GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	5 

SENATE BILL 1366
Appropriations Committee Substitute With Amendments Adopted 6/30/98
Third Edition Engrossed 7/1/98
House Committee Substitute Favorable 7/21/98
Fifth Edition Engrossed 7/22/98

Short Title:  Appropriations Act of 1998.	(Public)

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Sponsors:

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Referred to:  

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May 27, 1998

A BILL TO BE ENTITLED
AN ACT TO MODIFY THE CURRENT OPERATIONS AND CAPITAL IMPROVEMENTS APPROPRIATIONS ACT OF 1997 AND TO MAKE OTHER CHANGES IN THE BUDGET OPERATION OF THE STATE.
The General Assembly of North Carolina enacts:

PART I.  INTRODUCTION AND TITLE OF ACT

INTRODUCTION
Section 1.  The appropriations made in this act are for maximum amounts necessary to provide the services and accomplish the purposes described in the budget.  Savings shall be effected where the total amounts appropriated are not required to perform these services and accomplish these purposes and, except as allowed by the Executive Budget Act, or this act, the savings shall revert to the appropriate fund at the end of each fiscal year.

TITLE OF ACT
Section 1.1.  This act shall be known as the "Current Operations Appropriations and Capital Improvement Appropriations  Act of 1998".

PART II.  CURRENT OPERATIONS/GENERAL FUND
Section 2.  Appropriations from the General Fund of the State for the maintenance of the State departments, institutions, and agencies, and for other purposes as enumerated are made for the fiscal year ending June 30, 1999, according to the schedule that follows.  Amounts set out in brackets are reductions  from General Fund appropriations for the 1998-99 fiscal year.
Current Operations - General Fund	1998-99

General Assembly	$    (500,000)

Judicial Department	10,288,571

Office of the Governor
01.	Office of the Governor	(77,255)
02.	Office of State Budget
and Management	129,703
03.	Office of State Planning	559,968
04.	Housing Finance Agency	2,000,000

Office of the Lieutenant Governor	25,000

Department of Secretary of State	832,967

Department of State Auditor	1,583,258

Department of State Treasurer	413,593

Department of Public Education	126,854,583

Department of Justice	3,241,460

Department of Administration	290,482

Department of Agriculture and 
Consumer Services	5,337,391

Department of Labor	220,000

Department of Insurance	-0-

Department of Transportation	-

Department of Environment and
Natural Resources	3,895,259

Office of Administrative Hearings	277,641

Rules Review Commission	-

Department of Health and Human Services
01.	Office of the Secretary	8,828,375
02.	Division of Aging	8,546,044
03.	Division of Child Development	23,954,875
04.	Division of Services for the
Deaf and Hard of Hearing	-0-
05.	Division of Social Services	(14,171,926)
06.	Division of Health Services	(1,688,000)
07.	Division of Medical Assistance	(46,433,341)
08.	Division of Services
for the Blind	-0-
09.	Division of Mental Health,
Developmental Disabilities, and
Substance Abuse Services	49,753,003
10.	Division of Facility Services	704,402
11.	Division of Vocational
Rehabilitation Services	2,200,000
12.	Division of Youth Services	1,800,000
Total Department of Health and Human Services	33,493,432

Department of Correction	(21,548,959)

Department of Commerce
01.	Commerce	9,004,825
02.	Biotechnology Center	(25,483)
03.	MCNC	2,000,000
04.	Rural Economic Development
Center	8,662,338
05.	State Aid to non-State
Entities	8,941,400
06.	State Information Processing Services	5,871,630

Department of Revenue	10,446,050

Department of Cultural Resources	10,183,493

Department of Crime Control
and Public Safety	1,572,586

Office of the State Controller	2,146,988

University of North Carolina - Board
of Governors
01.	General Administration	(38,720)
02.	University Institutional
Programs	40,365,680
03.	Related Educational Programs	7,177,770
04.	University of North Carolina
at Chapel Hill
a.  Academic Affairs	(665,108)
b.  Health Affairs	(702,514)
c.  Area Health Education
    Centers	(39,753)
05.	North Carolina State University
at Raleigh
a.  Academic Affairs	(355,191)
b.  Agricultural Research Service	(42,451)
c.  Cooperative Extension Service	(33,652)
06.	University of North Carolina at
Greensboro	(232,914)
07.	University of North Carolina at
Charlotte	(111,070)
08.	University of North Carolina at
Asheville	(20,866)
09.	University of North Carolina at
Wilmington	(40,663)
10.	East Carolina University
a.  Academic Affairs	(191,207)
b.  Division of Health Affairs	(42,480)
11.	North Carolina Agricultural and
Technical State University	(51,643)
12.	Western Carolina University	(70,087)
13.	Appalachian State University	(151,650)
14.	The University of North
Carolina at Pembroke	(19,141)
15.	Winston-Salem State University	(20,759)
16.	Elizabeth City State
University	(58,252)
17.	Fayetteville State University	(24,605)
18.	North Carolina Central
University	(3,525)
19.	North Carolina School of the
Arts	(12,280)
20.	North Carolina School of
Science and Mathematics.	(9,897)
UNC Hospitals at Chapel Hill	(36,783)
Total University of North
Carolina - Board of Governors	44,568,239

Department of Community Colleges	32,337,705

State Board of Elections	745,000

Contingency and Emergency	-

Reserve for Compensation Increase	386,442,966

Retirement Rate Adjustment	 (44,381,870)

Reserve for Salary Adjustments	-

Debt Service	(14,179,574)

Debt Service - Federal	-

Postage Reduction	-

Reserve for Juvenile Justice Initiatives	6,000,000

Reserve for Travel Rate Increase
for State Employees	-0-

Reserve for Global TransPark	3,500,000

GRAND TOTAL CURRENT OPERATIONS –
GENERAL FUND	$641,153,387

PART III. CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND
Section 3.  Appropriations from the Highway Fund of the State for the maintenance and operation of the Department of Transportation, and for other purposes as enumerated, are made for the fiscal year ending June 30, 1999, according to the schedule that follows.   Amounts set out in brackets are reductions from Highway Fund appropriations for the 1998-99 fiscal year.

Current Operations - Highway Fund	1998-99      

Department of Transportation
01.	Administration  	$   14,719,314
02.	Operations	-    
03.	Construction and Maintenance
a.	Construction
(01)	Primary Construction    	-    
(02)	Secondary Construction	(2,050,000)
(03)	Urban Construction	-    
(04)	Access and Public
Service Roads	-    
(05)	Discretionary Fund	-    
(06)	Spot Safety Construction	-    
b.	State Funds to Match Federal
Highway Aid	(33,153,153)
c.	State Maintenance	22,974,044
d.	Ferry Operations	-    
e.	Capital Improvements	4,070,348
f.	State Aid to Municipalities	(2,050,000)
g.	State Aid for Public
Transportation and Railroads	13,400,000
h.	OSHA - State	-   
04.	Governor's Highway Safety Program	-   
05.	Division of Motor Vehicles	974,653
06.	Reserves and Transfers	   (12,501,573)
GRAND TOTAL CURRENT OPERATIONS/
  HIGHWAY FUND 	$    6,383,633

PART IV.  HIGHWAY TRUST FUND
Section 4.  Appropriations from the Highway Trust Fund are made for the fiscal year ending June 30, 1999, according to the schedule that follows.   Amounts set out in brackets are reductions from Highway Trust Fund appropriations for the 1998-99 fiscal year.

Highway Trust Fund	1998-99

01.	Intrastate System	($ 20,194,558)
02.	Secondary Roads Construction	(393,452)
03.	Urban Loops	(8,165,838)
04.	State Aid - Municipalities	(2,118,880)
05.	Program Administration	        143,380
GRAND TOTAL/HIGHWAY TRUST FUND	($ 30,729,348)

PART V.  BLOCK GRANT FUNDS
Requested by:   Representatives Gardner, Cansler, Clary, Howard, Berry
DHHS BLOCK GRANT PROVISIONS
Section 5. (a)	Appropriations from federal block grant funds are made for the fiscal year ending June 30, 1999, according to the following schedule:

COMMUNITY SERVICES BLOCK GRANT

01.	Community Action Agencies	$ 11,573,346

02.	Limited Purpose Agencies	642,964

03.	Department of Health and Human Services
to administer and monitor
the activities of the
Community Services Block Grant	642,964

TOTAL COMMUNITY SERVICES BLOCK GRANT	$ 12,859,274

SOCIAL SERVICES BLOCK GRANT

01.	County departments of social services	$ 30,395,663

02.	Allocation for in-home services provided
by county departments of
social services	2,101,113

03.	Division of Mental Health, Developmental
Disabilities, and Substance Abuse Services	4,764,124

04.	Division of Services for the Blind	3,205,711

05.	Division of Youth Services	950,674

06.	Division of Facility Services	343,341

07.	Division of Aging - Home and Community
Care Block Grant	1,915,234

08.	Transfer to Child Care and Development
Fund Block Grant for child care subsidies	10,971,241

09.	Division of Vocational Rehabilitation - 
United Cerebral Palsy	71,484

10.	State administration	1,954,237

11.	Child Medical Evaluation Program	238,321

12.	Adult day care services	2,255,301

13.	County departments of social services for
child abuse/prevention and
permanency planning	394,841

14.	Transfer to Preventive Health
Services Block Grant for
emergency medical services	213,128

15.	Transfer to Preventive Health Services
Block Grant for AIDS education, counseling,
and testing	66,939

16.	Department of Administration
for the N.C. Commission of Indian Affairs
In-Home Services Program for the elderly	203,198

17.	Division of Vocational Rehabilitation -
Easter Seals Society	116,779

18.	UNC-CH CARES Program for training and
consultation services	247,920

19.	Allocation to the Adolescent
Pregnancy Prevention Program	239,261

20.	Office of the Secretary - Office of Economic
Opportunity for N.C. Senior Citizens'
Federation for outreach services to
low-income elderly persons	41,302

21.	County departments of social services
for child welfare improvements	2,211,687

22.	Transfer from TANF -  Division of
Mental Health, Developmental
Disabilities, and Substance Abuse
Services for juvenile offenders	1,182,280

23.	Transfer from TANF -  Division of
Mental Health, Developmental
Disabilities, and Substance Abuse
Services for services for
Developmentally Disabled Waiting List	6,000,000

24.	Transfer from TANF - Division of Social
Services for Child Caring
Institutions	1,500,000

25.	Transfer from TANF - Division of Aging
for Home and Community Care Block Grant	3,853,956

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 75,437,735

LOW-INCOME ENERGY BLOCK GRANT

01.	Energy Assistance Programs	$ 6,350,240

02.	Crisis Intervention	6,461,000

03.	Administration	1,443,572

04.	Department of Commerce - 
Weatherization Program	4,171,960

05.	Department of Administration - 
N.C. Commission of Indian Affairs	33,228

TOTAL LOW-INCOME ENERGY BLOCK GRANT	$ 18,460,000

MENTAL HEALTH SERVICES BLOCK GRANT

01.	Provision of community-based
services in accordance with the
Mental Health Study Commission's
Adult Severe and Persistently
Mentally Ill Plan	$ 3,794,179

02.	Provision of community-based
services in accordance with the
Mental Health Study Commission's
Child Mental Health Plan	1,819,931

03.	Administration	624,231

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT	$ 6,238,341

SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT

01.	Provision of community-based
alcohol and drug abuse services,
tuberculosis services, and services
provided by the Alcohol, Drug Abuse
Treatment Centers	$ 11,502,939

02.	Continuation of services for
pregnant women and women
with dependent children	5,065,766

03.	Continuation and expansion of
services to IV drug users and others
at risk for HIV 	4,843,456

04.	Provision of services in accordance with
the Mental Health Study Commission's
Child and Adolescent Alcohol and Other
Drug Abuse Plan	5,964,093

05.	Services for former SSI recipients	1,123,757

06.	Services for Work First recipients	893,811

07.	Juvenile offender services and substance
abuse pilot	300,000

08.	Administration	2,171,228

TOTAL SUBSTANCE ABUSE PREVENTION 
AND TREATMENT BLOCK GRANT	$ 31,865,050

CHILD CARE AND DEVELOPMENT BLOCK GRANT

01.	Before and After School Child Care Programs
and Early Childhood Development Programs	$845,598

02.	Quality improvement activities	752,281

TOTAL CHILD CARE AND DEVELOPMENT
BLOCK GRANT	$ 1,597,879

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

01.	Child care subsidies	$108,625,251

02.	Quality and availability initiatives	4,774,736

03.	Administrative expenses	5,968,420

04.	Transfer from TANF Block Grant for 
child care subsidies	5,599,759

05.	Transfer from TANF Block Grant for
three child care centers at
community colleges	500,000

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT	$125,468,166

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES
(TANF) BLOCK GRANT 

01.	Work First Cash Assistance:
   Standard Counties	$160,230,540

02.	Work First Cash Assistance/
Flexible Funds:
   Electing Counties	55,678,913

03.	Transfer to Child Care and Development Fund
Block Grant for three child care centers
at community colleges	500,000

04.	Work First County Block Grants
for child care, transportation, and other
related TANF activities and support
at county discretion	129,869,482

05.	Transfer to the Child Care and 
Development Fund Block Grant
for child care subsidies	5,599,759

06.	Allocation to the Division of Mental
Health, Developmental Disabilities, and
Substance Abuse Services for Work First
substance abuse support services
and drug testing 	2,000,000

07.	Allocation to the Division of Social
Services for evaluation	400,000

08.	Allocation to the Division of Social
Services for State and county
staff development	500,000

09.	Reduction of out-of-wedlock births	1,600,000

10.	Allocation to the Division of Mental
Health, Developmental Disabilities, and
Substance Abuse Services for screening,
diagnostic, and counseling services
related to substance abuse services
for Work First participants	2,300,000

11.	Transfer to the Social Services Block Grant
for substance abuse services for juveniles	1,182,280

12.	Transfer to the Social Services Block Grant
to establish the Special Children 
Adoption Fund	300,000

13.	Department of Commerce - 
First Stop/Employment Security Commission	1,100,000

14.	Allocation to Division of Mental Health,
Developmental Disabilities, and Substance
Abuse Services for Enhanced
Employee Assistance Program	1,000,000

15.	Allocation for Employment Security
Commission for the Labor Market
and Common Follow Up Systems and
the NC WORKS Study	500,000

16.	Transfer to Social Services Block Grant	11,353,956

TOTAL TEMPORARY ASSISTANCE FOR NEEDY FAMILIES
(TANF) BLOCK GRANT	$374,114,930

MATERNAL AND CHILD HEALTH BLOCK GRANT

01.	Healthy Mother/Healthy Children
	Block Grants to Local Health
	Departments	$ 9,838,074

02.	High Risk Maternity Clinic Services,
	Perinatal Education and Training, 
	Childhood Injury Prevention,
	Public Information and Education, and
	Technical Assistance to Local Health
	Departments	1,722,869

03.	Services to Children With Special Health
	Care Needs	4,969,002

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 16,529,945

PREVENTIVE HEALTH SERVICES BLOCK GRANT

01.	Transfer from Social Services
	Block Grant - 
	Emergency Medical Services	$     213,128

02.	Hypertension and Statewide
	Health Promotion Programs	    3,320,637

03.	Dental Health for Fluoridation
	of Water Supplies	      213,308

04.	Rape Prevention and Rape
	Crisis Programs	      190,134

05.	Rape Prevention and Rape Education	1,144,957

06.	Transfer from Social Services
	Block Grant - 
	AIDS/HIV Education, Counseling,
	and Testing	       66,939

07.	Office of Minority Health and
	Minority Health Council	      177,442

08.	Administrative and Indirect Cost	207,210

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT	$   5,533,755

(b)	Decreases in Federal Fund Availability - 
Decreases in federal fund availability in all block grants except the TANF Block Grant, the Social Services Block Grant, the Maternal and Child Health Block Grant, and the Preventive Health Services Block Grant shall be reduced as follows: if federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of the federal block grants listed above shall be reduced by equal percentages to total the reduction in federal funds.
Decreases in federal fund availability in the Social Services Block Grant shall be allocated as follows:  if funds are decreased by less than ten percent (10%) of the amounts appropriated in this section, then every program shall be reduced by equal percentages of the total reduction in federal funds for the block grant.  If funds are decreased by ten percent (10%) or more of the amounts appropriated in this section, then the Department of Health and Human Services shall allocate these decreases giving priority first to those direct services mandated by State law, then to those programs providing direct services that have demonstrated effectiveness in meeting the federally mandated services goals established for the Social Services Block Grant.  The Department shall ensure that reductions in block grant funds allocated for State administration shall be subject to all reductions.  The Department shall not include transfers from TANF in any calculations of reductions to the Social Services Block Grant.
The Department of Health and Human Services shall cooperate with all other State and local agencies and public and private entities (i) that are impacted by the Social Services Block Grant and (ii) that will be affected by future reductions in the Social Services Block Grant in the preparation of a State/local report, setting out concrete plans for dealing with future cuts in the Social Services Block Grant.  The Department shall present this report to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources within a week of the convening of the 1999 General Assembly. 
If the United States Congress reduces the amount of TANF funds below the amounts specified above after the effective date of this act, then the Department shall reduce every item in the TANF Block Grant section listed above by equal percentages to the total reduction in federal funds.  Any TANF funds appropriated by the United States Congress in addition to the funds specified in this act shall not be expended until appropriated by the General Assembly.  Any TANF Block Grant fund changes shall be reported to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and to the Fiscal Research Division.
Decreases in federal fund availability shall be allocated for the Maternal and Child Health and Preventive Health Services federal block grant as follows:  if federal funds are reduced less than ten percent (10%) below the amounts specified above after the effective date of this act, then every program in the Maternal and Child Health and in the Preventive Health Services Block Grants shall be reduced by the same percentage as the reduction in federal funds. If federal funds are reduced by ten percent (10%) or more below the amounts specified above after the effective date of this act, then for the Maternal and Child Health and the Preventive Health Services Block Grants the Department of Health and Human Services shall allocate the decrease in funds after considering the effectiveness of the current level of services.
(c)	Increases in Federal Fund Availability -
Any increases in the Community Services Block Grant and the Low-Income Energy Block Grant Funds Grant shall be expended as follows:  any block grant funds appropriated by the United States Congress in addition to the funds specified in this act shall be expended by the Department of Health and Human Services, provided that the resultant increases are in accordance with federal block grant requirements, by allocating the additional funds for direct services only among the programs funded in this section.
Any increases in block grant funds appropriated by the United States Congress and any other additional Social Services Block Grant funds in addition to the funds specified in this act shall be expended by the Department of Health and Human Services, provided the resultant increases are in accordance with federal block grant requirements, as follows:
(1)	Fifty percent (50%) of the funds shall be allocated to the county departments of social services for mandatory services; and
(2)	The remaining fifty percent (50%) shall be allocated for direct services only among the programs funded in this section.
The Child Care and Development Fund Block Grant funds appropriated by the United States Congress in addition to the funds specified in this act shall be expended by the Department of Health and Human Services, provided the resultant increases are in accordance with federal block grant requirements and are within the scope of the block grant plan approved by the General Assembly.
Any block grant funds appropriated by the Congress of the United States for the Maternal and Child Health Block Grant and the Preventive Health Services Block Grant in addition to the funds specified in this act shall be expended as follows:
(1)	For the Maternal and Child Health Block Grant – Thirty percent (30%) of these additional funds shall be allocated to services for children with special health care needs and seventy percent (70%) shall be allocated to local health departments to assist in the reduction of infant mortality.
(2)	For the Preventive Health Services Block Grant –  These additional funds may be budgeted by the Department, with the approval of the Office of State Budget and Management, after considering the effectiveness of the current level of services and the effectiveness of services to be funded by the increase, provided the resultant increases are in accordance with federal block grant requirements and are within the scope of the block grant plan approved by the General Assembly.
(d) Changes to the budgeted allocations to the block grants appropriated in this act due to decreases or increases in federal funds shall be reported to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and to the Fiscal Research Division.
(e) Limitations on Preventive Health Services Block Grant Funds
Twenty-five percent (25%) of funds allocated for Rape Prevention and Rape Education shall be allocated as grants to nonprofit organizations to provide rape prevention and education programs targeted for middle, junior high, and high school students.  
If federal funds are received under the Maternal and Child Health Block Grant for abstinence education, pursuant to section 912 of Public Law 104-193 (42 U.S.C. § 710), for the 1998-99 fiscal year, then those funds shall be transferred to the State Board of Education to be administered by the Department of Public Instruction.  The Department shall use the funds to establish an Abstinence Until Marriage Education Program and shall delegate to one or more persons the responsibility of implementing the program and G.S. 115C-81(e1)(4).  The Department shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.
(g)  The sum of one million three hundred thousand dollars ($1,300,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 1998-99 fiscal year shall be allocated to county departments of social services for hiring or contracting for additional child protective services, foster care, and adoption worker and supervisor positions created effective July 1, 1997, based upon a formula which takes into consideration the number of child protective services, foster care, and adoption cases, and child protective services, foster care, and adoption workers and supervisors necessary to meet recommended standards adopted by the North Carolina Association of County Directors of Social Services.  No local match shall be required as a condition for receipt of these funds.
(h) The sum of nine hundred eleven thousand six hundred eighty-seven dollars ($911,687) appropriated in this section in (i) the Social Services Block Grant and (ii) in the TANF Block Grant transferred to the Social Services Block Grant to the Department of Health and Human Services, Special Children Adoption Fund, for the 1998-99 fiscal year shall be used to implement this subsection.  Of the monies in the Special Children Adoption Fund, the Department shall award a minimum of four hundred thousand dollars ($400,000) to licensed private adoption agencies.  The Department of Health and Human Services, Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon successful placement for adoption of children described in G.S. 108A-50 and in foster care.  No local match shall be required as a condition for receipt of these funds. 
The Department of Health and Human Services, Division of Social Services, shall evaluate the cost-effectiveness of county departments of social services and licensed public and private adoption agencies in placing children who are in the custody of the department of social services and report the results of this evaluation by May 1, 1999, to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources.
(i) The sum of six million dollars ($6,000,000) appropriated in the TANF Block Grant in this section and transferred to the Social Services Block Grant to the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, Department of Health and Human Services, for services for the Developmentally Disabled waiting list shall be used for the 1998-99 fiscal year to provide person-centered and family support services to developmentally disabled individuals who are not eligible for regular Medicaid or the Medicaid Community Alternative Program for Mentally Retarded/Developmentally Disabled persons and who are on the Department's waiting list for services.
(j) The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this act in the TANF Block Grant and transferred to the Social Services Block Grant for the Division of Social Services for Child Caring Institutions for the 1998-99 fiscal year shall be allocated to the following private nonprofit child-caring agencies as State Private Child Caring Institution Grant-in-Aid:
(1)	Agape House, Inc. (McDowell County)
(2)	Ashe Youth Services, Inc. (Ashe County)
(3)	Haven House, Inc. (Wake County)
(4)	Phoenix Group Homes, Inc. (Burke County)
(5)	Rutherford Youth Services (Rutherford County)
(6)	Watauga - Avery Youth Services, Inc. (Watauga County)
(7)	Wilkes County Group Homes, Inc. (Wilkes County)
(8)	Ebenezer Gardens Christian Childrens Home (Wilkes County)
(9)	Emergency Child Care Homes of Iredell County, Inc. (Iredell County)
(10)	Family Center, Inc. (Mecklenburg County)
(11)	LifeGains, Inc. (Burke County)
(12)	Mountain Youth Resources, Inc. (Jackson County)
(13)	The Presbyterian Home for Children, of Black Mountain, North Carolina (Buncombe County)
(14)	Rainbow Center for Wilkes, Inc. (Wilkes County)
(15)	Volunteer Families for Children of NC, Inc. (Wake County)
(16)	Youth Focus, Inc. (Guilford County)
(17)	Youth Opportunities, Incorporated (Forsyth County)
(18)	Youth Unlimited, Inc. (Guilford County).
Funds allocated under this section shall be used to provide reimbursement for the State portion of the cost of care for the placement of certain children by the county department of social services who are not eligible for IV-E or other federal subsidies.  Funds allocated under this subsection shall be combined with all other funds allocated to the State Private Child Caring Institution Grant-in-Aid Fund for payment to private child-caring institutions for the provision of care and services, and the 18 agencies named in this subsection shall be added to the list of agencies eligible to share proportionately in the child-caring institution grant-in-aid funds in accordance with rules adopted by the Social Services Commission pertaining to payments of grants-in-aid to private child-caring institutions.  Any future request for child-caring institution grant-in-aid to the 18 private child-caring agencies designated in this subsection shall be submitted as part of the requests of other eligible private child-caring institutions according to the rules adopted by the Social Services Commission pertaining to payments of grants-in-aid to private child-caring institutions.
(k) The sum of three million eight hundred fifty-three thousand nine hundred fifty-six dollars ($3,853,956) appropriated in this section in the TANF Block Grant and transferred to the Social Services Block Grant for the Division of Aging for the Home and Community Care Block Grant in fiscal year 1998-99 shall be allocated via the Home and Community Care Block Grant for home and community care services for older people who are not eligible for Medicaid and who are on the waiting list for these services.  These funds shall be used only for direct services.  Service recipients shall pay for services based on their income in accordance with G.S. 143B-181.1(a)(10).
(l)  If funds appropriated through the Child Care and Development Fund, which includes the Child Care and Development Block Grant, for any program cannot be obligated or spent in that program within the obligation or liquidation periods allowed by the federal grants, the Department may move funds to other programs, in accordance with federal requirements of the grant, in order to use the federal funds fully.
(m)  Notwithstanding the amounts specified in this section for the components of the Temporary Assistance for Needy Families (TANF) Block Grant, the Department may expend TANF Block Grant funds during the first quarter of the 1998-99 fiscal year for the same purposes for which those funds were expended during the last quarter of the fiscal year ending June 30, 1998.
(n) The sum of one million dollars ($1,000,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall be used for the Enhanced Employee Assistance Program, to implement a grant program of financial incentives for private businesses employing former and current Work First recipients.  These grants may supply funds to private employers who agree to hire former or current Work First recipients or their spouses at entry level positions and wages and to supply enhanced grant funds to private employers who agree to hire former or current Work First recipients or their spouses at a level higher than entry level positions, paying more than the minimum wage, including fringe benefits.  The Department of Health and Human Services shall report on the use of these funds to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and to the Fiscal Research Division by April 1, 1999.
(o) The sum of five hundred thousand dollars ($500,000) appropriated in the TANF Block Grant in this section and transferred to the Child Care and Development Fund Block Grant for three child care centers at community colleges shall be used to continue the establishment of the three model child care programs begun during the 1997-98 fiscal year.  Any of these funds remaining after the completed establishment of these three model programs shall be used to establish no more than three additional model programs across the State.  The Department of Health and Human Services shall report on the use of these funds to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and to the Fiscal Research Division by April 1, 1999.
(p) The funds appropriated in the TANF Block Grant and allocated to counties as Work First County Block Grants may be (i) used directly to fund Work First recipients' child care and (ii) transferred to the State's Child Care and Development Fund Block Grant for child care subsidies.
(q) It is the intent of the General Assembly to promote State and local activities that facilitate the success of the Work First Program and assist Work First recipients and families in attaining self-sufficiency.  It is the policy of the General Assembly that the Department of Health and Human Services allow maximum flexibility in the Work First Program while ensuring that counties comply with federal and State law, regulations, and rules and meet the overall goals of the Work First Program, including federal work participation rates.  The General Assembly strongly encourages counties to allocate the flexible Work First County Block Grant funds made available to them through the TANF Block Grant appropriated in this section for child care services needed to ensure continued success of welfare reform. 
(r) The sum of eight hundred ninety-three thousand eight hundred eleven dollars ($893,811) appropriated in the Substance Abuse Prevention and Treatment Block Grant in this section for services for Work First recipients shall be allocated to TROSA Therapeutic Community, FIRST Therapeutic Community, when these programs become licensed by the State, and other related licensed substance abuse services for start-up and support costs for Work First recipients and their families.

Requested by:   Representatives Mitchell, Baker, Carpenter
NER BLOCK GRANT FUNDS
Section 5.1.  (a) Appropriations from federal block grant funds are made for the fiscal year ending June 30, 1999, according to the following schedule:

WELFARE-TO-WORK	$25,332,173

COMMUNITY DEVELOPMENT BLOCK GRANT

01.	State Administration	$    980,000

02.	Urgent Needs and Contingency	   1,277,400

03.	Community Empowerment	   2,767,700

04.	Economic Development	   8,516,000

05.	Community Revitalization	  28,528,600

06.	State Technical Assistance	     440,000

07.	Housing Development	1,490,300

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT - 1999 Program Year	$ 44,000,000

(b)	Decreases in Federal Fund Availability
Decreases in federal fund availability for the Community Development Block Grants – If federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
(c)	Increases in Federal Fund Availability for Community Development Block Grant
Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows: – Each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
(d)	Limitations on Community Development Block Grant Funds – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to nine hundred thousand dollars ($900,000) may be used for State administration; up to one million two hundred seventy-seven thousand four hundred dollars ($1,277,400) may be used for Urgent Needs and Contingency; up to two million seven hundred sixty-seven thousand seven hundred dollars ($2,767,700) may be used for Community Empowerment; up to eight million five hundred sixteen thousand dollars ($8,516,000) may be used for Economic Development; not less than twenty-eight million five hundred twenty-eight thousand six hundred dollars ($28,528,600) shall be used for Community Revitalization; up to four hundred forty thousand dollars ($440,000) may be used for State Technical Assistance; up to one million four hundred ninety thousand three hundred dollars ($1,490,300) may be used for Housing Development.  If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
(e) Scattered Sites Program Improvements – The Department shall implement improvements to the system for distributing Scattered Sites awards in the Community Revitalization category to maximize funding opportunities. The Department shall make changes in the funding cycle for Scattered Sites projects, shall reduce the cap on grants for these projects to three hundred fifty thousand dollars ($350,000), and shall increase funding allocations by up to fifteen percent (15%) to address outhouses and other critical on-site water/wastewater needs.  The Department may adopt temporary rules to implement these changes.
(f) Welfare-to-Work Block Grant – The Office of State Budget and Management may identify in the budgets of the Department of Commerce, the Employment Security Commission, and the Department of Health and Human Services potential sources of State funds which may be used as a match for the federal Welfare-to-Work Block Grant.

PART VI.  GENERAL FUND AND HIGHWAY FUND AVAILABILITY STATEMENTS
GENERAL FUND AVAILABILITY STATEMENTS

Section 6.  The General Fund and availability used in developing the 1998-99 budget is shown below:
	($ Millions)
01.	Composition of the 1998-99 beginning availability:
a.	Revenue collections unaddressed in 1997-98	$ 121.5
b.	Revenue collections in 1997-98 in excess of
authorized estimates	531.1
c.	Unexpended appropriations during 1997-98 (reversions)	100.0
d.	Adjustment for Emergency Appro./Yr. 2000 Conversion	(20.5)
e.	Transfer of overcollections to the Reserve for 
Bailey/Emory/Patton Case Refunds	(400.0)
Beginning Credit Balance	332.1

02.	Earmarked Transfers from Credit Balance:
a.	Transfer to Savings Reserve	(21.6)
b.	Transfer for Reserve for Repairs & Renovations	(145.0)
c.	Transfer to Clean Water Management Reserve	(30.0)
Total Transfers	(196.6)

03.	Beginning Unrestricted Fund Balance	135.5

04.	Revenues Based on Existing Tax Structure:
a.	Tax Revenues Originally Projected	11,547.7
Additional Projected Tax Revenue	235.9
Total Tax Revenues	11,783.6
b.	Tax Changes:
01.	SB 1092:
(a)	Personal Income Tax Exemption	(56.1)
(b)	Food Tax Repeal Effective Oct. 1	(122.8)
(c)	Inheritance Tax Repeal	( - )
(d)	Homestead Exemption	( - )
02.	S.L. 1998-22 No Tax on Gas Cities	(1.3)
03.	HB 74 Long-Term Care	(13.3)
04.	HB 1318 Limit Nonresident Withholding	(7.0)
05.	HB 1326 Update IRC Ref./Conform Gift Tax	(13.1)
06.	HB 1367 Sales Tax Changes	(3.3)
07.	HB 1422 Make Credits Constitutional	(.6)
08.	SB 1569 Economic Opportunities Act of 1998	(2.2)
09.	Repeal Income Tax on Retired Gov't. Emp. (Bailey Case)	(128.6)
10.	Continue Earmarked Refund for Federal Retirees	(35.5)
Total Tax Changes	(383.8)

c.	Non-Tax Revenues	472.4
Additional Non-Tax Revenue:
Treasurer's Banking Division	0.1
Disaster Relief Fund Reversion	1.0
DHHS-Certificate of Need Fees	1.5
Fed. Retiree Refund Program-Administration	0.7
Intangibles Tax Reserve Balance	7.4
Fed. Retiree Refund Reserve Balance	9.7
Transfer from Insurance Regulatory Fund	.5
Total Non-Tax Revenues	493.3

d.	Disproportionate Share Receipts	85.0
1997-98 Reserved DSH Receipts	35.4
Total DSH Receipts	120.4

e.	Highway Trust Fund Transfer	170.0
f.	Highway Fund Sales Tax Transfer	13.4

TOTAL GENERAL FUND AVAILABILITY	$ 12,332.4

TOTAL 1998-99 APPROPRIATIONS
BY 1997 AND 1998 EXTRA SESSION	$ 11,547.6

REMAINING GENERAL FUND AVAILABILITY	$ 784.8

HIGHWAY FUND AVAILABILITY
Section 6.1.  The Highway Fund appropriations availability used in developing modifications to the 1998-99 Highway Fund budget contained in this act is shown below:

	1998-99
Beginning Credit Balance	$ 5,159,370
Estimated Revenue	   1,224,263
TOTAL HIGHWAY FUND AVAILABILITY	$ 6,383,633

PART VII.  GENERAL PROVISIONS
Requested by:  Representatives Holmes, Esposito, Creech, Crawford
NATURAL DISASTER ASSISTANCE
Section 7.1.  Of the unencumbered funds remaining in the Reserve for Disaster Relief for the 1997-98 fiscal year, the sum of one million dollars ($1,000,000) shall revert to the General Fund on July 1, 1998.  The balance shall remain available for disaster relief including natural disasters caused by flooding, wind or tornado damage, rockslides, blizzards, drought, hurricanes, and forest fires.  The balance may also be used to match federal funds or any other funds that may be made available for disaster relief.

Requested by:   Representative Davis
FEDERAL AND FOUNDATION FUNDS CLEARLY SHOWN
Section 7.2.  G.S. 143-16.1 reads as rewritten:
"§ 143-16.1.  Federal and foundation funds.
(a)	All federal and foundation funds shall be expended and reported in accordance with provisions of the Executive Budget Act, except as otherwise provided by law. Proposed budgets recommended to the General Assembly by the Governor and Advisory Budget Commission shall include information concerning the federal and foundation expenditures in State agencies, departments and institutions in the same manner as State funds.  Each budgetary category shall show the total received and anticipated State, federal, and foundation expenditures, along with a description of the purpose for which the federal and foundation funds will be spent at the program level.  All expenditures for the prior fiscal year and all expenditures anticipated in the proposed budget shall be reported by objects of expenditure by purpose and shall be identified by each federal grant or by each foundation responsible for the expenditure.  For the purpose of this section, 'federal and foundation funds' are any financial assistance made to a State agency by the United States government or a private foundation, whether a loan, grant, subsidy, augmentation, reimbursement, or any other form.  The Director of the Budget may adopt rules and regulations establishing uniform planning, budgeting and fiscal procedures, not inconsistent with federal law, that ensure that all federal funds shall be expended in a standardized manner. The function of the Advisory Budget Commission under this section applies only if the Director of the Budget consults with the Commission in preparation of the budget.
(b)	The Secretary of each State agency that receives and administers federal Block Grant funds shall prepare and submit the agency's Block Grant plans to the Fiscal Research Division of the General Assembly not later than April 20 of each fiscal year. The agency shall submit a separate Block Grant plan for each Block Grant received and administered by the agency, and each plan shall include, but not be limited to, the following:
(1)	A delineation of the proposed dollar amount allocations by activity and by category, including dollar amounts to be used for administrative costs; and
(2)	A comparison of the proposed funding with two prior years' program budgets.
The Director of the Budget shall review for accuracy, consistency, and uniformity each State agency's Block Grant plans prior to submission of the plans to the General Assembly."

PART VIII. RESERVES
Requested by:   Representatives Holmes, Esposito, Creech, Crawford
BAILEY/EMORY/PATTON CASES REFUNDS RESERVE
Section 8.  There is established in the Office of State Treasurer a Reserve Fund for the Bailey/Emory/Patton Cases Refunds.
There is transferred from General Fund overcollections for the 1997-98 fiscal year to the Office of State Treasurer, Reserve for the Bailey/Emory/Patton Cases Refunds, the sum of four hundred million dollars ($400,000,000).  These funds shall be held in reserve and allocated pursuant to the Consent Order entered in the Bailey/Emory/Patton cases, 92 CVS 10221, 94 CVS 06904, 95 CVS 06625, 95 CVS 08230, 98 CVS 00738, and 95 CVS 04346, in Wake County Superior Court on 10 June 1998.

Requested by:   Representatives Holmes, Esposito, Creech, Crawford
JUVENILE JUSTICE RESERVE/JUVENILE JUSTICE INFORMATION SYSTEM/REORGANIZATION PLAN FOR THE DIVISION OF YOUTH SERVICES OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND THE DIVISION OF JUVENILE SERVICES OF THE ADMINISTRATIVE OFFICE OF THE COURTS
Section 8.1.  (a) There is established in the Office of State Budget and Management a reserve fund entitled the "Juvenile Justice Reserve Fund" to provide funds to implement recommendations of the Governor's Commission on Juvenile Crime and Justice.  There is appropriated in Section 2 of this act from the General Fund to the Office of State Budget and Management the sum of six million dollars ($6,000,000) for the 1998-99 fiscal year for the Juvenile Justice Reserve Fund.  The Director of the Budget shall allocate funds from the Juvenile Justice Reserve Fund as follows:
(1)	$750,000 nonrecurring to the Department of Health and Human Services to plan and design 208 additional training school beds and support facilities.
(2)	$726,666 recurring and $21,000 nonrecurring to the Department of Health and Human Services to make 32 beds at Umstead Detention Center permanent effective October 1, 1998.
(3)	$985,165 recurring and $383,919 nonrecurring to the Administrative Office of the Courts for court counselors and support staff (22 court counselors, effective December 1, 1998;  50 court counselors, 3 court counselor supervisors, and 10 juvenile court secretaries, effective April 1, 1999, and June 1, 1999).
(4)	$1,400,000 nonrecurring to the Department of Health and Human Services to expand the Community-Based Alternatives Program.
(5)	$700,000 nonrecurring to the Department of Health and Human Services to construct a new modular Eckerd Wilderness Camp.
(6)	$100,000 recurring to the Judicial Department to provide funds to lease field monitoring units for electronic house arrest.
(7)	$200,000 recurring and $575,996 nonrecurring to the Department of Justice for the juvenile justice information system to provide one project coordinator and two business systems analysts effective October 1, 1998, and contractual funds to develop the scope and design of the system.
(8)	$47,498 recurring and $109,756 nonrecurring to the Judicial Department for the North Carolina Sentencing and Policy Advisory Commission to provide one research analyst to support juvenile data collection needs and to contract for assistance with data collection and update of the juvenile population simulation model.
(b)	The Director of the Budget shall allocate the sum of five hundred twenty-five thousand dollars ($525,000) for the 1998-99 fiscal year from the Repairs and Renovation Reserve Account established in G.S. 143-15.3A to the Department of Health and Human Services to plan and design the renovation of three 24-bed detention centers at Department of Correction GPAC units.
(c)	If North Carolina receives Juvenile Accountability Incentive Block Grants, or a notice of funds to be awarded, the Office of State Budget and Management and the Governor's Crime Commission of the Department of Crime Control and Public Safety shall report to the Appropriations Committees of the House of Representatives and the Senate and to the Joint Legislative Commission on Governmental Operations prior to allocation of these funds.  The report shall identify the amount of funds to be received for the 1998-99 fiscal year, the amount of funds anticipated for the 1999-2000 fiscal year, and the allocation of funds by program and purpose.
(d) The Department of Health and Human Services shall report to the Joint Legislative Commission on Governmental Operations prior to finalizing site selection for training school beds and detention beds authorized pursuant to this section.
(e)  The Criminal Justice Information Network Governing Board of the Department of Justice shall develop a juvenile justice information plan.  The plan shall ensure that the information system will enable the State to evaluate the efficiency and effectiveness of the overall juvenile justice system as well as to monitor and evaluate the progress of individual clients and shall specify the:
(1)	Scope and purpose of the system;
(2)	Management information that will be collected and tracked;
(3)	General design of the system;
(4)	Estimates of the short- and long-range cost of the system and the potential sources and amounts of federal funding; and
(5)	Estimated time required to develop the system.
The plan shall include priorities for system development, implementation, and options, including cost estimates for phasing in components of the system.  In developing the plan, the Criminal Justice Information Network Governing Board shall consult with the Information Resources Management Commission on the design and estimated cost of the system.  The Board shall also consult with the Sentencing and Policy Advisory Commission and with all agencies likely to be part of or need access to the juvenile justice information system.
Prior to expending more than the sum of six hundred thousand dollars ($600,000) from the Juvenile Justice Reserve Fund for the juvenile justice information system, the Department of Justice shall submit the plan to the Appropriations Committees of the House of Representatives and the Senate.  In the report, the Information Resources Management Commission shall comment on the design and estimated cost of the plan.
(f)  The Governor, in consultation with the Department of Health and Human Services, the Administrative Office of the Courts, and the Department of Crime Control and Public Safety, shall develop a plan of reorganization to transfer all authority, powers, duties, and functions of the Division of Youth Services of the Department of Health and Human Services and of the Division of Juvenile Services of the Administrative Office of the Courts to the Department of Crime Control and Public Safety (" Department" ).  The plan shall include a proposed budget for the new division or divisions of the Department and shall specify that:
(1)	The transfer of the authority, powers, duties, and functions of the Division of Youth Services and the Division of Juvenile Services to the Department shall occur as if by a Type I Transfer as defined in G.S. 143A-6 and shall include a transfer of all records, personnel, property, and budgeting and purchasing functions and powers.
(2)	Institutions operated by the Division of Youth Services and administered by the Department of Health and Human Services and the present central office of the Division, including land, buildings, equipment, supplies, personnel, or other properties rented or controlled by the Division, shall be administered by the Department.
(3)	Institutions operated by the Division of Juvenile Services and administered by the Administrative Office of the Courts and the present central office of the Division, including land, buildings, equipment, supplies, personnel, or other properties rented or controlled by the Division, shall be administered by the Department.
(4)	The transfer of the Division of Youth Services of the Department of Health and Human Services and of the Division of Juvenile Services of the Administrative Office of the Courts to the Department shall become effective July 1, 1999.
In developing the plan of reorganization, the Governor shall also review all agency divisions, councils, and programs that provide services to and treatment of juveniles, including other divisions of the Department of Health and Human Services, the Center for the Prevention of School Violence, School Resource Officers, and the Guardian ad Litem Program of the Administrative Office of the Courts, to determine whether the agency divisions, councils, or programs would operate more effectively and efficiently if consolidated within the Department under the plan of reorganization.
Prior to the transfer of any funds, personnel, equipment, or supplies within the Department of Health and Human Services from the Division of Youth Services during the 1998-99 fiscal year, as may be authorized by other provisions of law, the Department of Health and Human Services shall report the proposed transfer to the Joint Legislative Commission on Governmental Operations.  Prior to the transfer of any funds, personnel, equipment, or supplies within the Administrative Office of the Courts from the Division of Juvenile Services during the 1998-99 fiscal year, as may be authorized by other provisions of law, the Administrative Office of the Courts shall report the proposed transfer to the Joint Legislative Commission on Governmental Operations.
On or before April 1, 1999, the Governor shall report the plan of reorganization, including any legislative proposals and funding requirements that are required to implement the plan of reorganization, to the General Assembly.  The plan of reorganization developed pursuant to this subsection shall not become effective until it is approved by the General Assembly.

PART IX.  PUBLIC SCHOOLS
Requested by:  Representatives Arnold, Grady, Preston
ALLOCATIONS FOR PUBLIC SCHOOLS
Section 9.  There is allocated from unexpended 1997-98 General Fund appropriations the sum of fifty-five million twenty-seven thousand six hundred eighty dollars ($55,027,680) which shall not revert and shall be used as follows:
(1)	$17,118,003 to fulfill the State's obligations to  public school employees who qualified for performance bonuses for the 1997-98 school year under the ABC's of Public Education Program;
(2)	$9,010,274 to fulfill the State's obligations to public school teachers who qualified for longevity payments for the 1997-98 school year;
(3)	$24,199,403 to permit the State Board of Education to order school buses needed for the 1998-99 school year; and
(4)	$4,700,000 for the State School Technology Fund to provide additional school technology funds prior to the beginning of the 1998-99 school year.

Requested by:  Representatives Arnold, Grady, Preston
TEACHER SALARY SCHEDULES
Section 9.1. (a)	Effective for the 1998-99 school year, the Director of the Budget may transfer from the Reserve for Compensation Increase for the 1998-99 fiscal year funds necessary to implement the teacher salary schedule set out in subsection (b) of this section, including funds for the employer's retirement and social security contributions and funds for annual longevity payments at one percent (1%) of base salary for 10 to 14 years of State service, one and one-half percent (1.5%) of base salary for 15 to 19 years of State service, two percent (2%) of base salary for 20 to 24 years of State service, and four and one-half percent (4.5%) of base salary for 25 or more years of State service, commencing July 1, 1998, for all teachers whose salaries are supported from the State's General Fund.  These funds shall be allocated to individuals according to rules adopted by the State Board of Education and the Superintendent of Public Instruction.  The longevity payment shall be paid in a lump sum once a year.
(b)(1)	For the 1998-99 school year, the following monthly salary schedules shall apply to certified personnel of the public schools who are classified as teachers.  The schedule contains 30 steps with each step corresponding to one year of teaching experience.

1998-99 Monthly Salary Schedule
"A"Teachers

	Years of	 "A"	  NBPTS   
Experience	Teachers	 Certification

	0	2,310	N/A
	1	2,352	N/A
	2	2,395	N/A
	3	2,551	2,857
	4	2,678	2,999
	5	2,779	3,112
	6	2,826	3,165
	7	2,874	3,218
	8	2,923	3,273
	9	2,972	3,328
	10	3,021	3,383
	11	3,071	3,439
	12	3,123	3,497
	13	3,176	3,557
	14	3,230	3,617
	15	3,285	3,679
	16	3,341	3,741
	17	3,398	3,805
	18	3,456	3,870
	19	3,516	3,937
	20	3,577	4,006
	21	3,640	4,076
	22	3,703	4,147
	23	3,767	4,219
	24	3,832	4,291
	25	3,899	4,366
	26	3,968	4,444
	27	4,038	4,522
	28	4,109	4,602
	29+ 	4,182	4,683

1998-99 Monthly Salary Schedule
"G"Teachers

	Years of	 "G" 	  NBPTS   
	Experience	Teachers	 Certification

	0	2,454	N/A
	1	2,499	N/A
	2	2,545	N/A
	3	2,710	3,035
	4	2,845	3,186
	5	2,953	3,307
	6	3,003	3,363
	7	3,054	3,420
	8	3,106	3,478
	9	3,158	3,536
	10	3,210	3,595
	11	3,263	3,654
	12	3,318	3,716
	13	3,375	3,780
	14	3,432	3,843
	15	3,490	3,908
	16	3,550	3,976
	17	3,610	4,043
	18	3,672	4,112
	19	3,736	4,184
	20	3,801	4,257
	21	3,868	4,332
	22	3,934	4,406
	23	4,002	4,482
	24	4,072	4,560
	25	4,143	4,640
	26	4,216	4,721
	27	4,290	4,804
	28	4,366	4,889
	29+ 	4,443	4,976
(2)	Certified public school teachers with certification based on academic preparation at the six-year degree level shall receive a salary supplement of one hundred twenty-six dollars ($126.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "G"teachers.  Certified public school teachers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty-three dollars ($253.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "G"teachers.
(c)	Effective for the 1998-99 school year, the first step of the salary schedule for school psychologists shall be equivalent to Step 5, corresponding to five years of experience, on the salary schedule established in this section for certified personnel of the public schools who are classified as "G"teachers.  Certified psychologists shall be placed on the salary schedule at an appropriate step based on their years of experience.  Certified psychologists shall receive longevity payments based on years of State service in the same manner as teachers.
Certified psychologists with certification based on academic preparation at the six-year degree level shall receive a salary supplement of one hundred twenty-six dollars ($126.00) per month in addition to the compensation provided for certified psychologists.  Certified psychologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty-three dollars ($253.00) per month in addition to the compensation provided for certified psychologists.
(d) Effective for the 1998-99 school year, speech pathologists who are certified as speech pathologists at the masters degree level and audiologists who are certified as audiologists at the masters degree level and who are employed in the public schools as speech and language specialists and audiologists shall be paid on the school psychologist salary schedule.
Speech pathologists and audiologists with certification based on academic preparation at the six-year degree level shall receive a salary supplement of one hundred twenty-six dollars ($126.00) per month in addition to the compensation provided for speech pathologists and audiologists.  Speech pathologists and audiologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty-three dollars ($253.00) per month in addition to the compensation provided for speech pathologists and audiologists.
(e) The State Board of Education shall study the current salary schedules for nurses and other allied health professionals.  The State Board shall report to the Joint Legislative Education Oversight Committee prior to December 15, 1998, on the results of its study and on any recommended modifications to the current salary schedules.

Requested by:  Representatives Arnold, Grady, Preston
FUNDS TO IMPLEMENT THE ABC'S OF PUBLIC EDUCATION PROGRAM
Section 9.2. Section 8.36 of S.L. 1997-443 reads as rewritten:
"Section 8.36.  (a)	Of the funds appropriated to State Aid to Local School Administrative Units, the State Board of Education shall  provide incentive funding for schools that meet or exceed the projected levels of improvement in student performance, in accordance with the ABC's of Public Education Program.  In accordance with State Board of Education policy, incentive awards in schools that achieve higher than expected improvements may be up to: (i)	one thousand five hundred dollars ($1,500) for each teacher and for certified personnel; and (ii) five hundred dollars ($500.00) for each teacher assistant.  In accordance with State Board of Education policy, incentive awards in schools that meet the expected improvements may be up to: (i) seven hundred fifty dollars ($750.00) for each teacher and for certified personnel; and (ii) three hundred seventy-five dollars ($375.00) for each teacher assistant.
(b)	The State Board of Education may use funds appropriated to State Aid to Local School Administrative Units for assistance teams to low-performing schools."

Requested by:  Representatives Arnold, Grady, Preston
STATE BOARD STUDY MENTOR TEACHERS
Section 9.3.  The State Board of Education may use funds for the mentor program to evaluate the program.  The State Board shall report the results of its evaluation to the Joint Legislative Education Oversight Committee prior to March 5, 2000.

Requested by:  Representatives Arnold, Grady, Preston
AID TO LOW-PERFORMING AND AT-RISK SCHOOLS
Section 9.4. (a) Funds appropriated for the 1998-99 fiscal year for aid to low-performing and at-risk schools shall be used to provide services to:
(1)	Elementary schools at which fifty percent (50%) of the students are below grade level on previous year's end-of-grade test, during the 1997-98 school year or the 1998-99 school year;
(2)	Middle schools at which fifty percent (50%) of the students in the sixth grade were below grade level on their end-of-grade fifth grade tests during the 1997-98 school year or the 1998-99 school year; and
(3)	The five percent (5%) of high schools in the State that have the lowest composite scores on the ABC's accountability measures.
(b) Funds for salary-related items in the amounts of twelve million four hundred five thousand five hundred sixty-one dollars ($12,405,561) in recurring funds and three million one hundred sixty thousand four hundred fifty-four dollars ($3,160,454) in nonrecurring funds shall be used as follows:
(1)	Up to fifteen percent (15%) of the nonrecurring funds on a statewide basis may be used for salary supplements for teachers assigned to local assessment teams.
(2)	The remainder of the funds shall be used for extra pay for extra duties for teachers for such activities as Saturday academies and after-school tutoring, for professional development,  and for additional days of work outside of the 220 paid days in the school calendar.  These days should be cooperatively planned by the principal and the faculty.
These funds shall be allocated by the State Board based on additional teacher days based on average daily membership of the school.
The Director of the Budget is encouraged to include these funds in the continuation budget for the 1999-2001 fiscal biennium. 
(c) Funds for nonsalary items in the amount of one million two hundred fifteen thousand four hundred sixty-six dollars ($1,215,466) shall be used only for staff development costs, and for textbooks, instructional supplies, materials, and equipment.
(d)	The principal of a low-performing or at-risk school, in consultation with the faculty and the site-based management team, shall develop an initial plan for improving the school. The plan shall include whole-staff training.  The plan shall be submitted to the local superintendent and approved by the local board prior to submission to the State Board of Education. The plan shall be revised annually.
The plan shall be reviewed and accepted or rejected by the State Board of Education within 30 days after receipt of the plan.  The State Board may delegate to the State Superintendent the responsibility for accepting or rejecting the plan.
The local board shall receive the money for each school for which a plan is approved.  The local board shall receive for each school for which a plan is approved a minimum of ten thousand dollars ($10,000) from the funds in subsection (c) of this section; the remainder of these funds shall be allocated on the basis of average daily membership.
(e)  The State Board of Education is encouraged to use federal funds such as Goals 2000 and Comprehensive School Reform Demonstration Grants to assist low-performing and at-risk schools.
(f)  Funds allocated in subsections (b) and (c) of this section shall revert on August 31, 1999.
(g)  The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to December 15, 1998, on the plans and on the use of funds for Aid to Low-Performing and At-Risk Schools.

Requested by:  Representatives Arnold, Grady, Preston
ABC'S HIGH SCHOOL ACCOUNTABILITY MODEL
Section 9.5.  The State Board of Education shall continue its efforts to improve the standards for determining whether high schools meet or exceed their projected levels of improvement in student performance in accordance with the ABC's of Public Education Program.  The General Assembly urges the State Board to consider including in the standards (i) a measurement of improvement in individual students' performance, (ii) dropout rates, and (iii) a measurement of student enrollment and achievement in courses required for graduation, advanced placement courses, or other upper level courses.

Requested by:  Representatives Arnold, Grady, Preston
SCHOOL-BASED ADMINISTRATOR SALARIES
Section 9.6. (a)	Funds appropriated to the Reserve for Compensation Increase shall be used for the implementation of the salary schedule for school-based administrators as provided in this section.  These funds shall be used for State-paid employees only.
(b)	The salary schedule for school-based administrators shall apply only to principals and assistant principals.  The salary schedule for the 1998-99 fiscal year, commencing July 1, 1998, is as follows:
Assistant Principals	Principal I
Step	Base	Base	Base	Base	Base	Base
	+ 1%	+ 2%	+ 1%	+ 2%

4	$2,873	$2,902	$2,930	–  	–  	–  
5	2,983	3,013	3,043	–  	–  	–  
6	3,033	3,063	3,094	–  	–  	–  
7	3,085	3,116	3,147	–  	–  	–  
8	3,137	3,168	3,200	$3,137	$3,168	$3,200
9	3,190	3,222	3,254	3,190	3,222	3,254
10	3,242	3,274	3,307	3,242	3,274	3,307
11	3,296	3,329	3,362	3,296	3,329	3,362
12	3,351	3,385	3,418	3,351	3,385	3,418
13	3,409	3,443	3,477	3,409	3,443	3,477
14	3,466	3,501	3,535	3,466	3,501	3,535
15	3,525	3,560	3,596	3,525	3,560	3,596
16	3,586	3,622	3,658	3,586	3,622	3,658
17	3,646	3,682	3,719	3,646	3,682	3,719
18	3,709	3,746	3,783	3,709	3,746	3,783
19	3,773	3,811	3,848	3,773	3,811	3,848
20	3,839	3,877	3,916	3,839	3,877	3,916
21	3,907	3,946	3,985	3,907	3,946	3,985
22	3,973	4,013	4,052	3,973	4,013	4,052
23	4,042	4,082	4,123	4,042	4,082	4,123
24	4,113	4,154	4,195	4,113	4,154	4,195
25	4,184	4,226	4,268	4,184	4,226	4,268
26	4,258	4,301	4,343	4,258	4,301	4,343
27	4,333	4,376	4,420	4,333	4,376	4,420
28	4,410	4,454	4,498	4,410	4,454	4,498
29	4,487	4,532	4,577	4,487	4,532	4,577
30	4,577	4,623	4,669	4,577	4,623	4,669
31	4,669	4,716	4,762	4,669	4,716	4,762
32	–  	–  	–  	4,762	4,810	4,857

Principal II	Principal III
Step	Base	Base	Base	Base	Base	Base
	+ 1%	+ 2%	+ 1%	+ 2%

4	–  	–  	–  	–  	–  	–  
5	–  	–  	–  	–  	–  	–  
6	–  	–  	–  	–  	–  	–  
7	–  	–  	–  	–  	–  	–  
8	–  	–  	–  	–  	–  	–  
9	–  	–  	–  	–  	–  	–  
10	$3,296	$3,329	$3,362	–  	–  	–  
11	3,351	3,385	3,418	–  	–  	–  
12	3,409	3,443	3,477	$3,466	$3,501	$3,535
13	3,466	3,501	3,535	3,525	3,560	3,596
14	3,525	3,560	3,596	3,586	3,622	3,658
15	3,586	3,622	3,658	3,646	3,682	3,719
16	3,646	3,682	3,719	3,709	3,746	3,783
17	3,709	3,746	3,783	3,773	3,811	3,848
18	3,773	3,811	3,848	3,839	3,877	3,916
19	3,839	3,877	3,916	3,907	3,946	3,985
20	3,907	3,946	3,985	3,973	4,013	4,052
21	3,973	4,013	4,052	4,042	4,082	4,123
22	4,042	4,082	4,123	4,113	4,154	4,195
23	4,113	4,154	4,195	4,184	4,226	4,268
24	4,184	4,226	4,268	4,258	4,301	4,343
25	4,258	4,301	4,343	4,333	4,376	4,420
26	4,333	4,376	4,420	4,410	4,454	4,498
27	4,410	4,454	4,498	4,487	4,532	4,577
28	4,487	4,532	4,577	4,577	4,623	4,669
29	4,577	4,623	4,669	4,669	4,716	4,762
30	4,669	4,716	4,762	4,762	4,810	4,857
31	4,762	4,810	4,857	4,857	4,906	4,954
32	4,857	4,906	4,954	4,954	5,004	5,053
33	4,954	5,004	5,053	5,053	5,104	5,154
34	5,053	5,104	5,154	5,154	5,206	5,257
35	–  	–  	–  	5,257	5,310	5,362
36	–  	–  	–  	5,362	5,416	5,469

	Principal IV	Principal V
Step	Base	Base	Base	Base	Base	Base
	+ 1%	+ 2%	+ 1%	+ 2%

4	–	–	–	–	–	–
5	–	–	–	–	–	–
6	–	–	–	–	–	–
7	–	–	–	–	–	–
8	–	–	–	–	–	–
9	–	–	–	–	–	–
10	–	–	–	–	–	–
11	–	–	–	–	–	–
12	–	–	–	–	–	–
13	$3,586	$3,622	$3,658	–	–	–
14	3,646	3,682	3,719	$3,709	$3,746	$3,783
15	3,709	3,746	3,783	3,773	3,811	3,848
16	3,773	3,811	3,848	3,839	3,877	3,916
17	3,839	3,877	3,916	3,907	3,946	3,985
18	3,907	3,946	3,985	3,973	4,013	4,052
19	3,973	4,013	4,052	4,042	4,082	4,123
20	4,042	4,082	4,123	4,113	4,154	4,195
21	4,113	4,154	4,195	4,184	4,226	4,268
22	4,184	4,226	4,268	4,258	4,301	4,343
23	4,258	4,301	4,343	4,333	4,376	4,420
24	4,333	4,376	4,420	4,410	4,454	4,498
25	4,410	4,454	4,498	4,487	4,532	4,577
26	4,487	4,532	4,577	4,577	4,623	4,669
27	4,577	4,623	4,669	4,669	4,716	4,762
28	4,669	4,716	4,762	4,762	4,810	4,857
29	4,762	4,810	4,857	4,857	4,906	4,954
30	4,857	4,906	4,954	4,954	5,004	5,053
31	4,954	5,004	5,053	5,053	5,104	5,154
32	5,053	5,104	5,154	5,154	5,206	5,257
33	5,154	5,206	5,257	5,257	5,310	5,362
34	5,257	5,310	5,362	5,362	5,416	5,469
35	5,362	5,416	5,469	5,469	5,524	5,578
36	5,469	5,524	5,578	5,578	5,634	5,690
37	5,578	5,634	5,690	5,689	5,746	5,803
38	–	–	–	5,803	5,861	5,919
39	–	–	–	–	–	–
40	–	–	–	–	–	–
41	–	–	–	–	–	–

Principal VI	Principal VII
Step	Base	Base	Base	Base	Base	Base
	+ 1%	+ 2%	+ 1%	+ 2%

4	–	–	–	–	–	–
5	–	–	–	–	–	–
6	–	–	–	–	–	–
7	–	–	–	–	–	–
8	–	–	–	–	–	–
9	–	–	–	–	–	–
10	–	–	–	–	–	–
11	–	–	–	–	–	–
12	–	–	–	–	–	–
13	–	–	–	–	–	–
14	–	–	–	–	–	–
15	–	–	–	–	–	–
16	$3,907	$3,946	$3,985	–	–	–
17	3,973	4,013	4,052	$4,113	$4,154	$4,195
18	4,042	4,082	4,123	4,184	4,226	4,268
19	4,113	4,154	4,195	4,258	4,301	4,343
20	4,184	4,226	4,268	4,333	4,376	4,420
21	4,258	4,301	4,343	4,410	4,454	4,498
22	4,333	4,376	4,420	4,487	4,532	4,577
23	4,410	4,454	4,498	4,577	4,623	4,669
24	4,487	4,532	4,577	4,669	4,716	4,762
25	4,577	4,623	4,669	4,762	4,810	4,857
26	4,669	4,716	4,762	4,857	4,906	4,954
27	4,762	4,810	4,857	4,954	5,004	5,053
28	4,857	4,906	4,954	5,053	5,104	5,154
29	4,954	5,004	5,053	5,154	5,206	5,257
30	5,053	5,104	5,154	5,257	5,310	5,362
31	5,154	5,206	5,257	5,362	5,416	5,469
32	5,257	5,310	5,362	5,469	5,524	5,578
33	5,362	5,416	5,469	5,578	5,634	5,690
34	5,469	5,524	5,578	5,689	5,746	5,803
35	5,578	5,634	5,690	5,803	5,861	5,919
36	5,689	5,746	5,803	5,920	5,979	6,038
37	5,803	5,861	5,919	6,038	6,098	6,159
38	5,920	5,979	6,038	6,159	6,221	6,282
39	6,038	6,098	6,159	6,282	6,345	6,408
40	6,159	6,221	6,282	6,407	6,471	6,535
41	–	–	–	6,536	6,601	6,667

Principal VIII
Step	Base	Base	Base
	+ 1%	+ 2%

4	–	–	–
5	–	–	–
6	–	–	–
7	–	–	–
8	–	–	–
9	–	–	–
10	–	–	–
11	–	–	–
12	–	–	–
13	–	–	–
14	–	–	–
15	–	–	–
16	–	–	–
17	–	–	–
18	$4,258	$4,301	$4,343
19	4,333	4,376	4,420
20	4,410	4,454	4,498
21	4,487	4,532	4,577
22	4,577	4,623	4,669
23	4,669	4,716	4,762
24	4,762	4,810	4,857
25	4,857	4,906	4,954
26	4,954	5,004	5,053
27	5,053	5,104	5,154
28	5,154	5,206	5,257
29	5,257	5,310	5,362
30	5,362	5,416	5,469
31	5,469	5,524	5,578
32	5,578	5,634	5,690
33	5,689	5,746	5,803
34	5,803	5,861	5,919
35	5,920	5,979	6,038
36	6,038	6,098	6,159
37	6,159	6,221	6,282
38	6,282	6,345	6,408
39	6,407	6,471	6,535
40	6,536	6,601	6,667
41	6,667	6,734	6,800

(c)	The appropriate classification for placement of principals and assistant principals on the salary schedule, except for principals in alternative schools, shall be determined in accordance with the following schedule:
Number of Teachers
Classification	Supervised
Assistant Principal
Principal I	Fewer than 11 Teachers
Principal II	11-21 Teachers
Principal III	22-32 Teachers
Principal IV	33-43 Teachers
Principal V	44-54 Teachers
Principal VI	55-65 Teachers
Principal VII	66-100 Teachers
Principal VIII	More than 100 Teachers
The number of teachers supervised includes teachers and assistant principals paid from State funds only; it does not include teachers or assistant principals paid from non-State funds or the principal or teacher assistants.
The beginning classification for principals in alternative schools shall be the Principal III level.  Principals in alternative schools who supervise 33 or more teachers shall be classified according to the number of teachers supervised. 
(d)	A principal shall be placed on the step on the salary schedule that reflects total number of years of experience as a certificated employee of the public schools and an additional step for every three years of experience as a principal.
(e) For the 1998-99 fiscal year, a principal or assistant principal shall be placed on the appropriate step plus one percent (1%) if:
(1)	The employee's school met or exceeded the projected levels of improvement in student performance for the 1997-98 fiscal year, in accordance with the ABCs of Public Education Program; or
(2)	The local board of education found in 1997-98 that the employee's school met objectively measurable goals set by the local board of education for maintaining a safe and orderly school.
The principal or assistant principal shall be placed on the appropriate step plus two percent (2%) if the conditions set out in both subdivisions (1) and (2) are satisfied.
(f) For the 1998-99 fiscal year, a principal or assistant principal shall receive a lump-sum payment of:
(1)	One percent (1%) of his or her State-paid salary if the employee's school meets or exceeds the projected levels of improvement in student performance for the 1998-99 fiscal year, in accordance with the ABCs of Public Education Program; or
(2)	One percent (1%) of his or her State-paid salary if the local board of education finds that the employee's school has met the goals of the local plan for maintaining a safe and orderly school.
The principal or assistant principal shall receive a lump-sum payment of two percent (2%) if the conditions set out in both subdivisions (1) and (2) are satisfied.
The lump sum shall be paid as determined by guidelines adopted by the State Board.  Placement on the salary schedule in the following year shall be based upon these increases.
(g)  Principals and assistant principals with certification based on academic preparation at the six-year degree level shall be paid a salary supplement of one hundred twenty-six dollars ($126.00) per month and at the doctoral degree level shall be paid a salary supplement of two hundred fifty-three dollars ($253.00) per month.
(h)  There shall be no State requirement that superintendents in each local school unit shall receive in State-paid salary at least one percent (1%) more than the highest paid principal receives in State salary in that school unit:  Provided, however, the additional State-paid salary a superintendent who was employed by a local school administrative unit for the 1992-93 fiscal year received because of that requirement shall not be reduced because of this subsection for subsequent fiscal years that the superintendent is employed by that local school administrative unit so long as the superintendent is entitled to at least that amount of additional State-paid salary under the rules in effect for the 1992-93 fiscal year.
(i)  Longevity pay for principals and assistant principals shall be as provided for State employees.
(j)(1) If a principal is reassigned to a higher job classification because the principal is transferred to a school within a local school administrative unit with a larger number of State-allotted teachers, the principal shall be placed on the salary schedule as if the principal had served the principal's entire career as a principal at the higher job classification.
(2)	If a principal is reassigned to a lower job classification because the principal is transferred to a school within a local school administrative unit with a smaller number of State-allotted teachers, the principal shall be placed on the salary schedule as if the principal had served the principal's entire career as a principal at the lower job classification.
This subdivision applies to all transfers on or after the effective date of this section, except transfers in school systems that have been created, or will be created, by merging two or more school systems.  Transfers in these merged systems are exempt from the provisions of this subdivision for one calendar year following the date of the merger.
(k)  Participants in an approved full-time masters in school administration program shall receive up to a 10-month stipend at the beginning salary of an assistant principal during the internship period of the masters program.  Certification of eligible full-time interns shall be supplied to the Department of Public Instruction by the Principal's Fellow Program or a school of education where the intern participates in a full-time masters in school administration.

Requested by:  Representatives Arnold, Grady, Preston
PRINCIPAL SALARY STUDIES
Section 9.7.  Section 8.43(d) of S.L. 1997-443 reads as rewritten:
"(d)	The State Board of Education may use up to fifty thousand dollars ($50,000) of funds appropriated by this act to State Aid to Local School Administrative Units for the 1998-99 fiscal year to study principals' salaries including:
(1)	The relationship of principals' salaries to the salaries of teachers and other certified school personnel;
(2)	Whether the current relationship between the teacher and principal salary schedules should be increased to a three percent (3%) differential;
(3)	Whether assistant principals should be given additional steps for years of experience; and
(4)	The appropriate relationship of principal's salary to size of school.
  The State Board of Education shall report the results of the study to the Joint Legislative Education Oversight Committee prior to December 15, 1998."

Requested by:  Representatives Arnold, Grady, Preston
COMMUNITIES IN SCHOOLS FUNDS/DO NOT REVERT
Section 9.8.  Section 13(b) of S.L. 1998-23 reads as rewritten:
"(b)	This section becomes effective June 30, 1998."

[SECTIONS 9.9, 9.10 RESERVED]

Requested by:  Representatives Arnold, Grady, Preston
LITIGATION RESERVE
Section 9.11.  (a)	Section 14 of S.L. 1998-23 reads as rewritten:
"Section 14.  (a)	Funds in the State Board of Education's Litigation Reserve that are not expended or encumbered on June 30, 1998, shall not revert on July 1, 1998, but shall remain available for expenditure until June 30, 1999.
(b)	Subsection (a) of this section becomes effective June 30, 1998."
(b) The State Board of Education may expend up to five hundred thousand dollars ($500,000) for the 1998-99 fiscal year from unexpended funds for certified employees' salaries to pay expenses related to pending litigation.

Requested by:  Representatives Arnold, Grady, Preston
EXCEPTIONAL CHILDREN FUNDS
Section 9.12. (a) The funds appropriated for exceptional children in this act shall be allocated as follows:
(1)	Each local school administrative unit shall receive for academically gifted children the sum of seven hundred forty-six dollars and ninety-five cents ($746.95) per child for four percent (4%) of the 1998-99 allocated average daily membership in the local school administrative unit, regardless of the number of children identified as academically gifted in the local school administrative unit. The total number of children for which funds shall be allocated pursuant to this subdivision is 49,828 for the 1998-99 school year.
(2)	Each local school administrative unit shall receive for exceptional children other than academically gifted children the sum of two thousand two hundred forty-eight dollars and thirty-nine cents ($2,248.39) per child for the lesser of (i) all children who are identified as exceptional children other than academically gifted children or (ii) twelve and five-tenths percent (12.5%) of the 1998-99 allocated average daily membership in the local school administrative unit. The maximum number of children for which funds shall be allocated pursuant to this subdivision is 147,334 for the 1998-99 school year.
The dollar amounts allocated under this subsection for exceptional children shall also increase in accordance with legislative salary increments for personnel who serve exceptional children.
(b)	To the extent that funds appropriated for exceptional children other than academically gifted children are adequate to do so, the State Board of Education may allocate the excess of these funds to provide services for severely disabled children in school units and in group homes.

Requested by:  Representatives Arnold, Grady, Preston
ALTERNATIVE SCHOOLS/AT-RISK STUDENTS
Section 9.13.  The State Board of Education may use up to two hundred thousand dollars ($200,000) of the funds in the Alternative Schools/At-Risk Student allotment for the 1998-99 fiscal year to implement G.S. 115C-12(24) and to conduct studies of alternative schools.

Requested by:  Representatives Arnold, Grady, Preston
CHARTER SCHOOLS-1
Section 9.14. (a)	G.S. 115C-238.29F(d) reads as rewritten:
"(d)	Instructional Program. – 
(1)	The school shall provide instruction each year for at least 180 days.
(2)	The school shall design its programs to at least meet the student performance standards adopted by the State Board of Education and the student performance standards contained in the charter.
(3)	A charter school shall administer the tests adopted by the State Board of Education under G.S. 115C-174.11 that are used to implement the School-Based Management and Accountability Program in other public schools.
(4)	The school shall comply with policies adopted by the State Board of Education for charter schools relating to the education of children with special needs.
(5)	The school is subject to and shall comply with Article 27 of Chapter 115C of the General Statutes, except that a charter school may also exclude a student from the charter school and return that student to another school in the local school administrative unit in accordance with the terms of its charter."
(b) G.S. 115C-238.29G(a) reads as rewritten:
"(a)	The State Board of Education, or a chartering entity subject to the approval of the State Board of Education, may terminate or not renew a charter upon any of the following grounds:
(1)	Failure to meet the requirements for student performance contained in the charter or to meet the requirements for student testing contained in G.S. 115C-238.29F(d)(3).
(2)	Failure to meet generally accepted standards of fiscal management;
(3)	Violations of law;
(4)	Material violation of any of the conditions, standards, or procedures set forth in the charter;
(5)	Two-thirds of the faculty and instructional support personnel at the school request that the charter be terminated or not renewed; or
(6)	Other good cause identified."
(c)	This section becomes effective July 1, 1998, and applies to school years beginning with the 1998-99 school year.

Requested by:   Representative Daughtry
CHARTER SCHOOLS-2
Section 9.14A.  (a) G.S. 115C-238.29F(e) reads as rewritten:
"(e)	Employees. –
(1)	An employee of a charter school operated by a private nonprofit corporation is not an employee of the local school administrative unit in which the charter school is located. An employee of a charter school operated by a local school administrative unit is an employee of the local school administrative unit in which the charter school is located.  The charter school's board of directors shall employ and contract with necessary teachers to perform the particular service for which they are employed in the school; at least seventy-five percent (75%) of these teachers in grades kindergarten through five, at least fifty percent (50%) of these teachers in grades six through eight, and at least fifty percent (50%) of these teachers in grades nine through 12 shall hold teacher certificates. The board also may employ necessary employees who are not required to hold teacher certificates to perform duties other than teaching and may contract for other services. The board may discharge teachers and noncertificated employees.
(2)	No local board of education shall require any employee of the local school administrative unit to be employed in a charter school.
(3)	If a teacher employed by a local school administrative unit makes a written request for an extended leave of absence to teach at a charter school operated by a private nonprofit corporation, the local school administrative unit shall grant the leave. The local school administrative unit shall grant a leave for any number of years requested by the teacher, shall extend the leave for any number of years requested by the teacher, and shall extend the leave at the teacher's request. For the initial year of a charter school's operation, the local school administrative unit may require that the request for a leave or extension of leave be made up to 45 days before the teacher would otherwise have to report for duty. For subsequent years, the local school administrative unit may require that the request for a leave or extension of leave be made up to 90 days before the teacher would otherwise have to report for duty. A teacher who has career status under G.S. 115C-325 prior to receiving an extended leave of absence to teach at a charter school may return to a public school in the local school administrative unit with career status at the end of the leave of absence or upon the end of employment at the charter school if an appropriate position is available. If an appropriate position is unavailable, the teacher's name shall be placed on a list of available teachers and that teacher shall have priority on all positions for which that teacher is qualified in accordance with G.S. 115C-325(e)(2).
(4)	The employees of the charter school operated by a private nonprofit corporation shall be deemed employees of the local school administrative unit for purposes of providing certain State-funded employee benefits, including membership in the Teachers' and State Employees' Retirement System and the Teachers' and State Employees' Comprehensive Major Medical Plan. The State Board of Education provides funds to charter schools operated by private nonprofit corporations, approves the original members of the boards of directors of the charter schools, has the authority to grant, supervise, and revoke charters, and demands full accountability from charter schools for school finances and student performance. Accordingly, it is the determination of the General Assembly that charter schools operated by private nonprofit corporations are public schools and that the employees of these charter schools are public school " employees.  Employees of a charter school operated by a private nonprofit corporation whose board of directors elects to become a participating employer under G.S. 135-5.3 are 'teachers' for the purpose of membership in the North Carolina Teachers' and State Employees' Retirement System.  Employees of a charter school operated by a private nonprofit corporation whose board of directors elects to become a participating employer under G.S. 135-40.3A are 'teachers' for the purpose of membership in the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan. In no event shall anything contained in this Part require the North Carolina Teachers' and State Employees' Retirement System to accept employees of a private employer as members or participants of the System."
(b)	Article 1 of Chapter 135 of the General Statutes is amended by adding the following new section:
"§ 135-5.3.  Optional participation for charter schools operated by private nonprofit corporations.
(a)	The board of directors of each charter school operated by a private nonprofit corporation shall elect whether to become a participating employer in the Retirement System in accordance with this Article.  This election shall be in writing, shall be made no later than September 1, 1998, and shall be filed with the Retirement System and with the State Board of Education.  For each charter school employee who is employed on or before the date the board makes the election, membership in the System is effective as of the date the board makes the election.  For each charter school employee who is employed after the date the board makes the election, membership in the System is effective as of the date of that employee's entry into eligible service.  This subsection applies only to charter schools that received State Board of Education approval under G.S. 115C-238.29D in 1997 or 1998.
(b)	No later than 30 days after both parties have signed the written charter under G.S. 115C-238.29E, the board of directors of a charter school operated by a private nonprofit corporation shall elect whether to become a participating employer in the Retirement System in accordance with this Article.  This election shall be in writing and filed with the Retirement System and with the State Board of Education and is effective for each charter school employee as of the date of that employee's entry into eligible service.  This subsection applies to charter schools that receive State Board of Education approval under G.S. 115C-238.29D after 1998.
(c)	A board's election to become a participating employer in the Retirement System under this section is irrevocable and shall require all eligible employees of the charter school to participate.
(d)	No retirement benefit, death benefit, or other benefit payable under the Retirement System shall be paid by the State of North Carolina or the Board of Trustees of the Teachers' and State Employees' Retirement System with respect to any employee, or with respect to any beneficiary of an employee, of a charter school whose board of directors does not elect to become a participating employer in the Retirement System under this section.
(e)	The board of directors of each charter school shall notify each of its employees as to whether the board elected to become a participating employer in the Retirement System under this section.  This notification shall be in writing and shall be provided within 30 days of the board's election or at the time an initial offer for employment is made, whichever occurs last.  If the board did not elect to join the Retirement System, the notice shall include a statement that the employee shall have no legal recourse against the board or the State for any possible credit or reimbursement under the Retirement System.  The employee shall provide written acknowledgment of the employee's receipt of the notification under this subsection."
(c)	G.S. 135-4 is amended by adding the following new subsection to read:
"( bb)	Credit for Employment in Charter School Operated by a Private Nonprofit Corporation. – Any member may purchase creditable service for any employment as an employee of a charter school operated by a private nonprofit corporation whose board of directors did not elect to participate in the Retirement System under G.S. 135-5.3 upon completion of five years of membership service after that charter school employment by making a lump-sum payment into the Annuity Savings Fund. The payment by the member shall be equal to the full liability of the service credits calculated on the basis of the assumptions used for purposes of the actuarial valuation of the Retirement System's liabilities, taking into account the additional retirement allowance arising on account of the additional service credits commencing at the earliest age at which the member could retire with an unreduced retirement allowance, as determined by the Board of Trustees upon the advice of the actuary plus an administrative expense fee to be determined by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the terms 'full cost', 'full liability', and 'full actuarial cost' include assumed annual postretirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance."
(d)	G.S. 135-40.1(6) reads as rewritten:
"(6)	Employing Unit. – A North Carolina School System; Community College; State Department, Agency or Institution; Administrative Office of the Courts; or Association or Examining Board whose employees are eligible for membership in a State-Supported Retirement System. An employing unit also shall mean a charter school operated by a private nonprofit corporation in accordance with Part 6A of Chapter 115C of the General Statutes whose board of directors elects to become a participating employer in the Plan under G.S. 135-40.3A."
(e)  Part 3 of Article 3 of Chapter 135 is amended by adding the following new section:
"§ 135-40.3A.  Optional participation for charter schools operated by  private nonprofit corporations.
(a)	The board of directors of each charter school operated by a private nonprofit corporation shall elect whether to become a participating employer in the Plan in accordance with this Article. This election shall be in writing, shall be made no later than September 1, 1998, and shall be filed with the Executive Administrator and Board of Trustees and with the State Board of Education.  For each charter school employee who is employed on or before the date the board makes the election, membership in the Plan is effective as of the date the board makes the election.  For each charter school employee who is employed after the date the board makes the election, membership in the Plan is effective as of the date of that employee's entry into eligible service.   This subsection applies only to charter schools that received State Board of Education approval under G.S. 115C-238.29D in 1997 or 1998.
(b)	No later than 30 days after both parties have signed the written charter under G.S. 115C-238.29E, the board of directors of a charter school operated by a private nonprofit corporation shall elect whether to become a participating employer in the Plan in accordance with this Article.  This election shall be in writing and filed with the Executive Administrator, the Board of Trustees, and the State Board of Education.  This election is effective for each charter school employee as of the date of that employee's entry into eligible service.  This subsection applies to charter schools that receive State Board of Education approval under G.S. 115C-238.29D after 1998.
(c)	A board's election to become a participating employer in the Plan under this section is irrevocable and shall require all eligible employees of the charter school to participate.
(d)	If a charter school's board of directors does not elect to become a participating employer in the Plan under this section, that school's employees and the dependents of those employees are not eligible for any benefits under the Plan.
(e)	The board of directors of each charter school shall notify each of its employees as to whether the board elected to become a participating employer in the Plan under this section.  This notification shall be in writing and shall be provided within 30 days of the board's election or at the time an initial offer for employment is made, whichever occurs last.  If the board did not elect to become a participating employer in the Plan, the notice shall include a statement that the employee shall have no legal recourse against the board or the State for any possible benefit under the Plan.  The employee shall provide written acknowledgment of the employee's receipt of the notification under this subsection."
(f)  G.S. 105-228.90(b) reads as rewritten:
"(b)	Definitions. – The following definitions apply in this Article:
(1)	Reserved.
(2)	Charter school board. – A nonprofit corporation that has a charter under G.S. 115D-238.29D to operate a charter school.
(3)	City. – A city as defined by G.S. 160A-1(2). The term also includes an urban service district defined by the governing board of a consolidated city-county, as defined by G.S. 160B-2(1).
(4)	Code. – The Internal Revenue Code as enacted as of January 1, 1997, including any provisions enacted as of that date which become effective either before or after that date.
(5)	County. – Any one of the counties listed in G.S. 153A-10. The term also includes a consolidated city-county as defined by G.S. 160B-2(1).
(6)	Reserved. 
(7)	Electronic Funds Transfer. – A transfer of funds initiated by using an electronic terminal, a telephone, a computer, or magnetic tape to instruct or authorize a financial institution or its agent to credit or debit an account.
(8)	Reserved.
(9)	Person. – An individual, a fiduciary, a firm, an association, a partnership, a limited liability company, a corporation, a unit of government, or another group acting as a unit. The term includes an officer or employee of a corporation, a member, a manager, or an employee of a limited liability company, and a member or employee of a partnership who, as officer, employee, member, or manager, is under a duty to perform an act in meeting the requirements of Subchapter I, V, or VIII of this Chapter or of Article 3 of Chapter 119 of the General Statutes.
(10)	Secretary. – The Secretary of Revenue.
(11)	Tax. – A tax levied under Subchapter I, V, or VIII of this Chapter or an inspection tax levied under Article 3 of Chapter 119 of the General Statutes. Unless the context clearly requires otherwise, the terms "tax" and "additional tax" include penalties and interest as well as the principal amount.
(12)	Taxpayer. – A person subject to the tax or reporting requirements of Subchapter I, V, or VIII of this Chapter or of Article 3 of Chapter 119 of the General Statutes."
(g)  G.S. 105-449.88 reads as rewritten:
"§ 105-449.88.  Exemptions from the excise tax.
The excise tax on motor fuel does not apply to the following:
(1)	Motor fuel removed, by transport truck or another means of transfer outside the terminal transfer system, from a terminal for export, if the supplier of the motor fuel collects tax on it at the rate of the motor fuel's destination state.
(2)	Motor fuel sold to the federal government.
(3)	Motor fuel sold to the State for its use.
(4)	Motor fuel sold to a local board of education for use in the public school system. 
(5)	Motor fuel sold to a charter school board for use for charter school purposes."
(h)  G.S. 20-84 reads as rewritten:
"§ 20-84.  Vehicles owned by State, municipalities or orphanages, etc.; certain vehicles operated by the local chapters of American National Red Cross.
The Division upon proper proof being filed with it that any motor vehicle for which registration is herein required is owned by the State or any department thereof, or by any county, township, city or town, or by any board of education, or by any nonprofit corporation that has a charter under G.S. 115C-238.29D to operate a charter school, or by any orphanage or civil air patrol, or incorporated emergency rescue squad, or incorporated REACT (" Radio Emergency Association of Citizen Teams" ) Team, or for any motor vehicle involved exclusively in the support of a disaster relief effort, shall collect six dollars ($6.00) for the registration of such motor vehicles, but shall not collect any fee for application for certificate of title in the name of the State or any department thereof, or by any county, township, city or town, or by any board of education or orphanage: Provided, that the term "owned" shall be construed to mean that such motor vehicle is the actual property of the State or some department thereof or of the county, township, city or town, or of the board of education, and no motor vehicle which is the property of any officer or employee of any department named herein shall be construed as being "owned" by such department. Provided, that the above exemptions from registration fees shall also apply to any church-owned bus used exclusively for transporting children and parents to Sunday school and church services and for no other purpose.
In lieu of the annual six dollars ($6.00) registration provided for in this section, the Division may for the license year 1950 and thereafter provide for a permanent registration of the vehicles described in this section and issue permanent registration plates for such vehicles. The permanent registration plates issued pursuant to this paragraph shall be of a distinctive color and shall bear thereon the word "permanent." Such plates may be transferred as provided in G.S. 20-78 to a replacement vehicle of the same classification. For the permanent registration and issuance of permanent registration plates provided for in this paragraph, the Division shall collect a fee of six dollars ($6.00) for each vehicle so registered and licensed.
The provisions of this section are hereby made applicable to vehicles owned by a rural fire department, agency or association.
The Division of Motor Vehicles shall issue to the North Carolina Tuberculosis Association, Incorporated, or any local chapter or association of said corporation, for a fee of six dollars ($6.00) for each plate a permanent registration plate which need not be thereafter renewed for each motor vehicle in the form of a mobile X-ray unit which is owned by said North Carolina Tuberculosis Association, Incorporated, or any local chapter or local association thereof and operated exclusively in this State for the purpose of diagnosis, treatment and discovery of tuberculosis. The initial six dollars ($6.00) fee required by this section and for this purpose shall be in full payment of the permanent registration plates issued for such vehicle operated as a mobile X-ray unit, and such plates need not thereafter be renewed, and such plates may be transferred as provided in G.S. 20-78 to replacement vehicles to be used for the purposes above described and for which the plates were originally issued.
The Division of Motor Vehicles shall issue to the American National Red Cross, upon application of any local chapter thereof and payment of a fee of six dollars ($6.00) for each plate, a permanent registration plate, which need not be thereafter renewed, for all disaster vans, bloodmobiles, handivans, and such sedans and station wagons as are used for emergency or disaster work, and operated by a local chapter in this State in the business of the American National Red Cross. Such plates may be transferred as provided in G.S. 20-78 to a replacement vehicle to be used for the purposes above described and for which the plates were originally issued. In the event of transfer of ownership to any other person, firm or corporation, or transfer or reassignment of any vehicle bearing such registration plate to any chapter or association of the American National Red Cross in any other state, territory or country, the registration plate assigned to such vehicle shall be surrendered to the Division of Motor Vehicles.
In lieu of all other registration requirements, the Commissioner shall each year assign to the State Highway Patrol, upon payment of six dollars ($6.00) per registration plate, a sufficient number of regular registration plates of the same letter prefix and in numerical sequence beginning with number 100 to meet the requirements of the State Highway Patrol for use on Division vehicles assigned to the State Highway Patrol. The commander of the Patrol shall, when such plates are assigned, issue to each member of the State Highway Patrol a registration plate for use upon the Division vehicle assigned to him pursuant to G.S. 20-190 and assign a registration plate to each Division service vehicle operated by the Patrol. An index of such assignments of registration plates shall be kept at each State Highway Patrol radio station and a copy thereof shall be furnished to the registration division of the Division. Information as to the individual assignments of such registration plates shall be made available to the public upon request to the same extent and in the same manner as regular registration information. The commander, when necessary, may reassign registration plates provided that such reassignment shall be made to appear upon the index required herein within 20 days after such reassignment.
The Division of Motor Vehicles shall, upon appropriate certification of financial responsibility, issue to sheltered workshops recognized or approved by the Division of Vocational Rehabilitation Services and to public and nonprofit agencies or organizations which provide transportation for or operate programs subject to and approved in accordance with standards adopted by the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services of the Department of Health and Human Services upon application and payment of a fee of six dollars ($6.00) for each plate, a permanent registration plate for vehicles registered to and operated by such agencies. The initial six dollars ($6.00) fee required by this section and for this purpose shall be in full payment of the permanent registration plate issued for such vehicle operated by a sheltered workshop and such plates need not thereafter be renewed, and such plates may be transferred as provided in G.S. 20-78 to a replacement vehicle to be used by the sheltered workshop designated on the registration card.
On and after January 1, 1972, permanent registration plates used on all vehicles owned by the State of North Carolina or a department thereof shall be of a distinctive color and design which shall be readily distinguishable from all other permanent registration plates issued pursuant to this section or G.S. 20-84.1. For the purpose of carrying out the intent of this paragraph, all vehicles owned by the State of North Carolina or a department thereof in operation as of October 1, 1971, and bearing a permanent registration shall be reregistered during the months of October, November and December, 1971, and upon reregistration, registration plates issued for such vehicles shall be of a distinctive color and design as provided for hereinabove."
(i)  G.S. 115C-238.29B(a) reads as rewritten:
"(a)	Any person, group of persons, nonprofit corporation, or local board of education seeking to establish a charter school may apply to establish a charter school. If an applicant other than a local board of education seeks to convert a public school to a charter school, the application shall include a statement signed by a majority of the teachers and instructional support personnel currently employed at the school indicating that they favor the conversion and evidence that a significant number of parents of children enrolled in the school favor conversion.  If a local board of education seeks a charter for a school, the application shall include a statement that the local board understands that no employee shall be required to work at the charter school and no student shall be assigned to the school except at the request of the student's parent or guardian."
(j)  G.S. 115C-238.29B(b)(3) reads as rewritten:
"(3)	The governance structure of the school, if the applicant is not a local board of education, including the names of the proposed initial members of the board of directors of the nonprofit, tax-exempt corporation and the process to be followed by the school to ensure parental involvement."
(k)  G.S. 115C-238.29B(b)(11) reads as rewritten:
"(11)	The procedures by which students can be excluded from the charter school and returned to a public  school other than a charter school. Notwithstanding any law to the contrary, any local board may refuse to admit any student who is suspended or expelled from a charter school due to actions that would lead to suspension or expulsion from a public school under G.S. 115C-391 until the period of suspension or expulsion has expired."
(l)  G.S. 115C-238.29B(c) reads as rewritten:
	"(c)	An applicant shall submit the application to a chartering entity for preliminary approval. A chartering entity may be:
(1)	The local board of education of the local school administrative unit in which the charter school will be located, unless the applicant is a local board of education;
(2)	The board of trustees of a constituent institution of The University of North Carolina, so long as the constituent institution is involved in the planning, operation, or evaluation of the charter school; or
(3)	The State Board of Education.
Regardless of which chartering entity receives the application for preliminary approval, the State Board of Education shall have final approval of the charter school.
Notwithstanding the provisions of this subsection, if the State Board of Education finds that an applicant (i)	submitted an application to a local board of education and received final approval from the State Board of Education, but (ii) is unable to find a suitable location within that local school administrative unit to operate, the State Board of Education may authorize the charter school to operate within an adjacent local school administrative unit for one year only. The charter school cannot operate for more than one year unless it reapplies, in accordance with subdivision (1), (2), or (3) of this subsection, and receives final approval from the State Board of Education."
(m)  G.S. 115C-238.29B(d) is repealed.
(n)  G.S. 115C-238.29D(b) is repealed.
(o)  G.S. 115C-238.29E reads as rewritten:
"§ 115C-238.29E.  Charter school operation.
(a)	A charter school that is approved by the State shall be a public school within the local school administrative unit in which it is located. It shall be accountable to the local board of education if the applicant for the charter is the local board of education or if it applied for and received preliminary approval from that local board for purposes of ensuring compliance with applicable laws and the provisions of its charter. All other charter schools shall be accountable to the State Board for ensuring compliance with applicable laws and the provisions of their charters, except that any of these charter schools may agree to be accountable to the local board of the school administrative unit in which the charter school is located rather than to the State Board.
(b)	A charter school other than a charter school for which the applicant is a local board of education shall be operated by a private nonprofit corporation that shall have received federal tax-exempt status no later than 24 months following final approval of the application.  A charter school for which the applicant is a local board of education shall be operated by the local board of education.
(c)	The State Board shall issue the written charter no later than 30 days after the date on which the State Board grants final approval for the charter.  The written charter shall incorporate the information provided in the application, as modified during the charter approval process, and any terms and conditions applicable to all charter schools under the rules of the State Board.  The charter school is not required to agree to any additional terms, whether requested by the State Board, the local board where the charter school is located, or the entity to which the charter school is accountable.  No additional terms may be imposed on the charter school as a condition for receipt of local funds.  The charter school shall operate under the written charter signed by the entity to which it is accountable and the applicant.
(d)	The board of directors of the charter school operated by a private nonprofit corporation shall decide matters related to the operation of the school, including budgeting, curriculum, and operating procedures.  The local board of education shall decide these matters for a charter school operated by a local board.
(e)	The specific location of a charter school operated by a private nonprofit corporation shall not be prescribed or limited by a local board or other authority except a zoning authority. The school may lease space from a local board of education or as is otherwise lawful in the local school administrative unit in which the charter school is located. If a charter school leases space from a sectarian organization, the charter school classes and students shall be physically separated from any parochial students, and there shall be no religious artifacts, symbols, iconography, or materials on display in the charter school's entrance, classrooms, or hallways. Furthermore, if a charter school leases space from a sectarian organization, the charter school shall not use the name of that organization in the name of the charter school.
At the request of the charter school, the local board of education of the local school administrative unit in which the charter school will be located shall lease or may sell any available building or land to the charter school unless the board demonstrates that the lease or sale is not economically or practically feasible or that the local board does not have adequate classroom space to meet its enrollment needs. Notwithstanding any other law, a local board of education may provide a school facility to a charter school free of charge; however, the charter school is responsible for the maintenance of and insurance for the school facility.
(f)	Except as provided in this Part and pursuant to the provisions of its charter, a charter school is exempt from statutes and rules applicable to a local board of education or local school administrative unit.  The State Board shall not adopt any rules, policies, procedures, requirements, standards, terms, conditions, or regulations governing charter schools unless they are authorized specifically under this Part; they are applicable uniformly to all charter schools; and the Board proceeds under Chapter 150B of the General Statutes.  Only those rules, policies, procedures, requirements, standards, terms, conditions, and regulations that are adopted by the Board shall apply to charter schools and may be included in the written charter and amendments to that charter.  The Board may adopt guidelines to assist charter schools.  These guidelines are not binding on charter schools and shall not be included in any written charter unless the charter school agrees to the inclusion."
(p)  G.S. 115C-238.29F(b) reads as rewritten:
"(b)	School Nonsectarian. – A charter school shall be nonsectarian in its programs, admission policies, employment practices, and all other operations and shall not charge tuition, application fees, or admission fees. A charter school shall not be affiliated with a nonpublic sectarian school or a religious institution."
(q)  G.S. 115C-238.29F(c) is amended by adding the following new subdivision:
"(3)	The civil liability for a charter school operated by a local school administrative unit shall be the same as for any other school operated by the unit."
(r)  G.S. 115C-238.29F(h) reads as rewritten:
"(h)	Transportation. – The charter school may provide transportation for students enrolled at the school. The charter school shall develop a transportation plan so that transportation is not a barrier to any student who resides in the local school administrative unit in which the school is located. The charter school is not required to provide transportation to any student who lives within one and one-half miles of the school. At the request of the charter school and if the local board of the local school administrative unit in which the charter school is located operates a school bus system, then that local board may contract with the charter school to provide transportation in accordance with the charter school's transportation plan to students who reside in the local school administrative unit and who reside at least one and one-half miles of the charter school. A local board may charge the charter school a reasonable charge that is sufficient to cover the cost of providing this transportation. Furthermore, a local board may refuse to provide transportation under this subsection if it demonstrates there is no available space on buses it intends to operate during the term of the contract or it would not be practically feasible to provide this transportation.
A student who attends a charter school operated by a local board of education and who resides within the local school administrative unit in which the school is located has the same right to school transportation as students assigned to other public schools in the local school administrative unit."
(s)  G.S. 115C-238.29F(g)(5) reads as rewritten:
"(5)	A charter school shall not discriminate against any student on the basis of ethnicity, national origin, gender, or disability. Except as otherwise provided by law or the mission of the school as set out in the charter, the school shall not limit admission to students on the basis of intellectual ability, measures of achievement or aptitude, athletic ability, disability, race, creed, gender, national origin, religion, or ancestry. The charter school may give enrollment priority to siblings of currently enrolled students who were admitted to the charter school in a previous year and to children of the school's principal, teachers, and teacher assistants. In addition, and only for its first year of operation, the charter school may give enrollment priority to children of the initial members of the charter school's board of directors, so long as (i) these children are limited to no more than ten percent (10%) of the school's total enrollment or to 20 students, whichever is less, and (ii) the charter school is not a former public or private school. The charter school shall make a good faith effort to attract and enroll students so that the population of the school reasonably reflects the racial and ethnic composition of the general population residing within the local school administrative unit in which the school is located or the racial and ethnic composition of the special population that the school seeks to serve residing within the local school administrative unit in which the school is located. The school shall be subject to any court-ordered desegregation plan in effect for the local school administrative unit."
(t)  G.S. 115C-238.29G(c) reads as rewritten:
"(c)	The State Board and the charter school are encouraged to make a good faith attempt to resolve the differences that may arise between them. Furthermore, the local board of the local school administrative unit in which the charter school is located and the charter school are encouraged to make a good faith attempt to resolve any differences that may arise between them.  The parties in dispute may agree to jointly select a mediator. The mediator shall act as a neutral facilitator of disclosures of factual information, statements of positions and contentions, and efforts to negotiate an agreement settling the differences. The mediator shall, at the request of either party, commence a mediation immediately or within a reasonable period of time. The mediation shall be held in accordance with rules and standards of conduct adopted under Chapter 7A of the General Statutes governing mediated settlement conferences but modified as appropriate and suitable to the resolution of the particular issues in disagreement.
Notwithstanding Article 33C of Chapter 143 of the General Statutes, the mediation proceedings shall be conducted in private. Evidence of statements made and conduct occurring in a mediation are not subject to discovery and are inadmissible in any court action. However, no evidence otherwise discoverable is inadmissible merely because it is presented or discussed in a mediation. The mediator shall not be compelled to testify or produce evidence concerning statements made and conduct occurring in a mediation in any civil proceeding for any purpose, except disciplinary hearings before the State Bar or any agency established to enforce standards of conduct for mediators. The mediator may determine that an impasse exists and discontinue the mediation at any time. The mediator shall not make any recommendations or public statement of findings or conclusions. The parties in dispute shall share equally the mediator's compensation and expenses. The mediator's compensation shall be determined according to rules adopted under Chapter 7A of the General Statutes."
(u)  G.S. 115C-238.29H reads as rewritten:
"§ 115C-238.29H.  State and local funds for a charter school.
(a)	The State Board of Education shall allocate to each charter school (i) an amount equal to the average per pupil allocation for average daily membership from the local school administrative unit allotments in which the charter school is located for each child attending the charter school except for the allocation for children with special needs and (ii) an additional amount for each child attending the charter school who is a child with special needs. In accordance with G.S. 115C-238.29D(d), the State Board shall allow for annual adjustments to the amount allocated to a charter school based on its enrollment growth in school years subsequent to the initial year of operation.
In the event a child with special needs leaves the charter school and enrolls in a public school during the first 60 school days in the school year, the charter school shall return a pro rata amount of funds allocated for that child to the State Board, and the State Board shall reallocate those funds to the local school administrative unit in which the public school is located. In the event a child with special needs enrolls in a charter school during the first 60 school days in the school year, the State Board shall allocate to the charter school the pro rata amount of additional funds for children with special needs.
(a1)	Funds allocated by the State Board of Education may be used to enter into operational and financing leases for real property or mobile classroom units for use as school facilities for charter schools and may be used for payments on loans made to charter schools for facilities or equipment. However, State funds shall not be used to obtain any other interest in real property or mobile classroom units. No indebtedness of any kind incurred or created by the charter school shall constitute an indebtedness of the State or its political subdivisions, and no indebtedness of the charter school shall involve or be secured by the faith, credit, or taxing power of the State or its political subdivisions, unless the charter school is operated by a local board of education. Every contract or lease into which a charter school enters except for contracts or leases entered into by a local board of education shall include the previous sentence. The school also may own land and buildings it obtains through non-State sources.
(b)	If a student attends a charter school, the local school administrative unit in which the child resides shall transfer to the charter school an amount equal to the per pupil local current expense appropriation to the local school administrative unit for the fiscal year.  The per pupil local current expense appropriation shall be calculated by dividing the total county appropriation to the local school administrative unit's local current expense fund, including appropriations funded by supplemental taxes, by the unit's average daily membership for the budget year as determined by and certified to the unit and the board of county commissioners by the State Board.  In order to establish the number of children for whom these funds are to be transferred, the local administrative unit may require the charter school to provide electronically an invoice that identifies each child for whom these funds are to be remitted, that child's address, and that child's Student Information Management System identification number.  The local school administrative unit shall not require any other information from the charter school as a condition of the unit's remission of these funds.  If the local school administrative unit requires this invoice, the unit shall provide to the charter school the local current expense appropriation based on the number of children in the most recent invoice.  If no invoice is required, the local current expense appropriation shall be based on the number of children as mutually agreed upon by the local school administrative unit and the charter school.  The local school administrative unit shall remit these funds to the charter school at times that are mutually agreed upon by the unit and the charter school, but if no agreement is reached, then the unit shall remit these funds to the charter school no later than one week after the unit receives the funds from the board of county commissioners as established under G.S. 115C-437 and upon receipt of an invoice, if required.  The State Board may withhold money used for payment of salaries for the superintendent and school finance officer of any local school administrative unit if the Board finds that the unit is not using its best efforts to remit these funds on a timely basis.
(c)	The board of county commissioners of the county in which the charter school is located may allocate to the charter school funds that may be used for capital outlay purposes."
(v)  G.S. 115C-452 reads as rewritten:
"§ 115C-452.  Fines and forfeitures.
The clear proceeds of all penalties and forfeitures and of all fines collected in the General Court of Justice in each county shall be remitted by the clerk of the superior court to the county finance officer, who shall forthwith determine what portion of the total is due to each local school administrative unit and to each charter school in the county and remit the appropriate portion of the amount to the finance officer of each local school administrative unit and each charter school. The first twenty-five percent (25%) of fines and forfeitures shall be apportioned according to the projected average daily membership of each local school administrative unit as determined by and certified to the local school administrative units and the board of county commissioners by the State Board of Education pursuant to G.S. 115C-430.  The remainder of the fines and forfeitures shall be apportioned according to the projected average daily membership of each local school administrative unit and each charter school as determined by and certified to the local school administrative units, the charter schools, and the board of county commissioners by the State Board of Education pursuant to G.S. 115C-430 or G.S. 115C-238.29H(b)."
(w)  G.S. 115C-457.3 reads as rewritten:
"§ 115C-457.3.  Transfer of funds to the State School Technology Fund.
The Office of State Budget and Management shall transfer funds accruing to the Civil Penalty and Forfeiture Fund to the State School Technology Fund.  The first twenty-five percent (25%) of these funds shall be allocated to local school administrative units on the basis of average daily membership.  The remaining funds shall be allocated to local school administrative units and charter schools on the basis of average daily membership.  Notwithstanding any other law, the funds allocated to charter schools under this section shall be used for school technology; however, in accordance with G.S. 115C-238.29E(f), the charter school is not required to develop or submit a school technology plan under Part 3A of Article 8 of this Chapter."
(x)  G.S. 150B-2(8a) reads as rewritten:
"(8a)	'Rule' means any agency regulation, standard, or statement of general applicability that implements or interprets an enactment of the General Assembly or Congress or a regulation adopted by a federal agency or that describes the procedure or practice requirements of an agency. The term includes the establishment of a fee and the amendment or repeal of a prior rule.  The term also includes any State Board of Education or Department of Public Instruction rule, policy, procedure, requirement, standard, term, condition, or regulation that is authorized specifically under Part 6A of Article 16 of Chapter 115C of the General Statutes. The term does not include the following:
a.	Statements concerning only the internal management of an agency or group of agencies within the same principal office or department enumerated in G.S. 143A-11 or 143B-6, including policies and procedures manuals, if the statement does not directly or substantially affect the procedural or substantive rights or duties of a person not employed by the agency or group of agencies.
b.	Budgets and budget policies and procedures issued by the Director of the Budget, by the head of a department, as defined by G.S. 143A-2 or G.S. 143B-3, by an occupational licensing board, as defined by G.S. 93B-1, or by the State Board of Elections.
c.	Nonbinding interpretative statements within the delegated authority of an agency that merely define, interpret, or explain the meaning of a statute or rule.
d.	A form, the contents or substantive requirements of which are prescribed by rule or statute.
e.	Statements of agency policy made in the context of another proceeding, including:
1.	Declaratory rulings under G.S. 150B-4.
2.	Orders of establishing or fixing rates or tariffs.
f.	Requirements, communicated to the public by the use of signs or symbols, concerning the use of public roads, bridges, ferries, buildings, or facilities.
g.	Statements that set forth criteria or guidelines to be used by the staff of an agency in performing audits, investigations, or inspections; in settling financial disputes or negotiating financial arrangements; or in the defense, prosecution, or settlement of cases.
h.	Scientific, architectural, or engineering standards, forms, or procedures, including design criteria and construction standards used to construct or maintain highways, bridges, or ferries.
i.	Job classification standards, job qualifications, and salaries established for positions under the jurisdiction of the State Personnel Commission.
j.	Establishment of the interest rate that applies to tax assessments under G.S. 105-241.1 and the variable component of the excise tax on motor fuel under G.S. 105-449.80."
(y)  Article 2A of Chapter 150B of the General Statutes is amended by adding the following new Part:
"Part 6.  Rules Affecting Charter Schools.
"§ 150B-21.30.  Procedures applicable to rules affecting charter schools.
(a)	G.S. 150B-21.2(a)(1) shall not apply to proposed rules adopted by the State Board of Education if the proposed rules are authorized specifically under Part 6A of Article 16 of Chapter 115C of the General Statutes.
(b)	Notwithstanding G.S. 150B-21.3(b), a permanent rule that is adopted by the State Board of Education, is approved by the Rules Review Commission, and is authorized specifically under Part 6A of Article 16 of Chapter 115C of the General Statutes, becomes effective five business days after the Commission delivers the rule to the Codifier of Rules, unless the rule specifies a later effective date.  If the State Board of Education specifies a later effective date, the rule becomes effective upon that date.  A permanent rule that is adopted by the State Board of Education to implement Part 6A of Article 16 of Chapter 115C of the General Statutes, but is not approved by the Rules Review Commission, shall not become effective.
(c)	The rule proposed by the State Board of Education may create, amend, or repeal a rule.  The State Board of Education shall indicate in the notice of proposed text that the rule is authorized specifically under Part 6A of Article 16 of Chapter 115C of the General Statutes and that the State Board of Education is proceeding under that authority.
"§ 150B-21.31.  Procedures applicable to charters.
The State Board of Education shall submit to the Commission the standard written charter agreement that the State Board of Education approved and issued under Part 6A of Article 16 of Chapter 115C of the General Statutes to charter schools that received State Board approval under G.S. 115C-238.29D in 1997 or 1998.  The State Board of Education also shall submit to the Commission any modifications to that written charter agreement that the State Board approves after July 1, 1998, for issuance to charter schools approved in subsequent years.  The Commission shall review each portion of the charter and each modification to that charter as if it is a rule and shall follow the procedure established in Part 3 of this Article.   The Commission shall determine whether each portion or modification is authorized specifically under Part 6A of Article 16 of Chapter 115C of the General Statutes.  The Commission may approve only portions and modifications of the charter that are so authorized.  All approved portions and modifications of the charter are binding on the charter school.  Each portion or modification of the charter that is not approved is void and shall not apply to any charter school unless the charter school's board of directors agrees to its applicability.  The board of directors is not required to agree to any portion or modification of the charter that the Commission does not approve. This section shall not apply to information in a charter school's application, as modified during the approval process, that is incorporated in each charter school's charter agreement."
(z)(1)	The State Board of Education, in collaboration with the Charter School Professional Association, shall evaluate the Uniform Education Reporting System to determine whether this is the best way for charter schools to report information to the State Board or whether there is a mutually functional alternative that could be implemented.  The State Board shall report the results of this evaluation and its recommendations, including any proposed legislative changes, to the Joint Legislative Commission on Governmental Operations by December 1, 1998.
(2)	If, at any time, a majority of charter schools present to the State Board of Education an alternative reporting system that is the functional equivalent of the Uniform Education Reporting System and the alternative system has been benchmarked, the State Board shall consider the adoption of that system for charter schools.
(aa) G.S. 105-164.14(c) reads as rewritten:
"(c)	Certain Governmental Entities. – A governmental entity listed in this subsection is allowed an annual refund of sales and use taxes paid by it under this Article, except under G.S. 105-164.4(a)(4a) and G.S. 105-164.4(a)(4c), on direct purchases of tangible personal property. Sales and use tax liability indirectly incurred by a governmental entity on building materials, supplies, fixtures, and equipment that become a part of or annexed to any building or structure that is owned or leased by the governmental entity and is being erected, altered, or repaired for use by the governmental entity is considered a sales or use tax liability incurred on direct purchases by the governmental entity for the purpose of this subsection. A request for a refund must be in writing and must include any information and documentation required by the Secretary. A request for a refund is due within six months after the end of the governmental entity's fiscal year.
This subsection applies only to the following governmental entities:
(1)	A county.
(2)	A city as defined in G.S. 160A-1.
(2a)	A consolidated city-county as defined in G.S. 160B-2.
(2b)	A local school administrative unit.
(3)	A metropolitan sewerage district or a metropolitan water district in this State.
(4)	A water and sewer authority created under Chapter 162A of the General Statutes.
(5)	A lake authority created by a board of county commissioners pursuant to an act of the General Assembly.
(6)	A sanitary district.
(7)	A regional solid waste management authority created pursuant to G.S. 153A-421.
(8)	An area mental health, developmental disabilities, and substance abuse authority, other than a single-county area authority, established pursuant to Article 4 of Chapter 122C of the General Statutes.
(9)	A district health department.
(10)	A regional council of governments created pursuant to G.S. 160A-470.
(11)	A regional planning and economic development commission or a regional economic development commission created pursuant to Chapter 158 of the General Statutes.
(12)	A regional planning commission created pursuant to G.S. 153A-391.
(13)	A regional sports authority created pursuant to G.S. 160A-479.
(14)	A public transportation authority created pursuant to Article 25 of Chapter 160A of the General Statutes.
(14a)	A facility authority created pursuant to Part 4 of Article 20 of Chapter 160A of the General Statutes.
(15)	A regional public transportation authority created pursuant to Article 26 of Chapter 160A of the General Statutes.
(16)	A local airport authority that was created pursuant to a local act of the General Assembly and has at least one of the following characteristics:
a.	It has all of the rights of a municipality.
b.	A local act of the General Assembly declares it to be a municipality.
c.	A local act of the General Assembly specifically authorizes it to receive a refund under this section.
(17)	A joint agency created by interlocal agreement pursuant to G.S. 160A-462 to operate a public broadcasting television station.
(18)	The North Carolina Low-Level Radioactive Waste Management Authority created pursuant to Chapter 104G of the General Statutes.
(19)	The North Carolina Hazardous Waste Management Commission created pursuant to Chapter 130B of the General Statutes.
(20)	A constituent institution of The University of North Carolina, but only with respect to sales and use tax paid by it for tangible personal property acquired by it through the expenditure of contract and grant funds.
(21)	The University of North Carolina Hospitals at Chapel Hill."
(bb)  Subsections (a) through (e) of this section become effective February 1, 1998.  The remainder of this section becomes effective July 1, 1998.  Subsection (aa) of this section applies to taxes paid on or after July 1, 1998.

Requested by:  Representatives Arnold, Grady, Preston
TESTING
Section 9.15. (a) Of the funds appropriated for State Aid to Local School Administrative Units, the State Board of Education may use up to two million dollars ($2,000,000) for the 1998-99 fiscal year to:
(1)	Cover cost increases in end-of-grade, end-of-course, and other tests previously authorized by the SBE and the General Assembly, that are caused by increases in average daily membership;
(2)	Reestablish high school end-of-course tests previously established by the State Board of Education in accordance with Section 8.27 of S.L. 1997-443;
(3)	Develop new end-of-course tests required for high school, in accordance with Section 8.27 of S.L. 1997-443; and
(4)	Begin the development of alternative assessments for children with special needs.
The  General Assembly encourages the Director of the Budget to include these funds in the continuation budget request for the 1999-2000 fiscal year and subsequent fiscal years.
(b) G.S. 115C-174.11(c)(1) reads as rewritten:
"(1)	The State Board of Education shall adopt a system of annual testing for grades three through 12. These tests shall be designed to measure progress toward reading, communication skills, and mathematics for grades three through eight, and toward competencies designated by the State Board for grades nine through 12.  Notwithstanding subsection (a) of this section, the State Board shall develop and implement a study allowing selected local school administrative units that volunteer to administer a standardized test in May, 12 months prior to the third grade end-of-grade test, in order to establish a baseline that will be used to measure academic growth at the end of third grade.  Initially, the State Board shall select 12 volunteer local school administrative units that are diverse in geography and size to participate in the study.  If the State Board determines that a standardized test administered in May, 12 months prior to the third grade end-of-grade test, is more reliable than a standardized test administered at the beginning of third grade for the purpose of measuring academic growth, the State Board may change the test date for additional local school units.  The State Board shall report the results of the study to the Joint Legislative Education Oversight Committee by October 15, 2000.
	Baseline measurements administered in May, 12 months prior to the third grade end-of-grade test, are not public records as provided in Chapter 132 of the General Statutes."

Requested by:  Representatives Arnold, Grady, Preston
SUBSTITUTE TEACHERS
Section 9.16. (a) G.S. 115C-12(8) reads as rewritten:
"(8)	Power to Make Provisions for Sick Leave and for Substitute Teachers. – The Board shall provide for sick leave with pay for all public school employees in accordance with the provisions of this Chapter and shall promulgate rules and regulations providing for necessary substitutes on account of sick leave and other teacher absences.
The minimum pay for a substitute teacher who holds a teaching certificate shall be fifty-four and five-tenths percent (54.5%) of the daily pay rate of an entry-level teacher with an 'A' certificate.  The minimum pay for a substitute teacher who does not hold a teaching certificate shall be thirty-eight and five-tenths percent (38.5%) of the daily pay rate of an entry-level teacher with an 'A' certificate.  The pay for noncertified substitutes shall not exceed the pay of certified substitutes.
Local boards may use State funds allocated for substitute teachers to hire full-time substitute teachers.
If a teacher assistant acts as a substitute teacher, the salary of the teacher assistant for the day shall be the same as the daily salary of an entry-level teacher with an 'A' certificate.
."
(b)	If the average number of substitute teacher days taken by teachers in a local school administrative unit is higher than the statewide average, the local board of education shall determine the reasons unit average is high and shall develop a plan for decreasing the unit average.

Requested by:  Representatives Arnold, Grady, Preston
TORT CLAIM LIABILITY/SCHOOL BUSES
Section 9.17. (a) G.S. 115C-257 reads as rewritten:
"§ 115C-257.  Attorney General to pay claims.
The Attorney General is hereby authorized to pay reasonable medical expenses, not to exceed three thousand dollars ($3,000), incurred within one year from the date of accident to or for each pupil who sustains bodily injury or death caused by accident, while boarding, riding on, or alighting from a school bus operated by any local school administrative unit."
(b)	G.S. 143-300.1 reads as rewritten:
"§ 143-300.1.  Claims against county and city boards of education for accidents involving school buses or school transportation service vehicles.
(a)	The North Carolina Industrial Commission shall have jurisdiction to hear and determine tort claims against any county board of education or any city board of education, which claims arise as a result of any alleged mechanical defects or other defects which may affect the safe operation of a public school bus or school transportation service vehicle resulting from an alleged negligent act of maintenance personnel or as a result of any alleged negligent act or omission of the driver, transportation safety assistant, or monitor of a public school bus or school transportation service vehicle when:
(1)	The salary of that driver is paid or authorized to be paid from the State Public School Fund, and the driver is an employee of the county or city administrative unit of which that board is the governing body,
(1a)	The monitor was appointed and acting in accordance with G.S. 115C-245(d),
(1b)	The transportation safety assistant was employed and acting in accordance with G.S. 115C-245(e), or
(2)	The driver is an unpaid school bus driver trainee under the supervision of an authorized employee of the Department of Transportation, Division of Motor Vehicles, or an authorized employee of that board or a county or city administrative unit thereof,
and which driver was at the time of the alleged negligent act or omission operating a public school bus or school transportation service vehicle in the course of his employment by or training for that administrative unit or board, which monitor was at the time of the alleged negligent act or omission acting as such in the course of serving under G.S. 115C-245(d), or which transportation safety assistant was at the time of the alleged negligent act or omission acting as such in the course of serving under G.S. 115C-245(e).  The liability of such county or city board of education, the defenses which may be asserted against such claim by such board, the amount of damages which may be awarded to the claimant, and the procedure for filing, hearing and determining such claim, the right of appeal from such determination, the effect of such appeal, and the procedure for taking, hearing and determining such appeal shall be the same in all respects as is provided in this Article with respect to tort claims against the State Board of Education except as hereinafter provided. Any claim filed against any county or city board of education pursuant to this section shall state the name and address of such board, the name of the employee upon whose alleged negligent act or omission the claim is based, and all other information required by G.S. 143-297 in the case of a claim against the State Board of Education. Immediately upon the docketing of a claim, the Industrial Commission shall forward one copy of the plaintiff's affidavit to the superintendent of the schools of the county or city administrative unit against the governing board of which such claim is made, one copy of the plaintiff's affidavit to the State Board of Education and one copy of the plaintiff's affidavit to the office of the Attorney General of North Carolina. All notices with respect to tort claims against any such county or city board of education shall be given to the superintendent of schools of the county or city administrative unit of which such board is a governing board, to the State Board of Education and also to the office of the Attorney General of North Carolina.
(b)	The Attorney General shall be charged with the duty of representing the city or county board of education in connection with claims asserted against them pursuant to this section where the amount of the claim, in the opinion of the Attorney General, is of sufficient import to require and justify such appearance.
(c)	In the event that the Industrial Commission shall make award of damages against any county or city board of education pursuant to this section, the Attorney General shall draw a voucher for the amount required to pay such award. The funds necessary to cover vouchers written by the Attorney General for claims against county and city boards of education for accidents involving school buses and school transportation service vehicles shall be made available from funds appropriated to the Department of Public Instruction. Neither the county or city boards of education, or the county or city administrative unit shall be liable for the payment of any award made  pursuant to the provisions of this section in excess of the amount paid upon such voucher by the Attorney General. Settlement and payment may be made by the Attorney General as provided in G.S. 143-295.
(d)	The Attorney General may defend any civil action which may be brought against the driver, transportation safety assistant, or monitor of a public school bus or school transportation service vehicle or school bus maintenance mechanic when such driver or mechanic is paid or authorized to be paid from the State Public School Fund, when the monitor is acting in accordance with G.S. 115C-245(d), when the transportation safety assistant is acting in accordance with G.S. 115C-245(e), or when the driver is an unpaid school bus driver trainee under the supervision of an authorized employee of the Department of Transportation, Division of Motor Vehicles, or an authorized employee of a county or city board of education or administrative unit thereof. The Attorney General may afford this defense through the use of a member of his staff or, in his discretion, employ private counsel. The Attorney General is authorized to pay any judgment rendered in such civil action not to exceed the limit provided under the Tort Claims Act. The Attorney General may compromise and settle any claim covered by this section to the extent  that he finds the same to be valid, up to the limit provided in the Tort Claims Act, provided that the authority granted in this subsection shall be limited to only those claims which would be within the jurisdiction of the Industrial Commission under the Tort Claims Act."
(c) This section applies as to claims arising on or after July 1, 1998.

Requested by:  Representatives Arnold, Grady, Preston
EXTRA PAY FOR FORFEITED VACATION DAYS
Section 9.18. (a)	Of the funds appropriated to State Aid to Local School Administrative Units, the sum of four million two hundred fifty thousand dollars ($4,250,000) for the 1998-99 fiscal year shall be used by local boards of education to pay teachers for working on, and thereby forfeiting, vacation days, in accordance with G.S. 115C-302.1(c).  The State Board of Education shall make available to each local school administrative unit sufficient funds to provide pay for a maximum of six days for each teacher who is qualified to receive additional pay for forfeited vacation days under G.S. 115C-302.1(c).  For the 1998-99 fiscal year, the funds allotted under this subsection shall be available for days scheduled by local boards and individual schools as follows: two for days scheduled by the local board of education under G.S. 115C-84.2(a)(4); and four for days scheduled by school principals in consultation with school improvement teams under G.S. 115C-84.2(a)(5).
(b)	G.S. 115C-84.2 reads as rewritten:
"§ 115C-84.2.  School calendar.
(a)	School Calendar. – Each local board of education shall adopt a school calendar consisting of 220 days all of which shall fall within the fiscal year. A school calendar shall include the following:
(1)	A minimum of 180 days and 1,000 hours of instruction covering at least nine calendar months. The local board shall designate when the 180 instructional days shall occur. The number of instructional hours in an instructional day may vary according to local board policy and does not have to be uniform among the schools in the administrative unit. Local boards may approve school improvement plans that include days with varying amounts of instructional time. If school is closed early due to inclement weather, the day and the scheduled amount of instructional hours may count towards the required minimum to the extent allowed by State Board policy. The school calendar shall include a plan for making up days and instructional hours missed when schools are not opened due to inclement weather.
(2)	A minimum of 10 annual vacation leave days.
(3)	The same or an equivalent number of legal holidays occurring within the school calendar as those designated by the State Personnel Commission for State employees.
(4)	Ten days, as designated by the local board, for use as teacher workdays, additional instructional days, or other lawful purposes. A local board may delegate to the individual schools some or all of the 10 days to schedule under subdivision (5) of this subsection. A local board may schedule different purposes for different personnel on any given day and is not required to schedule the same dates for all personnel.
(5)	The remaining days shall be scheduled by each individual school by the school's principal in consultation with the school improvement team. Days may be scheduled for any of the purposes allowed under subdivision (4) of this subsection. Days may be scheduled for different purposes for different personnel and there is no requirement to schedule the same dates for all personnel.
Local boards and individual schools are encouraged to use the calendar flexibility in order to meet the annual performance standards set by the State Board. Local boards of education shall consult with parents and the employed public school personnel in the development of the school calendar.
Local boards and individual schools shall give teachers at least 14 calendar days' notice before requiring a teacher to work instead of taking vacation leave on days scheduled in accordance with subdivision (4)	or (5) of this subsection.  A teacher may elect to waive this notice requirement for one or more such days.
(b)	Limitations. – The following limitations apply when developing the school calendar:
(1)	The total number of teacher workdays for teachers employed for a 10 month term shall not exceed 200 days.
(2)	The calendar shall include at least 42 consecutive days when teacher attendance is not required unless: (i) the school is a year-round school; or (ii) the teacher is employed for a term in excess of 10 months.  At the request of the local board of education or of the principal of a school, a teacher may elect to work on one of the 42 days when teacher attendance is not required in lieu of another scheduled workday.
(3)	School shall not be held on Sundays.
(4)	Veteran's Day shall be a holiday for all students enrolled in the public schools.
(c)	Emergency Conditions. – During any period of emergency in any section of the State where emergency conditions make it necessary, the State Board of Education may order general, and if necessary, extended recesses or adjournment of the public schools.
(d)	Opening and Closing Dates. – Local boards of education shall determine the dates of opening and closing the public schools under subdivision (a)(1) of this section. A local board may revise the scheduled closing date if necessary in order to comply with the minimum requirements for instructional days or instructional time. Different opening and closing dates may be fixed for schools in the same administrative unit."
(c)	The amendments to G.S. 115C-84.2(b)(2) set out in subsection (b) of this section apply to school years beginning with the 1999-2000 school year.

[SECTION 9.19 RESERVED]

Requested by:  Representatives Arnold, Grady, Preston
LIMITED ENGLISH PROFICIENCY
Section 9.20.  (a)	The State Board of Education shall develop guidelines for identifying and providing services to students with limited proficiency in the English language.
The State Board shall allocate the funds to local school administrative units on the basis of the number of students they serve with limited English proficiency, with a minimum of 20 students per unit and a maximum of ten and six-tenths percent (10.6%) of the average daily membership of the unit.
Local school administrative units shall use funds allocated to them to pay for classroom teachers, textbooks, classroom materials/instructional supplies/equipment, and staff development for students with limited English proficiency.
A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds.
(b)	G.S. 115C-105.25(b)(4) reads as rewritten:
"(4)	Funds allocated for children with special needs, for students with limited English proficiency, and for driver's education shall not be transferred."
(c)	The State Board of Education shall review its certification requirements for English as a Second Language (ESL) and determine whether the requirements should be revised in order to assist local school administrative units to quickly obtain adequate numbers of qualified teachers.  The State Board and the Board of Governors of The University of North Carolina shall coordinate efforts to provide ESL certification programs that are geographically disbursed throughout the State.  The Board of Governors shall examine providing ESL certification programs through distance learning methods and off-campus programs.
(d) The State Board of Education shall identify existing or develop new programs that provide instructional personnel with in-service, noncertificate training for assisting students with limited English proficiency in the regular classroom.  The Board of Governors of The University of North Carolina and the State Board of Community Colleges shall collaborate with the State Board of Education in order to deliver these programs to geographically diverse locations.
(e) The State Board of Education shall survey local school administrative units to determine whether schools are able to recruit and retain ESL certified teachers.  The State Board shall provide the results of this survey to the Joint Legislative Education Oversight Committee prior to December 15, 1999.

Requested by:  Representatives Arnold, Grady, Preston
DRIVERS EDUCATION FUNDS DO NOT REVERT
Section 9.21.  (a) Section 12(b) of S.L. 1998-23 reads as rewritten:
"(b)	This section becomes effective June 30, 1998."
(b)	The State Board of Education may use funds appropriated for drivers education for the 1998-99 fiscal year to implement S.L. 1997-507.

Requested by:  Representatives Arnold, Grady, Preston
ADDITIONAL TEACHERS FOR MIDDLE SCHOOL CHILDREN WHO ARE ACADEMICALLY BELOW GRADE LEVEL
Section 9.22. Section 8.29(c) of S.L. 1997-443 reads as rewritten:
"(c)	Of the funds appropriated to State Aid to Local School Administrative Units, the sum of three million two hundred thousand dollars ($3,200,000) for the 1997-98 fiscal year and the sum of three million two hundred thousand dollars ($3,200,000) for the 1998-99 fiscal year shall be used to provide additional teachers for middle school children who are academically below grade level.   Middle school children are children in a school that serves grades six, seven, and eight, and no other grades.
(1)	The State Board of Education shall allocate these teacher positions to pilot middle schools on the basis of the number of students in grade six who scored at proficiency Level I on the end-of-grade test in mathematics, on the end-of-grade test in reading, or on both, at the end of their last school year.  The funds shall be used in schools at a ratio of one teacher to every 50 students.  Positions shall be rounded to the nearest one-half position.
(2)	The purpose of these funds is to improve the academic performance and the behavior of these students during the first school year after elementary school by placing them in classes with a low student-to-teacher ratio for either all of their core academic subjects or for the subject or subjects in which they are below grade level.  In order to accomplish this purpose, local school administrative units shall use (i) the teachers allocated for these students pursuant to the regular teacher allotment and (ii) the teachers allocated for these students under this section only to improve the academic performance and the behavior of these students. Local boards of education shall adopt rules to ensure that each student for whom funds for additional teacher positions are allocated under this section shall be assigned a teacher who is responsible for monitoring the academic progress of the student.
(3)	Of the funds appropriated in this section, the State Board of Education may use up to twenty-five thousand dollars ($25,000) to evaluate the effectiveness of these smaller classes in improving academic performance and discipline in middle schools."

Requested by:  Representatives Arnold, Grady, Preston
UNIFORM EDUCATION REPORTING SYSTEMS FUNDS/BUILDING LEVEL REPORTS ON SCHOOL FUNDING
Section 9.23.  G.S. 115C-12(18) reads as rewritten:
"(18)	Duty to Develop and Implement a Uniform Education Reporting System, Which Shall Include Standards and Procedures for Collecting Fiscal and Personnel Information.
a.	The State Board of Education shall adopt standards and procedures for local school administrative units to provide timely, accurate, and complete fiscal and personnel information, including payroll information, on all school personnel. All local school administrative units shall comply with these standards and procedures by the beginning of the 1987-88 school year.
b.	The State Board of Education shall develop and implement a Uniform Education Reporting System that shall include requirements for collecting, processing, and reporting fiscal, personnel, and student data, by means of electronic transfer of data files from local computers to the State Computer Center through the State Communications Network. All local school administrative units shall comply with the requirements of the Uniform Education Reporting System by the beginning of the 1989-90 school year.
c.	The State Board of Education shall comply with the provisions of G.S. 116-11(10a) to plan and implement an exchange of information between the public schools and the institutions of higher education in the State. The State Board of Education shall require local boards of education to provide to the parents of children at a school all information except for confidential information received about that school from institutions of higher education pursuant to G.S. 116-11(10a) and to make that information available to the general public.
d.	The State Board of Education shall modify the Uniform Education Reporting System to provide clear, accurate, and standard information on the use of funds at the unit and school level.  The plan shall provide information that will enable the General Assembly to determine State, local, and federal expenditures for personnel at the unit and school level.  The plan also shall allow the tracking of expenditures for textbooks, educational supplies and equipment, capital outlay, at-risk students, and other purposes.  The revised Uniform Education Reporting System shall be implemented beginning with the 1999-2000 school year."

[SECTION 9.25 RESERVED]

Requested by:  Representatives Arnold, Grady, Preston
UNIFORM EDUCATION REPORTING SYSTEM (UERS)/STUDENT INFORMATION MANAGEMENT SYSTEM (SIMS) FUNDS
Section 9.26. (a) The State Board of Education shall use funds appropriated for the Uniform Education Reporting System and the Student Information Management System for the 1998-99 fiscal year to begin the development of a replacement for the existing Student Information System.  In developing the new system, the State Board shall give priority to the development of applications that maintain student records,  maintain ABC accountability data, allow for the transfer of student records between local school administrative units, and facilitate the transfer of transcripts to institutions of higher education.
In designing the new system, the State Board shall develop a model for statewide implementation that maximizes the economies of scale with respect to operations, personnel, and hardware.  The State Board's goal shall be to develop a new system that provides information to local schools, local school boards, and the State Board in the most cost-efficient manner.
The new system shall follow guidelines established by the Information Resources Management System.
The State Board may develop pilots of the new system.
(b) The State Board shall provide periodic reports to the Joint Legislative Education Oversight Committee on the development of the new system and shall report to the 1999 General Assembly on implementation of the pilot projects.
(c)	Funds appropriated for the Uniform Education Reporting System and the Student Information Management System shall not revert at the end of the fiscal year but shall remain available until expended on the project.

[SECTION 9.27 RESERVED]

Requested by:  Representatives Arnold, Grady, Preston
SCHOOL ADMINISTRATION INTERNS
Section 9.29.  During the 1998-99 fiscal year, a local school administrative unit may employ a person in an assistant principal position who is not certified as an assistant principal if (i) the person is participating in a local school administrative unit-sponsored masters program in school administration as a part-time student, (ii) the placement of the person in the School Building Administration Allotment is part of the unit-sponsored program and is in cooperation with an accredited masters in administration program, and (iii) the person continues to participate in the unit-sponsored program and successfully completes the program within one year.  A person meeting these criteria shall be placed for no more than one year on the assistant principal salary schedule as if the individual were certified as a school administrator.

PART X.  COMMUNITY COLLEGES
Requested by:  Representatives Arnold, Grady, Preston
DELETE SUNSET ON ONE-YEAR EXTENSION ON THE DEADLINE FOR MATCHING COMMUNITY COLLEGE BOND FUNDS
Section 10. Section 8(b) of S.L. 1998-23 reads as rewritten:
"(b)	This section becomes effective June 30, 1998."

Requested by:  Representatives Arnold, Grady, Preston
INDEPENDENT STUDY OF CAPITAL BUDGET AND OPERATING BUDGET FUND ALLOCATIONS
Section 10.1.  The State Board of Community Colleges shall contract with an outside consultant to:
(1)	Review the community college capital allocation process and recommend modifications to the process necessary to make the process more equitable; and
(2)	Study performance budget measures and recommend options for allocating community college funds on a performance budgeting basis.
The State Board may use funds from the State Board Reserve to implement this section.
The State Board shall report to the Joint Legislative Appropriations Subcommittees on Education and the Fiscal Research Division prior to February 1, 1999, on the implementation of this section.

Requested by:  Representatives Arnold, Grady, Preston
COMMUNITY COLLEGE EQUIPMENT RESERVE FUND
Section 10.2.  (a) G.S. 115D-31 reads as rewritten:
"§ 115D-31.  State financial support of institutions.
(a)	The State Board of Community Colleges shall be responsible for providing, from sources available to the State Board, funds to meet the financial needs of institutions, as determined by policies and regulations of the State Board, for the following budget items:
(1)	Plant Fund. – Furniture and equipment for administrative and instructional purposes, library books, and other items of capital outlay approved by the State Board. Provided, the State Board may, on an equal matching-fund basis from appropriations made by the State for the purpose, grant funds to individual institutions for the purchase of land, construction and remodeling of institutional buildings determined by the State Board to be necessary for the instructional programs or administration of such institutions. For the purpose of determining amount of matching State funds, local funds shall include expenditures made prior to the enactment of this Chapter or prior to an institution becoming a community college pursuant to the provisions of this Chapter, when such expenditures were made for the purchase of land, construction, and remodeling of institutional buildings subsequently determined by the State Board to be necessary as herein specified, and provided such local expenditures have not previously been used as the basis for obtaining matching State funds under the provisions of this Chapter or any other laws of the State. Notwithstanding the provisions of this subdivision, G.S. 116-53(b), or G.S. 143-31.4, appropriations by the State of North Carolina for capital or permanent improvements for community colleges may be matched with any prior expenditure of non-State funds for capital construction or land acquisition not already used for matching purposes.
(2)	Current Operating Expenses:
a.	General administration. – Salaries and other costs as determined by the State Board necessary to carry out the functions of general administration.
b.	Instructional services. – Salaries and other costs as determined by the State Board necessary to carry out the functions of instructional services.
c.	Support services. – Salaries and other costs as determined by the State Board necessary to carry out the functions of support services.
(3)	Additional Support for Regional Institutions as Defined in G.S. 115D-2(4). – Matching funds to be used with local funds to meet the financial needs of the regional institutions for the items set out in G.S. 115D-32(a)(2)a. Amount of matching funds to be provided by the State under this section shall be determined as follows: The population of the administrative area in which the regional institution is located shall be called the 'local factor,' the combined populations of all other counties served by the institution shall be called the 'State factor.' When the budget for the items listed in G.S. 115D-32(a)(2)a has been approved under the procedures set out in G.S. 115D-45, the administrative area in which the regional institution is located shall provide a percentage to be determined by dividing the local factor by the sum of the local factor and the State factor. The State shall provide a percentage of the necessary funds to meet this budget, the percentage to be determined by dividing the State factor by the sum of the local factor and the State factor. If the local administrative area provides less than its proportionate share, the amount of State funds provided shall be reduced by the same proportion as were the administrative area funds.
		Wherever the word 'population' is used in this subdivision, it shall mean the population of the particular area in accordance with the latest United States census.
(b)	The State Board is authorized to accept, receive, use, or reallocate to the institutions any federal funds or aids that have been or may be appropriated by the government of the United States for the encouragement and improvement of any phase of the programs of the institutions.
(c)	State funds appropriated to the State Board of Community Colleges for equipment and library books, except for funds appropriated to the Equipment Reserve Fund, shall revert to the General Fund 12 months after the close of the fiscal year for which they were appropriated. Encumbered balances outstanding at the end of each period shall be handled in accordance with existing State budget policies. The Department shall identify to the Office of State Budget and Management the funds that revert at the end of the 12 months after the close of the fiscal year.
(d)	State funds appropriated to the State Board of Community Colleges for the Equipment Reserve Fund shall be allocated to institutions in accordance with the equipment allocation formula for the fiscal period.  An institution to which these funds are allocated shall spend the funds only in accordance with an equipment acquisition plan developed by the institution and approved by the State Board.
These funds shall not revert and shall remain available until expended in accordance with an approved plan."
(b) The State Board of Community Colleges shall allocate equipment funds appropriated for the 1998-99 fiscal year, including funds appropriated to the Equipment Reserve Fund, in accordance with the formula proposed to the General Assembly by the Board at its May 1998 meeting.

Requested by:  Representatives Arnold, Grady, Preston
BUDGET REALIGNMENT TO IMPLEMENT REORGANIZATION AUTHORIZED
Section 10.3.  Notwithstanding G.S. 143-23 or any other provision of law, the State Board of Community Colleges may transfer funds within the budget of the Department of Community Colleges to the extent necessary to implement the departmental reorganization plan recommended by the President of the North Carolina Community College System and adopted by the State Board.

Requested by:  Representatives Arnold, Grady, Preston
CONTINUING BUDGET CONCEPT
Section 10.4. (a)	The State Board of Community Colleges shall implement the continuing budget concept for full-time equivalent students (FTE) earned for the 1998-99 fiscal year as follows:
(1)	Community colleges that experience a decline in enrollment shall not receive a decrease in full-time equivalent student (FTE) enrollment funds until their enrollment declines more than three percent (3%).  At that time, they shall experience a decline of only the amount over three percent (3%);
(2)	Community colleges that experience an increase in enrollment shall not receive an increase in full-time equivalent student (FTE) enrollment funds until their enrollment increases more than two percent (2%).  At that time, they shall experience an increase of only the amount over two percent (2%).
(b) The State Board of Community Colleges shall implement the continuing budget concept for subsequent fiscal years by funding (i) the average earned full-time equivalent student (FTE) enrollment for the prior three fiscal years, or (ii) the earned full-time equivalent student (FTE) enrollment for the prior fiscal year, whichever is greater.

Requested by:  Representatives Arnold, Grady, Preston
ANNUAL REVIEW ACCOUNTABILITY ENHANCED
Section 10.5.  The General Assembly finds that the current annual program review standards are not adequate to ensure that programs are meeting the needs of students, employers, and the general public; therefore, the State Board of Community Colleges shall review the current standard to ensure a higher degree of program accountability and shall establish appropriate levels of performance for each measure based on sound methodological practices.
The State Board shall make an interim report to the Joint Legislative Education Oversight Committee and to the Fiscal Research Division on its improved accountability measures prior to  November 1, 1998, and a final report prior to February 1, 1999.

Requested by:  Representatives Arnold, Grady, Preston
DEVELOPMENT OF MANAGEMENT INFORMATION SYSTEM
Section 10.6. The State Board of Community Colleges shall develop a plan for an efficient and effective technology and management information system.  The system shall be  designed to support the Community College System's  planning, evaluation, communication, resource management, full-time equivalent student (FTE) reporting, and decision-making processes.  The plan shall identify the technology and management information needs of the local colleges and the Department of Community Colleges, the costs of meeting these needs, and the benefits of meeting them.
The State Board shall report to the Joint Legislative Education Oversight Committee prior to February 1, 1999, on the plan it develops.

Requested by:  Representatives Arnold, Grady, Preston
COOPERATIVE HIGH SCHOOL EDUCATION PROGRAM ACCOUNTABILITY
Section 10.7.  (a)	It is the goal of the General Assembly to increase the number of qualified high school students participating in cooperative high school education programs that are provided by local community colleges through cost-effective programs that do not duplicate high school Advanced Placement courses that are currently being offered or that could feasibly be offered.  These programs shall provide additional higher education opportunities for qualified high school students while minimizing overlapping costs to the State for public schools and community colleges.
(b)	The State Board of Community Colleges and the State Board of Education shall create a joint task force to study the existing policies for cooperative high school education programs and to recommend changes necessary to improve the programs' success and accountability.  The Boards shall report their findings and recommendations to the Joint Legislative Education Oversight Committee and the Fiscal Research Division prior to March 1, 1999.

Requested by:  Representatives Arnold, Grady, Preston
REPORTING REQUIREMENTS
Section 10.8.  The local institutions of the North Carolina Community College System shall comply with annual reporting requirements established by the State Board of Community Colleges; therefore, the State Board of Community Colleges shall develop an action plan to improve the timeliness and accuracy of the data that are required to be reported to the State Board by each institution.  This plan shall include withholding State funds from the institution if an institution is not in compliance.
The plan shall be approved and implemented by October 30, 1998.

Requested by:  Representatives Arnold, Grady, Preston
COMMUNITY COLLEGE TUITION STUDY
Section 10.9. The Joint Legislative Education Oversight Committee shall study community college tuition in light of federal "Hope Scholarships".  The Committee shall report the results of its study to the Appropriations Subcommittees on Education of the Senate and the House of Representatives prior to January 15, 1999.

Requested by:  Representatives Arnold, Grady, Preston
HOSPITALITY AND TOURISM JOB TRAINING PROGRAMS
Section 10.10. (a) The State Board of Community Colleges shall study hospitality and tourism job training programs offered by the local institutions of the North Carolina Community College System.  The State Board of Community Colleges shall collaborate with the Board of Governors of The University of North Carolina, the State Board of Education, and the Department of Commerce to improve articulation between institutions with regard to hospitality and tourism job training programs.  The efforts to improve articulations shall be considered a joint venture of these educational institutions that are participating members of the Culinary, Hospitality, Tourism Education Alliance (CHTEA), and of the Department of Commerce and the travel and tourism industry.
(b)	The State Board of Community Colleges, the State Board of Education, the Board of Governors of The University of North Carolina, and the Department of Commerce  shall report jointly to the Joint Legislative Education Oversight Committee prior to April 1, 1999, on the following:
(1)	An inventory of all curriculum, continuing education, and job training programs offered in the State that support the travel, tourism, and hospitality industries;
(2)	Recommendations for improvements to the programs and a system of program accountability; and
(3)	Recommendations on ways to improve communication between the industry and the Boards and to enhance efforts to promote the programs.

Requested by:  Representatives Arnold, Grady, Preston
ROANOKE-CHOWAN COMMUNITY COLLEGE/SHELTERED WORKSHOP
Section 10.11.  (a) Roanoke-Chowan Community College may use proceeds derived from the lease of buildings associated with the sheltered workshop to phase out the sheltered workshop operation.
(b) This section shall remain in effect until the closeout of the sheltered workshop has been accomplished.

Requested by:  Representative Shubert
ESTABLISHMENT OF UNION COMMUNITY COLLEGE
Section 10.12.   Notwithstanding Section 9.7 of S.L. 1997-443 or any other provision of law, the State Board of Community Colleges shall establish a new community college in Union County.  The institution shall begin operation with the second semester of the 1998-99 community college year and shall operate under the provisions of Chapter 115D of the General Statutes and shall be dedicated primarily to the educational needs of Union County.  No legislators shall serve on the board of the new community college.
Community college bond proceeds that were allocated to the Union County Satellite of Anson Community College prior to July 1, 1998, but not expended or encumbered by that date shall be reallocated to the new community college for construction of a planned community college facility in Union County.
Effective with the second semester of the 1998-99 community college year, Union County shall no longer be assigned to either the Anson Community College or the Stanly Community College service delivery area.  Union County shall be the only county in the service delivery area of the new community college established in this act.

PART XI.  UNIVERSITIES
Requested by:   Representatives Arnold, Grady, Preston
UNC INCENTIVE FUNDING
Section 11.  G.S. 116-30.3 reads as rewritten:
"§ 116-30.3.  Reversions.
(a)	Of the General Fund current operations appropriations credit balance remaining at the end of each fiscal year in each budget code of a special responsibility constituent institution, except for the budget code of the Area Health Education Centers of the University of North Carolina at Chapel Hill, any amount greater than two percent (2%) of the General Fund appropriation for that fiscal year may be carried forward by the institution to the next fiscal year and may be used for one-time expenditures that will not impose additional financial obligations on the State.  Of the General Fund current operations appropriations credit balance remaining in the budget code of the Area Health Education Centers of the University of North Carolina at Chapel Hill, any amount greater than one percent (1%) of the General Fund appropriation for that fiscal year may be carried forward in that budget code to the next fiscal year and may be used for one-time expenditures that will not impose additional financial obligations on the State.  However, the amount carried forward under this section shall not exceed two and one-half percent (2 1/2%) of the General Fund appropriation, plus the amount of the reversions to be retained under subsections (d) and (e) of this section.  The Director of the Budget, under the authority set forth in G.S. 143-25, shall establish the General Fund current operations credit balance remaining in each budget code of each institution.
(b)	An institution shall cease to be a special responsibility constituent institution under the following circumstances:
(1)	An institution, other than the Area Health Education Centers of the University of North Carolina, does not revert at least two percent (2%) of its General Fund current operations credit balance remaining in each budget code of that institution, or
(2)	The Area Health Education Centers of the University of North Carolina at Chapel Hill does not revert at least one percent (1%) of its General Fund current operations credit balance remaining in its budget code.
However, if the Board of Governors finds that the low reversion rate is due to adverse and unforeseen conditions, the Board may allow the institution to remain a special responsibility constituent institution for one year to come into conformity with this section.  The Board may make this exception only one time for any special responsibility constituent institution, and shall report these exceptions to the Joint Legislative Commission on Governmental Operations.
(c)	The reversions required in subsection (a) and (b) of this section shall be returned to the General Fund credit balance at the end of each fiscal year, less the amounts retained by the special responsibility constituent institutions under subsections (d) and (e) of this section.
(d)	For fiscal year 1997-98, one-half of the reversions required in subsections (a) and (b) of this section shall be available to each special responsibility constituent institution of The University of North Carolina. Those funds shall be used by the institution at the campus level for any of the following: the nonrecurring costs of technology, including the installation of technology infrastructure for academic facilities on the campus of the special responsibility constituent institution, the implementation by the constituent institution of its campus technology plan as approved by the Board of Governors, or for libraries. The funds shall not be used to support positions. Each special responsibility constituent institution shall report annually to the Board of Governors regarding how the institution spent the funds made available under this section.
(e)	For fiscal year 1998-99 and each subsequent fiscal year, the reversions required in subsections (a) and (b) of this section shall be available to each special responsibility constituent institution of The University of North Carolina if the constituent institution meets the following conditions  during the fiscal year 1998-99:  the institution spent an amount on technology equal to or greater than the total of (i) the amount spent by the institution in the preceding fiscal year on technology and (ii) the amount equal to or greater than one-half of the reversion required in subsections (a) and (b) of this section; for subsequent fiscal years, each special responsibility constituent institution shall spend an amount on technology equal to or greater than the amount expended on technology for the base year 1998-99.  Those funds made available under this subsection shall be used by the institution at the campus level for any of the following: the nonrecurring costs of technology, including the installation of technology infrastructure for academic facilities on the campus of the special responsibility constituent institution, the implementation by the constituent institution of its campus technology plan as approved by the Board of Governors, or for libraries. The funds shall not be used to support positions. Each special responsibility constituent institution shall report annually to the Board of Governors regarding how the institution spent the funds made available under this section."

Requested by:   Representatives Arnold, Grady, Preston
NATURAL RESOURCES LEADERSHIP INSTITUTE
Section 11.1.  For the 1998-99 fiscal year, the requirement for reversion of General Fund appropriations as required by G.S. 116-30.3 for the Cooperative Extension Service budget code at North Carolina State University is reduced by one hundred seventy thousand dollars ($170,000) in order to provide funding for the Natural Resource Leadership Institute sponsored by the Cooperative Extension Service.

Requested by:   Representatives Arnold, Grady, Preston
INCENTIVE SCHOLARSHIP FOR NATIVE AMERICANS
Section 11.2.  Section 17.3(a) of Chapter 769 of the 1993 Session Laws, reads as rewritten:
"Sec. 17.3.  (a)	The Board of Governors of The University of North Carolina shall establish the Incentive Scholarship Program for Native Americans to provide opportunities for Native Americans who are residents of North Carolina to attend constituent institutions of The University of North Carolina under rules adopted by the Board of Governors.  Scholarships awarded under the program shall carry a maximum value of three thousand dollars ($3,000) per recipient per academic year, to be awarded after all other need-based grants for which the recipient is eligible have been included in the student's financial aid package.  The maximum amount of the award shall not exceed the cost of attendance budget used to calculate financial aid less other need-based aid received, and in no case shall the award exceed three thousand dollars ($3,000).  To be eligible for such a scholarship, a student shall be a Native American, defined as an individual who maintains cultural identification as a Native American through membership in an Indian tribe recognized by the United States or by the State of North Carolina or through other tribal affiliation or community recognition."

Requested by:   Representatives Arnold, Grady, Preston
AID TO STUDENTS ATTENDING PRIVATE COLLEGES PROCEDURE
Section 11.3.  Section 10.4 of S.L. 1997-443 reads as rewritten:
"Section 10.4.  (a)	Funds appropriated in this act to the Board of Governors of The University of North Carolina for aid to private colleges shall be disbursed in accordance with the provisions of G.S. 116-19, 116-21, and 116-22.  These funds shall provide up to nine hundred dollars ($900.00) per full-time equivalent North Carolina undergraduate student enrolled at a private institution as of October 1 each year.
These funds shall be placed in a separate, identifiable account in each eligible institution's budget or chart of accounts.  All funds in this account shall be provided as scholarship funds for needy North Carolina students during the fiscal year.  Each student awarded a scholarship from this account shall be notified of the source of the funds and of the amount of the award.  Funds not utilized under G.S. 116-19 shall be available for the tuition grant program as defined in subsection (b)	of this section.
(b)	In addition to any funds appropriated pursuant to G.S. 116-19 and in addition to all other financial assistance made available to private educational institutions located within the State, or to students attending these institutions, there is granted to each full-time North Carolina undergraduate student attending an approved institution as defined in G.S. 116-22, a sum, not to exceed one thousand six hundred dollars ($1,600) per academic year, which shall be distributed to the student as hereinafter provided.
The tuition grants provided for in this section shall be administered by the State Education Assistance Authority pursuant to rules adopted by the State Education Assistance Authority not inconsistent with this section.  The State Education Assistance Authority shall not approve any grant until it receives proper certification from an approved institution that the student applying for the grant is an eligible student.  Upon receipt of the certification, the State Education Assistance Authority shall remit at such times as it shall prescribe the grant to the approved institution on behalf, and to the credit, of the student.
In the event a student on whose behalf a grant has been paid is not enrolled and carrying a minimum academic load as of the tenth classroom day following the beginning of the school term for which the grant was paid, the institution shall refund the full amount of the grant to the State Education Assistance Authority.  Each approved institution shall be subject to examination by the State Auditor for the purpose of determining whether the institution has properly certified eligibility and enrollment of students and credited grants paid on the behalf of the students.
In the event there are not sufficient funds to provide each eligible student with a full grant:
(1)	The Board of Governors of The University of North Carolina, with the approval of the Office of State Budget and Management, may transfer available funds to meet the needs of the programs provided by subsections (a) and (b) of this section; and
(2)	Each eligible student shall receive a pro rata share of funds then available for the remainder of the academic year within the fiscal period covered by the current appropriation.
Any remaining funds shall revert to the General Fund.
(c)	Expenditures made pursuant to this section may be used only for secular educational purposes at nonprofit institutions of higher learning.  Expenditures made pursuant to this section shall not be used for any student who:
(1)	Is incarcerated in a State or federal correctional facility for committing a Class A, B, B1, or B2 felony; or
(2)	Is  incarcerated in a State or federal correctional facility for committing a Class C through I felony and is not eligible for parole or release within 10 years.
(d)	The State Education Assistance Authority shall document the number of full-time equivalent North Carolina undergraduate students that are enrolled in off-campus programs and the State funds collected by each institution pursuant to G.S. 116-19 for those students.  The State Education Assistance Authority shall also document the number of scholarships and the amount of the scholarships that are awarded under G.S. 116-19 to students enrolled in off-campus programs.  An "off-campus program" is any program offered for degree credit away from the institution's main permanent campus.
The State Education Assistance Authority shall include in its annual report to the Joint Legislative Education Oversight Committee the information it has compiled and its findings regarding this program."

Requested by:   Representatives Arnold, Grady, Preston
UNC EQUITY FUNDS/CAPITAL FACILITIES STUDY
Section 11.4.  Section 10.1 of S.L. 1997-443 reads as rewritten:
"Section 10.1.  (a)	The funds appropriated to the Board of Governors of The University of North Carolina for equity funds are to address relative inequities in State operating funding revealed through a study of the constituent institutions in the university system.  The General Assembly notes that the study dealt with equity based upon current funding from State appropriations and tuition for operations and did not consider historical equity in funding for physical facilities or funding from non-State sources.  Therefore, in making this appropriation, the General Assembly does not conclude that the total funding of any institution, including specifically the historically black universities, is adequate in light of all considerations.
(b)	Based on findings of the Legislative Study Commission on the Status of Education at The University of North Carolina, the General Assembly is still  concerned about perceived differences in the quality of capital facilities on the different campuses, which may impact the ability of some campuses to attract students and faculty.  Since the Board of Governors has recently completed studies of equity of funding for operating costs among the constituent institutions and of the Board of Governors' capital improvements request process, it is timely that the question of equity of facilities be addressed.
The Board of Governors of The University of North Carolina shall study the relative equity and adequacy of the physical facilities of its constituent institutions.  The study shall consider the condition of the facilities, whether or not facilities are comparable among the campuses given the different missions of the institutions, comparable adequacy of the physical facilities given the size and projected growth of the school, and such other factors deemed appropriate by the Board of Governors.  The study shall include all facilities contributing to the accomplishment of the campuses' missions.  First, the Board of Governors shall study those facilities considered central to the academic missions of the campuses that are generally supported from General Fund appropriations.  Secondly, the Board of Governors shall study those facilities that contribute to the overall missions of the campuses, including residential, dining, research, and other facilities regardless of the sources of funding.  The Board of Governors shall consider its policies on funding of self-liquidating projects and whether those policies contribute to any inequities among the campuses, including the overall costs to the students.
(c)	The Board of Governors shall contract with a private consulting firm with expertise in higher education matters to assess the additional capital needs of the constituent institutions of The University of North Carolina.  The needs assessment shall project the needs for capital funding for a 10-year period, and shall include a detailed plan for making funding allocations based on the priorities of needs.
The plan shall provide a detailed capital spending plan for the next 10 years to assist the General Assembly in making funding decisions relating to The University of North Carolina, as the State plans for major increases in enrollment in higher education and prepares its citizens to compete in a global economy.  The plan shall include considerations of the costs and changes in capital needs caused by new technologies and alternative systems for delivery of higher education services.
The consultant shall visit each campus in The University of North Carolina System to understand the needs of each campus based on their assigned missions, physical needs, and plans.
The Board and its consultant shall provide interim progress reports to the General Assembly on a periodic basis.  The Board of Governors shall report to the General Assembly by April 15, 1999, with the results of its study and plan.
Of the funds appropriated to the Board of Governors for fiscal year 1998-99, up to two hundred fifty thousand dollars ($250,000) may be reallocated for the purposes of this section, including funds that would normally revert to the General Fund at the end of the fiscal year."

[SECTIONS 11.5, 11.6 RESERVED]

Requested by:   Representatives Arnold, Grady, Preston
UNC DISTANCE EDUCATION
Section 11.7.  This act provides funding to The University of North Carolina Board of Governors for degree-related courses provided away from the campus sites of the constituent institutions of The University of North Carolina. The intent of this commitment is to provide expanded opportunities for higher education to more North Carolina residents, including nontraditional students, and to increase the number of North Carolina residents who earn postsecondary degrees. 
These funds shall be used for the provision of off-campus higher education programs, including the costs for the development or adaptation of programs for this purpose, and the funds may be used for the costs of providing space and services at the off-campus sites. 
Prior to approving funding for off-campus programs in nursing, the Board shall consult with the central office of the Area Health Education Centers (AHEC) to obtain information about regional needs and priorities and to coordinate funding with AHEC efforts in nursing education.
The Board of Governors shall track these funds separately in order to provide data on the costs of providing these programs, including the different costs for various methods of delivery of educational programs. The Board of Governors shall provide for evaluation of these off-campus programs, including comparisons to the costs and quality of on-campus delivery of similar programs, as well as the impact on access to higher education and the educational attainment levels of North Carolina residents. The Board shall provide a preliminary report to the General Assembly by May 1, 2000, and subsequent evaluations, including recommendations for changes, shall be made at least biennially to the Joint Legislative Education Oversight Committee.

[SECTION 11.8 RESERVED]

Requested by:   Representatives Arnold, Grady, Preston
UNC APPLICATIONS POOL
Section 11.9.  The Board of Governors of The University of North Carolina shall create a system that provides for the sharing of selected applications for admissions from North Carolina residents among the constituent institutions. The intent of the system shall be to increase the number of qualified North Carolina high school graduates who participate in higher education by providing information about applicants to other schools as well as providing information to applicants about alternative higher education opportunities in North Carolina. The Board of Governors may cooperate with the State Board of Community Colleges and with the private colleges and universities in North Carolina in creating such a system.
The Board of Governors shall report on its progress in developing such a system to the Joint Legislative Education Oversight Committee by January 15, 1999.

Requested by:   Representatives Arnold, Grady, Preston
PRIVATE COLLEGES/INCENTIVE FUNDS
Section 11.10.  G.S. 116-20 reads as rewritten:
"§ 116-20. Scholarship and contract terms; base period.
In order to encourage and assist private institutions to educate additional numbers of North Carolinians, the Board of Governors of the University of North Carolina is hereby authorized to enter into contracts within the institutions under the terms of which an institution receiving any funds that may be appropriated pursuant to this section would agree that, during any fiscal year in which such funds were received, the institution would provide and administer scholarship funds for needy North Carolina students in an amount at least equal to the amount paid to the institution, pursuant to this section, during the fiscal year. Under the terms of the contracts the  Board of Governors of the University of North Carolina would agree to pay to the institutions, subject to the availability of funds, a fixed sum of money for each North Carolina student enrolled as of October 1 of any year for which appropriated funds may be available, over and above the number of North Carolina students enrolled in that institution as of October 1, 1997, which shall be the base date for the purpose of this calculation. Funds appropriated pursuant to this section shall be paid by the State Education Assistance Authority to an institution upon recommendation of the Board of Governors of the University of North Carolina and on certification of the institution showing the number of North Carolina students enrolled at the institution as of October 1 of any year for which funds may be appropriated over the number enrolled on the base date. In the event funds are appropriated for expenditure pursuant to this section and funds are also appropriated, for the same fiscal year, for expenditure pursuant to G.S. 116-19, students who are enrolled at an institution in excess of the number enrolled on the base date may be counted under this section for the purpose of calculating the amount to be paid to the institution, but the same students may also be counted under G.S. 116-19, for the purpose of calculating payment to be made under that section."

Requested by:   Representatives Arnold, Grady, Preston
SUSTAINABLE OYSTER AQUACULTURE STUDY
Section 11.11.  (a)	Of the funds appropriated in this act to the Board of Governors of The University of North Carolina for fiscal year 1998-99, the sum of one hundred thousand dollars ($100,000) shall be allocated to the Institute of Marine Sciences at the University of North Carolina at Chapel Hill to study the potential for sustainable oyster aquaculture of triploid Crassostrea sikamea (Kumamoto), triploid Crassostrea ariakensis (Suminoe), triploid Crassostrea gigas (Pacific), and triploid Ostrea edulis (European flat).  Testing shall be carried out under a variety of environmental conditions, including, but not limited to, the evaluation of oyster growth of each type of oyster in polluted waters and the ability of each type of oyster to purify polluted waters.
(b)	The Primary Investigator or Researcher receiving funding pursuant to subsection (a) of this section shall provide progress reports to the Joint Legislative Commission on Seafood and Aquaculture, the Environmental Review Commission, the Marine Fisheries Commission, and the Fiscal Research Division on January 1 and July 1 of each year until the project or study is complete.  Upon completion of the project or study, the Primary Investigator or Researcher shall provide a final report of its findings and recommendations to the above entities.

Requested by:   Representative Arnold
ALIGN UNC PROFESSIONAL DEVELOPMENT PROGRAMS
Section 11.12. (a) G.S. 116-11 is amended by adding a new subsection to read:
"(12b)	The Board of Governors of The University of North Carolina shall create a Board of Directors for the UNC Center for School Leadership Development.  The Board of Governors shall determine the powers and duties of the Board of Directors.  Notwithstanding any other law, the governing boards for all professional development programs located under the UNC Center for School Leadership Development shall serve in an advisory capacity to the Board of Directors."
(b) The Joint Legislative Education Oversight Committee shall study whether additional statutory changes are needed to implement the intent of this section and shall report its recommendations to the 1999 General Assembly.

Requested by:   Representatives Arnold, Grady, Preston
INCREASE THE NUMBER OF SCHOOL ADMINISTRATOR PROGRAMS THAT MAY BE ESTABLISHED BY UNC BOARD OF GOVERNORS
Section 11.13.  (a) G.S. 116-74.21(b) reads as rewritten:
"(b)	No more than nine school administrator programs shall be established under the competitive proposal program.  In selecting campus sites, the Board of Governors shall be sensitive to the racial, cultural, and geographic diversity of the State.  Special priority shall be given to the following factors: (i) the historical background of the institutions in training educators; (ii) the ability of the sites to serve the geographic regions of the State, such as, the far west, the west, the triad, the piedmont, and the east; and, (iii) whether the type of roads and terrain in a region make commuting difficult.  A school administrator program may provide for instruction at one or more campus sites."
(b) The Board of Governors of The University of North Carolina shall include the Master of School Administration program at North Carolina State University in Raleigh as one of the nine school administrator programs established pursuant to G.S. 116-74.21.

Requested by:   Representatives Arnold, Grady, Preston
UNC HOSPITALS/MANAGEMENT FLEXIBILITY
Section 11.14.  (a)	G.S. 116-37 reads as rewritten:
"§ 116-37.  University of North Carolina Hospitals at Chapel Hill.
(a)	Composition. – The Board of Governors of the University of North Carolina is hereby directed to create a board of directors for the University of North Carolina Hospitals at Chapel Hill consisting of 12 members of which nine shall be appointed by the Board of Governors. Three members ex officio of said board shall be the University of North Carolina at Chapel Hill Vice-Chancellor for Health Affairs, University of North Carolina at Chapel Hill Vice-Chancellor for Business and Finance, and the Dean of the University of North Carolina at Chapel Hill Medical School, or successors to these offices under other titles with similar responsibilities. Nine members shall be appointed from the business and professional public-at-large, none of whom shall be Governors of the University, and, thereafter, the nine appointive members shall select one of their number to serve as chairman. Members of this board shall include, but not be limited to, persons with special competence in business management, hospital administration, and medical practice not affiliated with University faculty. The Governors may remove any member for cause. Board members, other than ex officio members, shall each receive such per diem and necessary travel and subsistence expenses while engaged in the discharge of their official duties as is provided by law for members of State boards and commissions generally.
(a1)	Appointment to Board. – Each of the nine persons who, as of June 30, 1989, is serving as an appointed member of the Board shall be reassigned by the Governors, each to a different term, ending June 30, 1989, June 30, 1990, June 30, 1991, June 30, 1992, June 30, 1993, June 30, 1994, June 30, 1995, June 30, 1996, or June 30, 1997. After July 1, 1989, the term of office for new appointments shall commence on July 1, and all members shall serve for four-year terms; provided, however, that no person may be appointed to (i) more than three full four-year terms in succession, or (ii) a four-year term if preceded immediately by 12 years of service. Resignation from a term of office shall not constitute a break in service for the purpose of this subsection. Board member vacancies shall be filled by the Governors for the remainder of the unexpired term.
(b)	Meetings and Powers of Board. – The board of directors shall meet at least every 60 days and may hold special meetings at any time and place within the State at the call of its chairman. The board of directors shall make rules, regulations, and policies governing the management and operation of the University of North Carolina Hospitals at Chapel Hill, consistent with basic State statutes and procedures, to meet the goals of education, research, patient care, and community service. The board's action on matters within its jurisdiction is final, except that appeals may be made, in writing, to the Board of Governors with a copy of the appeal to the University administration. The board of directors shall elect and may remove the executive director of the University of North Carolina Hospitals at Chapel Hill. The board of directors may enter into formal agreements with the University of North Carolina at Chapel Hill, Division of Health Affairs, with respect to the provision of clinical experience for students and may also enter into formal agreements with the University of North Carolina at Chapel Hill for the provision of maintenance and supporting services.
(c)	Executive Director. – The chief administrative officer of the University of North Carolina Hospitals at Chapel Hill shall be the executive director, who shall be appointed by the board of directors to serve at its pleasure. The executive director shall administer the affairs of the University of North Carolina Hospitals at Chapel Hill subject to the duly adopted policies, rules, and regulations of the board of directors, including the appointment, promotion, demotion, and discharge of all personnel. The executive director shall report to the board of directors quarterly or more often as required. The executive director will serve as secretary to the board of directors.
(d)	Personnel. – The University of North Carolina Hospitals at Chapel Hill shall maintain a personnel office for personnel administration. All employees of the University of North Carolina Hospitals at Chapel Hill shall be deemed to be employees of the State and shall be subject to all provisions of State law relevant thereto; provided, however, that except as to the provisions of Articles 5, 6, 7, and 14 of Chapter 126 of the General Statutes, the provisions of Chapter 126 shall not apply to employees of the University of North Carolina Hospitals at Chapel Hill, and the policies and procedures governing the terms and conditions of employment of such employees shall be adopted by the Board of Directors.
(1)	The Board of Directors shall fix or approve the schedules of pay, expense allowances, and other compensation and adopt position classification plans for all employees of the University of North Carolina Hospitals at Chapel Hill.
(2)	The Board of Directors shall adopt or provide for rules and regulations concerning, but not limited to, annual leave, sick leave, special leave with full pay or with partial pay supplementing workers' compensation payments for employees injured in accidents arising out of and in the course of employment, working conditions, service awards, and incentive award programs, grounds for dismissal, demotion, or discipline, other personnel policies, and any other measures that promote the hiring and retention of capable, diligent, and effective career employees.  However, an employee who has achieved career State employee status as defined by G.S. 126-1.1 by October 31, 1998, shall not have his or her compensation reduced as a result of this subdivision.  Further, an employee who has achieved career State employee status as defined by G.S. 126-1.1 by October 31, 1998, shall be subject to the rules regarding discipline or discharge that were effective on October 31, 1998, and shall not be subject to the rules regarding discipline or discharge adopted after October 31, 1998.
(3)	The Board of Directors may prescribe the office hours, workdays, and holidays to be observed by the various offices and departments of the University of North Carolina Hospitals at Chapel Hill.
(4)	The Board of Directors shall establish boards, committees, or councils to conduct hearings upon the appeal of employees who have been suspended, demoted, otherwise disciplined, or discharged, to hear employee grievances, or to undertake any other duties relating to personnel administration that the Board of Directors may direct.
(e)	Finances. – The University of North Carolina Hospitals at Chapel Hill shall be subject to the provisions of the Executive Budget Act. There shall be maintained a business and budget office to administer the budget and financial affairs of the University of North Carolina Hospitals at Chapel Hill. The executive director, subject to the board of directors, shall be responsible for all aspects of budget preparation, budget execution, and expenditure reporting. Subject to the approval of the Director of the Budget: All operating funds of the University of North Carolina Hospitals at Chapel Hill may be budgeted and disbursed through a special fund code, all receipts of the University of North Carolina Hospitals at Chapel Hill may be deposited directly to the special fund code; and general fund appropriations for support of the University of North Carolina Hospitals at Chapel Hill may be budgeted in a general fund code under a single purpose, 'Contribution to University of North Carolina Hospitals at Chapel Hill Operations' and be transferable to the special fund operating code as receipts. Prior to taking any action under this subsection, the Director of the Budget may consult with the Advisory Budget Commission.
(e1)	Finances – Patient/Hospital Benefit. – The Executive Director of the University of North Carolina Hospitals at Chapel Hill or the Director's designee, may expend operating budget funds, including State funds, of the University of North Carolina Hospitals at Chapel Hill for the direct benefit of a patient, when, in the judgment of the Executive Director or the Director's designee, the expenditure of these funds would result in a financial benefit to the University of North Carolina Hospitals at Chapel Hill. Any such expenditures are declared to result in the provision of medical services and create charges of the University of North Carolina Hospitals at Chapel Hill for which the hospitals may bill and pursue recovery in the same way as allowed by law for recovery of other hospitals' charges for services that are unpaid.
These expenditures shall be limited to no more than seven thousand five hundred dollars ($7,500) per patient per admission and shall be restricted (i) to situations in which a patient is financially unable to afford ambulance or other transportation for discharge; (ii) to afford placement in an after-care facility pending  approval of third party entitlement benefits; (iii) to assure availability of a bed in an after-care facility after discharge from the hospitals; (iv) to secure equipment or other medically appropriate services after discharge; (v) or to pay health insurance premiums. The Executive Director or the Director's designee shall reevaluate at least once a month the cost-effectiveness of any continuing payment on behalf of a patient.
To the extent that the University of North Carolina Hospitals at Chapel Hill advance anticipated government entitlement benefits for a patient's benefit, for which the patient later receives a lump sum 'backpay' award from an agency of the State, whether for the current admission or subsequent admission, the State agency shall withhold from this backpay an amount equal to the sum advanced on the patient's behalf by the University of North Carolina Hospitals at Chapel Hill, if, prior to the disbursement of the backpay, the applicable State program has received notice from the University of North Carolina Hospitals at Chapel Hill of the advancement.
(f)	Purchases. –There shall be maintained a purchasing office to handle all purchasing requirements of the University of North Carolina Hospitals at Chapel Hill. Notwithstanding the provisions of Articles 3 and 3A of Chapter 143 of the General Statutes to the contrary, the Board of Directors shall establish policies and regulations governing the purchasing requirements of the University of North Carolina Hospitals at Chapel Hill.  These policies and regulations shall provide for requests for proposals, competitive bidding or purchasing by means other than competitive bidding, contract negotiations and contract awards for purchasing supplies, materials, equipment, and services which are necessary and appropriate to fulfill the clinical, educational, research, and community service missions of the University of North Carolina Hospitals at Chapel Hill.  The Board of Directors shall seek the advice of the Director of the Purchase and Contract Division on an annual basis  concerning the adequacy of the University of  North Carolina Hospitals at Chapel Hill  management staff and internal controls to administer the additional authorities authorized under this section.
(g)	Property. –Notwithstanding the provisions of Article 6 of Chapter 146 of the General Statutes to the contrary, the Board of Directors shall establish rules and regulations to perform the functions otherwise prescribed for the Department of Administration in acquiring or disposing of any interest in real property by the University of North Carolina Hospitals at Chapel Hill.  These rules and regulations shall include provisions for development of specifications, advertisement, and negotiations with owners for acquisition by purchase, gift, lease, or rental, but not by condemnation or exercise of eminent domain, on behalf of the University of North Carolina Hospitals at Chapel Hill.  This section does not authorize the Board of Directors to encumber real property.  The Board of Directors shall seek the advice of the State Property Office on an annual basis concerning the adequacy of the University of North Carolina Hospitals at Chapel Hill management staff and internal controls to administer the additional authorities permitted by this section.  After review by the Attorney General as to form and after the consummation of any such acquisition, the University of North Carolina Hospitals at Chapel Hill shall promptly file a report concerning the acquisition or disposition with the Governor and Council of State.
(h)	Patient Information. – The University of North Carolina Hospitals at Chapel Hill shall, at the earliest possible opportunity, specifically make a verbal and written request to each patient to disclose the patient's Social Security number, if any.  If the patient does not disclose that number, the University of North Carolina Hospitals at Chapel Hill shall deny benefits, rights, and privileges of the University of North Carolina Hospitals at Chapel Hill to the patient as soon as practical, to the maximum extent permitted by federal law or federal regulations.  The University of North Carolina Hospitals at Chapel Hill shall make the disclosure to the patient required by Section 7(b) of P.L. 93-579.  This subsection is supplementary to G.S. 105A-3(c).
(i)	Property Construction. – Notwithstanding G.S. 143-341(3) and G.S. 143-135.1, the Board of Directors shall, with respect to the design, construction, and renovation of buildings, utilities, and other property developments of the University of North Carolina Hospitals at Chapel Hill requiring the expenditure of public money:
(1)	Conduct the fee negotiations for all design contracts and supervise the letting of all construction and design contracts.
(2)	Develop procedures governing the responsibilities of the University of North Carolina Hospitals at Chapel Hill to perform the duties of the Department of Administration, the Office of State Construction, and the State Building Commission under G.S. 133-1.1(d), Article 8 of Chapter 143 of the General Statutes, and G.S. 143-341(3).
(3)	Develop procedures and limitations governing the use of open-end design agreements.
(4)	As appropriate, submit construction documents for review and approval by the Department of Insurance and the Division of Facility Services of the Department of Human Resources.
(5)	Use the standard contracts for design and construction currently in use for State capital improvement projects by the Office of State Construction of the Department of Administration.
(6)	Seek the advice of the Director of the Office of State Construction on an annual basis concerning the adequacy of the University of North Carolina Hospitals at Chapel Hill management staff and internal controls to administer the additional authorities authorized by this section."
	(b)	G.S. 126-5 is amended by adding a new subsection to read:
"( c8)	Except as to the provisions of Articles 5, 6, 7, and 14 of this Chapter, the provisions of this Chapter shall not apply to:
(1)	Employees of the University of North Carolina Hospitals at Chapel Hill.
(2)	Employees of the Medical Faculty Practice Plan, a division of the School of Medicine of East Carolina University.
(3)	Employees of UNC Physicians and Associates, a division of the School of Medicine of the University of North Carolina at Chapel Hill."
(c)	G.S. 143-56 reads as rewritten:
"§ 143-56.  Certain purchases excepted from provisions of Article.
Unless as may otherwise be ordered by the Secretary of Administration, the purchase of supplies, materials and equipment through the Secretary of Administration shall be mandatory in the following cases:
(1)	Published books, manuscripts, maps, pamphlets and periodicals.
(2)	Perishable articles such as fresh vegetables, fresh fish, fresh meat, eggs, and others as may be classified by the Secretary of Administration.
Purchase through the Secretary of Administration shall not be mandatory for a purchase of supplies, materials or equipment for the General Assembly if the total expenditures is less than the expenditure benchmark established under the provisions of G.S. 143-53.1, for group purchases made by hospitals through a competitive bidding purchasing program, as defined in G.S. 143-129, by the University of North Carolina Hospitals at Chapel Hill pursuant to G.S. 116-37(f), by the University of North Carolina at Chapel Hill on behalf of UNC Physicians and Associates pursuant to G.S. 116-37.2(c), or  by East Carolina University on behalf of the Medical Faculty Practice Plan pursuant to G.S. 116-40.6(c).
All purchases of the above articles made directly by the departments, institutions and agencies of the State government shall, whenever possible, be based on competitive bids.  Whenever an order is placed or contract awarded for such articles by any of the departments, institutions and agencies of the State government, a copy of such order or contract shall be forwarded to the Secretary of Administration and a record of the competitive bids upon which it was based shall be retained for inspection and review."
(d)	G.S. 146-22 reads as rewritten:
"§ 146-22. All acquisitions to be made by Department of Administration.
Every acquisition of land on behalf of the State or any State agency, whether by purchase, condemnation, lease, or rental, shall be made by the Department of Administration and approved by the  Governor and Council of State; provided that if the proposed acquisition is a purchase of land with an appraised value of at least  twenty-five thousand dollars ($25,000), and the acquisition is for other than a transportation purpose, the acquisition may only be made after consultation with the Joint Legislative Commission on Governmental Operations; and provided further, that acquisitions on behalf of the University of North Carolina Hospitals at Chapel Hill shall be made in accordance with G.S. 116-37(g), acquisitions on behalf of the UNC Physicians and Associates shall be made in accordance with G.S. 116-37.2(d), and acquisitions on behalf of the Medical Faculty Practice Plan made in accordance with G.S. 116-40.6(d).   In determining whether the appraised value is at least twenty-five thousand dollars ($25,000), the value of the property in fee simple shall be used. The State may not purchase land as a tenant-in-common without consultation with the Joint Legislative Commission on Governmental Operations if the appraised value of the property in fee simple is at least twenty-five thousand dollars ($25,000)."
(e)  G.S. 133-1.1(d) reads as rewritten:
"(d)	On projects on which no registered architect or engineer is required pursuant to the provisions of this section, the governing board or awarding authority shall require a certificate of compliance with the State Building Code from the city or county inspector for the specific trade or trades involved or from a registered architect or engineer, except that the provisions of this subsection shall not apply on projects (i) wherein plans and specifications are approved by the Department of Administration, Division of State Construction, and the completed project is inspected by the Division of State Construction and the State Electrical Inspector, (ii) that are exempt from the State Building Code, or (iii) that are subject to G.S. 116-31.11 and the completed project is inspected by the State Electrical Inspector and by The University of North Carolina or its constituent or affiliated institution, (iv) that are subject to G.S. 116-37(i) and the completed project is inspected by the State Electrical Inspector and by the University of North Carolina Hospitals at Chapel Hill, (v) that are subject to G.S. 116-37.2(e) and the completed project is inspected by the State Electrical Inspector and by the University of North Carolina at Chapel Hill on behalf of the UNC Physicians and Associates, or (vi) that are subject to G.S. 116-40.6(e) and the completed project is inspected by the State Electrical Inspector and by East Carolina University on behalf of the Medical Faculty Practice Plan."
(f)  Chapter 116 of the General Statutes is amended by adding the following:
"§ 116-37.2.  The University of North Carolina Physicians and Associates.
(a)	UNC Physicians and Associates. – 'UNC Physicians and Associates,' a division of the School of Medicine of the University of North Carolina at Chapel Hill, operates clinical programs and facilities for the purpose of providing medical care to the general public and training physicians and other health care professionals.
(b)	Personnel. – All employees of UNC Physicians and Associates shall be deemed to be employees of the State and shall be subject to all provisions of State law relevant thereto; provided, however, that except as to the provisions of Articles 5, 6, 7, and 14 of Chapter 126 of the General Statutes, the provisions of Chapter 126 shall not apply to employees of UNC Physicians and Associates, and the policies and procedures governing the terms and conditions of employment of such employees shall be adopted by the Board of Trustees of the University of North Carolina at Chapel Hill; provided, that with respect to such employees as may be members of the faculty of the University of North Carolina at Chapel Hill, no such policies and procedures may be inconsistent with policies established by, or adopted pursuant to delegation from, the Board of Governors of the University of North Carolina.  Such policies and procedures shall be implemented on behalf of UNC Physicians and Associates by a personnel office maintained by the University of North Carolina at Chapel Hill.
(1)	The Board of Trustees shall fix or approve the schedules of pay, expense allowances, and other compensation and adopt position classification plans for employees of UNC Physicians and Associates.
(2)	The Board of Trustees may adopt or provide for rules and regulations concerning, but not limited to, annual leave, sick leave, special leave with full pay or with partial pay supplementing workers' compensation payments for employees injured in accidents arising out of and in the course of employment, working conditions, service awards, and incentive award programs, grounds for dismissal, demotion, or discipline, other personnel policies, and any other measures that promote the hiring and retention of capable, diligent, and effective career employees.  However, an employee who has achieved career State employee status as defined by G.S. 126-1.1 by October 31, 1998, shall not have his or her compensation  reduced as a result of this subdivision.  Further, an employee who has achieved career State employee status as defined by G.S. 126-1.1 by October 31, 1998, shall be subject to the rules regarding discipline or discharge that were effective on October 31, 1998, and shall not be subject to the rules regarding discipline or discharge adopted after October 31, 1998.
(3)	The Board of Trustees may prescribe the office hours, workdays, and holidays to be observed by the various offices and departments of UNC Physicians and Associates.
(4)	The Board of Trustees shall establish boards, committees, or councils to conduct hearings upon the appeal of employees who have been suspended, demoted, otherwise disciplined, or discharged, to hear employee grievances, or to undertake any other duties relating to personnel administration that the Board of Trustees may direct.
(c)	Purchases. – Notwithstanding the provisions of Articles 3 and 3A of Chapter 143 of the General Statutes to the contrary, the Board of Trustees of the University of North Carolina at Chapel Hill shall establish policies and regulations governing the purchasing requirements of UNC Physicians and Associates.  These policies and regulations shall provide for requests for proposals, competitive bidding or purchasing by means other than competitive bidding, contract negotiations and contract awards for purchasing supplies, materials, equipment, and services which are necessary and appropriate to fulfill the clinical and educational missions of UNC Physicians and Associates.  Pursuant to such policies and regulations, purchases for UNC Physicians and Associates shall be effected by a purchasing office maintained by the University of North Carolina at Chapel Hill.  The Board of Trustees shall seek the advice of the Director of the Purchase and Contract Division on an annual basis concerning the adequacy of the University of North Carolina at Chapel Hill management staff and internal controls to administer the additional authorities authorized under this section.
(d)	Property. – Notwithstanding the provisions of Article 6 of Chapter 146 of the General Statutes to the contrary, the Board of Trustees shall establish rules and regulations to perform the functions otherwise prescribed for the Department of Administration in acquiring or disposing of any interest in real property for the use of UNC Physicians and Associates.  These rules and regulations shall include provisions for development of specifications, advertisement, and negotiations with owners for acquisition by purchase, gift, lease, or rental, but not by condemnation or exercise of eminent domain, on behalf of UNC Physicians and Associates.  This section does not authorize the Board of Trustees to encumber real property.  Such rules and regulations shall be implemented by a property office maintained by the University of North Carolina at Chapel Hill.  The Board of Trustees shall seek the advice of the State Property Office on an annual basis concerning the adequacy of the University of North Carolina at Chapel Hill management staff and internal controls to administer the additional authorities permitted by this section.  After review by the Attorney General as to form and after the consummation of any such acquisition, the University of North Carolina at Chapel Hill shall promptly file, on behalf of UNC Physicians and Associates, a report concerning the acquisition or disposition with the Governor and Council of State.
(e)	Property  Construction. – Notwithstanding G.S. 143-341(3) and G.S. 143-135.1, the Board of Trustees shall adopt policies and procedures to be implemented by the administration of the University of North Carolina at Chapel Hill, with respect to the design, construction, and renovation of buildings, utilities, and other property developments for the use of UNC Physicians and Associates, requiring the expenditure of public money for:
(1)	Conducting the fee negotiations for all design contracts and supervising the letting of all construction and design contracts.
(2)	Performing the duties of the Department of Administration, the Office of State Construction, and the State Building Commission under G.S. 133-1.1(d), Article 8 of Chapter 143 of the General Statutes, and G.S. 143-341(3).
(3)	Using open-end design agreements.
(4)	As appropriate, submitting construction documents for review and approval by the Department of Insurance and the Division of Facility Services of the Department of Human Resources.
(5)	Using the standard contracts for design and construction currently in use for State capital improvement projects by the Office of State Construction of the Department of Administration.
The Board of Trustees shall seek the advice of the Director of the Office of State Construction on an annual basis concerning the adequacy of the University of North Carolina at Chapel Hill management staff and internal controls to administer the additional authorities authorized by this section.
"§ 116-40.6. East Carolina University Medical Faculty Practice Plan.
(a)	Medical Faculty Practice Plan. – The 'Medical Faculty Practice Plan,' a division of the School of Medicine of East Carolina University, operates clinical programs and facilities for the purpose of providing medical care to the general public and training physicians and other health care professionals.
(b)	Personnel. – Employees of the Medical Faculty Practice Plan shall be deemed to be employees of the State and shall be subject to all provisions of State law relevant thereto; provided, however, that except as to the provisions of Articles 5, 6, 7, and 14 of Chapter 126 of the General Statutes, the provisions of Chapter 126 shall not apply to employees of the Medical Faculty Practice Plan, and the policies and procedures governing the terms and conditions of employment of such employees shall be adopted by the Board of Trustees of East Carolina University; provided, that with respect to such employees as may be members of the faculty of East Carolina University, no such policies and procedures may be inconsistent with policies established by, or adopted pursuant to delegation from, the Board of Governors of the University of North Carolina.  Such policies and procedures shall be implemented on behalf of the Medical Faculty Practice Plan by a personnel office maintained by East Carolina University.
(1)	The Board of Trustees shall fix or approve the schedules  of pay, expense allowances, and other compensation and adopt position classification plans for employees of the Medical Faculty Practice Plan.
(2)	The Board of Trustees may adopt or provide for rules and regulations concerning, but not limited to, annual leave, sick leave, special leave with full pay or with partial pay supplementing workers' compensation payments for employees injured in accidents arising out of and in the course of employment, working conditions, service awards, and incentive award programs, grounds for dismissal, demotion, or discipline, other personnel policies, and any other measures that promote the hiring and retention of capable, diligent, and effective career employees. However, an employee who has achieved career State employee status as defined by G.S. 126-1.1 by October 31, 1998, shall not have his or her compensation reduced as a result of this subdivision.  Further, an employee who has achieved career State employee status as defined by G.S. 126-1.1 by October 31, 1998, shall be subject to the rules regarding discipline or discharge that were effective on October 31, 1998, and shall not be subject to the rules regarding discipline or discharge adopted after October 31, 1998.
(3)	The Board of Trustees may prescribe the office hours, workdays, and holidays to be observed by the various offices and departments of the Medical Faculty Practice Plan.
(4)	The Board of Trustees shall establish boards, committees or councils to conduct hearings upon the appeal of employees who have been suspended, demoted, otherwise disciplined, or discharged, to hear employee grievances, or to undertake any other duties relating to personnel administration that the Board of Trustees may direct.
(c)	Purchases. – Notwithstanding the provisions of Articles 3 and 3A of Chapter 143 of the General Statutes to the contrary, the Board of Trustees of East Carolina University shall establish policies and regulations governing the purchasing requirements of the Medical Faculty Practice Plan.  These policies and regulations shall provide for requests for proposals, competitive bidding or purchasing by means other than competitive bidding, contract negotiations and contract awards for purchasing supplies, materials, equipment, and services which are necessary and appropriate to fulfill the clinical and educational missions of the Medical Faculty Practice Plan.  Pursuant to such policies and regulations, purchases for the Medical Faculty Practice Plan shall be effected by a purchasing office maintained by East Carolina University.  The Board of Trustees shall seek the advice of the Director of the Purchase and Contract Division on an annual basis  concerning the adequacy of the East Carolina University management staff and internal controls to administer the additional authorities authorized under this section.
(d)	Property. – Notwithstanding the provisions of Article 6 of Chapter 146 of the General Statutes to the contrary, the Board of Trustees shall establish rules and regulations to perform the functions otherwise prescribed for the Department of Administration in acquiring or disposing of any interest in real  property for the use of the Medical Faculty Practice Plan.  These rules and regulations shall include provisions for development of specifications, advertisement, and negotiations with owners for acquisition by purchase, gift, lease, or rental, but not by condemnation or exercise of eminent domain, on behalf of the Medical Faculty Practice Plan.  This section does not authorize the Board of Trustees to encumber real property.  Such rules and regulations shall be implemented by a property office maintained by East Carolina University.  The Board of Trustees shall seek the advice of the State Property Office on an annual basis concerning the adequacy of the East Carolina University management staff and internal controls to administer the additional authorities permitted by this section.  After review by the Attorney General as to form and after the consummation of any such acquisition, East Carolina University shall promptly file, on behalf of the Medical Faculty Practice Plan, a report concerning the acquisition or disposition with the Governor and Council of State.
(e)	Property Construction. – Notwithstanding G.S. 143-341(3) and G.S. 143-135.1, the Board of Trustees shall adopt policies and procedures, to be implemented by the administration of East Carolina University, with respect to the design, construction, and renovation of buildings, utilities, and other property developments for the use of the Medical Faculty Practice Plan, requiring the expenditure of public money for:
(1)	Conducting the fee negotiations for all design contracts and supervising the letting of all construction and design contracts.
(2) 	Performing the duties of the Department of Administration, the Office of State Construction, and the State Building Commission under G.S. 133-1.1(d), Article 8 of Chapter 143 of the General Statutes, and G.S. 143-341(3).
(3) 	Using open-end design agreements.
(4) 	As appropriate, submitting construction documents for review and approval by the Department of Insurance and the Division of Facility Services of the Department of Human Resources.
(5) 	Using the standard contracts for design and construction currently in use for State capital improvement projects by the Office of State Construction of the Department of Administration.
The Board of Trustees shall seek the advice of the Director of the Office of State Construction on an annual basis concerning the adequacy of East Carolina University management staff and internal controls to administer the additional authorities authorized by this section."
(g) This section becomes effective November 1, 1998.

Requested by: Representative Creech
FOREST BIOTECHNOLOGY/NCSU FUNDS
Section 11.15.  Of the funds appropriated in this act to the Board of Governors of The University of North Carolina, the sum of one hundred two thousand seven hundred seventy dollars ($102,770) for the 1998-99 fiscal year shall be allocated to the Forest Biotechnology Group at North Carolina State University for faculty or technical positions and operating funds.

PART XII.  DEPARTMENT OF HEALTH AND HUMAN SERVICES

SUBPART 1. ADMINISTRATION
Requested by:   Representatives Gardner, Cansler, Clary
HOSPITAL FACILITY AUDITED COST REPORT DUE DATE
Section 12.1A.  G.S. 131D-4.2(e) reads as rewritten:
"(e)	Except as otherwise provided in this subsection, the annual reporting period for facilities licensed pursuant to this Chapter or Chapter 131E of the General Statutes shall be October 1 through September 30, with the annual report due by the following December 31, unless the Department determines there is good cause for delay. The annual report for combination facilities and free-standing adult care home facilities owned and operated by a hospital shall be due 15 days after the hospital's Medicare cost report is due. The annual report for combination facilities not owned and operated by a hospital shall be due 15 days after the nursing facility's Medicaid cost report is due.  The annual reporting period for facilities licensed pursuant to Chapter 122C of the General Statutes shall be July 1 through June 30, with the annual report due by the following December 31, unless the Department determines there is good cause for delay. Under this subsection, good cause is an action that is uncontrollable by the provider. If the Department finds good cause for delay, it may extend the deadline for filing a report for up to an additional 30 days."

Requested by:   Representatives Gardner, Cansler, Clary
OFFICE OF STRATEGIC PLANNING
Section 12.2.  It is the intent of the General Assembly that the Department of Health and Human Services provide coordinated and strategic planning for the State's health and human services.  The Department shall study the advisability of creating an Office of Strategic Planning in the Office of the Secretary of Health and Human Services. The Director of the Office of Strategic Planning would report directly to the Secretary and would have the following responsibilities:
(1)	Implementing ongoing strategic planning that integrates budget, personnel, and resources with the mission and operational goals of the Department;
(2)	Improving program functioning and performance within the agency, across agency lines, and with non-State agencies; and
(3)	Reviewing, disseminating, monitoring, and evaluating best practice models.
The Department shall report its findings and recommendations, which shall include the advantages and disadvantages of creating an Office of Strategic Planning and projected costs of implementation. The report shall be made to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and shall be submitted not later than February 1, 1999.

Requested by:   Representatives Clary, Nye
NORTH CAROLINA BOARD OF PHARMACY/WAIVER FOR DISASTERS AND EMERGENCIES/RULES PERTAINING TO MAIL DELIVERY OF DISPENSED LEGEND DRUGS
Section 12.3B.  (a) G.S. 90-85.25 reads as rewritten:
"§ 90-85.25.  Disasters and emergencies.
(a)	In the event of a disaster or emergency, and in accordance with the provisions of Chapter 166A of the General Statutes and with G.S. 143B-474, the Board may waive the requirements of this Article in order to permit the provision of drugs, devices, and professional services to the public.  As used in this section, the term:
(1)	'Disaster' means any natural or man-made event which causes sufficient damage to life or property, the response to which requires resources that exceed local capabilities.
(2)	'Emergency' means any natural or man-made event which causes sufficient damage to life or property, the response to which can be handled with resources routinely available to the community.
(b)	The pharmacist in charge of a pharmacy shall report within 10 days to the Board any disaster, accident, theft, or emergency which may affect the strength, purity, or labeling of drugs and devices in the pharmacy."
(b)	G.S. 90-85.21A reads as rewritten:
"§ 90-85.21A.  Applicability to out-of-state operations.
(a)	Any pharmacy operating outside the State which ships, mails, or delivers in any manner a dispensed legend drug into this State shall annually register with the Board on a form provided by the Board.
(b)	Any pharmacy subject to this section shall at all times maintain a valid unexpired license, permit, or registration necessary to conduct such pharmacy in compliance with the laws of the state in which such pharmacy is located.  No pharmacy operating outside the State may ship, mail, or deliver in any manner a dispensed legend drug into this State unless such drug is lawfully dispensed by a licensed pharmacist in the state where the pharmacy is located.
(c)	The Board shall be entitled to charge and collect not more than two hundred fifty dollars ($250.00) for original registration of a pharmacy under this section, and for renewal thereof, not more than one hundred twenty-five dollars ($125.00).
(d)	The Board may deny a nonresident pharmacy registration upon a determination that the pharmacy has a record of being formally disciplined in its home state for violations that relate to the compounding or dispensing of legend drugs and presents a threat to the public health and safety.
(e)	Except as otherwise provided in this subsection, the Board may adopt rules to protect the public health and safety that are necessary to implement this section. Notwithstanding G.S. 90-85.6, the Board shall not adopt rules pertaining to the shipment, mailing, or other manner of delivery of dispensed legend drugs by pharmacies required to register under this section that are more restrictive than federal statutes or regulations governing the delivery of prescription medications by mail or common carrier. A pharmacy required to register under this section shall comply with rules adopted pursuant to this section.
(f)	The Board may deny, revoke, or suspend a nonresident pharmacy registration for failure to comply with any requirement of this section."
(c) G.S. 90-85.32 reads as rewritten:
"§ 90-85.32. Rules pertaining to filling, refilling, transfer, and mail or common-carrier delivery of prescription orders.
(a)	Except as otherwise provided in this section, the Board may adopt rules governing the filling, refilling and transfer of prescription orders not inconsistent with other provisions of law regarding the distribution of drugs and devices. The rules shall assure the safe and secure distribution of drugs and devices. Prescriptions marked PRN shall not be refilled more than one year after the date issued by the prescriber unless otherwise specified.
(b) Notwithstanding G.S. 90-85.6, the Board shall not adopt rules pertaining to the shipment, mailing, or other manner of delivery of dispensed legend drugs that are more restrictive than federal statutes or regulations governing the delivery of prescription medications by mail or common carrier."

Requested by:   Representatives Gardner, Cansler, Clary
COLLABORATIVE EFFORT TO IMPROVE QUALITY OF ACADEMIC PROGRAMS AT RESIDENTIAL SCHOOLS
Section 12.3C.  The Department of Health and Human Services, the State Board of Education, and the superintendents or their designees of the Burke, Guilford, Wake, and Wilson local education agencies shall work together to develop and implement strategies for strengthening the relationship between the agencies and the Governor Morehead School and the three residential schools for the deaf over the next five years.  The goal of this collaborative effort is to improve the quality of the academic programs at the residential schools and to utilize more fully and effectively the unique resources and expertise available on these residential campuses to the benefit of visually impaired and hearing-impaired students statewide.  This collaborative effort shall identify, at a minimum, the following:
(1)	Strategies for assisting in the implementation of the Standard Course of Study and the ABCs Program on the residential campuses;
(2)	Opportunities for collaboration and sharing of resources in other areas such as staff development, student exchange, transportation, and use of technology; and
(3)	Options for transferring to the local education agencies direct responsibility for the management of the academic programs on the residential campuses, including the preschool programs.
The Department of Health and Human Services, the State Board of Education, and the designated representatives of the Burke, Guilford, Wake, and Wilson local education agencies shall submit a joint report to the Joint Legislative Education Oversight Committee, the House of Representatives Appropriations Subcommittee on Human Resources, the Senate Appropriations Committee on Human Resources, and the Fiscal Research Division on the results of the effort required under this section.  The report shall be submitted no later than April 1, 1999.

SUBPART 2. MEDICAL ASSISTANCE
Requested by:   Representatives Gardner, Cansler, Clary
MEDICAID GROWTH REDUCTION
Section 12.5. Section 11.10 of S.L. 1997-443 reads as rewritten:
"Section 11.10. (a)	The Department of Health and Human Services shall develop and implement a plan that is designed to reduce the growth of Medicaid to eight percent (8%) by the year 2001.  However, the Department shall not eliminate categories of eligibles or categories of services to achieve this reduction unless the General Assembly identifies specific categories of eligibles or categories of services that it wants eliminated.
(b)	The Division of Medical Assistance, Department of Health and Human Services, shall consider the following actions in developing the plan to reduce Medicaid growth:
(1)	Changes in the methods of reimbursement;
(2)	Changes in the method of determining or limiting inflation factors or both;
(3)	Recalibration of existing methods of reimbursement;
(4)	Develop more specific criteria for determining medical necessity of services;
(5)	Contracting for services;
(6)	Application of limits on specific numbers of slots or expenditure levels for certain services or both;
(7)	Expansion of managed care; and
(8)	Recommend changes in statutes to enhance the ability of the Department to manage the program.
(c)	In considering the actions listed in subsection (b) of this section and in the development of the Medicaid growth reduction plan, the Division of Medical Assistance, Department of Health and Human Services, shall not adjust reimbursement rates to levels which would cause Medicaid providers of service to be out of compliance with certification requirements, licensure rules, or other mandated quality or safety standards.
(d)	The Division of Medical Assistance, Department of Health and Human Services, may make periodic progress reports to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and shall make a final report no later than September 1, 1997, on any actions the Department intends to take to meet the required reductions for 1998-99.  The Division of Medical Assistance shall not implement any of these actions until after the intended actions have been reported to the members.
(e)	The Division of Medical Assistance, Department of Health and Human Services, shall report to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources by February 1, 1999, on the final plan to reduce Medicaid growth to eight percent (8%) by the year 2001."

Requested by:   Representatives Gardner, Cansler, Clary
RULES GOVERNING TRANSFER OF MEDICAID BENEFITS BETWEEN COUNTIES
Section 12.6. Chapter 108A of the General Statutes is amended by inserting a new section to read:
"§ 108A-57.1.  Rules governing transfer of medical assistance benefits between counties.
Any recipient of medical assistance who moves from one county to another county of this State shall continue to receive medical assistance if eligible.  The county director of social services of the county from which the recipient has moved shall transfer all necessary records relating to the recipient to the county director of social services of the county to which the recipient has moved.  The county from which the recipient has moved shall pay the county portion of the nonfederal share of medical assistance payments paid for services provided to the recipient during the month following the recipient's move.  Thereafter, the county to which the recipient has moved shall pay the county portion of the nonfederal share of medical assistance payments paid for the services provided to the recipient."

Requested by:   Representatives Gardner, Cansler, Clary
CONTINUOUS MEDICAID COVERAGE FOR CATEGORICALLY NEEDY FAMILIES WITH CHILDREN
Section 12.7. (a) Section 11.11 of S.L. 1997-443 is amended by inserting a new subsection to read:
"( n1)	Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets."
(b) The Department of Health and Human Services shall study the effect of this section on both the Medicaid Program and the Health Insurance Program for Children.  The Department shall make an interim report on the results of this study to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources by October 1, 1999, and shall make a final report by January 1, 2000.
(c) This section becomes effective October 1, 1998.

Requested by:   Representatives Gardner, Cansler, Clary
ALLOCATION OF G.S. 143-23.2 MEDICAID FUNDS
Section 12.8. Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143-23.2, thirteen million dollars ($13,000,000) shall be allocated as prescribed by G.S. 143-23.2(b) for Medicaid programs.  Notwithstanding the prescription in G.S. 143-23.2(b) that these funds not reduce State general revenue funding, these funds shall replace the thirteen million dollar ($13,000,000) reduction in general revenue funding effected in this act.

[SECTION 12.9 RESERVED]

Requested by:   Representatives Cansler, Clary
DISPOSITION OF DISPROPORTIONATE SHARE RECEIPT CHANGE 
Section 12.10. (a)	Disproportionate share receipts reserved at the end of the 1997-98 fiscal year shall be deposited with the Department of State Treasurer as a nontax revenue for the 1998-99 fiscal year.
(b)	For the 1998-99 fiscal year, as it receives funds associated with Disproportionate Share Payments from the State hospitals, the Department of Health and Human Services, Division of Medical Assistance, shall deposit up to eighty-five million dollars ($85,000,000) of these Disproportionate Share Payments to the Department of State Treasurer for deposit as nontax revenues.  Any Disproportionate Share Payments collected in excess of the eighty-five million dollars ($85,000,000) shall be reserved by the State Treasurer for future appropriations.

Requested by:   Representatives Gardner, Cansler, Clary
CHILD HEALTH INSURANCE TECHNICAL CHANGES
Section 12.11. G.S. 108A-70.18(8), as enacted by Section 1 of S.L. 1998-1 Extra Session, reads as rewritten:
"(8)	'Uninsured' means the applicant for Program benefits was not covered under any private or employer-sponsored comprehensive health insurance plan for the six-month period immediately preceding the date of application for Program benefits.  Effective April 1, 1999, 'uninsured' means the applicant is and was not covered under any private or employer-sponsored comprehensive health insurance plan for 60 days immediately preceding the date of application. The waiting periods required under this subdivision shall be waived if the child has been enrolled in Medicaid and has lost Medicaid eligibility, has lost health care benefits due to cessation of a nonprofit organization program that provides health care benefits to low-income children, or has lost employer-sponsored comprehensive health care coverage due to termination of employment, cessation by the employer of employer-sponsored health coverage, or cessation of the employer's business."

Requested by:   Representatives Gardner, Cansler, Clary
CHILD HEALTH INSURANCE STUDY/OTHER CHANGES
Section 12.12A. (a) The Department of Health and Human Services shall conduct a study to identify Department programs where savings in State funds could be realized because some or all of the services provided by the programs are now provided under the Health Insurance Program for Children.  The Department shall report its findings to members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources not later than March 1, 1999.
(b) The Office of State Budget and Management shall examine the expenditures and services of State agencies other than the Department of Health and Human Services to determine whether the expenditures and services could be covered under the State Health Insurance Program for Children.  The study shall also examine services provided by non-State agencies and funded in whole or in part with State funds.  The Office of State Budget and Management shall report its findings to members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources not later than March 1, 1999. 
(c) Section 8 of S.L. 1998-1 Extra Session, reads as rewritten:
"Section 8.  Before a school-based health center or clinic may be reimbursed for services, other than immunization services, under the Health Insurance Program for Children, the center or clinic must develop and use parental consent forms which reflect a listing of the basic categories of health services offered at the school-based center or clinic, including referral services to other health care providers.  If the center or clinic provides services for sexually transmitted diseases, reproductive health services, or family planning services, then these services shall be specifically identified in the listing of basic services.  The school-based center or clinic must make available, if requested by the parent, a more detailed explanation of the types of services included within the listed categories.  The parent shall be advised in writing that detailed explanations of services are available upon request.  The Department of Health and Human Services shall request the assistance of the North Carolina Pediatric Society in developing a model listing of services for consideration by the school-based health centers or clinics and shall present the model listing to the Joint Legislative Health Care Oversight Committee not later than December 1, 1998.  Consent forms must be signed by the parent prior to the provision of services, except that a signature shall not be required for emergency services or treatment as authorized under Article 1A of Chapter 90 of the General Statutes, and must contain all of the following to provide parents the option to:
(1)	Withhold consent from all services provided by the center or clinic under the Program;
(2)	Consent to only those categories of health services specified by the parent on the form; or
(3)	Consent to all services provided by the center or clinic under the Program."
(d) G.S. 143-682, as enacted by Section 3 of S.L. 1998-1 Extra Session, reads as rewritten:
"§ 143-682.  Commission established.
(a)	There is established the Commission on Children With Special Health Care Needs.  The Department of Health and Human Services shall provide staff services and space for Commission meetings.  The purpose of the Commission is to monitor and evaluate the availability and provision of health services to special needs children in this State, and to monitor and evaluate services provided to special needs children under the Health Insurance Program for Children established under Part 8 of Article 2 of Chapter 108A of the General Statutes.
(b)	The Commission shall consist of eight members appointed by the Governor, as follows:
(1)	Two parents, not of the same family, each of whom has a special needs child.  In appointing parents, the Governor shall consider appointing one parent of a child with chronic illness and one parent of a child with a developmental disability or behavioral disorder;
(2)	A licensed psychiatrist recommended by the North Carolina Psychiatric Association;
(3)	A licensed psychologist recommended by the North Carolina Psychological Association;
(4)	A licensed pediatrician whose practice includes services for special needs children, recommended by the Pediatric Society of North Carolina;
(5)	A representative of one of the children's hospitals in the State, recommended by the Pediatric Society of North Carolina;
(6)	A local public health director recommended by the Association of Local Health Directors; and
(7)	An educator providing education services to special needs children, recommended by the North Carolina Council of Administrators of Special Education.
(c)	The Governor shall appoint from among Commission members the person who shall serve as chair of the Commission.  Of the initial appointments, two shall serve one-year terms, three shall serve two-year terms, and three shall serve three-year terms.  Thereafter, terms shall be for two years.  Vacancies occurring before expiration of a term shall be filled from the same appointment category in accordance with subsection (b) of this section."

Requested by:   Representatives Cansler, Gardner, Clary
MEDICAID/REPORTING ANTICIPATED CHANGES
Section 12.12B. (a) Section 11.11 of S.L. 1997-443 reads as rewritten:
"Section 11.11.  (a)	Funds appropriated in this act for services provided in accordance with Title XIX of the Social Security Act (Medicaid) are for both the categorically needy and the medically needy.  Funds appropriated for these services shall be expended in accordance with the following schedule of services and payment bases.  All services and payments are subject to the language at the end of this subsection.
Services and payment bases:
(1)	Hospital-Inpatient - Payment for hospital inpatient services will be prescribed in the State Plan as established by the Department of Health and Human Services.  Administrative days for any period of hospitalization shall be limited to a maximum of three days.
(2)	Hospital-Outpatient - Eighty percent (80%) of allowable costs or a prospective reimbursement plan as established by the Department of Health and Human Services.
(3)	Nursing Facilities - Payment for nursing facility services will be prescribed in the State Plan as established by the Department of Health and Human Services.  Nursing facilities providing services to Medicaid recipients who also qualify for Medicare, must be enrolled in the Medicare program as a condition of participation in the Medicaid program.  State facilities are not subject to the requirement to enroll in the Medicare program.
(4)	Intermediate Care Facilities for the Mentally Retarded - As prescribed in the State Plan as established by the Department of Health and Human Services.
(5)	Drugs - Drug costs as allowed by federal regulations plus a professional services fee per month excluding refills for the same drug or generic equivalent during the same month.  Reimbursement shall be available for up to six prescriptions per recipient, per month, including refills.  Payments for drugs are subject to the provisions of subsection (h) of this section and to the provisions at the end of subsection (a) of this section, or in accordance with the State Plan adopted by the Department of Health and Human Services consistent with federal reimbursement regulations.  Payment of the professional services fee shall be made in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations.  The professional services fee shall be five dollars and sixty cents ($5.60) per prescription.  Adjustments to the professional services fee shall be established by the General Assembly.
(6)	Physicians, Chiropractors, Podiatrists, Optometrists, Dentists, Certified Nurse Midwife Services - Fee schedules as developed by the Department of Health and Human Services.  Payments for dental services are subject to the provisions of subsection (g) of this section.
(7)	Community Alternative Program, EPSDT Screens - Payment to be made in accordance with rate schedule developed by the Department of Health and Human Services.
(8)	Home Health and Related Services, Private Duty Nursing, Clinic Services, Prepaid Health Plans, Durable Medical Equipment - Payment to be made according to reimbursement plans developed by the Department of Health and Human Services.
(9)	Medicare Buy-In - Social Security Administration premium.
(10)	Ambulance Services - Uniform fee schedules as developed by the Department of Health and Human Services.
(11)	Hearing Aids - Actual cost plus a dispensing fee.
(12)	Rural Health Clinic Services - Provider-based, reasonable cost; nonprovider-based, single-cost reimbursement rate per clinic visit.
(13)	Family Planning - Negotiated rate for local health departments.  For other providers - see specific services, for instance, hospitals, physicians.
(14)	Independent Laboratory and X-Ray Services - Uniform fee schedules as developed by the Department of Health and Human Services.
(15)	Optical Supplies - One hundred percent (100%) of reasonable wholesale cost of materials.
(16)	Ambulatory Surgical Centers - Payment as prescribed in the reimbursement plan established by the Department of Health and Human Services.
(17)	Medicare Crossover Claims - An amount up to the actual coinsurance or deductible or both, in accordance with the State Plan, as approved by the Department of Health and Human Services.
(18)	Physical Therapy and Speech Therapy - Services limited to EPSDT eligible children.  Payments are to be made only to qualified providers at rates negotiated by the Department of Health and Human Services.
(19)	Personal Care Services - Payment in accordance with the State Plan approved by the Department of Health and Human Services.
(20)	Case Management Services - Reimbursement in accordance with the availability of funds to be transferred within the Department of Health and Human Services.
(21)	Hospice - Services may be provided in accordance with the State Plan developed by the Department of Health and Human Services.
(22)	Other Mental Health Services - Unless otherwise covered by this section, coverage is limited to agencies meeting the requirements of the rules established by the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services, and reimbursement is made in accordance with a State Plan developed by the Department of Health and Human Services not to exceed the upper limits established in federal regulations.
(23)	Medically Necessary Prosthetics or Orthotics for EPSDT Eligible Children - Reimbursement in accordance with the State Plan approved by the Department of Health and Human Services.
(24)	Health Insurance Premiums - Payments to be made in accordance with the State Plan adopted by the Department of Health and Human Services consistent with federal regulations.
(25)	Medical Care/Other Remedial Care - Services not covered elsewhere in this section include related services in schools; health professional services provided outside the clinic setting to meet maternal and infant health goals; and services to meet federal EPSDT mandates.  Services addressed by this paragraph are limited to those prescribed in the State Plan as established by the Department of Health and Human Services.  Except for related services in schools, providers of these services shall be certified as meeting program standards of the Department of Health and Human Services, Division of Women's and Children's Health.
(26)	Pregnancy Related Services - Covered services for pregnant women shall include nutritional counseling, psychosocial counseling, and predelivery and postpartum home visits by maternity care coordinators and public health nurses.
Services and payment bases may be changed with the approval of the Director of the Budget.
Reimbursement is available for up to 24 visits per recipient per year to any one or combination of the following: physicians, clinics, hospital outpatient, optometrists, chiropractors, and podiatrists.  Prenatal services, all EPSDT children, and emergency rooms are exempt from the visit limitations contained in this paragraph.  Exceptions may be authorized by the Department of Health and Human Services where the life of the patient would be threatened without such additional care.  Any person who is determined by the Department to be exempt from the 24-visit limitation may also be exempt from the six-prescription limitation.
(b)	Allocation of Nonfederal Cost of Medicaid.  The State shall pay eighty-five percent (85%); the county shall pay fifteen percent (15%) of the nonfederal costs of all applicable services listed in this section.
(c)	Copayment for Medicaid Services.  The Department of Health and Human Services may establish copayment up to the maximum permitted by federal law and regulation.
(d)	Medicaid and Work First Family Assistance, Income Eligibility Standards.  The maximum net family annual income eligibility standards for Medicaid and Work First Family Assistance and the Standard of Need for Work First Family Assistance shall be as follows:

	Categorically Needy	Medically Needy
Family	Standard	AFDC Payment
Size	of Need	  Level*	AA, AB, AD*
1	$ 4,344	$ 2,172	  $ 2,900
2	  5,664	  2,832	3,800
3	  6,528	  3,264	4,400
4	  7,128	  3,564	4,800 5   7,776   3,888 5,200
6	  8,376	  4,188	5,600
7	  8,952	  4,476	6,000
8	  9,256	  4,680	6,300
* Work First Family Assistance (WFFA); Aid to the Aged (AA); Aid to the Blind (AB); and Aid to the Disabled (AD).

The payment level for Work First Family Assistance shall be fifty percent (50%) of the standard of need.
These standards may be changed with the approval of the Director of the Budget with the advice of the Advisory Budget Commission.
(e)	All Elderly, Blind, and Disabled Persons who receive Supplemental Security Income are eligible for Medicaid coverage.
(f)	ICF and ICF/MR Work Incentive Allowances.  The Department of Health and Human Services may provide an incentive allowance to Medicaid-eligible recipients of ICF and ICF/MR facilities who are regularly engaged in work activities as part of their developmental plan and for whom retention of additional income contributes to their achievement of independence.  The State funds required to match the federal funds that are required by these allowances shall be provided from savings within the Medicaid budget or from other unbudgeted funds available to the Department.  The incentive allowances may be as follows:

Monthly Net Wages	Monthly Incentive Allowance
$1.00 to $100.99	Up to $50.00
$101.00 - $200.99	$80.00
$201.00 to $300.99	$130.00
$301.00 and greater	$212.00.
(g)	Dental Coverage Limits.  Dental services shall be provided on a restricted basis in accordance with rules adopted by the Department to implement this subsection.
(h)	Dispensing of Generic Drugs.  Notwithstanding G.S. 90-85.27 through G.S. 90-85.31, under the Medical Assistance Program (Title XIX of the Social Security Act) a prescription order for a drug designated by a trade or brand name shall be considered to be an order for the drug by its established or generic name, except when the prescriber personally indicates, either orally or in the prescriber's own handwriting on the prescription order, "dispense as written" or words of similar meaning.  Generic drugs, when available in the pharmacy, shall be dispensed at a lower cost to the Medical Assistance Program rather than trade or brand name drugs, subject to the prescriber's "dispense as written" order as noted above.
As used in this subsection "brand name" means the proprietary name the manufacturer places upon a drug product or on its container, label, or wrapping at the time of packaging; and "established name" has the same meaning as in section 502(e)(3) of the Federal Food, Drug, and Cosmetic Act as amended, 21 U.S.C. § 352(e)(3).
(i)	Exceptions to Service Limitations, Eligibility Requirements, and Payments.  Service limitations, eligibility requirements, and payments bases in this section may be waived by the Department of Health and Human Services, with the approval of the Director of the Budget, to allow the Department to carry out pilot programs for prepaid health plans, managed care plans, or community-based services programs in accordance with plans approved by the United States Department of Health and Human Services, or when the Department determines that such a waiver will result in a reduction in the total Medicaid costs for the recipient.
(j)	Volume Purchase Plans and Single Source Procurement.  The Department of Health and Human Services, Division of Medical Assistance, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single source procurement, or other similar processes in order to improve cost containment.
(k)	Cost Containment Programs.  The Department of Health and Human Services, Division of Medical Assistance, may undertake cost containment programs including preadmissions to hospitals and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.
(l)	For all Medicaid eligibility classifications for which the federal poverty level is used as an income limit for eligibility determination, the income limits will be updated each April 1 immediately following publication of federal poverty guidelines.
(m)	The Department of Health and Human Services shall provide Medicaid to 19-, 20-, and 21-year olds in accordance with federal rules and regulations. 
(n)	The Department of Health and Human Services shall provide coverage to pregnant women and to children according to the following schedule:
(1)	Pregnant women with incomes equal to or less than one hundred eighty-five percent (185%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
(2)	Infants under the age of 1 with family incomes equal to or less than one hundred eighty-five percent (185%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
(3)	Children aged 1 through 5 with family incomes equal to or less than one hundred thirty-three percent (133%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits. 
(4)	Children aged 6 through 18 with family incomes equal to or less than the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.  
(5)	The Department of Health and Human Services shall provide Medicaid coverage for adoptive children with special or rehabilitative needs regardless of the adoptive family's income.
Services to pregnant women eligible under this subsection continue throughout the pregnancy but include only those related to pregnancy and to those other conditions determined by the Department as conditions that may complicate pregnancy.  In order to reduce county administrative costs and to expedite the provision of medical services to pregnant women, to infants, and to children described in subdivisions (3) and (4) of this subsection, no resources test shall be applied.
(n1)	Effective October 1, 1998, Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.
	(p)	The Department of Health and Human Services shall submit a monthly status report on expenditures for acute care and long-term care services to the Fiscal Research Division and to the Office of State Budget and Management.  This report shall include an analysis of budgeted versus actual expenditures for eligibles by category and for long-term care beds.  In addition, the Department shall revise the program's projected spending for the current fiscal year and the estimated spending for the subsequent fiscal year on a quarterly basis.  Reports for the preceding month shall be forwarded to the Fiscal Research Division and to the Office of State Budget and Management no later than the third Thursday of the month.
(q)	The Division of Medical Assistance, Department of Health and Human Services, may provide incentives to counties that successfully recover fraudulently spent Medicaid funds by sharing State savings with counties responsible for the recovery of the fraudulently spent funds.
(r)	If first approved by the Office of State Budget and Management, the Division of Medical Assistance, Department of Health and Human Services, may use funds that are identified to support the cost of development and acquisition of equipment and software through contractual means to improve and enhance information systems that provide management information and claims processing.
(s)	The Division of Medical Assistance, Department of Health and Human Services, may administer Medicaid estate recovery mandated by the Omnibus Budget Reconciliation Act of 1993, (OBRA 1993), 42 U.S.C. § 1396p(b), and G.S. 108-70.5 using temporary rules pending approval of final rules promulgated pursuant to Chapter 150B of the General Statutes.
(t)	The Department of Health and Human Services may adopt temporary rules according to the procedures established in G.S. 150B-21.1 when it finds that these rules are necessary to maximize receipt of federal funds, to reduce Medicaid expenditures, and to reduce fraud and abuse.  Prior to the filing of these temporary rules with the Office of Administrative Hearings, the Department shall consult with the Office of State Budget and Management on the possible fiscal impact of the temporary rule and its effect on State appropriations and local governments.
(u)	The Department shall report to the Fiscal Research Division of the Legislative Services Office and to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources or the Joint Legislative Commission on Health Care Oversight on any change it anticipates making in the Medicaid Program or service, including changes to rates, to waivers, and to positions, prior to making this change."
(b) The Department of Health and Human Services shall study the effect of subsection (n1) of Section 11.11 of S.L. 1997-443 on both the Medicaid Program and the Health Insurance Program for Children.  The Department shall make an interim report on the results of this study to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources by October 1, 1999, and shall make a final report by January 1, 2000.
(c) G.S. 108A-55(c) reads as rewritten:
"(c)	The Department shall reimburse providers of services, equipment, or supplies under the Medical Assistance Program in the following amounts:
(1)	The amount approved by the Health Care Financing Administration of the United States Department of Health and Human Services, if that Administration approves an exact reimbursement amount;
(2)	The amount determined by application of a method approved by the Health Care Financing Administration of the United States Department of Health and Human Services, if that Administration approves the method by which a reimbursement amount is determined, and not the exact amount.
The Department shall establish the methods by which reimbursement amounts are determined in accordance with Chapter 150B of the General Statutes.  A change in a reimbursement amount becomes effective as of the date for which the change is approved by the Health Care Financing Administration of the United States Department of Health and Human Services.  The Department shall report to the Fiscal Research Division of the Legislative Services Office and to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources or the Joint Legislative Commission on Health Care Oversight on any change in a reimbursement amount at the same time as it sends out public notice of this change prior to presentation to the Health Care Financing Administration."

Requested by:   Representative Gardner
PARTICIPATION IN MEDICAID DENTAL PROGRAM
Section 12.12C. It is the intent of the General Assembly, in funding the increase of the Medicaid reimbursement rate to dentists in 1998, to increase substantially the participation of dentists in the Medicaid dental program and to improve the program's provision of dental preventive services to Medicaid patients while ensuring the integrity and accountability of the program.
The General Assembly finds that, by June 1, 1999, the statewide participation rate should have increased by ten percent (10%) from the June 1, 1998, participation rate and by June 30, 2000, by forty percent (40%).  The General Assembly further finds that, ultimately, all dentists practicing in North Carolina should accept at least ten percent (10%) of their patients from the Medicaid population.  The Department of Health and Human Services shall adopt this goal and shall pursue every avenue available to it to ensure that this goal is realized, including:
(1)	Developing  strategies to aid dentists in increasing the number of their Medicaid patients;
(2)	Developing a statewide outreach plan;
(3)	Educating dental professionals in strategies to integrate successfully the Medicaid patients into the practice by November 1, 1998; and
(4)	Expanding the capacity of targeted local health departments and community health centers by using fully registered dental hygienists to provide preventive services such as sealant treatment, fluoride treatment, and basic dental hygiene treatment.
The Department of Health and Human Services shall report to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources on its progress in reaching this goal and on any other results of increasing the Medicaid reimbursement rate by June 30, 1999, and by June 30, 2000.
The Department of Health and Human Services shall ensure that dentists participating in the Medicaid program are fully accountable for their participation and that the integrity of the Medicaid program is maintained by all participants, including ensuring that Medicaid is billed only for services provided and not for missed appointments.
The Department of Health and Human Services, together with the North Carolina Dental Board of Examiners, shall study existing laws and rules that may serve as barriers to adequate dental treatment for Medicaid and other patients, including barriers to licensed dental hygienists from other states receiving licenses in North Carolina.  The Department shall report the results of this study, together with any recommendations of laws or rules that need to be changed, to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources by March 15, 1999.

Requested by:   Representatives Gardner, Cansler, Clary
MEDICAID COVERAGE FOR ELDERLY AND DISABLED PEOPLE
Section 12.12D. Effective January 1, 1999, the Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to all elderly and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines, as revised each April 1.

[SECTION 12.13 RESERVED]

SUBPART 3. FACILITY SERVICES
Requested by:   Representatives Gardner, Cansler, Clary
TRANSFER OF CHARITABLE SOLICITATION PROGRAM TO THE SECRETARY OF STATE
Section 12.14.  (a)	All functions, powers, duties, and obligations previously vested in the Department of Health and Human Services under Chapter 131F of the General Statutes are transferred to and vested in the Department of the Secretary of State as if by a Type I transfer defined in G.S. 143A-6.  All statutory authority, powers, duties, functions, records, personnel, property, and unexpended balances of appropriations or other funds of the program transferred pursuant to this section shall be transferred in their entirety.
(b)	G.S. 131F-2(7) reads as rewritten:
"(7) 	'Department' means the Department of the Secretary of State."
(c)	G.S. 147-36 reads as rewritten:
"§ 147-36.  Duties of Secretary of State.
It is the duty of the Secretary of State:
(1)	To perform such duties as may then be devolved upon the Secretary by resolution of the two houses of the General Assembly or either of them;
(2)	To attend the Governor, whenever required by the Governor, for the purpose of receiving documents which have passed the great seal;
(3)	To receive and keep all conveyances and mortgages belonging to the State;
(4)	To distribute annually the statutes and the legislative journals;
(5)	To distribute the acts of Congress received at the Secretary's office in the manner prescribed for the statutes of the State;
(6)	To keep a receipt book, in which the Secretary shall take from every person to whom a grant shall be delivered, a receipt for the same; but may inclose grants by mail in a registered letter at the expense of the grantee, unless otherwise directed, first entering the same upon the receipt book;
(7)	To issue charters and all necessary certificates for the incorporation, domestication, suspension, reinstatement, cancellation and dissolution of corporations as may be required by the corporation laws of the State and maintain a record thereof;
(8)	To issue certificates of registration of trademarks, labels and designs as may be required by law and maintain a record thereof;
(9)	To maintain a Division of Publications to compile data on the State's several governmental agencies and for legislative reference;
(10)	To receive, enroll and safely preserve the Constitution of the State and all amendments thereto;
(11)	To serve as a member of such boards and commissions as the Constitution and laws of the State may designate;
(12)	To administer the Securities Law of the State, regulating the issuance and sale of securities, as is now or may be directed;
(13)	To receive and keep all oaths of public officials required by law to be filed in the Secretary's office, and as Secretary of State, is fully empowered to administer official oaths to any public official of whom an oath is required; 
(14)	To receive and maintain a journal of all appointments made to any State board, agency, commission, council or authority which is filed in the office of the Secretary of State; and
(15)	To regulate the solicitation of contributions pursuant to Chapter 131F of the General Statutes."
(d)	This section becomes effective January 1, 1999.

[SECTION 12.15 RESERVED]

Requested by:   Representatives Gardner, Cansler, Clary
ADULT CARE HOME STAFFING RATIO CHANGES
Section 12.16B.  Effective January 1, 1999, G.S. 131D-4.3 reads as rewritten:
"§ 131D-4.3.  Adult care home rules.
(a)	Pursuant to G.S. 143B-153, the Social Services Commission shall adopt rules to ensure at a minimum, but shall not be limited to, the provision of the following by adult care homes:
(1)	Client assessment and independent case management;
(2)	A minimum of 75 hours of training for personal care aides performing heavy care tasks and a minimum of 40 hours of training for all personal care aides. The training for aides providing heavy care tasks shall be comparable to State-approved Certified Nurse Aide I training. For those aides meeting the 40-hour requirement, at least 20 hours shall be classroom training to include at a minimum:
a.	Basic nursing skills;
b.	Personal care skills;
c.	Cognitive, behavioral, and social care;
d.	Basic restorative services; and
e.	Residents' rights.
	A minimum of 20 hours of training shall be provided for aides in family care homes that do not have heavy care residents. Persons who either pass a competency examination developed by the Department of Health and Human Services, have been employed as personal care aides for a period of time as established by the Department, or meet minimum requirements of a combination of training, testing, and experience as established by the Department shall be exempt from the training requirements of this subdivision;
(3)	Monitoring and supervision of residents; 
(4)	Oversight and quality of care as stated in G.S. 131D-4.1; and
(5)	Adult care homes shall comply with all of the following staffing requirements:
a.	First shift (morning): 8.0 hours of aide duty per each 20 residents (licensed capacity or resident census);
b.	Second shift (afternoon): 8.0 hours of aide duty per each 20 residents (licensed capacity or resident census);
c.	Third shift (evening): 8.0 hours of aide duty per 30 or fewer residents (licensed capacity or resident census).
(b)	Rules to implement this section shall be adopted as emergency rules in accordance with Chapter 150B of the General Statutes. 
(c)	The Department may suspend or revoke a facility's license, subject to the provisions of Chapter 150B, to enforce compliance by a facility with this section or to punish noncompliance."

Requested by:   Representatives Gardner, Cansler, Clary
ADULT CARE HOME BED VACANCIES/EXTENSION
Section 12.16C.  (a) Section 11.69(b) of S.L. 1997-443 reads as rewritten:
"(b)	Effective until August 26, 1999, the Department of Health and Human Services shall not approve the addition of any adult care home beds for any type home or facility in the State, except as follows:
(1)	Plans submitted for approval prior to May 18, 1997, may continue to be processed for approval;
(2)	Plans submitted for approval subsequent to May 18, 1997, may be processed for approval if the individual or organization submitting the plan demonstrates to the Department that on or before August 25, 1997, the individual or organization purchased real property, entered into a contract to purchase or obtain an option to purchase real property, entered into a binding real property lease arrangement, or has otherwise made a binding financial commitment for the purpose of establishing or expanding an adult care home facility. An owner of real property who entered into a contract prior to August 25, 1997, for the sale of an existing building together with land zoned for the development of not more than 50 adult care home beds with a proposed purchaser who failed to consummate the transaction may, after August 25, 1997, sell the property to another purchaser and the Department may process and approve plans submitted by the purchaser for the development of not more than 50 adult care home beds.  It shall be the responsibility of the applicant to establish, to the satisfaction of the Department, that any of these conditions have been met; 
(3)	Adult care home beds in facilities for the developmentally disabled with six beds or less which are or would be licensed under G.S. 131D or G.S. 122C may continue to be approved; 
(4)	If the Department determines that the vacancy rate of available adult care home beds in a county is fifteen percent (15%) or less of the total number of available beds in the county as of August 26, 1997, and no new beds have been approved or licensed in the county or plans submitted for approval in accordance with subdivision (1) or (2) of this section which would raise the vacancy rate above fifteen percent (15%) in the county, then the Department may accept and approve the addition of beds in that county; or
(5)	If a county board of commissioners determines that a substantial need exists for the addition of adult care home beds in that county, the board of commissioners may request that a specified number of additional beds be licensed for development in their county.  In making their determination, the board of commissioners shall give consideration to meeting the needs of Special Assistance clients.  The Department may approve licensure of the additional beds from the first facility that files for licensure and subsequently meets the licensure requirements."
(b) The Division of Facility Services shall notify all persons who have filed plans and received initial approval for a project to develop and construct new adult care facilities but who have not proceeded with the development of the facilities within 18 months of the date of approval, that the project has been classified as inactive.  A person who has an approved project may request that the project be placed on inactive status by providing a written statement to the Division that the person does not intend to begin development or construction of the project within the ensuing State fiscal year. Projects classified as inactive may remain in that classification indefinitely.  A person whose approved project has been classified as inactive may reactivate the project as approved at any time, without having to reapply for initial approval, by notifying the Division in writing of the intent to proceed with project development and construction.  Changes to projects classified as inactive made subsequent to initial approval are subject to approval of the Division.

Requested by:   Representatives Gardner, Cansler, Clary
DIVISION OF FACILITY SERVICES/PROPOSE FEE SCHEDULE
Section 12.16D.  The Department of Health and Human Services, Division of Facility Services, shall develop a proposed schedule of fees to defray the cost of processing and reviewing construction plans for social and health care facilities and for conducting physical plant inspections of these facilities.  The Department shall report the proposed fee schedule to members of the House of Representatives Appropriations Subcommittee on Human Resources and the Senate Appropriations Committee on Human Resources, and the Joint Legislative Health Care Oversight Committee, not later than December 1, 1998.  The report shall include recommended legislation for enactment of the fee schedule by the 1999 General Assembly.

Requested by: Representative Culp
HEALTH CARE PERSONNEL REGISTRY
Section 12.16E.  (a)	Of the funds appropriated in this act to the Department of Health and Human Services to reduce the waiting list for developmental disability services, the sum of two hundred thirty-three thousand three hundred sixty-eight dollars ($233,368) for the 1998-99 fiscal year shall be used to implement the requirements of House Bill 1435 of the 1997 Session of the General Assembly to include State-operated facilities as well as residential facilities and hospitals for the mentally ill, developmentally disabled, and substance abusers in the Health Care Personnel Registry.
(b)	This section becomes effective only if House Bill 1435 is enacted by the 1997 Session (1998 Regular Session) of the General Assembly and, as enacted, provides for the registry of State-operated facilities as well as residential facilities and hospitals for the mentally ill, developmentally disabled, and substance abusers in the Health Care Personnel Registry.

[SECTION 12.17 RESERVED]

SUBPART 4. AGING
Requested by:   Representatives Gardner, Cansler, Clary
SENIOR CENTER FUNDS
Section 12.18A.  Section 11.17 of S.L. 1997-443 reads as rewritten:
"Section 11.17.  (a)	Of the funds appropriated in this act to the Department of Health and Human Services, the sum of one million dollars ($1,000,000) for the 1997-98 fiscal year and the sum of two million dollars ($2,000,000) for the 1998-99 fiscal year shall be used to support existing senior centers and to assist in the development of new senior centers.  The Department shall allocate funds equally among senior centers throughout the State as determined by the Division of Aging.  Expenditures of State funds for senior centers shall not exceed ninety percent (90%) of all funds expended for this purpose.
(b)	Of the funds appropriated in this act to the Department of Health and Human Services, the sum of one million five hundred thousand dollars ($1,500,000) for the 1998-99 fiscal year shall be used to provide grants-in-aid for the construction, renovation, and equipping of new senior centers.  Grant awards may not exceed fifty thousand dollars ($50,000) for each new senior center. Each grant award shall be matched by local funds in the amount of twenty-five percent (25%) of the total grant award."

Requested by:   Representatives Gardner, Cansler, Clary
IN-HOME AND CAREGIVER SUPPORT FUNDS
Section 12.19A. Section 11.18 of S.L. 1997-443 reads as rewritten:
"Section 11.18.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Aging, the sum of five million dollars ($5,000,000) for the 1997-98 fiscal year and the sum of nine million one hundred forty-six thousand forty-four dollars ($9,146,044) for the 1998-99 fiscal year shall be allocated via the Home and Community Care Block Grant for home and community care services for older persons who are not eligible for Medicaid and who are on the waiting list for these services.  These funds shall be used only for direct services.  Service recipients shall pay for services based on their income in accordance with G.S. 143B-181.1(a)(10)."

Requested by:   Representatives Gardner, Cansler, Clary
FUNDS FOR ALZHEIMER'S ASSOCIATION CHAPTERS IN NC
Section 12.20. Of the funds appropriated in this act to the Department of Health and Human Services, Division of Aging, the sum of one hundred thousand dollars ($100,000) for the 1998-99 fiscal year shall be allocated among the three chapters of the Alzheimer's Association, as follows:
(1)	$25,000 for the Western Alzheimer's Chapter;
(2)	$50,000 for the Southern Piedmont Alzheimer's Chapter; and
(3)	$25,000 for the Eastern Alzheimer's Chapter.
Before funds may be allocated to any Chapter under this section, the Chapter shall submit to the Division of Aging, for its approval, a plan for the use of these funds.

Requested by:   Representatives Gardner, Cansler, Clary
FUNDS FOR LONG-TERM CARE SYSTEMS REFORM
Section 12.20B.  Of the funds appropriated in this act to the Department of Health and Human Services, Office of Long-Term Care, the sum of one million two hundred thousand dollars ($1,200,000) for the 1998-99 fiscal year may be used to provide grants to not more than eight projects for long term care system reform efforts.  Annual grant awards may not exceed two hundred fifty thousand dollars ($250,000) per grant recipient.  Grants shall be awarded on an RFP basis.  Criteria for grant awards shall be consistent with Department concepts and goals and shall include the extent to which the project application addresses service delivery systems that serve multicounty areas and both physically disabled and elderly adults.

Requested by:   Representatives Gardner, Cansler, Clary
FUNDS FOR AREA AGENCIES ON AGING
Section 12.20C.  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of nine hundred thousand dollars ($900,000) for the 1998-99 fiscal year shall be allocated equally among the 18 Area Agencies on Aging.  These funds shall be used for planning, coordination, and operational activities that enhance each agency's ability to provide services, information, and education to consumers, and to better meet the data and technical assistance needs of providers, local planning committees, and local governments.

SUBPART 5. SOCIAL SERVICES
Requested by:   Representatives Gardner, Cansler, Clary
AUTHORIZED ADDITIONAL USE OF HIV FOSTER CARE AND ADOPTION FAMILY FUNDS
Section 12.21. Section 11.23 of S.L. 1997-443 reads as rewritten: 
"Section 11.23.  (a)	In addition to providing board payments to foster and adoptive families of HIV-infected children, as prescribed in Chapter 324 of the 1995 Session Laws, any additional funds remaining that were appropriated for this purpose shall be used as follows:
(1) 	To provide medical training in avoiding HIV transmission in the home; and
(2) 	To provide funds to support three social work positions created within the Department of Health and Human Services, for the eastern part of North Carolina to enable the case managing of families with HIV-infected children so that the children and the parents get access to medical care and so that child protective services issues are addressed rapidly and effectively.  The three positions shall be medically based and located:
a. 	One in the northeast, covering Northampton, Hertford, Halifax, Gates, Chowan, Perquimans, Pasquotank, Camden, Currituck, Bertie, Wilson, Edgecombe, and Nash Counties;
b. 	One in the central east, covering Martin, Pitt, Washington, Tyrrell, Dare, Hyde, Beaufort, Jones, Greene, Craven, and Pamlico Counties; and
c. 	One in the southeast, covering New Hanover, Robeson, Brunswick, Carteret, Onslow, Lenoir, Pender, Duplin, Bladen, and Columbus Counties.
(b)	The maximum rates for State participation in HIV foster care and adoptions assistance are established on a graduated scale as follows:
(1)	$800.00 per month per child with indeterminate HIV status;
(2)	$1,000 per month per child confirmed HIV-infected, asymptomatic;
(3)	$1,200 per month per child confirmed HIV-infected, symptomatic; and
(4)	$1,600 per month per child terminally ill with complex care needs."

Requested by:   Representatives Gardner, Cansler, Clary
CHILD WELFARE SYSTEM IMPROVEMENTS
Section 12.22. Section 11.57 of S.L. 1997-443 reads as rewritten:
"Section 11.57.  (a)	Of the funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, the sum of two million two hundred sixty-nine thousand seven hundred fifty-two dollars ($2,269,752) for the 1997-98 fiscal year and the sum of two million two hundred sixty-nine thousand seven hundred fifty-two dollars ($2,269,752) for the 1998-99 fiscal year shall be allocated to county departments of social services for hiring or contracting for additional foster care and adoption worker and supervisor positions created after July 1, 1997, based upon a formula which takes into consideration the number of cases and the number of workers and supervisors necessary to meet recommended standards adopted by the North Carolina Association of County Directors of Social Services.  County departments of social services shall make diligent efforts to hire staff with a professional social work degree from an accredited social work program.
(b)	Of the funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, the sum of one hundred fifty-nine thousand dollars ($159,000) for the 1997-98 fiscal year and the sum of one hundred sixty-three thousand dollars ($163,000) for the 1998-99 fiscal year shall be used to provide funds for the State Child Fatality Review Team established and maintained pursuant to Part 4B of Article 3 of Chapter 143B of the General Statutes. 
	Funds allocated under this subsection shall be used as follows:
(1)	To contract as needed with a statewide prevention organization and a statewide medical organization to identify and orient prevention specialists and medical professionals with experience in reviewing child fatalities to serve on the State Child Fatality Review Team; and
(2)	To pay per diem expenses as needed for the five participants in each review who are not employed by the Division of Social Services or county departments of social services.
The Division of Social Services, Department of Health and Human Services, shall report quarterly to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and the Fiscal Research Division on the activities of the State Child Fatality Review Team and shall provide a final report to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources within one week of the convening of the 1997 General Assembly, Regular Session 1998, including recommendations for changes in the statewide child protection system.
(c)	Counties shall not use State funds appropriated for child welfare services to supplant county funds or reduce county expenditures for child welfare services.
(d)	Notwithstanding G.S. 131D-10.6A, the Division of Social Services shall establish training requirements for child welfare services staff initially hired on and after January 1, 1998.  The minimum training requirements established by the Division shall be as follows:
(1)	Child welfare services workers must complete a minimum of 72 hours of preservice training before assuming direct client contact responsibilities;
(2)	Child protective services workers must complete a minimum of 18 hours of additional training that the Division determines is necessary to adequately meet training needs;
(3)	Foster care and adoption social workers must complete a minimum of 39 hours of additional training that the Division determines is necessary to adequately meet training needs;
(4)	Child Welfare Services supervisors must complete a minimum of 72 hours of preservice training before assuming supervisory responsibilities, and a minimum of 54 hours of additional training that the Division determines is necessary to adequately meet training needs; and
(5)	Child welfare services staff must complete 24 hours of continuing education annually thereafter.
The Division of Social Services shall ensure that training opportunities are available for county departments of social services and consolidated human services agencies to meet the training requirements of this subsection.
This subsection shall continue in effect until explicitly repealed.
(e)	Article 3 of Chapter 143B of the General Statutes is amended by inserting a new Part to read:
'Part 4B. State Child Fatality Review Team.
"§ 143B-150.20.  State Child Fatality Review Team; establishment; purpose; powers; duties.
There is established in the Department of Health and Human Services, Division of Social Services, a State Child Fatality Review Team to conduct in-depth reviews of any child fatalities which have occurred involving children and families involved with local departments of social services child protective services in the 12 months preceding the fatality.  Steps in this in-depth review shall include interviews with any individuals determined to have pertinent information as well as examination of any written materials containing pertinent information.
The purpose of these reviews shall be to implement a team approach to identifying factors which may have contributed to conditions leading to the fatality and to develop recommendations for improving coordination between local and State entities which might have avoided the threat of injury or fatality and to identify appropriate remedies.  The Division of Social Services shall make public the findings and recommendations developed for each fatality reviewed relating to improving coordination between local and State entities.  The State Child Fatality Review Team shall consult with the appropriate district attorney in accordance with G.S. 7A-675(d)	prior to the public release of the findings and recommendations.
The State Child Fatality Review Team shall include representatives of the local departments of social services and the Division of Social Services, a member of the local Community Child Protection Team, a member of the local child fatality prevention team, a representative from local law enforcement, a prevention specialist, and a medical professional.
The State Child Fatality Review Team shall have access to all medical records, hospital records, and records maintained by this State, any county, or any local agency as necessary to carry out the purposes of this subsection, including police investigative data, medical examiner investigative data, health records, mental health records, and social services records. The State Child Fatality Review Team may receive a copy of any reviewed materials necessary to the conduct of the fatality review. Any member of the State Child Fatality Review Team may share, only in an official meeting of the State Child Fatality Review Team, any information available to that member that the State Child Fatality Review Team needs to carry out its duties.
Meetings of the State Child Fatality Review Team are not subject to the provisions of Article 33C of Chapter 143 of the General Statutes.  However, the State Child Fatality Review Team may hold periodic public meetings to discuss, in a general manner not revealing confidential information about children and families, the findings of their reviews and their recommendations for preventive actions.  Minutes of all public meetings, excluding those of closed sessions, shall be kept in compliance with Article 33C of Chapter 143 of the General Statutes.  Any minutes or any other information generated during any executive session shall be sealed from public inspection.
All otherwise confidential information and records acquired by the State Child Fatality Review Team, in the exercise of its duties are confidential; are not subject to discovery or introduction into evidence in any proceedings except pursuant to an order of the court; and may only be disclosed as necessary to carry out the purposes of the State Child Fatality Review Team.  In addition, all otherwise confidential information and records created by the State Child Fatality Review Team in the exercise of its duties are confidential; are not subject to discovery or introduction into evidence in any proceedings; and may only be disclosed as necessary to carry out the purposes of the State Child Fatality Review Team.  No member of the State Child Fatality Review Team, nor any person who attends a meeting of the State Child Fatality Review Team, may testify in any proceeding about what transpired at the meeting, about information presented at the meeting, or about opinions formed by the person as a result of the meetings.  This subsection shall not, however, prohibit a person from testifying in a civil or criminal action about matters within that person's independent knowledge.
Each member of the State Child Fatality Review Team and invited participant shall sign a statement indicating an understanding of and adherence to confidentiality requirements, including the possible civil or criminal consequences of any breach of confidentiality.'"

Requested by:   Representatives Gardner, Cansler, Clary
CHILD PROTECTIVE SERVICES
Section 12.23. Section 11.25 of S.L. 1997-443 reads as rewritten:
"Section 11.25.  (a)	The funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, for the 1997-99 fiscal biennium for Child Protective Services shall be allocated to county departments of social services based upon a formula which takes into consideration the number of Child Protective Services cases and the number of Child Protective Services workers and supervisors necessary to meet recommended standards adopted by the North Carolina Association of County Directors of Social Services.
(b)	Funds allocated under subsection (a) of this section shall be used by county departments of social services for carrying out investigative assessments of child abuse or neglect or for providing protective or preventive services in which the department confirms abuse, neglect, or dependency."

[SECTION 12.24 RESERVED]

Requested by:   Representatives Gardner, Cansler, Clary
REPORT ON PROGRESS TOWARDS AUTOMATED APPLICATION SYSTEM
Section 12.25. The Department of Health and Human Services shall make an interim report by November 1, 1998, and a final report within a week of the convening of the 1999 General Assembly to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources on its progress in developing and implementing a single statewide automated application system for all means-tested public assistance benefit programs.

Requested by:   Representatives Gardner, Cansler, Clary, Howard, Berry 
BIOMETRICS LAW CHANGES
Section 12.26A. (a) G.S. 108A-25.1 reads as rewritten:
"§ 108A-25.1.  Recipient identification system.
(a)	The Department shall establish and maintain a uniform system in the Department and in all counties of identifying all Work First, food stamp, child care, and medical assistance program recipients, applicants, and payees, except those who are institutionalized adults, children under the age of 18 unless they are minor parents who are applying for or receiving assistance, or other individuals that federal law or regulation mandate be excluded. For purposes of this section, the term 'payee' means a responsible adult who receives assistance, whether cash assistance or services, on behalf of a recipient.  This system shall provide security and portability throughout the State and between the departments within the State involved in means-tested public assistance programs and shall have the capability of identifying recipients of assistance from all means-tested programs administered or funded through the Department.
(b)	The identification system established in this section shall use multiple biometrics to ensure greater than ninety-nine percent (99%) accuracy for interdepartmental identification.
(c)	The Department shall ensure that the biometric identification system will be compatible with any existing departmental biometric identification system.
(d)	The Department shall make biometric identification a condition of eligibility for Work First, food stamp, child care, and medical assistance programs for all recipients, applicants, and payees, described in subsection (a) of this section. If any recipient, applicant, or payee is denied Work First, food stamp, or child care assistance on the basis of the identification system established in this section, the recipient's, applicant's, or payee's whole case, or group of individuals whose eligibility for Work First, food stamp, and child care assistance is dependent on all the other group members' financial and nonfinancial situation, shall be denied Work First, food stamp, or child care assistance."
(b) Section 12.35 of S.L. 1997-443 reads as rewritten:
"Section 12.35.  The Department of Health and Human Services shall have the uniform system of recipient identification established in G.S. 108A-25.1 in place and operating no later than October 1, 2000. The Department shall implement the start of the phase-in process no later than October 1, 1999, and shall report on a quarterly basis to the Joint Legislative Public Assistance Commission on its progress towards statewide implementation.  Except as otherwise provided in this Part, this Part is effective when it becomes law."
(c) If the United States Department of Health and Human Services or the United States Department of Agriculture or both reject by written documentation any of the specifics of the biometric identification system prescribed in G.S. 108A-25.1, the North Carolina Department of Health and Human Services shall implement any remaining unrejected specifics.
(d) The Department of Health and Human Services shall report to the Joint Legislative Public Assistance Commission (i) whenever it determines that federal law or regulation mandates that other individuals than the ones specified in G.S. 108A-25.1(a) must be excluded from the biometric identification system prescribed in G.S. 108A-25.1 and (ii) whenever it is notified by written documentation that the United States Department of Health and Human Services or the United States Department of Agriculture or both have rejected any of the specifics of the biometric identification system prescribed in G.S. 108A-25.1.
(e) Funds appropriated by S.L. 1997-443 to the Department of Health and Human Services and the Office of State Budget and Management for the Biometrics Recipient Identification System for the 1997-98 fiscal year shall not revert but shall remain available to the Department for this purpose.
(f) Subsection (e) of this section becomes effective June 30, 1998. 

Requested by:   Representatives Gardner, Cansler, Clary, Howard, Berry
WELFARE LAW CHANGES
Section 12.27A. (a)	The General Assembly approves the plan titled "North Carolina's Temporary Assistance for Needy Families State Plan FY 1998-2000", prepared by the Department of Health and Human Services and presented to the General Assembly on May 15, 1998, and amended by the Temporary Assistance for Needy Families Welfare-to-Work Formula Grant Plan, prepared by the Department of Commerce and presented to the General Assembly on July 2, 1998, as amended by changes to the welfare law required by this section and any other act of the General Assembly.
(b) G.S. 108A-27.9(a) reads as rewritten:
"(a)	The Department shall prepare and submit to the Director of the Budget a biennial State Plan that proposes the goals and requirements for the State and the terms of the Work First Program for each fiscal year. Prior to submitting a State Plan to the General Assembly, the Department shall submit the State Plan to the Joint Legislative Public Assistance Commission for its review and then consult with local governments and private sector organizations regarding the design of the State Plan and allow 45 days to receive comments from them."
(c) Section 12.20(b) of S.L. 1997-443 reads as rewritten:
"(b)	The requirement that the Department prepare and submit the State Plan to the General Assembly for approval as prescribed in G.S. 108A-27.9(a) shall not be applicable for fiscal year 1997-98.  Until the counties have prepared their county plans and the State has prepared the State Plan in accordance with this Part and that State Plan has been enacted by the General Assembly and it becomes law, the provisions of the State Plan submitted to the federal government on October 16, 1996, shall remain in effect.  State Plans submitted after the 1997-98 fiscal year shall be enacted by the General Assembly and become law in order to be effective."
(d) Section 12.36(a)	of S.L. 1997-443 reads as rewritten:
"Section 12.36.  (a)	Of the funds appropriated in this act to the Office of State Budget and Management, the sum of five million seventy-five thousand two hundred two dollars ($5,075,202) for the 1997-98 fiscal year and the sum of three million eight hundred seventeen thousand dollars ($3,817,000) for the 1998-99 fiscal year shall be placed in a Restrictive Reserve to Implement Welfare Reform.  These funds shall be allocated from the Reserve as follows:
(1)	$275,000 for the 1997-98 fiscal year and $400,000 for the 1998-99 fiscal year to support the establishment of a uniform system of public assistance programs as authorized under G.S. 108A-25.1, and to provide counties with workstations for biometric imaging:
(2)	$2,500,000 in each fiscal year to fund program integrity activities in each county.  These funds shall be given to the counties in a lump sum and unexpended funds shall revert to the General Fund;
(3)	$500,000 for the 1997-98 fiscal year to establish and support an Office of Inspector General in the Department of Justice;
(4)	$300,000 in each fiscal year to establish a pilot project in the Department of Labor for creation of Individual Development Accounts;
(5)	$1,500,202 for the 1997-98 fiscal year for the following purposes:
a.	To establish First Stop Employment Assistance in the Department of Commerce;
b.	To expand the Labor Market Information System in the Employment Security Commission; and
c.	To assist the Job Service Employer Committees or the Workforce Development Boards in their completion of the study of the working poor.
	Funds shall not be allocated under this subdivision unless and until the Office of State Budget and Management has certified that federal funds are not available to the Department of Commerce for these purposes; and
(6)	$617,000 for the 1998-99 fiscal year for the continued support of the Office of Inspector General in the Department of Justice.  These funds shall be allocated by the Office of State Budget and Management on the basis of need."
(e)  G.S. 114-41(a)(2) reads as rewritten:
"(2)	Establish policies and standards for the investigation, detection, and elimination of fraud, abuse, waste, and mismanagement in the means-tested public assistance programs.  The Inspector General shall provide each of the county directors of social services with a copy of the policies and standards for investigation established pursuant to this provision, including any amendments.  When the Inspector General determines that a county social services agency has not complied with the policies and standards, the Inspector General shall notify the director of that agency of the agency's noncompliance and recommend appropriate action;".
(f) G.S. 108A-27.1 reads as rewritten:
"§ 108A-27.1.  Time limitations on assistance.
(a)	Under the Standard Work First Program, unless an extension or an exemption is provided pursuant to the provisions of the Part or the State Plan, or unless a board of county commissioners of a Standard County votes otherwise, any cash assistance provided to a person or family in the employment program shall only be provided for a cumulative total of 24 months. After having received cash assistance for 24 months, the person or the family may reapply for cash assistance, but not until after 36 months from the last month the person or the family received cash assistance. This subsection shall not apply to child-only cases.  A board of county commissioners in a Standard County may vote, by majority vote, once every State Plan biennium during the same time period that other counties are certified or recertified as Electing Counties to modify these time limits as long as the new time limits do not conflict with or exceed any federal time limitations.  These new time limits shall apply (i) to recipients applying for assistance on or after the date specified in the voted motion and (ii) to recipients currently receiving assistance after 90 days following the formal modification of their personal responsibility agreement.  Standard Counties that vote to modify their time limits shall notify the Department of their intent as soon as the vote is taken.  For the 1998-2000 State Plan biennium, a board of county commissioners of a Standard County may vote to modify these time limits within one month following the date of ratification of this section.
(b)	Electing Counties may set any time limitations on assistance it finds appropriate, so long as the time limitations do not conflict with or exceed any federal time limitations."
(g)  G.S. 108A-27.2(13) reads as rewritten:
"(13)	Make recommendations to the General Assembly for approval of counties to become Electing Counties and, for each county submitting a plan, the reasons individual counties were or were not recommended. Any county may apply to become an Electing County.  For the 1998-2000 State Plan biennium, all counties that submitted plans by February 1, 1998, that are in compliance with State and federal law and regulations as of the date of ratification of this act shall be Electing Counties."
(h) G.S. 108A-27.3(a)(7) reads as rewritten:
"(7)	Consider providing community service work for any recipient who cannot find employment;".
(i) G.S. 108A-27.11 reads as rewritten:
"§ 108A-27.11.  Work First Program funding.
(a)	County block grants, except funds for Work First Family Assistance, shall be computed based on the percentage of each county's total AFDC (including AFDC-EA) and JOBS expenditures, except expenditures for cash assistance, to statewide actual expenditures for those programs in fiscal year 1995-96. The resulting percentage shall be applied to the State's total certified budget enacted by the General Assembly for each fiscal year, except funds budgeted for Work First Family Assistance, for Work First Program expenditures at the county level.
(b)	The following shall apply to funding for Standard Program Counties:
(1)	The Department shall make payments of Work First Family Assistance and Work First Diversion Assistance subject to the availability of federal, State, and county funds.
(2)	The Department shall reimburse counties for county expenditures under the Work First Program subject to the availability of federal, State, and county funds.
(c)	Each Electing County's allocation for Work First Family Assistance shall be computed based on the percentage of each Electing County's total expenditures for cash assistance to statewide actual expenditures for cash assistance in 1995-96. The resulting percentage shall be applied to the federal TANF block grant funds appropriated for cash assistance by the General Assembly each fiscal year. The Department shall transmit the federal funds contained in the county block grants to Electing Counties as soon as practicable after they become available to the State and in accordance with federal cash management laws and regulations. The Department shall transmit one-fourth of the State funds contained in county block grants to Electing Counties at the beginning of each quarter. Once paid, the county block grant funds shall not revert."
(j) G.S. 108A-27.12 reads as rewritten:
"§ 108A-27.12.  Maintenance of effort.
(a)	The Department shall define in the State Plan or by rule the term "maintenance of effort" based on that term as defined in Title IV-A and shall provide to counties a list of activities that qualify for federal maintenance of effort requirements.
(b)	If a county fails to comply with the maintenance of effort requirement in subsection (a) of this section, the Director of the Budget may withhold State moneys appropriated to the county pursuant to G.S. 108A-93.
(c)	The Department shall maintain the State's maintenance of effort at one hundred percent (100%) of the State certified budget enacted by the General Assembly for programs under this Part during fiscal year 1996-97.  At no time shall the Department reduce or reallocate State or county funds previously obligated or appropriated for Work First County Block Grants or child welfare services.  State and county funds previously obligated or appropriated under this section shall be used only for activities that qualify for federal maintenance of effort and as a nonfederal match for the Temporary Assistance for Needy Families Welfare-to-Work Formula Grant Plan.
(d)	For Standard Program Counties, using the 1996-97 fiscal year as the base year, counties shall maintain a financial commitment to the Work First Program equal to the proportion of State funds allocated to the Work First Program. At no time shall a Standard Program County reduce State or county funds previously obligated or appropriated for child welfare services.
(e)	During the first year a county operates as an Electing County, the county's maintenance of effort shall be no less than ninety percent (90%) of the amount the county budgeted for programs under this Part during fiscal year 1996-97. If during the first year of operation as Electing the Electing County achieves one hundred percent (100%) of its goals as set forth in its Electing County Plan, then the Electing County may reduce its maintenance of effort to eighty percent (80%) of the amount the county budgeted for programs under this Part during fiscal year 1996-97 for the second year of the Electing County's operation and for all years thereafter that the county maintains Electing Status."
(k) G.S. 108A-27.16 reads as rewritten:
"§ 108A-27.16.  Use of Work First Reserve Fund.
(a)	By the fifteenth of each month, the Secretary shall certify to the Director of the Budget and the Fiscal Research Division of the General Assembly the actual expenditures for Work First Family Assistance for the fiscal year up until the beginning of that month and the projected expenditures for the remainder of the fiscal year. If a state of economic emergency is declared for the State, an individual county, or an individual region with regard to lack of funds available for Work First Family Assistance through events beyond their control, then the Director of the Budget shall direct the Secretary to attempt to access any available federal funds. If federal funds are unavailable and the General Assembly is not in session, the Director of the Budget may, in the order below:
(1)	Use funds available from the Work First Reserve Fund established pursuant to G.S. 143-15.3C to provide Work First Family Assistance funds for the State, the individual counties, or the individual region;
(2)	Use funds available to the Department to provide Work First Family Assistance funds for the State, the individual counties, or the individual region; or
(3)	Notwithstanding G.S. 143-23, use funds available from other departments, institutions, or other spending agencies of the State to provide Work First Family Assistance funds for the State, the individual counties, or the individual region.
(b)	The Director of the Budget shall report to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Public Assistance Commission, and the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources prior to making any transfer pursuant to this section.
(c)	Except as provided in this section, funds from the Work First Reserve Fund established pursuant to G.S. 143-15.3C shall not be expended until appropriated by the General Assembly."
(l) G.S. 108A-29(o) is recodified as G.S. 108A-29(d); G.S. 108A-29(p) is recodified as G.S. 108A-29(e);  G.S. 108A-29(e) is recodified as G.S. 108A-29(g); G.S. 108A-29(i) is recodified as G.S. 108A-29(h); G.S. 108A-29(k) is recodified as G.S. 108A-29(i); G.S. 108A-29(l) is recodified as G.S. 108A-29(j); G.S. 108A-29(m) is recodified as G.S. 108A-29(k); G.S. 108A-29(j) is recodified as G.S. 108A-29(l); G.S. 108A-29(n) is recodified as G.S. 108A-29(m); G.S. 108A-29(g) is recodified as G.S. 108A-29(n); G.S. 108A-29(h) is recodified as G.S. 108A-29(o); G.S. 108A-29(d) is recodified as G.S. 108A-29(p); G.S. 108A-29(r) is recodified as G.S. 108A-29(s).
(m)  G.S. 108A-29 reads as rewritten:
"§ 108A-29.  First Stop Employment Assistance; priority for employment services.
(a)	There is established in the Employment Security Commission a program to be called First Stop Employment Assistance. The Chair of the Employment Security Commission shall administer the program with the participation and cooperation of the Department of Commerce, county boards of commissioners, the Department of Health and Human Services, the Department of Labor, the Department of Crime Control and Public Safety, and the community college system. The responsibilities of each agency shall be specified in a Memorandum of Understanding between the Employment Security Commission and the Department of Health and Human Services, in consultation with the Department of Commerce, the Department of Labor, and the community college system. The Employment Security Commission shall be the presumptive primary deliverer of job placement services for the Work First Program.
(b)	Individuals seeking to apply or reapply for Work First Program assistance and who are not exempt from work requirements shall register with the First Stop Employment Assistance Program. The point of registration shall be at an office of the Employment Security Commission in the county in which the individual resides or at another location designated in a Memorandum of Understanding between the Employment Security Commission and the local department of social services.
(c)	Individuals who are not otherwise exempt shall present verification of registration at the time of applying for Work First Program assistance. Unless exempt, the individual shall not be approved for Work First Program assistance until verification is received. Child-only cases are exempt from this requirement.
(d)	Once an individual has registered as required in subsection (c) of this section and upon verification of the registration by the agency or contractor providing the Work First Program assistance, the individual's eligibility for Work First Program assistance may be evaluated and the application completed. Continued receipt of Work First Program benefits is contingent upon successful participation in the First Stop Employment Program, and lack of cooperation and participation in the First Stop Employment Program may result in the termination of benefits to the individual.
(e)	The county board of commissioners shall determine which agencies or nonprofit or private contractors will participate with the Employment Security Commission and the local department of social services in developing the rules to implement the First Stop Employment Program.
(f)	At the county's option, the Employment Security Commission, in consultation with and with the assistance of the agencies specified in the Memorandum of Understanding described in subsection (b) of this section, shall provide to Work First Program registrants the continuum of services available through its Employment Security Commission. Each County Plan may provide that the county department of social services enter into a cooperative agreement with the Employment Security Commission to operate the Job Search component on behalf of Work First Program registrants. The cooperative agreement shall include a provision for payment to the Employment Security Commission by the county department of social services for the cost of providing those services, not otherwise available to all clients of the Employment Security Commission, described in this subsection as the same are reflected as a component of the County Plan payable from fund allocations in the county block grant. The county department of social services may also enter into a cooperative agreement with the community college system or any other entity to operate the Job Preparedness component.  This cooperative agreement shall include a provision for payment to that entity by the county department of social services for the cost of providing those services, not otherwise available to all clients of the Employment Security Commission, described in this subsection as the same are reflected as a component of the County Plan payable from fund allocations in the county block grant.
(g)	The Employment Security Commission shall be the primary job placement entity of the Work First Program. The Employment Security Commission shall further assist registrants through job search, job placement, or referral to community service, if contracted to do so.
(h)	An individual placed in the Job Search component of the First Stop Employment Program shall look for work and shall accept any suitable employment. If contracted, the Employment Security Commission shall refer individuals to current job openings and shall make job development contacts for individuals. Individuals so referred shall be required to keep a record of their job search activities on a job search record form provided by the Commission, and the Employment Security Commission will monitor these activities. A 'job search record' means a written list of dates, times, places, addresses, telephone numbers, names, and circumstances of job interviews. The Job Search component shall include at least one weekly contact with the Employment Security Commission. The Employment Security Commission shall adopt rules to accomplish this subsection.
(i)	The Employment Security Commission shall notify all employers in the State of the 'Exclusive No-Fault' Referral Service available through the Employment Security Commission to employers who hire personnel through Job Service referrals.
(j)	All individuals referred to jobs through the Employment Security Commission shall be instructed in the procedures for applying for the Federal Earned Income Credit (FEIC). All individuals referred to jobs through the Employment Security Commission who qualify for the FEIC shall apply for the FEIC by filing a W-5 form with their employers.
(k)	The FEIC shall not be counted as income when eligibility is determined for Work First Program assistance, Medicaid, food stamps, subsidies, public housing, or Supplemental Security Income.
(l)	The Employment Security Commission shall work with the Department of Labor to develop a relationship with these private employment agencies to utilize their services and make referrals of individuals registered with the Employment Security Commission.
(m)	An individual who has not found a job within 12 weeks of being placed in the Job Search component of the Program may also be placed in the Community Service component at the county's option.
(n)	If after evaluation of an individual the Employment Security Commission believes it necessary, the Employment Security Commission or the county department of social services also may refer an individual to the Job Preparedness component of the First Stop Employment Program.  The local community college should include General Education Development, Adult Basic Education, or Human Resources Development programs that are already in existence as a part of the Job Preparedness component.  Additionally, the Commission or the county department of social services may refer an individual to a literacy council. Through a Memorandum of Understanding between the Employment Security Commission, the local department of social services, and other contracted entities, a system shall be established to monitor an individual's progress through close communications with the agencies assisting the individual. The Employment Security Commission or Job Preparedness provider shall adopt rules to accomplish this subsection.
(o)	The Job Preparedness component of the Program shall last a maximum of 12 weeks unless the recipient is registered and is satisfactorily progressing in a program that requires additional time to complete. Every reasonable effort shall be made to place the recipient in part-time employment or part-time community service if the time required exceeds the 12-week maximum. The county department of social services may contract with service providers to provide the services described in this section and shall monitor the provision of the services by the service providers.  Registrants may participate in more than one component at a time.
(p)	The Employment Security Commission shall expand its Labor Market Information System. The expansion shall at least include: statistical information on unemployment rates and other labor trends by county; and publications dealing with licensing requirements, economic development, and career projections, and information technology systems which can be used to track participants through the employment and training process.
(q)	Each county shall organize a Job Service Employer Committee, based on the membership makeup of the Job Service Employer Committees in existence at the time this act becomes law.  Each Job Service Employer Committee in counties participating in the First Stop Employment Program shall oversee the operation of the First Stop Employment Program in that county and shall report to the local Employment Security Commission quarterly on its recommendations to improve the First Stop Employment Program. The Employment Security Commission shall develop the reporting method and time frame and shall coordinate a full report to be presented to the Joint Legislative Public Assistance Commission by the end of each calendar year. Counties having a Workforce Development Board may designate the Board to perform the duties described in this section rather than organizing a Job Service Employer Committee.
(r)	Each county's Job Service Employer Committee shall continue the study of the working poor, titled 'NC WORKS', in their respective counties and shall include the following in the study:
(1)	Determination of the extent to which current labor market participation enables individuals and families to earn the amount of disposable income necessary to meet their basic needs;
(2)	Determination of how many North Carolinians work and earn wages below one hundred fifty percent (150%) of the Federal Poverty Guideline and study trends in the size and demographic profiles of this underemployed group within the respective county;
(3)	Examination of job market factors that contribute to any changes in the composition and numbers of the working poor including, but not limited to, shifts from manufacturing to service, from full-time to part-time work, from permanent to temporary or their contingent employment;
(4)	Consideration and determination of the respective responsibilities of the public and private sectors in ensuring that working families and individuals have disposable income adequate to meet their basic needs;
(5)	Evaluation of the effectiveness of the unemployment insurance system in meeting the needs of low-wage workers when they become unemployed;
(6)	Examination of the efficacy of a State-earned income tax credit that would enable working families to meet the requirements of the basic needs budget;
(7)	Examination of the wages, benefits, and protections available to part-time and temporary workers, leased employees, independent contractors, and other contingent workers as compared to regular full-time workers;
(8)	Solicitation, receipt, and acceptance of grants or other funds from any person or entity and enter into agreements with respect to these grants or other funds regarding the undertaking of studies or plans necessary to carry out the purposes of the committee; and
(9)	A request of any necessary data from either public or private entities that relate to the needs of the committee or board.
Each committee or board shall prepare and submit a report on the finding for the county which it represents by May 1 of each year to the Joint Legislative Public Assistance Commission, the Senate Appropriations Committee on Human Resources, the House of Representatives Appropriations Subcommittee on Human Resources, the Senate Appropriations Committee on Natural and Economic Resources, and the House of Representatives Appropriations Subcommittee on Natural and Economic Resources.
(s)	Members of families with dependent children and with aggregate family income at or below the level required for eligibility for Work First Family Assistance, regardless of whether or not they have applied for such assistance, shall be given priority in obtaining employment services including training and community service provided by or through State agencies or counties or with funds which are allocated to the State of North Carolina directly or indirectly through prime sponsors or otherwise for the purpose of employment of unemployed persons.
(t)	The Joint Legislative Public Assistance Commission shall further examine ways that Work First Program recipients can overcome obstacles to finding employment and remaining employed."
	(n) Section 12.7(b) and Section 12.20A of S.L. 1997-443 are repealed.
(o) G.S. 105-259(b) is amended by adding a new subdivision to read:
"(9a)	To furnish information to the Employment Security Commission to the extent required for its NC WORKS study of the working poor pursuant to G.S. 108A-29(r).  The Employment Security Commission shall use information furnished to it under this subdivision only in a nonidentifying form for statistical and analytical purposes related to its NC WORKS study.  The information that may be furnished under this subdivision is the following with respect to individual income taxpayers, as shown on the North Carolina income tax forms:
a.	Name, social security number, spouse's name, and county of residence.
b.	Filing status and federal personal exemptions.
c.	Federal taxable income, additions to federal taxable income, and total of federal taxable income plus additional income.
d.	Income while a North Carolina resident, total income from North Carolina sources while a nonresident, and total income from all sources."
(p)  G.S. 96-14 is amended by adding a new subdivision to read:
"(1f)	For the purposes of this Chapter, any claimant's leaving work, or discharge, if the claimant has been adjudged an aggrieved party as set forth by Chapter 50B of the General Statutes as the result of domestic violence committed upon the claimant or upon a minor child with or in the custody of the claimant by a person who has or has had a familial relationship with the claimant or minor child, shall constitute good cause for leaving work.  Benefits paid on the basis of this section shall be noncharged."
(q) The Department of Health and Human Services shall apply to the United States Department of Agriculture to operate a simplified Food Stamp Program, to make it possible to include the value of food stamp payments as compensation for community service or work experience. 
(r) Notwithstanding any law to the contrary, the Department of Health and Human Services and Electing Counties shall ensure that Individual Development Accounts' allowable purposes include purchase of a vehicle.
(s)  Subsection (d) of this section becomes effective June 30, 1998.  The remainder of this section becomes effective July 1, 1998.

[SECTION 12.28 RESERVED]

Requested by:   Representatives Gardner, Cansler, Clary
CHILD PLACING AGENCIES' RATE STUDY
Section 12.29A.  From funds appropriated to the Department of Health and Human Services in this act, the Department shall contract with an independent consultant to conduct a study of the rate setting of the State's licensed child placing agencies.  This study shall:
(1)	Review the agencies' current rate-setting process; and
(2)	Determine whether this process is resulting in adequate reimbursement.
The Department shall report the results of this study, together with any recommendations, to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources by January 1, 1999.

Requested by:   Representatives Gardner, Cansler, Clary, Howard, Berry
LABOR MARKET INFORMATION/COMMON FOLLOW UP SYSTEMS' FUNDS
Section 12.29B. Of the funds appropriated for the 1998-99 fiscal year to the Department of Health and Human Services for automation, the sum of one million dollars ($1,000,000) shall be transferred to the Employment Security Commission for the Labor Market Information and the Common Follow Up Systems.  

Requested by:   Representatives Gardner, Cansler, Clary
REPEAL REVIEW OF AUTOMATED COLLECTION AND TRACKING SYSTEM
Section 12.29C.  Section 11.28 of S.L. 1997-443 is repealed.

Requested by:   Representatives Gardner, Cansler, Clary
CHILD WELFARE SYSTEM PILOTS
Section 12.29D.  (a) The Department of Health and Human Services, Division of Social Services, shall work with local departments of social services to develop and implement a dual response system of child protection in no fewer than two and no more than five demonstration areas in the State during the 1998-99 fiscal year.  These pilots shall implement dual response systems in which:
(1)	Local child protective services and law enforcement work together as coinvestigators in serious abuse cases; and
(2)	Local departments of social services respond to reports of child abuse or neglect with a family assessment and services approach.
(b) The Department of Health and Human Services shall develop data collection processes that enable the General Assembly to assess the impact of these pilots on:
(1)	Child safety;
(2)	Timeliness of response;
(3)	Timeliness of services;
(4)	Coordination of local human services;
(5)	Cost effectiveness;
(6)	Any other related issues.
(c) Based on the data collected pursuant to subsection (b) of this section, the Department of Health and Human Services, Division of Social Services, shall contract with an independent consultant with proven expertise in evaluation of child welfare services to develop an evaluation component that compares the outcomes of the pilot programs to the outcomes of programs of county departments of social services not participating in the pilots.  The Division shall report to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources on its progress on implementing these pilots by December 1, 1998, and by March 1, 1999.

Requested by:   Representatives Gardner, Cansler, Clary
ADULT CARE HOMES REIMBURSEMENT RATE INCREASE
Section 12.29E. (a) Section 11.70(d) of S.L. 1997-443 reads as rewritten:
"(d)	Effective October 1, 1998, the maximum monthly rate for residents in adult care home facilities shall be nine hundred fifty-six dollars ($956.00) per month per resident."
(b) Effective January 1, 1999, the maximum monthly rate for residents in adult care home facilities shall be nine hundred seventy-two dollars ($972.00) per month per resident.
(c) Subsection (b) of this section becomes effective only if a law is enacted by the 1997 General Assembly, Regular Session 1998, requiring adult care homes to provide for the third shift 8.0 hours of aide duty per 30 or fewer residents.

SUBPART 6. MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE SERVICES
Requested by:   Representatives Gardner, Cansler, Clary
THOMAS S. COST CONTAINMENT REPORT EXTENSION
Section 12.30.  Section 11.37 of S.L. 1997-443 reads as rewritten:
"Section 11.37. 	
	(a) The Department of Health and Human Services, in conjunction with area mental health programs, shall develop and implement cost containment measures to reduce the cost of direct services.  The Department shall develop these strategies to emphasize positive client outcomes through developmental disability long-term managed supports rather than to emphasize process.  These measures shall include, but not be limited to, the following:
(1)	Reduction of those process-oriented tasks required by the State, including, but not limited to, tasks required by the Divisions of: Medical Assistance, Vocational Rehabilitation Services, Social Services, Facilities Services, and Mental Health, Developmental Disabilities, and Substance Abuse Services;
(2)	Single stream funding from all available sources;
(3)	Waivers of federal requirements in order to comply with the federal court order; and
(4)	Review and, if necessary, amendment or repeal of rules that conflict or otherwise interfere with cost containment measures.
	(b) The Department shall provide to the members of the House and Senate Appropriations Subcommittees on Human Resources, and to the Fiscal Research Division a detailed report of the status of development and implementation of cost containment measures required under this section. The report shall address each of the measures listed in subsection (b) of this section, and any other related cost containment measures developed by the Department.  The Department shall provide the report on May 1, 1999."

Requested by:   Representatives Gardner, Cansler, Clary
MENTAL HEALTH RESERVE FOR MEDICAID MATCH
Section 12.31A.  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of thirty-eight million dollars ($38,000,000) for the 1998-99 fiscal year shall be placed in a Mental Health Restricted Reserve in the Office of the Controller of the Department of Health and Human Services. In addition to these funds, the Department shall transfer to the Mental Health Restricted Reserve from the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the total amount of funds in the Division's budget allocated as matching funds for Medicaid payments to area mental health authorities.  Funds placed in the Reserve may only be used as a State match for Medicaid payments to area mental health authorities for the 1998-99 fiscal year.  Funds in the Reserve that are unexpended and unencumbered as of June 30, 1999, shall revert to the General Fund.

Requested by:  Representative Ellis
FUNDS TO REDUCE WAITING LIST FOR DEVELOPMENTAL DISABILITIES SERVICES
Section 12.31B.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of thirty-one million six hundred nineteen thousand six hundred ninety-seven dollars ($31,619,697) shall be used to reduce the waiting list for people waiting for developmental disabilities services.

Requested by:   Representatives Gardner, Cansler, Clary
EARLY INTERVENTION SERVICES/REFERRALS/STUDY
Section 12.32A.  (a) Section 11.43 of S.L. 1997-443 reads as rewritten:
"Section 11.43.  Of the funds appropriated in this act to the Department of Human Resources, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of five million dollars ($5,000,000) for the 1997-98 fiscal year and the sum of five million dollars ($5,000,000) for the 1998-99 fiscal year shall be allocated based on a plan developed in consultation with the affected divisions within the Department and the North Carolina Interagency Coordinating Council to meet the needs of those children who are on the waiting list for early intervention services.  The Department may create up to 41 new positions, as needed, in the Division of Services for the Blind and the Division of Services for the Deaf and the Hard of Hearing to expand early intervention-related preschool services for children from birth through five years of age with priority given to children birth through two years of age.
The North Carolina Schools for the Deaf and other agencies providing early intervention services to children from birth through five years of age shall implement procedures to ensure that:
(1)	Parents of children newly identified with hearing loss and determined to be eligible for services are informed of the services available to them through Beginnings for Parents of Hearing-Impaired Children, Inc., and
(2)	Beginnings for Parents of Hearing-Impaired Children, Inc., with the consent of parents, is notified of these children in a timely and appropriate manner."
(b) The North Carolina Interagency Coordinating Council, with the assistance of the Department of Health and Human Services and the Department of Public Instruction, shall conduct a comprehensive review of North Carolina's system for delivering early intervention services to children ages birth through five years.  This study shall identify issues and recommend solutions to the following:
(1)	Eligibility for services,
(2)	Quality, availability, and timeliness of services,
(3)	Improving transition from the infant-toddler program to the pre-school program, 
(4)	Management of and focus on preschool services for children with vision and hearing impairments, and
(5)	Matters pertaining to interagency coordination, and to funding.
The ICC shall report its findings and recommendations to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources, the Education Oversight Committee, and the Fiscal Research Division not later than March 1, 1999.

Requested by:   Representatives Gardner, Cansler, Clary
NONMEDICAID REIMBURSEMENT CHANGES
Section 12.33. Section 11.12 of S.L. 1997-443 reads as rewritten:
"Section 11.12.  Providers of medical services under the various State programs, other than Medicaid, offering medical care to citizens of the State shall be reimbursed at rates no more than those under the North Carolina Medical Assistance Program.  Hospitals that provide psychiatric inpatient care for Thomas S. class members or adults with mental retardation and mental illness may be paid an additional incentive payment not to exceed fifteen percent (15%) of their regular daily per diem reimbursement.
The Department of Health and Human Services may reimburse hospitals at the full prospective per diem rates without regard to the Medical Assistance Program's annual limits on hospital days.  When the Medical Assistance Program's per diem rates for inpatient services and its interim rates for outpatient services are used to reimburse providers in non-Medicaid medical service programs, retroactive adjustments to claims already paid shall not be required.
Notwithstanding the provisions of paragraph one, the Department of Health and Human Services may negotiate with providers of medical services under the various Department of Health and Human Services programs, other than Medicaid, for rates as close as possible to Medicaid rates for the following purposes:  contracts or agreements for medical services and purchases of medical equipment and other medical supplies.  These negotiated rates are allowable only to meet the medical needs of its non-Medicaid eligible patients, residents, and clients who require such services which cannot be provided when limited to the Medicaid rate.
Maximum net family annual income eligibility standards for services in these programs shall be as follows:

Medical Eye	     All
Family Size	Care Adults	Rehabilitation	Other
	1	$  4,860	$  8,364	$ 4,200
	2	   5,940	  10,944	5,300
	3	   6,204	  13,500	6,400
	4	   7,284	  16,092	7,500
	5	   7,824	  18,648	7,900
	6	   8,220	  21,228	8,300
	7	   8,772	  21,708	8,800
	8	   9,312	  22,220	9,300

The eligibility level for children in the Medical Eye Care Program in the Division of Services for the Blind shall be one hundred percent (100%) of the federal poverty guidelines, as revised annually by the United States Department of Health and Human Services and in effect on July 1 of each fiscal year.  The eligibility level for people in the Atypical Antipsychotic Medication Program in the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services shall be one hundred fifteen percent (115%) of the federal poverty guidelines, as revised annually by the United States Department of Health and Human Services and in effect on July 1 of each fiscal year. Additionally, those adults enrolled in the Atypical Antipsychotic Medication Program who become gainfully employed may continue to be eligible to receive State support, in decreasing amounts, for the purchase of atypical antipsychotic medication and related services up to three hundred percent (300%) of the poverty level.
State financial participation in the Atypical Antipsychotic Medication Program for those enrollees who become gainfully employed is as follows:

Income	State Participation	Client Participation
(% of poverty)
0-100% 	100%	0%
101-120% 	95%	5%
121-140%	85%	15%
141-160%	75%	25%
161-180%	65%	35%
181-200%	55%	45%
201-220%	45%	55%
221-240%	35%	65%
241-260%	25%	75%
261-280%	15%	85%
281-300%	5%	95%
301%-over	0%	100%.

The Department of Health and Human Services shall contract at, or as close as possible to, Medicaid rates for medical services provided to residents of State facilities of the Department."

Requested by:   Representatives Gardner, Cansler, Clary
DEVELOPMENTAL DISABILITY SERVICES REVIEW AND INITIATIVES
Section 12.34A.  The Department of Health and Human Services shall review and implement initiatives to provide and enhance person-centered and family support services to developmentally disabled individuals served by the State and local public mental health services system.  In order to accomplish this, the Department shall do all of the following:
(1)	Immediately pursue approval from the Health Care Financing Administration to implement flexible funding under the CAP-MR/DD Waiver as soon as possible;
(2)	Study the feasibility of providing new or additional services as part of the regular Medicaid program which are aimed at keeping developmentally disabled individuals in their homes rather than using the current criterion used in the Medicaid CAP-MR/DD Waiver Program.  The study shall include a projected cost-benefit analysis;
(3)	Work with area mental health authorities to determine why Medicaid-eligible individuals are waiting for services in the area mental health programs;
(4)	Establish goals for the State and area mental health programs that require not more than a six-month wait for services for developmentally disabled individuals; 
(5)	Collaborate with area mental health programs to maximize the use of existing funds to increase services to the developmentally disabled, non-Medicaid and non-CAP-MR/DD eligible population; and
(6)	Pursue additional Medicaid waivers which emphasize person-centered and family support services for developmentally disabled individuals.
The Department shall work with other State agencies as necessary to implement this section.
The Department shall report the results of its compliance with this section to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources not later than November 1, 1998.  The report shall also include the impact of expansion funds on the waiting list for services for developmentally disabled individuals.

Requested by:   Representatives Gardner, Cansler, Clary
STUDY OF STATE PSYCHIATRIC HOSPITALS/AREA MENTAL HEALTH PROGRAMS
Section 12.35A.  (a) Of the funds appropriated in this act to the Department of Health and Human Services, the sum of seven hundred fifty thousand dollars ($750,000) for the 1998-99 fiscal year shall be used to study the State psychiatric hospitals and area mental health programs.  The study shall build upon results of the MGT, Inc., study and shall assess:
(1)	How many and what type of beds are needed statewide;
(2)	The capacity and ability of area mental health programs to efficiently and effectively absorb specific services now provided within the existing State hospital system;
(3)	The mission, management, operations, and governance of the 40 area mental health programs including the potential for achieving cost efficiencies and improved effectiveness and quality of services to clients through changes in size, operating practices, increased use of private providers, and governance of area programs; and
(4)	The nonpublic system's capacity to absorb specific services identified by MGT as being inappropriately provided by the current State hospital system.
The study shall also make recommendations for other system changes as identified in order to appropriately downsize the State hospital system while maintaining existing service levels and ultimately increasing services to clients in the community.  The Department shall solicit proposals to conduct the study.
(b) The Department shall make an interim report to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources not later than March 15, 1999, and shall make a final report not later than May 1, 1999.

Requested by:  Representatives Gardner, Cansler, Clary
CIVIL COMMITMENT/FORENSIC UNIT
Section 12.35B. (a) G.S. 15A-1321 reads as rewritten:
"§ 15A-1321. Automatic civil commitment of defendants found not guilty by reason of insanity.
(a)	When a defendant charged with a crime, wherein it is not alleged that the defendant inflicted or attempted to inflict serious physical injury or death, is found not guilty by reason of insanity by verdict or upon motion pursuant to G.S. 15A-959(c), the presiding judge shall enter an order finding that the defendant has been found not guilty by reason of insanity of a crime and committing the defendant to a State 24-hour facility designated pursuant to G.S. 122C-252. The court order shall also grant custody of the defendant to a law enforcement officer who shall take the defendant directly to that facility. Proceedings thereafter are in accordance with Part 7 of Article 5 of Chapter 122C of the General Statutes. 
(b)	When a defendant charged with a crime, wherein it is alleged that the defendant inflicted or attempted to inflict serious physical injury or death, is found not guilty by reason of insanity, by verdict, or upon motion pursuant to G.S. 15A-959(c), notwithstanding any other provision of law, the presiding judge shall enter an order finding that the defendant has been found not guilty by reason of insanity of a crime and committing the defendant to a Forensic Unit operated by the Department of Health and Human Services, where the defendant shall reside until the defendant's release in accordance with Chapter 122C of the General Statutes.  The court order shall also grant custody of the defendant to a law enforcement officer who shall take the defendant directly to the facility.  Proceedings not inconsistent with this section shall thereafter be in accordance with Part 7 of Article 5 of Chapter 122C of the General Statutes."
(b) This section becomes effective December 1, 1998, and applies to offenses committed on and after that date.

Requested by:   Representative Cansler
AREA MENTAL HEALTH AUTHORITY PROGRAM ACCOUNTABILITY
Section 12.35C.  (a) The Secretary of Health and Human Services shall develop proposed standards for the fiscal and administrative practices of area mental health programs to ensure that the programs are accountable to the State for the management and use of federal and State funds allocated for mental health, developmental disabilities, and substance abuse services. The proposed standards shall be designed to ensure maximum accountability by area programs for rate-setting methodologies, reimbursement procedures, billing procedures, provider contracting procedures, record keeping, documentation, and other matters pertaining to financial management and fiscal accountability.  Proposed standards shall be consistent with professionally accepted accounting and management principles.  In addition to developing the proposed standards for fiscal and administrative practices of area programs, the Secretary shall propose methods for monitoring the clinical practices of area programs to ensure compliance with established laws, rules, and regulations governing the clinical practices.
(b) The Secretary shall submit a report to the Legislative Study Commission on Mental Health, Developmental Disabilities, and Substance Abuse Services, and to the Joint Legislative Health Care Oversight Committee not later than December 1, 1998. The report shall include all of the following:
(1)	Proposed standards required under subsection (a) of this section.
(2)	Proposed methods for ensuring area mental health compliance with the standards.  Methods shall take into account the Secretary's existing authority over area programs under G.S. 122C-124, 122C-125, 122C-125.1, and 122C-126, as well as the general powers and duties conferred upon the Secretary under Chapter 122C of the General Statutes.
(3)	Proposed methods for ensuring area mental health program compliance with existing laws, rules, and regulations governing clinical practices.
(4)	Proposed methods for assisting area mental health programs in complying with State and federal laws, rules, regulations, and standards.
(5)	Any other recommendations, including proposed legislation, the Secretary may have to enhance accountability of area mental health programs.

Requested by:   Representative Cansler
AGENCY OVERSIGHT OF CARE PROVIDED TO PERSONS WITH MENTAL ILLNESS AND DEVELOPMENTAL DISABILITIES
Section 12.35D.  The Department of Health and Human Services shall review the effectiveness of existing agency oversight with respect to family care centers, foster homes, nursing homes, and adult care homes which provide care for persons with mental illness and for persons with developmental disabilities.  The report shall include, but not be limited to, all of the following:
(1)	The current status of enforcement of existing laws, rules, and regulations in local settings, who is responsible for enforcement and under what authority,
(2)	Whether and to what extent clients, families, and staff in small residential settings feel free to speak to responsible authorities empowered to resolve problems without fear of reprisal, and
(3)	What can be done about problems in facilities that require immediate resolution for which no enforcement remedies are immediately available.
The Department shall report its findings and recommendations to the Joint Legislative Health Care Oversight Committee and the Legislative Study Commission on Mental Health, Developmental Disabilities, and Substance Abuse Services no later than February 1, 1999.

Requested by:   Representative Cansler
AREA MENTAL HEALTH PROGRAMS/STANDARDIZED CONTRACTS
Section 12.35E. (a) Effective January 1, 1999, Article 4 of Chapter 122C of the General Statutes is amended by adding the following new section to read:
"§ 122C-117.1.  Standardized contract for services.
The Secretary shall develop and make available to all area authorities a standardized contract form for use by area authorities contracting for services with private or public agency providers.  Area authorities shall use the standard contract form developed by the Secretary for all contracts between the area authority and private or public agency providers for mental health, developmental disability, and substance abuse services."
(b) This section applies to contracts entered into, renewed, or amended on and after January 1, 1999.

Requested by: Representative Cansler
FUNDS FOR ADULT MENTAL HEALTH RESIDENTIAL SERVICES
Section 12.35F. Of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, to reduce the waiting list for developmental disability services, the sum of three hundred thousand dollars ($300,000) for the 1998-99 fiscal year shall be used as matching funds for adult mental health residential services.

[SECTION 12.36 RESERVED]

SUBPART 7. CHILD DEVELOPMENT
Requested by:   Representatives Gardner, Cansler, Clary, Shubert
EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES REFORM
Section 12.37A. (a)	GENERAL STATUTES LAW ON EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES.
Part 10B of Article 3 of Chapter 143B of the General Statutes reads as rewritten:
"Part 10B.  Early Childhood Initiatives.
"§ 143B-168.10.  Early childhood initiatives; findings.
The General Assembly finds, upon consultation with the Governor, that every child can benefit from, and should have access to, high-quality early childhood education and development services to prepare each child for school.  The economic future and well-being of the State depend upon it.  To ensure that all children have access to high quality early childhood education and development services, the General Assembly further finds that:
(1)	Parents have the primary duty to raise, educate, and transmit values to young preschool children;
(2)	The State can assist parents in their role as the primary caregivers and educators of young preschool children to help these children be prepared for school; and
(3)	There is a need to explore innovative approaches and strategies for aiding parents and families in the education and development of young preschool children.
"§ 143B-168.11.  Early childhood initiatives; purpose; definitions.
(a)	The purpose of this Part is to establish a framework whereby the General Assembly, upon consultation with the Governor, may support through financial and other means, the North Carolina Partnership for Children, Inc. and comparable local partnerships, which have as their missions the development of a comprehensive, long-range strategic plan for early childhood to prepare children for school and the provision, through public and private means, of high-quality early childhood education and development services for children and families to prepare children for school. It is the intent of the General Assembly that communities be given the maximum flexibility and discretion practicable in developing their plans while remaining subject to the approval of the North Carolina Partnership and accountable to the North Carolina Partnership and to the General Assembly for their plans and for the programmatic and fiscal integrity of the programs and services provided to implement them.  It is also the intent of the General Assembly that the services provided be focused on preparing children for school and for success in school.
(b)	The following definitions apply in this Part:
(1)	Board of Directors. – The Board of Directors of the North Carolina Partnership for Children, Inc.
	(2)	Early childhood. – Birth through five years of age.
(3)	Local Partnership. – A county or regional private, nonprofit 501(c)(3) organization established to coordinate a local demonstration project, to provide ongoing analyses of their local needs that must be met to ensure that children are ready for school, and, in consultation with the North Carolina Partnership and subject to the approval of the North Carolina Partnership, to provide programs and services to meet these needs under this Part, while remaining accountable for the programmatic and fiscal integrity of their programs and services to the North Carolina Partnership.
(4)	North Carolina Partnership. – The North Carolina Partnership for Children, Inc.
	"§ 143B-168.12.  North Carolina Partnership for Children, Inc.; conditions.
(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 25 members:
a.	The Secretary of Health and Human Services, ex officio;
b.	Repealed by Session Laws 1997, c. 443, s. 11A.105.
c.	The Superintendent of Public Instruction, ex officio;
d.	The President of the Department of Community Colleges, ex officio;
e.	Four members of the public, including one child care provider, one other who is a parent, one other who is a representative of the faith community, and one other who is a representative of a local partnership, appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate;
f.	Four members of the public, including one child care provider, one other who is a parent, one other who is a  representative of the faith community, and one other who is a representative of a local partnership, appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives;
g.	Ten members, appointed by the Governor.  Three of these ten members shall be members of the party other than the Governor's party, appointed by the Governor. Seven of these ten members shall be appointed as follows:  one who is a child care provider, one other who is a pediatrician, one other who is a health care provider, one other who is a parent, one other who is a member of the business community, one other who is a member representing a philanthropic agency, and one other who is an early childhood educator;
		j.	One member of the public appointed by the General Assembly upon recommendation of the Majority Leader of the Senate;
k.	One member of the public appointed by the General Assembly upon recommendation of the Majority Leader of the House of Representatives;
l.	One member of the public appointed by the General Assembly upon recommendation of the Minority Leader of the Senate; and
m.	One member of the public appointed by the General Assembly upon recommendation of the Minority Leader of the House of Representatives.
		All appointed board members shall avoid conflicts of interests and the appearance of impropriety. Should instances arise when a conflict may be perceived, any individual who may benefit directly or indirectly from the North Carolina Partnership's disbursement of funds shall abstain from participating in any decision or deliberations by the North Carolina Partnership regarding the disbursement of funds.
		All ex officio members are voting members.  Each ex officio member may be represented by a designee selected to replace the ex officio member and to function as a permanent replacement.  These designees shall be voting members.  No legislators shall serve as members.
		The North Carolina Partnership shall establish a nominating committee and, in making their recommendations of members to be appointed by the General Assembly or by the Governor, the President Pro Tempore of the Senate, the Speaker of the House of Representatives, the Majority Leader of the Senate, the Majority Leader of the House of Representatives, the Minority Leader of the Senate, the Minority Leader of the House of Representatives, and the Governor shall consult with and consider the recommendations of this nominating committee.
		The North Carolina Partnership shall establish a policy on members' attendance,  which policy shall include provisions for reporting absences of at least three meetings immediately to the appropriate appointing authority.
		Members who miss more than three consecutive meetings without excuse or members who vacate their membership shall be replaced by the appropriate appointing authority and the replacing member shall serve either until the General Assembly and the Governor can appoint a successor or until the replaced member's term expires, whichever is earlier.
		The membership of local boards shall be at least 25 members, 18 of whom shall be selected from the following areas:  county commissioner, county manager, director of the local department of social services, director of the local area mental health agency, director of the local health agency, superintendent of the public schools, president of the community college, two business leaders, a Head Start representative, two parents with children receiving subsidies, a child care provider, a representative from the child care resource and referral agency or a representative of another nonprofit organization related to child care, a representative of the faith community, a representative of the interagency coordinating council or a parent with a child with a disability, a foundation representative, a representative of the municipal government, the chair of the local cooperative extension agency, and the director of the local public library.  No legislators shall sit on the local board.
		The North Carolina Partnership may establish a policy on membership of the local board, which policy shall include the requirement that all local board members be residents of the county or the partnership region they are representing.  Within these requirements for local board membership, the North Carolina Partnership shall allow local partnerships that are regional to have flexibility in the composition of their boards so that all counties in the region have adequate representation.
		All appointed local board members shall avoid conflicts of interests and the appearance of impropriety.  Should instances arise when a conflict may be perceived, any individual who may benefit directly or indirectly from the partnership's disbursement of funds shall abstain from participating in any decision or deliberations by the partnership regarding the disbursement of funds.
(2)	The North Carolina Partnership and the local partnerships 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. The North Carolina Partnership shall enforce these provisions in the event that a local partnership fails to abide by these procedures and the Office of the Attorney General shall enforce these provisions in the event that the North Carolina Partnership fails to follow them.
(3)	The North Carolina Partnership shall oversee the development and implementation of the local demonstration projects as they are selected and shall approve the ongoing plans, programs, and services developed and implemented by the local partnerships, and hold the local partnerships accountable for the financial and programmatic integrity of the programs and services.
		In the event that the North Carolina Partnership determines that a local partnership is not fulfilling its mandate to provide programs and services to prepare children for school and is not being accountable for the programmatic and fiscal integrity of its programs and services, the North Carolina Partnership shall suspend all funds to the partnership until the partnership demonstrates that these defects are corrected.  Further, at its discretion, the North Carolina Partnership may assume the managerial responsibilities for the partnership's programs and services until the North Carolina Partnership determines that it is appropriate to return the programs and services to the local partnership.
(4)	The North Carolina Partnership shall develop and implement a comprehensive standard fiscal accountability plan to ensure the fiscal integrity and accountability of State funds appropriated to it and to the local partnerships. The standard fiscal accountability plan shall, at a minimum, include a uniform, standardized, automated system of accounting, internal controls, payroll, fidelity bonding, chart of accounts, and contract management and monitoring. The North Carolina Partnership may contract with outside firms to develop and implement the standard fiscal accountability plan. All local partnerships shall be required to participate in the standard fiscal accountability plan developed and adopted by the North Carolina Partnership pursuant to this subdivision.
(5)	The North Carolina Partnership shall develop and implement a centralized accounting and contract management system as an integral part of the required standard fiscal accountability plan described in subdivision (4) of subsection (a) of this section. 
			The North Carolina Partnership shall establish criteria by which local partnerships' capacity to perform their own contracting and accounting services will be assessed annually.  Effective June 30, 1999, all local partnerships shall participate in the centralized accounting and contract management system that the North Carolina Partnership shall provide to them at no cost unless partnerships meet these criteria and undertake their own accounting and contract management, in which case the cost shall count against their administrative cap.  These local partnerships shall continue to participate in those portions of the standard fiscal accountability plan prescribed in subdivision (4) of this subsection.  In the event that the Partnership determines that such a partnership's annual financial audit reveals serious deficiencies in accounting or contract management, the Partnership shall assume the responsibilities of the accounting and contract management of the partnership.
(6)	The North Carolina Partnership shall develop a formula for allocating direct services funds appropriated for this purpose to local partnerships.
(7)	The North Carolina Partnership shall adjust its allocations on the basis of local partnerships' performance assessments. In determining whether to adjust its allocations to local partnerships, the North Carolina Partnership shall consider whether the local partnerships are meeting the outcome goals and objectives of the North Carolina Partnership and the goals and objectives set forth by the local partnerships in their approved annual program plans.
		The North Carolina Partnership shall use additional factors to determine whether to adjust the local partnerships' allocations. These additional factors shall be developed with input from the local partnerships and shall be communicated to the local partnerships when the additional factors are selected. These additional factors shall 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' may receive, to the extent that funds are available, a ten percent (10%) increase in their annual funding allocation. Local partnerships rated 'satisfactory' may receive their annual funding allocation. Local partnerships rated 'needs improvement' may receive up to ninety percent (90%) of their annual funding allocation.
		The North Carolina Partnership may contract with outside firms to conduct the performance assessments of local partnerships.
(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 Chair 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 shall 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.
		The Partnership may establish a Professional Advisory Board of providers of programs and services and of experts in the fields related to Early Childhood Education and Development.
(9)	The North Carolina Partnership shall report (i) quarterly to the Joint Legislative Commission on Governmental Operations and (ii) to the General Assembly and the Governor on the ongoing progress of all the local partnerships' work, including all details of the use to which the allocations were put, and on the continuing plans of the North Carolina Partnership and of the Department, together with legislative proposals, including proposals to implement the program statewide.
(b)	The North Carolina Partnership shall be subject to audit and review by the State Auditor under Article 5A of Chapter 147 of the General Statutes. The State Auditor shall conduct annual financial and compliance audits of the North Carolina Partnership. 
"§ 143B-168.13.  Implementation of program; additional duties of North Carolina Partnership.
(a)	The North Carolina Partnership shall:
(1)	 Develop a process to determine the locations of subsequent selections of local demonstration projects to represent the various geographic areas of the State.
(2)	Develop and conduct a statewide needs and resource assessment every third year, beginning in the 1997-98 fiscal year. This needs assessment shall be conducted in cooperation with the local partnerships. The North Carolina Partnership may contract with an independent firm to conduct the needs assessment. The needs assessment shall be conducted in a way which enables the North Carolina Partnership to review, and revise as necessary, the total program cost estimate and methodology. 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. A report of the findings of the needs assessment shall be presented to the General Assembly prior to the beginning of the 1999 Session and every three years after that date.
	(3)	Repealed by Session Laws 1997, c. 443, s. 11.55(m).
(4)	Adopt any rules necessary to implement this Part, including rules to ensure that State leave policy is not applied to the North Carolina Partnership and the local partnerships. In order to allow local partnerships to focus on the development of long-range and ongoing plans, the North Carolina Partnership may adopt rules that limit the categories of direct services for young children and their families for which funds are made available.
(5)	Repealed by Session Laws 1996, Second Extra Session, c. 18, s. 24.29(c).
(6)	Annually update its funding formula using the most recent data available. These amounts shall serve as the basis for determining 'full funding' amounts for each local partnership.
(7)	Monitor each partnership to require programmatic and fiscal integrity as follows:
a.	Monitor each local partnership's contracts, contractors, and subcontractors;
b.	Limit each contract to one level of subcontractor, when practical;
c.	Require each partnership to place in each of its new contracts a statement that the contract is subject to monitoring by the North Carolina Partnership, that contractors and subcontractors shall be bonded as required by the State Auditor, and that contractors and subcontractors are subject to audit oversight by the State Auditor; and
d.	Ensure that local partnerships, their contractors, and their subcontractors are bonded as required by the State Auditor.
	(b)	The North Carolina Partnership shall approve all allocations of State funds to local projects and also shall approve all local plans.
(c)	The North Carolina Partnership shall implement the performance-based evaluation system after June 30, 1999.  The Office of State Budget and Management shall include this item in its continuation budget request for the North Carolina Partnership for the 1999-2001 fiscal biennium.
(d)	The North Carolina Partnership shall not mandate that any of the local partnerships establish or otherwise support a child care resource and referral organization or service.
"§ 143B-168.14.  Local partnerships; conditions.
(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 concerned with early childhood education and development who are appointed pursuant to the policy adopted by the North Carolina Partnership pursuant to G.S. 143B-168.12(a)(1) and subject to the limitations prescribed in that subdivision. 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 North Carolina Partnership.
(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, standard fiscal accountability plan developed and adopted by the North Carolina Partnership.
(b)	Each local partnership shall be subject to audit and review by the State Auditor under Article 5A of Chapter 147 of the General Statutes. The State Auditor shall conduct annual financial and compliance audits of the local partnerships.
(c)	Local partnerships may establish Professional Advisory Boards of providers of programs and services and of experts in the fields related to early childhood education and development.
"§ 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 to prepare children for school, 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 to prepare them for school, 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 will prepare children for school that shall be made available and accessible to providers, children, and families on a voluntary basis. Of the total funds allocated to all local partnerships for direct services, seventy percent (70%) shall be used in child care-related activities and programs which improve access to child care services, develop new child care services, or improve the quality of child care services in all settings. 
(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 to prepare these children for school. 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 to prepare children for school. State funds designated to support direct services for children, families, and providers to prepare children for school 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 to prepare children for school, (ii) it is necessary to enable the local partnership to provide services and activities to underserved children and families to prepare children for school, 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 North Carolina Partnership'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 with the approval of the North Carolina Partnership, 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 care subsidies. To the extent practicable, these funds shall be used to enhance the affordability, availability, and quality of child care services as described in this section. No State Early Childhood Education and Development funds or public non-State matching funds may be used by any local partnership or by the North Carolina Partnership for early childhood education and development purposes, activities, programs, or services that have been disapproved by the General Assembly.  No State Early Childhood Education and Development funds or non-State Early Childhood Education and Development-related funds shall be used by any local partnership or by the North Carolina Partnership for any lobbying before the General Assembly.  Nothing in this section prohibits any citizen from expressing his or her views to a member of the General Assembly in his or her capacity as a citizen.
(h)	The North Carolina Partnership is subject to the Executive Budget Act and its concomitant accountability.
"§ 143B-168.16.  Home-centered services; consent.
No home-centered services including home visits or in-home parenting training shall be allowed under this Part unless the written, informed consent of the participating parents authorizing the home-centered services is first obtained by the local partnership, educational institution, local school administrative unit, private school, not-for-profit organization, governmental agency, or other entity that is conducting the parenting program. The participating parents may revoke at any time their consent for the home-centered services.
The consent form shall contain a clear description of the program including (i)	the activities and information to be provided by the program during the home visits, (ii) the number of expected home visits, (iii) any responsibilities of the parents, (iv) the fact, if applicable, that a record will be made and maintained on the home visits, (v) the fact that the parents may revoke at any time the consent, and (vi) any other information as may be necessary to convey to the parents a clear understanding of the program.
Parents at all times shall have access to any record maintained on home-centered services provided to their family and may place in that record a written response to any information with which they disagree that is in the record."
(b) UNCODIFIED STATUTE PROVISIONS ON EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES
Section 11.55 of S.L. 1997-443 reads as rewritten:
"Section 11.55. (a)	 The General Assembly finds that it is essential to continue developing comprehensive programs that provide high quality early childhood education and development services locally for children and their families, to prepare children for school. The General Assembly intends to expand the Early Childhood Education and Development Initiatives Program (the "Program") in a manner which ensures quality assurance and performance-based accountability for the Program.
(b)	The North Carolina Partnership for Children, Inc., shall continue to implement the recommendations contained in the Smart Start Performance Audit prepared pursuant to Section 27A(1)b. of Chapter 324 of the 1995 Session Laws, as modified by Section 24.29 of Chapter 18 of the Session Laws, Second Extra Session 1996, insofar as possible pursuant to Part 10B of Article 3 of Chapter 143B of the General Statutes.  The North Carolina Partnership for Children, Inc., shall continue to report quarterly to the Joint Legislative Commission on Governmental Operations on its progress toward full implementation of the modified audit recommendations.
(c)	The Joint Legislative Commission on Governmental Operations shall, consistent with current law, continue to be the legislative oversight body for the Program.  The President Pro Tempore of the Senate and the Speaker of the House of Representatives may appoint a subcommittee of the Joint Legislative Commission on Governmental Operations to carry out this function.  This subcommittee may conduct all initial reviews of plans, reports, and budgets relating to the Program and shall make recommendations to the Joint Legislative Commission on Governmental Operations.
(d)	Administrative costs shall be equivalent to, on an average statewide basis for all local partnerships, not more than eight percent (8%) of the total statewide allocation to all local partnerships.  What counts as administrative costs shall be as defined in the Smart Start Performance Audit.
(e)	Any local partnership, before receiving State funds, shall be required annually to submit a plan and budget for State funds for appropriate programs to the North Carolina Partnership for Children, Inc., and the Joint Legislative Commission on Governmental Operations.  State funds to implement the programs shall not be allocated to a local partnership until the program plan is approved by the North Carolina Partnership for Children, Inc.
(f)	The North Carolina Partnership for Children, Inc., and all local partnerships shall use competitive bidding practices in contracting for goods and services on contract amounts as follows:
(1)	For amounts of five thousand dollars ($5,000) or less, three verbal quotes;
(2)	For amounts greater than five thousand dollars ($5,000) but less than fifteen thousand dollars ($15,000), three written quotes;
(3)	For amounts of fifteen thousand dollars ($15,000) or more but less than forty thousand dollars ($40,000), a request for proposal process; and
(4)	For amounts of forty thousand dollars ($40,000) or more, request for proposal process and advertising in a newspaper with statewide circulation.
		(h)  The North Carolina Partnership for Children, Inc., and all local partnerships shall, in the aggregate, be required to match no less than fifty percent (50%) of the total amount budgeted for the Program in each fiscal year of the biennium as follows:  contributions of cash equal to at least ten percent (10%) and in-kind donated resources equal to no more than ten percent (10%) for a total match requirement of twenty percent (20%) for each fiscal year.  Only in-kind contributions that are quantifiable, as determined in the Smart Start Performance Audit, shall be applied to the in-kind match requirement.  Expenses, including both those paid by cash and in-kind contributions, incurred by other participating non-State entities contracting with the North Carolina Partnership for Children or the local partnerships, also may be considered resources available to meet the required private match.  In order to qualify to meet the required private match, the expenses shall:
(1)	Be verifiable from the contractor's records;
(2)	If in-kind, be quantifiable in accordance with generally accepted accounting principles for nonprofit organizations;
(3)	Not include expenses funded by State funds;
(4)	Be supplemental to and not supplant preexisting resources for related program activities;
(5)	Be incurred as a direct result of the Early Childhood Initiatives Program and be necessary and reasonable for the proper and efficient accomplishment of the Program's objectives;
(6)	Be otherwise allowable under federal or State law;
(7)	Be required and described in the contractual agreements approved by the North Carolina Partnership for Children or the local partnership; and
(8)	Be reported to the North Carolina Partnership for Children or the local partnership by the contractor in the same manner as reimbursable expenses.
The North Carolina Partnership shall establish uniform guidelines and reporting format for local partnerships to document the qualifying expenses occurring at the contractor level.  Local partnerships shall monitor qualifying expenses to ensure they have occurred and meet the requirements prescribed in this subsection.
Failure to obtain a twenty percent (20%) match by May 1 of each fiscal year shall result in a dollar-for-dollar reduction in the appropriation for the Program for the next fiscal year.  The North Carolina Partnership for Children, Inc., shall be responsible for compiling information on the private cash and in-kind contributions into a report that is submitted to the Joint Legislative Commission on Governmental Operations pursuant to G.S. 143B-168.13(5) in a format that allows verification by the Department of Revenue.  The same match requirements shall apply to any expansion funds appropriated by the General Assembly.
(i)	Counties participating in the Program may use the county's allocation of State and federal child care funds to subsidize child care according to the county's Early Childhood Education and Development Initiatives Plan as approved by the North Carolina Partnership for Children, Inc.  The use of federal funds shall be consistent with the appropriate federal regulations.  Child care providers shall, at a minimum, comply with the applicable requirements for State licensure or registration pursuant to Article 7 of Chapter 110 of the General Statutes, with other applicable requirements of State law or rule, including rules adopted for nonregistered child care by the Social Services Commission, and with applicable federal regulations.
		(k)  The Frank Porter Graham Child Development Center shall continue its evaluation of the Program until June 30, 1999. After this date, the North Carolina Partnership shall open the process for individuals and entities interested in bidding for a contract to evaluate the Program.  The Frank Porter Graham Child Development Center may submit a bid.  Notwithstanding any policy to the contrary, the Frank Porter Graham Child Development Center or any subsequent individual or entity that operates under contract to evaluate the Program may use any method legally available to it to track children who are participating or who have participated in any Early Childhood Education and Development Initiative in order to carry out its ongoing evaluation of the Program.
																																																					(o) The North Carolina Partnership shall not apply the subsidy requirement in G.S. 143B-168.15(g) to the 45 counties eligible to receive planning funds in 1997-98.
	(p) There is allocated from the funds appropriated to the Department of Health and Human Services, Division of Child Development,  in this act, the sum of twenty-two million two hundred fifty-eight thousand six hundred twenty-five dollars ($22,258,625) for the 1997-98 fiscal year pursuant to subdivisions (1) through (6) of this subsection.
There is transferred from the funds appropriated to the Department of Health and Human Services, Division of Child Development, for the 1998-99 fiscal year to the Office of State Budget and Management the sum of ninety-eight million one hundred fifty-five thousand eight hundred twenty-eight dollars ($98,155,828) for the North Carolina Partnership for Children, Inc. Of these funds, the sum of twenty-five million two hundred ninety-eight thousand eight hundred thirty-eight dollars ($25,298,838) for the 1998-99 fiscal year shall be used as follows:
(1)	Of the 35 partnerships existing as of the 1996-97 fiscal year, funds for direct services shall be increased a total of $15,215,912 for the 1997-98 fiscal year to the Department and $15,215,912 for the 1998-99 fiscal year to the North Carolina Partnership.  The North Carolina Partnership for Children, Inc., may use up to $1,500,000 of these funds in the 1997-98 fiscal year as planning funds for the remaining 45 unfunded counties.
(2)	For the 12 new partnerships planned for as of the 1996-97 fiscal year, funds shall be $5,252,713 for the 1997-98 fiscal year for the Department and $9,142,926 for the 1998-99 fiscal year for the North Carolina Partnership to administer and deliver direct services.
(3)	The North Carolina Partnership for Children, Inc., shall receive an additional $700,000 in the 1997-98 fiscal year and an additional $700,000 in the 1998-99 fiscal year for the State-level administration of the Program.
(4)	The Department of Health and Human Services shall receive $750,000 in nonrecurring funds in the 1997-98 fiscal year to conduct a statewide needs and resources assessment.
(5)	The Department of Health and Human Services shall receive $100,000 in nonrecurring funds in the 1997-98 fiscal year to complete the automation of a database of all regulated child care programs.
(6)	The Department of Health and Human Services shall receive $240,000 in the 1997-98 fiscal year and the North Carolina Partnership shall receive $240,000 in the 1998-99 fiscal year for professional development programs.
In addition to these funds, the sum of twenty-five million eighty-six thousand three hundred twenty-nine dollars ($25,086,329) shall be used to administer and deliver the direct services in all 100 counties.  Of this amount, the North Carolina Partnership for Children, Inc., may use up to two million dollars ($2,000,000) for State level administration of the program.
(q)	Of the funds appropriated to the Department of Health and Human Services for the Program for the 1997-99 biennium, the Frank Porter Graham Child Development Center shall receive the sum of eight hundred fifty thousand dollars ($850,000) for the 1997-98 fiscal year and the sum of eight hundred fifty thousand dollars ($850,000) for the 1998-99 fiscal year.
(r)	Except for replacements of legislative members, the changes required of the membership of the North Carolina Partnership in G.S. 143B-168.12(a)(1) and the changes required of the membership of the local boards in G.S. 143B-168.12(a)(1) and G.S. 143B-168.14(a)(1), made in subsection (a) of this section, shall be effected as the current members' terms expire.  The legislative members of the North Carolina Partnership and of the local boards shall be replaced immediately by the appropriate appointing authority."
(c) The General Assembly finds that two important, recent studies of the Early Childhood Education and Development Initiatives Program have stressed that local partnerships should, generally, be regional rather than single-county, in order to ensure the greatest cost-efficiency and the greatest administrative efficiency.
Effective July 1, 1999, the North Carolina Partnership for Children, Inc., shall implement a plan to regionalize appropriate local partnerships across the State.
The North Carolina Partnership shall develop the plan to be implemented after careful consideration of the Coopers and Lybrand Smart Start Program Performance Audit Final Report, dated April, 1996, and the McGladrey and Pullen Study of Administrative Structure, dated June 24, 1998.
The North Carolina Partnership shall report this plan, together with the criteria it used and with a detailed cost/benefit analysis, to the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and to the Fiscal Research Division by March 15, 1999.

[SECTION 12.38 RESERVED]

SUBPART 8. YOUTH SERVICES
Requested by:   Representatives Gardner, Cansler, Clary
DYS TRAINING SCHOOLS EVALUATION
Section 12.39.  (a) Of the funds appropriated in this act to the Department of Health and Human Services, the sum of four hundred seventy-five thousand dollars ($475,000) shall be used to ensure that multidisciplinary diagnoses and evaluations, as provided for in G.S. 115C-113, are made on all students in training schools operated by the Division of Youth Services and that the requisite resources and services are provided for all DYS training school students who are identified as children with special needs. The Department shall use these funds to provide evaluations, resources, and services, but shall not reduce current DYS services.  Lapsed salary funds shall not be used to create new permanent positions.
(b) Within 30 days of adjournment sine die of the 1997 General Assembly, the Department shall report to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and the Fiscal Research Division the line items in the Department's budget from which funds allocated under this section will be taken.

[SECTIONS 12.40, 12.41 RESERVED]

SUBPART 9. HEALTH SERVICES
Requested by:   Representatives Gardner, Cansler, Clary
WIC PROGRAM FUNDS
Section 12.42.  Section 15.27 of S.L. 1997-443 reads as rewritten:
"Section 15.27.  Of the funds appropriated to the Department of Health and Human Services for the Women, Infants, and Children (WIC)	Program, the sum of one million two hundred eighty thousand dollars ($1,280,000) for the 1997-98 fiscal year and the sum of one million two hundred eighty thousand dollars ($1,280,000) for the 1998-99  fiscal year shall, if sufficient federal food funds are available, be used for the WIC Program as follows:
(1)	Not more than $500,000 in each fiscal year shall be used to establish new WIC Programs in Head Start or other private or public nonprofit agencies to serve additional mothers, infants, and children.  The Department shall utilize these funds for local program operations including staff to provide eligibility determination, nutrition education, and health care referrals.  In selecting the new WIC Programs, the Department shall consider accessibility to the target population including location and hours of operation.
(2)	Not more than $250,000 in each fiscal year shall be used to renovate facilities of existing programs where space constraints limit program expansion, and to fund rental costs in areas where accessible donated space is not available.  In selecting the facilities the Department shall consider accessibility to the target population including location and extended hours of operation.  In determining whether to fund rental of space, the Department shall ensure that options for using donated accessible space have been considered.  Not more than $75,000 of funds allocated under this subdivision for each fiscal year shall be used for rental of space.
(3)	Not more than $300,000 in each fiscal year shall be used to purchase physician-prescribed special formulas and nutritional supplements for infants, children, and women.
(4)	Not more than $180,000 in the 1998-99 fiscal year shall be used to provide the required State match to the WIC farmers' market project.
(5)	Not more than $50,000 in the 1998-99 fiscal year shall be used for the purpose of establishing and maintaining a Public Health Nutritionist Internship Program.
If sufficient federal food funds are not available then funds appropriated for the WIC Program under this section shall be used to supplement federal food funds and any balance in funds remaining after the supplemental use shall be used in accordance with subdivisions (1) through (5) of this section."

Requested by:   Representatives Gardner, Cansler, Clary
HEALTHY MOTHERS/HEALTHY CHILDREN PILOT PROGRAM
Section 12.43.  (a) The Department of Health and Human Services may initiate a Healthy Mothers/Healthy Children Grant Program in up to six local health departments.  The Department may consolidate federal Maternal and Child Health Block Grant funds and State funds appropriated for the Maternal Health, Women's Preventive Health, Child Health, Child Service Coordination and Immunization programs into a Healthy Mothers/Healthy Children Grant Program for each participating local health department.  Local health departments participating in the Healthy Mothers/Healthy Children Grant Program may use grant funds to do any of the following:
(1)	Improve the health status of women of childbearing age by expanding preventive health services and reducing and/or controlling health risk factors.
(2)	Reduce infant mortality and morbidity by preventing high-risk pregnancies, improving the health status of women before pregnancy, improving access to prenatal care, reducing prematurity, and improving survival rates of preterm and other high-risk infants.
(3)	Reduce mortality and morbidity among children and youth by reducing the incidence of communicable disease and other preventable conditions, the occurrence and severity of injuries, the incidence of genetic disorders, and the incidence of chronic illnesses and developmental disabilities.
(4)	Enhance the health and functional status of children and youth with chronic handicapping conditions by reducing the severity of the conditions through the provision of early identification, diagnosis, treatment, and care coordination services.
(b) The Department shall not include federal categorical funds, competitive special project funds, and funds for regionalized services in grant funds awarded to local health departments under the Healthy Mothers/Healthy Children Grant Program.
(c) The Department shall require participating local health departments to identify and report expenditures by program in order to monitor and track the use of Healthy Mothers/Healthy Children Grant Program funds to meet federal and State reporting requirements.  In addition, the Department shall require local health departments to report on the administrative, programmatic, and health outcome benefits which are realized by providing localities greater flexibility.
(d) The Department shall report to members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources on the implementation of the Healthy Mothers/Healthy Children Grant Program not later than April 1, 1999.

Requested by:   Representatives Gardner, Cansler, Clary
CHILD FATALITY TASK FORCE
Section 12.44.  (a) Subsections (b), (c), and (d) of Section 285 of Chapter 321 of the 1993 Session Laws are repealed.
(b) G.S. 143-573(c) reads as rewritten:
"(c)	All members of the Task Force are voting members. Vacancies in the appointed membership shall be filled by the appointing officer who made the initial appointment. Terms shall be two years.  The members shall elect a chair who shall preside for the duration of the chair's term as member.  In the event a vacancy occurs in the chair before the expiration of the chair's term, the members shall elect an acting chair to serve for the remainder of the unexpired term."
(c) G.S. 143-574 reads as rewritten:
"§ 143-574.  Task Force – duties.
The Task Force shall:
(1)	Undertake a statistical study of the incidence and causes of child deaths in this State and establish a profile of child deaths.  The study shall include (i) an analysis of all community and private and public agency involvement with the decedents and their families prior to death, and (ii) an analysis of child deaths by age, cause, and geographic distribution;
(2)	Develop a system for multidisciplinary review of child deaths.  In developing such a system, the Task Force shall study the operation of existing local teams.  The Task Force shall also consider the feasibility and desirability of local or regional review teams and, should it determine such teams to be feasible and desirable, develop guidelines for the operation of the teams.  The Task Force shall also examine the laws, rules, and policies relating to confidentiality of and access to information that affect those agencies with responsibilities for children, including State and local health, mental health, social services, education, and law enforcement agencies, to determine whether those laws, rules, and policies inappropriately impede the exchange of information necessary to protect children from preventable deaths, and, if so, recommend changes to them;
(3)	Receive and consider reports from the State Team; and
(4)	Perform any other studies, evaluations, or determinations the Task Force considers necessary to carry out its mandate."
(d) G.S. 143-577 reads as rewritten:
"§ 143-577.  Task Force – reports.
	The Task Force shall report annually to the Governor and General Assembly, within the first week of the convening or reconvening of the General Assembly.  The report shall contain at least a summary of the conclusions and recommendations for each of the Task Force's duties, as well as any other recommendations for changes to any law, rule, and policy that it has determined will promote the safety and well-being of children.  Any recommendations of changes to law, rule, or policy shall be accompanied by specific legislative or policy proposals and detailed fiscal notes setting forth the costs to the State.
		."

Requested by:   Representatives Gardner, Cansler, Clary
MATERNAL OUTREACH
Section 12.45.  (a) The Department of Health and Human Services shall ensure that local communities who receive State funds for intensive home visiting programs, including the Olds and Healthy Families America models, collect and report data to the Department which will allow a valid and reliable evaluation of the long-term effectiveness of this intervention in improving maternal and child outcomes.  The Department shall design a standard reporting system for local programs to use in supplying this data.  At a minimum, the data should provide information on the effect of prenatal and infancy home visits by nurses on all of the following:
(1)	Preterm delivery, low-birth weight, and infant morbidity/mortality.
(2)	Childhood injuries.
(3)	Childhood maltreatment.
(4)	Immunizations.
(5)	Mental development and behavioral problems.
The data shall also provide information on maternal life course, as measured by:
(6)	Subsequent pregnancy.
(7)	Educational achievement.
(8)	Labor force participation.
(9)	Use of public assistance programs.
(b) The Department shall report on its plans for developing and implementing a scientifically sound methodology for evaluating these programs by February 1, 1999, to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources and to the Fiscal Research Division. 

Requested by:   Representatives Gardner, Cansler, Clary
AIDS DRUG ASSISTANCE PROGRAM (ADAP)
Section 12.46A.  (a)	The Department of Health and Human Services shall develop and implement a cost-containment plan for the purpose of serving additional clients of the HIV Medications Program.  In developing the Plan, the Department shall do the following:
(1)	Explore the feasibility of obtaining a Medicaid expansion waiver;
(2)	Estimate the potential cost savings to the State of participating in the 340B Drug Pricing Program by studying various ways of adhering to program requirements while also realizing cost savings;
(3)	Examine, for possible adoption, ADAP and other similar program cost-saving strategies in other states, including, but not limited to, restrictive formularies, prescription limitations, insurance continuity, and insurance purchasing programs, and biannual or quarterly reauthorizations; and
(4)	Conduct other activities that will assist in the development of a viable plan.
(b) The Department shall implement cost-containment programs or mechanisms, other than pharmaceutical rebates, by October 1, 1998, and shall report to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources
not later than December 15, 1998, on the following:
(1)	The realized and projected savings;
(2)	Findings from subdivisions (1), (2), and (3) of subsection (a) of this section; and
(3)	Recommendations for legislative action.
(c) Savings realized through cost-containment measures shall be used to serve additional ADAP participants in fiscal year 1998-99.  Funds not expended for authorized program costs shall revert to the General Fund.
(d) The Department shall also develop a comprehensive information system on AIDS/HIV clients receiving services from the State.  This system shall include information on program usage patterns of ADAP participants, including, but not limited to, frequency of prescription purchases, and types of medications prescribed.  The Department shall also develop a plan for monitoring patient compliance with physician treatment recommendations.  In developing the plan, the Department shall identify ways of obtaining information without interfering with physician-patient confidentiality.  The Department shall report on this plan to the members of the House of Representatives Appropriations Subcommittee on Human Resources and the Senate Appropriations Committee on Human Resources not later than December 15, 1998.

[SECTIONS 12.47, 12.48, 12.49 RESERVED]

Requested by:   Representatives Gardner, Cansler, Clary
HIV MEDICATIONS DISPENSED BY CERTAIN LOCAL HEALTH DEPARTMENT PHARMACIES
Section 12.50. A local health department or county agency providing public health services that has a full-time, on-site pharmacy may contract with the Department of Health and Human Services to be the sole dispenser of medications to participants in the HIV Medication Program in the county or counties served by the local health department or county agency providing public health services.

Requested by:   Representatives Gardner, Cansler, Clary
LOCAL HEALTH DEPARTMENTS PROVIDE HIV/STD PREVENTION SERVICES
Section 12.51.  The Department of Health and Human Services, Division of Epidemiology, shall allocate HIV/STD Prevention Services Program funds for community-based organizations to local health departments.  Local health departments may contract with community-based organizations, including HIV Care Consortia and Community Planning Regional Organizations, to ensure that services are provided to high-risk individuals.  Contracts between local health departments and community-based organizations shall provide for the local health director or his or her designee to serve as a liaison to the organization's board of directors.

Requested by:   Representatives Gardner, Cansler, Clary
IMPROVE IMMUNIZATION PROGRAM ACCOUNTABILITY
Section 12.52. (a) The Department of Health and Human Services, Division of Women's and Children's Health, shall develop and implement strategies to improve accountability in the Immunization Program.  The Division shall examine and report on the following options for improving Program accountability:
(1)	Enhancing the current doses administered reporting system;
(2)	Converting to a vaccine replacement system;
(3)	Collecting child-specific immunization and Program eligibility information;
(4)	Expediting implementation of the North Carolina Immunization Registry;
(5)	Conducting site visits to twenty percent (20%) of private providers annually;
(6)	Sanctioning providers who fail to comply with Program requirements;
(7)	Identifying means to verify and reduce wastage; and
(8)	Other options that will improve Program accountability.
The Department shall submit its report to the members of the House of Representatives Appropriations Subcommittee on Human Resources and the Senate Appropriations Committee on Human Resources within one week of the convening of the 1999 General Assembly.  This report shall include the Division's recommendations for improving Program accountability and shall identify the resources required to implement these recommendations and to meet State and federal program reporting requirements.
(b) The Department of Health and Human Services shall study the feasibility of changing the vaccine distribution system such that private providers obtain vaccines from the local health department.  The study shall include the method that would be used to enable local health departments to obtain sufficient quantities of vaccine, and cost-savings that could be realized in changing from a centralized vaccine distributions system to a decentralized system.  The Department shall report its findings and recommendations to the members of the House of Representatives Appropriations Subcommittee on Human Resources and the Senate Appropriations Committee on Human Resources within one week of the convening of the 1999 General Assembly.

Requested by:   Representative Aldridge
NO APPROPRIATIONS FOR ADOLESCENT PARENTING PROGRAM
Section 12.53.  Appropriations made in this act and in S.L. 1997-443 for the Adolescent Parenting Program for the 1998-99 fiscal year are reduced to zero.

Requested by:   Representative Berry
DIVISION OF VOCATIONAL REHABILITATION CAPITAL FUNDS
Section 12.54.  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of one million dollars ($1,000,000) for the 1998-99 fiscal year shall be used for capital expenditures for community rehabilitation programs.  The funds shall be distributed through the Division of Vocational Rehabilitation to community rehabilitation programs and Industries of the Blind based on a needs list provided to the Division by the North Carolina Association of Rehabilitation Facilities.

PART XIII. DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES

[SECTION 13.1 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
SPECIAL RESERVE FUNDS FOR CERTAIN AGRICULTURAL CENTERS
Section 13.2.  Article 1 of Chapter 106 of the General Statutes is amended by adding a new section to read:
"§ 106-6.2.  Create special revenue funds for certain agricultural centers.
(a)	The Eastern North Carolina Agricultural Center Fund is created within the Department of Agriculture and Consumer Services as a special revenue fund.  This Fund shall consist of receipts from the sale of naming rights to any facility located at the Eastern North Carolina Agricultural Center at Williamston, investments earnings on these moneys, and any gifts, bequests, or grants from any source for the benefit of the Eastern North Carolina Agricultural Center.  All interest that accrues to this Fund shall be credited to this Fund. Any balance remaining in this Fund at the end of any fiscal year shall not revert.  The Department may use this Fund only to promote, improve, repair, maintain, or operate the Eastern North Carolina Agricultural Center.
(b)	The Southeastern North Carolina Agricultural Center Fund is created within the Department of Agriculture and Consumer Services as a special revenue fund.  This Fund shall consist of receipts from the sale of naming rights to any facility located at the Southeastern North Carolina Agricultural Center at Lumberton, investments earnings on these moneys, and any gifts, bequests, or grants from any source for the benefit of the Southeastern North Carolina Agricultural Center.  All interest that accrues to this Fund shall be credited to this Fund. Any balance remaining in this Fund at the end of any fiscal year shall not revert.  The Department may use this Fund only to promote, improve, repair, maintain, or operate the Southeastern North Carolina Agricultural Center."

Requested by:   Representatives Mitchell, Baker, Carpenter
UMSTEAD ACT EXEMPTION FOR DEPARTMENT AGRICULTURAL CENTERS AND LIVESTOCK FACILITIES
Section 13.3.  G.S. 66-58(b) is amended by inserting the following subdivision:
"(13d)	Agricultural centers or livestock facilities operated by the Department of Agriculture and Consumer Services."

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall
GUIDELINES FOR GRANTS FOR LOCAL AGRICULTURAL FAIRS
Section 13.4.   The Department of Agriculture and Consumer Services shall adopt guidelines for the disbursement of funds appropriated to the Department for the 1998-99 fiscal year for grants for local agricultural fairs.

Requested by:   Representatives Mitchell, Baker, Carpenter
ANIMAL WASTE MANAGEMENT EQUIPMENT GRANTS FOR FAMILY-OWNED DAIRIES
Section 13.5.  (a)	The funds appropriated in this act to the Department of Agriculture and Consumer Services for the 1998-99 fiscal year for animal waste management equipment grants to farmers of family-owned dairies shall be used for the purchase of equipment that is a component of an animal waste management system and that is used solely for the purpose of transporting, storing, or distributing animal waste.  This equipment shall be limited to: pumps, spraying equipment, scrape blades, box blades, storage equipment, and any transport equipment, including tanks, spreaders, and applicators.
(b)	No funds allocated under this section shall be used to enlarge anaerobic lagoons or for the maintenance of anaerobic lagoons.
(c) The Department of Agriculture and Consumer Services shall adopt rules that establish guidelines for disbursing the funds in a fair and equitable manner and any other rules needed to implement this section.  Each recipient of grant funds under this section shall enter into a contract with the Department that contains provisions of the loan that are consistent with these guidelines.  This contract shall provide for the enforcement of the terms of the contract.  This contract shall provide that the recipient continue to operate at the current level of dairy production for a period of at least five years.  This contract shall provide that if the recipient reduces the number of dairy cows or ceases operation in fewer than five years, the recipient shall repay the Department of Agriculture and Consumer Services a prorated share of the grant funds received by that recipient.
(d) Only dairies with fewer than 300 dairy cows that were in operation prior to January 1, 1998, are eligible for grants under this section. 

Requested by:  Representatives Mitchell, Baker, Carpenter, H. Hunter
ASSISTANCE FOR SMALL, FAMILY FARMS
Section 13.6.  Of the funds appropriated in this act to the Department of Agriculture and Consumer Services for the 1998-99 fiscal year, the sum of fifty thousand dollars ($50,000) shall be used to provide assistance to farmers who operate small, family farms.  By March 1, 1999, the Department shall report to the Joint Legislative Commission on Governmental Operations, the Appropriations Subcommittees on Natural and Economic Resources in both the House of Representatives and the Senate, and the Fiscal Research Division on the use of these funds, including the number and geographic location of the small, family farms assisted through this allocation of funds, the type of assistance provided, and any other information or indicators that demonstrate the overall impact of this allocation of funds.

Requested by:  Representatives Mitchell, Baker, Carpenter, H. Hunter
GRANTS FOR LOCAL FARMERS' MARKETS
Section 13.7.   For the funds appropriated in this act to the Department of Agriculture and Consumer Services for the 1998-99 fiscal year for grants to local farmers' markets for the purpose of promoting or selling farm products produced by local small, family-owned farms, the Department shall establish guidelines and procedures for disbursing the grants in a fair and equitable manner.  A grant to a local farmers' market under this section shall not exceed the sum of ten thousand dollars ($10,000).  The Department shall adopt any rules needed to implement this section.

Requested by:  Representatives Mitchell, Baker, Carpenter, H. Hunter
LOAN PROGRAM FOR SMALL, FAMILY-OWNED FARMS
Section 13.8.  (a)	The funds appropriated in this act to the North Carolina Rural Rehabilitation Corporation within the  Department of Agriculture and Consumer Services for the 1998-99 fiscal year shall be used to make loans to those farmers of small, family-owned farms having financial difficulty as shown by their inability to obtain affordable conventional loans from other sources. 
(b)	Priority for loans from the funds allocated under this section shall be extended for the following small, family-owned farms:  
(1)	Dairy farms with fewer than 300 dairy cows.
(2)	Turkey farms that have lost contracts with integrators for reasons not related to having violated environmental laws or rules.
(3)	Swine farms of fewer than 500 swine at any time.
(4)	Peach or apple farms that have lost fifty percent (50%) or more of their fruit crop due to frost or freeze damage.
(c)	The term of the loans under this section shall not exceed 20 years.   These loans shall be provided in accordance with the lending requirements of the North Carolina Rural Rehabilitation Corporation pursuant to Article 2 of Chapter 137 of the General Statutes.
(d)	The Department of Agriculture and Consumer Services shall adopt rules to implement this section.

Requested by:   Representative Tolson
LEWIS STEAM POWERED SAWMILL RELOCATION
Section 13.9.  The Department of Agriculture and Consumer Services may use up to two hundred twenty-five thousand dollars ($225,000) in available funds for the State fair for the 1998-99 fiscal year for the expenses of relocating the Lewis Steam Powered Sawmill from Pitt County to the State Fairgrounds in Raleigh, restoring and rendering the sawmill operational at its new site, and operating the sawmill.

Requested by:   Representative Mitchell
POULTRY/RATITE DEALERS REGISTRATION
Section 13.10.  (a)	G.S. 106-540(3) reads as rewritten:
"(3)	Regulate hatching egg dealers, chick dealers, poult dealers, poultry dealers, ratite dealers,  and jobbers."
(b)	G.S. 106-541 reads as rewritten:
"§ 106-541. Definitions.
For the purpose of this Article, the following definitions apply:
(1)	'Hatchery' means any establishment that operates hatchery equipment for the  production of baby chicks or poults.
(2)	'Hatching egg dealer, chick dealer, or jobber' means any person, firm, or corporation that buys hatching eggs, baby chicks, or turkey poults and sells or offers them for sale.
(3)	'Live poultry or ratite dealer' means a person who sells or offers for sale to the general public live poultry or ratites.  Live poultry or ratite dealer does not include persons who sell on their own premises live poultry or ratites that were raised on the same premises.
(4)	'Mixed chicks' or 'assorted chicks' means chicks produced from eggs from purebred females of a distinct breed mated to a purebred male of a distinct breed.
(5)	'Poultry' means live chickens, doves, ducks, geese, grouse, guinea fowl, partridges, pea fowl, pheasants, pigeons, quail, swans, or turkeys other than chicks or poults.
(6)	'Ratite' has the same meaning as in G.S. 106-549.15."
(c)	G.S. 106-542 is amended by adding the following new subsections:
"( b1)	It shall be unlawful for any person, firm, or corporation to operate as a live poultry or ratite dealer without first registering with the Department of Agriculture and Consumer Services.
(b2)	It shall be unlawful for a specialty market operator, as defined in G.S. 66-250, to knowingly and willfully permit an unregistered poultry or ratite dealer to operate on the premises of the specialty market, as defined in G.S. 66-250, more than 10 days after being notified in writing by the Department of Agriculture and Consumer Services that the dealer is not registered."
(d)	G.S. 106-547 reads as rewritten:
"§ 106-547.  Records to be kept.
Every hatchery, hatching egg dealer, chick dealer, poultry dealer, ratite dealer, or jobber shall keep such records of operation as the regulations of the Department of Agriculture and Consumer Services may require for the proper inspection of said hatchery, dealer, or jobber."
(e)  The Department of Agriculture and Consumer Services shall use available funds for the 1998-99 fiscal year for the enforcement of registration requirements for poultry and ratite dealers as provided for in this section.
(f) Sections (a) through (d) of this section become effective December 1, 1998.

Requested by:  Representative Mitchell
TRANSPORTATION AGRICULTURAL PRODUCTS EXEMPTION
Section 13.11.  The definitions set out in 49 Code of Federal Regulations § 171.8 apply to this section.  The citations to the Code of Federal Regulations (CFR) refer to the 1 October 1997 Edition of the CFR.  The transportation of an agricultural product, other than a Class 2 material, over local roads between fields of the same farm by a farmer operating as an intrastate private motor carrier is exempt from the requirements of Parts 171 through 180 of 49 CFR as provided in 49 CFR § 173.5.  The Department of Transportation may adopt temporary rules to implement this section.

PART XIV.  DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

[SECTION 14.1 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
MARINE FISHERIES APPEALS PANEL/ROTATE MEETING LOCATIONS
Section 14.2.  Section 3(d) of Chapter 576 of the 1993 Session Laws, Regular Session 1994, as amended by Section 1 of Chapter 770 of the 1993 Session Laws, Regular Session 1994, reads as rewritten:
"(d)	During the moratorium, there shall be an Appeals Panel to consider license applications for new licenses.
(1)	The Appeals Panel shall consist of the Fisheries Director, the Chairman of the Marine Fisheries Commission, and one other person selected by the Cochairs of the Joint Legislative Commission on Seafood and Aquaculture to review hardship or emergency license cases.
(2)	The Marine Fisheries Commission shall adopt temporary rules to govern the operation of the Appeals Panel.  The Appeals Panel is exempt from the provisions of Article 3 of Chapter 150B of the General Statutes.  Decisions of the Appeals Panel shall be subject to judicial review under the provisions of Article 4 of Chapter 150B of the General Statutes.
(3)	The Appeals Panel may grant a license if it finds that the denial of the license application would create an emergency or hardship on the individual or the State.  In no event shall the Appeals Panel grant a license when the total number of licenses in the specific category would exceed the number of licenses in effect on June 30, 1994.
(4)	The Appeals Panel may grant an emergency temporary license due to death, illness, or incapacity, for a period not to exceed 30 days.  Emergency temporary licenses shall be limited to vessel crab licenses authorized under G.S. 113-153.1(d).
(5)	Beginning in July 1998, the Appeals Panel shall rotate the location of its meetings among the three districts of the State in the following order:   Northeastern district, Central district, Southern district, Central district, Northeastern district, Central district, Southern district.  The order of rotation is arranged so that the meeting location for every other meeting is in the Central district of the State. The meeting location for July 1998 shall be in the Northeastern district of the State and the rotation of the meeting locations shall continue as provided by this subdivision.
		If an applicant who is appealing a licensing decision in accordance with this section requests in writing that the Appeals Panel schedule the person's hearing when it meets in that person's home district, the Appeals Panel shall calendar that person's hearing for his or her home district as requested."

Requested by:   Representatives Mitchell, Baker, Carpenter
FISHERY MANAGEMENT PLANS/REGIONAL ADVISORY COMMITTEE
Section 14.3.  G.S. 113-182.1(c) reads as rewritten:
"(c)	The Chair of the Marine Fisheries Commission shall appoint a fishery management plan advisory committee for each Fishery Management Plan that is being developed.  Each fishery management plan advisory committee shall be composed of commercial fishermen, recreational fishermen, and scientists, all with expertise in the fishery for which the Fishery Management Plan is being developed.  The fishery management plan advisory committees shall assist the Department and the Marine Fisheries Commission in the development of all aspects of the Fishery Management Plans, including the development of preservation management measures.  The Department shall keep the regional advisory committees established under G.S. 143B-289.57 advised as the Fishery Management Plans are developed and consider the comments by the committees on the Fishery Management Plans."

Requested by:   Representatives Preston, Mitchell, Baker, Carpenter, Redwine
UP ADMINISTRATIVE CAP FOR FISHERY RESOURCE GRANT PROGRAM
Section 14.3B.  Section 5 of Chapter 633 of the 1995 Session Laws, Regular Session 1996, reads as rewritten:
"Sec. 5.  Funds appropriated to the Department of Environment and Natural Resources for the Fishery Resource Grant Program under Section 2 of Chapter 324 of the 1994 Session Laws shall be transferred to the Board of Governors of The University of North Carolina for the Sea Grant College Program to administer the Fishery Resource Grant Program.  The Sea Grant College Program may use up to seventy-five thousand dollars ($75,000) for administrative expenses relating to the Fishery Resource Grant Program.¨"

Requested by:   Representatives Mitchell, Baker, Carpenter
GRASSROOTS SCIENCE PROGRAM
Section 14.4.  Section 15.1 of S.L. 1997-443 reads as rewritten:
"Section 15.1.  Funds appropriated in this act for the Grassroots Science Program shall be allocated as grants-in-aid as follows:1997-98	1998-99

Iredell County Children's Museum	$56,500	$50,000
Museum of Coastal Carolina	$66,750	$50,000
Rocky Mount Children's Museum	$109,750	$50,000
Imagination Station	$111,000	$50,000
Western North Carolina Nature Center	$130,750	$50,000
The Health Adventure Museum
  of Pack Place Education,
  Arts and Science Center, Inc.	$162,500	$35,000
Cape Fear Museum	$188,500	$50,000
Catawba Science Center	$190,500	$50,000
Sci Works Science Center and
   Environmental Park of 
   Forsyth County	$231,000	$50,000
Natural Science 
   Center of Greensboro	$333,000	$50,000
Schiele Museum of Natural History	$383,750	$50,000
North Carolina Museum of
  Life and Science	$398,750	$50,000
Discovery Place	$887,250	$50,000

                           TOTAL	$3,250,000	$635,000Discovery Place may use up to one hundred thousand dollars ($100,000) of the funds allocated to it in the 1997-98 fiscal year to study the feasibility of an expansion of Discovery Place."

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall
ENVIRONMENTAL EDUCATION GRANTS
Section 14.5.  (a)	Of the two hundred thousand dollars ($200,000) appropriated in this act to the Department of Environment and Natural Resources for the 1998-99 fiscal year for environmental education grants, up to fifty thousand dollars ($50,000) may be used by the Department for the 1998-99 fiscal year for the costs of administering the environmental education grants.  The remainder of these funds shall be used to provide grants to promote environmental education throughout the State.  Grants under this section may be awarded to:
(1)	Schools, community organizations, and environmental education centers for the development of environmental education library collections; or
(2)	School groups for field trips to environmental education centers across the State, provided the activities of the field trip are correlated with the Department of Public Instruction's curriculum objectives.
(b)	The Department shall report to the Joint Legislative Commission on Governmental Operations, the Environmental Review Commission, and the Fiscal Research Division by January 1, 1999, and again by July 1, 1999, on the grant program.  The report shall include a list of amounts awarded and project descriptions for each grant recipient.

Requested by:   Representatives Mitchell, Baker, Carpenter
PARKS AND RECREATION/NATURAL HERITAGE TRUST FUNDS REPORTING REQUIREMENTS
Section 14.6.  (a)	G.S. 113-44.15(c) reads as rewritten:
"(c)	The North Carolina Parks and Recreation Authority shall report no later than October 1 of each year to the Joint Legislative Commission on Governmental Operations, the House and Senate Appropriations Subcommittees on Natural and Economic Resources, the Fiscal Research Division, and the Environmental Review Commission on allocations from the Trust Fund from the prior fiscal year.  The Authority also shall provide a progress report no later than March 15 of each year to the same recipients on the activities of and the expenditures from the Trust Fund for the current fiscal year."
(b)	G.S. 113-77.9(e) reads as rewritten:
"(e)	The Secretary shall maintain and revise twice each year a list of acquisitions made pursuant to this Article. The list shall include the acreage of each tract, the county in which the tract is located, the amount paid from the Fund to acquire the tract, and the State department or division responsible for managing the tract. The Secretary shall furnish a copy of the list to each Trustee, the Joint Legislative Commission on Governmental Operations, the House and Senate Appropriations Subcommittees on Natural and Economic Resources, the Fiscal Research Division, and the Environmental Review Commission within 30 days after each revision."

Requested by:   Representatives Mitchell, Baker, Carpenter 
NEUSE AND TAR-PAMLICO RIVER BASIN ASSISTANCE
Section 14.6B.  The Department of Environment and Natural Resources shall provide progress reports on an initiative by the Division of Soil and Water Conservation to assist local soil and water conservation districts in the Neuse and Tar-Pamlico River Basins in targeting and tracking nutrient reduction efforts of agriculture operations, as well as evaluating the cost-effectiveness of best management practices.  The Department shall report on the activities and accomplishments of this initiative by January 15 and April 15, 1999, to the House and Senate Appropriations Subcommittees on Natural and Economic Resources and the Fiscal Research Division.

[SECTIONS 14.7, 14.8 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
EXTEND AND EXPAND ENVIRONMENTAL HEALTH PROGRAMS STUDY
Section 14.9.  (a)	Section 11A.127 of S.L. 1997-443 reads as rewritten:
"Section 11A.127.  Pending action by the General Assembly on the recommendations of the Environmental Review Commission resulting from the study to be undertaken by the Environmental Review Commission as provided in this Part, on-site wastewater functions, public drinking water programs, and environmental health programs shall remain in the Department of Environment and Natural Resources, the Division of Environmental Health, shall remain intact in the Department of Environment and Natural Resources, and the Department of Environment and Natural Resources shall not consolidate on-site wastewater functions or drinking water programs in the Division of Water Quality."
(b)	Section 11A.128 of S.L. 1997-443 reads as rewritten:
"Section 11A.128.  The Environmental Review Commission shall study the following issues and report its findings to the 1999 General Assembly, along with any legislation it proposes to address these issues:
(1)	The appropriate roles and financing of local and state agencies in reviewing, permitting, inspecting, and monitoring private wells, community wells, municipal wells, and municipal surface water supplies;
(2)	The appropriate roles and financing of local and State agencies in reviewing, permitting, inspecting, monitoring, and maintaining septic tanks, package wastewater treatment plants, municipal wastewater treatment plants, industrial treatment plants, and animal waste operations;
(3)	The appropriate roles and financing of local and State agencies in administering the various environmental health programs;
(4)	The integration of State's review of the financial integrity of applicants for drinking water and wastewater discharge permits;
(5)	Policies to monitor the quality and prevent and reduce pollution of groundwaters;
(6)	Consistent State policies for cleaning up contaminated groundwater and soils;
(7)	Coordination of adoption and development of policies by the Coastal Resources Commission, Environmental Management Commission, Commission on Health Services, Marine Fisheries Commission, and other commissions having roles in water quality or wastewater issues;
(8)	Policies to monitor the quality and prevent and reduce pollution of surface waters;
(9)	Organization of the State's water planning agencies;
(10)	Technical and financial assistance to business, industry, local governments, and citizens;
(11)	Policies to encourage water conservation;
(12)	Policies to encourage regional water supply and wastewater treatment planning; 
(13)	The role of the North Carolina Cooperative Extension Services, North Carolina Department of Agriculture, and the North Carolina Department of Transportation in the protection of water supplies; and
(14)	The organization, functions, powers, and duties of the various boards, commissions, and councils having jurisdiction over environmental, public health, and natural resources programs, including whether those functions, powers, and duties should be consolidated in a single commission."
(c)	Section 11A.129 of S.L. 1997-443 reads as rewritten:
"Section 11A.129.  The Secretary of Health and Human Services may reorganize the Department of Health and Human Services in accordance with G.S. 143B-10 and shall report as required by that section.  In addition, the Department of Health and Human Services shall do the following:
(1)	Report to the Joint Legislative Commission on Governmental Operations by December 31, 1997, on the Department's progress in incorporating health functions and agencies into the Department;
(2)	Report to the General Assembly by 1 February 1999 on additional changes, including proposed legislation necessary to effectuate the purposes of this Part including the findings of the Environmental Review Commission's study;
(3)	Report to the Joint Legislative Commission on Governmental Operations by 1 February 1999 on any proposed changes in the Department's structure of boards and commissions not already implemented as a result of the Environmental Review Commission's study or necessary to effectuate the purposes of this Part and to deliver services more efficiently; and
(4)	Report to the General Assembly by February 1, 1999, on the Department's progress in adopting any rule changes necessary to effectuate the purposes of this Part and any proposed legislation necessary to change the structure of any boards and commissions as reported to the Joint Legislative Commission on Governmental Operations."

Requested by:  Representative Baker
CREATE NEW CLASSIFICATION OF ABANDONED WELLS
Section 14.9B.  G.S. 87-88(k) is amended by adding a new subdivision to read:
"(3)	Abandonment of Water Supply Wells for Other Use:  Any water supply well that is removed from service as a potable water supply source may be used for other purposes, including, but not limited to, irrigation, commercial use, or industrial use, and such well is not subject to either subdivision (1) or (2) of this subsection during its use for other purposes."

Requested by:   Representative Culp
RANDLEMAN DAM FUNDS DO NOT REVERT
Section 14.9C.  Section 8(c) of Chapter 777 of the 1993 Session Laws, as rewritten by Section 26.2 of Chapter 507 of the 1995 Session Laws and Section 15.47(a) of S.L. 1997-443, reads as rewritten:
"(c)	All funds appropriated in Chapter 769 of the 1993 Session Laws for the construction of Randleman Dam shall revert to the General Fund on October 1, 2000, if construction has not begun before that date."

Requested by:   Representative McComas
STUDY FEASIBILITY OF RELOCATING CHANNEL OF MASON'S INLET
Section 14.9D.  The Division of Coastal Management and the Division of Water Resources of the Department of Environment and Natural Resources jointly shall study the feasibility of relocating the channel of Mason's Inlet to an alignment that is protective of the north end of the town of Wrightsville Beach against the forces of erosion threatening property located at or adjacent to the inlet and that does not create a threat to the houses located on the south end of Figure Eight Island.  The study shall identify the time within which the relocation must be achieved to bring meaningful relief to the threatened property and what permit requirements apply and shall establish a time schedule for any recommended relocation.  The study shall include local participation in the inlet channel relocation project and acquisition of property.  The study shall presume that no State funds will be available for the inlet channel relocation project.  By October 15, 1998, the Department shall complete a final report of this study, including its findings and recommendations, and shall present this report at the next meeting of the Joint Legislative Commission on Governmental Operations.

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall
CLEAN WATER MANAGEMENT TRUST FUND/WATER QUALITY MONITORING
Section 14.9E.  For the 1998-99 fiscal year, of the funds reserved under G.S. 143-15.3B to the Clean Water Management Trust Fund, the State Controller shall transfer the sum of one million dollars ($1,000,000) to the Department of Environment and Natural Resources to expand ambient water quality monitoring efforts across the State and to increase the monitoring of flow and nutrient data in the coastal river basins through the use of automated monitors.  

Requested by:  Representatives Mitchell, Baker, Carpenter
CLEAN WATER MANAGEMENT TRUST FUND/UPPER NEUSE RIVER BASIN WATERSHED MANAGEMENT PLAN
Section 14.9F.  For the 1998-99 fiscal year, of the funds reserved under G.S. 143-15.3B to the Clean Water Management Trust Fund, the State Controller shall transfer the sum of three hundred thousand dollars ($300,000) to the Department of Environment and Natural Resources to be allocated to the Upper Neuse River Basin Association to develop a comprehensive and coordinated State-local watershed management plan for the Upper Neuse River Basin. The plan will serve as a model watershed management approach for river basins and subbasins in North Carolina.

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall
STATE MATCH FOR FEDERAL WATER SUPPLY AND WASTEWATER ASSISTANCE FUNDS
Section 14.9G.  For the 1998-99 fiscal year, of the funds reserved under G.S. 143-15.3B to the Clean Water Management Trust Fund, the State Controller shall transfer the sum of seven million four hundred thirty-two thousand four hundred twelve dollars ($7,432,412) to the Department of Environment and Natural Resources to be allocated as follows:  
(1)	The sum of $4,860,352 shall be used for the twenty percent (20%) State match required to receive federal wastewater assistance funds for revolving construction loans and other assistance as set forth in Chapter 159G of the General Statutes.  The funds allocated under this section shall be deposited in the State Revolving Water Fund account of the Clean Water Pollution Control Revolving Fund.
(2)	The sum of $2,571,880 shall be used for the twenty percent (20%) State match required to receive federal water supply assistance funds for revolving construction loans and other assistance as set forth in Title I, section 130 of the federal Safe Drinking Water Act Amendments of 1996.  The funds allocated under this section are to be deposited in a State fund that is available from year to year for the purpose of providing revolving loans and grants to local government units for water supply assistance.

Requested by:   Representatives Mitchell, Baker, Carpenter, Allred
NITROGEN LIMITS APPLY ONLY IF NITROGEN IS NUTRIENT OF CONCERN
Section 14.9H.  G.S. 143-215.1(c1) reads as rewritten:
"(c1)	Any person who is required to obtain an individual wastewater permit under this section for a facility discharging to the surface waters of the State that have been classified as nutrient sensitive waters (NSW) under rules adopted by the Commission where nitrogen is designated by the Commission as a nutrient of concern shall not discharge more than an average annual mass load of total nitrogen than would result from a discharge of the permitted flow, determined at the time the Commission makes a finding that those waters are experiencing or are subject to excessive growth of microscopic or macroscopic vegetation, having a total nitrogen concentration of five and one-half milligrams of nitrogen per liter (5.5 mg/l). The total nitrogen concentration of 5.5 mg/l for nutrient sensitive waters required by this subsection applies only to:
(1)	Facilities that were placed into operation prior to 1 July 1997 or for which an authorization to construct was issued prior to 1 July 1997 and that have a design capacity to discharge 500,000 gallons per day or more.
(2)	Facilities for which an authorization to construct is issued on or after 1 July 1997."

[SECTION 14.10 RESERVED]

Requested by:  Representatives Mitchell, Baker, Carpenter, Tolson
TAR-PAMLICO RIVER BASIN/RULE CORRECTION
Section 14.11.  The Environmental Management Commission may adopt a temporary rule pursuant to G.S. 150B-21.1 to provide that the boundaries of a WS-IV watershed protected area are measured by linear miles rather than "river miles" (as the river flows) if the Environmental Management Commission finds that the permanent rule being amended was approved by the Rules Review Commission in the 1997-98 fiscal year, the local governments affected by the rule inadvertently chose "river miles" rather than linear miles based on a misunderstanding of the different effects of the two measurement choices, and the public interest would be served by changing the method of measurement.  The temporary rule shall become effective at the same time as the rule it amends.

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall
PROGRESS REPORTS/ISOTOPE STUDY TO IDENTIFY SOURCES OF NITROGEN IN NEUSE AND CAPE FEAR RIVER BASINS
Section 14.11B.   The Primary Investigator or Researcher receiving funding from funds appropriated in this act to the Department of Environment and Natural Resources for the 1998-99 fiscal year for the isotope study to identify sources of nitrogen in the waters of the Neuse and Cape Fear River Basins shall satisfy the same reporting requirements as those set forth in Section 15.10 of S.L. 1997-443 for all the agriculture waste research reports.

[SECTION 14.12 RESERVED]

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall
PROGRESS REPORTS/ALTERNATIVE ANIMAL WASTE TECHNOLOGIES STUDY
Section 14.13.   The Primary Investigator or Researcher receiving funding from funds appropriated in this act to the Department of Environment and Natural Resources for the 1998-99 fiscal year for the study of alternative animal waste technologies shall satisfy the same reporting requirements as those set forth in Section 15.10 of S.L. 1997-443 for all the agriculture waste research reports.

[SECTIONS 14.14, 14.15, 14.16 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
CHATHAM FUNDS FOR LOW-LEVEL RADIOACTIVE WASTE SITING
Section 14.17.  Of the funds appropriated to the Department of Environment and Natural Resources in this act for the 1998-99 fiscal year, the sum of one hundred thousand dollars ($100,000) shall be used to reimburse Chatham County for the unreimbursed costs to Chatham County for providing technical assistance regarding the site selection of a low-level radioactive waste facility pursuant to Chapter 104G of the General Statutes and for other expenses incurred by Chatham County related to licensing and siting a low-level radioactive waste facility.

Requested by:   Representatives Mitchell, Baker, Carpenter
OREGON INLET STABILIZATION STUDY COMMISSION
Section 14.17B.  (a)	Section 32.22 of S.L. 1997-443 is repealed.
(b)	There is created the Oregon Inlet Stabilization Study Commission, an independent study commission, to continue the investigations undertaken by the Legislative Research Commission's Oregon Inlet Stabilization Study Committee during the 1997-98 interim as authorized by Section 32.22 of S.L. 1997-443.
The membership and chairmanship of the Study Commission shall be the same as that of the former Study Committee.  Vacancies shall be filled by the person who made the initial appointment.  Members of the Commission shall receive subsistence and travel allowances in accordance with G.S. 120-3.1 or G.S. 138-5, as appropriate.
The Study Commission may hold hearings to receive public input on the potential benefits and costs to the State of stabilizing the inlet and consider alternative procedures and actions for the stabilization of the inlet along with the environmental, economic, governmental, and cultural costs and benefits that may result from the stabilization.
In analyzing the benefits and costs of stabilizing the Oregon Inlet, the Study Commission may employ the expertise of the Departments of Environment and Natural Resources, Transportation, and Justice and may solicit the assistance of the United States Army Corps of Engineers and any other federal or State agencies that might assist the study.
Upon approval of the Legislative Services Commission, the Legislative Services Officer shall assign appropriate professional staff from the Legislative Services Office of the General Assembly to assist with the study.  The House of Representatives' and the Senate's Supervisors of Clerks shall assign clerical staff to the Commission, upon the direction of the Legislative Services Commission.  The Commission may meet in the Legislative Building or the Legislative Office Building upon the approval of the Legislative Services Commission.
The Study Commission may consider any of the following:
(1)	Continuation of the study beyond the current biennium until the issues surrounding the stabilization of the Oregon Inlet are finally resolved.
(2)	Additional detailed studies of the benefits and costs of stabilizing the Oregon Inlet including a long-range plan for the stabilization of the inlet and a projection for the State's future costs of participation in that stabilization.
(3)	Necessary statutory changes needed to implement any planned inlet stabilization.
(4)	Alternatives to the stabilization of the Oregon Inlet.
(5)	Funding sources for any stabilization projects or studies.
The Commission shall submit an interim or final report with any recommendations to the 1999 Session of the General Assembly prior to the adjournment of that session.  The Commission may meet during the 1999 Session of the General Assembly at any time when neither the House of Representatives nor the Senate are in session.
The Commission shall terminate upon the issuance of its final report.
(c) The Department of Environment and Natural Resources is designated as the lead State agency for monitoring, studying, analyzing, and making recommendations for the State on the stabilization of the Oregon Inlet.  The Department shall carry out all duties associated with this designation using funds already appropriated to the Department.
(d) G.S. 143B-279.2 reads as rewritten:
"§ 143B-279.2.  Department of Environment and Natural Resources – duties.
It shall be the duty of the Department:
(1)	To provide for the protection of the environment;
(1a)	To administer the State Outer Continental Shelf (OCS) Task Force and coordinate State participation activities in the federal outer continental shelf resource recovery programs as provided under the OCS Lands Act Amendments of 1978 (43 USC §§ 1801 et seq.) and the OCS Lands Act Amendments of 1986 (43 USC §§ 1331 et seq.).
(1b)	To provide for the protection of the environment and public health through the regulation of solid waste and hazardous waste management and the administration of environmental health programs.
(2)	Repealed by Session Laws 1997-443, s. 11A.5.
(2a)	To provide and keep a museum or collection of the natural history of the State and to maintain the North Carolina Biological Survey; and
(3)	To provide for the management of the State's natural resources.
(4)	To monitor, study, analyze, and make recommendations for the State on the stabilization of the Oregon Inlet."

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall, H. Hunter
STATEWIDE BEAVER DAMAGE CONTROL PROGRAM FUNDS
Section 14.18.  (a) Subsections (e) through (h) of Section 69 of Chapter 1044 of the 1991 Session Laws, as amended, are repealed.
(b) Section 69 of Chapter 1044 of the 1991 Session Laws, as amended by Section 111 of Chapter 561 of the 1993 Session Laws, Section 27.3 of Chapter 769 of the 1993 Session Laws, Section 26.6 of Chapter 507 of the 1995 Session Laws, Section 27.15 of Chapter 18 of the Session Laws of the 1996 Second Extra Session, Section 15.44 of S.L. 1997-443, and subsection (a) of this section reads as rewritten:
"Sec. 69.  (a)	There is established the Beaver Damage Control Advisory Board.  The Board shall consist of nine members, as follows:
(1)	The Executive Director of the North Carolina Wildlife Resources Commission, or his designee, who shall serve as chair;
(2)	The Commissioner of Agriculture and Consumer Services, or a designee;
(3)	The Director of the Division of Forest Resources of the Department of Environment and Natural Resources, or a designee;
(4)	The Director of the Soil and Water Conservation Division of the Department of Environment and Natural Resources, or a designee;
(5)	The Director of the North Carolina Cooperative Extension Service, or a designee;
(6) 	The Secretary of Transportation, or a designee;
(7) 	The State Director of the Animal Damage Control Division of the Animal and Plant Health Inspection Service, U.S. Department of Agriculture, or a designee;
(8)	The President of the North Carolina Farm Bureau Federation, Inc., or a designee, representing private landowners; and
(9) 	A representative of the North Carolina Forestry Association.
(b)	The Beaver Damage Control Advisory Board shall develop a statewide program to control beaver damage on private and public lands. The Beaver Damage Control Advisory Board shall act in an advisory capacity to the Wildlife Resources Commission in the implementation of the program.  In developing the program, the Board shall:
(1) 	Orient the program primarily toward public health and safety and toward landowner assistance, providing some relief to landowners through beaver control and management rather than eradication;
(2)	Develop a priority system for responding to complaints about beaver damage;
(3)	Develop a system for documenting all activities associated with beaver damage control, so as to facilitate evaluation of the program;
(4)	Provide educational activities as a part of the program, such as printed materials, on-site instructions, and local workshops; and
(5)	Provide for the hiring of personnel necessary to implement beaver damage control activities, administer the program, and set salaries of 
	personnel.
No later than March 15 of each year, the Board shall issue a report to the Wildlife Resources Commission, the Senate and House Appropriations Subcommittees on Natural and Economic Resources, and the Fiscal Research Division on the results of the program during the preceding year. 
(c)	The Wildlife Resources Commission shall implement the program, and may enter a cooperative agreement with the Animal Damage Control Division of the Animal and Plant Health Inspection Service, United States Department of Agriculture, to accomplish the program.
(d)	Notwithstanding G.S. 113-291.6(d) or any other law, it is lawful to use snares when trapping beaver pursuant to the beaver damage control program developed pursuant to this section.  The provisions of Chapter 218 of the 1975 Session Laws; Chapter 492 of the 1951 Session Laws, as amended by Chapter 506 of the 1955 Session Laws; and Chapter 1011 of the 1983 Session Laws do not apply to trapping carried out in implementing the beaver damage control program developed pursuant to this section.
(d1)	In case of any conflict between G.S. 113-291.6(a) and G.S. 113-291.6(b) and this section, this section prevails.
(d2)	Each county that volunteers to participate in this program for a given fiscal year shall provide written notification of its wish to participate no later than September 30 of that year and shall commit the sum of four thousand dollars ($4,000) in local funds no later than September 30 of that year."
(c) The Revisor of Statutes shall codify in Chapter 113 of the General Statutes Section 69 of Chapter 1044 of the 1991 Session Laws as amended.
(d)	Of the funds appropriated in this act to the Wildlife Resources Commission for the 1998-99 fiscal year, up to the sum of five hundred thousand dollars ($500,000) shall be used to provide the State share necessary to support the beaver damage control program as revised in this section, provided the sum of twenty-five thousand dollars ($25,000) in federal funds is available for the 1998-99 fiscal year to provide the federal share.

PART XV.  DEPARTMENT OF COMMERCE
Requested by:   Representatives Mitchell, Baker, Carpenter, H. Hunter
REGIONAL ECONOMIC DEVELOPMENT COMMISSION ALLOCATIONS
Section 15.  Section 16.11 of S.L. 1997-443 reads as rewritten:
"Section 16.11.  (a)	Funds appropriated in this act to the Department of Commerce for regional economic development commissions shall be allocated to the following commissions in accordance with subsection (b) of this section: Western North Carolina Regional Economic Development Commission, Research Triangle Regional Commission, Southeastern North Carolina Regional Economic Development Commission, Piedmont Triad Partnership, Northeastern North Carolina Regional Economic Development Commission, Global TransPark Development Commission, and Carolinas Partnership, Inc.
(b)	Funds appropriated pursuant to subsection (a) of this section shall be allocated to each regional economic development commission as follows:
(1)	First, the Department shall establish each commission's allocation by determining the sum of allocations to each county that is a member of that commission.  Each county's allocation shall be determined by dividing the county's enterprise factor by the sum of the enterprise factors for eligible counties and multiplying the resulting percentage by the amount of the appropriation.  As used in this subdivision, the term "enterprise factor" means a county's enterprise factor as calculated under G.S. 105-129.3;
(2)	Next, the Department shall subtract from funds allocated to the Global TransPark Development Zone the sum of two hundred eighty thousand five hundred two dollars ($280,502) in the 1998-99 fiscal year, which sum represents the interest earnings in each fiscal year on the estimated balance of seven million five hundred thousand dollars ($7,500,000) appropriated to the Global TransPark Development Zone in Section 6 of Chapter 561 of the 1993 Session Laws; and
(3)	Next, the Department shall redistribute the sum of two hundred eighty thousand five hundred two dollars ($280,502) in the 1998-99 fiscal year to the seven regional economic development commissions named in subsection (a) of this section.  Each commission's share of this redistribution shall be determined according to the enterprise factor formula set out in subdivision (1) of this subsection.  This redistribution shall be in addition to each commission's allocation determined under subdivision (1) of this subsection.
(c)	Of the funds appropriated in this act to the Department of Commerce for allocation to Regional Economic Development Commissions, the sum of two hundred twenty-five thousand dollars for the 1998-99 fiscal year shall be allocated to the Southeastern North Carolina Regional Economic Development Commission as follows:
(1)	$150,000 for the purchase of land and an office building; and
(2)	$75,000 to enhance recruiting and promotion of the film industry in the region.
These funds shall be in addition to funds allocated under subsections (a) and (b) of this section."

[SECTION 15.1 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
MARKETING OF GLOBAL TRANSPARK BY DEPARTMENT OF COMMERCE
Section 15.2.  The Division of Business and Industry of the Department of Commerce shall assume responsibility for the marketing of the North Carolina Global TransPark.  Funds designated in the Department's budget for marketing of the North Carolina Global TransPark shall remain in the Department and shall be used by the Division to carry out this purpose.

Requested by:   Representatives Mitchell, Baker, Carpenter, Hardy, H. Hunter, Preston
HISTORIC WATERFRONT REVITALIZATION
Section 15.2B. (a)	Planning Grants. – A unit of local government that is located within a county assigned to the Northeastern North Carolina Regional Economic Development Commission established by G.S. 158-8.2, the Southeastern North Carolina Regional Economic Development Commission established by G.S. 158-8.3, or the Global TransPark Development Commission established by G.S. 158-35, is eligible for planning grants for a proposed revitalization project as provided in this section if it meets all of the following conditions:
(1)	The unit is, or is located in, a Tier One, Tier Two, or Tier Three Enterprise Area as defined in G.S. 105-129.3 as of the date it applies for certification of planning stage eligibility.
(2)	The proposed revitalization project is located in a National Register Historic District or includes the rehabilitation of a certified historic structure as defined in G.S. 105-130.42.
(3)	The area of the proposed revitalization project is either contiguous to a navigable waterway or connected to a navigable waterway by a pedestrian walkway or alternative vehicular access trail that is natural, historically significant, or both.
(4)	The Northeastern North Carolina Regional Economic Development Commission, the Southeastern North Carolina Regional Economic Development Commission, or the Global TransPark Development Commission, as applicable, agrees to provide matching funds for the planning grant as required under subsection (b) of this section.
(b) Matching Requirement. – Planning grants awarded by the Department are contingent upon matching funds provided by the  Northeastern North Carolina Regional Economic Development Commission, the Southeastern North Carolina Regional Economic Development Commission, or the Global TransPark Development Commission, as applicable, on the basis of one dollar ($1.00) of Commission funds for every two dollars ($2.00) of State funds allocated under the grant.
(c)	Application; Grant Limitations. – A unit of local government may apply to the Department of Commerce for certification of planning stage eligibility for the benefits provided in this section with respect to a revitalization project.  The application must include all information required by the Department to determine the eligibility of the unit.  Within funds appropriated for this purpose, the Department of Commerce shall award grants to applicants eligible under this section.  Grants shall be awarded on a competitive basis. The Department shall develop procedures and guidelines for the application for and award of grants.  Initial grant awards shall not exceed fifty thousand dollars ($50,000) per grant.  If at the end of the third quarter of the 1998-99 fiscal year funds remain available for grant purposes, then the Department may make supplemental awards to any prior grant recipient if in the Department's judgment a supplemental grant award has merit.  Supplemental grant awards shall be matched on the same basis as required under subsection (b) of this section.
(d)	Technical Assistance. – The Department of Commerce is encouraged to provide technical assistance to eligible local governments in preparing State and federal grant and loan applications with respect to the proposed revitalization project.
(e)  Reports. – The Department of Commerce shall report annually to the Joint Legislative Commission on Governmental Operations and to the House of Representatives Appropriations Subcommittee on Natural and Economic Resources and the Senate Appropriations Committee on Natural and Economic Resources on the grants awarded to and assistance provided to eligible local governments with respect to proposed historic waterfront revitalization projects, including information regarding to whom grants were made, in what amounts, and for what projects.

Requested by:   Representatives Mitchell, Baker, Carpenter, Hall
COMPETITIVE GOVERNMENT INITIATIVE
Section 15.2C. (a)	The General Statutes are amended by adding a new Chapter to read:
"Chapter 143C.
"North Carolina Government Competition Act of 1998.
"§ 143C-1.  Short title.
This Chapter shall be known and may be cited as the 'North Carolina Government Competition Act'.
"§ 143C-2.  Definitions.
As used in this Chapter, unless the context requires otherwise:
(1)	'Commission' means the North Carolina Government Competition Commission.
(2)	'State agency' means any State department, agency, or institution.
"§ 143C-3.  North Carolina Government Competition Commission created; duties.
(a)	The North Carolina Government Competition Commission is created within the Department of Commerce.  The Commission shall exercise its powers independently of the Secretary of Commerce and shall be subject to the direction and supervision of the Secretary of Commerce only with respect to the management functions of coordination and reporting.  The purpose of the Commission is to be the catalyst for the use of competition to improve the delivery of State government services, to make State government more effective and more efficient, and to reduce the costs of government to taxpayers.
(b)	The Commission shall:
(1)	Develop an institutional framework for a statewide competition initiative to encourage innovation and competition within State government.
(2)	Establish a system to encourage the use of feasibility studies and innovation to determine where competition could reduce government costs without adversely affecting essential services.
(3)	Monitor the activities, products, and services of State agencies to bring an element of competition and to ensure a spirit of innovation and entrepreneurship to compete with the private sector to increase the quality of services or reduce costs to taxpayers.
(4)	Identify any barriers to competition in State government and recommend actions to overcome those barriers.
(5)	Promote acceptance of competition by State government officials and State employees as a viable alternative to in-house operations for delivering State government services where savings to the State may be realized through competition, including the development and implementation of State employee adjustment and incentive programs.
(6)	Advocate, develop, and accelerate implementation of a competitive program for State agencies to ensure competition for the provision or production of government services from both public sector and private sector entities.
(7)	Establish approval, planning, and reporting processes required to carry out the functions of the Commission.
(8)	Determine the competition potential of a State program or activity, perform cost and benefit analyses, and conduct public and private competition analyses.
(9)	Devise evaluation criteria to be used in conducting performance reviews of any State program or activity that is subject to a competition recommendation.
(10)	Assess the short-term and long-term results of State government competition efforts.
(11)	Appoint, as needed, ad hoc committees relating to specific matters within the Commission's purview.
"§ 143C-4.  Membership; appointment; terms; vacancies; chair; quorum; compensation.
(a)	The Commission shall be composed of nine members to be appointed as follows:
(1)	Three members appointed by the Governor, one of whom shall be a State employee and two of whom shall be members of the  private sector.  One of these private sector members shall have large-scale purchasing experience.
(2)	Three members appointed by the Speaker of the House of Representatives, two of whom shall be members of the private sector and one of whom shall be a State employee.
(3)	Three members appointed by the President Pro Tempore of the Senate, two of whom shall be members of the private sector and one of whom shall be a State employee.
Members of the Commission shall serve two-year terms.  In making the initial appointments to the Commission, the respective appointing authorities shall appoint at least one member for a one-year term so that subsequent terms stagger.
(b)	All initial appointments shall become effective July 1, 1998. The initial members' terms shall end on June 30 of the applicable year in which a term expires, with the subsequent term beginning on July 1 of that year.  No member may serve more than two consecutive terms. Vacancies shall be filled by the appointing authority for any unexpired portion of a term. Members shall receive subsistence, per diem, and travel allowances as provided by G.S. 138-5.
(c)	A majority of the members shall constitute a quorum.  The Commission shall annually elect its chair and vice-chair from among its members.
(d)	The Commission shall appoint an executive director and other necessary staff within funds available to it.
"§ 143C-5.  Cooperation of other State agencies.
All State agencies shall cooperate with the Commission and, upon request, assist the Commission in the performance of its duties and responsibilities.  The Commission shall not impose unreasonable burdens or costs in connection with requests of State agencies.
"§ 143C-6. Application for and acceptance of certain gifts and grants; authority to enter into contract; applicability of State purchasing laws.
(a)	The Commission may apply for, accept, and expend gifts, grants, or donations from governmental sources or from private nonprofit foundations organized for taxation purposes under section 501(c)(3) of the Internal Revenue Code to enable it to better carry out its objectives.  No entity that provides a gift, donation, or grant shall be eligible for a contract award that results from action of a Commission recommendation.
(b)	The Commission may contract for professional or consultant service.  Any consultant awarded a contract shall be ineligible for a contract award resulting from the consultant's recommendations.
	(c)	The Commission is subject to the provisions of Articles 3, 3C, and 3D of Chapter 143 of the General Statutes.
"§ 143C-7.  Public-private competition analysis; proposals for competition.
(a)	The Governor, the General Assembly, or the Commission may direct a State agency to perform a public-private competition analysis covering any service for which the Commission has received from a private entity a qualifying unsolicited proposal for competition that is consistent with the Commission's purposes and duties as provided in this Chapter.
(b)	The Commission may solicit competition proposals from private entities for the purposes of making cost-comparison analyses.  Any State agency may submit proposals to the Commission for cost-comparison analyses.
	(c)	If a service contract is awarded to a private vendor as a result of a recommendation by the Commission, cancellation of the contract requires the prior approval of both the Commission and the Division of Purchase and Contract.  The Commission's executive director may act on behalf of the Commission under this subsection pursuant to rules adopted by the Commission.
"§ 143C-8.  Duties of the Office of State Budget and Management.
The Office of State Budget and Management shall determine the amount of an existing appropriation that would no longer be needed by a State agency as the result of savings realized through competition and shall report annually, by February 1, the nature and amount of the savings to the Governor and to the Joint Legislative Commission on Governmental Operations.
"§ 143C-9.  Reports to the Governor and General Assembly.
The Commission shall report annually, by February 1, its findings and recommendations to the Governor and the Joint Legislative Commission on Governmental Operations and may make other interim reports it deems advisable."
(b) Funds appropriated in this act to the Department of Commerce for the Competitive Government Initiative shall be used by the Department to implement this section.

Requested by:  Representatives Mitchell, Baker, Carpenter, Hall, H. Hunter
RURAL TOURISM DEVELOPMENT GRANT PROGRAM
Section 15.3.  Of the funds appropriated in this act to the Department of Commerce, the sum of one hundred thousand dollars ($100,000) for the 1998-99 fiscal year shall be allocated for the Rural Tourism Development Grant Program.  The Department shall establish and implement this Program to provide grants to local governments and nonprofit organizations to encourage the development of new tourism projects and activities in rural areas of the State.  The Department shall develop procedures for the administration and distribution of funds allocated to the Rural Tourism Development Grant Program under the following guidelines:
(1)	Eligible organizations shall make application under procedures established by the Department;
(2)	Eligible organizations shall be nonprofit tourism-related organizations located in the State's rural regions;
(3)	Priority shall be given to eligible organizations that have significant involvement of travel- and tourism-related businesses;
(4)	Priority shall be given to eligible organizations serving economically distressed rural counties;
(5)	Priority shall be given to eligible organizations that match funds; and
(6)	Funds shall not be used for renting or purchasing land or buildings or for financing debt.
No recipient or new tourism project shall receive a total of more than fifty thousand dollars ($50,000) of these grant funds for the 1998-99 fiscal year.

[SECTIONS 15.4, 15.5 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
WORKER TRAINING TRUST FUND APPROPRIATIONS
Section 15.6A. Section 16 of Chapter 443 of the 1997 Session Laws reads as rewritten:
"Section 16.  (a)	There is appropriated from the Worker  Training Trust Fund to the Employment Security Commission of North Carolina the sum of six million six hundred eighty-nine thousand nine hundred sixty-four dollars ($6,689,964) for the 1997-98 fiscal year and the sum of seven million twenty-one thousand three hundred seventy-four dollars ($7,021,374) for the 1998-99 fiscal year for the operation of local offices.
(b)	Notwithstanding the provisions of G.S. 96-5(f), there is appropriated from the Worker Training Trust Fund to the following agencies the following sums for the 1997-98 and the 1998-99 fiscal years for the following purposes:
(1)	$2,400,000 for the 1997-98 fiscal year and $2,050,000 for the 1998-99 fiscal year to the Department of Commerce, Division of Employment and Training, for the Employment and Training Grant Program;
(2)	$1,000,000 for the 1997-98 fiscal year and $1,000,000 for the 1998-99 fiscal year to the Department of Labor for customized training of the unemployed and the working poor for specific jobs needed by employers through the Department's Bureau for Training Initiatives;
(3)	$1,746,000 for the 1997-98 fiscal year and $1,746,000 for the 1998-99 fiscal year to the Department of Community Colleges to continue the Focused Industrial Training Program;
(4)	$225,000 for the 1997-98 fiscal year and $225,000 for the 1998-99 fiscal year to the Employment Security Commission for the State Occupational Information Coordinating Committee to develop and operate an interagency system to track former participants in State education and training programs;
(5)	$400,000 for the 1997-98 fiscal year and $400,000 for the 1998-99 fiscal year to the Department of Community Colleges for a training program in entrepreneurial skills to be operated by North Carolina REAL Enterprises;
(6)	$50,000 for the 1997-98 fiscal year and $50,000 for the 1998-99 fiscal year to the Office of State Budget and Management to maintain compliance with Chapter 96 of the General Statutes, which directs the Office of State Budget and Management to employ the Common Follow-Up Management Information System to evaluate the effectiveness of the State's job training, education, and placement programs;
(7)	$500,000 for the 1997-98 fiscal year and $1,000,000 for the 1998-99 fiscal year to the Department of Labor to expand the Apprenticeship Program.  It is intended that the appropriation of funds in this subdivision will result in the Department of Labor serving a benchmark performance level of 10,000 adult and youth apprentices by the year 2000; and
(8)	$100,000 for the 1997-98 fiscal year and $100,000 for the 1998-99 fiscal year to the State Board of Education for the Teacher Apprenticeship Program.
		The State Board of Education may use funds appropriated from the Worker Training Trust Fund in this subdivision to design and implement a public school teacher apprenticeship program.
(9)	$350,000 for the 1998-99 fiscal year to the Department of Community Colleges for the Hosiery Technology Center of North Carolina.  It is the intent of the General Assembly that the Center operate in subsequent fiscal years without any special or supplemental funding."

Requested by:   Representatives Mitchell, Baker, Carpenter
YEAR 2000 CLARIFICATIONS
Section 15.7.  Section 28.1 of S.L. 1997-443 reads as rewritten:
"Section 28.1.  (a)	The Department of Commerce shall not reduce rates for data processing services for the first six months of the 1998-99 fiscal year.  If at the end of the first six months the Department determines that additional Year 2000 funds for the 1998-99 fiscal year are not needed from data processing services reserve funds, then the Department may reduce data processing services rates upon approval of the reduction by the Information Resources Management Commission. The Department shall develop and maintain procedures for managing the year 2000 conversion.
(b)	The Department of Commerce shall analyze the needs of State agencies for funds to convert their systems. In the course of the analysis, the Department shall consider an agency's need for each system it wishes to convert and the most cost-effective manner in which to manage conversion.  The Department shall certify to the Office of State Budget and Management the cost of each State agency for the year 2000 conversion.
	(	

Requested by:   Representatives Mitchell, Baker, Carpenter
NORTH CAROLINA INFORMATION HIGHWAY
Section 15.8.  Section 28 of S.L. 1997-443 reads as rewritten:
"Section 28.  (a)	The funds appropriated in this act to the Department of Commerce for the operation of the North Carolina Information Highway shall be used only for costs incurred by the Department related to the operations and support of the North Carolina Information Highway.  No funds appropriated in this act shall be expended to pay Minimum Monthly usage charges for North Carolina Information Highway Services.
(b)	
			The Department of Commerce shall develop a Migration Plan for converting existing and proposed North Carolina Information Highway sites to the H.320 international telecommunications standard for delivering audio and video services to participating sites.  The Department shall include at a minimum the following information in the Plan:
(1)	A list of sites categorized by institutional purpose to be converted under the Plan;
(2)	A timeline for converting each site;
(3)	The cost of conversion for each site;
(4)	The estimated operating cost savings for each site post conversion;
(5)	The estimated monthly and annual operating cost subsidy for each site post conversion;
(6)	The estimated total recurring dollar impact to the State's budget upon full implementation of the Plan; and
(7)	A detailed plan for providing connectivity or bridging between the current DV-45 proprietary standard sites and the converted H.320 international standard sites.
The Plan shall also identify any participating information highway sites that utilize telecommunication standards other than the H.320 international standard offered by the Department along with the estimated costs for providing connectivity or bridging among these sites and between these sites and the converted H.320 international standard sites.  The Plan shall be submitted by October 1, 1998, to the House and Senate Appropriations Subcommittees on Natural and Economic Resources, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division."

Requested by:   Representatives Mitchell, Baker, Carpenter, Dickson
EXTEND UNIVERSAL SERVICE RULES DEADLINE
Section 15.8B.  G.S. 62-110(f1) reads as rewritten:
"(f1)	Except as provided in subsection (f2) of this section, the Commission is authorized, following notice and an opportunity for interested parties to be heard, to issue a certificate to any person applying to provide local exchange or exchange access services as a public utility as defined in G.S. 62-3(23)a.6., without regard to whether local telephone service is already being provided in the territory for which the certificate is sought, provided that the person seeking to provide the service makes a satisfactory showing to the Commission that (i) the person is fit, capable, and financially able to render such service; (ii) the service to be provided will reasonably meet the service standards that the Commission may adopt; (iii) the provision of the service will not adversely impact the availability of reasonably affordable local exchange service; (iv) the person, to the extent it may be required to do so by the Commission, will participate in the support of universally available telephone service at affordable rates; and (v) the provision of the service does not otherwise adversely impact the public interest. In its application for certification, the person seeking to provide the service shall set forth with particularity the proposed geographic territory to be served and the types of local exchange and exchange access services to be provided. Except as provided in G.S. 62-133.5(f), any person receiving a certificate under this section shall, until otherwise determined by the Commission, file and maintain with the Commission a complete list of the local exchange and exchange access services to be provided and the prices charged for those services, and shall be subject to such reporting requirements as the Commission may require.
Any certificate issued by the Commission pursuant to this subsection shall not permit the provision of local exchange or exchange access service until July 1, 1996, unless the Commission shall have approved a price regulation plan pursuant to G.S. 62-133.5(a)	for a local exchange company with an effective date prior to July 1, 1996. In the event a price regulation plan becomes effective prior to July 1, 1996, the Commission is authorized to permit the provision of local exchange or exchange access service by a competing local provider in the franchised area of such local exchange company.
The Commission is authorized to adopt rules it finds necessary (i)	to provide for the reasonable interconnection of facilities between all providers of telecommunications services; (ii) to determine when necessary the rates for such interconnection; (iii) to provide for the reasonable unbundling of essential facilities where technically and economically feasible; (iv) to provide for the transfer of telephone numbers between providers in a manner that is technically and economically reasonable; (v) to provide for the continued development and encouragement of universally available telephone service at reasonably affordable rates; and (vi) to carry out the provisions of this subsection in a manner consistent with the public interest, which will include a consideration of whether and to what extent resale should be permitted.
Local exchange companies and competing local providers shall negotiate the rates for local interconnection. In the event that the parties are unable to agree within 90 days of a bona fide request for interconnection on appropriate rates for interconnection, either party may petition the Commission for determination of the appropriate rates for interconnection. The Commission shall determine the appropriate rates for interconnection within 180 days from the filing of the petition.
Each local exchange company shall be the universal service provider in the area in which it is certificated to operate on July 1, 1995, until otherwise determined by the Commission. In continuing this State's commitment to universal service, the Commission shall, by December 31, 1996, adopt interim rules that designate the person that should be the universal service provider and to determine whether universal service should be funded through interconnection rates or through some other funding mechanism. By July 1, 1999, the Commission shall complete an investigation and adopt final rules concerning the provision of universal services, the person that should be the universal service provider, and whether universal service should be funded through interconnection rates or through some other funding mechanism.
The Commission shall make the determination required pursuant to this subsection in a manner that furthers this State's policy favoring universally available telephone service at reasonable rates."

Requested by:   Representatives Mitchell, Baker, Carpenter
FUNDS FOR CERTIFIED ECONOMIC DEVELOPMENT TRAINING
Section 15.8C.  Notwithstanding G.S. 143-16.3, of the funds appropriated in this act to the Department of Commerce, the Department may use up to twenty-five thousand dollars ($25,000) to provide economic developers with Certified Economic Development (CED) training, the nationally recognized training standard for economic development professionals.

[SECTIONS 15.9, 15.10 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
NORTH CAROLINA INSTITUTE OF MINORITY ECONOMIC DEVELOPMENT, INC./REPORT
Section 15.11.  The North Carolina Institute of Minority Economic Development, Inc., shall:
(1)	By January 15, 1999, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1997-98 program activities, objectives, and accomplishments;
b.	State fiscal year 1997-98 itemized expenditures and fund sources;
c.	State fiscal year 1998-99 planned activities, objectives, and accomplishments including actual results through December 31, 1998; and
d.	State fiscal year 1998-99 estimated itemized expenditures and fund sources including actual  expenditures and fund sources through December 31, 1998.
(2)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

Requested by:   Representatives Mitchell, Baker, Carpenter
LAND LOSS PREVENTION PROJECT, INC./REPORT
Section 15.12.  The Land Loss Prevention Project, Inc.,  shall:
(1)	By January 15, 1999, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1997-98 program activities, objectives, and accomplishments;
b.	State fiscal year 1997-98 itemized expenditures and fund sources;
c.	State fiscal year 1998-99 planned activities, objectives, and accomplishments including actual results through December 31, 1998; and
d.	State fiscal year 1998-99 estimated itemized expenditures and fund sources including actual  expenditures and fund sources through December 31, 1998.
(2)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

[SECTION 15.13 RESERVED]

Requested by:   Representatives Mitchell, Baker, Carpenter
NC MINORITY SUPPORT CENTER/REPORT
Section 15.14.  The North Carolina Minority Support Center  shall:
(1)	By January 15, 1999, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1997-98 program activities, objectives, and accomplishments;
b.	State fiscal year 1997-98 itemized expenditures and fund sources;
c.	State fiscal year 1998-99 planned activities, objectives, and accomplishments including actual results through December 31, 1998; and
d.	State fiscal year 1998-99 estimated itemized expenditures and fund sources including actual  expenditures and fund sources through December 31, 1998.
(2)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

Requested by:   Representatives Mitchell, Baker, Carpenter
WORLD TRADE CENTER OF NORTH CAROLINA/REPORT
Section 15.14B.  The World Trade Center of North Carolina shall:
(1)	By January 15, 1999, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1997-98 program activities, objectives, and accomplishments;
b.	State fiscal year 1997-98 itemized expenditures and fund sources;
c.	State fiscal year 1998-99 planned activities, objectives, and accomplishments including actual results through December 31, 1998; and
d.	State fiscal year 1998-99 estimated itemized expenditures and fund sources including actual  expenditures and fund sources through December 31, 1998.
(2)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

[SECTIONS 15.15, 15.16 RESERVED]

Requested by:  Representatives Mitchell, Baker, Carpenter
MCNC
Section 15.17. Section 16.21 of S.L. 1997-443 reads as rewritten:
"Section 16.21.  (a)	MCNC shall report on all of its programs including contractual services for the Supercomputer and the Research and Education Network.  The reports shall:
(1)	By January 15, 1998, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1996-97 program activities, objectives, and accomplishments;
b.	State fiscal year 1996-97 itemized expenditures and fund sources;
c.	State fiscal year 1997-98 planned activities, objectives, and accomplishments including actual results through December 31, 1997;
d.	State fiscal year 1997-98 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 1997.
e.	The users, major projects and benefits resulting from the activities of the Supercomputer and the Research and Education Network.
f.	The organization's progress toward achieving self-sufficiency by July 1, 1999.
(2)	By January 15, 1999, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1997-98 program activities, objectives, and accomplishments;
b.	State fiscal year 1997-98 itemized expenditures and fund sources;
c.	State fiscal year 1998-99 planned activities, objectives, and accomplishments including actual results through December 31, 1998;
d.	State fiscal year 1998-99 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 1998.
e.	The users, major projects and benefits resulting from the activities of the Supercomputer and the Research and Education Network.
f.	The organization's progress toward achieving self-sufficiency by July 1, 1999.
(3)	Provide to the Fiscal Research Division a copy of MCNC's annual audited financial statement within 30 days of issuance of the statement.
(b)	The funds appropriated in this act to MCNC shall be used as follows:
	FY 1997-98	FY 1998-99
Electronic and Information
Technologies Programs	$4,500,000	$4,500,000
(c)	Of the funds appropriated for the Electronic and Information Technologies Programs, four million five hundred thousand dollars ($4,500,000) for the 1997-98 fiscal year and four million five hundred thousand dollars ($4,500,000) for the 1998-99 fiscal year is contingent upon a dollar-for-dollar match in non-State funds.
(d)	It is the intent of the General Assembly that State funds shall not be appropriated for MCNC in fiscal years 1999-2000 and beyond."

Requested by:  Representatives Mitchell, Baker, Carpenter, H. Hunter
RURAL ECONOMIC DEVELOPMENT CENTER
Section 15.18.  Section 16.24 of S.L. 1997-443 reads as rewritten:
"Section 16.24.  (a)	Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of one million two hundred seventy thousand dollars ($1,270,000) for the 1997-98 fiscal year and the sum of one million four hundred fifty-seven thousand three hundred thirty-eight dollars ($1,457,338) for the 1998-99 fiscal year shall be allocated as follows:
1997-98 FY	1998-99 FY
Research and Demonstration Grants	$475,864	$525,864
Technical Assistance and Center
  Administration of Research
  and Demonstration Grants	444,136	444,136
Center Administration, Oversight,
  and Other Programs	350,000	487,338
(a1)	Of the funds allocated under subsection (a) of this section for Research and Development Grants, the sum of thirty-five thousand dollars ($35,000) shall be allocated to the Fisheries Development Foundation for mariculture activities.
(b)	The Rural Economic Development Center, Inc., shall provide a report containing detailed budget, personnel, and salary information to the Office of State Budget and Management in the same manner as State departments and agencies in preparation for biennium budget requests.
(c)	Not more than fifty percent (50%) of the interest earned on State funds appropriated to the Rural Economic Development Center, Inc., may be used by the Center for administrative purposes, including salaries and fringe benefits.
(d)	For purposes of this section, the term 'community development corporation' means a nonprofit corporation:
(1)	Chartered pursuant to Chapter 55A of the General Statutes;
(2)	Tax-exempt pursuant to section 501(c)(3) of the Internal Revenue Code of 1986;
(3)	Whose primary mission is to develop and improve low-income communities and neighborhoods through economic and related development;
(4)	Whose activities and decisions are initiated, managed, and controlled by the constituents of those local communities; and
(5)	Whose primary function is to act as deal-maker and packager of projects and activities that will increase their constituencies' opportunities to become owners, managers, and producers of small businesses, affordable housing, and jobs designed to produce positive cash flow and curb blight in the targeted community.
(e)	Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of five million seven hundred fifty thousand dollars ($5,750,000) for the 1997-98 fiscal year and the sum of ten million eight hundred seventy-five thousand dollars ($10,875,000) for the 1998-99 fiscal year shall be allocated as follows:
(1)	$1,400,000 in fiscal year 1997-98 and $1,475,000 in fiscal year 1998-99 for community development grants to support development projects and activities within the State's minority communities.  Any community development corporation as defined in this section is eligible to apply for funds.  The Rural Economic Development Center, Inc., shall establish performance-based criteria for determining which community development corporation will receive a grant and the grant amount.  Funding shall also be allocated to the North Carolina Association of Community Development Corporations, Inc.  The Rural Economic Development Center, Inc., shall allocate these funds as follows:
a.	$900,000 in each fiscal year for direct grants to the local community development corporations that have previously received State funds for this purpose to support operations and project activities;
b.	$250,000 in each fiscal year for direct grants to local community development corporations that have not previously received State funds;
c.	$275,000 in fiscal year 1998-99 to the North Carolina Association of Community Development Corporations, Inc., to provide training, technical assistance, resource development, and support for local community development corporations statewide; of these funds, the sum of fifty thousand dollars ($50,000) shall be used to coordinate a special project targeting grassroot nonprofit organizations for economic development activities in distressed areas of Eastern North Carolina focusing on issues of infrastructure and affordable housing, and the sum of twenty-five thousand dollars ($25,000) shall be allocated to the Walnut Cove Colored School, Inc., for operational and program support; and
d.	$50,000 in each fiscal year to the Rural Economic Development Center, Inc., to be used to cover expenses in administering this section.
(2)	$250,000 in each fiscal year to the Microenterprise Loan Program to support the loan fund and operations of the Program; 
(3)	$4,100,000 for the 1997-98 fiscal year and $8,950,000 for the 1998-99 fiscal year shall be used for a program to provide supplemental funding for matching requirements for projects and activities authorized under this subdivision.  The Center shall use these funds to make grants to local governments and nonprofit corporations to provide funds necessary to match federal grants or other grants for:
a.	Necessary economic development projects and activities in economically distressed areas, 
b.	Necessary water and sewer projects and activities in economically distressed communities to address health or environmental quality problems except that funds shall not be expended for the repair or replacement of low pressure pipe wastewater systems.   If a grant is awarded under this sub-subdivision, then the grant shall be matched on a dollar for dollar basis in the amount of the grant awarded, or
c.	Projects that demonstrate alternative waste management processes for local governments.  Special consideration should be given to cost-effectiveness, efficacy, management efficacy, and the ability of the demonstration project to be replicated.
	The grant recipients in this subsection shall be selected on the basis of need; and
(4)	$200,000 in fiscal year 1998-99 to the Capacity Building Grants Program.  Grants shall be awarded to units of local government to pay all or a portion of the costs associated with the planning and writing of a grant or loan application, a capital improvement plan, or other efforts that support growth and development of rural areas.
(f)	The Rural Economic Development Center, Inc., shall:
(1)	By January 15, 1998, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1996-97 program activities, objectives, and accomplishments;
b.	State fiscal year 1996-97 itemized expenditures and fund sources;
c.	State fiscal year 1997-98 planned activities, objectives, and accomplishments including actual results through December 31, 1997; and
d.	State fiscal year 1997-98 estimated itemized expenditures and fund sources including actual  expenditures and fund sources through December 31, 1997.
(2)	By January 15, 1999, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 1997-98 program activities, objectives, and accomplishments;
b.	State fiscal year 1997-98 itemized expenditures and fund sources;
c.	State fiscal year 1998-99 planned activities, objectives, and accomplishments including actual results through December 31, 1998; and
d.	State fiscal year 1998-99 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 1998.
(3)	Provide to the Fiscal Research Division a copy of each grant recipient's annual audited financial statement within 30 days of issuance of the statement."

Requested by: Representatives Holmes, Esposito, Creech, Crawford
BLUE RIDGE REGIONAL DESTINATION CENTER
Section 15.18B.  Funds appropriated in Section 2 of this act for the construction of a Blue Ridge Regional Destination Center to be located next to the Blue Ridge Parkway Headquarters Building in Buncombe County shall not be expended unless federal funds become available for this purpose.

PART XVA.  DEPARTMENT OF LABOR
Requested by:  Representatives Mitchell, Baker, Carpenter
DEPARTMENT OF LABOR/BUDGET OVER-REALIZED INDIRECT COST RECEIPTS
Section 15A.1.  The Department of Labor may budget over-realized indirect cost receipts in the 1998-99 fiscal year to fund the following:
(1)	Departmental technology needs, and
(2)	Costs to relocate selected Divisions of the Department of Labor to the Old Revenue Building.

PART XVB.  HOUSING FINANCE AGENCY
Requested by:  Representatives Mitchell, Baker, Carpenter, Hall, H. Hunter
HOUSING TRUST FUND/FUNDS FOR AFFORDABLE HOUSING FOR ELDERLY
Section 15B.  Funds appropriated in this act to the Housing Finance Agency for the Housing Trust Fund for the 1998-99 fiscal year shall be used exclusively for affordable housing for elderly persons.

PART XVI.  JUDICIAL DEPARTMENT
Requested by:   Representatives Justus, Kiser, Thompson
IRMC REVIEW OF AOC INFORMATION TECHNOLOGY PLANS/LONG-RANGE REPORT
Section 16.  (a)	G.S. 143B-472.41 reads as rewritten:
"§ 143B-472.41.  Information Resource Management Commission.
(a)	Creation; Membership. – The Information Resource Management Commission is created in the Department of Commerce. The Commission consists of the following members:
(1)	Four members of the Council of State, appointed by the Governor.
(1a)	The Secretary of State.
(2)	The Secretary of Administration.
(3)	The State Budget Officer.
(4)	Two members of the Governor's cabinet, appointed by the Governor.
(5)	One citizen of the State of North Carolina with a background in and familiarity with information systems or telecommunications, appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120-121.
(6)	One citizen of the State of North Carolina with a background in and familiarity with information systems or telecommunications, appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S. 120-121.
(7)	The Chair of the Governor's Committee on Data Processing and Information Systems.
(8)	The Chair of the State Information Processing Services Advisory Board.
(9)	The Chair of the Criminal Justice Information Network Governing Board.
(10)	The State Controller.
(11)	The Director of the Administrative Office of the Courts or the Director's designee.
Members of the Commission shall not be employed by or serve on the board of directors or other corporate governing body of any information systems, computer hardware, computer software, or telecommunications vendor of goods and services to the State of North Carolina.
The two initial cabinet members appointed by the Governor and the two initial citizen members appointed by the General Assembly shall each serve a term beginning September 1, 1992, and expiring on June 30, 1995. Thereafter, their successors shall be appointed for four-year terms, commencing July 1. Members of the Governor's cabinet shall be disqualified from completing a term of service of the Commission if they are no longer cabinet members.
The appointees by the Governor from the Council of State shall each serve a term beginning on September 1, 1992, and expiring on June 30, 1993. Thereafter, their successors shall be appointed for four-year terms, commencing July 1. Members of the Council of State shall be disqualified from completing a term of service on the Commission if they are no longer members of the Council of State.
Vacancies in the two legislative appointments shall be filled as provided in G.S. 120-122.
The Commission chair shall be elected in the first meeting of each calendar year from among the appointees of the Governor from the Council of State and shall serve a term of one year. The Secretary of Commerce shall be secretary to the Commission.
No member of the Information Resource Management Commission shall vote on an action affecting solely his or her own State agency.
(b)	Powers and Duties. – The Commission has the following powers and duties:
(1)	To develop, approve, and publish a statewide information technology strategy covering the current and following biennium that shall be updated annually and shall be submitted to the General Assembly on the first day of each regular session.
(2)	To develop, approve, and sponsor statewide technology initiatives and to report on those initiatives in the annual update of the statewide information technology strategy.
(3)	To review and approve biennially the information technology plans of the executive agencies and the Administrative Office of the Courts. This review shall include plans for the procurement and use of personal computers and workstations.
(4)	To recommend to the Governor and the Office of State Budget and Management the relative priorities across executive agency information technology plans.
(5)	To establish a quality assurance policy for all agency information technology projects, information systems training programs, and information systems documentation.
(6)	To establish and enforce a quality review and expenditure review procedure for major agency information technology projects.
(7)	To review and approve expenditures from appropriations made to the Office of State Budget and Management for the purpose of creating a Computer Reserve Fund.
(8)	To develop and promote a policy and procedures for the fair and competitive procurement of information technology consistent with the rules of the Department of Administration and consistent with published industry standards for open systems that provide agencies with a vendor-neutral operating environment where different information technology hardware, software, and networks operate together easily and reliably.
(c)	Meetings. – The Information Resources Management Commission shall adopt bylaws containing rules governing its meeting procedures. The Information Resources Management Commission shall meet at least monthly."
(b)	The Administrative Office of the Courts shall develop a strategic information systems and technology plan to both serve the courts in the present and assist the courts in adapting to future changes.  The plan shall:
(1)	Identify and document the information technology goals and objectives of the Judicial Department;
(2)	Review and evaluate the findings and recommendations outlined in the Maddox and Ferguson report completed in September 1996;
(3)	Provide an inventory of existing hardware and software in the court system statewide, including the age of and proposed replacement schedules, for personal computers, laptop computers, mainframe and midrange computers, servers, terminals, printers, and communications infrastructure devices;
(4)	Assess the effectiveness of existing computer-based applications, including the district attorney and public defender case management system, courtroom automation, the civil case processing system, and the financial management system, and outline any changes that may be needed to meet the future needs of the court system;
(5)	Develop an architectural strategy and quality assurance review that is consistent with existing State standards;
(6)	Identify areas where the use of information technology would improve the efficiency and effectiveness of the court system in providing services to the public;
(7)	Develop a long-term implementation plan and cost analysis for the new Magistrates Criminal Information System; and
(8)	Recommend alternative five-year proposals for implementing the court system's technology plan, including a cost analysis of each alternative that specifies the order of priority in which various projects should be implemented.
The Administrative Office of the Courts shall report on the strategic information systems and technology plan developed pursuant to this section to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety.  The Administrative Office of the Courts shall make an interim report by April 1, 1999, and a final report by May 1, 1999.
(c)	The Judicial Department may use up to the sum of two hundred fifty thousand dollars ($250,000) in funds appropriated to the Department for the 1998-99 fiscal year to contract for consultant services in the development of the strategic information systems and technology plan required by this section.  Prior to expending these funds, the Department shall report to the Joint Legislative Commission on Governmental Operations, the Chairs of the Senate and House Appropriations Committees, and the Chairs of the Senate and House Subcommittees on Justice and Public Safety on the consultant selected and the proposed uses of these funds.

Requested by:   Representatives Justus, Kiser, Thompson
STUDY OF PUBLIC DEFENDER PROGRAMS
Section 16.1.  The Administrative Office of the Courts shall study the efficiency and cost-effectiveness of the public defender programs established in 11 judicial districts.  The report shall include:
(1)	A comparison outlining the number of defendants in each district represented by public defenders and privately assigned counsel by type of offense;
(2)	An analysis of the average cost per defendant or case for each public defender program and a comparison of that average to payments made to privately assigned counsel in those districts;
(3)	An implementation plan for potential expansion of public defender programs to additional districts, including possible locations, a cost analysis of necessary personnel and equipment to operate the programs, and the estimate of savings to be realized in using those programs rather than providing for privately assigned counsel. 
The Administrative Office of the Courts shall report the results of its study to the Chairs of the Senate and House Appropriations Committees, the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety, and the Indigent Fund Study Commission established in Section 16.5 of this act by April 1, 1999.

Requested by:   Representatives Justus, Kiser, Thompson
REVISE RECIDIVISM REPORTING DATE
Section 16.2.  G.S. 7A-675.3 reads as rewritten:
"§ 7A-675.3.  Juvenile recidivism rates.
(a)	On an annual basis, the Administrative Office of the Courts shall compute the recidivism rate of juveniles who are adjudicated delinquent for offenses that would be Class A, B1, B2, C, D, or E felonies if committed by adults and who subsequently are adjudicated delinquent or convicted and shall report the statistics to the Joint Legislative Commission on Governmental Operations by February 15 each year. 
(b)	The Chief Court Counselor of each judicial district shall forward to the Administrative Office of the Courts relevant information, as determined by the Administrative Office of the Courts, regarding every juvenile who is adjudicated delinquent for an offense that would be a Class A, B1, B2, C, D, or E felony if committed by an adult for the purpose of computing the statistics required by this section."

Requested by:   Representatives Justus, Kiser, Thompson, Redwine, Sexton, Smith
EXTEND SUNSET ON BAD CHECK PROGRAM/ADD LINCOLN AND WAKE COUNTY PILOTS
Section 16.3. (a) Subsection (e) of Section 18.22 of S.L. 1997-443 reads as rewritten:
"(e)	This section becomes effective October 1, 1997, and expires June 30, 1999."
(b)	Subsection (c) of Section 18.22 of S.L. 1997-443 reads as rewritten:
"(c)	Of the funds appropriated to the Judicial Department for the 1997-98 fiscal year, the sum of one hundred fifty thousand dollars ($150,000) shall be used to establish bad check collection pilot programs in Columbus, Durham, and Rockingham Counties.
Of the funds appropriated to the Judicial Department for the 1998-99 fiscal year, the sum of  two hundred seventy-two thousand six hundred forty-seven dollars ($272,647) shall be used to continue the bad check collection pilot programs in Columbus, Durham, and Rockingham Counties and to establish bad check collection pilot programs in Lincoln and Wake Counties.
The Administrative Office of the Courts shall report by April 1, 1999, to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the implementation of the programs, including their effectiveness in assisting the recipients of worthless checks in obtaining restitution and the amount of time saved in prosecuting worthless check cases."
(c)	Subsection (d) of Section 18.22 of S.L. 1997-443 reads as rewritten:
"(d)	This act apples only to Columbus, Durham, Lincoln, Rockingham, and Wake Counties."
(d)	Subsection (a) of this section becomes effective June 30, 1998.

Requested by:   Representatives Justus, Kiser, Thompson, Redwine, Sexton, Smith
TEEN COURT FUNDS DO NOT REVERT/ESTABLISH TEEN COURT PROGRAMS IN DUPLIN, GUILFORD, AND ONSLOW COUNTIES
Section 16.4.  (a) The funds appropriated in S.L. 1997-443 to the Judicial Department for teen court programs throughout the State shall not revert at the end of the 1997-98 fiscal year and shall remain available to the Department for the 1998-99 fiscal year to be used for teen court programs.
(b)	Of the funds appropriated in this act to the Judicial Department, the Administrative Office of the Courts shall use the sum of twenty thousand dollars ($20,000) for the 1998-99 fiscal year to establish a teen court program in Duplin County pursuant to the guidelines and objectives set forth in Section 40 of Chapter 24 of the Session Laws of the 1994 Extra Session.
(c)	Of the funds appropriated in this act to the Judicial Department, the Administrative Office of the Courts shall use the sum of twenty thousand dollars ($20,000) for the 1998-99 fiscal year to establish a teen court program in Guilford County pursuant to the guidelines and objectives set forth in Section 40 of Chapter 24 of the Session Laws of the 1994 Extra Session.
(d)	Of the funds appropriated in this act to the Judicial Department, the Administrative Office of the Courts shall use the sum of twenty thousand dollars ($20,000) for the 1998-99 fiscal year to establish a teen court program in Onslow County pursuant to the guidelines and objectives set forth in Section 40 of Chapter 24 of the Session Laws of the 1994 Extra Session.
(e) Subsection (a) of this section becomes effective June 30, 1998.

Requested by:   Representatives Justus, Kiser, Thompson
INDIGENT FUND STUDY COMMISSION
Section 16.5. (a)	The Administrative Office of the Courts shall establish a Study Commission on the Indigent Persons' Attorney Fee Fund.  The Commission shall consist of nine voting members as follows:
(1)	Two members appointed by the Speaker of the House of Representatives;
(2)	Two members appointed by the President Pro Tempore of the Senate;
(3)	One member appointed by the Chief Justice of the Supreme Court;
(4)	One member appointed by the North Carolina Association of Public Defenders;
(5)	One member appointed by the North Carolina Academy of Trial Lawyers;
(6)	One member appointed by the North Carolina Bar Association; and
(7)	One member appointed by the Conference of District Attorneys of North Carolina.
The Commission shall elect a chair upon being convened at the call of the Chief Justice's appointee.
(b)	The Commission shall study methods for improving the management and accountability of funds being expended to provide counsel to indigent defendants without compromising the quality of legal representation mandated by State and federal law.  In conducting its study, the Commission shall:
(1)	Evaluate the current procedures for determining the indigency of defendants and recommend any possible improvements in those procedures;
(2)	Determine whether sufficient information is available when evaluating compensation requests from assigned private counsel and expert witnesses;
(3)	Assess the effectiveness of the current management structure for the Indigent Persons' Attorney Fee Fund and outline any additional standards or guidelines that could be implemented to allow for greater accountability of the funds being expended;
(4)	Evaluate whether establishing an Indigent Defense Council to oversee the State's expenditure of funds on a district, regional, or statewide basis would make the functioning of the Indigent Persons' Attorney Fee Fund more efficient and economical;
(5)	Evaluate the effectiveness of existing methods of providing legal representation to indigent defendants, including the use of public defenders, appointed counsel, and contract lawyers;
(6)	Review methods used by other states to provide legal representation to indigent defendants;
(7)	Assess the potential effectiveness of distributing funds in other ways, including the hiring of contract attorneys on a retainer basis and the expansion of public defender programs; and
(8)	Outline additional suggestions that would improve the provision of legal representation to indigent defendants.
The Administrative Office of the Courts shall assign professional and clerical staff to assist in the work of the Commission.  The Commission shall report its findings and recommendations to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety no later than May 1, 1999.  The report shall include a cost analysis demonstrating the additional personnel and equipment necessary to implement the Commission's recommendations.  The report shall also include any legislation necessary to implement the Commission's recommendations.
(c)	The Administrative Office of the Courts may use up to the sum of fifty thousand dollars ($50,000) from the Indigent Persons' Attorney Fee Fund to contract for consultant services to assist in meeting the Commission's responsibilities.

Requested by:   Representatives Justus, Kiser, Thompson
CUMBERLAND JUVENILE ASSESSMENT CENTER
Section 16.6. (a)	Section 18.21 of S.L. 1997-443 reads as rewritten:
"Section 18.21.  (a)	Of the funds appropriated in this act to the Administrative Office of the Courts for the 1997-98 fiscal year, the sum of one hundred fifty thousand dollars ($150,000) shall be used to fund the Juvenile Assessment Project authorized by this section. These funds shall be matched by local funds on the basis of one dollar ($1.00) of local funds for every three dollars ($3.00) of State funds.  These funds shall not revert at the end of the 1997-98 fiscal year, but shall remain in the Department during the 1998-99 fiscal year to implement this section.
(b)	The Administrative Office of the Courts, in collaboration with the Chief Court Counselor of District Court District 12, the Cumberland County Department of Social Services, and the appropriate local school administrative units, shall develop and implement a Juvenile Assessment Center Project in District Court District 12 to operate from the effective date of this act to June 30, 1999.  The purpose of the Project is to facilitate efficient prevention and intervention service delivery to juveniles who are (i) alleged to be delinquent or undisciplined and have been taken into custody or (ii) at risk of becoming delinquent or undisciplined because they have behavioral problems and have committed delinquent acts even though they have not been taken into custody.  The Project shall assist these juveniles by providing a centralized point of intake and assessment for the juveniles, by addressing the educational, emotional, and physical needs of the juveniles, and by providing juveniles with an atmosphere for learning personal responsibility, self-respect, and respect for others.  The Administrative Office of the Courts shall consider the recommendations of the Juvenile Assessment Advisory Board in developing and implementing the Project.
(c)	The Project shall be modeled after the Juvenile Assessment Center in Hillsborough County, Florida, and shall:
(1)	Identify those juveniles who are alleged to be delinquent or undisciplined or are at risk of becoming delinquent or undisciplined;
(2)	Evaluate the educational, emotional, and physical needs of the juveniles identified and determine whether the juveniles have problems related to substance abuse, depression, or other emotional conditions;
(3)	Develop in-depth and comprehensive assessment plans for the juveniles identified that recommend appropriate treatment, counseling, and disposition of the juveniles; and
(4)	Provide services to juveniles identified and their families through collaboration with public and private resources, including local law enforcement, parents' organizations, the Fayetteville Chamber of Commerce, and county and community programs and organizations that provide substance abuse treatment and child and family counseling.
(d)	There is established the Juvenile Assessment Advisory Board to make recommendations to the Administrative Office of the Courts regarding the development and operations of the Project.  The Board shall consist of 13 members, including:
(1)	The director of the Department of Social Services of Cumberland County, or the director's designee.
(2)	A representative from the local mental health area authority of Cumberland County.
(3)	A member of the Cumberland County Board of Education.
(4)	The sheriff of Cumberland County, or the sheriff's designee.
(5)	The chief of police of the Fayetteville Police Department, or the designee of the chief of police.
(6)	A judge of District Court District 12.
(7)	A juvenile court counselor from District Court District 12.
(8)	The director of the Guardian Ad Litem program in Cumberland County, or the director's designee.
(9)	The director of the Health Department of Cumberland County, or the director's designee.
(10)	Two public members appointed by the Fayetteville City Council.
(11)	Two public members appointed by the Board of County Commissioners of Cumberland County.
The members of the Board shall, within 30 days after the initial appointment is made, meet and elect one member as chair.  The Board shall meet at least once a month at the call of the chair, and a quorum of the Board shall consist of a majority of its members. The Board of County Commissioners of Cumberland County shall provide necessary clerical and professional assistance to the Board.
Initial appointments shall be made by October 1, 1997, and all terms shall expire June 30, 1999.
(e)	The Administrative Office of the Courts, in consultation with the Department of Health and Human Services, shall evaluate the Project and report to the Chairs of the House and Senate Appropriations Committees, the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety and Health and Human Services, and the Fiscal Research Division of the General Assembly by May 1, 1999, on the progress of the development and implementation of the Project.  In the report, the Administrative Office of the Courts, in consultation with the Department of Health and Human Services, shall evaluate the effectiveness of the Project, including the number of juveniles served or expected to be served, and shall recommend whether the Project should be continued.  If the report recommends that the Project be continued, it shall also provide a cost analysis outlining the long-term staffing and operating needs of the Project."
(b)	This section becomes effective June 30, 1998.

[SECTIONS 16.7, 16.8 RESERVED]

Requested by:   Representatives Justus, Kiser, Thompson, Redwine
ADD NEW DISTRICT COURT CIVIL CASE MANAGEMENT PILOTS/REPORT
Section 16.9.  Section 18.23 of S.L. 1997-443 reads as rewritten:
"Section 18.23.  The Administrative Office of the Courts shall report by April 1, 1999, to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the civil case management pilot programs established in District Court Districts 13, 18, 27B, 29, and 30. The report shall assess the success of these programs in reducing the backlog of civil court cases and in resolving new cases more quickly."

[SECTION 16.10 RESERVED]

Requested by:   Representatives Justus, Kiser, Thompson, Redwine
AUTHORIZE ADDITIONAL MAGISTRATES
Section 16.11.  G.S. 7A-133(c) reads as rewritten:
"(c)	Each county shall have the numbers of magistrates and additional seats of district court, as set forth in the following table:

Additional
Magistrates	Seats of
County	Min.-Max.	Court         

Camden	1	2
Chowan	2	3
Currituck	1	4
Dare	3	8
Gates	2	3
Pasquotank	3	5
Perquimans	2	3
Martin	5	8
Beaufort	4	8
Tyrrell	1	3
Hyde	2	4
Washington	3	4
Pitt	10	13	Farmville
Ayden
Craven	7	10	Havelock
Pamlico	2	3
Carteret	5	8
Sampson	6	8
Duplin	9	11
Jones	2	3
Onslow	8	14
New Hanover	6	11
Pender	4	6
Halifax	9	14	Roanoke
Rapids,
Scotland Neck
Northampton	5	7
Bertie	4	6
Hertford	5	6
Nash	7	10	Rocky Mount
Edgecombe	4	7	Rocky Mount
Wilson	4	7
Wayne	5	12	Mount Olive
Greene	2	4
Lenoir	4	10	La Grange
Granville	3	7
Vance	3	6
Warren	3	4
Franklin	3	7
Person	3	4
Caswell	2	5
Wake	12	20	Apex,
Wendell,
Fuquay-
Varina,
Wake Forest
Harnett	7	11	Dunn
Johnston	10	12	Benson,
Clayton,
Selma
Lee	4	6
Cumberland	10	18
Bladen	4	6
Brunswick	4	8
Columbus	6	9	Tabor City
Durham	8	13
Alamance	7	10	Burlington
Orange	4	11	Chapel Hill
Chatham	3	8	Siler City
Scotland	3	5
Hoke	4	5
Robeson	8	16	Fairmont,
Maxton,
Pembroke,
Red Springs,
Rowland,
St. Pauls
Rockingham	4	9	Reidsville,
Eden,
Madison
Stokes	2	5
Surry	5	9	Mt. Airy
Guilford	20	26	High Point
Cabarrus	5	9	Kannapolis
Montgomery	2	4
Randolph	5	10	Liberty
Rowan	5	10
Stanly	5	6
Union	4	6
Anson	4	5
Richmond	5	6	Hamlet
Moore	5	8	Southern
Pines
Forsyth	3	16	Kernersville
Alexander	2	3
Davidson	7	10	Thomasville
Davie	2	3
Iredell	4	9	Mooresville
Alleghany	1	2
Ashe	3	4
Wilkes	4	6
Yadkin	3	5
Avery	3	5
Madison	4	5
Mitchell	3	4
Watauga	4	6
Yancey	2	4
Burke	4	7
Caldwell	4	7
Catawba	6	10	Hickory
Mecklenburg	15	27
Gaston	11	22
Cleveland	5	8
Lincoln	4	7
Buncombe	6	15
Henderson	4	7
McDowell	3	5
Polk	3	4
Rutherford	6	8
Transylvania	2	4
Cherokee	3	4
Clay	1	2
Graham	2	3
Haywood	5	7	Canton
Jackson	3	4
Macon	3	4
Swain	2	3."

Requested by:   Representatives Justus, Kiser, Thompson
ASSISTANT PUBLIC DEFENDERS
Section 16.12.  From funds appropriated to the Indigent Persons' Attorney Fee Fund for the 1998-99 fiscal year, the Administrative Office of the Courts may use up to one hundred thirty-four thousand four hundred fifteen dollars ($134,415) for salaries, benefits, equipment, and related expenses to establish up to three new assistant public defender positions.

[SECTIONS 16.13, 16.14 RESERVED]

Requested by:   Representatives Justus, Kiser, Thompson
EXTEND SUNSET ON DRUG TREATMENT COURT
Section 16.15.  Section 21.6(c) of Chapter 507 of the 1995 Session Laws reads as rewritten:
"(c)	Subsection (a) of this section becomes effective July 1, 1995, and expires June 30, 1999.  The remainder of this section becomes effective October 1, 1995."

Requested by:   Representatives Justus, Kiser, Thompson
ADDITIONAL DISTRICT COURT JUDGES
Section 16.16.  (a)	G.S. 7A-133(a) reads as rewritten:
"(a)	Each district court district shall have the numbers of judges as set forth in the following table:

District	Judges	County 

	1	4	Camden
	Chowan
Currituck
Dare
Gates
Pasquotank
Perquimans
2	3	Martin
Beaufort
Tyrrell 
Hyde
Washington
3A	4	Pitt
3B	5	Craven
Pamlico
Carteret
4	7	Sampson
Duplin
Jones
Onslow
5	6	New Hanover
Pender
6A	2	Halifax
6B	3	Northampton
Bertie
Hertford
7	7	Nash
	Edgecombe
Wilson
8	6	Wayne
Greene
Lenoir
9	4	Granville
(part of Vance
see subsection (b))
Franklin
9A	2	Person
Caswell
9B	1	Warren
(part of Vance
see subsection (b))
10	13	Wake
11	7	Harnett
Johnston
Lee
12	9	Cumberland
13	5	Bladen
Brunswick
Columbus
	14	6	Durham
15A	3	Alamance
15B	4	Orange
Chatham
16A	3	Scotland
Hoke
16B	5	Robeson
17A	2	Rockingham
17B	3	Stokes
Surry
18	11	Guilford
19A	3	Cabarrus
19B	6	Montgomery
Moore
Randolph
19C	3	Rowan
20	7	Stanly
Union
Anson
Richmond
21	8	Forsyth
22	8	Alexander
Davidson
Davie
Iredell
23	4	Alleghany
Ashe
Wilkes
Yadkin
24	4	Avery
Madison
Mitchell
Watauga
Yancey
25	8	Burke
Caldwell
Catawba
26	14 	Mecklenburg
27A	5	Gaston
27B	4	Cleveland
Lincoln
28	5	Buncombe
29	6	Henderson
McDowell
Polk
Rutherford
Transylvania
30	4	Cherokee
Clay
Graham
Haywood
Jackson
Macon
Swain."
(b)	The vacancies created by subsection (a) of this section in District Court Districts 11, 19B, 21, 25, and 29 shall be filled by appointment of the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S. 120-121.  The vacancies created by subsection (a) of this section in District Court Districts 4, 7, 10, 12, and 14 shall be filled by appointment of the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120-121.  Successors to these judges shall be elected in the 2002 election for four-year terms commencing on the first Monday in December 2002.
(c)	Subsection (a) of this section becomes effective December 15, 1998, as to any district where no county is subject to Section 5 of the Voting Rights Act of 1965.  As to any district where any county is subject to Section 5 of the Voting Rights Act of 1965, subsection (a) of this section becomes effective December 15, 1998 or 15 days after the date upon which that subsection is approved under Section 5 of the Voting Rights Act, whichever is later.

[SECTION 16.17 RESERVED]

Requested by:   Representatives Justus, Kiser, Thompson
EVALUATION OF CORRECTIONAL PROGRAMS
Section 16.18.  (a)	The Judicial Department, through the North Carolina Sentencing and Policy Advisory Commission, and the Department of Correction shall jointly conduct ongoing evaluations of community corrections programs and in-prison treatment programs and make a biennial report to the General Assembly.  The report shall include composite measures of program effectiveness based on recidivism rates, other outcome measures, and costs of the programs.
During the 1998-99 fiscal year, the Sentencing and Policy Advisory Commission shall coordinate the collection of all data necessary to create an expanded database containing offender information on prior convictions, current conviction and sentence, program participation, and outcome measures.  Each program to be evaluated shall assist the Commission in the development of systems and collection of data necessary to complete the evaluation process.  The first evaluation report shall be presented to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety by April 15, 2000, and future reports shall be made by April 15 of each even-numbered year.
The Judicial Department may use the sum of fifty thousand dollars ($50,000) in funds appropriated for the 1998-99 fiscal year to conduct the study provided for in this section.
(b)	Section 22.3 of Chapter 18 of the Session Laws of the 1996 Second Extra Session is repealed.

Requested by:   Representatives Justus, Kiser, Thompson, Baddour, Redwine
ESTABLISH PILOT PROGRAM OF SETTLEMENT PROCEDURES IN DISTRICT COURT ACTIONS INVOLVING FAMILY ISSUES
Section 16.19.  (a)	G.S. 7A-38.4 reads as rewritten:
"§ 7A-38.4. Settlement procedures in district court actions.
(a)	The purpose of this section is to authorize the design, implementation, and evaluation of a pilot program in which parties to district court actions involving equitable distribution, alimony, and support may be required to attend a pretrial mediated settlement conference or other settlement procedure.
	(c)	The Supreme Court may adopt rules to implement this section. The definitions in G.S. 7A-38.1(b)(2) and (b)(3) apply to this section.
(d)	District court judges of any participating district may order a mediated settlement conference or another settlement procedure for any action pending in the district involving issues of equitable distribution, alimony, or child or spousal support, pursuant to rules adopted by the Supreme Court.  The chief district court judge may by local rule order all such cases, not otherwise exempted by Supreme Court rule, to mediated settlement conference.
(e)	The parties to a district court action in which a mediated settlement conference is ordered, their attorneys, and other persons or entities with authority, by law or by contract, to settle the parties' claims shall attend the mediated settlement conference, or other settlement procedure ordered by a district court judge pursuant to rules of the Supreme Court, unless excused by those rules.  Nothing in this section shall require any party or other participant in the conference to make a settlement offer or demand which it deems is contrary to its best interests.
(f)	Any person required to attend a mediated settlement conference or other settlement procedure ordered by the court who, without good cause, fails to attend in compliance with this section and the rules adopted under this section, shall be subject to any appropriate monetary sanction imposed by a district court judge pursuant to rules of the Supreme Court, including the payment of attorneys' fees, mediator fees, and expenses incurred in attending the settlement procedure.  If the court imposes sanctions, it shall do so, after notice and hearing, in a written order, making findings of fact and conclusions of law. An order imposing sanctions shall be reviewable upon appeal where the entire record as submitted shall be reviewed to determine whether the order is supported by substantial evidence.
(g)	The parties to a district court action in which a mediated settlement conference is to be held pursuant to this section shall have the right to designate a mediator. Upon failure of the parties to designate within the time established by the rules of the Supreme Court, a mediator shall be appointed by a district court judge pursuant to rules of the Supreme Court.
(h)	Pursuant to rules of the Supreme Court, a chief district court judge, at the request of a party and with the consent of all parties, may order the parties to attend and participate in any other settlement procedure authorized by rules adopted by the Supreme Court or adopted by local district court rules, in lieu of attending a mediated settlement conference.  Neutrals acting pursuant to this section shall be selected and compensated in accordance with rules of the Supreme Court or pursuant to agreement of the parties. Nothing herein shall prohibit the parties from participating in other dispute resolution procedures, including arbitration, to the extent authorized under State or federal law.
(i)	Mediators and other neutrals acting pursuant to this section shall have judicial immunity in the same manner and to the same extent as a judge of the General Court of Justice, except that mediators and other neutrals may be disciplined in accordance with enforcement procedures adopted by the Supreme Court pursuant to G.S. 7A-38.2.
(j)	Costs of mediated settlement conferences and other settlement procedures shall be borne by the parties. Unless otherwise ordered by the court or agreed to by the parties, the mediator's fees shall be paid in equal shares by the parties. The rules adopted by the Supreme Court implementing this section shall set out a method whereby parties found by the court to be unable to pay the costs of settlement procedures are afforded an opportunity to participate without cost to an indigent party and without expenditure of State funds.
(k)	Evidence of statements made and conduct occurring in a settlement proceeding conducted pursuant to this section shall not be subject to discovery and shall be inadmissible in any proceeding in the action or other actions on the same claim. However, no evidence otherwise discoverable shall be inadmissible merely because it is presented or discussed in a settlement proceeding.
No mediator, or other neutral conducting a settlement procedure pursuant to this section, shall be compelled to testify or produce evidence concerning statements made and conduct occurring in a mediated settlement conference or other settlement procedure in any civil proceeding for any purpose, except proceedings for sanctions under this section, disciplinary hearings before the State Bar or any agency established to enforce standards of conduct for mediators, and proceedings to enforce laws concerning juvenile or elder abuse.
(l)	The Supreme Court may adopt standards for the certification and conduct of mediators and other neutrals who participate settlement procedures conducted pursuant to this section.  The standards may also regulate mediator training programs.  The Supreme Court may adopt procedures for the enforcement of those standards.  The administration of mediator certification, regulation of mediator conduct, and decertification shall be conducted through the Dispute Resolution Commission.
(m)	An administrative fee not to exceed two hundred dollars ($200.00) may be charged by the Administrative Office of the Courts to applicants for certification and annual renewal of certification for mediators and mediator training programs operation under this section.  The fees collected may be used by the Director of the Administrative Office of the Courts to establish and maintain the operations of the Commission and its staff.  The administrative fee shall be set by the Director of the Administrative Office of the Courts in consultation with the Dispute Resolution Commission.
(n)	The Administrative Office of the Courts, in consultation with the Dispute Resolution Commission, may require the chief district court judge of any participating district to report statistical data about settlement procedures conducted pursuant to this section for administrative purposes.
	(o)	Nothing in this section or rules adopted pursuant to it shall restrict the right to jury trial."
(b)	G.S. 7A-38.2(c) reads as rewritten:
"(c)	The Dispute Resolution Commission shall consist of 14 members: five judges appointed by the Chief Justice of the Supreme Court, at least two of whom shall be superior court judges, and at least two of whom shall be district court judges; two mediators certified to conduct superior court mediated settlement conferences and two mediators certified to conduct equitable distribution mediated settlement conferences appointed by the Chief Justice of the Supreme Court; two practicing attorneys who are not certified as mediators appointed by the President of the North Carolina State Bar, one of whom shall be a family law specialist; and three citizens knowledgeable about mediation, one of whom shall be appointed by the Governor, one by the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S. 120-121, and one by the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120-121. Members appointed by the Governor, the Speaker of the House of Representatives, and the President Pro Tempore of the Senate shall not be attorneys.  Members shall initially serve four-year terms, except that one judge, one mediator, one attorney, and the citizen member appointed by the Governor, shall be appointed for an initial term of two years. The Chief Justice shall designate one of the judge members to serve as chair for a two-year term. Members of the Commission shall be compensated pursuant to G.S. 138-5.
Vacancies shall be filled for unexpired terms and full terms in the same manner as incumbents were appointed.  Appointing authorities may receive and consider suggestions and recommendations of persons for appointment from the Dispute Resolution Commission, the Family Law, Litigation, and Dispute Resolution Sections of the North Carolina Bar Association, the North Carolina Association of Professional Family Mediators, the North Carolina Association of Clerks of Superior Court, the North Carolina Conference of Court Administrators, the Mediation Network of North Carolina, the Dispute Resolution Committee of the Supreme Court, the Conference of Chief District Court Judges, the Conference of Superior Court Judges, the Director of the Administrative Office of the Courts, and the Child Custody Mediation Advisory Committee of the Administrative Office of the Courts."
(c)	The Administrative Office of the Courts may solicit and accept funds from private sources to evaluate the pilot program conducted pursuant to this section.  The Administrative Office of the Courts shall report its findings and recommendations to the Chairs of the House and Senate Appropriations Committees and the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety by April 1, 2001.
(d)	Of the funds appropriated to the Judicial Department for the 1998-99 fiscal year, the sum of fifty thousand dollars ($50,000) shall be used to fund the activities of the Dispute Resolution Commission in association with the pilot program authorized by this section.  No such funds shall be expended for the payment of mediator fees.
(e)  This section becomes effective October 1, 1998.

Requested by:   Representatives Justus, Kiser, Thompson
ADDITIONAL ASSISTANT DISTRICT ATTORNEYS
Section 16.20.  (a) G.S. 7A-60(a1) reads as rewritten:
"(a1)	The counties of the State are organized into prosecutorial districts, and each district has the counties and the number of full-time assistant district attorneys set forth in the following table:

No. of Full-Time
Prosecutorial	Asst. District
District	Counties	Attorneys
1	Camden, Chowan, Currituck,	9
Dare, Gates, Pasquotank,
Perquimans
2	Beaufort, Hyde, Martin,	5
Tyrrell, Washington
3A	Pitt	9
3B	Carteret, Craven, Pamlico	10
4	Duplin, Jones, Onslow,	14
Sampson
5	New Hanover, Pender	13
6A	Halifax	4
6B	Bertie, Hertford,	4
	Northampton
	7	Edgecombe, Nash, Wilson	15
8	Greene, Lenoir, Wayne	11
9	Franklin, Granville,	10
Vance, Warren
9A	Person, Caswell	4
	10	Wake	28
11	Harnett, Johnston, Lee	14
12	Cumberland	17
13	Bladen, Brunswick, Columbus	9
14	Durham	12
15A	Alamance	7
15B	Orange, Chatham	7
16A	Scotland, Hoke	5
16B	Robeson	9
17A	Rockingham	5
17B	Stokes, Surry	5
18	Guilford	26
19A	Cabarrus	 	5
19B	Montgomery, Moore, Randolph	11
19C	Rowan	5
20	Anson, Richmond,	14
Stanly, Union
21	Forsyth	17
22	Alexander, Davidson, Davie,	16
Iredell
23	Alleghany, Ashe, Wilkes,	5
Yadkin
24	Avery, Madison, Mitchell,	4
Watauga, Yancey
25	Burke, Caldwell, Catawba	14
26	Mecklenburg	32
	27A	Gaston	12
27B	Cleveland,	8
Lincoln
28	Buncombe	11
29	Henderson, McDowell, Polk,	11
Rutherford, Transylvania
30	Cherokee, Clay, Graham,	7
Haywood, Jackson, Macon,
Swain."
(b)	This section becomes effective December 1, 1998.

Requested by:   Representatives Justus, Thompson, Kiser, Redwine
ADDITIONAL INVESTIGATORIAL ASSISTANTS
Section 16.21.  G.S. 7A-69 reads as rewritten:
"§ 7A-69.  Investigatorial assistants.
The district attorney in prosecutorial districts 1, 3B, 4, 6B, 7, 8, 10, 11, 12, 13, 14, 15A, 15B, 18, 19B, 20, 21, 24, 25, 26, 27A, 27B, 28, 29, and 30 is entitled to one investigatorial assistant to be appointed by the district attorney and to serve at his pleasure.
It shall be the duty of the investigatorial assistant to investigate cases preparatory to trial and to perform such other duties as may be assigned by the district attorney. The investigatorial assistant is entitled to reimbursement for his subsistence and travel expenses to the same extent as State employees generally."

Requested by:   Representatives Justus, Kiser, Thompson, Daughtry, Hardy, Neely
ADD TWO SPECIAL SUPERIOR COURT JUDGES/CLARIFY TERMS OF EXISTING SPECIAL SUPERIOR COURT JUDGES
Section 16.22.  (a)	G.S. 7A-45.1 is amended by adding a new subsection to read:
"( a3)	Effective December 15, 1998, the Governor may appoint two special superior court judges to serve terms expiring five years from the date that each judge takes office.  Successors to the special superior court judges appointed pursuant to this subsection shall be appointed to five-year terms. A special judge takes the same oath of office and is subject to the same requirements and disabilities as are or may be prescribed by law for regular judges of the superior court, save the requirement of residence in a particular district."
(b)	G.S. 7A-45.1(a2) reads as rewritten:
"(a2)	Effective December 15, 1996, the Governor may appoint four special superior court judges to serve terms expiring five years from the date that each judge takes office.  Successors to the special superior court judges appointed pursuant to this subsection shall be appointed to five-year terms. A special judge takes the same oath of office and is subject to the same requirements and disabilities as are or may be prescribed by law for regular judges of the superior court, save the requirement of residence in a particular district."

Requested by:   Representatives Justus, Kiser, Thompson
REPORTS ON VACANT POSITIONS
Section 16.23. The Judicial Department, the Department of Correction, the Department of Justice, and the Department of Crime Control and Public Safety shall each report by May 1 and December 1 of each year to the Chairs of the House and Senate Appropriations Committees and the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety on all positions within that department that have remained vacant for 12 months or more.  The report shall include the original position vacancy dates, the dates of any postings or repostings of the positions, and an explanation for the length of the vacancies.

Requested by:   Representatives Justus, Kiser, Thompson
PROJECT CHALLENGE REPORT
Section 16.24. Subsection (a) of Section 18.20 of S.L. 1997-443 reads as rewritten:
"(a)	Of the funds appropriated in this act to the Administrative Office of the Courts for the 1997-99 biennium, the sum of one hundred thousand dollars ($100,000) for the 1997-98 fiscal year and the sum of two hundred thousand dollars ($200,000) for the 1998-99 fiscal year shall be used to support the operation of Project Challenge North Carolina, Inc., a nonprofit corporation that provides alternative dispositions and services to juveniles who have been adjudicated delinquent or undisciplined in District Court Districts 24, 25, 29, and 30 and for expansion of the program into additional districts.  The funds shall be used to:
(1)	Provide community resources and dispositional alternatives for juveniles in the form of community services, including services to the elderly and economically disadvantaged;
(2)	Promote the involvement of juveniles in community programs that instill in juveniles pride in their communities and develop self-respect and the skills needed for them to be productive, responsible members of their communities;
(3)	Coordinate with the local schools and State and local law enforcement to educate juveniles regarding the justice system and to promote respect for authority and an appreciation of societal laws and mores; and
(4)	Collaborate with community agencies and organizations to provide guidance to and positive role models for juveniles."

Requested by:   Representatives Justus, Kiser, Thompson, McCrary
RECONFORM THE MILEAGE REIMBURSEMENT FOR OUT-OF-STATE WITNESSES TO THAT RECEIVED BY IN-STATE WITNESSES AND STATE EMPLOYEES
Section 16.25.  (a) G.S. 7A-314(c) reads as rewritten:
"(c)	A witness who resides in a state other than North Carolina and who appears for the purpose of testifying in a criminal action and proves his attendance may be compensated at the rate allowed to State officers and employees by subdivisions (1) and (2) of G.S. 138-6(a) for one round-trip from his place of residence to the place of appearance, and five dollars ($5.00) for each day that he is required to travel and attend as a witness, upon order of the court based upon a finding that the person was a necessary witness.  If such a witness is required to appear more than one day, he is also entitled to reimbursement for actual expenses incurred for lodging and meals, not to exceed the maximum currently authorized for State employees."
(b)	G.S. 15A-813 reads as rewritten:
"§ 15A-813. Witness from another state summoned to testify in this State.
If a person in any state which by its laws has made provision for commanding persons within its borders to attend and testify in criminal prosecutions, or grand jury investigations commenced or about to commence in this State, is a material witness in a prosecution pending in a court of record in this State, or in a grand jury investigation which has commenced or is about to commence, a judge of such court may issue a certificate under the seal of the court, stating these facts and specifying the number of days the witness will be required. Said certificate may include a recommendation that the witness be taken into immediate custody and delivered to an officer of this State to assure his attendance in this State. This certificate shall be presented to a judge of a court of record in the county in which the witness is found.
If the witness is summoned to attend and testify in this State he shall be compensated at the rate allowed to State officers and employees by subdivisions (1) and (2) of G.S. 138-6(a) for each mile by the ordinary traveled route to and from the court where the prosecution is pending, and five dollars ($5.00) for each day that he  is required to travel and attend as a witness. A witness who has appeared in accordance with the provisions of the summons shall not be required to remain within this State a longer period of time than the period mentioned in the certificate unless otherwise ordered by the court.  If such a witness is required to appear more than one day, he is also entitled to reimbursement for actual expenses incurred for lodging and meals, not to exceed the maximum currently authorized for State employees when traveling in the State.  If such witness, after coming into this State, fails without good cause to attend and testify as directed in the summons, he shall  be punished in the manner provided for the punishment of any witness who disobeys a summons issued from a court of record in this State."
(c)	This section is effective when it becomes law and applies to all out-of-state witness travel expenses incurred on or after that date.

Requested by:   Representatives Justus, Kiser, Thompson
COMPUTER REPLACEMENT FUNDS
Section 16.26.  The Judicial Department may use up to the sum of five hundred thousand dollars ($500,000) from funds available during the 1998-99 fiscal year to replace computers and associated equipment in response to computer-related problems that may occur during the fiscal year.  The Department shall report quarterly to the Chairs of the House and Senate Appropriations Committees and the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety on the expenditure of funds for this purpose.

PART XVII.  DEPARTMENT OF CORRECTION
Requested by:   Representatives Justus, Kiser, Thompson
REALLOCATE LAND TO NC STATE UNIVERSITY
Section 17.  The 17.4-acre tract of State-owned land adjacent to Schenck Forest that is described in the Memorandum of Agreement made in October 1992, by and between the North Carolina Department of Correction and North Carolina State University, is reallocated to North Carolina State University.  The land shall be used for the purpose of teaching, research, and extension, including timber management practices, and forestry demonstration purposes associated with the North Carolina State University College of Forest Resources.  North Carolina State University shall maintain this land in good condition according to current timber management practices.

Requested by:   Representatives Justus, Kiser, Thompson
REPORT ON BOOT CAMPS
Section 17.1.  Subsection (c) of Section 19 of Chapter 24 of the Session Laws of the 1994 Extra Session, as amended by Section 19.3 of Chapter 324 of the 1995 Session Laws, reads as rewritten:
"(c)	The Department of Correction shall evaluate the IMPACT program and the post-Boot Camp probation program funded under this section and report by March 1 of each year to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Corrections and Crime Control Oversight Committee, and the Fiscal Research Division.  The evaluation of the IMPACT program and the post-Boot Camp probation program shall focus on the performance, behavior, and attitudes of the offenders while in the program.  Specific topics shall include measures of participation and completion, data on completion of educational, substance abuse treatment, and community service programs, drug testing and probation revocation statistics, and the current status of IMPACT graduates.  The evaluation shall also include any available information on the difference in outcome among offenders who attend the IMPACT program only, offenders who attend both the IMPACT program and aftercare, and similar offenders who receive other intermediate sanctions."

Requested by:   Representatives Justus, Kiser, Thompson
REIMBURSE COUNTIES FOR HOUSING AND EXTRAORDINARY MEDICAL COSTS FOR INMATES, PAROLEES, AND POST-RELEASE SUPERVISEES AWAITING TRANSFER TO STATE PRISON SYSTEM
Section 17.2.   Section 19(b) of S.L. 1997-443 reads as rewritten:
"(b)	The Department of Correction may use funds appropriated to the Department for the 1997-99 biennium to pay the sum of forty dollars ($40.00) per day as reimbursement to counties for the cost of housing convicted inmates and parolees and post-release supervisees awaiting transfer to the State prison system, as provided in G.S. 148-29.  The Department shall report quarterly to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Corrections Oversight Committee, the Chairs of the Senate and House Appropriations Committees, and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the expenditure of funds to reimburse counties for prisoners awaiting transfer and on its progress in reducing the jail backlog.
Prior to the expenditure of more than the sum of six million five hundred thousand dollars ($6,500,000) for the 1997-98 fiscal year or more than the sum of two million dollars ($2,000,000) for the 1998-99 fiscal year to reimburse counties for prisoners awaiting transfer, the Department of Correction and the Office of State Budget and Management shall report to the Joint Legislative Commission on Governmental Operations, the Chairs of the Senate and House Appropriations Committees, and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the necessity of that expenditure."

Requested by:   Representatives Justus, Kiser, Thompson
INMATE HOUSING FUNDS
Section 17.3.  (a)	The Department of Correction may use funds available to the Department for the 1998-99 fiscal year to contract for prison beds to house inmates in local jails.  Prior to the expenditure of more than the sum of three million dollars ($3,000,000) in additional funds authorized by this section to contract for local jail beds, the Department of Correction and the Office of State Budget and Management shall report to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the necessity of that expenditure.  
(b)	The Department of Correction and the Office of State Budget and Management shall report by December 1, 1998, to the Joint Legislative Corrections and Crime Control Oversight Committee, the Chairs of the Senate and House Appropriations Committee, and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the status of contracts to house inmates in local jails, including the amount expended to date, the anticipated amount to be expended, and the dates each contract is expected to terminate.

[SECTION 17.4 RESERVED]

Requested by:   Representatives Justus, Kiser, Thompson
MODIFICATION OF FUNDING FORMULA FOR THE NORTH CAROLINA STATE-COUNTY CRIMINAL JUSTICE PARTNERSHIP ACT
Section 17.5. Subsection (a) of Section 19.8 of S.L. 1997-443 reads as rewritten:
"(a)	Notwithstanding the funding formula set forth in G.S. 143B-273.15, appropriations made to the Department of Correction through the North Carolina State-County Criminal Justice Partnership Act for the 1997-99 biennium shall be distributed to the counties as specified in G.S. 143B-273.15(2) only, and not as discretionary funds.  The Department may also use funds from the State-County Criminal Justice Partnership Account in order to maintain the counties' allocations of nine million six hundred thousand dollars ($9,600,000) as provided in previous fiscal years.  Appropriations not claimed or expended by the counties during the 1997-99 biennium shall be distributed as specified in G.S. 143B-273.15(1)."

Requested by:   Representatives Justus, Kiser, Thompson
PROGRESS REPORT/PERFORMANCE AUDIT OF DIVISION OF ADULT PROBATION AND PAROLE
Section 17.6.  The Division of Adult Probation and Parole shall report to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety and the Fiscal Research Division by January 1, 1999, on any actions taken or planned in response to the June 1, 1998, performance audit of the Division.  The report shall include details on any changes in funding, classification, staffing levels, or organization structure that have occurred since the June 1 audit and should highlight those changes that are directly related to issues raised in the audit.

Requested by:   Representatives Justus, Kiser, Thompson
FUNDING OF PRISON ROAD SQUADS
Section 17.7.  In preparing the continuation budget, the Office of State Budget and Management shall adjust the estimated receipts from the Highway Fund to the Department of Correction for the use of prison road squads to reflect only those costs authorized for reimbursement by G.S. 148-26.5.

Requested by:   Representatives Justus, Kiser, Thompson
INMATE COSTS
Section 17.8.  Section 19.20 of S.L. 1997-443 reads as rewritten:
"Section 19.20.  The Department of Correction may use funds available to the Department for the 1997-99 biennium to pay the cost of providing food and health care to inmates housed in the Division of Prisons 
	if the cost of providing food and health care to inmates is anticipated to exceed the continuation budget amounts provided for that purpose in this act.
Prior to making any expenditure authorized by this section, the Department of Correction shall report on its need to use these additional funds to the Joint Legislative Commission on Governmental Operations, the Chairs of the House and Senate Appropriations Committees, and the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety.
	The Office of State Budget and Management, in consultation with the Department of Correction, shall (i) analyze the basis for increases in the cost of providing food service and health care to inmates since the 1994-95 fiscal year, including an analysis of the major areas of expenditure growth, and an identification of major areas where cost-efficient actions have been taken, and (ii) determine future actions that will improve efficiency in the delivery of food service and health care to inmates.  The Office of State Budget and Management shall report on the results of this study to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety by February 15, 1999."

Requested by:   Representatives Justus, Kiser, Thompson
TITLE VII FUNDS/REPORT
Section 17.9.  Section 19.18 of S.L. 1997-443 reads as rewritten:
"Section 19.18. The Department of Correction may use funds available to the Department during the 1997-99 biennium for payment to claimants as part of the settlement of the Title VII lawsuit over the recruitment, hiring, and promotion of females in the Department.  Prior to final settlement of the lawsuit, the Department shall report on the proposed settlement to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Corrections Oversight Committee, and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety."

Requested by:   Representatives Justus, Kiser, Thompson
DIRECT CRIMINAL JUSTICE EDUCATION AND TRAINING STANDARDS COMMISSION TO REVISE HIRING AND RECORD-KEEPING PROCEDURES FOR EMPLOYEES OF DEPARTMENT OF CORRECTION
Section 17.10.  (a) Section 19.28 of S.L. 1997-443 reads as rewritten:
"Section 19.28.  No later than October 1, 1998, the Criminal Justice Education and Training Standards Commission shall reestablish the hiring and record-keeping procedures for the employment of certified positions in the Department of Correction."
(b)	The Criminal Justice Education and Training Standards Commission shall report by October 1, 1998, to the Joint Legislative Corrections and Crime Control Oversight Committee, the Chairs of the Senate and House Appropriations Committees, and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on its progress in complying with the provisions of this section.
(c)	This section becomes effective June 30, 1998.

Requested by:   Representatives Justus, Kiser, Thompson
FEDERAL GRANT MATCHING FUNDS
Section 17.11.  Notwithstanding the provisions of G.S. 148-2, the Department of Correction may use up to the sum of eight hundred seventy-five thousand dollars ($875,000) from funds available to the Department to provide the State match needed in order to receive federal grant funds.

Requested by:   Representatives Justus, Kiser, Thompson
SUBSTANCE ABUSE FUNDS
Section 17.12.  (a) Of the four hundred sixty-seven thousand eight hundred six dollars ($467,806) appropriated in S.L. 1997-443 to the Department of Correction for the 1997-98 fiscal year to be allocated to the DART/DWI aftercare program at Cherry Hospital, the sum of one hundred thousand dollars ($100,000) shall not revert at the end of the fiscal year but shall remain available to the Department during the 1998-99 fiscal year to be used for the purchase of hardware and software needed to implement an offender and inmate tracking and program evaluation system for the Substance Abuse Program.  These funds may not be expended until the Department has developed a plan for this new system and reported on the plan to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety.
(b)	Of the funds appropriated to the Department of Correction for the 1998-99 fiscal year, the Department may use up to the sum of three hundred nineteen thousand seven hundred fifteen dollars ($319,715) for DART/DWI aftercare.
(c)	 The Department of Correction shall report by March 1 of each year to the Joint Legislative Corrections and Crime Control Oversight Committee, the Chairs of the Senate and House Appropriations Committees, and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on their efforts to provide effective treatment to offenders with substance abuse problems.  The report shall include:
(1)	Details of any new initiatives and expansion or reduction of programs;
(2)	Details on any treatment efforts conducted in conjunction with other departments;
(3)	Utilization of the DART/DWI program, including its aftercare program;
(4)	Progress in the development of an offender and inmate tracking and program evaluation system; and
(5)	A report on the number of current inmates with substance abuse problems, the number of inmates currently receiving treatment, the number of these inmates who are receiving treatment for a second or subsequent time, and the numbers who have completed treatment.  As an offender and inmate tracking system becomes operational, this report shall also include information on the recidivism of inmates who have previously completed substance abuse treatment and been released from prison.

Requested by:   Representatives Justus, Kiser, Thompson
POST-RELEASE SUPERVISION AND PAROLE COMMISSION/REPORT ON STAFFING REORGANIZATION AND REDUCTION
Section 17.13.  The Post-Release Supervision and Parole Commission shall report by March 1, 1999, to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety and upon request of the Joint Legislative Corrections and Crime Control Oversight Committee after March 1, 1999, on:
(1)	The Commission's progress in reviewing cases requiring review in light of the decision of the North Carolina Supreme Court in Robbins v. Freeman; and
(2)	An updated transition plan for implementing staff reductions through the 2002-2003 fiscal year, including a minimum ten percent (10%) reduction in staff positions in the 1999-2000 fiscal year over the 1998-99 fiscal year.

Requested by:   Representatives Justus, Kiser, Thompson
PRIVATE PRISON CONTRACTS
Section 17.14.  If the Department of Correction determines, in consultation with the Attorney General's Office, the Office of State Budget and Management, and the Corrections Corporation of America, that it is appropriate to modify the terms of the contracts for the leasing and operation of one or both of the two private confinement facilities in Pamlico and Avery/Mitchell, the Department may use funds available to the Department for the 1998-99 fiscal year to modify the lease contract and the operating agreement as necessary.  Prior to taking actions or obligating funds as authorized by this section, the Department of Correction shall report to the Joint Legislative Commission on Governmental Operations, the Chairs of the Senate and House Appropriations Committees, and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the justification for using available funds to modify the contracts.

Requested by:   Representatives Justus, Kiser, Thompson
STUDY SPECIAL EDUCATION OBLIGATIONS OF DEPARTMENT OF CORRECTION
Section 17.15.  The Joint Legislative Corrections and Crime Control Oversight Committee shall study the issue of limiting the obligations of the Department of Correction to provide special education and related services to incarcerated youth ages 18 through 21.  The Committee shall consider the recent amendment to the federal Individuals with Disabilities Education Act (IDEA) that allows states to reduce the responsibility of their prisons to identify and serve inmates not previously identified and served in the public schools.  The Committee shall report its findings and recommendations to the 1999 General Assembly.

Requested by:   Representatives Justus, Kiser, Thompson, Sexton
ADDITIONAL PRISON BEDS/PROVIDE THAT A SENTENCE OF LIFE IMPRISONMENT WITHOUT PAROLE SHALL BE IMPOSED FOR A SECOND OR SUBSEQUENT CONVICTION OF A CLASS B1 FELONY IF THERE ARE NO MITIGATING CIRCUMSTANCES AND THE VICTIM IS THIRTEEN YEARS OF AGE OR YOUNGER/ENHANCE THE PUNISHMENT IMPOSED FOR INJURING A PREGNANT WOMAN IN THE COMMISSION OF A FELONY, ACT OF DOMESTIC VIOLENCE, OR UNLAWFUL OPERATION OF A MOTOR VEHICLE CAUSING A MISCARRIAGE OR STILLBIRTH/INCREASE THE PENALTY FOR CRUELTY TO ANIMALS/INCREASE OR ESTABLISH CRIMINAL AND CIVIL PENALTIES FOR THE OFFENSES OF SELLING DRUGS TO A MINOR, HIRING OR INTENTIONALLY USING A MINOR TO COMMIT A DRUG LAW VIOLATION, AND PURCHASING OR RECEIVING DRUGS FROM A MINOR
Section 17.16.  (a)	Article 81B of Chapter 15A of the General Statutes is amended by adding a new section to read:
"§ 15A-1340.16B.  Life imprisonment without parole for a second or subsequent conviction of a Class B1 felony.
(a)	Notwithstanding the sentencing dispositions in G.S. 15A-1340.17, a person convicted of a Class B1 felony shall be sentenced to life imprisonment without parole if:
(1)	The offense was committed against a victim who was 13 years of age or younger at the time of the offense;
(2)	The person has one or more prior convictions of a Class B1 felony; and
(3)	The court finds that there are no mitigating factors in accordance with G.S. 15A-1340.16(e).
(b)	If the sentencing court finds that there are mitigating circumstances, then the court shall sentence the person in accordance with G.S. 15A-1340.17.
(c)	A prior conviction of a Class B1 felony shall be proved in accordance with G.S. 15A-1340.14."
(b)	Article 6 of Chapter 14 of the General Statutes is amended by adding a new section to read:
"§ 14-18.2.  Injury to pregnant woman.
(a)	Definitions. – The following definitions shall apply in this section:
(1)	Miscarriage. – The interruption of the normal development of the fetus, other than by a live birth, and which is not an induced abortion permitted under G.S. 14-45.1, resulting in the complete expulsion or extraction from a pregnant woman of the fetus.
(2)	Stillbirth. – The death of a fetus prior to the complete expulsion or extraction from a woman irrespective of the duration of pregnancy and which is not an induced abortion permitted under G.S. 14-45.1.
(b)	A person who in the commission of a felony causes injury to a woman, knowing the woman to be pregnant, which injury results in a miscarriage or stillbirth by the woman is guilty of a felony that is one class higher than the felony committed.
(c)	A person who in the commission of a misdemeanor that is an act of domestic violence as defined in Chapter 50B of the General Statutes causes injury to a woman, knowing the woman to be pregnant, which results in miscarriage or stillbirth by the woman is guilty of a misdemeanor that is one class higher than the misdemeanor committed. If the offense was a Class A1 misdemeanor, the defendant is guilty of a Class I felony.
(d)	This section shall not apply to acts committed by a pregnant woman which result in a miscarriage or stillbirth by the woman."
(c)	Article 3 of Chapter 20 of the General Statutes is amended by adding a new section to read:
"§ 20-141.6.  Injury to pregnant woman by vehicle.
(a)	Definitions. – The following definitions shall apply in this section:
(1)	Miscarriage. – The interruption of the normal development of the fetus, other than by a live birth, and which is not an induced abortion permitted under G.S. 14-45.1, resulting in the complete expulsion or extraction from a pregnant woman of the fetus.
(2)	Stillbirth. – The death of a fetus prior to the complete expulsion or extraction from a woman irrespective of the duration of pregnancy and which is not an induced abortion permitted under G.S. 14-45.1.
(b)	Any person who in the unlawful operation of a motor vehicle commits a felony which causes a pregnant woman to suffer a miscarriage or stillbirth is guilty of a felony that is one class higher than the felony committed."
(d)	G.S. 14-360 reads as rewritten:
"§ 14-360.  Cruelty to animals; construction of section.
(a)	If any person shall willfully overdrive, overload, wound, injure, or deprive of necessary sustenance, or cause or procure to be overdriven, overloaded, wounded, injured, or deprived of necessary sustenance, any animal, every such offender shall for every such offense be guilty of a Class 1 misdemeanor.  " " " " "
(b)	If any person shall willfully torture, torment, mutilate, maim, cruelly beat, disfigure, poison, or kill, or cause or procure to be tortured, tormented, mutilated, maimed, cruelly beaten, disfigured, poisoned, or killed, any animal, every such offender shall for every such offense be guilty of a Class I felony. The word 'willfully', as used in this subsection, shall mean an act done intentionally, with bad motive or purpose and without justifiable excuse.
(c)	In this section, the term 'animal' shall be held to include every domestic or otherwise useful animal.  This section shall not apply to animals under the jurisdiction and regulation of the Wildlife Resources Commission, lawful activities conducted for purposes of biomedical research or training, lawful activities for sport or other lawful entertainment, the production of livestock or poultry, or the lawful destruction of any animal for the purpose of protecting the public, other animals, the public health, or for lawful veterinary purposes."
(e)  G.S. 90-95(e) reads as rewritten:
"(e)	The prescribed punishment and degree of any offense under this Article shall be subject to the following conditions, but the punishment for an offense may be increased only by the maximum authorized under any one of the applicable conditions:
(1),	(2) Repealed by Session Laws 1979, c. 760, s. 5.
(3)	If any person commits a Class 1 misdemeanor under this Article and if he has previously been convicted for one or more offenses under any law of North Carolina or any law of the United States or any other state, which offenses are punishable under any provision of this Article, he shall be punished as a Class I felon. The prior conviction used to raise the current offense to a Class I felony shall not be used to calculate the prior record level;
(4)	If any person commits a Class 2 misdemeanor, and if he has previously been convicted for one or more offenses under any law of North Carolina or any law of the United States or any other state, which offenses are punishable under any provision of this Article, he shall be guilty of a Class 1 misdemeanor. The prior conviction used to raise the current offense to a Class 1 misdemeanor shall not be used to calculate the prior conviction level;
(5)	Any person 18 years of age or over who violates G.S. 90-95(a)(1) by selling or delivering a controlled substance to a person under 16 years of age but more than 13 years of age or a pregnant female shall be punished as a Class D felon.  Any person 18 years of age or over who violates G.S. 90-95(a)(1) by selling or delivering a controlled substance to a person who is 13 years of age or younger shall be punished as a Class C felon.    Mistake of age is not a defense to a prosecution under this section. It shall not be a defense that the defendant did not know that the recipient was pregnant;
(6)	For the purpose of increasing punishment under G.S. 90-95(e)(3) and (e)(4), previous convictions for offenses shall be counted by the number of separate trials at which final convictions were obtained and not by the number of charges at a single trial;
(7)	If any person commits an offense under this Article for which the prescribed punishment requires that any sentence of imprisonment be suspended, and if he has previously been convicted for one or more offenses under any law of North Carolina or any law of the United States or any other state, which offenses are punishable under any provision of this Article, he shall be guilty of a Class 2 misdemeanor;
(8)	Any person 21 years of age or older who commits an offense under G.S. 90-95(a)(1) on property used for an elementary or secondary school or within 300 feet of the boundary of real property used for an elementary or secondary school shall be punished as a Class E felon. For purposes of this subdivision, the transfer of less than five grams of marijuana for no remuneration shall not constitute a delivery in violation of G.S. 90-95(a)(1).
(9)	Any person who violates G.S. 90-95(a)(3) on the premises of a penal institution or local confinement facility shall be guilty of a Class H felony."
(f)  G.S. 90-95.4 reads as rewritten:
"§ 90-95.4.  Employing or intentionally using minor to commit a drug law violation.
(a)	A person who is at least 18 years old but less than 21 years old who hires or intentionally uses a minor to violate G.S. 90-95(a)(1) shall be guilty of a felony.  An offense under this subsection shall be punishable as follows:
(1)	If the minor was more than 13 years of age, then as a felony that is one class more severe than the violation of G.S. 90-95(a)(1) for which the minor was hired or intentionally used.
(2)	If the minor was 13 years of age or younger, then as a felony that is two classes more severe than the violation of G.S. 90-95(a)(1) for which the minor was hired or intentionally used.
(b)	A person 21 years of age or older who hires or intentionally uses a minor to violate G.S. 90-95(a)(1) shall be guilty of a felony.  An offense under this subsection shall be punishable as follows:
(1)	If the minor was more than 13 years of age, then as a felony that is three classes more severe than the violation of G.S. 90-95(a)(1) for which the minor was hired or intentionally used.
(2)	If the minor was 13 years of age or younger, then as a felony that is four classes more severe than the violation of G.S. 90-95(a)(1) for which the minor was hired or intentionally used.
(c)	Mistake of Age.  Mistake of age is not a defense to a prosecution under this section.
(d)	The term 'minor' as used in this section is defined as an individual who is less than 18 years of age."
(g)  G.S. 90-95.5 reads as rewritten:
"§ 90-95.5.  Civil liability - employing a minor to commit a drug offense.
A person 21 years of age or older, who hires, employs, or intentionally uses a person under 18 years of age to commit a violation of G.S. 90-95 is liable in a civil action for damages for drug addiction proximately caused by the violation.  The doctrines of contributory negligence and assumption of risk are no defense to liability under this section."
(h)  Article 5 of Chapter 90 of the General Statutes is amended by adding the following new sections to read:
"§ 90-95.6.  Promoting drug sales by a minor.
(a)	A person who is 21 years of age or older is guilty of promoting drug sales by a minor if the person knowingly:
(1)	Entices, forces, encourages, or otherwise facilitates a minor in violating G.S. 90-95(a)(1).
(2)	Supervises, supports, advises, or protects the minor in violating G.S. 90-95(a)(1).
(b)	Mistake of age is not a defense to a prosecution under this section.
(c)	A violation of this section is a Class D felony.
"§ 90-95.7. Participating in a drug violation by a minor.
	(a) A person 21 years of age or older who purchases or receives a controlled substance from a minor who possesses, sells, or delivers the controlled substance in violation of G.S. 90-95(a)(1) is guilty of participating in a drug violation of a minor.
(b)	Mistake of age is not a defense to a prosecution under this section.
(c)	A violation of this section is a Class F felony."
(i) This section becomes effective December 1, 1998, and applies to offenses committed on or after that date.

Requested by:   Representatives Holmes, Esposito, Creech, Crawford
DISCLOSURE OF CONVICTION NOT REQUIRED IN SALE OR LEASE OF REAL PROPERTY
Section 17.16A. (a)	G.S. 39-50 reads as rewritten:
"§ 39-50.  Death, illness, or conviction of crime not a material fact.
In offering real property for sale it shall not be deemed a material fact that the real property was occupied previously by a person who died or had a serious illness while occupying the property or that a person convicted of any crime occupies, occupied, or resides near the property; provided, however, that no seller may knowingly make a false statement regarding any such fact."
(b)	G.S. 42-14.2 reads as rewritten:
"§ 42-14.2.  Death, illness, or conviction of crime not a material fact.
In offering real property for rent or lease it shall not be deemed a material fact that the real property was occupied previously by a person who died or had a serious illness while occupying the property or that a person convicted of any crime occupies, occupied, or resides near the property; provided, however, that no landlord or lessor may knowingly make a false statement regarding any such fact."

[SECTION 17.17 RESERVED]

Requested by:   Representatives Justus, Kiser, Thompson
USE OF FEDERAL PRISON CONSTRUCTION GRANT FUNDS
Section 17.18.  Section 19.22 of S.L. 1997-443 reads as rewritten:
"Section 19.22.  The Department of Correction shall use federal grant funds received from the U.S. Justice Department as part of the Violent Offender Incarceration Program and the Truth-In-Sentencing Incentive Grant Program  and any State funds appropriated for the further planning and design and construction of the following State prison facilities, provided that the project meets the criteria of the federal grant program:

Facility	Location	Number of Beds	Custody
Central Prison 	Wake	196	Close
Diagnostic Center
Warren Correctional	Warren 	168	Med/Close
Institution
Improvements to	Wake	208	Med/Close
NCCIW
Scotland Facility	Scotland	712	Close
Alexander Facility	Alexander	520	Close
(or replacement site)
Metro Facility	Charlotte	520	Close
Area
If the Department of Correction identifies a replacement for the Alexander Facility, the Department of Correction shall report on the site selected to the Chairs of the Senate and House Appropriations Committees, the Senate and House Appropriations Subcommittees on Justice and Public Safety, and the Joint Legislative Corrections and Crime Control Oversight Committee.
Prior to major redesign or expansion of plans for Scotland, Alexander, and Metro, the Department of Correction shall report to the Chairs of the Senate and House Appropriations Committees, the Senate and House Appropriations Subcommittees on Justice and Public Safety, and the Joint Legislative Corrections and Crime Control Oversight Committee.
The Department of Correction shall not initiate further construction on any of the projects listed in this section other than the Central Prison Diagnostic Center, which is already under contract, or on the Central Prison Medical Center project until the Department reports to the Chairs of the Senate and House Appropriations Committees, the Senate and House Appropriations Subcommittees on Justice and Public Safety, and the Joint Legislative Corrections and Crime Control Oversight Committee on the proposed construction plans and the short-term and long-term costs of the projects.
The Department of Correction shall report by October 1, 1998, to the Chairs of the Senate and House Appropriations Committees, the Senate and House Appropriations Subcommittees on Justice and Public Safety, the Joint Legislative Corrections and Crime Control Oversight Committee on the allocation of any federal funds received and of anticipated future federal grant funds."

Requested by:   Representatives Justus, Kiser, Thompson, Redwine, Sexton, Smith
INCREASE PENALTY FOR DOMESTIC CRIMINAL TRESPASS IF THE TRESPASS IS COMMITTED UPON PROPERTY OPERATED AS A SAFE HOUSE FOR VICTIMS OF DOMESTIC VIOLENCE AND THE PERSON TRESPASSING IS ARMED WITH A DEADLY WEAPON
Section 17.19. (a)	G.S. 14-134.3 reads as rewritten:
"§ 14-134.3.  Domestic criminal trespass.
(a)	Any person who enters after being forbidden to do so or remains after being ordered to leave by the lawful occupant, upon the premises occupied by a present or former spouse or by a person with whom the person charged has lived as if married, shall be guilty of a misdemeanor if the complainant and the person charged are living apart; provided, however, that no person shall be guilty if said person enters upon the premises pursuant to a judicial order or written separation agreement which gives the person the right to enter upon said premises for the purpose of visiting with minor children.  Evidence that the parties are living apart shall include but is not necessarily limited to:
(1)	A judicial order of separation;
(2)	A court order directing the person charged to stay away from the premises occupied by the complainant;
(3)	An agreement, whether verbal or written, between the complainant and the person charged that they shall live separate and apart, and such parties are in fact living separate and apart; or
(4)	Separate places of residence for the complainant and the person charged.
Except as provided in subsection (b) of this section, upon conviction, said person is guilty of a Class 1 misdemeanor.
	(b)	A person convicted of a violation of this section is guilty of a Class G felony if the person is trespassing upon property operated as a safe house or haven for victims of domestic violence and the person is armed with a deadly weapon at the time of the offense."
(b) This section becomes effective December 1, 1998, and applies to offenses committed on or after that date.

Requested by:   Representatives Dockham, Justus, Kiser, Thompson, McCrary
REQUIRE INMATE ROAD SQUADS IN DAVIDSON COUNTY TO WEAR UNIFORMS IDENTIFYING THEM AS INMATES
Section 17.20.  The Department of Correction and the Department of Transportation shall require all inmate road squads, maintenance road squads, and community work crews working in Davidson County to wear horizontally striped uniforms with stripes of three inches in width and color-coded by inmate classification in a manner consistent with the color-coding used by Davidson County for its road squads.

Requested by:   Representatives Justus, Kiser, Thompson
REMOVE IMPACT AS OPTION FOR SPECIAL PROBATION
Section 17.21. (a)	G.S. 15A-1344(e) reads as rewritten:
"(e)	Special Probation in Response to Violation. – When a defendant has violated a condition of probation, the court may modify his probation to place him on special probation as provided in this subsection. In placing him on special probation, the court may continue or modify the conditions of his probation and in addition require that he submit to a period or periods of imprisonment, either continuous or noncontinuous, at whatever time or intervals within the period of probation the court determines. In addition to any other conditions of probation which the court may impose, the court shall impose, when imposing a period or periods of imprisonment as a condition of special probation, the condition that the defendant obey the Rules and Regulations of the Department of Correction governing conduct of inmates, and this condition shall apply to the defendant whether or not the court imposes it as a part of the written order. If imprisonment is for continuous periods, the confinement may be in either the custody of the Department of Correction or a local confinement facility. Noncontinuous periods of imprisonment under special probation may only be served in a designated local confinement or treatment facility. Except for probationary sentences for impaired driving under G.S. 20-138.1, the total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, may not exceed six months or one fourth the maximum sentence of imprisonment imposed for the offense, whichever is less. For probationary sentences for impaired driving under G.S. 20-138.1, the total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, shall not exceed one-fourth the maximum penalty allowed by law. No confinement other than an activated suspended sentence may be required beyond the period of probation or beyond two years of the time the special probation is imposed, whichever comes first."
(b)	G.S. 15A-1351(a) reads as rewritten:
"(a)	The judge may sentence to special probation a defendant convicted of a criminal offense other than impaired driving under G.S. 20-138.1, if based on the defendant's prior record or conviction level as found pursuant to Article 81B of this Chapter, an intermediate punishment is authorized for the class of offense of which the defendant has been convicted. A defendant convicted of impaired driving under G.S. 20-138.1 may also be sentenced to special probation.  Under a sentence of special probation, the court may suspend the term of imprisonment and place the defendant on probation as provided in Article 82, Probation, and in addition require that the defendant submit to a period or periods of imprisonment in the custody of the Department of Correction or a designated local confinement or treatment facility at whatever time or intervals within the period of probation, consecutive or nonconsecutive, the court determines. In addition to any other conditions of probation which the court may impose, the court shall impose, when imposing a period or periods of imprisonment as a condition of special probation, the condition that the defendant obey the Rules and Regulations of the Department of Correction governing conduct of inmates, and this condition shall apply to the defendant whether or not the court imposes it as a part of the written order. If imprisonment is for continuous periods, the confinement may be in the custody of either the Department of Correction or a local confinement facility. Noncontinuous periods of imprisonment under special probation may only be served in a designated local confinement or treatment facility. Except for probationary sentences of impaired driving under G.S. 20-138.1, the total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, may not exceed six months or one fourth the maximum sentence of imprisonment imposed for the offense, whichever is less, and no confinement other than an activated suspended sentence may be required beyond two years of conviction. For probationary sentences for impaired driving under G.S. 20-138.1, the total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, shall not exceed one-fourth the maximum penalty allowed by law. In imposing a sentence of special probation, the judge may credit any time spent committed or confined, as a result of the charge, to either the suspended sentence or to the imprisonment required for special probation. The original period of probation, including the period of imprisonment required for special probation, shall be as specified in G.S. 15A-1343.2(d), but may not exceed a maximum of five years, except as provided by G.S. 15A-1342(a). The court may revoke, modify, or terminate special probation as otherwise provided for probationary sentences."
(c)	This section becomes effective December 1, 1998.

Requested by:   Representatives Justus, Kiser
ABOLISH EXECUTION BY LETHAL GAS AND PROVIDE THAT A PERSON CONVICTED OF A CRIMINAL OFFENSE WHO IS SENTENCED TO DEATH SHALL BE EXECUTED BY THE ADMINISTRATION OF LETHAL DRUGS
Section 17.22.  (a) G.S. 15-187 reads as rewritten:
"§ 15-187.  Death by administration of lethal drugs.
Death by electrocution under sentence of law and death by the administration of lethal gas under sentence of law are abolished.  Any person convicted of a criminal offense and sentenced to death shall be executed only by the administration of a lethal quantity of an ultrashort-acting barbiturate in combination with a chemical paralytic agent."
	(b)	G.S. 15-188 reads as rewritten:
"§ 15-188.  Manner and place of execution.
In accordance with G.S. 15-187, the mode of executing a death sentence must in every case be by administering to the convict or felon a lethal quantity of an ultrashort-acting barbiturate in combination with a chemical paralytic agent until the convict or felon is dead; and when any person, convict or felon shall be sentenced by any court of the State having competent jurisdiction to be so executed, the punishment shall only be inflicted within a permanent death chamber which the superintendent of the State penitentiary is hereby authorized and directed to provide within the walls of the North Carolina penitentiary at Raleigh, North Carolina. The superintendent of the State penitentiary shall also cause to be provided, in conformity with this Article and approved by the Governor and Council of State, the necessary appliances for the infliction of the punishment of death and qualified personnel to set up and prepare the injection, administer the preinjections, insert the IV catheter, and to perform other tasks required for this procedure in accordance with the requirements of this Article."
(c)	This section is effective when it becomes law and applies to all executions after the effective date of this section. 

Requested by:   Representatives Justus, Kiser, Thompson
PROHIBIT ESCAPE FROM PRIVATE CORRECTIONAL FACILITIES/PROPOSED STANDARDS FOR PRIVATE PRISONS FOR OUT-OF-STATE INMATES/
CLARIFY MORATORIUM ON PRIVATE PRISONS FOR OUT-OF-STATE INMATES
Section 17.23.  (a) Chapter 14 of the General Statutes is amended by adding a new section to read:
"§ 14-256.1.  Escape from private correctional facility.
It is unlawful for any person convicted in a jurisdiction other than North Carolina but housed in a private correctional facility located in North Carolina to escape from that facility.  Violation of this section is a Class I felony."
(b)	Subsection (b) of Section 19.17 of S.L. 1997-443 reads as rewritten:
"(b)	The Department of Correction, in cooperation with the Department of Justice, Department of Insurance, and Office of State Construction, shall establish proposed standards for any private correctional facilities in this State that are used to confine inmates from a jurisdiction other than North Carolina, a political subdivision of North Carolina, or the federal government.  These standards shall include provisions for all such facilities to:
(1) 	Meet minimum responsibility and insurance standards and may provide for the posting of surety bonds;
(2)	Meet or exceed all standards applicable to the State prison system, particularly those standards relating to inmate care and treatment;
(3)	Provide for the transfer or return of all inmates to the jurisdiction in which the inmates were originally convicted prior to release of the inmates;
(4)	Permit officials of the State of North Carolina to conduct periodic inspections of all such facilities; and
(5)	Meet any other standards the departments deem advisable.
The Department of Correction shall report on these proposed standards to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Corrections Oversight Committee, and the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety by January 15, 1999.  The report shall include a recommendation on the appropriate regulatory agency or agencies to enforce these standards and on the necessary enforcement authority to be vested in that agency or agencies.  The report shall also include a draft of legislation necessary to enact the proposed standards and regulatory authority.
The Department of Correction shall also consult with the Department of Justice on the appropriateness of the penalty provided for in G.S. 14-256.1, enacted in subsection (a)	of this section, and on the implications of convicting inmates already serving sentences imposed by other jurisdictions in private prisons located in North Carolina.  The Department of Correction shall include the conclusions reached during its consultation with the Department of Justice in the report required by this section."
(c)	Subsection (c) of Section 19.17 of S.L. 1997-443 reads as rewritten:
"(c)	No municipality, county, or private entity may authorize, construct, own, or operate any type of correctional facility for the confinement of inmates from any jurisdiction other than North Carolina, a political subdivision of North Carolina, or the federal government until the Department of Correction has developed proposed standards for such private correctional facilities pursuant to subsection (b) of this section and the General Assembly has acted upon those standards.  No private confinement facility authorized under G.S. 148-37(g) that receives payment from this State for the housing of State prisoners may contain inmates from any jurisdiction other than North Carolina or a political subdivision of North Carolina without the written consent of the Secretary of Correction."
(d)	Subsection (a) of this section becomes effective December 1, 1998, and applies to offenses committed on or after that date.

Requested by:   Representatives Justus, Kiser, Thompson
WOMEN AT RISK FUNDS
Section 17.24.  Of the funds appropriated to the Department of Correction for the 1998-99 fiscal year, the Department shall use the sum of thirty-five thousand dollars ($35,000) to expand the Women at Risk program into Burke and Catawba Counties.

Requested by:  Representatives Allred, Cole, and Reynolds
ESTABLISH A PILOT PROGRAM IN ALAMANCE COUNTY TO DETERMINE THE COST-EFFECTIVENESS OF PLACING ALL INMATES ON WORK RELEASE
Section 17.25.  The Department of Correction shall establish a pilot program for determining the benefits of work-release prison units by placing all able-bodied inmates in the Alamance Correctional Center on work release to the extent possible.  The Department shall report to the Chairs of the House and Senate Appropriations Committees and the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety by March 1, 1999, of the cost-effectiveness of the program.

PART XVIII.  DEPARTMENT OF JUSTICE
Requested by:   Representatives Justus, Kiser, Thompson, Sexton, Smith
SALARY EQUITY FOR SBI LAW ENFORCEMENT
Section 18.  Subsection (a) of Section 20.9 of S.L. 1997-443 reads as rewritten:
"(a)	Of the funds appropriated in this act to the Department of Justice for the State Bureau of Investigation, the sum of two million seven hundred thousand dollars ($2,700,000) for the 1997-98 fiscal year and the sum of two million six hundred sixty-seven thousand five hundred forty dollars ($2,667,540) for the 1998-99 fiscal year shall be used to adjust the salaries of law enforcement positions in the State Bureau of Investigation.  These adjustments shall be based on factors, such as employee salary, position class title, position grade, and credible years of sworn service with the State Bureau of Investigation.  No salary adjustment shall result in an increase beyond the maximum salary set for an officer's pay grade.  If an officer's salary is near or at the top of the officer's pay grade, the officer shall be eligible to receive a salary adjustment up to the top of the officer's pay grade.  If an officer is at the top of the officer's pay grade, then the officer is not eligible to receive a salary adjustment.  Sworn officers holding the following management positions are not eligible to receive the salary adjustment:  SBI Director, SBI Assistant Directors of Support Services, SBI Assistant Director, SBI Assistant Directors of Field Services, SBI Assistant Director of Crime Laboratory, Deputy Director of Medicaid Fraud."

Requested by:   Representatives Justus, Kiser, Thompson
LIMITS ON COMPUTER SYSTEM UPGRADE
Section 18.1. Section 20.4 of S.L. 1997-443 reads as rewritten:
"Section 20.4.  Any major new computer system or major computer system upgrade for the Judicial Department, the Department of Correction, the Department of Justice, or the Department of Crime Control and Public Safety, to be funded all or in part from the Continuation Budget, shall be reported to the Joint Legislative Commission on Governmental Operations, to the Chairs of the Senate and House of Representatives Appropriations Committees, and to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety before the department enters into any contractual agreement.  A major computer system upgrade includes any proposed enhancement, modification, or capacity increase to the computing and telecommunications infrastructure or to program applications where the total cost is anticipated to exceed five hundred thousand dollars ($500,000).  This report is to be made jointly by the Information Resource Management Commission, the Office of State Budget and Management, and the requesting department."

Requested by:   Representatives Justus, Kiser, Thompson
CRIMINAL JUSTICE INFORMATION NETWORK REPORT
Section 18.2.  The Criminal Justice Information Network Governing Board created pursuant to Section 23.3 of Chapter 18 of the Session Laws of the 1996 Second Extra Session shall report by March 1, 1999, to the Chairs of the Senate and House Appropriations Committees, the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety, and the Fiscal Research Division of the General Assembly on:
(1)	The operations of the Board, including the Board's progress in developing data-sharing standards in cooperation with State and local agencies and the estimated time of completion of the standards.
(2)	The operating budget of the Board, the expenditures of the Board as of the date of the report, and the amount of funds in reserve for the operation of the Board. 
(3)	A long-term strategic plan and cost analysis for statewide implementation of the Criminal Justice Information Network, and for each component of the Network, the initial cost estimate of the component, the amount of funds spent to date on the component, the source of funds for expenditures to date, and a timetable for completion of that component, including additional resources needed at each point.
The membership of the Criminal Justice Information Network Governing Board established in G.S. 143-661 shall remain in effect for the 1998-99 fiscal year. 

Requested by:   Representatives Justus, Kiser, Thompson
STUDY FEE ADJUSTMENT FOR CRIMINAL RECORDS CHECKS
Section 18.3.  The Office of State Budget and Management, in consultation with the Department of Justice, shall study the feasibility of adjusting the fees charged for criminal records checks conducted by the Division of Criminal Information of the Department of Justice as a result of the increase in receipts from criminal records checks.  The study shall include an assessment of the Division's operational, personnel, and overhead costs related to providing criminal records checks and how those costs have changed since the 1995-96 fiscal year. The Office of State Budget and Management shall report its findings and recommendations to the Chairs of the Senate and House Appropriations Committees, the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety, and the Fiscal Research Division of the General Assembly on or before March 1, 1999.

Requested by:   Representatives Justus, Kiser, Thompson, Sexton
STUDY RECIPROCITY OF CONCEALED HANDGUN PERMITS
Section 18.4. (a) The Joint Legislative Corrections and Crime Control Oversight Committee shall study the issue of providing that a nonresident who has been issued a valid handgun permit in a reciprocal state may carry a concealed handgun in accordance with Article 54B of Chapter 14 of the General Statutes as if the permit were issued by this State.  The Committee shall report its findings and recommendations to the 1999 General Assembly.
(b)	The Attorney General shall prepare a list of those states that provide for concealed handgun permits that are equal to or more stringent than those required by North Carolina in order to assist the Joint Legislative Corrections and Crime Control Oversight Committee in its study.

Requested by:   Representatives Justus, Kiser, Thompson
USE OF SEIZED AND FORFEITED PROPERTY TRANSFERRED TO STATE LAW ENFORCEMENT AGENCIES BY THE FEDERAL GOVERNMENT
Section 18.5.   Section 20.7(a) of S.L. 1997-443 reads as rewritten:
"(a)	Assets transferred to the Department of Justice during the 1997-99 biennium pursuant to 19 U.S.C. § 1616a shall be credited to the budget of the Department and shall result in an increase of law enforcement resources for the Department.  Assets transferred to the Department of Crime Control and Public Safety during the 1997-99 biennium pursuant to 19 U.S.C. § 1616a shall be credited to the budget of the Department and shall result in an increase of law enforcement resources for the Department.  The Departments of Justice and Crime Control and Public Safety shall report to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Corrections and Crime Control Oversight Committee upon receipt of the assets and, before using the assets, shall report on the intended use of the assets and the departmental priorities on which the assets may be expended.
	The General Assembly finds that the use of assets transferred pursuant to 19 U.S.C. § 1616a for new personnel positions, new projects, the acquisition of real property, repair of buildings where the repair includes structural change, and construction of or additions to buildings may result in additional expenses for the State in future fiscal periods.  Therefore, the Department of Justice and the Department of Crime Control and Public Safety are prohibited from using these assets for such purposes without the prior approval of the General Assembly, except during the 1998-99 fiscal year, the Department of Justice may:
(1)	Use an amount not to exceed the sum of twenty-five thousand dollars ($25,000) of the funds to extend the lease of space in the Town of Salemburg for SBI training; and
(2)	Use an amount not to exceed fifty thousand dollars ($50,000) of the funds to lease space for its technical operations unit, storage of its equipment and vehicles, and command post vehicle."

Requested by:   Representatives Justus, Kiser, Thompson
SBI USE OF COURT-ORDERED REIMBURSEMENT FUNDS
Section 18.6.  Section 20.2 of S.L. 1997-443 reads as rewritten:
"Section 20.2.  The State Bureau of Investigation (SBI)	may use funds available from court-ordered reimbursement in undercover drug operations. Any funds received from the court may be budgeted upon receipt from the court and may be used in addition to any funds appropriated by the General Assembly."

Requested by:   Representative Creech
ESTABLISH SETTLEMENT RESERVE FUND/ATTORNEY GENERAL REPORT OF STATE SETTLEMENTS AND COURT ORDERS
Section 18.7. (a)	Article 1 of Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143-16.4.  Settlement Reserve Fund.
The 'Settlement Reserve Fund' is established as a restricted reserve in the General Fund.  Except if prohibited by order of the court, funds in excess of seventy-five thousand dollars ($75,000) paid to the State or a State agency pursuant to a settlement agreement or final order or judgment of the court shall be deposited to the Settlement Reserve Fund.  Funds shall be expended from the Settlement Reserve Fund only by appropriation by the General Assembly."
(b)	Article 1 of Chapter 114 of the General Statutes is amended by adding a new section to read:
"§ 114-2.5.  Attorney General to report payment of public monies pursuant to settlement agreements and final court orders.
(a)	The Attorney General shall report to the Joint Legislative Commission on Governmental Operations and the Chairs of the Appropriations Subcommittees on Justice and Public Safety of the Senate and House of Representatives on the payments received pursuant to a settlement agreement or final order or judgment of the court and deposited to the Settlement Reserve Fund in accordance with G.S. 143-16.4.  The Attorney General shall also report on the terms or conditions of payment set forth in the agreement or order. The Attorney General shall submit a written report to the Fiscal Research Division of the General Assembly.
(b)	This section only applies to executed settlement agreements and final orders or judgments of the court and shall in no way affect the authority of the Attorney General to negotiate the settlement of cases in which the State or a State department, agency, institution, or officer is a party."

Requested by:   Representatives Justus, Thompson, Kiser
SBI FUNDS/SPENDING PRIORITIES
Section 18.8. Section 20.1 of S.L. 1997-443 reads as rewritten:
"Section 20.1.  Of the funds appropriated in this act to the Department of Justice, State Bureau of Investigation, for the 1997-99 biennium for overtime payments, the first priority for use of the funds by the Department shall be:
(1)	To make overtime payments to SBI agents in the Field Investigations Division and in the crime laboratories; and
(2)	To make overtime payments to supervisory personnel receiving overtime payments as of June 30, 1997, up to a maximum of five thousand two hundred dollars ($5,200) annually per individual."

PART XIX.  DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY
Requested by:   Representatives Justus, Kiser, Thompson, Esposito, Sexton
ACTIVATION OF NATIONAL GUARD FOR SPECIAL OLYMPICS
Section 19. With funds available, the Governor may place units or portions of units of the North Carolina National Guard on State Active Duty during the period from January 1, 1999, to September 30, 1999, to assist with the planning, support, and execution of events associated with the International Special Olympic Games.

Requested by:   Representatives Justus, Kiser, Thompson, Sexton
STUDY TARHEEL CHALLENGE PROGRAM
Section 19.1. With funds available, the Department of Crime Control and Public Safety shall contract with an external consultant to study the effectiveness of the National Guard Tarheel Challenge Program as an intervention method for preventing delinquent or criminal behavior and improving individual skills and employment potential of the participants in the Program.  The study shall include:
(1)	An evaluation of the goals of the Program and long-term effects of participation in the Program;
(2)	A comparison of the Program to (i) other similar programs that offer job training and behavior modification and (ii) a control group of students not participating in intervention programs; and
(3)	A cost-benefit analysis of the Program.
The Department shall report the results of the study, including any recommendations, to the Chairs of the Appropriations Subcommittees on Justice and Public Safety of the Senate and House of Representatives by March 1, 1999.

Requested by:   Representatives Justus, Kiser, Thompson
VICTIMS ASSISTANCE NETWORK REPORT
Section 19.2. The Department of Crime Control and Public Safety shall report on the expenditure of funds allocated in Section 21.1 of S.L. 1997-443 for the Victims Assistance Network.  The Department shall also report on the Network's efforts to gather data on crime victims and their needs, act as a clearinghouse for crime victims' services, provide an automated crime victims' bulletin board for subscribers, coordinate and support activities of other crime victims' advocacy groups, identify the training needs of crime victims' services providers and criminal justice personnel, and coordinate training for these personnel.  The Department shall submit its report to the Chairs of the Appropriations Subcommittees on Justice and Public Safety of the Senate and House of Representatives and to the Joint Legislative Corrections and Crime Control Oversight Committee by October 1, 1998.

[SECTIONS 19.3, 19.4, 19.5 RESERVED]

Requested by:   Representatives Justus, Kiser, Thompson
USE OF HIGHWAY PATROL AIRCRAFT
Section 19.6. (a)	G.S. 20-196.1 is repealed.
(b)	G.S. 20-196.2 reads as rewritten:
"§ 20-196.2. Use of aircraft to discover certain motor vehicle àviolations; declaration of policy.
The State Highway Patrol is hereby permitted the use of aircraft to discover violations of Part 10 of Article 3 of Chapter 20 of the General Statutes relating to operation of motor vehicles and rules of the road.  It is hereby declared the public policy of North Carolina that the aircraft should be used primarily for accident prevention and should also be used incident to the issuance of warning citations in accordance with the provisions of G.S. 20-183."

Requested by:   Representatives Justus, Kiser, Thompson
STUDY EMERGENCY MANAGEMENT POSITIONS
Section 19.7. (a) The Joint Legislative Corrections and Crime Control Oversight Committee shall study the State and local assistance funding eligibility criteria of the Division of Emergency Management of the Department of Crime Control and Public Safety that requires local governments to have a full-time or part-time Emergency Program Manager.  In its deliberations, the Committee shall consider:
(1)	The burden placed on local governments to maintain a full-time or part-time position pursuant to the funding eligibility requirements.
(2)	The feasibility and advisability of revising the funding eligibility criteria of the Division of Emergency Management to allow small local governments to:
a.	Share federal funds and an Emergency Program Manager; or
b.	Add the responsibilities of an Emergency Program Manager to an appropriate official or employee of the local government.
(3)	The feasibility and advisability of opening regional emergency management offices and allocating funds to regions rather than local governments.
(b)	The Committee shall report its findings and recommendations to the 1999 General Assembly.

Requested by:   Representatives Justus, Kiser, Thompson
UPGRADE CLERICAL POSITIONS IN DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY
Section 19.8.  Of the funds appropriated in this act to the Department of Crime Control and Public Safety for the 1998-99 fiscal year, up to fifteen thousand dollars ($15,000) may be used to upgrade clerical positions to coordinator positions in the community service work program established in the Department pursuant to G.S. 143B-475.1.  The Office of State Personnel shall approve each upgrade of clerical positions prior to the use of funds authorized by this section.

Requested by:   Representatives Thompson, Justus, Kiser, Sexton
STUDY DISASTER MITIGATION AND RELIEF FUNDING
Section 19.9.  The Department of Crime Control and Public Safety shall study the feasibility and advisability of establishing a disaster mitigation and relief fund to provide disaster relief and recovery assistance to individuals and local governments adversely affected by natural or man-made disasters through grants awarded to persons, corporations, nonprofit corporations, local governments, or other political subdivisions of the State.  The Department shall consider and make recommendations regarding:
(1)	Administration of the fund, including the membership of the body that establishes grant criteria and awards grants to applicants.
(2)	Objectives and criteria for awarding grants, including the eligibility requirements that are appropriate for obtaining grants.
(3)	Limitations on the amount of funds to be awarded to individuals and private entities or corporations, including the requirement that grant recipients obtain and maintain insurance against future loss of the property to be replaced, restored, repaired, or constructed with the funds awarded.
(4)	Guidelines for prioritizing the allocation of funds to serve the needs of those citizens of the State who cannot obtain financial assistance under any other State or federal program or from any other source and who do not have insurance, including consideration of whether grants should be awarded on a competitive basis only or should be distributed equally to local governments for disaster mitigation on an annual basis.
(5)	The intended use of the funds awarded to local governments, including training, upgrade, and standardization of communications capabilities statewide.
(6)	Establishment of a system of damage assessment whereby the Secretary of the Department of Crime Control and Public Safety determines whether the damage involved and its effects are of a severity and magnitude as to be beyond the response capabilities of the affected local government or political subdivision and makes recommendations  regarding whether a grant should be awarded.
(7)	The preferred method of funding a disaster mitigation and relief fund.
The Department shall report its recommendations and legislative proposals to the Joint Legislative Commission on Governmental Operations, the Chairs of the Appropriations Committees of the House of Representatives and the Senate, the Chairs of the Appropriations Subcommittees on Justice and Public Safety of the House of Representatives and the Senate, and the Joint Legislative Corrections and Crime Control Oversight Committee by March 1, 1999. A written copy of the report shall be sent to the Fiscal Research Division of the General Assembly by March 1, 1999.

Requested by:   Representative Hardy
COMMUNITY SERVICE NONCOMPLIANCE REPORT
Section 19.10.   The Division of Victim and Justice Services of the Department of Crime Control and Public Safety shall review its procedures on response to offenders who do not comply with community service requirements.  The Division shall report to the Joint Legislative Corrections and Crime Control Oversight Committee by March 1, 1999, on the extent to which offenders comply with the Community Service Work Program.  This report shall include statistics on compliance/noncompliance by category of offender, statistics on the number of court hearings and probation violations related to noncompliance, and any recommended changes in sanctions related to failure to complete community service requirements.

Requested by:  Representative Ellis
TRANSFER BOXING COMMISSION TO DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY
Section 19.11. (a) The statutory authority, powers, duties, functions, records, property, and unexpended balances of appropriations, allocations, or other funds of the North Carolina State Boxing Commission are transferred from the Department of the Secretary of State to the Department of Crime Control and Public Safety.
(b) G.S. 143-652 reads as rewritten:
"§ 143-652.  State Boxing Commission.
(a)	Creation. – The North Carolina State Boxing Commission is created within the Department of Crime Control and Public Safety to regulate in North Carolina live boxing and kickboxing matches, whether professional, amateur, sanctioned amateur, or toughman events, in which admission is charged for viewing, or the contestants compete for a purse or prize of value greater than twenty-five dollars ($25.00). The Commission shall consist of six voting members and two nonvoting advisory members. All the members shall be residents of North Carolina and shall meet requirements for membership under the Professional Boxing Safety Act of 1996. The members shall be appointed as follows:
(1)	One voting member shall be appointed by the Governor for an initial term of two years.
(2)	One voting member shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate for an initial term of one year, in accordance with G.S. 120-121.
(3)	One voting member shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives for an initial term of one year.
(4)	Two voting members shall be appointed by the Secretary of Crime Control and Public Safety. One shall serve for an initial term of three years, and the other shall serve for an initial term of two years.
(4a)	One member shall be appointed by the Tribal Council of the Eastern Band of the Cherokee for an initial term of three years.
(5)	One nonvoting advisory member shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives for an initial term of one year, in accordance with G.S. 120-121, from nominations made by the North Carolina Medical Society, which shall nominate two licensed physicians for the position.
(6)	One nonvoting advisory member shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate for an initial term of one year, in accordance with G.S. 120-121, from nominations made by the North Carolina Medical Society, which shall nominate two licensed physicians for the position.
The member appointed pursuant to subdivision (5)	of subsection (a) of this section may serve on the Commission only if an agreement exists and remains in effect between the Tribal Council of the Eastern Band of the Cherokee and the Commission authorizing the Commission to regulate professional boxing matches within the Cherokee Indian Reservation as provided by the Professional Boxing Safety Act of 1996.
The two nonvoting advisory members appointed pursuant to subdivisions (6)	and (7) of subsection (a) of this section shall advise the Commission on matters concerning the health and physical condition of boxers and health issues relating to the conduct of exhibitions and boxing matches. They may prepare and submit to the Commission for its consideration and approval any rules that in their judgment will safeguard the physical welfare of all participants engaged in boxing.
Terms for all members of the Commission except for the initial appointments shall be for three years.
	The Secretary of Crime Control and Public Safety shall designate which member of the Commission is to serve as chair. A member of the Commission may be removed from office by the Secretary of Crime Control and Public Safety for cause. Each member before entering upon the duties of a member shall take and subscribe an oath to perform the duties of the office faithfully, impartially, and justly to the best of the member's ability. A record of these oaths shall be filed in the Department of Crime Control and Public Safety.
(b)	Vacancies. – Members shall serve until their successors are appointed and have been qualified. Any vacancy in the membership of the Commission shall be filled in the same manner as the original appointment. Vacancies for members appointed by the General Assembly shall be filled in accordance with G.S. 120-122. A vacancy in the membership of the Commission other than by expiration of term shall be filled for the unexpired term only.
(c)	Meetings. – Meetings of the Commission shall be called by the chair or by any two members of the Commission, and meetings shall be held at least quarterly. Any three voting members of the Commission shall constitute a quorum at any meeting. Action may be taken and motions and resolutions adopted by the Commission at any meeting by the affirmative vote of a majority of the members of the Commission present at a meeting at which a quorum exists. Any or all members may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all members participating may simultaneously hear each other during the meeting. A member participating in the meeting by this means is deemed to be present in person at the meeting.
(d)	Rule-Making Authority of the Commission. – The Commission shall have the exclusive authority to approve and issue rules for the regulation of the conduct, promotion, and performances of live boxing, kickboxing, sanctioned amateur, amateur, and toughman matches and exhibitions in this State. The rules shall be issued pursuant to the provisions of Chapter 150B of the General Statutes and may include, without limitation, the following subjects:
(1)	Requirements for issuance of licenses and permits required by this Article.
(2)	Regulation of ticket sales.
(3)	Physical requirements for contestants, including classification by weight and skill.
(4)	Supervision of matches and exhibitions by licensed physicians and referees.
(5)	Insurance and bonding requirements.
(6)	Compensation of participants and licensees.
(7)	Contracts and financial arrangements.
(8)	Prohibition of dishonest, unethical, and injurious practices.
(9)	Facilities.
(10)	Approval of sanctioning amateur sports organizations.
(11)	Procedures and requirements for compliance with the Professional Boxing Safety Act of 1996.
(e)	Compensation. – None of the members of the Commission shall receive compensation for serving on the Commission. However, members of the Commission may be reimbursed for their expenses in accordance with the provisions of Chapter 138 of the General Statutes.
(f)	Staff Assistance. – The Secretary of Crime Control and Public Safety shall hire a person to serve as Executive Director of the Commission and shall provide staff assistance to the Executive Director. The Executive Director shall enforce this Article through the Division of Alcohol Law Enforcement.  If necessary, the Executive Director may train and contract with independent contractors for the purpose of regulating and monitoring events, issuing licenses, collecting fees, and enforcing rules of the Commission. The Executive Director may initiate criminal background checks on persons requesting to work as independent contractors for the Commission or persons applying to be licensed by the Commission."
(c)	G.S. 143-654(c) reads as rewritten:
"(c)	Surety Bond. – An applicant for a promoter's license must submit, in addition to any other forms, documents, or exhibits requested by the Commission, a surety bond payable to the Commission for the benefit of any person injured or damaged by (i) the promoter's failure to comply with any provision of this Article or any rules adopted by the Commission or (ii) the promoter's failure to fulfill the obligations of any contract between or among licensees related to the holding of a boxing event. The surety bond shall be issued in an amount to be no less than five thousand dollars ($5,000). The amount of the surety bond shall be negotiable upon the sole discretion of the Commission. All surety bonds shall be upon forms approved by the Secretary of Crime Control and Public Safety and supplied by the Commission."
(d)	G.S. 143-655(c) reads as rewritten:
"(c)	State Boxing Commission Revenue Account. – There is created the State Boxing Commission Revenue Account within the Department of Crime Control and Public Safety. Monies collected pursuant to the provisions of this Article shall be credited to the Account and applied to the administration of the Article."
(e) G.S. 143-658 reads as rewritten:
"§ 143-658.  Violations.
(a)	Civil Penalties. – The Secretary of Crime Control and Public Safety may issue an order against a licensee or other person who willfully violates any provision of this Article, imposing a civil penalty of up to five thousand dollars ($5,000) for a single violation or of up to twenty-five thousand dollars ($25,000) for multiple violations in a single proceeding or a series of related proceedings. No order under this subsection may be entered without giving the licensee or other person 15 days' prior notice and an opportunity for a contested case hearing conducted pursuant to Article 3 of Chapter 150B of the General Statutes.
(b)	Criminal Penalties. – A willful violation of any provision of this Article shall constitute a Class 2 misdemeanor. The Secretary of Crime Control and Public Safety may refer any available evidence concerning violations of this Article to the proper district attorney, who may, with or without such a reference, institute the appropriate criminal proceedings.
(c)	Injunction. – Whenever it appears to the Secretary of Crime Control and Public Safety that a person has engaged or is about to engage in an act or practice constituting a violation of any provision of this Article or any rule or order hereunder, the Secretary of Crime Control and Public Safety may bring an action in any court of competent jurisdiction to enjoin those acts or practices and to enforce compliance with this Article or any rule or order issued pursuant to this Article. 
	."
(f) G.S. 18B-502(a) reads as rewritten:
"(a)	Authority. – To procure evidence of violations of the ABC law, alcohol law-enforcement agents, employees of the Commission, local ABC officers, and officers of local law-enforcement agencies that have contracted to provide ABC enforcement under G.S. 18B-501(f) shall have authority to investigate the operation of each licensed premises for which an ABC permit has been issued, to make inspections that include viewing the entire premises, and to examine the books and records of the permittee.  The inspection authorized by this section may be made at any time it reasonably appears that someone is on the premises.  Alcohol law-enforcement agents are also authorized to be on the premises to the extent necessary to enforce the provisions of Article 68 of Chapter 143 of the General Statutes."
(g) Section 9 of S.L. 1997-504, as rewritten by Section 18 of S.L. 1998-23, reads as rewritten:
"Section 9. Except as otherwise specified herein, this act is effective when it becomes law.  "

PART XX.  DEPARTMENT OF ADMINISTRATION
Requested by:   Representatives Holmes, Esposito, Creech, Crawford, Ives, McCombs, Sherrill
STATE VETERANS NURSING HOME LOCATION STUDY
Section 20.  Of funds appropriated to the Department of Administration by this act, the Division of Veterans Affairs shall use up to twenty-five thousand dollars ($25,000) for the 1998-99 fiscal year to conduct a study for the siting and construction of state veterans nursing homes in Western and Eastern North Carolina.
The study shall make recommendations on matters relevant to the siting, construction, and operations of the veterans nursing homes, including:
(1)	The need for geographical diversity in the location of the facilities across North Carolina to serve the veterans and their families.
(2)	The size and number of facilities required to meet the needs of the present and predicted veterans population.
(3)	The estimated cost of constructing and operating the needed facilities and sources of funding for the construction and operations of the facilities.
The Division of Veterans Affairs shall report the findings of the study to the 1999 Session of the General Assembly by  submitting a report to the Joint Legislative Commission on Governmental Operations and the Joint Appropriations Subcommittee on General Government by February 1, 1999.

Requested by:   Representative Sherrill
DOMESTIC VIOLENCE–ADMINISTRATION OF GRANTS
Section 20.1.  (a)	The North Carolina Council for Women of the Department of Administration, the Division of Social Services of the Department of Health and Human Services, and the Governor's Crime Commission shall develop a simplified process by which eligible public and nonprofit entities may apply using a simplified grants process with one application form for any domestic violence grant funds and other grant funds administered by the North Carolina Council for Women, the Division of Social Services, and the Governor's Crime Commission.
(b)	The three State agencies listed in subsection (a) of this section shall jointly report on the new process to the Joint Legislative Commission on Governmental Operations by November 1, 1998.

Requested by:   Representatives Ives, McCombs, Sherrill
DOMESTIC VIOLENCE PREVENTION FUNDS
Section 20.2.  Of the funds appropriated to the Department of Administration, the sum of one million dollars ($1,000,000) for the 1998-99 fiscal year for the North Carolina Council for Women for the prevention of domestic violence and the continuation of domestic violence programs within the State.  The Council for Women shall provide grants from these funds to existing domestic violence programs, including the North Carolina Coalition Against Domestic Violence, Inc., and for the development of new domestic violence programs.  The Department of Administration or the Council for Women shall not use any of the funds for operating expenses.

Requested by:   Representatives Ives, McCombs, Sherrill
PROCUREMENT CARD PILOT PROGRAM
Section 20.3. (a) Except as provided by this section, no State agency, community college, constituent institution of The University of North Carolina, or local school administrative unit may use procurement cards for the purchase of equipment or supplies before March 31, 1999.
(b)	The Secretary of Administration shall designate no more than 15 governmental entities to participate in a pilot program on the purchase of supplies and equipment by procurement card.  Those designated shall represent a cross section of governmental entities and shall include at least one State agency, one community college, two constituent institutions of The University of North Carolina, and one local school administrative unit.
(c)	The Division of Purchase and Contract and the State Controller shall report to the Joint Legislative Commission on Governmental Operations and the Joint Appropriations Subcommittee on General Government on November 1, 1998, on this pilot program.
The report shall include all of the following:
(1)	Estimates from the pilot program of:
a.	How many purchasing and accounts payable personnel hours could be saved or redirected or both as a result of the procurement card.
b.	The impact of the procurement card on accounting and budgeting records and on purchasing history records.  
(2)	A discussion of the effect of the procurement card on the State's ability to track both:
a.	Out-of-state sales taxes.
b.	North Carolina State and local sales tax payments by county.  
(3)	A discussion of any other costs and benefits of the procurement card.
(d)	This section does not affect contracts for procurement cards entered into prior to March 31, 1997.

Requested by:   Representatives Ives, McCombs, Sherrill
ELIMINATE FUNDING FOR STATE HEALTH PLAN PURCHASING ALLIANCE BOARD
Section 20.4.  Of funds appropriated to the Department of Administration, no funds, from either General Fund accounts or Special Fund accounts shall be expended for the operating expenses of the State Health Plan Purchasing Alliance Board after December 31, 1998.  Upon ratification of this act through December 31, 1998, funds may be used to phase out the operations of the State Health Plan Purchasing Alliance Board.  Any funds remaining in either General Fund or Special Fund accounts on December 31, 1998 shall revert to the General Fund.
Effective January 1, 1999, the Secretary of Administration shall perform the statutory duties and have the statutory authority of the State Health Plan Purchasing Alliance Board under Article 66 of Chapter 143 of the General Statutes.

PART XXI.  DEPARTMENT OF CULTURAL RESOURCES
Requested by:   Representatives Ives, McCombs, Sherrill
MARITIME MUSEUM/DISPOSITION OF OBJECTS
Section 21.1.  (a) G.S. 106-22.2 is recodified as G.S. 143B-344.22 and reads as rewritten:
"§ 143B-344.22.  Museum of Natural Sciences; disposition of objects.
Notwithstanding Article 3A of Chapter 143 of the General Statutes, G.S. 143-49(4), or any other law pertaining to surplus State property, the Department of Environment and Natural Resources may sell or exchange any object from the collection of the Museum of Natural Sciences when it would be in the best interest of the Museum to do so. Sales or exchanges shall be conducted in accordance with generally accepted practices for accredited museums. If an object is sold, the net proceeds of the sale shall be deposited in the State treasury to the credit of a special fund to be used for the improvement of the Museum's collections or exhibits."
(b)	Chapter 121 of the General Statutes is amended by adding a new section to read:
"§ 121-7.1.  Maritime Museum; disposition of artifacts.
Notwithstanding Article 3A of Chapter 143 of the General Statutes, G.S. 143-49(4), or any other law pertaining to surplus State property, the Department of Cultural Resources, with the approval of the North Carolina Historical Commission, may sell, trade, or place on permanent loan any artifact from the collection of the North Carolina Maritime Museum unless the sale, trade, or loan would be contrary to the terms of the acquisition. Sales or exchanges shall be conducted in accordance with generally accepted practices for accredited museums. If an artifact is sold, the net proceeds of the sale shall be deposited in the State treasury to the credit of a special fund to be used for the improvement of the Museum's collections or exhibits."
(c)	G.S. 121-7(a) reads as rewritten:
"(a)	The Department of Cultural Resources shall maintain and administer State historic attractions under the management of the Division of Archives and History and the North Carolina Museum of History Division for the collection, preservation, study, and exhibition of authentic artifacts and other historical materials relating to the history and heritage of North Carolina. The Department, with the approval of the Historical Commission, may acquire, either by purchase, gift, or loan such artifacts and materials, and, having acquired them, shall according to accepted museum practices classify, accession, preserve, and where feasible exhibit such materials and make them available for study. Within available funds, one or more branch museums of history or specialized regional history museums may be established and administered by the Department. The Department of Cultural Resources, subject to the availability of staff and funds, may give financial, technical, and professional assistance to nonstate historical museums sponsored by governmental agencies and nonprofit organizations according to regulations adopted by the North Carolina Historical Commission.
The Department of Cultural Resources may, with the explicit approval of the North Carolina Historical Commission sell, trade, or place on permanent loan any artifact owned by the State of North Carolina and in the custody of and curated by the Museum of History Division or Division of Archives and History, unless the sale, trade, or loan would be contrary to the terms of acquisition.  Before a donated artifact is sold, the Museum of History Division or Division of Archives and History may make a reasonable attempt to notify the donor to allow the donor the first opportunity to purchase the artifact. If the donor is deceased, the Museum of History Division or Division of Archives and History shall make reasonable attempts to notify the donor's immediate family through publication or other means reasonably likely to provide them notice.  For purposes of this section, 'immediate family' means spouse, parents, siblings, children, and grandchildren. The net proceeds of any sale, after deduction of the expenses attributable to that sale, shall be deposited to the State treasury to the credit of either the Division of Archives and History Artifact Fund or the Museum of History Artifact Fund, as appropriate, and shall be used only for the purchase of other artifacts. No artifact curated by any agency of the Department of Cultural Resources may be pledged or mortgaged."

Requested by: Representative Davis
PLANNING FUNDS FOR MILITARY MUSEUM
Section 21.2.  Of the funds appropriated in this act to the Department of Cultural Resources for the Exploris Children's Museum, the sum of fifty thousand dollars ($50,000) shall be allocated to the William C. Lee Memorial Commission, Inc., for planning the construction in Harnett County of a museum dedicated to all branches of service of the military.

PART XXIA.  GENERAL ASSEMBLY
Requested by:   Representative Gray
PERMIT LEGISLATIVE SERVICES COMMISSION TO OPERATE FOOD FACILITIES IN THE LEGISLATIVE OFFICE BUILDING
Section 21A. (a) G.S. 111-42(c) reads as rewritten:
"(c)	'State property or State building' means building and land owned, leased, or otherwise controlled by the State, exclusive of schools, colleges and universities, the North Carolina State Fair, the Legislative Office Building, and the State Legislative Building."
(b) G.S. 66-58(c)(5) reads as rewritten:
"(5)	The operation of a snack bar and cafeteria in the Legislative Office Building and the State Legislative Building."

PART XXII.  OFFICE OF ADMINISTRATIVE HEARINGS
Requested by:   Representatives Ives, McCombs, Sherrill
EEOC DEFERRED CASES TO OAH/REPEAL SUNSET
Section 22.  Section 5 of S.L. 1997-513 reads as rewritten:
"Section 5.  Section 1 of this act is effective when it becomes law, applies to charges pending or filed on and after that date.  The remainder of this act becomes effective July 1, 1997, and applies to all suggestions and innovations pending on that date that were submitted under the former State Employee Suggestion Program as authorized by G.S. 143-340(1)	on or before June 30, 1997."

PART XXIII.  OFFICE OF SECRETARY OF STATE
[RESERVED]

PART XXIV.  STATE BOARD OF ELECTIONS
Requested by:   Representatives Ives, McCombs, Sherrill
EXTEND STATEWIDE DATA ELECTIONS MANAGEMENT SYSTEM
Section 24.  Section 31(a) of S.L. 1997-443 reads as rewritten:
"(a)	The State Board of Elections shall establish a statewide data elections management system. The system shall prescribe data format standards, data communication standards, and data content standards. The State Board of Elections shall establish the system no later than November 1, 1997. Counties shall adhere to the standards prescribed by the system no later than July 1, 1999.  The State Board of Elections may adopt rules to implement this section.  Chapter 150B of the General Statutes governs the adoption of rules by the State Board of Elections."

Requested by:    Representatives Ives, McCombs, Sherrill
NO STATE FUNDS FOR COUNCIL OF STATE MEMBER ADS
Section 24.1.  (a)	G.S. 163-278.16A reads as rewritten:
"§ 163-278.16A.  Prohibition on use of State funds by Council of State members for advertising or public service announcements using their names, pictures, or voices.
" The use of State funds for an advertisement or public service announcement in a newspaper, on radio, or on television that contains a Council of State member's name, picture, or voice is strictly prohibited unless it is a legal notice where the name of the officer is required under State or federal law to appear in the advertisement.  Appearances of members of the Council of State on bona fide noncommercial radio or television broadcasting station programs are not public service announcements."
(b) This section is effective when it becomes law.

Requested by:  Representative McMahan
CHARTER AMENDMENT
Section 24.2.  (a)	The second sentence of G.S. 160A-104 is amended by deleting the term "State Board of Elections or 5,000, whichever is less." and substituting the term "county board of elections."
(b)	This section applies only to the City of Charlotte.
(c)	This section becomes effective January 1, 1999.

PART XXV.  OFFICE OF STATE BUDGET AND MANAGEMENT
Requested by:   Representatives Ives, McCombs, Sherrill
ALLOW VOLUNTEER FIRE DEPARTMENT/RESCUE EMS GRANT FUNDS TO BE USED TO PAY HIGHWAY USE TAX ON EQUIPMENT PURCHASES
Section 25.  (a) G.S. 58-87-1(a) reads as rewritten:
"(a)	There is created the Volunteer Fire Department Fund to provide matching grants to volunteer fire departments to purchase equipment and make capital improvements. The Fund shall be set up in the Department of Insurance. The State Treasurer shall invest its assets according to law, and the earnings shall remain in the Fund. The Fund shall be distributed under the direction of the Commissioner of Insurance. Beginning January 1, 1988, an eligible fire department may apply to the Commissioner of Insurance for a grant under this section. Beginning May 1, 1988, and on each May 15, thereafter, the Commissioner shall make grants to eligible fire departments subject to the following limitations:
(1)	The size of a grant may not exceed twenty thousand dollars ($20,000);
(2)	The applicant shall match the grant on a dollar-for-dollar basis;
(3)	The grant may be used only for equipment purchases, payment of highway use taxes on those purchases, or capital expenditures necessary to provide fire protection services; and
(4)	An applicant may receive no more than one grant per fiscal year.
In awarding grants under this section, the Commissioner shall to the extent possible select applicants from all parts of the State based upon need.  Up to two percent (2%) of the Fund may be used for additional staff and resources to administer the Fund in each fiscal year.
No fire department may be declared ineligible for a grant under this section solely because it is classified as a municipal fire department."
(b) G.S. 58-87-5(a) reads as rewritten:
"(a)	There is created in the Department of Insurance the Volunteer Rescue/EMS Fund to provide grants to volunteer rescue units providing rescue or rescue and emergency medical services to purchase equipment and make capital improvements. An eligible rescue or rescue/EMS unit may apply to the Department of Insurance for a grant under this section. The application form and criteria for grants shall be established by the Department. The Department of Health and Human Services shall provide the Department with an advisory priority listing of EMS equipment eligible for funding. The State Treasurer shall invest the Fund's assets according to law, and the earnings shall remain in the Fund. On December 15 of each year, the Department shall make grants to eligible rescue or rescue/EMS units subject to all of the following limitations:
(1)	A grant to an applicant who is required to match the grant with non-State funds may not exceed fifteen thousand dollars ($15,000), and a grant to an applicant who is not required to match the grant with non-State funds may not exceed three thousand dollars ($3,000).
(2)	An applicant whose liquid assets, when combined with the liquid assets of any corporate affiliate or subsidiary of the applicant, are more than one thousand dollars ($1,000) shall match the grant on a dollar-for-dollar basis with non-State funds.
(3)	The grant may be used only for equipment purchases, payment of highway use taxes on those purchases, or capital expenditures.
(4)	An applicant may receive no more than one grant per fiscal year.
In awarding grants under this section, the Department shall to the extent possible select applicants from all parts of the State based upon need. Up to two percent (2%) of the Fund may be used for additional staff and resources to administer the Fund in each fiscal year. In addition, notwithstanding G.S. 58-78-20, up to four percent (4%) of the Fund may be used for additional staff and resources for the North Carolina Fire and Rescue Commission."

PART XXVI.  OFFICE OF STATE CONTROLLER
Requested by:   Representatives Ives, McCombs, Sherrill
PILOT PROGRAM ON REPORTING ON COLLECTION OF BAD DEBTS BY STATE AGENCIES
Section 26.  (a) The General Assembly finds that a significant number of bad debts are owed to State agencies, and even expansion of the Debt Collection Setoff Act scheduled for 2000 may still leave room for improvement.  The General Assembly has been presented information on the extent of the debts but lacks sufficient information to determine if the lack of collection in some cases relates to inability to the debtor to pay, contractual discharges that may have been taken to receive partial recovery from third parties, or need to improve collection procedures within State agencies.  Focusing on health care institutions within State government will allow maximum information without disrupting other agencies which have small amounts of bad debts.
(b) The Office of State Controller shall establish a procedure by which health care institutions under or affiliated with the Department of Health and Human Services or The University of North Carolina shall report on collection of bad debts.  This pilot program is intended to concentrate on agencies that have a large amount of bad debts, in order to determine the extent to which those debts may be better collected both in those agencies and in the whole of State government.
(c) The procedures shall require that in the case of each bad debt, that debt is reported to the Office of State Controller with its total amount and with standardized codes indicating the type of debt, the actions taken to collect the debt, and the estimate of the agency on the likelihood of being able to collect the bad debt.
(d) The Office of State Controller shall report the results of the pilot study to the General Assembly no later than April 1, 1999, along with recommendations on changes in law or procedure to better collect the bad debts.

Requested by:  Representative Church
RECOVERY OF OVERPAYMENTS BY STATE AGENCIES
Section 26.1.  G.S. 147-86.22(c) reads as rewritten:
	"(c)	Collection Techniques. – The State Controller, in conjunction with the Office of the Attorney General, shall establish policies and procedures to govern techniques for collection of accounts receivable.  These techniques may include use of credit reporting bureaus, judicial remedies authorized by law, and administrative setoff by a reduction of an individual's tax refund pursuant to the Setoff Debt Collection Act, Chapter 105A of the General Statutes, or a reduction of another payment, other than payroll, due from the State to a person to reduce or eliminate an account receivable that the person owes the State.
No later than October 1, 1998, the State Controller shall negotiate a contract with a third party to perform an audit and collection process of inadvertent overpayments by State agencies to vendors as a result of pricing errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds, erroneously paid excise taxes, and related errors.  The third party shall be compensated only from funds recovered as a result of the audit.  Savings realized in excess of costs shall be transferred from the agency to the Office of State Budget and Management and placed in a special reserve account for future direction by the General Assembly.  Any disputed savings shall be settled by the State Controller.  This paragraph does not apply to the purchase of medical services, supplies, or equipment by State agencies that reimburse or otherwise pay for health care costs."

PART XXVIA.  OFFICE OF STATE TREASURER
Requested by:   Representatives Ives, Sherrill, McCombs
DEPARTMENT OF STATE TREASURER/OFFICE SPACE IN ALBEMARLE BUILDING AND FUNDS FOR MOVING EXPENSES
Section 26A. (a) The Secretary of Administration may allocate to the Department of State Treasurer in the Albemarle Building the remaining space on the fifth floor that is not already allocated to the Department, as the space becomes available during the 1998-99 fiscal year, and 7,000 square feet of contiguous space on the sixth floor, as the space becomes available during the 1998-99 fiscal year.
(b) If the Secretary of Administration allocates space as described in subsection (a) of this section, the Department may expend up to four hundred seventy thousand seven hundred fifty dollars ($470,750) from departmental receipts and up to forty-four thousand dollars ($44,000) from funds appropriated in this act for expenses that are incurred as a result of the Department's relocation.

Requested by:   Representatives Ives, Sherrill, McCombs
IMPROVE DISABILITY INCOME PLAN
Section 26A.1.  If House Bill 1669, 1997 Session, entitled "Improve Disability Income Plan", becomes law, the Treasurer may expend departmental receipts in an amount that does not exceed five hundred ninety-four thousand one hundred forty-seven dollars ($594,147) to implement the requirements of that act. This includes provision for six additional employees and the necessary operating and initial preparation costs.

PART XXVII.  DEPARTMENT OF TRANSPORTATION
Requested by:   Representatives Bowie, Dockham, McMahan
DESIGN-BUILD TRANSPORTATION CONSTRUCTION CONTRACTS AUTHORIZED
Section 27.  Notwithstanding any other provision of law, the Board of Transportation may award up to three contracts annually for construction of transportation projects on a design-build basis.  These contracts may be awarded after a determination by the Department of Transportation that delivery of the projects must be expedited and that it is not in the public interest to comply with normal design and construction contracting procedures.  Prior to the award of a design-build contract, the Secretary of Transportation shall report to the Joint Legislative Transportation Oversight Committee and to the Joint Legislative Commission on Governmental Operations on the nature and scope of the project and the reasons an award on a design-build basis will best serve the public interest.

[SECTION 27.1 RESERVED]

Requested by:   Representatives Bowie, Dockham, McMahan
DISCONTINUE BOND RETIREMENT TRANSFER FROM HIGHWAY FUND TO HIGHWAY TRUST FUND FOR ONE YEAR
Section 27.2.  G.S. 136-176(a)(4) and G.S. 136-183 are suspended from July 1, 1998, to June 30, 1999.

Requested by:   Representatives Bowie, Dockham, McMahan
FEDERAL FUNDS FOR PUBLIC TRANSPORTATION IMPROVEMENTS
Section 27.3.  Section 32.18 of S.L. 1997-443 reads as rewritten:
"Section 32.18.  To the extent allowable by federal law, the Department of Transportation shall use ten million dollars ($10,000,000) of federal highway funds during each year of the 1997-99 biennium for improvements to public transportation."

Requested by:   Representatives Bowie, Dockham, McMahan
CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATIONS
Section 27.4.  Section 32.13 of S.L. 1997-443 reads as rewritten:
"Section 32.13.  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
FY 1999-2000	$1,190.8 million
FY 2000-2001	$1,225.7 million
FY 2001-2002	$1,265.4 million
FY 2002-2003	$1,301.0 million
The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
FY 1999-2000	$871.4 million
FY 2000-2001	$901.8 million
FY 2001-2002	$934.7 million
FY 2002-2003	$967.2 million."

Requested by:   Representatives Bowie, Dockham, McMahan
OUTDOOR ADVERTISING JUST COMPENSATION SUNSET EXTENDED
Section 27.5.  Section 2 of Chapter 1147 of the 1981 Session Laws, as amended by all of the following:
Chapter 318 of the 1983 Session Laws
Chapter 1024 of the 1987 Session Laws
Section 1 of Chapter 166 of the 1989 Session Laws
Section 1 of Chapter 725 of the 1993 Session Laws
reads as rewritten:
"Sec. 2.  This act is effective upon ratification, but shall expire June 30, 2000, and shall have no force or effect after that date."

Requested by:   Representatives Bowie, Dockham, McMahan
PAYMENTS TO CONTRACT AGENTS FOR COLLECTING EMISSION CONTROL CIVIL PENALTIES AND FOR MAKING SALES OF INSPECTION STICKERS TO LICENSED INSPECTION STATIONS, AND A TECHNICAL CHANGE TO A RELATED STATUTE
Section 27.6.  (a)	G.S. 20-63(h) reads as rewritten:
"(h)	Commission Contracts for Issuance of Plates and Certificates. – All registration plates, registration certificates and certificates of title issued by the Division, outside of those issued from the Raleigh offices of the said Division and those issued and handled through the United States mail, shall be issued insofar as practicable and possible through commission contracts entered into by the Division for the issuance of such plates and certificates in localities throughout North Carolina with persons, firms, corporations or governmental subdivisions of the State of North Carolina and the Division shall make a reasonable effort in every locality, except as hereinbefore noted, to enter into a commission contract for the issuance of such plates and certificates and a record of these efforts shall be maintained in the Division. In the event the Division is unsuccessful in making commission contracts as hereinbefore set out it shall then issue said plates and certificates through the regular employees of the Division. Whenever registration plates, registration certificates and certificates of title are issued by the Division through commission contract arrangements, the Division shall provide proper supervision of such distribution. Commission contracts entered under this subsection shall provide for the payment of compensation for all transactions as set forth below. Nothing contained in this subsection will allow or permit the operation of fewer outlets in any county in this State than are now being operated.
A transaction is any of the following activities:
(1)	Issuance of a registration plate, a registration card, a registration renewal sticker, or a certificate of title.
(2)	Issuance of a handicapped placard or handicapped identification card.
(3)	Acceptance of an application for a personalized registration plate.
(4)	Acceptance of a surrendered registration plate, registration card, or registration renewal sticker, or acceptance of an affidavit stating why a person cannot surrender a registration plate, registration card, or registration renewal sticker.
(5)	Cancellation of a title because the vehicle has been junked.
(6)	Acceptance of an application for, or issuance of, a refund for a fee or a tax, other than the highway use tax.
(7)	Receipt of the civil penalty imposed by G.S. 20-309 for a lapse in financial responsibility or receipt of the restoration fee imposed by that statute.
(8)	Acceptance of a notice of failure to maintain financial responsibility for a motor vehicle.
(8a)	Collection of civil penalties imposed for violations of G.S. 20-183.8A.
(8b)	Sale of one or more inspection stickers in a single transaction to a licensed inspection station.
(9)	Collection of the highway use tax.
Performance at the same time of any combination of the items that are listed within each subdivision or are listed within subdivisions (1)	through (8b) of this section is a single transaction for which a dollar and thirty-five cent ($1.35) compensation shall be paid. Performance of the item listed in subdivision (9) of this subsection in combination with any other items listed in this subsection is a separate transaction for which a one dollar and twenty cent ($1.20) compensation shall be paid."
(b)	G.S. 20-183.8A reads as rewritten:
"§ 20-183.8A.  Civil penalties against motorists for emissions violations.
The Division shall assess a civil penalty against a person who owns or leases a vehicle that is subject to an emissions inspection and who does any of the following:
(1)	Fails to have the vehicle inspected within four months after it is required to be inspected under this Part.
(2)	Instructs or allows a person to tamper with an emission control device of the vehicle so as to make the device inoperative or fail to work properly.
(3)	Incorrectly states the county of registration of the vehicle to avoid having an emissions inspection of the vehicle.
The amount of penalty is one hundred dollars ($100.00) if the vehicle is a pre-1981 vehicle and two hundred fifty dollars ($250.00) if the vehicle is a 1981 or newer model vehicle. As provided in G.S. 20-54, the registration of a vehicle may not be renewed until a penalty imposed under this section has been paid."

[SECTION 27.7 RESERVED]

Requested by:  Representative Weatherly
BRANDED TITLE CLARIFICATION
Section 27.8.  (a)	G.S. 20-71.3 reads as rewritten:
"§ 20-71.3.  Salvage and other vehicles.– titles and registration cards to be branded.
" 	(a)	Motor vehicle certificates of title and registration cards issued pursuant to G.S. 20-57 shall be branded in accordance with this section.
As used in this section, 'branded' means that the title and registration card shall contain a designation that discloses if the vehicle is classified as any of the following:
(1) Salvage Motor Vehicle.
(2) Salvage Rebuilt Vehicle.
(3) Reconstructed Vehicle.
(4) Flood Vehicle.
(5) Non-U.S.A. Vehicle.
(6) Any other classification authorized by law.
(b)	Any motor vehicle up to and including six model years old damaged by collision or other occurrence, that is to be retitled in this State, shall be subject to preliminary and final inspections by the Enforcement Section of the Division.
These inspections serve as antitheft measures and do not certify the safety or roadworthiness of a vehicle.
(c)	The Division shall not retitle a vehicle described in subsection (b) of this section that has not undergone the  preliminary and final inspections required by that subsection.
(d)	Any motor vehicle up to and including six model years old that has been inspected pursuant to subsection (b) of this section may be retitled with an unbranded title based upon a title application by the rebuilder with a supporting affidavit disclosing all of the following:
(1)	The parts used or replaced.
(2)	The major components replaced.
(3)	The hours of labor and the hourly labor rate.
(4)	The total cost of repair.
The unbranded title shall be issued only if the cost of repairs, including parts and labor, does not exceed seventy-five percent (75%) of its fair market retail value.
(e)	Any motor vehicle more than six model years old damaged by collision or other occurrence that is to be retitled by the State may be retitled, without inspection, with an unbranded title based upon a title application by the rebuilder with a supporting affidavit disclosing all of the following:
(1)	The parts used or replaced.
(2)	The major components replaced.
(3)	The hours of labor and the hourly labor rate.
(4)	The total cost of repair.
The unbranded title shall be issued only if the cost of repairs, including parts and labor does not exceed seventy-five percent (75%) of its fair market retail value.
(f)	The Division shall maintain the affidavits required by this section and make them available for review and copying by persons researching the salvage and repair history of the vehicle.
(g)	Any motor vehicle that has been branded in another state shall be branded with the nearest applicable brand specified in this section, except that no junk vehicle or vehicle that has been branded junk in another state shall be titled or registered.
(h)	A branded title for a salvage motor vehicle damaged by collision or other occurrence shall be issued if the cost of repairs, including parts and labor, exceeds seventy-five percent (75%) of its fair market retail value.
(i)	Once the Division has issued a branded title for a motor vehicle all subsequent titles for that motor vehicle shall continue to reflect the branding.
(j)	The Division shall prepare necessary forms and may adopt rules required to carry out the provisions of this Part."
(b)	G.S. 20-71.4(a) reads as rewritten:
"(	
  (a)	It shall be unlawful and constitute a Class 2 misdemeanor for any transferor who knows or reasonably should know that:
(1)	A motor vehicle up to and including five model years old has been involved in a collision or other occurrence to the extent that the cost of repairing that vehicle exceeds twenty-five percent (25%) of its fair market retail value at the time of the damage; or
(2)	The motor vehicle is, or was, a flood vehicle, a reconstructed vehicle, or a salvage vehicle
to fail to disclose that fact in writing to the transferee prior to the transfer of the vehicle.  Failure to disclose any of the above information will also result in civil liability under G.S. 20-348.  The Commissioner may prepare forms to carry out the provisions of this section."
(c)	The Joint Legislative Transportation Oversight Committee shall study all aspects of salvage titles, antitheft inspections, and damage disclosures and shall make recommendations for any needed statutory changes to the 1999 Session of the General Assembly.

Requested by:   Representatives Bowie, Dockham, McMahan
DMV ENFORCEMENT SECTION PAY EQUITY PLAN LIMITATIONS
Section 27.9. Of the funds appropriated in this act to the Department of Transportation, up to three million three hundred ninety thousand seven hundred eight dollars ($3,390,708) may be used to adjust the salaries and benefits of the enforcement officers assigned to the Enforcement Section of the Division of Motor Vehicles.
	These adjustments shall be based on factors such as:  employee salary, position class title, position grade, and creditable years of sworn service with the Enforcement Section.  
No salary adjustment shall result in an increase beyond the maximum salary set for an officer's pay grade.  If an officer's salary is near or at the top of the officer's pay grade, the officer shall be eligible to receive a salary adjustment up to the top of the officer's pay grade.  If an officer is at the top of the officer's pay grade, then the officer is not eligible to receive a salary adjustment.
Before adjusting salaries or benefits pursuant to this section, the Department of Transportation shall do all of the following:
(1)	Consult with and get approval of the Office of State Personnel.
(2)	Report to the Joint Legislative Transportation Oversight Committee.
(3)	Report to the Joint Legislative Commission on Governmental Operations.

Requested by:   Representative C. Wilson
PERFORMANCE AUDIT OF PUBLIC TRANSPORTATION AND RAIL DIVISIONS
Section 27.10.  The State Auditor shall conduct a performance audit of the Public Transportation and Rail Divisions of the Department of Transportation.  The performance audit shall be conducted according to Government Auditing Standards as promulgated by the Comptroller General of the United States.  The results of the audit shall be presented to the Fiscal Research Division of the General Assembly no later than February 1, 1999.

Requested by:   Representative Bowie
BOARD OF TRANSPORTATION TO REPORT BEFORE ADDING PERSONNEL
Section 27.11.  The Board of Transportation shall report a proposed staffing plan to the Joint Legislative Transportation Oversight Committee before hiring or reclassifying personnel as a result of any reorganization or restructuring of the Board or staff mandated by the General Assembly.

Requested by:   Representatives McMahan, Bowie, Dockham
REGIONAL TRANSPORTATION COMMITTEE OF CENTRALINA COUNCIL OF GOVERNMENTS FUNDS
Section 27.12.  From funds appropriated to the Department of Transportation from the Highway Fund, the Department shall expend up to one hundred thousand dollars ($100,000) for the 1998-99 fiscal year and each of the subsequent four fiscal years to fund an ongoing regional transportation study by the Regional Transportation Committee of Centralina Council of Governments.
Funds expended for the regional transportation study shall be approved by the Department of Transportation which shall make written reports to the Joint Legislative Transportation Oversight Committee on the progress of the study.

Requested by:   Representatives Cansler, Sherrill
NONBETTERMENT RELOCATION COSTS
Section 27.13.  (a)	G.S. 136-27.1 reads as rewritten:
"§ 136-27.1.  Relocation of water and sewer lines of municipalities and nonprofit water or sewer corporations or associations.
The Department of Transportation shall pay the nonbetterment cost for the relocation of water and sewer lines, located within the existing State highway right-of-way, that are necessary to be relocated for a State highway improvement project and that are owned by: (i)	a municipality with a population of 5,500 or less according to the latest decennial census; (ii) a nonprofit water or sewer association or corporation; (iii) any water or sewer system organized pursuant to Chapter 162A of the General Statutes; (iv) a rural water system operated by county as an enterprise system; (v) any sanitary district organized pursuant to Part 2 of Article 2 of Chapter 130A of the General Statutes; (vi) constructed by a water or sewer system organized pursuant to Chapter 162A of the General Statutes and then sold or transferred to a municipality with a population of greater than 5,500 according to the latest decennial census; or (vii) constructed by a water or sewer system organized pursuant to Article 20 of Chapter 160A of the General Statutes."
(b)	This section is effective when it becomes law and shall not affect pending litigation.

[SECTION 27.14 RESERVED]

Requested by:   Representatives McMahan, Bowie, Dockham
BLUE RIBBON TRANSPORTATION FINANCE STUDY COMMISSION
Section 27.15.  (a)	Commission established. – There is established a Blue Ribbon Transportation Finance Study Commission.
(b)	Membership. – The Commission shall be composed of 18 members, as follows:
(1)	Four members of the House of Representatives appointed by the Speaker of the House.
(2)	Four members of the Senate appointed by the President Pro Tempore of the Senate.
(3)	Three members of the public appointed by the Governor, two of whom shall have expertise in transportation matters.
(4)	Three members of the public appointed by the Speaker of the House, two of whom have expertise in transportation matters.
(5)	Three members of the public appointed by the President Pro Tempore of the Senate, two of whom have expertise in transportation matters.
(6)	The Secretary of Transportation or his designee who shall serve as a nonvoting ex officio member.
(c)	Duties of Commission. – The Commission shall study the following matters related to Transportation Finance:
(1)	The Highway Trust Fund Act of 1989. – The Commission shall review the current law and recommend any revisions that may be necessary, based on the nine-year history of the fund and the current transportation needs of the State.
(2)	Current revenue sources. – The Commission shall review all current revenue sources that support State transportation programs, and recommend changes, additions, or deletions based on projected needs for the next 25 years.
(3)	Transportation system maintenance. – The Commission shall review current financing of transportation system maintenance, and recommend changes to accommodate maintenance of new construction and increased traffic volume.
(4)	Public transportation. – The Commission shall evaluate funding public transportation with dedicated sources of funds. The Commission's recommendation shall include specific sources and amounts of any dedicated funds, if recommended.
(5)	Transfers from the Highway Fund to other State agencies; including whether or not those funds would more appropriately come from the General Fund.
(6)	Other transportation financing issues. – The Commission may study any other transportation finance-related issue approved by the cochairs, or recommended by the Secretary of Transportation and approved by the cochairs.
(d)	Vacancies. – Any vacancy on the Commission shall be filled by the appointing authority.
(e)  Cochairs. –  Cochair persons of the Commission shall be designated by the Speaker of the House and the President Pro Tempore of the Senate from among their respective appointees. The Commission shall meet upon the call of the chairs.  A quorum of the Commission shall be eight members.
(f)  Expenses of Members. – Members of the Commission shall receive per diem, subsistence, and travel allowances in accordance with G.S. 120-3.1, 138-5, or 138-6, as appropriate.
(g)  Staff. – Adequate staff shall be provided to the Commission by the Legislative Services Office.
(h)  Consultants. – The Commission may hire consultants to assist with the study.  Before expending any funds for a consultant, the Commission shall report to the Joint Legislative Commission on Governmental Operations on the consultant selected, the work products to be provided by the consultant, and the cost of the contract, including an itemization of the cost components.
(i)  Meeting Location. – The Legislative Services Commission shall grant adequate meeting space to the Commission in the State Legislative Building or the Legislative Office Building.
(j)  Report. – The Commission shall submit a final report to the General Assembly by February 1, 2000.  Upon the filing of its report, the Commission shall terminate.
(k)  Appropriation. – From appropriations to the General Assembly, the Legislative Services Commission may allocate up to two hundred thousand dollars ($200,000) for the expenses of the Commission.

Requested by:  Representatives Bowie, Dockham, McMahan 
MEDIUM CUSTODY ROAD CREW COMPENSATION
Section 27.16.  (a)	Of funds appropriated to the Department of Transportation by this act six million five hundred thousand dollars ($6,500,000) shall be used by the Department to reimburse the Department of Correction during the 1998-99 fiscal year for costs authorized by G.S. 148-26.5 for reimbursement for highway related labor performed by medium custody prisoners.  The Department of Transportation may use funds appropriated by this act to pay requested reimbursements submitted by the Department of Correction over and above the six million five hundred thousand dollars ($6,500,000) but those reimbursement requests shall be subject to negotiations among the Department of Transportation, the Department of Correction, and the Office of State Budget and Management prior to payment by the Department of Transportation.
(b)	Sections 19.16 and 32.2 of S.L. 1997-443 are repealed.

Requested by:   Representative Hiatt
DMV MEDICAL EVALUATION PROGRAM ENHANCEMENT FUNDS
Section 27.17.  Of funds appropriated from the Highway Fund to the Division of Motor Vehicles the sum of ninety-three thousand five hundred thirteen dollars ($93,513) for the 1998-99 fiscal year shall be used to fund an additional Public Health Physician II in the Department of Health and Human Services to review the medical records of the growing number of drivers referred to the Drivers Medical Evaluation Program.  This implements a recommendation of the Driver Medical Evaluation Program Study Commission.

DISCLOSURE OF PERSONAL INFORMATION IN MOTOR VEHICLE RECORDS
Section 27.18. G.S. 20-43.1 reads as rewritten:
"§ 20-43.1.  Disclosure of personal information in motor vehicle records.
The Division shall disclose personal information contained in motor vehicle records in accordance with the federal Driver's Privacy Protection Act of 1994, as amended, 18 U.S.C. §§ 2721, et seq.
As authorized in 18 U.S.C. § 2721, the Division shall not disclose personal information for the purposes specified in 18 U.S.C. § 2721(b)(11) or (12) or establish a waiver procedure described in 18 U.S.C. § 2721(d). "

PART XXVIII.  SALARIES AND BENEFITS
Requested by:  Representatives Holmes, Esposito, Creech, Crawford
GOVERNOR AND COUNCIL OF STATE/SALARY INCREASES
Section 28.  (a) G.S. 147-11(a) reads as rewritten:
"(a)	The salary of the Governor shall be one hundred ten thousand three hundred forty-six dollars ($110,346) annually, payable monthly."
(b) Section 33(b) of Chapter 443 of the 1997 Session Laws reads as rewritten:
"(b)	The annual salaries for the members of the Council of State, payable monthly, for the 1998-99 fiscal year, beginning July 1, 1998, are:

Council of State	Annual Salary

Lieutenant Governor		$97,388
Attorney General		97,388
Secretary of State		97,388
State Treasurer		97,388
State Auditor		97,388
Superintendent of Public Instruction		97,388
Agriculture Commissioner		97,388
Insurance Commissioner		97,388
Labor Commissioner		97,388."

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
NONELECTED DEPARTMENT HEADS/SALARY INCREASES
Section  28.1.  Section 33.1 of Chapter 443 of the 1997 Session Laws reads as rewritten:
"Section 33.1.  In accordance with G.S. 143B-9, the maximum annual salaries, payable monthly, for the nonelected heads of the principal State departments for the 1998-99 fiscal year, beginning July 1, 1998,  are:

Nonelected Department Heads	Annual Salary

Secretary of Administration		$95,149
Secretary of Correction		95,149
Secretary of Cultural Resources		95,149
Secretary of Commerce		95,149
Secretary of 
  Environment and Natural Resources		95,149
Secretary of Health and Human 
   Services		95,149
Secretary of Revenue		95,149
Secretary of Transportation		95,149
Secretary of Crime Control and Public Safety		95,149."

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
CERTAIN EXECUTIVE BRANCH OFFICIALS/SALARY INCREASES
Section  28.2A.  Section 33.2 of Chapter 443 of the 1997 Session Laws reads as rewritten:
"Section 33.2.  The annual salaries, payable monthly, for the 1998-99 fiscal year, beginning July 1, 1998, for the following executive branch officials are:

Executive Branch Officials	Annual Salary

Chairman, Alcoholic Beverage Control
  Commission		$86,602
State Controller		121,199
Commissioner of Motor Vehicles		86,602
Commissioner of Banks		97,389
Chairman, Employment Security Commission		121,046
State Personnel Director		95,149
Chairman, Parole Commission		79,078
Members of the Parole Commission		73,008
Chairman of the Utilities Commission		98,388
Commissioners of the Utilities Commission		97,388
Executive Director, Agency for Public
  Telecommunications		73,008
General Manager, Ports Railway Commission		65,925
Director, Museum of Art		88,739
Executive Director, Wildlife Resources
   Commission		74,746
Executive Director, North Carolina Housing
  Finance Agency		107,179
Executive Director, North Carolina Agricultural
Finance Authority		84,294
	".

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
JUDICIAL BRANCH OFFICIALS/SALARY INCREASES
Section  28.3A. (a) Section 33.7 of Chapter 443 of the 1997 Session Laws reads as rewritten:
"Section 33.7.  (a)	The annual salaries, payable monthly, for specified judicial branch officials for the 1998-99 fiscal year, beginning July 1, 1998, are:

Judicial Branch Officials	Annual Salary

Chief Justice, Supreme Court		$110,346
Associate Justice, Supreme Court		107,463
Chief Judge, Court of Appeals		104,776
Judge, Court of Appeals		102,985
Judge, Senior Regular Resident Superior Court		100,187
Judge, Superior Court		97,388
Chief Judge, District Court		88,433
Judge, District Court		85,635
District Attorney		90,224
Administrative Officer of the Courts		100,187
Assistant Administrative Officer of the Courts		84,134
Public Defender		90,224.

			%)."
(b)	The district attorney or public defender of a judicial district, with the approval of the Administrative Officer of the Courts, shall set the salaries of assistant district attorneys or assistant public defenders, respectively, in that district such that the average salaries of assistant district attorneys or assistant public defenders in that district do not exceed fifty-five thousand five hundred dollars ($55,500) and the minimum salary of any assistant district attorney or assistant public defender is at least twenty-eight thousand three hundred thirty-four dollars ($28,334), effective July 1, 1998.
(c)	The salaries in effect for the 1997-98 fiscal year on June 30, 1998, for permanent, full-time employees of the Judicial Department, except for those whose salaries are itemized in this Part, shall be increased by three percent (3%), commencing July 1, 1998.
(d)	The salaries in effect on June 30, 1998, for all permanent, part-time employees of the Judicial Department shall be increased on and after July 1, 1998, by pro rata amounts of three percent (3%).

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
CLERKS OF SUPERIOR COURT/SALARY INCREASES
Section  28.4.   G.S. 7A-101(a) reads as rewritten:
"(a)	The clerk of superior court is a full-time employee of the State and shall receive an annual salary, payable in equal monthly installments, based on the population of the county as determined in subsection (a1) of this section, according to the following schedule:

Population	Annual Salary
Less than 100,000 		$64,556
100,000 to 149,999		72,515
150,000 to 249,999		80,474
250,000 and above		88,433.

The salary schedule in this subsection is intended to represent the following percentage of the salary of a chief district court judge:

Population	Annual Salary
Less than 100,000	73%
100,000 to 149,999	82%
150,000 to 249,999	91%
250,000 and above       	100%.

When a county changes from one population group to another, the salary of the clerk shall be changed, on July 1 of the fiscal year for which the change is reported, to the salary appropriate for the new population group, except that the salary of an incumbent clerk shall not be decreased by any change in population group during his continuance in office."

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
ASSISTANT AND DEPUTY CLERKS OF SUPERIOR COURT/SALARY INCREASES
Section  28.5.  (a)	Effective July 1, 1998, those State employees whose salaries are determined by G.S. 7A-102 shall receive across-the-board salary increases in the amount of three percent (3%) in addition to step increases associated with their respective pay plans.
(b) G.S. 7A-102(c1) reads as rewritten:
"(c1)	A full-time assistant clerk or a full-time deputy clerk, and up to one full-time deputy clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the following minimum and maximum rates:
  Assistant Clerks and Head Bookkeeper	Annual Salary  Minimum		$24,122
  Maximum		42,710
  Deputy Clerks	Annual Salary
  Minimum	724	$19,286
  Maximum	. 	32,899. "
Requested by:  Representatives Holmes, Esposito, Creech, Crawford
MAGISTRATES/SALARY INCREASES
Section  28.6A.  Effective July 1, 1998, magistrates shall receive salary increases in the amount of three percent (3%), except that any person entitled to a step increase pursuant to G.S. 7A-171.1 for the 1998-99 fiscal year shall not receive the three percent increase provided by this section.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
GENERAL ASSEMBLY PRINCIPAL CLERKS/SALARY INCREASES
Section 28.7A.  (a)	G.S. 120-37(c) is repealed.
(b)	G.S. 120-37 is amended by adding a new subsection to read:
"( c1)	The principal clerks shall be full-time officers.  Each principal clerk shall be entitled to other benefits available to permanent legislative employees and shall be paid an annual salary set by the Legislative Services Commission payable monthly."

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
SERGEANT-AT-ARMS AND READING CLERKS/SALARY INCREASES
Section  28.8.   G.S. 120-37(b) reads as rewritten:
"(b)	The sergeant-at-arms and the reading clerk in each house shall be paid a salary of two hundred sixty-six dollars ($266.00) per week plus subsistence at the same daily rate provided for members of the General Assembly, plus mileage at the rate provided for members of the General Assembly for one round trip only from their homes to Raleigh and return.  The sergeants-at-arms shall serve during sessions of the General Assembly and at such time prior to the convening of, and subsequent to adjournment or recess of, sessions as may be authorized by the Legislative Services Commission.  The reading clerks shall serve during sessions only."

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
LEGISLATIVE EMPLOYEES/SALARY INCREASES
Section  28.9.  The Legislative Administrative Officer shall increase the salaries of nonelected employees of the General Assembly in effect for fiscal year 1997-98 by three percent (3%).  Nothing in this act limits any of the provisions of G.S. 120-32.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
COMMUNITY COLLEGES PERSONNEL/SALARY INCREASES
Section 28.10.  The Director of the Budget shall transfer from the Reserve for Salary Increases created in this act for fiscal year 1998-99 funds to the Department of Community Colleges necessary to provide an average annual salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, commencing July 1, 1998, for all permanent full-time community college institutional personnel supported by State funds.  The State Board of Community Colleges shall establish guidelines for providing their salary increases to community college institutional personnel to include consideration of increases based on performance.  Salary funds shall be used to provide an average annual salary increase of three percent (3%) to all full-time employees and part-time employees on a pro rata basis.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
UNIVERSITY OF NORTH CAROLINA SYSTEM - EPA SALARY INCREASES
Section 28.11.  (a) The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increase created in this act for fiscal year 1998-99 to provide an annual average salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, commencing July 1, 1998, for all employees of The University of North Carolina, as well as employees other than teachers of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA).  These funds shall be allocated to individuals according to the rules adopted by the Board of Governors, or the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate, and shall not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.  The Board of Governors shall include consideration of increases based on performance in its adoption of rules for the allocation of funds for salary increases.
(b) The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Salary Increases created in this act for fiscal year 1998-99 to provide an annual average salary increase comparable to that provided in this act for public school teachers, including funds for the employer's retirement and social security contributions, commencing July 1, 1998, for all teaching employees of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA).  These funds shall be allocated to individuals according to the rules adopted by the Board of Trustees of the North Carolina School of Science and Mathematics and shall not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
SCHOOL CENTRAL OFFICE SALARIES
Section 28.12.  (a) The following monthly salary ranges apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 1998-99 fiscal year, beginning July 1, 1998:
(1)	School Administrator I:	$2,846 - $4,857
(2)	School Administrator II:	$3,021 - $5,155
(3)	School Administrator III:	$3,206 - $5,471
(4)	School Administrator IV:	$3,335 - $5,692
(5)	School Administrator V:	$3,469 - $5,923
(6)	School Administrator VI:	$3,681 - $6,286
(7)	School Administrator VII:	$3,830 - $6,540
The local board of education shall determine the appropriate category and placement for each assistant superintendent, associate superintendent, director/coordinator, supervisor, or finance officer within the salary ranges and within funds appropriated by the General Assembly for central office administrators and superintendents.  The category in which an employee is placed shall be included in the contract of any employee hired on or after July 1, 1998.
(b)	The following monthly salary ranges apply to public school superintendents for the 1998-99 fiscal year, beginning July 1, 1998:
(1)	Superintendent I (Up to 2,500 ADM):	$4,065 - $6,941
(2)	Superintendent II (2,501 - 5,000 ADM):	$4,315 - $7,364
(3)	Superintendent III (5,001 - 10,000 ADM):	$4,578 - $7,815
(4)	Superintendent IV (10,001 - 25,000 ADM):	$4,859 - $8,293
(5)	Superintendent V (Over 25,000 ADM):	$5,157 - $8,801
The local board of education shall determine the appropriate category and placement for the superintendent based on the average daily membership of the local school administrative unit and within funds appropriated by the General Assembly for central office administrators and superintendents.
Notwithstanding the provisions of this subsection, a local board of education may pay an amount in excess of the applicable range to a superintendent who is entitled to receive the higher amount under Section 9.6 of this act.
(c)	Longevity pay for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers shall be as provided for State employees.
(d)	Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the six-year degree level shall receive a salary supplement of one hundred twenty-six dollars ($126.00) per month in addition to the compensation provided for pursuant to this section.  Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty-three dollars ($253.00) per month in addition to the compensation provided for under this section.
(e)  The State Board shall not permit local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.
(f)  The Director of the Budget shall transfer from the Reserve for Salary Increases created in this act for fiscal year 1998-99, beginning July 1, 1998, funds necessary to provide an average annual salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, commencing July 1, 1998, for all permanent full-time personnel paid from the Central Office Allotment. The State Board of Education shall allocate these funds to local school administrative units.  The local boards of education shall establish guidelines for providing their salary increases to these personnel.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
NONCERTIFIED PERSONNEL SALARY FUNDS/TEACHER ASSISTANT SALARY FUNDS
Section 28.13. (a) The Director of the Budget may transfer from the Reserve for Compensation Increase created in this act for fiscal year 1998-99, commencing July 1, 1998, funds necessary to provide a salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, commencing July 1, 1998, for all noncertified public school employees whose salaries are supported from the State's General Fund.  Local boards of education shall increase the rates of pay for all such employees who were employed during fiscal year 1997-98 and who continue their employment for fiscal year 1998-99 by at least three percent (3%), commencing July 1, 1998.  These funds shall not be used for any purpose other than for the salary increases and necessary employer contributions provided by this section.
The Director of the Budget may transfer from the Reserve for Compensation Increase created in this act for fiscal year 1998-99, beginning July 1, 1998, funds necessary to provide the salary increases for noncertified public school employees whose salaries are supported from the State's General Fund in accordance with the provisions of this section.
The State Board of Education may enact or create salary ranges for noncertified personnel to support increases of three percent (3%) for the 1998-99 fiscal year.
(b)	G.S. 115C-12(16)b. reads as rewritten:
"b.	Salary schedules for the following public school support personnel shall be adopted by the State Board of Education: school finance officer, office support personnel, teacher assistants, maintenance supervisors, custodial personnel, and transportation personnel. The Board shall classify these support positions in terms of uniform pay grades included in the salary schedule of the State Personnel Commission.
		By the end of the third payroll period of the 1995-96 fiscal year, local boards of education shall place State-allotted office support personnel, teacher assistants, and custodial personnel on the salary schedule adopted by the State Board of Education so that the average salary paid is the State-allotted amount for the category. In placing employees on the salary schedule, the local board may consider the education, training, and experience of each employee, including experience in other local school administrative units. It is the intent of the General Assembly that a local school administrative unit not fail to employ an employee who was employed for the prior school year in order to implement the provisions of this sub-subdivision. A local board of education is in compliance with this sub-subdivision if the average salary paid is at least ninety-five percent (95%) of the State-allotted amount for the category at the end of the third payroll period of the 1995-96 fiscal year, and at least ninety-eight percent (98%) of the State-allotted amount for the category at the end of the third payroll period of each subsequent fiscal year. The Department of Public Instruction shall provide technical assistance to local school administrative units regarding the implementation of this sub-subdivision."
(c) Subsection (b) of this section applies beginning with the 1999-2000 school year.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
COMPENSATION BONUS/STATE EMPLOYEES/SCHOOL PERSONNEL
Section 28.14A.  (a)	Any person:
(1)	Whose salary is set by or under this Part, other than Sections 28, 28.1, 28.2A, 28.3A(a), 28.4, 28.15(a); and 28.15(c), 28.15(d), 28.15(e), except that the exclusion of those under 28.15(c), 28.15(d), and 28.15(e) only applies to those whose salaries are set by the State Personnel Act; and 
(2)	Who was, on July 1, 1998, a permanent officer or permanent employee whose salary is set by or under this Part shall receive not later than September of 1998 a compensation bonus of one percent (1%), except that:
a.	The compensation bonus for persons subject to Section 28.10 of this act shall be an average of one percent (1%) per year and shall be allocated in accordance with guidelines adopted by the State Board of Community Colleges;
b.	The compensation bonus for persons subject to Section 28.11 of this act shall be an average of one percent (1%) per year and shall be allocated to individuals according to the rules adopted by the Board of Governors, or the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate; and
c.	The guidelines and rules adopted under sub-subdivisions a. and b. of this subdivision may cover employees of those institutions whose first day of employment for the 1998-99 academic year came after July 1, 1998.
(a1)  Any person:
(1)	Who did not receive a compensation bonus under subsection (a) of this section; and
(2)	Who was employed on the first day  of the 1998-99 school year as a permanent public school employee whose salary is set by or under this Part
shall receive in the third payroll period of the 1998-99 school year a compensation bonus of one percent (1%) of the annual salary for that position.
(b)	The annual salary on which the percentage compensation bonus is based is the annual salary in effect during the pay period in which the bonus is paid.
(c)	The Director of the Budget shall transfer from the Reserve for Compensation Bonus provided by this act sufficient funds to implement this section.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
MOST STATE EMPLOYEES/SALARY INCREASES
Section 28.15A.  (a)	The salaries in effect June 30, 1998, of all permanent full-time State employees whose salaries are set in accordance with the State Personnel Act, and who are paid from the General Fund or the Highway Fund shall be increased, on or after July 1, 1998, unless otherwise provided by this act, pursuant to the Comprehensive Compensation System set forth in G.S. 126-7 and rules adopted by the State Personnel Commission, as follows:
(1)	Career growth recognition awards in the amount of two percent (2%);
(2)	A cost-of-living adjustment in the amount of one percent (1%); and
(3)	A performance bonus in the amount of one percent (1%).
Notwithstanding G.S. 126-7(4a), any permanent full-time State employee whose salary is set in accordance with the State Personnel Act and whose salary is at the top of the salary range or within two percent (2%) of the top of the salary range shall receive a one-time bonus of two percent (2%) less the career growth recognition award the employee receives.  The employee shall receive the career growth bonus at the time the employee is eligible for the career growth recognition award, but not earlier than July 1, 1998.
(a1) It is the intent of the General Assembly that the annual career growth recognition award in the amount of two percent (2%) provided by G.S. 126-7(c)(4a) shall be part of the continuation budget for each fiscal year of the 1999-2001 biennium.
(b)	Except as otherwise provided in this act, salaries in effect June 30, 1998, for permanent full-time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall be increased by three percent (3%), commencing July 1, 1998.
(c)	The salaries in effect June 30, 1998, for all permanent part-time State employees shall be increased on and after July 1, 1998, by pro rata amounts of the salary increases provided for permanent full-time employees covered under subsection (a) of this section.
(d)	The Director of the Budget may allocate out of special operating funds or from other sources of the employing agency, except tax revenues, sufficient funds to allow a salary increase on and after July 1, 1998, in accordance with subsections (a), (b), or (c) of this section, including funds for the employer's retirement and social security contributions, of the permanent full-time and part-time employees of the agency.
(e)  Within regular Executive Budget Act procedures as limited by this act, all State agencies and departments may increase on an equitable basis the rate of pay of temporary and permanent hourly State employees, subject to availability of funds in the particular agency or department, by pro rata amounts the salary increase provided for permanent full-time employees covered by the provisions of subsection (a) of this section, commencing July 1, 1998.
(f)  No State employee or officer shall receive a merit increment during the 1998-99 fiscal year except as otherwise provided by this act.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
ALL STATE-SUPPORTED PERSONNEL
Section 28.16A.  (a)	Salaries and related benefits for positions that are funded partially from the General Fund or Highway Fund and partially from sources other than the General Fund or Highway Fund shall be increased from the General Fund or Highway Fund appropriation only to the extent of the proportionate part of the salaries paid from the General Fund or Highway Fund.
(b)	The granting of the salary increases under this act does not affect the status of eligibility for salary increments for which employees may be eligible unless otherwise required by this act.
(c)	The salary increases provided in this Part are to be effective July 1, 1998, do not apply to persons separated from State service due to resignation, dismissal, reduction in force, death, or retirement, whose last workday is prior to July 1, 1998.
	Payroll checks issued to employees after July 1, 1998, which represent payment of services provided prior to July 1, 1998, shall not be eligible for salary increases provided for in this act.  This subsection shall apply to all employees, subject to or exempt from the State Personnel Act, paid from State funds, including public schools, community colleges, and The University of North Carolina.
(d)	The Director of the Budget shall transfer from the Reserve for Compensation Increase in this act for fiscal year 1998-99 all funds necessary for the salary increases provided by this act, including funds for the employer's retirement and social security contributions.
(d1)  The Director of the Budget shall transfer from the Reserve for compensation Increase in this act for fiscal year 1998-99 one million four hundred thousand dollars ($1,400,000) to the University of North Carolina Board of Governors for allocation to the Agricultural Research and Cooperative Extension budget codes of North Carolina State University in order to provide sufficient operating support for those programs.
(d2)  The Director of the Budget shall transfer from the Reserve for Compensation Increase in this act for fiscal year 1998-99 funds necessary to provide statewide teacher supplements for State agency teachers who are paid on the teacher salary schedule as set out in Section 9.1 of this act based on five percent (5%) of their salaries.
(e)  Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.
Section 28.16B. (a) G.S. 126-7(c)(4b) reads as rewritten:
"(4b)	An employee whose performance is rated at or above level two of the rating scale and who has not received a suspension without pay or demotion that has not been resolved shall receive a cost-of-living increase. Other than the Commission, no agency, department, or institution shall set limits or initiate written disciplinary procedures for the purpose of precluding an eligible employee from receiving a cost-of-living adjustment."
(b) This section becomes effective July 1, 1998, and applies to any employee involved in the final written stage of a disciplinary procedure on or after January 1, 1997.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
SALARY ADJUSTMENT FUND
Section 28.17.  Any remaining appropriations for legislative salary increases not required for that purpose may be used to supplement the Salary Adjustment Fund.  These funds shall first be used to provide reclassifications of those positions already approved by the Office of State Personnel. The Office of State Budget and Management shall report to the Joint Legislative Commission on Governmental Operations prior to the allocation of these funds.

[SECTIONS 28.18, 28.19, 28.20 RESERVED]

Requested by:  Representatives Holmes, Esposito, Creech, Crawford, Daughtry
INCREASE THE MONTHLY PENSION FOR MEMBERS OF THE FIREMEN'S AND RESCUE SQUAD WORKERS' PENSION FUND
Section 28.21. (a) G.S. 58-86-55 reads as rewritten:
"§ 58-86-55.  Monthly pensions upon retirement.
Any member who has served 20 years as an 'eligible fireman' or 'eligible rescue squad worker' in the State of North Carolina, as provided in G.S. 58-86-25 and G.S. 58-86-30, and who has attained the age of 55 years is entitled to be paid a monthly pension from this fund. The monthly pension shall be in the amount of one hundred forty-six dollars ($146.00) per month. Any retired fireman receiving a pension shall, effective July 1, 1998, receive a pension of one hundred forty-six dollars ($146.00) per month.
Members shall pay ten dollars ($10.00) per month as required by G.S. 58-86-35 and G.S. 58-86-40 for a period of no longer than 20 years. No 'eligible rescue squad member' shall receive a pension prior to July 1, 1983. No member shall be entitled to a pension hereunder until the member's official duties as a fireman or rescue squad worker for which the member is paid compensation shall have been terminated and the member shall have retired as such according to standards or rules fixed by the board of trustees.
A member who is totally and permanently disabled while in the discharge of the member's official duties as a result of bodily injuries sustained or as a result of extreme exercise or extreme activity experienced in the course and scope of those official duties and who leaves the fire or rescue squad service because of this disability shall be entitled to be paid from the fund a monthly benefit in an amount of one hundred forty-six dollars ($146.00) per month beginning the first month after the member's fifty-fifth birthday. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application, and annually thereafter. Any disabled member shall not be required to make the monthly payment of ten dollars ($10.00) as required by G.S. 58-86-35 and G.S. 58-86-40.
A member who is totally and permanently disabled for any cause, other than line of duty, who leaves the fire or rescue squad service because of this disability and who has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member shall upon attaining the age of 55 years be entitled to receive a pension as provided by this section. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application and annually thereafter.
A member who, because his residence is annexed by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose department is closed because of an annexation by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, and because of such annexation is unable to perform as a fireman of any status, and if the member has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member upon attaining the age of 55 years and completion of such contributions shall be entitled to receive a pension as provided by this section. Any application to make monthly contributions under this section shall be subject to a finding of eligibility by the Board of Trustees upon application of the member.
The pensions provided shall be in addition to all other pensions or benefits under any other statutes of the State of North Carolina or the United States, notwithstanding any exclusionary provisions of other pensions or retirement systems provided by law."
(b)	This section becomes effective July 1, 1998.

Requested by:   Representatives Holmes, Esposito, Creech, Crawford, Barbee
RETIREE COLAS AND FORMULA INCREASE
Section 28.22. (a) G.S. 135-5 is amended by adding a new subsection to read:
"( eee)	From and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 1997, shall be increased by two and one-half percent (2.5%) of the allowance payable on June 1, 1998, in accordance with G.S. 135-5(o). Furthermore, from and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 1997, but before June 30, 1998, shall be increased by a prorated amount of two and one-half percent (2.5%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 1997, and June 30, 1998."
(b) G.S. 135-65 is amended by adding a new subsection to read:
"( s)	From and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 1997, shall be increased by two and one-half percent (2.5%) of the allowance payable on June 1, 1998. Furthermore, from and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 1997, but before June 30, 1998, shall be increased by a prorated amount of two and one-half percent (2.5%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 1997, and June 30, 1998."
(c)	G.S. 120-4.22A is amended by adding a new subsection to read:
"( m)	In accordance with subsection (a) of this section, from and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before January 1, 1998, shall be increased by two and one-half percent (2.5%) of the allowance payable on June 1, 1998. Furthermore, from and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced after January 1, 1998, but before June 30, 1998, shall be increased by a prorated amount of two and one-half percent (2.5%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between January 1, 1998, and June 30, 1998."
(d)	G.S. 128-27 is amended by adding a new subsection to read:
"( uu)	From and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 1997, shall be increased by two and one-half percent (2.5%) of the allowance payable on June 1, 1998, in accordance with subsection (k) of this section.  Furthermore, from and after July 1, 1998, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 1997, but before June 30, 1998, shall be increased by a prorated amount of two and one-half percent (2.5%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 1997, and June 30, 1998."
(e)  G.S. 128-27(b16) reads as rewritten:
"(b16)	Service Retirement Allowance of Member Retiring on or after July 1, 1997, but before July 1, 1998. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 1997, but before July 1, 1998, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 55th birthday, and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and seventy-six hundredths percent (1.76%) of his average final compensation, multiplied by the number of years of his creditable service.
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 128-27(b16)(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; or
2.	The service retirement allowance as computed under G.S. 128-27(b16)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of creditable service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and seventy-six hundredths percent (1.76%) of average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 128-27(b16)(2)a. but shall be reduced by one-quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 128-27(b16)(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one-quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement allowance as computed under G.S. 128-27(b16)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128-27(b16)(2)b.
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by G.S. 128-27(b)."
(f)  G.S. 128-27 is amended by adding a new subsection to read:
"( b17)	Service Retirement Allowance of Member Retiring on or After July 1, 1998. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 1998, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and seventy-seven hundredths percent (1.77%) of his average final compensation, multiplied by the number of years of his creditable service.
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 128-27(b17)(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; or
2.	The service retirement allowance as computed under G.S. 128-27(b17)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of creditable service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and seventy-seven hundredths percent (1.77%) of average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 128-27(b17)(2)a. but shall be reduced by one-quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 128-27(b17)(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one-quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement allowance as computed under G.S. 128-27(b17)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128-27(b17)(2)b.
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by G.S. 128-27(b)."
(g)  G.S. 128-27(m) reads as rewritten:
"(m)	Survivor's Alternate Benefit. – Upon the death of a member in service, the principal beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option two of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of his death, provided that all three of the following conditions apply:
(1)	a.	The member had attained such age and/or creditable service to be eligible to commence retirement with an early or service retirement allowance, or
b.	The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. 128-27(b17)(1)b. or G.S. 128-27(b17)(2)c., notwithstanding the requirement of obtaining age 50.
(2)	The member had designated as the principal beneficiary to receive a return of his accumulated contributions one and only one person who is living at the time of his death.
(3)	The member had not instructed the Board of Trustees in writing that he did not wish the provisions of this subsection apply.
For the purpose of this benefit, a member is considered to be in service at the date of his death if his death occurs within 180 days from the last day of his actual service. The last day of actual service shall be determined as provided in subsection (l)	of this section. Upon the death of a member in service, the surviving spouse may make all purchases for creditable service as provided for under this Chapter for which the member had made application in writing prior to the date of death, provided that the date of death occurred prior to or within 60 days after notification of the cost to make the purchase."
(h) G.S. 128-27 is amended by adding a new subsection to read:
"( vv)	Increase in Allowance as to Persons on Retirement Rolls as of June 1, 1998. – From and after July 1, 1998, the retirement allowance to or on account of beneficiaries on the retirement rolls as of June 1, 1998, shall be increased by six-tenths of one percent (0.6%) of the allowance payable on June 1, 1998. This allowance shall be calculated on the allowance payable and in effect on June 30, 1998, so as not to be compounded on any other increase payable under subsection (k) of this section or otherwise granted by act of the 1997 General Assembly."
(i)  This section becomes effective July 1, 1998.

Requested by:   Representatives Holmes, Esposito, Creech, Crawford, Barbee
EMPLOYER CONTRIBUTION RATES
Section 28.23A. (a)	Section 33.23(c) of S.L. 1997-443 reads as rewritten:
"(c)	Effective July 1, 1998, the State's employer contribution rates budgeted for retirement and related benefits as a percentage of covered salaries for the 1998-99 fiscal year are (i) ten and one-tenth percent (10.10%) - Teachers and State Employees; (ii) fifteen and one-tenth percent (15.10%) - State Law Enforcement Officers; (iii) nine and thirty-six hundredths percent (9.36%) - University Employees' Optional Retirement Program; (iv) eighteen and ninety-seven hundredths percent (18.97%) - Consolidated Judicial Retirement System; and (v) twenty-four and fifty-eight hundredths percent (24.58%) - Legislative Retirement System.  Each of the foregoing contribution rates includes two percent (2%) for hospital and medical benefits.  The rate for State Law Enforcement Officers includes five percent (5%) for the Supplemental Retirement Income Plan.  The rates for Teachers and State Employees, State Law Enforcement Officers, and for the University Employees' Optional Retirement Program include fifty-two hundredths percent (0.52%) for the Disability Income Plan."
(b)	Required employer salary-related contributions for employees whose salaries are paid from department, office, institution, or agency receipts shall be paid from the same source as the source of the employees' salary.  If an employee's salary is paid in part from the General Fund or Highway Fund and in part from department, office, institution, or agency receipts, required employer salary-related contributions may be paid from the General Fund or Highway Fund only to the extent of the proportionate part paid from the General Fund or Highway Fund in support of the salary of the employee, and the remainder of the employer's requirements shall be paid from the source that supplies the remainder of the employee's salary.  The requirements of this section as to source of payment are also applicable to payments on behalf of the employee for hospital-medical benefits, longevity pay, unemployment compensation, accumulated leave, workers' compensation, severance pay, separation allowances, and applicable disability income and disability salary continuation benefits.

[SECTION 28.24 RESERVED]

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
SALARY CONTINUATION BENEFITS FOR UNIVERSITY SYSTEM CAMPUS LAW ENFORCEMENT OFFICERS
Section 28.25. (a) G.S. 143-166.13(a) is amended by adding a new subdivision to read:
"(19)	Sworn State Law-Enforcement Officers with the power of arrest, University System."
(b)	This section becomes effective July 1, 1998, and applies to incapacities that occur on or after that date.

[SECTION 28.26 RESERVED]

Requested by:  Representatives Holmes, Esposito, Creech, Crawford, Barbee
INCREASE RETIREE DEATH BENEFIT
Section 28.27. (a) G.S. 135-5(l) reads as rewritten:
"(l)	Death Benefit Plan. – There is hereby created a Group Life Insurance Plan (hereinafter called the 'Plan') which is established as an employee welfare benefit plan that is separate and apart from the Retirement System and under which the members of the Retirement System shall participate and be eligible for group life insurance benefits. Upon receipt of proof, satisfactory to the Board of Trustees in their capacity as trustees under the Group Life Insurance Plan, of the death, in service, of a member who had completed at least one full calendar year of membership in the Retirement System, there shall be paid to such person as he shall have nominated by written designation duly acknowledged and filed with the Board of Trustees, if such person is living at the time of the member's death, otherwise to the member's legal representatives, a death benefit. Such death benefit shall be equal to the greater of:
(1)	The compensation on which contributions were made by the member during the calendar year preceding the year in which his death occurs, or
(2)	The greatest compensation on which contributions were made by the member during a 12-month period of service within the 24-month period of service ending on the last day of the month preceding the month in which his last day of actual service occurs;
(3),	(4) Repealed by Session Laws 1983 (Regular Session, 1984), c. 1049, s. 2.
subject to a minimum of twenty-five thousand dollars ($25,000) and to a maximum of fifty thousand dollars ($50,000). Such death benefit shall be payable apart and separate from the payment of the member's accumulated contributions under the System on his death pursuant to the provisions of subsection (f) of this section. For the purpose of the Plan, a member shall be deemed to be in service at the date of his death if his death occurs within 180 days from the last day of his actual service.
The death benefit provided in this subsection (l)	shall not be payable, notwithstanding the member's compliance with all the conditions set forth in the preceding paragraph, if his death occurs
(1)	After December 31, 1968 and after he has attained age 70; or
(2)	After December 31, 1969 and after he has attained age 69; or
(3)	After December 31, 1970 and after he has attained age 68; or
(4)	After December 31, 1971 and after he has attained age 67; or
(5)	After December 31, 1972 and after he has attained age 66; or
(6)	After December 31, 1973 and after he has attained age 65; or
(7)	After December 31, 1978, but before January 1, 1987, and after he has attained age 70.
Notwithstanding the above provisions, the death benefit shall be payable on account of the death of any member who died or dies on or after January 1, 1974, but before January 1, 1979, after attaining age 65, if he or she had not yet attained age 65, if he or she had not yet attained age 66, was at the time of death completing the work year for those individuals under specific contract, or during the fiscal year for those individuals not under specific contract, in which he or she attained 65, and otherwise met all conditions for payment of the death benefit.
Notwithstanding the above provisions, the Board of Trustees may and is specifically authorized to provide the death benefit according to the terms and conditions otherwise appearing in this Plan in the form of group life insurance, either (i)	by purchasing a contract or contracts of group life insurance with any life insurance company or companies licensed and authorized to transact business in this State for the purpose of insuring the lives of members in service, or (ii) by establishing a separate trust fund qualified under Section 501(c)(9) of the Internal Revenue Code of 1954, as amended, for such purpose. To that end the Board of Trustees is authorized, empowered and directed to investigate the desirability of utilizing group life insurance by either of the foregoing methods for the purpose of providing the death benefit. If a separate trust fund is established, it shall be operated in accordance with rules and regulations adopted by the Board of Trustees and all investment earnings on the trust fund shall be credited to such fund.
In administration of the death benefit the following shall apply:
(1)	For the purpose of determining eligibility only, in this subsection 'calendar year' shall mean any period of 12 consecutive months or, if less, the period covered by an annual contract of employment. For all other purposes in this subsection "calendar year" shall mean the 12 months beginning January 1 and ending December 31.
(2)	Last day of actual service shall be:
a.	When employment has been terminated, the last day the member actually worked.
b.	When employment has not been terminated, the date on which an absent member's sick and annual leave expire, unless he is on approved leave of absence and is in service under the provisions of G.S. 135-4(h).
(3)	For a period when a member is on leave of absence, his status with respect to the death benefit will be determined by the provisions of G.S. 135-4(h).
(4)	A member on leave of absence from his position as a teacher or State employee for the purpose of serving as a member or officer of the General Assembly shall be deemed to be in service during sessions of the General Assembly and thereby covered by the provisions of the death benefit. The amount of the death benefit for such member shall be the equivalent of the salary to which the member would have been entitled as a teacher or State employee during the 12-month period immediately prior to the month in which death occurred, not to be less than twenty-five thousand dollars ($25,000) nor to exceed fifty thousand dollars ($50,000).
The provisions of the Retirement System pertaining to Administration, G.S. 135-6, and management of funds, G.S. 135-7, are hereby made applicable to the Plan.
A member who is a beneficiary of the Disability Income Plan provided for in Article 6 of this Chapter shall be eligible for group life insurance benefits as provided in this subsection, notwithstanding that the member is no longer an employee or teacher or that the member's death occurs after the eligibility period after active service. The basis of the death benefit payable hereunder shall be the higher of the death benefit computed as above or a death benefit based on compensation used in computing the benefit payable under G.S. 135-105 and G.S. 135-106, as may be adjusted for percentage post-disability increases, all subject to the maximum dollar limitation as provided above. A member in receipt of benefits from the Disability Income Plan under the provisions of G.S. 135-112 whose right to a benefit accrued under the former Disability Salary Continuation Plan shall not be covered under the provisions of this paragraph.
Upon receipt of proof, satisfactory to the Board of Trustees in its capacity under this subsection, of the death of a retired member of the Retirement System on or after July 1, 1988, but before January 1, 1999, there shall be paid a death benefit to the surviving spouse of the deceased retired member or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Board of Trustees on a fully contributory basis, through retirement allowance deductions or other methods adopted by the Board of Trustees, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund. This death benefit shall be a lump-sum payment in the amount of five thousand dollars ($5,000) upon the completion of twenty-four months of contributions required under this subsection. Should death occur before the completion of twenty-four months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees.
Upon receipt of proof, satisfactory to the Board of Trustees in its capacity under this subsection, of the death of a retired member of the Retirement System on or after January 1, 1999, there shall be paid a death benefit to the surviving spouse of the deceased retired member or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Board of Trustees on a fully contributory basis, through retirement allowance deductions or other methods adopted by the Board of Trustees, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund. This death benefit shall be a lump-sum payment in the amount of six thousand dollars ($6,000) upon the completion of 24 months of contributions required under this subsection. Should death occur before the completion of 24 months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees."
(b) G.S. 135-64(g) reads as rewritten:
"(g)	Upon the death of a retired member on or after July 1, 1988, but before  January 1, 1999, there shall be paid a death benefit to the surviving spouse of a deceased retired member or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Board of Trustees on a fully contributory basis, through retirement allowance deductions or other methods adopted by the Board of Trustees, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund. This death benefit shall be a lump-sum payment in the amount of five thousand dollars ($5,000) upon the completion of 24 months of contributions required under this subsection. Should death occur before the completion of 24 months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees."
(c)	G.S. 135-64 is amended by adding a new subsection to read:
"( h)	Upon the death of a retired member on or after January 1, 1999, there shall be paid a death benefit to the surviving spouse of a deceased retired member or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Board of Trustees on a fully contributory basis, through retirement allowance deductions or other methods adopted by the Board of Trustees, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund. This death benefit shall be a lump-sum payment in the amount of six thousand dollars ($6,000) upon the completion of 24 months of contributions required under this subsection. Should death occur before the completion of 24 months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees."
(d)	G.S. 120-4.27 reads as rewritten:
"§ 120-4.27.  Death benefit.
The designated beneficiary of a member who dies while in service after completing one year of creditable service shall receive a lump-sum payment of an amount equal to the deceased member's highest annual salary, to a maximum of fifteen thousand dollars ($15,000). For purposes of this death benefit 'in service' means currently serving as a member of the North Carolina General Assembly.
The death benefit provided by this section shall be designated a group life insurance benefit payable under an employee welfare benefit plan that is separate and apart from the Retirement System but under which the members of the Retirement System shall participate and be eligible for group life insurance benefits. The Board of Trustees is authorized to provide the death benefit in the form of group life insurance either by purchasing a contract or contracts of group life insurance with any life insurance company or companies licensed and authorized to transact business in the State of North Carolina for the purpose of insuring the lives of qualified members in service, or by establishing or affiliating with a separate trust fund qualified under Section 501(c)(9) of the Internal Revenue Code of 1954, as amended.
	Upon receipt of proof, satisfactory to the Board of Trustees, of the death of a retired member of the Retirement System or Retirement Fund on or after July 1, 1988, but before January 1, 1999, there shall be paid a death benefit to the surviving spouse of a deceased retired member, or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Retirement System on a fully contributory basis, through retirement allowance deductions or other methods adopted by the Retirement System, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund.  This death benefit shall be a lump-sum payment in the amount of five thousand dollars ($5,000) upon the completion of twenty-four months of contributions required under this subsection.  Should death occur before the completion of twenty-four months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees.
	Upon receipt of proof, satisfactory to the Board of Trustees, of the death of a retired member of the Retirement System or Retirement Fund on or after January 1, 1999, there shall be paid a death benefit to the surviving spouse of a deceased retired member, or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Retirement System on a fully contributory basis, through retirement allowance deductions or other methods adopted by the Retirement System, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund.  This death benefit shall be a lump-sum payment in the amount of six thousand dollars ($6,000) upon the completion of 24 months of contributions required under this subsection.  Should death occur before the completion of 24 months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees."
(e)  G.S. 128-27(l2) reads as rewritten:
"(l2)	Death Benefit for Retired Members. – Upon receipt of proof, satisfactory to the Board of Trustees in its capacity under this subsection, of the death of a retired member of the Retirement System on or after July 1, 1988, but before January 1, 1999, there shall be paid a death benefit to the surviving spouse of the deceased retired member or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Board of Trustees on a fully contributory basis through retirement allowance deductions or other methods adopted by the Board of Trustees, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund. This death benefit shall be a lump-sum payment in the amount of five thousand dollars ($5,000) upon the completion of 24 months of contributions required under this subsection. Should death occur before the completion of 24 months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees."
(f)  G.S. 128-27 is amended by adding a new subsection to read:
"( l3)	Death Benefit for Retired Members. – Upon receipt of proof, satisfactory to the Board of Trustees in its capacity under this subsection, of the death of a retired member of the Retirement System on or after January 1, 1999,  there shall be paid a death benefit to the surviving spouse of the deceased retired member or to the deceased retired member's legal representative if not survived by a spouse; provided the retired member has elected, when first eligible, to make, and has continuously made, in advance of his death required contributions as determined by the Board of Trustees on a fully contributory basis through retirement allowance deductions or other methods adopted by the Board of Trustees, to a group death benefit trust fund administered by the Board of Trustees separate and apart from the Retirement System's Annuity Savings Fund and Pension Accumulation Fund. This death benefit shall be a lump-sum payment in the amount of six thousand dollars ($6,000) upon the completion of 24 months of contributions required under this subsection. Should death occur before the completion of 24 months of contributions required under this subsection, the deceased retired member's surviving spouse or legal representative if not survived by a spouse shall be paid the sum of the retired member's contributions required by this subsection plus interest to be determined by the Board of Trustees."
(g)  This section becomes effective January 1, 1999.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
RIF ABUSES PROHIBITED
Section 28.28.  G.S. 143-27.2 reads as rewritten:
"§ 143-27.2.  Discontinued service retirement allowance and severance wages for certain State employees.
(a)	When the Director of the Budget determines that the closing of a State institution or a reduction in force will accomplish economies in the State Budget, he shall pay either a discontinued service retirement allowance or severance wages to any affected State employee, provided reemployment is not available.  As used in this section, "economies in the State Budget" means economies resulting from elimination of a job and its responsibilities or from a lack of funds to support the job.  In determining whether to pay a discontinued service retirement allowance or severance wages, the Director of the Budget shall consider the recommendation of the department head involved and any recommendation of the State Personnel Director.  Severance wages shall not be paid to an employee who chooses a discontinued service retirement.  Severance wages shall not be subject to employer or employee retirement contributions.  Severance wages shall be paid according to the policies adopted by the State Personnel Commission.
Notwithstanding any other provisions of the State's retirement laws, any employee of the State who is a member of the Teachers' and State Employees' Retirement System or the Law-Enforcement Officers' Retirement System and who has his job involuntarily terminated as a result of economies in the State Budget may be entitled to a discontinued service retirement allowance, subject to the approval of the employing agency and the availability of agency funds.  An unreduced discontinued service retirement allowance, not otherwise allowed, may be approved for employees with 20 or more years of creditable retirement service who are at least 55 years of age; or a discontinued service retirement allowance, not otherwise allowed, may be approved for employees with 20 or more years of creditable retirement service who are at least 50 years of age, reduced by one-fourth of one percent (1/4 of 1%) for each month that retirement precedes his fifty-fifth birthday.  In cases where a discontinued service retirement allowance is approved, the employing agency shall make a lump sum payment to the Administrator of the State Retirement Systems equal to the actuarial present value of the additional liabilities imposed upon the System, to be determined by the System's consulting actuary, as a result of the discontinued service retirement, plus an administrative fee to be determined by the Administrator.
The salary used to determine severance wages under this section is the last annual salary except that if the employee was promoted within the previous 12 months, the last annual salary is that annual salary prior to the promotion.  If the annual salary prior to the promotion is used, it shall be adjusted to account for any across-the-board legislative salary increases.  Excluded from any calculation are any benefits such as, but not limited to, overtime pay, shift pay, holiday premium, or longevity pay.
(b)	Any employee separated from State government and paid severance wages under this section shall not be employed under a contractual arrangement by any State agency until 12 months have elapsed since the separation.  This subsection does not affect any reduction in force rights that the employee may have."

Requested by:   Representative Russell
CLINICAL TRIALS COVERAGE
Section 28.29. (a) G.S. 135-40.6(8) is amended by adding the following paragraph to read:
"u.	Clinical Trials:  Notwithstanding the provisions of this Article, coverage shall be extended to therapies still under investigation when the treatment is being provided pursuant to a Phase II, III, or IV clinical trial that has been approved by the National Institutes of Health (NIH) or the Department of Defense.  The coverage of new therapy provided pursuant to a Phase II clinical trial shall be required only for such portion of that treatment as is provided as part of the Phase II clinical trial and is not otherwise funded by a national agency or by commercial organizations.  Any portions of a Phase II trial that are customarily funded by government, biotechnical or pharmaceutical or medical device industry sources in North Carolina or in other states shall continue to be so funded in North Carolina and coverage pursuant to this section shall supplement not supplant such customary funding."
(b) G.S. 135-40.1(7a) reads as rewritten:
"(7a)	Experimental/Investigational Medical Procedures. – The use of a service, supply, drug, or device not recognized as standard medical care for the condition, disease, illness, or injury being treated as determined by the Executive Administrator and Board of Trustees upon the advice of the Claims Processor. Determinations are made after independent review of scientific data. Opinions of experts in a particular field and opinions and assessments of nationally recognized review organizations shall also be considered by the Plan but are not determinative or conclusive. The fact that an experimental/investigational treatment is the only available treatment for a particular condition will not result in coverage if the treatment is experimental/investigational in the treatment of the particular condition, nor is it relevant for purposes of coverage that the member has tried other more conventional therapies without success. The following criteria are the basis for determination that a service or supply is investigational:
a.	Services or supplies requiring federal or other governmental body approval, such as drugs and devices that do not have market approval from the Food and Drug Administration (FDA) or final approval from any other governmental regulatory body for use in treatment of the condition being treated, or are not recognized for the treatment of a condition in one of the standard reference compendia or in generally accepted peer-reviewed medical literature;
b.	There is insufficient or inconclusive scientific evidence in peer review medical literature to permit the Plan's evaluation of the therapeutic value of the service or supply;
c.	There is inconclusive evidence that the service or supply has a beneficial effect on health outcomes;
d.	Is provided as part of a research or clinical trial;
e.	Are provided pursuant to a written protocol or other document that lists an evaluation of the service's safety, toxicity, or efficacy as among its objectives;
f.	Are subject to approval or review of an Institutional Review Board or other body that approves or reviews research; or
g.	Are provided pursuant to informed consent documents that describe the service as experimental, investigational, or part of a research study.
     Coverage shall be extended to therapies still under investigation when the treatment is being provided pursuant to a Phase II, III, or IV clinical trial that has been approved by the National Institutes of Health (NIH) or the Department of Defense.  The coverage of new therapy provided pursuant to a Phase II clinical trial shall be required only for such portion of that treatment as is provided as part of the Phase II clinical trial and is not otherwise funded by a national agency or by commercial organizations.  Any portions of a Phase II trial that are customarily funded by government, biotechnical or pharmaceutical or medical device industry sources in North Carolina or in other states shall continue to be so funded in North Carolina and coverage pursuant to this section shall supplement not supplant such customary funding."

PART XXIX.  GENERAL CAPITAL APPROPRIATIONS/PROVISIONS
CAPITAL APPROPRIATIONS/GENERAL FUND
Section 29.  Appropriations are made from the General Fund of the State for the 1998-99 fiscal year for use by the State departments, institutions, and agencies to provide for capital improvement projects according to the following schedule:

Capital Improvements - General Fund
	1998-99
ADMINISTRATION

Reserve for Land Acquisitions-Government Complex	$500,000
Reserve for State Veterans Nursing Home-Salisbury
Renovation of a 100-bed nursing care unit	$1,000,000

AGRICULTURE AND CONSUMER SERVICES

N.C. State Fair
Construction of Multipurpose Building-
Site Development/Construction	$3,000,000

Cattle and Livestock Exposition Center-
Construction of part of complex	$6,000,000

Center for Environmental Farming Planning and
Development at Cherry Farm-Design	$600,000

Umstead Farm Unit
Authorizes the Department to use timber receipts
for fiscal year 1998-99 for the construction of nutrition
and animal care facilities at the Umstead Farm 
Unit in Butner

Total Requirements	$533,000
Less Receipts	($533,000)
–––––––––––––––––––––––-
Appropriation                    0

COMMUNITY COLLEGES

Center for Applied Textile Technology
Lab and Administration Building	$2,000,000

Yadkin County Satellite of Surry County
Community College	$1,500,000

Blue Ridge Community College	$2,000,000

Franklin County Satellite of Vance-
Granville Community College	$1,000,000

CORRECTION

Central Prison-Acute Care Hospital
Design of a new 90-bed facility	$2,500,000

CULTURAL RESOURCES

Museum of Art-Expansion and Renovation
Design funds	$2,400,000

ENVIRONMENT AND NATURAL RESOURCES

State Match-Water Resources Projects
Funds for the State share of federal civil	$7,000,000
works projects

Forestry-Construction of County Headquarters
Facilities in Moore and Sampson Counties	$700,000

Museum of Natural Sciences-Project Supplement
to cover cost overruns	$1,000,000

Land Acquisition-Jocassee Lake-Transylvania County
Purchase land adjacent to Jocassee Lake to be preserved
as a park, recreational, and scenic areas	$5,000,000

Channel Widening/Deepening-Wilmington Port
To improve navigation for shipping terminals and industries	$4,800,000

HEALTH AND HUMAN SERVICES

Eastern School for the Deaf
Construction of 11,000 square foot Independent Living
Complex in Wilson	$1,040,000

Cherry Hospital/Children and Youth Facility
Replace an existing building which no longer
meets federal standards	$5,000,000

New Whitaker School-Planning
Planning for a 33-bed facility	$250,000

Eastern Vocational Rehabilitation Facility/Goldsboro
Purchase an existing building for the expansion of the
Traumatic Brain Injured Program	$300,000

Dorothea Dix Hospital-Planning and General Design
of new Hospital Facility	$2,000,000

STATE PORTS

Reserve for Continued Development of State Ports
Continued development of the State ports 	$6,000,000

UNIVERSITY OF NORTH CAROLINA-BOARD OF GOVERNORS

Appalachian State University:
Rankin Science Building Addition and Renovations	$6,276,500

East Carolina University
Science Laboratories and Technology Building-
Site Development	$4,000,000

North Carolina Central University
Health and Safety Repairs and Renovations	$2,000,000

North Carolina State University
Toxicology Building-Construction	$13,806,100
Engineering Instructional Facility-Advanced Planning	$2,500,000
Upfit and Equip Center for Marine Science and
Technology Building	$2,400,000
Undergraduate Science Teaching Laboratories	$4,500,000
College of Veterinary Medicine Main Building
Addition-Planning	$2,000,000

UNC-Asheville
Highsmith Center Renovation and Addition-Planning	$1,000,000
Justice Center Gymnasium
Partial renovation	$500,000

UNC-Chapel Hill
Addition and renovation of the Knapp Building
Completion	$6,570,600

UNC-Public Television
Advanced Planning, Conversion to Digital TV	$1,100,000

UNC-Charlotte
Academic Facilities-Humanities-Site Development/
Construction	$12,000,000

UNC-Wilmington
School of Education Building Planning	$1,775,000

Western Carolina University
Fine and Performing Arts Center-Site Development	$2,500,000

University-Board of Governors:
a.  Land Acquisition	$5,000,000
b.  Technology Infrastructure	$20,000,000
TOTAL CAPITAL APPROPRIATION	$143,518,200

Requested by:   Representatives Russell, G. Wilson
EXPENDITURE OF FUNDS FROM RESERVE FOR REPAIRS AND RENOVATIONS
Section 29.1.  Of the funds in the Reserve for Repairs and Renovations for the 1998-99 fiscal year, forty-six percent (46%) shall be allocated to the Board of Governors of The University of North Carolina for repairs and renovations pursuant to G.S. 143-15.3A, in accordance with guidelines developed in The University of North Carolina Funding Allocation Model for Reserve for Repairs and Renovations, as approved by the Board of Governors of The University of North Carolina, and fifty-four percent (54%) shall be allocated to the Office of State Budget and Management for repairs and renovations pursuant to G.S. 143-15.3A.
Notwithstanding G.S. 143-15.3A, the Board of Governors may allocate funds for the repair and renovation of facilities not supported from the General Fund if the Board determines that sufficient funds are not available from other sources and that conditions warrant General Fund assistance.  Any such finding shall be included in the Board's submission to the Joint Legislative Commission on Governmental Operations on the proposed allocation of funds.
	The Board of Governors and the Office of State Budget and Management shall submit to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division of the Legislative Services Office, for their review, the proposed allocations of these funds.  Subsequent changes in the proposed allocations shall be reported prior to expenditure to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division of the Legislative Services Office.

Requested by:   Representatives Russell, G. Wilson
UNC REPAIRS AND RENOVATIONS
Section 29.2.  The Board of Governors of The University of North Carolina may allocate up to ten million dollars ($10,000,000) of its funding from the Reserve for Repairs and Renovations for improvements to the technology infrastructure on the campuses of the constituent institutions.  Such improvements to the technology infrastructure shall include repairs to existing systems, improvements to improve the use and suitability of existing space for technology, and other improvements to utilities infrastructure that will allow the increased use of advanced technology for educational and research purposes.
These funds shall be used in accordance with G.S. 143-15.3A.

Requested by:  Representatives Russell, G. Wilson
HISTORIC SITES REPAIRS AND RENOVATIONS FUNDS
Section 29.3.  (a) Funds allocated in this act to the Office of State Budget and Management for the Repairs and Renovations Fund may be used to make needed repairs and renovations at the State Historic Sites.
(b) There is established the Historic Sites Repairs and Renovations Review Committee.  The Committee shall consist of the following members:  the three cochairs of the Senate Appropriations and Base Budget Committee and the four cochairs of the House of Representatives Appropriations Committee.  The Office of State Budget and Management shall submit its proposal for the use of funds from the Repairs and Renovations Fund for Historic Sites to the Committee before submitting the proposal to the Joint Legislative Commission on Governmental Operations in accordance with this act.

Requested by:  Representatives Russell, G. Wilson
STATE CAPITOL AND VISITOR'S CENTER SITE
Section 29.4.  The new State Capitol and Visitor Center being planned for construction shall be located at the site bounded by Blount Street, Wilmington Street, Edenton Street, and Jones Street in Raleigh, unless that construction site is unacceptable for structural reasons.

Requested by:  Representatives Russell, G. Wilson
TIMBER RECEIPTS FOR CAPITAL CONSTRUCTION
Section 29.5.  The sum of five hundred thirty-three thousand dollars ($533,000) shall be transferred from the Department of Agriculture and Consumer Services' timber sales capital improvement account, established pursuant to G.S. 146-30, to the Department of Agriculture and Consumer Services for the 1998-99 fiscal year for construction of nutrition and animal care facilities at the Umstead Farm Unit in Butner.

Requested by:   Representatives Gardner, Cansler, Clary
FUNDS FOR DOROTHEA DIX HOSPITAL DESIGN
Section 29.5B.  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of two million dollars ($2,000,000) for the 1998-99 fiscal year shall be allocated for planning and general design of a new Dorothea Dix Hospital and to study the costs of construction and operation of new facilities as compared to redesign and long-term operation of other existing State psychiatric hospitals.  The general design and planning and the study shall be done in coordination with the Study of the State Psychiatric Hospitals/Area Mental Health Programs.  Actual design of a new Dorothea Dix Hospital with respect to the number and type of beds is subject to completion of the Study of the State Psychiatric Hospitals/Area Mental Health Programs.  The Department shall make an interim progress report on the status of the general design and the study to the members of the Senate Appropriations Committee on Human Resources and the House of Representatives Appropriations Subcommittee on Human Resources not later than February 1, 1999.

Requested by:   Representatives Gardner, Cansler, Clary
WHITAKER SCHOOL PLANNING FUNDS
Section 29.5C. (a) Of the funds appropriated in this act to the Department of Health and Human Services, the sum of two hundred fifty thousand dollars ($250,000) for the 1998-99 fiscal year shall be used to plan and design a replacement facility for the Whitaker School reeducation facility for behaviorally and emotionally disturbed youth.  These funds shall be used to plan and design a facility with a bed capacity of up to 33 beds.
(b) The Department of Health and Human Services shall provide the results of the planning and design including estimated costs to build and operate the facility to the House Appropriations Subcommittee on Human Resources and the Senate Appropriations Committee on Human Resources no later than one week after the convening of the 1999 General Assembly.

Requested by:  Representatives Russell, G. Wilson
SOUTH BROAD PARK LAKE AND WATER CONSERVATION FUND CONVERSION
Section 29.6.  Lands purchased by the State to establish a new State park in Transylvania County shall be used as replacement property to fulfill the requirements of the federal Land and Water Conservation Fund for the conversion of land within South Broad Park in Brevard to a use other than outdoor recreation.  Except for the tract currently used for an arboretum, Transylvania County may use for library purposes lands in South Broad Park converted under this section.

Requested by:  Representatives Russell, G. Wilson
CONSTRUCTION FUNDS FOR STATE PORTS
Section 29.7.  The State Ports Authority may expend the sum of six million dollars ($6,000,000) appropriated in this act in Section 29 in accordance with its schedule of priority for capital improvements.

Requested by:  Representatives Russell, G. Wilson
WATER RESOURCES DEVELOPMENT PROJECTS FUNDS
Section 29.8.  (a)	The Department of Environment and Natural Resources shall allocate the funds appropriated in this act for water resources development projects to the following projects whose estimated costs are as indicated:

Name of Project

1.	Morehead City Harbor Turning Basin	$ 2,000,000

2.	Wilmington Harbor Maintenance Dredging	200,000

3.	B. Everett Jordan Lake Water Supply	110,000

4.	Wilmington Harbor Long-Term Disposal	1,400,000

5.	Aquatic Plant Control Statewide and Lake Gaston	150,000

6.	Beaufort Harbor Maintenance Dredging	80,000

7.	North Channel Maintenance Dredging
  and Disposal Site	1,000,000

8.	Manteo Shallowbag Bay Maintenance Dredging	200,000

9.	Rollinson Channel Maintenance Dredging 
  (Dare County)	400,000

10.	State-Local Projects

a.	Frisco Ditch Snagging (Dare County)	3,500
b.	Moccasin Creek Restoration (Johnston County)	78,800
c.	Avery Pond Jetties and Dredging
   (Town of Kitty Hawk)	140,800
d.	High Rock Lake Dredging Feasibility Study 	20,000
e.	Other Stream Restoration Projects 	256,900
Subtotal	500,000

11.	Pine Knolls Shores Protection (Carteret Co.)	200,000

12.	Tar River Road Streambank Protection	50,000
  (City of Greenville)

13.	Battery Island Bird Habitat Restoration	140,000
  (Brunswick County)

14.	Dare County Beaches Feasibility Study	70,000

15.	Deep Creek Watershed Project (Yadkin Co.)	500,000

Total	$ 7,000,000
(b)	Where the actual costs are different from the estimated costs under subsection (a) of this section, the Department may adjust the allocations among projects as needed.  If any projects listed in subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 1998-99 fiscal year, or if the projects listed in subsection (a) of this section are accomplished at a lower cost, the Department may use the resulting fund availability to fund any of the following:
(1)	Corps of Engineers project feasibility studies.
(2)	Corps of Engineers projects whose schedules have advanced and require State matching funds in fiscal year 1998-99.
(3)	State-local water resources development projects.
Funds not expended or encumbered for these purposes shall revert to the General Fund at the end of the 1999-2000 fiscal year.
(c)	The Department shall make quarterly reports on the use of these funds to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Office of State Budget and Management.  Each report shall include all of the following:
(1)	All projects listed in this section.
(2)	The estimated cost of each project.
(3)	The date that work on each project began or is expected to begin.
(4)	The date that work on each project was completed or is expected to be completed.
(5)	The actual cost of each project.
The quarterly reports shall also show those projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.

[SECTIONS 29.9, 29.10 RESERVED]

Requested by:  Representatives Russell, G. Wilson
CAPITAL IMPROVEMENT PROJECTS/SUPPLEMENTAL FUNDING  APPROVAL/REPORTING REQUIREMENT
Section 29.11. Each department receiving capital improvement appropriations from the Highway Fund under this act shall report quarterly to the Director of the Budget on the status of those capital projects.  The reporting procedure to be followed shall be developed by the Director of the Budget.
Capital improvement projects authorized in this act that have not been placed under contract for construction due to insufficient funds may be supplemented with funds identified by the Director of the Budget, provided:
(1)	That the project was designed and bid within the scope as authorized by the General Assembly;
(2)	That the funds to supplement the project are the same source as authorized for the original project;
(3)	That the department to which the project was authorized has unsuccessfully pursued all statutory authorizations to award the contract; and
(4)	That the action be reported to the Fiscal Research Division of the Legislative Services Office.

Requested by:  Representatives Russell, G. Wilson
RELOCATE GLOBAL TRANSPARK AUTHORITY
Section 29.12.  Of funds available to the North Carolina Global TransPark Authority from funds appropriated in this act for the 1998-99 fiscal year, the Authority shall relocate its administrative offices from Raleigh to the site of the TransPark in Kinston.  No State funds shall be spent to lease office space in Raleigh after June 30, 1999.  At the request of the Authority, the State Property Office shall assist the Authority in locating State uses for that space, if practical and economical.
The Authority may maintain a contact person housed in the offices of the Department of Transportation in Raleigh.

[SECTION 29.13 RESERVED]

Requested by:  Representatives Russell, G. Wilson
UNC AGRICULTURAL RESEARCH FACILITIES
Section 29.14.  Of the funds appropriated in this act to the Board of Governors of The University of North Carolina for land acquisition, up to one million five hundred thousand dollars ($1,500,000) may be allocated for development of replacement facilities and associated expenses of moving agricultural research facilities to a newly acquired site.

Requested by:  Representative Redwine
UNC-WILMINGTON LAND SALE PROCEEDS
Section 29.15.  The University of North Carolina at Wilmington may retain the proceeds from the sale of real property which is the site of the old Marine Science Center near Wrightsville Beach to use for the completion and equipping of the new Marine Science Center currently under construction.

PART XXX.  MISCELLANEOUS PROVISIONS
Requested by:  Representatives Holmes, Esposito, Creech, Crawford
EXECUTIVE BUDGET ACT APPLIES
Section 30.  The provisions of the Executive Budget Act, Chapter 143, Article 1 of the General Statutes, are reenacted and shall remain in full force and effect and are incorporated in this act by reference.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
COMMITTEE REPORT
Section 30.1. (a)	The House Appropriations Committee Report on the Continuation, Expansion and Capital Budget, dated July 20, 1998, which was distributed in the Senate and the House of Representatives and used to explain this act, shall indicate action by the General Assembly on this act and shall therefore be used to construe this act, as provided in G.S. 143-15 of the Executive Budget Act, and for these purposes shall be considered a part of this act and as such shall be printed as a part of the Session Laws.
(b)	The budget enacted by the General Assembly for the maintenance of the various departments, institutions, and other spending agencies of the State for the 1998-99 fiscal year is a line item budget, in accordance with the Budget Code Structure and the State Accounting System Uniform Chart of Accounts set out in the Administrative Policies and Procedures Manual of the Office of the State Controller.  This budget includes the appropriations made from all sources including the General Fund, Highway Fund, special funds, cash balances, federal receipts, and departmental receipts.
The General Assembly amended the itemized budget requests submitted to the General Assembly by the Director of the Budget, in accordance with the steps that follow and the line item detail in the budget enacted by the General Assembly may be derived accordingly:
(1)	The base budget was adjusted in accordance with the base budget cuts and additions that were set out in the House Appropriations Committee Report on the Continuation, Expansion and Capital Budget, dated July 20, 1998, together with any accompanying correction sheets.
(2)	Transfers of funds supporting programs were made in accordance with the House Appropriations Committee Report on the Continuation, Expansion and Capital Budget, dated July 20, 1998, together with any accompanying correction sheets.
The budget enacted by the General Assembly shall also be interpreted in accordance with the special provisions in this act and in accordance with other appropriate legislation.
In the event that there is a conflict between the line item budget certified by the Director of the Budget and the budget enacted by the General Assembly, the budget enacted by the General Assembly shall prevail.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
MOST TEXT APPLIES ONLY TO 1998-99
Section 30.2.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 1998-99 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 1998-99 fiscal year.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
1997-98 APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY
Section 30.3.  (a)	Except where expressly repealed or amended by this act, the provisions of S.L. 1997-443, S.L. 1998-1 Extra Session, and S.L. 1998-9 remain in effect.
(b)	Notwithstanding any modifications by this act in the amounts appropriated, except where expressly repealed or amended, the limitations and directions for the 1998-99 fiscal year in S.L. 1997-443, S.L. 1998-1 Extra Session, and S.L. 1998-9 that applied to appropriations to particular agencies or for particular purposes apply to the newly enacted appropriations and budget reductions of this act for those same particular purposes.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
EFFECT OF HEADINGS
Section 30.4.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only.  The headings do not expand, limit, or define the text of this act, except for effective dates referring to a Part.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
SEVERABILITY CLAUSE
Section 30.5.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

Requested by:  Representatives Holmes, Esposito, Creech, Crawford
EFFECTIVE DATE
Section 30.6.  Except as otherwise provided, this act becomes effective July 1, 1998.