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OVERVIEW: FISCAL AND BUDGETARY ACTIONS NORTH CAROLINA GENERAL ASSEMBLY 2001 SESSION PREPAREDBY THE FISCAL RESEARCH DIVISION OF THE NORTH CAROLINA GENERAL ASSEMBLY RALEIGH, NORTH CAROLINA Rm. 619, Legislative Office Building Raleigh, North Carolina 27603-5925 Telephone: (919) 733-4910 Fax: (919) 715-3589 Budget Development Appropriations Bill Coordination Governmental Operations Capital Budgeting/Planning State LandsiBuilding Salaries and Benefits General Government Administration Administrative Rules Review Commission Board of Elections Cultural Resources General Assembly Govanor's Office JIBumlce Licensing Boards Lieutenant Governor OBce of Administrative H&gs Revenue Secrehy of State State Auditor State Budget and Management State Treasurer Jnstice and Public Safety Cmection Crime Control BE F'ublic Safety Judicial Justice Andy Willis - Senate MonaMm-Senate L p Mucbmore - House Sam Byrd Stanley Moore Mark Trogdon MarilynChism Michele Nelson Jim Mills Elisa Wolper Denise Thomas Health and Human Services Department of Health and Human Services Nataral and Economic Resowce~/Information Technology Department of Agriculture Department of Commerce Department of En-ent, Health, and Natural Resources Department of Labor Office of Infoxmation Technology Savices Transportation Education Department of Public Instruction UNC-Board of Governors Commuuiity Colleges Ewnomy and Taxation Revenue Estimates Finance Committees Revenue Laws Study Committee Economic Issues State Bond Proposals Fiscal Trends Commission Support Staff WOrdProcessing Graphics, Databases, Spread Sheet Prepamtion Karen Hammonds-Blanks Carol Shaw Lisa Hollowell Susan Morgan J d e r Ho- Adam Levinson Kelly Huffstetla Dwayne Pinkney Evan Rodewald Bob Weiss Jim Newlin Philip Price Charlotte Todd Leggett Richard Bostic David Crotts LindaMiUsaps Maahawalston Agnes p w Faydeau Robinson Bormie Trivette Debora Bridgua INTRODUCTION ...................................................................................................................................I.. . GLOSSARY ........................................................................................................................................... A.l TOTAL STATE BUDGET . Budget Reform Statement (General Fund Availability) .................................................................... 5 1 Summary Total State Budget ........................................................................................................... 5 2 Total State Budget by Agency ..........................................................................................................5 3 ECONOMY AND REVENUES Economic Outlook and General Fund Revenues ............................................................................G. I Economic indicators (State Fiscal Year Basis) Annual Rates of Change ........................................ General Fund Revenue Forecast ....................................................................................................G. 7 Highway Fund Revenue .................................................................................................................G I2 Highway Trust Fund Revenue ........................................................................................................3 FEDERAL BLOCK GRANTS 8 SUMMARY OF MEDICAID CHANGES Federal Block Grant Programs. ........................................................................................................ D-1 Changes to Ule Medicaid Pmgram ................................................................................................... D-4 SUMMARY: GENERAL FUND APPROPRIATIONS General Fund Appmpriations 2001-2003 Flscal Biennium. 2001 Session ....................................... E-1 EDUCATION Community Colleges .......................................................................................................................F. -1 Public Education. ..............................................................................................................................F -7 University of North Camlina System .............................................................................................F. -23 HEALTH 8 HUMAN SERVICES ..................................................................................................... G-1 NATURAL AND ECONOMIC RESOURCES Agriculture and Consumer Services ................................................................................................. H-1 Commerce ....................................................................................................................................... H-6 Commerce - State Aid ................................................................................................................... H-12 Environment and Nahtral Resources ............................................................................................. H-I4 Environment and Natural Resources - Clean Water Management T ~ sFtun d ............................ H-24 Housing Finance Agency ............................................................................................................... H-26 Labor ......................................................................................................................................:.. .... H-28 N.C. Biotechnology Center ............................................................................................................. H-31 Rural Economic Development Center ............................................................................................H -33 JUSTICE AND PUBLIC SAFETY Correction ......................................................................................................................................... 1-1 Crime Control and Public Safety ................................................................................................. I-I2 Judicial ........................................................................................................................................... 1-17 Judicial .In digent Defense ............................................................................................................ 1-24 Justice ............................................................................................................................................ 1-27 Juvenile Justice and Delinquency Prevention ................................................................................. 1-32 GENERAL GOVERNMENT Administratlon. ...............................................................................................................................J..- 1 ....... Cultural Resources. .......................................................................................................................J. -10 Cultural Resources . Roanoke Island Commisslon ................................................................... 5-16 General Assembly ...................................................................................................................... J-18 Governor ....................................................................................................................................... 5-20 Insurance ..................................................................................... ........................................... 5-24 Insurance .Vo lunteer Safety Workers' Compensation Fund ...................................................... 5-26 Lieutenant Governor. ...................................................................................................................... 5-30 Office of Administrative Hearings ................................................................................................... 5-32 Revenue ........................................................................................................................................ J-34 Rules Review Commission ..................................................................................................... J-41 Secretary of State ........................................................................................................................ 5-43 State Board of Elections. ................................................................................................................. J47 State Budget, Planning and Management. ..................................................................................... 5-49 State Budget, Piannirlg and Management - Flood Mapplng & Surveying ...................................... 5-53 State Budget, Planning and Management - Special Appropriations ............................................. J-56 State Controller ........................................................................................................................ J-58 Treasurer. .....................................................................................................................................J. -60 Treasurer - Retirement for Fke and Rescue Squad Workers ....................................................... 5-62 LEGISLATIVE ACTIONS: HIGHWAY FUND APPROPRIATIONS Transportation .................................................................................................................................. K-I INFORMATION TECHNOLOGY: INTERNAL SERVICE FUND Office of Information Technology Services ...................................................................................... L-1 RESERVES. DEBT SERVICE AND ADJUSTMENTS .......................................................................... M-1 CAPITAL .............................................................................................................................................. N-I ADDITIONAL LEGISLATION CONTAINING APPROPRIATIONS ....................................................... 0-1 SALARIES AND BENEFITS Salary Changes for Employees Supported by the State ...................................................................P -I Retirement and Pension Changes for State and Local Personnel. .................................................. P-9 Benefit Changes for State and Local Personnel ............................................................................ P-13 State Employes Health Benefit Changas ....................................................................................... P-14 REVENUEIFEE BILLS Bills Affecting General Fund Revenue ............................................................................................ 0-1 Bills Affecting Highway Fund Revenue. ......................................................................................... Q-23 Bills Affecting Special Revenue Funds. ......................................................................................... a-27 Bllls Affecting All Local Governments ........................................................................................... Q-28 Local Government Tax Aid .Hi storical Data ................................................................................ Q-40 APPENDIX Total State Budget by Source of Funds .................. ....1....-............. Total General Fund Authorizations as Adjusted to Determine Total Current Operations .......................................................................................... R-2 Savings Reserve at Year Ending June 30 ........................................................................................ R-4 Earmarking of the Credit Balance by Flsoal Year ............................................................................. R-5 Tax Revenues by Major Schedules (Actual) .................................................................................... R-6 APPENDU (CONTINUED) Authorized and Actual Revenue Collections by Flscai Year ($ in Thousands) ................................ R-7 North Carolina General Fund Operating Appropriations .................................................................. R-8 Capital Improvement Authorizations .............................................................................................. R-I 2 General Obligation Bond Acts Since 1971 ....................................................................................-. 3 Total North Carolina Budget for Debt Service .............................................................................. 4 North Carolina Bond Indebtedness ................................................................................................ R-16 Across-ThsBoard Salary Cost for Each 7% Increase (Millions) .................................................. 1 8 Leglslathre Increases .................................................................................................................. 1 9 Average Salary of Employees Subject to the Personnel Act .......................................................... R-21 INTRODUCTION This document is divided into sections as follows: Section A - Glossary Section B - Total State Budget summarins the composition of General Fund Availability (i.e. Budget Reform Statement) and the total state budget including federal funds and receipts. S&on C - Economy and Revenues desmies the economic and iinaucial backdrop against which the actions detailed in subsequent sections are conducted. Includes infonnation on General Fund, Highway Fund and Highway Trust Fund revenues. Section D - Federal Block Grants and Summary of Medicaid Changes gives a brief history of federal block grant programs and allocations for the fiscal year. Also provides a summay of recent Medicaid funding and program changes. Section E.- Slunmary: Genera1 Fund Appropriations ammmim actions taken by the GeneraI Assembly to adjust the continuation or base budget recommended by the Governor (applies to the Overview of budgetary actions taken in the long session) or to adjust the budget previously approved for the second year of the biennium (applies to the Overview of budgetary actions taken in the shoa session). Sections F through L - Budget adjustments (i.e. reductions and expansion) by state agency are outlined in detail and organized by appropriations subcommittee. Also smmmizes special provisions in the Appropriations Act governing state agencies. Section M -Reserves, Debt Service and Adj~mtments lists actions with statewide impact (i.e. affecting all state agencies). Also includes a summary of general provisions included in the Appropriations Act. Section N - Capital provides a list of agencies receiving appmpriations for capital improvement projects. Also includes a summary of apical related special provisions. Section 0 - Additional Legislation Containing Appropriations summarizes several bills e-nacted after the passage of the Appropriations Act that include additional Genera] Fund appropriations and govern other budgetary matters. Section P - Salaries and Benefits identifies salary increases, as approved, together with changes in retirement and pension plans, health irmnmce programs, and other benefit program. Section Q - Revenue/Fee Bib provides a summary of bills authorizing various tax changes and fee increases. Section R - Appendix provides historical data relating to &te revenues and expenditures, capital improvements, reversions, indebtedness, debt service and salaries. GLOSSARY Adjusted Appropriation: An appropriation altered to reflect the distriintion of reserves or other transfers authorized by the General Assembly. Appropriation: An action by the General ~skmblyau thorizing withdrawal of funds h m t he state treasury pursuant to Article V, Section 7 of the North Carolina Constitution. BeghnhglEnding Balance or Credit B'alance: The funds available at the beghhg or end of the fiscal year based upon revenue collections and expenditures. Capital Improvements: One-time appropriations for new co-on, renovations, repairs and land p u r c b . Carryforward: Funds *ated, but unspent in the k t fiscal year of a biennium that are brought forward for expenditure in the second fiscal year of the same biennium. Certified Appropriation: An e a t i o n as officially rewrded by the Office of State Budget, Planniug, and Management. Contingency and Emergency Fund: A special resave required by G.S. 143-12 which the Director of the Budget may expend for emergencies or other unanticipated needs with approval by the Council of State. Continuation B u m The part of the State budget necewq to continue the current level of services when adjusted for inflation, mandated rate increases such as social security, mannualizaton of programs and operation of new Mties. Current Operations: Cost associated with the daily activity of progams supported by the State, such as salaries, utilities, and travel. Departmental Receipts: Monies received by State agencies and institutions as federal &raats, charges for services performed, transfas hm other governmental units, license fees, gifts and donations, or similin sources. Disproportionate Share Fnnds: Share (DSH) funds are Medicaid payments made to health care providers who deliver services to large numbers of lminsured patients. Page A-1 GLOSSARY (Continued) Entitlements: Payment or benefit granted by law to individuals or political subdivisions. Expansion Budget: The part of the State budget which provides for new programs, expansion of existing programs, and salary and benefit increases. Federal Revenue Sharing: Program instituted by the federal government in 1972-73 and discontinued in 1982-83 to assist statdocal govemments. General Fond: The fund to which rev- are deposited that are not designated for special purposes and are therefore available to support the general opaations of State government. Highway Fund: The special fund to which revenues are deposited that are designated for transportaton-related operations and capital improvements. Highway Trust Fond: A fund established in 1989 for the completion of certain sp&d highway construction projects. Lapsed Salaries: Unexpended appropriations that accrue because funds have been budgeted for positions that are t w y =t. Negative Reserve: A method by which a budget reduction is imposed without detailing the specific lines of expenditure to be decreased. - N o n r e c e A tam applied to revenues or expenditures that are not repeated in future years. Reversion: The portion of an appmpriation that is not expended and is returned to the fund h which the -on is made when the appmpriation either expires or is caucelled. Savings Reserve: An amount dlished in G.S. 143-15.3 to reserve Gend Fund monies as a s a f d against economic fluctuations or major fiscal exigencies. Commonly r e f d to as the "Rainy Day Fund." Special Fonds: Accounts to which revenues are deposited that are designated for a specific purpose and remain in the account until expended for that purpose. Tax Reimbarsements: State revenues disbursed to local govermnents as reimbments due to State-mandated tax relief measures which have a local finaucial impact on locals. Total General Fund Avaflabm The sum of the beginning General Fund credit balance and Gend Fund revenues for a fiscal Hod. Page A-2 Total State Budget 1 BUDGET REFORM STATEMENT 3 FY 200142 ($ mllllon) FY 200203 ($ mllllon) 1. Composition of the FY 200102 beginning availability: a. Unappmpriatsd balance b. Revenue mllactions in FY 200041 In excess of authorized estimates c. Unexpended appropriations durlng 2000-01 (Reversions) Beginning Unreserved Credit Balance 2. Revenues Based on Existing Tax Structure 3. Non Tax Revenues: Investment lnmme Judicial Fees Dispmportionate Share Insurance Other Non-Tax Revenues Hlghway Trust Fund Transfer Highway Fund Transfer Subtotal 4. Other Adjustments IRC Conformity Adjustment (included in House Bill 232) North Camlina Railroad General Fund Repaymant Senate Bill 353 Enhance DeperhTlent of Revenue Collections EducationRluman SenrlceslMental HealthlRevenue Initiatives House Bill 11 57 lmplementatlon - Closure of Tax Loopholes House 8111 232 ImplernenEation - Budget Revenue Pmvlsions (Accelerations) increase in Nontax Revenues -Patients' Bill of Rights (Senate BllllQ9) TransferlAdjustment of Cash from Spedal, Trust, Internal Senrlce, and ~eserbeF Court Fee Funds to State Bar Credit to the Savings Resenre Account Subtotal TOTAL GENERAL FUND AVAlLABlUTY 14,530.0 Legislation Enacted Affecting Availability After the Passage of the Appropriations Act of 2001 5. Additional Adjustments Senate Bill 823 Pmmote Grape 8 Wine Indusby (ABC Permits) House Bill 571 Slmplffy Sales Tax on Communications House Bill 1388 Remove Sunset on Porb Tax Credn Senate Bill 748 - Blll Lee Act Changes House Bill 338, Section 122 Technical Corrections - Amend Blli Lee Act House Blll 888 Turfgrass Research Credit to the ~avlngsR esewe Account subtotal REVISED TOTAL GENERAL FUND AVAILABILITY 14,531? Page El General Fund Current Operations Summary of Total State Budget by Source of Funds 2001-2003 Fiscal Biennium FY 2001-02 FY 2002-03 ($ millions) ($ millions) Capital lm~rovernentdRepairs& Renovations 157.9 Subtotal General Fund Budget 1-4-, 530. .3 14,782.6 Highway FundRlighway Trust Fund 2,121.1 2,133.6 Federal Funds 7,066.3 7,404.0 Departmental Receipts 2,243.2 2,264.5 Total State Budget - All Sources $25,960.9 $26,584.7 Source: OfRce of State Budget and Menagement Page 5 2 Page 5 5 I Summary of Total State Budget by Agency and Appropriations Subcommittee I (Indudes all funding sourcea) 2002-03 Fkcal Year I I I I I I I w e d I ~ W B ~ T W I ~ m d I m y ~ ~ n d -mt Rate Adjusmmt I (243267.7~))l ( 1 ~20)3! 0 0- 1nfonnati011~ e chn~ ~Roagtey ~ 4mtumt (4,000,000) 1 o i o o 0 0 m.795 - . . General Government: Admumdon I I 61,563,497 1 0 Anditor ' 11,864,673 1 0 culowl ~ e s ~ ~ r ~ a 59,427,419 1 o Cdowl Resollrses - Roanoke island I I I I Other I Federal Total I 5,3i2,541 / 8,480,877 1 75,4169l5 50 WO.n6 0 1 11,864,723 4,788385 ; aa,466,no I ECONOMY AND REVENUES ECONOMIC OUTLOOK AND GENERAL FUND REVENUES I 2000-01 EXPERIENCE Last fiscal year was marked by the largest revenue shortfall since the 1990-91 recession. The shortFal1 of $702.1 million, or 4.8% of the budgeted forecast, can be broken down into two parts: One-Time Special Factors ($206.5 million - 29.4% of Total) (1) Tax Refund Canvover ($121.8 million) The Department of Revenue has indicated that $101.8 million of personal Income tax refunds and $20.0 million of corporate refunds were carried forward from the 1999-2000 fiscal year to July and August of 2000. The refunds are considered as part of the nonrecurring shortfall because they were not known at the time the 2000-01 budget was adopted during the last couple of days of June 2000. In most years, a reasonably accurate forecast of income tax refunds can be made in early May based on the known withholding tax collections for the prior year and refunds through April 30. However, during the Spring of 2000, major processing delays and technology problems at the Department of Revenue made it impossible to develop a reliable estlmate of the 'Inventoff of remaining refunds. These Issues were highlighted in the State Auditor's performance audit of the Department. In addition, the impact of the court ruling ("Bailey Case") that allowed an income tax exclusion for state and local oenslons rendered the 1998 and 1999 refund -experience useless for projectin$ Spring, 2001 refunds as it was impossible to determine how much of the relief came through refunds (versus lower tax payments) (2) LMaation Pavouts ($63.2 mlllion~ In September 2000 the N.C. Supreme Court ruled against the state in a license tax case involving the financing arm of Ford and Chrysler. This meant that the State was required to pay out $58.5 million of refunds plus interest going back a number of years. In addition, the State was required to pay $6.0 million of refunds and Interest in a case involving the intangibles tax on beneficial interests In foreign trusts, with $4.7 rnillion of the payments being paid out of General Fund revenues. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". Page C-1 (3) Cornorate Refund Acceleration A21 million) - One of the responses of the Deparbnent of Revenue to the adverse publicity surrounding the carryover refunds from June 2000 was an lnltiative to accelerate the working down of a backlog of corporate tax refunds. It is estimated that $21 mllllon of these refunds sent out during 200041 would not have been sent out until a later year. This had a negative cash-flow impact on 2000-01. Factors Related to Economy and Financial Markets ($495.6 million - 70.6% of total) (1) Rise in Enemv Prices The production quotas adopted by OPEC began showing up In higher fuel prices during the summer of 1999. This was one factor that led to the downward shift in state and local sales tax receipts at about the same time as Hurricanes Floyd and Dennis. In fact, the storms masked the effect of higher pump prices until it became clear that the impact of the natural disasters was limited to counties with only 18% of the retail sales base. , The U.S. economy has been hammered by many oil price spikes In the past The unique feature of this cycle was that OPEC members were able to hold the line against potential price cuts. (2) Monetarv Policy _I The Federal Reserve began pushing up interest rates in June 1999 to slow an overheating economy and spewlathre stock market. During the next year, shoit-term interest rates rose from 4 %% to 8 %%. Monetary policy ahvays works with a time lag of at least nine months and sometimes takes a year or more to have an Impact This meant that the real effect on the overall economy did not begin until around the Spring of 2001. The problem is that once the economy began to change directions, the downward slide became very steep, particulariy in the manufacturing sector. (3) Tech Stock Crash A unique feature of the current slowdown is the role of the technology sector. Capital investment in technology was one of the driving forces that led to the unusually strong economic performance of the 1990's. Thls investment In computers, telecommunications equipment, and technology was fueled by the explosive rise in tech stock prices. This created an environment in which it was felt I that the demand of new products was unlimited. This led businesses to believe that NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". . I Page G2 , a high return from additional capital investments was guaranteed. Just llke speculative real estate "bubblesn in prior recessions, this unbridled optimism sowed the seeds for a crash once consumer demand dried up and producers were caught with excess capacity on their hands. The market collapse finally came In March 2000. As tech stocks crashed, companies scaled back their capital plans. A few months later they began to shed jobs. For a while severance pay packages and the cashing in of stock options kept the economy afloat. Eventually, though, the damage spread to the overall economy. (4) Strona Auto Sales This seemingly favorable trend has actually had a negattve impact on sales tax receipts in North Carolina because taxes on vehicles are earmarked for highway programs in lieu of the General Fund. As consumers continued to buy new cars, spending on items subject to the sales tax was "crowded out". ECONOMIC OUTLOOK FOR 2001-02 FISCAL YEAR The outlook among economists for the current calendar year and the flrst part of 2002 has been worsening since last Fall. For example, in August 2000 a leading bank in North Carolina was forecasting that the real (inflation-adjusted) growth for the nation's economy for 2001 would be a healthy 4.2%. The expectation had fallen to 3.1% in the December 2000 update and by April the projection had dropped to 1.7%. This pattern is very typical of what goes on during a normal recession: the bad news snowballs and expectations decline as if there is no end in sight However, just as the seeds of the recession are always sowed well in advance, so Is the stimulus for the recovery. Once the economic indicators began imploding around the holidays, the Federal Reserve undertook a stimulus package that was unprecedented in terms of timing and magnitude. From January to August of 2001, short-term interest rates fell from 6W% to 3W%. The expectation in late August was that the Fed would cut rates a quarter point one more time. In addition, the Congress had adopted a major tax cut package that began with an Immediate $600 tax rebate. The combination of lower borrowing rates and the tax cut stimulus is a major factor behind the mainstream forecast that the economy will begin to recover during the Fall of 2001 and real growth rates will be over 3% by the flrst quarter of 2002. In addition, in past recoveries the State's economy has grown much faster than the U.S. experience as the key-manufacturing sector turns around. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". Page G3 There are a number of problems with this "mainstream" view of the typical business cycle recovery. First, excess capacity In the computer and telecommunications areas may require a couple of years to be worked down due to the magnitude of the inventory overhang. Another issue facing North Carolina is the loss of manufacturing jobs to Mexlco and overseas locations. This trend, beginning during the 1995-96 economic slowdown, has accelerated in recent years. For example, the annual drop in textile and apparel employment has accelerated from the 740% range to 12-14% during the last 12 months. These impacts have been devastating to small towns In rural areas and the 1-85 corridor. A concern is that it is not reasonable to expect all of the shuttered plants to be reopened when the national economy eventually improves. Manufacturing is not the only sector of the State's economy undergoing change in recent years. Starting in mid-1999, job growth in the financial services area (finance, insurance, real estate) and in healthcare began slowing dramatically. The most likely explanation has to do with mergerlacquisltion activity. When these consolidations take place, jobs are eliminated to enhance the benefits of the combination. It may take a while for this pattern to change. Energy prices represent a continued straln on the economy, even though costs have declined in recent months. The danger Is that there are signs that OPEC is concerned enough about the decline to consider further production cuts to maintain prices. If this occurs, consumers will not receive the hoped for relief. A final risk has to do wlth the fact that many Wail Street analysts feel that stocks are still richly valued. If this is the case, the rise in asset prices resulting from lower interest rates and improved corporate profits could be limited. This would have a dampening effect on consumer confidence and retail sales. ECONOMIC OUTLOOK FOR 2001-2002 FISCAL YEAR The economic outlook for the 2001-03 biennium Is based on a review of a number of different forecasts and analyses available to the Fiscal Research DMsion: (1) DRlMlEFA national and state outlook (subscribed to by State Budget Office). (2) First UnionMlachovia national forecast. (3) Specific estimates on state personal income growth by a panel of economists representing First UnionMlachovia, N.C. State Unhrersity, and Wake Forest University. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". Page G4 (4) National and state-level economic forecasts of other states (posted on Internet). The concerns over the uncertain economic outlook led to the use of official estimates for 2001-02 that were more conservative than the outlook of most economists. The specifics of the forecast are shown on page C-6. 200091 REVENUE ESTIMATE METHODOLOGY The projection of General Fund revenues for the budget year Involved a three-step process. First, the economic factors shown on page C6 were used to forecast baseline revenues based on long-term historical r&iationships. These estimates are shown on page G7. Some of the key revenue growth rates are on page G10. The next step was to adjust the baseline estimates to take into account the impact of 1995-2001 session tax law changes, lawsuit payouts, delayed tax collections and refunds, and other technical factors. These adjustments, shown on page C-8, are included in the detailed numbers on the adjoining pages. Finally, a judgment had to be made about the financial markets and capital gains tax reporting. In recent years a substantial portion of the General Fund revenue surpluses has been due to the Impact of the financial markets. The additional receipts come in primarily through increased quarterly estimated tax payments by high-income individuals and 'final" income tax payments due April 15. For this analysis, it was assumed that 2001 tax year capital gains would drop 23.2% and that the wage and salary portion of the Income tax would rise only 4.2% (compared to 7-9% growth in recent years). The actual General Fund forecast numbers by source are shown on page G9. These numbers reflect the actual experience for prior years and the official budget estirnates for 2001-02 and 2002-03, as stated earlier, the baseline estimates In Table G7 tie closely to the economic outlook because they are adjusted for tax law changes and other special factors. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 1 I*. Page C-5 ECONOMIC INDICATORS (STATE FISCAL YEAR BASIS) ANNUAL RATES OF CHANGE I U.S. INDICATORS Real Economic Growth' Nonfarm Employment Personal Income Industrial Production Corporate Profits (Pre-Tax) Short-Term Interest Rates (Actual Rate) Mortgage Rates (Actual Rate) Inflation (CPI) 200091 2001-02 Actual Projected 200293 Projected NORTH CAROLINA INDICATORS Personal Income 5.2% 5.4% 4.3% 5.5% Nonfarm Employment 2.1% I.7 % 5% 2.2% Unemployment Rate (Actual Rate) 3.2% 4.3% 5.5% 5.4% Average Hourly Earnings (Manufacturing) 4.0% 3.8% 3.3% 3.6% Retail Sales 5.8% 2.6% 3.6% 4.7% Housing Starts -3.0% -8.0% -1.7% 2.2% Auto Sales 7.5% 5.5% -3.6% 4.6% *Adjusted for inflation. NOTE: The analysis and outlook contained on these pages was developed ~ , prior to the events of September 11". GENERAL FUND REVENUE FORECAST ($MILL) TABLE 1: BASELINE FORECAST PRIOR TO RRlENUE LAW CHANGESIOTHER SPECIAL FACTOR* Tax Revenue Personal Income Sales & Use Corporate Incomeu Franchise insurance Alcoholic Beverage Intangibles Tax Inheritance Soft Drink PrMlege Ucense Tobacco Products Piped Natural Gas Glft Other Total-Tax Revenue Nontax Revenue Investment Income Judicial Fees Disproportionate Share Other Insurance Dept Total-Nontax Revenue Total: Tax & Nontax Revenue Transfers: Highway Trust Fund Highway Fund Total-Transfers TotaI-General Fund Revenue 'Actual collections have been adjusted for tax law changes, lltlgation payouts, processing delays, and other special factors Page C-7 GENERAL FUND REVENUE FORECAST ($MILL) TABLE 2: IMPACT OF 199S-2001 REVENUE LAW CHANGESIOTHER SPECIAL FACTORS ($MILL) Tax Revenue Personal lncome Sales & Use Corporate Income Franchise Insurance Alcoholic Beverage Intangibles Tax lnheritence Soft Drink PrMlege Ucense Tobacco Products Piped Natural Gas Glfl Other Total-Tax Revenue Nontax Revenue investment Income Judicial Fees Disproportionate Share Other Insurance Dept Total-Nontax Revenue Total: Tax & Nontax Revenue Transfers: Highway Trust Fund Highway Fund Total-Transfers Total-General Fund Revenue , , Page C-8 . - - I- ~ ! . - . -~- -- - - ~- TABLE 3: ACTUAL FORECAST INCLUDING IMPACT OF REVENUE LAW CHANGESIOTHER SPECIAL FACTORS ($MILL.) Tax Revenue: Personal income Sales & Use Corporate Income Franchise Insurance Alcoholic Beverage Intangibles Tax Inheritance Sofi Drink PrMlege License Tobacco Products Gifi Piped Natural Gas , Other Totai-Tax Revenue Nontax Revenue Investment Income Judicial Fees Disproportionate Share Other insurance Dept Total-Nontax Revenue Total: Tax 8 Nontax Revenue Transfers: Highway Trust Fund Highway Fund Total-Transfers Total-General Fund Revenue Page C-9 SOURCES OF INCOME ON FEDERAL TAX RETURNS FOR NORTH CAROLINA RESDENTS ($BILLION)* Wage9 & Salaries 64.60 69.20 73.00 77.46 82.76 87.50 94.08 100.85 107.19 114.26 119.17 125.37 131.26 %Change 7.1% 5.5% 6.1% 6.8% 5.7% 7.5% 7.2% 6.3% 6.6% 4.3% 5.2% 4.7% Capital Oams 201 2.38 2.73 291 3.41 5.1 1 7.06 8.45 938 950 7.30 7.95 6.68 %Change 18.4% 14.7% 6.6% 17.2% 49.9% 38.2% 19.7% 11.0% 1.3% -23.2% 9.0% -16.0% % Chwgo S f d Value 105% 8.6% 2.0% 17.7% 23.9% 30.1% 24.2% 221% 7.6% -1 1.7% 10.9% 122% IRA Distnions 0.50 0.64 0.65 0.80 0.91 1.13 1.37 1.90 2.27 2.61 3.13 3.76 4.51 %change 28.0% 1.6% 23.1% 13.8% 24.2% 21.2% 38.PA 195% 15.0% 20.0% 20.0% 20.0% Unemployment Bendits 0.44 0.48 0.42 0.30 03 I 030 025 025 0.31 0.33 0.40 0.38 036 %Change 9.1% -125% -28.6% 3.3% -3.2% 16.7% 0.0% 24.0% 6.5% 21.2% -5.0% -5.3% A m m a t e Taxable Inoome 82.3 1 87.90 92.16 98.02 105.81 114.38 125.03 135.35 144.65 154.06 158.64 168.10 175.82 %Change 6.8% 4.% 6.4% 7.9% 8.1% 93% 8.3% 6.9% 6.5% 3.1% 5.8% 4.6% Esthnated Tax Liability lnc~sse 9.8% 6.8% 9.2% 10.2% 11.9% 13.5% 103% 6.9% 7.8% 3.8% 7.3% 5.5% *Tabtllatm srcl& social in- sinm it is not subject to N d Ca rolina tax. Thus, the tabulation shown is a closa wxbnatim of taxableimpme for sbte tnx pupms. Page C-1 1 I HIGHWAY FUND REVENUE I The Highway Fund is supported from three primary revenue sources: threefourths of the motor fuels tax; license and fee revenues c4ecte.d by the Division of Motor Vehicles; and interest earned hm investment of fund balances by the State Treasurer. FY 2000-01 REVENUES Highway Fund collections totaled $1.259 billion in N 2000-01, a 6.6% increase over FY 1999-00. Motor fuels tax collections increased by 9.4% as a result of higher fuel prices. Highway Fund revenues are projected to grow by $44.2 million, or 3.5% in FY 200142. HIGHWAY FUND REVEWE (MELIONS) Page G12 I HIGHWAY TRUST FUND REVENUE The 1989 Session of the General Assembly established the Highway Trust Fund for the purpose of funding highway comction. The 2001 General Assembly permitted the use of $680 million of Trust Fund cash balances over the next three ikd years for additional purposes: primary mute pavement preservation, certain preikaimq engineering costs, computgized trafEc sigaal systems and signal optimization projects, and public transportaton The Trust Fund's primary revenue sourcm are one-fourth of the motor fuel tax; a 3% Highway Use Tax levied when a motor vehicle title is transferre title fees and various registration fees collected by the Division of Motor Vehicles; and inkrest earned from investment by the State Treasurer of the Trust Fund's cash balance. In addition, the law has required that $170 million be transferred each year from the Highway Trust Fund to the General Fund. As a result of a chan-ee in the law the transfer in N 2001-02 will be $1 71.7 million and will grow ova time. FY 2000-01 REVENUES Highway Trust Fund revenues for N 2000-01 (net of the transfer to the General Fund) totaled $794.8, an increase of 4.4% over the previous year. Highway Use Tax collecti011s were flaf but motor fuel tax collections were up as a result of higher fuel prices. FY 2001-02 FORECAST Highway Trust Fund revenues (net of the transfer to the General Fund) are expected to , increase by 2.8% in N 2001-02, reflehg the slower economy. HIGHWAY TRUST FUND REVENUE (MIL.LI0NS) Page GI3 FEDERAL BLOCK GRANTS AND SUMMARY OF MEDICAID CHANGES FEDERAL BLOCK GRANT PROGRAMS In 1981, the Reagan Administration reammended and Congress adopted the Omrubus Budget Reconciliation Act which created a number of new "block grants" to be dishiiuted to state govanments in lieu of nume.rous traditional "categorical" funds. This approach to state aid reflected the President's philosophy of shifting more fiscal decision making to the states. In addition, it allowed the A-tion to significantly cut the federal budget. In previous years, Congress had appropriated money to the States for small- narrow-purpose programs, such as those for disabled children, migrant health, family plwmh& and dons. These fimds were accoqmied by numerous "strings" and substantial pape~~ork xquimnents. The new block grants consolidated for many of these programs into large, general purpose grants which had fewer "strings" and allowed more flexibility in the use of the funds. BRIEF DESCRIPTION OF THE BLOCK GRANTS S O W SERVICES BLOCK GR4NT The Social Services Block Graut is intended to provide federal funds to help people achieve or maintain a ereater desree of economic self-support or self-mfhiency, to prevent abuse or exploitation i f childregand adults who are d i e to protect their own jut&, and to p e n t jnammkk W a n a l care or to secure m r i a t e W o n a l cace when other f o m of arre - A are not appropriate. The primary providersf t h e s enices are the 100 coun st&-y of social servica. Examples of services funded include child and adult day care and in-home savices for the elderly. SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANT The ADAMHA Reorganization Act of 1992 (PL. 102-321) split the Alcohol, Dug, and M d Health Services Block Graut (ADMBG), thereby creating the new Substance Abuse Revention and Treatment Block Grant (SAPTBG). The SAPTBG provides federal financial assiPtanoe to states for the provision of prevention and treatment of alcohol and drug abuse. MENTAL HEALTH SERVICES BLOCK GRANT The MHBG provides federal financial assistance to states for the provision of communily based services for the mentally ill. Services provided through the use of the block grant must be those descrii in the state's Plan in accmbce with Federal PL. 102-321. These services include outpatient, day treatment, psychosocial rehabilitation, emergency services, residential services, etc. Page D - 1 FEDERAL BLOCK GRANT PROGRAMS (Conthed) MATERNAL AND CHILD HEALTH BLOCK GRANT This block grant funds health services for m o t h and children to reduce infant mortality and the incidence of preventable diseases and handicappiug conditions among children It also provides for rehabilitative services for blind and disabled individuals under the age of 16 and for treatment and care of children with developmental disabilities. PREVENTIVE HEALTH SERVICES BLOCK GRANT This block grant provides health services to low-income persons in orda to reduce the risk of preventable illness and early death and to improve the quality of life through bet@ health. LOW-INCOME ENERGY ASSISTANCE BLOCK GRANT The purpose of this block grant is to provide funds to assist low-income families with their heating fuel costs, to provide some emergency assis$nce and home weatherization or energy-related home repairs. COMMUNITY SERVICES BLOCK GRANT This is a federally funded program that provides a nmge of services and activities designed to eliminate the causes of povaty among the elderly, poor, and handicapped. COMMUNITY DEVELOPMENT BLOCK GRANT This block grant provides funds to assist local goyemments with community and economic development proj- that primarily bene6t low and rncxkme-W persons. CHILD CARE AND DEVELOPMENT FUND (CCDF) BLOCK GRANT The Pasonal R q o d i t y and Work Oppodties Reumciliation Act of 1996 eliminated any entitlement to child care subsidies and consolidated all federal child care program into the CCDF block grant. The purpose of the CCDF block grant is to improve the aEodabWy, avaWBy, and quality of child care for W e s . Most of the block grant funding must be used to provide child care subsidies to families d v h g public assistance, making the tmmition off of public assistance, or at risk of becoming dependent on public assistanoe. In addition, 4% of the total all~onmustbespentonqualityandavailabilityhitiatives. CCDFrequksallproviders caring for children who receive subsidies to meet minimum health and safety standards. TEMPORARY ASSISTANCE FOR NEEDY FAMILIES In August 1996, Congress passed and the Clinton -on enacted the P d R e s p m i i t , and Work W t i e s Reconciliation Act of 1996 (PRWORA). Better knob as federal Welike Reform, passage of PRWORA ended decades of the Aid to Families of Dependest Children (AFDC) entitlement program and replaced it with the Temporary Assistance for Needy Families (TANF) Blook Granl This action gave states unprecedented flexibility to create their own welfare programs that emphasize self-dciency and work. DEPARTMENT OF COMMERCE Community Development Block Grant - 2002 Program Year $45,000,000 DEPARTMENT OF HEALTH AND HlTMAN SERVICES Division of Mental Health, Developmental Disabilities and Substance Abase Services Social Services Block Grant $8,984,601 Mental Health Services Block Grant 9,855,277 Substance Abuse Revention and Treatment Block Grant 36,455,601 Temporary Assistance for Needy Families Block Grant 9,182,280 Division of Sodal Services Low Income Enwgy Block Grant Social Services Block Grant Temporary Assistance for Needy Families Division of Facility Services Social Services Block Grant Division of Child Development Social Services Block Grant Child Care and Development Fund Block Grant Temporary Assistance for Needy Families Division of Vocational Rehabilitation Social Services Block Grant Division of Services for the BHnd Social Services Block Grant Office of the Secretary (Office of Economic Opporldty) Social Services Block Grant Community Services Block Grant Division of Aging Social Services Block Grant Division of Public Health Social ServicesBlockGrant Temporary Asistmce for Needy Families Preventive Health Services Block Grant Maternal and Child Health Block Grant Note. The fiigares listed above for the Department of Health and Human Services do not reflect the total amount of the Block Grants. due to various transfen to other Departments. Page D - 3 CHANGES TO THE MEDICAID PROGRAM STATE During its 2001 Regular Session, the N.C. General Assembly enacted a $6.3 Billion budget for the Medicaid Program for SFY 2001-02 and a $6.9 Billion budget for SFY 2002-03. State funding for the Medicaid Program totals $1.98 Billion for S N 2001-02 and $2.22 Billion for SFY 2002-03. During its dehiaations on the proposed budget, the 2001 General Assembly reduced the General Fund appropiations for the Medicaid Program by $44.4 million for SFY 2001- 02 and $99 million for SFY 2002-03. The reductions include implementation of a prescription drug utilization management program, reduction of the dispensing fee for brand name prescription drugs, increasing recipient co-payment for braud name drugs to $3, limiting personal care services to 3.5 hours per day, reducing physician rates to 95% of Medicare rates, limiting Medicare crossover claim payments to 95% of Medicare rates, and modifjring the asset policy for receiving Medicaid The 2001 General Assembly also made the following policy changes to the Medicaid Program and increased the budget for the program to support these changes: Increased General Fund appropriations by $35 million for SFY 2001-02 and $79 million for SFY 2002-03 to cover the d m in th e federal 6naucial participation rate. Provided Medicaid coverage for uninsured women under age 65 with breastorcavical~~~.cer. Incmsed funding for the Community Alternatives Programs for Children Increased funding for the Community Alternatives Program for the Mentally R ~ e v e l o p m e n t a l lDy i sabled. Provided funding to increase access to dental services for children and adults. The 2001 General Assembly also enacted other Medicaid policy changes: Exempted medical coverage policy h m APA rule-making and adopted a separate and quicker process for the implementation of medical coverage policy under Medicaid. Required the Department of Health and Human Service% to develop and implement a plan to reduce growth in the Medicaid program for SFY 2002-03 to 8% or less of the total expenditures for SFY 2001-02. Required the Division of Medical Assistance to prepare a five-year fiscal analysis documenting the increased costs on implementing any change in medical policy and submit it for Departmental review. Required the Department of Health and Human Services to consider implementation of the findings and recommendations in the "North Carolina Medicaid Benefits Study." FEDERAL No significant federal changes occurred in 2001. DISPROPORTIONATE SHARE FUNDS Disproportionate Share @SH) Funds are Medicaid payments made to health care providers who deliver services to large numbers of uninsured patients. DSH payments to health care providers are made in addition to reimbursements for savicea provided to Medicaid eligiile patients. Congress originally authorized the payments as a funding mechanisn to offbet the cost of uncompemated m e for' health care providers, particularly hospitals, in an effort to improve access to health care for the uninsured. Prior to the enactment of The Balanced Budget Act of 1997, federal law permitted states to draw federal funds up to a maximum allotment established by the federal Health Care Financing Agency (HCFA). .The law allowed states to match federal fuuds for DSH payments with direct appropriations or with funds appropriated to a governmental unit for the delivery of health &re to the mimud. States were required to obtain approval of their State Medicaid Plan for drawing DSH payments from HCFA. Under the amended federal law (effective October 1997), DSH allocations are set forth in law on a state-by-state basis. The law provides for gradual reductions in DSH allocations to states beginning 1999 through the yem 2002. North Carolina uses state appro&ations to the five state hospitals (UNC Memorial, Dorothea Dix, Broughton, Cheny and John Umstead) as the non-federal match with which the State draws disproportionate share payments. The 2001-03 b i d st ate budgets anticipate $107 million each fiscal year in DSH payments to the State Treasmz. Section 21.23 of Chapter 424 of the 2001 Session Laws stipulates that appropriations to the Medicaid program that become available due to federal -onate Share receipts will be deposited as nontax revenues. The St.a te. Treasurer will reserve my DSH payments in excess of $1 07 million for futrne Qpropn&on. Page D - 5 SUMMARY: GENERAL FUND APPROPRIATIONS 2001-2003 FISCAL BIENNIUM Page E-I Page E-3 Page E-5 EDUCATION Overview: 2001 Session Fiscal and Budgetary Actions Community Colleges Recammended Budget $&,021,974 $w8,021,S74 A Community Wage Syatam ORloe 1 Operating Efflclencles E l i mi nate the library orderi ng and receiving services and two library clerk p s i tions totaling $59,543. Col leges w i l l be responsible for ordering and receiving library materials. El i minate a vacant educational consultant position and operating funds totaling $64,432. El iminate a vacant position i n the Office of the President totaling $23,396. 8. stete Aid - Community College lnatltutiom 2 Compensatory Education Reduce the appropriation for Compensatory Education from $1,150,537 to $l,c00,OM). 3 Worker's Compensation Reduce the appropriation for Worker's Compensation from $976.629 to $703,702 to reflect actual expenditures. 4 Unemployment Compensation Reduce the appropriation for Unemployment Compensation from $521,766 to $440,751 to reflect actual expenditures. 5 Reduce Llablllty Insurance Reduce the appropriation for Liabi li ty Insurance fmm 853.m to $33.000 to match actual expenditures. 6 Eliminate Prlority Programs Eliminate Priority Programs since this item was intended to support federal funds that are no longer avai lable. 7 Reduce Human Resource Development Funds Reduce the appropriation for Human Resource Development from $6,951,895 to &I,OOO,OM). The program wi l l be reorganized and the classes w i I I be offered as Occupational Continuing Education classes. (SB 1005, Section 30.3). 8 Reduce Special Allotments Reduce the Special Allotment line item from 32,244,332 to $1,683,249. Community Colleges h= Overview: 2001 Sesslon Flscal and Budgetary Adions FY 200192 FY 200293 = g Community Setvice Block Grant Adjustment ($317,738) R ($317,738) R Reduce the funds allocated for hobby/leisure courses from $1,817,738 to $1,50O,OO. Col leges wi l I make every effort to ensure that this reduction does not result i n a lessening of senior services. 10 Eliminate the State Subsidy to Prlvate Diploma Nursing ($200,000) R ($200,000) R Programs El iminate the recurring State subsidy to private diploma $200,000 NR nursing programs. Provide non-recurring funds for the prcgram i n the f i r s t year of the biennium. 1 1 Adjustment for Over-realbed Receipts ($l,OOO,OOO) R ($1,OOO,OW) R lncrease the budgeted amount of tuition and registration fees to more accurate1 y reflect anticipated receipts. 12 Eliminate Trustees Association Education Fund ($25,000) R ($25,000) R Eliminate the appropriation for educational materials for the Trustees Association. 13 Enrollment Adjustment $10,000,000 R $10,000,000 R Provide funds for cclamuni ty col lege enrol lment growth i n accordame with the enrol lment funding formula. 14 Faculty and Professional Staff Salary Enhancements Provide the Conmwnity Col lege System with an additional 1.25X for faculty and professional staff salary increases. This increase of $6.9 million i n recurring funds i s located i n the Compensation Reserves section of the budget. I6 Other Cost Adjustment Provide a 2% inflationary increase to the 'Other Costn part of the funding formula. lncrease amount al located per FTE for 'Other Cost' from $175 to $178.50. 18 Maintenance of Plant Increase the Mai ntenance of Plant appropriation from $513,668 to $787.877. The purpose of this increase i s to hold harmless those colleges that had been receiving Maintenance of Plant funds when additional schools became eligible. (SB 1005, Section 30.13). 17 Fayettevliie Tech Botanical Lab Funds A nonrecurring grant-in-aid to Fayettevi l l e Tech to develop a regional botanical laboratory i n partnership with the Cape Fear Botanical Gardens. Community Colleges Overview 2001 Session nscal and Budgetary Actions PI 2001-02 FY 2002-03 18 Crhnlnal Justice Reorganhation ($350,OM)) R ($350,000) R Reorganize the Criminal Justice Regional Planning and Training Program into three regions to be determined by the 3.00 -3.00 System Office. Reduce the appropriation for the Criminal Justice program from $689.896 to $339,896. D. REWVW and Other Funds 18 Reduce State Board Rese~ve ($350,000) R ($350,000) R Reduce the approptiation for the State Board Reserve from $1,150,000 to 8800.WO. 20 Increase Need-Based Financial Aid $1,062,806 R $1,062,806 increase the Need-Based Financial Aid fund from $5,000,000 to $6,062,806. D. Tuffion and Fees 21 Increase Curriculum Tultlon Charge ($10,162,806) R ($10,162,806) R Increase the in-state tuition charge per semester hour by $3.50 from $27.50 to $31.00. Increase the out-of-state tuition charge per semester hour by $3.M from $169.75 to $173.25. It i s anticipated that for most students, this increase w i I I be off-set by federal and state financial assistance prcgrams. Total Legislative Changes Total Position Changes Revised Budget Community Colleges Page F 3 1 Special Provisions 2001 Session: SB 1005 Department: Community Colleges Section 30.1 me: Community College Funding FldbUity Summary BoUerplate language allowing community colleges to establish their budgets according to their local missions. Umits the transfer of funds fmm faculty salaries to 2% systemwide. Section 301 Pennr Transfers of FMds to the New and Expanding Industry Tralning Proarm Summary Allows the Governor to transfer funds to New and Expanding Industty Tralning from other agencies or programs funded fmm the General Fund. Section 30.3 me: Reorganioation of the Human Resources Development Program Summary Allows the colleges to offer Human Resources Development Courses as Occupational Continuing Education Courses and earn budgeted for those courses. Rovides for fee wahrers for certain eligible populations and requires the State Board of Community Colleges to report to Education OversigM on the reorganhation by January 1,2003. Section 30.4 Summary Prevents unexpended MIS funds from reverting so that they may be paid out in accordance with the contract perkxi for the development of the system. ' Community Colleges Section 30.5 Title: Employment SaourIty Cornrnlsslon Funds Summary Appropriates $20,054,298 from the Employment Searrlty Commission Tralnlng and Employment Account for: Equipment - $1 9,154,290 Regional and CcopmUve lnfflathres - $400,000 Focused IndusMal Training - $1,500,000 . New and Expanding Industry- $7,000,000 Of the $1.5 million appropriated for FIT, $250,000 shall be allocated to Catawba Valley CC for the oparation of the Hosiery Center and $250,000 shall be allocated to Gullford Technical CC for the operation of the Pledmont Triad Center for Advanced Manufacturing. Appmpriates $7,013,574 from the TBE Account to ESC for administratbe msts for the account and for other reemployment services. Directs that any additional funds MI be spM benveen the mmmunity colleges and ESC 80120. Changes the Trainlng and Employment Account triggers. If the Unemployment Insurance Fund balance is below $900,000,000 on August I, or C at any tlme in the twelve months preceding August 1 the state unemployment rate rises above 4.3%, the Training and Employment Account does not apply in the following calendar year. Changes the Trainlng and Employment Account sunset to January 1,2000. Keeps the unemployment tax rate revenue n e W for employers. For axample, If the TBE ~c&unt applles, then the base rate will be 1.0% plus a 02% surcharge. The employer pays 12%. If the TBE Account does not apply, the base rate will be 120. The employer pays 12%. Section 30.6 Mod[fy Tenn of Community Wege Faculty Contrao$ Summary Diracts the State Board to raqulre that all full-time community college faculty contracts be converted to ninemonth contracts for the fall and spring semesters. Faculty who are hired to teach in the summer term shall have supplemental contracts for the summer. No changes in the salary of any faculty member shall result from these modifications. The purpose of this proviaion is to provide the Ganeral Assembly with the data necessary to make informed declslons regarding faculty salaries and funding for the summer term. Section 30.7 TWe: . Realignment of Accounts for ImrtlMloltal and AdmfnEBbatlve Support Summary Combines four stateaid accounts in the community college budget to better reflect actual pnctice. Section 30.8 me: study M Dkqmndes in Faoulty Waries Summary Authorizes the Joint LeglslaUve Education Oversight Comrntttee to study faculty salaries at various colleges to determine why so much variance exists among the colleges' aversge faculty salaries. Community Colleges paseF8 SectiDn 30.9 Title: State Board R e a m Anooatiorrs Summary Dire& the State Board of Community Colleges to use $100,OW) from the State Board Reserve for the 2000-01 fiscal year to assist small, rural, low-wealth community colleges wlth operation and maintenance of plant costs Cthey need to assist new or expanding industries in their service delivery areas. Section 30.10 Title: Coltsolldate end Coordinate Worldbm Development Pr-8 Summary Transfers the Bureau of Training lnitlatives and the Apprenticeship Program from the Department of Labor to the Community College System. Requires the State Board of Community Colleges to report to Edumtion OverslgM 30 days prior to mak1n.g any changes to the programs. No changes to the programs, other than the intial transfer, may be made before January I , 2002. Transfsr of the Bureau of Training lnitiathres is efktive July 1,2001. T d e r of the Apprenticeship program becomes effectbe when the U.S. Department of Labor approves the transfer. Section 30.11 me: ~ m o f ~ e s h w a n 0 8 9 Summary Transfers the remaining cash balance from a now defunct communky college scholarship fund into the Need-Based Financial Aid fund. Section 30.12 Tie: ~ ~ B u n m mTbaheIc al Community College Fun& Do Not Revert Summary Extends the reversion date for funds appropriated for the Small Business Center at Ashevtlla Buncombe Technical Community College until the end of the 2002-2003fiscal year. Allows the funds to be used for capital and operating expenses. Section 30.13 Tie: Malntananoe of Plant Operatiom, Summary Changes G.S. 115D-31.2 to allow colleges which quallfyto receive a pro rata share of funds appropriated by the General Assembly for maintenance of plant Section 30.15 Summary Allows the State Board to use up to 8100,000 of the funds appropriated for FIT to pay reglstretion fees and material costs for safely wumes. Tlfle: Community College TmteeMrravel Rebnbrrreement Summary Umlts the use of state funds for Local Eloards of Trustees' travel to in-state travel. Local Boards must use I d fun ds for wt4-state travel. Saction 6 of House Bill 231, Appropriations Modlflcetions and Other Changes, SL 2001-513, repeals this provision. Community Colleges Overviw. 2001 Session Fiscal and Budgetary Actions Public Education I I ( - F j jzzq Recommended Budget $5,923,802,924 $6,021,031,149 Legislathre Changes A More Accurate Pmjectlon of Budget Requirements 22 Additional Adjustments In Average Salary Projections ($8,497,668) R ($8,497,668) R In addition to the annual Continuation Budget adjustment for average budgeted salary of certified personnel, a more recent review of certified personnel salaries f ram updated salary data, identified an additional reduction i n projected salary needs for N 2001-02. 23 School Bus Purchases Reduce funding for PI 2001 -02 based on a revised school bus ($23,915,692) NR replacement schedule. 24 Payments for Teacher Unused Vacation Days ($4,000,000) R ($4,000,000) R Adjust funding to reflect recent expenditure experience. 25 Mentor Pay ($3,000,000) R ($3,000.000) R Reduce funding to reflect recent expenditure experience. 26 Transportation Adjustment: Bus Driver Physicals ($535,000) R ($535,000) R The Division of Motor Vehicles i s delaying the implementation of the requirement that bus drivers must have a physical e m i nati on every two years. Twenty-f i ve thousand ($25,000) w i l I remain i n the budget for pi lot projects. 27 Transportation AdJustrnent: Diesel Fuel Cost ($2,990,000) R ($3,048,8Qo) R The economic forecast models project a 10.5% decline i n diesel fw l cost from the current year's average. The current average cost i s $0.92 per gal Ion and the Conti nuation Budget was based on an estimated cost of $1.05 per gal Ion. This adjustment budgets diesel fuel at $0.92 which i s the current level. AI l school buses uti lize diesel fuel. 28 Transportation Adjustment: Inventory Adjustment June 30, 2002 fnventory levels (oil, tires, and parts) were ($4,000,000) NR approximately 6s of annual needs. This one-time reduction i s to reduce current inventory levels to a more optimum level. Public Education m F 7 Overview: 2001 Sesslon flscal and Budgetary Actions 28 Revised ProJectlon of Average Daily Membership To eliminate the possibility of duplicating the inclusion of some students i n projecting a local school administrative units average daily membership and to project a more realistic estimate of future student populations. 30 Classroom Materials/lnstruotion SupplleeiEqulpment Adjust the increase for inflation to a 3 growth (in line with the Consumer Price Index) from the 5% growth used i n the Continuation Budget. 31 School Bulldlng Administration Estimated new pub1 i c schools opening i n N 2001 -02 has been revised to 35 (from 70). 32 At-RIsk Student SenridAItemathre Schools Each high schml receives funding to employ a school safety officer. The estimate of new high schools scheduled to open i n FY 2m1-02 has been reduced to 10 (from 20). 33 C M e r School Resenre Funds i n the category are used to distribute the applicable State funding to charter schools for students attending a charter school who were not previously i n a public school (private or home schooled). Since the number of charter schools has reached the maxim legislated number of 100, the reserve can be reduced to 82 mi 1 lion i n FY 2COl-02 and $1 million i n FY 2002-03. 34 Driver Education To reflect reductions to the Highway Fund for revised Average Daily Membership Projections and an adjustment based on average annual reversions. Reduction to Receipts: ($1,630,739) B. Redudion of Admlntsbetion Cost 35 Safety Assfstanca Teame El i mi nates funding used for Statewide consultants . 36 Regional Education Senrioe Alliances Reduce State funding distributed to local school administrative units that could be used to support the Regional Education Service A1 liences to $3 mi i t ion (a 55.4% reduction). 37 Central ORice Admlnlstratlon A 1.97% reduction from N M00-01 al locations for each local school administrative unit. The State Board i s directed to develop a revised formu la for N 2002-03 that eliminates any permanent hold harmless i n the formula. Public Education Page F 8 Overview: 2001 Sessbn Fiscal and Budgetary Actions 38 Uniform Education and Reporting System (UERS) Based on the current NC WISE implementation schedule, a one-year reduction i n funding i s possible. FY 2001-02 funding level w i l l be $12,518,927. 38 Depattment of Public Instruction The Department of Public Instruction w i l l eliminate at least 25 positions and w i l l reduce other costs. $533,730 can be transferred f ran the UERS budget i n FY 2001 -02 and additional $466.270 i n FY 2002-03 to DPI to reduce contractual costs by internal i zing work to support the Uniform Education and Reporting Systems (UERS) . This transfer i s to al low currently contracted services to be converted to positions. 25 I denti fied Posi ti ons ($ 942,344) Contracted Services ($1.502.269) Ce l l u 1 ar Phones ($1 1,505) Equipment ($194,251 Elimination of Stds Board ($175,041) Contracted Personal Services ($41,775) Travel ($195.503) Other Aid ($73,Cm) Printing ($24,506) Postage (323,876) Dues and Subs ($15.930) C. other Budget AdJusbn~nta 40 Vocational Education - Tach Prep Eliminates State funding for Tech Prep. Federal funds i n excess of $3 mi I l ion support this program. 41 Appmpdations to Non-Publlc School Agencies Eliminate funding for AVID pi lot program. Reduce funding to the fol lowing Agencies by 5U% and make non-recurring: A+ Schools, ExplorNet, TRE. Gecgraphic A l l iance. Cued Speech Center, Global Curriculum. Reduce funding to Schools Attuned, Public School Forum, Ci ties/Camrmni ties i n Schools. NC Network, and Teacher Cadet programs by 10%. D. lmprovhg Student Performance 42 Targeted Class Ske Reduction and lnstructlon a. In schools with 80% or more of the students eligible for free or reduced lunch and with 4.5% or more of students performing below grade level, lower class size i n grades K-3 to 1 : 15. Require teachers al lotted for these grades to be assigned to teach i n these grades. Public Education Overview: 2001 Session Flscal and Budgetary Actlons 43 Targeted Class Size Reductlon and lnstructlon b. Extend the contract for a l l teachers i n these targeted schools for five days (5) i n 2001 -02 and ten days (1 0) i n Mm-03. The f i r s t year days wi l l be for staff development i n methods to individualize instruction i n smaller classes. The second year wi I I add 5 instructional days. 44 Targeted Class Size Reductlon and Instruction c. Provide one additional instructional support position for each of these targeted schools. 45 Targeted Class Size Reductlon and lnstructlon d. Eliminate regular do1 lar allotment for teacher assistants i n grades K-3 i n these targeted schools due to significantly lower class size. 46 Targeted Class Size Reductlon and Instruction e. Provide funding for outside evaluation of targeted class size reduction initiatives. 47 Targeted Class Size Reductlon and Instruction: Kindergarten Lower class size ratio i n kindergarten to one teacher for every 19 students i n 2001-02 and to one teacher for every 18 students i n 2002-03. 48 Class Size Reduction/ lnstructlon: Continually Low- Perfonnlng Schools a. Reduce class-size i n schools identified by the State Board of Education as continual ly low-performing i n grades K-3 to 1 :15 and i n grades 4-5 to 1 :17. 40 CIass She Reduction/ lnstructlon: Continually Low- Perfonnlng Schools b. Reduce class-size a1 lotment i n middle schools (Grades 6-8) to 1 :17 and i n high schools to 1 :20 for continually low-performing schools. 50 Class She Reductlonl Instruction: Continually Low- Perfonnlng Schools c. Extend the contracts for additional teachers i n elementary schools and for a l l teachers i n middle and high schools by 5 Qys i n 21101 -02 for staff developrent and add an additional 5 days of instruction for middle and high schools i n u#);1-03. These apply for schools identified as continually low-performing. 51 Teacher Recruitment lnltiatlvea a. Have the Education Oversight Colmmittee study methods to provide benefits to part-time teachers to attract more certified teachers back into the classroom. Public Education Overview: 2001 Session Fiscal and Budgetary Actions 52 Teacher Recruitment lnitlathres b. Teacher Assistant Scholarships Additional scholarship funds for teacher assistants taking courses at community colleges that are prerequisites for teacher certification programs. (Major initiatives i n the UNC budget wi I I improve avai labi li ty of teacher education programs for teacher assistants). 53 Teacher Recruitment lnltiathrea c. To attract teachers in the shortage fields of mathematics, science and special education and to entice teachers i n these specialties to teach i n schools with large numbers of at-risk students. In middle schools and high schools with 80% or more of the students eligible for free or reduced lunch or with 50% or more of students performing below grade level, provide an annual bonus of $1,800 (paid monthly with matching benefits). Teachers must be certified i n and teaching i n these fields and wi II remain eligible for the bonus as long as they continue to teach i n eligible schools. 64 ABC Bonus& Provide funding for ABC bonuses for schools meting or exceeding expected growth i n 2000-01. 65 ABC Bonuses: Pilot Districts Provide funding for school personnel i n five (5) pi lot school districts for additional bonuses earned under the disaggregated performance pi lot project directed by the General Assembly i n 1999 (Sec. 8.36. SL 1999-237: HB 168). If a school achieves the pi lot program goals, a l l certified personnel assigned to the school wi I I receive up to $750 and teacher assistants up to $325 (these awards are i n addition to standard ABC bonuses). LEAS not eligible for low wealth or small county supplemental funding must contribute 2% of the total cost of the bonuses. 58 Character Education Funding for expansion of character education program. 67 Children with Special Needs Increase funding per student for chi ldren with special needs. The appropriation per funded headcount increases $37.98 to $2.650.28 (before increases for salary increases) . SB Impmvlng Student AEcountablllty Increase funding for additional instruction for students performing below grade level. Public Edumtion Overview: 2001 Sesslon Fiscal and Budgetary Wons 69 Umited Engilsh PIoRciency Appropriate additional funds to serve students with limited proficiency i n English. This brings the total funding for this purpose to $23,037,655 for M 2W1-02 (prior to adjustments for any legislated salary increase). 60 Low-Wealth Funding Increase funding for school districts i n counties with less abi li ty to generate local resources for pub1 ic schools. 81 Small County Funding Increase formula funding to counties with fewer than 3,239 students (or 4,080 i f property tax base per student i s lower than state average). This wi I I increase base allotment to each eligible LEA by $74,074. 62 InstrudIonal Supplles Expand funding for instructional supplies. Language w i l l direct that each LEA to al locate a minimum of $100 to each teacher for purchase of supplies. 63 School Accountability Report Cards Funds for the Education Cabinet to develop, publish, and distribute school accountabi l i ty report cards. The cards should be designed to supply parents information on school characteristics and performance. 64 Average Dally Membership Contingency Reserve Provides additional funds to the State Board of Education to address transitional year funding for local school administrative units with new charter schools and for f i r s t month al lotment adjustments to local school administrative units with higher than expected enrol lment growth. RS NCWISE OWL'S On-Una Subsgtptlons NCWISE OWL i s operated by the North Carolina Department of Public Instruction and offers on-line resources (periodicals. encyclopedia, etc.) for K-12 teachers and students. Federal resources that have been discontinued have covered the subscription cost. The Department of Public Instruction wi I I work col laboratively with the Department of Cultural Resources and report to the Joint Information Technology Appropriations Subcornmi ttee by March 15. 2002 as to the feasibility of merging NCWISE OWL with NCLIVE (which also offers owl ine subscription services). Public Education Page F 12 Overvi~2~0:0 1 Session Fiscal and Budgetary Actions Total Leglslalue Changes ($117,333,543) ($98.842603) R $73,170,983 NR $0 NR TotalPosYtlonChanges . 287.50 680.00 Revised Budad 65,879,640364 85,922,188,546 Public Education Special Provisions 2001 Session: SB 1005 Department Public Education Section 28.1 Me: Utigation Reserve Funds Do Not Revert Summary Allows funds set aside for lawsuits to carryover and allows up to $500.000, from funds appropriated to the State Board, to be added to the reserve. Section 282 Me: Chlldren With DlsabllItiaa Summary Specifies the number of students funded (158,825a)n d the appmprlatlon per funded student ($2,650.28)w, hich will be adjusted for legislated salarylbenefit changes. The fundlng per student is an increase of $37.98 from FY 2000-01 (beforaed justment for salarylbenefit changes). . Section 28.3 me: Funds For Academically Studenta Summary Specifies that 4% of average dany membership (ADM) shall receive funding (52,042)a nd the appropriation amount ($878.10) per funded ADM, which wlll be adjusted for legislated salaryibenefit changes Section 28.4 me: At-Rtsk Studant S e r v I o e s lAl ~Sc hools Summary Allows the North Camilna Deparbnent of Public insbudon to use $200,000 from funds appropriated to studyheport on alternative schools as outlined in (115G12(24)). Section 28.5 me: Uniform Education and RepDlting System (UERS) Summary Nows unexpended funds as of June 30,2001 and June 30,2002 to carryover for use in the next fiscal year. Funding is used to develophmpiement the new student Information system NC WISE. Section 28.6 we: Supplemental Funding In LowWaalth Counties Summary W t e s the description of the formula used to distribute funding to eligible school systems (no change from prevlous yeam). Adds a report from lo& school adminlstratfve unlts on how the funds were used for teacher ' rec~itmentc, losing the achievement gap, improving student accountability, at-risk students, and kee~lnasc hools safe. Aliokiocal school systems to use these funds to pay for contractual services (not to exceed $10,000) from the Department of Public instructJon for help wlth plant operations as an additional Public Education Page F 14 Title: Small SehDol System Supplemental Funding Summary Restates the description of the formula used to distribute funding to eligible county school systems. Minimum average daily membership was increased from 3,150 to 3,175. Increases the base funding for instructional supplies and equipment to $540,074 (the amount was $466,000). This is a funding increase of $74,074 per eligible school system. Adds a report from local school adminlstrattve units on how the funds were used for teacher recruitment, dosing the achievement gap, improving student accountability, at-risk students, and keeping schools safe. Section 28.8 Title: Funds To Implement The A6Cs Of Public Education ProQram Summary Authorizes the State Board of Education to utilize funds appropriated for FY 200102 to assure that inmntlve awards earned In FY 200041 are paid. Section 28.9 Tie:. Students With Limited EnglEsh Pmficienoy Summary Restates the formula which includes an expansion of $1 million. Section 28.9(b) requirea a headcount by December I and clarifies when students are removed fmm the headcount Section 28.10 Title: ExpmdMres for Driver Education Cgrtificatea Summary Allows the use of funds already appmpriated for Driver Education to be used for driving eligible certificates (normally amund $35,000). Section 28.11 Tide: T bSalar y Schedules Summary Outlines teacher salary schedules for FY 2001-02. Average teacher salary increase is 2.86%. Range of raises is from 1 % for teachers wlth 29+ years of experience to 6.92% for fourth-year teachers. Section 28.13 Tie: Wmol A d m i M r Salary Schedules Summary Outlines salary schedules for principals and assistant principals. The average salary increase for principals and assistant principals is the same as for teachers and instructional support personnel. The 1% salary increase for safe schools and the 1% salary increase for meetinglexcmding ABCs expectations are discontlnued; however, any additional percentage increase awarded since 1907- 98 shall continue. The 1% bonus for safe schools and the 1% bonus for mwtlnglexoeeding ABCs expectations are discontlnued after h u a e s are paid for FY 200041 performance. Section 28.14 Summary Directs the transfer of funds for a $625 annual salary hcreese for central office adminisWrs. Local Boards can determine the amount of raises to give employees in this category. Public Education paeeF15 L Section 28.15 r Summary Directs the transfer of funds for a $825 annual salary increase for noncertiRed personnel (includes: teacher assistants, clerical, custodians, and bus drivers). A full-time employee that works for the employment term of the local school administrative unit for that employee (10,11, or 12 months) will receive the $625 salary increase. Employees employed less than 100% Mi receive a porbion of the $625 based on thelr percent of employment Section 28.16 me: Hlgh School Exlt Exams Summary Allows the State Board of Education to use up to $3 million fcr the continued development of the High School Exit Exam. Funds can also be u dto purchase test scoring equipment and revisions to the reading and writing assessments. Section 28.17 Summary A Principal's decision on promotion Mi not be solely b a a on test scores; test scores used in such a decision must be validated. Local board policies must Include opportunities for parents to discuss decisions to retain a child In the same grade. State Board of Education must study costs and benefits of providing parents with a copy of standardhed tests. A personal education plan for focused intervention must be in place for all students performing below gmde level on end of grade tests. Students must be identitied as at-risk for academic failureas early as possible. Umb the number offleld tests at a school to a maxlmum of two per grade level. NOTE: Section 116 of House Bill 338,2M)lTechnlcal Corrections, SL 2001487 modified this language to allow the SWe Board of Education to waive this llmit U it is determined that without the W e r the reliability and validity of a s p d c test is wmpmmised Outllnes policies that must k In place for testing children with dlsabtities. A complete review ofthe State's testing program is also required before the next lagislathre session. Section 28.18 me: PDot amgram Authorldng The Use Of Mentar Funds For FuIl-Tbne Mentom 1 Summary Pilot p min Me cklenburg, Wake and Forsyth Counties. These three school systems are 1 authoiaed to employ full-time mentors who can SEN8 up to a total of 15 Rrst andlor second year teachers. The State mentor funds ofS1OO per month (maximum of $1,100 per year per teacher mentored) can be used to help pay for these full-time mentors. I Requires annual report on rjfktiveness on retention of teachers. I Public Education 4 i Public Education Section 28.19 TMe: Study of pmgmms for lnftlaay CeiMad Teaohm Summary Requlres State Board of Education to study performancebased limnsure, use of mentors and other strategies to improve retention of newly cerWied teachers. Report due Feb~ar1y, 2002 to Education Oversight Committee Allows initially cettified teachers to take up to 3 days of paid leave during second year of employment to work on performance based licensure requirements. Allows simllar leave in third year if licensure requirements have not been completed. Leave is allowable only wlth supenrisor's approval. Section 28.20 me : Phase In ADM ReduEtiom Due to ~harhvS chools Summary Limits fiscal impact on local school administrative units to a maximum loss of 5% of their average daily membership (ADM) a year due to opening of new charter school in a local district Phases out hold-harmless funding for counties previously covered beginning in 200203. Section 28.21 Title: Medlcaid Outmat% Summary Spells out methods of repayment In case of audit exceptions in reimbursement of federal funds to local school administrative units for Medicaid outreach. Section 28.22 me: Funds for NontnatfuEtional Support Personnel h4ay be Used for Staf Dewlopent Summary Allows transfer of up to 3% of this allotment for staff development purposes. W o n 28.24 me: Study Textbook MstribYtlon System Summary Requlres the State Board of Education to contract wlth a private consultant to determine the most effectbe and efficient method for providing textbmks to local schools. Report due to Education Oversight Committea by April I, 2002. Section 28.25 Title: Abolish the North Camlina Skmdards Board for PuMIc School Adm-n Summary Eliminates this Board and transfers essential functions to the State Board of Education. This reduction is a part of the $3.2 mnllon reduction to the Deparbnent of Public Instruction. W o n 28.26 TMe: Quldeanes for Charter School, Emollment Summary Clarifies language related to when the State Board of Education is required to approve the gmwth in a charter school's enrollment by more than fO% In one year. No requirement for review if Increase is no more than 10% of previous year's enrollment or is in accord with growth plan in charter application. Section 28.27 Summary Continues authority for State Board of Education to use up to $50,000 annually for a charter school advisory commlt&ee and evaluation of charter schools. Summary Requires NC Teacher Academy to include sMf development programs focused on teachlng in at-risk schools. Reaulres that 10% of Teacher academy budget for 2001-02 be used to ~rovlde training for elementary teachers assigned to small&class-sbss. Section 28.29 Title: Mod@ Law Regarding ChIldren wlth DlsabIlitles Summary Restructures the advfsory group Ccuncn on Educational Services for Exceptional Chldren to comply with federal requirements in the IndMduals with Disabilffles Education Act (IDEA). Requires Joint Legislathre Education Oversght Committee to review any changes needed to bring State laws dealing with special education and services to chfldren with dbablities into compliance w.. i. t- h . I.-D -EA . Adds requirement for State Board of Education to adopt rules on educational prcgrams for pregnant students to enable them to successfully complete publlc school. Section 28.30 Title: Closblg tb Achievementoapevelent Gap Summary Subsections a. 8 b. require State Board of Education to Include a "closing the gap" component in its school level measurement of student performance and to report to the Joint Education Oversight Commktee data by subgroups of students. Subsection c. requires school improvement plans to indude plan to prepare all students to read by the time they enter the second grade. Teachers must noWy parents if children are not reading at grade level. Subsection d. enmurages State Board of Education to consider If standards or other criteria fmm grades K-2 should be Included in a school's performance assessment e, Requires State Board of Education to adopt model guidelines for establishment of local task forces on closing the achievement gap. Local boards of education have discretion over establishment of such a local task force. f. Reauires State Board of Education to remrt to the Joint Education Overslaht Committee and to the sbdy Commission disaggregated data on dropouts, suspensions, expulhlons and placement in alternative programs, and to make the data available to the public. Subsections g., h. and I. reauthorize the Commlsslon on Improving the Academic Achievement of Minor& and At-Risk Students for two years. Requires Commission to study need for addfflonal resour& to close the achlevement gap. Section 28.31 me: Clarily Law RegardIng Mentors for Sacond-Year Teachera Summary hovides mentors to second-year teachers whose flrst year of teaching was in a private school, charter school. or another state. Public Education p a s a ~18 Section 28.32 me: Funds for the Testing and Implementetion of the New Student lnformatlon System Summary Allows use of up to $1 million from appropriations for the new student information system to be used forpurchase or lease of equipment by the Department of Public Instruction for implementation of system. Section 28.33 Title: Expanditure of Funds to Improve Student Acmuntabfllty Summary Directs allocation of funds based on students below grade level in grades 3-6. Requires funds to be used to impmve academic performance of students performing below grade level. Requires allotment of funds to i d school adminisirative units wlthln 30 days of passage of a.~.~ ro. oriationbsill . and allows funds to be available thmu-n h Aug- ust 31 of subsequent years for summer programs. Section 28.34 me: Study the Salaries of Sohool Fmd Servlw Workers and Custfxlh Summary Requires Joint Legislative Education Oversight Committee to study the salaries of these persons employed by NC public schools. and to report to the 2002 Session. Section 28.36 Title: Character Mucatlon Summary Directs State Board of Education to develop a model character education wniwlum; allows Board to contract for assistance. Section 28.37 Title: study of way DiffmntWs for instructional Support P818onnal Summary Directs Joint EducaUon OversigM Committee to study salary diirentials of instructional support personnel based on degrees and credentialing. A study of the impact on student performance of teacher salary differentials based on degrees and credentialing. Section 28.38 -Me: fledbnity to Implement Base Budget ~eductlon Summary Allows Deparbnent of Public instruction to shiit personnel in cmyfng out staff reductions requlred in this budget Requires conversion of contractual senricea to state employees withln existing number ofstat8f;nded personnel. S d o n 28.38 Title: Funds lbr lnstntcmna~S upplies Summary Directs that school teachers be able to purchase up to $100 in classroom supplies. L dsch ool administrative units must report on implementatJon by February 15,2002, wlth a summary repOfi to legislative committees b y ~ ~ r i2ldl0,2 . Public Education paeeF18 Section 28.40 Summary Directs Deparbnent of Public instmction to continue subscriptio~on this Web she for 2001-02 .- fiscal year (previously funded with federal resources). DPI and Cultural Rasources shall collaborate on most efficient use of funds to access the NC WISEOWL subscriptions through the NC L M program by 200203. Report due to Information Technolcgy Appropriations Subcommittee by 3/15/02. Section 20.7 Tftle: AIlocatlon of Federal Funds for Prior@ M s Summary Requires State Board of Education to cwrdlnate use of federal and State funds to avold overlap of efforts and to expand avaflabnity of smaller class s&es to as many at-risk students as possible. W o n 28.42 Tie: Overtime for Schd Employee6 Summary Clarifies wage and hour la& requirements on overtime pay for employees W n g as both a teacher assistant and a bus driver. Section 28.43 Tftle: Funds for Teaoher Recrurtmeni Wtlativas Summary Allows State Board of education to use up to $200,000 In public schools funds to allow NBPTS cerWied teachers or other teachers who have received special recognition to advfse the State Board on teacher recruitment Section 28.44 Summary Requires local schml districts to use class-size reduction positions for kindergarten only for kinderaarten teachers. Requires maximum class sirs limits set by State Board of Education to be r e d u d by one student in 2001-02 and by two students in 200243. Allotments are based on one teacher for every 19 students in 200102 and one teacher for every 18 &dents in 2002-03. W o n 28.45 Mle: ~ ~ ~ ~ o r ~ e t ~ u d t Summary Requires State Auditor to audit ExpiorNet, a non-profit recaMng state funds. Pmhlbits dktrlbution of funds to ExplorNet until wrtfficatlon offinandal cormds and procedures by Auditor and OfRw of State Budget NOTE W o n 114.6. of House Bnl 338,2001 Technlcal Carreotlons, SL 2M1- 487 modified-this language to allow the Stab Board of Education to distribute grant6 to local school adminlsWe units if the State Audbr has not completed the audt on ExplorNet by March Requb.es 80% of State funds appropriated to be dlstrlbuted in the form of grants to local school admlnlsWe units. Publlc Education Section 28.46 me: WWealth Tramition Funds Summary M d e s one year supplemental funding to low-wealth counties losing more than $1 mlllion in low-wealth funds in 2001-02. Allows State Board to hold these counties harmless for up to 60% of funding lost, using funds from the Average Daily Membarship Contingency Reserve Fund or other sources. Section 28.47 me: SubstiMe Schnol P~nnaVUnemploymenDt cdfnitlon Summary Clarifies that substitute teachers who are not fulltime employees are not eligible for unemployment compensation when not called to work. Section 28.48 Title: Qdrocl BZ18 Replacement Summary States that if State funds replace a school bus in one of two smallest school systems that school system may retain the replaced bus for use as an activity bus. Section 29.1 Title: Immediate Assistance b the Highest Prlority Elementary Schools Summary Lowers dass size in grades K-3 to 1 to 15 in 37 schools with 80% of children eligible for free or reduced price lunch and 45% or more of students are parformlng blow grade level. Allomtes funds for additional teachers, additional days of staff development and instruction, and additional instructional support personnel for high priority schools. Eliminates allotment of teacher assistant dollars for these schools, but does not prohlbt use of teacher assistants at t h a e schools. If the local school system applies for and receives a wdiver from hnplementation for FY 2001-02 hom the SWe Board of Education, the teacher assistant allocation is restated and the teacher alocation removed. Title: [mmediate Adiona to Address Teaoher Shortage Summary Provides $1 million for teacher assistant scholarships to take prerequisb courses (at Community Colleges or Universities) needed for entry into teacher preparation programs. Provlde $1,800 bonuses to teachers ceMed In and teaching in the fields of mathematics, science, or special education, Cthey are teaching In middle schools or high schools with 80% of chndren digible for free or reduced price lunch or 50% or more of students are performing below grade level in Algebra I and Biology. Bonuses are to be paid monthly. Teachers remain eligible as long as they continue to teach at a school that was eligible for the bonus program when the teacher first received the bonus. Joint Education Oversight Committee shall study the eRectiveness of atbacting certified teachers back into teaching by providfng bberwff$ to part-time teachers. Joint Education Oversight Commlttae shall study the effectiveness of athading students Into teachlng by expanding the Teaching Fellows Program. Public Education psge F 21 Summary Defines Continually Low-Performing Schools as those identified as low-performing in 2 of 3 comewtive years. Requires State Board of Education to adopt a series of progressive intervention strategies for such schools. Requires State Board to adopt and implement actions for schooi identified as iowpsrformingfor three or more years. Section 29.4 Title: Additions to the W Sup&tendent's Plan to Improve a Werfonning Summary Requires local superintendent to specify how central office admlnisbators wtli work with and monitor progress of iowperforrning schools. Section 29.5 Title: Appmprlatlorn, for Cofiually L D w P ~ l n Sgc hools Summary Funds to reduce class size in grades 4-5 In continually lowperforming schools to 1 to 17. This is in addition to the 1 to 15 class size funding in grades K-3. Provides funds to Mend teachers' contracts in these schools by 5 days for staff development in 200102 and 10 days, including 5 additional days of instruction, in 2002-03. The State Board of Educatlon has discretion on whlch strategies to implement and which schools to targat for the 2001-02 school year. Section 29.6 me: hralwtion ofi nmativm to ~ ~ ~Hi1ghs Plttori ty SohDols Summary Requires high priority schools identified in Sec. 29.1 to meet growth exp&ations and reach high growth in two of three years to remain eliglble for additional resources. All resources remaln &able until 2004-05 as a minimum. Requires teaching positions allotted for high priority schools and continually low-performhg schools to be assigned to and teaching in those schools and those gradas. Department of Public Instruction required to monitor class sires in these schools each month of school year (starting in January 2002). Mows schoois until January 2002 to implement class size restrictions. Allows local boards to seek wa[vera from the State Board of Education for 2001-02 school year only If the local board cannot implement hlgh-priority schools class size changes during 2001-02 school year. Provides $500,000 per year for evaluation of class size inWes, use of bonuses, and other efforts to assist high priority schools. Public Education Overview: 2001 Session Fiscal and Budgetary Actions UNC System / GENERALFUND I fbornmended Budget $1,804,923,800 $1,812,208,855 Campus Reductim 66 Temporary Wages and Membarship Dues ($2,500,000) R ($2,500,000) R Reduce the funding for temporary wages and membership dues at the 16 UNC constituent institutions. 67 Community S8 ~ l ~ e s lG~nA~cardaelm ic Support ($1,500,000) R ($1,5M),OOO) R Reduce aomunt appropriated for Community Services/General Academic Support for the 16 constituent i nstitutions. 68 Reduction in SPA Positions ($10,694,131) R ($10,694,131) R Reduce SPA positions at the 16 constituent institutions by 2.8%. 69 Reductions in EPA Non-Teaching Staff Positions ($5,902497) R ($5,802,497) R Reduce EPA non-teachi ng positions at the 16 constituent institutions by 2 . a . The position reductions in Cooperative -9520 -9S20 Extension and Agricultural Research shal l be made only in non-teaching positions. 70 Reductions in Various Modifled Zero-Based Budget Items ($5,726,311) R ($5,726,311) R An average 5% reduction is made in the budgets of the 16 constituent institutions for the fol lowing modified zero b e d budget i terns: miscel lanews contractual services, rental /lease of equi pfuent, trave I, ce l lular phones, furniture and equipment, and other aids and grants. 71 Prhrate Funding for Selected Summer Research In Ueu of ($1,000,000) R ($1,000,000) R State Appropriation Substitute same private funding for a portion of state appropriations for select faculty to do summer research. This will be selected at the campus level. 72 Continuing Education Receipts ($378,775) R ($378,775) R Increase by 10% the receipts generated through continuing education programs at UNC-CH Health Affairs. 73 Center for Alcohol Studies Endowment Reduces the appropriation to the Center for Alcohol Studies ($250,OW) NR Endomoent for one year. UNC System page F P Overview 2001 Sesslon Flscal and Budgetary Actions 74 InstiMe of Southern Politics, Medla 8 PubUc Ute Eliminates the specific funding for this program, but allows UNC-CH to use other state or other sources of funds to continue this prcgram. 76 indtute for Outdoor Drama Eliminates funds for the newly-establ ished p s i tion of Director of Comunications at the Institute for Outdoor Drama at UNC-CH. 76 Additional Adminkbatlve EfFiclencles The University System shal l find additional administrative efficiencies. TI Reduction In Travel The University System shall make additional reductions i n i t s travel expenses. UNC G a d AdmihtWon 78 Reductions In ModiRed Zero Based Budget Items for UNC-GA A 10% reduction i s made i n the budget of UNC-General Administration for the fol lowing modified zero based budget i terns: mi sce l l aneous contractual services, rental / lease of equi p n t , travel, cel lular phones, furniture and equipment, and other aids and grants. 78 Reduce EDP Equipment Reduce Electronic Data Processing equipment infrastructure replacement efforts at UNC-GA. 80 Board of Governors' Meetings The Board of Governors recently voted to reduce the number of times it w i II meet during the year to eight. This i s the corresponding budget reduction for meeting costs. 81 MCNC Contract Reduce the state funds paid to MCNC by UNC-Ceneral Administration for the use of the MCNC Supercomputing Center and move to a fee for service. 82 Litigation Contract Eliminate funding for the litigation contract with the Department of Justice. UNC-GA i s s t i l l required to maintain the contract and reimburse the Department of Justice for legal services. 83 UNC General Admfnbtmtion SPA Position Reductions Reduces the SPA positions in UNC General Administration by 5%. UNC System Ovenrim 2001 Sesslon Fiscal and Budgetary Actions M 2001-02 FY 2002-03 84 UNC General Adminlstratlon EPA Non-Teaching Staff ($541,925) R ($547,925) R Position Reductions Reduces the WA non-teaching staff posi tions i n UNC General Administration by 5%. -52% -525 85 Administratbe Overhead Reduction ($168,791) R ($166,791) R Eliminate the administrative overhead f rm General Fund appropriations i n the Center for School Leadership -1.80 -1.60 Development's central office. 88 Reduce Teacher Academy Reduces the funding for the Teacher Academy. 87 Reallocate Funds fram the Model Teacher Educatfon ($822,082) R ($822082) R Consortium Real locate a portion of the Model Teacher Education Consortium funds to a more comprehensive method of delivering 3.60 -250 program goals. 88 Ofiice Consolidation Savings ($100.000) R ($100.000) R Savings froa the consol idation of offices for the programs under the Center for School Leadership Development. 88 Redudon In All Center for School Leadership Development ($833,315) R ($833,315) R pm- Reduces a l l programs under the Center for School Leadership Development. These programs shal l not be subject to the mross-the-board personnel reductions taken for UNC-EA or the csmpuses. The Joint Legislative Commission on Education Oversight w i l l study these programs for reconrmended savings. (SB 1005. Section 31.4) 90 Matching Incentive Funds ($m,000) I3 ($350,000) R Reduce Matching Incentive Funds for staff development i n K-16 programs. 01 Lighthouse Schools ($2W),OOO) R ($280,000) R Eliminate funding for Lighthouse Schools under the Center for - School Leadership Deve lopment. 92 Strategic Initlathre Reserve Reduce the UNC System President's Strategic l n i t i a t i v e ($1,000,000) NR Reserve that i s used to fund special projects. The current reserve i s funded at $3,OM),O(Xl per year. UNC-GA shal l provide a detai led report to the Joint Legislative Coarpission on Education Oversight prior to March 1 annual l y on how these funds are spent. $1 mi l lion of the remaining funds shal l be used to provide transition funding to temporari l y offset the effects of permanent position cuts at the historically black and minority and smal ler campuses. UNC System Paee~= Overview 2001 Sesslon Rscal and Budgetary Actions Univedly Expanelon Funds $3 Regular Term Enrollment Increase Fully funds the UNC Board of Governors' regular term enrol lment increase, i ncluding the 'hold-harmless' for those campuses losing enrol lment. This funds an additional 2,435 ful I-time equivalent students. 84 Distanw Education Enrollment Increase Ful ly funds the UNC Board of Governors' distance education enrol lment increase requests. This funds 1,085 additional FfE students. 85 Faculty ProductMty lncrease faculty prcductivi ty by using existing tenure-stream faculty who teach an average of fewer than 15 credit hwn a year to help with the projected enrollment growth. This reduction is for faculty paid from the code '1310 EPA Teaching Faculty' line. 88 Tuitlon Increase There is a 9% across-the-board tuition increase for al l students for the 2001-02 academic year. In addition, the Board of Governors' differentials for graduate and professional schools shal l remain in effect. Also, the campus-initiated increases shall remain in effect. 07 Need-Based Student Financial Ald Adds additional funds to the existing need-based student financial aid program. The current direct appropriation for this program is $6.3 mi I lion. 68 Ald to Students Attending Prhfate Colleges Provides funds to cover the projected enrol lmnt increases in the funds for students attending private colleges. $2,346,210 is to cover the 1 ,192 additional students anticipated to receive the Legislative Tuition Grant (LTG). The State Contractual Scholarship (SCSF) p m g m will increase by $880,000 to cover an additional 600 FTE students. The current appropriation for the LTG program and the SCSF is $75.7 million. (SB 1005, Section 31.1) 88 Education CablnetlResearch Councll Funds This restores half of the non-recurri ng appropriation made during the lest fiscal year for the Education Cabinet and the Education Research Counci I . 100 Scholarships for Teacher Assistants Pursuing Teaching Das- Funds are appropriated to provide scholarships for teacher assistants. (SB 1005, Section 31.5) UNC System Overview: 2001 Session Fiscal and Budgetary Actions 101 InstlMe of Government-Center for Technology Support To support Center's efforts to provide technical assistance to local governments. 102 Teacher Preparation Programs through Distance Educatfon Provides additional funds for a1 1 UNC teacher education programs across the state provided through distance education that do not have an on-campus residency requirement. Funds shal l be a1 located based on their student credit hour enrollment. (SB 1005, Section 31.7) 103 Genomlcs, Biolnfomatlcs, Optoelecbonlcs, and Photonics Research Provides funds for the new genomics, bioinfoaratics, opt- lectroni cs, and photonics research programs. 104 Eliminate Room and Board Charges at the North Carollna School of them Eliminate room and board charges for in-state high school students at the North Carolina School of the Arts. 105 NC A&T State Unhrerslty Matching Funds Provides funds to match federal funds for NC AaT State University's agricultural programs. 108 ECU Doctoral Status Funds Funds the last phase of the transition of ECU to Doctoral I status. 107 Progress Board Provides recurring funds for the Progress Board which is funded through the university system. (SB 1005, Section 31.12) 108 Closing the Achievement Gap Provides funds to support the Historical l y Minority Col lege and University Consortium initiative to close the achievement .gap. Funds shal 1 be al located to UNC-General Administration for distribution to the consortium. 109 Focused Growth 1natituUonsSpeclal Needs To provide funds as requested by the UNC Board of Governors to fund the special needs for the Focused Growth Institutions in the UNC system. I10 TEACCH Program Fun& Additional funds for the TEACCH program to enable them to apply for a National Institute of Health grant and other grant funds. UNC System Page F n Overview: 2001 Session Fiscal and Budgetary Actions FY 200192 FY 2002-03 Total Legislattve Changes Total Posltlon Chmm Revised Budget UNC System Special Provisions 2001 Session: SB 1005 Department: UNC System Section 31.1 Title: Ald to Private Conages Summary Codffies the standard language for distributing the money to students attending private colleges. In addition, adds a section that reduces the Legislathre Tuition Grant by 25% for those students who have completed 140 semester credii hours. Section 312 Title: Academic Common Market Pilot Pmgfm Summary Allows the UNC Board of Governors to select certain graduate programs to be a part of a pilot program for tuition reciprocity with other SREB states in its "Academic Common Market". Section 31.3 Title: Ald to Private Medid SehoolslFundIng Formula Summary Codffies the standard language for the prccedures distributing the aid to private medical school money. Saction 31.4 Title: Sule ~ I o n eDalye lopment Programs for PuMo School Plofessbnals Summary Clarifies the General Assembly's intent for information to be included in pmf88sional development reports. in addition, directs Education Oversight to study these programs and develop r&mmendations for efflciencles and improvements. Section 31.5 me: TsadrerAsslsbnt Wmlershlp Fund Summary Pmvfslon follows the money decision to establish a new scholarship program for teacher assistants pursing teaching degrees. Section 31.6 Title:. UNC Budget Re*bWl~usHt onor Budget Reducthe Summary Directs the university system to follow the General Assembly's decisions with regard to budget reductions. Otherwise, UNCs budget flexibility remains. Summary Expresses the Intent ofthe General Assembly to make teacher education programs amliable through distance education statewide. Funds are distributed to all teacher education pmgrams that offer these programs through distance education and do not have an oncampus rssldency requirement UNC System page F 28 Section 31.8 me: UNC surplus property ~uiuldeltnes Summary Dbects UNC Board of Governors and the Department of Admlnlstratlon to jolntly develop guldelines for the disposal of unhrerslty surplus properly and to report to the General Assembly. Ssction 31.9 Title: SubstiMion of UNCCH Bond Pro@& Summary Allows UNCCH to make a change in one of its bond projects. Section 31.10 Tile: Maeter Ed. Adrntnistratlon at ABT Stab, NCCU, UNGP/Sludy P058lbIe Pharmacy School at ECSU Summary Authorizes three addltlonal Masters of School Administration pmgrams and directs the Board of Governors to establish them at ABT State, NCCU and UNCP. Also asks the Board of Governors to study the feasibflily of creating a Pharmacy School at ECSU, a school of Engineering at ECU, UNGA, and WCU and a School of Dentistry at ECU. Section 31.11 Tie: UNC Board of f3ovemors May Authorhe CarEatn Management RePdbUity for Spedal ResponslbUity Constituent InstMons Summary Allows the Board of Governors to grant the campuses ofthe UNC system the authority to have flexibility in the area of setting tuition and fees for campus-initiated tuition, Rxing compensation of senior personnel and tenured faculty and information technology dsclsions. Directed Education Overslght to study the issue of expanding flexibnii to the areas of personnel, purchasing and Property. Section 31.12 Tie: ~ogreesB& Summary Makes staMory changes to the Progress Board which is funded in the UNC system. ingeases the she of the Board, increases arm of study and changes the appointment of the Executive Director and budgetary location of the Beard. (Note: Section 6 of House BUI 231. Appropriations Modfficatlons and Other Changes, SL 2001-513 repealed subsection (d) ofthls provision which had earmarked money from the Strategic inltlatlve Reserve for the Pmgmsa Board.) Section 31.13 me: Transfer Chinqua-Penn Plantation Funds Summary Transfers all Endowment funds ralsed to support Chinqua-Penn and gifI shop funds from NCSU to Chlnqua-Penn Foundation. Section 31.14 me: UNC Board of Govamonr Report on Overhead Raoelpb Summary Requires the UNC Board of Govemors to report annually to the Joint Legislative Education Overslght Committee on the amount and expenditures of overhead receipts. UNC System HEALTH & HUMAN SERVICES Overview: 2001 Session Fiscal and Budgetary Actions Health and Human Services I I 1- 1- Recommended Budget $3,471,730,643 S3,725,304459 ( 1.O ) W o n o f Mentd Health 1 Admlnistation In Area Programs ($1,500,000) R ($1,500,000) R Reduces state appropriations to area mental health programs and directs DHHS to develop and implement guidelines to bring administrative costs at area programs into a more reasonable range. (SB 1005, Section 21.65) 2 Various Contracts Eliminates the fol lowing contracts: UNC-CH C t r for the Study of Development and Learning Life Plan Trust, Inc. Duke University Reduces the following: UNC-CH DD Training lnsti tute 100,000 NC State Center of Urban Affairs 265,227 Governor's I nsti tute on Alcohol and Substance Abuse, I nc. 100,OM) Counci I on the Accreditation of Services for Fami lies and Chi l dren 247.1 82 3 State Appropriations to State MR Centem ($2,800,000) R ($2,800,000) R Reduces state appropriations to the five (5) state mental retardation centers i n accordance with the State's 4% Downsizing Plan. (SB 1005. Section 21.62) 4 bledlcal Services Director Contract ($134,695) R ($134,695) R Eliminates a contract with UNC-CH for the services of a medical director for the Division. 5 Positlon Elimlnatlons (SB l a , Section 21.64) 6 Neurobehavioral Treatment Unit ($571,526) R ($571,526) R Eliminates funding for the creation of a new neurobehavioral treatment unit for individuals with traumatic brain injury 61.00 -51.00 (to be located at the state's Black Mountain Center). Health and Human Services . Paee 01 Overvlew 2001 Session Rscal and Budgetary Actions 7 Improved Efffclencies for Hospital Operations Transfers responsibi l i ty for Cherry Hospital laundry operations to the Department of Corrections Enterprise Industries. 8 MedicaVSurgicai Unit at Dbt Hospital Reduces appropriations for a medical /surgical unit located at Dix Hospital which was closed i n October ulW. Medical/surgical services w i l l be provided via contract. 0 Oakview Program Eliminates state appropriations for an apartment program for adolescents which i s no longer i n use. 10 Medicaid Recelpts on ChildlAdoleecent Beds Reduces state appropriations i n anticipation of receipts for the chi Id and adolescent beds i n state psychiatric hospitals. I I Medicaid Receipts for EATP at Wilson Reduces state appropriations i n anticipation of Medicaid receipts for the adolescent beds i n the state's Eastern Adolescent Treatment Program located i n W i Ison. 12 Varlous CoptmEts Eliminates the following: Work Central Cal l Support C t r Reduces the fol lowing: Appalachian State University Tier, Inc. NC DSS Director's Association 13 Positlon Elhnlnatlons (SB l a , Section 21.49) 14 Familtes for Klds Funding Reduces State funds for Fami lies for Kids initiative. 16 Family Resource Centem Reduces state funds for Family Resource Centers and directs DHHS to al locate the remaining funds based on program performance. (SB 1005, Section 21.48) Health and Human Services Page 0 2 Overview 2M)l Session Fml and Budgetary Actions 16 Excess State/County Special Asststance Reduces excess state appropriations i n the State/County Special Assistance program. 17 County Pmgram Integrity Worker Funding Eliminates a grant-in-aid to a l l counties for program integrity activities. I8 CaroItna ACCESS County Positions El i mi nates Carol i na ACCESS county positions located in county departments of social services. 10 Regional MAce Positions Eliminates 7 regional office clerical positions. Other personnel w i I I absorb associated job duties. 20 Work First Transfer to General Assembly Eliminates the transfer of funds to offset the cost of the Joint Legislative Public Assistance Commission which i s being repealed. (SB 1005, Section 21.13) 21 ICFIAAR Rate Adjustment Adjusts rates for private Intermediate Care Facilities for the Mental l y Retarded to reflect actual costs and eliminate profit. 22 New Inflatlonay increases Eliminates new inflationary increases for SW 2Mn-20D3. 23 Dnrg Utflhation Management Implements various drug uti l ization measures to contain the cost of prescription drugs as recamended by the 'North Carolina Medicaid Benefit Study'. (SB 1005. Section 21.26(b)) 24 ACCESS Mdlcal Director Contract Eliminates the contract for the medical director for the Carol i na ACCESS program as recommended by the 'North Carolina Benefit Study'. 25 Dispensing Fee for Dm@ Reduces the dispensing fee for prescription drugs from $5.60 to $4.00 per brand name prescription. The dispensing fee for generic drugs i s $5.60. (SB 1005, Section 21.19(a)(5)) 28 Generic Dmgs Implements increased uti lization of generic drugs. (SB 1005, Section 21.19(h)) Health and Human Services Overview: 2001 Sesslon Fiscal and Budgetary Actlons 27 Daily Personal Care Services Umit Limits Personal Care Services to 3.5 hours per day whi le maintaining the 80 hour per month l i m i t . 28 Asset Pollcy Changes Apply federal transfer of asset polices to real property excluded as "income producing' under Title XIX. (SB 1005, Section 21.19(y)) 28 Medlcare Crossover Claims Payments Limit Medicare Crossover claims payments to 95% of Medicare rates. 30 Position Elfminations 31 Optlonai Services Eliminates optional c i rcmision procedures except i n cases of medical necessity . (Note: Section 19 of House Bi l l 231. Appropriations Modifications and Other Changes, SL 2001-513 reinstated this reduction.) 32 Physician Rates to 95% of Medlcare Rates Reduces rates paid to physicians to 95% of the physician rates paid by Medicare as reconwended by the 'North Carolina Medicaid Benefit Study'. 33 Co-payments for Prescription Drugs Increases co-payments for brand name prescription drugs from $1 to $3 per prescription. Co-payments for generic prescriptions remain at $1 per prescription. ( 4.0) Office of the Secretary 34 Welfare Automation Fund Reduces state appropriations to the fund which supports automation enhancement i n the Work First Program. 36 Community Adon Agency Funds Eliminates state appropriations to Conrmuni ty Action Agencies i n lieu of increased federal grant funds. 38 Posmon Eliminations (Note: Section 1. (h) of House Bi I I 231, Appropriations Modifications and Other Changes, SL 2001-513 amended this item to reflect a final position elimination of 44 FTE's.1 Health and Human Services Overvim 2001 Session Fiscal and Budgetaly Actions 37 contract Eliminates a contract for personal services i n support of a Medicaid waiver proposal, activities w i I I be absorbed by existing staff. ( 6.0) DMslon of Chnd Development 38 Smart Start Evaluation Reduces state funds for evaluation activities for Smart Start and directs DHHS to contract for a mre focused review of Smart Start activities directly related to kindergarten readiness. 39 Early Head Start Eliminates state appropriations i n lieu of increased federal Early Head Start funds. 40 Position Elhninations (SB 1005, Section 21.74) 41 Various Contracts Eliminates contracts for the following: Personal Services contrect for chi Id abuse curriculum development 315.000 Chi Id Care Services Ass~iation, Inc. 25,O@JJ 42 Smart Start ($48.500,MX)) Reduces the Governor's proposed increase i n Smart Start continuation funding - funds not yet received by local partnerships. (310,500,000) Reduces state appropriations to the North Carol i na Partnership for Chi Idren, state administration and local partnership operations. This reduction i s minimized by pol icy changes i n how funds are utilized for quality improvements and a prohibition on the use of funds for capibl/equipnoent projects. (SB 1W)5, Section 21.75) ( 6.0) W o n of Vocational Rehabmtetlon 43 Position Eliminations ( 7.0) DMslon of Publlc Health 44 Poshton ReduotIons Health and Human Senllces Page 0 5 Ove~iew2: 001 Session Rscal and Budgetary Actions 45 Various Contracts Reduces the Heal thy Start Foundation contract by 5150,MB). Eliminates the fol lowing contracts: Association of NC Boards of Health - SlWJ.000, Mecklenburg County Mental Health Authority - $86,144, NC Fair Share - $10,000, Pennsylvania State University - W,355, UNC (Hypertension Data Analysis) - $10,000, UNC Family Services Network - $223,561, UNC School of Public Health - $225.000, and UNC School of Public Health - $127,494 48 Vital Record Recelpts Adjusts the budget to accurately reflect the amount of receipts to be col lected for the sale of vital records. 47 Newborn Screening Progm Reduces state appropriations i n anticipation of increased Medicaid Receipts. 48 HeaIth Promotton ActhMes Reduces state appropriations for Health Promotion activities. 49 Sickle Cell Prog. Ed. Counselors Reduces state appropriations i n anticipation of increased Medicaid receipts. aoo aoo 51 AIDS Drug Assistance Program Reduces state appropriations on a non-recurring basis due to excess ADAP funds. (SB 1005, Section 21.90) 62 Nurse Midwifery Program Eliminates funding for the Nurse Midwifery Program which funds start-up midwifery practices. 63 Position T d r s Transfers the following positions from Division of Early Intervention and Education into Division of Public Health, Women's and Children's Health Section: Audiologists: 4425- 1231 -1 21 1-921 , 4429-1 536-1 21 1-020: Speech and Language Pathologist: 4429-1526-121 1-027; Language/Cmunication Specialist: 4429-151 6-1251 -004; Saial Workers: 4425-1231- 121 1-920, 4429-1 526-121 1-026, and 4429-1536-121 1-01 9 (SB 1005. Section 21.80) Page 0 8 I Health and Human Services I Overview: 2001 Session Fiscal and Budgetary Actions 61 R U ~oIb stetrics Incenth. program Eliminates Rural Obstetrics Incentive Program which pays a portion of the mal-practice insurance for doctors in rural areas to encourage them to treat Medicaid patients. 55 Contracts to LEAS Eliminates the contracts with Local Education Agencies that were set-up to supplement educating heari ng-impai red chi ldren transitioning out of the Central North Carolina School for the Deaf. 68 Various Contracts Reduces the contract to Beginnings by $2CO,WlO, and personal services for audiological management by $87,240. 57 Stateoperated Deaf Preschools Reduces appropriations to the state-operated preschool centers and transitions the chi ldren from these centers to other preschool sites and services. (SB 1N6, Section 21.83) 68 Position Eliminations Eliminates 23 teacher and teacher assistant positions in the stateaperated deaf preschools, as a result of transi tioning chi ldren to other preschool sites and services. (SB 1005, Section 21.83) 58 Position Eliminations 60 Developmental Eval. Centers Reduces state appropriations i n anticipation of increased Medicaid receipts. 61 ReorganhationlChanges Eliminates state appropriations in the areas of administration and other recent budget revisions that reduced the budget of the Central North Carolina School for the Deaf to enhance the Division's central office. (SB 1W5, Section 21 .SO) 82 Central School for the Deaf Savings from the Department of Health and Human Service's closure of the Central North Carolina Schcol for the Deaf. (SB 1005, Section 21.81 ) Health and Human Services Overview: 2001 Sasslon Rscal and Budgetary Actions ( 9.0) Mvisbn of Aging 83 Position Elhinations Eliminates 1 position. 64 Area Agency on Aging (AAA) Adminlstratlon Funds Reduces 8200,CiUD i n administrative funding for 17 Area Agencies on Aging. The Division wi I I implement strategies to reduce overal I administrative costs. (SB 1005, Section 21 3 2 ) 85 UNC CARES Contract Eliminates State funding for a contract with UNC-Chapel H i l l for planning and evaluation services. The Division wi I I assume the duties of the contract. 68 Medical Eye Care Program Reduces excess funding i n the Medical Eye Care Program. 67 Position Elhinations 68 Flre Protection Revolving Loan Fund Eliminates appropriations i n the Fire Protection Revolving Loan Fund. 68 EMS Regional Grants Eliminates Emergency Medical Services Regional Grants. 71 Receipts for Mental Health Uwnsure Increases receipts from Medicaid to support Mental Health Li censure. 72 Gmnt for Association of Rescue and EMS Eliminates the grant-in-aid for the NC Association of Rescue and EMS Health and Human Services OveNlew: 2001 Session Fiscal and Budgetary Actions (12.0) Mvlslon of Mental Health n security Staff Increases appropriations and staff due to a transfer of security responsi bi li ties from the Juveni le Evaluation Center to the Jul ian F. Keith ADATC and the Black Mwntain Center. (SB 1005. Section 24.10) 74 Housing Support for the Mentally ill Provides funds to support the expansion of housing support and placements for the mental l y i I I. 76 Autism Funds Provides $450,000 for administrative, operational, and direct services funds to the Autism Society of North Carolina. Also provides $326,000 to continue operational support to the Residential Services. Inc. during FY01/02 in order al low the program to develop and implement the necessary processes to draw down Medicaid funds to continue residential services to autistic chi ldren. 76 Community Programs Provides funds for area mental health programs as follows: Assertive Comuni ty Treatment Teams for non-Medicaid clients 200,000 Fami l y Support Activities 300.oOO Substance Abuse Services to Special Populations 1 .000.000 Expand Capacity for Detoxi fiiation, Residential and Outpatient Services 2,OM).WO 77 Funds for At-Risk Children Provides recurring funds for direct services to seriously disturbed children (funds were appropriated as non-recurring since FY98/99). (SB 1005, Section 21.60) 78 Chlld Support Backlog Provides funding for chi Id support caseload backlogs in urban counties. (SB 1005, Section 21 .MA) 78 Food Banks Provides funds to be equally distributed to the regional network of food banks in North Carolina. 80 Chlld Support Receipt Shortlall Increases state appmpriations in chi Id support operations due to an ongoing receipt shortfal I. Health and Human Services Page O B Overview: 2001 Session Fiscal and Budgetary Actions 81 Community Alternathres Program for Children Provides additional slots for the Comnuni ty Alternatives Program for Chi Idren. 82 CAP-MRIDD Program Provides funding for the Community Alternative Program for the Mental l y Retarded&velopenteI l y Disabled. 83 Federal Financial Participation Rate Provides increased funding for the Medicaid Prcgram due to a decrease i n the federal financial participation rate. 84 Breast and Cenrical Cancer Coverage Provides funding for Medicaid coverage for uninsured women under age 65 with breast or cervical cancer. Includes state costs for administration. Bii Health Chofce Provides funding for increasing the enrollment for NC Health Choice to 82,000 chi ldren. (SB 1KS. Section 21 22) 88 Access to Dental Services Provides funding to increase access to dental sewices for chi ldren and adults. (SB 1005, Section 21.98) 87 Healthy Start Foundation Provides funds for Healthy Start Foundation to improve access to prenatal care and reduce poor hi rth outcomes for fami lies i n North Carolina. 88 Varlcella Vaalne Provides funding for varicel la vacd nations for approximately 20.000 chi ldren. 89 Asthma EducaUon Program Provides funding to support asthma management, control. suwei I lance, and education. 90 Alice Aycock Poe Center for Health Education Provides grant-in-aid to the Alice Aycock Poe Center for health education. 81 Osteoporosis Task Force Provides funding to continue activities of the Osteoporosis Task Force. Health and Human Services Overview 2001 Session Fiscal and Budgetary Actions 92 Birth Defects Monitoring Program Provides funding for the continuation of the birth defects registry. 03 Healthy Carollnlans Provides funding for Healthy Carolinians task forces throughout the state. 94 Office of Minority Health Funds Office of Minority Health activities to reduce health disparities. Q5 Prevention of Bltth Defeds Provides funding for education and awareness activities on the importance of fol ic acid consumption preceding pregnancy, to effectively prevent neural tube birth defects. QE Heart Disease and Stroke Prevention Funds Heart Disease and Stroke Prevention Task Force activities. (SB 1005, Section 21.95) 97 Arthritis Prevention Project Provides grant-in-aid for a private, local project i n Mecklenburg County. 88 Medical Day Care Pilot Project Provides funding for a start-up medical daycare center. (SB 1005. Section 5.1 (j)) 88 Prescription Drug Aeoesa Projwt Provides funding to support a centralized system for accessing free and low cost drugs through pharmaceutical companies. (SB 1 0 5 , Section 21.6) 100 AIDS Drug Assistance Program Increases funding for the AIDS Drug Assistance Program that pays for prescription drugs for qualified HIV and AIDS patients. (SB 1K5, Section 21.90) 101 North Carolina Counoll on the Holocaust Provides funds for the Holocaust education i n the public schools. 102 Adult Care Home Rate Methodology Tran
Object Description
Description
Title | Highlights, fiscal and budgetary actions |
Other Title | Overview, legislative session fiscal and budgetary actions; Overview, fiscal and budgetary actions; |
Date | 2001 |
Description | 2001 |
Digital Characteristics-A | 55 MB; 380 p. |
Digital Format | application/pdf |
Full Text | OVERVIEW: FISCAL AND BUDGETARY ACTIONS NORTH CAROLINA GENERAL ASSEMBLY 2001 SESSION PREPAREDBY THE FISCAL RESEARCH DIVISION OF THE NORTH CAROLINA GENERAL ASSEMBLY RALEIGH, NORTH CAROLINA Rm. 619, Legislative Office Building Raleigh, North Carolina 27603-5925 Telephone: (919) 733-4910 Fax: (919) 715-3589 Budget Development Appropriations Bill Coordination Governmental Operations Capital Budgeting/Planning State LandsiBuilding Salaries and Benefits General Government Administration Administrative Rules Review Commission Board of Elections Cultural Resources General Assembly Govanor's Office JIBumlce Licensing Boards Lieutenant Governor OBce of Administrative H&gs Revenue Secrehy of State State Auditor State Budget and Management State Treasurer Jnstice and Public Safety Cmection Crime Control BE F'ublic Safety Judicial Justice Andy Willis - Senate MonaMm-Senate L p Mucbmore - House Sam Byrd Stanley Moore Mark Trogdon MarilynChism Michele Nelson Jim Mills Elisa Wolper Denise Thomas Health and Human Services Department of Health and Human Services Nataral and Economic Resowce~/Information Technology Department of Agriculture Department of Commerce Department of En-ent, Health, and Natural Resources Department of Labor Office of Infoxmation Technology Savices Transportation Education Department of Public Instruction UNC-Board of Governors Commuuiity Colleges Ewnomy and Taxation Revenue Estimates Finance Committees Revenue Laws Study Committee Economic Issues State Bond Proposals Fiscal Trends Commission Support Staff WOrdProcessing Graphics, Databases, Spread Sheet Prepamtion Karen Hammonds-Blanks Carol Shaw Lisa Hollowell Susan Morgan J d e r Ho- Adam Levinson Kelly Huffstetla Dwayne Pinkney Evan Rodewald Bob Weiss Jim Newlin Philip Price Charlotte Todd Leggett Richard Bostic David Crotts LindaMiUsaps Maahawalston Agnes p w Faydeau Robinson Bormie Trivette Debora Bridgua INTRODUCTION ...................................................................................................................................I.. . GLOSSARY ........................................................................................................................................... A.l TOTAL STATE BUDGET . Budget Reform Statement (General Fund Availability) .................................................................... 5 1 Summary Total State Budget ........................................................................................................... 5 2 Total State Budget by Agency ..........................................................................................................5 3 ECONOMY AND REVENUES Economic Outlook and General Fund Revenues ............................................................................G. I Economic indicators (State Fiscal Year Basis) Annual Rates of Change ........................................ General Fund Revenue Forecast ....................................................................................................G. 7 Highway Fund Revenue .................................................................................................................G I2 Highway Trust Fund Revenue ........................................................................................................3 FEDERAL BLOCK GRANTS 8 SUMMARY OF MEDICAID CHANGES Federal Block Grant Programs. ........................................................................................................ D-1 Changes to Ule Medicaid Pmgram ................................................................................................... D-4 SUMMARY: GENERAL FUND APPROPRIATIONS General Fund Appmpriations 2001-2003 Flscal Biennium. 2001 Session ....................................... E-1 EDUCATION Community Colleges .......................................................................................................................F. -1 Public Education. ..............................................................................................................................F -7 University of North Camlina System .............................................................................................F. -23 HEALTH 8 HUMAN SERVICES ..................................................................................................... G-1 NATURAL AND ECONOMIC RESOURCES Agriculture and Consumer Services ................................................................................................. H-1 Commerce ....................................................................................................................................... H-6 Commerce - State Aid ................................................................................................................... H-12 Environment and Nahtral Resources ............................................................................................. H-I4 Environment and Natural Resources - Clean Water Management T ~ sFtun d ............................ H-24 Housing Finance Agency ............................................................................................................... H-26 Labor ......................................................................................................................................:.. .... H-28 N.C. Biotechnology Center ............................................................................................................. H-31 Rural Economic Development Center ............................................................................................H -33 JUSTICE AND PUBLIC SAFETY Correction ......................................................................................................................................... 1-1 Crime Control and Public Safety ................................................................................................. I-I2 Judicial ........................................................................................................................................... 1-17 Judicial .In digent Defense ............................................................................................................ 1-24 Justice ............................................................................................................................................ 1-27 Juvenile Justice and Delinquency Prevention ................................................................................. 1-32 GENERAL GOVERNMENT Administratlon. ...............................................................................................................................J..- 1 ....... Cultural Resources. .......................................................................................................................J. -10 Cultural Resources . Roanoke Island Commisslon ................................................................... 5-16 General Assembly ...................................................................................................................... J-18 Governor ....................................................................................................................................... 5-20 Insurance ..................................................................................... ........................................... 5-24 Insurance .Vo lunteer Safety Workers' Compensation Fund ...................................................... 5-26 Lieutenant Governor. ...................................................................................................................... 5-30 Office of Administrative Hearings ................................................................................................... 5-32 Revenue ........................................................................................................................................ J-34 Rules Review Commission ..................................................................................................... J-41 Secretary of State ........................................................................................................................ 5-43 State Board of Elections. ................................................................................................................. J47 State Budget, Planning and Management. ..................................................................................... 5-49 State Budget, Piannirlg and Management - Flood Mapplng & Surveying ...................................... 5-53 State Budget, Planning and Management - Special Appropriations ............................................. J-56 State Controller ........................................................................................................................ J-58 Treasurer. .....................................................................................................................................J. -60 Treasurer - Retirement for Fke and Rescue Squad Workers ....................................................... 5-62 LEGISLATIVE ACTIONS: HIGHWAY FUND APPROPRIATIONS Transportation .................................................................................................................................. K-I INFORMATION TECHNOLOGY: INTERNAL SERVICE FUND Office of Information Technology Services ...................................................................................... L-1 RESERVES. DEBT SERVICE AND ADJUSTMENTS .......................................................................... M-1 CAPITAL .............................................................................................................................................. N-I ADDITIONAL LEGISLATION CONTAINING APPROPRIATIONS ....................................................... 0-1 SALARIES AND BENEFITS Salary Changes for Employees Supported by the State ...................................................................P -I Retirement and Pension Changes for State and Local Personnel. .................................................. P-9 Benefit Changes for State and Local Personnel ............................................................................ P-13 State Employes Health Benefit Changas ....................................................................................... P-14 REVENUEIFEE BILLS Bills Affecting General Fund Revenue ............................................................................................ 0-1 Bills Affecting Highway Fund Revenue. ......................................................................................... Q-23 Bills Affecting Special Revenue Funds. ......................................................................................... a-27 Bllls Affecting All Local Governments ........................................................................................... Q-28 Local Government Tax Aid .Hi storical Data ................................................................................ Q-40 APPENDIX Total State Budget by Source of Funds .................. ....1....-............. Total General Fund Authorizations as Adjusted to Determine Total Current Operations .......................................................................................... R-2 Savings Reserve at Year Ending June 30 ........................................................................................ R-4 Earmarking of the Credit Balance by Flsoal Year ............................................................................. R-5 Tax Revenues by Major Schedules (Actual) .................................................................................... R-6 APPENDU (CONTINUED) Authorized and Actual Revenue Collections by Flscai Year ($ in Thousands) ................................ R-7 North Carolina General Fund Operating Appropriations .................................................................. R-8 Capital Improvement Authorizations .............................................................................................. R-I 2 General Obligation Bond Acts Since 1971 ....................................................................................-. 3 Total North Carolina Budget for Debt Service .............................................................................. 4 North Carolina Bond Indebtedness ................................................................................................ R-16 Across-ThsBoard Salary Cost for Each 7% Increase (Millions) .................................................. 1 8 Leglslathre Increases .................................................................................................................. 1 9 Average Salary of Employees Subject to the Personnel Act .......................................................... R-21 INTRODUCTION This document is divided into sections as follows: Section A - Glossary Section B - Total State Budget summarins the composition of General Fund Availability (i.e. Budget Reform Statement) and the total state budget including federal funds and receipts. S&on C - Economy and Revenues desmies the economic and iinaucial backdrop against which the actions detailed in subsequent sections are conducted. Includes infonnation on General Fund, Highway Fund and Highway Trust Fund revenues. Section D - Federal Block Grants and Summary of Medicaid Changes gives a brief history of federal block grant programs and allocations for the fiscal year. Also provides a summay of recent Medicaid funding and program changes. Section E.- Slunmary: Genera1 Fund Appropriations ammmim actions taken by the GeneraI Assembly to adjust the continuation or base budget recommended by the Governor (applies to the Overview of budgetary actions taken in the long session) or to adjust the budget previously approved for the second year of the biennium (applies to the Overview of budgetary actions taken in the shoa session). Sections F through L - Budget adjustments (i.e. reductions and expansion) by state agency are outlined in detail and organized by appropriations subcommittee. Also smmmizes special provisions in the Appropriations Act governing state agencies. Section M -Reserves, Debt Service and Adj~mtments lists actions with statewide impact (i.e. affecting all state agencies). Also includes a summary of general provisions included in the Appropriations Act. Section N - Capital provides a list of agencies receiving appmpriations for capital improvement projects. Also includes a summary of apical related special provisions. Section 0 - Additional Legislation Containing Appropriations summarizes several bills e-nacted after the passage of the Appropriations Act that include additional Genera] Fund appropriations and govern other budgetary matters. Section P - Salaries and Benefits identifies salary increases, as approved, together with changes in retirement and pension plans, health irmnmce programs, and other benefit program. Section Q - Revenue/Fee Bib provides a summary of bills authorizing various tax changes and fee increases. Section R - Appendix provides historical data relating to &te revenues and expenditures, capital improvements, reversions, indebtedness, debt service and salaries. GLOSSARY Adjusted Appropriation: An appropriation altered to reflect the distriintion of reserves or other transfers authorized by the General Assembly. Appropriation: An action by the General ~skmblyau thorizing withdrawal of funds h m t he state treasury pursuant to Article V, Section 7 of the North Carolina Constitution. BeghnhglEnding Balance or Credit B'alance: The funds available at the beghhg or end of the fiscal year based upon revenue collections and expenditures. Capital Improvements: One-time appropriations for new co-on, renovations, repairs and land p u r c b . Carryforward: Funds *ated, but unspent in the k t fiscal year of a biennium that are brought forward for expenditure in the second fiscal year of the same biennium. Certified Appropriation: An e a t i o n as officially rewrded by the Office of State Budget, Planniug, and Management. Contingency and Emergency Fund: A special resave required by G.S. 143-12 which the Director of the Budget may expend for emergencies or other unanticipated needs with approval by the Council of State. Continuation B u m The part of the State budget necewq to continue the current level of services when adjusted for inflation, mandated rate increases such as social security, mannualizaton of programs and operation of new Mties. Current Operations: Cost associated with the daily activity of progams supported by the State, such as salaries, utilities, and travel. Departmental Receipts: Monies received by State agencies and institutions as federal &raats, charges for services performed, transfas hm other governmental units, license fees, gifts and donations, or similin sources. Disproportionate Share Fnnds: Share (DSH) funds are Medicaid payments made to health care providers who deliver services to large numbers of lminsured patients. Page A-1 GLOSSARY (Continued) Entitlements: Payment or benefit granted by law to individuals or political subdivisions. Expansion Budget: The part of the State budget which provides for new programs, expansion of existing programs, and salary and benefit increases. Federal Revenue Sharing: Program instituted by the federal government in 1972-73 and discontinued in 1982-83 to assist statdocal govemments. General Fond: The fund to which rev- are deposited that are not designated for special purposes and are therefore available to support the general opaations of State government. Highway Fund: The special fund to which revenues are deposited that are designated for transportaton-related operations and capital improvements. Highway Trust Fond: A fund established in 1989 for the completion of certain sp&d highway construction projects. Lapsed Salaries: Unexpended appropriations that accrue because funds have been budgeted for positions that are t w y =t. Negative Reserve: A method by which a budget reduction is imposed without detailing the specific lines of expenditure to be decreased. - N o n r e c e A tam applied to revenues or expenditures that are not repeated in future years. Reversion: The portion of an appmpriation that is not expended and is returned to the fund h which the -on is made when the appmpriation either expires or is caucelled. Savings Reserve: An amount dlished in G.S. 143-15.3 to reserve Gend Fund monies as a s a f d against economic fluctuations or major fiscal exigencies. Commonly r e f d to as the "Rainy Day Fund." Special Fonds: Accounts to which revenues are deposited that are designated for a specific purpose and remain in the account until expended for that purpose. Tax Reimbarsements: State revenues disbursed to local govermnents as reimbments due to State-mandated tax relief measures which have a local finaucial impact on locals. Total General Fund Avaflabm The sum of the beginning General Fund credit balance and Gend Fund revenues for a fiscal Hod. Page A-2 Total State Budget 1 BUDGET REFORM STATEMENT 3 FY 200142 ($ mllllon) FY 200203 ($ mllllon) 1. Composition of the FY 200102 beginning availability: a. Unappmpriatsd balance b. Revenue mllactions in FY 200041 In excess of authorized estimates c. Unexpended appropriations durlng 2000-01 (Reversions) Beginning Unreserved Credit Balance 2. Revenues Based on Existing Tax Structure 3. Non Tax Revenues: Investment lnmme Judicial Fees Dispmportionate Share Insurance Other Non-Tax Revenues Hlghway Trust Fund Transfer Highway Fund Transfer Subtotal 4. Other Adjustments IRC Conformity Adjustment (included in House Bill 232) North Camlina Railroad General Fund Repaymant Senate Bill 353 Enhance DeperhTlent of Revenue Collections EducationRluman SenrlceslMental HealthlRevenue Initiatives House Bill 11 57 lmplementatlon - Closure of Tax Loopholes House 8111 232 ImplernenEation - Budget Revenue Pmvlsions (Accelerations) increase in Nontax Revenues -Patients' Bill of Rights (Senate BllllQ9) TransferlAdjustment of Cash from Spedal, Trust, Internal Senrlce, and ~eserbeF Court Fee Funds to State Bar Credit to the Savings Resenre Account Subtotal TOTAL GENERAL FUND AVAlLABlUTY 14,530.0 Legislation Enacted Affecting Availability After the Passage of the Appropriations Act of 2001 5. Additional Adjustments Senate Bill 823 Pmmote Grape 8 Wine Indusby (ABC Permits) House Bill 571 Slmplffy Sales Tax on Communications House Bill 1388 Remove Sunset on Porb Tax Credn Senate Bill 748 - Blll Lee Act Changes House Bill 338, Section 122 Technical Corrections - Amend Blli Lee Act House Blll 888 Turfgrass Research Credit to the ~avlngsR esewe Account subtotal REVISED TOTAL GENERAL FUND AVAILABILITY 14,531? Page El General Fund Current Operations Summary of Total State Budget by Source of Funds 2001-2003 Fiscal Biennium FY 2001-02 FY 2002-03 ($ millions) ($ millions) Capital lm~rovernentdRepairs& Renovations 157.9 Subtotal General Fund Budget 1-4-, 530. .3 14,782.6 Highway FundRlighway Trust Fund 2,121.1 2,133.6 Federal Funds 7,066.3 7,404.0 Departmental Receipts 2,243.2 2,264.5 Total State Budget - All Sources $25,960.9 $26,584.7 Source: OfRce of State Budget and Menagement Page 5 2 Page 5 5 I Summary of Total State Budget by Agency and Appropriations Subcommittee I (Indudes all funding sourcea) 2002-03 Fkcal Year I I I I I I I w e d I ~ W B ~ T W I ~ m d I m y ~ ~ n d -mt Rate Adjusmmt I (243267.7~))l ( 1 ~20)3! 0 0- 1nfonnati011~ e chn~ ~Roagtey ~ 4mtumt (4,000,000) 1 o i o o 0 0 m.795 - . . General Government: Admumdon I I 61,563,497 1 0 Anditor ' 11,864,673 1 0 culowl ~ e s ~ ~ r ~ a 59,427,419 1 o Cdowl Resollrses - Roanoke island I I I I Other I Federal Total I 5,3i2,541 / 8,480,877 1 75,4169l5 50 WO.n6 0 1 11,864,723 4,788385 ; aa,466,no I ECONOMY AND REVENUES ECONOMIC OUTLOOK AND GENERAL FUND REVENUES I 2000-01 EXPERIENCE Last fiscal year was marked by the largest revenue shortfall since the 1990-91 recession. The shortFal1 of $702.1 million, or 4.8% of the budgeted forecast, can be broken down into two parts: One-Time Special Factors ($206.5 million - 29.4% of Total) (1) Tax Refund Canvover ($121.8 million) The Department of Revenue has indicated that $101.8 million of personal Income tax refunds and $20.0 million of corporate refunds were carried forward from the 1999-2000 fiscal year to July and August of 2000. The refunds are considered as part of the nonrecurring shortfall because they were not known at the time the 2000-01 budget was adopted during the last couple of days of June 2000. In most years, a reasonably accurate forecast of income tax refunds can be made in early May based on the known withholding tax collections for the prior year and refunds through April 30. However, during the Spring of 2000, major processing delays and technology problems at the Department of Revenue made it impossible to develop a reliable estlmate of the 'Inventoff of remaining refunds. These Issues were highlighted in the State Auditor's performance audit of the Department. In addition, the impact of the court ruling ("Bailey Case") that allowed an income tax exclusion for state and local oenslons rendered the 1998 and 1999 refund -experience useless for projectin$ Spring, 2001 refunds as it was impossible to determine how much of the relief came through refunds (versus lower tax payments) (2) LMaation Pavouts ($63.2 mlllion~ In September 2000 the N.C. Supreme Court ruled against the state in a license tax case involving the financing arm of Ford and Chrysler. This meant that the State was required to pay out $58.5 million of refunds plus interest going back a number of years. In addition, the State was required to pay $6.0 million of refunds and Interest in a case involving the intangibles tax on beneficial interests In foreign trusts, with $4.7 rnillion of the payments being paid out of General Fund revenues. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". Page C-1 (3) Cornorate Refund Acceleration A21 million) - One of the responses of the Deparbnent of Revenue to the adverse publicity surrounding the carryover refunds from June 2000 was an lnltiative to accelerate the working down of a backlog of corporate tax refunds. It is estimated that $21 mllllon of these refunds sent out during 200041 would not have been sent out until a later year. This had a negative cash-flow impact on 2000-01. Factors Related to Economy and Financial Markets ($495.6 million - 70.6% of total) (1) Rise in Enemv Prices The production quotas adopted by OPEC began showing up In higher fuel prices during the summer of 1999. This was one factor that led to the downward shift in state and local sales tax receipts at about the same time as Hurricanes Floyd and Dennis. In fact, the storms masked the effect of higher pump prices until it became clear that the impact of the natural disasters was limited to counties with only 18% of the retail sales base. , The U.S. economy has been hammered by many oil price spikes In the past The unique feature of this cycle was that OPEC members were able to hold the line against potential price cuts. (2) Monetarv Policy _I The Federal Reserve began pushing up interest rates in June 1999 to slow an overheating economy and spewlathre stock market. During the next year, shoit-term interest rates rose from 4 %% to 8 %%. Monetary policy ahvays works with a time lag of at least nine months and sometimes takes a year or more to have an Impact This meant that the real effect on the overall economy did not begin until around the Spring of 2001. The problem is that once the economy began to change directions, the downward slide became very steep, particulariy in the manufacturing sector. (3) Tech Stock Crash A unique feature of the current slowdown is the role of the technology sector. Capital investment in technology was one of the driving forces that led to the unusually strong economic performance of the 1990's. Thls investment In computers, telecommunications equipment, and technology was fueled by the explosive rise in tech stock prices. This created an environment in which it was felt I that the demand of new products was unlimited. This led businesses to believe that NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". . I Page G2 , a high return from additional capital investments was guaranteed. Just llke speculative real estate "bubblesn in prior recessions, this unbridled optimism sowed the seeds for a crash once consumer demand dried up and producers were caught with excess capacity on their hands. The market collapse finally came In March 2000. As tech stocks crashed, companies scaled back their capital plans. A few months later they began to shed jobs. For a while severance pay packages and the cashing in of stock options kept the economy afloat. Eventually, though, the damage spread to the overall economy. (4) Strona Auto Sales This seemingly favorable trend has actually had a negattve impact on sales tax receipts in North Carolina because taxes on vehicles are earmarked for highway programs in lieu of the General Fund. As consumers continued to buy new cars, spending on items subject to the sales tax was "crowded out". ECONOMIC OUTLOOK FOR 2001-02 FISCAL YEAR The outlook among economists for the current calendar year and the flrst part of 2002 has been worsening since last Fall. For example, in August 2000 a leading bank in North Carolina was forecasting that the real (inflation-adjusted) growth for the nation's economy for 2001 would be a healthy 4.2%. The expectation had fallen to 3.1% in the December 2000 update and by April the projection had dropped to 1.7%. This pattern is very typical of what goes on during a normal recession: the bad news snowballs and expectations decline as if there is no end in sight However, just as the seeds of the recession are always sowed well in advance, so Is the stimulus for the recovery. Once the economic indicators began imploding around the holidays, the Federal Reserve undertook a stimulus package that was unprecedented in terms of timing and magnitude. From January to August of 2001, short-term interest rates fell from 6W% to 3W%. The expectation in late August was that the Fed would cut rates a quarter point one more time. In addition, the Congress had adopted a major tax cut package that began with an Immediate $600 tax rebate. The combination of lower borrowing rates and the tax cut stimulus is a major factor behind the mainstream forecast that the economy will begin to recover during the Fall of 2001 and real growth rates will be over 3% by the flrst quarter of 2002. In addition, in past recoveries the State's economy has grown much faster than the U.S. experience as the key-manufacturing sector turns around. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". Page G3 There are a number of problems with this "mainstream" view of the typical business cycle recovery. First, excess capacity In the computer and telecommunications areas may require a couple of years to be worked down due to the magnitude of the inventory overhang. Another issue facing North Carolina is the loss of manufacturing jobs to Mexlco and overseas locations. This trend, beginning during the 1995-96 economic slowdown, has accelerated in recent years. For example, the annual drop in textile and apparel employment has accelerated from the 740% range to 12-14% during the last 12 months. These impacts have been devastating to small towns In rural areas and the 1-85 corridor. A concern is that it is not reasonable to expect all of the shuttered plants to be reopened when the national economy eventually improves. Manufacturing is not the only sector of the State's economy undergoing change in recent years. Starting in mid-1999, job growth in the financial services area (finance, insurance, real estate) and in healthcare began slowing dramatically. The most likely explanation has to do with mergerlacquisltion activity. When these consolidations take place, jobs are eliminated to enhance the benefits of the combination. It may take a while for this pattern to change. Energy prices represent a continued straln on the economy, even though costs have declined in recent months. The danger Is that there are signs that OPEC is concerned enough about the decline to consider further production cuts to maintain prices. If this occurs, consumers will not receive the hoped for relief. A final risk has to do wlth the fact that many Wail Street analysts feel that stocks are still richly valued. If this is the case, the rise in asset prices resulting from lower interest rates and improved corporate profits could be limited. This would have a dampening effect on consumer confidence and retail sales. ECONOMIC OUTLOOK FOR 2001-2002 FISCAL YEAR The economic outlook for the 2001-03 biennium Is based on a review of a number of different forecasts and analyses available to the Fiscal Research DMsion: (1) DRlMlEFA national and state outlook (subscribed to by State Budget Office). (2) First UnionMlachovia national forecast. (3) Specific estimates on state personal income growth by a panel of economists representing First UnionMlachovia, N.C. State Unhrersity, and Wake Forest University. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 11". Page G4 (4) National and state-level economic forecasts of other states (posted on Internet). The concerns over the uncertain economic outlook led to the use of official estimates for 2001-02 that were more conservative than the outlook of most economists. The specifics of the forecast are shown on page C-6. 200091 REVENUE ESTIMATE METHODOLOGY The projection of General Fund revenues for the budget year Involved a three-step process. First, the economic factors shown on page C6 were used to forecast baseline revenues based on long-term historical r&iationships. These estimates are shown on page G7. Some of the key revenue growth rates are on page G10. The next step was to adjust the baseline estimates to take into account the impact of 1995-2001 session tax law changes, lawsuit payouts, delayed tax collections and refunds, and other technical factors. These adjustments, shown on page C-8, are included in the detailed numbers on the adjoining pages. Finally, a judgment had to be made about the financial markets and capital gains tax reporting. In recent years a substantial portion of the General Fund revenue surpluses has been due to the Impact of the financial markets. The additional receipts come in primarily through increased quarterly estimated tax payments by high-income individuals and 'final" income tax payments due April 15. For this analysis, it was assumed that 2001 tax year capital gains would drop 23.2% and that the wage and salary portion of the Income tax would rise only 4.2% (compared to 7-9% growth in recent years). The actual General Fund forecast numbers by source are shown on page G9. These numbers reflect the actual experience for prior years and the official budget estirnates for 2001-02 and 2002-03, as stated earlier, the baseline estimates In Table G7 tie closely to the economic outlook because they are adjusted for tax law changes and other special factors. NOTE: The analysis and outlook contained on these pages was developed prior to the events of September 1 I*. Page C-5 ECONOMIC INDICATORS (STATE FISCAL YEAR BASIS) ANNUAL RATES OF CHANGE I U.S. INDICATORS Real Economic Growth' Nonfarm Employment Personal Income Industrial Production Corporate Profits (Pre-Tax) Short-Term Interest Rates (Actual Rate) Mortgage Rates (Actual Rate) Inflation (CPI) 200091 2001-02 Actual Projected 200293 Projected NORTH CAROLINA INDICATORS Personal Income 5.2% 5.4% 4.3% 5.5% Nonfarm Employment 2.1% I.7 % 5% 2.2% Unemployment Rate (Actual Rate) 3.2% 4.3% 5.5% 5.4% Average Hourly Earnings (Manufacturing) 4.0% 3.8% 3.3% 3.6% Retail Sales 5.8% 2.6% 3.6% 4.7% Housing Starts -3.0% -8.0% -1.7% 2.2% Auto Sales 7.5% 5.5% -3.6% 4.6% *Adjusted for inflation. NOTE: The analysis and outlook contained on these pages was developed ~ , prior to the events of September 11". GENERAL FUND REVENUE FORECAST ($MILL) TABLE 1: BASELINE FORECAST PRIOR TO RRlENUE LAW CHANGESIOTHER SPECIAL FACTOR* Tax Revenue Personal Income Sales & Use Corporate Incomeu Franchise insurance Alcoholic Beverage Intangibles Tax Inheritance Soft Drink PrMlege Ucense Tobacco Products Piped Natural Gas Glft Other Total-Tax Revenue Nontax Revenue Investment Income Judicial Fees Disproportionate Share Other Insurance Dept Total-Nontax Revenue Total: Tax & Nontax Revenue Transfers: Highway Trust Fund Highway Fund Total-Transfers TotaI-General Fund Revenue 'Actual collections have been adjusted for tax law changes, lltlgation payouts, processing delays, and other special factors Page C-7 GENERAL FUND REVENUE FORECAST ($MILL) TABLE 2: IMPACT OF 199S-2001 REVENUE LAW CHANGESIOTHER SPECIAL FACTORS ($MILL) Tax Revenue Personal lncome Sales & Use Corporate Income Franchise Insurance Alcoholic Beverage Intangibles Tax lnheritence Soft Drink PrMlege Ucense Tobacco Products Piped Natural Gas Glfl Other Total-Tax Revenue Nontax Revenue investment Income Judicial Fees Disproportionate Share Other Insurance Dept Total-Nontax Revenue Total: Tax & Nontax Revenue Transfers: Highway Trust Fund Highway Fund Total-Transfers Total-General Fund Revenue , , Page C-8 . - - I- ~ ! . - . -~- -- - - ~- TABLE 3: ACTUAL FORECAST INCLUDING IMPACT OF REVENUE LAW CHANGESIOTHER SPECIAL FACTORS ($MILL.) Tax Revenue: Personal income Sales & Use Corporate Income Franchise Insurance Alcoholic Beverage Intangibles Tax Inheritance Sofi Drink PrMlege License Tobacco Products Gifi Piped Natural Gas , Other Totai-Tax Revenue Nontax Revenue Investment Income Judicial Fees Disproportionate Share Other insurance Dept Total-Nontax Revenue Total: Tax 8 Nontax Revenue Transfers: Highway Trust Fund Highway Fund Total-Transfers Total-General Fund Revenue Page C-9 SOURCES OF INCOME ON FEDERAL TAX RETURNS FOR NORTH CAROLINA RESDENTS ($BILLION)* Wage9 & Salaries 64.60 69.20 73.00 77.46 82.76 87.50 94.08 100.85 107.19 114.26 119.17 125.37 131.26 %Change 7.1% 5.5% 6.1% 6.8% 5.7% 7.5% 7.2% 6.3% 6.6% 4.3% 5.2% 4.7% Capital Oams 201 2.38 2.73 291 3.41 5.1 1 7.06 8.45 938 950 7.30 7.95 6.68 %Change 18.4% 14.7% 6.6% 17.2% 49.9% 38.2% 19.7% 11.0% 1.3% -23.2% 9.0% -16.0% % Chwgo S f d Value 105% 8.6% 2.0% 17.7% 23.9% 30.1% 24.2% 221% 7.6% -1 1.7% 10.9% 122% IRA Distnions 0.50 0.64 0.65 0.80 0.91 1.13 1.37 1.90 2.27 2.61 3.13 3.76 4.51 %change 28.0% 1.6% 23.1% 13.8% 24.2% 21.2% 38.PA 195% 15.0% 20.0% 20.0% 20.0% Unemployment Bendits 0.44 0.48 0.42 0.30 03 I 030 025 025 0.31 0.33 0.40 0.38 036 %Change 9.1% -125% -28.6% 3.3% -3.2% 16.7% 0.0% 24.0% 6.5% 21.2% -5.0% -5.3% A m m a t e Taxable Inoome 82.3 1 87.90 92.16 98.02 105.81 114.38 125.03 135.35 144.65 154.06 158.64 168.10 175.82 %Change 6.8% 4.% 6.4% 7.9% 8.1% 93% 8.3% 6.9% 6.5% 3.1% 5.8% 4.6% Esthnated Tax Liability lnc~sse 9.8% 6.8% 9.2% 10.2% 11.9% 13.5% 103% 6.9% 7.8% 3.8% 7.3% 5.5% *Tabtllatm srcl& social in- sinm it is not subject to N d Ca rolina tax. Thus, the tabulation shown is a closa wxbnatim of taxableimpme for sbte tnx pupms. Page C-1 1 I HIGHWAY FUND REVENUE I The Highway Fund is supported from three primary revenue sources: threefourths of the motor fuels tax; license and fee revenues c4ecte.d by the Division of Motor Vehicles; and interest earned hm investment of fund balances by the State Treasurer. FY 2000-01 REVENUES Highway Fund collections totaled $1.259 billion in N 2000-01, a 6.6% increase over FY 1999-00. Motor fuels tax collections increased by 9.4% as a result of higher fuel prices. Highway Fund revenues are projected to grow by $44.2 million, or 3.5% in FY 200142. HIGHWAY FUND REVEWE (MELIONS) Page G12 I HIGHWAY TRUST FUND REVENUE The 1989 Session of the General Assembly established the Highway Trust Fund for the purpose of funding highway comction. The 2001 General Assembly permitted the use of $680 million of Trust Fund cash balances over the next three ikd years for additional purposes: primary mute pavement preservation, certain preikaimq engineering costs, computgized trafEc sigaal systems and signal optimization projects, and public transportaton The Trust Fund's primary revenue sourcm are one-fourth of the motor fuel tax; a 3% Highway Use Tax levied when a motor vehicle title is transferre title fees and various registration fees collected by the Division of Motor Vehicles; and inkrest earned from investment by the State Treasurer of the Trust Fund's cash balance. In addition, the law has required that $170 million be transferred each year from the Highway Trust Fund to the General Fund. As a result of a chan-ee in the law the transfer in N 2001-02 will be $1 71.7 million and will grow ova time. FY 2000-01 REVENUES Highway Trust Fund revenues for N 2000-01 (net of the transfer to the General Fund) totaled $794.8, an increase of 4.4% over the previous year. Highway Use Tax collecti011s were flaf but motor fuel tax collections were up as a result of higher fuel prices. FY 2001-02 FORECAST Highway Trust Fund revenues (net of the transfer to the General Fund) are expected to , increase by 2.8% in N 2001-02, reflehg the slower economy. HIGHWAY TRUST FUND REVENUE (MIL.LI0NS) Page GI3 FEDERAL BLOCK GRANTS AND SUMMARY OF MEDICAID CHANGES FEDERAL BLOCK GRANT PROGRAMS In 1981, the Reagan Administration reammended and Congress adopted the Omrubus Budget Reconciliation Act which created a number of new "block grants" to be dishiiuted to state govanments in lieu of nume.rous traditional "categorical" funds. This approach to state aid reflected the President's philosophy of shifting more fiscal decision making to the states. In addition, it allowed the A-tion to significantly cut the federal budget. In previous years, Congress had appropriated money to the States for small- narrow-purpose programs, such as those for disabled children, migrant health, family plwmh& and dons. These fimds were accoqmied by numerous "strings" and substantial pape~~ork xquimnents. The new block grants consolidated for many of these programs into large, general purpose grants which had fewer "strings" and allowed more flexibility in the use of the funds. BRIEF DESCRIPTION OF THE BLOCK GRANTS S O W SERVICES BLOCK GR4NT The Social Services Block Graut is intended to provide federal funds to help people achieve or maintain a ereater desree of economic self-support or self-mfhiency, to prevent abuse or exploitation i f childregand adults who are d i e to protect their own jut&, and to p e n t jnammkk W a n a l care or to secure m r i a t e W o n a l cace when other f o m of arre - A are not appropriate. The primary providersf t h e s enices are the 100 coun st&-y of social servica. Examples of services funded include child and adult day care and in-home savices for the elderly. SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANT The ADAMHA Reorganization Act of 1992 (PL. 102-321) split the Alcohol, Dug, and M d Health Services Block Graut (ADMBG), thereby creating the new Substance Abuse Revention and Treatment Block Grant (SAPTBG). The SAPTBG provides federal financial assiPtanoe to states for the provision of prevention and treatment of alcohol and drug abuse. MENTAL HEALTH SERVICES BLOCK GRANT The MHBG provides federal financial assistance to states for the provision of communily based services for the mentally ill. Services provided through the use of the block grant must be those descrii in the state's Plan in accmbce with Federal PL. 102-321. These services include outpatient, day treatment, psychosocial rehabilitation, emergency services, residential services, etc. Page D - 1 FEDERAL BLOCK GRANT PROGRAMS (Conthed) MATERNAL AND CHILD HEALTH BLOCK GRANT This block grant funds health services for m o t h and children to reduce infant mortality and the incidence of preventable diseases and handicappiug conditions among children It also provides for rehabilitative services for blind and disabled individuals under the age of 16 and for treatment and care of children with developmental disabilities. PREVENTIVE HEALTH SERVICES BLOCK GRANT This block grant provides health services to low-income persons in orda to reduce the risk of preventable illness and early death and to improve the quality of life through bet@ health. LOW-INCOME ENERGY ASSISTANCE BLOCK GRANT The purpose of this block grant is to provide funds to assist low-income families with their heating fuel costs, to provide some emergency assis$nce and home weatherization or energy-related home repairs. COMMUNITY SERVICES BLOCK GRANT This is a federally funded program that provides a nmge of services and activities designed to eliminate the causes of povaty among the elderly, poor, and handicapped. COMMUNITY DEVELOPMENT BLOCK GRANT This block grant provides funds to assist local goyemments with community and economic development proj- that primarily bene6t low and rncxkme-W persons. CHILD CARE AND DEVELOPMENT FUND (CCDF) BLOCK GRANT The Pasonal R q o d i t y and Work Oppodties Reumciliation Act of 1996 eliminated any entitlement to child care subsidies and consolidated all federal child care program into the CCDF block grant. The purpose of the CCDF block grant is to improve the aEodabWy, avaWBy, and quality of child care for W e s . Most of the block grant funding must be used to provide child care subsidies to families d v h g public assistance, making the tmmition off of public assistance, or at risk of becoming dependent on public assistanoe. In addition, 4% of the total all~onmustbespentonqualityandavailabilityhitiatives. CCDFrequksallproviders caring for children who receive subsidies to meet minimum health and safety standards. TEMPORARY ASSISTANCE FOR NEEDY FAMILIES In August 1996, Congress passed and the Clinton -on enacted the P d R e s p m i i t , and Work W t i e s Reconciliation Act of 1996 (PRWORA). Better knob as federal Welike Reform, passage of PRWORA ended decades of the Aid to Families of Dependest Children (AFDC) entitlement program and replaced it with the Temporary Assistance for Needy Families (TANF) Blook Granl This action gave states unprecedented flexibility to create their own welfare programs that emphasize self-dciency and work. DEPARTMENT OF COMMERCE Community Development Block Grant - 2002 Program Year $45,000,000 DEPARTMENT OF HEALTH AND HlTMAN SERVICES Division of Mental Health, Developmental Disabilities and Substance Abase Services Social Services Block Grant $8,984,601 Mental Health Services Block Grant 9,855,277 Substance Abuse Revention and Treatment Block Grant 36,455,601 Temporary Assistance for Needy Families Block Grant 9,182,280 Division of Sodal Services Low Income Enwgy Block Grant Social Services Block Grant Temporary Assistance for Needy Families Division of Facility Services Social Services Block Grant Division of Child Development Social Services Block Grant Child Care and Development Fund Block Grant Temporary Assistance for Needy Families Division of Vocational Rehabilitation Social Services Block Grant Division of Services for the BHnd Social Services Block Grant Office of the Secretary (Office of Economic Opporldty) Social Services Block Grant Community Services Block Grant Division of Aging Social Services Block Grant Division of Public Health Social ServicesBlockGrant Temporary Asistmce for Needy Families Preventive Health Services Block Grant Maternal and Child Health Block Grant Note. The fiigares listed above for the Department of Health and Human Services do not reflect the total amount of the Block Grants. due to various transfen to other Departments. Page D - 3 CHANGES TO THE MEDICAID PROGRAM STATE During its 2001 Regular Session, the N.C. General Assembly enacted a $6.3 Billion budget for the Medicaid Program for SFY 2001-02 and a $6.9 Billion budget for SFY 2002-03. State funding for the Medicaid Program totals $1.98 Billion for S N 2001-02 and $2.22 Billion for SFY 2002-03. During its dehiaations on the proposed budget, the 2001 General Assembly reduced the General Fund appropiations for the Medicaid Program by $44.4 million for SFY 2001- 02 and $99 million for SFY 2002-03. The reductions include implementation of a prescription drug utilization management program, reduction of the dispensing fee for brand name prescription drugs, increasing recipient co-payment for braud name drugs to $3, limiting personal care services to 3.5 hours per day, reducing physician rates to 95% of Medicare rates, limiting Medicare crossover claim payments to 95% of Medicare rates, and modifjring the asset policy for receiving Medicaid The 2001 General Assembly also made the following policy changes to the Medicaid Program and increased the budget for the program to support these changes: Increased General Fund appropriations by $35 million for SFY 2001-02 and $79 million for SFY 2002-03 to cover the d m in th e federal 6naucial participation rate. Provided Medicaid coverage for uninsured women under age 65 with breastorcavical~~~.cer. Incmsed funding for the Community Alternatives Programs for Children Increased funding for the Community Alternatives Program for the Mentally R ~ e v e l o p m e n t a l lDy i sabled. Provided funding to increase access to dental services for children and adults. The 2001 General Assembly also enacted other Medicaid policy changes: Exempted medical coverage policy h m APA rule-making and adopted a separate and quicker process for the implementation of medical coverage policy under Medicaid. Required the Department of Health and Human Service% to develop and implement a plan to reduce growth in the Medicaid program for SFY 2002-03 to 8% or less of the total expenditures for SFY 2001-02. Required the Division of Medical Assistance to prepare a five-year fiscal analysis documenting the increased costs on implementing any change in medical policy and submit it for Departmental review. Required the Department of Health and Human Services to consider implementation of the findings and recommendations in the "North Carolina Medicaid Benefits Study." FEDERAL No significant federal changes occurred in 2001. DISPROPORTIONATE SHARE FUNDS Disproportionate Share @SH) Funds are Medicaid payments made to health care providers who deliver services to large numbers of uninsured patients. DSH payments to health care providers are made in addition to reimbursements for savicea provided to Medicaid eligiile patients. Congress originally authorized the payments as a funding mechanisn to offbet the cost of uncompemated m e for' health care providers, particularly hospitals, in an effort to improve access to health care for the uninsured. Prior to the enactment of The Balanced Budget Act of 1997, federal law permitted states to draw federal funds up to a maximum allotment established by the federal Health Care Financing Agency (HCFA). .The law allowed states to match federal fuuds for DSH payments with direct appropriations or with funds appropriated to a governmental unit for the delivery of health &re to the mimud. States were required to obtain approval of their State Medicaid Plan for drawing DSH payments from HCFA. Under the amended federal law (effective October 1997), DSH allocations are set forth in law on a state-by-state basis. The law provides for gradual reductions in DSH allocations to states beginning 1999 through the yem 2002. North Carolina uses state appro&ations to the five state hospitals (UNC Memorial, Dorothea Dix, Broughton, Cheny and John Umstead) as the non-federal match with which the State draws disproportionate share payments. The 2001-03 b i d st ate budgets anticipate $107 million each fiscal year in DSH payments to the State Treasmz. Section 21.23 of Chapter 424 of the 2001 Session Laws stipulates that appropriations to the Medicaid program that become available due to federal -onate Share receipts will be deposited as nontax revenues. The St.a te. Treasurer will reserve my DSH payments in excess of $1 07 million for futrne Qpropn&on. Page D - 5 SUMMARY: GENERAL FUND APPROPRIATIONS 2001-2003 FISCAL BIENNIUM Page E-I Page E-3 Page E-5 EDUCATION Overview: 2001 Session Fiscal and Budgetary Actions Community Colleges Recammended Budget $&,021,974 $w8,021,S74 A Community Wage Syatam ORloe 1 Operating Efflclencles E l i mi nate the library orderi ng and receiving services and two library clerk p s i tions totaling $59,543. Col leges w i l l be responsible for ordering and receiving library materials. El i minate a vacant educational consultant position and operating funds totaling $64,432. El iminate a vacant position i n the Office of the President totaling $23,396. 8. stete Aid - Community College lnatltutiom 2 Compensatory Education Reduce the appropriation for Compensatory Education from $1,150,537 to $l,c00,OM). 3 Worker's Compensation Reduce the appropriation for Worker's Compensation from $976.629 to $703,702 to reflect actual expenditures. 4 Unemployment Compensation Reduce the appropriation for Unemployment Compensation from $521,766 to $440,751 to reflect actual expenditures. 5 Reduce Llablllty Insurance Reduce the appropriation for Liabi li ty Insurance fmm 853.m to $33.000 to match actual expenditures. 6 Eliminate Prlority Programs Eliminate Priority Programs since this item was intended to support federal funds that are no longer avai lable. 7 Reduce Human Resource Development Funds Reduce the appropriation for Human Resource Development from $6,951,895 to &I,OOO,OM). The program wi l l be reorganized and the classes w i I I be offered as Occupational Continuing Education classes. (SB 1005, Section 30.3). 8 Reduce Special Allotments Reduce the Special Allotment line item from 32,244,332 to $1,683,249. Community Colleges h= Overview: 2001 Sesslon Flscal and Budgetary Adions FY 200192 FY 200293 = g Community Setvice Block Grant Adjustment ($317,738) R ($317,738) R Reduce the funds allocated for hobby/leisure courses from $1,817,738 to $1,50O,OO. Col leges wi l I make every effort to ensure that this reduction does not result i n a lessening of senior services. 10 Eliminate the State Subsidy to Prlvate Diploma Nursing ($200,000) R ($200,000) R Programs El iminate the recurring State subsidy to private diploma $200,000 NR nursing programs. Provide non-recurring funds for the prcgram i n the f i r s t year of the biennium. 1 1 Adjustment for Over-realbed Receipts ($l,OOO,OOO) R ($1,OOO,OW) R lncrease the budgeted amount of tuition and registration fees to more accurate1 y reflect anticipated receipts. 12 Eliminate Trustees Association Education Fund ($25,000) R ($25,000) R Eliminate the appropriation for educational materials for the Trustees Association. 13 Enrollment Adjustment $10,000,000 R $10,000,000 R Provide funds for cclamuni ty col lege enrol lment growth i n accordame with the enrol lment funding formula. 14 Faculty and Professional Staff Salary Enhancements Provide the Conmwnity Col lege System with an additional 1.25X for faculty and professional staff salary increases. This increase of $6.9 million i n recurring funds i s located i n the Compensation Reserves section of the budget. I6 Other Cost Adjustment Provide a 2% inflationary increase to the 'Other Costn part of the funding formula. lncrease amount al located per FTE for 'Other Cost' from $175 to $178.50. 18 Maintenance of Plant Increase the Mai ntenance of Plant appropriation from $513,668 to $787.877. The purpose of this increase i s to hold harmless those colleges that had been receiving Maintenance of Plant funds when additional schools became eligible. (SB 1005, Section 30.13). 17 Fayettevliie Tech Botanical Lab Funds A nonrecurring grant-in-aid to Fayettevi l l e Tech to develop a regional botanical laboratory i n partnership with the Cape Fear Botanical Gardens. Community Colleges Overview 2001 Session nscal and Budgetary Actions PI 2001-02 FY 2002-03 18 Crhnlnal Justice Reorganhation ($350,OM)) R ($350,000) R Reorganize the Criminal Justice Regional Planning and Training Program into three regions to be determined by the 3.00 -3.00 System Office. Reduce the appropriation for the Criminal Justice program from $689.896 to $339,896. D. REWVW and Other Funds 18 Reduce State Board Rese~ve ($350,000) R ($350,000) R Reduce the approptiation for the State Board Reserve from $1,150,000 to 8800.WO. 20 Increase Need-Based Financial Aid $1,062,806 R $1,062,806 increase the Need-Based Financial Aid fund from $5,000,000 to $6,062,806. D. Tuffion and Fees 21 Increase Curriculum Tultlon Charge ($10,162,806) R ($10,162,806) R Increase the in-state tuition charge per semester hour by $3.50 from $27.50 to $31.00. Increase the out-of-state tuition charge per semester hour by $3.M from $169.75 to $173.25. It i s anticipated that for most students, this increase w i I I be off-set by federal and state financial assistance prcgrams. Total Legislative Changes Total Position Changes Revised Budget Community Colleges Page F 3 1 Special Provisions 2001 Session: SB 1005 Department: Community Colleges Section 30.1 me: Community College Funding FldbUity Summary BoUerplate language allowing community colleges to establish their budgets according to their local missions. Umits the transfer of funds fmm faculty salaries to 2% systemwide. Section 301 Pennr Transfers of FMds to the New and Expanding Industry Tralning Proarm Summary Allows the Governor to transfer funds to New and Expanding Industty Tralning from other agencies or programs funded fmm the General Fund. Section 30.3 me: Reorganioation of the Human Resources Development Program Summary Allows the colleges to offer Human Resources Development Courses as Occupational Continuing Education Courses and earn budgeted for those courses. Rovides for fee wahrers for certain eligible populations and requires the State Board of Community Colleges to report to Education OversigM on the reorganhation by January 1,2003. Section 30.4 Summary Prevents unexpended MIS funds from reverting so that they may be paid out in accordance with the contract perkxi for the development of the system. ' Community Colleges Section 30.5 Title: Employment SaourIty Cornrnlsslon Funds Summary Appropriates $20,054,298 from the Employment Searrlty Commission Tralnlng and Employment Account for: Equipment - $1 9,154,290 Regional and CcopmUve lnfflathres - $400,000 Focused IndusMal Training - $1,500,000 . New and Expanding Industry- $7,000,000 Of the $1.5 million appropriated for FIT, $250,000 shall be allocated to Catawba Valley CC for the oparation of the Hosiery Center and $250,000 shall be allocated to Gullford Technical CC for the operation of the Pledmont Triad Center for Advanced Manufacturing. Appmpriates $7,013,574 from the TBE Account to ESC for administratbe msts for the account and for other reemployment services. Directs that any additional funds MI be spM benveen the mmmunity colleges and ESC 80120. Changes the Trainlng and Employment Account triggers. If the Unemployment Insurance Fund balance is below $900,000,000 on August I, or C at any tlme in the twelve months preceding August 1 the state unemployment rate rises above 4.3%, the Training and Employment Account does not apply in the following calendar year. Changes the Trainlng and Employment Account sunset to January 1,2000. Keeps the unemployment tax rate revenue n e W for employers. For axample, If the TBE ~c&unt applles, then the base rate will be 1.0% plus a 02% surcharge. The employer pays 12%. If the TBE Account does not apply, the base rate will be 120. The employer pays 12%. Section 30.6 Mod[fy Tenn of Community Wege Faculty Contrao$ Summary Diracts the State Board to raqulre that all full-time community college faculty contracts be converted to ninemonth contracts for the fall and spring semesters. Faculty who are hired to teach in the summer term shall have supplemental contracts for the summer. No changes in the salary of any faculty member shall result from these modifications. The purpose of this proviaion is to provide the Ganeral Assembly with the data necessary to make informed declslons regarding faculty salaries and funding for the summer term. Section 30.7 TWe: . Realignment of Accounts for ImrtlMloltal and AdmfnEBbatlve Support Summary Combines four stateaid accounts in the community college budget to better reflect actual pnctice. Section 30.8 me: study M Dkqmndes in Faoulty Waries Summary Authorizes the Joint LeglslaUve Education Oversight Comrntttee to study faculty salaries at various colleges to determine why so much variance exists among the colleges' aversge faculty salaries. Community Colleges paseF8 SectiDn 30.9 Title: State Board R e a m Anooatiorrs Summary Dire& the State Board of Community Colleges to use $100,OW) from the State Board Reserve for the 2000-01 fiscal year to assist small, rural, low-wealth community colleges wlth operation and maintenance of plant costs Cthey need to assist new or expanding industries in their service delivery areas. Section 30.10 Title: Coltsolldate end Coordinate Worldbm Development Pr-8 Summary Transfers the Bureau of Training lnitlatives and the Apprenticeship Program from the Department of Labor to the Community College System. Requires the State Board of Community Colleges to report to Edumtion OverslgM 30 days prior to mak1n.g any changes to the programs. No changes to the programs, other than the intial transfer, may be made before January I , 2002. Transfsr of the Bureau of Training lnitiathres is efktive July 1,2001. T d e r of the Apprenticeship program becomes effectbe when the U.S. Department of Labor approves the transfer. Section 30.11 me: ~ m o f ~ e s h w a n 0 8 9 Summary Transfers the remaining cash balance from a now defunct communky college scholarship fund into the Need-Based Financial Aid fund. Section 30.12 Tie: ~ ~ B u n m mTbaheIc al Community College Fun& Do Not Revert Summary Extends the reversion date for funds appropriated for the Small Business Center at Ashevtlla Buncombe Technical Community College until the end of the 2002-2003fiscal year. Allows the funds to be used for capital and operating expenses. Section 30.13 Tie: Malntananoe of Plant Operatiom, Summary Changes G.S. 115D-31.2 to allow colleges which quallfyto receive a pro rata share of funds appropriated by the General Assembly for maintenance of plant Section 30.15 Summary Allows the State Board to use up to 8100,000 of the funds appropriated for FIT to pay reglstretion fees and material costs for safely wumes. Tlfle: Community College TmteeMrravel Rebnbrrreement Summary Umlts the use of state funds for Local Eloards of Trustees' travel to in-state travel. Local Boards must use I d fun ds for wt4-state travel. Saction 6 of House Bill 231, Appropriations Modlflcetions and Other Changes, SL 2001-513, repeals this provision. Community Colleges Overviw. 2001 Session Fiscal and Budgetary Actions Public Education I I ( - F j jzzq Recommended Budget $5,923,802,924 $6,021,031,149 Legislathre Changes A More Accurate Pmjectlon of Budget Requirements 22 Additional Adjustments In Average Salary Projections ($8,497,668) R ($8,497,668) R In addition to the annual Continuation Budget adjustment for average budgeted salary of certified personnel, a more recent review of certified personnel salaries f ram updated salary data, identified an additional reduction i n projected salary needs for N 2001-02. 23 School Bus Purchases Reduce funding for PI 2001 -02 based on a revised school bus ($23,915,692) NR replacement schedule. 24 Payments for Teacher Unused Vacation Days ($4,000,000) R ($4,000,000) R Adjust funding to reflect recent expenditure experience. 25 Mentor Pay ($3,000,000) R ($3,000.000) R Reduce funding to reflect recent expenditure experience. 26 Transportation Adjustment: Bus Driver Physicals ($535,000) R ($535,000) R The Division of Motor Vehicles i s delaying the implementation of the requirement that bus drivers must have a physical e m i nati on every two years. Twenty-f i ve thousand ($25,000) w i l I remain i n the budget for pi lot projects. 27 Transportation AdJustrnent: Diesel Fuel Cost ($2,990,000) R ($3,048,8Qo) R The economic forecast models project a 10.5% decline i n diesel fw l cost from the current year's average. The current average cost i s $0.92 per gal Ion and the Conti nuation Budget was based on an estimated cost of $1.05 per gal Ion. This adjustment budgets diesel fuel at $0.92 which i s the current level. AI l school buses uti lize diesel fuel. 28 Transportation Adjustment: Inventory Adjustment June 30, 2002 fnventory levels (oil, tires, and parts) were ($4,000,000) NR approximately 6s of annual needs. This one-time reduction i s to reduce current inventory levels to a more optimum level. Public Education m F 7 Overview: 2001 Sesslon flscal and Budgetary Actions 28 Revised ProJectlon of Average Daily Membership To eliminate the possibility of duplicating the inclusion of some students i n projecting a local school administrative units average daily membership and to project a more realistic estimate of future student populations. 30 Classroom Materials/lnstruotion SupplleeiEqulpment Adjust the increase for inflation to a 3 growth (in line with the Consumer Price Index) from the 5% growth used i n the Continuation Budget. 31 School Bulldlng Administration Estimated new pub1 i c schools opening i n N 2001 -02 has been revised to 35 (from 70). 32 At-RIsk Student SenridAItemathre Schools Each high schml receives funding to employ a school safety officer. The estimate of new high schools scheduled to open i n FY 2m1-02 has been reduced to 10 (from 20). 33 C M e r School Resenre Funds i n the category are used to distribute the applicable State funding to charter schools for students attending a charter school who were not previously i n a public school (private or home schooled). Since the number of charter schools has reached the maxim legislated number of 100, the reserve can be reduced to 82 mi 1 lion i n FY 2COl-02 and $1 million i n FY 2002-03. 34 Driver Education To reflect reductions to the Highway Fund for revised Average Daily Membership Projections and an adjustment based on average annual reversions. Reduction to Receipts: ($1,630,739) B. Redudion of Admlntsbetion Cost 35 Safety Assfstanca Teame El i mi nates funding used for Statewide consultants . 36 Regional Education Senrioe Alliances Reduce State funding distributed to local school administrative units that could be used to support the Regional Education Service A1 liences to $3 mi i t ion (a 55.4% reduction). 37 Central ORice Admlnlstratlon A 1.97% reduction from N M00-01 al locations for each local school administrative unit. The State Board i s directed to develop a revised formu la for N 2002-03 that eliminates any permanent hold harmless i n the formula. Public Education Page F 8 Overview: 2001 Sessbn Fiscal and Budgetary Actions 38 Uniform Education and Reporting System (UERS) Based on the current NC WISE implementation schedule, a one-year reduction i n funding i s possible. FY 2001-02 funding level w i l l be $12,518,927. 38 Depattment of Public Instruction The Department of Public Instruction w i l l eliminate at least 25 positions and w i l l reduce other costs. $533,730 can be transferred f ran the UERS budget i n FY 2001 -02 and additional $466.270 i n FY 2002-03 to DPI to reduce contractual costs by internal i zing work to support the Uniform Education and Reporting Systems (UERS) . This transfer i s to al low currently contracted services to be converted to positions. 25 I denti fied Posi ti ons ($ 942,344) Contracted Services ($1.502.269) Ce l l u 1 ar Phones ($1 1,505) Equipment ($194,251 Elimination of Stds Board ($175,041) Contracted Personal Services ($41,775) Travel ($195.503) Other Aid ($73,Cm) Printing ($24,506) Postage (323,876) Dues and Subs ($15.930) C. other Budget AdJusbn~nta 40 Vocational Education - Tach Prep Eliminates State funding for Tech Prep. Federal funds i n excess of $3 mi I l ion support this program. 41 Appmpdations to Non-Publlc School Agencies Eliminate funding for AVID pi lot program. Reduce funding to the fol lowing Agencies by 5U% and make non-recurring: A+ Schools, ExplorNet, TRE. Gecgraphic A l l iance. Cued Speech Center, Global Curriculum. Reduce funding to Schools Attuned, Public School Forum, Ci ties/Camrmni ties i n Schools. NC Network, and Teacher Cadet programs by 10%. D. lmprovhg Student Performance 42 Targeted Class Ske Reduction and lnstructlon a. In schools with 80% or more of the students eligible for free or reduced lunch and with 4.5% or more of students performing below grade level, lower class size i n grades K-3 to 1 : 15. Require teachers al lotted for these grades to be assigned to teach i n these grades. Public Education Overview: 2001 Session Flscal and Budgetary Actlons 43 Targeted Class Size Reductlon and lnstructlon b. Extend the contract for a l l teachers i n these targeted schools for five days (5) i n 2001 -02 and ten days (1 0) i n Mm-03. The f i r s t year days wi l l be for staff development i n methods to individualize instruction i n smaller classes. The second year wi I I add 5 instructional days. 44 Targeted Class Size Reductlon and Instruction c. Provide one additional instructional support position for each of these targeted schools. 45 Targeted Class Size Reductlon and lnstructlon d. Eliminate regular do1 lar allotment for teacher assistants i n grades K-3 i n these targeted schools due to significantly lower class size. 46 Targeted Class Size Reductlon and Instruction e. Provide funding for outside evaluation of targeted class size reduction initiatives. 47 Targeted Class Size Reductlon and Instruction: Kindergarten Lower class size ratio i n kindergarten to one teacher for every 19 students i n 2001-02 and to one teacher for every 18 students i n 2002-03. 48 Class Size Reduction/ lnstructlon: Continually Low- Perfonnlng Schools a. Reduce class-size i n schools identified by the State Board of Education as continual ly low-performing i n grades K-3 to 1 :15 and i n grades 4-5 to 1 :17. 40 CIass She Reduction/ lnstructlon: Continually Low- Perfonnlng Schools b. Reduce class-size a1 lotment i n middle schools (Grades 6-8) to 1 :17 and i n high schools to 1 :20 for continually low-performing schools. 50 Class She Reductlonl Instruction: Continually Low- Perfonnlng Schools c. Extend the contracts for additional teachers i n elementary schools and for a l l teachers i n middle and high schools by 5 Qys i n 21101 -02 for staff developrent and add an additional 5 days of instruction for middle and high schools i n u#);1-03. These apply for schools identified as continually low-performing. 51 Teacher Recruitment lnltiatlvea a. Have the Education Oversight Colmmittee study methods to provide benefits to part-time teachers to attract more certified teachers back into the classroom. Public Education Overview: 2001 Session Fiscal and Budgetary Actions 52 Teacher Recruitment lnitlathres b. Teacher Assistant Scholarships Additional scholarship funds for teacher assistants taking courses at community colleges that are prerequisites for teacher certification programs. (Major initiatives i n the UNC budget wi I I improve avai labi li ty of teacher education programs for teacher assistants). 53 Teacher Recruitment lnltiathrea c. To attract teachers in the shortage fields of mathematics, science and special education and to entice teachers i n these specialties to teach i n schools with large numbers of at-risk students. In middle schools and high schools with 80% or more of the students eligible for free or reduced lunch or with 50% or more of students performing below grade level, provide an annual bonus of $1,800 (paid monthly with matching benefits). Teachers must be certified i n and teaching i n these fields and wi II remain eligible for the bonus as long as they continue to teach i n eligible schools. 64 ABC Bonus& Provide funding for ABC bonuses for schools meting or exceeding expected growth i n 2000-01. 65 ABC Bonuses: Pilot Districts Provide funding for school personnel i n five (5) pi lot school districts for additional bonuses earned under the disaggregated performance pi lot project directed by the General Assembly i n 1999 (Sec. 8.36. SL 1999-237: HB 168). If a school achieves the pi lot program goals, a l l certified personnel assigned to the school wi I I receive up to $750 and teacher assistants up to $325 (these awards are i n addition to standard ABC bonuses). LEAS not eligible for low wealth or small county supplemental funding must contribute 2% of the total cost of the bonuses. 58 Character Education Funding for expansion of character education program. 67 Children with Special Needs Increase funding per student for chi ldren with special needs. The appropriation per funded headcount increases $37.98 to $2.650.28 (before increases for salary increases) . SB Impmvlng Student AEcountablllty Increase funding for additional instruction for students performing below grade level. Public Edumtion Overview: 2001 Sesslon Fiscal and Budgetary Wons 69 Umited Engilsh PIoRciency Appropriate additional funds to serve students with limited proficiency i n English. This brings the total funding for this purpose to $23,037,655 for M 2W1-02 (prior to adjustments for any legislated salary increase). 60 Low-Wealth Funding Increase funding for school districts i n counties with less abi li ty to generate local resources for pub1 ic schools. 81 Small County Funding Increase formula funding to counties with fewer than 3,239 students (or 4,080 i f property tax base per student i s lower than state average). This wi I I increase base allotment to each eligible LEA by $74,074. 62 InstrudIonal Supplles Expand funding for instructional supplies. Language w i l l direct that each LEA to al locate a minimum of $100 to each teacher for purchase of supplies. 63 School Accountability Report Cards Funds for the Education Cabinet to develop, publish, and distribute school accountabi l i ty report cards. The cards should be designed to supply parents information on school characteristics and performance. 64 Average Dally Membership Contingency Reserve Provides additional funds to the State Board of Education to address transitional year funding for local school administrative units with new charter schools and for f i r s t month al lotment adjustments to local school administrative units with higher than expected enrol lment growth. RS NCWISE OWL'S On-Una Subsgtptlons NCWISE OWL i s operated by the North Carolina Department of Public Instruction and offers on-line resources (periodicals. encyclopedia, etc.) for K-12 teachers and students. Federal resources that have been discontinued have covered the subscription cost. The Department of Public Instruction wi I I work col laboratively with the Department of Cultural Resources and report to the Joint Information Technology Appropriations Subcornmi ttee by March 15. 2002 as to the feasibility of merging NCWISE OWL with NCLIVE (which also offers owl ine subscription services). Public Education Page F 12 Overvi~2~0:0 1 Session Fiscal and Budgetary Actions Total Leglslalue Changes ($117,333,543) ($98.842603) R $73,170,983 NR $0 NR TotalPosYtlonChanges . 287.50 680.00 Revised Budad 65,879,640364 85,922,188,546 Public Education Special Provisions 2001 Session: SB 1005 Department Public Education Section 28.1 Me: Utigation Reserve Funds Do Not Revert Summary Allows funds set aside for lawsuits to carryover and allows up to $500.000, from funds appropriated to the State Board, to be added to the reserve. Section 282 Me: Chlldren With DlsabllItiaa Summary Specifies the number of students funded (158,825a)n d the appmprlatlon per funded student ($2,650.28)w, hich will be adjusted for legislated salarylbenefit changes. The fundlng per student is an increase of $37.98 from FY 2000-01 (beforaed justment for salarylbenefit changes). . Section 28.3 me: Funds For Academically Studenta Summary Specifies that 4% of average dany membership (ADM) shall receive funding (52,042)a nd the appropriation amount ($878.10) per funded ADM, which wlll be adjusted for legislated salaryibenefit changes Section 28.4 me: At-Rtsk Studant S e r v I o e s lAl ~Sc hools Summary Allows the North Camilna Deparbnent of Public insbudon to use $200,000 from funds appropriated to studyheport on alternative schools as outlined in (115G12(24)). Section 28.5 me: Uniform Education and RepDlting System (UERS) Summary Nows unexpended funds as of June 30,2001 and June 30,2002 to carryover for use in the next fiscal year. Funding is used to develophmpiement the new student Information system NC WISE. Section 28.6 we: Supplemental Funding In LowWaalth Counties Summary W t e s the description of the formula used to distribute funding to eligible school systems (no change from prevlous yeam). Adds a report from lo& school adminlstratfve unlts on how the funds were used for teacher ' rec~itmentc, losing the achievement gap, improving student accountability, at-risk students, and kee~lnasc hools safe. Aliokiocal school systems to use these funds to pay for contractual services (not to exceed $10,000) from the Department of Public instructJon for help wlth plant operations as an additional Public Education Page F 14 Title: Small SehDol System Supplemental Funding Summary Restates the description of the formula used to distribute funding to eligible county school systems. Minimum average daily membership was increased from 3,150 to 3,175. Increases the base funding for instructional supplies and equipment to $540,074 (the amount was $466,000). This is a funding increase of $74,074 per eligible school system. Adds a report from local school adminlstrattve units on how the funds were used for teacher recruitment, dosing the achievement gap, improving student accountability, at-risk students, and keeping schools safe. Section 28.8 Title: Funds To Implement The A6Cs Of Public Education ProQram Summary Authorizes the State Board of Education to utilize funds appropriated for FY 200102 to assure that inmntlve awards earned In FY 200041 are paid. Section 28.9 Tie:. Students With Limited EnglEsh Pmficienoy Summary Restates the formula which includes an expansion of $1 million. Section 28.9(b) requirea a headcount by December I and clarifies when students are removed fmm the headcount Section 28.10 Title: ExpmdMres for Driver Education Cgrtificatea Summary Allows the use of funds already appmpriated for Driver Education to be used for driving eligible certificates (normally amund $35,000). Section 28.11 Tide: T bSalar y Schedules Summary Outlines teacher salary schedules for FY 2001-02. Average teacher salary increase is 2.86%. Range of raises is from 1 % for teachers wlth 29+ years of experience to 6.92% for fourth-year teachers. Section 28.13 Tie: Wmol A d m i M r Salary Schedules Summary Outlines salary schedules for principals and assistant principals. The average salary increase for principals and assistant principals is the same as for teachers and instructional support personnel. The 1% salary increase for safe schools and the 1% salary increase for meetinglexcmding ABCs expectations are discontlnued; however, any additional percentage increase awarded since 1907- 98 shall continue. The 1% bonus for safe schools and the 1% bonus for mwtlnglexoeeding ABCs expectations are discontlnued after h u a e s are paid for FY 200041 performance. Section 28.14 Summary Directs the transfer of funds for a $625 annual salary hcreese for central office adminisWrs. Local Boards can determine the amount of raises to give employees in this category. Public Education paeeF15 L Section 28.15 r Summary Directs the transfer of funds for a $825 annual salary increase for noncertiRed personnel (includes: teacher assistants, clerical, custodians, and bus drivers). A full-time employee that works for the employment term of the local school administrative unit for that employee (10,11, or 12 months) will receive the $625 salary increase. Employees employed less than 100% Mi receive a porbion of the $625 based on thelr percent of employment Section 28.16 me: Hlgh School Exlt Exams Summary Allows the State Board of Education to use up to $3 million fcr the continued development of the High School Exit Exam. Funds can also be u dto purchase test scoring equipment and revisions to the reading and writing assessments. Section 28.17 Summary A Principal's decision on promotion Mi not be solely b a a on test scores; test scores used in such a decision must be validated. Local board policies must Include opportunities for parents to discuss decisions to retain a child In the same grade. State Board of Education must study costs and benefits of providing parents with a copy of standardhed tests. A personal education plan for focused intervention must be in place for all students performing below gmde level on end of grade tests. Students must be identitied as at-risk for academic failureas early as possible. Umb the number offleld tests at a school to a maxlmum of two per grade level. NOTE: Section 116 of House Bill 338,2M)lTechnlcal Corrections, SL 2001487 modified this language to allow the SWe Board of Education to waive this llmit U it is determined that without the W e r the reliability and validity of a s p d c test is wmpmmised Outllnes policies that must k In place for testing children with dlsabtities. A complete review ofthe State's testing program is also required before the next lagislathre session. Section 28.18 me: PDot amgram Authorldng The Use Of Mentar Funds For FuIl-Tbne Mentom 1 Summary Pilot p min Me cklenburg, Wake and Forsyth Counties. These three school systems are 1 authoiaed to employ full-time mentors who can SEN8 up to a total of 15 Rrst andlor second year teachers. The State mentor funds ofS1OO per month (maximum of $1,100 per year per teacher mentored) can be used to help pay for these full-time mentors. I Requires annual report on rjfktiveness on retention of teachers. I Public Education 4 i Public Education Section 28.19 TMe: Study of pmgmms for lnftlaay CeiMad Teaohm Summary Requlres State Board of Education to study performancebased limnsure, use of mentors and other strategies to improve retention of newly cerWied teachers. Report due Feb~ar1y, 2002 to Education Oversight Committee Allows initially cettified teachers to take up to 3 days of paid leave during second year of employment to work on performance based licensure requirements. Allows simllar leave in third year if licensure requirements have not been completed. Leave is allowable only wlth supenrisor's approval. Section 28.20 me : Phase In ADM ReduEtiom Due to ~harhvS chools Summary Limits fiscal impact on local school administrative units to a maximum loss of 5% of their average daily membership (ADM) a year due to opening of new charter school in a local district Phases out hold-harmless funding for counties previously covered beginning in 200203. Section 28.21 Title: Medlcaid Outmat% Summary Spells out methods of repayment In case of audit exceptions in reimbursement of federal funds to local school administrative units for Medicaid outreach. Section 28.22 me: Funds for NontnatfuEtional Support Personnel h4ay be Used for Staf Dewlopent Summary Allows transfer of up to 3% of this allotment for staff development purposes. W o n 28.24 me: Study Textbook MstribYtlon System Summary Requlres the State Board of Education to contract wlth a private consultant to determine the most effectbe and efficient method for providing textbmks to local schools. Report due to Education Oversight Committea by April I, 2002. Section 28.25 Title: Abolish the North Camlina Skmdards Board for PuMIc School Adm-n Summary Eliminates this Board and transfers essential functions to the State Board of Education. This reduction is a part of the $3.2 mnllon reduction to the Deparbnent of Public Instruction. W o n 28.26 TMe: Quldeanes for Charter School, Emollment Summary Clarifies language related to when the State Board of Education is required to approve the gmwth in a charter school's enrollment by more than fO% In one year. No requirement for review if Increase is no more than 10% of previous year's enrollment or is in accord with growth plan in charter application. Section 28.27 Summary Continues authority for State Board of Education to use up to $50,000 annually for a charter school advisory commlt&ee and evaluation of charter schools. Summary Requires NC Teacher Academy to include sMf development programs focused on teachlng in at-risk schools. Reaulres that 10% of Teacher academy budget for 2001-02 be used to ~rovlde training for elementary teachers assigned to small&class-sbss. Section 28.29 Title: Mod@ Law Regarding ChIldren wlth DlsabIlitles Summary Restructures the advfsory group Ccuncn on Educational Services for Exceptional Chldren to comply with federal requirements in the IndMduals with Disabilffles Education Act (IDEA). Requires Joint Legislathre Education Oversght Committee to review any changes needed to bring State laws dealing with special education and services to chfldren with dbablities into compliance w.. i. t- h . I.-D -EA . Adds requirement for State Board of Education to adopt rules on educational prcgrams for pregnant students to enable them to successfully complete publlc school. Section 28.30 Title: Closblg tb Achievementoapevelent Gap Summary Subsections a. 8 b. require State Board of Education to Include a "closing the gap" component in its school level measurement of student performance and to report to the Joint Education Oversight Commktee data by subgroups of students. Subsection c. requires school improvement plans to indude plan to prepare all students to read by the time they enter the second grade. Teachers must noWy parents if children are not reading at grade level. Subsection d. enmurages State Board of Education to consider If standards or other criteria fmm grades K-2 should be Included in a school's performance assessment e, Requires State Board of Education to adopt model guidelines for establishment of local task forces on closing the achievement gap. Local boards of education have discretion over establishment of such a local task force. f. Reauires State Board of Education to remrt to the Joint Education Overslaht Committee and to the sbdy Commission disaggregated data on dropouts, suspensions, expulhlons and placement in alternative programs, and to make the data available to the public. Subsections g., h. and I. reauthorize the Commlsslon on Improving the Academic Achievement of Minor& and At-Risk Students for two years. Requires Commission to study need for addfflonal resour& to close the achlevement gap. Section 28.31 me: Clarily Law RegardIng Mentors for Sacond-Year Teachera Summary hovides mentors to second-year teachers whose flrst year of teaching was in a private school, charter school. or another state. Public Education p a s a ~18 Section 28.32 me: Funds for the Testing and Implementetion of the New Student lnformatlon System Summary Allows use of up to $1 million from appropriations for the new student information system to be used forpurchase or lease of equipment by the Department of Public Instruction for implementation of system. Section 28.33 Title: Expanditure of Funds to Improve Student Acmuntabfllty Summary Directs allocation of funds based on students below grade level in grades 3-6. Requires funds to be used to impmve academic performance of students performing below grade level. Requires allotment of funds to i d school adminisirative units wlthln 30 days of passage of a.~.~ ro. oriationbsill . and allows funds to be available thmu-n h Aug- ust 31 of subsequent years for summer programs. Section 28.34 me: Study the Salaries of Sohool Fmd Servlw Workers and Custfxlh Summary Requires Joint Legislative Education Oversight Committee to study the salaries of these persons employed by NC public schools. and to report to the 2002 Session. Section 28.36 Title: Character Mucatlon Summary Directs State Board of Education to develop a model character education wniwlum; allows Board to contract for assistance. Section 28.37 Title: study of way DiffmntWs for instructional Support P818onnal Summary Directs Joint EducaUon OversigM Committee to study salary diirentials of instructional support personnel based on degrees and credentialing. A study of the impact on student performance of teacher salary differentials based on degrees and credentialing. Section 28.38 -Me: fledbnity to Implement Base Budget ~eductlon Summary Allows Deparbnent of Public instruction to shiit personnel in cmyfng out staff reductions requlred in this budget Requires conversion of contractual senricea to state employees withln existing number ofstat8f;nded personnel. S d o n 28.38 Title: Funds lbr lnstntcmna~S upplies Summary Directs that school teachers be able to purchase up to $100 in classroom supplies. L dsch ool administrative units must report on implementatJon by February 15,2002, wlth a summary repOfi to legislative committees b y ~ ~ r i2ldl0,2 . Public Education paeeF18 Section 28.40 Summary Directs Deparbnent of Public instmction to continue subscriptio~on this Web she for 2001-02 .- fiscal year (previously funded with federal resources). DPI and Cultural Rasources shall collaborate on most efficient use of funds to access the NC WISEOWL subscriptions through the NC L M program by 200203. Report due to Information Technolcgy Appropriations Subcommittee by 3/15/02. Section 20.7 Tftle: AIlocatlon of Federal Funds for Prior@ M s Summary Requires State Board of Education to cwrdlnate use of federal and State funds to avold overlap of efforts and to expand avaflabnity of smaller class s&es to as many at-risk students as possible. W o n 28.42 Tie: Overtime for Schd Employee6 Summary Clarifies wage and hour la& requirements on overtime pay for employees W n g as both a teacher assistant and a bus driver. Section 28.43 Tftle: Funds for Teaoher Recrurtmeni Wtlativas Summary Allows State Board of education to use up to $200,000 In public schools funds to allow NBPTS cerWied teachers or other teachers who have received special recognition to advfse the State Board on teacher recruitment Section 28.44 Summary Requires local schml districts to use class-size reduction positions for kindergarten only for kinderaarten teachers. Requires maximum class sirs limits set by State Board of Education to be r e d u d by one student in 2001-02 and by two students in 200243. Allotments are based on one teacher for every 19 students in 200102 and one teacher for every 18 &dents in 2002-03. W o n 28.45 Mle: ~ ~ ~ ~ o r ~ e t ~ u d t Summary Requires State Auditor to audit ExpiorNet, a non-profit recaMng state funds. Pmhlbits dktrlbution of funds to ExplorNet until wrtfficatlon offinandal cormds and procedures by Auditor and OfRw of State Budget NOTE W o n 114.6. of House Bnl 338,2001 Technlcal Carreotlons, SL 2M1- 487 modified-this language to allow the Stab Board of Education to distribute grant6 to local school adminlsWe units if the State Audbr has not completed the audt on ExplorNet by March Requb.es 80% of State funds appropriated to be dlstrlbuted in the form of grants to local school admlnlsWe units. Publlc Education Section 28.46 me: WWealth Tramition Funds Summary M d e s one year supplemental funding to low-wealth counties losing more than $1 mlllion in low-wealth funds in 2001-02. Allows State Board to hold these counties harmless for up to 60% of funding lost, using funds from the Average Daily Membarship Contingency Reserve Fund or other sources. Section 28.47 me: SubstiMe Schnol P~nnaVUnemploymenDt cdfnitlon Summary Clarifies that substitute teachers who are not fulltime employees are not eligible for unemployment compensation when not called to work. Section 28.48 Title: Qdrocl BZ18 Replacement Summary States that if State funds replace a school bus in one of two smallest school systems that school system may retain the replaced bus for use as an activity bus. Section 29.1 Title: Immediate Assistance b the Highest Prlority Elementary Schools Summary Lowers dass size in grades K-3 to 1 to 15 in 37 schools with 80% of children eligible for free or reduced price lunch and 45% or more of students are parformlng blow grade level. Allomtes funds for additional teachers, additional days of staff development and instruction, and additional instructional support personnel for high priority schools. Eliminates allotment of teacher assistant dollars for these schools, but does not prohlbt use of teacher assistants at t h a e schools. If the local school system applies for and receives a wdiver from hnplementation for FY 2001-02 hom the SWe Board of Education, the teacher assistant allocation is restated and the teacher alocation removed. Title: [mmediate Adiona to Address Teaoher Shortage Summary Provides $1 million for teacher assistant scholarships to take prerequisb courses (at Community Colleges or Universities) needed for entry into teacher preparation programs. Provlde $1,800 bonuses to teachers ceMed In and teaching in the fields of mathematics, science, or special education, Cthey are teaching In middle schools or high schools with 80% of chndren digible for free or reduced price lunch or 50% or more of students are performing below grade level in Algebra I and Biology. Bonuses are to be paid monthly. Teachers remain eligible as long as they continue to teach at a school that was eligible for the bonus program when the teacher first received the bonus. Joint Education Oversight Committee shall study the eRectiveness of atbacting certified teachers back into teaching by providfng bberwff$ to part-time teachers. Joint Education Oversight Commlttae shall study the effectiveness of athading students Into teachlng by expanding the Teaching Fellows Program. Public Education psge F 21 Summary Defines Continually Low-Performing Schools as those identified as low-performing in 2 of 3 comewtive years. Requires State Board of Education to adopt a series of progressive intervention strategies for such schools. Requires State Board to adopt and implement actions for schooi identified as iowpsrformingfor three or more years. Section 29.4 Title: Additions to the W Sup&tendent's Plan to Improve a Werfonning Summary Requires local superintendent to specify how central office admlnisbators wtli work with and monitor progress of iowperforrning schools. Section 29.5 Title: Appmprlatlorn, for Cofiually L D w P ~ l n Sgc hools Summary Funds to reduce class size in grades 4-5 In continually lowperforming schools to 1 to 17. This is in addition to the 1 to 15 class size funding in grades K-3. Provides funds to Mend teachers' contracts in these schools by 5 days for staff development in 200102 and 10 days, including 5 additional days of instruction, in 2002-03. The State Board of Educatlon has discretion on whlch strategies to implement and which schools to targat for the 2001-02 school year. Section 29.6 me: hralwtion ofi nmativm to ~ ~ ~Hi1ghs Plttori ty SohDols Summary Requires high priority schools identified in Sec. 29.1 to meet growth exp&ations and reach high growth in two of three years to remain eliglble for additional resources. All resources remaln &able until 2004-05 as a minimum. Requires teaching positions allotted for high priority schools and continually low-performhg schools to be assigned to and teaching in those schools and those gradas. Department of Public Instruction required to monitor class sires in these schools each month of school year (starting in January 2002). Mows schoois until January 2002 to implement class size restrictions. Allows local boards to seek wa[vera from the State Board of Education for 2001-02 school year only If the local board cannot implement hlgh-priority schools class size changes during 2001-02 school year. Provides $500,000 per year for evaluation of class size inWes, use of bonuses, and other efforts to assist high priority schools. Public Education Overview: 2001 Session Fiscal and Budgetary Actions UNC System / GENERALFUND I fbornmended Budget $1,804,923,800 $1,812,208,855 Campus Reductim 66 Temporary Wages and Membarship Dues ($2,500,000) R ($2,500,000) R Reduce the funding for temporary wages and membership dues at the 16 UNC constituent institutions. 67 Community S8 ~ l ~ e s lG~nA~cardaelm ic Support ($1,500,000) R ($1,5M),OOO) R Reduce aomunt appropriated for Community Services/General Academic Support for the 16 constituent i nstitutions. 68 Reduction in SPA Positions ($10,694,131) R ($10,694,131) R Reduce SPA positions at the 16 constituent institutions by 2.8%. 69 Reductions in EPA Non-Teaching Staff Positions ($5,902497) R ($5,802,497) R Reduce EPA non-teachi ng positions at the 16 constituent institutions by 2 . a . The position reductions in Cooperative -9520 -9S20 Extension and Agricultural Research shal l be made only in non-teaching positions. 70 Reductions in Various Modifled Zero-Based Budget Items ($5,726,311) R ($5,726,311) R An average 5% reduction is made in the budgets of the 16 constituent institutions for the fol lowing modified zero b e d budget i terns: miscel lanews contractual services, rental /lease of equi pfuent, trave I, ce l lular phones, furniture and equipment, and other aids and grants. 71 Prhrate Funding for Selected Summer Research In Ueu of ($1,000,000) R ($1,000,000) R State Appropriation Substitute same private funding for a portion of state appropriations for select faculty to do summer research. This will be selected at the campus level. 72 Continuing Education Receipts ($378,775) R ($378,775) R Increase by 10% the receipts generated through continuing education programs at UNC-CH Health Affairs. 73 Center for Alcohol Studies Endowment Reduces the appropriation to the Center for Alcohol Studies ($250,OW) NR Endomoent for one year. UNC System page F P Overview 2001 Sesslon Flscal and Budgetary Actions 74 InstiMe of Southern Politics, Medla 8 PubUc Ute Eliminates the specific funding for this program, but allows UNC-CH to use other state or other sources of funds to continue this prcgram. 76 indtute for Outdoor Drama Eliminates funds for the newly-establ ished p s i tion of Director of Comunications at the Institute for Outdoor Drama at UNC-CH. 76 Additional Adminkbatlve EfFiclencles The University System shal l find additional administrative efficiencies. TI Reduction In Travel The University System shall make additional reductions i n i t s travel expenses. UNC G a d AdmihtWon 78 Reductions In ModiRed Zero Based Budget Items for UNC-GA A 10% reduction i s made i n the budget of UNC-General Administration for the fol lowing modified zero based budget i terns: mi sce l l aneous contractual services, rental / lease of equi p n t , travel, cel lular phones, furniture and equipment, and other aids and grants. 78 Reduce EDP Equipment Reduce Electronic Data Processing equipment infrastructure replacement efforts at UNC-GA. 80 Board of Governors' Meetings The Board of Governors recently voted to reduce the number of times it w i II meet during the year to eight. This i s the corresponding budget reduction for meeting costs. 81 MCNC Contract Reduce the state funds paid to MCNC by UNC-Ceneral Administration for the use of the MCNC Supercomputing Center and move to a fee for service. 82 Litigation Contract Eliminate funding for the litigation contract with the Department of Justice. UNC-GA i s s t i l l required to maintain the contract and reimburse the Department of Justice for legal services. 83 UNC General Admfnbtmtion SPA Position Reductions Reduces the SPA positions in UNC General Administration by 5%. UNC System Ovenrim 2001 Sesslon Fiscal and Budgetary Actions M 2001-02 FY 2002-03 84 UNC General Adminlstratlon EPA Non-Teaching Staff ($541,925) R ($547,925) R Position Reductions Reduces the WA non-teaching staff posi tions i n UNC General Administration by 5%. -52% -525 85 Administratbe Overhead Reduction ($168,791) R ($166,791) R Eliminate the administrative overhead f rm General Fund appropriations i n the Center for School Leadership -1.80 -1.60 Development's central office. 88 Reduce Teacher Academy Reduces the funding for the Teacher Academy. 87 Reallocate Funds fram the Model Teacher Educatfon ($822,082) R ($822082) R Consortium Real locate a portion of the Model Teacher Education Consortium funds to a more comprehensive method of delivering 3.60 -250 program goals. 88 Ofiice Consolidation Savings ($100.000) R ($100.000) R Savings froa the consol idation of offices for the programs under the Center for School Leadership Development. 88 Redudon In All Center for School Leadership Development ($833,315) R ($833,315) R pm- Reduces a l l programs under the Center for School Leadership Development. These programs shal l not be subject to the mross-the-board personnel reductions taken for UNC-EA or the csmpuses. The Joint Legislative Commission on Education Oversight w i l l study these programs for reconrmended savings. (SB 1005. Section 31.4) 90 Matching Incentive Funds ($m,000) I3 ($350,000) R Reduce Matching Incentive Funds for staff development i n K-16 programs. 01 Lighthouse Schools ($2W),OOO) R ($280,000) R Eliminate funding for Lighthouse Schools under the Center for - School Leadership Deve lopment. 92 Strategic Initlathre Reserve Reduce the UNC System President's Strategic l n i t i a t i v e ($1,000,000) NR Reserve that i s used to fund special projects. The current reserve i s funded at $3,OM),O(Xl per year. UNC-GA shal l provide a detai led report to the Joint Legislative Coarpission on Education Oversight prior to March 1 annual l y on how these funds are spent. $1 mi l lion of the remaining funds shal l be used to provide transition funding to temporari l y offset the effects of permanent position cuts at the historically black and minority and smal ler campuses. UNC System Paee~= Overview 2001 Sesslon Rscal and Budgetary Actions Univedly Expanelon Funds $3 Regular Term Enrollment Increase Fully funds the UNC Board of Governors' regular term enrol lment increase, i ncluding the 'hold-harmless' for those campuses losing enrol lment. This funds an additional 2,435 ful I-time equivalent students. 84 Distanw Education Enrollment Increase Ful ly funds the UNC Board of Governors' distance education enrol lment increase requests. This funds 1,085 additional FfE students. 85 Faculty ProductMty lncrease faculty prcductivi ty by using existing tenure-stream faculty who teach an average of fewer than 15 credit hwn a year to help with the projected enrollment growth. This reduction is for faculty paid from the code '1310 EPA Teaching Faculty' line. 88 Tuitlon Increase There is a 9% across-the-board tuition increase for al l students for the 2001-02 academic year. In addition, the Board of Governors' differentials for graduate and professional schools shal l remain in effect. Also, the campus-initiated increases shall remain in effect. 07 Need-Based Student Financial Ald Adds additional funds to the existing need-based student financial aid program. The current direct appropriation for this program is $6.3 mi I lion. 68 Ald to Students Attending Prhfate Colleges Provides funds to cover the projected enrol lmnt increases in the funds for students attending private colleges. $2,346,210 is to cover the 1 ,192 additional students anticipated to receive the Legislative Tuition Grant (LTG). The State Contractual Scholarship (SCSF) p m g m will increase by $880,000 to cover an additional 600 FTE students. The current appropriation for the LTG program and the SCSF is $75.7 million. (SB 1005, Section 31.1) 88 Education CablnetlResearch Councll Funds This restores half of the non-recurri ng appropriation made during the lest fiscal year for the Education Cabinet and the Education Research Counci I . 100 Scholarships for Teacher Assistants Pursuing Teaching Das- Funds are appropriated to provide scholarships for teacher assistants. (SB 1005, Section 31.5) UNC System Overview: 2001 Session Fiscal and Budgetary Actions 101 InstlMe of Government-Center for Technology Support To support Center's efforts to provide technical assistance to local governments. 102 Teacher Preparation Programs through Distance Educatfon Provides additional funds for a1 1 UNC teacher education programs across the state provided through distance education that do not have an on-campus residency requirement. Funds shal l be a1 located based on their student credit hour enrollment. (SB 1005, Section 31.7) 103 Genomlcs, Biolnfomatlcs, Optoelecbonlcs, and Photonics Research Provides funds for the new genomics, bioinfoaratics, opt- lectroni cs, and photonics research programs. 104 Eliminate Room and Board Charges at the North Carollna School of them Eliminate room and board charges for in-state high school students at the North Carolina School of the Arts. 105 NC A&T State Unhrerslty Matching Funds Provides funds to match federal funds for NC AaT State University's agricultural programs. 108 ECU Doctoral Status Funds Funds the last phase of the transition of ECU to Doctoral I status. 107 Progress Board Provides recurring funds for the Progress Board which is funded through the university system. (SB 1005, Section 31.12) 108 Closing the Achievement Gap Provides funds to support the Historical l y Minority Col lege and University Consortium initiative to close the achievement .gap. Funds shal 1 be al located to UNC-General Administration for distribution to the consortium. 109 Focused Growth 1natituUonsSpeclal Needs To provide funds as requested by the UNC Board of Governors to fund the special needs for the Focused Growth Institutions in the UNC system. I10 TEACCH Program Fun& Additional funds for the TEACCH program to enable them to apply for a National Institute of Health grant and other grant funds. UNC System Page F n Overview: 2001 Session Fiscal and Budgetary Actions FY 200192 FY 2002-03 Total Legislattve Changes Total Posltlon Chmm Revised Budget UNC System Special Provisions 2001 Session: SB 1005 Department: UNC System Section 31.1 Title: Ald to Private Conages Summary Codffies the standard language for distributing the money to students attending private colleges. In addition, adds a section that reduces the Legislathre Tuition Grant by 25% for those students who have completed 140 semester credii hours. Section 312 Title: Academic Common Market Pilot Pmgfm Summary Allows the UNC Board of Governors to select certain graduate programs to be a part of a pilot program for tuition reciprocity with other SREB states in its "Academic Common Market". Section 31.3 Title: Ald to Private Medid SehoolslFundIng Formula Summary Codffies the standard language for the prccedures distributing the aid to private medical school money. Saction 31.4 Title: Sule ~ I o n eDalye lopment Programs for PuMo School Plofessbnals Summary Clarifies the General Assembly's intent for information to be included in pmf88sional development reports. in addition, directs Education Oversight to study these programs and develop r&mmendations for efflciencles and improvements. Section 31.5 me: TsadrerAsslsbnt Wmlershlp Fund Summary Pmvfslon follows the money decision to establish a new scholarship program for teacher assistants pursing teaching degrees. Section 31.6 Title:. UNC Budget Re*bWl~usHt onor Budget Reducthe Summary Directs the university system to follow the General Assembly's decisions with regard to budget reductions. Otherwise, UNCs budget flexibility remains. Summary Expresses the Intent ofthe General Assembly to make teacher education programs amliable through distance education statewide. Funds are distributed to all teacher education pmgrams that offer these programs through distance education and do not have an oncampus rssldency requirement UNC System page F 28 Section 31.8 me: UNC surplus property ~uiuldeltnes Summary Dbects UNC Board of Governors and the Department of Admlnlstratlon to jolntly develop guldelines for the disposal of unhrerslty surplus properly and to report to the General Assembly. Ssction 31.9 Title: SubstiMion of UNCCH Bond Pro@& Summary Allows UNCCH to make a change in one of its bond projects. Section 31.10 Tile: Maeter Ed. Adrntnistratlon at ABT Stab, NCCU, UNGP/Sludy P058lbIe Pharmacy School at ECSU Summary Authorizes three addltlonal Masters of School Administration pmgrams and directs the Board of Governors to establish them at ABT State, NCCU and UNCP. Also asks the Board of Governors to study the feasibflily of creating a Pharmacy School at ECSU, a school of Engineering at ECU, UNGA, and WCU and a School of Dentistry at ECU. Section 31.11 Tie: UNC Board of f3ovemors May Authorhe CarEatn Management RePdbUity for Spedal ResponslbUity Constituent InstMons Summary Allows the Board of Governors to grant the campuses ofthe UNC system the authority to have flexibility in the area of setting tuition and fees for campus-initiated tuition, Rxing compensation of senior personnel and tenured faculty and information technology dsclsions. Directed Education Overslght to study the issue of expanding flexibnii to the areas of personnel, purchasing and Property. Section 31.12 Tie: ~ogreesB& Summary Makes staMory changes to the Progress Board which is funded in the UNC system. ingeases the she of the Board, increases arm of study and changes the appointment of the Executive Director and budgetary location of the Beard. (Note: Section 6 of House BUI 231. Appropriations Modfficatlons and Other Changes, SL 2001-513 repealed subsection (d) ofthls provision which had earmarked money from the Strategic inltlatlve Reserve for the Pmgmsa Board.) Section 31.13 me: Transfer Chinqua-Penn Plantation Funds Summary Transfers all Endowment funds ralsed to support Chinqua-Penn and gifI shop funds from NCSU to Chlnqua-Penn Foundation. Section 31.14 me: UNC Board of Govamonr Report on Overhead Raoelpb Summary Requires the UNC Board of Govemors to report annually to the Joint Legislative Education Overslght Committee on the amount and expenditures of overhead receipts. UNC System HEALTH & HUMAN SERVICES Overview: 2001 Session Fiscal and Budgetary Actions Health and Human Services I I 1- 1- Recommended Budget $3,471,730,643 S3,725,304459 ( 1.O ) W o n o f Mentd Health 1 Admlnistation In Area Programs ($1,500,000) R ($1,500,000) R Reduces state appropriations to area mental health programs and directs DHHS to develop and implement guidelines to bring administrative costs at area programs into a more reasonable range. (SB 1005, Section 21.65) 2 Various Contracts Eliminates the fol lowing contracts: UNC-CH C t r for the Study of Development and Learning Life Plan Trust, Inc. Duke University Reduces the following: UNC-CH DD Training lnsti tute 100,000 NC State Center of Urban Affairs 265,227 Governor's I nsti tute on Alcohol and Substance Abuse, I nc. 100,OM) Counci I on the Accreditation of Services for Fami lies and Chi l dren 247.1 82 3 State Appropriations to State MR Centem ($2,800,000) R ($2,800,000) R Reduces state appropriations to the five (5) state mental retardation centers i n accordance with the State's 4% Downsizing Plan. (SB 1005. Section 21.62) 4 bledlcal Services Director Contract ($134,695) R ($134,695) R Eliminates a contract with UNC-CH for the services of a medical director for the Division. 5 Positlon Elimlnatlons (SB l a , Section 21.64) 6 Neurobehavioral Treatment Unit ($571,526) R ($571,526) R Eliminates funding for the creation of a new neurobehavioral treatment unit for individuals with traumatic brain injury 61.00 -51.00 (to be located at the state's Black Mountain Center). Health and Human Services . Paee 01 Overvlew 2001 Session Rscal and Budgetary Actions 7 Improved Efffclencies for Hospital Operations Transfers responsibi l i ty for Cherry Hospital laundry operations to the Department of Corrections Enterprise Industries. 8 MedicaVSurgicai Unit at Dbt Hospital Reduces appropriations for a medical /surgical unit located at Dix Hospital which was closed i n October ulW. Medical/surgical services w i l l be provided via contract. 0 Oakview Program Eliminates state appropriations for an apartment program for adolescents which i s no longer i n use. 10 Medicaid Recelpts on ChildlAdoleecent Beds Reduces state appropriations i n anticipation of receipts for the chi Id and adolescent beds i n state psychiatric hospitals. I I Medicaid Receipts for EATP at Wilson Reduces state appropriations i n anticipation of Medicaid receipts for the adolescent beds i n the state's Eastern Adolescent Treatment Program located i n W i Ison. 12 Varlous CoptmEts Eliminates the following: Work Central Cal l Support C t r Reduces the fol lowing: Appalachian State University Tier, Inc. NC DSS Director's Association 13 Positlon Elhnlnatlons (SB l a , Section 21.49) 14 Familtes for Klds Funding Reduces State funds for Fami lies for Kids initiative. 16 Family Resource Centem Reduces state funds for Family Resource Centers and directs DHHS to al locate the remaining funds based on program performance. (SB 1005, Section 21.48) Health and Human Services Page 0 2 Overview 2M)l Session Fml and Budgetary Actions 16 Excess State/County Special Asststance Reduces excess state appropriations i n the State/County Special Assistance program. 17 County Pmgram Integrity Worker Funding Eliminates a grant-in-aid to a l l counties for program integrity activities. I8 CaroItna ACCESS County Positions El i mi nates Carol i na ACCESS county positions located in county departments of social services. 10 Regional MAce Positions Eliminates 7 regional office clerical positions. Other personnel w i I I absorb associated job duties. 20 Work First Transfer to General Assembly Eliminates the transfer of funds to offset the cost of the Joint Legislative Public Assistance Commission which i s being repealed. (SB 1005, Section 21.13) 21 ICFIAAR Rate Adjustment Adjusts rates for private Intermediate Care Facilities for the Mental l y Retarded to reflect actual costs and eliminate profit. 22 New Inflatlonay increases Eliminates new inflationary increases for SW 2Mn-20D3. 23 Dnrg Utflhation Management Implements various drug uti l ization measures to contain the cost of prescription drugs as recamended by the 'North Carolina Medicaid Benefit Study'. (SB 1005. Section 21.26(b)) 24 ACCESS Mdlcal Director Contract Eliminates the contract for the medical director for the Carol i na ACCESS program as recommended by the 'North Carolina Benefit Study'. 25 Dispensing Fee for Dm@ Reduces the dispensing fee for prescription drugs from $5.60 to $4.00 per brand name prescription. The dispensing fee for generic drugs i s $5.60. (SB 1005, Section 21.19(a)(5)) 28 Generic Dmgs Implements increased uti lization of generic drugs. (SB 1005, Section 21.19(h)) Health and Human Services Overview: 2001 Sesslon Fiscal and Budgetary Actlons 27 Daily Personal Care Services Umit Limits Personal Care Services to 3.5 hours per day whi le maintaining the 80 hour per month l i m i t . 28 Asset Pollcy Changes Apply federal transfer of asset polices to real property excluded as "income producing' under Title XIX. (SB 1005, Section 21.19(y)) 28 Medlcare Crossover Claims Payments Limit Medicare Crossover claims payments to 95% of Medicare rates. 30 Position Elfminations 31 Optlonai Services Eliminates optional c i rcmision procedures except i n cases of medical necessity . (Note: Section 19 of House Bi l l 231. Appropriations Modifications and Other Changes, SL 2001-513 reinstated this reduction.) 32 Physician Rates to 95% of Medlcare Rates Reduces rates paid to physicians to 95% of the physician rates paid by Medicare as reconwended by the 'North Carolina Medicaid Benefit Study'. 33 Co-payments for Prescription Drugs Increases co-payments for brand name prescription drugs from $1 to $3 per prescription. Co-payments for generic prescriptions remain at $1 per prescription. ( 4.0) Office of the Secretary 34 Welfare Automation Fund Reduces state appropriations to the fund which supports automation enhancement i n the Work First Program. 36 Community Adon Agency Funds Eliminates state appropriations to Conrmuni ty Action Agencies i n lieu of increased federal grant funds. 38 Posmon Eliminations (Note: Section 1. (h) of House Bi I I 231, Appropriations Modifications and Other Changes, SL 2001-513 amended this item to reflect a final position elimination of 44 FTE's.1 Health and Human Services Overvim 2001 Session Fiscal and Budgetaly Actions 37 contract Eliminates a contract for personal services i n support of a Medicaid waiver proposal, activities w i I I be absorbed by existing staff. ( 6.0) DMslon of Chnd Development 38 Smart Start Evaluation Reduces state funds for evaluation activities for Smart Start and directs DHHS to contract for a mre focused review of Smart Start activities directly related to kindergarten readiness. 39 Early Head Start Eliminates state appropriations i n lieu of increased federal Early Head Start funds. 40 Position Elhninations (SB 1005, Section 21.74) 41 Various Contracts Eliminates contracts for the following: Personal Services contrect for chi Id abuse curriculum development 315.000 Chi Id Care Services Ass~iation, Inc. 25,O@JJ 42 Smart Start ($48.500,MX)) Reduces the Governor's proposed increase i n Smart Start continuation funding - funds not yet received by local partnerships. (310,500,000) Reduces state appropriations to the North Carol i na Partnership for Chi Idren, state administration and local partnership operations. This reduction i s minimized by pol icy changes i n how funds are utilized for quality improvements and a prohibition on the use of funds for capibl/equipnoent projects. (SB 1W)5, Section 21.75) ( 6.0) W o n of Vocational Rehabmtetlon 43 Position Eliminations ( 7.0) DMslon of Publlc Health 44 Poshton ReduotIons Health and Human Senllces Page 0 5 Ove~iew2: 001 Session Rscal and Budgetary Actions 45 Various Contracts Reduces the Heal thy Start Foundation contract by 5150,MB). Eliminates the fol lowing contracts: Association of NC Boards of Health - SlWJ.000, Mecklenburg County Mental Health Authority - $86,144, NC Fair Share - $10,000, Pennsylvania State University - W,355, UNC (Hypertension Data Analysis) - $10,000, UNC Family Services Network - $223,561, UNC School of Public Health - $225.000, and UNC School of Public Health - $127,494 48 Vital Record Recelpts Adjusts the budget to accurately reflect the amount of receipts to be col lected for the sale of vital records. 47 Newborn Screening Progm Reduces state appropriations i n anticipation of increased Medicaid Receipts. 48 HeaIth Promotton ActhMes Reduces state appropriations for Health Promotion activities. 49 Sickle Cell Prog. Ed. Counselors Reduces state appropriations i n anticipation of increased Medicaid receipts. aoo aoo 51 AIDS Drug Assistance Program Reduces state appropriations on a non-recurring basis due to excess ADAP funds. (SB 1005, Section 21.90) 62 Nurse Midwifery Program Eliminates funding for the Nurse Midwifery Program which funds start-up midwifery practices. 63 Position T d r s Transfers the following positions from Division of Early Intervention and Education into Division of Public Health, Women's and Children's Health Section: Audiologists: 4425- 1231 -1 21 1-921 , 4429-1 536-1 21 1-020: Speech and Language Pathologist: 4429-1526-121 1-027; Language/Cmunication Specialist: 4429-151 6-1251 -004; Saial Workers: 4425-1231- 121 1-920, 4429-1 526-121 1-026, and 4429-1536-121 1-01 9 (SB 1005. Section 21.80) Page 0 8 I Health and Human Services I Overview: 2001 Session Fiscal and Budgetary Actions 61 R U ~oIb stetrics Incenth. program Eliminates Rural Obstetrics Incentive Program which pays a portion of the mal-practice insurance for doctors in rural areas to encourage them to treat Medicaid patients. 55 Contracts to LEAS Eliminates the contracts with Local Education Agencies that were set-up to supplement educating heari ng-impai red chi ldren transitioning out of the Central North Carolina School for the Deaf. 68 Various Contracts Reduces the contract to Beginnings by $2CO,WlO, and personal services for audiological management by $87,240. 57 Stateoperated Deaf Preschools Reduces appropriations to the state-operated preschool centers and transitions the chi ldren from these centers to other preschool sites and services. (SB 1N6, Section 21.83) 68 Position Eliminations Eliminates 23 teacher and teacher assistant positions in the stateaperated deaf preschools, as a result of transi tioning chi ldren to other preschool sites and services. (SB 1005, Section 21.83) 58 Position Eliminations 60 Developmental Eval. Centers Reduces state appropriations i n anticipation of increased Medicaid receipts. 61 ReorganhationlChanges Eliminates state appropriations in the areas of administration and other recent budget revisions that reduced the budget of the Central North Carolina School for the Deaf to enhance the Division's central office. (SB 1W5, Section 21 .SO) 82 Central School for the Deaf Savings from the Department of Health and Human Service's closure of the Central North Carolina Schcol for the Deaf. (SB 1005, Section 21.81 ) Health and Human Services Overview: 2001 Sasslon Rscal and Budgetary Actions ( 9.0) Mvisbn of Aging 83 Position Elhinations Eliminates 1 position. 64 Area Agency on Aging (AAA) Adminlstratlon Funds Reduces 8200,CiUD i n administrative funding for 17 Area Agencies on Aging. The Division wi I I implement strategies to reduce overal I administrative costs. (SB 1005, Section 21 3 2 ) 85 UNC CARES Contract Eliminates State funding for a contract with UNC-Chapel H i l l for planning and evaluation services. The Division wi I I assume the duties of the contract. 68 Medical Eye Care Program Reduces excess funding i n the Medical Eye Care Program. 67 Position Elhinations 68 Flre Protection Revolving Loan Fund Eliminates appropriations i n the Fire Protection Revolving Loan Fund. 68 EMS Regional Grants Eliminates Emergency Medical Services Regional Grants. 71 Receipts for Mental Health Uwnsure Increases receipts from Medicaid to support Mental Health Li censure. 72 Gmnt for Association of Rescue and EMS Eliminates the grant-in-aid for the NC Association of Rescue and EMS Health and Human Services OveNlew: 2001 Session Fiscal and Budgetary Actions (12.0) Mvlslon of Mental Health n security Staff Increases appropriations and staff due to a transfer of security responsi bi li ties from the Juveni le Evaluation Center to the Jul ian F. Keith ADATC and the Black Mwntain Center. (SB 1005. Section 24.10) 74 Housing Support for the Mentally ill Provides funds to support the expansion of housing support and placements for the mental l y i I I. 76 Autism Funds Provides $450,000 for administrative, operational, and direct services funds to the Autism Society of North Carolina. Also provides $326,000 to continue operational support to the Residential Services. Inc. during FY01/02 in order al low the program to develop and implement the necessary processes to draw down Medicaid funds to continue residential services to autistic chi ldren. 76 Community Programs Provides funds for area mental health programs as follows: Assertive Comuni ty Treatment Teams for non-Medicaid clients 200,000 Fami l y Support Activities 300.oOO Substance Abuse Services to Special Populations 1 .000.000 Expand Capacity for Detoxi fiiation, Residential and Outpatient Services 2,OM).WO 77 Funds for At-Risk Children Provides recurring funds for direct services to seriously disturbed children (funds were appropriated as non-recurring since FY98/99). (SB 1005, Section 21.60) 78 Chlld Support Backlog Provides funding for chi Id support caseload backlogs in urban counties. (SB 1005, Section 21 .MA) 78 Food Banks Provides funds to be equally distributed to the regional network of food banks in North Carolina. 80 Chlld Support Receipt Shortlall Increases state appmpriations in chi Id support operations due to an ongoing receipt shortfal I. Health and Human Services Page O B Overview: 2001 Session Fiscal and Budgetary Actions 81 Community Alternathres Program for Children Provides additional slots for the Comnuni ty Alternatives Program for Chi Idren. 82 CAP-MRIDD Program Provides funding for the Community Alternative Program for the Mental l y Retarded&velopenteI l y Disabled. 83 Federal Financial Participation Rate Provides increased funding for the Medicaid Prcgram due to a decrease i n the federal financial participation rate. 84 Breast and Cenrical Cancer Coverage Provides funding for Medicaid coverage for uninsured women under age 65 with breast or cervical cancer. Includes state costs for administration. Bii Health Chofce Provides funding for increasing the enrollment for NC Health Choice to 82,000 chi ldren. (SB 1KS. Section 21 22) 88 Access to Dental Services Provides funding to increase access to dental sewices for chi ldren and adults. (SB 1005, Section 21.98) 87 Healthy Start Foundation Provides funds for Healthy Start Foundation to improve access to prenatal care and reduce poor hi rth outcomes for fami lies i n North Carolina. 88 Varlcella Vaalne Provides funding for varicel la vacd nations for approximately 20.000 chi ldren. 89 Asthma EducaUon Program Provides funding to support asthma management, control. suwei I lance, and education. 90 Alice Aycock Poe Center for Health Education Provides grant-in-aid to the Alice Aycock Poe Center for health education. 81 Osteoporosis Task Force Provides funding to continue activities of the Osteoporosis Task Force. Health and Human Services Overview 2001 Session Fiscal and Budgetary Actions 92 Birth Defects Monitoring Program Provides funding for the continuation of the birth defects registry. 03 Healthy Carollnlans Provides funding for Healthy Carolinians task forces throughout the state. 94 Office of Minority Health Funds Office of Minority Health activities to reduce health disparities. Q5 Prevention of Bltth Defeds Provides funding for education and awareness activities on the importance of fol ic acid consumption preceding pregnancy, to effectively prevent neural tube birth defects. QE Heart Disease and Stroke Prevention Funds Heart Disease and Stroke Prevention Task Force activities. (SB 1005, Section 21.95) 97 Arthritis Prevention Project Provides grant-in-aid for a private, local project i n Mecklenburg County. 88 Medical Day Care Pilot Project Provides funding for a start-up medical daycare center. (SB 1005. Section 5.1 (j)) 88 Prescription Drug Aeoesa Projwt Provides funding to support a centralized system for accessing free and low cost drugs through pharmaceutical companies. (SB 1 0 5 , Section 21.6) 100 AIDS Drug Assistance Program Increases funding for the AIDS Drug Assistance Program that pays for prescription drugs for qualified HIV and AIDS patients. (SB 1K5, Section 21.90) 101 North Carolina Counoll on the Holocaust Provides funds for the Holocaust education i n the public schools. 102 Adult Care Home Rate Methodology Tran |
OCLC number | 213077756 |