GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2011

H                                                                                                                                                    4

HOUSE BILL 200

Committee Substitute Favorable 4/26/11

Committee Substitute #2 Favorable 4/28/11
Fourth Edition Engrossed 5/4/11

 

Short Title:        Appropriations Act of 2011.

(Public)

Sponsors:

 

Referred to:

 

March 2, 2011

 

A BILL TO BE ENTITLED

AN ACT to make base budget appropriations for current operations of state departments, institutions, and agencies; to enact budget related amendments; and to REORGANIZE state government.

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 2011."

 

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, 2013, according to the following schedule:

 

Current Operations - General Fund                                          2011-2012                2012-2013

 

EDUCATION

 

Community Colleges System Office                                        $     991,518,860      $     991,518,860

 

Department of Public Instruction                                                7,164,492,057          7,188,174,120

 

University of North Carolina - Board of Governors

      Appalachian State University                                                   145,517,520             145,634,877

      East Carolina University

            Academic Affairs                                                              245,397,807             245,397,807

            Health Affairs                                                                     65,196,439               65,196,439

      Elizabeth City State University                                                   38,046,385               38,218,704

      Fayetteville State University                                                      56,905,587               56,905,587

      NC A&T State University                                                       105,176,407             105,615,356

      NC Central University                                                              94,313,451               94,313,451

      NC State University

            Academic Affairs                                                              433,670,004             433,784,186

            Agricultural Research                                                          59,239,461               59,239,461

            Agricultural Extension                                                         43,539,609               43,539,609

      UNC-Asheville                                                                         41,957,576               41,957,576

      UNC-Chapel Hill

            Academic Affairs                                                              305,534,624             308,896,160

            Health Affairs                                                                   219,507,009             222,570,732

            AHEC                                                                                49,747,851               49,747,851

      UNC-Charlotte                                                                      216,403,013             217,419,156

      UNC-Greensboro                                                                  172,887,958             172,887,958

      UNC-Pembroke                                                                      61,534,005               62,277,254

      UNC-School of the Arts                                                           27,558,488               27,558,488

      UNC-Wilmington                                                                   105,812,709             107,008,285

      Western Carolina University                                                      90,591,556               91,070,460

      Winston-Salem State University                                                76,496,951               76,496,950

      General Administration                                                              38,186,863               27,628,722

            University Institution Programs                                         (448,889,424)           (450,130,098)

      Related Educational Programs                                                   83,066,868               83,519,790

      UNC Financial Aid Private Colleges                                         94,038,880               94,038,880

North Carolina School of Science and Mathematics                        18,937,535               18,937,535

UNC Hospitals at Chapel Hill                                                                         0                               0

Total University of North Carolina -

      Board of Governors                                                         $  2,440,375,132      $  2,439,731,176

 

HEALTH AND HUMAN SERVICES

 

Department of Health and Human Services

      Division of Central Management and Support                   $       52,152,812      $       46,553,422

      Division of Aging and Adult Services                                         37,019,667               37,019,667

      Division of Services for Blind/Deaf/Hard of Hearing                     7,889,110                 7,872,886

      Division of Child Development                                                266,102,933             266,102,933

      Division of Health Service Regulation                                        16,133,031               16,133,031

      Division of Medical Assistance                                             2,958,388,184          2,907,276,302

      Division of Mental Health,

            Developmental Disabilities and

            Substance Abuse                                                              665,342,797             710,342,797

      NC Health Choice                                                                    79,452,317               83,717,865

      Division of Public Health                                                         157,538,834             157,538,834

      Division of Social Services                                                      185,077,068             185,077,068

      Division of Vocational Rehabilitation                                          37,125,788               37,528,128

Total Health and Human Services                                           $  4,462,222,541      $  4,455,162,933

 

NATURAL AND ECONOMIC RESOURCES

 

Department of Agriculture and Consumer Services                  $      62,985,947       $      58,601,764

 

Department of Commerce

      Commerce                                                                               48,726,610               31,785,323

      Commerce State-Aid                                                                31,376,632               21,727,714

      NC Biotechnology Center                                                         17,551,710               17,551,710

      Rural Economic Development Center                                        20,376,729               20,376,729

 

Department of Environment and Natural Resources                       163,440,879             148,086,824

 

DENR Clean Water Management Trust Fund                                 10,000,000               10,000,000

 

Department of Labor                                                                      15,842,931               15,842,931

 

Wildlife Resources Commission                                                      18,500,000               17,721,179

 

JUSTICE AND PUBLIC SAFETY

 

Department of Correction                                                      $  1,340,202,159      $  1,350,623,300

 

Department of Crime Control and Public Safety                            222,629,011             219,701,034

 

Judicial Department                                                                      439,752,763             433,930,299

Judicial Department - Indigent Defense                                         109,353,574             108,842,576

 

Department of Justice                                                                     81,817,912               81,978,037

 

Department of Juvenile Justice and Delinquency Prevention            135,862,879             131,409,752

 

GENERAL GOVERNMENT

 

Department of Administration                                                  $      64,568,694       $      66,472,824

 

Department of State Auditor                                                           11,085,580                 9,904,041

 

Office of State Controller                                                                27,768,957               27,768,957

 

Department of Cultural Resources

      Cultural Resources                                                                    63,782,528               63,139,250

      Roanoke Island Commission                                                       1,203,491                               0

 

State Board of Elections                                                                   4,087,190                 4,027,190

 

General Assembly                                                                           47,851,154               46,562,667

 

Office of the Governor

      Office of the Governor                                                                5,243,332                 5,243,332

      Office of State Budget and Management                                     5,848,663                 5,848,663

      OSBM - Reserve for Special Appropriations                              1,940,612                    440,612

      Housing Finance Agency                                                             9,673,051                 9,673,051

 

Department of Insurance

      Insurance                                                                                  36,393,921               36,393,921

      Insurance - Volunteer Safety Workers' Compensation                2,294,000                 2,623,654

 

Office of Lieutenant Governor                                                              567,733                    567,733

 

Office of Administrative Hearings                                                      4,983,871                 4,983,871

 

Department of Revenue                                                                  78,321,271               78,321,271

 

Department of Secretary of State                                                      9,219,596                 9,219,596

 

Department of State Treasurer

      State Treasurer                                                                           6,657,031                 6,621,750

      State Treasurer -

            Retirement for Fire and Rescue Squad Workers                  17,812,114               17,812,114

 

RESERVES, ADJUSTMENTS, AND DEBT SERVICE

 

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

 

State Retirement System Contribution                                           297,400,000             404,200,000

 

Judicial Retirement System Contribution                                            7,900,000                 9,000,000

 

Firemen & Rescue Squad Workers Pension Fund                             5,800,000                 6,900,000

 

National Guard Pension Fund                                                              263,000                    523,000

 

State Health Plan                                                                            11,725,587             109,480,158

 

Information Technology Fund                                                            4,458,142                 6,158,142

 

Reserve for Job Development Investment Grants (JDIG)                 20,400,000               27,400,000

 

Continuation Review Reserve                                                                          0               36,738,931

 

Comprehensive Review of Compensation Plans                                 2,000,000                               0

 

Severance Expenditure Reserve                                                      75,000,000                               0

 

Debt Service

      General Debt Service                                                              688,957,188             759,984,974

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

 

TOTAL CURRENT OPERATIONS -

      GENERAL FUND                                                       $ 19,296,441,333     $ 19,505,292,343

 

Capital Improvements - General Fund                                     2011-2012                2012-2013

 

Water Resources Development Projects                                           4,535,000                               0

 

TOTAL CAPITAL IMPROVEMENTS - GENERAL FUND         4,535,000                               0

 

TOTAL ADJUSTMENT                                                   $ 19,300,976,333     $ 19,505,292,343

 

GENERAL FUND AVAILABILITY STATEMENT

SECTION 2.2.(a)  The General Fund availability used in developing the 2011-2013 biennial budget is shown below.

                                                                                                  FY 2011-2012          FY 2012-2013

Unappropriated Balance Remaining                                         $                     0          $  123,284,701

Ending Unreserved Fund Balance for FY 2009-2010                    236,902,394                               0

Anticipated Reversions for FY 2010-2011                                    537,740,799                               0

Anticipated Overcollections from FY 2010-2011                          156,300,000                               0

Repayment of Medicaid Receipts in FY 2010-2011                     (125,000,000)                              0

 

Statutory Earmarks:

      Savings Reserve Account                                                      (201,485,798)                              0

      Repairs and Renovations Reserve Account                            (201,485,798)                              0

 

Beginning Unreserved Fund Balance                                  $    402,971,597         $  123,284,701

 

Revenues Based on Existing Tax Structure                     $18,129,800,000      $19,181,900,000

 

Nontax Revenues

      Investment Income                                                             $     59,400,000         $    76,700,000

      Judicial Fees                                                                           217,800,000             217,800,000

      Disproportionate Share                                                           100,000,000             100,000,000

      Insurance                                                                                  71,400,000               73,500,000

      Other Nontax Revenues                                                          182,500,000             182,500,000

      Highway Trust Fund/Use Tax Reimbursement Transfer              41,500,000               27,600,000

      Highway Fund Transfer                                                             20,230,000               24,080,000

            Subtotal Nontax Revenues                                      $   692,830,000           $ 702,180,000

 

Total General Fund Availability                                         $19,225,601,597      $20,004,313,506

 

Adjustments to Availability:  2011 Session

      Loss of Estate Tax (nonrecurring)                                      $    (57,100,000)        $ (72,200,000)

      Reserve for Finance Committee                                             (230,000,000)           (405,000,000)

      Repeal Wildlife Resources Sales Tax Earmark                           22,970,000               23,920,000

      Suspend Corporate Income Tax Earmark

            (Public School Construction)                                               72,110,000               74,750,000

      Increase in Judicial Fees                                                            57,319,466               57,319,466

      Transfer from E-Commerce Reserve Fund                                  4,483,526                               0

      Divert Funds from Parks & Recreation Trust Fund                      8,435,000                               0

      Divert Funds from Recreational/

            Natural Heritage Trust Fund                                                  8,000,000                               0

      Transfer from Commerce - Enterprise Fund                                   500,000                               0

      Transfer from Highway Fund for State Highway Patrol            193,527,300             190,394,000

      Transfer from Mercury Prevention Pollution Fund                           250,000                               0

      Divert Funds from Scrap Tire Disposal Account                          2,268,989                               0

      Divert Funds from White Goods Management Account               1,951,465                               0

      Diversion of Golden LEAF Funds                                             67,563,760               67,563,760

      Tobacco Master Settlement Agreement Funds                          16,585,466               16,697,818

      Department of Revenue - Accounts Receivable Program           15,000,000               15,000,000

      Medicaid Disproportionate Share Receipts                                15,000,000               15,000,000

      Redirect Dispute Resolution Fees                                                  (205,535)                  (205,535)

            Subtotal Adjustments to

                  Availability:  2011 Session                             $       198,659,437    $        (16,760,491)

 

Revised General Fund Availability                                 $   19,424,261,034   $   19,990,604,210

 

Less General Fund Appropriations:                               $  (19,300,976,333)   $ (19,505,292,343)

 

Unappropriated Balance Remaining                               $        123,284,701   $        485,311,866

 

SECTION 2.2.(b)  Notwithstanding the provisions of G.S. 105-187.9(b)(1) and G.S. 105-187.9(b)(2), the sum to be transferred under those subdivisions for the 2011-2012 fiscal year is forty-one million five hundred thousand dollars ($41,500,000) and for the 2012-2013 fiscal year is twenty-seven million six hundred thousand dollars ($27,600,000).

SECTION 2.2.(c)  Notwithstanding the provisions of G.S. 115C-546.1, the Secretary of Revenue shall transfer the funds specified in G.S. 115C-546.1(b) to the State Controller for deposit in Nontax Budget Code 19978 (Intrastate Transfers) during the 2011-2013 fiscal biennium to offset continued operations of the State's public schools.

SECTION 2.2.(d)  Notwithstanding any other provision of law to the contrary, effective July 1, 2011, the following amounts shall be transferred to the State Controller to be deposited in Nontax Budget Code 19878 (Intrastate Transfers) or the appropriate budget code as determined by the State Controller.  These funds shall be used to support the General Fund appropriations as specified in this act for the 2011-2012 fiscal year.

 

Budget   Fund

Code      Code         Description                                                       Amount

24100     2514          E-Commerce Reserve                                     4,483,526

54600     5881          Commerce Enterprise Fund                                500,000

24300     2119          Mercury Prevention Pollution Fund                     250,000

 

SECTION 2.2.(e)  Pursuant to Section 2(b) of S.L. 1999-2, the fifty percent (50%) of the 2011-2012 and the 2012-2013 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., are transferred to the General Fund.

SECTION 2.2.(f)  Notwithstanding the provisions of G.S. 105-187.19(b), effective for taxes levied during the 2011-2012 fiscal year, the Secretary of Revenue shall credit to the General Fund the net tax proceeds that G.S. 105-187.19(b) directs the Secretary to credit to the Scrap Tire Disposal Account.

SECTION 2.2.(g)  Notwithstanding the provisions of G.S. 105-187.24, effective for taxes levied during the 2011-2012 fiscal year, the Secretary of Revenue shall credit to the General Fund the net tax proceeds that G.S. 105-187.24 directs the Secretary to credit to the White Goods Management Account.

SECTION 2.2.(h)  Notwithstanding the provisions of G.S. 105-228.30(b) and G.S. 113-44.15, effective for taxes levied during the 2011-2012 fiscal year, the Secretary of Revenue shall credit the sum of eight million four hundred thirty-five thousand dollars ($8,435,000) to the General Fund of the net tax proceeds that G.S. 105-228.30(b) directs the Secretary to credit to the Parks and Recreation Trust Fund.

SECTION 2.2.(i)  Notwithstanding the provisions of G.S. 105-228.30(b) and G.S. 113-77.9, effective for taxes levied during the 2011-2012 fiscal year, the Secretary of Revenue shall credit the sum of eight million dollars ($8,000,000) to the General Fund of the net tax proceeds that G.S. 105-228.30(b) directs the Secretary to credit to the Natural Heritage Trust Fund.

SECTION 2.2.(j)  Of the funds available in the year-end 2010-2011 fiscal year fund balance, the Director of the Budget may use up to one hundred twenty-five million dollars ($125,000,000) to repay the federal Centers for Medicare and Medicaid Services for excess Medicaid funds drawn down during the 2009-2010 fiscal year.  The Director of the Budget shall report the amount of funds used under this section no later than 30 days after payment to the Joint Legislative Commission on Governmental Operations, the Chairs of the Senate and House of Representatives Appropriations Committees, and the Fiscal Research Division.

 

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, 2013, according to the following schedule:

 

Current Operations - Highway Fund                                        2011-2012                2012-2013

 

Department of Transportation

      Administration                                                                  $      87,555,806        $     87,555,806

 

Division of Highways

      Administration                                                                          30,709,626               28,923,392

      Construction                                                                             80,401,826               79,508,087

      Maintenance                                                                        1,073,293,592          1,145,325,356

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

      OSHA Program                                                                            372,792                    372,792

 

Ferry Operations                                                                            31,189,589               38,538,132

 

State Aid

      Municipalities                                                                            89,373,921               90,187,224

      Public Transportation                                                                93,794,695               93,794,695

      Airports                                                                                    18,401,413               22,311,031

      Railroads                                                                                  22,101,153               22,101,153

 

Governor's Highway Safety                                                                  273,093                    273,093

Division of Motor Vehicles                                                              89,823,520               42,758,451

Other State Agencies, Reserves, Transfers                                    286,143,572             296,795,386

Capital Improvements                                                                     15,250,000               15,000,000

 

Total                                                                                     $ 1,922,740,000       $ 1,967,500,000

 

HIGHWAY FUND AVAILABILITY STATEMENT

SECTION 3.2.  The Highway Fund availability used in developing the 2011-2013 fiscal biennial budget is shown below:

 

Highway Fund Availability Statement                                 2011-2012                    2012-2013

 

Unappropriated Balance from Previous Year                      $                      0           $                       0

Beginning Credit Balance                                                                            0                                    0

Estimated Revenue                                                                1,922,740,000               1,967,500,000

 

Total Highway Fund Availability                                         $ 1,922,740,000            $ 1,967,500,000

 

Unappropriated Balance                                                     $                      0            $                      0

 

State Highway Patrol Funds Transfer

SECTION 3.3.(a)  In fiscal year 2011-2012, the State Treasurer shall transfer one hundred ninety-three million five hundred twenty-seven thousand three hundred dollars ($193,527,300) of the funds allocated to the Highway Fund under G.S. 105-449.125 to the General Fund. The transfer of funds authorized by this section may be made by transferring one­fourth of the amount at the end of each quarter in the fiscal year or by transferring the full amount annually on July 1 of each fiscal year, subject to the availability of revenue.

SECTION 3.3.(b)  In fiscal year 2012-2013, the State Treasurer shall transfer one hundred ninety million three hundred ninety-four thousand dollars ($190,394,000) of the funds allocated to the Highway Fund under G.S. 105-449.125 to the General Fund. The transfer of funds authorized by this section may be made by transferring one­fourth of the amount at the end of each quarter in the fiscal year or by transferring the full amount annually on July 1 of each fiscal year, subject to the availability of revenue.

SECTION 3.3.(c)  The Office of State Budget and Management and the Office of State Controller shall discontinue use of the Crime Control and Public Safety - Highway Fund budget code (Budget Code 24960) and shall certify funds appropriated by this act for the State Highway Patrol under a separate fund code within the Crime Control and Public Safety - General Fund budget code (Budget Code 14900). The Department of Transportation, Office of State Budget and Management, and Office of State Controller shall certify and account for State matching funds for Motor Carrier Safety Assistance Program grants, federal funds, and other receipts budgeted for State Highway Patrol programs, as necessary.

SECTION 3.3.(d)  G.S. 20-194 reads as rewritten:

"§ 20-194.  Expense of administration; defense Defense of members and other State law-enforcement officers in civil actions; payment of judgments.

(a)        All expenses incurred in carrying out the provisions of this Article shall be paid out of the highway fund.

…."

 

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 biennium ending June 30, 2013, according to the following schedule:

 

Current Operations - Highway Trust Fund                          2011-2012                    2012-2013

 

Intrastate                                                                              $  435,942,824              $  454,712,566

Aid to Municipalities                                                                   48,605,470                    50,602,947

Secondary Roads                                                                       51,155,667                    56,820,944

Program Administration                                                              44,774,400                    47,107,200

Turnpike Authority                                                                     99,000,000                    99,000,000

Transfer to General Fund                                                            41,497,276                    27,595,861

Transfer to Highway Fund                                                               400,000                         400,000

Debt Service                                                                              79,231,728                    81,481,543

Mobility Fund                                                                          272,602,635                  213,568,939

 

Grand Total Current Operations            $  1,073,210,000           $  1,031,290,000

 

Highway Trust Fund Availability Statement

SECTION 4.2.  The Highway Trust Fund availability used in developing the 2011-2013 fiscal biennial budget is shown below:

 

Total Highway Trust Fund Availability                         $  1,073,210,000           $  1,031,290,000

 

PART V. Other Appropriations

 

APPROPRIATION OF other funds

SECTION 5.1.(a)  State funds, as defined in G.S. 143C-1-1(d)(25), are appropriated and authorized as provided in G.S. 143C-1-2 for the 2011-2013 fiscal biennium, with the adjustments made to the continuation budget as reflected in the Governor's Recommended Budget and Budget Support document, as follows:

(1)        For all budget codes listed in "The State of North Carolina Governor's Recommended Budget, 2011-2013" 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 2011-2012 fiscal year and the 2012-2013 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 2011-2012 fiscal year and the 2012-2013 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 2011-2012 fiscal year and the 2012-2013 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)  In addition to the consultation and reporting requirements set out in G.S. 143C-6-4, the Office of State Budget and Management shall report to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division within 30 days after the end of each quarter on any overrealized receipts approved for expenditure under this subsection by the Director of the Budget. The report shall include the source of the receipt, the amount overrealized, the amount authorized for expenditure, and the rationale for expenditure.

SECTION 5.1.(d)  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.

 

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 and after consultation with the Joint Legislative Commission on Governmental Operations, spend funds received from grants awarded subsequent to the enactment of this act.

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. The Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations prior to expending any funds received from grant awards. 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.

 

Civil Forfeiture Funds

SECTION 5.3.  Appropriations. - Appropriations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2013, as follows:

 

                                                                                                  FY 2011-2012          FY 2012-2013

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

State Public School Fund                                                              120,362,790             120,362,790

Total Appropriation                                                                  $  138,362,790          $ 138,362,790

 

Education Lottery

SECTION 5.4.(a)  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 twenty-four million nine hundred seventy-three thousand six hundred thirty dollars ($424,973,630)  for the 2011-2012 fiscal year.

SECTION 5.4.(b)  Notwithstanding G.S. 18C-164, the appropriations made from the Education Lottery Fund for the 2011-2012 fiscal year are as follows:

 

Teachers in Early Grades                                $ 220,643,188

Prekindergarten Program                                     63,135,709

Public School Building Capital Fund                     98,697,370

UNC Need-Based Financial Aid                         42,497,363

Total Appropriation                                  $ 424,973,630

SECTION 5.4.(c)  Notwithstanding G.S. 18C-164, the North Carolina State Lottery Commission shall not transfer funds to the Education Lottery Reserve Fund for the 2011-2012 fiscal year or the 2012-2013 fiscal year.

SECTION 5.4.(d)  Notwithstanding G.S. 18C-164(c), G.S. 115C-546.2(d), or any other provision of law, funds appropriated in this section to the Public School Building Capital Fund for the 2011-2012 fiscal year shall be allocated to counties on the basis of average daily membership (ADM).

Counties may authorize local school administrative units to use funds received from the Public School Building Capital Fund pursuant to subsections (b) and (f) of this section for one or more of the following purposes only: (i) for school construction projects in accordance with G.S. 115C-546.2(d), (ii) to retire indebtedness incurred on or after January 1, 2003, in accordance with G.S. 115C-546.2(d), for school construction projects, and (iii) for classroom teachers. A county may authorize the use of these funds for classroom teachers only upon the request of the local board of education. Funds used for classroom teachers shall supplement and not supplant existing local current expense funding for the public schools.

SECTION 5.4.(e)  Notwithstanding G.S. 18C-164(c), Article 35A of Chapter 115C of the General Statutes, or any other provision of law, the funds appropriated in this section for UNC Need-Based Financial Aid shall be administered in accordance with the policy adopted by the Board of Governors of The University of North Carolina.

SECTION 5.4.(f)  Notwithstanding G.S. 18C-164(f), if the actual net lottery revenues for the 2011-2012 fiscal year exceed the amounts appropriated in subsection (b) of this section, the excess net lottery revenues shall be allocated for school capital on the basis of average daily membership.

 

PART VI. General Provisions

 

Clarify Certified Budget

SECTION 6.1.(a)  The purpose of this section is to clarify the distinction between changes to the budget enacted by the General Assembly in this act and changes made by the Director of the Budget pursuant to other authority.

SECTION 6.1.(b)  For the 2011-2013 fiscal biennium, and notwithstanding the provisions of Chapter 143C of the General Statutes or any other provision of law, the certified budget for each State agency shall reflect only the total of all appropriations enacted for each State agency by the General Assembly in this act as modified by this act; therefore, the Director of the Budget shall modify the certified budget only to reflect the following actions and only to the extent that they are authorized by this act:

(1)        The allocation of funds set out in reserves.

(2)        Government reorganizations.

The Director of the Budget shall set out all other budget modifications in the authorized budget.

 

Contingency and Emergency Fund limitation

SECTION 6.2.  For the 2011-2013 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-5(1)a.9. of the North Carolina Emergency Management Act of 1977.

 

ESTABLISHING OR INCREASING FEES UNDER THIS ACT

SECTION 6.3.(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 as authorized or anticipated in this act.

SECTION 6.3.(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.

 

Consultation Required Before Creation of new Funds

SECTION 6.4.  Notwithstanding G.S. 143C-1-3 or any other provision of law to the contrary, the Office of State Budget and Management and the Office of the State Controller shall consult with the Joint Legislative Commission on Governmental Operations prior to the establishment of a new fund as defined in G.S. 143C-1-3.

 

Interim appropriations Committees/meetings/CONSULTATION BY GOVERNOR

SECTION 6.5.(a)  The General Assembly finds that:

(1)        The power of appropriation is vested only with the General Assembly; and

(2)        Article V, Section 7 of the North Carolina Constitution requires that no money shall be drawn from the State treasury but in consequence of appropriations made by law; and

(3)        Article III, Section 5 of the North Carolina Constitution requires the Governor to administer the budget as enacted by the General Assembly; and

(4)        Proper oversight of public funds and oversight of the execution and administration of the State's budget are tantamount to good stewardship and proper governance; and

(5)        It is the proper duty of a legislative body to examine and review the expenditure of public funds on an ongoing basis and that the appropriations committees of the General Assembly shall meet as needed to fulfill this duty.

SECTION 6.5.(b)  Purpose. - The House of Representatives and Senate Appropriations Committees (the Committees) may meet monthly during the period between legislative sessions to perform ongoing examination and oversight of State agencies' execution and administration of the budget, including review of agency expenditures and collections of receipts, agency compliance with State laws governing the expenditure of public moneys, compliance with legislative policies and intent, and the ongoing fiscal stability and integrity of State government.

SECTION 6.5.(c)  The Committees may perform the following:

(1)        Review the expenditure of State funds as to:

a.         Conformity with State law.

b.         Conformity with legislative intent.

c.         Necessity with meeting program or purpose objectives.

(2)        Conduct zero-based budgeting or another systematic approach to examine the use of State funds on an ongoing basis.

(3)        Receive quarterly analyses of the State's revenues and expenditures as prepared by the Fiscal Research Division of the Legislative Services Commission.

(4)        Propose legislation that would result in enhanced program accountability.

(5)        Provide oversight of fiscal studies.

(6)        Provide oversight of justification reviews conducted by the Fiscal Research Division of the Legislative Services Commission, whereby programs are evaluated periodically for continuing appropriations. The results of these justification reviews shall be made to the Appropriations Committees at the beginning of each legislative session.

(7)        Evaluate State agencies' plans or proposals regarding the funding of new or expanded programs and services not previously approved by the General Assembly as part of its Appropriations Act.

(8)        Produce written reports of findings and recommendations as follows:

a.         To the General Assembly. If findings arrived at during a study have a potential impact on appropriations deliberations, the findings shall be presented immediately to the committees. These reports shall contain recommendations for appropriate executive action and when legislation is considered necessary to effect change, draft legislation for that purpose may be included.

b.         To the Governor. If findings arrived at during a review have a potential impact on the current budget, the findings shall be presented immediately to the Governor and shall contain recommendations for appropriate executive action.

SECTION 6.5.(d)  The Committees shall be consulted by the Governor prior to any of the following:

(1)        Establishment of permanent State positions in the executive branch unless authorized in this act.

(2)        Expenditures in excess of the total requirements of a purpose or program as enacted by the General Assembly and as provided by G.S. 143C-6-4.

(3)        Extraordinary measures taken under Article III, Section 5(3) of the North Carolina Constitution to effect necessary economies in State expenditures required for balancing the budget due to a revenue shortfall, including, but not limited to, the following: loans among funds, personnel freezes or layoffs, capital project reversions, program eliminations, and use of reserves. However, if the Committees fail to meet within 10 calendar days of a request by the Governor for its consultation, the Governor may proceed to take the appropriate and necessary actions and shall then report those actions at the next meeting of the Committees.

(4)        Notwithstanding G.S. 143C-8-7, G.S. 143C-8-12, or any law to the contrary, the Committees shall be consulted by the Governor prior to approval of new capital improvement projects funded from gifts, grants, receipts, special funds, self-liquidating indebtedness, and other funds or any combination of funds for projects not specifically authorized by the General Assembly. The consultation shall include a description for each proposed capital project as delineated in G.S. 143C-8-6(e).

 

Justification/operational Reviews

SECTION 6.6.(a)  It is the intent of the General Assembly to subject the operations of State government and the operations of nongovernmental entities receiving State funds to periodic Justification Reviews.  The Reviews shall be conducted by the Fiscal Research Division and shall specifically address the following questions:

(1)        Is the program or service fulfilling the letter and/or intent of its legislative mandate?

(2)        Is that mandate still justified, either in its original form or some modified form?

(3)        Does the program follow identified best practices to address its mandate?

(4)        Is the program duplicative of other services provided by the public or private sectors?

(5)        Is the program effective?

(6)        Is the program efficient?

(7)        Are there any other obstacles that might limit the program's ability to accomplish its mission?

SECTION 6.6.(b)  For the fiscal year 2011-2012, the following programs or services shall be the subject of review:

(1)        Lumberton Farmer's Market - Department of Agriculture and Consumer Services.

(2)        DENR Regional Offices - Department of Environment and Natural Resources.

(3)        DHHS postsecondary education programs.

(4)        Environmental Rating Scales Contract.

SECTION 6.6.(c)  By May 1, 2012, the Fiscal Research Division shall report its findings and recommendations to the House of Representatives and Senate Appropriations Committees. The report shall:

(1)        Provide a description of each program.

(2)        Identify major policy issues that the General Assembly should address.

(3)        Explore means to achieve program objectives more efficiently.

(4)        Characterize the likely results of alternative funding levels and/or opportunities to save taxpayer dollars.

(5)        Identify performance measures that have been established by the agency and the usefulness of those performance measures, as well as the agency's progress toward meeting their established measures.

 

Continuation Review of certain funds/programs/divisions

SECTION 6.7.(a)  It is the intent of the General Assembly to periodically and systematically review the funds, agencies, divisions, and programs financed by State government. This process is known as the Continuation Review Program. The Continuation Review Program is intended to assist the General Assembly in determining whether to continue, reduce, or eliminate funding for the State's funds, agencies, divisions, and programs subject to continuation review.

SECTION 6.7.(b)  The Appropriations Committees of the House of Representatives and the Senate may review the funds, programs, and divisions listed in this section and shall determine whether to continue, reduce, or eliminate funding for the funds, programs, and divisions, subject to the Continuation Review Program. The Fiscal Research Division may issue instructions to the State departments and agencies subject to continuation review regarding the expected content and format of the reports required by this section. No later than December 1, 2011, the following agencies shall report to the Fiscal Research Division:

(1)        Justice and Public Safety. -

a.         Drug Treatment Court.

b.         Family Court.

(2)        Education. - Center for Public Television as provided by Section 9.1 of this act.

(3)        Natural and Economic Resources. -

a.         Agriculture/Research Stations.

b.         DENR/Prairie Ridge Ecostation.

c.         Commerce/Office of Science and Technology.

d.         Wildlife Resources Commission/Conservation Education.

(4)        Health and Human Services. - Division of Information Resource Management.

(5)        General Government. - General Assembly Facility Services.

(6)        Transportation. - Division of Motor Vehicles Drivers' License Program.

SECTION 6.7.(c)  The continuation review reports required in this section shall include the following information:

(1)        A description of the fund, agency, division, or program mission, goals, and objectives.

(2)        The statutory objectives for the fund, agency, division, or program and the problem or need addressed.

(3)        The extent to which the fund, agency, division, or program objectives have been achieved.

(4)        The fund's, agency's, division's, or program's functions or programs performed without specific statutory authority.

(5)        The performance measures for each fund, agency, division, or program and the process by which the performance measures determine efficiency and effectiveness.

(6)        Recommendations for statutory, budgetary, or administrative changes needed to improve efficiency and effectiveness of services delivered to the public.

(7)        The consequences of discontinuing funding.

(8)        Recommendations for improving services or reducing costs or duplication.

(9)        The identification of policy issues that should be brought to the attention of the General Assembly.

(10)      Other information necessary to fully support the General Assembly's Continuation Review Program along with any information included in instructions from the Fiscal Research Division.

SECTION 6.7.(d)  State departments and agencies identified in subsection (b) of this section shall submit a final report to the General Assembly by March 1, 2012.

 

state Government Reorganization

SECTION 6.8.  The Joint Legislative Commission on Governmental Operations (Commission) shall study the feasibility of creating a single department to support State departments, agencies, and offices with services, including, but not limited to, human resource management, information technology, purchasing, and budget and financial management. The Commission shall report to the House of Representatives and Senate Appropriations Committees on its findings and recommendations upon the convening of the 2012 Regular Session of the 2011 General Assembly.

In the conduct of this study, the Commission may consider the Governor's proposed Department of Management and Administration as included in Executive Order 85, dated March 25, 2011, entitled "Consolidation and Reorganization of Executive Branch Agencies to Improve the Efficiency of State Government."

 

Utilization review/Public School and Public Health nurses

SECTION 6.9.(a)  Beginning July 1, 2011, the Fiscal Research Division, in consultation with the Department of Public Instruction and the Department of Health and Human Services, shall review all publicly (federal and State) funded public school nurse positions assigned within or connected to those respective organizations in order to determine the most effective and cost-efficient ways to provide needed nursing service to public school students. The review shall identify specific areas where overlaps of service provision may exist. The review shall focus on ways to maximize existing nursing resources and to change prospectively the manner in which local school nurses are allocated to better address the needs of students in the public schools at reasonable cost. Specifically, the review shall examine at least all of the following:

(1)        Feasibility of having the money all flow to local public health departments for management and administration purposes to align health-related activities with the local entity best equipped to manage.

(2)        Feasibility of using a mix of licensed nurses, both registered nurses (RN) and licensed practical nurses (LPN), to provide health care services in the public schools.

(3)        Feasibility of allowing a school nurse to be licensed as an LPN as long as the nurse works under the direct supervision of an RN.

(4)        Development of a new allocation formula that considers:

a.         Average daily membership.

b.         Local match requirement.

c.         A base amount for each local school administrative unit.

SECTION 6.9.(b)  By May 1, 2012, the Fiscal Research Division shall report to the House and Senate Appropriations Committees.

 

Global TransPark Debt/report

SECTION 6.10.(a)  G.S. 147-69.2(b)(11), as amended by Section 7 of S.L. 2005-144, Section 2 of S.L. 2005-201, Section 28.17 of S.L. 2005-276, Section 27.7 of S.L. 2007-323, and Section 25.2 of S.L. 2009-451, reads as rewritten:

"(b)      It shall be the duty of the State Treasurer to invest the cash of the funds enumerated in subsection (a) of this section in excess of the amount required to meet the current needs and demands on such funds, selecting from among the following:

(11)      With respect to assets of the Escheat Fund, obligations of the North Carolina Global TransPark Authority authorized by G.S. 63A-4(a)(22), not to exceed twenty-five million dollars ($25,000,000), that have a final maturity not later than October 1, 2011. 2012. The obligations shall bear interest at the rate set by the State Treasurer. No commitment to purchase obligations may be made pursuant to this subdivision after September 1, 1993, and no obligations may be purchased after September 1, 1994. In the event of a loss to the Escheat Fund by reason of an investment made pursuant to this subdivision, it is the intention of the General Assembly to hold the Escheat Fund harmless from the loss by appropriating to the Escheat Fund funds equivalent to the loss.

If any part of the property owned by the North Carolina Global TransPark Authority now or in the future is divested, proceeds of the divestment shall be used to fulfill any unmet obligations on an investment made pursuant to this subdivision."

SECTION 6.10.(b)  The Global TransPark Authority shall report to the Program Evaluation Division on its strategic, business, and financial plans. The report shall be made by no later than May 1, 2012, and shall include the Authority's proposed schedule to achieve financial self-sufficiency and proposed schedule to repay to the Escheat Fund the investment authorized under G.S. 147-69.2(b)(11) plus any accumulated interest, both of which totaled forty million sixty-seven thousand nine hundred eighteen dollars and twenty cents ($40,067,918.20) as of March 31, 2011.

 

Health and Wellness Trust Fund and Tobacco Trust Fund/Future MSA Payments

SECTION 6.11.(a)  Effective December 31, 2011, the Health and Wellness Trust Fund (HWTF) is abolished. Article 6C of Chapter 147 of the General Statutes is repealed.

SECTION 6.11.(b)  The title of Article 75 of Chapter 143 of the General Statutes reads as rewritten:

"Article 75.

Tobacco Trust Fund.Funds."

SECTION 6.11.(c)  G.S. 143-716 reads as rewritten:

"§ 143-716.  Definitions.

The following definitions apply in this Article:

(1)        Commission. - The Tobacco Trust Fund Commission.Board. - The Board of Agriculture established in G.S. 106-2.

(2)        Compensatory programs. - Programs developed by the Commission Board to identify, locate, compensate, and indemnify tobacco producers, allotment holders, and persons engaged in tobacco-related businesses who have suffered actual economic losses in this State due to lost quota, the decline in value of tobacco-related personal property assets, and declining market conditions resulting from the Master Settlement Agreement or declines in the tobacco-related segment of the State's economy.

(3)        Fund. - The Tobacco Trust Fund.

(4)        Master Settlement Agreement. - The settlement agreement between certain tobacco manufacturers and the states, as incorporated in the consent decree entered in the action of 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.

(5)        National Tobacco Grower Settlement Trust. - The trust established by tobacco companies to provide payments to tobacco growers and allotment holders in 14 states for the purposes of ameliorating potential adverse economic consequences of likely reduction in demand, sales, and prices for tobacco as an agricultural product as a result of the Master Settlement Agreement.

(6)        Qualified agricultural programs. - Programs developed by the Commission Board to support and foster the vitality and solvency of the tobacco-related segment of the State's agricultural economy, particularly the segment adversely affected by the Master Settlement Agreement, with the objective of alleviating and avoiding unemployment, preserving, and increasing local tax bases, and encouraging the economic stability of participants in the State's agricultural economy. Examples of qualified agricultural programs include programs to finance the modernization of farming equipment, programs to finance the conversion of existing equipment to conform to environmental and other regulatory requirements, and programs to finance the conversion or replacement of equipment in order to cultivate crops that are more profitable than are currently being cultivated.

(7)        Tobacco product component business. - An individual, partnership, limited liability company, corporation, or other commercial entity that engages in the manufacture of component products for use in the manufacture of tobacco products.

(8)        Tobacco-related business. - An individual, partnership, limited liability company, corporation, or other commercial entity that provides products or services used directly in (i) the production of tobacco, or (ii) support of the business of the production or sale of tobacco. The term does not include the manufacturing of tobacco products or the sale of tobacco products at wholesale or retail.

(9)        Tobacco-related employment. - Employment in a tobacco-related business, or in the manufacturing of tobacco products or the component products used in the manufacture of tobacco products. The term does not include persons employed in the sale of tobacco products at wholesale or retail."

SECTION 6.11.(d)  G.S. 143-717 is repealed.

SECTION 6.11.(e)  G.S. 143-718 reads as rewritten:

"§ 143-718.  Powers and duties.

The Commission Board shall have the following powers and duties:

(1)        To administer the provisions of this Article.

(2)        To develop compensatory programs and qualified agriculture programs, including guidelines and criteria for eligibility for and disbursement of funds, the forms of direct and indirect economic assistance to be awarded, and procedures for applying for and reviewing applications for assistance from the Fund.funds appropriated for purposes of this Article. In developing guidelines and criteria for eligibility and disbursement of funds, the Commission Board may consult with and otherwise obtain assistance from the State and local offices of the Farm Service Agency and other agencies of the United States Department of Agriculture.

(3)        To provide financial assistance to eligible recipients, in carrying out compensatory programs and qualified agricultural programs.

(4)        To hire staff for the administration of the Fund.funds.

(5)        To contract with other persons to assist in the administration of the Commission's Board's programs.

(6)        To accept gifts or grants from other sources.

(7)        To adopt rules to implement this Article."

SECTION 6.11.(f)  G.S. 143-719 is repealed.

SECTION 6.11.(g)  G.S. 143-720 reads as rewritten:

"§ 143-720.  Benefits and administration of Fund funds for compensatory programs.

(a)        Funds held in the Fundappropriated for purposes of this Article may be expended on compensatory programs as provided in this section.

(b)        The Fund Board may provide direct and indirect financial assistance, in accordance with criteria established by the Commission Board and to the extent allowed by law, to accomplish the following:

(1)        Indemnify tobacco producers, allotment holders, and persons engaged in tobacco-related businesses from the adverse economic effects in this State of the Master Settlement Agreement.

(2)        Compensate tobacco producers, allotment holders, and persons engaged in tobacco-related businesses for economic loss resulting from lost quota and compensate tobacco producers for the decline in value of tobacco-related personal property assets and declining market conditions resulting from the Master Settlement Agreement in this State.

(3)        Compensate individuals displaced from tobacco-related employment in this State as a result of the adverse economic effects of the Master Settlement Agreement.

(4)        Compensate tobacco product component businesses that are (i) adversely impacted by the Master Settlement Agreement and that (ii) need financial assistance to retool machinery or equipment or to retrain workers, in order to convert to the production of new products or nontobacco use of existing products, or to effect other similar changes.

(c)        Only tobacco producers, persons engaged in tobacco-related businesses, individuals displaced from tobacco-related employment, and tobacco product component businesses in this State, and holders of North Carolina tobacco allotments are eligible to apply for and receive assistance pursuant to subsection (b) of this section. Direct payments made to tobacco producers, tobacco allotment holders, and persons engaged in tobacco-related businesses shall be based on losses resulting in 1998 and thereafter. Lost quota shall be a primary determinative factor in calculating the amount of compensable economic loss for tobacco producers, allotment holders, and persons engaged in tobacco-related businesses.

(d)        The Commission Board shall determine the priority of awards among the categories in subsection (b) of this section and within each of those categories.

(e)        Financial assistance awards shall be for no more than one year at a time. An award may be renewed annually, without limitation.

(f)         The Commission Board may require applicants to provide copies of documents necessary to determine compensable economic loss.

(g)        In no event shall the amount paid to a tobacco producer or allotment holder pursuant to this Article, when combined with the amount received through the National Tobacco Grower Settlement Trust, exceed the compensable economic loss of the producer or allotment holder.

(h)        The Commission Board may consider the criteria used for National Tobacco Grower Settlement Trust payments and may correspond with the National Tobacco Grower Settlement Trust certification entity to ensure that tobacco farmers and allotment holders are treated fairly."

SECTION 6.11.(h)  G.S. 143-721 reads as rewritten:

"§ 143-721.  Benefits and administration of Fund funds for qualified agricultural programs.

(a)        Funds appropriated for purposes of this Article held in the Fund may be expended on qualified agricultural programs as provided in this section.

(b)        In implementing qualified agricultural programs, the Commission Board shall endeavor to identify those areas of the tobacco-related segment of the State's economy in need of assistance to be provided by the Fund funds in order to assure the continued vitality and solvency of those areas. The Commission Board shall endeavor to select for funding qualified agricultural programs that will have the greatest favorable impact on the long-term health of the tobacco-related economy of the State.

(c)        The benefits of qualified agricultural programs are not limited to persons suffering economic loss resulting from the Master Settlement Agreement, but these programs shall be designed to foster, support, and assist the tobacco-related segment of the agricultural economy.

(d)        The Commission Board may solicit and accept proposals from agencies and departments of the State, including institutions of The University of North Carolina, local units of government, the federal government, and members of the private sector for qualified agricultural programs to be funded with money held in the Fund.funds appropriated for purposes of this Article."

SECTION 6.11.(i)  G.S. 143-722 reads as rewritten:

"§ 143-722.  Reporting.

(a)        The chair of the Commission Board shall report each year by November 1 to the Joint Legislative Commission on Governmental Operations and the chairs of the House and Senate Appropriations Committees regarding the implementation of this Article, including a report on funds disbursed during the fiscal year by amount, purpose, and category of recipient, and other information as requested by the Joint Legislative Commission on Governmental Operations. A written copy of the report shall also be sent to the Legislative Library by November 1 each year.

(b)        Any non-State entity as that term is defined in G.S. 143C-1-1 that receives, uses, or expends any funds from the Commission Board under this Article is subject to the applicable reporting requirements of G.S. 143C-6-14."

SECTION 6.11.(j)  G.S. 143-723 is repealed.

SECTION 6.11.(k)  G.S. 143C-9-3 is repealed.

SECTION 6.11.(l)  G.S. 116-29.1(b)(1) reads as rewritten:

"(b)      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)        Notwithstanding G.S. 143C-9-3, ofOf the funds credited to the Tobacco Trust Account,Budget Code 69430 in the Department of State Treasurer, the sum of eight million dollars ($8,000,000) is transferred from the Tobacco Trust AccountBudget Code 69430 to the University Cancer Research Fund and appropriated for this purpose."

SECTION 6.11.(m)  Section 6 of  S.L. 1999-2 reads as rewritten:

"Section 6. It is the intent of the General Assembly that the funds under the Master Settlement Agreement, which is incorporated into the Consent Decree, be allocated as follows:

(1)        Fifty percent (50%) to the nonprofit corporation as provided by the Consent Decree.

(2)        Twenty-five percent (25%) to a trust fund to be established by the General AssemblyFifty percent (50%) shall be allocated as follows:

a.         Debt service as authorized by the State Capital Facilities Act of 2004, Part 1 of S.L. 2004-179 and S.L. 2004-124. As soon as practicable after the beginning of each fiscal year, the State Treasurer shall estimate and transfer to Budget Code 69430 the amount of debt service anticipated to be paid during the fiscal year for special indebtedness authorized by the State Capital Facilities Act of 2004.

b.         The sum of eight million dollars ($8,000,000) as credited to Budget Code 69430 shall be transferred from that Code to the University Cancer Research Fund in accordance with G.S. 116-29.1.

c.         The balance remaining to be credited to the State General Fund to be used for the following purposes:

1.         for theThe benefit of tobacco producers, tobacco allotment holders, and persons engaged in tobacco-related businesses, with this trust fund to be governed by a board of trustees representing these interests.businesses. To carry out this purpose, this trust fundfunds may provide direct and indirect financial assistance, in accordance with criteria established by the trustees of the trust fund andassistance, to the extent allowed by law, to (i) indemnify tobacco producers, allotment holders, and persons engaged in tobacco-related businesses from the adverse economic effects of the Master Settlement Agreement, (ii) compensate tobacco producers and allotment holders for the economic loss resulting from lost quota, and (iii) revitalize tobacco dependent communities.

2.         The benefit of health to fund programs and initiatives that include research, education, prevention, and treatment of health problems in North Carolina and to increase the capacity of communities to respond to the public's health needs through programs such as Health Choice and the State's Medicaid program.

(3)        Twenty-five percent (25%) to a trust fund to be established by the General Assembly for the benefit of health, with this trust fund to be governed by a board of trustees comprised of a broad representation of health interests."

SECTION 6.11.(n)  From funds available to the General Fund pursuant to this section, the funds shall be used as follows:

(1)        Funds to the Office of the Attorney General for the administration and oversight of the Master Settlement Agreement in the amount of two hundred thousand dollars ($200,000).

(2)        One million dollars ($1,000,000) to the Department of Agriculture and Consumer Services for tobacco grants pursuant to subsections (g) and (h) of this section.

(3)        Two million twenty-seven thousand seven hundred twenty-five dollars ($2,027,725) for the ChecKmeds program.

(4)        Two million two hundred ninety-four thousand seven hundred sixty-five dollars ($2,294,765) for the Medication Assistance Program.

(5)        Ten million dollars ($10,000,000) to a reserve account for the Division of Public Health. The Division shall develop a plan for the use of these funds that addresses the following:

a.         Tobacco use prevention, with an emphasis on adolescents and young adults.

b.         Prevention of chronic illnesses and conditions - obesity, heart disease, stroke, cancer, diabetes, and asthma.

c.         Health disparities amongst populations disproportionately affected by the diseases listed sub-subdivision b. of this subdivision.

SECTION 6.11.(o)  The Health and Wellness Trust Fund Commission and the Tobacco Trust Fund Commission shall develop a plan to phase out existing grant programs and staff by December 31, 2011.

SECTION 6.11.(p)  Any funds remaining in the Health and Wellness Trust Fund and the Tobacco Trust Fund on December 31, 2011, shall revert to the General Fund.

 

compensation limitations for grantee organizations receiving state funds

SECTION 6.12.(a)  In addition to the requirements of Part 3 of Article 6 of Chapter 143C of the General Statutes, or any other provision of law, any private organization that is a grantee as defined by G.S. 143C-6-23(a)(2) shall impose an annual salary cap limiting the amount of salary its full- and part-time employees may be paid from State funds in accordance with the schedule set forth in subsection (b) of this section.

SECTION 6.12.(b)  The annual salary cap limitation on the amount of State funds that can be used to pay a grantee's employee salaries are established by this subsection for the 2011-2013 fiscal biennium as follows:

(1)        For grantees receiving:

a.         Over ten million dollars ($10,000,000) annually in total State funds, the annual salary cap limitation is one hundred thousand dollars ($100,000).

b.         Over or equal to five million dollars ($5,000,000) but less than ten million dollars ($10,000,000) annually in total State funds, the annual salary cap limitation is ninety thousand dollars ($90,000).

c.         Over or equal to three million dollars ($3,000,000) but less than five million dollars ($5,000,000) annually in total State funds, the annual salary cap limitation is eighty thousand dollars ($80,000).

d.         Over or equal to one million dollars ($1,000,000) but less than three million dollars ($3,000,000) annually in total State funds, the annual salary cap limitation is seventy thousand dollars ($70,000).

e.         Less than one million dollars ($1,000,000) annually in total State funds, the annual salary cap limitation is sixty thousand dollars ($60,000).

(2)        Part-time employees shall be compensated on a pro rata basis in accordance with this schedule.

(3)        No State funds may be used to support the costs of any position with an annual salary in excess of two hundred fifty thousand dollars ($250,000).

SECTION 6.12.(c)  The limitations imposed by this section do not apply to salaries capped pursuant to the provisions of Parts X and XIV of this act.

SECTION 6.12.(d)  The provisions of G.S. 143C-6-23(f) apply to violations of this section.

 

Consolidation of Air Services and Centralization of Air Management/State-Owned Passenger and Non-Passenger Vehicles

SECTION 6.13.(a)  The State Motor Fleet project in the Work Plan of the Program Evaluation Division approved April 5, 2011, by the Joint Legislative Program Evaluation Oversight Committee is amended as described in this section.

SECTION 6.13.(b)  The Program Evaluation Division shall evaluate the consolidation of air services provided by the Department of Transportation, the State Bureau of Investigation, and the University of North Carolina Passenger Mission and shall recommend the most appropriate agency to house the consolidated services. Other air services may be examined for consolidation by the Program Evaluation Division. The study shall evaluate savings through consolidation, including potential savings from the following:

(1)        Reduction in aircraft.

(2)        Reduction in personnel.

(3)        Reduction in State facilities.

(4)        An improved level of service.

(5)        The potential sale of the DOT Beechcraft B200 aircraft tail number N3NC and if so when the sale should take place.

SECTION 6.13.(c)  The Program Evaluation Division shall study the formation of an Aviation Management Authority, as recommended by the Program Evaluation Division's April 2010 Report "Selling 25 Underutilized Aircraft May Yield Up to $8.1 Million and Save $1.5 Million Annually."

SECTION 6.13.(d)  The Program Evaluation Division shall study all passenger and non-passenger vehicles owned and operated by all State government departments, institutions, and entities. The study shall include motor fleet fees and associated cash balances, mechanic operations, the use and purpose of assigned vehicles, and State fueling stations and associated fees.

SECTION 6.13.(e)  The Program Evaluation Division shall report its findings and recommendations from the State Motor Fleet project described under this section to the Joint Legislative Program Evaluation Oversight Committee no later than May 1, 2012.

 

Tornado Assistance

SECTION 6.14.  The General Assembly finds that on April 16, 2011, heavy thunderstorms and powerful tornadoes swept through this State, with 18 counties sustaining the most extensive damage. Those counties are Bertie, Bladen, Craven, Cumberland, Currituck, Greene, Halifax, Harnett, Hertford, Hoke, Johnston, Lee, Onslow, Pitt, Robeson, Sampson, Wake, and Wilson Counties. It is the intent of the General Assembly to provide State matching funds to help mitigate losses, rebuild infrastructure, and aid affected citizens and businesses.

 

STATE-OWNED DISPOSABLE ASSETS

SECTION 6.15.  Definition. - For purposes of this section, the term "State-owned disposable assets" or "assets" means State-owned land, buildings, and other assets that are unused, underused, or do not involve a core function of government. The Department of Administration, in consultation with all other affected State departments, agencies, and institutions, shall do all of the following:

(1)        Develop criteria to be considered prior to the sale of assets. The criteria shall include all of the following factors:

a.         The condition of the property.

b.         The extent to which it meets the purpose for which it was intended.

c.         The future needs of the State to perform the service intended at the location.

d.         The best and most cost-effective manner in which these future needs can be serviced.

e.         The practicability of moving the function of the services performed at a location to another area that might reduce acquisition, construction, and labor costs without diminishing the quality of service.

f.          The manner in which an asset should be (i) sold or retained, (ii) renovated, (iii) expanded for future use, or (iv) sold with a leaseback.

g.         Other recommendations regarding use of the asset.

(2)        Determine whether the highest and best use is being made of the asset.

(3)        Review assets to determine whether an agency has any property that meets the criteria as set forth in this section.

(4)        Examine current State law to determine amendments to allow for the most efficient and effective disposition of assets.

The Department may retain consultants to assist with the accomplishment of the objectives set forth in this section. The Department of Administration shall make an interim report to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Program Evaluation Division by no later than December 31, 2011, regarding its findings and recommendations and the progress in implementing this section.

 

Part VI-A. Information Technology

 

Information Technology fund/Availability

SECTION 6A.1.(a)  The availability used to support appropriations made in this act from the Information Technology Fund established in G.S. 147-33.72H is as follows:

                                                                                                FY 2011-2012       FY 2012-2013

 

Appropriation from General Fund                                       $4,458,142            $6,158,142

Interest                                                                               $   100,000            $   100,000

IT Fund Balance June 30                                                    $2,454,934            $1,227,467

 

Total Funds Available                                                      $7,013,076            $7,485,609

 

Appropriations are made from the Information Technology Fund for the 2011-2013 fiscal biennium as follows:

                                                                                                FY 2011-2012       FY 2012-2013

 

Information Technology Operations

Center for Geographic Information and Analysis                   $   599,347               $   599,347

Enterprise Security Risk Management                                   $1,064,148               $1,064,148

Enterprise Project Management Office                                  $1,673,285               $1,673,285

Architecture and Engineering                                                $   648,000               $   648,000

Criminal Justice Information Network                                   $   166,422               $   166,422

Statewide IT Procurement                                                               $0                          $0

ITS Overhead Reduction                                                         ($91,486)                  ($91,486)

Subtotal Information Technology Operations                         $4,059,716               $4,059,716

Information Technology Projects

State Portal                                                                                     $0                          $0

IT Consolidation                                                                  $1,320,893               $   820,893

Transfer to OSC for Data Integration                                    $   100,000               $   100,000

Subtotal Information Technology Projects                             $1,420,893               $   920,893

Data Integration License Funding Transfer to State Agencies          $ 200,000               $2,400,000

Position Transfer to Office of State Budget and Management          $ 105,000               $   105,000

Total                                                                                   $5,785,609               $7,485,609

 

SECTION 6A.1.(b)  By September 1 of each year, data integration funding in the Information Technology Fund for that State fiscal year shall be transferred to State agencies in proportion to their use of data integration licenses at that point in time.  The State Chief Information Officer shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division by September 2 of each year on the status of the transfer.

Any licensing requirements after the 2011-2013 fiscal biennium shall be the responsibility of the participating agency. The State Chief Information Officer shall notify affected agencies of this requirement by September 1, 2011. The State Chief Information Officer shall ensure that agencies choosing to participate after that date are notified prior to agreeing to participate in the data integration license agreement. The State Chief Information Officer shall report to the Joint Legislative Oversight Committee on Information Technology Operations and the Fiscal Research Division by September 2, 2011, on agency notification of their responsibility to fund any data integration license requirements after the 2011-2013 fiscal biennium.

SECTION 6A.1.(c)  This section is effective when it becomes law.

 

Information Technology Operations

SECTION 6A.2.(a)  Information Technology Internal Service Fund Budget. - Notwithstanding G.S. 147-33.88, the Office of Information Technology Services shall develop an annual budget for review and approval by the Office of State Budget and Management 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.

Any uses of the Internal Service Fund not specifically related to the operation of the Office of Information Technology Services shall immediately be reported to the Office of State Budget and Management and the Fiscal Research Division with an explanation as to why it was necessary to use the Fund.

SECTION 6A.2.(b)  Enterprise Projects. - The State Chief Information Officer shall consult the respective State agency chief information officer and obtain approval from the Office of State Budget and Management prior to the initiation of any enterprise project or contract.  State agency requirements shall be incorporated into any enterprise agreement signed by the State Chief Information Officer or his or her representative.  Enterprise projects shall not exceed the participating State agencies' ability to financially support the contracts.

SECTION 6A.2.(c)  The State Chief Information Officer shall not enter into any 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 agreements throughout the life of the contract or project.

(2)        Transfer the agreed-upon funds to the Information Technology Internal Service Fund in sufficient time for the Office of Information Technology Services to meet vendor contract requirements.

The State Chief Information Officer shall ensure that enterprise project and contract costs are allocated to participating agencies in an equitable manner.

SECTION 6A.2.(d)  Agency Projects. - Prior to initiation, any information technology project, or any segment of a multipart project, costing more than one hundred thousand dollars ($100,000) shall be approved by the General Assembly.

SECTION 6A.2.(e)  Three-Year Contracts. - Notwithstanding the cash management provisions of G.S. 147-86.11, the Office of Information Technology Services may procure information technology goods and services for periods of up to a total of three years where the terms of the procurement contract 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 Information Technology 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 Information Technology Internal Service Fund rate calculations before the Office of State Budget and Management annually approves proposed rates. Any savings resulting from the agreements shall be returned to agencies included in the contract in the form of reduced rates. The Office of Information Technology Services shall submit a quarterly written report to the Office of State Budget and Management on any State agency budget impacts resulting from multiyear contracts. Under no circumstances shall multiyear contracts result in rate increases for participating agencies. The Office of Information Technology Services 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 of the North Carolina General Assembly.

SECTION 6A.2.(f)  Information Technology Hosting. - State agencies developing and implementing information technology projects shall use the State infrastructure to host their projects.  An exception to this requirement may be granted only if approved by both the State Chief Information Officer on the basis of technology requirements and by the Office of State Budget and Management based on cost savings, subject to consultation with the Joint Legislative Commission on Governmental Operations and a report to the Joint Legislative Oversight Committee on Information Technology.

Projects currently hosted outside the State infrastructure shall be returned to State infrastructure not later than the end of any current contract.

By October 1, 2011, the State Chief Information Officer shall report to the Joint Legislative Oversight Committee on Information Technology regarding projects currently hosted outside State infrastructure and a schedule to return those projects to State infrastructure.

SECTION 6A.2.(g)  Service Level Agreements. - Service level agreements developed with supported State agencies shall include metrics for the Office of Information Technology Services as well as the supported agencies.  When the Office of Information Technology Services or an agency fails to meet metrics established by the service level agreement, a report shall be provided to the Office of State Budget and Management and the Fiscal Research Division of the General Assembly within 10 days, detailing the shortfall and providing a corrective action plan with a time line.

SECTION 6A.2.(h)  The Office of Information Technology Services shall assist State agencies in identifying the least expensive source and best value for the purchase of IT goods and services and shall ensure that agencies receive every available discount when purchasing IT goods and services.  When the best value and the least expensive sources are different, the Office of Information Technology Services shall report to the Office of State Budget and Management and the Fiscal Research Division on why the least expensive vendor was not the best value.

SECTION 6A.2.(i)  Agency Billing and Payments. - The State CIO shall ensure that bills from the Office of Information Technology Services are easily understood and fully transparent. If a State agency fails to pay its IT Internal Service Fund bills within 30 days of receipt, the Office of State Budget and Management may transfer funds from the agency to cover the cost of the bill from that agency to the IT Internal Service Fund.

 

COORDINATION OF INFORMATION TECHNOLOGY REQUIREMENTS AND GEOGRAPHIC INFORMATION SYSTEM REQUIREMENTS

SECTION 6A.3.  The State Chief Information Officer, through the Enterprise Project Management Office, shall develop a plan and adopt measures to avoid the duplication of information technology capabilities and resources across State agencies.  When multiple agencies require the same or substantially similar information technology capability, the State Chief Information Officer shall designate one State agency as the lead to coordinate support and to manage that capability for all State agencies requiring the capability, with the State Chief Information Officer maintaining oversight of the effort.  Further, the Enterprise Project Management Office shall:

(1)        Review all ongoing and future technology projects to determine whether the capabilities required for each project, or the specific requirements comprising a component within a project, already exist in a planned, ongoing, or completed information technology project developed by another State agency. Information Technology Procurement shall work to develop contracts for information technology projects to allow the addition of other agencies' requirements within the terms of the existing contract.

(2)        Identify existing projects that can best support a particular requirement for multiple agencies and work to transition agencies to those projects.

(3)        When State agencies request approval for new projects, determine if the information technology project has transferable applicability to current or future capabilities required by another State agency.

(4)        Upon identifying an existing information technology capability needed by a State agency, assist that agency in determining how best to access existing projects.

(5)        Implement the State Chief Information Officer's plan to reduce duplication.

(6)        Deny approval for new projects that duplicate existing capabilities within State agencies.

(7)        Provide quarterly reports to the Fiscal Research Division of the General Assembly on progress toward eliminating duplication. The report shall include a list of duplicate projects across State agencies, both ongoing and legacy, and shall document explicit efforts to reduce the duplication. It shall specifically address progress during the quarter for which the report is being submitted. It shall also include a list of projects denied approval because of duplication, with a description of the measures taken to access an existing project with the same capabilities.

All State agencies shall coordinate any Geographic Information System (GIS) initiatives through the Center for Geographic Information and Analysis (CGIA) to ensure that they are not duplicating an existing function. 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 make a written report to the Joint Legislative Oversight Committee on Information Technology and to the Fiscal Research Division of the General Assembly on the results of these efforts.

 

CRIMINAL JUSTICE LAW ENFORCEMENT AUTOMATED DATA SERVICES (CJLEADS)

SECTION 6A.4.(a)  The Office of the State Controller, in cooperation with the State Chief Information Officer, shall:

(1)        Continue the implementation of the Criminal Justice Data Integration Pilot Program, which is now known as the Criminal Justice Law Enforcement Automated Data Services (CJLEADS), expanding it throughout the State of North Carolina;

(2)        Review plans to transition CJLEADS to the Department of Justice, determining if that is still the best course of action, and identifying an alternative, if required;

(3)        By October 1, 2011, provide a recommendation to the Joint Legislative Oversight Committee on Information Technology on the best alternative for managing and hosting CJLEADS, along with a time line for the transition; and

(4)        Provide quarterly reports on the status of the Program to the Joint Legislative Oversight Committee on Information Technology beginning October 1, 2011.

SECTION 6A.4.(b)  The Office of the State Controller shall administer CJLEADS with the assistance of a Leadership Council consisting of:

(1)        The Attorney General;

(2)        The Director of the Administrative Office of the Courts;

(3)        The Secretary of the Department of Correction;

(4)        The Secretary of Crime Control and Public Safety;

(5)        The Secretary of the Department of Juvenile Justice and Delinquency Prevention;

(6)        The Commissioner of Motor Vehicles, Department of Transportation;

(7)        The President of the North Carolina Association of Chiefs of Police;

(8)        The President of the North Carolina Sheriffs' Association, Inc.;

(9)        A representative of the Federal Bureau of Investigation, who shall be a nonvoting member;

(10)      The State Controller; and

(11)      The State Chief Information Officer.

SECTION 6A.4.(c)  Data that is not classified as a public record under G.S. 132-1 shall not be considered a public record when incorporated into the CJLEADS database.

SECTION 6A.4.(d)  To maintain the confidentiality requirements attached to the information provided to CJLEADS by the various State and local agencies, each source agency providing data for CJLEADS shall be the sole custodian of the data for the purpose of any request for inspection or copies thereof under Chapter 132 of the General Statutes. CJLEADS shall only allow access to data from the source agencies in accordance with rules adopted by the respective source agencies.

SECTION 6A.4.(e)  Section 6.10 of S.L. 2010-31 is repealed.

 

CONTINUING PILOT PROGRAM TO ALLOW PUBLIC-PRIVATE PARTNERSHIPS TO MEET DEPARTMENT OF REVENUE TECHNOLOGY NEEDS

SECTION 6A.5.(a)  To speed the implementation of the Tax Information Management System (TIMS) and the additional components of the Planning and Design Project (PDP) through June 30, 2015, the Secretary of the Department of Revenue may enter into public-private arrangements where (i) the funding of the project under the arrangement comes from revenue generated by the project and (ii) the project is related to the implementation of TIMS and additional components of the PDP. As used in this section, the "additional components of the PDP" are Enterprise Data Warehouse, Management Reporting and Decision Analytics, Customer Relationship Management, Enterprise Case Management, and E-Services. All such arrangements shall terminate June 30, 2015.

Work under a public-private arrangement may be contracted by requests for proposals, modifications to existing contracts, and purchases using existing contract vehicles.

The Secretary of Revenue shall establish a measurement process to determine the increased revenue attributable to the public-private arrangements. To accomplish this, the Secretary shall consult subject matter experts outside the Department of Revenue, both within State government and from private industry. The measurement process shall include:

(1)        Calculation of a revenue baseline against which the increased revenue attributable to the project is measured;

(2)        Periodic evaluation to determine if the baseline needs to be modified based on significant measurable changes in the economic environment; and

(3)        Monthly calculation of increased revenue attributable to contracts executed under this program.

Of funds generated from collections above the baseline established by subdivision (1) of this subsection, in both the General Fund, Highway Funds, and the State portion of the Unauthorized Substance Tax collections of the Special Revenue Fund, up to forty-five million five hundred thousand dollars ($45,500,000) may be authorized by the Office of State Budget and Management for the purchases related to the implementation of TIMS and the additional components of the PDP, including payment for services from non-State entities. The Department of Revenue may retain an additional six million six hundred forty-six thousand five hundred fifty-seven dollars ($6,646,557) from benefits generated for the General Fund since the beginning of the public-private partnership. These funds shall be used as payment of internal costs for the fiscal biennium, and such funds are hereby appropriated for this purpose.

If the Department of Revenue finds that it cannot generate additional benefits totaling forty-five million five hundred thousand dollars ($45,500,000) through June 30, 2015, or that total costs exceed the total available appropriations and earned benefits, then the Department shall do all of the following: (i) immediately notify the Chairs of the House of Representatives and Senate Appropriations Committees and the Fiscal Research Division, (ii) identify any obligations to vendors, (iii) identify options for meeting obligations to vendors, and (iv) provide costs associated with each option. The Department shall ensure that this notification is made in sufficient time to allow the General Assembly to properly evaluate the options presented.

SECTION 6A.5.(b)  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 review requests for proposals, and to negotiate and review contracts associated with TIMS and the additional components of the Planning and Design Project (PDP) (Enterprise Data Warehouse, Management Reporting and Decision Analytics, Customer Relationship Management, Enterprise Case Management, and E-Services).

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;

(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, 2015.

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 and Senate Committees on Appropriations, and the Fiscal Research Division.

SECTION 6A.5.(d)  Beginning August 1, 2011, and quarterly thereafter, the Department of Revenue shall submit detailed written reports to the Chairs of the House of Representatives and Senate Committees on Appropriations, to the Joint Legislative Oversight Committee on Information Technology, and to the Fiscal Research Division of the Legislative Services Office. The report shall include (i) details of each public-private contract, (ii) the benefits from each contract, (iii) a comprehensive forecast of the benefits of using public-private agreements to implement TIMS and the additional PDP components, including cost savings and the acceleration of the project time line, (iv) and any issues associated with the operation of the public-private partnership.

SECTION 6A.5.(e)  In addition to the oversight provided by the Oversight Committee established in subsection (c) of this section, the TIMS project shall be subject to existing Information Technology project oversight legislation and the TIMS project management shall comply with all statutory requirements and other requirements 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 6A.5.(f)  Section 6.20 of S.L. 2009-451, as rewritten by Section 2.3 of S.L. 2010-123, is repealed.

 

Information Technology personal services Contract Requirements

SECTION 6A.6.(a)  Effective for the 2011-2013 fiscal biennium, and notwithstanding any provision of law to the contrary:

(1)        No contract for information technology personal services, or providing personnel to perform information technology functions, may be established or renewed without the express written approval of the Statewide Information Technology Procurement Office.

(2)        Before any State agency, department, or institution may renew a contract position for information technology personnel, the State agency must report to the Statewide Information Technology Procurement Office, the Office of State Budget and Management, the Office of State Personnel, the Office of Information Technology Services, and to the Fiscal Research. The report shall explain:

a.         The proposed duration of the contract position. If the contract is for more than 12 months, why recruitment of a State employee is not feasible.

b.         Whether the contract position requires unique skills for which the State has a short-term need.

c.         Whether the position is required for a specific information technology project and if the position will be terminated upon completion of the project.

d.         The specific work products and completion time lines for the contract position.

(3)        All contract positions requiring information technology skills are subject to the provisions of this section. The Office of State Budget and Management may immediately terminate the funding for any information technology contractor position that is filled without following defined procedures.

(4)        All information technology personnel contracts shall be competitive and shall be subject to competition each time they expire. Exceptions must be approved by the Office of Information Technology Services, the Office of State Personnel, and the Office of State Budget and Management. Approved exceptions must immediately be reported to the Fiscal Research.

(5)        Agencies shall make every effort to convert SAP and Curam contractors supporting permanent requirements to State employees. Beginning October 1, 2011, agencies shall submit written quarterly reports to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division documenting their progress in converting these contractors to State employment.

Contract positions subject to this section shall be reviewed and approved by the Statewide Information Technology Procurement Office and shall be entered into the project portfolio management tool.

The Statewide Information Technology Procurement Office shall determine the market rate for the type of contract required, as well as to determine the comparable cost for a State employee. Agencies may not exceed the market rate determined by the Statewide Information Technology Procurement Office. After the Statewide Information Technology Procurement Office provides cost data, the Office of State Budget and Management must approve funding for the position.

SECTION 6A.6.(b)  Whenever a State agency, department, or institution determines that only a contractor can fill a position and the position is required to perform an ongoing function within the agency, the head of the State agency must develop and implement a plan to hire or train a qualified State employee to fill the position within 12 months.  Within 60 days of hiring the contractor, this plan shall be forwarded to the Office of State Budget and Management, the Office of State Personnel, the Office of Information Technology Services, and the Fiscal Research Division.

SECTION 6A.6.(c)  Beginning August 1, 2011, and monthly thereafter, each State agency, department, and institution employing information technology personal services contractors, or contract personnel performing information technology functions, shall provide a detailed report on those contracts to the Office of State Budget and Management, the Office of State Personnel, the Office of Information Technology Services, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division of the General Assembly.  Each State agency's report shall include at least the following:

(1)        For each contracted information technology position:

a.         The title of the position, a brief synopsis of the essential functions of the position, and how long the position has existed.

b.         The name of the individual filling the position and the vendor company, if any, that regularly employs that individual.

c.         The type of contract, start date, and termination date.

d.         The length of time that the individual filling the contracted position has been employed by the State as a contractor in any position.

e.         The contracted position salary or hourly rate, the number of hours per year, and the total annualized cost of the contracted position.

f.          The salary and benefits cost for a State employee performing the same function.

g.         The purchase order number for the position.

h.         Whether the position can be converted to a State employee position. This determination will be certified by the State Information Technology Purchasing Office.

i.          When the agency anticipates converting the position to a State employee.

(2)        The total annual cost for information technology contractors and the total annual salary and benefits cost for filling the contract positions with State employees.

(3)        A determination of whether the information technology functions performed by the contractor can be performed by State employees.

(4)        All information required by this subsection related to information technology contractors regardless of the contracting source.

SECTION 6A.6.(d)  Each State agency shall provide a detailed explanation of any differences between the agency report required by subsection (b) of this section and the Information Technology Expenditures Report published annually by the Office of the State Controller.  This report of differences shall be due 30 days after the publication of the Office of the State Controller's report and shall be submitted to the Office of State Budget and Management, the Fiscal Research Division, and the Joint Legislative Oversight Committee on Information Technology.

SECTION 6A.6.(e)  This section does not apply to The University of North Carolina and its constituent institutions.

 

State Information Technology Consolidation

SECTION 6A.7.(a)  By November 1, 2011, the State Chief Information Officer (State CIO), in conjunction with the Office of State Budget and Management (OSBM), shall develop a detailed plan for consolidating the information technology infrastructure and applications of all State agencies, departments, and institutions in the executive branch. Information technology infrastructure includes personal computers, hosting and network environments, the help desk, call centers, and information technology security. Applications include enterprise software, on-demand software, and customized software. At a minimum, the consolidation plan shall include the following:

(1)        Defined targets and priorities with a detailed time line for the implementation of consolidation.

(2)        The costs of consolidation by fiscal year and by agency.

(3)        The anticipated savings to result from consolidation and a time line for actual achievement of those savings.

(4)        Technical, policy, or other issues associated with achieving a timely and effective consolidation.

(5)        A process to transfer all information technology hardware and software funding to the Office of the State CIO.

(6)        Creation of a project management organization to manage all information technology projects.

(7)        Review of agency, Office of Information Technology Services, and Office of the State CIO to identify redundant personnel positions.

When setting consolidation targets, the State CIO shall give high priority to infrastructure issues that pose significant risk to agency operations or data, that provide opportunities for immediate cost savings, and where a statewide approach would minimize disruption of services. In carrying out the consolidation, the Office of Information Technology Services shall utilize the authority set out in G.S. 147-33.83.

SECTION 6A.7.(b)  Beginning July 1, 2011, the State CIO shall plan and implement an enterprise level grants management system. Similar systems currently under development may be suspended by the State CIO with funding reprogrammed to support development of the enterprise level grants management system.

In coordination with the State CIO, the Department of Health and Human Services shall develop a plan to implement a single case management system throughout that Department, beginning in the 2012-2013 fiscal year, and shall report to the Joint Legislative Oversight Committee on Information Technology by February 1, 2012, on its initiatives to implement the system. The report shall include a detailed time line for completion and an explanation of the costs associated with case management consolidation.

SECTION 6A.7.(c)  Beginning September 1, 2011, and quarterly thereafter, the Office of State Budget and Management, in conjunction with the State CIO, shall provide written reports to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division relating to State information technology consolidation.

 

ITS/Internal Service Fund rate establishment/cash management

SECTION 6A.8.(a)  For the 2011-2013 fiscal biennium, receipts for the Information Technology Internal Service Fund shall not exceed one hundred ninety million dollars ($190,000,000), excluding a 60-day balance for contingencies. Rates established by the Office of State Budget and Management (OSBM) to support the IT Internal Service Fund shall be based on this required fund limit. Established rates shall be adjusted within 30 days in the event the fund exceeds the prescribed limit. In the event that an increase in receipts for the IT Internal Service Fund is required, the Office of Information Technology Services may implement the increase after consultation with the Joint Legislative Commission on Governmental Operations.

SECTION 6A.8.(b)  Rates shall be set to support a specific service for which an agency is being charged.  Overhead charges to agencies must be consistently applied and must not exceed industry standards.  Rate increases shall require approval of the OSBM. Rate reductions shall be immediately implemented following notification of the OSBM.

SECTION 6A.8.(c)  Beginning October 1, 2011, the State Chief Information Officer shall submit a quarterly report to the Joint Legislative Commission on Governmental Operations and Fiscal Research Division on collections for, expenditures from, and the balance of the IT Internal Service Fund.  The report shall include all expenditures made from the fund to support the Office of Information Technology Services and the activities of the State Chief Information Officer.

 

Information technology Privatization

SECTION 6A.9.(a)  Any privatization of any grouping of information technology services, or "towers," identified in the Infrastructure Study and Assessment (INSA) shall require prior approval from the General Assembly.  Funding to support any outsourcing of any of these towers shall be specifically appropriated by the General Assembly for that purpose, to include any use of Information Technology Internal Service Fund receipts.

SECTION 6A.9.(b)  Before privatizing any major information technology function during the 2011-2013 fiscal biennium, the State Chief Information Officer shall do all of the following:

(1)        Develop a detailed plan for implementing any privatization initiative to include the following:

a.         A governance and accountability structure for the privatization effort.

b.         Detailed time line with milestones.

c.         Any costs necessary to accomplish outsourcing with funding sources identified.

d.         Estimated monthly cost for each participating agency for the first five years of privatization.

e.         Risks associated with privatization, measures being taken to mitigate those risks, and any costs associated with the mitigation measures.

f.          Any security issues associated with outsourcing each application impacted by the outsourcing, with a detailed plan to mitigate those issues.

g.         A list of State employees to be terminated with information on their job description and how long they have been employed by the State, a schedule of when the terminations are to occur, the cost of terminating each employee, and plans to assist each terminated employee.

The State Chief Information Officer shall consult the Joint Legislative Commission on Governmental Operations and report to the Joint Legislative Oversight Committee on Information Technology on the completed plan prior to any implementation of privatization.

(2)        Have a detailed plan in place, to include associated costs and sources of funding, to return the function to State control in the event privatization fails to provide anticipated cost­savings or required service levels.

(3)        Privatize only those individual functions where verifiable market data shows that privatization will result in cost­savings to the State and there is no data identifying alternatives that generate greater savings, ensuring that agencies receive at a minimum the same level of service and functionality as the level prior to privatization.

(4)        Document and certify any anticipated savings resulting from privatization by individual function.

(5)        Ensure full disclosure of any privatization decisions that combine multiple services or towers into a single contract, including the costs associated with each specific service or tower included in the contract.

(6)        Ensure that any changes are made across the entire executive branch.

(7)        Consult the Joint Legislative Commission on Governmental Operations and report to the Joint Legislative Oversight Committee on Information Technology regarding the plan for funding any requirements formerly covered by the receipts from the privatized function.

SECTION 6A.9.(c)  After privatizing any major information technology function, the State Chief Information Officer shall do all of the following:

(1)        Report quarterly on the results of the privatization, including a detailed comparison of projected savings to actual cost, data on whether or not the vendor is meeting service level agreements, and an explanation of the reasons for any deficiency or difference.

(2)        Immediately notify the Joint Legislative Commission on Governmental Operations of any outsourcing effort that does not meet projected savings or required service levels for two quarters in a row or during any two quarters of a fiscal year, and develop a corrective action plan.

(3)        Terminate any contract where privatization fails to achieve projected savings or meet service levels over a period of 12 months.

 

State portal

SECTION 6A.10.(a)  The Department of Administration may implement and operate a statewide electronic enterprise portal to increase the convenience of members of the public in conducting online transactions with, and obtaining information from, State government and to facilitate their interactions and communications with government agencies.  The portal shall be hosted on State information technology infrastructure.

SECTION 6A.10.(b)  Prior to implementation of a State portal, the Department of Administration shall provide all of the following to the General Assembly:

(1)        A detailed plan for development and implementation of the portal, to include a list of applications to be implemented during the 2011-2013 and 2013-2015 fiscal biennia, including:

a.         A description of how the portal is to be implemented, to include the use of outside vendors, with detailed information on their participation and potential cost.

b.         Detailed information on the anticipated total cost of ownership of the portal and any applications proposed for implementation during that period, to include the amount of any payments to be made to vendors supporting the project for each application and the portal as a whole.

c.         A detailed State governance structure to provide oversight of portal operations. This oversight shall include the review of any new functions and of rates associated with the operation of the portal.

(2)        A funding model for the implementation that does not increase the cost of services for any citizen of the State or reduce the receipts or other funding currently available to State agencies or included in appropriations for the 2011-2013 fiscal biennium. Any fees and other charges that may be required to support the portal shall not be collected from agencies without General Assembly approval.

(3)        If outsourced, a detailed, fully executable plan to return portal operations to the State, with associated costs.

SECTION 6A.10.(c)  Participation by State agencies in the portal shall be voluntary. 

SECTION 6A.10.(d)  Any fees or other charges collected under this section for the use of the State portal or any supporting functions shall be:

(1)        Collected by the Department of Administration only and not by a private vendor.

(2)        Deposited in the General Fund.

SECTION 6A.10.(e)  The State portal project shall meet all requirements for project management established by the State Chief Information Officer. Nothing in this section exempts the State portal project from the laws governing State information technology and purchasing.

 

Transfer Criminal Justice Information NETWORK TO the Office of the State Chief information officer

SECTION 6A.11.(a)  The Criminal Justice Information Network (CJIN), as provided in Article 69 of Chapter 143 of the General Statutes, is hereby transferred to the Office of the State Chief Information Officer.  The transfer shall have all the elements of a Type II transfer, as defined in G.S. 143A-6.

SECTION 6A.11.(b)  G.S. 143-661(a) reads as rewritten:

"(a)       The Criminal Justice Information Network Governing Board is established within the Department of Crime Control and Public Safety, Office of the State Chief Information Officer to operate the State's Criminal Justice Information Network, the purpose of which shall be to provide the governmental and technical information systems infrastructure necessary for accomplishing State and local governmental public safety and justice functions in the most effective manner by appropriately and efficiently sharing criminal justice and juvenile justice information among law enforcement, judicial, and corrections agencies. The Board is established within the Department of Crime Control and Public Safety Office of the State Chief Information Officer, for organizational and budgetary purposes only and the Board shall exercise all of its statutory powers in this Article independent of control by the Department of Crime Control and Public Safety.Office of the State Chief Information Officer."

SECTION 6A.11.(c)  G.S. 143-664(b)  reads as rewritten:

"(b)      Pending permanent staffing, the Department The staff of the Criminal Justice Information Network shall provide the Board with professional and clerical staff support and any additional support the Board needs to fulfill its mandate. The Board may meet in an area provided by the Department of Crime Control and Public Safety and the Board's staff shall use space provided by the Department.Office of the State Chief Information Officer."

 

INTEGRATED BUDGET information system

SECTION 6A.12.(a)  The Office of State Budget and Management (OSBM) shall create a detailed, comprehensive plan for the development and implementation of the Integrated Budget Information System (IBIS).  By August 1, 2011, the IBIS plan shall be submitted to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division. The plan must include at least the following:

(1)        A detailed description of the system with a list of the functions.

(2)        A projected time line for completion with detailed milestones.

(3)        Total cost of the project, including five years of operations and maintenance costs.

(4)        Projected costs for the project each month, including how the funding is to be spent.

(5)        Funds identified to support the project from its inception, with the amounts and sources of funding.

(6)        Personnel involved in the project, their position and responsibilities, their qualifications, the amount of time each devotes to the project, and their cost, including both State employees and contract personnel.

(7)        Number and cost of personnel required to operate the system after its completion.

(8)        Total number of hours required to complete the project.

(9)        Outside vendors supporting the project, their functions, and their total cost.

(10)      Implementation plan, to include a time line for fielding it to participating agencies.

(11)      A training plan with a time line.

(12)      Any risks to the project, with a strategy to mitigate those risks.

SECTION 6A.12.(b)  Beginning August 1, 2011, on the first day of each month, the Office of State Budget and Management shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the status of IBIS. The monthly reports shall be signed by the project sponsor, who shall verify in writing that the information contained in the report is current, complete, and accurate. The monthly report shall include the following:

(1)        Project status, to include any issues identified by the Enterprise Project Management Office.

(2)        Comparison of project status to the time line, with an explanation of any differences.

(3)        Detailed descriptions of milestones to be completed that month and the following month.

(4)        Any changes in project cost.

(5)        Actual expenditures to date and during that month.

(6)        Any variances from projected expenditures and the reasons for the variance.

(7)        Any potential funding shortfalls and their impact.

(8)        Total hours worked each month and cumulative total hours.

(9)        Any variance between projected and actual hours and the reason.

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

(11)      Impact of any issues identified on the project schedule.

(12)      Impact of any issues identified on project cost.

(13)      Any changes to the project.

(14)      Any change requests submitted to project vendors and their cost.

SECTION 6A.12.(c)  The State Chief Information Officer shall immediately suspend the project if OSBM fails to provide a monthly report required by subsection (b) of this section in a timely manner until such time as the report is submitted.

SECTION 6A.12.(d)  If OSBM fails to submit reports to the Enterprise Project Management Office for inclusion in the project portfolio management tool on time, the State CIO shall immediately suspend the project until the information is completed in the tool.

 

comprehensive, enterprise-level data integration capability

SECTION 6A.13.(a)  The Office of the State Controller (OSC) shall continue the development of a comprehensive, enterprise-level data integration capability, providing broad access to and analysis of information across State government.  As part of this development effort, OSC shall update the BEACON Strategic Plan for Data Integration by March 1, 2012, and shall provide the updated plan to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division of the General Assembly.  The plan shall comply with all necessary security measures and restrictions to ensure that access to any specific information held confidential under federal or State law is limited to appropriate and authorized persons.  OSC shall also develop, document, and enforce security requirements for data integration initiatives, to include establishing and monitoring security standards for vendors supporting development and implementation efforts.

SECTION 6A.13.(b)  As part of the State's continuing effort to develop a comprehensive, enterprise-level data integration capability, the Office of the State Controller shall develop an enterprise process to detect fraud, waste, and improper payments across State agencies.  In support of the automated fraud detection effort, the OSC shall:

(1)        Develop a detailed long range plan to implement an automated fraud detection system within State agencies.

(2)        Develop and issue a request for information to determine the range of options available to provide automated fraud detection to State agencies.

(3)        Coordinate with State agencies to determine interest in participating in the project and to identify potential applications that can be included in an initial request for proposal.

(4)        Establish priorities for developing and implementing potential applications.

(5)        Develop and issue a request for proposal to solicit bids to provide automated fraud detection. The committee may choose to make payments to vendors contingent on producing savings.

(6)        Review proposals and consider selecting multiple vendors, evaluating the requirements and information technology applications of specific State agencies participating in the process.

(7)        Evaluate savings resulting from each effort.

(8)        Beginning October 1, 2011, provide quarterly reports to the General Assembly.

(9)        Provide recommendations to the General Assembly on future initiatives.

SECTION 6A.13.(c)  Of the funds appropriated to the Information Technology Fund, one hundred thousand dollars ($100,000) shall be appropriated to support this initiative.

SECTION 6A.13.(d)  There is created a Data Integration Steering Committee that shall have responsibility for providing oversight for all data integration efforts in the State.  The Committee shall be housed in and supported by the Office of the State Controller. 

SECTION 6A.13.(e)  This Committee shall assume all of the BEACON Project Steering Committee roles and responsibilities for oversight of data integration projects.  This Committee shall be chaired by the State Controller and shall include the following six voting members:

(1)        One member appointed by the Governor with an information technology background and experience.

(2)        One member appointed by the Governor with a background in law enforcement.

(3)        One member appointed by the President Pro Tempore of the Senate with a background in government accounting.

(4)        One member appointed by the President Pro Tempore of the Senate with government operations experience.

(5)        One member appointed by the Speaker of the House of Representatives with a background in information technology.

(6)        One member appointed by the Speaker of the House of Representatives with a background in business management.

Members shall not have any connections to potential vendors. Current members of the General Assembly shall not serve as members of this Committee.

SECTION 6A.13.(f)  The Director of the Office of State Budget and Management, the State Chief Information Officer, the Secretary of Health and Human Services, and the State Treasurer shall serve as advisory members.

 

PART VII. Public Schools

 

EDUCATION REFORM IN NORTH CAROLINA

SECTION 7.1.(a)  It is the intent of the General Assembly that the children of North Carolina are ready to succeed when they start school, learn the appropriate foundational education in the early grades, are prepared for a career or higher education upon graduation, and have job and learning skills appropriate to the global economy.

SECTION 7.1.(b)  To implement this, the Joint Education Oversight Committee shall study the following and report to the 2012 Regular Session of the 2011 General Assembly with a comprehensive plan, including implementation dates and schedules, to accomplish this vision:

(1)        Elementary and secondary education. - It is a priority of the General Assembly that by the end of third grade, North Carolina children receive a foundational education in reading and mathematics upon which to build future educational achievement. Further, it is a priority that children in all grades receive quality education from high-quality teachers that are ready and able to teach and that children are promoted in an educationally appropriate manner. To that end, the Committee shall study the following:

a.         Teacher tenure and its relationship with student performance.

b.         Teacher pay and its relationship with student performance, including the following:

1.         Salary supplements for employees with master's degrees and national board certification, and their relationship with student performance.

2.         Methods of implementing a performance pay plan for school employees.

c.         Strategies for reducing teacher paperwork to assist teachers in spending more time with students.

d.         Kindergarten as a transition year between pre-K and elementary education, including the following:

1.         Kindergarten specific class size ratios.

2.         Effectiveness of teacher assistants.

e.         Reducing teacher-student ratio to 1:15 in first through third grades and its relationship with student performance.

f.          Specific reasons why students drop out and reasons why at-risk students decide to stay in school. In studying this, the Committee shall review dropout prevention programs implemented across the State to determine the effectiveness of different approaches.

g.         The effectiveness of various diagnostic tools in improving student performance.

h.         District size and its relationship with student performance and school finance.

i.          State funding formulas. In its examination and review, the Committee shall determine which funding formulas maximize district flexibility and parental choice.

j.          Course offerings, including the existence of duplicative courses of study in public and private secondary and postsecondary institutions in each local school administrative unit or county.

k.         Alternative course delivery methods, including virtual schools and off-site courses.

l.          Strategies to reduce the number of students that receive special education accommodations under the federal Individuals with Disabilities Education Act and its implementing regulations.

m.        The advisability, costs, and barriers to increasing public access to value-added assessments such as the Education Value Added Assessment System and local school administrative unit financial information.

n.         School and district accreditation and its relationship with student performance.

o.         The advisability, costs, and barriers to adding additional information to State Public School Report Cards, including productivity measures, compensation of personnel, and value-added scores.

p.         The amount of school district resources used for advocacy, including funds paid to organizations that employ lobbyists and government relations personnel.

q.         The advisability, costs, potential savings, and barriers to privatization of local school administrative unit services, including food service, transportation, cleaning, landscaping, and resource officers.

r.          Strategies for measuring and strengthening academic achievement in middle schools.

(2)        Transition from high school. - It is a priority of the General Assembly that high school graduates enter the workforce or higher education fully prepared. To that end, the Committee shall study the following:

a.         Ways to reduce the need for remedial or developmental education in the State's higher education institutions so that students and the State do not pay repeatedly for the same education, including the following:

1.         Ensuring clear, rigorous secondary school standards, such as using college assessment tests in high school, including reviewing models in Florida and California, and using college assessment tests as entrance requirements for universities.

2.         Ways to hold high schools accountable for the higher education performance of their students, including requiring funding for developmental education to come from high schools.

3.         The most cost-effective way to provide remedial education in higher education, including funding summer term developmental courses at community colleges based on successful course completions, focusing remediation at the community colleges, and redirecting university appropriations for remedial education to the community colleges.

b.         The most efficient and effective way to provide opportunities for high school students to access higher education, including the following:

1.         Models of specific instructional pathways to higher education, including the following:

I.          A Career Technical Education Pathway (CTE), leading to a certificate or diploma aligned with one or more high school Tech Prep Career Clusters.

II.         A College Transfer Pathway leading to a college transfer certificate requiring successful completion of eight college transfer courses, including English and Mathematics.

III.       A school-specific pathway, including Learn and Earn schools, the iSchool of the University of North Carolina at Greensboro, and other Cooperative and Innovative High Schools approved under Part 9 of Article 16 of Chapter 115C of the General Statutes.

IV.       Other pathways, including the Governor's Proposed Career and College Promise Program.

2.         Revising statutes for high school students in higher education.

(3)        Higher education. - It is a priority of the General Assembly that the State's higher education system produce college graduates in the most efficient and effective manner possible, to improve productivity and public accountability for performance in postsecondary education, and ultimately to increase the educational level and earning potential of the State. To that end, the Committee shall study the following:

a.         A revised set of accountability measures and performance standards by which to evaluate and measure student progress and student success in the North Carolina Community College System, as described in Section 8.14 of this act, including how to incorporate these measures into formula funding.

b.         Ways to increase transparency in the university system spending and revenues.

c.         Other states' performance funding systems, including efforts in Ohio, Florida, and Washington.

d.         Ways to increase college graduation rates by funding based on performance.

e.         The impact of directing more students to the community colleges for their freshman and sophomore years of a four-year degree, including requiring a certificate of transfer from the North Carolina Community College System before transferring to The University of North Carolina System.

f.          Faculty class loads at the constituent institutions of the North Carolina Community College System and The University of North Carolina.

SECTION 7.1.(c)  In all cases, any program implemented needs to be structured so that ongoing, evaluable performance and outcome data is available.

SECTION 7.1.(d)  Funds appropriated to implement this section  may be used by the Committee to hire one or more external consultants to complete these studies.

 

FUNDS FOR CHILDREN WITH DISABILITIES

SECTION 7.2.  The State Board of Education shall allocate additional funds for children with disabilities on the basis of three thousand five hundred ninety-eight dollars and fifty-five cents ($3,598.55) 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 five-tenths percent (12.5%) of its 2011-2012 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 7.3.  The State Board of Education shall allocate additional funds for academically or intellectually gifted children on the basis of one thousand eighty-three dollars and fifty-two cents ($1,083.52) per child for fiscal year 2011-2012 and one thousand eighty-three dollars and twenty cents ($1,083.20) per child for fiscal year 2012-2013. A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2011-2012 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 7.4.(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 3-8 and children who are performing at Level I or II in grades 4 and 7.

SECTION 7.4.(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 7.4.(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 7.4.(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 7.4.(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 7.4.(f)  Minimum Effort Required. - Counties that had effective tax rates in the 1996-1997 fiscal year that were above the State average effective tax rate but that had effective rates below the State average in the 1997-1998 fiscal year or thereafter shall receive reduced funding under this section. This reduction in funding shall be determined by subtracting the amount that the county would have received pursuant to Section 17.1(g) of Chapter 507 of the 1995 Session Laws from the amount that the county would have received if qualified for full funding and multiplying the difference by ten percent (10%). This method of calculating reduced funding shall apply one time only. This method of calculating reduced funding shall not apply in cases in which the effective tax rate fell below the statewide average effective tax rate as a result of a reduction in the actual property tax rate. In these cases, the minimum effort required shall be calculated in accordance with Section 17.1(g) of Chapter 507 of the 1995 Session Laws. If the county documents that it has increased the per student appropriation to the school current expense fund in the current fiscal year, the State Board of Education shall include this additional per pupil appropriation when calculating minimum effort pursuant to Section 17.1(g) of Chapter 507 of the 1995 Session Laws.

SECTION 7.4.(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 2011-2013 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 the following 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 current expense appropriations per student for the three prior fiscal years; and

(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 this section.

SECTION 7.4.(h)  Reports. - The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to May 1, 2012, if it determines that counties have supplanted funds.

SECTION 7.4.(i)  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.

 

LITIGATION RESERVE FUNDS

SECTION 7.5.  The State Board of Education may expend up to five hundred thousand dollars ($500,000) each year for the 2011-2012 and 2012-2013 fiscal years from unexpended funds for certified employees' salaries to pay expenses related to litigation.

 

UNIFORM EDUCATION REPORTING SYSTEM (UERS) FUNDS

SECTION 7.6.(a)  Funds appropriated for the Uniform Education Reporting System shall not revert at the end of the 2010-2011 fiscal year.

SECTION 7.6.(b)  This section becomes effective June 30, 2011.

 

FOCUSED EDUCATION REFORM PROGRAM FUNDS DO NOT REVERT

SECTION 7.7.(a)  Funds appropriated for the Focused Education Reform Pilot Program that are unexpended and unencumbered at the end of the 2010-2011 fiscal year shall not revert but shall remain available for expenditure for that purpose through the 2011-2012 fiscal year.

SECTION 7.7.(b)  This section becomes effective June 30, 2011.

 

DISADVANTAGED STUDENT SUPPLEMENTAL FUNDING (DSSF)

SECTION 7.8.(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 districts receiving funding under the Disadvantaged Student Supplemental Fund to purchase the Education Value Added Assessment System 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 7.8.(b)  Funds appropriated to a local school administrative unit for disadvantaged student supplemental funding shall be allotted based on (i) the local school administrative 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 LEAs receiving DSSF funds in 2005-2006, a ratio of 1:16. These LEAs shall receive no less than the DSSF amount allotted in 2006-2007.

For the purpose of this subsection, wealth shall be calculated under the low-wealth supplemental formula.

SECTION 7.8.(c)  If a local school administrative unit's wealth increases to a level that adversely affects the unit's DSSF allotment ratio, the DSSF allotment for that unit shall be maintained at the prior year level for one additional fiscal year.

 

tuition charge for governor's school

SECTION 7.9.  G.S. 115C-12(36) reads as rewritten:

"(36)    Duty to Charge Tuition for the Governor's School of North Carolina. - The State Board of Education shall may implement a five-hundred-dollar ($500.00) tuition charge for students attending the Governor's School of North Carolina.Carolina to cover the costs of the School."

 

school connectivity initiative funds

SECTION 7.10.(a)  Section 7.9(b) of S.L. 2010-31 reads as rewritten:

"SECTION 7.9.(b)  Up to three hundred fifty thousand dollars ($350,000) of the funds for the School Connectivity Initiative may be used for this and subsequent fiscal years the 2010-2011 fiscal year by the Office of the Governor for education innovation and the education E-learning portal. These funds may be used to provide services to coordinate e-learning activities across all education agencies and to support the operating of the E-learning portal."

SECTION 7.10.(b)  Section 7.6(a) of S.L. 2008-107, as rewritten by Section 7.12(b) of S.L. 2009-451, reads as rewritten:

"SECTION 7.6.(a)  Up to three hundred thousand dollars ($300,000) may be transferred annually through June 30, 2013, 2011, to the Friday Institute at North Carolina State University to evaluate the effectiveness of using technology and its impact on 21st Century Teaching and Learning outcomes approved by the State Board of Education. The Friday Institute shall report annually to the State Board of Education on the evaluation results."

 

textbooks

SECTION 7.11.  The State Board of Education shall not adopt any new textbooks prior to July 1, 2013.

 

SMALL SCHOOL SYSTEM SUPPLEMENTAL FUNDING

SECTION 7.12.(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 (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 3,175 to 4,000 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 seven hundred seventeen thousand three hundred sixty dollars ($717,360), excluding textbooks, for the 2011-2012 fiscal year and a base of seven hundred seventeen thousand three hundred sixty dollars ($717,360) for the 2012-2013 fiscal year.

(6)        Allot vocational education funds for grade 6 as well as for grades 7-12. 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 7.12.(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 2011-2013 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 the following 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 current expense appropriations per student for the three prior fiscal years; and

(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 this section.

SECTION 7.12.(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 seven years after the unit becomes ineligible.

SECTION 7.12.(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 7.12.(e)  Reports. - The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to May 1, 2012, if it determines that counties have supplanted funds.

SECTION 7.12.(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 3-8.

 

ELIMINATION OF REPORTING REQUIREMENTS

SECTION 7.13.(a)  G.S. 115C-47(32a) reads as rewritten:

"(32a)   To Establish Alternative Learning Programs and Develop Policies and Guidelines. - Each local board of education shall establish at least one alternative learning program and shall adopt guidelines for assigning students to alternative learning programs. These guidelines shall include (i) a description of the programs and services to be provided, (ii) a process for ensuring that an assignment is appropriate for the student and that the student's parents are involved in the decision, and (iii) strategies for providing alternative learning programs, when feasible and appropriate, for students who are subject to long term suspension or expulsion. In developing these guidelines, local boards shall consider the State Board's standards developed under G.S. 115C-12(24). Upon adoption of policies and guidelines under this subdivision, local boards are encouraged to incorporate them in their safe school plans developed under G.S. 115C-105.47.

The General Assembly urges local boards to adopt policies that prohibit superintendents from assigning to any alternative learning program any professional public school employee who has received within the last three years a rating on a formal evaluation that is less than above standard.

Notwithstanding this subdivision, each local board shall adopt policies based on the State Board's standards developed under G.S. 115C-12(24). These policies shall apply to any new alternative learning program or alternative school that is implemented beginning with the 2006-2007 school year. Local boards of education are encouraged to apply these standards to alternative learning programs and alternative schools implemented before the 2006-2007 school year.

Local boards shall assess on a regular basis whether the unit's alternative schools and alternative learning programs comply with the State Board's standards developed under G.S. 115C-12(24) and whether they incorporate best practices for improving student academic performance and reducing disruptive behavior, are staffed with professional public school employees who are well trained and provided with appropriate staff development, are organized to provide coordinated services, and provide students with high quality and rigorous academic instruction."

SECTION 7.13.(b)  G.S. 115C-105.27(b)(2) reads as rewritten:

"(2)      Shall include a plan to address school safety and discipline concerns in accordance with the safe school plan developed under Article 8C of this Chapter;concerns."

SECTION 7.13.(c)  G.S. 115C-105.46 reads as rewritten:

"§ 115C-105.46.  State Board of Education responsibilities.

In order to implement this Article, the State Board of Education:

(1)        Shall adopt guidelines for developing local plans under G.S. 115C-105.47.

(2)        Shall provide, in cooperation with the Board of Governors of The University of North Carolina, ongoing technical assistance to the local school administrative units in the development, implementation, and evaluation of their local plans under G.S. 115C-105.47.

(3)        May require a local board of education to withhold the salary of any administrator or other employee of a local school administrative unit who delays or refuses to prepare and implement local safe school plans in accordance with G.S. 115C-105.47.

(4)        May revoke the certificate of the superintendent, pursuant to G.S. 115C-274(c), for failure to fulfill the superintendent's duties under a local safe school plan.

(5)        Shall adopt policies that define who is an at-risk student."

SECTION 7.13.(d)  G.S. 115C-105.47 is repealed.

SECTION 7.13.(e)  G.S. 115C-102.6C is repealed.

SECTION 7.13.(f)  G.S. 115C-102.6D(d) is repealed.

SECTION 7.13.(g)  G.S. 115C-102.7 reads as rewritten:

"§ 115C-102.7.  Monitoring and evaluation of State and local school system technology plans; reports.

(a)        The Department of Public Instruction shall monitor and evaluate the development and implementation of the State and local school system technology plans. technology plan. The evaluation shall consider the effects of technology on student learning, the effects of technology on students' workforce readiness, the effects of technology on teacher productivity, and the cost-effectiveness of the technology.

(a1)      Repealed by Session Laws 1997-18, s. 15(k).

(b)        Repealed by Session Laws 2009-451, s. 7.31, effective July 1, 2009.

(c)        The Department of Public Instruction shall randomly check local school system technology plans to ensure that local school administrative units are implementing their plans as approved. The Department shall report to the State Board of Education on which local school administrative units are not complying with their plans. The report shall include the reasons these local school administrative units are out of compliance and a recommended plan of action to support each of these local school administrative units in carrying out their plans."

SECTION 7.13.(h)  Section 7.61(b) of S.L. 2005-276, as rewritten by Section 7.22(d) of S.L. 2010-31, is repealed.

 

allotment of principals

SECTION 7.14.(a)  A school with less than 100 students in final average daily membership is not entitled to 12 months of employment for a principal.

SECTION 7.14.(b)  This section applies only to schools created after July 1, 2011.

 

Transfer of Federal Agricultural Education Funds

SECTION 7.15.  The Agricultural Education Program in the Department of Agricultural and Extension Education at North Carolina State University shall develop the secondary agricultural education curricula.  The Program shall recommend the curricula and corresponding assessment instruments to the State Board of Education, which shall adopt the curricula for inclusion in the Standard Course of Study.  This curricula shall include as part of its core content the Future Farmers of America (FFA) student youth organization and the Supervised Agricultural Experience learning program.

Effective with the 2011 federal grant, the State Board of Education shall transfer a prorated share of funds from all federal Career and Technical Education funds available for State-level usage to the Agricultural Education and FFA Program housed in the Department of Agricultural and Extension at North Carolina State University. The transfer of funds shall be a percentage of the total based upon the grades 9-12 duplicated agricultural education enrollment as compared to the total career and technical education grades 9-12 duplicated enrollment. These funds shall be used to support the secondary Agricultural Education Program State-level administration, leadership, curriculum and professional development, operations, innovations and expansions, and the FFA and the Supervised Agricultural Education learning program.

 

GEOGRAPHICALLY ISOLATED SCHOOLS

SECTION 7.16.  Notwithstanding any other provision of this act, there shall be no reduction in funding for additional teacher positions at geographically isolated schools as defined by section 7.26 of S.L. 2009-451.  The recurring reduction for instructional support shall be increased by one hundred ninety-two thousand thirty-five dollars ($192,035) recurring for fiscal year 2011-2012 and four hundred eleven thousand five hundred and three dollars ($411,503) for fiscal year 2012-2013.

 

school calendar pilot program

SECTION 7.17.  The State Board of Education shall establish a school calendar pilot program in the Wilkes County Schools and the Stanly County Schools. The purpose of the pilot program is to determine whether and to what extent a local school administrative unit can save money during this extreme fiscal crisis by consolidating the school calendar.

Notwithstanding G.S. 115C-84.2(a)(1), the school calendar for the 2011-2012 calendar year for the pilot school systems shall include a minimum of 180 days or 1,000 hours of instruction covering at least nine calendar months. Notwithstanding G.S. 115C-84.2(d), the opening date for students may be before August 25.

If the local board of education in a pilot school system adds instructional hours to previously scheduled days under this section, the local school administrative unit is deemed to have a minimum of 180 days of instruction, and teachers employed for a 10-month term are deemed to have been employed for the days being made up and shall be compensated as if they had worked the days being made up.

The State Board of Education shall report to the Joint Legislative Education Oversight Committee by March 15, 2012, on the administration of the pilot program, cost-savings realized by it, and its impact on student achievement.

 

Performance Pay model program

SECTION 7.18.  The State Board of Education shall establish a performance pay model program. A local school administrative unit that is approved by the State Board of Education as a performance pay model unit may use State funds, except for funds allotted for salaries, to implement a performance pay model.

 

budget reductions/department of public instruction

SECTION 7.19.(a)  Notwithstanding G.S. 143C-6-4 or Section 7.14 of S.L. 2009-451, 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. This 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. The Department shall report to the Joint Legislative Commission on Governmental Operations on any reorganization.

SECTION 7.19.(b)  The Department of Public Instruction shall not increase the number of State-funded positions in any Department of Public Instruction divisions identified for reductions in this act.

SECTION 7.19.(c)  In implementing budget reductions under this act, the Department of Public Instruction shall make no reduction in funding or positions for the Positive Behavioral Support program.

 

LEA Budget Adjustment

SECTION 7.20.(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 7.20.(b)  Each unit or charter school shall report to the Department of Public Instruction on the flexibility budget reductions it has identified for the unit within 30 days of the date this act becomes law.

 

LEA Budgetary Flexibility

SECTION 7.21.(a)  For fiscal years 2011-2012 and 2012-2013, the State Board of Education is authorized to extend its emergency rules, in accordance with G.S. 150B-21.1A, granting maximum flexibility to local school administrative units regarding the expenditure of State funds. These rules shall not be subject to the limitations on transfers of funds between funding allotment categories set out in G.S. 115C-105.25. These rules shall not permit the transfer of funds into central office administration.

SECTION 7.21.(b)  For fiscal years 2011-2012 and 2012-2013, local school administrative units shall make every effort to reduce spending whenever and wherever such budget reductions are appropriate with the goal of protecting direct classroom services, such as classroom teachers and teacher assistants. In making reductions, local school administrative units shall first consider reductions to central office administration and other administrative functions. Notwithstanding G.S. 115C-301 or any other law, local school administrative units shall have the maximum flexibility to use allotted teacher positions to maximize student achievement in grades 4-12. Allocation of teachers and class size requirements in grades K-3 shall remain unchanged.

 

NORTH CAROLINA VIRTUAL PUBLIC SCHOOLS

SECTION 7.22.(a)  The North Carolina Virtual Public School (NCVPS) program shall report to the State Board of Education and shall maintain an administrative office at the Department of Public Instruction.

SECTION 7.22.(b)  The Director of NCVPS shall ensure that students residing in rural and low-wealth county local school administrative units have access to e-learning course offerings in order to expand available instructional opportunities. E-learning instructional opportunities shall include courses required as part of the standard course of study for high school graduation and AP offerings not otherwise available.

SECTION 7.22.(c)  Section 7.4 of S.L. 2010-31 is repealed.

SECTION 7.22.(d)  The State Board of Education shall take the following steps to implement an allotment formula for NCVPS beginning with the 2011-2012 school year:

(1)        Project NCVPS student enrollment by semester and year-long course types for each local school administrative unit and charter school.

(2)        Establish a per course teacher payment structure for the instructional costs of NCVPS. In establishing this payment structure, the Board shall consider the following:

a.         The payment structure is based on a total compensation analysis to ensure NCVPS teacher pay has parity with similar programs. The total compensation analysis shall take into account salaries, benefits, and work effort to ensure valid comparisons between occupations.

b.         The effects any change in NCVPS teacher payments may have on the attraction and retention of NCVPS teachers.

(3)        Develop a per student fee structure for in-State students that is based on the per course teacher pay structure. The fee structure for in-State students shall ensure that the projected cost for local school administrative units and charter schools equals the projected instructional cost for NCVPS courses.

(4)        Multiply the per course fees for in-State students by the projected enrollment by course type to determine the total instructional cost for each local school administrative unit and charter school.

(5)        Transfer a dollar amount equal to seventy-five percent (75%) of the local school administrative unit's or charter school's projected instructional cost from the classroom teacher allotment to NCVPS.

(6)        No later than February 21 of each year, calculate the actual instructional cost for each local school administrative unit and charter school based upon actual NCVPS enrollment as of that date.

(7)        Subtract the amount transferred pursuant to subdivision (5) of this subsection from the actual instructional cost for each unit or charter school and transfer the remaining dollar amount owed, up to a maximum of one hundred percent (100%) of the projected cost.

(8)        Develop and implement a policy regarding returning funds to local school administrative units and charter schools in cases where the amount transferred pursuant to subdivision (5) of this subsection exceeds the actual instructional costs.

NCVPS shall use funds transferred to it to provide the NCVPS program at no cost to all students in North Carolina who are enrolled in North Carolina's public schools, Department of Defense schools, and schools operated by the Bureau of Indian Affairs.

SECTION 7.22.(e)  In establishing the fee structure and payment structure for NCVPS, the State Board shall consider recommendations from the eLearning Commission and the NCVPS Advisory Board.

SECTION 7.22.(f)  The State Board shall establish a separate per student tuition for out-of-state students, home-schooled students, and private school students, which shall be adjusted upward from the in-State student fee structure by an amount determined appropriate by the State Board.

SECTION 7.22.(g)  NCVPS shall develop a revenue-generating plan for the sale of courses to out-of-state educational entities. NCVPS shall submit its plan to the State Board by September 1, 2011.

SECTION 7.22.(h)  Beginning in 2011, the Director of NCVPS shall submit an annual report on NCVPS to the State Board of Education no later than December 1 of each year. The report shall use data from the previous fiscal year and shall include statistics on actual versus projected costs to local administrative units and charter schools, student enrollment, virtual teacher salaries, and measures of academic achievement.

The Director of NCVPS shall continue to ensure the following:

(1)        Course quality standards are established and met.

(2)        All e-learning opportunities other than virtual charter schools offered by State-funded entities to public school students are consolidated under the NCVPS program, eliminating course duplication.

(3)        All courses offered through NCVPS are aligned to the North Carolina Standard Course of Study.

SECTION 7.22.(i)  The State Board of Education shall reduce ADM dollar allotments on the basis of ADM in grades 6-12 to provide the sum of two million eight hundred sixty-six thousand nine hundred twenty-three dollars ($2,866,923) for the State-level operations and administration of NCVPS for the 2011-2012 fiscal year.  The reduction to ADM dollar allotments for State-level operations and administration shall continue in future fiscal years and be adjusted annually based upon the percentage growth in NCVPS enrollment, ensuring the expansion of services due to increased virtual student enrollment.

SECTION 7.22.(j)  For fiscal year 2011-2012, the State Board of Education shall reduce ADM dollar allotments on the basis of ADM in grades 6-12 to provide the sum of two million dollars ($2,000,000) in order to create an NCVPS enrollment reserve.  The NCVPS enrollment reserve shall be used to cover the NCVPS instructional costs of local school administrative units or charter schools with enrollments exceeding projected NCVPS enrollment.

Beginning in fiscal year 2012-2013, and annually thereafter, the State Board of Education shall reduce ADM dollar allotments on the basis of ADM in grades 6-12 an amount that is the difference between two million dollars ($2,000,000) and the balance of the NCVPS enrollment reserve.

Amounts available in the NCVPS enrollment reserve shall not revert.

SECTION 7.22.(k)  The State Board shall use only funds provided through the North Carolina Virtual Public Schools Allotment Formula and the NCVPS enrollment reserve as set forth in this section to fund instructional costs of NCVPS.

 

Performance-Based Reductions in Force

SECTION 7.23.(a)  The State Board of Education shall adopt a Reduction in Force policy that is consistent across all local school administrative units. Under the policy, the following criteria shall apply to local school administrative units conducting any necessary reductions in force:

(1)        In determining which positions shall be subject to a reduction in force, a local school administrative unit shall consider the following:

a.         Structural considerations, such as identifying positions, departments, courses, programs, operations, and other areas where there are (i) less essential, duplicative, or excess personnel; (ii) job responsibility and/or position inefficiencies; (iii) opportunities for combined work functions; and/or (iv) decreased student or other demands for curriculum, programs, operations, or other services.

b.         Organizational considerations, such as anticipated organizational needs of the school system and program/school enrollment.

(2)        In determining which employees in similar positions shall be subject to a reduction in force, a local school administrative unit shall consider work performance.

The State Board of Education shall have this policy in place on or before July 15, 2011.

SECTION 7.23.(b)  G.S. 115C-325(e)(2) reads as rewritten:

"(2)      Reduction in Force. - Before recommending to a board the dismissal or demotion of the career employee pursuant to G.S. 115C-325(e)(1)l., the superintendent shall give written notice to the career employee by certified mail or personal delivery of his intention to make such recommendation and shall set forth as part of his recommendation the grounds upon which he believes such dismissal or demotion is justified. The notice shall include a statement to the effect that if the career employee within 15 days after receipt of the notice requests a review, he shall be entitled to have the proposed recommendations of the superintendent reviewed by the board. Within the 15-day period after receipt of the notice, the career employee may file with the superintendent a written request for a hearing before the board within 10 days. If the career employee requests a hearing before the board, the hearing procedures provided in G.S. 115C-325(j3) shall be followed. If no request is made within the 15-day period, the superintendent may file his recommendation with the board. If, after considering the recommendation of the superintendent and the evidence adduced at the hearing if there is one, the board concludes that the grounds for the recommendation are true and substantiated by a preponderance of the evidence, the board, if it sees fit, may by resolution order such dismissal. Provisions of this section which permit a hearing by a case manager shall not apply to a dismissal or demotion recommended pursuant to G.S. 115C-325(e)(1)l.

When a career employee is dismissed pursuant to G.S. 115C-325(e)(1)l. above, his name shall be placed on a list of available career employees to be maintained by the board. Career employees whose names are placed on such a list shall have a priority on all positions in which they acquired career status and for which they are qualified which become available in that system for the three consecutive years succeeding their dismissal. However, if the local school administrative unit offers the dismissed career employee a position for which he is certified and he refuses it, his name shall be removed from the priority list."

 

Teaching Fellows Administrative Reduction

SECTION 7.24.  G.S. 115C-363.23A(f) reads as rewritten:

"§ 115C-363.23A.  Teaching Fellows Program established; administration.

(f)         All funds appropriated to or otherwise received by the Teaching Fellows Program for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds, shall be placed in a revolving fund. This revolving fund shall be used for scholarship loans granted under the Teaching Fellows Program. With the prior approval of the General Assembly in the Current Operations Appropriations Act, the revolving fund may also be used for campus and summer program support, and costs related to disbursement of awards and collection of loan repayments.

The Public School Forum, as administrator for the Teaching Fellows Program, may use up to eight hundred ten thousand dollars ($810,000)six hundred thousand dollars ($600,000) annually from the fund balance for costs associated with administration of the Teaching Fellows Program."

 

Residential Schools

SECTION 7.25.(a)  Notwithstanding any other provision of this act, the Department of Public Instruction shall not close the Governor Morehead School for the Blind, the Eastern North Carolina School for the Deaf, or the North Carolina School for the Deaf (the "residential schools") nor consolidate all operations of any of the residential schools on the campus of another residential school until an enactment of the General Assembly instructs the Department to do so.

SECTION 7.25.(b)  The Department of Public Instruction shall ensure that the residential and instructional schedules for the residential schools that were in effect before February 8, 2010, shall remain in effect unless the General Assembly approves a material change to the instructional week. Residential students shall have the opportunity to arrive at their respective schools on the evening of the day before commencement of academic instruction for the week.  The Department shall also maintain summer school programming at the residential schools in substantially the same manner as in prior years and shall make no material changes to summer school programming without the approval of the General Assembly.

SECTION 7.25.(c)  The Department of Public Instruction may create a principal position at each residential school not currently assigned a principal position from funds appropriated in this act for the residential schools.

SECTION 7.25.(d)  The position of superintendent for the residential schools within the Department of Public Instruction is eliminated. The Department shall designate one of the directors of the residential schools to serve as the superintendent for the residential schools. Of funds previously appropriated to the Department for the position of superintendent for the residential schools, the sum of twenty thousand dollars ($20,000) shall be used to supplement the salary of the director who also serves as superintendent of residential schools. The remaining funds shall be used to offset other reductions to the residential schools made in this act.

 

Sixty­FIVE Percent OF SCHOOL FUNDING MUST BE USED FOR CLASSROOM INSTRUCTION

SECTION 7.26.(a)  Article 30 of Chapter 115C of the General Statutes is amended by adding a new section to read:

"§ 115C-408.1.  Duty to ensure that sixty-five percent of State funds for the operations of the public schools are used for classroom instruction.

Notwithstanding any other provision of law, the State Board of Education shall modify its allotment formulas, modify its rules regarding the expenditure of State funds, and transfer funds, as necessary, to ensure that each local administrative unit spends on classroom instruction at least sixty-five percent (65%) of the State funding it receives for the operations of the public schools. The State Board of Education shall adopt rules utilizing the existing purpose codes that are associated with instructional expenditures to implement this section."

SECTION 7.26.(b)  This section applies to expenditures for school years beginning with the 2012-2013 school year.

 

PART VIII. Community Colleges

 

REORGANIZATION OF THE COMMUNITY COLLEGES SYSTEM OFFICE

SECTION 8.1.(a)  Notwithstanding any other provision of law, and consistent with the authority granted 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 8.1.(b)  This section expires June 30, 2012.

 

REPEAL obsolete REPORTing requirementS

SECTION 8.2.(a)  G.S. 115D-4.1(e) reads as rewritten:

"(e)       The State Board of Community Colleges shall develop appropriate criteria and standards to regulate the operation of college transfer programs. The criteria and standards shall require all college transfer programs to continue to meet the accreditation standards of the Southern Association of Colleges and Schools.

The State Board of Community Colleges shall report annually to the General Assembly on compliance of the community colleges with these criteria and standards."

SECTION 8.2.(b)  G.S. 115D-5(j) reads as rewritten:

"(j)       The State Board of Community Colleges shall use its Board Reserve Fund for feasibility studies, pilot projects, start-up of new programs, and innovative ideas. The State Board shall report to the Joint Legislative Education Oversight Committee on expenditures from the State Board Reserve Fund on January 15 and June 15 each year."

 

IMPLEMENT ALTERNATIVE FORMULA MODEL

SECTION 8.3.(a)  The State Board of Community Colleges shall consolidate the Health Sciences Allotment, the Technical Education Allotment, and the Special High Cost Allotment for Heavy Equipment with formula funds to support curriculum instruction.

SECTION 8.3.(b)  The State Board of Community Colleges shall allocate formula funds appropriated to support curriculum instruction and the occupational education component of continuing education through a formula that provides an instructional base allocation to all colleges and allocates remaining funds on a weighted full-time equivalent (FTE) basis. In determining the appropriate weighting, the State Board of Community Colleges shall weigh curriculum courses in high-cost areas such as health care, technical education, and lab-based science courses more heavily than other curriculum courses. The State Board of Community Colleges shall also weigh continuing education courses that lead to a third-party credential or certification and courses providing an industry-designed curriculum more heavily than other occupational extension courses.

 

USE OF OVERREALIZED RECEIPTS TO SUPPORT ENROLLMENT GROWTH RESERVE RATHER THAN EQUIPMENT RESERVE

SECTION 8.4.  G.S. 115D-31(e) reads as rewritten:

"(e)       If receipts for community college tuition and fees exceed the amount certified in General Fund Codes at the end of a fiscal year, the State Board of Community Colleges shall transfer the amount of receipts and fees above those budgeted to the Equipment Reserve Fund.Enrollment Growth Reserve. Funds in the Enrollment Growth Reserve shall not revert to the General Fund and shall remain available to the State Board until expended. The State Board may allocate funds in this reserve to colleges experiencing an enrollment increase greater than five percent (5%) of budgeted enrollment levels."

 

BASIC SKILLS PLUS

SECTION 8.5.(a)  Notwithstanding any other provision of law, the State Board 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 8.5.(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.

 

CARRYFORWARD OF COLLEGE INFORMATION SYSTEM FUNDS

SECTION 8.6.  Of the funds appropriated to the Community Colleges System Office for the 2011-2013 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.

 

EQUIPMENT FUNDING

SECTION 8.8.(a)  For the 2011-2013 fiscal biennium, community colleges may expend regular equipment allocations on equipment, repairs and renovations of existing facilities, and new construction.  Colleges must match funds expended on new construction on an equal matching-fund basis in accordance with G.S. 115D-31.  Notwithstanding any other provision of law, community colleges are not required to match funds expended on repairs and renovations of existing facilities.

Colleges must have capital improvement projects approved by the State Board of Community Colleges and any required matching funds identified by June 30, 2013.

SECTION 8.8.(b)  Of the funds appropriated to the Community Colleges System Office for the 2011-2012 fiscal year for equipment, the State Board of Community Colleges shall allocate the sum of two hundred fifty thousand dollars ($250,000) to Forsyth Technical Community College.  These funds shall be used only for the purpose of building and equipping the Stokes County multicampus site.  These funds shall not be considered for a management flexibility reduction.

 

CLARIFICATION REGARDING EQUIPMENT TITLED TO STATE BOARD

SECTION 8.9.  G.S. 115D-15(a) reads as rewritten:

"(a)       The board of trustees of any institution organized under this Chapter may, with the prior approval of the North Carolina Community Colleges System Office, convey a right-of-way or easement for highway construction or for utility installations or modifications. When in the opinion of the board of trustees the use of any other real property owned or held by the board of trustees is unnecessary or undesirable for the purposes of the institution, the board of trustees, subject to prior approval of the State Board of Community Colleges, may sell, exchange, or lease the property. The board of trustees may dispose of any personal property owned or held by the board of trustees without approval of the State Board of Community Colleges. Personal property titled to the State Board of Community Colleges consistent with G.S. 115D-14 and G.S. 115D-58.5 may be transferred to another community college at no cost and without the approval of the Department of Administration, Division of Surplus Property.

Article 12 of Chapter 160A of the General Statutes shall apply to the disposal or sale of any real or personal property under this subsection. Personal property also may be disposed of under procedures adopted by the North Carolina Department of Administration. The proceeds of any sale or lease shall be used for capital outlay purposes, except as provided in subsection (b) of this section."

 

NO STATE FUNDS FOR INTERCOLLEGIATE ATHLETICS

SECTION 8.10.  Article 3 of Chapter 115D of the General Statutes is amended by adding a new section to read:

"§ 115D-42.1.  Funds for an intercollegiate athletics program.

No State funds, student tuition receipts, or student aid funds shall be used to create, support, maintain, or operate an intercollegiate athletics program at a community college."

 

MANAGEMENT FLEXIBILITY REDUCTION/COMMUNITY COLLEGES

SECTION 8.11.  The management flexibility reduction for the North Carolina Community College System shall be allocated by the State Board of Community Colleges in a manner that accounts for the unique needs of each college and provides for the equitable distribution of funds to the institutions consistent with G.S. 115D-5(a). Before taking reductions to instructional budgets, the community colleges shall consider reducing budgets for senior and middle management personnel and for programs that have both low enrollment and low postgraduate success. Colleges may, however, reduce funds from basic skills, curriculum, and continuing education programs. Colleges shall minimize the impact on student support services and on the retraining of dislocated workers. The community colleges shall also review their institutional funds to determine whether there are monies available in those funds that can be used to assist with operating costs before taking reductions in instructional budgets.

There shall be no reduction in funds allocated to Rowan-Cabarrus Community College for the Biotechnology Training Center at the North Carolina Research Campus.

 

community college tuition waivers

SECTION 8.12.(a)  G.S. 115D-5(b) reads as rewritten:

"(b)      In order to make instruction as accessible as possible to all citizens, the teaching of curricular courses and of noncurricular extension courses at convenient locations away from institution campuses as well as on campuses is authorized and shall be encouraged. A pro rata portion of the established regular tuition rate charged a full-time student shall be charged a part-time student taking any curriculum course. In lieu of any tuition charge, the State Board of Community Colleges shall establish a uniform registration fee, or a schedule of uniform registration fees, to be charged students enrolling in extension courses for which instruction is financed primarily from State funds. The State Board of Community Colleges may provide by general and uniform regulations for waiver of tuition and registration fees for:for the following:

(1)        Persons not enrolled in elementary or secondary schools taking courses leading to a high school diploma or equivalent certificate;certificate.

(2)        Training courses forCourses requested for the training of personnel by the following:

a.         (i) volunteer firemen,Volunteer fire departments.

b.         (ii) local fire department personnel, Municipal, county, or State fire departments.

c.         (iii) volunteer rescue and lifesaving department personnel,Volunteer EMS or rescue and lifesaving departments.

d.         (iv) local rescue and lifesaving department personnel, Municipal, county, or State EMS or rescue and lifesaving departments.

e.         (v) Radio Emergency Associated Citizens Team (REACT) members when the REACT team is under contract to a county as an emergency response agency, (vi) municipal, county, or State law-enforcement officers,Municipal, county, or State law enforcement agencies.

f.          (vii) all full-time custodial employees of the Department of Correction, and The Department of Correction for the training of full time custodial employees and employees of the Department's Division of Community Corrections required to be certified under Chapter 17C of the General Statutes and the rules of the Criminal Justice and Training Standards Commission.

g.         (viii) employees of the Department's Division of Community Corrections and employees of the The Department of Juvenile Justice and Delinquency Prevention for the training of employees required to be certified under Chapter 17C of the General Statutes and the rules of the Criminal Justice and Training Standards Commission;Commission.

(3)        Patients in State alcoholic rehabilitation centers;

(4)        Trainees enrolled in courses conducted under the Customized Training Program;Program.

(5)        Clients of sheltered workshops;

(6)        Clients of adult developmental activity programs;

(7)        Students in Health and Human Services Development Programs;

(8)        Juveniles of any age committed to the Department of Juvenile Justice and Delinquency Prevention by a court of competent jurisdiction;

(9)        Members of the North Carolina State Defense Militia as defined in G.S. 127A-5 and as administered under Article 5 of Chapter 127A of the General Statutes;

(10)      Elementary and secondary school employees enrolled in courses in first aid or cardiopulmonary resuscitation (CPR);(CPR).

(11)      Up to six hours of credit instruction and one course of noncredit instruction per academic semester for senior citizens age 65 or older who are qualified as legal residents of North Carolina;Carolina.

(12)      All curriculum courses taken by high school students at community colleges, including students in early college and middle college high school programs, in accordance with G.S. 115D-20(4) and this section;section.

(13)      Human resources development courses for any individual who (i) is unemployed; (ii) has received notification of a pending layoff; (iii) is working and is eligible for the Federal Earned Income Tax Credit (FEITC); or (iv) is working and earning wages at or below two hundred percent (200%) of the federal poverty guidelines; andguidelines.

(14)      Prison inmates.

The State Board of Community Colleges shall not waive tuition and registration fees for other individuals."

SECTION 8.12.(b)  G.S. 115D-5 is amended by adding a new subsection to read:

"(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."

SECTION 8.12.(c)  The Community Colleges System Office shall transfer funds appropriated for curriculum and continuing education instruction to the Department of Correction.  The Department of Correction shall use these funds to pay tuition and fees for prisoners.

The amount transferred shall be calculated by multiplying the number of curriculum and continuing education FTE served in prisons in the 2010-2011 fiscal year by the per capita budgeted receipts for curriculum and continuing education.

This section is projected to result in a reduction of up to forty-three percent (43%) reduction in the number of curriculum and continuing education courses provided to prisoners.

 

funding for multicampus centers

SECTION 8.13.  G.S. 115D-5(o) reads as rewritten:

"(o)      The General Assembly finds that additional data are needed to determine the adequacy of multicampus and off-campus center funds; therefore, multicampus colleges and colleges with off-campus centers shall report annually, beginning September 1, 2005, to the Community Colleges System Office on all expenditures by line item of funds used to support their multicampuses and off-campus centers. The Community Colleges System Office shall report on these expenditures to the Education Appropriation Subcommittees of the House of Representatives and the Senate, the Office of State Budget and Management, and the Fiscal Research Division by December 1 of each year.

All multicampus centers approved by the State Board of Community Colleges shall receive funding under the same formula. The State Board of Community Colleges shall not approve any additional multicampus centers without identified recurring sources of funding."

 

STUDY COMMUNITY COLLEGE PERFORMANCE MEASURES

SECTION 8.14.  The State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee by March 1, 2012, on a revised set of accountability measures and performance standards by which to evaluate and measure student progress and student success, including measures of graduation rates and course completions.  The report shall include a plan to incorporate these revised accountability measures and performance standards into regular formula funding.  These revised accountability measures and performance standards shall also be the basis for the allocation of performance funding, in accordance with G.S. 115D-31.3(g) and (h).

 

Community College Audits

SECTION 8.15.  Article 4A of Chapter 115D of the General Statutes is amended by adding a new section to read:

"§ 115D-58.16.  Audits.

(a)        Each community college shall be audited 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."

 

enrollment growth

SECTION 8.16.(a)  It is the intent of the General Assembly to ensure that there is an increase in funding for community college technology and equipment when enrollment increases; therefore, the continuation budget requirements proposed by the Director of the Budget in accordance with G.S. 143C-3-5 to fund the community college enrollment growth shall include adjustments necessary to fund additional equipment FTE at the prior year's rate.

SECTION 8.16.(b)  Beginning with any adjustments to the 2011-2012 fiscal year budget, and annually thereafter, the State Board of Community Colleges' requests for funding enrollment growth shall provide a detailed description of the costs of educating community college students. This request shall be based on the current year's enrollment, listed by college and aggregated for the system as a whole.

SECTION 8.16.(c)  Enrollment requests shall include the following information for each community college:

(1)        The budgeted enrollment for the current year, divided between the categories of instruction: curriculum, continuing education, and Basic Skills.

(2)        The budgeted enrollment for the current year, divided between tiers of instruction, as set forth in Section 8.3 of this act.

(3)        The actual enrollment for the two years prior to the current year.

(4)        A five-year enrollment projection at each community college by category and tier of instruction.

(5)        The projected requirements and anticipated tuition receipts for the growth in regular-term enrollment.

(6)        The costs per FTE in each category and tier of instruction, to include the following component parts:

a.         Instructional costs, including faculty salaries and other costs.

b.         Student support services and other college administrative costs.

 

limitation on community college tuition

SECTION 8.17.  Notwithstanding G.S. 115D-5 or G.S. 115D-39, the tuition for community college curriculum courses and the fees for community college continuing education courses for the 2011-2013 fiscal biennium shall not exceed the amounts provided for in this act.

 

PART IX. Universities

 

Center for public television continuation review

SECTION 9.1.(a)  A continuation review of the Center for Public Television shall be prepared jointly by The University of North Carolina General Administration and The University of North Carolina Center for Public Television. The review shall be submitted to the House of Representatives and Senate Appropriations Subcommittees on Education no later than March 31, 2012. The written report shall include the information listed in subsection (b) of this section.

SECTION 9.1.(b)  The continuation review required by this section shall include all of the following information:

(1)        A description of the services provided by the Center for Public Television and its mission, goals, and objectives.

(2)        The program's statutory objectives and the problem or need addressed.

(3)        The extent to which the program's objectives have been achieved.

(4)        The program's functions or programs performed without specific statutory authority.

(5)        The program's performance measures and the process by which the performance measures determine efficiency and effectiveness.

(6)        Recommendations for statutory, budgetary, or administrative changes needed to improve efficiency and effectiveness of services delivered to the public.

(7)        The consequences of discontinuing funding.

(8)        Recommendations for improving services or reducing costs or duplication.

(9)        The identification of policy issues that should be brought to the attention of the General Assembly.

(10)      Any other information necessary to fully support the General Assembly's Continuation Review Program, along with any information included in instructions from the Fiscal Research Division.

 

University Cancer Research Fund reporting requirement

SECTION 9.4.  G.S. 116-29.1 is amended by adding a new subsection to read:

"(g)       Report. - By November 1 of each year, the Cancer Research Fund Committee shall provide to the Joint Legislative Education Oversight Committee and to the Office of State Budget and Management an annual financial report which shall include the following components:

(1)        Accounting of expenditures of State funds related to strategic initiatives, development of infrastructure, and ongoing administrative functions.

(2)        Accounting of expenditures of extramural funds related to strategic initiatives, development of infrastructure, and ongoing administrative functions.

(3)        Measures of impact to the State's economy in the creation of jobs, intellectual property, and start-up companies.

(4)        Other performance measures directly related to the investment of State funds.

(5)        Accounting of any fund balances retained by the Fund, along with information about any restrictions on the use of these funds."

 

UNC Board of Governors Review Of Faculty Recruitment And Retention

SECTION 9.5.  The Board of Governors of The University of North Carolina shall review its current policies regarding financial incentives to retain faculty. The review shall focus on the prioritization of recruitment and retention funds and the identification of key metrics to measure overall program effectiveness. The Board of Governors shall report its findings and recommendations for changes to the policies, if any, to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division by April 1, 2012.

 

UNC Management Flexibility Reduction

SECTION 9.6.(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 mission 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)        Protecting direct classroom services including faculty members and adjunct professors.

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.

When implementing personnel reductions, the Board of Governors and the campuses shall make every effort to abolish vacant positions first.

SECTION 9.6.(b)  In allocating the management flexibility reduction, no reduction shall be made to funding for any of the following:

(1)        Hickory Metro Higher Education Center.

(2)        Need-Based Financial Aid.

(3)        Aid to Private Colleges.

(4)        Joint Graduate School of Nanoscience and Nanoengineering at North Carolina Agricultural and Technical State University and the University of North Carolina at Greensboro.

(5)        The North Carolina Research Campus.

SECTION 9.6.(c)  In allocating the management flexibility reduction, State funds for agricultural research stations operated by The University of North Carolina shall not be reduced in either fiscal year of the biennium by more than ten percent (10%) from the Governor's Recommended Continuation Budget for the 2011-2013 fiscal biennium.

 

USE OF ESCHEAT FUND FOR NEED-BASED FINANCIAL AID PROGRAMS

SECTION 9.8.(a)  There is appropriated from the Escheat Fund income to the Board of Governors of The University of North Carolina the sum of thirty-two million one hundred twenty-two thousand two hundred forty-two dollars ($32,122,242) for the 2011-2012 fiscal year and the sum of thirty-two million one hundred twenty-two thousand two hundred forty-two dollars ($32,122,242) for the 2012-2013 fiscal year to be used for The University of North Carolina Need-Based Financial Aid Program.

SECTION 9.8.(b)  In addition to the appropriation in subsection (a) of this section, there is appropriated from the Escheat Fund income to the Board of Governors of The University of North Carolina the sum of ninety-five million two hundred thirty-one thousand nine hundred twelve dollars ($95,231,912) for the 2011-2012 fiscal year to be used for The University of North Carolina Need-Based Financial Aid Program.

SECTION 9.8.(c)  There is appropriated from the Escheat Fund income to the State Board of Community Colleges the sum of sixteen million five hundred thousand dollars ($16,500,000) for the 2011-2012 fiscal year and the sum of sixteen million five hundred thousand dollars ($16,500,000) for the 2012-2013 fiscal year to be used for community college grants.

SECTION 9.8.(d)  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 2011-2012 fiscal year and the sum of six million five hundred twenty thousand nine hundred sixty-four dollars ($6,520,964) for the 2012-2013 fiscal year to be used for need-based student financial aid.

SECTION 9.8.(e)  The funds appropriated by this section shall be allocated by the State Educational 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 9.8.(f)  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 9.8.(g)  The Office of State Budget and Management shall transfer the cash balance of the community college grant program remaining in Budget Code 66801, Fund 6102, to the Escheat Fund.

 

UNC Need-Based Financial Aid Program Funding Schedule

SECTION 9.9.(a)  Of the funds appropriated by this act for the 2011-2012 fiscal year for The University of North Carolina Need-Based Financial Aid Program, the sum of eighty-nine million dollars ($89,000,000) shall not be used for expenditures in the 2011-2012 fiscal year but shall be carried forward and held in reserve by the State Education Assistance Authority.  The funds carried forward and held in reserve pursuant to this subsection may be disbursed by the State Education Assistance Authority after July 1, 2012, for need-based student financial aid in the 2012-2013 academic year in accordance with G.S. 116B-7.

SECTION 9.9.(b)  Of the funds appropriated by this act for the 2012-2013 fiscal year for The University of North Carolina Need-Based Financial Aid Program, the sum of eighty-nine million dollars ($89,000,000) shall not be used for expenditures in the 2012-2013 fiscal year but shall be carried forward and held in reserve by the State Education Assistance Authority.  The funds carried forward and held in reserve pursuant to this subsection may be disbursed by the State Education Assistance Authority after July 1, 2013, for need-based student financial aid in the 2013-2014 academic year in accordance with G.S. 116B-7.

 

consolidate assets of MILLENNIUM TEACHING SCHOLARSHIP LOAN PROGRAM and PROSPECTIVE TEACHERS SCHOLARSHIP LOAN FUND

SECTION 9.10.(a)  Effective January 1, 2012, the Millennium Teaching Scholarship Loan Program is abolished.

SECTION 9.10.(b)  All financial obligations to any student awarded a scholarship loan from the Millennium Teaching Scholarship Loan Program before January 1, 2012, shall be fulfilled with funds from the Scholarship Loan Fund for Prospective Teachers established under G.S. 116-209.33, provided the student remains eligible under the provisions of the Millennium Teaching Scholarship Loan Program. All contractual agreements between a student awarded a scholarship loan from the Millennium Teaching Scholarship Loan Program before January 1, 2012, and the State Education Assistance Authority regarding the loan remain enforceable.

SECTION 9.10.(c)  The assets and liabilities for the Millennium Teaching Scholarship Loan Program shall be transferred as follows:

(1)        Five hundred thousand dollars ($500,000) shall be transferred to the Escheat Fund on July 1, 2011.

(2)        The remaining balance of the assets and liabilities shall be transferred to the Scholarship Loan Fund for Prospective Teachers established under G.S. 116-209.33 on January 1, 2012.

 

Limit certain financial aid grants to the traditional time period required to earn a baccalaureate degree

SECTION 9.11.(a)  Except as otherwise provided by this subsection, a student shall not receive a grant from The University of North Carolina Need-Based Financial Aid Program for more than nine 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 need­based grant from The University of North Carolina Need­Based Financial Aid Program for more than 11 full-time academic semesters or its equivalent if enrolled part-time.

Upon application by a student, the student may receive a grant for one additional part-time or full-time academic semester as appropriate, 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. The Board of Governors shall establish the appropriate procedures to implement the additional semester extension provided by this subsection.

SECTION 9.11.(b)  G.S. 116-21.3(d) reads as rewritten:

"(d)      A legislative tuition grant authorized under G.S. 116-21.2(a) shall be reduced by twenty-five percent (25%) for any individual student who has completed 140 semester credit hours or the equivalent of 140 semester credit hours.Except as otherwise provided by this subsection, no student shall receive a legislative tuition grant under G.S. 116-21.2(a) for more than nine full-time academic semesters or its equivalent if enrolled part-time, unless the student is enrolled in a program officially designated by the 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 legislative tuition grant under G.S. 116-21.2(a) for more than 11 full-time academic semesters or its equivalent if enrolled part-time.

Upon application by a student, the student may receive a grant for one additional part-time or full-time academic semester, as appropriate, 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. The State Education Assistance Authority shall establish the appropriate procedures to implement the additional semester extension provided by this subsection."

SECTION 9.11.(c)  G.S. 116-43.5(f) reads as rewritten:

"(f)       Reduction of Grant Amount for Certain Students. - A State grant authorized by this act shall be reduced by twenty-five percent (25%) for any individual student who has completed 140 semester credit hours or the equivalent of 140 semester credit hours.Limit Grant Amount to Standard Graduation Time Period. - Except as otherwise provided by this subsection, no student shall receive a State grant under this section for more than four full academic years, unless the student is enrolled in a program officially designated by the 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 State grant under this section for more than five full academic years.

Upon application by a student, the student may receive a State grant under this section for one additional part-time or full-time academic semester, as appropriate, 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. The State Education Assistance Authority shall establish the appropriate procedures to implement the additional semester extension provided by this subsection."

SECTION 9.11.(d)  The Fiscal Research Division, in cooperation with The University of North Carolina, the North Carolina Community College System, the North Carolina Independent Colleges and Universities, Inc., and the State Education Assistance Authority shall study how to track and document the receipt of The University of North Carolina and North Carolina Community College need-based grants, legislative tuition grants, and State grants under G.S. 116-43.5 by students who enroll in both public and private institutions of higher education while pursuing a baccalaureate or associate degree so that no student receives a combination of these grants that exceeds a cumulative total of nine full-time academic semesters or 11 full-time academic semesters as appropriate. In addition, the study shall (i) consider the need to grant a waiver to the limit imposed on receipt of need-based grants, legislative tuition grants, and State grants under G.S. 116-43.5 for those students who encounter legitimate disruptions or interruptions of the academic pursuit of a degree and (ii) determine the appropriate criteria and procedure for extending the eligibility to receive those types of financial aid for an additional period of time. The study shall also examine any potential impact on licensure programs and college completion rates.

The Fiscal Research Division shall report its findings and recommendations, including any legislative recommendations, by March 1, 2012, to the Joint Legislative Education Oversight Committee and to the Education Appropriation Subcommittees of the House of Representatives and the Senate.

SECTION 9.11.(e)  Subsections (a), (b), and (c) of this section are effective for the 2012-2013 academic year and each subsequent fiscal year.

 

ACADEMIC COMMON MARKET

SECTION 9.12.(a)  Notwithstanding G.S. 116-43.10, the Board of Governors of The University of North Carolina shall not participate in the Academic Common Market for the purpose of accepting new students for the 2012-2013 academic year, and no new students shall be allowed to enroll through the Academic Common Market program into The University of North Carolina graduate programs for the 2012-2013 academic year.

SECTION 9.12.(b)  This section does not affect a student enrolled in The University of North Carolina System under the Academic Common Market program prior to the 2012-2013 academic year; that student may continue to pay in-State tuition as long as the student is enrolled in that graduate program.

 

Eliminate Certain UNC Tuition Waivers for Nonresident Students

SECTION 9.13.(a)  G.S. 116-143.6 is repealed.

SECTION 9.13.(b)  G.S. 116-143(c) reads as rewritten:

"(c)       Inasmuch as the giving of tuition and fee waivers, or especially reduced rates, represent in effect a variety of scholarship awards, the said practice is hereby prohibited except when expressly authorized by statute or by the Board of Governors of The University of North Carolina; and, furthermore, it is hereby directed and required that all budgeted funds expended for scholarships of any type must be clearly identified in budget reports. The Board of Governors of The University of North Carolina shall not authorize a reduced rate of tuition for the special talent of athletics.statute or session law."

SECTION 9.13.(c)  G.S. 116-143.5 is repealed.

SECTION 9.13.(d)  The Prospective Teacher Scholars program that was begun as a pilot program under Section 9.9 of S.L. 2002-126 is abolished.

 

Eliminate Private Medical School Aid

SECTION 9.14.  G.S. 116-21.6 is repealed.

 

TranSfer North Carolina Arboretum Responsibilities To Western Carolina

SECTION 9.15.(a)  G.S. 116-242 reads as rewritten:

"§ 116-242.  Administration of Arboretum; acceptance of gifts and grants.

The Arboretum shall be administered by The University of North Carolina and through the Board of Directors established in G.S. 116-243. State funds for the administration of the Arboretum shall be appropriated to The University of North Carolina for the University of North Carolina at Asheville. The for Western Carolina University to administer on behalf of the arboretum. The North Carolina Arboretum and The University of North Carolina may receive gifts and grants to be used for development or operation of the Arboretum."

SECTION 9.15.(b)  G.S. 116-243 reads as rewritten:

"§ 116-243.  Board of directors established; appointments.

A board of directors to govern the operation of the Arboretum is established, to be appointed as follows:

(1)        Two by the Governor, initially, one for a two-year term, and one for a four-year term. Successors shall be appointed for four-year terms.

(2)        Two by the General Assembly, in accordance with G.S. 120-121, upon the recommendation of the President Pro Tempore of the Senate, initially, one for a two-year term, and one for a four-year term. Successors shall be appointed for four-year terms.

(3)        Two by the General Assembly, in accordance with G.S. 120-121, upon the recommendation of the Speaker of the House of Representatives, initially, one for a two-year term, and one for a four-year term. Successors shall be appointed for four-year terms.

(4)        The President of The University of North Carolina or the President's designee to serve ex officio.

(4a)      Two by the President of The University of North Carolina. Members shall be appointed for four-year terms, except that the initial terms shall be as provided otherwise by law.

(5)        The chancellors, chief executive officers, or their designees of the following institutions of higher education: North Carolina State University, Western Carolina University, The University of North Carolina at Asheville, Mars Hill College, and Warren Wilson College, to serve ex officio.

(6)        The President of Western North Carolina Arboretum, Inc., to serve ex officio.

(7)        Six Eight by the Board of Governors of The University of North Carolina, initially, three for one-year terms, and three for three-year terms. Successors shall be appointed for four-year terms. One shall be an active grower of nursery stock, and one other shall represent the State's garden clubs.Members shall be appointed for four-year terms, except that the initial terms shall be as otherwise provided by law.

(8)        The executive director of the Arboretum and the Executive Vice President of Western North Carolina Development Association shall serve ex officio as nonvoting members of the board of directors. a nonvoting member of the Board of Directors.

(9)        The President of The North Carolina Arboretum Society, Inc., to serve ex officio.

All appointed members may serve two full four-year terms following the initial appointment and then may not be reappointed until they have been absent for at least one year. Members serve until their successors have been appointed. Appointees to fill vacancies serve for the remainder of the unexpired term. Vacancies in appointments made by the General Assembly shall be filled in accordance with G.S. 120-122. Initial terms begin July 1, 1986.July 1, 2011.

The chairman of the board of directors Chair of the Board of Directors shall be elected biennially by majority vote of the directors.

The executive director Executive Director of the Arboretum shall report to the board of directors.President of The University of North Carolina or the President's designee and to the Board of Directors."

SECTION 9.15.(c)  G.S. 116-244 reads as rewritten:

"§ 116-244.  Duties of board of directors.

The board of directors Board of Directors of the Arboretum has the following duties and responsibilities:

(1)        Development of the policies and procedures concerning the use of the land and facilities being developed as part of the Western North Carolina Arboretum, Inc.;

(2)        Approval of plans for any buildings to be constructed on the  facility;

(3)        Maintenance and upkeep of buildings and all properties;

(4)        Approval of permanent appointments to the staff of the Arboretum;

(5)        Recommendations to the General Administration of candidates for executive director Executive Director of the Arboretum;

(6)        Recommendations to the General Administration for necessary termination of the executive director Executive Director or other personnel of the Arboretum;

(7)        Ensurance of appropriate liaison between the Arboretum and the U. S. Forest Service, the National Park Service,the Western North Carolina Arboretum, Inc.,The North Carolina Arboretum Society, Inc., Bent Creek Institute, Inc., Centers for Environmental and Climatic Interaction, Inc., NOAA Cooperative Institute for Climate and Satellites, and other scientific and economic development agencies and organizations of interest to and involved in the work at the Arboretum;

(8)        Development of various policies and directives, including the duties of the executive director, Executive Director, to be prepared jointly by the members of the board of directors and the executive director;Board of Directors and the Executive Director;

(9)        Approval of annual expenditures and budget requests to be submitted to the Board of Governors.The University of North Carolina General Administration.

The board of directors Board of Directors shall meet at least twice a year, and more frequently on the call of the chairman Chair or at the request of at least 10 members of the board. Board. Meetings shall be held at the Arboretum, the University of North Carolina at Asheville, or Western Carolina University.any campus of a constituent institution of The University of North Carolina, or at other public locations in support of the Arboretum mission and purposes."

SECTION 9.15.(d)  Effective July 1, 2011, the President of The University of North Carolina shall appoint one member pursuant to G.S. 116-243(4a) as enacted by subsection (b) of this section to serve an initial term of two years to end July 1, 2013, and one member to serve an initial term of four years to end July 1, 2015; successors shall be appointed to four-year terms as provided by G.S. 116-243.  Effective July 1, 2011, the Board of Governors of The University of North Carolina shall appoint one of the new members to be added to Board of Directors pursuant to G.S. 116-243(7) as amended by subsection (b) of this section to serve an initial term of two years to end July 1, 2013, and the other new member to be added to serve an initial term of four years to end July 1, 2015; successors shall be appointed to four year terms as provided by G.S. 116-243.

 

Special RESPONSIBILITY Constituent Institution AUDITS

SECTION 9.16.  Article 1 of Chapter 116 of the General Statutes is amended by adding a new section to read:

"§ 116-30.8.  Special responsibility constituent institutions: annual audit by State Auditor or certified public accountant.

Each special responsibility constituent institution shall be audited annually. The Chancellor of the special responsibility constituent institution may use State funds to contract with the State Auditor or with a certified public accountant to perform the audit. The audit shall be provided to the Chancellor and Board of Trustees of the special responsibility institution, the Board of Governors of The University of North Carolina, and the State Auditor. The audit shall also be included in the State's Comprehensive Annual Financial Report (CAFR).

The Board of Governors of The University of North Carolina shall ensure that all special responsibility constituent institutions are audited in accordance with this section."

 

UNC Need-based financial aid program and unc management flexibility

SECTION 9.17.  Notwithstanding any other provision of this act, the General Fund appropriation to the Board of Governors of The University of North Carolina for the UNC Need-Based Financial Aid Program for the 2011-2012 fiscal year and for the 2012-2013 fiscal year shall be increased by the sum of eight million eight hundred fifty-nine thousand two hundred dollars ($8,859,200) in each fiscal year and the management flexibility reduction for The University of North Carolina shall be increased for the 2011-2012 fiscal year and for the 2012-2013 fiscal year by the sum of eight million eight hundred fifty-nine thousand two hundred dollars ($8,859,200).

 

PART X. Department of Health and Human Services

 

CHILD CARE SUBSIDY RATES

SECTION 10.1.(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 10.1.(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:

FAMILY SIZE                         PERCENT OF GROSS FAMILY INCOME

1-3                                                                        10%

4-5                                                                          9%

6 or more                                                                8%.

SECTION 10.1.(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.

(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.

(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 10.1.(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 10.1.(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 shall also calculate a statewide rate and regional market rates for each rated license level for each age category.

SECTION 10.1.(f)  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. 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 10.1.(g)  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 10.1.(h)  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.

 

CHILD CARE ALLOCATION FORMULA

SECTION 10.2.(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%) Smart Start 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%) Smart Start 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)        No county's allocation shall be less than ninety percent (90%) of its State fiscal year 2001-2002 initial child care subsidy allocation.

SECTION 10.2.(b)  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 Smart Start funds, within a county.

SECTION 10.2.(c)  Notwithstanding subsection (a) of this section, the Department of Health and Human Services shall allocate up to twenty million dollars ($20,000,000) in federal block grant funds and State funds appropriated for fiscal years 2011-2012 and 2012-2013 for child care services. These funds shall be allocated to prevent termination of child care services. Funds appropriated for specific purposes, including targeted market rate adjustments given in the past, may also be allocated by the Department separately from the allocation formula described in subsection (a) of this section.

 

CHILD CARE FUNDS MATCHING REQUIREMENT

SECTION 10.3.  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-4(1).

 

Child Care Revolving Loan

SECTION 10.4.  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.

 

EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES ENHANCEMENTS

SECTION 10.5.(a)  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 10.5.(b)  G.S. 143B-168.12(a)(5) is repealed.

SECTION 10.5.(c)  The North Carolina Partnership for Children, Inc., shall not use more than eighty thousand dollars ($80,000) in funds from the General Fund for the salary of any individual employee. A local partnership shall not use more than sixty thousand dollars ($60,000) in funds from the General Fund for the salary of any individual employee. Nothing in this subsection shall be construed to prohibit the North Carolina Partnership for Children, Inc., or a local partnership from using non-State funds to supplement the salary of an employee employed by the North Carolina Partnership for Children, Inc., or the local partnership.

SECTION 10.5.(d)  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 10.5.(e)  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 equal to at least ten percent (10%) and in-kind donated resources equal to no more than three percent (3%) for a total match requirement of thirteen percent (13%) for each 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 thirteen percent (13%) match by June 30 of each 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 10.5.(f)  The Department of Health and Human Services shall continue to implement the performance-based evaluation system.

SECTION 10.5.(g)  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 2011-2012 and 2012-2013 shall be administered and distributed in the following manner:

(1)        Capital expenditures are prohibited for fiscal years 2011-2012 and 2012-2013. 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 2011-2012 and 2012-2013.

SECTION 10.5.(h)  A county may use the county's allocation of State and federal child care funds to subsidize child care according to the county's Early Childhood Education and Development Initiatives Plan as approved by the North Carolina Partnership for Children, Inc. The use of federal funds shall be consistent with the appropriate federal regulations. Child care providers shall, at a minimum, comply with the applicable requirements for State licensure pursuant to Article 7 of Chapter 110 of the General Statutes.

SECTION 10.5.(i)  For fiscal years 2011-2012 and 2012-2013, the local partnerships shall spend an amount for child care subsidies that provides at least fifty-two million dollars ($52,000,000) for the TANF maintenance of effort requirement and the Child Care Development Fund and Block Grant match requirement.

SECTION 10.5.(j)  For fiscal years 2011-2012 and 2012-2013, 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.

SECTION 10.5.(k)  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- and two-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 10.5.(l)  It is the intent of the General Assembly that the North Carolina Partnership for Children, Inc., implement an evidence-based pilot literacy program that improves literacy of children from birth through five years of age and increases children's chances of success in school. An annual evaluation of the pilot literacy program shall access the goals and intended outcomes of the evidence-based pilot literacy program.

SECTION 10.5.(m)  The Legislative Research Commission is authorized to study the cost, quality, consumer education, and outcomes of the North Carolina Partnership for Children, Inc.'s activities funded to (i) increase early literacy, (ii) measurably improve families' abilities to raise healthy, productive, and successful children, and (iii) increase access to preventative health care for children from birth to five years of age. The Legislative Services Commission shall evaluate and report on the following:

(1)        The types of activities, goals, and intended outcomes of evidence-based early literacy activities that promote phonemic awareness, letter recognition, segmenting words into sounds, and decoding print text.

(2)        The types of family support and health activities supported with the North Carolina Partnership for Children, Inc., funds.

(3)        The goal and intended outcome of the family support and health activities.

(4)        The numbers served and results of the family support and health activities.

(5)        Study the match requirements and what constitutes the match requirements.

(6)        Any other matter the Commission deems relevant to its charge.

SECTION 10.5.(n)  On or before October 1, 2012, the Legislative Research Commission shall make a report of its findings and recommendations, including any proposed legislation, to the 2012 Regular Session of the 2011 General Assembly, 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.

 

Administrative Allowance for County Departments of Social Services

SECTION 10.6.  The Division of Child Development of the Department of Health and Human Services shall fund the allowance that county departments of social services may use for administrative costs at four percent (4%) of the county's total child care subsidy funds allocated in the Child Care Development Fund Block Grant plan.

 

Consolidate More At Four Program into Division of Child Development

SECTION 10.7.(a)  The Department of Public Instruction, Office of Early Learning, and the Department of Health and Human Services are directed to consolidate the "More At Four" program into the Division of Child Development.  The Division of Child Development is renamed the Division of Child Development and Early Education (DCDEE).  The DCDEE is directed to maintain "More At Four" program's high programmatic standards. The Department of Health and Human Services shall assume the functions of the regulation and monitoring system and payment and reimbursement system for the "More At Four" program.

All regulation and monitoring functions shall begin July 1, 2011. The "More At Four" program shall be designated as "prekindergarten" on the five-star rating scale.

The Office of State Budget and Management shall transfer positions to the Department of Health and Human Services to assume the regulation, monitoring, and accounting functions within the Division of Child Development's Regulatory Services Section. This transfer shall have all the elements of a Type I transfer as defined in G.S. 143A-6. All funds transferred pursuant to this section shall be used for the funding of prekindergarten slots  for four-year-olds and for the management of the program. The Department of Health and Human Services shall incorporate eight consultant positions into the regulation and accounting sections of Division of Child Development and Early Education, eliminate the remaining positions, and use position elimination savings for the purpose of funding prekindergarten students.

SECTION 10.7.(b)  The Childcare Commission shall adopt rules for programmatic standards for regulation of prekindergarten classrooms. The Commission shall review and approve comprehensive, evidenced-based early childhood curricula with a reading component. These curricula shall be added to the currently approved "More At Four" curricula.

SECTION 10.7.(c)  G.S. 143B-168.4(a) reads as rewritten:

"(a)       The Child Care Commission of the Department of Health and Human Services shall consist of 15 17 members. Seven of the members shall be appointed by the Governor and eight 10 by the General Assembly, four five upon the recommendation of the President Pro Tempore of the Senate, and four five upon the recommendation of the Speaker of the House of Representatives. Four of the members appointed by the Governor, two by the General Assembly on the recommendation of the President Pro Tempore of the Senate, and two by the General Assembly on the recommendation of the Speaker of the House of Representatives, shall be members of the public who are not employed in, or providing, child care and who have no financial interest in a child care facility. Two of the foregoing public members appointed by the Governor, one of the foregoing public members recommended by the President Pro Tempore of the Senate, and one of the foregoing public members recommended by the Speaker of the House of Representatives shall be parents of children receiving child care services. Of the remaining two public members appointed by the Governor, one shall be a pediatrician currently licensed to practice in North Carolina. Three of the members appointed by the Governor shall be child care providers, one of whom shall be affiliated with a for profit child care center, one of whom shall be affiliated with a for profit family child care home, and one of whom shall be affiliated with a nonprofit facility. Two of the members appointed by the General Assembly on the recommendation of the President Pro Tempore of the Senate, and two by the General Assembly on recommendation of the Speaker of the House of Representatives, shall be child care providers, one affiliated with a for profit child care facility, and one affiliated with a nonprofit child care facility. The General Assembly, upon the recommendation of the President Pro Tempore of the Senate, and the General Assembly, upon the recommendation of the Speaker of the House of Representatives, shall appoint two early childhood education specialists. None may be employees of the State."

SECTION 10.7.(d)  The additional curricula approved and taught in prekindergarten classrooms shall also be taught in four- and five-star rated facilities in the non-prekindergarten four-year-old classrooms. The Child Care Commission shall increase standards in the four- and five-star-rated facilities for the purpose of placing an emphasis on early reading. The Commission shall require the four- and five-star-rated facilities to teach from the Commission's approved curricula. The Division of Child Development may use funds from the Child Care Development Fund Block Grant to assist with the purchase of curricula or adjust rates of reimbursements to cover increased costs.

SECTION 10.7.(e)  The Division of Child Development and Early Education shall adopt a policy to encourage all prekindergarten classrooms to blend private pay families with prekindergarten subsidized children in the same manner that regular subsidy children are blended with private pay children. The Division may implement a waiver or transition period for the public classrooms.

SECTION 10.7.(f)  The prekindergarten program may continue to serve at-risk children identified through existing "child find" methods at-risk children are served within the Division of Child Development and serve at-risk children regardless of income, up to twenty percent (20%) of the four-year-olds served. 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 is ordered to active duty by the proper authority within the last 18 months or 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.

SECTION 10.7.(g)  The Division of Child Development and Early Education (DCDEE) shall adopt policies that improve the quality of childcare for subsidized children.  The DCDEE shall phase in a new policy in which child care subsidies will be paid, to the extent possible, for child care in the higher quality centers and homes only.  The DCDEE 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 three-, four-, and five-star-rated facilities, the DCDEE shall establish a transition period that allows the facilities to continue to receive subsidy funds while the facilities work on the increased star ratings. The DCDEE shall allow for exemptions in nonstar-rated programs, such as religious programs or other currently allowed arrangements, and continue to pay for child care in these situations.

SECTION 10.7.(h)  The Division of Child Development and Early Education shall implement a parent co-payment requirement for prekindergarten classrooms the same as what is required of parents subject to regular child care subsidy payments.

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:

FAMILY SIZE                         PERCENT OF GROSS FAMILY INCOME

1-3                                                                        10%

4-5                                                                          9%

6 or more                                                                8%.

SECTION 10.7.(i)  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 10.7.(j)  Based on market analysis and within funds available, the Division of Child Development and Early Education shall establish reimbursement rates based on newly increased requirements of four- and five-star-rated facilities and the higher teacher standards within the prekindergarten class rooms, specifically "More At Four" teacher standards, when establishing the rates of reimbursements. Additionally, the prekindergarten curriculum day shall cover six and one-half to 10 hours daily and no less than 10 months per year. The public classrooms will have a one-year transition period to become licensed through the Division of Child Development and may continue to operate prekindergarten, formerly "More At Four," classrooms during the 2011-2012 fiscal year.

 

Mental Health Changes

SECTION 10.8.(a)  For the purpose of mitigating cash flow problems that many nonsingle-stream local management entities (LMEs) experience at the beginning of each fiscal year, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall adjust the timing and method by which allocations of service dollars are distributed to each nonsingle-stream LME.  To this end, the allocations shall be adjusted such that at the beginning of the fiscal year the Department shall distribute not less than one-twelfth of the LME's continuation allocation and subtract the amount of the adjusted distribution from the LME's total reimbursements for the fiscal year.

SECTION 10.8.(b)  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, the sum of twenty-nine million one hundred twenty-one thousand six hundred forty-four dollars ($29,121,644) for the 2011-2012 fiscal year and the sum of twenty-nine million one hundred twenty-one thousand six hundred forty-four dollars ($29,121,644) for the 2012-2013 fiscal year shall be allocated for the purchase of local inpatient psychiatric beds or bed days. In addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated to LMEs for community-based mental health, developmental disabilities, and substance abuse services may be used to purchase additional local inpatient psychiatric beds or bed days. These beds or bed days shall be distributed across the State in LME catchment areas and according to need as determined by the Department. The Department shall enter into contracts with the LMEs and community 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. Local inpatient psychiatric beds or bed days shall be managed and controlled by the LME, including the determination of which local or State hospital the individual should be admitted to pursuant to an involuntary commitment order. Funds shall not be allocated to LMEs 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 LMEs and billed by the hospitals through the LMEs. LMEs shall remit claims for payment to the Division within 15 working days of receipt of a clean claim from the hospital and shall pay the hospital within 30 working days of receipt of payment from the Division. If the Department determines (i) that an LME 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 has failed to comply with the prompt payment provisions of this subsection, the Department may contract with another LME to manage the beds or bed days, or, notwithstanding any other provision of law to the contrary, may pay the hospital directly. The Department shall develop reporting requirements for LMEs regarding the utilization of the beds or bed days. Funds appropriated in this section for the purchase of local inpatient psychiatric beds or bed days shall be used to purchase additional beds or bed days not currently funded by or through LMEs and shall not be used to supplant other funds available or otherwise appropriated for the purchase of psychiatric inpatient services under contract with community hospitals, including beds or bed days being purchased through Hospital Utilization Pilot funds appropriated in S.L. 2007-323. Not later than March 1, 2012, the Department shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division on a uniform system for beds or bed days purchased (i) with local funds, (ii) from existing State appropriations, (iii) under the Hospital Utilization Pilot, and (iv) purchased using funds appropriated under this subsection.

SECTION 10.8.(c)  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, for mobile crisis teams, the sum of five million seven hundred thousand dollars ($5,700,000) shall be distributed to LMEs to support 30 mobile crisis teams.  The new mobile crisis units shall be distributed over the State according to need as determined by the Department.

SECTION 10.8.(d)  The Department of Health and Human Services may create a midyear process by which it can reallocate State service dollars away from LMEs that do not appear to be on track to spend the LMEs' full appropriation and toward LMEs that appear able to spend the additional funds.

 

Johnston County LME Administrative Funding

SECTION 10.8A.  Notwithstanding G.S. 122C-115(a1), the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall not further reduce the allocation of administrative funding to the Johnston County Area Mental Health, Developmental Disabilities, and Substance Abuse Authority for the 2011-2012 fiscal year as a consequence of the total population of the catchment area served.

 

MH/DD/SAS Health care Information System Project

SECTION 10.9.  Of the funds appropriated to the Department of Health and Human Services for the 2011-2013 fiscal biennium, the Department may use a portion of these funds to continue to develop and implement a health care information system for State institutions operated by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services. G.S. 143C-6-5 does not apply to this section.

 

LME Funds for Substance Abuse Services

SECTION 10.10.(a)  Consistent with G.S. 122C-2, the General Assembly strongly encourages Local Management Entities (LMEs) to use a portion of the funds appropriated for substance abuse treatment services to support prevention and education activities.

SECTION 10.10.(b)  An LME may use up to one percent (1%) of funds allocated to it for substance abuse treatment services to provide nominal incentives for consumers who achieve specified treatment benchmarks, in accordance with the federal substance abuse and mental health services administration best practice model entitled Contingency Management.

SECTION 10.10.(c)  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 (DOC) releasees who have completed substance abuse treatment while in custody.

In addition to 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, the Department shall allocate up to three hundred thousand dollars ($300,000) to TASC. These funds shall be allocated to TASC before funds are allocated to LMEs for mental health services, substance abuse services, and crisis services.

SECTION 10.10.(d)  In providing drug treatment court services, LMEs shall consult with the local drug treatment court team and shall select a treatment provider that meets all provider qualification requirements and the drug treatment court's needs. A single treatment provider may be chosen for non-Medicaid-eligible participants only. A single provider may be chosen who can work with all of the non-Medicaid-eligible drug treatment court participants in a single group. During the 52-week drug treatment court program, participants shall receive an array of treatment and aftercare services that meets the participant's level of need, including step-down services that support continued recovery.

 

MH/DD/SAS community service FUNDS

SECTION 10.11.(a)  The Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (as used in this section "The Division") is directed to reduce the Community Service Fund by twenty million dollars ($20,000,000).

SECTION 10.11.(b)  The Division is directed, through consultation with LME representatives and stakeholders, to develop a set of standardized covered benefits for recipients of LME Service Funds that shall become the only services paid for by community service funds through LMEs. These services shall be best practices for developmental disabilities, mental illness, and substance abuse.

SECTION 10.11.(c)  Effective January 1 2012, the Division shall implement a co-payment for all mental health, developmental disabilities, and substance abuse services based upon the Medicaid co-payment rates.

SECTION 10.11.(d)  The Division is directed to reduce the Community Service Fund by twenty-five million dollars ($25,000,000) for the 2011-2012 fiscal year based on available fund balance reported by the LMEs' 2010 fiscal audit. The Division is directed to allocate the reduction among LMEs based on unreserved, undesignated fund balance totals, as of June 30, 2010. The LMEs are required to backfill the reduction with fund balance availability and not further reduce services beyond the amount identified in subsection (a) of this section.

SECTION 10.11.(e)  LMEs are directed to spend their unreserved, undesignated fund balance on services, commensurate with the reduction directed by the Division.  Quarterly reports shall be submitted to the Division by LMEs to ensure expenditures from fund balance occurs at the level required by this law.  Additionally, the Division shall review the designation of reserved or designated fund balance accounts to determine whether accounts may be moved to unreserved, undesignated, in essence increasing the unreserved, undesignated fund balance available for purchase of services.  If categories of funds are moved into the unreserved/undesignated categories, the affected LMEs are encouraged to spend these funds to minimize their share of the twenty million dollars ($20,000,000) in reductions to services as required in subsection (a) of this section.

SECTION 10.11.(f)  The Department of Health and Human Services shall report to the House and Senate Appropriations Subcommittees by December 12, 2011, on the status of implementing this section.

 

CONSOLIDATION OF FORENSIC HEALTH CARE at dorothea dix complex

SECTION 10.12.  The Department of Health and Human Services, Division of State Operated Facilities, shall issue a Request for Proposal for the consolidation of forensic hospital care. The operation shall initially be located at the Dorothea Dix complex. The Secretary of Health and Human Services is authorized to proceed with contracting with a private entity if the Secretary can justify savings through the contract. The Secretary shall compare the Department's total cost to provide forensic care to proposals received and determine whether it is cost-effective to contract for this service. The Secretary may only proceed if the Secretary determines the Department will save money and ensure appropriate safety and quality of care for patients.

The Secretary shall report to the Joint Appropriations Subcommittee for Health and Human Services (or other interim oversight committees) by October 30, 2011, with cost detail and savings identified from the proposals.

 

Transition of Utilization Management of Community-Based Services to Local Management Entities

SECTION 10.13.  The Department of Health and Human Services shall collaborate with LMEs to enhance their administrative capabilities to assume utilization management responsibilities for the provision of community-based mental health, developmental disabilities, and substance abuse services.  The Department may, with approval of the Office of State Budget and Management, use funds available to implement this section.

 

Third-Party Billing for State Facilities

SECTION 10.14.  G.S. 122C-55 reads as rewritten:

"§ 122C-55.  Exceptions; care and treatment.

(g)        Whenever there is reason to believe that the client is eligible for financial benefits through a governmental agency, a facility may disclose confidential information to State, local, or federal government agencies. Except as provided in G.S.122C-55(a3), G.S. 122C-55(a3) and G.S. 122C-55(g1), disclosure is limited to that confidential information necessary to establish financial benefits for a client. After Except as provided in G.S. 122C-55(g1), after establishment of these benefits, the consent of the client or his legally responsible person is required for further release of confidential information under this subsection.

(g1)      A facility may disclose confidential information for the purpose of collecting payment due the facility for the cost of care, treatment, or habilitation.

…."

 

COLLABORATION AMONG DEPARTMENTS OF ADMINISTRATION, HEALTH AND HUMAN SERVICES, JUVENILE JUSTICE AND DELInQUENCY PREVENTION, AND PUBLIC INSTRUCTION ON SCHOOL-BASED CHILD AND FAMILY TEAM INITIATIVE

SECTION 10.15.(a)  School-Based Child and Family Team Initiative Established. -

(1)        Purpose and duties. - There is established the School-Based Child and Family Team Initiative. The purpose of the Initiative is to identify and coordinate appropriate community services and supports for children at risk of school failure or out-of-home placement in order to address the physical, social, legal, emotional, and developmental factors that affect academic performance. The Department of Health and Human Services, the Department of Public Instruction, the State Board of Education, the Department of Juvenile Justice and Delinquency Prevention, the Administrative Office of the Courts, and other State agencies that provide services for children shall share responsibility and accountability to improve outcomes for these children and their families. The Initiative shall be based on the following principles:

a.         The development of a strong infrastructure of interagency collaboration.

b.         One child, one team, one plan.

c.         Individualized, strengths-based care.

d.         Accountability.

e.         Cultural competence.

f.          Children at risk of school failure or out-of-home placement may enter the system through any participating agency.

g.         Services shall be specified, delivered, and monitored through a unified Child and Family Plan that is outcome-oriented and evaluation-based.

h.         Services shall be the most efficient in terms of cost and effectiveness and shall be delivered in the most natural settings possible.

i.          Out-of-home placements for children shall be a last resort and shall include concrete plans to bring the children back to a stable permanent home, their schools, and their community.

j.          Families and consumers shall be involved in decision making throughout service planning, delivery, and monitoring.

(2)        Program goals and services. - In order to ensure that children receiving services are appropriately served, the affected State and local agencies shall do the following:

a.         Increase capacity in the school setting to address the academic, health, mental health, social, and legal needs of children.

b.         Ensure that children receiving services are screened initially to identify needs and assessed periodically to determine progress and sustained improvement in educational, health, safety, behavioral, and social outcomes.

c.         Develop uniform screening mechanisms and a set of outcomes that are shared across affected agencies to measure children's progress in home, school, and community settings.

d.         Promote practices that are known to be effective based upon research or national best practice standards.

e.         Review services provided across affected State agencies to ensure that children's needs are met.

f.          Eliminate cost-shifting and facilitate cost-sharing among governmental agencies with respect to service development, service delivery, and monitoring for participating children and their families.

g.         Participate in a local memorandum of agreement signed annually by the participating superintendent of the local LEA, directors of the county departments of social services and health, director of the local management entity, the chief district court judge, and the chief district court counselor.

(3)        Local level responsibilities. - In coordination with the North Carolina Child and Family Leadership Council (Council), established in subsection (b) of this section, the local board of education shall establish the School-Based Child and Family Team Initiative at designated schools and shall appoint the Child and Family Team Leaders, who shall be a school nurse and a school social worker. Each local management entity that has any selected schools in its catchment area shall appoint a Care Coordinator, and any department of social services that has a selected school in its catchment area shall appoint a Child and Family Teams Facilitator. The Care Coordinators and Child and Family Team Facilitators shall have as their sole responsibility working with the selected schools in their catchment areas and shall provide training to school-based personnel, as required. The Child and Family Team Leaders shall identify and screen children who are potentially at risk of academic failure or out-of-home placement due to physical, social, legal, emotional, or developmental factors. Based on the screening results, responsibility for developing, convening, and implementing the Child and Family Team Initiative is as follows:

a.         School personnel shall take the lead role for those children and their families whose primary unmet needs are related to academic achievement.

b.         The local management entity shall take the lead role for those children and their families whose primary unmet needs are related to mental health, substance abuse, or developmental disabilities and who meet the criteria for the target population established by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.

c.         The local department of public health shall take the lead role for those children and their families whose primary unmet needs are health-related.

d.         Local departments of social services shall take the lead for those children and their families whose primary unmet needs are related to child welfare, abuse, or neglect.

e.         The chief district court counselor shall take the lead for those children and their families whose primary unmet needs are related to juvenile justice issues. A representative from each named or otherwise identified publicly supported children's agency shall participate as a member of the Team as needed. Team members shall coordinate, monitor, and assure the successful implementation of a unified Child and Family Plan.

(4)        Reporting requirements. - School-Based Child and Family Team Leaders shall provide data to the Council for inclusion in their report to the North Carolina General Assembly. The report shall include the following:

a.         The number of and other demographic information on children screened and assigned to a team and a description of the services needed by and provided to these children.

b.         The number of and information about children assigned to a team who are placed in programs or facilities outside the child's home or outside the child's county and the average length of stay in residential treatment.

c.         The amount and source of funds expended to implement the Initiative.

d.         Information on how families and consumers are involved in decision making throughout service planning, delivery, and monitoring.

e.         Other information as required by the Council to evaluate success in local programs and ensure appropriate outcomes.

f.          Recommendations on needed improvements.

(5)        Local advisory committee. - In each county with a participating school, the superintendent of the local LEA shall either identify an existing cross-agency collaborative or council or shall form a new group to serve as a local advisory committee to work with the Initiative. Newly formed committees shall be chaired by the superintendent and one other member of the committee to be elected by the committee. The local advisory committee shall include the directors of the county departments of social services and health; the directors of the local management entity; the chief district court judge; the chief district court counselor; the director of a school-based or school-linked health center, if a center is located within the catchment area of the School-Based Child and Family Team Initiative; and representatives of other agencies providing services to children, as designated by the Committee. The members of the Committee shall meet as needed to monitor and support the successful implementation of the School-Based Child and Family Team Initiative. The Local Child and Family Team Advisory Committee may designate existing cross-agency collaboratives or councils as working groups or to provide assistance in accomplishing established goals.

SECTION 10.15.(b)  North Carolina Child and Family Leadership Council. -

(1)        Leadership Council established; location. - There is established the North Carolina Child and Family Leadership Council (Council). The Council shall be located within the Department of Administration for organizational and budgetary purposes.

(2)        Purpose. - The purpose of the Council is to review and advise the Governor in the development of the School-Based Child and Family Team Initiative and to ensure the active participation and collaboration in the Initiative by all State agencies and their local counterparts providing services to children in participating counties in order to increase the academic success of and reduce out-of-home and out-of-county placements of children at risk of academic failure.

(3)        Membership. - The Superintendent of Public Instruction and the Secretary of Health and Human Services shall serve as cochairs of the Council. Council membership shall include the Secretary of the Department of Juvenile Justice and Delinquency Prevention, the Chair of the State Board of Education, the Director of the Administrative Office of the Courts, and other members as appointed by the Governor.

(4)        The Council shall do the following:

a.         Sign an annual memorandum of agreement (MOA) among the named State agencies to define the purposes of the program and to ensure that program goals are accomplished.

b.         Resolve State policy issues, as identified at the local level, which interfere with effective implementation of the School-Based Child and Family Team Initiative.

c.         Direct the integration of resources, as needed, to meet goals and ensure that the Initiative promotes the most effective and efficient use of resources and eliminates duplication of effort.

d.         Establish criteria for defining success in local programs and ensure appropriate outcomes.

e.         Develop an evaluation process, based on expected outcomes, to ensure the goals and objectives of this Initiative are achieved.

f.          Review progress made on integrating policies and resources across State agencies, reaching expected outcomes, and accomplishing other goals.

g.         Report semiannually, on January 1 and July 1, on progress made and goals achieved to the Office of the Governor, the Joint Appropriations Committees and Subcommittees on Education, Justice and Public Safety, and Health and Human Services, and the Fiscal Research Division of the Legislative Services Office. The Council may designate existing cross-agency collaboratives or councils as working groups or to provide assistance in accomplishing established goals.

SECTION 10.15.(c)  Department of Health and Human Services. - The Secretary of the Department of Health and Human Services shall ensure that all agencies within the Department collaborate in the development and implementation of the School-Based Child and Family Team Initiative and provide all required support to ensure that the Initiative is successful.

SECTION 10.15.(d)  Department of Juvenile Justice and Delinquency Prevention. - The Secretary of the Department of Juvenile Justice and Delinquency Prevention shall ensure that all agencies within the Department collaborate in the development and implementation of the School-Based Child and Family Team Initiative and provide all required support to ensure that the Initiative is successful.

SECTION 10.15.(e)  Administrative Office of the Courts. - The Director of the Administrative Office of the Courts shall ensure that the Office collaborates in the development and implementation of the School-Based Child and Family Team Initiative and shall provide all required support to ensure that the Initiative is successful.

SECTION 10.15.(f)  Department of Public Instruction. - The Superintendent of Public Instruction shall ensure that the Department collaborates in the development and implementation of the School-Based Child and Family Team Initiative and shall provide all required support to ensure that the Initiative is successful.

 

DHHS Position Eliminations

SECTION 10.16.  The Secretary of the Department of Health and Human Services is directed to eliminate 250 full-time equivalent positions that have been continuously vacant since July 1, 2010, in order to accomplish a total savings of six million five hundred thousand dollars ($6,500,000) in State funds.  To the extent possible, the Secretary shall not eliminate positions assigned to the Division of State Operated Healthcare Facilities or the Division of Medical Assistance.  In the event that eliminating 250 full-time equivalent positions that have been continuously vacant since July 1, 2010, does not achieve the savings specified in this section, the Secretary may eliminate other positions within the Department or achieve the designated savings through other administrative and operational reductions or efficiencies.  By September 30, 2011, the Secretary shall submit a report to the House Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on the positions eliminated and any other reductions or efficiencies implemented in order to achieve the savings required by this section.  The report shall include the total number of positions eliminated, savings generated by each eliminated position, the impact on any federal funds previously received for the eliminated positions, and any other reductions or efficiencies implemented to achieve the savings required by this section.

 

DHHS Regulatory Functions study and plan

SECTION 10.17.(a)  The Department of Health and Human Services shall examine all regulatory functions performed by each of the divisions within the Department.  By January 30, 2012, the Department shall make a report of its findings 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 all of the following:

(1)        A summary of each division's regulatory functions.

(2)        The purpose of each of the identified regulatory functions.

(3)        The amount of any fee charged for the identified regulatory functions, along with the date and amount of the most recent fee increase.

(4)        The number of full-time equivalent positions dedicated to the identified regulatory functions, broken down by division.

(5)        Whether there is a federal requirement for, or a federal component to, any of the identified regulatory functions.

(6)        Identification of overlap among the divisions within the Department and with other State agencies, with respect to the regulation of providers. For each area of overlap, the report shall specify all of the following:

a.         The name of each division and State agency that performs the regulatory function.

b.         How often each division or State agency performs the regulatory function.

c.         The total amount of funds expended by each division or State agency to perform the regulatory function.

SECTION 10.17.(b)  The Department of Health and Human Services shall develop a plan to consolidate regulatory functions performed by the various divisions within the Department.  The plan shall identify proposed position eliminations and anticipated savings as a result of the consolidation.  The Department shall not implement the plan or consolidate any of its regulatory functions except as directed by an act of the General Assembly.

 

Reduce Funding for Nonprofit Organizations

SECTION 10.18.  For fiscal years 2011-2012 and 2012-2013, the Department of Health and Human Services shall reduce the amount of funds allocated to nonprofit organizations by five million dollars ($5,000,000) on a recurring basis.  In achieving the reductions required by this section, the Department (i) shall minimize reductions to funds allocated to nonprofit organizations for the provision of direct services and (ii) shall not reduce funds allocated to nonprofit organizations to pay for direct services to individuals with developmental disabilities.

 

Prohibit Use of All Funds for Planned Parenthood Organizations

SECTION 10.19.  For fiscal years 2011-2012 and 2012-2013, the Department of Health and Human Services may not provide State funds or other funds administered by the Department for contracts or grants to Planned Parenthood, Inc., and affiliated organizations.

 

Liability Insurance

SECTION 10.20.(a)  The Secretary of the Department of Health and Human Services, the Secretary of the Department of Environment and Natural Resources, and the Secretary of the Department of Correction may provide medical liability coverage not to exceed one million dollars ($1,000,000) per incident on behalf of employees of the Departments licensed to practice medicine or dentistry, on behalf of all licensed physicians who are faculty members of The University of North Carolina who work on contract 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.

SECTION 10.20.(b)  The coverage provided under 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.

SECTION 10.20.(c)  The coverage provided pursuant to this section shall not require any additional appropriations and shall not apply to any individual providing contractual service to the Department of Health and Human Services, the Department of Environment and Natural Resources, or the Department of Correction, with the exception that coverage may include 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  and licensed physicians who are faculty members of The University of North Carolina who work for the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.

 

Changes to Community-Focused Eliminating Health Disparities Initiative

SECTION 10.21.(a)  Funds appropriated in this act from the General Fund to the Department of Health and Human Services for the Community-Focused Eliminating Health Disparities Initiative (CFEHDI) shall be used to provide grants-in-aid to community based organizations, faith based organizations, American Indian tribes, and local public health departments 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 shall focus on the use of preventive measures to eliminate or reduce health disparities in infant mortality, heart disease, cardiovascular disease, asthma, cancer, diabetes, and other conditions that disproportionately affect minority populations in this State. The Office of Minority Health shall coordinate and implement the grants-in-aid program authorized under this section.

SECTION 10.21.(c)  In implementing the grants-in-aid program authorized by subsection (a) of this section, the Department of Health and Human Services may consider the feasibility of a three-year grant period.  If approved, the grantee (i) shall not use more than five percent (5%) of the grant funds for indirect costs and (ii) shall be required at the end of the three-year grant period to demonstrate significant gains in addressing one or more of the health disparity focus areas identified in subsection (a) of this section.

SECTION 10.21.(d)  Funds appropriated in this act to the Department of Health and Human Services, Division of Public Health, for the CFEHDI shall be awarded as grants-in-aid to honor the memory of the following recently deceased members of the General Assembly: Bernard Allen, John Hall, Robert Holloman, Howard Hunter, Jeanne Lucas, Vernon Malone, William Martin, and Pete Cunningham. 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 10.21.(e)  By October 1, 2012, and annually thereafter, the Department of Health and Human Services 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, 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 programs and local health departments received CFEHDI grants.

(2)        The amount of funding awarded to each community program and local health department grantee.

(3)        Which of the minority populations were served by community programs and local health department grantees.

(4)        Which American Indian tribes, faith-based organizations, or community-based organizations were involved in fulfilling the goals and activities of each grant awarded to a local health department and what activities were planned and implemented by the community programs and local health departments to fulfill the community focus of the CFEHDI program.

(5)        How the activities implemented by the community programs and local health departments fulfilled the goal of reducing health disparities among minority populations, and the specific success in reducing particular incidences.

 

Funds for School Nurses

SECTION 10.22.(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 1 and 19 years of age.

(7)        Percentage of students with chronic illnesses.

(8)        Percentage of county population consisting of minority persons.

SECTION 10.22.(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.

 

Replacement of Receipts for Child Development Service Agencies

SECTION 10.23.  Receipts earned by the Child Development Service Agencies (CDSAs) from any public or private third-party payer shall be budgeted on a recurring basis to replace reductions in State appropriations to CDSAs.

 

Health Information Technology

SECTION 10.24.(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 10.24.(b)  The Department of Health and Human Services shall establish and direct a 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 10.24.(c)  Beginning October 1, 2011, the Department of Health and Human Services shall provide quarterly written reports on the status of HIT efforts to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee 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 1 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 Stroke Prevention

SECTION 10.25.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Public Health, the sum of four hundred thousand dollars ($400,000) in nonrecurring funds for the 2011-2012 fiscal year and the sum of four hundred thousand dollars ($400,000) in nonrecurring funds for the 2012-2013 fiscal year is allocated to the Heart Disease and Stroke Prevention Branch for continuation of community education campaigns and communication strategies, in partnership with the American Heart Association/American Stroke Association, on stroke signs and symptoms and the importance of immediate response.

SECTION 10.25.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Public Health, the sum of fifty thousand dollars ($50,000) in nonrecurring funds for the 2011-2012 fiscal year and the sum of fifty thousand dollars ($50,000) in nonrecurring funds for the 2012-2013 fiscal year is allocated for continued operations of the Stroke Advisory Council.

 

AIDS Drug Assistance Program

SECTION 10.26.  The Department of Health and Human Services (DHHS) shall work with the Department of Correction (DOC) to use DOC funds to purchase pharmaceuticals for the treatment of DOC inmates with HIV/AIDS in a manner that allows these funds to be accounted for as State matching funds in DHHS' drawdown of federal Ryan White funds.

 

MEN'S HEALTH

SECTION 10.26A.  The Department of Health and Human Services, Division of Public Health, shall delegate to the Chronic Disease Prevention and Control Office the responsibility for ensuring attention to 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 (i) developing a strategic plan to improve health care services, (ii) building public health awareness, (iii) developing initiatives within existing programs, and (iv) pursuing federal and State funding for the screening, early detection, and treatment of prostate cancer and other diseases affecting men's health.

 

NC Health Choice Medical Policy

SECTION 10.27.  Unless required for compliance with federal law, the Department shall not change medical policy affecting the amount, sufficiency, duration, and scope of NC Health Choice 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. If the fiscal impact indicated by the fiscal analysis for any proposed medical policy change exceeds one million dollars ($1,000,000) in total requirements for a given fiscal year, then the Department shall submit the proposed medical policy change with the fiscal analysis to the Office of State Budget and Management and the Fiscal Research Division. The Department shall not implement any proposed medical policy change exceeding one million dollars ($1,000,000) in total requirements for a given fiscal year unless the source of State funding is identified and approved by the Office of State Budget and Management. For medical policy changes exceeding one million dollars ($1,000,000) in total requirements for a given fiscal year that are required for compliance with federal law, the Department shall submit the proposed medical policy or policy interpretation change with a five-year fiscal analysis to the Office of State Budget and Management prior to implementing the change. The Department shall provide the Office of State Budget and Management and the Fiscal Research Division a quarterly report itemizing all medical policy changes with total requirements of less than one million dollars ($1,000,000).

 

Community Care of North Carolina

SECTION 10.28.(a)  The Department of Health and Human Services (Department)  shall submit a report annually 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 10.28.(b)  The Department and the Division of Medical Assistance (DMA) shall enter into a three-party contract between North Carolina Community Care Networks, Inc., (NCCCN, Inc.) and each of the 14 participating local CCNC networks and shall require NCCCN, Inc., to provide standardized clinical and budgetary coordination, oversight, and reporting for a statewide Enhanced Primary Care Case Management System for Medicaid enrollees. The contracts shall require NCCCN, Inc., to build upon and expand the existing successful CCNC primary care case management model to include comprehensive statewide quantitative performance goals and deliverables which shall include all of the following areas: (i) service utilization management, (ii) budget analytics, (iii) budget forecasting methodologies, (iv) quality of care analytics, (v) participant access measures, and (vi) predictable cost containment methodologies.

SECTION 10.28.(c)  NCCCN, Inc., 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, Inc., 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, Inc., 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 DMA and NCCCN, Inc. Upon identifying any variations, NCCCN, Inc., shall develop and implement a plan to address the variations. NCCCN, Inc., shall report the plan to DMA within 30 days after taking any action to implement the plan.

SECTION 10.28.(d)  By January 1, 2012, the Department and OSBM shall assess the performance of NCCCN, Inc., and CCNC regarding the goals and deliverables established in the contract. Based on this assessment, the Department and DMA shall expand, cancel, or alter the contract with NCCCN, Inc., and CCNC effective April 1, 2012. Expansion or alteration of the contract may reflect refinements based on clearly identified goals and deliverables in the areas of quality of care, participant access, cost containment, and service delivery.

SECTION 10.28.(e)  By July 1, 2012, the Department, DMA, and NCCCN, Inc., shall finalize a comprehensive plan that establishes management methodologies which include all of the following:  (i) quality of care measures, (ii) utilization measures, (iii) recipient access measures, (iv) performance incentive models in which past experience indicates a benefit from financial incentives, (v) accountable budget models, (vi) shared savings budget models, and (vii) budget forecasting analytics as agreed upon by the Department, DMA, and NCCCN, Inc. In the development of these methodologies, the Department, DMA, and NCCCN, Inc., shall consider options for shared risk. The Department and DMA shall provide assistance to NCCCN, Inc., in meeting the objectives of this section.

 

Medicaid Management Information System (MMIS) Funds/Implementation of MMIS

SECTION 10.29.(a)  The Secretary of the Department of Health and Human Services may utilize prior year earned revenue received for the new Medicaid Management Information System (MMIS) in the amount of three million two hundred thirty-two thousand three hundred four dollars ($3,232,304) in fiscal year 2011-2012 and twelve million dollars ($12,000,000) in fiscal year 2012-2013. The Department shall utilize prior year earned revenues received for the procurement, design, development, and implementation of the new MMIS. In the event that 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 is authorized, with approval of the Office of State Budget and Management, to utilize other overrealized receipts and funds appropriated to the Department to achieve the level of funding specified in this section for the MMIS.

SECTION 10.29.(b)  The Department shall make full development of the replacement MMIS a top priority. During the development and implementation of 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 administration of the Health Information System.

The Department shall make every effort to expedite the implementation of the enhancements. The Office of Information Technology Services shall work in cooperation with the Department to ensure the timely and effective implementation of the MMIS and enhancements. The contract between the Department and the contract vendor shall contain an explicit provision requiring that the MMIS have the capability to fully implement the administration of NC Health Choice, NC Kids' Care, Ticket to Work, Families Pay Part of the Cost of Services under the CAP-MR/DD, CAP Children's Program, and all relevant Medicaid waivers and the Medicare 646 waiver as it applies to Medicaid eligibles. The Department must have detailed cost information for each requirement before signing the contract. Any contract between the Department and a vendor for the MMIS that does not contain the explicit provision required under this subsection is void on its face. Notwithstanding any other provision of law to the contrary, the Secretary of the Department does not have the authority to sign a contract for the MMIS if the contract does not contain the explicit provision required under this section.

SECTION 10.29.(c)  Notwithstanding G.S. 114-2.3, the Department shall engage the services of private counsel with the pertinent information technology and computer law expertise to review requests for proposals and to negotiate and review contracts associated with MMIS. The counsel engaged by the Department shall review the MMIS contracts and amendments between the Department and the vendor to ensure that the requirements of subsection (b) of this section are met in their entirety.

SECTION 10.29.(d)  The Department shall develop a revised comprehensive schedule for the development and implementation of the MMIS that fully incorporates federal and State project management and review requirements.  The Department shall ensure that the schedule is as accurate as possible. Any changes to the design, development, and implementation schedule shall be reported as part of the Department's quarterly MMIS reporting requirements.  The Department shall submit the schedule to the Chairs of the House of Representatives Committee on Appropriations and the House of Representatives Subcommittee on Health and Human Services, the Chairs of the Senate Committee on Appropriations and the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.  This submission shall include a detailed explanation of schedule changes that have occurred since the initiation of the project. Any change to key milestones in either schedule shall be immediately reported to the Chairs of the House of Representatives Committee on Appropriations and the House of Representatives Subcommittee on Health and Human Services, the Chairs of the Senate Committee on Appropriations and the Senate Appropriations Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division with a full explanation of the reason for the change.

SECTION 10.29.(e)  Beginning July 1, 2011, the Department shall make quarterly reports on changes in the functionality and projected costs of the MMIS.  This report shall include any changes to MMIS vendor contracts and shall provide a detailed explanation for any cost increases. Each report shall be made to the Chairs of the House of Representatives Committee on Appropriations and the House of Representatives Subcommittee on Health and Human Services, the Chairs of the Senate Committee on Appropriations and the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.  A copy of the final report on the contract award also shall be submitted to the Joint Legislative Commission on Governmental Operations.

SECTION 10.29.(f)  Upon initiation of the NC MMIS Program Reporting and Analytics Project and the Division of Health Services Regulation Project, the Department shall submit all reports regarding functionality, schedule, and cost in the next regular cycle of reporting identified in subsections (d) and (e) of this section.  The Department shall ensure that the solution developed in the Reporting and Analytics Project supports the capability, in its initial implementation, to interface with the State Health Plan for Teachers and State Employees.  The costs for this capability shall be negotiated prior to the award of the Reporting and Analytics Project contract. The Reporting and Analytics Project solution must be completed simultaneously with the replacement MMIS.

 

North Carolina Families Accessing Services Through Technology (NC FAST) Funds

SECTION 10.30.  Of the funds appropriated in this act to the Department of Health and Human Services (Department), the nonrecurring sum of nine million five hundred ninety-two thousand three hundred thirty-two dollars ($9,592,332) for fiscal year 2011-2012 and the nonrecurring sum of nine million five hundred ninety-two thousand three hundred thirty-two dollars ($9,592,332) for fiscal year 2012-2013 shall be used to support the NC FAST project. These funds shall be (i) deposited to the Department's information technology budget code and (ii) used to match federal funds for the project. In addition, the Department shall utilize prior year earned revenues received in the amount of eight million seven hundred sixty-seven thousand six hundred ninety-six dollars ($8,767,696) in fiscal year 2011-2012 for the NC FAST project.  Funds appropriated to the Department by this act shall be used to expedite the development and implementation of the Global Case Management and Food and Nutrition Services and the Eligibility Information System (EIS) components of the North Carolina Families Accessing Services through Technology (NC FAST) project. In the event that the Department does not receive prior year earned revenues in the amount authorized by this section, the Department is authorized, with approval of the Office of State Budget and Management, to utilize other overrealized receipts and funds appropriated to the Department to achieve the level of funding specified in this section for the NC FAST project. The Department shall not obligate any of its overrealized receipts or funds for this purpose without (i) prior written approval from the United States Department of Agriculture Food and Nutrition Service, the United States Department of Health and Human Services Administration for Children and Families, the Centers for Medicare and Medicaid Services, and any other federal partner responsible for approving changes to the annual Advance Planning Document update (APDu) for the NC FAST Program and (ii) prior review and approval from the Office of Information Technology Services (ITS) and the Office of State Budget and Management (OSBM). The Department shall report any changes to the NC FAST Program to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Commission on Governmental Operations, the Senate Appropriations Committee on Health and Human Services, the House Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than 30 days after receiving all the approvals required by this section.

 

Medicaid

SECTION 10.31.(a)  Use of Funds, Allocation of Costs, Other Authorizations. -

(1)        Use of funds. - Funds appropriated in this act for services provided in accordance with Title XIX of the Social Security Act (Medicaid) are for both the categorically needy and the medically needy.

(2)        Allocation of nonfederal cost of Medicaid. - The State shall pay one hundred percent (100%) of the nonfederal costs of all applicable services listed in this section. In addition, the State shall pay one hundred percent (100%) of the federal Medicare Part D clawback payments under the Medicare Modernization Act of 2004.

(3)        Use of funds for development and acquisition of equipment and software. - If first approved by the Office of State Budget and Management, the Division of Medical Assistance, Department of Health and Human Services, may use funds that are identified to support the cost of development and acquisition of equipment and software and related operational costs through contractual means to improve and enhance information systems that provide management information and claims processing. The Department of Health and Human Services shall identify adequate funds to support the implementation and first year's operational costs that exceed funds allocated for the new contract for the fiscal agent for the Medicaid Management Information System.

(4)        Reports. - Unless otherwise provided, whenever the Department of Health and Human Services is required by this section to report to the General Assembly, the report shall be submitted 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 of the Legislative Services Office. Reports shall be submitted on the date provided in the reporting requirement.

SECTION 10.31.(b)  Policy. -

(1)        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.

(2)        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.

(3)        Fraud and abuse. - The Division of Medical Assistance, Department of Health and Human Services, 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.

(4)        Medical policy. - Unless required for compliance with federal law, 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. If the fiscal impact indicated by the fiscal analysis for any proposed medical policy change exceeds three million dollars ($3,000,000) in total requirements for a given fiscal year, then the Department shall submit the proposed medical policy change with the fiscal analysis to the Office of State Budget and Management and the Fiscal Research Division. The Department shall not implement any proposed medical policy change exceeding three million dollars ($3,000,000) in total requirements for a given fiscal year unless the source of State funding is identified and approved by the Office of State Budget and Management. For medical policy changes exceeding three million dollars ($3,000,000) in total requirements for a given fiscal year that are required for compliance with federal law, 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 provide the Office of State Budget and Management and the Fiscal Research Division a quarterly report itemizing all medical policy changes with total requirements of less than three million dollars ($3,000,000).

(5)        Posting of notices of changes on Department 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.

(6)        Electronic transactions. - Medicaid 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. Medicaid 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 10.31.(c)  Eligibility. - Eligibility for Medicaid shall be determined in accordance with the following:

(1)        Medicaid and Work First Family Assistance. -

a.         Income eligibility standards. - The maximum net family annual income eligibility standards for Medicaid and Work First Family Assistance and the Standard of Need for Work First Family Assistance shall be as follows:

 

                                              CATEGORICALLY                                     MEDICALLY

                              NEEDY - WFFA*                                          NEEDY

 

                  Standard of Need

                       &

                  Families and

                  Families and                       WFFA*                       Children &

Family        Children                             Payment                       AA, AB, AD*

Size            Income Level                      Level                            Income Level

1                 $4,344                               $2,172                          $2,900

2                   5,664                                 2,832                            3,800

3                   6,528                                 3,264                            4,400

4                   7,128                                 3,564                            4,800

5                   7,776                                 3,888                            5,200

6                   8,376                                 4,188                            5,600

7                   8,952                                 4,476                            6,000

8                   9,256                                 4,680                            6,300

 

*Work First Family Assistance (WFFA); Aid to the Aged (AA); Aid to the Blind (AB); and Aid to the Disabled (AD).

b.         The payment level for Work First Family Assistance shall be fifty percent (50%) of the standard of need. These standards may be changed with the approval of the Director of the Budget.

c.         The Department of Health and Human Services shall provide Medicaid coverage to 19- and 20-year-olds in accordance with federal rules and regulations.

d.         Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.

(2)        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:

a.         All elderly, blind, and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines.

b.         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.

c.         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.

d.         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.

e.         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.

f.          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.

g.         Workers with disabilities described in G.S. 108A-54.1 with unearned income equal to or less than one hundred fifty percent (150%) of the federal poverty guidelines.

(3)        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.

(4)        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.

(5)        ICF and ICF/MR work incentive allowances. - The Department of Health and Human Services may provide an incentive allowance to Medicaid-eligible recipients of ICF and ICF/MR services, who are regularly engaged in work activities as part of their developmental plan, and for whom retention of additional income contributes to their achievement of independence. The State funds required to match the federal funds that are required by these allowances shall be provided from savings within the Medicaid budget or from other unbudgeted funds available to the Department. The incentive allowances may be as follows:

Monthly Net Wages                                Monthly Incentive Allowance

$1.00 to $100.99                                       Up to $50.00

$101.00 to $200.99                                   $80.00

$201.00 to $300.99                                   $130.00

$301.00 and greater                                   $212.00

(6)        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 10.31.(d)  Services and Payment Bases. - The Department shall spend funds appropriated for Medicaid services in accordance with the following schedule of services and payment bases. All services and payments are subject to the language at the end of this subsection. Unless otherwise provided, services and payment bases will be as prescribed in the State Plan as established by the Department of Health and Human Services and may be changed with the approval of the Director of the Budget.

The Department of Health and Human Services (DHHS) shall operate and manage the Medicaid program within the annual State appropriation. DHHS shall establish policies, practices, rates, and expenditure procedures that are in compliance with CMS regulations and approved State Plans, State laws, and regulations.

Additionally, the Department shall be required to use the Physician's Advisory Group for review and will collaborate with other stakeholder groups in the adoption and implementation of all clinical and payment policies, including all public notice and posting provisions in use as of the effective date of this provision.

(1)        Mandatory Services. - In order to manage the Medicaid program within the annual State appropriation, the Secretary shall have the authority to submit State Plan amendments and establish temporary rules affecting the amount of service and payment rate for the following mandatory services:

a.         Hospital inpatient. - Payment for hospital inpatient services will be prescribed by the State Plan as established by the Department of Health and Human Services.

b.         Hospital outpatient. - Eighty percent (80%) of allowable costs or a prospective reimbursement plan as established by the Department of Health and Human Services.

c.         Nursing facilities. - Nursing facilities providing services to Medicaid recipients who also qualify for Medicare must be enrolled in the Medicare program as a condition of participation in the Medicaid program. State facilities are not subject to the requirement to enroll in the Medicare program. Residents of nursing facilities who are eligible for Medicare coverage of nursing facility services must be placed in a Medicare-certified bed. Medicaid shall cover facility services only after the appropriate services have been billed to Medicare.

d.         Physicians, certified nurse midwife services, nurse practitioners, physician assistants. - Fee schedules as developed by the Department of Health and Human Services.

e.         EPSDT Screens. - Payments in accordance with rate schedule developed by the Department of Health and Human Services.

f.          Home health and related services, durable medical equipment. - Payments according to reimbursement plans developed by the Department of Health and Human Services.

g.         Rural health clinical services. - Provider-based, reasonable cost, nonprovider-based, single-cost reimbursement rate per clinic visit.

h.         Family planning. - Negotiated rate for local health departments. For other providers see specific services, e.g., hospitals, physicians.

i.          Independent laboratory and X-ray services. - Uniform fee schedules as developed by the Department of Health and Human Services.

j.          Medicare Buy-In. - Social Security Administration premium.

k.         Ambulance services. - Uniform fee schedules as developed by the Department of Health and Human Services. Public ambulance providers will be reimbursed at cost.

l.          Medicare crossover claims. - The Department shall apply Medicaid medical policy to Medicare claims for dually eligible recipients. The Department shall pay an amount up to the actual coinsurance or deductible or both, 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.

m.        Pregnancy-related services. - Covered services for pregnant women shall include nutritional counseling, psychosocial counseling, and predelivery and postpartum home visits as described in clinical policy.

n.         Mental health services. - Coverage is limited to children eligible for EPSDT services provided by:

1.         Licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, licensed clinical addictions specialists, and certified clinical supervisors, when Medicaid-eligible children are referred by the Community Care of North Carolina primary care physician, a Medicaid-enrolled psychiatrist, or the area mental health program or local management entity, and

2.         Institutional providers of residential services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) for children and Psychiatric Residential Treatment Facility services that meet federal and State requirements as defined by the Department.

(2)        Optional Services. - In order to manage the Medicaid program within the annual State appropriation, the Secretary shall have the authority to submit State Plan amendments and establish temporary rules affecting the amount of service, payment rate, or elimination of the following optional services:

a.         Certified registered nurse anesthetists.

b.         Community Alternative Programs.

c.         Hearing aids. - Wholesale cost plus dispensing fee to provider.

d.         Ambulatory surgical centers.

e.         Private duty nursing, clinic services, prepaid health plans.

f.          Intermediate care facilities for the mentally retarded.

g.         Chiropractors, podiatrists, optometrists, dentists.

h.         Dental coverage. - Dental services shall be provided on a restricted basis in accordance with criteria adopted by the Department to implement this subsection.

i.          Optical supplies. - Payment for materials is made to a contractor in accordance with 42 C.F.R. § 431.54(d). Fees paid to dispensing providers are negotiated fees established by the State agency based on industry charges.

j.          Physical therapy, occupational therapy, and speech therapy. - Services for adults. Payments are to be made only to qualified providers at rates negotiated by the Department of Health and Human Services.

k.         Personal care services. - Payment in accordance with the State Plan developed by the Department of Health and Human Services.

l.          Case management services. - Reimbursement in accordance with the availability of funds to be transferred within the Department of Health and Human Services.

m.        Hospice and palliative care.

n.         Medically necessary prosthetics or orthotics. - In order to be eligible for reimbursement, providers must be licensed or certified by the occupational licensing board or the certification authority having authority over the provider's license or certification. Medically necessary prosthetics and orthotics are subject to prior approval and utilization review.

o.         Health insurance premiums.

p.         Medical care/other remedial care. - Services not covered elsewhere in this section include related services in schools; health professional services provided outside the clinic setting to meet maternal and infant health goals.

q.         Bariatric surgeries. - Covered as described in clinical policy 1A-15, Surgery for Clinically Severe Obesity. In order to raise the standard of bariatric care in North Carolina, approval for these procedures shall only be granted to those providers (facilities and surgeons) who are designated as a Bariatric Surgery Center of Excellence (BSCOE) by the American Society for Metabolic and Bariatric Surgery (ASMBS). Providers must then submit to NC Medicaid documentation of their designation as a BSCOE as well as verify their continued annual participation.

r.          Drugs. -

1.         Reimbursements. - Reimbursements shall be available for prescription drugs as allowed by federal regulations plus a professional services fee per month, excluding refills for the same drug or generic equivalent during the same month. Payments for drugs are subject to the provisions of this subdivision or in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. Payment of the professional services fee shall be made in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. The professional services fee shall be established by the Department. In addition to the professional services fee, the Department may pay an enhanced fee for pharmacy services.

2.         Limitations on quantity. - The Department of Health and Human Services may establish authorizations, limitations, and reviews for specific drugs, drug classes, brands, or quantities in order to manage effectively the Medicaid program. The Department may impose prior authorization requirements on brand-name drugs for which the phrase "medically necessary" is written on the prescription.

3.         Dispensing of generic drugs. - Notwithstanding G.S. 90-85.27 through G.S. 90-85.31, or any other law to the contrary, under the Medical Assistance Program (Title XIX of the Social Security Act), and except as otherwise provided in this subsection for drugs listed in the narrow therapeutic index, a prescription order for a drug designated by a trade or brand name shall be considered to be an order for the drug by its established or generic name, except when the prescriber has determined, at the time the drug is prescribed, that the brand-name drug is medically necessary and has written on the prescription order the phrase "medically necessary." An initial prescription order for a drug listed in the narrow therapeutic drug index that does not contain the phrase "medically necessary" shall be considered an order for the drug by its established or generic name, except that a pharmacy shall not substitute a generic or established name prescription drug for subsequent brand or trade name prescription orders of the same prescription drug without explicit oral or written approval of the prescriber given at the time the order is filled. Generic drugs shall be dispensed at a lower cost to the Medical Assistance Program rather than trade or brand-name drugs. Notwithstanding this subdivision to the contrary, the Secretary of Health and Human Services may prevent substitution of a generic equivalent drug, including a generic equivalent that is on the State maximum allowable cost list, when the net cost to the State of the brand-name drug, after consideration of all rebates, is less than the cost of the generic equivalent. As used in this subsection, "brand name" means the proprietary name the manufacturer places upon a drug product or on its container, label, or wrapping at the time of packaging; and "established name" has the same meaning as in section 502(e)(3) of the Federal Food, Drug, and Cosmetic Act, as amended, 21 U.S.C. § 352(e)(3).

4.         Specialty drug provider network. - The Department of Health and Human Services shall work with specialty drug providers, manufacturers of specialty drugs, Medicaid recipients who are prescribed specialty drugs, and the medical professionals that treat Medicaid recipients who are prescribed specialty drugs to develop ways to ensure that best practices and the prevention of overutilization are maintained in the delivery and utilization of specialty drugs.

5.         Lock controlled substances prescriptions into single pharmacy/provider. - The Department of Health and Human Services, Division of Medical Assistance, shall lock Medicaid enrollees into a single pharmacy and provider when the Medicaid enrollee's utilization of selected controlled substance medications meets the lock-in criteria approved by the NC Physicians Advisory Group, as follows:

I.          Enrollees may be prescribed selected controlled substance medications by only one prescribing physician and may not change the prescribing physician at any time without prior approval or authorization by the Division.

II.         Enrollees may have prescriptions for selected controlled substance medications filled at only one pharmacy and may not change to another pharmacy at any time without prior approval or authorization by the Division.

5A.      Prior authorization. - The Department of Health and Human Services shall not impose prior authorization requirements or other restrictions under the State Medical Assistance Program on medications prescribed for Medicaid recipients for the treatment of (i) mental illness, including, but not limited to, medications for schizophrenia, bipolar disorder, major depressive disorder or (ii) HIV/AIDS. Medications prescribed for the treatment of mental illness shall be included on the Preferred Drug List (PDL). The Department of Health and Human Services, Division of Medical Assistance, may initiate prior authorization for the prescribing of drugs specified for the treatment of mental illness by providers who fail to prescribe those drugs in accordance with indications and dosage levels approved by the federal Food and Drug Administration. The Department may require retrospective clinical justification for the use of multiple psychotropic drugs for a Medicaid patient. For individuals 18 years of age and under who are prescribed three or more psychotropic medications, the Department shall implement clinical edits that target inefficient, ineffective, or potentially harmful prescribing patterns. When such patterns are identified, the Medical Director for the Division of Medical Assistance and the Chief of Clinical Policy for the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services shall require a peer-to-peer consultation with the target prescribers. Alternatives discussed during the peer-to-peer consultations shall be based upon:

a.         Evidence-based criteria available regarding efficacy or safety of the covered treatments; and

b.         Policy approval by a majority vote of the North Carolina Physicians Advisory Group (NCPAG).

The target prescriber has final decision-making authority to determine which prescription drug to prescribe or refill.

6.         Preferred Drug List. - The Department of Health and Human Services shall establish and implement a preferred drug list program under the Division of Medical Assistance. Medications prescribed for the treatment of mental illness shall be included on the Preferred Drug List (PDL).

The pharmaceutical and therapeutics committee of the Physician's Advisory Group (PAG) shall provide ongoing review of the preferred drug list, including the implementation of prior authorization on identified drugs. Members of the committee shall submit conflict of interest disclosure statements to the Department and shall have an ongoing duty to disclose conflicts of interest not included in the original disclosure.

The Department, in consultation with the PAG, shall adopt and publish policies and procedures relating to the preferred drug list, including the following:

I.          Guidelines for the presentation and review of drugs for inclusion on the preferred drug list.

II.         The manner and frequency of audits of the preferred drug list for appropriateness of patient care and cost-effectiveness.

III.       An appeals process for the resolution of disputes.

IV.       Such other policies and procedures as the Department deems necessary and appropriate.

The Department and the pharmaceutical and therapeutics committee shall consider all therapeutic classes of prescription drugs for inclusion on the preferred drug list, except medications for treatment of human immunodeficiency virus or acquired immune deficiency syndrome shall not be subject to consideration for inclusion on the preferred drug list.

The Department shall maintain an updated preferred drug list in electronic format and shall make the list available to the public on the Department's Internet Web site.

The Department shall (i) enter into a multistate purchasing pool; (ii) negotiate directly with manufacturers or labelers; (iii) contract with a pharmacy benefit manager for negotiated discounts or rebates for all prescription drugs under the medical assistance program; or (iv) effectuate any combination of these options in order to achieve the lowest available price for such drugs under such program.

The Department may negotiate supplemental rebates from manufacturers that are in addition to those required by Title XIX of the Social Security Act. The committee shall consider a product for inclusion on the preferred drug list if the manufacturer provides a supplemental rebate. The Department may procure a sole source contract with an outside entity or contractor to conduct negotiations for supplemental rebates.

The Secretary of the Department of Health and Human Services shall establish a Preferred Drug List (PDL) Policy Review Panel within 60 days after the effective date of this section. The purpose of the PDL Policy Review Panel is to review the Medicaid PDL recommendations from the Department of Health and Human Services, Division of Medical Assistance, and the Physician Advisory Group Pharmacy and Therapeutics (PAG P&T) Committee.

The Secretary shall appoint the following individuals to the review panel:

I.          The Director of Pharmacy for the Division of Medical Assistance.

II.         A representative from the PAG P&T Committee.

III.       A representative from the Old North State Medical Society.

IV.       A representative from the North Carolina Association of Pharmacists.

V.        A representative from Community Care of North Carolina.

VI.       A representative from the North Carolina Psychiatric Association.

VII.      A representative from the North Carolina Pediatric Society.

VIII.     A representative from the North Carolina Academy of Family Physicians.

IX.       A representative from the North Carolina Chapter of the American College of Physicians.

X.        A representative from a research-based pharmaceutical company.

XI.       A representative from hospital-based pharmacy.

Individuals appointed to the Review Panel, except for the Division's Director of Pharmacy, shall only serve a two-year term.

After the Department, in consultation with the PAG P&T Committee, publishes a proposed policy or procedure related to the Medicaid PDL, the Review Panel shall hold an open meeting to review the recommended policy or procedure along with any written public comments received as a result of the posting. The Review Panel shall provide an opportunity for public comment at the meeting. After the conclusion of the meeting, the Review Panel shall submit policy recommendations about the proposed Medicaid PDL policy or procedure to the Secretary.

The Department may establish a Preferred Drug List for the North Carolina Health Choice for Children program and pursue negotiated discounts or rebates for all prescription drugs under the program in order to achieve the lowest available price for such drugs under such program. The Department may procure a sole source contract with an outside entity or contractor to conduct negotiations for  these discounts or rebates. The PAG P&T Committee and Preferred Drug List Policy Review Panel will provide recommendations on policies and procedures for the NC Health Choice Preferred Drug List.

s.          Incentive Payments as outlined in the State Medicaid Health Information Plan for Electronic Health Records.

t.          Other mental health services. - Unless otherwise covered by this section, coverage is limited to the following:

1.         Services as established by the Division of Medical Assistance in consultation with the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) when provided in agencies meeting the requirements and reimbursement is made in accordance with a State Plan developed by the Department of Health and Human Services not to exceed the upper limits established in federal regulations.

2.         For Medicaid-eligible adults, services provided by licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, and nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, certified clinical addictions specialists, and licensed clinical supervisors, Medicaid-eligible adults may be self-referred.

3.         Payments made for services rendered in accordance with this subdivision shall be qualified providers in accordance with approved policies and the State Plan. Nothing in sub­sub-subdivisions 1. or 2. of this sub­subdivision shall be interpreted to modify the scope of practice of any service provider, practitioner, or licensee, nor to modify or attenuate any collaboration or supervision requirement related to the professional activities of any service provider, practitioner, or licensee. Nothing in sub­sub-subdivisions 1. or 2. of this sub­subdivision shall be interpreted to require any private health insurer or health plan to make direct third-party reimbursements or payments to any service provider, practitioner, or licensee.

Notwithstanding G.S. 150B-21.1(a), the Department of Health and Human Services may adopt temporary rules in accordance with Chapter 150B of the General Statutes further defining the qualifications of providers and referral procedures in order to implement this subdivision. Coverage policy for services established by the Division of Medical Assistance in consultation with the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services under sub-subdivisions a. and b.2. of this subdivision shall be established by the Division of Medical Assistance.

u.         Experimental/investigational medical procedures. - Coverage is limited to services, supplies, drugs, or devices recognized as standard medical care for the condition, disease, illness, or injury being treated as determined by nationally recognized scientific professional organizations or scientifically based federal organizations such as the Food and Drug Administration, the National Institutes of Health, the Centers for Disease Control, or the Agency for Health Care Research and Quality.

v.         Clinical trials. - The Division of Medical Assistance shall develop clinical policy for the coverage of routine costs in clinical trial services for life-threatening conditions using resources such as coverage criteria from Medicare, NC State Health Plan, and the input of the Physician Advisory Group.

w.        Organ transplants.

(3)        Never Events and Hospital Acquired Conditions (HACs) shall not be reimbursed. Medicaid will adhere to Medicare requirements for definition of events and conditions.

SECTION 10.31.(e)  Provider Performance Bonds and Visits. -

(1)        Subject to the provisions of this subdivision, 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, or reinstatement if:

a.         The provider fails to demonstrate financial viability.

b.         The Department determines there is significant potential for fraud and abuse.

c.         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.

(1a)      The Department may waive or limit the requirements of this subsection for individual Medicaid-enrolled providers or for one or more classes of Medicaid-enrolled providers based on the following:

a.         The provider's or provider class's dollar amount of monthly billings to Medicaid.

b.         The length of time an individual provider has been licensed, endorsed, certified, or accredited in this State to provide services.

c.         The length of time an individual provider has been enrolled to provide Medicaid services in this State.

d.         The provider's demonstrated ability to ensure adequate record keeping, staffing, and services.

e.         The need to ensure adequate access to care.

In waiving or limiting requirements of this subsection, 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. The Department may adopt temporary rules in accordance with G.S. 150B-21.1 as necessary to implement this provision.

(2)        Reimbursement is available for up to 30 visits per recipient per fiscal year for the following professional services: physicians, nurse practitioners, nurse midwives, physician assistants, clinics, health departments, optometrists, chiropractors, and podiatrists. The Department of Health and Human Services shall adopt medical policies in accordance with G.S. 108A-54.2 to distribute the allowable number of visits for each service or each group of services consistent with federal law. In addition, the Department shall establish a threshold of some number of visits for these services. The Department shall ensure that primary care providers or the appropriate CCNC network are notified when a patient is nearing the established threshold to facilitate care coordination and intervention as needed.

Prenatal services, all EPSDT children, emergency room visits, and mental health visits subject to independent utilization review are exempt from the visit limitations contained in this subdivision. Subject to appropriate medical review, the Department may authorize exceptions when additional care is medically necessary. Routine or maintenance visits above the established visit limit will not be covered unless necessary to actively manage a life threatening disorder or as an alternative to more costly care options.

SECTION 10.31.(f)  Exceptions and Limitations on Services; Authorization of Co-Payments and Other Services. -

(1)        Exceptions to service limitations, eligibility requirements, and payments. - Service limitations, eligibility requirements, and payment bases in this section may be waived by the Department of Health and Human Services, with the approval of the Director of the Budget, to allow the Department to carry out pilot programs for prepaid health plans, contracting for services, managed care plans, or community-based services programs in accordance with plans approved by the United States Department of Health and Human Services or when the Department determines that such a waiver or innovation projects will result in a reduction in the total Medicaid costs.

(2)        Co-payment for Medicaid services. - The Department of Health and Human Services may establish co-payments up to the maximum permitted by federal law and regulation.

(3)        Provider enrollment fee. - Effective September 1, 2009, the Department of Health and Human Services, Division of Medical Assistance, shall charge an enrollment fee of one hundred dollars ($100.00), or 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.

SECTION 10.31.(g)  Rules, Reports, and Other Matters. -

Rules. - The Department of Health and Human Services may adopt temporary or emergency rules according to the procedures established in G.S. 150B-21.1 and G.S. 150B-21.1A when it finds that these rules are necessary to maximize receipt of federal funds within existing State appropriations, to reduce Medicaid expenditures, and to reduce fraud and abuse. The Department of Health and Human Services shall adopt rules requiring providers to attend training as a condition of enrollment and may adopt temporary or emergency rules to implement the training requirement.

Prior to the filing of the temporary or emergency rules authorized under this subsection 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 or emergency rule and its effect on State appropriations and local governments.

 

DMA Contract Shortfall

SECTION 10.32.(a)  Budget approval is required by the Office of State Budget and Management prior to the Department of Health and Human Services, Division of Medical Assistance, entering into any new contract or the renewal or amendment of existing contracts that exceed the current contract amounts.

SECTION 10.32.(b)  The Division of Medical Assistance shall make every effort to effect savings within its operational budget and use those savings to offset its contract shortfall. Notwithstanding G.S. 143C-6-4(b)(3), the Department may use funds appropriated in this act to cover the contract shortfall in the Division of Medical Assistance if insufficient funds exist within the Division.

 

Medicaid Cost Containment Activities

SECTION 10.33.(a)  The Department of Health and Human Services may use up to five million dollars ($5,000,000) in the 2011-2012 fiscal year and up to five million dollars ($5,000,000) in the 2012-2013 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 10.33.(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 and Senate Appropriations Subcommittees 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.

 

Medicaid Special Fund Transfer

SECTION 10.34.  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 2011-2012 fiscal year and the sum of forty-three million dollars ($43,000,000) for the 2012-2013 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. The Department may also use funds in the Medicaid Special Fund to fund the settlement of the Disproportionate Share Hospital payment audit issues between the Department of Health and Human Services and the federal government related to fiscal years 1997-2002, and funds are appropriated from the Fund for the 2011-2012 fiscal year for this purpose.

 

Accounting for Medicaid Receivables as Nontax Revenue

SECTION 10.35.(a)  Receivables reserved at the end of the 2011-2012 and 2012-2013 fiscal years shall, when received, be accounted for as nontax revenue for each of those fiscal years.

SECTION 10.35.(b)  For the 2011-2012 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred fifteen million dollars ($115,000,000) with the Department of State Treasurer to be accounted for as nontax revenue. For the 2012-2013 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred fifteen million dollars ($115,000,000) 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 operated hospitals which are used to provide indigent and non-indigent care services.  The return from State owned and 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.

 

Families Pay Part of the Cost of Services Under the CAP-MR/DD Program and the CAP-Children's Program Based on Family Income

SECTION 10.36.(a)  Subject to approval from the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services, Division of Medical Assistance, shall, in consultation with the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and Community Alternatives Program (CAP) stakeholders, develop a schedule of cost-sharing requirements for families of children with incomes above the Medicaid allowable limit to share in the costs of their child's Medicaid expenses under the CAP-MR/DD (Community Alternatives Program for Mental Retardation and Developmentally Disabled) and the CAP-C (Community Alternatives Program for Children). The cost-sharing amounts shall be based on a sliding scale of family income and shall take into account the impact on families with more than one child in the CAP programs. In developing the schedule, the Department shall also take into consideration how other states have implemented cost-sharing in their CAP programs. The Division of Medical Assistance may establish monthly deductibles as a means of implementing this cost-sharing. The Department shall provide for at least one public hearing and other opportunities for individuals to comment on the imposition of cost-sharing under the CAP program schedule.

SECTION 10.36.(b)  The Division of Medical Assistance shall also, in collaboration with the Controller's Office of the Department of Health and Human Services, the Division of Information Resource Management (DIRM), and the new vendor of the replacement Medicaid Management Information System, develop business rules, program policies, and procedures and define relevant technical requirements.

SECTION 10.36.(c)  Implementation of this provision shall be delayed until the implementation of the new Medicaid Management Information System.

 

Authorize the Division of Medical Assistance to Take Certain Steps to Effectuate Compliance with Budget Reductions in the Medicaid Program

SECTION 10.37.(a)  The Department of Health and Human Services, Division of Medical Assistance, may take the following actions, notwithstanding any other provision of this act or other State law or rule to the contrary:

(1)        In-Home Care provision. - In order to enhance in-home aide services to Medicaid recipients, the Department of Health and Human Services, Division of Medical Assistance, shall:

a.         No longer provide services under PCS and PCS-Plus the later of  January 1, 2012, or whenever CMS approves the elimination of the PCS and PCS-Plus programs and the implementation of the following two new services:

1.         In-Home Care for Children (IHCC). - Services to assist families to meet the in-home care needs of children, including those individuals under the age of 21 receiving comprehensive and preventive child health services through the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program.

2.         In-Home Care for Adults (IHCA). - Services to meet the eating, dressing, bathing, toileting, and mobility needs of individuals 21 years of age or older who, because of a medical condition, disability, or cognitive impairment, demonstrate unmet needs for, at a minimum:  (i)  three of the five qualifying activities of daily living (ADLs) with limited hands-on assistance; (ii) two ADLs, one of which requires extensive assistance; or (iii) two ADLs, one of which requires assistance at the full dependence level. The five qualifying ADLs are eating, dressing, bathing, toileting, and mobility. IHCA shall serve individuals at the highest level of need for in-home care who are able to remain safely in the home.

b.         Establish, in accordance with G.S. 108A-54.2, a Medical Coverage Policy for each of these programs to include:

1.         For IHCC, up to 60 hours per month in accordance with an assessment conducted by DMA or its designee and a plan of care developed by the service provider and approved by DMA or its designee. Additional hours may be authorized when the services are required to correct or ameliorate defects and physical and mental illnesses and conditions in this age group, as defined in 42 U.S.C. § 1396d(r)(5), in accordance with a plan of care approved by DMA or its designee.

2.         For IHCA, up to 80 hours per month in accordance with an assessment conducted by DMA or its designee and a plan of care developed by the service provider and approved by DMA or its designee.

c.         Implement the following program limitations and restrictions to apply to both IHCC and IHCA:

1.         Additional services to children required under federal EPSDT requirements shall be provided to qualified recipients in the IHCC Program.

2.         Services shall be provided in a manner that supplements, rather than supplants, family roles and responsibilities.

3.         Services shall be authorized in amounts based on assessed need of each recipient, taking into account care and services provided by the family, other public and private agencies, and other informal caregivers who may be available to assist the family. All available resources shall be utilized fully, and services provided by such agencies and individuals shall be disclosed to the DMA assessor.

4.         Services shall be directly related to the hands-on assistance and related tasks to complete each qualifying ADL in accordance with the IHCC or IHCA  assessment and plan of care, as applicable.

5.         Services provided under IHCC and IHCA shall not include household chores not directly related to the qualifying ADLs, nonmedical transportation, financial management, and non-hands-on assistance such as cueing, prompting, guiding, coaching, or babysitting.

6.         Essential errands that are critical to maintaining the health and welfare of the recipient may be approved on a case-by-case basis by the DMA assessor when there is no family member, other individual, program, or service available to meet this need. Approval, including the amount of time required to perform this task, shall be documented on the recipient's assessment form and plan of care.

d.         Utilize the following process for admission to the IHCC and IHCA programs:

1.         The recipient shall be seen by his or her primary or attending physician, who shall provide written authorization for referral for the service and written attestation to the medical necessity for the service.

2.         All assessments for admission to IHCC and IHCA, continuation of these services, and change of status reviews for these services shall be performed by DMA or its designee. The DMA designee may not be an owner of a provider business or provider of in-home or personal care services of any type.

3.         DMA or its designee shall determine and authorize the amount of service to be provided on a "needs basis," as determined by its review and findings of each recipient's degree of functional disability and level of unmet needs for hands-on personal assistance in the five qualifying ADLs.

e.         Take all appropriate actions to manage the cost, quality, program compliance, and utilization of services provided under the IHCC and IHCA programs, including, but not limited to:

1.         Priority independent reassessment of recipients before the anniversary date of their initial admission or reassessment for those recipients likely to qualify for the restructured IHCC and IHCA programs;

2.         Priority independent reassessment of recipients requesting a change of service provider;

3.         Targeted reassessments of recipients prior to their anniversary dates when the current provider assessment indicates they may not qualify for the program or for the amount of services they are currently receiving;

4.         Targeted reassessment of recipients receiving services from providers with a history of program noncompliance;

5.         Provider desk and on-site reviews and recoupment of all identified overpayments or improper payments;

6.         Recipient reviews, interviews, and surveys;

7.         The use of mandated electronic transmission of referral forms, plans of care, and reporting forms;

8.         The use of mandated electronic transmission of uniform reporting forms for recipient complaints and critical incidents;

9.         The use of automated systems to monitor, evaluate, and profile provider performance against established performance indicators; and

10.       Establishment of rules that implement the requirements of 42 C.F.R. § 441.16.

f.          Time line for implementation of new IHCC and IHCA programs.

1.         Subject to approvals from CMS, DMA shall make every effort to implement the new IHCC and IHCA programs by January 1, 2013.

2.         DMA shall ensure that individuals who qualify for the IHCC and IHCA programs shall not experience a lapse in service and, if necessary, shall be admitted on the basis of their current provider assessment when an independent reassessment has not yet been performed and the current assessment documents that the medical necessity requirements for the IHCC or IHCA program, as applicable, have been met.

3.         Prior to the implementation date of the new IHCC and IHCA programs, all recipients in the PCS and PCS-Plus programs shall be notified pursuant to 42 C.F.R. § 431.220(b) and discharged, and the Department shall no longer provide services under the PCS and PCS-Plus programs, which shall terminate. Recipients who qualify for the new IHCC and IHCA programs shall be admitted and shall be eligible to receive services immediately.

(2)        Clinical coverage. - The Department of Health and Human Services, Division of Medical Assistance, shall amend applicable clinical policies and submit applicable State Plan amendments to Centers for Medicare and Medicaid Services (CMS) to implement the budget reductions authorized in the following clinical coverage areas in this act:

a.         Eliminate or limit adult physical therapy, occupational therapy, and speech therapy visits to three visits per calendar year.

(3)        MH/DD/SAS personal care and personal assistance services provision. - A denial, reduction, or termination of Medicaid-funded personal care services or in-home care services shall result in a similar denial, reduction, or termination of State-funded MH/DD/SAS personal care and personal assistance services.

(4)        Community Support Team. - Authorization for a Community Support Team shall be based upon medical necessity as defined by the Department and shall not exceed 18 hours per week.

(5)        MH residential. - The Department of Health and Human Services shall restructure the Medicaid child mental health, developmental disabilities, and substance abuse residential services to ensure that total expenditures are within budgeted levels. All restructuring activities shall be in compliance with federal and State law or rule. The Divisions of Medical Assistance and Mental Health, Developmental Disabilities, and Substance Abuse Services shall establish a team inclusive of providers, LMEs, and other stakeholders to assure effective transition of recipients to appropriate treatment options. The restructuring shall address all of the following:

a.         Submission of the therapeutic family service definition to CMS.

b.         The Department shall reexamine the entrance and continued stay criteria for all residential services. The revised criteria shall promote least restrictive services in the home prior to residential placement. During treatment, there must be inclusion in community activities and parent or legal guardian participation in treatment.

c.         Require all existing residential providers or agencies to be nationally accredited within one year of enactment of this act. Any providers enrolled after the enactment of this act shall be subject to existing endorsement and nationally accrediting requirements. In the interim, providers who are nationally accredited will be preferred providers for placement considerations.

d.         Before a child can be admitted to Level III or Level IV placement, an assessment shall be completed to ensure the appropriateness of placement, and one or more of the following shall apply:

1.         Placement shall be a step down from a higher level placement such as a psychiatric residential treatment facility or inpatient; or

2.         Multisystemic therapy or intensive in-home therapy services have been unsuccessful; or

3.         The Child and Family Team has reviewed all other alternatives and recommendations and recommends Level III or Level IV placement due to maintaining health and safety; or

4.         Transition or discharge plan shall be submitted as part of the initial or concurrent request.

e.         Length of stay is limited to no more than 180 days. Any exceptions granted will require for non-CABHAs an independent psychological or psychiatric assessment, for CABHAs, a psychological or psychiatric assessment that may be completed by the CABHA, and for both Child and Family Team review of goals and treatment progress, family or discharge placement setting are actively engaged in treatment goals and objectives, and active participation of the prior authorization of vendor.

f.          Submission of discharge plan is required in order for the request for authorization for Level III or Level IV services to be considered  complete, but the authorization approval is not conditional upon the receipt of the signature of the system of care coordinator. The LME will designate appropriate individuals who can sign the discharge plan within 24 hours of receipt of the discharge plan. Failure to submit a complete discharge plan will result in the request being returned as unable to process.

g.         Any residential provider that ceases to function as a provider shall provide written notification to DMA, the Local Management Entity, recipients, and the prior authorization vendor 30 days prior to closing of the business.

h.         Record maintenance is the responsibility of the provider and must be in compliance with record retention requirements. Records shall also be available to State, federal, and local agencies.

i.          Failure to comply with notification, recipient transition planning, or record maintenance shall be grounds for withholding payment until such activity is concluded. In addition, failure to comply shall be conditions that prevent enrollment for any Medicaid or State-funded service. A provider (including its officers, directors, agents, or managing employees or individuals or entities having a direct or indirect ownership interest or control interest of five percent (5%) or more as set forth in Title XI of the Social Security Act) that fails to comply with the required record retention may be subject to sanctions, including exclusion from further participation in the Medicaid program, as set forth in Title XI.

(6)        Reduce Medicaid rates. - Subject to the prior approval of the Office of State Budget and Management, the Secretary shall reduce Medicaid provider rates to accomplish the reduction in funds for this purpose enacted in this act. The Secretary shall consider the impact on access to care through primary care providers and critical access hospitals and may adjust the rates accordingly. Medicaid rates predicated upon Medicare fee schedules shall follow Medicare reductions but not Medicare increases unless federally required. The reductions authorized by this subdivision are subject to the following additional limitations:

a.         Additional limitation on reductions for adult care home services. - Provider rates for adult care home services shall not be reduced below current levels.

b.         Exceptions for certain providers. - The rate reduction applies to all Medicaid private and public providers with the following exceptions:

1.         Federally qualified health centers.

2.         Rural health centers.

3.         State institutions.

4.         Hospital outpatient.

5.         Pharmacies.

6.         Local health departments.

7.         Critical Access Behavioral Health Agencies.

8.         The State Public Health Laboratory.

9.         The noninflationary components of the case-mix reimbursement system for nursing facilities.

(7)        Medicaid identification cards. - The Department shall issue Medicaid identification cards to recipients on an annual basis with updates as needed.

(8)        The Department of Health and Human Services shall develop a plan for the consolidation of case management services utilizing CCNC. The plan shall address the time line and process for implementation, the identification of savings, and the Medicaid recipients affected by the consolidation. Consolidation under this subdivision does not apply to HIV case management. By December 1, 2012, the Department shall report on the plan 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.

(9)        For the purpose of promoting cost-effective utilization of outpatient mental health services for children, DMA shall require prior authorization for services following the sixteenth visit.

(10)      Provision of Medicaid Private Duty Nursing (PDN). - DMA shall change the Medicaid Private Duty Nursing program provided under the State Medicaid Plan, as follows:

a.         Restructure the current PDN program to provide services that are:

1.         Provided only to qualified recipients under the age of 21.

2.         Authorized by the recipient's primary care or attending physician.

3.         Limited to 16 hours of service per day, unless additional services are required to correct or ameliorate defects and physical and mental illnesses and conditions as defined in 42 U.S.C. § 1396d(r)(5).

4.         Approved, based on an initial assessment and continuing need reassessments performed by an Independent Assessment Entity (IAE) that does not provide PDN services, and authorized in amounts that are medically necessary based on the recipient's medical condition, amount of family assistance available, and other relevant conditions and circumstances, as defined by the Medicaid Clinical Coverage Policy for this service.

5.         Provided in accordance with a plan of care approved by DMA or its designee.

b.         Develop and submit to CMS a 1915(c) Home and Community Based Services Waiver for individuals dependent on technology to substitute for a vital body function.

c.         Once approved by CMS and upon approval of the Medicaid Clinical Coverage Policy, transition all qualified recipients age 21 and older currently receiving PDN to waiver services provided under the Technology Dependent Waiver.

(11)      Medicaid service modifications and eliminations. - Subject to the prior approval of the Centers for Medicare and Medicaid Services where required, the Division of Medical Assistance shall make the following eliminations of or modifications to Medicaid services:

a.         Optical. - Eliminate adult routine eye exams. Eye exams shall be restricted to cases in which a specific optical problem exists.

b.         Durable medical equipment. - Negotiate a single source contract with a manufacturer for incontinence supply procurement, notwithstanding any other provision of law. The contract shall provide that suppliers may use the contract but are also free to take advantage of better prices available elsewhere.

c.         Specialized therapies. - For evaluations, re-evaluations, as well as physical, occupational, speech, respiratory, and audiological services, reduce the maximum number of allowable services by one per year.

d.         Home health. - Restrict usage of the miscellaneous T199 code. All billing must be for a specific service.

e.         Pregnancy Home Model Initiative.

f.          Dental. -

1.         Eliminate composite fillings for back teeth fillings.

2.         Limit the number of surfaces that can be filled to four per tooth.

3.         Limit frequency of scaling and replaning to once every two years.

4.         Raise the threshold for eligibility for replaning to 5mm to 4mm.

5.         Eliminate cast dentures for partial dentures only and replace with acrylic dentures. Change the frequency of replacement from every 10 years to every eight years.

6.         Require prior authorization for oral excision of gum tissue.

g.         Miscellaneous. -

1.         Restrict usage of evaluation and management billing as well as of unlisted codes and strengthen supporting documentation requirements. Billing shall use specific service codes for specific services as a prerequisite to reimbursement.

2.         Restrict circumcision coverage to medically necessary procedures.

3.         Utilize Bloodhound, Inc., software, or comparable software, to examine billing codes that are duplicative or inconsistent with evidence-based practices.

4.         Require prior authorization for back surgery for selective diagnoses and require that all other therapies have been exhausted prior to granting authorization.

5.         Require prior authorization for capsule endoscopy but not traditional endoscopy.

6.         Require prior authorization for selected medical procedures and services, including elective cardiac procedures, chronic pain management, and related procedures.

7.         Negotiate a single source contract for genetic testing, notwithstanding any other provision of law.

SECTION 10.37.(b)  At least 30 days prior to the adoption of new or amended medical coverage policies necessitated by the reductions to the Medicaid program enacted in this act, the Department shall:

(1)        Publish the proposed new or amended medical coverage policies via the Medicaid Bulletin published on the Department's Web site, which shall include an invitation to readers to send written comments on the proposed new or amended policies to the Department's mailing address, including e-mail.

(2)        Notify via direct mail the members of the Physician Advisory Group (PAG) of the proposed policies.

(3)        Update the policies published on the Web site to reflect any changes made as a result of written comments received from the PAG and others.

(4)        Provide written notice to recipients about changes in policy.

SECTION 10.37.(c)  The Department of Health and Human Services shall not implement any actions directed by this act if the Department determines that such actions would jeopardize the receipt of federal funds appropriated or allocated to the Department.

 

Medicaid Waiver for Assisted Living

SECTION 10.38.(a)  The Department of Health and Human Services, Division of Medical Assistance (Division), shall develop and implement a home- and community-based services program under Medicaid State Plan 1915(i) authority in order to continue Medicaid funding of personal care services to individuals living in adult care homes.

SECTION 10.38.(b)  The Division shall implement the program upon approval of the application by the Centers for Medicare and Medicaid Services.

SECTION 10.38.(c)  On or before April 1, 2012, the Division shall provide a report on the status of approval and implementation of the program to the Joint Legislative Commission on Governmental Operations, the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.

 

Program Integrity

SECTION 10.39.  In order to ensure all claims presented by a provider for payment by the Department of Health and Human Services meet the Department's medical necessity criteria and all other applicable Medicaid, Health Choice, or other federal or State documentation requirements, a provider may be required to undergo prepayment claims review by DHHS. Claims reviews conducted pursuant to this section shall be in accordance with the provisions of the Patient Protection and Affordable Care Act, P.L. 111-148, and any implementing regulations.

 

Transfer to Office of Administrative Hearings

SECTION 10.40.  From funds available to the Department of Health and Human Services (Department) for the 2011-2012 fiscal year, the sum of one million dollars ($1,000,000), and for the 2012-2013 fiscal year the sum of one million dollars ($1,000,000), shall be transferred by the Department of Health and Human Services 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.

 

NC Health Choice

SECTION 10.41.(a)  G.S. 108A-54.3 is amended by adding a new subdivision to read:

"§ 108A-54.3.  Procedures for changing medical policy.

The Department shall develop, amend, and adopt medical coverage policy in accordance with the following:

(5)        Any changes in medical policy that require an amendment to the Health Choice State Plan will be submitted by the Department upon approval of the proposed policy."

SECTION 10.41.(b)  G.S. 108A-70.21(b) reads as rewritten:

"(b)      Benefits. - The Department shall begin to transition all health benefit changes of the Program to meet the coverage requirements set forth in this subsection. Except as otherwise provided for eligibility, fees, deductibles, copayments, and other cost sharing charges, health benefits coverage provided to children eligible under the Program shall be equivalent to coverage provided for dependents under the Predecessor Plan. North Carolina Medicaid Program except for the following:

(1)        No services for long-term care.

(2)        No nonemergency medical transportation.

(3)        No EPSDT.

(4)        Dental services shall be provided on a restricted basis in accordance with criteria adopted by the Department to implement this subsection.

In addition to the benefits provided under the Predecessor Plan, North Carolina Medicaid Program, the following services and supplies are covered under the Health Insurance Program for Children established under this Part:

(1)        Oral examinations, teeth cleaning, and topical fluoride treatments twice during a 12-month period, full mouth X-rays once every 60 months, supplemental bitewing X-rays showing the back of the teeth once during a 12-month period, sealants, extractions, other than impacted teeth or wisdom teeth, therapeutic pulpotomies, space maintainers, root canal therapy for permanent anterior teeth and permanent first molars, prefabricated stainless steel crowns, and routine fillings of amalgam or other tooth colored filling material to restore diseased teeth.

(1a)      Orthognathic surgery to correct functionally impairing malocclusions when orthodontics was approved and initiated while the child was covered by Medicaid and the need for orthognathic surgery was documented in the orthodontic treatment plan.

(2)        Vision: Scheduled routine eye examinations once every 12 months, eyeglass lenses or contact lenses once every 12 months, routine replacement of eyeglass frames once every 24 months, and optical supplies and solutions when needed. Optical NCHC recipients must obtain optical services, supplies, and solutions must be obtained from NCHC enrolled, licensed or certified ophthalmologists, optometrists, or optical dispensing laboratories. opticians. In accordance with G.S. 148-134, NCHC providers must order complete eyeglasses, eyeglass lenses, and ophthalmic frames through Nash Optical Plant. Eyeglass lenses are limited to NCHC-approved single vision, bifocal, trifocal, or other complex lenses necessary for a Plan enrollee's visual welfare. Coverage for oversized lenses and frames, designer frames, photosensitive lenses, tinted contact lenses, blended lenses, progressive multifocal lenses, coated lenses, and laminated lenses is limited to the coverage for single vision, bifocal, trifocal, or other complex lenses provided by this subsection. Eyeglass frames are limited to those NCHC-approved frames made of zylonite, metal, or a combination of zylonite and metal. All visual aids covered by this subsection require prior approval. Requests for medically necessary complete eyeglasses, eyeglass lenses, and ophthalmic frames outside of the NCHC-approved selection require prior approval. Requests for medically necessary fabrication of complete eyeglasses or eyeglass lenses outside of Nash Optical Plan require prior approval. Upon prior approval refractions may be covered more often than once every 12 months.

(3)        Hearing: Auditory diagnostic testing services and hearing aids and accessories when provided by a licensed or certified audiologist, otolaryngologist, or other approved hearing aid specialist. Prior approval is required for hearing aids, accessories, earmolds, repairs, loaners, and rental aids.Under the North Carolina Health Choice Program for Children, the co-payment for nonemergency visits to the emergency room for children whose family income is at or below one hundred fifty percent (150%) of the federal poverty level is ten dollars ($10.00). The co-payment for children whose family income is between one hundred fifty-one percent (151%) and two hundred percent (200%) of the federal poverty level is twenty-five dollars ($25.00).

(4)        Over the counter medications: Selected over the counter medications provided the medication is covered under the State Medical Assistance Plan. Coverage shall be subject to the same policies and approvals as required under the Medicaid program.

(5)        Routine diagnostic examinations and tests: annual routine diagnostic examinations and tests, including x-rays, blood and blood pressure checks, urine tests, tuberculosis tests, and general health check-ups that are medically necessary for the maintenance and improvement of individual health are covered.

No benefits are to be provided for services and materials under this subsection that do not meet the standards accepted by the American Dental Association.

The Department shall provide services to children enrolled in the NC Health Choice Program through Community Care of North Carolina (CCNC) and shall pay Community Care of North Carolina providers for these services the per member, per month fees as allowed under Medicaid. The Department shall pay for these services only if sufficient information is available to the Department for utilization management of the services provided through CCNC."

SECTION 10.41.(c)  G.S. 108A-70.23 is repealed.

SECTION 10.41.(d)  G.S. 108A-70.27(c) reads as rewritten:

"(c)       The Executive Administrator and Board of Trustees of the North Carolina Teachers' and State Employees' Major Medical Plan ("Plan") DMA shall provide to the Department data required under this section that are collected by the Plan. Data shall be reported by the Plan in sufficient detail to meet federal reporting requirements under Title XXI. The Plan shall report periodically to the Joint Legislative Health Care Oversight Committee claims processing data for the Program and any other information the Plan or the Committee deems appropriate and relevant to assist the Committee in its review of the Program."

SECTION 10.41.(e)  G.S. 108A-70.29 is amended by adding a new subsection to read:

"(f)       Additional Rule­Making Authority. - The Department of Health and Human Services shall have the authority to adopt rules for the transition and operation of the North Carolina Health Choice Program. Notwithstanding G.S. 150B-21.1(a), the Department of Health and Human Services may adopt temporary rules in accordance with Chapter 150B of the General Statutes for enrolling providers to participate in the NC Health Choice Program, for regulating provider participation in the NC Health Choice Program, and for other operational issues regarding the NC Health Choice Program."

 

Medication Therapy Management Pilot

SECTION 10.42.(a)  The Department of Health and Human Services shall develop a two-year medication therapy management pilot program to be administered through Community Care of North Carolina (CCNC) in order to determine (i) the best method of adapting the ChecKmedsNC program to the Medicaid program and CCNC's Medical Homes and (ii) the most effective and efficient role for community-based pharmacists as active members of CCNC's care management teams. The pilot program created pursuant to this section shall consist of the following components:

(1)        Identification of at least 20 community-based pharmacies that are geographically distributed and sufficiently representative to generalize pilot findings among pharmacies that dedicate pharmacist time to work with patients, their care team members, and their Medical Home practices to improve patient outcomes. To the extent that available resources allow, other types of community-based pharmacists may be involved, including those working with long-term care residents or their attending physicians.

(2)        Targeting of Medicaid recipients with co-occurring illnesses or conditions that are especially susceptible to poor patient outcomes when medication is underused, misused, or poorly coordinated.

(3)        Allowing pharmacists identified pursuant to subdivision (1) of this section to have access to CCNC's Web-based Pharmacy Portal, which allows CCNC to establish and monitor patients' prescriptions and to communicate with other care team members.

SECTION 10.42.(b)  On January 1, 2012, and every six months thereafter, CCNC shall report to the Department of Health and Human Services, the House and Senate Appropriations Subcommittees on Health and Human Services, and the Fiscal Research Division on the development and implementation of this pilot program. This reporting requirement shall terminate with the filing of the third report on January 1, 2013. In addition to any other information, the reports required by this section shall include the following additional information:

(1)        The July 1, 2012, report shall include an interim evaluation of the pharmacists' demonstrated use of the CCNC Pharmacy Home Model and the pharmacists' role in intervening and successfully managing the medication therapy of Medicaid recipients with chronic illnesses.

(2)        The January 1, 2013, report shall include an evaluation of the pharmacists' role in CCNC's management of Medicaid recipients with mental health diagnoses or who receive Home Health or Nursing Home care, and a determination of the appropriate per member/per month pharmacists should receive for participating in the Medical Home Model of CCNC.

SECTION 10.42.(c)  Funding for this pilot program shall be made available through the Enhanced Federal Funding for Health Homes for the Chronically Ill.

 

No Inflationary Medicaid Provider Rate Increases

SECTION 10.43.  Notwithstanding any other provision of law, the Secretary of the Department of Health and Human Services shall not authorize any inflationary increases to Medicaid provider rates during the 2011-2013 fiscal biennium, except that inflationary increases for healthcare providers paying provider fees may occur if the State share of the increases can be funded with provider fees.

 

Medicaid Recipient Appeals

SECTION 10.44.  The Department of Health and Human Services shall review the appeals process for adverse Medicaid determinations for Medicaid recipients to examine whether it conforms with, or exceeds, the requirements of federal law.

 

Department to Determine Cost-Savings for Medicaid That Would Result from Provision of Musculoskeletal Health Services

SECTION 10.45.(a)  The Department of Health and Human Services shall study and determine the cost-savings that would result for Medicaid if the following measures were implemented:

(1)        Healthcare providers who have expertise in musculoskeletal conditions and who are willing to assist emergency departments were identified.

(2)        Evidence-based medical criteria were developed, implemented, and supported for high-cost/high-risk elective musculoskeletal procedures.

(3)        Patient management services were provided to primary care and emergency department physicians who provided musculoskeletal services.

SECTION 10.45.(b)  The Department shall report its findings to the House and Senate Appropriations Subcommittees on Health and Human Services and to the Fiscal Research Division on or before October 1, 2011.

 

Medicaid Provider Rate Adjustments

SECTION 10.46.(a)  Subject to the limitations contained in Section 10.37(a)(6) a. and b. of this act, the Secretary of Health and Human Services shall reduce Medicaid provider rates for all Medicaid providers by two percent (2%) except as follows:

(1)        Physician Services. - The provider rate for physicians shall not be reduced.

(2)        Hospital Inpatient Services. - The provider rate for inpatient hospital services shall be reduced by a percentage equal to two percent (2%) plus a percentage sufficient to achieve the amount of savings that would have resulted if provider rates for physicians had been reduced by two percent (2%). The provider rate for inpatient hospital services shall be further reduced to offset any reduction or inflationary freeze attributable to outpatient hospital services or to critical access hospitals.

SECTION 10.46.(b)  The rate reductions required by this section shall take effect in accordance with the following schedule:

(1)        October 1, 2011. - The provider rate reductions required by subsection (a) of this section shall take effect no later than October 1, 2011. If effective after July 1, 2011, the reductions shall be adjusted by a percentage sufficient to yield savings as if the reductions had taken effect on July 1, 2011.

(2)        July 1, 2012. - On July 1, 2012, the provider rate reductions required by subsection (a) of this section shall be adjusted to the level at which they would have been without the adjustment required by subdivision (1) of this subsection.

SECTION 10.46.(c)  No other adjustments to the provider rates for hospital outpatient or critical access hospital rates shall be made, except that hospital outpatient and critical access hospital rates may continue to be eligible for inflationary increases.

 

DHHS Savings Through CCNC

SECTION 10.47.(a)  The Department of Health and Human Services, in conjunction with Community Care of North Carolina (CCNC) Networks and North Carolina Community Care, Inc., shall obtain savings totaling ninety million dollars ($90,000,000) through cooperation and effective cost-savings on the part of various health care providers.

SECTION 10.47.(b)  The Department of Health and Human Services shall monitor the performance of the CCNC Networks and the expenditures of various healthcare providers to determine the extent to which the savings required by subsection (a) of this section are being achieved.

SECTION 10.47.(c)  On or before October 1, 2011, and quarterly thereafter, the Department shall report to the House and Senate Appropriations Subcommittees on Health and Human Services and to the Fiscal Research Division on the savings being achieved pursuant to this section.

SECTION 10.47.(d)  If, by October 1, 2011, savings are not being achieved at a rate sufficient to yield savings in the amount required by subsection (a) of this section, the Secretary of Health and Human Services shall, to the extent required in order to achieve savings at the required rate, take whatever actions are necessary, including the following, in the following order, to be effective January 1, 2012:

(1)        Reduce Medicaid provider rates by up to two percent (2%). This reduction shall be in addition to other provider rate reductions in this act.

(2)        Eliminate or reduce the level or duration of optional Medicaid services.

 

Increase Generic Drug Dispensing Rate in Medicaid by Revising Pharmacy Dispensing Fees for Pharmacists That Dispense High Proportions of Generic Drugs

SECTION 10.48.(a)  The Department of Health and Human Services shall revise its pharmacy dispensing fees under the Medicaid Program in order to encourage a greater proportion of prescriptions dispensed to be generic prescriptions and thereby achieve savings of eighteen million two hundred thousand dollars ($18,200,000) in the 2011-2012 fiscal year and twenty-nine million dollars ($29,000,000) in the 2012-2013 fiscal year.

SECTION 10.48.(b)  The Department shall report its progress in achieving the savings required by subsection (a) of this section on November 1, 2011, January 1, 2012, and quarterly thereafter to the House and Senate Appropriations Subcommittees on Health and Human Services and to the Fiscal Research Division.  If any report required by this subsection reveals that those savings are not being achieved, the Department shall reduce prescription drug rates by an amount sufficient to achieve the savings.

 

NC NOVA

SECTION 10.49.  The Department of Health and Human Services, Division of Health Service Regulation, may use up to thirty-eight thousand dollars ($38,000) for fiscal year 2011-2012 and thirty-eight thousand dollars ($38,000) for fiscal year 2012-2013 of existing resources to continue the NC New Organizational Vision Award special licensure designation program established under G.S. 131E-154.14. The Division shall use federal civil monetary penalty receipts as a source of support for this initiative, when appropriate.

 

INTENSIVE FAMILY PRESERVATION SERVICES FUNDING AND PERFORMANCE ENHANCEMENTS

SECTION 10.50.(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 10.50.(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 10.50.(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.

 

Foster Care and Adoption Assistance Payment Rates

SECTION 10.51.  Part 4 of Article 2 of Chapter 108A of the General Statutes is amended by adding the following new section to read:

"§ 108A-49.1.  Foster care and adoption assistance payment rates.

(a)        The maximum rates for State participation in the foster care assistance program are established on a graduated scale as follows:

(1)        $475.00 per child per month for children from birth through five years of age.

(2)        $581.00 per child per month for children six through 12 years of age.

(3)        $634.00 per child per month for children  13 through 18 years of age.

(b)        The maximum rates for the State adoption assistance program are established consistent with the foster care rates as follows:

(1)        $475.00 per child per month for children from birth through five years of age.

(2)        $581.00 per child per month for children six through 12 years of age.

(3)        $634.00 per child per month for children 13 through 18 years of age.

(c)        The maximum rates for the State participation in human immunodeficiency virus (HIV) foster care and adoption assistance are established on a graduated scale as follows:

(1)        $800.00 per child per month with indeterminate HIV status.

(2)        $1,000 per child per month with confirmed HIV infection, asymptomatic.

(3)        $1,200 per child per month with confirmed HIV infection, symptomatic.

(4)        $1,600 per child per month when the child is terminally ill with complex care needs.

In addition to providing board payments to foster and adoptive families of HIV-infected children, any additional funds remaining that are appropriated for purposes described in this subsection shall be used to provide medical training in avoiding HIV transmission in the home.

(d)        The State and a county participating in foster care and adoption assistance shall each contribute fifty percent (50%) of the nonfederal share of the cost of care for a child placed by a county department of social services or child-placing agency in a family foster home or residential child care facility. A county shall be held harmless from contributing fifty percent (50%) of the nonfederal share of the cost for a child placed in a family foster home or residential child care facility under an agreement with that provider as of October 31, 2008, until the child leaves foster care or experiences a placement change."

 

Child Caring Institutions

SECTION 10.52.  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.

 

Repeal State Abortion Fund

SECTION 10.53.  Section 93 of Chapter 479 of the 1985 Session Laws, as amended by Section 75 of Chapter 738 of the 1987 Session Laws, Section 72 of Chapter 500 of the 1989 Session Laws, Section 79 of Chapter 1066 of the 1989 Session Laws, Section 106 of Chapter 689 of the 1991 Session Laws, Section 259.1 of Chapter 321 of the 1993 Session Laws, Section 23.27 of Chapter 324 of the 1995 Session Laws, and Section 23.8A of Chapter 507 of the 1995 Session Laws, is repealed.

 

Child Welfare Postsecondary Support Program

SECTION 10.54.(a)  Of the funds appropriated from the General Fund to the Department of Health and Human Services, the sum of one million five hundred eighty-four thousand one hundred twenty-five dollars ($1,584,125) for the 2011-2012 fiscal year and one million five hundred eighty-four thousand one hundred twenty-five dollars ($1,584,125) for the 2012-2013 fiscal year shall be used to support 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. § 1087ll.

Funds appropriated by this subsection shall be allocated by the State Education Assistance Authority.

SECTION 10.54.(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 2011-2012 fiscal year and the sum of fifty thousand dollars ($50,000) for the 2012-2013 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 10.54.(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 2011-2012 fiscal year and the sum of three hundred thirty-nine thousand four hundred ninety-three dollars ($339,493) for the 2012-2013 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 10.54.(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.

 

TANF Benefit Implementation

SECTION 10.55.(a)  The General Assembly approves the plan titled "North Carolina Temporary Assistance for Needy Families State Plan FY 2010-2012," 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, 2010, through September 30, 2012. The Department shall submit the State Plan, as revised in accordance with subsection (b) of this section, to the United States Department of Health and Human Services, as amended by this act or any other act of the 2011 General Assembly.

SECTION 10.55.(b)  The counties approved as Electing Counties in the North Carolina Temporary Assistance for Needy Families State Plan FY 2010-2012, as approved by this section are  Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson.

SECTION 10.55.(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 fiscal year 2011 through 2012, pursuant to G.S. 108A-27(e), shall operate under the Electing County budget requirements effective July 1, 2009. For programmatic purposes, all counties referred to in this subsection shall remain under their current county designation through September 30, 2012.

SECTION 10.55.(d)  For the 2011-2012 fiscal year, Electing Counties shall be held harmless to their Work First Family Assistance allocations for the 2010-2011 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 10.55.(e)  In the event that departmental projections of Work First Family Assistance and Work First Diversion Assistance for the 2011-2012 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.

 

Payments for LIEAP/CIP

SECTION 10.56.(a)  Part 1 of Article 2 of Chapter 108A of the General Statutes is amended by adding the following new section to read:

"§ 108A-25.4.  Use of payments under the Low-Income Energy Assistance Program and Crisis Intervention Program.

(a)        The Low-Income Energy Assistance Program Plan developed by the Department of Health and Human Services (Department) and submitted to the U.S. Department of Health and Human Services shall focus the annual energy assistance payments on the elderly population age 60 and above with income up to one hundred thirty percent (130%) of the federal poverty level and disabled persons receiving services through the Division of Aging and Adult Services. The energy assistance payment shall be paid directly to the service provider by the county department of social services. The Plan for Crisis Intervention Program (CIP) shall provide assistance for vulnerable populations who meet income eligibility criteria established by the Department. The CIP payment shall be paid directly to the service provider by the county department of social services.

(b)        The Department shall submit the Plan for each program to the U.S. Department of Health and Human Services no later than September 1 of each year and implement the Plan no later than October 1 of each year."

SECTION 10.56.(b)  Beginning September 1, 2011, on or before September 1 of each year and for a period of three years thereafter, the Department of Health and Human Services shall submit a copy of the Plan to the House Appropriations Subcommittee on Health and Human Services and Senate Appropriations Committee on Health and Human Services.

 

Consolidate Blind, Deaf, and Vocational Rehabilitation Divisions

SECTION 10.57.(a)  On or before January 1, 2012, the Department of Health and Human Services shall consolidate the Division of Services for the Blind, the Division of Services for the Deaf and the Hard of Hearing, and the Division of Vocational Rehabilitation Services into one division within the Department for the provision of these services. The consolidation shall not eliminate or reduce any programs or services currently offered by the three Divisions.

SECTION 10.57.(b)  Notwithstanding any other provision of this act, savings pursuant to the consolidation of the Divisions of Services for the Blind, Services for the Deaf and Hard of Hearing, and Vocational Rehabilitation Services shall be achieved through reductions in administrative staff, leased space, and other administrative or overhead costs associated with the consolidation of the three Divisions only.

 

Non-Medicaid Reimbursement Changes

SECTION 10.58.(a)  Providers of medical services under the various State programs, other than Medicaid, offering medical care to citizens of the State shall be reimbursed at rates no higher than those under the North Carolina Medical Assistance Program.

The Department of Health and Human Services may reimburse hospitals at the full prospective per diem rates without regard to the Medical Assistance Program's annual limits on hospital days. When the Medical Assistance Program's per diem rates for inpatient services and its interim rates for outpatient services are used to reimburse providers in non-Medicaid medical service programs, retroactive adjustments to claims already paid shall not be required.

Notwithstanding the provisions of this section, the Department of Health and Human Services may negotiate with providers of medical services under the various Department of Health and Human Services programs, other than Medicaid, for rates as close as possible to Medicaid rates for the following purposes:  contracts or agreements for medical services and purchases of medical equipment and other medical supplies. These negotiated rates are allowable only to meet the medical needs of its non-Medicaid eligible patients, residents, and clients who require such services that cannot be provided when limited to the Medicaid rate.

Maximum net family annual income eligibility standards for services in these programs shall be as follows:

DSB Medical Eye Care                                        125% FPL

DSB Independent Living <55                                125% FPL

DSB Independent Living 55>                                200% FPL

DSB Vocational Rehabilitation                              125% FPL

DVR Independent Living                                      125% FPL

DVR Vocational Rehabilitation                              125% FPL

The Department of Health and Human Services shall contract at, or as close as possible to, Medicaid rates for medical services provided to residents of State facilities of the Department.

SECTION 10.58.(b)  Subject to the prior approval of the Office of State Budget and Management, the Secretary shall reduce provider rates for services rendered for the Medical Eye Care, Independent Living, and Vocational Rehabilitation programs within the Division of Services for the Blind, and Independent Living and Vocational Rehabilitation programs within the Division of Vocational Rehabilitation to accomplish the reduction in funds for this purpose enacted in this act.

 

State-County Special Assistance

SECTION 10.59.(a)  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 unless adjusted by the Department in accordance with subsection (d) of this section.  The eligibility of Special Assistance recipients residing in adult care homes on September 30, 2009, shall not be affected by an income reduction in the Special Assistance eligibility criteria resulting from the adoption of this maximum monthly rate, provided these recipients are otherwise eligible.

SECTION 10.59.(b)  The maximum monthly rate for residents in Alzheimer/Dementia special care units shall be one thousand five hundred fifteen dollars ($1,515) per month per resident unless adjusted by the Department in accordance with subsection (d) of this section.

SECTION 10.59.(c)  Notwithstanding any other provision of this section, the Department of Health and Human Services shall review activities and costs related to the provision of care in adult care homes and shall determine what costs may be considered to properly maximize allowable reimbursement available through Medicaid personal care services for adult care homes (ACH-PCS) under federal law.  As determined, and with any necessary approval from the Centers for Medicare and Medicaid Services (CMS), and the approval of the Office of State Budget and Management, the Department may transfer necessary funds from the State-County Special Assistance program within the Division of Social Services to the Division of Medical Assistance and may use those funds as State match to draw down federal matching funds to pay for such activities and costs under Medicaid's personal care services for adult care homes (ACH-PCS), thus maximizing available federal funds. The established rate for State-County Special Assistance set forth in subsections (b) and (c) of this section shall be adjusted by the Department to reflect any transfer of funds from the Division of Social Services to the Division of Medical Assistance and related transfer costs and responsibilities from State-County Special Assistance to the Medicaid personal care services for adult care homes (ACH-PCS). Subject to approval by the Centers for Medicare and Medicaid Services (CMS) and prior to implementing this section, the Department may disregard a limited amount of income for individuals whose countable income exceeds the adjusted State-County Special Assistance rate. The amount of the disregard shall not exceed the difference between the Special Assistance rate prior to the adjustment and the Special Assistance rate after the adjustment and shall be used to pay a portion of the cost of the ACH-PCS and reduce the Medicaid payment for the individual's personal care services provided in an adult care home. In no event shall the reimbursement for services through the ACH-PCS exceed the average cost of the services as determined by the Department from review of cost reports as required and submitted by adult care homes. The Department shall report any transfers of funds and modifications of rates 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 10.59.(d)  The Department of Health and Human Services shall recommend rates for State-County Special Assistance and for Adult Care Home Personal Care Services. The Department may recommend rates based on appropriate cost methodology and cost reports submitted by adult care homes that receive State-County Special Assistance funds and shall ensure that cost reporting is done for State-County Special Assistance and Adult Care Home Personal Care Services to the same standards as apply to other residential service providers.

 

DHHS Block Grants

SECTION 10.60.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2012, according to the following schedule:

 

TEMPORARY ASSISTANCE TO NEEDY FAMILIES

(TANF) FUNDS

 

Local Program Expenditures

 

Division of Social Services

 

01.       Work First Family Assistance                                                            $ 80,840,356

 

02.       Work First County Block Grants                                                          94,453,315

 

03.       Work First Electing Counties                                                                  2,378,213

 

04.       Adoption Services - Special Children's Adoption Fund                           3,609,355

 

05.       Family Violence Prevention                                                                     2,200,000

 

06.       Child Protective Services - Child Welfare

            Workers for Local DSS                                                                        14,452,391

 

07.       Child Welfare Collaborative                                                                       754,115

 

Division of Child Development

 

08.       Subsidized Child Care Program                                                            67,439,721

 

Division of Public Health

 

09.       Teen Pregnancy Initiatives                                                                          450,000

 

DHHS Administration

 

10.       Division of Social Services                                                                      1,093,176

 

11.       Office of the Secretary                                                                                 75,392

 

Transfers to Other Block Grants

 

Division of Child Development

 

12.       Transfer to the Child Care and Development Fund                                82,210,675

 

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

            Foster Care Services                                                                                 650,829

 

15.       Transfer to Social Services Block Grant for Child

            Protective Services                                                                                 5,040,000

 

16.       Transfer to Social Services Block Grant for Adult

            Protective Services                                                                                 1,191,925

 

17.       Transfer to Social Services Block Grant for County

            Departments of Social Services                                                                  375,000

 

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES

(TANF) FUNDS                                                                                              $ 358,514,463

 

TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)

EMERGENCY CONTINGENCY FUNDS

 

Local Program Expenditures

 

Division of Social Services

 

01.       NC FAST                                                                                           $ 1,664,936

 

02.       Work First - Boys and Girls Clubs                                                         2,500,000

 

03.       Maternity Homes                                                                                       943,002

 

Division of Public Health

 

04.       Teen Pregnancy Initiatives                                                                       2,500,000

 

DHHS Administration

 

05.       Division of Social Services                                                                      1,389,084

 

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)

EMERGENCY CONTINGENCY FUNDS                                                         $ 8,997,022

 

SOCIAL SERVICES BLOCK GRANT

 

Local Program Expenditures

 

Divisions of Social Services and Aging and Adult Services

 

01.       County Departments of Social Services                                              $ 29,288,783

 

02.       Child Protective Services (Transfer from TANF)                                     5,040,000

 

03.       Adult Protective Services (Transfer from TANF)                                     1,191,925

 

04.       State In-Home Services Fund                                                                 2,101,113

 

05.       State Adult Day Care Fund                                                                     2,155,301

 

06.       Child Protective Services/CPS Investigative

            Services-Child Medical Evaluation Program                                               609,455

 

07.       Foster Care Services

            (Transfer from TANF $650,829)                                                            2,147,967

 

08.       Special Children Adoption Incentive Fund                                                  500,000

 

09.       Child Protective Services-Child Welfare Training

            for Counties (Transfer from TANF)                                                        1,300,000

 

10.       Home and Community Care Block Grant (HCCBG)                               1,834,077

 

11.       Child Advocacy Centers                                                                            375,000

 

11A.    Food Banks                                                                                           1,000,000

 

Division of Central Management and Support

 

12.       ALS Association Jim "Catfish" Hunter Chapter                                           400,000

 

Division of Mental Health, Developmental Disabilities, and Substance

Abuse Services

 

13.       Mental Health Services Program                                                                422,003

 

14.       Developmental Disabilities Services Program                                           5,000,000

 

15.       Mental Health Services-Adult and

            Child/Developmental Disabilities Program/

            Substance Abuse Services-Adult                                                            3,234,601

 

Division of Public Health

 

16.       Prevent Blindness                                                                                      150,000

 

Division of Vocational Rehabilitation

 

17.       Vocational Rehabilitation Services - Easter Seal Society/UCP

            Community Health Program                                                                       188,263

 

DHHS Program Expenditures

 

Division of Aging and Adult Services

 

18.       UNC-CARES Training Contract                                                               247,920

 

Division of Services for the Blind

 

19.       Independent Living Program                                                                   3,633,077

 

20.       Accessible Electronic Information for Blind and Disabled Persons                 75,000

 

Division of Health Service Regulation

 

21.       Adult Care Licensure Program                                                                   411,897

 

22.       Mental Health Licensure and Certification Program                                     205,668

 

DHHS Administration

 

23.       Division of Aging and Adult Services                                                          688,436

 

24.       Division of Social Services                                                                         892,624

 

25.       Office of the Secretary/Controller's Office                                                  138,058

 

26.       Office of the Secretary/DIRM                                                                      87,483

 

27.       Division of Child Development                                                                     15,000

 

28.       Division of Mental Health, Developmental

            Disabilities, and Substance Abuse Services                                                   29,665

 

29.       Division of Health Service Regulation                                                         235,625

 

30.       Office of the Secretary-NC Interagency Council

            for Coordinating Homeless Programs                                                         250,000

 

31.       Office of the Secretary                                                                                 48,053

 

Transfers to Other Block Grants

 

Division of Public Health

 

32.       Transfer to Preventive Health Services Block Grant

            for HIV/STD Prevention and Community Planning                                      145,819

 

TOTAL SOCIAL SERVICES BLOCK GRANT                                               $ 64,042,813

 

LOW-INCOME HOME ENERGY ASSISTANCE BLOCK GRANT

 

Local Program Expenditures

 

Division of Social Services

 

01.       Low-Income Energy Assistance Program (LIEAP)                             $ 11,862,617

 

02.       Crisis Intervention Program (CIP)                                                         48,679,871

 

02A.    NC FAST Implementation                                                                      4,732,667

 

Local Administration

 

Division of Social Services

 

03.       County DSS Administration                                                                    5,604,940

 

DHHS Administration

 

04.       Office of the Secretary/DIRM                                                                    276,784

 

05.       Office of the Secretary/Controller's Office                                                    12,332

 

Transfers to Other State Agencies

 

Department of Commerce

 

06.       Weatherization Program                                                                             500,000

 

07.       Heating Air Repair and Replacement

            Program (HARRP)                                                                                 4,744,344

 

08.       Local Residential Energy Efficiency Service

            Providers - Weatherization                                                                          25,000

 

09.       Local Residential Energy Efficiency Service

            Providers - HARRP                                                                                  227,038

 

10.       Department of Commerce Administration -

            Weatherization                                                                                             25,000

 

11.       Department of Commerce Administration -

            HARRP                                                                                                    227,038

 

TOTAL LOW-INCOME HOME ENERGY ASSISTANCE

BLOCK GRANT                                                                                               $ 76,917,631

 

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

 

Local Program Expenditures

 

Division of Child Development

 

01.       Subsidized Child Care Services (CCDF)                                          $ 151,534,624

 

02.       Electronic Tracking System                                                                     3,336,345

 

03.       Subsidized Child Care Services

            (Transfer from TANF)                                                                          82,210,675

 

04.       Quality and Availability Initiatives

            (TEACH Program $3,800,000)                                                            25,948,434

 

Division of Social Services

 

05.       Local Subsidized Child Care Services Support                                      16,471,587

            (4% Administrative Allowance)

DHHS Administration

 

Division of Child Development

 

06.       DCD Administrative Expenses                                                                6,539,277

 

Division of Central Administration

 

07.       DHHS Central Administration - DIRM

            Technical Services                                                                                     774,317

 

TOTAL CHILD CARE AND DEVELOPMENT FUND

BLOCK GRANT                                                                                           $   286,815,255

 

MENTAL HEALTH SERVICES BLOCK GRANT

 

Local Program Expenditures

 

01.       Mental Health Services - Adult                                                      $       6,656,212

 

02.       Mental Health Services - Child                                                               5,121,991

 

03.       Administration                                                                                           100,000

 

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT                              $ 11,878,203

 

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                                                     $ 20,008,541

 

02.       Substance Abuse Treatment Alternative for Women                                8,107,303

 

03.       Substance Abuse - HIV and IV Drug                                                     5,116,378

 

04.       Substance Abuse Prevention - Child                                                       7,186,857

 

05.       Substance Abuse Services - Child                                                          4,940,500

 

06.       Institute of Medicine                                                                                  250,000

 

07.       Administration                                                                                           250,000

 

Division of Public Health

 

08.       Risk Reduction Projects                                                                             633,980

 

09.       Aid-to-Counties                                                                                        209,576

 

TOTAL SUBSTANCE ABUSE PREVENTION

AND TREATMENT BLOCK GRANT                                                              $ 46,703,135

 

MATERNAL AND CHILD HEALTH BLOCK GRANT

 

Local Program Expenditures

 

Division of Public Health

 

01.       Children's Health Services                                                                       8,528,156

 

02.       Women's Health                                                                                     8,510,783

 

03.       Oral Health                                                                                                  42,268

 

DHHS Program Expenditures

 

Division of Public Health

 

04.       Children's Health Services                                                                       1,417,087

 

05.       Women's Health                                                                                        136,628

 

06.       State Center for Health Statistics                                                                164,318

 

07.       Quality Improvement in Public Health                                                             1,636

 

08.       Health Promotion                                                                                         89,374

 

09.       Office of Minority Health                                                                             40,141

 

DHHS Administration

 

Division of Public Health

 

10.       Division of Public Health Administration                                                     631,966

 

TOTAL MATERNAL AND CHILD

HEALTH BLOCK GRANT                                                                               $ 19,562,357

 

PREVENTIVE HEALTH SERVICES BLOCK GRANT

 

Local Program Expenditures

 

Division of Public Health

 

01.       NC Statewide Health Promotion                                                          $ 1,730,653

 

02.       Services to Rape Victims                                                                             89,152

 

03.       HIV/STD Prevention and Community Planning

            (Transfer from Social Services Block Grant)                                               145,819

 

DHHS Program Expenditures

 

Division of Public Health

 

04.       State Center for Health Statistics                                                                  55,040

 

05.       NC Statewide Health Promotion                                                                947,056

 

06.       Oral Health                                                                                                  70,000

 

07.       State Laboratory of Public Health                                                                16,600

 

08.       Services to Rape Victims                                                                           107,960

 

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT                        $ 3,162,280

 

COMMUNITY SERVICES BLOCK GRANT

 

Local Program Expenditures

 

Office of Economic Opportunity

 

01.       Community Action Agencies                                                              $ 18,075,488

 

02.       Limited Purpose Agencies                                                                       1,004,194

 

DHHS Administration

 

03.       Office of Economic Opportunity                                                              1,004,194

 

TOTAL COMMUNITY SERVICES BLOCK GRANT                                     $ 20,083,876

 

GENERAL PROVISIONS

SECTION 10.60.(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 10.60.(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.

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 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.

SECTION 10.60.(d)  Appropriations from federal Block Grant funds are made for the fiscal year ending June 30, 2012, according to the schedule enacted for State fiscal year 2011-2012 or until a new schedule is enacted by the General Assembly.

SECTION 10.60.(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 House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations 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 10.60.(f)  The sum of one million ninety-three thousand one hundred seventy-six dollars ($1,093,176) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for the 2011-2012 fiscal year shall be used to support administration of TANF-funded programs.

SECTION 10.60.(g)  The sum of two million two hundred thousand dollars ($2,200,000) appropriated under this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for the 2011-2012 fiscal year shall be used to provide domestic violence services to Work First recipients. These funds shall be used to provide domestic violence counseling, support, and other direct services to clients. These funds shall not be used to establish new domestic violence shelters or to facilitate lobbying efforts. The Division of Social Services may use up to seventy-five thousand dollars ($75,000) in TANF funds to support one administrative position within the Division of Social Services to implement this subsection.

Each county department of social services and the local domestic violence shelter program serving the county shall develop jointly a plan for utilizing these funds. The plan shall include the services to be provided and the manner in which the services shall be delivered. The county plan shall be signed by the county social services director or the director's designee and the domestic violence program director or the director's designee and submitted to the Division of Social Services by December 1, 2011. The Division of Social Services, in consultation with the Council for Women, shall review the county plans and shall provide consultation and technical assistance to the departments of social services and local domestic violence shelter programs, if needed.

The Division of Social Services shall allocate these funds to county departments of social services according to the following formula: (i) each county shall receive a base allocation of five thousand dollars ($5,000) and (ii) each county shall receive an allocation of the remaining funds based on the county's proportion of the statewide total of the Work First caseload as of July 1, 2011, and the county's proportion of the statewide total of the individuals receiving domestic violence services from programs funded by the Council for Women as of July 1, 2011. The Division of Social Services may reallocate unspent funds to counties that submit a written request for additional funds.

SECTION 10.60.(h)  The sum of fourteen million four hundred fifty-two thousand three hundred ninety-one dollars ($14,452,391) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in TANF funds for the 2011-2012 fiscal year 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.

SECTION 10.60.(i)  The sum of three million six hundred nine thousand three hundred fifty-five dollars ($3,609,355) appropriated in this section in TANF funds to the Department of Health and Human Services, Special Children Adoption Fund, for the 2011-2012 fiscal year shall be used in accordance with G.S. 108A-50.2, as enacted in Section 10.48 of S.L. 2009-451. 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 10.60.(j)  The sum of seven hundred fifty-four thousand one hundred fifteen dollars ($754,115) appropriated in this section to the Department of Health and Human Services in TANF funds for the 2011-2012 fiscal year shall be used to continue support for the Child Welfare Collaborative.

 

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) CONTINGENCY FUNDS

SECTION 10.60.(k)  The sum of two million five hundred thousand dollars ($2,500,000) appropriated in this section to the Department in TANF funds for Boys and Girls Clubs for the 2011-2012 fiscal year shall be used to make grants for approved programs. The Department of Health and Human Services, in accordance with federal regulations for the use of TANF Contingency funds, shall administer a grant program to award funds to the Boys and Girls Clubs across the State in order to implement programs that improve the motivation, performance, and self-esteem of youths and to implement other initiatives that would be expected to reduce gang participation, school dropout, and teen pregnancy rates. The Department shall facilitate collaboration between the Boys and Girls Clubs and Support Our Students, Communities in Schools, and similar programs and encourage them to submit joint applications for the funds if appropriate.

SECTION 10.60.(l)  The sum of one million three hundred eighty-nine thousand eighty-four dollars ($1,389,084) appropriated in this section in TANF Contingency funds to the Department of Health and Human Services, Division of Social Services, for the 2011-2012 fiscal year shall be used to support administration of TANF-funded programs.

 

SOCIAL SERVICES BLOCK GRANT

SECTION 10.60.(m)  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 the 2011-2012 fiscal year 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 10.60.(n)  The sum of two million one hundred forty-seven thousand nine hundred sixty-seven dollars ($2,147,967) appropriated in this section in the Social Services Block Grant for child caring agencies for the 2011-2012 fiscal year shall be allocated in support of State foster home children.

SECTION 10.60.(o)  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 10.60.(p)  Social Services Block Grant funds appropriated for the Special Children's Adoption Incentive Fund will require a fifty percent (50%) local match.

SECTION 10.60.(q)  The sum of four hundred twenty-two thousand three dollars ($422,003) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2011-2012 fiscal year shall be used to continue a Mental Health Services Program for children.

SECTION 10.60.(r)  The sum of five million forty thousand dollars ($5,040,000) appropriated in this section in the Social Services Block Grant for the 2011-2012 fiscal year 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 10.60.(s)  The sum of four hundred thousand dollars ($400,000) appropriated in this section in the Social Service Block Grant for the 2011-2012 fiscal year to the Department of Health and Human Services, Division of Central Management and Support, shall be allocated to the ALS Association, Jim "Catfish" Hunter Chapter, to be used to provide patient care and community services to persons with ALS and their families. These funds are exempt from the provisions of 10A NCAC 71R .0201(3).

SECTION 10.60.(t)  The sum of one hundred fifty thousand dollars ($150,000) appropriated in this section in the Social Service Block Grant for the 2011-2012 fiscal year to the Department of Health and Human Services, Division of Public Health, shall be allocated to Prevent Blindness North Carolina to be used for direct service programs. These funds are exempt from the provisions of 10A NCAC 71R .0201(3).

SECTION 10.60.(u)  The sum of seventy-five thousand dollars ($75,000) appropriated in this section in the Social Service Block Grant for the 2011-2012 fiscal year to the Department of Health and Human Services, Division of Services for the Blind, shall be used to provide accessible electronic information for blind and disabled persons. These funds are exempt from the provisions of 10A NCAC 71R .0201(3).

SECTION 10.60.(v)  The sum of three hundred seventy-five thousand dollars ($375,000) appropriated in this section in the Social Service Block Grant for the 2011-2012 fiscal year to the Department of Health and Human Services, Division of Social Services, shall be used to continue support for the Child Advocacy Centers and are exempt from the provisions of 10A NCAC 71R .0201(3).

SECTION 10.60.(w)  Social Service Block Grant funds allocated to the North Carolina Inter-Agency Council for 2011-2012 fiscal year for coordinating homeless programs and child medical evaluations are exempt from the provisions of 10A NCAC 71R .0201(3).

 

LOW-INCOME HOME ENERGY ASSISTANCE BLOCK GRANT

SECTION 10.60.(x)  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 10.60.(y)  The sum of eleven million eight hundred sixty-two thousand six hundred seventeen dollars ($11,862,617) appropriated in this section in the Low-Income Home Energy Assistance Block Grant for the 2011-2012 fiscal year 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.

SECTION 10.60.(y1)  The sum of four million seven hundred thirty-two thousand six hundred sixty-seven dollars ($4,732,667)  appropriated in this section in the Low-Income Home Energy Assistance Block Grant for the 2011-2012 fiscal year to the Department of Health and Human Services, Central Management and Support Division, shall be used to continue the implementation of the NCFAST program.  The U.S. Department of Health and Human Services has authorized the use of the LIEAP program service funds to continue the implementation of the NCFAST program.  This meets the required participation based on the federally approved cost allocation plan.  In order to advance the implementation of NCFAST, which creates a single portal of entry for the Department Health and Human Services programs, these federal funds are critical, otherwise State funds will have to be identified.

 

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

SECTION 10.60.(z)  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 10.60.(aa)  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.

 

SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANT

SECTION 10.60.(bb)  The sum of two hundred fifty thousand dollars ($250,000) appropriated in this section in the Substance Abuse Prevention and Treatment Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2011-2012 fiscal year for the North Carolina Institute of Medicine (NCIOM) shall be used to continue its Task Force on the mental health, social, and emotional needs of young children and their families. In addition to the issues identified in Section 16.1 of S.L. 2010-152, the Task Force shall study the impact of parents' substance use problems on the mental health and social and emotional well-being of children from conception through age five. The NCIOM shall make an interim report to the General Assembly no later than January 15, 2012, which may include legislative and other recommendations, and shall issue its final report with findings, recommendations, and any proposed legislation to the 2013 General Assembly upon its convening.

 

MATERNAL AND CHILD HEALTH BLOCK GRANT

SECTION 10.60.(cc)  The sum of one million four hundred ninety-seven thousand dollars ($1,497,000) appropriated in this section in the Maternal and Child Health Block Grant for the 2011-2012 fiscal year to the Department of Health and Human Services, Division of Public Health, shall be used to fund the following activities as indicated:

(1)        March of Dimes to provide folic acid and education for women before pregnancy to reduce birth defects and infant mortality, the sum of three hundred fifty thousand dollars ($350,000).

(2)        Teen Pregnancy Prevention, the sum of six hundred fifty thousand dollars ($650,000).

(3)        Healthy Start/Safe Sleep, the sum of two hundred forty-seven thousand dollars ($247,000).

(4)        Perinatal Quality Collaborative of North Carolina, the sum of two hundred fifty thousand dollars ($250,000).

SECTION 10.60.(dd)  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 2011-2012 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 10.60.(ee)  The Department of Health and Human Services shall ensure that there will be follow-up testing in the Newborn Screening Program.

 

PART Xi. Department of Agriculture and Consumer Services

 

Repeal Board of Agriculture review of Fee Schedules

SECTION 11.2.  G.S. 106-6.1(b) is repealed.

 

Reclassify Three Vacant Positions within DACS to Animal Welfare Program

SECTION 11.7.  The Department of Agriculture and Consumer Services shall reclassify three vacant positions within the Department and shall fill these reclassified positions in a timely manner in order to provide support for the Animal Welfare Program within the Department.

 

AGRICULTURAL RESEARCH STATIONS OPERATING REDUCTION

SECTION 11.8.  Notwithstanding any other provision of this act, a recurring reduction for the operating expenses of the agricultural research stations of the Department of Agriculture and Consumer Services is increased by the sum of one hundred thousand dollars ($100,000) for the 2011-2012 fiscal year and the 2012-2013 fiscal year.

 

PART XII. Department of Labor

 

LABOR/REPEAL STATUTE REQUIRING BIENNIAL REVIEW OF FEES BY DEPARTMENT

SECTION 12.1.  G.S. 95-14.1 is repealed.

 

PART XIII. Department of Environment and Natural Resources

 

Abolish, Transfer to Other departments, or Consolidate within DENR All Environmental Health Programs Under DENR

SECTION 13.3.(a)  The Vector Control Program and the Tick Control Program within the Division of Environmental Health of the Department of Environment and Natural Resources are abolished.

SECTION 13.3.(b)  All functions, powers, duties, and obligations previously vested in the Grade "A" Milk Sanitation Program within the Division of Environmental Health of the Department of Environment and Natural Resources are transferred to and vested in the Food and Drug Protection Division of the Department of Agriculture and Consumer Services by a Type I transfer, as defined in G.S. 143A-6.

SECTION 13.3.(c)  All functions, powers, duties, and obligations previously vested in the Sleep Products Program within the Public Health Pest Management Section of the Division of Environmental Health of the Department of Environment and Natural Resources are transferred to and vested in the Department of Agriculture and Consumer Services by a Type I transfer, as defined in G.S. 143A-6.

SECTION 13.3.(d)  The following sections of the Division of Environmental Health that support programs implemented through local health departments and programs primarily focused on food safety and other public health concerns are, subject to subsection (b) of this section, transferred from the Department of Environment and Natural Resources to the Division of Public Health of the Department of Health and Human Services with all the elements of a Type I transfer, as defined by G.S. 143A-6:

(1)        Environmental Health Services Section.

(2)        On-Site Water Protection Section.

(3)        Radiation Protection Section.

(4)        Office of Education and Training.

SECTION 13.3.(e)  The Public Water Supply Section of the Division of Environmental Health of the Department of Environment and Natural Resources shall be transferred to the Division of Water Resources of the Department of Environment and Natural Resources with all the elements of a Type I transfer, as defined by G.S. 143A-6.

SECTION 13.3.(f)  The Shellfish Sanitation and Recreational Water Quality Section of the Division of Environmental Health of the Department of Environment and Natural Resources shall be transferred to the Division of Marine Fisheries of the Department of Environment and Natural Resources with all the elements of a Type I transfer, as defined by G.S. 143A-6.

SECTION 13.3.(g)  The Division of Environmental Health of the Department of Environment and Natural Resources is abolished, and the Public Health Pest Management Section of the Division of Environmental Health of the Department of Environment and Natural Resources is abolished.

SECTION 13.3.(h)  G.S. 143B-279.3(c)(3) is repealed.

SECTION 13.3.(i)  Part 1 of Article 12 of Chapter 130A of the General Statutes is repealed.

SECTION 13.3.(j)  G.S. 143-300.8 reads as rewritten:

"§ 143-300.8.  Defense of local sanitarians.

Any local health department sanitarian enforcing rules of the Commission for Public Health or of the Environmental Management Commission under the supervision of the Department of Environment and Natural Resources pursuant to G.S. 130A-4 shall be defended by the Attorney General, subject to the provisions of G.S. 143-300.4, and shall be protected from liability in accordance with the provisions of this Article in any civil or criminal action or proceeding brought against the sanitarian in his official or individual capacity, or both, on account of an act done or omission made in the scope and course of enforcing the rules of the Commission for Public Health or of the Environmental Management Commission.Health. The Department of Environment and Natural Resources shall pay any judgment against the sanitarian, or any settlement made on his behalf, subject to the provisions of G.S. 143-300.6."

SECTION 13.3.(k)  Part 9 of Article 8 of Chapter 130A of the General Statutes is recodified as Article 28C of Chapter 106 of the General Statutes, to be entitled "Grade 'A' Milk Sanitation"; G.S. 130A-274 is recodified as G.S. 106-266.30; G.S. 130A-275 is recodified as G.S. 106-266.31; G.S. 130A-276 is recodified as G.S. 106-266.32; G.S. 130A-277 is recodified as G.S. 106-266.33; G.S. 130A-278 is recodified as G.S. 106-266.34; and G.S. 130A-279 is recodified as G.S. 106-266.35.

SECTION 13.3.(l)  G.S. 106-266.30, as recodified under subsection (k) of this section, reads as rewritten:

"§ 106-266.30.  Definitions.

The following definitions shall apply throughout this Part:Article:

(1)        "Grade 'A' milk" means fluid milk and milk products which have been produced, transported, handled, processed and distributed in accordance with the provisions of the rules adopted by the Commission.Board of Agriculture.

(2)        "Milk" means the lacteal secretion practically free from colostrum obtained by the milking of one or more cows, goats, or other lactating animals."

SECTION 13.3.(m)  G.S. 106-266.31, as recodified under subsection (k) of this section, reads as rewritten:

"§ 106-266.31.  Commission Board to adopt rules.

Notwithstanding the provisions of G.S. 106-267 et seq., the Commission is authorized and directed toThe Board of Agriculture shall adopt rules relating to the sanitary production, transportation, processing and distribution of Grade "A" milk. The rules, in order to protect and promote the public health, shall provide definitions and requirements for: (i) the sanitary production and handling of milk on Grade "A" dairy farms; (ii) the sanitary transportation of Grade "A" raw milk for processing; (iii) the sanitary processing of Grade "A" milk; (iv) the sanitary handling and distribution of Grade "A" milk; (v) the requirements for the issuance, suspension and revocation of permits; and (vi) the establishment of quality standards for Grade "A" milk. The rules shall be no less stringent than the 1978 Pasteurized Milk Ordinance recommended by the U.S. Public Health Service/Food and Drug Administration as amended effective January 1, 1982. The Commission Board of Agriculture may adopt by reference the U.S. Public Health Service/Food and Drug Administration 1978 Pasteurized Milk Ordinance. and any amendment theretoOrdinance, as amended."

SECTION 13.3.(n)  G.S. 106-266.32, as recodified under subsection (k) of this section, reads as rewritten:

"§ 106-266.32.  Permits required.

No person shall produce, transport, process, or distribute Grade "A" milk without first having obtained a valid permit from the Department.Department of Agriculture and Consumer Services."

SECTION 13.3.(o)  G.S. 106-266.33, as recodified under subsection (k) of this section, reads as rewritten:

"§ 106-266.33.  Duties of the Department.

The Department of Agriculture and Consumer Services shall enforce the rules of the Commission Board of Agriculture governing Grade "A" milk by making sanitary inspections of Grade "A" dairy farms, Grade "A" processing plants, Grade "A" milk haulers and Grade "A" distributors; by determining the quality of Grade "A" milk; and by evaluating methods of handling Grade "A" milk to insure compliance with the provisions of the rules of the Commission.Board of Agriculture. The Department of Agriculture and Consumer Services shall issue permits for the operation of Grade "A" dairy farms, processing plants and haulers in accordance with the provisions of the rules of the Commission Board of Agriculture and shall suspend or revoke permits for violations in accordance with the rules."

SECTION 13.3.(p)  G.S. 106-266.34, as recodified under subsection (k) of this section, reads as rewritten:

"§ 106-266.34.  Certain other authorities of Department of Agriculture and Consumer Services not replaced.

This Part Article shall not repeal or limit the Department of Agriculture and Consumer Services' authority to carry out labeling requirements, required butterfat testing, aflatoxin testing, pesticide testing, other testing performed by the Department of Agriculture and Consumer Services Services, and any other function of the Department of Agriculture and Consumer Services concerning Grade "A" milk which under any other Article under this Chapter that is not inconsistent with this Article."

SECTION 13.3.(q)  G.S. 106-266.35, as recodified under subsection (k) of this section, reads as rewritten:

"§ 106-266.35.  Sale or dispensing of milk.

Only milk that is Grade "A" pasteurized milk may be sold or dispensed directly to consumers for human consumption. Raw milk and raw milk products shall be sold or dispensed only to a permitted milk hauler or to a processing facility at which the processing of milk is permitted, graded, or regulated by a local, State, or federal agency. The Commission Board of Agriculture may adopt rules to provide exceptions for dispensing raw milk and raw milk products for nonhuman consumption. Any raw milk or raw milk product dispensed as animal feed shall include on its label the statement "NOT FOR HUMAN CONSUMPTION" in letters at least one-half inch in height. Any raw milk or raw milk product dispensed as animal feed shall also include on its label the statement "IT IS NOT LEGAL TO SELL RAW MILK FOR HUMAN CONSUMPTION IN NORTH CAROLINA." "Sale" or "sold" shall mean any transaction that involves the transfer or dispensing of milk and milk products or the right to acquire milk and milk products through barter or contractual arrangement or in exchange for any other form of compensation including, but not limited to, the sale of shares or interest in a cow, goat, or other lactating animal or herd."

SECTION 13.3.(r)  G.S. 130A-21(b) is recodified as a new section G.S. 106-266.36 in Article 28C of Chapter 106 of the General Statutes, as recodified by subsection (k) of this section, to have the catchline "Milk embargo."

SECTION 13.3.(s)  G.S. 106-266.36, as recodified in subsection (r) of this section, reads as rewritten:

"§ 106-266.36. Milk embargo.

If the Secretary of Environment and Natural ResourcesCommissioner of Agriculture or a local health director has probable cause to believe that any milk designated as Grade "A" milk is misbranded or does not satisfy the milk sanitation rules adopted pursuant to G.S. 130A-275,G.S. 106-266.31, the Secretary of Environment and Natural ResourcesCommissioner of Agriculture or a local health director may detain or embargo the milk by affixing a tag to it and warning all persons not to remove or dispose of the milk until permission for removal or disposal is given by the official by whom the milk was detained or embargoed or by the court. It shall be unlawful for any person to remove or dispose of the detained or embargoed milk without that permission.

The official by whom the milk was detained or embargoed shall petition a judge of the district or superior court in whose jurisdiction the milk is detained or embargoed for an order for condemnation of the article. If the court finds that the milk is misbranded or that it does not satisfy the milk sanitation rules adopted pursuant to G.S. 130A-275,G.S. 106-266.31, either the milk shall be destroyed under the supervision of the petitioner or the petitioner shall ensure that the milk will not be used for human consumption as Grade "A" milk. All court costs and fees, storage, expenses of carrying out the court's order and other expense shall be taxed against the claimant of the milk. If, the milk, by proper labelling or processing, can be properly branded and will satisfy the milk sanitation rules adopted pursuant to G.S. 130A-275,G.S. 106-266.31, the court, after the payment of all costs, fees, and expenses and after the claimant posts an adequate bond, may order that the milk be delivered to the claimant for proper labelling and processing under the supervision of the petitioner. The bond shall be returned to the claimant after the petitioner represents to the court either that the milk is no longer mislabelled or in violation of the milk sanitation rules adopted pursuant to G.S. 130A-275,G.S. 106-266.31, or that the milk will not be used for human consumption, and that in either case the expenses of supervision have been paid."

SECTION 13.3.(t)  G.S. 106-143 reads as rewritten:

"§ 106-143.  Article construed supplementary.

Nothing in this Article shall be construed as in any way amending, abridging, or otherwise affecting the validity of any law or ordinance relating to the Commission for Public Health or the Department of Environment and Natural Resources or any local health department in their sanitary work in connection with public and private water supplies, sewerage, meat, milk, milk products, shellfish, finfish, or other foods, or food products, or the production, handling, or processing of these items."

SECTION 13.3.(u)  Part 8 of Article 8 of Chapter 130A of the General Statutes is recodified as Article 4H of Chapter 106 of the General Statutes, to be entitled "Bedding"; G.S. 130A-261 is recodified as G.S. 106-65.95; G.S. 130A-262 is recodified as G.S. 106-65.96; G.S. 130A-263 is recodified as G.S. 106-65.97; G.S. 130A-264 is recodified as G.S. 106-65.98; G.S. 130A-265 is recodified as G.S. 106-65.99; G.S. 130A-266 is recodified as G.S. 106-65.100; G.S. 130A-267 is recodified as G.S. 106-65.101; G.S. 130A-268 is recodified as G.S. 106-65.102; G.S. 130A-269 is recodified as G.S. 106-65.103; G.S. 130A-270 is recodified as G.S. 106-65.104; G.S. 130A-271 is recodified as G.S. 106-65.105; G.S. 130A-272 is recodified as G.S. 106-65.106; and G.S. 130A-273 is recodified as G.S. 106-65.107.

SECTION 13.3.(v)  G.S. 106-65.95, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.95.  Definitions.

The following definitions shall apply throughout this Part:Article:

…."

SECTION 13.3.(w)   G.S. 106-65.96, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.96.  Sanitizing.

(a)        No person shall sell any renovated bedding or secondhand bedding unless it is sanitized in accordance with rules adopted by the Commission.Board of Agriculture.

(b)        A sanitizing apparatus or process shall not be used for sanitizing bedding or material required to be sanitized under this Part Article until the apparatus is approved by the Department.Department of Agriculture and Consumer Services.

(c)        A person who sanitizes bedding shall attach to the bedding a yellow tag containing information required by the rules of the Commission.Board of Agriculture.

(d)        A person who sanitizes material or bedding for another person shall keep a complete record of the kind of material and bedding which has been sanitized. The record shall be subject to inspection by the Department.Department of Agriculture and Consumer Services.

(e)        A person who receives used bedding for renovation or storage shall attach to the bedding a tag on which is legibly written the date of receipt and the name and address of the owner."

SECTION 13.3.(x)  G.S. 106-65.98, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.98.  Storage of used materials.

No establishment shall store any unsanitized previously used materials in the same room with bedding or materials that are new or have been sanitized unless the new or sanitized bedding or materials are completely segregated from the unsanitized materials in a manner approved by the rules of the Commission.Board of Agriculture."

SECTION 13.3.(y)  G.S. 106-65.99, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.99.  Tagging requirements.

(a)        A tag of durable material approved by the Commission Board of Agriculture shall be sewed securely to all bedding. The tag shall be at least two inches by three inches in size.

(b)        The following shall be plainly stamped or printed upon the tag with ink in English:

(1)        The name and kind of material or materials used to fill the bedding which are listed in the order of their predominance;

(2)        A registration number obtained from the Department;Department of Agriculture and Consumer Services; and

(3)        In letters at least one-eighth inch high the words "made of new material", if the bedding contains no previously used material; or the words "made of previously used materials", if the bedding contains any previously used material; or the word "secondhand" on any bedding which has been used but not remade.

(4)        Repealed by Session Laws 1987, c. 456, s. 4.

(c)        A white tag shall be used for manufactured bedding and a yellow tag for renovated or sanitized bedding.

(d)        The tag must be sewed to the outside covering before the filling material has been inserted. No trade name, advertisement nor any other wording shall appear on the tag."

SECTION 13.3.(z)  G.S. 106-65.100, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.100.  Altering tags prohibited.

No person, other than one purchasing bedding for personal use or a representative of the Department of Agriculture and Consumer Services shall remove, deface or alter the tag required by this Part.Article."

SECTION 13.3.(aa)  G.S. 106-65.101, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.101.  Selling regulated.

(a)        No person shall sell any bedding in this State (whether manufactured within or without this State) which has not been manufactured, tagged, and labeled in the manner required by this Part Article and which does not otherwise comply with the provisions of this Part.Article.

(b)        This Part Article shall not apply to bedding sold by the owner and previous user from the owner's home directly to a purchaser for the purchaser's own personal use unless the bedding has been exposed to an infectious or communicable disease.

(c)        Possession of any bedding in any store, warehouse, itinerant vendor's conveyance or place of business, other than a private home, hotel or other place where these articles are ordinarily used, shall constitute prima facie evidence that the item is possessed with intent to sell. No secondhand bedding shall be possessed with intent to sell for a period exceeding 60 days unless it has been sanitized."

SECTION 13.3.(bb)  G.S. 106-65.102, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.102.  Registration numbers.

(a)        All persons manufacturing or sanitizing bedding in this State or manufacturing bedding to be sold in this State shall apply for a registration number on a form prescribed by the Secretary.Commissioner of Agriculture. Upon receipt of the completed application and applicable fees, the Department of Agriculture and Consumer Services shall issue to the applicant a certificate of registration showing the person's name and address, registration number and other pertinent information required by the rules of the Commission.Board of Agriculture."

SECTION 13.3.(cc)  G.S. 106-65.103, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.103.  Payment of fees; licenses.

(c)        The Department of Agriculture and Consumer Services shall administer and enforce this Part.Article. A person who has done business in this State throughout the preceding calendar year shall obtain a license by paying a fee to the Department of Agriculture and Consumer Services in an amount determined by the total number of bedding units manufactured, sold, or sanitized in this State by the applicant during the calendar year immediately preceding, at the rate of five and two tenths cents (5.2¢) per bedding unit. However, if this amount is less than fifty dollars ($50.00), a minimum fee of fifty dollars ($50.00) shall be paid to the Department.Department of Agriculture and Consumer Services.

(d)        A person who has not done business in this State throughout the preceding calendar year shall obtain a license by paying an initial fee to the Department of Agriculture and Consumer Services in the amount of seven hundred twenty dollars ($720.00) for the first year in which business is done in this State, prorated in accordance with the quarter of the calendar year in which the person begins doing business. After submission of proof of business volume in accordance with subsection (h) of this section for the part of the preceding calendar year in which the person did business in this State, the Department of Agriculture and Consumer Services shall determine the amount of fee for which the person is responsible for that time period by using a rate of five and two tenths cents (5.2¢) for each bedding unit. However, if this amount is less than fifty dollars ($50.00), then the amount of the fee for which the person is responsible shall be fifty dollars ($50.00). If the person's initial payment is more than the amount of the fee for which the person is responsible, the Department of Agriculture and Consumer Services shall make a refund or adjustment to the cost of the fee due for the next year in the amount of the difference. If the initial payment is less than the amount of the fee for which the person is responsible, the person shall pay the difference to the Department.Department of Agriculture and Consumer Services.

(d1)      Payments, refunds, and adjustments shall be made in accordance with rules adopted by the Commission.Board of Agriculture.

(d2)      Upon payment of the fees charged pursuant to subsections (c) and (d), or the first installment thereof as provided by rules adopted by the Commission,Board of Agriculture, the Department of Agriculture and Consumer Services shall issue a license to the person. Licenses shall be kept conspicuously posted in the place of business of the licensee at all times. The Secretary Commissioner of Agriculture may suspend a license for a maximum of six months for two or more serious violations of this Part Article or of the rules of the Commission,Board of Agriculture, within any 12-month period.

(e)        A maximum fee of seven hundred fifty dollars ($750.00) shall be charged for units of bedding manufactured in this State but not sold in this State.

(f)         For the sole purpose of computing fees for which a person is responsible, the following definitions shall apply: One mattress is defined as one bedding unit; one upholstered spring is defined as one bedding unit; one pad is defined as one bedding unit; one sleeping bag is defined as one bedding unit; five comforters, pillows or decorative pillows are defined as one bedding unit; and any other item is defined as one bedding unit.

(g)        An application for license must be submitted on a form prescribed by the Secretary.Commissioner of Agriculture. No license may be issued to a person unless the person complies with the rules of the Commission Board of Agriculture governing the granting of licenses.

(h)        The Commission Board of Agriculture shall adopt rules for the proper enforcement of this section. The rules shall include provisions governing the type and amount of proof which must be submitted by the applicant to the Department of Agriculture and Consumer Services in order to establish the number of bedding units that were, during the preceding calendar year:

(1)        Manufactured and sold in this State;

(2)        Manufactured outside of this State and sold in this State; and

(3)        Manufactured in this State but not sold in this State.

(i)         The Commission Board of Agriculture may provide in its rules for additional proof of the number of bedding units sold during the preceding calendar year when it has reason to believe that the proof submitted by the manufacturer is incomplete, misleading or incorrect."

SECTION 13.3.(dd)  G.S. 106-65.104, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.104.  Bedding Law Account.

The Bedding Law Account is established as a nonreverting account within the Department.Department of Agriculture and Consumer Services. All fees collected under this Part Article shall be credited to the Account and applied to the following costs:

(1)        Salaries and expenses of inspectors and other employees who enforce this Part.Article.

(2)        Expenses directly connected with the enforcement of this Part,Article, including attorney's fees, which are expressly authorized to be incurred by the Secretary Commissioner of Agriculture without authority from any other source when in the Secretary's opinionopinion of the Commissioner of Agriculture it is advisable to employ an attorney to prosecute any persons."

SECTION 13.3.(ee)  G.S. 106-65.105, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.105.  Enforcement by the Department.Department of Agriculture and Consumer Services.

(a)        The Department of Agriculture and Consumer Services shall enforce the provisions of this Part Article and the rules adopted by the Commission.Board of Agriculture.

(b)        The Secretary Commissioner of Agriculture may prohibit sale and place an "off sale" tag on any bedding which is not made, sanitized, or tagged as required by this Part Article and the rules of the Commission.Board of Agriculture. The bedding shall not be sold or otherwise removed until the violation is remedied and the Secretary Commissioner of Agriculture has reinspected it and removed the "off sale" tag.

(c)        A person supplying material to a bedding manufacturer shall furnish an itemized invoice of all furnished material. Each material entering into willowed or other mixtures shall be shown on the invoice. The bedding manufacturer shall keep the invoice on file for one year subject to inspection by the Department.Department of Agriculture and Consumer Services.

(d)        When the Secretary Commissioner of Agriculture has reason to believe that bedding is not tagged or filled as required by this Part,Article, the Secretary Commissioner of Agriculture shall have authority to open a seam of the bedding to examine the filling, and, if unable after this examination to determine if the filling is of the kind stated on the tag, shall have the authority to examine purchase or other records necessary to determine definitely the kind of material used in the bedding. The Secretary Commissioner of Agriculture shall have authority to seize and hold for evidence any records and any bedding or bedding material which in the Secretary's opinionopinion of the Commissioner of Agriculture is made, possessed or offered for sale in violation of this Part Article or the rules of the Commission.Board of Agriculture. The Secretary Commissioner of Agriculture shall have authority to take a sample of any bedding or bedding material for the purpose of examination or for evidence."

SECTION 13.3.(ff)  G.S. 106-65.106, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.106.  Exemptions for blind persons and State institutions.

(a)        In cases where bedding is manufactured, sanitized or renovated in a plant or place of business which has qualified as a nonprofit agency for the blind or severely handicapped under P.L. 92-28, as amended, the responsible person shall satisfy the provisions of this Part Article and the rules of the Commission.Board of Agriculture. However, the responsible persons at these plants or places of business shall not be required to pay fees in accordance with G.S. 130A-269.G.S. 106-65.103.

(b)        State institutions engaged in the manufacture, renovation or sanitizing of bedding for their own use or that of another State institution are exempted from all provisions of this Part.Article."

SECTION 13.3.(gg)  G.S. 106-65.107, as recodified under subsection (u) of this section, reads as rewritten:

"§ 106-65.107.  Rules.

The Commission Board shall adopt rules required by this Part Article in order to protect the public health."

SECTION 13.3.(hh)  G.S. 90A-51 reads as rewritten:

"§ 90A-51.  Definitions.

The words and phrases defined below shall when used in this Article have the following meaning unless the context clearly indicates otherwise:

(2a)      "Environmental health practice" means the provision of environmental health services, including administration, organization, management, education, enforcement, and consultation regarding environmental health services provided to or for the public. These services are offered to prevent environmental hazards and promote and protect the health of the public in the following areas: food, lodging, and institutional sanitation; on-site wastewater treatment and disposal; milk and dairy sanitation; shellfish sanitation; recreational water quality; public swimming pool sanitation; childhood lead poisoning prevention; well permitting and inspection; tattoo parlor sanitation; and all other areas of environmental health requiring the delegation of authority by the Division of Environmental Public Health of the Department of Health and Human Services to State and local environmental health professionals to enforce rules adopted by the Commission for Public Health or the Environmental Management Commission.Health. The definition also includes local environmental health professionals enforcing rules of local boards of health for on-site wastewater systems and wells.

…."

SECTION 13.3.(ii)  G.S. 90A-55(a) reads as rewritten:

"(a)       Board Membership. - The Board shall consist of 12 members who shall serve staggered terms: the Secretary of Environment and Natural Resources,Health and Human Services, or the Secretary's duly authorized representative, one public-spirited citizen, one environmental sanitation educator from an accredited college or university, one local health director, a representative of the Division of Environmental Public Health of the Department of Environment and Natural Resources,Health and Human Services, and seven practicing environmental health specialists who qualify by education and experience for registration under this Article, six of whom shall represent the Western, Piedmont, and Eastern Regions of the State as described more specifically in the rules adopted by the Board."

SECTION 13.3.(jj)  G.S. 90A-55(c) reads as rewritten:

"(c)       The Environmental Health Section of the North Carolina Public Health Association, Inc., shall submit a recommended list of Board member candidates to the Governor for the Governor's consideration in appointments, except for the two representatives of the Department of Environment and Natural ResourcesHealth and Human Services recommended by the Secretary of Environment and Natural ResourcesHealth and Human Services and the local health director recommended by the North Carolina Local Health Directors Association."

SECTION 13.3.(kk)  G.S. 90A-71(4) reads as rewritten:

"(4)      "Department" means the Department of Environment and Natural Resources.Health and Human Services."

SECTION 13.3.(ll)  G.S. 90A-73(a)(3) reads as rewritten:

"(3)      One member appointed by the Governor who is an employee of the Division of Environmental Public Health of the Department to a term that expires on 1 July of years that follow by one year those years that are evenly divisible by three."

SECTION 13.3.(mm)  G.S. 90A-81(b) reads as rewritten:

"(b)      Arbitration. - The Board may establish a voluntary arbitration procedure to resolve complaints concerning a certified contractor or inspector or any work performed by a certified contractor or inspector, or conflicts involving any certified contractor or inspector and the Division of Environmental Public Health of the Department or a local health department."

SECTION 13.3.(nn)  G.S. 130A-334(1a) reads as rewritten:

"(1a)     "Department" means the Department of Environment and Natural Resources.Health and Human Services."

SECTION 13.3.(oo)  G.S. 104E-5 reads as rewritten:

"§ 104E-5.  Definitions.

Unless a different meaning is required by the context, the following terms as used in this Chapter shall have the meanings hereinafter respectively ascribed to them:

(6)        "Department" means the State Department of Environment and Natural Resources.Department of Health and Human Services.

…."

SECTION 13.3.(pp)  G.S. 104E-8(c) reads as rewritten:

"(c)       The 10 ex officio members shall be appointed by the Governor, shall be members or employees of the following State agencies or their successors, and shall serve at the Governor's pleasure:

(6)        The Division of Environmental Public Health of the Department.

…."

SECTION 13.3.(qq)  G.S. 104E-9 reads as rewritten:

"§ 104E-9.  Powers and functions of Department of Environment and Natural Resources. Health and Human Services.

(a)        The Department of Environment and Natural Resources Health and Human Services is authorized:

(b)        The Division of Environmental Public Health of the Department shall develop a training program for tanning equipment operators that meets the training rules adopted by the Commission. If the training program is provided by the Department, the Department may charge each person trained a reasonable fee to recover the actual cost of the training program."

SECTION 13.3.(rr)  G.S. 106-307.2(b) reads as rewritten:

"(b)      The State Veterinarian shall notify the State Health Director and the Director of the Division of Environmental Public Health in the Department of Environment and Natural ResourcesHealth and Human Services when the State Veterinarian receives a report indicating an occurrence or potential outbreak of anthrax, arboviral infections, brucellosis, epidemic typhus, hantavirus infections, murine typhus, plague, psittacosis, Q fever, hemorrhagic fever, virus infections, and any other disease or condition transmissible to humans that the State Veterinarian determines may have been caused by a terrorist act."

SECTION 13.3.(ss)  G.S. 120-70.33(3) reads as rewritten:

"§ 120-70.33.  Powers and duties.

The Joint Select Committee shall have the following powers and duties:

(3)        To evaluate actions of the Radiation Protection Commission, the radiation protection programs administered by the Division of Environmental Public Health of the Department of Environment and Natural Resources,Health and Human Services, and of any other board, commission, department, or agency of the State or local government as such actions relate to low-level radioactive waste management;

…."

SECTION 13.3.(tt)  G.S. 130A-4(c) reads as rewritten:

"(c)       The Secretary of Environment and Natural Resources shall administer and enforce the provisions of Part 4 of Article 5 and Articles 8, 9, 10, 11, and 12Articles 9 and 10 of this Chapter and the rules of the Commission."

SECTION 13.3.(uu)  G.S. 130A-12 reads as rewritten:

"§ 130A-12.  Confidentiality of records.

All records containing privileged patient medical information, information protected under 45 Code of Federal Regulations Parts 160 and 164, and information collected under the authority of Part 4 of Article 5 of this Chapter that are in the possession of the Department of Health and Human Services, the Department of Environment and Natural Resources,Services or local health departments shall be confidential and shall not be public records pursuant to G.S. 132-1. Information contained in the records may be disclosed only when disclosure is authorized or required by State or federal law. Notwithstanding G.S. 8-53 or G.S. 130A-143, the information contained in the records may be disclosed for purposes of treatment, payment, or health care operations. For purposes of this section, the terms "treatment," "payment," and "health care operations" have the meanings given those terms in 45 Code of Federal Regulations § 164.501."

SECTION 13.3.(vv)  G.S. 130A-17(b) reads as rewritten:

"(b)      The Secretary of Environment and Natural Resources and a local health director shall have the same rights enumerated in subsection (a) of this section to enforce the provisions of Part 4 of Article 5 and Articles 8, 9, 10, 11, and 12Articles 9 and 10 of this Chapter."

SECTION 13.3.(ww)  G.S. 130A-18(b) reads as rewritten:

"(b)      The Secretary of Environment and Natural Resources and a local health director shall have the same rights enumerated in subsection (a) of this section to enforce the provisions of Part 4 of Article 5 and Articles 8, 9, 10, 11, and 12Articles 9 and 10 of this Chapter."

SECTION 13.3.(xx)  G.S. 130A-19(b) reads as rewritten:

"(b)      The Secretary of Environment and Natural Resources and a local health director shall have the same rights enumerated in subsection (a) of this section to enforce the provisions of Part 4 of Article 5 and Articles 8, 9, 10, 11, and 12Articles 9 and 10 of this Chapter."

SECTION 13.3.(yy)  G.S. 130A-20(b) reads as rewritten:

"(b)      The Secretary of Environment and Natural Resources and a local health director shall have the same rights enumerated in subsection (a) of this section to enforce the provisions of Part 4 of Article 5 and Articles 8, 9, 10, 11, and 12Articles 9 and 10 of this Chapter."

SECTION 13.3.(zz)  G.S. 130A-21(a) reads as rewritten:

"(a)       In addition to the authority of the Department of Agriculture and Consumer Services pursuant to G.S. 106-125, the Secretary of Environment and Natural Resources or a local health director has authority to exercise embargo authority concerning food or drink pursuant to G.S. 106-125(a), (b) and (c) when the food or drink is in an establishment that is subject to regulation by the Department of Environment and Natural ResourcesHealth and Human Services pursuant to this Chapter, that is subject to rules adopted by the Commission, or that is the subject of an investigation pursuant to G.S. 130A-144; however, no such action shall be taken in any establishment or part of an establishment that is under inspection or otherwise regulated by the Department of Agriculture and Consumer Services or the United States Department of Agriculture other than the part of the establishment that is subject to regulation by the Department of Environment and Natural ResourcesHealth and Human Services pursuant to this Chapter. Any action under this section shall only be taken by, or after consultation with, Department of Environment and Natural ResourcesHealth and Human Services regional environmental health specialists, or the Director of the Division of Environmental Public Health or the Director's designee, in programs regulating food and drink pursuant to this Chapter or in programs regulating food and drink that are subject to rules adopted by the Commission. Authority under this section shall not be delegated to individual environmental health specialists in local health departments otherwise authorized and carrying out laws and rules pursuant to G.S. 130A-4. When any action is taken pursuant to this section, the Department of Environment and Natural ResourcesHealth and Human Services or the local health director shall immediately notify the Department of Agriculture and Consumer Services. For the purposes of this subsection, all duties and procedures in G.S. 106-125 shall be carried out by the Secretary of the Department of Environment and Natural ResourcesHealth and Human Services or the local health director and shall not be required to be carried out by the Department of Agriculture and Consumer Services. It shall be unlawful for any person to remove or dispose of the food or drink by sale or otherwise without the permission of a Department of Environment and Natural ResourcesHealth and Human Services regional environmental health specialist, the Director of the Division of Environmental Public Health or the Director's designee, the local health director, or a duly authorized agent of the Department of Agriculture and Consumer Services, or by the court in accordance with the provisions of G.S. 106-125."

SECTION 13.3.(aaa)  G.S. 130A-21(d) reads as rewritten:

"(d)      Nothing in this section is intended to limit the embargo authority of the Department of Agriculture and Consumer Services. The Department of Environment and Natural ResourcesHealth and Human Services and the Department of Agriculture and Consumer Services are authorized to enter agreements respecting the duties and responsibilities of each agency in the exercise of their embargo authority."

SECTION 13.3.(bbb)  G.S. 130A-22(c) reads as rewritten:

"(c)       The Secretary of Environment and Natural Resources may impose an administrative penalty on a person who willfully violates Article 11 of this Chapter, rules adopted by the Commission pursuant to Article 11 or any condition imposed upon a permit issued under Article 11. An administrative penalty may not be imposed upon a person who establishes that neither the site nor the system may be improved or a new system installed so as to comply with Article 11 of this Chapter. Each day of a continuing violation shall constitute a separate violation. The penalty shall not exceed fifty dollars ($50.00) per day in the case of a wastewater collection, treatment and disposal system with a design daily flow of no more than 480 gallons or in the case of any system serving a single one-family dwelling. The penalty shall not exceed three hundred dollars ($300.00) per day in the case of a wastewater collection, treatment and disposal system with a design daily flow of more than 480 gallons which does not serve a single one-family dwelling."

SECTION 13.3.(ccc)  G.S. 130A-23(e) reads as rewritten:

"(e)       The Secretary of Environment and Natural Resources shall have all of the applicable rights enumerated in this section to enforce the provisions of Articles 8, 9, 10, 11, and 12Articles 9 and 10 of this Chapter."

SECTION 13.3.(ddd)  G.S. 130A-34.1(a) reads as rewritten:

"(a)       The Local Health Department Accreditation Board is established within the North Carolina Institute for Public Health. The Board shall be composed of 17 members appointed by the Secretary of the Department of Health and Human Services as follows:

(1)        Four shall be county commissioners recommended by the North Carolina Association of County Commissioners, and four shall be members of a local board of health as recommended by the Association of North Carolina Boards of Health.

(2)        Three local health directors.

(3)        Two Three staff members from the Division of Public Health, Department of Health and Human Services.

(4)        One staff member from the Division of Environmental Health, recommended by the Secretary of Environment and Natural Resources.

(5)        Three at large."

SECTION 13.3.(eee)  G.S. 130A-227(b) reads as rewritten:

"(b)      The following definitions shall apply throughout this Article:

(1)        "Department" means the Department of Environment and Natural Resources.Health and Human Services.

(2)        "Secretary" means the Secretary of Environment and Natural Resources.Health and Human Services."

SECTION 13.3.(fff)  G.S. 159G-20 reads as rewritten:

"§ 159G-20.  Definitions.

The following definitions apply in this Chapter:

(4)        Division of Environmental Health. - The Division of Environmental Health of the Department of Environment and Natural Resources.

(5)        Division of Water Quality. - The Division of Water Quality of the Department of Environment and Natural Resources.

(5a)      Division of Water Resources. - The Division of Water Resources of the Department of Environment and Natural Resources.

…."

SECTION 13.3.(ggg)  G.S. 159G-23 reads as rewritten:

"§ 159G-23.  Common criteria for loan or grant from Wastewater Reserve or Drinking Water Reserve.

The criteria in this section apply to a loan or grant from the Wastewater Reserve or the Drinking Water Reserve. The Division of Water Quality and the Division of Environmental HealthWater Resources must each establish a system of assigning points to applications based on the following criteria:

…."

SECTION 13.3.(hhh)  G.S. 159G-26(a) reads as rewritten:

"(a)       Requirement. - The Department must publish a report each year on the accounts in the Water Infrastructure Fund that are administered by the Division of Water Quality or the Division of Environmental Health.Water Resources. The report must be published by 1 November of each year and cover the preceding fiscal year. The Department must make the report available to the public and must give a copy of the report to the Environmental Review Commission and the Fiscal Research Division of the General Assembly."

SECTION 13.3.(iii)  G.S. 159G-30 reads as rewritten:

"§ 159G-30.  Department's responsibility.

The Department, through the Division of Water Quality and the Division of Environmental Health,Water Resources, administers loans and grants made from the CWSRF, the DWSRF, the Wastewater Reserve, and the Drinking Water Reserve. The Division of Water Quality administers loans and grants from the CWSRF and the Wastewater Reserve. The Division of Environmental HealthWater Resources administers loans and grants from the DWSRF and the Drinking Water Reserve."

SECTION 13.3.(jjj)  G.S. 159G-37 reads as rewritten:

"§ 159G-37.  Application to CWSRF, Wastewater Reserve, DWSRF, and Drinking Water Reserve.

An application for a loan or grant from the CWSRF or the Wastewater Reserve must be filed with the Division of Water Quality of the Department. An application for a loan or grant from the DWSRF or the Drinking Water Reserve must be filed with the Division of Environmental HealthWater Resources of the Department. An application must be submitted on a form prescribed by the Division and must contain the information required by the Division. An applicant must submit to the Division any additional information requested by the Division to enable the Division to make a determination on the application. An application that does not contain information required on the application or requested by the Division is incomplete and is not eligible for consideration. An applicant may submit an application in as many categories as it is eligible for consideration under this Article."

SECTION 13.3.(kkk)  G.S. 159G-38(b) reads as rewritten:

"(b)      Division Review. - If, after reviewing an application, the Division of Water Quality or the Division of Environmental Health,Water Resources, as appropriate, determines that a project requires an environmental assessment, the assessment must be submitted before the Division continues its review of the application. If, after reviewing an environmental assessment, the Division concludes that an environmental impact statement is required, the Division may not continue its review of the application until a final environmental impact statement has been completed and approved as provided in the North Carolina Environmental Policy Act."

SECTION 13.3.(lll)  G.S. 159G-38(c) reads as rewritten:

"(c)       Hearing. - The Division of Water Quality or the Division of Environmental Health,Water Resources, as appropriate, may hold a public hearing on an application for a loan or grant under this Article if it determines that holding a hearing will serve the public interest. An individual who is a resident of any county in which a proposed project is located may submit a written request for a public hearing. The request must set forth each objection to the proposed project or other reason for requesting a hearing and must include the name and address of the individual making the request. The Division may consider all written objections to the proposed project, any statement submitted with the hearing request, and any significant adverse effects the proposed project may have on the environment. The Division's decision on whether to hold a hearing is conclusive. The Division must keep all written requests for a hearing on an application as part of the records pertaining to the application."

SECTION 13.3.(mmm)  G.S. 159G-39(a) reads as rewritten:

"(a)       Point Assignment. - The Division of Water Quality or the Division of Environmental Health,Water Resources, as appropriate, must review all applications filed for a loan or grant under this Article for an application period. The Division must rank each application in accordance with the points assigned to the evaluation criteria. The Division must make a written determination of an application's rank and attach the determination to the application. The Division's determination of rank is conclusive."

SECTION 13.3.(nnn)  G.S. 166A-6.1(b) reads as rewritten:

"(b)      Every person, firm, corporation or municipality who is licensed to construct or who is operating a fixed nuclear facility for the production of electricity shall pay to the Department of Crime Control and Public Safety, for the use of the Division of Environmental Health of the Department of Environment and Natural Resources,Radiation Protection Section of the Division of Public Health of the Department of Health and Human Services, an annual fee of thirty-six thousand dollars ($36,000) for each fixed nuclear facility that is located within this State or that has a Plume Exposure Pathway Emergency Planning Zone any part of which is located within this State. This fee shall be applied only to the costs of planning and implementing emergency response activities as required by the Federal Emergency Management Agency for the operation of nuclear facilities. This fee is to be paid no later than July 31 of each year."

SECTION 13.3.(ooo)  Part 3 of Article 8 of Chapter 130A of the General Statutes is repealed, except G.S. 130A-230 is recodified as G.S. 113-221.2 in Article 17 of Chapter 113 of the General Statutes.

SECTION 13.3.(ppp)  G.S. 113-221.2, as recodified in subsection (ooo) of this section, reads as rewritten:

"§ 113-221.2.  Commission to adopt rules; enforcement of rules.Additional rules to establish sanitation requirements for scallops, shellfish, and crustacea.

For the protection of the public health, the Marine Fisheries Commission shall adopt rules establishing sanitation requirements for the harvesting, processing and handling of scallops, shellfish shellfish, and crustacea of in-State origin. The rules of the Marine Fisheries Commission may also regulate scallops, shellfish shellfish, and crustacea shipped into North Carolina. The Department is authorized to enforce the rules and may issue and revoke permits according to the rules."

SECTION 13.3.(qqq)  Part 3A of Article 8 of Chapter 130A of the General Statutes is repealed, except G.S. 130A-233.1 is recodified as G.S. 113-221.3 in Article 17 of Chapter 113 of the General Statutes.

SECTION 13.3.(rrr)  G.S. 113-221.3, as recodified in subsection (qqq) of this section, reads as rewritten:

"§ 113-221.3.  Monitoring program for State coastal fishing and recreation waters; development and implementation of program.removal or destruction of warning signs.

(a)        For the protection of the public health of swimmers and others who use the State's coastal fishing waters for recreational activities, the Department shall develop and implement a program to monitor the State's coastal fishing waters for contaminants. The monitoring program shall cover all coastal fishing waters up to the point where those waters are classified as inland fishing waters.

(b)        The Marine Fisheries Commission shall adopt rules to provide for a water quality monitoring program for the coastal recreation waters of the State and to allow the Department to implement the federal Beaches Environmental Assessment and Coastal Health Act of 2000 (Pub. L. No. 106-284; 114 Stat. 870, 875; 33 U.S.C. §§ 1313, 1362). The rules shall address, but are not limited to, definitions, surveys, sampling, action standards, and posting of information on the water quality of coastal recreation waters.

(c)        No person shall remove, destroy, damage, deface, mutilate, or otherwise interfere with any sign posted by the Department pursuant to subsection (b) of this section. No person, without just cause or excuse, shall have in his or her possession any sign posted by the Department pursuant to subsection (b) of this section. Any person who violates this section is guilty of a Class 2 misdemeanor.

(d)        As used in this section, coastal recreation waters has the same meaning as in 33 U.S.C. § 1362."

SECTION 13.3.(sss)  G.S. 130A-21(c) is recodified as a new section G.S. 113-221.4 in Article 17 of Chapter 113 of the General Statutes to be entitled "Embargo."

SECTION 13.3.(ttt)  G.S. 113-221.4 as recodified in subsection (sss) of this section, reads as rewritten:

"§ 113-221.4.  Embargo.

(a)        If the Secretary of Environment and Natural Resources or a local health director has probable cause to believe that any scallops, shellfish shellfish, or crustacea is adulterated or misbranded, the Secretary of Environment and Natural Resources or a local health director may detain or embargo the article by affixing a tag to it and warning all persons not to remove or dispose of the article until permission for removal or disposal is given by the official by whom it was detained or embargoed or by the court. It shall be unlawful for any person to remove or dispose of the detained or embargoed article without that permission.

(b)        The official by whom the scallops, shellfish shellfish, or crustacea was detained or embargoed shall petition a judge of the district or superior court in whose jurisdiction the article is detained or embargoed for an order for condemnation of the article. If the court finds that the article is adulterated or misbranded, that article shall be destroyed under the supervision of the petitioner. All court costs and fees, storage and other expense shall be taxed against the claimant of the article. If, the article, by proper labelling can be properly branded, the court, after the payment of all costs, fees, expenses, and an adequate bond, may order that the article be delivered to the claimant for proper labelling under the supervision of the petitioner. The bond shall be returned to the claimant after the petitioner represents to the court that the article is no longer mislabelled and that the expenses of supervision have been paid."

SECTION 13.3.(uuu)  The Revisor of Statutes shall make the conforming statutory changes necessary to reflect the transfers under this section. The Revisor of Statutes may correct any reference in the General Statutes to the statutes that are recodified by this section and make any other conforming changes necessitated by this section.

SECTION 13.3.(vvv)  The transfers under this section become effective July 1, 2011, and funds transferred shall be net of any changes enacted by this section.  Any references in this act to any program, office, section, division, or department that is transferred under this section shall be construed to be consistent with the transfer under this section.

 

Modify elimination of non-match positions in regional offices

SECTION 13.3A.  Of the non-match positions eliminated in items 104, 105, 107, 109, and 110 on page H18 of the Report on the Continuation, Expansion and Capital Budgets, the six positions listed in this section shall not be eliminated.  DENR shall have the flexibility to select other positions supported by the General Fund, in the same dollar amount, to substitute for elimination.

(1)        60035967

(2)        60035965

(3)        60035966

(4)        60035968

(5)        60035957

(6)        60035972

 

Require DENR to use DWQ's Groundwater Investigation Unit's well drilling services in other DENR Divisions

SECTION 13.4.(a)  The purposes of this section are (i) to assure that the Groundwater Investigation Unit well drilling staff are fully utilized by establishing a procedure whereby the Groundwater Investigation Unit may bid to contract to provide well drilling services to other divisions of the Department of Environment and Natural Resources and by providing funding support by these divisions for the Unit's costs and travel expenses and (ii) to reduce the need for the Department of Environment and Natural Resources to enter into contracts with private well drilling companies.

SECTION 13.4.(b)  During the 2011-2012 fiscal year and the 2012-2013 fiscal year, the Groundwater Investigation Unit of the Division of Water Quality of the Department of Environment and Natural Resources shall bid to contract to perform well drilling services for any division within the Department of Environment and Natural Resources that needs to have wells drilled to monitor groundwater, as part of remediating a contaminated site, or as part of any other division or program responsibility, except for a particular instance when this would be impracticable. The provisions of Article 3 of Chapter 143 of the General Statutes apply to any contract entered into under this section.

SECTION 13.4.(c)  The terms of any contract entered into under this section may include a provision whereby the division within the Department of Environment and Natural Resources that contracts for the well drilling services of the Groundwater Investigation Unit may use available receipts for the 2011-2012 fiscal year and for the 2012-2013 fiscal year, as applicable, for the costs of the Groundwater Investigation Unit well drilling staff that are incurred to perform the well drilling services under the contract.

 

Additional uses of hazardous waste fees

SECTION 13.5.  G.S. 130A-294.1(b) reads as rewritten:

"(b)      Funds collected pursuant to this section shall be used for personnel and other resources necessary to:

(1)        Provide a high level of technical assistance and waste minimization effort for the hazardous waste management program;

(2)        Provide timely review of permit applications;

(3)        Insure that permit decisions are made on a sound technical basis and that permit decisions incorporate all conditions necessary to accomplish the purposes of this Part;

(4)        Improve monitoring and compliance of the hazardous waste management program;

(5)        Increase the frequency of inspections;

(6)        Provide chemical, biological, toxicological, and analytical support for the hazardous waste management program; and

(7)        Provide resources for emergency response to imminent hazards associated with the hazardous waste management program.

(8)        Implement and provide oversight of necessary response activities involving inactive hazardous substance or waste disposal sites.

(9)        Provide compliance and prevention activities within the solid waste program to ensure that hazardous waste is not disposed in solid waste management facilities."

 

DENR Civil Penalty Assessments

SECTION 13.6.  Part 1 of Article 7 of Chapter 143B of the General Statutes is amended by adding a new section to read:

"§ 143B-279.16.  Civil penalty assessments.

(a)        The purpose of this section is to provide to the person receiving a notice of violation of an environmental statute or an environmental rule a greater opportunity to understand what corrective action is needed, receive technical assistance from the Department of Environment and Natural Resources, and to take the needed corrective action. It is also the purpose of this section to provide to the person receiving the notice of violation a greater opportunity for informally resolving matters involving any such violation.

(b)        In order to fulfill the purpose set forth in subsection (a) of this section, the Department of Environment and Natural Resources shall, effective July 1, 2011, extend the period of time by 10 days between the time the violator is sent a notice of violation of an environmental statute or an environmental rule and the subsequent date the violator is sent an assessment of the civil penalty for the violation."

 

Water and Air Quality Account Reverts

SECTION 13.7.  G.S. 143-215.3A(a) reads as rewritten:

"(a)       The Water and Air Quality Account is established as a nonrevertingan account within the Department. Revenue in the Account shall be applied to the costs of administering the programs for which the fees were collected. Revenue credited to the Account pursuant to G.S. 105-449.43, G.S. 105-449.125, and G.S. 105-449.136 shall be used to administer the air quality program. Any funds credited to the Account from fees collected for laboratory facility certifications under G.S. 143-215.3(a)(10) that are not expended at the end of each fiscal year for the purposes for which these fees may be used under G.S. 143-215.3(a)(10) shall revert. Any other funds credited to the Account that are not expended at the end of each fiscal year shall not revert. Except for the following fees, all application fees and permit administration fees collected by the State for permits issued under Articles 21, 21A, 21B, and 38 of this Chapter shall be credited to the Account:

(1)        Fees collected under Part 2 of Article 21A and credited to the Oil or Other Hazardous Substances Pollution Protection Fund.

(2)        Fees credited to the Title V Account.

(3)        Repealed by Session Laws 2005-454, s. 7, effective January 1, 2006.

(4)        Fees collected under G.S. 143-215.28A.

(5)        Fees collected under G.S. 143-215.94C shall be credited to the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund."

 

Change Effective Date Regarding Well Testing

SECTION 13.10.  Section 4 of S.L. 2009-124 reads as rewritten:

"SECTION 4. Section 1 of this act becomes effective October 1, 2010.2012. The remainder of the act is effective when it becomes law."

 

FUNDS FOR CLEANUP AND MONITORING OF TEXFI SITE CONTAMINATION

SECTION 13.10A.  Reduce the operating expenditures of the Solid Waste Management Trust Fund by the sum of fifty thousand dollars ($50,000) for the 2011-2012 fiscal year and provide funding in the sum of fifty thousand dollars ($50,000) to be used for the 2011-2012 fiscal year for the cleanup and monitoring of the groundwater and other contamination located at the Texfi site in Fayetteville and for any emergency cleanup activities needed at that site.

 

Funds for Recycling Programs for Products that Contain Mercury

SECTION 13.10B.(a)  Effective July 1, 2011, until December 31, 2017, G.S. 130A-310.54 reads as rewritten:

"§ 130A-310.54.  Mercury Switch Removal Account.Pollution Prevention Fund.

(a)        The Mercury Switch Removal AccountPollution Prevention Fund is established in the Department. Revenue is credited to the Account Fund from the certificate of title fee under G.S. 20-85.

(b)        Revenue in the Mercury Switch Removal AccountPollution Prevention Fund shall be used to for the following purposes:

(1)        To reimburse the Department and others for costs incurred in implementing the mercury switch removal program.

(2)        To establish and implement recycling programs for products containing mercury, including at least recycling programs for light bulbs and thermostats.

(b1)      The reimbursable costs under subdivision (1) of subsection (b) of this section are:

(1)        Five dollars ($5.00) for each mercury switch removed by a vehicle crusher, vehicle dismantler, vehicle recycler, or scrap vehicle processing facility pursuant to this Article and sent to destination facilities in accordance with the NVMSRP for recycling or disposal.

(2)        Costs incurred by the Department in administering the program.

(c)        The Department shall reimburse vehicle crushers, vehicle dismantlers, vehicle recyclers, and scrap vehicle processing facilities based on a reimbursement request that attests to the number of switches sent to destination facilities for recycling or disposal in accordance with the NVMSRP. Each reimbursement request shall be verified against information posted on the Internet site provided by the vehicle manufacturers in accordance with the NVMSRP, or against other information that verifies the reimbursement requested to the satisfaction of the Department. The vehicle crusher, vehicle dismantler, vehicle recycler, or scrap vehicle processing facility shall provide the Department with any information requested by the Department to verify the accuracy of a reimbursement request. Each vehicle crusher, vehicle dismantler, vehicle recycler, or scrap vehicle processing facility shall maintain accurate records that support each reimbursement request for a minimum of three years from the date the reimbursement request is approved."

SECTION 13.10B.(b)  Effective December 31, 2017, G.S. 130A-310.54, as amended by Sections 4 and 9 of S.L. 2007-142, reads as rewritten:

"§ 130A-310.54.  Funds to implement plan.

(a)        The Mercury Pollution Prevention Account Fund is established in the Department. Revenue is credited to the Account Fund from the certificate of title fee under G.S. 20-85.

(b)        Revenue in the Mercury Pollution Prevention Account Fund shall be used to for the following purposes:

(1)        To reimburse the Department and others for costs incurred in implementing the mercury minimization plan.

(2)        To establish and implement recycling programs for products containing mercury, including at least recycling programs for light bulbs and thermostats.

(b1)      The reimbursable costs under subdivision (1) of subsection (b) of this section are:

(1)        Five dollars ($5.00) for each mercury switch removed by a vehicle recycler or scrap metal recycling facility pursuant to this Article.

(2)        Costs incurred by the Department in administering the plan.

(c)        The Department shall reimburse vehicle recyclers and scrap metal recycling facilities based on the quarterly reports submitted under G.S. 130A-310.53. The Department may request any information needed to determine the accuracy of the reports."

 

USE OF FUNDS OBTAINED FROM CLOSING THE RALEIGH OFFICE OF THE DIVISION OF COASTAL MANAGEMENT

SECTION 13.10C.  Notwithstanding any other provision of this act, the Department of Environment and Natural Resources shall fund shift General Fund positions, operating expenses, or both to receipt support in the amount of one hundred nine thousand five hundred twenty-three dollars ($109,523) for the 2011-2012 fiscal year and the 2012-2013 fiscal year. These federal receipts were formerly used to support the one full-time receipt-supported position that is eliminated as a result of closing the Raleigh Office of the Division of Coastal Management of the Department of Environment and Natural Resources.

 

FUNDS FOR DENR STUDY OF OIL AND GAS EXPLORATION IN NC

SECTION 13.10D.  Notwithstanding any other provision of this act, if House Bill 242, 2011 Regular Session becomes law, the Department of Environment and Natural Resources shall use the sum of one hundred thousand dollars ($100,000) of the nonrecurring funds appropriated to the Department of Commerce for Commerce State-Aid for the Institute of Regenerative Medicine at Wake Forest University for the 2011-2012 fiscal year to study the issue of oil and gas exploration in the State as provided in House Bill 242.

 

FLEXIBILITY IN REDUCTIONS AT DENR REGIONAL OFFICES

SECTION 13.10E.  Notwithstanding any other provision of this act, the Department of Environment and Natural Resources shall have the flexibility to determine whether to eliminate vacant or filled match positions or non-match positions, whether to further reduce operating funds, or whether to do any combination of these in order to meet the total reduction under this act for each of the seven Regional Offices of the Department of Environment and Natural Resources for the 2011-2012 fiscal year and the 2012-2013 fiscal year.

 

RESTORE CERTAIN POSITIONS AT DENR REGIONAL OFFICES

SECTION 13.10F.(a)  Notwithstanding any other provision of this act, the total reduction for eliminating positions at the seven Regional Offices of the Department of Environment and Natural Resources is decreased by four hundred twenty thousand eight hundred seventy-two dollars ($420,872) for the 2011-2012 fiscal year and for the 2012-2013 fiscal year, and the following positions shall not be eliminated at the seven Regional Offices:

60032353        Environmental Specialist

60032355        Environmental Program Supervisor II

60032405        Engineer Technician

60032414        Hydrogeologist

60032552        Processing Assistant IV

60032402        Engineer Technician

60032396        Engineer Technician

60032403        Engineer Technician

60034270        Environmental Health Regional Specialist

SECTION 13.10F.(b)  Notwithstanding any other provision of this act, the Department of Environment shall reduce its costs by the sum of three hundred ten thousand seventy-nine dollars ($310,079) for the 2012-2013 fiscal year by eliminating vacant positions the Department selects from across the Department, and the Department shall use these funds to decrease the reduction under subsection (a) of this section by the sum of three hundred ten thousand seventy-nine dollars ($310,079) for the 2012-2013 fiscal year.

 

DENR CELL PHONE FUNDS REDUCTION

SECTION 13.10G.  Notwithstanding any other provision of this act, the General Fund recurring reduction for cell phones across the Department of Environment and Natural Resources is increased by the sum of twenty-two thousand four hundred fifty dollars ($22,450) for the 2011-2012 fiscal year and for the 2012-2013 fiscal year.

 

DENR MOTOR FLEET MANAGEMENT FUNDS REDUCTION

SECTION 13.10H.  Notwithstanding any other provision of this act, the General Fund recurring reduction for motor fleet management expenditures across the Department of Environment and Natural Resources is increased by the sum of eighty-eight thousand three hundred forty-three dollars ($88,343) for the 2011-2012 fiscal year and for the 2012-2013 fiscal year.

 

USE OF FUNDS/FOOD AND LODGING PROGRAM

SECTION 13.10I.  Notwithstanding any other provision of this act, the Division of Environmental Health shall not change the use of the four hundred thousand dollar ($400,000) appropriation originally intended for aid to counties for local food and lodging programs. The Division may not use those funds to pay for the costs to operate the State elements of the program. Counties will not receive a higher percentage of the food and lodging fee that would have offset not receiving the grant funds.

 

Repeal DENR review of Fee schedules

SECTION 13.11.  G.S. 143B-279.2(4) is repealed.

 

Parks and Recreation Trust Fund; Allocation of Deed Stamp Tax Proceeds Credited to Fund

SECTION 13.14.(a)  Notwithstanding the provisions of G.S. 113-44.15(b), effective for taxes levied during the 2011-2012 fiscal year, the net tax proceeds that are credited to the Parks and Recreation Trust Fund by the Secretary of Revenue pursuant to G.S. 105-228.30(b) shall be allocated as follows:

(1)        Six million dollars ($6,000,000) shall be used for the operating expenses of the Division of Parks and Recreation of the Department of Environment and Natural Resources;

(2)        Up to eight million dollars ($8,000,000) shall be used for the State Parks System for capital projects, repairs and renovations of park facilities, land acquisition, and to retire debt incurred for these purposes under Article 9 of Chapter 142 of the General Statutes;

(3)        Up to four million two hundred thirty thousand dollars ($4,230,000) shall be used for grants to local government units consistent with the match and other requirements set forth in G.S. 113-44.14(b)(2); and

(4)        Up to seven hundred five thousand dollars ($705,000) shall be used for the Coastal and Estuarine Water Beach Access Program.

SECTION 13.14.(b)  Any funds that become available to the Parks and Recreation Trust Fund during the 2011-2012 fiscal year that are in excess of the funds allocated under subsection (a) of this section shall be used as provided in G.S. 113-44.15(b).

 

Natural Heritage Trust Fund Used for Costs to Administer Plant Conservation Program/Conservation Planning & Community Affairs Program

SECTION 13.16.  G.S. 113-77.9(c) reads as rewritten:

"(c)       Other Purposes. - The Trustees may authorize expenditures from the Fund to pay for the inventory of natural areas conducted under the Natural Heritage Program established pursuant to the Nature Preserves Act, Article 9A of Chapter 113A of the General Statutes. The Trustees may also authorize expenditures from the Fund to pay for conservation and protection planning and for informational programs for owners of natural areas, as defined in G.S. 113A-164.3. The Trustees shall authorize expenditures from the Fund not to exceed seventy-five thousand dollars ($75,000) to pay the cost of the Department of Agriculture and Consumer Services to administer the Plant Conservation Program. The Trustees shall authorize expenditures from the Fund not to exceed three hundred twenty-five thousand dollars ($325,000) to pay the cost of supporting staff in the Office of Conservation Planning and Community Affairs of the Department of Environment and Natural Resources."

 

Oyster Sanctuary Program Support

SECTION 13.18.  G.S. 113-175.1(c) reads as rewritten:

"(c)       The Marine Fisheries Commission and the Wildlife Resources Commission may authorize the disbursement of the principal of the Marine Resources Fund and marine resources investment income only to manage, protect, restore, develop, cultivate, conserve, and enhance the marine resources of the State. The Marine Fisheries Commission and the Wildlife Resources Commission are encouraged to consider supporting the Oyster Sanctuary Program managed by the Division of Marine Fisheries. The Marine Fisheries Commission and the Wildlife Resources Commission may not authorize the disbursement of the principal of the Marine Resources Fund and marine resources investment income to establish positions without specific authorization from the General Assembly. All proposals to the Marine Fisheries Commission and the Wildlife Resources Commission for the disbursement of funds from the Marine Resources Fund shall be made by and through the Fisheries Director. Expenditure of the assets of the Marine Resources Fund shall be made through the State budget accounts of the Division of Marine Fisheries in accordance with the provisions of the Executive Budget Act. The Marine Resources Fund is subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes."

 

End Pilot Program for Annual Inspections of Certain Animal Operations

SECTION 13.21.(a)  Section 15.4(a) of S.L. 1997-443, as amended by Section 3.1 of S.L. 1999-329, Section 5 of S.L. 2001-254, Section 1.1 of S.L. 2002-176, Section 6.1 of S.L. 2003-340, Section 12.7(a) of S.L. 2005-276, Section 2 of S.L. 2007-536, and Section 1 of S.L. 2009-84, reads as rewritten:

"SECTION 1.  Section 15.4(a) of S.L. 1997-443, as amended by Section 3.1 of S.L. 1999-329, Section 5 of S.L. 2001-254, Section 1.1 of S.L. 2002-176, Section 6.1 of S.L. 2003-340, Section 12.7(a) of S.L. 2005-276, and Section 2 of S.L. 2007-536, reads as rewritten:

'(a)       The Department of Environment and Natural Resources shall develop and implement a pilot program to begin no later than 1 November 1997, and to terminate 1 September 2011,June 30, 2011, regarding the annual inspections of animal operations that are subject to a permit under Article 21 of Chapter 143 of the General Statutes. The Department shall select two counties located in a part of the State that has a high concentration of swine farms to participate in this pilot program. In addition, Brunswick County and Pender County shall be added to the program. Notwithstanding G.S. 143-215.10F, the Division of Soil and Water Conservation of the Department of Environment and Natural Resources shall conduct inspections of all animal operations that are subject to a permit under Article 21 of Chapter 143 of the General Statutes in these four counties at least once a year to determine whether any animal waste management system is causing a violation of water quality standards and whether the system is in compliance with its animal waste management plan or any other condition of the permit. The personnel of the Division of Soil and Water Conservation who are to conduct these inspections in each of these four counties shall be located in an office in the county in which that person will be conducting inspections. As part of this pilot program, the Department of Environment and Natural Resources shall establish procedures whereby resources within the local Soil and Water Conservation Districts serving the four counties are used for the quick response to complaints and reported problems previously referred only to the Division of Water Quality of the Department of Environment and Natural Resources.'"

SECTION 13.21.(b)  The section becomes effective June 30, 2011.

 

End DSWC Role Regarding Animal Waste Management Systems

SECTION 13.22.(a)  G.S. 143-215.10A reads as rewritten:

"§ 143-215.10A.  Legislative findings and intent.

The General Assembly finds that animal operations provide significant economic and other benefits to this State. The growth of animal operations in recent years has increased the importance of good animal waste management practices to protect water quality. It is critical that the State balance growth with prudent environmental safeguards. It is the intention of the State to promote a cooperative and coordinated approach to animal waste management among the agencies of the State with a primary emphasis on technical assistance to farmers. To this end, the General Assembly intends to establish a permitting program for animal waste management systems that will protect water quality and promote innovative systems and practices while minimizing the regulatory burden. Technical assistance, through operations reviews,assistance will be provided by the Division of Soil and Water Conservation. Permitting, inspection,Inspection and enforcement will be vested inprovided by the Division of Water Quality."

SECTION 13.22.(b)  G.S. 143-215.10D is repealed.

 

Agricultural Water Resources Assistance Program/Conforming CHANGES; FUNDS TO PROMOTE WATER SUPPLY DEVELOPMENT

SECTION 13.23.(a)  Chapter 139 of the General Statutes is amended by adding a new Article to read:

"Article 5.

"Agricultural Water Resources Assistance Program.

"§ 139-60.  Agricultural Water Resources Assistance Program.

(a)        Program Established. - The Agricultural Water Resources Assistance Program is established. The purpose of the Program shall be to assist farmers and landowners in doing any one or more of the following:

(1)        Identify opportunities to increase water use efficiency, availability, and storage.

(2)        Implement best management practices to conserve and protect water resources.

(3)        Increase water use efficiency.

(4)        Increase water storage and availability for agricultural purposes.

(b)        Program Administration. - The Agricultural Water Resources Assistance Program shall be implemented by the Soil and Water Conservation Commission through the soil and water conservation districts in the same manner as the Agriculture Cost Share Program for Nonpoint Source Pollution Control under Part 9 of Article 21 of Chapter 143 of the General Statutes. The Soil and Water Conservation Commission shall supervise and administer this Program as provided in this section and as provided in Part 9 of Article 21 of Chapter 143 of the General Statutes for the Agriculture Cost Share Program for Nonpoint Source Pollution Control. At least once each calendar year, the Director of the Division of Soil and Water Conservation of the Department of Environment and Natural Resources and the Commissioner of Agriculture shall meet with stakeholders for the purpose of advising the Soil and Water Conservation Commission on the development and administration of the Program, including the development of annual goals for the Program.

(c)        Program Functions. - Under the Agricultural Water Resources Assistance Program, the Soil and Water Conservation Commission shall do the following:

(1)        Within funds available for this Program, provide cost-share funds subject to all of the following limitations and requirements:

a.         Except as provided in G.S. 143-215.74(b)(9), State funding shall be limited to:

1.         Seventy-five percent (75%) of the average cost for each project, with the assisted person providing twenty-five percent (25%) of the project cost, which may include in-kind support of the project.

2.         A maximum of seventy-five thousand dollars ($75,000) per year to each applicant.

b.         Applicants shall be limited to farmers who have an adjusted gross income in each of the previous two years that is at or below two hundred fifty thousand dollars ($250,000), unless at least seventy-five percent (75%) of this adjusted gross income is derived directly from farming, ranching, or forestry operations.

c.         The requirements and limitations under subdivisions (1), (2), (5), (7), and (8) of subsection (b) of G.S. 143-215.74 do not apply. All other limitations and requirements set out in Part 9 of Article 21 of Chapter 143 of the General Statutes, as modified by this section, apply.

(2)        Approve best management practices eligible for cost-share funds under this Program.

(3)        Establish criteria to allocate funds to local soil and water conservation districts.

(4)        Develop a process for soliciting and reviewing applications and for selecting farmers to participate in the Program.

(5)        Investigate and pursue other funding sources to supplement State funds, including federal, local, and private funding sources.

(6)        Provide technical assistance to participating persons to assist with the projects that are eligible for cost-share funds under subsection (a) of this section and to facilitate the timely transfer of technology among participating persons.

(7)        Adopt temporary and permanent rules as necessary to implement this Program.

(d)        Report. - No later than January 31 of each year, the Division of Soil and Water Conservation of the Department of Environment and Natural Resources shall prepare a comprehensive report on the implementation of subsections (a) through (c) of this section. The report shall be submitted to the Environmental Review Commission as a part of the report required by G.S. 143-215.74(e)."

SECTION 13.23.(b)  G.S. 14-234(d3) reads as rewritten:

"(d3)    Subsection (a) of this section does not apply to an application for or the receipt of a grant under the Agriculture Cost Share Program for Nonpoint Source Pollution Control created pursuant to Part 9 of Article 21 of Chapter 143 of the General Statutes orStatutes, the Community Conservation Assistance Program created pursuant to Part 11 of Article 21 of Chapter 143 of the General Statutes Statutes, or the Agricultural Water Resources Assistance Program created pursuant to Article 5 of Chapter 139 of the General Statutes by a member of the Soil and Water Conservation Commission if the requirements of G.S. 139-4(e) are met, and does not apply to a district supervisor of a soil and water conservation district if the requirements of G.S. 139-8(b) are met."

SECTION 13.23.(c)  G.S. 139-4(d) reads as rewritten:

"(d)      In addition to the duties and powers hereinafter conferred upon the Soil and Water Conservation Commission, it shall have the following duties and powers:

(9)        To create, implement, and supervise the Agriculture Cost Share Program for Nonpoint Source Pollution Control created pursuant to Part 9 of Article 21 of Chapter 143 of the General Statutes and Statutes, the Community Conservation Assistance Program created pursuant to Part 11 of Article 21 of Chapter 143 of the General Statutes.Statutes, and the Agricultural Water Resources Assistance Program created pursuant to Article 5 of this Chapter.

(10)      To review and approve or disapprove the application of a district supervisor for a grant under the Agriculture Cost Share Program for Nonpoint Source Pollution Control orControl, the Community Conservation Assistance Program Program, or the Agricultural Water Resources Assistance Program as provided by G.S. 139-8(b)."

SECTION 13.23.(d)  G.S. 139-4(e) reads as rewritten:

"(e)       A member of the Commission may apply for and receive a grant under the Agriculture Cost Share Program for Nonpoint Source Pollution Control andControl, the Community Conservation Assistance Program Program, or the Agricultural Water Resources Assistance Program if:

(1)        The member does not vote on the application or attempt to influence the outcome of any action on the application; and

(2)        The application is approved by the Secretary of Environment and Natural Resources."

SECTION 13.23.(e)  G.S. 139-8(b) reads as rewritten:

"(b)      A district supervisor may apply for and receive a grant under the Agriculture Cost Share Program for Nonpoint Source Pollution Control created pursuant to Part 9 of Article 21 of Chapter 143 of the General Statutes orStatutes, the Community Conservation Assistance Program created pursuant to Part 11 of Article 21 of Chapter 143 of the General Statutes Statutes, or the Agricultural Water Resources Assistance Program created pursuant to Article 5 of this Chapter if:

1.         The district supervisor does not vote on the application or attempt to influence the outcome of any action on the application; and

2.         The application is approved by the Commission."

SECTION 13.23.(f)  The stakeholders that the Director of the Division of Soil and Water Conservation of the Department of Environment and Natural Resources and the Commissioner of Agriculture shall meet with, as required under G.S. 139-60, as enacted by subsection (a) of this section, shall be the stakeholders involved in identifying and developing best management practices for water conservation and water efficiency by agricultural water users pursuant to S.L. 2010-149.

SECTION 13.23.(g)  The first report required by G.S. 139-60, as enacted by subsection (a) of this section, shall be submitted to the Environmental Review Commission no later than January 31, 2013.

SECTION 13.23.(h)  Of the funds available to the Department of Environment and Natural Resources for Water Resource Projects, the sum of one million dollars ($1,000,000) shall be transferred to the Department of Environment and Natural Resources, Division of Soil and Water Conservation, for the 2011-2012 fiscal year to implement the Agricultural Water Resources Assistance Program established in Article 5 of Chapter 139 of the General Statutes, as enacted by subsection (a) of this section. The Soil and Water Conservation Commission may use up to fifteen percent (15%) of these funds for the costs of the Division of Soil and Water Conservation and the costs of the Soil and Water Conservation Districts to provide engineering assistance, to provide technical assistance, and to administer the Agricultural Water Resources Assistance Program. Any of these funds that are not expended or encumbered as of June 30, 2012, shall not revert and shall remain available for purposes set forth in this subsection until expended.

SECTION 13.23.(i)  Notwithstanding subsection (h) of this section, if House Bill 609, 2011 Regular Session becomes law, the Department of Environment and Natural Resources shall use eighty-three thousand dollars ($83,000) of funds available to the Department of Environment and Natural Resources for Water Resources projects for the 2011-2012 fiscal year to implement House Bill 609.

SECTION 13.23.(j)  If House Bill 609, 2011 Regular Session becomes law, the Department of Environment and Natural Resources shall use eighty-three thousand dollars ($83,000) of the funds appropriated under this act to the Department of Environment and Natural Resources for the Green Square Operating Reserve for the 2012-2013 fiscal year to implement House Bill 609.

 

CoNTRACT TO Outsource Gift Shops at NC Zoo to direct profits to Zoo Fund

SECTION 13.24.  The Department of Environment and Natural Resources shall enter into a contract for the operation of at least three of the gift shops located at the North Carolina Zoological Park during the 2011-2012 fiscal year and the 2012-2013 fiscal year, and this contract shall provide that any profits that result from operating these gift shops during the 2011-2012 fiscal year and the 2012-2013 fiscal year are credited at the end of each quarter to the Special Zoo Fund created under G.S. 143B-336.1. The provisions of Article 3 and Article 8 of Chapter 143 of the General Statutes apply to any contract entered into under this section.

 

Transfer Forestry Division and Forestry Council from DENR to DACS

SECTION 13.25.(a)  The Division of Forest Resources is transferred from the Department of Environment and Natural Resources to the Department of Agriculture and Consumer Services with all the elements of a Type I transfer as defined by G.S. 143A-6.

SECTION 13.25.(b)  G.S. 143B-279.3(a) reads as rewritten:

"(a)       All functions, powers, duties, and obligations previously vested in the following subunits of the following departments are  transferred to and vested in the Department of Environment and Natural Resources by a Type I transfer, as defined in G.S. 143A-6:

(6)        Forest Resources Division, Department of Natural Resources and Community Development.

…."

SECTION 13.25.(c)  Article 7 of Chapter 143A of the General Statutes is amended by adding a new section to read:

"§ 143A-65.1.  Division of Forest Resources.

The Department of Agriculture and Consumer Services shall have charge of the work of forest maintenance, forest fire prevention, reforestation, and the protection of lands and water supplies by the preservation of forests; it shall also have the care of State forests."

SECTION 13.25.(d)  All functions, powers, duties, and obligations previously vested in the Forestry Council are transferred from the Department of Environment and Natural Resources to and vested in the Department of Agriculture and Consumer Services by a Type II transfer, as defined in G.S. 143A-6.

SECTION 13.25.(e)  G.S. 143B-279.3(b) reads as rewritten:

"(b)      All functions, powers, duties, and obligations previously vested in the following commissions, boards, councils, and committees of the following departments are transferred to and vested in the Department of Environment and Natural Resources by a Type II transfer, as defined in G.S. 143A-6:

(13)      Forestry Council, Department of Natural Resources and Community Development.

…."

SECTION 13.25.(f)  Part 12 of Article 7 of Chapter 143B of the General Statutes (G.S. 143B-308, 143B-309, and 143B-310) is recodified in Article 7 of Chapter 143A of the General Statutes as G.S. 143A-66.1, 143A-66.2, and 143A-66.3.

SECTION 13.25.(g)  G.S. 143A-66.1, as recodified in subsection (f) of this section, reads as rewritten:

"§ 143A-66.1.  Forestry Council - creation; powers and duties.

There is hereby created the Forestry Council of the Department of Environment and Natural Resources.Agriculture and Consumer Services. The Forestry Council shall have the following functions and duties:

(1)        To advise the Secretary of Environment and Natural ResourcesCommissioner of Agriculture with respect to all matters concerning the protection, management, and preservation of State-owned, privately owned, and municipally owned forests in the State, including but not limited to:

a.         Profitable use of the State's forests consistent with the principles of sustained productivity.

b.         Best management practices, including those for protection of soil, water, wildlife, and wildlife habitat, to be used in managing the State's forests and their resources.

c.         Restoration of forest ecosystems and protection of rare and endangered species occurring in the State's private forests consistent with principles of private ownership of land.

(2)        To maintain oversight of a continuous monitoring and planning process, to provide a long-range, comprehensive plan for the use, management, and sustainability of North Carolina's forest resources, and to report regularly on progress made toward meeting the objectives of the plan.

(3)        To provide a forum for the identification, discussion, and development of recommendations for the resolution of conflicts in the management of North Carolina's forests.

(4)        To undertake any other studies, make any reports, and advise the Secretary of Environment and Natural ResourcesCommissioner of Agriculture on any matter as the Secretary Commissioner may direct."

SECTION 13.25.(h)  G.S. 143A-66.2, as recodified in subsection (f) of this section, reads as rewritten:

"§ 143A-66.2.  Forestry Council - members; chairperson; selection; removal; compensation; quorum.

(a)        The Forestry Advisory Council of the Department of Environment and Natural ResourcesAgriculture and Consumer Services shall consist of 18 members appointed as follows:

(1)        Three persons who are registered foresters and who represent the primary forest products industry, one each from the Mountains, Piedmont and Coastal Plain.

(2)        One person who represents the secondary wood-using industry.

(3)        One person who represents the logging industry.

(4)        Four persons who are nonindustrial woodland owners actively involved in forest management, one of whom has agricultural interests, and at least one each from the Mountains, Piedmont, and Coastal Plain.

(5)        Three persons who are members of statewide environmental or wildlife conservation organizations.

(6)        One consulting forester.

(7)        Two persons who are forest scientists with knowledge of the functioning and management of forest ecosystems.

(8)        One person who represents a banking institution that manages forestland.

(9)        One person with expertise in urban forestry.

(10)      One person with active experience in city and regional planning.

(h)        All clerical and other services required by the Council, including the support required to carry out studies it is requested to make, shall be supplied by the Secretary of Environment and Natural Resources.Commissioner of Agriculture."

SECTION 13.25.(i)  G.S. 106-22 is amended by adding two new subdivisions to read:

"(18)    Forests. - Have charge of forest maintenance, forest fire protection, reforestation, and the protection of the forests.

(19)      State forests. - Have charge of all State forests and measures for forest fire prevention."

SECTION 13.25.(j)  G.S. 113-8 reads as rewritten:

"§ 113-8.  Powers and duties of the Department.

The Department shall make investigations of the natural resources of the State, and take such measures as it may deem best suited to promote the conservation and development of such resources.

It shall have charge of the work of forest maintenance, forest fire prevention, reforestation, and the protection of lands and water supplies by the preservation of forests;supplies; it shall also have the care of State forests and parks, and other recreational areas now owned or to be acquired by the State, including the lakes referred to in G.S. 146-7.

It shall make such examination, survey and mapping of the geology, mineralogy and topography of the State, including their industrial and economic utilization, as it may consider necessary; make investigations of water supplies and water powers, prepare and maintain a general inventory of the water resources of the State, and take such measures as it may consider necessary to promote their development.

It shall have the duty of enforcing all laws relating to the conservation of marine and estuarine resources.

The Department may take such other measures as it may deem advisable to obtain and make public a more complete knowledge of the State and its resources, and it is authorized to cooperate with other departments and agencies of the State in obtaining and making public such information.

The Department may acquire such real and personal property as may be found desirable and necessary for the performance of the duties and functions of the Department and pay for same out of any funds appropriated for the Department or available unappropriated revenues of the Department, when such acquisition is approved by the Governor and Council of State. The title to any real estate acquired shall be in the name of the State of North Carolina for the use and benefit of the Department."

SECTION 13.25.(k)  G.S. 113-22 is repealed.

SECTION 13.25.(l)  G.S. 106-22 is amended by adding three new subdivisions to read:

"(18)    Forests. - Have charge of forest maintenance, forest fire protection, reforestation, and the protection of the forests.

(19)      State forests. - Have charge of all State forests and measures for forest fire prevention.

(20)      Property for State forests. - Acquire real and personal property as desirable and necessary for the performance of the duties and functions of the Department under subdivision (19) of this section and pay for the property out of any funds appropriated for the Department or available unappropriated revenues of the Department, when such acquisition is approved by the Governor and Council of State. The title to any real estate acquired under this subdivision shall be in the name of the State of North Carolina for the use and benefit of the Department."

SECTION 13.25.(m)  The title of Subchapter II of Chapter 113 of the General Statutes reads as rewritten:

"SUBCHAPTER II. STATE FORESTS AND PARKS."

SECTION 13.25.(n)  Article 2 of Chapter 113 of the General Statutes reads as rewritten:

"Article 2.

"Acquisition and Control of State Forests and Parks.

"§ 113-29.  Policy and plan to be inaugurated by Department of Environment and Natural Resources.Definitions.

(a)        In this Article, unless the context requires otherwise, "Department" means the Department of Environment and Natural Resources; and "Secretary" means the Secretary of Environment and Natural Resources.

(b)        The Department of Environment and Natural Resources shall inaugurate the following policy and plan looking to the cooperation with private and public forest owners in this State insofar as funds may be available through legislative appropriation, gifts of money or land, or such cooperation with landowners and public agencies as may be available:

(1)        The extension of the forest fire prevention organization to all counties in the State needing such protection.

(2)        To cooperate with federal and other public agencies in the restoration of forest growth on land unwisely cleared and subsequently neglected.

(3)        To furnish trained and experienced experts in forest management, to inspect private forestlands and to advise with forest landowners with a view to the general observance of recognized and practical rules of growing, cutting and marketing timber. The services of such trained experts of the Department must naturally be restricted to those landowners who agree to carry out so far as possible the recommendations of said Department.

(4)        To prepare and distribute printed and other material for the use of teachers and club leaders and to provide instruction to schools and clubs and other groups of citizens in order to train the younger generation in the principles of wise use of our forest resources.

(5)        To acquire small areas of suitable land in the different regions of the State on which to establish small, model forests which shall be developed and used by the said Department as State demonstration forests for experiment and demonstration in forest management.

"§ 113-29.1.  Growing of timber on unused State lands authorized.

The Department of Administration may allocate to the Department, for management as a State forest, any vacant and unappropriated lands, any marshlands or swamplands, and any other lands title to which is vested in the State or in any State agency or institution, where such lands are not being otherwise used and are not suitable for cultivation. Lands under the supervision of the Wildlife Resources Commission and designated and in use as wildlife management areas, refuges, or fishing access areas and lands used as research stations shall not be subject to the provisions of this section. The Department shall plant timber-producing trees on all lands allocated to it for that purpose by the Department of Administration. The Secretary may contract with the appropriate prison authorities for the furnishing, upon such conditions as may be agreed upon from time to time between such prison authorities and the Secretary, of prison labor for use in the planting, cutting, and removal of timber from State forests which are under the management of the Department.

"§ 113-30.  Use of lands acquired by counties through tax foreclosures as demonstration forests.

The boards of county commissioners of the various counties of North Carolina are herewith authorized to turn over to the said Department title to such tax-delinquent lands as may have been acquired by said counties under tax sale and as in the judgment of the Secretary may be suitable for the purposes named in G.S. 113-29, subdivision (5).

"§ 113-31.  Procedure for acquisition of delinquent tax lands from counties.

In the carrying out of the provisions of G.S. 113-30, the several boards of county commissioners shall furnish forthwith on written request of the Department a complete list of all properties acquired by the county under tax sale and which have remained unredeemed for a period of two years or more. On receipt of this list the Secretary shall have the lands examined and if any one or more of these properties is in his judgment suitable for the purposes set forth in G.S. 113-30, request shall be made to the county commissioners for the acquisition of such land by the Department at a price not to exceed the actual amount of taxes due without penalties. On receipt of this request the county commissioners shall make permanent transfer of such tract or tracts of land to the Department through fee-simple deed or other legal transfer, said deed to be approved by the Attorney General of North Carolina, and shall then receive payment from the Department as above outlined.

"§ 113-32.  Purchase of lands for use as demonstration forests.

Where no suitable tax-delinquent lands are available and in the judgment of the Department the establishment of a demonstration forest is advisable, the Department may purchase sufficient land for the establishment of such a demonstration forest at a fair and agreed-upon price, the deed for such land to be subject to approval of the Attorney General, but nothing in G.S. 113-29 to 113-33 shall allow the Department to acquire land under the right of eminent domain.

"§ 113-33.  Forest management appropriation.

Necessary funds for carrying out the provisions of G.S. 113-29 and 113-30 to 113-33 shall be set up in the regular budget as an item entitled "forest management.

"§ 113-34.  Power to acquire lands as State forests, parks, and other recreational areas; donations or leases by United States; leases for recreational purposes.

(a)        The Governor may, upon recommendation of the Department, accept gifts of land to the State to be held, protected, and administered by the Department as State forests, and to be used so as to demonstrate the practical utility of timber culture and water conservation, and as refuges for game. The gifts of land must be absolute except in cases where the mineral interest on the land has previously been sold. The Department may purchase lands in the name of the State, suitable chiefly for the production of timber, as State forests, for experimental, demonstration, educational, park, and protection purposes, using for these purposes any special appropriations or funds available. The Department may acquire by gift, purchase, or condemnation under the provisions of Chapter 40A of the General Statutes, areas of land in different sections of the State that may in the opinion of the Department be necessary for the purpose of establishing or developing State forests, State parks, and other areas and developments essential to the effective operation of the State forestry and State park activities under its charge. Condemnation proceedings shall be instituted and prosecuted in the name of the State, and any property so acquired shall be administered, developed, and used for experiment and demonstration in forest management, for public recreation,recreation and for other purposes authorized or required by law. Before any action or proceeding under this section can be exercised, the approval of the Governor and Council of State shall be obtained and filed with the clerk of the superior court in the county or counties where the property is located. The Attorney General shall ensure that all deeds to the State for land acquired under this section are properly executed before the gift is accepted or payment of the purchase money is made.

(b)        The Department may accept as gifts to the State any forest and submarginal farmland acquired by the federal government that is suitable for the purpose of creating and maintaining State forests, game refuges, public shooting grounds, State parks, State lakes, and other recreational areas, or to enter into longtime leases with the federal government for the areas and administer them with funds secured from their administration in the best interest of longtime public use, supplemented by any appropriations made by the General Assembly. The Department may segregate revenue derived from State hunting and fishing licenses, use permits, and concessions and other proper revenue secured through the administration of State forests, game refuges, public shooting grounds, State parks, State lakes, and other recreational areas to be deposited in the State treasury to the credit of the Department to be used for the administration of these areas.

(c)        The Department, with the approval of the Governor and Council of State, may enter into leases of lands and waters for State parks, State lakes, and recreational purposes.

(d),       (e) Repealed by Session Laws 2003-284, s. 35.1(a), effective July 1, 2003.

(f)         The authority granted to the Department under this section is in addition to any authority granted to the Department under any other provision of law.

"§ 113-34.1.  Power to acquire conservation lands not included in the State Parks System.

The Department of Administration may acquire and allocate to the Department of Environment and Natural Resources for management by the Division of Parks and Recreation lands that the Department of Environment and Natural Resources finds are important for conservation purposes but which are not included in the State Parks System. Lands acquired pursuant to this section are not subject to Article 2C of Chapter 113 of the General Statutes and may be traded or transferred as necessary to protect, develop, and manage the Mountains to Sea State Park Trail, other State parks, or other conservation lands. This section does not expand the power granted to the Department of Environment and Natural Resources under G.S. 113-34(a) to acquire land by condemnation.

"§ 113-35.  State timber may be sold by Department; forest nurseries; controlControl over State parks; operation of public service facilities; concessions to private concerns; authority to charge fees and adopt rules.

(a)        Timber and other products of State forests may be sold, cut, and removed under rules of the Department. The Department may establish and operate forest tree nurseries and forest tree seed orchards. Forest tree seedlings and seed from these nurseries and seed orchards may be sold to landowners of the State for purposes of forestation under rules adopted by the Department. When the Secretary determines that a surplus of seedlings or seed exists, this surplus may be sold, and the sale shall be in conformity with the following priority of sale: first, to agencies of the federal government for planting in the State of North Carolina; second, to commercial nurseries and nurserymen within this State; and third, without distinction, to federal agencies, to other states, and to recognized research organizations for planting either within or outside of this State. The Department shall make reasonable rules governing the use by the public of State forests, State parks, State lakes, game refuges, and public shooting groundsparks and State lakes under its charge. These rules shall be posted in conspicuous places on and adjacent to the properties of the State and at the courthouse of the county or counties in which the properties are located. A violation of these rules is punishable as a Class 3 misdemeanor.

(a1)      The Department may adopt rules under which the Secretary may issue a special-use permit authorizing the use of pyrotechnics in State parks in connection with public exhibitions. The rules shall require that experts supervise the use of pyrotechnics and that written authorization for the use of pyrotechnics be obtained from the board of commissioners of the county in which the pyrotechnics are to be used, as provided in G.S. 14-410. The Secretary may impose any conditions on a permit that the Secretary determines to be necessary to protect public health, safety, and welfare. These conditions shall include a requirement that the permittee execute an indemnification agreement with the Department and obtain general liability insurance covering personal injury and property damage that may result from the use of pyrotechnics with policy limits determined by the Secretary.

(b)        The Department may construct, operate, and maintain within the State forests, State parks, State lakes, and other areas under its charge suitable public service facilities and conveniences, and may charge and collect reasonable fees for the use of these facilities and conveniences. The Department may also charge and collect reasonable fees for each of the following:

(1)        The erection, maintenance, and use of docks, piers, and any other structures permitted in or on State lakes under rules adopted by the Department.

(2)        Hunting privileges on State forests and fishingFishing privileges in State forests, State parks,parks and State lakes, provided that these privileges shall be extended only to holders of State hunting and fishing licenses who comply with all State game and fish laws.

(3)        Vehicle access for off-road driving at the beach at Fort Fisher State Recreation Area.

(4)        The erection, maintenance, and use of a marina at Carolina Beach.

(b1)      Members of the public who pay a fee under subsection (b) of this section for access to Fort Fisher State Recreation Area may have 24-hour access to Fort Fisher State Recreation Area from September 15 through March 15 of each year.

(c)        The Department may make reasonable rules for the operation and use of boats or other craft on the surface of the waters under its charge. The Department may charge and collect reasonable fees for the use of boats and other watercraft that are purchased and maintained by the Department; however, the Department shall not charge a fee for the use or operation of any other boat or watercraft on these waters.

(d)        The Department may grant to private individuals or companies concessions for operation of public service facilities for such periods and upon such conditions as the Department deems to be in the public interest. The Department may adopt reasonable rules for the regulation of the use by the public of the lands and waters under its charge and of the public service facilities and conveniences authorized under this section. A violation of these rules is punishable as a Class 3 misdemeanor.

(e)        The authority granted to the Department under this section is in addition to any authority granted to the Department under any other provision of law.

"§ 113-36.  Applications of proceeds from sale of products.

(a)        Application of Proceeds Generally. - Except as provided in this section, all money received from the sale of wood, timber, minerals, or other products from the State forests shall be paid into the State treasury and to the credit of the Department; and such money shall be expended in carrying out the purposes of this Article and of forestry in general, under the direction of the Secretary.

(b)        Tree Cone and Seed Purchase Fund. - A percentage of the money obtained from the sale of seedlings and remaining unobligated at the end of a fiscal year, shall be placed in a special, continuing and nonreverting Tree Cone and Seed Purchase Fund under the control and direction of the Secretary. The percentage of the sales placed in the fund shall not exceed ten percent (10%). At the beginning of each fiscal year, the Secretary shall select the percentage for the upcoming fiscal year depending upon the anticipated costs of tree cones and seeds which the department must purchase. Money in this fund shall not be allowed to accumulate in excess of the amount needed to purchase a four-year supply of tree cones and seed, and shall be used for no purpose other than the purchase of tree cones and seeds.

(c)        Forest Seedling Nursery Program Fund. - The Forest Seedling Nursery Program Fund is created within the Department of Environment and Natural Resources, Division of Forest Resources, as a special revenue fund. Except as provided in subsection (b) of this section, this Fund shall consist of receipts from the sale of seed and seedlings as authorized in G.S. 113-35 and any gifts, bequests, or grants for the benefit of this Fund. No General Fund appropriations shall be credited to this Fund. Any balance remaining in this Fund at the end of any fiscal year shall not revert. The Department may use this Fund only to develop, improve, repair, maintain, operate, or otherwise invest in the Forest Seedling Nursery Program.

(d)        Bladen Lakes State Forest Fund. - The Bladen Lakes State Forest Fund is created within the Department of Environment and Natural Resources, Division of Forest Resources, as a special revenue fund. This Fund shall consist of receipts from the sale of forest products from Bladen Lakes State Forest as authorized in G.S. 113-35 and any gifts, bequests, or grants for the benefit of this Fund. No General Fund appropriations shall be credited to this Fund. Any balance remaining in this Fund at the end of any fiscal year shall not revert. The Department may use this Fund only to develop, improve, repair, maintain, operate, or otherwise invest in the Bladen Lakes State Forest.

"§ 113-37.  Legislative authority necessary for payment.

Nothing in this Article shall operate or be construed as authority for the payment of any money out of the State treasury for the purchase of lands or for other purposes unless by appropriation for said purpose by the General Assembly.

"§ 113-38.  Distribution of funds from sale of forestlands.

All funds paid by the National Forest Commission, by authority of act of Congress, approved May 23, 1908 (35 Stat., 260), for the Counties of Avery, Buncombe, Burke, Craven, Haywood, Henderson, Hyde, Jackson, Macon, Montgomery, Swain, Transylvania, Watauga, and Yancey, shall be paid to the proper county officers, and said funds shall, when received, be placed in the account of the general county funds: Provided, however, that in Buncombe County said funds shall be entirely for the use and benefit of the school district or districts in which said national forestlands shall be located.

All funds which may hereafter come into the hands of the State Treasurer from like sources shall be likewise distributed.

"§ 113-39.  License fees for hunting and fishing on government-owned property unaffected.

No wording in G.S. 113-307.1(a), or any other North Carolina statute or law, or special act, shall be construed to abrogate the vested rights of the State of North Carolina to collect fees for license for hunting and fishing on any government-owned land or in any government-owned stream in North Carolina including the license for county, State or nonresident hunters or fishermen; or upon any lands or in any streams hereafter acquired by the federal government within the boundaries of the State of North Carolina. The lands and streams within the boundaries of the Great Smoky Mountains National Park to be excepted exempt from this section.

"§ 113-40.  Donations of property for forestry or park purposes; agreements with federal government or agencies for acquisition.

The Department is hereby authorized and empowered to accept gifts, donations or contributions of land suitable for forestry or park purposes and to enter into agreements with the federal government or other agencies for acquiring by lease, purchase or otherwise such lands as in the judgment of the Department are desirable for State forests or State parks.

"§ 113-41.  Expenditure of funds for development, etc.; disposition of products from lands; rules.

When lands are acquired or leased under G.S. 113-40, the Department is hereby authorized to make expenditures from any funds not otherwise obligated, for the management, development and utilization of such areas; to sell or otherwise dispose of products from such lands, and to make such rules as may be necessary to carry out the purposes of G.S. 113-40 to 113-44.

"§ 113-42.  Disposition of revenues received from lands acquired.

All revenues derived from lands now owned or later acquired under the provisions of G.S. 113-40 to 113-44 shall be set aside for the use of the Department in acquisition, management, development and use of such lands until all obligations incurred have been paid in full. Thereafter, fifty percent (50%) of all net profits accruing from the administration of such lands shall be applicable for such purposes as the General Assembly may prescribe, and fifty percent (50%) shall be paid into the school fund to be used in the county or counties in which lands are located.

"§ 113-43.  State not obligated for debts created hereunder.

Obligations for the acquisition of land incurred by the Department under the authority of G.S. 113-40 to 113-44 shall be paid solely and exclusively from revenues derived from such lands and shall not impose any liability upon the general credit and taxing power of the State.

"§ 113-44.  Disposition of lands acquired.

The Department shall have full power and authority to sell, exchange or lease lands under its jurisdiction when in its judgment it is advantageous to the State to do so in the highest orderly development and management of State forests and State parks: Provided, however, said sale, lease or exchange shall not be contrary to the terms of any contract which it has entered into."

SECTION 13.25.(o)  Chapter 106 of the General Statutes is amended by adding a new Article to read:

"Article 71.

"Acquisition and Control of State Forests.

"§ 106-840.  Policy and plan to be inaugurated by Department of Agriculture and Consumer Services.

(a)        In this Article, unless the context requires otherwise, "Department" means the Department of Agriculture and Consumer Services and "Commissioner" means Commissioner of Agriculture.

(b)        The Department shall inaugurate the following policy and plan looking to the cooperation with private and public forest owners in this State insofar as funds may be available through legislative appropriation, gifts of money or land, or such cooperation with landowners and public agencies as may be available:

(1)        The extension of the forest fire prevention organization to all counties in the State needing such protection.

(2)        To cooperate with federal and other public agencies in the restoration of forest growth on land unwisely cleared and subsequently neglected.

(3)        To furnish trained and experienced experts in forest management, to inspect private forestlands and to advise with forest landowners with a view to the general observance of recognized and practical rules of growing, cutting, and marketing timber. The services of such trained experts of the Department must naturally be restricted to those landowners who agree to carry out so far as possible the recommendations of said Department.

(4)        To prepare and distribute printed and other material for the use of teachers and club leaders and to provide instruction to schools and clubs and other groups of citizens in order to train the younger generation in the principles of wise use of our forest resources.

(5)        To acquire small areas of suitable land in the different regions of the State on which to establish small, model forests which shall be developed and used by the said Department as State demonstration forests for experiment and demonstration in forest management.

"§ 106-841.  Growing of timber on unused State lands authorized.

The Department of Administration may allocate to the Department, for management as a State forest, any vacant and unappropriated lands, any marshlands or swamplands, and any other lands title to which is vested in the State or in any State agency or institution, where such lands are not being otherwise used and are not suitable for cultivation. Lands under the supervision of the Wildlife Resources Commission and designated and in use as wildlife management areas, refuges, or fishing access areas and lands used as research stations shall not be subject to the provisions of this section. The Department shall plant timber-producing trees on all lands allocated to it for that purpose by the Department of Administration. The Commissioner may contract with the appropriate prison authorities for the furnishing, upon such conditions as may be agreed upon from time to time between such prison authorities and the Commissioner, of prison labor for use in the planting, cutting, and removal of timber from State forests which are under the management of the Department.

"§ 106-842.  Use of lands acquired by counties through tax foreclosures as demonstration forests.

The boards of county commissioners of the various counties of North Carolina are herewith authorized to turn over to the said Department title to such tax-delinquent lands as may have been acquired by said counties under tax sale and as in the judgment of the Commissioner may be suitable for the purposes named in subdivision (5) of subsection (b) of G.S. 106-840.

"§ 106-843.  Procedure for acquisition of delinquent tax lands from counties.

In the carrying out of the provisions of G.S. 106-842, the several boards of county commissioners shall furnish forthwith on written request of the Department a complete list of all properties acquired by the county under tax sale and which have remained unredeemed for a period of two years or more. On receipt of this list, the Commissioner shall have the lands examined and, if any one or more of these properties is in the Commissioner's judgment suitable for the purposes set forth in G.S. 106-842, request shall be made to the county commissioners for the acquisition of such land by the Depart