GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

S	1 

SENATE BILL 1457

Short Title:  Early Childhood Initiatives.	(Public)

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Sponsors: Senators Cooper; Soles, Speed, Lucas, Kerr, Gulley, Perdue, Plyler, Hoyle, Martin of Pitt, Winner, Dannelly, Jordan, Albertson, Rand, Conder, Odom, Hobbs, Plexico, Edwards, Sherron, Parnell, and Martin of Guilford.

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Referred to:  Appropriations.

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June 3, 1996

A BILL TO BE ENTITLED
AN ACT TO APPROPRIATE FUNDS TO IMPLEMENT CERTAIN CHANGES RECOMMENDED BY THE SMART START AUDIT TO THE EARLY CHILDHOOD INITIATIVES PROGRAM.
The General Assembly of North Carolina enacts:
Section 1.  The intent of the General Assembly is to strengthen the accountability and effectiveness of the Early Childhood Education and Development Initiatives Program, as set forth in Part 10B of Article 3 of Chapter 143B of the General Statutes.
In order to accomplish this goal, the General Assembly finds that, to the extent practicable, the findings and recommendations of the independent performance audit prepared pursuant to subdivision (1) of Section 27A of Chapter 324 of the 1995 Session Laws by the North Carolina Partnership for Children, Inc., the Department of Human Resources, and the local partnerships. 
Sec. 2.  G.S. 143B-168.12(a) reads as rewritten:
"(a)	In order to receive State funds, the following conditions shall be met:
(1)	 The North Carolina Partnership shall have a Board of Directors consisting of the following 39 members:
a.	The Secretary of Human Resources, ex officio;
b.	The Secretary of Environment, Health, and Natural Resources, ex officio;
c.	The Superintendent of Public Instruction, ex officio;
d.	The President of the Department of Community Colleges, ex officio;
e.	One resident from each of the 1st, 3rd, 5th, 7th, 9th, and 11th Congressional Districts, appointed by the President Pro Tempore of the Senate;
f.	One resident from each of the 2nd, 4th, 6th, 8th, 10th, and 12th Congressional Districts, appointed by the Speaker of the House of Representatives;
g.	Seventeen members, of whom four shall be members of the party other than the Governor's party, appointed by the Governor;
h.	The President Pro Tempore of the Senate, or a designee;
i.	The Speaker of the House of Representatives, or a designee;
j.	The Majority Leader of the Senate, or a designee;
k.	The Majority Leader of the House of Representatives, or a designee;
l.	The Minority Leader of the Senate, or a designee; and
m.	The Minority Leader of the House of Representatives, or a designee.
(2)	The North Carolina Partnership shall agree to adopt procedures for its operations that are comparable to those of Article 33C of Chapter 143 of the General Statutes, the Open Meetings Law, and Chapter 132 of the General Statutes, the Public Records Law, and provide for enforcement by the Department.
(3)	The North Carolina Partnership shall oversee the development and implementation of the local demonstration projects as they are selected.
(4)	The North Carolina Partnership shall develop and implement a comprehensive fiscal accountability plan to ensure the fiscal integrity and accountability of State funds appropriated to it and to the local partnerships.  The fiscal accountability plan shall, at a minimum, include a uniform, standardized system of accounting, internal controls, payroll, fidelity bonding, and chart of accounts.
(5)	The North Carolina Partnership shall develop and implement a centralized accounting and contract management and monitoring system which incorporates features of the required standardized accountability plan described in subdivision (4) of subsection (a) of this section.  The North Carolina Partnership shall require the following local partnerships to participate in the centralized accountability system developed by the North Carolina Partnership:
a.	Local partnerships which have significant deficiencies in their accounting systems, internal controls, and contract management and contract monitoring systems, as determined by the annual financial audit conducted by the Office of the State Auditor; and
b.	Local partnerships which are in the first two years of operation following their selection.  At the end of this two-year period, local partnerships shall continue to participate in the centralized accounting and contract management and monitoring system.  With the approval of the North Carolina Partnership, local partnerships may perform accounting and contract management and monitoring functions at the local level using the standardized and uniform accounting system, internal controls, and contract management and contract monitoring systems developed by the North Carolina Partnership.
	Local partnerships which otherwise would not be required to participate in the centralized accounting, contract management and monitoring system may voluntarily choose to participate in the system.  Participation or nonparticipation shall be for a minimum of two years, unless, in the event of nonparticipation, any partnership's annual financial audit reveals serious deficiencies in accounting, contract management, or monitoring.
(6)	The North Carolina Partnership shall recommend a formula for allocating direct services funds appropriated for this purpose to local partnerships.  The formula shall incorporate 'full funding' allocations, as described in the performance audit authorized in Section 27A of Chapter 324 of the 1995 Session Laws, for each local partnership as determined by the Department based on its existing allocation formula, and shall include a base amount equal to a local partnership's full allocation of direct services funds, or the average allocation for all partnerships when the program is fully funded, whichever is less.  No local partnership, in its first year of receiving direct services funding, shall receive more than seventy-five percent (75%) of its direct services allocation.  The funds remaining after these base allocations are made shall be allocated from all available funds appropriated for direct services in any fiscal year on a pro rata basis to local partnerships which received less than their full allocation.
(7)	To the extent practicable, the North Carolina Partnership shall adjust its recommended allocations on the basis of local partnerships' performance in meeting the outcome goals and objectives of the North Carolina Partnership and the goals and objectives set forth by local partnerships in their approved annual program plans.
		The North Carolina Partnership may contract with an independent outside evaluator to conduct the performance assessments of local partnerships.  Factors which may be used in assessing the performance of local partnerships include board involvement, family and community outreach, collaboration among public and private service agencies, and family involvement.
		On the basis of performance assessments, local partnerships annually shall be rated 'superior', 'satisfactory', or 'needs improvement'.  Local partnerships rated 'superior' shall receive, to the extent that funds are available, a ten percent (10%) increase in their annual funding allocation.  Local partnerships rated 'satisfactory' shall receive their annual funding allocation.  Local partnerships rated 'needs improvement' shall receive ninety percent (90%) of their annual funding allocation.
(8)	The North Carolina Partnership shall establish a local partnership advisory committee comprised of 15 members.  Eight of the members shall be chairs of local partnerships' board of directors, and seven shall be staff of local partnerships.  Members shall be chosen by the Chairman of the North Carolina Partnership from a pool of candidates nominated by their respective boards of directors.  The local partnership advisory committee shall serve in an advisory capacity to the North Carolina Partnership and shall establish a schedule of regular meetings.  Members shall serve two-year terms and may not serve more than two consecutive terms.  Members shall be chosen from local partnerships on a rotating basis.  The advisory committee shall annually elect a chair from among its members."
Sec. 3.  G.S. 143B-168.13(a) reads as rewritten:
"(a)	The Department shall:
(1)	Develop a statewide process, in cooperation with the North Carolina Partnership, to select the local demonstration projects. The first 12 local demonstration projects developed and implemented shall be located in the 12 congressional districts, one to a district. The locations of subsequent selections of local demonstration projects shall represent the various geographic areas of the State.
(2)	Develop and conduct a statewide needs and resource assessment every third year, beginning in the 1996-97 fiscal year.  This needs assessment shall be conducted in cooperation with the North Carolina Partnership and with the local partnerships.  The data and findings of this needs assessment shall form the basis for annual program plans developed by local partnerships and approved by the North Carolina Partnership.
(3)	Provide technical and administrative assistance to local partnerships, particularly during the first year after they are selected under this Part to receive State funds. The Department, at any time, may authorize the North Carolina Partnership or a governmental or public entity to do the contracting for one or more local partnerships. After a local partnership's first year, the Department may allow the partnership to contract for itself.
(4)	Adopt, in cooperation with the North Carolina Partnership, any rules necessary to implement this Part, including rules to ensure that no State funds or local funds used to supplant these State funds shall be used for personnel sick leave and annual leave benefits not allowed to State employees. In order to allow local partnerships to focus on the development of long-range plans in their initial year of funding, the Department may adopt rules that limit the categories of direct services for young children and their families for which funds are made available during the initial year.
	(6)	The Department of Human Resources shall annually update its funding formula using the most recent data available.  These allocations shall serve as the basis for determining 'full funding' allocations for each local partnership."
Sec. 4.  (a) G.S. 143B-168.14(a) reads as rewritten:
"(a)	In order to receive State funds, the following conditions shall be met:
(1)	Each local demonstration project shall be coordinated by a new local partnership responsible for developing a comprehensive, collaborative, long-range plan of services to children and families in the service-delivery area. The board of directors of each local partnership shall consist of members including representatives of public and private nonprofit health and human service agencies, day care providers, the business community, foundations, county and municipal governments, local education units, and families. The Department, in cooperation with the North Carolina Partnership, may specify in its requests for applications the local agencies that shall be represented on a local board of directors. No existing local, private, nonprofit 501(c)(3) organization, other than one established on or after July 1, 1993, and that meets the guidelines for local partnerships as established under this Part, shall be eligible to apply to serve as the local partnership for the purpose of this Part.
(2)	Each local partnership shall agree to adopt procedures for its operations that are comparable to those of Article 33C of Chapter 143 of the General Statutes, the Open Meetings Law, and Chapter 132 of the General Statutes, the Public Records Law, and provide for enforcement by the Department.
(3)	Each local partnership shall adopt procedures to ensure that all personnel who provide services to young children and their families under this Part know and understand their responsibility to report suspected child abuse, neglect, or dependency, as defined in G.S. 7A-517.
(4)	Each local partnership shall participate in the uniform, standardized accountability system developed and adopted by the North Carolina Partnership.
(5)	Each local partnership shall have a minimum resident population of 150,000 or represent a minimum of three contiguous counties.  Population estimates of the Office of State Planning shall be used to determine whether the population requirements of this subdivision have been met."
(b)	Multicounty local partnerships existing as of the effective date of this act shall be exempt from the requirements described in subdivision (5) of G.S. 143B-168.14(a) above.  Local partnerships must be in compliance with this section effective July 1, 1997.
Sec. 5.  G.S. 143B-168.15 reads as rewritten:
"§ 143B-168.15.  Use of State funds.
(a)	State funds allocated to local projects for services to children and families shall be used to meet assessed needs, expand coverage, and improve the quality of these services. The local plan shall address the assessed needs of all children to the extent feasible. It is the intent of the General Assembly that the needs of both young children below poverty who remain in the home, as well as the needs of young children below poverty who require services beyond those offered in child care settings, be addressed. Therefore, as local partnerships address the assessed needs of all children, they should devote an appropriate amount of their State allocations, considering these needs and other available resources, to meet the needs of children below poverty and their families.
(b)	Depending on local, regional, or statewide needs, funds may be used to support activities and services that shall be made available and accessible to providers, children, and families on a voluntary basis. Of the funds allocated to local partnerships that are designated by the Secretary for direct services, seventy-five percent (75%) shall be used for any one or more of the following activities and services:
(1)	Child day care services, including:
a.	Child day care subsidies to reduce waiting lists;
b.	Raising the county child day care subsidy rate to the State market rate, if applicable, in return for improvements in the quality of child day care services;
c.	Raising the income eligibility for child day care subsidies to seventy-five percent (75%) of the State median family income;
d.	Start-up funding for child day care providers;
e.	Assistance to enable child day care providers to conform to licensing and building code requirements;
f.	Child day care resources and referral services;
g.	Enhancement of the quality of child day care provided;
h.	Technical assistance for child day care providers;
i.	Quality grants for child day care centers or family child day care homes;
j.	Expanded services or enhanced rates for children with special needs;
k.	Head Start services;
l.	Development of comprehensive child day care services that include child health and family support;
m.	Activities to reduce staff turnover;
n.	Activities to serve children with special needs;
o.	Transportation services related to providing child day care services;
p.	Evaluation of plan implementation of child day care services; and
q.	Needs and resources assessments for child day care services.
(2)	Family- and child-centered services, including early childhood education and child development services, including:
a.	Enhancement of the quality of family- and child-centered services provided;
b.	Technical assistance for family- and child-centered services;
c.	Needs and resource assessments for family- and child-centered services;
d.	Home-centered services; and
e.	Evaluation of plan implementation of family- and child-centered services.
(3)	Other appropriate activities and services for child day care providers and for family- and child-centered services, including:
a.	Staff and organizational development, leadership and administrative development, technology assisted education, and long-range planning; and
b.	Procedures to ensure that infants and young children receive needed health, immunization, and related services.
(c)	Long-term plans for local projects that do not receive their full allocation in the first year, other than those selected in 1993, should consider how to meet the assessed needs of low-income children and families within their neighborhoods or communities. These plans also should reflect a process to meet these needs as additional allocations and other resources are received.
(d)	State funds designated for start-up and related activities may be used for capital expenses or to support activities and services for children, families, and providers. State funds designated to support direct services for children, families, and providers shall not be used for major capital expenses unless the North Carolina Partnership approves this use of State funds based upon a finding that a local partnership has demonstrated that (i) this use is a clear priority need for the local plan, (ii) it is necessary to enable the local partnership to provide services and activities to underserved children and families, and (iii) the local partnership will not otherwise be able to meet this priority need by using State or federal funds available to that local partnership.  The funds approved for capital projects in any two consecutive fiscal years may not exceed ten percent (10%) of the total funds for direct services allocated to a local partnership in those two consecutive fiscal years.
(e)	State funds allocated to local partnerships shall not supplant current expenditures by counties on behalf of young children and their families, and maintenance of current efforts on behalf of these children and families shall be sustained. State funds shall not be applied without the Secretary's approval where State or federal funding sources, such as Head Start, are available or could be made available to that county.
(f)	Local partnerships may carry over funds from one fiscal year to the next, subject to the following conditions:
(1)	Local partnerships in their first year of receiving direct services funding may, on a one-time basis only, carry over any unspent funds to the subsequent fiscal year.
(2)	Any local partnership may carry over any unspent funds to the subsequent fiscal year, subject to the limitation that funds carried over may not exceed the increase in funding the local partnership received during the current fiscal year over the prior fiscal year.
(g)	Not less than thirty percent (30%) of each local partnership's direct services allocation shall be used to expand child day care subsidies.  To the extent practicable, these funds shall be used to enhance the affordability, availability, and quality of child day care services as described in this section.  Notwithstanding any other provision of law, funds allocated for child day care subsidies shall not be considered in calculating the base funding amount for determining the cash and in-kind matching requirements which the North Carolina Partnership or local partnerships may be required to meet."
Sec. 6.  In addition to the specific changes set forth in Sections 2 through 5 of this act, the Department of Human Resources, the North Carolina Partnership, and the local partnerships also shall do the following:
(1)	Plan and prepare for effective Early Childhood Initiatives Program implementation in those counties not yet phased into the overall program.
(2)	Maintain the current State level of administrative support for the Early Childhood Initiatives Program.
(3)	Develop a statewide resource and referral data base.
(4)	Continue the evaluation of the Early Childhood Initiatives Program by the Frank Porter Graham Child Development Center.
Sec. 7. Effective July 1, 1996, there is appropriated from the General Fund to the Department of Human Resources the sum of twenty-one million two hundred thousand dollars ($21,200,000) for the 1996-97 fiscal year to fund this act.
Sec. 8.  Except as otherwise provided in this act, this act is effective upon ratification.