A BILL TO BE ENTITLED
AN ACT to modify the current operations and capital appropriations act of 2005, to enact an early reduction in the sales tax rate and an early reduction in the income TAX RATE APPLICABLE TO MOST SMALL BUSINESSES, TO CAP THE VARIABLE WHOLESALE COMPONENT OF THE MOTOR FUEL TAX RATE AT ITS CURRENT RATE, TO INCREASE the minimum wage, and to provide for the financing of construction of psychiatric hospitals and other capital Projects.

The General Assembly of North Carolina enacts:

PART i. INtroduction and title of act

INTRODUCTION
SECTION 1.1.  The appropriations made in this act are for maximum amounts necessary to provide the services and accomplish the purposes described in the budget.  Savings shall be effected where the total amounts appropriated are not required to perform these services and accomplish these purposes and, except as allowed by the Executive Budget Act, or this act, the savings shall revert to the appropriate fund at the end of each fiscal year.

TITLE OF ACT
SECTION 1.2.  This act shall be known as "The Current Operations and Capital Improvements Appropriations Act of 2006."

PART II. CURRENT OPERATIONS AND EXPANSION/GENERAL FUND

CURRENT OPERATIONS AND EXPANSION/GENERAL FUND
SECTION 2.1.  Appropriations from the General Fund of the State for the maintenance of the State departments, institutions, and agencies, and for other purposes as enumerated are adjusted for the fiscal year ending June 30, 2007, according to the schedule that follows.  Amounts set out in brackets are reductions from General Fund appropriations for the 2006‑2007 fiscal year.

Current Operations – General Fund	FY 2006‑2007

EDUCATION

Community Colleges System Office	$	43,124,642

Department of Public Instruction	129,758,427

University of North Carolina – Board of Governors
	Appalachian State University	2,189
	East Carolina University
		Academic Affairs	(1,589,622)
		Health Affairs	0
	Elizabeth City State University	(28,887)
	Fayetteville State University	42,675
	NC Agricultural and Technical University	(223,690)
	North Carolina Central University	(312)
	North Carolina School of the Arts	29,159
	North Carolina State University
		Academic Affairs	(3,908,353)
		Agricultural Extension	0
		Agricultural Research	65,287
	University of North Carolina at Asheville	(569,398)
	University of North Carolina at Chapel Hill
		Academic Affairs	(846,370)
		Health Affairs	(795,501)
		Area Health Education Centers	0
	University of North Carolina at Charlotte	(471,439)
	University of North Carolina at Greensboro	(1,138)
	University of North Carolina at Pembroke	(299,992)
	University of North Carolina at Wilmington	(100,910)
	Western Carolina University	(735,491)
	Winston‑Salem State University	0
	General Administration	0
	University Institutional Programs	140,629,097
	Related Educational Programs	0
	North Carolina School of Science and Mathematics	52,250
	UNC Hospitals at Chapel Hill	                     0
Total			$	131,249,554

HEALTH AND HUMAN SERVICES

Department of Health and Human Services
	Office of the Secretary	$	(65,275,120)
	Division of Aging	3,000,000
	Division of Blind Services/Deaf/HH	75,000
	Division of Child Development	35,465,513
	Division of Education Services	828,548
	Division of Facility Services	0
	Division of Medical Assistance	(149,850,000)
	Division of Mental Health	77,589,934
	NC Health Choice	0
	Division of Public Health	19,085,242
	Division of Social Services	12,799,153
	Division of Vocational Rehabilitation Services	                     0
Total			$	(66,281,730)

NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	$	3,676,261

Department of Commerce
	Commerce	20,222,483
	Commerce State‑Aid	500,000
	NC Biotechnology Center	4,000,000
	Rural Economic Development Center	(500,000)

Department of Environment and Natural Resources
	Environment and Natural Resources	14,895,997
	Clean Water Management Trust Fund	0

Department of Labor	613,894

JUSTICE AND PUBLIC SAFETY

Department of Correction	$	33,281,348

Department of Crime Control and Public Safety	3,675,280

Judicial Department	27,095,425
	Judicial Department – Indigent Defense	7,483,129

Department of Justice	5,038,339

Department of Juvenile Justice and Delinquency Prevention	2,527,679

GENERAL GOVERNMENT

Department of Administration	$	4,217,236

Office of Administrative Hearings	281,367

Department of State Auditor	38,500

Office of State Controller	0

Department of Cultural Resources
	Cultural Resources	5,130,562
	Roanoke Island Commission	0

State Board of Elections	989,516

General Assembly	168,346

Office of the Governor
	Office of the Governor	100,000
	Office of State Budget and Management	409,938
	OSBM – Reserve for Special Appropriations	1,353,253
	Housing Finance Agency	17,750,000

Department of Insurance
	Insurance	142,057
	Insurance – Volunteer Safety Workers' Compensation	0

Office of Lieutenant Governor	88,433

Department of Revenue	1,108,392

Department of Secretary of State	553,067

Department of State Treasurer
	State Treasurer	281,784
	State Treasurer – Retirement for Fire and Rescue Squad Workers	514,000

TRANSPORTATION

Department of Transportation	$	0

RESERVES, ADJUSTMENTS, AND DEBT SERVICE

Reserve for Compensation Increases	$	692,188,373

Reserve for Teachers' and State Employees' Retirement Rate Adjustment	27,107,200

Retirement System Payback	30,000,000

Information Technology Fund	42,087,229

Reserve for Heating and Cooling Assistance	10,000,000

Reserve for Legal Expenses	1,065,710

Trust Fund for MH, DD, SAS, and Bridge Funding Needs	5,000,000

Establish State Emergency Response Fund	20,000,000

Debt Service
	General Debt Service	(50,000,000)
	Federal Reimbursement	0

TOTAL CURRENT OPERATIONS – GENERAL FUND	$	1,170,935,691

general fund availability statement
SECTION 2.2.(a)  Section 2.2(a) of S.L. 2005‑276 is repealed. The General Fund availability used in adjusting the 2006‑2007 budget is shown below:
	FY 2006‑2007
Unappropriated Balance from FY 2005‑2006	$	113,386,988
	Less: 	HB 1868 Emergency Appropriation for 
			Department of Correction	(15,000,000)
	Projected Reversions from FY 2005‑2006	125,000,000
	Projected Over Collections from FY 2005‑2006	1,072,100,000
Year End Unreserved Credit Balance before Earmarkings	$	1,295,486,988

Less:  Credit to Savings Reserve Account	$	(323,871,747)
Less:  Credit to Repairs and Renovations Reserve Account	(225,000,000)
Revised Year End Unreserved Credit Balance	$	746,615,241

Revenues Based on Existing Tax Structure	$	16,951,416,000

Nontax Revenues
	Investment Income	$	78,700,000
	Judicial Fees	168,605,271
	Disproportionate Share	100,000,000
	Insurance	51,543,813
	Other Nontax Revenues	455,382,930
Subtotal Nontax Revenues	$	854,232,014

Total General Fund Availability	$	18,552,263,255

Adjustments to Availability:  2006 Session
	Adjustment to Baseline Revenue Forecast	$	698,864,995
	Reduce Sales Tax from 4.5% to 4.25% – January 1, 2007	(118,000,000)
	Reduce Top Personal Income Tax Rate to 8.0% – January 1, 2007	(28,600,000)
	Reserve for Other Tax Reductions	(55,100,000)
	Reserve for Highway Fund Hold Harmless	(17,600,000)
	Reserve for Highway Trust Fund Hold Harmless	(5,700,000)
	Redirect Portion of Alcohol Excise Tax to Mental Health Trust Fund	(9,390,000)
	Redirect Court of Justice Fee for Legal Service Programs	(1,000,000)
	Reduce Transfer from Highway Trust Fund	(195,176,407)

Subtotal Adjustments to Availability:  2006 Session	$	268,298,588

Revised General Fund Availability for the 2006‑2007 Fiscal Year	$	18,820,561,843

Less:	Total General Fund Appropriations
		2006‑2007 Fiscal Year	(18,820,561,843)

Unappropriated Balance Remaining	$	0

SECTION 2.2.(b)  Notwithstanding G.S. 143‑15.2 and G.S. 143‑15.3A, the State Controller shall transfer two hundred twenty‑five million dollars ($225,000,000) from the unreserved credit balance to the Repairs and Renovations Reserve Account on June 30, 2006.  This subsection becomes effective June 30, 2006.
SECTION 2.2.(c)  Funds transferred under this section to the Repairs and Renovations Reserve Account are appropriated for the 2006‑2007 fiscal year to be used in accordance with G.S. 143‑15.3A.
SECTION 2.2.(d)  Section 2.2(e) of S.L. 2005‑276 is repealed effective June 30, 2006.
This subsection becomes effective June 30, 2006
SECTION 2.2.(e) Section 2.2.(f) of S.L. 2005‑276 reads as rewritten:
"SECTION 2.2.(f)  Notwithstanding G.S. 105‑187.9(b)(1), the sum to be transferred under that subdivision for the 2005‑2006 fiscal year is two hundred fifty million dollars ($250,000,000) and for the 2006‑2007 fiscal year isfifty‑five million dollars ($55,000,000)."
SECTION 2.2.(f)  Pursuant to G.S. 105‑187.9(b)(2), the sum to be transferred under that subdivision for the 2006‑2007 fiscal year is two million four hundred eighty‑six thousand six hundred two dollars ($2,486,602).
SECTION 2.2.(g)  The State Treasurer shall transfer funds reserved to hold harmless the Highway Fund and the Highway Trust Fund from the General Fund to the Highway Fund and the Highway Trust Fund only if the variable wholesale component of the motor fuel excise tax rate in G.S. 105-449.80 would, without the imposition of the cap imposed by Section 24.3 of this act, exceed twelve and four-tenths cents (12.4¢) a gallon. A transfer required under this subsection must be made on a monthly basis. The amount to be transferred from the General Fund to the Highway Fund is the difference between the amount of motor fuel excise tax revenue allocated to the Highway Fund under G.S. 105-449.125 for a month and the amount that would have been allocated to it if the variable wholesale component were not capped at twelve and four-tenths cents (12.4¢) a gallon. The total amount transferred to the Highway Fund under this subsection during fiscal year 2006-2007 may not exceed seventeen million six hundred thousand dollars ($17,600,000). The amount to be transferred from the General Fund to the Highway Trust Fund is the difference between the amount of motor fuel excise tax revenue allocated to the Highway Trust Fund under G.S. 105-449.125 for a month and the amount that would have been allocated to it if the variable wholesale component were not capped at twelve and four-tenths cents (12.4¢) a gallon. The total amount transferred to the Highway Trust Fund under this subsection during fiscal year 2006-2007 may not exceed five million seven hundred thousand dollars ($5,700,000).

PART iII. current operations and expansion/highway fund

CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND
SECTION 3.1.  Appropriations from the Highway Fund of the State for maintenance and operation of the Department of Transportation, and for other purposes as enumerated, are made for the fiscal year ending June 30, 2007, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Fund Appropriations for the 2006‑2007 fiscal year.

Current Operations – Highway Fund		2006‑2007
Department of Transportation
	Administration			$	(2,500,000)

Division of Highways
	Administration		0
	Construction		29,439,500
	Maintenance		196,018,256
	Planning and Research		0
	OSHA Program		0

Ferry Operations		1,000,000

State Aid
	Municipalities		1,439,500
	Public Transportation		(14,000,000)
	Railroads		3,198,750

Governor's Highway Safety		0
Division of Motor Vehicles		1,886,701
Other State Agencies		13,069,364
Reserves and Transfers		25,279,000

TOTAL					$254,831,071

HIGHWAY FUND AVAILABILITY STATEMENT
SECTION 3.2.  The Highway Fund availability used in developing the 2005‑2007 biennial budget is shown below:

Highway Fund Availability Statement		2006‑2007

Beginning Credit Balance		0
Estimated Revenue		 1,767,140,000
Estimated Reversions		26,600,000

Total Highway Fund Availability		$ 1,793,740,000

PART iv. highway trust fund appropriations

HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 4.1.  Appropriations from the Highway Trust Fund of the State for maintenance and operation of the Department of Transportation, and for other purposes as enumerated, are made for the fiscal year ending June 30, 2007, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Trust Fund Appropriations for the 2006‑2007 fiscal year.

Current Operations – Highway Trust Fund		2006‑2007
		
Intrastate System		97,860,379
Urban Loops		39,570,662
Aid to Municipalities		10,267,836
Secondary Roads 		8,987,310
Program Administration		3,180,220
Transfer to General Fund		(195,176,407)
		
Grand Total Current Operations 
	and Expansion		($35,310,000)

PART V. BLOCK GRANTS

DHHS Block Grants
SECTION 5.1.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2007, according to the following schedule:

TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT 

Local Program Expenditures

Division of Social Services

01.	Work First Family Assistance (Cash Assistance)	$114,625,680

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

03.	County Demonstration Grants	19,598,322

04.	Child Protective Services – Child Welfare
	Workers for Local DSS	12,452,391

05.	Work First – Boys and Girls Clubs	1,500,000

06.	Work First – After‑School Services for
	At‑Risk Children	2,249,642

07.	Work First – After‑School Programs for
At‑Risk Youth in Middle Schools	500,000

08.	Adoption Services – Special Children's
Adoption Fund	3,000,000

09.	Family Violence Prevention	2,200,000

10.	Foster Care	2,000,000

Division of Child Development

11.	Subsidized Child Care Program	36,563,266

DHHS Administration

12.	Division of Social Services	586,931

13.	Office of the Secretary	65,836

14.	Office of the Secretary/DIRM – TANF
	Automation Projects	592,500

15.	Office of the Secretary/DIRM – NC FAST
	Implementation	1,800,000

Transfers to Other Block Grants

Division of Child Development

16.	Transfer to the Child Care and
	Development Fund	81,292,880

Division of Social Services

17.	Transfer to Social Services Block Grant for
	Department of Juvenile Justice and Delinquency
	Prevention – Support Our Students	2,749,642

18.	Transfer to Social Services Block Grant for Child
	Protective Services – Child Welfare Training in
	Counties	2,550,000

19.	Transfer to Social Services Block Grant for
	Maternity Homes	838,000

20.	Transfer to Social Services Block Grant for Teen
	Pregnancy Prevention Initiatives	2,500,000

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

22.	Transfer to Social Services Block Grant for
	Foster Care Services	1,181,907

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT	$388,000,312

SOCIAL SERVICES BLOCK GRANT

Local Program Expenditures

Divisions of Social Services and Aging & Adult

01.	County Departments of Social Services	$ 28,868,189
(Transfer from TANF – $4,500,000)

02.	State In‑Home Services Fund	2,101,113

03.	State Adult Day Care Fund	2,155,301

04.	Child Protective Services/CPS Investigative
	Services‑Child Medical Evaluation Program	238,321

05.	Foster Care Services	1,706,063
	(Transfer from TANF – $1,181,907)

06.	Child Protective Services‑Child Welfare Training
	for Counties	2,550,000
(Transfer from TANF)

07.	Maternity Homes	838,000
(Transfer from TANF)

08.	Local DSS Services for Hurricane Victims	509,272

Division of Aging and Adult Services

09.	Home and Community Care Block Grant (HCCBG)	1,834,077

Division of Mental Health, Developmental Disabilities, and Substance
	Abuse Services

10.	Mental Health Services Program	422,003

11.	Developmental Disabilities Services Program	5,000,000

12.	Mental Health Services‑Adult/Mental Health Services‑
Child/Developmental Disabilities Program/
	Substance Abuse Services‑Adult	3,234,601

Division of Child Development

13.	Subsidized Child Care Program	3,150,000

Division of Vocational Rehabilitation

14.	Vocational Rehabilitation Services – Easter Seal
	Society/UCP	188,263

Office of the Secretary – Office of Economic Opportunity

15.	Elderly Supplemental Grant Program	41,302

Division of Public Health

16.	Teen Pregnancy Prevention Initiatives	2,500,000
(Transfer from TANF)

DHHS Program Expenditures

Division of Aging and Adult Services

17.	UNC‑CARES Training Contract	247,920

Division of Services for the Blind

18.	Independent Living Program	3,314,114

Division of Facility Services

19.	Adult Care Licensure Program	411,897

20.	Mental Health Licensure and Certification Program	205,668

DHHS Administration

21.	Division of Aging and Adult Services	630,636

22.	Division of Social Services	869,058

23.	Office of the Secretary/Controller's Office	123,059

24.	Office of the Secretary/DIRM	82,009

25.	Division of Child Development	15,000

26.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	18,098

27.	Division of Facility Services	62,986

28.	Office of the Secretary‑NC Inter‑Agency Council
	For Coordinating Homeless Programs	250,000

29.	Office of the Secretary‑Housing Coalition	100,000

Transfers to Other State Agencies

Department of Administration

30.	NC Commission of Indian Affairs In‑Home
	Services for the Elderly	203,198

Department of Juvenile Justice and Delinquency Prevention

31.	Support Our Students	2,749,642
	(Transfer from TANF)

Transfers to Other Block Grants

Division of Public Health

32.	Transfer to Preventive Health Services Block Grant for
	HIV/STD Prevention and Community Planning	145,819

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 64,765,609

LOW‑INCOME ENERGY BLOCK GRANT

Local Program Expenditures

Division of Social Services

01.	Low Income Energy Assistance Program (LIHEAP)	$ 28,684,494

02.	Crisis Intervention Program (CIP)	20,831,114

Office of the Secretary – Office of Economic Opportunity

03.	Weatherization Program	9,431,545

04.	Heating Air Repair & Replacement Program (HARRP)	4,399,042

Local Administration

Division of Social Services

05.	County DSS Administration	2,057,992

Office of the Secretary – Office of Economic Opportunity

06.	Local Residential Energy Efficiency Service
	Providers – Weatherization	257,185

07.	Local Residential Energy Efficiency Service
	Providers – HARRP	119,955

DHHS Administration

08.	Division of Social Services	319,774

09.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	7,146

10.	Office of the Secretary/DIRM	245,395

11.	Office of the Secretary/Controller's Office	11,211

12.	Office of the Secretary/Office of Economic
	Opportunity – Weatherization	257,185

13.	Office of the Secretary/Office of Economic
	Opportunity – HARRP	119,955

Transfers to Other State Agencies

14.	Department of Administration – 
N.C. State Commission of Indian Affairs	58,455

TOTAL LOW‑INCOME ENERGY BLOCK GRANT	$ 66,800,448

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

Local Program Expenditures

Division of Child Development

01.	Subsidized Child Care Services	$165,102,685

02.	Subsidized Child Care Services
	(TANF to CCDF)	81,292,880

DHHS Program Expenditures

Division of Child Development

03.	Quality and Availability Initiatives	34,951,707

Local Administrations

Division of Child Development

04.	Administrative Expenses (Non‑Direct Subsidy
	Services Support)	1,849,000

DHHS Administration

05.	DCD Administrative Expenses	6,028,354

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT	$289,224,626

MENTAL HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Mental Health Services – Adult	$ 7,184,481

02.	Mental Health Services – Child	3,921,991

03.	Comprehensive Treatment Service
Program	1,500,000

Local Administration

04.	Division of Mental Health	100,000

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT	$ 12,706,472

SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT

Local Program Expenditures

01.	Substance Abuse Services – Adult	$ 20,537,390

02.	Substance Abuse Treatment Alternative for
	Women	8,069,524

03.	Substance Abuse – HIV and IV Drug	4,816,378

04.	Substance Abuse Prevention – Child	5,835,701

05.	Substance Abuse Services – Child	4,940,500

06.	Substance Abuse Strengthening Families – 
	Prevention	851,156

Division of Public Health

07.	Risk Reduction Projects	383,980

08.	Aid‑to‑Counties	209,576

09.	Maternal Health	37,779

DHHS Administration

10.	Division of Mental Health	500,000

TOTAL SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT	$ 46,181,984

MATERNAL AND CHILD HEALTH BLOCK GRANT

Local Program Expenditures

Division of Public Health

01.	Healthy Mothers/Healthy Children	9,359,236

02.	Children's Health Services	4,114,216

03.	Healthy Beginnings	404,559

04.	Maternal Health	397,761

05.	Teen Pregnancy Prevention Initiatives	85,710

DHHS Program Expenditures

Division of Public Health

06.	Children's Health Services	3,149,826

07.	Maternal Health	185,488

08.	State Center for Health Statistics	29,432

09.	Local Technical Assistance & Training	47,424

10.	Injury and Violence Prevention	149,438

11.	Office of Minority Health	98,236

12.	Special Supplemental Nutrition Program
	for Women, Infants, and Children (WIC)	22,856

13.	Immunization Program – Vaccine Distribution	414,175

DHHS Administration

14.	Division of Public Health Administration	550,681

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 19,009,038

PREVENTIVE HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	NC Statewide Health Promotion	$1,755,653

02.	Services to Rape Victims	197,112

03.	HIV/STD Prevention and Community Planning
	(Transfer from Social Services Block Grant)	145,819

DHHS Program Expenditures

04.	NC Statewide Health Promotion	431,444

05.	Oral Health	114,251

06.	Osteoporosis Program	67,593

DHHS Administration

07.	Division of Public Health	109,211

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT	$2,821,083

COMMUNITY SERVICES BLOCK GRANT

Local Program Expenditures

Office of Economic Opportunity – Community Services Block Grant

01.	Community Action Agencies	$ 15,071,666

02.	Limited Purpose Agencies	823,261

DHHS Administration

03.	Office of Economic Opportunity	823,261

TOTAL COMMUNITY SERVICES BLOCK GRANT	$ 16,718,188

GENERAL PROVISIONS
SECTION 5.1.(b)  Information to Be Included in Block Grant Plans. – The Department of Health and Human Services shall submit a separate plan for each Block Grant received and administered by the Department, and each plan shall include the following:
(1)	A delineation of the proposed allocations by program or activity, including State and federal match requirements.
(2)	A delineation of the proposed State and local administrative expenditures.
(3)	An identification of all new positions to be established through the Block Grant, including permanent, temporary, and time‑limited positions.
(4)	A comparison of the proposed allocations by program or activity with two prior years' program and activity budgets and two prior years' actual program or activity expenditures.
(5)	A projection of current year expenditures by program or activity.
(6)	A projection of federal Block Grant funds available, including unspent federal funds from the current and prior fiscal years.
SECTION 5.1.(c)  Changes in Federal Fund Availability. – If the Congress of the United States increases the federal fund availability for any of the Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall allocate the increase proportionally across the program and activity appropriations identified for that Block Grant in this section.  In allocating an increase in federal fund availability, the Department shall not propose funding for new programs or activities not appropriated in this section or increase State administrative expenditures.
If the Congress of the United States decreases the federal fund availability for any of the Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall reduce State administration by at least the percentage of the reduction in federal funds. After determining the State administration, the remaining reductions shall be allocated proportionately across the program and activity appropriations identified for that Block Grant in this section. In allocating a decrease in federal fund availability, the Department shall not eliminate the funding for a program or activity appropriated in this section unless it is related to the State administration.
Prior to allocating the change in federal fund availability, the proposed allocation must be approved by the Office of State Budget and Management. If the Department adjusts the allocation of any Block Grant due to changes in federal fund availability, then a report shall be made to the Joint Legislative Commission on Governmental Operations, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.
SECTION 5.1.(d)  All changes to the budgeted allocations to the Block Grants administered by the Department of Health and Human Services that are not specifically addressed in this section shall be approved by the Office of State Budget and Management, and a report shall be submitted to the Joint Legislative Commission on Governmental Operations for review prior to implementing the changes. All changes to the budgeted allocations to the Block Grant shall be reported immediately to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division. This subsection does not apply to block grant changes caused by legislative salary increases and benefit adjustments.
SECTION 5.1.(e)  The Department of Health and Human Services shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on positions funded from federal Block Grants. The report shall include the following for each Block Grant:
(1)	All State positions currently funded through the Block Grant, including permanent, temporary, and time‑limited positions.
(2)	Budgeted salary and fringe benefits for each position.
(3)	Identify the percentage of Block Grant funds used to fund each position.
The report shall be submitted no later than December 1, 2006.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT (TANF)
SECTION 5.1.(f)  The sum of five hundred eighty‑six thousand nine hundred thirty‑one dollars ($586,931) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to support administration of TANF‑funded programs.
SECTION 5.1.(g)  The sum of two million dollars ($2,000,000) appropriated under this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to provide domestic violence services to Work First recipients.  These funds shall be used to provide domestic violence counseling, support, and other direct services to clients.  These funds shall not be used to establish new domestic violence shelters or to facilitate lobbying efforts.  The Division of Social Services may use up to seventy‑five thousand dollars ($75,000) in TANF funds to support one administrative position within the Division of Social Services to implement this subsection.
Each county department of social services and the local domestic violence shelter program serving the county shall jointly develop a plan for utilizing these funds. The plan shall include the services to be provided and the manner in which the services shall be delivered. The county plan shall be signed by the county social services director or the director's designee and the domestic violence program director or the director's designee and submitted to the Division of Social Services by December 1, 2006. The Division of Social Services, in consultation with the Council for Women, shall review the county plans and shall provide consultation and technical assistance to the departments of social services and local domestic violence shelter programs, if needed.
The Division of Social Services shall allocate these funds to county departments of social services according to the following formula:  (i) each county shall receive a base allocation of five thousand dollars ($5,000); and (ii) each county shall receive an allocation of the remaining funds based on the county's proportion of the statewide total of the Work First caseload as of July 1, 2006, and the county's proportion of the statewide total of the individuals receiving domestic violence services from programs funded by the Council for Women as of July 1, 2006. The Division of Social Services may reallocate unspent funds to counties that submit a written request for additional funds.
SECTION 5.1.(h)  The sum of two million two hundred forty‑nine thousand six hundred forty‑two dollars ($2,249,642) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to expand after‑school programs and services for at‑risk children. The Department shall develop and implement a grant program to award grants to community‑based programs that demonstrate the ability to reach children at risk of teen pregnancy, school dropout, and gang participation. The Department shall award grants to community‑based organizations that demonstrate the ability to develop and implement linkages with local departments of social services, area mental health programs, schools, and other human services programs in order to provide support services and assistance to the child and family. These funds may be used to fund one position within the Division of Social Services to coordinate at‑risk after‑school programs and shall not be used for other State administration.
SECTION 5.1.(i)  The sum of twelve million four hundred fifty‑two thousand three hundred ninety‑one dollars ($12,452,391) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2006‑2007 fiscal year for child welfare improvements, shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services cases; to provide foster care and support services; to recruit, train, license, and support prospective foster and adoptive families; and to provide interstate and postadoption services for eligible families.
SECTION 5.1.(j)  The sum of three million dollars ($3,000,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Special Children Adoption Fund, for the 2006‑2007 fiscal year shall be used in accordance with Section 10.48 of this act.  The Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A‑50 and in foster care. Payments received from the Special Children Adoption Fund by participating agencies shall be used exclusively to enhance the adoption services program. No local match shall be required as a condition for receipt of these funds.
SECTION 5.1.(k)  The sum of one million eight hundred thousand dollars ($1,800,000) in this section appropriated to the Department of Health and Human Services in the TANF Block Grant for the 2006‑2007 fiscal year shall be used to implement N.C. FAST (North Carolina Families Accessing Services through Technology). The N.C. FAST Program involves the entire automation initiative through which families access services and local departments of social services deliver benefits, supervised by the Department of Health and Human Services, Divisions of Social Services, Aging and Adult Services, Medical Assistance, and Child Development. The statewide automated initiative shall be implemented in compliance with federal regulations in order to ensure federal financial participation in the project. The Department of Health and Human Services shall report on its compliance with this subsection to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than January 1, 2007.
SECTION 5.1.(l)  The sum of five hundred thousand dollars ($500,000) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2006‑2007 fiscal year shall be used to expand after‑school programs for at‑risk children attending middle school. The Department shall develop and implement a grant program to award funds to community‑based programs demonstrating the capacity to reach children at risk of teen pregnancy, school dropout, and gang participation. These funds shall not be used for training or administration at the State level. All funds shall be distributed to community‑based programs, focusing on those communities where similar programs do not exist in middle schools.
SECTION 5.1.(m)  In implementing the TANF Block Grant, the Department of Health and Human Services shall review policies, programs, and initiatives to ensure that they support men in their role as fathers and strengthen fathers' involvement in their children's lives.  The Department shall encourage county departments of social services to ensure their Work First programs emphasize responsible fatherhood and increased participation by noncustodial fathers.
SECTION 5.1.(n)  The sum of nineteen million five hundred ninety‑eight thousand three hundred twenty‑two dollars ($19,598,322) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2006‑2007 fiscal year for county demonstration grants shall be used for Work First demonstration projects implemented by county departments of social services. The county demonstration grants may be awarded for up to three years with all projects ending no later than the end of fiscal year 2008‑2009. The purpose of the county demonstration grants is to identify best practices that can be used by counties to improve the work participation rates for TANF recipients. The Division of Social Services is authorized to establish two time‑limited positions to manage the grant award process and monitor the demonstration projects through fiscal year 2008‑2009.
Funding provided under the county demonstration grants shall not be used to supplant local funds and counties shall be required to maintain the current level of effort and funding for the Work First program.

SOCIAL SERVICES BLOCK GRANT
SECTION 5.1.(o)  Social Services Block Grant funds appropriated to the North Carolina Inter‑Agency Council for Coordinating Homeless Programs and the North Carolina Housing Coalition are exempt from the provisions of 10A NCAC 71R.0201(3).
SECTION 5.1.(p)  The sum of two million seven hundred forty‑nine thousand six hundred forty‑two dollars ($2,749,642) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services and transferred to the Department of Juvenile Justice and Delinquency Prevention for the 2006‑2007 fiscal year shall be used to support the existing Support Our Students Program, including gang prevention, and to expand the Program statewide, focusing on low‑income communities in unserved areas. These funds shall not be used for administration of the Program.
SECTION 5.1.(q)  The sum of two million five hundred fifty thousand dollars ($2,550,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to support various child welfare training projects as follows:
(1)	Provide a regional training center in southeastern North Carolina.
(2)	Support the Masters Degree in Social Work/Baccalaureate Degree in Social Work Collaborative.
(3)	Provide training for residential child care facilities.
(4)	Provide for various other child welfare training initiatives.
SECTION 5.1.(r)  The sum of eight hundred thirty‑eight thousand dollars ($838,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services for the 2006‑2007 fiscal year shall be used to purchase services at maternity homes throughout the State.
SECTION 5.1.(s)  The sum of one million seven hundred six thousand sixty‑three dollars ($1,706,063) appropriated in this section in the Social Services Block Grant for child caring agencies for the 2006‑2007 fiscal year shall be allocated to the State Private Child Caring Agencies Fund.
SECTION 5.1.(t)  The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this section to the Department of Health and Human Services in the Social Services Block Grant for Boys and Girls Clubs for the 2006‑2007 fiscal year shall be used to make grants for approved programs. The Department of Health and Human Services, in accordance with federal regulations for the use of Social Services Block Grant funds, shall administer a grant program to award funds to the Boys and Girls Clubs across the State in order to implement programs that improve the motivation, performance, and self‑esteem of youths and to implement other initiatives that would be expected to reduce gang participation, school dropout, and teen pregnancy rates. The Department shall encourage and facilitate collaboration between the Boys and Girls Clubs and Support Our Students, Communities in Schools, and similar programs to submit joint applications for the funds if appropriate.
SECTION 5.1.(u)  The Department of Health and Human Services is authorized, subject to the approval of the Office of State Budget and Management, to transfer Social Services Block Grant funding allocated for departmental administration between divisions that have received administrative allocations from the Social Services Block Grant.

LOW‑INCOME HOME ENERGY ASSISTANCE PROGRAM
SECTION 5.1.(v)  Additional emergency contingency funds received may be allocated for Energy Assistance Payments or Crisis Intervention Payments without prior consultation with the Joint Legislative Commission on Governmental Operations. Additional funds received shall be reported to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division upon notification of the award. The Department of Health and Human Services shall not allocate funds for any activities, including increasing administration, other than assistance payments, without prior consultation with the Joint Legislative Commission on Governmental Operations.

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT
SECTION 5.1.(w)  The sum of no more than four hundred thousand dollars ($400,000) appropriated in this section to the Department of Health and Human Services in the Child Care and Development Fund Block Grant for the 2006‑2007 fiscal year may be used for the operations of the Medical Child Care Pilot.
SECTION 5.1.(x)  Payment for subsidized child care services provided with federal TANF funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.
SECTION 5.1.(y)  If funds appropriated through the Child Care and Development Fund Block Grant for any program cannot be obligated or spent in that program within the obligation or liquidation periods allowed by the federal grants, the Department may move funds to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order to use the federal funds fully.

MENTAL HEALTH BLOCK GRANT
SECTION 5.1.(z)  The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this section in the Mental Health Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2006‑2007 fiscal year, and the sum of four hundred twenty‑two thousand three dollars ($422,003) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2006‑2007 fiscal year shall be used to continue a Comprehensive Treatment Services Program for Children in accordance with Section 10.25 of S.L. 2005‑276.
SECTION 5.1.(aa)  The Department of Health and Human Services shall contract with the University of North Carolina at Chapel Hill for the purpose of providing psychology student stipends in the amount of fifty thousand dollars ($50,000) for the 2006‑2007 fiscal year. Twenty‑five thousand dollars ($25,000) of this contract shall be paid from the Mental Health Block Grant.

MATERNAL AND CHILD HEALTH BLOCK GRANT
SECTION 5.1.(bb)  If federal funds are received under the Maternal and Child Health Block Grant for abstinence education, pursuant to section 912 of Public Law 104‑193 (42 U.S.C. § 710), for the 2006‑2007 fiscal year, then those funds shall be transferred to the State Board of Education to be administered by the Department of Public Instruction. The Department of Public Instruction shall use the funds to establish an Abstinence Until Marriage Education Program and shall delegate to one or more persons the responsibility of implementing the program and G.S. 115C‑81(e1)(4). The Department of Public Instruction shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.
SECTION 5.1.(cc)  The Department of Health and Human Services shall ensure that there will be follow‑up testing in the Newborn Screening Program.

NER BLOCK GRANTS
SECTION 5.2.(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	$	1,000,000

	02.	Urgent Needs and Contingency	1,000,000

	03.	Scattered Site Housing	13,200,000

	04.	Economic Development	8,710,000

	05.	Community Revitalization	13,500,000

	06.	State Technical Assistance	450,000

	07.	Housing Development	2,000,000

	08.	Infrastructure	5,140,000

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT – 2007 Program Year	$	45,000,000

SECTION 5.2.(b)  Decreases in Federal Fund Availability. – If federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
SECTION 5.2.(c)  Increases in Federal Fund Availability for Community Development Block Grant. – Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows: each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
SECTION 5.2.(d)  Limitations on Community Development Block Grant Funds. – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to one million dollars ($1,000,000) may be used for State Administration; not less than one million dollars ($1,000,000) may be used for Urgent Needs and Contingency; up to thirteen million two hundred thousand dollars ($13,200,000) may be used for Scattered Site Housing; up to eight million seven hundred ten thousand dollars ($8,710,000) may be used for Economic Development, including Urban Redevelopment Grants and Small Business or Entrepreneurial Assistance; not less than thirteen million five hundred thousand dollars ($13,500,000) shall be used for Community Revitalization; up to four hundred fifty thousand dollars ($450,000) may be used for State Technical Assistance; up to two million dollars ($2,000,000) may be used for Housing Development; up to five million one hundred forty thousand dollars ($5,140,000) may be used for Infrastructure. If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
SECTION 5.2.(e)  Increase Capacity for Nonprofit Organizations. – Assistance to nonprofit organizations to increase their capacity to carry out CDBG‑eligible activities in partnership with units of local government is an eligible activity under any program category in accordance with federal regulations.  Capacity building grants may be made from funds available within program categories, program income, or unobligated funds.
SECTION 5.2.(f)  Department of Commerce Demonstration Grants in Partnership with Rural Economic Development Center, Inc. – The Department of Commerce, in partnership with the Rural Economic Development Center, Inc., shall award up to two million two hundred fifty thousand dollars ($2,250,000) in demonstration grants to local governments in very distressed rural areas of the State. These grants shall be used to address critical infrastructure and entrepreneurial needs and to provide small business assistance.
SECTION 5.2.(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

Contingency and Emergency Fund allocations
SECTION 6.1.(a)  Section 6.2 of S.L. 2005‑276 is repealed.
SECTION 6.1.(b)  Funds in the amount of five million dollars ($5,000,000) for the 2006‑2007 fiscal year are appropriated to the Contingency and Emergency Fund.  Except as provided in subsection (c) of this section, these funds shall be expended only as:
(1)	Required by a court, Industrial Commission, or administrative hearing officer's order;
(2)	Required to call out the national guard; or
(3)	Required to respond to an unanticipated disaster such as a fire, hurricane, or tornado, if funds for this purpose are not available in the Reserve for Disaster Expenses as authorized in G.S. 166A.
SECTION 6.1.(c)  Up to five hundred thousand dollars ($500,000) may be spent for purposes other than those set out in subsection (b) of this section. Notwithstanding any other provision of law authorizing expenditures from the Contingency and Emergency Fund, no more than five hundred thousand dollars ($500,000) of these funds shall be expended for purposes other than those set out in subsection (b) of this section.

authorization to establish receipt‑supported positions
SECTION 6.2.  Notwithstanding G.S. 143‑34.1(a1), a department, institution, or other agency of State government may establish receipt‑supported positions authorized in this act upon approval by the Director of the Budget.  The Director, if necessary, may establish a receipt‑supported position pursuant to this section at an annual salary amount different from the salary amount set out in this act if (i) funds are available from the proposed funding source and (ii) the alternative salary amount remains within the established salary range grade identified for the job classification of the affected receipt‑supported position established in this act. The Director shall not change the job classifications or increase the number of receipt‑supported positions specified in this act without prior consultation with the Joint Legislative Commission on Governmental Operations.

Consultation Not Required prior to establishing or increasing fees pursuant to the executive budget act
SECTION 6.3.  Notwithstanding G.S. 12‑3.1, an agency is not required to consult with the Joint Legislative Commission on Governmental Operations prior to establishing or increasing a fee as authorized or anticipated in the Current Operations and Capital Improvements Appropriations Act of 2006 or the Senate Appropriations Committee Report on the Continuation, Expansion and Capital Budgets, which was distributed in the Senate Appropriations and Base Budget Committee and used to explain this act.

no fee increases which the general assembly has rejected
SECTION 6.4.  Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143‑16.7.  No fee increases that the General Assembly has rejected.
Notwithstanding any other provision of law, no fee shall be increased if the General Assembly has rejected an increase of that fee for the current fiscal period. For the purpose of this section, the General Assembly has rejected a fee increase when that fee increase is included in a bill which fails a reading, or if the fee increase is included in the version of a bill that passes one house, but the bill is enacted without the fee increase."

State Emergency Response Account
SECTION 6.5.(a)  G.S. 166A‑6.01(b)(2) reads as rewritten:
"(b)	Disaster Assistance Programs – Type I Disaster. – In the event that a Type I disaster is proclaimed, the Governor may make State funds available for disaster assistance in the disaster area in the form of individual assistance and public assistance as provided in this subsection.
…
(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 percent (1%) 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.
c.	An eligible entity that receives a public assistance grant pursuant to this subsection may use the grant for the following purposes only:
1.	Debris clearance.
2.	Emergency protective measures.
3.	Roads and bridges.
4.	Crisis counseling.
5.	Assistance with public transportation needs."
SECTION 6.5.(b)  Article 1 of Chapter 166A of the General Statutes is amended by adding a new section to read:
"§ 166A‑6.02.  State Emergency Response Account.
(a)	Account Established. – There is established a State Emergency Response Account as a reserve in the General Fund. Any funds appropriated to the Account shall remain available for expenditure as provided by this section, unless directed otherwise by the General Assembly.
(b)	Purpose of Funds. – The Governor may spend funds from the Account for the following purposes:
(1)	To cover the start‑up costs of State Emergency Response Team operations for an emergency that poses an imminent threat of a Type I, Type II, or Type III disaster as defined by G.S. 166A‑6.
(2)	To cover the cost of first responders to a Type I, Type II, or Type III disaster and any related supplies and equipment needed by first responders that are not provided for under subdivision (1) of this subsection.
All other types of disaster assistance authorized by G.S. 166A‑6 shall continue to be financed by the funds made available under G.S. 166A‑6.01.
(c)	Reporting Requirement. – The Governor shall report to the Joint Legislative Commission on Governmental Operations and to the Chairs of the Appropriations Committees of the Senate and House of Representatives on any expenditures from the State Emergency Response Account no later than 30 days after making the expenditure. The report shall include a description of the emergency and type of action taken."
SECTION 6.5.(c)  G.S. 166A‑4(1) reads as rewritten:
"(1a)	Disaster. – An occurrence or imminent threat of widespread or severe damage, injury, or loss of life or property resulting from any natural or man‑made accidental, military or paramilitary cause."
SECTION 6.5.(d)  G.S. 166A‑4 is amended by adding a new subdivision to read:
"(1)	Account. – The State Emergency Response Account  established in G.S. 166A‑6.02."

Information Technology Fund Availability Statement
SECTION 6.6.  Section 6.13(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 6.13.(a)  The availability used to support appropriations made in this act from the Information Technology Fund established in G.S. 147‑33.72H is as follows:
	FY 2005‑2006	FY 2006‑2007
Estimated Unencumbered Balance,
June 30, 2006		$1,120,000

Receipts from Information Technology
	Enterprise Fee (G.S. 147‑33.82)	$5,000,000	$5,000,000

Transfer from June 30, 2005, Information Technology 
	Services Internal Service Fund cash balance to 
		support statewide IT initiatives	$5,000,000

			Appropriation from General Fund	$24,375,000		$50,112,229

Total Funds Available	$34,375,000	$56,232,229."

Information Technology Appropriations
SECTION 6.7.  Section 6.14 of S.L. 2005‑276 reads as rewritten:
"SECTION 6.14. Appropriations are made from the Information Technology Fund established in G.S. 147‑33.72H as follows:

Office of Information Technology Services	FY 2005‑2006	FY 2006‑2007
	To establish  two project management assistant
		positions and one enterprise licensing position
		and to purchase and maintain asset management
		software and enterprise licenses.	$1,600,000	$1,400,000
	To continue existing activities including project
		management assistance, security, asset management,
		legal support, and legacy system assessment.	$5,100,000	 $3,300,000
	To provide services previously supported by 
		cross subsidies in the rate structure, including
		State portal maintenance, security services,
		enterprise identity management, and office 
		operations.	$6,300,000	$5,800,000
	To facilitate consolidation of information 
		technology services in State agencies.	$500,000
	To establish two attorneys to assist Information
		Technology Services (ITS) with complex
		information technology procurements.		$298,826

Office of State Controller
									
	To implement replacement of the State's
		human resources and payroll system
		with a new system, Building Enterprise
		Access for North Carolina's Core
		Operations (BEACON)/State Business
		Infrastructure Program (SBIP).	$20,875,000	$44,313,403 
	To provide funding to integrate and deploy
	the following data warehousing projects as 
	part of BEACON/SBIP:
		(i)	Department of Revenue: Guest Worker
		Compliance Project.
		(ii)	Office of StatePersonnel:
		Workforce Planning Project.
		(iii) Office of the State Auditor:
		Business Intelligence Software
		and Data Warehousing Project.		$1,000,000

		Total Appropriation						$34,375,000	     $56,112,229

Funds appropriated under this section are subject to the reporting requirement set out in G.S. 147‑33.72H."

review of information technology contracts
SECTION 6.8.  G.S. 147‑33.103 reads as rewritten:
"§ 147‑33.103. Attorney General contract assistance; use of private counsel.
(a)	At the request of the State Chief Information Officer, the Attorney General shall provide legal advice and services necessary to implement this Part.
(b)	Repealed by Session Laws 2004‑129, s. 26, effective July 1, 2004.
(c)	The State Chief Information Officer shall retain private counsel to provide legal advice and services and to ensure that the State's interests are protected regarding information technology contracts that obligate the State to expend over five million dollars ($5,000,000) over the life of the contract. The requirements of G.S. 114‑2.3 do not apply to this subsection.
The State Chief Information Officer may use funds from the Information Technology Fund, which is established in G.S. 147‑33.72H, for this purpose."

AMEND CIVIL PENALTY AND FORFEITURE FUND AVAILABILITY
SECTION 6.9.(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 6.9.(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 6.9.(c)  G.S. 115C‑457.2  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 6.9.(d)  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.

funds for enrollment increases
SECTION 6.10.  G.S. 143‑11 is amended by adding a new subsection to read:
"(a1)	In developing the budget, the Director shall consider the information on student enrollment increases submitted to the Director by the State Board of Education, the State Board of Community Colleges, and the Board of Governors of The University of North Carolina. The Director shall include in the continuation budget the amount the Director proposes to fund for the enrollment increases for public schools, community colleges, and the university system."

Housing Assistance Funds
SECTION 6.11.  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. The Department shall review these persons' applications for CHAF assistance using the same criteria employed by the SBA to determine eligibility for an SBA Real Property Disaster loan. The applicants shall be eligible for CHAF assistance if it is determined that they would have failed to qualify for assistance under the SBA Real Property disaster loan criteria and that they otherwise meet the criteria for CHAF."

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 funds necessary to implement the teacher salary schedules set out in subsection (b) of this section and for longevity in accordance with subsection (c) of this section, including funds for the employer's retirement and social security contributions 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.
SECTION 7.1.(b)  The following monthly salary schedules shall apply for the 2006‑2007 fiscal year 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)  Annual longevity payments for teachers shall be at the rate of one and one‑half percent (1.5%) of base salary for 10 to 14 years of State service, two and twenty‑five hundredths percent (2.25%) of base salary for 15 to 19 years of State service, three and twenty‑five hundredths percent (3.25%) of base salary for 20 to 24 years of State service, and four and one‑half percent (4.5%) of base salary for 25 or more years of State service.  The longevity payment shall be paid in a lump sum once a year.
SECTION 7.1.(d)  Certified public schoolteachers 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 schoolteachers 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.(e)  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.(f)  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.(g)  Certified school nurses who are employed in the public schools as nurses shall be paid on the "M" salary schedule.
SECTION 7.1.(h)  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 funds necessary to implement the salary schedules 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 and in cooperative innovative high schools, shall be determined in accordance with the following schedule:
Number of Teachers
Classification	Supervised

Assistant Principal
Principal I		Fewer than 11 Teachers
Principal II	11‑21 Teachers
Principal III	22‑32 Teachers
Principal IV	33‑43 Teachers
Principal V	44‑54 Teachers
Principal VI	55‑65 Teachers
Principal VII		66‑100 Teachers
Principal VIII		More than 100 Teachers

The number of teachers supervised includes teachers and assistant principals paid from State funds only; it does not include teachers or assistant principals paid from non‑State funds or the principal or teacher assistants.
The beginning classification for principals in alternative schools and in cooperative innovative high school programs 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.  For the 2006‑2007 fiscal year and subsequent fiscal years, the stipend shall not exceed the difference between the beginning salary of an assistant principal and any fellowship funds received by the intern as a full‑time student, including awards of the Principal Fellows Program. The Principal Fellows Program or the school of education where the intern participates in a full‑time masters in school administration program shall supply the Department of Public Instruction with certification of eligible full‑time interns.
SECTION 7.2.(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	$3,079	$6,012
	School Administrator II	$3,268	$6,378
	School Administrator III	$3,468	$6,765
	School Administrator IV	$3,608	$7,035
	School Administrator V	$3,753	$7,319
	School Administrator VI	$3,982	$7,762
	School Administrator VII	$4,142	$8,075
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	$4,396	$8,566
	Superintendent II	$4,667	$9,084
	Superintendent III	$4,952	$9,637
	Superintendent IV	$5,225	$10,221
	Superintendent V	$5,578	$10,844
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.
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 five percent (5%), 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 five percent (5%), 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 five percent (5%). 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 five percent (5%) for the 2006‑2007 fiscal year.
SECTION 7.4.(d)  Effective July 1, 2006, permanent full‑time noncertified public school employees whose salaries are supported from the State's General Fund shall be paid a minimum salary of at least twenty thousand one hundred twelve dollars ($20,112) per year. Permanent, full‑time employees working on a schedule requiring less than 12 months' service per year and permanent part‑time employees, whose salaries are supported from the State's General Fund, shall be paid the minimum salary pro rata. The fair minimum wage salary adjustment provided by this section shall be calculated and awarded after any across‑the‑board salary increases authorized by this 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‑five hundredths percent (1.55%). 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.

DISADVANTAGED STUDENT SUPPLEMENTAL FUNDING
SECTION 7.10.  Section 7.8 of S.L. 2005‑276 is amended by 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:
(1)	Local education agencies (LEAs) in counties with wealth greater than ninety percent (90%) of the statewide average shall receive one teaching position per 20.5 DSSF population;
(2)	LEAs in counties with wealth not less than eighty percent (80%) and not greater than ninety percent (90%) of the statewide average shall receive one teaching position per 20 DSSF population;
(3)	LEAs in counties with wealth less than eighty percent (80%) of the statewide average shall receive one teaching position per 19.5 DSSF population;
(4)	LEAs receiving DSSF funds in 2005‑2006 shall receive one teaching position per 16 DSSF population. These LEAs shall receive no less than the DSSF amount allotted in 2005‑2006.
For the purpose of this subsection, wealth shall be calculated under the low wealth supplemental formula."

LEARN AND EARN HIGH SCHOOLS
SECTION 7.11.  Section 7.32 of S.L. 2005‑276 is amended by adding the following new subsections:
"SECTION 7.32.(e)  Enrollment fees and tuition for The University of North Carolina courses in which Learn and Earn students are enrolled are allowable uses of these funds. Tuition costs may include laboratory fees assessed to all students enrolled in the course or a similar course. 
SECTION 7.32.(f)  Textbooks required for college courses in which Learn and Earn students are enrolled may be purchased with these funds. 
SECTION 7.32.(g)  Payment of fees from these funds by local school administrative units 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 7.32.(h)  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."

NC WISE POSITIONS
SECTION 7.12.(a)  Notwithstanding G.S. 143‑23, the State Board of Education may, in consultation with the Office of Information Technology Services, use funds appropriated in this act for NC WISE to create a maximum of  20 positions and incur expenditures necessary to transfer the maintenance and administration of the NC WISE system from the vendor to the Department of Public Instruction. 
SECTION 7.12.(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.

LITERACY COACHES
SECTION 7.13.(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 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 7.13.(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.

expand LEA access to EDUCATION VALUE ADDED ASSESSMENT SYSTEM (EVAAS)
SECTION 7.14.(a)  The State Board of Education shall identify local school administrative units to receive funds for purchasing licenses to EVAAS diagnostic software based on criteria that shall include (i) identified need, (ii) readiness, and (iii) county wealth, as defined in the Low‑Wealth Supplemental Funding Formula. The Board shall identify as many units as possible within funds available for this purpose.
SECTION 7.14.(b)  Funds appropriated for EVAAS in the 2005‑2006 fiscal year shall not revert, but shall be carried forward to the 2006‑2007 fiscal year for expenditures for training related to expanding local school administrative units' access to the EVAAS tool.  Any such funds not spent by June 30, 2007, shall revert to the General Fund.
SECTION 7.14.(c)  This section becomes effective June 30, 2006.

clarify  definition: public school capital funds
SECTION 7.15.  G.S. 115C‑546.2(d)(2)a. reads as rewritten:
"a.	"Effective county tax rate" means the actual county tax rate, including any countywide supplemental taxes levied for the benefit of public schools, multiplied by a three‑year weighted average of the most recent annual sales assessment ratio studies."

NORTH CAROLINA VIRTUAL public SCHOOL
SECTION 7.16.(a)  The North Carolina Virtual Public School (NCVPS)  program shall report to the State Board of Education and shall maintain an administrative office at the Department of Public Instruction
SECTION 7.16.(b)  The Director of NCVPS will ensure that course quality standards are established and met and that all e‑learning opportunities offered by State‑funded entities to public school students are consolidated under the NC Virtual Public School Program, eliminating course duplication. The Director shall report on the proposed consolidation and operating plan for 2007‑2008 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 7.16.(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 7.16.(d)  The State Board of Education shall develop an allotment formula for funding e‑learning, effective in the 2007‑2008 fiscal year. In developing the formula, the Board shall consider, at a minimum, the following:
(1)	The number of students in average daily membership (ADM) projected to enroll in e‑learning,
(2)	The projected cost of fees for e‑learning courses,
(3)	The extent to which projected enrollment in e‑learning courses affects funding required for other allotments that are based on ADM.
SECTION 7.16.(e)  Any funds appropriated in this act for the NCVPS program that are not expended in fiscal year 2006‑2007 shall be carried forward for expenditure in fiscal year 2007‑2008. Any such funds that remain unexpended on June 30, 2008, shall revert to the General Fund.

DISTANCE EDUCATION
SECTION 7.17.  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.
In preparation for the 2007‑2008 fiscal year, the Office of State Budget and Management is urged to include costs associated with increases in enrollment in Distance Education courses in the continuation budget.

TRANSFER MORE AT FOUR PROGRAM AND OFFICE OF SCHOOL READINESS TO THE DEPARTMENT OF PUBLIC INSTRUCTION
SECTION 7.18.(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 7.18.(b)  Section 10.67(a) of S.L. 2005‑276 is repealed.
SECTION 7.18.(c)  Section 10.67(b) of S.L. 2005‑276 reads as rewritten: 
"SECTION 10.67.(b)  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 7.18.(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 7.18.(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 7.18.(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 7.18.(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 7.18.(h)  Section 10.67(g) of S.L. 2005‑276 is repealed.
SECTION 7.18.(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."

administrative funding for teaching fellows program
SECTION 7.19.(a)  G.S. 115C‑363.23A(f) reads as rewritten:
"(f)	All funds appropriated to or otherwise received by the Teaching Fellows Program 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 shall be used for scholarship loans granted under the Teaching Fellows Program. With the prior approval of the General Assembly in the Current Operations Appropriations Act, the revolving fund may also be used for campus and summer program support, and costs related to disbursement of awards and collection of loan repayments.
The Public School Forum, as administrator for the Teaching Fellows Program, may use up to eight hundred ten thousand dollars ($810,000) for the 2006‑2007 fiscal year from the fund balance for costs associated with administration of the Teaching Fellows Program. In subsequent fiscal years, this amount shall be increased by the Office of State Budget and Management as necessary to provide salary increases to Program employees commensurate with legislative salary increases for State employees."
SECTION 7.19.(b)  The additional funding provided for administration of the Teaching Fellows Program in G.S. 115C‑363.23A(f), as rewritten by subsection (a) of this section, shall be used to meet current administrative expenses of the Program, expand minority recruitment initiatives, and expand the Program to up to four additional campuses using a merit‑based selection process developed by the North Carolina Teaching Fellows Commission.
The Teaching Fellows Program shall report to the Joint Legislative Education Oversight Committee by December 1, 2006, on the campuses selected and on the selection process.

REFUND OF LOCAL SALES AND USE TAXES TO A LOCAL SCHOOL ADMINISTRATIVE UNIT
SECTION 7.20.(a)  G.S. 105‑467(b) reads as rewritten:
"(b)	Exemptions and Refunds. – The State exemptions and exclusions contained in G.S. 105‑164.13, the State sales and use tax holiday contained in G.S. 105‑164.13C, and the State refund provisions contained in G.S. 105‑164.14 apply to the local sales and use tax authorized to be levied and imposed under this Article. Except as provided in this subsection, a taxing county may not allow an exemption, exclusion, or refund that is not allowed under the State sales and use tax. A local school administrative unit and a joint agency created by interlocal agreement among local school administrative units pursuant to G.S. 160A‑462 to jointly purchase food service‑related materials, supplies, and equipment on their behalf is allowed an annual refund of sales and use taxes paid by it under this Article on direct purchases of tangible personal property and services, other than electricity and telecommunications service. Sales and use tax liability indirectly incurred by the entity on building materials, supplies, fixtures, and equipment that become a part of or annexed to any building or structure that is owned or leased by the entity and is being erected, altered, or repaired for use by the entity is considered a sales or use tax liability incurred on direct purchases by the entity for the purpose of this subsection. A request for a refund shall be in writing and shall include any information and documentation required by the Secretary. A request for a refund is due within six months after the end of the entity's fiscal year. Refunds applied for more than three years after the due date are barred."
SECTION 7.20.(b)  Section 7.51(c) of S.L. 2005‑276, as amended by Section 7 of S.L. 2005‑345, reads as rewritten:
"SECTION 7.51.(c)  Subsection (b) of this section becomes effective July 1, 2006. Notwithstanding the provisions of G.S. 105‑164.44H, for the 2006‑2007 fiscal year, the amount transferred to the State Public School Fund each quarter shall equal one‑fourth of the amount refunded under G.S. 105‑164.14(c)(2b) and (2c) during the 2005‑2006 fiscal year for State sales and use taxes only plus or minus the percentage of that amount by which the total collection of State sales and use tax increased or decreased during the preceding fiscal year. The remainder of this section becomes effective July 1, 2005, and applies to sales made on or after that date."
SECTION 7.20.(c)  This section becomes effective July 1, 2005, and applies to sales made on or after that date.

salary SUPPLEMENT for Math and Science Teachers Pilot Program
SECTION 7.21.(a)  Funds in the amount of five hundred fifteen thousand one hundred fifteen dollars ($515,115) are appropriated in this act for a pilot program providing for a salary supplement for newly hired teachers (as defined by the State Board of Education) of mathematics or science at the middle or high school level.  The State Board of Education shall develop the pilot program and select three local school administrative units to participate in the pilot program.  In selecting the units, the Board shall target low‑performing local school administrative units and take geographical diversity into account. Selected local school administrative units shall use salary supplement funds for newly hired teachers at low‑performing schools.
Each of the pilot units shall receive funds to provide for a salary supplement of fifteen thousand dollars ($15,000) to up to 10 newly hired teachers at the middle or high school level who have nonprovisional certification in and are teaching in one or more of the following areas of teacher certification:
(1)	Middle grades mathematics,
(2)	Middle grades science,
(3)	Mathematics (9‑12),
(4)	Science (9‑12),
(5)	Earth science (9‑12),
(6)	Biology (9‑12),
(7)	Physics (9‑12), and
(8)	Chemistry (9‑12).
SECTION 7.21.(b)  In accordance with G.S. 115C‑325 and by way of clarification, it shall not constitute a demotion as that term is defined in G.S. 115C‑325(a)(4) if:
(1)	A teacher who receives a salary supplement pursuant to subsection (a) of this section is reassigned to a school at which there is no such salary supplement;
(2)	A teacher who receives a salary supplement pursuant to subsection (a) of this section moves to a different local school administrative unit; or
(3)	A teacher receives a salary supplement pursuant to subsection (a) of this section and the salary supplement is subsequently discontinued or reduced.
SECTION 7.21.(c)  Funds not needed to pay for salary supplements shall revert to the General Fund.
SECTION 7.21.(d)  The State Board of Education shall report to the Joint Legislative Education Oversight Committee on the design of the pilot program prior to implementation. The State Board of Education shall report to the Joint Legislative Education Oversight Committee on the implementation of the pilot program by January 15, 2007.

PART VIII. COMMUNITY COLLEGES

SALARIES OF COMMUNITY COLLEGE FACULTY AND PROFESSIONAL STAFF
SECTION 8.1.  Section 8.3 of S.L. 2005‑276 is amended by adding a new subsection to read:
"SECTION 8.3.(b1)  For the 2006‑2007 school year, the minimum salaries for nine‑month, full‑time, curriculum community college faculty shall be as follows:
	Education Level	Minimum Salary
		2006‑2007
Vocational Diploma/Certificate or Less	$31,728
Associate Degree or Equivalent	$32,195
Bachelors Degree	$34,220
Masters Degree or Education Specialist	$36,016
Doctoral Degree	$38,607
No full‑time faculty member shall earn less than the minimum salary for his or her education level.
The pro rata hourly rate of the minimum salary for each education level shall be used to determine the minimum salary for part‑time faculty members."

use of funds appropriated for isothermal community college
SECTION 8.2.  Funds appropriated for composite testing at Isothermal Community College and not used for that purpose may be used to purchase equipment for the Lifelong Learning Center located at Isothermal Community College.

USE OF FUNDS FOR THE COLLEGE INFORMATION SYSTEM PROJECT
SECTION 8.3.(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 8.3.(b)  Notwithstanding G.S. 143‑23, the Community Colleges System Office may, subject to the approval of the Office of State Budget and Management, in consultation with the Office of Information Technology Services, and after consultation with the Joint Legislative Commission on Governmental Operations, use funds appropriated in this act for the College Information System Project to create a maximum of 20 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 8.3.(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 8.3.(d)  Subsection (a) of this section becomes effective June 30, 2006.

CARRYFORWARD FOR EQUIPMENT
SECTION 8.4.(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 8.4.(b)  This section becomes effective June 30, 2006.

NC COMMUNITY COLLEGE SYSTEM MAY USE STATE FUNDS IN LIEU OF FEDERAL FUNDS DUE TO FEDERAL MANDATES
SECTION 8.5.  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 8.6.  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.

STUDY OF NEW AND EXPANDING INDUSTRY TRAINING
SECTION 8.7.  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.

MATCHING REQUIREMENT FOR BOND FUNDS
SECTION 8.8.  Section 3(d) of S.L. 2000‑3 reads as rewritten:
"Section 3.(d)  If the State Board of Community Colleges determines that a community college has not met its matching requirements by July 1, 2007, with respect to a capital improvement project for which bond proceeds are allocated in this act, the Board shall certify that fact to the State Treasurer by October 1, 2007. All of these bond proceeds with respect to which the Board certifies that the matching requirement has not been met by July 1, 2007, shall be placed by the State Treasurer in a special account within the Community Colleges Bond Fund and shall be used for making grants to community colleges. Bond proceeds in the special account shall be allocated among the community colleges in accordance with the following conditions:
(1)	The State Board of Community Colleges shall generate, by October 1, 2007, a priority ranking of legitimate community college capital improvement needs using a formula based on objective meaningful factors relevant to capital needs, including actual and projected enrollment, space requirements, current capacity, construction costs, and any other factors the State Board considers relevant.
(2)	The State Board of Community Colleges shall provide the State Treasurer a projected allocation of the proceeds in the special account in accordance with this priority ranking, except that:
a.	No projected allocation shall be made for a community college that the Board certified in accordance with this subsection had failed to meet a matching requirement.
b.	No more than four million dollars ($4,000,000) shall be allocated to a single community college.
c.	Funds shall not be allocated for more than one project per community college.
(3)	The proceeds of grants made from bond proceeds in the special account shall be allocated and expended for paying the cost of community college capital improvements in accordance with this allocation by the State Board of Community Colleges, to the extent and as provided in this act. The Director of the Budget is empowered, when the Director of the Budget determines it is in the best interest of the State and the North Carolina Community College System to do so, and if the cost of a particular project is less than the projected allocation, to use the excess funds to increase the size of that project or increase the size of any other project itemized in this section, or to increase the amount allocated to a particular community college within the aggregate amount of funds available under this section. The Director of the Budget shall consult with the Advisory Budget Commission and the Joint Legislative Commission on Governmental Operations before making these changes."

community college low‑wealth funding
SECTION 8.9.(a)  G.S. 115D‑31.3 is amended by adding a new subsection to read:
"(j)	Use of funds in low‑wealth counties. –  Funds retained by colleges or distributed to colleges pursuant to this section may be used to supplement local funding for maintenance of plant if the college does not receive maintenance of plant funds pursuant to G.S. 115D‑31.2, and if the county in which the main campus of the community college is located:
(1)	Is designated as a Tier 1 or Tier 2 county in accordance with G.S. 105‑129.3;
(2)	Had an unemployment rate of at least two percent (2%) above the State average or greater than seven percent (7%), whichever is higher, in the prior calendar year; and
(3)	Is a county whose wealth, as calculated under the formula for distributing supplemental funding for schools in low‑wealth counties, is eighty percent (80%) or less of the State average.
Funds may be used for this purpose only after all local funds appropriated for maintenance of plant have been expended."
SECTION 8.9.(b)  This section becomes effective June 30, 2006.

PART iX. UNIVERSITIES

UNC‑NCCCS 2+2 E‑Learning Initiative
SECTION 9.1.  The University of North Carolina and Community Colleges System Office shall report by September 1, 2006, 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.

teacher education program enrollment plans
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 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 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.

North Carolina in the World Project
SECTION 9.3.  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) nonrecurring appropriation for North Carolina in the World Project no later than March 31, 2007.

Study the feasibility of Adding North Carolina Wesleyan College To UNC System
SECTION 9.4.(a)  The Board of Governors of The University of North Carolina shall study the feasibility of making North Carolina Wesleyan College a constituent institution of The University of North Carolina.  The study shall include all of the following:
(1)	Mission. – The Board of Governors shall evaluate the potential missions of the campus that would meet the academic and economic needs of the region, the State, and of the University System. The Board of Governors shall take into account the need to avoid duplication of curriculum and programs at other campuses, particularly those within the same geographic area, unless the need for duplication is warranted. The Board of Governors shall seek recommendations, suggestions, and comments from community leaders, educational experts, and business leaders in defining the mission of the new campus. Particular focus shall be placed on utilizing the campus in a manner that addresses both the economic and educational challenges of the region in a unique and focused manner, such as in the areas of science, technology, education, and economic development.
(2)	Cost. – The Board of Governors shall analyze the potential operating costs of the campus. Factors such as the mission, staff and faculty salaries, benefits, total faculty and staff levels, total projected student enrollment, facility needs, and tuition rates shall be taken into account. 
(3)	Facility Needs. – The Board of Governors shall consider what additional facility needs there may be, taking into account the proposed mission of the campus. Examples of those needs may be lab facility upgrades, new buildings to house an expanded student population, and associated infrastructure expansion.
(4)	Asset Transfer. – The Board of Governors shall obtain legal and financial analyses to determine if there are any restrictions attached to any of the College's assets (title to property, gifts to endowment, assets purchased with restricted grant funds, etc.) that would prohibit the transfer of the assets to the State. If there are restrictions, then the analyses shall also include the steps necessary to lift the restrictions and the costs of obtaining a clear title. 
(5)	Liability Analysis. – The Board of Governors shall also obtain a legal analysis to determine whether there are pending liabilities against the campus or reasonably foreseeable future liabilities against the campus. If there are such liabilities, the legal analysis shall also address the action needed to avoid transfer of any liability to the State.
(6)	Transition of Current Students/Programs. – The Board of Governors shall consider how best to handle the transition of the currently enrolled student population, both on and off campus, into continuing or new curriculum programs during the conversion period. 
(7)	Personnel. – The Board of Governors shall assess the employment status of current personnel to determine what, if any, contractual and other employment issues may arise in the conversion.
(8)	Legislative Action. – The Board of Governors shall determine the legislative action and statutory amendments needed to authorize and implement the conversion.
SECTION 9.4.(b)  Of the funds available to the Board of Governors of The University of North Carolina, the sum of fifty thousand dollars ($50,000) for the 2006‑2007 fiscal year shall be used to conduct the study required by this act.

North Carolina Progress Board
SECTION 9.5.(a)  G.S. 143B‑372.1 reads as rewritten:
"§ 143B‑372.1.  North Carolina Progress Board.
(a)	The North Carolina Progress Board is established. The Board shall be located administratively in the Board of Governors of The University of North Carolina and may be located at any constituent institution within The University of North Carolina, or at any institution to which it is invited formally, but shall exercise all its prescribed statutory powers independently of the Board of Governors or the institution at which it resides.
(b)	The North Carolina Progress Board shall consist of 24 members of statewide prominence as follows:
	
(2)	Six persons appointed by the Governor, none of whom shall be State employees or officers;
(3)	Six persons appointed by the Speaker of the House of Representatives, two of whom shall be members of the House of Representatives;
(4)	Six persons appointed by the President Pro Tempore of the Senate, two of whom shall be members of the Senate; and
(5)	Six persons appointed by the North Carolina Progress Board.
(c)	The Progress Board shall elect a chair from among the membership of the Progress Board to serve at the pleasure of the Progress Board. The Progress Board may elect  any officers as it sees fit.
(d)	The North Carolina Progress Board shall meet at least twice annually on the call of the chair or as additionally provided by the North Carolina Progress Board. A quorum is 12 members of the Board. Members may not send designees to board meetings, nor may they vote by proxy.
(e)	Board appointments shall be for terms to begin July 1, 1999, with subsequent appointments to be made as terms expire or resignations occur. Of the Governor's appointments, two shall be for one‑year terms, two shall be for two‑year terms, two shall be for three‑year terms, and two shall be for four‑year terms. Of the appointments made by the Speaker of the House of Representatives, the President Pro Tempore of the Senate, and the North Carolina Progress Board, one member appointed by each shall be appointed for a one‑year term, one member appointed by each shall be appointed for a two‑year term, one member appointed by each shall be appointed for a three‑year term, and two members appointed by each shall be appointed for a four‑year term. As terms expire, successors shall be appointed for four‑year terms.
(d1)	Effective July 1, 2006, the initial term for the additional member appointed by the Speaker of the House of Representatives to the North Carolina Progress Board shall be for a four‑year term to begin on July 1, 2006, and the initial term for the additional member appointed by the President Pro Tempore of the Senate to the North Carolina Progress Board shall be for a four‑year term to begin on July 1, 2006. The Governor shall not appoint any members on July 1, 2006, for four‑year terms.
(f)	No member may be appointed to more than two consecutive terms. A member of the House of Representatives appointed by the Speaker of the House vacates membership on the North Carolina Progress Board when that person is no longer a member of the House of Representatives, except that if that person is in office at the expiration of the term of office in the House of Representatives but has not been elected to the next term, that person shall continue to serve until the convening of the regular session. A member of the Senate appointed by the President Pro Tempore of the Senate vacates membership on the North Carolina Progress Board when that person is no longer a member of the Senate, except that if that person is in office at the expiration of the term of office in the Senate but has not been elected to the next term, that person shall continue to serve until the convening of the regular session."
SECTION 9.5.(b)  G.S. 143B‑372.3 reads as rewritten:
"§ 143B‑372.3.  Staff.
(a)	The Progress Board or its supporting nonprofit entity shall hire or contract with support staff and obtain any other resources and take any other actions reasonably required to fulfill the duties of the Progress Board as set forth in G.S. 143B‑372.2.
(b)	The Office of State Budget and Management shall also provide support, information, reports, and other assistance to the North Carolina Progress Board as requested.
(c)	Repealed by Session Laws 1999‑237, s. 10.12(a)."

Graduate Nurse Scholarship Program for Faculty Production
SECTION 9.6.  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."

Management Flexibility to Reorganize Budget Code 16012 UNC Board of Governors Related Educational Programs
SECTION 9.7.  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 9.8.  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."

Nursing Scholars Program Modification
SECTION 9.9.(a)  G.S. 90‑171.61 reads as rewritten:
"§ 90‑171.61.  Nursing Scholars Program established; administration.
(a)	There is established the Nursing Scholars Program. The North Carolina Nursing Scholars Commission shall determine selection criteria, methods of selection, and shall select recipients of scholarship loans made under the Nursing Scholars Program.
(b)	The Nursing Scholars Program shall be used to provide the following:
(1)	Scholarship loans in amounts of up to six thousand five hundred dollars ($6,500) per year, for each scholarship of no more than four years per recipient, to North Carolina residents interested in preparing to become  registered nurses through associate or baccalaureate degree programs or through diploma programs.
			
(5)	Scholarship loans of six thousand five hundred dollars ($6,500) per year, per recipient, for two years of study leading to a master of science in nursing degree for residents already holding a baccalaureate degree in nursing.
In awarding scholarship loans  pursuant to subdivisions (1) and (5) of this subsection, the Commission may award pro rata scholarship loans to recipients enrolled at least half‑time in study to become registered nurses or to attain a master of science in nursing degree. In awarding all scholarship loans, the Commission shall give priority to full‑time students over part‑time students. The State Education Assistance Authority shall adopt specific rules to regulate scholarship loans to part‑time  nursing students.
Within current funds available or with any additional funds provided by the General Assembly for this purpose, the Commission may set aside slots for scholarship loans prescribed by  subdivision (1) of this subsection to enable licensed practical nurses to become registered nurses. 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 a baccalaureate nursing 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 and retain loans under the Nursing Scholars Program. 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 Nursing Scholars Program shall be awarded only to applicants who meet the standards set by the Commission and who agree to practice nursing in North Carolina upon completion of the nursing education program supported by the loan.
(d)	The Commission shall develop and administer the Nursing Scholars Program in cooperation with nursing schools at institutions approved by the Commission and the North Carolina Board of Nursing. The Nursing Scholars Program 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 and to provide leadership for the nursing profession.
(e)	The Commission may form regional review committees within North Carolina 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 Nursing Scholars Program.
(f)	Upon the naming of recipients of loans from the Nursing Scholars Program, 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: rule‑making, 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."
SECTION 9.9.(b)  This section applies to all scholarship loans awarded or renewed on or after July 1, 2006.

UNC Board of Governors Medical and Dental Scholarships
SECTION 9.10.(a)  Section 9.9(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 9.9.(a)  The current Board of Governors' Dental Scholarship Program, under the purview of the Board of Governors of The University of North Carolina, shall make any awards to students admitted after July 1, 2005, as scholarship loan awards. The Board of Governors' Dental Scholarship Program is administered by the Board of Governors of The University of North Carolina. The Board of Governors' Dental Scholarship Program shall be used to provide a four‑year scholarship loan of relevant tuition and fees, mandatory medical insurance, required laptop computers for first‑year students, required dental equipment, and an annual payment of five thousand dollars ($5,000) per year to students who have been accepted for admission to the School of Dentistry at the University of North Carolina at Chapel Hill. The Board may adopt standards, including minimum grade point average and DAT scores, for awarding these scholarship loans to ensure that only the most qualified students receive them. The Board shall make an effort to identify and encourage minority and economically disadvantaged youth to enter the program. All scholarship loans shall be evidenced by notes made payable to the Board that shall bear interest at the rate of ten percent (10%) per year beginning September 1 after completion of the program, or immediately after termination of the scholarship loan, whichever is earlier. The scholarship loan may be terminated by the recipient withdrawing from school or by the recipient not meeting the standards set by the Board. The Board shall forgive the loan if, within seven years after graduation, the recipient practices dentistry in North Carolina for four years. An extension of the seven‑year period for satisfaction of the service requirements for the scholarship loan may be granted subject to the approval on the finding of extenuating circumstances by the State Education Assistance Authority. Such extenuating circumstances may include, but are not be limited to, participation in a dental residency program. The Board shall also forgive the loan if it finds that it is impossible for the recipient to practice dentistry in North Carolina for four years, within seven years after graduation, because of the death or permanent disability of the recipient. All unused funds appropriated to or otherwise received by the Board for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds shall revert to the General Fund at the end of each fiscal year."
SECTION 9.10.(b)  Section 9.10(a) reads as rewritten:
"SECTION 9.10.(a)  The current Board of Governors' Medical Scholarship Program, under the purview of the Board of Governors of The University of North Carolina, shall make any awards to students admitted after July 1, 2005, as scholarship loan awards. The Board of Governors' Medical Scholarship Program is administered by the Board of Governors of The University of North Carolina. The Board of Governors' Medical Scholarship Program shall be used to provide a four‑year scholarship loan of relevant tuition and fees, mandatory medical insurance, required laptop computers, and an annual payment of five thousand dollars ($5,000) per year to students who have been accepted for admission to either Duke University School of Medicine, Brody School of Medicine at East Carolina University, the University of North Carolina at Chapel Hill School of Medicine, or the Wake Forest University School of Medicine. The Board may adopt standards, including minimum grade point average and MCAT scores, for awarding these scholarship loans to ensure that only the most qualified students receive them. The Board shall make an effort to identify and encourage minority and economically disadvantaged youth to enter the program. All scholarship loans shall be evidenced by notes made payable to the Board that shall bear interest at the rate of ten percent (10%) per year beginning September 1 after completion of the program, or immediately after termination of the scholarship loan, whichever is earlier. The scholarship loan may be terminated by the recipient withdrawing from school or by the recipient not meeting the standards set by the Board. The Board shall forgive the loan if, within seven years after graduation, the recipient practices medicine in North Carolina for four years. An extension of the seven‑year period for satisfaction of the service requirements of the scholarship loan may be granted subject to the approval of the State Education Assistance Authority.  Such extenuating circumstances may include, but not be limited to, participation in a medical residency program.  The Board shall also forgive the loan if it finds that it is impossible for the recipient to practice medicine in North Carolina for four years, within seven years after graduation, because of the death or permanent disability of the recipient. All unused funds appropriated to or otherwise received by the Board for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds shall revert to the General Fund at the end of each fiscal year."
SECTION 9.10.(c)  This section is effective when it becomes law and applies to all scholarship loans issued after July 1, 2005.

NC School of Science and Math/High School Constituent Institution
SECTION 9.11.(a)  G.S. 116‑2 reads as rewritten:
"§ 116‑2.  Definitions.
As used in this Article, unless the context clearly indicates a contrary intent:
(1)	"Board" means the Board of Governors of the University of North Carolina.
(2)	"Board of trustees" means the board of trustees of a constituent institution.
(3)	"Chancellor" means the chancellor of a constituent institution.
(4)	"Constituent institution" or "institution" means one of the 16 public  institutions of higher education, to wit, the University of North Carolina at Chapel Hill, North Carolina State University at Raleigh, the University of North Carolina at Greensboro, the University of North Carolina at Charlotte, the University of North Carolina at Asheville, the University of North Carolina at Wilmington, Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina Agricultural and Technical State University, North Carolina Central University, North Carolina School of the Arts, Pembroke State University, redesignated effective July 1, 1996, as the "University of North Carolina at Pembroke", Western Carolina University, and Winston‑Salem State University, and the constituent high school, the North Carolina School of Science and Mathematics.
(5)	"President" means the President of the University of North Carolina.
(6)	"Vending facilities" has the same meaning as it does in G.S. 143‑12.1." 
SECTION 9.11.(b)  G.S. 116‑4 reads as rewritten:
"§ 116‑4.  Constituent institutions of the University of North Carolina.
 The University of North Carolina shall be composed of the following institutions of higher education: the University of North Carolina at Chapel Hill, North Carolina State University at Raleigh, the University of North Carolina at Greensboro, the University of North Carolina at Charlotte, the University of North Carolina at Asheville, the University of North Carolina at Wilmington, Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina Agricultural and Technical State University, North Carolina Central University, North Carolina School of the Arts, Pembroke State University, redesignated effective July 1, 1996, as the "University of North Carolina at Pembroke", Western Carolina University and Winston‑Salem State University, and the constituent high School, the North Carolina School of Science and Mathematics." 
SECTION 9.11.(c)  G.S. 116‑12 reads as rewritten:
"§ 116‑12.  Property and obligations.
All property of whatsoever kind and all rights and privileges held by the Board of Higher Education and by the Boards of Trustees of Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina Agricultural and Technical State University, North Carolina Central University, North Carolina School of the Arts, Pembroke State University, redesignated effective July 1, 1996, as the "University of North Carolina at Pembroke", Western Carolina University and Winston‑Salem State University, as said property, rights and privileges may exist immediately prior to July 1, 1972, shall be, and hereby are, effective July 1, 1972, transferred to and vested in the Board of Governors of the University of North Carolina. All obligations of whatsoever kind of the Board of Higher Education and of the Boards of Trustees of Appalachian State University, East Carolina University, Elizabeth City State University, Fayetteville State University, North Carolina Agricultural and Technical State University, North Carolina Central University, North Carolina School of the Arts, Pembroke State University, redesignated effective July 1, 1996, as the "University of North Carolina at Pembroke", Western Carolina University and Winston‑Salem State University, as said obligations may exist immediately prior to July 1, 1972, shall be, and the same hereby are, effective July 1, 1972, transferred to and assumed by the Board of Governors of the University of North Carolina. Any property, real or personal, held immediately prior to July 1, 1972, by a board of trustees of a constituent institution for the benefit of that institution or by the University of North Carolina for the benefit of any one or more of its six institutions, shall from and after July 1, 1972, be kept separate and distinct from other property held by the Board of Governors, shall continue to be held for the benefit of the institution or institutions that were previously the beneficiaries and shall continue to be held subject to the provisions of the respective instruments, grants or other means or process by which any property right was acquired. All property of whatsoever kind and all rights and privileges held by the Board of Trustees of the North Carolina School of Science and Mathematics, as said property, rights and privileges may exist immediately prior to July 1, 2007, shall be and hereby are, effective July 1, 2007, transferred to and vested in the Board of Governors of The University of North Carolina. All obligations of whatsoever kind of the Board of Trustees of the North Carolina School of Science and Mathematics as said obligations may exist immediately prior to July 1, 2007, shall be, and the same hereby are, effective July 1, 2007, transferred to and assumed by the Board of Governors of The University of North Carolina. In case a conflict arises as to which property, rights or privileges were held for the beneficial interest of a particular institution, or as to the extent to which such property, rights or privileges were so held, the Board of Governors shall determine the issue, and the determination of the Board shall constitute final administrative action. Nothing in this Article shall be deemed to increase or diminish the income, other revenue or specific property which is pledged, or otherwise hypothecated, for the security or liquidation of any obligations, it being the intent that the Board of Governors shall assume said obligations without thereby either enlarging or diminishing the rights of the holders thereof."
SECTION 9.11.(d)  G.S. 116‑17 reads as rewritten:
"§ 116‑17.  Purchase of annuity or retirement income contracts for faculty members, officers and employees.
Notwithstanding any provision of law relating to salaries and/or salary schedules for the pay of faculty members, administrative officers, or any other employees of universities, colleges, constituent institutions, and other institutions of higher learning as named and set forth in this Article, and other State agencies qualified as educational institutions under section 501(c)(3) of the United States Internal Revenue Code, the governing boards of any such universities, colleges, constituent institutions, and other institutions of higher learning may authorize the business officer or agent of same to enter into annual contracts with any of the faculty members, administrative officers and employees of said institutions  which provide for a reduction in salary below the total established compensation or salary schedule for a term of one year. The financial officer or agent shall use the funds derived from the reduction in the salary of the faculty member, administrative officer or employee to purchase a nonforfeitable annuity or retirement income contract for the benefit of said faculty member, administrative officer or employee of said universities, colleges and institutions. A faculty member, administrative officer or employee who has agreed to a salary reduction for this purpose shall not have the right to receive the amount of the salary reduction in cash or in any other way except the annuity or retirement income contract. Funds used for the purchase of an annuity or retirement income contract shall not be in lieu of any amount earned by the faculty member, administrative officer or employee before his election for a salary reduction has become effective. The agreement for salary reductions referred to herein shall be effected under any necessary regulations and procedures adopted by the various governing boards of the various institutions  and on forms prepared by said governing boards. Notwithstanding any other provision of this section or law, the amount by which the salary of any faculty member, administrative officer or employee is reduced pursuant to this section shall not be excluded, but shall be included, in computing and making payroll deductions for social security and retirement system purposes, and in computing and providing matching funds for retirement system purposes.
In lieu of the annuity and related contracts provided for under this section, interests in custodial accounts pursuant to Section 401(f), Section 403(b)(7), and related sections of the Internal Revenue Code of 1986 as amended may be purchased for the benefit of qualified employees under this section with the funds derived from the reduction in the salaries of such employees."
SECTION 9.11.(e)  The catch line of G.S. 116‑30.2 reads as rewritten:
"§ 116‑30.2.  Appropriations to special responsibility constituent institutions."
SECTION 9.11.(f)  G.S. 116‑30.2(b) is repealed.
SECTION 9.11.(g)  G.S. 116‑31(d) reads as rewritten:
"(d)	Except as provided in G.S. 116‑65, effective July 1, 1973, each of the 16  institutions of higher education set out in G.S. 116‑2(4) shall have board of trustees composed of 13 persons chosen as follows:
(1)	Eight elected by the Board of Governors,
(2)	Four appointed by the Governor, and
(3)	The president of the student government ex officio.
The Board of Trustees of the North Carolina School of Science and Mathematics shall be established in accordance with G.S. 116‑233."
SECTION 9.11.(h)  G.S. 116‑40.22(c) reads as rewritten:
"(c)	Tuition and Fees. – Notwithstanding any provision in Chapter 116 of the General Statutes to the contrary, in addition to any tuition and fees set by the Board of Governors pursuant to G.S. 116‑11(7), the Board of Trustees of the institution may recommend to the Board of Governors tuition and fees for program‑specific and institution‑specific needs at that institution without regard to whether an emergency situation exists and not inconsistent with the actions of the General Assembly. The institution shall retain any tuition and fees set pursuant to this subsection for use by the institution. Notwithstanding this subsection, neither the Board of Governors of The University of North Carolina nor its Board of Trustees shall impose any tuition or mandatory fee at the North Carolina School of Science and Mathematics without the approval of the General Assembly."
SECTION 9.11.(i)  G.S. 116‑143 reads as rewritten:
"§ 116‑143.  State‑supported institutions of higher education required to charge tuition and fees.
The Board of Governors of The University of North Carolina shall fix the tuition and fees, not inconsistent with actions of the General Assembly, at the institutions of higher education enumerated in G.S. 116‑4 in such amount or amounts as it may deem best, taking into consideration the nature of each institution and program of study and the cost of equipment and maintenance; and each institution shall charge and collect from each student, at the beginning of each semester or quarter, tuition, fees, and an amount sufficient to pay other expenses for the term.
In the event that said students are unable to pay the cost of tuition and required academic fees as the same may become due, in cash, the said several boards of trustees are hereby authorized and empowered, in their discretion, to accept the obligation of the student or students together with such collateral or security as they may deem necessary and proper, it being the purpose of this Article that all students in State institutions of higher learning shall be required to pay tuition, and that free tuition is hereby abolished. Notwithstanding this section, neither the Board of Governors of The University of North Carolina nor its Board of Trustees shall impose any tuition or mandatory fee at the North Carolina School of Science and Mathematics without the approval of the General Assembly.
Inasmuch as the giving of tuition and fee waivers, or especially reduced rates, represent in effect a variety of scholarship awards, the said practice is hereby prohibited except when expressly authorized by statute or by the Board of Governors of The University of North Carolina; and, furthermore, it is hereby directed and required that all budgeted funds expended for scholarships of any type must be clearly identified in budget reports.
Notwithstanding the above provision relating to the abolition of free tuition, the Board of Governors of The University of North Carolina may, in its discretion, provide regulations under which a full‑time faculty member of the rank of full‑time instructor or above, and any full‑time staff member of The University of North Carolina may during the period of normal employment enroll for not more than one course per semester in The University of North Carolina free of charge for tuition, provided such enrollment does not interfere with normal employment obligations and further provided that such enrollments are not counted for the purpose of receiving general fund appropriations."
SECTION 9.11.(j)  G.S. 116‑230.1 reads as rewritten:
"§ 116‑230.1.  Policy.
It is hereby declared to be the policy of the State to foster, encourage, promote, and provide assistance in the development of skills and careers in science and mathematics among the people of the State."
SECTION 9.11.(k)  G.S. 116‑231 reads as rewritten:
"§ 116‑231.  Reestablishment of the North Carolina School of Science and Mathematics as a Constituent High School of The University of North Carolina.
The North Carolina School of Science and Mathematics is hereby reestablished, as a constituent high school of The University of North Carolina, and shall be governed by the Board of Governors as prescribed in this Chapter and a Board of Trustees as prescribed in this Article."
SECTION 9.11.(l)  G.S. 116‑232 reads as rewritten:
"§ 116‑232.  Purposes.
The purposes of the School shall be to foster the educational development of North Carolina high school students who are academically talented in the areas of science and mathematics and show promise of exceptional development and global leadership through participation in a residential educational setting emphasizing instruction in the areas of science and mathematics; and to provide instruction, methods, and curricula designed to improve teaching and learning in North Carolina and the nation with an emphasis on distance education and programs that expand pathways for students into careers in science and mathematics."
SECTION 9.11.(m)  The introductory language of G.S. 116‑233(a) reads as rewritten:
"(a)	Notwithstanding the provisions of G.S. 116‑31(d), there shall be a Board of Trustees of the School, which shall consist of 27 members as follows:
…"
SECTION 9.11.(n)  G.S. 116‑234 reads as rewritten:
"§ 116‑234.  Board of Trustees; meetings; rules of procedure; officers.
(a)	The Board of Trustees shall meet at least three times a year and may hold special meetings at any time, at the call of the chairman or upon petition addressed to the chairman by at least four of the members of the Board.
(b)	Notwithstanding the provisions of G.S. 116‑32, the Board of Trustees shall elect a chairman and a vice‑chairman; no ex officio member may hold such an office.
(c)	The Board of Trustees shall determine its own rules of procedure and may delegate to such committees as it may create such of its powers as it deems appropriate.
(d)	Members of the Board of Trustees, other than ex officio members under G.S. 116‑233(a)(3), shall receive such per diem compensation and necessary travel and subsistence expenses while engaged in the discharge of their official duties as is provided by law for members of State boards and commissions. Ex officio members under G.S. 116‑233(a)(3) shall be reimbursed for travel expenses as provided by G.S. 138‑6."
SECTION 9.11.(o)  The catch line of G.S. 116‑235 reads as rewritten:
"§ 116‑235.  Board of Trustees; additional powers and duties."
SECTION 9.11.(p)  G.S. 116‑235 is amended by adding a new subsection to read:
"(a)	In addition to the powers enumerated in Chapter 116, Article I, Part 3, the Board of Trustees shall have the powers and duties set out in this section."
SECTION 9.11.(q)  G.S. 116‑235(a) reads as rewritten:
"(a1)	Academic Program. –
(1)	The Board of Trustees shall establish the standard course of study for the School. This course of study shall set forth the subjects to be taught in each grade and the texts and other educational materials on each subject to be used in each grade.
(2)	The Board of Trustees shall adopt regulations governing class size, the instructional calendar, the length of the instructional day, and the number of instructional days in each term."
SECTION 9.11.(r)  G.S. 116‑235(b) reads as rewritten:
"(b)	Students. –
(1)	Admission of Students. – The School shall admit students in accordance with criteria, standards, and procedures established by the Board of Trustees. To be eligible to be considered for admission, an applicant must be either a legal resident of the State, as defined by G.S. 116‑143.1(a)(1), or a student whose parent is an active duty member of the armed services, as defined by G.S. 116‑143.3(2), who is abiding in this State incident to active military duty at the time the application is submitted, provided the student shares the abode of that parent; eligibility to remain enrolled in the School shall terminate at the end of any school year during which a student becomes a nonresident of the State. The Board of Trustees shall ensure, insofar as possible without jeopardizing admission standards, that an equal number of qualified applicants is admitted to the program and to the residential summer institutes in science and mathematics from each of North Carolina's congressional districts. In no event shall the differences in the number of qualified applicants offered admission to the program from each of North Carolina's congressional districts be more than two and one‑half percentage points from the average number per district who are offered admission.
(2)	School Attendance. – Every parent, guardian, or other person in this State having charge or control of a child who is enrolled in the School and who is less than 16 years of age shall cause such child to attend school continuously for a period equal to the time which the School shall be in session. No person shall encourage, entice, or counsel any child to be unlawfully absent from the School. Any person who aids or abets a student's unlawful absence from the School shall, upon conviction, be guilty of a Class 1 misdemeanor. The Chancellor of the School shall be responsible for implementing such additional policies concerning compulsory attendance as shall be adopted by the Board of Trustees, including regulations concerning lawful and unlawful absences, permissible excuses for temporary absences, maintenance of attendance records, and attendance counseling.
(3)	Student Discipline. – Rules of conduct governing students of the School shall be established by the Board of Trustees. The Chancellor, other administrative officers, and all teachers, substitute teachers, voluntary teachers, teacher aides and assistants, and student teachers in the School may use reasonable force in the exercise of lawful authority to restrain or correct pupils and maintain order.
SECTION 9.11.(s)  G.S. 116‑235(c) through G.S. 116‑235(h) is repealed.
SECTION 9.11.(t)  G.S. 116‑236 is repealed.
SECTION 9.11.(u)  G.S. 116‑237 is repealed.
SECTION 9.11.(v)  G.S. 116‑238 is repealed
SECTION 9.11.(w)  G.S.66‑58(c)(3) reads as rewritten:
"(c)	The provisions of subsection (a) shall not prohibit:
…
(3)	The business operation of endowment funds established for the purpose of producing income for educational purposes; for purposes of this section, the phrase "operation of endowment funds" shall include the operation by constituent institutions of The University of North Carolina of campus stores, the profits from which are used exclusively for awarding scholarships to defray the expenses of students attending the institution; provided, that the operation of the stores must be approved by the board of trustees of the institution, and the merchandise sold shall be limited to educational materials and supplies, gift items and miscellaneous personal‑use articles. Provided further that, notwithstanding this subsection, profits from a campus store operated by the endowment of the North Carolina School of Science and Mathematics are used exclusively for student activities, athletics, and other programs to enhance student life. Provided further that sales at campus stores are limited to employees of the institution and members of their immediate families, to duly enrolled students of the campus at which a campus store is located and their immediate families, to duly enrolled students of other campuses of the University of North Carolina other than the campus at which the campus store is located, to other campus stores and to other persons who are on campus other than for the purpose of purchasing merchandise from campus stores. It is the intent of this subdivision that campus stores be established and operated for the purpose of assuring the availability of merchandise described in this Article for sale to persons enumerated herein and not for the purpose of competing with stores operated in the communities surrounding the campuses of the University of North Carolina."
SECTION 9.11.(x)  G.S. 66‑58(g) is repealed.
SECTION 9.11.(y)  G.S. 126‑5(c1)(8) reads as rewritten:
"(c1)	Except as to the provisions of Articles 6 and 7 of this Chapter, the provisions of this Chapter shall not apply to:
…
(8)	Instructional and research staff, physicians, and dentists of The University of North Carolina, including the faculty of the North Carolina School of Science and Mathematics.
…"
SECTION 9.11.(z)  G.S. 126‑5(c1)(11) is repealed.
SECTION 9.11.(aa)  The catch line of G.S. 135‑5.1 reads as rewritten:
"§ 135‑5.1.  Optional retirement program for The University of North Carolina."
SECTION 9.11.(bb)  G.S. 135‑5.1(a) reads as rewritten:
"(a)	An Optional Retirement Program provided for in this section is authorized and established and shall be implemented by the Board of Governors of The University of North Carolina. The Optional Retirement Program shall be underwritten by the purchase of annuity contracts, which may be both fixed and variable contracts or a combination thereof, or financed through the establishment of a trust, for the benefit of participants in the Program. Participation in the Optional Retirement Program shall be limited to University personnel who are eligible for membership in the Teachers' and State Employees' Retirement Program and who are:
(1)	Administrators and faculty of The University of North Carolina with the rank of instructor or above;
(2)	The President and employees of The University of North Carolina who are appointed by the Board of Governors on recommendation of the President pursuant to G.S. 116‑11(4), 116‑11(5), and 116‑14 or who are appointed by the Board of Trustees of a constituent institution of The University of North Carolina upon the recommendation of the Chancellor pursuant to G.S. 116‑40.22(b);
(3)	Nonfaculty instructional and research staff who are exempt from the State Personnel Act, as defined by the provisions of G.S. 126‑5(c1)(8), and the faculty of the North Carolina School of Science and Mathematics; and
(4)	Field faculty of the Cooperative Agriculture Extension Service, and tenure track faculty in North Carolina State University agriculture research programs who are exempt from the State Personnel Act and who are eligible for membership in the Teachers' and State Employees' Retirement System pursuant to G.S. 135‑3(1), who in any of the cases described in this subsection (i) had been members of the Optional Retirement Program under the provisions of Chapter 338, Session Laws of 1971, immediately prior to July 1, 1985, or (ii) have sought membership as required in subsection (b), below. Under the Optional Retirement Program, the State and the participant shall contribute, to the extent authorized or required, toward the purchase of such contracts or deposited in such trust on the participant's behalf."
SECTION 9.11.(cc)  G.S. 143‑597(a) is amended by adding a new subdivision to read:
"(7)	The North Carolina School of Science and Mathematics."
SECTION 9.11.(dd)  This section becomes effective July 1, 2007. Subsection (bb) of this section applies only to eligible persons who are employees as of July 1, 2007, or who are employed thereafter.

Expand Tuition Waiver Program for UNC Faculty & Staff
SECTION 9.12.  G.S. 116‑143 reads as rewritten:
"§ 116‑143.  State‑supported institutions of higher education required to charge tuition and fees.
(a)	The Board of Governors of the University of North Carolina shall fix the tuition and fees, not inconsistent with actions of the General Assembly, at the institutions enumerated in G.S. 116‑4 in such amount or amounts as it may deem best, taking into consideration the nature of each institution and program of study and the cost of equipment and maintenance; and each institution shall charge and collect from each student, at the beginning of each semester or quarter, tuition, fees, and an amount sufficient to pay other expenses for the term.
(b)	In the event that said students are unable to pay the cost of tuition and required academic fees as the same may become due, in cash, the said several boards of trustees are hereby authorized and empowered, in their discretion, to accept the obligation of the student or students together with such collateral or security as they  may deem necessary and proper, it being the purpose of this Article that all students in State institutions of higher learning shall be required to pay tuition, and that free tuition is hereby abolished.
(c)	Inasmuch as the giving of tuition and fee waivers, or especially reduced rates, represent in effect a variety of scholarship awards, the said practice is hereby prohibited except when expressly authorized by statute or by the Board of Governors of the University of North Carolina; and, furthermore, it is hereby directed and required that all budgeted funds expended for scholarships of any type must be clearly identified in budget reports.
(d)	Notwithstanding the above provision relating to the abolition of free tuition, the Board of Governors of the University of North Carolina may, in its discretion, provide regulations under which a full‑time faculty member of the rank of full‑time instructor or above, and any full‑time staff member of the University of North Carolina may during the period of normal employment enroll for not more than  three courses per year in the University of North Carolina free of charge for tuition, provided such enrollment does not interfere with normal employment obligations and further provided that such enrollments are not counted for the purpose of receiving general fund appropriations."

Tuition and Contractual Grants for Teaching/Nursing
SECTION 9.13.(a)  G.S. 116‑19 reads as rewritten:
"§ 116‑19.  Contracts with private institutions to aid North Carolina students and licensure students; reporting requirement.
(a)	In order to encourage and assist private institutions to continue to educate North Carolina students and licensure students, the State Education Assistance Authority may enter into contracts with the institutions under the terms of which an institution receiving any funds that may be appropriated pursuant to this section would agree that, during any fiscal year in which such funds were received, the institution would provide and administer scholarship funds for needy North Carolina students and licensure students in an amount at least equal to the amount paid to the institution, pursuant to this section, during the fiscal year. Under the terms of the contracts the State Education Assistance Authority would agree to pay to the institutions, subject to the availability of funds, a fixed sum of money for each North Carolina student and licensure student enrolled at the institutions for the regular academic year, said sum to be determined by appropriations that might be made from time to time by the General Assembly pursuant to this section. Funds appropriated pursuant to this section shall be paid by the State Education Assistance Authority to an institution on certification of the institution showing the number of North Carolina students and licensure students enrolled at the institution as of October 1 of any year for which funds may be appropriated. For purposes of this subsection, "needy North Carolina students and licensure students" are those eligible students and licensure students who have financial need as determined by the institution under the institutional methodology or the federal methodology as defined by the State Education Assistance Authority. For purposes of this subsection, "institutional methodology" means a need‑analysis formula, developed by College Scholarship Service, that determines the student's or licensure student's and his or her family's capacity to pay for postsecondary education each year.
(b)	The State Education Assistance Authority shall document the number of full‑time equivalent North Carolina undergraduate students and full‑time and less than full‑time licensure students that are enrolled in off‑campus programs and the State funds collected by each institution pursuant to G.S. 116‑19 for those students. The State Education Assistance Authority shall also document the number of scholarships and the amount of the scholarships that are awarded under G.S. 116‑19 to students and licensure students enrolled in off‑campus programs. An "off‑campus program" is any program offered for degree credit away from the institution's main permanent campus.
The State Education Assistance Authority shall include in its annual report to the Joint Legislative Education Oversight Committee the information it has compiled and its findings regarding this program."
SECTION 9.13.(b)  G.S. 116‑20 reads as rewritten:
"§ 116‑20.  Scholarship and contract terms; base period.
In order to encourage and assist private institutions to educate additional numbers of North Carolinians, the Board of Governors of the University of North Carolina is hereby authorized to enter into contracts within the institutions under the terms of which an institution receiving any funds that may be appropriated pursuant to this section would agree that, during any fiscal year in which such funds were received, the institution would provide and administer scholarship funds for needy North Carolina students and licensure students in an amount at least equal to the amount paid to the institution, pursuant to this section, during the fiscal year. Under the terms of the contracts the Board of Governors of the University of North Carolina would agree to pay to the institutions, subject to the availability of funds, a fixed sum of money for each North Carolina student and licensure student enrolled as of October 1 of any year for which appropriated funds may be available, over and above the number of North Carolina students enrolled in that institution as of October 1, 1997, which shall be the base date for the purpose of this calculation. Funds appropriated pursuant to this section shall be paid by the State Education Assistance Authority to an institution upon recommendation of the Board of Governors of the University of North Carolina and on certification of the institution showing the number of North Carolina students and licensure students enrolled at the institution as of October 1 of any year for which funds may be appropriated over the number enrolled on the base date. In the event funds are appropriated for expenditure pursuant to this section and funds are also appropriated, for the same fiscal year, for expenditure pursuant to G.S. 116‑19, students and licensure students who are enrolled at an institution in excess of the number enrolled on the base date may be counted under this section for the purpose of calculating the amount to be paid to the institution, but the same students and licensure students may also be counted under G.S. 116‑19, for the purpose of calculating payment to be made under that section."
SECTION 9.13.(c)  G.S. 116‑21.1 reads as rewritten:
"§ 116‑21.1.  Financial aid for North Carolina students and licensure students attending private institutions of higher education in North Carolina.
(a)	Funds shall be appropriated each fiscal year in the Current Operations Appropriations Act to the Board of Governors of The University of North Carolina for aid to institutions and shall be disbursed in accordance with the provisions of G.S. 116‑19, 116‑21, and 116‑22.
(b)	The funds appropriated in compliance with this section shall be placed in a separate, identifiable account in each eligible institution's budget or chart of accounts. All funds in the account shall be provided as scholarship funds for needy North Carolina students and licensure students during the fiscal year. Each student and licensure student awarded a scholarship from this account shall be notified of the source of the funds and of the amount of the award. Funds not utilized under G.S. 116‑19 shall be available for the tuition grant program as defined in G.S. 116‑21.2."
SECTION 9.13.(d)  G.S. 116‑21.2 reads as rewritten:
"§ 116‑21.2.  Legislative tuition grants to aid students and licensure students attending private institutions of higher education.
(a)	In addition to any funds appropriated pursuant to G.S. 116‑19 and in addition to all other financial assistance made available to institutions, or to persons attending these institutions, there is granted to each full‑time North Carolina undergraduate student attending an approved institution as defined in G.S. 116‑22, a sum, to be determined by the General Assembly for each academic year which shall be distributed to the full‑time undergraduate student as provided by this subsection.
(a1)	The legislative tuition grant provided by this section shall also be granted to each full‑time licensure student who is enrolled in a program intended to result in a license in teaching or nursing at an approved institution. The legislative tuition grant provided by this section shall be awarded on a pro rata basis to any licensure student who is enrolled less than full‑time in a program intended to result in a license in teaching or nursing at an approved institution. The legislative tuition grant and prorated legislative tuition grant authorized under this subsection shall be paid for undergraduate courses only.(b)	The tuition grants provided for in this section shall be administered by the State Education Assistance Authority pursuant to rules adopted by the State Education Assistance Authority not inconsistent with this section. The State Education Assistance Authority shall not approve any grant until it receives proper certification from an approved institution that the student or licensure student applying for the grant is eligible. Upon receipt of the certification, the State Education Assistance Authority shall remit at the times as it prescribes the grant to the approved institution on behalf, and to the credit, of the student or licensure student.
(c)	Except as provided in subsection (a1) of this section, in the event a student on whose behalf a grant has been paid is not enrolled and carrying a minimum academic load as of the tenth classroom day following the beginning of the school term for which the grant was paid, the institution shall refund the full amount of the grant to the State Education Assistance Authority. If a licensure student on whose behalf a prorated grant has been paid in accordance with subsection (a1) of this section is not enrolled in the undergraduate class as of the tenth classroom day following the beginning of the school term for which the grant was paid, the institution shall refund the full amount of the grant to the State Education Assistance Authority. Each approved institution shall be subject to examination by the State Auditor for the purpose of determining whether the institution has properly certified eligibility and enrollment of students and licensure students and credited grants paid on behalf of them.
(d)	In the event there are not sufficient funds to provide each eligible student or licensure student with a full grant as provided by subsection (a) of this section or a full or a prorated grant as provided by subsection (a1) of this section:
(1)	The Board of Governors of The University of North Carolina, with the approval of the Office of State Budget and Management, may transfer available funds to meet the needs of the programs provided by subsections (a), (a1), and (b) of this section; and
(2)	Each eligible student and licensure student shall receive a pro rata share of funds then available for the remainder of the academic year within the fiscal period covered by the current appropriation.
(e)	Any remaining funds shall revert to the General Fund."
SECTION 9.13.(e)  G.S. 116‑21.3 reads as rewritten:
"§ 116‑21.3.  Legislative tuition grant limitations.
(a)	For purposes of this section, an "off‑campus program" is any program offered for degree credit away from the institution's main permanent campus.
(b)	No legislative tuition grant funds shall be expended for a program at an off‑campus site of a private institution, as defined in G.S. 116‑22(1), established after May 15, 1987, unless (i) the private institution offering the program has previously notified and secured agreement from other private institutions operating degree programs in the county in which the off‑campus program is located or operating in the counties adjacent to that county or (ii) the degree program is neither available nor planned in the county with the off‑campus site or in the counties adjacent to that county.
(c)	Any member of the armed services, as defined in G.S. 116‑143.3(a), abiding in this State incident to active military duty, who does not qualify as a resident for tuition purposes, as defined under G.S. 116‑143.1, is eligible for a legislative tuition grant pursuant to this section if the member is enrolled as a full‑time undergraduate student or as a licensure student. The member's legislative tuition grant shall not exceed the cost of tuition less any tuition assistance paid by the member's employer.
(d)	A legislative tuition grant authorized under G.S. 116‑21.2(a) shall be reduced by twenty‑five percent (25%) for any individual student who has completed 140 semester credit hours or the equivalent of 140 semester credit hours."
SECTION 9.13.(f)  G.S. 116‑21.4(b) reads as rewritten:
"(b)	Expenditures made pursuant to G.S. 116‑19, 116‑20, 116‑21.1, or 116‑21.2 shall not be used for any student or licensure student who:
(1)	Is incarcerated in a State or federal correctional facility for committing a Class A, B, B1, or B2 felony; or
(2)	Is incarcerated in a State or federal correctional facility for committing a Class C through I felony and is not eligible for parole or release within 10 years."
SECTION 9.13.(g)  G.S. 116‑22 is amended by adding a new subdivision to read:
"(1b)	'Licensure student' shall mean a person who:
a.	Has a bachelors degree;
b.	Is enrolled either full‑time or less than full‑time in a program intended to result in licensure in teaching or nursing;
c.	Attends an institution located in the State; and
d.	Qualifies as a resident of North Carolina in accordance with definitions of residency that may from time to time be adopted by the Board of Governors of The University of North Carolina and published in the residency manual of the Board."

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

CHANGE REPORTING DATE OF AGING STUDY COMMISSION
SECTION 10.1.  The third paragraph of Section 10.40A.(p) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.40A.(p)  
…
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.
…"

Rate Setting For Child Caring Institutions
SECTION 10.2.(a)  Section 10.47(b) of S.L. 2005‑276 is repealed.
SECTION 10.2.(b)  G.S. 110‑93.1 is repealed.
SECTION 10.2.(c)  G.S. 143B‑153(2)d. reads as rewritten:
"§ 143B‑153.  Social Services Commission – creation, powers and duties.
There is hereby created the Social Services Commission of the Department of Health and Human Services with the power and duty to adopt rules and regulations to be followed in the conduct of the State's social service programs with the power and duty to adopt, amend, and rescind rules and regulations under and not inconsistent with the laws of the State necessary to carry out the provisions and purposes of this Article. Provided, however, the Department of Health and Human Services shall have the power and duty to adopt rules and regulations to be followed in the conduct of the State's medical assistance program.
…
(2)	The Social Services Commission shall have the power and duty to establish standards and adopt rules and regulations:
…
d.	For the payment of State funds to private child‑placing agencies as defined in G.S. 131D‑10.2(4) and residential child care facilities as defined in G.S. 131D‑10.2(13) for care and services provided to children who are in the custody or placement responsibility of a county department of social services. The Commission shall establish standardized rates for child caring institutions in this State, which rates shall be updated annually on July 1. Rate‑setting recommendations provided by the Office of the State Auditor shall be incorporated into the Department of Social Services' rate‑setting methodology; and
…
…."
SECTION 10.2.(d)  The effective date for establishing standardized rates for child caring institutions in this State, as enacted in subsection (c) of this section, shall be July 1, 2007.

MEDICAID
SECTION 10.3. Section 10.11 of S.L. 2005‑276 reads as rewritten:
"SECTION 10.11.(a) Use of Funds, Allocation of Costs, Other Authorizations.
(1)	Use of Funds. – Funds appropriated in this act for services provided in accordance with Title XIX of the Social Security Act (Medicaid) are for both the categorically needy and the medically needy. 
(2)	Allocation of Nonfederal Cost of Medicaid. – The State shall pay eighty‑five percent (85%); the county shall pay fifteen percent (15%) of the nonfederal costs of all applicable services listed in this section. In addition, the State shall pay eighty‑five percent (85%); the county shall pay fifteen percent (15%) of the federal Medicare Part D clawback payments under the Medicare Modernization Act of 2004. 
(3)	Funds for Development and Acquisition of Equipment and Software. – If first approved by the Office of State Budget and Management, the Division of Medical Assistance, Department of Health and Human Services, may use funds that are identified to support the cost of development and acquisition of equipment and software through contractual means to improve and enhance information systems that provide management information and claims processing. The Department of Health and Human Services shall identify adequate funds to support the implementation and first year's operational costs that exceed the currently allocated funds for the new contract for the fiscal agent for the Medicaid Management Information System.
(4)	Reports. – Unless otherwise provided, whenever the Department of Health and Human Services is required by this section to report to the General Assembly, the report shall be submitted to the House of Representatives Appropriations Subcommittee for Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division of the Legislative Services Office. Reports shall be submitted on the date provided in the reporting requirement.
SECTION 10.11.(b)  Policy. –
(1)	Volume purchase plans and single source procurement. – The Department of Health and Human Services, Division of Medical Assistance, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single source procurement, or other contracting processes in order to improve cost containment.
(2)	Cost‑containment programs. – The Department of Health and Human Services, Division of Medical Assistance, may undertake cost‑containment programs, including contracting for services, preadmissions to hospitals, and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting. 
(3)	Fraud and abuse. – 
a.	The Division of Medical Assistance, Department of Health and Human Services, may provide incentives to counties that successfully recover fraudulently spent Medicaid funds by sharing State savings with counties responsible for the recovery of the fraudulently spent funds.
b.	For the purposes of investigating and reducing client fraud and abuse, the Department of Health and Human Services, Division of Medical Assistance, shall, unless prohibited by federal law, include in the Medicaid enrollment process the requirement that the applicant for Medicaid consent to or authorize in writing the release of the applicant's medical records for the three years immediately preceding the application for Medicaid benefits. The Department shall obtain and use information from the applicant's medical records in a manner and form that complies with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), P.L. 104‑191, as amended, and that protects the privacy of the information as required by other applicable federal or State law. In addition to fraud and abuse detection, the Department may require the applicant's consent for other purposes permitted by HIPAA and required or authorized by other applicable federal or State law.
(4)	Medical policy. –
Unless required for compliance with federal law, the Department shall not change medical policy affecting the amount, sufficiency, duration, and scope of health care services and who may provide services until the Division of Medical Assistance has prepared a five‑year fiscal analysis documenting the increased cost of the proposed change in medical policy and submitted it for Departmental review. If the fiscal impact indicated by the fiscal analysis for any proposed medical policy change exceeds three million dollars ($3,000,000) in total requirements for a given fiscal year, then the Department shall submit the proposed policy change with the fiscal analysis to the Office of State Budget and Management and the Fiscal Research Division. The Department shall not implement any proposed medical policy change exceeding three million dollars ($3,000,000) in total requirements for a given fiscal year unless the source of State funding is identified and approved by the Office of State Budget and Management. The Department shall provide the Office of State Budget and Management and the Fiscal Research Division a quarterly report itemizing all medical policy changes with total requirements of less than three million dollars ($3,000,000).
SECTION 10.11.(c)  Eligibility. – Eligibility for Medicaid shall be determined in accordance with the following:
(1)	Medicaid and Work First Family Assistance, Income Eligibility Standards. – The maximum net family annual income eligibility standards for Medicaid and Work First Family Assistance and the Standard of Need for Work First Family Assistance shall be as follows:

Categorically Needy‑WFFA*		Medically Needy
Family 		Standard		Families and Children
Size		Of Need		Income
Level		AA,AB,AD*
1		$4,344			$2,172		$2,900
2		  5,664			  2,832		  3,900
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.
(2)	The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to all elderly, blind, and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines, as revised each April 1.
(3)	The Department of Health and Human Services shall provide Medicaid to 19 and 20-year-olds in accordance with federal rules and regulations.
(4)	Pregnant women and children. – The Department of Health and Human Services shall provide coverage to pregnant women and to children according to the following schedule:
a.	Pregnant women with incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
b.	Effective January 1, 2006, infants under the age of one with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
c.	Effective January 1, 2006, children aged one through five with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
d.	Children aged six through 18 with family incomes equal to or less than the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
e.	The Department of Health and Human Services shall provide Medicaid coverage for adoptive children with special or rehabilitative needs regardless of the adoptive family's income.
Services to pregnant women eligible under this subsection continue throughout the pregnancy but include only those related to pregnancy and to those other conditions determined by the Department as conditions that may complicate pregnancy. In order to reduce county administrative costs and to expedite the provision of medical services to pregnant women, to infants, and to children described in subdivisions (3) and (4) of this subsection, no resources test shall be applied.
(5)	The Department of Health and Human Services shall provide Medicaid coverage for family planning services to men and women of childbearing age with family incomes equal to or less than one hundred eight‑five percent (185%) of the federal poverty level.
(6)	ICF and ICF/MR Work Incentive Allowances. – The Department of Health and Human Services may provide an incentive allowance to Medicaid‑eligible recipients of ICF and ICF/MR services, who are regularly engaged in work activities as part of their developmental plan, and for whom retention of additional income contributes to their achievement of independence. The State funds required to match the federal funds that are required by these allowances shall be provided from savings within the Medicaid budget or from other unbudgeted funds available to the Department. The incentive allowances may be as follows:
Monthly Net Wages			Monthly Incentive Allowance
$1.00 to $100.99				Up to $50.00
$101.00 to $200.99			$80.00
$201.00 to $300.99			$130.00
$301.00 and greater			$212.00
(7)	Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.
(8)	For all Medicaid eligibility classifications for which the federal poverty level is used as an income limit for eligibility determination, the income limits will be updated each April 1 immediately following publication of federal poverty guidelines.
(9)	When implementing the Supplemental Security Income (SSI) method for considering equity value of income producing property, the Department shall, to the maximum extent possible, employ procedures to mitigate the hardship to Medicaid enrollees occurring from application of the SSI method.
SECTION 10.11.(d)  Services and Payment Bases. – Funds appropriated for Medicaid services shall be expended in accordance with the following schedule of services and payment bases. All services and payments are subject to the language at the end of this subsection. This subsection is divided into services that are mandated by federal law, and those that are optional under federal law.  Unless otherwise provided, services and payment bases will be as prescribed in the State Plan as established by the Department of Health and Human Services and may be changed with the approval of the Director of the Budget.
Services and payment bases – Mandatory
(1)	Hospital inpatient.(2)	Hospital outpatient. – Eighty percent (80%) of allowable costs or a prospective reimbursement plan as established by the Department of Health and Human Services.
(3)	Nursing facilities. – Nursing facilities providing services to Medicaid recipients who also qualify for Medicare must be enrolled in the Medicare program as a condition of participation in the Medicaid program. State facilities are not subject to the requirement to enroll in the Medicare program. Residents of nursing facilities who are eligible for Medicare coverage of nursing facility services must be placed in a Medicare‑certified bed. Medicaid shall cover facility services only after the appropriate services have been billed to Medicare. The Division of Medical Assistance shall allow nursing facility providers sufficient time from the effective date of this act to certify additional Medicare beds if necessary. In determining the date that the requirements of this subdivision become effective, the Division of Medical Assistance shall consider the regulations governing certification of Medicare beds and the length of time required for this process to be completed.
(4)	Physicians, certified nurse midwife services, nurse practitioners. – Fee schedules as development by the Department of Health and Human Services.
(5)	Community Alternative Program, EPSDT Screens. – Payments in accordance with rate schedule developed by the Department of Health and Human Services.
(6)	Home health and related services, durable medical equipment. – Payments according to reimbursement plans developed by the Department of Health and Human Services.
(7)	Hearing aids. – Wholesale cost plus dispensing fee to provider.
(8)	Rural health clinical services. – Provider‑based, reasonable cost; non‑provider‑based, single–cost reimbursement rate per clinic visit.
(9)	Family planning. – Negotiated rate for local health departments. For other providers see specific services, e.g. hospitals, physicians.
(10)	Independent laboratory and X‑ray services. – Uniform fee schedules as developed by the Department of Health and Human Services.
(11)	Ambulatory surgical centers.
Services and payment bases – Optional
(12)	Private duty nursing, clinic services, prepaid health plans.
(13)	Intermediate care facilities for the mentally retarded.
(14)	Chiropractors, podiatrists, optometrists, dentists.
(15)	Limitations on Dental Coverage. – Dental services shall be provided on a restricted basis in accordance with criteria adopted by the Department to implement this subsection. 
(16)	Medicare Buy‑In. – Social Security Administration premium.
(17)	Ambulance services. – Uniform fee schedules as developed by the Department of Health and Human Services. Public ambulance providers will be reimbursed at cost.
(18)	Optical supplies. – Payment for materials is made to a contractor in accordance with 42 C.F.R. § 431.54(d). Fees paid to dispensing providers are negotiated fees established by the State agency based on industry charges.
(19)	Medicare crossover claims. – The Department shall apply Medicaid medical policy to Medicare claims for dually eligible recipients. The Department shall pay an amount up to the actual coinsurance or deductible or both, in accordance with the State Plan, as approved by the Department of Health and Human Services.
(20)	Physical therapy and speech therapy. – Services limited to EPSDT‑eligible children. Payments are to be made only to qualified providers at rates negotiated by the Department of Health and Human Services. Physical therapy (including occupational therapy) and speech therapy services are subject to prior approval and utilization review.
(21)	Personal care services.
(22)	Case management services. – Reimbursement in accordance with the availability of funds to be transferred within the Department of Health and Human Services.
(23)	Hospice.
(24)	Medically necessary prosthetics or orthotics. – In order to be eligible for reimbursement, providers must be Board certified. Medically necessary prosthetics and orthotics are subject to prior approval and utilization review.
(25)	Health insurance premiums.
(26)	Medical care/other remedial care. – Services not covered elsewhere in this section include related services in schools; health professional services provided outside the clinic setting to meet maternal and infant health goals; and services to meet federal EPSDT mandates.
(27)	Pregnancy‑related services. – Covered services for pregnant women shall include nutritional counseling, psychosocial counseling, and predelivery and postpartum home visits by maternity care coordinators and public health nurses.
(28)	Drugs. – Reimbursements. Reimbursements shall be available for prescription drugs as allowed by federal regulations plus a professional services fee per month, excluding refills for the same drug or generic equivalent during the same month. Payments for drugs are subject to the provisions of this subdivision or in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. Payment of the professional services fee shall be made in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. The professional services fee shall be five dollars and sixty cents ($5.60) per prescription for generic drugs and four dollars ($4.00) per prescription for brand‑name drugs. Adjustments to the professional services fee shall be established by the General Assembly. In addition to the professional services fee, the Department may pay an enhanced fee for pharmacy services.
Limitations on quantity. – The Department of Health and Human Services may establish authorizations, limitations, and reviews for specific drugs, drug classes, brands, or quantities in order to manage effectively the Medicaid pharmacy program, except that the Department shall not impose limitations on brand‑name medications for which there is a generic equivalent in cases where the prescriber has determined, at the time the drug is prescribed, that the brand‑name drug is medically necessary and has written on the prescription order the phrase "medically necessary". In addition to the entities listed in subsection (a) of this section, the Department shall report to the Joint Legislative Commission on Governmental Operations on authorizations, limitations, and reviews established under this subparagraph, including limitations on monthly brand‑name and generic prescriptions as well as restrictions on the total number of medications. The Department shall submit the report not later than May 1, 2006.
Dispensing of generic drugs. – Notwithstanding G.S. 90‑85.27 through G.S. 90‑85.31, or any other law to the contrary, under the Medical Assistance Program (Title XIX of the Social Security Act), and except as otherwise provided in this subsection for atypical antipsychotic drugs and drugs listed in the narrow therapeutic index, a prescription order for a drug designated by a trade or brand name shall be considered to be an order for the drug by its established or generic name, except when the prescriber has determined, at the time the drug is prescribed, that the brand‑name drug is medically necessary and has written on the prescription order the phrase "medically necessary". An initial prescription order for an atypical antipsychotic drug or a drug listed in the narrow therapeutic drug index that does not contain the phrase "medically necessary" shall be considered an order for the drug by its established or generic name, except that a pharmacy shall not substitute a generic or established name prescription drug for subsequent brand or trade name prescription orders of the same prescription drug without explicit oral or written approval of the prescriber given at the time the order is filled. Generic drugs shall be dispensed at a lower cost to the Medical Assistance Program rather than trade or brand‑name drugs. As used in this subsection, "brand name" means the proprietary name the manufacturer places upon a drug product or on its container, label, or wrapping at the time of packaging; and "established name" has the same meaning as in section 502(e)(3) of the Federal Food, Drug, and Cosmetic Act as amended, 21 U.S.C. § 352(e)(3).
Prior authorization. – The Department of Health and Human Services shall not impose prior authorization requirements or other restrictions under the State Medical Assistance Program on medications prescribed for Medicaid recipients for the treatment of: (i) mental illness, including, but not limited to, medications for schizophrenia, bipolar disorder, and major depressive disorder, or (ii) HIV/AIDS.(29)	Other mental health services. – Unless otherwise covered by this section, coverage is limited to:
a.	Services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) when provided in agencies meeting the requirements of the rules established by the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services and reimbursement is made in accordance with a State Plan developed by the Department of Health and Human Services not to exceed the upper limits established in federal regulations, and
b.	For children eligible for EPSDT services 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, certified clinical addictions specialists, and certified 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.
c.	For Medicaid‑eligible adults, services provided by licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, and nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, licensed clinical addictions specialists, and licensed clinical supervisors, Medicaid‑eligible adults may be self‑referred.
d.	Payments made for services rendered in accordance with this subdivision shall be to qualified providers in accordance with approved policies and the State Plan. Nothing in sub‑subdivision b. or c. of this subdivision shall be interpreted to modify the scope of practice of any service provider, practitioner, or licensee, nor to modify or attenuate any collaboration or supervision requirement related to the professional activities of any service provider, practitioner, or licensee. Nothing in sub‑subdivision b. or c. of this subdivision shall be interpreted to require any private health insurer or health plan to make direct third‑party reimbursements or payments to any service provider, practitioner, or licensee.
e.	The Department of Health and Human Services shall not enroll licensed psychological associates, licensed professional counselors, licensed marriage and family therapists, licensed clinical addiction specialists, and licensed clinical supervisors until all of the following conditions have been met:
1.	The fiscal impact of payments to these qualified providers has been projected;
2.	Funding for any projected requirements in excess of budgeted Division of Medical Assistance funding has been identified from within State funds appropriated to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to support area mental health programs or county programs, or identified from other sources; and
3.	Approval has been obtained from the Office of State Budget and Management to transfer these State or other source funds from the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to the Division of Medical Assistance. Upon approval and implementation, the Department of Health and Human Services shall, on a quarterly basis, provide a status report to the Office of State Budget and Management and the Fiscal Research Division.
Notwithstanding G.S. 150B‑21.1(a), the Department of Health and Human Services may adopt temporary rules in accordance with Chapter 150B of the General Statutes further defining the qualifications of providers and referral procedures in order to implement this subdivision. Coverage policy for services defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services under sub‑subdivisions a. and b.2 of this subdivision shall be established by the Division of Medical Assistance.
SECTION 10.11.(e)  Limitations on payments. –
(1)	Payment is limited to Medicaid‑enrolled providers that purchase a performance bond in an amount not to exceed one hundred thousand dollars ($100,000) naming as beneficiary the Department of Health and Human Services, Division of Medical Assistance, or provide to the Department a validly executed letter of credit or other financial instrument issued by a financial institution or agency honoring a demand for payment in an equivalent amount. The Department may waive or limit the requirements of this paragraph for one or more classes of Medicaid‑enrolled providers based on the provider's dollar amount of monthly billings to Medicaid or the length of time the provider has been licensed in this State to provide services. In waiving or limiting requirements of this paragraph, the Department shall take into consideration the potential fiscal impact of the waiver or limitation on the State Medicaid Program. The Department may adopt temporary rules in accordance with G.S. 150B‑21.1 as necessary to implement this provision.
(2)	Reimbursement is available and may be limited in accordance with federal EPSDT requirements to any one or combination of the following: physicians, clinics, hospital outpatient, optometrists, chiropractors, and podiatrists. Prenatal services, all EPSDT children, emergency rooms, and mental health services subject to independent utilization review are exempt from the visit limitations contained in this paragraph. Exceptions may be authorized by the Department of Health and Human Services where the life of the patient would be threatened without such additional care.
SECTION 10.11.(f)  Exceptions and limitations on services; authorization of co‑payments and other services.(1)	Exceptions to Service Limitations, Eligibility Requirements, and Payments. – Service limitations, eligibility requirements, and payments bases in this section may be waived by the Department of Health and Human Services, with the approval of the Director of the Budget, to allow the Department to carry out pilot programs for prepaid health plans, contracting for services, managed care plans, or community‑based services programs in accordance with plans approved by the United States Department of Health and Human Services or when the Department determines that such a waiver will result in a reduction in the total Medicaid costs for the recipient. The Department of Health and Human Services may proceed with planning and development work on the Program of All‑Inclusive Care for the Elderly.
(2)	Co‑Payment for Medicaid Services. – The Department of Health and Human Services may establish co‑payments up to the maximum permitted by federal law and regulation and required by this subsection in order to achieve reductions in the budget in fiscal years 2005‑2006 and 2006‑2007.
(3)	The Department of Health and Human Services shall provide Medicaid coverage for family planning services to men and women of childbearing age with family incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty level. Of the funds appropriated in this act to the Division of Medical Assistance, the sum of seven hundred fifty thousand dollars ($750,000) for the 2005‑2006 fiscal year shall be used to provide the State‑match for the family planning demonstration waiver approved by the federal government.
SECTION 10.11.(g)  Rules, Reports, and Other Matters. – 
(1)	Rules. – The Department of Health and Human Services may adopt temporary or emergency rules according to the procedures established in G.S. 150B‑21.1 and G.S. 150B‑21.1A when it finds that these rules are necessary to maximize receipt of federal funds within existing State appropriations, to reduce Medicaid expenditures, and to reduce fraud and abuse. Prior to the filing of these temporary or emergency rules with the Rules Review Commission and the Office of Administrative Hearings, the Department shall consult with the Office of State Budget and Management on the possible fiscal impact of the temporary or emergency rule and its effect on State appropriations and local governments.
(2)	Changes to Medicaid program; reports. – The Department shall report on any change it anticipates making in the Medicaid program that impacts the type or level of service, reimbursement methods, or waivers, any of which require a change in the State Plan or other approval by the Centers for Medicare and Medicaid Services (CMS). The reports shall be provided at the same time they are submitted to CMS for approval. In addition to the entities listed in subsection (a)(4) of this section, the report shall be submitted to the Joint Legislative Health Care Oversight Committee."

 																																											

					

										

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PROCEDURES FOR CHANGES TO DHHS MEDICAL POLICY
SECTION 10.4.  Article 2 of Chapter 108A of the General Statutes is amended by adding the following new section to read:
"§ 108A‑54.2.  Procedures for changing medical policy.
The Department shall develop, amend, and adopt medical coverage policy in accordance with the following:
(1)	During the development of new medical coverage policy or amendment to existing medical coverage policy, consult with and seek the advice of the Physician Advisory Group of the North Carolina Medical Society and other organizations the Secretary deems appropriate. The Secretary shall also consult with and seek the advice of officials of the professional societies or associations representing providers who are affected by the new medical coverage policy or amendments to existing medical coverage policy.
(2)	At least 45 days prior to the adoption of new or amended medical coverage policy, the Department shall:
a.	Publish the proposed new or amended medical coverage policy on the Department's Web site;
b.	Notify all Medicaid providers of the proposed, new, or amended policy; and
c.	Upon request, provide persons copies of the proposed medical coverage policy.
(3)	During the 45‑day period immediately following publication of the proposed new or amended medical coverage policy, accept oral and written comments on the proposed new or amended policy.
(4)	If, following the comment period, the proposed new or amended medical coverage policy is modified, then the Department shall, at least 15 days prior to its adoption:
a.	Notify all Medicaid providers of the proposed policy;
b.	Upon request, provide persons notice of amendments to the proposed policy; and
c.	Accept additional oral or written comments during this 15‑day period."

TRANSFER OF ASSETS REWRITE
SECTION 10.5.(a)  G.S. 108A‑58 is repealed.
SECTION 10.5.(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(h) 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(h)(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 (3) 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. § 435.232.
(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 10.5.(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.

MEDICAID DUALLY ELIGIBLE TO ENROLL IN MEDICARE PARTS A,B,C, D
SECTION 10.6.  G.S. 108A‑55.1 reads as rewritten:
"§ 108A‑55.1.  Medicare enrollment required.
The Department shall require State Medical Assistance Program recipients who qualify for Medicare to enroll in Medicare, 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.
Failure to enroll in Medicare shall result in nonpayment of these expenditures under the State Medical Assistance Program. A provider may seek payment for services from Medicaid enrollees who are eligible for but not enrolled in Medicare  Parts A, B, C, and D."

MEDICAID RESERVE fund TRANSFER
SECTION 10.7.(a)  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 fifty million dollars ($50,000,000) for the 2006‑2007 fiscal year shall be allocated as prescribed by G.S. 143‑23.2(b) for Medicaid programs. Notwithstanding the prescription in G.S. 143‑23.2(b) that these funds not reduce State general revenue funding, these funds shall replace the reduction in general revenue funding effected in this act.
SECTION 10.7.(b)  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143‑23.2, the sum of five million  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).

REQUIRED DATA SHARING BY PRIVATE HEALTH INSURERS
SECTION 10.8.  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 the individual's spouses or the individual's 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.
(4)	Accept the Division's right of recovery and the assignment to the Division of any right of an individual or other entity to payment from the party for an item or service for which payment has been made under the State Medical Assistance Plan.
(5)	Respond to any inquiry by the Division of Medical Assistance regarding a claim for payment for any health care item or service that is submitted not later than three years after the date of the provision of the health care item or service.
(6)	Agree not to deny a claim submitted by the Division of Medical Assistance solely on the basis of the date of submission of the claim, the type of format of the claim form, or a failure to present property documentation at the point‑of‑sale that is the basis of the claim, if:
a.	The claim is submitted by the Division within the three‑year period beginning on the date on which the item or service was furnished; and
b.	Any action by the Division to enforce its rights with respect to  such claim is commenced within six years of the Division's submission of the claim.
(c)	An insurer that complies with this section shall not be liable on that account in any civil or criminal actions or proceedings brought by an individual covered under the insurer's health benefit plan or the individual's beneficiaries."

TICKET TO WORK EFFECTIVE DATE CHANGE
SECTION 10.9.(a)  Section 10.18(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.18.(c)  Subsection (b) of this section becomes effective July 1, 2006. Subsection (a) of this section becomes effective July 1, 2007. Client enrollment shall begin not later than six months from the date subsection (a) becomes effective. The remainder of this section is effective when it becomes law."
SECTION 10.9.(b)  The Department of Health and Human Services shall study and develop a plan for the implementation of the Ticket to Work Program.  The Department shall report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than March 1, 2007, on the results of its study.  The report shall include what system changes need to be made to implement the Ticket to Work Program, how soon the changes can be made, and an analysis of the five‑year fiscal impact of the Program.

PUBLIC‑PRIVATE LONG TERM CARE PARTNERSHIP PROGRAM
SECTION 10.10.  Pursuant to authority under Section 1917(b) of the Social Security Act (42 USC 1396p(c)), as amended by Public Law 109‑171 effective January 1, 2007, there is established in the Department of Health and Human Services the North Carolina Long‑Term Care Partnership Program. The purpose of the Program is to reduce future Medicaid costs for long‑term care by delaying or eliminating dependence on Medicaid. The Program shall be administered by the Department of Health and Human Services with the assistance of the Commissioner of Insurance.  The Department shall structure and administer the Program in accordance with applicable federal law and guidelines for qualified State long‑term care partnerships.  The Program, including the treatment of assets for Medicaid eligibility and estate recovery, notwithstanding statutory provisions on treatment of assets and estate recovery to the contrary, shall offer incentives to individuals to insure against the substantial costs of providing for their long‑term care needs.  The Long‑Term Care Partnership Program becomes effective on the effective date of the approved State Plan amendment.

STUDY MEDICAID PROVIDER RATE INCREASES
SECTION 10.11.(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 and affected parties to validate any methodologies used in the development of the standard.  
SECTION 10.11.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Medical Assistance, the sum of one hundred thousand dollars ($100,000) for the 2006‑2007 fiscal year shall be used to support the study.  Not later than March 1, 2007, the Department shall report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on the findings and recommendations of the study.
SECTION 10.11.(c)  The Department of Health and Human Services shall study the feasibility and effectiveness of adjusting and rebasing case-mix reimbursement rates using 2005 cost data for nursing facilities.  The study shall include the frequency of rebasing to appropriately reflect increases and decreases in reported and audit costs.

INCREASE HEALTH CARE ACCESS FOR UNINSURED PERSONS
SECTION 10.12.(a)  The Secretary of the Department of Health and Human Services shall develop a plan to expand health care access for uninsured North Carolinians through the use of public/private partnerships, federal flexibility and  resources, and promotion of charity care by health care providers.  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 persons.
(3)	Secure all available federal funds to support the program.
(4)	Promote charity care by health care providers. 
SECTION 10.12.(b)  In developing the plan, the Secretary shall:
(1)	Consider findings and recommendations of 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)	Determine waivers necessary to secure federal funding available through 1115 Demonstration Waivers and other federal waivers to cover the uninsured.
(4)	Explore 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 10.12.(c)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Medical Assistance, the sum of two hundred thousand dollars ($200,000) for the 2006‑2007 fiscal year shall be used to support the development of the plan.  The proposed plan shall be submitted to the 2007 General Assembly not later than March 1, 2007.

HEALTH INFORMATION SYSTEMS (HIS) FUNDS
SECTION 10.13.(a)  The sum of nine million eight hundred thirty‑five thousand seven hundred ninety‑five dollars ($9,835,795) is appropriated from Budget Code 24430, Fund Code 2117, to the Department of Health and Human Services, Division of Public Health, for the 2006‑2007 fiscal year.  These funds shall be used for the development and implementation of the Health Information Systems (HIS), an initiative that will provide an automated means of capturing, monitoring, reporting, and billing services provided in local health departments, CDSAs, and the State Public Health Lab.  The HIS will allow for interfaces to local health departments' own vendor systems and is intended to replace the outdated Health Services Information System. Allocation of these funds is contingent upon full compliance with the reporting requirements of Section 10.59A.(b) of S.L. 2005‑276 and the identification of total estimated costs and future funding sources.
SECTION 10.13.(b)  The Department of Health and Human Services, Division of Public Health, shall report on the use of these funds to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division not later than March 1, 2007.

REPEAL VISION CARE PROGRAM
SECTION 10.14.  Section 10.59F of S.L. 2005‑276 (as amended by Section 20 of S.L. 2005‑345), G.S. 130A‑440.1, and Part 34 of Article 3 of Chapter 143B of the General Statutes are repealed.

EARLY INTERVENTION SERVICES REPORT
SECTION 10.15.  The Department of Health and Human Services, Division of Public Health, shall report on Early Intervention services.  The report shall include the following information for all children, ages birth to three years, entering the Early Intervention system as of July 1, 2006, through December 31, 2006:
(1)	Children served: the number of children referred and the source of referral, the number of children receiving initial evaluations, the number of children determined eligible, the number of children enrolled, and the number of IFS Plans developed.
(2)	Services provided: the number and types of evaluation services, treatment services, and other services provided and whether the service was provided by an employee of a Children's Developmental Services Agency or a private provider.
(3)	Sliding scale participation: the percentage of enrolled children whose family income falls into each of the following categories: at or below 200% of the federal poverty level, between 250% and 300% of the federal poverty level, between 350% and 400% of the federal poverty level, and over 400% of the federal poverty level. These percentages shall be reported based on gross income and net income after allowable deductions.
The Division of Public Health shall report its findings and recommendations to the Senate Appropriations Committee on Health and Human Services, the House of Representative Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than February 1, 2007.

COMMUNITY HEALTH CENTER CHANGES
SECTION 10.16.  Section 10.9(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.9.(a)  Of the funds appropriated in this act for Community Health Grants, the sum of two million dollars ($2,000,000) in recurring  funds for the 2006‑2007 fiscal year shall be used for federally qualified health centers, for those health centers that meet the criteria for federally qualified health centers, and for State‑designated rural health centers and public health departments and other clinics to:
(1)	Increase access to preventative and primary care services by uninsured or medically indigent patients in existing or new health center locations;
(2)	Establish community health center services in counties where no such services exist;
(3)	Create new services or augment existing services provided to uninsured or medically indigent patients, including primary care and preventative medical services, dental services, pharmacy, and behavioral health; and
(4)	Increase capacity necessary to serve the uninsured by enhancing or replacing facilities, equipment, or technologies.
Grant funds may not be used to enhance or increase compensation or other benefits of personnel, administrators, directors, consultants, or any other parties. Grant funds may not be used to supplant federal funds traditionally received by federally qualified community health centers and may not be used to finance or satisfy any existing debt. The Department of Health and Human Services shall distribute funds on the basis of the availability of other funds for the agency, and also on the basis of incidence of poverty or percentage of indigent clients served. Grant applicants must provide after‑hours access in order to qualify for grant funds. The Department shall give preference to those grant applicants demonstrating collaboration with the applicant's community hospital."

EDUCATION ON PREVENTION OF PRETeRM BIRTHS
SECTION 10.17.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Public Health, the sum of one hundred fifty thousand dollars ($150,000) for the 2006‑2007 fiscal year shall be used to provide education to women on the benefits of progesterone for those who have had preterm births and to purchase medication for eligible minority and low‑income women until the medication becomes readily available through the Medicaid Program.  The Division of Public Health shall evaluate the impact of the use of these funds and shall share the outcomes of the evaluation with the Division of Medical Assistance, the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.

COMMUNITY‑FOCUSED ELIMINATING HEALTH DISPARITIES INITIATIVE
SECTION 10.18.  Of funds appropriated in this act to the Department of Health and Human Services for the 2006‑2007 fiscal year, the sum of two million dollars ($2,000,000) shall be allocated for the Community‑Focused Eliminating Health Disparities Initiative (CFEHDI) to provide grants‑in‑aid to local public health departments, American Indian tribes, and faith‑based and community‑based organizations to close the gap in the health status of African‑Americans, Hispanics/Latinos, and American Indians as compared to white persons. These grants shall focus on the use of preventive measures to support health lifestyles. The areas of focus on health status shall be infant mortality, HIV‑AIDS and sexually transmitted infections, cancer, diabetes, and homicides and motor vehicle deaths. These funds shall also be used to support one FTE in the Department of Health and Human Services to monitor, track, and evaluate grantees' progress in meeting performance‑based standards and outcomes established by the Department.

AUTHORIZE ONE NEW POSITION FOR HEALTHY CAROLINIANS INITIATIVE
SECTION 10.18A.  The Department of Health and Human Services, Division of Public Health, may use funds appropriated for the 2006-2007 fiscal year to support one new position for the Healthy Carolinians Initiative.

CLARIFICATION OF CERTAIN AUDIT REQUIREMENTS
SECTION 10.19.  G.S. 143B‑139.4.(b) reads as rewritten:
"(b)	A private, nonprofit organization that receives employee assistance or other appropriate services in accordance with subsection (a) of this section, shall document all contributions received, including employee time, supplies, materials, equipment, and physical space. The documentation shall also provide an estimated value of all contributions received as well as any compensation paid to or bonuses received by State employees. This documentation shall be submitted annually to the Secretary of the Department of Health and Human Services in a format approved by the Secretary. Nonprofit organizations with less than five hundred thousand dollars ($500,000) in annual income shall submit an affidavit from the chief officer of the organization providing and attesting to the financial condition of the organization and the expenditure of funds or use of State employee services or other State services. The board of directors of each private, nonprofit organization with an annual income of  five hundred thousand dollars ($500,000) or more 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. Nothing in this subsection shall be construed to relieve the private, nonprofit organization from other applicable reporting requirements established by law."

AIDS DRUG ASSISTANCE PROGRAM
SECTION 10.21.  Section 10.59(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.59.(a)  For the 2006‑2007 fiscal year, the Department may adjust the financial eligibility criterion of the ADAP Program up to an amount not exceeding two hundred fifty percent (250%) of the federal poverty level in order to serve as many eligible North Carolinians living with HIV disease as possible within existing resources plus any new federal resources. If the Department raises the eligibility limit above one hundred twenty‑five percent (125%) of the federal poverty level and a waiting list develops as a result, the Department shall give priority on the waiting list to those individuals at or below one hundred twenty‑five percent (125%) of the federal poverty level."

TECHNICAL CORRECTION TO LICENSURE FEE LIMITS
SECTION 10.22.  G.S. 131E‑267 reads as rewritten:
"§ 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
7 or more beds	$ 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."

CLARIFICATION OF FEES FOR MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE SERVICE FACILITIES
SECTION 10.23.  G.S. 122C‑23(h) reads as rewritten:
"(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 (non ICF/MR):	0 beds	$175.00	$0

	1 to 6 beds	$250.00	$0
	More than 6 beds	$350.00	$12.50
ICF/MR Only: 	
	1 to 6 beds	$650.00	$0
	More than 6 beds	$650.00	$12.50"

TRANSFER ADVOCACY AND CUSTOMER SERVICE SECTION  TO OFFICE OF THE SECRETARY
SECTION 10.24.  The Advocacy and Customer Service Section of the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services is transferred to the Office of the Secretary of the Department of Health and Human Services.  The transfer has the elements of a Type I transfer as defined in G.S. 143A‑6. In addition to its other responsibilities, the Advocacy and Customer Service Section shall assume and carry out the requirements of the Consumer Advocacy Program as established under Article 1A of Chapter 122C of the General Statutes.

AUTHORIZE LOCAL MANAGEMENT ENTITIES TO TRANSFER FUNDS BETWEEN AGE AND DISABILITY CATEGORIES
SECTION 10.25.(a)  Notwithstanding G.S. 143‑23, an area authority or a county program may transfer from one age or disability category to a different age or disability category up to fifteen percent (15%) of the funds initially allocated to the age or disability category from which funds are being transferred. Prior to the transfer, the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services shall verify that the transfer meets applicable federal requirements. Area authorities and county programs shall:
(1)	Publicly document that they have addressed the service needs of the category from which the funds are being transferred before any transfer may occur, and 
(2)	Submit the required documentation to the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and to the Fiscal Research Division within 15 days of making the transfer. 
SECTION 10.25.(b)  This section expires July 1, 2007.

AREA AUTHORITY AND COUNTY PROGRAM CRISIS REGIONS
SECTION 10.26.(a)  Using funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, and allocated to area authorities and county programs for this purpose, area authorities and county programs shall organize themselves into no more than 21 crisis regions based upon the existing Geriatric Specialty team configurations or other approved regions. These funds shall be allocated to each area authority or county programs on a per capita basis. The funds may be used for operational start‑up, capital, or subsidies related to developing a continuum of crisis services. No more than three percent (3%) may be spent for administrative costs. The area authorities and county program within a crisis region shall work together to identify gaps in their ability to provide a continuum of crisis services for all consumers and use the funds allocated to them to develop and implement a plan to address those needs. At a minimum, the plan must address the development over time of the following components:  24‑hour crisis telephone lines, walk‑in crisis services, mobile crisis outreach, crisis respite/residential services, crisis stabilization units, 23‑hour beds, facility‑based crisis, in‑patient crisis and transportation. Options for voluntary admissions to a secured facility must include at least one service appropriate to address the mental health, developmental disability, and substance abuse needs of adults, and the mental health, developmental disability, and substance abuse needs of children. Options for involuntary commitment to a secured facility must include at least one option in addition to admission to a State facility.
If all area authorities and county programs in a crisis region determine that a facility‑based crisis center is needed and sustainable on a long‑term basis, the crisis region shall attempt to secure those services through a community hospital or other community facility first. If all the area authorities and county programs in the crisis region determine the region's crisis needs are being met, the area authorities and county programs may use the funds to meet local crisis service needs.
SECTION 10.26.(b)  Of the funds appropriated in this act for consultant services to aid local management entities and the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of two  hundred twenty‑five thousand dollars ($225,000) shall be used for consulting services engaged pursuant to this subsection.  Each area authority and county program and each crisis region shall utilize the technical assistance of a consultant under contract with the Division to develop and implement its crisis services plan. The consultant shall assist area authorities and county programs and crisis regions to identify local and regional gaps in crisis services, identify options for providing services, implement new services, and maintain transparency and accountability for the use of funds. The crisis region or area authorities and county programs shall submit their crisis services plan to the consultant and to the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (Division) for review and public comment. The crisis regions and area authorities and county programs shall consider the comments prior to submitting a final plan for implementation. Upon submission of a final plan to DHHS, each crisis region, area authority, and county program will receive implementation funds. Funds not expended during the 2006‑2007 fiscal year shall not revert.
Area authorities and county programs and crisis regions shall report monthly to the consultant and to the Division regarding the use of the funds, whether there has been a reduction in the use of State psychiatric hospitals for acute admissions, and remaining gaps in local and regional crisis services. The consultant shall report regularly to the General Assembly, the Fiscal Research Division, and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services regarding each crisis region's and area authorities' and county programs' proposed and actual use of the funds.

EXTEND SUNSET FOR FIRST COMMITMENT PILOT PROGRAM
SECTION 10.27.  S.L. 2003‑178 reads as rewritten:
"SECTION 1. The Secretary of Health and Human Services may, upon request of a phase‑one local management entity, waive temporarily the requirements of G.S. 122C‑261 through G.S. 122C‑263 and G.S. 122C‑281 through G.S. 122C‑283 pertaining to initial (first‑level) examinations by a physician or eligible psychologist of individuals meeting the criteria of G.S. 122C‑261(a) or G.S. 122C‑281(a), as applicable, as follows:
(1)	The Secretary has received a request from a phase‑one local management entity to substitute for a physician or eligible psychologist, a licensed clinical social worker, a masters level psychiatric nurse, or a masters level certified clinical addictions specialist to conduct the initial (first‑level) examinations of individuals meeting the criteria of G.S. 122C‑261(a) or G.S. 122C‑281(a). The waiver shall be implemented on a pilot‑program basis. The request from the local management entity shall be submitted as part of the entity's local business plan and shall specifically describe:
a.	How the purpose of the statutory requirement would be better served by waiving the requirement and substituting the proposed change under the waiver.
b.	How the waiver will enable the local management entity to improve the delivery or management of mental health, developmental disabilities, and substance abuse services.
c.	How the services to be provided by the licensed clinical social worker, the masters level psychiatric nurse, or the masters level certified clinical addictions specialist under the waiver are within each of these professional's scope of practice.
d.	How the health, safety, and welfare of individuals will continue to be at least as well protected under the waiver as under the statutory requirement.
(2)	The Secretary shall review the request and may approve it upon finding that:
a.	The request meets the requirements of this section.
b.	The request furthers the purposes of State policy under G.S. 122C‑2 and mental health, developmental disabilities, and substance abuse services reform.
c.	The request improves the delivery of mental health, developmental disabilities, and substance abuse services in the counties affected by the waiver and also protects the health, safety, and welfare of individuals receiving these services.
d.	The duties and responsibilities performed by the licensed clinical social worker, the masters level psychiatric nurse, or the masters level certified clinical addictions specialist are within the individual's scope of practice.
(3)	The Secretary shall evaluate the effectiveness, quality, and efficiency of mental health, developmental disabilities, and substance abuse services and protection of health, safety, and welfare under the waiver. The Secretary shall send a report on the evaluation to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substances Abuse Services on or before July 1, 2006.
(4)	The waiver granted by the Secretary under this section shall be in effect until October 1, 2007.
(5)	The Secretary may grant a waiver under this section to up to five local management entities that have been designated as phase‑one entities as of July 1, 2003.
(6)	In no event shall the substitution of a licensed clinical social worker, masters level psychiatric nurse, or masters level certified clinical addictions specialist under a waiver granted under this section be construed as authorization to expand the scope of practice of the licensed clinical social worker, the masters level psychiatric nurse, or the masters level certified clinical addictions specialist.
(7)	The Department shall assure that staff performing the duties are trained and privileged to perform the functions identified in the waiver. The Department shall involve stakeholders including, but not limited to, the North Carolina Psychiatric Association, The North Carolina Nurses Association, National Association of Social Workers, The North Carolina Substance Abuse Professional Certification Board, North Carolina Psychological Association, The North Carolina Society for Clinical Social Work, and the North Carolina Medical Society in developing required staff competencies.
(8)	The local management entity shall assure that a physician is available at all times to provide backup support to include telephone consultation and face‑to‑face evaluation, if necessary.
SECTION 2. This act becomes effective July 1, 2003, and expires October 1, 2007."

CHANGES TO THE STATE PLAN FOR MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE SERVICES
SECTION 10.28.(a)  G.S. 122C‑102 reads as rewritten:
"§ 122C‑102.  State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services; system performance measures.
(a)	Purpose of State Plan. – The Department shall develop and implement a State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services. The purpose of the State Plan is to provide a strategic template regarding how State and local resources shall be organized and used to provide services. The State Plan shall be issued every three years beginning July 1, 2007. It shall identify specific goals to be achieved by the Department, area authorities, and county programs over a three‑year period of time and benchmarks for determining whether progress is being made towards those goals. It shall also identify data that will be used to measure progress towards the specified goals. In order to increase the ability of the State, area authorities, county programs, private providers, and consumers to successfully implement the goals of the State Plan, the Department shall not adopt or implement policies that are inconsistent with the State Plan without first consulting with the Joint Legislative Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services.
(b)	Content of State Plan. – The State Plan shall include the following:
(1)	Vision and mission of the State Mental Health, Developmental Disabilities, and Substance Abuse Services system.
	(3)	Protection of client rights and consumer involvement in planning and management of system services.
(4)	Provision of services to targeted populations, including criteria for identifying targeted populations.
(5)	Compliance with federal mandates in establishing service priorities in mental health, developmental disabilities, and substance abuse.
(6)	Description of the core services that are available to all individuals in order to improve consumer access to mental health, developmental disabilities, and substance abuse services at the local level.
(7)	Service standards for the mental health, developmental disabilities, and substance abuse services system.
(8)	Implementation of the uniform portal process.
(9)	Strategies and schedules for implementing the service plan, including consultation on Medicaid policy with area and county programs, qualified providers, and others as designated by the Secretary, intersystem collaboration, promotion of best practices, technical assistance, outcome‑based monitoring, and evaluation.
(10)	A plan for coordination of the State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services with the Medicaid State Plan, and NC Health Choice.
(11)	A business plan to demonstrate efficient and effective resource management of the mental health, developmental disabilities, and substance abuse services system, including strategies for accountability for non‑Medicaid and Medicaid services.
(12)	Strategies and schedules for implementing a phased in plan to eliminate disparities in the allocation of State funding across county programs and area authorities by January 1, 2007, including methods to identify service gaps and to ensure equitable use of State funds to fill those gaps among all counties.
(c)	State Performance Measures. – The State Plan shall also include a mechanism for measuring the State's progress towards increased performance on the following matters:  access to services, consumer‑focused outcomes, individualized planning and supports, promotion of best practices, quality management systems, system efficiency and effectiveness, and prevention and early intervention. Beginning October 1, 2006, and every six months thereafter, the Secretary shall report to the General Assembly and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services on the State's progress in these performance areas."
SECTION 10.28.(b)  The North Carolina Department of Health and Human Services (DHHS) shall review all State Plans for Mental Health, Developmental Disabilities, and Substance Abuse Services, implemented after July 1, 2001, and before the effective date of this act and produce a single document that contains a cumulative statement of all still applicable provisions of those Plans.  This cumulative document shall constitute the State Plan until July 1, 2007.
DHHS and the Secretary shall also identify those provisions in G.S. 122C‑112.1, prior State Plans, and directives or communications by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services that must be adopted as administrative rules in order to be enforceable and undertake to adopt those rules.
SECTION 10.28.(c)  Independent consultants hired by the Department from funds appropriated in this act for this purpose shall undertake the following tasks:
(1)	Assist DHHS with the strategic planning necessary to develop the revised State Plan as required under G.S. 122C‑102. The State Plan shall be coordinated with local and regional crisis service plans by area authorities and county programs.
(2)	Study and make recommendations to increase the capacity of DHHS to implement system reform successfully and in a manner that maintains strong management functions by area authorities and county programs at the local level.
(3)	Assist the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to work with area authorities and county programs to:
a.	Develop and implement five to ten critical performance indicators to be used to hold area authorities and county programs accountable for managing the mental health, developmental disabilities, and substance abuse services system. The performance system indicators shall be implemented no later than six months after the consultant's contract is awarded and in no event later than July 1, 2007.
b.	Standardize the utilization management functions for Medicaid and non‑Medicaid services and for the review and approval of person‑centered plans.
c.	Develop area authorities' and county programs' expertise to assume utilization management for Medicaid services. The goal shall be to have a portion of the area authorities and county programs assume that function beginning July 1, 2007, and the remainder to assume the function no later than July 1, 2009.
d.	Implement other uniform procedures for the management functions of area authorities and county programs.
(4)	Provide technical assistance and oversight to private service providers, area authorities, and county programs to ensure that best practices and new services are being delivered with fidelity to the service definition model.
(5)	Provide ongoing and focused technical assistance to area authorities and county programs in the implementation of their administrative and management functions and the establishment and operation of community‑based programs. The Secretary shall include in the State Plan a mechanism for monitoring the Department's success in implementing this duty and the progress of area authorities and county programs in achieving these functions.
(6)	Assist the Division with implementing standard forms, contracts, processes, and procedures to be used by all area authorities and county programs with other public and private service providers. These processes and procedures shall include standardized denial codes and a standard policy regarding the coordination of benefits. The independent consultant shall consult with area authorities and county programs regarding the development of these forms, contracts, processes, and procedures. Any document or process developed under this subdivision shall place an obligation upon providers to transmit to area authorities and county programs timely client information and outcome data. The independent consultant shall also recommend language regarding what constitutes a clean claim for purposes of billing. When implementing this subdivision, the independent consultant shall balance the need for area authorities and county programs to exercise discretion in the discharge of their management responsibilities with the need of private service providers for a uniform system of doing business with public entities. The independent consultant shall also (i) identify other areas of standardization that may be implemented without undermining the authority of area authorities and county programs, and (ii) identify and eliminate processes and procedures that are duplicative or result in unnecessary paperwork.

FACILITY LICENSURE REQUIREMENTS FOR OUTPATIENT SUBSTANCE ABUSE SERVICES CONSISTENT WITH FACILITY LICENSURE REQUIREMENTS FOR OUTPATIENT Mental health AND Developmental disability SERVICES
SECTION 10.29.  G.S. 122C‑3(14) reads as rewritten:
"§ 122C‑3.  Definitions.
As used in this Chapter, unless another meaning is specified or the context clearly requires otherwise, the following terms have the meanings specified:
…
(14)	"Facility" means any person at one location whose primary purpose is to provide services for the care, treatment, habilitation, or rehabilitation of the mentally ill, the developmentally disabled, or substance abusers, and includes:
a.	An "area facility", which is a facility that is operated by or under contract with the area authority or county program. For the purposes of this subparagraph, a contract is a contract, memorandum of understanding, or other written agreement whereby the facility agrees to provide services to one or more clients of the area authority or county program. Area facilities may also be licensable facilities in accordance with Article 2 of this Chapter. A State facility is not an area facility;
b.	A "licensable facility", which is a facility that provides services to individuals who are mentally ill, developmentally disabled, or substance abusers for one or more minors or for two or more adults. These services shall be day services offered to the same individual for a period of three hours or more during a 24‑hour period, or residential services provided for 24 consecutive hours or more. Facilities for individuals who are substance abusers include chemical dependency facilities;
c.	A "private facility", which is a facility that is either a licensable facility or a special unit of a general hospital or a part of either in which the specific service provided is not covered under the terms of a contract with an area authority;
d.	The psychiatric service of the University of North Carolina Hospitals at Chapel Hill;
e.	A "residential facility", which is a 24‑hour facility that is not a hospital, including a group home;
f.	A "State facility", which is a facility that is operated by the Secretary;
g.	A "24‑hour facility", which is a facility that provides a structured living environment and services for a period of 24 consecutive hours or more and includes hospitals that are facilities under this Chapter; and
h.	A Veterans Administration facility or part thereof that provides services for the care, treatment, habilitation, or rehabilitation of the mentally ill, the developmentally disabled, or substance abusers."

INDEDPENDENT‑ AND SUPPORTIVE‑LIVING APARTMENTS INITIATIVE
SECTION 10.30.  The independent and supportive living apartments for persons with disabilities constructed from funds appropriated in this act for that purpose shall be affordable to persons with incomes at the Supplemental Security Income (SSI) level. If the North Carolina Housing Finance Agency is able to finance the apartments for less than the amount appropriated under this section, any remaining funds, as well as any interest earned on the amount appropriated, may be used to finance additional apartments, group homes, and transitional housing for individuals with disabilities.

LME FINANCIAL REPORTS TO COUNTY REVIEWED BY COUNTY FINANCE OFFICERS
SECTION 10.31.(a)  G.S. 122C‑117(c) reads as rewritten:
"(c)	Within 30 days of the end of each quarter of the fiscal year, the area director and finance officer of the area authority shall provide to each member of the board of county commissioners the quarterly report of the area authority. The quarterly report shall also be presented to the county finance officer for review and comment. The clerk to the board of commissioners shall notify the area director and finance officer if it has not received the quarterly report required by this subsection.This information shall be presented in a format prescribed by the county. At least twice a year, this information shall be presented in person and shall be read into the minutes of the meeting at which it is presented. In addition, the area director or finance officer of the area authority shall provide to the board of county commissioners ad hoc reports as requested by the board of county commissioners."
SECTION 10.31.(b)  Article 23 of Chapter 153A of the General Statutes is amended by adding the following new section to read:
"§ 153A‑453. Quarterly reports of Mental Health, Developmental Disabilities, and Substance Abuse Services area authority or county program.
Quarterly reports by the area director and finance officer of Mental Health, Developmental Disabilities, and Substance Abuse Services area authorities or county programs shall be submitted to the county finance officer as provided under G.S. 122C‑117(c)."

LOCAL MANAGEMENT ENTITY ADMINISTRATIVE FUNCTIONS
SECTION 10.32.  The Department of Health and Human Services shall recalculate local management entity (LME) systems management allocations for fiscal year 2006‑2007 to include funds for each LME to implement 24‑hour, seven days a week screening, triage, and referral, and the review and approval of all person‑centered plans. The Department shall allocate funds appropriated in this act for this purpose to LMEs to implement the functions described in this section.

PORTION OF PROCEEDS FROM ALCOHOL EXCISE TAX DEPOSITED TO TRUST FUND FOR MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE SERVICES AND BRIDGE FUNDING NEEDS
SECTION 10.33.(a)  Part 4 of Article 2C of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.82A.  Distribution to the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs.
After setting aside funds for the distributions required by G.S. 105‑113.81A and G.S. 105‑113.82, the Secretary shall on a monthly basis distribute to the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs, established under G.S. 143‑15.3D, five percent (5%) of the net proceeds of the amount of excise taxes collected under this Article on malt beverages, unfortified wine, fortified wine, and spirituous liquor."
SECTION 10.33.(b)  This section becomes effective July 1, 2006, and applies to taxes collected on or after that date.

Child Care Allocation Formula
SECTION 10.34.  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."

Child Care Subsidy Rates
SECTION 10.35.  Section 10.62(e) of S.L. 2005‑276 reads as rewritten:
"SECTION 10.62.(e)  A market rate shall be calculated for child care centers and homes at each rated license level for each county and for each age group or age category of enrollees and shall be representative of fees charged to  parents for each age group of enrollees within the county. The Division of Child Development shall also calculate a statewide rate and regional market rates for each rated license level for each age category."

PART XI. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

Conservation reserve enhancement program
SECTION 11.1.  Funds appropriated to the Department of Environment and Natural Resources for the 2006‑2007 fiscal year for the Division of Soil and Water Conservation for the Conservation Reserve Enhancement Program for acquiring conservation easements and leases or for contracts under the Program shall not revert, but shall remain available for these purposes.

AQUARIUM FUNDS
SECTION 11.2.  Of the funds appropriated in this act to the Department of Environment and Natural Resources, the sum of two million five hundred thousand dollars ($2,500,000) for the 2006‑2007 fiscal year shall be for the Division of Aquariums for the operations of the Division of Aquariums of the Department of Environment and Natural Resources. These funds are in addition to the funding the Division of Aquariums receives from departmental receipts, and the Department of Environment and Natural Resources may use these funds to shift funding for operations of the Division from receipt‑support to General Fund support.

Grassroots Science Program
SECTION 11.3.  Section 12.5 of S.L. 2005‑276, as amended by Section 23 of S.L. 2005‑345, reads as rewritten:
"SECTION 12.5.(a) Of the funds appropriated in this act to the Department of Environment and Natural Resources for the Grassroots Science Program, the sum of three million one hundred ninety‑seven thousand seven hundred sixty‑two dollars ($3,197,762) for the 2005‑2006 fiscal year and the sum of three million eight hundred sixty‑three thousand seven hundred dollars ($3,863,700) for the 2006‑2007 fiscal year is allocated as grants‑in‑aid  as follows:
	2005‑2006	2006‑2007

Aurora Fossil Museum	$59,057	$62,593
Cape Fear Museum	$161,007	$195,926
Carolina Raptor Center	$112,174	$126,878
Catawba Science Center	$133,429	$181,452
The Children's Museum of Iredell County		$65,424
Colburn Earth Science
Museum, Inc.	$74,545	$82,856
Discovery Place	$662,865	$845,882
Eastern NC Regional Science Center	$50,000	$51,094
	
Fascinate‑U	$80,742	$92,389
Granville County Museum Commission,
Inc.–Harris Gallery	$56,422	$58,079
Greensboro Children's Museum	$135,076	$142,558
The Health Adventure Museum of Pack
Place Education, Arts and
Science Center, Inc.	$134,499	$194,079
Highlands Nature Center	$79,268	$83,826
Imagination Station	$86,034	$95,505
Kidsenses	$50,000	$92,676Museum of Coastal Carolina	$74,192	$80,207
The Natural Science Center of
Greensboro, Inc.	$186,354	$218,069
North Carolina Museum of Life
and Science	$379,826	$432,752
Port Discover: Northeastern North Carolina's
Center for Hands‑On Science, Inc.	$50,000	$50,117
Rocky Mount Children's Museum	$72,254	$74,928
Schiele Museum of Natural History
and Planetarium, Inc.	$229,547	$264,353
Sci Works Science Center and
Environmental Park of Forsyth County	$146,499	$177,886
Western North Carolina Nature Center	$112,879	$123,079
Wilmington Children's Museum	$71,093	$71,093

Total	$3,197,762	$3,863,700
SECTION 12.5.(b)  No later than March 1, 2006, the Department of Environment and Natural Resources shall report to the Fiscal Research Division all of the following information for each museum that receives funds under this section:
(1)	The operating budget for the 2004‑2005 fiscal year.
(2)	The operating budget for the 2005‑2006 fiscal year.
(3)	The total attendance at the museum during the 2005 calendar year.
SECTION 12.5.(c)  No later than March 1, 2007, the Department of Environment and Natural Resources shall report to the Fiscal Research Division all of the following information for each museum that receives funds under this section:
(1)	The operating budget for the 2005‑2006 fiscal year.
(2)	The operating budget for the 2006‑2007 fiscal year.
(3)	The total attendance at the museum during the 2006 calendar year."

Moratorium Imposed on New Landfills
SECTION 11.4.(a)  Definitions. – The definitions set forth in G.S. 130A‑290 apply throughout this section.
SECTION 11.4.(b)  Moratorium Established. – There is hereby established a moratorium on consideration of applications for a permit and on the issuance of permits for new landfills in the State.  The purposes of this moratorium are to allow the State to study solid waste disposal issues in order to protect public health and the environment. The Department of Environment and Natural Resources shall not consider a permit application nor issue a permit for a new landfill for the disposal of construction or demolition waste, municipal solid waste, or industrial solid waste for a period beginning on 1 July 2006 and ending on 1 January 2008.
SECTION 11.4.(c)  Exceptions. – The moratorium established by subsection (b) of this section shall not prohibit consideration of an application for or issuance of:
(1)	A modification of a permit for an existing permitted landfill.
(2)	A permit to expand an existing permitted landfill if the proposed facility boundary will provide no more than five years of disposal capacity.
(3)	A modification of a permit to reflect a transfer of ownership of an existing permitted landfill.
(4)	A modification of a permit to provide for a substantial change to the waste stream described in a permit in effect as of 1 May 2006 for an existing landfill.
(5)	A permit for a sanitary landfill used only to dispose of waste generated by a coal‑fired generating unit that is owned or operated by an investor‑owned utility subject to the requirements of G.S. 143‑215.107D.
(6)	A permit for a sanitary landfill determined to be necessary by the Secretary in order to respond to an imminent hazard to public health or a natural disaster.
SECTION 11.4.(d)  Study. – The Environmental Review Commission, with the assistance of the Division of Waste Management of the Department of Environment and Natural Resources, shall study issues related to solid waste.  The Commission shall specifically study measures concerning:
(1)	Financial responsibility requirements for solid waste landfills, including the application of requirements to limited liability companies and other business entity structures of applicants seeking solid waste landfill permits.
(2)	Application of franchise requirements and local government approval for solid waste landfill permits, including adequacy of public notice and comment, community studies, and site designations prior to local government approval.
(3)	Siting, design, and operational requirements for landfills for the disposal of construction or demolition waste, municipal solid waste, or industrial solid waste that are proposed in areas susceptible to flooding from natural disasters, areas with high water tables, and other environmentally sensitive areas.
(4)	Traffic considerations for proposed landfills.
(5)	Regulatory oversight and staffing for permitting and compliance of solid waste landfills, and inspection of waste containers on barges, railways, and trucks.
(6)	Compliance with statutory prohibitions on disposal of certain types of solid waste and measures to prevent disposal of hazardous waste in solid waste and construction and demolition landfills.
(7)	Ways to reduce the amount of solid waste disposed of within North Carolina landfills, including statewide tipping fees, bans on the disposal of certain types of waste in landfills, more aggressive recycling requirements, and enhanced regulatory requirements for landfills and other solid waste management facilities. 
SECTION 11.4.(e)  Subcommittee. – In order to facilitate the conduct of this study, the Cochairs of the Environmental Review Commission may establish a subcommittee of the Commission.  The subcommittee of the Commission may include nonlegislative members who have special knowledge, interest, or expertise in various aspects of solid waste management, appointed in consultation with the President Pro Tempore of the Senate and the Speaker of the House of Representatives.
SECTION 11.4.(f)  Report. – The Commission shall report its findings, together with any recommended legislation, to the 2007 Regular Session of the 2007 General Assembly upon its convening.
SECTION 11.4.(g)  This section is effective when this act becomes law.

PART XII. DEPARTMENT OF COMMERCE

EMPLOYMENT SECURITY FUNDS
SECTION 12.1.  Section 13.4 of S.L. 2005‑276 reads as rewritten:
"SECTION 13.4.(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 13.4.(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)	Six million dollars ($6,000,000) for the operation and support of local offices.
(2)	Two hundred thousand dollars ($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)	One hundred thousand dollars ($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 12.2.  Section 13.6(a) of S.L. 2005‑276 reads as rewritten:
"SECTION 13.6.(a)  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."

EXTEND E‑NC AUTHORITY SUNSET/e‑NC AUTHORITY FUNDS AND REPORTING REQUIREMENTS
SECTION 12.3.(a)  Section 4 of S.L. 2003‑425 reads as rewritten:
"SECTION 4. Sections 1 and 2 of this act become effective December 31, 2003, with the e‑NC Authority hereby designated as the successor entity of the Rural Internet Access Authority that will dissolve on that date, as provided by Section 5 of S.L. 2000‑149. The remainder of this act is effective when it becomes law. The e‑NC Authority created in this act is dissolved effective  December 31, 2008. This act is repealed effective December 31, 2008. Part 2F of Article 10 of Chapter 143B of the General Statutes and G.S. 120‑123(77), as enacted by this act, are repealed effective December 31, 2008."
SECTION 12.3.(b)  Section 13.12 of S.L. 2005‑276 reads as rewritten:
"SECTION 13.12.(a)  Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of twenty million dollars ($20,000,000) for the 2005‑2006 fiscal year and the sum of nineteen million five hundred thousand dollars ($19,500,000) for the 2006‑2007 fiscal year shall be allocated as follows: 
(1)	To continue the North Carolina Infrastructure Program. The purpose of the Program is to provide grants to local governments to construct critical water and wastewater facilities and to provide other infrastructure needs, including technology needs, to sites where these facilities will generate private job‑creating investment. At least fifteen million dollars ($15,000,000) of the funds appropriated in this act for each year of the biennium must be used to provide grants under this Program.
(2)	To provide matching grants to local governments in distressed areas and equity investments in public‑private ventures that will productively reuse vacant buildings and properties, with priority given to towns or communities with populations of less than 5,000.
(3)	To provide economic development research and demonstration grants.
…
SECTION 13.12.(f)  Of the funds appropriated in this act to the Rural Economic Development Center, Inc., and allocated in subsection (a) of this section, the sum of five hundred thousand dollars ($500,000) for the 2005‑2006 fiscal year  shall be allocated to the e‑NC Authority.
The e‑NC Authority may contract with other State agencies, The University of North Carolina, the North Carolina Community College System, and nonprofit organizations to assist with program development and the evaluation of program activities.
The e‑NC Authority shall report to the 2006 General Assembly on the following:
(1)	The activities necessary to be undertaken in distressed urban areas of the State to enhance the capability of citizens and businesses residing in these areas to access the high‑speed Internet.
(2)	An implementation plan for the training of citizens and businesses in distressed urban areas.
(3)	The technology and digital literacy training necessary to assist citizens and existing businesses to create new technology‑based enterprises in these communities and to use the Internet to enhance the productivity of their businesses.
The e‑NC Authority shall, by January 31, 2006, and quarterly thereafter, report to the Joint Legislative Commission on Governmental Operations on program development and the evaluation of program activities."
SECTION 12.3.(c)  Of the funds appropriated in this act to the Department of Commerce, the sum of five hundred thousand dollars ($500,000) shall be allocated to the e‑NC Authority.
The e‑NC Authority may contract with other State agencies, The University of North Carolina, the North Carolina Community College System, and nonprofit organizations to assist with program development and the evaluation of program activities.
The e‑NC Authority shall report to the 2007 General Assembly on the following:
(1)	The activities necessary to be undertaken in distressed urban areas of the State to enhance the capability of citizens and businesses residing in these areas to access high‑speed Internet.
(2)	An implementation plan for the training of citizens and businesses in distressed urban areas.
(3)	The technology and digital literacy training necessary to assist citizens and existing businesses to create new technology‑based enterprises in these communities and to use the Internet to enhance the productivity of their businesses.
The e‑NC Authority shall, by September 30, 2006, and quarterly thereafter, report to the Joint Legislative Commission on Governmental Operations on program development and the evaluation of program activities.

COUNCIL OF GOVERNMENT FUNDS/ELECTRONIC TRANSFER
SECTION 12.4.  Section 13.2(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 13.2.(c)  Funds appropriated by this section shall be paid by electronic transfer in two equal installments, the first no later than September 1, 2006, and the second subsequent to acceptable submission of the annual report due to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division by January 15, 2007, as specified in subdivision (e)(2) of this section."

ADVANCED VEHICLE RESEARCH CENTER REPORTING REQUIREMENTS/FUNDS SHALL NOT REVERT
SECTION 12.5.(a)  Section 13.8A(d) of S.L. 2005‑276 reads as rewritten:
"SECTION 13.8A.(d)  By December 31, 2006, and April 30, 2007, the Center shall report to the Governor, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division the following information: (i) fiscal year 2006‑2007 projects, objectives, and accomplishments; and (ii) fiscal year 2006‑2007 itemized expenditures and fund sources. The April 30, 2007, report shall also contain the following: (i) fiscal year 2007‑2008 planned projects, objectives, and accomplishments; and (ii) fiscal year 2007‑2008 estimated expenditures and fund sources."
SECTION 12.5.(b) Funds appropriated to the Advanced Vehicle Research Center Reserve for the 2005‑2006 fiscal year for the Advanced Vehicle Research Center of North Carolina, Inc., that are unexpended and unencumbered as of  June 30, 2006, shall not revert to the General Fund on June 30, 2006, but shall remain available in the Reserve.
SECTION 12.5.(c)  Subsection (b) of this section becomes effective June 30, 2006.

WANCHESE SEAFOOD INDUSTRIAL PARK/OREGON INLET FUNDS
SECTION 12.6.  Section 13.1 of S.L. 2005‑276 reads as rewritten:
"SECTION 13.1.(a)  Funds appropriated to the Department of Commerce for the 2005‑2006 fiscal year for the Wanchese Seafood Industrial Park that are unexpended and unencumbered as of June 30, 2006, shall not revert to the General Fund on June 30, 2006, but shall remain available to the Department to be expended by the Wanchese Seafood Industrial Park for operations, maintenance, repair, and capital improvements in accordance with Article 23C of Chapter 113 of the General Statutes. 
SECTION 13.1.(b)  Funds appropriated to the Department of Commerce for the 2005‑2006 fiscal year for the Oregon Inlet Project that are unexpended and unencumbered as of June 30, 2006, shall not revert to the General Fund on June 30, 2006.
SECTION 13.1.(c)  This section becomes effective June 30, 2006."

DEPARTMENT OF COMMERCE/REPORT ON AGRIBUSINESS FUNDS
SECTION 12.7.(a)  The Department of Commerce (Department) shall report on all funds available for companies or organizations designed to promote agribusiness in North Carolina. The report shall include the following:  (i) information on all Department economic incentive funds, including Commerce State Aid funds; and (ii) information on the number of agribusinesses and organizations that applied for State funds through the Department or other organizations, including the number of requests for funds, the amount of funds requested, and whether the requests were awarded or denied.
SECTION 12.7.(b)  In the report, the Department shall make recommendations for the development of economic incentive programs designed specifically for agribusinesses. The report shall include a plan to implement the programs recommended and the estimated cost of the programs.  In determining the estimated cost of the programs, the Department shall consider and include all sources of funding, including federal, State, local, and grant funds.
SECTION 12.7.(c) The Department shall collaborate with the Department of Agriculture and Consumer Services, the Rural Economic Development Center, Inc., and the University System, in preparing the report.
SECTION 12.7.(d)  The Department shall submit the report to the House Appropriations Committee on Environment, Health, and Natural Resources, the Senate Appropriations Committee on Natural and Economic Resources, and the Fiscal Research Division no later than May 1, 2007.

PART XIII. department of labor

REPEAL FEE FOR MINE SAFETY EDUCATION/TRAINING PROGRAMS
SECTION 13.1.  G.S. 74‑24.16(d) is repealed.

PART XIV. JUDICIAL DEPARTMENT

COLLECTION OF WORTHLESS CHECK FUNDS
SECTION 14.1.  Notwithstanding the provisions of G.S. 7A‑308(c), the Judicial Department may use any balance remaining in the Collection of Worthless Checks Fund on June 30, 2006, for the purchase or repair of office or information technology equipment during the 2006‑2007 fiscal year.  Prior to using any funds under this section, the Judicial Department shall report to the Joint Legislative Commission on Governmental Operations and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on the equipment to be purchased or repaired and the reasons for the purchases.

Grant Funds
SECTION 14.2.  The Judicial Department may use up to the sum of one million two hundred fifty thousand dollars ($1,250,000) from funds available to the Department to provide the State match needed in order to receive grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds.

PROVIDE ADDITIONAL ASSISTANT DISTRICT ATTORNEYS
SECTION 14.3.(a)  G.S. 7A‑60(a1) reads as rewritten:
"(a1)	The counties of the State are organized into prosecutorial districts, and each district has the counties and the number of full‑time assistant district attorneys set forth in the following table:
		No. of Full‑Time
		Prosecutorial		Asst. District
		District	Counties	Attorneys
	1	Camden, Chowan, Currituck,	 11
		Dare, Gates, Pasquotank,
		Perquimans
	2	Beaufort, Hyde, Martin,	 7
		Tyrrell, Washington
	3A	Pitt	 11	3B	Carteret, Craven, Pamlico	 11
	4	Duplin, Jones, Onslow,	 16
		Sampson
	5	New Hanover, Pender	 16
	6A	Halifax	 5
	6B	Bertie, Hertford,	 5
		Northampton
	7	Edgecombe, Nash, Wilson	 18
	8	Greene, Lenoir, Wayne	 13
	9	Franklin, Granville,	 12
		Vance, Warren
	9A	Person, Caswell	 5
	10	Wake	 38
	11	Harnett, Johnston, Lee	 16
	12	Cumberland	 21
	13	Bladen, Brunswick, Columbus	 12
	14	Durham	 15
	15A	Alamance	 10
	15B	Orange, Chatham	 9
	16A	Scotland, Hoke	 6
	16B	Robeson	 13
	17A	Rockingham	 6	17B	Stokes, Surry	 7
	18	Guilford	 30
	19A	Cabarrus	 8
	19B	Montgomery, Moore, Randolph	 12	19C	Rowan	 7
	20A	Anson, Richmond,	 10
		Stanly
	20B	Union	 8
	21	Forsyth	 20
	22	Alexander, Davidson, Davie,	 20
		Iredell
	23	Alleghany, Ashe, Wilkes,	 7
		Yadkin
	24	Avery, Madison, Mitchell,	 6		Watauga, Yancey
	25	Burke, Caldwell, Catawba	 18
	26	Mecklenburg	 49	27A	Gaston	 14
	27B	Cleveland,	 10
		Lincoln
	28	Buncombe	 13
	29A	McDowell, Rutherford	 6	29B	Henderson, Polk, Transylvania	 7
	30	Cherokee, Clay, Graham,	 11
		Haywood, Jackson, Macon,
		Swain."
SECTION 14.3.(b)  This section becomes effective January 1, 2007.

ADDITIONAL DISTRICT COURT JUDGESHIPS
SECTION 14.4.(a)  G.S. 7A‑133(a) reads as rewritten:
"(a)	Each district court district shall have the numbers of judges as set forth in the following table:
District	Judges	County
1	5	Camden
		Chowan
		Currituck
		Dare
		Gates
		Pasquotank
		Perquimans
2	4	Martin
		Beaufort
		Tyrrell
		Hyde
		Washington
3A	 6	Pitt
3B	 6	Craven
		Pamlico
		Carteret
4	8	Sampson
		Duplin
		Jones
		Onslow
5	8	New Hanover
		Pender
6A	 3	Halifax
6B	3	Northampton
		Bertie
		Hertford
7	7	Nash 
		Edgecombe
		Wilson
8	6	Wayne 
		Greene
		Lenoir
9	4	Granville
		(part of Vance
		see subsection (b))
		Franklin
9A	2	Person 
		Caswell
9B	2	Warren
		(part of Vance
		see subsection (b))
10	 17	Wake
11	8	Harnett
		Johnston
		Lee
12	9	Cumberland
13	6	Bladen
		Brunswick
		Columbus
14	 7	Durham
15A	4	Alamance
15B	 5	Orange 
		Chatham
16A	3	Scotland
		Hoke
16B	5	Robeson
17A	2	Rockingham
17B	4	Stokes 
		Surry
18	 13	Guilford
19A	4	Cabarrus
19B	 7	Montgomery
		Moore
		Randolph
19C	 5	Rowan
20A	4	Stanly
		Anson
		Richmond
20B	3	Union
21	9	Forsyth
22	9	Alexander
		Davidson
		Davie
		Iredell
23	4	Alleghany
		Ashe
		Wilkes
		Yadkin
24	4	Avery
		Madison
		Mitchell
		Watauga
		Yancey
25	 9	Burke 
		Caldwell
		Catawba
26	 18	Mecklenburg
27A	 7	Gaston
27B	 5	Cleveland
		Lincoln
28	 7	Buncombe
29A	3	McDowell
		Rutherford
29B	4	Henderson
		Polk
		Transylvania
30	 6	Cherokee
		Clay
		Graham
		Haywood
		Jackson
		Macon
		Swain."
SECTION 14.4.(b)  The Governor shall appoint the additional district court judges for Districts 3A, 3B, 6A, 10, 14, 15B, 18, 19B, 19C, 25, 26, 27A, 27B, 28, and 30 authorized by this act, and those judges' successors shall be elected in the 2008 election for four‑year terms commencing on January 1, 2009.
SECTION 14.4.(c)  This section becomes effective January 15, 2007, except as to any district court district subject to Section 5 of the Voting Rights Act of 1965, it becomes effective January 15, 2007 or the date upon which subsection (a) of this section is approved under Section 5 of the Voting Rights Act of 1965, whichever is later.

PROVIDE ADDITIONAL MAGISTRATES/ELIMINATE MAXIMUM ALLOCATION OF MAGISTRATES
SECTION 14.5.  G.S. 7A‑133(c) reads as rewritten:
"(c)	Each county shall have the numbers of magistrates and additional seats of district court, as set forth in the following table:
			Additional
	Magistrates	Seats of
County	Min.	Court
Camden	1		
Chowan	2		
Currituck	1		
Dare	3		
Gates	2		
Pasquotank	3		
Perquimans	2		
Martin	4		
Beaufort	4		
Tyrrell	1		
Hyde	2		
Washington	3		
Pitt	10		Farmville
			Ayden
Craven	7		Havelock
Pamlico	2		
Carteret	 6		
Sampson	6		
Duplin	8		
Jones	2		
Onslow	8		
New Hanover	6		
Pender	4		
Halifax	9		Roanoke
			Rapids,
			Scotland Neck
Northampton	5		
Bertie	4		
Hertford	5		
Nash	7		Rocky Mount
Edgecombe	4		Rocky Mount
Wilson	4		
Wayne	5		Mount Olive
Greene	 3		
Lenoir	4		La Grange
Granville	3		
Vance	3		
Warren	3		
Franklin	3		
Person	3		
Caswell	2		
Wake	12		Apex,
			Wendell,
			Fuquay‑
			Varina,
			Wake Forest
Harnett	7		Dunn
Johnston	10		Benson,
			Clayton,
			Selma
Lee	4		
Cumberland	10		
Bladen	4		
Brunswick	4		
Columbus	6		Tabor City
Durham	8		
Alamance	 8		Burlington
Orange	4		Chapel Hill
Chatham	3		Siler City
Scotland	3		
Hoke	4		
Robeson	 9		Fairmont,
			Maxton,
			Pembroke,
			Red Springs,
			Rowland,
			St. Pauls
Rockingham	4		Reidsville,
			Eden,
			Madison
Stokes	2		
Surry	5		Mt. Airy
Guilford	20		High Point
Cabarrus	5		Kannapolis
Montgomery	 3		
Randolph	5		Liberty
Rowan	5		
Stanly	5		
Union	4		
Anson	4		
Richmond	5		Hamlet
Moore	5		Southern
			Pines
Forsyth	3		Kernersville
Alexander	2		
Davidson	7		Thomasville
Davie	2		
Iredell	4		Mooresville
Alleghany	1		
Ashe	3		
Wilkes	4		
Yadkin	3		
Avery	3		
Madison	4		
Mitchell	3		
Watauga	4		
Yancey	2		
Burke	4		
Caldwell	4		
Catawba	6		Hickory
Mecklenburg	15		
Gaston	 12		
Cleveland	5		
Lincoln	4		
Buncombe	6		
Henderson	4		
McDowell	3		
Polk	3		
Rutherford	6		
Transylvania	2		
Cherokee	3		
Clay	1		
Graham	2		
Haywood	5		Canton
Jackson	3		
Macon	3		
Swain	2	."

INCREASE THE PORTION OF THE GENERAL COURT OF JUSTICE COURT FEE USED FOR LEGAL SERVICES PROGRAMS
SECTION 14.6.(a)  G.S. 7A‑304(a)(4) reads as rewritten:
"(4)	For support of the General Court of Justice, the sum of eighty‑five dollars and fifty cents ($85.50) in the district court, including cases before a magistrate, and the sum of ninety‑two dollars and fifty cents ($92.50) in the superior court, to be remitted to the State Treasurer. For a person convicted of a felony in superior court who has made a first appearance in district court, both the district court and superior court fees shall be assessed. The State Treasurer shall remit the sum of  two dollars and five cents ($2.05) of each fee collected under this subdivision to the North Carolina State Bar for the provision of services described in G.S. 7A‑474.4, and ninety‑five cents ($.95) of each fee collected under this subdivision to the North Carolina State Bar for the provision of services described in G.S. 7A‑474.19."
SECTION 14.6.(b)  G.S. 7A‑305(a)(2) reads as rewritten:
"(2)	For support of the General Court of Justice, the sum of seventy‑nine dollars ($79.00) in the superior court, except that if a case is assigned to a special superior court judge as a complex business case under G.S. 7A‑45.3, an additional two hundred dollars ($200.00) shall be paid upon its assignment, and the sum of sixty‑four dollars ($64.00) in the district court except that if the case is assigned to a magistrate the sum shall be fifty‑three dollars ($53.00). Sums collected under this subdivision shall be remitted to the State Treasurer. The State Treasurer shall remit the sum of  two dollars and five cents ($2.05) of each fee collected under this subdivision to the North Carolina State Bar for the provision of services described in G.S. 7A‑474.4, and ninety‑five cents ($.95) of each fee collected under this subdivision to the North Carolina State Bar for the provision of services described in G.S. 7A‑474.19."
SECTION 14.6.(c)  G.S. 7A‑306(a)(2) reads as rewritten:
"(2)	For support of the General Court of Justice the sum of forty dollars ($40.00). In addition, in proceedings involving land, except boundary disputes, if the fair market value of the land involved is over one hundred dollars ($100.00), there shall be an additional sum of thirty cents (30¢) per one hundred dollars ($100.00) of value, or major fraction thereof, not to exceed a maximum additional sum of two hundred dollars ($200.00). Fair market value is determined by the sale price if there is a sale, the appraiser's valuation if there is no sale, or the appraised value from the property tax records if there is neither a sale nor an appraiser's valuation. Sums collected under this subdivision shall be remitted to the State Treasurer. The State Treasurer shall remit the sum of  two dollars and five cents ($2.05) of each forty‑dollar ($40.00) General Court of Justice fee collected under this subdivision to the North Carolina State Bar for the provision of services described in G.S. 7A‑474.4."
SECTION 14.6.(d)  G.S. 7A‑307(a)(2) reads as rewritten:
"(2)	For support of the General Court of Justice, the sum of forty dollars ($40.00), plus an additional forty cents (40¢) per one hundred dollars ($100.00), or major fraction thereof, of the gross estate, not to exceed six thousand dollars ($6,000). Gross estate shall include the fair market value of all personalty when received, and all proceeds from the sale of realty coming into the hands of the fiduciary, but shall not include the value of realty. In collections of personal property by affidavit, the fee based on the gross estate shall be computed from the information in the final affidavit of collection made pursuant to G.S. 28A‑25‑3 and shall be paid when that affidavit is filed. In all other cases, this fee shall be computed from the information reported in the inventory and shall be paid when the inventory is filed with the clerk. If additional gross estate, including income, comes into the hands of the fiduciary after the filing of the inventory, the fee for such additional value shall be assessed and paid upon the filing of any account or report disclosing such additional value. For each filing the minimum fee shall be fifteen dollars ($15.00). Sums collected under this subdivision shall be remitted to the State Treasurer. The State Treasurer shall remit the sum of  two dollars and five cents ($2.05) of each forty‑dollar ($40.00) General Court of Justice fee collected under this subdivision to the North Carolina State Bar for the provision of services described in G.S. 7A‑474.4."
SECTION 14.6.(e)  This section becomes effective July 1, 2006, and applies to fees assessed or collected on or after that date.

COLLECTION OF OFFENDER FINES AND FEES ASSESSED BY THE general court of justice
SECTION 14.7.  Article 28 of Chapter 7A of the General Statutes is amended by adding a new section to read:
"§ 7A‑321.  Collection of offender fines and fees assessed by the court.
(a)	The Judicial Department may, in lieu of payment by cash or check, accept payment by credit card, charge card, or debit card for the fines and fees owed to the Court by offenders. The Department 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 Department's acceptance of electronic payment. The Department may impose the fee or charge as a surcharge on the amount paid by the offender using electronic payment.
(b)	In attempting to collect the fines and fees owed by offenders to the Judicial Department, the Department may:
(1)	Refer an offender who owes the court for fines and fees to a reputable credit counseling agency for the purpose of assisting the offender in restructuring the debt, with the Department designated as the lead or primary creditor.
(2)	Assess additional collection fees if an amount due remains unpaid after the time period allotted by the Department.
(3)	Assign debt, in the form of fines and fees owed to the Department, to a collection agency after internal collection efforts have failed.
(4)	Report the delinquency to agencies that assemble or evaluate credit information.
(5)	Intercept tax refunds under Chapter 105A of the General Statutes, the Setoff Debt Collection Act."

JURY FEE WAIVER PROGRAM
SECTION 14.8.(a)  G.S. 7A‑312 reads as rewritten:
"§ 7A‑312.  Uniform fees for jurors; meals.
(a)	A juror in the General Court of Justice including a petit juror, or a coroner's juror, but excluding a grand juror, shall receive twelve dollars ($12.00) per day, except that if any person serves as a juror for more than five days in any 24‑month period, the juror shall receive thirty dollars ($30.00) per day for each day of service in excess of five days. A grand juror shall receive twelve dollars ($12.00) per day. However, any juror may waive payment of the per diem fees provided for in this section. A juror waiving the fee may designate that the fee be used for any of various services provided in that district, as designated by the senior resident superior court judge in accordance with the provisions of subsection (b) of this section. A juror required to remain overnight at the site of the trial shall be furnished adequate accommodations and subsistence. If required by the presiding judge to remain in a body during the trial of a case, meals shall be furnished the jurors during the period of sequestration. Jurors from out of the county summoned to sit on a special venire shall receive mileage at the same rate as State employees.
(b)	The senior resident superior court judge in each district may provide jurors with a choice of various services in that district to which they may designate their waived juror fees. The services designated by the senior resident superior court judge shall be human services provided either by a government agency or a charitable nonprofit corporation and may include drug treatment court client services, courthouse self‑help centers, and courthouse child care centers. The choice may also include the Crime Victims Compensation Fund and designation to a fund for the establishment of a service not yet available in that district to be provided by a governmental agency or a charitable nonprofit corporation. If the senior resident superior court judge elects not to provide jurors with a choice of human services to designate their waived fees to, or if jurors elect not to designate the fees to a particular service, the waived fees shall represent cost savings to the Judicial Department."
SECTION 14.8.(b)  This section becomes effective July 1, 2006, and applies to jury service that begins on or after that date.

ESTABLISH INTERMEDIATE DEFERRED PROSECUTION FOR THE DRUG TREATMENT COURT PROGRAM
SECTION 14.9.(a)  Section 14.22 of S.L. 2005‑276 is repealed.
SECTION 14.9.(b)  G.S. 15A‑1341(a2) reads as rewritten:
"(a2)	Deferred Prosecution for Purpose of Drug Treatment Court Program. – A defendant eligible for a Drug Treatment Court Program pursuant to Article 62 of Chapter 7A of the General Statutes may be placed on probation if the court finds that prosecution has been deferred by the prosecutor, with the approval of the court, pursuant to a written agreement with the defendant, for the purpose of allowing the defendant to participate in and successfully complete the Drug Treatment Court Program. A defendant who would be eligible for deferred prosecution but for a prior criminal conviction may participate in the Drug Treatment Court Program by executing a local drug treatment court contract, by being placed on supervised probation, and by submitting to any of the following additional conditions the court may require:
(1)	Special probation as defined in G.S. 15A‑1351(a);
(2)	Assignment to a residential program;
(3)	House arrest with electronic monitoring;
(4)	Intensive probation; or
(5)	Assignment to a day‑reporting center."
SECTION 14.9.(c)  G.S. 7A‑796 reads as rewritten:
"§ 7A‑796.  Local drug treatment court management committee.
Each judicial district choosing to establish a drug treatment court shall form a local drug treatment court management committee, which shall be comprised to assure representation appropriate to the type or types of drug treatment court operations to be conducted in the district and shall consist of persons appointed by the senior resident superior court judge with the concurrence of the chief district court judge and the district attorney for that district, chosen from the following list:
(1)	A judge of the superior court;
(2)	A judge of the district court;
(3)	A district attorney or assistant district attorney;
(4)	A public defender or assistant public defender in judicial districts served by a public defender;
(5)	An attorney representing a county department of social services within the district;
(6)	A representative of the guardian ad litem;
(7)	A member of the private criminal defense bar;
(8)	A member of the private bar who represents respondents in department of social services juvenile matters;
(9)	A clerk of superior court;
(10)	The trial court administrator in judicial districts served by a trial court administrator;
(11)	The director or member of the child welfare services division of a county department of social services within the district;
(12)	The chief juvenile court counselor for the district;
(13)	A probation officer;
(14)	A local law enforcement officer;
(15)	A representative of the local school administrative unit;
(16)	A representative of the local community college;
(17)	A representative of the treatment providers;
(18)	A representative of the area mental health program;
(19)	The local program director provided for in G.S. 7A‑798; and
(20)	Any other persons selected by the local management committee.
The local drug treatment court management committee shall develop local guidelines and  procedures that are necessary for the operation and evaluation of the local drug treatment  courts in accordance with the National Drug Court Institute's "Ten Key Components" for drug treatment courts and in consultation with the Director of the Administrative Office of the Courts and the Drug Treatment Court Advisory Committee.The senior resident superior court judge and the chief district court judge shall have hiring and appointment authority over drug treatment court personnel and over policy issues, and they shall consult with the local management committee concerning the local drug treatment court policies and procedures."
SECTION 14.9.(d)  G.S. 7A‑797 reads as rewritten:
"§ 7A‑797.  Eligible population; drug treatment court  procedures; funding.
(a)	The Director of the Administrative Office of the Courts, in conjunction with the State Drug Treatment Court Advisory  Committee and local drug treatment court management committees, shall develop criteria for eligibility and other procedural and substantive guidelines for drug treatment court operation in accordance with the National Drug Court Institute's "Ten Key Components" for drug treatment courts.
(b)	Limitations imposed by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services on other public funds spent for substance abuse treatment shall not apply to treatment provided for Drug Treatment Court Programs."

PERMANENCY MEDIATION
SECTION 14.10.(a)  Article 2 of Chapter 7B of the General Statutes is amended by adding a new section to read:
"§ 7B‑202. Permanency Mediation.
(a)	The Administrative Office of the Courts shall establish a Permanency Mediation Program to provide statewide and uniform services to resolve issues in cases under this Subchapter in which a juvenile is alleged or has been adjudicated to be abused, neglected, or dependent, or in which a petition or motion to terminate a parent's rights has been filed. Participants in the mediation shall include the parties and their attorneys, including the guardian ad litem and attorney advocate for the child; provided, the court may allow mediation to proceed without the participation of a parent whose identity is unknown, a party who was served and has not made an appearance, or a parent, guardian, or custodian who has not been served despite a diligent attempt to serve the person. Upon a finding of good cause, the court may allow mediation to proceed without the participation of a parent who is unable to participate due to incarceration, illness, or some other cause. Others may participate by agreement of the parties, their attorneys, and the mediator, or by order of the court.
(b)	The Administrative Office of the Courts shall establish in phases a statewide Permanency Mediation Program consisting of local district programs to be established in all judicial districts of the State. The Director of the Administrative Office of the Courts is authorized to approve contractual agreements for such services as executed by order of the Chief District Court Judge of a district court district, such contracts to be exempt from competitive bidding procedures under Chapter 143 of the General Statutes. The Administrative Office of the Courts shall promulgate policies and regulations necessary and appropriate for the administration of the program. Any funds appropriated by the General Assembly for the establishment and maintenance of permanency mediation programs under this Article shall be administered by the Administrative Office of the Courts.
(c)	Mediation proceedings shall be held in private and shall be confidential. Except as provided otherwise in this section, all verbal or written communications from participants in the mediation to the mediator or between or among the participants in the presence of the mediator are absolutely privileged and inadmissible in court.
(d)	Neither the mediator nor any party or other person involved in mediation sessions under this section shall be competent to testify to communications made during or in furtherance of such mediation sessions; provided, there is no confidentiality or privilege as to communications made in furtherance of a crime or fraud. Nothing in this subsection shall be construed as permitting an individual to obtain immunity from prosecution for criminal conduct or as excusing an individual from the reporting requirements of Article 3 of Chapter 7B of the General Statutes or G.S. 108A‑102.
(e)	Any agreement reached by the parties as a result of the mediation, whether referred to as a "placement agreement," "case plan," or some similar name, shall be reduced to writing, signed by each party, and submitted to the court as soon as practicable. Unless the court finds good reason not to, the court shall incorporate the agreement in a court order, and the agreement shall become enforceable as a court order. If some or all of the issues referred to mediation are not resolved by mediation, the mediator shall report that fact to the court."
SECTION 14.10.(b)  The Administrative Office of the Courts may use funds available in the 2006‑2007 fiscal year to implement the provisions of this section.

court INTERPRETERS
SECTION 14.11.(a)  G.S. 7A‑314(f) reads as rewritten:
"(f)	In  any case in which the Judicial Department is bearing the costs of representation for a party and that party or a witness for that party does not speak or understand the English  language, and the court appoints a foreign language interpreter to assist that  party or witness, the reasonable fee for the interpreter's services,  is payable from funds appropriated to the  Judicial Department. The appointment and payment shall be made in accordance with G.S. 7A‑343(9b)."
SECTION 14.11.(b)  G.S. 7A‑343 is amended by adding a new subdivision to read:
"(9b)	Prescribe, in consultation with the Office of Indigent Defense Services, policies and procedures for the appointment and payment of foreign language interpreters in those cases specified in G.S. 7A‑314(f). These policies and procedures shall be applied uniformly throughout the General Court of Justice. After consultation with the Joint Legislative Commission on Governmental Operations, the Director may also convert contractual foreign language interpreter positions to permanent State positions when the Director determines that it is more cost‑effective to do so."
SECTION 14.11.(c)  G.S. 7A‑450(a) reads as rewritten:
"(a)	An indigent person is a person who is financially unable to secure legal representation and to provide all other necessary expenses of representation in an action or proceeding enumerated in this Subchapter.  A sign language interpreter is a necessary expense as defined in Chapter 8B of the General Statutes for a deaf person who is entitled to counsel under this subsection. A foreign language interpreter is a necessary expense for a party entitled to counsel under this subsection who does not speak or understand the English language."
SECTION 14.11.(d)  G.S. 8C‑1, Evidence Rule 604, reads as rewritten:
"Rule 604. Interpreters.
An interpreter is subject to the provisions of these rules relating to qualification as an expert and the administration of an oath or affirmation that he will make a true interpretation. Interpreters provided under G.S. 7A‑314(f) shall be appointed and compensated in accordance with G.S. 7A‑343(9b)."

MONITORING OF COMMUNITY MEDIATION CENTERS
SECTION 14.12.  G.S. 7A‑38.6(a) reads as rewritten:
"(a)	All community mediation centers currently receiving State funds shall report annually to the Mediation Network of North Carolina on the program's funding and activities, including:
(1)	Types of dispute settlement services provided;
(2)	Clients receiving each type of dispute settlement service;
(3)	Number and type of referrals received, cases actually mediated (identified by docket number), cases resolved in mediation, and total clients served in the cases mediated;
(4)	Total program funding and funding sources;
(5)	Itemization of the use of funds, including operating expenses and personnel;
(6)	Itemization of the use of State funds appropriated to the center;
(7)	Level of volunteer activity; and
(8)	Identification of future service demands and budget requirements.
The Mediation Network of North Carolina shall compile and summarize the information provided pursuant to this subsection and shall provide the information to the Chairs of the House of Representatives and Senate Appropriations Committees and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety by February 1 of each year.
The Mediation Network of North Carolina shall also submit a copy of its report to the Administrative Office of the Courts. The receipt and review of this report by the Administrative Office of the Courts shall satisfy any program monitoring, evaluation, and contracting requirements imposed on the Administrative Office of the Courts by G.S. 143‑6.2 and any rules adopted under that section."

COMMUNITY MEDIATION CENTER FUNDING
SECTION 14.13.  G.S. 7A‑38.6(e) reads as rewritten:
"(e)	Each community mediation center receiving State funds for six or more years shall document that at least  twenty‑five percent (25%) of total funding comes from non‑State sources."

Indigent Defense Services/State Match for Grants
SECTION 14.14.  The Office of Indigent Defense Services may use a sum up to fifty thousand dollars ($50,000) from funds available to provide the State matching funds needed to receive grant funds.  Prior to using funds for this purpose, the Office shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds.

Office of Indigent Defense Services Expansion Funds
SECTION 14.15.  Section 14.11 of S.L. 2005‑276 reads as rewritten:
"SECTION 14.11. The Judicial Department, Office of Indigent Defense Services, may use up to the sum of two million one hundred eighteen thousand five hundred eighty dollars ($2,118,580) in appropriated funds during the 2006‑2007 fiscal year for the expansion of existing offices currently providing legal services to the indigent population under the oversight of the Office of Indigent Defense Services by creating up to 20 new attorney positions and 10 new support staff positions. These funds may be used for salaries, benefits, equipment, and related expenses. Prior to using funds for this purpose, the Office of Indigent Defense Services shall report to the Chairs of the House and the Senate Appropriations Subcommittees on Justice and Public Safety on the proposed expansion."

PART XV. DEPARTMENT OF JUVENILE JUSTICE AND DELINQUENCY PREVENTION

REPORTS ON CERTAIN PROGRAMS
SECTION 15.1.  Section 16.3 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.3.(a)  Project Challenge North Carolina, Inc., shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee by April 1 each year on the operation and the effectiveness of its program in providing alternative dispositions and services to juveniles who have been adjudicated delinquent or undisciplined. The report shall include information on:
(1)	The source of referrals for juveniles.
(2)	The types of offenses committed by juveniles participating in the program.
(3)	The amount of time those juveniles spend in the program.
(4)	The number of juveniles who successfully complete the program.
(5)	The number of juveniles who commit additional offenses after completing the program.
(6)	The program's budget and expenditures, including all funding sources.
SECTION 16.3.(b)  The Juvenile Assessment Center shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on the effectiveness of the Center by April 1 each year. The report shall include information on the number of juveniles served and an evaluation of the effectiveness of juvenile assessment plans and services provided as a result of these plans. In addition, the report shall include information on the Center's budget and expenditures, including all funding sources.
SECTION 16.3.(c)  Communities in Schools shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety, the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee, and the Joint Legislative Education Oversight Committee by April 1 each year on the operation and effectiveness of its program. The report shall include information on:
(1)	The number of children served.
(2)	The number of volunteers used.
(3)	The impact on children who have received services from Communities in Schools.
(4)	The program's budget and expenditures, including all funding sources."

STATE FUNDS MAY BE USED AS FEDERAL MATCHING FUNDS
SECTION 15.2.  Section 16.5 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.5. Funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention for the 2006‑2007 fiscal year may be used as matching funds for the Juvenile Accountability Incentive Block Grants. If North Carolina receives Juvenile Accountability Incentive Block Grants, or a notice of funds to be awarded, the Office of State Budget and Management and the Governor's Crime Commission shall consult with the Department of Juvenile Justice and Delinquency Prevention regarding the criteria for awarding federal funds. The Office of State Budget and Management, the Governor's Crime Commission, and the Department of Juvenile Justice and Delinquency Prevention shall report to the Appropriations Committees of the Senate and House of Representatives and the Joint Legislative Commission on Governmental Operations prior to allocation of the federal funds. The report shall identify the amount of funds to be received for the  2006‑2007 fiscal year, the amount of funds anticipated for the 2007‑2008 fiscal year, and the allocation of funds by program and purpose."

Waiver of revised licensing Standards for Juvenile Facilities
SECTION 15.3.  Notwithstanding any other provision of law, the Department of Juvenile Justice and Delinquency Prevention shall operate the seven wilderness camping programs in conjunction with Eckerd Youth Alternatives, Inc., pursuant to the mental health licensing standards of the Department of Health and Human Services, Division of Social Services, effective on July 1, 2006, until January 1, 2008. Revisions or amendments to the State mental health licensing standards that become effective after July 1, 2006, shall not apply to the seven Eckerd wilderness camping programs from July 1, 2006, to July 1, 2008.

ANNUAL evaluation of COMMUNITY programs
SECTION 15.4.  Section 16.4 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.4. The Department of Juvenile Justice and Delinquency Prevention shall conduct an evaluation of the Eckerd and Camp Woodson wilderness camp programs, the teen court programs, the program that grants funds to the local organizations of the Boys and Girls Clubs established pursuant to Section 21.10 of S.L. 1999‑237, the Save Our Students program, the Governor's One‑on‑One Programs, and multipurpose group homes. The teen court report shall include statistical information on the number of juveniles served, the number and type of offenses considered by teen courts, referral sources for teen courts, and the number of juveniles that become court‑involved after participation in teen courts. The report on the Boys and Girls Clubs program shall include information on:
(1)	The expenditure of State appropriations on the program;
(2)	The operations and the effectiveness of the program; and
(3)	The number of juveniles served under the program.
In conducting the evaluation of each of these programs, the Department shall consider whether participation in each program results in a reduction of court involvement among juveniles. The Department shall also identify whether the programs are achieving the goals and objectives of the Juvenile Justice Act, S.L. 1998‑202. The Department shall report the results of the evaluation to the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee, the Chairs of the House of Representatives and Senate Appropriations Committees, and the Chairs of the Subcommittees on Justice and Public Safety of the House of Representatives and Senate Appropriations Committees by March 1 of each year."

alternatives to juvenile commitment/juvenile crime prevention councils
SECTION 15.5.  Section 16.11 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.11.(a)  Of the funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention, the sum of two hundred fifty thousand dollars ($250,000) shall be used to expand  Juvenile Crime Prevention Councils demonstration projects designed to reduce commitments to youth development centers. Specifically, the funds shall be awarded to Juvenile Crime Prevention Councils to provide residential and/or community‑based intensive services to juveniles who have been adjudicated delinquent with a level 2 or 3 disposition or who are reentering the community after serving time in a youth development center. The Department shall develop a competitive grant award process to allocate the funds to county Juvenile Crime Prevention Councils. The programs must initiate services to the targeted population no later than March 1, 2006. On June 30, 2006, any funds not awarded for demonstration projects pursuant to this section by the Department shall revert to the General Fund. The Department may award up to four grants to Juvenile Crime Prevention Councils, and no individual grant may exceed one hundred thousand dollars ($100,000).
SECTION 16.11.(b)  The Department of Juvenile Justice and Delinquency Prevention shall report to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee no later than March 1, 2006, on the implementation and award process. The report shall provide a detailed description of the services to be provided by each program, the number and types of juveniles to be served, and the amount awarded to each program.
SECTION 16.11.(c)  The Department of Juvenile Justice and Delinquency Prevention shall report to the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety no later than March 1, 2006, and annually thereafter, on the results of the alternatives to commitment demonstration programs funded by Section 16.7 of S.L. 2004‑124. The 2007 report and all annual reports thereafter shall also include projects funded by this section for the 2005‑2006 fiscal year. Specifically, the report shall provide a detailed description of each of the demonstration programs, including the numbers of juveniles served, their adjudication status at the time of service, the services/treatments provided, the length of service, the total cost per juvenile, and the six‑ and 12‑month recidivism rates for the juveniles after the termination of program services.
SECTION 16.11.(d)  The requirements of this section apply to all future allocations by the Department of Juvenile Justice and Delinquency Prevention of the funds appropriated to the Department by Section 16.11 of S.L. 2005‑276 and Section 16.7 of S.L. 2004‑124."

Reports on Youth Development Centers
SECTION 15.6.(a)  Section 16.6 of S.L. 2005‑276 reads as rewritten:
"SECTION 16.6.(a)  The Department of Juvenile Justice and Delinquency Prevention shall report December 31, 2005, and quarterly thereafter during the 2005‑2007 biennium to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and to the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee on the treatment staffing model being piloted at Samarkand and Stonewall Jackson Youth Development Centers. The report shall include a list of total positions at each facility by job class, whether the position is vacant or filled, whether positions were filled from internal employees or new employees, and the training and certification status of each position. The report shall also describe the nature of the treatment program, the criteria for evaluating the program, and how the program is performing in comparison to these criteria. The report shall also describe the training approach to be used to train staff in using treatment methods in youth development centers and provide information on current staff training and staff training planned for the next quarter. The Department shall also develop indicators for evaluating staff performance once the model has been implemented.
SECTION 16.6.(b)  The Department of Juvenile Justice and Delinquency Prevention shall report December 31, 2005, and quarterly thereafter during the 2005‑2007 biennium to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee on the implementation of the treatment staffing model at Dobbs, Dillon, and Juvenile Evaluation Center Youth Development Centers. The Department shall identify the number of positions reallocated to the new treatment job classes and the source of funding for those positions.
SECTION 16.6.(c)  The Department of Juvenile Justice and Delinquency Prevention shall report to the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Corrections, Crime Control, and Juvenile Justice Oversight Committee by November 10, 2006, on the final recommended staffing plan for youth development centers for the 2007‑2008 fiscal year. The report shall include:
(1)	The latest results of the evaluation of the pilot treatment staffing models at the Samarkand and Stonewall Jackson Youth Development Centers and the progress in implementing the model at other youth development centers.
(2)	The total recommended staffing by position classification for each youth development center. Staffing by shift shall be provided for each housing unit as well as justification for the level and type of staff on each shift.
(3)	The total cost and cost per bed for each youth development center to implement the staffing model.
(4)	The primary basis for the number of staff at each youth development center by classification.
(5)	An identification of other states that have implemented a treatment based staffing model, how the staffing patterns compare to the Department of Juvenile Justice and Delinquency Prevention proposal, and any research on the benefits and outcomes of using the treatment based approach in these states."
SECTION 15.6.(b)  It is the intent of the General Assembly to consider appropriating funds for new treatment positions at youth development centers only when the report required by subsection (a) of this section is received by the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety.

PART XVI. DEPARTMENT OF CORRECTION

INMATE COSTS/MEDICAL BUDGET FOR PRESCRIPTION DRUGS AND INMATE LAUNDRY SERVICES
SECTION 16.1.  Section 17.6 of S.L. 2005‑276 reads as rewritten:
"SECTION 17.6.(a)  If the cost of providing  health care to inmates housed in the Division of Prisons is anticipated to exceed the continuation budget amounts provided for that purpose in this act, the Department of Correction shall report the reasons for the anticipated cost increase and the source of funds the Department intends to use to cover those additional needs to the Joint Legislative Commission on Governmental Operations, the Chairs of the Senate and House of Representatives Appropriations Committees, and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety.
SECTION 17.6.(b)  Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the  2005‑2007 biennium for the purchase of prescription drugs for inmates if expenditures are projected to exceed the Department's inmate medical continuation budget for prescription drugs. The Department shall consult with the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount.
SECTION 17.6.(c)  Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the  2005‑2007 biennium for the purchase of  laundry services for inmates if expenditures are projected to exceed the Department's budget for clothing and laundry services. The Department shall consult with the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount."

CONVERSION OF CONTRACTED MEDICAL POSITIONS
SECTION 16.2.  Section 17.7 of S.L. 2005‑276 reads as rewritten:
"SECTION 17.7.(a)  The Department of Correction may convert contract medical positions to permanent State medical positions if the Department can document that the total savings generated will exceed the total cost of the new positions for each facility. Where practical, the Department shall convert contract positions to permanent positions by using existing vacancies in medical positions.
SECTION 17.7.(b)  The Department of Correction shall report by April of each year to the Joint Legislative Commission on Governmental Operations and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on all conversions made pursuant to this section, by type of position and location, and on the savings generated at each correctional facility."

COMPUTER/DATA PROCESSING SERVICES FUNDS
SECTION 16.3.  Section 17.10. of S.L. 2005‑276 reads as rewritten:
"SECTION 17.10. Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the 2005‑2007 biennium for expenses for computer/data processing services if expenditures exceed the Department's continuation budget amount for those services. The Department shall report to the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount."

REPORTS ON NONPROFIT PROGRAMS
SECTION 16.4.  Section 17.22 of Session Laws 2005‑276 reads as rewritten:
"SECTION 17.22.(a)  Funds appropriated in this act to the Department of Correction to support the programs of Harriet's House may be used for program operating costs, the purchase of equipment, and the rental of real property to serve women released from prison with children in their custody. Harriet's House shall report by February 1 of each year to the  Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on the expenditure of State appropriations and on the effectiveness of the program, including information on the number of clients served, the number of clients who successfully complete the Harriet's House program, and the number of clients who have been rearrested within three years of successfully completing the program. The report shall provide financial and program data for the complete fiscal year prior to the year in which the report is submitted. The financial report shall identify all funding sources and amounts.
SECTION 17.22.(b)  Summit House shall report by February 1 of each year to the  Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on the expenditure of State appropriations and on the effectiveness of the program, including information on the number of clients served, the number of clients who have had their probation revoked, the number of clients who successfully complete the program while housed at Summit House, Inc., and the number of clients who have been rearrested within three years of successfully completing the program. The report shall provide financial and program data for the complete fiscal year prior to the year in which the report is submitted. The financial report shall identify all funding sources and amounts.
SECTION 17.22.(c)  Women at Risk shall report by February 1 of each year to the  Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on the expenditure of State funds and on the effectiveness of the program, including information on the number of clients served, the number of clients who have had their probation revoked, the number of clients who have successfully completed the program, and the number of clients who have been rearrested within three years of successfully completing the program. The report shall provide financial and program data for the complete fiscal year prior to the year in which the report is submitted. The financial report shall identify all funding sources and amounts."

PAROLE ELIGIBILITY REPORT
SECTION 16.5.  Section 17.28 of S.L. 2005‑276 reads as rewritten:
"SECTION 17.28.(a)  The Post‑Release Supervision and Parole Commission shall, with the assistance of the North Carolina Sentencing and Policy Advisory Commission and the Department of Correction, analyze the amount of time each parole‑eligible inmate has served compared to the time served by offenders under Structured Sentencing for comparable crimes. The Commission shall determine if the person has served more time in custody than the person would have served if sentenced to the maximum sentence under the provisions of Article 81B of Chapter 15A of the General Statutes. The "maximum sentence", for the purposes of this section, shall be calculated as set forth in subsection (b) of this section.
SECTION 17.28.(b)  For the purposes of this section, the following rules apply for the calculation of the maximum sentence:
(1)	The offense upon which the person was convicted shall be classified as the same felony class as the offense would have been classified if committed after the effective date of Article 81B of Chapter 15A of the General Statutes.
(2)	The minimum sentence shall be the maximum number of months in the presumptive range of minimum durations in Prior Record Level VI of G.S. 15A‑1340.17(c) for the felony class determined under subdivision (1) of this subsection. The maximum sentence shall be calculated using G.S. 15A‑1340.17(d), (e), or (e1).
(3)	If a person is serving sentences for two or more offenses that are concurrent in any respect, then the offense with the greater classification shall be used to determine a single maximum sentence for the concurrent offenses. The fact that the person has been convicted of multiple offenses may be considered by the Commission in making its determinations under subsection (a) of this section.
SECTION 17.28.(c)  The Commission shall report to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee  and to the Chairs of the Senate and House of Representatives Appropriations Committees, and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety by April 1, 2007. The report shall include the following:  the class of the offense for which each parole‑eligible inmate was convicted and whether an inmate had multiple criminal convictions. The Commission shall reinitiate the parole review process for each offender who has served more time than that person would have under Structured Sentencing as provided by subsections (a) and (b) of this section.
The Commission shall also report  on the number of parole‑eligible inmates reconsidered in compliance with this section and the number who were actually paroled."

PRETRIAL SERVICES PROGRAM
SECTION 16.6.  Of funds appropriated from the General Fund to the Department of Correction the sum of four hundred thousand dollars ($400,000) for the 2006‑2007 fiscal year shall be used for the Pretrial Services Program. These funds will be managed by the Criminal Justice Partnership Program and will be allocated on a matching basis according to the following priorities:
(1)	Counties that received State funds through the Criminal Justice Partnership Program to operate pretrial services programs in the 2005‑2006 fiscal year.
(2)	Counties that do not currently have a pretrial services program, but would like to start one.
(3)	Counties that currently operate pretrial services programs but did not receive State funds to operate during the 2005‑2006 fiscal year.

GPS Monitoring of Most Serious Sex Offenders
SECTION 16.7.(a)  Article 27A of Chapter 14 of the General Statutes is amended by adding a new Part to read:
"Part 5. Sex Offender Monitoring.
"§ 14‑208.33.  Establishment of program; creation of guidelines; duties.
(a)	The Department of Correction shall establish a sex offender monitoring program that uses a continuous satellite‑based monitoring system and shall create guidelines to govern the program. The program shall be designed to monitor two categories of offenders as follows:
(1)	Any offender who is convicted of a reportable conviction as defined by G.S. 14‑208.6(4) and who is required to register under Part 3 of Article 27A of Chapter 14 of the General Statutes because the defendant is classified as a sexually violent predator, is a recidivist, or was convicted of an aggravated offense as those terms are defined in G.S. 14‑208.6. An offender in this category who is ordered by the court to submit to satellite‑based monitoring is subject to that requirement for the person's natural life, unless the requirement is terminated pursuant to G.S. 14‑208.36.
(2)	Any offender who satisfies all of the following criteria:  (i) is convicted of a reportable conviction as defined by G.S. 14‑208.6(4), (ii) is required to register under Part 2 of Article 27A of Chapter 14 of the General Statutes, (iii) has committed an offense involving the physical, mental, or sexual abuse of a minor, and (iv) based on the Department's risk assessment program requires the highest possible level of supervision and monitoring. An offender in this category who is ordered by the court to submit to satellite‑based monitoring is subject to that requirement only for the period of time ordered by the court and is not subject to a requirement of lifetime satellite‑based monitoring.
(b)	In developing the guidelines for the program, the Department shall require that any offender who is enrolled in the satellite‑based program submit to an active continuous satellite‑based monitoring program, unless an active program will not work as provided by this section. If the Department determines that an active program will not work as provided by this section, then the Department shall require that the defendant submit to a passive continuous satellite‑based program that works within the technological or geographical limitations.
(c)	The satellite‑based monitoring program shall use a system that provides all of the following:
(1)	Time‑correlated and continuous tracking of the geographic location of the subject using a global positioning system based on satellite and other location tracking technology.
(2)	Reporting of subject's violations of prescriptive and proscriptive schedule or location requirements. Frequency of reporting may range from once a day (passive) to near real‑time (active).
(d)	The Department may contract with a single vendor for the hardware services needed to monitor subject offenders and correlate their movements to reported crime incidents. The contract may provide for services necessary to implement or facilitate any of the provisions of this Part.
"§ 14‑208.34.  Enrollment in satellite‑based monitoring programs mandatory; length of enrollment.
(a)	Any person described by G.S. 14‑208.33(a)(1) shall enroll in a satellite‑based monitoring program with the Division of Community Corrections office in the county where the person resides. The person shall remain enrolled in the satellite‑based monitoring program for the registration period imposed under G.S. 14‑208.23 which is the person's life, unless the requirement to enroll in the satellite‑based monitoring program is terminated pursuant to G.S. 14‑208.35.
(b)	Any person described by G.S. 14‑208.33(a)(2) who is ordered by the court to enroll in a satellite‑based monitoring program shall do so with the Division of Community Corrections office in the county where the person resides. The person shall remain enrolled in the satellite‑based monitoring program for the period of time ordered by the court.
"§ 14‑208.35.  Lifetime registration offenders required to submit to satellite‑based monitoring for life and to continue on unsupervised probation upon completion of sentence.
Notwithstanding any other provision of law, when the court sentences an offender who is in the category described by G.S. 14‑208.33(a)(1) for a reportable conviction as defined by G.S. 14‑208.6(4), and orders the offender to enroll in a satellite‑based monitoring program, the court shall also order that the offender, upon completion of the offender's sentence and any term of parole, post‑release supervision, intermediate punishment, or supervised probation that follows the sentence, continue to be enrolled in the satellite‑based monitoring program for the offender's life and be placed on unsupervised probation unless the requirement that the person enroll in a satellite‑based monitoring program is terminated pursuant to G.S. 14‑208.36.
"§ 14‑208.36.  Request for termination of satellite‑based monitoring requirement.
(a)	An offender described by G.S. 14‑308.33(a)(1) who is required to submit to satellite‑based monitoring for the offender's life may file a request for termination of monitoring requirement with the Post‑Release Supervision and Parole Commission. The request to terminate the satellite‑based monitoring requirement and to terminate the accompanying requirement of unsupervised probation may not be submitted until at least one year after the offender:  (i) has served his or her sentence for the offense for which the satellite‑based monitoring requirement was imposed, and (ii) has also completed any period of probation, parole, or post‑release supervision imposed as part of the sentence.
(b)	Upon receipt of the request for termination, the Commission shall review documentation contained in the offender's file and the statewide registry to determine whether the person has complied with the provisions of this Article. In addition, the Commission shall conduct fingerprint‑based state and federal criminal history record checks to determine whether the person has been convicted of any additional reportable convictions.
(c)	If it is determined that the person has not received any additional reportable convictions during the period of satellite‑based monitoring and the person has substantially complied with the provisions of this Article, the Commission may terminate the monitoring requirement if the Commission finds that the person is not likely to pose a threat to the safety of others. 
(d)	If it is determined that the person has received any additional reportable convictions during the period of satellite‑based monitoring or has not substantially complied with the provisions of this Article, the Commission shall not order the termination of the monitoring requirement.
(e)	The Commission shall not consider any request to terminate a monitoring requirement except as provided by this section. The Commission has no authority to consider or terminate a monitoring requirement for an offender described in G.S. 14‑208.33(a)(2).
"§ 14‑208.37.  Failure to enroll; tampering with device.
(a)	Any person required to enroll in a satellite‑based monitoring program who fails to enroll shall be guilty of a Class E felony.
(b)	Any person who intentionally tampers with, removes, or vandalizes a device issued pursuant to a satellite‑based monitoring program to a person duly enrolled in the program shall be guilty of a Class C felony.
"§ 14‑208.38.  Fees.
(a)	There shall be a onetime fee of ninety dollars ($90.00) assessed to each person required to enroll pursuant to this Part. The court may exempt a person from paying the fee only for good cause and upon motion of the person placed on satellite‑based monitoring. The court may require that the fee be paid in advance or in a lump sum or sums, and a probation officer may require payment by those methods if the officer is authorized by subsection (c) of this section to determine the payment schedule. This fee is intended to offset only the costs associated with the time‑correlated tracking of the geographic location of subjects using the location tracking crime correlation system.
(b)	The fee shall be payable to the clerk of superior court, and the fees shall be remitted quarterly to the Department.
(c)	If a person placed on supervised probation, parole, or post‑release supervision is required as a condition of that probation, parole, or post‑release supervision to pay any moneys to the clerk of superior court, the court may delegate to a probation officer the responsibility to determine the payment schedule."
SECTION 16.7.(b)  G.S. 15A‑1343(b2) reads as rewritten:
"(b2)	Special Conditions of Probation for Sex Offenders and Persons Convicted of Offenses Involving Physical, Mental, or Sexual Abuse of a Minor. – As special conditions of probation, a defendant who has been convicted of an offense which is a reportable conviction as defined in G.S. 14‑208.6(4), or which involves the physical, mental, or sexual abuse of a minor, must:
(1)	Register as required by G.S. 14‑208.7 if the offense is a reportable conviction as defined by G.S. 14‑208.6(4).
(2)	Participate in such evaluation and treatment as is necessary to complete a prescribed course of psychiatric, psychological, or other rehabilitative treatment as ordered by the court.
(3)	Not communicate with, be in the presence of, or found in or on the premises of the victim of the offense.
(4)	Not reside in a household with any minor child if the offense is one in which there is evidence of sexual abuse of a minor.
(5)	Not reside in a household with any minor child if the offense is one in which there is evidence of physical or mental abuse of a minor, unless the court expressly finds that it is unlikely that the defendant's harmful or abusive conduct will recur and that it would be in the minor child's best interest to allow the probationer to reside in the same household with a minor child.
(6)	Satisfy any other conditions determined by the court to be reasonably related to his rehabilitation.
(7)	Submit to satellite‑based monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes, if the defendant is described by G.S. 14‑208.33(a)(1).
(8)	Submit to electronic monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes, if the defendant is in the category described by G.S. 14‑208.33(a)(2), and the Department of Correction, based on the Department's risk assessment program, recommends that the defendant submit to the highest possible level of supervision and monitoring.
Defendants subject to the provisions of this subsection shall not be placed on unsupervised probation."
SECTION 16.7.(c)  G.S. 15A‑1343.2 is amended by adding a new subsection to read:
"(f1)	Mandatory Condition of Satellite‑Based Monitoring For Some Sex Offenders. – Notwithstanding any other provision of this section, the court shall impose satellite‑based monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes as a condition of probation on any offender who is described by G.S. 14‑208.33(a)(1)."
SECTION 16.7.(d)  G.S. 15A‑1343.2(f) is amended by adding a new subdivision to read:
"(5)	Submit to electronic monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes, if the defendant is described by G.S. 14‑208.33(a)(2)."
SECTION 16.7.(e)  G.S. 15A‑1344 is amended by adding a new subsection to read:
"(e2)	Mandatory Satellite‑Based Monitoring Required for Extension of Probation in Response to Violation by Certain Sex Offenders. – If a defendant who is in the category described by G.S. 14‑208.33(a)(1) violates probation and if the court extends the probation as a result of the violation, then the court shall order satellite‑based monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes as a condition of the extended probation."
SECTION 16.7.(f)  G.S. 15A‑1368.2 is amended by adding a new subsection to read:
"(c1)	Notwithstanding subsection (c) of this section, a person required to submit to satellite‑based monitoring pursuant to G.S. 15A‑1368.4(b1)(6) shall continue to participate in satellite‑based monitoring beyond the period of post‑release supervision until the Commission releases the person from that requirement pursuant to G.S. 15A‑1368.4A."
SECTION 16.7.(g)  G.S. 15A‑1368.4 (b1) reads as rewritten:
"(b1)	Additional Required Conditions for Sex Offenders and Persons Convicted of Offenses Involving Physical, Mental, or Sexual Abuse of a Minor. –
In addition to the required condition set forth in subsection (b) of this section, for a supervisee who has been convicted of an offense which is a reportable conviction as defined in G.S. 14‑208.6(4), or which involves the physical, mental, or sexual abuse of a minor, controlling conditions, violations of which may result in revocation of post‑release supervision, are:
(1)	Register as required by G.S. 14‑208.7 if the offense is a reportable conviction as defined by G.S. 14‑208.6(4).
(2)	Participate in such evaluation and treatment as is necessary to complete a prescribed course of psychiatric, psychological, or other rehabilitative treatment as ordered by the Commission.
(3)	Not communicate with, be in the presence of, or found in or on the premises of the victim of the offense.
(4)	Not reside in a household with any minor child if the offense is one in which there is evidence of sexual abuse of a minor.
(5)	Not reside in a household with any minor child if the offense is one in which there is evidence of physical or mental abuse of a minor, unless a court of competent jurisdiction expressly finds that it is unlikely that the defendant's harmful or abusive conduct will recur and that it would be in the child's best interest to allow the supervisee to reside in the same household with a minor child.
(6)	Failure to submit to satellite‑based monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes, if the offense is a reportable conviction as defined by G.S. 14‑208.6(4) and the supervisee is in the category described by G.S. 14‑208.33(a)(1).
(7)	Failure to submit to satellite‑based monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes, if the offense is a reportable conviction as defined by G.S. 14‑208.6(4) and the supervisee is in the category described by G.S. 14‑208.33(a)(2)."
SECTION 16.7.(h)  G.S. 15A‑1374 is amended by adding a new subsection to read:
"(b1)	Mandatory Satellite‑Based Monitoring Required as Condition of Parole for Certain Offenders. – If a parolee is in a category described by G.S. 14‑208.33(a)(1), the Commission must require as a condition of parole that the parolee submit to satellite‑based monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes. If a parolee is in a category described by G.S. 14‑208.33(a)(2), the Commission may require as a condition of parole that the parolee submit to satellite‑based monitoring pursuant to Part 5 of Article 27A of Chapter 14 of the General Statutes."
SECTION 16.7.(i)  G.S. 143B‑266 is amended by adding a new subsection to read:
"(e)	The Commission may accept and review requests from persons placed on probation, parole, or post‑release supervision to terminate a mandatory condition of satellite‑based monitoring as provided by G.S. 14‑208.35. The Commission may grant or deny those requests in compliance with G.S.14‑208.35."
SECTION 16.7.(j)  The Department of Correction shall have the program enacted by subsection (a) of this section established by January 1, 2007.
SECTION 16.7.(k)  This section is effective when it becomes law and applies to offenses committed on or after that date.  This section also applies to any person sentenced to intermediate punishment on or after that date and to any person released from prison by parole or post‑release supervision on or after that date.  This section also applies to any person who completes his or her sentence on or after the effective date of this section who is not on post‑release supervision or parole.  However, the requirement to enroll in a satellite‑based program is not mandatory until January 1, 2007, when the program is established.

PART XVII. DEPARTMENT OF ADMINISTRATION

Examine Feasibility of Combining Funding sources/nc Council for women and Domestic violence commission
SECTION 17.1.  The North Carolina Council for Women and the Domestic Violence Commission, within the Department of Administration, shall examine the feasibility of combining the funding sources to distribute domestic violence grants and sexual assault grants. The North Carolina Council for Women and the Domestic Violence Commission shall report their findings to the Joint Legislative Commission on Governmental Operations by February 1, 2007.

PART XVIII. Office of Administrative hearings

Codifier's Authority over the Register
SECTION 18.1.  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 XIX. DEPARTMENT OF REVENUE

Extended DOR Call Center Fee Use
SECTION 19.1.  Section 22.6(a) of S.L. 2002‑126, as amended by Section 23.1 of S.L. 2003‑284, as amended by Section 23.1 of S.L. 2004‑124, reads as rewritten:
"SECTION 22.6.(a)  There is appropriated from the collection assistance fee account created in G.S. 105‑243.1 to the Department of Revenue the sum of one million six hundred twenty‑two thousand eight hundred ninety‑six dollars ($1,622,896) for the 2003‑2004 fiscal year and the sum of two million one hundred fifty‑four thousand five hundred ninety‑three dollars ($2,154,593) for the 2004‑2005 fiscal year to pay for the costs of establishing and equipping a central taxpayer telecommunications service center for collections and assistance and for the costs associated with aligning local field offices with the new center. Of the funds appropriated in this subsection, the sum of three million dollars ($3,000,000) that was designated for the 2003‑2005 biennium to pay for the costs of establishing and equipping a central taxpayer telecommunications service center does not revert at the end of the 2004‑2005 fiscal year but remains available until June 30, 2007, for operating costs of the service center."

Revised Maximums for Collection Assistance Fees
SECTION 19.2.  G.S. 105‑243.1(e) reads as rewritten:
"(e)	Use. – The fee is a receipt of the Department and must be applied to the costs of collecting overdue tax debts. The proceeds of the fee must be credited to a special account within the Department and may be expended only as provided in this subsection. The proceeds of the fee may not be used for any purpose that is not directly and primarily related to collecting overdue tax debts. The Department may apply the proceeds of the fee for the purposes listed in this subsection. The remaining proceeds of the fee may be spent only pursuant to appropriation by the General Assembly. The fee proceeds do not revert but remain in the special account until spent for the costs of collecting overdue tax debts. The Department and the Office of State Budget and Management must account for all expenditures using accounting procedures that clearly distinguish costs allocable to collecting overdue tax debts from costs allocable to other purposes and must demonstrate that none of the fee proceeds are used for any purpose other than collecting overdue tax debts.
The Department may apply the fee proceeds for the following purposes:
(1)	To pay contractors for collecting overdue tax debts under subsection (b) of this section.
(2)	To pay the fee the United States Department of the Treasury charges for setoff to recover tax owed to North Carolina.
(3)	To pay for taxpayer locater services, not to exceed one hundred forty‑one thousand dollars ($141,000) a year.
(4)	To pay for postage or other delivery charges for correspondence directly and primarily relating to collecting overdue tax debts, not to exceed three hundred fifty‑three thousand dollars ($353,000) a year.
(5)	To pay for operating expenses for Project Collection Tax and the Taxpayer Assistance Call Center.
(6)	To pay for expenses of the Examination and Collection Division directly and primarily relating to collecting overdue tax debts."

Consolidate Tax Projects Reports
SECTION 19.3.(a)  G.S. 105‑243.1(f) reads as rewritten:
"(f)	Reports. – The report of Department activities required by G.S. 105‑256 contains information on the Department's efforts to collect tax debts and its use of the proceeds of the collection assistance fee."
SECTION 19.3.(b)  G.S. 105‑256(a) reads as rewritten:
"(a)	Reports. – The Secretary shall prepare and publish the following:
…
(6)	On an annual basis, a report on the quality of services provided to taxpayers through the Taxpayer Assistance Call Center, walk‑in assistance, and taxpayer education. The report must be submitted to the Joint Legislative Commission on Governmental Operations.
…
(8)	By January 1 and July 1 of each year, a semiannual report on the Department's activities listed in this subdivision. The report must be submitted to the Joint Legislative Commission on Governmental Operations and to the Revenue Laws Study Committee. 
a.	Its efforts to increase compliance with the tax laws. The report must describe the Department's existing initiatives in this area as of July 1, 2006, and must estimate, by tax type and amount, the revenue expected in the fiscal year by the initiative. The report must describe any new initiative implemented since July 1, 2006, and estimate, by tax type and amount, the revenue expected in the fiscal year by the initiative. 
b.	Its efforts to identify and address fraud and other abuses of the voluntary tax compliance system that result in unreported and underreported tax. The report must describe the Department's long‑term plan for achieving greater voluntary compliance and must summarize the steps taken since the last report and their results. 
c.	Its efforts to collect tax debts. The report must include a breakdown of the amount and age of tax debts collected through warning letters and by other means, must itemize collections by type of tax, must describe the Department's long‑term collection plan, and must summarize the steps taken since the last report and their results. 
d.	Its use of the proceeds of the collection assistance fee imposed by G.S. 105‑243.1.
SECTION 19.3.(c)  The first report required under G.S. 105‑256(a)(8), as enacted by this section, is due by January 1, 2007.

Payment of USUB Penalties to Civil Penalty and Forfeiture Fund
SECTION 19.4.  Notwithstanding G.S. 143‑18, the Department of Revenue shall be allowed to expend up to two million four hundred thirty‑four thousand two hundred seventy dollars and seventy‑one cents ($2,434,270.71) of unencumbered maintenance appropriations as of June 30, 2006, for the purpose of paying the Civil Penalty and Forfeiture Fund.  The amount to be expended represents Unauthorized Substance Tax penalty collections that were paid to local law enforcement agencies for the period of July 1, 2005, through December 31, 2005.  The source of the unencumbered funds shall come entirely from the Department of Revenue.  If unencumbered funds are not sufficient at June 30, 2006, the Department shall use anticipated unencumbered funds as of July 1, 2006.  The Department shall reduce succeeding distributions to a law enforcement agency under G.S. 105‑113.113 by the amount that was improperly distributed to that agency.

PART XX. DEPARTMENT OF THE STATE TREASURER

Consolidate Public Employee Retirement Programs in Single Agency
SECTION 20.1.  G.S. 143B‑426.24 reads as rewritten:
"§ 143B‑426.24.  Board of Trustees of the North Carolina Public Employee Deferred Compensation Plan.
(a)	The Governor may, by Executive Order, establish a Board of Trustees of the North Carolina Public Employee Deferred Compensation Plan, which when established shall be constituted an agency of the State of North Carolina within the Department of State Treasurer. The Board shall create, establish, implement, coordinate and administer a Deferred Compensation Plan for employees of the State, any county or municipality, the North Carolina Community College System, and any political subdivision of the State. Until so established, the Board heretofore established pursuant to Executive Order XII dated November 12, 1974, shall continue in effect. Likewise, the Plan heretofore established shall continue until a new plan is established.
(b)	The Board shall consist of seven voting members, as follows:
(1)	Three persons shall be appointed by the Governor who shall have experience with taxation, finance and investments, one of whom shall be a State employee;
(2)	One member shall be appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives under G.S. 120‑121;
(3)	One member shall be appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate under G.S. 120‑121;
(4)	The Secretary of Administration, ex officio; and
(5)	The State Treasurer, ex officio, chairman.
(c)	General Assembly appointments shall serve two year terms. A member shall continue to serve until his successor is duly appointed but a holdover under this provision does not affect the expiration date of the succeeding term. No member of the Board may serve more than three consecutive two year terms.
(d)	In case of a vacancy on the Board before the expiration of a member's term, a successor shall be appointed within 30 days of the vacancy for the remainder of the unexpired term by the appropriate official pursuant to subsection (b). Vacancies in legislative appointments shall be filled under G.S. 120‑122.
(e)	Other than ex officio members, members appointed by the Governor shall serve at his pleasure.
(f)	Any ex officio member may designate in writing, filed with the Board, any employee of his department to act at any meeting of the Board from which the member is absent, to the same extent that the member could act if present in person at such meeting.
(g)	It shall be the duty of the Board when established to review all contracts, agreements or arrangements then in force relating to G.S. 147‑9.2 and Executive Order XII to include, but not be limited to, such contracts, agreements or arrangements pertaining to the administrative services and the investment of deferred funds under the Plan for the purpose of recommending continuation of or changes to such contracts, agreements or arrangements.
(h)	It shall be the duty of the Board to devise a uniform Deferred Compensation Plan for teachers and employees, which shall include a reasonable number of options to the teacher or employee, for the investment of deferred funds, among which may be life insurance, fixed or variable annuities and retirement income contracts, regulated investment trusts, pooled investment funds managed by the Board or its designee, or other forms of investment approved by the Board, always in such form as will assure the desired tax treatment of such funds. The Board may alter, revise and modify the Plan from time to time to improve the Plan or to conform to and comply with requirements of State and federal laws and regulations relating to the deferral of compensation of teachers and public employees generally.
(h1)	Notwithstanding any other law, an employee of any county or municipality, an employee of the North Carolina Community College System, or an employee of any political subdivision of the State may participate in any 457 Plan adopted by the State, with the consent of the Board and with the consent of the proper governing authority of such county, municipality, community college, or political subdivision of the State where such employee is employed.
(i)	The Board is authorized to delegate the performance of such of its administrative duties as it deems appropriate including coordination, administration, and marketing of the Plan to teachers and employees. Prior to entering into any contract with respect to such administrative duties, it shall seek bids, hold public hearings and in general take such steps as are calculated by the Board to obtain competent, efficient and worthy services for the performance of such administrative duties.
(j)	The Board may acquire investment vehicles from any company duly authorized to conduct such business in this State or may establish, alter, amend and modify, to the extent it deems necessary or desirable, a trust for the purpose of facilitating the administration, investment and maintenance of assets acquired by the investment of deferred funds. All assets of the Plan, including all deferred amounts, property and rights purchased with deferred amounts, and all income attributed thereto shall be held in trust for the exclusive benefit of the Plan participants and their beneficiaries.
(k)	Members of the Board, who are not officers or employees of the State, shall receive per diem and necessary travel and subsistence in accordance with the provisions of G.S. 138‑5, funded as provided in subsection (m) hereof.
(l)	All clerical and other services and personnel required by the Board shall be supplied by the Department of State Treasurer, funded as provided in subsection (m) hereof.
(m)	Investment of deferred funds shall not be unreasonably delayed, and in no case shall the investment of deferred funds be delayed more than 30 days. The Board may accumulate such funds pending investment, and the interest earned on such funds pending investment shall be available to and may be spent in the discretion of the Board only for the reasonable and necessary expenses of the Board. The State Treasurer is authorized to prescribe guidelines for the expenditure of such funds by the Board. From time to time as the Board may direct, funds not required for such expenses may be used to defray administrative expenses and fees which would otherwise be required to be borne by teachers and employees who are then participating in the Plan.
(n)	A majority of the Board shall constitute a quorum for the transaction of business.
(o)	It is intended that the provisions of this Part shall be liberally construed to accomplish the purposes provided for herein."

PART XXI. DEPARTMENT OF TRANSPORTATION

Transportation of Wood Residuals
SECTION 21.1.  G.S. 20‑118(c)(15) reads as rewritten:
"(c)	Exceptions. – The following exceptions apply to G.S. 20‑118(b) and 20‑118(e).
…
(15)	Subsections (b) and (e) of this section do not apply to a vehicle or vehicle combination that meets all of the conditions below, but all other enforcement provisions of this Article remain applicable:
a.	Is hauling wood residuals, including wood chips, sawdust, mulch, or tree bark from any site; or is transporting bulk soil, bulk rock, sand, sand rock, or asphalt millings from a site that does not have a certified scale for weighing the vehicle.
b.	Does not operate on an interstate highway, a posted light‑traffic road, or a posted bridge.
c.	Does not exceed a maximum gross weight 4,000 pounds in excess of what is allowed in subsection (b) of this section.
d.	Does not exceed a single‑axle weight of more than 22,000 pounds and a tandem‑axle weight of more than 42,000 pounds.
…"

Online Dealer Registration Funds
SECTION 21.2.(a)  Notwithstanding the provisions of Section 28.22(b) of S.L. 2005‑276, for fiscal year 2006‑2007, the Division of Motor Vehicles is prohibited from spending any funds appropriated to it for Online Dealer Registration enhancements.
SECTION 21.2.(b)  This section becomes effective June 30, 2006.

Transportation Improvement Plan Pilot
SECTION 21.3.  The Department of Transportation may enter into agreements with units of local government for the purpose of expediting transportation projects currently programmed in the Transportation Improvement Plan.
The agreements affected by this section shall be between the Department of Transportation and units of local government. The agreements may authorize units of local government to construct projects scheduled in the Transportation Improvement Plan more than two years from the date of the agreement. The units of local government shall fund one hundred percent (100%) of the project at current prices. In a future year, when the project is funded from State and federal sources, the units of local government shall be reimbursed an appropriate share of the funds, at the future programmed project funding amount, as identified and scheduled in the Transportation Improvement Plan.
The Department of Transportation shall report to the Joint Legislative Transportation Oversight Committee by December 1, 2006, on any agreements executed with units of local government pursuant to this section.

CASH FLOW HIGHWAY FUNDS AND HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 21.4.(a)  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
For Fiscal Year 2007‑2008	$1,798.0 million
For Fiscal Year 2008‑2009	$1,836.2 million
For Fiscal Year 2009‑2010	$1,859.2 million
For Fiscal Year 2010‑2011	$1,872.6 million
SECTION 21.4.(b)  The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
For Fiscal Year 2007‑2008	$1,128.9 million
For Fiscal Year 2008‑2009	$1,167.8 million
For Fiscal Year 2009‑2010	$1,203.0 million
For Fiscal Year 2010‑2011	$1,235.0 million

DEPARTMENT OF TRANSPORTATION TO PROVIDE REAL‑TIME ACCESS TO ALL Weigh‑in‑Motion Data PRODUCED AND TRANSMITTED FROM WEIGH‑IN‑MOTION SITES THROUGHOUT THE STATE and PROVIDE Periodic Summaries of Data Collected at EXISTING DOT Weigh‑in‑Motion Sites
SECTION 21.5.(a)  The Department of Transportation shall provide the State Highway Patrol real‑time access to all real‑time data collection efforts at all existing weigh‑in‑motion sites by October 1, 2006, to include but not limited to:
(1)	Install wireless access points at each site to allow the State Highway Patrol to station troopers at or near the weigh‑in‑motion site, capture data on a computer with software and technology capable of receiving the real‑time data as it is captured by the weigh‑in‑motion site, and then take appropriate enforcement action.
(2)	Provide periodic summaries of collected data to assist in monitoring overweight vehicle travel volumes, habits, routes, and date and time information.
(3)	Acquire any necessary software to allow the State Highway Patrol to interface with the existing systems at all weigh‑in‑motion sites throughout the State.
(4)	Provide access to any new facilities constructed on DOT rights‑of‑way that collect, monitor, seize, or capture any data related to violations of weight, length, or height restrictions.
SECTION 21.5.(b)  The State Highway Patrol shall report the effectiveness of the access to weigh‑in‑motion sites, the collected data, and use of these sites as a vehicle weight screening technology to increase the effectiveness of Motor Carrier Enforcement activities to the Joint Legislative Transportation Oversight Committee by October 1, 2006.

FUNDS FOR ECONOMIC DEVELOPMENT, SPOT SAFETY, AND TRANSPORTATION IMPROVEMENT PROGRAM PROJECTS
SECTION 21.6.  Of the funds appropriated by this act to the Department of Transportation in fiscal year 2006‑2007, twenty‑eight million dollars ($28,000,000) shall be allocated equally among the 14 Highway Divisions for economic development transportation projects recommended by the member of the Board of Transportation representing the Division in which the project is to be constructed in consultation with the Division Engineer and approved by the Board of Transportation. Funds in each Division not needed for economic development projects shall be used on spot safety needs to enhance safety, reduce congestion, improve traffic flow, reduce accidents, and for system preservation. Any remaining funds in each Division shall be used on Transportation Improvement Program projects. The Secretary of Transportation shall not prevent or delay the implementation of any projects approved by the Board of Transportation pursuant to this section.

Change Sunset of Open Container Law
SECTION 21.7.  Section 21 of S.L. 2000‑155, as amended by Section 1 of S.L. 2002‑25, reads as rewritten:
"SECTION 21. Section 4 of this act is effective September 1, 2000, and expires September 30, 2010. Sections 19 and 20 of this act are effective when those sections become law. The remainder of this act becomes effective September 1, 2000, and applies to offenses committed on or after that date."

Maintenance of Permanent Weigh Stations
SECTION 21.8.  G.S. 20‑183.9 reads as rewritten:
"§ 20‑183.9.  Establishment and maintenance of permanent weigh stations.
The Department of Crime Control and Public Safety is hereby authorized, empowered and directed to equip and operate permanent weigh stations equipped to weigh vehicles using the streets and highways of this State to determine whether such vehicles are being operated in accordance with legislative enactments relating to weights of vehicles and their loads. The permanent weigh stations shall be established at such locations on the streets and highways in this State as will enable them to be used most advantageously in determining the weight of vehicles and their loads. The Department of Transportation shall be responsible for the maintenance and upkeep of all permanent weigh stations established pursuant to this section."

Viper Radio Program
SECTION 21.9.  The State Highway Patrol shall issue a request for a proposal for the maintenance of the Voice Interoperability Plan for Emergency Responders (VIPER). The bid shall be for the current system in place and shall not include installation of the system.
The Criminal Justice Information Network (CJIN) shall prepare a cost allocation plan for the continued building and operation of the VIPER system that shall include proposed shared costs for installation and use by all State government users, including, but not limited to the Department of Health and Human Services, the State Emergency Management Division, the Wildlife Resources Commission, the State Bureau of Investigation, the State Highway Patrol, and Alcohol Law Enforcement. 
The CJIN shall report to the Legislative Transportation Oversight Committee, the Chairs of both the Appropriations Subcommittees for Transportation and Justice and Public Safety, and the Fiscal Research Division by October 1, 2006.

access roads for economic development
SECTION 21.10.  Of funds appropriated to the Department of Transportation, the Department shall use up to the sum of one million seven hundred thousand dollars ($1,700,000) from the maintenance funds account for construction of access roads in municipalities that have populations greater than 500,000 persons, according to the most recent decennial federal census, to encourage economic development of undeveloped lands. The Department of Transportation may contract with an approved developer to construct an access road and reimburse the developer from the appropriate funds.

Conform Seat Belt Law to Federal Law to prevent a loss of federal highway funds
SECTION 21.11.  G.S. 20‑135.2A.(c) reads as rewritten:
"(c)	This section shall not apply to any of the following:
(1)	A driver or occupant of a noncommercial motor vehicle with a medical or physical condition that prevents appropriate restraint by a safety belt or with a professionally certified mental phobia against the wearing of vehicle restraints;
(2)	A motor vehicle operated by a rural letter carrier of the United States Postal Service while performing duties as a rural letter carrier and a motor vehicle operated by a newspaper delivery person while actually engaged in delivery of newspapers along the person's specified route;
(3)	A driver or passenger frequently stopping and leaving the vehicle or delivering property from the vehicle if the speed of the vehicle between stops does not exceed 20 miles per hour;
(4)	Any vehicle registered and licensed as a property‑carrying vehicle in accordance with G.S. 20‑88, while being used for agricultural purposes in intrastate commerce; or
(5)	A motor vehicle not required to be equipped with seat safety belts under federal law."

Utilization of small business enterprises in department projects or the Use of Fully Operated Rental Equipment
SECTION 21.12.  From funds available to the Department of Transportation, a goal of fifty million dollars ($50,000,000) per year is established for the utilization of small business enterprises through contracts or the use of fully operated rental equipment.

Consolidation of Rural Funding programs by the Department of Transportation's Public Transportation Division
SECTION 21.13.  The Department of Transportation, Public Transportation Division, may consolidate its rural funding programs into one large rural capital and operating program for funding of rural and small urban public transportation systems.  The Division shall have flexibility to realign funding based on actual needs of transportation systems and for leveraging additional federal funds.  The programs affected by the consolidation include: Rural Capital Program, Rural Intercity Program, Rural General Public, Rural Facility Program, Elderly and Disabled Transportation Assistance Program, Rural Technology Program, and Work First/Employment Transportation Program.
The Division shall submit a report on its funding allocation no later than October 31, 2006, to the Chairs of the Appropriations Subcommittee for Transportation and the Fiscal Research Division.

Funds For Stormwater Projects
SECTION 21.14.  Of funds available to the Department of Transportation, fifteen million dollars ($15,000,000) shall be transferred during the 2006‑2007 fiscal year to the Department of Environment and Natural Resources for a stormwater pilot project to clean up State‑maintained ocean outfalls and associated outlets through new and innovative technologies and filtering mechanisms.

Allowable Loads in Agricultural Transporting
SECTION 21.15.  G.S. 20‑51(6) reads as rewritten:
"(6)	Any trailer or semitrailer attached to and drawn by a properly licensed motor vehicle when used by a farmer, his tenant, agent, or employee in transporting unginned cotton, peanuts, soybeans, corn, hay, tobacco, silage, cucumbers, potatoes, all vegetables, fruits, greenhouse and nursery plants and flowers, Christmas trees, fertilizers or chemicals purchased or owned by the farmer or tenant for personal use in implementing husbandry, irrigation pipes, loaders, or equipment owned by the farmer or tenant from place to place on the same farm, from one farm to another, from farm to gin, from farm to dryer, or from farm to market, and when not operated on a for‑hire basis. The term "transporting" as used herein shall include the actual hauling of said products and all unloaded travel in connection therewith."

An Act to Promote Preservation of the Interstate Highway System
SECTION 21.16.  In order to promote the preservation of the Interstate Highway System and to more effectively utilize existing Federal Highway Funds for Interstate Maintenance and Preservation, the Department of Transportation shall annually allocate, of the funds available from the Interstate Maintenance Federal Funds authorization, thirty million dollars ($30,000,000) to the 14 Highway Divisions for Interstate resurfacing and preventive maintenance activities specifically for the purposes of pavement preservation, improving ride quality, and extending the life of the Interstate System.
These funds shall be distributed to each Highway Division according to the percentage of lane‑miles of Interstate Highways within that division and deducting from that lane‑mileage, projects awarded the previous fiscal year for pavement rehabilitation, not including Division awarded projects for preventive maintenance.
If during any fiscal year, the Board of Transportation authorizes the transfer of Interstate Maintenance Funds to other federal funding types, the amount of funds distributed to the 14 Highway Divisions by this act shall be concurrently increased by an amount equal to the transfer of Interstate Maintenance Funds.

develop and implement a plan to plant trees and other vegetation on the right‑of‑ways of the state's roads and highways and to provide funding for that plan.
SECTION 21.17.(a)  The Department of Environment and Natural Resources, in collaboration with the Departments of Transportation and Correction shall develop and implement a plan to plant the maximum number of trees and other natural and native vegetation feasible along State roads and highways in the right‑of‑way of the Department of Transportation. The Department of Environment and Natural Resources shall report to the Legislative Oversight Commission on Governmental Operations and the Fiscal Research Division by January 1, 2007, on the number of trees and the amount of native vegetation planted pursuant to this section. 
SECTION 21.17.(b)  Of the funds available to the Department of Transportation, the Department shall transfer twenty‑five thousand dollars ($25,000) to the Department of Environment and Natural Resources during the 2006‑2007 fiscal year to implement this section.

PART XXII. SALARIES AND EMPLOYEE BENEFITS

governor and council of state/salary increases
SECTION 22.1.(a)  Effective July 1, 2006, G.S. 147‑11(a) reads as rewritten:
"(a)	The salary of the Governor shall be one hundred thirty thousand ten dollars ($130,010) annually, payable monthly."
SECTION 22.1.(b)  Section 29.1(b) of S.L. 2005‑276 reads as rewritten:
"SECTION 29.1.(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	$114,743
	Attorney General	114,743
	Secretary of State	114,743
	State Treasurer	114,743
	State Auditor	114,743
	Superintendent of Public Instruction	114,743
	Agriculture Commissioner	114,743
	Insurance Commissioner	114,743
	Labor Commissioner	114,743"

nonelected department heads/salary increases
SECTION 22.2.  Section 29.2 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.2. 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	$112,103
	Secretary of Correction	112,103
	Secretary of Crime Control and Public Safety	112,103
	Secretary of Cultural Resources	112,103
	Secretary of Commerce	112,103
	Secretary of Environment and Natural Resources	112,103
	Secretary of Health and Human Services	112,103
	Secretary of Juvenile Justice and Delinquency	112,103
	Secretary of Revenue	112,103
	Secretary of Transportation	112,103"

certain executive branch officials/salary increases
SECTION 22.3. Section 29.3 of Section of S.L. 2005‑276 reads as rewritten:
"SECTION 29.3. 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	$	102,034
	State Controller		142,797
	Commissioner of Motor Vehicles		102,034
	Commissioner of Banks		114,743
	Chairman, Employment Security Commission	133,161
	State Personnel Director		112,103
	Chairman, Parole Commission		93,170
	Members of the Parole Commission		43,008
	Chairman, Utilities Commission		127,786
	Members of the Utilities Commission		114,743
	Executive Director, Agency for 
Public Telecommunications		86,017
	Director, Museum of Art		104,552
	Executive Director, North Carolina Agricultural
Finance Authority		99,316
	State Chief Information Officer		142,711"

judicial branch officials/salary increases
SECTION 22.4.  Section 29.4 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.4.(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	$130,010
	Associate Justice, Supreme Court	126,612
	Chief Judge, Court of Appeals	123,446
	Judge, Court of Appeals	121,337
	Judge, Senior Regular Resident Superior Court	118,040
	Judge, Superior Court	114,743
	Chief Judge, District Court	104,193
	Judge, District Court	100,896
	Administrative Officer of the Courts	118,040
	Assistant Administrative Officer of the Courts	107,818"
SECTION 29.4.(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‑six thousand seventy‑seven dollars ($66,077), and the minimum salary of any assistant district attorney or assistant public defender is at least thirty‑four thousand five hundred twenty‑nine dollars ($34,529) effective July 1, 2006.
SECTION 29.4.(c)  Effective July 1, 2005, the annual salaries of permanent, full‑time employees of the Judicial Department whose salaries are not itemized in this act shall be increased by the greater of eight hundred fifty dollars ($850.00) or two percent (2%). 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 five percent (5%).
SECTION 29.4.(d)  Effective July 1, 2005, 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 eight hundred fifty dollars ($850.00) or two percent (2%), whichever is greater. 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 five percent (5%)."

clerk of superior court/salary increases
SECTION 22.5.  Effective July 1, 2006, G.S. 7A‑101(a) reads as rewritten:
"(a)	The clerk of superior court is a full‑time employee of the State and shall receive an annual salary, payable in equal monthly installments, based on the population of the county as determined in subsection (a1) of this section, according to the following schedule:
Population	Annual Salary
Less than 100,000		$76,747
100,000 to 149,999		86,122
150,000 to 249,999		95,500
250,000 and above		104,878.
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 22.6.  Effective July 1, 2006, G.S. 7A‑102(c1) reads as rewritten:
"(c1)	A full‑time assistant clerk or a full‑time deputy clerk, and up to one full‑time deputy clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the following minimum and maximum rates:
Assistant Clerks and Head Bookkeeper	Annual Salary
Minimum		$29,783
Maximum		51,008

Deputy Clerks	Annual Salary
Minimum		$25,636
Maximum		39,673."

magistrates' salary increases
SECTION 22.7.(a)  Effective July 1, 2006, G.S. 7A‑171.1(a) reads as rewritten:
"(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		$30,176
Step 1		32,944
Step 2		35,955
Step 3		39,242
Step 4		42,842
Step 5		46,898
Step 6		51,447.
(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 22.7.(b)  Effective July 1, 2006, G.S. 7A‑171.1(a1) reads as rewritten:
"(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	$24,334
1 or more but less than 3 years of service		25,451
3 or more but less than 5 years of service		27,699.
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 22.8.  Effective July 1, 2006, G.S. 120‑37(c) reads as rewritten:
"(c)	The principal clerks shall be full‑time officers. Each principal clerk shall be entitled to other benefits available to permanent legislative employees and shall be paid an annual salary of ninety‑six thousand nine hundred forty dollars ($96,940) payable monthly. Each principal clerk shall also receive such additional compensation as approved by the Speaker of the House of Representatives or the President Pro Tempore of the Senate, respectively, for additional employment duties beyond those provided by the rules of their House. 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 22.9.  Effective July 1, 2006, G.S. 120‑37(b) reads as rewritten:
"(b)	The sergeant‑at‑arms and the reading clerk in each house shall be paid a salary of three hundred forty‑three dollars ($343.00) 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 22.10.  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 five percent (5%).  Nothing in this act limits any of the provisions of G.S. 120‑32.

Community college personnel/salary increases
SECTION 22.11.  Section 29.11 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.11. The Director of the Budget shall transfer from the Reserve for Compensation Increases, created in this act for fiscal years 2005‑2006 and 2006‑2007, funds to the North Carolina Community Colleges System Office necessary to provide an annual salary increase of the greater of eight hundred fifty dollars ($850.00) or two percent (2%), including funds for the employer's retirement and social security contributions, commencing July 1, 2005, for all community college employees supported by State funds. 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:
(1)	An annual salary increase for faculty and professional staff of six percent (6%), plus a one‑time two percent (2%) bonus, including funds for the employer's retirement and social security contributions, commencing July 1, 2006, for all community college employees supported by State funds. The one‑time two percent (2%) bonus authorized by this section shall be made in accordance with rules adopted by the State Board of Community Colleges.
(2)	An annual increase of five percent (5%), including funds for employer's retirement and social security contributions, commencing July 1, 2006, for all other community college employees  supported by State funds."

university of north carolina system/epa compensation
SECTION 22.12.  Section 29.12 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.12.(a)   For the 2005‑2006 fiscal year, 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 years 2005‑2006 and 2006‑2007, to provide an annual salary increase of the greater of eight hundred fifty dollars ($850.00) or two percent (2%), including funds for the employer's retirement and social security contributions, commencing July 1, 2005, 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 flat dollar increase of eight hundred fifty dollars ($850.00) shall be made to all employees whose annual salary is less than or equal to forty‑two thousand five hundred dollars ($42,500). The percentage annual salary increase of two percent (2%) authorized by this section shall be made on an aggregated average basis, and these funds shall be allocated to individuals whose annual salary is greater than forty‑two thousand five hundred dollars ($42,500), 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 29.12(a1)  For the 2006‑2007 fiscal year, 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 six percent (6%), plus a one‑time two percent bonus (2%), 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 six percent (6%), plus the one‑time two percent (2%) bonus, authorized by this section shall be made on an aggregated average basis, 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 29.12.(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 years 2005‑2006 and 2006‑2007, to provide an average annual salary increase of two and twenty‑four hundredths percent (2.24%), including funds for the employer's retirement and social security contributions, commencing July 1, 2005, 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.
SECTION 29.12.(b1)  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 eight percent (8%), but at least an annual increase of two thousand two hundred fifty dollars ($2,250) 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 22.13.  Section 29.13 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.13.(a)  The salaries in effect June 30, 2005, 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, 2005, by the greater of eight hundred fifty dollars ($850.00) or two percent (2%), unless otherwise provided by this act. Effective July 1, 2006, 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 Highway Funds shall be increased by five percent (5%).
SECTION 29.13.(b)  Except as otherwise provided in this act, the fiscal year 2005‑2006 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 the greater of eight hundred fifty dollars ($850.00) or two percent (2%), effective July 1, 2005, unless otherwise provided by this act. Effective July 1, 2006, the compensation of permanent full‑time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall be increased by five percent (5%).
SECTION 29.13.(c)  The salaries in effect for fiscal year 2005‑2006 for all permanent part‑time State employees shall be increased, effective July 1, 2005, by pro rata amounts of eight hundred fifty dollars ($850.00) or two percent (2%), whichever is greater. Effective July 1, 2006, the salaries of all permanent part‑time State employees shall be increased by five percent (5%).
SECTION 29.13.(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 salary increases, 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 29.13.(e)  For the 2005‑2006 fiscal year, within regular Executive Budget Act procedures as limited by this act, all State agencies and departments may increase on an equitable basis the rate of pay of temporary and permanent hourly State employees, subject to availability of funds in the particular agency or department, by pro rata amounts of the greater of the eight hundred fifty dollar ($850.00) or two percent (2%) increase provided for permanent full‑time employees covered by the provisions of subsection (a) of this section, commencing July 1, 2005. For the 2006‑2007 fiscal year, 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 the five percent (5%) 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 22.14.  Section 29.14 of S.L. 2005‑276 reads as rewritten:
"SECTION 29.14.(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 29.14.(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 29.14.(c)  The fiscal year 2005‑2006 salary increases provided in this act are to be effective July 1, 2005, 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, 2005. The fiscal year 2006‑2007 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  which represent payment of services provided prior to these increases 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 29.14.(d)  The Director of the Budget shall transfer from the Reserve for Compensation Increases in this act for fiscal year 2005‑2006 and 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 29.14.(e)  Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.
SECTION 29.14.(f)  For the 2005‑2006 fiscal year, permanent full‑time employees who work a nine‑, ten‑, or eleven‑month work year schedule shall receive the eight hundred fifty dollars ($850.00) or two percent (2%) annual increase provided by this act, whichever is greater. For the 2006‑2007 fiscal year, permanent full‑time employees who work a nine‑, ten‑, or eleven‑month work year schedule shall receive the five percent (5%) annual increase provided by this act."

SALARY ADJUSTMENT FUND
SECTION 22.15.  Section 29.15(b) of S.L. 2005‑276 reads as rewritten:
"SECTION 29.15.(b)  Funds appropriated or otherwise transferred to the Salary Adjustment Fund by this act or any other provision of law shall be used to fund agency requests for the following purposes:
(1)	Salary range revisions, including special minimum rate adjustments, to provide competitive salary rates for affected job classifications in response to changes in labor market salary rates as documented through data collection and analysis according to accepted human resource professional practices and standards.
(2)	Reallocation of positions to higher‑level job classifications to compensate employees for more difficult duties at competitive salary rates as documented through data collection and analysis according to accepted human resource professional practices and standards.
The terms 'salary range revision' and 'reallocation' as used in this section shall conform to the definitions of those terms as previously contained in the State Personnel Manual and adopted by the State Personnel Commission effective immediately prior to November 1, 2005. Funding shall be given only to those salary range revisions previously approved by the State Personnel Commission and reallocations previously approved by the Office of State Personnel or  designee prior to January 1, 2006, and shall not be used for other purposes including, but not limited to, in‑range adjustments, career banding adjustments (whether by grade to band transfer adjustments, career progression adjustments, or other similar methods), geographic differentials, or other adjustments as these terms may be defined by State Personnel Policy."

division of water quality salary increases
SECTION 22.16.  The Department of Environment and Natural Resources is authorized to, and shall, provide to the employees of the Division of Water Quality an increase in annual salary of ten percent (10%). This increase shall be calculated and awarded after any across‑the‑board salary increases authorized by this act.

SALARY‑RELATED CONTRIBUTIONS/EMPLOYER
SECTION 22.17.  Section 29.24(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 29.24.(c)  Effective July 1, 2006, the State's employer contribution rates budgeted for retirement and related benefits as percentage of covered salaries for the 2006‑2007 fiscal year are:  (i)  seven and fourteen hundredths percent (7.14%) – Teachers and State Employees; (ii)  twelve and fourteen hundredths percent (12.14%) – State Law Enforcement Officers; (iii) eleven and sixteen hundredths percent (11.16%) – University Employees' Optional Retirement System; (iv) eleven and sixteen hundredths percent (11.16%) – Community College Optional Retirement Program; (v) sixteen and thirty‑nine hundredths percent (16.39%) – Consolidated Judicial Retirement System; and (vi) three and eight‑tenths percent (3.8%) – Legislative Retirement System. Each of the foregoing contribution rates includes three and eight‑tenths percent (3.8%) for hospital and medical benefits. The rate for Teachers and State Employees, State Law Enforcement Officers, Community College Optional Retirement Program, and for the University Employees' Optional Retirement Program includes fifty‑two hundredths percent (0.52%) for the Disability Income Plan. The rates for Teachers and State Employees and State Law Enforcement Officers include sixteen hundredths percent (0.16%) for the Death Benefits Plan. The rate for State Law Enforcement Officers includes five percent (5%) for Supplemental Retirement Income."

PROVIDE COST‑OF‑LIVING INCREASES FOR RETIREES OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE JUDICIAL RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT SYSTEM
SECTION 22.18.(a).  G.S. 135‑5 is amended by adding a new subsection to read:
"(ooo)	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 percent (3%) 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 percent (3%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2005, and June 30, 2006."
SECTION 22.18.(b)  G.S. 120‑4.22A is amended by adding a new subsection to read:
"(u)	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 percent (3%) 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 percent (3%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between January 1, 2006, and June 30, 2006."
SECTION 22.18.(c)  G.S. 135‑65 is amended by adding a new subsection to read:
"(aa)	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 percent (3%) 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 percent (3%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2005, and June 30, 2006."

INCREASE THE MONTHLY PENSION FOR MEMBERS OF THE FIREMEN'S AND RESCUE SQUAD WORKERS' PENSION FUND
SECTION 22.19.  G.S. 58‑86‑55 reads as rewritten:
"§ 58‑86‑55.  Monthly pensions upon retirement.
Any member who has served 20 years as an "eligible fireman" or "eligible rescue squad worker" in the State of North Carolina, as provided in G.S. 58‑86‑25 and G.S. 58‑86‑30, and who has attained the age of 55 years is entitled to be paid a monthly pension from this fund. The monthly pension shall be in the amount of  one hundred sixty‑five dollars ($165.00) per month. Any retired fireman receiving a pension shall, effective  July 1, 2006, receive a pension of  one hundred sixty‑five dollars ($165.00) per month.
Members shall pay ten dollars ($10.00) per month as required by G.S. 58‑86‑35 and G.S. 58‑86‑40 for a period of no longer than 20 years. No "eligible rescue squad member" shall receive a pension prior to July 1, 1983. No member shall be entitled to a pension hereunder until the member's official duties as a fireman or rescue squad worker for which the member is paid compensation shall have been terminated and the member shall have retired as such according to standards or rules fixed by the board of trustees.
A member who is totally and permanently disabled while in the discharge of the member's official duties as a result of bodily injuries sustained or as a result of extreme exercise or extreme activity experienced in the course and scope of those official duties and who leaves the fire or rescue squad service because of this disability shall be entitled to be paid from the fund a monthly benefit in an amount of  one hundred sixty‑five dollars ($165.00) per month beginning the first month after the member's fifty‑fifth birthday. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application, and annually thereafter. Any disabled member shall not be required to make the monthly payment of ten dollars ($10.00) as required by G.S. 58‑86‑35 and G.S. 58‑86‑40.
A member who is totally and permanently disabled for any cause, other than line of duty, who leaves the fire or rescue squad service because of this disability and who has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member shall upon attaining the age of 55 years be entitled to receive a pension as provided by this section. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application and annually thereafter.
A member who, because his residence is annexed by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose department is closed because of an annexation by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose volunteer department is taken over by a city or county, and because of such annexation or takeover is unable to perform as a fireman or rescue squad worker of any status, and if the member has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member upon attaining the age of 55 years and completion of such contributions shall be entitled to receive a pension as provided by this section. Any application to make monthly contributions under this section shall be subject to a finding of eligibility by the Board of Trustees upon application of the member.
The pensions provided shall be in addition to all other pensions or benefits under any other statutes of the State of North Carolina or the United States, notwithstanding any exclusionary provisions of other pensions or retirement systems provided by law."

INCREASE THE MAXIMUM MONTHLY PENSION BENEFITS FOR RETIRED MEMBERS OF THE NORTH CAROLINA NATIONAL GUARD
SECTION 22.20.  G.S. 127A‑40(a) reads as rewritten:
"(a)	Every member and former member of the North Carolina national guard who meets the requirements hereinafter set forth shall receive, commencing at age 60, a pension of  eighty dollars ($80.00) per month for 20 years' creditable military service with an additional  eight dollars ($8.00) per month for each additional year of such service; provided, however, that the total pension shall not exceed  one hundred sixty dollars ($160.00) per month. The requirements for such pension are that each member shall:
(1)	Have served and qualified for at least 20 years' creditable military service, including national guard, reserve and active duty, under the same requirement specified for entitlement to retired pay for nonregular service under Chapter 67, Title 10, United States Code.
(2)	Have at least 15 years of the aforementioned service as a member of the North Carolina national guard.
(3)	Have received an honorable discharge from the North Carolina national guard."

PART XXIII. CAPITAL APPROPRIATIONS.

CAPITAL APPROPRIATIONS/GENERAL FUND
SECTION 23.1.  There is appropriated from the General Fund for the 2006‑2007 fiscal year the following amounts for capital improvements:

Capital Improvements – General Fund	2006‑2007
	
Department of Agriculture and Consumer Services
	Rollins Laboratory – Bio Security Level 2 Lab Conversion	$250,000

Department of Crime Control and Public Safety	
	Emergency Management Operations Center 	8,500,000

Department of Environment and Natural Resources	
	Hickory Nut Gorge Expansion	15,000,000
	Water Resources Development Projects	20,000,000

Office of the Governor
	Information Technology Services – State Data Center	24,841,300

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

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

	University of North Carolina at Charlotte –
		Center City Classroom Building	45,827,400

	Winston Salem State University – Center for Design
		Innovation	3,500,000

	University of North Carolina at Chapel Hill –
		Genomics Science Building Design and Construction
			Preparation	35,000,000
	
	UNC Hospitals at Chapel Hill – Master Facilities Plan	3,000,000

	Western Carolina University – New School of Health and
		Gerontological Sciences Building Planning Funds	2,402,661

	Dental Schools Planning Funds	7,000,000

TOTAL CAPITAL IMPROVEMENTS – GENERAL FUND	$253,321,361

Water Resources Development Project Funds
SECTION 23.2.(a)  The Department of Environment and Natural Resources shall allocate the funds appropriated in this act for water resources development projects to the following projects whose costs are as indicated:
Name of Project	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	3,500,000
			TOTALS	$ 20,000,000
SECTION 23.2.(b)  Where the actual costs are different from the estimated costs under subsection (a) of this section, the Department may adjust the allocations among projects as needed. If any projects funded under subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 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 23.2.(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.

Repairs and Renovations Reserve Allocation
SECTION 23.3.  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.
Notwithstanding G.S. 143‑15.3A, the Board of Governors may allocate funds for the repair and renovation of facilities not supported from the General Fund if the Board determines that sufficient funds are not available from other sources and that conditions warrant General Fund assistance. Any such finding shall be included in the Board's submission to the Joint Legislative Commission on Governmental Operations on the proposed allocation of funds.
The Board of Governors and the Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations prior to the allocation or reallocation of these funds.

include in the six‑year capital improvement plan the recommended funding sources for the projects proposed
SECTION 23.4.  G.S. 143‑34.45 reads as rewritten:
"§ 143‑34.45.  Six‑year capital improvement plan.
(a)	The State capital improvement plan shall address the long‑term capital improvement needs of all State government agencies and shall incorporate all capital projects, however financed, proposed to meet those needs, except that transportation infrastructure projects shall be excluded. On or before December 31 of each even‑numbered year, the Director of the Budget shall prepare and transmit to the General Assembly a six‑year capital improvement plan. When preparing the plan, the Director of the Budget shall consider the capital improvement needs estimates submitted by State agencies as required in G.S. 143‑34.44. The plan shall be prepared in two parts.
(b)	The first part of the capital improvement plan shall set forth repair and renovations requirements that, in the judgment of the Director of the Budget, must be met to protect and preserve existing capital improvement facilities. The plan shall identify individual projects in priority order by State agency and shall specify the proposed means of financing.
(c)	The second part of the capital improvement plan shall set forth an integrated schedule for land acquisition, new construction, or rehabilitation of existing facilities that, in the judgment of the Director of the Budget, should be initiated within each year of the six‑year planning period. The plan shall contain all of the following for each project: 
(1)	An estimate of land acquisition and construction or rehabilitation costs.
(2)	The proposed means of financing the project. Where the means of financing would involve direct or indirect debt service obligations, the plan shall include a schedule of those obligations.
(3)	An estimated schedule for the completion of the project."

use of existing plans for state construction
SECTION 23.5.(a)  G.S. 143‑31.1 reads as rewritten:
"§ 143‑31.1.  Use of existing plans for State construction projects; study and review of plans and specifications for building, improvement, etc., projects.
(a)	All State agencies shall use existing plans and specifications for construction projects, where feasible. Prior to designing a project, State agencies shall consult with the Department of Administration on the availability of appropriate existing plans and specifications and the feasibility of using them for a project.
(b)	The Director of the Budget shall determine whether buildings, repairs, alterations, additions or improvements to physical properties for which appropriations of State funds are made have been designed for the specific purpose for which such appropriations are made, that such projects have been designed giving proper consideration to economy in first cost, in maintenance cost, in materials and type of construction. Architectural features shall be selected which give proper consideration to economy in design. The Director of the Budget shall have prepared a complete study and review of all plans and specifications for such projects and bids on same will not be received until the results of such study and review have been incorporated in such plans and specifications, and until economic conditions of the construction industry are considered by the Office of State Budget and Management to be favorable to the letting of construction contracts. The Director of the Budget may, when he considers it in the best interest of the State to do so, terminate design contracts when it is documented that the designer has failed to perform the conditions enumerated in the contract.
Notwithstanding G.S. 143‑135, the Director of the Budget may authorize the Department of Health and Human Services and the Department of Correction to use funds necessary for projects that correct deficiencies, improve living conditions, or renovate unneeded patient space for State office space."
SECTION 23.5.(b)  G.S. 116‑31.11(a) reads as rewritten:
"(a)	Notwithstanding G.S. 143‑341(3) and G.S. 143‑135.1, the Board shall, with respect to the design, construction, or renovation of buildings, utilities, and other property developments of The University of North Carolina requiring the estimated expenditure of public money of two million dollars ($2,000,000) or less:
(1)	Conduct the fee negotiations for all design contracts and supervise the letting of all construction and design contracts.
(2)	Develop procedures governing the responsibilities of The University of North Carolina and its affiliated and constituent institutions to perform the duties of the Department of Administration and the Director or Office of State Construction under G.S. 133‑1.1(d) and G.S. 143‑341(3).
(3)	Develop procedures and reasonable limitations governing the use of open‑end design agreements, subject to G.S. 143‑64.34 and the approval of the State Building Commission.
(4)	Use existing plans and specifications for construction projects, where feasible. Prior to designing a project, the Board shall consult with the Department of Administration on the availability of existing plans and specifications and the feasibility of using them for a project."
SECTION 23.5.(c)  This section applies to construction projects on which design is begun after that date.

USE OF RECEIPTS OF THE AQUARIUMS
SECTION 23.6.  Notwithstanding any other provision of law and pursuant to G.S. 143B‑289.44, the Department of Environment and Natural Resources shall use funds available in the North Carolina Aquariums Fund to pay the debt service related to the construction of a one million gallon aquarium tank at the aquarium on Roanoke Island, a one million gallon tank at the Fort Fisher aquarium, and improvements to Jennette's pier in Nags Head and the Emerald Isle pier.

Timber Sales Receipts for Capital Improvements at Agricultural Research Stations and Farms
SECTION 23.7.  Section 11.2 of S.L. 2005‑276 reads as rewritten:
"SECTION 11.2. The sum of one million thirty‑three thousand one hundred dollars ($1,033,100) shall be transferred from the Department of Agriculture and Consumer Services' timber sales capital improvement account in the Department of Agriculture and Consumer Services as such funds become available  during the 2006‑2007 fiscal year and used by the Department for the following capital improvements projects at agricultural research stations and research farms:
(1)	$378,000 for improvements at the swine facility at the Cherry Research Farm.
(2)	$285,500 for renovation of dairy facilities at the Cherry Research Farm. 
(3)	$369,600 for land acquisition and development at the Tidewater Research Station."

Timber Sales Receipts for Land Acquisition at Piedmont Research Station
SECTION 23.8.  The sum of one million seven hundred thousand dollars ($1,700,000) shall be transferred from the Department of Agriculture and Consumer Services' timber sales capital improvement account in the Department of Agriculture and Consumer Services as such funds become available during the 2006‑2007 fiscal year and shall be used by the Department for land acquisition at the Piedmont Research Station in Rowan County.

PLANT CONSERVATION PROGRAM FUNDS
SECTION 23.9.  Section 11.3 of S.L. 2005‑276 reads as rewritten:
"SECTION 11.3. 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) for the 2006‑2007 fiscal year shall be transferred to the Department of Agriculture and Consumer Services to be used by the Department for its 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 the management of plant conservation program preserves owned by the Department."

PART XXIV. tax reductions 

Reduce Sales Tax Rate Early
SECTION 24.1.(a)  Section 34.13(c) of S.L. 2001‑424, as amended by Section 38.1 of S.L. 2003‑284, 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 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."
SECTION 24.1.(b)  G.S. 105‑164.4(a), as amended by subsection (a) of this section, 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 and one‑quarter percent (4.25%).
…"
SECTION 24.1.(c)  G.S. 105‑164.4(a), as amended by subsections (a) and (b) of this section, 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 (4%).
…"
SECTION 24.1.(d)  G.S. 105‑164.44F (a) reads as rewritten:
"(a)	Amount. – The Secretary must distribute to the cities part of the taxes imposed by G.S. 105‑164.4(a)(4c) on telecommunications service. The Secretary must make the distribution within 75 days after the end of each calendar quarter. The amount the Secretary must distribute is  eighteen and seventy one‑hundredths percent (18.70%) of the net proceeds of the taxes collected during the quarter, minus two million six hundred twenty thousand nine hundred forty‑eight dollars ($2,620,948). This deduction is one‑fourth of the annual amount by which the distribution to cities of the gross receipts franchise tax on telephone companies, imposed by former G.S. 105‑120, was required to be reduced beginning in fiscal year 1995‑96 as a result of the "freeze deduction." The Secretary must distribute the specified percentage of the proceeds, less the "freeze deduction" among the cities in accordance with this section."
SECTION 24.1.(e)  G.S. 105‑164.44F(a), as amended by subsection (d) of this section, reads as rewritten:
"(a)	Amount. – The Secretary must distribute to the cities part of the taxes imposed by G.S. 105‑164.4(a)(4c) on telecommunications service. The Secretary must make the distribution within 75 days after the end of each calendar quarter. The amount the Secretary must distribute is nineteen and forty‑two one‑hundredths percent (19.42%) of the net proceeds of the taxes collected during the quarter, minus two million six hundred twenty thousand nine hundred forty‑eight dollars ($2,620,948). This deduction is one‑fourth of the annual amount by which the distribution to cities of the gross receipts franchise tax on telephone companies, imposed by former G.S. 105‑120, was required to be reduced beginning in fiscal year 1995‑96 as a result of the "freeze deduction." The Secretary must distribute the specified percentage of the proceeds, less the "freeze deduction" among the cities in accordance with this section."
SECTION 24.1.(f)  Subsection (b) of this section becomes effective January 1, 2007, and applies to sales made on or after that date. Subsection (d) of this section becomes effective January 1, 2007, and applies to taxes collected on or after that date. Subsection (c) of this section becomes effective July 1, 2007, and applies to sales made on or after that date. Subsection (e) of this section becomes effective July 1, 2007, and applies to taxes collected on or after that date.  The remainder of this section is effective when it becomes law.

reduce Income Tax rate applicable to most small businesses early
SECTION 24.2.(a)  Section 39.1 of S.L. 2003‑284, as amended by Section 36.1(a) of S.L. 2005‑276, is repealed.
SECTION 24.2.(b)  G.S. 105‑134.2(a), as amended by subsection (a) of this section, reads as rewritten:
"(a)	A tax is imposed upon the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105‑152 and for surviving spouses, as defined in section 2(a) of the Code:

	Over	Up To	Rate
	0	$21,250	6%
	$21,250	$100,000	7%
	$100,000	$200,000	7.75%
	$200,000	NA	8%

(2)	For heads of households, as defined in section 2(b) of the Code:

	Over	Up To	Rate
	0	$17,000	6%
	$17,000	$80,000	7%
	$80,000	$160,000	7.75%
	$160,000	NA	8%

(3)	For unmarried individuals other than surviving spouses and heads of households:

	Over	Up To	Rate
	0	$12,750	6%
	$12,750	$60,000	7%
	$60,000	$120,000	7.75%
	$120,000	NA	8%

(4)	For married individuals who do not file a joint return under G.S. 105‑152:

	Over	Up To	Rate
	0	$10,625	6%
	$10,625	$50,000	7%
	$50,000	$100,000	7.75%
	$100,000	NA	8%" .
SECTION 24.2.(c)  G.S. 105‑134.2(a), as amended by subsections (a) and (b) of this section, reads as rewritten:
"(a)	A tax is imposed upon the North Carolina taxable income of every individual. The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105‑152 and for surviving spouses, as defined in section 2(a) of the Code:

	Over	Up To	Rate
	0	$21,250	6%
	$21,250	$100,000	7%
	$100,000	NA	7.75%

(2)	For heads of households, as defined in section 2(b) of the Code:

	Over	Up To	Rate
	0	$17,000	6%
	$17,000	$80,000	7%
	$80,000	NA	7.75%

(3)	For unmarried individuals other than surviving spouses and heads of households:

	Over	Up To	Rate
	0	$12,750	6%
	$12,750	$60,000	7%
	$60,000	NA	7.75%

(4)	For married individuals who do not file a joint return under G.S. 105‑152:

	Over	Up To	Rate
	0	$10,625	6%
	$10,625	$50,000	7%
	$50,000	NA	7.75%
			" .
SECTION 24.2.(d)  Subsection (b) of this section is effective for taxable years beginning on or after January 1, 2007. Subsection (c) of this section is effective for taxable years beginning on or after January 1, 2008. The remainder of this section is effective when it becomes law.

CAP THE VARIABLE WHOLESALE COMPONENT OF THE MOTOR FUEL TAX RATE AT ITS CURRENT RATE FOR ONE YEAR.
SECTION 24.3(a).  Notwithstanding G.S. 105-449.80(a), for the period July 1, 2006, through June 30, 2007, the variable wholesale component of the motor fuel excise tax rate may not exceed twelve and four-tenths cents (12.4¢) a gallon.

PART XXV. MInimum wage increase

Increase Minimum Wage
SECTION 25.1.(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 and fifteen cents ($6.15) per hour, except as otherwise provided in this section."
SECTION 25.1.(b)  This section becomes effective September 1, 2006.

PART XXVI. set regulatory fees

Set Utilities Regulatory Fee
SECTION 26.1.(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 26.1.(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).

Set Insurance Regulatory Fee
SECTION 26.2.  The percentage rate to be used in calculating the insurance regulatory charge under G.S. 58‑6‑25 is five and one‑half percent (5.5%) for the 2006 calendar year.

PART XXVII. special indebtedness projects

Hospital and Museum Special Indebtedness
SECTION 27.1.(a)  In accordance with G.S. 142‑83, this subsection 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 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.  Each project is listed below in its order of priority.
Aggregate	Project
Maximum
$20,000,000	Completing the construction and equipping of the Central Regional Psychiatric Hospital for the Department of Health and Human Services.

$145,500,000	Acquiring, constructing, and equipping a new Eastern Regional Psychiatric Hospital for the Department of Health and Human Services.

$40,000,000	Acquiring, constructing, and equipping an expansion for the North Carolina Museum of Art, but not including the acquisition of additional land.

TOTAL:
$205,500,000
SECTION 27.1.(b)  In accordance with G.S. 142‑83, this subsection authorizes the issuance or incurrence of special indebtedness in the maximum aggregate principal amount of one hundred sixty‑two million eight hundred thousand dollars ($162,800,000) to finance the capital facility costs of a new Western Regional Psychiatric Hospital for the Department of Health and Human Services. 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 costs of acquiring, constructing, and equipping the project described in this subsection.  The special indebtedness authorized by this subsection may not be issued before July 1, 2008, unless the State Treasurer makes a specific written finding that an earlier issuance date is in the best interests of the State.
SECTION 27.1.(c)  This section is effective when it becomes law.

PART XXVIII. MISCELLANEOUS PROVISIONS

EXECUTIVE BUDGET ACT APPLIES
SECTION 28.1.  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.

COMMITTEE REPORT
SECTION 28.2.(a)  The Senate Appropriations Committee Report on the Continuation, Expansion, and Capital Budgets shall indicate action by the General Assembly on this act and shall therefore be used to construe this act, as provided in G.S. 143‑15 of the Executive Budget Act, and for these purposes shall be considered a part of this act and as such shall be printed as a part of the Session Laws.
SECTION 28.2.(b)  The budget enacted by the General Assembly for the maintenance of the various departments, institutions, and other spending agencies of the State for the 2006‑2007 fiscal year is a line‑item budget, in accordance with the Budget Code Structure and the State Accounting System Uniform Chart of Accounts set out in the Administrative Policies and Procedures Manual of the Office of the State Controller. This budget includes the appropriations made from all sources including the General Fund, Highway Fund, special funds, cash balances, federal receipts, and departmental receipts.
The General Assembly amended the requested adjustments to the budgets submitted to the General Assembly by the Director of the Budget and the Advisory Budget Commission in accordance with the steps that follow, and the line‑item detail in the budget enacted by the General Assembly may be derived accordingly:
(1)	The base budget was adjusted in accordance with the base budget cuts and additions that were set out in the Senate Appropriations Committee Report on the Continuation, Expansion, and Capital Budgets.
(2)	Transfers of funds supporting programs were made in accordance with the Senate Appropriations Committee Report on the Continuation, Expansion, and Capital Budgets.
SECTION 28.2.(c)  The budget enacted by the General Assembly shall also be interpreted in accordance with the special provisions in this act and in accordance with other appropriate legislation.
In the event that there is a conflict between the line‑item budget certified by the Director of the Budget and the budget enacted by the General Assembly, the budget enacted by the General Assembly shall prevail.

MOST TEXT APPLIES ONLY TO 2006‑2007
SECTION 28.3.  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.

APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY
SECTION 28.4.(a)  Except where expressly repealed or amended by this act, the provisions of S.L. 2005‑276 and S.L. 2005‑345 remain in effect.
SECTION 28.4.(b)  Notwithstanding any modifications by this act in the amounts appropriated, except where expressly repealed or amended, the limitations and directions for the 2006‑2007 fiscal year in S.L. 2005‑276 and S.L. 2005‑345 that applied to appropriations to particular agencies or for particular purposes apply to the newly enacted appropriations and budget reductions of this act for those same particular purposes.

EFFECT OF HEADINGS
SECTION 28.5.  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 28.6.  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 28.7.  Except as otherwise provided, this act becomes effective July 1, 2006.