics without the approval of the General Assembly.Assembly, except as provided in subsection (e) of this section.

(e)        The Board of Governors of The University of North Carolina may approve, upon the recommendation of the Board of Trustees of the North Carolina School of Science and Mathematics, the imposition of fees not inconsistent with actions of the General Assembly for distance education services provided by the North Carolina School of Science and Mathematics to nonresidents and for students participating in extracurricular enrichment programs sponsored by the School."

SECTION 11.7.(b)  G.S. 116-143 reads as rewritten:

" 116-143.  State-supported institutions of higher education required to charge tuition and fees.

(b)        In the event that said students are unable to pay the cost of tuition and required academic fees as the same may become due, in cash, the said several boards of trustees are hereby authorized and empowered, in their discretion, to accept the obligation of the student or students together with such collateral or security as they may deem necessary and proper, it being the purpose of this Article that all students in State institutions of higher learning shall be required to pay tuition, and that free tuition is hereby abolished. Notwithstanding this section, neither the Board of Governors of The University of North Carolina nor its Board of Trustees shall impose any tuition or mandatory fee at the North Carolina School of Science and Mathematics without the approval of the General Assembly.Assembly, except as provided in subsection (e) of this section.

(e)        The Board of Governors of The University of North Carolina may approve, upon the recommendation of the Board of Trustees of the North Carolina School of Science and Mathematics, the imposition of fees not inconsistent with actions of the General Assembly for distance education services provided by the North Carolina School of Science and Mathematics to nonresidents and for students participating in extracurricular enrichment programs sponsored by the School."

SECTION 11.7.(c)  This section applies to the 2013-2014 spring academic semester and each subsequent academic semester.

 

STUDENT CHARGES AT THE UNC SCHOOL OF THE ARTS

SECTION 11.8.(a)  Article 4 of Chapter 116 of the General Statutes is amended by adding a new section to read:

" 116-68.1.  Fees.

The Board of Governors of The University of North Carolina may set fees, not inconsistent with the actions of the General Assembly, to be paid by in-State high school students enrolled at the University of North Carolina School of the Arts to assist with expenses of the institution. The Board of Trustees may recommend to the Board of Governors of The University of North Carolina that fees be set, not inconsistent with actions of the General Assembly, to be paid by in-State high school students enrolled at the University of North Carolina School of the Arts to assist with expenses of the institution. The University of North Carolina School of the Arts may charge and collect fees established as provided by this section from in-State high school students enrolled at the University of North Carolina School of the Arts."

SECTION 11.8.(b)  This section applies to the 2014-2015 academic year and each subsequent academic year.

 

AUTHORIZE STATE EDUCATION ASSISTANCE AUTHORITY TO CONTINUE TO COLLECT NORTH CAROLINA TEACHING FELLOWS REPAYMENTS

SECTION 11.9.  Subsection (b) of Section 1.38 of S.L. 2011-266 is repealed.

 

UNC Strategic Direction initiative

SECTION 11.14.(a)  Data Analytics Projects. - Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2013-2015 fiscal biennium to be used for data analytics, the sum of five hundred thousand dollars ($500,000) for the 2013-2014 fiscal year and the sum of five hundred thousand dollars ($500,000) for the 2014-2015 fiscal year shall be allocated to the University of North Carolina at Wilmington to complete the construction of the Predictive Analytics Project and to make the project available as a model for data analytics that may be used by the other constituent institutions. The Board of Governors shall allocate the remaining funds appropriated by this act for data analytics among the other constituent institutions to construct data analytic projects similar to the model project at the University of North Carolina at Wilmington.

The University of North Carolina at Wilmington shall report the progress in implementing its Predictive Analytics Project and the information gained through the Project to the House of Representatives Education Appropriations Subcommittee and the Senate Education Appropriations Committee by the convening of the 2014 Regular Session of the 2013 General Assembly. The information in the report shall include the expenditures at the Wilmington campus for the 2012-2013 fiscal year set out separately by degree level.

The General Administration of The University of North Carolina shall make a final report to the 2015 General Assembly by the time it convenes regarding the implementation of the Predictive Analytics Project at the University of North Carolina at Wilmington and the progress in implementing data analytics projects at the other campuses in The University of North Carolina System. The report shall include the expenditures at each campus set out separately by degree level and by campus for the 2013-2014 fiscal year and the plans to continue to make the expenditure information available in the same manner for each subsequent fiscal year.

SECTION 11.14.(b)  Tuition Assistance for Nonresident Veterans. - Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2013-2015 fiscal biennium to increase degree attainment, the sum of three million dollars ($3,000,000) for the 2013-2014 fiscal year and the sum of three million dollars ($3,000,000) for the 2014-2015 fiscal year shall be used to provide funding to assist nonresident veteran students with the difference in cost between resident and nonresident tuition. The University of North Carolina is encouraged to use these funds to increase participation in the federal Yellow Ribbon Program to maximize available resources.

SECTION 11.14.(c)  Funds for UNC Investments in Faculty, Research, and Scholarship. - Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2013-2015 fiscal biennium, the sum of two million four hundred thousand dollars ($2,400,000) in recurring funds and the sum of one million dollars ($1,000,000) in nonrecurring funds for the 2013-2014 fiscal year and the sum of twelve million one hundred thousand dollars ($12,100,000) in recurring funds and the sum of ten million dollars ($10,000,000) in nonrecurring funds for the 2014-2015 fiscal year for focused investments in faculty, research, and scholarship that support certain priorities of The University System shall be allocated as follows:

                                                                 FY 2013-2014                                  FY 2014-2015

Advanced Manufacturing:

  Faculty and Staff                                          $200,000 (R)                                 $1,000,000 (R)

Advanced Manufacturing:

  Operations and Support                               $200,000 (R)                                    $500,000 (R)

Data Sciences:

  Faculty and Staff                                          $200,000 (R)                                    $900,000 (R)

Data Sciences:

  Operations and Support                               $200,000 (R)                                    $400,000 (R)

Defense, Military, and Security:

  Faculty and Staff                                          $200,000 (R)                                 $1,000,000 (R)

Defense, Military, and Security:

  Operations and Support                               $200,000 (R)                                    $500,000 (R)

Energy:

  Faculty and Staff                                          $200,000 (R)                                 $1,000,000 (R)

Energy:

  Operations and Support                               $200,000 (R)                                    $500,000 (R)

Marine and Coastal Sciences:

  Faculty and Staff                                          $400,000 (R)                                 $1,300,000 (R)

Marine and Coastal Sciences:

  Operations and Support                               $200,000 (R)                                    $400,000 (R)

Pharmaco-Engineering:

  Faculty and Staff                                          $200,000 (R)                                 $3,400,000 (R)

Pharmaco-Engineering:

Graduate Fellowship/Support                                    --                                          $200,000 (R)

Capital Facilities Lease Costs                                    --                                       $1,000,000 (R)

Startup and Infrastructure                                          --                                       $7,000,000 (NR)

Shared Research Equipment                       $1,000,000 (NR)                              $3,000,000 (NR)

SECTION 11.14.(d)  The Board of Governors shall allocate the funds designated for data sciences in subsection (c) of this section to the University of North Carolina at Charlotte.

 

Student Financial Aid/Semester Limit

SECTION 11.15.(a)  G.S. 115C-499.2(6) is repealed.

SECTION 11.15.(b)  Article 35A of Chapter 115C of the General Statutes is amended by adding a new section to read:

" 115C-499.2A.  Semester limitation on eligibility for scholarship.

(a)        Except as otherwise provided by subsection (c) of this section, a student with a matriculated status at a constituent institution of The University of North Carolina shall not receive a scholarship for more than 10 full-time academic semesters, or its equivalent if enrolled part-time, unless the student is enrolled in a program officially designated by the Board of Governors as a five-year degree program. If a student is enrolled in such a five-year degree program, then the student shall not receive a scholarship for more than 12 full-time academic semesters or the equivalent if enrolled part-time.

(b)        Except as otherwise provided by subsection (c) of this section, a student with a matriculated status at a community college shall not receive a scholarship for more than six full-time academic semesters, or the equivalent if enrolled part-time.

(c)        Upon application by a student, the appropriate postsecondary institution may grant a waiver to the student who may then receive a scholarship for the equivalent of one additional full-time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a degree, diploma, or certificate: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short-term or long-term disability, or (iv) other extraordinary hardship. The Board of Governors or the State Board of Community Colleges, as appropriate, shall establish policies and procedures to implement the waiver provided by this subsection."

SECTION 11.15.(c)  Article 3 of Chapter 115D of the General Statutes is amended by adding a new section to read:

" 115D-40.2.  Semester limitation on eligibility for North Carolina Community College grants.

(a)        Except as otherwise provided by this section, a student shall not receive a need-based grant from the North Carolina Community College Grant Program for more than six full-time academic semesters, or the equivalent if enrolled part-time.

(b)        Upon application by a student, the community college may grant a waiver to the student who may then receive a grant from the North Carolina Community College Grant Program for the equivalent of one additional full-time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a degree, diploma, or certificate: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short-term or long-term disability, or (iv) other extraordinary hardship. The State Board shall establish policies and procedures to implement the waiver provided by this subsection."

SECTION 11.15.(d)  G.S. 116-25.1 reads as rewritten:

" 116-25.1.  Limit receipt of Semester limitation on eligibility for The University of North Carolina need-based financial aid grants to traditional time period required to earn baccalaureate degree.grants.

(a)        Except as otherwise provided by this section, a student shall not receive a grant from The University of North Carolina Need-Based Financial Aid Program for more than nine 10 full-time academic semesters, or its equivalent if enrolled part-time, unless the student is enrolled in a program officially designated by the Board of Governors as a five-year degree program. If a student is enrolled in such a five-year degree program, then the student shall not receive a need-based grant from The University of North Carolina Need-Based Financial Aid Program for more than 11 12 full-time academic semesters or its equivalent if enrolled part-time.

(b)        Upon application by a student, the student may receive a grant for one additional part-time or full-time academic semester as appropriate, the constituent institution may grant a waiver to the student who may then receive a grant for the equivalent of one additional full-time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a degree: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short-term or long-term disability, or (iv) other extraordinary hardship, including inability to enroll in the appropriate courses due to reduced course offerings. hardship. The Board of Governors shall establish the appropriatepolicies and procedures to implement the additional semester extensionwaiver provided by this subsection."

SECTION 11.15.(e)  G.S. 116-281(6) is repealed.

SECTION 11.15.(f)  Article 34 of Chapter 116 of the General Statutes is amended by adding a new section to read:

" 116-281.1.  Semester limitation on eligibility for scholarship.

(a)        A student shall not receive a scholarship under this Article for more than 10 full-time academic semesters, or the equivalent if enrolled part-time, unless the student is enrolled in a program officially designated by the eligible private postsecondary institution as a five-year degree program. If a student is enrolled in such a five-year degree program, then the student shall not receive a scholarship under this Article for more than 12 full-time academic semesters or the equivalent if enrolled part-time.

(b)        Upon application by a student, the eligible private postsecondary institution may grant a waiver to the student who may then receive a scholarship for the equivalent of one additional full-time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a baccalaureate degree: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short-term or long-term disability, or (iv) other extraordinary hardship. The eligible private postsecondary institution shall establish policies and procedures to implement the waiver provided by this subsection."

SECTION 11.15.(g)  Article 23 of Chapter 116 of the General Statutes is amended by adding a new section to read:

" 116-209.19A.  Limit semesters eligible for need-based grants and scholarships.

The Authority administers the following need-based grant and scholarship programs: the Education Lottery Scholarships, North Carolina Community College Grant Program, The University of North Carolina Need-Based Financial Aid Program, and Need-Based Scholarships for Students Attending Private Institutions of Higher Education. G.S. 115C-499.2A, 115D-40.2, 116-25.1, and 116-281.1 limit the number of semesters that a student may receive a grant or scholarship from any of those programs and also provide the circumstances in which a waiver to those limits may be granted by the appropriate postsecondary institution. The Authority shall enforce these limitations in administering these programs so that unless a waiver is granted by the appropriate postsecondary institution, no student shall receive a grant or scholarship from any of those programs or any combination of those financial aid programs while pursuing a degree, diploma, or certificate for more than any of the following time periods: (i) 10 full-time academic semesters or its equivalent if enrolled part-time or (ii) 12 full-time academic semesters or its equivalent if the student is enrolled in a program officially designated as a five-year degree program.

A postsecondary institution that grants a waiver under G.S. 115C-499.2A, 115D-40.2, 116-25.1, or 116-281.1 shall certify the granting of the waiver in a manner acceptable to the Authority and shall also maintain documentation substantiating the reason for the waiver."

SECTION 11.15.(h)  The State Education Assistance Authority shall structure its payment schedule to encourage students to complete an average of 30 credit hours per academic year. The State Education Assistance Authority shall report to the Joint Legislative Education Oversight Committee by March 1, 2014, regarding the measures implemented by the Authority pursuant to this subsection.

SECTION 11.15.(i)  This section applies to the 2014-2015 academic year and each subsequent academic year.

 

Study School of Science and Mathematics/Morganton campus

SECTION 11.16.(a)  The Board of Governors of The University of North Carolina, the North Carolina School of Science and Mathematics (School of Science and Math), and the Department of Public Instruction shall jointly study the feasibility of establishing a western campus for the School of Science and Math at the School for the Deaf in Morganton. In its study, the Board of Governors, the School of Science and Math, and the Department of Public Instruction shall consider the number of students with excellent academic records who apply to the School of Science and Math but are not accepted because of the School's lack of physical space to accommodate additional students. They may also consult with the Department of Administration regarding what, if any, renovations would be required at the School for the Deaf if a western campus for the School of Science and Math were located at that facility.

If it is determined that the School for the Deaf is not a suitable site for the location of a western campus, the Board of Governors, School of Science and Math, and the Department of Public Instruction in consultation with the Department of Administration may consider other sites in western North Carolina that are available as a site.

SECTION 11.16.(b)  The Department of Administration shall, upon request by the Board of Governors, the North Carolina School of Science and Math, and the Department of Public Instruction, provide information regarding renovations that may be required to locate a western campus for the School of Science and Math at the School for the Deaf and shall also provide, upon request, information regarding other State-owned real property that may be available for such a purpose.

SECTION 11.16.(c)  The Board of Governors, the School of Science and Math, and the Department of Public Instruction shall report their findings and recommendations to the House of Representatives and Senate Appropriations Subcommittees on Education by February 1, 2014.

 

NC Guaranteed Admission Program

SECTION 11.17.(a)  The Board of Governors of The University of North Carolina, in consultation with the State Board of Community Colleges, shall develop the North Carolina Guaranteed Admission Program (NC GAP). The goals of NC GAP are to encourage and assist more students to obtain a baccalaureate degree within a shorter time period; to provide students with a college education at significantly lower costs for both the student and the State; to help decrease the amount of debt resulting from loans that a student may owe upon graduation; to provide a student with an interim degree that may increase a student's job opportunities if the student chooses not to continue postsecondary education; and to provide easier access to academic counseling that will assist a student in selecting coursework that reflects the student's educational and career goals and helps the student succeed academically.

The purpose of the program is to provide an option for students who apply for admission to a constituent institution and satisfy the admission criteria, but whose academic credentials are not as competitive as other students admitted to the institution. A student who chooses to participate in NC GAP shall agree to defer admission to the constituent institution for at least two years and in return shall be guaranteed admission to the constituent institution for the student's junior year, provided the student enrolls in a community college and earns an associate degree.

SECTION 11.17.(b)  The State Board of Community Colleges, in consultation with the Board of Governors of The University of North Carolina, shall adopt rules to ensure that a student participating in NC GAP is provided counseling and assistance in selecting coursework that reflects the student's educational and career goals and that provides a smooth transition from the community college to the constituent institution.

SECTION 11.17.(c)  The State Board of Community Colleges shall allocate a portion of the nonrecurring funds appropriated to the Board by this act for the 2014-2015 fiscal year to assist community colleges with students who are participating in NC GAP.

SECTION 11.17.(d)  The Board of Governors of The University of North Carolina and the State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee by March 1, 2014, on the development and implementation of NC GAP. The report shall include a comprehensive description of the program and the academic counseling required to help students in NC GAP succeed academically.

SECTION 11.17.(e)  NC GAP shall be implemented for the 2014-2015 academic year and shall continue for each subsequent academic year.

 

UNC ISchool/Career and College Promise Program

SECTION 11.18.  The University of North Carolina at Greensboro and the Department of Public Instruction shall jointly study the feasibility of restarting the UNC-G iSchool by incorporating it as a part of the Career and College Promise Program. As part of the study, the University of North Carolina at Greensboro and the Department of Public Instruction shall consider the cost of incorporating the iSchool within the existing structure of the Career and College Promise Program. The University of North Carolina at Greensboro and the Department of Public Instruction shall report to the Joint Legislative Education Oversight Committee by March 1, 2014, regarding their findings and recommendations.

 

PART XII. DEPARTMENT OF HEALTH AND HUMAN SERVICES

 

SUBPART XII-A. CENTRAL MANAGEMENT AND SUPPORT

 

DEPARTMENT FLEXIBILITY TO ACHIEVE DEPARTMENTAL PRIORITIES AND ENHANCE FISCAL OVERSIGHT AND ACCOUNTABILITY

SECTION 12A.1.(a)  Notwithstanding any other provision of law to the contrary and consistent with G.S. 143B-10, the Secretary of the Department of Health and Human Services may reorganize positions and related operational costs within the Department (i) upon a demonstration by the Department of cost-effectiveness and (ii) after approval by the Office of State Budget and Management (OSBM) of a written proposal submitted by the Department to OSBM. Proposals submitted to OSBM under this section shall, at a minimum, identify the positions involved and the strategies to be implemented in order to achieve efficiencies.

SECTION 12A.1.(b)  In order to enhance fiscal oversight and accountability, the Secretary of the Department of Health and Human Services may realign existing resources to expand its internal audit capacity. The Secretary may identify up to 32 existing positions for this purpose. Any realignment of resources and positions pursuant to this subsection is subject to the prior approval of OSBM. Notwithstanding any provision of law to the contrary, these realignments shall be reflected in the authorized budget. The expanded Office of Internal Audit shall provide the Department's management personnel with independent reviews and analyses of various functions and services within the Department, including operational audits, performance audits, compliance audits, financial audits, and other special reviews.

SECTION 12A.1.(c)  By no later than June 30, 2014, the Department shall report any actions undertaken pursuant to this section to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The report shall, at a minimum, identify the positions involved and the strategies implemented to achieve efficiencies, to expand internal audit capacity, or both.

 

FUNDING FOR NONPROFIT ORGANIZATIONS/Establish COMPETITIVE GRANTS PROCESs

SECTION 12A.2.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, the sum of nine million five hundred twenty-nine thousand one hundred thirty-four dollars ($9,529,134) for the 2013-2014 fiscal year only and the sum of three million twenty-one thousand three hundred twenty-three dollars ($3,021,323) appropriated in Section 12J.1 of this act for each year of the 2013-2015 fiscal biennium shall be used to allocate funds for nonprofit organizations.

SECTION 12A.2.(b)  For fiscal year 2013-2014 only, from funds appropriated under subsection (a) of this section, the Department shall allocate the designated amounts to the following nonprofit organizations:

(1)        North Carolina Senior Games, Inc.                                    $     111,908

(2)        ARC of North Carolina                                                           281,517

(3)        ARC of North Carolina - Wilmington                                        47,025

(4)        Autism Society of North Carolina                                          2,710,003

(5)        The Mariposa School for Children with Autism                         313,097

(6)        Easter Seals UCP of North Carolina                                     1,491,827

(7)        ABC of North Carolina Child Development Center                  337,807

(8)        Residential Services, Inc.                                                         227,006

(9)        Oxford House, Inc.                                                                  184,240

(10)      Brain Injury Association of North Carolina                               207,475

(11)      Food Bank of Central and Eastern North Carolina, Inc.            460,600

(12)      Food Bank of the Albemarle                                                    460,600

(13)      Manna Food Bank                                                                  460,600

(14)      Second Harvest Food Bank of Metrolina, Inc.                         460,600

(15)      Second Harvest Food Bank of Northwest North Carolina, Inc.                                                                                      460,600

(16)      Second Harvest Food Bank of Southeast North Carolina 460,600

(17)      Prevent Blindness NC                                                              422,060

(18)      Maternity Homes                                                                     345,450

(19)      NC High School Athletic Association (NCHSAA)                   306,291

(20)      Work First - Boys & Girls Clubs                                          2,259,243

(21)      Vocational Rehabilitation Services - Easter Seal Society/UCP North Carolina                                                                                  173,428

(22)      ALS Jim "Catfish" Hunter                                                         368,480

SECTION 12A.2.(c)  It is the intent of the General Assembly that beginning fiscal year 2014-2015 the Department implement a competitive grants process for nonprofit funding. To that end, the Department shall develop a plan that establishes a competitive grants process to be administered by the Division of Central Management and Support. The Department shall develop a plan that, at a minimum, includes each of the following:

(1)        A request for application (RFA) process to allow nonprofits to apply for and receive State funds on a competitive basis.

(2)        A requirement that nonprofits match a minimum of ten percent (10%) of the total amount of the grant award.

(3)        A requirement that the Secretary prioritize grant awards to those nonprofits that are able to leverage non-State funds in addition to the grant award.

(4)        A process that awards grants to nonprofits dedicated to providing services on a statewide basis and that support any of the following State health and wellness initiatives:

a.         A program targeting advocacy, support, education, or residential services for persons diagnosed with autism.

b.         A comprehensive program of education, advocacy, and support related to brain injury and those affected by brain injury.

c.         A system of residential supports for those afflicted with substance abuse addiction.

d.         A program of advocacy and supports for individuals with intellectual and developmental disabilities or severe and persistent mental illness, substance abusers, or the elderly.

e.         Supports and services to children and adults with developmental disabilities or mental health diagnoses.

f.          A food distribution system for needy individuals.

g.         The provision and coordination of services for the homeless.

h.         The provision of services for individuals aging out of foster care.

i.          Programs promoting wellness, physical activity, and health education programming for North Carolinians.

j.          A program focused on enhancing vision screening through the State's public school system.

k.         Provision for the delivery of after-school services for at-risk youth.

l.          The provision of direct services for amyotrophic lateral sclerosis (ALS) and those diagnosed with the disease.

(5)        Ensures that funds received by the Department to implement the plan supplement and do not supplant existing funds for health and wellness programs and initiatives.

SECTION 12A.2.(d)  By no later than December 1, 2013, each nonprofit organization receiving funding pursuant to subsection (b) of this section shall submit to the Division of Central Management and Support a written report of all activities funded by State appropriations. The report shall include the following information about the fiscal year preceding the year in which the report is due:

(1)        The entity's mission, purpose, and governance structure.

(2)        A description of the types of programs, services, and activities funded by State appropriations.

(3)        Statistical and demographical information on the number of persons served by these programs, services, and activities, including the counties in which services are provided.

(4)        Outcome measures that demonstrate the impact and effectiveness of the programs, services, and activities.

(5)        A detailed program budget and list of expenditures, including all positions funded and funding sources.

(6)        The source and amount of any matching funds received by the entity.

SECTION 12A.2.(e)  By no later than February 1, 2014, the Secretary of Health and Human Services shall develop a plan for the implementation of the competitive grants process for nonprofit funding and shall report to the Joint Legislative Oversight Committee on Health and Human Services on the plan.

SECTION 12A.2.(f)  By no later than April 1, 2014, the Secretary of Health and Human Services shall implement the plan for the competitive grants process.

SECTION 12A.2.(g)  By no later than July 1, 2014, the Secretary shall announce the recipients of the competitive grant awards. After awards have been granted, the Secretary shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services on the grant awards that includes at least all of the following:

(1)        The identity and a brief description of each grantee and each program or initiative offered by the grantee.

(2)        The amount of funding awarded to each grantee.

(3)        The number of persons served by each grantee, broken down by program or initiative.

 

Supplemental Short-Term Assistance For Group Homes

SECTION 12A.2A.(a)  As used in this act, "group home" means any facility that (i) is licensed under Chapter 122C of the General Statutes, (ii) meets the definition of a supervised living facility under 10A NCAC 27G .5601(c)(1) or 10A NCAC 27G .5601(c)(3), and (iii) serves adults whose primary diagnosis is mental illness or a developmental disability but may also have other diagnoses.

SECTION 12A.2A.(b)  From the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, the sum of eight million dollars ($8,000,000) in nonrecurring funds shall be used to provide temporary, short-term financial assistance in the form of a monthly payment to group homes on behalf of each resident who meets all of the following criteria:

(1)        Was eligible for Medicaid-covered personal care services (PCS) prior to January 1, 2013, but was determined to be ineligible for PCS on or after January 1, 2013, due to Medicaid State Plan changes in PCS eligibility criteria specified in Section 10.9F of S.L. 2012-142, as amended by Section 3.7 of S.L. 2012-145 and Section 70 of S.L. 2012-194.

(2)        Has continuously resided in a group home since December 31, 2012.

SECTION 12A.2A.(c)  These monthly payments shall be subject to all of the following requirements and limitations:

(1)        The amount of the monthly payments authorized by this section shall not exceed four hundred sixty-four dollars and thirty cents ($464.30) per month for each resident who meets all criteria specified in subsection (b) of this section.

(2)        A group home that receives the monthly payments authorized by this section shall not, under any circumstances, use these payments for any purpose other than providing, as necessary (i) non-hands-on assistance, (ii) supervision, and (iii) medication management for a resident who meets all criteria specified in subsection (b) of this section.

(3)        The Department shall make monthly payments authorized by this section to a group home on behalf of each resident who meets all criteria specified in subsection (b) of this section only for the period commencing July 1, 2013, and ending June 30, 2014, or upon depletion of the eight million dollars ($8,000,000) in nonrecurring funds appropriated in this act to the Division of Central Management and Support for the 2013-2014 fiscal year for the purpose of this section, whichever is earlier.

(4)        The Department shall make monthly payments authorized by this section only to the extent sufficient funds are available from the eight million dollars ($8,000,000) in nonrecurring funds appropriated in this act to the Division of Central Management and Support for the 2013-2014 fiscal year for the purpose of this section.

(5)        The Department shall not make monthly payments authorized by this section to a group home on behalf of a resident during the pendency of an appeal by or on behalf of the resident under G.S. 108A-70.9A.

(6)        The Department shall terminate all monthly payments pursuant to this section on June 30, 2014, or upon depletion of the funds appropriated in this act to the Division of Central Management and Support for the 2013-2014 fiscal year for the purpose of this section, whichever is earlier.

SECTION 12A.2A.(d)  The Department shall use an existing mechanism to administer these funds in the least restrictive manner that ensures compliance with this section and timely and accurate payments to group homes. The Department shall not, under any circumstances, use any portion of the eight million dollars ($8,000,000) appropriated in this act to the Division of Central Management and Support for the purpose of this section for any other purpose.

SECTION 12A.2A.(e)  By no later than April 1, 2014, the Department of Health and Human Services shall study and submit to the House Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Legislative Oversight Committee on Health and Human Services, and the Fiscal Research Division a plan for a long-term solution for individuals residing in group homes who would like to continue residing in this setting and, as a result of an independent assessment, have been determined to need only one or more of the following: (i) non-hands-on assistance, (ii) supervision, and (iii) medication management.

SECTION 12A.2A.(f)  Nothing in this section shall be construed as an obligation by the General Assembly to appropriate funds for the purpose of this section, or as an entitlement by any group home, resident of a group home, or other person to receive temporary, short-term financial assistance under this section.

SECTION 12A.2A.(g)  This section expires June 30, 2014.

 

HEALTH INFORMATION TECHNOLOGY

SECTION 12A.3.(a)  The Department of Health and Human Services, in cooperation with the State Chief Information Officer, shall coordinate health information technology (HIT) policies and programs within the State of North Carolina. The Department's goal in coordinating State HIT policy and programs shall be to avoid duplication of efforts and to ensure that each State agency, public entity, and private entity that undertakes health information technology activities does so within the area of its greatest expertise and technical capability and in a manner that supports coordinated State and national goals, which shall include at least all of the following:

(1)        Ensuring that patient health information is secure and protected, in accordance with applicable law.

(2)        Improving health care quality, reducing medical errors, reducing health disparities, and advancing the delivery of patient-centered medical care.

(3)        Providing appropriate information to guide medical decisions at the time and place of care.

(4)        Ensuring meaningful public input into HIT infrastructure development.

(5)        Improving the coordination of information among hospitals, laboratories, physicians' offices, and other entities through an effective infrastructure for the secure and authorized exchange of health care information.

(6)        Improving public health services and facilitating early identification and rapid response to public health threats and emergencies, including bioterrorist events and infectious disease outbreaks.

(7)        Facilitating health and clinical research.

(8)        Promoting early detection, prevention, and management of chronic diseases.

SECTION 12A.3.(b)  The Department of Health and Human Services shall establish and direct an HIT management structure that is efficient and transparent and that is compatible with the Office of the National Health Coordinator for Information Technology (National Coordinator) governance mechanism. The HIT management structure shall be responsible for all of the following:

(1)        Developing a State plan for implementing and ensuring compliance with national HIT standards and for the most efficient, effective, and widespread adoption of HIT.

(2)        Ensuring that (i) specific populations are effectively integrated into the State plan, including aging populations, populations requiring mental health services, and populations utilizing the public health system, and (ii) unserved and underserved populations receive priority consideration for HIT support.

(3)        Identifying all HIT stakeholders and soliciting feedback and participation from each stakeholder in the development of the State plan.

(4)        Ensuring that existing HIT capabilities are considered and incorporated into the State plan.

(5)        Identifying and eliminating conflicting HIT efforts where necessary.

(6)        Identifying available resources for the implementation, operation, and maintenance of health information technology, including identifying resources and available opportunities for North Carolina institutions of higher education.

(7)        Ensuring that potential State plan participants are aware of HIT policies and programs and the opportunity for improved health information technology.

(8)        Monitoring HIT efforts and initiatives in other states and replicating successful efforts and initiatives in North Carolina.

(9)        Monitoring the development of the National Coordinator's strategic plan and ensuring that all stakeholders are aware of and in compliance with its requirements.

(10)      Monitoring the progress and recommendations of the HIT Policy and Standards Committee and ensuring that all stakeholders remain informed of the Committee's recommendations.

(11)      Monitoring all studies and reports provided to the United States Congress and reporting to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the impact of report recommendations on State efforts to implement coordinated HIT.

SECTION 12A.3.(c)  Section 10.24(c) of S.L. 2011-145 reads as rewritten:

"SECTION 10.24.(c)  Beginning October 1, 2011, the Department of Health and Human Services shall provide quarterly written reportsBy no later than January 15, 2015, the Department of Health and Human Services shall provide a written report on the status of HIT efforts to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The reports due each January 1 and July 1 shall consist of updates to substantial initiatives or challenges that have occurred since the most recent comprehensive report. The reports due each October 1 and April 1report shall be comprehensive and shall include all of the following:

(1)        Current status of federal HIT initiatives.

(2)        Current status of State HIT efforts and initiatives among both public and private entities.

(3)        A breakdown of current public and private funding sources and dollar amounts for State HIT initiatives.

(4)        Department efforts to coordinate HIT initiatives within the State and any obstacles or impediments to coordination.

(5)        HIT research efforts being conducted within the State and sources of funding for research efforts.

(6)        Opportunities for stakeholders to participate in HIT funding and other efforts and initiatives during the next quarter.

(7)        Issues associated with the implementation of HIT in North Carolina and recommended solutions to these issues."

 

FUNDS FOR REPLACEMENT MEDICAID MANAGEMENT INFORMATION SYSTEM/IMPLEMENTATION OF REPLACEMENT MMIS

SECTION 12A.4.(a)  The Secretary of the Department of Health and Human Services may utilize prior year earned revenue received for the replacement MMIS in the amount of nine million six hundred fifty-eight thousand one hundred fifty-two dollars ($9,658,152) for the 2013-2014 fiscal year and in the amount of one million six hundred sixty-six thousand six hundred twenty-five dollars ($1,666,625) for the 2014-2015 fiscal year. In the event the Department does not receive prior year earned revenues in the amounts authorized by this section, or funds are insufficient to advance the project, the Department may, with prior approval from the Office of State Budget and Management (OSBM), utilize overrealized receipts and funds appropriated to the Department to achieve the level of funding specified in this section for the replacement MMIS.

SECTION 12A.4.(b)  The Department shall make full development of the replacement MMIS a top priority. During development and implementation of the replacement MMIS, the Department shall develop plans to ensure the timely and effective implementation of enhancements to the system to provide the following capabilities:

(1)        Receiving and tracking premiums or other payments required by law.

(2)        Compatibility with the Health Information System.

SECTION 12A.4.(c)  The Department shall make every effort to expedite the implementation of the enhancements. The replacement MMIS shall have the capability to fully implement the administration of NC Health Choice, Ticket to Work, CAP Children's Program, all relevant Medicaid waivers, and the Medicare 646 waiver as it applies to Medicaid eligibles.

SECTION 12A.4.(d)  The Office of the State Chief Information Officer (SCIO) and the Office of Information Technology Services (ITS) shall work in cooperation with the Department to ensure the timely and effective implementation of the replacement MMIS and any enhancements. The SCIO shall ensure that the replacement MMIS meets all State requirements for project management and shall immediately report any failure to meet these requirements to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of State Budget and Management. The SCIO shall also immediately report if any replacement MMIS project, or portion of a project, is listed as red in the project portfolio management tool.

SECTION 12A.4.(e)  Notwithstanding G.S. 114-2.3, the Department shall consult with the Office of the SCIO concerning the retention of private counsel for the replacement MMIS, and as directed by the Office of the SCIO, retain private counsel with expertise in pertinent information technology and computer law to negotiate and review contract amendments associated with the replacement MMIS. The private counsel engaged by the Department shall review the replacement MMIS contract amendments between the Department and the vendors to ensure that the requirements of subsection (c) of this section are met in their entirety and that the terms of the contract amendments are in the State's best interest.

SECTION 12A.4.(f)  The Department shall immediately report any changes to the replacement MMIS implementation schedules to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of State Budget and Management, with a full explanation of the reason for the change and any associated costs.

SECTION 12A.4.(g)  The Department shall provide the following reports on the replacement MMIS by the dates specified in this subsection to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of State Budget and Management:

(1)        By no later than September 1, 2013, a progress report on full implementation of the replacement MMIS, which shall include at least all of the following:

a.         Any issues encountered following the "go-live" date of July 1, 2013, and how each issue was resolved.

b.         Any system requirements for manual workarounds and the time line for implementing an automated solution for each manual workaround.

c.         Required capabilities that are not available in the replacement MMIS on the "go-live" date of July 1, 2013, with a date for the implementation of each.

(2)        By no later than November 1, 2013, a progress report on full implementation of the replacement MMIS, which shall include at least all of the following:

a.         An updated estimate of the costs associated with operating and maintaining the system during the 2013-2014 and 2014-2015 fiscal years, with an explanation for any changes from previous submissions.

b.         The cost, if any, associated with the resolution of each issue encountered following the "go-live" date of July 1, 2013, and the source of funding for the associated cost.

c.         The cost, if any, associated with any system requirements for manual workarounds, the source of funding used to pay for the associated cost, the cost associated with transitioning to each automated solution, and the source of funding for each identified cost.

d.         A comparison of timeliness and accuracy of payments for legacy system and replacement system transactions, using the same criteria for both.

e.         The cost, if any, associated with implementation of any required capabilities that are not available in the replacement MMIS on the "go-live" date of July 1, 2013.

(3)        By no later than December 1, 2013, a plan for the elimination of the Office of Medicaid Management Information System Services (OMMISS) and the transfer of its remaining operations to other Divisions within the Department of Health and Human Services. This plan shall include at least all of the following:

a.         The specific operations to be transferred to other Divisions within the Department, the specific Division to which each operation will be transferred, the State personnel that will be impacted by each transfer, costs associated with each transfer, and sources of funding to enable the identified Divisions to assume these transferred operations.

b.         Any State personnel costs that will result from the dissolution of OMMISS, including the costs of any severance payments and any compensatory time earned during the course of the project, broken down by employee; and any identified sources of funding to pay for these personnel costs.

c.         A plan for transitioning out of the space currently leased by the State for OMMISS, costs associated with this transition, and any savings that will result from the transition.

(4)        By no later than January 15, 2014, a preliminary report on the Department's plan for achieving system certification, which shall include at least all of the following:

a.         A description of the process.

b.         A detailed time line.

c.         Any issues that could impact the timing of system certification and plans to mitigate identified issues.

d.         Any costs associated with system certification.

e.         Any identified funding sources to pay for costs associated with system certification.

SECTION 12A.4.(h)  The Department shall complete the Reporting and Analytics Project solution simultaneously with the implementation of the replacement MMIS.

SECTION 12A.4.(i)  Notwithstanding any other provision of law and to the extent permitted by federal law, the Department shall not approve any overtime or compensatory time related to the replacement MMIS after the replacement MMIS "go-live" date of July 1, 2013, without the prior written approval of the Office of State Personnel for each specific instance of overtime or compensatory time.

 

FUNDING FOR NORTH CAROLINA FAMILIES ACCESSING SERVICES THROUGH TECHNOLOGY (NC FAST); REPORT ON ELIGIBILITY DETERMINATIONS FOR THE EXCHANGE

SECTION 12A.6.(a)  Funds appropriated in this act in the amount of eight hundred sixty-four thousand six hundred fifty-five dollars ($864,655) for State fiscal year 2014-2015 along with the cash balance in Budget Code 24410 Fund 2411 for the North Carolina Families Accessing Services through Technology (NC FAST) project shall be used to match federal funds in fiscal years 2013-2014 and 2014-2015 to expedite the development and implementation of the Eligibility Information System (EIS), Child Care, Low Income Energy Assistance, and Crisis Intervention Programs, and Child Service components of the NC FAST project.

SECTION 12A.6.(b)  The Department of Health and Human Services shall report on NC FAST's performance in providing eligibility determinations for Medicaid applicants on the federally facilitated Health Benefit Exchange, a required function of NC FAST directed by Section 2 of S.L. 2013-5. The report shall contain a description of the following:

(1)        Funding sources, funding amounts, and expenditures for the project beginning in fiscal year 2012-2013 through the time of the report.

(2)        Any challenges with the eligibility determination project and how NC FAST solved those challenges.

(3)        The number of eligibility determinations performed for applicants on the federally facilitated Health Benefit Exchange, including an analysis of on what days and for how many persons eligibility determinations were performed as well as how many applicants were determined to be eligible.

The Department shall submit a report to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Oversight Committee on Health and Human Services, and the Joint Legislative Oversight Committee on Information Technology three months after open enrollment begins for the federally facilitated Health Benefit Exchange.

 

LIABILITY INSURANCE

SECTION 12A.7.  Article 31 of Chapter 58 of the General Statutes is amended by adding a new section to read:

" 58-31-26.  Medical liability insurance for certain physicians and dentists.

(a)        The Secretary of the Department of Health and Human Services and the Secretary of the Department of Public Safety may provide medical liability insurance not to exceed one million dollars ($1,000,000) per incident on behalf of employees of these Departments who are licensed to practice medicine or dentistry; on behalf of all licensed physicians who are faculty members of The University of North Carolina who perform work on a contractual basis for the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services for incidents that occur in Division programs; and on behalf of physicians in all residency training programs from The University of North Carolina who are in training at institutions operated by the Department of Health and Human Services. This coverage may include commercial insurance or self-insurance and shall cover these individuals for their acts or omissions only while they are engaged in providing medical and dental services pursuant to their State employment or training.

(b)        The coverage provided pursuant to this section shall not cover any individual for any act or omission that the individual knows or reasonably should know constitutes a violation of the applicable criminal laws of any state or the United States, or that arises out of any sexual, fraudulent, criminal, or malicious act or out of any act amounting to willful or wanton negligence.

(c)        The coverage provided pursuant to this section shall not require any additional appropriations and, except as provided in subsection (a) of this section, shall not apply to any individual providing contractual service to the Department of Health and Human Services or the Department of Public Safety."

 

ELIMINATion of UNNECESSARY AND REDUNDANT REPORTS

SECTION 12A.8.(a)  Eliminate Outcomes Evaluation Study on the Effectiveness of Substance Abuse Services Provided to Person Convicted of DWI. - G.S. 122C-142.1(j) is repealed.

SECTION 12A.8.(b)  Eliminate Evaluation of Efficiency and Effectiveness of Family Resource Center Grant Program. - G.S. 143B-152.15(b) is repealed.

SECTION 12A.8.(c)  Eliminate Annual Report on Progress of MH/DD/SAS State Plan. - G.S. 122C-102(c) is repealed.

SECTION 12A.8.(d)  Eliminate Annual Report on North Carolina State Plan on Healthcare Associated Infections. - G.S. 130A-150(e) is repealed.

SECTION 12A.8.(e)  Eliminate Annual Report on The Health Insurance Program for Children. - G.S. 108A-70.27(b) is repealed.

SECTION 12A.8.(f)  Eliminate Annual Report by State Child Fatality Review Team. - G.S. 143B-150.20(h) is repealed.

 

CANCER COORDINATION REPORTING

SECTION 12A.9.  G.S. 130A-33.51(b) reads as rewritten:

"(b)      The Committee shall submit a written report not later than May 1, 1994, and not later than October 1 of each subsequent year, to the Governor and to the Joint Legislative Commission on Governmental Operations. the Secretary. The report shall address the progress in implementation of a cancer control program. The report shall include an accounting of funds expended and anticipated funding needs for full implementation of recommended programs."

 

MEETINGS OF CANCER COORDINATION COMMITTEE

SECTION 12A.10.  G.S. 130A-33.50(b) reads as rewritten:

"(b)      The Committee shall have up to 34 members, including the Secretary of the Department or the Secretary's designee. The members of the Committee shall elect a chair and vice-chair from among the Committee membership. The Committee shall meet not more than twice a year at the call of the chair. Six of the members shall be legislators, three of whom shall be appointed by the Speaker of the House of Representatives, and three of whom shall be appointed by the President Pro Tempore of the Senate. Four of the members shall be cancer survivors, two of whom shall be appointed by the Speaker of the House of Representatives, and two of whom shall be appointed by the President Pro Tempore of the Senate. The remainder of the members shall be appointed by the Governor as follows:

(1)        One member from the Department of Environment and Natural Resources;

(2)        Three members, one from each of the following: the Department, the Department of Public Instruction, and the North Carolina Community College System;

(3)        Four members representing the cancer control programs at North Carolina medical schools, one from each of the following: the University of North Carolina at Chapel Hill School of Medicine, the Bowman Gray School of Medicine, the Duke University School of Medicine, and the East Carolina University School of Medicine;

(4)        One member who is an oncology nurse representing the North Carolina Nurses Association;

(5)        One member representing the Cancer Committee of the North Carolina Medical Society;

(6)        One member representing the Old North State Medical Society;

(7)        One member representing the American Cancer Society, North Carolina Division, Inc.;

(8)        One member representing the North Carolina Hospital Association;

(9)        One member representing the North Carolina Association of Local Health Directors;

(10)      One member who is a primary care physician licensed to practice medicine in North Carolina;

(11)      One member representing the American College of Surgeons;

(12)      One member representing the North Carolina Oncology Society;

(13)      One member representing the Association of North Carolina Cancer Registrars;

(14)      One member representing the Medical Directors of the North Carolina Association of Health Plans; and

(15)      Up to four additional members at large.

Except for the Secretary, the members shall be appointed for staggered four-year terms and until their successors are appointed and qualify. The Governor may remove any member of the Committee from office in accordance with the provisions of G.S. 143B-13. Members may succeed themselves for one term and may be appointed again after being off the Committee for one term."

 

ANNUAL REPORT OF LAPSED SALARY FUNDS

SECTION 12A.11.  Section 10.20 of S.L. 2012-142 reads as rewritten:

"SECTION 10.20. Beginning no later than November 1, 2012, and annually thereafter, the Department of Health and Human Services shall submit quarterly reportsa report to the Joint Legislative Oversight Committee on Health and Human Services, the House Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, Services and the Fiscal Research Division on the use of lapsed salary funds by each Division within the Department. For each Division, the report shall include the following information about the preceding calendar quarterState fiscal year:

(1)        The total amount of lapsed salary funds.

(2)        The number of full-time equivalent positions comprising the lapsed salary funds.

(3)        The Fund Code for each full-time equivalent position included in the number reported pursuant to subdivision (2) of this section.

(4)        The purposes for which the Department expended lapsed salary funds."

 

PRISON REPORT

SECTION 12A.12.  G.S. 148-19(d) reads as rewritten:

"(d)      The Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services shall adopt standards for the delivery of mental health and mental retardation services to inmates in the custody of the Division of Adult Correction of the Department of Public Safety. The Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services shall give the Secretary of Public Safety an opportunity to review and comment on proposed standards prior to promulgation of such standards; however, final authority to determine such standards remains with the Commission. The Secretary of the Department of Health and Human Services shall designate an agency or agencies within the Department of Health and Human Services to monitor the implementation by the Division of Adult Correction of the Department of Public Safety of these standards and of substance abuse standards adopted by the Division of Adult Correction of the Department of Public Safety. The Secretary of Health and Human Services shall send a written report on the progress which the Division of Adult Correction of the Department of Public Safety has made on the implementation of such standards to the Governor, the Lieutenant Governor, and the Speaker of the House. Such reports shall be made on an annual basis beginning January 1, 1978."

 

MODIFICATIONS TO JUSTUS-WARREN TASK FORCE

SECTION 12A.13.  G.S. 143B-216.60 reads as rewritten:

" 143B-216.60.  The Justus-Warren Heart Disease and Stroke Prevention Task Force.

(e)        The Task Force shall meet at least quarterly or more frequently not more than twice annually at the call of the Chair.

(f)         The Task Force Chair may establish committees for the purpose of making special studies pursuant to its duties, and may appoint non-Task Force members to serve on each committee as resource persons. Resource persons shall be voting members of the committees and shall receive subsistence and travel expenses in accordance with G.S. 138-5 and G.S. 138-6. Committees may meet with the frequency needed to accomplish the purposes of this section.

."

 

SUBPART XII-B. DIVISION OF CHILD DEVELOPMENT AND EARLY EDUCATION

 

NC PRE-K

SECTION 12B.1.(a)  Eligibility. - The Department of Health and Human Services, Division of Child Development and Early Education, shall continue implementing the prekindergarten program (NC Pre-K). The NC Pre-K program shall serve children who are four years of age on or before August 31 of the program year. Income eligibility requirements for the program shall be based on a child whose family's gross income is at or below one hundred thirty percent (130%) of the federal poverty guidelines. In addition, any age-eligible child who is a child of either of the following shall be eligible for the program: (i) an active duty member of the Armed Forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the Armed Forces, who was ordered to active duty by the proper authority within the last 18 months or is expected to be ordered within the next 18 months or (ii) a member of the Armed Forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the Armed Forces, who was injured or killed while serving on active duty. Eligibility determinations for prekindergarten participants may continue through local education agencies and local North Carolina Partnership for Children, Inc., partnerships.

SECTION 12B.1.(b)  Multiyear Contracts. - The Division of Child Development and Early Education shall require the NC Pre-K contractor to issue multiyear contracts for licensed private child care centers providing NC Pre-K classrooms.

SECTION 12B.1.(c)  Programmatic Standards. - All entities operating prekindergarten classrooms shall adhere to all of the policies prescribed by the Division of Child Development and Early Education regarding programmatic standards and classroom requirements.

SECTION 12B.1.(d)  NC Pre-K Committees. - The Division of Child Development and Early Education shall establish a standard decision-making process to be used by local NC Pre-K committees in awarding prekindergarten classroom slots and student selection.

SECTION 12B.1.(e)  SEEK. - All prekindergarten classrooms shall be required to participate in the Subsidized Early Education for Kids (SEEK) accounting system to streamline the payment function for these classrooms with a goal of eliminating duplicative systems and streamlining the accounting and payment processes among the subsidy reimbursement systems. Prekindergarten funds transferred may be used to add these programs to SEEK.

SECTION 12B.1.(f)  Pilot Program. - The Division of Child Development and Early Education shall create a pilot program that provides funding for NC Pre-K classrooms on a per classroom basis. The pilot program shall include three different NC Pre-K contractual regions that are geographically diverse. The local NC Pre-K administrator shall contract with the provider for operation of a classroom established pursuant to the pilot program. The Division shall provide a report on the status of the pilot program to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division no later than January 31, 2014. The report shall include the following:

(1)        The number of students served.

(2)        The amount of funds paid for each classroom.

(3)        The amount of funds paid per student.

(4)        The student attendance records, parent satisfaction levels, teacher retention, and provider satisfaction levels for classrooms in the pilot program, as compared to classrooms having a traditional funding structure.

(5)        Information on the number of students and students' families using the Subsidized Early Education for Kids (SEEK) system.

(6)        A cost comparison of the classroom pilots to the average cost per student through the per student funding methodology.

SECTION 12B.1.(g)  Reporting. - The Division of Child Development and Early Education shall submit an annual report no later than March 15 of each year to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Oversight Committee on Health and Human Services, the Office of State Budget and Management, and the Fiscal Research Division. The report shall include the following:

(1)        The number of children participating in the NC Pre-K program by county.

(2)        The number of children participating in the NC Pre-K program who have never been served in other early education programs such as child care, public or private preschool, Head Start, Early Head Start, or early intervention programs.

(3)        The expected NC Pre-K expenditures for the programs and the source of the local contributions.

(4)        The results of an annual evaluation of the NC Pre-K program.

SECTION 12B.1.(h)  Child Care Commission. - G.S.  143B-168.4(b) reads as rewritten:

"(b)      Members shall be appointed as follows:

(1)        Of the Governor's initial appointees, four shall be appointed for terms expiring June 30, 1986,2015, and three shall be appointed for terms expiring June 30, 1987;2016;

(2)        Of the General Assembly's initial appointees appointed upon recommendation of the President of the Senate, two shall be appointed for terms expiring June 30, 1986,2015, and two shall be appointed for terms expiring June 30, 1987;2016;

(3)        Of the General Assembly's initial appointees appointed upon recommendation of the Speaker of the House of Representatives, two shall be appointed for terms expiring June 30, 1986,2015, and two shall be appointed for terms expiring June 30, 1987.2016.

Appointments by the General Assembly shall be made in accordance with G.S. 120-121. After the initial appointees' terms have expired, all members shall be appointed to serve two-year terms. Any appointment to fill a vacancy on the Commission created by the resignation, dismissal, death, or disability of a member shall be for the balance of the unexpired term."

SECTION 12B.1.(i)  The terms of all members currently serving on the Child Care Commission shall expire on January 1, 2014. A new Commission of 17 members shall be appointed in the manner provided by G.S. 143B-168.4(a) and (b), as amended in subsection (h) of this section. Members appointed pursuant to subsection (h) of this section shall be appointed no later than July 1, 2014.

 

CHILD CARE SUBSIDY RATES

SECTION 12B.3.(a)  The maximum gross annual income for initial eligibility, adjusted biennially, for subsidized child care services shall be seventy-five percent (75%) of the State median income, adjusted for family size.

SECTION 12B.3.(b)  Fees for families who are required to share in the cost of care shall be established based on a percent of gross family income and adjusted for family size. Fees shall be determined as follows:

                                                                                   PERCENT OF GROSS

                                    FAMILY SIZE                         FAMILY INCOME

                                             1-3                                                10%

                                             4-5                                                 9%

                                         6 or more                                            8%

SECTION 12B.3.(c)  Payments for the purchase of child care services for low-income children shall be in accordance with the following requirements:

(1)        Religious-sponsored child care facilities operating pursuant to G.S. 110-106 and licensed child care centers and homes that meet the minimum licensing standards that are participating in the subsidized child care program shall be paid the one-star county market rate or the rate they charge privately paying parents, whichever is lower, unless prohibited by subsection (f) of this section.

(2)        Licensed child care centers and homes with two or more stars shall receive the market rate for that rated license level for that age group or the rate they charge privately paying parents, whichever is lower, unless prohibited by subsection (f) of this section.

(3)        Nonlicensed homes shall receive fifty percent (50%) of the county market rate or the rate they charge privately paying parents, whichever is lower.

(4)        No payments shall be made for transportation services or registration fees charged by child care facilities.

(5)        Payments for subsidized child care services for postsecondary education shall be limited to a maximum of 20 months of enrollment.

(6)        The Department of Health and Human Services shall implement necessary rule changes to restructure services, including, but not limited to, targeting benefits to employment.

SECTION 12B.3.(d)  Provisions of payment rates for child care providers in counties that do not have at least 50 children in each age group for center-based and home-based care are as follows:

(1)        Except as applicable in subdivision (2) of this subsection, payment rates shall be set at the statewide or regional market rate for licensed child care centers and homes.

(2)        If it can be demonstrated that the application of the statewide or regional market rate to a county with fewer than 50 children in each age group is lower than the county market rate and would inhibit the ability of the county to purchase child care for low-income children, then the county market rate may be applied.

SECTION 12B.3.(e)  A market rate shall be calculated for child care centers and homes at each rated license level for each county and for each age group or age category of enrollees and shall be representative of fees charged to parents for each age group of enrollees within the county. The Division of Child Development and Early Education shall also calculate a statewide rate and regional market rate for each rated license level for each age category.

SECTION 12B.3.(f)  The Division of Child Development and Early Education shall continue implementing policies that improve the quality of child care for subsidized children, including a policy in which child care subsidies are paid, to the extent possible, for child care in the higher quality centers and homes only. The Division shall define higher quality, and subsidy funds shall not be paid for one- or two-star rated facilities. For those counties with an inadequate number of four- and five-star rated facilities, the Division shall continue a transition period that allows the facilities to continue to receive subsidy funds while the facilities work on the increased star ratings. The Division may allow exemptions in counties where there is an inadequate number of four- and five-star rated facilities for nonstar rated programs, such as religious programs.

SECTION 12B.3.(g)  Facilities licensed pursuant to Article 7 of Chapter 110 of the General Statutes and facilities operated pursuant to G.S. 110-106 may participate in the program that provides for the purchase of care in child care facilities for minor children of needy families. Except as authorized by subsection (f) of this section, no separate licensing requirements shall be used to select facilities to participate. In addition, child care facilities shall be required to meet any additional applicable requirements of federal law or regulations. Child care arrangements exempt from State regulation pursuant to Article 7 of Chapter 110 of the General Statutes shall meet the requirements established by other State law and by the Social Services Commission.

County departments of social services or other local contracting agencies shall not use a provider's failure to comply with requirements in addition to those specified in this subsection as a condition for reducing the provider's subsidized child care rate.

SECTION 12B.3.(h)  Payment for subsidized child care services provided with Work First Block Grant funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.

SECTION 12B.3.(i)  Noncitizen families who reside in this State legally shall be eligible for child care subsidies if all other conditions of eligibility are met. If all other conditions of eligibility are met, noncitizen families who reside in this State illegally shall be eligible for child care subsidies only if at least one of the following conditions is met:

(1)        The child for whom a child care subsidy is sought is receiving child protective services or foster care services.

(2)        The child for whom a child care subsidy is sought is developmentally delayed or at risk of being developmentally delayed.

(3)        The child for whom a child care subsidy is sought is a citizen of the United States.

SECTION 12B.3.(j)  Department of Health and Human Services, Division of Child Development and Early Education, shall require all county departments of social services to include on any forms used to determine eligibility for child care subsidy whether the family waiting for subsidy is receiving assistance through the NC Pre-K Program or Head Start.

 

CHILD CARE ALLOCATION FORMULA

SECTION 12B.4.(a)  The Department of Health and Human Services shall allocate child care subsidy voucher funds to pay the costs of necessary child care for minor children of needy families. The mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation under G.S. 143B-168.15(g) shall constitute the base amount for each county's child care subsidy allocation. The Department of Health and Human Services shall use the following method when allocating federal and State child care funds, not including the aggregate mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation:

(1)        Funds shall be allocated to a county based upon the projected cost of serving children under age 11 in families with all parents working who earn less than seventy-five percent (75%) of the State median income.

(2)        The Department of Health and Human Services shall allocate to counties all State funds appropriated for child care subsidy and shall not withhold funds during the 2013-2014 and 2014-2015 fiscal years.

SECTION 12B.4.(b)  When implementing the formula under subsection (a) of this section, the Department shall include the market rate increases in the formula process, rather than running these increases outside the formula process. Additionally, the Department shall do the following:

(1)        Effective for fiscal year 2013-2014, use twenty-five percent (25%) annual implementation which reflects a four-year phase-in approach through the end of the current Census cycle.

(2)        Effective immediately following the next new Census data release, use one-third (1/3) annual implementation, which reflects a three-year phase-in approach for each Census cycle thereafter going forward.

SECTION 12B.4.(c)  The Department of Health and Human Services may reallocate unused child care subsidy voucher funds in order to meet the child care needs of low-income families. Any reallocation of funds shall be based upon the expenditures of all child care subsidy voucher funding, including North Carolina Partnership for Children, Inc., funds within a county.

 

CHILD CARE FUNDS MATCHING REQUIREMENTS

SECTION 12B.5.  No local matching funds may be required by the Department of Health and Human Services as a condition of any locality's receiving its initial allocation of child care funds appropriated by this act unless federal law requires a match. If the Department reallocates additional funds above twenty-five thousand dollars ($25,000) to local purchasing agencies beyond their initial allocation, local purchasing agencies must provide a twenty percent (20%) local match to receive the reallocated funds. Matching requirements shall not apply when funds are allocated because of a disaster as defined in G.S. 166A-19.3(6).

 

CHILD CARE REVOLVING LOAN

SECTION 12B.6.  Notwithstanding any law to the contrary, funds budgeted for the Child Care Revolving Loan Fund may be transferred to and invested by the financial institution contracted to operate the Fund. The principal and any income to the Fund may be used to make loans, reduce loan interest to borrowers, serve as collateral for borrowers, pay the contractor's cost of operating the Fund, or pay the Department's cost of administering the program.

 

ADMINISTRATIVE ALLOWANCE FOR COUNTY DEPARTMENTS OF SOCIAL SERVICES

SECTION 12B.7.  The Department of Health and Human Services, Division of Child Development and Early Education, shall fund the allowance that county departments of social services may use for administrative costs at three percent (3%) of the county's total child care subsidy funds allocated in the Child Care Development Fund Block Grant plan or eighty thousand dollars ($80,000), whichever is greater.

 

EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES ENHANCEMENTS/SALARY SCHEDULE/MATCH REQUIREMENT ADJUSTMENTS

SECTION 12B.9.(a)  Policies. - The North Carolina Partnership for Children, Inc., and its Board shall establish policies that focus the North Carolina Partnership for Children, Inc.'s mission on improving child care quality in North Carolina for children from birth to five years of age. North Carolina Partnership for Children, Inc.-funded activities shall include assisting child care facilities with (i) improving quality, including helping one-, two-, and three-star rated facilities increase their star ratings and (ii) implementing prekindergarten programs. State funding for local partnerships shall also be used for evidence-based or evidence-informed programs for children from birth to five years of age that do the following:

(1)        Increase children's literacy.

(2)        Increase the parents' ability to raise healthy, successful children.

(3)        Improve children's health.

(4)        Assist four- and five-star rated facilities in improving and maintaining quality.

SECTION 12B.9.(b)  Administration. - Administrative costs shall be equivalent to, on an average statewide basis for all local partnerships, not more than eight percent (8%) of the total statewide allocation to all local partnerships. For purposes of this subsection, administrative costs shall include costs associated with partnership oversight, business and financial management, general accounting, human resources, budgeting, purchasing, contracting, and information systems management. The North Carolina Partnership for Children, Inc., shall develop a single statewide contract management system that incorporates features of the required standard fiscal accountability plan described in G.S. 143B-168.12(a)(4). All local partnerships shall be required to participate in the contract management system and shall be directed by the North Carolina Partnership for Children, Inc., to collaborate, to the fullest extent possible, with other local partnerships to increase efficiency and effectiveness.

SECTION 12B.9.(c)  Salaries. - The salary schedule developed and implemented by the North Carolina Partnership for Children, Inc., shall set the maximum amount of State funds that may be used for the salary of the Executive Director of the North Carolina Partnership for Children, Inc., and the directors of the local partnerships. The North Carolina Partnership for Children, Inc., shall base the schedule on the following criteria:

(1)        The population of the area serviced by a local partnership.

(2)        The amount of State funds administered.

(3)        The amount of total funds administered.

(4)        The professional experience of the individual to be compensated.

(5)        Any other relevant factors pertaining to salary, as determined by the North Carolina Partnership for Children, Inc.

The salary schedule shall be used only to determine the maximum amount of State funds that may be used for compensation. Nothing in this subsection shall be construed to prohibit a local partnership from using non-State funds to supplement an individual's salary in excess of the amount set by the salary schedule established under this subsection.

SECTION 12B.9.(d)  Match Requirements. - It is the intent of the General Assembly to continue to increase the percentage of the match of cash and in-kind contributions required of the North Carolina Partnership for Children, Inc., and the local partnerships. The North Carolina Partnership for Children, Inc., and all local partnerships shall, in the aggregate, be required to match one hundred percent (100%) of the total amount budgeted for the program in each fiscal year of the biennium. Of the funds the North Carolina Partnership for Children, Inc., and the local partnerships are required to match, contributions of cash shall be equal to at least eleven percent (11%), and in-kind donated resources shall be equal to no more than three percent (3%) for a total match requirement of fourteen percent (14%) for the 2013-2014 fiscal year; and contributions of cash shall be equal to at least eleven percent (11%), and in-kind donated resources shall be equal to no more than four percent (4%) for a total match requirement of fifteen percent (15%) for the 2014-2015 fiscal year. The North Carolina Partnership for Children, Inc., may carry forward any amount in excess of the required match for a fiscal year in order to meet the match requirement of the succeeding fiscal year. Only in-kind contributions that are quantifiable shall be applied to the in-kind match requirement. Volunteer services may be treated as an in-kind contribution for the purpose of the match requirement of this subsection. Volunteer services that qualify as professional services shall be valued at the fair market value of those services. All other volunteer service hours shall be valued at the statewide average wage rate as calculated from data compiled by the Employment Security Commission in the Employment and Wages in North Carolina Annual Report for the most recent period for which data are available. Expenses, including both those paid by cash and in-kind contributions, incurred by other participating non-State entities contracting with the North Carolina Partnership for Children, Inc., or the local partnerships, also may be considered resources available to meet the required private match. In order to qualify to meet the required private match, the expenses shall:

(1)        Be verifiable from the contractor's records.

(2)        If in-kind, other than volunteer services, be quantifiable in accordance with generally accepted accounting principles for nonprofit organizations.

(3)        Not include expenses funded by State funds.

(4)        Be supplemental to and not supplant preexisting resources for related program activities.

(5)        Be incurred as a direct result of the Early Childhood Initiatives Program and be necessary and reasonable for the proper and efficient accomplishment of the Program's objectives.

(6)        Be otherwise allowable under federal or State law.

(7)        Be required and described in the contractual agreements approved by the North Carolina Partnership for Children, Inc., or the local partnership.

(8)        Be reported to the North Carolina Partnership for Children, Inc., or the local partnership by the contractor in the same manner as reimbursable expenses.

Failure to obtain a fourteen percent (14%) match by June 30 of the 2013-2014 fiscal year and a fifteen percent (15%) match by June 30 of the 2014-2015 fiscal year shall result in a dollar-for-dollar reduction in the appropriation for the Program for a subsequent fiscal year. The North Carolina Partnership for Children, Inc., shall be responsible for compiling information on the private cash and in-kind contributions into a report that is submitted to the Joint Legislative Commission on Governmental Operations in a format that allows verification by the Department of Revenue. The same match requirements shall apply to any expansion funds appropriated by the General Assembly.

SECTION 12B.9.(e)  Bidding. - The North Carolina Partnership for Children, Inc., and all local partnerships shall use competitive bidding practices in contracting for goods and services on contract amounts as follows:

(1)        For amounts of five thousand dollars ($5,000) or less, the procedures specified by a written policy to be developed by the Board of Directors of the North Carolina Partnership for Children, Inc.

(2)        For amounts greater than five thousand dollars ($5,000), but less than fifteen thousand dollars ($15,000), three written quotes.

(3)        For amounts of fifteen thousand dollars ($15,000) or more, but less than forty thousand dollars ($40,000), a request for proposal process.

(4)        For amounts of forty thousand dollars ($40,000) or more, a request for proposal process and advertising in a major newspaper.

SECTION 12B.9.(f)  Allocations. - The North Carolina Partnership for Children, Inc., shall not reduce the allocation for counties with less than 35,000 in population below the 2012-2013 funding level.

SECTION 12B.9.(g)  Performance-Based Evaluation. - The Department of Health and Human Services shall continue to implement the performance-based evaluation system.

SECTION 12B.9.(h)  Expenditure Restrictions. - The Department of Health and Human Services and the North Carolina Partnership for Children, Inc., shall ensure that the allocation of funds for Early Childhood Education and Development Initiatives for State fiscal years 2013-2014 and 2014-2015 shall be administered and distributed in the following manner:

(1)        Capital expenditures are prohibited for fiscal years 2013-2014 and 2014-2015. For the purposes of this section, "capital expenditures" means expenditures for capital improvements as defined in G.S. 143C-1-1(d)(5).

(2)        Expenditures of State funds for advertising and promotional activities are prohibited for fiscal years 2013-2014 and 2014-2015.

For fiscal years 2013-2014 and 2014-2015, local partnerships shall not spend any State funds on marketing campaigns, advertising, or any associated materials. Local partnerships may spend any private funds the local partnerships receive on those activities.

 

SUBPART XII-C. DIVISION OF SOCIAL SERVICES

 

REVISE DATES/TANF BENEFIT IMPLEMENTATION

SECTION 12C.1.(a)  The General Assembly approves the plan titled "North Carolina Temporary Assistance for Needy Families State Plan 2012-2015," prepared by the Department of Health and Human Services and presented to the General Assembly. The North Carolina Temporary Assistance for Needy Families State Plan covers the period October 1, 2012, through September 30, 2015. The Department shall submit the State Plan, as revised in accordance with subsection (b) of this section and as amended by this act or any other act of the 2013 General Assembly, to the United States Department of Health and Human Services.

SECTION 12C.1.(b)  The counties approved as Electing Counties in the North Carolina Temporary Assistance for Needy Families State Plan 2012-2015, as approved by this section are Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson.

SECTION 12C.1.(c)  Counties that submitted the letter of intent to remain as an Electing County or to be redesignated as an Electing County and the accompanying county plan for years 2012 through 2015 pursuant to G.S. 108A-27(e) shall operate under the Electing County budget requirements effective July 1, 2012. For programmatic purposes, all counties referred to in this subsection shall remain under their current county designation through September 30, 2015.

SECTION 12C.1.(d)  For the 2013-2014 fiscal year, Electing Counties shall be held harmless to their Work First Family Assistance allocations for the 2012-2013 fiscal year, provided that remaining funds allocated for Work First Family Assistance and Work First Diversion Assistance are sufficient for payments made by the Department on behalf of Standard Counties pursuant to G.S. 108A-27.11(b).

SECTION 12C.1.(e)  In the event that departmental projections of Work First Family Assistance and Work First Diversion Assistance for the 2013-2014 fiscal year indicate that remaining funds are insufficient for Work First Family Assistance and Work First Diversion Assistance payments to be made on behalf of Standard Counties, the Department is authorized to deallocate funds, of those allocated to Electing Counties for Work First Family Assistance in excess of the sums set forth in G.S. 108A-27.11, up to the requisite amount for payments in Standard Counties. Prior to deallocation, the Department shall obtain approval by the Office of State Budget and Management. If the Department adjusts the allocation set forth in subsection (d) of this section, then a report shall be made to the Joint Legislative Commission on Governmental Operations, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.

 

INTENSIVE FAMILY PRESERVATION SERVICES FUNDING AND PERFORMANCE ENHANCEMENTS

SECTION 12C.2.(a)  Notwithstanding the provisions of G.S. 143B-150.6, the Intensive Family Preservation Services (IFPS) Program shall provide intensive services to children and families in cases of abuse, neglect, and dependency where a child is at imminent risk of removal from the home and to children and families in cases of abuse where a child is not at imminent risk of removal. The Program shall be developed and implemented statewide on a regional basis. The IFPS shall ensure the application of standardized assessment criteria for determining imminent risk and clear criteria for determining out-of-home placement.

SECTION 12C.2.(b)  The Department of Health and Human Services shall require that any program or entity that receives State, federal, or other funding for the purpose of IFPS shall provide information and data that allows for the following:

(1)        An established follow-up system with a minimum of six months of follow-up services.

(2)        Detailed information on the specific interventions applied, including utilization indicators and performance measurement.

(3)        Cost-benefit data.

(4)        Data on long-term benefits associated with IFPS. This data shall be obtained by tracking families through the intervention process.

(5)        The number of families remaining intact and the associated interventions while in IFPS and 12 months thereafter.

(6)        The number and percentage, by race, of children who received IFPS compared to the ratio of their distribution in the general population involved with Child Protective Services.

SECTION 12C.2.(c)  The Department shall establish a performance-based funding protocol and shall only provide funding to those programs and entities providing the required information specified in subsection (b) of this section. The amount of funding shall be based on the individual performance of each program.

 

CHILD CARING INSTITUTIONS

SECTION 12C.3.  Until the Social Services Commission adopts rules setting standardized rates for child caring institutions as authorized under G.S. 143B-153(8), the maximum reimbursement for child caring institutions shall not exceed the rate established for the specific child caring institution by the Department of Health and Human Services, Office of the Controller. In determining the maximum reimbursement, the State shall include county and IV-E reimbursements.

 

USE OF FOSTER CARE BUDGET FOR GUARDIANSHIP ASSISTANCE PROGRAM

SECTION 12C.4.  Of the funds available for the provision of foster care services, the Department of Health and Human Services, Division of Social Services, may provide for the financial support of children who are deemed to be (i) in a permanent family placement setting, (ii) eligible for legal guardianship, and (iii) otherwise unlikely to receive permanency. The Division of Social Services shall design the Guardianship Assistance Program (GAP) in such a manner that no additional expenses are incurred beyond the funds budgeted for foster care. The Guardianship Assistance Program rates shall reimburse the legal guardian for room and board and be set at the same rate as the foster care room and board rates in accordance with rates established under G.S. 108A-49.1. The Social Services Board shall adopt rules establishing a Guardianship Assistance Program to implement this section, including defining the phrase "legal guardian" as used in this section.

 

CHILD WELFARE POSTSECONDARY SUPPORT PROGRAM (NC REACH)

SECTION 12C.5.(a)  Of the funds appropriated from the General Fund to the Department of Health and Human Services, the sum of one hundred eighty-seven thousand two hundred seventy-five dollars ($187,275) for the 2013-2014 fiscal year and three hundred sixty-four thousand four hundred fifteen dollars ($364,415) for the 2014-2015 fiscal year shall be used to expand support for the child welfare postsecondary support program for the educational needs of foster youth aging out of the foster care system and special needs children adopted from foster care after age 12 by providing assistance with the "cost of attendance" as that term is defined in 20 U.S.C. 108711. These funds shall be allocated by the State Education Assistance Authority.

SECTION 12C.5.(b)  Of the funds appropriated from the General Fund to the Department of Health and Human Services, the sum of fifty thousand dollars ($50,000) for the 2013-2014 fiscal year and the sum of fifty thousand dollars ($50,000) for the 2014-2015 fiscal year shall be allocated to the North Carolina State Education Assistance Authority (SEAA). The SEAA shall use these funds only to perform administrative functions necessary to manage and distribute scholarship funds under the child welfare postsecondary support program.

SECTION 12C.5.(c)  Of the funds appropriated from the General Fund to the Department of Health and Human Services, the sum of three hundred thirty-nine thousand four hundred ninety-three dollars ($339,493) for the 2013-2014 fiscal year and the sum of three hundred thirty-nine thousand four hundred ninety-three dollars ($339,493) for the 2014-2015 fiscal year shall be used to contract with an entity to administer the child welfare postsecondary support program described under subsection (a) of this section, which administration shall include the performance of case management services.

SECTION 12C.5.(d)  Funds appropriated to the Department of Health and Human Services for the child welfare postsecondary support program shall be used only for students attending public institutions of higher education in this State.

 

Work First Family Assistance Eligibility and Payment Levels

SECTION 12C.8.  The maximum net family annual income eligibility standards for Work First Family Assistance are the same standards of need for eligibility for the categorically needy under the Medicaid Program. The payment level for Work First Family Assistance shall be fifty percent (50%) of the standard of need.

 

Revise Duties of State Child Fatality Prevention Team/Repeal Task Force

SECTION 12C.9.(a)  G.S. 7B-1405 reads as rewritten:

" 7B-1405.  State Team - duties.

The State Team shall:

(2)        Report to the Task Force during the existence of the Task Force, in the format and at the time required by the Task Force, on the State Team's activities and its recommendations for changes to any law, rule, and policy that would promote the safety and well-being of children;

The State Team may report to the Governor or General Assembly, within the first week of the convening or reconvening of the General Assembly, on the State Team's activities and its recommendations for changes to any law, rule, or policy that would promote the safety and well-being of children. Any recommendations of changes to law, rule, or policy shall be accompanied by specific legislative or policy proposals and detailed fiscal notes setting forth the costs to the State."

SECTION 12C.9.(b)  G.S. 7B-1413 reads as rewritten:

" 7B-1413.  Access to records.

(a)        The State Team, the Local Teams, and the Task Force during its existence,Team and the Local Teams shall have access to all medical records, hospital records, and records maintained by this State, any county, or any local agency as necessary to carry out the purposes of this Article, including police investigations data, medical examiner investigative data, health records, mental health records, and social services records. The State Team, the Task Force,Team and the Local Teams shall not, as part of the reviews authorized under this Article, contact, question, or interview the child, the parent of the child, or any other family member of the child whose record is being reviewed. Any member of a Local Team may share, only in an official meeting of that Local Team, any information available to that member that the Local Team needs to carry out its duties.

(c)        All otherwise confidential information and records acquired by the State Team, the Local Teams, and the Task Force during its existence,Team and the Local Teams in the exercise of their duties are confidential; are not subject to discovery or introduction into evidence in any proceedings; and may only be disclosed as necessary to carry out the purposes of the State Team, the Local Teams, and the Task Force.Team and the Local Teams. In addition, all otherwise confidential information and records created by a Local Team in the exercise of its duties are confidential; are not subject to discovery or introduction into evidence in any proceedings; and may only be disclosed as necessary to carry out the purposes of the Local Team. No member of the State Team, a Local Team, nor any person who attends a meeting of the State Team or a Local Team, may testify in any proceeding about what transpired at the meeting, about information presented at the meeting, or about opinions formed by the person as a result of the meetings. This subsection shall not, however, prohibit a person from testifying in a civil or criminal action about matters within that person's independent knowledge.

."

SECTION 12C.9.(c)  G.S. 7B-1414 reads as rewritten:

" 7B-1414.  Administration; funding.

(a)        To the extent of funds available, the chairs of the Task Force andState Team may hire staff or consultants to assist the Task Force andthe State Team in completing their its duties.

(b)        Members, staff, and consultants of the Task Force orState Team shall receive travel and subsistence expenses in accordance with the provisions of G.S. 138-5 or G.S. 138-6, as the case may be, paid from funds appropriated to implement this Article and within the limits of those funds.

(c)        With the approval of the Legislative Services Commission, legislative staff and space in the Legislative Building and the Legislative Office Building may be made available to the Task Force."

SECTION 12C.9.(d)  G.S. 7B-1401(4) is repealed.

SECTION 12C.9.(e)  G.S. 7B-1402, 7B-1403, and 7B-1412 are repealed.

SECTION 12C.9.(f)  The Revisor of Statutes shall delete the phrases "Child Fatality Task Force" or "North Carolina Child Fatality Task Force" wherever those phrases appear in Article 14 of Chapter 7B of the General Statutes or anywhere in the General Statutes. In making the changes authorized by this subsection, the Revisor is also authorized to adjust subject and verb agreement and the placement of conjunctions.

SECTION 12C.9.(g)  This section becomes effective July 1, 2014.

 

A Family for Every Child/Provision of Foster Care

SECTION 12C.10.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, the sum of one million five hundred thousand dollars ($1,500,000) for the 2013-2014 fiscal year and the sum of one million five hundred thousand dollars ($1,500,000) for the 2014-2015 fiscal year shall be used to restore funding to the Adoption Promotion Fund to (i) reimburse private nonprofit organizations pursuant to performance-based contracts to support adoption programs and (ii) provide a financial incentive to public county departments of social services to complete adoptions above an established baseline.

SECTION 12C.10.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, the sum of one million dollars ($1,000,000) for the 2013-2014 fiscal year and the sum of two million seven hundred fifty thousand dollars ($2,750,000) for the 2014-2015 fiscal year shall be used solely for the Permanency Innovation Initiative Fund for services provided by the Children's Home Society of North Carolina as established by G.S. 131D-10.9B, enacted in subsection (e) of this section.

SECTION 12C.10.(c)  G.S. 108A-50.2 reads as rewritten:

" 108A-50.2.  Special Children Adoption Promotion Fund.

(a)        Funds appropriated by the General Assembly to the Department of Health and Human Services, Division of Social Services, for the Special Children Adoption Promotion Fund shall be used as provided in this section. The Division of Social Services of the Department of Health and Human Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A-50 and in foster care. Payments received from the Special Children Adoption Promotion Fund by participating agencies shall be used exclusively to enhance the adoption services. No local match shall be required as a condition for receipt of these funds. In accordance with State rules for allowable costs, the Special Children Adoption Promotion Fund may be used for post-adoption services for families whose income exceeds two hundred percent (200%) of the federal poverty level.

(b)        Of the total funds appropriated for the Special Children Adoption Promotion Fund each year, twenty percent (20%) of the total funds available shall be reserved for payment to participating private adoption agencies. If the funds reserved in this subsection for payments to private agencies have not been spent on or before March 31 of each State fiscal year, the Division of Social Services may reallocate those funds, in accordance with this section, to other participating adoption agencies.

(c)        The Division of Social Services shall monitor the total expenditures in the Special Children Adoption Promotion Fund and redistribute unspent funds to ensure that the funds are used in accordance with the guidelines established in subsection (a) of this section."

SECTION 12C.10.(d)  G.S. 131D-10.1 through G.S. 131D-10.9 are recodified as Part 1 of Article 1A of Chapter 131D of the General Statutes.

SECTION 12C.10.(e)  Article 1A of Chapter 131D of the General Statutes is amended by adding the following new Part to read:

"Part 2. A Family for Every Child Initiative.

" 131D-10.9A.  Permanency Innovation Initiative Oversight Committee created.

(a)        Creation and Membership. - The Permanency Innovation Initiative Oversight Committee is established. The Committee shall be located administratively in the General Assembly. The Committee shall consist of 11 members serving staggered terms. In making appointments, each appointing authority shall select members who have appropriate experience and knowledge of the issues to be examined by the Committee and shall strive to ensure racial, gender, and geographical diversity among the membership. The initial Committee members shall be appointed on or after July 1, 2013, as follows:

(1)        Four members shall be appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives. Of the members appointed under this subdivision, at least one shall be a member of the judiciary who shall serve for a term of two years and at least one shall be a representative from the Children's Home Society of North Carolina who shall serve for a term of three years. One member of the House shall be appointed for a one-year term. The remaining appointee shall serve a one-year term.

(2)        Four members shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate. Of the members appointed under this subdivision, at least one shall be a representative from the Department of Health and Human Services, Division of Social Services, who shall serve for a term of two years and at least one shall be a representative from The Duke Endowment who shall serve for a term of three years. One member of the Senate shall be appointed for a one-year term. The remaining appointee shall serve a one-year term.

(3)        Three members shall be appointed by the Governor. Of the members appointed under this subdivision, at least one shall be a representative from a county department of social services who shall serve for a term of three years and at least one shall be a representative from the University of North Carolina at Chapel Hill who shall serve for a term of two years. The remaining member shall serve a one-year term.

(b)        Terms. - Upon the expiration of the terms of the initial Committee members, each member shall be appointed for a term of three years and shall serve until a successor is appointed. No member may serve more than two consecutive full terms. A vacancy shall be filled within 30 days by the authority making the initial appointment.

(c)        Purpose and Powers. - The Committee shall:

(1)        Design and implement a data tracking methodology to collect and analyze information to gauge the success of the initiative.

(2)        Develop a methodology to identify short- and long-term cost-savings in the provision of foster care and any potential reinvestment strategies.

(3)        Oversee program implementation to ensure fidelity to the program models identified under subdivisions (1) and (2) of G.S. 131D-10.9B(a).

(4)        Study, review, and recommend other policies and services that may positively impact permanency and well-being outcomes.

(d)        Reports. - The Committee shall report its analysis and any findings and recommendations to the General Assembly by September 15 of each year.

(e)        Organization. - The President Pro Tempore of the Senate and the Speaker of the House of Representatives shall each designate a cochair of the Committee. The Committee shall meet at least once a quarter upon the joint call of the cochairs. A quorum of the Committee is seven members. No action may be taken except by a majority vote at a meeting at which a quorum is present.

(f)         Funding. - From funds available to the General Assembly, the Legislative Services Commission shall allocate monies to fund the work of the Committee. Members of the Committee shall receive subsistence and travel expenses as provided in G.S. 120-3.1 and G.S. 138-5.

(g)        Staff. - The Legislative Services Commission, through the Legislative Services Officer, shall assign professional staff to assist the Committee in its work. Upon the direction of the Legislative Services Commission, the Director of Legislative Assistants of the Senate and of the House of Representatives shall assign clerical staff to the Committee. The expenses for clerical employees shall be borne by the Committee.

" 131D-10.9B.  Permanency Innovation Initiative Fund.

(a)        There is created the Permanency Innovation Initiative Fund that will support a demonstration project with services provided by Children's Home Society of North Carolina to (i) improve permanency outcomes for children living in foster care through reunification with parents, providing placement or guardianship with other relatives, or adoption, (ii) improve engagement with biological relatives of children in or at risk of entering foster care, and (iii) reduce costs associated with maintaining children in foster care. In implementing these goals, the Permanency Innovation Initiative Fund shall support the following strategies:

(1)        Family Finding, which is a program that uses intensive biological family engagement services to discover and engage biological relatives of children living in public foster care to provide permanent emotional and relational support, including adoption, legal guardianship, or legal custody.

(2)        Child Specific Adoption Recruitment Services, which is a program that follows the Wendy's Wonderful Kids Model as developed by The Dave Thomas Foundation for Adoption and works with children in public foster care to develop and execute adoption recruitment plans tailored to the needs of the individual child.

(3)        Permanency Training Services, which are services delivered by Children's Home Society of North Carolina to assess the readiness of county departments of social services to implement the permanency strategies under subdivisions (1) and (2) of this subsection and provide training services to support the delivery of the services.

(b)        This program shall not constitute an entitlement and is subject to the availability of funds.

(c)        The Social Services Commission shall adopt rules to implement the provisions of this section."

 

SUBPART XII-D. DIVISION OF AGING AND ADULT SERVICES

 

TIERED STATE-COUNTY SPECIAL ASSISTANCE PILOT

SECTION 12D.2.(a)  It is the intent of the General Assembly to create a State-County Special Assistance program that allows counties greater flexibility in serving individual needs within their communities and greater control over how county funds are used to support this program in light of the fact that counties are required to pay for fifty percent (50%) of the costs of this program. To that end, the General Assembly directs the Department of Health and Human Services to establish a pilot program in accordance with subsection (b) of this section.

SECTION 12D.2.(b)  The Department of Health and Human Services, Division of Aging and Adult Services, shall establish a pilot program to implement a tiered rate structure within the State-County Special Assistance program for individuals residing in group homes, in-home living arrangements, and assisted living residences as defined in G.S. 131D-2.1. The purposes of the pilot program are to (i) determine the best way to implement a block grant for this program statewide and (ii) test the feasibility and effectiveness of implementing a tiered rate structure to address program participants' intensity of need, including medication management. The Department shall select a minimum of four and a maximum of six counties to participate in the pilot program, at least two of which shall be rural counties and at least two of which shall be urban counties. The pilot program shall (i) be implemented during the 2013-2014 fiscal year, (ii) operate for at least a 12-month period, and (iii) comply with any agreements in effect between the State of North Carolina and the United States government.

SECTION 12D.2.(c)  The Department shall implement the pilot program in collaboration with the local departments of social services in the counties selected for participation. As part of the pilot program, the selected counties shall receive a State General Fund allocation as a block grant to be equally matched with county general funds. The General Fund allocation provided to each county participating in the pilot program shall be calculated based upon the average annual Special Assistance expenditures for that county during the 2011-2013 fiscal biennium, adjusted for the amount of projected annual growth in the number of Special Assistance recipients in that county during the 2013-2015 fiscal biennium. These funds may be used to pay for room, board, and personal care services, including medication management, for individuals eligible to receive State-County Special Assistance, subject to the following limitations and requirements:

(1)        These funds shall not be used to cover any portion of the cost of providing services for which an individual receives Medicaid coverage.

(2)        The pilot program shall comply with all federal and State requirements governing the existing State-County Special Assistance program, except that Section 12D.3 does not apply to the pilot program.

(3)        The tiered rate structure shall be based upon intensity of need, and an individual's placement within a tier shall be based upon an independent assessment of the individual's need for room, board, and assistance with activities of daily living, including medication management.

SECTION 12D.2.(d)  By no later than February 1, 2014, the Department shall submit a progress report on the implementation and operation of the pilot program, including any obstacles to implementation; and by no later than February 1, 2015, the Department shall submit a final report on the results of the pilot program, along with any recommendations based on these results, to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The report due by February 1, 2015, shall include information from all participating counties on at least all of the following:

(1)        The amount of the tiered rates implemented as part of the pilot program.

(2)        The cost methodology for determining these tiered rates.

(3)        The number of individuals participating in the pilot program while residing in a group home.

(4)        The number of individuals participating in the pilot program while residing in an in-home living arrangement.

(5)        The number of individuals participating in the pilot program while residing in an assisted living residence as defined by G.S. 131D-2.1, broken down by facility type.

(6)        A comparison of the number of recipients of State-County Special Assistance prior to and during the pilot program, broken down by county and living arrangement.

(7)        Any other information the Department deems relevant for determining the best way to implement a block grant statewide for the State-County Special Assistance program.

SECTION 12D.2(e)  As used in this section, the term "group home" means any facility that (i) is licensed under Chapter 122C of the General Statutes, (ii) meets the definition of a supervised living facility under 10A NCAC 27G .5601, and (iii) serves adults whose primary diagnosis is mental illness or a developmental disability but may also have other diagnoses.

 

State-County Special Assistance

SECTION 12D.3.(a)  For each year of the 2013-2015 fiscal biennium, the maximum monthly rate for residents in adult care home facilities shall be one thousand one hundred eighty-two dollars ($1,182) per month per resident.

SECTION 12D.3.(b)  For each year of the 2013-2015 fiscal biennium, the maximum monthly rate for residents in Alzheimer's/Dementia special care units shall be one thousand five hundred fifteen dollars ($1,515) per month per resident.

 

SUBPART XII-E. DIVISION OF PUBLIC HEALTH

 

PERMIT FEE increase FOR CERTAIN FOOD AND LODGING ESTABLISHMENTS

SECTION 12E.1.(a)  G.S. 130A-247 is amended by adding a new subdivision to read:

"(8)      "Temporary food establishment" means an establishment not otherwise exempted from this part pursuant to G.S. 130A-250 that (i) prepares or serves food, (ii) operates for a period of time not to exceed 21 days in one location, and (iii) is affiliated with and endorsed by a transitory fair, carnival, circus, festival, or public exhibition."

SECTION 12E.1.(b)  G.S. 130A-248(d) reads as rewritten:

"(d)      The Department shall charge each establishment subject to this section, except nutrition programs for the elderly administered by the Division of Aging and Adult Services of the Department of Health and Human Services, establishments that prepare and sell meat food products or poultry products, temporary food establishments, limited food services establishments, and public school cafeterias, a fee of seventy-five ninety-five dollars ($75.00) ($95.00) for each permit issued. This fee shall be reassessed annually for permits that do not expire. The Commission shall adopt rules to implement this subsection. Fees collected under this subsection shall be used for State and local food, lodging, and institution sanitation programs and activities. No more than thirty-three and one-third percent (33 1/3%) of the fees twenty-five dollars ($25.00) of each fee collected under this subsection may be used to support State health programs and activities."

SECTION 12E.1.(c)  G.S. 130A-248(d1) reads as rewritten:

"(d1)    The Department shall charge a twenty-five dollar ($25.00) late payment fee to any establishment subject to this section, except nutrition programs for the elderly administered by the Division of Aging of the Department of Health and Human Services, establishments that prepare and sell meat food products or poultry products, temporary food establishments, limited food services establishments, and public school cafeterias, that fails to pay the fee required by subsection (d) of this section within 45 days after billing by the Department. The Department may, in accordance with G.S. 130A-23, suspend the permit of an establishment that fails to pay the required fee within 60 days after billing by the Department. The Department shall charge a reinstatement fee of one hundred fifty dollars ($150.00) to any establishment that requests reinstatement of its permit after the permit has been suspended. The Commission shall adopt rules to implement this subsection.

The clear proceeds of civil penalties collected pursuant to this subsection shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2."

SECTION 12E.1.(d)  G.S. 130A-248 is amended by adding a new subsection to read:

"(d2)    A local health department shall charge each temporary food establishment and each limited food services establishment a fee of seventy-five dollars ($75.00) for each permit issued. A local health department shall use all fees collected under this subsection for local food, lodging, and institution sanitation programs and activities."

SECTION 12E.1.(e)  Subsections (a) through (d) of this section become effective on July 1, 2013, and apply to food and lodging permits effective or reassessed on or after July 1, 2013.

SECTION 12E.1.(f)  Section 31.11A of S.L. 2011-145, as amended by Section 61A of S.L. 2011-391 and Section 10.15 of S.L. 2012-142, is repealed.

 

FUNDS FOR SCHOOL NURSES

SECTION 12E.3.(a)  All funds appropriated in this act for the School Nurse Funding Initiative shall be used to supplement and not supplant other State, local, or federal funds appropriated or allocated for this purpose. Communities shall maintain their current level of effort and funding for school nurses. These funds shall not be used to fund nurses for State agencies. These funds shall be distributed to local health departments according to a formula that includes all of the following:

(1)        School nurse-to-student ratio.

(2)        Percentage of students eligible for free or reduced meals.

(3)        Percentage of children in poverty.

(4)        Per capita income.

(5)        Eligibility as a low-wealth county.

(6)        Mortality rates for children between one and 19 years of age.

(7)        Percentage of students with chronic illnesses.

(8)        Percentage of county population consisting of minority persons.

SECTION 12E.3.(b)  The Division of Public Health shall ensure that school nurses funded with State funds (i) do not assist in any instructional or administrative duties associated with a school's curriculum and (ii) perform all of the following with respect to school health programs:

(1)        Serve as the coordinator of the health services program and provide nursing care.

(2)        Provide health education to students, staff, and parents.

(3)        Identify health and safety concerns in the school environment and promote a nurturing school environment.

(4)        Support healthy food services programs.

(5)        Promote healthy physical education, sports policies, and practices.

(6)        Provide health counseling, assess mental health needs, provide interventions, and refer students to appropriate school staff or community agencies.

(7)        Promote community involvement in assuring a healthy school and serve as school liaison to a health advisory committee.

(8)        Provide health education and counseling and promote healthy activities and a healthy environment for school staff.

(9)        Be available to assist the county health department during a public health emergency.

SECTION 12E.3.(c)  Section 6.9(b) of S.L. 2011-145, as amended by Section 6.2 of S.L. 2012-142, is repealed.

 

CHILDREN'S DEVELOPMENTAL SERVICE AGENCIES

SECTION 12E.4.  In order to reduce the amount of State funds appropriated for the Children's Developmental Service Agencies (CDSAs) program, the Department of Health and Human Services, Division of Public Health, shall close four CDSAs, effective July 1, 2014. The Department shall retain the CDSA located in the City of Morganton and the CDSAs with the highest caseloads of children residing in rural and medically underserved areas. By no later than March 1, 2014, the Department shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division identifying the four CDSAs selected for closure in accordance with this section.

 

AIDS DRUG ASSISTANCE PROGRAM

SECTION 12E.5.(a)  The Department of Health and Human Services shall work with the Department of Public Safety (DPS) to use DPS funds to purchase pharmaceuticals for the treatment of individuals in the custody of DPS who have been diagnosed with Human Immunodeficiency Virus or Acquired Immune Deficiency Syndrome (HIV/AIDS) in a manner that allows these funds to be accounted for as State matching funds in the Department of Health and Human Services drawdown of federal Ryan White funds earmarked for the AIDS Drug Assistance Program (ADAP).

SECTION 12E.5.(b)  By no later than April 1, 2014, and by no later than April 1, 2015, the Department of Health and Human Services, Division of Public Health, shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on alternative options for serving individuals diagnosed with HIV/AIDS who are eligible to receive services under ADAP, including the State Medicaid program and the federally facilitated Health Benefit Exchange that will operate in this State.

 

COMMUNITY-FOCUSED ELIMINATING HEALTH DISPARITIES INITIATIVE

SECTION 12E.6.(a)  Funds appropriated in this act to the Department of Health and Human Services, Division of Public Health, for the Community-Focused Eliminating Health Disparities Initiative (CFEHDI) shall be used to provide a maximum of 12 grants-in-aid to close the gap in the health status of African-Americans, Hispanics/Latinos, and American Indians as compared to the health status of white persons. These grants-in-aid shall focus on the use of measures to eliminate or reduce health disparities among minority populations in this State with respect to heart disease, stroke, diabetes, obesity, asthma, HIV/AIDS, and cancer. The Office of Minority Health shall coordinate and implement the grants-in-aid program authorized by this section.

SECTION 12E.6.(b)  In implementing the grants-in-aid program authorized by subsection (a) of this section, the Department shall ensure all of the following:

(1)        The amount of any grant-in-aid is limited to three hundred thousand dollars ($300,000).

(2)        Only community-based organizations, faith-based organizations, local health departments, hospitals, and CCNC networks located in urban and rural areas of the western, eastern, and Piedmont areas of this State are eligible to apply for these grants-in-aid. No more than four grants-in-aid shall be awarded to applicants located in any one of the three areas specified in this subdivision.

(3)        Each eligible applicant shall be required to demonstrate substantial participation and involvement with all other categories of eligible applicants, in order to ensure an evidence-based medical home model that will affect change in health and geographic disparities.

(4)        Eligible applicants shall select one or more of the following chronic illnesses or conditions specific to the applicant's geographic area as the basis for applying for a grant-in-aid under this section to affect change in the health status of African-Americans, Hispanics/Latinos, or American Indians:

a.         Heart Disease.

b.         Stroke.

c.         Diabetes.

d.         Obesity.

e.         Asthma.

f.          HIV/AIDS.

g.         Cancer.

(5)        The minimum duration of the grant period for any grant-in-aid is two years.

(6)        The maximum duration of the grant period for any grant-in-aid is three years.

(7)        If approved for a grant-in-aid, the grantee (i) shall not use more than eight percent (8%) of the grant funds for overhead costs and (ii) shall be required at the end of the grant period to demonstrate significant gains in addressing one or more of the health disparity focus areas identified in subsection (a) of this section.

(8)        An independent panel with expertise in the delivery of services to minority populations, health disparities, chronic illnesses and conditions, and HIV/AIDS shall conduct the review of applications for grants-in-aid. The Department shall establish the independent panel required by this section.

SECTION 12E.6.(c)  The grants-in-aid awarded under this section shall be awarded in honor of the memory of the following deceased members of the General Assembly: Bernard Allen, Pete Cunningham, John Hall, Robert Holloman, Howard Hunter, Ed Jones, Jeanne Lucas, Vernon Malone, William Martin, and William Wainwright. These funds shall be used for concerted efforts to address large gaps in health status among North Carolinians who are African-American, as well as disparities among other minority populations in North Carolina.

SECTION 12E.6.(d)  Section 10.21(d) of S.L. 2011-145 reads as rewritten:

"SECTION 10.21.(d)  By October 1, 2012, and annually thereafter,October 1, 2013, the Department shall submit a report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on funds appropriated to the CFEHDI. The report shall include specific activities undertaken pursuant to subsection (a) of this section to address large gaps in health status among North Carolinians who are African-American and other minority populations in this State, and shall also address all of the following:

(1)        Which community-based organizations, faith-based organizations, local health departments, hospitals, and CCNC networks received CFEHDI grants-in-aid.

(2)        The amount of funding awarded to each grantee.

(3)        Which of the minority populations were served by each grantee.

(4)        Which community-based organizations, faith-based organizations, local health departments, hospitals, and CCNC networks were involved in fulfilling the goals and activities of each grant-in-aid awarded under this section and what activities were planned and implemented by the grantee to fulfill the community focus of the CFEHDI program.

(5)        How the activities implemented by the grantee fulfilled the goal of reducing health disparities among minority populations, and the specific success in reducing particular incidences."

 

STRATEGIES FOR IMPROVING MEN'S HEALTH

SECTION 12E.7.  Article 7 of Chapter 130A of the General Statutes is amended by adding a new Part to read:

"Part 5A. Men's Health.

" 130A-223.1.  Department to establish strategies for improving men's health.

The Department of Health and Human Services, Division of Public Health, Chronic Disease and Injury Prevention Section, shall work to expand the State's attention and focus on the prevention of disease and improvement in the quality of life for men over their entire lifespan. The Department shall develop strategies for achieving these goals, which shall include, but not be limited to, all of the following:

(1)        Developing a strategic plan to improve health care services.

(2)        Building public health awareness.

(3)        Developing initiatives within existing programs.

(4)        Pursuing federal and State funding for the screening, early detection, and treatment of prostate cancer and other diseases affecting men's health."

 

INCREASE NORTH CAROLINA MEDICAL EXAMINER AUTOPSY FEES

SECTION 12E.8.(a)  G.S. 130A-389(a) reads as rewritten:

"(a)       If, in the opinion of the medical examiner investigating the case or of the Chief Medical Examiner, it is advisable and in the public interest that an autopsy or other study be made; or, if an autopsy or other study is requested by the district attorney of the county or by any superior court judge, an autopsy or other study shall be made by the Chief Medical Examiner or by a competent pathologist designated by the Chief Medical Examiner. A complete autopsy report of findings and interpretations, prepared on forms designated for the purpose, shall be submitted promptly to the Chief Medical Examiner. Subject to the limitations of G.S. 130A-389.1 relating to photographs and video or audio recordings of an autopsy, a copy of the report shall be furnished to any person upon request. A fee for the autopsy or other study shall be paid by the State. However, if the deceased is a resident of the county in which the death or fatal injury occurred, that county shall pay the fee. The fee shall be one thousand two hundred fifty dollars ($1,000).($1,250)."

SECTION 12E.8.(b)  This section becomes effective July 1, 2013, and applies to fees imposed for autopsies performed on or after that date.

 

SUBPART XII-F. DIVISION OF MH/DD/SAS AND STATE OPERATED HEALTHCARE FACILITIES

 

Establish Statewide Telepsychiatry Program

SECTION 12F.1.(a)  By no later than August 15, 2013, the Office of Rural Health and Community Care of the Department of Health and Human Services shall develop and submit to the Senate Appropriations Committee on Health and Human Services, the House Appropriations Subcommittee on Health and Human Services, the Joint Legislative Oversight Committee on Health and Human Services, and the Fiscal Research Division a plan to implement a statewide telepsychiatry program to be administered by East Carolina University Center for Telepsychiatry and e-Behavioral Health (ECU Center for Telepsychiatry) pursuant to a contract between the Department and ECU Center for Telepsychiatry. The plan shall be substantially similar to the Albemarle Hospital Foundation telepsychiatry project currently operating in 14 hospitals in eastern North Carolina and shall allow all hospitals licensed to operate in the State under Chapter 131E or Chapter 122C of the General Statutes to participate in the telepsychiatry program, either as a consultant site or as a referring site. As used in this section, the terms "consultant site" and "referring site" are as defined in G.S. 143B-139.4B(a). In addition, the plan shall include at least all of the following:

(1)        Specific steps to be taken by ECU Center for Telepsychiatry, within specified time periods, to work toward implementation of the telepsychiatry program on a statewide basis.

(2)        Specific steps to be taken by the Department to oversee and monitor establishment and administration of the program.

(3)        Estimated program costs and rates of payment for telepsychiatry services.

(4)        Requirements for liability coverage related to participation in telepsychiatry.

SECTION 12F.1.(b)  Article 3 of Chapter 143B of the General Statutes is amended by adding a new section to read:

" 143B-139.4B.  Office of Rural Health and Community Care to oversee and monitor establishment and administration of statewide telepsychiatry program.

(a)        The following definitions apply in this section:

(1)        Consultant site. - The hospital or other site at which the consulting provider is physically located at the time the consulting provider delivers the acute mental health or substance abuse care by means of telepsychiatry.

(2)        Hospital. - A facility licensed under Chapter 131E or Chapter 122C of the General Statutes, or a State facility listed in G.S. 122C-181.

(3)        Referring site. - The hospital at which the patient is physically located.

(4)        Telepsychiatry. - The delivery of acute mental health or substance abuse care, including diagnosis or treatment, by means of two-way real-time interactive audio and video by a consulting provider at a consultant site to an individual patient at a referring site. The term does not include the standard use of telephones, facsimile transmissions, unsecured electronic mail, or a combination of these in the course of care.

(5)        Consulting provider. - A physician or other health care provider licensed in this State to provide acute mental health or substance abuse care.

(b)        The North Carolina Office of Rural Health and Community Care shall oversee the establishment and administration of a statewide telepsychiatry program that allows referring sites to utilize consulting providers at a consultant site to provide timely psychiatric assessment and rapid initiation of treatment for patients at the referring site experiencing an acute mental health or substance abuse crisis. The Office of Rural Health and Community Care shall contract with East Carolina University Center for Telepsychiatry and e-Behavioral Health to administer the telepsychiatry program. The contract shall include a provision requiring East Carolina University Center for Telepsychiatry and e-Behavioral Health to work toward implementing this program on a statewide basis by no later than January 1, 2014, and to report annually to the Office of Rural Health and Community Care on the following performance measures:

(1)        Number of consultant sites and referring sites participating in the program.

(2)        Number of psychiatric assessments conducted under the program, reported by site or region.

(3)        Length of stay of patients receiving telepsychiatry services in the emergency departments of hospitals participating in the program, reported by disposition.

(4)        Number of involuntary commitments resulting from psychiatric assessments conducted by consulting providers under the program, reported by year and compared to prior years.

(c)        The Office of Rural Health and Community Care shall have all of the following powers and duties relative to the statewide telepsychiatry program:

(1)        Ongoing oversight and monitoring of the program.

(2)        Ongoing monitoring of the performance of East Carolina University Center for Telepsychiatry and e-Behavioral Health under its contract with the Department, including all of the following:

a.         Review of the performance measures described in subsection (b) of this section.

b.         Annual site visits to East Carolina University Center for Telepsychiatry and e-Behavioral Health.

(3)        Facilitation of program linkages with critical access hospitals and small rural hospitals.

(4)        Conducting visits to referring sites and consultant sites to monitor implementation of the program; and upon implementation, conducting these site visits at least once annually.

(5)        Addressing barriers and concerns identified by consulting providers, consultant sites, and referring sites participating in the program.

(6)        Encouraging participation in the program by all potential consultant sites, consulting providers, and referring sites throughout the State, and promoting continued participation in the program by consultant sites, consulting providers, and referring sites throughout the State.

(7)        Compiling a list of recommendations for future tele-health initiatives, based on operation of the statewide telepsychiatry program.

(8)        Reviewing on a quarterly basis the financial statements of East Carolina University Center for Telepsychiatry and e-Behavioral Health related to the telepsychiatry program in order to compare and monitor projected and actual program costs.

(9)        Annually reporting to the Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on or before November 1st on the operation and effectiveness of the program. The report shall include information on each of the performance measures described in subsection (b) of this section.

(d)        The Department shall adopt rules necessary to ensure the health and safety of patients who receive care, diagnosis, or treatment under the telepsychiatry program authorized by this section."

SECTION 12F.1.(c)  From the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, Office of Rural Health and Community Care, the sum of two million dollars ($2,000,000) for the 2013-2014 fiscal year and the sum of two million dollars ($2,000,000) for the 2014-2015 fiscal year shall be used for the following purposes:

(1)        To enter into a contract with East Carolina University Center for Telepsychiatry and e-Behavioral Health for statewide implementation and administration of the telepsychiatry program authorized in G.S. 143B-139.4B of the General Statutes.

(2)        To purchase needed telepsychiatry equipment for the State facilities listed in G.S. 122C-181 that participate in the statewide telepsychiatry program.

SECTION 12F.1.(d)  Subsection (c) of this section becomes effective July 1, 2013. The remainder of this section is effective when it becomes law.

 

FUNDS FOR LOCAL INPATIENT PSYCHIATRIC BEDS OR BED DAYS

SECTION 12F.2.(a)  Use of Funds. - Of the funds appropriated in Section 2.1 of this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for crisis services, the sum of thirty-eight million one hundred twenty-one thousand six hundred forty-four dollars ($38,121,644) for the 2013-2014 fiscal year and the sum of thirty-eight million one hundred twenty-one thousand six hundred forty-four dollars ($38,121,644) for the 2014-2015 fiscal year shall be used to purchase additional local inpatient psychiatric beds or bed days not currently funded by or though LME/MCOs. The Department shall develop and implement a two-tiered system of payment for purchasing these local inpatient psychiatric beds or bed days based on acuity level, with an enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels, as defined by the Department. The enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels shall not exceed the lowest average cost per patient bed day among the State psychiatric hospitals. In addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated to LME/MCOs for community-based mental health, developmental disabilities, and substance abuse services may be used to purchase additional local inpatient psychiatric beds or bed days. Funds designated in this subsection for the purchase of local inpatient psychiatric beds or bed days shall not be used to supplant other funds appropriated or otherwise available to the Department for the purchase of inpatient psychiatric services through contracts with local hospitals.

SECTION 12F.2.(b)  Distribution and Management of Beds or Bed Days. - The Department shall work to ensure that any local inpatient psychiatric beds or bed days purchased in accordance with this section are distributed across the State in LME/MCO catchment areas and according to need as determined by the Department. The Department shall ensure that beds or bed days for individuals with higher acuity levels are distributed across the State in LME catchment areas, including any catchment areas served by managed care organizations, and according to greatest need based on hospital bed utilization data. The Department shall enter into contracts with LME/MCOs and local hospitals for the management of these beds or bed days. The Department shall work to ensure that these contracts are awarded equitably around all regions of the State. LME/MCOs shall manage and control these local inpatient psychiatric beds or bed days, including the determination of the specific local hospital or State psychiatric hospital to which an individual should be admitted pursuant to an involuntary commitment order.

SECTION 12F.2.(c)  Funds to be Held in Statewide Reserve. - Funds appropriated to the Department for the purchase of local inpatient psychiatric beds or bed days shall not be allocated to LME/MCOs but shall be held in a statewide reserve at the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to pay for services authorized by the LME/MCOs and billed by the hospitals through the LME/MCOs. LME/MCOs shall remit claims for payment to the Department within 15 working days after receipt of a clean claim from the hospital and shall pay the hospital within 30 working days after receipt of payment from the Department.

SECTION 12F.2.(d)  Ineffective LME/MCO Management of Beds or Bed Days. - If the Department determines that (i) an LME/MCO is not effectively managing the beds or bed days for which it has responsibility, as evidenced by beds or bed days in the local hospital not being utilized while demand for services at the State psychiatric hospitals has not reduced, or (ii) the LME/MCO has failed to comply with the prompt payment provisions of subsection (c) of this section, the Department may contract with another LME/MCO to manage the beds or bed days or, notwithstanding any other provision of law to the contrary, may pay the hospital directly.

SECTION 12F.2.(e)  Reporting by LME/MCOs. - The Department shall establish reporting requirements for LME/MCOs regarding the utilization of these beds or bed days.

SECTION 12F.2.(f)  Reporting by Department. - By no later than March 1, 2014, the Department shall report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on all of the following:

(1)        A uniform system for beds or bed days purchased during the fiscal year ending June 30, 2013, from (i) funds appropriated in this act that are designated for this purpose in subsection (a) of this section, (ii) existing State appropriations, and (iii) local funds.

(2)        Other Department initiatives funded by State appropriations to reduce State psychiatric hospital use.

SECTION 12F.2.(g)  Repeal of Hospital Utilization Pilot. - Sections 10.49(s1) through 10.49(s5) of S.L. 2007-323 are repealed.

 

FUNDS FOR THE NORTH CAROLINA CHILD TREATMENT PROGRAM

SECTION 12F.3.(a)  Recurring funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2013-2015 fiscal biennium for the North Carolina Child Treatment Program (NC CTP) shall be used for the following purposes:

(1)        To provide clinical training and coaching to licensed Medicaid clinicians on an array of evidence-based treatments and to provide a statewide platform to assure accountability and outcomes.

(2)        To maintain and manage a public roster of program graduates, linking high-quality clinicians with children, families, and professionals.

(3)        To partner with State, LME/MCO, and private sector leadership to bring effective mental health treatment to children in juvenile justice and mental health facilities.

SECTION 12F.3.(b)  Nonrecurring funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2013-2015 fiscal biennium for the North Carolina Child Treatment Program (NC CTP) shall be used to pay for the cost of developing a secure database for the NC CTP to track individual-level and aggregate-level data with interface capability to work with existing networks within State agencies. The database shall be the property of the State and shall be hosted on State infrastructure. Any data or product that is part of, or derived from, this database shall be and will remain the sole property of the State.

 

SINGLE STREAM FUNDING FOR MH/DD/SAS COMMUNITY SERVICES

SECTION 12F.4.(a)  For the purpose of mitigating cash flow problems that many LME/MCOs experience at the beginning of each fiscal year relative to single stream funding, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall distribute not less than one-twelfth of each LME/MCO's continuation allocation at the beginning of the fiscal year and subtract the amount of that distribution from the LME/MCO's total reimbursements for the fiscal year.

SECTION 12F.4.(b)  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall periodically review and, as deemed necessary by the Department, update the set of standardized covered benefits developed and implemented by the Department pursuant to Section 10.11(b) of S.L. 2011-145 for recipients of LME/MCO community service funds; provided, however, the Department shall not implement any updates that increase the overall cost of these standardized covered benefits.

 

Behavioral Health Clinical Integration and Performance Monitoring

SECTION 12F.4A.(a)  The Department of Health and Human Services shall require local management entities, including local management entities that have been approved to operate the 1915(b)/(c) Medicaid Waiver (LME/MCOs), to implement clinical integration activities with Community Care of North Carolina (CCNC) through TotalCare, a collaborative initiative designed to improve and minimize the cost of care for patients who suffer from comorbid mental health or substance abuse and primary care or other chronic conditions.

SECTION 12F.4A.(b)  The Department shall ensure that, by no later than January 1, 2014, all LME/MCOs submit claims data, including to the extent practical, retrospective claims data and integrated payment and reporting system (IPRS) data, to the CCNC Informatics Center, either directly or through the Medicaid Management Information System. Upon receipt of this claims data, CCNC shall provide access to clinical data and care management information within the Informatics Center to LME/MCOs and authorized behavioral health providers to support treatment, quality assessment and improvement activities, or coordination of appropriate and effective patient care, treatment, or habilitation.

SECTION 12F.4A.(c)  The Department, in consultation with CCNC and the LME/MCOs, shall develop quality and performance statistics on the status of mental health, developmental disabilities, and substance abuse services, including, but not limited to, variations in total cost of care, clinical outcomes, and access to and utilization of services.

SECTION 12F.4A.(d)  The Department shall, within available appropriations and as deemed necessary by the Department, expand or alter existing contracts by mutual agreement of all parties to the contract in order to implement the provisions of this section.

SECTION 12F.4A.(e)  By no later than March 1, 2014, and semiannually thereafter, the Department shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on the progress, outcomes, and savings associated with the implementation of clinical integration activities with CCNC pursuant to this section.

 

LME/MCO FUNDS FOR SUBSTANCE ABUSE SERVICES

SECTION 12F.6.(a)  LME/MCOs shall use a portion of their allocated funds for substance abuse treatment services to support prevention and education activities at a level at least equivalent to the 2012-2013 fiscal year.

SECTION 12F.6.(b)  In providing treatment and services for adult offenders and increasing the number of Treatment Accountability for Safer Communities (TASC) case managers, local management entities shall consult with TASC to improve offender access to substance abuse treatment and match evidence-based interventions to individual needs at each stage of substance abuse treatment. Special emphasis should be placed on intermediate punishment offenders, community punishment offenders at risk for revocation, and Department of Correction releases who have completed substance abuse treatment while in custody.

The Department shall allocate up to three hundred thousand dollars ($300,000) of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, to provide substance abuse services for adult offenders and to increase the number of TASC case managers. These funds shall be allocated to TASC before funds are allocated to LMEs for mental health services, substance abuse services, and crisis services.

 

IMPROVE REPORTING BY DISPENSERS UNDER CONTROLLED SUBSTANCES REPORTING SYSTEM

SECTION 12F.7.  G.S. 90-113.73(a) reads as rewritten:

"(a)       The Department shall establish and maintain a reporting system of prescriptions for all Schedule II through V controlled substances. Each dispenser shall submit the information in accordance with transmission methods and frequency established by rule by the Commission. The Department may issue a waiver to a dispenser that is unable to submit prescription information by electronic means. The waiver may permit the dispenser to submit prescription information by paper form or other means, provided all information required of electronically submitted data is submitted. The dispenser shall report the information required under this section on a monthly basis for the first 12 months of the Controlled Substances Reporting System's operation, and twice monthly thereafter, until January 2, 2010, at which time dispensers shall report no later than seven daysno later than the close of business on the third business day after delivery of the prescription is dispensedprescription, beginning the next day after the delivery date. However, the dispenser is encouraged to report the information required under this section no later than 24 hours after delivery of the prescription. The dispenser shall submit the information in a format as determined annually by the Department based on the format used in the majority of the states operating a controlled substances reporting system."

 

SUBPART XII-G. DIVISION OF HEALTH SERVICE REGULATION

 

ELIMINATE COMPREHENSIVE REPORT ON MEDICATION-RELATED ERRORS IN NURSING HOMES

SECTION 12G.2.(a) G.S. 131E-128.1(e) reads as rewritten:

"(e)       Confidentiality. - The meetings or proceedings of the advisory committee, the records and materials it produces, and the materials it considers, including analyses and reports pertaining to medication-related error reporting under G.S. 131E-128.2 and G.S. 131E-128.5 and pharmacy reports on drug defects and adverse reactions under G.S. 131E-128.4, shall be confidential and not be considered public records within the meaning of G.S. 132-1. The meetings or proceedings and records and materials also shall not be subject to discovery or introduction into evidence in any civil action against a nursing home or a provider of professional health services resulting from matters that are the subject of evaluation and review by the committee. No person who was in attendance at a meeting of the committee shall testify in any civil action as to any evidence or other matters produced or presented during the meetings or proceedings of the committee or as to any findings, recommendations, evaluations, opinions, or other actions of the committee or its members. Notwithstanding the foregoing:

(1)        Information, documents, or records otherwise available, including any deficiencies found in the course of an inspection conducted under G.S. 131E-105, shall not be immune from discovery or use in a civil action merely because they were presented during meetings or proceedings of the advisory committee. A member of the advisory committee or a person who testifies before the committee may testify in a civil action but cannot be asked about that person's testimony before the committee or any opinion formed as a result of the committee meetings or proceedings.

(2)        Information that is confidential and not subject to discovery or use in civil actions under this subsection may be released to a professional standards review organization that performs any accreditation or certification function. Information released to the professional standards review organization shall be limited to information reasonably necessary and relevant to the standards review organization's determination to grant or continue accreditation or certification. Information released to the standards review organization retains its confidentiality and is not subject to discovery or use in any civil action as provided under this subsection. The standards review organization shall keep the information confidential subject to this subsection.

(3)        Information that is confidential and not subject to discovery or use in civil actions under this subsection may be released to the Department of Health and Human Services pursuant to its investigative authority under G.S. 131E-105. Information released to the Department shall be limited to information reasonably necessary and relevant to the Department's investigation of compliance with Part 1 of Article 6 of this Chapter. Information released to the Department retains its confidentiality and is not subject to discovery or use in any civil action as provided in this subsection. The Department shall keep the information confidential subject to this subsection.

(4)        Information that is confidential and is not subject to discovery or use in civil actions under this subsection may be released to an occupational licensing board having jurisdiction over the license of an individual involved in an incident that is under review or investigation by the advisory committee. Information released to the occupational licensing board shall be limited to information reasonably necessary and relevant to an investigation being conducted by the licensing board pertaining to the individual's involvement in the incident under review by the advisory committee. Information released to an occupational licensing board retains its confidentiality and is not subject to discovery or use in any civil action as provided in this subsection. The occupational licensing board shall keep the information confidential subject to this subsection."

SECTION 12G.2.(b)  G.S. 131E-128.1(g) reads as rewritten:

"(g)       Penalty. - The Department may take adverse action against the license of a nursing home upon a finding that the nursing home has failed to comply with this section, G.S. 131E-128.2, 131E-128.3, 131E-128.4, or 131E-128.5.or 131E-128.4."

SECTION 12G.2.(c)  G.S. 131E-128.5 is repealed.

 

SUBPART XII-H. DIVISION OF MEDICAL ASSISTANCE (MEDICAID)

 

Detailed Medicaid Reform Proposal to be Prepared by Department of Health and Human Services; Medicaid Reform Advisory Group Established

SECTION 12H.1.(a)  The Department of Health and Human Services, Division of Medical Assistance, (Department), in consultation with the Medicaid Reform Advisory Group created by subsection (e) of this section, shall create a detailed plan for, but not implement, significant reforms to the State's Medicaid Program that shall accomplish the following:

(1)        Create a predictable and sustainable Medicaid program for North Carolina taxpayers.

(2)        Increase administrative ease and efficiency for North Carolina Medicaid providers.

(3)        Provide care for the whole person by uniting physical and behavioral health care.

SECTION 12H.1.(b)  The Department shall submit its detailed proposal of how to reform the State's Medicaid Program to the General Assembly. The report shall contain the following:

(1)        The details of the reform plan, including how the plan would accomplish the goals set out in subsection (a) of this section.

(2)        The Department's methodology for selecting the reform plan over alternatives.

(3)        Forecasts of the reform plan's potential to slow the growth of the costs of the Medicaid Program, including the assumptions and methodology used for the forecast, as well as an explanation of how the Department's forecast methodology has been improved to produce more accurate forecasting than in prior years.

(4)        The reform plan's impact, as compared to the existing Medicaid Program, on both providers and recipients in areas such as enrollment within the Medicaid system, access to services, quality of care, and payment methodologies, and any other areas of comparison to help the General Assembly evaluate the reform plan.

(5)        If regional demonstration projects, pilot projects, or similar projects will be used to test a proposal, how the Department will ensure that the test methodology is scientifically valid and consistent with social science research methods.

(6)        How financial risks will be allocated under the reform plan.

(7)        The mechanisms through which the Department and any contractors under the reform plan would be held accountable for the implementation and performance of the plan.

(8)        Short-term costs to implement the plan and expected long-term savings in future years from slowing the growth of costs.

(9)        A realistic time line for implementation.

(10)      Draft Medicaid State Plan Amendments, Medicaid waivers, amendments to State law, or other changes necessary to legally allow the Department to implement its reform plan.

(11)      Any other detailed information that would assist the General Assembly in evaluating the strength of the reform plan and the plan's ability to accomplish the goals set out in subsection (a) of this section.

SECTION 12H.1.(c)  The Department is encouraged to and may submit draft Medicaid State Plan amendments, draft waiver applications, or other documents to the federal government to solicit feedback on the Department's proposal prior to reporting to the General Assembly. The Department shall not, however, submit any documents to the federal government to implement the reform plan without legislation authorizing the Department to implement the Department's reform plan.

SECTION 12H.1.(d)  The Department shall submit its reform plan to the 2013 General Assembly when it reconvenes in 2014 but is encouraged to submit its plan as early as it responsibly can.

SECTION 12H.1.(e)  Advisory Group. - There is established the North Carolina Medicaid Reform Advisory Group (Advisory Group) in order to advise and guide the Department of Health and Human Services in its development of its detailed plan to reform Medicaid. The Advisory Group shall meet in order to (i) provide stakeholder input in a public forum and (ii) ensure the transparency of the process of developing the reform proposal. Until the submission of the Medicaid reform plan to the General Assembly, the Advisory Group shall meet not less than monthly and shall begin meeting after a majority of the membership has been appointed. The Advisory Group shall meet at the call of the Cochairs.

The Advisory Group shall consist of the following 22 members:

(1)        Seven members appointed by the Speaker of the House of Representatives, as follows:

a.         Three members of the House of Representatives, one of whom shall be designated as a cochair.

b.         A licensed pharmacist.

c.         A representative of Community Care of North Carolina (CCNC).

d.         A representative of a larger hospital in an urban community.

e.         A patient advocate for mental health, developmental disabilities, or substance abuse issues.

(2)        Seven members appointed by the President Pro Tempore of the Senate, as follows:

a.         Three members of the Senate, one of whom shall be designated as a cochair.

b.         A specialist physician.

c.         A representative of a long-term care facility provider.

d.         A representative of a smaller hospital in a rural community.

e.         A representative of a health insurer.

(3)        A cochair appointed by the Governor. This appointee may not be an employee of the Department of Health and Human Services. In order to work confidentially with legislative staff assigned to the Advisory Group and for the limited purposes of working with those legislative staff, this appointee shall be considered a "legislator," as that term is defined under G.S. 120-129, for the application of legislative confidentiality under Article 17 of Chapter 120 of the General Statutes.

(4)        The Secretary of the Department of Health and Human Services, who shall serve ex officio, or the Secretary's designee.

(5)        The Director of the Division of Medical Assistance within the Department of Health and Human Services, who shall serve ex officio, or the Director's designee.

(6)        Five members appointed by the Governor as follows:

a.         A pediatrician.

b.         A non-pediatric primary care physician.

c.         A representative of an assisted living provider.

d.         A director of a local management entity/managed care organization (LME/MCO).

e.         A patient advocate for physical health issues.

The appointing officer shall fill vacancies. Neither an individual required to register under Article 2 of Chapter 120C of the General Statutes nor an immediate family member of such an individual may be appointed to the Advisory Group.

Legislative members of the Advisory Group shall receive per diem, subsistence, and travel expenses as provided in G.S. 120-3.1. Non-legislative members of the Advisory Group shall receive reimbursements as allowed under G.S. 138-6. The Advisory Group may contract for consultant services as provided in G.S. 120-32.02. Upon approval of the Legislative Services Commission, the Legislative Services Officer shall assign professional staff to assist the Advisory Group in its work. Clerical staff shall be furnished to the Advisory Group through the offices of the House of Representatives and Senate Directors of Legislative Assistants. The Advisory Group may exercise all of the powers provided under G.S. 120-19 through G.S. 120-19.4 while in the discharge of its official duties.

The Secretary of Health and Human Services shall ensure adequate staff representation and support from the Department of Health and Human Services.

The Advisory Group shall terminate on July 1, 2014.

 

Clarify State Plan Amendment Procedures

SECTION 12H.2.(a)  Part 6 of Article 2 of Chapter 108A of the General Statutes is amended by adding a new section to read as follows:

" 108A-54.1A.  Amendments to Medicaid State Plan and Medicaid Waivers.

(a)        No provision in the Medicaid State Plan or in a Medicaid Waiver may expand or otherwise alter the scope or purpose of the Medicaid program from that authorized by law enacted by the General Assembly. For purposes of this section, the term "amendments to the State Plan" includes State Plan amendments, Waivers, and Waiver amendments.

(b)        The Department may submit amendments to the State Plan only as required under any of the following circumstances:

(1)        A law enacted by the General Assembly directs the Department to submit an amendment to the State Plan.

(2)        A law enacted by the General Assembly makes a change to the Medicaid Program that requires approval by the federal government.

(3)        A change in federal law, including regulatory law, or a change in the interpretation of federal law by the federal government requires an amendment to the State Plan.

(4)        A change made by the Department to the Medicaid Program requires an amendment to the State Plan, if the change was within the authority granted to the Department by State law.

(5)        An amendment to the State Plan is required in response to an order of a court of competent jurisdiction.

(c)        Amendments to the State Plan submitted to the federal government for approval shall contain only those changes that are allowed by the authority for submitting an amendment to the State Plan in subsection (b) of this section.

(d)        No fewer than 10 days prior to submitting an amendment to the State Plan to the federal government, the Department shall post the amendment on its Web site and notify the members of the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division, that the amendment has been posted. This requirement shall not apply to draft or proposed amendments submitted to the federal government for comments, but not submitted for approval. If the authority for submitting the amendment to the State Plan is pursuant to subdivision (3), (4), (5), or (6) of subsection (b) of this section, then, prior to submitting an amendment to the federal government, the Department shall submit to the General Assembly members receiving notice under this subsection and to the Fiscal Research Division an explanation of the amendment, the need for the amendment, and the federal time limits required for implementation of the amendment.

(e)        The Department shall submit an amendment to the State Plan to the federal government by a date sufficient to provide the federal government adequate time to review and approve the amendment so the amendment may be effective by the date required by the directing authority in subsection (b) of this section."

SECTION 12H.2.(b)  G.S. 108A-70.25 reads as rewritten:

" 108A-70.25.  State Plan for Health Insurance Program for Children.

The Department shall develop and submit a State Plan to implement "The Health Insurance Program for Children" authorized under this Part to the federal government as application for federal funds under Title XXI. The State Plan submitted under this Part shall be developed by the Department only as authorized by and in accordance with this Part. No provision in the State Plan submitted under this Part may expand or otherwise alter the scope or purpose of the Program from that authorized under this Part. The Department shall include in the State Plan submitted only those items required by this Part and required by the federal government to qualify for federal funds under Title XXI and necessary to secure the State's federal fund allotment for the applicable fiscal period. Except as otherwise provided in this section, the Department shall not amend the State Plan nor submit any amendments thereto to the federal government for review or approval without the specific approval of the General Assembly. In the event federal law requires that an amendment be made to the State Plan and further requires that the amendment be submitted or implemented within a time period when the General Assembly is not and will not be in session to approve the amendment, then the Department may submit the amendment to the federal government for review and approval without the approval of the General Assembly. Prior to submitting an amendment to the federal government without General Assembly approval as authorized in this section, the Department shall report the proposed amendment to the Joint Legislative Oversight Committee on Health and Human Services and to members of the Joint Appropriations Subcommittee on Health and Human Services. The report shall include an explanation of the amendment, the necessity therefor, and the federal time limits required for implementation of the amendment.

(a)        The NC Health Choice program shall be administered and operated in accordance with this Part and the NC Health Choice State Plan, as periodically amended by the Department of Health and Human Services and approved by the federal government.

(b)        The requirements in G.S. 108A-54.1A shall apply to NC Health Choice State Plan amendments in the same manner in which they apply to Medicaid State Plan amendments."

 

General Medicaid Policies

SECTION 12H.3.(a)  G.S. 108A-54 reads as rewritten:

" 108A-54.  Authorization of Medical Assistance Program.

(a)        The Department is authorized to establish a Medicaid Program in accordance with Title XIX of the federal Social Security Act. The Department may adopt rules to implement the Program. The State is responsible for the nonfederal share of the costs of medical services provided under the Program. A county is responsible for the county's cost of administering the Program in that county.

(c)        The Medicaid Program shall be administered and operated in accordance with this Part and the North Carolina Medicaid State Plan and Waivers, as periodically amended by the Department of Health and Human Services in accordance with G.S. 108A-54.1A and approved by the federal government."

SECTION 12H.3.(b)  In addition to paying the non-federal share of the costs of medical services provided under the Medicaid Program, as provided in G.S. 108A-54(a), the State shall pay one hundred percent (100%) of the federal Medicare Part D clawback payments under the Medicare Modernization Act of 2004, P.L. 108-173, as amended.

SECTION 12H.3.(c)  The Department shall not take any actions that the Department determines would jeopardize the State's qualification to receive federal funds through the Medicaid Program.

 

Medicaid Is Secondary Payor of Claims

SECTION 12H.4.  Medicaid is a secondary payor of claims. The Department shall apply Medicaid medical policy to recipients who have primary insurance other than Medicare, Medicare Advantage, or Medicaid. For recipients who have primary insurance other than Medicare, Medicare Advantage, or Medicaid, the Department shall pay the lesser of the Medicaid Allowable Amount or an amount up to the actual coinsurance or deductible or both of the primary payor, in accordance with the State Plan, as approved by the Department of Health and Human Services. The Department may disregard application of this policy in cases where application of the policy would adversely affect patient care.

 

Counties Sharing in Fraud Recovery

SECTION 12H.5.  The Department of Health and Human Services, Division of Medical Assistance, shall provide incentives to counties that successfully recover fraudulently spent Medicaid funds by sharing State savings with counties responsible for the recovery of the fraudulently spent funds.

 

Procedure to Change Medical Policy

SECTION 12H.6.(a)  G.S. 108A-54.2 reads as rewritten:

" 108A-54.2.  Procedures for changing medical policy.

(a)        The Department shall adopt rules to develop, amend, and adopt medical coverage policy for Medicaid and NC Health Choice in accordance with this section.

(b)        Medical coverage policy is defined as those policies, definitions, or guidelines utilized to evaluate, treat, or support the health or developmental conditions of a recipient so as to determine eligibility, authorization or continued authorization, medical necessity, course of treatment and supports, clinical outcomes, and clinical supports treatment practices for a covered procedure, product, or service. Medical coverage policy is subject to the following:

(1)        During the development of new medical coverage policy or amendment to existing medical coverage policy, the Department shall consult with and seek the advice of the Physician Advisory Group and other organizations the Secretary deems appropriate. The Secretary shall also consult with and seek the advice of officials of the professional societies or associations representing providers who are affected by the new medical coverage policy or amendments to existing medical coverage policy.

(2)        At least 45 days prior to the adoption of new or amended medical coverage policy, the Department shall:

a.         Publish the proposed new or amended medical coverage policy on the Department's Web site;

b.         Notify all Medicaid and NC Health Choice providers of the proposed, new, or amended policy; and

c.         Upon request, provide persons copies of the proposed medical coverage policy.

(3)        During the 45-day period immediately following publication of the proposed new or amended medical coverage policy, the Department shall accept oral and written comments on the proposed new or amended policy.

(4)        If, following the comment period, the proposed new or amended medical coverage policy is modified, then the Department shall, at least 15 days prior to its adoption:

a.         Notify all Medicaid and NC Health Choice providers of the proposed policy;

b.         Upon request, provide persons notice of amendments to the proposed policy; and

c.         Accept additional oral or written comments during this 15-day period.

(c)        If the adoption of new or amended medical coverage policies is necessitated by an act of the General Assembly or a change in federal law, then the 45- and 15-day time periods specified in subsection (b) of this section shall instead be 30- and 10-day time periods."

SECTION 12H.6.(b)  G.S. 108A-54.3 is repealed.

SECTION 12H.6.(c)  Unless directed to do so by the General Assembly, the Department shall not change medical policy affecting the amount, sufficiency, duration, and scope of health care services and who may provide services until the Division of Medical Assistance has prepared a five-year fiscal analysis documenting the increased cost of the proposed change in medical policy and submitted it for departmental review. Changes to medical policy affecting the amount, sufficiency, duration, and scope of health care services and who may provide services are subject to the following:

(1)        If the fiscal impact indicated by the fiscal analysis for any proposed medical policy change exceeds five hundred thousand dollars ($500,000) in total requirements for Medicaid or fifty thousand dollars ($50,000) in total requirements for NC Health Choice for a given fiscal year, then the Department shall submit the proposed medical policy change to the fiscal analysis to the Office of State Budget and Management and the Fiscal Research Division. The Department shall not implement the proposed medical policy change unless the source of State funding is identified and approved by the Office of State Budget and Management.

(2)        If the medical policy change meets the requirement thresholds specified in subdivision (1) of this subsection but is required for compliance with federal law, then the Department shall submit the proposed medical policy or policy interpretation change with the five-year fiscal analysis to the Office of State Budget and Management prior to implementing the change.

The Department shall annually report, by November 1 of each year, all medical policy changes with total requirements of less than the amount specified in subdivision (1) of this subsection to the Office of State Budget and Management and the Fiscal Research Division of the Legislative Services Commission.

 

Provider Application and Recredentialing Fee

SECTION 12H.7.  The Department of Health and Human Services, Division of Medical Assistance, shall charge an application fee of one hundred dollars ($100.00), and the amount federally required, to each provider enrolling in the Medicaid Program for the first time. The fee shall be charged to all providers at recredentialing every three years.

 

Electronic Transaction Requirements for Providers

SECTION 12H.8.(a)  Providers shall follow the Department's established procedures for securing electronic payments, and the Department shall not provide routine provider payments by check. Medicaid providers shall file claims electronically, except that nonelectronic claims submission may be required when it is in the best interest of the Department.

SECTION 12H.8.(b)  Providers shall submit Preadmission Screening and Annual Resident Reviews (PASARR) through the Department's Web-based tool or through a vendor with interface capability to submit data into the Web-based PASARR.

SECTION 12H.8.(c)  Providers shall submit requests for prior authorizations electronically via Web site. Providers shall access their authorizations via online portals rather than receiving hard copies by mail. Providers shall receive copies of adverse decisions electronically, although recipients shall receive adverse decisions via certified mail.

SECTION 12H.8.(d)  Providers shall submit their provider enrollment applications online. The Department shall accept electronic signatures rather than require receipt of signed hard copies.

 

Clarify Rule Making

SECTION 12H.9.(a)  G.S. 108A-54(b) is recodified as G.S. 108A-54.1B(a).

SECTION 12H.9.(b)  G.S. 108A-54.1B, as created by subsection (a) of this section, reads as rewritten:

" 108A-54.1B.  Adoption of rules; State Plans, including amendments and waivers to State Plans, have effect of rules.

(a)        The Department is expressly authorized to adopt temporary and permanent rules to implement or define the federal laws and regulations, the North Carolina State Plan of Medical Assistance, and the North Carolina State Plan of the Health Insurance Program for Children, the terms and conditions of eligibility for applicants and recipients of the Medical Assistance Program and the Health Insurance Program for Children, audits and program integrity, the services, goods, supplies, or merchandise made available to recipients of the Medical Assistance Program and the Health Insurance Program for Children, and reimbursement for the services, goods, supplies, or merchandise made available to recipients of the Medical Assistance Program and the Health Insurance Program for Children.

(b)        State Plans, State Plan Amendments, and Waivers approved by the Centers for Medicare and Medicaid Services (CMS) for the North Carolina Medicaid Program and the NC Health Choice program shall have the force and effect of rules adopted pursuant to Article 2A of Chapter 150B of the General Statutes."

SECTION 12H.9.(c)  G.S. 150B-1(d) is amended by adding a new subdivision to read as follows:

"(d)      Exemptions from Rule Making. - Article 2A of this Chapter does not apply to the following:

(22)      The Department of Health and Human Services with respect to the content of State Plans, State Plan Amendments, and Waivers approved by the Centers for Medicare and Medicaid Services (CMS) for the North Carolina Medicaid Program and the NC Health Choice program."

SECTION 12H.9.(d)  G.S. 150B-21.1(a) is amended by adding a new subdivision to read as follows:

"(a)       Adoption. - An agency may adopt a temporary rule when it finds that adherence to the notice and hearing requirements of G.S. 150B-21.2 would be contrary to the public interest and that the immediate adoption of the rule is required by one or more of the following:

(17)      To maximize receipt of federal funds for the Medicaid or NC Health Choice programs within existing State appropriations, to reduce Medicaid or NC Health Choice expenditures, and to reduce Medicaid and NC Health Choice fraud and abuse."

SECTION 12H.9.(e)  Prior to filing a temporary rule authorized under G.S. 150B-21.1(a)(17), as enacted by this section, with the Rules Review Commission and the Office of Administrative Hearings, the Department shall consult with the Office of State Budget and Management on the possible fiscal impact of the temporary rule and its effect on State appropriations and local governments.

 

Medicaid Eligibility; Adjustment to Health Choice Eligibility

SECTION 12H.10.(a)  Families and children who are categorically and medically needy are eligible for Medicaid, subject to the following annual income levels:

                                                         Categorically                        Medically

                            Family                       Needy                                 Needy

                              Size                    Income Level                     Income Level

                                1                          $ 4,344                                $ 2,900

                                2                             5,664                                   3,800

                                3                             6,528                                   4,400

                                4                             7,128                                   4,800

                                5                             7,776                                   5,200

                                6                             8,376                                   5,600

                                7                             8,952                                   6,000

                                8                             9,256                                   6,300

The Department of Health and Human Services shall provide Medicaid coverage to 19- and 20-year-olds under this subsection in accordance with federal rules and regulations. Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.

SECTION 12H.10.(b)  For the following Medicaid eligibility classifications for which the federal poverty guidelines are used as income limits for eligibility determinations, the income limits will be updated each April 1 immediately following publication of federal poverty guidelines. The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to the following:

(1)        All elderly, blind, and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines.

(2)        Pregnant women with incomes equal to or less than one hundred eighty-five percent (185%) of the federal poverty guidelines and without regard to resources. Services to pregnant women eligible under this subsection continue throughout the pregnancy but include only those related to pregnancy and to those other conditions determined by the Department as conditions that may complicate pregnancy.

(3)        Infants under the age of one with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines and without regard to resources.

(4)        Children aged one through five with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines and without regard to resources.

(5)        Effective until January 1, 2014, children aged six through 18 with family incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines and without regard to resources.

(6)        Effective January 1, 2014, children aged six through 18 with family incomes equal to or less than one hundred thirty-three percent (133%) of the federal poverty guidelines and without regard to resources.

(7)        Workers with disabilities described in G.S. 108A-66A with unearned income equal to or less than one hundred fifty percent (150%) of the federal poverty guidelines.

The Department of Health and Human Services, Division of Medical Assistance, shall also provide family planning services to men and women of childbearing age with family incomes equal to or less than one hundred eighty-five percent (185%) of the federal poverty guidelines and without regard to resources.

SECTION 12H.10.(c)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to adoptive children with special or rehabilitative needs, regardless of the adoptive family's income.

SECTION 12H.10.(d)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to "independent foster care adolescents," ages 18, 19, and 20, as defined in section 1905(w)(1) of the Social Security Act (42 U.S.C. 1396d(w)(1)), without regard to the adolescent's assets, resources, or income levels.

SECTION 12H.10.(e)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to women who need treatment for breast or cervical cancer and who are defined in 42 U.S.C. 1396a(a)(10)(A)(ii)(XVIII).

SECTION 12H.10.(f)  G.S. 108A-54.1 is recodified as G.S. 108A-66.1. G.S. 108A-66.1(a), as recodified by this subsection, reads as rewritten:

"(a)       Title. - This act section may be cited as the Health Coverage for Workers With Disabilities Act. The Department shall implement a Medicaid buy-in eligibility category as permitted under P.L. 106-170, Ticket to Work and Work Incentives Improvement Act of 1999. The Department shall establish rules, policies, and procedures to implement this act in accordance with this section."

SECTION 12H.10.(g)  Effective January 1, 2014, G.S. 108A-70.21(a)(1)d. reads as rewritten:

" 108A-70.21.  Program eligibility; benefits; enrollment fee and other cost-sharing; coverage from private plans; purchase of extended coverage.

(a)        Eligibility. - The Department may enroll eligible children based on availability of funds. Following are eligibility and other requirements for participation in the Program:

(1)        Children must:

a.         Be between the ages of 6 through 18;

b.         Be ineligible for Medicaid, Medicare, or other federal government-sponsored health insurance;

c.         Be uninsured;

d.         Be in a family whose family income is above one hundred percent (100%) one hundred thirty-three percent (133%) through two hundred percent (200%) of the federal poverty level;

e.         Be a resident of this State and eligible under federal law; and

f.          Have paid the Program enrollment fee required under this Part.

."

 

NC Health Choice Temporary Extended Coverage

SECTION 12H.11.  An enrollee in the NC Health Choice program who loses eligibility due to reaching the age of 19 on or after June 1, 2013, may purchase at full premium cost continued coverage under the NC Health Choice program until the end of the month following the date on which the Secretary of the United States Department of Health and Human Services determines that the North Carolina federally facilitated Health Benefits Exchange is fully operational. The benefits, co-payments, and other conditions of enrollment under the NC Health Choice program applicable to extended coverage purchased in accordance with this section shall be the same as those applicable to an NC Health Choice enrollee who has not yet reached the age of 19.

 

Modifications to Existing Covered Services and Payment for Services

SECTION 12H.13.(a)  Except as otherwise provided in this act, the allowable State plan services, co-pays, reimbursement rates, and fees shall remain the same as those effective June 30, 2013. Except as otherwise provided in this act and to the extent allowable under federal law, the adjustments made in this section apply to both the Medicaid Program and the NC Health Choice program.

SECTION 12H.13.(b)  Effective July 1, 2013, any rates that contain an inflationary or increase factor shall not increase above the rate in effect on June 30, 2013, unless the rate is otherwise increased by the General Assembly. Hospital outpatient services' percentage of cost shall be adjusted to compensate for expected inflation that hospitals would be eligible for, and cost settlement will only be up to that percentage. The following rates are excluded from this subsection: Federally Qualified Health Centers, Rural Health Centers, State-Operated services, Hospice, Part B and D Premiums, third-party and health maintenance organization (HMO) premiums, drugs, managed care organization (MCO) capitation payments, and nursing direct care services case mix index increases.

SECTION 12H.13.(c)  Effective November 1, 2013, nominal co-pays are increased to the maximum amount allowed by the Centers for Medicare and Medicaid Services (CMS) as of June 30, 2013.

SECTION 12H.13.(d)  Effective January 1, 2014, the following changes are made to allowable State plan services:

(1)        Of the 22 visits allowed per recipient per fiscal year for professional services provided by physicians, nurse practitioners, nurse midwives, physician assistants, clinics, and health departments, prior authorization is required for visits in excess of 10 within a year. This limitation and prior authorization requirement does not apply to chronic conditions.

(2)        Adult rehabilitation home visits for set-up and training are limited to three within a 12-month period.

SECTION 12H.13.(e)  Effective January 1, 2014, the percentage of allowable costs for hospital outpatients is reduced from eighty percent (80%) to seventy percent (70%).

SECTION 12H.13.(f)  Effective January 1, 2014, nonemergency facility services provided in an emergency room shall be reimbursed based on a single fee. The Department of Health and Human Services, Division of Medical Assistance, shall establish such a fee. This fee may not be cost-settled.

SECTION 12H.13.(g)  The Department of Health and Human Services, Division of Medical Assistance, shall implement changes, after consultation with the Joint Legislative Oversight Committee on Health and Human Services, in order to achieve the savings required by this act. The options selected by the Department shall be implemented to be effective January 1, 2014. Options to achieve savings include changing, including creating or eliminating, any of the following:

(1)        The percentage paid on the Wholesale Acquisition Cost (WAC).

(2)        The percentage paid on the State Medicaid Average Costs (SMAC).

(3)        The rates for dispensing generic, preferred, and brand drugs.

(4)        The rates and tiers for dispensing drugs based on the percentage of generic drugs dispensed by a pharmacist.

(5)        Targeted savings for all classes of specialty drugs.

In implementing drug reimbursement rates and methodologies under this subsection, and notwithstanding any other provision of this act, the Department of Health and Human Services, Division of Medical Assistance, shall not consider (i) supplemental rebates for mental health and HIV drugs or (ii) payments based on invoice costs.

SECTION 12H.13.(h)  Effective January 1, 2014, prior authorization is required for all drugs prescribed that have an on-label use of treating attention deficit hyperactivity disorder (ADHD) or attention deficit disorder (ADD).

 

Additional Management of Drug Utilization

SECTION 12H.13A.  The Department of Health and Human Services shall work with Community Care of North Carolina (CCNC) to do the following:

(1)        Ensure better pharmacy management, including compliance by Medicaid recipients with taking their prescription drugs and compliance by pharmacy providers with the CCNC protocols.

(2)        Identify Medicaid recipients who are frequent users of pharmacy services and coordinate with physicians and pharmacists to implement steps to enhance CCNC care management programs.

 

Reduce cost Savings through Drug Adjustment by Reducing Funds Appropriated for Expected "Woodwork" Enrollees

SECTION 12H.13B.  Notwithstanding any other provisions of this act, the following adjustments are made to the amounts budgeted elsewhere in this act:

                                                                                        2013-2014                    2014-2015

            Cost Savings Through Drug Adjustments           $5,000,000     R          $8,000,000     R

            "Woodwork" and Affordable Care Act ($5,000,000)    R          ($8,000,000)    R

 

Administrative Hearings Funding and Procedure Modification

SECTION 12H.16.(a)  The Department of Health and Human Services (Department) shall transfer the sum of one million dollars ($1,000,000) for the 2013-2014 fiscal year, and the sum of one million dollars ($1,000,000) for the 2014-2015 fiscal year, to the Office of Administrative Hearings (OAH). These funds shall be allocated by the OAH for mediation services provided for Medicaid applicant and recipient appeals and to contract for other services necessary to conduct the appeals process. OAH shall continue the Memorandum of Agreement (MOA) with the Department for mediation services provided for Medicaid recipient appeals and contracted services necessary to conduct the appeals process. The MOA will facilitate the Department's ability to draw down federal Medicaid funds to support this administrative function. Upon receipt of invoices from OAH for covered services rendered in accordance with the MOA, the Department shall transfer the federal share of Medicaid funds drawn down for this purpose.

SECTION 12H.16.(b)  G.S. 108C-5 reads as rewritten:

" 108C-5.  Payment suspension and audits utilizing extrapolation.

(a)        The Department may suspend payments to a provider in accordance with the requirements and procedures set forth in 42 C.F.R. 455.23.

(b)        In addition to the procedures for suspending payment set forth at 42 C.F.R. 455.23, the Department may also suspend payment to any provider that (i) owes a final overpayment, assessment, or fine to the Department and has not entered into an approved payment plan with the Department or (ii) has had its participation in the Medicaid or Health Choice programs suspended or terminated by the Department. For purposes of this section, a suspension or termination of participation does not become final until all administrative appeal rights have been exhausted and shall not include any agency decision that is being contested at the Department or the Office of Administrative Hearings or in Superior Court provided that the Superior Court has entered a stay pursuant to the provisions of G.S. 150B-48.

(b1)      The Department shall withhold payment to any North Carolina Medicaid provider or Health Choice provider for whom the Division of Medical Assistance, or its vendor, has identified an overpayment in a written notice to the provider. Withholding shall begin on the 31st day after the day the notice of overpayment is mailed and shall continue during the pendency of any appeal until the overpayment becomes a final overpayment. For purposes of this subsection, withholding during any month shall not exceed the amount of any interest required by law plus nine percent (9%) of the sum of the total overpayment amount identified in the notice of overpayment and any penalty required by law. If the Department subsequently reduces the identified overpayment in writing, withholding during any subsequent month shall not exceed the amount of any interest required by law plus nine percent (9%) of the sum of the total reduced identified overpayment and any penalty required by law. Total withholdings shall not exceed the total amount of the overpayment plus any penalty and interest charges required by law. If the total amount withheld exceeds the final overpayment plus interest and penalty required by law, the Department shall pay the provider the amount withheld in excess of the final overpayment plus penalty and interest. Upon request by the provider and for good cause shown, the Department is authorized to approve a payment plan for a provider to pay an overpayment, pursuant to subsection (g) of this section. Absent a showing of good cause for repayment to be made over a period of more than one year, the Department shall take all necessary and appropriate action to recover overpayments within 365 days of the date the notice of overpayment was mailed to the provider.

(c)        For providers who owe a final overpayment, assessment, or fine to the Department, the payment suspension shall begin the thirty-first day after the overpayment, assessment, or fine becomes final. The payment suspension shall not exceed the amount owed to the Department, including any applicable penalty and interest charges.

(d)        Providers whose participation in the Medicaid or Health Choice programs has been suspended or terminated shall have all payments suspended beginning on the thirty-first day after the suspension or termination becomes final.

(e)        The Department shall consult with the N.C. Departments of Treasury and Revenue and other State departments and agencies to determine if a provider owes debts or fines to the State. The Department may collect any of these debts owed to the State subsequent to consideration by the Department of the financial impact upon the provider and the impact upon access to the services provided by the provider.

(f)         When issuing payment suspensions and withholdings in accordance with this Chapter, the Department may suspend or withhold payment to all providers which share the same IRS Employee Identification Number or corporate parent as the provider or provider site location which owes the final overpayment, overpayment, assessment, or fine. The Department shall give 30 days advance written notice to all providers which share the same IRS Employee Identification Number or corporate parent as the provider or provider site location of the intention of the Department to implement a payment suspension.suspension or withholding.

(g)        The Department is authorized to approve a payment plan for a provider to pay a final overpayment, overpayment, assessment, or fine including interest and any penalty. The payment plan can include a term of up to 24 months. The Department shall establish in rule the conditions of such provider payment plans. Nothing in this subsection shall prevent the provider and the Department from mutually agreeing to modifications of a payment plan.

(h)        All payments suspended or withheld in accordance with this Chapter shall be applied toward any final overpayment, assessment, or fine owed to the Department.

."

SECTION 12H.16.(c)  Chapter 108C of the General Statutes is amended by adding a new section to read as follows:

" 108C-5.1.  Post-payment review and recovery audit contracts.

The Department shall not pay contingent fees pursuant to any contract with an entity conducting Medicaid post-payment reviews or Recovery Audit Contractor (RAC) audits before all appeal rights have been exhausted. Any contingent fee for Medicaid post-payment reviews or RAC audits shall be calculated as a percentage of the amount of the final overpayment, as defined in G.S. 108C-2(5). The State share of the contingent fee paid for Medicaid post-payment reviews or RAC audits shall not exceed the State share of the amount actually recovered by the Department and applied to the final overpayment."

SECTION 12H.16.(d)  Subsection (c) of this section applies only to contracts entered into or amended on or after the effective date of subsection (c).

SECTION 12H.16.(e)  G.S. 1A-1 is amended by adding a new Article to read as follows:

"Article 9.

"Extraordinary Writs.

"Rule 90.  Certiorari.

(a)        Scope of the Writ; Review of the Judgments, Decisions, and Orders of the Office of Administrative Hearings. - The writ of certiorari may be issued in appropriate circumstances by the Superior Court to permit review of the judgments, decisions, and orders of the Office of Administrative Hearings when no right of appeal from an interlocutory order exists.

(b)        Petition for Writ; to Which Superior Court Addressed. - Application for the writ of certiorari shall be made by filing a petition therefor with the clerk of the superior court division to which appeal of right might lie from a final decision of the Office of Administrative Hearings in the contested case for which issuance of the writ is sought.

(c)        Same; Filing and Service; Content. - The petition shall be filed without unreasonable delay and shall be accompanied by proof of service upon all other parties. The petition shall contain a statement of the facts necessary to an understanding of the issues presented by the application, a statement of the reasons why the writ should issue, and certified copies of the judgment, decision, order, or opinion or parts of the record which may be essential to an understanding of the matters set forth in the petition. The petition shall be verified by counsel or the petitioner. Upon receipt of the prescribed docket fee, the clerk will docket the petition.

(d)        Response; Determination by Court. - Within 10 days after service of the petition any party may file a response thereto with supporting affidavits or certified portions of the record not filed with the petition. Filing shall be accompanied by proof of service upon all other parties. The court for good cause shown may shorten the time for filing a response. Determination will be made on the basis of the petition, the response, and any supporting papers. No briefs or oral argument will be received or allowed unless ordered by the court upon its own initiative.

"Rule 91.  Mandamus and Prohibition.

(a)        Petition for Writ; to Which Superior Court Addressed. - Applications for the writs of mandamus or prohibition directed to an administrative law judge shall be made by filing a petition therefor with the clerk of the superior court division to which appeal of right might lie from a final decision entered in the contested case for which issuance of the writ is sought.

(b)        Same; Filing and Service; Content. - The petition shall be filed without unreasonable delay after the action by the Office of Administrative Hearings sought to be prohibited or compelled has been undertaken, or has occurred, or has been refused, and shall be accompanied by proof of service on the respondent administrative law judge or administrative law judges and on all other parties to the action. The petition shall contain a statement of the facts necessary to an understanding of the issues presented by the application, a statement of the issues presented and of the relief sought, a statement of the reasons why the writ should issue, and certified copies of any order or opinion or parts of the record that may be essential to an understanding of the matters set forth in the petition. The petition shall be verified by counsel or the petitioner. Upon receipt of the prescribed docket fee, the clerk shall docket the petition.

(c)        Response; Determination by Court. - Within 10 days after service of the petition the respondent or any party may file a response thereto with supporting affidavits or certified portions of the record not filed with the petition. Filing shall be accompanied by proof of service upon all other parties. The court for good cause shown may shorten the time for filing a response. Determination will be made on the basis of the petition, the response, and any supporting papers. No briefs or oral argument will be received or allowed unless ordered by the court upon its own initiative.

"Rule 92.  Supersedeas.

(a)        Pending Review of Office of Administrative Hearings Judgments, Decisions, and Orders. - Application may be made to the appropriate superior court for a writ of supersedeas to stay the execution or enforcement of any judgment, decision, order, or other determination of the Office of Administrative Hearings which is not automatically stayed by the taking of appeal when an appeal has been taken or a petition for mandamus, prohibition, or certiorari has been filed to obtain review of the judgment, decision, order, or other determination and (i) a stay order or entry has been sought by the applicant by deposit of security or by motion at the Office of Administrative Hearings and such order or entry has been denied or vacated by the trial tribunal or (ii) extraordinary circumstances make it impracticable to obtain a stay by deposit of security or by application to the Office of Administrative Hearings for a stay order.

(b)        Petition; Filing and Service; Content. - The petition shall be filed with the clerk of the superior court division to which appeal of right might lie from a final decision of the Office of Administrative Hearings in the contested case for which issuance of the writ is sought. The petitions shall be accompanied by proof of service upon all other parties. The petition shall be verified by counsel or the petitioner. Upon receipt of the required docket fee, the clerk will docket the petition. For stays of the judgments of the Office of Administrative Hearings, the petition shall contain a statement that a stay has been sought in the Office of Administrative Hearings and denied or vacated or shall contain facts showing that it was impracticable there to seek a stay. For stays of any judgment, the petition shall contain (i) a statement of any facts necessary to an understanding of the basis upon which the writ is sought and (ii) a statement of reasons why the writ should issue in justice to the applicant. The petition may be accompanied by affidavits and by any certified portions of the record pertinent to its consideration. It may be included in a petition to the superior court for certiorari, mandamus, or prohibition.

(c)        Response; Determination by Court. - Within 10 days after service of the petition, any party may file a response thereto with supporting affidavits or certified portions of the record not filed with the petition. Filing shall be accompanied by proof of service upon all other parties. The court for good cause shown may shorten the time for filing a response. Determination will be made on the basis of the petition, the response, and any supporting papers. No briefs or oral argument will be received or allowed unless ordered by the court upon its own initiative.

(d)        Temporary Stay. - Upon the filing of a petition for supersedeas, the applicant may apply, either within the petition or by separate paper, for an order temporarily staying enforcement or execution of the judgment, decision, order, or other determination pending decision by the court upon the petition for supersedeas. If application is made by separate paper, it shall be filed and served in the manner provided for the petition for supersedeas in Rule 92(b). The court for good cause shown in such a petition for temporary stay may issue such an order ex parte."

SECTION 12H.16.(f)  Article 4 of Chapter 150B of the General Statutes is amended by adding a new section to read:

" 150B-53.  Writs.

Any party to a contested case may petition for writs of certiorari, mandamus, prohibition, or supersedeas in the manner prescribed in Rules 90, 91, and 92 of the North Carolina Rules of Civil Procedure."

 

Provider Performance Bonds

SECTION 12H.17.(a)  Subject to the provisions of this section, the Department may require Medicaid-enrolled providers to purchase a performance bond in an amount not to exceed one hundred thousand dollars ($100,000) naming as beneficiary the Department of Health and Human Services, Division of Medical Assistance, or provide to the Department a validly executed letter of credit or other financial instrument issued by a financial institution or agency honoring a demand for payment in an equivalent amount. The Department may require the purchase of a performance bond or the submission of an executed letter of credit or financial instrument as a condition of initial enrollment, reenrollment, recredentialing, or reinstatement if any of the following are true:

(1)        The provider fails to demonstrate financial viability.

(2)        The Department determines there is significant potential for fraud and abuse.

(3)        The Department otherwise finds it is in the best interest of the Medicaid program to do so.

The Department shall specify the circumstances under which a performance bond or executed letter of credit will be required.

SECTION 12H.17.(b)  The Department may waive or limit the requirements of subsection (a) of this section for individual Medicaid-enrolled providers or for one or more classes of Medicaid-enrolled providers based on the following:

(1)        The provider's or provider class's dollar amount of monthly billings to Medicaid.

(2)        The length of time an individual provider has been licensed, endorsed, certified, or accredited in this State to provide services.

(3)        The length of time an individual provider has been enrolled to provide Medicaid services in this State.

(4)        The provider's demonstrated ability to ensure adequate record keeping, staffing, and services.

(5)        The need to ensure adequate access to care.

In waiving or limiting requirements of this section, the Department shall take into consideration the potential fiscal impact of the waiver or limitation on the State Medicaid Program. The Department shall provide to the affected provider written notice of the findings upon which its action is based and shall include the performance bond requirements and the conditions under which a waiver or limitation apply.

SECTION 12H.17.(c)  The Department may adopt temporary rules in accordance with G.S. 150B-21.1 as necessary to implement G.S. 108C-14, as enacted by this section.

 

Shared Savings Plan with Providers

SECTION 12H.18.(a)  The Department of Health and Human Services shall consult with providers affected by subsection (b) of this section to develop a shared savings plan under which the Department shall begin making provider payments no later than June 30, 2014. The shared savings plan shall provide incentives to provide effective and efficient care that results in positive outcomes for Medicaid and NC Health Choice recipients. Payments under the shared savings plan shall be paid from funds withheld under subsection (b) of this section.

SECTION 12H.18.(b)  During the 2013-2015 fiscal biennium, the Department of Health and Human Services shall withhold two percent (2%) of payments for the following services rendered to Medicaid and NC Health Choice recipients on or after July 1, 2013:

(1)        Inpatient hospital.

(2)        Physician, excluding primary care until January 1, 2015.

(3)        Dental.

(4)        Optical services and supplies.

(5)        Podiatry.

(6)        Chiropractors.

(7)        Hearing aids.

(8)        Personal care services.

(9)        Nursing homes.

(10)      Adult care homes.

(11)      Drugs.

Funds from payments withheld under this section that are budgeted to be shared with providers shall not revert to the General Fund.

SECTION 12H.18.(c)  The Department of Health and Human Services shall report to the Joint Legislative Oversight Committee on Health and Human Services on the development of the shared savings program established by this section no later than March 1, 2014.

SECTION 12H.18.(d)  The Department of Health and Human Services shall use funds withheld from payments for drugs to develop with Community Care of North Carolina (CCNC) a program for Medicaid and Health Choice recipients based on the ChecKmeds NC program. The program shall include the following:

(1)        At least 50 community pharmacies by June 30, 2014.

(2)        At least 500 community pharmacies in at least 70 counties by June 30, 2015.

(3)        A per member per month (PMPM) payment for care coordination and population health services provided in conjunction with CCNC.

(4)        A pay for performance payment.

 

Modify Hospital Provider Assessments by Changing Amount Retained by the State

SECTION 12H.19.(a)  G.S. 108A-121(8) reads as rewritten:

"(8)      State's annual Medicaid payment. - Forty-three million dollars ($43,000,000).Ninety-five million dollars ($95,000,000)."

SECTION 12H.19.(b)  G.S. 108A-124 reads as rewritten:

" 108A-124.  Use of assessment proceeds.

(a)        Use. - The proceeds of the assessments imposed under this Article and all corresponding matching federal funds must be used to make the State annual Medicaid payment to the State and the Medicaid equity payments and UPL payments to hospitals.

(b)        Quarterly Payments. - Within seven business days of following the due date for each quarterly assessment imposed under G.S. 108A-123, the Secretary must do the following:

(1)        Transfer to the State Controller twenty-five percent (25%) of the State's annual Medicaid payment amount.

(2)(1)   Pay to each hospital that has paid its equity assessment for the respective quarter twenty-five percent (25%) of its Medicaid equity payment amount. A hospital's Medicaid equity payment amount is the sum of the hospital's Medicaid inpatient and outpatient deficits after calculating all other Medicaid payments, excluding disproportionate share hospital payments and the UPL payment remitted to the hospital under subdivision (3)(2) of this subsection.

(3)(2)   Pay to the primary affiliated teaching hospital for the East Carolina University Brody School of Medicine, to the critical access hospitals, and to each hospital that has paid its UPL assessment for the respective quarter twenty-five percent (25%) of its UPL payment amount, as determined under subsection (c) of this section.

."

SECTION 12H.19.(c)  Article 7 of Chapter 108A of the General Statutes is amended by adding a new section to read as follows:

" 108A-128.  Payment for providers formerly subject to this Article.

If a hospital provider is made exempt from an assessment under this Article because of an acquisition of the hospital by another hospital provider that is exempt from an assessment under this Article, then the acquired hospital provider shall continue to make payments to the State for the acquired hospital provider's pro rata portion of the State's annual Medicaid payment. This pro rata portion shall be based on the acquired hospital provider's percentage contribution to the State's annual Medicaid payment at the time of acquisition."

 

Modify Medicaid Rate Methodologies for Recently Acquired Providers; Create Regional Base Rates for Hospitals

SECTION 12H.20.(a)  The Department of Health and Human Services shall modify Medicaid rate methodologies to ensure that rates paid to hospital or physician providers that were acquired, merged, leased, or managed after December 31, 2011, do not exceed rates that would have been paid if the provider had not been acquired, merged, leased, or managed.

SECTION 12H.20.(b)  The Department of Health and Human Services, Division of Medical Assistance, shall replace the existing base rates for individual hospitals with new regional base rates for all hospitals within a given region. The Department shall consult with hospitals to define the regions and to identify appropriate regional differences in order to establish regional base rates. The new regional base rates shall do the following:

(1)        Maintain the same statewide total for the base rates for all hospitals as before the base rate revision, after first adjusting the statewide total based on the changes to rates made by subsection (a) of this section.

(2)        Ensure the sustainability of small rural hospitals, ensuring access to care.

 

Community Care of North Carolina Cost-Effectiveness and Outcomes Study; Continued Reporting

SECTION 12H.21.(a)  The Office of the State Auditor shall, as recommended in its January 2013 performance audit of the Medicaid Program, engage nationally recognized medical researchers to perform a scientifically valid study based upon actual data to determine whether the Community Care of North Carolina (CCNC) model saves money and improves health outcomes. This study shall begin during fiscal year 2013-2014 and shall, if possible, be completed by the end of that fiscal year. The Department of Health and Human Services shall, upon the direction of and in amounts specified by the Office of the State Auditor, make payments to the contractor hired by the Office of the State Auditor from the one hundred thousand dollars ($100,000) appropriated elsewhere in this budget for this study as well as from federal Medicaid matching funds available for this study.

SECTION 12H.21.(b)  During fiscal year 2014-2015, the Department of Health and Human Services shall submit a report from a qualified entity with proven experience in conducting actuarial and health care studies on the Medicaid cost-savings achieved by the CCNC networks, which shall include children, adults, and the aged, blind, and disabled, to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.

SECTION 12H.21.(c)  North Carolina Community Care Networks, Inc. (NCCCN), shall report quarterly to the Department and to the Office of State Budget and Management (OSBM) on the development of the statewide Enhanced Primary Care Case Management System and its defined goals and deliverables as agreed upon in the contract. NCCCN shall submit biannual reports to the Secretary of Health and Human Services, OSBM, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on the progress and results of implementing the quantitative, analytical, utilization, quality, cost containment, and access goals and deliverables set out in the contract. NCCCN shall conduct its own analysis of the CCNC system to identify any variations from the development plan for the Enhanced Primary Care Case Management System and its defined goals and deliverables set out in the contract between the Department of Health and Human Services, Division of Medical Assistance (DMA), and NCCCN. Upon identifying any variations, NCCCN shall develop and implement a plan to address the variations. NCCCN shall report the plan to DMA within 30 days after taking any action to implement the plan.

 

Community Care of North Carolina to Set and Pay Per Member Per Month Payments on Performance Basis to Encourage Better Care Management

SECTION 12H.22.(a)  The Department of Health and Human Services shall contract with Community Care Networks, Inc. (NCCCN), to administer and distribute the funds currently allocated to per member per month (PMPM) payments for Community Care of North Carolina (CCNC) primary care providers. NCCCN shall distribute one hundred percent (100%) of the funds allocated to PMPM payments to primary care providers on a care management performance basis using criteria developed by NCCCN. In developing its pay for performance model, NCCCN shall (i) ensure an adequate statewide network of participating CCNC primary care providers and (ii) adopt a payment level of zero dollars ($0.00) for providers who do not satisfactorily participate in CCNC care management initiatives. Performance-based payments shall begin on July 1, 2014.

SECTION 12H.22.(b)  PMPM payments from the Department to CCNC primary care providers shall continue until the implementation of the performance-based payment system.

SECTION 12H.22.(c)  The Department shall consult with the Joint Legislative Oversight Committee on Health and Human Services on the performance-based payment proposal from NCCCN to incentivize better care management from primary care providers. If the Department submits a report and requests a meeting for the consultation, but the Oversight Committee does not hear the consultation within 90 days of the request, then the consultation requirement shall be deemed waived by the Oversight Committee. The report submitted for consultation shall include the following:

(1)        Measureable elements that will be used to differentiate care management performance-based payments from the existing PMPM payments.

(2)        A comparison of the performance plan to other measures such as the Healthcare Effectiveness Data and Information Set (HEDIS) or other national performance or quality measures.

(3)        The specific structure of when payments would be made.

(4)        An impact calculation of prospective payments under the performance-based payment plan and the current PMPM rates.

SECTION 12H.22.(d)  Subsection (a) of this section is contingent upon both of the following:

(1)        The Department's successful renegotiation of and modification to the existing contract or entering into a new contract with NCCCN to administer and distribute performance-based payments, as provided in subsection (a) of this section.

(2)        The consultation required under subsection (c) of this section or an implied waiver of the consultation requirement, as provided in subsection (c) of this section.

 

Accounting for Medicaid Receivables as Nontax Revenue

SECTION 12H.24.(a)  Receivables reserved at the end of the 2013-2014 and 2014-2015 fiscal years shall, when received, be accounted for as nontax revenue for each of those fiscal years.

SECTION 12H.24.(b)  For the 2013-2014 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred ten million dollars ($110,000,000) with the Department of State Treasurer to be accounted for as nontax revenue. For the 2014-2015 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred nine million dollars ($109,000,000) with the Department of State Treasurer to be accounted for as nontax revenue. These deposits shall represent the return of General Fund appropriations, nonfederal revenue, fund balances, or other resources from State-owned and State-operated hospitals which are used to provide indigent and non-indigent care services. The return from State-owned and State-operated hospitals to DHHS will be made from nonfederal resources in an amount equal to the amount of the payments from the Division of Medical Assistance for uncompensated care. The treatment of any revenue derived from federal programs shall be in accordance with the requirements specified in the Code of Federal Regulations, Title 2, Part 225.

 

Medicaid Special Fund Transfer

SECTION 12H.25.  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143C-9-1, there is appropriated from the Medicaid Special Fund to the Department of Health and Human Services the sum of forty-three million dollars ($43,000,000) for the 2013-2014 fiscal year and the sum of forty-three million dollars ($43,000,000) for the 2014-2015 fiscal year. These funds shall be allocated as prescribed by G.S. 143C-9-1(b) for Medicaid programs. Notwithstanding the prescription in G.S. 143C-9-1(b) that these funds not reduce State general revenue funding, these funds shall replace the reduction in general revenue funding effected in this act.

 

Medicaid Cost Containment Activities

SECTION 12H.26.(a)  The Department of Health and Human Services may use up to five million dollars ($5,000,000) in the 2013-2014 fiscal year and up to five million dollars ($5,000,000) in the 2014-2015 fiscal year in Medicaid funds budgeted for program services to support the cost of administrative activities when cost-effectiveness and savings are demonstrated. The funds shall be used to support activities that will contain the cost of the Medicaid Program, including contracting for services, hiring additional staff, funding pilot programs, Health Information Exchange and Health Information Technology (HIE/HIT) administrative activities, or providing grants through the Office of Rural Health and Community Care to plan, develop, and implement cost containment programs.

Medicaid cost containment activities may include prospective reimbursement methods, incentive-based reimbursement methods, service limits, prior authorization of services, periodic medical necessity reviews, revised medical necessity criteria, service provision in the least costly settings, plastic magnetic-stripped Medicaid identification cards for issuance to Medicaid enrollees, fraud detection software or other fraud detection activities, technology that improves clinical decision making, credit balance recovery and data mining services, and other cost containment activities. Funds may be expended under this section only after the Office of State Budget and Management has approved a proposal for the expenditure submitted by the Department. Proposals for expenditure of funds under this section shall include the cost of implementing the cost containment activity and documentation of the amount of savings expected to be realized from the cost containment activity.

SECTION 12H.26.(b)  The Department shall report annually on the expenditures under this section to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division. The report shall include the methods used to achieve savings and the amount saved by these methods. The report is due to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division not later than December 1 of each year for the activities of the previous State fiscal year.

 

Miscellaneous Medicaid Provisions

SECTION 12H.27.(a)  Volume Purchase Plans and Single Source Procurement. - The Department of Health and Human Services, Division of Medical Assistance, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single source procurement, or other contracting processes in order to improve cost containment.

SECTION 12H.27.(b)  Cost Containment Programs. - The Department of Health and Human Services, Division of Medical Assistance, may undertake cost containment programs, including contracting for services, preadmissions to hospitals, and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.

SECTION 12H.27.(c)  Posting of Notices on Web Site. - For any public notice of change required pursuant to the provisions of 42 C.F.R. 447.205, the Department shall, no later than seven business days after the date of publication, publish the same notice on its Web site on the same Web page as it publishes State Plan amendments, and the notice shall remain on the Web site continuously for 90 days.

SECTION 12H.27.(d)  Medicaid Identification Cards. - The Department shall issue Medicaid identification cards to recipients on an annual basis with updates as needed.

 

Continue A+KIDS Registry and ASAP Initiative

SECTION 12H.28.  Community Care of North Carolina (CCNC) and the Department of Health and Human Services, Division of Medical Assistance, shall continue to do the following:

(1)        Monitor the prescription and administration of atypical antipsychotic medications to Medicaid recipients under the age of 18 through the About the Antipsychotics - Keeping It Documented for Safety (A+KIDS) Registry.

(2)        Utilize a prior authorization policy for off-label antipsychotic and safety monitoring for Medicaid recipients 18 and older through the Adult Safety with Antipsychotic Prescribing (ASAP) Initiative.

 

SUBPART XII-I. MISCELLANEOUS

 

Study/allow Certified nurse-Midwives greater Flexibility in practice of midwifery

SECTION 12I.2.(a)  The Joint Legislative Oversight Committee on Health and Human Services shall appoint a subcommittee to study whether certified nurse-midwives should be given more flexibility in the practice of midwifery. In conducting the study, the subcommittee shall consider whether a certified nurse-midwife should be allowed to practice midwifery in collaboration with, rather than under the supervision of, a physician licensed to practice medicine under Article 1 of Chapter 90 of the General Statutes who is actively engaged in the practice of obstetrics.

SECTION 12I.2.(b)  The subcommittee shall report its findings and recommendations to the Joint Legislative Oversight Committee on Health and Human Services on or before April 1, 2014, at which time it shall terminate.

 

SUBPART XII-J. DHHS BLOCK GRANTS

 

DHHS BLOCK GRANTS

SECTION 12J.1.(a)  Except as otherwise provided, appropriations from federal block grant funds are made for each year of the fiscal biennium ending June 30, 2015, according to the following schedule:

 

TEMPORARY ASSISTANCE TO NEEDY FAMILIES

(TANF) FUNDS

 

Local Program Expenditures

 

Division of Social Services

 

01.       Work First Family Assistance                                                            $ 60,285,413

 

02.       Work First County Block Grants                                                          82,485,495

 

03.       Work First Electing Counties                                                                  2,352,521

 

04.       Adoption Services - Special Children's Adoption Fund                           2,026,877

 

05.       Child Protective Services - Child Welfare

            Workers for Local DSS                                                                          9,412,391

 

06.       Child Welfare Collaborative                                                                       632,416

 

Division of Child Development

 

07.       Subsidized Child Care Program                                                            52,060,846

 

08.       Swap Child Care Subsidy                                                                       6,352,644

 

Division of Public Health

 

09.       Teen Pregnancy Initiatives                                                                       2,500,000

 

DHHS Administration

 

10.       Division of Social Services                                                                      2,482,260

 

11.       Office of the Secretary                                                                                 34,042

 

Transfers to Other Block Grants

 

Division of Child Development

 

12.       Transfer to the Child Care and Development Fund                                71,773,001

 

13.       Transfer to Social Services Block Grant for Child

            Protective Services - Child Welfare Training in

            Counties                                                                                                 1,300,000

 

14.       Transfer to Social Services Block Grant for Child

            Protective Services                                                                                 5,040,000

 

15.       Transfer to Social Services Block Grant for County

            Departments of Social Services for Children's Services                            4,148,001

 

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES

(TANF) FUNDS                                                                                              $ 302,885,907

 

TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)

EMERGENCY CONTINGENCY FUNDS

 

Local Program Expenditures

 

Division of Social Services

 

01.       Work First County Block Grants                                                         $ 5,580,925

 

02.       Work First Electing Counties                                                                       25,692

 

03.       Subsidized Child Care                                                                            6,549,469

 

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)

EMERGENCY CONTINGENCY FUNDS                                                     $ 12,156,086

 

SOCIAL SERVICES BLOCK GRANT

 

Local Program Expenditures

 

Divisions of Social Services and Aging and Adult Services

 

01.       County Departments of Social Services

            (Transfer from TANF $4,148,001)                                                    $ 29,927,551

 

02.       Child Protective Services (Transfer from TANF)                                     5,040,000

 

03.       State In-Home Services Fund                                                                 1,977,379

 

04.       Adult Protective Services                                                                        1,266,778

 

05.       State Adult Day Care Fund                                                                     2,028,375

 

06.       Child Protective Services/CPS Investigative Services -

            Child Medical Evaluation Program                                                             573,564

 

07.       Special Children Adoption Incentive Fund                                                  470,555

 

08.       Child Protective Services - Child Welfare Training

            for Counties (Transfer from TANF)                                                        1,300,000

 

09.       Home and Community Care Block Grant (HCCBG)                               1,726,068

 

10.       Child Advocacy Centers                                                                            345,450

 

11.       Guardianship                                                                                          4,046,773

 

12.       UNC Cares Contract                                                                                229,376

 

13.       Foster Care Services                                                                              1,408,971

 

Division of Central Management and Support

 

14.       DHHS Funding for Nonprofits                                                                3,021,323

 

Division of Mental Health, Developmental Disabilities, and Substance Abuse Services

 

15.       Mental Health Services - Adult and Child/Developmental

            Disabilities Program/Substance Abuse Services - Adult                           4,100,043

 

DHHS Program Expenditures

 

Division of Services for the Blind

 

16.       Independent Living Program                                                                   3,419,125

 

Division of Health Service Regulation

 

17.       Adult Care Licensure Program                                                                   381,087

 

18.       Mental Health Licensure and Certification Program                                     190,284

 

DHHS Administration

 

19.       Division of Aging and Adult Services                                                          577,745

 

20.       Division of Social Services                                                                         559,109

 

21.       Office of the Secretary/Controller's Office                                                  127,731

 

22.       Division of Child Development                                                                     13,878

 

23.       Division of Mental Health, Developmental

            Disabilities, and Substance Abuse Services                                                   27,446

 

24.       Division of Health Service Regulation                                                         118,946

 

TOTAL SOCIAL SERVICES BLOCK GRANT                                           $ 62,877,557

 

LOW-INCOME HOME ENERGY ASSISTANCE BLOCK GRANT

 

Local Program Expenditures

 

Division of Social Services

 

01.       Low-Income Energy Assistance Program (LIEAP)                             $ 50,876,440

 

02.       Crisis Intervention Program (CIP)                                                         33,866,195

 

Local Administration

 

Division of Social Services

 

03.       County DSS Administration                                                                    6,757,731

 

DHHS Administration

 

04.       Office of the Secretary/DIRM                                                                    412,488

 

05.       Office of the Secretary/Controller's Office                                                    18,378

 

Transfers to Other State Agencies

 

Department of Environment and Natural Resources

 

06.       Weatherization Program                                                                        14,947,789

 

07.       Heating Air Repair and Replacement

            Program (HARRP)                                                                                 7,193,873

 

08.       Local Residential Energy Efficiency Service

            Providers - Weatherization                                                                          37,257

 

09.       Local Residential Energy Efficiency Service

            Providers - HARRP                                                                                  338,352

 

10.       Department of Commerce Administration -

            Weatherization                                                                                             37,257

 

11.       Department of Commerce Administration -

            HARRP                                                                                                    338,352

 

Department of Administration

 

12.       N.C. Commission on Indian Affairs                                                              87,736

 

TOTAL LOW-INCOME HOME ENERGY ASSISTANCE

BLOCK GRANT                                                                                            $ 114,911,848

 

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

 

Local Program Expenditures

 

Division of Child Development

 

01.       Child Care Services

            (Smart Start $7,000,000)                                                                $ 158,328,747

 

02.       Electronic Tracking System                                                                     3,000,000

 

03.       Transfer from TANF Block Grant

            for Child Care Subsidies                                                                       71,773,001

 

04.       Quality and Availability Initiatives

            (TEACH Program $3,800,000)                                                            22,500,000

 

DHHS Administration

 

Division of Child Development

 

05.       DCDEE Administrative Expenses                                                            6,000,000

 

06.       Local Subsidized Child Care Services Support                                      13,274,413

 

Division of Central Administration

 

07.       DHHS Central Administration - DIRM

            Technical Services                                                                                     775,000

 

TOTAL CHILD CARE AND DEVELOPMENT FUND

BLOCK GRANT                                                                                            $ 275,651,161

 

MENTAL HEALTH SERVICES BLOCK GRANT

 

Local Program Expenditures

 

01.       Mental Health Services - Adult                                                         $  10,717,607

 

02.       Mental Health Services - Child                                                               5,121,991

 

03.       Administration                                                                                           200,000

 

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT                        $ 16,039,598

 

SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANT

 

Local Program Expenditures

 

Division of Mental Health, Developmental Disabilities, and Substance Abuse Services

 

01.       Substance Abuse Services - Adult                                                     $ 14,960,371

 

02.       Substance Abuse Treatment Alternative for Women                                6,050,300

 

03.       Substance Abuse - HIV and IV Drug                                                     3,919,723

 

04.       Substance Abuse Prevention - Child                                                       7,186,857

 

05.       Substance Abuse Services - Child                                                          4,190,500

 

06.       Administration                                                                                           454,000

 

Division of Public Health

 

07.       Risk Reduction Projects                                                                             575,654

 

08.       Aid-to-Counties                                                                                        190,295

 

TOTAL SUBSTANCE ABUSE PREVENTION

AND TREATMENT BLOCK GRANT                                                          $ 37,527,700

 

MATERNAL AND CHILD HEALTH BLOCK GRANT

 

Local Program Expenditures

 

Division of Public Health

 

01.       Children's Health Services

            (Safe Sleep Campaign $45,000)                                                        $   8,042,531

 

02.       Women's Health

            (March of Dimes $350,000; Teen Pregnancy

            Prevention Initiatives $650,000; Perinatal

            Quality Collaborative $250,000; 17P Project $52,000;

            Maternity Homes $925,085; Carolina Pregnancy Care

            Fellowship $250,000; ECU High Risk Maternity Clinic $325,000

            Nurse-Family Partnership $1,184,018)                                                   8,532,935

 

03.       Oral Health Preventive Services                                                                   44,901

 

DHHS Program Expenditures

 

Division of Public Health

 

04.       Children's Health Services                                                                       1,301,504

 

05.       Women's Health - Maternal Health                                                            105,419

 

06.       State Center for Health Statistics                                                                164,487

 

07.       Health Promotion - Injury and Violence Prevention                                      89,374

 

DHHS Administration

 

Division of Public Health

 

08.       Division of Public Health Administration                                                     573,108

 

TOTAL MATERNAL AND CHILD

HEALTH BLOCK GRANT                                                                             $ 18,854,259

 

PREVENTIVE HEALTH SERVICES BLOCK GRANT

 

Local Program Expenditures

 

Division of Public Health

 

01.       Physical Activity and Prevention                                                           $ 1,331,961

 

02.       Injury and Violence Prevention (Services to Rape

            Victims - Set-Aside)                                                                                 169,730

 

DHHS Program Expenditures

 

Division of Public Health

 

03.       HIV/STD Prevention and Community Planning

            (Transfer from Social Services Block Grant)                                               145,819

 

04.       Oral Health Preventive Services                                                                   46,302

 

05.       Laboratory Services - Testing, Training, and Consultation                            10,980

 

06.       Injury and Violence Prevention (Services to Rape

            Victims - Set-Aside)                                                                                 199,634

 

07.       Heart Disease and Stroke Prevention                                                         162,249

 

08.       Performance Improvement and Accountability                                            213,971

 

09.       Physical Activity and Nutrition                                                                      38,000

 

10.       State Center for Health Statistics                                                                  61,406

 

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT                  $ 2,380,052

 

COMMUNITY SERVICES BLOCK GRANT

 

Local Program Expenditures

 

Office of Economic Opportunity

 

01.       Community Action Agencies                                                              $ 22,402,724

 

02.       Limited Purpose Agencies                                                                       1,244,596

 

DHHS Administration

 

03.       Office of Economic Opportunity                                                              1,244,596

 

TOTAL COMMUNITY SERVICES BLOCK GRANT                               $ 24,891,916

 

GENERAL PROVISIONS

SECTION 12J.1.(b)  Information to Be Included in Block Grant Plans. - The Department of Health and Human Services shall submit a separate plan for each Block Grant received and administered by the Department, and each plan shall include the following:

(1)        A delineation of the proposed allocations by program or activity, including State and federal match requirements.

(2)        A delineation of the proposed State and local administrative expenditures.

(3)        An identification of all new positions to be established through the Block Grant, including permanent, temporary, and time-limited positions.

(4)        A comparison of the proposed allocations by program or activity with two prior years' program and activity budgets and two prior years' actual program or activity expenditures.

(5)        A projection of current year expenditures by program or activity.

(6)        A projection of federal Block Grant funds available, including unspent federal funds from the current and prior fiscal years.

SECTION 12J.1.(c)  Changes in Federal Fund Availability. - If the Congress of the United States increases the federal fund availability for any of the Block Grants or contingency funds and other grants related to existing Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall allocate the increase proportionally across the program and activity appropriations identified for that Block Grant in this section. In allocating an increase in federal fund availability, the Office of State Budget and Management shall not approve funding for new programs or activities not appropriated in this section.

If the Congress of the United States decreases the federal fund availability for any of the Block Grants or contingency funds and other grants related to existing Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall develop a plan to adjust the block grants based on reduced federal funding.

Notwithstanding the provisions of this subsection, for fiscal years 2013-2014 and 2014-2015, increases in the federal fund availability for the Temporary Assistance to Needy Families (TANF) Block Grant shall be used for the North Carolina Child Care Subsidy Program to pay for child care in four- or five-star rated facilities for four-year-old children.

Prior to allocating the change in federal fund availability, the proposed allocation must be approved by the Office of State Budget and Management. If the Department adjusts the allocation of any Block Grant due to changes in federal fund availability, then a report shall be made to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division.

SECTION 12J.1.(d)  Except as otherwise provided, appropriations from federal Block Grant funds are made for each year of the fiscal biennium ending June 30, 2015, according to the schedule enacted for State fiscal years 2013-2014 and 2014-2015 or until a new schedule is enacted by the General Assembly.

SECTION 12J.1.(e)  All changes to the budgeted allocations to the Block Grants or contingency funds and other grants related to existing Block Grants administered by the Department of Health and Human Services that are not specifically addressed in this section shall be approved by the Office of State Budget and Management, and the Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations for review prior to implementing the changes. The report shall include an itemized listing of affected programs, including associated changes in budgeted allocations. All changes to the budgeted allocations to the Block Grants shall be reported immediately to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. This subsection does not apply to Block Grant changes caused by legislative salary increases and benefit adjustments.

 

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) FUNDS

SECTION 12J.1.(f)  The sum of eighty-two million four hundred eighty-five thousand four hundred ninety-five dollars ($82,485,495) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for each year of the 2013-2015 fiscal biennium shall be used for Work First County Block Grants. The Division shall certify these funds in the appropriate State-level services based on prior year actual expenditures. The Division has the authority to realign the authorized budget for these funds among the State-level services based on current year actual expenditures.

SECTION 12J.1.(g)  The sum of two million four hundred eighty-two thousand two hundred sixty dollars ($2,482,260) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for each year of the 2013-2015 fiscal biennium shall be used to support administration of TANF-funded programs.

SECTION 12J.1.(h)  The sum of nine million four hundred twelve thousand three hundred ninety-one dollars ($9,412,391) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in TANF funds for each year of the 2013-2015 fiscal biennium for child welfare improvements shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services cases; to provide foster care and support services; to recruit, train, license, and support prospective foster and adoptive families; and to provide interstate and post-adoption services for eligible families.

Counties shall maintain their level of expenditures in local funds for Child Protective Services' workers. Of the block grant funds appropriated for Child Protective Services' workers, the total expenditures from State and local funds for fiscal years 2013-2014 and 2014-2015 shall not be less than the total expended from State and local funds for the 2012-2013 fiscal year.

SECTION 12J.1.(i)  The sum of two million twenty-six thousand eight hundred seventy-seven dollars ($2,026,877) appropriated in this section in TANF funds to the Department of Health and Human Services, Special Children Adoption Fund, for each year of the 2013-2015 fiscal biennium shall be used in accordance with G.S. 108A-50.2. The Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A-50 and in foster care. Payments received from the Special Children Adoption Fund by participating agencies shall be used exclusively to enhance the adoption services program. No local match shall be required as a condition for receipt of these funds.

SECTION 12J.1.(j)  The sum of six hundred thirty-two thousand four hundred sixteen dollars ($632,416) appropriated in this section to the Department of Health and Human Services in TANF funds for each year of the 2013-2015 fiscal biennium shall be used to continue support for the Child Welfare Collaborative.

 

SOCIAL SERVICES BLOCK GRANT

SECTION 12J.1.(k)  The sum of twenty-nine million nine hundred twenty-seven thousand five hundred fifty-one dollars ($29,927,551) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for each year of the 2013-2015 fiscal biennium shall be used for County Block Grants. The Division shall certify these funds in the appropriate State-level services based on prior year actual expenditures. The Division has the authority to realign the authorized budget for these funds among the State-level services based on current year actual expenditures.

SECTION 12J.1.(l)  The sum of one million three hundred thousand dollars ($1,300,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for each year of the 2013-2015 fiscal biennium shall be used to support various child welfare training projects as follows:

(1)        Provide a regional training center in southeastern North Carolina.

(2)        Provide training for residential child caring facilities.

(3)        Provide for various other child welfare training initiatives.

SECTION 12J.1.(m)  The Department of Health and Human Services is authorized, subject to the approval of the Office of State Budget and Management, to transfer Social Services Block Grant funding allocated for departmental administration between divisions that have received administrative allocations from the Social Services Block Grant.

SECTION 12J.1.(n)  Social Services Block Grant funds appropriated for the Special Children's Adoption Incentive Fund will require a fifty percent (50%) local match.

SECTION 12J.1.(o)  The sum of five million forty thousand dollars ($5,040,000) appropriated in this section in the Social Services Block Grant for each year of the 2013-2015 fiscal biennium shall be allocated to the Department of Health and Human Services, Division of Social Services. The Division shall allocate these funds to local departments of social services to replace the loss of Child Protective Services State funds that are currently used by county government to pay for Child Protective Services staff at the local level. These funds shall be used to maintain the number of Child Protective Services workers throughout the State. These Social Services Block Grant funds shall be used to pay for salaries and related expenses only and are exempt from 10A NCAC 71R .0201(3) requiring a local match of twenty-five percent (25%).

SECTION 12J.1.(p)  The sum of three million twenty-one thousand three hundred twenty-three dollars ($3,021,323) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Central Management and Support, shall be used for funding for nonprofits pursuant to Section 12A.2 of this act for each year of the 2013-2015 fiscal biennium. These funds are exempt from the provisions of 10A NCAC 71R .0201(3).

SECTION 12J.1.(q)  The sum of three hundred forty-five thousand four hundred fifty dollars ($345,450) appropriated in this section in the Social Services Block Grant for each year of the 2013-2015 fiscal biennium to the Department of Health and Human Services, Division of Social Services, shall be used to continue support for the Child Advocacy Centers, and these funds are exempt from the provisions of 10A NCAC 71R .0201(3).

SECTION 12J.1.(r)  The sum of four million forty-six thousand seven hundred seventy-three dollars ($4,046,773) appropriated in this section in the Social Services Block Grant for each year of the 2013-2015 fiscal biennium to the Department of Health and Human Services, Divisions of Social Services and Aging and Adult Services, shall be used for guardianship services pursuant to Chapter 35A of the General Statutes. The Department may expend funds appropriated in this section to support (i) existing corporate guardianship contracts during the 2013-2014 and 2014-2015 fiscal years and (ii) guardianship contracts transferred to the State from local management entities or managed care organizations during the 2013-2014 and 2014-2015 fiscal years.

 

LOW-INCOME HOME ENERGY ASSISTANCE BLOCK GRANT

SECTION 12J.1.(s)  Additional emergency contingency funds received may be allocated for Energy Assistance Payments or Crisis Intervention Payments without prior consultation with the Joint Legislative Commission on Governmental Operations. Additional funds received shall be reported to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division upon notification of the award. The Department of Health and Human Services shall not allocate funds for any activities, including increasing administration, other than assistance payments, without prior consultation with the Joint Legislative Commission on Governmental Operations.

SECTION 12J.1.(t)  The sum of fifty million eight hundred seventy-six thousand four hundred forty dollars ($50,876,440) appropriated in this section in the Low-Income Home Energy Assistance Block Grant for each year of the 2013-2015 fiscal biennium to the Department of Health and Human Services, Division of Social Services, shall be used for energy assistance payments for the households of (i) elderly persons age 60 and above with income up to one hundred thirty percent (130%) of the federal poverty level and (ii) disabled persons eligible for services funded through the Division of Aging and Adult Services. County departments of social services shall submit to the Division of Social Services an outreach plan for targeting households with 60 year-old household members no later than August 1 of each year.

 

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

SECTION 12J.1.(u)  Payment for subsidized child care services provided with federal TANF funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.

SECTION 12J.1.(v)  If funds appropriated through the Child Care and Development Fund Block Grant for any program cannot be obligated or spent in that program within the obligation or liquidation periods allowed by the federal grants, the Department may move funds to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order to use the federal funds fully.

 

MATERNAL AND CHILD HEALTH BLOCK GRANT

SECTION 12J.1.(w)  If federal funds are received under the Maternal and Child Health Block Grant for abstinence education, pursuant to section 912 of Public Law 104-193 (42 U.S.C. 710), for the 2013-2014 fiscal year or the 2014-2015 fiscal year, then those funds shall be transferred to the State Board of Education to be administered by the Department of Public Instruction. The Department of Public Instruction shall use the funds to establish an abstinence until marriage education program and shall delegate to one or more persons the responsibility of implementing the program and G.S. 115C-81(e1)(4) and (4a). The Department of Public Instruction shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.

SECTION 12J.1.(x)  The Department of Health and Human Services shall ensure that there will be follow-up testing in the Newborn Screening Program.

 

PART XIII. DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES

 

INCREASE CERTAIN AGRONOMIC TESTING FEES

SECTION 13.1.(a)  G.S. 106-22 reads as rewritten:

" 106-22.  Joint duties of Commissioner and Board.

The Commissioner of Agriculture, by and with the consent and advice of the Board of Agriculture shall:

(17)      Agronomic Testing. - Provide agronomic testing services and charge reasonable fees for plant analysis, nematode testing, in-State soil testing during peak season, out-of-state soil testing, and expedited soil testing. The Board shall charge at least four dollars ($4.00) for plant analysis, at least two dollars ($2.00) for nematode testing, at least four dollars ($4.00) for in-State soil testing during peak season, at least five dollars ($5.00) for out-of-state soil testing, and at least one hundred dollars ($100.00)two hundred dollars ($200.00) for expedited soil testing. As used in this subdivision, "peak season" includes at a minimum the four-month period beginning no later than December 1 of any year and extending until at least March 31 of the following year. The Board may modify the meaning of peak season by starting a peak season earlier in any year or ending it later the following year or both.

."

SECTION 13.1.(b)  It is the intent of the General Assembly that receipts generated from the new fee for in-State soil testing during peak season under G.S. 106-22(17), as amended by this section, are to be used to alleviate testing delays in the peak testing season. Any receipts generated as a result of the new fee for in-State soil testing during peak season are appropriated to the Department of Agriculture and Consumer Services for the 2013-2014 fiscal year and for the 2014-2015 fiscal year and shall be available to the Department in addition to any other existing funding sources.

SECTION 13.1.(c)  This section becomes effective July 1, 2013, and applies to submissions received by the Department for testing or analysis on or after that date.

 

TVA SETTLEMENT FUNDS

SECTION 13.3.(a)  In each fiscal year of the 2013-2015 biennium, the Department of Agriculture and Consumer Services shall apply for two million two hundred forty thousand dollars ($2,240,000) from the Tennessee Valley Authority Settlement Agreement in compliance with the requirements of paragraphs 122 through 128 of the Consent Decree entered into by the State in State of Alabama et al. v. Tennessee Valley Authority, Civil Action 3:11-cv-00170 in the United States District Court for the Eastern District of Tennessee, and Appendix C to the Compliance Agreement. The funds received by the State under this section shall be allocated as follows:

(1)        One million dollars ($1,000,000) for each fiscal year of the 2013-2015 biennium to award grants for "Environmental Mitigation Projects" of the types specified in paragraph 128 of the Consent Decree in the following counties: Avery, Buncombe, Burke, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Swain, Transylvania, Watauga, Yancey.

(2)        One million dollars ($1,000,000) for each fiscal year of the 2013-2015 biennium to North Carolina Agricultural Development and Farmland Preservation Trust Fund to be used, notwithstanding G.S. 106-744, to award funds in the following counties: Avery, Buncombe, Burke, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Swain, Transylvania, Watauga, Yancey.

(3)        Two hundred forty thousand dollars ($240,000) for each fiscal year of the 2013-2015 biennium to Appalachian Energy Center at Appalachian State University.

SECTION 13.3(b)  Funds allocated under subdivision (1) of subsection (a) of this section shall not be used to acquire land.

 

BOB MARTIN EASTERN AGRICULTURAL CENTER

SECTION 13.6.  If the Senator Bob Martin Eastern Agricultural Center is not at least fifty percent (50%) receipt supported by the end of the 2014-2015 fiscal year, no additional appropriations from the General Fund shall be provided to the Senator Bob Martin Eastern Agricultural Center, and no funds shall be included for this purpose in the continuation budget of the Department of Agriculture and Consumer Services.

 

FUTURE FARMERS OF AMERICA PROGRAM FUNDS/REPORTING REQUIREMENTS

SECTION 13.7.(a)  Up to forty thousand dollars ($40,000) of the funds appropriated to the Department of Agriculture and Consumer Services for the 2013-2014 fiscal year and up to one hundred forty thousand dollars ($140,000) of the funds appropriated to the Department of Agriculture and Consumer Services for the 2014-2015 fiscal year may be used as a grant-in-aid to the North Carolina Agricultural Foundation, Inc., for the Future Farmers of America program for each of these fiscal years.

SECTION 13.7.(b)  North Carolina Agricultural Foundation - FFA Foundation (hereinafter "FFA Foundation") shall do the following if the Department of Agriculture and Consumer Services allocates funds to the entity:

(1)        By September 1 of each year, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on prior State fiscal year program activities, objectives, and accomplishments and prior State fiscal year itemized expenditures and fund sources.

(2)        Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

 

Allow Board to Establish Examination Fee/Soil Scientists

SECTION 13.8.  G.S. 89F-25 reads as rewritten:

" 89F-25.  Fees.

(a)        The Board shall determine fees for the following services that shall not exceed the amounts specified in this section:

Application                                                                                                            $ 50.00

Examination                                                                                                            125.00

License                                                                                                                     85.00

Renewal                                                                                                                   85.00

Restoration                                                                                                             110.00

Replacement license                                                                                                  50.00

Seal                                                                                                                          30.00.

(b)        The Board may charge the applicant the actual cost of preparation, administration, and grading of examinations for soil scientists, in addition to its other fees."

 

Increase Certain Commercial Fertilizer Fees for Packages of Five Pounds or Less

SECTION 13.9.(a)  G.S. 106-660(a) reads as rewritten:

"(a)       Each brand of commercial fertilizer for tobacco, specialty fertilizer, fertilizer materials, manipulated manure and fortified mulch shall be registered by the person whose name appears upon the label before being offered for sale, sold or distributed in this State, except those brands expressly produced for experimental and demonstration purposes only. Other fertilizers may be manufactured and sold without registration after obtaining a license as required in G.S. 106-661(a). The application for registration shall be submitted in duplicate to the Commissioner for his approval on forms furnished by the Commissioner, and shall include a fee of five dollars ($5.00) per brand and grade for all packages greater than five pounds. The registration fee for packages of five pounds or less shall be thirty dollars ($30.00).fifty-five dollars ($55.00). All approved registrations expire on June 30 of each year. The application shall include such information as deemed necessary by the Board of Agriculture."

SECTION 13.9.(b)  G.S. 106-671(a) reads as rewritten:

"(a)       For the purpose of defraying expenses on the inspection and of otherwise determining the value of commercial fertilizers in this State, there shall be paid to the Department of Agriculture and Consumer Services a charge of fifty cents (50) per ton on all commercial fertilizers other than packages of five pounds or less. Inspection fees shall be paid on all tonnage distributed into North Carolina to any person not having a valid reporting permit. On individualIndividual packages of five pounds or less there shall be paid in lieu of the tonnage fee an annual registration fee of twenty-five dollars ($25.00) for each brand offered for sale, sold, or distributed;shall be exempt from the tonnage fee; provided that any per annum (fiscal) tonnage of any brand sold in excess of one hundred tons may shall be subject to the charge of fifty cents (50) per ton on any amount in excess of one hundred tons as provided herein. Whenever any manufacturer of commercial fertilizer shall have paid the charges required by this section his goods shall not be liable to further tax, whether by city, town, or county; provided, this shall not exempt the commercial fertilizers from an ad valorem tax."

 

PART XIV. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

 

DEVELOP PLAN FOR AQUARIUMS TO RAISE PRIVATE FUNDS FOR SUPPORT ASSISTANCE

SECTION 14.1.  No later than April 1, 2014, the Division of North Carolina Aquariums of the Department of Environment and Natural Resources shall develop a plan for the North Carolina Aquariums established under Article 5C of Chapter 143B of the General Statutes to increase the amount of private funds raised through the direct efforts of each North Carolina Aquarium in order to make the North Carolina Aquariums become more financially self-sustaining. No later than April 1, 2014, the Division of North Carolina Aquariums of the Department of Environment and Natural Resources shall report its plan under this section to the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division.

 

EARLY SUNSET FOR NC SUSTAINABLE COMMUNITIES TASK FORCE

SECTION 14.2.  Section 13.5(e) of S.L. 2010-31 reads as rewritten:

"SECTION 13.5.(e)  Sunset. - This section expires June 30, 2016.2013."

 

Clean Water Management Trust Fund under DENR; NHTF Repealed; CWMTF Changes

SECTION 14.3.(a)  All staff that are supported by the Clean Water Management Trust Fund and employed by the Clean Water Management Trust Fund Board of Trustees are transferred to the Department of Environment and Natural Resources and shall continue to be supported by the Clean Water Management Trust Fund, established in G.S. 113A-253, and shall be employed by the Department of Environment and Natural Resources. The Clean Water Management Trust Fund shall be administered by the Department of Environment and Natural Resources.

SECTION 14.3.(b)  Article 5A of Chapter 113 of the General Statutes is repealed.

SECTION 14.3.(c)  G.S. 20-79.7(b) reads as rewritten:

"(b)      Distribution of Fees. - The Special Registration Plate Account and the Collegiate and Cultural Attraction Plate Account are established within the Highway Fund. The Division must credit the additional fee imposed for the special registration plates listed in subsection (a) of this section among the Special Registration Plate Account (SRPA), the Collegiate and Cultural Attraction Plate Account (CCAPA), the Natural Heritage Trust Fund (NHTF),Clean Water Management Trust Fund (CWMTF), which is established under G.S. 113-77.7,G.S. 113A-253, and the Parks and Recreation Trust Fund, which is established under G.S. 113-44.15, as follows:

Special Plate                               SRPA            CCAPA      NHTFCWMTF       PRTF

                    ."

SECTION 14.3.(d)  G.S. 113A-253 reads as rewritten:

" 113A-253.  Clean Water Management Trust Fund.

(a)        Fund Established. - The Clean Water Management Trust Fund is established as a special revenue fund.fund to be administered by the Department of Environment and Natural Resources. The Fund receives revenue from the following sources and may receive revenue from other sources:

(1)        Annual appropriations.

(2)        Scenic River specialSpecial registration plates under G.S. 20-81.12.

(3)        Other special registration plates under G.S. 20-79.7.

(4)        Deed stamp tax proceeds under G.S. 105-228.30.

(b)        Fund Earnings, Assets, and Balances. - The State Treasurer shall hold the Fund separate and apart from all other moneys, funds, and accounts. Investment earnings credited to the assets of the Fund shall become part of the Fund. Any balance remaining in the Fund at the end of any fiscal year shall be carried forward in the Fund for the next succeeding fiscal year. Payments from the Fund shall be made on the warrant of the Chair of the Board of Trustees.

(c)        Fund Purposes. - Moneys from the Fund are appropriated annually to finance projects to clean up or prevent surface water pollution and for land preservation in accordance with this Article. Revenue in the Fund may be used for any of the following purposes:

(1)        To acquire land for riparian buffers for the purposes of providing environmental protection for surface waters and urban drinking water supplies and establishing a network of riparian greenways for environmental, educational, and recreational uses and to retire debt incurred for this purpose under Article 9 of Chapter 142 of the General Statutes.

(2)        To acquire conservation easements or other interests in real property for the purpose of protecting and conserving surface waters and enhancing drinking water supplies, including the development of water supply reservoirs, and to retire debt incurred for this purpose under Article 9 of Chapter 142 of the General Statutes.

(3)        To coordinate with other public programs involved with lands adjoining water bodies to gain the most public benefit while protecting and improving water quality and to retire debt incurred for this purpose under Article 9 of Chapter 142 of the General Statutes.

(4)        To restore previously degraded lands to reestablish their ability to protect water quality and to retire debt incurred for this purpose under Article 9 of Chapter 142 of the General Statutes.

(5)        To repair failing wastewater collection systems and wastewater treatment works if the repair is a reasonable remedy for resolving an existing waste treatment problem and the repair is not for the purpose of expanding the system to accommodate future anticipated growth of a community.

(6)        To repair and eliminate failing septic tank systems, to eliminate illegal drainage connections, and to expand a wastewater collection system or wastewater treatment works if the expansion eliminates failing septic tank systems or illegal drainage connections.

(7)        To finance stormwater quality projects.

(8)        To facilitate planning that targets reductions in surface water pollution.

(8a)      To finance innovative efforts, including pilot projects, to improve stormwater management, to reduce pollutants entering the State's waterways, to improve water quality, and to research alternative solutions to the State's water quality problems.

(8b)      To provide buffers around military bases or for State matching funds for the Readiness and Environmental Protection Initiative, a federal funding initiative that provides funds for military buffers.

(8c)      To acquire land that represents the ecological diversity of North Carolina, including natural features such as riverine, montane, coastal, and geologic systems and other natural areas to ensure their preservation and conservation for recreational, scientific, educational, cultural, and aesthetic purposes, and to retire debt incurred for this purpose under Article 9 of Chapter 142 of the General Statutes.

(8d)      To acquire land that contributes to the development of a balanced State program of historic properties.

(9)        To fund operating expenses of the Board of Trustees and its staff.

(d)        Limit on Operating and Administrative Expenses. - No more than two percent (2%) of the annual balance of the Fund on 1 July or a total sum of one million two hundred fifty thousand dollars ($1,250,000), whichever is greater, may be used each fiscal year for administrative and operating expenses of the Board of Trustees and its staff.For the fiscal year beginning July 1, 2013, the limit on operating and administrative expenses of the Board of Trustees and its staff is one million five hundred thousand dollars ($1,500,000). For fiscal years beginning on or after July 1, 2014, the limit on operating and administrative expenses of the Board of Trustees and its staff is the amount for the preceding year, adjusted to include any change in the distribution of Statewide salary and benefits reserves."

SECTION 14.3.(e)  G.S. 113A-254 is amended by adding a new subsection to read:

"(g)       Limit on Land Acquisition Grants. - During any fiscal year, the total amount of grants awarded under this Article for land acquisition shall not exceed the total amount of revenue credited to the Fund during the previous fiscal year from the following sources:

(1)        Special registration plates under G.S. 20-81.12.

(2)