North Carolina state budget. Post-legislative budget summary

              The North Carolina State Budget 2001-2003 Post
Legislative Budget Summary
Prepared by
Office of State Budget and Management
David T. McCoy
State Budget Officer
Charles E. Perusse
Deputy State Budget Officer
The North Carolina State Budget 2001-2003 Post Legislative Budget Summary is available on line at
www.osbm.state.nc.us. For any further information please contact the appropriate administrator from the Office
of State Budget and Management, at 20320 Mail Service Center, Raleigh, North Carolina 27699-0320, (919)
733-7061.
Susan S. Adams Public Education
Community Colleges
University of North Carolina
Buddy Humphrey Departments of General Government
Departments of Natural and Economic Resources
Janet Pittard OSBM Personnel Development and Support Services
Mike Kiltie Economic Forecast
Revenue Forecast
Revenue and Tax Issues
Economic Impact on Rules
Maurice King Capital Improvements
Transportation
Special Appropriations
Department of Correction
Department of Crime Control and Public Safety
Judicial Department
Department of Justice
Department of Juvenile Justice and Delinquency Prevention
Tom Newsome Management and Productivity Services
Information Systems
Salary Control
Data Services Unit
Bonnie Cramer Department of Health and Human Services
Editorial team for this document was composed of section representatives: Sam Lee, Thomas Cheek, Wayne
Williams and Nic k Holt under the direction of Sally Hunter assisted by Carolyn West. Preparation provided by
Faye Mial and support staff. Summary tables were prepared by Julie Mitchel.
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Table of Contents
Page
I. Summary of State Budget.......................................................................................................1
II. Economic Outlook For 2001-2003 ........................................................................................6
A. For the Nation ...........................................................................................................6
B. For North Carolina ....................................................................................................7
III. General Fund .......................................................................................................................11
A. Revenue...................................................................................................................11
B. Condition of the Fund...............................................................................................15
C. Appropriations by Department .................................................................................16
Education
Public Education......................................................................................................23
Community Colleges ................................................................................................42
University of North Carolina.....................................................................................54
General Government
Department of Administration...................................................................................74
Office of Administrative Hearings..............................................................................78
Department of State Auditor.....................................................................................80
Office of the State Controller....................................................................................81
Department of Cultural Resources ............................................................................82
General Assembly....................................................................................................84
Office of the Governor .............................................................................................85
Office of State Budget and Management...................................................................86
Flood Mapping Survey.............................................................................................88
Office of State Budget and Management
- Reserve for Special Appropriation ........................................................................90
Department of Insurance ..........................................................................................91
Office of the Lieutenant Governor.............................................................................93
Department of Revenue............................................................................................93
Rules Review Commission........................................................................................95
Department of Secretary of State..............................................................................96
State Board of Elections ...........................................................................................99
Department of State Treasurer..................................................................................99
Department of State Treasurer
- Retirement for Fire and Rescue Squad Workers..................................................100
Health and Human Services
Department of Health and Human Services.............................................................102
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Table of Contents (Continued)
Page
Justice and Public Safety
Department of Correction.......................................................................................131
Department of Crime Control and Public Safety......................................................144
Judicial Department................................................................................................150
Judicial Department – Indigent Defense………………...........................................157
Department of Justice.............................................................................................159
Office of Juvenile Justice & Delinquency Prevention................................................162
Natural and Economic Resources
North Carolina Housing Finance Agency................................................................167
Department of Agriculture and Consumer Services..................................................167
Department of Commerce......................................................................................175
Department of Environment and Natural Resources.................................................179
Clean Water Management Trust Fund ....................................................................191
Department of Labor..............................................................................................192
Commerce - State Aid to Non-State Entities ..........................................................195
NC Biotechnology Center................................................................................195
Rural Economic Development Center ...............................................................196
IV. Transportation...................................................................................................................198
A. Highway Fund........................................................................................................202
1. Revenue.....................................................................................................202
2. Condition of the Fund.................................................................................204
3. Highway Fund Budget Changes..................................................................205
B. Highway Trust Fund...............................................................................................211
1. Revenue.....................................................................................................211
C. Highway Bonds......................................................................................................217
V. Capital Improvements ........................................................................................................218
VI. Reserves, Debt Service and Other Adjustments..................................................................223
VII Appendix
Text Tables
Table 1A. Total North Carolina State Budget by Function and Source of Funds, 2001-2002.............4
Table 1B. Total North Carolina State Budget by Function and Source of Funds, 2002-2003.............5
Table 2. Economic Conditions .......................................................................................................8
Table 3A. Education/Human Services/Mental Health Revenue Initiatives..........................................13
Table 3B. General Fund Revenue, 2001-03....................................................................................14
Table 4. Condition of the General Fund, 2001-03 ........................................................................15
Table 5A. 2001-02 General Fund - Appropriation..........................................................................16
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Table 5B. 2002-03 General Fund - Appropriation..........................................................................19
Table of Contents (Continued)
Page
Table 6. North Carolina Transportation Program, 2001-02 ........................................................199
Table 7. North Carolina Transportation Program, 2002-03 ........................................................200
Table 8. Highway Fund Revenue, 2001-03 ................................................................................203
Table 9. Condition of the Highway Fund, 2001-03.....................................................................204
Table 10. Recommended Highway Fund Appropriations, 2001-03...............................................212
Table 11. Condition of the Highway Trust Fund, 2001-03 ............................................................214
Table 12. Highway Trust Fund Revenue, 2001-03 .......................................................................215
Table 13. Highway Trust Fund Appropriations, 2001-03..............................................................216
Appendix Tables
Appendix Table 1A. Condition of the General Fund, 1974-1975 to 2000-2001..........................229
Appendix Table 1B. Condition of the Highway Fund, 1974-1975 to 2000-2001 ........................230
Appendix Table 1C. Condition of the Highway Trust Fund, 1989-90 to 2000-01........................231
Appendix Table 1D. Schedule of Savings Reserve Account Balance,
1990-91 to 2000-02......................................................................232
Appendix Table 1E Schedule of Reserve for Repairs and Renovations,
1992-93 to 2000-02......................................................................233
Appendix Table 1F. Reserve for Clean Water Management Trust Fund,
1995-96 to 2000-01......................................................................234
Appendix Table 2. Total Authorized North Carolina State Budget,
1968-69 to 2002-03......................................................................235
Appendix Table 3A. Total North Carolina State Budget by Function, Department, and
Source of Funds, 2001-2002 .........................................................236
Appendix Table 3B. Total North Carolina State Budget by Function, Department, and
Source of Funds, 2002-2003 .........................................................239
Appendix Table 4. Trends in the Total State Budget, 1977-78 to 2002-03...............................242
Appendix Table 5. Total Authorized State Budget by Source of Funds,
1974-75 to 2002-03......................................................................243
Appendix Table 6. Highway Fund State Tax and Nontax Revenue,
1974-75 to 2002-03......................................................................244
Appendix Table 7. Highway Trust Fund Tax and Nontax Revenue,
1989-90 to 2002-03......................................................................245
Appendix Table 8. General Fund Tax and Nontax Revenue, 1974-1975 to 2002-2003............246
Appendix Table 9. Authorized General Fund Appropriations 1968-1969 to 2002-2003...........247
Appendix Table 10. North Carolina State General Fund Operating Appropriation for
Public Schools, Community Colleges, and Higher
Education, 1969-1970 to 2002-2003.............................................248
Appendix Table 11. North Carolina’s Bond Indebtedness, 1968-1969 to 2000-2001................249
Appendix Table 12. Total North Carolina Budget for Debt Services,
1968-1969 to 2002-2003.......................................................................250
Post-Legislative Budget Summary, 2001-2003
I. Summary of State Budget
Total Budget
The 2001 General Assembly enacted a state budget for the 2001-03 biennium totaling $54
billion, which includes $26.6 billion for 2001-02 and $27.4 billion for 2002-03. This includes funds to
continue the current operations of state government (traditionally referred to as the “operating budget”
for agencies) as well as monies for capital improvements and other nonrecurring items. The total budget
is supported from four primary sources of revenue including:
Fund Type Amount Source of Funds
General Fund $30.7 billion Tax collections, investment earnings, and
other nontax revenues
Federal Funds $14.5 billion Federal monies allocated to North Carolina
Highway Fund $4.2 billion Funds from motor fuels tax, licenses/fees,
investments, and sales/use of motor vehicles
Other Funds $4.5 billion Receipts collected from tuition, fees, and
other charges
Total support is distributed as 56.9% general fund tax and nontax; 26.9% federal funds; 7.8%
highway fund tax and nontax; and 8.6% other receipts and charges.
The operating budget for state government totals $52.3 billion for the 2001-03 biennium,
including $25.8 billion in 2001-02 and $26.5 billion in 2002-03. This level of funding represents a $5.6
billion or 12% increase over the 1999-2001 biennium. The operating budget includes funding to
continue existing programs, implementation of new programs authorized by the General Assembly, and
compensation increases for teachers and state employees.
For 2001-03, current operations comprise 96.9% of the total state budget while the remaining
3.1% are budgeted for capital improvements and other nonrecurring items.
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Post-Legislative Budget Summary, 2001-2003
Summary of State Budget - Continued
General Fund Budget
The General Fund supported operating budget for 2001-03 is $29 billion, representing an
increase of $2.1 billion or 7.8% over the 1999-2001 biennium. The distribution of resources for the
general fund operating budget is as follows:
II. Program Area Total Budget % of Total
Education – includes public schools, community
colleges and universities
$ 16.7 billion
57.0%
Health and Human Services $ 7.0 billion 24.0%
Justice and Public Safety – includes prisons, court
system and other public safety agencies
$ 3.1 billion
11.0%
General Government – includes environment and
other regulatory agencies
$ 1.4 billion
4.8%
Statewide Reserves – includes debt service, health
plan and compensation increases
$ .90 billion
3.0%
The majority of funding increases to continue existing services were in the education and human
service areas. The largest budget increase, $467.7 million in 2001-02 and $714.2 million in 2002-03,
was provided to the Medicaid program. Other major funding increases include: $93.1 million in
2001-02 for the ABC Incentives Program; $158.6 million in 2001-02 and $255.9 million in 2002-03 for
public school enrollment; $28.4 million in 2001-02 and 2002-03 for university enrollment; $10 million
in 2001-02 and 2002-03 for community college enrollment; $8 million in 2001-02 and $12.5 million in
2002-03 for the NC Health Choice program; and $15.0 million in 2001-02 for the Industrial Recruitment
Competitive Fund.
Several new initiatives were also provided funding in the 2001 Session. They include: $25.2
million in 2001-02 and $40.8 million in 2002-03 for class size reductions; $6.5 million in 2001-02 and
2002-03 for the More-at-Four program; and $2 million in 2001-02 and $2.8 million in 2002-03 for
Project Collect Tax.
The General Assembly adopted a compensation package that included an average 2.86%
increase for teachers; an average 2.93% increase for principals and assistant principals and a $625 salary
increase for all other state employees. In addition, funds were provided to support the employer’s share
of the increased cost of health insurance for teachers and state employees ($150 million in 2001-02 and
$200 million in 2002-03).
While nonrecurring availability was limited due to measures to balance the 2000-01 fiscal year
budget deficit, the General Assembly did authorize $47.5 million for a mental health trust fund,
$15 million for HIPAA (federal Health Insurance Portability and Accountability Act) implementation,
$125 million for the Repair and Renovation Reserve, and $32.9 million to match federal and local funds
for water resources development projects.
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Post-Legislative Budget Summary, 2001-2003
Summary of State Budget - Continued
Transportation Budget
The 2001-03 budget for the Department of Transportation totals $6.4 billion, including
$3.2 billion for 2001-02 and $3.2 billion for 2002-03. This represents a 12.3% increase in funding over
the 1999-01 biennium. The budget is supported from four primary sources of revenue including:
Source of Funding
Total Amount
% of Total
Motor Fuel Taxes $ 2.4 billion 37.0%
Vehicle & Driver Taxes and Fees $ 2.2 billion 34.0%
Federal Funds $ 1.6 billion 26.0%
General Fund and Other Sources $ 180 million 3.0%
These funds are distributed to the Highway Fund and the Highway Trust Fund on a formula
basis. Appropriations to the Highway Fund total $2.1 billion in 2001-02 and $2.2 billion in 2002-03 and
represent 67.2% of the total budget, while Highway Trust Fund appropriations of $1.0 billion in 2001-02
and $1.0 billion in 2002-03 comprise 31.3% of the total budget. The budgeted resources are allocated in
the following manner:
Budgeted Uses of Funding Total Amount % of Total
Highway Construction $ 3.00 billion 52.0%
Highway Maintenance / Municipal Aid $ 1.40 billion 22.0%
General Fund Agencies $ .72 billion 13.0%
DOT Management and Support $ .32 billion 5.0%
Non-Highway Transportation $ .22 billion 4.0%
Division of Motor Vehicles $ .21 billion 4.0%
The following sections of this document provide further details on the programs outlined above.
Post-Legislative Budget Summary, 2001-2003
Total State Budget - Continued
Table 1A
Total North Carolina State Budget by Function
and Source of Funds
FY 2001-2002
General Highway
Function Fund Fund** Other Federal Total
General Assembly $ 39,383,848$ - $ 403,000$ - $ 39,786,848
Judicial 375,672,741 - 7,128,074 - 382,800,815
General Government 383,277,415 4,038,525 15,997,545 51,679,646 454,993,131
Public Safety & Regulation 152,920,240 131,697,852 71,496,470 213,468,923 569,583,485
Correction 923,995,281 - 9,280,008 - 933,275,289
Juvenile Justice 140,800,030 - 6,595,544 - 147,395,574
Education:
Public Education* 5,996,982,529 29,101,069 2,886,501 606,524,524 6,635,494,623
Community Colleges 643,695,459 - 115,589,384 12,818,209 772,103,052
Universities 1,789,935,775 - 963,608,871 27,490,660 2,781,035,306
Subtotal Education 8,430,613,763 29,101,069 1,082,084,756 646,833,393 10,188,632,981
Transportation 1 0,030,000 1,923,273,710 38,917,668 809,950,673 2,782,172,051
Health and Human Svcs. 3,397,939,955 437,623 871,876,631 5,297,249,807 9,567,504,016
Environment
and Natural Resources 159,072,700 846,102 69,945,279 40,802,151 270,666,232
Agriculture and
Consumer Services 5 5,468,040 3,659,405 18,904,748 6,316,584 8 4,348,777
Debt Service 251,978,040 26,106,800 50,606,598 - 328,691,438
Reserves and Transfers# 1 1,257,790 1,895,680 - - 1 3,153,470
Total Current Operations 14,332,409,843 2,121,056,766 2,243,236,321 7,066,301,177 25,763,004,107
Capital Improvement - App 3 2,936,000 - - - 3 2,936,000
Capital Improvement R&R 125,000,000 - - - 125,000,000
Savings Reserve - - - - -
Clean Water Mgmt Trust 4 0,000,000 - - - 4 0,000,000
General Obligation Bonds 605,000,000 - - - 605,000,000
Grand Total $ 15,135,345,843 $ 2,121,056,766 $ 2,243,236,321 $ 7,066,301,177 $ 26,565,940,107
* Appropriation for Public School LI included in Public Education.
** Includes Highway Fund and Highway Trust Fund.
# Includes appropriation for the state employee's compensation increases and the state health plan.
Note: Highway Fund appropriation excludes $14.5 million transferred to the General Fund
and $171.7 million transferred from the Highway Trust Fund to the General Fund.
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Post-Legislative Budget Summary, 2001-2003
Total State Budget - Continued
Table 1B
Total North Carolina State Budget by Function
and Source of Funds
FY 2002-2003
General Highway
Function Fund Fund** Other Federal Total
General Assembly $ 39,553,848$ - $ 403,000$ - $ 39,956,848
Judicial 374,332,906 - 7,128,074 - 381,460,980
General Government 348,831,993 4,038,525 15,913,545 51,679,646 420,463,709
Public Safety & Regulation 135,666,824 133,098,294 72,142,673 212,437,706 553,345,497
Correction 930,964,916 - 9,300,008 - 940,264,924
Juvenile Justice 142,554,017 - 6,595,544 - 149,149,561
Education:
Public Education* 6,039,530,711 30,353,964 2,886,501 606,524,524 6,679,295,700
Community Colleges 643,195,459 - 115,589,384 12,818,209 771,603,052
Universities 1,798,320,830 - 978,956,903 27,490,660 2,804,768,393
Subtotal Education 8,481,047,000 30,353,964 1,097,432,788 646,833,393 10,255,667,145
Transportation 1 3,393,341 1,931,969,036 38,617,668 825,448,590 2,809,428,635
Health and Human Svcs. 3,644,080,118 437,623 919,409,850 5,620,453,098 10,184,380,689
Environment
and Natural Resources 158,722,700 846,102 69,945,279 40,802,151 270,316,232
Agriculture and
Consumer Services 5 5,268,040 3,586,465 18,895,298 6,312,784 8 4,062,587
Debt Service 353,422,808 25,356,425 8,750,000 - 387,529,233
Reserves and Transfers# 3 4,732,115 3,895,680 - - 3 8,627,795
Total Current Operations 14,712,570,626 2,133,582,114 2,264,533,727 7,403,967,368 26,514,653,835
Capital Improvement - App - - - - -
Capital Improvement R&R - - - - -
Savings Reserve - - - - -
Clean Water Mgmt Trust 7 0,000,000 - - - 7 0,000,000
General Obligation Bonds 850,000,000 - - - 850,000,000
Grand Total $ 15,632,570,626 $ 2,133,582,114 $ 2,264,533,727 $ 7,403,967,368 $ 27,434,653,835
* Appropriation for Public School LI included in Public Education.
** Includes Highway Fund and Highway Trust Fund.
# Includes appropriation for the state employee's compensation increases and the state health plan.
Note: Highway Fund appropriation excludes $15.3 million transferred to the General Fund
and $170.0 million transferred from the Highway Trust Fund to the General Fund.
5
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Post-Legislative Budget Summary, 2001-03
II. Economic Outlook for 2001-03
[The economic and revenue forecast as of August 2001]
A. For The Nation
U.S. economic growth remained in positive territory in the second quarter of 2001, albeit only
barely. Real Gross Domestic Product (GDP) grew at a modest 0.2% annual rate. Consumers, through
their home-buying as well as regular spending, and government spending saved the day. Investment fell
sharply, while exports were flat.
Looking forward, there is little to jump-start the economy. Consumers have been buying cars
and houses right along, so there is little of the pent-up demand that once responded to lower interest
rates. The economy may avoid a recession, but will also miss out on the post-recession bounce.
Consumer spending has been supported by equity gains in homes and stock portfolios, but these are
once-a-cycle boosts in spending. Unless the economy slips into recession, however, consumer spending
should continue to rise in line with income.
Government spending will also rise, although budgets will be tighter in the fiscal year just
starting than in the recent past. Federal government purchases will get a third-quarter boost from the
supplemental fiscal 2001 spending bill, and all signs point to further increases in 2002. State and local
governments, faced with rising school populations and heavy building needs, will also be spending
more.
Aside from consumers and the government, there is little hope for any immediate contribution to
growth. Businesses have cut back sharply on new facilities and equipment; most have more than ample
capacity to satisfy demand for the foreseeable future. Exports have slowed less than imports, but the
spreading global malaise and strong dollar will preclude the sort of export boom that supported growth
in the 1980s.
Investment is the heart of the weakness in the economy. The nominal value of orders for capital
equipment is still sliding. However, this may paint an overly pessimistic picture. Cutthroat pricing in
the high-technology sector means that real spending is not falling as fast as current-dollar orders.
Nonresidential construction spending, which had looked so strong and offset most of the drop in
equipment spending in the second quarter of 2001, has now hit the skids. Residential construction is
also slipping. New construction is holding up, but the renovation and rehab business has slowed.
Inflation is moderating as energy prices retreat. Producer prices are particularly weak. One area
of concern is the acceleration in medical care costs. Health insurance costs are climbing rapidly, but
employers are passing part of the increases on to workers in the form of higher premiums and
co-payments. Overall, however, the Consumer Price Index (CPI) is expected to increase at about 2.5%
annuals during the 2001-03 biennium.
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Post-Legislative Budget Summary, 2001-03
Economic Outlook for 2001-03 - Continued
As the federal fiscal stimulus from the tax “rebates” combines with lower interest rates,
economic growth is expected to gradually accelerate beginning in the fourth quarter of 2001. Following
an anemic 1.7% in 2001-02, real GDP growth is forecast to rebound to 3.4% in
2002-03. This rate of growth compares very favorably with the 2.6% average rate of real GDP growth
over the past 20 years.
B. For North Carolina
The North Carolina manufacturing sector has been experiencing recessionary conditions for over
a year. During 2000, the technology industries began to weaken, joining the already slumping
traditional industry group of textiles, apparel, and furniture. Over the twelve months ending in August
2001, total manufacturing employment fell by 5.9%, representing a loss of 45,800 jobs. On a percentage
basis, the hardest hit industries are textiles, apparel, industrial machinery (including computer
equipment), primary metals, electrical equipment, and transportation equipment).
The deterioration of the industrial sector had a profound impact on the State’s unemployment
rate. In early 2000, North Carolina continued to be the envy of the nation, enjoying an unemployment
rate of 3.4%. As the layoff announcements accelerated, unemployment quickly moved along side of the
national rate, hitting 4.2% in January 2001. At August, the rate of unemployment in North Carolina
stood at 5.0%.
As the economic stimulus from lower interest rates and tax reductions begin to take hold,
manufacturing activity in North Carolina will slowly improve during all of 2002. The resurgence in
industrial output will gain momentum in 2003 when U.S. investment in computers, communications
equipment, and heavy-duty trucks gears up. Although production activity recovers, manufacturing
employment will not. It is expected that much of the increase in new orders will be matched by
productivity gains, rather than adding employees.
Services will continue to be the growth engine of the North Carolina economy through 2003,
particularly business services. The Finance Sector (banking, real estate, and insurance) will rebound,
along with the stock market, but will not retur n to the 7.0%-plus growth of the late 1990s.
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Post-Legislative Budget Summary, 2001-03
Economic Outlook for 2001-03 - Continued
Table 2
Economic Conditions
(Annual Rates of Change)
2000-01
Actual
2001-02
Projected
2002-03
Projected
National
Real Gross Domestic Product 2.7% 1.7% 3.4%
Real Personal Consumption 4.0% 2.8% 3.3%
Industrial Production 2.0% -1.9% 5.7%
Personal Income 6.6% 4.6% 5.8%
Inflation (CPI) 3.4% 2.6% 2.5%
Federal Funds Rate (%) 5.8% 3.5% 4.1%
North Carolina
Industrial Production 3.5% -2.5% 5.0%
Nonfarm Employment 1.7% 0.5% 2.8%
Manufacturing Employment -2.9% -4.0% -0.5%
Unemployment Rate (%) 4.3% 5.5% 5.9%
Total Personal Income 6.7% 4.3% 5.5%
Housing Starts (000) 74.9% 73.7% 71.8%
Note: Forecast dated August 2001
9
Post-Legislative Budget Summary, 2001-03
Economic Outlook for 2001-03 - Continued
[The economic and revenue forecast as of November 2001]
It no longer seems possible for the U.S. economy to escape recession. The only question is how
severe it will be. The economy was already teetering on the brink of recession when the September 11th
attacks occurred. The heroic efforts required to clean up from the attacks and restore services will not
compensate for the thousands of jobs lost as worried consumers and workers shun travel and recreation.
Through the end of 2001, the only positive contribution to economic growth is expected to come
from the government – mostly federal – sector. Consumer spending, business purchases of equipment
and software, construction outlays, and net exports are all expected to decline. Federal spending will
drive a not-particularly-vigorous recovery through a combination of increased transfer payments (anti-recessionary),
some tax relief, and direct purchases stemming from the struggle against terrorism.
Bottom line: The current forecasts from DRI-WEFA (and others) show only a mild downturn, ending in
the first quarter of 2002.
North Carolina will continue to bear the brunt of the current recession. Industrial activity, which
was beginning to show some positive signs in July and August, is tanking once again. Layering on the
difficulties in the travel sector and consumer sector, une mployment will continue to trend upward,
reaching 6.7% by mid-2002.
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Post-Legislative Budget Summary, 2001-03
III. General Fund
A. Revenue
Baseline General Fund Revenue
At the onset of 2001-02, the General Fund operated under a continuing resolution. This provided
an opportunity to adjust the revenue forecast as the economic outlook for the nation and North Carolina
deteriorated during the summer of 2001. Given the economic forecast described earlier, baseline
General Fund revenue growth (i.e. under existing law, adjusted for refund anomalies in 2000) was
authorized at 4.0% for 2001-02, and 4.9% for 2002-03. These increases are well below the 8.4%
average baseline rate of growth experienced between fiscal years 1992-93 and 1999-00.
Enhancements to Baseline Revenue
Baseline revenue growth provided insufficient revenue to continue to support essential State
services as well as undertake Governor Easley’s initiatives for education. Consequently, supplemental
revenue was enacted in the ratified Budget for the 2001-03 Biennium as shown below:
2001-02 2002-03
Baseline GF Revenue $ 14,013.7 $ 14,702.9
Revenue Enhancements:
Education/Human Services
Mental Health Revenue Initiatives (HB231)
435.3
620.0
Tax Loophole Closures (HB1157) 61.3 64.3
Tax Collection Accelerations (HB232) 112.1 6.0
Debt Collection – Dept. of Revenue (SB353) 50.0 50.0
Other Actions 40.7 (3.7)
Total Revenue $ 14,715.1 $ 15,439.5
The comprehensive tax package (HB 231) is shown in detail on Table 3a. The package contains
broad-based adjustments, including tax reductions affecting married couples and families with children.
The major components of the tax package include an increase in the state sales tax rate from 4.0% to
4.5% effective October 16, 2001. This change converts to a local option rate increase in July 2003, after
which local tax reimbursements are repealed. Another major item is the enactment of a 8.25% marginal
income tax rate on incomes over $200,000 (married filing jointly). This new bracket is in effect for the
2001 through 2003 tax years. The General Assembly addressed the so-called “Marriage Penalty” by
increasing the standard deduction from $5,000 to $5,500 in 2002 and $6,000 in 2003. In addition, the
Child Tax Credit is increased from $60 to $75 in 2002, up to $100 in 2003 and beyond.
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Post-Legislative Budget Summary, 2001-03
General Fund – Continued
In the Spring of 2001, Governor Easley established the Efficiency and Loophole Closing
Commission. The mandate presented to the Commission was to review the array of North Carolina tax
preferences to determine those which were no longer achieving their original intended purpose. Based
on the Commission’s recommendations, the General Assembly eliminated the following tax preferences:
2001-02 2002-03
(Millions)
Conform N.C.’s Subsidiary Dividend Deduction
To Generally Accepted Accounting Practices
$ 30.8
$ 32.2
Follow the Ohio Law on Royalty Expenses 20.0 21.0
Tax Limited Liability Companies Under Franchise Tax 10.5 11.0
The General Assembly also reviewed opportunities to accelerate the collection of taxes due.
Measures were enacted which quickened the receipt of withholding, sales, and franchise taxes, as well as
increased the compliance with these accelerated payment schedules. These actions will result in a one-time
windfall of $112.1 million in 2001-02.
Finally, the Department of Revenue was given broader authority to collect unpaid tax liabilities.
Within the authorized budget, it is estimated that Project Collect will yield $50.0 million annually in
debt collections.
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Post-Legislative Budget Summary, 2001-03
General Fund – Continued
Table 3A
Education/Human Services/Mental Health Revenue Initiatives
(House Bill 231)
($Millions)
2001-02 2002-03 2003-04 2004-05
8.25% Income Tax Rate over $200,000 married
filing jointly effective tax years 2001 through 2003
$ 125.5
$ 102.9
$ 61.6
$ -
Marriage Penalty: Increase standard deduction for
married filing jointly (currently $5,000)
(9.7)
(32.0)
(45.0)
(45.8)
Increase Child Credit (currently $60)
$75 in tax year 2002
$100 in tax year 2003
-
(19.8)
(54.8)
(55.0)
Remove $1,500 tax cap on non-commercial
vehicles (Effective October 1, 2001)
1.7
2.4
2.6
2.7
Tax HMOs/Blue Cross at 1% effective 2002 - 33.8 30.6 33.2
Impose 6% Sales Tax on Liquor
(Effective December 1, 2002)
11.9
24.7
25.6
26.6
Reduce excise tax on liquor from 28% to 25%
(Effective February 1, 2002)
(3.5)
(10.9)
(11.4)
(12.0)
Sales Tax Holiday - (8.3) (8.6) (9.0)
Repeal Child Health Insurance Credit
(Effective tax year 2001)
18.9
18.9
18.9
18.9
Tax Satellite TV at 5%
(Effective January 1, 2002)
9.8
21.7
22.9
24.1
Tax Telecommunications at 6%
(Effective January 1, 2002)
34.4
87.9
87.9
87.9
Impose state half-cent sales tax effective October
16, 2001 - converts to local option in July 2003
with 100% hold harmless and repeal of local
reimbursements.
246.3
398.7
337.4
314.3
Total $ 435.3 $ 620.0 $ 467.7 $ 385.9
14
Post-Legislative Budget Summary, 2001-03
General Fund – Continued
Table 3B
General Fund Revenue
2000-01
Actual
2001-02
Projected
2002-03
Projected
Tax Revenue :
Inheritance $ 123,165,443 $ 130,200,000 $ 116,700,000
Licenses 2,953,654 26,400,000 45,800,000
Cigarette 42,025,877 40,700,000 39,400,000
Soft Drink 51,202 - -
Franchise 580,431,850 639,000,000 810,100,000
Income Tax:
Individual $ 7,391,342,524 $ 8,179,300,000 $ 8,515,700,000
Corporate 460,315,086 586,400,000 583,200,000
Subtotal $ 7,851,657,610 $ 8,765,700,000 $ 9,098,900,000
Sales and Use $ 3,435,558,577 $ 3,796,300,000 $ 3,999,100,000
Beverage 172,698,910 174,000,000 170,900,000
Gift 20,254,465 23,200,000 24,400,000
Freight Car Lines 497,560 500,000 500,000
Insurance
Piped Natural Gas
305,791,331
37,212,997
321,600,000
37,900,000
362,700,000
38,700,000
Miscellaneous 756,029 600,0000 600,000
Total Tax Revenue $12,573,059,411 $13,956,100,000 $14,707,800,000
Nontax Revenue:
Investment Income $ 170,899,624 $ 166,800,000 $ 177,000,000
Judicial Fees 109,261,029 112,000,000 114,200,000
Disproportionate Share Receipts 109,142,641 107,000,000 107,000,000
Insurance 43,608,410 45,500,000 47,400,000
Miscellaneous* 262,289,859 139,500,000 98,400,000
Total Nontax Revenue $ 695,201,563 $ 570,800,000 $ 544,000,000
Transfers:
Highway Fund $ 13,600,000 $ 14,500,000 $ 15,300,000
Highway Trust Fund 170,000,000 171,700,000 172,400,000
Total General Fund Revenue* $13,451,860,974 $14,713,100,000 $15,439,500,000
* Includes funds generated by budgetary actions to balance the 2000-01 budget.
15
Post-Legislative Budget Summary, 2001-2003
General Fund-Continued
B. Condition of the Fund
Table 4
Fiscal Years 2000-01, 2001-02 and 2002-03
2000-01 2001-02 2002-03
Description Actual Authorized Authorized
Unreserved Credit Balance $ - $ - $ -
Reserved Credit Balance
Budget Stabilization Reserve $ 157,522,049 $ 339,272,049 $ 339,272,049
Repair and Renovations Reserve 2,901,932 - -
Clean Water Management Trust Fund Reserve 1,054,152 - -
Disproportionate Share Receipts 1,170,396 1,170,396 - -
Intangible Tax Reserve 240,000,000 - -
Railroad Dividends 918,220 - -
Easley Executive Order #3 - 178,472,174 -
Disaster Relief - 448,608,263 -
Total Reserved Credit Balance $ 403,566,749 $ 967,522,882 $ 339,272,049
Revenue
Tax Revenue $ 12,573,059,410 $ 13,956,100,000 $ 14,707,800,000
Nontax Revenue 525,541,951 421,300,000 436,500,000
Highway Fund Transfer 13,600,000 14,500,000 15,300,000
Highway Trust Fund Transfer 170,000,000 171,700,000 172,400,000
Disproportionate Share Receipts 109,142,641 107,000,000 107,000,000
Total Revenue $ 13,391,344,002 $ 14,670,600,000 $ 15,439,000,000
Direct Authorized Transfer to Availability $ 60,516,971 $ 42,400,000 $ 500,000
Easley Executive Order #3 308,401,820 - -
Disaster Relief 312,328,030 - -
Direct Authorized Transfer from Availability
Savings Reserve - (181,750,000) -
Total Availability $ 14,476,157,572 $ 15,498,772,882 $ 15,778,772,049
Appropriations
Continuation Budget $ 13,220,036,214 $ 14,325,840,827 $ 14,682,410,940
Adjustments to Continuation Budget - (738,825,345) (743,831,356)
Expansion Budget - 745,394,361 773,991,042
Total Operating Budget $ 13,220,036,214 $ 14,332,409,843 $ 14,712,570,626
Capital Improvement – Direct Appropriation 14,974,172 32,936,000 -
Other Direct Appropriations
Repair and Renovation 60,500,000 125,000,000 -
Clean Water Management Trust Fund 30,000,000 40,000,000 70,000,000
Budget Stabilization Reserve 120,000,000 - -
Total Appropriations $ 13,445,510,36 $ 14,530,345,843 $ 14,782,570,626
Direct Authorized Transfer from Reserves 244,874,304 474,621,175 -
Ending Balance 785,772,881 493,805,864 996,201,423
Ending Reserved Balance
Budget Stabilization Reserve $ 157,522,049 $ 339,272,049 $ 339,272,049
Clean water Management Trust Fund - - -
Repair and Renovations - - -
Disproportionate Share Receipts 1,170,396 1,170,396 -
Intangible Tax Reserve - - -
Railroad Dividends - - -
Easley Executive Order #3 178,472,173 - -
Disaster Relief 448,608,263 152,459,262 -
Total Reserved Balance $ 785,772,881 $ 492,901,707 $ 339,272,049
Ending Unreserved Balance $ - $ 904,157 $ 656,929,374
Post-Legislative Budget Summary, 2001-2003
Appendix-Continued
Recurring
Line Budget Baseline Position Final
No. Code Department Budget Recurring N/R Recurring N/R Changes Appropriation
Table 5A
Reductions Expansion
FY 2001-02
General Fund Appropriation
1 11000 General Assembly $ 40,567,848 $ ( 1,014,000) $ (170,000)$ - $ - - $ 39,383,848
2 12000 Judicial - AOC 308,769,898 ( 5,714,051) - 1 ,919,640 5 15,653 3 .50 305,491,140
3 12001 AOC-Indigent 66,660,467 ( 1,580,000) - 5 ,101,134 - 1 1.00 70,181,601
4 13000 Gov.Office 5,633,739 (190,834) - - - - 5 ,442,905
5 13005 OSBM 5,789,900 (560,245) (40,000) 2 01,392 67,500 (8.00) 5 ,458,547
6 13006 Flood Mapping & Surveying 1,232,845 ( 1,232,845) - - - (31.00) -
7 13010 NC Housing Finance 5,300,000 - - - - - 5 ,300,000
8 13085 OSBM-Res.for Special Approp. 3,080,000 - - 3 6,000,000 5 55,000 - 39,635,000
9 13100 Lt. Governor 6 86,308 (16,763) - - - - 6 69,545
10 13200 Sec.of State 8,760,901 (556,267) - 1 27,142 2 25,000 (16.00) 8 ,556,776
11 13300 Auditor 12,166,518 (301,845) - - - - 11,864,673
12 13410 St. Treasurer 7,837,007 (620,190) - - - - 7 ,216,817
13 13412 St. Treasurer-Transfer Ret.Sys. 12,294,780 - (2,077,883) 85,000 - - 10,301,897
14 13510 DPI 5,870,290,681 ( 161,590,416) (30,415,892) 4 4,256,873 1 03,586,875 287.50 5,826,128,121
a " DPI - Department 53,512,243 - - - - - 53,512,243
15 13600 Justice 76,471,632 ( 2,897,263) (922,018) 4 90,424 - (24.00) 73,142,775
16 13700 DACS 56,695,276 ( 1,827,236) - 4 00,000 2 00,000 (31.50) 55,468,040
17 13800 Labor 16,617,178 ( 1,124,272) - 25,000 - (9.00) 15,517,906
18 13900 Insurance 23,392,288 (263,000) - 1 36,449 4 84,300 4 .00 23,750,037
19 13901 Insurance-Direct 4,500,000 - (3,450,000) - - - 1 ,050,000
20 14060 Juvenile Justice & Delinq. Prevention 147,706,045 ( 7,352,280) (406,280) 8 52,545 - (92.50) 140,800,030
21 14100 DOA 61,078,651 ( 1,661,172) - 1 ,640,780 7 98,054 (21.00) 61,856,313
22 14160 OSC 11,817,271 (293,403) - - - (2.00) 11,523,868
23 14222 DOT 17,753,426 ( 1,062,717) (6,660,709) - - - 10,030,000
24 14300 DENR 164,902,678 ( 7,687,823) - 1 ,507,845 3 50,000 (32.54) 159,072,700
25 14301 DENR-Clean Water Mgmt.Trust 30,000,000 - - 1 0,000,000 - - 40,000,000
26 14410 DHHS-Central Mgmt. 45,649,860 ( 4,347,655) - 6 ,706,500 1 00,000 (45.00) 48,108,705
27 14411 DHHS-Aging 29,825,449 (293,539) - - - (1.00) 29,531,910
28 14420 DHHS-Child Dev. 70,039,360 ( 1,655,285) - - - (16.00) 68,384,075
a Smart Start 279,674,321 ( 59,000,000) - - - - 220,674,321
29 14424 DHHS-Education Services 77,290,419 ( 7,708,894) - - - (56.00) 69,581,525
30 14430 DHHS-Health Services 112,142,547 ( 6,534,225) (1,500,000) 1 ,825,761 2 ,985,000 (12.59) 108,919,083
31 14440 DHHS-Social Services 192,948,114 ( 8,757,877) - 3 ,500,000 1 ,000,000 (27.00) 188,690,237
32 14445 DHHS-Medical Assistance 1,987,547,863 ( 44,432,335) - 3 8,368,762 - (11.00) 1,981,484,290
33 14446 DHHS-NC Health Choice 24,987,142 - - 8 ,000,000 - - 32,987,142
Post-Legislative Budget Summary, 2001-2003
Appendix-Continued
Recurring
Line Budget Baseline Position Final
No. Code Department Budget Recurring N/R Recurring N/R Changes Appropriation
Table 5A
Reductions Expansion
FY 2001-02
General Fund Appropriation
34 14450 DHHS-Blind & Deaf/HH 10,334,149 (166,034) - - - (2.00) 10,168,115
35 14460 DHHS-Mental/DD/SAS 582,879,191 ( 11,361,999) - 9 ,551,435 3 26,000 (83.50) 581,394,627
36 14470 DHHS-Facility Services 16,584,502 ( 1,142,266) (195,267) - - (6.00) 15,246,969
37 14480 DHHS-Voc.Rehab. 41,827,726 (58,770) - 3 20,000 6 80,000 (3.00) 42,768,956
38 14500 Correction 931,350,075 ( 18,476,013) (5,272,295) 1 6,193,514 2 00,000 177.00 923,995,281
39 14600 Commerce 45,027,007 ( 1,467,935) - 7 21,302 1 5,000,000 (6.75) 59,280,374
40 14601 Commerce-State Aid 16,196,251 (655,312) (1,999,694) 1 ,020,278 1 ,925,000 - 16,486,523
41 14700 Revenue 76,967,284 ( 1,924,173) - 1 ,598,156 4 59,200 4 0.00 77,100,467
42 14800 Cultural Resources 60,840,696 ( 1,413,277) - - 8 00,000 (9.00) 60,227,419
43 14802 Cultural Resources-Roanoke Isl. 1,907,245 (47,782) - - - - 1 ,859,463
44 14900 CC & PS 37,554,148 ( 5,734,270) (504,688) 4 33,941 1 ,900,000 ( 226.00) 33,649,131
45 16010 UNC-GA 50,371,368 ( 10,090,779) - - - (20.85) 40,280,589
46 16011 UNC Institutional Prog. 11,884,496 - (1,000,000) 2 9,963,258 1 50,000 ( 118.20) 40,997,754
47 16012 UNC Related Ed.Programs 100,411,702 - - 3 ,226,210 - - 103,637,912
48 16020 UNC-CH Academic 206,519,475 ( 6,909,457) - - - (3.00) 199,610,018
49 16021 UNC-CH Health Affairs 157,508,711 ( 2,818,824) (250,000) - - - 154,439,887
50 16022 UNC-CH Area Health Educa. 46,273,050 (200,714) - - - - 46,072,336
51 16030 NCSU-Academic 272,091,447 ( 6,715,218) - - - - 265,376,229
52 16031 NCSU-Agri.Research Svc. 48,229,380 ( 1,524,891) - - - - 46,704,489
53 16032 NCSU-Agri. Extension Svc. 38,694,580 ( 1,260,180) - - - - 37,434,400
54 16040 UNC-Greensboro 95,784,621 ( 2,539,417) - - - - 93,245,204
55 16050 UNC-Charlotte 97,770,214 ( 2,110,290) - - - - 95,659,924
56 16055 UNC-Asheville 26,002,376 (523,189) - - - - 25,479,187
57 16060 UNC-Wilmington 60,854,575 ( 1,269,598) - - - - 59,584,977
58 16065 ECU 123,194,097 ( 2,473,593) - - - - 120,720,504
59 16066 ECU-Health Services 47,050,741 (988,667) - - - - 46,062,074
60 16070 NCA&T 60,834,025 ( 1,321,257) - - - - 59,512,768
61 16075 Western Carolina 53,032,166 ( 1,144,118) - - - - 51,888,048
62 16080 Appalachian 86,959,766 ( 1,728,239) - - - - 85,231,527
63 16082 UNC-Pembroke 25,082,875 (491,319) - - - - 24,591,556
64 16084 Winston Salem State 28,703,631 (608,104) - - - - 28,095,527
65 16086 Elizabeth City State 22,075,248 (425,620) - - - - 21,649,628
66 16088 Fayetteville State 31,392,225 (595,654) - - - - 30,796,571
67 16090 NCCU 45,337,950 (956,598) - - - - 44,381,352
68 16092 NC School of Arts 16,790,603 (381,767) - - - - 16,408,836
Post-Legislative Budget Summary, 2001-2003
Appendix-Continued
Recurring
Line Budget Baseline Position Final
No. Code Department Budget Recurring N/R Recurring N/R Changes Appropriation
Table 5A
Reductions Expansion
FY 2001-02
General Fund Appropriation
69 16094 NCSSM 11,487,156 - - - - - 11,487,156
70 16095 UNC-Hospitals 40,587,322 - - - - - 40,587,322
71 Total UNC 1,804,923,800 ( 47,077,493) (1,250,000) 3 3,189,468 1 50,000 ( 142.05) 1,789,935,775
72 16800 Comm.Colleges 648,021,974 ( 16,684,736) - 1 1,858,221 5 00,000 (7.00) 643,695,459
73 18025 St. Bd. Of Elections 3,271,453 (85,184) - - - - 3 ,186,269
74 18210 Office of Admin.Hearings 2,908,088 (112,933) - - - (2.00) 2 ,795,155
75 18300 Rules Review Comm. 3 34,085 (8,290) - - - - 3 25,795
76 19420 St.Treas.Gen.Debt Service 238,509,550 - - 1 2,312,542 - - 250,822,092
77 19425 St.Treas.Federal Debt Service 1,155,948 - - - - - 1 ,155,948
78 Total Operating Budget 14,354,215,827 ( 436,692,899) (54,864,726) 2 48,344,104 1 32,807,582 ( 400.43) 14,243,809,888
79 19001 Contingency & Emergency 1,125,000.00 - - 3 ,875,000 - - 5 ,000,000
80 19003 Legislative Compensation Res. - - - 1 93,842,000 - - 193,842,000
81 19004 Salary Adjustment Reserve 5 00,000 - - - - - 5 00,000
82 19049 Trust Fund for MH/DD/SAS - - - - 4 7,525,675 - 47,525,675
83 19039 Reserve-HIPPA Implementation - - - - 1 5,000,000 - 15,000,000
84 19027 ITS Rate Reduction - ( 4,000,000) - - - - (4,000,000)
85 19043 Health Plan Reserve - - - 1 14,000,000 - - 114,000,000
86 19047 Retirement Rate Adj. Reserve - ( 243,267,720) - - - - ( 243,267,720)
87 Total G/F Operating Budget 14,355,840,827 ( 683,960,619) (54,864,726) 5 60,061,104 1 95,333,257 ( 400.43) 14,372,409,843
88 19600 Capital Improvement - - - - 1 57,936,000 - 157,936,000
-
89 Total General Fund Budget $ 14,355,840,827 $ ( 683,960,619) $ ( 54,864,726) $ 560,061,104 $ 353,269,257 ( 400.43) $ 14,530,345,843
Post-Legislative Budget Summary, 2001-2003
Appendix-Continued
Recurring
Line Budget Baseline Position Final
No. Code Department Budget Recurring N/R Recurring N/R Changes Appropriation
Table 5B
Reductions Expansion
FY 2002-03
General Fund Appropriation
1 11000 General Assembly $ 40,567,848 $ ( 1,014,000)$ - $ - $ - - $ 39,553,848
2 12000 Judicial - AOC 308,769,898 ( 5,739,654) - 2 ,309,891 1 25,000 3 .50 305,465,135
3 12001 AOC-Indigent 66,660,467 ( 2,410,000) - 4 ,617,304 - 1 1.00 68,867,771
4 13000 Gov.Office 5,633,739 (190,834) - - - - 5 ,442,905
5 13005 OSBM 5,789,900 (950,775) - 4 85,813 30,000 (7.00) 5 ,354,938
6 13006 Flood Mapping & Surveying 1,232,845 ( 1,232,845) - - - (31.00) -
7 13010 NC Housing Finance 5,300,000 - - - - - 5 ,300,000
8 13085 OSBM-Res.for Special Approp. 3,080,000 - - - - - 3 ,080,000
9 13100 Lt. Governor 6 86,308 (16,763) - - - - 6 69,545
10 13200 Sec.of State 8,760,901 (601,193) - 1 27,142 - (16.00) 8 ,286,850
11 13300 Auditor 12,166,518 (301,845) - - - - 11,864,673
12 13410 St. Treasurer 7,837,007 (620,190) - - - - 7 ,216,817
13 13412 St. Treasurer-Transfer Ret.Sys. 12,294,780 - - 85,000 - - 12,379,780
14 13510 DPI 5,967,518,906 ( 158,677,459) - 5 9,834,856 - 660.00 5,868,676,303
a " DPI - Department 53,512,243 - - - - - 53,512,243
15 13600 Justice 76,471,632 ( 3,241,263) - 5 55,215 - (24.00) 73,785,584
16 13700 DACS 56,695,276 ( 1,827,236) - 4 00,000 - (31.50) 55,268,040
17 13800 Labor 16,617,178 ( 1,524,272) - 25,000 - (9.00) 15,117,906
18 13900 Insurance 23,392,288 (263,000) - 3 98,264 - 4 .00 23,527,552
19 13901 Insurance-Direct 4,500,000 - - - - - 4 ,500,000
20 14060 Juvenile Justice & Delinq. Prevention 149,456,045 ( 7,754,573) - 8 52,545 - (92.50) 142,554,017
21 14100 DOA 61,078,651 ( 1,661,172) - 1 ,946,018 2 00,000 (21.00) 61,563,497
22 14160 OSC 11,817,271 (293,403) - - - (2.00) 11,523,868
23 14222 DOT 14,486,443 ( 1,093,102) - - - - 13,393,341
24 14300 DENR 164,902,678 ( 7,687,823) - 1 ,507,845 - (32.54) 158,722,700
25 14301 DENR-Clean Water Mgmt.Trust 30,000,000 - - 4 0,000,000 - - 70,000,000
26 14410 DHHS-Central Mgmt. 45,649,860 ( 4,347,655) - 6 ,706,500 - (45.00) 48,008,705
27 14411 DHHS-Aging 29,825,449 (293,539) - - - (1.00) 29,531,910
28 14420 DHHS-Child Dev. 70,039,360 ( 1,655,285) - - - (16.00) 68,384,075
a Smart Start 279,674,321 ( 59,000,000) - - - - 220,674,321
29 14424 DHHS-Education Services 77,290,419 ( 7,708,894) - - - (56.00) 69,581,525
30 14430 DHHS-Health Services 112,142,547 ( 6,534,225) - 1 ,825,761 - (12.59) 107,434,083
31 14440 DHHS-Social Services 200,021,408 ( 8,757,877) - 3 ,500,000 - (27.00) 194,763,531
32 14445 DHHS-Medical Assistance 2,234,048,385 ( 98,717,418) - 8 4,115,925 - (11.00) 2,219,446,892
33 14446 DHHS-NC Health Choice 24,987,142 - - 1 2,500,000 - - 37,487,142
Post-Legislative Budget Summary, 2001-2003
Appendix-Continued
Recurring
Line Budget Baseline Position Final
No. Code Department Budget Recurring N/R Recurring N/R Changes Appropriation
Table 5B
Reductions Expansion
FY 2002-03
General Fund Appropriation
34 14450 DHHS-Blind & Deaf/HH 10,334,149 (166,034) - - - (2.00) 10,168,115
35 14460 DHHS-Mental/DD/SAS 582,879,191 ( 11,361,999) - 9 ,551,435 - (83.50) 581,068,627
36 14470 DHHS-Facility Services 16,584,502 ( 1,142,266) - - - (6.00) 15,442,236
37 14480 DHHS-Voc.Rehab. 41,827,726 (58,770) - 3 20,000 - (3.00) 42,088,956
38 14500 Correction 931,350,075 ( 19,746,574) (1,000,000) 2 0,361,415 - 177.00 930,964,916
39 14600 Commerce 45,027,007 ( 1,467,935) - 7 21,302 - (6.75) 44,280,374
40 14601 Commerce-State Aid 16,196,251 (655,312) - 1 ,020,278 - - 16,561,217
41 14700 Revenue 76,967,284 ( 1,924,173) - 2 ,912,593 - 4 0.00 77,955,704
42 14800 Cultural Resources 60,840,696 ( 1,413,277) - - - (9.00) 59,427,419
43 14802 Cultural Resources-Roanoke Isl. 1,907,245 (47,782) - - - - 1 ,859,463
44 14900 CC & PS 37,554,148 ( 9,494,583) - 4 33,941 - ( 229.00) 28,493,506
45 16010 UNC-GA 51,366,792 ( 10,090,779) - - - (20.85) 41,276,013
46 16011 UNC Institutional Prog. 11,884,496 - - 2 9,963,258 - ( 118.20) 41,847,754
47 16012 UNC Related Ed.Programs 100,411,702 - - 3 ,226,210 - - 103,637,912
48 16020 UNC-CH Academic 207,028,989 ( 6,909,457) - - - (3.00) 200,119,532
49 16021 UNC-CH Health Affairs 158,988,927 ( 2,818,824) - - - - 156,170,103
50 16022 UNC-CH Area Health Educa. 46,273,050 (200,714) - - - - 46,072,336
51 16030 NCSU-Academic 272,576,399 ( 6,715,218) - - - - 265,861,181
52 16031 NCSU-Agri.Research Svc. 48,203,264 ( 1,524,891) - - - - 46,678,373
53 16032 NCSU-Agri. Extension Svc. 38,694,580 ( 1,260,180) - - - - 37,434,400
54 16040 UNC-Greensboro 95,861,945 ( 2,539,417) - - - - 93,322,528
55 16050 UNC-Charlotte 98,241,440 ( 2,110,290) - - - - 96,131,150
56 16055 UNC-Asheville 26,158,475 (523,189) - - - - 25,635,286
57 16060 UNC-Wilmington 61,205,957 ( 1,269,598) - - - - 59,936,359
58 16065 ECU 124,457,165 ( 2,473,593) - - - - 121,983,572
59 16066 ECU-Health Services 47,050,741 (988,667) - - - - 46,062,074
60 16070 NCA&T 60,834,025 ( 1,321,257) - - - - 59,512,768
61 16075 Western Carolina 53,300,425 ( 1,144,118) - - - - 52,156,307
62 16080 Appalachian 87,222,766 ( 1,728,239) - - - - 85,494,527
63 16082 UNC-Pembroke 25,024,188 (491,319) - - - - 24,532,869
64 16084 Winston Salem State 29,127,220 (608,104) - - - - 28,519,116
65 16086 Elizabeth City State 22,075,248 (425,620) - - - - 21,649,628
66 16088 Fayetteville State 31,392,225 (595,654) - - - - 30,796,571
67 16090 NCCU 45,337,950 (956,598) - - - - 44,381,352
68 16092 NC School of Arts 17,064,222 (381,767) - - - - 16,682,455
Post-Legislative Budget Summary, 2001-2003
Appendix-Continued
Recurring
Line Budget Baseline Position Final
No. Code Department Budget Recurring N/R Recurring N/R Changes Appropriation
Table 5B
Reductions Expansion
FY 2002-03
General Fund Appropriation
69 16094 NCSSM 11,839,342 - - - - - 11,839,342
70 16095 UNC-Hospitals 40,587,322 - - - - - 40,587,322
71 Total UNC 1,812,208,855 ( 47,077,493) - 3 3,189,468 - ( 142.05) 1,798,320,830
72 16800 Comm.Colleges 648,021,974 ( 16,684,736) - 1 1,858,221 - (7.00) 643,195,459
73 18025 St. Bd. Of Elections 3,271,453 (85,184) - - - - 3 ,186,269
74 18210 Office of Admin.Hearings 2,908,088 (112,933) - - - (2.00) 2 ,795,155
75 18300 Rules Review Comm. 3 34,085 (8,290) - - - - 3 25,795
76 19420 St.Treas.Gen.Debt Service 238,509,550 - - 1 13,757,310 - - 352,266,860
77 19425 St.Treas.Federal Debt Service 1,155,948 - - - - - 1 ,155,948
78 Total Operating Budget 14,710,785,940 ( 495,563,636) (1,000,000) 4 15,919,042 3 55,000 (29.93) 14,630,496,346
79 19001 Contingency & Emergency 1,125,000.00 - - 3 ,875,000 - - 5 ,000,000
80 19003 Legislative Compensation Res. - - - 1 93,842,000 - - 193,842,000
81 19004 Salary Adjustment Reserve 5 00,000 - - - - - 5 00,000
82 19049 Trust Fund for MH/DD/SAS - - - - - - -
83 19039 Reserve-HIPPA Implementation - - - - - - -
84 19027 ITS Rate Reduction - ( 4,000,000) - - - - (4,000,000)
85 19043 Health Plan Reserve - - - 2 00,000,000 - - 200,000,000
86 19047 Retirement Rate Adj. Reserve - ( 243,267,720) - - - - ( 243,267,720)
87 Total G/F Operating Budget 14,712,410,940 ( 742,831,356) (1,000,000) 8 13,636,042 3 55,000 (29.93) 14,782,570,626
88 19600 Capital Improvement - - - - - - -
-
89 Total General Fund Budget $ 14,712,410,940 $ ( 742,831,356) $ (1,000,000) $ 813,636,042 $ 3 55,000 (29.93) $ 14,782,570,626
23
Post-Legislative Budget Summary, 2001-03
General Fund - Public Education
C. Appropriations by Department
General Fund Continuation and expansion appropriations are listed by department in the
following pages. They are grouped in the categories of education, general government, health and
human services, justice and public safety, natural and economic resources, and other appropriations.
Public Education
Public education receives the largest state appropriation. For 2001-02 and 2002-03 the totals are
$5,922,505,768 and $6,005,415,512, respectively. These appropriations, which include the
appropriation for the public education compensation increase, represent 41.4% and 40.6% of the total
General Fund operating budget for 2001-02 and 2002-03. The largest single factor affecting the level of
funds appropriated to the Public School System was the number of students enrolled. The budgeted
average daily membership (ADM) in grades K through 12 is 1,301,048 for 2001-02 and 1,318,170 for
2002-03, compared to the ADM of 1,288,556 budgeted for 2000-01.
The State Board of Education establishes policy for the general administration of the state’s
Public School System. The Superintendent of Public Instruction, elected to office for a four-year term,
is the administrative head of the Department of Public Instruction and a member of the Council of State.
Total Appropriations
2000-01
Authorized
2001-02
Certified
% Over
2000-01
2002-03
Certified
% Over
2001-02
Requirements $ 6,441,340,507 $ 6,529,184,860 1.4% $ 6,572,985,937 0.7%
Receipts 649,066,387 649,544,496 0.1% 650,797,391 0.2%
Appropriation $ 5,792,274,120 $ 5,879,640,364 1.5% $ 5,922,188,546 0.7%
No. of Positions 492.77 467.77 (5.1)% 467.77 0.0%
24
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Appropriation Items (Changes Enacted Over Fiscal Year 2000-01)
Continuation Budget:
2001-02 2002-03
1. One-Time Appropriations Removed
The following nonrecurring appropriations were
removed from the budget:
Compensation Bonus
Top of Salary Range Bonus
School Buses
School Leadership Pilot
Transportation
School Technology
Reserve for ADM Contingency
Total Appropriation
$ (31,531,018)
(32,607)
(20,337,457)
(240,000)
(7,000,000)
(5,000,000)
(500,000)
$ (64,641,082)
$ (31,531,018)
(32,607)
(20,337,457)
(240,000)
(7,000,000)
(5,000,000)
(500,000)
$ (64,641,082)
2. One-Time Reductions Restored
The following nonrecurring reductions were
restored in the budget:
Death Benefit Contribution Rate
Retiree Health Premium Reserve
Teaching Fellows Scholarship/Loan Program
Prospective Teacher Scholarship/Loan
Program
Total Appropriation
$ 6,234,911
28,057,043
2,500,000
750,000
$ 37,541,954
$ 6,234,911
28,057,043
2,500,000
750,000
$ 37,541,954
3. Average Daily Membership (ADM)
Adjustment
Positions, textbooks, instructional equipment
and supplies allocated to the public schools
were budgeted on the basis of average daily
membership (ADM) of students in the
classroom. The budgeted ADM for 2000-01
was 1,288,556. The budgeted ADM for
2001-02 and 2002-03 is shown in item number 4
which follows.
Requirements
Receipts (Highway Fund/Driver’s Ed.
Appropriation)
$ 104,287,164
2,313,828
$ 101,973,336
$ 203,249,940
3,566,723
$ 199,683,217
25
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Continuation Budget:
2001-02 2002-03
4. Revised Projection of Average Daily
Membership
A revision was made to the projected Average
Daily Membership calculation to eliminate the
possibility of duplicating some students in
projecting a local school administrative unit’s
average daily membership. This revised ADM
adjustment reduces the ADM increases funded
in item number three and is a more realistic
estimate of future student populations. The
budgeted ADM for 2001-02 is 1,301,048 and
1,318,170 for 2002-03. This represents an
ADM increase of 12,492 for 2001-02 over the
2000-01 ADM and a 17,122 increase for
2002-03 over 2001-02.
Number of Positions
$ (20,199,068)
(235.0)
$ (16,227,221)
(175.0)
5. Average Salary Adjustment
An adjustment in the continuation budget was
made for the average for public school
personnel salaries based on the 6th pay period
for 2000-01. An additional average salary
adjustment was made in item number six below.
(36,445,404)
(36,927,060)
6. Revised Average Salary Adjustment
In addition to the annual continuation budget
adjustment for the average budgeted salary for
certified personnel, a more recent projection of
certified personnel salaries from updated salary
data was done. This review identified an
additional reduction in the projected salary
needs for 2001-02 and 2002-03.
(8,497,668)
(8,497,668)
7. School Bus Replacement Funding
The replacement schedule for school buses was
revised for 2001-02. With this adjustment, the
total budget for school bus purchases is
$4,917,800 for 2001-02 and $30,015,377 for
2002-03. The remaining school bus budget
provides for the purchase of approximately 95
buses in 2001-02 and 570 buses in 2002-03.
Appropriation – Nonrecurring
(23,915,892)
NR
-
NR - Nonrecurring
26
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Continuation Budget:
2001-02 2002-03
8. Extra Pay for Forfeited Vacation Days
Funds were appropriated in the Excellent
Schools Act in 1997 to allow local boards of
education the option of paying teachers for
working on, and thereby forfeiting, a maximum
of four annual vacation leave days per teacher
per year in accordance with G.S. 115C-302.1(c).
Funds have reverted from this funding category
each year. The funding category was reduced to
more closely reflect actual expenditures. After
this reduction, the budget is $4,750,000
annually.
$ (4,000,000)
$ (4,000,000)
9. Mentor Pay
A reduction was made for mentor pay for
teachers who serve as mentors to first and
second year teachers in North Carolina. This
adjustment more accurately reflects the
expenditures for mentor pay.
A pilot program will be established to allow
three local school administrative units to use
funds allocated for mentors for full-time
mentors. The pilot local school administrative
units are Charlotte-Mecklenburg, Forsyth
County and Wake County. (2001 Session Laws,
Chapter 424, Sec. 28.18(a))
(3,000,000)
(3,000,000)
10.
Bus Driver Physicals
Due to a delay by the Division of Motor
Vehicles in implementing the requirement that
school bus drivers must have a physical
examination every two years, these funds were
not needed. However, $25,000 will remain in
the continuation budget for the designated pilot
projects in Caldwell, Halifax and Robeson
county schools.
(535,000)
(535,000)
27
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Continuation Budget:
2001-02 2002-03
11. Transportation Inventory Adjustment
A one-time reduction was made due to large
transportation inventories on June 30, 2000.
These inventories include oil, tires and parts.
Appropriation - Nonrecurring
$ (4,000,000)
NR
$ -
12. School Bus Fuel Cost Adjustment
Based on a projected decline in the cost of
diesel fuel, funding was reduced to reflect the
anticipated lower diesel fuel costs for school
buses.
(2,990,000)
(3,048,890)
13. Classroom Material, Instructional Supplies
and Equipment Adjustment
The inflationary increase for classroom
materials, instructional supplies, and equipment
was reduced from the 5% allowed in the
continuation budget to 3%. This change was
reflective of the Consumer Price Index.
(1,140,499)
(1,140,499)
14. School Building Administration Reduction
The estimated number of new public schools
opening in 2001-02 included in the continuation
budget was 70. Revised estimates indicate that
only 35 new public schools will open in
2001-02, requiring a reduction in the amount
budgeted for new school administrators.
(2,338,140)
(2,338,140)
15. School Safety Officer Reduction
Operating funds for 20 new high schools were
budgeted in the 2001-02 continuation budget.
However, recent projections indicated that only
ten high schools will open in 2001-02.
Therefore, the funding for school safety officers
was reduced to reflect the more recent
projection.
(529,732)
(529,732)
NR – Nonrecurring
28
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Continuation Budget:
2001-02 2002-03
16. Charter School Reserve Adjustment
The Charter School Reserve is used to distribute
the applicable State funding to charter schools
whose students were not previously enrolled in
public schools. Since the number of charter
schools has reached the legislated maximum of
100, a reduction was made in this funding. Two
million dollars remained in the Charter School
Reserve for 2001-02 and one million dollars for
2002-03.
$ (2,404,513)
$ (3,404,513)
17. Driver Education
Funds were reduced for Driver Education based
on the revised Average Daily Membership.
These funds are transferred from the Highway
Fund for Driver Education.
Requirements
Receipts
Appropriation
$ (1,830,739)
(1,830,739)
$ -
$ (1,830,739)
(1,830,739)
$ -
18. Safety Assistance Teams
The 1997 Session of the General Assembly
provided $500,000 for safety assistance teams.
School safety assistance teams were created to
assist local schools in establishing a safe
and orderly learning environment. The 2001
Session of the General Assembly eliminated
funding for the Statewide School Safety
Assistance Teams.
(500,000)
(500,000)
19. Regional Education Service Alliances
Appropriations distributed to local school
administrative units to support the Regional
Education Service Alliances were reduced.
Funding was reduced by 55.4%, leaving a
recurring budget of three million dollars.
(3,732,100)
(3,732,100)
29
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Continuation Budget:
2001-02 2002-03
20. Central Office Administration
The Central Office Administration category was
reduced by 1.97% for each local school
administrative unit. The State Board of
Education was directed to develop a
revised formula for 2002-03 that eliminates any
permanent hold harmless in the allotment
formula.
$ (3,300,000)
$ (3,300,000)
21. Uniform Education and Reporting System
(UERS)
The implementation schedule for the Window of
Information into Student Education (NC WISE)
of the Uniform Education and Reporting System
(UERS) has been extended. A nonrecurring
reduction in funding was made based on the
delayed UERS implementation. The 2001-02
budget remaining after this reduction is
$12,518,927.
Appropriation - Nonrecurring
(2,500,000)
NR
-
22. Department of Public Instruction Reduction
A reduction made in the Department of Public
Instruction (DPI) eliminated at least 25 positions
and reduced other costs. One million dollars was
transferred from the UERS budget to DPI to
reduce contractual costs by internalizing work
on the new Uniform Education and Reporting
System (NC WISE).
25 identified positions ($ 942,344)
Contracted Services ($1,502,269)
Cellular Phones ($ 11,505)
Equipment ($ 194,251)
NR – Nonrecurring
30
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Continuation Budget:
2001-02 2002-03
Department of Public Instruction Reduction -
Continued
Elimination of Standards
Board ($ 175,041)
Contracted Personal Services ($ 41,775)
Travel ($ 195,503)
Other Aid ($ 73,000)
Printing ($ 24,506)
Postage ($ 23,876)
Dues and Subscriptions ($ 15,930)
Number of Positions
$ (3,200,000)
(25.0)
$ (3,200,000)
(25.0)
23. Vocational Education-Tech Prep
State funding was eliminated for the Tech Prep
program. Federal funds will continue to support
the program.
(100,000)
(100,000)
24. Non-Public School Agencies
Recurring funding was eliminated for the
Advancement Via Individual Determination
(AVID) program pilots ($150,000). Other
recurring funding was eliminated as
follows: A+ Schools ($400,000), ExplorNet
($2,500,000), Total Quality Education (TQE)
($400,000), Geographic Alliance ($50,000),
Cued Speech Center ($73,750) and Global
Curriculum ($150,000).
The following programs were reduced by ten
percent. The amounts of the reductions are as
follows: Schools Attuned ($64,310), Public
School Forum ($42,056), Communities/Cities in
Schools ($75,000), NC Network ($35,000) and
Teacher Cadet Program ($15,000).
31
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Continuation Budget:
2001-02 2002-03
Non-Public School Agencies - Continued
Nonrecurring budgets were funded with 50% of
the original continuation budget amounts.
These programs and nonrecurring funds are
listed as follows: A+ Schools ($200,000),
ExplorNet ($1,250,000), Total Quality
Education (TQE) ($200,000), Geographic
Alliance ($25,000), Cued Speech Center
($36,875), and Global Curriculum ($75,000).
Appropriation - Recurring
Appropriation - Nonrecurring
$ (3,955,116)
1,786,875
NR
$ (3,955,116)
-
Expansion Budget:
25. Targeted Elementary Schools
The General Assembly appropriated funds to
improve student performance at 36 high priority
elementary schools. These funds will be used
to provide the State’s lowest-performing
elementary schools with the tools needed to
improve student achievement. These targeted
schools are schools with 80% or more of their
students eligible for free or reduced lunch and
with 45% or more of students performing below
grade level.
A. Class Size Reduction-Targeted Schools
Additional teaching positions were funded to
reduce the class size in grades K-3 to 1:15.
These additional teachers were required to
be assigned to teach in these grades. (2001
Session Laws, Chapter 424, Sec. 29.1(1))
Number of Positions
8,062,603
179.6
8,062,603
179.6
NR - Nonrecurring
32
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
Targeted Elementary Schools - Continued
B. Staff Development -Targeted Schools
Contract extensions will be given to all
teachers assigned to the targeted schools for
five days in 2001-02 and ten days in
2002-03. These days will be used for staff
development in methods of individualized
instruction in smaller classes. (2001 Session
Laws, Chapter 424, Sec. 29.1(2))
$ 973,455
$ 2,334,930
C. Instructional Support-Targeted Schools
Funding was provided for each of
the targeted schools to have one additional
instructional support position. (2001
Session Laws, Chapter 424, Sec. 29.1(3))
Number of Positions
1,840,380
37.0
1,840,380
37.0
D. Reduce Teacher Assistants-Targeted
Schools
Since the class size was reduced to 1:15 in
these targeted schools, the allotment for
teacher assistants in grades K-3 was
eliminated.
(8,068,580)
(8,068,580)
E. Program Evaluation-Targeted Schools
Funding was provided for evaluation of the
targeted class size reduction initiatives.
500,000
500,000
26. Kindergarten Class Size Reduction
Funds were provided to reduce the kindergarten
class size allotment ratio to 1:19 in 2001-02 and
to 1:18 in 2002-03. The original 2000-01
allotment ratio for Kindergarten was 1:20.
(2001 Session Laws, Chapter 424, Sec. 28.44)
Number of Positions
12,045,179
268.5
26,082,252
581.0
33
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
27. Continually Low-Performing Schools
Continually low-performing schools are schools
that have received State-mandated assistance as
prescribed by the ABCs program and have been
designated by the State Board of Education
(SBE) as low performing for at least two of
three consecutive years. For schools that have
received State-mandated assistance for two
consecutive years or for two of three
consecutive years, a series of progressive
assistance and intervention strategies will be
provided to that school. These strategies will be
designed to improve student achievement and to
maintain student achievement at appropriate
levels and may include assistance such as
reductions in class size, extension of teachers’
and assistant principals’ contracts, extension of
instructional year and grant-based assistance.
A. Elementary Class Size Reduction-
Continually Low-Performing Schools
Funds were provided to reduce the class
size in grades K-2 from 1:20 to 1:15, grade
3 from 1:22.23 to 1:15 and grades 4-5 from
1:22 to 1:17. (2001 Session Laws, Chapter
424, Sec. 29.5(1))
Number of Positions
$ 471,366
10.5
$ 471,366
10.5
B. Middle and High Schools Class Size
Reduction- Continually Low-Performing
Schools
The class size for middle schools (Grades
6-8) that are continually low performing
was reduced to 1:17. The class size for
high schools was reduced to 1:20. The
2000-01 allotment ratios were 1:22 for
grade 6; 1:21 for grades 7-8; 1:24.5 for
grade 9; and 1:26.64 for grades 10-12.
(2001 Session Laws, Chapter 424, Sec.
29.5(2))
Number of Positions
1,207,595
26.9
1,207,595
26.9
34
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
Continually Low-Performing Schools - Continued
C. Staff Development - Continually Low-
Performing Schools
Appropriations were provided for contract
extensions for all elementary, middle and
high school teachers assigned to the
Continually Low-Performing Schools. The
contract extensions are for five days in
2001-02 for staff development. Middle and
high school teachers’ contracts will be
extended an additional five days in
2002-03. (2001 Session Laws, Chapter
424, Sec. 29.5(3))
$ 128,295
$ 307,730
28. Teacher Recruitment Initiatives
Appropriations were provided for teacher
recruitment and retention in the State’s public
schools. The funds will be used to expand the
pool of qualified teachers and to provide
recruitment and retention incentives to attract
and retain high-quality teachers to low-performing
school and schools with shortages of
teachers in certain areas of certification. These
areas include mathematics, science, and special
education.
A. Teacher Assistant Scholarships
Additional scholarship funds were
appropriated for teacher assistants who take
community college courses that are
prerequisites for teacher certification
programs. (2001 Session Laws, Chapter 424,
Sec. 29.2. (a)(1))
1,000,000
1,000,000
35
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
B. Middle and High School Teacher Bonuses
-At-Risk Schools
Middle and high school teachers who teach
mathematics, science and special education
in schools with large numbers of at-risk
students receive a bonus of $1,800 with
matching fringe benefits. These payments
shall be made monthly. At-risk middle and
high schools have 80% or more of their
students eligible for free or reduced lunch
and 50% or more of students performing
below grade level. (2001 Session Laws,
Chapter 424, Sec. 29.2.(a)(2))
$ 1,500,000
$ 1,500,000
29. School-Based Incentive Awards Under the
ABCs Program
The ABCs initiative directs that each year a
school must assure that the students receive a
year’s worth of education for a year of
instruction. According to G.S. 115C-105.36,
incentive awards are given when a school either
meets or exceeds the projected levels of
improvement in student performance. In
accordance with the State Board of Education
policy, incentive awards in schools that achieve
higher than expected improvement may be up to
$1,500 for each teacher and certified personnel
and $500 for each teacher assistant.
In accordance with State Board of Education
policy, incentive awards in schools that meet the
expected improvements may be up to $750 for
each teacher and certified personnel, and $375
for each teacher assistant. One-time funds in
the amount of $98 million were appropriated in
the 1998 Short Session for those awards earned
in the 1998-99 school year and awarded in
July 1999. The 1999 General Assembly
provided $140 million for 1999-00 awards.
36
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
School-Based Incentive Awards Under the
ABCs Program - Continued
The 2001 General Assembly provided one-time
funding for the ABC bonuses for schools
meeting or exceeding expected growth during
the 2000-01 school year. (2001 Session Laws,
Chapter 424, Sec. 28.8)
Appropriation - Nonrecurring
$ 93,100,000
NR
$ -
30. ABC Bonuses-Pilot Districts
One-time appropriations were provided for
additional bonuses to school personnel in five
pilot school districts. The pilot districts are
Bladen, Craven, Forsyth, Mecklenburg and
Pasquotank Counties. Under the pilot program,
schools that achieve the pilot program goals will
receive bonuses. The pilot will provide that all
certified personnel assigned to the school would
receive up to $750 and teacher assistants up to
$325 in addition to the standard ABC bonuses.
School districts that do not receive low wealth
or small county supplemental funding must
contribute 25% of the total cost of the bonuses.
Appropriation - Nonrecurring
4,600,000
NR
-
31. Character Education
Funding was provided to expand the character
education program. These funds shall be used
to develop a model character education
curriculum for public schools. (2001 Session
Laws, Chapter 424, Sec. 28.36)
200,000
200,000
32. Children With Special Needs
Funding was increased for the headcount of
children with special needs by $37.98 to
$2,650.28 per child. (2001 Session Laws,
Chapter 424, Sec. 28.2)
3,000,000
3,000,000
NR – Nonrecurring
37
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
33. Improving Student Accountability
Funds were provided for additional instruction
for students performing below grade level.
Assistance will be provided to help students
perform at or above grade level in reading and
mathematics in grades 3-8 as measured by the
State’s end-of- grade tests. These funds shall not
revert at the end of the fiscal year but shall
remain available until August 31 of the
subsequent year. (2001 Session Laws, Chapter
424, Sec. 28.33)
$ 5,000,000
$ 5,000,000
34. Limited English Proficiency (LEP)
Additional funding was appropriated to serve
students with limited English proficiency. The
total 2001-02 funding to serve these students is
$23,037,655. (2001 Session Laws, Chapter 424,
Sec. 28.9)
1,000,000
1,000,000
35. Low-Wealth Funding
Funds were provided for school districts in
counties with less ability to generate local
resources for public schools. (2001 Session
Laws, Chapter 424, Sec. 28.6)
4,000,000
4,000,000
36. Small County Funding
Funds were appropriated to increase the funding
to counties with fewer than 3,239 students (or
4,080 if the property tax base per student is
lower than the state average). This will increase
the base allotment to each eligible local school
administrative unit by $74,074. (2001 Session
Laws, Chapter 424, Sec. 28.7)
2,000,000
2,000,000
37. Instructional Supplies for Teachers
Funds were appropriated to enable each
classroom teacher to purchase a minimum of
$100 for instructional supplies for their
classrooms. (2001 Session Laws, Chapter 424,
Sec. 28.39)
Appropriation - Nonrecurring
4,100,000
NR
-
NR - Nonrecurring
38
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
38. School Accountability Report Cards
In order to assist in making North Carolina’s
schools First in America by 2010, funding was
provided to the Education Cabinet of the
University of North Carolina to develop, design,
publish and distribute school accountability
report cards. The school accountability report
cards will provide parents information on school
performance and characteristics.
$ 200,000
$ 200,000
39. Average Daily Membership Contingency
Reserve
Funds were provided to the State Board of
Education to address transitional year funding
for local school administrative units with new
charter schools and for first month allotment
adjustments to local school administrative units
with higher than expected enrollment growth.
500,000
500,000
40. NC WISE OWL’s On-Line Subscriptions
NC WISE OWL, operated by the North
Carolina Department to Public Instruction,
offers on-line resources (periodicals,
encyclopedia, etc.) for K-12 teachers and
students. Federal resources that covered the
subscription cost will not be available. The
Department of Public Instruction will work
collaboratively with the Department of Cultural
Resources and report to the Joint Information
Technology Appropriations Sub Committee by
March 15, 2002 as to the feasibility of merging
NC WISE OWL and NC LIVE (which also
offers on-line subscription services). (2001
Session Laws, Chapter 424, Sec. 28.40)
628,000
628,000
39
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Expansion Budget:
2001-02 2002-03
41. Salary Increases- Teachers, Principals and
Assistant Principals
Funding for an average 2.86% salary increase
for teachers and certified instructional support
personnel and 2.93% for principals and assistant
principals, effective July 1, 2001, was
appropriated for these state funded positions.
The increase for certified instructional support
personnel applies to certified psychologist,
social workers, counselors, librarians, media
coordinators, and school nurses. (2001 Session
Laws, Chapter 424, Sec. 28.11 and 28.13)
42. Salary Increases – Other Public School
Employees
Funds were appropriated for a $625 salary
increase (effective July 1, 2001) for all other
public school employees not paid from the
teacher or principal salary schedules. This
includes certified non-teaching positions in
central office administration (superintendents
and school administrators) and non-certified
employees, such as finance officers, clerical
workers, teacher assistants, custodians, bus
drivers, bus mechanics, and maintenance
supervisors. (2001 Session Laws, Chapter 424,
Sec. 28.14 and 28.15)
Other Provisions:
43. Litigation Reserve
Effective June 30, 2001, funds in the State
Board of Education’s Litigation Reserve that
were not expended or encumbered on June 30,
2001, shall not revert on July 1, 2001, but shall
remain available for expenditure until June 30,
2002. (2001 Session Laws, Chapter 424,
Sec. 28.1.(a))
40
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Other Provisions – Continued:
2001-02 2002-03
Litigation Reserve – Continued
The State Board of Education may expend up to
$500,000 for 2001-02 from unexpended
certified employee salary funds to pay expenses
related to pending litigation. (2001 Session
Laws, Chapter 424, Sec. 28.1(c))
44. Alternative Schools/At-Risk Students
The State Board of Education may use up to
$200,000 of funds in the Alternative Schools/At
Risk Student allotment each year in 2001-02
and 2002-03. These funds may be used by the
department to develop policies and guidelines
for alternative learning programs, provide
technical assistance on implementation of
programs and evaluate programs. (2001 Session
Laws, Chapter 424, Sec. 28.4)
45. Low Wealth Transition Funds
For 2001-02 only, the State Board of Education
may allocate funds from the Average Daily
Membership Contingency Reserve to local
school administrative units in which low-wealth
supplemental funding decreased by more than
$1,000,000 from the 2000-01 allotment. These
allocations shall not exceed 60% of the decrease
in funding of each such local school
administrative unit. If the balance of funds in
the Average Daily Membership Contingency
Reserve is insufficient to cover these
supplemental allocations, the State Board may
allocate funds from State Aid to Local School
Administrative Units for this purpose. (2001
Session Laws, Chapter 424, Sec. 28.46)
46. Uniform Education Reporting System
(UERS)
Funds appropriated for the Uniform Education
Reporting System, NC WISE, shall not revert at
the end of 2001-02 and 2002-03, but shall
remain available until expended. (2001 Session
Laws, Chapter 424, Sec. 28.5)
41
Post-Legislative Budget Summary, 2001-03
General Fund – Public Education – Continued
Other Provisions – Continued:
2001-02 2002-03
47. Expenditures for Driving Education
Certificates
The State Board of Education may use funds
appropriated for driver’s education for 2001-02
and 2002-03 for driving eligibility certificates.
(2001 Session Laws, Chapter 424, Sec. 28.10)
48. High School Exit Exams
Of the funds appropriated for State Aid to Local
School Administrative Units, the State Board of
Education may use up to $3,000,000 for
2001-02 to: (1) continue to develop a high
school exit examination; (2) purchase
equipment for scoring tests, including the new
computer adaptive exam for eligible students
with disabilities; and (3) revise the reading and
writing assessments. (2001 Session Laws,
Chapter 424, Sec. 28.16)
49. Funds for Testing and Implementation of the
New Student Information System
The State Board of Education may transfer up to
$1,000,000 of funds appropriated for the
Uniform Education Reporting System for
2001-02 to the Department of Public Instruction
to lease or purchase equipment necessary for
testing and implementation of NC WISE, the
new student information system for public
schools. (2001 Session Laws, Chapter 424,
Sec. 28.32)
50. Teacher Recruitment Initiatives
The State Board of Education may use up to
$200,000 of the funds appropriated for State
Aid to Local School Administrative Units for
2001-02 and 2002-03 to enable teachers who
received National Board for Professional
Teaching Standards certification or who have
otherwise received special recognition to advise
the State Board of Education on teacher
recruitment and other strategic priorities of the
Board. (2001 Session Laws, Chapter 424, Sec.
28.43)
42
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges
Community Colleges
The mission of the North Carolina Community College System has been defined in the North
Carolina General Statutes (G.S. 115D) as the establishment, organization, and administration of a
system of educational institutions throughout the state offering courses of instruction in one or more of
the general areas of two-year college parallel, technical, vocational, and adult education programs.
The law further states that the major purpose of each and every institutio n operating under the
provisions of this chapter shall be and shall continue to be the offering of vocational and technical
education and training, and of basic, high school level academic education needed in order to profit from
vocational and technical education, for students who are high school graduates or who are beyond the
compulsory age limit of the public school system and who have left the public schools.
The working mission statement of the North Carolina Community College System is to open the
door to opportunity for adults seeking to improve their lives and well being by providing education and
training for the workforce. This training includes basic skills and literacy education, occupational and
pre-baccalaureate programs, and support for economic development through services to business and
industry, and services to communities which improve the quality of life.
Total Appropriations
2000-01
Authorized
2001-02
Certified
% Over
2000-01
2002-03
Certified
% Over
2001-02
Requirements $ 777,109,719 $ 785,329,611 1.1% $ 784,829,611 (0.1%)
Receipts 133,077,347 141,634,152 6.4% 141,634,152 0.0%
Appropriation $ 644,032,372 $ 643,695,459 (0.1%) $ 643,195,459 (0.1%)
No. of Positions 182.50 178.50 (2.2%) 178.50 0.0%
43
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Appropriation Items (Changes Enacted Over Fiscal Year 2000-01)
Continuation Budget:
2001-02 2002-03
1. One-Time Appropriations Removed
The following nonrecurring appropriation was
removed from the continuation budget:
Compensation Bonus
$ (7,114,433)
$ (7,144,433)
2. One-Time Reductions Restored
The following nonrecurring reductions were
restored in the continuation budget:
Death Benefit Contribution Rate
Retiree Health Premium Reserve
New and Expanding Industry Training
Educational Equipment
State Board Reserve
Need-Based Financial Aid Fund Balance
Management Information System
Hurricane Floyd Hold Harmless
Total Requirements
Hurricane Floyd Hold Harmless
Overrealized Tuition and Fee Receipts
Scholarship Reserve Fund Balance
Total Receipts
Total Appropriation
740,692
3,333,118
500,000
1,020,225
100,000
1,000,000
2,000,000
(1,800,000)
$ 6,894,035
(1,800,000)
(2,000,000)
(410,000)
(4,210,000)
$ 11,104,035
740,692
3,333,118
500,000
1,020,225
100,000
1,000,000
2,000,000
(1,800,000)
$ 6,894,035
(1,800,000)
(2,000,000)
(410,000)
(4,210,000)
$ 11,104,035
3. System Office Operating Efficiencies
Two vacant library clerk positions and library
ordering and receiving services were eliminated
from the System Office for a reduction of
$59,543. The colleges will be responsible for
ordering and receiving their library materials.
Additional reductions were: one vacant
educational consultant position and operating
expenses totaling $64,432; one vacant position
in the Office of the President totaling $23,396;
and System Office operating expenses totaling
$50,552.
Number of Positions
(197,923)
(4.0)
(197,923)
(4.0)
44
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Continuation Budget:
2001-02 2002-03
4. Private Diploma Nursing Subsidy Eliminated
A recurring $200,000 subsidy for hospital-based
diploma nursing programs, which are fully
accredited by the NC Board of Nursing and
operate under the authority of a public or
nonprofit hospital licensed by the NC Medical
Care Commission, was eliminated. A
nonrecurring appropriation of $200,000 was
provided for these programs in 2001-02.
Appropriation - Nonrecurring
$ (200,000)
200,000
NR
$ (200,000)
-
5. Trustees’ Association Educational Materials
Eliminated
The appropriation for educational materials for
the Trustees’ Association was eliminated.
(25,000)
(25,000)
6. State Board Reserve
The State Board Reserve is limited by statute to
funding feasibility studies, pilot projects, start-up
of new programs, and innovative ideas. The
State Board Reserve budget was reduced from
$1,150,000 to $800,000. The State Board of
Community Colleges shall use $100,000 of
State Board Reserve funds to assist small, rural,
low-wealth community colleges with operation
and maintenance of plant costs. (2001 Session
Laws, Chapter 424, Sec. 30.9)
(350,000)
(350,000)
College Reductions
7. Compensatory Education
The Compensatory Education Program provides
instruction for adults with mental retardation.
The appropriation for Compensatory Education
was reduced from $1,150,537 to $1,000,000.
(150,537)
(150,537)
NR - Nonrecurring
45
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Continuation Budget:
2001-02 2002-03
8. Worker’s Compensation
The appropriation for Worker’s Compensation
was reduced from $976,629 to $703,702 to
reflect actual expenditures.
$ (272,927)
$ (272,927)
9. Unemployment Compensation
The appropriation for Unemployment
Compensation was reduced from $521,766 to
$440,751 to reflect actual expenditures.
(81,015)
(81,015)
10. Liability Insurance
The appropriation for Liability Insurance was
reduced from $53,000 to $33,000 to match
actual expenditures.
(20,000)
(20,000)
11. Priority Programs Eliminated
Since Priority Programs funds were intended to
supplement federal funds that are no longer
available, the Priority Programs appropriation
was eliminated.
(43,812)
(43,812)
12. Human Resource Development
Reorganization
The Human Resources Development (HRD)
program is an intensive program to recruit, train,
or place in employment unemployed or
underemployed adults. The appropriation for
HRD was reduced from $6,951,895 to
$4,000,000. The program will be reorganized
and the classes will be offered as Occupational
Continuing Education classes. Tuition and fees
for these classes may be waived for individuals
who: (1) are unemployed, (2) have received
notification of a pending layoff, (3) are eligible
for the Federal Earned Income Tax Credit, or
(4) are earning wages below 200% of federal
poverty guidelines. The State Board may adopt
temporary rules to implement the reorganization
and shall report the reorganization to the Joint
Legislative Education Oversight Committee by
January 1, 2003. (2001 Session Laws, Chapter
424, Sec. 30.3)
(2,951,895)
(2,951,895)
46
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Continuation Budget:
2001-02 2002-03
College Reductions – Continued
13. Special Allotments – High Cost Programs
Since 1982, training programs in areas which
require extensive in-house and on-the-job
training, have been identified as high cost
programs and have been eligible for special
allotments. Special Allotment funds for high
cost programs at Haywood (saw mill and
robotics), Caldwell (truck driving), Johnston
(truck driving), Wilson Technical (heavy
equipment), and Cape Fear (marine technology)
Community Colleges were reduced from
$2,244,332 to $1,683,249.
$ (561,083)
$ (561,083)
14. Community Service Block Grant
The Community Service Block Grant
appropriation for hobby/leisure courses was
reduced from $1,817,738 to $1,500,000.
Colleges are directed to make every effort to
ensure that this reduction does not result in a
lessening of senior services.
(317,738)
(317,738)
15. Criminal Justice Reorganization
The Criminal Justice Regional Planning and
Training Program budget was reduced from
$689,896 to $339,896 and was reduced from six
regions to three regions. The Community
Colleges System Office will determine the three
regions to be eliminated.
(350,000)
(350,000)
47
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Continuation Budget:
2001-02 2002-03
16. Overrealized Receipts
The budgeted amount for tuition and fees was
increased to more accurately reflect anticipated
receipts.
Requirements
Receipts
Appropriation
$ -
1,000,000
$ (1,000,000)
$ -
1,000,000
$ (1,000,000)
Expansion Budget:
17. Enrollment Changes
Funds were appropriated for the estimated 2,638
increase in full time equivalent (FTE) students
above the 2000-01 budgeted enrollment
of 151,348 FTE. The 2001-02 budgeted
enrollment is 153,986 FTE, a 1.74% increase. It
is estimated that there will be 2,788 additional
FTE enrolled in Curriculum Programs, a 2.37%
increase; 753 fewer FTE enrolled in Continuing
Education Programs or a decrease of 4.03%; and
an increase of 603 FTE enrolled in Basic Skills
Programs, a 3.98% increase.
Requirements
Receipts
Appropriation
$ 11,603,999
1,603,999
$ 10,000,000
$ 11,603,999
1,603,999
$ 10,000,000
18. Other Cost Inflationary Adjustment
A 2% inflationary adjustment was provided to
increase the funding formula for “Other Costs”
from $175 per FTE to $178.50 per FTE.
Colleges use “other cost” funds for operating
expenses such as instructional supplies,
advertising/recruitment materials, postage,
travel, and printing and binding.
521,206
521,206
48
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Expansion Budget:
2001-02 2002-03
19. Maintenance of Plant
In accordance with G.S. 115D-31.2, any
community college that has an out-of-county
student head count served on the main campus
of the college in excess of 50% of the total
student head count shall be provided funds for
the purpose of maintenance of plant. The
appropriation for maintenance of plant was
increased from $513,668 to $787,877. The
purpose of this increase was to hold harmless
the three colleges (College of the Albemarle,
Southwestern, and Central Carolina Community
Colleges) that had been receiving maintenance
of plant funds when Mayland and Vance-
Granville Community Colleges became eligible
for funding. The 2001 Session of the General
Assembly modified G.S. 115D-31.2 to allow
each college that qualified for maintenance of
plant funds to receive a pro rata amount of the
funds appropriated for that purpose. (2001
Session Laws, Chapter 424, Sec. 30.13)
$ 274,209
$ 274,209
20. Fayetteville Tech Botanical Laboratory
Funds
A nonrecurring grant- in-aid was provided for
Fayetteville Technical Community College to
develop a regional botanical laboratory in
partnership with the Cape Fear Botanical
Garden.
Appropriation – Nonrecurring
300,000
NR
-
NR - Nonrecurring
49
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Expansion Budget:
2001-02 2002-03
21. Curriculum Tuition
The Curriculum tuition charge for resident
students was increased 12.71% with an
equivalent dollar increase for nonresidents. For
2001-02, resident tuition increased by $3.50
from $27.50 to $31.00 per semester credit hour.
Resident tuition was last increased by $0.75 per
semester credit hour in 2000-01. For 2001-02,
nonresident tuition increased by $3.50 from
$169.75 to $173.25 per semester credit hour.
Nonresident tuition was last increased by $6.75
per semester credit hour in 1999-00. It is
anticipated that for most students, federal and
state financial assistance programs will offset
this increase.
Requirements
Receipts
Appropriation
$ -
10,162,806
$ (10,162,806)
$ -
10,162,806
$ (10,162,806)
22. Need-Based Financial Aid
In 1999 the General Assembly appropriated
$5,000,000 on a recurring basis for a
North Carolina Community College System
need-based financial aid program. Grants are
targeted to students with federal Pell grants less
than the cost of attendance and with an
estimated income tax liability too low for the
student to be eligible for the federal tax credit.
In addition, the 2001 Session of the General
Assembly codified the financial aid program
(G.S. 115D-40.1), which also allows up to 10%
of the appropriation to be targeted to students
who matriculate in low-enrollment programs
that prepare students for high-demand
occupations. The appropriation for need-based
financial aid was increased from $5,000,000 to
$6,062,806.
1,062,806
1,062,806
50
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Expansion Budget:
2001-02 2002-03
23. Faculty and Professional Staff Salary
Enhancements
A December 2000 study by the North Carolina
Community College System benchmarked the
average community college faculty salary and
average professional staff salary against national
averages. The study concluded that North
Carolina’s community college faculty and
professional staff salaries are not competitive
with national comparison groups. In an effort to
attract and retain highly qualified and
experienced community college faculty and
professional staff, $6.9 million in recurring
funds was provided in the Compensation
Reserves for an approximate 1.25% salary
increase for community college faculty and
professional staff. This salary increase is in
addition to the salary increase ($625) received
by all community college personnel.
24. Salary Increase
Funding for an average $625 salary increase
effective July 1, 2001, was appropriated for all
community college personnel supported from
state funds. (2001 Session Laws, Chapter 424,
Sec. 32.11)
Other Provisions:
25. Community College Funding Flexibility
The 1999 Session of the General Assembly
expressed its intent that the formula salary line
item be used to enhance salaries by requiring
that no more than 2% systemwide may be
transferred from faculty salaries without the
approval of the State Board of Community
Colleges. This restriction was continued for the
2001-03 biennium. (2001 Session Laws,
Chapter 424, Sec. 30.1)
51
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Other Provisions:
2001-02 2002-03
26. Transfers to the New and Expanding
Industry Training Program
After consultation with the Joint Legislative
Commission on Governmental Operations, the
Director of the Budget may transfer funds from
any agency or program funded from the General
Fund to the New and Expanding Industry
Training Program during the 2001-03 biennium.
(2001 Session Laws, Chapter 424, Sec. 30.2)
27. Management Information System Funds
Management Information System funds shall
not revert at the end of the 2001-02 and 2002-03
fiscal years and shall remain available until
expended. (2001 Session Laws, Chapter 424,
Sec. 30.4)
28. Employment Security Commission Funds
Funds were appropriated to the Community
Colleges System Office from the Employment
Security Commission Training and Employment
Account established by G.S. 96-6.1. The
appropriation provided $19,154,298 for
Equipment, $400,000 for Regional and
Cooperative Initiatives, $7,000,000 for the New
and Expanding Industry Training Program, and
$1,500,000 for the Focused Industrial Training
Program. The 2001 General Assembly rewrote
G.S. 96-6.1(a) to require that the training and
reemployment contribution does not apply in a
calendar year if: (1) as of August 1 of the
preceding year, the amount in the
Unemployment Insurance Fund equals or is less
than $900 million, or (2) if at any time during
the 12 months preceding August 1, the State
unemployment rate rises above 4.3%. Session
Law 1999-321 was rewritten by the 2001
General Assembly to extend the repeal date of
G.S. 96-6.1 from January 1, 2002 to January
2006. (2001 Session Laws, Chapter 424,
Sec. 30.5)
52
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Other Provisions:
2001-02 2002-03
29. Realignment of Accounts
State Aid accounts 536938 through 536941
(administrative and institutional support line
items for the base and enrollment formula
allocations) shall be consolidated into a single
State Aid account for Institutional and
Academic Support. (2001 Session Laws,
Chapter 424, Sec. 30.7)
30. Consolidate Workforce Development
Programs
The Bureau of Training Initiatives and the
Apprenticeship program are transferred from the
North Carolina Department of Labor to the
North Carolina Community College System by
a Type I transfer as defined in G.S. 143A-6.
(2001 Session Laws, Chapter 424, Sec. 30.10)
31. Transfer of Cash Balances
In 1999, the General Assembly eliminated an
interest only scholarship reserve that was not
generating enough financial aid resources for
the North Carolina Community College System
and replaced it with a need-based financial aid
program with a direct $5 million recurring
appropriation. A balance remained in the
interest only scholarship program due to
accumulated interest earnings. The balance
remaining in the interest only scholarship
reserve Budget Code 66800, Fund 6101
(entitled DCC Scholarships) shall be transferred
to the need-based financial aid program Budget
Code 66800, Fund 6102 (entitled CCS Financial
Assistance) to support the Need Based Financial
Aid program. (2001 Session Laws, Chapter
424, Sec. 30.11)
53
Post-Legislative Budget Summary, 2001-03
General Fund – Community Colleges - Continued
Other Provisions:
2001-02 2002-03
32. Asheville-Buncombe Funds Do Not Revert
Funds appropriated to Asheville-Buncombe
Technical Community College in S.L. 1999-237
for the Small Business Center shall not revert at
the end of 2000-01, but shall remain available
for expenditure in the 2001-02 fiscal year.
(2001 Session Laws, Chapter 424, Sec. 30.12)
33. Focused Industrial Training
The State Board of Community Colleges may
use up to $100,000 of the Focused Industrial
Training appropriation each year of the 2001-03
biennium to pay registration fees and material
costs for Occupational Continuing Education or
Focused Industrial Training safety courses.
(2001 Session Laws, Chapter 424, Sec. 30.13)
54
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina
University of North Carolina
The University of North Carolina is a public, multi-campus university dedicated to the service of
North Carolina and its people. It encompasses the 16 diverse constituent institutions and other
educational, research, and public service organizations. Each shares in the overall mission of the
university. That mission is to discover, create, transmit, and apply knowledge to address the needs of
individuals and society. This mission is accomplished through instruction, which communicates the
knowledge and values and imparts the skills necessary for individuals to lead responsible, productive,
and personally satisfying lives; through research, scholarship, and creative activities which advance
knowledge and enhance the educational process; and through public service, which contributes to the
solution of societal problems and enriches the quality of life in the state. In the fulfillment of this
mission, the university seeks an efficient use of available resources to ensure the highest quality in its
service to the citizens of the state. Teaching and learning constitute the primary service that the
university renders to society. Teaching, or instruction, is the primary responsibility of each of the
constituent institutions. The relative importance of research and public service, which enhance teaching
and learning, varies among the constituent institutions, depending on their overall missions.
The Board of Governors is responsible for the 16 constituent institutions of The University of
North Carolina system, the UNC Health Care System, UNC General Administration (including the
Center for Public Television), agricultural research and extension programs, certain related educational
programs (Aid to Students Attending Private Colleges, Aid to Private Medical Schools, Southern
Regional Education Board contracts, etc.) and the North Carolina School of Science and Mathematics.
Total Appropriations
2000-01
Authorized
2001-02
Certified
% Over
2000-01
2002-03
Certified
% Over
2001-02
Requirements $ 2,344,083,614 $ 2,325,699,951 (0.8%) $ 2,334,085,006 0.4%
Receipts 542,014,340 535,764,176 (1.2%) 535,764,176 0.0%
Appropriation $ 1,802,069,274 $ 1,789,935,775 (0.7%) $ 1,798,320,830 0.5%
No. of Positions 27,918.69 28,210.68 1.0% 28,403.68 0.7%
________________________________________________________________________________________
55
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Appropriation Items (Cha nges Enacted Over Fiscal Year 2000-01)
Continuation Budget:
2001-02 2002-03
1. One-Time Appropriations Removed
The following one time appropriations were
removed from the continuation budget:
Compensation Bonus $ (11,882,603) $ (11,882,603)
Top of the Salary Range Bonus (934,318) (934,318)
Model Teacher Consortium (500,000) (500,000)
Education Cabinet (500,000) (500,000)
Achievement Gap (500,000) (500,000)
Piedmont Triad Center for Applied
Manufacturing
(250,000)
(250,000)
Chinqua-Penn Plantation (100,000) (100,000)
Total Appropriation $ (14,666,921) $ (14,666,921)
2. One Time Reductions Restored
The following one time reductions were
restored in the continuation budget:
Death Benefit Contribution Rate $ 1,412,999 $ 1,412,999
Retiree Health Premium Reserve 8,816,994 8,816,994
Total Appropriation $ 10,229,993 $ 10,229,993
3. Reserves for Operating New Facilities
Funds were appropriated for operation and
maintenance costs of new facilities in the UNC
system that will be completed during the
2001-03 biennium.
5,891,454
13,176,509
4. Transfers Between Departments
A. Transfer Center for Ergonomics
Section 10.10 of Session Laws 2000-67
directed that $500,000 be transferred from
the Department of Labor to the Board of
Governors of the University of North
Carolina in the continuation budget
process. The funds for the Center for
Ergonomics were reflected in the
continuation budget for North Carolina
State University in the 2001-03 biennium.
500,000
500,000
56
Post-Legislative Budget Summary, 2001-03
General Fund �� University of North Carolina - Continued
Continuation Budget:
2001-02 2002-03
Transfers Between Departments -
Continued
B. Transfer Biotechnology Funds
Since 1993-94, funds have been
appropriated to the North Carolina
Biotechnology Center to provide
biotechnology grants for six constituent
institutions (Elizabeth City State
University, Fayetteville State University,
North Carolina Central University, North
Carolina A & T State University,
UNC–Pembroke, and Winston-Salem
State University).
The primary objective of the
Biotechnology Initiative for Minority
Universities is to help these institutions
develop their biotechnology programs to
ensure that North Carolina has a trained
workforce for the new jobs being
created in the biotechnology industry.
Development of biotechnology programs
includes efforts to design curricula
and courses, train faculty, acquire
lab equipment, develop instructional
materials, and recruit students. The
emphasis is on developing immediate
educational capacity as well as long-term
program needs. Appropriations for the
biotechnology grants were transferred
from the North Carolina Biotechnology
Center budget to the continuation budget
of each of the six campuses in the amount
of $150,000 per campus. The North
Carolina Biotechnology Center budget
was reduced accordingly.
$ 900,000
$ 900,000
57
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Continuation Budget:
Campus Reductions
2001-02 2002-03
5. Temporary Wages and Membership Dues
Funds were reduced by $2,500,000 for
temporary wages and membership dues at the
16 constituent institutions.
$ (2,500,000)
$ (2,500,000)
6. Community Services/General Support
Funds were reduced by $1,500,000 for
Community Services/General Academic
Support for the 16 constituent institutions.
(1,500,000)
(1,500,000)
7. Reduction in SPA Positions
SPA positions were reduced by 2.8% at the 16
constituent institutions.
Number of Positions
(10,694,131)
(359.6)
(10,694,131)
(359.6)
8. Reduction in EPA Non-Teaching Positions
EPA non-teaching positions were reduced by
2.8% at the 16 constituent institutions.
Number of Positions
(5,902,497)
(95.2)
(5,902,497)
(95.2)
9. Reductions in Various Modified Zero Based
Budget Items
The budgets of the 16 constituent institutions
were reduced by an average of 5% for the
following modified zero based budget items:
miscellaneous contractual services, rental/lease
of equipment, travel, cellular phones, furniture
and equipment, and other aids and grants.
(5,726,311)
(5,726,311)
10. Private Funding for Selected Summer
School Research in Lieu of State
Appropriation
A portion of state appropriation for summer
research was reduced by $500,000 each at
NCSU and UNC-CH for a total reduction of
$1,000,000 and substituted with private funds.
Each campus is responsible for the selection of
which faculty and summer research will be
funded with these private funds.
(1,000,000)
(1,000,000)
58
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Continuation Budget:
Campus Reductions - Continued
2001-02 2002-03
11. Continuing Education Receipts
The budgeted amount for receipts generated
through continuing education programs at
UNC-CH Health Affairs was increased by ten
percent from $3,787,759 to $4,166,534 to more
accurately reflect anticipated receipts.
Requirements
Receipts
Appropriation
$ -
378,775
$ (378,775)
$ -
378,775
$ (378,775)
12. Center for Alcohol Studies Endowme nt
A nonrecurring reduction was taken for the
Center for Alcohol Studies Endowment at
UNC-CH Health Affairs.
Appropriation – Nonrecurring (250,000) NR -
13. Institute of Southern Politics, Media, and
Public Life
Funds appropriated for the Institute of
Southern Politics, Media, and Public Life were
eliminated, but UNC-CH can continue this
program through the use of other state funds or
through other sources of funds.
Number of Positions
(225,000)
(2.0)
(225,000)
(2.0)
14. Institute for Outdoor Drama
The funding for the Director of
Communications position at the Institute for
Outdoor Drama at UNC-CH was eliminated.
(60,000)
(60,000)
Number of Positions (1.0) (1.0)
15. Administrative Efficiencies Reduction
A reduction in appropriations was made to the
University system. This reduction was
achieved by directing the system to find
additional administrative efficiencies.
(5,000,000)
(5,000,000)
NR - Nonrecurring
59
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Continuation Budget:
Campus Reductions - Continued
2001-02 2002-03
16. Reduction in Travel
A reduction in appropriations for travel
expenses was made to the UNC system.
$ (1,000,000)
$ (1,000,000)
UNC-General Administration Reductions
17. Reduce Various Modified Zero Based
Budget Items
Funds appropriated for the following line items
were reduced by ten percent:
Miscellaneous Contractual Service
Rental/Lease of Equipment
Travel
Cellular Phones
Furniture and Equipment Replacement
Total Appropriation
$ (535,732)
(13,363)
(91,957)
(3,347)
(105,726)
$ (750,125)
$ (535,732)
(13,363)
(91,957)
(3,347)
(105,726)
$ (750,125)
18. Reduce EDP Equipment
Funds appropriated for electronic
data processing equipment infrastructure
replacement efforts at UNC-General
Administration were reduced.
(80,000)
(80,000)
19. Board of Governors Meetings
In their meeting on April 12, 2001, the UNC
Board of Governors voted to reduce the
number of times it meets during the year from
ten to eight. Funds appropriated for the Board
of Governor’s meetings were reduced to reflect
the reduction in meeting costs.
(30,800)
(30,800)
20. MCNC Contract
The appropriation for the use of the
Microelectronics Center for North
Carolina (MCNC), paid by UNC-General
Administration, was reduced by $5,000,000.
The remaining General Fund appropriation
to MCNC is $8,359,429. MCNC may also
charge a fee for service to UNC institutions for
MCNC usage.
(5,000,000)
(5,000,000)
60
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Continuation Budget:
UNC-General Administration Reductions - Continued
2001-02 2002-03
21. Litigation Contract
The funding for UNC–General Administration’s
litigation contract with the Department of
Justice was eliminated. UNC-General
Administration is still required to maintain
the contract and reimburse the Department of
Justice for legal services.
$ (200,000)
$ (200,000)
22. SPA Position Reductions
Funding for SPA positions in UNC-General
Administration was reduced by 5%.
Number of Positions
(422,345)
(11.5)
(422,345)
(11.5)
23. EPA Non-Teaching Position Reductions
Funding for EPA non-teaching staff positions in
UNC-General Administration was reduced by
5%.
Number of Positions
(541,925)
(5.3)
(541,925)
(5.3)
24. Center for School Leadership Development
Administrative Overhead
The administrative overhead in the Center for
School Leadership Development’s central office
was eliminated.
Number of Positions
(166,791)
(1.6)
(166,791)
(1.6)
25. Center for School Leadership Development
Office Consolidation
Savings were achieved from the consolidation
of offices for the programs under the Center
for School Leadership Development. These
programs include the North Carolina Center
for the Advancement of Teaching, the North
Carolina Teacher Academy, the North Carolina
Model Teacher Education Consortium, the
Math Science Education Network, the
Principal Executive Program, and the Principal
Fellows Program.
(100,000)
(100,000)
61
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Continuation Budget:
UNC-General Administration Reductions - Continued
2001-02 2002-03
26. Center for School Leadership Development
Office Reduction in Programs
The appropriation for all programs under the
Center for School Leadership Development
was reduced. These programs include the
North Carolina Center for the Advancement of
Teaching, the North Carolina Teacher
Academy, the North Carolina Model Teacher
Education Consortium, the Math Science
Education Network, the Principal’s Executive
Program, and the Principal Fellows Program.
$ (833,315)
$ (833,315)
27. Teacher Academy
Funding for the Teacher Academy was
reduced.
(533,396)
(533,396)
28. Reallocation of funds from the Model
Teacher Education Consortium
A portion of the appropriation for the Model
Teacher Education Consortium was reallocated
to a more comprehensive method of delivering
program goals.
Number of Positions
(822,082)
(2.5)
(822,082)
(2.5)
29. Matching Incentive Funds
Matching Incentive funds for staff
development in K-16 programs were reduced.
(350,000)
(350,000)
30. Lighthouse Schools
The appropriation for the Lighthouse Schools
program under the Center for School
Leadership Development was eliminated.
(260,000)
(260,000)
62
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Continuation Budget:
UNC-General Administration Reductions - Continued
2001-02 2002-03
31. Strategic Initiatives Reserve
The appropriation for the UNC system
President’s Strategic Initiatives Reserve, used
to fund special projects, was reduced for one
year. In 2000-01, the Strategic Initiatives
Reserve was funded at $3,000,000. The
2001-02 nonrecurring reduction of $1,000,000
leaves an appropriation of $2,000,000. One
million dollars of the remaining 2001-02
budget shall be used to provide transition
funding to temporarily offset the effects of
permanent position cuts at the historically
black, minority, and smaller campuses. In
addition, UNC – General Administration shall
provide a detailed report to the Joint
Legislative Commission on Education
Oversight prior to March 1 annually on how
Strategic Initiatives Reserve funds were
expended.
Appropriation – Nonrecurring
$ (1,000,000)
NR
$ -
Expansion Budget:
32. Schedule of Priorities
General Statute 116-11(9) requires the Board
of Governors (BOG) of The University of
North Carolina to “develop, prepare, and
present to the Governor, Advisory Budget
Commission, and the General Assembly a
single, unified recommended budget for
all of public senior education.” Funds
requested for expansion, new programs and
activities, increases in enrollment, remedying
deficiencies, etc. are to be itemized in priority
order and any funds appropriated for the
priority schedule are to be in a lump sum.
NR - Nonrecurring
63
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Expansion Budget:
Schedule of Priorities - Continued
2001-02 2002-03
In response to the Board of Governors’
2001-03 “Schedule of Priorities,” the
following items were appropriated:
Line 1a - Enrollment Changes
Regular Term Enrollment Increase
Regular Term Enrollment projections from the
Board of Governors indicated an increase in
enrollment for 2001-02 over the 2000-01
budgeted 137,959 full-time equivalent
(FTE) students. Based upon the Board’s
estimate, enrollment in the University was
projected to increase by 2,435 FTE or 1.7% to
140,394 FTE in 2001-02. In addition, the
UNC Board of Governors wishes to include
FTE at the NCSU Veterinary School (375) and
ECU Medical School (300) which have not
previously been included in the total UNC
budgeted enrollment figures. This would bring
the total budgeted FTE to 141,069. This
represents an increase in student credit
hours (SCHs) from 3,700,454 in 2000-01
to 3,743,204 in 2001-02. The increase of
$28,358,828 supports enrollment growth after
accounting for an expected increase in receipts
of $9,908,297. This enrollment increase also
includes the “hold-harmless” for the campuses
(ECU, FSU, and NCCU) losing enrollment.
Requirements
Receipts
Appropriation
Number of Positions
$ 38,267,125
9,908,297
$ 28,358,828
238.3
$ 38,267,125
9,908,297
$ 28,358,828
238.3
64
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Expansion Budget:
Schedule of Priorities - Continued
2001-02 2002-03
Line 1a - Distance Education Enrollment
Increase
Distance Education was funded by the General
Assembly at $12,890,335 in 1998-99,
$3,895,187 in 1999-00, and $10,000,000 in
2000-01. Enrollment projections from the
UNC Board of Governors indicated a projected
increase in distance education enrollment for
2001-02 in the amount of 25,642 SCHs (an
additional 1,085 FTE students) for a new total
of 97,610 SCHs. Funds were appropriated to
fully fund the UNC Board of Governors
projected distance education enrollment
increase request.
Requirements
Receipts
Appropriation
Number of Positions
$ 14,124,489
1,946,354
$ 12,178,135
96.3
$ 14,124,489
1,946,354
$ 12,178,135
96.3
Line 1b – Tuition Increase
The General Assembly increased tuition 9%
across-the-board for all students at the 16
University of North Carolina campuses and
allowed the Board of Governors�� differentials
for graduate and professional schools as well
as campus- initiated tuition increases to remain
in effect.
(30,864,857)
(30,864,857)
Line 1b – Need - Based Student Financial
Aid Plan
A Task Force on Student Financial Aid
estimated that the aggregate amount of unmet
need for UNC resident students in 1997-98
was at least $143 million and recommended
funding for a new UNC grant program to help
students with financial need. The program was
partially funded with an appropriation of
$5 million in 2000-01, which when combined
with $1.3 million appropriated in 1999-00,
65
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Expansion Budget:
Schedule of Priorities - Continued
2001-02 2002-03
Line 1b – Need – Based Student Financial
Aid Plan - Continued
was used to make grants only to qualifying in-state
first-time freshmen during the 2000-01
year. The program requires that eligibility
requirements for the new grants include a
“self- help” expectation of at least $4,000 per
student and that federal Pell grants and tax
credits be used first to meet students’ needs.
Funds were appropriated to expand the Need-
Based Student Financial Aid Plan.
$ 8,928,000
$ 8,928,000
Line 1c –North Carolina School of the Arts
High School Access Initiative
Funds were appropriated to eliminate the
tuition, fees, and room and board charges
totaling $6,406 per student for the 167 in-state
high school students at the North Carolina
School of the Arts.
1,069,802
1,069,802
Line 1e – Focused Growth Institutions -
Special Needs
Funds were appropriated to fund special needs
for the Focused Growth Institutions in the
UNC System. In April 1998, the Board of
Governors adopted a ten year enrollment plan
that would enable the University to serve
significant enrollment growth projected over
the following decade. The Board of Governors’
plan targets enrollment growth in underutilized
campuses in the system. As a result, seven
campuses developed strategies that would
enable them to grow by 20% by fall
2003 and by up to 50% over the coming
decade. Funding was provided to assist in this
66
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Expansion Budget:
Schedule of Priorities - Continued
2001-02 2002-03
Line 1e – Focused Growth Institutions –
Special Needs - Continued
effort and will be used fo r assessment of needs,
better operating efficiencies through
economies of scale, physical facilities
management, faculty improvement, and
development capacity. The seven campuses
are Elizabeth City State University,
Fayetteville State University, North Carolina
Agricultural and Technical State University,
North Carolina Central University, the
University of North Carolina at Pembroke,
Western Carolina University, and Winston-
Salem State University.
$ 2,247,850
$ 2,247,850
Line 2e – Transition of East Carolina
University to Doctoral II Status
In 1998, East Carolina University exceeded the
requirements to be classified as a Doctoral II
university and their movement into the
doctoral category was recognized by the Board
of Governors of The University of North
Carolina. The 1998 Session of the General
Assembly appropriated $1,500,000 for phase
one of East Carolina University’s change to a
Doctoral II university. The 1999 Session of the
General Assembly appropriated $1,500,000 in
recurring funds for the second phase of the
classification change. The 2000 Session of the
General Assembly appropriated $1,500,000 in
recurring funds to continue the classification
change.
67
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Expansion Budget:
Schedule of Priorities - Continued
2001-02 2002-03
Line 2e – Transition of East Carolina
University to Doctoral II Status
Funds were provided by the 2001 Session of
the General Assembly to fund the final phase
of change in classification of East Carolina
University to a Doctoral II university. These
funds may be used to hire additional faculty,
increase faculty salaries, increase the number
of graduate student tuition remissions, and
provide other enhancements to meet the needs
of a Doctoral II institution.
$ 1,500,000
$ 1,500,000
Line 3 – K-16 Initiatives
Education Cabinet/Research Council
Recurring funds in the amount of $250,000
were appropriated to the Education
Cabinet/Research Council. These funds
restored half of the $500,000 nonrecurring
appropriation made to the Education
Cabinet/Research Council in 2000-01.
Number of Positions
250,000
2.0
250,000
2.0
Line 3 – UNC Teacher Preparation
Programs through Distance Education
Additional funds were appropriated for all
UNC teacher education programs across the
state that are provided through distance
education and do not have an on-campus
residency requirement. These funds are to be
allocated based on student credit hour
enrollment. (2001 Session Laws, Chapter 424,
Sec. 31.7)
2,000,000
2,000,000
68
Post-Legislative Budget Summary, 2001-03
General Fund – University of North Carolina - Continued
Expansion Budget:
Schedule of Priorities - Continued
2001-02 2002-03
Line 3 – TEACCH Program Funds
Additional funds were appropriated for the
Treatment and Education of Autistic and
related Communication handicapped Children
(TEACCH) program, located at UNC-CH, to
enable them to apply for a National Institute of
Health grant and other grant funds.
$ 290,500
$ 290,500
Line 4a – Genomics, Bioinfomatics,
Optoelectronics, and Photonics Research
Initiatives
Recurring funds were appropriated to provide
funding for the new genomics, bioinfomatics,
optoelectronics, and photonics research
programs. The funds were placed in a reserve
by the UNC Board of Governors to be
allocated by the UNC System President.
1,375,000
1,375,000
Line 4c – Institute of Government Center
for Technology Support
Nonrecurring funds were appropriated to
support the Center for Technology at
UNC-CH’s Institute of Government to provide
technical assistance to local governments.
Appropriation – Nonrecurring
150,000
NR
-
33. Aid to Students Attending North Carolina
Private Colleges and Universities -
Enrollment Changes
The program “Aid to Students Attending
Private Colleges and Universities” is
composed of the following: the Legislative