GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 273

Short Title:  GPAC/Public School Funding.	(Public)
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Sponsors: (by request) Representatives Diamont, Blue, Barnes, Hackney, Hensley, H. Hunter, G. Miller, Nesbitt, and Robinson.
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Referred to:  Appropriations.
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February 25, 1993

A BILL TO BE ENTITLED
AN ACT TO IMPLEMENT THE RECOMMENDATIONS OF THE GOVERNMENT PERFORMANCE AUDIT COMMITTEE REGARDING PUBLIC SCHOOL FUNDING.
The General Assembly of North Carolina enacts:
––-BEP FUNDING.
Section 1.  (a)	The General Assembly finds that the funding formulas for the Basic Education Program, which were established in 1984, represented the best ideas and estimates at that time regarding improving student achievement in North Carolina.  The formulas did not and could not have considered the significant changes that the State and public education have undergone in the ensuing eight years, such as the economic challenges that the State is facing and educational changes including the increased use of automation in the local school administrative units and the movement to site-based management in the schools.  The General Assembly is committed to the improvement of education and to the complete implementation of the strongest possible Basic Education Program; therefore, it is the intent of the General Assembly to complete the funding of the Basic Education Program, as scheduled, for teachers and instructional support personnel.  It is the intent of the General Assembly to reconsider the anticipated use of the remainder of the funds scheduled for appropriation under the Basic Education Program and to consider redirecting the funds to other State education needs such as (i) instructional and administrative needs identified through the Annual Report Card or other measures in the School Improvement and Accountability Act of 1989, (ii) funding for small and low wealth local school administrative units, (iii) gaps in the current public education program such as the need for comprehensive preschool programs, and (iv) new educational reforms such as school-linked collaborative services.
(b)	This section is effective upon ratification.
––-LOCAL FLEXIBILITY/SCHOOL FUNDS.
Sec. 2. (a) The General Assembly finds that it is appropriate to consolidate major nonteaching funding categories in the Public School Fund; therefore, the following existing funding categories in the Public School Fund are combined into the following  categories:
(1)	School Administration	School Administration
Finance Officers

(2)	Noncertified Personnel	Clerical Assistants
Teacher Assistants
Custodians

(3)	Support Services	Summer School/Remediation
Dropout Prevention
Community Schools
Duty-Free Period
Sports Medicine
Child Nutrition
Staff Development
Textbooks
Consolidated Allotment
For budgetary reporting and accounting purposes, the local school administrative units shall continue to provide expenditure data at such detailed levels as required by the State Board of Education.  Presentation, control, and reporting of salary and salary-related objects of expenditure shall be in accordance with applicable statutes and the directives of the Director of the Budget.
(b) The General Assembly encourages local school administrative units to become more efficient in their current operations by (i) implementing the recommendations in the State Auditor's performance audits, (ii) using the funds in the combined funding category created in subsection (a) of this section to contract out for services where private sector resources are available, and (iii) working with other local school administrative units to deliver shared services.
(c)	The General Assembly finds that because of the increased management flexibility provided to local school administrative units in this section, local school administrative units can operate more efficiently; therefore, appropriations to the combined funding categories created in subsection (a) of this section are decreased by five percent (5%).  As an incentive to increase this efficiency, the local school administrative units may, notwithstanding any other provision of law, retain at the end of each fiscal year twenty-five percent (25%) of the unencumbered and unexpended funds in the combined funding categories created in subsection (a) of this section.
(d)	There is appropriated from the General Fund to the Department of Public Education, the sum of five hundred thousand dollars ($500,000) for the 1993-94 fiscal year and the sum of five hundred thousand dollars ($500,000) for the 1994-95 fiscal year to fund model programs to increase efficiency in local school administrative unit operations and to provide incentive awards to local school administrative units that operate efficiently.  The funds shall be awarded by the State Board of Education based upon proposals submitted by the local school administrative units or by multiple local governments in a single county or adjoining counties.
(e)  This section becomes effective July 1, 1993.
––-STABILIZE SCHOOL ACCOUNTABILITY.
Sec. 3.  (a)	G.S. 115C-238.1 reads as rewritten:
"§ 115C-238.1.  Performance-based Accountability Program; development and implementation by State Board.
The General Assembly believes that all children can learn. It is the intent of the General Assembly that the mission of the public school community is to challenge with high expectations each child to learn, to achieve, and to fulfill his or her potential. With that mission as its guide, the State Board of Education shall develop and implement a Performance-based Accountability Program.  The primary goal of the Program shall be to improve student performance.  The State Board of Education shall adopt:
(1)	Procedures and guidelines through which, beginning with the 1990-91 fiscal year, local school administrative units may participate in the Program;
(2)	Guidelines for developing local school improvement plans with three-year student performance goals and annual milestones to measure progress in meeting those goals; and
(3)	A set of student performance indicators for measuring and assessing student performance in the participating local school administrative units.  These indicators may include attendance rates, dropout rates, test scores, parent involvement, and post-secondary outcomes.
Because local school administrative units need time to adapt to changes in the Performance-based Accountability Program, the General Assembly urges the State Board of Education to minimize departmental changes to the Performance-based Accountability Program until July 1, 1995.  It is the intent of the General Assembly also to minimize legislative changes to the Performance-based Accountability Program until July 1, 1995."
(b)	G.S. 115C-12(9) reads as rewritten:
"(9)	Miscellaneous Powers and Duties. – All the powers and duties exercised by the State Board of Education shall be in conformity with the Constitution and subject to such laws as may be enacted from time to time by the General Assembly. Among such duties are:
a.	To certify and regulate the grade and salary of teachers and other school employees.
b.	To adopt and supply textbooks.
c.	To adopt rules requiring all local boards of education to implement the Basic Education Program on an incremental basis within funds appropriated for that purpose by the General Assembly and by units of local government.  Beginning with the 1991-92 school year, the rules shall require each local school administrative unit to implement fully the standard course of study in every school in the State in accordance with the Basic Education Program so that every student in the State shall have equal access to the curriculum as provided in the Basic Education Program and the standard course of study.
		The Board shall establish benchmarks by which to measure the progress that each local board of education has made in implementing the Basic Education Program.  The Board shall report to the Joint Legislative Education Oversight Committee and to the General Assembly by December 31, 1991, and by February 1 of each subsequent year on each local board's progress in implementing the Basic Education Program, including the use of State and local funds for the Basic Education Program.
		The Board shall develop a State accreditation program that meets or exceeds the standards and requirements of the Basic Education Program. The Board shall require each local school administrative unit to comply with the State accreditation program to the extent that funds have been made available to the local school administrative unit for implementation of the Basic Education Program.  Because local school administrative units need time to adapt to changes in the State accreditation program, the General Assembly urges the State Board of Education to minimize departmental changes to the Performance-based Accountability Program until July 1, 1995.  It is the intent of the General Assembly also to minimize legislative changes to the State accreditation program until July 1, 1995.
		The Board shall use the State accreditation program to monitor the implementation of the Basic Education Program.
c1.	To issue an annual 'report card' for the State and for each local school administrative unit, assessing each unit's efforts to improve student performance and taking into account progress over the previous years' level of performance and the State's performance in comparison with other states.  This assessment shall take into account demographic, economic, and other factors that have been shown to affect student performance.  Because local school administrative units need time to adapt to changes in the Performance-based Accountability Program, the General Assembly urges the State Board of Education to minimize departmental changes to the annual report card until July 1, 1995.  It is the intent of the General Assembly also to minimize legislative changes to the annual report card until July 1, 1995.
c2.	To develop management accountability indicators to measure the efficiency and appropriate use of staff in each school and at the administrative office.  Staff development for school administrators shall be a high priority of the Department of Public Instruction.
c3.	To develop a system of school building improvement reports for each school building. The purpose of school building improvement reports is to measure improvement in student performance at each school building from year to year, not to compare school buildings. The Board may consider for inclusion in the building reports the following criteria: test scores, the success of graduating students in postsecondary institutions, attendance, graduation and dropout rates, the numbers of children enrolled in free lunch or Chapter 1 programs, the education level of the parents of children enrolled in the school, the teaching experience of the school staff, and whether the building has been successful in meeting the goals of the building and systemwide plans developed in accordance with G.S. 115C-238.1 through G.S. 115C-238.6.  Local school administrative units shall produce school building improvement reports by March 15, 1995, and annually thereafter.  Each report shall be based on building-level data for the prior school year.
d.	To formulate rules and regulations for the enforcement of the compulsory attendance law.
e.	To manage and operate a system of insurance for public school property, as provided in Article 38 of this Chapter.
		In making substantial policy changes in administration, curriculum, or programs the Board should conduct hearings throughout the regions of the State, whenever feasible, in order that the public may be heard regarding these matters."
(c)	This section is effective upon ratification.
––-LINK SCHOOL FUNDING/PERFORMANCE.
Sec. 4.  (a)	G.S. 115C-64.2 reads as rewritten:
"§ 115C-64.2.  Development of plans to improve student performance and decrease dropout rates.
(a)	Each local school administrative unit that is identified as a low performing local school administrative unit shall submit to the State Board of Education a plan for improving student performance and decreasing dropout rates.  The plan may include requests for the State Board to waive State laws and regulations so as to grant the unit the fiscal and programmatic flexibility necessary to implement the plan.  The State Board may grant such waivers if it finds that the waivers are necessary and appropriate for the unit to improve student performance and decrease dropout rates.  The State Board may also withhold State funding from an identified unit if it deems it necessary to make the unit more accountable for the use of State funds.
(b)	It is the goal of the General Assembly to provide significant assistance to an identified unit and to enable the unit to implement successfully its improvement plan. To accomplish these goals the Department of Public Instruction shall contact each identified unit, notify it of the services available through the Department to assist the unit in developing its plan and in improving student performance and decreasing dropout rates, and assist the unit in developing and implementing its plan. Department services shall include monitoring the unit's progress, and tutoring and counseling unit personnel in strategies to reach the unit's goals.  The Department shall also make challenge grant funds available to identified units on a competitive basis as an incentive to improve."
(b)	There is appropriated from the General Fund to the Department of Public Education, Department of Public Instruction, the sum of one million two hundred fifty thousand dollars ($1,250,000) for the 1993-94 fiscal year and the sum of one million two hundred fifty thousand dollars ($1,250,000) for the 1994-95 fiscal year for incentive grants for local school administrative units identified as low performing local school administrative units.
(c)	There is appropriated from the General Fund to the Department of Public Education, Department of Public Instruction, the sum of three hundred fifty thousand dollars ($350,000) for the 1993-94 fiscal year and the sum of three hundred fifty thousand dollars ($350,000) for the 1994-95 fiscal year for incentive grants for local school administrative units identified by the Department of Public Instruction as high performing local school administrative units.
(d)	This section becomes effective July 1, 1993.
––-SCHOOL ACCOUNTABILITY MANDATORY.
Sec. 5.  (a)	G.S. 115C-238.2 reads as rewritten:
"§ 115C-238.2.  Local participation in the Program mandatory; the benefits of the program.
(a)	Local school administrative units shall participate in the Performance-based Accountability Program.
(b)	As a result of the Performance-based Accountability Program, local school administrative units:
(1)	Are exempt from State requirements to submit reports and plans, other than local school improvement plans, to the Department of Public Education; they are not exempt from federal requirements to submit reports and plans to the Department.
(2)	Are subject to the performance standards but not the opportunity standards or the staffing ratios of the State Accreditation Program.  The performance standards in the State Accreditation Program, modified to reflect the results of end-of-course and end-of-grade tests, may serve as the basis for developing the student performance indicators adopted by the State Board of Education pursuant to G.S. 115C-238.1.
(3)	May receive funds for differentiated pay for teachers and administrators, in accordance with G.S. 115C-238.4, if they elect to participate in a differentiated pay plan.
(4)	May be allowed increased flexibility in the expenditure of State funds, in accordance with G.S. 115C-238.5.
(5)	May be granted waivers of certain State laws, regulations, and policies that inhibit their ability to reach local accountability goals, in accordance with G.S. 115C-238.6(a).
(6)	Shall continue to use the Teacher Performance Appraisal Instrument (TPAI) for evaluating beginning teachers during the first three years of their employment; they may, however, develop other evaluation approaches for teachers who have attained career status.
		The Department of Public Instruction shall provide technical assistance, including the provision of model evaluation processes and instruments, to local school administrative units that elect to develop dual personnel evaluation processes.  A dual personnel evaluation process includes (i) an evaluation designed to provide information to guide teachers in their professional growth and development, and (ii) an evaluation to provide information to make personnel decisions pertaining to hiring, termination, promotion, and reassignment."
(b)	G.S. 115C-238.3(a) reads as rewritten:
"(a)	Development of systemwide plan by the local board of education. – The board of education of each local school administrative unit shall develop and submit a local school improvement plan for the entire local school administrative unit to the State Superintendent of Public Instruction before April 15 of the fiscal year preceding the fiscal year in which participation is sought.
A systemwide improvement plan shall remain in effect for no more than three years."
(c)	G.S. 115C-238.5 reads as rewritten:
"§ 115C-238.5.  Flexible funding.
(a)	For fiscal years beginning with the 1990-91 fiscal year, the State Board of Education, only upon the recommendation of the State Superintendent, shall increase flexibility in the use of State funds for schools by combining into a single funding category the existing categories for instructional materials, supplies and equipment, textbooks, testing support, and drivers education except for funds for classroom teachers of drivers education.  
(b)	Notwithstanding subsection (a) of this section, for fiscal years beginning with the 1992-93 fiscal year, State funds for textbooks shall be set out in a separate allotment category.
(c)	Local boards of education shall provide maximum flexibility in the use of funds to individual schools to enable them to accomplish their individual schools' goals."
(d)	G.S. 115C-238.6(b) reads as rewritten:
"(b)	Local school administrative units shall continue to receive funds for differentiated pay, if their local plans call for differentiated pay, so long as (i) they demonstrate satisfactory progress toward student performance goals set out in their local school improvement plans; or (ii) once their local goals are met, they continue to achieve their local goals and they otherwise demonstrate satisfactory performance, as determined by the State Superintendent in accordance with guidelines set by the State Board of Education.
If the local school administrative units do not achieve their goals after two years, the Department of Public Instruction shall provide them with technical assistance to help them meet their goals.  If after one additional year they do not achieve their goals, the State Board of Education shall decide what steps shall be taken to improve the education of students in the unit."
(e)  This section becomes effective July 1, 1993.
––-RAISE BEP INSTRUCTIONAL STDS.
Sec. 6.  (a)	G.S. 115C-12(9) reads as rewritten:
"(9)	Miscellaneous Powers and Duties. – All the powers and duties exercised by the State Board of Education shall be in conformity with the Constitution and subject to such laws as may be enacted from time to time by the General Assembly. Among such duties are:
a.	To certify and regulate the grade and salary of teachers and other school employees.
b.	To adopt and supply textbooks.
c.	To adopt rules requiring all local boards of education to implement the Basic Education Program on an incremental basis within funds appropriated for that purpose by the General Assembly and by units of local government.  Beginning with the 1991-92 school year, the rules shall require each local school administrative unit to implement fully the standard course of study in every school in the State in accordance with the Basic Education Program so that every student in the State shall have equal access to the curriculum as provided in the Basic Education Program and the standard course of study.
		The Board shall establish benchmarks by which to measure the progress that each local board of education has made in implementing the Basic Education Program.  The Board shall report to the Joint Legislative Education Oversight Committee and to the General Assembly by December 31, 1991, and by February 1 of each subsequent year on each local board's progress in implementing the Basic Education Program, including the use of State and local funds for the Basic Education Program.
		The Board shall develop a State accreditation program that meets or exceeds the standards and requirements of the Basic Education Program. The Board shall require each local school administrative unit to comply with the State accreditation program to the extent that funds have been made available to the local school administrative unit for implementation of the Basic Education Program.
		The Board shall use the State accreditation program to monitor the implementation of the Basic Education Program.
c1.	To issue an annual 'report card' for the State and for each local school administrative unit, assessing each unit's efforts to improve student performance and taking into account progress over the previous years' level of performance and the State's performance in comparison with other states.  This assessment shall take into account demographic, economic, and other factors that have been shown to affect student performance.
c2.	To develop management accountability indicators to measure the efficiency and appropriate use of staff in each school and at the administrative office.  Staff development for school administrators shall be a high priority of the Department of Public Instruction.
c3.	To develop a system of school building improvement reports for each school building. The purpose of school building improvement reports is to measure improvement in student performance at each school building from year to year, not to compare school buildings. The Board may consider for inclusion in the building reports the following criteria: test scores, the success of graduating students in postsecondary institutions, attendance, graduation and dropout rates, the numbers of children enrolled in free lunch or Chapter 1 programs, the education level of the parents of children enrolled in the school, the teaching experience of the school staff, and whether the building has been successful in meeting the goals of the building and systemwide plans developed in accordance with G.S. 115C-238.1 through G.S. 115C-238.6.  Local school administrative units shall produce school building improvement reports by March 15, 1995, and annually thereafter.  Each report shall be based on building-level data for the prior school year.
c4.	To establish a regular process, including an advisory panel of accountability experts and public school personnel, to review and revise the minimum standards that appear in the annual report card, the end-of-course and end-of-grade tests, and the Basic Education Program Standard Course of Study.  As part of the process, special attention shall be given to the effectiveness of the Basic Education Standard Program Course of Study and local instructional practices, as reflected in assessment results.  Also, the use and function of the 'Index of Advantagement' on the annual report cards shall be studied and refined, in collaboration with appropriate State university experts.
d.	To formulate rules and regulations for the enforcement of the compulsory attendance law.
e.	To manage and operate a system of insurance for public school property, as provided in Article 38 of this Chapter.
		In making substantial policy changes in administration, curriculum, or programs the Board should conduct hearings throughout the regions of the State, whenever feasible, in order that the public may be heard regarding these matters."
(b)	This section becomes effective July 1, 1993.
––-SCHOOLS/ACCOUNTABILITY.
Sec. 7.  (a)	There is appropriated from the General Fund to the Department of Public Education, Department of Public Instruction, the sum of three hundred sixty thousand dollars ($360,000) for the 1993-94 fiscal year and the sum of three hundred sixty thousand dollars ($360,000)  for the 1994-95 fiscal year to augment the Technical Assistance Center staffs with regional assessment coordinators and accountability experts to help local school administrative units implement the Performance-based Accountability Program and the end-of-course and end-of-grade tests.  The Department shall intensify the staff development and communications program to promote the outcomes-based focus of these programs and to assist users of data with interpreting and using the evaluative data.
(b)	This section becomes effective July 1, 1993.