A BILL TO BE ENTITLED
AN ACT TO MODIFY THE CURRENT OPERATIONS AND CAPITAL APPROPRIATIONS ACT OF 2007 AND TO MAKE OTHER CHANGES IN THE BUDGET OPERATIONS OF THE STATE.

The General Assembly of North Carolina enacts:

PART I. INTRODUCTION AND TITLE OF ACT

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

TITLE OF ACT
SECTION 1.2.  This act shall be known as "The Current Operations and Capital Improvements Appropriations Act of 2008."

PART II. CURRENT OPERATIONS AND EXPANSION/GENERAL FUND
SECTION 2.1.  Appropriations from the General Fund of the State for the maintenance of the State's departments, institutions, and agencies, and for other purposes as enumerated are made for the fiscal year ending June 30, 2009, according to the following schedule. Amounts set out in brackets are reductions from General Fund appropriations for the 2008‑2009 fiscal year.

State Agency or Division	FY2008‑2009 Adjustments

Health and Human Services:	
Central Administration	$(11,980,958)
Aging			500,000
Child Development	(2,865,501)
Smart Start	
Education Services	698,940
Public Health	2,833,121
Social Services	(3,415,302)
Medical Assistance	(150,331,041)
Child Health	11,883,268
Services for the Blind	0
Mental Health/DD/SAS	53,287,771
Health Services Regulation	(414,464)
Vocational Rehabilitation	(2,000,000)
	Total Health & Human Services	(101,804,166)

Natural and Economic Resources:	
Agriculture & Consumer Services	4,683,634
Commerce	15,830,860
Commerce – State Aid to Non‑State Entities	42,000,000
Environment and Natural Resources	9,733,208
Clean Water Management Trust Fund	0
Labor			719,493
	Total Natural and Economic Resources	34,242,695

Justice and Public Safety:	
Correction	986,696
Crime Control & Public Safety	1,392,097
Judicial		(2,421,818)
Judicial – Indigent Defense	2,800,000
Justice			64,483
Juvenile Justice	23,197,447
	Total Justice and Public Safety	75,503,165

General Government:	
Administration	1,738,062
State Auditor	(233,938)
Cultural Resources	1,667,867
Cultural Resources – Roanoke Island	0
General Assembly	(636,000)
Governor's Office	(16,916)
Insurance		239,040
Insurance – Worker's Compensation Fund	0
Lieutenant Governor	0
Office of Administrative Hearings	313,544
Revenue		14,232,025
NC Housing Finance	2,500,000
Secretary of State	159,950
State Board of Elections	237,828
State Budget and Management (OSBM)	48,697
OSBM – Special Appropriations	1,300,000
Office of State Controller	(103,638)
State Treasurer	0
State Treasurer – Retirement/Benefits	0
	Total General Government	21,446,521

Education:	
Public Schools	100,185,195
Community Colleges	24,660,195
University System	31,258,677
	Total Education	156,104,067

Debt Service:	
General Debt Service	(17,500,000)
Federal Reimbursement	0
	Total Debt Service	(17,500,000)

Reserves & Adjustments:	
Compensation Increase Reserve	594,200,000
State Health Plan Reserve	(5,000,000)
Pesticide Prevention Reserve	714,110
Drought and Energy Efficiency Reserve	3,500,000
Job Development Investment Grant Reserve	17,700,000
IT Hold Harmless Reserve 	1,500,000
Geographic Information System Reserve	6,500,000
Census 2010 Outreach and Promotion	1,500,000
Multipurpose Database Reserve	1,000,000

	Total Reserves & Adjustments	621,614,110

Capital:
Capital Improvements	96,998,826

Total General Fund Budget Changes	$740,846,832

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a)  The General Fund availability used in adjusting the 2008‑2009 budget is shown below:
								FY 2008‑2009
	Description	Recommended
				(In Millions)
Beginning Availability:
	Unappropriated Balance FY 2007‑2008	269.2
	Adjusted from Estimated to Actual FY 2007‑2008
		Beginning Unreserved Balance	47.9
	Overcollections FY 2007‑2008	151.5
	Reversions FY 2007‑2008	150.0
	Credit to Savings Reserve Account	(61.5)
	Credit to Repair and Renovations Reserve Account	(65.0)
	Beginning Unreserved Credit Balance	492.1

Revenue:
	Tax:
		Individual Income 	11,394.7
		Corporate Income	1,202.2
		Sales and Use	5,410.7
		Other Tax	2,054.7
	Total Tax	20,062.3
		Nontax/Transfers	977.7
	Total Revenue	21,040.0
	Total Availability	21,532.1

SECTION 2.2.(b)  Notwithstanding G.S. 143C‑4‑3, the State Controller shall transfer sixty‑five million dollars ($65,000,000) from the unreserved fund balance to the Repairs and Renovations Reserve Account on June 30, 2008. This subsection becomes effective June 30, 2008.
SECTION 2.2.(c)  Notwithstanding G.S. 143C‑4‑2, the State Controller shall transfer only sixty‑one million four hundred ninety thousand two hundred nineteen dollars($61,490,219) from the unreserved fund balance to the Savings Reserve Account on June 30, 2008. This subsection becomes effective June 30, 2008.
SECTION 2.2.(d)  Section 2.2.(d) of S.L. 2007‑032 is amended to read as follows:
Notwithstanding the provisions of G.S. 105‑187.9(b)(1), the sum to be transferred under that subdivision for the 2007‑2008 fiscal year is one hundred seventy million dollars ($170,000,000) and for the 2008‑2009 fiscal year is one hundred forty‑five million dollars ($145,000,000).
SECTION 2.2 (f)  Notwithstanding G.S. 143‑719, of the funds credited to the Tobacco Trust Account from the Master Settlement Agreement pursuant to Section 6(2) of S.L. 1999‑2 during the 2007‑2009 fiscal biennium, the sum of ten million dollars ($10,000,000) for the 2008‑2009 fiscal year shall be transferred from the Department of Agriculture and Consumer Services, Budget Code 23703 (Tobacco Trust Fund) to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) to support General Fund appropriations for the Farmland Preservation Trust Fund and agriculture capital items in the 2008‑2009 fiscal year. 
SECTION 2.2.(g)  Notwithstanding G.S. 147‑86.30, of the funds credited to the Health Trust Account from the Master Settlement Agreement pursuant to Section 6(2) of S.L. 1999‑2 during the 2007‑2009 fiscal biennium, the sum of ten million dollars ($5,000,000) for the 2008‑2009 fiscal year shall be transferred from the Department of State Treasurer, Budget Code 23460 (Health and Wellness Trust Fund) to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) to support General Fund appropriations for North Carolina Health Net and local obesity and health promotion programs in the 2008‑2009 fiscal year.
SECTION 2.2.(h)  Notwithstanding any other provision of law, the sum of twenty‑one million dollars ($21,000,000) shall be transferred from the Disaster Relief Reserve Fund (Budget Code 19930) to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) to support General Fund appropriations in the 2008‑2009 fiscal year.

PART III. CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND

CURRENT OPERATIONS/HIGHWAY FUND
SECTION 3.1.  Revised appropriations from the Highway Fund of the State for the maintenance and operation of the Department of Transportation, and for other purposes as enumerated, are made for the 2008‑2009 fiscal year, according to the following schedule. Amounts set out in brackets are reductions from Highway Fund appropriations for the 2008‑2009 fiscal year.

Current Operations – Highway Fund	2008‑2009
				Adjustments

DOT – General Administration	$ (9,583,308)
	Highway Division Administration	0
	State Match for Federal Aid‑Planning and Research	0

Construction Program:
	State Secondary System	1,807,592
	State Urban System	0
	Discretionary Funds	0
	Spot Safety Improvements	0
	Small Urban Construction	0
	Access and Public Services Roads	               0
		Total Construction Program	1,807,592

Maintenance Program
	Primary System	0
	Secondary System	0
	Urban System	0
	Contract Resurfacing	0
	General Maintenance Reserve	0
	System Preservation	   28,805,712
		Total Maintenance Program	28,805,712

Ferry Operations	
State Aid to Municipalities	1,807,592
State Aid to Railroads	0
State Aid for Public Transportation	0
State Aid for Airports	0
Asphalt Plant Cleanup	0
Governor's Highway Safety Program	0
Division of Motor Vehicles	         95,266

Total Department of Transportation	$ 23,032,854

Appropriations to Other State Agencies:
	Agriculture	0
	Revenue	0
	State Treasurer – Sales Tax	0
	Public Instruction – Driver Education	 667,068
	CCPS – Highway Patrol	0
	DENR – LUST Trust Fund	(185,000)
	DHHS – Chemical Test	0
	Global TransPark	               0
		Total – Other State Agencies	482,068
	
Reserves and Transfers:
	Reserve for Compensation Adjustments	    2,542,500
	Reserve for Legislative Increase	    20,502,578
		Total Reserves and Transfers	23,045,078
	
Capital Improvements	0
	
Total Highway Fund Appropriation	$ 46,560,000

HIGHWAY FUND AVAILABILITY STATEMENT
SECTION 3.2.  The Highway Fund appropriations availability used in developing modifications to the 2008‑2009 Highway Fund budget contained in this act is shown below:

Beginning Credit Balance	$	35,000,000
Estimated Revenue	1,822,550,000
TOTAL HIGHWAY FUND AVAILABILITY	$1,857,550,000

PART IV. HIGHWAY TRUST FUND APPROPRIATIONS

HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 4.1.  Appropriations from the Highway Trust Fund are made for the fiscal year ending June 30, 2009, according to the following schedule. Amounts set out in brackets are reductions from Highway Trust Fund appropriations for the 2008‑2009 fiscal year.

Current Operations – Highway Trust Fund	2008‑2009
				Adjustments

Department of Transportation:	
	Maximum Allowance for Administration	$    3,627,360
	
	Construction Allocation:	
		Intrastate System	(40,691,948)
		Urban Loop System	(16,454,129)
		Secondary Roads	(  7,687,956)
		Other Authorized Purposes	25,000,000

	State Aid to Municipalities	( 4,269,534)
	
	Transfer to the General Fund (1)	(25,143,793)
	
Total Highway Trust Fund Appropriation	$ (65,620,000)

PART V. BLOCK GRANTS

NER BLOCK GRANTS
SECTION 11.5.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2009, 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.	Small Business/Entrepreneurship	1,000,000

06.	Community Revitalization	13,000,000

07.	State Technical Assistance	450,000

08.	Housing Development	1,500,000

09.	Infrastructure	5,140,000

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT – 2009 Program Year	$ 45,000,000

SECTION 11.5.(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 11.5.(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 11.5.(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; eight million seven hundred ten thousand dollars ($8,710,000) may be used for Economic Development; up to one million dollars ($1,000,000) may be used for  Small Business/Entrepreneurship; not less than thirteen million dollars ($13,000,000) shall be used for Community Revitalization; up to four hundred fifty thousand dollars ($450,000) may be used for State Technical Assistance; up to one million five hundred dollars ($1,500,000) 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 11.5.(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 11.5.(f)  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

CHANGES TO STATE BUDGET ACT
SECTION 6.1.(a)  Article 6 of Chapter 143C of the General Statutes reads as rewritten:
"§ 143C‑6‑4.  Budget adjustments authorized.
(a)	Findings. – The General Assembly recognizes that even the most thorough budget deliberations may be affected by unforeseeable events. Under limited circumstances set forth in this section, the Director may adjust the enacted budget by making transfers among lines of expenditure, purposes, or programs or by increasing expenditures funded by departmental receipts. Under no circumstances, however, shall total General Fund expenditures for a State department exceed the amount appropriated to that department from the General Fund for the fiscal year.
(b)	Adjustments to the Certified Budget. – Notwithstanding the provisions of G.S. 143C‑6‑1, a State agency may, with approval of the Director of the Budget, spend more than was authorized in the certified budget for all of the following:
(1)	An object or line item within a purpose or program so long as the total amount expended for the purpose or program is no more than was authorized in the certified budget for the purpose or program.
(2)	A purpose or program if the overexpenditure of the purpose or program is:
a.	Required by a court or Industrial Commission order;
b.	Authorized under G.S. 166A‑5(1)a.9. of the Emergency Management Act; or
c.	Required to call out the national guard.
(3)	A purpose or program not subject to the provisions of subdivision (b)(2) of this subsection, but only in accord with the following restrictions: (i) the overexpenditure is required to continue the purpose or programs due to complications or changes in circumstances that could not have been foreseen when the budget for the fiscal period was enacted, (ii) the scope of the purpose or program is not increased, (iii) the overexpenditure is authorized on a nonrecurring basis, except when required to establish a permanent position or to address salary reserve purposes, and (iv) under no circumstances shall the total requirements for a State department exceed the department's certified budget for the fiscal year by more than seven and one‑half percent (7.5%) for a department with a certified budget totaling twenty million dollars ($20,000,000) or less, or three percent (3%) or one million five hundred thousand dollars ($1,500,000) (whichever is greater) without prior consultation with the Joint Legislative Commission on Governmental Operations.
(c)	Overexpenditures Reported. – The Director shall report quarterly, beginning October 31, to the Joint Legislative Commission on Governmental Operations on overexpenditures approved by the Director under subdivisions (2) and (3) of subsection (b) of this section.
(d)	Overexpenditures in Senate Budget. – The President Pro Tempore of the Senate may approve expenditures for more than was authorized in the enacted budget for objects or line items in the budget of the Senate.
(e)	Overexpenditures in House of Representatives Budget. – The Speaker of the House of Representatives may approve expenditures for more than was authorized in the enacted budget objects or line items in the budget of the House of Representatives.
(f)	Transfers Between Line Items or Programs in General Assembly Budget Other Than Senate and House of Representatives. – Expenditures exceeding amounts authorized for programs, objects, or line items in the budget of the General Assembly other than those of the Senate and House of Representatives shall be approved jointly by the President Pro Tempore of the Senate and the Speaker of the House of Representatives.
(g)	Transfers in The University of North Carolina Budget. – Transfers or changes within the budget of The University of North Carolina may be made as provided in Article 1 of Chapter 116 of the General Statutes.
(h)	Transfers Within the Office of the Governor. – Transfers or changes as between objects or line items in the budget of the Office of the Governor may be made by the Governor."
SECTION 6.1.(b)  Article 6 of Chapter 143C of the General Statutes reads as rewritten:
"§ 143C‑4‑3.  Repairs and Renovations Reserve Account.
(a)	Creation and Source of Funds. – The Repairs and Renovations Reserve Account is established as a reserve in the General Fund. The State Controller shall reserve to the Repairs and Renovations Reserve Account one‑fourth of any unreserved fund balance, as determined on a cash basis, remaining in the General Fund at the end of each fiscal year.
(b)	Use of Funds. – The funds in the Repairs and Renovations Reserve Account shall be used for the repair and renovation of State facilities and related infrastructure that are supported from the General Fund. The Board of Governors or the Office of State Budget and Management may allocate funds for the repair and renovation of facilities not supported from the General Fund if it is determined that sufficient funds are not available from other sources and that conditions warrant General Fund assistance. Any such finding shall be included in the submissions to the Joint Legislative Commission on Governmental Operations on the proposed allocations of funds. Funds from the Repairs and Renovations Reserve Account shall be used only for the following types of projects:
(1)	Roof repairs and replacements;
(2)	Structural repairs;
(3)	Repairs and renovations to meet federal and State standards;
(4)	Repairs to electrical, plumbing, and heating, ventilating, and air‑conditioning systems;
(5)	Improvements to meet the requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., as amended;
(6)	Improvements to meet fire safety needs;
(7)	Improvements to existing facilities for energy efficiency;
(8)	Improvements to remove asbestos, lead paint, and other contaminants, including the removal and replacement of underground storage tanks;
(9)	Improvements and renovations to improve use of existing space;
(10)	Historical restoration;
(11)	Improvements to roads, walks, drives, utilities infrastructure; and
(12)	Drainage and landscape improvements.
Funds from the Repairs and Renovations Reserve Account shall not be used for new construction or the expansion of the building area (sq. ft.) of an existing facility unless required in order to comply with federal or State codes or standards.
(c)	Use of Funds. – Funds Available Only Upon Appropriation. – Funds reserved to the Repairs and Renovations Reserve Account shall be available for expenditure only upon an act of appropriation by the General Assembly."
SECTION 6.1.(c)  Article 6 of Chapter 143C of the General Statutes reads as rewritten:
"§ 143C‑8‑12.  University system capital improvement projects from sources that are not General Fund sources: approval of new project or change in scope of existing project.
Notwithstanding any other provision of this Chapter, the Director of the Budget may, upon request of the Board of Governors of The University of North Carolina and after consultation with the Joint Legislative Commission on Governmental Operations, approve: (i) expenditures for a capital improvement project of The University of North Carolina that is to be funded entirely with non‑General Fund money, or (ii) a change in the scope of any previously approved capital improvement project of The University of North Carolina provided that both the project and change in scope are funded entirely with non‑General Fund money."
SECTION 6.1.(d)  Article 6 of Chapter 143C of the General Statutes reads as rewritten:
"§ 143C‑8‑13.  State agency capital improvement projects from sources that are not General Fund sources: approval of new project or change in scope of existing project.
Notwithstanding any other provision of this Chapter, the Director of the Budget may, upon request of a state agency and after consultation with the Joint Legislative Commission on Governmental Operations, approve: (i) expenditures for a capital improvement project that is to be funded entirely with non‑General Fund money, or (ii) a change in the scope of any previously approved capital improvement project provided that both the project and change in scope are funded entirely with non‑General Fund money."
SECTION 6.1.(e)  Article 13 of the General Statutes reads as rewritten:
"§ 120‑76.1.  Prior consultation with the Commission.
(a)	Notwithstanding the provisions of G.S. 120‑76(8) or any other provision of law requiring prior consultation by the Governor with the Commission, whenever an expenditure is required because of an emergency that poses an imminent threat to public health or public safety, and is either the result of a natural event, such as a hurricane or a flood, or an accident, such as an explosion or a wreck, the Governor may take action without consulting the Commission if the action is determined by the Governor to be related to the emergency. The Governor shall report to the Commission on any expenditures made under this subsection no later than 30 days after making the expenditure and shall identify in the report the emergency, the type of action taken, and how it was related to the emergency.
(b)	Any agency, board, commission, or other entity required under G.S. 120‑76(8) or any other provision of law to consult with the Commission prior to taking an action shall submit a detailed report of the action under consideration to the Chairs of the Commission, the Commission Assistant, and the Fiscal Research Division of the General Assembly. If the Commission does not hold a meeting to hear the consultation within 90 days of receiving the submission of the detailed report, the consultation requirement is satisfied. With regard to capital improvement projects if the Commission does not hold a meeting to hear the consultation within 30 days of receiving the submission of the detailed report, the consultation requirement of G.S. 120‑76(8)e. is satisfied.
(c)	Consultations regarding the establishment of new fees and charges and the increase of existing fees and charges are governed by G.S. 12‑3.1, and this section does not apply to those consultations."
SECTION 6.1.(f)  Article 6 of Chapter 143C of the General Statutes reads as rewritten:
"§ 143C‑8‑7.1.  Land acquisitions.
At the request of a State agency, the Director of the Budget may authorize land acquisitions if the transaction is entirely funded from non‑General Fund sources."

FEDERAL AND OTHER RECEIPTS
SECTION 6.2.(a)  The Governor's recommended budget for FY 2008‑2009 includes all expected expenditures and anticipated receipts that were known at the time the budget was prepared. Applications for grants whose funding status was unknown during budget preparation are not included in the budget. A list of grants that was applied for but is not included in the Governor's recommended budget for FY 2008‑2009 due to the timing of the award or whose outcome is still pending follows in subsection (c) of this section.
SECTION 6.2.(b)  Notwithstanding G.S. 143C‑6‑4, a State agency may, with approval of the Director of the Budget, spend funds received from the grant applications listed in subsection (c) of this section. The dollar amounts listed represent the total amount of funds applied for and anticipated over the course of the grant period.  If awarded, the Office of State Budget and Management shall work with the recipient State agencies to budget the grant award according to the annual program needs and within the parameters of the granting entity. Depending on the nature of the award, additional State personnel may be employed on a permanent or time‑limited basis.
SECTION 6.3.(c)  Funds received from the grants listed below are hereby appropriated and shall be incorporated into the certified budget of the recipient State agency.

Recipient State Agency	Grant Amount
Department of Environment and Natural Resources
	Clear Skies	$  300,000
	Keep Our Waters Clean 	200,000

Department of Health and Human Services
	Money Follows the Person	1,000,000

Department of Correction
	Prisoner Reentry Post‑Release Services	130,434

Department of Transportation
	2008 REAL ID Demonstration Program	1,799,000

Administrative Office of the Courts
	Sharks vs. Jets	104,847
	Traffic Court Legal Assistant	42,653
	Bilingual Legal Assistant	51,543
	Clerk of Superior Court Leadership Training	99,989
	Adult Drug Treatment Court	70,756
	SAVAN	310,697
	DWI Court – Watauga	75,737
	Safe Havens Supervised Visitation Center	143,665
	Rockingham County Sexual Assault Victim Advocate	30,001
	Pitt County Drug Prosecutor	68,300
	Getting the Whole Picture	29,375
	Guardian Ad Litem Volunteer Training Conference	116,237
	Federal Drug Liaison Prosecutor	65,514
	Family Violence Justice Project	106,358
	DWI Prosecutor – Wake	57,305
	DWI Legal Assistant – Buncombe	48,970

Public Schools
	The Power of K: Quality Kindergarten for the 21st Century	133,190
	AP Test Fee Program	14,365
	Chinese Foreign Language Assistance	5,209
	Foreign Language Assistance 	52,516
	English Language Acquisition	2,475,639
	JAVITS Gifted and Talented	95
	Math and Science Partnerships Grant	404,666
	IDEA VI B Handicapped	15,230,466
	Education for Homeless Children and Youth	241,163
	School Improvement Grant	12,921,759
	Safe and Drug‑Free Schools and Communities	362,797
	21st Century Community Learning Centers‑After School	2,593,251
	Improve Teacher Quality State Grant	1,803,529
	Healthy Schools/HIV	792,035
	Troops to Teachers	191,103
	Child Nutrition Grant	3,166,077
	Child Nutrition Food Services	347,000,000
	Fresh Fruits and Vegetable Program	1,137,757
	Ed Tech State Grant	6,759,383
	NC CEDARS	1,816,055
	Rural and Low‑Income Schools	80,706
	State Assessment and Related Activities	302,700
	Even Start Educational Agencies	1,596,400
	Title I to LEAs	33,181,783
	Migrant Education Basic State Grant	18,858
	AT&T Foundation	50,000

Community Colleges System Office	
	Golden LEAF Scholars Program – 2‑Year Colleges	500,000
	Career Start Grant	21,950

Environment and Natural Resources	
	Boating Infrastructure Grant	200,000
	Multistate Geospatial Content Transfer	280,000
	Wetland Permit Tracking System Expansion Grant	150,427
	Model for Implementing the Standard for the National Grid	25,000
	NC National Estuarine Masonboro Island Acquisition	104,150
	North Carolina Conservation and Transportation Planning	100,000
	Measurement and Assessment of Marsh Ecosystems	20,000

Agriculture	
	EUREPGAP Certification Project	60,000
	NC Commodity Asian Export Promotion	21,000

Commerce	
	Workforce Innovation in Regional Economic Development	2,447,500
	WIA Youth Formula Grants	19,061,803
	BRAC Military Spouse L.A.	5,000,000

Labor
	Assets for Independence	287,500
	
Insurance	
	State Health Insurance Assistance Program 	1,044,791
	Senior Medicare Patrol Program 	180,000
	State Health Insurance Assistance Program 	180,045
	Smoke Alarm and Residential Sprinkler Initiative	134,500
	Governor's Highway Safety Program 	717,000
	Volunteer Fire Department Fund 	5,100,000
	Volunteer Rescue/EMS Fund 	1,019,000
	NC Association of Insurance Agents, Inc., Surplus Funds	25,000
	NC Association of Insurance Agents, Inc., Surplus Funds 	21,000
	NC Independent Insurance Agents	112,019
	Fire Prevention Week Materials 	40,000
	Fire and Rescue – Emergency Response	 15,500
	Hazardous Materials Emergency Preparedness	85,000
	Rescue Squad Workers' Relief Grant	6,300,000

Board of Elections	
	Elections Assistance for Individuals with Disabilities	318,521

Administration	
	State Energy Program Plan 	750,000
	Priority State Wind Energy Outreach Strategy	75,000
	Native American Employment and Training	274,675

Department of Health and Human Services

Office of Secretary
	Real Choice Systems Grants	172,944

Division of Aging and Adult Services
	Seniors Farmers Market Nutrition Program	43,495
	Advanced Performance Outcome Measures Project	100,000
	Empowering Older Adults to Take More Control of Their
		Health "Chronic Disease Mgmt Grant" 	213,615

Division of Child Development
	Child Care State Research Capacity Cooperative Agreements	246,274

Division of Public Health
	State/Tribal Suicide Prevention Grants	500,000
	Innovative Approaches to a Healthy Weight & Mental
		Wellness in Women	143,750
	WIC State Agency Model (SAM) Project	14,400,000
	Opportunity Grants for Healthy Aging	25,000
	Early Diagnosis Grant	1,000,000

Division of Social Services
	Targeted Assistance Formula Grant	712,724
	Refugee School Impact	218,750
	Recently Arrived Refugees	493,561
	Child Support – Court Partnership for Parental Education 	65,968
	Child Support – Community Outreach	79,824

Division of Mental Health, Developmental Disabilities, and Substance
Abuse Services
	Screening, Brief Intervention, Referral, and Treatment	2,520,000
	Jail Diversion and Trauma Recovery Program
		Priority to Veterans	412,498

Division of Health Services Regulation
	EMS Performance Improvement Toolkits	1,600,000

APPROPRIATION OF CASH BALANCES AND RECEIPTS
SECTION 6.3.  Section 6.1 of S.L. 2007‑323 reads as rewritten:
"SECTION 6.1.(a)  Expenditures of cash balances, federal funds, departmental receipts, grants, and gifts from the various General Fund, Special Revenue Fund, Enterprise Fund, Internal Service Fund, and Trust and Agency Fund budget codes are appropriated and authorized for the 2007‑2009 fiscal biennium as follows:
(1)	For all budget codes listed in "North Carolina State Budget, Recommended Operating Budget 2007‑2009, Volumes 1 through 6," cash balances and receipts are appropriated up to the amounts specified in Volumes 1 through 6, as adjusted by the General Assembly, for the 2007‑2008 fiscal year and the 2008‑2009 fiscal year. Adjustments to the second year of the biennial budget are appropriated up to the amounts recommended by the Governor in the "North Carolina State Budget, Recommended Adjustments FY 2008‑2009" and supplemental budget documents for FY 2008‑2009, as adjusted by the General Assembly. Funds may be expended only for the programs, purposes, objects, and line items specified therein, or otherwise authorized by the General Assembly.
(2)	For all budget codes that are not listed in "North Carolina State Budget, Recommended Operating Budget 2007‑2009, Volumes 1 through 6," cash balances and receipts are appropriated for each year of the 2007‑2009 fiscal biennium up to the level of actual expenditures for the 2006‑2007 fiscal year, unless otherwise provided by Law or as specified in the "North Carolina State Budget, Recommended Adjustments 2008‑2009" and supplemental budget documents for 2008‑2009 submitted by the Governor, as adjusted by the General Assembly. Funds may be expended only for the programs, purposes, objects, and line items authorized therein. In an extraordinary event that there were no actual expenditures in FY 2006‑2007 or no budget recommended in the Governor's FY 2008‑2009 supplemental budget documents and it is necessary to expend funds in FY 2008‑2009, cash balances and receipts are appropriated up the amounts necessary to operate in the FY 2008‑2009 fiscal year. In this event, the state agency shall seek approval from the Office of State Budget and Management to establish an authorized budget prior to any expenditure of funds authorized in this subsection.
(3)	Notwithstanding subdivisions (1) and (2) of this subsection, any receipts that are required to be used to pay debt service requirements for various outstanding bond issues and certificates of participation are appropriated up to the actual amounts received for the 2007‑2008 fiscal year and the 2008‑2009 fiscal year and shall be used only to pay debt service requirements. 
(4)	Notwithstanding subdivisions (1) and (2) of this subsection, cash balances and receipts of funds that meet the definition issued by the Governmental Accounting Standards Board of a trust or agency fund are appropriated for and in the amounts required to meet the legal requirements of the trust agreement for the 2007‑2008 fiscal year and the 2008‑2009 fiscal year.
All these cash balances, federal funds, departmental receipts, grants, and gifts shall be expended and reported in accordance with the provisions of the State Budget Act, except as otherwise provided by law and this section.
"SECTION 6.1.(b)  Receipts collected in a fiscal year in excess of the amounts authorized by this section shall remain unexpended and unencumbered until appropriated by the General Assembly in a subsequent fiscal year, unless the expenditure of overrealized receipts in the fiscal year in which the receipts were collected is authorized by the State Budget Act.
Overrealized receipts are appropriated up to the amounts necessary to implement this subsection.
In addition to the consultation and reporting requirements set out in G.S. 143C‑6‑4, the Office of State Budget and Management shall report to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division of the Legislative Services Office within 30 days after the end of each quarter on any overrealized receipts approved for expenditure under this subsection by the Director of the Budget. The report shall include the source of the receipt, the amount overrealized, the amount authorized for expenditure, and the rationale for expenditure.
"SECTION 6.1.(c)  Notwithstanding subsections (a) and (b) of this section, there is appropriated from the Reserve for Reimbursements to Local Governments and Shared Tax Revenues for each fiscal year an amount equal to the amount of the distributions required by law to be made from that reserve for that fiscal year."

BUDGET CODE CONSOLIDATIONS
SECTION 6.4.  Notwithstanding G.S. 143C‑6‑4, the Office of State Budget and Management may adjust the enacted budget by making transfers among purposes or programs for the purpose of consolidating budget and fund codes or eliminating inactive budget and funds codes. The Office of State Budget and Management shall change the authorized budget to reflect these adjustments.

CIVIL PENALTIES AND FORFEITURE FUND AVAILABILITY AND APPROPRIATION
SECTION 6.5.(a)  Section 5.1(a) of S.L. 2007‑323 reads as rewritten:
"SECTION 5.1.(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 2007‑2008	FY 2008‑2009
Department of Revenue	$63,000,000	 $84,000,000
Department of Transportation	$15,000,000	 $21,000,000
Employment Security Commission	$	3,000,000	 $4,000,000
Department of Insurance	$	1,000,000	 $500,000
University of North Carolina	$	3,500,000	 $3,000,000
Other Agencies	$10,000,000	$10,000,000
Total Funds Available	$95,500,000	 $122,500,000
SECTION 5.2.(b)  Section 5.2(b) of S.L. 2007‑323 reads as rewritten:
"SECTION 5.2.(b)  Appropriations. – Appropriations are made from the Civil Penalty and Forfeiture Fund for the fiscal year ending June 30, 2009, as follows:
				FY 2007‑2008	FY 2008‑2009
School Technology Fund	$18,000,000	$18,000,000
State Public School Fund	$77,500,000	$104,500,000
Total Appropriation	$95,500,000	$122,500,000"

EDUCATION LOTTERY
SECTION 6.6.(a)  Pursuant to G.S. 18C‑164, the revenue used to support appropriations made in this act is transferred from the State Lottery Fund in the amount of four hundred three million dollars ($403,000,000) for the FY 2008‑2009 fiscal year.
SECTION 6.6.(b)  The appropriations made from the Education Lottery Fund pursuant to G.S. 18C‑164(d) for the FY 2008‑2009 fiscal year are as follows:
	(1)	Class Size Reduction	$116,864,291
	(2)	Prekindergarten Program	84,635,709
	(3)	Public School Building Capital Fund	161,200,000
	(4)	Scholarships for Needy Students	40,300,000
	Total		$403,000,000

PART VII. PUBLIC SCHOOLS

TEACHER SALARY SCHEDULES
SECTION 7.1.(a)  Effective for the 2008‑2009 school year, the Director of the Budget shall transfer from the Reserve for Compensation Increases funds necessary to implement the teacher salary schedules set out in subsection (b) of this section and for longevity in accordance with subsection (d) 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 2008‑2009 fiscal year to certified personnel of the public schools who are classified as teachers. The schedule contains 29 steps with each step corresponding to one year of teaching experience.
2008‑2009 Monthly Salary Schedule "A" Teachers
Years of Experience	"A" Teachers 	NBPTS Certification
0‑2	$3,261 	N/A
3‑4	$3,557 	$3,984 
5	$3,691 	$4,134 
6	$3,820 	$4,278 
7	$3,924 	$4,395 
8	$3,972 	$4,449 
9	$4,021 	$4,504 
10	$4,071 	$4,560 
11	$4,120 	$4,614 
12	$4,171 	$4,672 
13	$4,222 	$4,729 
14	$4,275 	$4,788 
15	$4,329 	$4,848 
16	$4,384 	$4,910 
17	$4,439 	$4,972 
18	$4,498 	$5,038 
19	$4,556 	$5,103 
20	$4,614 	$5,168 
21	$4,676 	$5,237 
22	$4,737 	$5,305 
23	$4,803 	$5,379 
24	$4,867 	$5,451 
25	$4,932 	$5,524 
26	$4,998 	$5,598 
27	$5,066 	$5,674 
28	$5,137 	$5,753 
29	$5,208 	$5,833 
30	$5,306 	$5,943 
31+	$5,408 	$6,057 

2008‑2009 Monthly Salary Schedule "M" Teachers
Years of Experience	 "M" Teachers 	NBPTS Certification
0‑2	$3,587 	N/A
3‑4	$3,913 	$4,383 
5	$4,060 	$4,547 
6	$4,202 	$4,706 
7	$4,316 	$4,834 
8	$4,369 	$4,893 
9	$4,423 	$4,954 
10	$4,478 	$5,015 
11	$4,532 	$5,076 
12	$4,588 	$5,139 
13	$4,644 	$5,201 
14	$4,703 	$5,267 
15	$4,762 	$5,333 
16	$4,822 	$5,401 
17	$4,883 	$5,469 
18	$4,948 	$5,542 
19	$5,012 	$5,613 
20	$5,075 	$5,684 
21	$5,144 	$5,761 
22	$5,211 	$5,836 
23	$5,283 	$5,917 
24	$5,354 	$5,996 
25	$5,425 	$6,076 
26	$5,498 	$6,158 
27	$5,573 	$6,242 
28	$5,651 	$6,329 
29	$5,729 	$6,416 
30	$5,837 	$6,537 
31+	$5,949 	$6,663 

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 school teachers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers. Certified public 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 master's degree level and audiologists who are certified as audiologists at the master's degree level and who are employed in the public schools as speech and language specialists and audiologists shall be paid on the school psychologist salary schedule.
Speech pathologists and audiologists with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for speech pathologists and audiologists. Speech pathologists and audiologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for speech pathologists and audiologists.
SECTION 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 2008‑2009 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 2008‑2009 fiscal year, commencing July 1, 2008, is as follows:

2008‑2009 Principal and Assistant Principal Salary Schedules
Classification
Years of Exp	Assistant	Prin I	Prin II	Prin III	Prin IV
	Principal	(0‑10)	(11‑21)	(22‑32)	(33‑43)
	0‑4	$3,952				
	5	$4,101				
	6	$4,244				
	7	$4,359				
	8	$4,413	$4,413 			
	9	$4,467	$4,467 			
	10	$4,523	$4,523 	$4,577 		
	11	$4,577	$4,577 	$4,634 		
	12	$4,634	$4,634 	$4,690 	$4,750 	
	13	$4,690	$4,690 	$4,750 	$4,810 	$4,870 
	14	$4,750	$4,750 	$4,810 	$4,870 	$4,932 
	15	$4,810	$4,810 	$4,870 	$4,932 	$4,997 
	16	$4,870	$4,870 	$4,932 	$4,997 	$5,062 
	17	$4,932	$4,932 	$4,997 	$5,062 	$5,126 
	18	$4,997	$4,997 	$5,062 	$5,126 	$5,195 
	19	$5,062	$5,062 	$5,126 	$5,195 	$5,263 
	20	$5,126	$5,126 	$5,195 	$5,263 	$5,336 
	21	$5,195	$5,195 	$5,263 	$5,336 	$5,408 
	22	$5,263	$5,263 	$5,336 	$5,408 	$5,479 
	23	$5,336	$5,336 	$5,408 	$5,479 	$5,553 
	24	$5,408	$5,408 	$5,479 	$5,553 	$5,629 
	25	$5,479	$5,479 	$5,553 	$5,629 	$5,708 
	26	$5,553	$5,553 	$5,629 	$5,708 	$5,786 
	27	$5,629	$5,629 	$5,708 	$5,786 	$5,895
	28	$5,708	$5,708 	$5,786 	$5,895	$6,008
	29	$5,786	$5,786 	$5,895	$6,008	$6,128 
	30	$5,895	$5,895	$6,008	$6,128 	$6,251 
	31	$6,008	$6,008	$6,128 	$6,251 	$6,376 
	32		$6,128 	$6,251 	$6,376 	$6,504 
	33			$6,376 	$6,504 	$6,634 
	34			$6,504 	$6,634 	$6,767 
	35				$6,767 	$6,902 
	36				$6,902 	$7,040 
	37					$7,181 

2008‑2009 Principal and Assistant Principal Salary Schedules
Classification
Years of Exp	Prin V	Prin VI	Prin VII	Prin VIII
	(44‑54)	(55‑65)	(66‑100)	(100+)
	0‑14	$4,997 			
	15	$5,062 			
	16	$5,126 	$5,195 		
	17	$5,195 	$5,263 	$5,408 	
	18	$5,263 	$5,336 	$5,479 	$5,553 
	19	$5,336 	$5,408 	$5,553 	$5,629 
	20	$5,408 	$5,479 	$5,629 	$5,708 
	21	$5,479 	$5,553 	$5,708 	$5,786 
	22	$5,553 	$5,629 	$5,786 	$5,895
	23	$5,629 	$5,708 	$5,895	$6,008
	24	$5,708 	$5,786 	$6,008	$6,128 
	25	$5,786 	$5,895	$6,128 	$6,251 
	26	$5,895	$6,008	$6,251 	$6,376 
	27	$6,008	$6,128 	$6,376 	$6,504 
	28	$6,128 	$6,251 	$6,504 	$6,634 
	29	$6,251 	$6,376 	$6,634 	$6,767 
	30	$6,376 	$6,504 	$6,767 	$6,902 
	31	$6,504 	$6,634 	$6,902 	$7,040 
	32	$6,634 	$6,767 	$7,040 	$7,181 
	33	$6,767 	$6,902 	$7,181 	$7,325 
	34	$6,902 	$7,040 	$7,325 	$7,472 
	35	$7,040 	$7,181 	$7,472 	$7,621 
	36	$7,181 	$7,325 	$7,621 	$7,773 
	37	$7,325 	$7,472 	$7,773 	$7,928 
	38	$7,472 	$7,621 	$7,928 	$8,087 
	39		$7,773 	$8,087 	$8,249 
	40		$7,928 	$8,249 	$8,414 
	41			$8,414 	$8,582 

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 master's 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 master's 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 plus the cost of tuition, fees, and books 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 master's in school administration program shall supply the Department of Public Instruction with certification of eligible full‑time interns.
SECTION 7.2.(i)  During the 2008‑2009 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 2008‑2009 fiscal year, beginning July 1, 2008.
School Administrator I 	$3,264	$6,132
School Administrator II 	$3,465	$6,503
School Administrator III 	$3,678	$6,899
School Administrator IV 	$3,827	$7,174
School Administrator V 	$3,981	$7,464
School Administrator VI 	$4,223	$7,916
School Administrator VII 	$4,393	$8,235
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 contract of any employee.
SECTION 7.3.(b)  The monthly salary ranges that follow apply to public school superintendents for the 2008‑2009 fiscal year, beginning July 1, 2008.
Superintendent I 	$4,663	$8,735
Superintendent II 	$4,950	$9,263
Superintendent III 	$5,252	$9,827
Superintendent IV 	$5,573	$10,424
Superintendent V 	$5,915	$11,059
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 one and one‑half percent (1 1/2%) and a one thousand dollar ($1,000) bonus commencing July 1, 2008. 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 SALARIES
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 one and one‑half percent (1 ½ %) and a one thousand dollar ($1,000) bonus commencing July 1, 2008.
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 2007‑2008 and who continue their employment for fiscal year 2008‑2009 by providing an annual salary increase for employees of  one and one half percent (1 ½ %) and a one thousand dollar ($1,000) bonus. 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 one and one half‑percent (1 ½ %) and a one thousand dollar ($1,000) bonus for the 2008‑2009 fiscal year.

BONUS FOR CERTIFIED PERSONNEL AT THE TOP OF THEIR 	SALARY SCHEDULES
SECTION 7.5.  Effective July 1, 2008, any permanent personnel employed on July 1, 2008, and paid at the top of the principal and assistant principal salary schedule shall receive a onetime bonus equivalent to two percent (2%). Any permanent personnel employed on July 1, 2008, paid at the top of the teacher salary schedule shall receive a onetime bonus equivalent to one and eight tenths percent (1.80%). Personnel defined under G.S. 115C‑325(a)(5a) are not eligible to receive the bonus.

CHILDREN WITH DISABILITIES
SECTION 7.6.  The State Board of Education shall allocate funds for children with disabilities on the basis of three thousand three hundred fifty dollars and eighty‑one cents ($3,350.81) per child for a maximum of 173,114 children for the 2008‑2009 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 2008‑2009 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 7.7.  The State Board of Education shall allocate funds for academically or intellectually gifted children on the basis of one thousand eight –three dollars and one cent ($1,083.01) per child. A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2008‑2009 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 59,063 children for the 2008‑2009 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.

FUNDS TO IMPLEMENT THE ABCS OF PUBLIC EDUCATION
SECTION 7.8.(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 2007‑2008 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:
a.	Up to one thousand five hundred dollars ($1,500) for each teacher and for certified personnel; and
b.	Up to five hundred dollars ($500.00) for each teacher assistant.
(2)	Incentive awards in schools that meet the expected improvements may be:
a.	Up to seven hundred fifty dollars ($750.00) for each teacher and for certified personnel; and
b.	Up to three hundred seventy‑five dollars ($375.00) for each teacher assistant.

NORTH CAROLINA VIRTUAL PUBLIC SCHOOL
SECTION 7.9.  Section 7.20(d) of S.L. 2007‑323 reads as rewritten:
"SECTION 7.20.(d)  The State Board of Education shall implement an allotment formula developed pursuant to Section 7.16(d) of S.L. 2006‑66, for funding e‑learning, effective the beginning of the 2008‑2009 school year. The formula developed for allotting NCVPS funds shall be reported to the Fiscal Research Division, the Office of State Budget and Management, and the Joint Legislative Education Oversight Committee no later than July 1, 2008. NCVPS shall be available at no cost to all students in North Carolina who are enrolled in North Carolina's public schools, Department of Defense schools, and schools operated by the Bureau of Indian Affairs. The Department of Public Instruction shall communicate to local school administrative units all applicable guidelines regarding the enrollment of nonpublic school students in these courses."

MORE AT FOUR PROGRAM
SECTION 7.10.(a)  Chapter 115C of the General Statutes is amended by adding a new section to read:
"Part 10. More at Four Program.
"§ 115C‑238.58.  Purpose.
(a)	The purpose of this part is to authorize the More at Four pre‑kindergarten program to enhance school readiness for children who are at risk for school failure. The More at Four program shall be available on a voluntary basis statewide to all counties that choose to participate. The More at Four program shall serve children who reach the age of four on or before August 31 of that school year and who meet eligibility criteria that indicate a child's risk of school failure. More at Four programs shall be operated in public schools, Head Start programs, and licensed child care facilities that choose to participate under procedures defined by the Office of School Readiness within the Department of Public Instruction. All More at Four programs so established shall be subject to the supervision of the Office of School Readiness and shall be operated in accordance with standards adopted by the State Board of Education.
(b)	The More at Four program shall specify program standards and requirements addressing:
(1)	Early learning standards and curricula;
(2)	Teacher education and specialized training;
(3)	Teacher in‑service training and professional development;
(4)	Maximum class size;
(5)	Staff‑child ratio;
(6)	Screenings, referrals, and support services;
(7)	Meals;
(8)	Monitoring of sites to demonstrate adherence to State programs standards.
(c)	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. Furthermore, any age‑eligible child of (i) an active duty member of the armed forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the armed forces, who is ordered to active duty by the proper authority within the last 18 months or expected to be ordered within the next 18 months, or (ii) a member of the armed forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the armed forces, who was injured or killed while serving on active duty, shall be eligible for the program."
SECTION 7.10.(b)  This section becomes effective July 1, 2008.
SECTION 7.10.(c)  The salaries and benefits of twenty‑seven and one‑half More at Four positions in the Department of Public Instruction currently supported by lottery receipts shall be funded with existing More at Four appropriation and all lottery receipts shall be used to pay for direct slot costs. 
SECTION 7.10.(d)  Section 7.24(b) of S.L. 2007‑323 reads as rewritten:
"SECTION 7.24.(b)  The Department of Public Instruction shall continue to implement the "NC Prekindergarten Program Standards" initiative to recognize as high quality those prekindergarten classrooms located in four‑ and five‑star‑rated centers that choose to apply and meet equivalent "More at Four" program standards. Such recognized classrooms shall have access to training and workshops available to "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 7.10.(e)  Section 7.24.(f) of S.L. 2007‑323 reads as rewritten:
"SECTION 7.24.(f)  If a county is unable to request "More at Four" expansion slots because of a documented lack of available resources necessary to supplement those slots to full funding, the contract agency for that county may appeal to the Office of School Readiness. The Office of School Readiness may grant an exception and allot funds to pay up to ninety percent (90%) of the full cost of the additional slots for that county if it finds that (i) there is in fact a documented lack of available resources in the county to support expansion of the More at Four program and (ii) granting the exception will specifically target a known unserved at‑risk four‑year‑old population with the county."

LEARN AND EARN PROGRAM DIRECTORS
SECTION 7.11.(a)  The State Board of Education shall use funds appropriated in this act and three million four hundred twenty‑nine thousand eight hundred eighty‑eight dollars ($3,429,888) from the 2008‑2009 Learn and Earn Online appropriation  to establish a full‑time Learn and Earn Program Director in each local school administrative unit.  The full‑time position will be responsible for overseeing the Learn and Earn initiatives for each school in a local school administrative unit.
SECTION 7.11.(b)  The individual in this position will serve on the district cabinet as a leadership position for 21st century innovation in the local school administrative unit with the primary responsibility of serving as the liaison between the North Carolina Virtual Public Schools, Learn and Earn Online, the local district central office, and each school principal. Each Learn and Earn Program Director shall coordinate monthly with the State Board of Education and the Department of Public Instruction. 
SECTION 7.11.(c)  This position shall serve as the primary student advocate by providing leadership, direction, and support to each school principal in the district by creating and monitoring student success in the online environment. 
The Learn and Earn Program Director shall ensure that teachers, administrators, students, and parents are fully informed of the Learn and Earn opportunities and know how to access these courses. The Director will also train high school teachers and counselors to  align high school coursework to higher education curricula, and identify appropriate technical assistance resources in each school so that the resources are available to all local school administrative unit students participating in Learn and Earn programs.

LEARN AND EARN ONLINE CARRYFORWARD
SECTION 7.12.(a)  Funds appropriated for the Learn and Earn Online that are unexpended or unencumbered at the end of each fiscal year shall not revert, but shall remain available for expenditure.
SECTION 7.12.(b)  This section becomes effective June 30, 2008.

LEARN AND EARN
SECTION 7.13.  Chapter 115C of the General Statutes is amended by adding a new section to read:
" §115C‑238.56   Learn and Earn high schools.
(a)	The purpose of the Learn and Earn high school program is to create rigorous and relevant high school options that provide students with the opportunity and assistance to earn an associate degree or two years of college credit by the conclusion of the year after their senior year in high school. The State Board of Education shall work closely with the Education Cabinet and the New Schools Project in administering the program.
(b)	Learn and Earn funds shall be used to establish new high schools in which a local school administrative unit, two‑ and four‑year colleges and universities, and local employers work together to ensure that high school and postsecondary college curricula operate seamlessly and meet the needs of participating employers. Funds shall not be allotted until Learn and Earn high schools are certified as operational.
(c)	During the first year of its operation, a high school established under G.S. 115C‑238.50 shall be allotted a principal regardless of the number of State‑paid teachers assigned to the school or the number of students enrolled in the school. The budget flexibility authorized by G.S. 115C‑105.25 does not apply to these positions.
(d)	The State Board of Education, in consultation with the State Board of Community Colleges and The University of North Carolina Board of Governors, shall conduct an annual evaluation of this program. The evaluation shall include measures as identified in G.S. 115C‑238.55. It shall also include: (i) an accounting of how funds and personnel resources were utilized and their impact on student achievement, retention, and employability; (ii) recommended statutory and policy changes; and (iii) recommendations for improvement of the program. The State Board of Education shall report the results of this evaluation to the Office of State Budget and Management, the Joint Legislative Education Oversight Committee, and the Fiscal Research Division by January 15 of each fiscal year.
(e)	Enrollment fees and tuition for The University of North Carolina courses in which Learn and Earn students are enrolled are allowable uses of Learn and Earn funds. Tuition costs may include laboratory fees assessed to all students enrolled in the course or a similar course.
(f)	Textbooks required for college courses in which Learn and Earn students are enrolled may be purchased with Learn and Earn funds.
(g)	Payment of fees from Learn and Earn funds by local school administrative units to partnering community colleges and universities are restricted to technology or course fees. State funds 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.
(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."

LEARN AND EARN ONLINE
SECTION 7.14.  Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑238.57.  Learn and Earn Online.
(a)	The purpose of  the Learn and Earn Online program is to allow high school students to enroll in college courses to qualify for college credit. Online courses will be made available to students through The University of North Carolina and the North Carolina Community College System.
(b)	Learn and Earn Online funds shall be used for course tuition and only those technology and course fees and textbooks required for course participation.
(c)	The State Board of Education shall determine the allocation of Learn and Earn Online course offerings across the State.
(d)	The State Board of Education shall allot funds for tuition, fees, and textbooks on the basis of, and after verification of, the credit hour enrollment of high school students in Learn and Earn Online courses. Community college student enrollments in Learn and Earn Online shall not be considered as a regular budget full‑time equivalent (FTE) in the curriculum enrollment formula, but shall be accounted for separately, and funds shall be allotted as a special allotment.
(e)	The University of North Carolina program shall report to The University of North Carolina Board of Governors, and the North Carolina Community College program shall report to the North Carolina Community College Board of Trustees. The Department of Public Instruction shall report to the State Board of Education. The following information should be reported by semester on an annual basis to the Office of State Budget and Management, the  Fiscal Research Division, and the Joint Legislative Education Oversight Committee:  expenditures for tuition, textbooks, technology, and course fees; the number of participating students, the number of course registrations, and the number of credit hours earned per student.
(f)	Both The University of North Carolina and the North Carolina Community College System shall provide oversight and coordination, including coordination with the Department of Public Instruction and with the North Carolina Virtual Public School (NCVPS) to avoid course duplication."

EVALUATIONS OF PRINCIPALS
SECTION 7.15.  G.S. 115C‑286.1 reads as rewritten:
"§ 115C‑286.1.  Evaluations of principals.
Local school administrative units shall evaluate all principals and assistant principals at least once each year. Either the superintendent or the superintendent's designee shall conduct the evaluations.
Beginning with the 2008‑2009 school year, administrators shall be evaluated based on the new evaluation instrument developed by the State Board of Education that includes the accountability measures of teacher retention, teacher support, and school climate. A local board shall use the performance instrument adopted by the State Board for a minimum of three years. After three years, a local board may request a waiver to use an alternative evaluation that is properly validated and that includes the State Board of Education's standards for 21st century administrators and criteria similar to those adopted by the State Board."

PROFESSIONAL DEVELOPMENT PROGRAMS
SECTION 7.16.  Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑335.  Professional Development.
(1)	The State Board of Education shall approve all professional development programs made available to public school administrators and teachers in North Carolina.
(2)	All providers of professional development must apply for and be granted formal approval by the State Board of Education prior to delivering professional development services or programs to North Carolina public school administrators and teachers."

TEACHER ACADEMY
SECTION 7.17.  Of the funds appropriated in S.L. 2007‑323 for literacy coach training, the North Carolina Teacher Academy may use up to three hundred twenty‑eight thousand dollars ($328,000) to establish up to three new positions including associated operating support.  Any positions established under this section shall be dedicated to providing ongoing literacy coach training.

ANNUAL TEACHER TURNOVER
SECTION 7.18.  G.S. 115C‑12 (22) of the General Statutes reads as rewritten:
"§ 115C‑12.  Powers and Duties of the Board generally.
(22)	Duty to Monitor the Decisions of Teachers to Leave the Teaching Profession. – The State Board of Education shall monitor and compile an annual report on the decisions of teachers to Remain in the teaching profession. The State Board shall  analyze the data from the biennial North Carolina Teacher Working Conditions Survey and report major trends and findings at the State and district level on the reasons teachers state they will remain teaching in North Carolina."

SCHOOL CONNECTIVITY INITIATIVE
SECTION 7.19.(a)  Section 7.28.(c) of S.L. 2007‑323 reads as rewritten:
"SECTION 7.28.(c)  Funds currently used for the services covered by these new funds shall not be supplanted by this additional funding and shall be used to support instructional technologies and local infrastructure in schools in support of acquisition and delivery of instructional technology resources to the classroom.  Any refunds received for services paid with these technology funds shall return to the originating technology fund.
Expenditures of existing funds for instructional technologies and local infrastructure shall be reported for each local school administrative unit to the Office of State Budget and Management, the Fiscal Research Division, and the Joint Legislative Education Oversight Committee annually by January 15."
SECTION 7.19.(b)  Up to three hundred thousand dollars ($300,000) may be transferred to the Friday Institute at North Carolina State University to evaluate the effectiveness of using technology and its impact on 21st Century Teaching and Learning outcomes approved by the State Board of Education.  The Friday Institute shall report annually to the State Board of Education on the evaluation results including recommendations for continued implementation of the school connectivity initiative.
SECTION 7.19.(c)  Funds appropriated for the connectivity initiative that are unexpended or unencumbered at the end of each fiscal year shall not revert, but shall remain available for expenditure.
SECTION 7.19.(d)  This section becomes effective June 30, 2008.

COMPREHENSIVE SUPPORT PROGRAM
SECTION 7.20.  Funds appropriated in this act for the Comprehensive District and School Support program shall be used for positions and operating support in accordance with the plan approved by the State Board of Education.  These funds shall replace the salaries and benefits of fifteen and eighty‑one hundredths (15.81) federally funded positions due to a reduction in the federal grants.  The State Board of Education may also use these funds to establish new positions or raise the salaries of existing positions for the Comprehensive District and School Support program, subject to the approval of the Office of State Budget and Management.

COMMUNITIES IN SCHOOLS
SECTION 7.21.  Funds appropriated in this act shall be used to match a Gates Foundation grant awarded specifically to support the creation and implementation of Performance Learning Centers.

PART VIII. COMMUNITY COLLEGES

REORGANIZATION OF THE NORTH CAROLINA COMMUNITY COLLEGEs SYSTEM OFFICE
SECTION 8.1.(a)  Notwithstanding any other provision of law, and consistent with the authority established in G. S. 115D‑3, the President of the North Carolina Community Colleges System may reorganize the System Office in accordance with recommendations and plans submitted to and approved by the State Board of Community Colleges.
SECTION 8.1.(b)  This section expires June 30, 2009.

CARRYFORWARD FOR EQUIPMENT
SECTION 8.2.(a)  Subject to the approval of the Office of State Budget and Management and cash availability, the North Carolina Community Colleges System Office may carry forward an amount not to exceed ten million dollars ($10,000,000) of the operating funds that were not reverted in fiscal year 2007‑2008 to be reallocated to the State Board of Community Colleges' Equipment Reserve Fund. These funds shall be distributed to colleges consistent with G.S.115D‑31.
SECTION 8.2.(b)  This section becomes effective June 30, 2008.

USE OF FUNDS FOR THE COLLEGE INFORMATION SYSTEM
SECTION 8.3.(a)  Funds appropriated in this act to the Community Colleges System Office for the College Information System shall not revert at the end of the 2008‑2009 fiscal year but shall remain available until expended.  These funds may be used to purchase periodic system upgrades.
SECTION 8.3.(b)  Notwithstanding G.S. 143C‑6‑4, 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, use funds appropriated in this act for the College Information System to create a maximum of three positions.  Personnel positions created pursuant to this subsection shall be dedicated to maintaining and administering information technology and software upgrades to the College Information System.
SECTION 8.3.(c)  The Community Colleges System Office shall report by January 1, 2009, to the Joint Legislative Education Oversight Committee on the final implementation of the College Information System Project.

NCCCS DATA WAREHOUSE
SECTION 8.4.(a)  Funds are appropriated in this act for the North Carolina Community Colleges System Data Warehouse project.  The Community Colleges System Office shall consult with the Office of State Budget and Management and the Office of Information Technology Services upon completion of the final business requirements for the expansion and enhancement of the NCCCS Data Warehouse and before commencing further work on the Data Warehouse.
SECTION 8.4.(b)  NCCCS Data Warehouse expansion and enhancements shall be compatible and able to be integrated with other data systems maintained by The University of North Carolina and the Department of Public Instruction.

ADDITIONAL NURSING FACULTY SHALL BE ALLOCATED BASED ON PROGRAM WAITING LISTS
SECTION 8.5.(a)  Funds are appropriated in this act for 55 additional nursing faculty for community college nursing programs.  The State Board of Community Colleges shall determine the allocation of these positions among the community colleges.  This determination shall include such criteria as the length of the program's waiting list, the duration of a student's time on the waiting list, and the physical capacity of the community college to support additional faculty positions.
SECTION 8.5.(b)  These funds shall be used to create new faculty positions in nursing programs and shall not be used to supplement existing faculty salaries or be transferred for any other purpose.

REPORT ON EFFECT OF ADDITIONAL ALLIED HEALTH FUNDING
SECTION 8.6.  The Community Colleges System Office shall report by March 1, 2009, to the Joint Legislative Education Oversight Committee, the Fiscal Research Division, and the Office of State Budget and Management regarding the effect of additional funding received for nursing and allied health programs in 2006‑2007, 2007‑2008 and funds received in this act.  This report shall describe how the additional allied health funding has addressed the following:
(1)	The number of students enrolled in these programs;
(2)	The length of program waiting lists;
(3)	The number of additional faculty hired;
(4)	The faculty credentials earned by community college nursing faculty;
(5)	The level of salary and compensation awarded to faculty members;
(6)	The clinical opportunities available to students; and
(7)	The performance of students on nursing licensure exams.

REPORT ON COST OF ALL PROGRAMS
SECTION 8.7.  The Community Colleges System Office shall report by November 15, 2009, to the Fiscal Research Division and the Office of State Budget and Management regarding the instructional cost of all curriculum and non‑curriculum programs.  This report shall include an explanation of the differences in costs between programs, including faculty salaries and equipment costs.

MINORITY MALE MENTORING PROGRAM FUNDS
SECTION 8.8.(a)  Funds appropriated for the Minority Male Mentoring Program shall not revert at the end of the fiscal year, but shall remain available until expended. 
SECTION 8.8.(b)  This section becomes effective June 30, 2008.

LEARN & EARN ON‑LINE FUNDS
SECTION 8.9.(a)  Funds allotted to the North Carolina Community Colleges System for full‑time equivalent (FTE) students shall not revert at the end of a fiscal year, but shall remain available for expenditure up to 12 months after the close of a fiscal year.
SECTION 8.9.(b)  This section becomes effective June 30, 2008.

CONSOLIDATE WORKFORCE DEVELOPMENT PROGRAMS
SECTION 8.10.(a)  G.S. 115D‑5.1. reads as rewritten:
"§ 115D‑5.1.  Workforce Development Programs.
(a)	Community colleges shall assist in the preemployment and in‑service training of employees in industry, business, agriculture, health occupation and governmental agencies. Such training shall include instruction on worker safety and health standards and practices applicable to the field of employment. The State Board of Community Colleges shall make appropriate regulations including the establishment of maximum hours of instruction which may be offered at State expense in each in‑plant training program. No instructor or other employee of a community college shall engage in the normal management, supervisory and operational functions of the establishment in which the instruction is offered during the hours in which the instructor or other employee is employed for instructional or educational purposes.
(b)	The State Board of Community Colleges shall adopt guidelines governing all Customized Industry Training Programs that shall incorporate the North Carolina Community College System's current New and Expanding Industry Training (NEIT) Program Guidelines, which were adopted by the State Board of Community Colleges on April 18, 1997, and subsequently modified. The guidelines shall apply to all funds appropriated for customized Industry Training Programs after June 30, 2008. A project approved as an exception under these Guidelines, or these Guidelines as modified by the State Board of Community Colleges, shall be approved for one year only.
(b1)	Notwithstanding any other provision of law, the State Board of Community Colleges may adopt rules and guidelines that allow the Customized Industry Training Programs to use funds appropriated for those programs to support training projects for the various branches of the United States Armed Forces.
(c)	The State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee on September 1 of each year on expenditures for the Customized Industry Training Programs each fiscal year. The report shall include, for each company or individual that receives funds for the Customized Industry Training Programs:
(1)	The desired business expansion or enhancement objective sought by the company or individual;
(2)	The total amount of funds received by the company or individual;
(3)	The amount of funds per trainee received by the company or individual;
(4)	The amount of funds received per trainee by the community college training the trainee;
(5)	The number of trainees trained by company and by community college;
(6)	The types of services rendered per company or individual by community college; and
(7)	The number of years the companies or individuals have been funded or served.
(d)	Funds available for Customized Training Programs shall not revert at the end of a fiscal year but shall remain available until expended.
(e)	Before a business or industry qualifies to receive assistance under the Customized Industry Training Programs, the President of the North Carolina Community College System, or the President's designee, shall determine that:
(1)	The business is making an appreciable capital investment;
(2)	The business is deploying new technology; 
(3)	The business or individual is creating jobs, expanding an existing workforce, or enhancing the productivity and profitability of their operations within the State; and 
(4)	The skills of the workers will be enhanced by the assistance.
						(f)	The State Board may approve the use of funds appropriated for Customized Industry Training Programs for the training and support of regional, community college personnel to deliver Customized Industry Training Program services to business and industry up to five percent (5%) of the funds appropriated in the current year for Customized Industry Training Programs.
(g)	The State Board shall adopt rules and policies to implement this section."
SECTION 8.10.(b)  The State Board of Community Colleges shall transfer funds appropriated for the New and Expanding Industry Training Program and the Focused Industrial Training Program to the Customized Industry Training Programs appropriation.  This transfer shall be completed by September 1, 2008.

PART IX: UNIVERSITIES

REPORTING ON UNC FACULTY WORKLOAD
SECTION 9.1.(a)  The Board of Governors shall conduct a study on faculty workload. The study shall be done using the Delaware Study Method of collecting data. Information in the report should include, but is not to be limited to:
(1)	Faculty workload data for each UNC constituent institution compared to the UNC enrollment model.
(2)	UNC faculty workload average as compared to the UNC enrollment model student credit hours per instructional position.
(3)	Faculty workload of regional and peer institutions as compared to each UNC constituent institution faculty average and to the UNC faculty workload average.
SECTION 9.1.(b)  The UNC Board of Governors shall submit the study to the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division no later than August 1, 2008.

UNC‑NCCCS 2+2 E‑LEARNING INITIATIVE
SECTION 9.2.(a)  Funds appropriated in this act to The University of North Carolina and the North Carolina Community College System for the UNC‑NCCCS 2+2 E‑Learning Initiative shall be used to fund further development of online courses for 2+2 programs.  Based on a mutually agreed upon decision by the State Board of Education Chairman, the President of the Community Colleges, and the President of The University of North Carolina as to the areas of greatest need, to include mathematics and science teacher licensure fields, funds are available to support joint technology development, systems to track student progress and articulation between a North Carolina community college and a UNC constituent institution, and develop technology needed to support online courses and 2+2 programs.
SECTION 9.2.(b)  The University of North Carolina and The North Carolina Community Colleges System shall use these funds first to develop online teacher education programs, including baccalaureate and associate pre‑major programs.
SECTION 9.2.(c)  The University of North Carolina and Community College System Office shall report by September 1, 2008, and annually thereafter, to the Joint Legislative Education Oversight Committee, the State Board of Education, 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.

EDUCATION ACCESS REWARDS NORTH CAROLINA (EARN) SCHOLARS FUND TO INCLUDE RESIDENT STUDENTS ENROLLED AT A PRIVATE COLLEGE OR UNIVERSITY
SECTION 9.3.(a)  G.S. 116‑209.26(a) is rewritten to read:
"§ 116‑209.26.  Education Access Rewards North Carolina Scholars Fund.
(a)	The following definitions apply to this section:
(1)	Academic year. – A period of time in which a student in matriculated status is expected to complete the equivalent of at least two semesters' or three quarters' academic work.
(2)	Eligible postsecondary institution. – A school that is:
a.	A constituent institution of The University of North Carolina as defined in G.S. 116‑2(4); or
b.	A community college as defined in  G.S. 115D‑2(2); or
c.	An institution as defined in G.S. 116‑22(1).
(3)	Matriculated status. – Being recognized as a first‑time candidate for a degree or certificate, exclusive of any course credits earned while in high school, in a defined program of study at an eligible postsecondary institution.
(4)	Title IV. – Title IV of the Higher Education Act of 1965, as amended."
SECTION 9.3.(b)   Any funds appropriated from the Escheat Fund to the Education Access Rewards North Carolina Scholars Fund shall be allocated by the State Educational Assistance Authority in accordance with G.S. 116B‑7.

MATCHING GRANTS FOR TEACHERS IN THE NORTH CAROLINA PUBLIC SCHOOLS WHO HAVE ESTABLISHED PARENTAL SAVINGs TRUST FUND ACCOUNTS
SECTION 9.4.(a)  There is appropriated from the General Fund to the State Education Assistance Authority the sum of two million dollars ($2,000,000) for the 2008‑2009 fiscal year to make grants in the form of matching contributions, of up to one thousand dollars ($1,000) per account, to accounts in the Parental Savings Trust Fund established pursuant to G.S. 116‑209.25. Such matching grants shall be made only for amounts contributed to accounts owned by teachers who are employed in the North Carolina public schools. Any account opened as of or after July 1, 2008, is eligible to receive an annual matching grant of one hundred percent (100%) of all amounts contributed up to the maximum grant per teacher per year provided that, the account owner is a licensed teacher employed in the North Carolina public schools, and provided further that, matching grants are not available for withdrawal for payment of the qualified higher education expenses of the designated beneficiary until after the account owner has been teaching in the North Carolina public schools for five years. If a teacher leaves employment in a North Carolina public school before completing five years of service, all matching grant funds allocated to such teacher's account, and all interest earned on those funds, shall be available for matching grants to other eligible teachers. The matching grants provided for in this section shall be used only for payment of the qualified higher education expenses of the designated beneficiary.
SECTION 9.4.(b)  The State Education Assistance Authority may adopt specific rules to regulate the matching contributions.

UNC ENROLLMENT GROWTH REQUEST TO CONTAIN PREVIOUS ACADEMIC YEAR'S ACTUAL STUDENT CREDIT HOURS (SCH) AND FULL‑TIME EQUIVALENCIES (FTE)
SECTION 9.5.  G.S. 116‑11(9)(a) reads as rewritten:
"§ 116‑11.  Powers and duties generally.
…
(9)	a1.	The Board of Governors shall develop, prepare and present to the Governor and the General Assembly a single, unified recommended budget for all of the constituent institutions of The University of North Carolina. The recommendations shall consist of requests in three general categories: (i) funds for the continuing operation of each constituent institution, (ii) funds for salary increases for employees exempt from the State Personnel Act and (iii) funds requested without reference to constituent institutions, itemized as to priority and covering such areas as new programs and activities, expansions of programs and activities, increases in enrollments, increases to accommodate internal shifts and categories of persons served, capital improvements, improvements in levels of operation and increases to remedy deficiencies, as well as other areas. The president may present to the General Assembly an updated estimate of tuition, fees, and other receipts by June 15 of each year to be included in the budget for the following fiscal year.
a2.	The Board of Governors shall provide full documentation and justification of any enrollment change funding request at the time it is recommended. This documentation and justification shall include the most recent academic year's actual enrollment numbers in the same format in which the growth increase request is made. The actual enrollment numbers shall be the actual student credit hours (SCH) or full‑time equivalencies (FTE).
…."

REVERT THE 2007‑2008 APPROPRIATION FOR THE EDUCATION ACCESS REWARDS NORTH CAROLINA (EARN) SCHOLARS FUND
SECTION 9.6.  Effective June 30, 2008, the unencumbered balance of the funds appropriated in 2007‑2008 to The University of North Carolina Board of Governors and the State Education Assistance Authority in Section 9.7 of S.L. 2007‑323 shall revert to the General Fund. The amount reverted shall be no less than twenty‑seven million six hundred five thousand two hundred ten dollars ($27,605,210).

STUDY OF ANY PART OF THE UNC SYSTEM FUNDED BASED ON THE FULL‑TIME EQUIVALENCY (FTE) MODEL
SECTION 9.7.(a)  The Office of State Budget and Management shall conduct a study of the formula for enrollment growth for any portion of the UNC system that is funded based on the FTE enrollment growth model. If this study recommends changes to the enrollment growth formula, the revised formula will be used to calculate the amount of funds needed for enrollment growth. The formula will be used for calculating the enrollment growth funding recommendation to be submitted to the 2009 Session of the North Carolina General Assembly. 
SECTION 9.7.(b)  The Office of State Budget and Management shall submit the study to the Joint Legislative Education Oversight Committee and the Fiscal Research Division no later than March 1, 2009. 

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

BUDGET FLEXIBILITY FOR DHHS ADMINISTRATION
SECTION 10.1.  Notwithstanding G.S. 143C‑6‑4, for 2008‑2009 fiscal year, the Department of Health and Human Services may, with approval of the Office of State Budget and Management, take actions necessary to identify and realign or adjust the authorized budgets of the department to fund payments for audit services provided by the Office of State Auditor and for data processing services billed by the State Information Technology Services office.

CHANGES TO FOSTER CARE AND ADOPTION ASSISTANCE PAYMENTS
SECTION 10.2. Sections 10.29(a) and (b) of S.L. 2007‑323 read as rewritten:
"SECTION 10.29.(a)  The maximum rates for the State foster care assistance program are established based on the United States Department of Agriculture annual report on the cost of raising a child and are appropriated as follows:
(1)	$475.00 per child per month for children aged birth through 5;
(2)	$581.00 per child per month for children aged 6 through 12; and
(3)	$634.00 per child per month for children aged 13 through 18.

SECTION 10.29.(b)  The maximum rates for the State adoption assistance program are established consistent with the foster care rates as follows:
(1)	$475.00 per child per month for children aged birth through 5;
(2)	$581.00 per child per month for children aged 6 through 12; and
(3)	$634.00 per child per month for children aged 13 through 18.
SECTION 10.29.(c)  In addition to providing board payments to foster and adoptive families of HIV‑infected children, as prescribed in Section 23.28 of Chapter 324 of the 1995 Session Laws, any additional funds remaining that were appropriated for this purpose shall be used to provide medical training in avoiding HIV transmission in the home.
SECTION 10.29.(d)  The maximum rates for the State participation in HIV foster care and adoption assistance are established on a graduated scale as follows:
(1)	$800.00 per child per month with indeterminate HIV status;
(2)	$1,000 per child per month confirmed HIV‑infected, asymptomatic;
(3)	$1,200 per child per month confirmed HIV‑infected, symptomatic; and
(4)	$1,600 per child per month terminally ill with complex care needs."

CHANGES TO SPECIAL CHILDREN ADOPTION FUND
SECTION 10.3.  Section 10.31(a) of S.L. 2007‑323 reads as rewritten:
"SECTION 10.31.(a)  Of the funds appropriated to the Department of Health and Human Services in this act, the sum of one hundred thousand dollars ($100,000) shall be used to support the Special Children Adoption Fund for the 2007‑2008 and 2008‑2009 fiscal years. For 2008‑2009 an additional one hundred thousand dollars ($100,000) from the Social Services Block Grant shall be allocated for this purpose. The Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A‑50 and in foster care. Payments received from the Special Children Adoption Fund by participating agencies shall be used exclusively to enhance the adoption services. No local match shall be required as a condition for receipt of these funds. In accordance with State rules for allowable costs, the Special Children Adoption Fund may be used for post‑adoption services for families whose income exceeds two hundred percent (200%) of the federal poverty level.
SECTION 10.31.(b)  Of the total funds appropriated for the Special Children Adoption Fund each year, twenty percent (20%) of the total funds available shall be reserved for payment to participating private adoption agencies. If the funds reserved in this subsection for payments to private agencies have not been spent on or before March 31, 2008, the Division of Social Services may reallocate those funds, in accordance with this section, to other participating adoption agencies.
SECTION 10.31.(c)  The Division of Social Services shall monitor the total expenditures in the Special Children Adoption Fund and redistribute unspent funds to ensure that the funds are used according to the guidelines established in subsection (a) of this section. The Division shall implement strategies to ensure that funds that have historically reverted for this program are used for the intended purpose."

CHANGES TO AIDS DRUG ASSISTANCE PROGRAM
SECTION 10.4.  Section 10.26 of S.L. 2007‑323 is amended by adding a new subsection to read:
"AIDS DRUG ASSISTANCE PROGRAM
SECTION 10.26.(a)  For the 2007‑2008 fiscal year, the Department may adjust the financial eligibility criterion of the ADAP 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.
(b)	For the 2008‑2009 fiscal year, the Department may adjust the financial eligibility criterion of the ADAP up to an amount not exceeding three hundred percent (300%) 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 a waiting list develops as a result of the eligibility criterion being raised, 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."

CHANGES TO MEDICAL EXAMINER JURISDICTION
SECTION 10.5.  Article 16 of Chapter 130A of the General Statutes reads as rewritten:
"§ 130A‑383.  Medical examiner jurisdiction.
(a)	Upon the death of any person resulting from violence, poisoning, accident, suicide or homicide; occurring suddenly when the deceased had been in apparent good health or when unattended by a physician; occurring in a jail, prison, correctional institution, State facilities operated in accordance with G.S. 122C, Article 4, Part 5 or in police custody; occurring pursuant to Article 19 of Chapter 15 of the General Statutes; or occurring under any suspicious, unusual or unnatural circumstance, the medical examiner of the county in which the body of the deceased is found shall be notified by a physician in attendance, hospital employee, law‑enforcement officer, funeral home employee, emergency medical technician, relative or by any other person having suspicion of such a death. No person shall disturb the body at the scene of such a death until authorized by the medical examiner unless in the unavailability of the medical examiner it is determined by the appropriate law enforcement agency that the presence of the body at the scene would risk the integrity of the body or provide a hazard to the safety of others. For the limited purposes of this Part, expression of opinion that death has occurred may be made by a nurse, an emergency medical technician or any other competent person in the absence of a physician."

CHANGES TO REPORT REQUIRED UPON DEATH OF CLIENT
SECTION 10.6.  G.S. 122C‑31 is amended by adding a new subsection to read:
"§ 122C‑31.  Report required upon death of client.
(g)	In addition to the reporting requirements specified in (a)‑(e) of this section and pursuant to G.S. 130A‑383, State facilities shall report the death of any client of the facility, regardless of the manner of death, to the medical examiner of the county in which the body of the deceased is found."

CHANGES TO SCREENING OF NEWBORNS FOR METABOLIC AND OTHER HEREDITARY AND CONGENItAL DISORDERS
SECTION 10.7.  Chapter 130A‑125(c) reads as rewritten:
"§ 130A‑125.  Screening of newborns for metabolic and other hereditary and congenital disorders.
(c)	A fee of seventeen dollars and forty‑five cents ($17.45) applies to a laboratory test performed by the State Laboratory of Public Health pursuant to this section. Fees collected shall remain in the Department to be used to offset the cost of the Newborn Screening  and shall be assessed for all specimens of the non‑Medicaid eligible population. The Director of the State Laboratory of Public Health shall review the fee annually, and each time a new test is added to the Newborn Screening Program, to determine if an increase is necessary to cover the laboratory's newborn screening costs. If the actual cost to perform newborn screening exceeds the amount of the fee authorized under this section, then the Department shall recommend an increase in the fee for consideration by the Director of the Budget and the North Carolina General Assembly."
CHANGES TO ASBESTOS CONTAINING MATERIAL REMOVAL PERMIT FEES
SECTION 10.8.  G. S. 130A‑450 is amended by adding a new subsection to read:
"§ 130A‑450.  Asbestos containing material removal permit fees.
(a)	The Department shall establish and collect an application fee for asbestos containing material removal permits to support the asbestos hazard management program. The fee shall not exceed one percent (1%) of the contracted price or twenty cents ($.20) per square foot or linear foot of asbestos containing material to be removed, whichever is greater.
(b)	Notwithstanding the provisions of subsection (a) of this section, the application fee for asbestos containing material removal prior to demolition shall be one percent (1%) of the contracted price or twenty cents ($.20) per square foot or linear foot of asbestos containing material to be removed, whichever is greater, but shall not exceed five thousand dollars ($5,000.00)."

REPEAL VISION CARE PROGRAM
SECTION 10.9.  G.S. 130A‑440.1 is repealed.

PROTECT THE HEALTH OF EMPLOYEES OF  POULTRY PROCESSING PLANTS BY AUTHORIZING THE STATE HEALTH DIRECTOR TO INSPECT THE PLANTS
SECTION 10.10.  Article 16 of Chapter 95 is amended by adding a new section to read:
"§ 95‑136.2.  Inspection of Poultry Processing Plants.
(a)	The following definitions shall apply throughout this section:
(1)	"Poultry Processing Plant" means an entity that processes poultry in this State.
(2)	""Large Processing Plant" means an entity that processes poultry and employs more than 500 employees in this State.
(3)	"State Health Director" means the person appointed pursuant to G.S. 130A‑3 or the director's designee.
(4)	"Licensed Medical Professional" means a physician licensed to practice medicine in this State, or a registered nurse, a licensed practical nurse, a nurse practitioner, or a physician's assistant licensed to practice in this State acting under the supervision of a physician licensed to practice medicine in this State.
(b)	Without abrogating the authority of the Commissioner, the State Health Director is delegated the authority of the Commissioner to inspect poultry processing plants pursuant to this Article. The purpose of the inspection shall be to review and investigate the medical evaluation, treatment, referral, record keeping, reporting and possible causes of injuries, illnesses, or deaths within the poultry processing plant. The State Health Director shall provide a written report to the Director of OSHA with the findings of the inspection, including any deficiencies found. The Director of OSHA shall review the report and shall take appropriate action to correct any deficiencies or violations.
(c)	The State Health Director shall have all powers to inspect the poultry processing plant under G.S. 95‑136, including, but not limited to, full and immediate access to any part of the poultry processing plant, the ability to question privately any employer, owner, operator, agent or employee and full and immediate access to any and all records. If access is denied, an administrative search warrant shall be obtained pursuant to G.S. 15‑27.2.
(d)	The State Health Director shall be permitted to examine, review, and obtain a copy of all records, reports, or other materials maintained by the Department of Labor pursuant to this Article. The Commissioner or Director shall be permitted to examine, review, and obtain a copy of all records, reports, or other materials maintained by the State Health Director pursuant to this Article.
(e)	In addition to complying with existing OSHA record‑keeping requirements, poultry processing plants shall maintain a written log of all injuries and health concerns, including complaints of pain, whether or not such complaints reach any other threshold. This log shall include the name of the employee, the description of the injury or illness, the date that the symptom was first noticed, any action taken by the licensed medical professional or the plant management in response to the report, and the outcome of such treatment or referral. Employees are free to report, and the employer shall not discourage, threaten, or prevent employees from reporting, the information required by this section.
(f)	Effective September 1, 2008, any large poultry processing plant shall employ or contract with a licensed medical professional(s) who will be available on a regular basis at the plant to provide the evaluation, treatment, and referral of employees who are injured or become ill during operating hours of the plant or as a result of work performed at the facility.
(g)	The State Health Director shall make an annual report to the Governor, to the Speaker of the House of Representatives, the President Pro Tempore of  the Senate and the Commissioner of Labor on the findings of the inspection program, including any recommendations for additional legislation, regulation, or enforcement measures necessary to protect the health of  workers in poultry processing plants."

HOUSING FOR MH/DD/SAS CONSUMERS
SECTION 10.11.  Of the funds appropriated in this act to the Mental Health Trust Fund, the Department of Health and Human Services shall use the sum of four million dollars ($4,000,000) to strengthen the capacity the of the LMEs and the provider network to sustain and expand supportive housing opportunities for MH/DD/SAS consumers.  In allocating these funds, the Department of Health and Human Services shall factor in the relative needs and strengths of the Local Management Entity (LME) catchment areas in the area of housing services and supports and shall allocate the funds in proportion to the needs and strengths of the LMEs.

CRISIS SERVICES FUNDS
SECTION 10.12.  Notwithstanding G. S. 122C‑112.1(b)(7), the Secretary may contract with one or more private providers or other public agencies to deliver expanded crisis services for which funding is appropriated in this act.  The General Assembly supports the plan developed by the Secretary to phase in the creation of regional management entities over three years through voluntary merger and partnership arrangements among LMEs.  The plan, which will be implemented in a single state facility catchment area at a time, will result in the creation of up to eight regional entities serving a total population of at least one million.  The Secretary may allocate the expanded crisis services funding appropriated in this act to regional management entities as they are developed.

CRISIS AND ACUTE CARE SERVICES
SECTION 10.13.  Section 10.49(s5) of S. L. 2007‑323 reads as rewritten:
"SECTION 10.49.(s5)  The budgets for the State psychiatric hospitals shall not be reduced during the 2007‑2008 and 2008‑2009 fiscal years as a result of the pilot developed under subsection (s1) of this section. However, those budgets shall be adjusted in following years to reflect the previous year's use by the LMEs participating in the pilot program."

CHANGES TO STRENGTHEN THE SERVICES NETWORK
SECTION 10.14.  Section 10.49(y) of S. L. 2007‑323 reads as rewritten:
"SECTION 10.49.(y)  Not later than September 1, 2007, the Department of Health and Human Services shall designate two additional local management entities to receive all State allocations through single stream funding. The Department shall develop clear standards for how an LME qualifies for single stream funding and shall award single stream funding to any other LME that meets those standards within the 2007‑2008 and 2008‑2009 fiscal years. These standards shall be developed and implemented not later than October 1, 2007. In addition to the LMEs designated by the Department, the Piedmont, New River, Smoky Mountain, Guilford, Sandhills, Five County, and Mecklenburg LMEs shall continue to receive State allocations through single stream funding. The Department is authorized to remove the designation of an LME if it is not in compliance with the performance contract. The Department may adopt temporary rules in accordance with Chapter 150B of the General Statutes in order to implement the standards required by this subsection by October 1, 2007."

CHANGES TO FILLING SERVICE GAPS
SECTION 10.15.  Section 10.29(ee) of S.L. 2007‑323 reads as rewritten:
"SECTION 10.49.(ee)  For the purpose of avoiding overutilization of community support services and overexpenditure of funds for these services, the Department of Health and Human Services shall immediately conduct an in‑depth evaluation of the use and cost of community support services to identify existing and potential areas of overutilization and overexpenditure. The Department shall also adopt or revise as necessary management policies and practices that will ensure that at a minimum:
(1)	There is in place a list of community support services that are appropriate to meet the critical needs of the client and are cost effective;
(2)	Community support services are appropriately utilized based on the critical needs of the client, and utilization is monitored routinely to ensure against overutilization;
(3)	That expenditures for services are controlled to the maximum extent possible without unnecessarily impairing service quality and efficiency;
(4)	Service providers are fully competent to provide each service, to provide the service in the most efficient manner, and that services and providers meet standards of protocol adopted by the Department. To this end, endorsement shall be based on compliance with:  a Medicaid service‑specific checklist, rules for Mental Health, Developmental Disabilities, and Substance Abuse Services, client rights rules in community Mental Health, Developmental Disabilities, and Substance Abuse Services, the Medicaid service records manual, and other Medicaid requirements as stipulated in the participation agreement with the Division of Medical Assistance. In accordance with G.S. 122C‑115.4, an LME may remove a provider's endorsement;
(5)	All community support services are subject to prior approval; and the LME may participate in the development of the person‑centered plan as part of its care coordination and quality management function as defined in G.S. 122C‑115.4; 
(6)	Providers are limited to four hours of community support for adults and eight hours of community support for children to develop the person‑centered plan. Those hours shall be provided only by a qualified professional. Providers that determine that additional hours are needed must seek and obtain prior approval. If additional hours are authorized, the LME may participate in the development of the person‑centered plan as part of its care coordination and quality management function as defined in G.S. 122C‑115.4.
(7)	Based on standards of care and practice, a stringent clinical review process for authorization of services is implemented uniformly and in accordance with State guidelines;
(8)	Additional record audits of providers are conducted on a routine basis to continually ensure compliance with Medicaid requirements;
(9)	Post‑payment clinical reviews are conducted at the local level to ensure that consumers receive the appropriate level and intensity of care;
(10)	Beginning October 1, 2007, and monthly thereafter, report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services. The report shall include the following:
a.	The number of consumers of community support services by month, segregated by adult and child;
b.	The number of units of community support services billed and paid by month, segregated by adult and child;
c.	The amount paid for community support by month, segregated by adult and child;
d.	Of the numbers provided in sub‑subdivision b. of this subdivision, identify those units provided by a qualified professional and those provided by a paraprofessional;
e.	The length of stay in community support, segregated by adult and child;
f.	The number of clinical post payment reviews conducted by LMEs and a summary of those findings;
g.	The total number of community support providers and the number of newly enrolled, re‑enrolled, or terminated providers, and if available, reasons for termination;
h.	The number of community support providers that have been referred to DMA's Program Integrity Section, the Division's "Rapid Action response" committee; or the Attorney General's Office;
i.	The utilization of other, newly enhanced mental health services, including the number of consumers served by month, the number of hours billed and paid by month, and the amount expended by month;
(11)	If possible, modify the Medicaid claims payment processing system so that providers will be required to identify, by claim, whether the service was provided by a qualified professional or a paraprofessional; and
(12)	The Department of Health and Human Services and the Department of Public Instruction shall amend their Memorandum of Agreement to ensure that each local education agency develops its own list of approved providers and individual service providers authorized to provide services on campus as provided under the Federal Safe Schools Act.
The Department shall report not later than November 1, 2007, on the list of community support services determined to be appropriate. Not later than March 1, 2008, the Department shall provide a detailed report on the implementation and status of each of the activities required by this subsection to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services,  and the Fiscal Research Division. The report shall also include clear standards for determining local management entity capability to perform utilization review and utilization management and clear statewide standards for utilization review and utilization management. These standards shall include (i) determination of medical necessity; (ii) an authorization process that includes the use of standardized forms; (iii) concurrent review procedures; (iv) recipient appeals process; (v) minimum staffing requirements; (vi) requirements for data collection and reporting; and (vi) performance criteria for the LMEs and outside vendor.
In order to ensure full compliance with the laws of this State on the implementation of mental health reform, the Department shall, by January 1, 2008, adopt statewide standardized authorization procedures and processes for Medicaid utilization review. Before July 1, 2008, (i) up to six LMEs that meet those standards (not including LMEs approved for 1915(b) waivers) may, under contract with the outside vendor, complete the utilization review process for enhanced benefit and CAP MR/DD services for the LMEs' respective catchment areas; (ii) the Department shall have a process outlined that would enable all other LMEs to meet the standards required for completing the utilization review process under contract with the outside vendor; (iii) the Department shall report on the implementation of utilization review, including the utilization review process, subcontract details, and funding levels, to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division. The Department shall ensure that all Medicaid utilization review contracts with outside vendors, as required under this subsection, that are executed, renewed, or extended after the effective date of this act, are in compliance with and do not impair, interfere with, or otherwise prohibit the implementation of this subsection. Prior to renewing, extending, or entering into a contract with an outside vendor for utilization review under this subsection, the Department shall consult with the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services."

CHANGES TO CHILD CARE FUNDS MATCHING REQUIREMENT
SECTION 10.16.  Section 10.17 of S. L. 2007‑323 reads as rewritten:
"SECTION 10.17.(a)  No local matching funds may be required by the Department of Health and Human Services as a condition of any locality's receiving its initial allocation of child care funds appropriated by this act unless federal law requires a match. If the Department reallocates additional funds above twenty‑five thousand dollars ($25,000) to local purchasing agencies beyond their initial allocation, local purchasing agencies must provide a fifteen percent (15%) local match to receive the reallocated funds. Matching requirements shall not apply when funds are allocated because of a disaster as defined in G.S. 166A‑4(1).
SECTION 10.17.(b)  If funds are reallocated to local purchasing agencies in accordance with subsection (a) of this section, the Department of Health and Human Services shall evaluate the twenty percent (20%) local matching requirement to determine its effect on local purchasing agencies and whether the matching requirement should be adjusted. The Department shall report its findings and recommendations 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 April 1, 2008."

CHANGES TO MEDICAID MEDICAL POLICY
SECTION 10.17.  Section 10.36(b) and (d) of S. L. 2007‑323 reads as rewritten:
"SECTION 10.36.(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. – The Division of Medical Assistance, Department of Health and Human Services, shall 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.
(4)	Medical policy. – Unless required for compliance with federal law, the Department shall not change medical policy or policy interpretation 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 or policy interpretation and submitted it for Departmental review. If the fiscal impact indicated by the fiscal analysis for any proposed medical policy or policy interpretation change exceeds three million dollars ($3,000,000) in total requirements for a given fiscal year, then the Department shall submit the proposed medical policy or policy interpretation 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 or policy interpretation 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. For medical policy or policy interpretation changes exceeding three million dollars ($3,000,000) in total requirements for a given fiscal year that are required for compliance with federal law, the Department shall submit the proposed medical policy or policy interpretation change with the fiscal analysis to the Office of State Budget and Management prior to implementing the change. The Department shall provide the Office of State Budget and Management and the Fiscal Research Division a quarterly report itemizing all medical policy and policy interpretation changes with total requirements of less than three million dollars ($3,000,000).
SECTION 10.36.(d)  Services and Payment Bases. – The Department shall spend funds appropriated for Medicaid services 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. 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.
(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.
(4)	Physicians, certified nurse midwife services, certified registered nurse anesthetists, nurse practitioners. – Fee schedules as developed 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; nonprovider‑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.
(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. The Department may disregard application of this policy in cases where application of the policy would adversely affect patient care.
(20)	Physical therapy, occupational 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, occupational therapy, and speech therapy services are subject to prior approval and utilization review.
(21)	Personal care services. – Payment in accordance with the State Plan developed by the Department of Health and Human 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 licensed or certified by the occupational licensing board or the certification authority having authority over the provider's license or certification. 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."
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, or (ii) HIV/AIDS, except that the Department of Health and Human Services shall continually review utilization of medications under the State Medical Assistance Program prescribed for Medicaid recipients for the treatment of mental illness, including but not limited to, medications for schizophrenia, bipolar disorder, or major depressive disorder. For individuals 18 years of age and under who are prescribed three or more psychotropic medications, the Department shall implement clinical edits that target inefficient, ineffective, or potentially harmful prescribing patterns. When such patterns are identified, the Medical Director for the Division of Medical Assistance and the Chief of Clinical Policy for the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services shall require a peer‑to‑peer consultation with the target prescribers. Alternatives discussed during the peer‑to‑peer consultations shall be based upon:
a.	Evidence‑based criteria available regarding efficacy or safety of the covered treatments; and 
b.	Policy approval by a majority vote of the North Carolina Physicians Advisory Group (NCPAG).
The target prescriber has final decision‑making authority to determine which prescription drug to prescribe or refill. 
The Department shall report on the implementation of this subdivision not later than January 1, 2008, and quarterly thereafter to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Fiscal Research Division, and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services.
(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.
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."

DMA CONTRACT SHORTFALL
SECTION 10.18.(a)  The funds appropriated to the Department of Health and Human Services, Division of Medical Assistance for the 2008‑2009 fiscal year for their contract funding shortfall shall only be used to cover existing contract shortfalls. Budget approval is required by the Office of State Budget and Management prior to the division entering into any new contract or the renewal or amendment of existing contacts that exceed the current contract amounts. 
SECTION 10.18.(b)  The Division of Medical Assistance shall make every effort to effect savings within its operational budget and use those savings to offset its contract shortfall. Notwithstanding G.S. 143C‑6‑4(b)(3), the department may use funds appropriated in this act to the department to cover the contract shortfall in the Division of Medical Assistance if insufficient funds exist within the division.

EXPAND SCHIP TO ESTABLISH NC KIDS' CARE PROGRAM
SECTION 10.19.(a)  Section 10.48 of S.L. 2007‑323 reads as rewritten:
"SECTION 10.48.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Medical Assistance, the sum of three hundred sixty‑eight thousand dollars ($368,000) for the 2007‑2008 fiscal year shall be used by the Department of Health and Human Services to produce a report that identifies the most cost‑efficient and cost‑effective method for developing and implementing a program of comprehensive health care benefits within available funding for children ages 0 through 18 in families with annual incomes between two hundred percent (200%) and three hundred percent (300%) of the federal poverty level. The report shall consider and address the following:
(1)	Congress' reauthorization of the State Children's Health Insurance Program (SCHIP) with respect to:
a.	The amount of federal funds authorized for each of the fiscal years covered in the reauthorization;
b.	The number of fiscal years that federal funding awarded to the states remains available to each state;
c.	The adequacy of the formula by which federal funds are distributed to the states; and
d.	The ability of states to expand SCHIP coverage to children whose family incomes exceed two hundred percent (200%) of the federal poverty level.
The Department shall determine whether the most effective use of State funds is to develop a program that expands access to health insurance for children whose family income exceeds two hundred percent (200%) of the federal poverty level through NC Health Choice or the State Medical Assistance Program.
(2)	Eligibility and benefits are not an entitlement, are for legal residents of North Carolina, and are subject to availability of State and federal funds, and State and federal requirements.
(3)	The most cost‑effective use of limited State funds to offer health care services to children in families between two hundred percent (200%) and three hundred percent (300%) of the federal poverty level. 
(4)	Children enrolled in the program must be ineligible for Medicaid, Medicare, or other government‑sponsored health insurance. The Department shall study whether children must also be without private health insurance for a specified amount of time, e.g. six months.
(5)	The health care benefits covered in the proposed expansion program shall not exceed the benefits currently covered by the NC Health Choice.
(6)	The establishment of cost‑sharing measures for the families of children with an income above two hundred percent (200%) of the federal poverty level, including:
a.	A monthly premium per child that is at an optimal level that simultaneously is affordable, encourages participation by families, controls costs, and provides revenue to reduce the cost of the program to the State. The amount of the premium may increase as income increases above two hundred percent (200%) of the federal poverty level.
b.	Increased co‑payments and cost‑sharing that are affordable and sufficient to control costs, while not discouraging families from seeking and continuing prescribed treatment for children.
c.	A deductible that is to be applied to certain health care benefits.
d.	A limit on out‑of‑pocket expenses that is no more than five percent (5%) of family income.
(7)	The establishment of a comprehensive annual benefit limit per child that is no more than the current annual benefit limit under NC Health Choice.
(8)	The most cost‑effective and efficient way of administering and managing enrollment in the program and the collection of premiums. This may include having the current administrator of NC Health Choice be the entity to collect premiums, or designating some other benefit management or administrative entity to do so, including the Department.
SECTION 10.48.(b)  Not later than January 1, 2008, the Department shall submit an interim report of its findings and recommendations to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division. The Department shall submit its final report not later than February 1, 2008. It is the intent of the General Assembly to review the Department's recommendations before the Department implements a program to expand access to health insurance to children above two hundred percent (200%) of the federal poverty level.
SECTION 10.48.(c)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of three million three hundred sixteen thousand dollars ($3,316,000) for the 2008‑2009 fiscal year shall be used to implement a program to expand access to health insurance to children above two hundred percent (200%) of the federal poverty level. These funds may be used to support nonrecurring start‑up costs and ongoing administrative and program services expenditures.
SECTION 10.48.(d)  The Department of Health and Human Services, Division of Medical Assistance, shall implement a health care assistance program, NC Kids' Care, to provide health insurance coverage to children in families with incomes above two hundred percent (200%) and not more than two hundred fifty percent (250%) of the federal poverty level, by expanding the Health Insurance Program for Children established under Part 8 of Article 2 of Chapter 108A of the General Statutes. Except as otherwise provided, all the requirements of Part 8 of Article 2 of Chapter 108A of the General Statutes shall apply to the NC Kids' Care program. The Department shall submit any State Child Health Plan amendments required to implement this section. Eligibility for and benefits under this program are not an entitlement and are subject to availability of funds and other changes to State and federal law.
SECTION 10.48.(e)  Eligibility. – The Department may enroll eligible children based on the availability of funds. The following are the eligibility and other requirements for participation in NC Kids' Care. Children must:
(1)	Be between the ages of birth through 18 years of age;
(2)	Be ineligible for Medicaid, Medicare, or other government sponsored health insurance, except that any child covered under G.S. 108A‑70.21(g) as of the effective date of this section shall be eligible for participation in NC Kids' Care as provided in Section 10.48(o);
(3)	Have been uninsured for three months immediately prior to enrollment; the Department may require a longer uninsured waiting period if required by federal regulations;
(4)	Be in a family whose family income is above two hundred percent (200%) through two hundred fifty percent (250%) of the federal poverty level;
(5)	Be a resident of this State, meet applicable federal citizenship and immigration requirements, and be eligible under federal law; and
(6)	Have paid the monthly premiums required under this section.
SECTION 10.48.(f)  Benefits and Limitations. – Except as otherwise provided in this section for eligibility and cost‑sharing requirements, health benefits coverage provided to children eligible for NC Kids' Care shall be the same as coverage provided under Part 8 of Article 2 of Chapter 108A of the General Statutes.
SECTION 10.48.(g)  Community Care of North Carolina. – The Department of Health and Human Services shall provide services to children enrolled in the NC Kids' Care program through Community Care of North Carolina and shall pay Community Care of North Carolina providers a care management fee for these services as allowed under Medicaid.
SECTION 10.48.(h)  Cost Sharing. – The Department shall require NC Kids' Care enrollees to contribute to the cost of their care through the use of deductibles, co‑payments, and premiums as follows:
(1)	No annual enrollment fee. – In lieu of an annual enrollment fee, a monthly premium shall be charged for each child or family enrolled in NC Kids' Care. The Department shall establish a procedure for sharing a portion of premium receipts with each county department of social services to cover the cost of determining eligibility for services under NC Kids' Care.
(2)	Premiums. – The premium amount charged for each child or family shall vary depending on family income. Enrollees shall pay monthly premiums as follows:
a.	Enrollees whose family income is above two hundred percent (200%) through two hundred twenty‑five percent (225%) of the federal poverty level shall pay a monthly premium not to exceed thirty dollars ($30.00) per child.
b.	Enrollees whose family income is above two hundred twenty‑five percent (225%) through two hundred fifty percent (250%) of the federal poverty level shall pay a monthly premium not to exceed sixty dollars ($60.00) per child.
(3)	Co‑payments. – NC Kids' Care enrollees shall be responsible for co‑payments to providers as follows:
a.	Ten dollars ($10.00) per child for each primary care physician visit;
b.	Twenty‑five dollars ($25.00) per child for each specialty care physician visit;
c.	Twenty‑five dollars ($25.00) per child for each physical therapy, occupational therapy, or speech therapy visit;
d.	Thirty dollars ($30.00) per child for each outpatient hospital visit;
e.	Fifty dollars ($50.00) per child for each inpatient hospital visit;
f.	Twenty dollars ($20.00) per child for durable medical equipment, except there shall be no co‑payment required for diabetic supplies;
g.	One hundred dollars ($100.00) for each emergency room visit, except the co‑payment is waived if the enrollee is admitted to the hospital;
h.	One hundred fifty dollars ($150.00) for each ambulance service, except the co‑payment is waived if the enrollee is admitted to the hospital;
i.	Outpatient prescription drugs, as follows:
1.	Five dollars ($5.00) for each generic prescription drug; for each brand‑name prescription drug for which there is no generic substitution available, and for each covered over‑the‑counter medication, and
2.	Twenty dollars ($20.00) for each brand‑name prescription drug for which there is a generic substitution available.
(4)	Deductible. – The Department may establish an annual deductible not to exceed two hundred fifty dollars ($250.00) per child.
(5)	The Department shall establish maximum annual cost sharing limits per individual or family, provided that the total annual aggregate cost‑sharing, including premiums, with respect to all children in a family receiving benefits under this section, shall not exceed five percent (5%) of the family's income for the year involved.
SECTION 10.48.(i)  Enrollment in NC Kids' Care shall not exceed 15,000 children for the 2008‑2009 fiscal year.
SECTION 10.48.(j)  The nonfederal costs of NC Kids' Care shall be paid with State funds and enrollee premiums. Counties shall not be required to share in the nonfederal costs of NC Kids' Care.
SECTION 10.48.(k)  Providers of services under NC Kids' Care shall be paid at rates equivalent to Medicaid rates less any applicable co‑payments or deductibles. 
SECTION 10.48.(l)  Administration of NC Kids' Care shall be in accordance with Part 8 of Article 2 of Chapter 108A of the General Statutes.
SECTION 10.48.(m)  G.S. 108A‑70.21(c) reads as rewritten:
'(c)	Annual Enrollment Fee. – There shall be no enrollment fee for Program coverage for enrollees whose family income is at or below one hundred fifty percent (150%) of the federal poverty level. The enrollment fee for Program coverage for enrollees whose family income is above one hundred fifty percent (150%) through two hundred percent (200%) of the federal poverty level shall be fifty dollars ($50.00) per year per child with a maximum annual enrollment fee of one hundred dollars ($100.00) for two or more children. The enrollment fee shall be collected by the county department of social services and retained to cover the cost of determining eligibility for services under the Program. County departments of social services shall establish procedures for the collection of enrollment fees.'
SECTION 10.48.(n)  G.S. 108A‑70.21(g) reads as rewritten:
'(g)	Purchase of Extended Coverage. – An enrollee in the Program who loses eligibility due to an increase in family income above two hundred fifty percent (250%) of the federal poverty level and up to and including two hundred seventy‑five percent (275%) of the federal poverty level may purchase at full premium cost continued coverage under the Program for a period not to exceed one year beginning on the date the enrollee becomes ineligible under the income requirements for the Program. The benefits, copayments, and other conditions of enrollment under the Program applicable to extended coverage purchased under this subsection shall be the same as those applicable to an NC Kids' Care enrollee whose family income equals two hundred fifty percent (250%) of the federal poverty level.'
SECTION 10.48.(o)  Enrollees covered under G.S. 108A‑70.21(g) prior to the effective date of subsection (n) of this section may choose to continue coverage under that section through the end of their buy‑in coverage period or enroll in NC Kids' Care provided they meet the eligibility requirements, pay the applicable premium, and notify their county department of social services within 60 days of receiving notice of their potential eligibility under NC Kids' Care. For any enrollee electing to transfer coverage from the buy‑in program to NC Kids' Care, coverage under NC Kids' Care shall become effective the first day of the next month immediately following the month in which they notified their county department of social services of their intent to enroll in NC Kids' Care.
SECTION 10.48.(p)  This section becomes effective January 1, 2009, or upon approval of all State child health plan amendments, whichever is later, and is contingent upon the availability of sufficient federal funding. The Department shall not apply for such amendments until the U. S. Congress acts to reauthorize the State Children's Health Insurance Program with sufficient funding to support the current North Carolina program and the provisions of this section."

NC HEALTH CHOICE TRANSITION
SECTION 10.20.(a)  G.S. 135‑39.5 reads as rewritten:
"§ 135‑39.5.  Powers and duties of the Executive Administrator and Board of Trustees.
The Executive Administrator and Board of Trustees of the Teachers' and State Employees' Comprehensive Major Medical Plan shall have the following powers and duties:
…
	
…."
SECTION 10.20.(b)  G.S. 135‑39.6 reads as rewritten:
"§ 135‑39.6.  Special funds created.
(a)	There are hereby established two special funds, to be known as the Public Employee Health Benefit Fund and the Health Benefit Reserve Fund for the payment of hospital and medical benefits.
All premiums, fees, charges, rebates, refunds or any other receipts including, but not limited to, earnings on investments, occurring or arising in connection with health benefits programs established by this Article, shall be deposited into the Public Employee Health Benefit Fund. Disbursements from the Fund shall include any and all amounts required to pay the benefits and administrative costs of such programs as may be determined by the Executive Administrator and Board of Trustees.
Any unencumbered balance in excess of prepaid premiums or charges in the Public Employee Health Benefit Fund at the end of each fiscal year shall be used first, to provide an actuarially determined Health Benefit Reserve Fund for incurred but unpresented claims, second, to reduce the premiums required in providing the benefits of the health benefits programs, and third to improve the plan, as may be provided by the General Assembly. The balance in the Health Benefits Reserve Fund may be transferred from time to time to the Public Employee Health Benefit Fund to provide for any deficiency occurring therein.
The Public Employee Health Benefit Fund and the Health Benefit Reserve Fund shall be deposited with the State Treasurer and invested as provided in G.S. 147‑69.2 and 147‑69.3.
(b)	Disbursement from the Public Employee Health Benefit Fund may be made by warrant drawn on the State Treasurer by the Executive Administrator, or the Executive Administrator and Board of Trustees may by contract authorize the Claims Processor to draw the warrant.
(c)	Separate and apart from the special funds authorized by subsections (a) and (b) of this section, there shall be a Public Employee Long‑Term Care Benefit Fund if the long‑term care benefits provided by Part 4 of this Article are administered on a self‑insured basis.
	"
SECTION 10.20.(c)  G.S. 135‑39.6A reads as rewritten:
"§ 135‑39.6A.  Premiums set.
(a)	(Effective until July 1, 2008) The Executive Administrator and Board of Trustees shall, from time to time, establish premium rates for the Teachers' and State Employees' Comprehensive Major Medical Plan except as they may be established by the General Assembly in the Current Operations Appropriations Act, and establish regulations for payment of the premiums. Premium rates shall be established for coverages where Medicare is the primary payer of health benefits separate and apart from the rates established for coverages where Medicare is not the primary payer of health benefits.
(a)	(Effective July 1, 2008) The Executive Administrator and Board of Trustees shall, from time to time, establish premium rates for the State Health Plan for Teachers and State Employees except as they may be established by the General Assembly in the Current Operations Appropriations Act, and establish regulations for payment of the premiums. Premium rates shall be established for coverages where Medicare is the primary payer of health benefits separate and apart from the rates established for coverages where Medicare is not the primary payer of health benefits.
(b)	The Executive Administrator and Board of Trustees shall establish separate premium rates for the long‑term care benefits provided by Part 4 of this Article if the benefits are administered on a self‑insured basis.
	(d)	In setting premiums for firemen, rescue squad workers, and members of the national guard, and their eligible dependents, the Executive Administrator and Board of Trustees shall establish rates separate from those affecting other members of the Plan. These separate premium rates shall include rate factors for incurred but unreported claim costs, for the effects of adverse selection from voluntary participation in the Plan, and for any other actuarially determined measures needed to protect the financial integrity of the Plan for the benefit of its served employees, retired employees, and their eligible dependents.
(e)	The total amount of premiums due the Plan from charter schools as employing units, including amounts withheld from the compensation of Plan members, that is not remitted to the Plan by the fifteenth day of the month following the due date of remittance shall be assessed interest of one and one‑half percent (1 ½%) of the amount due the Plan, per month or fraction thereof, beginning with the sixteenth day of the month following the due date of the remittance. The interest authorized by this section shall be assessed until the premium payment plus the accrued interest amount is remitted to the Plan. The remittance of premium payments under this section shall be presumed to have been made if the remittance is postmarked in the United States mail on a date not later than the fifteenth day of the month following the due date of the remittance."
SECTION 10.20.(d)  Part 5 of Article 3 of Chapter 135 of the General Statutes reads as rewritten:
"Part 5. Health Insurance Program for Children.
"§ 135‑42.  Administration and processing of Program claims.
(a)	(Effective until July 1, 2008) The State of North Carolina undertakes to make available a health insurance program for children (hereinafter called the "Program") to provide comprehensive acute medical care to low‑income, uninsured children who are residents of this State and who meet the eligibility requirements established for the Program under Part 8 of Article 2 of Chapter 108A of the General Statutes. The Executive Administrator and Board of Trustees of the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan (hereinafter called the "Plan") shall administer the Program under this Part and shall carry out their duties and responsibilities in accordance with Parts 2 and 3 of this Article and with applicable provisions of Part 8 of Article 2 of Chapter 108A. The Plan's self‑insured indemnity program shall not incur any financial obligations for the Program in excess of the amount of funds that the Plan's self‑insured indemnity program receives for the Program.
(a)	(Effective July 1, 2008) The State of North Carolina undertakes to make available a health insurance program for children, The North Carolina Health Insurance Program for Children, known as North Carolina Health Choice for Children, (hereinafter called the "Program") to provide comprehensive acute medical care to low‑income, uninsured children who are residents of this State and who meet the eligibility requirements established for the Program under Part 8 of Article 2 of Chapter 108A of the General Statutes. Except as provided in this Part, the Program shall be administered by the Department of Health and Human Services in accordance with Part 8 of Article 2 of Chapter 108A of the General Statutes and as required under Title XXI and related federal statutes. (a1)	Notwithstanding any other provision of law, the Secretary of the Department of Health and Human Services shall delegate the responsibility for the administration and processing of claims for benefits provided under the Program to the Executive Administrator and Board of Trustees of the State Health Plan for Teachers and State Employees (hereinafter called the "Plan") until such date, but not later than July 1, 2010, the Secretary determines that the Department is prepared to assume some or all of these responsibilities. In administering the processing of claims for benefits, the Executive Administrator and Board of Trustees shall have the same type of powers and duties as provided for these purposes under the Predecessor Plan. For the purposes of this Part, "Predecessor Plan" means the "North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan in effect prior to July 1, 2008." The claims payments shall be made against accounts maintained by the Department of Health and Human Services. The Executive Administrator and Board of Trustees shall establish premium rates for benefits provided under this Part. The Department of Health and Human Services shall, from State and federal appropriations and from any other funds made available for the Program, make payments to the Plan as determined by the Plan for its administration, claims processing and other services delegated by the Secretary to provide coverage for acute medical care for children eligible for benefits provided under the Program. The Plan shall not incur any financial obligations for the Program in excess of the amount of funds that the Plan receives for the Program.
(b)	The benefits provided under the Program shall be equivalent to the Predecessor Plan and as provided under Part 8 of Article 2 of Chapter 108A of the General Statutes. To the extent there is a conflict between the provisions of Part 8 of Article 2 of Chapter 108A and the Predecessor Plan pertaining to eligibility, fees, deductibles, life time maximum benefits, copayments, and other cost‑sharing charges, the provisions of Part 8 of Article 2 of Chapter 108A shall control. In administering the benefits provided by this Part, the Executive Administrator and Board of Trustees shall have the same type of powers and duties that are provided under the Predecessor Plan for hospital and medical benefits.
(c)	The benefits authorized by this Part are available only to children who are residents of this State and who meet the eligibility requirements established for the Program under Part 8 of Article 2 of Chapter 108A of the General Statutes."
SECTION 10.20.(e)  Part 5 of Article 3 of Chapter 135 is amended by adding the following two sections to read:
"§ 135‑43.  Child health insurance fund.
There is established a Child Health Insurance Fund. All premium receipts or any other receipts, including earnings on investments, occurring or arising in connection with acute medical care benefits provided under the Program shall be deposited into the Child Health Insurance Fund. Disbursements from the Child Health Insurance Fund shall include any and all amounts required to pay the benefits and administrative costs of the Health Insurance Program for Children.
"§ 135‑44.  Data reporting.
(a)	The Executive Administrator and Board of Trustees of the State Health Plan for Teachers and State Employees shall provide to the Department:
(1)	Data as necessary and in sufficient detail to meet federal reporting requirements under Title XXI; and
(2)	Data showing cost sharing paid by Program enrollees to assist the Department in monitoring and ensuring that enrollees do not exceed cost the Program's sharing limitations.
(3)	Data as necessary and in sufficient detail to meet the data collections and reporting requirements pursuant to G.S. 108A ‑70.27."
SECTION 10.20.(f)  G.S. 108A‑70.18 reads as rewritten:
"Part 8. Health Insurance Program for Children.
"§ 108A‑70.18.  Definitions.
As used in this Part, unless the context clearly requires otherwise, the term:
(1)	"Comprehensive health coverage" means creditable health coverage as defined under Title XXI.
(2)	"Family income" has the same meaning as used in determining eligibility for the Medical Assistance Program.
(3)	"FPL" or "federal poverty level" means the federal poverty guidelines established by the United States Department of Health and Human Services, as revised each April 1.
(4)	"Medical Assistance Program" means the State Medical Assistance Program established under Part 6 of Article 2 of Chapter 108A of the General Statutes.
(4a)	"Predecessor Plan" means the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan in effect prior to July 1, 2009.
(5)	"Program" means The Health Insurance Program for Children established in this Part.
(6)	"State Plan" means the State Child Health Plan for the State Children's Health Insurance Program established under Title XXI.
(7)	"Title XXI" means Title XXI of the Social Security Act, as added by Pub. L. 105‑33, 111 Stat. 552, codified in scattered sections of 42 U.S.C. (1997).
(8)	"Uninsured" means the applicant for Program benefits is not covered under any private or employer‑sponsored comprehensive health insurance plan on the date of enrollment."
SECTION  10.20.(g)  G.S. 108A‑70.20 reads as rewritten:
"§ 108A‑70.20.  Program established.
The Health Insurance Program for Children is established. The Program shall be known as North Carolina Health Choice for Children. The Program shall be administered by the Department of Health and Human Services in accordance with this Part and as required under Title XXI and related federal rules and regulations. "
SECTION 10.20.(h)  G.S. 108A‑70.21 reads as rewritten:
"§ 108A‑70.21.  (Effective until July 1, 2008)  Program eligibility; benefits; enrollment fee and other cost‑sharing; coverage from private plans; purchase of extended coverage.
(a)	Eligibility. – The Department may enroll eligible children based on availability of funds. Following are eligibility and other requirements for participation in the Program:
(1)	Children must:
a.	Be between the ages of 6 through 18;
b.	Be ineligible for Medicaid, Medicare, or other federal government‑sponsored health insurance;
c.	Be uninsured;
d.	Be in a family whose family income is above one hundred percent (100%) through two hundred percent (200%) of the federal poverty level;
e.	Be a resident of this State and eligible under federal law; and
f.	Have paid the Program enrollment fee required under this Part.
(2)	Proof of family income and residency and declaration of uninsured status shall be provided by the applicant at the time of application for Program coverage. The family member who is legally responsible for the children enrolled in the Program has a duty to report any change in the enrollee's status within 60 days of the change of status.
(3)	If a responsible parent is under a court order to provide or maintain health insurance for a child and has failed to comply with the court order, then the child is deemed uninsured for purposes of determining eligibility for Program benefits if at the time of application the custodial parent shows proof of agreement to notify and cooperate with the child support enforcement agency in enforcing the order.
If health insurance other than under the Program is provided to the child after enrollment and prior to the expiration of the eligibility period for which the child is enrolled in the Program, then the child is deemed to be insured and ineligible for continued coverage under the Program. The custodial parent has a duty to notify the Department within 10 days of receipt of the other health insurance, and the Department, upon receipt of notice, shall disenroll the child from the Program. As used in this paragraph, the term "responsible parent" means a person who is under a court order to pay child support.
(4)	Except as otherwise provided in this section, enrollment shall be continuous for one year. At the end of each year, applicants may reapply for Program benefits.
(b)	Benefits. – Except as otherwise provided for eligibility, fees, deductibles, copayments, and other cost‑sharing charges, health benefits coverage provided to children eligible under the Program shall be equivalent to coverage provided for dependents under the Predecessor Plan. In addition to the benefits provided under the Predecessor Plan, the following services and supplies are covered under the Health Insurance Program for Children established under this Part:
(1)	Dental: Oral examinations, teeth cleaning, and scaling twice during a 12‑month period, full mouth X‑rays once every 60 months, supplemental bitewing X‑rays showing the back of the teeth once during a 12‑month period, fluoride applications twice during a 12‑month period, fluoride varnish, sealants, simple extractions, therapeutic pulpotomies, prefabricated stainless steel crowns, and routine fillings of amalgam or other tooth‑colored filling material to restore diseased teeth. No benefits are to be provided for services and materials under this subsection that do not meet the standards accepted by the American Dental Association.
(2)	Vision: Scheduled routine eye examinations once every 12 months, eyeglass lenses or contact lenses once every 12 months, routine replacement of eyeglass frames once every 24 months, and optical supplies and solutions when needed. Optical services, supplies, and solutions must be obtained from licensed or certified ophthalmologists, optometrists, or optical dispensing laboratories. Eyeglass lenses are limited to single vision, bifocal, trifocal, or other complex lenses necessary for an enrollee's visual welfare. Coverage for oversized lenses and frames, designer frames, photosensitive lenses, tinted contact lenses, blended lenses, progressive multifocal lenses, coated lenses, and laminated lenses is limited to the coverage for single vision, bifocal, trifocal, or other complex lenses provided by this subsection. Eyeglass frames are limited to those made of zylonite, metal, or a combination of zylonite and metal. All visual aids covered by this subsection require prior Approval. Upon prior approval, refractions may be covered more often than once every 12 months.
(3)	Hearing: Auditory diagnostic testing services and hearing aids and accessories when provided by a licensed or certified audiologist, otolaryngologist, or other approved hearing aid Specialist. Prior approval is required for hearing aids, accessories, earmolds, repairs, loaners, and rental aids.
The Department shall provide services to children enrolled in the NC Health Choice Program through Community Care of North Carolina and shall pay Community Care of North Carolina providers for these services as allowed under Medicaid.
(b1)	Payments. – Prescription drug providers shall accept as payment in full, for outpatient prescriptions filled, amounts allowable for prescription drugs under Medicaid. For all other providers, services provided to children enrolled in the Program shall be provided at rates equivalent to one hundred percent (100%) of Medicaid rates, less any co‑payments assessed to enrollees under this Part.(c)	Annual Enrollment Fee. – There shall be no enrollment fee for Program coverage for enrollees whose family income is at or below one hundred fifty percent (150%) of the federal poverty level. The enrollment fee for Program coverage for enrollees whose family income is above one hundred fifty percent (150%) of the federal poverty level shall be fifty dollars ($50.00) per year per child with a maximum annual enrollment fee of one hundred dollars ($100.00) for two or more children. The enrollment fee shall be collected by the county department of social services and retained to cover the cost of determining eligibility for services under the Program. County departments of social services shall establish procedures for the collection of enrollment fees.
(d)	Cost‑Sharing. – There shall be no deductibles, copayments, or other cost‑sharing charges for families covered under the Program whose family income is at or below one hundred fifty percent (150%) of the federal poverty level, except that fees for outpatient prescription drugs are applicable and shall be one dollar ($1.00) for each outpatient generic prescription drug; for each outpatient brand‑name prescription drug for which there is no generic substitution Available, and for each covered over‑the‑counter medication. The fee for each outpatient brand‑name prescription drug for which there is a generic substitution available is three dollars ($3.00). Families covered under the Program whose family income is above one hundred fifty percent (150%) of the federal poverty level shall be responsible for copayments to providers as follows:
(1)	Five dollars ($5.00) per child for each visit to a provider, except that there shall be no copayment required for well‑baby, well‑child, or age‑appropriate immunization services;
(2)	Five dollars ($5.00) per child for each outpatient hospital visit;
(3)	A one dollar ($1.00) fee for each outpatient generic prescription drug; for each outpatient brand‑name prescription drug for which there is no generic substitution Available, and for each covered over‑the‑counter medication. The fee for each outpatient brand‑name prescription drug for which there is a generic substitution available is ten dollars ($10.00).
(4)	Twenty dollars ($20.00) for each emergency room visit unless:
a.	The child is admitted to the hospital, or
b.	No other reasonable care was available as determined by the Department.
Copayments required under this subsection for prescription drugs apply only to prescription drugs prescribed on an outpatient basis.
(e)	Cost‑Sharing Limitations. – The total annual aggregate cost‑sharing, including fees, with respect to all children in a family receiving Program benefits under this Part shall not exceed five percent (5%) of the family's income for the year involved. 
(f)	Coverage From Private Plans. – The Department shall, from funds available for the Program, pay the cost for dependent coverage provided under a private insurance plan for persons eligible for coverage under the Program if all of the following conditions are met:
(1)	The person eligible for Program coverage requests to obtain dependent coverage from a private insurer in lieu of coverage under the Program and shows proof that coverage under the private plan selected meets the requirements of this subsection;
(2)	The dependent coverage under the private plan is actuarially equivalent to the coverage provided under the Program and the private plan does not engage in the exclusive enrollment of children with favorable health care risks;
(3)	The cost of dependent coverage under the private plan is the same as or less than the cost of coverage under the Program; and
(4)	The total annual aggregate cost‑sharing, including fees, paid by the enrollee under the private plan for all dependents covered by the plan, do not exceed five percent (5%) of the enrollee's family income for the year involved.
The Department may reimburse an enrollee for private coverage under this subsection upon a showing of proof that the dependent coverage is in effect for the period for which the enrollee is eligible for the Program.
(g)	Purchase of Extended Coverage. – An enrollee in the Program who loses eligibility due to an increase in family income above two hundred percent (200%) of the federal poverty level and up to and including two hundred twenty‑five percent (225%) of the federal poverty level may purchase at full premium cost continued coverage under the Program for a period not to exceed one year beginning on the date the enrollee becomes ineligible under the income requirements for the Program. The same benefits, copayments, and other conditions of enrollment under the Program shall apply to extended coverage purchased under this subsection.
(h)	No State Funds for Voluntary Participation. – No State or federal funds shall be used to cover, subsidize, or otherwise offset the cost of coverage obtained under subsection (g) of this section.
(i)	No lifetime maximum benefit limit. – Benefits provided to an enrollee in the Program shall not be subject to a maximum lifetime limit."
SECTION 10.20.(i)  G.S. 108A‑70.22 is repealed.
SECTION 10.20.(j)  G.S. 108A‑70.23 reads as rewritten:
"§ 108A‑70.23.  Services for children with special needs established; definition; eligibility; services; limitation; recommendations; no entitlement.
(a)	[Special Needs Services Authorized. –] The Department shall, from federal funds received and State funds appropriated for the Program, pay for services for children with special needs as authorized under this section. As used in this section, the term "children with special needs" or "special needs child" means children who have been diagnosed as having one or more of the following conditions which in the opinion of the diagnosing physician (i) is likely to continue indefinitely, (ii) interferes with daily routine, and (iii) require extensive medical intervention and extensive family management:
(1)	Birth defect, including genetic, congenital, or acquired disorders;
(2)	Developmental disability as defined under G.S. 122C‑3;
(3)	Mental or behavioral disorder; or
(4)	Chronic and complex illnesses.
(b)	Eligibility for Services. – In order to be eligible for services under this section a special needs child must be enrolled in the Program.
(c)	Services Provided. – The services authorized to be provided to children eligible under this section are as follows:
(1)	The same level of services as provided for special needs children under the Medical Assistance Program as authorized in the Current Operations Appropriations Act except that:
a.	No services for long‑term care shall be provided under this section;
b.	Services for respite care shall be provided only under emergency circumstances; and
c.	The Department may limit services for special needs children after consultation with the Commission on Children with Special Health Care Needs.
(2)	Only those services eligible under this section that are not covered or otherwise provided under the Predecessor Plan.
(d)	Limitation. – Funds may be expended for services under this section only if the special needs child is enrolled in the Program, the services provided under this section are not provided under the Predecessor Plan, and the child meets the definition of a special needs child under this section.
(e)	Case Management Services. – The Department shall develop procedures for the provision of case management services by the Department to eligible special needs children. Case management services shall be developed to ensure to the maximum extent possible that services are provided in the most efficient and effective manner considering the special needs of the child. The cost of providing case management services for children with special needs shall be paid from funds available for services under this section.
(f)	Recommendations by Commission on Children With Special Health Care Needs. – In implementing this section the Department shall consider the recommendations of the Commission on Children With Special Health Care Needs established under Article 71 of Chapter 143 of the General Statutes. The Department, in consultation with the Commission on Children With Special Health Care Needs shall develop procedures for providing respite care services under emergency circumstances.
(g)	No Entitlement. – Nothing in this section shall be construed as entitling any person to services under this section."
SECTION  10.20.(k)  G.S. 108A‑70.24 is repealed.
SECTION  10.20.(l)  G.S. 108A‑70.27 reads as rewritten:
"§ 108A‑70.27.  Data collection; reporting.
(a)	The Department shall ensure that the following data are collected, analyzed, and reported in a manner that will most effectively and expeditiously enable the State to evaluate Program goals, objectives, operations, and health outcomes for children:
(1)	Number of applicants for coverage under the Program;
(2)	Number of Program applicants deemed eligible for Medicaid;
(3)	Number of applicants deemed eligible for the Program, by income level, age, and family size;
(4)	Number of applicants deemed ineligible for the Program and the basis for ineligibility;
(5)	Number of applications made at county departments of social services, public health departments, and by mail;
(6)	Total number of children enrolled in the Program to date and for the immediately preceding fiscal year;
(7)	Total number of children enrolled in Medicaid through the Program application process;
(8)	Trends showing the Program's impact on hospital utilization, immunization rates, and other indicators of quality of care, and cost‑effectiveness and efficiency;
(9)	Trends relating to the health status of children;
(10)	Other data that would be useful in carrying out the purposes of this Part.
(b)	The Department shall report annually to the Joint Legislative Health Care Oversight Committee and shall provide a copy of the report to the Joint Appropriations Subcommittees on Health and Human Services. The report shall include:
(1)	Data collected as required under subsection (a) of this section and an analysis thereof giving trends and projections for continued Program funding;
(2)	Program areas working most effectively and least effectively;
(3)	Performance measures used to ensure Program quality, fiscal integrity, ease of access, and appropriate utilization of preventive and medical care;
(4)	Effectiveness of system linkages in addressing access, quality of care, and Program efficiency;
(5)	Recommended changes in the Program necessary to improve Program efficiency and effectiveness;
(6)	Any other information requested by the Committee pertinent to the provision of health insurance for children and the implementation of the Program.
(c)	The Department shall report periodically to the Joint Legislative Health Care Oversight Committee claims processing data for the Program and any other information the Department or the Committee deems appropriate and relevant to assist the Committee in its review of the Program."
SECTION 10.20.(m)  G.S. 108A‑70.21(b)(1) reads as rewritten:
"(b)	Benefits. – Except as otherwise provided for eligibility, fees, deductibles, copayments, and other cost‑sharing charges, health benefits coverage provided to children eligible under the Program shall be equivalent to coverage provided for dependents under the Predecessor Plan.
In addition to the benefits provided under the Plan, the following services and supplies are covered under the Health Insurance Program for Children established under this Part:
(1)	Dental:
a.	Oral examinations, teeth cleaning, and scaling topical fluoride treatments twice during a 12‑month period, full mouth X‑rays once every 60 months, supplemental bitewing X‑rays showing the back of the teeth once during a 12‑month period, sealants, extractions other than impacted teeth or wisdom teeth, therapeutic pulpotomies, space maintainers, root canal therapy for permanent anterior teeth and permanent first molars, prefabricated stainless steel crowns, and routine fillings of amalgam or other tooth‑colored filling material to restore diseased teeth.
b.	Orthognathic surgery to correct functionally impairing malocclusions when orthodontics was approved and initiated while the child was covered by Medicaid and the need for orthognathic surgery was documented in the orthodontic treatment plan.
No benefits are to be provided for services and materials under this subsection that do not meet the standards accepted by the American Dental Association."
SECTION 10.20.(n)  The Secretary of the Department of Health and Human Services shall develop and implement a plan for assuming administrative responsibility for the North Carolina Health Choice for Children program by transitioning all administrative oversight and claims processing activities from the Executive Administrator and Board of Trustees of the State Health Plan for Teachers and State Employees to the Division of Medical Assistance no later than July 1, 2010. The Secretary shall report to the Joint Legislative Health Care Oversight Committee and the Committee on Employee Hospital and Medical Benefits and at least 30 days prior to effecting the transition of some or all of the responsibilities for the administration and processing of claims for benefits provided under the North Carolina Health Choice for Children program from the Executive Administrator and Board of Trustees of the State Health Plan for Teachers and State Employees to the Department.
SECTION 10.20.(o)  The Secretary of the Department of Health and Human Services shall develop a plan to ensure operation of the most cost‑effective program on a long‑term basis, including identifying a new third‑party administrator and restructuring the benefits design for the North Carolina Health Choice program, if necessary, and provide a progress report to the General Assembly by May 15, 2009. The following factors should be considered in identifying and evaluating alternatives for a long‑term claims processing solution:
(1)	The ability of the State and the amount of time required to realize a return on its investment in the BCBSNC Power MHS system (i.e. the costs to move NCHC claims processing from legacy to MHS).
(2)	The operational efficiency of the BCBSNC Power MHS system as an interim solution.
(3)	The amount of time, transition, and operating costs required to select a new vendor and develop, design, and implement an independent claims processing system for NC Health Choice.
(4)	Likely operational issues and additional costs associated with ensuring "compatibility" of an independent claims processing system with the MMIS replacement system.
(5)	The amount of time, transition, and operating costs required to modify and enhance the core MMIS replacement system to process NC Health Choice claims.
(6)	The impact of decisions related to the benefit structure and coverage policies, including the ability to implement future program changes.
(7)	Any other factors or issues related to ensuring long‑term cost‑effectiveness and operating efficiency of claims processing and other administrative activities for NC Health Choice
SECTION 10.20.(p)  Sections 10.20(a)‑(c) and Sections 10.20(f)‑(l) become effective July 1, 2008. Sections 10.20(d) and (e) become effective July 1, 2008, and sunset July 1, 2010.  Section 10.20(m) becomes effective January 1, 2009.

CHANGES TO NC HEALTH CHOICE ENROLLMENT
SECTION 10.21.  Section 10.47 of S. L. 2007‑323 is repealed.

ASSESSMENT PROGRAM
SECTION 10.22.(a)  Pursuant to guidelines herein established as to the hospitals to be assessed, the basis for and the amount of the assessment, and the use of funds generated by the assessment to support the nonfederal share of supplemental Medicaid payments and DSH payments to hospitals, the Secretary of Health and Human Services shall implement a Medicaid assessment program for hospitals licensed by the State.  The assessment shall comply with federal regulations under 42 C.F.R. Part 433, Subpart B.
SECTION 10.22.(b)  The assessment authorized under this section shall be implemented only if all of the following conditions are met:
(1)	The Secretary in consultation with the North Carolina Hospital Association issues a written determination to the hospitals to be assessed that certified public expenditures from hospitals qualified to provide such certifications are insufficient for the State to maintain enhanced Medicaid payments described in the State Medicaid Plan, Attachment 4.19‑A, pp. 9‑12 and Attachment 4.19‑B, Section 2, pp. 1a‑1d at substantially the same levels of such payments to hospitals for federal fiscal year ending September 30, 2007; and
(2)	The Centers for Medicare and Medicaid Services approves a Medicaid State Plan Amendment authorizing payments to hospitals described in this section.
SECTION 10.22.(c)  From the assessment authorized under this Section the sum of $40 million shall be allocated to the Medicaid special fund for support of Medicaid program expenditures.
SECTION 10.22.(d)  This section is effective through the federal fiscal year ending September 30, 2010.

CHANGES TO FAMILIES PAY PART OF THE COST OF SERVICES UNDER THE CAP‑MR/DD PROGRAM AND THE CAP‑CHILDREN'S PROGRAM BASED ON FAMILY INCOME
SECTION 10.23.  Section 10.45 of S.L. 2007‑323 reads as rewritten:
"SECTION 10.45.(a)  Subject to approval from the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services, Division of Medical Assistance, shall develop a schedule of cost‑sharing requirements for families of children with incomes above the Medicaid allowable limit to share in the costs of their child's Medicaid expenses under the CAP‑MR/DD (Community Alternatives Program for Mental Retardation and Developmentally Disabled) Program and the CAP‑C (Community Alternatives Program for Children). The cost‑sharing amounts shall be based on a sliding scale of family income and shall take into account the impact on families with more than one child in the CAP programs. In developing the schedule, the Department shall also take into consideration how other states have implemented cost‑sharing in their CAP programs. The Division of Medical Assistance may establish monthly deductibles as a means of implementing this cost‑sharing. The Department shall provide for at least one public hearing and other opportunities for individuals to comment on the imposition of cost‑sharing under the CAP program. Not later than March 1, 2008, the Department shall report on the cost‑sharing requirements to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs, and to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division. The report shall include a summary of comments the Department has received at the public hearing required under this subsection, and shall also indicate any barriers to implementing the cost‑sharing schedule.
SECTION 10.45.(b)  This section becomes effective not later than 12 months after the date on which the replacement Medicaid Management Information System becomes operational and stabilized,  for children enrolled in CAP‑MR/DD or CAP‑C on and after that date. CAP‑MR/DD and CAP‑C recipients enrolled prior to the effective date of this section shall be subject to the cost‑sharing requirements authorized in this section beginning with the recipient's first certification period following the effective date of this section.
SECTION 10.45.(c)  The Division of Medical Assistance shall use the proceeds of any premiums collected from recipients or any savings resulting from the implementation of co‑payments, deductibles, or coinsurance to offset the costs of implementing this section. Any additional receipts or program savings realized due to the cost‑sharing implemented pursuant to this section shall remain in the CAP‑MR/DD and CAP‑C programs, as applicable, and shall be used to fund additional CAP‑MR/DD and CAP‑C slots. The Department shall submit a report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on or before March 1, 2009, on its progress in implementing the requirements of this section.
SECTION 10.45.(d)  Prior to the effective date of this section, the Department of Health and Human Services, Division of Medical Assistance, shall develop the necessary procedures, program policies and business rules, and prepare administrative rules and State Plan Amendments, if applicable, to ensure its readiness to implement the cost‑sharing requirements of this section in accordance with subsection (b) of this section."

APPEALS OF COUNTY LEVEL DECISIONS
SECTION 10.24.  The catch line of G.S. 108A‑79 reads as rewritten:
"§ 108A‑79.  Appeals of County Level Decisions."

APPEALS OF DEPARTMENTAL LEVEL DECISIONS
SECTION 10.25.  Article 4 of Chapter 108A‑79 is amended by adding the following new section to read:
"§ 108A‑79.1.  Appeals of departmental level decisions.
(a)	The Department shall notify a Medicaid applicant or recipient of its intent to deny, terminate, suspend, or reduce Medicaid eligibility or to deny, terminate, suspend, or reduce Medicaid services. Such notice shall be in writing and shall contain:
(1)	A statement of the agency action;
(2)	The reasons for the agency action;
(3)	The specific regulations or medical coverage policy that supports, or the change in law that requires, the action;
(4)	An explanation of the right to a hearing, or, in cases of an action based on a change in law, the circumstances under which a hearing will be granted;
(5)	The procedure by which the petitioner may obtain a hearing;
(6)	Notice that the petitioner may represent himself or be represented by legal counsel, a relative, a friend, or other spokesman; and
(7)	An explanation of the circumstances under which services are continued if a hearing is requested.
The Department shall mail the notice at least 10 days before the date of the action except when federal regulations allow immediate action to be taken.
(b)	Any applicant or recipient aggrieved by a decision of the Department to deny, terminate, suspend, or reduce Medicaid eligibility or to deny, terminate, suspend, or reduce Medicaid services; and any provider aggrieved by a decision of the Department to reduce, deny, recoup, or recover reimbursement or to deny, suspend, or revoke a provider agreement shall be entitled to a hearing. A hearing shall be commenced by filing a petition with the chief hearings clerk of the Department within 30 days of the mailing of the notice by the Department of the action giving rise to the contested case. The petition shall identify the petitioner, be signed by the party or the representative of the party, and shall describe the agency action giving rise to the contested case. "File or filing" means to place the paper or item to be filed into the care and custody of the chief hearings clerk of the Department of Health and Human Services and acceptance thereof by him, except that the hearing officer may permit the papers to be filed with him in which event the hearing officer shall note thereon the filing date. The Department shall supply forms for use in these contested cases.
(c)	If there is a timely request for an appeal, the Department shall promptly designate a hearing officer who shall hold an evidentiary hearing. The hearing officer shall conduct the hearing according to applicable federal law and regulations and shall ensure that: 
(1)	Notice of the hearing is given not less than 15 days before the hearing. The notice shall state the date, hour, and place of the hearing and shall be deemed to have been given on the date that a copy of the notice is mailed, via certified mail, to the address provided by the petitioner in the petition for hearing.
(2)	The hearing shall be held in Wake County, except that the hearing officer may, after consideration of the numbers, locations, and convenience of witnesses and in order to promote the ends of justice, hold the hearing by telephone, or other electronic means, or hold the hearing in a county in which the petitioner resides.
(3)	Discovery shall be no more extensive or formal than that required by federal law and regulations applicable to such hearings. Prior to and during the hearing an applicant or recipient or his representative shall have adequate opportunity to examine his case file. No later than five days before the date of the hearing each party to a contested case shall provide to each other party a copy of any documentary evidence that the party intends to introduce at the hearing and shall identify each witness that the party intends to call.
(4)	The hearing officer shall have the power to administer oaths and affirmations, subpoena the attendance of witnesses, rule on prehearing motions, and regulate the conduct of the hearing.
(5)	At the hearing, the parties may present such sworn evidence, law and regulations as are relevant to the issues in the case.
(6)	The petitioner and the respondent agency shall have a right to be represented by a person of his choice, including an attorney obtained at his own expense.
(7)	The petitioner and the respondent agency shall have the right to cross‑examine witnesses as well as make a closing argument summarizing his view of the case and the law.
(8)	The appeal hearing shall be recorded; however, no transcript will be prepared unless a petition for judicial review is filed pursuant to subsection (f) herein, in which case, the transcript shall be made a part of the official record. In the absence of the filing of a petition for a judicial review, the recording of the appeal hearing may be erased or otherwise destroyed 180 days after the final decision is mailed as provided in G.S. 108A‑79(i)(5).
(d)	The hearing officer shall decide the case based upon a preponderance of the evidence, giving deference to the demonstrated knowledge and expertise of the agency as provided by G.S. 150B‑34(a). The hearing officer shall prepare a proposal for decision, citing relevant law, regulations and evidence, which shall be served upon the petitioner or their representative by certified mail, with a copy furnished to the respondent agency. 
(e)	The petitioner and the respondent agency shall have 15 days from the date of the mailing of the proposal for decision to present written arguments in opposition to or in support of the proposal for decision to the designated official of the Department who is to make the final decision. If neither written arguments are presented, nor extension of time granted by the final agency decision maker for good cause, within 15 days of the date of the mailing of the proposal for decision, the proposal for decision becomes final. If written arguments are presented, such arguments shall be considered and the final decision shall be rendered. The final decision shall be rendered not more than 90 days from the date of the filing of the petition. This time limit may be extended by agreement of the parties or by final agency decision‑maker, for good cause shown, for an additional period of up to 30 days. The final decision shall be served upon the petitioner or their representative by certified mail, with a copy furnished to the respondent agency. In the absence of a petition for judicial review filed pursuant to subsection (f) herein, the final decision shall be binding upon the petitioner and the Department.
(f)	Any petitioner who is dissatisfied with the final decision of the Department may file, within 30 days of the service of such decision, a petition for judicial review in the Superior Court of Wake County or of the county from which the case arose. The judicial review shall be conducted according to the provisions of Article 4, Chapter 150B, of the North Carolina General Statutes.
(g)	In the event of conflict between federal law or regulations and State law or regulations, the federal law or regulations shall control.
(h)	This Act shall be effective for all petitions that are filed on or after the effective date of this Act and for all petitions that have been previously filed at the Office of Administrative Hearings but for which a hearing on the merits has not been commenced prior to the effective date of this Act. The requirement that the agency decision must be rendered not more than 90 days from the date of the filing of the petition for hearing shall not apply to petitions that were filed at the Office of Administrative Hearings prior to the effective date of this Act. The Office of Administrative Hearings shall transfer all cases affected by this Act to the Department of Health and Human Services within thirty (30) days of the effective date of this Act. This Act preempts the existing informal appeal process and reconsideration review process at the Department and the existing appeal process at the Office of Administrative Hearings with regard to all appeals under the Medical Assistance Program."

EXTEND IMPLEMENTATION OF TICKET TO WORK
SECTION 10.26.(a)  Section 10.18(c) of S.L. 2005‑276, as amended by Section 10.9(a) of S.L. 2006‑66, as amended by Section 2 of S.L. 2007‑144, reads as rewritten:
"SECTION 10.18.(c)  Subsection (b) of this section becomes effective July 1, 2006. Subsection (a) of this section becomes effective not later than twelve months after the date on which the replacement Medicaid Management Information System becomes operational and stabilized."
SECTION 10.26.(b)  Prior to the effective date of G.S. 108A‑54.1, the Department of Health and Human Services, Division of Medical Assistance, shall develop the necessary procedures, program policies, and business rules and prepare administrative rules and State Plan Amendments, if applicable, to implement and administer the requirements of G.S. 108A‑54.1 to ensure its readiness to enroll eligible residents in accordance with subsection (a) of this section.

AMEND FEES IN DIVISION OF HEALTH SERVICES REGULATION 
SECTION 10.27.(a)  Article 16 of Chapter 131E of the General Statutes reads as rewritten:
"§ 131E‑267.  Fees for departmental review of licensed health care facility or Medical Care Commission bond‑financed construction projects.
(a)	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 provided in this section. In no event may a fee imposed under this section exceed two hundred thousand dollars ($200,000) for any single project. The first seven hundred twelve thousand six hundred twenty‑six dollars ($712,626) in fees collected under this section shall remain in the Division of Health Service Regulation. Additional fees collected shall be credited to the General Fund as nontax revenue and are intended to offset rather than replace appropriations made for this purpose.
(b)	The fee imposed for the review of a hospital construction project varies depending upon the square footage of the project:
	Over	Up To	Project Fee
												
	0	5,000	$1,500 plus $0.50 per square foot
	5,000	10,000	$3,000 plus $0.50 per square foot
	0,000	20,000	$4,500 plus $0.75 per square foot
	20,000	NA	$6,000 plus $0.75 per square foot(c)	The fee imposed for the review of a nursing home construction project varies depending upon the square footage of the project:
	Over	Up To	Project Fee
							0	2,000	$250.00 plus $0.16 per square foot
	2,000	NA	$500.00 plus $0.30 per square foot
(d)	The fee imposed for the review of an ambulatory surgical facility construction project varies depending upon the square footage of the project:
									
	0	2,000	$200.00 plus $0.16 per square foot
	2,000	NA	$400.00 plus $0.30 per square foot(e)	The fee imposed for the review of a psychiatric hospital construction project varies depending upon the square footage of the project:
Over		Up To	Project Fee
													0	5,000	$750.00 plus $0.25 per square foot
	5,000	10,000	$1,500.00 plus $0.25 per square foot
	10,000	20,000	$2,250.00 plus $0.50 per square foot
	20,000	NA	$3000.00 plus $0.50 per square foot
(f)	The fee imposed for the review of an adult care home construction project varies depending upon the square footage of the project:
	Over	Up To	Project Fee
							0	2,000	$175.00 plus $0.10 per square foot
	2,000	NA	$350.00 plus $0.20 per square foot
(g)	The fee imposed for the review of the following residential construction projects is:
Residential Project	Project Fee
							Family Care Homes 	$225.00 flat fee
ICF/MR Group Homes	$350.00 flat fee
Group Homes: 1‑3 beds	$125.00 flat fee
Group Homes: 4‑6 beds	$225.00 flat fee
Group Homes: 7‑9 beds	$275.00 flat fee
Other residential:
	More than 9 beds	$275.00 plus $0.15 per square foot
of project space."
SECTION 10.27(b) This section becomes effective July 1, 2008, and applies to applications or plans for review submitted on or after that date.

CHANGES TO NON‑MEDICAID REIMBURSEMENT CHANGES
SECTION 10.28.  Section 10.5 of S.L. 2007‑323 is rewritten as follows:
"SECTION 10.5. Providers of medical services under the various State programs, other than Medicaid, offering medical care to citizens of the State shall be reimbursed at rates no more than those under the North Carolina Medical Assistance Program.
The Department of Health and Human Services may reimburse hospitals at the full prospective per diem rates without regard to the Medical Assistance Program's annual limits on hospital days. When the Medical Assistance Program's per diem rates for inpatient services and its interim rates for outpatient services are used to reimburse providers in non‑Medicaid medical service programs, retroactive adjustments to claims already paid shall not be required.
Notwithstanding the provisions of paragraph one, the Department of Health and Human Services may negotiate with providers of medical services under the various Department of Health and Human Services programs, other than Medicaid, for rates as close as possible to Medicaid rates for the following purposes:  contracts or agreements for medical services and purchases of medical equipment and other medical supplies. These negotiated rates are allowable only to meet the medical needs of its non‑Medicaid eligible patients, residents, and clients who require such services which cannot be provided when limited to the Medicaid rate.
Maximum net family annual income eligibility standards for services in these programs shall be as follows:
DSB Medical Eye Care	125% FPL
DSB Independent Living <55	125% FPL
DSB Independent Living 55>	200% FPL
DSB Vocational Rehabilitation	125% FPL
DVR Independent Living 	125% FPL
DVR Vocational Rehabilitation	125% FPL
																			The Department of Health and Human Services shall contract at, or as close as possible to, Medicaid rates for medical services provided to residents of State facilities of the Department."

DHHS BLOCK GRANTS
SECTION 10.29.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2009, 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)	$91,429,966

02.	Work First County Block Grants	97,031,528

03.	Work First Functional Assessments	2,721,787

04.	Child Protective Services – Child Welfare
	Workers for Local DSS	14,452,391

05.	Work First – Boys and Girls Clubs	2,000,000

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.	Work First – Connect, Inc.	550,000

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

10.	Family Violence Prevention	2,200,000

Division of Child Development

11.	Subsidized Child Care Program	60,587,077

DHHS Administration

12.	Division of Social Services	995,142

13.	Office of the Secretary	66,101

14.	Office of the Secretary/DIRM – TANF
	Automation Projects	595,541

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

Division of Public Health

16.	Teen Pregnancy Prevention Initiatives	450,000

Transfers to Other Block Grants

Division of Child Development

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

Division of Social Services

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

19.	Transfer to Social Services Block Grant for Child
	Protective Services – Child Welfare Training in
	Counties	2,738,827

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

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

22.	Transfer to Social Services Block Grant for County
	Departments of Social Services for Children's Services	4,620,619

23.	Transfer to Social Services Block Grant for
	Foster Care Services	2,649,662

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT	$378,018,805

SOCIAL SERVICES BLOCK GRANT

Local Program Expenditures

Divisions of Social Services and Aging and Adult Services

01.	County Departments of Social Services	$ 28,868,189
(Transfer from TANF – $4,620,619)

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	2,649,662
	(Transfer from TANF)

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

 07.	Special Children Adoption Incentive Fund	500,000

08.	Foster Parent Incentive	100,000

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‑ Child	422,003

11.	Developmental Disabilities Services Program	5,000,000

12.	Mental Health Services‑Adult and
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 Community Health Program	188,263

Division of Public Health

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

DHHS Program Expenditures

Division of Aging and Adult Services

16.	UNC‑CARES Training Contract	247,920

Division of Social Services

17.	CPS – Child Welfare Training from Counties
(Transfer from TANF)	2,738,827

 Division of Services for the Blind

18.	Independent Living Program	3,633,077

Division of Health Service Regulation

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	675,593

22.	Division of Social Services	869,058

23.	Office of the Secretary/Controller's Office	135,093

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	28,860

27.	Division of Health Service Regulation	216,418

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

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

30.	Office of the Secretary	46,819

Transfers to Other State Agencies

Department of Administration

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

Department of Juvenile Justice and Delinquency Prevention

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

Transfers to Other Block Grants

Division of Public Health

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

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 66,534,428

LOW‑INCOME ENERGY BLOCK GRANT

Local Program Expenditures

Division of Social Services

01.	Low‑Income Energy Assistance Program (LIHEAP)	$ 19,510,559

02.	Crisis Intervention Program (CIP)	14,588,514

Office of the Secretary – Office of Economic Opportunity

03.	Weatherization Program	6,268,946

04.	Heating Air Repair & Replacement Program (HARRP)	2,923,950

Local Administration

Division of Social Services

05.	County DSS Administration	2,259,757

Office of the Secretary – Office of Economic Opportunity

06.	Local Residential Energy Efficiency Service
	Providers – Weatherization	268,146

07.	Local Residential Energy Efficiency Service
	Providers – HARRP	125,067

DHHS Administration

08.	Division of Social Services	219,410

09.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	7,389

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	268,146

13.	Office of the Secretary/Office of Economic
	Opportunity – HARRP	125,067

Transfers to Other State Agencies

14.	Department of Administration – 
NC State Commission of Indian Affairs	60,947

TOTAL LOW‑INCOME ENERGY BLOCK GRANT	$ 46,882,504

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

Local Program Expenditures

Division of Child Development

01.	Subsidized Child Care Services	$148,186,059

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

03.	Contract Subsidy Services Support (CCDF)	504,695

DHHS Program Expenditures

Division of Child Development

04.	Quality and Availability Initiatives	27,298,901

Local Administration

Division of Social Services

05.	Subsidy Services Support 	15,813,021

DHHS Administration

Division of Child Development

06.	DCD Administrative Expenses	6,540,707

DHHS Central Administration

07.	DHHS Central Administration‑DIRM Technical Services	749,081

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT	$280,385,344

MENTAL HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Mental Health Services – Adult	$ 7,154,932

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

03.	Comprehensive Treatment Service
Program	1,500,000

DHHS Administration

04.	Division of Mental Health	100,000

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT	$ 12,676,923

SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT

Local Program Expenditures

01.	Substance Abuse Services – Adult	$ 22,008,080

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

03.	Substance Abuse – HIV and IV Drug	5,116,378

04.	Substance Abuse Prevention – Child	7,186,857

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

Division of Public Health

07.	Risk Reduction Projects	633,980

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	$ 48,702,674

MATERNAL AND CHILD HEALTH BLOCK GRANT

Local Program Expenditures

Division of Public Health

01.	Children's Health Services	$   7,415,569

02.	Women's Health‑Aid‑to‑County	7,504,019

DHHS Program Expenditures

Division of Public Health

03.	Oral Health	35,951

04.	Children's Health Services	1,654,428

05.	Women's Health	121,285

06.	State Center for Health Statistics	120,364

07.	Quality Improvement in Public Health	14,646

08.	Health Promotions	84,843

09.	Office of Minority Health	51,562

10.	Immunization Program – Vaccine Distribution	310,667

DHHS Administration

11.	Division of Public Health Administration	631,966

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 17,945,300

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	1,508,889

05.	Oral Health	70,000

06.	State Laboratory of Public Health	16,600

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT	$3,694,073

COMMUNITY SERVICES BLOCK GRANT

Local Program Expenditures

Office of Economic Opportunity – Community Services Block Grant

01.	Community Action Agencies	$ 16,062,653

02.	Limited Purpose Agencies	892,370

DHHS Administration

03.	Office of Economic Opportunity	892,369

TOTAL COMMUNITY SERVICES BLOCK GRANT	$17,847,392

GENERAL PROVISIONS
SECTION 10.29.(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 10.29.(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 10.29.(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.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT (TANF)
SECTION 10.29.(e)  The sum of nine hundred ninety‑five thousand one hundred forty‑two dollars ($995,142) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2008‑2009 fiscal year shall be used to support administration of TANF‑funded programs.
SECTION 10.29.(f)  The sum of two million two hundred thousand dollars ($2,200,000) appropriated under this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2008‑2009 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, 2008. 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, 2008, 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, 2008. The Division of Social Services may reallocate unspent funds to counties that submit a written request for additional funds.
SECTION 10.29.(g)  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 2008‑2009 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 10.29.(h)  The sum of fourteen million four hundred fifty‑two thousand three hundred ninety‑one dollars ($14,452,391) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in the TANF Block Grant for the 2008‑2009 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 post‑adoption services for eligible families.
SECTION 10.29.(i)  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 2008‑2009 fiscal year shall be used in accordance with Section 10.31 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 10.29.(j)  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 2008‑2009 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, 2009.
SECTION 10.29.(k)  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 2008‑2009 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 10.29.(l)  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 10.29.(m)  The sum of five hundred fifty thousand dollars ($550,000) appropriated in this section to the Department of Health and Human Services in the TANF Block Grant for the 2008‑2009 fiscal year shall be transferred to Connect, Inc. Connect, Inc., shall report on the number of people served and the services received as a result of the receipt of funds. The report shall contain expenditure data, including the amount of funds used for administration and direct training. The report shall also include the number of people who have been employed as a direct result of services provided by Connect, Inc., including the length of employment in the new position. The Department of Health and Human Services shall evaluate the program and ensure that services provided are not duplicative of local employment security commissions in the nine counties served by Connect, Inc. The evaluation report shall be submitted to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than May 1, 2009.
SECTION 10.29.(n)  The sum of two million dollars ($2,000,000) appropriated in this section to the Department of Health and Human Services in the TANF Block Grant for Boys and Girls Clubs for the 2008‑2009 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 TANF Block Grant funds, shall administer a grant program to award funds to the Boys and Girls Clubs across the State in order to implement programs that improve the motivation, performance, and self‑esteem of youths and to implement other initiatives that would be expected to reduce 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 10.29.(o)  The Department of Health and Human Services, Division of Social Services, shall continue implementing county demonstration grants that began in the 2006‑2007 fiscal year. The county demonstration grants may be awarded for up to three years with all projects ending no later than the end of fiscal year 2009‑2010. The purpose of the county demonstration grants is to identify best practices that can be used by counties to improve the work participation rates. 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 2009‑2010.
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.
The Department of Health and Human Services, Division of Social Services, shall report on the status of county demonstration grants implemented pursuant to 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 February 1, 2009.

SOCIAL SERVICES BLOCK GRANT
SECTION 10.29.(p)  Social Services Block Grant funds appropriated to the North Carolina Inter‑Agency Council for Coordinating Homeless Programs, the North Carolina Housing Coalition, and Foster Parent Incentive are exempt from the provisions of 10A NCAC 71R .0201(3).  The Special Children's Adoption Incentive Fund will require a fifty percent (50%) local match.
SECTION 10.29.(q)  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 2008‑2009 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 10.29.(r)  The sum of two million seven hundred thirty‑eight thousand eight hundred twenty‑seven dollars ($2,738,827) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2008‑2009 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 Master's Degree in Social Work/Baccalaureate Degree in Social Work Collaborative.
(3)	Provide training for residential child caring facilities.
(4)	Provide for various other child welfare training initiatives.
SECTION 10.29.(s)  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 2008‑2009 fiscal year shall be used to purchase services at maternity homes throughout the State.
SECTION 10.29.(t)  The sum of two million six hundred forty‑nine thousand six hundred sixty‑two dollars ($2,649,662) appropriated in this section in the Social Services Block Grant for child caring agencies for the 2008‑2009 fiscal year shall be allocated to the State Private Child Caring Agencies Fund.
SECTION 10.29.(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 10.29.(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 10.29.(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 2008‑2009 fiscal year may be used for the operations of the Medical Child Care Pilot.
SECTION 10.29.(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 10.29.(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.  The Department may also adjust the amount of subsidy services support funds based on the initial formula allocation to counties.

MENTAL HEALTH BLOCK GRANT
SECTION 10.29.(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 2008‑2009 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 2008‑2009 fiscal year shall be used to continue a Comprehensive Treatment Services Program for Children in accordance with Section 10.10 of this act.
SECTION 10.29.(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 2008‑2009 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 10.29.(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 2008‑2009 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 10.29.(cc)  The Department of Health and Human Services shall ensure that there will be follow‑up testing in the Newborn Screening Program.

PART XI. DEPARTMENT OF COMMERCE

ONE NORTH CAROLINA FUND
SECTION 11.1.  G.S. 143B‑437.71 is amended by adding a new subsection to read:
"§ 143B‑437.71.  One North Carolina Fund established as a special revenue fund.
(a)	Establishment. – The One North Carolina Fund is established as a special revenue fund in the Department of Commerce.
(b)	Purposes. – Moneys in the One North Carolina Fund may only be allocated pursuant to this subsection. Moneys may be allocated to local governments for use in connection with securing commitments for the recruitment, expansion, or retention of new and existing businesses and to the One North Carolina Small Business Account created pursuant to subsection (c) of this section in an amount not to exceed three million dollars ($3,000,000). Moneys in the One North Carolina Fund allocated to local governments shall be used for the following purposes only:
(1)	Installation or purchase of equipment.
(2)	Structural repairs, improvements, or renovations to existing buildings to be used for expansion.
(3)	Construction of or improvements to new or existing water, sewer, gas, or electric utility distribution lines or equipment for existing buildings.
(4)	Construction of or improvements to new or existing water, sewer, gas, or electric utility distribution lines or equipment for new or proposed buildings to be used for manufacturing and industrial operations.
(5)	Any other purposes specifically provided by an act of the General Assembly.
(c)	There is created in the One North Carolina Fund a special account, the One North Carolina Small Business Account, to be used for the North Carolina SBIR/STTR Incentive Program and the North Carolina SBIR/STTR Matching Funds Program, as specified in Part 2I of Article 10 of Chapter 143B of the General Statutes.
(d)	The Department of Commerce may use up to three hundred thousand dollars ($300,000) each year from funds appropriated from the One North Carolina Fund to cover the expenses in administering of the program. The department may use these funds to cover personnel and other administrative cost as long as the program has grants outstanding."

North Carolina SBIR/STTR Matching Funds Program
SECTION 11.2.G.S. 143B‑437.81 is amended by adding a new subsection to read:
"§ 143B‑437.81.  North Carolina SBIR/STTR Matching Funds Program.
(a)	Program. – There is established the North Carolina SBIR/STTR Matching Funds Program to be administered by the North Carolina Board of Science and Technology. In order to foster job creation and economic development in the State, the Board may provide grants to eligible businesses to match funds received by a business as a SBIR or STTR Phase I award and to encourage businesses to apply for Phase II awards.
(b)	Eligibility. – In order to be eligible for a grant under this section, a business must satisfy all of the following conditions:
(1)	The business must be a for‑profit, North Carolina‑based business. For the purposes of this section, a North Carolina‑based business is one that has its principal place of business in this State.
(2)	The business must have received a SBIR/STTR Phase I award from a participating federal agency in response to a specific federal solicitation. To receive the full match, the business must also have submitted a final Phase I report, demonstrated that the sponsoring agency has interest in the Phase II proposal, and submitted a Phase II proposal to the agency.
(3)	The business must satisfy all federal SBIR/STTR requirements.
(4)	The business shall not receive concurrent funding support from other sources that duplicates the purpose of this section.
(5)	The business must certify that at least fifty‑one percent (51%) of the research described in the federal SBIR/STTR Phase II proposal will be conducted in this State and that the business will remain a North Carolina‑based business for the duration of the SBIR/STTR Phase II project.
(6)	The business must demonstrate its ability to conduct research in its SBIR/STTR Phase II proposal.
(c)	Grant. – The North Carolina Board of Science and Technology may award grants to match the funds received by a business through a SBIR/STTR Phase I proposal up to a maximum of one hundred thousand dollars ($100,000). Seventy‑five percent (75%) of the total grant shall be remitted to the business upon receipt of the SBIR/STTR Phase I award and application for funds under this section. Twenty‑five percent (25%) of the total grant shall be remitted to the business upon submission by the business of the Phase II application to the funding agency and acceptance of the Phase I report by the funding agency. A business may receive only one grant under this section per year. A business may receive only one grant under this section with respect to each federal proposal submission. Over its lifetime, a business may receive a maximum of five awards under this section.
(d)	Application. – A business shall apply, under oath, to the North Carolina Board of Science and Technology for a grant under this section on a form prescribed by the Board that includes at least all of the following:
(1)	The name of the business, the form of business organization under which it is operated, and the names and addresses of the principals or management of the business.
(2)	An acknowledgement of receipt of the Phase I report and Phase II proposal by the relevant federal agency.
(3)	Any other information necessary for the Board to evaluate the application.
(e)	The Department of Commerce may use up to one hundred thousand dollars ($100,000) each year from funds appropriated to the North Carolina Small Business Account to cover the expenses in administering of the program. The department may use these funds to cover personnel and other administrative costs as long as the program has grants outstanding."

EMPLOYMENT SECURITY COMMISSION FUNDS
SECTION 11.3.(a)  Funds from the Employment Security Commission Reserve Fund shall be available to the Employment Security Commission of North Carolina 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 in the 2008‑2009 fiscal year shall not exceed two million five hundred thousand dollars ($2,500,000).
SECTION 11.3.(b)  There is appropriated from the Employment Security Commission Reserve Fund to the Employment Security Commission of North Carolina the sum of twenty million dollars ($20,000,000) for the 2008‑2009 fiscal year to be used for the following purposes:
(1)	Nineteen million seven hundred thousand dollars ($19,700,000) for the operation and support of ESC 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.
SECTION 11.3.(c)  There is appropriated from the Employment Security Commission Reserve Fund to the Employment Security Commission of North Carolina an amount not to exceed one million dollars ($1,000,000) for the 2008‑2009 fiscal year to fund State initiatives not currently funded through federal grants.
SECTION 11.3.(d)  There is appropriated from the Employment Security Commission Reserve Fund to the Employment Security Commission of North Carolina an amount not to exceed three hundred fifty thousand dollars ($350,000) for the 2008‑2009 fiscal year to allow the Commission to continue to work with Connect, Inc., to provide dislocated workers with assistance in obtaining health care benefits, receiving vocational training, and securing employment.
SECTION 11.3.(e)  There is appropriated from the Employment Security Commission Reserve Fund to the Department of Commerce an amount not to exceed five hundred thousand dollars ($500,000) for the 2008‑2009 fiscal year.  Funds will be used by the Division of Workforce Development for the Valuing Education Initiative, a broad‑based effort to promote higher educational attainment levels to ensure the future prosperity of all North Carolina's citizens, with a special focus on the existing workforce.
SECTION 11.3.(f)  There is appropriated from the Employment Security Commission Reserve Fund to the Department of Commerce an amount not to exceed one million five hundred thousand dollars ($1,500,000) for the 2008‑2009 fiscal year. Funds will be used for the Incumbent Worker Training Initiative in the Division of Workforce Development. The initiative will provide grants to specific high growth industry sectors that are experiencing significant worker availability and skill gaps.
SECTION 11.3.(g)  This section becomes effective July 1, 2008.

SET REGULATORY FEE FOR UTILITIES COMMISSION
SECTION 11.4.(a)  The percentage rate to be used in calculating the public utility regulatory fee under G.S. 62‑302(b)(2) is twelve one‑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, 2008.
SECTION 11.4.(b)  The electric membership corporation regulatory fee imposed under G.S. 62‑302 (b1) for the 2008‑2009 fiscal year is two hundred thousand dollars ($200,000).
SECTION 11.4.(c)  This section becomes effective July 1, 2008.

PART XII. DEPARTMENT OF AGRICULTURE

PLANT CONSERVATION PROGRAM
SECTION 12.1.  From funds that are deposited with the State Treasurer pursuant to G.S. 146‑30 to the credit of the Department of Agriculture and Consumer Services in a capital improvement account, the sum of thirty thousand dollars ($30,000) for the 2008‑09 fiscal year shall be transferred to the Department of Agriculture and Consumer Services to be used, notwithstanding G.S. 146‑30, 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, environmental studies, and for the management of plant conservation program preserves owned by the Department.

PART XIII. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

COMMERCIAL LEAKING PETROLEUM UNDERGROUND STORAGE TANK CLEANUP FUND
SECTION 13.1.  There is appropriated from the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund to the Department of Environment and Natural Resources the sum of $870,678 for the 2008‑2009 fiscal year to establish eleven positions and associated operating budget in the UST program to increase compliance inspection frequency and to develop and conduct UST operator training for regulated UST systems under Parts 2A and 2B of Article 21A of Chapter 143 of the General Statutes. It is the intent of the General Assembly that funds appropriated under this section are recurring funds and that these funds are in addition to funds previously appropriated.

PART XIV. STATEWIDE PROVISIONS

NORTH CAROLINA GEOGRAPHIC INFORMATION SYSTEMS (GIS) RESERVE ACCOUNT
SECTION 14.1.(a)  The North Carolina Geographic Information Systems Reserve Account shall be established as a special reserve account.
Establishment and Purpose. – The NC Geographic Information Systems Reserve Account is established as a Special Reserve Account in the Office of State Budget and Management (OSBM) and the department shall be responsible for administering and allocating funds from the Reserve Account in consultation with the Geographic Information Coordinating Council's Management and Operations Committee.
SECTION 14.1.(b)  Program Guidelines.
1.	The Geographic Information Coordinating Council, the Center for Geographic Information and Analysis and the Office of State Budget and Management in consultation with state agency partners shall identify the required funds needed to build and maintain an accurate and comprehensive GIS database.
2.	GIS data layer development and maintenance funds shall flow through the Reserve Account to ensure consistency standards are met. The data steward for each data layer shall produce the data in an agreed upon schedule and shall be disseminated via the NC OneMap. If the data production process is a multi‑year effort, the agency must show on an annual basis that it is making satisfactory progress toward completion or risk continued funding.
3.	GIS data layer requirements shall be netted for any anticipated cost share from federal or local governments.

NORTH CAROLINA GEOGRAPHIC INFORMATION COORDINATING COUNCIL
SECTION 14.2.  G.S. 143‑725 through 143‑726 are rewritten as follows:
"Article 76.
"North Carolina Geographic Information Coordinating Council.
"§ 143‑725.  Council established; role of the Center for Geographic Information and Analysis.
(a)	Council Established. – The North Carolina Geographic Information Coordinating Council ("Council") is established to develop policies regarding the utilization of geographic information, GIS systems, and other related technologies. The Council shall be responsible for the following:
(1)	Developing the Statewide GIS Strategy.
(2)	Create, update, adopt, and enforce GIS related standards for State agencies and collaborate with counties and municipalities.
(3)	Resolution of policy and technology issues.
(4)	Coordination, direction, and oversight of State, local, and private GIS efforts.
(5)	Advising the Governor, the General Assembly, and the State Chief Information Officer as to needed directions, responsibilities, and funding regarding geographic information.
The purpose of this statewide geographic information coordination effort shall be to further cooperation among State, federal, and local government agencies; academic institutions; and the private sector to improve the quality, access, cost‑effectiveness, and utility of North Carolina's geographic information and to promote geographic information as a strategic resource in the State. Statewide GIS roles and responsibilities shall be defined for all agencies that develop and maintain GIS data. The Council shall be located in the Office of the Governor for organizational, budgetary, and administrative purposes.
(b)	Role of CGIA. – The Center for Geographic Information and Analysis (CGIA) shall staff the Geographic Information and Coordinating Council and its committees. CGIA shall coordinate the execution of the Statewide GIS Strategy and shall manage and distribute digital geographic information about North Carolina maintained by numerous State and local government agencies. It shall also maintain a statewide inventory of geospatial data and policies, operate a statewide data clearinghouse and provide Internet access to State agency geographic information. CGIA shall serve as the lead State agency for coordination of the Statewide GIS Strategy with federal coordination initiatives.
"§ 143‑726.  Council membership; organization.
(a)	Members. – The Council shall consist of up to 35 members, or their designees, as set forth in this section. An appointing authority may reappoint a Council member for successive terms.
(b)	Governor's Appointments. – The Governor shall appoint the following members:
(1)	The head of an at‑large State agency not represented in subsection (d) of this section.
(2)	An employee of a county government, nominated by the North Carolina Association of County Commissioners.
(3)	An employee of a municipal government, nominated by the North Carolina League of Municipalities.
(4)	An employee of the federal government who is stationed in North Carolina.
(5)	A representative from the Lead Regional Organizations.
(6)	Two representatives of the private sector from the GIS industry and the information consumer, respectively.
(7)	A member of the general public.
(8)	Other individuals whom the Governor deems appropriate to enhance the efforts of geographic information coordination.
Members appointed by the Governor shall serve three‑year terms. The Governor shall appoint an individual from the membership of the Council to serve as Chair of the Council. The member appointed shall serve as Chair for a term of one year.
(c)	General Assembly Appointments. – The President Pro Tempore of the Senate and the Speaker of the House of Representatives shall each appoint three members to the Council. These members shall serve one‑year terms.
(d)	Other Members. – Other Council members shall include:
(1)	The Secretary of State.
(2)	The Commissioner of Agriculture.
(3)	The Superintendent of Public Instruction.
(4)	The Secretary of Environment and Natural Resources.
(5)	The Secretary of the Department of Transportation.
(6)	The Secretary of the Department of Administration.
(7)	The Secretary of the Department of Commerce.
(8)	The Secretary of the Department of Crime Control and Public Safety.
(9)	The Secretary of the Department of Health and Human Services.
(10)	The Secretary of the Department of Revenue.
(11)	The Secretary of the Department of Cultural Resources.
(12)	The President of The University of North Carolina System.
(13)	The Chair of the Public Utilities Commission.
(14)	The State Budget Officer.
(15)	The Executive Director of the North Carolina League of Municipalities.
(16)	The Executive Director of the North Carolina Association of County Commissioners.
(17)	One representative from the State Government GIS User Committee.
(18)	One representative elected annually from the Local Government Committee established pursuant to subdivision (h)(2) of this section.
(19)	The State Chief Information Officer who shall serve as a nonvoting member.
Council members serving ex officio pursuant to this subsection shall serve terms coinciding with their respective offices. Members serving by virtue of their appointment by a standing committee of the Council shall serve for the duration of their appointment by the standing committee.
(e)	Meetings. – The Council shall meet at least quarterly on the call of the Chair. The Management and Operations Committee shall conduct the Council's business between quarterly meetings.
(f)	Administration. – The Director of the CGIA shall be secretary of the Council and provide staff support as it requires.
(g)	Reports. – The Council shall report at least annually to the Governor and to the Joint Legislative Commission on Governmental Operations.
(h)	Committees. – The Council may establish work groups, as needed, and shall oversee the standing committees created in this subsection. Each standing committee shall adopt bylaws, subject to the Council's approval, to govern its proceedings. Except as otherwise provided, the Chair of the Council shall appoint the standing committee chairs from representatives listed in subsections (b), (c), or (d) of this section. The standing committees are as follows:
(1)	State Government GIS User Committee. – Membership shall consist of representatives from all interested State government departments. The Chair of the Council shall appoint the committee chair from one of the State agencies represented in subsection (d) of this section.
(2)	Local Government Committee. – Membership shall consist of representatives from organizations and professional associations that currently serve or represent local government GIS users, the North Carolina League of Municipalities, the North Carolina Association of County Commissioners, and Lead Regional Organizations. The committee shall elect one of its members to the Council.
(3)	Federal Interagency Committee. – Membership shall consist of representatives from all interested federal agencies and Tribal governments with an office located in North Carolina. The appointed federal representative serving pursuant to subdivision (b)(4) of this section shall serve as the Chair of the Federal Interagency Committee.
(4)	Statewide Mapping Advisory Committee. – This committee shall consolidate statewide mapping requirements and attempt to gain statewide support for financing cooperative programs. The committee shall also advise the Council on issues, problems, and opportunities relating to federal, State, and local government geospatial data programs.
(5)	GIS Technical Advisory Committee. – This committee shall develop the statewide technical architecture for GIS and anticipate and respond to GIS technical opportunities and issues affecting State, county, and local governments in North Carolina.
(6)	Management and Operations Committee. – This committee, with oversight by the GICC and the Office of State Budget and Management, shall set and manage the Statewide GIS Strategy. It shall account for and assign any fiscal resources appropriated or otherwise acquired from stakeholders for framework data stewardship plus other key data resources that are mission critical to the Statewide GIS Strategy. The Committee shall consider management and operational matters related to GIS and other matters that are formally requested by the Council. The committee membership shall consist of the Chair of the Council, the State Budget Officer, the the State Chief Information Officer, and chair of each of the standing committees of the Council, and other members of the Council appointed by the Chair."

PART XV DPEARTMENT OF ADMINISTRATION

SCHOLARSHIPS FOR CHILDREN OF WAR VETERANS
Section 15.1.  G.S. 165‑21 is rewritten as follows:
"§ 165‑21.  Scholarship.
(a)	A scholarship granted pursuant to this Article shall consist of the following benefits in either a State or private educational institution:
(1)	With respect to State educational institutions, unless expressly limited elsewhere in this Article, a scholarship shall consist of:
a.	Tuition,
b.	A reasonable board allowance,
c.	A reasonable room allowance at a college or university‑owned facility,
d.	Matriculation and other institutional fees required to be paid as a condition to remaining in said institution and pursuing the course of study selected, including a reasonable allowance as established by the Secretary of the Department of Administration for books, supplies, tools, personal computers and specialty clothing required for the student's course of study.
e.	Travel allowance of $100 per semester.
(2)	With respect to private educational institutions, a scholarship shall consist of a monetary allowance as prescribed in G.S. 165‑22.1(d).
(3)	Only one scholarship may be granted pursuant to this Article with respect to each child and it shall not extend for a longer period than four academic years, which years, however, need not be consecutive. However, an extension may be granted by the Secretary of the Department of Administration for unusual or compelling situations.(4)	No educational assistance shall be afforded a child under this Article after the end of an eight‑year period beginning on the date the scholarship is first awarded. Those persons who have been granted a scholarship under this Article prior to the effective date of this act shall be entitled to the remainder of their period of scholarship eligibility if used prior to August 1, 2010. Whenever a child is enrolled in an educational institution and the period of entitlement ends while enrolled in a term, quarter or semester, such period shall be extended to the end of such term, quarter or semester, but not beyond the entitlement limitation of four academic years.
(b)	Repealed by Session Laws 2002‑126, s. 19.3(b), effective November 1, 2002.
(c)	If a child is awarded a scholarship under this Article, the Commission shall notify the recipient by May 1st of the year in which the recipient enrolls in college."

PART XVI DPEARTMENT OF REVENUE

USE OF COLLECTION ASSISTANCE FEE
SECTION 16.1.(a)  G.S. 105‑243.1(e)(4) reads as rewritten:
"(4)	To pay for postage or other delivery charges for correspondence directly and primarily relating to collecting overdue tax debts, not to exceed five hundred thousand dollars ($500,000) a year."
SECTION 16.1.(b)  The General Assembly finds that a computer system that records tax payments and determines when the payments are overdue directly and primarily relates to the collection of overdue tax debts and that the cost of the computer system is subject to the collection assistance fee set forth in G.S. 105‑243.1. The Department of Revenue is authorized to use funds in the 20% Collection Assistance Fee Account, Budget Code 24704‑2474, during the  2008‑2009 fiscal year to replace the Department's current computer system, and ten million dollars ($10,000,000) are  appropriated for the 2008‑2009 fiscal year to the Department for that purpose.  . Funds  appropriated to the Department in this subsection may be transferred to Budget Code 24708‑2478 during the 2008‑2009 fiscal year  for the purposes set forth in this subsection.
SECTION 16.1.(c)  The Department of Revenue shall contract with private counsel with the pertinent information technology and computer law expertise to review requests for proposals and to negotiate and review contracts associated with the Integrated Tax Administration System.  G.S. 114‑2.3 does not apply to this subsection.
SECTION 16.1.(d)  Funds  appropriated to the Department to be used from the 20% Collection Assistance Fee Account from the 2007‑2008 fiscal year (fifteen million dollars, $15,000,000) are authorized to be used during the 2008‑2009 fiscal year for ITAS replacement.  These funds may be transferred to Budget Code 24708‑2478 for the purpose set forth in this subsection.

PART XVII. SALARIES AND BENEFITS

GOVERNOR AND COUNCIL OF STATE
SECTION 17.1.(a)  Effective July 1, 2008, G.S. 147‑11(a) reads as rewritten:
"(a)	The salary of the Governor shall be one hundred thirty‑seven thousand eight hundred ninety‑two dollars ($137,892) annually, payable monthly."
SECTION 17.1.(b)  Effective July 1, 2008, the annual salaries for the members of the Council of State, payable monthly, for the 2008‑2009 fiscal year are:

	Council of State	Annual Salary

	Lieutenant Governor	$  121,700
	Attorney General	121,700
	Secretary of State	121,700
	State Treasurer	121,700
	State Auditor	121,700
	Superintendent of Public Instruction	121,700
	Agriculture Commissioner	121,700
	Insurance Commissioner	121,700
	Labor Commissioner	121,700

NON‑ELECTED DEPARTMENT HEAD/SALARY INCREASES
SECTION 17.2.  In accordance with G.S. 143B‑9, the maximum annual salaries, payable monthly, for the non‑elected heads of the principal State departments for the 2008‑2009 fiscal year are:

	Non‑elected Department Heads	Annual Salary

	Secretary of Administration	$  118,899
	Secretary of Correction	118,899
	Secretary of Crime Control and Public Safety	118,899
	Secretary of Cultural Resources	118,899
	Secretary of Commerce	118,899
	Secretary of Environment, Health, and Natural Resources	118,899
	Secretary of Human Resources	118,899
	Secretary of Revenue	118,899
	Secretary of Transportation	118,899

CERTAIN EXECUTIVE BRANCH OFFICIALS/SALARY INCREASES
SECTION 17.3.  The annual salaries, payable monthly, for the 2008‑2009 fiscal year for the following executive branch officials are:

	Executive Branch Officials	Annual Salary
	Chairman, Alcoholic Beverage Control Commission	$  108,220
	State Controller	151,454
	Commissioner of Motor Vehicles	108,220
	Commissioner of Banks	121,700
	Chairman, Employment Security Commission	133,161
	State Personnel Director	118,899
	Chairman, Parole Commission	98,818
	Members of the Parole Commission	45,616
	Chairman, Utilities Commission	135,534
	Members of the Utilities Commission	121,700
	Executive Director, Agency for Public Telecommunications	91,232
	Director, Museum of Art	110,891
	Executive Director, North Carolina Agricultural
		Finance Authority	105,338
	State Chief Information Officer	151,363

JUDICIAL BRANCH OFFICIALS/SALARY INCREASE
SECTION 17.4.(a)  The annual salaries, payable monthly, for specified judicial branch officials the 2008‑2009 fiscal year are:

	Judicial Branch Officials	Annual Salary
	Chief Justice, Supreme Court	$139,217
	Associate Justice, Supreme Court	135,580
	Chief Judge, Court of Appeals	132,190
	Judge, Court of Appeals	129,931
	Judge, Senior Regular Resident Superior Court	126,400
	Judge, Superior Court	122,869
	Chief Judge, District Court	111,572
	Judge, District Court	108,042
	District Attorney	117,854
	Administrative Officer of the Courts	125,196
	Assistant Administrative Officer of the Courts	114,355
	Public Defender	117,854
	
SECTION 17.4.(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 seventy thousand eighty‑three dollars ($70,083), and the minimum salary of any assistant district attorney or assistant public defender is at least thirty‑six thousand six hundred twenty‑three dollars ($36,623) effective July 1, 2008.

CLERK OF SUPERIOR COURT SALARY INCREASES
SECTION 17.5.  Effective July 1, 2008 G.S. 7A‑101(a) reads as rewritten:
"§ 7A‑101.  Compensation.
(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	$  	81,399
100,000 to 149,999		91,343
150,000 to 249,999		101,289
250,000 and above		111,237.

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/ELIMINATE DEPUTY CLERK HIRING RATE
SECTION 17.6.  Effective July 1, 2008, 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	Annual Salary
Head Bookkeeper
Minimum		$31,589Maximum		54,101

Deputy Clerks	Annual Salary
Minimum		$27,190
Maximum		42,078.

MAGISTRATES' SALARY INCREASES
SECTION 17.7.(a)  Effective July 1, 2008, 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		$32,006
Step 1		34,941
Step 2		38,135
Step 3		41,621
Step 4		45,440
Step 5		49,742
Step 6		54,566.
(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 17.7.(b)  Effective July 1, 2008, 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		$25,809
1 or more but less than 3 years of service		26,994
3 or more but less than 5 years of service		29,378.
		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
SECTION 17.8. Effective July 1, 2008, 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 one hundred two thousand eight hundred seventeen dollars ($102,817) payable monthly. The Legislative Services Commission shall review the salary of the principal clerks prior to submission of the proposed operating budget of the General Assembly to the Governor and Advisory Budget Commission and shall make appropriate recommendations for changes in those salaries. Any changes enacted by the General Assembly shall be by amendment to this paragraph."

SERGEANT‑AT‑ARMS AND READING CLERKS
SECTION 17.9.  Effective July 1, 2008, 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 sixty‑four dollars ($364.00) 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 17.10.  The Legislative Services Officer shall increase the salaries of nonelected employees of the General Assembly in effect for fiscal year 2007‑2008 by one and one‑half percent (1.5%).  Nothing in this act limits any of the provisions of G.S. 120‑32.

COMMUNITY COLLEGES PERSONNEL/SALARY INCREASES
SECTION 17.11.(a)  The Director of the Budget shall transfer from the Reserve for Compensation Increases, created in this act for fiscal year 2008‑2009, funds to the North Carolina Community Colleges System Office necessary to provide an annual salary increase of one and one‑half percent (1.5%), including funds for the employer's retirement and social security contributions, commencing July 1, 2008, for all permanent full‑time community college institutional personnel supported by State funds.

UNIVERSITY OF NORTH CAROLINA SYSTEM/EPA SALARY INCREASES
SECTION 17.12.(a)  The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases, created in this act for fiscal year 2008‑2009, to provide an annual salary increase of one and one‑half percent (1.5%), including funds for the employer's retirement and social security contributions, commencing July 1, 2008, 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).

COMPENSATION BONUS FOR FISCAL YEAR 2008‑2009
SECTION 17.13A.(a)  Except as provided by subsection (b) of this section, any person (i) whose salary is set pursuant to the State Personnel Act under this Part and (ii) who is employed in a State‑funded position on July 1, 2008, shall be awarded a one‑time, lump‑sum compensation bonus for the 2008‑2009 fiscal year in the amount of one thousand dollars ($1,000). The compensation bonus shall be adjusted pro rata for permanent part‑time employees. The Director of the Budget shall transfer sufficient funds from the Reserve for Compensation Increases provided in this act to implement this section. The compensation bonus awarded by this section shall not be administered under G.S. 126‑7. The compensation bonus shall be awarded to eligible employees without regard to an employee's placement within the salary range, including employees at the top of the salary range.
SECTION 17.13A.(b)  The following persons shall not be eligible for the compensation bonus authorized by this section:
Any public school employee or State employee paid on the Teacher Salary Schedule or the School Based Administrator Salary Schedule.

MOST STATE EMPLOYEES
SECTION 17.14.(a)  The salaries in effect June 30, 2008, of all permanent full‑time State employees whose salaries are set in accordance with the State Personnel Act, and who are paid from the General Fund or the Highway Fund shall be increased, on or after July 1, 2008, unless otherwise provided by this act, by one and one‑half percent (1.5%).
SECTION 17.14.(b)  Except as otherwise provided in this act, the fiscal year 2008‑2009 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 one and one‑half percent (1.5%), commencing July 1, 2008.
SECTION 17.14.(c)  The salaries in effect for fiscal year 2008‑2009 for all permanent part‑time State employees shall be increased on and after July 1, 2008, by pro rata amounts of the one and one‑half percent (1.5%) salary increase provided for permanent full‑time employees covered under this part.
SECTION 17.14.(d)  The Director of the Budget may allocate out of special operating funds or from other sources of the employing agency, except tax revenues, sufficient funds to allow a salary increase, on and after July 1, 2008, 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 17.14.(e)  Within regular State 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 one and one‑half percent (1.5%) salary increase provided for permanent full‑time employees covered by the provisions of subsection (a), commencing July 1, 2008.

SPECIAL ANNUAL LEAVE BONUS
SECTION 17.15A.(a)  Except as provided by subsection (b) of this section, any person (i) who is a full‑time permanent employee of the State, a community college institution, or a local board of education on July 1, 2008, and (ii) who is eligible to earn annual leave shall have a one‑time additional five days of annual leave credited on that date. The additional leave shall be accounted for separately and shall remain available until used, notwithstanding any other limitation on the total number of days of annual leave that may be carried forward. Part‑time permanent employees shall receive a pro rata amount of the five days.
SECTION 17.15A.(b)  The following persons are not eligible to receive the special annual leave bonus authorized by this section:
(1)	Any employee or officer who does not earn annual leave.
(2)	Employees who receive during the 2008‑2009 fiscal year an automatic or step increase under G.S. 7A‑102(c), 7A‑171.1, or 20‑187.3.
(3)	Any public school employee or State employee paid on the Teacher Salary Schedule or the School Based Administrator Salary Schedule.

ALL STATE‑SUPPORTED PERSONNEL
SECTION 17.16.(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 17.16.(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 17.16.(c)  The salary increases provided in this act are to be effective July 1, 2008, 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, 2008.
Payroll checks issued to employees after July 1, 2008, which represent payment of services provided prior to July 1, 2008, 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 17.16.(d)  The Director of the Budget shall transfer from the Reserve for Compensation Increases in this act for fiscal year 2008‑2009 all funds necessary for the salary increases provided by this act, including funds for the employer's retirement and social security contributions.
SECTION 17.16.(e)  Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.

SALARY‑RELATED CONTRIBUTIONS/EMPLOYER
SECTION 17.17.(a)  Required employer salary‑related contributions for employees whose salaries are paid from department, office, institution, or agency receipts shall be paid from the same source as the source of the employees' salary.  If an employee's salary is paid in part from the General Fund or Highway Fund and in part from department, office, institution, or agency receipts, required employer salary‑related contributions may be paid from the General Fund or Highway Fund only to the extent of the proportionate part paid from the General Fund or Highway Fund in support of the salary of the employee, and the remainder of the employer's requirements shall be paid from the source that supplies the remainder of the employee's salary.  The requirements of this section as to source of payment are also applicable to payments on behalf of the employee for hospital‑medical benefits, longevity pay, unemployment compensation, accumulated leave, workers' compensation, severance pay, separation allowances, and applicable disability income benefits.

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 17.18.(a)  G.S. 135‑5(iii) is amended to read:
"(iii)	From and after July 1, 2001, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2007, shall be increased by one and two‑tenths percent (1.2%) of the allowance payable on June 1, 2008, in accordance with G.S. 135‑5(o). Furthermore, from and after July 1, 2008, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2007, but before June 30, 2008, shall be increased by a prorated amount of one and two‑tenths percent (1.2%) 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, 2007, and June 30, 2008."
SECTION 17.18(b) G.S. 135‑65(v) is amended to read:
"(v)	From and after July 1, 2008, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2007, shall be increased by one and two‑tenths percent (1.2%) of the allowance payable on June 1, 2008. Furthermore, from and after July 1, 2008, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2007, but before June 30, 2008, shall be increased by a prorated amount of one and two‑tenths percent (1.2%) 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, 2007, and June 30, 2008."
SECTION 17.18(c) G.S. 120‑4.22A(p) is amended to read:
"(p)	In accordance with subsection (a) of this section, from and after July 1, 2008, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before January 1, 2008, shall be increased by one and two‑tenths percent (1.2%) of the allowance payable on June 1, 2008. Furthermore, from and after July 1, 2008, the retirement allowance to or on account of beneficiaries whose retirement commenced after January 1, 2008, but before June 30, 2008, shall be increased by a prorated amount of one and two‑tenths percent (1.2%) 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, 2008, and June 30, 2008."
SECTION 17.18(d)  G.S. 128‑27(zz) is amended to read:
"(zz)	From and after July 1, 2008, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2007, shall be increased by one and two‑tenths percent (1.2%) of the allowance payable on June 1, 2008, in accordance with subsection (k) of this section. Furthermore, from and after July 1, 2008, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2007, but before June 30, 2008, shall be increased by a prorated amount of one and two‑tenths percent (1.2%) 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, 2007, and June 30, 2008."

PART XVIII. CAPITAL APPROPRIATIONS.

GENERAL FUND CAPITAL APPROPRIATIONS/INTRODUCTION
SECTION 18.1.  The appropriations made by the 2008 General Assembly for capital improvements are for constructing, repairing, or renovating State buildings, utilities, and other capital facilities, for acquiring sites for them where necessary, and acquiring buildings and land for State government purposes.

CAPITAL APPROPRIATIONS/GENERAL FUND
SECTION 18.2.  There is appropriated from the General Fund for the 2008‑2009 fiscal year the following amount for capital improvements:

Capital Improvements – General Fund	2008‑2009

Department of Cultural Resources	
Museum of History Chronology Exhibit Phase I 	$2,600,000
Museum of Art Expansion (supplement)	5,126,700
Mattamuskeet Lodge Renovations	15,022,790

Department of Administration	
North Carolina Freedom Monument – Phase I	$1,000,000

Department of Agriculture	
Study Veterinary Diagnostic Laboratory System	620,000
Agriculture Building Renovation Planning	1,225,000
Motor Fuels/Metrology Labs – Planning	1,000,000
Southeastern NC Agricultural Center Pavilion	3,701,700
Horse Barns at the Hunt Horse Complex	900,000

Department of Commerce	
Wanchese Fire Protection Improvements	110,900
Wanchese Road Repair and Road Construction	94,800
Wanchese Wastewater Treatment System (supplement)	400,000
Wanchese Seafood Industrial Park Green Initiative	250,000

State Ports Authority	
Ports of Wilmington Berth 8 Replacement Phase I	5,000,000
Port of Morehead City Port‑wide Berth Structure Construction	2,500,000

Department of Environment and Natural Resources	
NC Zoo – Polar Bear Exhibit Addition and Renovation	2,700,000
NC Zoo – Children's Nature Zoo	2,700,000
NC Zoo – Africa Pavilion Replacement – Planning	600,000
Water Resources Development Projects	25,736,000
State Highway Patrol	
Training Academy Facilities and Dormitory – Planning	1,790,300

Department of Justice	
Addition to SBI Buildings 17 and 18	1,792,006

Department of Crime Control and Public Safety	
Master Planning Statewide – Phase II of V	300,300
Camp Butner Training Site Buffer – Phase II	126,200
Butner Training Sewer Extension & Latrine Replacement	245,430
Gastonia Armory Rehab, Addition and Alteration	527,100
Siler City Armory Rehab, Addition and Alteration	929,600

UNC System – Board of Governors	
Fire Sprinkler Systems	20,000,000

TOTAL CAPITAL IMPROVEMENTS – GENERAL FUND	$96,998,826

WATER RESOURCES DEVELOPMENT PROJECT FUNDS
SECTION 18.3.(a)  The Department of Environment and Natural Resources shall allocate the funds appropriated in this act for water resources development projects to the following projects whose costs are as indicated:
	Name of Project	2008‑2009
	
(1)	Wilmington Harbor Deepening 	$  1,000,000
(2)	Wilmington Harbor Maintenance	500,000
(3)	Morehead City Harbor Maintenance	‑
(4)	B. Everett Jordan Water Supply Storage	200,000
(5)	Dredging Contingency Fund	4,000,000
(6)	North Carolina Beach and Inlet Management 	250,000
(7)	Neuse River Basin Study	33,000
(8)	Manteo Channel Maintenance	100,000
(9)	Currituck Sound Water Management Study	50,000
(10)	Planning Assistance to Communities	100,000
(11)	Bogue Banks Beach Protection	120,000
(12)	West Onslow Beach (Topsail Beach County)	‑
(13)	Belhaven Harbor Feasibility	15,000
(14)	Princeville Flood Control	‑
(15)	Surf City – N. Topsail Beach Protection 	‑
(16)	N,C. International Terminal	500,000
(17)	AIWW Dredging	3,500,000
(18)	State‑Local Projects	2,000,000
(19)	Aquatic Plant Control, Statewide/Lake Gaston	200,000
(20)	Aquatic Weeds Program Storage Facility	100,000
(21)	Hammocks Beach State 	2,600,000
(22)	Dillsboro Dam Removal	400,000
(23)	Topsail Beach Emergency Nourishment	2,000,000
(24)	Little Fork Creek (Rendezvous State Park)	423,000
(25)	Concord Stream Restoration (Cabarrus Co)	1,020,000
(26)	Wilson Bay Restoration Onslow County	931,000
(27)	Deep Creek Structure (Yadkin) County)	5,444,000
(28)	Soil & Water Cons. – Swan Quarter Dike 	250,000
	
	TOTALS	$25,736,000

SECTION 18.3.(b)  Where the actual costs are different from the estimated costs under subsection (a) of this section, the Department may adjust the allocations among projects as needed. If any projects funded under subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 2008‑2009 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 2008‑2009.
(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 2009‑2010 fiscal year.
SECTION 18.3.(c)  The Department shall make semiannual reports on the use of these funds to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Office of State Budget and Management. Each report shall include all of the following:
(1)	All projects listed in this section.
(2)	The estimated cost of each project.
(3)	The date that work on each project began or is expected to begin.
(4)	The date that work on each project was completed or is expected to be completed.
(5)	The actual cost of each project.
The semiannual reports shall also show those projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.

UNC BOARD OF GOVERNORS – FIRE SPRINKLER SYSTEMS
SECTION 18.4.  The funds allocated to the Board of Governors of The University of North Carolina in Section 18.2 shall be used by the Board of Governors for the installation of fire sprinklers in University residence halls. Such funds shall be allocated among the University's constituent institutions by the President of The University of North Carolina, who shall consider the following factors when allocating those funds:
(1)	The safety and well‑being of the residents of campus housing programs.
(2)	The current level of housing rents charged to students and how that compares to an institution's public peers and other UNC institutions.
(3)	The level of previous authorizations to constituent institutions for the construction or renovation of residence halls funded from the General Fund, or from bonds or certificates of participation supported by the General Fund, since 1996.
(4)	The financial status of each constituent institution's housing system, including debt capacity, debt coverage ratios, credit rankings, required reserves, the planned use of cash balances for other housing system improvements, and the constituent institution's ability to pay for the installation of fire sprinklers in all residence halls.
(5)	The total cost of each proposed project, including the cost of installing fire sprinklers and the cost of other construction, such as asbestos removal and additional water supply needs.

REPAIR AND RENOVATION RESERVE ALLOCATION
SECTION 18.5.  Of the funds in the Reserve for Repairs and Renovations for the 2008‑2009 fiscal year, fifty percent (50%) shall be allocated to the Board of Governors of The University of North Carolina for repairs and renovations pursuant to G.S. 143C‑4‑3, 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 percent (50%) shall be allocated to the Office of State Budget and Management for repairs and renovations pursuant to G.S. 143C‑4‑3.
Notwithstanding G.S. 143C‑4‑3, the Board of Governors or the Office of State Budget and Management may allocate funds for the repair and renovation of facilities not supported from the General Fund if it is determined that sufficient funds are not available from other sources and that conditions warrant General Fund assistance. Any such finding shall be included in the submissions to the Joint Legislative Commission on Governmental Operations on the proposed allocations 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.

special Indebtedness Projects
SECTION 18.6.(a)  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 capital facility costs of the projects described in this subsection. In accordance with G.S. 142‑83, this subsection authorizes the issuance or incurrence of special indebtedness:

	Amount	Project

(1)	$40,400,000	Planning, design, and construction of a new Capital Area Visitors Center and Parking Garage in downtown Raleigh.

(2)	$109,479,000	To the Department of Environment and Natural Resources for construction of the Green Square Complex, including a 172,000 sq. ft. DENR Office Building, 79,400 sq. ft. Nature Research Center, and  approximately 418 parking spaces.

(3)	$45,170,500	To the Department of Correction for planning, design, and construction of a women's health and mental health medical facility at the NC Correctional Institution for Women.

(4)	$12,316,600	Planning, design, and construction of a 252 bed minimum security addition to the Scotland Correctional Institution.

(5)	$18,942,200	Planning design, and construction of a 504 bed medium security addition to the Bertie Correctional Institution.

(6)	$18,942,200		Planning design, and construction of a 504 bed medium security addition to the Lanesboro Correctional Institution.

(7)	$13,007,500		Planning, design, and construction of a 252 bed minimum security addition to the Tabor Correctional Institution.

(8)	$62,000,000	To complete a new 112,000 square foot building for a dental school on the Health Sciences Campus at East Carolina University and 10 satellite clinics in the region.

(9)	$97,000,000	For construction of a new 279,000 square foot Library on Centennial Campus at North Carolina State University.

(10)	$69,000,000	For construction of a new 216,000 square foot building for the School of Dentistry at the University of North Carolina at Chapel Hill.

(11)	$9,799,000	Supplemental funds to complete the Student Activity Center at Winston‑Salem State University.

(12)	$42,667,000	To provide a 120,000 square foot Academic Classroom and Office Building at the University of North Carolina at Greensboro.

(13)	$14,480,000	For design and construction of  a 36,000 square foot general classroom building for the Upper Coastal Plain Higher Education Center in Rocky Mount.
	$553,204,000	Total

Maximum Amount
SECTION 18.6.(b)  Except as otherwise provided by this act, the aggregate amount of special indebtedness issued pursuant to this act shall not exceed five hundred fifty‑three million two hundred four thousand dollars ($553,204,000).  The maximum aggregate special indebtedness issued pursuant to this act shall not exceed the following amounts for each fiscal year:
	Fiscal Year	Aggregate Amount
	2008‑2009	$200,000,000
	2009‑2010	$200,000,000
	2010‑2011	$153,204,000
If less than the aggregate amount of special indebtedness authorized to be issued in a fiscal year is issued in that fiscal year, the balance for that fiscal year may be issued in any subsequent fiscal year.
SECTION 18.6.(c)  Except as otherwise provided in this act, this act is effective when it becomes law.

IRC CODE UPDATE/BONUS DEPRECIATION
SECTION 19.1.(a)  G.S. 105‑228.90(b)(1b) reads as rewritten:
"(1b)	Code. – The Internal Revenue Code as enacted as of May 1, 2008, including any provisions enacted as of that date which become effective either before or after that date."
SECTION 19.1.(b)  Notwithstanding Section 1 of this act, any amendments to the Internal Revenue Code enacted after January 1, 2007, that increase North Carolina taxable income for the 2007 taxable year become effective for taxable years beginning on or after January 1, 2008.
SECTION 19.1.(c)  G.S. 105‑130.5(a) reads as rewritten:
"(a)	The following additions to federal taxable income shall be made in determining State net income:
…
(15)	For taxable years 2002‑2005, the applicable percentage of the amount allowed as a special accelerated depreciation deduction under section 168(k) or section 1400L of the Code, as set out in the table below. In addition, a taxpayer who was allowed a special accelerated depreciation deduction under section 168(k) or section 1400L of the Code in a taxable year beginning before January 1, 2002, and whose North Carolina taxable income in that earlier year reflected that accelerated depreciation deduction must add to federal taxable income in the taxpayer's first taxable year beginning on or after January 1, 2002, an amount equal to the amount of the deduction allowed in the earlier taxable year. These adjustments do not result in a difference in basis of the affected assets for State and federal income tax purposes. The applicable percentage is as follows:

Taxable Year	Percentage
2002	100%
2003	70%
2004	70%
2005	0%

…."
SECTION 19.1.(d)  G.S. 105‑130.5(a) is amended by adding a new subdivision to read:
"(a)	The following additions to federal taxable income shall be made in determining State net income:
…
(15a)	The applicable percentage of the amount allowed as a special accelerated depreciation deduction under section 168(k) of the Code for property placed in service after December 31, 2007, but before January 1, 2009. In addition, a taxpayer who was allowed a special accelerated depreciation deduction in taxable year 2007 for property placed in service during that period, and whose North Carolina taxable income for that year reflected that accelerated depreciation deduction must add to federal taxable income in the taxpayer's 2008 taxable year an amount equal to the applicable percentage of the deduction amount allowed in the 2007 taxable year. These adjustments do not result in a difference in basis of the affected assets for State and federal income tax purposes. The applicable percentage under this subdivision is eighty‑five percent (85%).
…."
SECTION 19.1.(e)  G.S. 105‑134.6(c) reads as rewritten:
"(c)	Additions. – The following additions to taxable income shall be made in calculating North Carolina taxable income, to the extent each item is not included in taxable income:
…
(8)	For taxable years 2002‑2005, the applicable percentage of the amount allowed as a special accelerated depreciation deduction under section 168(k) or section 1400L of the Code, as set out in the table below. In addition, a taxpayer who was allowed a special accelerated depreciation deduction under section 168(k) or section 1400L of the Code in a taxable year beginning before January 1, 2002, and whose North Carolina taxable income in that earlier year reflected that accelerated depreciation deduction must add to federal taxable income in the taxpayer's first taxable year beginning on or after January 1, 2002, an amount equal to the amount of the deduction allowed in the earlier taxable year. These adjustments do not result in a difference in basis of the affected assets for State and federal income tax purposes. The applicable percentage is as follows:
Taxable Year	Percentage
2002	100%
2003	70%
2004	70%
2005	0%
…."
SECTION 19.1.(f)  G.S. 105‑134.6(c) is amended by adding a new subdivision to read:
"(c)	Additions. – The following additions to taxable income shall be made in calculating North Carolina taxable income, to the extent each item is not included in taxable income:
…
(8a)	The applicable percentage of the amount allowed as a special accelerated depreciation deduction under section 168(k) of the Code for property placed in service after December 31, 2007, but before January 1, 2009. In addition, a taxpayer who was allowed a special accelerated depreciation deduction in taxable year 2007 for property placed in service for that period, and whose North Carolina taxable income for that year reflected that accelerated depreciation deduction must add to federal taxable income in the taxpayer's 2008 taxable year an amount equal to the applicable percentage of the deduction amount allowed in the 2007 taxable year. These adjustments do not result in a difference in basis of the affected assets for State and federal income tax purposes. The applicable percentage under this subdivision is eighty‑five percent (85%).
…."
SECTION 19.1.(g)  G.S. 105‑130.5(b) is amended by adding a new subdivision to read:
"(b)	The following deductions from federal taxable income shall be made in determining State net income:
…
(21a)	In each of the taxpayer's first five taxable years beginning on or after January 1, 2009, an amount equal to twenty percent (20%) of the amount added to taxable income in taxable year 2008 as accelerated depreciation under subdivision (a)(15a) of this section.
…."
SECTION 19.1.(h)  G.S. 105‑134.6(b) is amended by adding a new subdivision to read:
"(b)	Deductions. – The following deductions from taxable income shall be made in calculating North Carolina taxable income, to the extent each item is included in taxable income:
…
(17a)	In each of the taxpayer's first five taxable years beginning on or after January 1, 2009, an amount equal to twenty percent (20%) of the amount added to taxable income in taxable year 2008 as accelerated depreciation under subdivision (c)(8a) of this section.
…."
SECTION 19.1.(i)  This section is effective January 1, 2008.

EXTEND PORTS AND RESEARCH AND DEVELOPMENT TAX CREDITS
SECTION 19.2.(a)  G.S. 105‑129.51(b) reads as rewritten:
"(b)	This Article is repealed for taxable years beginning on or after January 1, 2013."
SECTION 19.2.(b)  G.S. 105‑130.41(d) reads as rewritten:
"(d)	Sunset. – This section is repealed effective for taxable years beginning on or after January 1, 2013."
SECTION 19.2.(c )  G.S. 105‑151.22(d) reads as rewritten:
"(d)	Sunset. – This section is repealed effective for taxable years beginning on or after January 1, 2013."
SECTION 19.2.(d)  The section shall take effect immediately.

CREATE SALES TAX HOLIDAY FOR ENERGY STAR PRODUCTS
SECTION 19.3.(a)  G.S. 105‑164.3 is amended to add a new subdivision to read:
"8g.	ENERGY STAR Qualified Product – A product that meets the energy efficient guidelines set by the United States Environmental Protection Agency and the United States Department of Energy that are authorized to carry the ENERGY STAR label."
SECTION 19.3.(b)  G.S. 105‑164.13C is amended by adding a new subparagraph (b) to read and to renumber:
"…
(b)	The taxes imposed by this Article do not apply to the following items of tangible personal property if sold between 12:01 A.M. on the fourth Friday of October and 11:59P.M.of the following Sunday:  Clothes washers, dehumidifiers, dishwashers, refrigerators and freezers, room air conditioners, compact fluorescent light bulbs, and programmable thermostats that are ENERGY STAR Qualified Products with a sales price."
SECTION 19.3.(c)  This section shall take effect immediately and apply to sales made on or after that date.

EXEMPT DISASTER ASSISTANCE DEBIT SALES
SECTION 19.4.(a)  G.S. 105‑164.13 is amended by adding a new subdivision to read:
"(58)	Tangible personal property purchased with a client assistance debit card issued for disaster assistance relief by a State agency or a federal agency or instrumentality."
SECTION 19.4(b) This act shall take effect on July 1, 2008 and apply to sales made on or after that date.

INCREASE CIGARETTE TAX TO RAISE TEACHER PAY TO THE NATIONAL AVERAGE
SECTION 19.5.(a)  G.S. 105‑113.5 is amended as follows:
Part 2. Cigarette Tax.
§ 105‑113.5.  Tax on cigarettes.
A tax is levied on the sale or possession for sale in this State, by a distributor, of all cigarettes at the rate of two and three‑fourths cents (2.75 cents) per individual cigarette.
SECTION 19.5.(b)  This section shall take effect on September 1, 2008.

INCREASE ALCOHOL TAXES TO PROVIDE CRUCIAL MENTAL HEALTH SERVICES
SECTION 19.6.(a)  G.S. 105‑113.80 is amended to read as follows:
"Part 4. Excise Taxes, Distribution of Tax Revenue.
"§ 105‑113.80.  Excise taxes on beer, wine, and liquor.
(a)	Beer. – An excise tax of ninety‑five and seven hundred nineteen thousandths cents (95.719 cents) per gallon is levied on the sale of malt beverages.
(b)	Wine. – An excise tax of twenty‑five cents (25 cents) per liter is levied on the sale of unfortified wine, and an excise tax of twenty‑eight cents (28 cents) per liter is levied on the sale of fortified wine.
(c)	Liquor. – An excise tax of twenty‑nine percent (29%) is levied on liquor sold in ABC stores. Pursuant to G.S. 18B‑804(b), the price of liquor on which this tax is computed is the distiller's price plus (i) the State ABC warehouse freight and bailment charges, and (ii) a markup for local ABC boards."
SECTION 19.6.(b)  This section shall take effect on September 1, 2008.

EXTEND LOW‑INCOME HOUSING TAX CREDIT
SECTION 19.7.  G.S. 105‑129.45 reads as rewritten:
"§ 105‑129.45.  Sunset.
This Article is repealed effective January 1, 2014. The repeal applies to developments to which federal credits are allocated on or after January 1, 2014."

CLARIFY UNIVERSITY‑RELATED PROJECTS ELIGIBILITY FOR SALES TAX REFUNDS
SECTION 19.8.(a)  G.S. 105‑164.14(b) is amended to add a new subsection as follows:
"(5)	Entities not operated for profit, including, but not limited to entities exempt from taxation as disregarded entities of an organization not operated for profit, that procure, design, construct, or otherwise provide facilities to or for use by constituent institutions of the University of North Carolina."
SECTION 19.8.(b)  This act shall take effect immediately and shall have been deemed to be in effect for all sales on or after January 1, 2004.

PART XXIII. MISCELLANEOUS PROVISIONS

EXECUTIVE BUDGET ACT APPLIES
SECTION 20.1.  The provisions of the Executive Budget Act, Chapter 143, Article 1 of the General Statutes, are reenacted and shall remain in full force and effect and are incorporated in this act by reference.

MOST TEXT APPLIES ONLY TO THE 2007‑2009 FISCAL BIENNIUM
SECTION 20.2.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2008‑2009 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2008‑2009 fiscal year.

EFFECT OF HEADINGS
SECTION 20.3.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only.  The headings do not expand, limit, or define the text of this act, except for effective dates referring to a Part.

SEVERABILITY CLAUSE
SECTION 20.4.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE
SECTION 20.5.  Except as otherwise provided, this act becomes effective July 1, 2008.