The Governor’s2014-2015Pat McCroryGovernorThe State of North Carolina
R
ecomm ended Budget AdjustmentsThe Governor of North Carolina’s2014-2015
Recommended Budget Adjustments
Office of State Budget and Management
Office of the Governor
Raleigh, North Carolina
osbm.nc.gov
Art Pope, State Budget Director
Tony Gurley, Chief Operating Officer
David Brown, Deputy Director for Budget
May 2014
Questions about the Governor of North Carolina’s Recommended Budget Adjustments, 2014-15 or requests for further infor­mation may be directed to the Office of State Budget and Management, 20320 Mail Service Center, Raleigh, NC 27699-0320, or telephone (919) 807-4700. The document may also be downloaded from the Office of State Budget and Management’s website at osbm.nc.gov.v
Introduction
Governor’s recommended budget for the state
The purpose of this document is to summarize the governor’s recommended state budget adjustments for fiscal year 2014-15. These recom­mended changes are based on the certified bud­get approved by the 2013 session of the General Assembly. This publication includes recommen­dations for expenditures from the General Fund, Highway Fund, and Highway Trust Fund. Recom­mended expenditures for capital improvements and for reserves, debt service, and other adjust­ments are also included.
Governor’s letter and highlights
Governor McCrory’s priorities are listed in his transmittal letter, followed by a brief description of key recommendations on a “Highlights” page.
Revenue and budget summary
A summary of General Fund recommended budget changes by department/budget code for the entire state budget appears in table 4: “Gov­ernor’s Recommended General Fund Appropria­tion, FY 2014-15.” Estimates of fund availability, an economic forecast, and demographic analysis are also included in this section.
Budget recommendations
Brief explanations of recommended adjustments to the budget are provided in sections that cor­respond to the following government functions: Education; General Government; Health and Hu­man Services; Justice and Public Safety; Natural and Economic Resources; and Transportation.
Budget adjustments for a given department/agency appear in the appropriate section (for example, the North Carolina Community Col­lege System appears in the Education section, the Department of Administration appears in the General Government section, and so forth). A department/agency presentation begins with a summary table, showing the 2012-13 actual expenditures, 2013-14 certified budget, 2014-15 certified base budget, and the total recom­mended adjustments to requirements, receipts, appropriation, and positions for the department/agency. Next is an explanation of each adjust­ment for a given department/agency, along with a listing of the recurring and non-recurring requirements, receipts, appropriation, and posi­tions for the proposed change. At the end of each department/budget code or section, there is a table that summarizes all recommended changes.
Adjustments are listed for each agency/depart­ment including adjustments that are required by statute, such as the Average Daily Membership (ADM) adjustment for public schools.
The Transportation section summarizes recom­mended revenue and expenditures for the High­way Fund and the Highway Trust Fund in addi­tion to the typical presentation of adjustments.
The Capital Improvements section and Reserves and Other Adjustments section display informa­tion in a manner similar to the presentation of adjustments as described above.vivii
Table of Contents
Introduction.......................................................................................................................................................................v
List of Figures and Tables............................................................................................................................................ix
Governor’s Letter.............................................................................................................................................................1
Budget Summary.............................................................................................................................................................7
Economy and Revenue............................................................................................................................................... 13
Economic Outlook for the State........................................................................................................................15
Revenue Forecasts................................................................................................................................................20
NC Population Dynamics....................................................................................................................................27
General Fund - Recommended Appropriations
Education
Education Highlights...................................................................................................................................... 31
Public Education (13510).............................................................................................................................. 33
Community Colleges (16800)....................................................................................................................... 38
The University of North Carolina (160xx)................................................................................................. 41
General Government
General Government Highlights................................................................................................................. 45
General Assembly (11000)........................................................................................................................... 47
Office of the Governor (13000).................................................................................................................... 48
Office of State Budget and Management (13005)................................................................................ 49
OSBM - Reserve for Special Appropriation (13085).............................................................................. 50
North Carolina Housing Finance Agency (13010)................................................................................ 51
Office of the Lieutenant Governor (13100)............................................................................................. 52
Department of Secretary of State (13200).............................................................................................. 53
Office of the State Auditor (13300)............................................................................................................ 54
Department of State Treasurer (13410).................................................................................................... 55
State Treasurer - Retirement for Fire and Rescue Workers (13412)................................................. 56
Department of Insurance (13900).............................................................................................................. 57
Department of Administration (14100).................................................................................................... 58
Department of Administration - Internal Service (74100)................................................................. 60
Department of Administration - Internal Service - Special (74103)............................................... 61
Office of the State Controller (14160)....................................................................................................... 62
Office of the State Controller - Special (24160)...................................................................................... 64
Department of Revenue (14700)................................................................................................................ 65
Department of Revenue - IT Projects (24708)........................................................................................ 68
Department of Cultural Resources (14800)............................................................................................. 69
Roanoke Island Commission (14802)........................................................................................................ 71
State Board of Elections (18025)................................................................................................................. 72
Office of Administrative Hearings (18210).............................................................................................. 73
viii
Health and Human Services
Health and Human Services Highlights................................................................................................... 75
Department of Health and Human Services (144xx)........................................................................... 77
Division of Central Management and Support (14410)..................................................................... 78
Division of Aging and Adult Services (14411)........................................................................................ 80
Division of Child Development and Early Education (14420).......................................................... 81
Division of Public Health (14430)................................................................................................................ 83
Division of Social Services (14440)............................................................................................................. 87
Division of Medical Assistance (14445).................................................................................................... 90
NC Health Choice (14446)............................................................................................................................ 92
Divisions of Services for the Blind, Deaf, and Hard of Hearing (14450)........................................ 93
Division of Mental Health/Developmental Disabilities/
Substance Abuse Services (14460).................................................................................................. 94
Division of Health Service Regulation (14470)...................................................................................... 95
Division of Vocational Rehabilitation (14480)........................................................................................ 97
Justice and Public Safety
Justice and Public Safety Highlights.......................................................................................................... 99
Judicial Branch (12000)...............................................................................................................................101
Judicial Branch - Indigent Defense (12001)..........................................................................................103
Department of Justice (13600)..................................................................................................................105
Department of Public Safety (14550)......................................................................................................107
Natural and Economic Resources
Natural and Economic Resources Highlights.......................................................................................111
Department of Agriculture and Consumer Services (13700).........................................................113
Department of Labor (13800)....................................................................................................................114
Department of Environment and Natural Resources (14300)........................................................115
Wildlife Resources Commission (14350)................................................................................................119
Department of Commerce (14600)..........................................................................................................120
Commerce - General State Aid (14601)..................................................................................................123
Transportation
Transportation Highlights..........................................................................................................................123
Highway Fund (84210).................................................................................................................................127
Highway Trust Fund (84290).......................................................................................................................133
Turnpike Authority (64208).........................................................................................................................134
Capital Improvements
Capital Highlights..........................................................................................................................................135
Capital Improvements - General Fund (19600)....................................................................................137
Capital Improvements - Non-General Fund (404xx)..........................................................................138
Reserves, Debt Service, and Other Adjustments
Reserves, Debt Service, and Other Adjustments - General Fund (190xx)..................................151
ix
List of Figures and Tables
Figures
1. Recommended Total State Budget by Function, FY 2014-2015........................ 7
2. Recommended General Fund Budget by Function, FY 2014-15....................... 8
3. Unemployment Rate Falling........................................................................................15
4. Uneven Recession, Uneven Recovery.......................................................................16
5. Uneven Recovery across NC Communities.............................................................17
6. Growth of Services Driving Labor Market Recovery............................................18
7. Exports Have Grown Substantially.............................................................................19
8. Highway Fund Revenue, Revised FY 2014-15........................................................23
9. Highway Trust Fund Revenue, Revised FY 2014-15.............................................25
10. Number of Movers to NC...............................................................................................28
Tables
1. Recommended Total State Budget by Function, FY 2014-2015.........................7
2. Recommended General Fund Budget by Function, FY 2014-15....................... 8
3. Governor’s Recommended General Fund Balance Sheet, FY 2014-15............9
4. Governor’s Recommended General Fund Budget, FY 2014-15.......................10
5. Recommended Highway Fund and Highway Trust Fund Budget..................12
6. General Fund Revenue by Fiscal Year: Recent History and Forecast..............22
7. Highway Fund Revenue.................................................................................................24
8. Highway Trust Fund Revenue......................................................................................26
9. Migration Flows for North Carolina, 2012...............................................................27
10. North Carolina’s Age Distribution, 1994-2034.......................................................29
11. Employed as a Percent of Total Population, July 1992-2013............................29
xSTATE OF NORTH CAROLINAOFFICE OF THE GOVERNORPAT MCCRORYGOVERNORLOCATION: 116 WESTJONESSTREET•RALEIGH, NC • TELEPHONE: (919) 733-5811WWW.GOVERNOR.STATE.NC.USMay 14, 2014 The North Carolina Senate The Honorable Phil Berger, President Pro Tempore The North Carolina House of Representatives The Honorable Thom Tillis, Speaker The Citizens of North Carolina Dear Mr. President, Mr. Speaker, Ladies and Gentlemen of the General Assembly and my fellow North Carolina citizens: The short session adjustments contained in my budget continue the long-term investments we began last year in North Carolina’s people and economy. Foremost among these adjustments is a pay raise for state employees and teachers. Increased Pay for Teachers and State Employees A slow economic recovery from the recession has limited North Carolina’s investments in our state employees. This budget reverses the trend by providing an average two percent salary increase. State employees who have been “frozen” on early pay steps for several years, specifically the Highway Patrol, Magistrates and Deputy and Assistant Clerks of Court will, on average, receive larger pay increases. This budget fulfills a commitment to raise the base pay for teachers with up to seven years’ experience from $30,800 to $33,000 annually in the upcoming academic year -- a 7.1 percent increase. A commitment to further raise the base to $35,000 for the 2015-2016 school year will mean a 13.6 percent increase for beginning teachers. Those teachers with more than seven years’ experience will receive a pay increase that averages from 2 up to 4.3 percent. This immediate pay increase lays the foundation for long-term education and teacher compensation reform. Education - Innovation and Achievement The Recommended Budget for Fiscal Year 2014-2015 (including pay raises) increases spending for public schools, community colleges, and universities by $196 million or 1.7 percent more than the certified budget for the previous year. Giving all teachers a pay raise this year lays the foundation for innovative reform of teacher compensation. The Career Pathways for Teachers framework will give pilot school districts the flexibility to develop additional teacher career opportunities and to reward classroom teaching that directly improves student achievement. This budget will also restore funding for a reformed master’s degree salary supplement and doubles spending on textbooks. This budget continues to assist the community colleges in closing the “skills gap” with $16.8 million in additional funding for higher cost courses and for training workers in high demand fields such as health sciences, engineering, construction, manufacturing, transportation, chemical and biotechnology. During the next few years, approximately 60,000 veterans will separate from their respective service at a military installation located in North Carolina. These men and women will come to the civilian workforce highly trained, disciplined and with the experience to get a job done. To help veterans make the transition to the civilian workforce easier, my budget provides in-state tuition for our veterans at all of the state’s 58 community colleges. Likewise, this budget establishes the North Carolina Scholarship for the Education of Returning Veterans (NC SERV). It will provide financial aid for returning military veterans attending UNC institutions who meet certain requirements. The aid will make up the difference between in-state and out-of-state tuition for their initial school year. This budget makes strategic investments in our universities that will be a catalyst for future innovative growth such as new funding of $2 million a year for the Next Generation Power Electronics Innovation Institution at North Carolina State University. It also provides $3 million annually to help transition research from the university laboratory to the commercial marketplace. Additionally, this budget continues to provide the University of North Carolina the overall management flexibility it requests. Natural and Economic Resources – Protection and Growth The development of our natural resources into economic resources must be done in a manner that protects the environment without strangling jobs and economic growth. Protecting the environment and economic growth are not mutually exclusive. To accomplish both goals responsibly, this budget increases the funding for the Oil and Gas Regulatory Program and Mining and Energy Commission by 35 percent to ensure the exploration and production of energy is done in a manner that protects our citizens and the environment that we will leave for our children. Last year’s budget made major commitments for sound environmental practices and to protect clean water. It included additional funding for the Drinking Water Revolving Fund match, Clean Water State Revolving Fund match, and Clean Water Management Trust Fund. However, it’s past time to solve the problems with the storage and containment of coal ash which literally has been accumulating for a hundred years. Therefore, I am proposing an initiative that converts or closes the state’s coal ash ponds and eliminates special exemptions for utilities. Furthermore, it increases regulatory authority to ensure dam safety and protect water quality. This budget requests funding for 19 additional positions for increased inspection, reporting, and enforcement of environmental protections by the Department of Environment and Natural Resources. In addition, $3.46 million in recurring funds are provided to continue the clean-up of residential leaking underground storage tanks as well as $1.3 million in new funds to support statewide aquatic weed control measures that protect our state’s drinking water, lakes and waterways.
23
Commerce and Job Growth Since I took office in January 2013, the state’s unemployment rate has fallen from one of the highest in the nation, at 8.8 percent, to 6.3 percent in March 2014. That is a 28 percent decrease in North Carolina’s unemployment rate. North Carolina added 65,000 jobs this year for a total of 4.1 million North Carolinians at work. But the growth in jobs so far is not enough. While unemployment reform and tax reform will continue to help an economy that is still in weak recovery, we also need to take direct action with our Department of Commerce. Using authority granted in last year’s budget, this year’s budget proposes a streamlined, more flexible and accountable Department of Commerce with a Public Private Partnership (PPP) for Economic Development to be established by July 1, 2014. This will result in an anticipated annual savings of 5 percent. More importantly, the PPP will have the flexibility to provide marketing, recruitment, and job creation support for existing and new businesses in North Carolina. However, decisions awarding public funds will be made separately by the Department of Commerce. Health and Human Services and Medicaid – Reform and Service Unbudgeted Medicaid costs have bedeviled the budgeting process for years. This year, the state and counties faced the challenge of implementing completely new computer systems that had been delayed for years. While it is estimated that Medicaid will cost approximately $70 million more for Fiscal Year 2013-2014 than budgeted, the state will carry over sufficient funds to cover this cost. To provide a further cushion for next year, I am proposing a Medicaid Risk Reserve Fund of $50 million which will be in addition to the $506 million increase (from Fiscal Year 2012-2013) already built into the biennium budget. An additional $9 million will be invested to continue to upgrade and implement the NC Tracks and NC Fast computer systems. However, more fundamental reform is vital to care for our citizens most in need. We have undertaken bold reform that will ensure Medicaid patients will receive comprehensive and compassionate care at a cost North Carolina taxpayers can afford. This reform will be submitted through separate legislation with this budget providing an initial $1 million in seed money to begin implementation. To support a better life and education for our most vulnerable children from the start, this budget continues to not only fully fund, but will increase funding, for NC Pre-K, Oversight for County Child Welfare Operations, and Foster Care. General Government and Capital – Restoration and Improvements A broad range of investments are made by this budget throughout state government. They range from increased funding for the Youth Advocacy program to additional dollars for veterans nursing homes in Black Mountain and Kinston. For the first time since the Battleship North Carolina was acquired in 1961, $3 million will be provided for a challenge grant to pay for major hull repairs. (The Battleship North Carolina will not sink on our watch!) Additionally, funding is restored for the preservation and operation of Tryon Palace. This budget provides $6.8 million for vital water resource projects that include dredging, navigation, flood control, beach protection and stream restoration. An additional $500,000 is specifically provided for the preservation and enhancement of navigability of Oregon Inlet. An additional $50 million is being added to the Repair and Renovation Fund to reverse deterioration and ensure safe buildings for the public and employees throughout the university system and state government. Justice and Public Safety This budget continues to strengthen our Courts and the Department of Justice with further funding increases for crime labs and updated technology. Reforms of the Justice Reinvestment Act will continue to be implemented, including placing more misdemeanor offenders in county jails rather than state prisons. Probation/Parole Officers will receive more funding (including more vehicles) which will aid in advancing the rehabilitation and transition of probationers and parolees from prison to a free society. As part of the overall state employee pay increase, the “frozen” pay steps for the Highway Patrol, Magistrates, and Clerks of Court will be partially restored and increased. The Alcohol Law Enforcement positions for its officers will be partially restored. Transportation and the Division of Motor Vehicles – Infrastructure and Modernization From the first day of my administration, I have emphasized providing customer service to our citizens - starting with the Division of Motor Vehicles. This budget pays for substantial technology upgrades that will allow customers to access DMV services through self-service kiosks, tablet computers or smart phones as well as through DMV call centers and high volume DMV offices. The core function of the Department of Transportation is supported with an additional $43 million for the Highway Fund in 2014-2015 for highway maintenance, preservation and resurfacing. The Highway Trust Fund’s Strategic Investment Program will also increase by $57.9 million. Sound Budget – Hard Decisions Earlier this month, the Fiscal Research Division and the Office of State Budget and Management issued a General Fund Revenue Consensus Forecast which showed revenue for this current Fiscal Year 2013-2014 as $445 million under budget and reduced the revenue forecast for this Fiscal Year 2014-2015 budget by $191 million. However, the $445 million projected shortfall is more than offset by savings of $323.7 million in unappropriated funds set aside at the beginning of the fiscal year along with agency savings and reversions to the General Fund approaching $290 million. This fiscally conservative approach to the state budget means that the state does not have to take any extraordinary measures to balance its budget this year, and our Triple-A bond rating is secure. Even with $191 million less revenue than originally forecasted for Fiscal Year 2014-2015, responsible budgeting and making hard decisions will still provide a much needed pay increase for state employees and teachers and an overall increase in state funding for education. In education, these hard decisions included giving school districts the same amount of funding for grades K-3 for classroom assistants in 2014-15 as they received in 2013-14 without any additional assistants for growth. I believe that giving our current teachers and public school employees a pay increase is a higher priority than hiring additional assistants at this time. While an additional 2% management flexibility reduction for the UNC system was a difficult decision, my budget seeks to minimize hardships on smaller institutions by extending the exemption to include Winston-Salem State University, Fayetteville State University, and Elizabeth City State University in addition to institutions previously exempted by the General Assembly.
4I have asked the Board of Governors to reduce spending on centers and institutes that are not essential for the awarding of degrees and the educational mission of the University. We all appreciate the private scholarships that attract the best students to UNC institutions. However, my budget treats these scholarships similar to other scholarships in the UNC System by requiring that they pay the full tuition for out-of-state students. While tuition should be kept as low as practical, this budget does implement the already approved tuition increase for out of state students which offsets $27 million in general fund savings in the UNC budget. To save state dollars, in Health and Human Services I aggressively identified $40 million in federal funds and other receipts to finance existing health and human services programs. However, this means that those federal dollars are not available for the expansion of other programs. Hospitals are being asked to contribute more for the funding of Medicaid by increasing the State’s share of the current assessment program. Likewise, local management entities/managed care organizations will begin participation in the assessment program. Together, these contributions will replace nearly $75 million in State funding for Medicaid without reducing Medicaid services. On the other hand, a common sense decision was to sell a Department of Transportation helicopter. To minimize the need for future budget reductions, this budget continues sound fiscally conservative practices by adding $50 million to the state’s Saving Reserve Account and $50 million to the Repair and Renovation fund, which is more than required by statute. It also adds $50 million for the Medicaid Risk Reserve. The budget also leaves over $100 million unappropriated on the “bottom line” to provide for unknown contingencies in state revenue or Medicaid funding for next year. There will always be more requests for spending and programs than there is money available. Priorities must be set and hard decisions made in order to provide a balanced and responsible budget for the state programs that serve the people of North Carolina. North Carolina Is On the Comeback North Carolina has a lot to be proud of. During the past year, our unemployment rate has fallen 28 percent. More North Carolinians are earning a paycheck than were a year ago, and there is more money in those paychecks thanks to the historic tax reform we passed last session. This budget builds upon these accomplishments with strategic investments, prudent spending, and continued reform that includes a much needed pay raise for teachers and state employees. This budget is directed at unleashing the potential of North Carolina’s hard working and innovative people. Thank you for your consideration of this budget recommendation, and I look forward to working with you on this budget during the session. Sincerely, Pat McCrory Governor of North Carolina
57
Education
32.09%
General
Government
4.86%
Health and Human
Services
Justice and Public Safety 36.12%
5.51%
Natural and Economic
Resources
11.32%
Transportation
7.47%
Capital
Improvements
0.10%
Debt Service
0.08%
Reserves and
Adjustments
0.66%
Recommended Total State Budget by Function Excluding Transfers
2014-15
Economic Priorities and
Budget Summary
for 2014-15
Table 1
Recommended Total State Budget by Function Excluding Transfers
2014-15
Figure 1
2014-15
Recommended %
Education $16,449,921,755 32.09%
General Government 2,492,751,071 4.86%
Health and Human Services 18,518,671,328 36.12%
Justice and Public Safety 2,825,049,836 5.51%
Natural and Economic Resources 5,805,676,628 11.32%
Transportation 3,830,475,637 7.47%
Capital Improvements 43,369,274 0.10%
Debt Service 914,916,877 0.08%
Reserves and Adjustments 338,907,143 0.66%
Total State Budget $51,269,739,549 100.0%
8
Table 2
Recommended General Fund Budget by Function
2014-15
Figure 2
2014-15
Recommended
%
Education
$11,676,317,509
55.6%
General Government
420,724,043
2.0%
Health and Human Services
5,015,081,715
23.9%
Justice and Public Safety
2,368,530,560
11.3%
Natural and Economic Resources
381,269,353
1.8%
Transportation
0
0.0%
Capital Improvements
23,431,574
0.1%
Debt Service
715,996,743
3.4%
Reserves and Adjustments
388,907,640
1.9%
Total General Fund Budget
$20,990,267,640
100.0%
Education55.6%General Government2.0%Health and Human Services23.9%Justice and Public Safety11.3%Natural and Economic Resources1.8%Transportation0%Capital Improvements0.1%Debt Service3.4%Reserves and Adjustments1.9%General Fund Budget by Function, 2014-159
Table 3
Brief DescriptionFY 2014-15AvailabilityCredit Balance:Unappropriated Balance323,693,704Anticipated Over (Under) Collections from FY 2013-14(445,400,000)Anticipated Reversions from FY 2013-14290,000,000Subtotal Unreserved Fund Balance168,293,704Transfer to Savings Reserve Account42,073,426Transfer to Repair and Renovations Account42,073,426Subtotal Statutory Reserve Allocation84,146,852Subtotal Credit Balance84,146,852Revenue Based on Existing Tax Structure 20,962,767,811Revenue Changes:Department of Revenue Out-of-State Sales Tax Collections40,000,000FICA Transfer4,000,000Subtotal Revenue Changes44,000,000Total Availability21,090,914,663Recommended AppropriationsAuthorized Budget20,998,801,208Fiscal Responsibility:Additional Transfer to Savings Reserve Account7,926,574Additional Transfer to Repair and Renovations Account7,926,574Medicaid Risk Reserve50,000,000Subtotal Fiscal Responsibility65,853,148Net Change by Subcommittee:EducationPublic Education46,358,028Community Colleges16,866,780University System(49,398,097)Health and Human Services(122,592,860)General Government1,941,928Natural and Economic Resources4,561,239Justice and Public Safety28,433,112Statewide Reserves1,702,070Debt Service(9,340,916)Capital7,082,000Subtotal Net Change by Subcommittee(74,386,716)Total Recommended General Fund Appropriations20,990,267,640General Fund Balance100,647,023Governor's Budget Recommendations for FY 2014-15: General Fund Balance SheetFY 2013-14
FY 2014-15
Difference
Difference
#
Brief Description
Enacted
Recommended
($)
(%)
1
Budget Availability
2
Beginning Credit Balance:
3
Unappropriated Balance
213,432,877
323,693,704
110,260,827
51.7%
4
Anticipated Over (Under) Collections*
537,441,075
(445,400,000)
(982,841,075)
-182.9%
5
Anticipated Reversions*
290,742,586
290,000,000
(742,586)
-0.3%
6
Supplemental Medicaid Appropriations
(308,100,000)
0
308,100,000
-100.0%
7
Subtotal Unreserved Fund Balance
733,516,538
168,293,704
(565,222,834)
-77.1%
8
9
Transfer to Savings Reserve Account
(232,537,942)
(42,073,426)
190,464,516
-81.9%
10
Transfer to Repair and Renovations Account
(150,000,000)
(42,073,426)
107,926,574
-72.0%
11
Subtotal Statutory Reserve Allocation
(382,537,942)
(84,146,852)
298,391,090
-78.0%
12
13
Subtotal Credit Balance
350,978,596
84,146,852
(266,831,744)
-76.0%
14
15
Base Revenue (consensus revenue forecast)
20,603,482,753
20,962,767,811
359,285,058
1.7%
16
17
Revenue Changes:
18
Department of Revenue Out-of-State Sales Tax Collection
40,000,000
19
FICA Transfer
4,000,000
20
Subtotal Revenue Changes
44,000,000
21
22
Total Availability
20,954,461,349
21,090,914,663
136,453,314
0.7%
23
24
25
Recommended Appropriations
26
Authorized Budget
20,630,767,645
20,998,801,208
368,033,563
1.8%
27
28
Fiscal Responsibility:
29
Additional Transfer to Savings Reserve Account
7,926,574
30
Additional Transfer to Repair and Renovations Account
7,926,574
31
Medicaid Risk Reserve
50,000,000
32
Subtotal Fiscal Responsibility
65,853,148
33
34
Net Change by Subcommittee:
35
Education
36
Public Education
46,358,028
37
Community Colleges
16,866,780
38
University System
(49,398,097)
39
Health and Human Services
(122,592,860)
40
General Government
1,941,928
41
Natural and Economic Resources
4,561,239
42
Justice and Public Safety
28,433,112
43
Statewide Reserves
1,702,070
44
Debt Service
(9,340,916)
45
Capital
7,082,000
46
Subtotal Net Change by Subcommittee
(74,386,716)
47
48
Total Recommended Appropriations
20,630,767,645
20,990,267,640
359,499,995
1.7%
49
50
General Fund Balance
323,693,704
100,647,023
(223,046,681)
-68.9%
51
52
53
54
*FY 2013-14 Enacted column uses actual over (under) collections and reversions from FY 2012-13 Governor's Budget Recommendations for FY 2014-15
Compared to FY 2013-14 Enacted Budget (in 2013)FY 2014-15
FY 2014-15
Difference
Difference
#
Brief Description
Enacted
Recommended
($)
(%)
1
Budget Availability
2
Beginning Credit Balance:
3
Unappropriated Balance Remaining From Previous Year
323,693,704
323,693,704
0
0.0%
4
Anticipated Over (Under) Collections
0
(445,400,000)
(445,400,000)
n.a.
5
Anticipated Reversions
0
290,000,000
290,000,000
n.a.
6
Supplemental Medicaid Appropriations
0
0
0
n.a.
7
Subtotal Unreserved Fund Balance
323,693,704
168,293,704
(155,400,000)
-48.0%
8
9
Transfer to Savings Reserve Account
(37,122,346)
(42,073,426)
(4,951,080)
13.3%
10
Transfer to Repair and Renovations Account
(12,751,137)
(42,073,426)
(29,322,289)
230.0%
11
Subtotal Statutory Reserve Allocation
(49,873,483)
(84,146,852)
(34,273,369)
68.7%
12
13
Subtotal Credit Balance
273,820,221
84,146,852
(189,673,369)
-69.3%
14
15
Base Revenue (consensus revenue forecast)
21,153,767,811
20,962,767,811
(191,000,000)
-0.9%
16
17
Revenue Changes:
18
Department of Revenue Out-of-State Sales Tax Collection
40,000,000
19
FICA Transfer
4,000,000
20
Subtotal Revenue Changes
44,000,000
21
22
Total Availability
21,427,588,032
21,090,914,663
(336,673,369)
-1.6%
23
24
25
Recommended Appropriations
26
Authorized Budget
20,998,801,208
20,998,801,208
0
0.0%
27
28
Fiscal Responsibility:
29
Additional Transfer to Savings Reserve Account
7,926,574
30
Additional Transfer to Repair and Renovations Account
7,926,574
31
Medicaid Risk Reserve
50,000,000
32
Subtotal Fiscal Responsibility
65,853,148
33
34
Net Change by Subcommittee:
35
Education
36
Public Education
46,358,028
37
Community Colleges
16,866,780
38
University System
(49,398,097)
39
Health and Human Services
(122,592,860)
40
General Government
1,941,928
41
Natural and Economic Resources
4,561,239
42
Justice and Public Safety
28,433,112
43
Statewide Reserves
1,702,070
44
Debt Service
(9,340,916)
45
Capital
7,082,000
46
Subtotal Net Change by Subcommittee
(74,386,716)
47
48
Total Recommended Appropriations
20,998,801,208
20,990,267,640
(8,533,568)
0.0%
49
50
General Fund Balance
428,786,824
100,647,023
(328,139,801)
-76.5%
51
52
Governor's Budget Recommendations for FY 2014-15
Compared to FY 2014-15 Enacted Budget (in 2013)10
Table 4
FY 2014-15FY 2014-15Approved AppropriationAppropriationFY 2014-15NetBudgetCertified SupportedSupportedNetRecommendedPositionCodeFunctionBudgetRecurringNonrecurringPositionsRecurringNonrecurringPositionsChangeAppopriationChangeEducation:13510Public Education $ 8,046,101,622 (137,689,366)$ (3,239,639) (46.25)182,729,893$ 4,557,140$ 8.00 46,358,028$ 8,092,459,650$ (38.25)16800Community Colleges 1,016,487,467 (20,074,626) (851,572) - 37,792,978 - - 16,866,780 1,033,354,247 - 160xxUniversity System 2,599,901,709 (89,339,523) (4,579,138) - 42,943,940 1,576,624 (2.80) (49,398,097) 2,550,503,612 (2.80) Total Education 11,662,490,798 (247,103,515) (8,670,349) (46.25)263,466,811 6,133,764 5.20 13,826,711 11,676,317,509 (41.05) General Government:14100Administration 58,839,490 (1,176,790) - - 606,028 120,154 2.00 (450,608) 58,388,882 2.00 13300State Auditor 11,217,468 (224,348) - (2.00) 122,000 400,000 - 297,652 11,515,120 (2.00)14800Cultural Resources 63,008,100 (634,408) - (6.00) 1,392,072 - - 757,664 63,765,764 (6.00)14802Cultural Resources - Roanoke Island 450,000 (9,000) - - - - - (9,000) 441,000 - 11000General Assembly 51,634,767 - - - 529,250 - - 529,250 52,164,017 - 13000Governor's Office 7,172,132 (103,442) - - 51,700 - - (51,742) 7,120,390 - 14100NC Ethics Commission 1,164,169 (23,339) - - 12,000 - - (11,339) 1,152,830 - 13010NC Housing Finance 8,411,632 - - - - - - - 8,411,632 - 13900Insurance 38,003,624 (1,513,955) - (7.80) 367,910 - - (1,146,045) 36,857,579 (7.80)13100Lieutenant Governor 675,089 (13,502) - - 6,000 - - (7,502) 667,587 - 18210Office of Administrative Hearings 5,027,130 (312,169) - (2.50) 45,000 - - (267,169) 4,759,961 (2.50)14100Office of State Human Resources 7,043,374 (142,368) - - 280,261 - 2.50 137,893 7,181,267 2.50 14700Revenue 80,896,458 (2,360,425) - (1.00) 1,671,306 - 2.00 (689,119) 80,207,339 1.00 13200Secretary of State 11,575,183 (100,000) - - 173,750 - - 73,750 11,648,933 - 18025State Board of Elections 5,693,244 (117,415) - - 51,000 - - (66,415) 5,626,829 - 13005State Budget and Management (OSBM) 7,534,217 (150,684) - (1.00) 560,680 - - 409,996 7,944,213 (1.00)13085OSBM-Special Appropriations 1,520,000 (20,000) (500,000) - - 3,000,000 - 2,480,000 4,000,000 - 14160Controller's Office 28,710,691 (1,051,869) - (4.75) 929,010 - - (122,859) 28,587,832 (4.75)13410State Treasurer 7,026,305 (140,700) - - 218,221 - - 77,521 7,103,826 - 13412State Treasurer - Retirement / Benefits 23,179,042 - - - - - - - 23,179,042 - Total General Government 418,782,115 (8,094,414) (500,000) (25.05) 7,016,188 3,520,154 6.50 1,941,928 420,724,043 (18.55)Health and Human Services:14410Central Administration 76,301,328 (3,120,000) - - 477,850 - - (2,642,150) 73,659,178 - 14411Aging 54,342,341 - - - 28,890 - - 28,890 54,371,231 - 14420Child Development 254,314,609 (30,383,496) (7,195,807) - 91,090 - 1.00 (37,488,213) 216,826,396 1.00 14430Public Health 141,941,587 (1,173,380) (3,782,163) (7.00) 2,001,560 - - (2,953,983) 138,987,604 (7.00)14440Social Services 176,558,432 (6,754,406) - - 7,858,580 - 30.00 1,104,174 177,662,606 30.00 14445Medical Assistance 3,608,119,091 (81,808,789) - - 6,366,847 1,000,000 - (74,441,942) 3,533,677,149 - 14446NC Health Choice 57,747,933 (9,750,000) - - 1,000 - - (9,749,000) 47,998,933 - 14450Services for the Blind 8,178,618 - - - 59,830 - - 59,830 8,238,448 - 14460Mental Health/DD/SAS 704,985,988 (10,774,708) - (7.00) 14,603,618 - - 3,828,910 708,814,898 (7.00)14470Health Service Regulation 16,411,479 (288,000) - - 227,000 - - (61,000) 16,350,479 - 14480Vocational Rehabilitation 38,773,169 (575,336) - (20.75) 296,960 - - (278,376) 38,494,793 (20.75) Total Health and Human Services 5,137,674,575 (144,628,115) (10,977,970) (34.75) 32,013,225 1,000,000 31.00 (122,592,860) 5,015,081,715 (3.75)Justice and Public Safety:14550Public Safety 1,690,014,006 (15,884,875) - (379.50) 25,528,307 2,883,754 27.00 12,527,186 1,702,541,192 (352.50)12000Judicial 456,426,252 - - - 9,509,825 2,061,800 1.00 11,571,625 467,997,877 1.00 12001Judicial - Indigent Defense 111,357,264 - - - 603,250 3,850,000 - 4,453,250 115,810,514 - 13600Justice 82,308,926 (2,699,327) - - 2,009,478 570,900 13.00 (118,949) 82,189,977 13.00 Total Justice and Public Safety 2,340,106,448 (18,584,202) - (379.50) 37,650,860 9,366,454 41.00 28,433,112 2,368,539,560 (338.50)Natural and Economic Resources:13700Agriculture & Consumer Services 115,409,902 (2,930,390) - (10.00) 1,322,040 - - (1,608,350) 113,801,552 (10.00)14600Commerce 56,733,282 (675,554) - (68.00) 2,158,986 1,454,750 - 2,938,182 59,671,464 (68.00)14601Commerce - State Aid 15,624,767 - - - - - - - 15,624,767 - 14300Environment and Natural Resources 157,767,236 (1,963,456) - (10.72) 4,287,515 1,096,000 19.00 3,420,059 161,187,295 8.28 14350Wildlife Resources Commission 14,476,588 (289,532) - - 179,500 - - (110,032) 14,366,556 - 13800Labor 16,696,339 (316,970) - (2.00) 238,350 - - (78,620) 16,617,719 (2.00) Total Natural & Economic Resources 376,708,114 (6,175,902) - (90.72) 8,186,391 2,550,750 19.00 4,561,239 381,269,353 (71.72)14222Transportation - - - - - - - - - - Net Agency 19,935,762,050 (424,586,148) (20,148,319) (576.27) 348,333,475 22,571,122 102.70 (73,829,870) 19,861,932,180 (473.57)19600Capital Improvements 8,423,000 - - - 7,926,574 7,082,000 - 15,008,574 23,431,574 - ReductionsGovernor's Recommended General Fund Budget, FY 2014-15Continuation/Expansion11
FY 2014-15FY 2014-15Approved AppropriationAppropriationFY 2014-15NetBudgetCertified SupportedSupportedNetRecommendedPositionCodeFunctionBudgetRecurringNonrecurringPositionsRecurringNonrecurringPositionsChangeAppopriationChangeReductionsGovernor's Recommended General Fund Budget, FY 2014-15Continuation/ExpansionDebt Service:19420General Debt Service 723,721,279 (9,340,916) - - - - - (9,340,916) 714,380,363 - 19425Federal Reimbursement 1,616,380 - - - - - - - 1,616,380 - Total Debt Service 725,337,659 (9,340,916) - - - - - (9,340,916) 715,996,743 - Reserves and Adjustments:19001Contingency & Emergency 5,000,000 - - - - - - - 5,000,000 - 19003GF- Reserve for Compensation Increase - Retirees - - - - 70,000,000 - - 70,000,000 70,000,000 19004GF-Reserve for Salary Adjustment 7,500,000 - - - - - - - 7,500,000 - 19013Job Development Incentive Grants Reserve 63,045,357 - (14,000,000) - - - - (14,000,000) 49,045,357 - 19042Severance Expenditure Reserve - - - - - - - - - - 19043Reserve for State Employee Comprehensive Major Medical 89,000,000 - - - - - - - 89,000,000 - 19044Reserve for IT Fund 10,470,657 (179,933) - (1.00) 1,129,488 2,005,000 - 2,954,555 13,425,212 (1.00)19044Information Technology Reserve Fund 31,582,485 - (8,612,485) - - - - (8,612,485) 22,970,000 - 19047Retirement Rate Adjustment 37,000,000 - - - 7,210,000 - - 7,210,000 44,210,000 - 19047Firemen's and Rescue Squad Workers' Pension Fund (13412) (820,000) - - - - - - - (820,000) - 19063One North Carolina Fund 9,000,000 - - - - - - - 9,000,000 - 19064Reserve for Future Benefits 56,400,000 (56,400,000) - - - - - (56,400,000) - - 19065NC Government Efficiency and Reform Project 2,000,000 - - - - - - - 2,000,000 - 19066Unemployment Insurance (UI) Reserve 13,600,000 - - - - - - - 13,600,000 - 19068Reserve for Pending Legislation 4,500,000 - - - - - - - 4,500,000 - 19070Reserve for Voter ID 1,000,000 - - - - - - - 1,000,000 - 19xxxLitigation Reserve - - - - - 550,000 - 550,000 550,000 - 19xxxMedicaid Risk Reserve - - - - - 50,000,000 - 50,000,000 50,000,000 - 19xxxSavings Reserve - - - 7,926,574 - - 7,926,574 7,926,574 - Total Reserves and Adjustments 329,278,499 (56,579,933) (22,612,485) (1.00) 86,266,062 52,555,000 - 59,628,644 388,907,143 (1.00) Total $ 20,998,801,208 $ (490,506,997) $ (42,760,804) (577.27) $ 442,526,111 $ 82,208,122 102.70 $ (8,533,568) $ 20,990,267,640 (474.57)12
Table 5
FY 2014-15AppropriationAppropriation2014-15NetBaseSupportedSupportedNetApprovedPositionFunctionAppropriationRecurringNonrecurringPositionsRecurringNonrecurringPositionshangeAppropriationChangeDOT Administration 94,975,916 (1,705,907) - - - - -(1,705,907)93,270,009-Division of HighwaysAdministration 35,139,990 - - - - - --35,139,990-Construction 46,859,878 (5,000,000) - - - - -(5,000,000)41,859,878 -Maintenance 1,022,097,721 (17,387,438) - - 43,386,032 - -25,998,5941,048,096,315 -Planning and Research 4,055,402 - - - - - --4,055,402 -OSHA Program 365,337 (7,307) - - - - -(7,307)358,030 -State Aid to Municipalities 136,874,010 - - - 9,453,990 - -9,453,990146,328,000 -Mult-ModalAirports 22,244,510 (468,490) - (1.00) - - -(468,490)21,776,020 (1.00)Bicycle 751,066 - - - - - --751,066 -Ferry 39,785,538 (794,486) - - - - -(794,486)38,991,052 -Public Transportation 85,244,235 (1,704,879) - - - - -(1,704,879)83,539,356 -Railroads 24,692,294 (417,420) - - - - -(417,420)24,274,874 -Governor's Highway Safety Program 284,932 (5,699) - - - - -(5,699)279,233 -Division of Motor Vehicles 119,532,589 (2,383,409) - - 7,534,410 13,947,484 44.00 19,098,485138,631,074 44.00 Other State Agencies 39,967,810 (306,001) - - 3,458,927 - -3,152,92643,120,736 -Transfer to General Fund 215,871,719 - - - - - --215,871,719Other Reserves 7,629,853 - - - 9,839,693 - -9,839,69317,469,546 -Capital Improvements 19,937,700 - - - - - --19,937,700 Total Highway Fund 1,916,310,500 (30,181,036) - (1.00) 73,673,052 13,947,484 44.00 57,439,500 1,973,750,000 43.00 Administration 45,590,880 (911,818) - - - - - -44,679,062-ConstructionStrategic Prioritization Program 950,101,672 - - - 57,911,818 - - -1,008,013,490State Aid to Municipalities - - - ---BondsBond Redemption 46,676,132 - - - - - - - 46,676,132-Bond Interest 13,631,316 - - - - - - - 13,631,316--NC Turnpike Authority 49,000,000 - - - - - - -49,000,000-Reserve for Visitor's Centers 400,000 - - - - - - -400,000- Total Highway Trust Fund 1,105,400,000 (911,818) - - 57,911,818 - - - 1,162,400,000 -ReductionsOther Continuation/Expansion Highway Fund and Highway Trust Fund Budget2014-15Economic Outlook
and Revenue Forecasts1415
Economic Outlook
North Carolina’s Unemployment Rate Has Rapidly Declined in the Past Year
The unemployment rate1 in North Carolina rose rapidly in the early stages of the Great Recession, from 5.1% in January of 2008 to 9.0% one year later to a peak of 11.3% in January and February of 2010. Unemployment remained stubbornly high in North Carolina throughout the early years of the national economic recovery, leaving the state with an unemployment rate among the five worst in the country through much of 2011 and 2012. It was not until early 2013 that North Carolina’s unemployment rate began to fall faster than in most other states. Between March 2013 and March 2014, North Carolina’s unemployment rate fell by 2.2 percentage points to 6.3%, a larger decline than in all other states except South Carolina. In February 2014, North Carolina’s unemployment rate fell below the national unemployment rate for the first time since March 2006.
Figure 3
North Carolina’s Economy: Recovering from the Great Recession North Carolina’s Unemployment Rate Has Rapidly Declined in the Past Year The unemployment rate1 in North Carolina rose rapidly in the early stages of the Great Recession, from 5.1% in January of 2008 to 9.0% one year later a to a peak of 11.3% in January and February of 2010. Unemployment remained stubbornly high in North Carolina throughout the early years of the national economic recovery, leaving the state with an unemployment rate among the five worst in the country through much of 2011 and 2012. It was not until early 2013 that North Carolina’s unemployment rate began to fall faster than in most other states. Between March 2013 and March 2014, North Carolina’s unemployment rate fell by 2.2 percentage points to 6.3%, a larger decline than in all other states except South Carolina. In February 2014, North Carolina’s unemployment rate fell below the national unemployment rate for the first time since March 2006. 1 All data in this section from the Local Area Unemployment Statistics program at the US Department of Commerce’s Bureau of Labor Statistics, with the most recent data being for the month of March 2014.16
North Carolina had regained nearly four in
five of the net jobs lost during the recession,
leaving eighteen states behind North Carolina
in progress toward reaching or exceeding pre-recession
employment levels. If job growth in
the months ahead were to proceed at a similar
pace, North Carolina would surpass its pre-recession
employment peak in the first half of
2015.
Figure 4
North Carolina, Like Most States, Has Yet to
Regain Pre-Recession Employment Peak
Only ten states suffered greater job losses during
the Great Recession than North Carolina. After
experiencing a net loss of more than 335,000
jobs between February 2008 and February 2010,
North Carolina has steadily added jobs at a rate
of nearly 64,000 jobs per year. As of March 2014,
North Carolina, Like Most States, Has Yet to Regain Pre-Recession Employment Peak
Only ten states suffered greater job losses during the Great Recession than North Carolina.2 After experiencing a net loss
of more than 335,000 jobs between February 2008 and February 2010, North Carolina has steadily added jobs at a rate
of nearly 64,000 jobs per year. As of March 2014, North Carolina had regained nearly four in five of the net jobs lost
during the recession, leaving eighteen states behind North Carolina in progress toward reaching or exceeding pre-recession
employment levels. If job growth in the months ahead proceeds at a similar pace, North Carolina would
surpass its pre-recession employment peak in the first half of 2015.
2 All data in this section from the Current Employment Statistics program at the US Department of Commerce’s Bureau of Labor
Statistics, with the most recent data being for the month of March 2014.
17
Figure 5
Labor Market Recovery Has Proceeded Uneven-ly
Across North Carolina Communities
The severity of the recession’s impact and the
pace of the labor market recovery have each
varied substantially across North Carolina’s com-munities.
Several areas of the state, including
the two largest metropolitan areas, have sur-passed
pre-recession employment peaks, while
employment levels in other metropolitan areas
and the state’s non-metropolitan areas remain
more than 5% below pre-recession levels. The
Charlotte metro area and the two Triangle-area
metro areas have accounted for roughly two out
of every three net new jobs created in the state
since the worst point in the labor market reces-sion.
At the other end of the labor market spec-trum,
the Rocky Mount metro area continued to
shed jobs even after the labor market began to
recover in other areas of the state after February
2010 – only recently stabilizing at employment
levels nearly 15% below pre-recession levels.
Other metro areas still struggling to regain lost
jobs include Greensboro-High Point, Burlington,
and, especially, the Hickory-Lenoir-Morganton
metro area.
18
A Few Service Industries Responsible for the Majority of State’s Labor Market Recovery
Private service-providing industries have accounted for 95% of net new jobs created in North Carolina since the depths
of the labor market recession in early 2010.4 Among the major goods-producing industries, durable-goods
manufacturing – especially the manufacturing of transportation equipment, fabricated metal products, and machinery –
has accounted for nearly all net new job growth. The sector with the largest employment gains since the low point of the
recession is administrative and waste management services, which accounts for one in four net new jobs, with
particularly strong gains in the employment services industry group. Other sectors with significant job growth since early
2010 include retail and wholesale trade, which together account for one in five net new jobs, and the accommodation
and food services sector, which accounts for one in seven net new jobs. The hard-hit construction sector has only just
begun to recover, with year-over-year job growth of nearly 4,000 jobs as of March 2014.
4 All data in this section from the Current Employment Statistics program at the US Department of Commerce’s Bureau of Labor
Statistics, with the most recent data being for the month of March 2014.
A Few Service Industries Responsible for
the Majority of State’s Labor Market Recov-ery
Private service-providing industries have ac-counted
for 95% of net new jobs created in
North Carolina since the depths of the labor
market recession in early 2010. Among the ma-jor
goods-producing industries, durable-goods
manufacturing – especially the manufacturing
of transportation equipment, fabricated metal
products, and machinery – has accounted for
nearly all net new job growth. The sector with
the largest employment gains since the low
Figure 6
point of the recession is administrative and waste
management services, which accounts for one in
four net new jobs, with particularly strong gains
in the employment services industry group.
Other sectors with significant job growth since
early 2010 include retail and wholesale trade,
which together account for one in five net new
jobs, and the accommodation and food services
sector, which accounts for one in seven net new
jobs. The hard-hit construction sector has only
just begun to recover, with year-over-year job
growth of nearly 4,000 jobs as of March 2014.
19
North Carolina’s Exports Have Risen to Record Highs Since the End of the Recession
Exports have been a significant source of growth for North Carolina’s economy over the course of the state’s recovery
from the Great Recession.5 Inflation-adjusted exports were up by more than $6.1 billion (26%) in 2013 compared to
2009. Exports of manufactured goods accounted for more than three-quarters of the total increase in exports, driven to
a large extent, since 2010, by a substantial increase of more than $665 million in inflation-adjusted exports of semi-tractors,
other large trucks, and truck engines as well as a more than $365 million increase in exports of
pharmaceuticals. Canada and Mexico have, together, accounted for more than half of North Carolina’s increase in
exports since 2010. Other countries accounting for a large share of the state’s export growth since 2010 include Saudi
Arabia, China, Belgium, and India.
5 All trade data in this section from the Foreign Trade Division at the US Census Bureau, with the most recent data being for the
month of February 2014. All monetary values are adjusted for inflation using the national GDP deflator produced by the US
Department of Commerce’s Bureau of Economic Analysis.
North Carolina’s Exports Have Risen to Re-cord
Highs Since the End of the Recession
Exports have been a significant source of growth
for North Carolina’s economy over the course of
the state’s recovery from the Great Recession.
Inflation-adjusted exports were up by more than
$6.1 billion (26%) in 2013 compared to 2009.
Exports of manufactured goods accounted for
more than three-quarters of the total increase in
exports, driven to a large extent, since 2010, by a
substantial increase of more than $665 million in
inflation-adjusted exports of semi-tractors, other
large trucks, and truck engines as well as a more
than $365 million increase in exports of phar-maceuticals.
Canada and Mexico have, together,
accounted for more than half of North Carolina’s
increase in exports since 2010. Other countries
accounting for a large share of the state’s export
growth since 2010 include Saudi Arabia, China,
Belgium, and India.
Figure 7
20
General Fund Revenue Forecast
About half of North Carolina’s total revenue originates from tax collections and other sources comprising the General Fund. The other half consists of funds from the federal government, highway funds, the Education Lottery, and other receipts and fees (e.g., tuition). General Fund revenues are primarily derived from three sources: individual income tax, corporate income tax, and the sales and use tax. Other important sources include franchise, insurance, alcohol and other miscellaneous taxes. In addition, nontax revenue, such as earnings from investment of state funds, supports the General Fund.
The revisions to the consensus revenue forecast for 2014-15 and the remainder of the current fiscal year reflect a cautious outlook. The consensus revenue forecast for FY 2014-15 was revised downward by $191.0 million (0.9%) and the current fiscal year is anticipated to register under-collections of $445.4 million (2.1%).
Specific highlights of the revisions include:
•
By the end of 2013-14, General Fund revenue collections are expected to total $20,158.1 million, $445.4 million below the budgeted forecast (see table 6). This downward adjustment is caused by three primary reasons related to individual income tax collections. These reasons are:
•
Slower than anticipated wage and salary withholding growth – Withholding growth slowed in the second half of 2013 and is projected to finish over 1.0% below forecast.
•
Timing of taxpayer adjustments to tax law changes enacted last year – Last year, significant changes to the individual income tax were enacted, including both base-broadening and rate reductions. The rate reduction is having a greater immediate impact on collections than originally anticipated, while most of the base-broadening will not impact collections until taxpayers file their returns next April 2015. This results in a greater drop in collections this year than originally projected, which will in part be offset by lower refunds and higher final payments in April 2015.
•
Impact of the 2012 federal tax law changes - Expectation of higher federal taxes resulting from fiscal cliff negotiations at the end of 2012 likely resulted in the “shifting” of income into 2012 and out of 2013. This “shift” impacts collections in FY 2013-14 since April 2014 payments are based on 2013 tax year income. While original projections anticipated some of the impact, the magnitude of the response to the federal fiscal cliff appears to have exceeded expectations.
•
The 2014-15 forecast was revised downward by $191.0 million or 0.9%.Once recemmended revenue changes are incorporated, General Fund revenue is expected to total $21,006.8 million (see table 6). The revision is primarily driven by lower than expected tax base growth in personal income. Withholding on wages and salaries was below expectations throughout 2013-14 and economic projections for income growth in 2014-15 are lower than anticipated last year. Despite this downward revision to the original forecast, individual income tax collections are still expected to increase 5.3% in 2014-15 as the base-broadening changes bolster collections.
•
Sales and use tax collections, which comprise nearly one-third of General Fund revenue, are estimated to increase 12.6% compared to 2013-14. This increase represents an upward 21
adjustment of $174.8 million to original
revenue projections and is boosted by
recently enacted tax changes to broaden the
sales and use tax base and out-of-state sales
and use tax agreements.
• Reflecting the anticipated revenue loss
from a corporate rate reduction, corporate
collections are projected to decline 14.6
percent in 2014-15. Compared to original
revenue projections, however, corporate
collections were adjusted upward by $23.0
million.
• Other revenue sources, including the
franchise, estate, and piped natural gas taxes
are expected to realize significant revenue
changes in 2014-15 due to recently enacted
tax changes. Both the estate and piped
natural gas taxes were repealed. Franchise
taxes are anticipated to decline over 22
percent in 2014-15 as the electricity franchise
tax was also repealed.
While the downward revisions to the General
Fund forecast reflect a cautious outlook, revenue
volatility remains a risk. State revenue volatility
and responsiveness to economic changes has
increased in recent years. In addition, recently
enacted tax law changes are expected to have
major impacts on income and sales and use tax
collections, adding greater potential short-term
forecast volatility for the remainder of 2013-14
and 2014-15 than normally associated with a
revenue forecast.
Recommended Revenue Changes
Out-of-State Sales and Use Tax Collections – The
Department of Revenue has reached settlement
and/or agreement with significant out-of-state
taxpayers to remit sales and use taxes to North
Carolina. The agreements are expected to add
$40.0 million in 2014-15.
FICA Transfer – The Governor recommends a
transfer of $4.0 million from the NC Flex FICA
fund balance in 2014-15. A similar action
was included for 2013-14 in Senate Bill 402,
Appropriations Act of 2013.
22
2010-11 2011-12 2012-13 2013-14 2013-14 % Change 2014-15 2014-15 % Change
Actual Actual Actual Budget Revised 13-14 Revised /
2012-13 Actual
Budget Revised 14-15 Revised /
13-14 Revised
Tax Revenue
Individual Income 9,734.9 10,272.1 10,953.1 10,996.7 10,340.5 -5.6 11,254.5 10,885.4 5.3
Sales and Use 5,871.7 5,257.6 5,294.1 5,444.2 5,580.1 5.4 6,110.7 6,285.5 12.6
Corporate Income 1,013.5 1,132.8 1,191.7 1,249.2 1,282.8 7.6 1,072.2 1,095.2 -14.6
Franchise 607.5 612.5 660.1 660.2 698.2 5.8 510.2 543.1 -22.2
Insurance 480.1 460.4 521.5 506.0 491.6 -5.7 513.1 507.1 3.2
Beverage 275.2 287.4 298.6 309.6 305.7 2.4 318.0 310.9 1.7
Estate 23.8 58.1 111.4 0.0 14.0 -87.4 0.0 0.0 -100.0
Licenses 41.3 48.5 46.1 44.8 47.6 3.2 46.3 48.6 2.1
Tobacco Products 265.3 270.9 255.4 251.8 256.3 0.4 248.5 248.7 -3.0
Real Estate 0.0 0.0 0.0 37.4 43.9 n.a. 37.4 44.5 1.4
White Goods 0.0 0.0 0.0 1.2 1.2 n.a. 1.2 1.2 0.0
Scrap Tire 0.0 0.0 0.0 3.5 3.5 n.a. 3.5 3.5 0.0
Mill Machinery 32.5 36.2 36.9 34.4 34.8 -5.6 34.5 35.0 0.6
Solid Waste 0.0 0.0 0.0 2.3 2.3 n.a. 2.3 2.3 0.0
Piped Natural Gas 31.0 25.9 30.4 28.9 33.4 9.8 0.0 0.0 -100.0
Gift 3.0 0.2 0.8 0.0 0.0 -100.0 0.0 0.0 n.a.
Miscellaneous 0.0 0.6 1.2 1.1 1.1 -8.5 1.1 1.1 0.0
Total Tax Revenue 18,379.8 18,463.1 19,401.5 19,571.3 19,137.0 -1.4 20,153.5 20,012.1 4.6
Nontax Revenue
Investment Income 26.3 17.8 12.5 13.7 14.8 18.7 14.1 11.3 -23.6
Judicial Fees 225.8 258.8 249.9 250.2 241.8 -3.2 251.4 244.5 1.1
Disproportionate Share Receipts 135.0 115.0 115.0 110.0 110.0 -4.3 109.0 109.0 -0.9
Master Settlement Agreement n.a. n.a. n.a. 162.1 162.1 n.a. 137.5 137.5 -15.2
Miscellaneous 257.3 313.2 441.1 205.5 198.3 -55.0 198.9 199.5 0.6
Insurance Department 67.5 72.3 72.6 72.5 76.0 4.7 73.4 77.0 1.3
Total Nontax Revenue 711.9 777.0 891.1 814.1 803.0 -9.9 784.3 778.8 -3.0
Transfers
Highway Fund 17.0 217.1 27.6 0.0 0.0 -100.0 0.0 0.0 n.a.
Highway Trust Fund 72.9 76.7 220.3 218.1 218.1 -1.0 215.9 215.9 -1.0
Total Transfers 89.9 293.8 247.9 218.1 218.1 -12.0 215.9 215.9 -1.0
Total General Fund Revenue 19,181.6 19,533.9 20,540.5 20,603.5 20,158.1 -1.9 21,153.8 21,006.8 4.2
Totals may differ from the sum of their parts due to rounding.
Table 6
General Fund Revenue by Fiscal Year: Recent History and Forecast
(In Millions)
23
Highway Fund Revenue Forecast
The Highway Fund receives support from three revenue sources. The primary source is the excise tax on motor fuels, of which the Highway Fund receives 75%. The second source is licenses and fees collected by the Division of Motor Vehicles. The third source is interest earned on invest­ments of Highway Fund cash balances held by the State Treasurer. Table 7 shows the revised forecast estimates for the Highway Fund revenue collections projected for fiscal years 2013-14 and 2014-15.
Current Fiscal Year Update
Fiscal year 2013-14 revenues are expected to exceed last year’s totals by 2.7%. This is mostly due to increases in revenues from some licenses and fees and anticipated NC Railroad Company dividend payments. Both motor fuel consump­tion and licenses and fees are anticipated to con­tinue increasing from the previous year by 0.5% and 5.1%, respectively. Revenue is anticipated to finish 1.2% over the official forecast as the 3.1% expected gain in motor fuel consumption is partially offset by a 2.8% loss in licenses and fees collections.
Fiscal Year 2014-15 Revenue Projections
Projected total Highway Fund revenue collec­tions are expected to decline in fiscal year 2014-15 (-1.3%). The forecast assumes the current year’s rate of increase in motor fuel consumption will not persist. Instead, motor fuel consumption is anticipated to grow a modest 0.2% in fiscal year 2014-15. Despite this modest increase in consumption, total motor fuel tax revenue is an­ticipated to decline slightly due to lower antici­pated fuel prices. The forecasted decline in total revenue is also driven by the expected decrease in investment income (-74.3%) as the NC Railroad Co. dividend payments are scaled back. While staggered registrations fueled by economic improvements are expected to increase (4.7%), statutory changes and historical trends are expected to lead to a 2.2% and 6.6% decrease respectively in drivers licenses and other licenses revenues.
Figure 8
Motor Fuels70.54%Gasoline Inspection0.69%Highway Use Reg.0.02%Staggered Registration10.74%International Registration Plan3.17%Driver Licenses5.03%Truck Licenses6.72%Other Licenses and Fees2.81%Investment Income0.27%
Highway Fund Revenue, Revised 2014-1524
Table 7
Source 2012-13 2013-14 2013-14 % Change 2014-15 2014-15 % Change
Actual Budget Revised 13-14 Revised /
2012-13 Actual
Budget Revised 14-15 Revised /
13-14 Revised
Motor Fuels Tax
Motor Fuels 1,400.0 1,364.1 1,407.0 0.5% 1,313.9 1,392.3 -1.0%
Gasoline Inspection 13.6 13.8 13.7 0.5% 13.2 13.5 -1.0%
Highway Use Reg. 0.3 0.3 0.4 12.1% 0.3 0.4 0.0%
Total Motor Fuel Taxes 1,413.9 1,378.2 1,421.0 0.5% 1,327.4 1,406.2 -1.0%
Licenses and Fees
Staggered Registration 198.3 194.6 202.5 2.1% 197.6 212.0 4.7%
International Registration Plan 58.5 65.7 62.9 7.4% 68.0 62.7 -0.4%
Driver Licenses 111.5 122.5 101.6 -8.9% 123.8 99.4 -2.2%
Truck Licenses 132.5 131.6 132.5 0.0% 132.4 132.6 0.1%
Other Licenses and Fees 30.7 60.8 59.4 93.2% 59.3 55.5 -6.6%
Total Licenses and Fees 531.6 575.2 558.8 5.1% 581.2 562.2 0.6%
Investment Income 2.3 23.2 20.8 794.9% 7.8 5.4 -74.3%
Total Highway Fund Availability 1,947.8 1,976.6 2,000.6 2.7% 1,916.3 1,973.7 -1.3%
Totals may differ from the sum of their parts due to rounding.
Highway Fund Revenue by Fiscal Year: Recent History and Forecast
(In Millions)
25
Highway Trust Fund Revenue
The Highway Trust Fund, established in 1989, receives support from four sources. The primary source is the highway use tax, or sales tax, on vehicle sales. The second source is the excise tax on motor fuels. The Highway Trust Fund receives 25% of this excise tax. The third source is fees on certificates of title and other miscellaneous titles. The final source is the interest earned from investments of the Highway Trust Fund cash bal­ances held by the State Treasurer. Table 8 shows the revised forecast estimates for the Highway Trust Fund revenue collections projected for fis­cal years 2013-14 and 2014-15.
Current Fiscal Year Update
Fiscal year 2013-14 revenues are expected to exceed last year’s levels by 3.3%, $48.4 million above the budgeted forecast. The modest sur­plus is primarily fueled by better than anticipat­ed highway use tax. After several years of well below average car sales, sales have improved markedly and highway use tax revenues are expected to finish 5.6% over fiscal year 2012-13. Motor fuel tax revenue is expected to increase slightly by 0.5%, while certificate of title and mis­cellaneous fees are anticipated to grow 3.8% and 2.5%, respectively, over last year but fall below official forecast by about 1.5% each.
Fiscal Year 2014-15 Revenue Projections
Projected revenue is expected to grow only slightly in fiscal year 2014-15 (0.8%). As the economy and consumer spending continue to improve, the highway use tax is expected to increase by 1.9%. Motor fuel consumption is an­ticipated to grow a modest 0.2% next fiscal year, however overall motor fuel revenue is expected to slightly decline due to lower anticipated fuel prices. When the highway use tax and motor fuel tax are considered together, the growth in the highway use tax outpaces the decline in motor fuels, leading to modest total revenue growth. Title registrations and miscellaneous fees are ex­pected to increase 2.2% and 3.7%, respectively.
Figure 9
Highway Trust Fund Revenue, Revised 2014-15
Motor Fuel Tax39.99%Highway Use51.28%Certificate of Title Fees7.26%Miscellaneous Title Fees1.29%Interest on Investments0.17%26
Table 8
Source 2012-13 2013-14 2013-14 % Change 2014-15 2014-15 % Change
Actual Budget Revised 13-14 Revised /
2012-13 Actual
Budget Revised 14-15 Revised /
13-14 Revised
Fuel Taxes and Fees
Motor Fuel Tax 467.6 455.5 469.8 0.5% 438.7 464.8 -1.0%
Highway Use 553.6 550.2 584.7 5.6% 565.3 596.1 1.9%
Certificate of Title Fees 79.6 83.7 82.6 3.8% 85.3 84.4 2.2%
Miscellaneous Title Fees 14.2 14.7 14.5 2.5% 15.1 15.0 3.7%
Subtotal 1,114.9 1,104.1 1,151.5 3.3% 1,104.4 1,160.4 0.8%
Interest on Investments 2.2 1.0 2.0 -8% 1.0 2.0 0%
Total Highway Trust Fund Availability 1,117.0 1,105.1 1,153.5 3.3% 1,105.4 1,162.4 0.8%
Totals may differ from the sum of their parts due to rounding.
Highway Trust Fund Revenue by Fiscal Year: Recent History and Forecast
(In Millions)
27
NC Population Dynamics
Rapid population growth has had a strong im-pact
on North Carolina, with the state growing
by roughly 1.5 million people between 2000 and
2010. By the end of the biennium, we project
that the state will grow by an additional 190,000
people, from more than 9.86 million people on
July 1, 2013 to nearly 10.06 million people by
July 1, 2015. This is equivalent to adding an
entire city approximately the size of Wilmington
and Asheville combined to North Carolina over
two years. In other words, the State is growing
by a net 265 people every day (or about 1,850
people every week).
Migration
Net-migration is a major component of popula-tion
growth in North Carolina. Over the current
biennium, we expect people moving into the
state to account for approximately 65% of total
population growth. This means that of the 265
people that are added to North Carolina’s popu-lation
every day, approximately 172 moved into
the State from somewhere else. Figure 10 high-lights
where newcomers to North Carolina are
coming from – the majority of movers come from
nearby states. The table below shows the major
in and out-flows for North Carolina for 2012. The
highest estimate both for in and out migration
was Virginia. A significant number of people also
moved to North Carolina from abroad.
Table 9
28
Age
As the State’s population has grown, it has also
been aging. Table 10 shows the distribution
of the State’s population in 1994 compared to
projections for July 1, 2014 and July 1, 2034. The
population 65+ is expected to account for an in-creasing
share of the total population, while the
percent of the population under 35 is decreasing.
Overall the median age is expected to increase to
38.14 by 2014 and 40.69 by 2034.
Although the fastest growth has been among
the 65+ population, every age group has grown
significantly. By July 1, 2014 we expect there to
be 2.29 million children under 18, an increase
of 542,000 from 1994. At the other end of the
age distribution, as the baby boomer generation
reaches retirement age and life expectancy in-creases,
the population 65 and over is increasing
rapidly. By 2014, we expect this group to reach
1.46 million, or nearly 15% of the State’s popula-tion.
This is an increase of nearly 580,000 people
or 66% growth since 1994. By 2034, the popula-tion
65 and over is expected to reach 2.45 million
– more than 20% of the State’s total population.
The population aged 85+ is growing even faster,
with an expected 97% increase over 1994 totals
by 2014. The total population aged 85 and over
by July 1, 2014, is likely to exceed 169,000 people
(more than 1.7% of the total population). By
2034 we expect the state to have almost 325,000
residents aged 85+, with nearly 6,000 of them
being centenarians.
Employment as a Percent of
Total Population
As shown in table 11, the number of people
employed as a percent of total population de-creased
from 49.2% in 1992 to 43.7% by 2013,
although the rate is on an upward trend after its
low of 43.1% in July 2011. The employed-to-total
population ratio has been affected by both eco-nomic
conditions and by demographic trends.
The state has seen both a shrinking labor force
as a percent of the total population and a lower
labor force participation rate over this period.
Figure 10
29
Table 10
Table 11
30
Public Education The University of North Carolina Community Colleges
Education
Public Education
Increases starting teacher pay by 7.1% to $33,000. Funds the experience step increase: teachers moving to steps 8-12 of the salary schedule will receive an increase ranging from 2.8% to 4.3% and teachers moving to steps 13-26 will receive an average 2% increase.
Appropriates $9.8 million of lottery receipts for an innovative Career Pathways pilot that will support LEAs in their transition to a rigorous, aligned performance-based teacher compensation system that targets and rewards our most effective teachers with additional career opportunities and pay.
Increases the funding for textbooks by $23.2 million, a 100% increase, which allows for activity-oriented class­room kits and/or technology-based program formats in addition to traditional textbooks.
Continues the master’s degree salary for teachers who have taken a course towards the master’s degree as of July 1, 2013. Also provides the master’s degree salary for teachers who are teaching in the field of their gradu­ate academic preparation.
Provides $4 million to provide for school districts and charter schools to have access to instructional content and assessment items as well as professional development tools.
North Carolina Community College System
Reinvests the savings achieved from a reduction in remedial course enrollments by appropriating $16.8 million into programs targeted to close the skills gap.
Invests $1.9 million to establish a community college tuition waiver for military veterans who served at least four years, are within two years of exiting service under honorable conditions, have been stationed in North Carolina, and reside or have their official Home of Record listed within North Carolina at time of enrollment.
Transfers funds to the Department of Commerce to suspend the required $50 fee currently charged to partici­pate in the apprenticeship program.University of North Carolina
Appropriates $5 million of lottery receipts to establish NC SERV, a financial aid program for military veterans attending UNC institutions who served at least four years, are within two years of exiting service under honorable conditions, have been stationed in North Carolina, and reside or have their official Home of Record listed within North Carolina at time of enrollment. Funds will be awarded for the 2015-16 academic year.
Invests $3 million annually to assist UNC campuses with the transition from laboratory research to the marketplace, providing competitive funding for proof-of-concept work and commercialization costs.
Provides $2 million annually for 5 years for the $10 million required State contribution towards the Next Generation Power Electronics Innovation Institute housed at North Carolina State University.North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Public Education
33
Recurring Non Recurring
Changes Changes Total
Requirements $ 1 02,166,322 $ 2 66,730 $ 1 02,433,052
Less Receipts $ - $ - $ -
Appropriation $ 1 02,166,322 $ 2 66,730 $ 1 02,433,052
Positions 0.000 0.000 0.000
Requirements $ 5 ,818,632 $ 1 33,410 $ 5 ,952,042
Less Receipts $ - $ - $ -
Appropriation $ 5 ,818,632 $ 1 33,410 $ 5 ,952,042
Positions 0.000 0.000 0.000
Requirements $ 5 2,952,330 $ - $ 5 2,952,330
Less Receipts $ - $ - $ -
Appropriation $ 5 2,952,330 $ - $ 5 2,952,330
Positions 0.000 0.000 0.000
2. Salary and Benefit Increase for Assistant Principals and Principals--Funds are provided to support an
average 2% increase for principals, and assistant principals who will move to steps 10-36 on the salary
schedule in the 2014-15 school year, which includes an experience-based step increase, effective July 1,
2014.
Nonrecurring funds are provided to support a one-time salary and benefit bonus of $1,000 for any
assistant principal paid on years 0-8 on the State Salary Schedule in the 2013-14 school year and
employed on July 1, 2014, who will not be receiving a salary increase as a result of the step increase.
3. Salary and Benefit Increase for All Other School-Based Personnel--Funds are provided for a $1,000
salary and benefit increase for all other school-based personnel effective July 1, 2014.
1. Salary and Benefit Increases for Teachers--Effective July 1, 2014 funds are provided to raise starting
teacher pay by increasing the salaries for teachers with 0-7 years of experience to $33,000. Teachers
who move to steps 8-12 of the salary schedule in the 2014-15 school year will receive an experience-based
step increase ranging from 2.8% to 4.3%, and teachers who move to steps 13-36 of the salary
schedule in the 2014-15 school year will receive an experience-based step increase averaging 2.0%.
Nonrecurring funds are provided to support a one-time salary and benefit bonus of $1,000 for any
school psychologist paid on years 0-4 on the State Salary Schedule in the 2013-14 school year and
employed on July 1, 2014, who will not be receiving a salary increase as a result of the step increase.
% Change % Change
from from
2013-14 2014-15
Certified Certified
1.95% 0.70%
(0.25)% 1.00%
2.88% 0.58%
(2.85)% (2.85)%
$ 3 2,629,006
$ 4 6,385,028
(38.250)
$ 1 1,387,130,437
$ 3 ,294,643,787
$ 8 ,092,486,650
1,303.942
$ ( 319,336)
$ 4 5,067,527
5.000
$ 3 4,265,843
$ 3 2,948,342
$ 1 ,317,501
(43.250)
$ 3 ,302,973,049
$ 7 ,865,960,649
1,342.192
$ 11,308,116,403
$ 3 ,262,014,781
$ 8 ,046,101,622
1,342.192
Less Receipts
Total Appropriation
Total Positions
$ 9 ,804,398,812
$ 2 ,064,365,645
$ 7 ,740,033,167
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 11,168,933,698 $ 4 4,748,191 $ 7 9,014,034
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
Public Education (13510)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Public Education
34
Requirements $ 8 91,750 $ - $ 8 91,750
Less Receipts $ - $ - $ -
Appropriation $ 8 91,750 $ - $ 8 91,750
Positions 0.000 0.000 0.000
Requirements $ - $ 9 ,777,150 $ 9 ,777,150
Less Receipts $ - $ 9 ,777,150 $ 9 ,777,150
Appropriation $ - $ - $ -
Positions 0.000 3.000 3.000
Requirements $ - $ 2 3,171,192 $ 2 3,171,192
Less Receipts $ - $ 2 3,171,192 $ 2 3,171,192
Appropriation $ - $ - $ -
Positions 0.000 0.000 0.000
Requirements $ 1 8,700,000 $ - $ 1 8,700,000
Less Receipts $ - $ - $ -
Appropriation $ 1 8,700,000 $ - $ 1 8,700,000
Positions 0.000 0.000 0.000
Requirements $ - $ 4 ,000,000 $ 4 ,000,000
Less Receipts $ - $ - $ -
Appropriation $ - $ 4 ,000,000 $ 4 ,000,000
Positions 0.000 0.000 0.000
8. Fund Opt-In Portion of Home Base for LEAs and Charter Schools--These funds will be used to pay for
LEAs and charter schools to have access to the optional portions of Home Base that previously would
have required $4.00 per ADM if an LEA or charter school opted-in. LEAs and charter schools will have
access to instructional content and assessment items for Math, ELA, Science, and Social Studies. Funds
will also allow LEAs and charter schools to have access to additional professional development
management tools, instructional tools and assessments, and a learning management system .
5. Career Pathways--The Career Pathways pilot, funded by lottery receipts, will provide selected LEAs
with the resources to offer career paths for professional growth and advancement opportunities to
promote retention of the highest quality teachers within the teaching profession, and at the classroom
and school level. These pathways are directed at retaining quality teachers who take on increasing
responsibility for students and for the development and success of their peers, and impact student
achievement in the classroom.
Three staff at the Department of Public Instruction will provide necessary teacher qualification data to
LEAs, manage the pilot implementation, and oversee the evaluation process and reporting. Each of
eight pilot LEAs will receive funding for implementation, including professional guidance in pilot design
tailored to the LEA and for salary supplements for eligible teachers.
6. Textbooks--The increased textbook budget is supported with nonrecurring lottery funds in order to
bring the per student funding level to $30.48. Textbooks includes textbook formats allowable for
adoption, activity-oriented programs, classroom kits, and technology-based programs that require the
use of electronic equipment in order to be used in the learning process. This is a 100% increase above
the 2013-14 certified budget of $23,169,585.
7. Master's Degree Salary Supplements--This adjustment restores the recurring reduction of $18.7 million
enacted in the 2013 Session Laws to be effective in 2014-15. The restoration of the appropriation
reinstates the ability to pay these salary supplements for 1) personnel who have taken a course toward
the master's degree as of July 1, 2013, and 2) for personnel for who have received a master's degree
and are teaching in-field (in the subject of their graduate academic preparation) for at least 70% of their
work time.
4. Salary and Benefit Increase for Department of Public Instruction Employees--Funds are provided for a
$1,000 salary and benefit increase for all Department of Public Instruction employees, effective July 1,
2014.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Public Education
35
Requirements $ 1 ,864,014 $ - $ 1 ,864,014
Less Receipts $ - $ - $ -
Appropriation $ 1 ,864,014 $ - $ 1 ,864,014
Positions 0.000 0.000 0.000
Requirements $ 3 52,151 $ 1 57,000 $ 5 09,151
Less Receipts $ - $ - $ -
Appropriation $ 3 52,151 $ 1 57,000 $ 5 09,151
Positions 5.000 0.000 5.000
Requirements $ 1 1,694 $ - $ 1 1,694
Less Receipts $ - $ - $ -
Appropriation $ 1 1,694 $ - $ 1 1,694
Positions 0.000 0.000 0.000
11. Interstate Commission on Educational Opportunity for Military Children--Forty-six states and the
District of Columbia are members of the Military Interstate Children’s Compact Commission. The intent
of the compact is to provide consistent policies in each member school district and state to resolve key
educational transition issues (enrollment, placement, attendance, and graduation) encountered by
military children due to frequent relocation. The cost of membership is based on the number of military
children living in the state. The cost for any state with 60,000 or more military students is capped at
$60,000. The Department of Public Instruction is currently funded at $48,306. This recommended
adjustment of $11,694 will bring the current funding to the cap.
9. Cooperative Innovative High Schools--The State Board of Education approved six new Cooperative
Innovative High Schools (CIHS) in three LEAs. The associated funding requests are for three schools in
Mecklenburg County; one STEM Early College and two Middle Colleges, two in Wake County; A Young
Men’s and Young Women’s Leadership Academy, and one in Buncombe County; Buncombe Discovery
Academy. Each school will receive the same dollar amount that has been appropriated to existing CIHS
programs of $310,669.
10. Increase Months of Employment for Teachers of Visually and Hearing Impaired Preschool Children--
Federal Law IDEA Part C requires that teachers providing family support and early intervention services
to preschool children who are vision and hearing impaired, provide year-round services. Currently,
there are 16 ten-month employees and nine eleven-month employees providing services for visually
impaired children, and 19 eleven-month teachers providing services for hearing impaired children.
Positions from which staff have retired have had to remain unfilled in order to support this need.
Increasing these 44 positions to 12 months equates to an additional 60 months of salary (or five FTE)
totaling $326,951.
These teachers work and travel from home in the geographic area to which they are assigned. Funds
for the additional 60 months of travel are included in this adjustment at $25,200.
Additionally, nonrecurring funds are recommended to replace outdated technology that transferred
with staff when the residential schools and these functions moved from the Department of Health and
Human Services in 2010-11. Nonrecurring funds will support the replacement of laptops, printers, and
cartridges for each of 100 existing teachers at a per teacher cost of $1,570.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Public Education
36
Requirements $ ( 37,773,070) $ - $ ( 37,773,070)
Less Receipts $ ( 319,336) $ - $ ( 319,336)
Appropriation $ ( 37,453,734) $ - $ ( 37,453,734)
Positions 0.000 0.000 0.000
Requirements $ ( 64,923,926) $ - $ ( 64,923,926)
Less Receipts $ - $ - $ -
Appropriation $ ( 64,923,926) $ - $ ( 64,923,926)
Positions 0.000 0.000 0.000
Requirements $ - $ ( 3,239,639) $ ( 3,239,639)
Less Receipts $ - $ - $ -
Appropriation $ - $ ( 3,239,639) $ ( 3,239,639)
Positions 0.000 (46.250) (46.250)
Requirements $ ( 9,000,000) $ - $ ( 9,000,000)
Less Receipts $ - $ - $ -
Appropriation $ ( 9,000,000) $ - $ ( 9,000,000)
Positions 0.000 0.000 0.000
Requirements $ ( 1,000,000) $ - $ ( 1,000,000)
Less Receipts $ - $ - $ -
Appropriation $ ( 1,000,000) $ - $ ( 1,000,000)
Positions 0.000 0.000 0.000
Requirements $ ( 5,509,816) $ - $ ( 5,509,816)
Less Receipts $ - $ - $ -
Appropriation $ ( 5,509,816) $ - $ ( 5,509,816)
Positions 0.000 0.000 0.000
17. Adjust Transportation Average Daily Membership (ADM) to Actual--The transportation allotment
supports the maintenance, fuel, maintenance staff, and bus drivers, to operate the buses that transport
students to public schools. This adjustment aligns the ADM used in the transportation formula to the
actual 2014-15 ADM. This adjustment represents a -0.1% change to the 2013-14 budget of
$440,140,142.
15. Workers' Compensation--Local boards of education shall pay all workers' compensation claims arising
from events occurring on or after July 1, 2014 for school employees, regardless of the portion of the
employee's salary paid from state funds. These claims must be paid from non-state funds.
16. Tort Claims--Local boards of education shall assume liability for all tort claims arising from events
occurring on or after July 1, 2014. Claims payments shall be made with non-state funds.
12. Average Daily Membership (ADM) Adjustment--This appropriation ensures adequate funding for
instructional positions and instructional supplies that are allocated to the LEAs based on ADM. ADM is
currently budgeted for 1,509,985 for 2013-14 and 1,526,591 projected for 2014-15. Recent data result
in an overall net decrease in ADM of 6,286 from the 2014-15 projected ADM resulting in a budgeted
ADM of 1,520,305. Driver Education receipts from the Highway Fund are reduced due to a decrease in
9th grade ADM.
14. Sunset Funding for the North Carolina Center for the Advancement of Teaching--Appropriations for
NCCAT were made nonrecurring for each year of the 2013-15 biennium. This adjustment sunsets the
funding for NCCAT. This adjustment is nonrecurring due to the nonrecurring nature of the current
appropriation. Funds are included in the severance reserve in the amount of $1 million to support
severance costs associated with the elimination of all state-funded positions.
Recommended nonrecurring building maintenance budgets for the NCCAT facilities located in
Cullowhee and Ocracoke are located in the Western Carolina University and Department of
Administration budgets respectively.
13. Average Salary Adjustment--Budgeted average annual salaries are revised using the 2013-14 sixth pay
period salaries as the base. This adjustment is made annually after reviewing the budgeted salary
projections for all certified personnel. Typically, because of turnover in these positions, the actual
salaries are lower than the budgeted salaries, and savings can be realized without reducing teacher
salaries.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Public Education
37
Requirements $ ( 19,801,890) $ - $ ( 19,801,890)
Less Receipts $ - $ - $ -
Appropriation $ ( 19,801,890) $ - $ ( 19,801,890)
Positions 0.000 0.000 0.000
Recurring Non Recurring
Changes Changes Total
Total Requirements $ 4 5,067,527 $ 3 4,265,843 $ 7 9,333,370
Total Receipts $ - $ 3 2,948,342 $ 3 2,948,342
Total Appropriation (Requirements minus Receipts) $ 4 5,067,527 $ 1 ,317,501 $ 4 6,385,028
Total Positions 5.000 (43.250) (38.250)
Net Adjustments
18. Teacher Assistants--This allotment allocates funding for Teacher Assistants on the basis of student
headcount in grades K-3. This adjustment maintains the appropriation for the assistants to teachers
allotment at the 2013-14 budgeted level of $453,579,630 and does not require the elimination of any
positions.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Community Colleges
38
Recurring Non Recurring
Changes Changes Total
Requirements $ 1 8,556,950 $ - $ 1 8,556,950
Less Receipts $ - $ - $ -
Appropriation $ 1 8,556,950 $ - $ 1 8,556,950
Positions 0.000 0.000 0.000
Requirements $ ( 11,646,877) $ - $ ( 11,646,877)
Less Receipts $ ( 11,264,696) $ - $ ( 11,264,696)
Appropriation $ ( 382,181) $ - $ ( 382,181)
Positions 0.000 0.000 0.000
2. Closing the Skills Gap--Currently there are jobs in North Carolina that are unfilled due to the lack of
qualified workers. The Governor recommends $16.8 million in funding for programs which will develop
the needed skills for students to fill these jobs. To allocate these funds to community colleges, the State
Board of Community Colleges shall create a fourth tier in their enrollment funding formula. This tier will
be funded 15% higher than the current top tier. The new tier will include health care and technical
education programs that train North Carolinians for jobs having documented skills gaps and paying
higher wages. The $16.8 million shall be funded by reinvesting savings from the enrollment decline
experienced by North Carolina community colleges in 2013-14.
North Carolina community colleges saw their actual enrollment decline by 2.5% (or 6,156 FTE) from the
budgeted amount in the 2013-14 certified budget. This lower enrollment resulted mostly from a shift in
developmental education that permitted students to enroll in instruction for those areas needing
remediation, rather than requiring students to enroll in a full-semester course. The enrollment decline
produces a savings of $17.2 million.
1. Salary and Benefit Increase for NC Community College System Employees--Funds are provided for a
$1,000 salary and benefit increase for all NC Community College System employees, effective July 1,
2014. This amount includes $18,393,200 for employees located at local community colleges, and
$163,750 for employees located at the Community Colleges System Office.
% Change % Change
from from
2013-14 2014-15
Certified Certified
0.11% 0.40%
(2.46)% (2.59)%
1.18% 1.66%
-% -%
$ ( 11,031,220)
$ 1 6,866,780
-
$ 1 ,448,551,127
$ 4 15,196,880
$ 1 ,033,354,247
194.100
$ ( 11,031,220)
$ 1 7,718,352
-
$ ( 851,572)
$ -
$ ( 851,572)
-
$ 4 25,660,981
$ 1 ,021,295,467
194.100
$ 1 ,442,715,567
$ 4 26,228,100
$ 1 ,016,487,467
194.100
Less Receipts
Total Appropriation
Total Positions
$ 1 ,458,457,154
$ 4 22,203,748
$ 1 ,036,253,406
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 1 ,446,956,448 $ 6 ,687,132 $ 5 ,835,560
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
NC Community Colleges System (16800)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Community Colleges
39
Requirements $ - $ - $ -
Less Receipts $ ( 1,867,584) $ - $ ( 1,867,584)
Appropriation $ 1 ,867,584 $ - $ 1 ,867,584
Positions 0.000 0.000 0.000
Requirements $ - $ - $ -
Less Receipts $ 2 ,101,060 $ - $ 2 ,101,060
Appropriation $ ( 2,101,060) $ - $ ( 2,101,060)
Positions 0.000 0.000 0.000
Requirements $ - $ ( 300,000) $ ( 300,000)
Less Receipts $ - $ - $ -
Appropriation $ - $ ( 300,000) $ ( 300,000)
Positions 0.000 0.000 0.000
Requirements $ ( 620,460) $ - $ ( 620,460)
Less Receipts $ - $ - $ -
Appropriation $ ( 620,460) $ - $ ( 620,460)
Positions 0.000 0.000 0.000
Requirements $ ( 100,000) $ - $ ( 100,000)
Less Receipts $ - $ - $ -
Appropriation $ ( 100,000) $ - $ ( 100,000)
Positions 0.000 0.000 0.000
5. Transfer to Department of Commerce to Offset Apprenticeship Fees--For the 2014-15 fiscal year, fees
collected from each apprentice who is covered by an apprenticeship agreement entered into under GS
94 shall be waived. The Community Colleges System Office shall transfer $300,000 to the Department
of Commerce for the 2014-15 fiscal year. These funds shall be used by the Department of Commerce to
offset the revenue foregone due to the apprenticeship fees being waived. The Department of
Commerce will evaluate the success of the fee waivers in increasing participation in apprenticeship
programs before requesting a permanent change to the fees. There is a corresponding budget increase
in the Department of Commerce section of the budget document.
6. Community Colleges Workers' Compensation Costs--Local boards of trustees for community colleges
shall pay all workers' compensation claims arising from events occurring on or after July 1, 2014 for
college employees, regardless of the portion of the employee's salaries paid from state funds. These
claims must be paid from local or institutional funds. The total cost of workers' compensation claims for
community colleges in 2012-13 was $3,595,270. The $620,460 represents 17.3% of all 2012-13 costs.
7. Fayetteville Technical Community College Botanical Laboratory--It is recommended that the
Fayetteville Technical Community College Botanical Laboratory focus its efforts on industry- and
community-supported activities. These funds are distributed as a categorical allotment and are not
distributed through the state aid formulas. The Fayetteville Technical Community College Botanical
Laboratory received $100,000 in 2013-14. This reduction represents 100% of the total budget.
3. Charge Military Veterans Resident Tuition--The Governor recommends charging military veterans the
resident tuition rate at North Carolina community colleges. To qualify, military veterans must have
served at least four years, be within two years of exiting service under honorable conditions, been
stationed in North Carolina and reside or have their official Home of Record listed within North Carolina
at the time of enrollment. These funds shall be appropriated to the NC Community College System to
offset the anticipated tuition waived by community colleges.
4. Generate Additional Tuition Revenue--It is recommended that NC community colleges shall generate
additional tuition and registration fee revenue by increasing tuition by $0.50 per curriculum credit hour
(a 0.7% increase). An additional $0.50 would increase resident tuition to $72 per credit hour (from
$71.50). Non-resident tuition would increase to $264 per credit hour (from $263.50). A resident
student would pay $2,304 a year in 2014-15.
The NC Community College System has a total tuition and fees budget of $367,096,183 for 2013-14 and
2014-15. The $2.1 million total generated from additional student tuition will represent a 0.6% increase
in the total budget.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Community Colleges
40
Requirements $ 5 51,572 $ ( 551,572) $ -
Less Receipts $ - $ - $ -
Appropriation $ 5 51,572 $ ( 551,572) $ -
Positions 0.000 0.000 0.000
Requirements $ ( 54,053) $ - $ ( 54,053)
Less Receipts $ - $ - $ -
Appropriation $ ( 54,053) $ - $ ( 54,053)
Positions 0.000 0.000 0.000
Recurring Non Recurring
Changes Changes Total
Total Requirements $ 6 ,687,132 $ ( 851,572) $ 5 ,835,560
Total Receipts $ ( 11,031,220) $ - $ ( 11,031,220)
Total Appropriation (Requirements minus Receipts) $ 1 7,718,352 $ ( 851,572) $ 1 6,866,780
Total Positions 0.000 0.000 0.000
Net Adjustments
8. Technical Adjustment - Restore Recurring Funds for Audit Services--This recommendation restores
recurring funding for the Audit Services division of the System Office. The Audit Services division
conducts compliance, program, and fiscal operations audits of all 58 community colleges. Audit services
also reviews and verifies class enrollment. Recurring funding was cut in the 2013 session and replaced
with nonrecurring funds. Restoring recurring funding ensures adequate fiscal oversight of the
community colleges while the committee's findings are implemented.
The 2013-14 budget for the Audit Services Division is $551,572 in nonrecurring funds. This
recomendation converts 100% of the budget to recurring appropriation.
9. Community Colleges System Office Operating Efficiencies--The Community Colleges System Office is
encouraged to realize efficiencies in various operating budgets. The $54,053 represents a -25% change
in those accounts from the 2013-14 certified budget of $217,485.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
The University of North Carolina
41
Recurring Non Recurring
Changes Changes Total
Requirements $ 3 3,443,940 $ - $ 3 3,443,940
Less Receipts $ - $ - $ -
Appropriation $ 3 3,443,940 $ - $ 3 3,443,940
Positions 0.000 0.000 0.000
Requirements $ - $ 5 ,000,000 $ 5 ,000,000
Less Receipts $ - $ 5 ,000,000 $ 5 ,000,000
Appropriation $ - $ - $ -
Positions 0.000 0.000 0.000
Requirements $ 3 ,000,000 $ - $ 3 ,000,000
Less Receipts $ - $ - $ -
Appropriation $ 3 ,000,000 $ - $ 3 ,000,000
Positions 0.000 0.000 0.000
2. NC Scholarship for the Education for Returning Veterans (NC SERV) --The Governor recommends using
$5 million of lottery funds to establish a pilot scholarship program for nonresident veterans who are
working towards their first baccalaureate degree and plan to establish residency in the state. A
minimum $7,500 scholarship will be available to veterans who are within two years of exiting service
from the Armed Forces of the United States under honorable conditions, have served at least four
cumulative years, and were stationed in North Carolina for a portion of their military service. Eligible
grant recipients must reside or have official Home of Record within North Carolina at the time of
enrollment and must be matriculated and enrolled at least half time. The scholarship is limited to two
semesters since recipients are expected to establish residency for tuition purposes after completing one
year of coursework. Funds provided in 2014-15 will be used to make scholarship awards for the 2015-
16 academic year.
3. Convert Discovery into Innovation--Funding is recommended to assist campuses in moving promising
ideas, research, and technologies from the laboratory to the marketplace. This item provides
competitive funding for proof-of-concept work, commercialization costs, and additional capacity to
assess, protect, develop, and commercialize intellectual property.
1. Salary and Benefit Increase for UNC System Employees-- Funds are provided for a $1,000 salary and
benefit increase for all University of North Carolina employees, effective July 1, 2014.
% Change % Change
from from
2013-14 2014-15
Certified Certified
(1.67)% (1.62)%
(2.34)% (1.15)%
(1.26)% (1.90)%
0.02% (0.01)%
$ ( 17,879,045)
$ ( 49,398,097)
(2.800)
$ 4 ,081,523,353
$ 1 ,531,019,741
$ 2 ,550,503,612
34,963.220
$ ( 22,879,045)
$ ( 46,395,583)
(2.800)
$ 1 ,997,486
$ 5 ,000,000
$ ( 3,002,514)
-
$ 1 ,567,782,825
$ 2 ,583,048,270
34,957.220
$ 4 ,148,800,495
$ 1 ,548,898,786
$ 2 ,599,901,709
34,966.020
Less Receipts
Total Appropriation
Total Positions
$ 4 ,256,834,231
$ 1 ,604,986,881
$ 2 ,651,847,350
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 4 ,150,831,095 $ ( 69,274,628) $ ( 67,277,142)
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
The University of North Carolina (160xx)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
The University of North Carolina
42
Requirements $ 2 ,000,000 $ - $ 2 ,000,000
Less Receipts $ - $ - $ -
Appropriation $ 2 ,000,000 $ - $ 2 ,000,000
Positions 0.000 0.000 0.000
Requirements $ - $ 1 ,000,000 $ 1 ,000,000
Less Receipts $ - $ - $ -
Appropriation $ - $ 1 ,000,000 $ 1 ,000,000
Positions 0.000 0.000 0.000
Requirements $ - $ 3 17,500 $ 3 17,500
Less Receipts $ - $ - $ -
Appropriation $ - $ 3 17,500 $ 3 17,500
Positions 0.000 0.000 0.000
Requirements $ - $ 2 59,124 $ 2 59,124
Less Receipts $ - $ - $ -
Appropriation $ - $ 2 59,124 $ 2 59,124
Positions 0.000 0.000 0.000
Requirements $ 4 ,500,000 $ ( 4,500,000) $ -
Less Receipts $ - $ - $ -
Appropriation $ 4 ,500,000 $ ( 4,500,000) $ -
Positions 0.000 0.000 0.000
8. NC Need-Based Scholarship--The North Carolina Need Based Scholarship (NCNBS) provides scholarship
aid to state residents with financial need to attend a private college or university in the state. In 2011-
12, lottery scholarships were no longer provided for students attending private institutions which had
totaled approximately $4.5 million annually. Since 2012-13, the General Assembly has appropriated a
$4.5 million nonrecurring reduction to need based scholarships. This recommendation continues this on
a recurring basis. The 2013-14 and 2014-15 certified budget of $86,351,588 is not changed by this item.
5. CFNC Support--Federal loan program changes have resulted in the phasing-out of fees that have been
used to fund operations of the College Foundation of North Carolina (CFNC). The Governor
recommends temporary funding to partially support operations of CFNC until sufficient non-General
Fund revenues are generated. In 2013-14, the operating budget for CFNC totaled $5,850,000.
6. Internships and Career-Based Opportunities for HBCU Students--The Governor recommends funding
to create a pilot internship program linking 60 students attending Historically Black Colleges and
Universities (HBCUs) with North Carolina-based companies. ECSU and three HBCUs selected through a
competitive application process will participate in the pilot. Of the three institutions selected, one must
be an HBCU constituent institution of the UNC system and two must be private HBCU colleges or
universities located in North Carolina. No more than 5% of funds may be used by UNC for the
administration of this program.
7. WCU - Building Reserve for NCCAT Facilities--This item provides funds for the maintenance of facilities
transferred to WCU from the NC Center for the Advancement of Teaching (NCCAT) upon
discontinuation of the program.
4. NCSU - Next Generation Power Electronics Innovation Institute--The Governor recommends funding
the State contribution for the establishment of a regional and national Wide Bandgap Institute at NCSU.
This Institute will be part of the U.S. Department of Energy's National Network for Manufacturing
Innovation for Wide Bandgap Semiconductors for Power Electronic Devices. The research and
technology development resulting from this public/private consortium will significantly improve energy
efficiency, reduce greenhouse gas emissions, and create sustained job growth. This $2 million annual
appropriation will continue for five years to meet the total state obligation of $10 million.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
The University of North Carolina
43
Requirements $ ( 44,037,290) $ - $ ( 44,037,290)
Less Receipts $ - $ - $ -
Appropriation $ ( 44,037,290) $ - $ ( 44,037,290)
Positions 0.000 0.000 0.000
Requirements $ ( 9,325,958) $ - $ ( 9,325,958)
Less Receipts $ - $ - $ -
Appropriation $ ( 9,325,958) $ - $ ( 9,325,958)
Positions 0.000 0.000 0.000
Requirements $ ( 1,999,312) $ - $ ( 1,999,312)
Less Receipts $ - $ - $ -
Appropriation $ ( 1,999,312) $ - $ ( 1,999,312)
Positions 0.000 0.000 0.000
Requirements $ ( 13,125,000) $ - $ ( 13,125,000)
Less Receipts $ - $ - $ -
Appropriation $ ( 13,125,000) $ - $ ( 13,125,000)
Positions 0.000 0.000 0.000
Requirements $ ( 24,652,063) $ - $ ( 24,652,063)
Less Receipts $ ( 22,879,045) $ - $ ( 22,879,045)
Appropriation $ ( 1,773,018) $ - $ ( 1,773,018)
Positions 0.000 0.000 0.000
11. Optimize University Administrators--The Governor recommends the UNC System examine and
implement workload efficiencies for senior administrators and middle management positions (EPA
administrators) to curtail the recent growth in university administration. In allocating this reduction the
UNC Board of Governors shall consider for each institution: 1) average salary of EPA administrators
relative to the UNC System average, 2) number of EPA administrators relative to student enrollment
and faculty positions, and 3) rate of growth of EPA administrator positions relative to rate of
enrollment growth over the last decade.
12. UNC Centers and Institutes--A reduction to centers and institutes across the UNC System is
recommended. The UNC Board of Governors shall consider allocating reductions to centers and
institutes that are redundant, not involved in degree production, or not central to the educational
mission of the constituent institution. This decrease of $13.1 million is a 20% reduction to the 2013-14
appropriation supporting centers and institutes totaling $65.6 million.
13. Revise Enrollment Growth Funding--Enrollment growth funding was provided by the General Assembly
in the amount of $29,124,491 in 2013-14 for an additional 503 FTE and $55,838,115 in 2014-15 for an
additional 1,952 FTE. Total budgeted student FTE is 200,704 in 2013-14 and 202,656 in 2014-15. UNC
estimates that enrollment for 2014-15 will fall short of projections by 2,961 FTE resulting in a total FTE
of 199,695. This represents a 0.5% decline in FTE since 2013-14 and is 1.5% lower than projected for
2014-15. The UNC enrollment funding model calculates a reduction for 2014-15 of $1,773,018. Even
with this reduction, enrollment growth funding will increase from the 2013-14 certified budget (see
related item below).
9. 2% Management Flexibility Reduction--It is recommended that the UNC Board of Governors
implement efficiencies to achieve a 2% savings from the UNC System's 2014-15 certified appropriation
excluding financial aid, UNCA, UNCSA, NCSSM, ECSU, FSU, and WSSU. Before taking reductions in
instructional budgets, the Board of Governors should consider faculty workload adjustments,
restructuring research activities, span of control measures, reducing senior and middle management,
eliminating redundant and low-enrollment programs, and use of alternative funding sources. This
recommendation is a decrease of 1.8% from the UNC System's 2013-14 certified budget of $2.58
billion.
10. Assess Same Tuition Rate for All Non-resident Full-Scholarship Students--This item repeals GS 116-
143.6, which allows nonresident students who receive full scholarships to be considered in-state
students for tuition purposes. In 2014-15, 446 scholarships would receive this waiver. The General
Assembly repealed this tuition waiver for athletic scholarships in the 2010 Session Laws, Chapter 31,
Section 9.25.
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
The University of North Carolina
44
Requirements $ ( 5,326,425) $ - $ ( 5,326,425)
Less Receipts $ - $ - $ -
Appropriation $ ( 5,326,425) $ - $ ( 5,326,425)
Positions 0.000 0.000 0.000
Requirements $ ( 9,128,060) $ - $ ( 9,128,060)
Less Receipts $ - $ - $ -
Appropriation $ ( 9,128,060) $ - $ ( 9,128,060)
Positions 0.000 0.000 0.000
Requirements $ ( 1,801,861) $ - $ ( 1,801,861)
Less Receipts $ - $ - $ -
Appropriation $ ( 1,801,861) $ - $ ( 1,801,861)
Positions 0.000 0.000 0.000
Requirements $ ( 922,599) $ ( 79,138) $ ( 1,001,737)
Less Receipts $ - $ - $ -
Appropriation $ ( 922,599) $ ( 79,138) $ ( 1,001,737)
Positions (2.800) 0.000 (2.800)
Requirements $ ( 1,900,000) $ - $ ( 1,900,000)
Less Receipts $ - $ - $ -
Appropriation $ ( 1,900,000) $ - $ ( 1,900,000)
Positions 0.000 0.000 0.000
Recurring Non Recurring
Changes Changes Total
Total Requirements $ ( 69,274,628) $ 1 ,997,486 $ ( 67,277,142)
Total Receipts $ ( 22,879,045) $ 5 ,000,000 $ ( 17,879,045)
Total Appropriation (Requirements minus Receipts) $ ( 46,395,583) $ ( 3,002,514) $ ( 49,398,097)
Total Positions (2.800) 0.000 (2.800)
Net Adjustments
17. Adjust Building Reserves for Delayed Completion--The UNC certified budget for 2014-15 includes
seven building reserves for facilities with delayed completion dates. This reduction adjusts the budget
of those reserves to reflect updated completion dates as reported by the campuses.
18. Coastal Wave Energy Research--It is recommended that General Fund support for the Coastal Wave
Energy Research Program be concluded. This is a 100% reduction to the 2013-14 and 2014-15 certified
budget.
14. Reflect Full General Institutional Enrollment Decrease--The UNC enrollment growth formula includes a
negative adjustment factor that buffers a campus from reductions to general institutional support.
When enrollment declines, the UNC enrollment formula only reduces general institutional support by
half. The Governor recommends that the full reduction to general institutional support be
implemented. This item represents a 9.5% reduction to the 2014-15 certified budget for enrollment
growth which totals $55,838,115. Even with this reduction and updated enrollment growth projections
reflecting declining enrollment, enrollment growth funding increases by $19,614,181 from the 2013-14
certified budget.
15. Utility Budgets to Reflect Actual Expenditures--Utility budgets that exceed actual expenditures will be
reduced at several campuses. Savings generated from energy efficiency measures that are dedicated to
pay the debt service on energy performance contracts will be held harmless. In 2012-13, actual utility
expenditures were $191.1 million. This $9.1 million decrease brings the 2014-15 utility budget for the
UNC system to $193.5 million. This represents a 2.1% decrease to the 2013-14 utility budget which
totals $197.8 million.
16. End Duplication of Funding for Teacher Prep Distance Education Programs--The Governor
recommends that the Teacher Prep Distance Education Reserve no longer be funded since the
enrollment growth formula provides campuses with funding for distance education programs. This is a
100% decrease to the 2013-14 and 2014-15 certified budget.
General Assembly Office of the Governor Office of State Budget and Management North Carolina Housing Finance Authority
Office of the Lieutenant Governor Department of Secretary of State Office of the State Auditor Department of State Treasurer
Department of Insurance Department of Administration Office of the State Controller Department of Revenue
Department of Cultural Resources Roanoke Island Commission State Board of Elections Office of Administrative Hearings
General Government
Recognizes the hard work and contributions of the State’s most valuable resource, its people, with a $1,000 sal­ary and benefit increase for each employee.
Invests $520,000 in maintaining Tryon Palace and preserving North Carolina’s historic heritage for our citizens and visitors.
Invests $3,000,000 in a Challenge Grant to enable major hull repairs for the USS North Carolina Battleship, which will help preserve our military heritage.
Recognizes Agency Secretary initiatives to streamline and reorganize operations, identify management ef­ficiencies and business process improvements that resulted in a reduction in 22 full time positions and the redirection of $3.8M into high priority initiatives to improve government.
Upgrades the State’s cash management system and business processes in human resources, payroll, budget management, taxation, data storage and accounting, which will allow the State Treasurer, State Controller and Department of Revenue to improve customer service to North Carolina citizens.
Invests in North Carolina youth by increasing funding for the Youth Advocacy and Information Office.
Supports small business development throughout the state by increasing support for the Historically Under­utilized Business (HUB) Program.North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
General Assembly
47
Recurring Non Recurring
Changes Changes Total
Requirements $ 5 29,250 $ - $ 5 29,250
Less Receipts $ - $ - $ -
Appropriation $ 5 29,250 $ - $ 5 29,250
Positions 0.000 0.000 0.000
Recurring Non Recurring
Changes Changes Total
Total Requirements $ 5 29,250 $ - $ 5 29,250
Total Receipts $ - $ - $ -
Total Appropriation (Requirements minus Receipts) $ 5 29,250 $ - $ 5 29,250
Total Positions 0.000 0.000 0.000
Net Adjustments
1. Salary and Benefit Increase for General Assembly Employees--Funds are provided for a $1,000 salary
and benefit increase for all General Assembly employees, effective July 1, 2014.
% Change % Change
from from
2013-14 2014-15
Certified Certified
0.43% 1.00%
14.45% -%
0.15% 1.02%
-% -%
$ -
$ 5 29,250
-
$ 53,380,672
$ 1 ,216,655
$ 52,164,017
315.250
$ -
$ 5 29,250
-
$ -
$ -
$ -
-
$ 1 ,063,055
$ 52,087,986
315.250
$ 52,851,422
$ 1 ,216,655
$ 51,634,767
315.250
Less Receipts
Total Appropriation
Total Positions
$ 57,347,555
$ 3 ,821,404
$ 53,526,151
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 53,151,041 $ 5 29,250 $ 5 29,250
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
General Assembly (11000)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Office of the Governor
48
Recurring Non Recurring
Changes Changes Total
Requirements $ 5 1,700 $ - $ 5 1,700
Less Receipts $ - $ - $ -
Appropriation $ 5 1,700 $ - $ 5 1,700
Positions 0.000 0.000 0.000
Requirements $ ( 103,442) $ - $ ( 103,442)
Less Receipts $ - $ - $ -
Appropriation $ ( 103,442) $ - $ ( 103,442)
Positions 0.000 0.000 0.000
Recurring Non Recurring
Changes Changes Total
Total Requirements $ ( 51,742) $ - $ ( 51,742)
Total Receipts $ - $ - $ -
Total Appropriation (Requirements minus Receipts) $ ( 51,742) $ - $ ( 51,742)
Total Positions 0.000 0.000 0.000
1. Salary and Benefit Increase for Office of Governor Employees--Funds are provided for a $1,000 salary
and benefit increase for all Office of the Governor employees, effective July 1, 2014.
Net Adjustments
2. Management Flexibility Reduction--A management flexibility reduction of two percent (2%) will be
identified in FY 2014-15.
% Change % Change
from from
2013-14 2014-15
Certified Certified
(0.62)% (0.64)%
-% -%
(0.69)% (0.72)%
-% -%
$ -
$ ( 51,742)
-
$ 7 ,980,517
$ 8 60,127
$ 7 ,120,390
52.201
$ -
$ ( 51,742)
-
$ -
$ -
$ -
-
$ 8 60,127
$ 7 ,170,050
52.201
$ 8 ,032,259
$ 8 60,127
$ 7 ,172,132
52.201
Less Receipts
Total Appropriation
Total Positions
$ 5 ,866,006
$ 7 90,717
$ 5 ,075,289
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 8 ,030,177 $ ( 51,742) $ ( 51,742)
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
Office of the Governor (13000)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Office of State Budget and Management
49
Recurring Non Recurring
Changes Changes Total
Requirements $ 6 0,680 $ - $ 6 0,680
Less Receipts $ - $ - $ -
Appropriation $ 6 0,680 $ - $ 6 0,680
Positions 0.000 0.000 0.000
Requirements $ - $ 5 00,000 $ 5 00,000
Less Receipts $ - $ - $ -
Appropriation $ - $ 5 00,000 $ 5 00,000
Positions 0.000 0.000 0.000
Requirements $ ( 150,684) $ - $ ( 150,684)
Less Receipts $ - $ - $ -
Appropriation $ ( 150,684) $ - $ ( 150,684)
Positions (1.000) 0.000 (1.000)
Recurring Non Recurring
Changes Changes Total
Total Requirements $ ( 90,004) $ 5 00,000 $ 4 09,996
Total Receipts $ - $ - $ -
Total Appropriation (Requirements minus Receipts) $ ( 90,004) $ 5 00,000 $ 4 09,996
Total Positions (1.000) 0.000 (1.000)
1. Salary and Benefit Increase for Office of State Budget and Management Employees--Funds are
provided for a $1,000 salary and benefit increase for all Office of State Budget and Management
employees, effective July 1, 2014.
Net Adjustments
2. Economic Modeling Tool--The Governor recommends $500,000 for an economic modeling tool to
inform and accurately analyze the state and local economic impacts of policy proposals.
3. Reduce Software Licensing Fees and One Grants Assistant Position--This change reflects a reduction in
licensing costs for IBM Cognos software used for the reporting component of the new Integrated
Budget Information System (IBIS), as well as a reduction in software licensing fees and mainframe
hosting fees associated with the legacy Budget System modules that were replaced by IBIS on July
1,2013. The licensing and hosting fees reduction of $100,000 reflects a change of 15% from the 2013-14
certified budget for operations and maintenance of $644,547.
A vacant grants assistant position is also eliminated. The grants assistant position reduction of $50,584
reflects a change of .82% from the 2013-14 personal services certified budget of $6,212,926.
% Change % Change
from from
2013-14 2014-15
Certified Certified
6.38% 5.26%
-% -%
6.61% 5.44%
-% (1.69)%
$ -
$ 4 09,996
(1.000)
$ 8 ,207,127
$ 2 62,914
$ 7 ,944,213
58.250
$ -
$ ( 90,004)
(1.000)
$ 5 00,000
$ -
$ 5 00,000
-
$ 2 62,914
$ 7 ,451,706
58.250
$ 7 ,797,131
$ 2 62,914
$ 7 ,534,217
59.250
Less Receipts
Total Appropriation
Total Positions
$ 8 ,197,591
$ 2 ,807,623
$ 5 ,389,967
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 7 ,714,620 $ ( 90,004) $ 4 09,996
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
Office of State Budget and Management (13005)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
OSBM - Reserve for Special Appropriations
50
Recurring Non Recurring
Changes Changes Total
Requirements $ - $ 3 ,000,000 $ 3 ,000,000
Less Receipts $ - $ - $ -
Appropriation $ - $ 3 ,000,000 $ 3 ,000,000
Positions 0.000 0.000 0.000
Requirements $ ( 20,000) $ - $ ( 20,000)
Less Receipts $ - $ - $ -
Appropriation $ ( 20,000) $ - $ ( 20,000)
Positions 0.000 0.000 0.000
Requirements $ - $ ( 500,000) $ ( 500,000)
Less Receipts $ - $ - $ -
Appropriation $ - $ ( 500,000) $ ( 500,000)
Positions 0.000 0.000 0.000
Recurring Non Recurring
Changes Changes Total
Total Requirements $ ( 20,000) $ 2 ,500,000 $ 2 ,480,000
Total Receipts $ - $ - $ -
Total Appropriation (Requirements minus Receipts) $ ( 20,000) $ 2 ,500,000 $ 2 ,480,000
Total Positions 0.000 0.000 0.000
1. Initiate Challenge Grant for the USS North Carolina Battleship--This proposal initiates a Challenge
Grant for the USS North Carolina Battleship to match $5,000,000 in non-State revenue with $3,000,000
in State appropriations. The purpose is to repair the shell plating of the hull of the Battleship. The
proposed repair plan would include construction of a permanent bulkhead (coffer dam) around the
perimeter of the ship to facilitate in-place repairs. The Challenge Grant requires the Battleship to raise
$3,000,000 in non-State revenue which the State would match with $1,000,000 in appropriations.
Once an additional $2,000,000 ($5,000,000 total) in non-State revenue had been raised, an additional
matching State appropriation of $2,000,000 would be released.
Net Adjustments
2. Reduce Funding for NC Humanities Council--This proposal reduces state support for the NC Humanities
Council. This is a 100% and $20,000 change from the 2013-14 certified budget of $20,000.
3. Adjust Funding for the NC Symphony Challenge Grant--This proposal reduces the NC Symphony
Challenge Grant from $1.5 million to $1.0 million. This is a 33% change from the 2013-14 certified
budget of $1,500,000.
% Change % Change
from from
2013-14 2014-15
Certified Certified
(18.57)% 163.16%
-% -%
(18.57)% 163.16%
-% -%
$ -
$ 2 ,480,000
-
$ 4 ,000,000
$ -
$ 4 ,000,000
-
$ -
$ ( 20,000)
-
$ 2 ,500,000
$ -
$ 2 ,500,000
-
$ -
$ 4 ,912,000
-
$ 1 ,520,000
$ -
$ 1 ,520,000
-
Less Receipts
Total Appropriation
Total Positions
$ 1 ,732,346
$ 8 5,017
$ 1 ,647,329
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 4 ,912,000 $ ( 20,000) $ 2 ,480,000
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
OSBM - Reserve for Special Appropriation (13085)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
North Carolina Housing Finance Agency
51
% Change % Change
from from
2013-14 2014-15
Certified Certified
-% -%
-% -%
-% -%
-% -%
$ -
$ -
-
$ 8 ,411,632
$ -
$ 8 ,411,632
-
$ -
$ -
-
$ -
$ -
$ -
-
$ -
$ 8 ,411,632
-
$ 8 ,411,632
$ -
$ 8 ,411,632
-
Less Receipts
Total Appropriation
Total Positions
$ 1 ,206,312
$ -
$ 1 ,206,312
-
Recommended
Adjustment
Revised
2014-15
Total Requirements $ 8 ,411,632 $ - $ -
2014-15
Certified
Net
Recurring
Net
Non-Recurring
2012-13
Actual
2013-14
Certified
2013 Session Law-Enacted 2014 Legislative Session-Recommended Change
North Carolina Housing Finance Agency (13010)
North Carolina State Budget
Recommended Adjustments, 2014-15
General Fund
Office of the Lieutenant Governor
52
Recurring Non Recurring
Changes Changes Total
Requirements $6,000 $0 $6,000
Less Receipts $0 $0 $0
Appropriation $6,000 $0 $6,000
Positions 0.000 0.000 0.000
Requirements ($13,502) $0 ($13,502)
Less Receipts $0 $0 $0
Appropriation ($13,502) $0 ($13,502)
Positions 0.000 0.000 0.000
Recurring Non Recurring
Changes Changes Total
Total Requirements ($7,502) $0 ($7,502)
Total Receipts $0 $0 $0
Total Appropriation (Requirements minus Receipts) ($7,502) $0 ($7,502)
Total Positions 0.000 0.000 0.000
1. Salary and Benefit Increase for the Office of the Lieutenant Governor Employees--Funds are provided
for a $1,000 salary and benefit increase for all Office of the Lieutenant Governor employees, effective
July 1, 2014.
Net Adjustments
2. Adjust Operating Budget--This reduction to the travel, food supplies and telephone accounts
represents a two percent (2%) budget reduction made possible through increased efficiencies