A BILL TO BE ENTITLED
AN ACT to modify the current operations and capital improvements appropriations Act of 2009 by adjusting appropriations for the 2010‑2011 fiscal year; to conform to changes made in the internal revenue code; to extend and enhance the tax credit for investments in qualified business ventures; to extend the tax credit for small businesses that provide health insurance to their employees; and to provide for a tax credit for small businesses that create jobs.
The General Assembly of North Carolina enacts:

PART I. INTRODUCTION AND TITLE OF ACT

title of act
SECTION 1.1.  This act shall be known as "The Current Operations and Capital Improvements Appropriations Act of 2010."

INTRODUCTION
SECTION 1.2.  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 State Budget Act, or this act, the savings shall revert to the appropriate fund at the end of each fiscal year as provided in G.S. 143C‑1‑2(b).

PART II. CURRENT OPERATIONS AND EXPANSION GENERAL FUND

CURRENT OPERATIONS AND EXPANSION/GENERAL FUND
SECTION 2.1.  Appropriations from the General Fund of the State for the maintenance of the State departments, institutions, and agencies, and for other purposes as enumerated, are adjusted for the fiscal year ending June 30, 2011, according to the schedule that follows.  Amounts set out in brackets are reductions from General Fund appropriations for the 2009‑2010 fiscal year.

Current Operations – General Fund	2010‑2011

EDUCATION

Community Colleges System Office	$      36,581,844

Department of Public Instruction	(289,017,128)

University of North Carolina – Board of Governors
	Appalachian State University	1,596,619
	East Carolina University: Academic Affairs	4,801,587
	Elizabeth City State University	535,182
	Fayetteville State University	1,115,416
	NC A&T State University	2,012,592
	NC Central University	333,852
	NC State University: Academic Affairs	7,926,606
	UNC‑Asheville	532,691
	UNC‑Chapel Hill
		Academic Affairs	4,226,263
		Health Affairs	156,027
		AHEC	109,065
	UNC‑Charlotte	5,585,300
	UNC‑Greensboro	2,993,959
	UNC‑Pembroke	732,505
	UNC‑School of the Arts	410,161
	UNC‑Wilmington	2,621,171
	Western Carolina University 	750,510
	Winston‑Salem State University	798,672
	General Administration	(410,863)
	University Institutional Programs	(132,260,448)
	Related Educational  Programs	13,862,815
	UNC Financial Aid Private Colleges	4,488,129
	NC School of Science & Math	80,851
	UNC Hospitals	(15,000,000)
Total University of North Carolina – Board of Governors	$     (92,001,338)

HEALTH AND HUMAN SERVICES

Department of Health and Human Services
	Central Management and Support	$       (1,894,959)
	Division of Aging and Adult Services	100,000
	Division of Blind Services/Deaf/HH	(707,912)
	Division of Child Development	(29,959,584)
	Office of Education Services	(2,885,539)
	Division of Health Service Regulation	(1,915,531)
	Division of Medical Assistance	(314,978,617)
	Division of Mental Health, Dev. Disabilities and Sub. Abuse	16,985,760
	NC Health Choice	3,135,450
	Division of Public Health	(5,919,724)
	Division of Social Services	(11,126,752)
	Division of Vocation Rehabilitation	(1,805,713)
Total Health and Human Services	$  (350,973,121)

NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	$           826,343

Department of Commerce
	Commerce	18,250,959
	Commerce State‑Aid	10,630,564
	NC Biotechnology Center	4,274,905
	Rural Economic Development Center	3,933,378

Department of Environment and Natural Resources	3,490,981

Department of Labor	(902,555)

JUSTICE AND PUBLIC SAFETY

Department of Correction	$   (43,269,273)

Department of Crime Control and Public Safety	(1,106,592)

Judicial Department	(11,216,251)
Judicial Department – Indigent Defense	(4,056,626)

Department of Justice	(2,979,760)

Department of Juvenile Justice and Delinquency Prevention	(77,804)

GENERAL GOVERNMENT

Department of Administration	$         (734,950)

Department of State Auditor	(473,265)

Office of State Controller	8,375,323

Department of Cultural Resources
	Cultural Resources	(2,137,000)
	Roanoke Island Commission	(71,663)

State Board of Elections	380,559

General Assembly	(2,229,859)

Office of the Governor
	Office of the Governor	(217,832)
	Office of State Budget and Management	(242,610)
	OSBM – Reserve for Special Appropriations	496,661
	Housing Finance Agency	(525,903)

Department of Insurance
	Insurance	(2,213,620)

Office of Lieutenant Governor	(33,539)

Office of Administrative Hearings	(160,963)

Department of Revenue	(2,319,341)

Department of Secretary of State	(415,575)

Department of State Treasurer
	State Treasurer	(380,086)

RESERVES, ADJUSTMENTS, AND DEBT SERVICE

State Retirement System Contributions	$      40,000,000

Judicial Retirement System Contributions	1,000,000

Firemen's and Rescue Squad Workers System Contributions	1,000,000

Job Development Investment Grants (JDIG)	(6,600,000)

Reserve for Modernization of 1040 e‑File Platform	1,504,718

Debt Service
	General Debt Service	(9,799,385)

TOTAL CURRENT OPERATIONS – GENERAL FUND	$   (693,409,804)

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a)  Section 2.2(a) of S.L. 2009‑451 is repealed. The General Fund availability used in adjusting the 2010‑2011 budget is shown below:

				FY 2010‑2011

Unappropriated Balance Remaining from Previous Year	3,702,182
Adjustment from Estimated to Actual FY 2009‑2010 Beginning Unreserved Fund
	Balance	270,080
Beginning Unreserved Fund Balance	3,972,262

Revenues Based on Existing Tax Structure	18,199,339,016

Nontax Revenues	
	Investment Income	57,500,000
	Judicial Fees	239,100,000
	Disproportionate Share	100,000,000
	Insurance	67,000,000
	Other Nontax Revenues	182,700,000
	Highway Trust Fund/Use Tax Reimbursement Transfer	72,800,000
	Highway Fund Transfer	17,600,000
		Subtotal Nontax Revenues	736,700,000

Total General Fund Availability	18,940,011,278

Adjustments to Availability: Senate Bill 897	
	Internal Revenue Code Conformity	(7,700,000)
	Tax Benefits for Investments in Small Business	(3,600,000)
	Tax Benefits for Small Businesses That Provide Health Insurance	(7,200,000)
	Tax Benefits for Putting People Back to Work	(7,200,000)
	Reserve for Pending Finance Legislation	(34,300,000)
	Department of Revenue Settlement Initiative	110,000,000
	Transfer from Disproportionate Share Reserve	35,000,000
	Loss of Estate Tax Revenue	(85,000,000)
	Cap on Transfer to Wildlife Resources Commission	3,000,000
	Divert Funds from Scrap Tire Disposal Account	2,500,000
	Divert Funds from White Goods Fund	1,200,000
	Transfer from Mercury Pollution Prevention Fund	2,250,000
	Transfer from Express Permitting Fund	600,000
	Transfer from Bladen Lakes Special Fund	500,000
	Transfer from Aquariums Fund	2,000,000
	Transfer Funds from ECU Magnetic Resonance Imaging Lease and Equipment
		Fund	2,000,000
	Adjust Transfer from Insurance Regulatory Fund	(2,213,620)
	Adjust Transfer from Treasurer's Office	(380,086)
	
		Subtotal Adjustments to Availability: Senate Bill 897	11,456,294

Revised General Fund Availability	18,951,467,572
Less General Fund Appropriations 	18,875,484,772

Balance Remaining for Savings Reserve Account	75,982,800

SECTION 2.2.(b)  Except for funds transferred in Section 2.3 of this act and notwithstanding G.S. 143C‑4‑2 and G.S. 143C‑4‑3, the State Controller shall reserve the remaining balance specified in Section 2.1 of this act to the Savings Reserve Account.
SECTION 2.2.(c)  Notwithstanding the provisions of G.S. 105‑187.19(b), effective for taxes levied during the 2010‑2011 fiscal year, the Secretary of Revenue shall credit to the General Fund the net tax proceeds that G.S. 105‑187.19(b) directs the Secretary to credit to the Scrap Tire Disposal Account.
SECTION 2.2.(d)  Notwithstanding the provisions of G.S. 105‑187.24, effective for taxes levied during the 2010‑2011 fiscal year, the Secretary of Revenue shall credit to the General Fund the net tax proceeds that G.S. 105‑187.24 directs the Secretary to credit to the White Goods Management Account.
SECTION 2.2.(e)  The Brody School of Medicine (formerly known as the East Carolina University School of Medicine) shall transfer the sum of two million dollars ($2,000,000) from Budget Code 06067, Fund Code 0142, to the Office of State Controller for deposit to Nontax Budget Code 19978 (Intrastate Transfers) for the 2010‑2011 Fiscal Year.
SECTION 2.2.(f)  Section 2.2(g) of S.L. 2009‑451, as amended by Section 2 of S.L. 2009‑575, reads as rewritten:
"SECTION 2.2.(g)  Notwithstanding any other provision of law to the contrary, effective July 1, 2009, the following amounts shall be transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) or the appropriate budget code as determined by the State Controller. These funds shall be used to support the General Fund appropriations as specified in this act for the 2009‑2010 fiscal year.

				FY 2009‑2010	FY 2010‑2011
Budget	Fund
Code	Code	Description	Amount	Amount
67425			Trust Telecommunication	4,500,000	0
23515	2510	DPI IT Projects – Legacy Updates 	3,000,000	0
63501	6801	DPI Trust Special‑Teaching Fellows	5,500,000	0
63501	6112	Computer Loan Revolving Fund	120,677	0
63501	6117	Business and Education Technology Alliance	26,336	0
24600	2553	Grape Growers Council	194,929	0
24600	2821	Credit Union Supervision	760,411	0
24600	2851	Cemetery Commission	259,036	0
54600			Commerce Enterprise	10,501,726	0
64605			Utilities Commission/Public Staff	12,008,720	0
64612			NC Rural Electrification Authority	210,240	0
24308	2815	VRS Geodetic Survey & DOT	5,328	0
24317	2339	ADM Fines & Penalties	230,902	0
Nurse Educators of Tomorrow Scholarship Loan	1,000,000	0"

SECTION 2.2.(g)  Notwithstanding any other provision of law to the contrary, effective July 1, 2010, the following amounts shall be transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) or the appropriate budget code as determined by the State Controller.  These funds shall be used to support the General Fund appropriations as specified in this act for the 2010‑2011 fiscal year.

					FY 2010‑2011
Budget	Fund
Code	Code	Description		Amount

24300	2119	Mercury Pollution Prevention		2,250,000
24300	2221	Forestry – Bladen Lakes		500,000
24300	2356	Express Permitting		600,000
24300	2865	N.C. Aquariums		2,000,000

SECTION 2.2.(h)  Section 2.2(h) of S.L. 2009‑451 reads as rewritten:
"SECTION 2.2.(h) Notwithstanding G.S. 143C‑9‑3, of the funds credited to the Tobacco Trust, the sum of five million dollars ($5,000,000) shall be transferred from the Department of Agriculture and Consumer Services, Budget Code 23703 (Tobacco Trust Fund), to the State Controller to be deposited in Nontax Budget Code 19978 (Intrastate Transfers) to support General Fund appropriations for the 2009‑2010 and 2010‑2011 fiscal years. These funds shall be transferred on or after April 30, 2011."

designate excess funds generated by the Department of revenue settlement initiative to supplement contribution to the state retirement system
SECTION 2.3.(a)  The General Assembly finds that losses to the Teachers' and State Employees' Retirement System are substantial due to the decline in the State and national economies beginning in 2007.  The General Assembly also finds that the Teachers' and State Employees' Retirement System is in need of additional funds to help rebuild the System's financial stability and provide assurance to the State's current and future employees and retirees of a sound retirement benefit. Therefore, it is the General Assembly's intent to address the System's financial needs and to establish a means to increase funding to the System by using certain excess revenue in the State's General Fund.
SECTION 2.3.(b)  In the event that the State's General Fund revenues, including all transfers to the General Fund authorized by law, are at or above those projected by the Governor (or that officer's designee) and by the Fiscal Research Division and are sufficient to meet the level of appropriations authorized by law from the General Fund for the 2010‑2011 fiscal year, any excess accruing from additional tax revenue generated by the Department of Revenue Settlement Initiative to resolve outstanding disputes with businesses that owe taxes to the State shall be transferred to the Reserve for the Teachers' and State Employees' Retirement System.
SECTION 2.3.(c)  Excess revenue realized pursuant to subsection (b) of this section is hereby appropriated for the 2010‑2011 fiscal year up to the amount of one hundred thirty‑five million dollars ($135,000,000) and is to be transferred from the Reserve for Teachers' and State Employees' Retirement System to the Pension Accumulation Fund of the Teachers' and State Employees' Retirement System as provided for in G.S. 135‑8(d).

PART III. CURRENT OPERATIONS/HIGHWAY FUND

CURRENT OPERATIONS/HIGHWAY FUND
SECTION 3.1.  Appropriations from the State Highway Fund for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are adjusted for the fiscal year ending June 30, 2011, according to the following schedule. Amounts set out in brackets are reductions from Highway Fund Appropriations for the 2010‑2011 fiscal year.

				2010‑2011
Department of Transportation
	Administration	$    (1,360,746)

Division of Highways
	Administration	0
	Construction	3,840,718
	Maintenance	(2,078,811)
	Planning and Research	0
	OSHA Program	0

Ferry Operations	11,349,869 

State Aid
	Municipalities	(785,319)
	Public Transportation	0 
	Airports	500,000 
	Railroads	6,325,000 

Governor's Highway Safety Program	0 

Division of Motor Vehicles	200,325 

Transfers to Other State Agencies, and Reserves	34,898,964 

TOTAL		$   52,890,000 

HIGHWAY FUND AVAILABILITY
SECTION 3.2.  Section 3.2 of S.L. 2009‑451 is repealed. The Highway Fund availability used in adjusting the 2010‑2011 fiscal year budget is shown below:

Highway Fund Availability Statement	2010‑2011

Unappropriated Balance from Previous Year	$0
Beginning Fund Balance	$0
Estimated Revenue	$1,792,540,000

Total Highway Fund Availability	$1,792,540,000

Unappropriated Balance	$0

PART IV. HIGHWAY TRUST FUND APPROPRIATIONS

CURRENT OPERATIONS/HIGHWAY TRUST FUND
SECTION 4.1.  Appropriations from the State Highway Trust Fund for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are adjusted for the fiscal year ending June 30, 2011, according to the following schedule. Amounts set out in brackets are reductions from Highway Trust Fund Appropriations for the 2010‑2011 fiscal year.

Current Operations – Highway Trust Fund	2010‑2011

Intrastate System	4,995,162
Urban Loops	2,019,836
Aid to Municipalities	524,109
Secondary Roads	(170,627)
Program Administration	371,520
North Carolina Turnpike Authority	0
Transfer to General Fund	0
Debt Service	0

TOTAL		7,740,000

HIGHWAY TRUST FUND AVAILABILITY STATEMENT
SECTION 4.2.  Section 4.2 of S.L. 2009‑451 is repealed.  The Highway Trust Fund availability used in developing the 2010‑2011 fiscal year budget is shown below:

Total Highway Trust Fund Availability	$928,730,000

PART V. OTHER appropriations

EDUCATION LOTTERY
SECTION 5.1.(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 forty‑one million three hundred forty‑seven thousand five hundred dollars ($441,347,500) for the 2010‑2011 fiscal year.
SECTION 5.1.(b)  Notwithstanding G.S. 18C‑164(f) or any other provision of law, excess lottery receipts realized in the 2009‑2010 fiscal year in the amount of thirty‑one million eight hundred eighty‑one thousand forty‑six dollars ($31,881,046) shall be transferred to the Public School Building Capital Fund and allocated on the basis of average daily membership (ADM) to those local school administrative units that did not qualify for funding in the 2009‑2010 fiscal year pursuant to G.S. 115C‑546.2(d)(2). Notwithstanding G.S. 18C‑164(f) or any other provision of law, the balance of the excess lottery revenues realized in the 2009‑2010 fiscal year shall be used for class size reduction.
SECTION 5.1.(c)  Section 5.2(d) of S.L. 2009‑451, as enacted by Section 3N of S.L. 2009‑575, is repealed.
SECTION 5.1.(d)  Notwithstanding G.S. 18C‑164(b), funds in the amount of sixteen million eight hundred eight thousand seventy‑six dollars ($16,808,076) shall be transferred from the Education Lottery Reserve Fund to the Education Lottery Fund to support appropriations made in this act. These funds shall be allocated for class size reduction.
SECTION 5.1.(e)  Notwithstanding G.S. 18C‑164, the appropriations made from the Education Lottery Fund pursuant to G.S. 18C‑164(d) for the 2010‑2011 fiscal year are as follows:
(1)	Class Size Reduction	$ 226,038,041
(2)	Prekindergarten Program	84,635,709
(3)	Public School Building Capital Fund	130,008,122
(4)	Scholarships for Needy Students	36,807,021
Total		$ 477,488,893
SECTION 5.1.(f)  Funds appropriated in subsection (e) of this section to the Public School Building Capital Fund for the 2010‑2011 fiscal year shall be allocated to counties in accordance with G.S. 115C‑546.2.
Notwithstanding G.S. 18C‑164(f), if the actual net lottery revenues for the 2010‑2011 fiscal year exceed the amounts appropriated in subsection (e) of this section, the excess net revenues shall be allocated on the basis of average daily membership to local school administrative units that did not qualify for funding for the 2010‑2011 fiscal year pursuant to G.S. 115C‑546.2(d)(2). The maximum allocation shall be the amount received by other units pursuant to G.S. 115C‑546.2(d)(2) on the basis of per average daily membership.
SECTION 5.1.(g)  Counties may authorize local school administrative units to use funds received from the Public School Capital Fund pursuant to subsection (f) of this section for one or more of the following purposes only: (i) for school construction projects in accordance with G.S. 115C‑546.2(d), (ii) to retire indebtedness incurred for school construction projects incurred on or after January 1, 2003, in accordance with G.S. 115C‑546.2(d), and (iii) for classroom teachers. A county may authorize the use of these funds for classroom teachers only upon the request of the local board of education. Funds used for classroom teachers shall supplement and not supplant existing local current expense funding for the public schools.
These funds shall not be included in the computation of "average per pupil allocation for average daily membership" or "per pupil local current expense appropriation" under G.S. 115C‑238.29H.
SECTION 5.1.(h)  Subsections (b) and (c) of this section become effective June 30, 2010.

APPROPRIATION OF CASH BALANCES
SECTION 5.3.  Section 5.4 of S.L. 2009‑451 reads as rewritten:
"SECTION 5.4.(a)  State funds, as defined in G.S. 143C‑1‑1(d)(25), are appropriated  as provided in G.S. 143C‑1‑2 for the 2009‑2011 fiscal biennium as follows:
(1)	For all budget codes listed in the Base Budget and Performance Management Information sections of "North Carolina State Budget, Recommended Operating Budget 2009‑2011, Volumes 1 through 6," and in the Budget Support Document, cash balances and receipts are appropriated up to the amounts specified in Volumes 1 through 6, as adjusted by the General Assembly, for the 2009‑2010 fiscal year and the 2010‑2011 fiscal year. Funds may be expended only for the programs, purposes, objects, and line items specified in Volumes 1 through 6, or otherwise authorized by the General Assembly. Expansion budget funds listed in those documents are appropriated only as otherwise provided in this act.
(2)	For all budget codes that are not listed in "North Carolina State Budget, Recommended Operating Budget 2009‑2011, Volumes 1 through 6," or in the Budget Support Document, cash balances and receipts are appropriated for each year of the 2009‑2011 fiscal biennium up to the level of actual expenditures for the 2009‑2010 fiscal year, unless otherwise provided by law. Funds may be expended only for the programs, purposes, objects, and line items authorized for the 2009‑2010 fiscal year.
(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 2009‑2010 fiscal year and the 2010‑2011 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 2009‑2010 fiscal year and the 2010‑2011 fiscal year.
"SECTION 5.4.(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 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 5.4.(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."

OTHER RECEIPTS FROM PENDING GRANT AWARDS
SECTION 5.4.  Section 5.6 of S.L. 2009‑451 reads as rewritten:
"SECTION 5.6. Notwithstanding G.S. 143C‑6‑4, State agencies may, with approval of the Director of the Budget and after consultation with the Joint Legislative Committee on Governmental Operations, spend funds received from grants awarded subsequent to the enactment of this act. The Office of State Budget and Management shall work with the recipient State agencies to budget grant awards according to the annual program needs and within the parameters of the respective granting entities. Depending on the nature of the award, additional State personnel may be employed on a time‑limited basis. The Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations prior to expending any funds received from grant awards. Funds received from such grants are hereby appropriated and shall be incorporated into the authorized budget of the recipient State agency."

PART VI. GENERAL PROVISIONs

EXPENDITURE OF FUNDS IN RESERVES LIMITED
SECTION 6.1.  All funds appropriated by this act into reserves may be expended only for the purposes for which the reserves were established.

BUDGET CODE CONSOLIDATIONS
SECTION 6.2.  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 fund codes. The Office of State Budget and Management shall change the authorized budget to reflect these adjustments.

BUDGET REALIGNMENT
SECTION 6.3.  Notwithstanding G.S. 143C‑6‑4(b), the Office of State Budget and Management, in consultation with the Office of the State Controller and the Fiscal Research Division, may adjust the enacted budget by making transfers among purposes or programs for the sole purpose of correctly aligning authorized positions and associated operating costs with the appropriate purposes or programs as defined in G.S. 143C‑1‑1(d)(23).  The Office of State Budget and Management shall change the certified budget to reflect these adjustments only after reporting the proposed adjustments to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division.  Under no circumstances shall total General Fund expenditures for a State department exceed the amount appropriated to that department from the General Fund for the fiscal year.

BUDGET ADJUSTMENTS AUTHORIZED
SECTION 6.4.(a)  Notwithstanding G.S. 143C‑6‑4(b)(3), the maximum amount expended at the budget code level from funds appropriated in Section 2.1 of S.L. 2009‑451, as amended, shall not exceed by more than three percent (3%) the amount appropriated for that budget code in Section 2.1 of S.L. 2009‑451, as amended.
SECTION 6.4.(b)  This section applies to the 2010‑2011 fiscal year only.

ESTABLISHING OR INCREASING FEES PURSUANT TO THIS ACT
SECTION 6.5.(a)  Notwithstanding G.S. 12‑3.1, an agency is not required to consult with the Joint Legislative Commission on Governmental Operations prior to establishing or increasing a fee as authorized or anticipated in this act.
SECTION 6.5.(b)  Notwithstanding G.S. 150B‑21.1A(a), an agency may adopt an emergency rule in accordance with G.S. 150B‑21.1A to establish or increase a fee as authorized by this act if the adoption of a rule would otherwise be required under Article 2A of Chapter 150B of the General Statutes.

LEGISLATIVE BUDGET PRIORITIES for economic development
SECTION 6.6.  The General Assembly finds North Carolina's citizens and businesses are suffering from the effects of a significant State, national, and international financial crisis and that this financial crisis has resulted in large reductions in revenues available to fund the State's budget for the upcoming year and in large increases in demand for State services.  The General Assembly further finds that, in spite of the reduced revenues, the State must act decisively to create jobs, encourage economic activity to keep our families working, provide job training and higher education opportunities to the citizens of the State, and protect core government services such as health care for the most vulnerable populations and public safety for the citizens of the State; therefore, the General Assembly provides funding for and support of the following initiatives:
(1)	Retention of classroom teachers.
(2)	Tax credits for small businesses.
(3)	Small Business Assistance Fund to make loans available to businesses.
(4)	Preservation of access to health care for vulnerable populations.
(5)	Financial aid to needy college and community college students.
(6)	Full funding for community college enrollment growth to be used to hire additional faculty and student support staff.
(7)	Small Business Centers at community colleges.
(8)	Business Recruitment, Marketing, and Agricultural and Business International Trade funds to create export opportunities and increase investment in North Carolina.
(9)	One North Carolina Small Business matching grants for federal incentives.
(10)	One North Carolina Fund to enhance business recruitment.
(11)	Job Maintenance and Capital Development Fund for employment in Tier 1 counties.
(12)	Energy Research Grants that match federal funds for research in energy and green jobs.
(13)	Full funding for the seven Regional Economic Development Commissions.
(14)	Home Grown Jobs to help rural communities compete for businesses.
(15)	Main Street Solutions grants for downtown improvements that support small businesses.
(16)	Biofuels Center working to develop North Carolina's biofuels industry.
(17)	North Carolina Biotechnology Center developing the State's biotechnology industry.
(18)	Indian Economic Development initiatives to assist Indian communities with job creation.
(19)	Family Farm Opportunity and Innovation grants to stimulate jobs and innovation on small farms.
(20)	Got to Be NC Marketing to promote North Carolina agricultural products.
(21)	Agricultural Development and Farmland Preservation funds to sustain working farms and promote agribusiness.
(22)	Natural Gas and Petroleum Exploration to understand the State's natural gas and petroleum potential.
(23)	Funding restored for mental health programs.
(24)	Tar Heel Works Program providing work‑based training.
(25)	UNCC Energy Production Infrastructure Center (EPIC).
(26)	ECU Dental School Operations.
(27)	NC A&T/UNC‑G Joint School of Nanoscience and Nanoengineering.
(28)	NC A&T College of Engineering.
(29)	Full funding for Clean Water State Revolving Fund.
(30)	Full funding for Drinking Water State Revolving Fund.
(31)	Minority Support Center funds for loans to small businesses with limited access to credit.
(32)	Tourism Marketing funds to promote North Carolina as a tourist destination.
(33)	In‑Source NC creating buyer‑supplier networks among businesses in North Carolina.
(34)	Capital projects.
(35)	Basic Skills Plus providing accelerated job training for people seeking their high school diploma or its equivalent.
(36)	Minority Male Mentoring Program.

AMEND ARRA FUNDS
SECTION 6.7.  Section 6.6C(b) of Session Law 2009‑451 reads as rewritten:
"SECTION 6.6C.(b) Appropriation of ARRA Funds. – Funds received from ARRA grants and receipts not specified in this act are hereby appropriated in the amounts provided in the notification of award from the federal government or any entity acting on behalf of the federal government to administer federal ARRA funds. Within 30 days after notification of the allocation of federal funds, OSBM and affected State agencies shall report to the Joint Legislative Commission on Governmental Operations on ARRA grants received that are not expressly delineated in this act."

INFORMATION TECHNOLOGY OPERATIONS
SECTION 6.8.  Section 6.7 of S.L. 2009‑451 reads as rewritten:
"SECTION 6.7.(a)  Office of Information Technology Services Budget. – Notwithstanding G.S. 147‑33.88, the Office of Information Technology Services shall develop an annual budget for review and approval by the Office of State Budget and Management in accordance with a schedule prescribed by the Director of the Office of State Budget and Management. The approved Office of Information Technology Services budget shall be included in the Governor's budget recommendations to the General Assembly.
The Office of State Budget and Management shall ensure that State agencies have an opportunity to adjust their budgets based on any rate changes proposed by the Office of Information Technology Services.
"SECTION 6.7.(b)  Enterprise Projects. – The State Chief Information Officer shall consult the respective State agency chief information officers to identify specific State agency requirements prior to the initiation of any enterprise project or contract. State agency requirements shall be incorporated into any enterprise agreement signed by the State Chief Information Officer. Enterprise projects shall not exceed the participating State agencies' ability to financially support the contracts.
The State Chief Information Officer shall not enter into any information technology contracts without obtaining written agreements from participating State agencies regarding apportionment of funding. State agencies agreeing to participate in a contract shall:
(1)	Ensure that sufficient funds are budgeted to support their agreed shares of enterprise agreements throughout the life of the contract.
(2)	Transfer the agreed‑upon funds to the Office of Information Technology Services in sufficient time for the Office of Information Technology Services to meet contract requirements.
(3)	Ensure that enterprise project costs are allocated to participating agencies in an equitable manner.
"SECTION 6.7.(c)  Notwithstanding the cash management provisions of G.S. 147‑86.11, the Office of Information Technology Services may procure information technology goods and services for periods of up to a total of three years where the terms of the procurement contract require payment of all, or a portion, of the contract purchase price at the beginning of the agreement. All of the following conditions shall be met before payment for these agreements may be disbursed:
(1)	Any advance payment complies with the Office of Information Technology Services budget.
(2)	The State Controller receives conclusive evidence that the proposed agreement would be more cost‑effective than a multiyear agreement that complies with G.S. 147‑86.11.
(3)	The procurement complies in all other aspects with applicable statutes and rules.
(4)	The proposed agreement contains contract terms that protect the financial interests of the State against contractor nonperformance or insolvency through the creation of escrow accounts for funds, source codes, or both, or by any other reasonable means that have legally binding effect.
The Office of State Budget and Management shall ensure the savings from any authorized agreement shall be included in the Office of Information Technology Services calculation of rates before the Office of State Budget and Management annually approves the proposed rates. The Office of Information Technology Services shall report to the Office of State Budget and Management on any State agency budget impacts resulting from multiyear contracts.
The Office of Information Technology Services shall submit a quarterly written report of any authorizations granted under this subsection to the Joint Legislative Oversight Committee on Information Technology and to the Fiscal Research Division.
"SECTION 6.7.(d)  State agencies developing and implementing information technology projects shall use the State infrastructure to host their projects. The State Chief Information Officer may grant an exception if the State agency can demonstrate any of the following:
(1)	Using an outside contractor would be more cost‑effective for the State.
(2)	The Office of Information Technology Services does not have the technical capabilities required to host the application.
(3)	Valid security requirements preclude the use of State infrastructure, and a contractor can provide a more secure environment.
"SECTION 6.7.(e)  Service level agreements developed with supported State agencies shall include metrics for ITS, as well as the supported agencies. When ITS or an agency fails to meet metrics established by the SLA, a report will be provided to the Office of State Budget and Management and the Fiscal Research Division of the General Assembly within 10 days that details the shortfall and provides a corrective action plan with a time line.
"SECTION 6.7.(f)  The Office of Information Technology Procurement shall assist State agencies in identifying the least expensive source for the purchase of IT goods and services and shall ensure that agencies receive every available discount when purchasing IT goods and services.
"SECTION 6.7.(g)  The State CIO shall ensure that the agency bills from ITS for information technology goods and services are easily understood and fully transparent.
"SECTION 6.7.(h)  If a State agency fails to pay its Information Technology Internal Service Fund bills within 30 days of receipt, the Office of State Budget and Management may transfer funds to cover the cost of the bill from that agency to the IT Internal Service Fund."

COORDINATION OF INFORMATION TECHNOLOGY REQUIREMENTS AND GEOGRAPHICAL INFORMATION SYSTEM EFFORTS
SECTION 6.9.(a)  The State Chief Information Officer (SCIO), through the Enterprise Program Management Office (EPMO), shall adopt measures to avoid the duplication of information technology capabilities and resources across State agencies. When multiple State agencies require the same or a substantially similar information technology capability, the SCIO shall designate one State agency as the lead to coordinate support and to manage that capability for all State agencies requiring the capability, with the SCIO maintaining oversight of the effort. Further, the EPMO shall:
(1)	Review all ongoing and future information technology projects to determine whether the capabilities required for each project, or the specific requirements comprising a component within a project, already exist in a planned, ongoing, or completed information technology project developed by another State agency.
(2)	When State agencies request approval for new projects determine if the information technology project has transferable applicability to current or future capabilities required by another State agency.
(3)	Upon identifying an existing information technology capability needed by a State agency, assist that agency in determining how best to access existing projects.
(4)	Identify all current instances of duplication and work with the affected State agencies to develop and implement a plan to integrate their efforts. These plans shall be reported to the Joint Legislative Oversight Committee on Information Technology and to the Fiscal Research Division by January 1, 2011.
SECTION 6.9.(b)  All State agencies shall coordinate any Geographic Information System (GIS) initiatives through the Center for Geographic Information and Analysis (CGIA) to ensure that they are not duplicating an existing function.  The CGIA shall monitor and approve all new GIS‑related information technology projects and expansion budget requests. By January 1, 2011, the CGIA shall make a written report to the Joint Legislative Oversight Committee on Information Technology and to the Fiscal Research Division on the results of these efforts.

CRIMINAL JUSTICE LAW ENFORCEMENT AUTOMATED DATA SERVICES (CJLEADS)
SECTION 6.10.(a)  The Department of Justice and the Office of the State Controller, in cooperation with the State Chief Information Officer, shall:
(1)	Continue the implementation of the Criminal Justice Data Integration Pilot Program, which is now known as the Criminal Justice Law Enforcement Automated Data Services (CJLEADS), in Wake County;
(2)	Develop a plan to transition CJLEADS to the Department of Justice beginning July 1, 2011, with all the elements of a Type I transfer as defined in G.S. 143A‑6, and
(3)	Provide quarterly reports on the status of the Program and the transition plan to the Joint Legislative Oversight Committee on Information Technology beginning October 1, 2010.
The Office of the State Controller shall not expand CJLEADS beyond Wake County without prior coordination with the Department of Justice.
SECTION 6.10.(b)  The Department of Justice shall administer CJLEADS with the assistance of a Leadership Council consisting of:
(1)	The Attorney General;
(2)	The Director of Administrative Office of the Courts;
(3)	The Secretary of the Department of Correction;
(4)	The Secretary of Crime Control and Public Safety;
(5)	The Secretary of the Department of Juvenile Justice and Delinquency Prevention;
(6)	The Commissioner of Motor Vehicles, Department of Transportation;
(7)	The President of The North Carolina Association of Chiefs of Police;
(8)	The Executive Director of the North Carolina Sheriffs' Association;
(9)	A representative of the Federal Bureau of Investigation who shall be a nonvoting member;
(10)	The State Controller; and
(11)	The State Chief Information Officer.
SECTION 6.10.(c)  The transfer of the hosting of CJLEADS to the Department of Justice shall be completed by July 1, 2012.

ITS NETWORK INTEGRATION
SECTION 6.11.  Section 6.13(c) of S.L. 2009‑451, as amended by Sections 3A(b) and 3A(c) of S.L. 2009‑575, reads as rewritten:
"SECTION 6.13.(c)  Following completion of the feasibility study by the Office of Information and Technology Services and the Office of State Budget and Management, and if the Program Evaluation Division and the Fiscal Research Division can verify that the efficiencies and savings identified in the study are valid, accurate, and substantial enough to justify increased coordination, then the Office of Information Technology Services and MCNC shall develop a plan to identify areas in which it may be feasible to coordinate their operations. The coordination plan shall include at least the following:
(1)	Definition of requirements to achieve statewide integration.
(2)	Detailed information on the allocation of responsibility for each requirement and component.
(3)	An estimate of the associated costs with each requirement or component, including what the costs to each agency would be without coordination.
(4)	Priorities for integration.
(5)	A schedule for implementation.
(6)	Detailed cost information for the development and integration of a single network.
(7)	A governance structure for management and oversight of the network.
(8)	A means for resolution of any issues identified during the feasibility study.
The coordination plan shall be completed by December 1, 2010, and shall be presented to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Oversight Committee on Information Technology."

INFORMATION TECHNOLOGY CONTRACTED PERSONNEL
SECTION 6.12.  Section 6.18 of S.L. 2009‑451 reads as rewritten:
"SECTION 6.18.(a)  Beginning July 1, 2009, and notwithstanding any provision of law to the contrary:
(1)	No contract for information technology personal services, or providing personnel to perform information technology functions, may be established or renewed without the express written approval of the Statewide Information Technology Procurement Office (SITPO). If a State agency is unable to hire an appropriately qualified permanent State employee to perform specialized industry unique information technology skills for any of the reasons set out in sub‑subdivisions a. through c. of this subdivision, then the agency may renew the contract, if necessary, subject to the approval of the SITPO and documentation that sufficient funds are available to renew the contract. The renewed contract term shall be terminated when all of the following are available:  (i) adequate recurring funding, (ii) appropriate classified positions, and (iii) qualified candidates. The reasons for which a contract may be renewed under this subdivision are as follows:
a.	There are no available or approved vacant positions.
b.	There are no applicants or there are only unqualified applicants.
c.	Failure to renew an existing contractor beyond the current contract termination date would result in significant risk, hardship, liability, exposure, loss of investment, or inability to conduct the agency's duties on behalf of the State.
(2)	Before any State agency, department, or institution may renew a contract position for information technology personnel the State agency must report to the SITPO, Office of State Budget and Management (OSBM), to the Office of State Personnel (OSP), to the Office of Information Technology Services (ITS), and to the Fiscal Research Division (FRD) of the Legislative Services Office on the justification for the contract. The report shall explain:
a.	The proposed duration of the contract position. If the contract term is for more than 12 months, why recruitment for an in‑house State employee position is not feasible.
b.	Whether the contract position requires unique skills for which the State has a short‑term need.
c.	Whether the contract position is required by a specific information technology project and if the position will be terminated upon completion of the project.
d.	The specific work products and completion time lines for the contract position.
(3)	Contract positions subject to this subsection shall be reviewed and approved by the Statewide Information Technology Procurement Office and shall be entered in the project portfolio management tool. 
(4)	Once approved, contract positions will be reviewed by the Office of State Personnel to determine what the market rate is for the type of contractor required, as well as to determine the comparable cost for a State employee. Agencies may not exceed the market rate determined by OSP.
(5)	After OSP provides cost data, OSBM must approve funding for the position.
(6)	Whenever a State agency, department, or institution determines that only a contractor can fill a position and the position is required to perform an ongoing function within the agency, the head of the State agency must develop and implement a plan to hire or train a qualified State employee to fill that position within 12 months. Within 60 days of hiring the contractor, this plan shall be forwarded to the Office of State Budget and Management, to the Office of State Personnel, to the Office of Information Technology Services, to the Joint Legislative Oversight Committee on Information Technology, and to the Fiscal Research Division of the Legislative Services Office.
(7)	Any contract position requiring information technology skills is subject to this provision. OSBM may immediately terminate the funding for any information technology position that is filled without following defined procedures.
(8)	All information technology personnel contracts shall be competitive and shall be subject to competition each time they expire. Exceptions must be approved by ITS, OSP, and OSBM and can only be approved once for a particular individual. Approved exceptions must be immediately reported to the Joint Legislative Oversight Committee on Information Technology and to the Fiscal Research Division of the Legislative Services Office.
(9)	Deviations from these requirements shall be approved in advance only by the SITPO.
"SECTION 6.18.(b)  By October 1, 2009, and monthly thereafter, each State agency, department, and institution employing information technology personal services contractors, or personnel to perform information technology functions, shall provide a detailed report on those contracts to the Office of State Budget and Management, to the Office of State Personnel, to the Office of Information Technology Services, to the Joint Legislative Oversight Committee on Information Technology, and to the Fiscal Research Division of the Legislative Services Office. Each State agency's report shall include at least the following:
(1)	For each contracted information technology position:
a.	The title of the position, a brief synopsis of the essential functions of the position, and how long the position has existed.
b.	The name of the individual filling the position and the vendor company, if any, that regularly employees that individual.
c.	The type, start date, and the termination date of the contract.
d.	The length of time that the individual filling the contracted position has been employed as a contractor.
e.	The contracted position salary or hourly rate, the number of hours per year, and the total annualized cost of the contracted position.
f.	The salary and benefits cost for a State employee performing the same function.
g.	The purchase order number for the position.
h.	Whether the position can be converted to a State employee position. This determination shall be made by the SITPO.
i.	When the agency anticipates converting the position to a State employee.
(2)	The total annual cost for information technology contractors and the total annual salary and benefits cost for filling the contract positions with State employees.
(3)	A determination of whether the information technology functions performed by contractors can be performed by State employees, which shall be validated by the Statewide Information Technology Procurement Office.
(4)	All information required by this subsection related to information technology contractors regardless of the contracting source.
(5)	A detailed explanation for any differences between the agency report and the Information Technology Expenditures Report annually published by the Office of the State Controller.
"SECTION 6.18.(c)  This section does not apply to The University of North Carolina and its constituent institutions."

CONTINUING PILOT PROGRAM TO ALLOW PUBLIC‑PRIVATE PARTNERSHIPS TO MEET DEPARTMENT OF REVENUE TECHNOLOGY NEEDS
SECTION 6.13.  Section 6.20 of S.L. 2009‑451 reads as rewritten:
"SECTION 6.20.(a)  To speed the implementation of the Tax Information Management System (TIMS) and the additional components of the Planning and Design Project (PDP) through June 30, 2015, the Secretary of the Department of Revenue may enter into public‑private arrangements where (i) the funding of project under the arrangement comes from revenue generated by the project and (ii) the project is related to the implementation of TIMS and additional components of the PDP. As used in this section, the "additional components of the PDP" are Enterprise Data Warehouse, Management Reporting and Decision Analytics, Customer Relationship Management, Enterprise Case Management, and E‑Services.
Work under a public‑private arrangement may be contracted by requests for proposals, modifications to existing contracts, and purchases using existing contract vehicles.
The Secretary of Revenue shall establish a measurement process to determine the increased revenue attributable to the public‑private arrangements. To accomplish this, the Secretary shall consult subject matter experts outside the Department of Revenue, both within State government and from private industry. The measurement process shall include:
(1)	Calculation of a revenue baseline against which the increased revenue attributable to the project is measured;
(2)	Periodic evaluation to determine if the baseline needs to be modified based on significant measurable changes in the economic environment; and
(3)	Monthly calculation of increased revenue attributable to contracts executed under this program.
Of funds generated from collections above the baseline established by subdivision (1) of this subsection, in both the General and Highway Funds, up to forty‑one million dollars ($41,000,000) may be authorized by the Office of State Budget and Management (i) for the purchases related to the implementation of TIMS and the additional components of the PDP, including payment for services from non‑State entities and (ii) toward internal State costs related to the implementation of TIMS and PDP components. The total of any funds expended during the 2009‑2011 biennium for implementation of TIMS and the additional PDP components shall not exceed the sum of forty‑one million dollars ($41,000,000).
If the Department of Revenue finds that it cannot generate additional benefits totaling forty‑one million dollars ($41,000,000) through June 30, 2015, or that total costs exceed the total available appropriations and earned benefits, then the Department shall do all of the following: (i) immediately notify the Chairs of the House of Representatives and Senate Appropriations Committees and Fiscal Research Division, (ii) identify any obligations to vendors, (iii) identify options for meeting obligations to vendors, and (iv) provide costs associated with each option. The Department shall ensure that this notification is made in sufficient time to allow the General Assembly to properly evaluate the options presented.
"SECTION 6.20.(b)  Notwithstanding G.S. 114‑2.3, the Department of Revenue shall engage the services of private counsel with the pertinent information technology and computer law expertise to review requests for proposals, and to negotiate and review contracts associated with TIMS and the additional components of the Planning and Design Project (PDP) (Enterprise Data Warehouse, Management Reporting and Decision Analytics, Customer Relationship Management, Enterprise Case Management, and E‑Services).
"SECTION 6.20.(c)  There is established within the Department of Revenue the Oversight Committee for reviewing and approving the benefits measurement methodology and calculation process. The Oversight Committee shall review and approve all contracts executed under this section. This shall include (i) details of each public‑private contract, (ii) the benefits from each contract, and (iii) a comprehensive forecast of the benefits of using public‑private agreements to implement TIMS and the additional PDP components, including the measurement process established for the Secretary of Revenue. The Oversight Committee shall approve all of the fund transfers for this project.
The members of the Committee shall include the following:
(1)	The State Budget Director;
(2)	The Secretary of the Department of Revenue;
(3)	The State Chief Information Officer;
(4)	Two persons appointed by the Governor;
(5)	One member of the general public having expertise in information technology appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives; and
(6)	One member of the general public having expertise in economic and revenue forecasting appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate.
The State Budget Director shall serve as chair of the Committee. The Committee shall set its meeting schedule and adopt its rules of operation by majority vote. A majority of the members constitutes a quorum. Vacancies shall be filled by the appointing authority. Administrative support staff shall be provided by the Department of Revenue. Members of the Committee shall receive reimbursements for subsistence and travel expenses as provided by Chapter 138 of the General Statutes. The Committee shall terminate on June 30, 2015.
"SECTION 6.20.(d)  Beginning October 1, 2009, and quarterly thereafter, the Department of Revenue shall submit reports to the Chairs of the House of Representatives and Senate Committees on Appropriation, to the Joint Legislative Oversight Committee on Information Technology, and to the Fiscal Research Division of the Legislative Services Office. The report shall include (i) details of each public‑private contract, (ii) the benefits from each contract, (iii) a comprehensive forecast of the benefits of using public‑private agreements to implement TIMS and the additional PDP components, including cost savings and the acceleration of the project timeline, (iv) and any issues associated with the operation of the public‑private partnership. Within 60 days of implementing the public‑private partnership, the Department of Revenue shall provide to the Chairs of the House of Representatives and Senate Appropriations Committees, and Fiscal Research Division, a schedule for vendor payments that identifies sources and amounts of funding anticipated as a result of the project's implementation.
"SECTION 6.20.(e)  In addition to the oversight provided by the Oversight Committee established in subsection (c) of this section, the TIMS project shall be subject to existing Information Technology project oversight legislation, including, but not limited to, G.S. 147‑33.72C and G.S. 147‑33.72E."

FUNDING FOR DATA INTEGRATION ENTERPRISE LICENSING AGREEMENTS
SECTION 6.14.(a)  If the cost of data integration enterprise licensing agreements for the 2010‑2011 fiscal year is in excess of two million dollars ($2,000,000), the Office of Information Technology Services shall recover the excess cost through cost allocation to participating agencies.
SECTION 6.14.(b)  The State Chief Information Officer shall develop a plan for the equitable distribution of all costs for executive agency data integration enterprise licensing agreements to the participating agencies.  By October 1, 2010, the State Chief Information Officer shall present this plan to the Joint Legislative Oversight Committee on Information Technology and shall provide a copy to Fiscal Research Division.
SECTION 6.14.(c)  Beginning with the 2011‑2012 fiscal year, all costs for executive agency data integration enterprise licensing agreements shall be allocated to the participating agencies.

NETWORK SECURITY ASSESSMENTS
SECTION 6.15.(a)  G.S. 147‑33.111 reads as rewritten:
"§ 147‑33.111.  State CIO approval of security standards and security assessments.
(a)	Notwithstanding G.S. 143‑48.3 or any other provision of law, and except as otherwise provided by this section, all information technology security purchased using State funds, or for use by a State agency or in a State facility, shall be subject to approval by the State Chief Information Officer in accordance with security standards adopted under this Article.
(a1)	The State Chief Information Officer shall conduct assessments of network vulnerability, including network penetration or any similar procedure. The State Chief Information Officer may contract with another party or parties to perform the assessments. Detailed reports of the security issues identified shall be kept confidential as provided in G.S. 132‑6.1(c).
(b)	If the legislative branch, the judicial branch, The University of North Carolina and its constituent institutions, local school administrative units as defined by G.S. 115C‑5, or the North Carolina Community Colleges System develop their own security standards, taking into consideration the mission and functions of that entity, that are comparable to or exceed those set by the State Chief Information Officer under this section, then these entities may elect to be governed by their own respective security standards, and approval of the State Chief Information Officer shall not be required before the purchase of information technology security. The State Chief Information Officer shall consult with the legislative branch, the judicial branch, The University of North Carolina and its constituent institutions, local school administrative units, and the North Carolina Community Colleges System in reviewing the security standards adopted by those entities.
(c)	Before a State agency may enter into any contract with another party for an assessment of network vulnerability, the State agency shall notify the State Chief Information Officer and obtain approval of the request. If the State agency enters into a contract with another party for assessment and testing, after approval of the State Chief Information Officer, the State agency shall issue public reports on the general results of the reviews. The contractor shall provide the State agency with detailed reports of the security issues identified that shall not be disclosed as provided in G.S. 132‑6.1(c). The State agency shall provide the State Chief Information Officer with copies of the detailed reports that shall not be disclosed as provided in G.S. 132‑6.1(c).
(d)	Nothing in this section shall be construed to preclude the Office of the State Auditor from assessing the security practices of State information technology systems as part of that Office's duties and responsibilities."
SECTION 6.15.(b)  G.S. 147‑64.6(c)(18) is repealed.

enterprise Electronic Forms and digital signatures
SECTION 6.17.(a)  Under the direction of the State Chief Information Officer (SCIO), the State shall plan, develop, and implement a coordinated enterprise electronic forms and digital signatures capability. In developing this capability, the SCIO shall complete an inventory of paper and electronic forms currently in use by executive branch agencies within the State, determine the cost of converting forms to an electronic format, determine priorities for converting forms, and establish milestones for completing this conversion.
The SCIO's effort shall include integrating executive branch agencies already in the process of developing electronic forms and digital signatures projects. Before beginning this effort, the SCIO shall determine specific agency requirements and incorporate their requirements into its planning efforts.
SECTION 6.17.(b)  Beginning October 1, 2010, the SCIO shall present quarterly reports on the status of the project to the Joint Legislative Oversight Committee on Information Technology.

address needs for broadband for education and economic development/CREATE JOINT BROADBAND TASK FORCE
SECTION 6.18.(a)  There is created the Joint Broadband Task Force (Task Force). The purpose of the Task Force is to bring together public and private Internet access providers, legislators, and others to:
(1)	Examine issues related to last mile broadband deployments in the State and to improving the rate at which the general public accesses high‑speed broadband.
(2)	Consider incentives and other funding mechanisms to advance last mile deployments.
(3)	Review the best and most cost‑effective ways to address the needs of communities and households that lack broadband access. 
(4)	Consider any other matters relating to last mile broadband deployment in this State.
SECTION 6.18.(b)  The Task Force shall consist of 21 voting members appointed as follows:
(1)	Ten members appointed by the Speaker of the House of Representatives, including:
a.	Five members of the House of Representatives.
b.	One representative of the North Carolina League of Municipalities.
c.	One representative of the North Carolina Association of County Commissioners.
d.	One representative of a large telephone company that provides high‑speed Internet service to 200,000 or more access lines.
e.	One representative of a wireless high‑speed Internet access provider.
f.	One member of the general public.
(2)	Ten members appointed by the President Pro Tempore of the Senate, including:
a.	Five members of the Senate.
b.	One representative of the North Carolina League of Municipalities.
c.	One representative of the North Carolina Association of County Commissioners.
d.	One representative of a small telephone company that provides high‑speed Internet service to less than 200,000 access lines.
e.	One representative of a cable television company that provides high‑speed Internet access.
f.	One member of the general public.
(3)	One member elected by a vote of the other members of the Task Force from nominees recommended by municipalities providing high‑speed Internet access within the State.
SECTION 6.18.(c)  The State Chief Information Officer, a member of the Utilities Commission, the Secretary of the Department of Transportation (or the Secretary's designee), and a representative of the e‑NC Authority shall serve as nonvoting ex officio members of the Task Force.
SECTION 6.18.(d)  The Speaker of the House of Representatives and the President Pro Tempore of the Senate each shall appoint a cochair for the Task Force. The Task Force may contract for consultant services as provided by G.S. 120‑32.02. Upon approval of the Legislative Services Commission, the Legislative Services Officer shall assign professional and clerical staff to assist in the work of the Task Force. Clerical staff shall be furnished through the offices of the House of Representatives' and the Senate's Directors of Legislative Assistants. The Task Force may meet in the Legislative Building or the Legislative Office Building upon the approval of the Legislative Services Commission. The appointing authority shall fill vacancies. The Task Force, while in the discharge of its official duties, may exercise all the powers provided under the provisions of G.S. 120‑19 through G.S. 120‑19.4, including the power to request all officers, agents, agencies, and departments of the State to provide any information, data, or documents within their possession, ascertainable from their records, or otherwise available to them and the power to subpoena witnesses.  Members of the Task Force shall receive per diem, subsistence, and travel allowances as follows:
(1)	Members of the General Assembly, at the rate established in G.S. 120‑3.1.
(2)	Members who are officials or employees of the State or of local government agencies, at the rate established in G.S. 138‑6.
(3)	All other members, at the rate established in G.S. 138‑5.
SECTION 6.18.(e)  Beginning December 1, 2010, the Task Force shall provide quarterly reports to the Joint Legislative Oversight Committee on Information Technology and shall terminate upon filing its final report.

Smart Cards for efficiency, enhanced services, and reduced fraud
SECTION 6.19.  E‑procurement receipts, in excess of required vendor payments, up to the sum of one million dollars ($1,000,000) for the 2010‑2011 fiscal year may be used to develop integrated circuit cards, or "smart cards," that have the capability to support financial and health services transactions, particularly validation of the cardholder through the use of biometrics.  Development of any such systems shall be coordinated by the State Chief Information Officer with other State agencies (including the Department of Health and Human Services) that have programs for which the use of the cards are appropriate. Beginning October 1, 2010, the State Chief Information Officer shall submit quarterly progress reports to the Joint Legislative Oversight Committee on Information Technology on the implementation of this section.

PART VII. PUBLIC SCHOOLS

FUNDS FOR CHILDREN WITH DISABILITIES
SECTION 7.1.  The State Board of Education shall allocate additional funds for children with disabilities on the basis of three thousand five hundred ninety‑eight dollars and fifty‑five cents ($3,598.55) per child. 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 2010‑2011 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 7.2.  The State Board of Education shall allocate additional funds for academically or intellectually gifted children on the basis of one thousand one hundred ninety‑two dollars and ninety cents ($1,192.90) per child. A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2010‑2011 allocated average daily membership, regardless of the number of children identified as academically or intellectually gifted in the unit. 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.

STATE FISCAL STABILIZATION FUND APPROPRIATION
SECTION 7.3.  In order to ensure compliance with the requirements of Title XIV of the American Recovery and Reinvestment Act of 2009 and notwithstanding any other provision of law, the Office of State Budget and Management shall adjust the State Fiscal Stabilization Fund appropriation amounts, including any associated budget reductions, between the State Public School Fund and The University of North Carolina budget to align with the requirements of the North Carolina State Fiscal Stabilization Fund application as amended for 2010‑2011. If associated budget reductions are required within the State Public School Fund, the Office of State Budget and Management shall first adjust the Classroom Materials/Instructional Supplies/Equipment allotment prior to adjusting any other allotments within the State Public School Fund.

MORE AT FOUR PROGRAM
SECTION 7.5.(a)  The Department of Public Instruction shall continue the implementation of the More at Four prekindergarten program for four‑year‑olds who are at risk for school failure in all counties. The State prekindergarten 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 for school failure. Prekindergarten classrooms 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 Early Learning within the Department of Public Instruction. All such classrooms shall be subject to the supervision of the Office of Early Learning and shall be operated in accordance with standards adopted by the State Board of Education.
SECTION 7.5.(b)  The Office of Early Learning 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; and
(8)	Monitoring of sites to demonstrate adherence to State programs standards.
SECTION 7.5.(c)  The State Board of Education shall submit an annual report no later than March 15 of each year to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Education Oversight Committee, the Senate Appropriations Committee on Education, the House of Representatives Appropriations Subcommittee on Education, the Office of State Budget and Management, and the Fiscal Research Division. The report shall include the following:
(1)	The number of children participating in State prekindergarten.
(2)	The number of children participating in State prekindergarten who have never been served in other early education programs, such as child care, public or private preschool, Head Start, Early Head Start, or early intervention programs.
(3)	The expected State prekindergarten expenditures for the programs and the source of the local contributions.
(4)	The results of an annual evaluation of the program.
SECTION 7.5.(d)  The Office of Early Learning 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 7.5.(e)  The More at Four program funding shall not supplant any funding for classrooms serving four‑year‑olds as of the 2005‑2006 fiscal year. Support of existing four‑year‑old classrooms with More at Four program funding shall be permitted when current funding is eliminated, reduced, or redirected as required to meet other specified federal or State mandates.
SECTION 7.5.(f)  The Office of Early Learning shall develop a new More at Four funding model to be implemented in the 2010‑2011 fiscal year. The per‑child funding rates shall be based on participating provider cost structures and shall require a contribution of local resources to support the full cost of providing high quality prekindergarten. The Office of Early Learning shall implement an administrative cap on More at Four program funding and shall establish parameters for allowable administrative costs.
SECTION 7.5.(g)  The Office of Early Learning shall contract with an independent research organization not affiliated with the Department of Health and Human Services, the Department of Public Instruction, the Office of the Governor, or any entity currently funded by or affiliated with the Department of Health and Human Services, the Department of Public Instruction, or the Office of the Governor to produce an annual report to include longitudinal review of the More at Four program and academic, behavioral, and other child‑specific outcomes. The review shall include a quasi‑experimental research design of a representative sample of children who complete the More at Four program every other year and shall report on their sustained progress until the end of grade 6. The review shall also study a representative sample of children who do not enter the More at Four program but who are of the same grade level and demographic as those who complete the program, and their sustained progress shall also be reviewed until the end of grade 6. The review shall be presented to the Joint Legislative Oversight Committee on Education by January 31 of every year.
SECTION 7.5.(h)  To consolidate all of the regulatory functions regarding the monitoring of early care and education providers in certain private settings, it is the intent of the General Assembly that the Department of Health and Human Services and the Department of Public Instruction authorize Division of Child Development staff to assume the regulatory functions of the More at Four program in private classroom settings. The Department of Public Instruction shall provide Division of Child Development staff with the training necessary to monitor compliance with the More at Four program. The Division of Child Development shall continue its current licensing functions for those classrooms voluntarily licensed in public settings.

LEADERSHIP ACADEMY
SECTION 7.6.  Of the funds appropriated in this act to the Department of Public Instruction for the 2010‑2011 fiscal year, up to two hundred thousand dollars ($200,000) may be used to support a Leadership Academy that provides professional development to principals and assistant principals to address critical areas such as student achievement and teacher recruitment and retention.  The Leadership Academy is encouraged to utilize webinars and other technologies to reduce travel expenses and to reach additional participants.

DEPARTMENT OF PUBLIC INSTRUCTION
SECTION 7.7.(a)  The Department of Public Instruction is not required to eliminate receipt‑supported positions for the 2010‑2011 fiscal year.
SECTION 7.7.(b)  The Department of Public Instruction shall review expenditures of federal funds for personnel and contracts at the State level. Unless the expenditure is a condition of receiving the funds, the Department shall reallocate the funds to local school administrative units whenever possible.
The Department shall report on the reallocation of these funds to local school administrative units, to the Office of the Governor, the chairs of the House of Representatives Committee on Appropriations and the House of Representatives Appropriations Subcommittee on Education, the chairs of the Senate Committee on Appropriations/Base Budget and the Senate Appropriations Committee on Education/Higher Education, and the Office of State Budget and Management no later than January 15, 2011.

CAREER AND COLLEGE – READY, SET, GO!
SECTION 7.8.(a)  The State Board of Education shall work with all member institutions of the Education Cabinet and the Joint Governing Boards to focus funding and program priorities to ensure that all North Carolina students graduate prepared to successfully pursue a career or further education. Each Education Cabinet institution shall prioritize the Governor's Ready, Set, Go! initiative and ensure to the extent practicable that all students PK‑20:
(1)	Are prepared to be successful in school and can successfully progress through PK‑20 education. This includes, but is not limited to:
a.	Establishment of the Governor's Child Advocacy Council to increase ways for all children to come to school healthy and ready to learn;
b.	Investment in early child development programs like Smart Start and More at Four;
c.	Investment in smaller class sizes in K‑3;
d.	Implementation of student diagnostics in grades K‑3 and 5 to ensure that all students at a minimum possess grade‑level reading, writing, and math skills;
e.	Implementation of student diagnostics for career and college readiness in grades 8 and 11 so students graduate prepared for work, college, or technical training; and
f.	Implementation of the Student Learning Conditions Survey for grades 7, 9, and 11 that is aligned with the Teacher Working Conditions Survey.
(2)	Receive clear standards and high expectations, and benefit from the best teachers and principals that can most effectively help students reach those standards. This includes, but is not limited to:
a.	Adoption of the State‑led National Common Standards, including Career and College Ready Skills and assessments that prepare students for the global economy;
b.	Evaluation of Teacher Preparation programs to identify best practices and programs that produce effective teachers;
c.	Increased access to virtual learning opportunities for students and teachers like those provided through the NC Virtual Public School;
d.	Increased access to Science, Technology, Engineering and Mathematics (STEM) opportunities;
e.	Development of leadership academies that recruit and prepare effective principals;
f.	Development of a PK‑20 data system to provide comprehensive information on students;
g.	Reduction and eventual elimination of low‑performing status in North Carolina schools; and
h.	Job‑imbedded professional development for teachers and principals.
(3)	Fully understand and complete the prerequisites for the career, certification, or degree of choice that promotes workforce success. This includes, but is not limited to:
a.	Development of academic boot camps for high school students who need additional support in reading, composition, and math;
b.	Consolidation of high school transition courses to provide high school students with more college‑level or career and technical courses;
c.	Increased access to virtual college‑level and specific career and technical courses for high school students;
d.	Alignment between high school and college curricula so that all students are prepared for higher education work; and
e.	Implementation of NCSuccess, a program designed to increase the number of certificates and associate or bachelor's degrees in higher education.
SECTION 7.8.(b)  The Education Cabinet shall report by January 15, 2011, to the Office of the Governor, the Joint Governing Boards, and the Joint Education Oversight Committee on its progress toward reaching the Governor's goal that every North Carolina student will graduate ready to be successful in a career, a 2‑ or 4‑year college, or technical training.

SCHOOL CONNECTIVITY INITIATIVE
SECTION 7.9.(a)  Section 7.12.(a) of S.L. 2009‑451, as rewritten by Section 3E of S.L. 2009‑575, is repealed.
SECTION 7.9.(b)  Up to three hundred fifty thousand dollars ($350,000) of the funds for the School Connectivity Initiative may be used for this and subsequent fiscal years by the Office of the Governor for education innovation and the education E-learning portal. These funds may be used to provide services to coordinate e-learning activities across all education agencies and to support the operating of the E-learning portal.

SCHOOL CALENDAR PILOT PROGRAM
SECTION 7.10.  Section 7.40 of S.L. 2009‑451 reads as rewritten:
"SECTION 7.40. The State Board of Education shall establish a school calendar pilot program in the Wilkes County Schools. The purpose of the pilot program is to determine whether and to what extent a local school administrative unit can save money during this extreme fiscal crisis by consolidating the school calendar.
Notwithstanding G.S. 115C‑84.2(a)(1), the school calendar for the 2009‑2010 calendar year years for the Wilkes County Schools shall include a minimum of 180 days or 1,000 hours of instruction covering at least nine calendar months. Notwithstanding G.S. 115C‑84.2(d), the opening date for students shall not be before August 24.
If the Wilkes County Board of Education adds instructional hours to previously scheduled days under this section, the local school administrative unit is deemed to have a minimum of 180 days of instruction and teachers employed for a 10‑month term are deemed to have been employed for the days being made up and shall be compensated as if they had worked the days being made up.
The State Board of Education shall report to the Joint Legislative Education Oversight Committee by October 15, 2010, on the administration of the pilot program, cost‑savings realized by it, and its impact on student achievement."

NATIONAL BOARD FOR PROFESSIONAL TEACHING STANDARDS (NBPTS) FUNDS
SECTION 7.11.(a)  G.S. 115C‑296.2(d1) reads as rewritten:
"(d1)	Repayment of the Application Fee. – A teacher shall repay the application fee to the State Education Assistance Authority within three years. The commencement of cash repayment shall begin 12 months following the disbursement of the loan funds. The State Education Assistance Authority may forgive the loan upon the death of the teacher or upon an injury deemed to leave the teacher totally and permanently disabled.
All funds appropriated to, or otherwise received by, the Authority to provide loans to teachers pursuant to this section, all funds received as repayment of loans, and all interest earned on these funds shall be placed in a trust fund. This fund shall be used only for loans made pursuant to this section and administrative costs of the Authority."
SECTION 7.11.(b)  The State Board of Education shall transfer funds in the amount of three million two hundred seventy‑four thousand five hundred dollars ($3,274,500) from the State Public School Fund to the State Education Assistance Authority for the 2010‑2011 fiscal year for NBPTS loans.  It is the intent of the General Assembly that these funds are included in the certified budget for the State Education Assistance Authority for the 2011‑2012 fiscal year and subsequent fiscal years.
SECTION 7.11.(c)  The Joint Legislative Education Oversight Committee is directed to recommend a plan for implementing a National Board Certification Program for Principals in conjunction with the pilot program being developed by the National Board for Professional Teaching Standards. The Committee shall report its recommendation to the 2011 General Assembly by March 1, 2011.

DRIVER EDUCATION
SECTION 7.12.  The Highway Safety Research Center Institute of the University of North Carolina at Chapel Hill shall work in collaboration with the Department of Public Instruction and the Governor's Highway Safety Commission to create a standard curriculum to be used for the Driver Education Program in the Department of Public Instruction. The curriculum shall be ready for use in the school year beginning in the fall of 2011 and shall be used for all driver education programs funded with State funds.

PROTECTION OF THE CLASSROOM WHILE MAXIMIZING FLEXIBILITY
SECTION 7.13.  Section 7.8 of S.L. 2009‑451 reads as rewritten:
"SECTION 7.8.(a)  The State Board of Education is authorized to adopt emergency rules in accordance with G.S. 150B‑21.1A to grant maximum flexibility to local school administrative units regarding the expenditure of State funds. These rules shall not be subject to the limitations on transfers of funds between funding allotment categories set out in G.S. 115C‑105.25. These rules:
(1)	Shall authorize the transfer of textbook funds to other allotments to manage funding cuts; and
(2)	Shall not permit the transfer of funds from school‑based positions to the central office.
"SECTION 7.8.(b)  For the 2010‑2011 fiscal year, local school administrative units shall reduce spending whenever and wherever such budget reductions are appropriate to protect direct classroom services. Local school administrative units shall implement administrative and other operating efficiencies prior to the dismissal of classroom‑based personnel. Local school administrative units shall maximize federal funds received  including American Recovery and Reinvestment Act of 2009 (ARRA), P.L. 111‑5; Keep Our Educators Working Act or any other federal act that provides funding that can be expended on positions; Individuals with Disabilities Act (IDEA); Title I; and Title II funds. Local school administrative units are encouraged to designate all Title I‑eligible schools and must maximize attrition prior to the dismissal of classroom‑based personnel. Notwithstanding G.S. 115C‑301 or any other law, local school administrative units shall have the maximum flexibility to use allotted teacher positions to maximize student achievement in grades 4‑12. Allocation of teachers and class size requirements in grades K‑3 shall remain unchanged.
"SECTION 7.8.(c)  Within 14 days of the date this act becomes law, the State Board of Education shall notify each local school administrative unit and charter school of the amount the unit must reduce from the State General Fund appropriations. The State Board shall determine the amount of the reduction for each unit on the basis of average daily membership.
"SECTION 7.8.(d)  Each unit shall report to the State Board of Education, the Office of State Budget and Management, and the Department of Public Instruction on the flexibility budget reductions it has identified for the unit, including an explanation of how administrative efficiencies, federal funds, and attrition have been maximized prior to the dismissal of classroom‑based personnel, within 30 days of the date this act becomes law.
"SECTION 7.8.(e)  For the 2010‑2011 fiscal year, local school administrative units shall make every effort to reduce spending from Career Technical Education – State: Program Support Funds before making any reductions to Career Technical Education – State: Months of Employment funds."

PROBATIONARY TEACHERS
SECTION 7.14.(a)  G.S. 115C‑325(c)(5) reads as rewritten:
"(5)	Consecutive Years of Service. – If a probationary teacher in a full‑time permanent position does not work for at least 120 workdays in a school year because the teacher is on sick leave, disability leave, or both, that school year shall not be deemed to constitute (i) a consecutive year of service for the teacher or (ii) a break in the continuity in consecutive years of service for the teacher.
If a probationary teacher in a full‑time permanent position resigns or is not renewed because of a reduction in force and is subsequently rehired by the same school system within three years, there shall be deemed to be no break in the continuity in consecutive years of service for such teacher up to a maximum of three consecutive years towards career status. If, at the time the teacher resigns or is not renewed because of a reduction in force, the teacher had been employed by a school system for four consecutive years pursuant to G.S. 115C‑325(c)(1), or one year pursuant to G.S. 115C‑325(c)(2), and the board subsequently rehires such teacher within three years, the board may grant career status immediately upon reemploying the teacher, or vote on the teacher's career status pursuant to G.S. 115C‑325(c)(1) or (c)(2) after one additional year of employment."
SECTION 7.14.(b)  This act is effective when it becomes law and applies to probationary teacher employed by a local school administrative unit in a full‑time permanent position for the 2010‑2011 school year.

Joint Legislative Study Committee on the Consolidation of Early Childhood Education and Care 
SECTION 7.16.(a)  Committee Established. – There is created the Joint Legislative Study Committee on the Consolidation of Early Childhood Education and Care. The Committee shall consist of 18 members to be appointed as follows:
(1)	Five members of the House of Representatives appointed by the Speaker of the House of Representatives.
(2)	Five members of the Senate appointed by the President Pro Tempore of the Senate.
(3)	Seven ex officio nonvoting members as follows:
a.	The Secretary of the Department of Health and Human Services.
b.	The Chairman of the State Board of Education.
c.	The President of the North Carolina Partnership for Children, Inc.
d.	The Executive Director of the Office of Early Learning at the Department of Public Instruction.
e.	The Director of the Head Start State Collaboration Office at the Office of Early Learning at the Department of Public Instruction.
f.	The President of the Child Care Services Association.
g.	The Executive Director of the North Carolina Licensed Child Care Association.
(4)	A developmental pediatrician appointed by the Governor as a nonvoting member.
The Speaker of the House of Representatives shall designate one representative as cochair, and the President Pro Tempore of the Senate shall designate one senator as cochair. Vacancies on the Committee shall be filled by the same appointing authority making the initial appointment.
The Committee, while in the discharge of its official duties, may exercise all powers provided for under G.S. 120‑19 and G.S. 120‑19.1 through G.S. 120‑19.4. The Committee may meet at any time upon the joint call of the cochairs. The Committee may meet in the Legislative Building or the Legislative Office Building. The Committee may contract for professional, clerical, or consultant services as provided by G.S. 120‑32.02.
The Legislative Services Commission, through the Legislative Services Officer, shall assign professional staff to assist the Committee in its work. The House of Representatives and the Senate's Directors of Legislative Assistants shall assign clerical staff to the Committee, and the expenses relating to the clerical employees shall be borne by the Committee.
SECTION 7.16.(b)  Duties. – The Committee shall continue the work of the Task Force on the Consolidation of Early Childhood Education and Care created under S.L. 2009‑451 by continuing to work toward the development of an integrated system of early childhood education and care. To that end, the Committee may consult with and receive reports from the appropriate State departments, agencies, and board representatives on issues related to early childhood education and care and consider any other issues the Committee deems relevant.
The Committee shall closely coordinate its activities with the Governor's State Advisory Council on Early Childhood Education and Care.
SECTION 7.16.(c)  Report. – The Committee shall make a final report of its findings and recommendations to the 2011 Regular Session of the General Assembly. The Committee shall terminate on December 31, 2010.

uniform budget format
SECTION 7.17.  G.S. 115C‑426(c) reads as rewritten:
"(c)	The uniform budget format shall require the following funds:
(1)	The State Public School Fund.
(2)	The local current expense fund.
(3)	The capital outlay fund.
In addition, other funds may be used to account for reimbursements, including indirect costs, fees for actual costs, tuition, sales tax revenues distributed using the ad valorem method pursuant to G.S. 105‑472(b)(2), sales tax refunds, gifts and grants restricted as to use, trust funds, federal appropriations made directly to local school administrative units, funds received for prekindergarten programs, and special programs. Each local  school administrative unit shall maintain those funds shown in the uniform budget format that are applicable to its operations."

legislative Commission on diversity in the public schools
SECTION 7.18.(a)  There is created the Legislative Commission on Diversity in the Public Schools.
SECTION 7.18.(b)  The Commission shall consist of 15 members as follows:
(1)	Five members of the House of Representatives appointed by the Speaker of the House of Representatives.
(2)	Five members of the Senate appointed by the President Pro Tempore of the Senate.
(3)	Five public members appointed by the Governor.
SECTION 7.18.(c)  The Speaker of the House of Representatives shall designate one representative as cochair, and the President Pro Tempore of the Senate shall designate one senator as cochair. Vacancies on the Commission shall be filled by the same appointing authority that made the initial appointment.  A quorum of the Commission shall be a majority of its members.
SECTION 7.18.(d)  The Commission shall study the effects of student diversity in public school enrollment.  As part of this study, the Commission shall:
(1)	Consider whether schools in which students of various racial, ethnic, and socioeconomic characteristics are balanced improve the quality of the learning experience and the academic achievement of all students as compared to schools with more homogeneous student enrollments.
(2)	Examine whether diverse public schools are successful in closing the achievement gap.
(3)	Explore the level of parental involvement in schools with a diverse student population.
(4)	Examine best practices for creating and maintaining student diversity in schools and school systems in other states.
(5) 	Consider whether diverse public schools improve student discipline.
(6)	Consider the fiscal impact and efficiency of State funding streams given the data accumulated in items (1) through (5).
(7)	Study any other issue the Commission considers relevant.
SECTION 7.18.(e)  The Commission, while in the discharge of its official duties, may exercise all powers provided for under G.S. 120‑19 and G.S. 120‑19.1 through G.S. 120‑19.4. The Commission may meet at anytime upon the joint call of the cochairs. The Commission may meet in the Legislative Building or the Legislative Office Building.
With approval of the Legislative Services Commission, the Legislative Services Officer shall assign professional staff to assist the Commission in its work. The House of Representatives' and the Senate's Directors of Legislative Assistants shall assign clerical staff to the Commission, and the expenses relating to the clerical employees shall be borne by the Commission. The Commission may contract for professional, clerical, or consultant services as provided by G.S. 120‑32.02. If the Commission hires a consultant, the consultant shall not be a State employee or a person currently under contract with the State to provide services.
All State departments and agencies and local governments and their subdivisions shall furnish the Commission with any information in their possession or available to them.
SECTION 7.18.(f)  The Commission shall submit a final report of the results of its study and its recommendations to the 2011 General Assembly.  The Commission shall terminate on March 1, 2011, or upon the filing of its final report, whichever occurs first.

dropout prevention grants
SECTION 7.19.(a)  Notwithstanding Section 7.13 of S.L. 2009‑451, the Committee on Dropout Prevention shall provide grants of one million dollars ($1,000,000) each to the following three evidence‑based operators of dropout prevention initiatives:
(1)	Communities in Schools of North Carolina, Inc., to expand service to existing local programs, enable establishment of new local CIS programs, and, as matching or sustaining funds become available, support the placement of graduation coaches or creation of new Performance Learning Centers (PLCs).
(2)	North Carolina Congress of Parents and Teachers, Incorporated, to implement the PTA Parental Involvement Initiative in additional school sites.
(3)	One other recipient selected by the Committee.
SECTION 7.19.(b)  The Committee on Dropout Prevention shall identify a minimum of three additional recipients of Dropout Prevention Grants that the Committee feels show promise as statewide models for dropout prevention interventions. The Committee on Dropout Prevention shall report its selected grantees and the reasons why they were chosen to the Joint Legislative Education Oversight Committee and the Joint Legislative Commission on Dropout Prevention and High School Graduation by March 15, 2011.

Uniform Education Reporting System (UERS) funds
SECTION 7.20.(a)  Funds appropriated for the Uniform Education Reporting System shall not revert at the end of the 2009‑2010 fiscal year.
SECTION 7.20.(b)  This act becomes effective June 30, 2010.

cooperative and innovative high schools
SECTION 7.21.(a)  G.S. 115C‑238.50(e) reads as rewritten:
"(e)	Cooperative innovative high school programs may include the creation of a school within a school, a technical high school, a high school or technical center located on the campus of a college or  university, or a five‑year career academy operating as part of an existing high school."
SECTION 7.21.(b)  G.S. 115C‑238.54 reads as rewritten:
"§ 115C‑238.54.  Funds for programs.
(a)	The Department of Public Instruction shall assign a school code for each program that is approved under this Part, with the exception of a five‑year career academy operating as part of an existing high school, which shall continue to use the existing school code. All positions and other State and federal allotments that are generated for this program shall be assigned to that school code. Notwithstanding G.S. 115C‑105.25, once funds are assigned to that school code, the local board of education may use these funds for the program and may transfer these funds between funding allotment categories.
(a1)	A five‑year career academy operating as part of an existing high school shall maintain records to identify and evaluate students enrolled in the five‑year career academy program distinct from the general school population.
...."
SECTION 7.21.(c)  The Department of Public Instruction shall study the fiscal impacts of the Cooperative and Innovative High School Act (Part 9 of Article 16 of Chapter 115C of the General Statutes).  The Department shall report the results of its study to the Joint Legislative Education Oversight Committee and the Fiscal Research Division by March 15, 2011.  The report shall include historical data on the number of new schools created each fiscal year attributable to the Cooperative and Innovative High School Act (Part 9 of Article 16 of Chapter 115C of the General Statutes).
SECTION 7.21.(d)  The State Board of Education shall not approve any additional schools under the Cooperative and Innovative High School Act (Part 9 of Article 16 of Chapter 115C of the General Statutes) after July 1, 2010, unless the school has received an explicit appropriation from the General Assembly.
SECTION 7.21.(e)  Subsections (a) and (b) of this section are effective when this act becomes law and apply beginning with the 2010‑2011 school year.

elimination of certain reports
SECTION 7.22.(a)  G.S. 115C‑301(g) reads as rewritten:
"(g)	Waivers and Allotment Adjustments. – Local boards of education shall report exceptions to the State Board of Education as provided in G.S. 115C‑47(10), and shall request allotment adjustments or waivers from the standards set out above. Within 45 days of receipt of reports, the State Board of Education, within funds available, may allot additional positions or grant waivers for the excess class size or daily load.
(1)	If the exception resulted from (i) exceptional circumstances, emergencies, or acts of God, (ii) large changes in student population, (iii) organizational problems caused by remote geographic location, or (iv) classes organized for a solitary curricular area, and 
(2)	If the local board cannot organizationally correct the exception.
"
SECTION 7.22.(b)  Sections 4 through 6 of S.L. 2007‑453 are repealed.
SECTION 7.22.(c)  Section 7.60 of S.L. 2005‑276 is repealed.
SECTION 7.22.(d)  Section 7.61(b) of S.L. 2005‑276 reads as rewritten:
"SECTION 7.61.(b)  To remain eligible for funds appropriated for the At‑Risk/Alternative Schools allotment and the Improving Student Accountability allotment, local school administrative units must submit a report to the State Board of Education by October 31 of each year detailing the expenditure of the funds and the impact of these funds on student achievement. "

disadvantaged students supplemental funding
SECTION 7.23.  In determining whether to approve a local school administrative unit's plan for the expenditure of funds allocated to it for disadvantaged student supplemental funding, the State Board of Education shall take into consideration the extent to which the local school administrative unit's policies or expenditures contribute to increased segregation of schools on the basis of race or socioeconomic status.

COMMUNITY COLLEGE COURSES FOR HIGH SCHOOL STUDENTS
SECTION 7.24.(a)  It is the intent of the General Assembly to implement a funding formula in the 2011‑2012 school year that will provide money to local school administrative units for the purpose of paying the tuition of high school students taking community college courses for which tuition is required.
SECTION 7.24.(b)  It is the intent of the General Assembly to eliminate the tuition waiver for courses taken by high school students at community colleges set forth in G.S. 115D‑5(b) effective July 1, 2011, except for the waiver that applies to students in cooperative innovative high school programs established pursuant to Part 9 of Article 16 of Chapter 115C of the General Statutes.  Tuition shall continue to be waived for students in cooperative innovative high school programs.
SECTION 7.24.(c)  For the 2011‑2012 school year, the North Carolina Community College System General Fund appropriations shall be reduced by an amount calculated by multiplying the number of FTE high school students for whom tuition is required by the per capita budgeted receipts for community college curriculum instruction.  This amount of funds shall be transferred to the State Board of Education for distribution to the local school administrative units.
SECTION 7.24.(d)  For the 2011‑2012 school year, the State Public School Fund shall be reduced by an amount calculated by (i) subtracting the per capita budgeted receipts for community college curriculum instruction from the in‑State tuition amount per FTE and (ii) multiplying the result by the number of FTE high school students for whom tuition is required. This amount of funds shall be available to the State Board of Education for distribution to the local school administrative units.
The State Board of Education shall ensure that appropriate and reliable data is corrected in order to implement this section.
SECTION 7.24.(e)  The amounts transferred to the State Board of Education under subsections (c) and (d) of this section shall be distributed to local school administrative units based on the pro rata share of each local school administrative unit's number of FTE high school students for whom tuition is required.
SECTION 7.24.(f)  The amounts allocated to local school administrative units under this section shall not be transferred to other uses and shall only be available for paying the tuition of high school students taking community college courses for which tuition is required.

ENVIRONMENTAL ENGINEEr/SUPPORT SERVICES DIVISION
SECTION 7.25.  The State Board of Education may use up to two hundred thousand dollars ($200,000) of funds available to provide an environmental engineer in the Department of Public Instruction, Support Services Division, to address increasing environmental concerns in the public schools of North Carolina.

LEA CONSTRUCTION CONTRACTING CLARIFICATION
SECTION 7.26.  G.S. 115C‑530 reads as rewritten:
"§ 115C‑530.  Operational leases of school buildings and school facilities.
(a)	Local boards of education may enter into operational leases of real or personal property for use as school buildings or school facilities. Operational leases for terms of less than three years shall not be subject to the approval of the board of county commissioners. Operational leases for terms of three years or longer, including periods that may be added to the original term through the exercise of options to renew or extend, are permitted if all of the following conditions are met:
(1)	The budget resolution includes an appropriation authorizing the current fiscal year's portion of the obligation.
(2)	An unencumbered balance remains in the appropriation sufficient to pay in the current fiscal year the sums obligated by the lease for the current fiscal year.
(3)	The leases are approved by a resolution adopted by the board of county commissioners. If an operational lease is approved by the board of county commissioners, in each year the county commissioners shall appropriate sufficient funds to meet the amounts to be paid during the fiscal year under the lease.
(4)	Any construction, repair, or renovation of the property is in compliance with the requirements of G.S. 115C‑521(c) relating to energy guidelines.
For purposes of this section, an operational lease is defined according to generally accepted accounting principles and may be for new or renovated buildings.
(b)	Local boards of education may enter into contracts for the construction, repair or renovation of leased property if (i) the budget resolution includes an appropriation authorizing the obligation, (ii) an unencumbered balance remains in the appropriation sufficient to pay in the current fiscal year the sums obligated by the transaction for the current fiscal year, and (iii) the repair or renovation is in compliance with the requirements of G.S. 115C‑521(c) relating to energy guidelines. Construction, repair, or renovation work undertaken or contracted by a private developer is not subject to the requirements of Article 8 of Chapter 143 of the General Statutes. Contracts for renovation that involve the expenditure of public funds in excess of five hundred thousand dollars ($500,000) and which do not constitute continuing contracts for capital outlay must be approved by the board of county commissioners.
(c)	Operational leases and contracts entered into under this section are subject to approval by the Local Government Commission under Article 8 of Chapter 159 of the General Statutes if they meet the standards set out in G.S. 159‑148(a)(1), 159‑148(a)(2), and 159‑148(a)(3). For purposes of determining whether the standards set out in G.S. 159‑148(a)(3) have been met, only the five hundred thousand dollar ($500,000) threshold shall apply."

PART VIII. COMMUNITY COLLEGES

CARRYFORWARD OF COLLEGE INFORMATION SYSTEM FUNDS
SECTION 8.1.(a)  Of the funds appropriated to the Community Colleges System Office for the 2009‑2011 fiscal biennium for the College Information System, up to one million two hundred fifty thousand dollars ($1,250,000) shall not revert at the end of each fiscal year but shall remain available until expended.  These funds may only be used to purchase periodic system upgrades.
SECTION 8.1.(b)  This section becomes effective June 30, 2010.

STATE AID BUDGET FLEXIBILITY
SECTION 8.2.  G.S. 115D‑31 is amended by adding a new subsection to read:
"(b1)	A local community college may use all State funds allocated to it, except for Literacy funds and Customized Training funds, for any authorized purpose that is consistent with the college's Institutional Effectiveness Plan. Each local community college shall include in its Institutional Effectiveness Plan a section on how funding flexibility allows the college to meet the demands of the local community and to maintain a presence in all previously funded categorical programs."

education FOR PRISON INMATES
SECTION 8.3.(a)  Funds appropriated for community college courses for prison inmates shall be used only for inmates in State prisons.  The first priority for the use of these funds shall be to restore the FTE for basic skills courses to the FY 2008‑2009 level.  Funds not needed for this purpose may be used for continuing education and curriculum courses related to job skills training.  These funds shall not be used for Associate of Arts, Associate of Science, or Associate of General Education degrees.
SECTION 8.3.(b)  Courses in federal prisons or local jails shall not earn regular budget full‑time equivalents, but may be offered on a self‑supporting basis.
SECTION 8.3.(c)  The Department of Correction and the Community Colleges System Office shall report to the 2011 General Assembly on:
(1)	The implementation of the new funding structure and requirements.
(2)	Strategies for implementing their recommendations to:
a.	Enhance measurable goals, objectives, and outcomes.
b.	Enhance and standardize data collection.
c.	Strengthen the continuum of programming from entry to exit, based on assessment of skills and needs.
d.	Give individuals the opportunity to use specific skills through work assignments that meet system needs.
e.	Tailor programs to specific inmate needs.
f.	Increase Cognitive Behavioral Interventions (CBI) courses.
g.	Develop an offender‑specific human resources development course.
h.	Explore additional funding sources.
i.	Explore federal grant for wiring courses.
(3)	Strategies for reasonably limiting the number of courses an individual takes while in prison.
SECTION 8.3.(d)  G.S. 115D‑5(c) reads as rewritten:
"(c)	No course of instruction shall be offered by any community college at State expense or partial State expense to any captive or co‑opted group of students, as defined by the State Board of Community Colleges, without prior approval of the State Board of Community Colleges. All course offerings approved for State prison inmates must be tied to clearly identified job skills, transition needs, or both. Approval by the State Board of Community Colleges shall be presumed to constitute approval of both the course and the group served by that institution. The State Board of Community Colleges may delegate to the President the power to make an initial approval, with final approval to be made by the State Board of Community Colleges. A course taught without such approval will not yield any full‑time equivalent students, as defined by the State Board of Community Colleges."

TUITION WAIVERS
SECTION 8.4.(a)  G.S. 115D‑5(b) reads as rewritten:
"(b)	In order to make instruction as accessible as possible to all citizens, the teaching of curricular courses and of noncurricular extension courses at convenient locations away from institution campuses as well as on campuses is authorized and shall be encouraged. A pro rata portion of the established regular tuition rate charged a full‑time student shall be charged a part‑time student taking any curriculum course. In lieu of any tuition charge, the State Board of Community Colleges shall establish a uniform registration fee, or a schedule of uniform registration fees, to be charged students enrolling in extension courses for which instruction is financed primarily from State funds. The State Board of Community Colleges may provide by general and uniform regulations for waiver of tuition and registration fees for:
(1)	Persons not enrolled in elementary or secondary schools taking courses leading to a high school diploma or equivalent certificate;
(2)	Training courses for (i) volunteer firemen, (ii) local fire department personnel, (iii) volunteer rescue and lifesaving department personnel, (iv) local rescue and lifesaving department personnel, (v) Radio Emergency Associated Citizens Team (REACT) members when the REACT team is under contract to a county as an emergency response agency, (vi) municipal, county, or State law‑enforcement officers, (vii) inpatients in State alcoholic rehabilitation centers, (viii) all full‑time custodial employees of the Department of Correction, and (ix) employees of the Department's Division of Community Corrections and employees of the Department of Juvenile Justice and Delinquency Prevention required to be certified under Chapter 17C of the General Statutes and the rules of the Criminal Justice and Training Standards Commission;
(3)	Patients in State alcoholic rehabilitation centers;
(4)	Trainees enrolled in courses conducted under the  Customized Training Program;
(5)	Clients of sheltered workshops;
(6)	Clients of adult developmental activity programs;
(7)	Students in Health and Human Services Development Programs;
(8)	Juveniles of any age committed to the Department of Juvenile Justice and Delinquency Prevention by a court of competent jurisdiction;
(9)	Members of the North Carolina State Defense Militia as defined in G.S. 127A‑5 and as administered under Article 5 of Chapter 127A of the General Statutes;
(10)	Elementary and secondary school employees enrolled in courses in first aid or cardiopulmonary resuscitation (CPR);
(11)	Up to six hours of credit instruction and one course of noncredit instruction per academic semester for senior citizens age 65 or older who are qualified as legal residents of North Carolina;
(12)	All curriculum courses taken by high school students at community colleges, including students in early college and middle college high school programs, in accordance with G.S. 115D‑20(4) and this section;
(13)	Human resources development courses for any individual who (i) is unemployed; (ii) has received notification of a pending layoff; (iii) is working and is eligible for the Federal Earned Income Tax Credit (FEITC); or (iv) is working and earning wages at or below two hundred percent (200%) of the federal poverty guidelines; and
(14)	Prison inmates."
SECTION 8.4.(b)  G.S. 115D‑39 is amended by adding a new subsection to read:
"(a1)	In addition, any federal law enforcement officer whose permanent duty station is within North Carolina shall also be eligible for the State resident community college tuition rate for law enforcement training courses."
SECTION 8.4.(c)  The Community Colleges System Office shall report to the 2011 General Assembly on the number and cost of courses taken by State law enforcement officers and of courses taken by local law enforcement officers.
SECTION 8.4.(d)  The Fiscal Research Division, in consultation with the Community Colleges System Office, shall make a comprehensive study of the currently authorized tuition waivers and shall report to the 2011 General Assembly on waivers that should be modified or abolished because they are not being used or for other reasons.

COMMUNITY COLLEGE FINANCIAL AID LOANS
SECTION 8.5.(a)  The State Board of Community Colleges shall permanently realign its funding formula by increasing the amount allocated in the funding formula for students' services by fifty million dollars ($50,000,000) and by reducing the amount in the funding formula for curriculum and continuing education instruction by a commensurate amount.  The revised formula shall ensure that community colleges have the adequate funds and resources necessary to administer and provide financial aid services to students. 
SECTION 8.5.(b)  G.S. 115D‑40.1 reads as rewritten:
"§ 115D‑40.1.  Financial Assistance for Community College Students.
(a)	Need‑Based Assistance Program. – It is the intent of the General Assembly that the Community College System make these financial aid funds available to the neediest students who are not eligible for other financial aid programs that fully cover the required educational expenses of these students. The State Board may use some of these funds as short‑term loans to students who anticipate receiving the federal HOPE or Lifetime Learning Tax Credits.
(b)	Targeted Assistance. – Notwithstanding subsection (a) of this section, the State Board may allocate no more than ten percent (10%) of the funds appropriated for Financial Assistance for Community College Students to:
(1)	Students who do not qualify for need‑based assistance but who enroll in low‑enrollment programs that prepare students for high‑demand occupations, and
(2)	Students with disabilities who have been referred by the Division of Vocational Rehabilitation and are enrolled in a community college.
(c)	Administration of Program. – The State Board shall adopt rules and policies for the disbursement of the financial assistance provided in subsections (a) and (b) of this section. Degree, diploma, and certificate students must complete a Free Application for Federal Student Aid (FAFSA) to be eligible for financial assistance. The State Board may contract with the State Education Assistance Authority for administration of these financial assistance funds. These funds shall not revert at the end of each fiscal year but shall remain available until expended for need‑based financial assistance. The
 interest earned on the funds provided in subsections (a) and (b) of this section may be used to support the costs of administering the Community College Grant Program.
(d)	Participation in Federal Loan Programs. – All community colleges shall participate in the William D. Ford Federal Direct Loan Program. The State Board shall ensure that at least one counselor is available at each college to inform students about federal programs and funds available to assist community college students, including, but not limited to, Pell Grants, HOPE and Lifetime Learning Tax Credits, and the William D. Ford Federal Direct Loan Program, and to actively encourage students to utilize these federal programs and funds."
SECTION 8.5.(c)  Subsection (b) of this section becomes effective July 1, 2011, and expires July 1, 2012.  The remainder of this section becomes effective July 1, 2010.

TUITION REFUNDS
SECTION 8.6.(a)  A refund of community college tuition shall not be made except under the following circumstances:
(1)	A one hundred percent (100%) refund shall be made if the student officially withdraws prior to the first day of class of the academic semester or term as noted in the college calendar. Also, a student is eligible for a 100 percent refund if the class in which the student is officially registered is cancelled  due to insufficient enrollment. 
(2)	A seventy‑five percent (75%) refund shall be made if the student officially withdraws from the class prior to or on the official ten percent (10%) point of the semester.
(3)	For classes beginning at times other than the first week (seven calendar days) of a semester a one hundred percent (100%) refund shall be made if the student officially withdraws from the class prior to the first class meeting. A seventy‑five percent (75%) refund shall be made if the student officially withdraws from the class prior to or on the ten percent (10%) point of the class.
(4)	A one hundred percent (100%) refund shall be made if the student officially withdraws from a contact hour class prior to the first day of class of the academic semester or term or if the college cancels the class. A seventy‑five percent (75%) shall be made if the student officially withdraws from a contact hour class on or before the tenth calendar day of the class.
SECTION 8.6.(b)  To comply with applicable federal regulations regarding refunds, federal regulations supersede the provisions of this section.
SECTION 8.6.(c)  Where a student, having paid the required tuition for a semester, dies during that semester (prior to or on the last day of examinations of the college the student was attending), all tuition and fees for that semester may be refunded to the estate of the deceased.
SECTION 8.6.(d)  Community colleges shall adopt local refund policies for classes for which they collect receipts which are not required to be deposited into the State Treasury account.

MANAGEMENT FLEXIBILITY REDUCTION/COMMUNITY COLLEGES
SECTION 8.7.  Section 8.24 of S.L. 2009‑451 reads as rewritten:
"SECTION 8.24. The management flexibility reduction for the North Carolina Community College System shall be allocated by the State Board of Community Colleges in a manner that accounts for the unique needs of each college and provides for the equitable distribution of funds to the institutions consistent with G.S. 115D‑5(a). Before taking reductions to instructional budgets, the community colleges shall consider reducing budgets for senior and middle management personnel and for programs that have both low‑enrollment and low‑postgraduate success. Colleges shall minimize the impact on student support services and on the retraining of dislocated workers. Colleges shall not reduce funding for the Small Business Centers. The community colleges shall also review their institutional funds to determine whether there are monies available in those funds that can be used to assist with operating costs before taking reductions in instructional budgets."

catawba Valley community college manufacturing solutions center
SECTION 8.8.(a)  G.S. 115D‑67.2(b)(7) reads as rewritten:
"(7)	The Director of the Manufacturing Solutions Center at Catawba Valley Community College who shall serve ex officio as a nonvoting member."
SECTION 8.8.(b)  Notwithstanding any other provision of law, all fees collected by the Manufacturing Solutions Center of Catawba Valley Community College for the testing of products shall be retained by the Center and used for the operations of the Center.  Purchases made by the Center using these funds are not subject to the provisions of Article 3 of Chapter 143 of the General Statutes.

community college equipment funds
SECTION 8.9.  Of the expansion funds appropriated for the 2010‑2011 fiscal year for community college equipment, up to two hundred fifty thousand dollars ($250,000) may be used for virtual 3‑D equipment.

basic skills plus
SECTION 8.10.  Section 8.2 of S.L. 2009‑451 reads as rewritten:
"SECTION 8.2.(a)  Notwithstanding any other provision of law, a local community college may use up to five percent (5%) of the Literacy Funds allocated to it by the State Board of Community Colleges to procure instructional technology for literacy labs. This technology may include computers, instructional software and software licenses, scanners for testing, and classroom projection equipment. The State Board may also authorize a local community college to use up to twenty percent (20%) of the State Literacy Funds allocated to it to provide employability skills, job‑specific occupational and technical skills, and developmental education instruction to students concurrently enrolled in a community college course leading to a high school diploma or equivalent certificate.
"SECTION 8.2.(b)  Notwithstanding any other provision of law, if a community college provides employability skills, job‑specific occupational or technical skills, or developmental education instruction, to students concurrently enrolled in a community college course leading to a high school diploma or equivalent certificate, the college may waive the tuition and registration fees associated with this instruction."

multicampus funds
SECTION 8.11.  The funds appropriated for the 2010-2011 fiscal year for multi-campus colleges shall be allocated under the existing funding formula to all multicampus community colleges approved by the State Board of Community Colleges.

PART IX. UNIVERSITIES

REPEAL ESCHEAT FUND APPROPRIATION FOR MILLENNIUM TEACHING SCHOLARSHIP LOAN PROGRAM
SECTION 9.1.  Section 9.1.(c) of S.L. 2009‑451 is repealed.

STUDY FINANCIAL AID CONSOLIDATION
SECTION 9.2.(a)  The State Education Assistance Authority, The University of North Carolina, the North Carolina Community College System, and the Fiscal Research Division of the General Assembly shall establish a work group to study jointly the simplification and consolidation of State‑funded financial aid for students.  North Carolina Independent Colleges and Universities, Inc., shall also be included as a joint member of the work group if it chooses to participate in the study.  The State Education Assistance Authority shall be the lead agency for the work group and study.
SECTION 9.2.(b)  The purpose of the study is to develop recommendations and options for simplifying and consolidating the delivery of, administration of, and access to State‑funded financial aid for students.  In conducting the study, the work group shall consider the State's current student financial aid programs and how to consolidate those programs into two categories of State‑funded student aid programs:  one program that consolidates the State's major need‑based programs and one program that consolidates many of the State's scholarship and forgivable loan programs currently available to students who plan to earn degrees and pursue careers in certain professional areas.  More specifically the work group shall do the following:
(1)	Design a unified need‑based financial aid program that combines at a minimum the following three programs into a single need‑based financial aid program:  The University of North Carolina Need‑Based Grant program, the North Carolina Community College Grant program, and the North Carolina Education Lottery Scholarship program established under Article 35A of Chapter 115C of the General Statutes. Currently each of these programs has its own award criteria, formulas, target populations, and funding sources (Escheat Fund, General Fund, and Lottery Funds). As part of its study, the work group shall determine what the appropriate parameters may be for such a unified program by using models that take into account income, expected family contribution, college expenses, type of college attended, and any other factors the work group deems relevant. In designing the program, the work group shall address the issue of proportionality of funding and shall take into account all of the following in its consideration of that issue:  the proportionality of funding that currently exists among The University of North Carolina, the North Carolina Community College System, and the North Carolina private colleges and universities; funding sources; accounting for student enrollment change; monetary differences between certain categories of students and whether based on those monetary differences student financial aid should be based on cost of attendance or tuition and fees. The work group may also consider whether it is appropriate to redefine "need" for purposes of student financial aid and to develop a common formula for the distribution of financial aid and the consequences of any proposed modifications if the decision is made to redefine "need" and develop a common formula. The program shall be designed to:  (i) distribute funds in a manner that is consistent with legislative intent, but more easily understood by potential students, and (ii) retain the ability to track lottery funds.
(2)	Design a "forgivable loans for service" program that combines at a minimum the following existing programs into one consolidated program that focuses on loans for services:  the Nurse Educators of Tomorrow; Nurse Scholars Program; Nurse Education Scholarship Loan Program; Board of Governors Medical Scholarship Loans; Board of Governors Dental Scholarship Loans; Health, Science and Mathematics Student Loan Program; Prospective Teacher Scholarship Loan Program; and the Teacher Assistant Scholarship Program. This single consolidated program shall initially focus on two high area needs:  teaching and health professions (including nursing, allied health and medical, dental, and pharmacy careers). In designing this program, the work group may consider the current allocation of funds among the various scholarship and forgivable loan programs, whether it would be appropriate to allow the reallocation and award of funds not distributed as forgivable loans in a specific service area to be awarded as forgivable loans in a different service area, and, if so, what procedure and methodology would be appropriate to trigger the reallocation of funds and provide for the distribution of those funds as awards in a different service area.
SECTION 9.2.(c)  In addition to the considerations set out in subsection (b) of this section, the work group shall also consider all of the following: 
(1)	The time period required to phase out student loans from any of the programs affected by the program consolidation.
(2)	How federal funding may affect student financial aid services.
(3)	How to deal with current recipients of funds from programs affected by the consolidation.
(4)	How to deal with recipients who are paying back loans made through programs affected by the consolidation.
(5)	Whether the State Education Assistance Authority should be authorized to extend the repayment period for forgivable loans in hardship circumstances when a good faith effort has been made to repay the loan in a timely manner, and if so, what the appropriate procedure may be for making that determination and extending the repayment period.
(6)	Whether there are, and if so how to address, any significant abuses of the financial aid system, particularly by persons who intentionally apply for and receive financial aid but who intend to drop out of school after securing financial aid funds.
(7)	The relationship and any appropriate linkage that should be established for accountability purposes between financial aid, retention, and graduation rates.
(8)	Any other issues the work group deems relevant to this study.
SECTION 9.2.(d)  The work group shall present its proposed program designs and report its findings and recommendations to the Joint Select Committee on State Funded Student Financial Aid by October 1, 2010.  In its report the work group shall also identify options that may vary from the proposed program designs but that are alternatives that the work group determines may also be workable and consistent with the legislative intent of this study.  The work group shall also include in the report any legislative changes that may be needed to implement the program designs and work group recommendations.

COORDINATE THE REPORT DUE DATES FOR VARIOUS TEACHER EDUCATION REPORTS
SECTION 9.3.(a)  G.S. 116‑11 is amended by adding a new subdivision to read:
"(12d)	The Board of Governors shall provide a comprehensive annual report on teacher education efforts at The University of North Carolina. The report shall include information about teacher education and recruitment, 2+2 initiatives, distance education programs focused on teacher education, and professional development programs for teachers and school administrators. The teacher education report shall be due on April 15 of each year to the Joint Legislative Education Oversight Committee and the State Board of Education."
SECTION 9.3.(b)  G.S. 116‑74.21(c) reads as rewritten:
"(c)	The Board of Governors shall study the issue of supply and demand of school administrators to determine the number of school administrators to be trained in the programs in each year of the biennium and report the results of this study to the Joint Legislative Education Oversight Committee no later than April 15 annually."
SECTION 9.3.(c)  Section 9.7(c) of S.L. 2008‑107 reads as rewritten:
"SECTION 9.7.(c)  The University of North Carolina and Community Colleges System Office shall report by April 15, 2011, 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 classrooms, 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."
SECTION 9.3.(d)  Section 9.3(c) of S.L. 2005‑276 reads as rewritten:
"SECTION 9.3.(c)  These results shall be reported by April 15, 2011, and annually thereafter to the State Board of Education, the Board of Governors of The University of North Carolina, the State Board of Community Colleges, the Education Cabinet, the Joint Legislative Education Oversight Committee, and the Office of State Budget and Management."
SECTION 9.3.(e)  Section 9.9 of S.L. 2002‑126 reads as rewritten:
"SECTION 9.9. The Board of Governors of The University of North Carolina may allow Elizabeth City State University, the University of North Carolina at Pembroke, and Western Carolina University each to allocate up to one hundred seventy‑eight thousand three hundred eighty dollars ($178,380) of the funds allocated to them for focused enrollment growth for a maximum of 20 Prospective Teacher Scholars. These funds may be used to recruit new nonresident students to enter into agreements to:  (i) pursue a full‑time course of study that will lead to teacher certification in North Carolina and (ii) teach in a North Carolina public school or a school operated by the United States government in North Carolina for one year for each year that they receive this benefit. The Board of Governors shall establish guidelines and regulations for this pilot program, including methodology for determining its success in increasing the supply of qualified teachers for North Carolina public schools. The Board shall report its guidelines and regulations to guide these pilot programs to the Joint Legislative Education Oversight Committee by April 15, 2011. The Board shall report annually to the Committee on the progress of the pilot programs and their costs."

ELIMINATE BIENNIAL DISTANCE EDUCATION REPORTS
SECTION 9.4.  Section 11.7 of S.L. 1998‑212 reads as rewritten:
"Section 11.7. This act provides funding to The University of North Carolina Board of Governors for degree‑related courses provided away from the campus sites of the constituent institutions of The University of North Carolina. The intent of this commitment is to provide expanded opportunities for higher education to more North Carolina residents, including nontraditional students, and to increase the number of North Carolina residents who earn post‑secondary degrees. 
These funds shall be used for the provision of off‑campus higher education programs, including the costs for the development or adaptation of programs for this purpose, and the funds may be used for the costs of providing space and services at the off‑campus sites. 
Prior to approving funding for off‑campus programs in nursing, the Board shall consult with the central office of the Area Health Education Centers (AHEC) to obtain information about regional needs and priorities and to coordinate funding with AHEC efforts in nursing education.
The Board of Governors shall track these funds separately in order to provide data on the costs of providing these programs, including the different costs for various methods of delivery of educational programs. The Board of Governors shall provide for evaluation of these off‑campus programs, including comparisons to the costs and quality of on‑campus delivery of similar programs, as well as the impact on access to higher education and the educational attainment levels of North Carolina residents."

REPEAL DUPLICATE STUDY/STATE‑FUNDED STUDENT FINANCIAL AID
SECTION 9.5.  Section 9.24 of S.L. 2009‑451 is repealed.

PERMANENT TRANSFER OF FUNDING TO ROANOKE ISLAND COMMISSION FOR PERFORMING ARTS
SECTION 9.6.  Section 9.4 of S.L. 2009‑451 reads as rewritten:
"SECTION 9.4. The General Assembly finds that in order to expand opportunities for students involved in the performing arts, existing funding for the Summer Institute on Roanoke Island should not be allocated to one specific University of North Carolina institution but instead be allocated directly to the Roanoke Island Commission, so that any interested University of North Carolina institution may have the opportunity to participate in summer arts enrichment and education programs. Therefore, of the funds appropriated by this act to the Board of Governors of The University of North Carolina and allocated to the Summer Institute of the University of North Carolina School of the Arts on Roanoke Island program for the 2009‑2011 fiscal biennium, the sum of four hundred sixty‑one thousand six hundred forty‑six dollars ($461,646) shall be transferred for the 2009‑2010 fiscal year to the Roanoke Island Commission, and the recurring funds appropriated for the 2010‑2011 fiscal year to the Board of Governors of The University of North Carolina and allocated to the University of North Carolina School of the Arts for the Summer Institute on Roanoke Island program shall be permanently transferred to the Department of Cultural Resources and allocated to the Roanoke Island Commission. The amount to be transferred shall be equal to the amount of the appropriation remaining after all reductions, prior to and included in the act, are incorporated. The Roanoke Island Commission may use these funds to purchase equipment and to contract with any of the constituent institutions of The University of North Carolina System to provide music and drama students an education in a professional performing environment while providing a public service to the State. Any available funds may be used to contract with community‑based or nonprofit performing arts groups or other performing arts groups supported with State or local funds to provide music and drama on Roanoke Island."

REVIEW OF UNC SCIENCE, TECHNOLOGY, ENGINEERING, AND MATHEMATICS (STEM) PROGRAMS
SECTION 9.7.(a)  In order to assess the effectiveness of the science, technology, engineering, and mathematics (STEM) programs administered by The University of North Carolina, General Administration shall compile a comprehensive list of the programs within The University System whose primary objective is to provide community outreach in the form of either (i) teacher professional development programs to strengthen the quality of science or mathematics instruction in the public schools; or (ii) K‑12 student enrichment programs in the areas of science, technology, engineering, or mathematics. The University of North Carolina General Administration shall submit the list of STEM programs compiled pursuant to this subsection to the Office of State Budget and Management and the Fiscal Research Division by February 15, 2011.
At a minimum, all of the following programs shall be included in the list:
(1)	Pre‑College and Teacher Professional Development programs administered through the North Carolina Mathematics and Science Education Network (NC‑MSEN).
(2)	Summer Ventures Program.
(3)	North Carolina Central University Center for Science, Math and Technology Education.
(4)	Fayetteville State University CHEER Summer Bridges.
(5)	NCSTEM Community Collaborative.
SECTION 9.7.(b)  The University of North Carolina General Administration shall conduct a review of each of the programs identified pursuant to subsection (a) of this section and shall report the results to the Office of State Budget and Management and the Fiscal Research Division no later than September 30, 2011, to assist with future funding decisions. The report shall contain the following information for each program:
(1)	A description of the program mission, goals, and objectives.
(2)	The statutory objectives for the program if applicable.
(3)	Annual State appropriation and receipt funding for the program.
(4)	Program effectiveness measures for Teacher Professional Development programs to include at a minimum:
a.	A measure of teachers' classroom effectiveness in STEM areas before and after attending a university professional development program.
b.	A measure of math and science educators retained as a result of attending a UNC professional development program.
(5)	Program effectiveness measures for student enrichment programs to include at a minimum:
a.	A measure of students' expected college and career aspirations before and after attending a STEM program.
b.	A measure of students' math and science performance on standardized tests before and after attending a STEM program.
c.	A measure of declared STEM majors within the UNC system who attended a UNC‑sponsored STEM program.
SECTION 9.7.(c)  In addition, the Department of Public Instruction shall survey math and science educators in North Carolina to identify the number of current math and science educators who attended a Pre‑College or Summer Ventures program sponsored by The University of North Carolina before entering college. The survey may be conducted in cooperation with ongoing data collection efforts within The University of North Carolina System. The data shall be reported to the Office of State Budget and Management and the Fiscal Research Division by February 15, 2011.

TRANSFER OF A+ SCHOOLS FROM UNC‑GREENSBORO TO DEPARTMENT OF CULTURAL RESOURCES
SECTION 9.8.  The A+ Schools program is transferred from the University of North Carolina at Greensboro to the North Carolina Arts Council in the Department of Cultural Resources, as if by a Type I transfer as defined in G.S. 143A‑6, with all the elements of such a transfer. The program transfer shall include the sum of fifty‑eight thousand six hundred thirty‑eight dollars ($58,638).

COASTAL DEMONSTRATION WIND TURBINES
SECTION 9.9.  Section 9.14(a) of S.L. 2009‑451 reads as rewritten:
"SECTION 9.14.(a)  Of the funds received by the State and appropriated by United States Public Law 111‑005, the American Recovery and Reinvestment Act of 2009, and appropriated in this act to the State Energy Office for the 2009‑2010 fiscal year, the sum of three hundred thousand dollars ($300,000) in nonrecurring funds shall be allocated to The University of North Carolina to continue the coastal sounds wind energy study set forth in Section 9.12 of S.L. 2008‑107. The University shall contract with a third party by October 1, 2009, to design, permit, procure, construct, establish, and operate up to three demonstration turbines and necessary support facilities in the sounds or off the coast of North Carolina. The contract shall provide for the reclamation and decommissioning of the project at the end of its economic life. The demonstration project shall commence operations as soon as practicable, and, in any event, no later than December 31, 2011.
Any contract entered into between The University and a third party pursuant to this section shall ensure that The University is provided appropriate access to the demonstration turbines and necessary support facilities for research purposes. The actual number and placement of the wind turbines and necessary support facilities shall be determined by the coastal sounds wind energy study in coordination with participating entities. The Director of the Budget shall ensure that any available federal funds are secured by the State to construct the demonstration turbines and necessary support facilities. The University may negotiate and execute any rights‑of‑way, easements, leases, and any other agreements necessary to construct, establish, and operate the demonstration turbines and supporting facilities, notwithstanding any other provisions of law governing such negotiation and execution of any rights‑of‑way, easements, leases, or other required agreements required for the facilities authorized under this section."

UNIVERSITY CANCER RESEARCH FUND
SECTION 9.12.  G.S. 116‑29.1 reads as rewritten:
"§ 116‑29.1.  University Cancer Research Fund.
…
(c)	Cancer Research Fund Committee. – The Cancer Research Fund Committee shall consist of five ex officio members and two appointed members. The five ex officio members shall consist of the following: (i) one member shall be the Chancellor of the University of North Carolina at Chapel Hill, (ii) one member shall be the Director of the Lineberger Comprehensive Cancer Center, (iii) one member shall be the Dean of the School of Medicine at The University of North Carolina, (iv) one member shall be the Dean of the School of Pharmacy at The University of North Carolina, and (v) one member shall be the Dean of the School of Public Health at The University of North Carolina. The remaining two members shall be appointed by a majority vote of the standing members of the Committee and shall be selected from persons holding a leadership position in a nationally prominent cancer program.
If any of the specified positions cease to exist, then the successor position shall be deemed to be substituted in the place of the former one, and the person holding the successor position shall become an ex officio member of the Committee."
(d)	Chair. – The chair shall be the Chancellor of the University of North Carolina at Chapel Hill.
…."

RECRUITMENT OF PHARMACY STUDENTS
SECTION 9.15.  The University of North Carolina at Chapel Hill shall collaborate with the University of North Carolina at Asheville and Elizabeth City State University regarding the recruitment of students of pharmacy. The universities shall develop and institute a plan in which potential pharmacy students are informed of the pharmacy programs at each of the public universities in an effort to recruit those students to State schools.

Success NC Report
SECTION 9.16.  The Executive Director of UNC Tomorrow and the Executive Vice President of the North Carolina Community College System shall report to the Joint Legislative Education Oversight Committee by December 1, 2010, regarding the progress in implementing Success NC.  Success NC is a program that represents a collaborative effort between The University of North Carolina and the North Carolina Community College System with the goal of increasing the number of North Carolinians with college degrees and workplace relevant credentials to prepare them for success in today's 21st century knowledge‑based workforce.

APPALACHIAN STATE UNIVERSITY CENTER AT HICKORY
SECTION 9.17.(a)  Section 8.25 of S.L. 2009‑451 is repealed.
SECTION 9.17.(b)  Of the funds appropriated by this act to the Community Colleges System Office and allocated to the Hickory Metropolitan Higher Education Center for the 2010‑2011 fiscal year the sum of two hundred sixty‑four thousand eight hundred thirty‑three dollars ($264,833) is transferred from the Community Colleges System Office to the Board of Governors of The University of North Carolina to be allocated to Appalachian State University to assist with the administrative costs of operating the Appalachian State University Center at Hickory.

ECU DENTAL SCHOOL FUNDS/continuing state financial support to help secure accreditation
SECTION 9.18.  It is the intent of the General Assembly to appropriate funds in the amount of three million five hundred thousand dollars ($3,500,000) for the 2011‑2012 fiscal year and the sum of one million five hundred thousand dollars ($1,500,000) for the 2012‑2013 fiscal year to the Board of Governors of The University of North Carolina for East Carolina University to provide continuing State financial support of the School of Dentistry at East Carolina University in future fiscal years and to help secure accreditation of the School of Dentistry by the American Dental Association's Commission on Accreditation.

TRANSFER SURPLUS IN LEGISLATIVE TUITION GRANTS AND RELIGIOUS COLLEGE GRANTS TO CONTRACTUAL SCHOLARSHIP FUND
SECTION 9.19.(a)  Notwithstanding any other provision of law, if the amount appropriated by this act to the State Education Assistance Authority for the 2010‑2011 fiscal year for legislative tuition grants exceeds the amount required to pay the legislative tuition grants in the amount of one thousand eight hundred fifty dollars ($1,850) to each North Carolina resident student attending the State's private colleges, then the State Education Assistance Authority shall deposit the surplus balance of the funds into the State Contractual Scholarship Fund and may use those funds to provide additional scholarships for or to increase the scholarship amounts awarded to students who have financial need.
SECTION 9.19.(b)  Notwithstanding any other provision of law, if the amount appropriated by this act to the State Education Assistance Authority for the 2010‑2011 fiscal year for religious college grants exceeds the amount required to pay the religious college grants in the amount of one thousand eight hundred fifty dollars ($1,850) to each North Carolina resident student attending the State's eligible institutions as defined by G.S. 116‑43.5, then the State Education Assistance Authority shall deposit the surplus balance of the funds into the State Contractual Scholarship Fund and may use those funds to provide additional scholarships for or to increase the scholarship amounts awarded to students who have financial need.

CAMPUS INITIATED TUITION INCREASES/fifty percent for student financial aid
SECTION 9.20.(a)  Section 9.23 of S.L. 2009‑451 is repealed.
SECTION 9.20.(b)  All campus initiated tuition increases approved by the Board of Governors of The University of North Carolina may be implemented; however, each campus that implements the tuition increase shall expend fifty percent (50%) of the increase on student financial aid and may use as much of the remaining tuition income as needed to fully meet student financial aid needs on that campus.

projection of unc enrollment growth/SECOND YEAR OF BIENNIUM/LIMIT FUTURE APPROPRIATIONS FOR ENROLLMENT GROWTH
SECTION 9.22.(a)  G.S. 116‑30.7 reads as rewritten:
"§ 116‑30.7.  Biennial projection of enrollment growth for The University of North Carolina.
By October 15 of each even‑numbered year, the General Administration of The University of North Carolina shall provide to the Joint Education Legislative Oversight Committee and to the Office of State Budget and Management a projection of the total student enrollment in The University of North Carolina that is anticipated for the next biennium. The enrollment projection shall be divided into the following categories and shall include the projected growth for each year of the biennium in each category at each of the constituent institutions: undergraduate students, graduate students (students earning master's and doctoral degrees), first professional students, and any other categories deemed appropriate by General Administration. The projection shall also distinguish between on‑campus and distance education students. The projections shall be considered by the Director of the Budget when determining the amount the Director proposes to fund as the continuation requirement for the enrollment increase in the university system pursuant to G.S. 143C‑3‑5(b). The amount of the funds budgeted for enrollment growth for the biennium shall not be increased in the second year of the biennium."
SECTION 9.22.(b)  The General Assembly intends to appropriate funds for a maximum of one percent (1%) growth in student credit hours in the 2011‑2012 fiscal year.

ASU HEALTH SCIENCES
SECTION 9.23.(a)  Of the funds appropriated to the Board of Governors of The University of North Carolina for a "Strategic Initiatives Reserve," for the 2010‑2011 fiscal year, the sum of two hundred fifty thousand dollars ($250,000) of the reserve shall be used to fund the operating and staffing needs of the newly established College of Health Sciences and Allied Professions at Appalachian State University.
SECTION 9.23.(b)  By February 1, 2011, the President of The University of North Carolina shall report to the House of Representatives Appropriations Subcommittee on Education and the Senate Appropriations Committee on Education/Higher Education regarding the use of the funds for the operating and staffing needs of the College of Health Sciences and Allied Professions at Appalachian State University.

NCSU/Restore Master Gardener Funds
SECTION 9.24.  Of the funds appropriated by this act to the Board of Governors of The University of North Carolina and allocated to North Carolina State University for the 2010‑2011 fiscal year the sum of forty‑eight thousand eight hundred seventy‑eight dollars ($48,878) shall be restored to the master gardener account.

ELIMINATE IN‑STATE TUITION FOR ATHLETIC SCHOLARSHIPS
SECTION 9.25.  G.S. 116‑143.6(a) reads as rewritten:
"(a)	Notwithstanding any other provision of law, if the Board of Trustees of a constituent institution of The University of North Carolina elects to do so, it may by resolution adopted consider as residents of North Carolina all persons who receive full scholarships, unless the scholarship is for athletics, to the institution from entities recognized by the institution and attend the institution as undergraduate students. The aforesaid persons shall be considered residents of North Carolina for all purposes by The University of North Carolina."

AMEND TUITION WAIVER
SECTION 9.26.  G.S. 115B‑2 reads as rewritten:
"§ 115B‑2.  Tuition waiver authorized.
(a)	The constituent institutions of The University of North Carolina and the community colleges as defined in G.S. 115D‑2(2) shall permit the following persons to attend classes for credit or noncredit purposes without the required payment of tuition:
(1)	Repealed by Session Laws 2009‑451, s. 8.11(a), effective July 1, 2009.
(2)	Any person who is the survivor of a law enforcement officer, firefighter, volunteer firefighter, or rescue squad worker killed as a direct result of a traumatic injury sustained in the line of duty.
(3)	The spouse of a law enforcement officer, firefighter, volunteer firefighter, or rescue squad worker who is permanently and totally disabled as a direct result of a traumatic injury sustained in the line of duty.
(4)	Any child, if the child is at least 17 years old but not yet 24 years old, whose parent is a law enforcement officer, firefighter, volunteer firefighter, or rescue squad worker who is permanently and totally disabled as a direct result of a traumatic injury sustained in the line of duty. However, a child's eligibility for a waiver of tuition under this Chapter shall not exceed: (i) eight academic semesters if the child is seeking a baccalaureate degree, or (ii) if the child is not seeking a baccalaureate degree, the number of months required to complete the educational program to which the child is applying.
(5)	Any child, if the child (i) is at least 17 years old but not yet 24 years old, (ii) is a ward of North Carolina or was a ward of the State at the time the child reached the age of 18, (iii) is a resident of the State; and (iv) is eligible for services under the Chaffee Education and Training Vouchers Program; but the waiver shall only be to the extent that there is any tuition still payable after receipt of other financial aid received by the student.
(b)	Persons eligible for the tuition waiver under subsection (a) of this section must meet admission and other standards considered appropriate by the educational institution. In addition, the constituent institutions of The University of North Carolina shall accept these persons only on a space available basis."

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

ELECTRONIC BENEFITS TRANSFER SYSTEM
SECTION 10.1.  The Department of Health and Human Services, Division of Child Development, shall implement an Electronic Benefits Transfer system for child care subsidy. The Department shall review all current electronic card system operations as related to Child Support Enforcement and Food and Nutrition to determine whether coordination may occur among the three‑card systems that result in cost‑savings.
The Department shall monitor the implementation of the "smart card" system pilot program in Georgia and implementation of the Medicaid Access Card in Texas. The Department shall submit a report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on the implementation of Georgia's pilot program and Texas' Medicaid Access Card and provide any recommendations for a card system program in this State by May 1, 2011.

CHANGES TO POLICIES TO FACILITATE AND EXPEDITE USE OF CHILD CARE SUBSIDY FUNDS
SECTION 10.2.(a)  Section 10.4 of S.L. 2009‑451 reads as rewritten:
"SECTION 10.4. The Division of Child Development of the Department of Health and Human Services shall adopt temporary policies that: (i) facilitate and expedite the prudent expenditure of child care subsidy 						funds, and (ii) address lowering the number of hours a parent must work to be eligible for subsidy to assist parents who are continuing to work at least 20 hours per week."
SECTION 10.2.(b)  This section becomes effective October 1, 2010.

EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES ENHANCEMENTS
SECTION 10.3.  Section 10.7.(g) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.7.(g)  For fiscal years 2009‑2010 and 2010‑2011, the local partnerships shall spend an amount for child care subsidies that provides at least fifty‑two million dollars ($52,000,000) for the TANF maintenance of effort requirement and the Child Care Development Fund and Block Grant match requirement."

ADMINISTRATIVE ALLOWANCE FOR COUNTY DEPARTMENTS OF SOCIAL SERVICES
SECTION 10.5.  Section 10.10 of S.L. 2009‑451 reads as rewritten:
"SECTION 10.10. The Division of Child Development of the Department of Health and Human Services shall increase the allowance that county departments of social services may use for administrative costs from four percent (4%) to five percent (5%) of the county's total child care subsidy funds allocated in the Child Care Development Fund Block Grant plan. The increase shall be effective for the 2009‑2010 and 2010‑2011 fiscal years."

TERM LIMITS FOR COUNTY commissioners and county MANAGERS ON AREA MENTAL HEALTH BOARDS
SECTION 10.7.  G.S. 122C‑118.1(d) reads as rewritten:
"(d)	Any member of an area board who is a county commissioner serves on the board in an ex officio  capacity at the pleasure of the initial appointing authority, for a term not to exceed the member's service as a county commissioner. Any member of an area board who is a county manager serves on the board at the pleasure of the initial appointing authority, for a term not to exceed the duration of the member's employment as a county manager.  The terms of the other members on the area board shall be for three years, except that upon the initial formation of an area board one‑third shall be appointed for one year, one‑third for two years, and all remaining members for three years. Members, other than county commissioners and county managers, shall not be appointed for more than two consecutive terms. Board members serving as of July 1, 2006, may remain on the board for one additional term. This subsection applies to all area authority board members regardless of the procedure used to appoint members under subsection (a) of this section."

CAP‑MR/DD State Fund Service Eligibility
SECTION 10.7A.  Section 10.21B of S.L. 2009‑451 reads as rewritten:
"SECTION 10.21B. Except as otherwise provided in this section for former Thomas S. recipients and recipients with high behavioral needs described in this section, CAP‑MR/DD recipients are not eligible for any State‑funded services except for those services for which there is not a comparable service in the CAP‑MR/DD waiver. The excepted services are limited to guardianship, room and board, and time‑limited supplemental staffing to stabilize residential placement. Former Thomas S. recipients currently living in community placements may continue to receive State‑funded services. In recognition of CAP‑MR/DD recipients with high behavioral needs that exceed the services available under the current CAP‑MR/DD waiver, and in recognition of the need for supplemental staffing for these recipients in order to maintain their placement in the community, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall develop a procedure to review and approve or deny requests for State‑funded supplemental staffing for individuals receiving services through the CAP‑MR/DD waiver who (i) reside in small residential placements, (ii) have a  high intensity of behavioral needs, and (iii) require supervision 24 hours per day, seven days per week, as evidenced by a score of 4 or 5 for both behavioral severity and supervision on the North Carolina Supports Needs Assessment Profile and as corroborated by a behavior support plan and a Supports Intensity Scale assessment."

JOINT STUDY COMMITTEE ON AUTISM SPECTRUM DISORDERS AND PUBLIC SAFETY
SECTION 10.9.  Section 10.21D.(i) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.21D.(i)  The Committee may submit an interim report on the results of its study, including any proposed legislation, to the members of the Senate and the House of Representatives on or before May 1, 2010, by filing a copy of the report with the Office of the President Pro Tempore of the Senate, the Office of the Speaker of the House of Representatives, and the Legislative Library. The Committee shall submit a final report on the results of its study, including any proposed legislation, to the members of the Senate and the House of Representatives  upon the completion of its work by filing a copy of the report with the Office of the President Pro Tempore of the Senate, the Office of the Speaker of the House of Representatives, and the Legislative Library. The Committee shall terminate upon the completion of its work."

DOROTHEA DIX HOSPITAL
SECTION 10.10.  By August 1, 2010, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall submit an operations budget for Dorothea Dix Hospital for the 2010‑2011 fiscal year 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.

Change Effective Date for Well Testing
SECTION 10.10A.  Section 4 of S.L. 2009‑124 reads as rewritten:
"SECTION 4. Section 1 of this act becomes effective October 1, 2012. The remainder of the act is effective when it becomes law."

CHANGES TO COMMUNITY‑FOCUSED ELIMINATING HEALTH DISPARITIES INITIATIVE
SECTION 10.11.  Section 10.23.(c) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.23.(c)  The Department of Health and Human Services shall report on the following with respect to funds appropriated to the CFEHDI for the 2009‑2010 fiscal year. The report shall address the following:
(1)	Which community programs and local health departments received CFEHDI grants.
(2)	The amount of funding each program or local  health department received.
(3)	Which of the minority populations were served by the programs or local health departments.
(4)	Which counties were served by the programs or local health departments.
(5)	What activities were planned and implemented by the programs or local health departments to fulfill the community focus of the CFEHDI program.
(6)	How the activities implemented by the programs or local health departments fulfilled the goal of reducing health disparities among minority populations.
The report shall also include specific activities undertaken pursuant to subsection (a) of this section to address large gaps in health status among North Carolinians who are African‑American and other minority populations in this State. The Department shall submit the report not later than March 14, 2011, 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."

IMMUNIZATION CHANGES
SECTION 10.13.  Section 10.29A of S.L. 2009‑451 is amended by adding two new subsections to read:
"SECTION 10.29A.(c)  The General Assembly finds that health insurers licensed to practice in this State currently provide reimbursement for the full series of standard immunizations recommended by the federal Centers for Disease Control and Prevention (CDC) and the American Academy of Family Physicians and required by the North Carolina Immunization Program. The covered immunizations include all of the following:
(1)	Diphtheria, Pertussis, Tetanus Toxoid (DPT).
(2)	Polio.
(3)	Measles, Mumps, Rubella (MMR).
(4)	Influenza.
(5)	Pneumococcal vaccine.
(6)	Human Papilloma virus (HPV).
(7)	Haemophilus Influenzae Type b (Hib) vaccine.
(8)	Hepatitis B.
(9)	Meningococcal vaccine.
(10)	Chicken Pox.
(11)	Rotavirus.
The General Assembly also finds that, consistent with G.S. 130A‑153, physicians and local health departments currently administer the required immunizations listed in subdivisions (1) through (11) of this subsection, which are supplied by the federal government at no cost through the Vaccine For Children (VFC) program, to uninsured and underinsured children with incomes below two hundred percent (200%) of the federal poverty level. Therefore, the General Assembly eliminates the State appropriation for the purchase of childhood vaccines for which health care providers, including local health departments, should be billing health insurers.
"SECTION 10.29A.(d)  Of the funds appropriated in this act for the Childhood Immunization Program, the sum of five million dollars ($5,000,000) in nonrecurring funds for the 2010‑2011 fiscal year shall be used by the Division of Public Health on a onetime basis to provide for the stocking of required childhood vaccines for the 2010‑2011 school year for children with health insurance coverage. Local health departments should seek reimbursement from licensed health insurers in order to maintain the necessary inventory of childhood vaccines."

COMMUNITY CARE OF NORTH CAROLINA
SECTION 10.15.  Section 10.36 of S.L. 2009‑451 reads as rewritten:
				"
"
"SECTION 10.36.(f)  The Department of Health and Human Services (Department) shall conduct a Request for Proposal process to solicit bids from qualified outside entities with proven experience in conducting actuarial and health care studies and evaluations to annually report on the Medicaid cost savings achieved by the Community Care of North Carolina (CCNC) networks during a 12‑month period. Beginning March 1, 2011, and every year thereafter, the Department shall submit a report on the Medicaid cost savings achieved by the CCNC networks, which shall include children, adults, and the aged, blind, and disabled, to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division.
"SECTION 10.36.(g)  By October 1, 2010, the Department and the Division of Medical Assistance (DMA) shall contract with North Carolina Community Care Networks, Inc., (NCCCN, Inc.) and the 14 participating local CCNC networks represented by NCCCN, Inc., to provide standardized clinical and budgetary coordination, oversight, and reporting for a statewide Enhanced Primary Care Management System for Medicaid enrollees. The contract with NCCCN, Inc., shall build upon and expand the existing successful CCNC primary care case management model to include comprehensive statewide quantitative performance goals and deliverables which shall include all of the following areas: (i) service utilization management, (ii) budget analytics, (iii) budget forecasting methodologies, (iv) quality of care analytics, (v) participant access measures, and (vi) predictable cost containment methodologies.
"SECTION 10.36.(g1)  NCCCN, Inc., shall report quarterly to the Department and to the Office of State Budget and Management (OSBM) on the development of the statewide Enhanced Primary Care Management System and its defined goals and deliverables as agreed upon in the contract. Beginning July 1, 2010, NCCCN, Inc., shall submit a quarterly report to the Secretary of Health and Human Services, OSBM, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on the progress and results of implementing the quantitative, analytical, utilization, quality, cost containment, and access goals and deliverables set out in the contract. NCCCN, Inc., shall conduct its own analysis of the CCNC system to identify any variations from the development plan for the Enhanced Primary Care Management System and its defined goals and deliverables set out in the contract between DMA and NCCCN, Inc. Upon identifying any variations, NCCCN, Inc., shall develop and implement a plan to address the variations. NCCCN, Inc., shall report the plan to DMA within 30 days after taking any action to implement the plan.
"SECTION 10.36.(h)  By July 1, 2011, the Department and OSBM shall assess the performance of NCCCN, Inc., and CCNC regarding the goals and deliverables established in the contract. Based on this assessment, the Department and DMA shall expand, cancel, or alter the contract with NCCCN, Inc., and CCNC effective October 1, 2011. Expansion or alteration of the contract may reflect refinements based on clearly identified goals and deliverables in the areas of quality of care, participant access, cost containment, and service delivery.
"SECTION 10.36.(i)  By July 1, 2012, the Department, DMA, and NCCCN, Inc., shall finalize a comprehensive plan that establishes management methodologies which include all of the following:  (i) quality of care measures, (ii) utilization measures, (iii) recipient access measures, (iv) performance incentive models in which past experience indicates a benefit from financial incentives, (v) accountable budget models, (vi) shared savings budget models, and (vii) budget forecasting analytics as agreed upon by the Department, DMA, and NCCCN, Inc. In the development of these methodologies, the Department, DMA, and NCCCN, Inc., shall consider options for shared risk. The Department and DMA shall provide assistance to NCCCN, Inc., in meeting the objectives of this section.
"SECTION 10.36.(j)  Beginning with the 2010‑2011 fiscal year, the Department shall establish a separate line item in Budget Code 14445 for all expenditures in DMA associated with managed care activities pertaining to the utilization of Medicaid expenditures through CCNC.
"SECTION 10.36.(k)  The Department shall not increase the per member per month reimbursement rate to CCNC without prior approval from the General Assembly."

MEDICAID MANAGEMENT INFORMATION SYSTEM (MMIS) FUNDS/IMPLEMENTATION OF MMIS
SECTION 10.16.  Section 10.41.(a) of S.L. 2009‑451, as amended by Section 10A of S.L. 2009‑575, reads as rewritten:
"SECTION 10.41.(a)  Of the funds appropriated in this act to the Department of Health and Human Services (Department), the sum of eleven million seven hundred thirty‑seven thousand four hundred fourteen dollars ($11,737,414) for fiscal year 2010‑2011 shall be (i) deposited to the Department's information technology budget code and (ii) used to match federal funds for the procurement, design, development, and implementation of the new Medicaid Management Information System (MMIS) and to fund the central management of the project. The Department shall utilize prior year earned revenues received for the MMIS. In the event that the Department does not receive prior year earned revenues in the amounts authorized by this section, the Department is authorized, with approval of the Office of State Budget and Management, to utilize other overrealized receipts and funds appropriated to the Department to achieve the level of funding specified in this section for the MMIS."

ELIMINATE STATE FUNDING FOR CHILD SUPPORT OFFICES
SECTION 10.17.  Section 10.46A of S.L. 2009‑451 is amended by adding a new subsection to read:
"SECTION 10.46A.(c)  Notwithstanding G.S. 143‑64.03 and G.S. 143‑64.05, the Secretary of the Department of Health and Human Services may transfer State‑owned equipment, including computers, printers, and furniture, used by State‑operated child support offices to administer child support enforcement programs to a county government or the Eastern Band of the Cherokee Indians for the sole purpose of facilitating the county government or the Eastern Band of the Cherokee Indians' administration of the child support program. The transfer shall be at no cost to the county government or the Eastern Band of the Cherokee Indians and shall occur no later than July 1, 2010.
The county government or the Eastern Band of the Cherokee Indians assuming responsibility for the child support program effective July 1, 2010, shall identify from the existing equipment and office furnishings which items will be needed to administer the child support program. A comprehensive list of items to be transferred shall be compiled and signed by the manager of the State‑operated child support office and the manager of the county or tribal child support office and the signed list shall serve as official documentation of the transfer. Copies of the documentation shall be provided to the Department of Health and Human Services Controller's Office and the Department of Administration. Any equipment not included in the transfer shall revert to the Department of Administration, Division of Surplus Property."

CHILD WELFARE POSTSECONDARY SUPPORT PROGRAM/USE OF ESCHEAT FUND
SECTION 10.18.  Section 10.50 of S.L. 2009‑451 reads as rewritten:
"SECTION 10.50.(a)  There is appropriated from the Escheat Fund income to the Department of Health and Human Services the sum of three million one hundred sixty‑eight thousand two hundred fifty dollars ($3,168,250) for the 2009‑2010 fiscal year. These funds shall be used to support the child welfare postsecondary support program for the educational needs of foster youth aging out of the foster care system and special needs children adopted from foster care after age 12 by providing assistance with the "cost of attendance" as that term is defined in 20 U.S.C. § 1087ll. The Department shall collaborate with the State Education Assistance Authority to develop policies and procedures for the distribution of these funds.
If the interest income generated from the Escheat Fund is less than the amounts referenced in this section, the difference may be taken from the Escheat Fund principal to reach the appropriations referenced in this section; however, under no circumstances shall the Escheat Fund principal be reduced below the sum required in G.S. 116B‑6(f).
Funds appropriated by this subsection shall be allocated by the State Education Assistance Authority.
The purpose for which funds are appropriated under this section is in addition to other purposes for which Escheat Fund income is distributed under G.S. 116B‑7 and shall not be construed to otherwise affect the distribution of funds under G.S. 116B‑7.
"SECTION 10.50.(a1)  Of the funds appropriated from the General Fund to the Department of Health and Human Services, the sum of one million five hundred eighty‑four thousand one hundred twenty‑five dollars ($1,584,125) for the 2010‑2011 fiscal year shall be used to support the child welfare postsecondary support program for the educational needs of foster youth aging out of the foster care system and special needs children adopted from foster care after age 12 by providing assistance with the "cost of attendance" as that term is defined in 20 U.S.C. § 1087ll.
Funds appropriated by this subsection shall be allocated by the State Education Assistance Authority.
"SECTION 10.50.(b)  Of the funds appropriated from the General Fund to the Department of Health and Human Services the sum of fifty thousand dollars ($50,000) for the 2009‑2010 fiscal year and the sum of fifty thousand dollars ($50,000) for the 2010‑2011 fiscal year shall be allocated to the North Carolina State Education Assistance Authority (SEAA). The SEAA shall use these funds only to perform administrative functions necessary to manage and distribute scholarship funds under the child welfare postsecondary support program.
"SECTION 10.50.(c)  Of the funds appropriated from the General Fund to the Department of Health and Human Services the sum of five hundred thousand dollars ($500,000) for the 2009‑2010 fiscal year and the sum of three hundred thirty‑nine thousand four hundred ninety‑three dollars ($339,493) for the 2010‑2011 fiscal year shall be used to contract with an entity to develop and administer the child welfare postsecondary support program described under subsection (a) of this section, which development and administration shall include the performance of case management services.
"SECTION 10.50.(d)  Funds appropriated to the Department of Health and Human Services for the child welfare postsecondary support program shall be used only for students attending public institutions of higher education in this State."

TANF BENEFIT IMPLEMENTATION
SECTION 10.19.  Section 10.51 of S.L. 2009‑451 reads as rewritten:
"SECTION 10.51.(a)  The General Assembly approves the plan titled "North Carolina Temporary Assistance for Needy Families State Plan FY 2010‑2012," prepared by the Department of Health and Human Services and presented to the General Assembly. The North Carolina Temporary Assistance for Needy Families State Plan covers the period October 1, 2010, through September 30, 2012. The Department shall submit the State Plan, as revised in accordance with subsection (b) of this section, to the United States Department of Health and Human Services, as amended by this act or any other act of the 2009 General Assembly.
"SECTION 10.51.(b)  The counties approved as Electing Counties in the North Carolina Temporary Assistance for Needy Families State Plan FY 2010‑2012, as approved by this section are:  Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson.
"SECTION 10.51.(c)  Counties that submitted the letter of intent to remain as an Electing County or to be redesignated as an Electing County and the accompanying county plan for fiscal years 2009 through 2011, pursuant to G.S. 108A‑27(e), shall operate under the Electing County budget requirements effective July 1, 2009. For programmatic purposes, all counties referred to in this subsection may remain under their current county designation through September 30, 2012.
"SECTION 10.51.(d)  For the 2010‑2011 fiscal year, Electing Counties shall be held harmless to their Work First Family Assistance allocations for the 2008‑2009 fiscal year, provided that remaining funds allocated for Work First Family Assistance and Work First Diversion Assistance are sufficient for payments made by the Department on behalf of Standard Counties pursuant to G.S. 108A‑27.11(b).
"SECTION 10.51.(e)  In the event that Departmental projections of Work First Family Assistance and Work First Diversion Assistance for the 2010‑2011 fiscal year indicate that remaining funds are insufficient for Work First Family Assistance and Work First Diversion Assistance payments to be made on behalf of Standard Counties, the Department is authorized to deallocate funds, of those allocated to Electing Counties for Work First Family Assistance in excess of the sums set forth in G.S. 108A‑27.11, up to the requisite amount for payments in Standard Counties. Prior to deallocation, the Department shall obtain approval by the Office of State Budget and Management. If the Department adjusts the allocation set forth in subsection (d) of this section, 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."

STATE-COUNTY SPECIAL ASSISTANCE CONSOLIDATING CHANGES
SECTION 10.19A.(a)  G.S. 105A-2(2)e. reads as rewritten:
"The following definitions apply in this Chapter:
…
(2)	Debt. – Any of the following:
…
e.	A sum owed as a result of having obtained public assistance payments under any of the following programs through an intentional false statement, intentional misrepresentation, intentional failure to disclose a material fact, or inadvertent household error:
1.	The Work First Program provided in Article 2 of Chapter 108A of the General Statutes.
2.	The State‑County Special Assistance  Program enabled by Part 3 of Article 2 of Chapter 108A of the General Statutes.
3.	A successor program of one of these programs.
…."
SECTION 10.19A.(b)  G.S. 108A-25(a)(2) reads as rewritten:
"(a)	The following programs of public assistance are established, and shall be administered by the county department of social services or the Department of Health and Human Services under federal regulations or under rules adopted by the Social Services Commission and under the supervision of the Department of Human Resources:
…
(2)	State‑county special assistance.
…."
SECTION 10.19A.(c)  G.S. 108A-40 reads as rewritten:
"Part 3. State‑County Special Assistance.
"§ 108A‑40.  Authorization of State‑County Special Assistance  Program.
The Department is authorized to establish and supervise a State‑County Special Assistance  Program. This program is to be administered by county departments of social services under rules and regulations of the Social Services Commission."
SECTION 10.19A.(d)  G.S. 108A-41 reads as rewritten:
"§ 108A‑41.  Eligibility.
(a)	Assistance shall be granted under this Part to all persons in adult care homes for care found to be essential in accordance with the rules and regulations adopted by the Social Services Commission and prescribed by G.S. 108A‑42(b). As used in this Part, the term "adult care home" includes a supervised living facility for  adults with intellectual and developmental disabilities licensed under Article 2 of Chapter 122C of the General Statutes.
(b)	Assistance shall be granted to any person who:
(1)	Is 65 years of age and older, is between the ages of 18 and 65, and is permanently and totally disabled or is legally blind pursuant to G.S. 111-11; and
(2)	Has insufficient income or other resources to provide a reasonable subsistence compatible with decency and health as determined by the rules and regulations of the Social Services Commission; and
(3)	Is one of the following:
a.	A resident of North Carolina for at least 90 days immediately prior to receiving this assistance;
b.	A person coming to North Carolina to join a close relative who has resided in North Carolina for at least 180 consecutive days immediately prior to the person's application. The close relative shall furnish verification of his or her residency to the local department of social services at the time the applicant applies for special assistance. As used in this sub‑subdivision, a close relative is the person's parent, grandparent, brother, sister, spouse, or child; or
c.	A person discharged from a State facility who was a patient in the facility as a result of an interstate mental health compact. As used in this sub‑subdivision the term State facility is a facility listed under G.S. 122C‑181.
(c)	When determining whether a person has insufficient resources to provide a reasonable subsistence compatible with decency and health, there shall be excluded from consideration the person's primary place of residence and the land on which it is situated, and in addition there shall be excluded real property contiguous with the person's primary place of residence in which the property tax value is less than twelve thousand dollars ($12,000).
(d)	The county shall also have the option of granting assistance to Certain Disabled persons as defined in the rules and regulations adopted by the Social Services Commission. Nothing in this Part should be interpreted so as to preclude any individual county from operating any program of financial assistance using only county funds."
SECTION 10.19A.(e)  G.S. 108A-45 reads as rewritten:
"§ 108A‑45.  Participation.
The State‑County Special Assistance  Program established by this Part shall be administered by all the county departments of social services under rules and regulations adopted by the Social Services Commission and under the supervision of the Department. Provided that, assistance for certain disabled persons shall be provided solely at the option of the county."
SECTION 10.19A.(f)  G.S. 108A-46.1 reads as rewritten:
"§ 108A‑46.1.  Transfer of assets for purposes of qualifying for State‑county Special Assistance.
Notwithstanding any other provision of law to the contrary, Supplemental Security Income (SSI) policy applicable to transfer of assets and estate recovery, as prescribed by federal law, shall apply to applicants for State‑county Special Assistance."
SECTION 10.19A.(g)  G.S. 108A-47 reads as rewritten:
"§ 108A‑47.  Limitations on payments.
No payment of assistance under this Part shall be made for the care of any person in a licensed facility that is owned or operated in whole or in part by any of the following:
(1)	A member of the Social Services Commission, of any county board of social services, or of any board of county commissioners;
(2)	An official or employee of the Department, unless the official or employee has been appointed temporary manager of the facility pursuant to G.S. 131E‑237, or of any county department of social services;
(3)	A spouse of a person designated in subdivisions (1) and (2)."
SECTION 10.19A.(h)  G.S. 108A-47.1 reads as rewritten:
"§ 108A‑47.1.  Special Assistance in‑home payments.
The Department of Health and Human Services may use funds from the existing State‑County Special Assistance  budget to provide Special Assistance payments to eligible individuals 18 years of age or older in in‑home living arrangements. These payments may be made for up to fifteen percent (15%) of the caseload for all State‑County Special Assistance. The standard monthly payment to individuals enrolled in the Special Assistance in‑home program shall be seventy‑five percent (75%) of the monthly payment the individual would receive if the individual resided in an adult care home and qualified for Special Assistance, except if a lesser payment amount is appropriate for the individual as determined by the local case manager. The Department shall implement Special Assistance in‑home eligibility policies and procedures to assure that in‑home program participants are those individuals who need and, but for the in‑home program, would seek placement in an adult care home facility. The Department's policies and procedures shall include the use of a functional assessment. The Department shall make this in‑home option available to all counties on a voluntary basis. To the maximum extent possible, the Department shall consider geographic balance in the dispersion of payments to individuals across the State."
SECTION 10.19A.(i)  G.S. 108A-80(b) reads as rewritten:
"(b)	The Department shall furnish a copy of the recipient check register monthly to each county auditor showing a complete list of all recipients of Work First Family Assistance in Standard Program Counties and State‑County Special Assistance, their addresses, and the amounts of the monthly grants. An Electing County whose checks are not being issued by the State shall furnish a copy of the recipient check register monthly to its county auditor showing a complete list of all recipients of Work First Family Assistance in the Electing County, their addresses, and the amounts of the monthly payments. These registers shall be public records open to public inspection during the regular office hours of the county auditor, but the registers or the information contained therein may not be used for any commercial or political purpose. Any violation of this section shall constitute a Class 1 misdemeanor."

EXTEND REPORTING DATE/EVALUATION OF CONSOLIDATION OF ADMINISTRATIVE FUNCTIONS OF COUNTY DEPARTMENT OF SOCIAL SERVICES
SECTION 10.20.  Section 10.52.(b) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.52.(b) The Program Evaluation Division shall report 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, and the Fiscal Research Division by February 1, 2011."

Children's Trust Fund
SECTION 10.20A.(a)  G.S. 7B‑1302(a) reads as rewritten:
"(a)	There is established a fund to be known as the "Children's Trust Fund," in the Department of Health and Human Services, Division of Social Services, which shall be funded by a portion of the marriage license fee under G.S. 161‑11.1 and a portion of the special license plate fee under G.S. 20‑81.12. The money in the Fund shall be used by the Division of Social Services to fund abuse and neglect prevention programs so authorized by this Article."
SECTION 10.20A.(b)  G.S. 161‑11.1(a) reads as rewritten:
"(a)	Five dollars ($5.00) of each fee collected by a register of deeds on or after October 1, 1983, for issuance of a marriage license pursuant to G.S. 161‑10(a)(2) shall be forwarded, as soon as practical but no later than 60 days after collection by the register of deeds, to the county finance officer, who shall forward same to the Department of Health and Human Services, Division of Social Services, for deposit in the Children's Trust Fund."

Office of Education Services/Consolidation of Principal Functions
SECTION 10.20B.(a)  The Office of Education Services (OES) within the Department of Health and Human Services shall consolidate the functions of the School Director OES Residential Schools and School Principal positions located at the North Carolina School for the Deaf, Eastern North Carolina School for the Deaf, and Governor Morehead School for the Blind. In addition to the minimum qualifications for School Administrator‑Principals outlined in Chapter 115C of the General Statutes and set by the Department, a person occupying the position of School Director OES Residential Schools shall be fully licensed as a School Administrator‑Principal and shall have prior experience as an educator of exceptional children or as a school administrator trained in the education of exceptional children.
SECTION 10.20B.(b)  The following positions in the Office of Education Services are hereby eliminated:
(1)	60039101 – School Principal
(2)	60039225 – School Principal
(3)	60039380 – School Administrator
(4)	60039080 – School Assistant Principal
The Office of Education Services shall ensure that elimination of these positions does not interrupt oversight of instructional programming by a fully licensed School Administrator‑Principal or School Administrator‑Assistant Principal at the North Carolina School for the Deaf, Eastern North Carolina School for the Deaf, or Governor Morehead School for the Blind.
SECTION 10.20B.(c)  The Office of Education Services (OES) shall reinstate the residential and instructional schedules for the Governor Morehead School for the Blind, Eastern North Carolina School for the Deaf, and North Carolina School for the Deaf in effect before February 8, 2010. Residential students shall have the opportunity to arrive at their respective schools on the evening of the day before commencement of academic instruction for the week. OES shall also reinstate on‑site summer school programming for these schools.

MEDICAID POLICY CHANGES
SECTION 10.22.(a)  Section 10.58(d) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.58.(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.
…
(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. The Department may impose prior authorization requirements on brand‑name drugs for which the phrase "medically necessary" is written on the prescription.
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 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 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. Notwithstanding this subdivision to the contrary, the Secretary of Health and Human Services may prevent substitution of a generic equivalent drug, including a generic equivalent that is on the State maximum allowable cost list, when the net cost to the State of the brand‑name drug, after consideration of all rebates, is less than the cost of the generic equivalent. 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, major depressive disorder or (ii) HIV/AIDS. Medications prescribed for the treatment of mental illness shall be included on the Preferred Drug List (PDL). The Department of Health and Human Services, Division of Medical Assistance, may initiate prior authorization for the prescribing of drugs specified for the treatment of mental illness for the purpose of identifying providers who fail to prescribe those drugs in accordance with indications and dosage levels approved by the federal Food and Drug Administration. The Department may require retrospective clinical justification for the use of multiple psychotropic drugs for a Medicaid patient. 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.
…
(30)	Experimental or trial procedures. – Coverage is limited to procedures that are recognized or approved by the National Institutes of Health (NIH).
(31)	Medicaid as secondary payer claims. – The Department shall apply Medicaid medical policy to recipients who have primary insurance other than Medicare, Medicare Advantage, and Medicaid. 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."
SECTION 10.22.(b)  Section 10.58(e) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.58.(e) Provider Performance Bonds and Visits. – 
(1)	Subject to the provisions of this subdivision, the Department may require Medicaid‑enrolled providers to purchase a performance bond in an amount not to exceed one hundred thousand dollars ($100,000) naming as beneficiary the Department of Health and Human Services, Division of Medical Assistance, or provide to the Department a validly executed letter of credit or other financial instrument issued by a financial institution or agency honoring a demand for payment in an equivalent amount. The Department may require the purchase of a performance bond or the submission of an executed letter of credit or financial instrument as a condition of initial enrollment, reenrollment, or reinstatement if:
a.	The provider fails to demonstrate financial viability,
b.	The Department determines there is significant potential for fraud and abuse,
c.	The Department otherwise finds it is in the best interest of the Medicaid program to do so.
The Department shall specify the circumstances under which a performance bond or executed letter of credit will be required.
(1a)	The Department may waive or limit the requirements of this paragraph for individual Medicaid‑enrolled providers or for one or more classes of Medicaid‑enrolled providers based on the following:
a.	The provider's or provider class's dollar amount of monthly billings to Medicaid. 
b.	The length of time an individual provider has been licensed, endorsed, certified, or accredited in this State to provide services.
c.	The length of time an individual provider has been enrolled to provide Medicaid services in this State.
d.	The provider's demonstrated ability to ensure adequate record keeping, staffing, and services.
e.	The need to ensure adequate access to care.
In waiving or limiting requirements of this paragraph, the Department shall take into consideration the potential fiscal impact of the waiver or limitation on the State Medicaid Program. The Department shall provide to the affected provider written notice of the findings upon which its action is based and shall include the performance bond requirements and the conditions under which a waiver or limitation apply. The Department may adopt temporary rules in accordance with G.S. 150B‑21.1 as necessary to implement this provision.
(2)	Reimbursement is available for up to 30 visits per recipient per fiscal year for the following professional services: physicians, nurse practitioners, nurse midwives, clinics, health departments, optometrists, chiropractors, and podiatrists. The Department of Health and Human Services shall adopt medical policies in accordance with G.S. 108A‑54.2 to distribute the allowable number of visits for each service or each group of services consistent with federal law. In addition, the Department shall establish a threshold of some number of visits for these services. The Department shall ensure that primary care providers or the appropriate CCNC network are notified when a patient is nearing the established threshold to facilitate care coordination and intervention as needed.
Prenatal services, all EPSDT children, emergency room visits, and mental health visits subject to independent utilization review are exempt from the visit limitations contained in this subdivision. Subject to appropriate medical review, the Department may authorize exceptions when additional care is medically necessary. Routine or maintenance visits above the established visit limit will not be covered unless necessary to actively manage a life threatening disorder or as an alternative to more costly care options."

SPECIALTY DRUG PROVIDER NETWORK
SECTION 10.23.  The Department of Health and Human Services shall work with providers to develop ways to reduce expenditures for specialty drugs, maintain best practices, prevent overutilization, and allow for drug reimbursement rate negotiations for hemophilia, hepatitis C, and intravenous immunoglobulin (IVIG) drugs.

STATEWIDE EXPANSION OF CAPITATED 1915(B)/(C) BEHAVIORAL HEALTH WAIVERS
SECTION 10.24.(a)  The Department of Health and Human Services (Department) shall select one additional Local Management Entity (LME) to implement the capitated 1915 (b)/(c) Medicaid waiver as a demonstration program. The waiver program shall include all Medicaid‑covered mental health, developmental disabilities, and substance abuse services.  Expansion of the waiver to one additional LME shall be contingent upon approval by the Centers for Medicare and Medicaid Services. The Department shall not approve any expansion of the Piedmont Behavioral Healthcare LME beyond its existing catchment area.
SECTION 10.24.(b)  The Department shall conduct an evaluation of the two capitated 1915(b)/(c) Medicaid waiver demonstration program sites to determine the programs' impact on consumers with developmental disabilities.  The evaluation shall include a satisfaction survey of consumers.  The Department shall consider the impact on ICF/MR facilities included in the waiver to determine and, to the extent possible, minimize potential inconsistencies with the DMA‑ICF/MR rate plan and the requirements of G.S. 131E‑176 and G.S. 131E‑178 without negatively impacting the viability and success of the waiver program.  The Department shall consult with stakeholders and evaluate all other waiver options, including the possibility of a wavier without a 1915(b)/(c) combination.  The Department shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division no later than April 1, 2012.

STUDY MEDICAID PROVIDER RATES
SECTION 10.25.(a)  The Department of Health and Human Services, Division of Medical Assistance, shall initiate a study or contract out for a study of reimbursement rates for Medicaid providers and program benefits. The study shall include the following information:
(1)	A comparison of Medicaid reimbursement rates in North Carolina with reimbursement rates in surrounding states and with rates in two additional states; and
(2)	A comparison of Medicaid program benefits in North Carolina with program benefits provided in surrounding states and with rates in two additional states. Selected provider rates shall be studied for the initial report.
SECTION 10.25.(b)  The Department shall report its initial findings to the Governor, 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 by April 1, 2011.
SECTION 10.25.(c)  Funds appropriated to the Department of Health and Human Services may be used to complete this study.

MEDICAID FRAUD PREVENTION
SECTION 10.26.(a)  The Department of Health and Human Services (Department) is authorized to create a fraud prevention program that uses information, lawfully obtained, from State and private databases to develop a fraud risk analysis of Medicaid providers and recipients. This analysis would be used to prevent fraud before it takes place and to achieve cost avoidance savings. For the purposes of the fraud prevention program created pursuant to this subsection, State agencies shall provide the Department with access to their databases and the Department shall comply with all necessary security measures and restrictions to ensure that access to any specific information held confidential under federal and State law is limited to authorized persons.
SECTION 10.26.(b)  The information obtained by the Department pursuant to subsection (a) of this section shall be privileged and confidential, is not a public record pursuant to G.S. 132‑1, and may only be used for investigative or evidentiary purposes related to violations of State or federal law and regulatory activities. The Department shall release data collected pursuant to this section to the following persons only:
(1)	An individual who requests the individual's own Medicaid recipient information.
(2)	A provider who requests the provider's Medicaid provider information.
(3)	Special agents of the North Carolina State Bureau of Investigation who are assigned to the Medicaid Fraud Investigations Unit. The SBI shall notify the Office of the Attorney General of North Carolina of each request for inspection of records maintained by the Department.
(4)	To a court pursuant to a lawful court order in a criminal action.
The Department may provide data to public or private entities for statistical, research, or educational purposes only after removing information that could be used to identify individual recipients or providers of Medicaid services.
SECTION 10.26.(c)  Notwithstanding any other provision of law to the contrary, the Department may modify or extend existing contracts to achieve Medicaid fraud prevention savings in a timely manner, subject to review and approval by the Secretary of the Department of Administration. The requirements of G.S. 143‑59 apply to contracts entered into, modified, or extended pursuant to this section.
SECTION 10.26.(d)  The Department shall report on the activities conducted under this section, including actions taken relating to compliance with G.S. 143‑59 and any contract modifications or extensions that are approved pursuant to this section to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Office of State Budget and Management, and the Fiscal Research Division on or before April 1, 2011.
SECTION 10.26.(e)  The authority granted to the Department under this section expires one year following the effective date of this section. The Department shall destroy all records and information obtained pursuant to this section after five years. Any records or information turned over to the State Bureau of Investigation or a court of competent jurisdiction shall not be subject to the destruction requirements of this subsection.

STUDY HIV MEDICAID WAIVER
SECTION 10.27.  By November 1, 2010, the Department of Health and Human Services, Divisions of Medical Assistance and Public Health, shall jointly study and report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on the financial and programmatic feasibility of reducing the waiting list for the AIDS Drug Assistance Program (ADAP) by expanding eligibility for Medicaid to HIV‑positive individuals with incomes at or below one hundred thirty‑three percent (133%) of the federal poverty level. The study shall include an assessment of the cost‑effectiveness of using State dollars to expand Medicaid eligibility to this population as compared to using State dollars for ADAP. The study may also consider any planning and coordination benefits the State may derive from expanding Medicaid eligibility to HIV‑positive individuals, in preparation for the expansion of Medicaid eligibility in calendar year 2014 to all individuals with incomes at or below one hundred thirty‑three percent (133%) of the federal poverty level. If, as a result of the study, the Divisions of Medical Assistance and Public Health conclude that expanding Medicaid eligibility to HIV‑positive individuals with incomes at or below one hundred thirty‑three percent (133%) of the federal poverty level is a cost‑effective means for the State to eliminate its ADAP waiting list, then the Division of Medical Assistance shall apply to the Centers for Medicare and Medicaid Services (CMS) for an appropriate waiver to implement this expansion in Medicaid eligibility.  If approved by CMS, the Division shall not implement the waiver except as authorized by an act of the General Assembly appropriating funds for this purpose.

ELIMINATE REIMBURSEMENT OF "NEVER EVENTS"
SECTION 10.28.  The Department of Health and Human Services, Division of Medical Assistance, shall modify its Medicaid State Plan, as detailed by the Centers for Medicare and Medicaid Services in its July 31, 2008 letter to State Medicaid Directors, to ensure that inpatient hospital reimbursement is not provided for Hospital‑Acquired Conditions (HACs) that are identified as nonpayable by Medicare. The State Plan Amendment addressing this "Never Event" modification shall apply to all Medicaid reimbursement provisions in section 4.19A of the North Carolina Medicaid State Plan governing inpatient hospital reimbursement, including Medicaid supplemental or enhanced payments and Medicaid disproportionate share hospital payments.

AMEND MEDICAID RECIPIENT APPEALS PROCESS
SECTION 10.30.(a)  Section 10.15A(h1) through (h6) of S.L. 2008‑107, as amended by Section 3.13(b) of S.L. 2008‑118, Section 2(a) of S.L. 2009‑526, Section 2(b) of S.L. 2009‑526, and by Section. 1.1(a) and (b) of S.L. 2009‑550, reads as rewritten:
"SECTION 10.15A.(h1)
(1)	General Rule. – Notwithstanding any provision of State law or rules to the contrary, this subsection shall govern the process used by a Medicaid applicant or recipient to appeal a determination made by the Department of Health and Human Services to deny, terminate, suspend, or reduce Medicaid covered services. For purposes of this subsection, the phrase "adverse determination" means a determination by the Department to deny, terminate, suspend, or reduce Medicaid covered services. For purposes of this subsection, all references to an applicant or recipient include the applicant or recipient's parent, guardian, or legal representative; however, notice need only be given to a parent, guardian, or legal representative who has requested in writing to receive the notice. 
(2)	Notice. – Except as otherwise provided by federal law or regulation, at least 10 days before the effective date of an adverse determination, the Department shall notify the applicant or recipient, and the provider, if applicable, in writing of the determination and of the applicant's or recipient's right to appeal the determination. The notice shall be mailed on the date indicated on the notice as the date of the determination. The notice shall include:
a.	An identification of the applicant or recipient whose services are being affected by the adverse determination, including full name and Medicaid identification number.
b.	An explanation of what service is being denied, terminated, suspended, or reduced and the reason for the determination.
c.	The specific regulation, statute, or medical policy that supports or requires the adverse determination.
d.	The effective date of the adverse determination.
e.	An explanation of the applicant's or recipient's right to appeal the Department's adverse determination in an evidentiary hearing before an administrative law judge.
f.	An explanation of how the applicant or recipient can request a hearing and a statement that the applicant or recipient may represent himself or use legal counsel, a relative, or other spokesperson.
g.	A statement that the applicant or recipient will continue to receive Medicaid services at the level provided on the day immediately preceding the Department's adverse determination or the amount requested by the applicant or recipient, whichever is less, if the applicant or recipient requests a hearing before the effective date of the adverse determination. The services shall continue until the hearing is completed and a final decision is rendered. 
h.	The name and telephone number of a contact person at the Department to respond in a timely fashion to the applicant's or recipient's questions.
i.	The telephone number by which the applicant or recipient may contact a Legal Aid/Legal Services office.
j.	The appeal request form described in subdivision (4) of this subsection that the applicant or recipient may use to request a hearing.
(3)	Appeals. – Except as provided by this subsection and subsection 10.15A(h2) of this act, a request for a hearing to appeal an adverse determination of the Department under this section is a contested case subject to the provisions of Article 3 of Chapter 150B of the General Statutes. The applicant or recipient must request a hearing within 30 days of the mailing of the notice required by subdivision (2) of this subsection by sending an appeal request form to the Office of Administrative Hearings and the Department. Where a request for hearing concerns the reduction, modification, or termination of Medicaid services, upon the receipt of a timely appeal, the Department shall reinstate the services to the level or manner prior to action by the Department as permitted by federal law or regulation. The Department shall immediately forward a copy of the notice to the Office of Administrative Hearings electronically. The information contained in the notice is confidential unless the recipient appeals. The Office of Administrative Hearings may dispose of the records after one year. The Department may not influence, limit, or interfere with the applicant's or recipient's decision to request a hearing.
(4)	Appeal Request Form. – Along with the notice required by subdivision (2) of this subsection, the Department shall also provide the applicant or recipient with an appeal request form which shall be no more than one side of one page. The form shall include the following:
a.	A statement that in order to request an appeal, the applicant or recipient must send the form by mail or fax to the address or fax number listed on the form within 30 days of mailing of the notice.
b.	The applicant's or recipient's name, address, telephone number, and Medicaid identification number.
c.	A preprinted statement that indicates that the applicant or recipient would like to appeal the specific adverse determination of which the applicant or recipient was notified in the notice.
d.	A statement informing the applicant or recipient that he or she may choose to be represented by a lawyer, a relative, a friend, or other spokesperson.
e.	A space for the applicant's or recipient's signature and date.
(5)	Final Decision. – After a hearing before an administrative law judge, the judge shall return the decision and record to the Department in accordance with subsection 10.15A(h2) of this act. The Department shall make a final decision in the case within 20 days of receipt of the decision and record from the administrative law judge and promptly notify the applicant or recipient of the final decision and of the right to judicial review of the decision pursuant to Article 4 of Chapter 150B of the General Statutes.
"SECTION 10.15A.(h2)
(1)	Application. – This subsection applies only to contested Medicaid cases commenced by Medicaid applicants or recipients under subsection 10.15A(h1) of this act. Except as otherwise provided by subsection 10.15A(h1) and this subsection governing time lines and procedural steps, a contested Medicaid case commenced by a Medicaid applicant or recipient is subject to the provisions of Article 3 of Chapter 150B. To the extent any provision in this subsection or subsection 10.15A(h1) of this act conflicts with another provision in Article 3 of Chapter 150B, this subsection and subsection 10.15A(h1) controls.
(2)	Simple Procedures. – Notwithstanding any other provision of Article 3 of Chapter 150B of the General Statutes, the chief administrative law judge may limit and simplify the procedures that apply to a contested Medicaid case involving a Medicaid applicant or recipient in order to complete the case as quickly as possible. To the extent possible, the Office of Administrative Hearings shall schedule and hear all contested Medicaid cases within 55 days of submission of a request for appeal. Hearings shall be conducted telephonically or by video technology, however the recipient or applicant, or the recipient's or applicant's representative may request that the hearing be conducted before the administrative law judge in‑person. An in‑person hearing shall be conducted in Wake County, however for good cause shown, the in‑person hearing may be conducted in the county of residence of the recipient or applicant. Good cause shall include but is not limited to the applicant's or recipient's impairments limiting travel or the unavailability of the applicant's or recipient's treating professional witnesses. The Department shall provide written notice to the recipient or applicant of the use of telephonic hearings, hearings by video conference,  and in‑person hearings before the administrative law judge, and how to request a hearing in the recipient's or applicant's county of residence. The simplified procedure may include requiring that all prehearing motions be considered and ruled on by the administrative law judge in the course of the hearing of the case on the merits. An administrative law judge assigned to a contested Medicaid case shall make reasonable efforts in a case involving a Medicaid applicant or recipient who is not represented by an attorney to assure a fair hearing and to maintain a complete record of the hearing. The administrative law judge may allow brief extensions of the time limits contained in this section for good cause and to ensure that the record is complete. Good cause includes delays resulting from untimely receipt of documentation needed to render a decision and other unavoidable and unforeseen circumstances. Continuances shall only be granted in accordance with rules adopted by the Office of Administrative Hearings, and shall not be granted on the day of the hearing, except for good cause shown. If a petitioner fails to make an appearance at a hearing that has been properly noticed via certified mail by the Office of Administrative Hearings, the Office of Administrative Hearings shall immediately dismiss the contested case provision.
(3)	Mediation. – Upon receipt of an appeal request form as provided by subdivision 10.15A(h1)(4) of this act or other clear request for a hearing by a Medicaid applicant or recipient, the Office of Administrative Hearings shall immediately notify the Mediation Network of North Carolina which shall within five days contact the petitioner to offer mediation in an attempt to resolve the dispute. If mediation is accepted, the mediation must be completed within 25 days of submission of the request for appeal. Upon completion of the mediation, the mediator shall inform the Office of Administrative Hearings and the Department within 24 hours of the resolution by facsimile or electronic messaging. If the parties have resolved matters in the mediation, the case shall be dismissed by the Office of Administrative Hearings. The Office of Administrative Hearings shall not conduct any contested Medicaid cases hearings until it has received notice from the mediator assigned that either: (i) the mediation was unsuccessful, or (ii) the petitioner has rejected the offer of mediation, or (iii) the petitioner has failed to appear at a scheduled mediation. Nothing in this subdivision shall restrict the right to a contested case hearing.
(4)	Burden of Proof. – The petitioner has the burden of proof to show entitlement to a requested benefit or the propriety of requested agency action when the agency has denied the benefit or refused to take the particular action. The agency has the burden of proof when the appeal is from an agency determination to impose a penalty or reduce, terminate, or suspend a benefit previously granted. The party with the burden of proof on any issue has the burden of going forward, and the administrative law judge shall not make any ruling on the preponderance of evidence until the close of all evidence.
(4a)	New Evidence.‑ The petitioner shall be permitted to submit evidence regardless of whether obtained prior to or subsequent to the Department's actions and regardless of whether the Department had an opportunity to consider the evidence in making its determination to deny, reduce, terminate or suspend a benefit. When such evidence is received, at the request of the Department, the administrative law judge shall continue the hearing for a minimum of 15 days and a maximum of 30 days to allow for the Department's review of the evidence. Subsequent to review of the evidence, if the Department reverses its original decision, it shall immediately inform the administrative law judge.
(4b)	Issue for Hearing.‑ For each penalty imposed or benefit reduced, terminated, or suspended, the hearing shall determine whether the Department substantially prejudiced the rights of the petitioner and if the Department, based upon evidence at the hearing:
a.	Exceeded its authority or jurisdiction;
b.	Acted erroneously;
c.	Failed to use proper procedure;
d.	Acted arbitrarily or capriciously; or,
e.	Failed to act as required by law or rule.
(5)	Decision. – The administrative law judge assigned to a contested Medicaid case shall hear and decide the case without unnecessary delay. The Office of Administrative Hearings shall send a copy of the audiotape or diskette of the hearing to the agency within five days of completion of the hearing. The judge shall prepare a written decision and send it to the parties. The decision must be sent together with the record to the agency within 20 days of the conclusion of the hearing.
"SECTION 10.15A.(h3)  From funds available to the Department of Health and Human Services for the 2010‑2011 fiscal year, the sum of one million dollars  ($1,000,000) shall be transferred by the Department of Health and Human Services to the Office of Administrative Hearings (OAH). These funds shall be allocated by  OAH for mediation services provided for Medicaid applicant and recipient appeals and to contract for other services necessary to conduct the appeals process. OAH shall continue the Memorandum of Agreement (MOA) with the Department of Health and Human Services for mediation services provided for Medicaid applicant and recipient appeals and contracted services necessary to conduct the appeals process. The MOA will facilitate the Department's ability to draw down federal Medicaid funds to support this administrative function. Upon receipt of invoices from OAH for covered services rendered in accordance with the MOA, the Department shall transfer the federal share of Medicaid funds drawn down for this purpose. 
"SECTION 10.15A.(h4)  Effective October 1, 2008, the Department of Health and Human Services shall discontinue its current informal appeals process for Medicaid applicants and recipients appealing a determination made by the Department to deny, terminate, suspend, or reduce Medicaid covered services. All such informal appeals by Medicaid applicants or recipients under the current system which are pending on that date and for which a hearing has not been held shall be discontinued and the applicant or recipient offered an opportunity to appeal to the Office of Administrative Hearings in accordance with the provisions of subsection 10.15A(h1) of this act. The Department shall make every effort to resolve or settle all of the backlogged cases prior to the effective date of this act.
"SECTION 10.15A.(h5)  Nothing in this act shall prevent the Department of Health and Human Services from engaging in an informal review of the case with the applicant or recipient prior to issuing a notice of adverse determination as provided by subsection 10.15A(h1) of this act.""
SECTION 10.30.(b)  The Revisor of Statutes shall codify the statutes set forth in subsection (a) of this section.
SECTION 10.30.(c)  Not later than October 1, 2011, the Department of Health and Human Services and the Office of Administrative Hearings (OAH) shall submit a report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Subcommittee on Health and Human Services, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division on the number, status, and outcome of contested Medicaid cases handled by OAH pursuant to the appeals process established in subsection (a) of this section. The report shall include information on the number of contested Medicaid cases resolved through mediations and through formal hearings, the outcome of settled and withdrawn cases, and the number of incidences in which the Division of Medical Assistance (DMA) reversed the decision of an administrative law judge, along with DMA's rationale for the reversal.

ACCOUNTING FOR MEDICAID RECEIVABLES AS NONTAX REVENUE
SECTION 10.31.  Section 10.64.(b) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.64.(b)  For the 2009‑2010 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred twenty‑four million nine hundred ninety‑four thousand nine hundred fifty‑four dollars ($124,994,954) with the Department of State Treasurer to be accounted for as nontax revenue. For the 2010‑2011 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred thirty‑five million dollars ($135,000,000) with the Department of State Treasurer to be accounted for as nontax revenue. These deposits shall represent the return of General Fund appropriations provided to the Department of Health and Human Services to provide indigent care services at State‑owned and operated mental hospitals. The treatment of any revenue derived from federal programs shall be in accordance with the requirements specified in the Code of Federal Regulations, Volume 2, Part 225."

MEDICAID PREFERRED DRUG LIST
SECTION 10.32.  Section 10.66.(c) of S.L. 2009‑451 reads as rewritten:
"SECTION 10.66.(c)  The Department, in consultation with the PAG, shall adopt and publish policies and procedures relating to the preferred drug list, including:
(1)	Guidelines for the presentation and review of drugs for inclusion on the preferred drug list,
(2)	The manner and frequency of audits of the preferred drug list for appropriateness of patient care and cost‑effectiveness,
(3)	An appeals process for the resolution of disputes, and
(4)	Such other policies and procedures as the Department deems necessary and appropriate.
The Department and the pharmaceutical and therapeutics committee shall consider all therapeutic classes of prescription drugs for inclusion on the preferred drug  list.
The Department shall maintain an updated preferred drug list in electronic format and shall make the list available to the public on the Department's Internet Web site. 
The Department shall: (i) enter into a multistate purchasing pool; (ii) negotiate directly with manufacturers or labelers; (iii) contract with a pharmacy benefit manager for negotiated discounts or rebates for all prescription drugs under the medical assistance program; or (iv) effectuate any combination of these options in order to achieve the lowest available price for such drugs under such program.
The Department may negotiate supplemental rebates from manufacturers that are in addition to those required by Title XIX of the federal Social Security Act. The committee shall consider a product for inclusion on the preferred drug list if the manufacturer provides a supplemental rebate. The Department may procure a sole source contract with an outside entity or contractor to conduct negotiations for supplemental rebates."

MEDICAID PREFERRED DRUG LIST (PDL) REVIEW PANEL
SECTION 10.33.(a)  The Secretary of the Department of Health and Human Services shall establish a Preferred Drug List (PDL) Policy Review Panel within 60 days after the effective date of this section. The purpose of the PDL Policy Review Panel is to review the Medicaid PDL recommendations from the Department of Health and Human Services, Division of Medical Assistance, and the Physician Advisory Group Pharmacy and Therapeutics (PAG P&T) Committee.
SECTION 10.33.(b)  The Secretary shall appoint the following individuals to the review panel:
(1)	The Director of Pharmacy for the Division of Medical Assistance.
(2)	A representative from the PAG P&T Committee.
(3)	A representative from the Old North State Medical Society.
(4)	A representative from the North Carolina Association of Pharmacists.
(5)	A representative from Community Care of North Carolina.
(6)	A representative from the North Carolina Psychiatric Association.
(7)	A representative from the North Carolina Pediatric Society.
(8)	A representative from the North Carolina Academy of Family Physicians.
(9)	A representative from the North Carolina Chapter of the American College of Physicians.
(10)	A representative from a research‑based pharmaceutical company.
Individuals appointed to the Review Panel, except for the Division's Director of Pharmacy, shall only serve a two‑year term.
SECTION 10.33.(c)  Within 30 days after the Department, in consultation with the PAG P&T Committee, publishes a proposed policy or procedure related to the Medicaid PDL, the Review Panel shall hold an open meeting to review the recommended policy or procedure along with any written public comments received as a result of the posting.  The Review Panel shall provide an opportunity for public comment at the meeting. After the conclusion of the meeting, the Review Panel shall submit policy recommendations about the proposed Medicaid PDL policy or procedure to the Secretary.

LOCK NARCOTIC PRESCRIPTIONS INTO SINGLE PHARMACY/PROVIDER
SECTION 10.34.  The Department of Health and Human Services, Division of Medical Assistance, shall lock narcotic prescription medications provided to Medicaid enrollees into a single pharmacy and provider, as follows:
(1)	Enrollees may be prescribed narcotic medications by only one prescribing physician and may not change the prescribing physician at anytime without prior approval or authorization by the Division.
(2)	Enrollees may have prescriptions for narcotic medications filled at only one pharmacy and may not change to another pharmacy at anytime without prior approval or authorization by the Division.

AUTHORIZE THE DIVISION OF MEDICAL ASSISTANCE TO TAKE CERTAIN STEPS TO EFFECTUATE COMPLIANCE WITH BUDGET REDUCTIONS IN THE MEDICAID PROGRAM
SECTION 10.35.  Section 10.68A(a) of S.L. 2009‑451, as amended by Section 5A of S.L. 2009‑575, reads as rewritten:
"SECTION 10.68A.(a)  For the purpose of enabling the Department of Health and Human Services, Division of Medical Assistance, to achieve the budget reductions enacted in this act for the Medicaid program, the Department may take the following actions, notwithstanding any other provision of this act or other State law or rule to the contrary and subject to the requirements of subsection (e) of this section:
(1)	Electronic transactions. – 
a.	Within 60 days of notification of its procedures via the DMA Web site, Medicaid providers shall follow the Department's established procedures for securing electronic payments. No later than September 1, 2009, the Department shall cease routine provider payments by check.
b.	Effective September 1, 2009, all Medicaid providers shall file claims electronically to the fiscal agent. Nonelectronic claims submission may be required when it is in the best interest of the Department.
c.	Effective September 1, 2009, enrolled Medicaid providers shall submit Preadmission Screening and Annual Resident Reviews (PASARR) through the Department's Web‑based tool or through a vendor with interface capability to submit data into the Web‑based PASARR.
(2)	Clinical coverage. – The Department of Health and Human Services, Division of Medical Assistance, shall amend applicable clinical policies and submit applicable State Plan amendments to CMS to implement the budget reductions authorized in the following clinical coverage areas in this act:
a.	Consolidate and reduce Targeted Case Management and case management functions bundled within other Medicaid services.
b.	Take appropriate action to lower the cost of HIV case management, including tightening service hours and limiting administrative costs. The Department shall maintain HIV case management as a stand‑alone service outside of departmental efforts to consolidate case management services.
c.	Eliminate coverage of therapeutic camps. The Department shall report on or before October 1, 2009, on the plan to transition children out of mental health residential therapeutic camps. The Department shall submit the report to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services.
(3)	Medicaid Personal Care Service provision. – Upon the enactment of this act, the Division of Medical Assistance shall implement the following new criteria for personal care services (PCS):
a.	Independent assessment by an entity that does not provide direct PCS services for evaluation of the recipient prior to initiation of service. The independent assessment will determine the qualifying Activities of Daily Living (ADL), the level of assistance required, and the amount and scope of PCS to be provided, according to policy criteria.
b.	Independent assessment or review from the assigned Community Care of North Carolina (CCNC) physician of the continued qualification for PCS services under the revised PCS policy criteria.
c.	Establishment of time limits on physician service orders and reauthorization in accordance with the recipient's diagnosis and acuity of need.
d.	Add the following items to the list of tasks that are not covered by this service: nonmedical transportation, errands and shopping, money management, cueing, and prompting, guiding, or coaching.
e.	Online physician attestation of medical necessity.
f.	If sufficient reduction in cost is not achieved with the revised policy, the Secretary shall direct the Division of Medical Assistance to further modify the policy to achieve targeted cost savings.
g.	Essential errands that are critical to maintaining the health and welfare of the recipient may be approved on a case‑by‑case basis by the DMA nurse assessor when there is no family member, other individual, program, or service available to meet this need. Approval, including the amount of time required to perform this task, shall be documented on the recipient's assessment form and plan of care.
Recipients currently receiving PCS services shall be reviewed under the above criteria, and those recipients not meeting the new criteria shall be terminated from the service within 30 days of the review. The Department shall conduct a study determining the cost effectiveness, efficiencies gained, and challenges associated with transitioning the performance of independent assessments for PCS to CCNC and shall report its findings to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on or before January 1, 2011.
(4)	MH/DD/SA Personal Care and Personal Assistance Services Provision. – A denial, reduction, or termination of Medicaid‑funded personal care services shall result in a similar denial, reduction, or termination of State‑funded MH/DD/SA personal care and personal assistance services.
(5)	Community Support and other MH/DD/SA services. – The Department of Health and Human Services shall transition community support child and adult, individual and group services to other defined services on or before June 30, 2010. The Division of Medical Assistance and the Division of MH/DD/SA shall take the steps necessary for the Medicaid and the State‑funded community support program to provide for transition and discharge planning to recipients currently receiving community support services. The following shall occur:
a.	The Department shall submit to CMS: (i) revised service definitions that separate case management functions from the Community Support definition and (ii) a new service definition for peer support services for adults with mental illness and/or substance abuse disorders, for implementation no sooner than January 1, 2011.
b.	No new admissions for community support individual or group shall be allowed during this transition period unless the Department determines appropriate alternative services are not available, in which case limited community support services may be provided during the transition period. LMEs will be responsible for referring eligible consumers to appropriate alternative services.
c.	Authorizations currently in effect as of the date of enactment of this act remain valid. Any new authorization or subsequent reauthorization is subject to the provisions of this act.
d.	No community support services shall be provided in conjunction with other enhanced services. Until CMS approves the new case management definition, professional level community support may be provided in conjunction with residential Level III and IV to assist in recipient discharge planning. Up to a maximum of 24 hours of case management (professional level) functions may be provided over a 90‑day authorization period as approved by the prior authorization vendor.
e.	The current moratorium on community support provider endorsement shall remain in effect.
f.	A provider of community support services whose endorsement has been withdrawn or whose Medicaid participation has been terminated is not entitled to payment during the period the appeal is pending, and the Department shall make no payment to the provider during that period. If the final agency decision is in favor of the provider, the Department shall remove the suspension, commence payment for valid claims, and reimburse the provider for payments withheld during the period of appeal.
g.	Effective 60 days from the enactment of this act, the paraprofessional level of community support shall be eliminated, and from this date the Department shall not use any Medicaid or State funds to pay for this level of service.
h.	Thirty days after the enactment of this act, any concurrent request shall be accompanied with a discharge plan. Submission of the discharge plan will be a required document for a request to be considered complete. Failure to submit the discharge plan will result in the request being returned as "unable to process."  Discharge from the service must occur within 90 days after the submission of the discharge plan.
i.	Any community support provider that ceases to function as a provider shall provide written notification to DMA, the Local Management Entity, recipients, and the prior authorization vendor 30 days prior to closing of the business.
j.	Medical and financial record retention is the responsibility of the provider and shall be in compliance with the record retention requirements of their Medicaid provider agreement or State‑funded services contract. Records shall also be available to State, federal, and local agencies.
k.	Failure to comply with notification, recipient transition planning, or record maintenance shall result in suspension of further payment until such failure is corrected. In addition, failure to comply shall result in denial of enrollment as a provider for any Medicaid or State‑funded service. A provider (including its officers, directors, agents, or managing employees or individuals or entities having a direct or indirect ownership interest or control interest of five percent (5%) or more as set forth in Title XI of the Social Security Act) that fails to comply with  the required record retention may be subject to sanctions, including exclusion from further participation in the Medicaid program, as set forth in Title XI.
(6)	Community Support Team. – Authorization for a Community Support Team shall be based upon medical necessity as defined by the Department and shall not exceed 18 hours per week. The Division of Medical Assistance shall do an immediate rate study of the Community Support Team to bring the average cost of service per recipient in line with Assertive Community Treatment Team (ACTT) services. The Division shall also revise provider qualifications and tighten the service definition to contain costs in this line item. Not later than December 1, 2009, the Division of Medical Assistance shall report its findings on the rate study and any actions it has taken to conform with this subdivision to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services.
(7)	MH Residential. – The Department of Health and Human Services shall restructure the Medicaid child mental health, developmental disabilities, and substance abuse residential services to ensure that total expenditures are within budgeted levels. All restructuring activities shall be in compliance with federal and State law or rule. The Divisions of Medical Assistance and Mental Health, Developmental Disabilities, and Substance Abuse Services shall establish a team inclusive of providers, LMEs, and other stakeholders to assure effective transition of recipients to appropriate treatment options. The restructuring shall address all of the following:
a.	Submission of the therapeutic family service definition to CMS.
b.	The Department shall reexamine the entrance and continued stay criteria for all residential services. The revised criteria shall promote least restrictive services in the home prior to residential placement. During treatment, there must be inclusion in community activities and parent or legal guardian participation in treatment.
c.	Require all existing residential providers or agencies to be nationally accredited within one year of enactment of this act. Any providers enrolled after the enactment of this act shall be subject to existing endorsement and nationally accrediting requirements. In the interim, providers who are nationally accredited will be preferred providers for placement considerations.
d.	Before a child can be admitted to Level III or Level IV placement, one or more of the following shall apply:
1.	Placement shall be a step down from a higher level placement such as a psychiatric residential treatment facility or inpatient; or
2.	Multisystemic therapy or intensive in‑home therapy services have been unsuccessful; or
3.	The Child and Family Team has reviewed all other alternatives and recommendations and recommends Level III or IV placement due to maintaining health and safety; or
4.	Transition or discharge plan shall be submitted as part of the initial or concurrent request.
e.	Length of stay is limited to no more than 120 days. Any exceptions granted will require an independent psychiatric assessment, Child and Family Team review of goals and treatment progress, family or discharge placement setting are actively engaged in treatment goals and objectives and active participation of the prior authorization of vendor. The Department shall study the effectiveness of the length of stay limitation imposed pursuant to this sub‑subdivision, and the number of children staying in Level II, III, and IV facilities, and report its findings to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services on or before January 1, 2011, and shall provide update reports on the number of children in these facilities to this same committee every six months thereafter, for the following three‑year period.
f.	Submission of discharge plan is required in order for the request to be considered complete. Failure to submit a complete discharge plan will result in the request being returned as unable to process.
g.	Any residential provider that ceases to function as a provider shall provide written notification to DMA, the Local Management Entity, recipients, and the prior authorization vendor 30 days prior to closing of the business.
h.	Record maintenance is the responsibility of the provider and must be in compliance with record retention requirements. Records shall also be available to State, federal, and local agencies.
i.	Failure to comply with notification, recipient transition planning, or record maintenance shall be grounds for withholding payment until such activity is concluded. In addition, failure to comply shall be conditions that prevent enrollment for any Medicaid or State‑funded service. A provider (including its officers, directors, agents, or managing employees or individuals or entities having a direct or indirect ownership interest or control interest of five percent (5%) or more as set forth in Title XI of the Social Security Act) that fails to comply with the required record retention may be subject to sanctions, including exclusion from further participation in the Medicaid program, as set forth in Title XI.
j.	On or before October 1, 2009, the Department shall report on its plan for transitioning children out of Level III and Level IV group homes. The Department shall submit the reports to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services.
(8)	Reduce Medicaid rates. – Subject to the prior approval of the Office of State Budget and Management, the Secretary shall reduce Medicaid provider rates to accomplish the reduction in funds for this purpose enacted in this act. In exercising authority under this subdivision, the Secretary shall not reduce Medicaid provider rates in excess of the amount required to achieve the budget reductions enacted in this act. The Secretary shall consider the impact on access to care through primary care providers and critical access hospitals and may adjust the rates accordingly. The rate reduction applies to all Medicaid private and public providers with the following exceptions:  federally qualified health clinics, rural health centers, State institutions, hospital outpatient, pharmacies, and the noninflationary components of the case‑mix reimbursement system for nursing facilities. Medicaid rates predicated upon Medicare fee schedules shall follow Medicare reductions but not Medicare increases unless federally required. Inflationary increases for Medicaid providers paying provider fees (private ICF‑MRs and nursing facilities) can occur if the State share of the increases can be funded with provider fees.
(9)	Medicaid identification cards. – The Department shall issue Medicaid identification cards to recipients on an annual basis with quarterly updates.
(10)	The Department of Health and Human Services shall develop a plan for the consolidation of case management services utilizing CCNC. The plan shall address the time line and process for implementation, the identification of savings, and the Medicaid recipients affected by the consolidation. Consolidation under this subdivision does not apply to HIV case management. By December 1, 2010, the Department shall report on the plan 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.
(11)	For the purpose of promoting cost‑effective utilization of outpatient mental health services for children, DMA shall require prior authorization for services following the sixteenth visit.
(12)	Provision of Medicaid Private Duty Nursing (PDN). – DMA shall change the Medicaid Private Duty Nursing Program provided under the State Medicaid Plan, as follows:
a.	Restructure the current PDN Program to provide services that are:
1.	Provided only to qualified recipients under the age of 21.
2.	Authorized by the recipient's primary care or attending physician.
3.	Limited to 16 hours of service per day, unless additional services are required to correct or ameliorate defects and physical and mental illnesses and conditions as defined in 42 U.S.C. § 1396d(r)(5).
4.	Approved based on an initial assessment and continuing need reassessments performed by an Independent Assessment Entity (IAE) that does not provide PDN services and authorized in amounts that are medically necessary based on the recipient's medical condition, amount of family assistance available, and other relevant conditions and circumstances, as defined by the Medicaid Clinical Coverage Policy for this service.
5.	Provided in accordance with a plan of care approved by DMA or its designee.
b.	Develop and submit to CMS a § 1915(c) Home and Community‑Based Services Waiver for individuals dependent on technology to substitute for a vital body function.
c.	Once approved by CMS and upon approval of the Medicaid Clinical Coverage Policy, transition all qualified recipients age 21 and older currently receiving PDN to waiver services provided under the Technology Dependent Waiver."

Medicaid Waiver for Assisted Living
SECTION 10.35A.  The Division of Medical Assistance (Division) shall develop a plan for a 1915(c) Home and Community Based Services assisted living waiver in order to continue Medicaid funding of personal care services for individuals living in adult care homes. The plan shall include the following components:
(1)	All adult care home residents who receive State‑County Special Assistance and meet the criteria for nursing facility level of care shall be eligible for participation in the waiver.
(2)	Waiver services shall be delivered according to the acuity‑level of adult care home residents.
(3)	The Division shall develop a new Medicaid payment methodology for waiver services that shall be associated with the acuity‑based service delivery model.
On or before January 1, 2011, the Division shall report the plan to the Joint Legislative Commission on Governmental Operations, 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 Division shall then apply to the Centers for Medicare and Medicaid Services (CMS) for the 1915(c) waiver. If approved by CMS, the Division shall not implement the waiver except as authorized by an act of the General Assembly appropriating funds for this purpose.

Senior Services:  Project C.A.R.E. (Caregiver Alternatives To Running On Empty)
SECTION 10.35B. Of the funds appropriated to the Department of Health and Human Services, Division of Aging and Adult Services, for the 2010‑2011 fiscal year, the sum of two hundred thousand dollars ($200,000) in recurring funds shall be used to support Alzheimer's‑related activities consistent with the goals of Project Caregiver Alternatives To Running On Empty (Project C.A.R.E.).  The Division of Aging and Adult Services shall annually develop and implement a plan for use of these funds and beginning October 1, 2010, and annually thereafter, report the plan to the Governor's Advisory Council on Aging, the North Carolina Study Commission on Aging, and the Fiscal Research Division.

DHHS BLOCK GRANTS
SECTION 10.37.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2011, according to the following schedule:

TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) FUNDS

Local Program Expenditures

Division of Social Services

01.	Work First Family Assistance	$78,047,502

02.	Work First County Block Grants	94,453,315

03.	Work First Electing Counties	2,378,213

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

05.	Work First – After‑School Services
	for At‑Risk Children	2,000,000

06.	Work First – After‑School Programs
	for At‑Risk Youth in Middle Schools	550,000

07.	Work First – Connect, Inc. (Work Central)	1,000,000

08.	Work First – Citizens Schools Program	360,000

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

10.	Family Violence Prevention	2,200,000

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

12.	Child Welfare Collaborative	1,129,115

12A.	Children's Home Society	200,000

Division of Child Development

13.	Subsidized Child Care Program	61,087,077

Division of Public Health

14.	Teen Pregnancy Initiatives	450,000

DHHS Administration

15.	Division of Social Services	1,093,176

16.	Office of the Secretary	75,392

Transfers to Other Block Grants

Division of Child Development

17.	Transfer to the Child Care and
	Development Fund	84,330,900

Division of Social Services

18.	Transfer to Social Services Block Grant for Child
	Protective Services – Child Welfare Training in
	Counties	2,300,000

19.	Transfer to Social Services Block Grant for
	Maternity Homes	943,002

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

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

22.	Transfer to Social Services Block Grant for
	Foster Care Services	390,000

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) FUNDS	$359,440,083

TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)
EMERGENCY CONTINGENCY FUNDS RECEIVED THROUGH
THE AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA)

Local Program Expenditures

Division of Social Services

01.	Work First Family Assistance	$ 9,780,494

Division of Child Development

02.	Subsidized Child Care	23,625,329

Department of Public Instruction

03.	More at Four	32,986,721

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)
EMERGENCY CONTINGENCY FUNDS RECEIVED THROUGH THE
AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA)	$66,392,544

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 – $4,500,000)

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

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

04.	Child Protective Services/CPS Investigative
	Services‑Child Medical Evaluation Program	609,455

05.	Foster Care Services	2,372,619
	(Transfer from TANF – $390,000)

06.	Maternity Homes (Transfer from TANF)	943,002

07.	Special Children Adoption Incentive Fund	500,000

08.	Child Protective Services‑Child Welfare Training
	for Counties	2,300,000
(Transfer from TANF)

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

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

10.	Mental Health Services Program	422,003

11.	Developmental Disabilities Services Program	5,000,000

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

Division of Child Development

13.	Subsidized Child Care Program	1,156,744

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 Services for the Blind

17.	Independent Living Program	3,633,077

Division of Health Service Regulation

18.	Adult Care Licensure Program	411,897

19.	Mental Health Licensure and Certification Program	205,668

DHHS Administration

20.	Division of Aging and Adult Services	688,436

21.	Division of Social Services	892,624

22.	Office of the Secretary/Controller's Office	138,058

23.	Office of the Secretary/DIRM	87,483

24.	Division of Child Development	15,000

25.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	29,665

26.	Division of Health Service Regulation	235,625

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

28.	Office of the Secretary	48,053

Transfers to Other State Agencies

Department of Administration

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

Transfers to Other Block Grants

Division of Public Health

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

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 61,417,890

LOW‑INCOME HOME ENERGY ASSISTANCE BLOCK GRANT

Local Program Expenditures

Division of Social Services

01.	Low‑Income Energy Assistance Program (LIEAP)	$ 70,909,401

02.	Crisis Intervention Program (CIP)	40,373,328

Local Administration

Division of Social Services

03.	County DSS Administration	6,362,505

DHHS Administration

04.	Division of Social Services	275,000

05.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	8,128

06.	Office of the Secretary/DIRM	276,784

07.	Office of the Secretary/Controller's Office	12,332

Transfers to Other State Agencies

Department of Commerce

08.	Weatherization Program	500,000

09.	Heating Air Repair and Replacement
	Program (HARRP)	8,103,157

10.	Local Residential Energy Efficiency Service
	Providers – Weatherization	25,000

11.	Local Residential Energy Efficiency Service
	Providers – HARRP	266,375

12.	Department of Commerce Administration – 
	Weatherization	25,000

13.	Department of Commerce Administration – 
	HARRP	266,375

14.	Department of Administration – 
N.C. State Commission of Indian Affairs	129,807

TOTAL LOW‑INCOME HOME ENERGY ASSISTANCE
BLOCK GRANT	$ 127,533,192

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

Local Program Expenditures

Division of Child Development

01.	Subsidized Child Care Services (CCDF)	$153,889,889

02.	Contract Subsidized Child Care Services Support	547,600

03.	Subsidized Child Care Services
	(Transfer from TANF)	84,330,900

04.	Quality and Availability Initiatives	23,726,564

05.	TEACH	3,800,000

Division of Social Services

06.	Local Subsidized Child Care Services Support	$19,340,596

DHHS Administration

Division of Child Development

07.	DCD Administrative Expenses	6,539,277

Division of Central Administration

08.	DHHS Central Administration – DIRM
	Technical Services	774,317

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT	$292,949,143

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT RECEIVED THROUGH THE AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA)

Local Program Expenditures

Division of Child Development

01.	Subsidized Child Care Services (CCDF)	$5,980,997

02.	Electronic Benefits Transfer System	4,000,000

DHHS Program Expenditures

Division of Child Development

03.	Quality and Availability Initiatives	2,904,787

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT RECEIVED THROUGH THE AMERICAN
RECOVERY AND REINVESTMENT ACT (ARRA)	$12,885,784

MENTAL HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Mental Health Services – Adult	$ 6,706,212

02.	Mental Health Services – Child	5,421,991

03.	Mental Health Services – UNC School
	of Medicine, Department of Psychiatry (STEP)	150,000

04.	Administration	100,000

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT	$ 12,378,203

SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT

Local Program Expenditures

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

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

02.	Substance Abuse Treatment Alternative for
	Women	8,107,303

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

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

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

06.	Institute of Medicine	250,000

07.	Administration	250,000

Division of Public Health

08.	Risk Reduction Projects	633,980

09.	Aid‑to‑Counties	209,576

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	7,534,865

02.	Women's Health	7,701,691

03.	Oral Health	38,041

DHHS Program Expenditures

Division of Public Health

04.	Children's Health Services	1,368,778

05.	Women's Health	135,452

06.	State Center for Health Statistics	179,483

07.	Quality Improvement in Public Health	14,646

08.	Health Promotion	88,746

09.	Office of Minority Health	55,250

10.	Immunization Program – Vaccine Distribution	382,648

DHHS Administration

Division of Public Health

11.	Division of Public Health Administration	631,966

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 18,131,566

PREVENTIVE HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

Division of Public Health

01.	NC Statewide Health Promotion	$1,730,653

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

Division of Public Health

04.	NC Statewide Health Promotion	1,623,117

05.	Oral Health	70,000

06.	State Laboratory of Public Health	16,600

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT	$3,783,301

COMMUNITY SERVICES BLOCK GRANT

Local Program Expenditures

Office of Economic Opportunity

01.	Community Action Agencies	$ 17,968,944

02.	Limited Purpose Agencies	998,275

DHHS Administration

03.	Office of Economic Opportunity	998,274

TOTAL COMMUNITY SERVICES BLOCK GRANT	$ 19,965,493

COMMUNITY SERVICES BLOCK GRANT RECEIVED THROUGH
THE AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA)

Local Program Expenditures

Office of Economic Opportunity

01.	Community Action Agencies	$ 10,000,000

TOTAL COMMUNITY SERVICES BLOCK GRANT
RECEIVED THROUGH THE AMERICAN RECOVERY
AND REINVESTMENT ACT (ARRA)	$ 10,000,000

GENERAL PROVISIONS
SECTION 10.37.(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 10.37.(c)  Changes in Federal Fund Availability. – If the Congress of the United States increases the federal fund availability for any of the Block Grants or contingency funds and other grants related to existing 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 Office of State Budget and Management shall not approve funding for new programs or activities not appropriated in this section.
If the Congress of the United States decreases the federal fund availability for any of the Block Grants or contingency funds and other grants related to existing 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. The Office of State Budget and Management shall report on these changes.
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 10.37.(d)  Appropriations from federal Block Grant funds are made for the fiscal year ending June 30, 2011, according to the schedule enacted for State fiscal year 2010‑2011 or until a new schedule is enacted by the General Assembly.
SECTION 10.37.(e)  All changes to the budgeted allocations to the Block Grants or contingency funds and other grants related to existing 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 the Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations for review prior to implementing the changes. The report shall include an itemized listing of affected programs, including associated changes in budgeted allocations. All changes to the budgeted allocations to the Block Grants 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 (TANF) FUNDS
SECTION 10.37.(f)  The sum of one million ninety‑three thousand one hundred seventy‑six dollars ($1,093,176) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for the 2010‑2011 fiscal year shall be used to support administration of TANF‑funded programs.
SECTION 10.37.(g)  The sum of two million two hundred thousand dollars ($2,200,000) appropriated under this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for the 2010‑2011 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 develop jointly 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, 2010. 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, 2010, 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, 2010. The Division of Social Services may reallocate unspent funds to counties that submit a written request for additional funds.
SECTION 10.37.(h)  The sum of two million dollars ($2,000,000) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for the 2010‑2011 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 10.37.(i)  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 TANF funds for the 2010‑2011 fiscal year for child welfare improvements shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services cases; to provide foster care and support services; to recruit, train, license, and support prospective foster and adoptive families; and to provide interstate and postadoption services for eligible families.
SECTION 10.37.(j)  The sum of three million dollars ($3,000,000) appropriated in this section in TANF funds to the Department of Health and Human Services, Special Children Adoption Fund, for the 2010‑2011 fiscal year shall be used in accordance with G.S. 108A‑50.2, as enacted in Section 10.48 of S.L. 2009‑451.  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 10.37.(k)  The sum of five hundred fifty thousand dollars ($550,000) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in TANF funds for the 2010‑2011 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 10.37.(l)  In implementing the use of TANF funds, 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 10.37.(m)  The sum of one million dollars ($1,000,000) appropriated in this section to the Department in TANF funds for the 2010‑2011 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, 2011.
SECTION 10.37.(n)  The sum of two million dollars ($2,000,000) appropriated in this section to the Department in TANF funds for Boys and Girls Clubs for the 2010‑2011 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 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 10.37.(o)  The sum of one million one hundred twenty‑nine thousand one hundred fifteen dollars ($1,129,115) appropriated in this section to the Department of Health and Human Services in TANF funds for the 2010‑2011 fiscal year shall be used to continue support for the Child Welfare Collaborative.
SECTION 10.37.(p)  The sum of three hundred sixty thousand dollars ($360,000) appropriated to the Department of Health and Human Services, Division of Social Services, under this section in TANF funds for the 2010‑2011 fiscal year shall be used to continue support for the Citizens Schools Program, a three‑year urban/rural dropout prevention pilot program in the Durham and Vance County public school systems.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) EMERGENCY CONTINGENCY FUNDS
SECTION 10.37.(q)  The sum of twenty‑three million six hundred twenty‑five thousand three hundred twenty‑nine dollars ($23,625,329) appropriated under this section from TANF Emergency Contingency funds to the Department of Health and Human Services, Division of Child Development, for the 2010‑2011 fiscal year shall be used for subsidized child care services. Payment for subsidized child care services provided with TANF Emergency Contingency funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.
SECTION 10.37.(r)  The sum of nine million seven hundred eighty thousand four hundred ninety‑four dollars ($9,780,494) appropriated under this section from TANF Emergency Contingency funds to the Department of Health and Human Services, Division of Social Services, for the 2010‑2011 fiscal year shall be used to support assistance payments provided under the Work First Family Assistance program.

SOCIAL SERVICES BLOCK GRANT
SECTION 10.37.(s)  Social Services Block Grant funds appropriated to the North Carolina Inter‑Agency Council for coordinating homeless programs and child medical evaluations are exempt from the provisions of 10A NCAC 71R .0201(3).
SECTION 10.37.(t)  The sum of two million three hundred thousand dollars ($2,300,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2010‑2011 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)	Provide training for residential child caring facilities.
(3)	Provide for various other child welfare training initiatives.
SECTION 10.37.(u)  The sum of nine hundred forty‑three thousand two dollars ($943,002) appropriated in this section to the Department of Health and Human Services in the Social Services Block Grant for the 2010‑2011 fiscal year shall be used to support maternity home services.
SECTION 10.37.(v)  The sum of two million three hundred seventy‑two thousand six hundred nineteen dollars ($2,372,619) appropriated in this section in the Social Services Block Grant for child caring agencies for the 2010‑2011 fiscal year shall be allocated in support of State foster home children.
SECTION 10.37.(w)  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.
SECTION 10.37.(x)  Social Services Block Grant funds appropriated for the Special Children's Adoption Incentive Fund will require a fifty percent (50%) local match.
SECTION 10.37.(y)  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 2010‑2011 fiscal year shall be used to continue a Mental Health Services Program for children.

LOW‑INCOME HOME ENERGY ASSISTANCE BLOCK GRANT
SECTION 10.37.(z)  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 10.37.(aa)  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 10.37.(bb)  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.
SECTION 10.37.(cc)  If American Recovery and Reinvestment Act of 2009 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.

SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANT
SECTION 10.37.(dd)  The sum of two hundred fifty thousand dollars ($250,000) appropriated in this section in the Substance Abuse Prevention and Treatment Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2010‑2011 fiscal year for the North Carolina Institute of Medicine (NCIOM) shall be used to study the following:
(1)	The availability of Medicaid and State‑funded mental health, developmental disabilities, and substance abuse services to active duty, reserve, and veteran members of the military and National Guard. The study should discuss the current availability of services, the extent of use, and any gaps in services.
(2)	Issues related to cost, quality, and access to appropriate and affordable health care for all North Carolinians. The North Carolina Institute of Medicine (NCIOM) may use funds appropriated for the 2007‑2009 fiscal biennium to continue the work of its Health Access Study Group to study these issues. The Health Access Study Group may include in its study the matters contained in Sections 31.1, 31.2, and 31.3 of S.L. 2008‑181 and also may monitor federal health‑related legislation to determine how the legislation would impact costs, quality, and access to health care.
(3)	Short‑term and long‑term strategies to address issues within adult care homes that provide residence to persons who are frail and elderly and to persons suffering from mental illness.
The Institute shall make an interim report to the Governor's Office, the Joint Legislative Health Care Oversight Committee, and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services no later than January 15, 2011, which may include recommendations and proposed legislation, and shall issue its final report with findings, recommendations, and suggested legislation to the 2011 General Assembly upon its convening. In the event members of the General Assembly serve on the NCIOM Health Access Study Group, they shall receive per diem, subsistence, and travel allowances in accordance with G.S. 120‑3.1. The Health Access Study Group may include in its study the matters contained in Sections 31.1, 31.2, and 31.3 of S.L. 2008‑181 and also may monitor federal health‑related legislation to determine how the legislation would impact costs, quality, and access to health care.

MATERNAL AND CHILD HEALTH BLOCK GRANT
SECTION 10.37.(ee)  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 2010‑2011 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) and (4a). The Department of Public Instruction shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.
SECTION 10.37.(ff)  The Department of Health and Human Services shall ensure that there will be follow‑up testing in the Newborn Screening Program.

PART Xi. RESERVED

PART XII. RESERVED

PART XIII. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

CONSOLIDATE THREE DENR SUBUNITS WITHIN THE NEW DIVISION OF ENVIRONMENTAL ASSISTANCE AND OUTREACH
SECTION 13.1.(a)  The Division of Environmental Assistance and Outreach is established as a new division within the environmental area of the Department of Environment and Natural Resources. All functions, powers, duties, and obligations previously vested in the following subunits of the Department of Environment and Natural Resources are transferred to, vested in, and consolidated within the Division of Environmental Assistance and Outreach by a Type I transfer, as defined in G.S. 143A‑6:
(1)	The Customer Service Center.
(2)	The Division of Pollution Prevention and Environmental Assistance.
(3)	The Small Business Ombudsman. 
SECTION 13.1.(b)  G.S. 18B‑902(h) reads as rewritten:
"(h)	Recycling Plan Required. – Each applicant for an on‑premises malt beverage permit, on‑premises unfortified wine permit, on‑premises fortified wine permit, or a mixed beverages permit shall prepare and submit with the application a plan for the collection and recycling of all recyclable beverage containers of all beverages to be sold at retail on the premises. A permittee who is not able to find a recycler for its beverage containers may apply to the Alcoholic Beverage Control Commission for a one‑year stay of the requirement to implement a recycling program in compliance with G.S. 18B‑1006.1. The application shall be made in a form specified by the Commission, shall detail the efforts made by the permittee to provide for the collection and recycling of beverage containers, and shall specify the impediments to implementation of a recycling plan. The Commission shall submit all such applications to the Division of Environmental Assistance and Outreach of the Department of Environment and Natural Resources for review and certification. The Division of  Environmental Assistance and Outreach shall investigate each application and prepare a summary of its investigation and shall submit the summary to the Commission along with a notation indicating certification or denial of the application. A permittee whose application for a stay is certified by the Division of  Environmental Assistance and Outreach shall not be required to comply with the recycling requirement of the alcoholic beverage laws and regulations during the one‑year stay period so certified."
SECTION 13.1.(c)  G.S. 130A‑309.12(a)(6) reads as rewritten:
"(6)	Providing funding for the activities of the Division of Environmental Assistance and Outreach."
SECTION 13.1.(d)  G.S. 130A‑309.63(b)(2) reads as rewritten:
"(2)	The Department may use up to forty percent (40%) of the revenue in the Account to make grants to encourage the use of processed scrap tire materials. These grants may be made to encourage the use of tire‑derived fuel, crumb rubber, carbon black, or other components of tires for use in products such as fuel, tires, mats, auto parts, gaskets, flooring material, or other applications of processed tire materials. These grants shall be made in consultation with the Department of Commerce, the Division of  Environmental Assistance and Outreach of the Department, and, where appropriate, the Department of Transportation. Grants to encourage the use of processed scrap tire materials shall not be used to process tires."
SECTION 13.1.(e)  G.S. 136‑28.8(g) reads as rewritten:
"(g)	On or before October 1 of each year, the Department shall report to the Division of  Environmental Assistance and Outreach of the Department of Environment and Natural Resources as to the amounts and types of recycled materials that were specified or used in contracts that were entered into during the previous fiscal year. On or before December 1 of each year, the Division of  Environmental Assistance and Outreach shall prepare a summary of this report and submit the summary to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Transportation Oversight Committee. The summary of this report shall also be included in the report required by G.S. 130A‑309.06(c)."
SECTION 13.1.(f)  G. S. 143‑58.2(d) reads as rewritten:
"(d)	The Department of Administration, in cooperation with the Division of  Environmental Assistance and Outreach of the Department of Environment and Natural Resources, shall identify materials and supplies with recycled content that meet appropriate standards for use by State departments, institutions, agencies, community colleges, and local school administrative units."
SECTION 13.1.(g)  The Revisor of Statutes shall make any other conforming statutory changes necessary to reflect the transfer under subsection (a) of this section that are not included in this section.

Consolidate Two DENR Offices into New Office of Environmental Education and Public Affairs
SECTION 13.1A.(a)  The Office of Environmental Education and Public Affairs is established as a new office within the administrative area of the Department of Environment and Natural Resources. All functions, powers, duties, and obligations previously vested in the following offices of the Department of Environment and Natural Resources are transferred to, vested in, and consolidated within the Office of Environmental Education and Public Affairs by a Type I transfer, as defined in G.S. 143A‑6:
(1)	North Carolina Office of Environmental Education.
(2)	Office of Public Affairs.
SECTION 13.1A.(b)  The title of Part 4B of Article 7 of Chapter 143B of the General Statutes reads as rewritten:
"Part 4B. Office of Environmental Education and Public Affairs."
SECTION 13.1A.(c)  G.S. 143B‑285.22 reads as rewritten:
"§ 143B‑285.22.  Creation.
There is hereby created the Office of Environmental Education and Public Affairs (hereinafter referred to as "Office") within the Department of Environment and Natural Resources."
SECTION 13.1A.(d)  G.S. 143B‑285.23 reads as rewritten:
"§ 143B‑285.23.  Powers and duties of the Secretary of Environment and Natural Resources.
The Secretary of Environment and Natural Resources shall:
(1)	Establish an Office of Environmental Education and Public Affairs to:
a.	Serve as a clearinghouse of environmental information for the State.
…
…."
SECTION 13.1A.(e)  The catch line of G.S. 143B‑285.25 reads as rewritten:
"§ 143B‑285.25.  Liaison between the Office of Environmental Education and Public Affairs and the Department of Public Instruction."
SECTION 13.1A.(f)  The Revisor of Statutes shall make any other conforming statutory changes that are necessary to reflect the transfers under subsection (a) of this section.

Consolidate Two Subunits in DENR in the Office of the Secretary of Environment and Natural Resources
SECTION 13.1B.  All functions, powers, duties, and obligations previously vested in the following subunits of the Department of Environment and Natural Resources are transferred to, vested in, and consolidated within the Office of the Secretary of Environment and Natural Resources by a Type I transfer, as defined in G.S. 143A‑6:
(1)	Office of Conservation and Community Affairs.
(2)	Natural Resources Planning and Conservation.

INCREASE ADMINISTRATIVE CAP FOR INACTIVE HAZARDOUS WASTE SITES PROGRAM; add Recipients to Annual Report Requirement
SECTION 13.9.(a)  G.S. 130A‑295.9(1) reads as rewritten:
"(1)	Funds credited pursuant to G.S. 105‑187.63(1) to the Inactive Hazardous Sites Cleanup Fund shall be used by the Department of Environment and Natural Resources to fund the assessment and remediation of pre‑1983 landfills, except up to thirteen percent (13%) of the funds credited under this subdivision may be used to fund administrative expenses related to the assessment and remediation of pre‑1983 landfills and other inactive hazardous waste sites."
SECTION 13.9.(b)  G.S. 130A‑310.10(a) reads as rewritten:
"(a)	The Secretary shall report on inactive hazardous sites to the Joint Legislative Commission on Governmental Operations, the Environmental Review Commission, and the Fiscal Research Division on or before 1 October of each year. The report shall include at least:
(1)	The Inactive Hazardous Waste Sites Priority List;
…."

Funds for Cleanup and Monitoring of Texfi Site Contamination
SECTION 13.9A.  There is appropriated from the Solid Waste Management Trust Fund to the Department of Environment and Natural Resources, Division of Waste Management, the sum of fifty thousand dollars ($50,000) for the 2010‑2011 fiscal year to be used for the cleanup and monitoring of the groundwater and other contamination located at the Texfi site in Fayetteville and for any emergency cleanup activities needed at that site.

Funds for Recycling Programs for Products that Contain Mercury
SECTION 13.9B.(a)  Effective July 1, 2010, until December 31, 2017, G.S. 130A‑310.54 reads as rewritten:
"§ 130A‑310.54.  Mercury Pollution Prevention Fund.
(a)	The Mercury Pollution Prevention Fund is established in the Department. Revenue is credited to the Fund from the certificate of title fee under G.S. 20‑85.
(b)	Revenue in the Mercury Pollution Prevention Fund shall be used for the following purposes:
(1)	To reimburse the Department and others for costs incurred in implementing the mercury switch removal program.
(2)	To establish and implement recycling programs for products containing mercury, including at least recycling programs for light bulbs and thermostats.
(b1)	The reimbursable costs under subdivision (1) of subsection (b) of this section are:
(1)	Five dollars ($5.00) for each mercury switch removed by a vehicle crusher, vehicle dismantler, vehicle recycler, or scrap vehicle processing facility pursuant to this Article and sent to destination facilities in accordance with the NVMSRP for recycling or disposal.
(2)	Costs incurred by the Department in administering the program.
(c)	The Department shall reimburse vehicle crushers, vehicle dismantlers, vehicle recyclers, and scrap vehicle processing facilities based on a reimbursement request that attests to the number of switches sent to destination facilities for recycling or disposal in accordance with the NVMSRP. Each reimbursement request shall be verified against information posted on the Internet site provided by the vehicle manufacturers in accordance with the NVMSRP, or against other information that verifies the reimbursement requested to the satisfaction of the Department. The vehicle crusher, vehicle dismantler, vehicle recycler, or scrap vehicle processing facility shall provide the Department with any information requested by the Department to verify the accuracy of a reimbursement request. Each vehicle crusher, vehicle dismantler, vehicle recycler, or scrap vehicle processing facility shall maintain accurate records that support each reimbursement request for a minimum of three years from the date the reimbursement request is approved."
SECTION 13.9B.(b)  Effective December 31, 2017, G.S. 130A‑310.54, as amended by Sections 4 and 9 of S.L. 2007‑142, reads as rewritten:
"§ 130A‑310.54.  Funds to implement plan.
(a)	The Mercury Pollution Prevention Fund is established in the Department. Revenue is credited to the Fund from the certificate of title fee under G.S. 20‑85.
(b)	Revenue in the Mercury Pollution Prevention Fund shall be used for the following purposes:
(1)	To reimburse the Department and others for costs incurred in implementing the mercury minimization plan.
(2)	To establish and implement recycling programs for products containing mercury, including at least recycling programs for light bulbs and thermostats.
(b1)	The reimbursable costs under subdivision (1) of subsection (b) of this section are:
(1)	Five dollars ($5.00) for each mercury switch removed by a vehicle recycler or scrap metal recycling facility pursuant to this Article.
(2)	Costs incurred by the Department in administering the plan.
(c)	The Department shall reimburse vehicle recyclers and scrap metal recycling facilities based on the quarterly reports submitted under G.S. 130A‑310.53. The Department may request any information needed to determine the accuracy of the reports."

PARKS AND RECREATION TRUST FUND/AUTHORITY TO CONSIDER OPERATING EXPENSES
SECTION 13.11.  G.S. 113‑44.15 reads as rewritten:
"§ 113‑44.15.  Parks and Recreation Trust Fund.
(a)	Fund Created. – There is established a Parks and Recreation Trust Fund in the State Treasurer's Office. The Trust Fund shall be a nonreverting special revenue fund consisting of gifts and grants to the Trust Fund, monies credited to the Trust Fund pursuant to G.S. 105‑228.30(b), and other monies appropriated to the Trust Fund by the General Assembly. Investment earnings credited to the assets of the Fund shall become part of the Fund.
(b)	Use. – Funds in the Trust Fund are annually appropriated to the North Carolina Parks and Recreation Authority and, unless otherwise specified by the General Assembly or the terms or conditions of a gift or grant, shall be allocated and used as follows:
(1)	Sixty‑five percent (65%) for the State Parks System for capital projects, repairs and renovations of park facilities, and land acquisition, and to retire debt incurred for these purposes under Article 9 of Chapter 142 of the General Statutes.
(2)	Thirty percent (30%) to provide matching funds to local governmental units or public authorities as defined in G.S. 159‑7 on a dollar‑for‑dollar basis for local park and recreation purposes. The appraised value of land that is donated to a local government unit or public authority may be applied to the matching requirement of this subdivision. These funds shall be allocated by the North Carolina Parks and Recreation Authority based on criteria patterned after the Open Project Selection Process established for the Land and Water Conservation Fund administered by the National Park Service of the United States Department of the Interior.
(3)	Five percent (5%) for the Coastal and Estuarine Water Beach Access Program.
(b1)	Geographic Distribution. – In allocating funds in the Trust Fund under this section, the North Carolina Parks and Recreation Authority shall make geographic distribution across the State to the extent practicable.
(b2)	Administrative Expenses. – Of the funds appropriated to the North Carolina Parks and Recreation Authority from the Trust Fund each year, no more than three percent (3%) may be used by the Department for operating expenses associated with managing capital improvements projects, acquiring land, and administration of local grants programs.
(b3)	Operating Expenses for State Parks System Allocations. – In allocating funds in the Trust Fund under subdivision (1) of subsection (b) of this section, the North Carolina Parks and Recreation Authority shall consider the operating expenses associated with each capital project, repair and renovation project, and each land acquisition. In considering the operating expenses, the North Carolina Parks and Recreation Authority shall determine both:
(1)	The minimal anticipated operating expenses, which are determined by the minimum staff and other operating expenses needed to maintain the project.
(2)	The optimal anticipated operating budget, which is determined by the level of staff and other operating expenses required to achieve a more satisfactory level of operation under the project.
(c)	Reports. – The North Carolina Parks and Recreation Authority shall report no later than October 1 of each year to the Joint Legislative Commission on Governmental Operations, the House and Senate Appropriations Subcommittees on Natural and Economic Resources, the Fiscal Research Division, and the Environmental Review Commission on allocations from the Trust Fund from the prior fiscal year. For funds allocated from the Trust Fund under subdivision (b1) of this section, this report shall include the operating expenses determined under subdivisions (1) and (2) of subsection (b3) of this section.
…"

RECLASSIFY SEVEN VACANT POSITIONS IN THE DIVISION OF PARKS AND RECREATION
SECTION 13.12.  The Division of Parks and Recreation of the Department of Environment and Natural Resources shall reclassify seven vacant positions within the Division and shall fill these reclassified positions in a timely manner in order to provide support for new or expanding parks within the State Parks System, as defined in G.S. 113‑44.9.

STATE PARKS SYSTEM PLAN
SECTION 13.13.  G.S. 113‑44.11 is amended by adding a new subsection to read:
"(d)	No later than October 1 of each year, the Department shall submit electronically the State Parks System Plan to the Environmental Review Commission, the Senate and the House of Representatives Appropriations Subcommittees on Natural and Economic Resources, and the Fiscal Research Division. Concurrently, the Department shall submit a summary of each change to the Plan that was made during the previous fiscal year."

NO NEW FEES FOR PARKING IN STATE PARKS
SECTION 13.14.  Notwithstanding any provision to the contrary, the funds appropriated to the Department of Environment and Natural Resources for State Parks for the 2010‑2011 fiscal year shall not be reduced or replaced with fees for parking at State Parks, unless these fees were charged prior to the 2010‑2011 fiscal year. No fees shall be charged and no fees shall be collected for parking in a State Park during the 2010‑2011 fiscal year, unless these fees were charged prior to the 2010‑2011 fiscal year. 

AUTHORITY FOR THE DEPARTMENT OF REVENUE TO SHARE INFORMATION WITH DENR
SECTION 13.15.  G.S. 105‑259(b) is amended by adding a new subdivision to read:
"(b)	Disclosure Prohibited. – An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the information to any other person except as provided in this subsection. Standards used or to be used for the selection of returns for examination and data used or to be used for determining the standards may not be disclosed for any purpose. All other tax information may be disclosed only if the disclosure is made for one of the following purposes:
…
(40)	To furnish the Division of Forest Resources of the Department of Environment and Natural Resources pertinent contact and financial information concerning companies that are involved in the primary processing of timber products so that the Secretary of Environment and Natural Resources is able to comply with G.S. 113A‑193 under the Primary Forest Product Assessment Act."

DIVISION OF MARINE FISHERIES AND DIVISION OF FOREST RESOURCES AIRCRAFT MAINTENANCE
SECTION 13.16.(a)  The Division of Marine Fisheries of the Department of Environment and Natural Resources shall use mechanics employed by the Division of Forest Resources of the Department of Environment and Natural Resources for the purpose of performing aircraft maintenance for all aircraft of the Division of Marine Fisheries except for a particular instance when this would be impracticable.
SECTION 13.16.(b)  The Division of Forest Resources of the Department of Environment and Natural Resources shall perform aircraft maintenance using its mechanics for all aircraft of the Division of Marine Fisheries, except for a particular instance when this would be impracticable. The Division of Forest Resources shall develop a process to establish priorities for the aviation maintenance needs of all the aircraft in both the Division of Forest Resources and the Division of Marine Fisheries.

PURCHASE OF COMPUTER SOFTWARE BY DENR FOR DENR AIRCRAFT FLIGHTS AND MAINTENANCE RECORDKEEPING
SECTION 13.17.  The Department of Environment and Natural Resources shall purchase computer software to be used to establish and maintain a record of the flights and the maintenance of aircraft of the Department of Environment and Natural Resources.  For the purchase under this section, the Department of Environment and Natural Resources shall use funds realized from the sale of aircraft by the divisions within the department that operate aircraft. The Department of Environment and Natural Resources shall work with the Division of Marine Fisheries, the Division of Forest Resources, and the Aviation Division of the Department of Transportation to develop the specifications for this software system and to evaluate the best product available to accomplish the purpose set forth in this section. The Department should evaluate all available options, including the purchase of a commercially available system and the purchase of a license to use a software system that is currently used by another State agency.  The purchase under this section is subject to all State laws and rules regarding the procurement of distributed information technology assets, as defined in G.S. 147‑33.81.

REPORT ON DENR AVIATION ACTIVITIES
SECTION 13.18.(a)  No later than October 1, 2010, the Department of Environment and Natural Resources shall submit a report to the Joint Legislative Commission on Governmental Operations, the House of Representatives and Senate Appropriations Subcommittees on Natural and Economic Resources, and the Fiscal Research Division. The report shall:
(1)	Describe the uses of the State aircraft fleet within the control of either the Division of Forest Resources of the Department of Environment and Natural Resources or the Division of Marine Fisheries of the Department of Environment and Natural Resources; and
(2)	Describe the progress of the Department of Environment and Natural Resources in implementing the eight management practices that were recommended by the Program Evaluation Division of the General Assembly in its report entitled "Selling 25 Underutilized Aircraft May Yield Up to $8.1 Million and Save $1.5 Million Annually" (Report 2010‑04), based upon its study of the State's aircraft fleets, as authorized by Section 14.6 of S.L. 2009‑451.
SECTION 13.18.(b)  The Department of Environment and Natural Resources shall include in its report under subsection (a) of this section a summary of the Conklin & de Decker report that is due to be submitted to the Division of Forest Resources in August 2010, including any recommendations included in the Conklin & de Decker report and a description of the Department's plan to implement the Conklin & de Decker report recommendations.

Close/Transfer Certain DENR Special Funds
SECTION 13.21.(a)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Environment and Natural Resources, shall transfer to the Division of Soil and Water Conservation (General Fund code 14300‑1310) any unencumbered cash balance as of June 30, 2010, of each of the following special funds within the Department and then close each of these special funds:
(1)	SWC – CREP (Special Fund code 24308‑2313).
(2)	SWC – EEP Agreement (Special Fund code 24308‑2317).
SECTION 13.21.(b)  G.S. 113‑36(d) is repealed.
SECTION 13.21.(c)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Environment and Natural Resources, shall transfer to the Division of Forest Resources (General Fund code 14300‑1210) the operating budget, positions, and any unencumbered cash balance as of June 30, 2010, that remains in the special fund Bladen Lakes (Special Fund code 24300‑2221) after conducting the transfer under Section 2.2 of this act and then close the special fund Bladen Lakes.
SECTION 13.21.(d)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Environment and Natural Resources, shall transfer to the Division of Water Quality (General Fund code 14300‑1695) the operating budget, positions, and any unencumbered cash balance as of June 30, 2010, in the special fund DWQ – Lab Certification Fees (Special Fund code 24300‑2335) within the Department and then close this special fund.
SECTION 13.21.(e)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Environment and Natural Resources, shall transfer to the General Fund any unencumbered cash balance as of June 30, 2010, in each of the following special funds within the Department and then close each of these special funds:
(1)	DWM – Kernersville Site (Special Fund code 24308‑2116).
(2)	DWM – Meadowview Site (Special Fund code 24308‑2118).
(3)	DWR – Streamwatch Project (Special Fund code 24308‑2180).
(4)	DAQ – Terrorism Defense (Special Fund code 24308‑2343).
(5)	MNS – E A Publications (Special Fund code 24308‑2461).
(6)	MNS – Mus Nat Sci/School Science Fairs (Special Fund code 24308‑2462).
(7)	MNS – Mus Nat Sci/Scientific Pub. (Special Fund code 24308‑2465).
(8)	DFR – Hurricane Frances (Special Fund code 24310‑2786).
(9)	DFR – Hurricane Ivan (Special Fund code 24310‑2797).
(10)	DFR – Dare Bomb Range Isabel Interest (Special Fund code 24310‑2249).
SECTION 13.21.(f)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Environment and Natural Resources, shall transfer to Special Fund code 24317 any unencumbered cash balance as of June 30, 2010, of each of the following special funds within the Department and then close each of these special funds:
(1)	SWC – Agricultural Cost Share Programs (Special Fund code 24308‑2510).
(2)	SWC – Animal Waste Cost Share (Special Fund code 24308‑2520).
(3)	NC07 – Network Date IT Project (Special Fund code 24308‑2931).
SECTION 13.21.(g)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Environment and Natural Resources, shall transfer to Special Fund code 64305 any unencumbered cash balance as of June 30, 2010, of the special fund DWM – Noncommercial Leaking Petroleum Storage (Special Fund code 64308‑6371) within the Department and then close this special fund.
SECTION 13.21.(h)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Environment and Natural Resources, shall transfer to Special Fund code 24300 the operating budget, positions, and any unencumbered cash balance as of June 30, 2010, of each special fund within the Department with Special Fund code 24308 that is not subject to closure under the provisions of other subsections of this section.

Wildlife Resources Commission Funding
SECTION 13.22.  Section 13.11 of S.L. 2009‑451 reads as rewritten:
"SECTION 13.11. Notwithstanding G.S. 105‑164.44B, during the 2009‑2010 fiscal year and the 2010‑2011 fiscal year, the Secretary of Revenue shall transfer at the end of each quarter from the State sales and use tax net collections received by the Department of Revenue under Article 5 of Chapter 105 of the General Statutes to the State Treasurer for the Wildlife Resources Fund one‑fourth of the amount transferred the preceding fiscal year plus or minus the percentage of that amount by which the total collection of State sales and use taxes increased or decreased during the preceding fiscal year, not to exceed twenty‑one million five hundred thousand dollars ($21,500,000) for the 2009‑2010 fiscal year and not to exceed eighteen million five hundred thousand dollars ($18,500,000) for the 2010‑2011 fiscal year."

PART XIV. DEPARTMENT OF COMMERCE

ONE NORTH CAROLINA FUND
SECTION 14.1.  Section 14.1 of S.L. 2009‑451 reads as rewritten:
"SECTION 14.1. Of the funds appropriated in this act to the One North Carolina Fund for the 2010‑2011 fiscal year, the Department of Commerce may use up to three hundred thousand dollars ($300,000) to cover its expenses in administering the One North Carolina Fund and other economic development incentive grant programs during the 2010‑2011 fiscal year."

NER BLOCK GRANTS
SECTION 14.2.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2011, according to the following schedule:

COMMUNITY DEVELOPMENT BLOCK GRANT

	01.	State Administration	$	1,000,000

	02.	Scattered Site Housing	16,500,000

	03.	Economic Development	7,210,000

	04.	Small Business/Entrepreneurship	3,000,000

	05.	NC Catalyst	8,240,000

	06.	State Technical Assistance	450,000

	07.	Infrastructure	8,000,000

	08.	Capacity Building	600,000

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT – 2010 Program Year	$	45,000,000

SECTION 14.2.(b)  Decreases in Federal Fund Availability. – If federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
SECTION 14.2.(c)  Increases in Federal Fund Availability for Community Development Block Grant. – Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows: each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
SECTION 14.2.(d)  Limitations on Community Development Block Grant Funds. – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to one million dollars ($1,000,000) may be used for State Administration; up to sixteen million five hundred thousand dollars ($16,500,000) may be used for Scattered Site Housing; up to seven million two hundred ten thousand dollars ($7,210,000) may be used for Economic Development; up to three million dollars ($3,000,000) may be used for Small Business/Entrepreneurship; not less than eight million two hundred forty thousand dollars ($8,240,000) shall be used for NC Catalyst; up to four hundred fifty thousand dollars ($450,000) may be used for State Technical Assistance; up to eight million dollars ($8,000,000) may be used for Infrastructure; six hundred thousand dollars ($600,000) may be used for Capacity Building. 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 14.2.(e)  Increase Capacity for Nonprofit Organizations. – Assistance to nonprofit organizations to increase their capacity to carry out CDBG‑eligible activities in partnership with units of local government is an eligible activity under any program category in accordance with federal regulations. Capacity building grants may be made from funds available within program categories, program income, or unobligated funds.
SECTION 14.2.(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.
SECTION 14.2.(g)  By September 1, 2010, the Division of Community Assistance, Department of Commerce, shall report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on the use of Community Development Block Grant Funds appropriated in the prior fiscal year.

STATE AGENCIES AND INSTITUTIONS/GREATER ENERGY EFFICIENCY REPORTING AND COMPLIANCE
SECTION 14.3.  G.S. 143‑64.12 reads as rewritten:
"§ 143‑64.12.  Authority and duties of the Department; State agencies and State institutions of higher learning.
(a)	The Department of Commerce through the State Energy Office shall develop a comprehensive program to manage energy, water, and other utility use for State agencies and State institutions of higher learning and shall update this program annually. Each State agency and State institution of higher learning shall develop and implement a management plan that is consistent with the State's comprehensive program under this subsection to manage energy, water, and other utility use, and that addresses any findings or recommendations resulting from the energy audit required by subsection (b1) of this section. The energy consumption per gross square foot for all State buildings in total shall be reduced by twenty percent (20%) by 2010 and thirty percent (30%) by 2015 based on energy consumption for the 2002‑2003 fiscal year. Each State agency and State institution of higher learning shall update its management plan annually and include strategies for supporting the energy consumption reduction requirements under this subsection. Each community college shall submit to the State Energy Office an annual written report of utility consumption and costs.
…
(b1)	The Department of Administration, as part of the Facilities Condition and Assessment Program, shall identify and recommend energy conservation maintenance and operating procedures that are designed to reduce energy consumption within the facility of a State agency or a State institution of higher learning and that require no significant expenditure of funds. Every State agency or State institution of higher learning shall implement these recommendations. Where energy management equipment is proposed for any facility of a State agency or of a State institution of higher learning, the maximum interchangeability and compatibility of equipment components shall be required. As part of the Facilities Condition and Assessment Program under this section, the Department of Administration, in consultation with the State Energy Office, shall develop an energy audit and a procedure for conducting energy audits. Every five years the Department shall conduct an energy audit for each State agency or State institution of higher learning, and the energy audits conducted shall serve as a preliminary energy survey. The State Energy Office shall be responsible for system‑level detailed surveys.
(b2)	The Department of Administration shall submit a report of the energy audit required by subsection (b1) of this section to the affected State agency or State institution of higher learning and to the State Energy Office. The State Energy Office shall review each audit and, in consultation with the affected State agency or State institution of higher learning, incorporate the audit findings and recommendations into the management plan required by subsection (a) of this section.
…
(h)	When conducting a facilities condition and assessment under this section, the Department of Administration shall identify and recommend to the State Energy Office any facility of a State agency or State institution of higher learning as suitable for building commissioning to reduce energy consumption within the facility or as suitable for installing an energy savings measure pursuant to a guaranteed energy savings contract under Part 2 of this Article.
…
(j)	The State Energy Office shall submit a report by December 1 of each year to the Joint Legislative Commission on Governmental Operations describing the comprehensive program to manage energy, water, and other utility use for State agencies and State institutions of higher learning required by subsection (a) of this section. The report shall also contain the following:
(1)	A comprehensive overview of how State agencies and State institutions of higher learning are managing energy, water, and other utility use and achieving efficiency gains.
(2)	Any new measures that could be taken by State agencies and State institutions of higher learning to achieve greater efficiency gains, including any changes in general law that might be needed.
(3)	A summary of the State agency and State institutions of higher learning management plans required by subsection (a) of this section and the energy audits required by subsection (b1) of this section.
(4)	A list of the State agencies and State institutions of higher learning that did and did not submit management plans required by subsection (a) of this section and a list of the State agencies and State institutions of higher learning that received an energy audit.
(5)	Any recommendations on how management plans can be better managed and implemented."

LOCAL WORKFORCE DEVELOPMENT BOARDS/CONSUMER CHOICE REQUIREMENTS
SECTION 14.4.  G.S. 143B‑438.11(a) is amended by adding the following new subdivision to read as follows:
"(a)	Duties. – Local Workforce Development Boards shall have the following powers and duties:
…
(8)	To provide the appropriate guidance and information to Workforce Investment Act consumers to ensure that they are prepared and positioned to make informed choices in selecting a training provider. Each local workforce development board shall ensure that consumer choice is properly maintained in the one‑stop centers and that consumers are provided the full array of public and private training provider information."

CONSOLIDATE PASSENGER AIRCRAFT
SECTION 14.6.(a)  The Executive Aircraft Division of the Department of Commerce is transferred to the Division of Aviation of the Department of Transportation. This transfer shall have all the elements of a Type I transfer, as defined by G.S. 143A‑6.
SECTION 14.6.(b)  G.S. 143B‑437.011 is repealed.
SECTION 14.6.(c)  Article 7 of Chapter 136 of the General Statutes is amended by adding a new section to read:
"§ 136‑102.20.  Use of aircraft managed by the Department of Transportation.
The use of aircraft for emergency or disaster response shall take precedence over all other uses of the aircraft managed by the Department of Transportation. The use of aircraft for economic development purposes shall have second priority followed by the use of aircraft for all other legitimate purposes. The Department of Transportation shall annually review the rates charged for the use of aircraft and shall adjust the rates, as necessary, to account for upgraded aircraft and inflationary increases in operating costs, including jet fuel prices. If an aircraft is used to attend athletic events or for any other purpose related to collegiate athletics, the rate charged shall be equal to the direct cost of operating the aircraft as established by the aircraft's manufacturer, adjusted for inflation."

MAIN STREET SOLUTIONS FUND
SECTION 14.6A.  G.S. 143B‑472.35 reads as rewritten:
"§ 143B‑472.35.  Establishment of fund; use of funds; application for grants; disbursal; repayment; inspections; rules; reports.
(a)	A fund to be known as the Main Street Solutions Fund is established in the Department of Commerce. This Fund shall be administered by the Department of Commerce. The Department of Commerce shall be responsible for receipt and disbursement of all funds as provided in this section. Interest earnings shall be credited to the Main Street Solutions Fund.
(a1)	The Main Street Solutions Fund is a reimbursable, matching grant program. The Department of Commerce and the North Carolina Main Street Center are authorized to award grants from the Main Street Solutions Fund totaling not more than two hundred thousand dollars ($200,000) to each eligible local government. Funds from eligible local governments, main street organizations, downtown organizations, downtown economic development organizations, and sources other than the State or federal government must be committed to match the amount of any grant from the Main Street Solutions Fund on the basis of a minimum of two non‑State dollars ($2.00) for every one dollar ($1.00) provided by the State from the Main Street Solutions Fund.
(a2)	Definitions. – For purposes of this section, the following definitions shall apply:
(1)	Active North Carolina main street community. – A community in a Tier 1, 2, or 3 county that has been selected by the Department of Commerce to participate in the Main Street Program or the Small Town Main Street Program and that meets the reporting and eligibility requirements of the respective Program.
(2)	Designated micropolitan. – A geographic entity containing an urban core and having a population of between 10,000 and 50,000 people, according to the most recent federal decennial census.
(3)	Designated downtown area. – A designated area within a community that is considered the primary, traditional downtown business district of the community.
(4)	Downtown economic development organization. – An agency that is part of a public‑private partnership intended to develop and recruit business opportunities or to undertake economic development projects that will create jobs.
(5)	Downtown organization. – An agency that is part of a public‑private partnership on the local level and whose core mission is to revitalize a  traditional downtown business district.
(6)	Eligible local government. – A municipal government that is located in a designated micropolitan or an active North Carolina main street community.
(7)	Historic properties. – Properties that have been designated as historically significant by the National Register of Historic Places or a local historic properties commission.
(8)	Interlocal small business economic development project. – A project or group of projects in a cluster of communities or counties or in a region that share a common economic development strategy for small business growth and job creation.
(9)	Main Street Organization. – An agency working in a public‑private partnership on the local level, guided by a professional downtown manager, board of directors, or revitalization committee, and charged with administering the local Main Street Program initiative and facilitating revitalization initiatives in the traditional downtown business district through appropriate design, promotion, and economic restructuring activities.
(10)	Main Street Program. – The program developed by the National Trust for Historic Preservation to promote downtown revitalization through economic development within the context of historic preservation.
(11)	Mixed‑use centers. – Areas zoned and developed for a mix of uses, including retail, service, professional, governmental, institutional, and residential.
(12)	Main Street Center. – The agency within the North Carolina Department of Commerce, Office of Urban Development, which receives applications and makes decisions with respect to Main Street Solutions Fund grant applications from eligible local governments.
(13)	Private investment. – A project or group of projects in a designated downtown area that will spur private investment and improve property. A project must be owned and maintained by a private entity and must provide a direct benefit to small businesses.
(14)	Public improvements and public infrastructure. – The improvement of property or infrastructure that is owned and maintained by a city or county.
(15)	Revolving loan programs for private investment. – A property redevelopment or small business assistance fund that is administered on the local level and that may be used to stabilize or appropriately redevelop properties located in the downtown area in connection with private investment or that may be used to provide necessary operating capital for small business creation or expansion in connection with private investment in a designated downtown area.
(16)	Small business. – An independently owned and operated business with less than 100 employees and with annual revenues of less than six million dollars ($6,000,000).
(17)	Small Town Main Street Program. – A program based upon the Main Street Program developed by the National Trust for Historic Preservation to promote downtown revitalization through economic development within the context of historic preservation. The purpose of the Small Town Main Street Program is to provide guidance to local communities that have a population of less than 7,500 and do not have a downtown manager.
(18)	Tier 1, 2, or 3 counties. – North Carolina counties annually ranked by the Department of Commerce based upon the counties' economic well‑being and assigned a Tier designation. The 40 most distressed counties are designated as Tier 1, the next 40 as Tier 2, and the 20 least distressed as Tier 3.
(a3)	The purpose of the Main Street Program is to provide economic development planning assistance and coordinated grant support to designated micropolitans located in Tier 2 and 3 counties and to active North Carolina main street communities. To achieve the purposes of the Main Street Program, the Main Street Center shall develop criteria for community participation and shall provide technical assistance and strategic planning support to eligible local governments. Local governments, in collaboration with a main street organization, downtown organization, or downtown economic development organization, and the small businesses that will directly benefit from these funds may apply for grants from the Main Street Solutions Fund as provided in this section.
(a4)	The Secretary of Commerce, through the Main Street Center, shall award grants from the Main Street Solutions Fund to eligible designated micropolitans and active North Carolina main street communities. Grant funds awarded from the Main Street Solutions Fund shall be used as provided by the provisions of this section and any rules or regulations adopted by the Secretary of Commerce.
(b)	Funds in the Main Street Solutions Fund shall be available only to designated micropolitans in Tier 2 and 3 counties and to active North Carolina main street communities in the State.  Funds in the Main Street Solutions Fund shall be used for any of the following eligible activities:
	
(1a)	Downtown economic development initiatives that do any of the following:
a.	Encourage the development or redevelopment of traditional downtown areas by increasing the capacity for mixed‑use centers of activity within downtown core areas. Funds may be used to support the rehabilitation of properties, utility infrastructure improvements, new construction, and the development or redevelopment of parking lots or facilities. Projects under this sub‑subdivision must foster private investment and provide direct benefit to small business retention, expansion, or recruitment.
b.	Attract and leverage private‑sector investments and entrepreneurial growth in downtown areas through strategic planning efforts, market studies, and downtown master plans in association with direct benefit to small business retention, expansion, or recruitment.
c.	Attract and stimulate the growth of business professionals and entrepreneurs within downtown core areas.
d.	Establish revolving loan programs for private investment and small business assistance in downtown historic properties.
e.	Encourage public improvement projects that are necessary to create or stimulate private investment in the designated downtown area and provide a direct benefit to small businesses.
	
(2a)	Historic preservation initiatives outside of downtown core areas that enhance: (i) community economic development and small business retention, expansion, or recruitment; and (ii) regional or community job creation.
	
(3a)	Public improvements and public infrastructure outside of downtown core areas that are consistent with sound municipal planning and that support community economic development, small business retention, expansion, or recruitment, and regional or community job creation.
	
(4a)	Interlocal small business economic development projects designed to enhance regional economic growth and job creation.

	
(c1)	The application shall include each of the following:
	
(1a)	The proposed activities for which the funds are to be used and the projected cost of the project.
(2)	The amount of grant funds requested for these activities.
(3)	Projections of the dollar amount of public and private investment that are expected to occur in the designated micropolitan or designated downtown area as a direct result of the  proposed activities.
	
(5)	An explanation of the nature of the private investment in the designated micropolitan or designated downtown area that will result from the  proposed activities.
(6)	Projections of the time needed to complete the proposed activities.
(7)	Projections of the time needed to realize the private investment that is expected to result from the  proposed activities.
	
(9)	Any additional or supplemental information requested by the Division.
(d)				
A local government whose application is denied may file a new or amended application.
	
(f)	Repealed by Session Laws 2009‑451, s. 14.10, effective July 1, 2009.
(g)	(1)	A local government that has been selected to receive a grant shall use the full amount of the grant for the activities that were approved pursuant to the provisions of this section. Funds are deemed used if the local government is legally committed to spend the funds on the approved activities.
	
(3)	A local government that fails to satisfy the condition set forth in subdivision (1) of this subsection shall lose any funds that have not been used within three years of being selected. These unused funds shall be credited to the Main Street Solutions Fund. A local government that fails to satisfy the conditions set forth in subdivision (1) of this subsection may file a new application.
(4)	Any funds repaid or credited to the Main Street Solutions Fund pursuant to subdivision (3) of this subsection shall be available to other applicants as long as the Main Street Solutions Fund is in effect.
(h)	Repealed by Session Laws 2009‑451, s. 14.10, effective July 1, 2009.
(i)	After a project financed  pursuant to this section has been completed, the local government shall report the actual cost of the project to the Department of Commerce. 
(j)	Inspection of a project for which a grant has been awarded may be performed by personnel of the Department of Commerce. No person may be approved to perform inspections who is an officer or employee of the unit of local government to which the grant was made or who is an owner, officer, employee, or agent of a contractor or subcontractor engaged in the construction of any project for which the grant was made.
(k)	The Department of Commerce may adopt, modify, and repeal rules establishing the procedures to be followed in the administration of this section and regulations interpreting and applying the provisions of this section, as provided in the Administrative Procedure Act.
(l)	The Department of Commerce and local governments that have been selected to receive a grant from the Main Street Solutions Fund shall prepare and file on or before September 1 of each year with the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division a consolidated report for the preceding fiscal year concerning the allocation of grants authorized by this section.
The portion of the annual report prepared by the Department of Commerce shall set forth for the preceding fiscal year itemized and total allocations from the Main Street Solutions Fund for grants. The Department of Commerce shall also prepare a summary report of all allocations made from the fund for each fiscal year; the total funds received and allocations made and the total unallocated funds in the Fund.
The portion of the report prepared by the local government shall include each of the following:
(1)	The total amount of public and private funds that was committed and the amount that was invested in the designated micropolitan or designated downtown area during the preceding fiscal year.
	
(3)	The total amount of grants received from the Main Street Solutions Fund during the preceding fiscal year.
(4)	Repealed by Session Laws 2009‑451, s. 14.10, effective July 1, 2009.
(5)	A description of how the grant funds and funds from public and private investors were used during the preceding fiscal year.
(6)	Details regarding the types of private investment created or stimulated, the dates of this activity, the amount of public money involved, and any other pertinent information, including any jobs created, businesses started, and number of jobs retained due to the approved activities.
(m)	The Department of Commerce may annually use up to seventy‑five thousand dollars ($75,000) of the funds in the Main Street Solutions Fund for expenses related to the administration of the Fund."

AMEND JDIG REPORTING REQUIREMENTS
SECTION 14.8.  G.S. 143B‑437.55 reads as rewritten:
"§ 143B‑437.55.  Applications; fees; reports; study.
…
(c)	Annual Reports. – The Committee shall publish a report on the Job Development Investment Grant Program on or before April 30 of each year. The Committee shall submit the report electronically to the House of Representatives Finance Committee, the Senate Finance Committee, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, the Senate Appropriations Committee on Natural and Economic Resources, and the Fiscal Research Division. The report shall include the following:
…
(d)	Quarterly Reports. – The Committee shall publish a report on the Job Development Investment Grant Program within two months of the end of each quarter. This report shall include a listing of each grant awarded during the preceding quarter, including the name of the business, the cost/benefit analysis conducted by the Committee during the application process, a description of the project, and the amount of the grant expected to be made under the agreement during the current fiscal year. The Committee shall submit the report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division.
(e)	Study. – The Committee shall conduct a study to determine the minimum funding level required to implement the Job Development Investment Grant Program successfully. The Committee shall report the results of this study to the House of Representatives Finance Committee, the Senate Finance Committee, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, the Senate Appropriations Committee on Natural and Economic Resources, and the Fiscal Research Division no later than April 1 of each year."

INDUSTRIAL DEVELOPMENT FUND/REPORTING REQUIREMENTS
SECTION 14.9.  G.S. 143B‑437.01 reads as rewritten:
"§ 143B‑437.01.  Industrial Development Fund.
…
(c)	Reports. – The Department of Commerce shall report to the Joint Legislative Commission on Governmental Operations on September 1 of each year concerning the applications made to the fund and the payments made from the fund and the impact of the payments on job creation in the State. The Department of Commerce shall also report quarterly to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on the use of the moneys in the fund, including information regarding to whom payments were made, in what amounts, and for what purposes.
(c1)	In addition to the reporting requirements of subsection (c) of this section, the Department of Commerce shall report to the Joint Legislative Commission on Governmental Operations on September 1 of each year concerning the payments made from the Utility Account and the impact of the payments on job creation in the State. The Department of Commerce shall also report quarterly to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on the use of the moneys in the Utility Account including information regarding to whom payments were made, in what amounts, and for what purposes.
…."

WINE AND GRAPE GROWERS COUNCIL/REPORTING REQUIREMENT
SECTION 14.10.  G.S. 143B‑437.90 is amended by adding a new subdivision to read:
"§ 143B‑437.90.  North Carolina Wine and Grape Growers Council – Creation; powers and duties.
There is created the North Carolina Wine and Grape Growers Council of the Department of Commerce. The North Carolina Wine and Grape Growers Council shall have the following powers and duties:
…
(14)	By September 1 of each year, to report to the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, the Senate Appropriations Committee on Natural and Economic Resources, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division on the activities of the Council, the status of the wine and grape industry in North Carolina and the United States, progress on the development and implementation of the State Viticulture Plan, and any contracts or agreements entered into by the Council for research, education, or marketing."

EMPLOYMENT SECURITY COMMISSION FUNDS
SECTION 14.13.  Section 14.17 of S.L. 2009‑451 reads as rewritten:
"SECTION 14.17.(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 2010‑2011 fiscal year shall not exceed two million five hundred thousand dollars ($2,500,000).
"SECTION 14.17.(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 2010‑2011 fiscal year to be used for the following purposes:
(1)	Nineteen million five hundred thousand dollars ($19,500,000) for the operation and support of local Employment Security Commission offices.
(2)	Two hundred thousand dollars ($200,000) to operate the system that tracks former participants in State education and training programs.
(3)	Three hundred thousand dollars ($300,000) 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 14.17.(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 2010‑2011 fiscal year to fund State initiatives not currently funded through federal grants.
"SECTION 14.17.(d)  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 two hundred thousand dollars ($1,200,000) for the 2010‑2011 fiscal year to fund a system upgrade to the Common Follow‑Up Management Information System.
" 
"SECTION 14.17.(f)  There is appropriated from the Worker Training Trust Fund to the Employment Security Commission of North Carolina the sum of one million dollars ($1,000,000) for the 2010‑2011 fiscal year to fund the 'Tar Heel Works Program' which provides work based training opportunities to recipients of unemployment insurance benefits. The Tar Heels Works Program must meet all of the following factors:
(1)	The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction.
(2)	The training is for the benefit of the trainee.
(3)	The trainees do not displace regular employees, but work under their close observation.
(4)	The employer who provides the training derives no immediate advantage from the activities of the trainees and, on occasion, the employer’s operations may actually be impeded.
(5)	The trainees are not necessarily entitled to a job at the conclusion of the training period.
(6)	The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.
"SECTION 14.17.(g)  Of the funds credited to and held in the State of North Carolina's account in the Unemployment Trust Fund by the Secretary of the Treasury of the United States pursuant to and in accordance with section 903 of the Social Security Act and pursuant to Title II of P.L. 111‑5, the Assistance for Unemployed Workers and Struggling Families Act, the Employment Security Commission of North Carolina may expend the sum of two hundred five million sixty‑three thousand five hundred fifty‑two dollars ($205,063,552) as follows: (i) one hundred fifty million dollars ($150,000,000) shall be used to design and build the integrated unemployment insurance benefit and tax accounting system; and (ii) the remaining funds shall be used for the operation of the unemployment insurance program."

SET REGULATORY FEE FOR UTILITIES COMMISSION
SECTION 14.14.  Section 14.26 of S.L. 2009‑451 reads as rewritten:
"SECTION 14.26.(a)  The rate to be used in calculating the regulatory fee imposed on public utilities 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, as defined in G.S. 62-302(b)(4), earned during each quarter that begins on or after July 1, 2010.
SECTION 14.26.(b)  The electric membership corporation regulatory fee imposed under G.S. 62‑302(b1) for the 2010‑2011 fiscal year is two hundred thousand dollars ($200,000).
SECTION 14.26.(c)  This section becomes effective July 1, 2010."

REGIONAL ECONOMIC DEVELOPMENT COMMISSIONS ALLOCATIONS
SECTION 14.15.(a)  Funds appropriated in this act to the Department of Commerce for regional economic development commissions shall be allocated to the following commissions in accordance with subsection (b) of this section: Western North Carolina Regional Economic Development Commission, Research Triangle Regional Partnership, Southeastern North Carolina Regional Economic Development Commission, Piedmont Triad Partnership, Northeastern North Carolina Regional Economic Development Commission, North Carolina's Eastern Region Economic Development Partnership, and Carolinas Partnership, Inc.
SECTION 14.15.(b)  Funds appropriated pursuant to subsection (a) of this section shall be allocated to each regional economic development commission as follows:
(1)	First, the Department shall establish each commission's allocation by determining the sum of allocations to each county that is a member of that commission. Each county's allocation shall be determined by dividing the county's development factor by the sum of the development factors for eligible counties and multiplying the resulting percentage by the amount of the appropriation. As used in this subdivision, the term "development factor" means a county's development factor as calculated under G.S. 143B‑437.08; and
(2)	Next, the Department shall subtract from funds allocated to the North Carolina's Eastern Region Economic Development Partnership the sum of two hundred thirty thousand three hundred twenty‑five dollars and thirty‑three cents ($230,325.33) in the 2010‑2011 fiscal year, which sum represents: (i) the total interest earnings in the prior fiscal year on the estimated balance of the seven million five hundred thousand dollars ($7,500,000) appropriated to the Global TransPark Development Zone in Section 6 of Chapter 561 of the 1993 Session Laws; and (ii) the total interest earnings in the prior fiscal year on loans made from the seven million five hundred thousand dollars ($7,500,000) appropriated to the Global TransPark Development Zone in Section 6 of Chapter 561 of the 1993 Session Laws; and
(3)	Next, the Department shall redistribute the sum of two hundred thirty thousand three hundred twenty‑five dollars and thirty‑three cents ($230,325.33) in the 2010‑2011 fiscal year to the seven regional economic development commissions named in subsection (a) of this section. Each commission's share of this redistribution shall be determined according to the development factor formula set out in subdivision (1) of this subsection. This redistribution shall be in addition to each commission's allocation determined under subdivision (1) of this subsection.
SECTION 14.15.(c)  No more than one hundred twenty thousand dollars ($120,000) in State funds shall be used for the annual salary of any one employee of a regional economic development commission.
SECTION 14.15.(d)  The General Assembly finds that successful economic development requires the collaboration of the State, regions of the State, counties, and municipalities.  Therefore, the regional economic development commissions are encouraged to seek supplemental funding from their county and municipal partners to continue and enhance their efforts to attract and retain business in the State.

E‑NC AUTHORITY/REPORTING REQUIREMENT
SECTION 14.16.  G.S. 143B‑437.47 reads as rewritten:
"§ 143B‑437.47.  (This part has a delayed repeal date. See notes.) Powers, duties, and goals of the Authority.
…
(e)	Reports. – By September 1 of each year, the Authority shall submit a report to the Governor, the Joint Legislative Oversight Committee on Information Technology, and the Joint Legislative Commission on Governmental Operations. The report shall summarize the Authority's activities during the prior State fiscal year and contain any information about the Authority's activities that is requested by the Governor, the Committee, or the Commission."

DEFENSE AND SECURITY TECHNOLOGY ACCELERATOR/REPORTING REQUIREMENT
SECTION 14.17.  By September 1, 2010, the Defense and Security Technology Accelerator shall report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on prior State fiscal year program activities, objectives, and accomplishments and prior State fiscal year itemized expenditures and fund sources.

COUNCIL OF GOVERNMENT FUNDS
SECTION 14.18.  Section 14.21.(a) of S.L. 2009‑451 reads as rewritten:
"SECTION 14.21.(a)  Of the funds appropriated in this act to the Department of Commerce, the sum of four hundred twenty‑five thousand dollars ($425,000) for the 2009‑2010 fiscal year and the sum of four hundred three thousand seven hundred fifty dollars ($403,750) for the 2010‑2011 fiscal year shall only be used as provided by this section. Each regional council of government or lead regional organization is allocated up to twenty‑five thousand dollars ($25,000) for the 2009‑2010 and the 2010‑2011 fiscal years."

RURAL ECONOMIC DEVELOPMENT CENTER
SECTION 14.19.  Section 14.27.(a) of S.L. 2009‑451 reads as rewritten:
"SECTION 14.27.(a)  Of the funds appropriated in this act to the North Carolina Rural Economic Development Center, Inc. (Rural Center), the sum of four million six hundred two thousand four hundred thirty‑six dollars ($4,602,436) for the 2009‑2010 fiscal year and the sum of three million nine hundred eighty‑one thousand eight hundred sixty‑four dollars ($3,981,864) for the 2010‑2011 fiscal year shall be allocated as follows:
	2009‑2010	2010‑2011
Center Administration, Technical Assistance,
& Oversight	$1,555,000		$1,446,850
Research and Demonstration Grants	$351,000		$326,800
Institute for Rural Entrepreneurship	$136,000		$127,300
Community Development Grants	$987,436		$938,064
Microenterprise Loan Program	$185,000		$172,900
Water/Sewer/Business Development
Matching Grants	$840,000		$779,950
Statewide Water/Sewer Database	$ 95,000			$88,350
Agricultural Advancement Consortium	$110,000		$101,650"

RURAL ECONOMIC DEVELOPMENT CENTER/INFRASTRUCTURE PROGRAM
SECTION 14.20.  Section 14.28 of S.L. 2009‑451 reads as rewritten:
"SECTION 14.28.(a)  Of the funds appropriated in this act to the North Carolina Rural Economic Development Center, Inc. (Rural Center), the sum of nineteen million three hundred five thousand dollars ($19,305,000) for the 2009‑2010 fiscal year and the sum of eighteen million three hundred thirty‑nine thousand seven hundred fifty dollars ($18,339,750) for the 2010‑2011 fiscal year shall be allocated as follows: 
(1)	To continue the North Carolina Infrastructure Program. The purpose of the Program is to provide grants to local governments to construct critical water and wastewater facilities and to provide other infrastructure needs, including technology needs, to sites where these facilities will generate private job‑creating investment. At least fourteen million two hundred fifty thousand dollars ($14,250,000) of the funds appropriated in this act for the 2010‑2011 fiscal year must be used to provide grants under this Program.
(2)	To provide matching grants to local governments in distressed areas and equity investments in public‑private ventures that will productively reuse vacant buildings and properties, with priority given to towns or communities with populations of less than 5,000.
(3)	To provide economic development research and demonstration grants.
"SECTION 14.28.(b)  The Rural Center may contract with other State agencies, constituent institutions of The University of North Carolina, and colleges within the North Carolina Community College System for certain aspects of the North Carolina Infrastructure Program, including design of Program guidelines and evaluation of Program results.
"SECTION 14.28.(c)  For the 2010‑2011 fiscal year, the Rural Center may use up to three hundred sixty‑five thousand seven hundred fifty dollars ($365,750) of the funds appropriated in this act to cover its expenses in administering the North Carolina Economic Infrastructure Program.
"SECTION 14.28.(d)  Of the funds appropriated in subsection (a) of this section to the Rural Center for the 2009‑2010 fiscal year, the sum of one million five hundred forty‑four thousand four hundred dollars ($1,544,400) shall be transferred to the Department of Environment and Natural Resources to be used to provide the State match to draw down maximum federal funds for the Clean Water State Revolving Loan Fund.
"SECTION 14.28.(e)   By September 1 of each year, and more frequently as requested, the Rural Center shall report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division concerning the progress of the North Carolina Economic Infrastructure Program in the prior State fiscal year."

OPPORTUNITIES INDUSTRIALIZATION CENTERS FUNDS
SECTION 14.21.  Section 14.30.(a) of S.L. 2009‑451 reads as rewritten:
"SECTION 14.30.(a)  Of the funds appropriated in this act to the North Carolina Rural Economic Development Center, Inc. (Rural Center), the sum of three hundred forty‑three thousand dollars ($343,000) for the 2009‑2010 fiscal year and the sum of three hundred nineteen thousand two hundred dollars ($319,200) for the 2010‑2011 fiscal year shall be equally distributed among the certified Opportunities Industrialization Centers (OI Centers)."

RURAL CENTER/REALLOCATION OF CLEAN WATER BOND FUNDS
SECTION 14.22.  Notwithstanding the provisions of S.L. 1998‑132, S.L. 2000‑156, and S.L. 2001‑416, if the North Carolina Rural Economic Development Center, Inc. (Rural Center) determines that there has been a change in any fiscal year in the relative needs for funds between the supplemental, capacity, and unsewered communities categories of Clean Water Bond funding, the Rural Center may reallocate funds between these categories. The Board of Directors of the Rural Center must approve in advance any reallocation under this section.  At least 30 days before making a reallocation under this section, the Rural Center must consult with the Joint Legislative Commission on Governmental Operations.

PART XV. JUDICIAL DEPARTMENT

COLLECTION OF WORTHLESS CHECK FUNDS
SECTION 15.1.  Notwithstanding the provisions of G.S. 7A‑308(c), the Judicial Department may use any balance remaining in the Collection of Worthless Check Fund on June 30, 2010, for the purchase or repair of office or information technology equipment during the 2010‑2011 fiscal year.  Prior to using any funds under this section, the Judicial Department shall report to the Joint Legislative Commission on Governmental Operations and the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the equipment to be purchased or repaired and the reasons for the purchases.

OFFICE OF INDIGENT DEFENSE SERVICES EXPANSION FUNDS
SECTION 15.3.  Section 15.12 of S.L. 2009‑451 reads as rewritten:
"SECTION 15.12. The Judicial Department, Office of Indigent Defense Services, may use up to the sum of two million five hundred one thousand one hundred fifty dollars ($2,501,150) in appropriated funds during the 2009‑2010 fiscal year and up to the sum of two million four hundred thirty‑three thousand seven hundred dollars ($2,433,700) in appropriated funds during the 2010‑2011 fiscal year for the expansion of existing public defender offices currently providing legal services to the indigent population under the oversight of the Office of Indigent Defense Services, or for the creation of new public defender offices within existing public defender districts currently providing those services, by creating up to 20 new attorney positions and 10 new support staff positions during the 2009‑2010 fiscal year. In addition, the Office of Indigent Defense Services may use up to the sum of one million dollars ($1,000,000) in appropriated funds to create up to 12 new attorney positions and six new support positions during the 2010‑2011 fiscal year. These funds may be used for salaries, benefits, equipment, and related expenses. Prior to using funds for this purpose, the Office of Indigent Defense Services shall report to the Chairs of the House of Representatives and the Senate Appropriations Subcommittees on Justice and Public Safety on the proposed expansion."

CORRECT DEATH PENALTY LITIGATION FUNDING AMOUNT
SECTION 15.4.  Section 15.3 of S.L. 2009‑451 reads as rewritten:
"SECTION 15.3. Of the funds appropriated in this act to the Office of Indigent Defense Services for the 2009‑2011 fiscal biennium, the Office may use up to the sum of three hundred seventy‑six thousand one hundred twenty‑five dollars ($376,125) for the 2009‑2010 fiscal year and up to the sum of  four hundred fifty‑two thousand six hundred four dollars ($452,604) for the 2010‑2011 fiscal year to contract with the Center for Death Penalty Litigation to provide training, consultation, brief banking, and other assistance to attorneys representing indigent capital defendants. The Office of Indigent Defense Services shall report by February 1 of each year in the biennium to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety on the activities funded by this section."

CHILD SUPPORT FEE MODIFICATION
SECTION 15.6.  G.S. 110‑134 reads as rewritten:
"§ 110‑134.  Filing of affidavits, agreements, and orders; fees.
All affidavits, agreements, and resulting orders entered into under the provisions of G.S. 110‑132 and G.S. 110‑133 shall be filed by the clerk of superior court in the county in which they are entered. The filing fee for the institution of an action through the entry of an order under either of these provisions shall be in an amount equal to that provided in G.S. 7A‑308(a)(18)."

EXPERT FEES
SECTION 15.7.  G.S. 7A‑314(d) reads as rewritten:
"(d)	An expert witness, other than a salaried State, county, or municipal law‑enforcement officer, shall receive such compensation and allowances as the court, or the Judicial Standards Commission, in its discretion, may authorize. A law‑enforcement officer who appears as an expert witness shall receive reimbursement for travel expenses only, as provided in subsection (b) of this section. Compensation of experts acting on behalf of the court or prosecutorial offices shall be paid in accordance with the rules established by the Administrative Office of the Courts. Compensation of experts provided under G.S. 7A‑454 shall be in accordance with rules established by the Office of Indigent Defense Services."

MODIFICATION TO THE DUTIES OF THE DIRECTOR OF THE ADMINISTRATIVE OFFICE OF THE COURTS with respect to payment of interpreters and expert witnesses
SECTION 15.12.  G.S. 7A‑343 is amended by adding two new subdivisions to read:
"(9e)	Prescribe policies and procedures for the appointment and payment of deaf and hearing‑impaired interpreters, in accordance with G.S. 8B‑8(a), for those cases specified in G.S. 8B‑8(b) and (c). These policies and procedures shall be applied uniformly throughout the General Court of Justice. After consultation with the Joint Legislative Commission on Governmental Operations, the Director may also convert contractual hearing‑impaired interpreter positions to permanent State positions when the Director determines that it is more cost‑effective to do so.
(9f)	Prescribe policies and procedures for the payment of those experts acting on behalf of the court or prosecutorial offices, as provided for in G.S. 7A‑314(d)."

ESTABLISH A PILOT PROGRAM FOR ELECTRONIC FILING IN DOMESTIC VIOLENCE AND CIVIL NO‑CONTACT CASES IN ALAMANCE COUNTY
SECTION 15.13.(a)  A pilot program for electronic filing in domestic violence cases is established in District Court District 15A.  In order to implement the program, the chief district court judge in District Court District 15A may adopt local rules that permit the clerk of superior court for Alamance County to accept electronically filed complaints requesting Chapter 50B of the General Statutes ex parte domestic violence protective orders, and Chapter 50C of the General Statutes ex parte civil no‑contact orders, that are transmitted from the Alamance County Family Justice Center.
SECTION 15.13.(b)  This section expires June 30, 2012.

PART XVI. DEPARTMENT OF JUSTICE

REPORTING BY MEDICAID FRAUD CONTROL UNIT
SECTION 16.1.  Article 1 of Chapter 114 of the General Statutes is amended by adding a new section to read:
"§ 114‑2.5A.  Report by the Medicaid Fraud Control Unit required annually.
By September 1 of each year, the Medicaid Fraud Control Unit of the Department of Justice shall file a written report about its activities with the Chairs of the Appropriations Subcommittees on Justice and Public Safety and Health and Human Services of the Senate and House of Representatives and with the Fiscal Research Division of the Legislative Services Office. This report may be combined with the report required by G.S. 1‑617 and shall include the following information about the Unit's activities during the previous fiscal year:
(1)	The number of matters reported to the Unit.
(2)	The number of cases investigated.
(3)	The number of criminal convictions and civil settlements.
(4)	The total amount of funds recovered in each case.
(5)	The allocation of recovered funds in each case to (i) the federal government; (ii) the State Medical Assistance Program; (iii) the Civil Penalty and Forfeiture Fund; (iv) the Department of Justice; and (v) other victims."

PART XVII. DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY

AMEND LAW ENFORCEMENT SUPPORT SERVICES FEE AUTHORITY
SECTION 17.1.(a)  The General Assembly finds that a centralized evidence and DNA storage facility will provide local law enforcement agencies and clerks of court with a lower cost storage alternative, reducing or eliminating the need for local entities to provide their own storage and streamlining the evidence storage process. 
SECTION 17.1.(b)  G.S. 143B‑475.2 is repealed.
SECTION 17.1.(c)  Part 7 of Article 11 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑508.1.  Fees for services provided by the Division.
Fees shall be established and collected by the Department for all program services provided by the Law Enforcement Support Services Division, except for Department of Defense property being transferred pursuant to the National Defense Authorization Act of 1997. The fees collected are departmental receipts and are applied to the Division's costs in providing services to these entities. The fees apply to the following:
(1)	A law enforcement agency that receives any services from the Division.
(2)	An agency for which the Department stores evidence."
SECTION 17.1.(d)  Subsections (b) and (c) of this section become effective July 1, 2010, and fees established pursuant to subsection (c) of this section apply to program services provided on or after that date.

REQUIRE DEVELOPMENT AND REPORTING OF LESS FEE SCHEDULE
SECTION 17.2.(a)  The Department of Crime Control and Public Safety, Law Enforcement Support Services Division (LESS), shall, in consultation with the Fiscal Research Division of the General Assembly, develop a fee schedule for the services provided by LESS. In developing this fee schedule, the Department shall consider the following:
(1)	Fees charged in other states for similar services.
(2)	Utilization rates for each of the three main program areas of LESS for the last five years.
(3)	Actual workload requirements for each of the three main program areas of LESS, including the average time to complete a single transaction for each of the programs. For example, the Division shall determine, on average, how many person hours it takes to log in a piece of evidence for storage.
(4)	Projected evidence storage needs for the next five years.
(5)	Projected space costs and the feasibility of purchasing a permanent storage facility rather than continuing to lease space.
SECTION 17.2.(b)  The fee schedule required to be developed pursuant to this section shall be reported to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee and the Fiscal Research Division of the General Assembly not later than October 1, 2010.

TRANSFER TUITION ASSISTANCE PROGRAM
SECTION 17.3.(a)  The North Carolina National Guard Tuition Assistance Program of the Department of Crime Control and Public Safety is transferred to the State Education Assistance Authority. This transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6.
SECTION 17.3.(b)  Article 15 of Chapter 127A of the General Statutes is recodified as Part 2 of Article 23 of Chapter 116 of the General Statutes, G.S. 116‑209.50 through G.S. 116‑209.55.  The remainder of Article 23 of Chapter 116 of the General Statutes is recodified as Part 1 of Article 23 of Chapter 116 of the General Statutes and shall be designated "State Education Assistance Authority".
SECTION 17.3.(c)  Part 2 of Article 23 of Chapter 116 of the General Statutes, as recodified as Part 2 of Article 23 of Chapter 116 of the General Statutes by subsection (b) of this section, reads as rewritten:
"Part 2. North Carolina National Guard Tuition Assistance Act of 1975.
"§ 116‑209.50.  Short title.
This Article shall be known and may be cited as the North Carolina National Guard Tuition Assistance Act of 1975.
"§ 116‑209.51.  Purpose.
The General Assembly of North Carolina, recognizing that the North Carolina National Guard is the only organized, trained and equipped military force subject to the control of the State, hereby establishes a program of tuition assistance for qualifying guard members for the purpose of encouraging voluntary membership in the guard, improving the educational level of its members, and thereby benefiting the State as a whole.
"§ 116‑209.52.  Definitions.
(a)	Academic Year. – Any period of 365 days beginning with the first day of enrollment for a course of instruction.
(a1)	Business or Trade School. – Any school within the State of North Carolina which is licensed by the State Board of Education and listed by that Board as an approved private business school or an approved private trade school.
(b)	Private Educational Institutions. – Any junior college, senior college or university which is operated and governed by private interests not under the control of the federal, State or any local government, which is located within and licensed by the State of North Carolina, which does not operate for profit, whose curriculum is primarily directed toward the awarding of associate, baccalaureate or graduate degrees, which agrees to the applicable administration and funding provisions of this Article.
(c)	(d)	State Educational Institutions. – Any of the constituent institutions of the University of North Carolina, or any community college operated under the provisions of Chapter 115D of the General Statutes of North Carolina.
(e)	Repealed by Session Laws 2008‑94, s. 2, effective July 1, 2008.
(f)	Student Loan. – A loan or loans made to eligible students or parents of students to aid in attaining an education beyond the high school level.
"§ 116‑209.53.  Benefit.
The benefit provided under this Article shall consist of a monetary educational assistance grant not to exceed the highest amount charged by a State educational institution per academic year or a lesser amount, as prescribed by the Authority, to remain within the funds appropriated, to qualifying members of the North Carolina National Guard. Benefits provided under  G.S. 116‑209.55(g) shall be payable for a period of one year at a time, renewable at the option of the Authority. All other benefits provided under this Article shall be payable for a period of one academic year at a time, renewable at the option of the Authority.
"§ 116‑209.54.  Eligibility.
(a)	Active members of the North Carolina National Guard who are enrolled or who shall enroll in any business or trade school, private educational institution, or State educational institution shall be eligible to apply for this tuition assistance benefit: Provided, that the applicant has a minimum obligation of two years remaining as a member of the National Guard from the end of the academic period for which tuition assistance is provided or that the applicant commit himself or herself to extended membership for at least two additional years from the end of that academic period.
(b)	This tuition assistance benefit shall be applicable to students in the following categories:
(1)	Students seeking to achieve completion of their secondary school education at a community college or technical institute.
(2)	Students seeking trade or vocational training or education.
(3)	Students seeking to achieve a two‑year associate degree.
(4)	Students seeking to achieve a four‑year baccalaureate degree.
(5)	Students seeking to achieve a graduate degree.
(c)	The following persons shall be eligible to apply for disbursements to pay outstanding student loans pursuant to G.S. 116‑209.55(g):
(1)	Persons described in subsections (a) and (b) of this section.
(2)	Active members of the North Carolina National Guard who were previously enrolled in any business or trade school, private educational institution, or State educational institution, but only if:
a.	The applicant has a minimum obligation of two years remaining as a member of the National Guard from the time of the application; or
b.	The applicant commits himself or herself to extended membership for at least two additional years from the time of the application."
"§ 116‑209.55.  Administration and funding.
(a)	The  Authority is charged with the administration of the tuition assistance program under this Article. (b)	The  Authority shall determine the eligibility of applicants, select the benefit recipients, establish the effective date of the benefit, and may suspend or revoke the benefit if the Authority finds that the recipient does not maintain an adequate academic status, or if the recipient engages in riots, unlawful demonstrations, the seizure of educational buildings, or otherwise engages in disorderly conduct, breaches of the peace, or unlawful assemblies. The  Authority shall maintain such records and shall promulgate such rules and regulations as the Authority deems necessary for the orderly administration of this program. The  Authority may require of business or trade schools or State or private educational institutions such reports and other information as the Authority may need to carry out the provisions of this Article and the Authority shall disburse benefit payments for recipients upon certification of enrollment by the enrolling institutions.
(c)	All tuition benefit disbursements shall be made to the business or trade school or State or private educational institution concerned, for credit to the tuition account of each recipient. Funds disbursed pursuant to subsection (g) of this section shall be made to the student loan creditor concerned to be applied against the outstanding student loans of each National Guard member beneficiary.
(d)	The participation by any business or trade school or private educational institution in this program shall be subject to the applicable provisions of this Article and to examination by the State Auditor of the accounts of the benefit recipients attending or having attended such private schools or institutions. The  Authority may defer making an award or may suspend an award in any business or trade school or private educational institution which does not comply with the provisions of this Article relating to said institutions. The manner of payment to any business or trade school or private educational institution shall be as prescribed by the Authority.
(e)	Irrespective of other provisions of this Article, the  Authority may prescribe special procedures for adjusting the accounts of benefit recipients who, for reasons of illness, physical inability to attend classes or for other valid reason satisfactory to the Authority, may withdraw from any business or trade school or State or private educational institution prior to the completion of the term, semester, quarter or other academic period being attended at the time of withdrawal.
(f)	Any balance of the monetary educational assistance grant up to the maximum for the academic year remaining after tuition is paid pursuant to subsection (c) of this section may be disbursed to the recipient as reimbursement for required course books and materials. The manner of obtaining the reimbursement payment for these required books and materials shall be as prescribed by the Authority.
(g)	Any funds not needed to accomplish the other purposes of this Article may be used to help members of the North Carolina National Guard repay outstanding student loans in accordance with rules to be adopted by the Authority. These rules shall provide that the length of a member's deployment may be considered in determining whether or not, and in what amount, a member receives assistance pursuant to this subsection. There shall be no reimbursement under this subsection for payments already made on student loans, and funds shall not be provided under this subsection for the purpose of paying student loans obtained for courses from which the member withdrew or for which the member did not receive a passing grade. Payments for outstanding loans shall not exceed the maximum benefit available under G.S. 116‑209.53."

PART XVIII. DEPARTMENT OF JUVENILE JUSTICE AND DELINQUENCY PREVENTION

STATE FUNDS MAY BE USED AS FEDERAL MATCHING FUNDS
SECTION 18.1.  Funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention for the 2010‑2011 fiscal year may be used as matching funds for the Juvenile Accountability Incentive Block Grants. If North Carolina receives Juvenile Accountability Incentive Block Grants or a notice of funds to be awarded, the Office of State Budget and Management and the Governor's Crime Commission shall consult with the Department of Juvenile Justice and Delinquency Prevention regarding the criteria for awarding federal funds. The Office of State Budget and Management, the Governor's Crime Commission, and the Department of Juvenile Justice and Delinquency Prevention shall report to the Appropriations Committees of the Senate and House of Representatives and the Joint Legislative Commission on Governmental Operations prior to allocation of the federal funds. The report shall identify the amount of funds to be received for the 2010‑2011 fiscal year, the amount of funds anticipated for the 2010‑2011 fiscal year, and the allocation of funds by program and purpose.

REPEAL TREATMENT STAFFING MODEL AT YOUTH DEVELOPMENT CENTERS
SECTION 18.2.  Section 18.4 of S.L. 2009‑451 is repealed.

PART XIX. DEPARTMENT OF CORRECTION

FEDERAL GRANT MATCHING FUNDS
SECTION 19.1.  Section 19.9 of S.L. 2009‑451 reads as rewritten:
"SECTION 19.9. Notwithstanding the provisions of G.S. 143C‑6‑9, the Department of Correction may use up to the sum of one million two hundred thousand dollars ($1,200,000) during the 2009‑2010 fiscal year and up to the sum of one million two hundred thousand dollars ($1,200,000) during the 2010‑2011 fiscal year from funds available to the Department to provide the State match needed in order to receive federal grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds."

STUDY MISDEMEANOR CLASSIFICATION
SECTION 19.5.  It is the intent of the General Assembly that there be only three misdemeanor punishment levels: Class A1, Class 1, and Class 2.  The North Carolina Sentencing and Policy Advisory Commission, in consultation with the Conference of District Attorneys, the Office of Indigent Defense Services, and the School of Government, shall review all Class 3 misdemeanor offenses and provide recommendations to the 2011 General Assembly for reclassifying each Class 3 misdemeanor as either an infraction or a Class 2 misdemeanor. The Commission may, in its discretion, consider other misdemeanor offenses for reclassification as infractions.

INMATE MEDICAL COST CONTAINMENT
SECTION 19.6.(a)  The Department of Correction may reimburse those providers and facilities providing inmate medical services at a rate not to exceed seventy percent (70%) of the amount charged based on the usual and customary charges in effect for all other patients as of June 30, 2010. This subsection applies to all medical and facility services provided outside the correctional facility, including hospitalizations, professional services, medical supplies, and other medications provided to any inmate confined in a correctional facility.
SECTION 19.6.(b)  The Department of Correction shall make every effort to contain inmate medical costs by making use of its own hospital and health care facilities to provide health care services to inmates. To the extent that the Department of Correction must utilize other facilities and services to provide health care services to inmates, the Department shall make use of hospitals with available capacity or other health care facilities in a region to accomplish that goal. The Department shall work to ensure that care usage is distributed equitably among all hospitals or other appropriate health care facilities, with no one health care facility being required to admit more than five percent (5%) of all patients requiring hospitalization or hospital services, unless doing so would jeopardize the health of an inmate or unless otherwise agreed to by contract. The Department shall also give preference to those hospitals in the same county or an adjoining county to the correctional facility where an inmate requiring hospitalization is incarcerated.
SECTION 19.6.(c)  The Department of Correction shall consult with the Division of Medical Assistance in the Department of Health and Human Services to develop protocols for prisoners who would be eligible for Medicaid if they were not incarcerated to access Medicaid while in custody or under extended limits of confinement. The Department shall seek reimbursement from Medicaid for those health care costs incurred by the Department in those instances when an inmate's Medicaid eligibility has been temporarily reinstated due to a hospitalization.
SECTION 19.6.(d)  The Department of Correction, in consultation with the Office of State Budget and Management, shall study the impact on inmate medical costs resulting from the measures set forth in subsections (a), (b), and (c) of this section. The Department shall present its findings by March 1, 2011, to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety and to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee.
SECTION 19.6.(e)  The Department of Correction shall make every effort to explore other cost containment methods not expressly outlined in this section. These methods may include the following:
(1)	Contracting with a private third party to manage and provide all inmate medical services;
(2)	Partnering with the federal government to allow for treatment of State inmates in federal correctional hospitals; and 
(3)	Purchasing a fixed number of beds at a hospital.
SECTION 19.6.(f)  The Department of Correction shall report to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee no later than October 1, 2010, on:
(1)	The Department's progress with the RFP process initiated pursuant to Section 19.20(b) of S.L. 2009‑451, as rewritten by Section 15A of S.L. 2009‑575, to contract for claims processing, medical management services, and the development and management of a medical professional and facility provider network.
(2)	The anticipated effects on medical care provided to inmates as a result of the new hospital at Central Prison and the updated facilities at the North Carolina Correctional Institute for Women, as well as any other new medical services capacity within the Department. Specifically, the Department shall report on:
a.	The types and volumes of services that the new and updated facilities will provide that previously would have been provided by community providers; and
b.	The projected types and volumes of services that will still be referred to community providers.
The report shall also address changes in statewide inmate custody that are needed to maximize the utilization of the new facilities and the Department's ability to contract with community providers with the available capacity throughout the State.
SECTION 19.6.(g)  The Department of Correction shall report to the Joint Legislative Commission on Governmental Operations no later than October 1, 2010, and quarterly thereafter on:
(1)	The volume of services provided by community medical providers that can be scheduled in advance and, of that volume, the percentage of those services that are provided by contracted providers; and
(2)	The volume of services provided by community medical providers that cannot be scheduled in advance and, of that volume, the percentage of those services that are provided by contracted providers.
SECTION 19.6.(h)  Section 19.20(a) of S.L. 2009‑451, as amended by Section 15A of S.L. 2009‑575, is repealed.

COMMUNITY‑BASED RESIDENTIAL REENTRY PROGRAM FOR INMATES – PILOT INITIATIVE
SECTION 19.7.  The Department of Correction may contract with a community‑based residential facility that provides a range of offender services to pilot a two‑year reentry program for selected inmates. The Department may use funds available to support the pilot. The eligible inmates shall be assessed by the Department of Correction as low‑risk and eligible for minimum custody security level. Selected inmates may be housed at a community‑based residential facility with other populations such as those on community supervision and nonoffenders. The pilot will begin during the 2010‑2011 fiscal year and end during the 2011‑2012 fiscal year. The Department shall report on the outcome of the pilot to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety and to the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee by February 1, 2012. The report shall include the number of inmates served, the number who successfully completed the program/program services, a cost comparison between placement in a community‑based residential facility and incarceration in the State prison system, and may make recommendations regarding continuing placement of offenders in such facilities.

STUDY INMATE MEDICAL COSTS
SECTION 19.8.(a)  The Legislative Research Commission may study the issue of inmate medical costs and develop recommendations for effective means of containing those costs.
SECTION 19.8.(b)  The Legislative Research Commission may make an interim report to the 2011 General Assembly and shall make its final report to the 2011 General Assembly, Regular Session 2012.

Part XX. RESERVED

curb excess private motor vehicle expense reimbursement.
SECTION 20.2.  The Division of Motor Fleet Management of the Department of Administration shall work with State agencies to analyze the travel costs of employees receiving excessive private automobile travel reimbursements associated with their job, and if it is determined the State would save money from that employee using a State vehicle (including the assignment of a vehicle to that employee) then the employee may not be reimbursed for private automobile use. Affected employees shall be given adequate notice.

PART XXI. Office OF THE state auditor

BATTLESHIP COMMISSION PAY FOR AUDIT
SECTION 21.1.  G.S. 143B‑74.1 reads as rewritten:
"§ 143B‑74.1.  U.S.S. North Carolina Battleship Commission – funds.
The Commission shall establish and maintain a "Battleship Fund" composed of the moneys which may come into its hands from admission or inspection fees, gifts, donations, grants, or bequests, which funds will be used by the Commission to pay all costs of maintaining and operating the ship for the purposes herein set forth. The Commission shall maintain books of accounting records concerning revenue derived and all expenses incurred in maintaining and operating the ship as a public memorial. The operations of the Commission shall be subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes. The Commission shall reimburse the State Auditor the cost of any audit. The Commission shall establish a reserve fund in an amount to be determined by the Secretary of Cultural Resources to be maintained and used for contingencies and emergencies beyond those occurring in the course of routine maintenance and operation, and may authorize the deposit of this reserve fund in a depository to be selected by the Treasurer of North Carolina."

STATE PORTS AUTHORITY PAY FOR AUDIT
SECTION 21.2.  G.S. 143B‑464 reads as rewritten:
"§ 143B‑464.  Audit.
The operations of the State Ports Authority shall be subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes. The State Ports Authority shall reimburse the State Auditor the cost of any audit."

PART XXII. DEPARTMENT OF Cultural Resources

MODIFY TERMS OF THE 2007‑2008 GRANT‑IN‑AID FOR FREEDOM MONUMENT
SECTION 22.1.  Funds appropriated by the 2007 General Assembly as a grant‑in‑aid for North Carolina Freedom Monument Project, Inc., to fabricate and construct a monument that have not been used for this purpose may be used by North Carolina Freedom Monument Project, Inc., for planning and development of preconstruction stages of the monument.

Funds for NC Symphony
SECTION 22.2.(a)  Of the funds appropriated in this act to the Office of State Budget and Management‑Special Appropriations, the sum of one million five hundred thousand dollars ($1,500,000) in nonrecurring funds for the 2010‑2011 fiscal year shall be allocated to the North Carolina Symphony in accordance with this section.
SECTION 22.2.(b)  It is the intent of the General Assembly that the NC Symphony achieve its goal of raising the sum of eight million dollars ($8,000,000) in non‑State funding to support the operations of the Symphony. To that end, upon demonstrating to the Office of State Budget and Management that the NC Symphony has reached fund‑raising targets in the amounts set forth in this subsection, the NC Symphony shall receive allocations from the Office of State Budget and Management as follows:
(1)	Upon raising the initial sum of four million dollars ($4,000,000) in non‑State funding, the NC Symphony shall receive the sum of five hundred thousand dollars ($500,000).
(2)	Upon raising an additional sum of two million dollars ($2,000,000) in non‑State funding for a total amount of six million dollars ($6,000,000) in non‑State funds, the NC Symphony shall receive the sum of five hundred thousand dollars ($500,000).
(3)	Upon raising an additional sum of two million dollars ($2,000,000) in non‑State funding for a total sum of eight million dollars ($8,000,000) in non‑State funds, the NC Symphony shall receive the final sum of five hundred thousand dollars ($500,000) for the 2010‑2011 fiscal year.
SECTION 22.2.(c)  Funds allocated pursuant to this section are in addition to any other funds allocated to the NC Symphony in this act.

PART XXIII. Housing Finance Agency

Allow Housing Finance Agency to Create A Corporation to Receive Federal Funds From the "Hardest Hit Housing Markets" Program
SECTION 23.1.  G.S. 122A‑5 reads as rewritten:
"§ 122A‑5.  General powers.
The Agency shall have all of the powers necessary  to carry out  the  provisions of this Chapter, including, but without limiting the generality of the foregoing, the power:
…
(28)	To form corporations for the purpose of receiving and administering funds from federal programs that prohibit an entity receiving funds from being a State agency."

PART XXIV. RESERVED

PART XXV. RESERVED

PART XXVI. RESERVED

PART XXVII. RESERVED

PART XXVII‑A. OFFICE OF STATE BUDGET AND MANAGEMENT

Military Morale and Welfare Fund
SECTION 27A.1.(a)  Of the funds appropriated to the Office of State Budget and Management, the sum of five hundred thousand dollars ($500,000) for the 2010‑2011 fiscal year shall be placed in a Reserve for the Military Morale, Recreation, and Welfare Fund.
SECTION 27A.1.(b)  The Office of State Budget and Management shall distribute for the purposes described in this section the amount appropriated by subsection (a) of this section. That amount shall be distributed to each military installation on a per capita basis. 
SECTION 27A.1.(c)  Funds distributed to a military installation exchange under this section must be deposited in the Military Morale, Recreation, and Welfare Fund for that installation and used only for community services and other expenditures to improve quality of life programs for military members and their families in North Carolina.
SECTION 27A.1.(d)  Beginning with the 2010‑2011 fiscal year, each military installation shall report at least annually on the allocation and use of the funding to the Joint Legislative Commission on Governmental Operations.

PART XXVII‑B. OFFICE OF THE STATE CONTROLLER

Add Office of State Personnel Director to BEACON Project Steering Committee
SECTION 27B.1.  Section 6.16(b) of S.L. 2008‑107, as amended by S.L. 2008‑118, reads as rewritten:
"SECTION 6.16.(b) The State Controller shall serve as the Chairman of the BEACON Project Steering Committee. The other members of the committee shall be the State Chief Information Officer, the State Treasurer, the Attorney General, the Secretary of Correction, the Administrative Officer of the Courts, the State Budget Officer, the Secretary of Administration, the State Personnel Director, and the Chief Financial Officer of the Department of Transportation."

PART XXVIII. DEPARTMENT OF TRANSPORTATION

Cash Flow Highway Fund and Highway Trust Fund Appropriations
SECTION 28.1.(a)  Section 25.1 of S.L. 2009‑451 is repealed.
SECTION 28.1.(b)  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
For Fiscal Year 2011‑2012	$	1,793.1 million
For Fiscal Year 2012‑2013	$	1,880.6 million
For Fiscal Year 2013‑2014	$	1,920.5 million
For Fiscal Year 2014‑2015	$	1,958.9 million
SECTION 28.1.(c)  The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
For Fiscal Year 2011‑2012	$	989.2 million
For Fiscal Year 2012‑2013	$	1,046.4 million
For Fiscal Year 2013‑2014	$	1,078.3 million
For Fiscal Year 2014‑2015	$	1,120.4 million

Driver Education Program Fund Reversion and Studies
SECTION 28.2.(a)  G.S. 20‑88.1 reads as rewritten:
"§ 20‑88.1.  Driver education.
…
(a1)	For each fiscal year, the State Superintendent of Public Instruction shall calculate a per student allocation for the driver education program by dividing the total funds allocated for the program by the estimated number of qualified students throughout the State, as described in subsection (a) of this section. The Superintendent shall distribute funds to local school administrative units by giving each local school administrative unit an amount equal to the per student allocation multiplied by the estimated number of qualified students within that local school administrative unit's district, including students enrolled in both public and private schools. If, at the end of the fiscal year, fewer than the expected number of students have participated in the driver education program in a local school administrative unit, then the local school administrative unit shall revert the per student allocation for each student that was estimated to be eligible to participate but did not actually participate in the driver education program.
…
(c)	All expenses incurred by the State in carrying out the provisions of this section shall be paid out of the Highway Fund. At the end of each fiscal year, the Department of Public Instruction shall collect and revert any unused funds allocated for this program back to the Highway Fund.
…."
SECTION 28.2.(b)  The Highway Safety Research Center Institute of the University of North Carolina at Chapel Hill shall work in collaboration with the Department of Public Instruction and the Governor's Highway Safety Commission to create a standard curriculum to be used for the Driver Education Program in the Department of Public Instruction. The curriculum shall be ready for use in the school year beginning in the fall of 2011 and shall be used for all driver education programs funded with State funds.
SECTION 28.2.(c)  The Office of State Budget and Management (OSBM) shall review the funding and efficacy of the Driver Education Program to determine the most appropriate source of funds to support the program and outcomes of the funding on student driving. The review shall include recommendations for improving services, reducing costs and/or duplication, and alternative funding mechanisms including fees. OSBM shall also work with the Department of Public Instruction to establish performance measures for the program to be used to determine the program's effectiveness. OSBM shall make recommendations to the Governor and the General Assembly no later than November 1, 2010.

Require Global TransPark to Report on Anticipated Repayment Schedule
SECTION 28.3.  The Board of Directors of the Global TransPark Authority shall report on or before December 31, 2010, to the House Appropriations Subcommittee on Transportation and the Senate Committee on Appropriations on Department of Transportation on the Authority's strategic, business, and financial plans. The report shall include the Authority's proposed schedule to achieve financial self‑sufficiency and proposed schedule to repay to the Escheat Fund the investment authorized under G.S. 147‑69.2(b)(11) and any accumulated interest, both of which totaled thirty‑seven million seven hundred ninety‑eight thousand eight hundred ninety‑eight dollars and fifty cents ($37,798,898.50) as of March 31, 2010.

Adjust Road Naming Policy
SECTION 28.4.  The Department of Transportation shall remove the existing prohibition on naming State roads after specific military veterans and shall adopt a policy for naming highways after specific military veterans. This new policy shall be part of the Department of Transportation's existing system for naming State roads after people. The Department of Transportation shall report to the Joint Legislative Transportation Oversight Committee no later than December 1, 2011, on the new policy and the Department's implementation of the policy.

State Highway Patrol to Use Forfeiture Funds for VIPER Program
SECTION 28.5.  The Department of Crime Control and Public Safety, State Highway Patrol Division, shall use two million five hundred thousand dollars ($2,500,000) of the funds in the State Highway Patrol's asset forfeiture account from its participation in the United States Asset Forfeiture Program for the Voice Interoperability Plan for Emergency Responders (VIPER) project for expenditures that would be permitted under the Asset Forfeiture Program's rules.
In the event that the State Highway Patrol's 2010‑2011 budget, as established by S.L. 2009‑451, this act, or any other act, is reduced in any way, the State Highway Patrol may use, but shall not be required to use, two million five hundred thousand dollars ($2,500,000) of the funds in the State Highway Patrol's asset forfeiture account from its participation in the Asset Forfeiture Program for the VIPER project.

Develop Fee Schedule for Ferry System
SECTION 28.6.  The Department of Transportation, Ferry Division, shall develop a fee schedule for all ferry routes in an amount necessary to cover the operating costs of the existing ferry routes. As part of developing a fee schedule, the Department of Transportation, Ferry Division, shall provide a fee exception for schoolchildren and teachers who reside on a barrier island and travel on a ferry to attend or teach at a primary or secondary school. The Division shall also consider the needs of commuters and other frequent passengers in developing the fee schedule. The Department of Transportation, Ferry Division, shall report on its planned fee schedule and implementation time line to the House Appropriations Subcommittee on Transportation and the Senate Committee on Appropriations on Department of Transportation no later than February 1, 2011.

Establish NC Mobility Fund
SECTION 28.7.(a)  Chapter 136 of the General Statutes is amended by adding a new Article to read:
"Article 14A.
"North Carolina Mobility Fund.
"§ 136‑187.  Creation of the North Carolina Mobility Fund.
(a)	A special fund designated as the North Carolina Mobility Fund is hereby created. The Mobility Fund consists of revenue from appropriations or transfers by the General Assembly.
(b)	The amounts deposited to the Mobility Fund shall be used as provided in this Article, notwithstanding any provision of Article 14 to the contrary. The provisions of G.S. 136‑17.2A shall not apply to the application of the Mobility Fund.
"§ 136‑188.  Use of North Carolina Mobility Fund.
(a)	The Department of Transportation shall use the Mobility Fund to fund transportation projects of statewide and regional significance that relieve congestion and enhance mobility across all modes of transportation. The Department of Transportation shall establish project selection criteria based on the provisions of this Article.
(b)	The initial project funded from the Mobility Fund shall be the widening and improvement of Interstate 85 north of the Yadkin River Bridge.
"§ 136‑189.  Reports by Department of Transportation.
The Department of Transportation shall develop, and update annually, a report containing a completion schedule for all projects to be funded from the Mobility Fund, including the selection criteria and reasoning used for each project. The annual update shall indicate the projects, or portions thereof, that were completed during the preceding fiscal year, any changes in the original completion schedules, and the reasons for the changes. The report shall also include the Department's anticipated schedule for future projects. The Department shall submit the report and the annual updates to the Joint Legislative Transportation Oversight Committee."
SECTION 28.7.(b)  The Department of Transportation shall develop a selection criteria under G.S. 136‑188, as enacted by this act, and shall report to the Joint Legislative Transportation Oversight Committee on its development of the selection criteria. A preliminary report on the selection criteria for projects is due to the Joint Legislative Transportation Oversight Committee by October 1, 2010. A final report is due to the Joint Legislative Transportation Oversight Committee by December 15, 2010. When developing the project criteria and selection process, the Department shall give preferential consideration to projects qualified to receive state grants from the Congestion Relief and Intermodal Transportation 21st Century Fund under Article 19 of Chapter 136 of the General Statutes. When developing the project criteria and selection process, the Department shall involve the public and other stakeholders, including, but not limited to, the North Carolina Association of Municipal Planning Organizations, the North Carolina Association of Rural Planning Organizations, the North Carolina League of Municipalities, the North Carolina Association of County Commissioners, the North Carolina Metropolitan Mayors Coalition, and the North Carolina Council of Regional Governments.
SECTION 28.7.(c)  Any funds appropriated to the North Carolina Turnpike Authority in fiscal year 2009‑2010 under G.S. 136‑176(b2) that remain unencumbered at the end of fiscal year 2009‑2010 are hereby transferred to the North Carolina Mobility Fund, as enacted by this act, to be used for Phase II of the Yadkin River Bridge project.
SECTION 28.7.(d)  G.S. 105‑187.9 reads as rewritten:
"§ 105‑187.9.  Disposition of tax proceeds.
…
(b)	 General Fund Transfer. – In each fiscal  year, the State Treasurer shall transfer the amounts provided below from the taxes deposited in the Trust Fund to the General Fund. The transfer of funds authorized by this section may be made by transferring one‑fourth of the amount at the end of each quarter in the fiscal year or by transferring the full amount annually on July 1 of each fiscal year, subject to the availability of revenue.
(1)	The sum of  forty million dollars ($40,000,000).
…
(c)	Mobility Fund Transfer. – In each fiscal year, the State Treasurer shall transfer thirty‑one million dollars ($31,000,000) from the taxes deposited in the Trust Fund to the Mobility Fund. The transfer of funds authorized by this section may be made by transferring one‑fourth of the amount at the end of each quarter in the fiscal year or by transferring the full amount annually on July 1 of each fiscal year, subject to the availability of revenue."
SECTION 28.7.(e)  G.S. 105‑187.9, as amended by this act, reads as rewritten:
"§ 105‑187.9.  Disposition of tax proceeds.
…
(b)	General Fund Transfer. – In each fiscal year, the State Treasurer shall transfer the amounts provided below from the taxes deposited in the Trust Fund to the General Fund. The transfer of funds authorized by this section may be made by transferring one‑fourth of the amount at the end of each quarter in the fiscal year or by transferring the full amount annually on July 1 of each fiscal year, subject to the availability of revenue."
(1)	The sum of  twenty‑six million dollars ($26,000,000).
…
(c)	Mobility Fund Transfer. – In each fiscal year, the State Treasurer shall transfer  forty‑five million dollars ($45,000,000) from the taxes deposited in the Trust Fund to the Mobility Fund. The transfer of funds authorized by this section may be made by transferring one‑fourth of the amount at the end of each quarter in the fiscal year or by transferring the full amount annually on July 1 of each fiscal year, subject to the availability of revenue."
SECTION 28.7.(f)  Subsection (d) of this section becomes effective July 1, 2011. Subsection (e) of this section becomes effective July 1, 2012.

PART XXIX. SALARIES AND BENEFITS

TEACHER SALARY SCHEDULES
SECTION 29.2.(a)  The following monthly salary schedules shall apply for the 2010‑2011 fiscal year to certified personnel of the public schools who are classified as teachers.  The schedules contain 34 steps, with each step corresponding to one year of teaching experience. Provided, however, teachers employed during the 2009‑2010 school year who did not work the required number of months to acquire an additional year of experience shall not receive a decrease in salary as otherwise would be required by the salary schedule below.

2010‑2011 Monthly Salary Schedule
"A" Teachers
	Years of Experience	"A" Teachers	NBPTS Certification
	0	$3,043	N/A
	1	$3,043	N/A
	2	$3,043	N/A
	3	$3,085	$3,455
	4	$3,129	$3,504
	5	$3,264	$3,656
	6	$3,404	$3,812
	7	$3,538	$3,963
	8	$3,667	$4,107
	9	$3,771	$4,224
	10	$3,819	$4,277
	11	$3,868	$4,332
	12	$3,918	$4,388
	13	$3,967	$4,443
	14	$4,018	$4,500
	15	$4,069	$4,557
	16	$4,122	$4,617
	17	$4,176	$4,677
	18	$4,231	$4,739
	19	$4,286	$4,800
	20	$4,345	$4,866
	21	$4,403	$4,931
	22	$4,461	$4,996
	23	$4,523	$5,066
	24	$4,584	$5,134
	25	$4,650	$5,208
	26	$4,714	$5,280
	27	$4,779	$5,352
	28	$4,845	$5,426
	29	$4,913	$5,503
	30	$4,984	$5,582
	31	$5,055	$5,662
	32	$5,153	$5,771
	33+	$5,255	$5,886

2010‑2011 Monthly Salary Schedule
"M" Teachers
	Years of Experience	"M" Teachers	NBPTS Certification
	0	$3,347	N/A
	1	$3,347	N/A
	2	$3,347	N/A
	3	$3,394	$3,801
	4	$3,442	$3,855
	5	$3,590	$4,021
	6	$3,744	$4,193
	7	$3,892	$4,359
	8	$4,034	$4,518
	9	$4,148	$4,646
	10	$4,201	$4,705
	11	$4,255	$4,766
	12	$4,310	$4,827
	13	$4,364	$4,888
	14	$4,420	$4,950
	15	$4,476	$5,013
	16	$4,534	$5,078
	17	$4,594	$5,145
	18	$4,654	$5,212
	19	$4,715	$5,281
	20	$4,780	$5,354
	21	$4,843	$5,424
	22	$4,907	$5,496
	23	$4,975	$5,572
	24	$5,042	$5,647
	25	$5,115	$5,729
	26	$5,185	$5,807
	27	$5,257	$5,888
	28	$5,330	$5,970
	29	$5,404	$6,052
	30	$5,482	$6,140
	31	$5,561	$6,228
	32	$5,668	$6,348
	33+	$5,781	$6,475
SECTION 29.2.(b)  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 29.2.(c)  Certified public schoolteachers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers.  Certified public schoolteachers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers.
SECTION 29.2.(d)  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 29.2.(e)  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 29.2.(f)  Certified school nurses who are employed in the public schools as nurses shall be paid on the "M" salary schedule.
SECTION 29.2.(g)  As used in this section, the term "teacher" shall also include instructional support personnel.

SCHOOL‑BASED ADMINISTRATOR SALARY SCHEDULE
SECTION 29.3.(a)  The following base salary schedule for school‑based administrators shall apply only to principals and assistant principals.  This base salary schedule shall apply for the 2010‑2011 fiscal year, commencing July 1, 2010. Provided, however, school‑based administrators (i) employed during the 2009‑2010 school year who did not work the required number of months to acquire an additional year of experience and (ii) employed during the 2010‑2011 school year in the same classification shall not receive a decrease in salary as otherwise would be required by the salary schedule below.

2010‑2011 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)
	0‑6	$3,781	‑	‑	‑	‑
	7	$3,931	‑	‑	‑	‑
	8	$4,074	‑	‑	‑	‑
	9	$4,189	‑	‑	‑	‑
	10	$4,243	$4,243	‑	‑	‑
	11	$4,298	$4,298	‑	‑	‑
	12	$4,353	$4,353	$4,408	‑	‑
	13	$4,408	$4,408	$4,464	‑	‑
	14	$4,464	$4,464	$4,521	$4,579	‑
	15	$4,521	$4,521	$4,579	$4,640	$4,701
	16	$4,579	$4,579	$4,640	$4,701	$4,762
	17	$4,640	$4,640	$4,701	$4,762	$4,828
	18	$4,701	$4,701	$4,762	$4,828	$4,891
	19	$4,762	$4,762	$4,828	$4,891	$4,956
	20	$4,828	$4,828	$4,891	$4,956	$5,025
	21	$4,891	$4,891	$4,956	$5,025	$5,092
	22	$4,956	$4,956	$5,025	$5,092	$5,166
	23	$5,025	$5,025	$5,092	$5,166	$5,237
	24	$5,092	$5,092	$5,166	$5,237	$5,310
	25	$5,166	$5,166	$5,237	$5,310	$5,383
	26	$5,237	$5,237	$5,310	$5,383	$5,458
	27	$5,310	$5,310	$5,383	$5,458	$5,537
	28	$5,383	$5,383	$5,458	$5,537	$5,617
	29	$5,458	$5,458	$5,537	$5,617	$5,725
	30	$5,537	$5,537	$5,617	$5,725	$5,839
	31	$5,617	$5,617	$5,725	$5,839	$5,956
	32	$5,725	$5,725	$5,839	$5,956	$6,075
	33	$5,839	$5,839	$5,956	$6,075	$6,197
	34	‑	$5,956	$6,075	$6,197	$6,321
	35	‑	‑	$6,197	$6,321	$6,447
	36	‑	‑	$6,321	$6,447	$6,576
	37	‑	‑	‑	$6,576	$6,708
	38	‑	‑	‑	$6,708	$6,842
	39	‑	‑	‑	‑	$6,979

2010‑2011 Principal and Assistant Principal Salary Schedules
Classification
Years of Exp	Prin V	Prin VI	Prin VII	Prin VIII
	(44‑54)	(55‑65)	(66‑100)	(101+)
	0‑16	$4,828	‑	‑	‑
	17	$4,891	‑	‑	‑
	18	$4,956	$5,025	‑	‑
	19	$5,025	$5,092	$5,237	‑
	20	$5,092	$5,166	$5,310	$5,383
	21	$5,166	$5,237	$5,383	$5,458
	22	$5,237	$5,310	$5,458	$5,537
	23	$5,310	$5,383	$5,537	$5,617
	24	$5,383	$5,458	$5,617	$5,725
	25	$5,458	$5,537	$5,725	$5,839
	26	$5,537	$5,617	$5,839	$5,956
	27	$5,617	$5,725	$5,956	$6,075
	28	$5,725	$5,839	$6,075	$6,197
	29	$5,839	$5,956	$6,197	$6,321
	30	$5,956	$6,075	$6,321	$6,447
	31	$6,075	$6,197	$6,447	$6,576
	32	$6,197	$6,321	$6,576	$6,708
	33	$6,321	$6,447	$6,708	$6,842
	34	$6,447	$6,576	$6,842	$6,979
	35	$6,576	$6,708	$6,979	$7,119
	36	$6,708	$6,842	$7,119	$7,261
	37	$6,842	$6,979	$7,261	$7,406
	38	$6,979	$7,119	$7,406	$7,554
	39	$7,119	$7,261	$7,554	$7,705
	40	$7,261	$7,406	$7,705	$7,859
	41	‑	$7,554	$7,859	$8,016
	42	‑	$7,705	$8,016	$8,176
	43	‑	‑	$8,176	$8,340

SECTION 29.3.(b)  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 29.3.(c)  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. Provided, however, a principal who acquires an additional step for the 2009‑2010 or 2010‑2011 fiscal years shall not receive a corresponding increase in salary during the 2009‑2011 fiscal biennium. 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 29.3.(d)  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 29.3.(e)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 29.3.(f)  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 29.3.(g)  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.

NO SALARY INCREASES
SECTION 29.5.(a)  Section 26.1A(a) of S.L. 2009‑451, as amended by Section 21 of S.L. 2009‑575, reads as rewritten:
"SECTION 26.1A.(a)  The salaries of those officers and employees, whose salaries for the 2008‑2009 fiscal year were set or increased in Sections 26.1, 26.2, 26.3, 26.4, 26.5, 26.6, 26.7, 26.8, 26.9, 26.10, 26.11, 26.11A, 26.12, 26.12D, 26.13, 26.14, 26.18, and 26.19 of Session Law 2008‑107, and in effect on June 30, 2009, or the last date in pay status during the 2008‑2009 fiscal year if earlier, shall remain in effect and shall not increase for the 2009‑2010 fiscal year, except:
(1)	As provided for by Section 29.20A of S.L. 2005‑276.
(2)	For Community College faculty as otherwise provided in Section 8.1 of this act.
(3)	For University of North Carolina faculty as otherwise provided by the Faculty Recruiting and Retention Fund or the Distinguished Professors Endowment Fund.
(4)	Salaries may be increased for reallocations or promotions, in‑range adjustments for job change, career progression adjustments for demonstrated competencies, or any other adjustment related to an increase in job duties or responsibilities, none of which are subject to the salary freeze otherwise provided by this subsection. All other salary increases are prohibited."
SECTION 29.5.(b)  Section 26.1 of S.L. 2009‑451, as amended by S.L. 2009‑575, is further amended by adding a new subsection to read:
"SECTION 26.1A.(a1)  Notwithstanding any provisions of law to the contrary, the salaries, regardless of the funding source, of those officers and employees of:
(1)	State agencies; departments; institutions; authorities; boards; commissions;
(2)	The judicial branch;
(3)	The legislative branch;
(4)	The University of North Carolina, including, but not limited to, its constituent institutions, affiliated enterprises, and foundations; and
(5)	The North Carolina Community College System;
and in effect on June 30, 2010, or the last date in pay status during the 2009‑2010 fiscal year if earlier, shall remain in effect and shall not increase for the 2010‑2011 fiscal year."
SECTION 29.5.(c)  Section 26.1 of S.L. 2009‑451, as amended by S.L. 2009‑575, is further amended by adding a new subsection to read:
"SECTION 26.1A.(a2)  The Office of State Budget and Management and the Office of State Personnel shall monitor jointly the compliance of the following units of government with the provisions of subsection (a1) of this section: (i) State agencies, departments, and institutions, including authorities, boards, and commissions; (ii) the judicial branch; and (iii) The University of North Carolina, its constituent institutions, and affiliated enterprises. Beginning November 1, 2010, and through August 1, 2011, the Office of State Budget and Management and the Office of State Personnel shall submit quarterly reports (covering the preceding calendar quarter) of their monitoring activities to the President Pro Tempore of the Senate, the Speaker of the House of Representatives, and the Fiscal Research Division. Quarterly reports shall include a summary of the actions taken by the Office of State Budget and Management and the Office of State Personnel with respect to any unauthorized salary increases granted by the above units of government."

SALARY‑RELATED CONTRIBUTIONS/EMPLOYER
SECTION 29.6.  Section 6(c) of S.L. 2009‑16, as amended by Section 26.20(b) of S.L. 2009‑451, reads as rewritten:
"SECTION 6.(c)  Effective July 1, 2010, the State's employer contribution rates budgeted for retirement and related benefits as percentage of covered salaries for the 2010‑2011 fiscal year are:  (i)   ten and ninety‑two hundredths percent (10.92%) – Teachers and State Employees; (ii)   fifteen and ninety‑two hundredths percent (15.92%) – State Law Enforcement Officers; (iii) twelve and twenty‑six hundredths percent (12.26%) – University Employees' Optional Retirement System; (iv) twelve and twenty‑six hundredths percent (12.26%) – Community College Optional Retirement Program; (v)  twenty‑one and forty‑six hundredths percent (21.46%) – Consolidated Judicial Retirement System; and (vi) four and ninety hundredths percent (4.90%) – Legislative Retirement System. Each of the foregoing contribution rates includes four and ninety hundredths percent (4.90%) for hospital and medical benefits. The rate for Teachers and State Employees, State Law Enforcement Officers, Community College Optional Retirement Program, and for the University Employees' Optional Retirement Program includes fifty‑two hundredths percent (0.52%) for the Disability Income Plan. The rates for Teachers and State Employees and State Law Enforcement Officers include sixteen‑hundredths percent (0.16%) for the Death Benefits Plan. The rate for State Law Enforcement Officers includes five percent (5%) for Supplemental Retirement Income."

PART XXX. CAPITAL APPROPRIATIONS

CAPITAL APPROPRIATIONS/GENERAL FUND
SECTION 30.1.  There is appropriated from the General Fund for the 2010‑2011 fiscal year the following amounts for capital improvements:

Capital Improvements – General Fund	2010‑2011

Department of Environment and Natural Resources
	Water Resources Development Projects	$9,130,000

TOTAL CAPITAL IMPROVEMENTS – GENERAL FUND	$9,130,000

WATER RESOURCES DEVELOPMENT PROJECT FUNDS
SECTION 30.2.(a)  The Department of Environment and Natural Resources shall allocate the funds appropriated in this act for water resources development projects in accordance with the schedule that follows. These funds will provide a State match for an estimated twenty‑seven million four hundred four thousand dollars ($27,404,000) in federal funds.

Name of Project	2010‑2011

(1)	Wilmington Harbor Deepening		$900,000
(2)	Wilmington Harbor Maintenance		2,000,000
(3)	Morehead City Harbor Maintenance		100,000
(4)	B. Everett Jordan Lake Water Supply Storage		200,000
(5)	Dredging Contingency Fund			1,250,000
(6)	AIWW Dredging				1,000,000
(7)	Bogue Banks Shore Protection Study		5,000
(8)	John H. Kerr Dam and Reservoir Sec. 216		50,000
(9)	Neuse River Basin PED			–
(10)	Princeville Flood Damage Reduction		200,000
(11)	Currituck Sound Environmental Restoration Study		50,000
(12)	Belhaven Harbor – Cap – Sec 1135		350,000
(13)	Surf City/North Topsail Beach Protection Study PED		–
(14)	West Onslow Beach (Topsail Beach) PED		50,000
(15)	Silver Lake Harbor Disposal Area Maintenance		800,000
(16)	Manteo Old House Channel – CAP – Sec. 204		25,000
(17)	Concord Streams Restoration – CAP – Sec. 206		–
(18)	North Carolina International Terminal		–
(19)	Planning Assistance to Communities		–
(20)	State‑Local Projects				1,800,000
(21)	Aquatic Plant Control, Statewide and Lake Gaston		350,000

TOTALS	$9,130,000

SECTION 30.2.(b)  Where the actual costs are different from the estimated costs under subsection (a) of this section, the Department may adjust the allocations among projects as needed. If any projects funded under subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 2010‑2011 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 2010‑2011.
(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 2011‑2012 fiscal year.
SECTION 30.2.(c)  The Department shall make semiannual reports on the use of these funds to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Office of State Budget and Management. Each report shall include all of the following:
(1)	All projects listed in this section.
(2)	The estimated cost of each project.
(3)	The date that work on each project began or is expected to begin.
(4)	The date that work on each project was completed or is expected to be completed.
(5)	The actual cost of each project.
The semiannual reports shall also show those projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.

NON‑GENERAL FUND CAPITAL IMPROVEMENT AUTHORIZATIONS
SECTION 30.3.(a)  Subject to subsection (c) of this section, the General Assembly authorizes the following capital projects to be funded with receipts or from other non‑General Fund sources available to the appropriate department:

Name of Project	Amount of Non‑General Fund
	Funding Authorized for FY 2010‑2011

Department of Agriculture and Consumer Services
	Food and Drug – Upgrade Steam Generation					        $18,000
	Markets/Southeast NC Ag Center – Multipurpose Pavilion			   $1,290,000
	Markets/Southeast NC Ag Center – Associated Development 
Around Multipurpose Pavilion					   $1,500,000
	Markets/State Farmers Market – Electrical Improvements			      $200,000
	Markets/State Farmers Market – Restroom Improvements			      $600,000
	Markets/WNC Ag Center – Livestock Sales Area HVAC			      $500,000
	Markets/WNC Ag Center – Code, Facility and Site Improvements		      $300,000
	Plant Industry – Support Facility Renovations and Repairs			        $50,000
	Research Stations – Irrigation							      $200,000
	Research Stations – Grain Storage						      $400,000
	State Fair – Site Development						      $500,000
	State Fair – Hunt Horse Complex Improvements				      $250,000
	Veterinary/Food and Drug – Standby Generators				      $700,000

Department of Correction
	Southern Medium Programs Building	600,000
	Caledonia Programs Building	600,000
	Caswell Programs Building	600,000
	Southern Minimum Programs Building	600,000
	Randolph Programs Building	600,000

Department of Cultural Resources
	USS NC Battleship Repairs, Dredging, Construction
		Commission Battleship Fund	1,700,000

Department of Environment and Natural Resources
	Forest Resources – Bladen Lakes Ranger Residence	399,000

Department of Justice
	NC Justice Academy Live Fire Shoot House	282,000

Wildlife Resources Commission
	Pisgah Education Center Repairs & Renovation	60,000
	Outer Banks Education Center Repairs and Renovation	26,000
	Mt. Holly Depot Acquisition	150,000
	Statewide Boating Access Areas (BAA) Renovations	3,610,000
	Table Rock Hatchery Residence Renovation	150,000
	McKinney Lake Equipment Shed	70,000
	Fishing Access Areas Construction	180,000

TOTAL AMOUNT OF NON‑GENERAL FUND CAPITAL
	PROJECTS AUTHORIZED	$16,135,000

SECTION 30.3.(b)  From funds deposited with the State Treasurer in a capital improvement account to the credit of the Department of Agriculture and Consumer Services pursuant to G.S. 146‑30, the sum of thirty thousand dollars ($30,000) for the 2010‑2011 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 the plant conservation program preserves owned by the Department.
SECTION 30.3.(c)  A project authorized in subsection (a) of this section is  authorized only if upon completion the project will not require operating support from the General Fund.

REPAIRS AND RENOVATIONS RESERVE ALLOCATION
SECTION 30.4.(a)  Of the funds in the Reserve for Repairs and Renovations for the 2010‑2011 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 may allocate funds for the repair and renovation of facilities not supported from the General Fund if the Board determines that sufficient funds are not available from other sources and that conditions warrant General Fund assistance. Any such finding shall be included in the Board's submission to the Joint Legislative Commission on Governmental Operations on the proposed allocation of funds.
The Board of Governors and the Office of State Budget and Management shall consult with the Joint Legislative Commission on Governmental Operations prior to the allocation or reallocation of these funds.
SECTION 30.4.(b)  In addition to any other funds in the Reserve for Repairs and Renovations for the 2010‑2011 fiscal year, the proceeds of any bonds and notes issued pursuant to Section 30.7 of this act are transferred to that Reserve.
SECTION 30.4.(c)  Of the funds allocated to the Board of Governors of The University of North Carolina in subsection (a) of this section, a portion shall be used by the Board of Governors for the installation of fire sprinklers in university residence halls. This portion shall be in addition to funds otherwise appropriated in this act for the same purpose. 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.
The Board of Governors shall submit progress reports to the Joint Legislative Commission on Governmental Operations. Reports shall include the status of completed, current, and planned projects. Reports also shall include information on the financial status of each constituent institution's housing system, the constituent institution's ability to pay for fire protection in residence halls, and the timing of installation of fire sprinklers. Reports shall be submitted on January 1 and July 1 until all residence halls have fire sprinklers.
SECTION 30.4.(d)  Of the funds allocated to the Board of Governors of The University of North Carolina in subsection (a) of this section, a portion shall be used by the Board of Governors for campus public safety improvements allowable under G.S. 143C‑4‑3(b).
SECTION 30.4.(e)  Of the funds allocated to the Office of State Budget and Management in subsection (a) of this section, five hundred thousand dollars ($500,000) shall be transferred to the Department of Crime Control and Public Safety to be used for Armory Repair and Renovation.

AMEND 2009 WILDLIFE RESOURCES COMMISSION NON‑GENERAL FUND CAPITAL IMPROVEMENT AUTHORIZATIONS
SECTION 30.5.(a)  Subsection 27.4(a) of S.L. 2009‑451 reads as rewritten:
"SECTION 27.4.(a)  The General Assembly authorizes the following capital projects to be funded with receipts or from other non‑General Fund sources available to the appropriate department:

Name of Project	Amount of Non‑General Fund
	Funding Authorized for FY 2009‑2010

Department of Crime Control and Public Safety
	Additions and Renovations to Armories		$ 9,303,442
	Camp Butner Cantonment – Phase 1 Design	1,367,000
	Family Assistance Centers	2,000,000
	Gastonia Armory Renovation and Expansion	1,100,000
	Tactical Unmanned Aerial Systems Facility	6,746,000

Department of Cultural Resources
	Aycock Birthplace Picnic Shelter	86,100
	Maritime Museum – Floating Dock	130,000
	Museum of History Chronology Exhibit – Phase 2B (1900‑1960)	1,200,000

Department of Environment and Natural Resources
	Zoo – Elephant Exhibit New Restrooms	300,000

Wildlife Resources Commission
	Armstrong Hatchery Lower Raceway Replacement	1,725,000
	Centennial Campus Education Center Exhibit Completion	180,000
	Chinquapin Equipment Storage Pole Shed	60,000
	Chowan Bridge Fishing Pier and Edenton Boating Access	450,000
	Emerald Isle New Boating Access Area	600,000
	Falls Lake Office Building	550,000
	Hampstead Land Acquisition	10,000,000
	Land Acquisitions – State Gamelands	20,000,000
	Lewelyn Branch New Boating Access Area	150,000
	Manns Harbor Bridge Marina Acquisition	5,750,000
	Marion Depot Drainage Repairs	200,000
	Marion Hatchery and Depot Renovation	4,000,000
	McKinney Lake Hatchery Kettles Replacement	1,700,000
	Minor Boating Access Area Renovations – Various Locations	150,000
		
	Ocean Isle Boating Access Area Renovations	150,000
	Outer Banks Education Center Teaching Facility Repairs	245,000
	Pechmann Fishing Education Center Pond Restoration	160,000
	Pechmann Fishing Education Center Storage Building	220,000
	Pisgah Education Center Gift Shop Renovation and Expansion	200,000
	Pisgah Education Center Outdoor Exhibit Renovation	450,000
	Pisgah Education Center Repairs	155,000
	Pisgah Hatchery Water System Renovation	100,000
	Rhodes Pond Dam Repairs	500,000
	Sneads Ferry Land Acquisition	6,500,000
	Sunset Harbor Land Acquisition	925,000
	Swan Quarter Land Acquisition	1,700,000
	Sykes Depot Pond, Office, Storage Construction	350,000
	Table Rock Hatchery Office and Workshop Replacement	345,000

TOTAL AMOUNT OF NON‑GENERAL FUND CAPITAL
	PROJECTS AUTHORIZED	$79,747,542"

SPECIAL INDEBTEDNESS FOR REPAIRS AND RENOVATIONS
SECTION 30.7.(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 in the maximum aggregate principal amount of seventy million dollars  ($70,000,000) to finance the capital facility costs of repairing and renovating State facilities and related infrastructure, to be allocated in accordance with Section 30.4 of this act.
SECTION 30.7.(b)  This section is effective when it becomes law.

PHASE I OF STATE HIGHWAY PATROL TRAINING FACILITY
SECTION 30.8.(a)  Section 27.8(a) of S.L. 2008‑107 is amended by adding a new subdivision to read:
"(29)	In the maximum aggregate principal amount of twenty‑three million forty‑three thousand dollars ($23,043,000) to finance the capital facility costs of completing Phase I of the State Highway Patrol Training Facility, to include an armory, computer security, medical office, and dorm  facilities, and related site work. No more than a maximum aggregate amount of ten million dollars ($10,000,000) of special indebtedness may be issued or incurred under this subdivision prior to July 1, 2011."SECTION 30.8.(b)  Section 27.9(f)(1) of S.L. 2008‑107, as amended by Section 2.7(d) of S.L. 2008‑218 and Section 1(b) of S.L. 2009‑209, reads as rewritten:
"(1)	A maximum aggregate principal amount of ninety‑six million five hundred fifty‑four thousand five hundred eighty‑four dollars ($96,554,584) to finance the capital facility costs of the Green Square Project, Department of Environment and Natural Resources. The projected allocation may be increased to reflect the availability of other funds, including contingency funds, income earned on the investment of bond and note proceeds, and the proceeds of any grants."
SECTION 30.8.(c)  Section 27.9(f) of S.L. 2008‑107, as amended by Section 2.7(d) of S.L. 2008‑118 and Section 1(b) of S.L. 2009‑209, is amended by adding a new subdivision to read:
"(3a)	A maximum aggregate principal amount of two million five hundred thousand dollars ($2,500,000) to finance the capital facility costs of Phase I of the State Highway Patrol Training Facility."
SECTION 30.8.(d)  Section 27.9(f)(4) of S.L. 2008‑107, as amended by Section 2.7(d) of S.L. 2008‑118 and Section 1(b) of S.L. 2009‑209, reads as rewritten:
 "(4)	An amount the Director of the Budget determines is not required for projects listed in subdivisions (1), (2), (3), and (3a) of this subsection to finance a portion of those capital projects that have been approved by the General Assembly for financing with the proceeds of special indebtedness as hereinafter described."
SECTION 30.8.(e)  Part XXVII of S.L. 2008‑107 is amended by adding a new section to read:
"PHASE I OF STATE HIGHWAY PATROL TRAINING FACILITY
"SECTION 27.9. In addition to the proceeds of special indebtedness authorized by Section 27.8(a)(29) of this act to finance the capital facility costs of completing Phase I of the State Highway Patrol Training Facility, the proceeds of bonds and notes issued pursuant to Section 27.9(f)(3a) of S.L. 2008‑107, as enacted by this act, shall be used for that purpose."
SECTION 30.8.(f)  Subdivision (13) of Section 27.8(a) of S.L. 2008‑107 reads as rewritten:
"(13)	In the maximum aggregate principal amount of thirty‑four million one hundred seventy thousand dollars ($34,170,000) to finance the capital facility costs of completing an academic classroom and office building at the University of North Carolina at Greensboro. No more than a maximum aggregate amount of twenty‑one million dollars ($21,000,000) of special indebtedness may be issued or incurred under this subdivision prior to July 1, 2009."
SECTION 30.8.(g)  Section 27.8(a)(15) of S.L. 2008‑107, as amended by Section 2(a) of S.L. 2009‑209, reads as rewritten:
"(15)	In the maximum aggregate principal amount of ten million four hundred fifty‑seven thousand dollars ($10,457,000) to finance the capital improvement costs of acquiring State land throughout The University of North Carolina System. No more than a maximum aggregate amount of ten million dollars ($10,000,000) of special indebtedness may be issued or incurred under this subdivision prior to July 1, 2011."
SECTION 30.8.(h)  This section is effective when it becomes law.

STATUTORILY DEFINE "SCOPE"
SECTION 30.9.  G.S. 143C‑1‑1(d) is amended by adding a new subdivision to read:
"§ 143C‑1‑1.  Purpose and definitions.
(d)	Definitions. – The following definitions apply in this Chapter:
…
(16a)	Increase the scope. – With respect to a capital improvement project, either  increasing the square footage of a capital improvement project by more than ten percent (10%) of the amount authorized or programming new functions into the project."

AMEND DEBT SERVICE FOR GREEN SQUARE COMPLEX PARKING CONSTRUCTION
SECTION 30.10.  Section 27.8 of S.L. 2009‑451 reads as rewritten:
"SECTION 27.8. Notwithstanding Item 61, Page M‑11, of the Joint Conference Committee Report on the Continuation, Expansion and Capital Budgets for S.L. 2008‑107, the General Fund shall service the debt for the Green Square Complex parking deck."

part XXXI. tax changes

irc update
SECTION 31.1.(a)  G.S. 105‑228.90(b)(1b) reads as rewritten:
"§ 105‑228.90.  Scope and definitions.
…
(b)	Definitions. – The following definitions apply in this Article:
…
(1b)	Code. – The Internal Revenue Code as enacted as of May 1, 2010, including any provisions enacted as of that date which become effective either before or after that date."
SECTION 31.1.(b)  G.S. 105‑134.6(d) reads as rewritten:
"§ 105‑134.6.  Adjustments to taxable income.
…
(d)	Other Adjustments. – The following adjustments to taxable income shall be made in calculating North Carolina taxable income:
…
(7)	The taxpayer shall add to taxable income the amounts listed in this subdivision. An addition is not required under this subdivision for a net operating loss deduction of an eligible small business as defined under section 172(b)(1)(H) of the Code. The amounts are:
a.	For taxable years 2003, 2004, and 2005, the amount of any 2008 net operating loss deduction claimed on a federal return under section 172(b)(1)(H) or section 810(b)(4) of the Code.
b.	For taxable years 2004, 2005, and 2006, the amount of any 2009 net operating loss deduction claimed on a federal return under section 172(b)(1)(H) or section 810(b)(4) of the Code.
(8)	For taxable years 2011 through 2013, a taxpayer who made an addition under subdivision (7) of this subsection may deduct one‑third of the taxpayer's net operating loss absorbed on the taxpayer's 2003, 2004, 2005, and 2006 federal returns under section 172(b)(1)(H) or section 810(b)(4) of the Code."
SECTION 31.1.(c)  This section is effective when it becomes law.  Notwithstanding subsection (a) of this section, any amendments to the Internal Revenue Code enacted after May 1, 2009, that increase North Carolina taxable income for the 2009 taxable year become effective for taxable years beginning on or after January 1, 2010.

Increase Tax Benefits for Investments in Small Businesses
SECTION 31.12.(a)  G.S. 105‑163.012(b) reads as rewritten:
"§ 105‑163.012.  Limit; carry‑over; ceiling; reduction in basis.
…
(b)	The total amount of all tax credits allowed to taxpayers under G.S. 105‑163.011 for investments made in a calendar year may not exceed  eight million dollars ($8,000,000). The Secretary of Revenue shall calculate the total amount of tax credits claimed from the applications filed pursuant to G.S. 105‑163.011(c). If the total amount of tax credits claimed for investments made in a calendar year exceeds this maximum amount, the Secretary shall allow a portion of the credits claimed by allocating the maximum amount in tax credits in proportion to the size of the credit claimed by each taxpayer."
SECTION 31.12.(b)  G.S. 105‑163.015 reads as rewritten:
"§ 105‑163.015.  Sunset.
This Part is repealed effective for investments made on or after  January 1, 2013."
SECTION 31.12.(c)  Subsection (a) of this section is effective for investments made on or after January 1, 2010.  The remainder of this section is effective when it becomes law.

Tax Benefits for Small Businesses That Provide Health Insurance
SECTION 31.13.(a)  G.S. 105‑129.16E(d) reads as rewritten:
"§ 105‑129.16E.  Credit for small business employee health benefits.
…
(d)	Sunset. – This section expires for taxable years beginning on or after  January 1, 2014."
SECTION 31.13.(b)  This section is effective when it becomes law.

Tax Benefits for Putting People Back to Work
SECTION 31.14.(a)  Article 3B of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑129.16J.  Credit for small businesses that create jobs.
(a)	Definitions. – The following definitions apply in this section:
(1)	Full‑time job. – Defined in G.S. 105‑129.81.
(2)	Small business. – A taxpayer that employed no more than 25 full‑time employees at the beginning of the taxable year.
(b)	Credit. – A small business that meets the eligibility requirements of this section and creates a new, full‑time job in this State is allowed a credit. The amount of the credit is equal to one thousand dollars ($1,000) for each new full‑time job created and maintained for a period of at least three years. The credit is taken in the taxable year in which the job is created.
(c)	Calculation. – The number of new jobs a taxpayer creates or maintains during the taxable year is determined by subtracting the average number of full‑time employees the taxpayer had in this State during the 12‑month period preceding the beginning of the taxable year from the average number of full‑time employees the taxpayer has in this State during the taxable year.
(d)	Eligibility Requirements. – In order to be eligible for a credit under this section, the taxpayer must satisfy the following eligibility requirements:
(1)	Environmental impact. – The taxpayer must satisfy the environmental impact requirement under G.S. 105‑129.83.
(2)	Safety and health programs. – The taxpayer must satisfy the safety and health programs requirement under G.S. 105‑129.83.
(3)	Overdue tax debts. – The taxpayer must not have any overdue tax debts that have not been satisfied or otherwise resolved.
(e)	Forfeiture. – A taxpayer forfeits a credit allowed under this section if the taxpayer was not eligible for the credit for the calendar year in which the taxpayer created the job. In addition, a taxpayer forfeits a credit if the taxpayer fails to maintain the job for at least three years. A taxpayer that forfeits a credit under this Article is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105‑241.21, computed from the date the taxes would have been due if the credit had not been allowed. The past taxes and interest are due 30 days after the date the credit is forfeited; a taxpayer that fails to pay the past taxes and interest by the due date is subject to the penalties provided in G.S. 105‑236.
(f)	Limitations. – A taxpayer may not claim a credit under this section with respect to a job for which the taxpayer claims any other credit under this Chapter for job creation. The credit allowed by this section may not exceed twenty‑five thousand dollars ($25,000). 
(g)	Report. – The Department must publish by May 1 of each year the total credits claimed under this section, itemized by taxpayer, for the 12‑month period ending the previous December 31.
(h)	Sunset. – This section is repealed for jobs created on or after January 1, 2013."
SECTION 31.14.(b)  This section is effective for taxes imposed for taxable years beginning on or after January 1, 2010, and for jobs created on or after January 1, 2010.

PART XXXII. MISCELLANEOUS PROVISIONS

STATE BUDGET ACT APPLIES
SECTION 32.1.  The provisions of the State Budget Act, Chapter 143C of the General Statutes, are reenacted and shall remain in full force and effect and are incorporated in this act by reference.

COMMITTEE REPORT
SECTION 32.2.(a)  The North Carolina House of Representatives Appropriations Committee Report On The Continuation, Expansion and Capital Budgets for Senate Bill 897, dated June 2, 2010 which was distributed in the House of Representatives and used to explain this act, shall indicate action by the General Assembly on this act and shall therefore be used to construe this act, as provided in the State Budget Act, Chapter 143C of the General Statutes, as appropriate, and for these purposes shall be considered a part of this act and as such shall be printed as a part of the Session Laws.
SECTION 32.2.(b)  The budget enacted by the General Assembly is for the maintenance of the various departments, institutions, and other spending agencies of the State for the 2010‑2011 budget as provided in G.S. 143C‑3‑5. This budget includes the appropriations of State funds as defined in G.S. 143C‑1‑1(d)(25).
The Director of the Budget submitted recommended adjustments to the budget to the General Assembly in April 2010 in the documents "The North Carolina State Budget, Recommended Operating Budget with Performance Management Information 2010‑2011" for the 2010‑2011 fiscal year for the various departments, institutions, and other spending agencies of the State. The adjustments to these documents made by the General Assembly are set out in the Committee Report.
SECTION 32.2.(c)  The budget enacted by the General Assembly shall also be interpreted in accordance with G.S. 143C‑5‑5, the special provisions in this act, and other appropriate legislation.
In the event that there is a conflict between the line‑item budget certified by the Director of the Budget and the budget enacted by the General Assembly, the budget enacted by the General Assembly shall prevail.

MOST TEXT APPLIES ONLY TO THE 2010‑2011 FISCAL YEAR
SECTION 32.3.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2010‑2011 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2010‑2011 fiscal year.

EFFECT OF HEADINGS
SECTION 32.4.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only. The headings do not expand, limit, or define the text of this act, except for effective dates referring to a part.

APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY
SECTION 32.5.(a)  Except where expressly repealed or amended by this act, the provisions of S.L. 2009‑451 and S.L. 2009‑575 remain in effect.
SECTION 32.5.(b)  Notwithstanding any modifications by this act in the amounts appropriated, except where expressly repealed or amended, the limitations and directions for the 2010‑2011 fiscal year in S.L. 2009‑451 and S.L. 2009‑575 that applied to appropriations to particular agencies or for particular purposes apply to the newly enacted appropriations and budget reductions of this act for those same particular purposes.

SEVERABILITY CLAUSE
SECTION 32.6.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE
SECTION 32.7.  Except as otherwise provided, this act becomes effective July 1, 2010.