GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
S	1
SENATE BILL 1005

 
 
Short Title:	The Appropriations Act.	()	
Sponsors:	Senators Plyler, Odom, and Lee.	
Referred to:	Appropriations/Base Budget.	
April 5, 2001

A BILL TO BE ENTITLED
AN ACT TO MAKE BASE BUDGET APPROPRIATIONS FOR CURRENT OPERATIONS OF STATE DEPARTMENTS, INSTITUTIONS, AND AGENCIES, AND FOR OTHER PURPOSES.

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 2.  This act shall be known as "The Current Operations Appropriations Act of 2001."
An outline of the provisions of the act follows this section. The outline shows the heading "CONTENTS/INDEX" and it lists by general category the descriptive captions for the various sections and groups of sections that make up the act.

CONTENTS/INDEX

(This outline is designed for reference only, and the outline and the corresponding entries throughout the act in no way limit, define, or prescribe the scope or application of the text of the act.)
INTRODUCTION
TITLE OF ACT
PART I. CURRENT OPERATIONS/GENERAL FUND
PART II. CURRENT OPERATIONS/HIGHWAY FUND
PART III. HIGHWAY TRUST FUND
PART IV. GENERAL FUND AVAILABILITY STATEMENT
BUDGET REFORM STATEMENTS
PART V. GENERAL PROVISIONS
SPECIAL FUNDS, FEDERAL FUNDS, AND DEPARTMENTAL 
RECEIPTS/AUTHORIZATION FOR EXPENDITURES
INSURANCE AND FIDELITY BONDS
CONTINGENCY AND EMERGENCY FUND ALLOCATIONS
AUTHORIZED TRANSFERS
EXPENDITURES OF FUNDS IN RESERVES LIMITED
PART VI. PUBLIC EDUCATION
CLASS‑SIZE REDUCTION
LITIGATION RESERVE
FUNDS TO IMPLEMENT THE ABC’S OF PUBLIC EDUCATION 
PROGRAM
UNIFORM EDUCATION REPORTING SYSTEM (UERS)/STUDENT 
INFORMATION MANAGEMENT SYSTEM (SIMS) FUNDS
TEACHER SALARY SCHEDULES
SCHOOL‑BASED ADMINISTRATOR SALARIES
SCHOOL CENTRAL OFFICE SALARIES
NONCERTIFIED PUBLIC SCHOOL EMPLOYEES’ SALARY 
INCREASE
PART VII. COMMUNITY COLLEGES
COMMUNITY COLLEGE FUNDING FLEXIBILITY
PERMIT TRANSFERS OF FUNDS TO THE NEW AND EXPANDING 
INDUSTRY TRAINING PROGRAM
RESTRUCTURE HUMAN RESOURCES DEVELOPMENT PROGRAM
MANAGEMENT INFORMATION SYSTEM FUNDS
PART VIII. COLLEGES AND UNIVERSITIES
AID TO STUDENTS ATTENDING PRIVATE COLLEGES PROCEDURE
AID TO PRIVATE COLLEGES/LEGISLATIVE TUITION GRANT 
LIMITATIONS
WAKE FOREST AND DUKE MEDICAL SCHOOLS 
ASSISTANCE/FUNDING FORMULA
BOARD OF GOVERNORS’ MEDICAL SCHOLARSHIPS
BOARD OF GOVERNORS’ DENTAL SCHOLARSHIPS
NORTH CAROLINA TEACHER ASSISTANT EDUCATION DEGREE 
PROGRAM
PART IX. DEPARTMENT OF TRANSPORTATION
GLOBAL TRANSPARK AUTHORITY TO REIMBURSE HIGHWAY 
FUND FROM FEDERAL SOURCES
AIRCRAFT AND FERRY ACQUISITIONS
HIGHWAY FUND ALLOCATIONS BY CONTROLLER
CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND 
APPROPRIATIONS
HIGHWAY FUND LIMITATIONS ON OVEREXPENDITURES
HIGHWAY FUND ADJUSTMENTS TO REFLECT ACTUAL REVENUE
DEPARTMENT OF TRANSPORTATION EXEMPTION FROM 
GENERAL STATUTES FOR EXPERIMENTAL PROJECT—
CONGESTION MANAGEMENT
ALLOCATION OF FUNDS FOR DRIVER TRAINING
INCREASE IN TRANSFER AMOUNT FROM HIGHWAY TRUST FUND 
TO GENERAL FUND 
AIRPORT GRANTS
PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES
PHYSICIAN SERVICES
PRIVATE AGENCY UNIFORM COST FINDING REQUIREMENT
NONSUPPLANTING OF MENTAL HEALTH, DEVELOPMENTAL 
DISABILITIES, AND SUBSTANCE ABUSE FUNDS
TRANSFERS OF CERTAIN FUNDS AUTHORIZED
LIABILITY INSURANCE
LIMITATION ON USE OF SPECIAL ALZHEIMER’S UNITS
MEDICAID
DISPOSITION OF DISPROPORTIONATE SHARE RECEIPT CHANGE
NONMEDICAID REIMBURSEMENT
ADULT CARE HOMES REIMBURSEMENT RATE/ADULT CARE 
HOMES ALLOCATION OF NONFEDERAL COST OF MEDICAID 
PAYMENTS/STAFFING GRANT 
ADOPTION SUBSIDY
FOSTER CARE
CLARIFICATION OF AUTHORIZED ADDITIONAL USE OF HIV 
FOSTER CARE AND ADOPTIVE FAMILY FUNDS
SENIOR CENTER OUTREACH
DAY CARE ALLOCATION FORMULA
DAY CARE FUNDS MATCHING REQUIREMENT
CHILD DAY CARE REVOLVING LOAN FUND
CHILD PROTECTIVE SERVICES
MATCH REQUIREMENTS FOR MEDICAID SERVICES
ELIMINATE STATE EMPLOYEE REPORT
LEASE‑PURCHASE OF OFFICE AND INSTITUTIONAL FACILITIES
PART XI. DEPARTMENT OF CULTURAL RESOURCES
DEPARTMENT OF CULTURAL RESOURCES MAY RETAIN 
HISTORICAL PUBLICATIONS RECEIPTS
PART XII. SALARIES AND BENEFITS
SALARY INCREASES/SALARY RELATED CONTRIBUTIONS
GOVERNOR AND COUNCIL OF STATE
NONELECTED DEPARTMENT HEAD/SALARY INCREASES
CERTAIN EXECUTIVE BRANCH OFFICIALS/SALARY INCREASES
JUDICIAL BRANCH OFFICIALS/SALARY INCREASE
CLERK OF SUPERIOR COURT SALARY 
DETERMINATION/INCREASE
ASSISTANT AND DEPUTY CLERKS OF COURT/SALARY 
INCREASES/ELIMINATE DEPUTY CLERK HIRING RATE 
MAGISTRATES’ SALARY INCREASES
GENERAL ASSEMBLY PRINCIPAL CLERKS
SERGEANT‑AT‑ARMS AND READING CLERKS
LEGISLATIVE EMPLOYEES
COMMUNITY COLLEGES PERSONNEL/SALARY INCREASES
UNIVERSITY OF NORTH CAROLINA SYSTEM/EPA SALARY 
INCREASES
MOST STATE EMPLOYEES
PART XIII. GENERAL CAPITAL APPROPRIATIONS/PROVISIONS
CAPITAL APPROPRIATIONS/GENERAL FUND
PART XIV. MISCELLANEOUS PROVISIONS
EFFECT OF HEADINGS
MOST TEXT APPLIES ONLY TO 2001‑2003
SEVERABILITY CLAUSE
EFFECTIVE DATE

PART I. CURRENT OPERATIONS/GENERAL FUND

SECTION 3.  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 biennium ending June 30, 2003, according to the following schedule:

Current Operations – General Fund	2001‑2002	2002‑2003

General Assembly	$	39,953,848	$	39,953,848
Judicial Department	377,356,206	377,356,206
Office of the Governor
01.	Office of the Governor	5,497,905	5,497,905
02.	Office of State Budget, Planning, and 
	Management	5,702,900	5,722,900
03.	Flood Mapping and Surveying	1,211,845	1,211,845
04.	Housing Finance	5,220,000	5,220,000
Department of Juvenile Justice and Delinquency 
Prevention	144,568,423	146,318,423
Office of the Lieutenant Governor	676,308	676,308
Department of Secretary of State	8,730,901	8,730,901
Department of State Auditor	11,984,518	11,984,518
Department of State Treasurer		
01.	State Treasurer	7,719,007	7,719,007
02.	Special Contributions	12,294,780	12,294,780
Department of Public Education	5,958,233,628	6,310,194,196
Department of Justice	75,557,337 	75,557,337 
Department of Agriculture and Consumer Services	55,845,276	55,845,276
Department of Labor	16,368,178	16,368,178
Department of Insurance
01.	Insurance	23,362,288	23,362,288
02.	Direct Appropriation	1,500,000	4,500,000
Department of Administration	61,917,180	61,917,180
Office of the State Controller	11,640,271	11,640,271

Current Operations – General Fund	2001‑2002	2002‑2003
Department of Transportation$	10,451,882	$    14,486,443
Department of Environment and Natural Resources	161,778,842	161,778,842
Clean Water Management Trust Fund	30,000,000	70,000,000
Office of Administrative Hearings	2,864,088	2,864,088
Rules Review Commission	329,085	329,085
Department of Health and Human Services		
01.	Central Management and Support	48,106,360	80,171,660
02.	Division of Aging	29,825,449	29,825,449
03.	Division of Child Development	326,213,681	326,213,681
04.	Division of Early Intervention and Education	75,633,148	75,633,148
05.	Division of Public Health	109,739,919	109,739,919
06.	Division of Social Services	190,252,330	197,325,624
07.	Division of Medical Assistance	1,971,138,483	2,213,749,436
08	N.C. Health Choice	34,975,528	45,908,556
09.	Division of Services for the Blind and 
	Deaf/Hard of Hearing	10,334,149	10,334,149
10.	Division of Mental Health/DD/SAS	579,477,510	579,477,510
11.	Division of Facility Services	17,334,502	17,334,502
12.	Division of Vocational Rehabilitation 
	Services	41,827,726	41,827,726
Total Department of Health and Human Services	$ 3,434,858,785	$ 3,727,541,360

Department of Correction	920,050,075	920,620,289
Department of Commerce		
01.	Commerce	47,352,944 	47,352,944
02.	State Aid to Nonstate Entities	16,931,308	16,931,308
Department of Revenue	75,812,784	75,812,784
Department of Cultural Resources		
01.	Cultural Resources 	60,027,696	60,027,696
02.	Roanoke Island Commission	1,878,245	1,878,245
Department of Crime Control and Public Safety	37,083,513	37,083,513
University of North Carolina ‑ Board of Governors		
01.	General Administration	49,707,473	50,702,897
02.	University Institutional Programs	44,567,132	44,567,132
03.	Related Educational Programs	100,411,702	100,411,702

Current Operations – General Fund	2001‑02	2002‑03
04.	University of North Carolina at Chapel Hill
a.	Academic Affairs	203,797,548	204,307,062
b.	Health Affairs	155,432,746	156,912,962
c.	Area Health Education Centers	45,968,111	45,968,111
05.	North Carolina State University at Raleigh		
a.	Academic Affairs	$       268,505,282	$   268,990,234
b.	Agricultural Research Service	47,593,717	47,567,601
c.	Agricultural Extension Service	38,184,585	38,184,585
06.	University of North Carolina at Greensboro	94,522,180	94,599,504
07.	University of North Carolina at Charlotte	96,481,603	96,952,829
08.	University of North Carolina at Asheville	25,659,665	25,815,764
09.	University of North Carolina at Wilmington	60,052,512	60,403,894
10.	East Carolina University		
a.	Academic Affairs	121,570,399	122,833,467 
b.	Division of Health Affairs	46,430,612	46,430,612
11.	North Carolina Agricultural and Technical State
	University	60,032,233	60,032,233
12.	Western Carolina University	52,333,202	52,601,461
13.	Appalachian State University	85,813,636	86,076,636
14.	University of North Carolina at Pembroke	24,752,283	24,693,596
15.	Winston‑Salem State University	28,325,317	28,748,906
16.	Elizabeth City State University	21,784,296	21,784,296
17.	Fayetteville State University	30,978,475	30,978,475
18.	North Carolina Central University	44,740,396	44,740,396
19.	North Carolina School of the Arts	16,569,303	16,842,922
20.	North Carolina School of Science and 
Mathematics	11,450,501	11,802,687
21.	UNC Hospitals at Chapel Hill	40,052,381	40,052,381
Total University of North Carolina	$    1,815,717,289	$    1,823,002,344

Community Colleges System	663,330,949	663,330,949
State Board of Elections	3,218,453	3,218,453
Contingency and Emergency	1,125,000	1,125,000
Reserve for Special Appropriation	3,080,000	3,080,000
Reserve for Compensation Increase	184,538,436	184,538,436
Reserve for Motor Pool Reduction	(1,200,000)	(1,200,000) 
Reserve for Salary Adjustments	500,000	500,000
Reserve for Retirement Rate Adjustment	(181,027,500)	(181,027,500) 

Current Operations – General Fund	2001‑02	2002‑03
Reserve for State Health Plan	$       150,000,000	200,000,000
Debt Service		
01.	Debt Service 	$        275,120,390	$     52,266,860
02. Federal	1,155,948	1,155,948

GRAND TOTAL CURRENT OPERATIONS‑
GENERAL FUND	$   14,540,319,011	$ 15,368,768,454

PART II. CURRENT OPERATIONS/HIGHWAY FUND

SECTION 4.  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 biennium ending June 30, 2003, according to the following schedule:

Current Operations – Highway Fund	2001‑02	2002‑03
Department of Transportation		
01.	Administration	$      69,195,895 	$      69,195,895
02.	Division of Highways		
a.	Administration and Operations	28,801,650	28,801,650
b.	State Construction		
(01)	Primary Construction
(02)	Secondary Construction	87,462,000	89,387,000
(03)	Urban Construction	14,000,000	14,000,000
(04)	Access and Public Service Roads	2,000,000	2,000,000
(05)	Discretionary Fund	10,000,000	10,000,000
(06)	Spot Safety Improvements	9,100,000	9,100,000
c.	State Funds to Match Federal Highway Aid		
Planning Survey and Highway Planning
Research	3,959,649	3,959,649
d.	State Maintenance		
(01)	Primary	135,631,083	133,781,935
(02)	Secondary	243,698,549	239,098,503
(03)	Urban	43,765,075	43,191,298
(04)	Contract Resurfacing	145,529,734	145,529,734
e.	Ferry Operations	19,747,132	19,747,132
03.	Division of Motor Vehicles	101,969,376	108,325,115
04.	Governor’s Highway Safety Program	357,277	357,277
05.	State Aid to Municipalities	87,462,000	89,387,000
06.	State Aid for Public Transportation	54,746,921	54,746,921
07.	Salary Adjustments for Highway Fund
Employees	400,000	400,000
08.	Asphalt Plant Cleanup	425,000	425,000
09.	State Aid to Railroads	36,507,088	36,507,088
10.	Capital Improvements	10,000,000	‑
11.	Stormwater Discharge Permit	500,000	500,000
Current Operations – Highway Fund	2001‑2002	2002‑2003
12.	Minority Contractor Development	$ 150,000	$ 150,000
13.	DMV Systems Reserve	3,300,000	3,300,000
14.	State Fire Protection 	150,000	150,000
15.	Reserve for Compensation Increases	8,600,000	8,600,000
16.	State Health Plan	7,000,000	9,000,000
17.	State Employee Health Reserve	3,700,000	3,700,000
18.	Visitor’s Centers	175,000	175,000
19.	Retirement Rate Reduction	(9,155,000)	(9,155,000)
20.	Airports	5,000,000	‑‑     

Appropriations for Other State Agencies		
01.	Department of Crime Control and 
Public Safety	133,687,067	135,875,855
02.	Department of Agriculture and 
Consumer Services	3,697,157	3,615,136
03.	Department of Revenue	4,038,525	4,038,525
04.	Department of Environment and Natural
Resources‑LUST Trust Fund	5,144,318	5,586,339
05.	Department of Health and Human Services –
Chemical Test Program	437,623	437,623
06.	Global Transpark	1,211,098	1,259,542
07.	Department of Public Education	31,185,783	31,185,783
08.	State Treasurer – Sales Tax	14,560,000	15,360,000

GRAND TOTAL CURRENT OPERATIONS –
HIGHWAY FUND	$ 1,318,140,000	$ 1,311,720,000

PART III. HIGHWAY TRUST FUND

SECTION 5.  Appropriations from the Highway Trust Fund are made for the fiscal biennium ending June 30, 2003, according to the following schedule:

Highway Trust Fund	2001‑2002	2002‑2003
01.	Intrastate System	$     446,546,841	$     471,654,615
02.	Secondary Roads Construction	81,965,608	85,583,142
03.	Urban Loops	180,564,946	190,717,483
04.	State Aid – Municipalities	46,853,179	49,487,571
05.	Program Administration	32,792,426	34,831,189
06.	Transfer to General Fund	200,000,000	200,000,000
		
GRAND TOTAL—HIGHWAY TRUST FUND	$     988,723,000	$ 1,032,274,000

PART IV. GENERAL FUND AVAILABILITY STATEMENT

BUDGET REFORM STATEMENTS
SECTION 6.  The General Fund and availability used in developing the 2001‑2003 budget is shown below:
	2001‑2002	2002‑2003
	(In Millions)	(In Millions)
	Beginning Unrestricted Fund Balance	$           0.0	$           0.0
	Revenues Existing Tax Structure 	13,659.0	14,507.8
	Non‑tax Revenues	433.4	447.7
	Transfer from Highway Trust Fund	200.0	200.0
	Disproportionate Share Receipts	107.0	106.0
	Highway Fund Transfer	14.5	15.3
	Additional Resources:
		N.C. Efficiency & Tax Preference Commission	175.0	175.0
		Other Measures	34.0	318.0
	Total Availability	$14,622.9  	$15,769.8 

PART V. GENERAL PROVISIONS

SPECIAL FUNDS, FEDERAL FUNDS, AND DEPARTMENTAL RECEIPTS/AUTHORIZATION FOR EXPENDITURES
SECTION 7.  There is appropriated out of the cash balances, federal receipts, and departmental receipts available to each department, sufficient amounts to carry on authorized activities included under each department's operations.  All these cash balances, federal receipts, and departmental receipts shall be expended and reported in accordance with provisions of the Executive Budget Act, except as otherwise provided by statute.  The Director of the Budget shall develop necessary budget controls, regulations, and systems to ensure that these funds and other State funds subject to the Executive Budget Act may not be spent in a manner, which would cause a deficit in expenditures.
Pursuant to G.S. 143‑34.2, State departments, agencies, institutions, boards, or commissions may make application for, receive, or disburse any form of nonstate aid. All nonstate monies received shall be deposited with the State Treasurer unless otherwise provided by State law. These funds shall be expended in accordance with the terms and conditions of the fund award that are not contrary to the laws of North Carolina.

INSURANCE AND FIDELITY BONDS
SECTION 7.1.  All insurance and all official fidelity and surety bonds authorized for the several departments, institutions, and agencies shall be effected and placed by the Department of Insurance, and the cost of placement shall be paid by the affected department, institution, or agency with the approval of the Insurance Commissioner.

CONTINGENCY AND EMERGENCY FUND ALLOCATIONS
SECTION 7.2.  Of the funds appropriated in this act to the Contingency and Emergency Fund, the sum of nine hundred thousand dollars ($900,000) for the 2001‑2002 fiscal year and the sum of nine hundred thousand dollars ($900,000) for the 2002‑2003 fiscal year shall be designated for emergency allocations, which are for expenditures:
(1)	Required by a court, Industrial Commission, or administrative hearing officer’s order or award or 
match unanticipated federal funds;
(2)	Required to respond to an unanticipated disaster such as a fire, hurricane, or tornado; or
(3)	Required to call out the National Guard.
Two hundred twenty‑five thousand dollars ($225,000) for the 2001‑2002 fiscal year and two hundred twenty‑five thousand dollars ($225,000) for the 2002‑2003 fiscal year shall be designated for other allocations from the Contingency and Emergency Fund.

AUTHORIZED TRANSFERS
SECTION 7.3.   The Director of the Budget may transfer to General Fund budget codes from the General Fund Salary Adjustment Reserves appropriation, and may transfer to Highway Fund budget codes from the Highway Fund Salary Adjustment Reserve appropriation amounts required to support approved salary adjustments made necessary by difficulties in recruiting and holding qualified employees in State government.  The funds may be transferred only when salary reserve funds in individual operating budgets are not available.

EXPENDITURES OF FUNDS IN RESERVES LIMITED
SECTION 7.4.  All funds appropriated by this act into reserves may be expended only for the purposes for which the reserves were established, except as otherwise provided.
SECTION 7.5.  Each private, nonprofit entity eligible to receive State funds, either by General Assembly appropriation, or by grant, loan, or other allocation from a State agency, before funds may be disbursed to the entity, shall file with the disbursing agency a notarized copy of that entity’s policy addressing conflicts of interest that may arise involving the entity’s management employees and the members of its board of directors or other governing body.  The policy shall address situations where any of these individuals may directly or indirectly benefit, except as the entity’s employees or members of the board or other governing body, from the entity’s disbursing of State funds, and shall include actions to be taken by the entity or the individual, or both, to avoid conflicts of interest and appearance of impropriety.

PART VI.  PUBLIC EDUCATION

CLASS‑SIZE REDUCTION
SECTION 8.  Funds are appropriated to reduce class size in kindergarten to 1:18 in fiscal year 2001‑2002.   Funds are also appropriated to reduce the class size in grades 1‑3 in under‑performing schools to 1:18.  In fiscal biennium 2002‑2003 grade 1 will be reduced to 1:18.

LITIGATION RESERVE
SECTION 8.1.(a)  Funds in the State Board of Education's Litigation Reserve that are not expended or encumbered on June 30, 2001, shall not revert on July 1, 2001, but shall remain available for expenditure until June 30, 2002.
SECTION 8.1.(b)  Subsection (a) of this section becomes effective June 30, 2001.
SECTION 8.1.(c)  The State Board of Education may expend up to five hundred thousand dollars ($500,000) for the 2001‑2002 fiscal year from unexpended funds for certified employees' salaries to pay expenses related to pending litigation.

FUNDS TO IMPLEMENT THE ABCs OF PUBLIC EDUCATION PROGRAM
SECTION 8.2.  The State Board of Education shall use State Aid to Local School Administrative Units funds to provide incentive funding for schools that met or exceeded the projected levels of improvement in student performance during the 2000‑2001 and 2001‑2002 school years, payable in 2001‑2002 and 2002‑2003 fiscal years, in accordance with the ABCs of Public Education Program.  In accordance with State Board of Education Policy:

(1)	Incentive awards in schools that achieve higher than expected improvements may be up to:
(a)	$1,500 for each teacher and for certified personnel; and
(b)	$500 for each teacher assistant.

(2)	Incentive awards in schools that meet the expected improvements may be up to:
(a)	$750 for each teacher and for certified personnel; and
(b)	$375 for each teacher assistant.

UNIFORM EDUCATION REPORTING SYSTEM (UERS)/STUDENT INFORMATION MANAGEMENT SYSTEM (SIMS) FUNDS
SECTION 8.3.(a)  Funds appropriated for the Uniform Education Reporting System and the Student Information Management System shall not revert at the end of the 2001‑2002 and 2002‑2003 fiscal years, but shall remain available until expended.
SECTION 8.3.(b)  This section becomes effective June 30, 2001.

TEACHER SALARY SCHEDULES
SECTION 8.4.(a)  Effective for the 2001‑2002 school year, the Director of the Budget may transfer from the Reserve for Compensation Increase for the 2001‑2002 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 and one‑half percent (1.5%) of base salary for 10 to 14 years of State service, two and twenty‑five hundredths percent (2.25%) of base salary for 15 to 19 years of State service, three and twenty‑five hundredths percent (3.25%) 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.  The salary schedule will commence July 1, 2001, 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.  The longevity payment shall be paid in a lump sum once a year.
SECTION 8.4.(b)  For the 2001‑2002 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.

2001‑2002 Monthly Salary Schedule
“A” Teachers

Years of Experience	“A” Teachers	NBCTS Certification
	0				$2,525					N/A
	1				$2,567					N/A
	2				$2,611					N/A
	3				$2,764					$3,096
	4				$2,904					$3,252
	5				$3,036					$3,400
	6				$3,164					$3,543
	7				$3,266					$3,658
	8				$3,314					$3,711
	9				$3,362					$3,765
            10				$3,412					$3,821	
            11				$3,461					$3,876
            12				$3,511					$3,932
            13				$3,561					$3,988
            14				$3,614					$4,047
            15				$3,667					$4,107
            16				$3,722					$4,168
            17				$3,777					$4,230
            18				$3,834					$4,294
            19				$3,892					$4,358
            20				$3,950					$4,424
            21				$4,011					$4,491
            22				$4,072					$4,560
            23				$4,136					$4,632
            24				$4,200					$4,703

2001‑2002 Monthly Salary Schedule
“A” Teachers ‑ Continued

Years of Experience	“A” Teachers	NBCTS Certification

25				$4,264					$4,775
26				$4,330					$4,849
            27				$4,398					$4,925
            28				$4,467					$5,003
            29+				$4,538					$5,082

2001‑2002 Monthly Salary Schedule
“M” Teachers
Years of Experience	“M” Teachers	NBCTS Certification
0				$2,778					N/A
1				$2,824					N/A
2				$2,872					N/A
3				$3,041					$3,406
4				$3,195					$3,578
5				$3,340					$3,741
6				$3,480					$3,898
7				$3,593					$4,023
8				$3,645					$4,082
9				$3,699					$4,142
            10				$3,753					$4,203
            11				$3,808					$4,264
            12				$3,862					$4,325
            13				$3,918					$4,387
            14				$3,975					$4,452
            15				$4,034					$4,518
            16				$4,095					$4,585
            17				$4,155					$4,653
            18				$4,218					$4,724
            19				$4,280					$4,793
            20				$4,345					$4,866
            21				$4,412					$4,941
            22				$4,479					$5,017
            23				$4,550					$5,095
            24				$4,620					$5,173
            25				$4,690					$5,253
            26				$4,763					$5,334
            27				$4,837					$5,417
            28				$4,914					$5,502
            29+ 				$4,991					$5,590
SECTION 8.4.(c)  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 “M” 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 ($253.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as “M” teachers.
SECTION 8.4.(d)  Effective for the 2001‑2002 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 “M” 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.
SECTION 8.4.(e)  Effective for the 2001‑2002 school year, speech pathologists who are certified as speech pathologists at the master’s 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.
SECTION 8.4.(f)  Certified school nurses who are employed in the public schools as nurses shall be paid on the “M” salary schedule.

SCHOOL‑BASED ADMINISTRATOR SALARIES
SECTION 8.5.(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.
SECTION 8.5.(b)  The base salary schedule for school‑based administrators shall apply only to principals and assistant principals.  The base salary schedule for the 2001‑2002 fiscal year, commencing July 1, 2001, is as follows:

2001‑2002
Principal and Assistant Principal Salary Schedules
Classification

Yrs. of	Assistant	Prin I	Prin II	Prin III	Prin IV 
 Exp     	Principal	(0‑10)	(11‑21)	(22‑32)	(33‑43)
0‑4	$3,227	
5	$3,373
6	$3,515
7	$3,629
8	$3,681	$3,681
9	$3,736	$3,736
10	$3,791	$3,791	$3,846
11	$3,846	$3,846	$3,901
12	$3,901	$3,901	$3,957	$4,015
13	$3,957	$3,957	$4,015	$4,074	$4,136
14	$4,015	$4,015	$4,074	$4,136	$4,197
15	$4,074	$4,074	$4,136	$4,197	$4,260
16	$4,136	$4,136	$4,197	$4,260	$4,323
17	$4,197	$4,197	$4,260	$4,323	$4,388
18	$4,260	$4,260	$4,323	$4,388	$4,456
19	$4,323	$4,323	$4,388	$4,456	$4,524
20	$4,388	$4,388	$4,456	$4,524	$4,596
21	$4,456	$4,456	$4,524	$4,596	$4,666
22	$4,524	$4,524	$4,596	$4,666	$4,737
23	$4,596	$4,596	$4,666	$4,737	$4,811
24	$4,666	$4,666	$4,737	$4,811	$4,885
25	$4,737	$4,737	$4,811	$4,986	$4,963
26	$4,811	$4,811	$4,885	$4,963	$5,041
27	$4,885	$4,885	$4,963	$5,041	$5,142
28	$4,963	$4,963	$5,041	$5,142	$5,245
29	$5,041	$5,041	$5,142	$5,245	$5,350
30	$5,142	$5,142	$5,245	$5,350	$5,457
31	$5,245	$5,245	$5,350	$5,457	$5,566
32		$5,350	$5,457	$5,566	$5,677
33			$5,566	$5,677	$5,790
34			$5,677	$5,790	$5,906
35				$5,906	$6,025
36				$6,025	$6,145
37					$6,268

2001‑2002
Principal and Assistant Principal Salary Schedules

					Classification

Yrs. of	Prin V	Prin VI	Prin VII	Prin VIII 
 Exp     	(44‑54)	(55‑65)	(66‑100)	(101 +)
 14	$4,260
 15	$4,323
 16	$4,388	$4,456
 17	$4,456	$4,524	$4,666
 18	$4,524	$4,596	$4,737	$4,811
 19	$4,596	$4,666	$4,811	$4,885
 20	$4,666	$4,737	$4,885	$4,963
 21	$4,811	$4,885	$5,041	$5,142
 23	$4,885	$4,963	$5,142	$5,245
 24	$4,963	$5,041	$5,245	$5,350
 25	$5,041	$5,142	$5,350	$5,457
 26	$5,142	$5,245	$5,457	$5,566
 27	$5,245	$5,350	$5,566	$5,677
 28	$5,350	$5,457	$5,677	$5,790
 29	$5,457	$5,566	$5,790	$5,906
 30	$5,566	$5,677	$5,906	$6,025
 31	$5,677	$5,790	$6,025	$6,145
 32	$5,790	$5,906	$6,145	$6,268
 33	$5,906	$6,025	$6,268	$6,393
 34	$6,025	$6,145	$6,393	$6,522
 35	$6,145	$6,268	$6,522	$6,652
 36	$6,268	$6,393	$6,652	$6,785
 37	$6,393	$6,522	$6,785	$6,921
 38	$6,522	$6,652	$6,921	$7,059
 39		$6,785	$7,059	$7,200
 40		$6,921	$7,200	$7,345
 41			$7,345	$7,491
SECTION 8.5.(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.
SECTION 8.5.(d)  A principal shall be placed on the salary schedule step that reflects total number of years of experience as a certified employee of the public schools and an additional step for every three years of experience as a principal.
SECTION 8.5.(e)  For the 2001‑2002 fiscal year and subsequent years, 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 1998‑99 fiscal year, in accordance with the ABCs of Public Education Program;
(2)	The local board of education found in 1998‑99 that the employee’s school met objectively measurable goals set by the local board of education for maintaining a safe and orderly school;
(3)	The employee’s school met or exceeded the projected levels of improvement in student performance for the 1999‑00 fiscal year, in accordance with the ABCs of Public Education Program;
(4)	The local board of education found in 1999‑00 that the employee’s school met objectively measurable goals set by the local board of education for maintaining a safe and orderly school;
(5)	The employee’s school met or exceeded the projected levels of improvement in student performance for the 2000‑01 fiscal year, in accordance with the ABCs of Public Education Program; or
(6)	The local board of education found in 2000‑01 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 an additional one percent (1%) for meeting each additional condition set out in subdivisions (1) through (6). Under no circumstance shall placement of a principal or assistant principal be higher than six percent (6%) above the appropriate step on the salary schedule.
SECTION 8.5.(f)  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.
SECTION 8.5.(g)  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 the 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.
SECTION 8.5.(h)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 8.5.(i)  
(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.
SECTION 8.5.(j)  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 Fellows Program or a school of education where the intern participates in a full‑time masters in school administration.
SECTION 8.5.(k)  During the 2001‑2002 fiscal year, the placement on the salary schedule of an administrator with a one‑year provisional assistant principal’s certificate shall be at the entry‑level salary for an assistant principal or the appropriate step on the teacher salary schedule, whichever is higher.  

SCHOOL CENTRAL OFFICE SALARIES 
SECTION 8.6.(a)  The following monthly salary ranges apply to public school superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 2001‑2002 fiscal year, beginning July 1, 2001:
	School Administrator I:	$2,932 ‑ $5,318
	School Administrator II:	$3,112 ‑ $5,645
	School Administrator III:	$3,303 ‑ $5,990
	School Administrator IV:	$3,436 ‑ $6,232
	School Administrator V:	$3,574 ‑ $6,485
	School Administrator VI:	$3,792‑  $6,882
	School Administrator VII:	$3,945 ‑ $7,160
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, 2001.
SECTION 8.6.(b)  The following monthly salary ranges apply to public school superintendents for the 2001‑2002 fiscal year, beginning July 1, 2001:
(1)	Superintendent I (Up to 2,500 ADM):	$4,187‑ $7,600
(2)	Superintendent II (2,501 ‑ 5,000 ADM):	$4,445 ‑ $8,062
(3)	Superintendent III (5,001 ‑ 10,000 ADM):	$4,716 ‑ $8,557
(4)	Superintendent IV (10,001 ‑ 25,000 ADM):	$5,005 ‑ $9,079
(5)	Superintendent V (Over 25,000 ADM):	$5,312 ‑ $9,636
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 8.5. (g) of this act.
SECTION 8.6.(c)  Longevity pay for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers shall be as provided for State employees under the State Personnel Act.
SECTION 8.6.(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.
SECTION 8.6.(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.

NONCERTIFIED PUBLIC SCHOOL EMPLOYEES’ SALARY INCREASE
SECTION 8.7.(a)  The Director of the Budget may transfer from the Reserve for Compensation Increases created in this act for fiscal year 2001‑2002, commencing July 1, 2001, funds necessary to provide a salary increase of two percent (2%), including funds for the employer’s retirement and social security contributions, for all noncertified public school employees, except school bus drivers, whose salaries are supported from the State’s General Fund. These funds shall not be used for any purpose other than for the salary increases and necessary employer contributions provided by this subsection.
SECTION 8.7.(b)  The fiscal year 2001‑2002 pay rates adopted by local boards of education for school bus drivers shall be increased by at least two percent (2%) to the extent that such rates of pay are supported by the allocation of State funds from the State Board of Education. Local boards of education shall increase the rates of pay for all school bus drivers who were employed during fiscal year 2000‑01 and who continue their employment for fiscal year 2001‑2002 by at least two percent (2%). The Director of the Budget may transfer from the compensation increase reserve fund created in this act for fiscal year beginning July 1, 2001, funds necessary to provide the salary increases for school bus drivers whose salaries are supported from the State’s General Fund in accordance with the provisions of this subsection.

PART VII. COMMUNITY COLLEGES
COMMUNITY COLLEGE FUNDING FLEXIBILITY
SECTION 9.  A local community college may use all State funds allocated to it, except for Literacy Funds and Funds for New and Expanding Industries, for any authorized purpose that is consistent with the college’s Institutional Effectiveness Plan.  Each local community college shall include in its Institutional Effectiveness Plan a section on how funding flexibility allows the college to meet the demands of the local community and maintain a presence in all previously funded categorical programs.
No more than two percent (2%) systemwide may be transferred from faculty salaries without the approval of the State Board of Community Colleges. The State Board shall report on any such transfers above two percent (2%) systemwide to the Joint Legislative Commission on Governmental Operations at its next meeting.

PERMIT TRANSFERS OF FUNDS TO THE NEW AND EXPANDING INDUSTRY TRAINING PROGRAM
SECTION 9.1.  Notwithstanding G.S. 143‑16.3, G.S. 143‑23, or any other provision of law, the Director of the Budget may, after consultation with the Joint Legislative Commission on Governmental Operations, transfer funds from any agency or program funded from the General Fund to the New and Expanding Industry Training Program to supplement the needs of this Program during the 2001‑2003 biennium.

RESTRUCTURE HUMAN RESOURCES DEVELOPMENT PROGRAM
SECTION 9.2. The Human Resources Development (HRD) program is designed to recruit, train and/or place in employment unemployed or underemployed adults.  Effective July 1, 2001, the HRD program shall be restructured into the JobLink Training program.  Serving as a liaison to community college training and educational programs, each JobLink training coordinator will be located at a JobLink Career Center(s) to provide skill assessments and employability training assistance.  The State Board of Community Colleges shall develop policies to implement the restructured program.

MANAGEMENT INFORMATION SYSTEM FUNDS
SECTION 9.3.(a)  Funds appropriated for the Community College System Management Information System shall not revert at the end of the 2001‑2002 and 2002‑2003 fiscal years but shall remain available until expended.
SECTION 9.3.(b)  This section becomes effective June 30, 2001.

PART VIII. COLLEGES AND UNIVERSITIES

AID TO STUDENTS ATTENDING PRIVATE COLLEGES PROCEDURE
SECTION 10.(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 one thousand one hundred dollars ($1,100) per full‑time equivalent North Carolina undergraduate student enrolled at a private institution as of October 1, 2001, for the 2001‑2002 fiscal year and up to one thousand one hundred dollars ($1,100) per full‑time equivalent North Carolina undergraduate student enrolled at a private institution as of October 1, 2002, for the 2002‑2003 fiscal 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.
SECTION 10.(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 eight hundred dollars ($1,800) for the 2001‑2002 academic year and one thousand eight hundred dollars ($1,800) for the 2002‑2003 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 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, Planning, 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.
SECTION 10.(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.
SECTION 10.(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.

AID TO PRIVATE COLLEGES/LEGISLATIVE TUITION GRANT LIMITATIONS
SECTION 10.1.(a)  No Legislative Tuition Grant funds shall be expended for a program at an off‑campus site of a private institution, as defined in G.S. 116‑22(1), established after May 15, 1987, unless (i) the private institution offering the program has previously notified and secured agreement from other private institutions operating degree programs in the county in which the off‑campus program is located or operating in the counties adjacent to that county or (ii) the degree program is neither available nor planned in the county with the off‑campus site or in the counties adjacent to that county.
An “off‑campus program” is any program offered for degree credit away from the institution’s main, permanent campus.
SECTION 10.1.(b)  Any member of the armed services, as defined in G.S. 116‑143.3(a), abiding in this State incident to active military duty, who does not qualify as a resident for tuition purposes, as defined under G.S. 116‑143.1, is eligible for a legislative tuition grant pursuant to this section if the member is enrolled as a full‑time student.  The member’s legislative tuition grant shall not exceed the cost of tuition less any tuition assistance paid by the member’s employer.

WAKE FOREST AND DUKE MEDICAL SCHOOLS ASSISTANCE/FUNDING FORMULA
SECTION 10.2.(a)  Funds appropriated in this act to the Board of Governors of The University of North Carolina for continuation of financial assistance to the medical schools of Duke University and Wake Forest University shall be disbursed on certifications of the respective schools of medicine that show the number of North Carolina residents as first‑year, second‑year, third‑year, and fourth‑year students in the medical school as of November 1, 2001, and November 1, 2002.  Disbursement to Wake Forest University shall be made in the amount of eight thousand dollars ($8,000) for each medical student who is a North Carolina resident, one‑thousand dollars ($1,000) of which shall be placed by the school in a fund to provide financial aid to needy North Carolina students who are enrolled in the medical school.  The maximum aid given to any student from this fund in a given year may not exceed the amount of the difference in tuition and academic fees charged by the school and those charged at the School of Medicine at the University of North Carolina at Chapel Hill.
Disbursement to Duke University shall be made in the amount of five thousand dollars ($5,000) for each medical student who is a North Carolina resident, five hundred dollars ($500) of which shall be placed by the school in a fund to be used to provide student financial aid to financially needy North Carolina students who are enrolled in the medical school. No individual student may be awarded assistance from this fund in excess of two thousand dollars ($2,000) each year. In addition to this basic disbursement for each year of the biennium, a disbursement of one thousand dollars ($1,000) shall be made for each medical student who is a North Carolina resident in the first‑year, second‑year, third‑year, and fourth‑year classes to the extent that enrollment of each of those classes exceeds 30 North Carolina students.
The Board of Governors shall establish the criteria for determining the eligibility for financial aid of needy North Carolina students who are enrolled in the medical schools and shall review the grants or awards to eligible students. The Board of Governors shall adopt rules for determining which students are residents of North Carolina for the purposes of these programs. The Board shall also make any regulations as necessary to ensure that these funds are used directly for instruction in the medical programs of the schools and not for religious or other nonpublic purposes. The Board shall encourage the two schools to orient students toward primary care, consistent with the directives of G.S. 143‑613(a). The two schools shall supply information necessary for the Board to comply with G.S. 143‑613(d).
SECTION 10.2.(b)  If the funds appropriated in this act to the Board of Governors of The University of North Carolina for continuation of financial assistance to the medical schools of Duke University and Wake Forest University are insufficient to cover the enrolled students in accordance with this section, then the Board of Governors with the approval of the Office of State Budget, Planning, & Management, may transfer unused funds from other programs in the Related Educational Programs budget code to cover the extra students.

BOARD OF GOVERNORS’ MEDICAL SCHOLARSHIPS
SECTION 10.3.  The current Board of Governors’ Medical Scholarship Program, under the purview of the Board of Governors of the University of North Carolina, shall make any awards to students admitted after July 1, 2001, as scholarship loan awards. The Board of Governors’ Medical Scholarship program is administered by the Board of Governors of the University of North Carolina.  The Board of Governors’ Medical Scholarship Program shall be used to provide a four‑year scholarship loan of relevant tuition and fees, mandatory medical insurance, required laptop computers, and an annual stipend of $5,000 per year to students who have been accepted for admission to either Duke University School of Medicine, Brody School of Medicine at East Carolina University, the University of North Carolina at Chapel Hill School of Medicine, or the Wake Forest University School of Medicine.  The Board may adopt standards, including minimum grade point average and scholastic aptitude test scores, for awarding these scholarship loans to ensure that only the most qualified students receive them. The Board shall make an effort to identify and encourage minority and economically disadvantaged youth to enter the program. All scholarship loans shall be evidenced by notes made payable to the Board that shall bear interest at the rate of ten percent (10%) per year beginning September 1 after completion of the program, or immediately after termination of the scholarship loan, whichever is earlier. The scholarship loan may be terminated by the recipient withdrawing from school or by the recipient not meeting the standards set by the Board. The Board shall forgive the loan if, within seven years after graduation, the recipient practices medicine in North Carolina for four years. The Board shall also forgive the loan if it finds that it is impossible for the recipient to practice medicine in North Carolina for four years, within seven years after graduation, because of the death or permanent disability of the recipient.  All unused funds appropriated to or otherwise received by the Board for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds, shall revert to the General Fund at the end of each 
fiscal year. 

BOARD OF GOVERNORS’ DENTAL SCHOLARSHIPS
SECTION 10.4.  The current Board of Governors’ Dental Scholarship Program, under the purview of the Board of Governors of the University of North Carolina, shall make any awards to students admitted after July 1, 2001, as scholarship loan awards.  The Board of Governors’ Dental Scholarship program is administered by the Board of Governors of the University of North Carolina.  The Board of Governors’ Dental Scholarship Program shall be used to provide a four‑year scholarship loan of relevant tuition and fees, mandatory medical insurance, required laptop computers for first‑year students, required dental equipment and an annual stipend of $5,000 per year to students who have been accepted for admission to the School of Dentistry at the University of North Carolina at Chapel Hill.  The Board may adopt standards, including minimum grade point average and scholastic aptitude test scores, for awarding these scholarship loans to ensure that only the most qualified students receive them.  The Board shall make an effort to identify and encourage minority and economically disadvantaged youth to enter the program.  All scholarship loans shall be evidenced by notes made payable to the Board that shall bear interest at the rate of ten percent (10%) per year beginning September 1 after completion of the program, or immediately after termination of the scholarship loan, whichever is earlier.  The scholarship loan may be terminated by the recipient withdrawing from school or by the recipient not meeting the standards set by the Board.  The Board shall forgive the loan if, within seven years after graduation, the recipient practices medicine in North Carolina for four years.  The Board shall also forgive the loan if it finds that it is impossible for the recipient to practice medicine in North Carolina for four years, within seven years after graduation, because of the death or permanent disability of the recipient.  All unused funds appropriated to or otherwise received by the Board for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds, shall revert to the General Fund at the end of each fiscal year.  

NORTH CAROLINA TEACHER ASSISTANT EDUCATION DEGREE PROGRAM
SECTION 10.5.  The North Carolina Teacher Assistant Education Degree Program is created.  The North Carolina Teacher Assistant Education Degree Program shall be used to provide scholarship loans to teacher assistants in North Carolina who are interested in becoming certified classroom teachers.  Scholarship loans in the amount of two thousand dollars ($2,000) per year shall be awarded to North Carolina teacher assistants to complete a college transfer program/associate degree appropriate for entry into a teacher education program in the University of North Carolina for up to two years of study at a North Carolina Community College.  For participants enrolled less than full‑time, the scholarship loan amount shall be prorated.  The purpose of this program is to achieve the degree necessary to enter UNC teacher education degree program with Junior‑level status.  Scholarship loans in the amount of three thousand dollars ($3,000) per year shall be awarded to North Carolina teacher assistants to complete a baccalaureate degree for up to two years of study at a UNC institution.  For participants enrolled less than full‑time, the scholarship loan amount shall be prorated.  The University of North Carolina Board of Governors and the North Carolina State Board of Community Colleges shall adopt rules and policies for the disbursement of North Carolina Teacher Assistant Education Degree Program funds.  The Boards shall make an effort to identify and encourage minority students to enter the program.  All scholarship loans shall be evidenced by notes made payable to the North Carolina State Board of Community Colleges or the UNC Board of Governors that shall bear interest at the rate of ten percent (10%) per year beginning September 1 after completion of the program, or immediately after termination of the scholarship loan, whichever is earlier.  The scholarship loan shall be terminated by the recipient withdrawing from the community college associate degree program, by the recipient not completing the baccalaureate degree at a UNC institution, or by the recipient not meeting the standards set by the Boards.  The Boards shall forgive each year of the scholarship loan for each year the recipient serves as a certified classroom teacher in a North Carolina public school or at a school operated by the United States government in North Carolina.  For loan forgiveness to occur, the service requirement must be completed within seven years after the recipient graduates from a UNC institution.  The Boards shall also forgive the loan if it finds that it is impossible for the recipient to complete the service requirement within seven years after graduation at a North Carolina public school or at a school operated by the United States government in North Carolina; because of the death or permanent disability of the recipient; or other unforeseen events as determined by the Boards.  All unused funds appropriated to or otherwise received by the North Carolina Teacher Assistant Degree Program for scholarship loans, all funds received as repayment of scholarship loans, and all interest earned on these funds, shall revert to the General Fund at the end of each fiscal year.  The North Carolina State Board of Community Colleges may contract with the State Education Assistance Authority for administration of the program.

PART IX. DEPARTMENT OF TRANSPORTATION

GLOBAL TRANSPARK AUTHORITY TO REIMBURSE HIGHWAY FUND FROM FEDERAL SOURCES
SECTION 11.  When funds are provided from the Highway Fund to the Global TransPark Authority for environmental impact statements or assessments and the Global TransPark Authority applies for and receives reimbursement for those expenses from federal sources, up to one million eight hundred thousand dollars ($1,800,000) of the federal reimbursements shall be paid over by the Global TransPark Authority into the Highway Fund within 30 days of receipt.  These funds shall be allocated to State‑funded maintenance appropriations in the manner approved by the Board of Transportation.

AIRCRAFT AND FERRY ACQUISITIONS
SECTION 11.1.  Before approving the purchase of an aircraft from the Equipment Fund or a ferry in a Transportation Improvement Program, the Board of Transportation shall prepare an estimate of the operational costs and capital costs associated with the addition of the aircraft or ferry and shall report those additional costs to the General Assembly pursuant to G.S. 136‑12(b), and to the Joint Legislative Commission on Governmental Operations.

HIGHWAY FUND ALLOCATIONS BY CONTROLLER
SECTION 11.2.  The Controller of the Department of Transportation shall allocate at the beginning of each fiscal year from the various appropriations made to the Department of Transportation in this act, Titles:
	State Construction
	State Funds to Match Federal Highway Aid
	State Maintenance
	Ferry Operations,
sufficient funds to eliminate all overdrafts on State maintenance and construction projects, and these allocations may not be diverted to other purposes.

CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 11.3.(a)  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
For Fiscal Year 2003‑04					$1,340.3 Million
For Fiscal Year 2004‑05					$1,370.7 Million
For Fiscal Year 2005‑06					$1,401.4 Million
For Fiscal Year 2006‑07					$1,444.1 Million

SECTION 11.3.(b)  The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
For Fiscal Year 2003‑04					$1,073.8 Million
For Fiscal Year 2004‑05					$1,118.2 Million
For Fiscal Year 2005‑06					$1,163.9 Million
For Fiscal Year 2006‑07					$1,213.7 Million

HIGHWAY FUND LIMITATIONS ON OVEREXPENDITURES
SECTION 11.4.(a)  Overexpenditures from Section 4 of this act may be made by authorization of the Director of the Budget, Titles:
	State Construction Primary Construction 
	State Construction Urban Construction
	Spot Safety Construction
	State Construction Access and Public Service Roads
	State Funds to Match Federal Highway Aid
	State Maintenance
	Ferry Operations,
provided that there are corresponding underexpenditures from these same Titles. Overexpenditures or underexpenditures in any Titles may not vary by more than ten percent (10%) without prior consultation with the Advisory Budget Commission. Written reports covering overexpenditures or underexpenditures of more than ten percent (10%) shall be made to the Joint Legislative Oversight Committee. The reports shall be delivered to the Director of the Fiscal Research Division not less than 96 hours prior to the beginning of the Commission's full meeting.
SECTION 11.4.(b)  Overexpenditures from Section 4 of this act, Titles:
	State Construction Primary Construction 
	State Construction Urban Construction
	Spot Safety Construction
	State Construction Access and Public Service Roads
	State Funds to Match Federal Highway Aid
	State Maintenance
	Ferry Operations,
for the purpose of providing additional positions shall be approved by the Director of the Budget and shall be reported on a quarterly basis to the Joint Legislative Highway Oversight Committee and to the Fiscal Research Division.

HIGHWAY FUND ADJUSTMENTS TO REFLECT ACTUAL REVENUE
SECTION 11.5.  Any unreserved credit balance in the Highway Fund on June 30 of each of the fiscal years of this biennium shall support appropriations in the succeeding fiscal year.  If all of the balance is not needed for these appropriations, the Director of the Budget may use the remaining excess to establish a reserve for access and public roads, a reserve for unforeseen happening of a state of affairs requiring prompt action as provided by G.S. 136‑44.1, and other required reserves.  If all of the remaining excess is not used to establish these reserves, the remainder shall be allocated to the State‑funded maintenance appropriations in the manner approved by the Board of Transportation.  The Board of Transportation shall report monthly to the Joint Legislative Highway Oversight Committee and the Fiscal Research Division about the use of the reserve for highway and maintenance.

DEPARTMENT OF TRANSPORTATION EXEMPTION FROM GENERAL STATUTES FOR EXPERIMENTAL PROJECT‑‑CONGESTION MANAGEMENT
SECTION 11.6.  The Department of Transportation may enter into a design‑build‑warrant contract to develop, with Federal Highway Administration participation under The 1991 Intermodal Surface Transportation Efficiency Act, Title VI, Part B, Sections 6051‑6059, a “Congestion Avoidance and Reduction for Autos and Trucks (CARAT)” system of traffic management for the greater Charlotte‑Mecklenburg urban areas.  Notwithstanding any other provision of law, contractors, contractors’ employees, and Department of Transportation employees involved in this project only do not have to be licensed by occupational licensing boards as “license” and “occupational licensing board” are defined in G.S. 93B‑1 and for the purpose of entering into contracts, the Department of Transportation is exempted from the provisions of the following General Statutes:  G.S. 136‑28.1, 143‑52, 143‑53, 143‑58, 143‑128, and 143‑129.  These statutory exemptions are limited and available only to the extent necessary to comply with federal rules, regulations, and policies for completion of this project.
The Department of Transportation shall report quarterly to the Joint Legislative Highway Oversight Committee on its efforts to enter into a design‑build‑warrant contract and to award and construct the project. The report shall include, but not be limited to, the number of types of firms bidding on the project, special qualifications of the firms bidding, and the effect statutory exemptions might have had on the award and construction of the project and the receipt of federal discretionary funding for the project.

ALLOCATION OF FUNDS FOR DRIVER TRAINING
SECTION 11.7.  In allocating funds for driver training, the State Board of Education shall consider the needs of small and low‑wealth local school administrative units.

INCREASE IN TRANSFER AMOUNT FROM HIGHWAY TRUST FUND TO GENERAL FUND
SECTION 11.8.  Pursuant to G.S. 105‑187.9 Highway Use Taxes collected at the rate of three percent (3%) shall be credited to the North Carolina Highway Trust Fund.  The amount of the highway use tax to be transferred to the General Fund is increased from one hundred seventy million dollars ($170,000,000) to two hundred million dollars ($200,000,000).  The increase in the amount to be transferred is based on inflation since 1989.

AIRPORT GRANTS
SECTION 11.9.  Recommendation is made to transfer $5,000,000 from Highway Fund availability to support airport grants for fiscal year 2001‑2002.

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

PHYSICIAN SERVICES
SECTION 12.  With the approval of the Office of State Budget, Planning, and Management, the Department of Health and Human Services may use funds appropriated in this act for across‑the‑board salary increases and performance pay to offset similar increases in the costs of contracting with private and independent universities for the provision of physician services to clients in facilities operated by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.  This offsetting shall be done in the same manner as is currently done with constituent institutions of The University of North Carolina.

PRIVATE AGENCY UNIFORM COST FINDING REQUIREMENT
SECTION 12.1.  To ensure uniformity in rates charged to area programs and funded with State‑allocated resources, the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services of the Department of Health and Human Services may require a private agency that provides services under contract with two or more area programs, except for hospital services that have an established Medicaid rate, to complete an agency‑wide uniform cost finding in accordance with G.S. 122C‑143.2(a) and G.S.122C‑147.2.  The resulting cost shall be the maximum included for the private agency in the contracting area program’s unit cost finding.

NONSUPPLANTING OF MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE FUNDS
SECTION 12.2.  The Department of Health and Human Services shall ensure that counties do not reduce county appropriations and expenditures for area mental health, developmental disabilities, and substance abuse authorities because the authorities have received additional State appropriations for services.

TRANSFERS OF CERTAIN FUNDS AUTHORIZED
SECTION 12.3.  In order to assure maximum utilization of funds in county departments of social services, county or district health agencies, and area mental health, developmental disabilities and substance abuse authorities, the Director of the Budget is authorized to transfer excess funds appropriated to a specific service, program, or fund whether specified service in a block grant plan or General Fund appropriation, into another service, program, or fund for local services within the budget of the respective State agency.

LIABILITY INSURANCE
SECTION 12.4.  The Department of Health and Human Services and the Department of Correction may provide medical liability coverage not to exceed one million dollars ($1,000,000) on behalf of employees of the Department licensed to practice medicine or dentistry and on behalf of physicians in all residency training programs from The University of North Carolina who are in training at institutions operated by the Department of Health and Human Services.  This coverage may include commercial insurance or self‑insurance and shall cover these individuals for their acts or omissions only while they are engaged in providing medical and dental services pursuant to their State employment or training.
The coverage provided under this section shall not cover any individual for any act or omission that, the individual knows or reasonably should know constitutes a violation of the applicable criminal laws of any state or the United States, or that arises out of any sexual, fraudulent, criminal or malicious act, or out of any act amounting to willful or wanton negligence.
The coverage provided pursuant to this section shall not require any additional appropriations and shall not apply to any individual providing contractual service to the Department of Health and Human Services or the Department of Correction, with the exception that coverage may include physicians in all residency training programs from The University of North Carolina who are in training at institutions operated by the Department of Health and Human Services.

LIMITATION ON USE OF SPECIAL ALZHEIMER’S UNITS
SECTION 12.5.  The Special Alzheimer’s Unit established in Wilson by funds appropriated in Chapter 507 of the 1995 Session Laws and the Special Alzheimer's Unit in Black Mountain shall serve only those clients who cannot be served by a similar private facility.

MEDICAID
SECTION 12.6.(a)  Funds appropriated in this Title 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 (f) 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 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, Nurse Practitioners ‑ 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. Public ambulance providers will be reimbursed at cost.
(11)	Hearing Aids ‑ Actual cost plus a dispensing fee.
(12)	Rural Health Clinic Services ‑ Provider based ‑ reasonable cost; non‑provider 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 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 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 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:
(a)	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 Plan developed by the Department of Health and Human Services not to exceed the upper limits established in federal regulations, and
(b)	For children eligible for EPSDT services:
1.	Licensed or certified psychologists, certified mental health nurse practitioners, and licensed clinical social workers when Medicaid‑eligible children are referred by the primary care physician or the area mental health program, and
2.	Institutional providers of residential services for children and Psychiatric Residential Treatment Facility services, that meet federal and State requirements as defined by the Department.
The Department of Health and Human Services may adopt temporary rules in accordance with Chapter 150B of the General Statutes further defining the qualifications of providers and referral procedures in order to implement this subdivision.
(23)	Medically Necessary Prosthetics or Orthotics for EPSDT Eligible Children ‑ Reimbursement in accordance with Plan approved by the Department of Health and Human Services.
(24)	Health Insurance Premiums ‑ Payments to be made in accordance with the 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. Providers of these services must be certified as meeting program standards of the Department of Health and Human Services.
(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, emergency rooms, and mental health services subject to independent utilization review 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.
SECTION 12.6(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.
SECTION 12.6(c)  Co‑payment for Medicaid Services.  The Department of Health and Human Services may establish copayment up to the maximum permitted by federal law and regulation.
SECTION 12.6.(d)  Medicaid and Work First Family Assistance Eligibility Standards.  The maximum net family annual income eligibility standards for Medicaid and the Standard of Need for Work First Family Assistance shall be as follows: 
	Categorically Needy	Medically Needy
Family	Standard	WFFA 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; 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.
SECTION 12.6.(e)  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 12.6.(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 to $200.99	$     80.00
	$201.00 to $300.99	$   130.00
	$301.00 and greater	$   212.00
SECTION 12.6.(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.
SECTION 12.6.(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 his 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).
SECTION 12.6.(i)  Exceptions to Service Limitations, Eligibility Requirements, and Payments.  Service limitations, eligibility requirements, and payments, 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.
SECTION 12.6.(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.
SECTION 12.6.(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.
SECTION 12.6.(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.
SECTION 12.6.(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.
SECTION 12.6.(n)  The Department of Health and Human Services shall provide coverage to pregnant women and 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. Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to charges in income or assets.
(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.
SECTION 12.6.(o)  Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.
SECTION 12.6.(p)  The Department of Health and Human Services shall submit a quarterly status report on expenditures for acute care and long‑term care services to the Fiscal Research Division and to the Office of State Budget, Planning and Management.  This report shall include an analysis of budgeted versus actual experience 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.  The quarterly expenditure report and the revised forecast for the preceding month shall be forwarded to the Fiscal Research Division and to the Office of State Budget, Planning and Management no later than the third Thursday of the month following the end of each quarter.
SECTION 12.6.(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.
SECTION 12.6.(r)  If first approved by the Office of State Budget, Planning, 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.
SECTION 12.6.(s)  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 such 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, Planning, and Management on the possible fiscal impact of the temporary rule and its effect on state appropriations and local governments.

DISPOSITION OF DISPROPORTIONATE SHARE RECEIPT CHANGE
SECTION 12.7.(a)  Disproportionate share receipts reserved at the end of the 2001‑02 fiscal year shall be deposited with the Department of State Treasurer as nontax revenue for the 2001‑02 fiscal year.
SECTION 12.7.(b)  For the 2001‑02 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 one hundred seven million dollars ($107,000,000) 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 one hundred seven million dollars ($107,000,000) shall be reserved by the State Treasurer for future appropriations.

NONMEDICAID REIMBURSEMENT
SECTION 12.8.  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 and for adults in the Atypical Antipsychotic Medication program in the Division of Mental, Health, Developmental Disabilities, and Substance Abuse Services 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. 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 these 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.

ADULT CARE HOMES REIMBURSEMENT RATE/ADULT CARE HOMES ALLOCATION OF NONFEDERAL COST OF MEDICAID PAYMENTS/STAFFING GRANT
SECTION 12.9.(a)  The eligibility of Special Assistance recipients residing in adult care homes on August 1, 1995, shall not be affected by an income reduction in the Special Assistance eligibility criteria resulting from adoption of the Rate Setting Methodology Report and Related Services, providing these recipients are otherwise eligible.  
SECTION 12.9.(b)  Effective August 1, 1995, the State shall pay fifty percent (50%) and the county shall pay fifty percent (50%) of the nonfederal costs of Medicaid services paid to adult care home facilities.  As Medicaid personal care requirements increase, the county matching share shall be capped until it equals fifteen percent (15%) of the nonfederal Medicaid personal care requirements. 

ADOPTION SUBSIDY
SECTION 12.10.  The maximum rates for state participation in the adoption assistance program are established on a graduated scale as follows:
(1)	$315.00 per child per month for children aged birth through 5;
(2)	$365.00 per child per month for children aged 6 through 12; and
(3)	$415.00 per child per month for children aged 13 through 18.

FOSTER CARE
SECTION 12.11.  The maximum rates for state participation in the foster care assistance program are established on a graduated scale as follows:
(1)	$315.00 per child per month for children aged birth through 5;
(2)	$365.00 per child per month for children aged 6 through 12; and
(3)	$415.00 per child per month for children aged 13 through 18.
Of these amounts, fifteen dollars ($15.00) is a special needs allowance for the child.

CLARIFICATION OF AUTHORIZED ADDITIONAL USE OF HIV FOSTER CARE AND ADOPTIVE FAMILY FUNDS
SECTION 12.12.(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 in Chapter 324 of the 1995 Session Laws for this purpose shall be used to provide medical training in avoiding HIV transmission in the home.
	SECTION 12.12.(b)	The maximum rates for the 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.

SENIOR CENTER OUTREACH
SECTION 12.12A.(a) Funds appropriated to the Department of Health and Human Services, Division of Aging, for the 2001‑2003 fiscal biennium, shall be used by the Division of Aging to enhance senior center programs as follows:
(1)	To expand the outreach capacity of senior centers to reach unserved or underserved areas; or
(2)	To provide start‑up funds for new senior centers.
All of these funds shall be allocated by October 1 of each fiscal year.
	SECTION 12.12A.(b)	Prior to funds being allocated pursuant to this section for start‑up funds for a new senior center, the county commissioners of the county in which the new center will be located shall:
(1)	Formally endorse the need for such a center;
(2)	Formally agree on the sponsoring agency for the center; and
(3)	Make a formal commitment to use local funds to support the ongoing operation of the center.
	SECTION 12.12A.(c)	State funding shall not exceed ninety percent (90%) of reimbursable costs.

DAY CARE ALLOCATION FORMULA
SECTION 12.13.(a)  To simplify current day care allocation methodology and more equitably distribute State day care funds, the Department of Health and Human Services shall apply the following allocation formula to all noncategorical federal and State day care funds used to pay the costs of necessary day care for minor children of needy families:
(1)	One‑third of budgeted funds shall be distributed according to the county’s population in relation to the total population of the State;
(2)	One‑third of the budgeted funds shall be distributed according to the number of children under 6 years of age in a county who are living in families whose income is below the State poverty level in relation to the total number of children under 6 in the State in families whose income is below the poverty level; and
(3)	One‑third of budgeted funds shall be distributed according to the number of working mothers with children under 6 years of age in a county in relation to the total number of working mothers with children under 6 in the State.
		SECTION 12.13.(b)  A county's initial allocation shall not be less than that county's total expenditures for childcare in fiscal year 1995‑96.

DAY CARE FUNDS MATCHING REQUIREMENT
SECTION 12.14.  No local matching funds may be required by the Department of Health and Human Services as a condition of any locality's receiving any State day care funds appropriated by this act unless federal law requires such a match.

CHILD DAY CARE REVOLVING LOAN FUND
SECTION 12.15.  Notwithstanding any law to the contrary, funds budgeted for the Child Day Care Revolving Loan Fund may be transferred to and invested by the financial institution contracted to operate the Fund.  The principal and any income to the Fund may be used to make loans, reduce loan interest to borrowers, serve as collateral for borrowers, pay the contractor's cost of operating the Fund, or to pay the Department's cost of administering the program.

CHILD PROTECTIVE SERVICES
SECTION 12.16.(a)  The funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, for the 2001‑2003 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 in the county and the number of Child Protective Services workers necessary to meet recommended standards adopted by the North Carolina Association of County Directors of Social Services.
	SECTION 12.16.(b)  Funds allocated under subsection (a) of this section shall be used by county departments for carrying out investigations of reports of child abuse or neglect or for providing protective or preventive services in which the department confirms abuse, neglect, or dependency.
	SECTION 12.16.(c)  The Division of Social Services, Department of Health and Human Services, shall establish criteria and guidelines to ensure that the allocations to county departments of social services are used in accordance with this section and that available Federal Emergency Assistance funds for Child Protective Services are maximized.
	SECTION 12.16.(d)  As long as Federal Emergency Assistance funds are available, counties shall use these federal funds, State Child Protective Services appropriations, and county funds to provide Child Protective Services.

MATCH REQUIREMENTS FOR MEDICAID SERVICES
SECTION 12.17.  The Department of Health and Human Services will continue to administer the matching funds for public Mental Health Services reimbursed by the Medicaid program.  Growth in the non‑federal share of Medicaid budget for Mental Health Services will be borne equally by the state and county/local entity until the county/local entity share totals 15% of the nonfederal share of the Medicaid budget for public Mental Health services.

ELIMINATE STATE EMPLOYEE REPORT
SECTION 12.18.  G.S. 108A 27.10(b) is repealed.

LEASE‑PURCHASE OF OFFICE AND INSTITUTIONAL FACILITIES
SECTION 12.19.(a)  Authorization. – The Secretary of the Department of Health and Human Services may, as  provided in this section, enter into contracts with private for‑profit or nonprofit firms for the construction of office and institutional facilities to be operated by the Department pursuant to a lease that contains a schedule for purchase of the facilities over a period of up to 20 years or other periods that may be appropriate and advantageous to the State.
The State, with the prior approval of the Council of State and the State Treasurer as provided in this section, is authorized to execute and deliver one or more lease‑purchase agreements with a special nonprofit corporation in connection with and under an arrangement whereby certificates of participation are sold and delivered by the special nonprofit corporation in order to provide funds to pay the purchase price of the Projects. The projects will be constructed by selected contractors designated to the special nonprofit corporation by the State Property Office of the Department of Administration in consultation with the Department of Health and Human Services. The selected contractors will be responsible for arranging for and obtaining their own construction financing, which will consist solely of private funds. The projects will be sold to the special nonprofit corporation, with the purchase price paid by the special nonprofit corporation from the proceeds of the certificates of participation. The State may lease the real property upon which the Projects will be located, if owned by the State, to the selected contractors constructing the Projects and to the special nonprofit corporation for nominal consideration.
SECTION 12.19.(b)  Definitions. – The following definitions apply in this section:
(1)	Certificates of participation. – Certificates or other instruments delivered by a special nonprofit corporation as provided in this section evidencing the assignment of proportionate and undivided interests in the rights to receive lease payments to be made by the State pursuant to a lease‑purchase agreement.
(2)	Construction contract agreement. – A contract between the Department of Health and Human Services and the selected contractors for construction of the Projects, under which the selected contractors will be responsible for arranging for and obtaining their own construction financing, which will consist solely of private funds.
(3)	Lease‑purchase agreement. – A lease‑purchase agreement entered into pursuant to this section, under which the State will lease the Projects from the special nonprofit corporation, with option to purchase.
(4)	Projects. – Office and institutional facilities to be constructed by selected contractors, sold to the special nonprofit corporation, and leased to the State pursuant to this section.
(5)	Purchase agreement. – A contract under which the special nonprofit corporation will purchase the Projects from the selected contractors.
(6)	Selected contractors. – One or more private firms selected to construct the Projects.
(7)	Special nonprofit corporation. – A nonprofit corporation created under Chapter 55A of the General Statutes and designated by the State Treasurer for entering into the transactions contemplated by this section. 
SECTION 12.19.(c)  Request for Proposals. – The Secretary of the Department of Health and Human Services may issue a request for proposals to private firms for the private firms to construct the Projects in accordance with the plans and specifications developed by the Department of Health and Human Services and reviewed by the Office of State Construction.  The Secretary of the Department of Health and Human Services shall make recommendations to the State Property Office of the Department of Administration on the final award decision.  The Department of Health and Human Services and the State Property Office of the Department of Administration shall consult with the Joint Legislative Commission on Governmental Operations before making the final award decision.  The Department of Administration shall make the final award decision, which shall then be subject to the approval of the Council of State.  The Department of Health and Human Services will enter into a construction contract agreement with the selected contractors for the construction of the Projects.  The special nonprofit corporation will enter into a purchase agreement with the selected contractors for the sale of the constructed Projects to the special nonprofit corporation.  The Department of Health and Human Services shall furnish plans and specifications for review by the State Construction Office.  Construction contract agreements entered into under this section shall provide that the Department of Health and Human Services and the Office of State Construction shall inspect and review each facility during construction to ensure and determine jointly that the facility is suitable for use as an office or institutional facility and for future acquisition by the State.  The Department of Health and Human Services may contract with a design consortium for construction administration services.
SECTION 12.19.(d)  Approval of Lease‑Purchase Agreement. – A lease‑purchase agreement may not be entered into pursuant to this section unless the following conditions are met before the lease‑purchase agreement is entered into:  (i) the Council of State, by resolution, approves the execution and delivery of the lease‑purchase agreement, and (ii) the State Treasurer approves the lease‑purchase agreement and all other documentation related to it, including any leasehold deed of trust or trust agreement in connection with it.  The resolution of the Council of State may include any matters the Council of State determines.  In determining whether to approve the lease‑purchase agreement, the State Treasurer may consider any factors as the State Treasurer considers relevant in order to find and determine that all of the following conditions are met:
(1)	The principal amount to be financed under the lease‑purchase agreement is adequate and not excessive for the purpose of paying the cost of the Projects.
(2)	The increase, if any, in State revenues necessary to pay the sums to become due under the lease‑purchase agreement is not excessive.
(3)	The lease‑purchase agreement can be entered into on terms desirable to the State.
(4)	The sale of certificates of participation will not have any adverse effect on any scheduled or proposed sale of obligations of the State or any State agency or of any unit of local government in the State.
SECTION 12.19.(e)  Terms and Conditions. – The following provisions apply to a lease‑purchase agreement entered into under this section:
(1)	In order to secure the performance by the State of its obligations under the lease‑purchase agreement, the lease‑purchase agreement may require the eviction of the State from the occupancy of one or more of the Projects in the event that the State breaches its obligations and agreements under the lease‑purchase agreement.
(2)	No deficiency judgement may be rendered against the State or any agency, department, or commission of the State in any action for breach of any obligation contained in the lease‑purchase agreement or any other related documentation, and the taxing power of the State or any agency, department, or commission of the State is not and may not be pledged to secure any monies due under the lease‑purchase agreement.
(3)	The lease‑purchase agreement shall not contain a non‑substitution clause that restricts the right of the State to replace or provide a substitute for the Projects.
(4)	The lease‑purchase agreement may include provisions requesting the Governor to submit in the Governor’s budget proposal, or any amendments or supplements to it, appropriations necessary to make the payments required under the lease‑purchase agreement.
(5)	The lease‑purchase agreement may contain any provisions for protecting and enforcing the rights and remedies of the special nonprofit corporation that are reasonable and proper and not in violation of law, including covenants setting forth the duties of the State with respect to the Projects, which may include provisions relating to insuring, operating, and maintaining the Projects and the custody, safeguarding, investment, and application of monies.
(6)	The lease‑purchase agreement may designate the lease payments to be paid by the State under it to be ‘principal components’ and ‘interest components.’  Any interest component of the lease payments may be calculated based upon a fixed or variable interest rate or rates as determined by the State Treasurer.
(7)	The lease‑purchase agreement may be entered into by the State, and certificates of participation may be delivered by the special nonprofit corporation, at any time, including at times prior to the delivery of the Projects to the special nonprofit corporation for purchase, and the related delivery of occupancy of the Projects to the State by the special nonprofit corporation. The costs incurred in connection with the preparation of the lease‑purchase agreement and related documents and the delivery of the certificates of participation may be paid from the proceeds of the certificates of participation.
(8)	The State is authorized to agree in the lease‑purchase agreement to indemnify the special corporation and its directors and agents for any liabilities that arise to the special corporation or directors or agents on account of their participation in the activities contemplated by this act.
SECTION 12.19.(f)  Faith and Credit Not Pledged. – The payment of amounts payable by the State under the lease‑purchase agreement and other related documentation during any fiscal biennium or fiscal year is limited to funds appropriated for that purpose by the General Assembly in its discretion.  No provision of this section and no lease‑purchase agreement creates any pledge of the faith and credit of the State or any agency, department, or commission of the State within the meaning of any constitutional debt limitation.
SECTION 12.19.(g)  Certificates of Participation. – The State may cooperate as necessary to effectuate the delivery by the special nonprofit corporation of tax‑exempt certificates of participation, including participating in the preparation of offering documents, the filing of required tax forms and agreeing to comply with restrictions on the use of the Projects as required in order for the interest component of the lease payments to be tax‑exempt.  Disclosures and compliance with other federal law requirements by the special nonprofit corporation shall be under the direction of the State Treasurer.  Certificates of participation may be sold at the direction of the State Treasurer in the manner, either at public or private sale, and for any price or prices that the State Treasurer determines to be in the best interest of the State and to effect the purposes of this section.  Interest payable with respect to certificates of participation shall accrue at the rate or rates determined by the State Treasurer with the approval of the special nonprofit corporation.  Certificates of participation may be delivered pursuant to a trust agreement with a corporate trustee approved by the State Treasurer.  The corporate trustee may be any trust company or bank having the powers of a trust company within or without the State.  A trust agreement may (i) provide for security and pledges and assignments with respect to the security as may be permitted under this section and further provide for the enforcement of any lien or security interest created pursuant to this section, and (ii) contain any provisions for protecting and enforcing the rights and remedies of the owners of any certificates of participation that are reasonable and proper and not in violation of law as determined by the State Treasurer.  The State Treasurer shall designate the professionals providing legal or financial services relating to the lease‑purchase agreement and the delivery of certificates of participation, including the provider of any credit facility and the underwriter or placement agent for any certificates of participation.
SECTION 12.19.(h)  Tax exemption. – The lease‑purchase agreement and any certificates of participation relating to it shall at all times be free from taxation by the State or any political subdivision or any of their agencies, excepting estate, inheritance, or gift taxes, income taxes on the gain from the transfer of the lease‑purchase agreement and certificates of participation, and franchise taxes.  The interest component of the lease payments made by the State under the lease‑purchase agreement, including the interest payable with respect to any certificates of participation, is not subject to taxation as income.
SECTION 12.19.(i)  This section, being necessary for the health and welfare of the people of the State, shall be liberally construed to affect its purposes.

PART XI. DEPARTMENT OF CULTURAL RESOURCES

DEPARTMENT OF CULTURAL RESOURCES MAY RETAIN HISTORICAL PUBLICATIONS RECEIPTS

SECTION 14.  The Historical Publications Section, Division of Archives and History, Department of Cultural Resources, may retain the receipts, including over‑realized receipts, from the sale of its publications during each year of the 2001‑2003 biennium.  The receipts from the sale of those publications retained by the Historical Publications Section shall not revert but shall be used to reprint the publications.

PART XII. SALARIES AND BENEFITS

SALARY INCREASES/SALARY RELATED CONTRIBUTIONS
SECTION 15.(a)  The Director of the Budget may budget funds appropriated in Sections 3 and 4 of this Act for the purpose of providing compensation increases to public school employees, community college institutional personnel, and all other permanent state employees.  Increases shall be granted equating to 2% funding of current salaries.
SECTION 15.(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.
SECTION 15.(c)  The State’s employer contribution rates budgeted for retirement and related benefits as percentage of covered salaries for the 2001‑02 fiscal year is (i) five and fifty‑one hundredths percent (5.51%) ‑ Teachers and State Employees; (ii) (ten and fifty‑one hundredths percent (10.51%) ‑ State Law Enforcement Officers; (iii) nine and thirty‑six hundredths percent (9.36%) ‑ University employees’ Optional Retirement System; (iv) seventeen and sixteen hundredths percent (17.16%) ‑ Consolidated Judicial Retirement System; and (v) twenty‑four and seventy hundredths percent (24.70%) ‑ Legislative Retirement System.  Each of the foregoing contribution rates includes two percent (2.0%) for hospital and medical benefits.  The rate for Teachers & State Employees, State Law Enforcement Officers, and for the University Employees’ Optional Retirement Program includes fifty‑two hundredths percent (0.52%) for the Disability Income Plan.  The rates for Teachers and State Employees and Law Enforcement Officers include sixteen‑hundredths percent (0.16%) for the Death Benefits Plan.  The rate for State Law Enforcement Officers includes five percent (5%) for Supplemental Retirement Income.
SECTION 15.1.  Notwithstanding any other provision of law, the Board of Trustees of the Teachers’ and State Employees’ Retirement System shall adopt such assumptions as necessary to put into effect the asset cap of 77% of market value removed to allow for a 5‑year smooth market method of asset value and increase the amortization period for the retirement fund from a 9‑year period to a 15‑year period.

GOVERNOR AND COUNCIL OF STATE
SECTION 15.2.(a)  Effective July 1, 2001, G.S. 147‑11(a) reads as rewritten:
“(a)	The salary of the Governor shall be one hundred twenty thousand seven hundred ninety‑nine dollars ($120,799) annually, payable monthly."
SECTION 15.2.(b)  Effective July 1, 2001, the annual salaries for the members of the Council of State, payable monthly, for the 2001‑2002 and 2002‑2003 fiscal years are:

	Council of State	Annual Salary
	Lieutenant Governor	$	106,613
	Attorney General	$	106,613
	Secretary of State	$	106,613
	State Treasurer	$	106,613
	State Auditor	$	106,613
	Superintendent of Public Instruction	$	106,613
	Agriculture Commissioner	$	106,613
	Insurance Commissioner	$	106,613
	Labor Commissioner	$	106,613

NON‑ELECTED DEPARTMENT HEAD/SALARY INCREASES
SECTION 15.3.  In accordance with G.S. 143B‑9, the maximum annual salaries, payable monthly, for the non‑elected heads of the principal State departments for the 2001‑2002 and 2002‑2003 fiscal years are:

	Non‑elected Department Heads	Annual Salary
	Secretary of Administration	$	104,161
	Secretary of Correction		104,161
	Secretary of Crime Control and Public Safety		104,161
	Secretary of Cultural Resources		104,161
	Secretary of Commerce		104,161
	Secretary of Environment, Health, and Natural Resources		104,161
	Secretary of Human Resources		104,161
	Secretary of Revenue		104,161
	Secretary of Transportation		104,161

CERTAIN EXECUTIVE BRANCH OFFICIALS/SALARY INCREASES
SECTION 15.4.  The annual salaries, payable monthly, for the 2001‑2002 and 2002‑2003 fiscal years for the following executive branch officials are:
	Executive Branch Officials	Annual Salary
	Chairman, Alcoholic Beverage Control Commission	$ 	94,805
	State Controller		132,680
	Commissioner of Motor Vehicles		94,805
	Commissioner of Banks		106,613
	Chairman, Employment Security Commission		132,511
	State Personnel Director		104,161
	Chairman, Parole Commission		86,568
	Members of the Parole Commission		79,923
	Chairman, Utilities Commission		118,733
	Members of the Utilities Commission		106,613
	Executive Director, Agency for Public Telecommunications		79,923
	General Manager, Ports Railway Commission		72,170
	Director, Museum of Art		97,145
	Executive Director, North Carolina Housing Finance Agency		117,332
	Executive Director, North Carolina Agricultural Finance Authority		92,279
	
JUDICIAL BRANCH OFFICIALS/SALARY INCREASE
SECTION 15.5.(a)  The annual salaries, payable monthly, for specified judicial branch officials the 2001‑2002 and 2002‑2003 fiscal years are:

	Judicial Branch Officials	Annual Salary
	Chief Justice, Supreme Court	$	120,799
	Associate Justice, Supreme Court		117,643
	Chief Judge, Court of Appeals		114,701
	Judge, Court of Appeals		112,741
	Judge, Senior Regular Resident Superior Court	$	109,678
	Judge, Superior Court		106,613
	Chief Judge, District Court		96,810
	Judge, District Court		93,747
	Administrative Officer of the Courts		109,678
	Assistant Administrative Officer of the Courts		100,180
	SECTION 15.5.(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 sixty thousand seven hundred fifty‑seven dollars ($60,757), and the minimum salary of any assistant district attorney or assistant public defender is at thirty‑one thousand eighteen dollars ($31,018) effective July 1, 2001.

CLERK OF SUPERIOR COURT SALARY INCREASES
SECTION 15.6.  Effective July 1, 2001 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	$ 69,286	$ 70,672
	100,000 to 149,999	77,827	79,384
	150,000 to 249,999	88,369	88,096
	250,000 and above	94,912	96,810

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 the incumbent clerk shall not be decreased by any change in population group during his continuance in office.”

ASSISTANT AND DEPUTY CLERKS OF COURT/SALARY INCREASES/ELIMINATE DEPUTY CLERK HIRING RATE
SECTION 15.7.  Effective July 1, 2001, 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	$ 25,890	  $ 26,408
	Maximum	45,839	46,756

	Deputy Clerks	Annual Salary
	Minimum	$ 21,940	$ 22,379
	Maximum	35,309	36,015"

MAGISTRATES’ SALARY INCREASES
SECTION 15.8.  Effective July 1, 2001, G.S. 7A‑171.1 reads as rewritten:
"§ 7A‑171.1.  Duty hours, salary, and travel expenses within county.
(a)	The Administrative Officer of the Courts, after consultation with the chief district judge and pursuant to the following provisions, shall set an annual salary for each magistrate.	

(1)	A full‑time magistrate shall be paid the annual salary indicated in the table set out in this subdivision. A full‑time magistrate is a magistrate who is assigned to work an average of not less than 40 hours a week during the term of office. The Administrative Officer of the Courts shall designate whether a magistrate is full‑time. Initial appointment shall be at the entry rate. A magistrate’s salary shall increase to the next step every two years on the anniversary of the date the magistrate was originally appointed for increases to Steps 1 through 3, and every four years on the anniversary of the date the magistrate was originally appointed for increases to Steps 4 through 6.

	Table of Salaries of Full‑time Magistrates

Level	Annual Salary
Entry Rate	$27,811	$28,367
Step 1	30,601	31,213
Step 2	33,639	34,312
Step 3	36,853	37,692
Step 4	40,582	41,394
Step 5	44,523	45,464
Step 6	48,961	49,939

(2)	A part‑time magistrate is a magistrate who is assigned to work an average of less than 40      hours of work a week during the term, except that no magistrate shall be assigned an average of less than 10 hours of work a week during the term. A part‑time magistrate is included, in accordance with G.S. 7A‑170, under the provisions of G.S. 135‑1 (10) and G.S. 135‑40.2 (a). The Administrative Officer of the Courts designates whether a magistrate is a part‑time magistrate. A part‑time magistrate shall receive an annual salary based on the following formula:  The average number of hours a week that a part‑time magistrate is assigned work during the term shall be multiplied by the annual salary payable to a full‑time magistrate who has the same number of years of service prior to the beginning of that term as does the part‑time magistrate and the product of that multiplication shall be divided by the number 40. The quotient shall be the annual salary payable to that part‑time magistrate.
(3)	Notwithstanding any other provision of this subsection, an individual who, when initially appointed as a full‑time magistrate, is licensed to practice law in North Carolina, shall receive the annual salary provided in the Table in subdivision (1) of this subsection for Step 4. This magistrate’s salary shall increase to the next step every four years on the anniversary of the date the magistrate was originally appointed. An individual who, when initially appointed as a part‑time magistrate, is licensed to practice law in North Carolina, shall be paid an annual salary based on that for Step 4 and determined according to the formula in subdivision (2) of this subsection. This magistrate’s salary shall increase to the next step every four years on the anniversary of the date the magistrate  was originally appointed. The salary of a full‑time magistrate who acquires a license to practice law in North Carolina while holding the office of magistrate and who at the time of acquiring the license is receiving a salary at a level lower than Step 4 shall be adjusted to Step 4 and, thereafter, shall advance in accordance with the Table’s schedule. The salary of a part‑time magistrate who acquires a license to practice law in North Carolina while holding the office of magistrate and who at the time acquiring the license is receiving an annual salary as determined by subdivision (2) of this subsection based on a salary level lower than Step 4 shall be adjusted to a salary based on Step 4 in the Table, and, thereafter, shall advance in accordance with the provision in subdivision (2) of thissubsection.
(a1)	Notwithstanding subsection (a) of this section, the following salary provisions apply to individuals who were serving as magistrates on June 30, 1994:
(1)	The salaries of magistrates who on June 30, 1994, were paid at a salary level of less than five years of service under the table in effect that date shall be as follows:

Less than 1 year of service	$ 20,700	$ 21,114
1 or more but less than 3 years of service	21,764	22,199 
3 or more but less than 5 years of service 	23,905	24,383 

Upon completion of five years of service, those magistrates shall receive the salary set as the Entry Rate in the table in subsection (a).
(2)	The salaries of magistrates who on June 30, 1994, were paid at a salary level of five or more years of service shall be based on the rates set out in subsection (a) as follows:

Salary level on	Salary level on 
June 30, 1994	July 1, 1994

5 or more but less than 7 years of service	Entry Rate
7 or more but less than 9 years of service	Step 1
9 or more but less than 11 years of service	Step 2
11 or more years of service	Step 3

Thereafter, their salaries shall be set in accordance with the provisions in subsection (a).
(3)	The salaries of magistrates who are licensed to practice law in North Carolina shall be adjusted to the annual salary provided in the table in subsection (a) as Step 4, and, thereafter, their salaries shall be set in accordance with the provisions in subsection (a).
(4)	The salaries of “part‑time magistrates” shall be set under the formula set out in subdivision of subsection (a) but according to the rates set out in this subsection.
(a2)	The Administrative Officer of the Courts shall provide magistrates with longevity 	pay at the same rates as are provided by the State to its employees subject to the State Personnel Act.
(b)	Notwithstanding G.S. 138‑6, a magistrate may not be reimbursed by the State for travel expenses incurred on official business within the county in which the magistrate resides."

GENERAL ASSEMBLY PRINCIPAL CLERKS
SECTION 15.9.  Effective July 1, 2001, G.S. 120‑37(c) reads as rewritten:
“(c)	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 of eighty‑four thousand one hundred forty‑seven dollars ($84,147) eighty‑nine thousand four hundred thirty‑five dollars ($89,435) payable monthly. The Legislative Services Commission shall review the salary of the principal clerks prior to submission of the proposed operating budget of the General Assembly to the Governor and Advisory Budget Commission and shall make appropriate recommendations for changes in those salaries. Any changes enacted by the General Assembly shall be by amendment to this paragraph.”

SERGEANT‑AT‑ARMS AND READING CLERKS
SECTION 15.10.  Effective July 1, 2001, 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 seventy‑four dollars ($274.00) two hundred ninety‑two dollars ($292.00) 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.”

LEGISLATIVE EMPLOYEES
SECTION 15.11.  The Legislative Services Officer shall increase the salaries of non‑elected employees of the General Assembly in effect for fiscal year 2001‑2002 by two percent (2%).  Nothing in this act limits any of the provisions of G.S. 120‑32.
COMMUNITY COLLEGES PERSONNEL/SALARY INCREASES
SECTION 15.12.  The Director of the Budget shall transfer from the Reserve for Compensation Increase, created in this act for fiscal year 2001‑02, funds to the Community Colleges System Office necessary to provide an average annual salary increase of two percent (2%), including funds for the employer’s retirement and social security contributions, commencing July 1, 2001, 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.  Salary funds shall be used to provide an average annual salary increase of two percent (2%) to all full‑time employees and part‑time employees on a pro‑rata basis.

UNIVERSITY OF NORTH CAROLINA SYSTEM/EPA SALARY INCREASES
SECTION 15.13.(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 2001‑2002, to provide an annual average salary increase of two percent (2%), including funds for the employer’s retirement and social security contributions, commencing July 1, 2001, 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 may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.
SECTION 15.13. (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 Compensation Increase, created in this act for fiscal biennium 2001‑2003, to provide an annual average salary increase of two percent (2%) in fiscal year 2001‑2002, including funds for the employer’s retirement and social security contributions, commencing July 1, 2001, 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 may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.

MOST STATE EMPLOYEES
SECTION 15.14.  The salaries in effect June 30, 2001, 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, 2001, 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 two percent cost of living increase (2%).

PART XIII. GENERAL CAPITAL APPROPRIATIONS/PROVISIONS

CAPITAL APPROPRIATIONS/GENERAL FUND
SECTION 16.  There is appropriated from the General Fund for the 2001‑2002 fiscal year the following amount for capital improvements:
	2001‑2002
Department of Environment and Natural Resources	
	Water Resource Projects	$	15,000,000

	TOTAL CAPITAL APPROPRIATION	$	15,000,000

PART XIV. MISCELLANEOUS PROVISIONS

EFFECT OF HEADINGS
SECTION 17.  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.

MOST TEXT APPLIES ONLY TO 2001‑2003
SECTION 17.1.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2001‑2003 fiscal biennium, the textual provisions of this act shall apply only to funds appropriated for and activities occurring during the 2001‑2003 fiscal biennium.

SEVERABILITY CLAUSE
SECTION 17.2.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of the act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE
SECTION 17.3.  Except as otherwise provided, this act shall become effective July 1, 2001.