A BILL TO BE ENTITLED
AN ACT to modify the current operations and capital appropriations act of 2003 and to make other changes in the budget operations of the state.
The General Assembly of North Carolina enacts:

PART I. INTRODUCTION AND TITLE OF ACT

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
INTRODUCTION
SECTION 1.1.  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.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
TITLE OF ACT
SECTION 1.2.  This act shall be known as "The Current Operations and Capital Improvements Appropriations Act of 2004."

PART II. CURRENT OPERATIONS AND EXPANSION/GENERAL FUND

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle,  Grady, Owens, Wright
current operations and expansion/general fund
SECTION 2.1.(a)  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 adjusted for the fiscal year ending June 30, 2005, according to the schedule that follows.  Amounts set out in brackets are reductions from General Fund appropriations for the 2004‑2005 fiscal year.

Current Operations – General Fund	2004‑2005

EDUCATION

Community Colleges System Office	28,407,571

Department of Public Instruction	127,395,755

University of North Carolina System	46,548,176

HEALTH AND HUMAN SERVICES

Department of Health and Human Services
	Office of the Secretary	(4,440,839)
	Division of Aging	3,681,000
	Division of Blind Services/Deaf/HH	(30,000)
	Division of Child Development	1,925,000
	Division of Education Services	10,873
	Division of Facility Services	(450,000)
	Division of Medical Assistance	(86,879,913)
	Division of Mental Health	(13,713,000)
	Division of Public Health	4,696,000
	Division of Social Services	(11,948)
	Division of Vocation Rehabilitation	(1,479,294)
Total			(96,692,121)

NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	75,538

Department of Commerce
	Commerce	1,161,000
	Commerce State‑Aid	1,750,000
	NC Biotechnology Center	5,000,000
	Rural Economic Development Center	144,000

Department of Environment and Natural Resources
	Environment and Natural Resources	(218,339)

Department of Labor	364,216

JUSTICE AND PUBLIC SAFETY

Department of Correction	(11,444,276)

Department of Crime Control and Public Safety	3,414,793

Judicial Department	7,760,075
Judicial Department – Indigent Defense	10,500,000

Department of Justice	361,923

Department of Juvenile Justice and Delinquency Prevention	2,326,114

GENERAL GOVERNMENT

Department of Administration	2,448,330

Office of Administrative Hearings	90,476

Department of State Auditor	(200,000)

Office of State Controller	(99,429)

Department of Cultural Resources
	Cultural Resources	5,622,311
	Roanoke Island Commission	(32,731)

State Board of Elections	1,472,412

General Assembly	(779,579)

Office of the Governor
	Office of the Governor	(99,037)
	Office of State Budget and Management	148,427
	OSBM – Reserve for Special Appropriations	350,000

Department of Insurance
	Insurance	4,062,654
	Insurance – Volunteer Safety Workers' Compensation	(1,734,000)

Office of Lieutenant Governor	0

Department of Revenue	(2,161,737)

Rules Review Commission	(3,185)

Department of Secretary of State	(110,389)

Department of State Treasurer
	State Treasurer	424,708
	State Treasurer – Retirement for Fire and Rescue Squad Workers	370,000

TRANSPORTATION

Department of Transportation	(228,056)

RESERVES, ADJUSTMENTS AND DEBT SERVICE

Reserve for Compensation Increases	237,900,000

State Health Plan Reserve	(7,800,000)

Escheats Fund Repayment – Global Transpark	19,654,487

Retirement System Payback	16,000,000

Salary Adjustment Fund	(376,576)

Job Development Incentive Grants Reserve 	4,000,000
 
Senate Bill 100 Compliance	(11,813,949)

Mental Health, Developmental Disabilities and 
	Substance Abuse Services Trust Fund	8,500,000

Debt Service
	General Debt Service	(83,648,480)
	Federal Reimbursement	460,432

TOTAL CURRENT OPERATIONS – GENERAL FUND	320,024,666

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a)  The General Fund availability used in adjusting the 2004‑2005 budget is shown below:
	2004‑2005
	Unappropriated Balance from FY 2003-2004	145,664,254
	Emergency Appropriation	(24,100,000)
	Projected Reversions from FY 2003-2004	198,300,000
	Projected Overcollections from FY 2003-2004	150,000,000
Beginning Unreserved Credit Balance	469,864,254

	Credit to Savings Reserve Account	(117,466,064)
	Credit to Repairs and Renovation Reserve Account	(100,000,000)

Adjusted Beginning Unreserved Credit Balance	252,398,190

Revenues Based on Existing Tax Structure	14,716,866,500

Nontax Revenues
	Investment Income	86,020,000
	Judicial Fees	136,730,000
	Disproportionate Share	100,000,000
	Insurance	53,900,000 
	Other Nontax Revenues	261,517,607
	Highway Trust Fund Transfer	242,586,830
	Highway Fund Transfer	16,166,400
		Subtotal Nontax Revenues	896,920,837

Total General Fund Availability	15,866,185,527

Adjustments to Availability:  2004 Session

Internal Revenue Code Conformity	(2,600,000)
Tobacco Payments Decline-Tobacco Trust Fund	(5,000,000)
Tobacco Payments Decline-Health and Wellness Trust Fund	(5,000,000)
Adjustment to 911 Wireless Fund	(3,720,573)
Reserve for Tax Law Revisions	(2,950,000)
Transfer from Fire Safety Loan Fund	250,000
Transfer from Veteran's Home Trust Fund	500,000
Transfer from Information Technology Services Internal Service Fund	2,180,000
		Subtotal Adjustments to Availability:  2004 Session	(16,340,573)

Revised General Fund Availability for 2004-2005 Fiscal Year	15,849,844,954

Less:		Total General Fund Appropriations 
			for 2004-2005 Fiscal Year	15,849,844,954

SECTION 2.2.(b)  Subsections 2.2(b), 2.2(c), and 2.2(f) of S.L. 2003-284 read as rewritten:
"SECTION 2.2.(b)  Notwithstanding G.S. 143‑16.4(a2), of the funds credited to the Tobacco Trust Account from the Master Settlement Agreement pursuant to Section 6(2) of S.L. 1999‑2 during the 2004‑2005 fiscal fiscal year, the sum of thirty‑five million dollars ($35,000,000) shall be transferred from the Department of Agriculture and Consumer Services, Budget Code 23703 (Tobacco Trust Fund), to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2004‑2005 fiscal year.
"SECTION 2.2.(c)  Notwithstanding G.S. 143‑16.4(a1), of the funds credited to the Health Trust Account from the Master Settlement Agreement pursuant to Section 6(2) of S.L. 1999‑2 during the 2003‑2004 year, the sum of twenty million dollars ($20,000,000) that would otherwise be deposited in the Fund Reserve established by G.S. 147‑86.30(c) and five million ($5,000,000) of the funds that are not reserved pursuant to G.S. 147‑86.30(c) shall be transferred from the Department of State Treasurer, Budget Code 23460 (Health and Wellness Trust Fund), to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2003‑2004 fiscal year.
Notwithstanding G.S. 143‑16.4(a1) and G.S. 147‑86.30, of the funds credited to the Health Trust Account from the Master Settlement Agreement pursuant to Section 6(2) of S.L. 1999‑2 during the 2004‑2005 fiscal year, the sum of twenty million dollars ($20,000,000) shall be transferred from the Department of State Treasurer, Budget Code 23460 (Health and Wellness Trust Fund), to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2004‑2005 fiscal year. Any funds remaining after the transfer to the General Fund, shall be deposited in the Nonreserve Fund, not to exceed a total deposit of twenty million dollars ($20,000,000). If the total amount deposited to the Nonreserve Fund equals twenty million dollars ($20,000,000) and there are additional remaining funds, then those funds shall be deposited in the Reserve Fund.
It is the intent of the General Assembly that the transfer of funds to the General Fund shall have first priority, over both the Nonreserve Fund and the Reserve Fund. It is the further intent of the General Assembly that any funds remaining after the transfer to the General Assembly shall not be divided equally between the Nonreserve Fund and the Reserve Fund, but that the Nonreserve Fund shall have priority over the Reserve Fund.
"SECTION 2.2.(f)  Notwithstanding G.S. 143‑15.2 and G.S. 143‑15.3A, the State Controller shall transfer  one hundred million dollars ($100,000,000) from the unreserved credit balance to the Repairs and Renovations Reserve Account on June 30, 2004. This subsection becomes effective June 30, 2004."SECTION 2.2.(c)  Subsection 2.2(h) of S.L. 2003‑284 as amended by Section 29(a) of S.L. 2003‑416 reads as rewritten:
"SECTION 2.2.(h)  Notwithstanding the provisions of G.S. 62A‑22(c), 62A‑24(d), and 62A-25, the following shall be transferred from Wireless Fund created in G.S. 62A‑22(c) to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2003‑2005 fiscal biennium: (i) sums equal to the lesser of thirty-three million dollars ($33,000,000) or the aggregated service charges remitted to the Wireless Fund during the 2003‑2004 fiscal year less the administrative fee allowed under G.S. 62A-26; and (ii) the sum of twenty-one million two hundred seventy-nine thousand four hundred twenty-seven dollars ($21,279,427) from the Wireless Fund during the 2004‑2005 fiscal year."

PART III. CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND
SECTION 3.1.  Appropriations from the Highway Fund of the State for the maintenance and operation of the Department of Transportation, and for other purposes as enumerated are made for the fiscal year ending June 30, 2005, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Fund appropriations for the 2004‑2005 fiscal year.

Current Operations – Highway Fund	2004‑2005
Transportation Administration	 $ 1,227,072
Operations	–
Match for Federal Aid	–
Construction Program:
	State Secondary System	410,000
	State Urban System	–
	Discretionary Funds	5,000,000
	Spot Safety Improvements	–
	Access and Public Service Roads	–
Maintenance	32,559,191
Capital Improvements	–
Ferry Operations	–
State Aid to Municipalities	410,000
State Aid to Railroads	–
State Aid for Public Transportation	563,521
Asphalt Plant Cleanup	–
Governor's Highway Safety Program	–
Division of Motor Vehicles	2,405,121
Appropriations to Other State Agencies	(569,511)
Reserves and Transfers	17,370,191
Total			$59,375,585

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
HIGHWAY FUND AVAILABILITY STATEMENT
SECTION 3.2.  The Highway Fund appropriations availability used in developing modifications to the 2004‑2005 Highway Fund budget contained in this act is shown below.

Highway Fund Budget Reform Statement	2004‑2005

Beginning Credit Balance	–
Estimated Revenue	 $ 1,390,900,000
Estimated Reversions	–

Total Highway Fund Availability	 $ 1,390,900,000

PART IV. HIGHWAY TRUST FUND APPROPRIATIONS

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 4.1.  Appropriations from the Highway Trust Fund of the State for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are made for the fiscal year ending June 30, 2005, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Trust Fund appropriations for the 2004‑2005 fiscal year. 

Current Operations – Highway Trust Fund	2004‑2005

Intrastate System 	(16,781,215)
Urban Loops 	(6,785,625)
Aid to Municipalities 	(1,760,741)
Secondary Roads 	(738,170)
Administrative Expense 	(439,736)
Leaking Underground Storage Tank Fund	15,000,000
Transfer to General Fund 	(66,513)
GRAND TOTAL CURRENT OPERATIONS AND 
	EXPANSION 	(11,572,000)

PART V. BLOCK GRANTS

Requested by:	Representative Nye 
dhhs block grants
SECTION 5.1.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2005, according to the following schedule:

COMMUNITY SERVICES BLOCK GRANT

01.	Community Action Agencies	$ 15,266,973

02.	Limited Purpose Agencies	848,165

03.	NC Interagency Council for Homeless
	Programs	262,472

04.	Department of Health and Human Services
to administer and monitor
the activities of the
Community Services Block Grant	848,165

TOTAL COMMUNITY SERVICES BLOCK GRANT	$ 17,225,775

SOCIAL SERVICES BLOCK GRANT

01.	County departments of social services	$ 28,868,189
(Transfer from TANF – $4,500,000)

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

03.	Division of Services for the Blind	3,105,711

04.	Division of Facility Services	426,836

05.	Division of Aging – Home and Community
Care Block Grant	1,840,234

06.	Child Care Subsidies	6,269,309

07.	Division of Vocational Rehabilitation – 
United Cerebral Palsy	71,484

08.	State administration	1,693,368

09.	Child Medical Evaluation Program	238,321

10.	Adult day care services	2,155,301

11.	Comprehensive Treatment Services
Program	422,003

12.	Department of Administration
for the N.C. State Commission of Indian Affairs
In‑Home Services Program for the Elderly	203,198

13.	Division of Vocational Rehabilitation  Services – 
Easter Seals Society	116,779

14.	UNC‑CH CARES Program for training and
consultation services	247,920

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

16.	Division of Social Services – Child
Caring Agencies	1,500,000

17.	Division of Mental Health, Developmental Disabilities, and
	 Substance Abuse Services – Developmentally Disabled 
	Waiting List for services 	5,000,000

18.	Transfer to Preventive Health Services Block
Grant for HIV/AIDS education, counseling, and
testing		145,819

19.	Division of Facility Services – 
Mental Health Licensure	213,128

20.	Division of Mental Health, Developmental Disabilities,
and Substance Abuse Services	3,234,601

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 57,894,616

LOW‑INCOME ENERGY BLOCK GRANT

01.	Energy Assistance Programs	$ 12,775,323

02.	Crisis Intervention	9,192,927

03.	Administration	2,957,339

04.	Weatherization Program	4,212,740

05.	Department of Administration – 
N.C. State Commission of Indian Affairs	54,840

06.	Heating Air Repair and Replacement Program	1,966,153

TOTAL LOW‑INCOME ENERGY BLOCK GRANT	$ 31,159,322

MENTAL HEALTH SERVICES BLOCK GRANT

01.	Provision of community‑based
services for severe and persistently
mentally ill adults	$ 6,307,035

02.	Provision of community‑based
services to children	3,921,991

03.	Comprehensive Treatment Services
Program for Children	1,500,000

04.	Administration	568,911

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT	$ 12,297,937

SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT

01.	Provision of community‑based
alcohol and drug abuse services,
tuberculosis services, and services
provided by the Alcohol and Drug Abuse
Treatment Centers	$ 20,441,082

02.	Continuation of services for
pregnant women and women
with dependent children	8,069,524

03.	Continuation of services to
IV drug abusers and others at risk
for HIV diseases	4,816,378

04.	Child Substance Abuse Prevention	5,835,701

05.	Provision of services to children
and adolescents	4,940,500

06.	Juvenile Services – Family Focus	851,156

07.	Allocation to the Division of Public Health
for HIV/STD Risk Reduction Projects	383,980

08.	Allocation to the Division of Public Health
for HIV/STD Prevention by County Health
Departments	209,576

09.	Allocation to the Division of Public Health
for the Maternal and Child Health Hotline	37,779

10.	Administration	2,596,307

TOTAL SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT	$ 48,181,983

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

01.	Child care subsidies	$154,163,120

02.	Quality and availability initiatives	17,764,577

03.	Administrative expenses	7,163,654

04.	Transfer from TANF Block Grant for 
child care subsidies	81,292,880

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT	$260,384,231

TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT 

01.	Work First Cash Assistance	$119,841,508

02.	Work First County Block Grants	94,653,315

03.	Transfer to the Child Care and 
Development Fund Block Grant
for child care subsidies	81,292,880

04.	Child Care Subsidies for TANF Recipients	33,512,238

05.	Child Welfare Workers for local DSS	11,452,391

06.	Transfer to Social Services Block Grant for
County Departments of Social Services for
Children's Services	4,500,000

07.	Support Our Students – Department of
Juvenile Justice and Delinquency
Prevention	3,521,056

08.	Domestic Violence Services
for Work First Families	1,200,000

09.	After‑School Services for
At‑Risk Children	2,249,642
YWCA Central Carolinas
Youth Development Programs  $176,000

10.	Division of Social Services – 
Administration	400,000

11.	Child Welfare Training	2,550,000

12.	TANF Automation Projects	592,500

13.	Boys and Girls Clubs	1,000,000

14.	Work Central Career Advancement Center	550,000

15.	WCH‑Teen Pregnancy Prevention	1,000,000

16.	Transfer to Social Services Block Grant for Child Caring
	Institutions	1,500,000

17.	Special Children's Adoption Fund	3,000,000

18.	NC Fast Implementation	2,717,298

19.	Maternity Homes	838,000

20.	Individual Development Accounts	180,000

21.	Reduction of Out‑of‑Wedlock Births	1,000,000

22.	After‑School Programs for At‑Risk
Youths in Middle Schools	1,000,000

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT	$368,550,828

MATERNAL AND CHILD HEALTH BLOCK GRANT

01.	Healthy Mothers/Healthy Children
Block Grants to Local Health
Departments	9,565,205

02.	High‑Risk Maternity Clinic Services,
Perinatal Education and Training, 
Childhood Injury Prevention,
Public Information and Education, and
Technical Assistance to Local Health
Departments	2,207,273

03.	Adolescent Pregnancy Prevention Coalition of NC	150,000

04.	Office of Minority Health	159,000

05.	Services to Children With Special Health
Care Needs	4,280,987

06.	School Health Nurse Initiative	3,250,000
	School Health Nurse Initiative Reserve 2005‑2006	3,250,000

07.	Administration and Program Support	2,434,303

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 25,296,768

PREVENTIVE HEALTH SERVICES BLOCK GRANT

01.	Statewide Health Promotion Programs	$2,810,294

02.	Rape Crisis/Victims' Services
Program – Council for Women	197,112

03.	Transfer from Social Services
Block Grant – HIV/AIDS education, 
counseling, and testing	145,819

04.	Administration and Program Support	661,092

05.	Osteoporosis Task Force Operating Costs	150,000

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT	$3,964,317

GENERAL PROVISIONS
SECTION 5.1.(b)  Information to be included in Block Grant Plans. – The Department of Health and Human Services shall submit a separate plan for each Block Grant received and administered by the Department and each plan shall include the following:
(1)	A delineation of the proposed allocations by program or activity, including State and federal match requirements.
(2)	A delineation of the proposed State and local administrative expenditures.
(3)	An identification of all positions not previously funded through the Block Grant, including permanent, temporary, and time‑limited positions.
(4)	A comparison of the proposed allocations by program or activity with two prior years' program and activity budgets and two prior years' actual program or activity expenditures.
(5)	A projection of current year expenditures by program or activity.
(6)	A projection of federal Block Grant funds available, including unspent federal funds from the current and prior fiscal years.
SECTION 5.1.(c)  Changes in Federal Fund Availability. – If the United States Congress reduces or increases the federal fund availability for any of the Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall allocate the increase or decrease proportionally across the program and activity appropriations identified for that Block Grant in this section. In allocating a decrease in federal fund availability, the Department shall not eliminate the funding for a program or activity appropriated in this section. In allocating an increase in federal fund availability, the Department shall not propose funding for new programs or activities not appropriated in this section or increase administrative expenditures.
Prior to allocating the change in federal fund availability, the proposed allocation must be approved by the Office of State Budget and Management. If the Department adjusts the allocation of any Block Grant due to changes in federal fund availability, then a report shall be made to the Joint Legislative Committee on Governmental Operations, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.
SECTION 5.1.(d)  All changes to the budgeted allocations to the Block Grants administered by the Department of Health and Human Services that are not specifically addressed in this section shall be approved by the Office of State Budget and Management and a report shall be submitted to the Joint Legislative Commission on Governmental Operations for review prior to implementing the changes. All changes to the budgeted allocations to the Block Grant shall be reported immediately to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.
SECTION 5.1.(e)  The Department of Health and Human Services shall develop a monitoring and oversight plan for all recipients, both public and private, and sub‑recipients of the federal Block Grant funding. The plan shall be modeled after the Department's performance contracting initiative and include the following:
(1)	Performance standards for recipients.
(2)	Financial audit standards for non‑State entities equivalent to the requirements in G.S. 143‑6.1 for non‑State entities receiving State funds.
(3)	Means for collecting performance data from recipients.
(4)	Any other information necessary for monitoring and overseeing the use of Block Grant funding.
The Department shall provide the plan to the Fiscal Research Division by January 1, 2005.
SECTION 5.1.(f)  The Department of Health and Human Services shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on positions funded from federal Block Grants. The report shall include the following for each Block Grant:
(1)	All State positions currently funded through the Block Grant, including permanent, temporary, and time‑limited positions.
(2)	Budgeted salary and fringe benefits for each position.
(3)	Block Grant expenditures for each position.
The report shall be submitted no later than December 1, 2004.
LOW INCOME HOME ENERGY ASSISTANCE PROGRAM
SECTION 5.1.(g)  Additional funds received for the Low Income Home Energy Assistance Program (LIHEAP) may be allocated for Energy Assistance Payments or Crisis Intervention Payments without prior consultation with the Joint Legislative Commission on Governmental Operations. Additional funds received shall be reported to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division upon notification of the award. The Department of Health and Human Services shall not allocate funds for any activities, including increasing administration, other than assistance payments, without prior consultation with the Joint Legislative Commission on Governmental Operations.
COMMUNITY SERVICE BLOCK GRANT
SECTION 5.1.(h)  The Department of Health and Human Services shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on the activities and expenditures of the North Carolina Inter‑Agency Council for Coordinating Homeless Programs no later than April 1, 2005.
MENTAL HEALTH BLOCK GRANT
SECTION 5.1.(i)  The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this section in the Mental Health Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2004‑2005 fiscal year and the sum of four hundred twenty‑two thousand three dollars ($422,003) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2004‑2005 fiscal year shall be used to continue a Comprehensive Treatment Services Program for Children in accordance with Section 21.60 of S.L. 2001‑424, as amended.
SECTION 5.1.(j)  The Department of Health and Human Services shall contract with the University of North Carolina at Chapel Hill for the purpose of providing psychology student stipends in the amount of fifty thousand dollars ($50,000) for the 2004‑2005 fiscal year. Twenty‑five thousand dollars ($25,000) of this contract shall be paid from the Mental Health Block Grant.
CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT
SECTION 5.1.(k)  The sum of four hundred thousand dollars ($400,000) appropriated in this section to the Department of Health and Human Services in the Child Care and Development Fund Block Grant shall be used for the continued operations of the Medical Child Care Pilot.
SECTION 5.1.(l)  Payment for subsidized child care services provided with federal TANF funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.
SECTION 5.1.(m)  If funds appropriated through the Child Care and Development Fund Block Grant for any program cannot be obligated or spent in that program within the obligation or liquidation periods allowed by the federal grants, the Department may move funds to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order to use the federal funds fully.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT (TANF)
SECTION 5.1.(n)  The sum of four hundred thousand dollars ($400,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2004‑2005 fiscal year shall be used to support administration of TANF‑funded programs.
SECTION 5.1.(o)  The sum of three million five hundred twenty‑one thousand fifty‑six dollars ($3,521,056) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services and transferred to the Department of Juvenile Justice and Delinquency Prevention for the 2004‑2005 fiscal year shall be used to support the existing Support Our Students Program and to expand the Program statewide, focusing on low‑income communities in unserved areas. These funds shall not be used for administration of the Program.
SECTION 5.1.(p)  The sum of one million two hundred thousand dollars ($1,200,000) appropriated under this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2004‑2005 fiscal year shall be used to provide domestic violence services to Work First recipients.  These funds shall be used to provide domestic violence counseling, support, and other direct services to clients.  These funds shall not be used to establish new domestic violence shelters or to facilitate lobbying efforts.  The Division of Social Services may use up to seventy‑five thousand dollars ($75,000) in TANF funds to support one administrative position within the Division of Social Services to implement this subsection.
Each county department of social services and the local domestic violence shelter program serving the county shall jointly develop a plan for utilizing these funds. The plan shall include the services to be provided and the manner in which the services shall be delivered. The county plan shall be signed by the county social services director or the director's designee and the domestic violence program director or the director's designee and submitted to the Division of Social Services by December 1, 2004. The Division of Social Services, in consultation with the Council for Women, shall review the county plans and shall provide consultation and technical assistance to the departments of social services and local domestic violence shelter programs, if needed.
The Division of Social Services shall allocate these funds to county departments of social services according to the following formula:  (i) each county shall receive a base allocation of five thousand dollars ($5,000); and (ii) each county shall receive an allocation of the remaining funds based on the county's proportion of the statewide total of the Work First caseload as of July 1, 2004, and the county's proportion of the statewide total of the individuals receiving domestic violence services from programs funded by the Council for Women as of July 1, 2004. The Division of Social Services may reallocate unspent funds to counties that submit a written request for additional funds.
The Department of Health and Human Services shall report on the uses of these funds no later than March 1, 2005, to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.
SECTION 5.1.(q)  The sum of two million two hundred forty‑nine thousand six hundred forty‑two dollars ($2,249,642) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, shall be used to expand after‑school programs and services for at‑risk children. The Department shall develop and implement a grant program to award grants to community‑based programs that demonstrate the ability to reach children at risk of teen pregnancy and school dropout. The Department shall award grants to community‑based organizations that demonstrate the ability to develop and implement linkages with local departments of social services, area mental health programs, schools, and other human services programs in order to provide support services and assistance to the child and family. These funds may be used to fund one position within the Division of Social Services to coordinate at‑risk after‑school programs and shall not be used for other State administration. The Department shall report no later than March 1, 2005, on its progress in complying with this section to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Committee on Health and Human Services, and the Fiscal Research Division.
SECTION 5.1.(r)  The sum of eleven million four hundred fifty‑two thousand three hundred ninety‑one dollars ($11,452,391) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2004‑2005 fiscal year for Child Welfare Improvements shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services.
SECTION 5.1.(s)  The sum of two million five hundred fifty thousand dollars ($2,550,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for fiscal year 2004‑2005 shall be used to support various child welfare training projects as follows:
(1)	Provide a regional training center in southeastern North Carolina.
(2)	Support the Masters Degree in Social Work/Baccalaureate Degree in Social Work Collaborative.
(3)	Provide training for residential child care facilities.
(4)	Provide for various other child welfare training initiatives.
SECTION 5.1.(t)  The sum of eight hundred thirty‑eight thousand dollars ($838,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services shall be used to purchase services at maternity homes throughout the State.
SECTION 5.1.(u)  The sum of three million dollars ($3,000,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Special Children Adoption Fund, for the 2004‑2005 fiscal year shall be used to implement this subsection. The Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A‑50 and in foster care. Payments received from the Special Children Adoption Fund by participating agencies shall be used exclusively to enhance the adoption services program. No local match shall be required as a condition for receipt of these funds.
SECTION 5.1.(v)  The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this act in the TANF Block Grant and transferred to the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for child caring agencies for the 2004‑2005 fiscal year shall be allocated to the State Private Child Caring Agencies Fund. These funds shall be combined with all other funds allocated to the State Private Child Caring Agencies Fund for the reimbursement of the State's portion of the cost of care for the placement of certain children by the county departments of social services who are not eligible for federal IV‑E funds.  These funds shall not be used to match other federal funds.
SECTION 5.1.(w)  The sum of one million dollars ($1,000,000) appropriated in this section to the Department of Health and Human Services in the TANF Block Grant for Boys and Girls Clubs shall be used to make grants for approved programs. The Department of Health and Human Services, in accordance with federal regulations for the use of TANF Block Grant funds, shall administer a grant program to award funds to the Boys and Girls Clubs across the State in order to implement programs that improve the motivation, performance, and self‑esteem of youths and to implement other initiatives that would be expected to reduce school dropout and teen pregnancy rates. The Department shall encourage and facilitate collaboration between the Boys and Girls Clubs and Support Our Students, Communities in Schools, and similar programs to submit joint applications for the funds if appropriate.
SECTION 5.1.(x)  The sum of one million dollars ($1,000,000) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant shall be used to expand after‑school programs for at‑risk children attending middle school. The Department shall develop and implement a grant program to award funds to community‑based programs demonstrating the capacity to reach children at risk of teen pregnancy and school dropout. These funds shall not be used for training or administration at the State level. All funds shall be distributed to community‑based programs, focusing on those communities where similar programs do not exist in middle schools. The Department shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on its progress in complying with this subsection no later than May 1, 2005.
SECTION 5.1.(y)  The sum of one hundred eighty thousand dollars ($180,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services for the 2004‑2005 fiscal year shall be used for Individual Development Accounts (IDA) for TANF‑eligible individuals. The Social Services Commission shall adopt rules for the implementation of this subsection. The Department shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on the implementation of the program and the use of the funds no later than May 1, 2005.
SECTION 5.1.(z)  The sum of five hundred fifty thousand dollars ($550,000) appropriated in this section to the Department of Health and Human Services in the TANF Block Grant shall be transferred to Work Central, Inc. Work Central, Inc., shall report on the number of people served and the services received as a result of the receipt of funds. The report shall contain expenditure data, including the amount of funds used for administration and direct training. The report shall also include the number of people who have been employed as a direct result of services provided by Work Central, Inc., including the length of employment in the new position. The Department of Health and Human Services shall evaluate the program and ensure that services provided are not duplicative of local employment security commissions in the nine counties served by Work Central, Inc. The evaluation report shall be submitted to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than May 1, 2005.
SECTION 5.1.(aa)  The sum of two million seven hundred seventeen thousand two hundred ninety‑eight dollars ($2,717,298) in this section appropriated to the Department of Health and Human Services in the TANF Block Grant shall be used to implement the component of N.C. Fast that specifically deals with the creation and implementation of a statewide automated child welfare information system. The statewide system shall be implemented in compliance with federal regulations in order to avoid any potential payback of funds due to noncompliance. The Department of Health and Human Services shall report on its compliance with this subsection to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than January 1, 2005.
MATERNAL AND CHILD HEALTH BLOCK GRANT
SECTION 5.1.(bb)  If federal funds are received under the Maternal and Child Health Block Grant for abstinence education, pursuant to section 912 of Public Law 104‑193 (42 U.S.C. § 710), for the 2004‑2005 fiscal year, then those funds shall be transferred to the State Board of Education to be administered by the Department of Public Instruction. The Department of Public Instruction shall use the funds to establish an Abstinence Until Marriage Education Program and shall delegate to one or more persons the responsibility of implementing the program and G.S. 115C‑81(e1)(4). The Department of Public Instruction shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.
SECTION 5.1.(cc)  The Department of Health and Human Services shall ensure that there will be follow‑up testing in the Newborn Screening Program.
SECTION 5.1.(dd)  Of the funds budgeted in the Maternal and Child Health Block Grant, six million five hundred thousand dollars ($6,500,000) shall be used for a school nurse funding initiative. Of these funds, the sum of three million two hundred fifty thousand dollars ($3,250,000) shall be allocated for the 2004‑2005 fiscal year, and the sum of three million two hundred fifty thousand dollars ($3,250,000) shall be placed in a reserve for the 2005‑2006 fiscal year.  The Department of Health and Human Services, Division of Public Health, in conjunction with the Department of Public Instruction, shall provide funds to communities to hire school nurses. The program will fund approximately 65 time‑limited nurses over a two‑year period.
The Department of Health and Human Services and the Department of Public Instruction shall form a committee to select a limited number of communities where school nurses are most needed to receive these grants. The criteria shall include determining the areas in the greatest need for school nurses with the greatest inability to pay for these nurses. Among other criteria, the committee shall consider:  (i) the current nurse‑to‑student ratio; (ii) the economic status of the community; and (iii) the health needs of area children.
There shall be no supplanting of local or Title I funds with these block grant funds. Communities shall maintain their current level of effort and funding for school nurses. No block grant funds shall be used for funding nurses for State agencies. All funding shall be used for direct services.
The Department of Health and Human Services shall report on the use of funds allocated under this section by December 1, 2004, to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Representatives Fox, West 
NER Block Grants
SECTION 5.2.(a)  Appropriations from federal block grant funds are made for fiscal year ending June 30, 2005, according to the following schedule:

COMMUNITY DEVELOPMENT BLOCK GRANT

	01. 	State Administration	$	1,000,000

	02.	Urgent Needs and Contingency	50,000

	03.	Scattered Site Housing	13,200,000

	04.	Economic Development	10,960,000

	05.	Community Revitalization	12,200,000

	06.	State Technical Assistance	450,000

	07.	Housing Development	2,000,000

	08.	Infrastructure	5,140,000

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT – 2005 Program Year	$	45,000,000

SECTION 5.2.(b)  Decreases in Federal Fund Availability. – If federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
SECTION 5.2.(c)  Increases in Federal Fund Availability for Community Development Block Grant. – Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows: each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
SECTION 5.2.(d)  Limitations on Community Development Block Grant Funds. – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to one million dollars ($1,000,000) may be used for State Administration; not less than fifty thousand dollars ($50,000) may be used for Urgent Needs and Contingency; up to thirteen million two hundred dollars ($13,200,000) may be used for Scattered Site Housing; up to ten million nine hundred sixty thousand dollars ($10,960,000) may be used for Economic Development, including Urban Redevelopment Grants and Small Business or Entrepreneurial Assistance; not less than twelve million two hundred thousand dollars ($12,200,000) shall be used for Community Revitalization; up to four hundred fifty thousand ($450,000) may be used for State Technical Assistance; up to two million dollars ($2,000,000) may be used for Housing Development; up to five million one hundred forty thousand dollars ($5,140,000) may be used for Infrastructure.  If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
SECTION 5.2.(e)  Increase Capacity for Nonprofit Organizations. – Assistance to nonprofit organizations to increase their capacity to carry out CDBG‑eligible activities in partnership with units of local government is an eligible activity under any program category in accordance with federal regulations.  Capacity building grants may be made from funds available within program categories, program income, or unobligated funds.
SECTION 5.2.(f)  Department of Commerce Demonstration Grants in Partnership with Rural Economic Development Center, Inc. – The Department of Commerce, in partnership with the Rural Economic Development Center, Inc., shall award up to two million two hundred fifty thousand dollars ($2,250,000) in demonstration grants to local governments in very distressed rural areas of the State.  These grants shall be used to address critical infrastructure and entrepreneurial needs and to provide small business assistance.

PART VI. GENERAL PROVISIONS

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
PREFERENCE GIVEN TO AMERICAN MADE PRODUCTS
SECTION 6.1.  Article 3 of Chapter 143 of the General Statutes is amended by adding the following new section:
"§ 143‑59.1A.  Preference given to products made in United States.
If the Secretary of Administration or State agency cannot give preference to North Carolina products or services as provided in G.S. 143‑59, the Secretary or State agency shall give preference as far as may be practicable to products or services manufactured or produced in the United States. Provided, however, that in giving such preference no sacrifice or loss in price or quality shall be permitted; and provided further, that preference in all cases shall be given to surplus products or articles produced and manufactured by other State departments, institutions, or agencies which are available for distribution."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
RULES REVIEW COMMISSION TRANSFERRED TO OFFICE OF ADMINISTRATIVE HEARINGS; AUTHORIZATION FOR RULES REVIEW COMMISSION TO OBTAIN OUTSIDE COUNSEL
SECTION 6.2.(a)  All personnel and equipment presently assigned to the Rules Review Commission for the purpose of carrying out Article 2A of Chapter 150B of the General Statutes, are transferred to the Office of Administrative Hearings by a Type I transfer as defined by G.S. 143A‑6(a).  The Chief Administrative Law Judge shall be responsible for the hiring of the Director and other staff of the Rules Review Commission.
SECTION 6.2.(b)  G.S. 143B‑30.1 reads as rewritten:
"§ 143B‑30.1.  Rules Review Commission created.
(a)	The Rules Review Commission is created. The Commission shall consist of 10 members to be appointed by the General Assembly, five upon the recommendation of the President Pro Tempore of the Senate, and five upon the recommendation of the Speaker of the House of Representatives. These appointments shall be made in accordance with G.S. 120‑121, and vacancies in these appointments shall be filled in accordance with G.S. 120‑122. Except as provided in subsection (b) of this section, all appointees shall serve two‑year terms.
(b)	In 1990, two of the appointments made by the General Assembly upon the recommendation of the President of the Senate shall expire June 30, 1991, and two shall expire June 30, 1992. In 1990, two of the appointments made by the General Assembly upon the recommendation of the Speaker of the House of Representatives shall expire June 30, 1992, and two shall expire June 30, 1993. Subsequent terms shall be for two years.
(c)	Any appointment to fill a vacancy on the Commission created by the resignation, dismissal, ineligibility, death, or disability of any member shall be for the balance of the unexpired term. The chairman shall be elected by the Commission, and he shall designate the times and places at which the Commission shall meet. The Commission shall meet at least once a month. A quorum of the Commission shall consist of six members of the Commission. . The Chief Administrative Law Judge, Office of Administrative Hearings, shall be responsible for the hiring and supervision of the Director and staff to the Commission.
(d)	Members of the Commission who are not officers or employees of the State shall receive compensation of two hundred dollars ($200.00) for each day or part of a day of service plus reimbursement for travel and subsistence expenses at the rates specified in G.S. 138‑5. Members of the Commission who are officers or employees of the State shall receive reimbursement for travel and subsistence at the rate set out in G.S. 138‑6.
(e)	Any other provision of the General Statutes notwithstanding, the appointment of employees of the Commission shall be made by the Chief Administrative Law Judge, Office of Administrative Hearings. Nothing in this Article shall be construed to exempt employees of the Commission from the State Personnel Act.
(f)	The Commission shall prescribe procedures and forms to be used in submitting rules to the Commission for review. The Commission may have computer access to the North Carolina Administrative Code to enable the Commission and its staff to view and copy rules in the Code."
SECTION 6.2.(c)  The Rules Review Commission may hire outside counsel, the expenses to be paid from the Reserve Fund.  Outside counsel for the Rules Review Commission shall be selected by the Chief Administrative Law Judge, Office of Administrative Hearings.
SECTION 6.2.(d)  Subsection (a) of this section becomes effective October 1, 2004. The remainder of this section becomes effective July 1, 2004.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
Extend Local Government Hold Harmless
SECTION 6.3.  G.S. 105‑521 reads as rewritten:
"§ 105‑521.  Transitional local government hold harmless.
(a)	Definitions. – The following definitions apply in this section:
(1)	Local government. – A county or municipality that received a distribution of local sales taxes in the most recent fiscal year for which a local sales tax share has been calculated.
(2)	Local sales tax share. – A local government's percentage share of the two‑cent (2¢) sales taxes distributed during the most recent fiscal year for which data are available.
(3)	Repealed reimbursement amount. – The total amount a local government would have been entitled to receive during the 2002‑2003 fiscal year under G.S. 105‑164.44C, 105‑275.1, 105‑275.2, 105‑277.001, and 105‑277.1A, if the Governor had not withheld any distributions under those sections.
(4)	Two‑cent (2¢) sales taxes. – The first one‑cent (1¢) sales and use tax authorized in Article 39 of this Chapter and in Chapter 1096 of the 1967 Session Laws, the first one‑half cent (1/2¢) local sales and use tax authorized in Article 40 of this Chapter, and the second one‑half cent (1/2¢) local sales and use tax authorized in Article 42 of this Chapter.
(b)	Distributions. – On or before August 15, 2003, and every August 15 through August 15, 2012, the Secretary must multiply each local government's local sales tax share by the estimated amount that all local governments would be expected to receive during the current fiscal year under G.S. 105‑520 if every county levied the tax under this Article for the year. If the resulting amount is less than one hundred percent (100%) of the local government's repealed reimbursement amount, the Secretary must pay the local government the difference, but not less than one hundred dollars ($100.00).
On or before May 1, 2003, and every May 1 through May 1, 2012, the Department of Revenue and the Fiscal Research Division of the General Assembly must each submit to the Secretary and to the General Assembly a final projection of the estimated amount that all local governments would be expected to receive during the upcoming fiscal year under G.S. 105‑520 if every county levied the tax under this Article for the fiscal year. If, after May 1 and before a distribution is made, a law is enacted that would affect the projection, an updated projection must be submitted as soon as practicable. If the Secretary does not use the lower of the two final projections to make the calculation required by this subsection, the Secretary must report the reasons for this decision to the Joint Legislative Commission on Governmental Operations within 60 days after receiving the projections.
(c)	Source of Funds. – The Secretary must draw the funds distributed under this section from sales and use tax collections under Article 5 of this Chapter.
(d)	Reports. – The Secretary must report to the Revenue Laws Study Committee by January 31, 2004, and each January 31 through January 31, 2013, the amount distributed under this section for the current fiscal year."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle,  Grady, Owens, Wright
Legislative Commission on State Property/state property office duties
SECTION 6.4.(a)  Chapter 120 of the General Statutes is amended by adding a new Article to read:
"Article 30.
"Legislative Commission on State Property.
"§ 120‑261.  Commission established; purpose and powers.
(a)	The purpose of the Commission on State Property (Commission) is to identify State‑owned real property that is suitable for sale on the private market and to make recommendations to the General Assembly, to the Governor, and to the Council of State concerning the disposition of State property suitable for sale. The Commission shall involve realtors, real estate appraisers, and other knowledgeable persons in determining its recommendations. In particular, the Commission shall adopt guidelines to assure the participation of realtors in identifying State real property suitable for sale. In the course of its work, the Commission shall:
(1)	First, give notice to each licensed realtor in the State that the Commission will receive recommendations from realtors on State real property that is suitable for sale.
(2)	Next, adopt guidelines to encourage realtors across the State to examine the State's real property inventory to ascertain which properties are suitable for sale.
(3)	Include in its recommendations to the Governor and Council of State the names and addresses of the realtors who identified the State real property suitable for sale.
(4)	Give priority to conducting regional public hearings to receive recommendations from realtors and the general public.
(b)	The Commission shall consist of 15 members as follows:
(1)	The Speakers of the House of Representatives, or their respective designees.
(2)	The President Pro Tempore of the Senate, or designee.
(3)	Four members of the Senate at the time of their appointment, appointed by the President Pro Tempore of the Senate. At least two appointees shall be members of the Senate Appropriations Committee.
(4)	Four members of the House of Representatives at the time of their appointment, appointed by the Speaker of the House of Representatives. At least two appointees shall be members of the House of Representatives Appropriations Committee.
(5)	Two members of the public, appointed by the President Pro Tempore of the Senate.
(6)	Two members of the public, appointed by the Speaker of the House of Representatives.
(7)	At least two members shall be realtors and at least two members shall be real estate appraisers.
The members appointed to the Commission from the public shall be chosen from among individuals who have the ability and commitment to promote and fulfill the purposes of the Commission, including individuals who have expertise in the fields of real estate, property development, and other related fields.
(c)	Members of the Commission shall serve terms of two years beginning on August 15 of each odd‑numbered year, with no prohibition against being reappointed, except initial appointments shall be for terms as follows:
(1)	The public members shall serve terms of three years.
(2)	The members who are members of the General Assembly shall serve terms of two years.
Initial terms shall commence on August 15, 2004.
(d)	Members who are elected officials may complete a term of service on the Commission even if they do not seek reelection or are not reelected, but resignation or removal from service constitutes resignation or removal from service on the Commission.
(e)	The President Pro Tempore of the Senate and the Speaker of the House of Representatives shall each select a legislative member from their appointees to serve as cochair of the Commission.
(f)	The Commission shall meet at least once a quarter and may meet at other times upon the call of the cochairs. A majority of the members of the Commission shall constitute a quorum for the transaction of business. The affirmative vote of a majority of the members present at meetings of the Commission shall be necessary for action to be taken by the Commission.
(g)	All members shall serve at the will of their appointing authority. A member continues to serve until the member's successor is appointed. A vacancy shall be filled within 30 days by the appointing authority that made the original appointment.
(h)	The Commission cochairs may establish subcommittees for the purpose of making special studies pursuant to its duties and may appoint non‑Commission members to serve on each subcommittee as resource persons. Resource persons shall be voting members of the subcommittee and shall receive subsistence and travel expenses in accordance with G.S. 138‑5 and G.S. 138‑6.
"§ 120‑262.  Assistance; per diem; subsistence; and travel allowances.
(a)	The Commission may contract for consulting services as provided by G.S. 120‑32.02. Upon approval of the Legislative Services Commission, the Legislative Services Officer shall assign professional and clerical staff to assist in the work of the Commission. The professional staff shall include the appropriate staff from the Fiscal Research, Research, Legislative Drafting, and Information Systems Divisions of the Legislative Services Office of the General Assembly. Clerical staff shall be furnished to the Commission through the offices of the Senate and the House of Representatives Supervisors of Clerks. The expenses of employment of the clerical staff shall be borne by the Commission. The Commission may meet in the Legislative Building or the Legislative Office Building upon the approval of the Legislative Services Commission.
(b)	Members of the Commission shall receive per diem, subsistence, and travel allowances as follows:
(1)	Commission members who are members of the General Assembly, at the rate established in G.S. 120‑3.1.
(2)	Commission members who are officials or employees of the State or of local government agencies, at the rate established in G.S. 138‑6.
(3)	All other Commission members, at the rate established in G.S. 138‑5.
"§ 120‑263.  Commission reports.
The Commission shall submit annual reports to the General Assembly, to the Governor, and to the Council of State on or before the convening of the regular session of the General Assembly each year. The Commission may submit interim reports at any time it deems appropriate.
"§ 120‑264.  Commission authority.
(a)	The Commission has the authority to obtain information and data from all State officers, agents, agencies, and departments, while in discharge of its duties, pursuant to G.S. 120‑19, as if it were a committee of the General Assembly.
(b)	The Department of Administration, State Property Office, shall provide quarterly written reports to the Commission on the status of State property negotiations and transactions and shall provide promptly any other information requested by the Commission."
SECTION 6.4.(b)  The initial appointments to the Legislative Commission on State Property shall be made by August 15, 2004. The initial members shall serve for a period of one year, with the initial terms expiring August 15, 2005.
SECTION 6.4.(c)  Article 7 of Chapter 146 of the General Statutes is amended by adding a new section to read:
"§ 146‑29.1.  Licensed realtor; compensation.
Notwithstanding any other provision of this Chapter, the Department of Administration shall retain the services of the licensed realtor responsible for making a recommendation for the sale of State property under G.S. 120‑261 when the property identified by the realtor is placed on the private market. Compensation shall be awarded for the realtor's services in accordance with Article 1 of Chapter 93A of the General Statutes and the rules of the North Carolina Real Estate Commission."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
CHANGE EFFECTIVE DATE – PRIVATE PLATES ON PUBLIC VEHICLES
SECTION 6.5.(a)  The introductory language to Section 6.14(b) of S.L. 2001‑424, as amended by Section 6.5(a) of S.L. 2003‑284, reads as rewritten:
"SECTION 6.14.(b)  Effective  May 1, 2005, G.S. 20‑39.1(b), as enacted in subsection (a) of this section, reads as rewritten:".
SECTION 6.5.(b)  Section 6.14(h) of S.L. 2001‑424, as amended by Section 6.5(b) of S.L. 2003‑284, reads as rewritten:
"SECTION 6.14.(h)  Subsection (b) of this section becomes effective  May 1, 2005. Except as provided in subsection (c) of this section, the remainder of this section is effective when it becomes law."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
Escheat Fund Repayment
SECTION 6.6.  Funds appropriated in this act to the Reserve for Global TransPark Debt Repayment shall be remitted to the State Treasurer for deposit in the Escheat Fund on July 1, 2004.  This deposit will satisfy the intent expressed by the General Assembly in G.S. 147‑69.2 to hold the Escheat Fund harmless from loss.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
Veterans Home Trust Fund Transfer
SECTION 6.7.  Notwithstanding G.S. 165‑48, five hundred thousand dollars ($500,000) of the cash balance remaining in the NC Veterans Home Trust Fund (Budget Code 64106, Fund 6771) on July 1, 2004, shall be transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers). These funds shall be used to support the General Fund appropriation for the 2004‑2005 fiscal year for the start‑up cost of the State Veterans Nursing Home in Salisbury.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
Fire Safety Loan Fund Transfer
SECTION 6.8.  Notwithstanding G.S. 116‑44.8, two hundred fifty thousand dollars ($250,000) of the cash balance remaining in the Fire Safety Loan Fund (Budget Code 63414, Fund 6510) on July 1, 2004, shall be transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers). These funds shall be used to support General Fund appropriations for the 2004‑2005 fiscal year.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright 
ITS Budget TRANSFER
SECTION 6.9.  On July 1, 2004, the State Controller shall transfer two million one hundred eighty thousand dollars ($2,180,000) from Information Technology Services Budget Code 74460, to Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2004‑2005 fiscal year.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright 
Repair and Renovation Reserve Allocation
SECTION 6.10.  Of the funds in the Reserve for Repairs and Renovations for the 2004‑2005 fiscal year, forty‑six percent (46%) shall be allocated to the Board of Governors of The University of North Carolina for repairs and renovations pursuant to G.S. 143‑15.3A, in accordance with guidelines developed in The University of North Carolina Funding Allocation Model for Reserve for Repairs and Renovations, as approved by the Board of Governors of The University of North Carolina, and fifty‑four percent (54%) shall be allocated to the Office of State Budget and Management for repairs and renovations pursuant to G.S. 143‑15.3A.
Notwithstanding G.S. 143‑15.3A, the Board of Governors may allocate funds for the repair and renovation of facilities not supported from the General Fund if the Board determines that sufficient funds are not available from other sources and that conditions warrant General Fund assistance. Any such finding shall be included in the Board's submission to the Joint Legislative Commission on Governmental Operations on the proposed allocation of funds.
The Board of Governors and the Office of State Budget and Management shall submit to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division of the Legislative Services Office, for their review, the proposed allocations of these funds. Subsequent changes in the proposed allocations shall be reported prior to expenditure to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division of the Legislative Services Office.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle,  Grady, Owens, Wright 
Dorothea Dix Property Master Plan
SECTION 6.11.(a)  S.L. 2003‑314 is amended by adding a new section to read:
"SECTION 3.4.(a1)  The State Property Office, in consultation with the City of Raleigh shall develop a Master Plan for the Dorothea Dix Campus in the event all or part of the property is sold to a nongovernmental entity. The Master Plan shall be submitted to the Dorothea Dix Property Study Commission no later than April 1, 2005. The Commission shall review the Master Plan and shall make recommendations to the 2005 General Assembly.
In order to enhance communication and feedback regarding the planning process, an oversight committee shall be established to oversee the development of the Master Plan. The oversight committee shall consist of five members:  three shall be appointed by the cochairs of the Dorothea Dix Property Study Commission; one shall be appointed by the Raleigh City Council; and one shall be appointed by the Wake County Board of Commissioners. The oversight committee shall terminate upon the submission of the Master Plan by the City to the Dorothea Dix Property Study Commission."
SECTION 6.11.(b)  Section 3.4(a) of S.L. 2003‑314 reads as rewritten:
"SECTION 3.4.(a)  Dorothea Dix Hospital Property Study Commission. – If any of the State‑owned real property encompassing the Dorothea Dix Hospital campus is no longer needed by Dorothea Dix Hospital and is not transferred to another State agency or agencies before the sale of any or all of the property to a nongovernmental entity, options for this sale shall be considered by the Dorothea Dix Hospital Property Study Commission. The Commission shall make recommendations on the options for sale of the property to the Joint Legislative Commission on Governmental Operations, the 2005 General Assembly, and the Appropriations Committees of the Senate and the House of Representatives before any sale of any or all parts of the property. The Commission terminates upon submission of its final report."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle,  Grady, Owens, Wright 
JDIG Appropriation Structure
SECTION 6.12.(a)  Article 1 of Chapter 143 is amended by adding a new section to read:
"§ 143‑15.3E.  JDIG Reserve Fund.
The State Controller shall establish a reserve in the General Fund to be known as the JDIG Reserve. Funds from the JDIG Reserve shall not be expended or transferred except in accordance with G.S. 143B‑437.63."
SECTION 6.12.(b)  Part 2G of Article 10 of Chapter 143B is amended by adding a new section to read:
"§ 143B‑437.63.  JDIG Special Revenue Fund.
(a)	Establishment. – The JDIG Special Revenue Fund is established as a special reserve fund in the Department of Commerce.
(b)	Funding. – The JDIG Special Revenue Fund shall receive moneys transferred from the JDIG Reserve created pursuant to G.S. 143‑15.3E and shall be the source of funding for Job Development Investment Grant Program.
(c)	Notwithstanding any other provision of law, grants made through the Job Development Investment Grant Program may be budgeted and funded on a cash flow basis. The Office of State Budget and Management shall periodically transfer funds from the JDIG Reserve to the JDIG Special Revenue Fund sufficient to satisfy grant obligations.
(d)	Funds are hereby annually appropriated from the JDIG Special Revenue Fund in amounts adequate to meet the cash requirements of the Job Development Investment Grant Program."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
POTTERY HIGHWAY SIGNS
SECTION 6.13.  The Department of Transportation may not prohibit off‑premises signs located on private property for potteries on the Pottery Highway (North Carolina Highway 705) in Moore and Randolph Counties.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
No Median on Part of NC‑64 in Randolph County
SECTION 6.14.  The Board of Transportation shall not approve contracts for the construction of a median, and the Department of Transportation shall not build a median on NC‑64 between Third Street in Asheboro and the intersection of NC‑64 and NC‑42 highways.

Requested by:	Representative Moore
DEPARTMENT OF TRANSPORTATION TO ERECT INFORMATIONAL SIGNS FOR HISTORIC DISTRICT IN THE CITY OF KINGS MOUNTAIN
SECTION 6.15.  The Department of Transportation shall erect appropriate informational signage on Interstate Highway 85 and US Highway 74 informing travelers of the Historic District in the City of Kings Mountain.  These informational signs shall be designed by the Department in conjunction with governmental agencies of the City of Kings Mountain and Cleveland County.

Requested by:	Representative Allred
No elected state officials in public service announcements paid for by state funds, federal funds, or funds received from settlement of litigation
SECTION 6.16.  No elected State official may appear in any radio or television public service announcement paid for by State funds, federal funds, or funds provided by litigation settlement, except during a state of disaster as defined by G.S. 166A-6."

PART VII. PUBLIC SCHOOLS

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
teacher salary schedules
SECTION 7.1.(a)  Effective for the 2004‑2005 school year, the Director of the Budget shall transfer from the Reserve for Experience Step Salary Increase for Teachers and Principals in Public Schools for the 2004‑2005 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, commencing July 1, 2004, 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 7.1.(b)  For the 2004‑2005 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.

2004‑2005 Monthly Salary Schedule
"A" Teachers

Years of Experience	"A" Teachers	NBPTS Certification

	0	$2,538	N/A
	1	$2,580	N/A
	2	$2,624	N/A
	3	$2,778	$3,111
	4	$2,919	$3,268
	5	$3,051	$3,417
	6	$3,180	$3,562
	7	$3,282	$3,676
	8	$3,331	$3,731
	9	$3,379	$3,784
	10	$3,429	$3,840
	11	$3,478	$3,895
	12	$3,529	$3,952
	13	$3,579	$4,008
	14	$3,632	$4,068
	15	$3,685	$4,128
	16	$3,741	$4,190
	17	$3,796	$4,251
	18	$3,853	$4,315
	19	$3,911	$4,381
	20	$3,970	$4,446
	21	$4,031	$4,514
	22	$4,092	$4,584
	23	$4,157	$4,655
	24	$4,221	$4,728
	25	$4,285	$4,800
	26	$4,352	$4,874
	27	$4,420	$4,951
	28	$4,489	$5,028
	29	$4,561	$5,108
	30+	$4,561	$5,108

2004‑2005 Monthly Salary Schedule
"M" Teachers

Years of Experience	"M" Teachers	NBPTS Certification

	0	$2,792	N/A
	1	$2,838	N/A
	2	$2,886	N/A
	3	$3,055	$3,422
	4	$3,210	$3,595
	5	$3,357	$3,760
	6	$3,497	$3,917
	7	$3,611	$4,044
	8	$3,663	$4,102
	9	$3,716	$4,163
	10	$3,772	$4,224
	11	$3,826	$4,285
	12	$3,881	$4,347
	13	$3,937	$4,409
	14	$3,995	$4,474
	15	$4,054	$4,541
	16	$4,114	$4,608
	17	$4,176	$4,677
	18	$4,238	$4,747
	19	$4,302	$4,819
	20	$4,367	$4,890
	21	$4,434	$4,966
	22	$4,501	$5,041
	23	$4,573	$5,121
	24	$4,643	$5,200
	25	$4,713	$5,279
	26	$4,787	$5,362
	27	$4,862	$5,446
	28	$4,939	$5,532
	29	$5,017	$5,619
	30+	$5,017	$5,619
SECTION 7.1.(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 dollars ($253.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers.
SECTION 7.1.(d)  Effective for the 2004‑2005 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 7.1.(e)  Effective for the 2004‑2005 school year, speech pathologists who are certified as speech pathologists at the masters degree level and audiologists who are certified as audiologists at the masters degree level and who are employed in the public schools as speech and language specialists and audiologists shall be paid on the school psychologist salary schedule.
Speech pathologists and audiologists with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for speech pathologists and audiologists. Speech pathologists and audiologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for speech pathologists and audiologists.
SECTION 7.1.(f)  Certified school nurses who are employed in the public schools as nurses shall be paid on the "M" salary schedule.
SECTION 7.1.(g)  As used in this section, the term "teacher" shall also include instructional support personnel.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
school‑based administrator salary schedule
SECTION 7.2.(a)  Effective for the 2004‑2005 school year, the Director of the Budget shall transfer from the Reserve for Compensation Increase for the 2004‑2005 fiscal year funds necessary to implement the salary schedule for school‑based administrators as provided in this section.  These funds shall be used for State‑paid employees only.
SECTION 7.2.(b)  The base salary schedule for school‑based administrators shall apply only to principals and assistant principals.  The base salary schedule for the 2004‑2005 fiscal year, commencing July 1, 2004, is as follows:

2004‑2005
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	$3,242	‑	‑	‑	‑
5	$3,390	‑	‑	‑	‑
6	$3,533	‑	‑	‑	‑
7	$3,647	‑	‑	‑	‑
8	$3,699	$3,699	‑	‑	‑
9	$3,754	$3,754	‑	‑	‑
10	$3,810	$3,810	$3,864	‑	‑
11	$3,864	$3,864	$3,921	‑	‑
12	$3,921	$3,921	$3,976	$4,035	‑
13	$3,976	$3,976	$4,035	$4,094	$4,156
14	$4,035	$4,035	$4,094	$4,156	$4,218
15	$4,094	$4,094	$4,156	$4,218	$4,280
16	$4,156	$4,156	$4,218	$4,280	$4,346
17	$4,218	$4,218	$4,280	$4,346	$4,410
18	$4,280	$4,280	$4,346	$4,410	$4,478
19	$4,346	$4,346	$4,410	$4,478	$4,547
20	$4,410	$4,410	$4,478	$4,547	$4,619
21	$4,478	$4,478	$4,547	$4,619	$4,689
22	$4,547	$4,547	$4,619	$4,689	$4,761
23	$4,619	$4,619	$4,689	$4,761	$4,835
24	$4,689	$4,689	$4,761	$4,835	$4,910
25	$4,761	$4,761	$4,835	$4,910	$4,988
26	$4,835	$4,835	$4,910	$4,988	$5,067
27	$4,910	$4,910	$4,988	$5,067	$5,169
28	$4,988	$4,988	$5,067	$5,169	$5,272
29	$5,067	$5,067	$5,169	$5,272	$5,378
30	$5,169	$5,169	$5,272	$5,378	$5,485
31	$5,272	$5,272	$5,378	$5,485	$5,595
32	‑	$5,378	$5,485	$5,595	$5,706
33	‑	‑	$5,595	$5,706	$5,821
34	‑	‑	$5,706	$5,821	$5,938
35	‑	‑	‑	$5,938	$6,056
36	‑	‑	‑	$6,056	$6,178
37	‑	‑	‑	‑	$6,301

2004‑2005
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	$4,280	‑	‑	‑
15	$4,346	‑	‑	‑
16	$4,410	$4,478	‑	‑
17	$4,478	$4,547	$4,689	‑
18	$4,547	$4,619	$4,761	$4,835
19	$4,619	$4,689	$4,835	$4,910
20	$4,689	$4,761	$4,910	$4,988
21	$4,761	$4,835	$4,988	$5,067
22	$4,835	$4,910	$5,067	$5,169
23	$4,910	$4,988	$5,169	$5,272
24	$4,988	$5,067	$5,272	$5,378
25	$5,067	$5,169	$5,378	$5,485
26	$5,169	$5,272	$5,485	$5,595
27	$5,272	$5,378	$5,595	$5,706
28	$5,378	$5,485	$5,706	$5,821
29	$5,485	$5,595	$5,821	$5,938
30	$5,595	$5,706	$5,938	$6,056
31	$5,706	$5,821	$6,056	$6,178
32	$5,821	$5,938	$6,178	$6,301
33	$5,938	$6,056	$6,301	$6,427
34	$6,056	$6,178	$6,427	$6,556
35	$6,178	$6,301	$6,556	$6,686
36	$6,301	$6,427	$6,686	$6,820
37	$6,427	$6,556	$6,820	$6,957
38	$6,556	$6,686	$6,957	$7,095
39	‑	$6,820	$7,095	$7,237
40	‑	$6,957	$7,237	$7,382
41	‑	‑	$7,382	$7,529

SECTION 7.2.(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 7.2.(d)  A principal shall be placed on the step on the salary schedule that reflects total number of years of experience as a certificated employee of the public schools and an additional step for every three years of experience as a principal. A principal or assistant principal shall also continue to receive any additional State‑funded percentage increases earned for the 1997‑1998, 1998‑1999, and 1999‑2000 school years for improvement in student performance or maintaining a safe and orderly school.
SECTION 7.2.(e)  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 7.2.(f)  There shall be no State requirement that superintendents in each local school unit shall receive in State‑paid salary at least one percent (1%) more than the highest paid principal receives in State salary in that school unit; provided, however, the additional State‑paid salary a superintendent who was employed by a local school administrative unit for the 1992‑1993 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 1992‑1993 fiscal year.
SECTION 7.2.(g)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 7.2.(h)  
(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 subsection 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 subsection for one calendar year following the date of the merger.
SECTION 7.2.(i)  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.  For the 2004‑2005 fiscal year and subsequent fiscal years, the stipend shall not exceed the difference between the beginning salary of an assistant principal and any fellowship funds received by the intern as a full‑time student, including awards of the Principal Fellows Program. The Principal Fellows Program or the school of education where the intern participates in a full‑time masters in school administration program shall supply the Department of Public Instruction with certification of eligible full‑time interns.
SECTION 7.2.(j)  During the 2004‑2005 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.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
central office salaries
SECTION 7.3.(a)  The monthly salary ranges that follow apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 2004‑2005 fiscal year, beginning July 1, 2004.
School Administrator I	$2,932	$6,266
School Administrator II	$3,112	$6,586
School Administrator III	$3,303	$6,925
School Administrator IV	$3,436	$7,162
School Administrator V	$3,574	$7,410
School Administrator VI	$3,792	$7,799
School Administrator VII	$3,945	$8,072
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, 2004.
SECTION 7.3.(b)  The monthly salary ranges that follow apply to public school superintendents for the 2004‑2005 fiscal year, beginning July 1, 2004. 
Superintendent I	$4,187	$8,503
Superintendent II	$4,445	$8,956
Superintendent III	$4,716	$9,441
Superintendent IV	$5,005	$9,953
Superintendent V	$5,312	$10,499
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 7.2.(f) of this act.
SECTION 7.3.(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 7.3.(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 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 7.3.(e)  The State Board of Education shall not permit local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.
SECTION 7.3.(f)  The Director of the Budget shall transfer from the Reserve for Compensation Increases created in this act for fiscal year 2004‑2005, commencing July 1, 2004, funds necessary to provide a salary increase of eighty‑three dollars and thirty‑four cents ($83.34) per month,  including funds for the employer's retirement and social security contributions, commencing July 1, 2004, for all permanent personnel paid from the Central Office Allotment.  The State Board of Education shall allocate these funds to local school administrative units.  The local boards of education shall establish guidelines for providing their salary increases to these personnel.
SECTION 7.3.(g)  Notwithstanding any other provision of this section, permanent full-time personnel shall not receive an annual increase of less than one thousand dollars ($1,000).

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
noncertified personnel salary
SECTION 7.4.(a)  The Director of the Budget shall transfer from the Reserve for Compensation Increases created in this act for fiscal year 2004‑2005, commencing July 1, 2004, funds necessary to provide a salary increase of eighty‑three dollars and thirty‑four cents ($83.34) per month, including funds for the employer's retirement and social security contributions, commencing July 1, 2004, for all noncertified public school employees whose salaries are supported from the State's General Fund. 
SECTION 7.4.(b)  Local boards of education shall increase the rates of pay for such employees who were employed for all or part of fiscal year 2003‑2004 and who continue their employment for fiscal year 2004‑2005 by eighty‑three dollars and thirty‑four cents ($83.34) per month, commencing July 1, 2004.  For part‑time employees, the pay increase shall be pro rata based on the number of hours worked.
SECTION 7.4.(c)  These funds shall not be used for any purpose other than for the salary increases and necessary employer contributions provided by this section.
SECTION 7.4.(d)  The State Board of Education may adopt salary ranges for noncertified personnel to support increases of eighty‑three dollars and thirty‑four cents ($83.34) per month for the 2004‑2005 fiscal year.
SECTION 7.4.(e)  Notwithstanding any other provision of this section, permanent full-time personnel shall not receive an annual increase of less than one thousand dollars ($1,000).

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
APPROPRIATIONS FOR CONTINUALLY LOW‑PERFORMING SCHOOLS
SECTION 7.5.  Section 7.8 of S.L. 2003‑284 reads as rewritten:
"SECTION 7.8.  Of funds appropriated from the General Fund to State Aid to Local School Administrative Units, the sum of one million nine hundred fifty‑six thousand one hundred fifteen dollars ($1,956,115) for the 2003‑2004 fiscal year and the sum of six hundred two thousand nine hundred seventy‑five dollars ($602,975) for the 2004‑2005 fiscal year shall be used to provide the State's chronically low‑performing schools with tools needed to dramatically improve student achievement. These funds shall be used to implement any of the following strategies at the schools that have not previously been implemented with State or other funds:
(1)	The sum of one million six hundred fifty‑seven thousand three hundred forty‑five dollars ($1,657,345) for the 2003‑2004 fiscal year and the sum of two hundred ninety‑seven thousand four hundred six dollars ($297,406) for the 2004‑2005 fiscal year shall be used to reduce class size at a continually low‑performing school to ensure that the number of teachers allotted for students in grades four and five is one for every 17 students, and that the number of teachers allotted in grades six through eight is one for every 17 students, and that the number of teachers allotted in grades nine through twelve is one for every 20 students; and
(2)	The sum of two hundred ninety‑eight thousand seven hundred seventy dollars ($298,770) for the 2003‑2004 fiscal year and the sum of three hundred five thousand five hundred sixty‑nine dollars ($305,569) for the 2004‑2005 fiscal year shall be used to extend teachers' contracts for a total of 10 days, including five days of additional instruction with related costs for other than teachers' salaries for the 2003‑2004 and 2004‑2005 school years.
Notwithstanding any other provision of law, the State Board of Education may implement intervention strategies for the 2003‑2004 and 2004‑2005 school years that it deems appropriate."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
children with disabilities
SECTION 7.6.  The State Board of Education shall allocate funds for children with disabilities on the basis of two thousand seven hundred seventy‑three dollars and ninety‑six cents ($2,773.96) per child for a maximum of 166,500 children for the 2004‑2005 school year.  Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities, or (ii) twelve and five‑tenths percent (12.5%) of the 2004‑2005 allocated average daily membership in the local school administrative unit.
The dollar amounts allocated under this section for children with disabilities shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve children with disabilities.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
FUNDS FOR ACADEMICALLY GIFTED CHILDREN
SECTION 7.7.  The State Board of Education shall allocate funds for academically or intellectually gifted children on the basis of nine hundred fourteen dollars and ninety‑five cents ($914.95) per child.  A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2004‑2005 allocated average daily membership, regardless of the number of children identified as academically or intellectually gifted in the unit. The State Board shall allocate funds for no more than 54,762 children for the 2004‑2005 school year.
The dollar amounts allocated under this section for academically or intellectually gifted children shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve academically or intellectually gifted children.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
LEA ASSISTANCE PROGRAM
SECTION 7.8.  Section 7.17 of S.L. 2003‑284 reads as rewritten:
"SECTION 7.17.  Of funds appropriated from the General Fund to State Aid to Local School Administrative Units, the sum of five hundred thousand dollars ($500,000) for fiscal year 2003‑2004 and the sum of five hundred thousand dollars ($500,000) for fiscal year 2004‑2005 shall be used to provide assistance to the State's low‑performing Local School Administrative Units (LEAs) and to assist schools in meeting adequate yearly progress in each subgroup identified in the No Child Left Behind Act of 2001. The State Board of Education shall report to the Office of State Budget and Management, the Fiscal Research Division, and the Joint Legislative Education Oversight Committee on the expenditure of these funds by May 15, 2004, and by December 15, 2005. The report shall contain: (i) the criteria for selecting LEAs and schools to receive assistance, (ii) measurable goals and objectives for the assistance program, (iii) an explanation of the assistance provided, (iv) findings from the assistance program, (v) actual expenditures by category, (vi) recommendations for the continuance of this program, and (vii) any other information the State Board deems necessary."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
LOCAL EDUCATION AGENCY FLEXIBILITY
SECTION 7.9.  Section 7.23 of S.L. 2003‑284 reads as rewritten:
"SECTION 7.23. Within 14 days of the date this act becomes law, the State Board of Education shall notify each local school administrative unit of the amount the unit must reduce from State General Fund appropriations for the 2003‑2004 fiscal year. Within 14 days of the date the Current Operations and Capital Improvements Appropriations Act of 2004 becomes law, the State Board of Education shall notify each local school administrative unit of the amount the unit must reduce from State General Fund appropriations for the 2004‑2005 fiscal year. The State Board shall determine the amount of the reduction for each unit for each fiscal year on the basis of average daily membership.
Each unit shall report to the Department of Public Instruction on the discretionary budget reductions it has identified for the 2003‑2004 fiscal year for the unit within 30 days of the date this act becomes law and within 30 days of the date the Current Operations and Capital Improvements Appropriations Act of 2004 becomes law for reductions for the 2004‑2005 fiscal year. The State Board of Education shall make a summary report to the Office of State Budget and Management and the Fiscal Research Division on all reductions made by the LEAs to achieve this reduction for the 2003‑2004 fiscal year by December 31, 2003, and for the 2004‑2005 fiscal year by December 31, 2004.
For fiscal years 2003‑2004 and 2004‑2005, the General Assembly urges local school administrators to make every effort to reduce spending whenever and wherever such budget reductions are appropriate as long as the targeted reductions do not directly impact classroom services or any services for students at risk or children with special needs, including those services or supports that are called for in students' Personal Education Plans (PEP) and/or Individual Education Plans (IEP). If reductions to the allotment categories listed in this paragraph are necessary in order to meet the reduction target, the local board of education shall submit an explanation of the anticipated impact of the reductions to student services along with the budget reductions to the Department of Public Instruction. "

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
REPLACEMENT SCHOOL BUSES FUNDS
SECTION 7.10.  Section 7.25(a) of S.L. 2003‑284 reads as rewritten:
"SECTION 7.25.(a)  Of the funds appropriated to the State Board of Education, the Board may use up to fifteen million dollars ($15,000,000) for the 2003‑2004 fiscal year and up to thirty‑seven million two hundred thirty‑nine thousand nine hundred twelve dollars ($37,239,912) for the 2004‑2005 fiscal year for allotments to local boards of education for replacement school buses under G.S. 115C‑249(c) and (d). In making these allotments, the State Board of Education may impose any of the following conditions:
(1)	The local board of education must use the funds only to make the first, second, or third year's payment on a financing contract entered into pursuant to G.S. 115C‑528.
(2)	The term of a financing contract entered into under this section shall not exceed three years.
(3)	The local board of education must purchase the buses only from vendors selected by the State Board of Education and on terms approved by the State Board of Education.
(4)	The State Board of Education shall solicit bids for the direct purchase of buses and for the purchasing of buses through financing. The State Board of Education may solicit separate bids for financing if the Board determines that multiple financing options are more cost‑efficient.
(5)	A bus financed pursuant to this section must meet all federal motor vehicle safety regulations for school buses.
(6)	Any other condition the State Board of Education considers appropriate."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
K‑2 ASSESSMENT
SECTION 7.11.  G.S.115C‑174.11(a) reads as rewritten:
"§ 115C‑174.11.  Components of the testing program.
(a)	Assessment Instruments for First and Second Grades. – The State Board of Education shall adopt and provide to the local school administrative units developmentally appropriate individualized assessment instruments consistent with the Basic Education Program for the first and second grades, rather than standardized tests. Local school administrative units may use these assessment instruments provided to them by the State Board for first and second grade students, and shall not use standardized tests except as required as a condition of receiving a federal grant."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
EVALUATE VALIDITY OF ABC ACCOUNTABILITY SYSTEM
SECTION 7.12.(a)  G.S. 115C‑105.35 reads as rewritten:
"§ 115C‑105.35.  Annual performance goals.
(a)	The School‑Based Management and Accountability Program shall (i) focus on student performance in the basics of reading, mathematics, and communications skills in elementary and middle schools, (ii) focus on student performance in courses required for graduation and on other measures required by the State Board in the high schools, and (iii) hold schools accountable for the educational growth of their students. To those ends, the State Board shall design and implement an accountability system that sets annual performance standards for each school in the State in order to measure the growth in performance of the students in each individual school. At least once every five years, the State Board shall evaluate the accountability system and modify the testing standards to assure the standards reasonably reflect the level of performance necessary to be successful at the next grade level or for more advanced study in the content area. As part of this evaluation, the Board shall, where available, review the historical trend data on student academic performance on State tests.
(b)	For purposes of this Article, the State Board shall include a "closing the achievement gap" component in its measurement of educational growth in student performance for each school. The "closing the achievement gap" component shall measure and compare the performance of each subgroup in a school's population to ensure that all subgroups as identified by the State Board are meeting State standards.
(c)	The State Board shall consider incorporating into the School‑Based Management and Accountability Program a character and civic education component which may include a requirement for student councils."
SECTION 7.12.(b)  The State Board shall complete its initial evaluation and any revisions required under G.S. 115C‑105.35, as rewritten by subsection (a) of this section, so that the modified standards are in effect no later than the 2005‑2006 school year.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
FUNDS TO IMPLEMENT THE ABCS OF PUBLIC EDUCATION
SECTION 7.13.(a)  The State Board of Education shall use funds appropriated for State Aid to Local School Administrative Units for the 2004‑2005 fiscal year to provide incentive funding for schools that met or exceeded the projected levels of improvement in student performance during the 2003‑2004 school year, 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.	One thousand five hundred dollars ($1,500) for each teacher and for certified personnel; and
b.	Five hundred dollars ($500.00) for each teacher assistant.
(2)	Incentive awards in schools that meet the expected improvements may be up to:
a.	Seven hundred fifty dollars ($750.00) for each teacher and for certified personnel; and
b.	Three hundred seventy‑five dollars ($375.00) for each teacher assistant.
SECTION 7.13.(b)  The State Board of Education shall use funds appropriated for State Aid to Local School Administrative Units for the 2005‑2006 fiscal year to provide incentive funding for schools that exceeded the projected levels of improvement in student performance during the 2004‑2005 school year, in accordance with the ABCs of Public Education Program.  In accordance with State Board of Education policy, incentive awards in schools that achieve higher than expected improvements may be up to:
(1)	One thousand five hundred dollars ($1,500) for each teacher and for certified personnel; and
(2)	Five hundred dollars ($500.00) for each teacher assistant.
SECTION 7.13.(c)  The State Board of Education may use funds appropriated to State Aid to Local School Administrative Units for assistance teams to low‑performing schools.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
discontinue ineffective program 
SECTION 7.14.  Section 7.20(a) of S.L. 2003‑284 is repealed.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
restore vocational education funding
SECTION 7.15.(a)  Section 7.37 of  S.L. 2003‑284 reads as rewritten:
"SECTION 7.37. Local school administrative units shall make every effort to focus the vocational education budget reductions on the seventh grade for 2003‑2004 school year. For the 2004‑2005 school year, after making the base allotment for each local school administrative unit, the State Board of Education shall use the average daily membership for grades eight through twelve to calculate vocational education budget allotments to local school administrative units.  Priority use of these funds should be to provide vocational education in grades eight through 12."
SECTION 7.15.(b)  G.S. 115C‑151 reads as rewritten:
"§ 115C‑151.  Statement of purpose.
It is the intent of the General Assembly that vocational and technical education be an integral part of the educational process. The State Board of Education shall administer through local boards of education a comprehensive program of vocational and technical education that shall be available to all students, with priority given to students in grades eight through 12, who desire it in the public secondary schools and middle schools of this State. The purposes of vocational and technical education in North Carolina public secondary schools shall be:
(1)	Occupational Skill Development. – To prepare individuals for paid or unpaid employment in recognized occupations, new occupations, and emerging occupations.
(2)	Preparation for Advanced Education. – To prepare individuals for participation in advanced or highly skilled vocational and technical education.
(3)	Career Development; Introductory. – To assist individuals in the making of informed and meaningful occupational choices.
It is also legislative intent to authorize the State Board of Education to support appropriate vocational and technical education instruction and related services for individuals who have special vocational and technical education needs which can be fulfilled through a comprehensive vocational and technical education program as designated by State Board of Education policy or federal vocational and technical education legislation."
SECTION 7.15.(c)  G.S. 115C‑157 reads as rewritten:
"§ 115C‑157.  Responsibility of local boards of education.
Each local school administrative unit, shall provide free appropriate vocational and technical education instruction, activities, and services in accordance with the provisions of this Part for all youth, with priority given to youth in grades eight through 12, who elect the instruction and shall have responsibility for administering the instruction, activities, and services in accordance with federal and State law and State Board of Education policies."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
expedite allotments from the adm contingency reserve
SECTION 7.16.  Section 7.27 of S.L. 2003‑284 reads as rewritten:
"SECTION 7.27.(a)  If the State Board of Education does not have sufficient resources in the ADM Contingency Reserve line item to make allotment adjustments in accordance with the Allotment Adjustments for ADM Growth provisions of the North Carolina Public Schools Allotment Policy Manual, the State Board of Education may use funds appropriated to State Aid for Public Schools for this purpose.
"SECTION 7.27.(a1)  The State Board of Education shall expedite requests for allotments from the Contingency Reserve. The State Board shall either grant such a request and allot the funds, reject it, or require additional information to support the request, within five business days of the later of:
(1)	The day the State Board receives the request from the unit or
(2)	The day the State Board receives from the unit the official ADM for the month relevant to the request.
If the State Board requires additional information to support a request, the State Board shall complete its analysis of the information and either grant the request and allot the funds or reject the request, within 25 business days of receiving the data.
"SECTION 7.27.(b)  If the higher of the first or second month average daily membership in a local school administrative unit is at least two percent (2%) or 100 students lower than the anticipated average daily membership used for allotments for the unit, the State Board of Education shall reduce allotments for the unit. The reduced allotments shall be based on the higher of the first or second month average daily membership plus one‑half of the number of students overestimated in the anticipated average daily membership.
The allotments reduced pursuant to this subsection shall include only those allotments that may be increased pursuant to the Allotment Adjustments for ADM Growth provisions of the North Carolina Public Schools Allotment Policy Manual."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
healthful school food choices/pilot program
SECTION 7.17.(a)  The State Board of Education, with the advice and assistance of The North Carolina School Food Service Association and the Academy of Family Physicians, shall develop and implement a pilot program to support the efforts of local school administrative units to provide only healthful, nutritious food choices to students.  The State Board of Education shall select up to eight local school administrative units to participate in the pilot program and shall set standards for the food choices offered to students.  In selecting the eight pilot units, the State Board shall give priority to those units that volunteer to be a pilot.  The pilots shall be distributed geographically throughout the State.
For the 2004‑2005 school year, pilot units shall implement the program in elementary schools.
SECTION 7.17.(b)  If, at the end of the 2004‑2005 school year, the State Board of Education finds that a pilot unit experienced a decrease in food service revenues because students opted not to purchase the healthful, nutritious food choices offered by the school food service, the State Board shall reimburse the unit for that decrease in revenues.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
VISITING INTERNATIONAL FACULTY
SECTION 7.18.  Section 7.41 of S.L. 2003‑284 reads as rewritten:
"SECTION 7.41. The State Board of Education shall convert teacher positions to dollars for Visiting International Faculty Program teachers for the 2003‑2004 fiscal year and the 2004‑2005 fiscal year on the basis of the allotted average teacher salary and benefits."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
state board of education authority to set certification standards for teachers
SECTION 7.19.(a)  G.S. 115C‑296 reads as rewritten:
"§ 115C‑296.  Board sets certification requirements.
(a)	The State Board of Education shall have entire control of certifying all applicants for teaching positions in all public elementary and high schools of North Carolina; and it shall prescribe the rules and regulations for the renewal and extension of all certificates and shall determine and fix the salary for each grade and type of certificate which it authorizes.
The State Board of Education may require an applicant for an initial bachelors degree certificate or graduate degree certificate to demonstrate the applicant's academic and professional preparation by achieving a prescribed minimum score on a standard examination appropriate and adequate for that purpose. The State Board of Education shall permit an applicant to fulfill any such testing requirement before or during the applicant's second year of teaching provided the applicant took the examination at least once during the first year of teaching. The State Board of Education shall make any required standard initial certification exam sufficiently rigorous and raise the prescribed minimum score as necessary to ensure that each applicant has adequate academic and professional preparation to teach.
(a1)	The State Board shall adopt policies that establish the minimum scores for any required standard examinations and other measures necessary to assess the qualifications of professional personnel as required under subsection (a) of this section. For purposes of this subsection, the State Board shall not be subject to Article 2A of Chapter 150B of the General Statutes. At least 30 days prior to changing any policy adopted under this subsection, the State Board shall provide written notice to all North Carolina schools of education and to all local boards of education. The written notice shall include the proposed revised policy.
.…"
SECTION 7.19.(b)  G.S. 115C‑296.1(c) reads as rewritten:
"(c)	A local board may re‑employ as a teacher an individual the board initially employed under subdivisions (a)(2)b and (a)(2)c of this section. If the individual, either prior to initial employment or within one year after initial employment, takes and passes any required standard examination adopted by the State Board under G.S. 115C‑296(a) that is or was applicable to the grade or subject the individual is employed to teach, then upon re‑employment the individual is deemed to have satisfied the academic and professional preparation required to receive an initial State teacher certificate. An individual who receives an initial certificate under this subsection is subject to the same requirements for continuing certification as other teachers who hold initial State teacher certificates. If the individual, within one year of the initial employment, does not take and pass any required standard examination adopted by the State Board under G.S. 115C.296(a) that is applicable to the grade or subject the individual is employed to teach, then upon re‑employment the individual shall continue to hold a provisional certificate and is subject to G.S. 115C‑296(c)."
SECTION 7.19.(c)  Subsection (b) of this section expires September 1, 2006.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
maintain 12‑month vocational agriculture teacher positions
SECTION 7.20.  G.S. 115C‑302.1(b) reads as rewritten:
"(b)	Salary Payments. – State‑allotted teachers shall be paid for a term of 10 months. State‑allotted months of employment for vocational education to local boards shall be used for the employment of teachers of vocational and technical education for a term of employment to be determined by the local boards of education. However, local boards shall not reduce the term of employment for any vocational agriculture teacher personnel position that was 12 calendar months for the 1982‑83 school year for any school year thereafter. In addition, local boards shall not reduce the term of employment for any vocational agriculture teacher personnel position that was 12 calendar months for the 2003‑2004 school year for any school year thereafter.
Each local board of education shall establish a set date on which monthly salary payments to State‑allotted teachers shall be made. This set pay date may differ from the end of the month of service. The daily rate of pay for teachers shall equal one twenty‑second of the monthly rate of pay.
Teachers may be prepaid on the monthly pay date for days not yet worked. A teacher who fails to attend scheduled workdays or who has not worked the number of days for which the teacher has been paid and who resigns, is dismissed, or whose contract is not renewed shall repay to the local board any salary payments received for days not yet worked. A teacher who has been prepaid and continues to be employed by a local board but fails to attend scheduled workdays may be subject to dismissal under G.S. 115C‑325 or other appropriate discipline.
Any individual teacher who is not employed in a year‑round school may be paid in 12 monthly installments if the teacher so requests on or before the first day of the school year. The request shall be filed in the local school administrative unit which employs the teacher. The payment of the annual salary in 12 installments instead of 10 shall not increase or decrease the teacher's annual salary  nor in any other way alter the contract made between the teacher and the local school administrative unit. Teachers employed for a period of less than 10 months shall not receive their salaries in 12 installments."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
ADDITIONAL TEACHER POSITIONS FOR THIRD GRADE
SECTION 7.21.(a)  The maximum class size limits for third grade established by the State Board of Education for the 2004‑2005 school year shall be reduced by 4.23 from the 2003‑2004 limits, based on an allotment ratio of one teacher for every 18 students.
SECTION 7.21.(b)  For the 2004‑2005 school year, local school administrative units shall use these additional teacher positions to reduce class size in third grade.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
high school workforce development program
SECTION 7.22.(a)  Funds are appropriated in this act for a high school workforce development program.  The purpose of the program shall be to identify students who may not plan to attend or be adequately prepared to attend a two‑ or four‑year degree program and to provide the assistance those students need to earn an Associate Degree the year after their senior year in high school.  The Department of Public Instruction shall work closely with the Education Cabinet and the New Schools Project in administering the program.
These funds shall be used to establish five pilot projects in which a local school administrative unit, two‑ and four‑year colleges and universities, and local employers work together to ensure that high school and community college curricula operate seamlessly and meet the needs of participating employers.
SECTION 7.22.(b)  The State Board of Education shall conduct an annual evaluation of this program.  The evaluation shall include (i) an assessment of the overall impact of this program on student achievement, retention, and employability, (ii) an accounting of how funds and personnel resources were utilized and their impact on student achievement, retention, and employability, and (iii) recommendations for continuance and improvement of the program.  The State Board of Education shall report the results of this evaluation to the Office of State Budget and Management, the Joint Legislative Education Oversight Committee, and the Fiscal Research Division, by September 15 of each year.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
FUNDS FOR THE TESTING AND IMPLEMENTATION OF THE NEW STUDENT INFORMATION SYSTEM
SECTION 7.23.  Section 7.21 of S.L. 2003‑284 is amended by adding a new subsection to read:
"SECTION 7.21.(d)  Notwithstanding G.S. 143‑23, funds budgeted in the State Public School Fund 1800 for the Uniform Education Reporting System in account 536508 that are used by the Department of Public Instruction for support and maintenance of existing reporting systems shall be transferred to Accountability and Technology Services Fund 1500, maintained in a center structure so as to provide sufficient system project detail, and budgeted at a sufficient level of detail to report budget and expenditures at the four digit account level as established by the Office of State Controller statewide chart of accounts. Funds budgeted in the State Public School Fund 1800 for the Uniform Education Reporting System in account 536508 that are used by the Department of Public Instruction for the development and implementation of NC WISE shall be maintained in a unique center and budgeted at a sufficient level of detail to report the NC WISE budget and expenditures at the four digit account level as established by the Office of State Controller statewide chart of accounts. Funds budgeted in the State Public School Fund 1800 for the Uniform Education Reporting System in account 536508 that are used by the Department of Public Instruction for development of reporting systems other than NC WISE shall be maintained in a unique center and budgeted at a sufficient level of detail to enable reporting at the four digit account level as established by the Office of State Controller statewide chart of accounts."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
EXPERIENCE STEP INCREASE FOR TEACHERS AND PRINCIPALS IN PUBLIC SCHOOLS
SECTION 7.24.  Effective July 1, 2004, any permanent certified personnel employed on July 1, 2004, and paid on the teacher salary schedule with 29+ years of experience shall receive a one‑time bonus equivalent to the average increase of the 26 to 29 year steps.  Effective July 1, 2004, any permanent personnel employed on July 1, 2004, and paid at the top of the principal and assistant principal salary schedule shall receive a one‑time bonus equivalent to two percent (2%).  For permanent part‑time personnel, the one‑time bonus shall be adjusted pro rata.  Personnel defined under G.S. 115C‑325(a)(5a) are not eligible to receive the bonus.

Requested by:	Representative Baker
charter school facility funds
SECTION 7.25.  Chapter 153A of the General Statutes is amended by adding a new section to read:
"§ 153A‑451.  Funding for charter school facilities.
A county may appropriate funds for capital outlay for charter schools located in the county. Before such an appropriation may be made, a charter school shall adopt and present to the county a resolution requesting the funds and describing the intended use of the funds. Charter school capital outlay funds may be used for the construction of school facilities.  The ordinance making the appropriation shall state specifically what the appropriation is to be used for, and the governing board of the county shall require that the recipient account for the appropriation at the close of the fiscal year."

Requested by:	Representative Gorman
new school bus equipment requirements
SECTION 7.26.(a)  G.S. 115C-240(c) reads as rewritten:
"(c)	The State Board of Education shall from time to time adopt such rules and regulations with reference to the construction, equipment, color, and maintenance of school buses, the number of pupils who may be permitted to ride at the same time upon any bus, and the age and qualifications of drivers of school buses as it shall deem to be desirable for the purpose of promoting safety in the operation of school buses.  No school bus shall be operated for the transportation of pupils unless such bus is constructed and maintained as prescribed in such regulations and is equipped with adequate heating facilities, a standard signaling device for giving due notice that the bus is about to make a turn, an alternating flashing stoplight on the front of the bus, an alternating flashing stoplight on the rear of the bus, and such other warning devices, fire protective equipment and first aid supplies as may be prescribed for installation upon such buses by the regulation of the State Board of Education. These rules shall not require air conditioning on school buses."
SECTION 7.26.(b)  The request for bids on school buses issued by the State of North Carolina for 2005 shall include pricing for school buses with and without air conditioning.

PART VIII. COMMUNITY COLLEGES

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
use of funds for the college information system project
SECTION 8.1.(a)  Notwithstanding G.S. 143‑23 or any other provision of law, the Community Colleges System Office may use funds, other than personal service funds, appropriated for the College Information System Project for the 2004‑2005 fiscal year to establish new personnel positions to support the project.  Creation of these positions is subject to the provisions of the Executive Budget Act and to approval by the Office of State Budget and Management.
SECTION 8.1.(b)  Funds appropriated to the Community Colleges System Office for the College Information System Project shall not revert at the end of the 2003‑2004 fiscal year but shall remain available until expended.
SECTION 8.1.(c)  The Community Colleges System Office shall report on a quarterly basis to the Joint Legislative Education Oversight Committee on the implementation of the College Information System Project.
SECTION 8.1.(d)  Subsection (b) of this section becomes effective June 30, 2004.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
carryforward for equipment
SECTION 8.2.(a)  Subject to the approval of the Office of State Budget and Management and cash availability, the North Carolina Community Colleges System may carry forward an amount not to exceed ten million dollars ($10,000,000) of the operating funds held in reserve that were not reverted in fiscal year 2003‑2004 to be reallocated to the State Board of Community Colleges' Equipment Reserve Fund.  These funds shall be distributed to colleges consistent with G.S. 115D‑31.
SECTION 8.2.(b)  This section becomes effective June 30, 2004.

Requested by:	Representatives Tolson, McLawhorn, Warren, Bordsen, L. Johnson, Preston, Yongue
salaries of community college faculty and professional staff
SECTION 8.3.(a)  It is the intent of the General Assembly to establish a community college faculty salary plan that (i) provides accountability to the General Assembly, (ii) maintains local flexibility and autonomy for the community colleges, and (iii) ensures that community college faculty members have a uniform minimum salary based on level of education, equivalent applicable experience, or both.
It is imperative that the State move community college faculty and professional staff salaries to the national average. The estimated incremental costs of doing so over five years are thirty‑three million two hundred eighty‑nine thousand three hundred seventy‑one dollars ($33,289,371) for the 2004‑2005 fiscal year, twenty‑one million ninety‑two thousand sixty‑six dollars ($21,092,066) for the 2005‑2006 fiscal year, twenty‑one million five hundred seventy‑four thousand five hundred three dollars ($21,574,503) for the 2006‑2007 fiscal year, twenty‑two million ninety‑five thousand five hundred thirty‑two dollars ($22,095,532) for the 2007‑2008 fiscal year, and twelve million four hundred twenty‑seven thousand five hundred thirty‑one dollars ($12,427,531) for the 2008‑2009 fiscal year.
SECTION 8.3.(b)  The minimum salaries for community college faculty shall be based on the following education levels:
(1)	Vocational Diploma/Certificate or Less. – This education level includes faculty members who are high school graduates, have vocational diplomas, or have completed one year of college.
(2)	Associates Degree or Equivalent. – This education level includes faculty members who have an associates degree or have completed two or more years of college but have no degree.
(3)	Bachelors Degree.
(4)	Masters Degree or Education Specialist.
(5)	Doctoral Degree.
SECTION 8.3.(c)  For the 2004‑2005 school year, the minimum salaries for nine‑month, full‑time, curriculum community college faculty shall be as follows:
Education Level	Minimum Salary
Vocational Diploma/Certificate or Less	$28,512
Associates Degree or Equivalent	$28,944
Bachelors Degree	$30,817
Masters Degree or Education Specialist	$32,478
Doctoral Degree	$34,874.
No full‑time faculty member shall earn less than the minimum salary for his or her education level.
The pro rata hourly rate of the minimum salary for each education level shall be used to determine the minimum salary for part‑time faculty members.
SECTION 8.3.(d)
(1)	It is the intent of the General Assembly to encourage community colleges to make faculty salaries a priority and to reward colleges that have taken steps to achieve the national average, therefore:
a.	If the average faculty salary at a community college is one hundred percent (100%) or more of the national average community college faculty salary, the college may transfer up to ten percent (10%) of the State funds allocated to it for faculty salaries.
b.	If the average faculty salary at a community college is at least ninety‑five percent (95%) but less than one hundred percent (100%) of the national average community college faculty salary, the college may transfer up to eight percent (8%) of the State funds allocated to it for faculty salaries.
c.	If the average faculty salary at a community college is at least ninety (90%) but less than ninety‑five percent (95%) of the national average community college faculty salary, the college may transfer up to six percent (6%) of the State funds allocated to it for faculty salaries.
d.	If the average faculty salary at a community college is at least eighty‑five percent (85%) but less than ninety percent (90%) of the national average community college faculty salary, the college may transfer up to four percent (4%) of the State funds allocated to it for faculty salaries.
e.	If the average faculty salary at a community college is eighty‑five percent (85%) or less of the national average community college faculty salary, the college may transfer up to two percent (2%) of the State funds allocated to it for faculty salaries.
Except as provided by subdivision (2) of this subsection, a community college shall not transfer a greater percentage of the State funds allocated to it for faculty salaries than is authorized by this subsection.
(2)	With the approval of the State Board of Community Colleges, a community college at which the average faculty salary is eighty‑five percent (85%) or less of the national average may transfer a greater percentage of the State funds allocated to it for faculty salaries than is authorized by sub‑subdivision e. of subdivision (1) of this subsection. The State Board shall approve the transfer only for purposes that directly affect student services.
The State Board of Community Colleges shall adopt rules to implement the provisions of this subdivision.
(3)	A local community college may use all State funds allocated to it except for Literacy Funds and Funds for New and Expanding Industries to increase faculty salaries.
SECTION 8.3.(e)  As used in this section:
(1)	"Average faculty salary at a community college" means the total nine‑month salary from all sources of all nine‑month, full‑time, curriculum faculty at the college, as determined by the North Carolina Community College System on October 1 of each year.
(2)	"National average community college faculty salary" means the nine‑month, full‑time, curriculum salary average, as published by the Integrated Postsecondary Education Data System (IPEDS), for the most recent year for which data are available.
SECTION 8.3.(f)  The State Board of Community Colleges shall adopt rules to implement the provisions of this section.
SECTION 8.3.(g)  The State Board of Community Colleges shall report to the appropriations subcommittees on education, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, the Fiscal Research Division, and the Office of State Budget and Management by December 1, 2004, and every year thereafter through December 1, 2009, on the implementation of this section.
SECTION 8.3.(h)  Funds appropriated in this act for salary increases shall be used to:
(1)	Implement the minimum salaries set out in subsection (c) of this section. Funds shall be allocated to those colleges with faculty below the minimum salary in each education level as determined by the North Carolina Community College System. These funds shall only be used to bring the salaries of full‑time faculty members to the applicable minimum; and
(2)	Increase faculty and professional staff salaries by an average of two percent (2.0%). These increases are in addition to other salary increases provided for in this act, and shall be calculated on the average salaries prior to the issuance of the compensation increase. Colleges may provide additional increases from funds available.
The State Board of Community Colleges shall adopt rules to ensure that these funds are used only to move faculty and professional staff to the respective national averages. These funds shall not be transferred by the State Board or used for any other budget purpose by the community colleges.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
modify reporting REQUIREMENT for new and expanding industry TRAINING program 
SECTION 8.4.  G.S.115D‑5(i) reads as rewritten:
"(i)	The State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee on September 1 of each year on expenditures for the New and Expanding Industry Program each fiscal year. The report shall include, for each company or individual that receives funds for New and Expanding Industry:
(1)	The total amount of funds received by the company or individual;
(2)	The amount of funds per trainee received by the company or individual;
(3)	The amount of funds received per trainee by the community college training the trainee;
(4)	The number of trainees trained by company and by community college; and
(5)	The number of years the companies or individuals have been funded."

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
new and expanding industries training program funds
SECTION 8.5.(a)  Funds available to the New and Expanding Industries Program shall not revert at the end of the 2003‑2004 fiscal year but shall remain available until expended.
SECTION 8.5.(b)  This section becomes effective June 30, 2004.

Requested by:	Representatives Clary, L. Johnson, Preston, Tolson, Yongue
nccatt to operate as the North Carolina Center for Applied Textile Technology at gaston college
SECTION 8.6.(a)  The General Assembly finds that:
(1)	A strong and revitalized textile industry is an essential component of the State's economy;
(2)	The State must therefore preserve, protect, and enhance its ability to provide support services to the textile industry;
(3)	It is necessary to make improvements in the administration, operations, and procedures of the North Carolina Center for Applied Textile Technology to maximize the State's ability to provide support services to the textile industry; 
(4)	Since its creation in 1989, the Hosiery Technology Center at Catawba Valley Community College has effectively provided the hosiery industry with the services it needs to succeed amid growing global competition; and
(5)	The State can best utilize its facilities in eastern Gaston County for economic development by transferring the North Carolina Center for Applied Textile Technology to Gaston College.
SECTION 8.6.(b)  G.S. 115D‑68 reads as rewritten:
"§ 115D‑68.   Transfer of North Carolina Center for Applied Textile Technology; establishment of advisory committee.

(a)	Effective July 1, 2004, the North Carolina Center for Applied Textile Technology is transferred to the Community Colleges System Office. The transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6(a).
(b)	Effective January 1, 2005, the North Carolina Center for Applied Textile Technology is transferred from the Community Colleges System Office to Gaston College. The transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6(a).
The Center shall be known as the North Carolina Center for Applied Textile Technology at Gaston College.
(c)	An advisory committee to the North Carolina Center for Applied Textile Technology is hereby established. The advisory committee shall consist of three members appointed by the Governor, three members appointed by the President Pro Tempore of the Senate, three members appointed by the Speaker of the House of Representatives, and three members appointed by the Gaston County Board of Commissioners. Initial terms shall begin July 1, 2004.
Initial members of the board shall serve staggered terms. One initial member appointed by each appointing authority shall serve for a two‑year term, one initial member appointed by each appointing authority shall serve for a three‑year term, and one initial member appointed by each appointing authority shall serve for a four‑year term. Subsequent terms shall be for four years.
All vacancies occurring on the board shall be filled for the remainder of the unexpired term by the appointing authority making the original appointment. 
Members shall receive per diem, travel, and subsistence allowances in accordance with G.S. 138‑5 and G.S. 138‑6, as appropriate."
SECTION 8.6.(c)  The State Board of Community Colleges, in consultation with the Department of Commerce, representatives of the North Carolina textile industry, the School of Textiles at North Carolina State University and the Hosiery Technology Center, shall develop a plan for transferring the North Carolina Center for Applied Textile Technology to Gaston College.  In developing the plan, the State Board shall determine the most effective method for serving the textile industry throughout the State.
The plan shall address:
(1)	The implementation of any proposed changes to the Center’s (i) organization and funding structure, (ii) mission and purpose, and  (iii) programs or services currently offered;
(2)	Appropriate staffing levels based on the model of the Hosiery Technology Center and provisions for current staff; and
(3)	Necessary funding for the repair and renovation of existing structures. 
The State Board of Community Colleges shall report the results of its study to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on or before October 15, 2004.
SECTION 8.6.(d)  The State Board of Community Colleges may use funds appropriated for the operation of the North Carolina Center for Applied Textile Technology for the 2004‑2005 fiscal year for maintenance and operation of plant.
SECTION 8.6.(e)  The State Board of Community Colleges shall transfer three hundred thousand dollars ($300,000) of the funds appropriated for the North Carolina Center for Applied Textile Technology for the 2004‑2005 fiscal year to the Hosiery Technology Center at Catawba Valley Community College.  These funds shall be used by the Hosiery Technology Center to assist in the implementation of the transfer of the North Carolina Center for Applied Textile Technology and to offset the loss of funds by the Hosiery Technology Center from the Worker Training Trust Fund.  These funds shall be used only for the operation of the Hosiery Technology Center and shall not be used for any other purpose.
SECTION 8.6.(f)  G.S. 115D‑2(3) reads as rewritten:
"§ 115D‑2.  Definitions.
As used in this Chapter:
…
(3)	The term "institution" refers to any institution established pursuant to this Chapter."
SECTION 8.6.(g)  G.S. 115D‑69, 115D‑70, and 115D‑71 are repealed.
SECTION 8.6.(h)  G.S. 115D‑58.14(a) reads as rewritten:
"(a)	Community colleges may purchase the same supplies, equipment, and materials from noncertified sources as are available under State term contracts, subject to the following conditions:
(1)	The purchase price, including the cost of delivery, is less than the cost under the State term contract; and
(2)	The cost of the purchase shall not exceed the bid value benchmark established under G.S. 143‑53.1."
SECTION 8.6.(i)  Subsections (e) and (g) of this section become effective January 1, 2005.  The remainder of this section becomes effective July 1, 2004.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue 
funds for the bureau of training initiatives
SECTION 8.7.(a)  The Community Colleges System Office may carry forward the unexpended balance of funds appropriated for the 2003‑2004 fiscal year from the Worker Training Trust Fund to the Community College System Office, Bureau of Training Initiatives.  These funds shall be used for pilot programs that support the retraining of the existing workforce in new skills related to specific industry sectors. The purposes for which the funds may be used in the pilot programs include targeted assessments, training equipment, software, third‑party trainers, and supplies and material costs. Any unexpended balance remaining in this program shall revert to the Worker Training Trust Fund on June 30, 2005.
SECTION 8.7.(b)  This act becomes effective June 30, 2004.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
FUNDS FOR the comprehensive articulation AGREEMENT study
SECTION 8.8.(a)  Section 8.12(h) of S.L. 2003‑284 reads as rewritten:
"SECTION 8.12.(h)  The University of North Carolina, Office of the President, and the North Carolina Community College System shall each transfer thirty‑five thousand dollars ($35,000) to the Joint Legislative Education Oversight Committee to carry out this study. Funds transferred by the North Carolina Community College System that are not expended shall not revert on June 30, 2004, but shall remain available for the 2004‑2005 fiscal year to pay costs associated with the study."
SECTION 8.8.(b)  This section becomes effective June 30, 2004.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
Report on the adequacy of multicampus funds
SECTION 8.9.  The General Assembly finds that additional data is needed to determine the adequacy of multicampus funds; therefore, multicampus colleges shall report annually, beginning September 1, 2005, to the Community Colleges System Office on all expenditures by line item of funds used to support their multicampuses.  The Community Colleges System Office shall report on these expenditures to the Education Appropriation Subcommittees of the House of Representatives and the Senate, the Office of State Budget and Management, and the Fiscal Research Division by October 1 of each year.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
COMMUNITY COLLEGE FUNDING FLEXIBILITY
SECTION 8.10.  Section 8.1 of S.L. 2003‑284 reads as rewritten:
"SECTION 8.1.  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 to maintain a presence in all previously funded categorical programs.
"

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
middle college start‑up funds
SECTION 8.11.(a)  Funds appropriated for a middle college program at Edgecombe Community College shall not revert at the end of the 2003‑2004 fiscal year but shall remain available until expended.
SECTION 8.11.(b)  This section becomes effective June 30, 2004.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
matching funds for the career start project
SECTION 8.12.  Community colleges may use funds earned through the continuation education enrollment allotment for Human Resource Development Programs to match federal grants for the Career Start Project.

Requested by:	Representatives Baker, L. Johnson, Preston, Tolson, Yongue
study of fte funding formula
SECTION 8.13.  The State Board of Community Colleges shall consider modifications to its funding formulas to ensure that colleges have sufficient funds to adequately serve students when enrollment increases.  In the course of the study, the State Board shall consider methods of accurately projecting enrollment for the upcoming academic year and using projected enrollment in its funding formulas. The State Board shall also consider modifications to its funding formulas to ensure that adequate funding is provided for high‑cost programs.
The State Board shall report the results of its study to the Joint Legislative Education Oversight Committee and to the chairs of the appropriations committees of the House of Representatives and the Senate by January 15, 2005.

Requested by:	Representatives Baker, L. Johnson, Preston, Tolson, Yongue
funds for significant fte increases
SECTION 8.14.  Funds are appropriated in this act for the 2004‑2005 fiscal year to create a contingency reserve fund for community college enrollment increases.  The State Board of Community Colleges shall use these funds to increase the FTE allotment for the spring semester of the 2004‑2005 school year at colleges that experience a total enrollment growth for the fall semester of the 2004‑2005 school year of over ten percent (10%).  Each such college shall receive an increase in its FTE allotment for the spring semester equal to the amount the enrollment increase exceeded ten percent (10%), insofar as funds are available within the enrollment reserve.
Funds not expended or encumbered for this purpose shall revert to the General Fund at the end of the 2004‑2005 fiscal year.
The State Board of Community Colleges shall adopt rules to determine eligibility for funds from the contingency reserve.

Requested by:	Representatives Barnhart, L. Johnson, Preston, Tolson, Yongue, Baker
contingency reserve for colleges experiencing high rates of unemployment
SECTION 8.15.  There is created in the Community College System a contingency reserve fund to assist colleges in counties experiencing high rates of unemployment due to manufacturing job losses. The State Board of Community Colleges shall provide training and assistance to displaced workers who have lost employment as a result of the closing or relocation of a manufacturing company. The State Board shall report on the implementation of this program to the Joint Legislative Education Oversight Committee by May 1, 2005.
The State Board of Community Colleges shall adopt rules to implement this section.

PART IX. UNIVERSITIES

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
UNC Flexibility Guidelines
SECTION 9.1.  The Chancellor of each constituent institution shall report to the Board of Governors of The University of North Carolina on the management flexibility adjustments made to the General Fund budget codes in order to meet the reserve amounts for that institution. The President of The University of North Carolina shall report to the Board of Governors of The University of North Carolina on the reductions made to the General Fund budget codes controlled by the Board in order to meet the reduction reserve amounts for those entities. The Board of Governors shall make a summary report to the Office of State Budget and Management and the Fiscal Research Division by December 31, 2004, on all reductions made by these entities and constituent institutions in order to reduce the budgets by the targeted amounts.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
Need‑Based Financial Aid From Escheat Funds
SECTION 9.2.(a)  There is appropriated from the Escheat Fund to the Board of Governors of The University of North Carolina the sum of twenty‑one million three hundred forty‑four thousand dollars ($21,344,000) for the 2004‑2005 fiscal year and to the State Board of Community Colleges the sum of seven hundred eighteen thousand three hundred ninety‑six dollars ($718,396) for the 2004‑2005 fiscal year.  These funds shall be allocated by the State Educational Assistance Authority for need‑based student financial aid in accordance with G.S. 116B‑7 and this act. The use of principal is allowed if interest income is insufficient.
SECTION 9.2.(b)  The Director of the Budget shall include General Fund appropriations in the amounts provided in subsection (a) of this section in the proposed 2005‑2007 fiscal biennium continuation budget for the purposes provided in G.S. 116B‑7.
SECTION 9.2.(c)  There is appropriated from the Escheat Fund to the Board of Governors of The University of North Carolina the sum of one hundred ninety‑five thousand dollars ($195,000) for the 2004‑2005 fiscal year to be allocated to the State Education Assistance Authority for need‑based student financial aid to be used in accordance with G.S. 116B‑7 and this act.  The State Education Assistance Authority shall use these funds only to provide scholarship loans to North Carolina high school seniors interested in preparing to teach in the State's public schools who also enroll at any of the Historically Black Colleges and Universities that do not have Teaching Fellows.  An allocation of 10 grants of six thousand five hundred dollars ($6,500) each shall be given to the three universities without any Teaching Fellows for the purposes specified in this subsection.  The State Education Assistance Authority shall administer these funds and shall establish any additional criteria needed to award these scholarship loans, the conditions for forgiving the loans, and the collection of the loan repayments when necessary.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
Area health education center (AHEC) Funds
SECTION 9.3.  Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2004‑2005 fiscal year and in all subsequent fiscal years, the Board of Governors shall allocate the sum of twenty‑four thousand dollars ($24,000) to the Wilmington AHEC program annually and the sum of twenty‑four thousand dollars ($24,000) to the Region L AHEC program on an annual basis for information highway line charges.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
UNC Bond Project Modifications
SECTION 9.4.(a)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interest of the State to respond to current educational and research program requirements at North Carolina Agricultural & Technical State University by:
(1)	Substituting a project entitled "New School of Education" for a project entitled "Central Cooling Plant Phase I" as contained in Section 2(a) of S.L. 2000‑3, as it has been determined, based on an independent engineering analysis, that the cooling plant project is not technically feasible.
(2)	The cancellation of "New Student Housing" and "Curtis Residence Hall‑Replacement." The money from "New Student Housing" and "Curtis Residence Hall‑Renovation" should be transferred to "Scott Residence Hall‑Replacement."
(3)	The cancellation of "Holland Residence Hall‑Comprehensive Renovation." The unused money should be transferred to "Zoe Barbee Residence Hall‑Comprehensive Renovation."
Section 2(a) of S.L. 2000‑3 is therefore amended in the portion under North Carolina Agricultural & Technical State University as follows:
(1)	By substituting the "New School of Education" for "Central Cool Plant‑Phase I."
(2)	By deleting "New Student Housing 1,897,900" and "Curtis Residence Hall‑Replacement 3,723,500" and by amending "Scott Residence Hall‑Replacement" to create a total allocation of thirty‑one million eight hundred seventy‑four thousand seven hundred dollars ($31,874,700).
(3)	By deleting "Holland Residence Hall‑Comprehensive Renovation 856,800" and by amending "Zoe Barbee Residence Hall‑Comprehensive Renovation" to create a total allocation of four million five hundred fifty thousand six hundred dollars ($4,550,600).
SECTION 9.4.(b)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interest of the State to respond to current educational and research program requirements at East Carolina University to reduce the scope of  "Expansion & Renovation of the Old Nursing Building" by three million dollars ($3,000,000) to a total allocation of eleven million six hundred eighty‑five thousand five hundred dollars ($11,685,500) and transferring the unused funds to " 'Old Cafeteria' Office Building‑Comprehensive Renovation for Student Services/Academic Use" to create a total allocation of seven million four hundred forty‑two thousand one hundred dollars ($7,442,100).
Section 2(a) of S.L. 2000‑3 is therefore amended under the portion under East Carolina University by reduction of allocations for the project entitled "Expansion and Renovation of the Old Nursing Building 14,685,500" by three million dollars ($3,000,000) to a total allocation of eleven million six hundred eighty‑five thousand five hundred dollars ($11,685,500) and the addition of the money to allocations for the project entitled " 'Old Cafeteria' Office Building‑Comprehensive Renovation for Student Services/Academic Use 4,442,100" by three million dollars ($3,000,000) to create a total allocation of seven million four hundred forty‑two thousand one hundred dollars ($7,442,100).
SECTION 9.4.(c)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interest of the State to respond to current educational and research program requirements at the University of North Carolina at Wilmington, due to growth in enrollment and programs offered, by reducing the scope of the comprehensive renovation of the "Alderman Hall Classroom Building" and by reducing the scope of the comprehensive renovation of the "Kenan Auditorium," both as contained in Section 2(a) of S.L. 2000‑3, and by transferring a portion of the funds allocated to these two projects to the comprehensive renovation of the "King Hall Classroom Building," "James Hall Classroom Building," and "Kenan Hall Classroom Building," as contained in Section 2(a) of S.L. 2000‑3.
Section 2(a) of S.L. 2000‑3 is therefore amended in the portion under the University of North Carolina at Wilmington, by reducing the money allocated to "Alderman Hall Classroom Building" by two million two hundred four thousand six hundred fifty‑two dollars ($2,204,652) to create a total allocation of seven hundred thirty‑six thousand one hundred forty‑eight dollars ($736,148), by reducing the monies allocated to "Kenan Auditorium" by one million one hundred seventy‑three thousand three hundred twenty‑five dollars ($1,173,325) to create a total allocation of one million nine hundred twenty‑one thousand nine hundred seventy‑five dollars ($1,921,975) and by reallocating the money saved as follows: increase the budget of "King Hall" from two million six hundred ninety‑seven thousand four hundred dollars ($2,697,400) to three million five hundred twenty‑seven thousand four hundred dollars ($3,527,400), increase the budget for "Hinton James Hall" from one million four hundred sixty‑eight thousand dollars ($1,468,000) to two million eight hundred fifty‑four thousand twenty‑five dollars ($2,854,025), and increase the budget of "Kenan Hall" from three million fifty‑six thousand six hundred dollars ($3,056,600) to four million two hundred eighteen thousand five hundred fifty‑two dollars ($4,218,552).
SECTION 9.4.(d)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interests of the State to respond to current educational and research program requirements at Fayetteville State University by changing the scope of the "Comprehensive Renovation and Conversion of Spaulding (Old Infirmary) for Public Safety Facilities" to "Comprehensive Renovation of Spaulding for Student Health Services and Student Counseling."
Section 2(a) of S.L. 2000‑3 is therefore amended by retitling the project currently entitled "Comprehensive Renovation and Conversion of Spaulding (Old Infirmary) for Public Safety Facilities" to "Comprehensive Renovation of Spaulding for Student Health Services and Student Counseling."
SECTION 9.4.(e)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interests of the State to respond to current educational and research program requirements at Fayetteville State University by reallocating unused money from the "William Collins Building Renovation" to a new project entitled "Mitchell Building Renovation for use by Public Safety". 
Section 2(a) of S.L. 2000‑3 is therefore amended in the portion under Fayetteville State University by reducing the money allocated to "William Collins Building‑Comprehensive Renovation" by three hundred thousand dollars ($300,000) to a total of three hundred forty thousand six hundred dollars ($340,600) and by the addition of a project entitled "Mitchell Building‑Comprehensive Renovation for use by Public Safety $300,000."
SECTION 9.4.(f)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interests of the State to respond to current educational and research program requirements at North Carolina State University by substituting a project entitled "Harrelson Classroom Building‑Replacement Classroom Facility Construction" for the project entitled "Harrelson Classroom Building‑Comprehensive Renovation" as contained in Section 2(a) of S.L. 2000‑3.
Section 2(a) of S.L. 2000‑3 is therefore amended in the portion under North Carolina State University, by deleting "Harrelson Classroom Building‑Comprehensive Renovation" and substituting "Harrelson Classroom Building‑Replacement Classroom Facility Construction."
SECTION 9.4.(g)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interests of the State to respond to current educational and research program requirements at the University of North Carolina at Chapel Hill by deleting a project entitled "Community Health Building‑Consolidation of Programs" as contained in Section 2(a) of S.L. 2000‑3, and dispersing the funds from that project to other health affairs related bond projects.
Section 2(a) of S.L. 2000‑3 is therefore amended in the portion under the University of North Carolina at Chapel Hill by deleting "Community Health Building Consolidation of Programs" and disbursing the funds associated with that project as follows: adding ten million six hundred twenty‑five thousand seven hundred forty‑seven dollars ($10,625,747) to the project entitled "School of Medicine‑Medical Research Building‑Comprehensive Renovation of Classroom & Laboratory Space," for a total of twenty‑three million five hundred twenty thousand seven hundred forty‑seven dollars ($23,520,747); adding one million forty thousand six hundred dollars ($1,040,600) to a project entitled "Burnett Womack Building Research Laboratory‑Comprehensive Renovation," for a total of twenty‑five million eight hundred eighty‑eight thousand six hundred dollars ($25,888,600), and adding six million six hundred seventy‑three thousand six hundred fifty‑three dollars ($6,673,653) to a project entitled "Berryhill Hall Laboratory Building‑Comprehensive Renovation" for a total of seventeen million three hundred seventy‑three thousand six hundred fifty‑three dollars ($17,373,653).
SECTION 9.4.(h)  Nothing in this section is intended to supersede any other requirement of law or policy for approval of the substituted capital improvement projects. 

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
Fayetteville State University and North Carolina School of the Arts Retain Real Property Proceeds
SECTION 9.5.  Notwithstanding any other provision of law, Fayetteville State University and the North Carolina School of the Arts may retain the proceeds from the sale of their existing chancellor's residences and the appurtenant land.
Fayetteville State University may use the proceeds from the sale of its existing chancellor's residence and the appurtenant land, and any other nonappropriated funds available, to construct or otherwise acquire a new chancellor's residence. Proceeds from the sale not used for that purpose shall revert.
The North Carolina School of the Arts may use the proceeds from the sale of its existing chancellor's residence and the appurtenant land, and any other nonappropriated funds available, to construct or otherwise acquire a new chancellor's residence. Proceeds from the sale not used for that purpose shall revert.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
North Carolina School of Science and Math carryover/onetime expenditures
SECTION 9.6.  G.S. 116‑30.2(b) reads as rewritten:
"(b)	The North Carolina School of Science and Mathematics is authorized to be designated as a special responsibility constituent institution for the purposes of G.S. 116‑30.1, G.S. 116‑30.3, G.S. 116‑30.4, G.S. 116‑30.5, G.S. 116‑30.6, and G.S. 116‑31.10. In addition, all General Fund appropriations made by the General Assembly for continuing operations of the North Carolina School of Science and Mathematics shall be made in the form of a single sum to each budget code of the School for each year of the fiscal period for which the appropriations are being made. Notwithstanding G.S. 143‑23(a1), G.S. 143‑23(a2), and G.S. 120‑76(8), the North Carolina School of Science and Mathematics may expend monies from the overhead receipts special fund budget code and the General Fund monies so appropriated to it in the manner deemed by the Director of the School to be calculated to maintain and advance the programs and services of the School, consistent with the directives and policies of the Board of Trustees of the North Carolina School of Science and Mathematics. The preparation, presentation, and review of General Fund budget requests of the North Carolina School of Science and Mathematics shall be conducted in the same manner as are requests of the constituent institutions. The quarterly allotment procedure established under G.S. 143‑17 shall apply to the General Fund appropriations made for the current operations of the North Carolina School of Science and Mathematics. All General Fund monies so appropriated to the North Carolina School of Science and Mathematics shall be recorded, reported, and audited in the same manner as are General Fund appropriations to constituent institutions of The University of North Carolina."

Requested by:	Representative Michaux
EVALUATE SCIENCE & MATH SCHOOL TUITION GRANTS
SECTION 9.6A.(a)  It is the intent of the General Assembly to review G.S. 116‑238.1, which provides a four‑year tuition grant to any North Carolina resident who graduates from the North Carolina School of Science and Mathematics and enrolls as a full‑time student in a constituent institution of The University of North Carolina, to evaluate that tuition grant program, and to determine whether the program should be continued. It is the further intent of the General Assembly to provide notice to the students attending and applying to the North Carolina School of Science and Mathematics that the tuition grant program may be discontinued after review by the General Assembly.
SECTION 9.6A.(b)  The North Carolina School of Science and Mathematics shall collect data on the median family income of the students attending the school.
SECTION 9.6A.(c)  The President of the North Carolina School of Science and Mathematics and the Board of Governors of The University of North Carolina shall report to the Joint Legislative Education Oversight Committee regarding the information collected in compliance with subsection (a) of this section and the findings and recommendations of the Board of Governors regarding the need, if any, to continue the scholarship program established by G.S. 116‑238.1. The Joint Legislative Education Oversight Committee shall report to the 2005 General Assembly the information received from the President of the North Carolina School of Science and Mathematics and the Board of Governors and the findings and recommendations of the Board of Governors, along with the Committee's own findings and recommendations regarding the continuation of the tuition grant program.

Requested by:	Representatives L. Johnson, Preston, Tolson, Yongue
UNC‑Chapel Hill Continue to Operate Horace Williams Airport
SECTION 9.7.(a)  The University of North Carolina at Chapel Hill shall operate the Horace Williams Airport and continue air transportation support for the Area Health Education Centers (AHEC) from that location until a replacement facility that is accessible to the University of North Carolina at Chapel Hill becomes operational.
SECTION 9.7.(b)  The University of North Carolina at Chapel Hill shall report to the Joint Legislative Commission on Governmental Operations by July 1, 2006, and biannually thereafter, on progress locating a replacement facility for the Area Health Education Center.

Requested by:	Representative Michaux
RESTORE BOND FUNDS USED FOR MOLD REMEDIATION
SECTION 9.8.  Of the funds appropriated by this act to the Reserve for Repairs and Renovations that is allocated to the Board of Governors of The University of North Carolina for the 2004-2005 fiscal year the sum of eight million nine hundred six thousand six hundred forty-two dollars ($8,906,642) shall be allocated to North Carolina Central University to restore the bond funds that were transferred for mold remediation.

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Requested by:	Representatives Nye, Barnhart
CENTRALIZE CRIMINAL RECORD CHECK FUNCTIONS
SECTION 10.1.  The Department of Health and Human Services shall centralize all activities throughout the Department relating to the coordination and processing of criminal record checks required by law.  The centralization shall include the transfer of positions, corresponding State appropriations, federal funds, and other funds. The Department shall implement the centralization beginning January 1, 2005, and shall report on the details of the centralization and implementation to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than January 1, 2005.

Requested by:	Representatives Clary, Nye, Barnhart
STUDY ISSUES RELATED TO MENTALLY ILL RESIDENTS OF LONG‑TERM CARE FACILITIES
SECTION 10.2.(a)  The Department of Health and Human Services shall work with long‑term care providers and advocates for the elderly and the mentally ill to study issues concerning the care of mentally ill individuals residing in long‑term care facilities.  The study shall include:
(1)	Examining whether current State statutes and Departmental rules adequately address the populations served by long‑term care facilities.
(2)	Exploring the development of separate licensure categories within the adult care home and nursing home designations to address the various populations being served.
(3)	Examining adult care home rules to determine whether they are easy to understand, attainable under current staffing patterns, give appropriate guidance to facility operators according to the needs and characteristics of residents served, support residents' freedom of choice, and whether they support the autonomy, dignity, and independence philosophy of assisted living.
(4)	Determining the most effective way to identify mentally ill individuals that have mental health treatment needs.
(5)	Examining the criteria for admission of mentally ill individuals to long‑term care facilities to ensure that the health and safety of all residents are safeguarded.
(6)	Providing recommendations for improving the quality of care for mentally ill individuals in adult care homes and nursing homes including the potential cost associated with implementing the recommendations.
(7)	Identifying specific problems that exist due to mixing aging and mentally ill populations.
SECTION 10.2.(b)  The Department shall report its findings and recommendations to the North Carolina Study Commission on Aging by October 1, 2005.  The Department of Health and Human Services shall include in this report how it defines "mentally ill" for purposes of this study.
SECTION 10.2.(c)  The Department of Health and Human Services may use up to one hundred fifty thousand dollars ($150,000) of funds appropriated to it for the 2004‑2005 fiscal year to contract for the study required in this section.

Requested by:	Representatives Nye, Barnhart, England, Allred
COMMUNITY HEALTH grant FUNDS
SECTION 10.3(a)  Of the funds appropriated in this act for Community Health Grants for the 2004-2005 fiscal year, the sum of five million dollars ($5,000,000) in nonrecurring funds shall be used for federally qualified health centers and for those health centers that meet the criteria for federally qualified health centers, and the sum of three million dollars ($3,000,000) in nonrecurring funds shall be allocated from institutional receipts in the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to Community Health Grants to be used for State-designated rural health centers and public health departments.
(1)	Increase access to preventative and primary care services by uninsured or medically indigent patients in existing or new health center locations;
(2)	Establish community health center services in counties where no such services exist;
(3)	Create new services or augment existing services provided to uninsured or medically indigent patients, including primary care and preventive medical services, dental services, pharmacy, and behavioral health; and
(4)	Increase capacity necessary to serve the uninsured by enhancing or replacing facilities, equipment, or technologies.
Grant funds may not be used to enhance or increase compensation or other benefits of personnel, administrators, directors, consultants, or any other parties. Grant funds may not be used to supplant federal funds traditionally received by federally qualified community health centers and may not be used to finance or satisfy any existing debt.
SECTION 10.3.(b)  The Office shall work with the North Carolina Community Health Center Association (hereafter "NCCHCA") and the North Carolina Public Health Association (hereafter "NCPHA") to establish an advisory committee to develop an objective and equitable process for awarding grant funds. The Office shall also develop auditing and accountability procedures. Not more than one percent (1.0%) of the funds appropriated in this section may be used to reimburse the Office for administering the grant program in collaboration with the NCCHCA and the NCPHA.
SECTION 10.3.(c)  Recipients of grant funds shall provide to the Office annually a written report detailing the number of additional uninsured and medically indigent patients that are cared for, the types of services that were provided, and any other information requested by the Office as necessary for evaluating the success of the grant program.
SECTION 10.3.(d)  The Office shall work with the NCCHCA and NCPHA to study and present recommendations for continuing funds to support the expansion of community health centers, State‑designated rural health centers, and public health departments to serve more of the State's uninsured and indigent population. The Office shall submit the report to the 2005 General Assembly upon its convening.

Requested by:	Representatives Nye, Barnhart
MEDICAID
SECTION 10.4.  Section 10.19 of S.L. 2003‑284 reads as rewritten:
"MEDICAID
SECTION 10.19.(a)  Funds appropriated in this act for services provided in accordance with Title XIX of the Social Security Act (Medicaid) are for both the categorically needy and the medically needy. Funds appropriated for these services shall be expended in accordance with the following schedule of services and payment bases. All services and payments are subject to the language at the end of this subsection.
Services and payment bases:
(1)	Hospital‑Inpatient. – Payment for hospital inpatient services will be prescribed in the State Plan as established by the Department of Health and Human Services.
(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. Residents of nursing facilities who are eligible for Medicare coverage of nursing facility services must be placed in a Medicare certified bed. Medicaid shall cover facility services only after the appropriate services have been billed to Medicare. The Division of Medical Assistance shall allow nursing facility providers sufficient time from the effective date of this act to certify additional Medicare beds if necessary. In determining the date that the requirements of this subdivision become effective, the Division of Medical Assistance shall consider the regulations governing certification of Medicare beds and the length of time required for this process to be completed.
(4)	Intermediate Care Facilities for the Mentally Retarded. – As prescribed in the State Plan as established by the Department of Health and Human Services.
(5)	Drugs. – Drug costs as allowed by federal regulations plus a professional services fee per month excluding refills for the same drug or generic equivalent during the same month. Reimbursement shall be available for up to six prescriptions per recipient, per month, including refills. Payments for drugs are subject to the provisions of subsection (h) of this section and to the provisions at the end of subsection (a) of this section or in accordance with the State Plan adopted by the Department of Health and Human Services consistent with federal reimbursement regulations. Payment of the professional services fee shall be made in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. The professional services fee shall be five dollars and sixty cents ($5.60) per prescription for generic drugs and four dollars ($4.00) per prescription for brand name drugs. 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 the 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. – Wholesale cost plus a dispensing fee to the provider.
(12)	Rural Health Clinic Services. – Provider‑based, reasonable cost; nonprovider‑based, single‑cost reimbursement rate per clinic visit.
(13)	Family Planning. – Negotiated rate for local health departments. For other providers, see specific services, for instance, hospitals, physicians.
(14)	Independent Laboratory and X‑Ray Services. – Uniform fee schedules as developed by the Department of Health and Human Services.
(15)	Optical Supplies. – Payment for materials is made to a contractor in accordance with 42 C.F.R. 431.54(d). Fees paid to dispensing providers are negotiated fees established by the State agency based on industry charges.(16)	Ambulatory Surgical Centers. – Payment as prescribed in the reimbursement plan established by the Department of Health and Human Services.
(17)	Medicare Crossover Claims. – By not later than October 1, 2005, the Department shall apply Medicaid medical policy to Medicare claims for dually eligible recipients. The Department shall pay an amount up to the actual coinsurance or deductible or both, in accordance with the State Plan, as approved by the Department of Health and Human Services.
(18)	Physical Therapy and Speech Therapy. – Services limited to EPSDT‑eligible children. Payments are to be made only to qualified providers at rates negotiated by the Department of Health and Human Services. Physical therapy (including occupational therapy) and speech therapy services are subject to prior approval and utilization review.
(19)	Personal Care Services. – Payment in accordance with the State Plan approved by the Department of Health and Human Services.
(20)	Case Management Services. – Reimbursement in accordance with the availability of funds to be transferred within the Department of Health and Human Services.
(21)	Hospice. – Services may be provided in accordance with the State Plan developed by the Department of Health and Human Services.
(22)	Other Mental Health Services. – Unless otherwise covered by this section, coverage is limited to:
a.	Services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) when provided in agencies meeting the requirements of the rules established by the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services and reimbursement is made in accordance with a State Plan developed by the Department of Health and Human Services not to exceed the upper limits established in federal regulations, and
b.	For children eligible for EPSDT services:
1.	Licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, and nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, when Medicaid‑eligible children are referred by the  Community Care of North Carolina primary care physician or the area mental health program, and
2.	Institutional providers of residential services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) for children and Psychiatric Residential Treatment Facility services that meet federal and State requirements as defined by the Department.
Notwithstanding G.S. 150B‑21.1(a), 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. Coverage policy for services defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services under sub‑subdivisions a. and b.2 of this subdivision shall be established by the Division of Medical Assistance.
(23)	Medically Necessary Prosthetics or Orthotics for EPSDT‑Eligible Children. – Reimbursement in accordance with the State Plan approved by the Department of Health and Human Services.
(24)	Health Insurance Premiums. – Payments to be made in accordance with the State Plan adopted by the Department of Health and Human Services consistent with federal regulations.
(25)	Medical Care/Other Remedial Care. – Services not covered elsewhere in this section include related services in schools; health professional services provided outside the clinic setting to meet maternal and infant health goals; and services to meet federal EPSDT mandates. Services addressed by this subdivision are limited to those prescribed in the State Plan as established by 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.
Payment is limited to Medicaid‑enrolled providers that purchase a performance bond in an amount not to exceed one hundred thousand dollars ($100,000) naming as beneficiary the Department of Health and Human Services, Division of Medical Assistance, or provide to the Department a validly executed letter of credit or other financial instrument issued by a financial institution or agency honoring a demand for payment in an equivalent amount. The Department may waive or limit the requirements of this paragraph for one or more classes of Medicaid‑enrolled providers based on the provider's dollar amount of monthly billings to Medicaid or the length of time the provider has been licensed in this State to provide services. In waiving or limiting requirements of this paragraph, the Department shall take into consideration the potential fiscal impact of the waiver or limitation on the State Medicaid Program. The Department may adopt temporary rules in accordance with G.S. 150B‑21.1 as necessary to implement this provision.
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 10.19.(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 10.19.(c)  Copayment for Medicaid Services. – The Department of Health and Human Services may establish co‑payment up to the maximum permitted by federal law and regulation.
SECTION 10.19.(d)  Medicaid and Work First Family Assistance, Income Eligibility Standards. – The maximum net family annual income eligibility standards for Medicaid and Work First Family Assistance and the Standard of Need for Work First Family Assistance shall be as follows:

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

The payment level for Work First Family Assistance shall be fifty percent (50%) of the standard of need.
These standards may be changed with the approval of the Director of the Budget with the advice of the Advisory Budget Commission.
SECTION 10.19.(e)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to all elderly, blind, 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 10.19.(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 10.19.(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 10.19.(h)  Dispensing of Generic Drugs. – Notwithstanding G.S. 90‑85.27 through G.S. 90‑85.31, or any other law to the contrary, under the Medical Assistance Program (Title XIX of the Social Security Act), and except as otherwise provided in this subsection for atypical antipsychotic drugs and drugs listed in the narrow therapeutic index, 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 has determined, at the time the drug is prescribed, that the brand name drug is medically necessary and has written on the prescription order the phrase "medically necessary". An initial prescription order for an atypical antipsychotic drug or a drug listed in the narrow therapeutic drug index that does not contain the phrase "medically necessary" shall be considered an order for the drug by its established or generic name, except that a pharmacy shall not substitute a generic or established name prescription drug for subsequent brand or trade name prescription orders of the same prescription drug without explicit oral or written approval of the prescriber given at the time the order is filled. Generic drugs shall be dispensed at a lower cost to the Medical Assistance Program rather than trade or brand name drugs. 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 10.19.(i)  The Department of Health and Human Services shall not impose prior authorization requirements or other restrictions under the State Medical Assistance Program on medications prescribed for Medicaid recipients for the treatment of: (i) mental illness, including, but not limited to, medications for schizophrenia, bipolar disorder, and major depressive disorder, or (ii) HIV/AIDS.
SECTION 10.19.(j)  Exceptions to Service Limitations, Eligibility Requirements, and Payments. – Service limitations, eligibility requirements, and payments bases in this section may be waived by the Department of Health and Human Services, with the approval of the Director of the Budget, to allow the Department to carry out pilot programs for prepaid health plans, contracting for services, 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. The Department of Health and Human Services may proceed with planning and development work on the Program of All‑Inclusive Care for the Elderly.
SECTION 10.19.(k)  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 contracting processes in order to improve cost containment.
SECTION 10.19.(l)  Cost‑Containment Programs. – The Department of Health and Human Services, Division of Medical Assistance, may undertake cost‑containment programs in accordance with Section 3 of S.L. 2001‑395, including contracting for services, preadmissions to hospitals, and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.
SECTION 10.19.(m)  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 10.19.(n)  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 10.19.(o)  The Department of Health and Human Services shall provide coverage to pregnant women and to children according to the following schedule:
(1)	Pregnant women with incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits. (2)	Infants under the age of one 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 one through five 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 six 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 10.19.(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 10.19.(r)  If first approved by the Office of State Budget and Management, the Division of Medical Assistance, Department of Health and Human Services, may use funds that are identified to support the cost of development and acquisition of equipment and software through contractual means to improve and enhance information systems that provide management information and claims processing. The Department of Health and Human Services shall identify adequate funds to support the implementation and first year's operational costs that exceed the currently allocated funds for the new contract for the fiscal agent for the Medicaid Management Information System.
SECTION 10.19.(s)  The Department of Health and Human Services may adopt temporary or emergency rules according to the procedures established in G.S. 150B‑21.1 and G.S. 150B‑21.1A when it finds that these rules are necessary to maximize receipt of federal funds within existing State appropriations, to reduce Medicaid expenditures, and to reduce fraud and abuse. Prior to the filing of these temporary or emergency rules with the Rules Review Commission and the Office of Administrative Hearings, the Department shall consult with the Office of State Budget and Management on the possible fiscal impact of the temporary or emergency rule and its effect on State appropriations and local governments.
SECTION 10.19.(t)  The Department shall report to the Fiscal Research Division of the Legislative Services Office and to the House of Representatives Appropriations Subcommittee on Health and Human Services and the Senate Appropriations Committee on Health and Human Services or the Joint Legislative Health Care Oversight Committee on any change it anticipates making in the Medicaid Program that impacts the type or level of service, reimbursement methods, or waivers, any of which require a change in the State Plan or other approval by the Centers for Medicare and Medicaid Services (CMS). The reports shall be provided at the same time they are submitted to CMS for approval.
SECTION 10.19.(u)  Upon approval of a demonstration waiver by the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services may provide Medicaid coverage for family planning services to men and women of child‑bearing age with family incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty level. Coverage shall be contingent upon federal approval of the waiver and shall begin no earlier than January 1, 2001.
SECTION 10.19.(v)  The Department of Health and Human Services, Division of Medical Assistance, shall use the latest audited cost reporting data available when establishing Medicaid provider rates or when making changes to the reimbursement methodology. For hospital services, the Division shall use the latest audited cost reporting data available, supplemented by additional financial information available to the Division if and to the extent that the Division concludes that the information is reliable and relevant, when establishing rates or when making changes to the reimbursement methodology.
SECTION 10.19.(w)  The Department of Health and Human Services, Division of Medical Assistance, shall implement a new coding system for therapeutic mental health services as required by the Health Insurance Portability and Accountability Act of 1996. In implementing the new coding system, the Division shall ensure that the new coding system does not discriminate between providers of therapeutic mental health services with similar qualifications and training. In meeting the requirements of this subsection, the Division shall consult with the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and the professional licensing boards responsible for licensing the affected professionals.
SECTION 10.19.(x)  The Department of Health and Human Services may apply federal transfer of assets policies, as described in Title XIX, section 1917(c) of the Social Security Act, including the attachment of liens, to real property excluded as  "income producing", tenancy‑in‑common, or as nonhomesite property made "income producing" under Title XIX, section 1902(r)(2) of the Social Security Act. The transfer of assets policy shall apply only to an institutionalized individual or the individual's spouse as defined in Title XIX, section 1917(c) of the Social Security Act. This subsection becomes effective no earlier than October 1, 2001. Federal transfer of asset policies and attachment of liens to properties excluded as tenancy‑in‑common or as nonhomesite property made "income producing" in accordance with this subsection shall become effective not earlier than November 1, 2002.
SECTION 10.19.(y)  When implementing the Supplemental Security Income (SSI) method for considering equity value of income producing property, the Department shall, to the maximum extent possible, employ procedures to mitigate the hardship to Medicaid enrollees occurring from application of the Supplemental Security Income (SSI) method.
SECTION 10.19.(z)  Unless required for compliance with federal law, the Department shall not change medical policy affecting the amount, sufficiency, duration, and scope of health care services and who may provide services until the Division of Medical Assistance has prepared a five‑year fiscal analysis documenting the increased cost of the proposed change in medical policy and submitted it for Departmental review. If the fiscal impact indicated by the fiscal analysis for any proposed medical policy change exceeds three million dollars ($3,000,000) in total requirements for a given fiscal year, then the Department shall submit the proposed policy change with the fiscal analysis to the Office of State Budget and Management and the Fiscal Research Division. The Department shall not implement any proposed medical policy change exceeding three million dollars ($3,000,000) in total requirements for a given fiscal year unless the source of State funding is identified and approved by the Office of State Budget and Management. The Department shall provide the Office of State Budget and Management and the Fiscal Research Division a quarterly report itemizing all medical policy changes with total requirements of less than three million dollars ($3,000,000).
SECTION 10.19.(aa)  The Department of Health and Human Services, Division of Medical Assistance, shall convene a work group to review the current Medicaid standards for vision screening for Medicaid‑eligible children to determine whether the standards are meeting the vision needs of these children. The Secretary shall appoint to the work group pediatricians, ophthalmologists, optometrists, and other individuals with expertise or interest in children's vision care. The Department shall report the findings of the work group to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division by March 1, 2004. The report shall include recommendations on whether current Medicaid standards need to be modified to meet the vision care needs of Medicaid‑eligible children and, if modification is necessary, the cost of providing vision services based on the modified standards.
SECTION 10.19.(bb)  The Department shall develop, amend, and adopt medical coverage policy in accordance with the following:
(1)	During the development of new medical coverage policy or amendment to existing medical coverage policy, consult with and seek the advice of the Physician Advisory Group of the North Carolina Medical Society and other organizations the Secretary deems appropriate. The Secretary shall also consult with and seek the advice of officials of the professional societies or associations representing providers groups listed in subdivision (a)(6) of this section who are affected by the new medical coverage policy or amendments to existing medical coverage policy due to their involvement with or use of new technologies or therapies.
(2)	At least 45 days prior to the adoption of new or amended medical coverage policy, the Department shall:
a.	Publish the proposed new or amended medical coverage policy on the Department's web site;
b.	Notify all Medicaid providers of the proposed, new, or amended policy; and
c.	Upon request, provide persons copies of the proposed medical coverage policy.
(3)	During the 45‑day period immediately following publication of the proposed new or amended medical coverage policy, accept oral and written comments on the proposed new or amended policy.
(4)	If, following the comment period, the proposed new or amended medical coverage policy is modified, then the Department shall, at least 15 days prior to its adoption:
a.	Notify all Medicaid providers of the proposed policy;
b.	Upon request, provide persons notice of amendments to the proposed policy; and
c.	Accept additional oral or written comments during this 15‑day period."

Requested by:	Representatives Nye, Barnhart
MEDICAID RESERVE FUND TRANSFER
SECTION 10.5.(a)  Section 10.20 of S.L. 2003‑284 reads as rewritten:
"SECTION 10.20.  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143‑23.2, the sum of sixty‑two million five hundred thousand dollars ($62,500,000) for the 2003‑2004 fiscal year and the sum of seventy‑nine million two hundred four thousand two hundred fifty‑one dollars ($79,204,251) for the 2004‑2005 fiscal year shall be allocated as prescribed by G.S. 143‑23.2(b) for Medicaid programs. Notwithstanding the prescription in G.S. 143‑23.2(b) that these funds not reduce State general revenue funding, these funds shall replace the reduction in general revenue funding effected in this act."
SECTION 10.5.(b)  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143‑23.2, the sum of five million dollars ($5,000,000) for the 2004‑2005 fiscal year shall be allocated as prescribed by G.S. 143‑23.2(b) for the implementation of the Medicaid Management Information System (MMIS).

Requested by:	Representatives Nye, Barnhart
TRANSFER OF PROPERTY TO QUALIFY FOR MEDICAID/TECHNICAL CORRECTION
SECTION 10.6.  G.S. 108A‑58, as amended by Section 10.26 of S.L. 2003‑284, reads as rewritten:
"§ 108A‑58.  Transfer of property for purposes of qualifying for medical assistance; periods of ineligibility.
(a)	Any person, otherwise eligible, who, either while receiving medical assistance benefits or within the time period mandated by controlling federal law, sells, gives, assigns or transfers countable real or personal property or an interest in real or personal property for the purpose of retaining or establishing eligibility for medical assistance benefits, shall be ineligible to receive medical assistance benefits as set forth in section 1917(c) of the Social Security Act. Countable real and personal property includes real property, excluding a homesite, unless other applicable federal or State law requires the homesite to be counted for transfer of property purposes, intangible personal property, nonessential motor and recreational vehicles, nonincome producing business equipment, boats and motors. The provisions of this act shall not apply to the sale, gift, assignment or transfer of real or personal property if and to the extent that the person applying for medical assistance would have been eligible for such assistance notwithstanding ownership of such property or an interest therein.
(b)	Any sale, gift, assignment or transfer of real or personal property or an interest in real or personal property, as provided in subsection (a) of this section, shall be presumed to have been made for the purpose of retaining or establishing eligibility for medical assistance benefits unless the person, or the person's legal representative, who sells, gives, assigns or transfers the property or interest, receives valuable consideration at least equal to the fair market value, less encumbrances, of the property or interest.
(c)	Any person who sells, gives, assigns or transfers real or personal property or an interest in real or personal property for the purpose of retaining or establishing eligibility for medical assistance benefits, as provided in subsection (a) of this section, shall, after the time of transfer, be ineligible to receive these benefits until an amount equal to the uncompensated value of the property or interest has been expended by or on behalf of the person for the person's maintenance and support, including medical expenses, paid or incurred, or shall be ineligible based on the period of time required under section 1917(c) of the Social Security Act.
(d)	The sale, gift, assignment or transfer for a consideration less than fair market value, less encumbrances, of any tangible personal property which was acquired with the proceeds of sale, assignment or transfer of real or intangible personal property described in subsection (a) of this section or in exchange for such real or intangible personal property shall be presumed to have been for the purpose of evading the provisions of this section if the acquisition and sale, gift, assignment or transfer of the tangible personal property is by or on behalf of a person receiving medical assistance or within the time period mandated by controlling federal law and the consequences of the sale, gift, assignment of transfer of such tangible personal property shall be determined under the provisions of subsections (c) and (f) of this section.
(e)	The presumptions created by subsections (b) and (d) may be overcome if the person receiving or applying for medical assistance, or the person's legal representative, establishes by the greater weight of the evidence that the sale, gift, assignment or transfer was exclusively for some purpose other than retaining or establishing eligibility for medical assistance benefits.
(f)	For the purpose of establishing uncompensated value under subsection (c), the value of property or an interest therein shall be the fair market value of the property or interest at the time of the sale, gift, assignment or transfer, less the amount of compensation, if any, received for the property or interest. There shall be a rebuttable presumption that the fair market value of real property is the most recent property tax value of the property, as ascertained according to Subchapter II of Chapter 105 of the General Statutes. Fair market value for purpose of this subsection shall be such value, determined as above set out, less any legally enforceable encumbrances to which the property is subject.
(g)	Repealed by Session Laws 2003‑284, s. 10.26, effective July 1, 2003.
(h)	This section shall not apply to applicants for or recipients of Work First Family Assistance or to persons entitled to medical assistance by virtue of their eligibility for Work First Family Assistance.
	"

Requested by:	Representatives Nye, Barnhart
MEDICAID ASSESSMENT PROGRAM FOR ICF/MR FACILITIES
SECTION 10.8.(a)  The Secretary of Health and Human Services shall implement a Medicaid assessment program for State ICF/MR facilities and ICF/MR facilities licensed under Chapter 122C of the General Statutes.  The assessment shall be imposed in a manner consistent with federal regulations under 42 C.F.R. Part 433, Subpart B.  The Department shall impose the assessment effective October 1, 2004.  Funds realized from assessments imposed shall be used only to draw down federal Medicaid matching funds and for increasing private ICF/MR facility rates.
SECTION 10.8.(b)  Funds realized from the Medicaid assessment program established pursuant to subsection (a) of this section shall not be used to supplant State funds appropriated for private ICF/MR services.  The Secretary shall use funds realized from the Medicaid assessment program to reduce State funds appropriated for public ICF/MR services.
SECTION 10.8.(c)  Funds realized from the assessment on licensed ICF/MR facilities shall be used to pay one hundred percent (100%) of the nonfederal share for increasing rates for licensed ICF/MR facilities.
SECTION 10.8.(d)  The Secretary shall adopt rules to implement this section.

Requested by:	Representatives Nye, Barnhart
COMMUNITY ALTERNATIVES PROGRAMS
SECTION 10.9.(a)  In administering CAP Programs, the Department of Health and Human Services shall ensure that expenditures do not exceed the budget for these programs. The Department shall further ensure that CAP slots are fully allocated and filled in a timely manner within budgeted expenditures and shall ensure that budgeted expenditures are not limited by the nonallocation of or delays in filling CAP slots.
SECTION 10.9.(b)  Community Alternatives Programs for Disabled Adults (CAP/DA) services shall be provided for the 2004‑2005 fiscal year to any eligible person who entered a nursing facility on or before June 1, 2004, within the existing availability of the county allocation or within the existing availability of services.

Requested by:	Representatives Nye, Barnhart, Wright
DISEASE MANAGEMENT PILOT PROGRAMS
SECTION 10.10.  The Department of Health and Human Services shall work with managed care entities and other health care providers to establish a plan to identify Medicaid enrollees at risk for chronic kidney disease through routine clinical laboratory assessment of kidney function, evaluate those individuals, and determine if early identification and appropriate management of risk factors can improve health conditions and prolonged kidney function, thereby delaying disease progression to end‑stage renal disease.  The Department shall prepare information for physicians and other health care providers regarding generally accepted standards of clinical care in the clinical management of high‑risk individuals and shall report on projected cost savings and health outcomes that result from early identification and clinical management of individuals at highest risk for chronic kidney disease.

Requested by:	Representatives Nye, Barnhart, Culpepper 
PILOT PROGRAM TO TEST NEW APPROACHES TO MANAGING ACCESS TO AND UTILIZATION OF HEALTH CARE SERVICES TO MEDICAID RECIPIENTS
SECTION 10.11.  The Department of Health and Human Services shall establish and implement two or more pilot programs to test new approaches to management of access to and utilization of health care services to Medicaid recipients.  The purpose of the pilot programs is to determine if additional cost savings can be achieved in addition to that provided by the Community Care of North Carolina program.  With respect to at least two of the pilot programs, the Department shall contract with a physician‑owned and managed network that has demonstrated success in improving the cost‑effectiveness of Medicaid services in at least one state other than North Carolina.  The Department shall develop a payment methodology that may include sharing savings with contractors providing medical management services but the methodology shall not allow increased spending relative to current appropriations.  The Department may apply for federal waivers necessary to implement this section.  The Department shall report on the implementation of the pilot programs to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division not later than February 1, 2005.

Requested by:	Representatives Nye, Barnhart
PACE PILOT PROGRAM FUNDS
SECTION 10.12.(a)  The Department of Health and Human Services, Division of Medical Assistance, shall develop a pilot program to implement the Program for All‑Inclusive Care for the Elderly (PACE). One pilot site shall be planned for the southeastern area of the State and the other pilot site shall be planned for the western area of the State. The Division shall design the pilot program to access federal Medicaid and Medicare dollars to provide acute and long‑term care services for older patients through the use of interdisciplinary teams. When implemented, services provided through the PACE pilot program may include physician visits, drugs, rehabilitation services, personal care services, hospitalization, and nursing home care. The PACE pilot program may also offer social services intervention, case management, respite care, or extended home care nursing.  
SECTION 10.12.(b)  Of the funds appropriated to the Department of Health and Human Services, Division of Medical Assistance, for the 2004‑2005 fiscal year, the sum of one hundred twenty‑three thousand one hundred fifty‑six dollars ($123,156) shall be used to support two positions in the Division of Medical Assistance to develop the pilot programs in accordance with subsection (a) of this section. These funds may also be used to contract for actuarial analysis as part of the development of the pilot programs.
SECTION 10.12.(c)  The Department of Health and Human Services shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services and the Senate Appropriations Committee on Health and Human Services on March 1, 2005, on PACE pilot program development. The report shall include services proposed to be offered under the pilot program, administrative structure of the pilot program, number of Medicare and Medicaid eligible recipients anticipated to receive services from the PACE pilot sites, and the projected savings to the State from PACE pilot program implementation.
SECTION 10.12.(d)  Nothing in this section obligates the General Assembly to appropriate funds to implement the PACE program statewide.

Requested by:	Representatives Clary, Nye, Barnhart
DHHS STUDY MEDICAID INSTITUTIONAL BIAS
SECTION 10.13.(a)  The Department of Health and Human Services shall contract with an independent entity to study whether the State's Medicaid program has a bias that favors support for individuals in institutional settings over support for individuals living at home and if a bias is found, to determine and recommend ways to alleviate the bias.  The entity selected by the Department shall be one that has documented experience in conducting similar studies.  The study shall include consideration of all in‑home services paid under the State's Medicaid program, including CAP/DA, home health, and personal care services.  The Department shall report the results of the study to the North Carolina Study Commission on Aging by January 2005.
SECTION 10.13.(b)  The Department of Health and Human Services may use up to one hundred fifty thousand dollars ($150,000) of funds available for the 2004‑2005 fiscal year to fund this study.

Requested by:	Representatives Nye, Barnhart
NC HEALTH CHOICE ELIGIBILITY; premium contribution
SECTION 10.14.(a)  G.S. 108A‑70.21(a) reads as rewritten:
"§ 108A‑70.21.  Program eligibility; benefits; enrollment fee and other cost‑sharing; coverage from private plans; purchase of extended coverage.
(a)	Eligibility. – The Department may enroll eligible children based on availability of funds. Following are eligibility and other requirements for participation in the Program:
(1)	Children must:
a.	Be under the age of 19;
b.	Be ineligible for Medicaid, Medicare, or other federal government‑sponsored health insurance;
c.	Be uninsured;
d.	Be in a family that meets the following family income requirements:
1.	Infants under the age of one year whose family income is from one hundred eighty‑five percent (185%) through two hundred percent (200%) of the federal poverty level;
2.	Children age one year through five years whose family income is above one hundred thirty‑three percent (133%) through two hundred percent (200%) of the federal poverty level; and
3.	Children age six years through eighteen years whose family income is above one hundred percent (100%) through two hundred percent (200%) of the federal poverty level;
e.	Be a resident of this State and eligible under federal law; and
f.	Have paid the Program enrollment fee required under this Part.
(2)	Proof of family income and residency and declaration of uninsured status shall be provided by the applicant at the time of application for Program coverage. The family member who is legally responsible for the children enrolled in the Program has a duty to report any change in the enrollee's status within 60 days of the change of status.
(3)	If a responsible parent is under a court order to provide or maintain health insurance for a child and has failed to comply with the court order, then the child is deemed uninsured for purposes of determining eligibility for Program benefits if at the time of application the custodial parent shows proof of agreement to notify and cooperate with the child support enforcement agency in enforcing the order.
If health insurance other than under the Program is provided to the child after enrollment and prior to the expiration of the eligibility period for which the child is enrolled in the Program, then the child is deemed to be insured and ineligible for continued coverage under the Program. The custodial parent has a duty to notify the Department within 10 days of receipt of the other health insurance, and the Department, upon receipt of notice, shall disenroll the child from the Program. As used in this paragraph, the term "responsible parent" means a person who is under a court order to pay child support.
	
(4)	The Program shall cover only those medical expenditures incurred after the date the family has applied for Program enrollment. Expenditures incurred prior to the date of application shall not be reimbursed by the Program. The premium rate paid to the Program administrator shall be prorated for the first month of coverage based on the number of days remaining in that month."
SECTION 10.14.(b)  G.S. 108A‑70.21 is amended by adding the following new subsection to read:
"(e1)	Premium Contribution. – Effective January 1, 2006, a premium contribution shall be applicable for children whose family income is above one hundred fifty percent (150%) of the federal poverty level. The premium contribution shall be a minimum of ten dollars ($10.00) per child, per month, not to exceed twenty dollars ($20.00) per family, per month. Application of the premium is subject to the limitations of subsection (e) of this section."
SECTION 10.14.(c)  The Department of Health and Human Services shall develop and implement a system for allowing families to contribute to the NC Health Choice premium cost.  The premium payment shall be applicable for children whose family income is above one hundred fifty percent (150%) of the federal poverty level and shall be a minimum of ten dollars ($10.00) per child, per month, not to exceed twenty dollars ($20.00) per family, per month.  The premium shall be implemented not later than January 1, 2006.

Requested by:	Representatives Nye, Barnhart
NC HEALTH CHOICE ADMINISTRATION AND CLAIMS PROCESSING
SECTION 10.15.(a)  The Department of Health and Human Services shall issue a Request for Proposal to contract for administration and claims processing of the NC Health Choice program. The Department shall schedule the review process for proposals received such that the Department has signed a contract with the selected contractor not later than July 1, 2005. The contract shall provide for full implementation of administration and claims processing not later than January 1, 2006.
SECTION 10.15.(b)  Effective January 1, 2006, Part 5 of Article 3 of Chapter 135 of the General Statutes is repealed.

Requested by:	Representatives Nye, Barnhart
NC HEALTH CHOICE ENROLLMENT MANAGEMENT
SECTION 10.16.  The total amount of State funds expended for the Health Insurance Program for Children (NC Health Choice) in the 2004‑2005 fiscal year shall not exceed the amount of State funds appropriated to match federal funds for the Program for the 2004‑2005 fiscal year. The Department of Health and Human Services shall manage Program enrollment in a way that maximizes the number of the children served within existing funds.

Requested by:	Representatives Nye, Barnhart
foster care and adoption assistance payments
SECTION 10.17.  Section 10.46 of S.L. 2003‑284 reads as rewritten:
"SECTION 10.46.(a)  The maximum rates for State participation in the foster care assistance program are established on a graduated scale as follows:
(1)	$415.00 per child per month for children aged birth through 5;
(2)	$465.00 per child per month for children aged 6 through 12; and
(3)	$515.00 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.
"SECTION 10.46.(b)  The maximum rates for State participation in the adoption assistance program are established on a graduated scale as follows:
(1)	$415.00 per child per month for children aged birth through 5;
(2)	$465.00 per child per month for children aged 6 through 12; and
(3)	$515.00 per child per month for children aged 13 through 18.
"SECTION 10.46.(c)  In addition to providing board payments to foster and adoptive families of HIV‑infected children, as prescribed in Section 23.28 of Chapter 324 of the 1995 Session Laws, any additional funds remaining that were appropriated for this purpose shall be used to provide medical training in avoiding HIV transmission in the home.
"SECTION 10.46.(d)  The maximum rates for the State participation in HIV foster care and adoption assistance are established on a graduated scale as follows:
(1)	$800.00 per child per month with indeterminate HIV status;
(2)	$1,000 per child per month confirmed HIV‑infected, asymptomatic;
(3)	$1,200 per child per month confirmed HIV‑infected, symptomatic; and
(4)	$1,600 per child per month terminally ill with complex care needs."

Requested by:	Representatives Nye, Barnhart
Special Children Adoption Fund
SECTION 10.18.  Section 10.47 of S.L. 2003‑284 reads as rewritten:
"SECTION 10.47.(a)  Of the funds appropriated to the Department of Health and Human Services in this act, the sum of one hundred thousand dollars ($100,000) shall be used to support the Special Children Adoption Fund for the 2004‑2005 fiscal year. The Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A‑50 and in foster care. Payments received from the Special Children Adoption Fund by participating agencies shall be used exclusively to enhance the adoption services. No local match shall be required as a condition for receipt of these funds. In accordance with State rules for allowable costs, the Special Children Adoption Fund may be used for post‑adoption services for families whose income exceed two hundred percent (200%) of the federal poverty level.
"SECTION 10.47.(b)  Of the total funds appropriated for the Special Children Adoption Fund each year, twenty percent (20%) of the total funds available shall be reserved for payment to participating private adoption agencies. If the funds reserved in this subsection for payments to private agencies have not been spent on or before March 31, 2004, the Division of Social Services may reallocate those funds, in accordance with this section, to other participating adoption agencies.
"SECTION 10.47.(c)  The Division of Social Services shall monitor the total expenditures in the Special Children Adoption Fund and redistribute unspent funds to ensure that the funds are used according to the guidelines established in subsection (a) of this section. The Division shall implement strategies to ensure that funds that have historically reverted for this program are used for the intended purpose. The Division shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on the expenditures and activities of the program no later than December 1, 2004, and June 30, 2005."

Requested by:	Representatives Nye, Barnhart
Funds for Child Protective Services Staff
SECTION 10.19.  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of five million dollars ($5,000,000) shall be used to hire additional child protective services staff at the local level for the 2004‑2005 fiscal year. The Division of Social Services shall distribute the funds based on a funding formula that shall address the needs of counties that have high caseload per child protective services worker ratios. These funds shall not be used to supplant any other source of funding for staff. These funds shall be used to increase the number of child protective services workers throughout the State. The Department of Health and Human Services shall report on the use of these funds to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than January 1, 2005.

Requested by:	Representatives Nye, Barnhart
Child Welfare System Reform
SECTION 10.20.(a)  The Department of Health and Human Services shall transfer funds to the General Assembly to hire an independent consultant to evaluate North Carolina's Child Welfare System at the State and local levels and provide recommendations to reform that system.
SECTION 10.20.(b)  The Fiscal Research Division, through the Legislative Services Office, in consultation with the Department of Health and Human Services, shall issue a Request for Proposal (RFP) for an independent consultant with extensive experience in child welfare systems to develop recommendations for reforming the State's existing system. The contractor shall evaluate the overall administration and oversight of the existing system and make specific recommendations to strengthen the system. The contractor shall review North Carolina's historical performance in meeting national performance outcome measurements and note any progress in taking corrective action to address the areas identified as weaknesses in the existing system. The contractor shall evaluate variances in resources, including staffing levels, at the local level as well as the administrative structure at the State level. The contractor shall review statewide abuse and neglect data to determine if the data is accurate and useful and make recommendations for improving the data collection system. The contractor's final report shall include recommendations to ensure accountability and consistency at both the State and local levels.
SECTION 10.20.(c)  The final report from the consultant shall be presented to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than October 1, 2005.

Requested by:	Representatives Nye, Barnhart
ADULT DAY SERVICES TRAINING AND REIMBURSEMENT METHODOLOGY
SECTION 10.21.  In an effort to support and sustain adult day services in North Carolina, the Department of Health and Human Services shall, within existing resources, utilize up to two hundred fifty thousand dollars ($250,000) for the 2004‑2005 fiscal year to contract with a national adult day services resource center to provide training and consultation to adult day services providers and State and county adult day services consultants.  The selected consultant shall study the current method of reimbursement for adult day services and make recommendations regarding changes to the reimbursement methodology.  The final report shall be presented to the Study Commission on Aging by January 1, 2005.

Requested by:	
STATE/COUNTY SPECIAL ASSISTANCE
SECTION 10.21A.(a)  Effective October 1, 2004, the maximum monthly rate for residents in adult care home facilities shall be one thousand ninety-six dollars ($1,096) per month per resident unless adjusted by the Department in accordance with Section 10.52(f) of S.L. 2003-284.
SECTION 10.21A.(b)  From funds appropriated in this act to the Department of Health and Human Services for the 2004-2005 fiscal year, the sum of five million dollars ($5,000,000) shall be transferred from institutional receipts in the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to the Division of Social Services to provide the rate increase required under subsection (a) of this section.

Requested by:	Representatives Nye, Barnhart
ADMINISTRATION OF REDUCTION IN FUNDS TO AREA AUTHORITIES
SECTION 10.22.(a)  In administering the five-million-dollar ($5,000,000) reduction in funds to area programs enacted in this act, the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services shall do the following:
(1)	Apply the reduction to area authority funds that have reverted in each of the past two fiscal years; and
(2)	Apportion the area authority reduction across disability groups by the proportion of the total funds reverted for each disability fund code in fiscal year 2003‑2004.
SECTION 10.22.(b)  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143‑23.2, the sum of five million dollars ($5,000,000) shall be allocated as prescribed by G.S. 143‑23(b) to the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to restore a portion of the reduction in funds to area mental health programs and county programs. Notwithstanding the prescription in G.S. 143‑23.2(b) that these funds not reduce State general revenue funding, these funds shall replace the reduction in general revenue funding effected in this act.

Requested by:	Representative Insko
DHHS POLICIES AND PROCEDURES IN AT RISK CHILDREN'S PROGRAM AND MULTIPLY DIAGNOSED ADULTS PROGRAM
SECTION 10.22A.  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall in cooperation with area mental health authorities and county programs, identify and eliminate administrative and fiscal barriers created by existing State and local policies and procedures in the At Risk Children's Program and the Multiply Diagnosed Adults Program.  The Department shall implement changes in policies and procedures in order to facilitate all of the following:
(1)	The provision of services to adults and children as defined in the Mental Health System Reform State Plan as priority or targeted populations.
(2)	A revised system of allocating State and federal funds to area mental health authorities and county programs that reflects projected needs including the impact of system reform efforts rather than historical spending patterns.
(3)	The provision of services to children not deemed eligible for the At Risk Children's Program but who would otherwise be in need of medically necessary treatment services to prevent out‑of‑home placement.
(4)	The provision of services in the community to adults remaining in and being placed in State institutions addressed in Olmstead v. L.C.
The Department, in consultation with the area mental health authorities and county programs, shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services on the progress in implementing these changes.  The report shall be submitted on October 1, 2004, and February 1, 2005.

Requested by:	Representatives Nye, Barnhart
FUNDS FOR PATH PROGRAM RESIDENCE PURCHASE
SECTION 10.23.  The Department of Health and Human Services may use up to five hundred thousand dollars ($500,000) from the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs to purchase an existing house or other residential facility, and the land on which the house or facility is located, for use by the PATH Program at the Murdoch Center.

Requested by:	Representatives Nye, Barnhart
USE OF MENTAL HEALTH TRUST FUND MONIES FOR CAPITAL IMPROVEMENTS AND EXPANSIONS AT ADACT CENTERS
SECTION 10.24.  Of the funds appropriated to the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs for the 2004‑2005 fiscal year, not more than three million five hundred thousand dollars ($3,500,000) may be used by the Department of Health and Human Services for capital improvements and capital expansions at the State's Alcohol and Drug Abuse Treatment Centers (ADACT) in accordance with G.S. 143‑15D.

Requested by:	Representatives Nye, Barnhart
STUDY FINANCING OF MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE SERVICES
SECTION 10.25.  The Department of Health and Human Services shall study the financing of mental health, developmental disabilities, and substance abuse services.  The study shall include the following:
(1)	An examination of all sources of funds used in the delivery of mental health, developmental disabilities, and substance abuse services throughout the Department.
(2)	An examination of alternative financing mechanisms for funding mental health, developmental disabilities, and substance abuse services, including Medicaid.
(3)	Recommendations for feasible alternative financing mechanisms.
The Department shall report its findings and recommendations to the Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, the  House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than July 1, 2005.

Requested by:	Representatives Nye, Barnhart
AREA PROGRAM AND COUNTY PROGRAM TRANSITION FLEXIBILITY
SECTION 10.26.(a)  G.S. 122C-115(a) reads as rewritten:
"(a)	A county shall provide mental health, developmental disabilities, and substance abuse services through an area authority or through a county program established pursuant to G.S. 122C‑115.1. To the extent this section conflicts with G.S. 153A‑77(a), the provisions of G.S. 153A‑77(a) control. If a county that is a member of an area authority determines to provide its services through a county program or through a multicounty program, it may, with the agreement of the other counties comprising the area authority and the approval of the Secretary, simultaneously participate in a county program or a multicounty program while remaining a participating member of the area authority until the end of the subsequent fiscal year."
SECTION 10.26.(b)  This section is effective upon ratification and expires on July 1, 2005.

Requested by:	Representatives Nye, Barnhart
MENTAL HEALTH TREATMENT COURTS
SECTION 10.27.(a)  The Administrative Office of the Courts shall establish pilot programs in judicial districts 15B, 26, and 28 that add a mental health treatment component to the existing drug treatment courts in those districts, thereby expanding those courts into therapeutic court programs aimed at providing treatment to repeat adult offenders with needs for either mental health or substance abuse services. The purpose of the mental health treatment component of the pilot programs is to facilitate cooperation between the State mental health system, mental health service providers, and the judicial system in order for the State mental health system to provide repeat adult offenders that need mental health services with treatment and other mental health services aimed at improving their ability to function in the community, thereby reducing recidivism and easing the workload of the courts.
In expanding the drug treatment courts in these districts into therapeutic courts under this section, the Administrative Office of the Courts and the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall collaborate on a plan for the structure of the court process, treatment services provided by area authorities or county programs and other appropriate mental health service providers, and administration of the pilot programs. Treatment services provided under the mental health treatment court component shall use best treatment practices approved by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services. The collaborative effort required under this section shall also include consideration of the effectiveness and efficiency of the mental health treatment court component to determine feasibility of the statewide expansion of drug treatment courts into therapeutic courts.
SECTION 10.27.(b)  The Administrative Office of the Courts shall report to the Chairs of the Senate and House Appropriations Committees, the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety, and the Chairs of the Senate and House Appropriations Subcommittees on Health and Human Services by March 1, 2005, on the implementation of the therapeutic treatment court pilot programs provided for in this section, including an evaluation of the effectiveness of the new mental health treatment component of those programs and recommendations on the feasibility and desirability of expanding the existing drug treatment court program into a statewide therapeutic court program.
SECTION 10.27.(c)  There is appropriated from the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs to the Judicial Department the sum of thirty‑six thousand one hundred sixty‑one dollars ($36,161) for the 2004‑2005 fiscal year.  These funds shall be used for administrative costs associated with expanding the Drug Treatment Court to serve adult repeat offenders who are within the targeted population for mental health, developmental disabilities, and substance abuse services as defined in G.S. 122C‑3(38).
SECTION 10.27.(d)  There is appropriated from the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of one hundred thirty‑seven thousand nine hundred forty dollars ($137,940) for the 2004‑2005 fiscal year.  These funds shall be used for mental health treatment services to repeat adult offenders within the targeted population for mental health, developmental disabilities, and substance abuse services as defined in G.S. 122C‑3(38).
SECTION 10.27.(e)  Of the funds appropriated in this act to the Judicial Department, the sum of twenty thousand dollars ($20,000) for the 2004‑2005 fiscal year shall be used to obtain an independent evaluation of the effectiveness of the pilot programs authorized under this section.
SECTION 10.27.(f)  A county may appropriate county or other non‑State funds to expand mental health services to adult repeat offenders served by the pilot programs for mental health treatment established under subsection (a) of this section. No State funds appropriated for this section shall be used to provide mental health services to nontargeted population adult repeat offenders.

Requested by:	Representatives Nye, Barnhart
PUBLIC HEALTH TASK FORCE REPORTING REQUIREMENT
SECTION 10.28.  The Department of Health and Human Services shall provide a detailed report on recommendations made by the Public Health Task Force.  The report shall include an implementation schedule with the fiscal impact of each recommendation on both State and county governments.  The Department shall submit the report upon the completion of the work of the Task Force.  The Department shall submit the report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Representatives Nye, Barnhart
Early Intervention Reporting Requirement
SECTION 10.29.  The Department of Health and Human Services, Division of Public Health, shall track and report on the number of children referred to the Early Intervention program through Department of Social Services abuse and neglect agents. The report shall include the number and types of services provided to these children and the fiscal impact to the program. The Department shall submit a report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division by January 30, 2005.

Requested by:	Representatives Nye, Barnhart
aids drug assistance program (ADAP)
SECTION 10.30.  Section 10.31 of S.L. 2003‑284 reads as rewritten:
"SECTION 10.31.(a)  For the 2003‑2004 fiscal year and for the 2004‑2005 fiscal year, HIV‑positive individuals with incomes at or below one hundred twenty‑five percent (125%) of the federal poverty level are eligible for participation in ADAP. Eligibility for participation in ADAP during the 2003‑2005 fiscal biennium shall not be extended to individuals with incomes above one hundred twenty‑five percent (125%) of the federal poverty level.
"SECTION 10.31.(b)  The Department of Health and Human Services shall make an interim report on ADAP program utilization by January 1, 2005, and a final report on ADAP program utilization by May 1, 2005, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on ADAP. The reports shall include the following:
(1)	ADAP program utilization:
a.	Monthly data on total cumulative AIDS/HIV cases reported in North Carolina.
b.	Monthly data on the number of individuals who have applied to participate in ADAP that have been determined to be ineligible.
c.	Monthly data on the income level of participants in ADAP and of individuals who have applied to participate in ADAP who have been determined to be ineligible.
d.	Monthly data on fiscal year‑to‑date expenditures of ADAP. The interim report shall contain monthly data on the calendar year‑to‑date expenditures of ADAP.
e.	An update on the status of the information management system.
f.	Monthly data on ADAP usage patterns and demographics of participants in ADAP.
g.	Fiscal year‑to‑date budget information."

Requested by:	Representatives Nye, Barnhart
maximize adap program funding and aids/hiv testing
SECTION 10.31.  The Department of Health and Human Services shall budget all 340B rebates received from pharmaceutical purchases for the AIDS Drug Assistance Program (ADAP) for use in the ADAP program. Priority use of these funds shall be to continue funding for HIV/AIDS testing. Funds remaining after use for HIV/AIDS testing may be used for the purchase of pharmaceuticals. The Department shall consider changing the ADAP program to a six‑month eligibility process in its effort to control costs. If after consideration it is determined that a savings will occur, the Department shall implement the change. The Department shall report on its findings to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division in its January report.

Requested by:	Representatives Nye, Barnhart
NORTH CAROLINA PUBLIC HEALTH DEPARTMENT INCUBATORS
SECTION 10.32.(a)  There is appropriated from the General Fund to the Department of Health and Human Services the sum of two million two hundred fifty thousand dollars ($2,250,000) for the 2004‑2005 fiscal year.  These funds shall be allocated to the North Carolina Institute for Public Health, School of Public Health at the University of North Carolina at Chapel Hill to coordinate the development of "public health incubators."  Core participants in these incubators will be local public health departments in selected underserved regions. Other governmental agencies and nonprofit organizations will also be invited to participate.  The funds shall be used to:
(1)	Establish or strengthen the capacity to conduct epidemiological investigation and to actively monitor public health conditions, diseases, and risk factors.
(2)	Establish or strengthen the capacity to monitor health disparities and to develop plans to reduce those disparities.
(3)	Conduct regional community health assessments with the assistance of other members of the public health community including other governmental agencies and nonprofit organizations, to establish partnership health priorities based on these findings, and to draft public health interventions to address the highest health priorities.
(4)	Raise public awareness of the health‑related issues in partnership communities, collaborating with members of the larger public health community and with local and State media, reporting health issues to the county commissioners, the boards of health, legislators, at‑risk groups, and to the community at large.
(5)	Provide regular, supplemental training to members of the participating boards of health to inform them about their overall responsibilities including their role in policy development, to introduce them to evidence‑based best practices in public health with an emphasis on collaborative initiatives, and to update them on emerging public health issues, particularly those that are of greatest concern to their communities.
(6)	Conduct workforce preparedness assessments and follow‑on training for the public health workforce in the pilot regions and to establish or supplement policy to facilitate effective responses to public health emergencies where appropriate.
(7)	Establish a formal, systematic review of the incubators to track and evaluate the efficacy of roles, organization, and programs, to identify best practices, and to develop recommendations for improvement based on these findings.
SECTION 10.32.(b)  The Department of Health and Human Services shall report on the use of these funds and an evaluation of the incubator efforts to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.  The Department shall submit the report not later than January 14, 2005.

Requested by:	Representatives Nye, Barnhart
FUNDS FOR SCHOOL NURSES
SECTION 10.33.  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of one million seven hundred fifty thousand dollars ($1,750,000) shall be used for a school nurse funding initiative.  The Department of Health and Human Services, Division of Public Health, in conjunction with the Department of Public Instruction, shall provide funds to communities to hire school nurses.  The program will fund 35 permanent local nurses. The Department of Health and Human Services and the Department of Public Instruction shall form a committee to select a limited number of communities where school nurses are most needed to receive these grants. The criteria shall include determining the areas in the greatest need for school nurses with the greatest inability to pay for these nurses. Among other criteria, the team shall consider:  (i) the current nurse‑to‑student ratio; (ii) the economic status of the community; and (iii) the health needs of area children.
There shall be no supplanting of local, State, or federal funds with these funds. Communities shall maintain their current level of effort and funding for school nurses. These funds shall not be used for funding nurses for State agencies. All funding shall be used for direct services.
The Department of Health and Human Services shall report on the use of funds allocated under this section by December 1, 2004, to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Representatives Nye, Barnhart
HOSPITAL EMERGENCY DEPARTMENT DATA REPORTING
SECTION 10.34.(a)  Effective January 1, 2005, G.S. 130A‑476(f) is repealed.
SECTION 10.34.(b)  Effective January 1, 2005, Article 22 of Chapter 130A of the General Statutes is amended by adding the following new section to read:
"§ 130A‑480.  Emergency department data reporting.
(a)	For the purpose of ensuring the protection of the public health, the State Health Director shall develop a syndromic surveillance program for hospital emergency departments in order to detect and investigate public health threats that may result from (i) a terrorist incident using nuclear, biological, or chemical agents or (ii) an epidemic or infectious, communicable, or other disease. The State Health Director shall specify the data to be reported by hospitals pursuant to this program, subject to the following:
(1)	Each hospital shall submit electronically available emergency department data as specified by rule by the Commission. The Commission, in consultation with hospitals, shall establish by rule a schedule for the implementation of full electronic reporting capability of all data elements by all hospitals. The schedule shall take into consideration the number of data elements already reported by the hospital, the hospital's capacity to electronically maintain the remaining elements, available funding, and other relevant factors. 
(2)	None of the following data for patients or their relatives, employers, or household members may be collected by the State Health Director: names; postal or street address information, other than town or city, county, state, and the first five digits of the zip code; geocode information; telephone numbers; fax numbers; electronic mail addresses; social security numbers; health plan beneficiary numbers; account numbers; certificate or license numbers; vehicle identifiers and serial numbers, including license plate numbers; device identifiers and serial numbers; web universal resource locators (URLs); Internet protocol (IP) address numbers; biometric identifiers, including finger and voice prints; and full face photographic images and any comparable images. 
(b)	The following are not public records under Chapter 132 of the General Statutes and are privileged and confidential:
(1)	Data reported to the State Health Director pursuant to this section.
(2)	Data collected or maintained by any entity with whom the State Health Director contracts for the reporting, collection, or analysis of data pursuant to this section. 
The State Health Director shall maintain the confidentiality of the data reported pursuant to this section and shall ensure that adequate measures are taken to provide system security for all data and information. The State Health Director may share data with local health departments for public health purposes, and the local health departments are bound by the confidentiality provisions of this section. The State Health Director shall not allow information that it receives pursuant to this section to be used for commercial purposes and shall not release data except as authorized by other provisions of law.
(c)	A person is immune from liability for actions arising from the required submission of data under this Article. 
(d)	For purposes of this section, "hospital" means a hospital, as defined in G.S. 131E‑214.1(3), that operates an emergency room on a 24‑hour basis. The term does not include a psychiatric hospital subject to Article 2 of Chapter 122C of the General Statutes.
(e)	Administrative emergency department data shall be reported by hospitals under Article 11A of Chapter 131E of the General Statutes."
SECTION 10.34.(c)  This section is effective when this act becomes law.

Requested by:	Representatives Barnhart, Nye
authorize child care commission to adopt rules for Child care facilities for medically fragile children
SECTION 10.35.  G.S. 110‑88 is amended by adding a new subdivision to read:
"The Commission shall have the following powers and duties:
…
(13)	To adopt rules for child care facilities that provide care for medically fragile children.
…."

Requested by:	Representatives Nye, Barnhart
Criminal History Record Checks for Local Child Care Centers
SECTION 10.36.  It is the intent of the General Assembly that the Division of Child Development be able to conduct criminal history record checks for local child care centers in an expedient manner during the 2004‑2005 fiscal year. The Division of Child Development may use lapsed salary funds to support up to three additional temporary positions during fiscal year 2005 to eliminate the backlog and keep current the criminal history record checks process. The Office of State Budget and Management and the Department of Health and Human Services shall expedite the approval process for these temporary positions.

Requested by:	Representatives Barnhart, Nye
Increase North Carolina Partnership for Children Board Membership
SECTION 10.37.  G.S. 143B‑168.12(a)(1) reads as rewritten:
"(1)	The North Carolina Partnership shall have a Board of Directors consisting of the following 26 members:
a.	The Secretary of Health and Human Services, ex officio, or the Secretary's designee;
b.	Repealed by Session Laws 1997, c. 443, s. 11A.105.
c.	The Superintendent of Public Instruction, ex officio, or the Superintendent's designee;
d.	The President of the Community Colleges System, ex officio, or the President's designee;
e.	Three members of the public, including one child care provider, one other who is a parent, and one other who is a board chair of a local partnership serving on the North Carolina Partnership local partnership advisory committee, appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate;
f.	Three members of the public, including one who is a parent, one other who is a representative of the faith community, and one other who is a board chair of a local partnership serving on the North Carolina Partnership local partnership advisory committee, appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives;
g.	Twelve members, appointed by the Governor. Three of these 12 members shall be members of the party other than the Governor's party, appointed by the Governor. Seven of these 12 members shall be appointed as follows: one who is a child care provider, one other who is a pediatrician, one other who is a health care provider, one other who is a parent, one other who is a member of the business community, one other who is a member representing a philanthropic agency, and one other who is an early childhood educator;
h.	Repealed by Session Laws 1998‑212, s. 12.37B(a), effective October 30, 1998.
h1.	The Chair of the North Carolina Partnership Board shall be appointed by the Governor;
i.	Repealed by Session Laws 1998‑212, s. 12.37B(a), effective October 30, 1998.
j.	One member of the public appointed by the General Assembly upon recommendation of the Majority Leader of the Senate;
k.	One member of the public appointed by the General Assembly upon recommendation of the Majority Leader of the House of Representatives;
l.	One member of the public appointed by the General Assembly upon recommendation of the Minority Leader of the Senate; 
m.	One member of the public appointed by the General Assembly upon recommendation of the Minority Leader of the House of Representatives; and
n.	The Director of the More at Four Pre‑Kindergarten Program, or the Director's designee.
All members appointed to succeed the initial members and members appointed thereafter shall be appointed for three‑year terms. Members may succeed themselves.
All appointed board members shall avoid conflicts of interests and the appearance of impropriety. Should instances arise when a conflict may be perceived, any individual who may benefit directly or indirectly from the North Carolina Partnership's disbursement of funds shall abstain from participating in any decision or deliberations by the North Carolina Partnership regarding the disbursement of funds.
All ex officio members are voting members. Each ex officio member may be represented by a designee. These designees shall be voting members. No members of the General Assembly shall serve as members.
The North Carolina Partnership may establish a nominating committee and, in making their recommendations of members to be appointed by the General Assembly or by the Governor, the President Pro Tempore of the Senate, the Speaker of the House of Representatives, the Majority Leader of the Senate, the Majority Leader of the House of Representatives, the Minority Leader of the Senate, the Minority Leader of the House of Representatives, and the Governor shall consult with and consider the recommendations of this nominating committee.
The North Carolina Partnership may establish a policy on members' attendance, which policy shall include provisions for reporting absences of at least three meetings immediately to the appropriate appointing authority.
Members who miss more than three consecutive meetings without excuse or members who vacate their membership shall be replaced by the appropriate appointing authority, and the replacing member shall serve either until the General Assembly and the Governor can appoint a successor or until the replaced member's term expires, whichever is earlier.
The North Carolina Partnership shall establish a policy on membership of the local boards. No member of the General Assembly shall serve as a member of a local board. Within these requirements for local board membership, the North Carolina Partnership shall allow local partnerships that are regional to have flexibility in the composition of their boards so that all counties in the region have adequate representation.
All appointed local board members shall avoid conflicts of interests and the appearance of impropriety. Should instances arise when a conflict may be perceived, any individual who may benefit directly or indirectly from the partnership's disbursement of funds shall abstain from participating in any decision or deliberations by the partnership regarding the disbursement of funds."

Requested by:	Representatives Barnhart, Nye
More At Four Program
SECTION 10.38.  Section 10.40 of S.L. 2003‑284 reads as rewritten:
"SECTION 10.40.(a)  Of the funds appropriated to the Department of Health and Human Services, the sum of forty‑three million one hundred twenty‑one thousand eight hundred dollars ($43,121,800) in the 2003‑2004 fiscal year and the sum of fifty million nine hundred seventy‑nine thousand two dollars ($50,979,002) in the 2004‑2005 fiscal year shall be used to implement "More At Four", a voluntary prekindergarten program for at‑risk four‑year‑olds.
"SECTION 10.40.(b)  The Department of Health and Human Services and the Department of Public Instruction shall establish the "More At Four" Pre‑K Task Force to oversee development and implementation of the pilot program. The membership shall include:
(1)	Parents of at‑risk children.
(2)	Representatives with expertise in early childhood development.
(3)	Classroom teachers who are certified in early childhood education.
(4)	Representatives of the private not‑for‑profit and for‑profit child care providers in North Carolina.
(5)	Employees of the Department of Health and Human Services who are knowledgeable in the areas of early childhood development, current State and federally funded efforts in child development, and providing child care.
(6)	Representatives of local Smart Start partnerships.
(7)	Representatives of local school administrative units.
(8)	Representatives of Head Start prekindergarten programs in North Carolina.
(9)	Employees of the Department of Public Instruction.
"SECTION 10.40.(c)  The Department of Health and Human Services and the Department of Public Instruction, with guidance from the Task Force, shall continue the implementation of the "More At Four" prekindergarten program for at‑risk four‑year‑olds who are at risk of failure in kindergarten. The program is available statewide to all counties that choose to participate, including underserved areas. The goal of the program is to provide quality prekindergarten services to a greater number of at‑risk children in order to enhance kindergarten readiness for these children. The program shall be consistent with standards and assessments established jointly by the Department of Health and Human Services, the Department of Public Instruction, and the Task Force and may consider the "More At Four" Pre‑K Task Force recommendations. The program shall include:
(1)	A process and system for identifying children at risk of academic failure.
(2)	A process and system for identifying children who are not being served first priority in formal early education programs, such as child care, public or private preschools, Head Start, Early Head Start, early intervention programs, or other such programs, who demonstrate educational needs, and who are eligible to enter kindergarten the next school year, as well as children who are underserved.
(3)	A curriculum or several curricula that are recommended by the Task Force. The Task Force will identify and approve appropriate research‑based curricula. These curricula shall: (i) focus primarily on oral language and emergent literacy; (ii) engage children through key experiences and provide background knowledge requisite for formal learning and successful reading in the early elementary years; (iii) involve active learning; (iv) promote measurable kindergarten language‑readiness skills that focus on emergent literacy and mathematical skills; and (v) develop skills that will prepare children emotionally and socially for kindergarten.
(4)	An emphasis on ongoing family involvement with the prekindergarten program.
(5)	Evaluation of child progress through pre‑ and post‑assessment of children in the statewide evaluation, as well as ongoing assessment of the children by teachers.
(6)	Guidelines for a system to reimburse local school boards and systems, private child care providers, and other entities willing to establish and provide prekindergarten programs to serve at‑risk children.
(7)	A system built upon existing local school boards and systems, private child care providers, and other entities that demonstrate the ability to establish or expand prekindergarten capacity.
(8)	A quality‑control system. Participating providers shall comply with standards and guidelines as established by the Department of Health and Human Services, the Department of Public Instruction, and the Task Force. The Department may use the child care rating system to assist in determining program participation.
(9)	Standards for minimum teacher qualifications. A portion of the classroom sites initially funded shall have at least one teacher who is certified or provisionally certified in birth to kindergarten education.
(10)	A local contribution. Programs must demonstrate that they are accessing resources other than "More At Four".
(11)	A system of accountability.
(12)	Collaboration with State agencies and other organizations. The Department of Health and Human Services, the Department of Public Instruction, and the Task Force shall collaborate with State agencies and other organizations such as the North Carolina Partnership for Children, Inc., in the design and implementation of the program.
(13)	Consideration of the reallocation of existing funds. In order to maximize current funding and resources, the Department of Health and Human Services, the Department of Public Instruction, and the Task Force shall consider the reallocation of existing funds from State and local programs that provide prekindergarten related care and services.
(14)	Recommendations for long‑term organizational placement and administration of the program.
"SECTION 10.40.(d)  During the 2003‑2004 fiscal year, the Department of Health and Human Services shall plan for expansion of the "More At Four" program within existing resources to include four and five star rated centers and schools serving four‑year‑olds and develop guidelines for these programs. The Department shall analyze guidelines for use of the "More At Four" funds, State subsidy funds, and Smart Start subsidy funds and devise a complementary plan for administration of funds for all four‑year‑old classrooms. The four and five star centers that choose to become a "More at Four" program shall, at a minimum, receive curricula and access to training and workshops for "More at Four" programs and be considered along with other "More at Four" programs for T.E.A.C.H. funding. The Department shall ensure that no individual receives funding from more than one source for the same purpose or activity during the same funding period. For purposes of this subsection, sources shall include T.E.A.C.H., W.A.G.E.$., and T.E.A.C.H. Health Insurance programs for individual recipients.
 
The "More At Four" program shall review the number of slots filled by counties on a monthly basis and shift the unfilled slots to counties with waiting lists. The shifting of slots shall occur through January 30, 2005, at which time any remaining funds for slots unfilled shall be transferred to the Division of Child Development to meet the needs of the waiting list for subsidized child care.
"SECTION 10.40.(e)  The Department of Health and Human Services, the Department of Public Instruction, and the Task Force shall submit a progress report by January 1, 2005, and May 30, 2005, to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Education Oversight Committee, the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division. This final report shall include the following:
(1)	The number of children participating in the program.
(2)	The number of children participating in the program who have never been served in other early education programs, such as child care, public or private preschool, Head Start, Early Head Start, or early intervention programs.
(3)	The expected expenditures for the programs and the source of the local match for each grantee.
(4)	The location of program sites and the corresponding number of children participating in the program at each site.
(5)	Activities involving Child Find in counties.
(6)	A comprehensive cost analysis of the program, including the cost per child served by the program.
(7)	The plan for expansion of "More At Four" through existing resources as outlined in this section.
"SECTION 10.40.(f)  Beginning in the 2004‑2005 fiscal year, the "More At Four" program shall establish income eligibility requirements for the program of seventy‑five percent (75%) of the State median income in an effort to make the program consistent with the child care subsidy requirements."

PART Xi. DEPARTMENT OF Agriculture and consumer Services

Requested by:	Representative West
Sale of Umstead Farm Dairy Herd and Use of Proceeds
SECTION 11.1.(a)  The Department of Agriculture and Consumer Services may sell the dairy herd, including embryos and semen inventories, at the Umstead Farm Unit in Butner and may place the proceeds of the sale in a nonreverting special revenue fund within the Department. This fund shall be used only for any one or more of the following purposes: 
(1)	To relocate the milking parlor equipment and nutrition barn from the Umstead Farm Unit to the Piedmont Research Station in Salisbury.
(2)	To purchase additional dairy animals to fully utilize dairy facilities located at the Piedmont Research Station in Salisbury.
(3)	To purchase or construct grain and feed storage facilities and to purchase equipment and supplies necessary for dairy research at the dairy units operated by the Department. 
(4)	To demolish or remove unneeded or obsolete dairy buildings at the Umstead Farm Unit or for the closure of any animal waste management system located at the Umstead Farm Unit.
SECTION 11.1.(b)  The proceeds in the special revenue fund under subsection (a) of this section are appropriated to the Department of Agriculture and Consumer Services for the 2004‑2005 fiscal year to be used for the purposes under subsection (a) of this section.
SECTION 11.1.(c)  Beginning with the 2005‑2007 biennium, the special revenue fund established under subsection (a) of this section shall be included in the Governor's recommended budget.

Requested by:	Representatives Fox, West
Study Funding for DACS Research Stations
SECTION 11.2.(a)  The Department of Agriculture and Consumer Services and the Agricultural Research Service, North Carolina State University, in consultation with the Fiscal Research Division, shall study the manner in which the 18 research stations within the Department of Agriculture and Consumer Services are funded, including the differences as to how the Department of Agriculture and Consumer Services and the Agricultural Research Service fund the facilities sponsored by each, the differences as to how the Department of Agriculture and Consumer Services and the Agricultural Research Service allocate federal grant funds for administration of the research stations, and the efforts of the Department of Agriculture and Consumer Services and the Agricultural Research Service to collaborate on providing necessary funding of the research stations.
SECTION 11.2.(b)  No later than December 15, 2004, the Department of Agriculture and Consumer Services and the Agricultural Research Service, North Carolina State University, in consultation with the Fiscal Research Division, shall prepare a final joint report of the findings and recommendations of the study and submit this report to the House and Senate Appropriations Subcommittees on Natural and Economic Resources and the Fiscal Research Division.

PART XIi. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

Requested by:	Representatives Fox, West
Grassroots Science Program
SECTION 12.1.(a)  Section 11.1(a) of S.L. 2003‑284 reads as rewritten:
"SECTION 11.1.(a)  Of the funds appropriated in this act to the Department of Environment and Natural Resources for the Grassroots Science Program, the sum of two million five hundred fifty‑one thousand seven hundred sixty dollars ($2,551,760) for fiscal year 2003‑2004 and the sum of two million seven hundred seventeen thousand seven hundred seven dollars ($2,717,707) for fiscal year 2004‑2005 are allocated as grants‑in‑aid for each fiscal year as follows:

	2003‑2004	2004‑2005

Aurora Fossil Museum	$56,690		$57,120
Cape Fear Museum	$185,470		$194,188
Catawba Science Center	$134,913		$140,377
Colburn Gem and Mineral Museum, Inc.	$66,858		$67,943
Discovery Place	$624,407		$661,371
Granville County Museum Commission,
Inc. – Harris Gallery	$55,885		$56,263
The Health Adventure Museum of Pack
Place Education, Arts and
Science Center, Inc.	$121,115		$125,691
Imagination Station	$85,308		$87,580
Iredell County Children's Museum	$6,616		$57,042
Museum of Coastal Carolina	$69,311		$70,553
Natural Science Center of Greensboro	$183,416		$192,001
North Carolina Museum of Life
and Science	$388,283		$410,052
Rocky Mount Children's Museum	$72,810		$74,277
Schiele Museum of Natural History	$234,524		$246,398
Sci Works Science Center and
Environmental Park of Forsyth County	$147,578		$153,857
Western North Carolina Nature Center	$118,578		$122,991

Total	$2,551,760		$2,717,707"
SECTION 12.1.(b)  Of the funds appropriated in this act to the Department of Environment and Natural Resources for the Grassroots Science Program, the sum of two hundred fifty thousand twenty dollars ($250,020) for the 2004‑2005 fiscal year shall be allocated as grants‑in‑aid of forty‑one thousand six hundred seventy dollars ($41,670) to each of the following unfunded members of the Grassroots collaborative:
(1)	Wilmington Children's Museum, Inc.
(2)	Carolina Raptor Center, Inc.
(3)	Highlands Nature Center
(4)	Fascinate‑U Children's Museum
(5)	KidSenses, Inc.
(6)	Greensboro Children's Museum, Inc.
SECTION 12.1.(c)  The Department of Environment and Natural Resources shall modify the formula that was used by the Department to determine the appropriations under subsection (a) of this section to add museum attendance as a factor, and it is the intent of the General Assembly that this revised formula is used to determine appropriations for the Grassroots Science Program in the future, starting with the 2005‑2007 biennium.
SECTION 12.1.(d)  No more members shall be added to the Grassroots collaborative.

Requested by:	Representatives Fox, West
No New Funds for Statewide Beaver Damage Control Program
SECTION 12.2.(a)  Section 11.2 of S.L. 2003‑284 reads as rewritten:
"SECTION 11.2.  Of the funds appropriated to the Wildlife Resources Fund in this act, the sum of four hundred forty‑nine thousand dollars ($449,000) for the 2003‑2004 fiscal year  shall be used to provide the State share necessary to support the beaver damage control program established in G.S. 113‑291.10, provided the sum of at least twenty‑five thousand dollars ($25,000) in federal funds is available for the 2003‑2004 fiscal year to provide the federal share."
SECTION 12.2.(b)  There is appropriated from the Wildlife Resources Fund to the Wildlife Resources Commission the sum of four hundred forty‑nine thousand dollars ($449,000) for the 2004‑2005 fiscal year to provide the State share necessary to support the beaver damage control program established in G.S. 113‑291.10, provided the sum of at least twenty‑five thousand dollars ($25,000) in federal funds is available for the 2004‑2005 fiscal year to provide the federal share.

Requested by:	Representatives McComas, Stiller
Twenty‑four Hour Access to Fort Fisher State Recreation Area/Funds for Department Activities at Fort Fisher 
SECTION 12.3.(a)  G.S. 113‑35 is amended by adding a new subsection to read:
"(b1)	Members of the public who pay a fee under subsection (b) of this section for access to Fort Fisher State Recreation Area may have 24‑hour access to Fort Fisher State Recreation Area."
SECTION 12.3.(b)  Of the funds appropriated to the Department of Environment and Natural Resources for the 2004‑2005 fiscal year, the sum of twenty‑five thousand dollars ($25,000) shall be used for education, conservation, and enforcement activities by the Department at Fort Fisher State Park.

Requested by:	Representatives Fox, West
Wildlife Resources Commission Fiscal Responsibility and Accountability
SECTION 12.4.(a)  G.S. 113‑306(b) reads as rewritten:
"(b)	All money credited to, held by, or  received by the Wildlife Resources Commission from the sale of licenses authorized by this Subchapter shall be credited by the State Treasurer to a separate account within the Wildlife Resources Fund, and this account shall not be commingled with other funds in the Wildlife Resources Fund." 
SECTION 12.4.(b)  G.S. 143‑250 reads as rewritten:
"§ 143‑250.  Wildlife Resources Fund.
 The Wildlife Resources Fund is created as a special revenue fund within the Department of the State Treasurer.  Except as otherwise specifically provided by law, all moneys derived from hunting, fishing, trapping, and related license fees, exclusive of commercial fishing license fees, including the income received and accruing from the investment of license revenues,  shall be credited to  a separate license account within the Wildlife Resources Fund and shall not be commingled with other funds in the Wildlife Resources Fund. License revenues include the proceeds from the sale of hunting, fishing, trapping, and related licenses, from the sale, lease, rental, or other granting of rights to real or personal property acquired or produced with license revenues, and from federal aid project reimbursements to the extent that license revenues originally funded the project for which the reimbursement is being made. For purposes of this section, real property includes lands, buildings, minerals, energy resources, timber, grazing rights, and animal products. Personal property includes equipment, vehicles, machines, tools, and annual crops.  
All moneys credited to the Wildlife Resources Fund shall be used to carry out the intent and purposes of this Article in accordance with plans approved by the North Carolina Wildlife Resources Commission, and  funds shall be appropriated in accordance with the Executive Budget Act, Article 1 of Chapter 143 of the General Statutes, to enforce and administer this Article, Article 1 of Chapter 75A of the General Statutes, and Subchapter IV of Chapter 113 of the General Statutes.  
In the event any uncertainty arises as to the funds to be turned over to the North Carolina Wildlife Resources Commission, the Governor shall  determine the matter, and the Governor's recommendation shall be final and binding to all parties concerned."

Requested by:	Representatives Fox, West
Wildlife Resources Commission Subject to Service Charge for Sale of Surplus Property/Recyclable Material
SECTION 12.5.  The Wildlife Resources Commission is subject to G.S. 143‑64.05.

Requested by:	Representative LaRoque
Cost Share Funds for Limited Resource/New Farmers Clarification
SECTION 12.6.  G.S. 143‑215.74(b)(9) reads as rewritten:
"(9)	When the applicant is either a limited‑resource farmer or a beginning farmer, State funding shall be limited to ninety percent (90%) of the average cost for each practice with the assisted farmer providing ten percent (10%) of the cost, which may include in‑kind support of the practice, with a maximum of one hundred thousand dollars ($100,000) per year to each applicant. The following definitions apply in this subdivision:
a.	Beginning farmer. – A farmer who has not operated a farm or who has operated a farm for not more than 10 years and who will materially and substantially participate in the operation of the farm. Beginning farmer may include an entity so long as each member of the entity has not operated a farm or has operated a farm for not more than 10 years and each member of the entity will materially and substantially participate in the operation of the farm. 
b.	Limited‑resource farmer. – A farmer with direct and indirect annual gross farm sales that do not exceed one hundred thousand dollars ($100,000) and with a gross household income in each of the previous two years that is at or below the greater of the county median household income, as determined by the United States Department of Housing and Urban Development, or two times the national poverty level based on the federal poverty guidelines established by the United States Department of Health and Human Services and revised each April 1.c.	Materially and substantially participate. –
1.	In the case of an individual, for the individual, including members of the immediate family of the individual, to provide substantial day‑to‑day labor and management of the farm, consistent with the practices in the county in which the farm is located.
2.	In the case of an entity, for all members of the entity, to participate in the operation of the farm, with some members providing management and some members providing labor and management necessary for day‑to‑day activities such that if the members did not provide the management and labor, the operation of the farm would be seriously impaired."

Requested by:	Representatives Baker, Hunter, Gillespie
Authorize the Use of Available Funds for Purchase of Bertie County Forestry Headquarters Building/Construction of MCDOWELL COUNTY FORESTRY HEADQUARTERS BUILDING 
SECTION 12.7.(a)  The Division of Forest Resources of the Department of Environment and Natural Resources may use any available funds for the 2004‑2005 fiscal year to purchase an existing building to be used as the Bertie County Forestry Headquarters.
SECTION 12.7.(b)  In the event that property located in McDowell County is donated to the State by transfer of title in fee simple and the Department of Environment and Natural Resources approves the land as a suitable location for a forestry headquarters building, the Division of Forest Resources of the Department of Environment and Natural Resources may use any available funds for the 2004‑2005 fiscal year to construct a building on that donated property to be used as the McDowell County Forestry Headquarters.

Requested by:	Representatives Fox, West, LaRoque
State Match for Federal safe drinking water Act Funds AND FOR FEDERAL WATER QUALITY ACT FUNDS
SECTION 12.8.  Notwithstanding the provisions of Chapter 159G of the General Statutes, the Department of Environment and Natural Resources may transfer from the General Water Supply Revolving Loan Account up to six million nine hundred thousand dollars ($6,900,000) to the Department of Environment and Natural Resources to be used to match the federal grant moneys authorized by section 1452 of the federal Safe Drinking Water Act amendments of 1996 for the 2004‑2005 fiscal year and to match the federal grant moneys authorized by Title VI of the federal Water Quality Act of 1987 for the 2004‑2005 fiscal year.  The General Water Supply Revolving Loan Account is an account under the Clean Water Revolving Loan and Grant Fund and is established under G.S. 159G‑4.  The Clean Water Revolving Loan and Grant Fund is established by G.S. 159G‑5.

Requested by:	Representatives Fox, West, LaRoque
Expand Express Review Pilot Program
SECTION 12.9.(a)  The Department of Environment and Natural Resources shall continue the Express Review Pilot Program established by Section 11.4A of S.L. 2003‑284 that was implemented in the Wilmington and Raleigh regional offices and shall expand the Express Review Pilot Program to two additional regional offices within the Department, to be selected by the Department.
SECTION 12.9.(b)  The Department of Environment and Natural Resources shall continue and support the eight positions that were authorized under Section 11.4A of S.L. 2003‑284 to administer the expanded Express Review Pilot Program under this section. This expanded Program and these positions and support shall be funded from the Express Review Fund, created by Section 11.4A of S.L. 2003‑284.
SECTION 12.9.(c)  The Department of Environment and Natural Resources may establish and support eight additional positions to administer the expanded Express Review Pilot Program under this section.  These positions and support may be funded for the 2004‑2005 fiscal year from funds appropriated in this act to the Department of Environment and Natural Resources for this purpose. It is the intent of the General Assembly that these positions and support be funded in future fiscal years from the Express Review Fund.
SECTION 12.9.(d)  No later than March 1, 2005, the Department of Environment and Natural Resources shall report to the Fiscal Research Division and the Environmental Review Commission its findings on the success of the continued Express Pilot Review Program and whether it recommends that the Program be continued or expanded and any other findings or recommendations, including any legislative proposals, that it deems pertinent.

Requested by:	Representatives Fox, West, LaRoque
Leaking Petroleum Underground Storage Tank Cleanup Fund Solvency
SECTION 12.10.(a)  There is appropriated from the Clean Water Management Trust Fund to the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund the sum of thirteen million five hundred thousand dollars ($13,500,000) for the 2004‑2005 fiscal year to be used for assessment and cleanup of discharges and releases of petroleum from commercial underground storage tanks under Part 2A of Article 21A of Chapter 143 of the General Statutes.
SECTION 12.10.(b)  There is appropriated from the Highway Trust Fund to the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund the sum of thirteen million five hundred thousand dollars ($13,500,000) for the 2004‑2005 fiscal year to be used for assessment and cleanup of discharges and releases of petroleum from commercial underground storage tanks under Part 2A of Article 21A of Chapter 143 of the General Statutes.
SECTION 12.10.(c)  There is appropriated from the Clean Water Management Trust Fund to the Noncommercial Leaking Petroleum Underground Storage Tank Cleanup Fund the sum of one million five hundred thousand dollars ($1,500,000) for the 2004‑2005 fiscal year to be used for assessment and cleanup of discharges and releases of petroleum from noncommercial underground storage tanks under Part 2A of Article 21A of Chapter 143 of the General Statutes.
SECTION 12.10.(d)  There is appropriated from the Highway Trust Fund to the Noncommercial Leaking Petroleum Underground Storage Tank Cleanup Fund the sum of one million five hundred thousand dollars ($1,500,000) for the 2004‑2005 fiscal year to be used for assessment and cleanup of discharges and releases of petroleum from noncommercial underground storage tanks under Part 2A of Article 21A of Chapter 143 of the General Statutes.
SECTION 12.10.(e)  It is the intent of the General Assembly that the funds appropriated under subsection (a) through subsection (d) of this section are onetime funds.
SECTION 12.10.(f)  There is appropriated from the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund to the Department of Environment and Natural Resources the sum of fifty‑two thousand dollars ($52,000) for the 2004‑2005 fiscal year to establish and support an Accounting Tech IV position to expedite the processing of claims under G.S. 143‑215.94E.  There is appropriated from the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund to the Department of Environment and Natural Resources up to seventy‑six thousand dollars ($76,000) for the 2004‑2005 fiscal year as needed to cover the cost of any legislative salary increase for personnel who administer the underground storage tank program under Parts 2A and 2B of Article 21A of Chapter 143 of the General Statutes.  It is the intent of the General Assembly that funds appropriated under this section are recurring funds and that these funds are in addition to funds appropriated under subsection 11.4(b) of S. L. 2003‑284.
SECTION 12.10.(g)  Subsection 11.4(e) of S.L. 2003‑284 reads as rewritten:
"SECTION 11.4.(e)  It is the intent of the General Assembly that the funds under subsection (d) of this section are recurring funds."
SECTION 12.10.(h)  G.S. 143‑215.94E(e2) reads as rewritten:
"(e2)	The Commission may require an owner, operator, or landowner to obtain approval from the Department before proceeding with any task that will result in a cost that is eligible to be paid or reimbursed under G.S. 143‑215.94B(b), 143‑215.94B(b1), or 143‑215.94D(b1). The Department shall specify by rule those tasks for which preapproval is required. The Department shall deny any request for payment or reimbursement of the cost of any task for which preapproval is required if the owner, operator, or landowner failed to obtain preapproval of the task. The Department shall pay or reimburse the cost of a task only if the cost is eligible to be paid under G.S. 143‑215.94B(b), 143‑215.94B(b1), or 143‑215.94D(b1) and if the Department determines that the cost is reasonable and necessary. The Department shall adopt rules governing reimbursement of reasonable and necessary costs. Rules that specify tasks for which preapproval is required and rules establishing necessary and reasonable costs are statements within the meaning of G.S. 150B‑2(8a)g. In all cases, the Department shall require an owner, operator, or landowner to submit documentation sufficient to establish that a cost is eligible to be paid or reimbursed under this Part before the Department pays or reimburses the cost. The Department shall not preapprove any task the cost of which is to be paid or reimbursed from the Commercial Fund unless the Department determines that sufficient funds will be available in the Commercial Fund to pay a claim for payment or reimbursement of the cost of that task within 90 days after the Department determines that the owner, operator, or landowner has submitted a claim with documentation sufficient to establish that the owner, operator, or landowner is eligible to have the claim paid under this Part. The Department shall not preapprove any task the cost of which is to be paid or reimbursed from the Noncommercial Fund unless the Department determines that sufficient funds will be available in the Noncommercial Fund to pay a claim for payment or reimbursement of the cost of that task within 90 days after the Department determines that the owner, operator, or landowner has submitted a claim with documentation sufficient to establish that the owner, operator, or landowner is eligible to have the claim paid under this Part."
SECTION 12.10.(i)  Section 10 of S.L. 2003‑352 reads as rewritten:
"SECTION 10.  The definitions set out in G.S. 143‑212 and G.S. 143‑215.94A apply to this section. The rights and obligations of an owner, an operator, or a landowner to whom either G.S. 143‑215.94E(b1) or G.S. 143‑215.94E(c1) apply who is eligible to have costs paid or reimbursed under G.S. 143‑215.94B or G.S. 143‑215.94D shall be governed by G.S. 143‑215.94E as modified by this section. The Department shall establish the degree of risk to human health and the environment posed by a discharge or release of petroleum from a commercial underground storage tank and shall determine a schedule for further assessment and cleanup that is based on the degree of risk to human health and the environment posed by the discharge or release and that gives priority to the assessment and cleanup of discharges and releases that pose the greatest risk. If any of the costs of assessment and cleanup of the discharge or release from a commercial underground storage tank are eligible to be paid from the Commercial Fund, the Department shall also consider the availability of funds in the Commercial Fund and the order in which the discharge or release was reported in determining the schedule. The Department shall establish the degree of risk to human health and the environment posed by a discharge or release of petroleum from a noncommercial underground storage tank and shall determine a schedule for further assessment and cleanup that is based on the degree of risk to human health and the environment posed by the discharge or release and that gives priority to the assessment and cleanup of discharges and releases that pose the greatest risk. If any of the costs of assessment or cleanup of the discharge or release from a noncommercial underground storage tank are eligible to be paid from the Noncommercial Fund, the Department shall also consider the availability of funds in the Noncommercial Fund and the order in which the discharge or release was reported in determining the schedule. The Department may revise the schedules that apply to the assessment and cleanup of any discharge or release at any time based on its reassessment of any of the foregoing factors. The lack of availability of funds in the Commercial Fund or the Noncommercial Fund shall not relieve an owner or operator of responsibility to immediately undertake to collect and remove the discharge or release or to conduct any assessment or cleanup ordered by the Department or be a defense against any violations and penalties issued to the owner or operator for failure to conduct required assessment or cleanup. If the owner or operator takes initial steps to collect and remove the discharge or release as required by the Department and completes initial assessment required to determine degree of risk, the owner or operator shall not be subject to any violation or penalty for any failure to proceed with further assessment or cleanup under G.S. 143‑215.84 or G.S. 143‑215.94E before the owner or operator is authorized to proceed with further assessment or cleanup pursuant to the schedule set by the Department. Once the Department has determined a schedule for the assessment and cleanup of a discharge or release from a commercial underground storage tank or a noncommercial underground storage tank, an owner, operator, or other person responsible for the assessment and cleanup is not eligible to have the costs of the assessment or cleanup paid or reimbursed from the Commercial Fund or the Noncommercial Fund until such time as further assessment or cleanup is authorized by the Department pursuant to the schedule. An owner, operator, or other person may undertake further assessment or cleanup before receiving authorization from the Department. An owner, operator, or other person who undertakes further assessment or cleanup before receiving authorization from the Department shall be reimbursed only after the Department has paid or reimbursed the costs for all assessments and cleanups that the Department has authorized."
SECTION 12.10.(j)  The Environmental Review Commission shall study the desirability and feasibility of altering or eliminating the role of the State of North Carolina and the Department of Environment and Natural Resources in the implementation of Part 2A of Article 21A of Chapter 143 of the General Statutes.  In conducting this study, the Commission shall consider:
(1)	The requirements of applicable federal law.
(2)	What role the State should play in assisting owners and operators of underground storage tanks in meeting applicable financial responsibility requirements and the availability and adequacy of private insurance for that purpose.
(3)	The adequacy of current and projected revenue available to the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund and the Noncommercial Leaking Petroleum Underground Storage Tank Cleanup Fund under existing law to achieve the purposes for which those funds were established.
(4)	The desirability and feasibility of privatizing the administration of Part 2A of Article 21A of Chapter 143 of the General Statutes by transferring control and direction of the Commercial Fund and the Noncommercial Fund to a private entity or, in the alternative, of abolishing or narrowing the purposes for which those funds are used.
(5)	What role the State should play in the cleanup of discharges and releases from petroleum underground storage tanks when no owner or operator can be identified or located or when the owner or operator fails to proceed with assessment or cleanup due to insolvency, inadequate resources, or other reasons.
(6)	The extent to which current regulatory oversight and inspection of underground storage tanks, including enforcement, under Part 2B of Article 21A of Chapter 143 of the General Statutes is adequate and effective in preventing discharges and releases of petroleum from underground storage tanks.
(7)	The impact of privatization and of any other options identified during the course of the study on the solvency of the Commercial Fund and the Noncommercial Fund.
(8)	The impact of privatization and of any other options identified during the course of the study, including abolishing the Commercial Fund or the Noncommercial Fund or narrowing the purposes for which those funds are used, on the cleanup of discharges and releases of petroleum to standards established by federal or State law, the long‑term public health and safety, and protection of the environment.
SECTION 12.10.(k)  The Environmental Review Commission shall report its findings and recommendations as to the matters to be studied pursuant to subsection (j) of this section, including any legislative proposals, to the 2005 General Assembly no later than 31 January 2005.
SECTION 12.10.(l)  Subsections (a) through (f) of this section become effective 1 July 2004.  Subsection (g) of this section is effective retroactively to 1 July 2003.  Subsections (h) and (i) of this section become effective 1 October 2004.  Subsections (j), (k), and (l) of this section are effective when this act becomes law.

Requested by:	Representative Haire
OneTime Grants to Swain County
SECTION 12.11.(a) The Board of Trustees of the Clean Water Management Trust Fund may provide a onetime grant of up to thirty‑five thousand seven hundred six dollars ($35,706) to Swain County for the 2004‑2005 fiscal year as compensation to the County for the loss of ad valorem taxes associated with the fee simple purchase by the Wildlife Resources Commission of the 3,431‑acre Needmore game lands property located on the Little Tennessee River in Swain County, which grant shall be used to provide public services to the residents of Swain County.
SECTION 12.11.(b)  The Ecosystem Enhancement Program within the Department of Environment and Natural Resources may provide a onetime grant of up to forty thousand two hundred sixty‑four dollars ($40,264) for the 2004‑2005 fiscal year as compensation to the County for the loss of ad valorem taxes associated with the fee simple purchase by the Wildlife Resources Commission of the 3,431‑acre Needmore game lands property located on the Little Tennessee River in Swain County, which grant shall be used to provide public services to the residents of Swain County.

Requested by:	Representatives Fox, West, Owens, LaRoque
Expand One‑Stop Permit Assistance Program Statewide
SECTION 12.12.(a)  Part 1 of Article 7 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑279.12.  One‑stop permits for certain environmental permits.
(a)	The Department of Environment and Natural Resources shall establish a one‑stop environmental permit application assistance and tracking system program for all its regional offices. The Department shall provide to each person who submits an application for any environmental permit subject to this section to any regional office a time frame within which that applicant may expect a final decision regarding the issuance or denial of the permit. The Department shall identify the environmental permits that are subject to this section. The procedure regulating the time frame estimates and sanction for failing to honor the time frame shall be as set out in subsections (b) and (c) of this section. 
(b)	Upon receipt of a complete application for an environmental permit, the Department of Environment and Natural Resources shall provide to the applicant a good faith estimate of the date by which the Department expects to make the final decision of whether to issue or deny the permit.
(c)	Unless otherwise provided by law, when an applicant has provided to the Department of Environment and Natural Resources the information and documentation required and requested by the Department and the Department fails to issue or deny the permit within 60 days of the date projected by the Department for the final decision of whether to issue or deny the permit, the permit shall be automatically granted to the applicant. This subsection does not apply when an applicant submits a substantial amendment to its application after the Department has provided the applicant the projected time frame as required by this section. This subsection does not apply when an applicant agrees to receive a final decision from the Department more than 60 days from the date projected by the Department under subsection (b) of this section.
(d)	The Department of Environment and Natural Resources shall track the time required to process each complete environmental permit application that is subject to this section. The Department shall compare the time in which the permit was issued or denied with the projected time frame provided to the applicant by the Department as required by this section. The Department shall identify each permit that was issued or denied more than 90 days after receipt of a complete application by the Department and shall document the reasons for the delayed action.
(e)	No later than October 1, 2004, and annually thereafter, the Department of Environment and Natural Resources shall report to the House of Representatives and the Senate Appropriations Subcommittees on Natural and Economic Resources, the Fiscal Research Division, and the Environmental Review Commission the number of environmental permits subject to this section that took more than 90 days to issue or deny, the types of permits those were, the reasons for the extended processing time of those permits, and how the time within which the permit was actually issued or denied compared with the projected time frame provided to the applicant by the Department as required by this section. Based on the data gathered under this subsection, the Department shall include in its annual report recommendations regarding permit time frames for all major permits issued by the Department. 
(f)	The Department may adopt temporary rules to implement this section."
SECTION 12.12.(b)  The Department of Environment and Natural Resources shall expand to a statewide program that operates in each regional office of the Department the one‑stop environmental permit application assistance and tracking system pilot project established under Section 13.7 of S.L. 2000‑67 for those environmental permits that were subject to this pilot program, and the provisions of G.S. 143B‑12, as enacted by subsection (a) of this section, shall apply to this statewide program.  
SECTION 12.12.(c)  Any positions that were used by the Department of Environment and Natural Resources to staff the one‑stop environmental permit application assistance and tracking system pilot project established under Section 13.7 of S.L. 2000‑67 shall be used for the 2004‑2005 fiscal year to staff the statewide one‑stop environmental permit application assistance and tracking system program under G.S. 143B‑279.12, as enacted in subsection (a) of this section. The Department of Environment and Natural Resources shall use available funds for the 2004‑2005 fiscal year to continue and support these positions, and the Department of Environment and Natural Resources shall use funds appropriated in this act to the Department only for the purposes of implementing the statewide one‑stop environmental permit application assistance and tracking system and establishing and supporting four positions to staff this statewide program for the 2004‑2005 fiscal year.

Requested by:	Representatives Fox, West
Prohibit Certain Grants from the Clean Water Management Trust Fund
SECTION 12.13.  Notwithstanding G.S. 113A‑254(a), no grant may be made from the Clean Water Management Trust Fund to the Wildlife Resources Commission unless the total balance in the Wildlife Resources Fund established by G.S. 143‑250 plus any other fund that is available to the Commission and is not a fund to retire debt for capital falls below ten million dollars ($10,000,000).

Requested by:	Representatives Fox, West, Warner, McAllister, Lucas, Dickson, Glazier
Monitoring and Emergency Cleanup Funds for Texfi Site Contamination
SECTION 12.14.  Of the funds appropriated to the Clean Water Management Trust Fund for the 2004‑2005 fiscal year, up to fifty thousand dollars ($50,000) may be transferred to the Department of Environment and Natural Resources, Division of Waste Management, to be used for monitoring the groundwater and other contamination located at the Texfi site in Fayetteville and for any emergency cleanup activities needed at this site.

PART XIiI. DEPARTMENT OF COMMERCE

Requested by:	Representatives Fox, West
Council of Government Funds
SECTION 13.1.  Section 12.2(c) of S.L. 2003‑284 reads as rewritten:
"SECTION 12.2.(c)  Funds appropriated by this section for the 2004‑2005 fiscal year shall be paid by electronic transfer in two equal installments, the first no later than September 1, 2004, and the second subsequent to acceptable submission of the annual report due to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division by January 15, 2005, as specified in subdivision (e)(2) of this section."

Requested by:	Representatives Fox, West
One North Carolina Fund
SECTION 13.2.(a)  Article 10 of Chapter 143B of the General Statutes is amended by adding a new Part to read:
"Part 2H. One North Carolina Fund.
"§ 143B‑437.70.  Legislative findings and purpose.
The General Assembly finds that:
(1)	It is the policy of the State of North Carolina to stimulate economic activity and to create new jobs for the citizens of the State by encouraging and promoting the retention and expansion of existing business and industry within the State and by recruiting and attracting new business and industry to the State.
(2)	Both short‑term and long‑term economic trends at the State, national, and international levels have made the successful implementation of the State's economic development policy and programs both more critical and more challenging; and the decline in the State's traditional industries and the resulting adverse impact upon the State and its citizens have been exacerbated in recent years by adverse national and State economic trends that contribute to the reduction in the State's industrial base and that inhibit the State's ability to sustain or attract new and expanding businesses.
(3)	The purpose of this Part is to stimulate economic activity and to create new jobs within the State.
(4)	The enactment of this Part will maintain consistency and accountability in a key economic development program and will ensure that the program benefits the State and its citizens.
(5)	Nothing in this Part shall be construed to constitute a guarantee or assumption by the State of any debt of any business or to authorize the taxing power or the full faith and credit of the State to be pledged.
"§ 143B‑437.71.  One North Carolina Fund established as a nonreverting account.
(a)	Establishment. – The One North Carolina Fund is established as a special revenue fund in the Department of Commerce.
(b)	Purposes. – Moneys in the One North Carolina Fund may be allocated only to local governments for use in connection with securing commitments for the recruitment, expansion, or retention of new and existing businesses. Moneys in the One North Carolina Fund shall be used for the following purposes only:
(1)	Installation or purchase of equipment.
(2)	Structural repairs, improvements, or renovations to existing buildings to be used for expansion. 
(3)	Construction of new buildings to be used for expansion.
(4)	Construction of or improvements to new or existing water, sewer, gas, or electric utility distribution lines or equipment for existing buildings.
(5)	Construction of or improvements to new or existing water, sewer, gas, or electric utility distribution lines or equipment for new or proposed buildings to be used for manufacturing and industrial operations.
(6)	Any other purposes specifically provided by an act of the General Assembly.
"§ 143B‑437.72.  Agreements required; disbursement of funds.
(a)	Agreements Required. – Funds may be disbursed from the One North Carolina Fund only in accordance with agreements entered into between the State and one or more local governments and between the local government and a grantee business.
(b)	Company Performance Agreements. – An agreement between a local government and a grantee business must contain the following provisions:
(1)	A commitment to create or retain a specified number of jobs within a specified salary range at a specific location and commitments regarding the time period in which the jobs will be created or retained and the minimum time period for which the jobs must be maintained.
(2)	A commitment to provide proof satisfactory to the local government and the State of new jobs created or existing jobs retained and the salary level of those jobs.
(3)	A provision that funds received under the agreement may be used only for a purpose specified in G.S. 143B‑437.71(b).
(4)	A provision allowing the State or the local government to inspect all records of the business that may be used to confirm compliance with the agreement or with the requirements of this Part.
(5)	A provision establishing the method for determining compliance with the agreement.
(6)	A provision establishing a schedule for disbursement of funds under the agreement that allows disbursement of funds only in proportion to the amount of performance completed under the agreement.
(7)	A provision allowing recapture of grant funds if a business subsequently fails to comply with the terms of the agreement.
(8)	Any other provision the State or the local government finds necessary to ensure the proper use of State or local funds.
(c)	Local Government Grant Agreement. – An agreement between the State and one or more local governments shall contain the following provisions:
(1)	A commitment on the part of the local government to match the funds allocated by the State. A local match may include cash, fee waivers, in‑kind services, the donation of assets, the provision of infrastructure, or a combination of these.
(2)	A provision requiring the local government to recapture any funds to which the local government is entitled under the company performance agreement.
(3)	A provision requiring the local government to reimburse the State for any funds improperly disbursed by the local government.
(4)	A provision allowing the State access to all records possessed by the local government necessary to ensure compliance with the company performance agreement and with the requirements of this Part.
(5)	A provision establishing a schedule for the disbursement of funds from the One North Carolina Fund to the local government that reflects the disbursement schedule established in the company performance agreement.
(6)	Any other provision the State finds necessary to ensure the proper use of State funds.
(d)	Disbursement of Funds. – Funds may be disbursed from the One North Carolina Fund to the local government only after the local government has demonstrated that the business has complied with the terms of the company performance agreement. The State shall disburse funds allocated under the One North Carolina Fund to a local government in accordance with the disbursement schedule established in the local government grant agreement.
"§ 143B‑437.73.  Program guidelines.
The Department of Commerce, in conjunction with the Governor's Office, shall develop guidelines related to the administration of the One North Carolina Fund and to the selection of projects to receive allocations from the Fund. At least 20 days before the effective date of any guidelines or nontechnical amendments to guidelines, the Department of Commerce must publish the proposed guidelines on the Department's Web site and provide notice to persons who have requested notice of proposed guidelines. In addition, the Department must accept oral and written comments on the proposed guidelines during the 15 business days beginning on the first day that the Department has completed these notifications. For the purpose of this section, a technical amendment is either of the following:
(1)	An amendment that corrects a spelling or grammatical error.
(2)	An amendment that makes a clarification based on public comment and could have been anticipated by the public notice that immediately preceded the public comment.
"§ 143B‑437.74.  Reports.
The Department of Commerce shall publish a report on the use of funds in the One North Carolina Fund at the end of each fiscal quarter. The report shall contain information on the commitment, disbursement, and use of funds allocated under the One North Carolina Fund. The report is due no later than one month after the end of the fiscal quarter and must be submitted to the following:
(1)	The Joint Legislative Commission on Governmental Operations.
(2)	The chairs of the House and Senate Finance Committees. 
(3)	The chairs of the House and Senate Appropriations Committees.
(4)	The Fiscal Research Division of the General Assembly."
SECTION 13.2.(b)  G.S. 150B‑1(d) is amended by adding a new subdivision to read:
"(d)	Exemptions from Rule Making. – Article 2A of this Chapter does not apply to the following:
…
(13)	The Department of Commerce and the Governor's Office in developing guidelines for the One North Carolina Fund under Part 2H of Article 10 of Chapter 143B of the General Statutes."
SECTION 13.2.(c)  Program guidelines developed by the Department of Commerce for the One North Carolina Industrial Recruitment Competitive Fund that are in effect when this section becomes effective shall apply to the One North Carolina Fund, as enacted in subsection (a) of this section, until guidelines for the One North Carolina Fund are adopted pursuant to G.S.143B‑437.73, as enacted in subsection (a) of this section. Program guidelines for the One North Carolina Fund shall be adopted in accordance with G.S.143B‑437.73, as enacted in subsection (a) of this section, on or before August 1, 2004.
SECTION 13.2.(d)  This section becomes effective July 1, 2004.

Requested by:	Representatives Fox, West
Tourism PROMOTION Funds
SECTION 13.3.(a)  Funds appropriated in this act to the Department of Commerce for tourism promotion grants shall be allocated according to counties most in need of tourism promotion funds as indicated by the North Carolina Division of Tourism, Film and Sports Development's annual county‑by‑county tourism expenditures ranking in the following manner:
(1)	Eligible organizations in the counties with the 30 lowest tourism expenditures are each eligible to receive a maximum grant of seven thousand five hundred dollars ($7,500) for each fiscal year, provided these funds are matched on the basis of one non‑State dollar ($1.00) for every four State dollars ($4.00).
(2)	Eligible organizations in counties with tourism expenditures ranked from the 31st to the 60th highest are each eligible to receive a maximum grant of three thousand five hundred dollars ($3,500) for two of the next three fiscal years, provided these funds are matched on the basis of one non‑State dollar ($1.00) for every three State dollars ($3.00).
(3)	Eligible organizations in counties with tourism expenditures ranked from the 61st to 100th highest are each eligible to receive a maximum grant of three thousand five hundred dollars ($3,500) in alternating fiscal years, provided these funds are matched on the basis of two non‑State dollars ($2.00) for every one State dollar ($1.00), beginning with the 2004‑2005 fiscal year. An eligible organization in a county with tourism expenditures ranked from the 61st to 100th highest that applies and is turned down for funding in one year may reapply in the following year.
SECTION 13.3.(b)  Section 12.3 of S.L. 2003‑284 is repealed.

Requested by:	Representatives Fox, West
One NC Funds to Retain Traditional Industries
SECTION 13.4.  The Department of Commerce shall use forty‑three thousand five hundred dollars ($43,500) from the funds in the One North Carolina Fund for the 2004‑2005 fiscal year for economic development grants to municipalities to retain traditional manufacturing employers with substantial investments in machinery and equipment. The funds must be matched by the municipality on a dollar‑for‑dollar basis.

Requested by:	Representatives Fox, West
Industrial Development Fund
SECTION 13.5.  Section 12.5 of S.L. 2003‑284 reads as rewritten:
"SECTION 12.5.(a)  The Department of Commerce shall reduce the cash balance of the Industrial Development Fund by one hundred eighty‑two thousand one hundred fifty‑four dollars ($182,154).
"SECTION 12.5.(b)  This section becomes effective June 30, 2004."

Requested by:	Representative Harrell
Regional Partnerships Vision Plans
SECTION 13.6.(a)  There is appropriated from the General Fund to the North Carolina Partnership for Economic Development, Inc., the sum of one million seven hundred fifty thousand dollars ($1,750,000) for the 2004‑2005 fiscal year.  From these funds, the Partnership shall allocate two hundred fifty thousand dollars ($250,000) to each of the seven regional economic development partnerships.  These funds shall be used by each partnership to develop, implement, or develop and implement a strategic economic development plan in accordance with this section.
SECTION 13.6.(b)  In developing and implementing a strategic economic development plan, each of the regional partnerships shall do the following:
(1)	Perform a comprehensive study of the region's resources and existing businesses located in the region to determine what business clusters exist and the boundaries of those clusters, to develop ways to strengthen those clusters, and to determine in what areas the region has a competitive advantage that could lead to the development of future clusters.
(2)	Ensure that the benefits of the economic development plan are widely dispersed and that the plan provides real opportunities in rural areas as well as in urban and suburban areas.
(3)	Develop focused and targeted economic development initiatives related to the recruitment and development of new businesses and the retention of existing businesses.
(4)	Provide a mechanism for continuous monitoring of the regional economy and competitiveness indicators and for updating the strategic economic development plan to take account of changing economic conditions.
(5)	Recommend infrastructure investments to meet the region's current and anticipated future needs.
(6)	Integrate the North Carolina Community College System and The University of North Carolina into economic development efforts and planning.
(7)	Create leadership networks that span the public and private sectors and that facilitate communication within clusters, between members of complementary clusters, and between members of the public and private sectors.
SECTION 13.6.(c)  Section 8.3 of S.L. 2002‑126 is repealed.

Requested by:	Representatives Fox, West
Regional Economic Development Commission Allocations
SECTION 13.7.  Section 12.7(b) of S.L. 2003‑284 reads as rewritten:
"SECTION 12.7.(b)  Funds appropriated pursuant to subsection (a) of this section shall be allocated to each Regional Economic Development Commission as follows:
(1)	First, the Department shall establish each Commission's allocation by determining the sum of allocations to each county that is a member of that Commission. Each county's allocation shall be determined by dividing the county's enterprise factor by the sum of the enterprise factors for eligible counties and multiplying the resulting percentage by the amount of the appropriation. As used in this subdivision, the term "enterprise factor" means a county's enterprise factor as calculated under G.S. 105‑129.3; and
(2)	Next, the Department shall subtract from funds allocated to the Global TransPark Development Commission the sum of one hundred seventy‑one thousand nine hundred seventy‑nine dollars ($171,979) in the 2003‑2004 fiscal year and the sum of one hundred twenty‑five thousand six hundred eighty‑one dollars ($125,681) in the 2004‑2005 fiscal year which sum represents the interest earnings in each fiscal year on the estimated balance of seven million five hundred thousand dollars ($7,500,000) appropriated to the Global TransPark Development Zone in Section 6 of Chapter 561 of the 1993 Session Laws; and
(3)	Next, the Department shall redistribute the sum of one hundred seventy‑one thousand nine hundred seventy‑nine dollars ($171,979)  in the 2003‑2004 fiscal year and the sum of one hundred twenty‑five thousand six hundred eighty‑one dollars ($125,681) in the 2004‑2005 fiscal year to the seven Regional Economic Development Commissions named in subsection (a) of this section. Each Commission's share of this redistribution shall be determined according to the enterprise factor formula set out in subdivision (1) of this subsection. This redistribution shall be in addition to each Commission's allocation determined under subdivision (1) of this subsection."

Requested by:	Representatives Fox, West, Hunter
Rural Economic Development Center
SECTION 13.8.  Section 12.11(d)(1) of S.L. 2003‑284 reads as rewritten:
"SECTION 12.11.(d)  Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of two million four hundred fifteen thousand nine hundred ten dollars ($2,415,910) for the 2003‑2004 fiscal year and the sum of two million four hundred fifteen thousand nine hundred ten dollars ($2,415,910) for the 2004‑2005 fiscal year shall be allocated as follows:
(1)	$1,047,410 in each fiscal year for community development grants to support development projects and activities within the State's minority communities. Any new or previously funded community development corporation as defined in this section is eligible to apply for funds. The Rural Economic Development Center, Inc., shall establish performance‑based criteria for determining which community development corporation will receive a grant and the grant amount. The Rural Economic Development Center, Inc., shall allocate these funds for the 2004‑2005 fiscal year as follows:
		a.	$997,410 for direct grants to local community development corporations to support operations and project activities.
b.	$50,000 in each fiscal year to the Rural Economic Development Center, Inc., to be used to cover expenses in administering this section."

Requested by:	Representatives Fox, West
Opportunities Industrialization Center Funds
SECTION 13.9.  Section 12.12(a) of S.L. 2003‑284 reads as rewritten:
"SECTION 12.12.(a)  Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of three hundred sixty‑one thousand dollars ($361,000) for the 2003‑2004 fiscal year and the sum of three hundred sixty‑one thousand dollars ($361,000) for the 2004‑2005 fiscal year shall be equally distributed among the certified Opportunities Industrialization Centers for ongoing job training programs. 				"

PART XIv. JUDICIAL DEPARTMENT

Requested by:	Representative Howard
increase maximum Magistrate authorizations/Study Magistrate Funding
SECTION 14.1.(a)  G.S. 7A‑133(c) reads as rewritten:
"(c)	Each county shall have the numbers of magistrates and additional seats of district court, as set forth in the following table:

			Additional
	Magistrates	Seats of
County	Min. – Max.	Court
Camden	1	3	
Chowan	2	3	
Currituck	1	4	
Dare	3	8	
Gates	2	3	
Pasquotank	3	5	
Perquimans	2	4	
Martin	4	8	
Beaufort	4	8	
Tyrrell	1	3	
Hyde	2	4	
Washington	3	4	
Pitt	10	12	Farmville
			Ayden
Craven	7	10	Havelock
Pamlico	2	4	
Carteret	5	8	
Sampson	6	8	
Duplin	8	11	
Jones	2	3	
Onslow	8	14	
New Hanover	6	11	
Pender	4	6	
Halifax	9	14	Roanoke
			Rapids,
			Scotland Neck
Northampton	5	7	
Bertie	4	6	
Hertford	5	7	
Nash	7	10	Rocky Mount
Edgecombe	4	7	Rocky Mount
Wilson	4	7	
Wayne	5	12	Mount Olive
Greene	2	4	
Lenoir	4	10	La Grange
Granville	3	7	
Vance	3	6	
Warren	3	5	
Franklin	3	7	
Person	3	4	
Caswell	2	5	
Wake	12	21	Apex,
			Wendell,
			Fuquay‑
			Varina,
			Wake Forest
Harnett	7	11	Dunn
Johnston	10	12	Benson,
			Clayton,
			Selma
Lee	4	6	
Cumberland	10	19	
Bladen	4	6	
Brunswick	4	9	
Columbus	6	10	Tabor City
Durham	8	14	
Alamance	7	11	Burlington
Orange	4	11	Chapel Hill
Chatham	3	9	Siler City
Scotland	3	5	
Hoke	4	5	
Robeson	8	16	Fairmont,
			Maxton,
			Pembroke,
			Red Springs,
			Rowland,
			St. Pauls
Rockingham	4	9	Reidsville,
			Eden,
			Madison
Stokes	2	5	
Surry	5	9	Mt. Airy
Guilford	20	27	High Point
Cabarrus	5	9	Kannapolis
Montgomery	2	4	
Randolph	5	10	Liberty
Rowan	5	10	
Stanly	5	6	
Union	4	7	
Anson	4	6	
Richmond	5	6	Hamlet
Moore	5	8	Southern
			Pines
Forsyth	3	 16	Kernersville
Alexander	2	4	
Davidson	7	10	Thomasville
Davie	2	 4	
Iredell	4	9	Mooresville
Alleghany	1	2	
Ashe	3	4	
Wilkes	4	6	
Yadkin	3	5	
Avery	3	5	
Madison	4	5	
Mitchell	3	4	
Watauga	4	6	
Yancey	2	4	
Burke	4	7	
Caldwell	4	7	
Catawba	6	10	Hickory
Mecklenburg	15	28	
Gaston	11	22	
Cleveland	5	8	
Lincoln	4	7	
Buncombe	6	15	
Henderson	4	7	
McDowell	3	6	
Polk	3	4	
Rutherford	6	8	
Transylvania	2	4	
Cherokee	3	4	
Clay	1	2	
Graham	2	3	
Haywood	5	7	Canton
Jackson	3	5	
Macon	3	4	
Swain	2	4"	
SECTION 14.1.(b)  The Administrative Office of the Courts shall evaluate the need for magistrates across the State and shall reexamine the caseload formula it uses to assign priority to that need, considering county population, warrant workload, and automation levels. The Administrative Office of the Courts shall report its findings to the General Assembly by March 15, 2005.

Requested by:	Representatives Kiser, Haire, Sexton
COLLECTION OF WORTHLESS CHECK FUNDS
SECTION 14.2.  Section 13.2 of S.L. 2003‑284 reads as rewritten:
"SECTION 13.2.  Notwithstanding the provisions of G.S. 7A‑308(c), the Judicial Department may use any balance remaining in the Collection of Worthless Checks Fund on June 30,  2004, for the purchase or repair of office or information technology equipment during the  2003‑2005 biennium. Prior to using any funds under this section, the Judicial Department shall report to the Joint Legislative Commission on Governmental Operations and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on the equipment to be purchased or repaired and the reasons for the purchases.
The Judicial Department may use up to the sum of five hundred thousand dollars ($500,000) in receipts collected from the Worthless Check Program during the 2004‑2005 fiscal year to create up to 10 positions in, and to provide equipment for, district attorney's offices that are establishing or expanding programs for the collection of worthless checks. The Judicial Department shall report by March 1, 2005, to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on the prosecutorial districts in which expansion has been implemented."

Requested by:	Representatives Kiser, Haire
OFFICE OF INDIGENT DEFENSE SERVICES/EXPANSION FUNDS/JUVENILE DEFENDER
SECTION 14.3.(a)  The Office of Indigent Defense Services may use up to the sum of one million two hundred fifty thousand six hundred thirty‑seven dollars ($1,250,637) in appropriated funds for the expansion of existing offices currently providing legal services to the indigent population under the oversight of the Office of Indigent Defense Services by creating up to 12 new attorney positions and six new support staff positions. These funds may be used for salaries, benefits, equipment, and related expenses. Prior to using funds for this purpose, the Office of Indigent Defense Services shall report to the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety on the proposed expansion.
SECTION 14.3.(b)  The Office of Indigent Defense Services may use up to the sum of two hundred sixty‑two thousand four hundred seven dollars ($262,407) in appropriated funds for the creation of an Office of the Juvenile Defender to be comprised of one attorney position and one support staff position. These funds may be used for salaries, benefits, equipment, and related expenses.

Requested by:	Representatives Kiser, Haire, Culpepper
establish a public defender's office in the first defender district
SECTION 14.4.(a)  G.S. 7A‑498.7(a) reads as rewritten:
"(a)	The following counties of the State are organized into the defender districts listed below, and in each of those defender districts an office of public defender is established:

	Defender District	Counties	

1	Camden, Chowan,
	Currituck, Dare,
	Pasquotank, Perquimans
3A	Pitt
3B	Carteret
12	Cumberland
14	Durham
15B	Orange, Chatham
16A	Scotland, Hoke
16B	Robeson
18	Guilford
21	Forsyth
26	Mecklenburg
27A	Gaston
28	Buncombe

After notice to, and consultation with, the affected district bar, senior resident superior court judge, and chief district court judge, the Commission on Indigent Defense Services may recommend to the General Assembly that a district or regional public defender office be established. A legislative act is required in order to establish a new office or to abolish an existing office."
SECTION 14.4.(b)  Of the funds appropriated to the Judicial Department, Office of Indigent Defense Services, in this act, the Office of Indigent Defense Services shall use up to the sum of six hundred thousand dollars ($600,000) for the 2004‑2005 fiscal year to establish a public defender's office in the First Defender District, as established in this section. The funds shall be used to establish the public defender, six assistant public defenders, one investigator, and two support positions.

Requested by:	Representatives Kiser, Haire, Clary, Moore
PILOT PROGRAM FOR PROVISION OF COURTROOM TESTIMONY OF LAB ANALYSTS BY VIDEOCONFERENCE/DIRECT JUDICIAL DEPARTMENT TO STUDY FEASIBILITY OF A STATEWIDE PROGRAM FOR PROVIDING TESTIMONY IN THAT MANNER
SECTION 14.5.(a)  The Administrative Office of the Courts shall conduct a pilot program in Superior Court District 27B for the provision of State Bureau of Investigation lab analyst testimony by videoconference. Notwithstanding any provision of law to the contrary, lab analysts with the State Bureau of Investigation may provide courtroom testimony by means of videoconferencing to courtrooms in Superior Court District 27B for purposes of participating in this pilot project.
SECTION 14.5.(b)  Of the funds appropriated to the Judicial Department in this act, the Department shall use up to the sum of ninety‑three thousand two hundred twenty‑nine dollars ($93,229) for the 2004‑2005 fiscal year for equipment and other expenses to conduct a pilot program in Superior Court District 27B for the provision of SBI lab analyst testimony by videoconference to courtrooms in District 27B.
SECTION 14.5.(c)  Of the funds appropriated to the Department of Justice in this act, the Department shall use up to the sum of forty‑eight thousand four hundred fifty dollars ($48,450) for equipment, set‑up charges, telecommunication charges, and other expenses associated with providing lab analyst testimony by videoconference from the SBI laboratory. 
SECTION 14.5.(d)  The Judicial Department, in consultation and cooperation with the Department of Justice, shall study the feasibility of statewide implementation of a program to allow lab analysts with the State Bureau of Investigation to provide their testimony establishing chain‑of‑custody and any other necessary courtroom testimony by means of videoconferencing or other remote means. In conducting this study, the departments shall determine the most efficient and cost‑effective means of providing such testimony and agree upon the appropriate equipment needed for the provision of testimony in that manner. The departments shall report their findings and recommendations to the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety and the Chairs of the House and Senate Appropriations Committees by January 1, 2005.

Requested by:	Representatives Kiser, Haire 
DOMESTIC VIOLENCE RESERVEs
SECTION 14.6.(a)  Of the funds appropriated in this act to the Judicial Department for the 2003‑2004 fiscal year, the sum of one million seven hundred twenty‑eight thousand two hundred forty‑four dollars ($1,728,244) shall be placed in a reserve.  The funds shall be released if House Bill 1354, or a substantially similar bill to strengthen domestic violence laws, becomes law.
SECTION 14.6.(b)  Of the funds appropriated in this act to the Department of Justice for the 2003‑2004 fiscal year, the sum of one hundred twenty‑one thousand seven hundred fifty‑six dollars ($121,756) shall be placed in a reserve.  The funds shall be released if House Bill 1354, or a substantially similar bill to strengthen domestic violence laws, becomes law.

PART XV. DEPARTMENT OF JUSTICE

Requested by:	Representative Haire
Study Cost of the DCI‑PIN System
SECTION 15.1.  The Office of State Budget and Management, in consultation with the Department of Justice, shall study the cost of the DCI‑PIN system, which allows State and local law enforcement agencies to access criminal information from desktop terminals and mobile data laptops installed in vehicles.  The study shall include an assessment of the Division's operational, personnel, and overhead costs related to the DCI‑PIN system and how those costs have changed since the prior fiscal year. The Office of State Budget and Management shall report its findings and recommendations to the Chairs of the Senate and House of Representatives Appropriations Committees, the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety, and the Fiscal Research Division on or before March 1, 2005.

Requested by:	Representatives Kiser, Haire 
Reduce Backlog of Rape Kits
SECTION 15.2.  From funds available to the Department of Justice, the Department may contract with private entities to reduce the backlog of rape kits in storage in local law enforcement agencies as of July 1, 2004.  The Department may contract with private entities to analyze bodily fluids, DNA evidence, or both, from rape kits that are evidence in cases in which a suspect has not been identified.  The Department of Justice shall report, on or before May 1, 2005, to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the number of rape kits analyzed by private entities and how many of those analyses resulted in arrests or convictions.

PART XVi. DEPARTMENT OF JUVENILE JUSTICE AND DELINQUENCY PREVENTION

Requested by:	Representatives Kiser, Haire 
STATE FUNDS MAY BE USED AS FEDERAL GRANT MATCHING FUNDS
SECTION 16.1.  Section 15.4 of S.L. 2003‑284 reads as rewritten:
"SECTION 15.4.  Funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention for the  2004‑2005 fiscal year may be used as matching funds for the Juvenile Accountability Incentive Block Grants. If North Carolina receives Juvenile Accountability Incentive Block Grants, or a notice of funds to be awarded, the Office of State Budget and Management and the Governor's Crime Commission shall consult with the Department of Juvenile Justice and Delinquency Prevention regarding the criteria for awarding federal funds. The Office of State Budget and Management, the Governor's Crime Commission, and the Department of Juvenile Justice and Delinquency Prevention shall report to the Appropriations Committees of the Senate and House of Representatives and the Joint Legislative Commission on Governmental Operations prior to allocation of the federal funds. The report shall identify the amount of funds to be received for the  2004‑2005 fiscal year, the amount of funds anticipated for the  2005‑2006 fiscal year, and the allocation of funds by program and purpose."

Requested by:	Representatives Kiser, Haire, Fisher 
OPERATION OF BUNCOMBE YOUTH DETENTION CENTER
SECTION 16.2.  Section 15.8 of S.L. 2003‑284 reads as rewritten:
"SECTION 15.8.  The Department of Juvenile Justice and Delinquency Prevention shall continue to operate the Buncombe Youth Detention Center at its current site during the  2004‑2005 fiscal year. To the extent practicable during the  2004‑2005 fiscal year, the Department shall operate the Buncombe Youth Detention Center at the same average population and staffing levels and at the same budget as the  2003‑2004  fiscal year."

Requested by:	Representatives Kiser, Haire
Planning for New Youth Development Centers
SECTION 16.3.  The Department of Juvenile Justice and Delinquency Prevention and the Department of Administration, State Construction Office, shall continue planning and design for up to 512 youth development centers beds.  The Department of Juvenile Justice and Delinquency Prevention shall provide a plan for new youth development centers by December 1, 2004, to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee, the Chairs of the House of Representatives and Senate Appropriations Committees and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety.
The plan shall include all of the following:
(1)	The recommended number of facilities and beds, including plans for up to 512 beds at 13 sites and alternative plans for up to 512 beds at fewer sites.
(2)	The project schedule for the new facilities, from the bid phase through completion, and the juvenile occupancy of each of the facilities.
(3)	A detailed schematic of a prototype facility.
(4)	The facility staffing plan, which shall include the number of positions by job class, the unit cost per position, and the job descriptions of the positions. The plan shall also identify the number of positions to be assigned on each shift for a 24‑hour period and the assigned location of each position.
(5)	A transition plan for recruiting and establishing new positions and converting current positions to new job classes.
(6)	The recommended site locations for each facility, including the specific site location and the county in which each site is located.
(7)	A comparison of the cost of constructing and operating a youth development center in North Carolina to the cost of constructing and operating similar facilities in other states.
(8)	A description of major facility programs, including education, health services, recreation, therapy and clinical services, parental involvement and accountability, and aftercare programs. This description shall also identify programs for female offenders and recommend sites where female offenders will be committed.
The Department shall also provide recommendations and community‑based alternatives for further reducing the youth development center populations.
The Department of Administration, State Construction Office, shall assist the Department of Juvenile Justice and Delinquency Prevention, as necessary, with the reports required by this section. The Department of Administration and the Department of Juvenile Justice and Delinquency Prevention shall not solicit bids for construction of new youth development centers until at least 30 days after submission of the plan.

Requested by:	Representatives Kiser, Haire 
Youth Development Center Staffing
SECTION 16.4.(a)  With the approval of the Office of State Personnel and the Office of State Budget and Management, the Department of Juvenile Justice and Delinquency Prevention may reclassify existing departmental vacant positions to establish up to 18 new positions in new job classes defined in this section.  The Department may use departmental salary reserves and salaries from vacant positions to establish these positions. These newly established positions shall be assigned to Stonewall Jackson and Samarkand Youth Development Centers.  The positions shall be reclassified as 14 youth development center youth counselors, two youth counselor supervisors, and two licensed mental health clinicians. These new positions will provide the starting point for the potential implementation of a statewide therapeutic staffing model.
The Department of Juvenile Justice and Delinquency Prevention shall prepare a report that includes a plan for explaining (i) the amount of funds and number of positions reallocated from vacant positions to establish new positions, (ii) the amount of departmental salary reserves used to establish new positions, (iii) the source of funds, (iv) the time frame for recruiting and hiring staff, (v) copies of the job specifications for new job classes, and (vi) a statement of how the positions will be allocated between Stonewall Jackson Youth Development Center and Samarkand Youth Development Center. Prior to establishing these positions, the report shall be provided to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety by October 1, 2004.
SECTION 16.4.(b)  The Department of Juvenile Justice and Delinquency Prevention shall prepare a long‑range plan for establishing a therapeutic staffing model to be used in all youth development centers. The plan shall include:
(1)	An outline of the cost and benefits of the proposed model for juveniles in the custody of the Department and a summary of available research regarding the use of therapeutic staffing models in juvenile facilities.
(2)	An action plan and time line for reclassifying current counselor technicians, behavioral specialists, cottage parents, or other current positions to youth counselor or youth counselor supervisor positions or to other job classes that are progressive steps towards youth counselor positions.
(3)	Job specifications, salary grades, and operating costs for each job class.
(4)	The proposed number of existing positions to be reclassified to youth counselors or youth counselor supervisors in the 2004‑2005 fiscal year.
(5)	The recommended staffing for and qualifications of teachers and teacher assistants and the standards for evaluating teacher quality in youth development centers.
The Department shall also estimate the number of current positions likely to be reclassified to youth counselor positions and youth counselor supervisors statewide based on the qualifications of the current staff.
SECTION 16.4.(c)  The Department of Juvenile Justice and Delinquency Prevention shall report by February 1, 2005, to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the long‑range plan required by this section and the budgetary costs for statewide implementation of the therapeutic staffing model. 
SECTION 16.4.(d)  The Department of Juvenile Justice and Delinquency Prevention may use up to the sum of one hundred thousand dollars ($100,000) in salary reserves to reallocate existing positions to youth counselor and youth counselor supervisor positions for youth development centers. The Department shall not reclassify current positions to youth counselor or youth counselor supervisor positions until at least 30 days after it submits the long‑range plan required by subsection (b) of this section to the General Assembly.

Requested by:	Representatives Kiser, Haire
Juvenile Recidivism
SECTION 16.5.  Pursuant to G.S. 164‑42.1 and G.S. 164‑43, the North Carolina Sentencing and Policy Advisory Commission shall prepare biennial reports on juvenile recidivism in North Carolina. The Commission shall consult with the Department of Juvenile Justice and Delinquency Prevention and the Fiscal Research Division of the Legislative Services Office of the General Assembly in developing a methodology for measuring juvenile recidivism in North Carolina.  The Commission shall report the proposed methodology to the 2005 General Assembly by March 1, 2005.  The Commission's report shall also include a timeline for completing the initial analysis and recidivism report and any proposed legislation regarding juvenile recidivism. The report shall also include recommendations for other outcome measures that are appropriate for evaluating juvenile program effectiveness.

Requested by:	Representatives Kiser, Haire 
Electronic Monitoring of Juveniles
SECTION 16.6.  The Department of Juvenile Justice and Delinquency Prevention shall study the issue of electronic monitoring of juveniles in consultation with the Fiscal Research Division of the Legislative Services Office of the General Assembly and shall report to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety by March 1, 2005, on electronic monitoring programs and electronic house arrest programs for juvenile offenders.  The report shall include all of the following:
(1)	Information on current usage, including the number of juveniles in the various programs, by district, and the available capacity of the electronic programs in comparison to the current usage of the programs.
(2)	The criminal histories of the juveniles in electronic monitoring or house arrest programs and how their criminal histories compare to those of juveniles committed to youth development centers.
(3)	An analysis of the costs and benefits of passive and active global positioning systems for monitoring juvenile offenders.
(4)	A comparison of the electronic monitoring programs for juvenile offenders used by other states.
(5)	The Department's recommendations on ways to expand the use of all electronic monitoring programs, in particular as an alternative to committing juveniles to youth development centers. 

Requested by:	Representatives Kiser, Haire 
Alternatives to Juvenile Commitment/Juvenile Crime Prevention Councils
SECTION 16.7.  Of the funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention, the sum of five hundred thousand dollars ($500,000) shall be used for demonstration projects of the Juvenile Crime Prevention Councils to identify effective alternative community programs for juvenile offenders who would otherwise have been committed to youth development centers. The Department shall develop a competitive grant award process that gives consideration to commitment rates, programs that target juveniles in rural areas, geographical representation, and collaboration among counties. The Department may award up to 10 grants to Juvenile Crime Prevention Councils and no individual grant may exceed one hundred thousand dollars ($100,000).

Requested by:	Representatives Kiser, Haire 
Education of Juveniles Committed to the Department of Juvenile Justice and Delinquency Prevention
SECTION 16.8.  The Department of Juvenile Justice and Delinquency Prevention, in consultation with the State Board of Education and the Community Colleges System Office, shall review and develop a report on the assessment of juveniles committed to the Department of Juvenile Justice and Delinquency Prevention and the curricula, education plans, and alternative education programs for those juveniles.  The Department of Juvenile Justice and Delinquency Prevention, the State Board of Education, and the Community Colleges System Office shall submit the report to the Chairs of the House of Representatives and Senate Appropriations Committees and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on or before March 1, 2005.

PART XViI. DEPARTMENT OF CORRECTION

Requested by:	Representatives Kiser, Haire
SHIFT PAY for security staff
SECTION 17.1.  Section 16.3 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.3. The Department of Correction may use funds available for the  2003‑2005 biennium for the payment to security staff of special supplemental weekend shift premium pay that exceeds standard weekend shift pay by up to ten percent (10%). The Department shall also continue to take steps to hold down the cost of shift pay by converting prisons from three eight‑hour shifts to two 12‑hour shifts whenever practical.
The Department of Correction shall report to the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety by  March 1, 2005, on its progress in converting prison work shifts from eight hours to 12 hours. The report shall include information on savings generated to date and potential future savings, as well as any changes in employee morale and leave usage, as a result of converting to 12‑hour shifts."

Requested by:	Representatives Kiser, Haire
DEPARTMENT OF CORRECTION SECURITY STAFFING FORMULAS
SECTION 17.2.  Section 16.4(c) of S.L. 2003‑284 reads as rewritten:
"SECTION 16.4.(c)  The Department of Correction shall report on its progress in implementing the staffing recommendations of the National Institute of Corrections to the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety by  February 1, 2005. The report shall include a status report on the implementation of a centralized postaudit control system and the automation of leave records. The report shall also provide an updated staffing relief formula and the methodology used to develop the updated formula."

Requested by:	Representatives Kiser, Haire
INMATE COSTS/ INMATE CLOTHING AND LAUNDRY SERVICES
SECTION 17.3.  Section 16.6(c) of S.L. 2003‑284 reads as rewritten:
"SECTION 16.6.(c)  Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the 2003‑2005 biennium for the purchase of clothing and laundry services for inmates if expenditures are projected to exceed the Department's budget for clothing and laundry services. The Department shall consult with the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount."

Requested by:	Representatives Kiser, Haire
FEDERAL GRANT MATCHING FUNDS
SECTION 17.4.  Section 16.10 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.10.  Notwithstanding the provisions of G.S. 148‑2, the Department of Correction may use up to the sum of nine hundred thousand dollars ($900,000) in the 2003‑2004 fiscal year and up to the sum of six hundred fifty thousand dollars ($650,000) in the 2004‑2005 fiscal year from funds available to the Department to provide the State match needed in order to receive federal grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds."

Requested by:	Representatives Kiser, Haire
ENERGY COMMITTED TO OFFENDERS/CONTRACT AND REPORT
SECTION 17.5.  Section 16.13 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.13.  The Department of Correction may continue to contract with Energy Committed To Offenders, Inc., for the purchase of prison beds for minimum security female inmates during the 2003‑2005 biennium. Energy Committed To Offenders, Inc., shall report by February 1 of each year to the Joint Legislative Commission on Governmental Operations on the annual cost per inmate and the average daily inmate population compared to bed capacity using the same methodology as that used by the Department of Correction.  The Department of Correction, after consultation with the Sentencing and Policy Advisory Commission and Energy Committed To Offenders, Inc., shall recommend the best approach for determining the program's effectiveness to the 2005 General Assembly."

Requested by:	Representatives Kiser, Haire 
INMATE CUSTODY AND CLASSIFICATION SYSTEM
SECTION 17.6.(a)  The Department of Correction shall review the current inmate custody and classification system, with the assistance of consultants from the National Institute of Corrections. The review shall focus primarily on the custody classification instrument used to assess inmate custody and the policies and practice of overriding the assessed custody level.  The review should focus particularly on determining whether the instrument is effective in predicting custody classification, analyzing the current override rate by custody level, and assessing any need for changes in the override policy.  The Department should request assistance from the National Institute of Corrections in obtaining (i) a comparison between Department of Correction override rates and policies and those of other states; (ii) suggestions on an acceptable override rate for classification systems; and (iii) any recommendations the NIC may have on the Department's custody classification instrument and override policy.
SECTION 17.6.(b)  The Department shall report its findings and recommendations to the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety no later than April 15, 2005.

Requested by:	Representatives Kiser, Haire
REPORTS ON NONPROFIT PROGRAMS
SECTION 17.7.  Section 16.17 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.17.(a)  Funds appropriated in this act to the Department of Correction to support the programs of Harriet's House may be used for program operating costs, the purchase of equipment, and the rental of real property. Harriet's House shall report by February 1 of each year to the Joint Legislative Commission on Governmental Operations on the expenditure of State appropriations and on the effectiveness of the program, including information on the number of clients served, the number of clients who successfully complete the Harriet's House  program, and the number of clients who have been rearrested within three years of successfully completing the program.
"SECTION 16.17.(b)  Summit House shall report by February 1 of each year to the Joint Legislative Commission on Governmental Operations on the expenditure of State appropriations and on the effectiveness of the program, including information on the number of clients served, the number of clients who have had their probation revoked, the number of clients who successfully complete the program while housed at Summit House,  Inc.,  and the number of clients who have been rearrested within three years of successfully completing the program.
"SECTION 16.17.(c)  Women at Risk shall report by February 1 of each year to the Joint Legislative Commission on Governmental Operations on the expenditure of State funds and on the effectiveness of the program, including information on the number of clients served, the number of clients who have had their probation revoked,  the number of clients who have successfully completed the  program, and the number of clients who have been rearrested within three years of successfully completing the program."

Requested by:	Representatives Kiser, Haire
ELECTRONIC MONITORING Request for Proposals
SECTION 17.8.  The Department of Correction shall issue a Request for Proposal for electronic monitoring equipment and monitoring services for the Division of Community Corrections' electronic house arrest and electronic monitoring programs. The RFP shall require separate bids: one for equipment, maintenance, and technical support, and one for the aforementioned items plus monitoring services. The Department shall design the RFP to use the most recent, cost‑effective technology available; the Department shall not restrict vendors to the specifications of the equipment currently utilized by the Department.  The RFP shall also include a bid request for passive and active Global Positioning System monitoring equipment.  No less than 30 days prior to issuing the RFP, the Department shall provide the Fiscal Research Division with a copy of the draft RFP. The RFP shall be issued by December 31, 2004, for a contract term to begin July 1, 2005.
The Department of Correction shall report by March 1, 2005, to the Chairs of the House and Senate Appropriations Committees and the Chairs of the House and Senate Appropriations Subcommittees on Justice and Public Safety on the responses to the RFP. In evaluating the responses, the Department of Correction shall give preference to proposals making use of equipment manufactured and serviced in the United States.

Requested by:	Representatives Kiser, Haire
REPORT ON INMATES ELIGIBLE FOR PAROLE
SECTION 17.9.  Section 16.20 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.20.  The Post‑Release Supervision and Parole Commission shall report by January 15 and July 15 of each year to the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on inmates eligible for parole. These reports shall include at least the following:
(1)	The total number of Fair Sentencing and Pre‑Fair Sentencing inmates that were parole‑eligible during the current fiscal year and the total number of those inmates that were paroled. The report should group these inmates by offense type, custody classification, and type of parole. The report should also include a more specific analysis of those inmates who were parole‑eligible and assigned to minimum custody classification but not released;
(2)	The average time served, by offense class, of Fair Sentencing and Pre‑Fair Sentencing inmates compared to inmates sentenced under Structured Sentencing; and
(3)	The projected number of parole‑eligible inmates to be paroled or released by the end of the 2003‑2004 fiscal year and by the end of each of the next five fiscal years, beginning with the 2004‑2005 fiscal year."

Requested by:	Representatives Kiser, Haire
POST‑RELEASE SUPERVISION AND PAROLE COMMISSION/REPORT ON STAFFING REORGANIZATION AND REDUCTION
SECTION 17.10.  Section 16.21 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.21.(a)  The Post‑Release Supervision and Parole Commission shall report by October 1, 2003, to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on a plan for restructuring the organization and operation of the Commission and implementing staff reductions to reflect both declines and changes in workload.
"SECTION 16.21.(b)  The Post‑Release Supervision and Parole Commission shall report by October 1, 2004, to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on the implementation of the plan for restructuring the organization and operation of the Commission and for implementing staff reductions to reflect both declines and changes in workload. The report shall include the number of parole reviews, paroles, and post‑release supervision reviews conducted per analyst per year for the last five years."

Requested by:	Representatives Kiser, Haire 
CRIMINAL JUSTICE PARTNERSHIP PROGRAM
SECTION 17.11.  Section 16.16 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.16.(a)  It is the intent of the General Assembly that State Criminal Justice Partnership Program funds not be used to fund case manager positions when those services can be reasonably provided by Division of Community Corrections personnel or by the Treatment Alternatives to Street Crime (TASC) Program in the Department of Health and Human Services.
"SECTION 16.16.(b)  Notwithstanding the provisions of G.S. 143B‑273.15 specifying that grants to participating counties are for the full fiscal year and that unobligated funds are returned to the State‑County Criminal Justice Partnership Account at the end of the grant period, the Department of Correction may reallocate unspent or unclaimed funds distributed to counties participating in the State‑County Criminal Justice Partnership Program in an effort to maintain the level of services realized in previous fiscal years.
"SECTION 16.16.(c)  The Department of Correction may not deny funds to a county to support both a residential program and a day reporting center if the Department of Correction determines  that the county has a demonstrated need and a fully developed plan for each type of sanction.
"SECTION 16.16.(d)  The Department of Correction shall report by February 1 of each year to the Chairs of the Senate and House of Representatives Appropriations Committees, the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety, and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on the status of the State‑County Criminal Justice Partnership Program. The report shall include the following information:
(1)	The amount of funds carried over from the prior fiscal year;
(2)	The dollar amount and purpose of grants awarded to counties as discretionary grants for the current fiscal year;
(3)	Any counties the Department anticipates will submit requests for new implementation grants;
(4)	An update on efforts to ensure that all counties make use of the electronic reporting system, including the number of counties submitting offender participation data via the system;
(5)	An analysis of offender participation data received, including data on each program's utilization and capacity; and
(6)	An analysis of comparable programs, prepared by the Research and Planning Division of the Department of Correction, and a summary of the reports prepared by county Criminal Justice Partnerships Advisory Boards.(7)	An evaluation of Criminal Justice Partnership programs, based upon evaluation standards designed by the Division of Community Corrections in consultation with the Fiscal Research Division and the Department of Correction, Division of Research and Planning.
"SECTION 16.16.(e)  The Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee, in consultation with the Sentencing and Policy Advisory Commission and the Department of Correction, Division of Research and Planning, shall review the Criminal Justice Partnership Program funding formula and recommend any necessary changes in that formula to the 2005 General Assembly."

Requested by:	Representatives Kiser, Haire
collection of OFFENDER FEES
SECTION 17.12.  Section 16.15 of S.L. 2003‑284 reads as rewritten:
"SECTION 16.15.(a)  The Department of Correction and the Judicial Department shall report by March 1 of each year to the Chairs of the Senate and House of Representatives Appropriations Committees and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on the success of their efforts to improve the collection rate of offender fees for probationers and for nonprobationers sentenced to community service and on any recommendations for statutory or procedural changes that will improve the collection of financial obligations from offenders.
The report shall include a comparison of the  total offender fees collected in the most recent year compared to prior  years. The report shall also  include, for each judicial district: the total offender fees collected, the total fines and restitution collected, the number of offenders ordered to supervised probation, the number of offenders ordered to unsupervised probation, the number and percentage of supervised probation cases in which no payment was made, the number and percentage of unsupervised probation cases (any case in which an offender is not given an active or supervised probation sentence) in which no payment was made, and whether that judicial district enters offender information into the financial management system for all offenders required to pay fines, fees, or restitution, or whether that data is entered only when the offender makes a payment. If any of this information cannot be collected, the report shall include a description of the data collection issues and a plan for addressing those issues.
"SECTION 16.15.(b)  The Judicial Department shall make use of the new deputy clerk positions funded in this act to ensure that offender accounts payable information is entered into the financial management system within a reasonable time after sentencing. As part of this undertaking, the Judicial Department shall review the use of its financial management system to determine whether there are methods of streamlining or expediting the entry of offender accounts payable information into that system."

PART XVIIi. DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY

Requested by:	Representatives Kiser, Haire
VICTIMS COMPENSATION/ medical treatment
SECTION 18.1.  G.S. 15B‑2(1) reads as rewritten:
"(1)	"Allowable expense" means reasonable charges incurred for reasonably needed products, services, and accommodations, including those for medical care, rehabilitation, medically‑related property, and other remedial treatment and care.
Allowable expense includes a total charge not in excess of three thousand five hundred dollars ($3,500) for expenses related to funeral, cremation, and burial, including transportation of a body, but excluding expenses for flowers, gravestone, and other items not directly related to the funeral service.
Allowable expense for medical care, counseling, rehabilitation, medically‑related property, and other remedial treatment and care of a victim shall be limited to sixty‑six and two‑thirds percent (66 2/3%) of the amount usually charged by the provider for the treatment or care. The provider shall accept the compensation received as payment in full for the treatment or care."

PART Xix. DEPARTMENT OF ADMINISTRATION

Requested by:	Representatives Jeffus, Walend
Allocation of the Petroleum Violation Escrow Funds
SECTION 19.1.(a)  There is appropriated from funds and interest thereon received from the case of United States v. Stripper Well that remain in the Special Reserve for Oil Overcharge Funds to the Department of Administration the sum of five million dollars ($5,000,000) for the 2004‑2005 fiscal year to be allocated for projects that were approved by the State Energy Policy Council in April 2004.
SECTION 19.1.(b)  There is appropriated from funds and interest thereon received from the case of United States v. Exxon that remain in the Special Reserve for Oil Overcharge Funds to the Department of Health and Human Services the sum of one million dollars ($1,000,000) for the 2004‑2005 fiscal year to be allocated for the Weatherization Assistance Program.
SECTION 19.1.(c)  Any funds remaining in the Special Reserve for Oil Overcharge Funds after the allocation made pursuant to subsections (a) and (b) of this section may be expended only as authorized by the General Assembly.  All interest or income accruing from all deposits or investments of cash balances shall be credited to the Special Reserve for Oil Overcharge Funds.

Requested by:	Representatives Grady, Jeffus, Walend, Baker
State Veterans cemeteries to provide burial services on weekends
SECTION 19.2.(a)  Article 8A of Chapter 65 of the General Statutes is amended by adding a new section to read:
"§ 65‑44.  Days for burial.
Notwithstanding any other provision of law, burial services shall be conducted from Monday through Sunday, except when the day for services falls on a State holiday."
SECTION 19.2.(b)  The Department of Administration may use funds credited to the Veterans Burial Fund for the 2004‑2005 fiscal year to cover costs incurred as a result of burials on Saturday or Sunday that are not covered by General Fund appropriations for that purpose.

Requested by:	Representatives Jeffus, Walend 
study of state‑funded advertising  
SECTION 19.3.(a)  The Office of State Budget and Management, in collaboration with the Department of Administration, shall conduct a study of the State agencies' requirements for advertisements and public service announcements. The study shall include a review of the nature and cost of the advertisements and public service announcements.  The study shall consider (i) the extent to which the North Carolina Agency for Public Telecommunication (APT) can efficiently and effectively provide the services related to the development and placement of these advertisements and public service announcements at a savings to the State, and (ii) whether the services should be provided by APT, decentralized, or outsourced.
SECTION 19.3.(b)  The Office of State Budget and Management shall submit a  report of its findings and recommendations to the Chairs of the Appropriations Subcommittees on General Government of the Senate and House of Representatives by December 1, 2004.

Requested by:	Representatives Jeffus, Walend
Veterans Scholarships partially funded from escheat fund
SECTION 19.4.  Section 18.5(c) of S.L. 2003‑284 reads as rewritten:
"SECTION 18.5.(c)  In accordance with G.S. 116B‑7(b) as enacted by this act, there is appropriated from the Escheat Fund to the Department of Administration the amount of three million nine hundred three thousand three hundred twenty‑four dollars ($3,903,324) for the 2004‑2005 fiscal year."

Requested by:	Representatives Jeffus, Walend
RELOCATION AND RENT EXPENSE TO BE PAID FROM PROCEEDS OF SALE OF POLK BUILDING
SECTION 19.5.  Of the proceeds realized by the State from the sale of the James K. Polk Building in the City of Charlotte, the amount needed to meet the moving expenses and rent expense for the 2004‑2005 fiscal year, not to exceed eight hundred ninety thousand six hundred thirty‑four dollars ($890,634), shall be deposited into a reserve fund in the Office of State Budget and Management. Up to one hundred sixty thousand one hundred one dollars ($160,101) shall be used to cover the expenses of relocating the offices of the University of North Carolina at Chapel Hill TEACH program, the Office of Administrative Hearings, the Office of the State Auditor, and the Departments of Administration, Commerce, Correction, Crime Control and Public Safety, Health and Human Services, and Revenue that are currently housed in the Polk Building. Up to seven hundred thirty thousand five hundred thirty‑three dollars ($730,533) shall be used to cover the rent expense incurred by those State agencies for fiscal year 2004‑2005 as a result of the relocation.

Requested by:	Representatives Jeffus, Walend 
Continuation of the Study of Advocacy Programs in the department of administration
SECTION 19.6.  Section 18.2 of S.L. 2003‑284 reads as rewritten:
"STUDY OF ADVOCACY PROGRAMS IN THE DEPARTMENT OF ADMINISTRATION
SECTION 18.2.  The Secretary of the Department of Administration, in collaboration with appropriate entities which concentrate on public policy and business management, shall continue the study that was completed during the 2003‑2004 fiscal year of the functions of the advocacy programs that are housed in the Department of Administration to determine the appropriate organizational placement of the programs within State government. The study shall include both the advocacy and service functions of the Division of Veterans Affairs, the Council for Women and the Domestic Violence Commission, the Commission of Indian Affairs, the Governor's Advocacy Council for Persons with Disabilities, the Human Relations Commission, and the Youth Advocacy and Involvement Office. The study shall also consider whether the functions of the programs could be more efficiently and effectively performed by an appropriate nonprofit organization. The Secretary shall report the findings and recommendations to the Joint Legislative Commission on Governmental Operations and to the Chairs of the Senate and House of Representatives Appropriations Committees by May 1, 2005."

Requested by:	Representatives Grady, Jeffus, Walend, Baker
Design and Advance Planning for State Veterans Cemetery
SECTION 19.7.  Of the funds appropriated in this act to the Department of Administration, the Department shall use up to three hundred thousand dollars ($300,000) for the 2004‑2005 fiscal year to fund the design and advance planning cost for the expansion of the State veterans cemetery located in Jacksonville. The Department is authorized to retain any reimbursement from the U.S. Department of Veterans Affairs for the amount expended on the design and advance planning of the cemetery expansion project.

Requested by:	Representatives Jeffus, Walend
Transfer Light Ground Pocosin to Wildlife Resources Commission
SECTION 19.8.  The 1094‑acre Light Ground Pocosin property in Pamlico County is reallocated from the Department of Administration to the Wildlife Resources Commission.  Notwithstanding any other provision of law, the Wildlife Resources Commission shall manage the property as gamelands for hunting, fishing, outdoor recreation, nature study, water quality, and conservation of natural resources.

Requested by:	Representative Ross
Implement Blount Street Property Sale
SECTION 19.9.  Section 1.(d) of S.L. 2003‑404 reads as rewritten:
"SECTION 1.(d)  Funds to implement the sales process. – Of the funds available to the Department of Administration, the Department may use up to five hundred thousand dollars ($500,000) to implement the provisions of this act."

PART XX. OFFICE OF THE STATE AUDITOR

Requested by:	Representatives Jeffus, Walend
Auditor to Reduce Span of Control
SECTION 20.1.  The State Auditor shall reduce the span of control for the Office of the State Auditor by eliminating two senior management positions effective January 1, 2005. In reducing the span of control, the State Auditor shall ensure that the Office has no more than two Deputy Auditor positions. Funds appropriated for the positions that are eliminated shall be used to create additional audit positions for the nongovernmental and investigative audit sections.  The State Auditor shall report to the Chairs of the Appropriations Subcommittees on General Government of the Senate and House of Representatives by December 1, 2004.

PART XXI. DEPARTMENT OF INSURANCE

Requested by:	Representatives Jeffus, Walend
Remove Sunset for funding certain operations of the department of insurance through the insurance regulatory fund
SECTION 21.1.  Section 12 of S.L. 2002‑144, as amended by Section 22.2 of S.L. 2003‑284, reads as rewritten:
"SECTION 12.  This act becomes effective July 1, 2002. "

PART XXIi. INFORMATION TECHNOLOGY

Requested by:	Representatives Jeffus, Walend, Tolson
MultiYear Maintenance Contracts
SECTION 22.1.  Section 21.2(a) of S.L. 2003‑284 reads as rewritten:
"SECTION 21.2.(a)  Notwithstanding the cash management provisions of G.S. 146‑86.11, the State Controller may authorize the Office of Information Technology Services (ITS) to purchase not more than four infrastructure maintenance agreements for periods not exceeding two years where the terms of those maintenance agreements require payment of the full purchase price at the beginning of the maintenance period. The State Controller shall not authorize the agreements authorized by this section unless all of the following conditions are met:
(1)	The proposed infrastructure maintenance agreement is entered into after June 30, 2004, and before July 1, 2005.
(2)	The State Controller receives conclusive evidence that the proposed infrastructure agreement would be more cost‑effective than any similar agreement that complies with G.S. 146‑86.11.
(3)	The State Controller verifies that the savings resulting from the proposed infrastructure agreement will be passed on to users in the form of lower rates for ITS services.
(4)	The purchase of the proposed maintenance agreement complies in all other respects with applicable statutes and rules.
(5)	ITS shall make adjustments of excess revenue, based on IRMC‑approved rates, over allowable costs. "

Requested by:	Representatives Jeffus, Walend
Establish Joint Legislative Oversight Committee on Information Technology
SECTION 22.2.  Chapter 120 of the General Statutes is amended by creating a new Article to read:
"Article 30.
"Joint Legislative Oversight Committee on Information Technology.
"§ 120‑261.  Committee established; purpose; organization.
(a)	Establishment. – There is established the Joint Legislative Oversight Committee on Information Technology (Committee). 
(b)	Purpose. – The Committee shall examine, on a continuing basis, systemwide issues affecting State government information technology, including, but not limited to, State information technology operations, infrastructure, development, financing, administration, and service delivery. The Committee may examine State agency or enterprise‑specific information technology issues. The Committee shall make ongoing recommendations to the General Assembly on ways to improve the effectiveness, efficiency, and quality of State government information technology.
(c)	Membership. – The Committee shall consist of 16 members as follows:
(1)	Eight members of the Senate appointed by the President Pro Tempore of the Senate. At least two appointees shall be members of the Senate Appropriations Committee.
(2)	Eight members of the House of Representatives appointed by the Speaker of the House of Representatives. At least two appointees shall be members of the House of Representatives Appropriations Committee.
The President Pro Tempore of the Senate and the Speaker of the House of Representatives shall each select a member from their appointees to serve as cochair of the Committee. 
(d)	Terms. – Members of the Committee shall serve two‑year terms beginning at the convening of the General Assembly in each odd‑numbered year, with no prohibition against being reappointed, except for the terms of the initial members which shall begin on appointment and end on the day of convening of the 2005 General Assembly. A member continues to serve until the member's successor is appointed. Members may complete a term of service on the Committee even if they do not seek reelection or are not reelected to the General Assembly, but resignation or removal from service in the General Assembly constitutes resignation or removal from service on the Committee. The officer who made the original appointment shall fill any vacancy within 30 days.
(e)	Quorum. – A majority of the members of the Committee shall constitute a quorum for the transaction of business. The affirmative vote of a majority of the members present at meetings of the Committee shall be necessary for action to be taken by the Committee.
(f)	Subcommittees. – The Committee cochairs may establish subcommittees for the purpose of making special studies pursuant to its duties, and may appoint non‑Committee members to serve on each subcommittee as resource persons. Resource persons shall be voting members of the subcommittee and shall receive subsistence and travel expenses in accordance with G.S. 138‑5 and G.S. 138‑6.
"§ 120‑262.  Assistance; per diem; subsistence; and travel allowances.
(a)	The Committee may contract for consulting services as provided by G.S. 120‑32.02. Upon approval of the Legislative Services Commission, the Legislative Services Officer shall assign professional and clerical staff to assist in the work of the Committee. The professional staff shall include the appropriate staff from the Fiscal Research, Research, Legislative Drafting, and Information Systems Divisions of the Legislative Services Office of the General Assembly. Clerical staff shall be furnished to the Committee through the offices of the Senate and the House of Representatives Supervisors of Clerks. The expenses of employment of the clerical staff shall be borne by the Committee. The Committee may meet in the Legislative Building or the Legislative Office Building upon the approval of the Legislative Services Commission.
(b)	Members of the Committee shall receive per diem, subsistence, and travel allowances as follows:
(1)	Committee members who are members of the General Assembly, at the rate established in G.S. 120‑3.1.
(2)	Committee members and resource persons who are officials or employees of the State or of local government agencies, at the rate established in G.S. 138‑6.
(3)	All other Committee members and resource persons, at the rate established in G.S. 138‑5.
"§ 120‑263.  Reports.
The Committee shall submit annual reports to the General Assembly on or before the convening of the regular session of the General Assembly each year. The Committee may submit interim reports at any time it deems appropriate.
"§ 120‑264.  Authority.
The Committee has the authority to obtain information and data from all State officers, agents, agencies, and departments, while in discharge of its duties, pursuant to G.S. 120‑19, as if it were a committee of the General Assembly."

PART XXIII. DEPARTMENT OF REVENUE

Requested by:	Representatives Jeffus, Walend
Extend DOR Call Center Fee Use
SECTION 23.1.  Section 22.6(a) of S.L. 2002‑126, as amended by Section 23.1 of S.L. 2003‑284, reads as rewritten:
"SECTION 22.6.(a)  There is appropriated from the collection assistance fee account created in G.S. 105‑243.1 to the Department of Revenue the sum of one million six hundred twenty‑two thousand eight hundred ninety‑six dollars ($1,622,896) for the 2003‑2004 fiscal year and the sum of two million one hundred fifty‑four thousand five hundred ninety‑three dollars ($2,154,593) for the 2004‑2005 fiscal year to pay for the costs of establishing and equipping a central taxpayer telecommunications service center for collections and assistance and for the costs associated with aligning local field offices with the new center. Of the funds appropriated in this subsection, the sum of three million dollars ($3,000,000) that was designated for the 2003‑2005 biennium to pay for the costs of establishing and equipping a central taxpayer telecommunications service center does not revert at the end of the 2004‑2005 fiscal year but remains available until June 30, 2006, for operating costs of the service center."

Requested by:	Representatives Jeffus, Walend 
DOR Debt Fee for Taxpayer Locater Services AND COLLECTION
SECTION 23.2.(a)  G.S. 105‑243.1(e) reads as rewritten:
"(e)	Use. – The fee is a receipt of the Department and must be applied to the costs of collecting overdue tax debts. The proceeds of the fee must be credited to a special account within the Department and may be expended only as provided in this subsection. The proceeds of the fee may not be used for any purpose that is not directly and primarily related to collecting overdue tax debts. The Department may apply the proceeds of the fee for the purposes listed in this subsection. The remaining proceeds of the fee may be spent only pursuant to appropriation by the General Assembly. The fee proceeds do not revert but remain in the special account until spent for the costs of collecting overdue tax debts. The Department may apply the fee proceeds for the following purposes:
(1)	To pay contractors for collecting overdue tax debts under subsection (b) of this section.
(2)	To pay the fee the United States Department of the Treasury charges for setoff to recover tax owed to North Carolina.
(3)	To pay for taxpayer locater services, not to exceed one hundred thousand dollars ($100,000) a year."
SECTION 23.2.(b)  Funds are appropriated in this act from the collection assistance fee account created in G.S. 105‑243.1 to the Department of Revenue for postage for correspondence directly and primarily relating to collecting overdue tax debts, for operating expenses for Project Collect Tax, and for expenses of the Examinations and Collections Division directly and primarily relating to collecting overdue tax debts as defined in G.S. 105‑243.1. The Department of Revenue and the Office of State Budget and Management must account for all expenditures using accounting procedures that clearly distinguish costs allocable to collecting overdue tax debts as defined in G.S. 105‑243.1 from costs allocable to other purposes and must demonstrate that none of the fee proceeds are used for any purpose other than collecting overdue tax debts.
The Department of Revenue must report to the 2005 General Assembly on its implementation of this section.

Requested by:	Representatives Jeffus, Walend
Modify DOR Reporting to Gov Ops
SECTION 23.3.(a)  Section 22.6(c) of S.L. 2002‑126 reads as rewritten:
"SECTION 22.6.(c)  Beginning January 1, 2003, and ending six months following completion of the projects described in subsection (a) of this section, the Department of Revenue must report semiannually to the Joint Legislative Commission on Governmental Operations on the use of the funds and the progress of establishing the new center."
SECTION 23.3.(b)  G.S. 105‑256(e) is repealed.
SECTION 23.3.(c)  G.S. 105‑243.1(f) reads as rewritten:
"(f)	Reports. – The Department must report semiannually to the Joint Legislative Commission on Governmental Operations and to the Revenue Laws Study Committee on its efforts to collect tax debts. Each report must include a breakdown of the amount and age of tax debts collected by collection agencies on contract, the amount and age of tax debts collected by the Department through warning letters, and the amount and age of tax debts otherwise collected by Department personnel. The report must itemize collections by type of tax. Each report must also include a long‑term collection plan, a timeline for implementing each step of the plan, a summary of steps taken since the last report and their results, and any other data requested by the Commission or the Committee."

PART Xxiv. RULES REVIEW COMMISSION

Requested by:	Representatives Jeffus, Walend
RESERVE FOR ATTORNEYS' FEES OF RULES REVIEW COMMISSION
SECTION 24.1.(a)  The Reserve for Attorneys' Fees of the Rules Review Commission in the Office of State Budget and Management shall consist of appropriations from the General Assembly and funds received from any State agency in accordance with this section.
SECTION 24.1.(b)  When a State agency files a petition for judicial review of a final decision of the Rules Review Commission under Article 4 of Chapter 150B of the General Statutes and the Rules Review Commission prevails in that action, that State agency shall deposit to the reserve under subsection (a) of this section a sum equal to the Commission's actual attorneys' fees.

PART XXv. SECRETARY OF STATE

Requested by:	Representatives Jeffus, Walend 
Transfer of Business License Information Office
SECTION 25.1.  Effective July 1, 2004, the Business License Information Office is transferred from the Department of the Secretary of State to the Community Colleges System Office.  The transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6(a).

PART XXVi. STATE BOARD OF ELECTIONS

Requested by:	Representatives Jeffus, Walend
INCREASE HAVA MATCH FUNDS
SECTION 26.1.  Section 25.1 of S.L. 2003‑284 reads as rewritten:
"SECTION 25.1.(a)  Of the funds appropriated to the State Board of Elections for the 2003‑2004 fiscal year by Section 2.1 of this act:
(1)	The sum of $1,791,936 is transferred to a Reserve Fund to meet the Maintenance of Effort requirements of section 254(a)(7) of the Help America Vote Act, Public Law 107‑252.
(2)	The sum of $1,665,650 currently appropriated to Fund 1100 Administration for the SEIMS RCC is transferred to a Reserve Fund for the State Board of Elections.
(3)	The sum of $1,922,215 is transferred in the 2003‑2004 fiscal year and the sum of $1,521,918 is transferred in the 2004‑2005 fiscal year to the Election Fund established by S.L. 2003‑12 to meet the five percent (5%) matching requirement of Title II Help America Vote Act, Public Law 107‑252 for the 2003‑2005 fiscal biennium. Of that amount, $1,232,508 shall be available for expenditure in the 2003‑2004 fiscal year, and the remaining $2,211,625 shall be available for expenditure only during the 2004‑2005 fiscal year. The money shall only be expended as federal funds are available to match, and if the amount available to the State is less than projected, the unexpended remainder of the $1,922,215 for the 2003‑2004 fiscal year and $1,521,918 for the 2004‑2005 fiscal year shall revert to the General Fund on the earlier of:
a.	June 30, 2006; or
b.	A determination by the Office of State Budget and Management that the unexpended remainder will not be needed.
"SECTION 25.1.(b)  The 107th Congress established the Help America Vote Act (HAVA) as Public Law 107‑252 establishing a program to assist in the administration of federal elections and provide assistance with the administration of certain federal elections laws and programs; establish minimum election administration standards for states and units of local government with the responsibility for the administration of federal elections. In HAVA, Congress authorized appropriations for elections assistance in the form of a matching grant program (Title II of HAVA, Requirements Payments) for which states are required as one condition of the Election Assistance Requirements Payments to match federal allocations with a five percent (5%) match of State dollars. The federal government has additional requirements, including a required state plan and a stipulation for each participating state to implement the Maintenance of Effort (MOE) requirements of Title II, section 254(a)(7) of HAVA. The MOE requires that the state maintain the expenditures of the state for activities funded by the payment at a level that is not less than the level of such expenditures maintained by the state for the fiscal year ending prior to November 2000. Congress authorized up to $1.4 billion for Requirements Payments, and $810 million for Title II requirements grants was funded for fiscal year 2003. 
Based upon the 2003 and 2004 approved funding, it is estimated that North Carolina will receive $23,431,708 of the Title II funding if North Carolina meets all the conditions of the Election Assistance program, including not only the five percent (5%) state match but also maintenance of its expenditure level on HAVA activities at the expense level the State Board of Elections had in State fiscal year 1999‑2000. Actual expenditures for the State Elections Information Management System (SEIMS), which is a qualified HAVA activity, in 1999‑2000 were three million four hundred fifty‑seven thousand five hundred eighty‑five dollars and six cents ($3,457,585.06). The authorized expenditures on SEIMS in 2002‑2003 by the State Board of Elections is one million six hundred sixty‑five thousand six hundred fifty dollars ($1,665,650). The difference in expenditure levels is one million seven hundred ninety‑one thousand nine hundred thirty‑five dollars and six cents ($1,791,935.06). To meet HAVA's Title II MOE requirement, North Carolina has to appropriate from its General Fund to a Reserve on a recurring basis (or for as long as Congress requires the MOE as a condition of states' being eligible to receive Requirements Payments), the amount of three million four hundred fifty‑seven thousand five hundred eighty‑five dollars and six cents ($3,457,585.06) annually.
For the State to meet its obligatory five percent (5%) match for HAVA's Title II Requirements Payments, North Carolina has to match twenty‑three million four hundred thirty‑one thousand seven hundred eight dollars ($23,431,708) estimated federal funds in 2003‑2004; forty‑two million forty‑six thousand one hundred dollars ($42,046,100) estimated federal funds in 2004‑2005. The State's match is  one million two hundred thirty‑two thousand five hundred eight dollars ($1,232,508) in 2003‑2004 and two million two hundred eleven thousand six hundred twenty‑five dollars ($2,211,625) in 2004‑2005. The nonrecurring match total required for the 2003‑2005 fiscal biennium from the General Fund is one million nine hundred twenty‑two thousand two hundred fifteen dollars ($1,922,215)."

PART XXVII. OFFICE OF STATE BUDGET AND MANAGEMENT

Requested by:	Representatives Jeffus, Walend
NC Humanities Council
SECTION 27.1.  Section 26.1 of S.L. 2003‑284 reads as rewritten:
"NC HUMANITIES COUNCIL
SECTION 26.1.  The North Carolina Humanities Council shall:
(1)	By January 15, 2005, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 2003‑2004 program activities, objectives, and accomplishments;
b.	State fiscal year 2003‑2004 itemized expenditures and fund sources;
c.	State fiscal year 2004‑2005 planned activities, objectives, and accomplishments including actual results through December 31, 2004; and
d.	State fiscal year 2004‑2005 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 2004.
(2)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement."

PART XXVIII. OFFICE OF THE STATE CONTROLLER

Requested by:	Representatives Jeffus, Walend
OVERPAYMENTS AUDIT
SECTION 28.1.(a)  During the 2004‑2005 fiscal year, receipts generated by the collection of inadvertent overpayments by State agencies to vendors as a result of pricing errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds, erroneously paid excise taxes, and related errors as required by G.S. 147‑86.22(c) are to be deposited in the Special Reserve Account 24172.
SECTION 28.1.(b)  For the 2004‑2005 fiscal year, two hundred thousand dollars ($200,000) of the funds transferred from the Special Reserve Account 24172 shall be used by the Office of the State Controller for data processing, debt collection, or e‑commerce costs.
SECTION 28.1.(c)  All funds available in the Special Reserve Account 24172 on July 1, 2003, are transferred to the General Fund on that date.
SECTION 28.1.(d)  Any unobligated funds in the Special Reserve Account 24172 that are realized above the allowance in subsection (b) of this section are subject to appropriation by the General Assembly in the 2005 Regular Session.
SECTION 28.1.(e)  The State Controller shall report quarterly to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on the revenue deposited into the Special Reserve Account and the disbursement of that revenue.

PART XXIx. DEPARTMENT OF THE STATE TREASURER

Requested by:	Representatives Jeffus, Walend, Sherrill 
Reestablish State Investment Officer Position
SECTION 29.1.  The position of State Investment Officer shall be reestablished in the Investment Division of the Department of State Treasurer. The State Treasurer shall fix the compensation of the State Investment Officer in an amount up to one hundred fifty thousand dollars ($150,000) per year. The State Treasurer may award the State Investment Officer an annual performance‑based incentive bonus, not to exceed thirty percent (30%) of salary, based upon the officer's achievement of specific goals and objectives set by the Treasurer. The State Treasurer shall report the incentive bonus paid to the Chief Investment Officer to the Joint Legislative Commission on Governmental Operations by October 1 of each year.

PART XXx. DEPARTMENT OF TRANSPORTATION

Requested by:	Representatives Cole, Gillespie
Small Urban Contingency Funds
SECTION 30.1.(a)  Of the funds appropriated in this act to the Department of Transportation:
(1)	Fourteen million dollars ($14,000,000) shall be allocated in fiscal year 2004‑2005 for small urban construction projects. These funds shall be allocated equally in each fiscal year of the biennium among the 14 Highway Divisions for the small urban construction program for small construction projects that are located within the area covered by a two‑mile radius of the municipal corporate limits.
(2)	Fifteen million dollars ($15,000,000) in fiscal year 2004‑2005 shall be used statewide for rural or small urban highway improvements and related transportation enhancements to public roads and public facilities, industrial access roads, and spot safety projects as approved by the Secretary of Transportation.
None of these funds used for rural secondary road construction are subject to the county allocation formulas in G.S. 136‑44.5(b) and (c).
These funds are not subject to G.S. 136‑44.7.
The Department of Transportation shall report to the members of the General Assembly on projects funded pursuant to this section in each member's district prior to the Board of Transportation's action. The Department shall make a quarterly comprehensive report on the use of these funds to the Joint Legislative Transportation Oversight Committee and the Fiscal Research Division.
SECTION 30.1.(b)  Section 29.2 of S.L. 2003‑284 is repealed.

Requested by:	Representatives Cole, Gillespie
CASH‑FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 30.2.(a)  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
For Fiscal Year 2005‑2006	$1,416.3 million
For Fiscal Year 2006‑2007	$1,452.3 million
For Fiscal Year 2007‑2008	$1,512.4 million
For Fiscal Year 2008‑2009	$1,571.4 million
SECTION 30.2.(b)  The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
For Fiscal Year 2005‑2006	$1,074.9 million
For Fiscal Year 2006‑2007	$1,115.4 million
For Fiscal Year 2007‑2008	$1,168.9 million
For Fiscal Year 2008‑2009	$1,220.2 million
SECTION 30.2.(c)  Section 29.1 of S.L. 2003‑284 is repealed.

Requested by:	Representatives Cole, Gillespie
Insure Cash‑Flow Fund Availability
SECTION 30.3.(a)  G.S. 136‑176(a1) reads as rewritten:
"(a1)	The Department shall use two hundred twenty million dollars ($220,000,000) in fiscal year 2001‑2002, two hundred twelve million dollars ($212,000,000) in fiscal year 2002‑2003, and two hundred fifty‑five million dollars ($255,000,000) in fiscal year 2003‑2004 of the cash balance of the Highway Trust Fund for the following purposes:
(1)	For primary route pavement preservation. – One hundred seventy million dollars ($170,000,000) in fiscal year 2001‑2002, and one hundred fifty million dollars ($150,000,000) in each of the fiscal years 2002‑2003 and 2003‑2004. Up to ten percent (10%) of the amount for each of the fiscal years 2001‑2002, 2002‑2003, and 2003‑2004 is available in that fiscal year, at the discretion of the Secretary of Transportation, for:
a.	Highway improvement projects that further economic growth and development in small urban and rural areas, that are in the Transportation Improvement Program, and that are individually approved by the Board of Transportation; or
b.	Highway improvements that further economic development in the State and that are individually approved by the Board of Transportation.
(2)	For preliminary engineering costs not included in the current year Transportation Improvement Program. – Fifteen million dollars ($15,000,000) in each of the fiscal years 2001‑2002, 2002‑2003, and 2003‑2004.
(3)	For computerized traffic signal systems and signal optimization projects. – Fifteen million dollars ($15,000,000) in each of the fiscal years 2001‑2002, 2002‑2003, and 2003‑2004.
(4)	For public transportation twenty million dollars ($20,000,000) in fiscal year 2001‑2002, twenty‑five million dollars ($25,000,000) in fiscal year 2002‑2003, and seventy‑five million dollars ($75,000,000) in fiscal year 2003‑2004.
(5)	For small urban construction projects. – Seven million dollars ($7,000,000) in fiscal year 2002‑2003.
Funds authorized for use by the Department pursuant to this subsection shall remain available to the Department until expended."
SECTION 30.3.(b)  G.S. 136‑176 reads as rewritten:
"(a3)	The Department may obligate three hundred million dollars ($300,000,000) in fiscal year 2003‑2004 and four hundred million dollars ($400,000,000) in fiscal year 2004‑2005 of the cash balance of the Highway Trust Fund for the following purposes:
(1)	Six hundred thirty million dollars ($630,000,000) for highway system preservation, modernization, and maintenance, including projects to enhance safety, reduce congestion, improve traffic flow, reduce accidents, upgrade pavement widths and shoulders, extend pavement life, improve pavement smoothness, and rehabilitate or replace deficient bridges; and for economic development transportation projects recommended by local officials and approved by the Board of Transportation.
(2)	Seventy million dollars ($70,000,000) for regional public transit systems, rural and urban public transportation system facilities, regional transportation and air quality initiatives, rail system track improvements and equipment, and other ferry, bicycle, and pedestrian improvements. For any project or program listed in this subdivision for which the Department receives federal funds, use of funds pursuant to this subdivision shall be limited to matching those funds.
Funds authorized for obligation and use by the Department pursuant to this subsection shall remain available to the Department until expended."

Requested by:	Representatives Cole, Gillespie
Western North Carolina Passenger Rail Service Property Acquisition
SECTION 30.4.  The Rail Division may use up to one million sixty‑six thousand dollars ($1,066,000) of the funds placed in the Western North Carolina Reserve created by Section 25.13 of S.L. 2000‑67 for property acquisition and infrastructure improvements in the Biltmore Village area of Asheville to develop a terminus for western North Carolina passenger rail service. 

Requested by:	Representative Sutton
Department of Transportation may pave areas in North Carolina Indian Culture Center
SECTION 30.5.  The Department of Transportation may pave the appropriate areas inside the North Carolina Indian Culture Center.

PART XXXI. SALARIES AND EMPLOYEE BENEFITS

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
gOVERNOR AND cOUNCIL OF sTATE/SALARY INCREASES
SECTION 31.1.(a)  Section 30.1(a) of S.L. 2003‑284 reads as rewritten:
"SECTION 30.1.(a)  For the 2003‑2004 fiscal year, the salary of the Governor shall remain the amount set by G.S. 147‑11(a)."
SECTION 31.1.(b)  Effective July 1, 2004, G.S. 147‑11(a) reads as rewritten:
"(a)	The salary of the Governor shall be one hundred nineteen thousand four hundred thirty dollars ($119,430) annually, payable monthly."
SECTION 31.1.(c)  Section 30.1(b) of S.L. 2003‑284 reads as rewritten:
"SECTION 30.1.(b)  Effective July 1, 2004, the annual salaries for the members of the Council of State, payable monthly, for the 2004‑2005 fiscal year are:
	Council of State	Annual Salary
	Lieutenant Governor	$105,523
	Attorney General	105,523
	Secretary of State	105,523
	State Treasurer	105,523
	State Auditor	105,523
	Superintendent of Public Instruction	105,523
	Agriculture Commissioner	105,523
	Insurance Commissioner	105,523
	Labor Commissioner	105,523"

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
NONELECTED DEPARTMENT HEADS/SALARY INCREASES
SECTION 31.2  Section 30.2 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.2.  In accordance with G.S. 143B‑9, the maximum annual salaries, payable monthly, for the nonelected heads of the principal State departments for the 2004‑2005 fiscal year are:
	Nonelected Department Heads	Annual Salary
	Secretary of Administration	$103,119
	Secretary of Correction	103,119
	Secretary of Crime Control and Public Safety	103,119
	Secretary of Cultural Resources	103,119
	Secretary of Commerce	103,119
	Secretary of Environment and Natural Resources	103,119
	Secretary of Health and Human Services	103,119
	Secretary of Juvenile Justice and Delinquency Prevention	103,119
	Secretary of Revenue	103,119
	Secretary of Transportation	103,119"

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
CERTAIN EXECUTIVE BRANCH OFFICIALS/SALARY INCREASES
SECTION 31.3  Section 30.3 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.3.  The annual salaries, payable monthly, for the 2004‑2005 fiscal year for the following executive branch officials are:
	Executive Branch Officials	Annual Salary
	Chairman, Alcoholic Beverage Control Commission		$93,946
	State Controller		131,078
	Commissioner of Motor Vehicles		93,946
	Commissioner of Banks		105,523
	Chairman, Employment Security Commission		130,913
	State Personnel Director		103,119
	Chairman, Parole Commission		85,871
	Members of the Parole Commission		79,356
	Chairman, Utilities Commission		117,405
	Members of the Utilities Commission		105,523
	Executive Director, Agency for Public Telecommunications		79,356
	Director, Museum of Art		96,240
	Executive Director, North Carolina Agricultural Finance
	Authority		91,470
	State Chief Information Officer		131,000"

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
JUDICIAL BRANCH OFFICIALS/SALARY INCREASES
SECTION 31.4  Section 30.4 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.4.(a)  The annual salaries, payable monthly, for specified judicial branch officials for the 2004‑2005 fiscal year are:
	Judicial Branch Officials	Annual Salary
	Chief Justice, Supreme Court		$119,430
	Associate Justice, Supreme Court		116,336
	Chief Judge, Court of Appeals		113,452
	Judge, Court of Appeals		111,530
	Judge, Senior Regular Resident Superior Court		108,527
	Judge, Superior Court		105,523
	Chief Judge, District Court		95,912
	Judge, District Court		92,909
	Administrative Officer of the Courts		108,527
	Assistant Administrative Officer of the Courts		99,216
"SECTION 30.4.(b)  The district attorney or public defender of a judicial district, with the approval of the Administrative Officer of the Courts or the Commission on Indigent Defense Services, respectively, 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‑one thousand one hundred ninety‑one dollars ($61,191) and the minimum salary of any assistant district attorney or assistant public defender is at least thirty‑two thousand thirty‑five dollars ($32,035) effective July 1, 2004.
"SECTION 30.4.(c)  Permanent, full‑time employees of the Judicial Department, whose salaries are not itemized in this Part, shall be awarded a compensation bonus for the 2003‑2004 fiscal year as authorized in this Part. Effective July 1, 2004, the salaries of permanent, full‑time employees of the Judicial Department whose salaries are not itemized in this part shall be increased by eighty‑three dollars and thirty‑four cents ($83.34) per month.
"SECTION 30.4.(d)  The salaries in effect for fiscal year 2004‑2005 for all permanent part‑time employees of the Judicial Department shall be increased on or after July 1, 2004, by pro rata amounts of the eighty‑three dollars and thirty‑four cents ($83.34) per month."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
CLERK OF SUPERIOR COURT/SALARY INCREASES
SECTION 31.5.(a)  Section 30.5 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.5.  For the 2003‑2004 fiscal year the compensation of clerks of superior court shall remain as set forth in G.S. 7A‑101(a)."
SECTION 31.5.(b)  Effective July 1, 2004, 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		$70,911
100,000 to 149,999		79,452
150,000 to 249,999		87,994
250,000 and above		96,537.
The salary schedule in this subsection is intended to represent the following approximate percentage of the salary of a chief district court judge:
Population	Annual Salary
Less than 100,000	73%
100,000 to 149,999	82%
150,000 to 249,999	91%
250,000 and above	100%.
When a county changes from one population group to another, the salary of the clerk shall be changed, on July 1 of the fiscal year for which the change is reported, to the salary appropriate for the new population group, except that the salary of an incumbent clerk shall not be decreased by any change in population group during his continuance in office."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
ASSISTANT AND DEPUTY CLERKS OF COURT/SALARY INCREASES
SECTION 31.6.(a)  Section 30.6 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.6.  For the 2003‑2004 fiscal year, the compensation of assistant and deputy clerks of superior court shall remain as set forth in G.S. 7A‑102(c1), except that there shall be awarded to each clerk not receiving a statutory step increase a compensation bonus for the 2003‑2004 fiscal year as authorized in this Part."
SECTION 31.6.(b)  Effective July 1, 2004, 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		$27,515
Maximum		47,464
	
Deputy Clerks	Annual Salary
Minimum		$23,565
Maximum		36,934."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
MAGISTRATES' SALARY INCREASES
SECTION 31.7.(a)  Section 30.7 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.7.  For the 2003‑2004 fiscal year, the compensation of magistrates shall remain as set forth in G.S. 7A‑171.1, except that there shall be awarded to each magistrate not receiving a statutory step increase a compensation bonus for the 2003‑2004 fiscal year as authorized in this Part."
SECTION 31.7.(b)  Effective July 1, 2004, 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

Step Level	Annual Salary
Entry Rate		$27,889
Step 1		30,525
Step 2		33,393
Step 3		36,523
Step 4		39,952
Step 5		43,721
Step 6		47,864

(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, a magistrate who is licensed to practice law in North Carolina or any other state shall receive the annual salary provided in the Table in subdivision (1) of this subsection for Step 4. 
(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		$22,325
1 or more but less than 3 years of service		23,389
3 or more but less than 5 years of service		25,530.

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	Salary Level
on June 30, 1994	on 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 (2) 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."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
GENERAL ASSEMBLY PRINCIPAL CLERKS
SECTION 31.8.(a)  Section 30.8 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.8. For the 2003‑2004 fiscal year, the compensation of General Assembly principal clerks shall remain as set forth in G.S. 120‑37, except that there shall be awarded a compensation bonus for the 2003‑2004 fiscal year as authorized in this Part."
SECTION 31.8.(b)  Effective July 1, 2004, 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‑nine thousand three hundred six dollars ($89,306), 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."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
SERGEANT‑AT‑ARMS AND READING CLERKS
SECTION 31.9.(a)  Section 30.9 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.9.  For the 2003‑2004 fiscal year, the compensation of General Assembly sergeant‑at‑arms and reading clerks shall remain as set forth in G.S. 120‑37."
SECTION 31.9.(b)  Effective July 1, 2004, 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 three hundred eleven dollars ($311.00) per week plus subsistence at the same daily rate provided for members of the General Assembly, plus mileage at the rate provided for members of the General Assembly for one round trip only from their homes to Raleigh and return. The sergeants‑at‑arms shall serve during sessions of the General Assembly and at such time prior to the convening of, and subsequent to adjournment or recess of, sessions as may be authorized by the Legislative Services Commission. The reading clerks shall serve during sessions only."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
LEGISLATIVE EMPLOYEES
SECTION 31.10.  Effective July 1, 2004, the Legislative Services Officer shall increase the salaries of nonelected employees of the General Assembly in effect for fiscal year 2003‑2004 by eighty‑three dollars and thirty‑four cents ($83.34) per month. Nothing in this act limits any of the provisions of G.S. 120‑32.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
COMMUNITY COLLEGE PERSONNEL
SECTION 31.11.  The Director of the Budget shall transfer to the North Carolina Community College System Office from the Reserve for Compensation Increases created in this act for fiscal year 2004‑2005 funds necessary to provide an annual salary increase of eighty‑three dollars and thirty‑four cents ($83.34) per month, including funds for the employer's retirement and social security contributions, commencing July 1, 2004, for all permanent full‑time community college institutional personnel supported by State funds.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
UNIVERSITY OF NORTH CAROLINA SYSTEM/EPA COMPENSATION
SECTION 31.12.  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 Increases, created in this act for fiscal year 2004‑2005, to provide an annual salary increase of eighty‑three dollars and thirty‑four cents ($83.34) per month, including funds for the employer's retirement and social security contributions, commencing July 1, 2004, 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).

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
MOST STATE EMPLOYEES
SECTION 31.13.  Section 30.13 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.13.(a)  The salaries in effect June 30, 2003, 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 remain in effect for the 2003‑2004 fiscal year, and there shall be awarded a compensation bonus for the 2003‑2004 fiscal year as authorized in this Part. Effective July 1, 2004, the salaries 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 by eighty‑three dollars and thirty‑four cents ($83.34) per month, unless otherwise provided by this act.
"SECTION 30.13.(b)  Except as otherwise provided in this act, the compensation of permanent full‑time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall remain in effect, and there shall be awarded a compensation bonus for the 2003‑2004 fiscal year as authorized in this Part. Effective July 1, 2004, the compensation of permanent full‑time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall be increased by eighty‑three dollars and thirty‑four cents ($83.34) per month, unless otherwise provided by this act.
"SECTION 30.13.(c)  For the 2003‑2004 fiscal year, the salaries of all permanent part‑time State employees shall remain in effect, and there shall be awarded a compensation bonus for the 2003‑2004 fiscal year as authorized in this Part. The salaries in effect for fiscal year 2004‑2005 for all permanent part‑time State employees shall be increased on or after July 1, 2004, by pro rata amounts of the eighty‑three dollars and thirty‑four cents ($83.34) per month.
"SECTION 30.13.(d)  The Director of the Budget may allocate out of special operating funds or from other sources of the employing agency, except tax revenues, sufficient funds for salaries in accordance with subsection (a), (b), or (c) of this section including funds for the employer's retirement and social security contributions, for the permanent full‑time and part‑time employees of the agency, provided the employing agency elects to make available the necessary funds.
"SECTION 30.13.(e)  Within regular Executive Budget Act procedures as limited by this act, all State agencies and departments may increase on an equitable basis the rate of pay of temporary and permanent hourly State employees, subject to availability of funds in the particular agency or department, by pro rata amounts of the eighty‑three dollars and thirty‑four cents ($83.34) per month salary increase provided for permanent full‑time employees covered by the provisions of subsection (a) of this section, commencing July 1, 2004."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
ALL STATE‑SUPPORTED PERSONNEL
SECTION 31.14.  Section 30.14 of S.L. 2003‑284 reads as rewritten:
"SECTION 30.14.(a)  Salaries and related benefits for positions that are funded partially from the General Fund or Highway Fund and partially from sources other than the General Fund or Highway Fund shall remain in effect and be paid from the General Fund or Highway Fund appropriation only to the extent of the proportionate part of the salaries paid from the General Fund or Highway Fund.
"SECTION 30.14.(a1)  Effective July 1, 2004, salaries and related benefits for positions that are funded partially from the General Fund or Highway Fund and partially from sources other than the General Fund or Highway Fund shall be increased from the General Fund or Highway Fund appropriation only to the extent of the proportionate part of the salaries paid from the General Fund or Highway Fund.
"SECTION 30.14.(b)  The salaries authorized under this act do not affect the status of eligibility for salary increments for which employees may be eligible unless otherwise required by this act.
"SECTION 30.14.(c)  The compensation bonuses do not apply to persons separated from State service due to resignation, dismissal, reduction in force, death, or retirement, or whose last workday is prior to October 1, 2003. The salary increases provided by this Part are to be effective July 1, 2004, and do not apply to persons separated from State service due to resignation, dismissal, reduction‑in‑force, death, or retirement, whose last work day is prior to July 1, 2004. This subsection shall apply to all employees, subject to or exempt from the State Personnel Act, paid from State funds, including public schools, community colleges, and The University of North Carolina.
"SECTION 30.14.(d)  The Director of the Budget shall transfer from the Reserve for Compensation Increases in this act for fiscal year 2003‑2004 and fiscal year 2004‑2005 all funds necessary for the compensation increases provided by this act, including funds for the employer's retirement and social security contributions.
"SECTION 30.14.(e)  Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.
"SECTION 30.14.(f)  Notwithstanding any other provision of this part, except Section 31.9.(b), permanent full-time personnel shall not receive an annual increase of less than one thousand dollars ($1,000)."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
Housing Finance Director
SECTION 31.15.(a)  G.S. 122A‑4(f) reads as rewritten:
"(f)	The Governor shall designate from among the members of the Board a chairman and a vice‑chairman. The terms of the chairman and vice‑chairman shall extend to the earlier of either two years or the date of expiration of their then current terms as members of the Board of Directors of the Agency. The Agency shall exercise all of its prescribed statutory powers independently of any principal State Department except as described in this Chapter. The Executive Director of the Agency shall be appointed by the Board of Directors, subject to approval by the Governor. All staff and employees of the Agency shall be appointed by the Executive Director, subject to approval by the Board of Directors; shall be eligible for participation in the State Employees' Retirement System; and shall be exempt from the provisions of the State Personnel Act. All employees other than the Executive Director shall be compensated in accordance with the salary schedules adopted pursuant to the State Personnel Act. The salary of the Executive Director shall be fixed by the Board of Directors. The salary of the Executive Director and all staff and employees of the Agency shall not be subject to any limitations imposed pursuant to any salary schedule adopted pursuant to the terms of the State Personnel Act. The Board of Directors shall, subject to the approval of the Governor, elect and prescribe the duties of any other officers it finds necessary or advisable, and the Board of Directors shall fix the compensation of these officers. The books and records of the Agency shall be maintained by the Agency and shall be subject to periodic review and audit by the State.
No part of the revenues or assets of the Agency shall inure to the benefit of or be distributable to its members or officers or other private persons. The members of the Agency shall receive no compensation for their services but shall be entitled to receive, from funds of the Agency, for attendance at meetings of the Agency or any committee thereof and for other services for the Agency reimbursement for such actual expenses as may be incurred for travel and subsistence in the performance of official duties and such per diem as is allowed by law for members of other State boards, commissions and committees.
The Executive Director shall administer, manage and direct the affairs and business of the Agency, subject to the policies, control and direction of the members of the Agency Board of Directors. The Secretary of the Agency shall keep a record of the proceedings of the Agency and shall be custodian of all books, documents and papers filed with the Agency, the minute book or journal of the Agency and its official seal. The Secretary may have copies made of all minutes and other records and documents of the Agency and may give certificates under the official seal of the Agency to the effect that such copies are true copies, and all persons dealing with the Agency may rely upon such certificates. Seven members of the Board of Directors of the Agency shall constitute a quorum and the affirmative vote of a majority of the members present at a meeting of the Board of Directors duly called and held shall be necessary for any action taken by the Board of Directors of the Agency, except adjournment; provided, however, that the Board of Directors may appoint an executive committee to act in behalf of said Board during the period between regular meetings of said Board, and said committee shall have full power to act upon the vote of a majority of its members. No vacancy in the membership of the Agency shall impair the rights of a quorum to exercise all the rights and to perform all the duties of the Agency."
SECTION 31.15.(b)  The salary of the Executive Director of the North Carolina Housing Finance Agency, as fixed by the General Assembly in Section 30.3 of S.L. 2003‑284, shall remain in effect until the Board of Directors fixes the Director's compensation as authorized by this act.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
SALARY ADJUSTMENT FUND
SECTION 31.16.(a)  Up to five million dollars ($5,000,000) in any remaining appropriations in the Reserve for Compensation Increases authorized for employee salary increases not required for that purpose may be used to supplement the Salary Adjustment Fund.  Funds transferred to the Salary Adjustment Fund under this act shall be used to fund agency requests for the following purposes:
(1)	Salary range revisions to provide competitive salary rates for affected job classifications in response to changes in labor market salary rates as documented through data collection and analysis according to accepted human resource professional practices and standards.
(2)	Reallocation of positions to higher‑level job classifications to compensate employees for more difficult duties at competitive salary rates as documented through data collection and analysis according to accepted human resource professional practices and standards.
Priority funding shall be given to those salary range revisions and reallocations already approved. The Office of State Budget and Management shall report to the Joint Legislative Commission on Governmental Operations prior to the allocation of any salary adjustment funds for any State agency.
SECTION 31.16.(b)  The Judicial Department is eligible for the funding authorized in subsection (a) of this section.
SECTION 31.16.(c)  Notwithstanding subdivisions (a)(1) and (a)(2) of subsection (a) of this section, of the funds transferred under that subsection the sum of fifteen thousand two hundred dollars ($15,200) shall be used to fund in‑range salary adjustments for Department of Environment and Natural Resources, Division of Water Quality employees who are employed in the Hydrogeological Drilling Technician I and the Hydrogeological Drilling Technician II job classifications. The funds shall be used to provide in‑range salary adjustments to these employees in an amount up to ten percent (10%) of an eligible employee's current annual salary. Employee eligibility for an in‑range salary adjustment authorized under this section shall be administered according to the in‑range adjustment polices and guidelines adopted in the State Personnel Manual by the State Personnel Commission.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
RETIREMENT SYSTEM COLAS
SECTION 31.17.(a)  G.S. 135‑5 is amended by adding a new subsection to read:
"(mmm)	From and after July 1, 2004, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2003, shall be increased by one and thirty‑two hundredths percent (1.32%) of the allowance payable on June 1, 2004, in accordance with G.S. 135‑5(o). Furthermore, from and after July 1, 2004, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2003, but before June 30, 2004, shall be increased by a prorated amount of one and thirty‑two hundredths percent (1.32%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2003, and June 30, 2004."
SECTION 31.17.(b)  G.S. 135‑65 is amended by adding a new subsection to read:
"(y)	From and after July 1, 2004, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2003, shall be increased by three‑tenths percent (0.3%) of the allowance payable on June 1, 2004, in accordance with G.S. 135‑5(o). Furthermore, from and after July 1, 2004, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2003, but before June 30, 2004, shall be increased by a prorated amount of three‑tenths percent (0.3%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2003, and June 30, 2004."
SECTION 31.17.(c)  G.S. 120‑4.22A is amended by adding a new subsection to read:
"(s)	From and after July 1, 2004, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before January 1, 2004, shall be increased by one and thirty‑two hundredths percent (1.32%) of the allowance payable on June 1, 2004, in accordance with G.S. 135‑5(o). Furthermore, from and after July 1, 2004, the retirement allowance to or on account of beneficiaries whose retirement commenced after January 1, 2004, but before June 30, 2004, shall be increased by a prorated amount of one and thirty‑two hundredths percent (1.32%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between January 1, 2004, and June 30, 2004."
SECTION 31.17.(d)  The increases provided for in this section are granted to the extent of available actuarial gains that were generated within each retirement system for the 2004‑2005 fiscal year only.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright, A. Williams
INCREASE monthly pension for members of the firemen's and rescue squad workers' pension fund
SECTION 31.18.  G.S. 58‑86‑55 reads as rewritten:
"§ 58‑86‑55.  Monthly pensions upon retirement.
Any member who has served 20 years as an "eligible fireman" or "eligible rescue squad worker" in the State of North Carolina, as provided in G.S. 58‑86‑25 and G.S. 58‑86‑30, and who has attained the age of 55 years is entitled to be paid a monthly pension from this fund. The monthly pension shall be in the amount of  one hundred sixty dollars ($160.00) per month. Any retired fireman receiving a pension shall, effective  July 1, 2004, receive a pension of  one hundred sixty dollars ($160.00) per month.
Members shall pay ten dollars ($10.00) per month as required by G.S. 58‑86‑35 and G.S. 58‑86‑40 for a period of no longer than 20 years. No "eligible rescue squad member" shall receive a pension prior to July 1, 1983. No member shall be entitled to a pension hereunder until the member's official duties as a fireman or rescue squad worker for which the member is paid compensation shall have been terminated and the member shall have retired as such according to standards or rules fixed by the board of trustees.
A member who is totally and permanently disabled while in the discharge of the member's official duties as a result of bodily injuries sustained or as a result of extreme exercise or extreme activity experienced in the course and scope of those official duties and who leaves the fire or rescue squad service because of this disability shall be entitled to be paid from the fund a monthly benefit in an amount of  one hundred sixty dollars ($160.00) per month beginning the first month after the member's fifty‑fifth birthday. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application, and annually thereafter. Any disabled member shall not be required to make the monthly payment of ten dollars ($10.00) as required by G.S. 58‑86‑35 and G.S. 58‑86‑40.
A member who is totally and permanently disabled for any cause, other than line of duty, who leaves the fire or rescue squad service because of this disability and who has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member shall upon attaining the age of 55 years be entitled to receive a pension as provided by this section. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application and annually thereafter.
A member who, because his residence is annexed by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose department is closed because of an annexation by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose volunteer department is taken over by a city or county, and because of such annexation or takeover is unable to perform as a fireman or rescue squad worker of any status, and if the member has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member upon attaining the age of 55 years and completion of such contributions shall be entitled to receive a pension as provided by this section. Any application to make monthly contributions under this section shall be subject to a finding of eligibility by the Board of Trustees upon application of the member.
The pensions provided shall be in addition to all other pensions or benefits under any other statutes of the State of North Carolina or the United States, notwithstanding any exclusionary provisions of other pensions or retirement systems provided by law."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
RETIREE HEALTH BENEFIT FUND
SECTION 31.20.(a)  G.S. 135‑7 reads as rewritten:
"§ 135‑7.  Management of funds.
(a)	Vested in Board of Trustees. – The Board of Trustees shall be the trustee of the several funds created by this Chapter as provided in this section and in G.S. 135‑8.
(b)	Regular Interest Allowance. – The Board of Trustees annually shall allow regular interest on the mean amount for the preceding year in each of the funds with the exception of the expense fund. The amounts so allowed shall be due and payable to said funds, and shall be annually credited thereto by the Board of Trustees from interest and other earnings on the moneys of the Retirement System. Any additional amount required to meet the interest on the funds of the Retirement System shall be paid from the pension accumulation fund, and any excess of earnings over such amount required shall be paid to the pension accumulation fund. Regular interest shall mean such per centum rate to be compounded annually as shall be determined by the Board of Trustees on the basis of the interest earnings of the System for the preceding year and of the probable earnings to be made, in the judgment of the Board, during the immediate future, such rate to be limited to a minimum of three per centum (3%) and a maximum of four per centum (4%), with the latter rate applicable during the first year of operation of the Retirement System.
(c)	Custodian of Funds; Disbursements; Bond of Director. – The State Treasurer shall be the custodian of the several funds and shall invest their assets in accordance with the provisions of G.S. 147‑69.2 and 147‑69.3.
(d)	Deposits to Meet Disbursements. – For the purpose of meeting disbursements for pensions, annuities and other payments there may be  kept available cash, not exceeding ten per centum (10%) of the total amount in the several funds of the Retirement System, on deposit with the State Treasurer of North Carolina.
(e)	Personal Profit or Acting as Surety Prohibited. – Except as otherwise herein provided, no trustee and no employee of the Board of Trustees shall have any direct interest in the gains or profits of any investment made by the Board of Trustees, nor as such receive any pay or emolument for his service. No trustee or employee of the Board shall, directly or indirectly, for himself or as an agent in any manner use the same, except to make such current and necessary payments as are authorized by the Board of Trustees; nor shall any trustee or employee of the Board of Trustees become an endorser or surety or in any manner an obligor for moneys loaned or borrowed from the Board of Trustees.
(f)	Retiree Health Benefit Fund. – The Retiree Health Benefit Fund is established as a fund in which accumulated contributions from employers and any earnings on those contributions shall be used to provide health benefits to retired and disabled employees and their applicable beneficiaries as provided by this Chapter. The Retiree Health Benefit Fund shall be administered in accordance with the provisions of subsection (a) of this section. Employer contributions to the Fund are irrevocable. The assets of the Fund are dedicated to providing health benefits to retired and disabled employees and their applicable beneficiaries as provided by this Chapter and are not subject to the claims of creditors of the employers making contributions to the Fund."
SECTION 31.20.(b)  The assets contained in the Department of State Treasurer's Retirees Clearing Account (Code 19342) and the Department of State Treasurer's Reserve for Retirement Health Premiums (Code 19942) at the end of June 30, 2004, shall be deposited into the Retiree Health Benefit Fund created by this section on July 1, 2004.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
Employees of North Carolina Symphony Society, Inc., Under State Health Plan
SECTION 31.21.(a)  G.S. 135‑40.1(6) reads as rewritten:
"(6)	Employing Unit. – A North Carolina School System; Community College; State Department, Agency or Institution; Administrative Office of the Courts; or Association or Examining Board whose employees are eligible for membership in a State‑Supported Retirement System. An employing unit also shall mean a charter school in accordance with Part 6A of Chapter 115C of the General Statutes whose board of directors elects to become a participating employer in the Plan under G.S. 135‑40.3A. Bona fide fire departments, rescue or emergency medical service squads, and national guard units are deemed to be employing units for the purpose of providing benefits under this Article. The North Carolina Symphony Society, Inc., is deemed to be an employing unit for the purpose of providing benefits under this Article."
SECTION 31.21.(b)  G.S. 135‑40.2(a2) reads as rewritten:
"(a2)	The following persons are eligible for coverage under the Plan on a partially contributory basis, subject to the provisions of G.S. 130‑40.3.
(1)	A school employee in a job‑sharing position as defined in G.S.  115C‑302.2(b). If these employees elect to participate in the Plan, the employing unit shall pay fifty percent (50%) of the Plan's total noncontributory premiums. Individual employees shall pay the balance of the total noncontributory premiums not paid by the employing unit.
(2)	Employees of the North Carolina Symphony Society, Inc., their eligible spouses, and eligible dependent children."
SECTION 31.21.(c)  This section becomes effective July 1, 2004.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright, Nye 
STATE HEALTH PLAN PRESCRIPTION DRUG PROGRAM
SECTION 31.22.  If the Executive Administrator of the Teachers' and State Employees' Comprehensive Major Medical Plan develops a prescription drug program other than the prescription drug program in effect on May 10, 2004, the newly developed prescription drug program shall provide Plan members access to pharmacies located in and throughout the State and shall encourage the use of generic drugs.  The Executive Administrator shall not implement the new prescription drug program until it has been approved by the General Assembly.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
PREFERRED PROVIDERS OF EMERGENCY MEDICAL CARE
SECTION 31.23.  G.S. 135‑40.8(e) reads as rewritten:
"(e)	Where qualified  preferred providers of medical care are not reasonably available in medical emergencies, the Plan pays the amounts covered by subsection (a) of this section. Any amount of charges for services under this section that exceeds the amount allowed by the Plan for the services of qualified preferred providers under this section shall be negotiated between the Plan and the provider of medical services, and the Plan shall ensure that the Plan member is not held financially responsible for the amount of these excess charges.  As used in this section, a "medical emergency" is the sudden and unexpected onset of a condition manifesting itself by acute symptoms of sufficient severity that, in the absence of immediate medical care, could imminently result in injury or danger to self or others. As used in this subsection, the Plan's use of "Cost-Wise" contract services are considered to be qualified preferred provider services."

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright 
TRICARE SUPPLEMENTAL HEALTH INSURANCE
SECTION 31.24.(a)  In lieu of the maximum annual employer contributions to the Teachers' and State Employees' Comprehensive Major Medical Plan authorized in Section 30.16(e) of S.L. 2003‑284, employers, including the State Retirement Systems, may make contributions, payable monthly, each monthly payment not to exceed sixty‑three dollars and fifty cents ($63.50), on behalf of each covered employee or retired employee to sponsors of TRICARE Supplemental Health Insurance programs for employees or retired employees who elect to be covered by the TRICARE Military Health System's standard benefit option and who elect not to be covered by the Teachers' and State Employees' Comprehensive Major Medical Plan.
SECTION 31.24.(b)  This section becomes effective January 1, 2005.

PART XXXIi. CAPITAL APPROPRIATIONS

Requested by:	Representatives Baker, Clary, Crawford, Earle, Grady, Owens,  Sherrill, Wright
Capital Appropriations/General Fund
SECTION 32.1.  There is appropriated from the General Fund for the 2004‑2005 fiscal year the following amount for capital improvements:
	2004‑2005
Department of Environment and Natural Resources
	Water Resources Development Projects	$22,492,000

Department of Commerce – State Ports Authority
	Replacement of Port of Wilmington Crane Rail	$2,000,000

TOTAL CAPITAL APPROPRIATION	$24,492,000

Requested by:	Representatives Baker, Clary, Crawford, Earle, Grady, Owens,  Sherrill, Wright
Water Resources Development Project Funds
SECTION 32.2.(a)  The Department of Environment and Natural Resources shall allocate the funds appropriated in this act for water resources development projects to the following projects whose costs are as indicated:

	Name of Project	2004‑2005

(1)	Wilmington Harbor Deepening	$9,300,000
(2)	Morehead City Harbor Maintenance	1,000,000
(3)	Manteo (Shallowbag) Bay Channel Maintenance	2,000,000
(4)	B. Everett Jordan Water Supply Storage	100,000
(5)	John H. Kerr Reservoir Operations Evaluation	600,000
(6)	Beaufort Harbor Maintenance Dredging (Carteret County)	80,000
(7)	Bogue Banks Shore Protection Study (Carteret County) 	129,000
(8)	Surf City/North Topsail Beach Protection Study	350,000
(9) 	West Onslow Beach (Topsail)	117,000
(10)	Swan Quarter (Hyde County) Flood Control Dikes	100,000
(11)	Hurricane Isabel Emergency Stream Cleanup – NE NC	2,000,000
(12)	Cape Fear River Basin Water Management Study	161,000
(13)	State Local Projects	2,339,000
(14)	Lower Lockwoods Folly Dredging	336,000
(15)	Currituck Sound Water Management Study	210,000
(16)	Aquatic Weed Control, Lake Gaston and Statewide	275,000
(17)	Deep Creek (Yadkin County) Water Management	2,000,000
(18)	Neuse River Basin Feasibility Study	400,000
(19)	Environmental Restoration Projects	700,000
(20)	Projected Feasibility Studies	200,000
(21)	Planning Assistance to Communities	        95,000
TOTAL	$22,492,000

SECTION 32.2.(b)  Where the actual costs are different from the estimated costs under subsection (a) of this section, the Department may adjust the allocations among projects as needed.  If any projects funded under subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 2004‑2005 fiscal year, or if the projects funded under subsection (a) of this section are accomplished at a lower cost, the Department may use the resulting fund availability to fund any of the following:
(1)	Corps of Engineers project feasibility studies.
(2)	Corps of Engineers projects whose schedules have advanced and require State‑matching funds in fiscal year 2004‑2005.
(3)	State‑local water resources development projects.
Funds not expended or encumbered for these purposes shall revert to the General Fund at the end of the 2005‑2006 fiscal year.
SECTION 32.2.(c)  The Department shall make quarterly reports on the use of these funds to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Office of State Budget and Management.  Each report shall include all of the following:
(1)	All projects listed in this section.
(2)	The estimated cost of each project.
(3)	The date that work on each project began or is expected to begin.
(4)	The date that work on each project was completed or is expected to be completed.
(5)	The actual cost of each project.
The quarterly reports shall also show those projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.
SECTION 32.2.(d)  Notwithstanding G.S. 143‑23, if additional federal funds that require a State match are received for water resources projects or for beach renourishment projects for the 2004‑2005 fiscal year, the Director of the Budget may, after consultation with the Joint Legislative Commission on Governmental Operations, transfer funds from General Fund appropriations to match the federal funds.

PART XxxIii. MISCELLANEOUS PROVISIONS

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
EXECUTIVE BUDGET ACT APPLIES
SECTION 33.1.  The provisions of the Executive Budget Act, Chapter 143, Article 1 of the General Statutes, are reenacted and shall remain in full force and effect and are incorporated in this act by reference.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle,  Grady, Owens, Wright
COMMITTEE REPORT
SECTION 33.2.(a)  The House Appropriations Committee Report on the Continuation, Expansion and Capital Budgets, dated June 4, 2004, which was distributed in the House of Representatives and used to explain this act, shall indicate action by the General Assembly on this act and shall therefore be used to construe this act, as provided in G.S. 143‑15 of the Executive Budget Act, and for these purposes shall be considered a part of this act and as such shall be printed as a part of the Session Laws.
SECTION 33.2.(b)  The budget enacted by the General Assembly for the maintenance of the various departments, institutions, and other spending agencies of the State for the 2004‑2005 fiscal year is a line‑item budget, in accordance with the Budget Code Structure and the State Accounting System Uniform Chart of Accounts set out in the Administrative Policies and Procedures Manual of the Office of the State Controller. This budget includes the appropriations made from all sources including the General Fund, Highway Fund, special funds, cash balances, federal receipts, and departmental receipts.
The General Assembly amended the requested adjustments to the budgets submitted to the General Assembly by the Director of the Budget and the Advisory Budget Commission, in accordance with the steps that follow and the line‑item detail in the budget enacted by the General Assembly may be derived accordingly:
(1)	The base budget was adjusted in accordance with the base budget cuts and additions that were set out in the House Appropriations Committee Report on the Continuation, Expansion and Capital Budgets.
(2)	Transfers of funds supporting programs were made in accordance with the House Appropriations Committee Report on the Continuation, Expansion and Capital Budgets.
SECTION 33.2.(c)  The budget enacted by the General Assembly shall also be interpreted in accordance with the special provisions in this act and in accordance with other appropriate legislation.
In the event that there is a conflict between the line‑item budget certified by the Director of the Budget and the budget enacted by the General Assembly, the budget enacted by the General Assembly shall prevail.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
MOST TEXT APPLIES ONLY TO 2004‑2005
SECTION 33.3.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2004‑2005 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2004‑2005 fiscal year.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
EFFECT OF HEADINGS
SECTION 33.4.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only.  The headings do not expand, limit, or define the text of this act, except for effective dates referring to a Part.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
SEVERABILITY CLAUSE
SECTION 33.5.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

Requested by:	Representatives Crawford, Sherrill, Baker, Clary, Earle, Grady, Owens, Wright
EFFECTIVE DATE
SECTION 33.6.  Except as otherwise provided, this act becomes effective July 1, 2004.