A BILL TO BE ENTITLED
AN ACT TO MODIFY THE CURRENT OPERATIONS AND CAPITAL APPROPRIATIONS ACT OF 2005 AND TO MAKE OTHER CHANGES IN THE BUDGET OPERATIONS OF THE STATE, as recommended by the governor.
The General Assembly of North Carolina enacts:

PART I. INTRODUCTION AND TITLE OF ACT

INTRODUCTION

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

TITLE OF ACT

SECTION 1.2.  This act shall be known as "The Current Operations and Capital Improvements Appropriations Act of 2005."

PART II.	 CURRENT OPERATIONS AND EXPANSION/GENERAL FUND

SECTION 2.1.  Appropriations from the General Fund of the State for the maintenance of the State's departments, institutions, and agencies, and for other purposes as enumerated are made for the fiscal year ending June 30, 2007, according to the following schedule.  Amounts set out in brackets are reductions from General Fund appropriations for the 2006‑2007 fiscal year.

State Agency or Division		FY 2006‑2007
				Adjustments  

Health and Human Services:
	Central Administration	$(64,030,678)
	Aging		3,000,000
	Child Development	30,465,513
		Smart Start	
	Education Services	828,548
	Public Health	20,305,744
	Social Services	14,686,546
	Medical Assistance	(150,000,000)
	Child Health	0
	Services for the Blind	0
	Mental Health/DD/SAS	89,133,395
	Facility Services	0
	Vocational Rehabilitation	        699,856
Total Health & Human Services	(54,911,076)

Natural and Economic Resources:
	Agriculture & Consumer Services	1,320,839
	Commerce	19,246,828
	Commerce – State Aid to Non‑State Entities	2,000,000
	Environment and Natural Resources	11,225,028
	Clean Water Management Trust Fund	0
	Labor		      450,000
Total Natural and Economic Resources	34,242,695
	
Justice and Public Safety:
	Correction	31,529,391
	Crime Control & Public Safety	3,968,741
	Judicial	26,158,821
	Judicial – Indigent Defense	6,213,600
	Justice		4,571,760
	Juvenile Justice	   3,060,852
Total Justice and Public Safety	75,503,165

General Government:
	Administration	5,691,818
	State Auditor	407,564
	Cultural Resources	4,252,602
	Cultural Resources – Roanoke Island	0
	General Assembly	238,346
	Governor's Office	100,000
	Insurance	597,903
	Insurance – Workers' Compensation Fund	0
	Lieutenant Governor	2,600
	Office of Administrative Hearings	365,000
	Revenue	1,360,060
	NC Housing Finance	5,000,000
	Secretary of State	838,671
	State Board of Elections	143,279
	State Budget and Management (OSBM)	409,938
	OSBM – Special Appropriations	1,255,000
	Office of State Controller	0
	State Treasurer	281,274
	State Treasurer – Retirement/Benefits	                 0
Total General Government	20,944,565

Education:
	Public Schools	127,574,985
	Community Colleges	39,838,763
	University System	123,385,910
Total Education	290,799,658

Debt Service:
	General Debt Service	(50,000,000)
	Federal Reimbursement	                   0
Total Debt Service	(50,000,000)
	
Reserves & Adjustments:
	Compensation Increase Reserve	594,536,890
	Minimum Fair Wage Noncertified Public School Employees	8,582,073
	Salary Adjustment Fund	20,000,000
	Retirement System COLA	48,000,000
	Reserve for Lawsuits	2,000,000
	Reserve for Innovative IT Initiatives	3,000,000
	Reserve for Disaster Expenses	50,000,000
	BEACON Project	41,788,403
	Retirement System Payback	30,000,000
Total Reserves & Adjustments	808,206,192
	
Capital:
	Capital Improvements	329,453,300
	
Total General Fund Budget Changes	$1,454,238,499

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a) The General Fund availability used in adjusting the 2006‑2007 budget is shown below:
					FY 2006‑2007
	Description		Recommended
					(In Millions)
Beginning Availability: 
	Unappropriated Balance FY 2005‑2006		$113.4
	Overcollections FY 2005‑2006		1,072.1
	Reversions FY 2005‑2006		125.0
	Credit to Savings Reserve Account		(324.0)
	Credit to Repair and Renovations Reserve Account		(200.0)
Beginning Unreserved Credit Balance		$771.5

Revenue:
	Tax:
		Income (Individual & Corporate)		10,753.0
		Sales and Use		4,973.0
		Other Tax		1,699.0
Total Tax		$17,425.0
	Nontax/Transfers		655.0
Total Revenue		$18,080.0

Total Availability		$18,850.5

SECTION 2.2.(b)  Notwithstanding the allocations outlined in G.S.143‑15.2 and G.S.143‑15.3, the sum of three hundred twenty‑four million dollars ($324,000,000) shall be transferred to the Savings Reserve Account from the beginning credit balance on June 30, 2006.
SECTION 2.2.(c) Notwithstanding the allocations outlined in G.S.143‑15.2 and G.S.143‑15.3, the sum of two hundred million dollars ($200,000,000) shall be transferred to the Repairs and Renovations Reserve Account from the credit balance on June 30, 2006.  

PART III. 	CURRENT OPERATIONS/HIGHWAY FUND

SECTION 3.1.  Revised 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 2006‑2007 fiscal year, according to the following schedule. Amounts set out in brackets are reductions from Highway Fund appropriations for the 2006‑2007 fiscal year.
Current Operations – Highway Fund		2006‑2007
					Adjustments
		
DOT – General Administration		$2,500,000
	Highway Division Administration		
	State Match for Federal Aid‑Planning and Research		

Construction Program:		
	State Secondary System		1,439,500
	Small Urban Construction		38,000,000
Total Construction Program		39,439,500

Maintenance Program		
	Contract Resurfacing		82,853,280
	General Maintenance Reserve		57,481,289
Total Maintenance Program		140,334,569

State Aid to Municipalities		1,439,500
State Aid to Railroads		3,198,750
State Aid for Public Transportation		(14,000,000)
State Aid for Airports		2,000,000
Division of Motor Vehicles		2,168,301
		
Total Department of Transportation		$  177,080,620
		
Appropriations to Other State Agencies:		
	Public Instruction – Driver Education		457,971
	CCPS – Highway Patrol		15,017,698
Total – Other State Agencies		15,325,669

Reserves and Transfers:		
	Salary Adjustment		1,000,000
	Weigh Station Improvements		12,824,782
	Reserve for Legislative Increase		19,500,000
	Reserve for Retirement Adjustment		2,500,000
Total Reserves and Transfers		35,824,782
		
Total Highway Fund Appropriation		$  228,231,071

HIGHWAY FUND AVAILABILITY STATEMENT	
SECTION 3.2. The Highway Fund appropriations availability used in developing modifications to the 2006‑2007 Highway Fund budget contained in this act is shown below: 

Beginning Credit Balance		$‑
Transfer from General Fund		17,662,725
Estimated Revenue		1,749,477,275
TOTAL HIGHWAY FUND AVAILABILITY		$ 1,767,140,000

HIGHWAY TRUST FUND
SECTION 4.1.  Appropriations from the Highway Trust Fund are made for the fiscal year ending June 30, 2007, according to the following schedule.  Amounts set out in brackets are reductions from Highway Trust Fund appropriations for the 2006‑2007 fiscal year.

Highway Trust Fund	2006‑2007
		Adjustments

Department of Transportation:
	Maximum Allowance for Administration		$ 3,180,220

	Construction Allocation:		
		Intrastate System		169,102,879
		Urban Loop System		68,378,162
		Secondary Roads		16,462,310

	State Aid to Municipalities		17,742,836

Transfer to the General Fund 		(195,176,407)

Total Highway Trust Fund		$    79,690,000

CAP GAS TAX RATE/HOLD HIGHWAY FUND HARMLESS
SECTION 4.2.(a)  Notwithstanding G.S.105‑449.80, the motor fuel excise tax rate shall not exceed 29.9 cents per gallon.  The sum of seventeen million six hundred sixty‑two thousand seven hundred twenty‑five dollars ($17,662,725) shall be transferred from Nontax Budget Code 19978 (Intrastate Transfers) to Highway Fund Budget Code 84210 by April 30, 2007, if the motor fuel excise tax rate is scheduled to exceed 29.9 cents per gallon at any time during FY 2006‑2007.
SECTION 4.2.(b)  G.S. 105‑449.80(a) reads as rewritten:
"(a)	Rate. – The motor fuel excise tax rate is a flat rate of seventeen and one‑half cents (17 1/2¢)a gallon plus a variable wholesale component. The variable wholesale component is either three and one‑half cents (3 1/2¢) a gallon or seven percent (7%) of the average wholesale price of motor fuel for the applicable base period, whichever is greater. In no case may the variable wholesale component be greater than twelve and four‑tenths cents (12.4¢) a gallon.
The two base periods are six‑month periods; one ends on September 30 and one ends on March 31. The Secretary must set the tax rate twice a year based on the wholesale price for each base period. A tax rate set by the Secretary using information for the base period that ends on September 30 applies to the six‑month period that begins the following January 1. A tax rate set by the Secretary using information for the base period that ends on March 31 applies to the six‑month period that begins the following July 1."
SECTION 4.2.(c)  Subsection (b) of this section is effective when it becomes law.

REDUCE HIGHWAY TRUST FUND TRANSFER TO GENERAL FUND
SECTION 4.3.  Section 2.2(e) of S.L. 2005‑276 is repealed.  Notwithstanding any other provision of law, the sum of fifty‑one million five hundred ninety‑nine thousand twenty‑seven dollars ($51,599,027) shall be transferred from the Highway Trust Fund to the General Fund for fiscal year 2006‑2007. 

PART V. BLOCK GRANTS

NATURAL AND ECONOMIC RESOURCES BLOCK GRANTS
SECTION 5.1.(a)  Appropriations from federal block grant funds are made for fiscal year ending June 30, 2007, according to the following schedule:

COMMUNITY DEVELOPMENT BLOCK GRANT

	01.	State Administration	$  850,000
	02.	Urgent Needs and Contingency	600,000
	03.	Scattered Site Housing	11,550,000
	04.	Economic Development	7,500,000
	05.	Small Business/Entrepreneurship	1,000,000
	06.	Community Revitalization	11,000,000
	07.	State Technical Assistance	375,000
	08.	Housing Development	1,500,000
	09.	Infrastructure	3,125,000

TOTAL COMMUNITY DEVELOPMENT
	BLOCK GRANT – 2007 Program Year				$ 37,500,000

SECTION 5.1.(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 5.1.(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 5.1.(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 eight hundred fifty thousand dollars ($850,000) may be used for State Administration; not less than six hundred thousand dollars ($600,000) may be used for Urgent Needs and Contingency; up to eleven million five hundred fifty thousand dollars ($11,550,000) may be used for Scattered Site Housing; up to seven million five hundred thousand dollars ($7,500,000) may be used for Economic Development; up to one million dollars ($1,000,000) may be used for  Small Business/Entrepreneurship; not less than eleven million dollars ($11,000,000) shall be used for Community Revitalization; up to three hundred seventy‑five thousand dollars ($375,000) may be used for State Technical Assistance; up to one million five hundred thousand dollars ($1,500,000) may be used for Housing Development; up to three million one hundred twenty‑five thousand dollars ($3,125,000) 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 5.1.(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 5.1.(f)  Department of Commerce Demonstration will create a small business/entrepreneurship program in coordination with micro‑lending programs and other small business assistance groups in the State.  The Department of Commerce shall award up to one million dollars ($1,000,000) in grants to local governments to provide assistance to low‑to‑moderate income individuals for small business and entrepreneurship development as a means of achieving economic independence during these times of structural change in North Carolina's economy. 
SECTION 5.1.(g)  The Department of Commerce shall consult with the Joint Legislative Commission on Governmental Operations prior to reallocating Community Development Block Grant Funds.  Notwithstanding the provisions of this subsection, whenever the Director of the Budget finds that:
(1)	A reallocation is required because of an emergency that poses an imminent threat to public health or public safety, the Director of the Budget may authorize the reallocation without consulting the Commission. The Department of Commerce shall report to the Commission on the reallocation no later than 30 days after it was authorized and shall identify in the report the emergency, the type of action taken, and how it was related to the emergency.
(2)	The State will lose federal block grant funds or receive less federal block grant funds in the next fiscal year unless a reallocation is made. The Department of Commerce shall provide a written report to the Commission on the proposed reallocation and shall identify the reason that failure to take action will result in the loss of federal funds. If the Commission does not hear the issue within 30 days of receipt of the report, the Department may take the action without consulting the Commission.

PART VI.	 GENERAL PROVISIONS

INCREASE MINIMUM WAGE
SECTION 6.1.(a)  G.S. 95‑25.3(a) reads as rewritten:
"(a)	Every employer shall pay to each employee who in any workweek performs any work, wages of at least six dollars ($6.00) per hour, except as otherwise provided in this section."
SECTION 6.1.(b) This act is effective January 1, 2007.

GENERAL FUND Operating APPROPRIATIONS CAP
SECTION 6.2.  Article 1 of Chapter 143 of the General Statutes is amended by adding the following new sections to read:
"§ 143‑2.1.  Definitions and determination of the General Fund appropriations cap.
(a)	Definitions. – The following definitions apply in this section and in G.S. 143‑2.2:
(1)	Fiscal growth factor. – The average of total State personal income change for each of the preceding 10 State fiscal years. If income change for any of the preceding 10 fiscal years is negative, then that change shall be counted as zero. For fiscal year 2006‑2007, the fiscal growth factor is 5.6 percent.
(2)	Total State personal income change. – The annual percentage change in State personal income for each State fiscal year as reported by the Office of State Budget and Management.
(3)	General Fund appropriations limit. – The General Fund appropriations limit for each fiscal year shall be the previous fiscal year's General Fund appropriations for operations  increased by a percentage rate that equals the fiscal growth factor.
(4)	Exemptions from the limit. – Any increases in appropriations for the following purposes shall be excluded from the appropriations limit:
a.	Repayments to the Retirement Fund for moneys intercepted in order to balance the State budget in previous years.
b.	Compliance with a court order or directive.
c.	Mental Health Trust Fund.
d.	To implement the teacher pay plan required under Section 2.2(j) of S.L. 2005‑276.
e.5.	Disaster reserve funds and utility assistance.
(b)	Fiscal Reports. – On or before March 15 of each year, the Fiscal Research Division and the Office of State Budget and Management shall issue a determination of the General Fund appropriations limit for the fiscal year beginning July 1 of that year and a projection of the General Fund appropriations limit for the next fiscal year.
"§ 143‑2.2.  Increase in General Fund appropriations limited.
(a)	Governor Bound by General Fund Appropriations Limit. – In preparing a budget for a fiscal year, the Governor shall not propose appropriations from the General Fund for the ensuing fiscal period in excess of the projected General Fund appropriations limit established under G.S. 143‑2.1. For purposes of this section, transfers, appropriations, or other deposits to the Savings Reserve Account established in G.S. 143‑15.3 and the Repairs and Renovations Reserve Account established in G.S. 143‑15.3A shall not count toward the calculation of the limit.
(b)	General Assembly Bound by General Fund Appropriations Limit. – In enacting a budget for the fiscal year, the General Assembly shall not make appropriations from the General Fund in excess of the projected General Fund appropriations limit established in G.S. 143‑2.1. For purposes of this section, transfers, appropriations, or other deposits to the Savings Reserve Account established in G.S. 143‑15.3 and the Repairs and Renovations Reserve Account established in G.S. 143‑15.3A shall not count toward the calculation of the limit."

REQUIRE VOTER APPROVAL FOR DEBT EXCEEDING TWENTY‑FIVE MILLION DOLLARS
SECTION 6.3.  G.S. 142‑83 reads as rewritten:
"§ 142‑83.  Authorization of special indebtedness; General Assembly approval.
The State may incur or issue special indebtedness subject to the terms and conditions provided in this Article for the purpose of financing the cost of capital facilities that meet one of the following conditions:
(1)	The General Assembly has enacted legislation describing the capital facility and authorizing its financing by the incurrence or issuance of special indebtedness up to a specific maximum  amount, or legislation authorizing the incurrence or issuance of special indebtedness up to a specific maximum amount for a specific category of capital facilities and the capital facility meets all of the conditions set in that legislation.
(2)	The General Assembly has enacted legislation authorizing the incurrence or issuance of special indebtedness up to a specific maximum amount for a specific category of capital facilities and the capital facility meets all of the conditions set in that legislation.
(3)	The authorization of special indebtedness, except for matters of public safety, public health, or to enforce a court order, shall not exceed twenty‑five million dollars ($25,000,000). The authorization cap of twenty‑five million dollars ($25,000,000) shall include all authorizations made by the General Assembly during one fiscal year."

RECEIPT SUPPORTED POSITIONS CONSULTATION REQUIREMENT
SECTION 6.4. G.S. 143‑34.1(a1) is repealed.

PART VII. PUBLIC SCHOOLS

TEACHER SALARY SCHEDULES
SECTION 7.1.(a)  Effective for the 2006‑2007 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 2006‑2007 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, 2006, 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 2006‑2007 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.

2006‑2007 Monthly Salary Schedule
"A" Teachers

Years of Experience	"A" Teachers	NBPTS Certification
		
	0	$2,851	N/A
	1	$2,893	N/A
	2	$2,937	N/A
	3	$3,093	$3,464
	4	$3,233	$3,621
	5	$3,367	$3,771
	6	$3,496	$3,916
	7	$3,600	$4,032
	8	$3,648	$4,086
	9	$3,697	$4,141
	10	$3,747	$4,197
	11	$3,796	$4,252
	12	$3,847	$4,309
	13	$3,898	$4,366
	14	$3,951	$4,425
	15	$4,005	$4,486
	16	$4,060	$4,547
	17	$4,115	$4,609
	18	$4,174	$4,675
	19	$4,232	$4,740
	20	$4,290	$4,805
	21	$4,352	$4,874
	22	$4,413	$4,943
	23	$4,479	$5,016
	24	$4,543	$5,088
	25	$4,608	$5,161
	26	$4,674	$5,235
	27	$4,742	$5,311
	28	$4,813	$5,391
	29+	$4,884	$5,470

2006‑2007 Monthly Salary Schedule
"M" Teachers

	Years of Experience	"M" Teachers	NBPTS Certification
			
	0	$3,136	N/A
	1	$3,182	N/A
	2	$3,231	N/A
	3	$3,402	$3,810
	4	$3,556	$3,983
	5	$3,704	$4,148
	6	$3,846	$4,308
	7	$3,960	$4,435
	8	$4,013	$4,495
	9	$4,067	$4,555
	10	$4,122	$4,617
	11	$4,176	$4,677
	12	$4,232	$4,740
	13	$4,288	$4,803
	14	$4,346	$4,868
	15	$4,406	$4,935
	16	$4,466	$5,002
	17	$4,527	$5,070
	18	$4,591	$5,142
	19	$4,655	$5,214
	20	$4,719	$5,285
	21	$4,787	$5,361
	22	$4,854	$5,436
	23	$4,927	$5,518
	24	$4,997	$5,597
	25	$5,069	$5,677
	26	$5,141	$5,758
	27	$5,216	$5,842
	28	$5,294	$5,929
	29+	$5,372	$6,017

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 2006‑2007 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 2006‑2007 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.

SCHOOL‑BASED ADMINISTRATOR SALARY SCHEDULE
SECTION 7.2.(a)  Effective for the 2006‑2007 school year, the Director of the Budget shall transfer from the Reserve for Compensation Increases for the 2006‑2007 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 2006‑2007 fiscal year, commencing July 1, 2006, is as follows:

2006‑2007
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	$3,592				
5	$3,741				
6	$3,884				
7	$4,000				
8	$4,053	$4,053			
9	$4,108	$4,108			
10	$4,163	$4,163	$4,218		
11	$4,218	$4,218	$4,274		
12	$4,274	$4,274	$4,331	$4,389	
13	$4,331	$4,331	$4,389	$4,450	$4,511
14	$4,389	$4,389	$4,450	$4,511	$4,572
15	$4,450	$4,450	$4,511	$4,572	$4,637
16	$4,511	$4,511	$4,572	$4,637	$4,702
17	$4,572	$4,572	$4,637	$4,702	$4,766
18	$4,637	$4,637	$4,702	$4,766	$4,835
19	$4,702	$4,702	$4,766	$4,835	$4,903
20	$4,766	$4,766	$4,835	$4,903	$4,976
21	$4,835	$4,835	$4,903	$4,976	$5,047
22	$4,903	$4,903	$4,976	$5,047	$5,120
23	$4,976	$4,976	$5,047	$5,120	$5,192
24	$5,047	$5,047	$5,120	$5,192	$5,268
25	$5,120	$5,120	$5,192	$5,268	$5,347
26	$5,192	$5,192	$5,268	$5,347	$5,426
27	$5,268	$5,268	$5,347	$5,426	$5,535
28	$5,347	$5,347	$5,426	$5,535	$5,646
29	$5,426	$5,426	$5,535	$5,646	$5,759
30	$5,535	$5,535	$5,646	$5,759	$5,874
31	$5,646	$5,646	$5,759	$5,874	$5,991
32		$5,759	$5,874	$5,991	$6,111
33			$5,991	$6,111	$6,233
34			$6,111	$6,233	$6,358
35				$6,358	$6,485
36				$6,485	$6,615
37					$6,747

Principal and Assistant Principal Salary Schedules
Classification

Yrs. of	PrinV	PrinVI	PrinVII	PrinVIII
Exp	(44‑54)	(55‑65)	(66‑100)	(101+)

0‑14	$4,637			
15	$4,702			
16	$4,766	$4,835		
17	$4,835	$4,903	$5,047	
18	$4,903	$4,976	$5,120	$5,192
19	$4,976	$5,047	$5,192	$5,268
20	$5,047	$5,120	$5,268	$5,347
21	$5,120	$5,192	$5,347	$5,426
22	$5,192	$5,268	$5,426	$5,535
23	$5,268	$5,347	$5,535	$5,646
24	$5,347	$5,426	$5,646	$5,759
25	$5,426	$5,535	$5,759	$5,874
26	$5,535	$5,646	$5,874	$5,991
27	$5,646	$5,759	$5,991	$6,111
28	$5,759	$5,874	$6,111	$6,233
29	$5,874	$5,991	$6,233	$6,358
30	$5,991	$6,111	$6,358	$6,485
31	$6,111	$6,233	$6,485	$6,615
32	$6,233	$6,358	$6,615	$6,747
33	$6,358	$6,485	$6,747	$6,882
34	$6,485	$6,615	$6,882	$7,020
35	$6,615	$6,747	$7,020	$7,160
36	$6,747	$6,882	$7,160	$7,303
37	$6,882	$7,020	$7,303	$7,449
38	$7,020	$7,160	$7,449	$7,598
39		$7,303	$7,598	$7,750
40		$7,449	$7,750	$7,905
41			$7,905	$8,063
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:
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 and in cooperative innovative high 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)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 7.2.(g)  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.
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.(h)  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.  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.(i)  During the 2006‑2007 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.

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 2006‑2007 fiscal year, beginning July 1, 2006.
	School Administrator I	$2,932	$5,726
	School Administrator II	$3,112	$6,074
	School Administrator III	$3,303	$6,443
	School Administrator IV	$3,436	$6,700
	School Administrator V	$3,574	$6,970
	School Administrator VI	$3,792	$7,392
	School Administrator VII	$3,945	$7,690
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, 2006.
SECTION 7.3.(b)  The monthly salary ranges that follow apply to public school superintendents for the 2006‑2007 fiscal year, beginning July 1, 2006. 
	Superintendent I	$4,187	$8,158
	Superintendent II	$4,445	$8,651
	Superintendent III	$4,716	$9,178
	Superintendent IV	$5,005	$9,734
	Superintendent V	$5,312	$10,328
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 annual salary increase for all permanent full‑time personnel paid from the Central Office Allotment shall be four percent (4%), commencing July 1, 2006. The State Board of Education shall allocate these funds to local school administrative units.  The local boards of education shall establish guidelines for providing salary increases to these personnel.

NONCERTIFIED PERSONNEL SALARY AND FAIR MINIMUM PAY
SECTION 7.4.(a)  The annual salary increase for permanent, full‑time noncertified public school employees whose salaries are supported from the State's General Fund shall be four percent (4%), commencing July 1, 2006. 
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 2005‑2006 and who continue their employment for fiscal year 2006‑2007 by providing an annual salary increase for employees of four percent (4%). For part‑time employees, the pay increase shall be pro rata based on the number of hours worked.
SECTION 7.4.(c)  The State Board of Education may adopt salary ranges for noncertified personnel to support increases of four percent (4%) for the 2006‑2007 fiscal year.
SECTION 7.4.(d)  Effective July 1, 2006, permanent noncertified public school employees whose salaries are supported from the State's General Fund shall be paid a minimum monthly or hourly salary equivalent to the minimum salary of State employees subject to the State Personnel Act.  

BONUS FOR CERTIFIED PERSONNEL AT THE TOP OF THEIR SALARY SCHEDULES
SECTION 7.5.   Effective July 1, 2006, any permanent certified personnel employed on July 1, 2006, 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, one and fifty‑eight hundredths percent (1.58%).  Effective July 1, 2006, any permanent personnel employed on July 1, 2006, 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.

FUNDS TO IMPLEMENT THE ABCS OF PUBLIC EDUCATION
SECTION 7.6.(a)  The State Board of Education shall use funds appropriated in this act for State Aid to Local School Administrative Units to provide incentive funding for schools that met or exceeded the projected levels of improvement in student performance during the 2005‑2006 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 7.6.(b)  The State Board of Education may use funds appropriated to the State Public School Fund to provide assistance to low‑performing schools.

CHILDREN WITH DISABILITIES
SECTION 7.7.  The State Board of Education shall allocate funds for children with disabilities on the basis of two thousand nine hundred sixty‑six dollars and sixty‑five cents ($2,966.65) per child for a maximum of 172,040 children for the 2006‑2007 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 2006‑2007 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.

FUNDS FOR ACADEMICALLY GIFTED CHILDREN
SECTION 7.8.  The State Board of Education shall allocate funds for academically or intellectually gifted children on the basis of nine hundred sixty‑one dollars and sixty cents ($961.60) per child.  A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2006‑2007 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 57,419 children for the 2006‑2007 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.

LEA ASSISTANCE PROGRAM
SECTION 7.9.(a)  The State Board of Education shall report on a plan to provide assistance to low‑performing schools and LEAs and to assist schools and LEAs not meeting adequate yearly progress as identified in the No Child Left Behind Act of 2001.  The report shall include historical data on assistance that has been provided and the quantitative outcomes, including student academic performance for each school and LEA assisted.  The report shall also include research‑based data regarding state LEA and school assistance programs.  The plan shall ensure that all assistance to LEAs and schools that is provided on behalf of the State Board of Education (SBE) by the Department of Public Instruction and its contractors shall be consolidated into the LEA Assistance Program (LEAAP) created in the 2003 Session of the General Assembly.  
SECTION 7.9.(b)  The State Board of Education shall develop the criteria for LEA Assistance Teams (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 type of assistance to be provided with these combined resources.  The Department will develop a revised organizational structure and budget for the provision of assistance services to LEAs to ensure the department can meet the needs of the LEAs.  This structure and budget must be approved by the State Board of Education.  The report to the Office of State Budget and Management, the Fiscal Research Division, and the Joint Legislative Education Oversight Committee on the criteria and the new organizational structure, proposed budget, functions, and projected workloads shall be submitted by August 15, 2006.
SECTION 7.9.(c)  To implement the plan, notwithstanding G.S. 143‑23, funds shall be transferred from within existing appropriations to the LEAAP.  The State Board of Education may, subject to the approval of the Office of State Budget and Management, use these funds to create positions.  For 2006‑2007 only, the State Board may transfer General Fund appropriations between personnel service and nonpersonnel service line items provided that it has been approved by the State Board and has prior approval from the Office of State Budget and Management, in order to have the flexibility during the transition year to structure itself most efficiently for the delivery of services.  However, all funds transferred under this provision are only for this program and for the services described herein.  Funds are not to be used to raise the salary of existing employees.  These funds shall come from appropriations currently supporting positions, and related operating costs within the Department of Public Instruction for school improvement teams and for Closing the Gap positions, and from the funds appropriated to the State Public School Fund being used for contractual services and associated costs for the Assistance Teams.  The Office of State Budget and Management shall approve the plan prior to the transfer of funds. 
SECTION 7.9.(d)  A report shall be submitted on the prior year's expenditure of these funds by August 31 of each year.  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. These funds shall not revert at the end of each fiscal year but shall remain available until expended for this purpose.

DISADVANTAGED STUDENT SUPPLEMENTAL FUNDING
SECTION 7.10.  Section 7.8 of S.L. 2005‑276 is amended adding a new subsection to read:
"Section 7.8.(c) Beginning in the 2006‑2007 fiscal year, funds appropriated for disadvantaged student supplemental funding (DSSF) shall be allotted based upon a teacher‑to‑student ratio for the eligible DSSF population using the following formula:  (i) local education agencies (LEAs) in counties with wealth greater than ninety percent (90%) of the statewide average as calculated under the low‑wealth supplemental formula shall receive one teaching position per 20.5 DSSF population, (ii) LEAs in counties with wealth not less than eighty percent (80%) and not greater than ninety percent (90%) of the statewide average as calculated under the low‑wealth supplemental formula shall receive one teaching position per 20 DSSF population, (iii) LEAs in counties with less wealth than eighty percent (80%) of the statewide average as calculated under the low‑wealth supplemental formula shall receive one teaching position per 19.5 DSSF population, and (iv) LEAs receiving DSSF funds in 2005‑2006 shall receive one teaching position per 16 DSSF population. LEAs receiving DSSF funds in 2005‑2006 shall receive no less than the DSSF amount allotted in 2005‑2006."

LEARN AND EARN HIGH SCHOOLS
SECTION 7.11.(a)  Funds are appropriated in this act for the Learn and Earn high school workforce development program. The purpose of the program is to create rigorous and relevant high school options that provide students with the opportunity and assistance to earn an associate degree or two years of college credit by the conclusion of the year after their senior year in high school. The State Board of Education shall work closely with the Education Cabinet and the New Schools Project in administering the program.
SECTION 7.11.(b)  These funds shall be used to establish new high schools 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 postsecondary college curricula operate seamlessly and meet the needs of participating employers. Funds shall not be allotted until Learn and Earn high schools are certified as operational.
SECTION 7.11.(c)  During the first year of its operation, a high school established under G.S. 115C‑238.50 shall be allotted a principal regardless of the number of State‑paid teachers assigned to the school or the number of students enrolled in the school. The budget flexibility authorized by G.S. 115C‑105.25 does not apply to these positions.
SECTION 7.11.(d)  The State Board of Education, in consultation with the State Board of Community Colleges and The University of North Carolina Board of Governors, shall conduct an annual evaluation of this program. The evaluation shall include measures as identified in G.S. 115C‑238.55. It shall also include: (i) an accounting of how funds and personnel resources were utilized and their impact on  student achievement, retention, and employability; (ii) recommended statutory and policy changes; and (iii) recommendations for 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 January 15 of each fiscal year.
SECTION 7.11.(e)  Funds appropriated in this act will expand the number of   Learn and Earn sites to 34 in 2006‑2007.  Enrollment and tuition for The University of North Carolina courses in which Learn and Earn students are enrolled is an allowable use of these funds. Tuition costs may include laboratory fees assessed to all students enrolled in the course or a similar course. 
SECTION 7.11.(f)  Textbooks required for college courses in which Learn and Earn students are enrolled may be purchased with these funds. 
SECTION 7.11.(g)  Payment of fees by LEAs to partnering community colleges and universities are restricted to technology or course fees. Funds appropriated in this act shall not be used to support the cost of athletic or other student activity or campus fees not required by enrollment in a specific course.  
SECTION 7.11.(h)  Nonrecurring funds are appropriated to support planning sites in 2006‑2007.  These funds may be used for planning and start‑up costs, and principal salary for the four months immediately prior to the academic year in which the site becomes operational.   
SECTION 7.11.(i)  The State Board of Education shall allot funds for university enrollment, tuition and fees, and textbooks on the basis of and after verification of the credit hour enrollment of Learn and Earn students in university courses. The State Board of Education shall allot funds for community college fees and textbooks on the basis of and after verification of the credit hour enrollment of Learn and Earn students in community college courses. 

NEW SCHOOLS PROJECT HIGH SCHOOLS 
SECTION 7.12.(a)  Funds are appropriated in this act to expand the Small Specialty Schools pilot. This appropriation will support the redesign of an additional 21 new schools in 2006‑2007.  The purpose of the program is to improve graduation rates and to achieve higher student performance as measured by standard tests and postgraduate gainful employment or admission into an institution of higher education. The State Board of Education shall work closely with the Education Cabinet and the New Schools Project in administering the program.
SECTION 7.12.(b)  Nonrecurring funds are appropriated to support 10 planning sites in 2006‑2007 for redesigned schools focused on science, technology, engineering, and/or mathematics (STEM). The State Board of Education shall work closely with the NC New Schools Project in administering the program. These funds may be used for planning and start‑up costs and principal salaries for the four months immediately prior to the academic year in which the site becomes operational. Any implementation grants for STEM schools shall come from non‑State sources, such as private and other public sources.

NC WISE POSITIONS
SECTION 7.13.(a)  Notwithstanding G.S. 143‑23, the State Board of Education may, subject to the approval of the Office of State Budget and Management, and in consultation with the Office of Information Technology Services, use funds appropriated in this act for NC WISE to create positions or incur expenditures necessary to transfer the maintenance and administration of the NC WISE system from the vendor to the Department of Public Instruction. 
SECTION 7.13.(b)  The Department of Public Instruction shall report on a quarterly basis to the Joint Legislative Education Oversight Committee on the implementation of the NC WISE project.

ONLINE PROFESSIONAL DEVELOPMENT RESOURCE CENTER
SECTION 7.14.(a)  Funds appropriated to the State Board of Education for the Online Professional Development Resource Center Web portal will be placed in a reserve in the Professional Teaching Standards Commission budget until an IT project plan is developed and approved.
SECTION 7.14.(b)  Funds will be released upon approval of the IT project plan by the State Budget Director and the Chief Information Officer.

21st CENTURY LITERACY COACHES
SECTION 7.15.(a)  Funds in the amount of four million seven hundred sixty‑seven thousand four hundred dollars ($4,767,400) are appropriated to support the selection and hiring of 100 21st Century Literacy Coaches.  Coaches will be hired and placed in 100 middle schools or other public schools with an eighth grade class.  A site selection process including formal criteria will be developed by the State Board of Education in consultation with the North Carolina Teacher Academy.   The site must receive formal approval of the State Board of Education to receive funds for this purpose. Sites prioritized for selection will include representation from a wide demographic and will include, but will not be limited to, feeder schools to Learn and Earn schools, New Schools Project schools, Disadvantaged Student Supplemental Funding (DSSF) districts, or select schools with the lowest tier of reading scores in the most recent three years on end‑of‑grade tests.  To be selected, schools must (i) contain an eighth grade class, and (ii) ensure that Literacy Coaches will have no administrative responsibilities in the schools in which they are placed. 
SECTION 7.15.(b)  National Board for Professional Teaching Standards (NBPTS) certified teachers serving in these positions shall be exempt from the requirements in G.S.115C‑296.2(b)(2)d. and shall remain on the NBPTS teacher salary schedule.

EDUCATION VALUES ADDED ASSESSMENT SYSTEM (EVAAS) – ALLOW LEAs TO PARTICIPATE 
SECTION 7.16.  Effective July 1, 2006, the Education Value Added Assessment System (EVAAS) will be made available to LEAs as a tool to provide in‑depth analysis of student performance and to help identify strategies for improving student achievement.  The State Board of Education shall identify LEAs to receive funding in 2006‑2007 based on criteria that shall include (i) identified need, (ii) readiness, and (iii) county wealth, as defined in the Low‑Wealth Supplemental Funding Formula. 

NORTH CAROLINA VIRTUAL SCHOOL
SECTION 7.17.(a)  Funds are appropriated in this act for the North Carolina Virtual Public School (NCVPS)  program.  The NCVPS shall report to the State Board of Education and shall maintain an administrative office at the Department of Public Instruction.  Funds shall be used for eight positions for administration of the program; course reviews, consolidation, acquisition and development; an NCVPS management system; employment of instructional staff; and operating expenses of the program. The purpose of the North Carolina Virtual Public School (NCVPS) program is to ensure that North Carolina public school students and faculty can access a standard set of quality educational resources online. 
SECTION 7.17.(b)  The Director of NCVPS will ensure that course quality standards are established and met and that all e‑learning opportunities offered to public school students are consolidated under the NC Virtual Public School Program, eliminating course duplication.   Assessment will be conducted by the director who shall evaluate current course offerings for rigor and quality.   A report on the proposed consolidation and operating plan for 2007‑2008 will be made to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division no later than January 15, 2007.  Consolidation will be completed by June 30, 2007.  Notwithstanding G.S 143‑23, the State Board of Education may move funds within the budget to implement the consolidation.
SECTION 7.17.(c)  Subsequent to course consolidation, the Director will prioritize e‑learning course offerings for students residing in rural and low‑wealth county LEAs, in order to expand available instructional opportunities.  First‑available e‑learning instructional opportunities should include courses required as part of the standard course of study for high school graduation and AP offerings not otherwise available. 
SECTION 7.17.(d)  Beginning in fiscal year 2007‑2008 funds for e‑learning opportunities for public school students will be budgeted as an ADM adjustment within the State Public School Fund.
SECTION 7.17.(e)  The appropriation for the information technology component of this initiative is placed in a reserve in the Department of Public Instruction.  This project component must be approved by the State Budget Director and the Chief Information Officer prior to the expenditure of funds.

DISTANCE EDUCATION
SECTION 7.18.  Notwithstanding G.S. 143‑23, the State Board of Education  may use monies from the State Public School Fund in 2006‑2007 only to pay for the additional costs associated with an increased number of registration fees for students enrolling in distance education courses.

DEPARTMENT OF PUBLIC INSTRUCTION LEGACY SYSTEM MIGRATION AND UPGRADE
SECTION 7.19.  Nonrecurring funds in the amount of  two million dollars ($2,000,000) are placed in a reserve in the Department of Public Instruction for Legacy System Migration and Update.  The department must obtain approval from the Chief Information Officer and the State Budget Director prior to the expenditure of funds for this project. Funds in the reserve may be carried forward to fiscal year 2007‑2008 to complete the project.  Unexpended funds will revert to the General Fund June 30, 2008.

SCHOOL CONNECTIVITY
SECTION 7.20.  A nonrecurring appropriation of four million dollars ($4,000,000) shall support the NC Education Network and expand the number of the State's K‑12 public schools to use technology as an instructional tool to prepare students for the demands of the 21st century workforce. Funding shall be placed in reserve in the Department of Public Instruction. The State Board of Education and the Department of Public Instruction, in collaboration with ITS, shall work with pilot districts to provide "last mile connectivity" and infuse technology into schools' instructional efforts. Funding for support, network operations, security, and other appropriate expenditures shall be managed out of the appropriation.

CONVERT 100 TEACHING FELLOWS SCHOLARSHIP LOANS FOR PROSPECTIVE MATHEMATICS AND SCIENCE TEACHERS
SECTION 7.21.(a)  Beginning in the 2007‑2008 fiscal year, 100 of the 500 teaching fellows scholarship loans as established in G.S. 115C‑363.23A  shall be changed from four‑year scholarship loans to two‑year scholarship loans for North Carolina college juniors who intend to obtain licensure in middle school or high school mathematics or science.
SECTION 7.21.(b)  G.S. 115C‑363.23A reads as rewritten:
"§ 115C‑363.23A.  Teaching Fellows Program established; administration.
(a)	A Teaching Fellows Program shall be administered by the North Carolina Teaching Fellows Commission. The Teaching Fellows Program shall be used to provide a four‑year scholarship loan of six thousand five hundred dollars ($6,500) per year to North Carolina high school seniors interested in preparing to teach in the public schools of the State. Beginning July 1, 2007, the Teaching Fellows Program shall be used to provide 100 two‑year scholarship loans of six thousand five hundred dollars ($6,500) per year to North Carolina college juniors who intend to obtain licensure in middle school or high school mathematics or science. The Commission shall adopt very stringent standards, including minimum grade point average and scholastic aptitude test scores, for awarding these scholarship loans to ensure that only the best high school seniors receive them.
(b)	The Commission shall administer the program in cooperation with teacher training institutions selected by the Commission. Teaching Fellows should be exposed to a range of extra‑curricular activities while in college. These activities should be geared to instilling a strong motivation not only to remain in teaching but to provide leadership for tomorrow's schools.
(c)	The Commission shall form regional review committees to assist it in identifying the best high school seniors or college juniors for the program. The Commission and the review committees shall make an effort to identify and encourage minority students and students who may not otherwise consider a career in teaching to enter the program.
(d)	All scholarship loans shall be evidenced by notes made payable to the Commission that shall bear interest at the rate of ten percent (10%) per year beginning September 1 after completion of the program, or immediately after termination of the scholarship loan, whichever is earlier. The scholarship loan may be terminated by the recipient withdrawing from school or by the recipient not meeting the standards set by the Commission.
(e)	The Commission shall forgive the four‑year loan if, within seven years after graduation, the recipient teaches for four years and forgive the two‑year loan if the recipient teaches for three years at a North Carolina public school or at a school operated by the United States government in North Carolina. The Commission shall also forgive the four‑year loan if, within seven years after graduation, the recipient teaches for three consecutive years and forgive the two‑year loan if the recipient teaches for two years, unless the recipient takes an approved leave of absence, at a North Carolina public school in a local school administrative unit that, at the time the recipient accepts employment with the unit, is a low‑performing school system identified in accordance with Article 6A of this Chapter or is on warning status as defined by the State Board of Education. The Commission shall also forgive the four‑year loan and the two‑year loan if it finds that it is impossible for the recipient to teach, within seven years after graduation, at a North Carolina public school or at a school operated by the United States government in North Carolina, because of the death or permanent disability of the recipient."

PUBLIC SCHOOL BUILDING CAPITAL FUND – SMALL COUNTY MINIMUM GUARANTEE 
SECTION 7.22.(a)  G.S. 115C‑546.2(a) reads as rewritten:
"(a)	Monies in the Fund shall be allocated to the counties on a per average daily membership basis according to the average daily membership for the budget year as determined and certified by the State Board of Education. Interest earned on funds allocated to each county shall be allocated to that county. It is provided, however, any county defined as low‑wealth and eligible for funds under subsection (d) of this section shall receive an additional allocation per annum equal to the remainder of five hundred thousand dollars ($500,000) less the funds provided under subsection (d) of this section. It is further provided that subsection (c) of this section does not apply to this additional allocation."
SECTION 7.22.(b)  The State Board of Education  may use monies within the Public School Building Capital Fund to establish an engineer position in the Division of School Planning. 

TRANSFER MORE AT FOUR PROGRAM AND OFFICE OF SCHOOL READINESS TO THE DEPARTMENT OF PUBLIC INSTRUCTION
SECTION 7.23.(a)  The More at Four program and the Office of School Readiness are transferred from the Office of the Governor to the Department of Public Instruction effective July 1, 2006.  This transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6.  The Office of School Readiness will provide oversight to the More at Four program and other related early childhood and prekindergarten education experiences.  An Executive Director for the Office of School Readiness will be appointed by the State Board of Education.
SECTION 7.23.(b) Section 10.67(a) of S.L. 2005‑276 is repealed.
SECTION 7.23.(c) Section 10.67(b) of S.L. 2005‑276 reads as rewritten: 
"SECTION 10.67.(b)  The Department of Health and Human Services and the Department of Public Instruction 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 and the Department of Public Instruction. 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 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 research‑based and/or built on sound instructional theory.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 a 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 and the Department of Public Instruction. 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)	Consideration of the reallocation of existing funds. In order to maximize current funding and resources, the Department of Health and Human Services and the Department of Public Instruction shall consider the reallocation of existing funds from State and local programs that provide prekindergarten‑related care and services."
SECTION 7.23.(d)  Section 10.67(c) of S.L. 2005‑276 reads as rewritten: 
"SECTION 10.67.(c) The  Department of Public Instruction  shall implement a plan to expand "More at Four" program standards within existing resources to include four‑ and five‑star‑rated centers and schools serving four‑year‑olds and develop guidelines for these programs. The "NC Prekindergarten Program Standards" initiative shall recognize four‑ and five‑star‑rated centers that choose to apply and meet equivalent "More at Four" program standards as high quality pre‑k classrooms.  Classrooms meeting these standards shall, have access to training and workshops for "More at Four" programs.  Whenever expansion slots are available, these classrooms shall have first priority to receive them.
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 31 of each year, at which time any remaining funds for slots unfilled shall be used to meet the needs of the waiting list for subsidized child care."
SECTION 7.23.(e)  Section 10.67(d) of S.L. 2005‑276 reads as rewritten: 
"SECTION 10.67.(d)  The Department of Public Instruction shall submit a report by February 1, 2007, to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Education Oversight Committee, the Senate Appropriations Committee on  Education, the House of Representatives Appropriations Subcommittee on  Education, 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)	A comprehensive cost analysis of the program, including the cost per child served by the program.
(6)	The status of the NC  Prekindergarten initiatives as outlined in this section."
SECTION 7.23.(f)  Section 10.67(e) of S.L. 2005‑276 reads as rewritten: 
"SECTION 10.67.(e) For the 2005‑2006 and the 2006‑2007 fiscal years, the "More at Four" program shall establish income eligibility requirements for the program not to exceed seventy‑five percent (75%) of the State median income. Up to twenty percent (20%) of children enrolled may have family incomes in excess of seventy‑five percent (75%) of median income if they have other designated risk factors."
SECTION 7.23.(g)  Section 10.67(f) of S.L. 2005‑276 reads as rewritten: 
"SECTION 10.67.(f)  The "More at Four" program funding shall not supplant any funding for classrooms serving four‑year‑olds as of the  2005‑2006 fiscal year. Support of existing four‑year‑old classrooms with "More at Four" program funding shall be permitted when current funding is eliminated, reduced, or redirected as required to meet other specified federal or state educational mandates."
SECTION 7.23.(h) Section 10.67(g) of S.L. 2005‑276 is repealed.
SECTION 7.23.(i)  G.S. 115C‑242(1) reads as rewritten:
"(1)	A school bus may be used for the transportation of pupils enrolled in and employees in the operation of the school to which such bus is assigned by the superintendent of the local school administrative unit. Except as otherwise herein provided, such transportation shall be limited to transportation to and from such school for the regularly organized school day, and from and to the points designated by the principal of the school to which such bus is assigned, for the receiving and discharging of passengers. No pupil or employee shall be so transported upon any bus other than the bus to which such pupil or employee has been assigned pursuant to the provisions of this Article: Provided, that children enrolled in a Headstart program or any More at Four program may be transported on public school buses, and any additional costs associated with such contractual arrangements shall be incurred by the benefitting Head Start or More at Four program: Provided further, that children with special needs may be transported to and from the nearest appropriate private school having a special education program approved by the State Board of Education if the children to be transported are or have been placed in that program by a local school administrative unit as a result of the State or the unit's duty to provide such children with a free appropriate public education."

PROHIBIT USE OF STATE FUNDS FOR LOBBYING EXPENSES
SECTION 7.24.  State funds appropriated by this act for local school administrative units shall not be used for the payment of dues to organizations that conduct lobbying or legislative advocacy.

AMEND CIVIL PENALTY AND FORFEITURE FUND AVAILABILITY
SECTION  7.25.(a)  Section 6.37(a) of S. L. 2005‑276 reads as rewritten:
"SECTION 6.37.(a) Availability. – The availability used to support appropriations made in this act from the Civil Penalty and Forfeiture Fund is based upon estimated collections of fines and forfeitures from the agencies and in the amounts listed below:
				FY 2005‑2006 	FY 2006‑2007
Department of Revenue 	$ 80,000,000	$ 	63,000,000
Department of Transportation 	$ 15,000,000	$ 15,000,000
Employment Security Commission 	$ 3,000,000	$ 3,000,000
Department of Insurance	$ 3,000,000	$ 	1,000,000
University of North Carolina 	$ 5,000,000	$ 	3,500,000
Other Agencies 	$ 14,500,000	$ 	10,000,000
Total Funds Available 	$ 120,500,000 	$ 	95,500,000

SECTION 7.25.(b) Section 6.37(b) of S.L. 2005‑276 reads as rewritten: 
"SECTION 6.37.(b) Appropriations. – Appropriations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2007, as follows:
	2005‑2006	2006‑2007
School Technology Fund 	$ 18,000,000	$ 18,000,000
State Public School Fund 	$ 102,500,000	$ 	77,500,000
Total Appropriation	$ 120,500,000	$ 	95,500,000

SECTION 7.25. (c)  G.S. 115C‑457.2, as amended by Section 6.37(v) of S.L. 2005‑276 reads as rewritten:
"§ 115C‑457.2. Remittance of moneys to the Fund.
The clear proceeds of all civil penalties, civil forfeitures, and civil fines that are collected by a State agency and that the General Assembly is authorized to place in a State fund pursuant to Article IX, Section 7(b) of the Constitution shall be remitted to the Office of State Budget and Management by the officer having custody of the funds within 10 days after the close of the calendar month in which the revenues were received or collected. Notwithstanding any other law, all such funds shall be deposited in the Civil Penalty and Forfeiture Fund. The clear proceeds of these funds include the full amount of all civil penalties, civil forfeitures, and civil fines collected under Page 48 Session Law 2005‑276 SL2005‑0276 authority conferred by the State, diminished only by the actual costs of collection, not to exceed twenty percent (20%) of the amount collected. The collection cost percentage to be used by a State agency shall be established and approved by the Office of State Budget and Management on an annual basis based upon the computation of actual collection costs by each agency for the prior fiscal year."
SECTION 7.26.  The State Board of Education may use up to five hundred thousand dollars ($500,000) from the State Public School Fund to support the Senior Project Initiative. These funds shall be used for training for LEA staff and teachers to implement this graduation requirement which was approved by the State Board of Education in 2004.

PART VIII. COMMUNITY COLLEGES

USE OF FUNDS FOR THE COLLEGEs INFORMATION SYSTEM PROJECT
SECTION 8.1.(a)  Funds appropriated to the Community Colleges System Office for the College Information System Project shall not revert at the end of the 2005‑2006 fiscal year but shall remain available until expended.
SECTION 8.1.(b)  Notwithstanding G.S. 143‑23, the Community Colleges System Office may, subject to  the approval of the Office of State Budget and Management and in consultation with the Office of Information Technology Services, use funds appropriated in this act for the College Information System Project to create positions or incur expenditures necessary to transfer the maintenance and administration of the College Information System Project from the vendor to the System Office.
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 (a) of this section becomes effective June 30, 2006.

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 Office may carry forward an amount not to exceed ten million dollars ($10,000,000) of the operating funds that were not reverted in fiscal year 2005‑2006 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, 2006.

SALARIES OF COMMUNITY COLLEGE FACULTY AND PROFESSIONAL STAFF
SECTION 8.3.(a)  Funds appropriated in this act for salary increases shall be used to increase faculty and professional staff salaries by an average of four percent (4%). 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.
SECTION 8.3.(b)  The State Board of Community Colleges shall adopt rules to ensure that these funds are used only to move faculty and professional staff salaries 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.

USE OF NEW AND EXPANDING INDUSTRY TRAINING PROGRAM FUNDS FOR CUSTOMIZED INDUSTRY TRAINING
SECTION 8.4.  Notwithstanding any other provision of law, the State Board of Community Colleges may use funds appropriated to it for the New and Expanding Industry Training Program to operate programs under the Customized Industry Training Program.

UNC‑NCCCS 2+2 E‑LEARNING INITIATIVE FUNDS
SECTION 8.5.(a)  Funds appropriated in this act to The University of North Carolina and the North Carolina Community College System for the UNC‑NCCCS 2+2 E‑Learning Initiative shall be used to fund further development of online courses for 2+2 programs.  Based on a mutually agreed upon decision by the State Board of Education Chairman, the President of the Community Colleges, and the President of The University of North Carolina as to the areas of greatest need, to include mathematics and science teacher licensure fields, funds are available to support joint technology development, systems to track student progress and articulation between a North Carolina community college and a University of North Carolina campus, and develop technology needed to support online courses and 2+2 programs.
SECTION 8.5.(b)  The University of North Carolina and Community Colleges System Office shall report by September 1, 2006, and annually thereafter, to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division of the General Assembly on the implementation of the UNC‑NCCCS 2+2 E‑Learning Initiative.  This report shall include:
(1)	The courses and programs within the 2+2 E‑Learning Initiative;
(2)	The total number of prospective teachers that have taken or are taking part in this initiative to date broken down by the current academic period and each of the previous academic periods since the program's inception;
(3)	The total number of teachers currently in the State's classroom, by local school administrative unit, who have taken part in this initiative;
(4)	The change in the number of teachers available to schools since the program's inception;
(5)	The qualitative data from students, teachers, local school administrative unit personnel, university personnel, and community college personnel as to the impact of this initiative on our State's teaching pool; and
(6)	An explanation of the expenditures and collaborative programs between the NC Community College System and The University of North Carolina, including recommendations for improvement.

NC COMMUNITY COLLEGE SYSTEM MAY USE STATE FUNDS IN LIEU OF FEDERAL FUNDS DUE TO FEDERAL MANDATES
SECTION 8.6.(a)  Changes in Guidelines Governing the Use of Federal Funds. – If the Congress of the United States or the granting federal agency changes the eligibility or guidelines governing grant monies awarded to the North Carolina Community College System, the Community Colleges System Office shall adjust its budget accordingly.  In allocating an increase in federal funds, the Community Colleges System Office shall not propose funding for new programs or activities not approved as a condition of the grant award.  In allocating a decrease in federal funds, the Department shall not eliminate the funding for a program or activity appropriated in this act unless it is related to the State administration or is mandated by the granting federal agency.
SECTION 8.6.(b)  Prior to making any budget adjustments due to changes in federal fund availability, the proposed allocation must 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 budget adjustments shall be reported immediately to the Office of State Budget and Management, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division of the General Assembly.
SECTION 8.6.(c)  Notwithstanding G.S. 143‑23, the Community Colleges System Office may use State literacy funds to fund the State administration of the GED office.  Federal funds previously used to support the State administration functions shall be reallocated to the colleges.

REPORT ON THE NCCCS BIONETWORK
SECTION 8.7.  The Community Colleges System Office shall report by November 1, 2006, to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division on the implementation of the NCCCS BioNetwork.  This report shall include an explanation of the BioNetwork's activities, accomplishments, and expenditures. 

DISTRIBUTION OF ENROLLMENT RESERVE FUND
SECTION 8.8.(a)  Funds appropriated to the North Carolina Community College System for the Enrollment Reserve Fund shall be used to assist colleges that experience high enrollment growth in the Fall Semester.  Funds shall be distributed to colleges in which enrollment growth in curriculum full‑time‑equivalent (FTE) in the Fall Semester exceeds five percent (5%) over the previous year.
SECTION 8.8.(b)  The State Board of Community Colleges shall approve any allocation of funds occurring under subsection (a) of this section and may adopt additional rules governing the distribution of these funds.

COMMUNITY COLLEGE DISTANCE LEARNING SOFTWARE MUST BE COMPATIBLE WITH K‑12 AND UNC DISTANCE LEARNING SOFTWARE
SECTION 8.9.(a)  Funds are appropriated in this act to the Community Colleges System Office for the purchase and development of a Course Management System and Learning Object Repository common to all community colleges.  This software shall be compatible and able to be integrated with course management and distance learning software adopted by The University of North Carolina and the State Board of Education.
SECTION 8.9.(b)  The Office of Information Technology Services shall approve any software purchases and ensure compatibility pursuant to subsection (a) of this section.

NEW EQUIPMENT FUNDS SHALL BE DIRECTED TOWARDS PROGRAMS TO REDUCE WAITING LISTS
SECTION 8.10.  The eleven million dollars ($11,000,000) appropriated in this act to the North Carolina Community College System for the purchase of new or replacement equipment at the community colleges shall be directed first, to the maximum extent feasible, towards the purchase of new or replacement equipment for those programs with waiting lists, including allied health programs.  The State Board of Community Colleges must approve the allocation of these funds.

STUDY OF NEW AND EXPANDING INDUSTRY TRAINING
SECTION 8.11.  The Office of State Budget and Management shall conduct a study to analyze and evaluate the New and Expanding Industry Training program of the North Carolina Community College System.  This study shall examine the companies served, the number of times each company has been served, the number of jobs created, the length of time the company has remained in North Carolina after receiving New and Expanding Industry Training funds, and whether the company has maintained employment levels at the same level promised when training was received.  The findings of the study shall be reported to the Joint Legislative Education Oversight Committee no later than April 1, 2007.

VIRTUAL LEARNING COMMUNITY CURRICULUM DEVELOPMENT CENTERS
SECTION 8.12.  Of the Virtual Learning Community development centers created in this act, the three curriculum development centers shall focus first on developing courses included in the program of study for teacher licensure and allied health programs.

PART IX. 	UNIVERSITIES

UNC‑NCCCS 2+2 E‑LEARNING INITIATIVE
SECTION 9.1.(a)  Funds appropriated in this act to The University of North Carolina and the North Carolina Community College System for the UNC‑NCCCS 2+2 E‑Learning Initiative shall be used to fund further development of online courses for 2+2 programs.  Based on a mutually agreed upon decision by the State Board of Education Chairman, the President of the Community Colleges, and the President of The University of North Carolina as to the areas of greatest need, to include mathematics and science teacher licensure fields, funds are available to support joint technology development, systems to track student progress and articulation between a North Carolina community college and a University of North Carolina constituent institution, and develop technology needed to support online courses and 2+2 programs.
SECTION 9.1.(b)  The University of North Carolina and Community Colleges System Office shall report by September 1, 2006, and annually thereafter, to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division of the General Assembly on the implementation of the UNC‑NCCCS 2+2 E‑Learning Initiative.  This report shall include:
(1)	The courses and programs within the 2+2 E‑Learning Initiative;
(2)	The total number of prospective teachers that have taken or are taking part in this initiative to date broken down by the current academic period and each of the previous academic periods since the program's inception;
(3)	The total number of teachers currently in the State's classroom, by local school administrative unit, who have taken part in this initiative;
(4)	The change in the number of teachers available to schools since the program's inception;
(5)	The qualitative data from students, teachers, local school administrative unit personnel, university personnel, and community college personnel as to the impact of this initiative on our State's teaching pool; and
(6)	An explanation of the expenditures and collaborative programs between the North Carolina Community College System and The University of North Carolina, including recommendations for improvement.

ENROLLMENT GROWTH FUND/ENCOURAGE PARTNERSHIPS FOR NEW 2 + 2 PROGRAMS
SECTION 9.2.  The University of North Carolina Board of Governors' Task Force on Meeting Teacher Supply and Demand called for the President to develop a plan for enrollment growth in the University system's teacher education programs to respond to the State's shortage of teachers. In a presentation to the Joint Legislative Education Oversight Committee and to the Board of Governors, a commitment was made to increase the number of teacher education graduates. The University of North Carolina General Administration shall obtain plans from each constituent institution as to how they will maintain their current enrollment in the teacher education programs and achieve their growth targets to ensure that such increases in those programs occur. Plans may include using enrollment growth funds for targeted admissions, enhanced student support, and advising, recruiting, increases in faculty in necessary instructional areas that lead to certification, and other methods the General Administration believes will achieve those results. The University of North Carolina General Administration shall report back to the Office of State Budget and Management and the Joint Legislative Education Oversight Committee no later than December 30, 2006, on each constituent institution's plan. No later than March 31, 2007, the University of North Carolina General Administration shall submit a report on progress towards meeting this priority for the 2007‑2008 academic year, based on each constituent institution's current students in the education programs, and the students who have been accepted for the 2007‑2008 fiscal year who are enrolling in the education programs. The report shall also explain the distribution of enrollment growth funds by specific initiative.

DESTINY LAB AT the university of north carolina at CHAPEL HILL
SECTION 9.3.  Of the funds appropriated in this act to the Board of Governors of The University of North Carolina, the sum of two million dollars ($2,000,000) shall be used for the DESTINY Lab program at the University of North Carolina at Chapel Hill.  Specifically, this appropriation shall be used for the purchase of an additional mobile DESTINY Lab and the personnel and nonpersonnel costs needed to provide statewide access to DESTINY's resources and curricula to help meet the current demand.

INITIATIVE TO IMPROVE THE MANAGEMENT AND LEADERSHIP SKILLS OF THE PRINCIPALS IN HIGH NEED SCHOOLS (PRINCIPALS' EXECUTIVE PROGRAM)
SECTION 9.4.  Of the funds appropriated to the Board of Governors of The University of North Carolina, the sum of two hundred fifty thousand dollars ($250,000) shall be used for the Principals' Executive Program to enhance and link its Instructional Leadership Reform Program to provide focused support to eligible high schools based on criteria set by the State Board of Education. PEP shall provide a customized professional development program and a coaching/mentor component that provides assistance at the school level. Important components of this overall initiative are teacher recruitment and retention in responding to the Teacher Working Conditions Survey and data‑driven decision making.

NORTH CAROLINA TEACHER ACADEMY TRAINING OF 21ST CENTURY LITERACY COACHES
SECTION 9.5.  Of the funds appropriated to the Board of Governors of The University of North Carolina, one million nine hundred thousand dollars ($1,900,000) shall be used by the North Carolina Teacher Academy (NCTA), a part of the Center for School Leadership Development of the University of North Carolina General Administration, to provide training to 21st Century Literacy coaches to provide in‑service professional development to a wide demographic of schools, as determined by the State Board of Education,  all containing an eighth grade.  
The NCTA will train the Literacy coaches to be able to deliver professional development to teachers in their assigned schools in the following areas:
(1)	Basic Literacy
(2)	Technological Literacy
(3)	Visual Literacy
(4)	Informational Literacy
(5)	Higher Order Thinking
(6)	Cultural Competency
(7)	Self Direction
The NCTA will also provide an online professional development network for additional training opportunities for the Literacy coaches.

NURSE SCHOLARS PROGRAM EXPANSION
SECTION 9.6.  G.S. 90‑171.61(b) reads as rewritten:
"(b)	The Nursing Scholars Program shall be used to provide scholarship loans up to an amount of six thousand five hundred dollars ($6,500) awarded at the discretion of the Nursing Scholars Commission.
					In awarding all scholarship loans, the Commission shall prorate the scholarship loan amount for eligible part‑time students.The State Education Assistance Authority shall adopt specific rules to regulate all Nursing Scholars Program scholarship loans."

GRADUATE NURSE SCHOLARSHIP PROGRAM FOR FACULTY PRODUCTION
SECTION 9.7.  Article 9H of Chapter 90 of the General Statutes is amended by adding the following new sections to read:
"§ 90‑171.95.  Graduate Nurse Scholarship Program for Faculty Production established; administration.
(a)	There is established the Graduate Nurse Scholarship Program for Faculty Production. The North Carolina Nursing Scholars Commission shall determine selection criteria, methods of selection, and shall select recipients of scholarship loans made under the Graduate Nurse Scholarship Program for Faculty Production.
(b)	The Graduate Nurse Scholarship Program for Faculty Production shall be used to provide the following:
(1)	A scholarship loan for up to two years in the amount of fifteen thousand dollars ($15,000) per year, per recipient, to students enrolled in a masters degree program in nursing education or any other area of the nursing field that would permit them to become a nursing instructor at a North Carolina community college or university.
(2)	A scholarship loan for up to three years in the amount of fifteen thousand dollars ($15,000) per year, per recipient, to students enrolled in a doctoral degree program in nursing education or any other area of the nursing field that would permit them to become a nursing instructor at a North Carolina community college or university. 
The State Education Assistance Authority shall adopt specific rules to regulate these scholarship loans.
(b1)	If a recipient is awarded a scholarship loan under this program and is enrolled, or accepted for enrollment, in an eligible program, but is unable to pursue the course of study in nursing for a semester due to limited faculty resources at the institution for that semester, then the recipient shall continue to receive the scholarship loan for that semester and shall not be required to forfeit or repay the scholarship loan for that semester, provided that the recipient remains otherwise eligible for the program. This waiver shall be valid for only one semester of study and may extend a recipient's eligibility for funding under the program by no more than one semester.
(c)	The Commission shall adopt stringent standards, which may include minimum grade point average, scholastic aptitude test scores, and other standards deemed appropriate by the Commission, to ensure that only the best potential students receive loans under the Graduate Nurse Scholarship Program for Faculty Production. Standards adopted by the Commission shall include provisions for ensuring that the qualifications of applicants who are or would be nontraditional students are considered fairly in providing them with opportunities to compete for the loans. Loans under the Graduate Nurse Scholarship Program for Faculty Production shall be awarded only to applicants who meet the standards set by the Commission and who agree to teach in a North Carolina public nursing program upon completion of the nursing education program supported by the loan.
(d)	The Commission shall develop and administer the Graduate Nurse Scholarship Program for Faculty Production in cooperation with nursing schools at institutions approved by the Commission and the North Carolina Board of Nursing. The Graduate Nurse Scholarship Program for Faculty Production shall provide for participants to be exposed to a range of extracurricular activities while in school, which activities shall be aimed at instilling in students a strong motivation to remain in the practice of nursing education and to provide leadership for the nursing profession.
(e)	The Commission may form regional review committees to assist it in identifying the best high school seniors and other applicants for the program. The Commission and the review committees shall make an effort to identify and encourage minority students and students who may not otherwise consider a career in nursing to apply for the Graduate Nurse Scholarship Program for Faculty Production.
(f)	Upon the naming of recipients of loans from the Graduate Nurse Scholarship Program for Faculty Production, the Commission shall inform the State Education Assistance Authority (SEAA) of its decisions. The SEAA shall perform all of the administrative functions necessary to implement this Article, which functions shall include: rulemaking, dissemination of information to the public, distribution and receipt of applications for scholarship loans, and the functions necessary for the execution, payment, and enforcement of promissory notes required under this Article.
"§ 90‑171.96.  Terms of loans; receipt and disbursement of funds.
(a)	All scholarship loans shall be evidenced by notes made payable to the State Education Assistance Authority that bear interest at the rate of ten percent (10%) per year beginning 90 days after completion of the nursing education program, or 90 days after termination of the scholarship loan, whichever is earlier. The scholarship loan may be terminated upon the recipient's withdrawal from school or by the recipient's failure to meet the standards set by the Commission.
(b)	The State Education Assistance Authority shall forgive the loan if, within seven years after graduation from a nursing education program, the recipient teaches in a public nursing education program in a public educational institution in North Carolina for one year for every year a scholarship loan was provided. If the recipient repays the scholarship loan by cash payments, all indebtedness shall be repaid within 10 years. The Authority may provide for accelerated repayment and for less than full‑time employment options to encourage the practice of nursing education in either geographic or nursing specialty shortage areas. The Authority shall adopt specific rules to designate these geographic areas and these nursing specialty shortage areas, upon recommendations of the North Carolina Center for Nursing. The North Carolina Center for Nursing shall base its recommendations on objective information provided by interested groups or agencies and upon objective information collected by the Center. The Authority may forgive the scholarship loan if it determines that it is impossible for the recipient to teach in a public nursing program in North Carolina for a sufficient time to repay the loan because of the death or permanent disability of the recipient within 10 years following graduation or termination of enrollment in a nursing education program.
(c)	All funds appropriated to or otherwise received by the Graduate Nurse Scholarship Program for Faculty Production for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds, shall be placed in a revolving fund. This revolving fund may be used only for scholarship loans granted under the Graduate Nurse Scholarship Program for Faculty Production."

INFORMATION TECHNOLOGY
SECTION 9.8.  Of the funds appropriated to the Board of Governors of The University of North Carolina for constituent institution level information technology, two million four hundred thousand dollars ($2,400,000) is to be distributed to institutions according to policy determined by the Board of Governors.  The Board is encouraged to develop a policy with consideration for the constituent institutions that are implementing the Banner Information System. Each constituent institution is strongly encouraged, where applicable, to use its portion of these funds for Banner related costs including but not limited to:
(1)	Temporary employees to relieve current employees to allow for Banner system training;
(2)	Consultants and/or trainers to assist the constituent institution with troubleshooting once the constituent institution goes live on any of the Banner modules; and
(3)	Report writers to be able to create automatic reports in common formats.
Each constituent institution is also encouraged to use these funds toward preparation for disaster recovery.

MANAGEMENT FLEXIBILITY TO REORGANIZE BUDGET CODE 16012 UNC BOARD OF GOVERNORS RELATED EDUCATIONAL PROGRAMS 
SECTION 9.9.  Notwithstanding G.S. 143‑23, for the 2006‑2007 fiscal year, the General Administration of The University of North Carolina and the State Educational Assistance Authority shall, with the approval of the Office of State Budget and Management, reorganize budget code 16012, UNC Board of Governors Related Educational Programs, so that the budget reflects and segregates each specific program individually.  The Office of State Budget and Management shall work with The University of North Carolina General Administration and the State Educational Assistance Authority to ensure that each program represented in code 16012 is identified and budgeted separately.

TRANSFERS OF APPROPRIATION
SECTION 9.10.  G.S. 116‑30.2.(a) reads as rewritten:
"(a)	All General Fund appropriations made by the General Assembly for continuing operations of a special responsibility constituent institution of The University of North Carolina shall be made in the form of a single sum to each budget code of the institution 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), each special responsibility constituent institution 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 Chancellor to be calculated to maintain and advance the programs and services of the institutions, consistent with the directives and policies of the Board of Governors. Special responsibility constituent institutions may transfer appropriations between budget codes. These transfers shall be considered certified even if as a result of agreements between special responsibility constituent institutions. The preparation, presentation, and review of General Fund budget requests of special responsibility constituent institutions shall be conducted in the same manner as are requests of other constituent institutions. The quarterly allotment procedure established pursuant to G.S. 143‑17 shall apply to the General Fund appropriations made for the current operations of each special responsibility constituent institution. All General Fund monies so appropriated to each special responsibility constituent institution shall be recorded, reported, and audited in the same manner as are General Fund appropriations to other constituent institutions."

NORTH CAROLINA AGRICULTURAL AND TECHNICAL STATE UNIVERSITY FUNDS
SECTION 9.11.   Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2006‑2007 fiscal year the sum of one million three hundred thousand dollars ($1,300,000) shall be allocated to North Carolina Agricultural and Technical State University for agricultural and research extension programs.

UNIVERSITY OF NORTH CAROLINA SYSTEM/EPA SALARY INCREASES
SECTION 9.12.(a)  The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increase, created in this act for fiscal year 2006‑2007, to provide an annual average salary increase of four percent (4%), including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all employees of The University of North Carolina, as well as employees other than teachers of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA). These funds shall be allocated to individuals according to the rules adopted by the Board of Governors or the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate, and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.
SECTION 9.12.(b)  The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increase, created in this act for fiscal year 2006‑2007, to provide an annual average salary increase of eight percent (8%), including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all teaching employees of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA). These funds shall be allocated to individuals according to the rules adopted by the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate, and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.

North Carolina in the World Project
SECTION 9.13.  In collaboration with the State Board of Education and the NC Department of Commerce, the NC Center for International Understanding shall develop a plan to ensure that public K‑12 international education efforts such as teacher and student exchanges, curriculum development, and other initiatives for students, teachers, and administrators are focused on key countries and regions of strategic economic interest to North Carolina. The NC Center for International Understanding shall report to the Office of State Budget and Management and the Joint Legislative Education Oversight Committee on the activities and accomplishments of the two hundred thousand dollar ($200,000) recurring appropriation for North Carolina in the World Project no later than March 31, 2007.

Distance Education Professional Development for Math and Science
SECTION 9.14.  The Board of Governors of The University of North Carolina shall work with the Center for School Leadership Development constituent programs, the State Board of Education, and the constituent institutions of ECU, ECSU, and UNCW to develop a multicampus distance education professional development initiative focused on support for mathematics and science teachers and to make the initiative results available to school districts throughout the State. The Board of Governors shall report to the Joint Legislative Education Oversight Committee on the activities and accomplishments of the partnership no later than March 31, 2007.

PROSPECTIVE TEACHER SCHOLARSHIP LOAN
SECTION 9.15.  There is appropriated one million dollars ($1,000,000) for an additional 400 scholarship loans of two thousand five hundred dollars ($2,500) each from the Prospective Teacher Scholarship Loan Fund.  Priority for the 400 additional scholarship/loans shall be given to students seeking licensure in middle and high school mathematics and science and students participating in a 2+2 program between constituent institutions in The University of North Carolina and the NC Community College System.

PART X.	DEPARTMENT OF HEALTH AND HUMAN SERVICES

BLOCK GRANT CHANGES TO FUND LEGISLATIVE SALARY ADJUSTMENTS
SECTION 10.1. The Department of Health and Human Services with the approval of the Office of State Budget and Management may change the budgeted allocations to Block Grants administered by the Department of Health and Human Services to establish funding for adjustments in salary and related benefits authorized by the General Assembly for positions that are fully or partially funded by the block grant allocations.

COUNTY GRANTS TO IMPROVE TANF WORK PARTICIPATION RATES
SECTION 10.2.  Of the funds budgeted in the TANF block grant, twelve million five hundred thousand dollars ($12,500,000) shall be used for Work First demonstration grants for the county social service offices.  These funds shall be allocated during State fiscal years 2006‑2007, 2007‑2008 and 2008‑2009.  The Department of Health and Human Services, Division of Social Services, in conjunction with the County Departments of Social Service, shall use this money to support demonstration grants.  The demonstration grants will be awarded to those counties whose proposals meet all the established requirements and demonstrate a need for additional funding to improve their work participation rates.  The division will also establish two time‑limited positions to manage the grant award process and document all efforts.
There shall be no supplanting of local funds with these block grant funds. Counties shall maintain their current level of effort and funding for Work First efforts.

SOCIAL SERVICES BLOCK GRANT
SECTION 10.3.  Section 5.1(g) of S.L. 2005‑276 reads as rewritten:
"SECTION 5.1.(g)  Social Services Block Grant funds appropriated to the North Carolina Inter‑Agency Council for Coordinating Homeless Programs and to the North Carolina Housing Coalition are exempt from the provisions of 10A NCAC 71R.0201.(3)." 

INCREASE HEALTH CARE ACCESS FOR UNINSURED
SECTION 10.4.(a)  The Secretary of the Department of Health and Human Services shall develop and execute a plan to expand health care access for uninsured North Carolinians through the use of public/private partnerships, federal flexibility and  resources, and through promotion of charity care.  The goals of the plan are to:
(1)	Aid small businesses that want to provide health care coverage;
(2)	Expand health care coverage for the working uninsured;
(3)	Secure all available federal funds to support the project; and
(4)	Promote charity care by health care providers. 
SECTION 10.4.(b)  In developing the plan, the Secretary shall:
(1)	Consider previous studies on increased access to health care and covering the uninsured to determine their feasibility;
(2)	Draw on the experience of other states that have successfully increased access to health care and covered the uninsured; 
(3)	Take all appropriate steps to secure federal funding available through 1115 Demonstration Waivers and other federal waivers to cover the uninsured;
(4)	Employ options such as those available through the Deficit Reduction Act of 2005 (DEFRA) to adjust Medicaid eligibility and benefits to cover the uninsured;
(5)	Consider the use of existing funding that might be used to leverage additional federal matching funds including certified public expenditures (CPE), and appropriate federal Disproportionate Share Hospital Program (DSH) funds; 
(6)	Pursue an agreement with the Centers for Medicare and Medicaid Services (CMS) to develop a methodology for investing Medicare savings realized from the expansion of the scope of Community Care of North Carolina Program to help fund the plan; and
(7)	Determine in conjunction with the Office of State Budget and Management the fiscal impact of the plan for a five‑year period.
SECTION 10.4.(c)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Medical Assistance, up to two hundred thousand dollars ($200,000) for the 2006‑2007 fiscal year may be used to support the development of the plan.  The plan shall be completed by January 1, 2007.

CERTAIN AUDIT REQUIREMENTS MODIFIED
SECTION 10.5.  G.S. 143B‑139.4.(b) reads as rewritten:
"§ 143B‑139.4.  Department of Health and Human Services; authority to assist private nonprofit organizations.
(a)	The Secretary of the Department of Health and Human Services may allow employees of the Department or provide other appropriate services to assist any private nonprofit organization which works directly with services or programs of the Department and whose sole purpose is to support the services and programs of the Department. Except as provided in G.S. 143B‑164.18, a Department employee shall be allowed to work with an organization no more than 20 hours in any one month. These services are not subject to the provisions of Chapter 150B of the General Statutes.
(b)	The board of directors of each private, nonprofit organization shall secure and pay for the services of the State Auditor's Office or employ a certified public accountant to conduct an annual audit of the financial accounts of the organization. The board of directors shall transmit to the Secretary of the Department a copy of the annual financial audit report of the private nonprofit organization. The Secretary of the Department has the authority to waive audits or require an alternative service from a certified public accountant for organizations which exhibit special circumstances and are not the recipient of State funding.
(c)	Notwithstanding the limitations of subsection (a) of this section, the Secretary of the Department of Health and Human Services may assign employees of the Office of Rural Health and Resource Development to serve as in‑kind match to nonprofit organizations working to establish health care programs that will improve health care access while controlling costs."

RATE SETTING FOR CHILD CARING INSTITUTIONS
SECTION 10.6.  G.S. 110‑93.1 is repealed.

MEDICAID RESERVE FUND TRANSFER
SECTION 10.7.  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 four thousand five hundred four dollars ($5,004,504) for the 2006‑2007 fiscal year shall be allocated as prescribed by G.S. 143‑23.2(b) for the implementation of the Medicaid Management Information System (MMIS).

REGULATORY CHANGES TO IMPROVE QUALITY AND SAFETY IN HOME CARE SERVICES, MENTAL HEALTH FACILITIES, ADULT CARE HOMES, AND CERTAIN HOSPITAL FACILITIES
SECTION 10.8.  Section 10.40(p), S.L. 2005‑276 reads as rewritten:
"SECTION 10.40.(p)  The Department's Division of Aging and Adult Services shall develop a Quality Improvement Consultation Program for Adult Care Homes. The purpose of the Program is to promote better care and improve quality of life in a safe environment for residents in adult care homes through consultation and assistance with adult care home providers. The county departments of social services shall be responsible for implementation of the Program with all adult care homes located in the respective county, based on a timetable for statewide implementation. 
The Division of Aging and Adult Services shall consult with adult care home providers, county departments of social services, consumer advocates, and other interested stakeholders and parties in the development of the Quality Improvement Consultation Program for Adult Care Homes. 
The Department shall submit a progress report to the North Carolina Study Commission on Aging and to the Senate Appropriations Committee on Health and Human Services and to the House of Representatives Subcommittee on Health and Human Services on or before January 1, 2007.
The report will address the following topics:
(1)	Principles and philosophies that are resident‑centered and promote independence, dignity, and choice for residents;
(2)	Approaches to develop continuous quality improvement with a focus on resident satisfaction and optimal outcomes;
(3)	Dissemination of best practice models that have been used successfully elsewhere;
(4)	A determination of the availability of standardized instruments, and their use to the extent possible, to assess and measure adult care home performance according to quality of life indicators;
(5)	Utilization of quality improvement plans for adult care homes that identify and resolve issues that adversely affect quality of care and services to residents. The plans include agreed upon time frames for completion of improvements and identification of needed resources;
(6)	Training required to equip county departments of social services' staff to implement the Program;
(7)	A distinction of roles between the regulatory role of the Department's Division of Facility Services and the quality improvement consultation and monitoring responsibilities of the county departments of social services; and
(8)	Identification of staffing and other resources needed to implement the Program.
The Division of Aging and Adult Services shall conduct a pilot of the Quality Improvement Consultation Program for Adult Care Homes. No more than four county departments of social services shall participate in the pilot. The Division of Aging and Adult Services shall consider geographic balance and size in carrying out the pilot. At the conclusion of the pilot, the Division of Aging and Adult Services shall make recommendations regarding the effectiveness of the Quality Improvement Consultation Program for Adult Care Homes. If the Division recommends expansion of the pilot to other counties or statewide implementation of the Program, its report shall include the cost and a proposed timetable for implementing these recommendations, including the identification of any necessary statutory and administrative rule changes. The recommendations shall be made to the Secretary of the Department of Health and Human Services, the North Carolina Study Commission on Aging, the Senate Appropriations Committee on Health and Human Services, and the House of Representatives Subcommittee on Health and Human Services."

LOCAL PARTNERSHIPS AND PRIVACY OF PERSONNEL RECORDS
SECTION 10.9.  G.S. 143B‑168.14 reads as rewritten:
"§ 143B‑168.14.  Local partnerships; conditions.
In order to receive State funds, the following conditions shall be met:
(1)	Each local partnership shall develop a comprehensive, collaborative, long‑range plan of services to children and families in the service‑delivery area. No existing local, private, nonprofit 501(c)(3) organization, other than one established on or after July 1, 1993, and that meets the guidelines for local partnerships as established under this Part, shall be eligible to apply to serve as the local partnership for the purpose of this Part. The Board of the North Carolina Partnership may authorize exceptions to this eligibility requirement.
(2)	Each local partnership shall agree to adopt procedures for its operations that are comparable to those of Article 33C of Chapter 143 of the General Statutes, the Open Meetings Law, and Chapter 132 of the General Statutes, the Public Records Law, and provide for enforcement by the Department. Such procedures may provide for the confidentiality of personnel files that are comparable to Article 7 of Chapter 126 of the General Statutes.
(3)	Each local partnership shall adopt procedures to ensure that all personnel who provide services to young children and their families under this Part know and understand their responsibility to report suspected child abuse, neglect, or dependency, as defined in G.S. 7B‑101.
(4)	Each local partnership shall participate in the uniform, standard fiscal accountability plan developed and adopted by the North Carolina Partnership.
(b)	Each local partnership shall be subject to audit and review by the State Auditor under Article 5A of Chapter 147 of the General Statutes. The State Auditor shall conduct annual financial and compliance audits of local partnerships that are rated "needs improvement" in performance assessments authorized in G.S. 143B‑168.12(a)(7). Local partnerships that are rated "superior" or "satisfactory" in performance assessments authorized in G.S. 143B‑168.12(a)(7) shall undergo biennial financial and compliance audits by the State Auditor."

NORTH CAROLINA PARTNERSHIP FOR CHILDREN AND PRIVACY OF PERSONNEL RECORDS
SECTION 10.10.  G.S. 143B‑168.12(b) reads as rewritten:
"(b)	The North Carolina Partnership shall be subject to audit and review by the State Auditor under Article 5A of Chapter 147 of the General Statutes. The State Auditor shall conduct annual financial and compliance audits of the North Carolina Partnership. Such procedures may provide for the confidentiality of personnel files that are comparable to Article 7 of Chapter 126 of the General Statutes."

CHILD CARE FUNDS MATCHING REQUIREMENT
SECTION 10.11.  Section 10.60 of S.L. 2005‑276 reads as rewritten:
"SECTION 10.60.  No local matching funds may be required by the Department of Health and Human Services as a condition of any locality's receiving its initial allocation of child care funds appropriated by this act unless federal law requires a match. Additional funds above twenty‑five thousand dollars ($25,000) that  are reallocated by the Department to local purchasing agencies beyond their initial allocation shall require a twenty‑five percent (25%) local match in order to receive the reallocated funds. Matching requirements do not apply when funds are allocated as a result of a disaster as defined in G.S. 166A‑4(1)."

CHILD CARE ALLOCATION FORMULA
SECTION 10.12.  Section 10.61(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.61.(c)  Notwithstanding subsection (a) of this section, the Department of Health and Human Services shall allocate up to twenty‑two million dollars ($22,000,000) in federal block grant funds and State funds appropriated for fiscal years  2005‑2006 and  2006‑2007 for child care services.  These funds shall be allocated to prevent termination of child care services."

PRIVATE WELL WATER TESTING
SECTION 10.13.   G.S. 130A‑5 is amended by adding a new subdivision to read:
"(16)	To charge a fee of forty dollars ($40.00) for analyzing Private Well Water samples sent to the State Laboratory of Public Health by local health departments. In July 2007, and each succeeding July, the fee shall be recomputed by the Director of the State Laboratory of Public Health by analyzing the previous year's testing at the State Laboratory of Public Health, and the total cost of the Private Well Water testing minus State appropriations that support this effort. The fee amount determined in July  2007 and succeeding months of July shall be effective during that current State fiscal year. This fee shall be in addition to the charge for the Private Well Water panel test kit."

MEDICAID TRANSFER OF ASSETS
SECTION 10.14.(a)  G.S. 108A‑58 is repealed.
SECTION 10.14.(b)  Part 6 of Article 2 of Chapter 108A of the General Statutes is amended by adding the following new section to read:
"§ 108A‑58.1.  Ineligibility for medical assistance based on transferring assets for less than fair market value.
(a)	General rule. – Except as otherwise provided herein, an individual who is otherwise eligible to receive medical assistance under this Part is ineligible for Medicaid coverage and payment for the services specified in subsection (d) during the period specified in subsection (c) if the individual or the individual's spouse transfers an asset for less than fair market value on or after the "lookback date" specified in subsection (b).
(b)	Lookback date. – 
(1)	Except as otherwise provided herein, the lookback date is the date specified in 42 U.S.C. § 1396p(c)(1)(B).
(2)	Notwithstanding subdivision (1), the lookback date with respect to the medical services specified in subdivision (d)(2) is the date specified in 42 U.S.C. § 1396p(c)(1)(B) or February 1, 2003, whichever is later.
(c)	Penalty period. – The penalty period for the transfer of assets for less than fair market value is the period specified in 42 U.S.C. § 1396p(c)(1)(D), (E), and (H).
(d)	Medical services.– 
(1)	In the case of an institutionalized individual, the transfer of assets penalty applies with respect to nursing facility services, a level of care in any institution equivalent to that of nursing facility services, and to home or community‑based services furnished under the State's Community Alternatives Program waiver pursuant to 42 U.S.C. § 1396n(c) or (d).
(2)	In the case of a noninstitutionalized individual, the transfer of assets penalty applies with respect to home health services and personal care services as defined in 42 U.S.C. § 1396d(a)(7) and (24) and, to the extent permitted by federal law, such other long‑term care services specified by rules adopted by the Department of Health and Human Services pursuant to subsection (k) of this section.
(e)	Assets. – Assets are the income and resources of an individual or the individual's spouse (including the individual's or spouse's home) as defined in 42 U.S.C. § 1396p(e) and 42 U.S.C. § 1396p(c)(1)(G), (I), and (J).
(f)	Fair market value and uncompensated value. – 
(1)	The fair market value of an asset is the value (minus any valid and legally enforceable liens, mortgages, and encumbrances against the asset) that would have been received if the asset had been sold for good and valuable consideration at the prevailing market price at the time the asset was transferred. In the case of real or personal property that is taxable under Subchapter II of Chapter 105 of the General Statutes, there is a rebuttable presumption that the fair market value of the property is its most recent value as ascertained under Subchapter II of Chapter 105 of the General Statutes (minus any valid and legally enforceable liens, mortgages, and encumbrances against the property).
(2)	The uncompensated value of an asset is its fair market value minus the amount of good and valuable consideration received in exchange for the asset's transfer.
(g)	Individual. – An individual is a person who applies for or is receiving medical assistance under this Part regardless of whether the person was, at the time an asset was transferred, a Medicaid applicant or recipient. The term "individual" also includes an individual's legal representative, anyone acting at the individual's direction or request, and any person, agency, or court acting lawfully on behalf of the individual.
(h)	Institutionalized and noninstitutionalized individuals. – 
(1)	An institutionalized individual is an individual who meets the criteria set forth in 42 U.S.C. § 1396p(f)(3), regardless of whether the individual was institutionalized at the time an asset was transferred.
(2)	A noninstitutionalized individual is any individual who (i) is not an institutionalized individual, (ii) is an aged, blind, or disabled person who is categorically or medically needy pursuant to 42 C.F.R. § 435.120 or a qualified Medicare beneficiary as defined in 42 U.S.C. § 1396d(p)(1), and (iii) is not eligible for medical assistance under this Part based on his or her eligibility for an optional State supplement pursuant to 42 C.F.R. § 435.130.
(i)	Exceptions. – 
(1)	This section does not apply if an individual establishes by the greater weight of the evidence that the transfer was exclusively for some purpose other than establishing or retaining eligibility for medical assistance under this Part.
(2)	This section does not apply to any transfer specified in 42 U.S.C. § 1396p(c)(2)(A), (B), (C)(i), or (C)(iii).
(j)	Hardship waiver. – The Department of Health and Human Services shall waive a transfer of assets penalty that has been imposed or is imposable under this section if the Department determines that imposition of the penalty would create an undue hardship.
(k)	Rules and compliance with federal law. – 
(1)	This section shall be interpreted and administered consistently with governing federal law, including 42 U.S.C. § 1396p(c).
(2)	The Department of Health and Human Services shall determine and publish at least annually the average monthly cost of nursing facility services for private patients that will be used in determining the length of a penalty period under this section.
(3)	The Department of Health and Human Services shall provide for a hardship waiver process in accordance with 42 U.S.C. § 1396p(c)(2)(D).
(4)	The Department of Health and Human Services may adopt administrative rules that are necessary and appropriate to implement this section or the requirements of 42 U.S.C. § 1396p(c) or other federal laws governing the transfer of assets and Medicaid eligibility."
SECTION 10.14.(c)  This section is effective when it becomes law. This section does not affect the validity of any Medicaid transfer of assets penalty that was validly imposed before the date this act becomes law under prior federal or State law or rules.

REQUIRED DATA SHARING BY PRIVATE HEALTH INSURERS
SECTION 10.15.  Part 1 of Article 50 of Chapter 58 of the General Statutes is amended by adding the following new section to read:
"§ 58‑50‑46.  Insurers to provide certain information to Department of Health and Human Services.
(a)	As used in this section, the terms:
(1)	'Department' means the Department of Health and Human Services.
(2)	'Division' means the Division of Medical Assistance of the Department of Health and Human Services.
(3)	'Health insurer' includes self‑insured plans, group health plans (as defined in section 607(1) of the Employee Retirement Income Security Act of 1974, [29 USC Section 1167(1)], service benefit plans, managed care organizations, pharmacy benefit managers, or other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service as a condition of doing business in the State.
(4)	'Medical assistance' means medical assistance benefits provided under the State Medical Assistance Plan.
(b)	Notwithstanding any other provision of law, every insurer issuing a health benefit plan shall provide, in a timely manner and at no cost, to the Department of Health and Human Services, upon its request, information, including automated data matches conducted under the direction of the Department of Health and Human Services, Division of Medical Assistance, as necessary to (i) identify individuals covered under the insurer's health benefit plans who are also recipients of medical assistance; (ii) determine the period during which the individual or his or her spouses or their dependents may be or may have been covered by the health benefit plan; and (iii) determine the nature of the coverage. To facilitate the Division in obtaining this and other related information, every insurer shall:
(1)	Cooperate with the Division to determine whether a named individual who is a recipient of medical assistance may be covered under the insurer's health benefit plan and eligible to receive benefits under the health benefit plan for services provided under the State Medical Assistance Plan;
(2)	Accept the Division's authorization for the provision of medical services on behalf of the recipient of medical assistance as the insurer's authorization for the provision of the services;
(3)	Respond to the request for information within 30 working days after receipt of written proof of loss or claim for payment for health care services provided to a recipient of medical assistance who is covered by the insurer's health benefit plan."

STUDY OF MEDICAID PROVIDER RATE INCREASES
SECTION 10.16.(a)  The Secretary of the Department of Health and Human Services shall study and develop a proposal for an equitable standard for providing inflationary increases and other cost related increases to service providers in the Medicaid Program.  The Department shall seek the assistance of external consultants and other appropriate financial experts to validate any methodologies used in the development of the standard.
SECTION 10.16.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Medical Assistance, up to one hundred thousand dollars ($100,000) for the 2006‑2007 fiscal year shall be used to support the study.

MEDICAID
SECTION 10.17.(a)  Sub‑subdivision b. of Subdivision (22) of Subsection 10.11.(a) of S.L. 2005‑276 reads as rewritten:
"b.	For children eligible for EPSDT services provided by:
1.	Licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, licensed  clinical addictions specialists, and licensed  clinical supervisors, when Medicaid‑eligible children are referred by the Community Care of North Carolina primary care physician, a Medicaid‑enrolled psychiatrist, or the area mental health program or local management entity, 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."
SECTION 10.17.(b)  Subsection 10.11.(d) of S.L. 2005‑276 reads as rewritten:
SECTION 10.11.(d)  Eligibility. – Eligibility for Medicaid shall be determined in accordance with the following:
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:

	Family Size 	WFFA Standard of	WFFA Income Level	Medically Needy
		Need & Families		Income Level for
		and Children		Families and
		Categorically		Children, AA,
		Needy Income		AB, & AD
		Limit
	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 10.17.(c)  Subsection 10.11(g) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.11.(g)  Dental Coverage Limits. – Dental services shall be provided on a restricted basis in accordance with criteria  adopted by the Department to implement this subsection."
SECTION 10.17.(d)  Subsection 10.11(t) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.11.(t)  Except as otherwise provided in State law, the Department shall apply transfer of asset laws in accordance with 42 U.S.C. 1396p(c).  This act is effective when it becomes law and does not affect the validity of any Medicaid transfer of assets penalty that was validly imposed prior to the date this act becomes law under prior federal or state law or rules. 
"
SECTION 10.17.(e)  Subsection 10.11(z) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.11(z)   G.S. 108A‑55.1 reads as rewritten:  
"§ 108A‑55.1.  Medicare enrollment required.
The Department shall require State Medical Assistance (Medicaid) Program recipients who qualify for Medicare to enroll in all Medicare Parts for which they are qualified, in accordance with Title XIX of the Social Security Act, in order to pay medical expenditures that qualify for payment under Medicare Parts A, B, C and D. Enrollment in Part D shall not be required if the recipient has creditable drug coverage as defined in federal law. Failure to enroll in Medicare shall result in ineligibility under the State Medical Assistance (Medicaid) Program. A provider may seek payment for services from persons who are otherwise eligible for Medicaid, but made ineligible for failure to enroll in Medicare Parts A, B, C, and D when eligible. A provider may also seek payment for services from Medicaid enrollees who are enrolled in Medicare but do not use or refuse to use Medicare to pay for Medicaid services."

MEDICAID ESTATE RECOVERY TO INCLUDE LIENS ON REAL PROPERTY
SECTION 10.18.  G.S. 108A‑70.5, 108A‑70.6, 108A‑70.7, 108A‑70.8, and 108A‑70.9 are repealed.

HEALTH CARE FACILITY LICENSURE FEE UPPER LIMIT
SECTION 10.19.  G.S. 131E‑267 is amended as follows:
"§ 131E‑267.  Fees for departmental review of health care facility construction projects.
The Department of Health and Human Services shall charge a fee for the review of each health care facility construction project to ensure that project plans and construction are in compliance with State law. The fee shall be charged on a one‑time, per‑project basis, as follows, and shall not exceed twenty‑five thousand dollars ($25,000)for any single project:

Institutional Project	Project Fee
Hospitals	$300.00 plus $0.20/square foot of project space
Nursing Homes	$250.00 plus $0.16/square foot of project space
Ambulatory Surgical Facility	$200.00 plus $0.16/square foot of project space
Psychiatric Hospital	$200.00 plus $0.16/square foot of project space
Adult Care Home	$175.00 plus $0.10/square foot of project space

Residential Project	Project Fee
Family Care Homes	$175.00 flat fee
ICF/MR Group Homes	$275.00 flat fee
Group Homes: 1‑3 beds	$100.00 flat fee
Group Homes: 4‑6 beds	$175.00 flat fee
Group Homes: 7‑9 beds	$225.00 flat fee
Other residential: More than 9 beds	$225.00 plus $0.075/square
	foot of project space."

FACILITY LICENSURE FEES
SECTION 10.20.  G.S. 122C‑23(h) is amended as follows: 
"(h)	The Department shall charge facilities licensed under this Chapter a nonrefundable annual base license fee plus a nonrefundable annual per‑bed fee as follows: 
Type of Facility	Number of Beds	Base Fee	Per‑Bed Fee
Facilities (with no beds)	0	$175.00	$0
Facilities (non‑ICF/MR):	6 or fewer beds	$250.00 	$0
	More than 6 beds	$350.00	$12.50
ICF/MR Only:	6 or fewer beds	$650.00	$0
		More than 6 beds	$650.00	$12.50"

PART XI. DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES

PLANT CONSERVATION PROGRAM FUNDS
SECTION 11.1. From funds that are deposited with the State Treasurer pursuant to G.S. 146‑30 to the credit of the Department of Agriculture and Consumer Services in a capital improvement account, the sum of thirty thousand dollars ($30,000) shall be transferred to the Department of Agriculture and Consumer Services to be used by the Department in the plant conservation program under Article 19B of Chapter 106 of the General Statutes for costs incidental to the acquisition of land such as land appraisals, land surveys, title searches, and environmental studies and for management of plant conservation program preserves owned by the Department.

PART XII. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

CONSERVATION RESERVE ENHANCEMENT PROGRAM
SECTION 12.1.  Of the funds appropriated to the Department of Environment and Natural Resources, Division of Soil and Water Conservation, for the Conservation Reserve Enhancement Program for acquiring conservation easements and leases and for contracts for the 2006‑2007 State fiscal year, one million seven hundred twenty‑three thousand eight hundred dollars ($1,723,800) shall not revert, but shall remain available until expended.

WATER QUALITY FEE CHANGES
SECTION 12.2. G. S. 143‑215.3D reads as rewritten:
"§ 143‑215.3D.  Fee schedule for water quality permits.
(a)	Annual fees for discharge and nondischarge permits under G.S. 143‑215.1. –
(1)	Major Individual NPDES Permits. – The annual fee for an individual permit for a point source discharge of 1,000,000 or more gallons per day, a publicly owned treatment works (POTW) that administers a POTW pretreatment program, as defined in 40 Code of Federal Regulations § 403.3 (1 July 1996 Edition), or an industrial waste treatment works that has a high toxic pollutant potential shall be  three thousand four hundred twenty‑five dollars ($3,425).
(2)	Minor Individual NPDES Permits. – The annual fee for an individual permit for a point source discharge other than a point source discharge to which subdivision (1) of this subsection applies shall be seven hundred fifteen dollars ($715.00).
(3)	Single‑Family Residence. – The annual fee for a certificate of coverage under a general permit for a point source discharge or an individual nondischarge permit from a single‑family residence shall be fifty dollars ($50.00).
(4)	Stormwater and Wastewater Discharge General Permits. – The annual fee for a certificate of coverage under a general permit for a point source discharge of stormwater or wastewater shall be one hundred twenty dollars ($120.00)."

ANIMAL WASTE FEE CHANGES
SECTION 12.3.  G.S. 143‑215.10G reads as rewritten:
"§ 143‑215.10G.  Fees for animal waste management systems. 
(a)	The Department shall charge an annual permit fee to an animal operation that is subject to a permit under G.S. 143‑215.10C for an animal waste management system according to the following schedule:
(1)	For a system with a design capacity of 38,500 or more and less than 100,000 pounds steady state live weight, one hundred dollars ($100.00).
(2)	For a system with a design capacity of 100,000 or more and less than 800,000 pounds steady state live weight, three hundred dollars ($300.00).
(3)	For a system with a design capacity of 800,000 pounds or more steady state live weight,  six hundred dollars ($600.00)."

HAZARDOUS WASTE FEE CHANGES
SECTION 12.4. G.S. 130A‑294.1 reads as rewritten:
"§ 130A‑294.1. Fees applicable to generators and transporters of hazardous waste, and to hazardous waste storage, treatment, and disposal facilities.
(a)	It is the intent of the General Assembly that the fee system established by this section is solely to provide funding in addition to federal and State appropriations to support the State's hazardous waste management program.
(b)	Funds collected pursuant to this section shall be used for personnel and other resources necessary to:
(1)	Provide a high level of technical assistance and waste minimization effort for the hazardous waste management program;
(2)	Provide timely review of permit applications;
(3)	Insure that permit decisions are made on a sound technical basis and that permit decisions incorporate all conditions necessary to accomplish the purposes of this Part;
(4)	Improve monitoring and compliance of the hazardous waste management program;
(5)	Increase the frequency of inspections;
(6)	Provide chemical, biological, toxicological, and analytical support for the hazardous waste management program; and
(7)	Provide resources for emergency response to imminent hazards associated with the hazardous waste management program.
(c)	It is the intent of the General Assembly that the total funds collected per year pursuant to this section not exceed thirty percent (30%) of the total funds budgeted from all sources for the hazardous waste management program. This subsection shall not be construed to limit the obligation of any person to pay any fee imposed by this section.
(d)	The Hazardous Waste Management Account is established as a nonreverting account within the Department. All fees collected under this section shall be credited to the Account and shall be used for the purposes listed in subsection (b).
(e)	A person who generates either one kilogram or more of any acute hazardous waste as listed in 40 C.F.R. § 261.30(d) or § 261.33(e) as revised 1 July 1987, or 1000 kilograms or more of hazardous waste, in any calendar month during the year beginning 1 July and ending 30 June shall pay an annual fee of one thousand two hundred fifty dollars ($1,250).
(f)	A person who generates 100 kilograms or more of hazardous waste in any calendar month during the year beginning 1 July and ending 30 June but less than 1000 kilograms of hazardous waste in each calendar month during that year shall pay an annual fee of one hundred fifty dollars ($150.00).
(g)	A person who generates one kilogram or more of acute hazardous waste or 1000 kilograms or more of hazardous waste in any calendar month during the calendar year shall pay, in addition to any fee under subsections (e) and (f) of this section, a tonnage fee of fifty cents ($0.50) per ton or any part thereof of hazardous waste generated during that year up to a maximum of 25,000 tons.
(h)	A person who generates less than one kilogram of acute hazardous waste and less than 100 kilograms of hazardous waste in each calendar month during the year beginning 1 July and ending 30 June shall not be liable for payment of a fee under subsections (e) and (f) of this section for that year.
(i)	Hazardous waste generated as a result of any type of remedial action or by collection by a local government of hazardous waste from households shall not be subject to a tonnage fee under subsections (g) and (l) of this section.
(j)	A person who transports hazardous waste shall pay an annual fee of seven hundred dollars ($700.00).
(k)	A storage, treatment, or disposal facility shall pay an annual activity fee of one thousand four hundred dollars ($1,400) for each activity.
(l)	A commercial hazardous waste storage, treatment, or disposal facility shall pay annually, in addition to the fees applicable to all hazardous waste storage, treatment, or disposal facilities, a single tonnage charge of one dollar and seventy‑five cents ($1.75) per ton or any part thereof of hazardous waste stored, treated, or disposed of at the facility. A manufacturing facility that receives hazardous waste generated from the use of a product typical of its manufacturing process for the purpose of recycling is exempt from this tonnage charge. A facility must have a permit issued under this Article which includes the recycling activity and specifies the type and amount of waste allowed to be received from off‑site for recycling.
(m)	An applicant for a permit for a hazardous waste storage, treatment, or disposal facility that proposes to operate as a commercial facility shall pay an application fee for each proposed activity as follows:
(1)	Storage facility	$10,000;
(2)	Treatment facility	$15,000;
(3)	Disposal facility	$25,000.
(n)	The Commission may adopt rules setting fees for modifications to permits. Such fees shall not exceed fifty percent (50%) of the application fee.
(o)	Annual fees established under this section are due no later than 31 July for the fiscal year beginning 1 July in the same year. Tonnage fees established under this section are due no later than 31 July for the previous calendar year.
(p)	The Department shall make an annual report to the General Assembly and its Fiscal Research Division on the cost of the hazardous waste management program. The report shall include, but is not limited to, beginning fund balance, fees collected under this section, anticipated revenue from all sources, total expenditures (by activities and categories) for the hazardous waste management program, ending fund balance, any recommended adjustments in the annual and tonnage fees which may be necessary to assure the continued availability of funds sufficient to pay the State's share of the cost of the hazardous waste management program, and any other information requested by the General Assembly. In recommending adjustments in annual and tonnage fees, the Department may propose fees for hazardous waste generators, and for hazardous waste treatment facilities which treat waste generated on‑site, which are designed to encourage reductions in the volume or quantity and toxicity of hazardous waste."

PART XIII. DEPARTMENT OF COMMERCE

EMPLOYMENT SECURITY FUNDS
SECTION 13.1.(a)  Funds from the Employment Security Commission Reserve Fund shall be available to the Employment Security Commission to use as collateral to secure federal funds and to pay the administrative costs associated with the collection of the Employment Security Commission Reserve Fund surcharge. The total administrative costs paid with funds from the Reserve shall not exceed the total administrative costs paid in fiscal year 2005‑2006.
SECTION 13.1.(b)  There is appropriated from the Employment Security Commission Reserve Fund to the Employment Security Commission of North Carolina the sum of six million three hundred thousand dollars ($6,300,000) for the 2006‑2007 fiscal year to be used for the following purposes: 
(1)	$6,000,000 for the operation and support of local offices.
(2)	$200,000 for the State Occupational Information Coordinating Committee to develop and operate an interagency system to track former participants in State education and training programs.
(3)	$100,000 to maintain compliance with Chapter 96 of the General Statutes, which directs the Commission to employ the Common Follow‑Up Management Information System to evaluate the effectiveness of the State's job training, education, and placement programs.

ONE NORTH CAROLINA FUND
SECTION 13.2.  Of the funds appropriated in this act to the One North Carolina Fund, the Department of Commerce may use up to three hundred thousand dollars ($300,000) to cover its expenses in administering the One North Carolina Fund and other economic development incentive grant programs in the 2006‑2007 fiscal year.

RURAL ECONOMIC DEVELOPMENT CENTER
SECTION 13.3.  Notwithstanding any other provision of law, the North Carolina Rural Economic Development Center shall provide up to two hundred fifty‑five thousand dollars ($255,000) to the Yadkin‑Pee Dee Lakes Project for the Central Park of North Carolina from its appropriation for economic development projects.

PART XIV. DEPARTMENT OF LABOR

REPEAL FEE FOR MINE SAFETY EDUCATION/TRAINING PROGRAMS
SECTION 14.1.  G.S. 74‑24.16(d) is repealed.

PART XV. OFFICE OF ADMINISTRATIVE HEARINGS

NC REGISTER CHANGES
SECTION 15.1.  G.S. 150B‑21.17 reads as rewritten:
"§ 150B‑21.17.  North Carolina Register.
(a)	Content. – The Codifier of Rules must publish the North Carolina Register. The North Carolina Register must be published at least two times a month and must contain the following:
(1)	Temporary rules entered in the North Carolina Administrative Code.
(1a)	The text of proposed rules, and the text of permanent rules approved by the Commission.
(1b)	Emergency rules entered into the North Carolina Administrative Code.
(2)	Notices of receipt of a petition for municipal incorporation, as required by G.S. 120‑165.
(3)	Executive orders of the Governor.
(4)	Final decision letters from the United States Attorney General concerning changes in laws that affect voting in a jurisdiction subject to section 5 of the Voting Rights Act of 1965, as required by G.S. 120‑30.9H.
(5)	Orders of the Tax Review Board issued under G.S. 105‑241.2.
(6)	Other information the Codifier determines to be helpful to the public.
(b)	Form. – When an agency publishes notice in the North Carolina Register of the proposed text of a new rule, the Codifier of Rules must publish the complete text of the proposed new rule. In publishing the text of a proposed new rule, the Codifier must indicate the rule is new by underlining the proposed text of the rule.
When an agency publishes notice in the North Carolina Register of the proposed text of an amendment to an existing rule, the Codifier must publish the complete text of the rule that is being amended unless the Codifier determines that publication of the complete text of the rule being amended is not necessary to enable the reader to understand the proposed amendment. In publishing the text of a proposed amendment to a rule, the Codifier must indicate deleted text with overstrikes and added text with underlines.
When an agency publishes notice in the North Carolina Register of the proposed repeal of an existing rule, the Codifier must publish the complete text of the rule the agency proposes to repeal unless the Codifier determines that publication of the complete text is impractical. In publishing the text of a rule the agency proposes to repeal, the Codifier must indicate the rule is to be repealed.
(c)	The Codifier may authorize and license the private indexing, marketing, sales, reproduction, and distribution of the Register."

PART XVI. OFFICE OF STATE CONTROLLER

NEW PAYROLL DEDUCTION SLOTS
SECTION 16.1.  Pending the implementation of the State's Human Resources/Payroll infrastructure, a temporary suspension of new payroll deduction slots is authorized.  The State Controller may, at his discretion, elect to authorize a new payroll deduction slot if it is deemed to be in the immediate best interest of the State's employees.

PROPOSED LEGISLATIVE CHANGES PERTAINING TO CREDIT CARDS
SECTION 16.2.(a)  G.S. 66‑58.12 reads as rewritten:
"§ 66‑58.12. Agencies may provide access to services through electronic and digital transactions; fees authorized.
(a)	Public agencies are encouraged to maximize citizen and business access to their services through the use of electronic and digital transactions. A public agency may determine, through program and transaction analysis, which of its services may be made available to the public through electronic means, including the Internet. The agency shall identify any inhibitors to electronic transactions between the agency and the public, including legal, policy, financial, or privacy concerns and specific inhibitors unique to the agency or type of transaction. An agency shall not provide a transaction through the Internet that is impractical, unreasonable, or not permitted by laws pertaining to privacy or security.
(b)	An agency may charge a convenience fee to cover its all or a portion of the costs of permitting a person to complete a transaction through the World Wide Web or other means of electronic access, including the cost of electronic payments pursuant to G.S. 147‑86.22(b). The fee may be applied on a per transaction basis and may be calculated either as a flat fee or a percentage fee, as determined under an agreement between a person and a public agency. The convenience fee shall be levied in accordance with applicable payment card industry standards, consistent with policies promulgated by the State Controller pursuant to G.S. 147‑86.22(b).The convenience fee may be collected by the agency or by its third party agent. 
(c)	The fee imposed under subsection (b) of this section must be approved by the Office of State Budget and Management, in consultation with the State Chief Information Officer and the Joint Legislative Commission on Governmental Operations. The revenue derived from the fee must be credited to a nonreverting agency reserve account. The funds in the account may be expended only for the e‑commerce initiatives from which the funds were collected and only if the e‑commerce initiative has been approved and projects approved by the State Chief Information Officer, in consultation with the Joint Legislative Oversight Committee on Information Technology. For purposes of this subsection, the term "public agencies" does not include a county, unit, special district, or other political subdivision of government.
(d)	This section does not apply to the Judicial Department."
SECTION 16.2.(b)  G.S. 147‑86.22(b) reads as rewritten:
"(b)	Electronic Payment. – Notwithstanding the provisions of G.S. 147‑86.20 and G.S. 147‑86.21, this subsection applies to debts owed a community college, a local school administrative unit, an area mental health, developmental disabilities, and substance abuse authority, and the Administrative Office of the Courts, and to debts payable to or through the office of a clerk of superior court or a magistrate, as well as to debts owed to other State agencies as defined in G.S. 147‑86.20.
The State Controller shall establish policies that allow accounts receivable to be payable under certain conditions by electronic payment. These policies shall be established with the concurrence of the State Treasurer. In addition, any policies that apply to debts payable to or through the office of a clerk of superior court or a magistrate shall be established with the concurrence of the Administrative Officer of the Courts. The Administrative Officer of the Courts may also establish policies otherwise authorized by law that apply to these debts as long as those policies are not inconsistent with the Controller's policies.
A condition of payment by electronic payment is receipt by the appropriate State agency of the full amount of the account receivable owed to the State agency. A debtor who pays by electronic payment may be required to pay any fee or charge associated with the use of electronic payment. Fees associated with processing electronic payments may be paid out of the General Fund and Highway Fund if the payment of the fee by the State is economically beneficial to the State and the payment of the fee by the State has been approved by the State Controller and State Treasurer.
The State Controller and State Treasurer shall consult with the Joint Legislative Commission on Governmental Operations before establishing policies that allow accounts receivable to be payable by electronic payment and before authorizing fees associated with electronic payment to be paid out of the General Fund and Highway Fund. A State agency must also consult with the Joint Legislative Commission on Governmental Operations before implementing any program to accept payment under the policies established pursuant to this subsection.
Costs associated with the use of electronic payments shall be paid by an agency from either receipts‑supported or appropriated funds, as approved by the Office of State Budget and Management. Any convenience fees levied and collected pursuant to G.S. 66‑58.12 shall only be utilized to pay the costs specified therein. This provision shall not prohibit an agency from absorbing a portion or all the costs associated with accepting electronic payments if deemed economical to either the agency or the State's cash management program, or if deemed appropriate to provide the convenience to the payor.
A payment of an account receivable that is made by electronic payment and is not honored by the issuer of the card or the financial institution offering electronic funds transfer does not relieve the debtor of the obligation to pay the account receivable."
SECTION 16.2.(c)  G.S. 159‑32.1 reads as rewritten:
"§ 159‑32.1.  Electronic payment.
A unit of local government, public hospital, or public authority may, in lieu of payment by cash or check, accept payment by electronic payment as defined in G.S. 147‑86.20 for any tax, assessment, rate, fee, charge, rent, interest, penalty, or other receivable owed to it. A unit of local government, public hospital, or public authority may pay any negotiated discount, processing fee, transaction fee, or other charge imposed by a credit card, charge card, or debit card company, or by a third‑party merchant bank, as a condition of contracting for the unit's or the authority's acceptance of electronic payment. A unit of local government, public hospital, or public authority may impose the fee or charge as a surcharge convenience fee on the amount paid by the person using electronic payment, provided the fee is levied in accordance with applicable payment card industry standards, consistent with either policies promulgated by the State Controller pursuant to G.S. 147‑86.22(b) or with other policies promulgated by the governing board, as applicable."
SECTION 16.2.(d)  G.S. 105‑357(b) reads as rewritten:
"(b)	Acceptance of Checks and Electronic Payment. – The tax collector may accept checks and electronic payments, as defined in G.S. 147‑86.20, in payment of taxes, as authorized by G.S. 159‑32.1. Acceptance of a check or electronic payment is at the tax collector's own risk. A tax collector who accepts electronic payment of taxes may add a convenience fee to each electronic payment transaction to offset the service charge the taxing unit pays for electronic payment service, provided the fee is levied in accordance with applicable payment card industry standards, consistent with policies promulgated by the State Controller pursuant to G.S. 147‑86.22(b) or with other policies promulgated by the governing board, as applicable. A tax collector who accepts electronic payment or check in payment of taxes may issue the tax receipt immediately or withhold the receipt until the check has been collected or the electronic payment invoice has been honored by the issuer.
If a tax collector accepts a check or an electronic payment and issues a tax receipt and the check is returned unpaid (without negligence on the part of the tax collector in presenting the check for payment) or the electronic payment invoice is not honored by the issuer, the taxes for which the check or electronic payment was given shall be deemed unpaid; the tax collector shall immediately correct the copy of the tax receipt and other appropriate records to show the fact of nonpayment, and shall give written notice by certified or registered mail to the person to whom the tax receipt was issued to return it to the tax collector. After correcting the records to show the fact of nonpayment, the tax collector shall proceed to collect the taxes by the use of any remedies allowed for the collection of taxes or by bringing a civil action on the check or electronic payment."
SECTION 16.2.(e)  G.S. 14‑113.24 reads as rewritten:
"§ 14‑113.24.  Credit, charge, or debit card numbers on receipts.
(a)	For purposes of this section, the word "person" means the person that owns or leases the cash register or other machine or device that electronically prints receipts of credit, charge, or debit card transactions.
(b)	Except as provided in this section, no person that accepts credit, charge, or debit cards for the transaction of business shall print more than five the last four digits of the credit, charge, or debit card account number or print the expiration date upon any receipt with the intent to provide the receipt to the cardholder at the point of sale. This section applies to a person who employs a cash register or other machine or device that electronically prints receipts for credit, charge, or debit card transactions. This section does not apply to a person whose sole means of recording a credit, charge, or debit card number for the transaction of business is by handwriting or by an imprint or copy of the credit, charge, or debit card."

PART XVII. UTILITIES COMMISSION

REGULATORY FEE FOR UTILITIES COMMISSION
SECTION 17.1.(a)  The percentage rate to be used in calculating the public utility regulatory fee under G.S. 62‑302(b)(2) is twelve‑hundredths of one percent (0.12%) for each public utility's North Carolina jurisdictional revenues earned during each quarter that begins on or after July 1, 2006.
SECTION 17.1.(b)  The electric membership corporation regulatory fee imposed under G.S. 62‑302(b1) for the 2006‑2007 fiscal year is two hundred thousand dollars ($200,000).
SECTION 17.1.(c ) This section becomes effective July 1, 2006.

PART XVIII. INFORMATION TECHNOLOGY

ESTABLISH INFORMATION TECHNOLOGY INNOVATION FUND 
SECTION 18.1.(a)  There is established an Information Technology Innovation Fund in the Office of State Budget and Management.  This Fund will support technology projects that:
(1)	Implement a legislative mandate, increase safety of staff and citizens, or improve the overall efficiency of a business process demonstrated through cost savings or future cost avoidance.
(2)	Facilitate consolidation of information technology services in State agencies and/or an enterprise approach across agencies.
(3)	Improve customer service to the public.
Projects must complete a detailed analysis and clearly demonstrate that benefits are greater than costs.
SECTION 18.1.(b)  A review board comprised of the State Budget Officer, the State CIO, and the State Controller will review agency requests to evaluate their validity, costs and benefits, and overall return to the State.   The Office of State Budget and Management, in consultation with Information Technology Services, shall establish the timeline, criteria, and review process by which department requests will be evaluated.
SECTION 18.1.(c ) The review board shall consult with the Joint Committee on Information Technology prior to transferring monies from the Fund.    
SECTION 18.1.(d)  Funds will be provided to departments from the Information Technology Innovation Fund during the implementation period only.  Any remaining funds shall revert to the Information Technology Innovation Fund for reprioritization and allocation at the end of project implementation.

GEOGRAPHICAL INFORMATION SYSTEMS STUDY
SECTION 18.2.(a)  The Office of State Budget and Management (OSBM) shall conduct a study to identify the utilization of Geographical Information Systems (GIS) in State agencies.  The study shall identify the purpose for which each system exists, any duplication of effort across agencies, actual staffing for each system, the data used and developed for the systems, the organizational location of each system, and the hardware and software inventories associated with each system.  As a result of the study, OSBM should make recommendations on the governance, organization, and staffing of GIS in and across State agencies.  The findings of this study shall be reported to the Joint Committee on Information Technology by March 1, 2007.
SECTION 18.2.(b)  This section does not apply to The University of North Carolina and to the Judicial Branch. 

PART XIX.	CRIME CONTROL AND PUBLIC SAFETY 

ESTABLISH DISASTER RELIEF RESERVE
SECTION 19.1.(a)  G.S. 166A‑6.01(2) reads as rewritten:
"(2)	Public assistance. – State disaster assistance in the form of public assistance grants may be made available to eligible entities located within the disaster area on the following terms and conditions:
a.	Eligible entities shall meet the following qualifications:
1.	The eligible entity suffers a minimum of ten thousand dollars ($10,000) in uninsurable losses;
2.	The eligible entity suffers uninsurable losses in an amount equal to or exceeding one‑half percent (0.5%) one percent (1.0 %) of the annual operating budget; 
3.	For a state of disaster proclaimed pursuant to G.S. 166A‑6(a) after the deadline established by the Federal Emergency Management Agency pursuant to the Disaster Mitigation Act of 2002, P.L. 106‑390, the eligible entity shall have a hazard mitigation plan approved pursuant to the Stafford Act; and
4.	For a state of disaster proclaimed pursuant to G.S. 166A‑6(a) after August 1, 2002, the eligible entity shall be participating in the National Flood Insurance Program in order to receive public assistance for flooding damage.
b.	Eligible entities shall be required to provide non‑State matching funds equal to twenty‑five percent (25%) of the eligible costs of the public assistance grant."
SECTION 19.1.(b)  G.S. 166A‑5 is amended by adding a new subdivision to read:
"(4)	Disaster Relief Reserve. – There is established a Disaster Relief Reserve as a restricted reserve in the General Fund. The Governor may access these funds to (i) initially prepare for, and respond to, an emergency,  (ii) contribute to the required nonfederal cost share for federal emergency and disaster assistance programs, and (iii) implement State disaster assistance programs as authorized in Chapter  166A of the General Statutes. The Governor shall report to the Joint Legislative Commission on Governmental Operations on any expenditures from the Disaster Relief Reserve no later than 30 days after making the expenditure. The report shall include a description of the emergency and type of action taken."

HOUSING ASSISTANCE FUNDS
SECTION 19.2.  Section 5.1(c) of S.L. 2005‑1 reads as rewritten:
"SECTION 5.1.(c)  The Department of Crime Control and Public Safety shall modify the Crisis Housing Assistance Fund (CHAF) to provide money to persons who do not qualify for CHAF assistance solely because they failed to apply for federal assistance through FEMA or the Small Business Administration's (SBA) Real Property Disaster loan program."

HOPE MILLS DAM
SECTION 19.3. Of the funds appropriated in this act to the Reserve for Disaster Expenses, the sum of two million one hundred seventeen thousand one hundred thirty‑nine dollars ($2,117,139) shall be allocated to the town of Hope Mills in the 2006‑2007 fiscal year for additional costs associated with repairing the dam, roadway, and bridge from flooding in 2003.

PART XX. SALARIES AND BENEFITS

governor and council of state/salary increases 
SECTION 20.1.(a)  Effective July 1, 2006, G.S. 147‑11(a) is rewritten to read:
"(a)	The salary of the Governor shall be one hundred twenty‑eight thousand seven hundred seventy‑two dollars ($128,772) annually, payable monthly."
SECTION 20.1.(b)  Effective July 1, 2006, the annual salaries for the members of the Council of State, payable monthly, for the 2006‑2007 fiscal year are:

	Council of State	Annual Salary
	Lieutenant Governor	$113,650
	Attorney General	113,650
	Secretary of State	113,650
	State Treasurer	113,650
	State Auditor	113,650
	Superintendent of Public Instruction	113,650
	Agriculture Commissioner	113,650
	Insurance Commissioner	113,650
	Labor Commissioner	113,650

nonelected department heads/salary increases
SECTION 20.2.  In accordance with G.S. 143B‑9, the maximum annual salaries, payable monthly, for the nonelected heads of the principal State departments for the 2006‑2007 fiscal year are:

	Nonelected Department Heads	Annual Salary
	Secretary of Administration	$111,036
	Secretary of Correction	111,036
	Secretary of Crime Control and Public Safety	111,036
	Secretary of Cultural Resources	111,036
	Secretary of Commerce	111,036
	Secretary of Environment and Natural Resources	111,036
	Secretary of Health and Human Services	111,036
	Secretary of Juvenile Justice and Delinquency Prevention	111,036
	Secretary of Revenue	111,036
	Secretary of Transportation	111,036

certain executive branch officials/salary increases
SECTION 20.3.  The annual salaries, payable monthly, for the 2006‑2007 fiscal year for the following executive branch officials are:

	Executive Branch Officials	Annual Salary
	Chairman, Alcoholic Beverage Control Commission	$101,062
	State Controller	141,437
	Commissioner of Motor Vehicles	101,062
	Commissioner of Banks	113,650
	Chairman, Employment Security Commission	138,487
	State Personnel Director	111,036
	Chairman, Parole Commission	92,282
	Members of the Parole Commission	42,598
	Chairman, Utilities Commission	126,569
	Members of the Utilities Commission	113,650
	Executive Director, Agency for Public Telecommunications	85,198
	Director, Museum of Art	103,556
	Executive Director, North Carolina Agricultural
		Finance Authority	98,370
	State Chief Information Officer	141,352

judicial branch officials/salary increases
SECTION 20.4.(a)  The annual salaries, payable monthly, for specified Judicial Branch officials for the 2006‑2007 fiscal year are:

	Judicial Branch Officials	Annual Salary
	Chief Justice, Supreme Court	$128,772
	Associate Justice, Supreme Court	125,406
	Chief Judge, Court of Appeals	122,271
	Judge, Court of Appeals	120,181
	Judge, Senior Regular Resident Superior Court	116,916
	Judge, Superior Court	113,650
	Chief Judge, District Court	103,200
	Judge, District Court	99,935
	Administrative Officer of the Courts	116,916
	Assistant Administrative Officer of the Courts	106,791
SECTION 20.4.(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‑five thousand four hundred forty‑seven dollars ($65,447), and the minimum salary of any assistant district attorney or assistant public defender is at least thirty‑four thousand two hundred  dollars ($34,200), effective July 1, 2006.
SECTION 20.4.(c)  Effective July 1, 2006, the annual salaries of permanent, full‑time employees of the Judicial Department whose salaries are not itemized in this act shall be increased by four percent (4%).
SECTION 20.4.(d)  Effective July 1, 2006, the annual salaries of permanent, part‑time employees of the Judicial Department whose salaries are not itemized in this act shall be increased by pro rata amounts of four percent (4%).

clerk of superior court/salary increases
SECTION 20.5.  Effective July 1, 2006, G.S. 7A‑101(a) is rewritten to read:
"(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		$76,016
100,000 to 149,999		85,302
150,000 to 249,999		94,590
250,000 and above		103,879.
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."

assistant and deputy clerks of court/salary increases
SECTION 20.6.  Effective July 1, 2006, G.S. 7A‑102(c1) is rewritten to read:
"(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		$29,500
Maximum		50,522

Deputy Clerks	Annual Salary
Minimum		$25,392
Maximum		39,295."

magistrates' salary increases
SECTION 20.7.(a)  Effective July 1, 2006, G.S. 7A‑171.1(a) is rewritten to read:
"(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	$29,889
Step 1	32,630
Step 2	35,613
Step 3	38,868
Step 4	42,434
Step 5	46,452
Step 6	50,957.
(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."
SECTION 20.7.(b)  Effective July 1, 2006, G.S. 7A‑171.1(a1) is rewritten to read:
"(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	$24,102
1 or more but less than 3 years of service	25,209
3 or more but less than 5 years of service	27,435.
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."

general assembly principal clerks/salary increases
SECTION 20.8.  Effective July 1, 2006, G.S. 120‑37(c) is rewritten to read:
"(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 ninety‑six thousand seventeen dollars ($96,017) 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."

sergeants‑at‑arms and reading clerks
SECTION 20.9.  Effective July 1, 2006, G.S. 120‑37(b) is rewritten to read:
"(b)	The sergeant‑at‑arms and the reading clerk in each house shall be paid a salary of three hundred forty dollars ($340.00) per week plus subsistence at the same daily rate provided for members of the General Assembly, plus mileage at the rate provided for members of the General Assembly for one round trip only from their homes to Raleigh and return. The sergeants‑at‑arms shall serve during sessions of the General Assembly and at such time prior to the convening of, and subsequent to adjournment or recess of, sessions as may be authorized by the Legislative Services Commission. The reading clerks shall serve during sessions only."

legislative employees
SECTION 20.10.  Effective July 1, 2006, the Legislative Services Officer shall increase the salaries of nonelected employees of the General Assembly in effect for fiscal year 2005‑2006 by four percent (4%).  Nothing in this act limits any of the provisions of G.S. 120‑32.

Community college personnel/salary increases
SECTION 20.11.  The Director of the Budget shall transfer from the Reserve for Compensation Increases, created in this act for fiscal year 2006‑2007, funds to the North Carolina Community Colleges System Office necessary to provide an annual salary increase of four percent (4%), including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all community college employees supported by State funds.

university of north carolina system/epa compensation
SECTION 20.12.(a)  The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases, created in this act for fiscal year 2006‑2007, to provide an annual salary increase of four percent (4%), including funds for the employer's retirement and social security contributions, commencing July 1, 2006, 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).  The percentage annual salary increase of four percent (4%) authorized by this section shall be made on an aggregated average basis, and these funds shall be allocated according to the rules adopted by the Board of Governors of The University of North Carolina or the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate, and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.
SECTION 20.12.(b)  The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases, created in this act for fiscal year 2006‑2007, to provide an average annual salary increase of four percent (4%), including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all teaching employees of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA).  These funds shall be allocated to individuals according to the rules adopted by the Board of Trustees of the North Carolina School of Science and Mathematics and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.

most state employees/salary increases
SECTION 20.13.(a)  The salaries in effect June 30, 2006, 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, effective July 1, 2006, by four percent (4%), unless otherwise provided by this act.
SECTION 20.13.(b)  Except as otherwise provided in this act, the fiscal year 2006‑2007 salaries for permanent full‑time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall be increased by four percent (4%), effective July 1, 2006, unless otherwise provided by this act.
SECTION 20.13.(c)  The salaries in effect for fiscal year 2006‑2007 for all permanent part‑time State employees shall be increased, effective July 1, 2006, by pro rata amounts of four percent (4%).
SECTION 20.13.(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 to allow a salary increase, effective July 1, 2006, 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 20.13.(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 four percent (4%) increase provided for permanent full‑time employees covered by the provisions of subsection (a) of this section, commencing July 1, 2006.

all state‑supported personnel/salary increases
SECTION 20.14.(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 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 20.14.(b)  The granting of the salary increases under this act does not affect the status of eligibility for salary increments for which employees may be eligible unless otherwise required by this act.
SECTION 20.14.(c)  The salary increases provided in this act are to be effective July 1, 2006, and 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 July 1, 2006.
Payroll checks issued to employees after July 1, 2006, which represent payment of services provided prior to July 1, 2006, shall not be eligible for salary increases provided for in this act. This subsection shall apply to all employees, subject to or exempt from the State Personnel Act, paid from State funds, including public schools, community colleges, and The University of North Carolina.
SECTION 20.14.(d)  The Director of the Budget shall transfer from the Reserve for Compensation Increases in this act for fiscal year 2006‑2007 all funds necessary for the salary increases provided by this act, including funds for the employer's retirement and social security contributions.
SECTION 20.14.(e)  Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.
SECTION 20.14.(f)  Permanent full‑time employees who work a nine‑, ten‑, or eleven‑month work year schedule shall receive the four percent (4%) annual increase provided by this act.

SALARY ADJUSTMENT FUND
SECTION 20.15.(a) 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.
SECTION 20.15.(b) The purpose of the Salary Adjustment Fund is to provide salary adjustments for job groups in response to changes in labor market rates to assist the State in recruiting and retaining employees. Funds appropriated or otherwise transferred to the Salary Adjustment Fund by this act or any other provision of law may be used for the following purposes:
(1)	Salary range revisions, special minimum wage rates, and career‑banding adjustments to provide competitive salary rates for affected job groups.
(2)	Reallocation of positions to higher‑level job groups to compensate employees for more difficult duties.
(3)	In‑range adjustments in order to recognize job change, establish equitable salary relationships, or to respond to market conditions.
Funds shall only be used for salary adjustments that are in compliance with State Personnel Commission policies. 
SECTION 20.15.(c)  The Director of the Budget shall consult with the Joint Legislative Commission on Governmental Operations prior to transferring any salary adjustment funds for any State agency.
SECTION 20.15.(d)  The Director of the Budget may transfer to General Fund budget codes from the General Fund Salary Adjustment Fund and may transfer to Highway Fund budget codes from the Highway Fund Salary Adjustment Fund amounts required to support salary adjustments authorized by this section. 
SECTION 20.15.(e)  The Judicial Department is eligible for the funding authorized in subsection (a) of this section.  
SECTION 20.15.(f)  Employees subject to the State Personnel Act in The University of North Carolina System are eligible to receive funds for career‑banding adjustments as authorized in subdivision (1) of subsection (b) of this section. 

STATE AGENCY TEACHERS' COMPENSATION
SECTION 20.16.  Funds in the Reserve for Compensation Increases shall be used for experience step increases for employees of schools operated by the Department of Health and Human Services, the Department of Correction, or the Department of Juvenile Justice and Delinquency Prevention, who are paid on the Teacher Salary Schedule or the School‑Based Administrator Salary Schedule.

PROVIDE COST‑OF‑LIVING INCREASES FOR RETIREES OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE JUDICIAL RETIREMENT SYSTEM, THE LOCAL RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT SYSTEM
SECTION 20.17.(a)  G.S. 135‑5 is amended by adding a new subsection to read:
"(nnn)	From and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2005, shall be increased by three and seven‑tenths percent (3.7%) of the allowance payable on June 1, 2006, in accordance with G.S. 135‑5(o). Furthermore, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2005, but before June 30, 2006, shall be increased by a prorated amount of three and seven‑tenths percent (3.7%) 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, 2005, and June 30, 2006."
SECTION 20.17.(b)  G.S. 135‑65 is amended by adding a new subsection to read:
"(z)	From and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2005, shall be increased by three and seven‑tenths percent (3.7%) of the allowance payable on June 1, 2006. Furthermore, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2005, but before June 30, 2006, shall be increased by a prorated amount of three and seven‑tenths percent (3.7%) 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, 2005, and June 30, 2006."
SECTION 20.17.(c)  G.S. 120‑4.22A is amended by adding a new subsection to read:
"(t)	In accordance with subsection (a) of this section, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before January 1, 2006, shall be increased by three and seven‑tenths percent (3.7%) of the allowance payable on June 1, 2006. Furthermore, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced after January 1, 2006, but before June 30, 2006, shall be increased by a prorated amount of three and seven‑tenths percent (3.7%) 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, 2006, and June 30, 2006."
SECTION 20.17.(d)  G.S. 128‑27 is amended by adding a new subsection to read:
"(ggg)	From and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2005, shall be increased by three and seven‑tenths percent (3.7%) of the allowance payable on June 1, 2006, in accordance with subsection (k) of this section. Furthermore, from and after July 1, 2006, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2005, but before June 30, 2006, shall be increased by a prorated amount of three and seven‑tenths percent (3.7%) 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, 2005, and June 30, 2006."

PART XXI. CAPITAL PROVISIONS

GENERAL FUND CAPITAL APPROPRIATIONS/INTRODUCTION
SECTION 21.1.  The appropriations made by the 2005 General Assembly for capital improvements are for constructing, repairing, or renovating State buildings, utilities, and other capital facilities, for acquiring sites for them where necessary, and acquiring buildings and land for State government purposes.

CAPITAL APPROPRIATIONS/GENERAL FUND
SECTION 21.2.  There is appropriated from the General Fund for the 2006‑2007 fiscal year the following amount for capital improvements:

Capital Improvements – General Fund	2006‑2007
Department of Administration	
	Asheville and Kinston Veterans Affairs Nursing Homes	$  8,773,300

Department of Agriculture	
	Constable Lab Renovation	537,500
	Expansion/Renovation to Rollins Laboratory  – planning and design	1,250,000
	NCDA & CS Oxford Complex Planning and Design	1,000,000

State Ports Authority	
	Port of Wilmington Container Cranes	7,500,000

Commerce	
	Wanchese Industrial Park Office Addition	519,500

Correction	
	Gatehouse/Security Drives at Morrison Correctional Institution	2,986,200

Department of Crime Control and Public Safety	
	Emergency Operations Center and Access Road	8,500,000
	Marion Transportation Center – parking	222,700

Department of Cultural Resources	
	Horne Creek Visitors Center	378,700
	Museum of Art Expansion	40,000,000
	
Department of Environment and Natural Resources	
	Division of Water Quality Laboratory – Modular Office Building	257,100
	Forest Resources District 9 Headquarters Complex	2,164,500
	North Carolina Zoo‑ Children's Discovery Center	1,500,000
	North Carolina Zoo‑ Exhibit Storage Building	452,800
	New DENR Office Building	50,005,300
	Water Resources Development Projects	18,500,000
	Chimney Rock Tract, Hickorynut Gorge State Park Expansion	15,000,000
	Museum of Natural Sciences – Nature Resource Center	10,000,000

Information Technology Services	
	New Backup Data Center – Planning, Design and Construction	24,841,300

Department of Juvenile Justice and Delinquency Prevention	
	Safety/Security Fixtures and Furnishings for new 
		Youth Development Centers	500,000

University of North Carolina System – Board of Governors	
	North Carolina Center for the Advancement of Teaching – 
		Ocracoke Island Station Renovation Phase III, 
		Furnishing and Equipment	737,000

North Carolina State University Engineering Complex III	61,000,000

University of North Carolina at Wilmington School of Nursing	27,000,000

University of North Carolina at Charlotte – 
	Center City Classroom Building	45,827,400
	
TOTAL CAPITAL IMPROVEMENTS – GENERAL FUND	$ 329,453,300
WATER RESOURCES DEVELOPMENT PROJECT FUNDS
SECTION 21.3.(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	2006‑2007
(1)	Wilmington Harbor Deepening *	$  5,275,000
(2)	Morehead City Harbor Sand Management	1,200,000
(3)	Manteo (Shallowbag) Bay Channel Maintenance*	‑
(4)	Wilmington Harbor Maintenance Dredging*	‑
(5)	Morehead City Harbor Maintenance Dredging**	0
(6)	Carolina Beach Renourishment	1,125,000
(7)	Carolina Beach Renourishment (Kure Beach)	681,000
(8)	Brunswick County Beaches Study**	0
(9)	Ocean Isle Beach Renourishment (Brunswick County)	435,000
(10)	Beaufort Harbor Maintenance Dredging	300,000
(11)	B. Everett Jordan Reservoir Water Supply Storage	100,000
(12)	Aquatic Weed Control – Lake Gaston and Statewide	400,000
(13)	Waterway Connecting Pamlico Sound to Beaufort Harbor (Carteret)	400,000
(14)	John H. Kerr Reservoir Operations Evaluation	188,000
(15)	Currituck Sound Water Management Study	386,000
(16)	Surf City / North Topsail Beach Protection Study*	‑
(17)	West Onslow Beach (Topsail) Study (Pender County)	85,000
(18)	Hurricane Steam Restoration – Western NC (Phase II)	2,000,000
(19)	Hurricane Isabel Emergency Management Stream Cleanup (Phase III)	850,000
(20)	Bogue Banks Shore Protection Study (Carteret County)*	‑
(21)	Neuse River Basin Study	280,000
(22)	Beach and Inlet Management Study	500,000
(23)	Dredging Contingency Fund***	2,295,000
(24)	State – Local Projects	2,000,000
		
	TOTALS	$ 18,500,000
*	State share will include additional funds allocated in prior fiscal years
**	All funds are from federal and/or local share
***	For dredging shallow draft navigation channels and inlets to offset reduced federal funding
SECTION 21.3.(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 2006‑2007 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)	U.S. Army Corps of Engineers project feasibility studies.
(2)	U.S. Army Corps of Engineers projects whose schedules have advanced and require State‑matching funds in fiscal year 2006‑2007.
(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 2007‑2008 fiscal year.
SECTION 21.3.(c)  The Department shall make semiannual 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 semiannual 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.

RESEARCH BUILDING ON THE JOINT MILLENNIAL CAMPUS OF NORTH CAROLINA AGRICULTURal and technical state university AND the UNIVERSITY OF NORTH CAROLINA AT GREENSBORO; NURSING AND ALLIED HEALTH BUILDING AT THE UNIVERSITY OF NORTH CAROLINA AT PEMBROKE; CENTER FOR DESIGN INNOVATION IN THE PIEDMONT‑TRIAD RESEARCH PARK
SECTION 21.4.(a)  Section 1.1 of S.L. 2004‑179 reads as rewritten:
"SECTION 1.1. In accordance with G.S. 142‑83, this section authorizes the issuance or incurrence of special indebtedness in the following maximum aggregate principal amounts to finance the costs of the following projects. The table below provides the maximum principal amounts. The first column is the aggregate maximum principal amount. The second column is the maximum portion of this amount that can be issued or incurred before July 1, 2005. The State, with the prior approval of the State Treasurer and the Council of State, as provided in Article 9 of Chapter 142 of the General Statutes is authorized to issue or incur special indebtedness in order to provide funds to the State to be used, together with other available funds, to pay the cost of these projects.
	Aggregate 	Maximum before	Project
	Maximum	7/1/05	
	$180,000,000	$110,000,000	Acquiring, constructing, and equipping a new cancer rehabilitation and treatment center, a nearby physicians' office building, and a walkway between the two, all to be located at the University of North Carolina Hospitals at Chapel Hill.
	60,000,000	30,000,000		Acquiring, constructing, and equipping the North Carolina Cardiovascular Diseases Institute at East Carolina University.
	35,000,000	25,000,000	Acquiring, constructing, and equipping a Bioinformatics Center at the University of North Carolina at Charlotte.
	28,000,000	25,000,000	Acquiring, constructing, and equipping a stand‑alone facility to house the new Pharmacy School program to be located at Elizabeth City State University, and interim temporary facilities to house the program during construction of the facility.
	35,000,000	25,000,000	Acquiring, constructing, and equipping a Center for Health Promotion and Partnerships at the University of North Carolina at Asheville.
	10,000,000	10,000,000	Land acquisition, site preparation, engineering, architectural, and other consulting services, and construction for the Southeastern North Carolina Nursing Education and Research Center at Fayetteville State University.
	10,000,000	10,000,000	Land acquisition, site Site preparation, and engineering, architectural, and other consulting services, and construction of a research building on the for facilities for development of the joint Millennial Campus of North Carolina Agricultural and Technical State University and the University of North Carolina at Greensboro.
	10,000,000	10,000,000	Land acquisition, site preparation, and engineering, architectural, and other consulting services and construction for an Optometry School facility a Nursing and Allied Health Building at the University of North Carolina at Pembroke.
	10,000,000	10,000,000	To Western Carolina University for land acquisition, site preparation, and engineering, architectural, and other consulting services for Western Carolina University and the Mountain Area Health Education Consortium for the North Carolina Center for Health and Aging to be operated as a consortium among Western Carolina University, the University of North Carolina at Asheville, and the Mountain Area Health Education Consortium
	10,000,000	10,000,000	Property acquisition in Piedmont‑Triad Research Park for Winston‑Salem State University programming related to biotechnology education and research; and land Land acquisition, site preparation, and engineering, architectural, and other consulting services, and construction of for a Center for Design Innovation in the Piedmont Triad Research Park to be operated jointly by Winston‑Salem State University and the North Carolina School of the Arts.
TOTAL:
$388,000,000	$265,000,000"

THE NORTH CAROLINA CENTER FOR HEALTH AND AGING
SECTION 21.4.(b)  If The University of North Carolina – Board of Governors approves the request of Western Carolina University to revise the project description of the North Carolina Center for Health and Aging at its board meeting of May 12, 2006, the ninth project listed in Section 1.1 of S.L. 2004‑179 reads as rewritten:

	"10,000,000	10,000,000	To Western Carolina University for land acquisition, site preparation, and engineering, architectural, and other consulting services, and construction of a building for Western Carolina University and the Mountain Area Health Education Consortium for the North Carolina Center for Health and Aging to be operated as a consortium among Western Carolina University, the University of North Carolina at Asheville, and the Mountain Area Health Education Consortium. Additional funding for this project will be provided by the Mountain Area Health Education Consortium."

REPAIR AND RENOVATION RESERVE ALLOCATION
SECTION 21.5. Of the funds in the Reserve for Repairs and Renovations for the 2006‑2007 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. 
The Board of Governors and the Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations prior to the allocation or reallocation of these funds.

STATE PUBLIC HEALTH LABORATORY AND OFFICE OF CHIEF MEDICAL EXAMINER – DEPARTmENT OF HEALTH AND HUMAN SERVICES; REGIONAL MEDICAL CENTER AND MENTAL HEALTH CENTER AT CENTRAL PRISON – DEPARTMENT OF CORRECTION
SECTION 21.6.(a) In accordance with G.S. 142‑83, this section authorizes the issuance or incurrence of special indebtedness in the following maximum aggregate principal amounts to finance the costs of the following projects. The table below provides the maximum principal amounts. The first column is the aggregate maximum principal amount. The second column is the maximum portion of this amount that can be issued or incurred before July 1, 2007.

Aggregate	Maximum	Project
Maximum	before 7/1/07
	$101,000,000	$15,000,000		Acquiring, constructing, and equipping a new 204,000 square foot facility to house the State Laboratory of Public Health and Office of the Chief Medical Examiner. 
	144,000,000	20,000,000		Acquiring, constructing, and equipping a new 473,000 square foot facility for the Department of Correction's  Regional Medical Center and Mental Health Center and infrastructure improvements to sustain the facility at the North Carolina Central Prison in Raleigh.
TOTAL:
$245,000,000		$35,000,000  

SECTION 21.6.(b) Authorization of Financing Contracts. – The State, with the prior approval of the State Treasurer and the Council of State, as provided in Article 9 of Chapter 142 of the General Statutes, is authorized to issue or incur special indebtedness in order to provide funds to the State to be used, together with other available funds, to pay the cost of these projects.

PART XXII: TAX PROVISIONS 

ADOPTION TAX CREDIT
SECTION 22.1.  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑151.30.  Credit for adoption expenses.
(a)	Credit. – An individual who is allowed a federal adoption tax credit under section 23 of the Code for the taxable year is allowed a credit against the tax imposed by this Part in an amount equal to fifty percent (50%) of the amount of the federal adoption tax credit claimed effective as of January 1, 2006.
(b)	Limitations. – A nonresident or part‑year resident who claims the credit allowed by this section shall reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105‑134.5(b) or (c), as appropriate. The credit allowed under this section may not exceed the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer."

ELIMINATE SALES TAX ON RESEARCH AND DEVELOPMENT EQUIPMENT/INSTALL PRIVILEGE TAX OF ONE PERCENT OR EIGHTY DOLLARS
SECTION 22.2.(a)  G.S. 105‑164.3 is amended by adding a new subdivision to read:
"(33a)	Research and development equipment. – Equipment used by a taxpayer to perform experimental or laboratory activity that has as its ultimate goal one or more of the following:
a.	The development of new manufactured products.
b.	The improvement of existing manufactured products.
c.	The development of new uses for existing manufactured products.
d.	The development or improvement of methods for producing manufactured products.
The term does not include equipment used for testing or inspection for quality control purposes, efficiency surveys, management studies, consumer surveys or other market research, advertising or promotional activities, or research in connection with literacy, historical, or similar projects."
SECTION 22.2.(b)  G.S. 105‑164.13 is amended by adding a new subdivision to read:
"(54)	Research and development equipment that is subject to tax under Article 5F of this Chapter."
SECTION 22.2.(c)  G.S. 105‑187.51(a) is amended by adding a new subdivision to read:
"(4)	A qualified taxpayer who purchases research and development equipment for storage, use, or consumption in this State. A qualified taxpayer is a taxpayer whose primary business is as a research and development company in the physical, engineering, and life sciences, as defined by NAICS. The term 'NAICS' has the same meaning as defined in G.S. 105‑129.2."
SECTION 22.2.(d)  This section becomes effective January 1, 2007.

Sales Tax Changes‑cut state sales tax by one‑quarter cent effective october 1, 2006
SECTION 22.3.(a)  G.S. 105‑164.4(a) reads as rewritten:
"(a)	A privilege tax is imposed on a retailer at the following percentage rates of the retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is four percent and one‑half (4.5%). four and one‑quarter percent (4.25%)."
SECTION 22.3.(b)  Section 34.13(c) of S.L. 2001‑424, as amended by Section 38.1 of S.L. 2003‑284 and Section 9.1 of S.L. 2005‑144 and Section 33.1 of S.L. 2005‑276, reads as rewritten:
"SECTION 34.13.(c)  This section becomes effective October 16, 2001, and applies to sales made on or after that date. This section is repealed effective for sales made on or after October 1, 2006. This section does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this section before the effective date of its amendment or repeal; nor does it affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal."

SALES TAX REFUND FOR COMPONENT PARTS
SECTION 22.4.(a)  G.S. 105‑164.3 reads as rewritten:
"§ 105‑164.3.  Definitions.
The following definitions apply in this Article:
…
(30a)	Professional motorsports racing team. – A racing team that satisfies all of the following conditions:
a.	The team is operated for profit.
b.	A majority of the revenues of the team is derived from sponsorship of the racing team and prize money.
c.	The team competes in at least sixty‑six percent (66%) of the races sponsored in a single season by a motorsports sanctioning body.
(30b)	Prosthetic device. – A replacement, corrective, or supporting device worn on or in the body that meets one of the conditions of this subdivision. The term includes repair and replacement parts for the device.
a.	Artificially replaces a missing portion of the body.
b.	Prevents or corrects a physical deformity or malfunction.
c.	Supports a weak or deformed portion of the body.
…"
SECTION 22.4.(b)  G.S. 105‑164.14(l) reads as rewritten:
"(l)	Aviation Fuel for Motorsports Events. – A professional motorsports racing team or a motorsports sanctioning body is allowed a refund of the sales and use tax paid by it in this State on aviation fuel that is used to travel to or from a motorsports event in this State, to travel to a motorsports event in another state from a location in this State, or to travel to this State from a motorsports event in another state. For the purposes of this subsection, a "motorsports event"includes a motorsports race, a motorsports sponsor event, and motor sports testing. A request for a refund must be in writing and must include any information and documentation the Secretary requires. A request for a refund is due within six months after the end of the State's fiscal year. Refunds applied for after the due date are barred. This subsection is repealed for purchases made on or after January 1, 2007."
SECTION 22.4.(c)  G.S. 105‑164.14 is amended by adding a new subsection to read:
"(m)	Professional Motor Racing Vehicles. –  A professional motorsports racing team is allowed a refund of the sales and use tax paid by it in this State on tangible personal property, other than tires or accessories, that comprises any part of a professional motor racing vehicle. For the purposes of this subsection, 'accessories' includes instrumentation, telemetry, consumables, and paint. A request for a refund must be in writing and must include any information and documentation the Secretary requires. A request for a refund is due within six months after the end of the State's fiscal year. Refunds applied for after the due date are barred."
SECTION 22.4.(d)  Section 62 of S.L. 2005‑435 reads as rewritten:
"SECTION 62. This part becomes effective January 1, 2005, and applies to purchases made on or after that date. Section 61 is repealed effective for purchases made on or after January 1, 2007. This part does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this part before the effective date of its amendment or repeal; nor does it affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal."
SECTION 22.4.(e)  This act becomes effective January 1, 2006, and applies to purchases made on or after that date.  This act does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this act before the effective date of its amendment or repeal; nor does it affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal.

PART XXIII. MISCELLANEOUS PROVISIONS

EXECUTIVE BUDGET ACT APPLIES
SECTION 23.1.  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.

MOST TEXT APPLIES ONLY TO THE 2005‑2007 FISCAL BIENNIUM
SECTION 23.2.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2006‑2007 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2006‑2007 fiscal year.

EFFECT OF HEADINGS
SECTION 23.3.  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.

SEVERABILITY CLAUSE
SECTION 23.4.  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.

EFFECTIVE DATE
SECTION 23.5.  Except as otherwise provided, this act becomes effective July 1, 2006.