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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. -i- 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 -ii- 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 -iii- 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. 2 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. 3 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. 4 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 6 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. 7 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. 8 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. 11 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. 12 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 $50.0 million annually in debt collections. 13 Post-Legislative Budget Summary, 2001-03 General Fund – Continued Table 3A Education/Human Services/Mental Health Revenue Initiatives (House Bill 231) ($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
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Title | North Carolina state budget. Post-legislative budget summary |
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Date | 2001; 2002; 2003 |
Description | 2001-2003 |
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Full Text | 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. -i- 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 -ii- 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 -iii- 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. 2 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. 3 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. 4 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 6 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. 7 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. 8 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. 11 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. 12 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 $50.0 million annually in debt collections. 13 Post-Legislative Budget Summary, 2001-03 General Fund – Continued Table 3A Education/Human Services/Mental Health Revenue Initiatives (House Bill 231) ($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 |
OCLC number | 17694460 |