AN ACT TO MAKE BASE BUDGET APPROPRIATIONS FOR CURRENT OPERATIONS OF STATE DEPARTMENTS, INSTITUTIONS, AND AGENCIES, AND FOR OTHER PURPOSES.

The General Assembly of North Carolina enacts:

PART I. INTRODUCTION AND TITLE OF ACT

TITLE
SECTION 1.1.  This act shall be known as the "Current Operations and Capital Improvements Appropriations Act of 2013."

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.

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 made for the fiscal biennium ending June 30, 2015, according to the following schedule:

Current Operations – General Fund	2013‑2014		2014‑2015

EDUCATION

Community Colleges System Office	1,021,295,467	1,016,487,467

Department of Public Instruction	7,867,960,649	8,048,101,622

University of North Carolina – Board of Governors
	Appalachian State University	127,908,903	127,908,903
	East Carolina University				Academic Affairs	220,012,450	220,615,626
		Health Affairs	64,841,247	64,841,247
	Elizabeth City State University	35,363,212	35,385,057
	Fayetteville State University	49,336,186	49,336,186
	North Carolina Agricultural and Technical State
		University	96,882,428	96,882,428
	North Carolina Central University	84,084,488	84,084,488
	North Carolina State University
		Academic Affairs	389,976,973	390,045,059
		Agricultural Extension	39,859,682	39,859,682
		Agricultural Research	54,911,053	54,911,053
	University of North Carolina at Asheville	37,465,299	37,465,299
	University of North Carolina at Chapel Hill
		Academic Affairs	274,632,544	274,515,010
		Health Affairs	187,260,403	190,741,444
		Area Health Education Centers	42,418,348	42,418,348
	University of North Carolina at Charlotte	192,697,970	192,683,456
	University of North Carolina at Greensboro	153,838,192	153,783,960
	University of North Carolina at Pembroke	54,175,566	54,175,566
	University of North Carolina School of the Arts	31,547,460	29,146,203
	University of North Carolina at Wilmington	96,484,692	96,484,692
	Western Carolina University	83,140,199	83,161,081
	Winston‑Salem State University	68,957,656	68,980,084
	General Administration	34,752,475	34,752,475
	University Institutional Programs	(32,137,074)	(52,671,909)	Related Educational Programs	82,160,148	117,918,501
	North Carolina School of Science and Mathematics	19,126,182	19,126,182
	Aid to Private Colleges	93,351,588	93,351,588

Total University of North Carolina – Board of Governors	2,583,048,270	2,599,901,709

HEALTH AND HUMAN SERVICES

Department of Health and Human Services
	Central Management and Support	73,786,129	76,301,328
	Division of Aging and Adult Services	54,142,341	54,342,341
	Division of Blind Services/Deaf/Hard of Hearing	8,178,618	8,178,618
	Division of Child Development and Early Education	254,314,609	254,314,609
	Health Service Regulation	16,396,057	16,411,479
	Division of Medical Assistance	3,461,950,119	3,608,119,091
	Division of Mental Health	699,535,602	704,985,988
	NC Health Choice	67,949,160	57,747,933
	Division of Public Health	144,154,087	141,941,587
	Division of Social Services	174,608,432	176,558,432
	Division of Vocation Rehabilitation	38,773,169	38,773,169

Total Health and Human Services	4,993,788,323	5,137,674,575

NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	115,085,702	115,409,902

Department of Commerce
	Commerce	51,228,804	56,733,282
	Commerce State‑Aid	21,723,226	15,624,767

Wildlife Resources Commission 	12,476,588	14,476,588

Department of Environment and Natural Resources	154,037,311	157,767,236

Department of Labor	16,696,339	16,696,339

JUSTICE AND PUBLIC SAFETY

Department of Public Safety	1,716,893,395	1,690,014,006

Judicial Department	456,926,252	456,426,252

Judicial Department – Indigent Defense	115,129,423	111,357,264

Department of Justice	79,726,123	82,308,926

GENERAL GOVERNMENT

Department of Administration	67,567,025	67,047,033

Office of Administrative Hearings	5,241,643	5,027,130

Department of State Auditor	11,217,468	11,217,468

Office of State Controller	28,710,691	28,710,691

Department of Cultural Resources
	Cultural Resources	63,670,145	63,008,100
	Roanoke Island Commission	450,000	450,000

State Board of Elections	5,302,373	5,693,244

General Assembly	52,087,986	51,634,767

Office of the Governor
	Office of the Governor	5,170,050	5,172,132
	Office of State Budget and Management	7,451,706	7,534,217
	OSBM – Reserve for Special Appropriations	4,912,000	1,520,000

Housing Finance Agency	8,411,632	8,411,632

Department of Insurance
	Insurance	37,994,004	38,003,624
	Insurance – Volunteer Safety Workers' Compensation Fund	0	0

Office of Lieutenant Governor	681,089	675,089

Department of Revenue	80,998,918	80,896,458

Department of Secretary of State	11,575,183	11,575,183

Department of State Treasurer
	State Treasurer	8,137,890	7,026,305
	State Treasurer – Retirement for Fire and Rescue Squad
		Workers	23,179,042	23,179,042

RESERVES, ADJUSTMENTS, AND DEBT SERVICE

Salary Adjustment Reserve	7,500,000	7,500,000

State Health Plan Contribution	33,500,000	89,000,000

State Retirement System Contributions	36,000,000	36,000,000

Reserve for Future Benefit Needs	0	56,400,000

Judicial Retirement System Contributions	1,000,000	1,000,000

Severance Reserve	16,000,000	0

Statewide Compensation Study	1,000,000	0

Firemen's and Rescue Squad Workers' Pension Fund	(820,000)	(820,000)

Information Technology Fund	9,053,142	10,470,657

Information Technology Reserve Fund	28,000,000	31,582,485

NC Government Efficiency and Reform Project	2,000,000	2,000,000

One North Carolina Fund	9,000,000	9,000,000

Unemployment Insurance (UI) Reserve	23,800,000	13,600,000

Reserve for Escheat Fund Global TransPark Debt Repayment	27,000,000	0

Reserve for Voter ID	1,000,000	1,000,000

Reserve for Pending Legislation	4,000,000	4,500,000

Reserve for Eugenics Program	10,000,000	0

Contingency and Emergency Fund	5,000,000	5,000,000

Job Development Investment Grants (JDIG)	51,823,772	63,045,357

Debt Service
	General Debt Service	707,580,634	723,721,279
	Federal Reimbursement	1,616,380	1,616,380

TOTAL CURRENT OPERATIONS – 
GENERAL FUND	20,602,828,645	20,990,378,208

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a)  The General Fund availability used in developing the 2013‑2015 biennial budget is shown below.
	FY 2013‑2014	FY 2014‑2015
Unappropriated Balance Remaining from Previous Year	$     213,432,877	$    250,510,043
Projected Overcollections FY 2012‑2013	458,483,783	0
Overcollections Due to Disputed MSA Payments	71,516,217	0
Projected Reversions FY 2012‑2013	225,000,000	0
Net Supplemental Medicaid Appropriations (S.L. 2013‑56,
	as amended by Section 13 of S.L. 2013-184)	(308,100,000)	0
Less Earmarkings of Year End Fund Balance		0
Savings Reserve	(232,537,942)	(37,122,346)
Repairs and Renovations	(150,000,000)	(12,751,137)
Beginning Unreserved Fund Balance	277,794,935	200,636,560

Revenues Based on Existing Tax Structure	19,628,100,000	20,549,000,000

Nontax Revenues		
Investment Income	13,700,000	14,100,000
Judicial Fees	250,200,000	251,400,000
Disproportionate Share	110,000,000	109,000,000
Insurance		72,500,000	73,400,000
Other Nontax Revenues	173,000,000	175,000,000
Highway Trust Fund/Use Tax Reimbursement Transfer	0	0
Highway Fund Transfer	218,100,000	215,900,000
	Subtotal Non‑tax Revenues	837,500,000	838,800,000

Total General Fund Availability	$ 20,743,394,935	$ 21,588,436,560

Adjustments to Availability:  2013 Session
Reserve for Tax Simplification and Reduction Act (HB 998)	(86,600,000)	(437,800,000)
Repeal Certain Real Estate Conveyance Tax Earmarks	37,400,000	37,400,000
Repeal Certain Scrap Tire Disposal Tax Earmarks	3,475,291	3,475,291
Repeal Certain White Goods Management Tax Earmarks	1,217,796	1,217,796
Direct Portion of Solid Waste Disposal Tax to General Fund	2,300,000	2,300,000
Adjust Gross Premiums Tax for Volunteer Safety Workers
	Worker's Compensation Fund	(3,000,000)	(3,000,000)
Reserve for Repeal of Education Expenses Credit (HB 269)	0	1,500,000
Extend Aviation Fuel Tax Refunds	(3,186,000)	0
Tobacco Master Settlement Agreement (MSA)	137,500,000	137,500,000
MSA Disputed Payments Erroneously Paid to
	Golden LEAF (S.L. 2011‑145)	24,639,357	0
Repeal North Carolina Public Campaign Fund	3,500,000	0
Transfer from NC Flex FICA Fund Balance	6,000,000	0
Transfer from E‑Commerce Reserve Fund Balance	5,111,585	6,000,000
Transfer from Misdemeanant Confinement Fund	1,000,000	1,000,000
Transfer from Separate Insurance Benefits Plan for
	Reimbursement of Premiums Paid for State Law
	Enforcement Officers	16,510,611	16,510,611
Increase Lobbyist Fees	400,000	400,000
Extend Local Government Hold Harmless	(7,850,000)	0
Certificate of Need for Certain Replacement Equipment	(150,513)	(150,513)
Adjust Transfer from Insurance Regulatory Fund	(560,589)	(560,589)
Adjust Transfer from Treasurer's Office	175,215	175,215

Subtotal Adjustments to Availability:  2013 Session	137,882,753	(234,032,189)

Revised General Fund Availability	20,881,277,688	21,354,404,371

Less General Fund Appropriations	(20,630,767,645)	(20,998,801,208)

Unappropriated Balance Remaining	$        250,510,043	$       355,603,163
SECTION 2.2.(b)  In addition to funds transferred pursuant to G.S. 105‑164.44D, the sum of two hundred eighteen million one hundred thousand dollars ($218,100,000) for the 2013‑2014 fiscal year and the sum of two hundred fifteen million nine hundred thousand dollars ($215,900,000) for the 2014‑2015 fiscal year shall be transferred from the Highway Fund to the General Fund.
SECTION 2.2.(c)  Notwithstanding the provisions of G.S. 143C‑4‑3, the State Controller shall transfer a total of one hundred fifty million dollars ($150,000,000) from the unreserved fund balance to the Repairs and Renovations Reserve on June 30, 2013, and a total of twelve million seven hundred fifty‑one thousand one hundred thirty‑seven dollars ($12,751,137) to the Repairs and Renovations Reserve on June 30, 2014. This subsection becomes effective June 30, 2013. Funds transferred under this section to the Repairs and Renovations Reserve are appropriated for the 2013‑2014 and 2014‑2015 fiscal years and shall be used in accordance with G.S. 143C‑4‑3.
SECTION 2.2.(d)  Notwithstanding G.S. 143C‑4‑2, the State Controller shall transfer a total of two hundred thirty‑two million five hundred thirty‑seven thousand nine hundred forty‑two dollars ($232,537,942) from the unreserved fund balance to the Savings Reserve Account on June 30, 2013, and the sum of thirty‑seven million one hundred twenty‑two thousand three hundred forty‑six dollars ($37,122,346) from the unreserved fund balance to the Savings Reserve Account on June 30, 2014. Neither of these transfers is an "appropriation made by law," as that phrase is used in Section 7(1) of Article V of the North Carolina Constitution. This subsection becomes effective June 30, 2013.
SECTION 2.2.(e)  Notwithstanding any other provision of law to the contrary, effective July 1, 2013, the following amounts shall be transferred to the State Controller to be deposited in 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 2013‑2014 fiscal year and the 2014‑2015 fiscal year.
Budget	Fund		FY 2013‑2014	FY 2014‑2015
Code	Code		Description	Amount	Amount
24100	2514		E‑Commerce Fund	$	5,111,585	$	6,000,000
24500	2225		Misdemeanant Confinement Fund	1,000,000	1,000,000
24160	2000		NC FICA Account		6,000,000	0
68025	6101		NC Public Campaign Finance Fund		3,500,000	0
73429	7429		Separate Insurance Benefits Plan	$ 16,510,611	$ 16,510,611

PART III. CURRENT OPERATIONS/HIGHWAY FUND

CURRENT OPERATIONS AND EXPANSION/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 made for the fiscal biennium ending June 30, 2015, according to the following schedule:

Current Operations – Highway Fund	2013‑2014	2014‑2015

Department of Transportation
	Administration	$	91,066,219	$	94,975,916

Division of Highways
	Administration	35,139,990	35,139,990
	Construction	61,669,922	46,859,878
	Maintenance	1,120,543,988	1,022,097,721
	Planning and Research	4,055,402	4,055,402
	OSHA Program	365,337	365,337

Ferry Operations	40,935,538	39,785,538

State Aid to Municipalities	142,102,740	136,874,010

Intermodal Divisions
	Public Transportation	85,244,235	85,244,235
	Aviation	28,744,510	22,244,510
	Rail	  40,142,294	24,692,294
	Bicycle and Pedestrian	751,066	751,066

Governor's Highway Safety	284,932	284,932
Division of Motor Vehicles	118,994,643	119,532,589

Other State Agencies, Reserves, Transfers	260,693,983	263,469,382

Capital Improvements	18,055,500	19,937,700

Total Highway Fund Appropriations	$ 2,048,790,299	$ 1,916,310,500

HIGHWAY FUND/AVAILABILITY STATEMENT
SECTION 3.2.  The Highway Fund availability used in developing the 2013‑2015 fiscal biennial budget is shown below:

Highway Fund Availability Statement	2013‑2014	2014‑2015
Unreserved Fund Balance	$	72,214,149	$	0
Estimated Revenue	1,937,200,000	1,892,400,000
Adjustment to Revenue Availability:
Adjustment to Emission Inspection Fees	23,600,000	21,600,000
Adjustment to Technology Improvement Account Fees	634,000	634,000
Motor Fuel Tax
	(Shallow Draft Navigation Channel Dredging Fund)	(2,280,350)	(2,193,500)
Motor Fuel Tax (37.5 cents per gallon cap)	(1,837,500)	0
Electric Vehicle Registration Fee	60,000	120,000
North Carolina Railroad Company Dividend Payments	19,200,000	3,750,000

Total Highway Fund Availability	$ 2,048,790,299	$ 1,916,310,500

Unappropriated Balance	0	0

PART IV. HIGHWAY TRUST FUND APPROPRIATIONS

HIGHWAY TRUST FUND APPROPRIATIONS
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 made for the fiscal biennium ending June 30, 2015, according to the following schedule:

Current Operations – Highway Trust Fund	2013‑2014	2014‑2015
Program Administration	$	45,590,880	$	45,590,880
Aid to Municipalities	0	0
Intrastate	0	0
Secondary Roads	0	0
Urban Loops	0	0
Mobility Fund	0	0
Turnpike Authority	49,000,000	49,000,000
Transfer to General Fund	0	0
Transfer to Highway Fund	400,000	400,000
Debt Service	79,170,090	60,307,448
Strategic Prioritization Funding Plan
for Transportation Investments	930,926,530	950,101,672

Total Highway Trust Fund Appropriations	$ 1,105,087,500	$ 1,105,400,000

HIGHWAY TRUST FUND AVAILABILITY STATEMENT
SECTION 4.2.  The Highway Trust Fund availability used in developing the 2013‑2015 fiscal biennial budget is shown below:

Highway Trust Fund Availability	2013‑2014	2014‑2015
Unreserved Fund Balance	$	0	$	0
Estimated Revenue	1,105,700,000	1,105,400,000
Adjustment to Revenue Availability
Motor Fuel Tax (37.5 cents per gallon cap)	(612,500)	0

Total Highway Trust Fund Availability	$ 1,105,087,500	$ 1,105,400,000

Unappropriated Balance	$	0	$	0

PART V. OTHER APPROPRIATIONS

APPROPRIATION OF OTHER FUNDS
SECTION 5.1.(a)  Expenditures of cash balances, federal funds, departmental receipts, grants, and gifts from the General Fund, Special Revenue Fund, Enterprise Fund, Internal Service Fund, and Trust and Agency Fund are appropriated and authorized for the 2013‑2015 fiscal biennium as follows:
(1)	For all budget codes listed in "The State of North Carolina Recommended Continuation Budget and Fund Purpose Statements, 2013‑2015" and in the Budget Support Document, cash balances and receipts are appropriated up to the amounts specified, as adjusted by the General Assembly, for the 2013‑2014 fiscal year and the 2014‑2015 fiscal year. Funds may be expended only for the programs, purposes, objects, and line items or as otherwise authorized by the General Assembly. Expansion budget funds listed in those documents are appropriated only as otherwise provided in this act.
(2)	Notwithstanding the provisions of subdivision (1) of this subsection:
a.	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 2013‑2014 fiscal year and the 2014‑2015 fiscal year and shall be used only to pay debt service requirements.
b.	Other funds, 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 2013‑2014 fiscal year and the 2014‑2015 fiscal year.
SECTION 5.1.(b)  Receipts collected in a fiscal year in excess of the amounts authorized by this section shall remain unexpended and unencumbered until appropriated by the General Assembly in a subsequent fiscal year, unless the expenditure of overrealized receipts in the fiscal year in which the receipts were collected is authorized by the State Budget Act. Overrealized receipts are appropriated up to the amounts necessary to implement this subsection.
SECTION 5.1.(c)  Notwithstanding subsections (a) and (b) of this section, there is appropriated from the Reserve for Reimbursements to Local Governments and Shared Tax Revenues for each fiscal year an amount equal to the amount of the distributions required by law to be made from that reserve for that fiscal year.
SECTION 5.1.(d)  The Office of State Budget and Management, the Office of the State Controller, the Department of Revenue, and the Fiscal Research Division shall jointly study the Reserve for Reimbursements to Local Governments and Shared Tax Revenues (Budget Code 24705) within the Department of Revenue and shall determine the best manner in which to budget the funds deposited into and expended from this fund. When conducting this study, the Office of State Budget and Management, the Office of the State Controller, the Department of Revenue, and the Fiscal Research Division shall jointly determine if any statutory or other changes are needed in order to ensure that these funds are properly accounted for and budgeted in a manner consistent with the North Carolina Constitution. No later than May 1, 2014, the Office of State Budget and Management, the Office of the State Controller, the Department of Revenue, and the Fiscal Research Division shall report the results of this study, including their findings, recommendations, and any legislative proposals, to the Chairs of the Senate Appropriations/Base Budget Committee and of the House Appropriations Committee.
SECTION 5.1.(e)  Subdivisions (2) through (4) of subsection (d) of Section 5.1 of S.L. 2011‑145, as enacted by Section 5.1 of S.L. 2012‑142, are repealed. This subsection becomes effective on June 30, 2013.

OTHER RECEIPTS FROM PENDING GRANT AWARDS
SECTION 5.2.(a)  Notwithstanding G.S. 143C‑6‑4, State agencies may, with approval of the Director of the Budget, spend funds received from grants awarded subsequent to the enactment of this act for grant awards that are for less than two million five hundred thousand dollars ($2,500,000), do not require State matching funds, and will not be used for a capital project. State agencies shall report to the Joint Legislative Commission on Governmental Operations within 30 days of receipt of such funds.
State agencies may spend all other funds from grants awarded after the enactment of this act only with approval of the Director of the Budget and after consultation with the Joint Legislative Commission on Governmental Operations.
SECTION 5.2.(b)  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. Funds received from such grants are hereby appropriated and shall be incorporated into the authorized budget of the recipient State agency.
SECTION 5.2.(c)  Notwithstanding the provisions of this section, no State agency may accept a grant not anticipated in this act if acceptance of the grant would obligate the State to make future expenditures relating to the program receiving the grant or would otherwise result in a financial obligation as a consequence of accepting the grant funds.

CIVIL PENALTY AND FORFEITURE FUND
SECTION 5.3.(a)  Appropriations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2015, as follows:
	FY 2013‑2014	FY 2014‑2015
School Technology Fund	$  18,000,000	$  18,000,000
State Public School Fund	$163,392,921	$120,362,790
Total Appropriation	$181,392,921	$138,362,790
SECTION 5.3.(b)  Excess receipts realized in the Civil Penalty and Forfeiture Fund in the 2012‑2013 fiscal year are hereby appropriated to the State Public School Fund for the 2013‑2014 fiscal year.
SECTION 5.3.(c)  Excess receipts realized in the Civil Penalty and Forfeiture Fund in the 2013‑2014 fiscal year shall be allocated to the School Technology Fund for the 2014‑2015 fiscal year.

INDIAN GAMING EDUCATION REVENUE FUND
SECTION 5.4.(a)  There is appropriated from the Indian Gaming Education Revenue Fund to the Department of Public Instruction, School Technology Fund, the sum of three million dollars ($3,000,000) for the 2013‑2014 fiscal year and the sum of three million five hundred thousand dollars ($3,500,000) for the 2014‑2015 fiscal year.
SECTION 5.4.(b)  G.S. 143C‑9‑7 does not apply to the use of these funds for the 2013‑2015 fiscal biennium.

PART VI. GENERAL PROVISIONS

CONTINGENCY AND EMERGENCY FUND LIMITATION
SECTION 6.1.  For the 2013‑2015 fiscal biennium and notwithstanding the provisions of G.S. 143C‑4‑4(b), funds appropriated to the Contingency and Emergency Fund may be used only for expenditures required (i) by a court or Industrial Commission order or (ii) to respond to events as authorized under G.S. 166A‑19.40(a) of the North Carolina Emergency Management Act. These funds shall not be used for other statutorily authorized purposes or for any other contingencies and emergencies.

ESTABLISHING OR INCREASING FEES UNDER THIS ACT
SECTION 6.2.(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 to the level authorized or anticipated in this act.
SECTION 6.2.(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.

GLOBAL TRANSPARK LOAN REPAYMENT
SECTION 6.3.(a)  The Office of State Budget and Management shall transfer funds from the Reserve for Global TransPark Loan Repayment to the Escheat Fund as payment‑in‑full for the outstanding loan from the Escheat Fund to the Global TransPark Authority originally authorized under G.S. 63A‑4(a)(22) and G.S. 147‑69.2(b)(11).
SECTION 6.3.(b)  G.S. 63A‑4(a)(22) is repealed.
SECTION 6.3.(c)  G.S. 147‑69.2(b)(11) is repealed.

MSA PAYMENTS
SECTION 6.4.(a)  Sections 2(a) and 2(b) of S.L. 1999‑2 are repealed.
SECTION 6.4.(b)  Section 6 of S.L. 1999‑2, as amended by Section 6.11(d) of Session Law 2011‑145 and Section 7(b) of Session Law 2011‑391, reads as rewritten:
"SECTION 6.(a)  The funds under the Master Settlement Agreement, which is incorporated into the Consent Decree, shall be credited to the Settlement Reserve Fund.
							
(b)	Any monies paid into the North Carolina State Specific Account from the Disputed Payments Account on account of the Non‑Participating Manufacturers that would have been transferred to The Golden L.E.A.F. (Long‑Term Economic Advancement Foundation), Inc., shall be deposited in the Settlement Reserve Fund."
SECTION 6.4.(c)  The Attorney General shall take all necessary actions to notify the court in the action entitled State of North Carolina v. Philip Morris Incorporated, et al., 98 CVS 14377, in the General Court of Justice, Superior Court Division, Wake County, North Carolina, and the administrators of the State Specific Account established under the Master Settlement Agreement of this action by the General Assembly regarding redirection of payments set forth in subsections (a) and (b) of this section.
SECTION 6.4.(d)  G.S. 116‑29.1(b) reads as rewritten:
"(b)	Effective July 1 of each calendar year,		 the funds remitted to the University Cancer Research Fund by the Secretary of Revenue from the tax on tobacco products other than cigarettes pursuant to G.S. 105‑113.40A are appropriated for this purpose.
	"
SECTION 6.4.(e)  G.S. 143C‑9‑3 reads as rewritten:
"§ 143C‑9‑3.  Settlement Reserve Fund.
(a)	The "Settlement Reserve Fund" is established in the General Fund to receive proceeds from tobacco litigation settlement agreements or final orders or judgments of a court in litigation between tobacco companies and the states. Funds credited to the Settlement Reserve Fund each fiscal year shall be included in General Fund availability as nontax revenue for the next fiscal year.
(b),	(c) Repealed by Session Laws 2011‑145, s. 6.11(i), effective July 1, 2011.
(d)	Unless prohibited by federal law, federal funds provided to the State by block grant or otherwise as part of federal legislation implementing a settlement between United States tobacco companies and the states shall be credited to the Settlement Reserve Fund. Unless otherwise encumbered or distributed under a settlement agreement or final order or judgment of the court, funds paid to the State or a State agency pursuant to a tobacco litigation settlement agreement, or a final order or judgment of a court in litigation between tobacco companies and the states, shall be credited to the Settlement Reserve Fund."

GOVERNMENT EFFICIENCY AND REFORM
SECTION 6.5.(a)  The Office of State Budget and Management shall contract for a Government Efficiency and Reform review and analysis of the executive branch of State government, which shall be known as NC GEAR. The purpose of the review and analysis is to evaluate the efficiency and effectiveness of State government and to identify specific strategies for making State government more efficient and effective. The review and analysis may examine entire departments, agencies, institutions, or similar programs in different departments. The review and analysis shall include an examination of the efficiency and effectiveness of major management policies, practices, and functions pertaining to the following areas:
(1)	The statutory authority, funding sources, and functions of each department, agency, institution, or program.
(2)	The organizational structure and staffing patterns in place to perform these functions and whether they are appropriate based on comparative data and other reasonable staffing criteria.
(3)	The measurement of each reviewed program's outcomes, overall performance, and success in accomplishing its mandated or stated mission and subsequent goals, considering the resources provided to the program.
(4)	State and local responsibilities for providing government services and funding for those services, and whether these responsibilities should be reallocated.
(5)	Personnel systems operations and management.
(6)	State purchasing operations and management.
(7)	Information technology and telecommunications systems policy, organization, and management.
(8)	The identification of opportunities to reduce fragmentation, duplication, and related or overlapping services or activities through restructuring of departmental organizations and streamlining programs.
SECTION 6.5.(b)  All executive branch departments, agencies, boards, commissions, authorities, and institutions in the executive branch of State government, including receipt‑supported agencies, and all non‑State entities receiving State funds shall be subject to review and analysis. The chief administrative officer of each entity shall ensure full cooperation with the Office of State Budget and Management and provide timely responses to the Office of State Budget and Management's request for information under the provisions of G.S. 143C‑2‑1(b).
SECTION 6.5.(c)  The Office of State Budget and Management will work collaboratively with the Office of State Auditor to develop the review, analysis, and findings needed to produce a final report and recommendations to the Governor and General Assembly.
SECTION 6.5.(d)  The contracting provisions of Chapter 143 of the General Statutes and related State purchasing and budget regulations do not apply to NC GEAR; however, the Office of State Budget and Management shall report all external contracts for consultants or professional services within 30 days of their execution to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives.
SECTION 6.5.(e)  The Office of State Budget and Management shall submit an interim report of the NC GEAR's analysis, findings, and recommendations to the Governor, the President Pro Tempore of the Senate, the Speaker of the House of Representatives, the Fiscal Research Division, and the Program Evaluation Division by February 15, 2014, and a final report by February 15, 2015.
SECTION 6.5.(f)  Funds appropriated for NC GEAR shall be used to contract with consultants and other experts and to pay for travel, postage, printing, planning, and other related costs as needed to accomplish the objectives specified for the project. Funds appropriated for the 2013‑2015 fiscal biennium for NC GEAR shall not revert at the end of each fiscal year but shall remain available for expenditure for the project.

EXPENDITURES OF FUNDS IN RESERVES LIMITED
SECTION 6.6.  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 6.7.  Notwithstanding G.S. 143C‑6‑4, the Office of State Budget and Management may, after reporting to the Fiscal Research Division, adjust the authorized 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.

NORTH CAROLINA STATE LOTTERY COMMISSION CONTRACTS
SECTION 6.8.  G.S. 18C‑151(a) reads as rewritten:
"(a)	Except as otherwise specifically provided in this subsection for contracts for the purchase of services, apparatus, supplies, materials, or equipment, Article 8 of Chapter 143 of the General Statutes, including the provisions relating to minority participation goals, shall apply to contracts entered into by the Commission. If this subsection and Article 8 of Chapter 143 are in conflict, the provisions of this subsection shall control. In recognition of the particularly sensitive nature of the Lottery and the competence, quality of product, experience, and timeliness, fairness, and integrity in the operation and administration of the Lottery and maximization of the objective of raising revenues, a contract for the purchase of services, apparatus, supplies, materials, or equipment requiring an estimated aggregate expenditure of three hundred thousand dollars ($300,000) or more may be awarded by the Commission only after the following have occurred:
…."

PROVISION OF ANONYMOUS TAX RETURN DATA TO STATE BUDGET DIRECTOR
SECTION 6.9.  G.S. 105‑259(b) is amended by adding the following 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:
…
(44)	To furnish the State Budget Director or the Director's designee a sample of tax returns or other tax information from which taxpayers' names and identification numbers have been removed that is suitable in character, composition, and size for statistical analyses by the Office of State Budget and Management."

EXEMPTIONS FROM MANAGEMENT FLEXIBILITY REDUCTIONS
SECTION 6.10.  Notwithstanding G.S. 143C‑6‑4, expansion funds appropriated for the 2013‑2015 fiscal biennium to State agencies as defined by G.S. 143C‑1‑1(d)(24) shall not be used to offset management flexibility adjustments in this act.

REVISE PUBLIC SCHOOL BUILDING CAPITAL FUND/ APPROPRIATE EDUCATION LOTTERY FUNDS
SECTION 6.11.(a)  G.S. 115C‑546.1(a) reads as rewritten:
"(a)	There is created the Public School Building Capital Fund. The Fund shall be used to assist county governments in meeting their public school building capital needs."
SECTION 6.11.(b)  G.S. 115C‑546.2 reads as rewritten:
"§ 115C‑546.2.  Allocations from the Fund; uses; expenditures; reversion to General Fund; matching requirements.
...(b)	Counties shall use monies previously credited to the Fund by the Secretary of Revenue pursuant to G.S. 115C‑546.1(b) for capital outlay projects including the planning, construction, reconstruction, enlargement, improvement, repair, or renovation of public school buildings and for the purchase of land for public school buildings; for equipment to implement a local school technology plan; or for both. Monies used to implement a local school technology plan shall be transferred to the State School Technology Fund and allocated by that Fund to the local school administrative unit for equipment.
As used in this section, "public school buildings" only includes facilities for individual schools that are used for instructional and related purposes and does not include centralized administration, maintenance, or other facilities.
In the event a county finds that it does not need all or part of the funds allocated to it for capital outlay projects including the planning, construction, reconstruction, enlargement, improvement, repair, or renovation of public school buildings, for the purchase of land for public school buildings, or for equipment to implement a local school technology plan, the unneeded funds allocated to that county may be used to retire any indebtedness incurred by the county for public school facilities.
In the event a county finds that its public school building needs and its school technology needs can be met in a more timely fashion through the allocation of financial resources previously allocated for purposes other than school building needs or school technology needs and not restricted for use in meeting public school building needs or school technology needs, the county commissioners may, with the concurrence of the affected local Board of Education, use those financial resources to meet school building needs and school technology needs and may allocate the funds it receives under this Article for purposes other than school building needs or school technology needs to the extent that financial resources were redirected from such purposes. The concurrence described herein shall be secured in advance of the allocation of the previously unrestricted financial resources and shall be on a form prescribed by the Local Government Commission.
(c)	Monies previously credited to the Fund by the Secretary of Revenue pursuant to G.S. 115C‑546.1(b) for capital projects shall be matched on the basis of one dollar of local funds for every three dollars of State funds. Such monies in the Fund transferred to the State Technology Fund do not require a local match.
Revenue received from local sales and use taxes that is restricted for public school capital outlay purposes pursuant to G.S. 105‑502 or G.S. 105‑487 may be used to meet the local matching requirement. Funds expended by a county after July 1, 1986, for land acquisition, engineering fees, architectural fees, or other directly related costs for a public school building capital project that was not completed prior to July 1, 1987, may be used to meet the local match requirement.
(d)	If funds are appropriated from the Education Lottery Fund to the Public School Building Capital Fund, such funds shall be allocated for school capital construction projects on a per average daily membership basis according to the average daily membership for the budget year as determined and certified by the State Board of Education.	
				(3)	No county shall have to provide matching funds required under subsection (c) of this section.
(4)	A county may use monies in this Fund to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects.
(5)	A county may not use monies in this Fund to pay for school technology needs.
(e)	The State Board of Education may use up to one million five hundred thousand dollars ($1,500,000) each year of monies in the Fund to support positions in the Department of Public Instruction's Support Services Division."
SECTION 6.11.(c)  G.S. 18C‑164 reads as rewritten:
"§ 18C‑164.  Transfer of net revenues.
(a)	The funds remaining in the North Carolina State Lottery Fund after receipt of all revenues to the Lottery Fund and after accrual of all obligations of the Commission for prizes and expenses shall be considered to be the net revenues of the North Carolina State Lottery Fund. The net revenues of the North Carolina State Lottery Fund shall be transferred four times a year to the Education Lottery Fund, which shall be created in the State treasury.
(b)	From the Education Lottery Fund, the Office of State Budget and Management shall transfer a sum equal to five percent (5%) of the net revenue of the prior year to the Education Lottery Reserve Fund. A special revenue fund for this purpose shall be established in the State treasury to be known as the Education Lottery Reserve Fund, and that fund shall be capped at fifty million dollars ($50,000,000). Monies in the Education Lottery Reserve Fund may be appropriated only as provided in subsection (e) of this section.
(c)	The General Assembly shall appropriate the remaining net revenue of the Education Lottery Fund annually in the Current Operations Appropriations Act for education‑related purposes, based upon estimates of lottery net revenue to the Education Lottery Fund provided by the Office of State Budget and Management and the Fiscal Research Division of the Legislative Services Commission.			
	(e)	If the actual net revenues are less than the appropriation for that given year, then the Governor may transfer from the Education Lottery Reserve Fund an amount sufficient to equal the appropriation by the General Assembly.				
(f)	Actual net revenues in excess of the amounts appropriated in  a fiscal year shall remain in the Education Lottery  Fund.		"
SECTION 6.11.(d)  G.S. 115C‑499.3(b) reads as rewritten:
"(b)	Subject to the maximum amounts provided in this section, the Authority shall have the power to determine the actual scholarship amounts disbursed to students in any given year based on the amount of funds appropriated from the Education Lottery Fund. If the net income available is not sufficient to fully fund the scholarships to the maximum amount, all scholarships shall be reduced equally, to the extent practicable, so that every eligible applicant shall receive a proportionate scholarship amount."
SECTION 6.11.(e)  The appropriations made from the Education Lottery Fund for the 2013‑2015 fiscal biennium are as follows:
	FY 2013‑2014	FY 2014‑2015

Classroom Teachers	$ 220,643,188	$ 220,643,188
Prekindergarten Program	75,535,709	75,535,709
Public School Building Capital Fund	100,000,000	100,000,000
Scholarships for Needy Students	30,450,000	30,450,000
UNC Need‑Based Financial Aid	10,744,733	10,744,733
UNC Need‑Based Financial Aid Forward Funding Reserve	32,530,359	19,130,728
Digital Learning	11,928,735	11,928,735

TOTAL APPROPRIATION	$ 481,832,724	$ 468,433,093
SECTION 6.11.(f)  Notwithstanding G.S. 18C‑164, the Office of State Budget and Management shall not transfer funds to the Education Lottery Reserve Fund for the 2013‑2014 fiscal year.
SECTION 6.11.(g)  Funds appropriated for Digital Learning pursuant to subsection (e) of this section shall be used to support grants to local education agencies (LEAs) for (i) delivering educator professional development focused on using digital and other instructional technologies to provide high‑quality, integrated digital teaching and learning to all students and (ii) acquiring quality digital content to enhance instruction.
Up to one million dollars ($1,000,000) may be used by the Department of Public Instruction to (i) develop a plan to transition from funding for textbooks, both traditional and digital, to funding for digital materials, including textbooks and instructional resources and (ii) provide educational resources that remain current, are aligned with curriculum, and are effective for all learners by 2017. The plan shall also include an inventory of the infrastructure needed to support robust digital learning in public schools.
SECTION 6.11.(h)  Subsection (c) of this section becomes effective June 30, 2013.

STATE BUDGET ACT AMENDMENTS
SECTION 6.12.(a)  G.S. 143C‑1‑1(d)(19) reads as rewritten:
"(19)	Nontax revenue. – Revenue that is not a tax proceed or a departmental receipt and that is required by statute to be credited to a fund."
SECTION 6.12.(b)  G.S. 143C‑1‑1(d)(30) reads as rewritten:
"(30)	Unreserved fund balance. – The available cash balance effective June 30 after excluding documented encumbrances, unearned revenue, statutory requirements, and other legal obligations to a fund's cash balance as determined by the State Controller. Beginning unreserved fund balance equals ending unreserved fund balance from the prior fiscal year."
SECTION 6.12.(c)  G.S. 143C‑1‑3(c) reads as rewritten:
"(c)	Notwithstanding subsections (a) and (b) of this section, funds established for The University of North Carolina and its constituent institutions pursuant to the following statutes are exempt from Chapter 143C of the General Statutes and shall be accounted for as provided by those statutes, except that the provisions of Article 8 of Chapter 143C of the General Statutes shall apply to the funds: G.S. 116‑35, 116‑36, 116‑36.1, 116‑36.2, 116‑36.4, 116‑36.5, 116‑36.6, 116‑44.4, 116‑68, 116‑220, 116‑235."
SECTION 6.12.(d)  Article 1 of Chapter 143C of the General Statutes is amended by adding a new section to read:
"§ 143C‑1‑5.  Chapter is applicable to The University of North Carolina.
Except as expressly provided in G.S. 143C‑1‑3(c) or otherwise expressly provided by law, The University of North Carolina shall be subject to the provisions of this Chapter in the same manner and to the same degree as other State agencies."
SECTION 6.12.(e)  G.S. 143C‑3‑5(e) reads as rewritten:
"(e)	Availability Estimates. – The recommended Current Operations Appropriations Act shall contain a statement showing the estimates of General Fund availability, Highway Fund availability, and Highway Trust Fund availability upon which the Recommended State Budget is based."
SECTION 6.12.(f)  G.S. 143C‑9‑6 reads as rewritten:
"§ 143C‑9‑6.  JDIG Reserve.
(a)	The State Controller shall establish a reserve in the General Fund to be known as the JDIG Reserve. Funds from the JDIG Reserve shall not be transferred except in accordance with G.S. 143B‑437.63.
(b)	It is the intent of the General Assembly to appropriate funds annually to the JDIG Reserve established in this section in amounts sufficient to meet the anticipated cash requirements for each fiscal year of the Job Development Investment Grant Program established pursuant to G.S. 143B‑437.52."
SECTION 6.12.(g)  G.S. 143C‑9‑8(a) reads as rewritten:
"(a)	The State Controller shall establish a reserve in the General Fund to be known as the One North Carolina Fund Reserve. Funds from the One North Carolina Fund Reserve shall not be transferred except in accordance with G.S. 143B‑437.75."

SUBSTANTIVE CHANGES
SECTION 6.12.(h)  G.S. 143C‑1‑1(d) is amended by adding the following new subdivisions to read:
"(1a)	Authorized budget. – The certified budget with changes authorized by the Director of the Budget through authority granted in G.S. 143C‑6‑4 or other statutes.
(1b)	Availability. – The total anticipated cash available within a fund for appropriation purposes, including unreserved fund balance and all revenue and receipts anticipated in a fiscal year.
...
(7a)	Continuation budget. – That part of the Recommended State Budget necessary to continue the same level of services in the next biennium as is provided in the current fiscal year, including (i) mandated Social Security rate adjustments; (ii) annualization of programs and positions; (iii) enrollment adjustments for public schools and Medicaid; (iv) reductions to adjust for items funded with nonrecurring funds during the prior fiscal biennium; (v) increases to adjust for nonrecurring reductions during the prior fiscal biennium; and (vi) if deemed necessary by the Director, other adjustments such as inflation, building reserves, and equipment replacement."
SECTION 6.12.(i)  G.S. 143C‑1‑1(d)(7) reads as rewritten:
"(7)	Certified budget. – The budget as enacted by the General Assembly including adjustments made for (i) distributions to State agencies from statewide reserves appropriated by the General Assembly, (ii) distributions of reserves appropriated to a specific agency by the General Assembly, and (iii) organizational or budget changes mandated by the General Assembly."
SECTION 6.12.(j)  G.S. 143C‑3‑3 reads as rewritten:
"§ 143C‑3‑3.  Budget requests from State agencies in the executive branch.
…
(b)	University of North Carolina System Request. – Notwithstanding the requirement in G.S. 116‑11 that the Board of Governors prepare a unified budget request for all of the constituent institutions of The University of North Carolina, repairs and renovations, capital fund requests, and information technology requests shall comply with subsections (c), (d), and (e) of this section.
…
(e)	Information Technology Request. – In addition to any other information requested by the Director, any State agency requesting significant State resources, as defined by the Director, for the purpose of acquiring or maintaining information technology shall accompany that request with all of the following:
(1)	A statement of its needs for information technology and related resources, including expected improvements to programmatic or business operations, together with a review and evaluation of that statement prepared by the State Chief Information Officer.
(2)	A statement setting forth the requirements for State resources, together with an evaluation of those requirements by the State Chief Information Officer that takes into consideration the State's current technology, the opportunities for technology sharing, the requirements of Article 3D of Chapter 147 of the General Statutes, and any other factors relevant to the analysis.
(3)	A statement by the State Chief Information Officer that sets forth viable alternatives, if any, for meeting the agency needs in an economical and efficient manner.
(4)	In the case of an acquisition, an explanation of the method by which the acquisition is to be financed.
This subsection shall not apply to requests submitted by the General Assembly or the Administrative Office of the Courts."
SECTION 6.12.(k)  G.S. 143C‑3‑5 reads as rewritten:
"§ 143C‑3‑5.  Budget recommendations and budget message.
…
(b)	Odd‑Numbered Years. – In odd‑numbered years the budget recommendations shall include the following components:
(1)	A Recommended State Budget setting forth goals for improving the State with recommended expenditure requirements, funding sources, and performance information for each State government program and for each proposed capital improvement. The Recommended State Budget may be presented in a format chosen by the Director, except that the Recommended State Budget shall clearly distinguish program continuation requirements, program reductions, program eliminations, program expansions, and new programs, and shall explain all proposed capital improvements in the context of the Six‑Year Capital Improvements Plan and as required by G.S. 143C‑8‑6.(1a)	The Governor's Recommended State Budget shall include a continuation budget, which shall be presented in the budget support document pursuant to subdivision (2) of this subsection.
…
(5)	A list of budget adjustments made during the prior fiscal year pursuant to G.S. 143C‑6‑4 that are included in the proposed continuation budget for the upcoming fiscal year.
(c)	Even‑Numbered Years. – In even‑numbered years, the Governor may recommend changes in the enacted budget for the second year of the biennium. These recommendations shall be presented as amendments to the enacted budget and shall be incorporated in a recommended Current Operations Appropriation Act and a recommended Capital Improvements Appropriations Act as necessary. Any recommended changes shall clearly distinguish program reductions, program eliminations, program expansions, and new programs, and shall explain all proposed capital improvements in the context of the Six‑Year Capital Improvements Plan and as required by G.S. 143C‑8‑6. The Governor shall provide sufficient supporting documentation and accounting detail, consistent with that required by G.S. 143C‑3‑5(b), corresponding to the recommended amendments to the enacted budget.
(d)	Funds Included in Budget. – Consistent with requirements of the North Carolina Constitution, Article 5, Section 7(1), the Governor's Recommended State Budget, together with the Budget Support Document, shall include recommended expenditures of State funds from all Governmental and Proprietary Funds, as those funds are described in G.S. 143C‑1‑3, and all funds established for The University of North Carolina and its constituent institutions that are subject to this Chapter. Except where provided otherwise by federal law, funds received from the federal government become State funds when deposited in the State treasury and shall be classified and accounted for in the Governor's budget recommendations no differently than funds from other sources.
…."
SECTION 6.12.(l)  G.S. 143C‑4‑3 reads as rewritten:
"§ 143C‑4‑3.  Repairs and Renovations Reserve.
(a)	Creation and Source of Funds. – The Repairs and Renovations Reserve is established as a reserve in the General Fund. The State Controller shall reserve to the Repairs and Renovations Reserve one‑fourth of any unreserved fund balance, as determined on a cash basis, remaining in the General Fund at the end of each fiscal year.
(b)	Use of Funds. – The funds in the Repairs and Renovations Reserve shall be used only for the repair and renovation of State facilities and related infrastructure that are supported from the General Fund. Funds from the Repairs and Renovations Reserve shall be used only for the following types of projects:
(1)	Roof repairs and replacements;
(2)	Structural repairs;
(3)	Repairs and renovations to meet federal and State standards;
(4)	Repairs to electrical, plumbing, and heating, ventilating, and air‑conditioning systems;
(5)	Improvements to meet the requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., as amended;
(6)	Improvements to meet fire safety needs;
(7)	Improvements to existing facilities for energy efficiency;
(8)	Improvements to remove asbestos, lead paint, and other contaminants, including the removal and replacement of underground storage tanks;
(9)	Improvements and renovations to improve use of existing space;
(10)	Historical restoration;
(11)	Improvements to roads, walks, drives, utilities infrastructure; and
(12)	Drainage and landscape improvements.
Funds from the Repairs and Renovations Reserve shall not be used for new construction or the expansion of the building area (sq. ft.) of an existing facility unless required in order to comply with federal or State codes or standards.
(c)	Use of Funds. – Funds Available Only Upon Appropriation. – Funds reserved to the Repairs and Renovations Reserve shall be available for expenditure only upon an act of appropriation by the General Assembly.
(d)	Allocation and Reallocation of Funds for Particular Projects. – Any funds in the Repairs and Renovations Reserve that are allocated to the Board of Governors of The University of North Carolina or to the Office of State Budget and Management may be allocated or reallocated by those agencies for repairs and renovations projects so long as all of the following conditions are satisfied:
(1)	Any project that receives an allocation or reallocation satisfies the requirements of subsection (b) of this section.
(2)	If the allocation or reallocation of funds from one project to another under this section is two million five hundred thousand dollars ($2,500,000) or more for a particular project, the Office of State Budget and Management or the Board of Governors, as appropriate, consults with the Joint Legislative Commission on Governmental Operations prior to the expenditure or reallocation.(3)	If the allocation or reallocation of funds from one project to another under this section is less than two million five hundred thousand dollars ($2,500,000) for a particular project, the allocation or reallocation of funds is reported to the Joint Legislative Commission on Governmental Operations within 60 days of the expenditure or reallocation.
	"
SECTION 6.12.(m)  G.S. 143C‑6‑1 reads as rewritten:
"§ 143C‑6‑1.  Budget enacted by the General Assembly; certified budgets of State agencies.
…
(b)	Departmental Receipts. – Departmental receipts collected to support a program or purpose shall be credited to the fund from which appropriations have been made to support that program or purpose. A State agency shall expend departmental receipts first, including receipts in excess of the amount of receipts budgeted in the certified budget for the program or purpose, and shall expend other funds appropriated for the purpose or program only to the extent that receipts are insufficient to meet the costs anticipated in the certified budget.
Except as authorized in G.S. 143C‑6‑4, excess departmental receipts shall not be used to increase expenditures for a purpose or program.
(c)	Certification of the Budget. – The Director of the Budget shall certify to each State agency the amount appropriated to it for each program and each object from all funds included in the budget as defined in G.S. 143C‑3‑5(d). The certified budget for each State agency shall reflect the total of all appropriations enacted for each State agency by the General Assembly in the Current Operations Appropriations Act, the Capital Improvements Appropriations Act, and any other act affecting the State budget. The certified budget for each State agency shall follow the format of the Budget Support Document as modified to reflect changes enacted by the General Assembly."
SECTION 6.12.(n)  G.S. 143C‑6‑4 reads as rewritten:
"§ 143C‑6‑4.  Budget Adjustments Authorized.
(a)	Findings. – The General Assembly recognizes that even the most thorough budget deliberations may be affected by unforeseeable events; therefore, under the limited circumstances set forth in this section, the Director is authorized to adjust the enacted budget by making transfers among lines of expenditure, purposes, or programs or by increasing expenditures funded by departmental receipts.(b)	Budget Adjustments. – Notwithstanding the provisions of G.S. 143C‑6‑1, a State agency may, with approval of the Director of the Budget, spend more than was appropriated in the certified budget by adjusting the authorized budget for all of the following:
(1)	Line items within programs. – An object or line item within a purpose or program so long as the total amount expended for the purpose or program is no more than was authorized in the certified budget for the purpose or program.
(2)	Responses to extraordinary events. – A purpose or program if the overexpenditure of the purpose or program is:
a.	Required by a court or Industrial Commission order;
b.	Authorized under G.S. 166A‑19.40(a) of the North Carolina Emergency Management Act; or
c.	Required to call out the North Carolina National Guard.
(3)	Responses to unforeseen circumstances. – A purpose or program not subject to the provisions of subdivision (b)(2) of this subsection, if each of the following conditions is satisfied:
a.	The overexpenditure is required to continue the purpose or programs due to complications or changes in circumstances that could not have been foreseen when the budget for the fiscal period was enacted.b.	The scope of the purpose or program is not increased.
c.	The overexpenditure is authorized on a one‑time nonrecurring basis for one year only, unless the overexpenditure is the result of (i) salary adjustments authorized by law or (ii) the establishment of time‑limited positions funded with agency receipts.
(b1)	If the overexpenditure would cause a department's total requirements for a fund to exceed the department's certified budget for a fiscal year for that fund by more than three percent (3%), the Director shall consult with the Joint Legislative Commission on Governmental Operations prior to authorizing the overexpenditure.
(b2)	Subsection (b) of this section shall not be construed to authorize budget adjustments that cause General Fund expenditures, excluding expenditures from General Fund receipts, to exceed General Fund appropriations for a department.
…."
SECTION 6.12.(o)  G.S. 143C‑6‑21 reads as rewritten:
"§ 143C‑6‑21.  Payments to nonprofits.
Except as otherwise provided by law, an annual appropriation of one hundred thousand dollars ($100,000) or less to or for the use of a nonprofit corporation may be made in a single annual payment, in the discretion of the Director of the Budget. An annual appropriation of more than one hundred thousand dollars ($100,000) to or for the use of a nonprofit corporation shall be made in quarterly or monthly payments, in the discretion of the Director of the Budget."
SECTION 6.12.(p)  G.S. 143C‑7‑2(a) reads as rewritten:
"(a)	Plans Submitted and Reviewed. – The Secretary of each State agency that receives and administers federal Block Grant funds shall prepare and submit the agency's Block Grant plans to the Director of the Budget. The Director of the Budget shall submit the Block Grant plans to the General Assembly as part of the Recommended State Budget submitted pursuant to G.S. 143C‑3‑5."
SECTION 6.12.(q)  G.S. 143C‑8‑2 reads as rewritten:
"§ 143C‑8‑2.  Capital facilities inventory.
(a)	The Department of Administration shall develop and maintain an automated inventory of all facilities owned by State agencies pursuant to G.S. 143‑341(4). The inventory shall include the location, occupying agency, ownership, size, description, condition assessment, maintenance record, parking and employee facilities, and other information to determine maintenance needs and prepare life‑cycle cost evaluations of each facility listed in the inventory. The Department of Administration shall update and publish the inventory at least once every three years. The Department shall also record in the inventory acquisitions of new facilities and significant changes in existing facilities as they occur.
(b)	No later than October 1 of each even‑numbered year, the Department of Administration shall provide a summary of the information maintained in the inventory described in subsection (a) of this section to the Fiscal Research Division of the Legislative Services Commission. This summary shall include all of the following:
(1)	A summary of the number, type, square footage or acreage, and condition of facilities allocated to or owned by each State agency.
(2)	A summary of the geographical distribution of State facilities.
(3)	An estimate of the percentage increase or decrease of square footage or acreage allocated to or owned by each State agency since the last report was submitted pursuant to this subsection.
(4)	Any other information requested by the Fiscal Research Division."
SECTION 6.12.(r)  G.S. 143C‑9‑7(b) reads as rewritten:
"(b)	Upon appropriation by the General Assembly, funds received in the Indian Gaming Education Revenue Fund shall be allocated quarterly by the State Board of Education to local school administrative units, charter schools, and regional schools on the basis of allotted average daily membership. The funds allotted by the State Board of Education pursuant to this section shall be nonreverting. Funds received pursuant to this section by local school administrative units shall be expended for classroom teachers, teacher assistants, classroom materials or supplies, or textbooks."

CAP STATE FUNDED PORTION OF NONPROFIT SALARIES
SECTION 6.14.  No more than one hundred twenty thousand dollars ($120,000) in State funds may be used for the annual salary of any individual employee of a nonprofit organization receiving State funds. For the purposes of this section, the term "State funds" means funds as defined in G.S. 143C‑1‑1(d)(25) and any interest earnings that accrue from those funds.

NO STATE FUNDS FOR LOBBYING
SECTION 6.15.(a)  No State funds shall be used by a non‑State entity to pay for lobbying or lobbyists.
SECTION 6.15.(b)  For the purposes of this section, the following definitions apply:
(1)	Lobbying. – As defined by G.S. 120C‑100(a)(9).
(2)	Lobbyist. – As defined by G.S. 120C‑100(a)(10).
(3)	Non‑State entity. – As defined by G.S. 143C‑1‑1(d)(18).
(4)	State funds. – As defined by G.S. 143C‑1‑1(d)(25) and interest earnings that accrue from those funds.

AVIATION FUEL TAX
SECTION 6.16.  Section 3(b) of S.L. 2012‑74 reads as rewritten:
"SECTION 3.(b)  An interstate passenger air carrier is allowed a refund of the sales and use tax paid by it on fuel in excess of one million two hundred fifty thousand dollars ($1,250,000) for the period January 1, 2011, through June 30, 2011. The State portion of the refund is payable in two installments. The first installment, payable in fiscal year 2012‑2013, may not exceed three million one hundred fifty thousand dollars ($3,150,000). The remainder of the refund is payable in fiscal year 2013‑2014. The amount of sales and use tax paid does not include a refund allowed to the interstate passenger air carrier under G.S. 105‑164.14(a). A request for a refund must be in writing and must include any information and documentation required by the Secretary. The request for a refund is due before October 1, 2012. A refund applied for after the due date is barred."

RESTORE LOCAL GOVERNMENT HOLD HARMLESS FOR REPEALED REIMBURSEMENTS
SECTION 6.17.  G.S. 105‑521 reads as rewritten:
"§ 105‑521.  Transitional local government hold harmless for repealed reimbursements.
(a)	Definitions. – The following definitions apply in this section:
(1)	Local government. – A county or municipality that received a distribution of local sales taxes in the most recent fiscal year for which a local sales tax share has been calculated.
(2)	Local sales tax share. – A local government's percentage share of the two‑cent (2¢) sales taxes distributed during the most recent fiscal year for which data are available.
(3)	Repealed reimbursement amount. – The total amount a local government would have been entitled to receive during the 2002‑2003 fiscal year under G.S. 105‑164.44C, 105‑275.1, 105‑275.2, 105‑277.001, and 105‑277.1A, if the Governor had not withheld any distributions under those sections.
(3a)	Replacement revenue. – The sum of the following:
a.	Fifty percent (50%) of the amount of sales and use tax revenue distributed under Article 40 of this Chapter, other than revenue from the sale of food that is subject to local tax but is exempt from State tax under G.S. 105‑164.13B.
b.	Twenty‑five percent (25%) of the amount of sales and use tax revenue distributed under Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws, other than revenue from the sale of food that is subject to local tax but is exempt from State tax under G.S. 105‑164.13B.
(4)	Two‑cent (2¢) sales taxes. – The first one‑cent (1¢) sales and use tax authorized in Article 39 of this Chapter and in Chapter 1096 of the 1967 Session Laws, the first one‑half cent (1/2¢) local sales and use tax authorized in Article 40 of this Chapter, and the second one‑half cent (1/2¢) local sales and use tax authorized in Article 42 of this Chapter.
(b)	Distributions. – On or before September 15, 2013, the Secretary must multiply each local government's local sales tax share by the estimated amount of replacement revenue that all local governments are expected to receive during the current fiscal year. If the resulting amount is less than one hundred percent (100%) of the local government's repealed reimbursement amount, the Secretary must pay the local government fifty percent (50%) of the difference, but not less than fifty dollars ($50.00).
On or before August 15, 2013, the Department of Revenue and the Fiscal Research Division of the General Assembly must each submit to the Secretary and to the General Assembly a final projection of the estimated amount of replacement revenue that all local governments would be expected to receive during the upcoming fiscal year. If, after May 1 and before a distribution is made, a law is enacted that would affect the projection, an updated projection must be submitted as soon as practicable. If the Secretary does not use the lower of the two final projections to make the calculation required by this subsection, the Secretary must report the reasons for this decision to the Joint Legislative Commission on Governmental Operations within 60 days after receiving the projections.
(c)	Source of Funds. – The Secretary must draw the funds distributed under this section from sales and use tax collections under Article 5 of this Chapter.
(d)	Reports. – The Secretary must report to the Revenue Laws Study Committee by January 31, 2014, the amount distributed under this section for the current fiscal year."

EUGENICS COMPENSATION PROGRAM
SECTION 6.18.(a)  Article 9 of Chapter 143B of the General Statutes is amended by adding a new Part to read:
"Part 30. Eugenics Asexualization and Sterilization Compensation Program.
"§ 143B‑426.50.  Definitions.
As used in this Part, the following definitions apply:
(1)	Claimant. – An individual on whose behalf a claim is made for compensation as a qualified recipient under this Part. An individual must be alive on June 30, 2013, in order to be a claimant.
(2)	Commission. – The North Carolina Industrial Commission.
(3)	Involuntarily. – In the case of:
a.	A minor child, either with or without the consent of the minor child's parent, guardian, or other person standing in loco parentis.
b.	An incompetent adult, with or without the consent of the incompetent adult's guardian or pursuant to a valid court order.
c.	A competent adult, without the adult's informed consent, with the presumption being that the adult gave informed consent.
(4)	Office. – The Office of Justice for Sterilization Victims.
(5)	Qualified recipient. – An individual who was asexualized involuntarily or sterilized involuntarily under the authority of the Eugenics Board of North Carolina in accordance with Chapter 224 of the Public Laws of 1933 or Chapter 221 of the Public Laws of 1937.
"§ 143B‑426.51.  Compensation payments.
(a)	A claimant determined to be a qualified recipient under this Part shall receive lump‑sum compensation in the amount determined by this subsection from funds appropriated to the Department of State Treasurer for these purposes. Except as provided by the succeeding sentence, the amount of compensation for each qualified recipient is the sum of ten million dollars ($10,000,000) divided by the total number of qualified recipients, and all such payments shall be made on June 30, 2015. The State Treasurer shall reduce the ten million dollars ($10,000,000) by holding out a pro‑rata amount per claimant for any cases in which there has not been a final determination of the claim on June 30, 2015. Payments made to persons determined to be qualified claimants after that date shall be made upon such determination, and if after final adjudication of all claims there remains a balance from the funds held out, they shall be paid pro‑rata to all qualified claimants.(a1)	If any claimant shall die during the pendency of a claim, or after being determined to be a qualified recipient, any payment shall be made to the estate of the decedent.
(b)	A qualified recipient may assign compensation received pursuant to subsection (a) of this section to a trust established for the benefit of the qualified recipient.
"§ 143B‑426.52.  Claims for compensation for asexualization or sterilization.
(a)	An individual shall be entitled to compensation as provided for in this Part if a claim is submitted on behalf of that individual in accordance with this Part on or before June 30, 2014, and that individual is subsequently determined by a preponderance of the evidence to be a qualified recipient, except that any competent adult who gave consent is not a qualified recipient unless that individual can show by a preponderance of the evidence that the consent was not informed.
(b)	A claim under this section shall be submitted to the Office. The claim shall be in a form and supported by appropriate documentation and information, as required by the Commission. A claim may be submitted on behalf of a claimant by a person lawfully authorized to act on the individual's or the individual's estate's behalf.
(c)	The Commission shall determine the eligibility of a claimant to receive the compensation authorized by this Part in accordance with G.S. 143B‑426.53. The Commission shall notify the claimant in writing of the Commission's determination regarding the claimant's eligibility.
(d)	The Commission shall adopt rules for the determination of eligibility and the processing of claims."§ 143B‑426.53.  Industrial Commission determination.
(a)	The Commission shall determine whether a claimant is eligible for compensation as a qualified recipient under this Part. The Commission shall have all powers and authority granted under Article 31 of Chapter 143 of the General Statutes with regard to claims filed pursuant to this Part.
(b)	A deputy commissioner shall be assigned by the Commission to make initial determinations of eligibility for compensation under this Part. The deputy commissioner shall review the claim and supporting documentation submitted on behalf of a claimant and shall make a determination of eligibility. In any case where the claimant was a competent adult when asexualized or sterilized, the burden is on the claimant to rebut the presumption that the claimant gave informed consent. If the claim is not approved, the deputy commissioner shall set forth in writing the reasons for the disapproval and notify the claimant.
(c)	A claimant whose claim is not approved under subsection (b) of this section may submit to the Commission additional documentation in support of the individual's claim and request a redetermination by the deputy commissioner.
(d)	A claimant whose claim is not approved under subsection (b) or (c) of this section shall have the right to request a hearing before the deputy commissioner. The hearing shall be conducted in accordance with rules of the Commission. For claimants who are residents of this State, at the request of the claimant, the hearing shall be held in the county of residence of the claimant. For claimants who are not residents of this State, the hearing shall be held in Wake County or at a location of mutual convenience as determined by the deputy commissioner. The claimant shall have the right to be represented, including the right to be represented by counsel, present evidence, and call witnesses. The deputy commissioner who hears the claim shall issue a written decision of eligibility which shall be sent to the claimant.
(e)	Upon the issuance of a decision by the deputy commissioner under subsection (d) of this section, the claimant may file notice of appeal with the Commission within 30 days of the date notice of the deputy commissioner's decision is given. Such appeal shall be heard by the Commission, sitting as the full Commission, on the basis of the record in the matter and upon oral argument. The full Commission may amend, set aside, or strike out the decision of the deputy commissioner and may issue its own findings of fact, conclusions of law, and decision. The Commission shall notify all parties concerned in writing of its decision.
(f)	A claimant may appeal the decision of the full Commission to the Court of Appeals within 30 days of the date notice of the decision of the full Commission is given. Appeals under this section shall be in accordance with the procedures set forth in G.S. 143‑293 and G.S. 143‑294.
(g)	If at any stage of the proceedings the claimant is determined to be a qualified recipient, the Commission shall give notice to the claimant and to the Office of the State Treasurer, and the State Treasurer shall make payment of compensation to the qualified recipient or a trust specified under G.S. 143B‑426.51(b).
(h)	Decisions and determinations by the Commission favorable to the claimant shall be final and not subject to appeal by the State.
(i)	Costs under this section shall be taxed to the State.
"§ 143B‑426.54.  Office of Justice for Sterilization Victims.
(a)	There is created in the Department of Administration the Office of Justice for Sterilization Victims.
(b)	At the request of a claimant or a claimant's legal representative, the Office shall assist an individual who may be a qualified recipient to determine whether the individual qualifies for compensation under this Part. The Office may assist an individual filing a claim under this Part and collect documentation in support of the claim. With the claimant's consent, the Office may represent and advocate for the claimant before the Commission and may assist the claimant with any good‑faith further appeal of an adverse decision on a claim.
(c)	The Office shall plan and implement an outreach program to attempt to notify individuals who may be possible qualified recipients.
"§ 143B‑426.55.  Confidentiality.
Records of all inquiries of eligibility, claims, and payments under this Part shall be confidential and not public records under Chapter 132 of the General Statutes.
"§ 143B‑426.56.  Compensation excluded as income, resources, or assets.
(a)	Any payment made under this section shall not be considered income or assets for purposes of determining the eligibility for, or the amount of, any benefits or assistance under any State or local program financed in whole or in part with State funds.
(b)	Pursuant to G.S. 108A‑26.1, the Department of Health and Human Services shall do the following:
(1)	Provide income, resource, and asset disregard to an applicant for, or recipient of, public assistance who receives compensation under this Part. The amount of the income, resource, and asset disregard shall be equal to the total compensation paid to the individual from the Eugenics Sterilization Compensation Fund.
(2)	Provide resource protection by reducing any subsequent recovery by the State under G.S. 108A‑70.5 from a deceased recipient's estate for payment of Medicaid‑paid services by the amount of resource disregard given under subdivision (1) of this subsection.
(3)	Adopt rules to implement the provisions of subdivisions (1) and (2) of this subsection.
"§ 143B‑426.57.  Limitation of liability.
Nothing in this Part shall revive or extend any statute of limitations that may otherwise have expired prior to July 1, 2013. The State's liability arising from any cause of action related to any asexualization or sterilization performed pursuant to an order of the Eugenics Board of North Carolina shall be limited to the compensation authorized by this Part."
SECTION 6.18.(b)  If House Bill 998 becomes law, then G.S. 105‑153.5(b), as enacted by House Bill 998, reads as rewritten:
"§ 105‑153.5.  Modifications to adjusted gross income.
…
(b)	Other Deductions. – In calculating North Carolina taxable income, a taxpayer may deduct from the taxpayer's adjusted gross income any of the following items that are included in the taxpayer's adjusted gross income:
…
(9)	The amount paid to the taxpayer during the taxable year from the Eugenics Sterilization Compensation Fund as compensation to a qualified recipient under the Eugenics Asexualization and Sterilization Compensation Program under Part 30 of Article 9 of Chapter 143B of the General Statutes. This subdivision expires for taxable years beginning on or after January 1, 2016."
SECTION 6.18.(c)  G.S. 132‑1.23 reads as rewritten:
"§ 132‑1.23.  Eugenics program records.
(a)	Records in the custody of the State, including those in the custody of the Office of Justice for Sterilization Victims, concerning the Eugenics Board of North Carolina's program are confidential and are not public records, including the records identifying (i) individuals impacted by the program, (ii) individuals, or their guardians or authorized agents, inquiring about the impact of the program on the individuals, or (iii) individuals, or their guardians or authorized agents, inquiring about the potential impact of the program on others.
(b)	Notwithstanding subsection (a) of this section, an individual impacted by the program, or a guardian or authorized agent of that individual, may obtain that individual's records under the program upon execution of a proper release authorization.
(c)	Notwithstanding subsections (a) and (b) of this section, minutes or reports of the Eugenics Board of North Carolina, for which identifying information of the individuals impacted by the program have been redacted, may be released to any person. As used in this subsection, "identifying information" shall include the name, street address, birth day and month, and any other information the State believes may lead to the identity of any individual impacted by the program, or of any relative of an individual impacted by the program."
SECTION 6.18.(d)  There is established the Eugenics Sterilization Compensation Fund. The Fund shall be designated a special fund and shall be used to pay the compensation authorized under Part 30 of Article 9 of Chapter 143B of the General Statutes. The Fund shall be administered by the Office of Justice for Sterilization Victims established in G.S. 143B‑426.54. Monies in the Fund shall not be expended or transferred except in accordance with Part 30 of Article 9 of Chapter 143B of the General Statutes. Monies in the Fund shall remain until all claims timely filed with the Industrial Commission as prescribed in this act have been finally adjudicated and all qualified recipients who timely submit claims are paid. The Office of Justice for Sterilization Victims and the Fund are subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes.
SECTION 6.18.(e)  The Department of Health and Human Services shall submit to the Centers for Medicare and Medicaid Services by August 1, 2013, a State Plan Amendment for the Medical Assistance Program and a State Plan Amendment for the Children's Health Insurance Program to allow for income, resource, and asset disregard for compensation payments under Part 30 of Article 9 of Chapter 143B of the General Statutes, the Eugenics Asexualization and Sterilization Compensation Program, as enacted by this act.
SECTION 6.18.(f)  Of the funds appropriated to the Eugenics Sterilization Compensation Fund, the sum of one hundred twenty‑three thousand seven hundred forty‑eight dollars ($123,748) shall be transferred to the Office of Justice for Sterilization Victims to pay the continued operations of the Justice for Sterilization Victims Foundation for the 2013‑2014 fiscal year.
SECTION 6.18.(g)  Subsection (b) of this section becomes effective for taxable years beginning on or after January 1, 2015. Subsections (e) and (g) of this section are effective when this act becomes law. The remainder of this section becomes effective July 1, 2013. Except for the provisions of subsections (b) and (c) of this section, and the final adjudication of any claims under subsection (a) of this section that are pending on June 30, 2015, this section expires June 30, 2015.

PART VII. INFORMATION TECHNOLOGY

INFORMATION TECHNOLOGY FUND
SECTION 7.1.  The availability used to support appropriations made in this act from the Information Technology Fund established in G.S. 147‑33.72H is as follows:
	FY 2013‑2014	FY 2014‑2015

	General Fund Appropriation for IT Fund	$6,053,142	$6,055,342
	General Fund Appropriation for
		Government Data Analytics Center	$3,000,000	$4,417,515
	Interest	$2,200	$2,200
	IT Fund Balance, June 30	$0	$0

Total Funds Available	$9,055,342	$10,475,057
Appropriations are made from the Information Technology Fund for the 2013‑2015 fiscal biennium as follows:
Information Technology Operations
	Criminal Justice Information Network	$189,563	$189,563
	Center for Geographic Information and Analysis	$495,338	$495,338
	Enterprise Security Risk Management	$864,148	$864,148
	Enterprise Project Management Office	$1,473,285	$1,473,285
	Architecture and Engineering	$851,986	$851,986
	State Web Site	$224,741	$224,741
	Enterprise Licenses	$33,000	$33,000
	Subtotal Information Technology Operations	$4,132,061	$4,132,061

Information Technology Projects
	Government Data Analytics Center	$3,000,000	$4,417,515	IT Consolidation	$1,021,081	$1,021,081
	Electronic Forms/Digital Signatures	$900,000	$900,000
	Subtotal Information Technology Projects	$4,921,081	$6,338,596

Total			$9,053,142	$10,470,657
Unless a change is approved by the State Chief Information Officer after consultation with the Office of State Budget and Management, funds appropriated to the Information Technology Fund shall be spent only as specified in this section. Changes shall not result in any degradation to the information technology operations or projects listed in this section for which the funds were originally appropriated.
Any changes to the specified uses shall be reported in writing to the Chairs of the Joint Legislative Oversight Committee on Information Technology, the Chair and Cochair of the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division.

INFORMATION TECHNOLOGY INTERNAL SERVICE FUND
SECTION 7.2.(a)  G.S. 147‑33.88 reads as rewritten:
"§ 147‑33.88.  Information technology budget development and reports.
(a)	The Office of Information Technology Services (ITS) shall develop an annual budget for review and approval by the Office of State Budget and Management (OSBM) in accordance with a schedule prescribed by the Director of the Office of State Budget and Management. The approved Information Technology Internal Service Fund 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 and approved by the Office of State Budget and Management.
(b)	The Office shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the Office's Internal Service Fund on a quarterly basis, no later than the first day of the second month following the end of the quarter. The report shall include current cash balances, line‑item detail on expenditures from the previous quarter, and anticipated expenditures and revenues. The Office shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on expenditures for the upcoming quarter, projected year‑end balance, and the status report on personnel position changes including new positions created and existing positions eliminated. The Office spending reports shall comply with the State Accounting System object codes."
SECTION 7.2.(b)  IT Internal Service Fund. – For each year of the 2013‑2015 fiscal biennium, receipts for the IT Internal Service Fund shall not exceed one hundred ninety million dollars ($190,000,000), excluding a 60‑day balance for contingencies. Rates approved by the Office of State Budget and Management (OSBM) to support the IT Internal Service Fund shall be based on this fund limit. In the event the Fund exceeds the required limit, rates shall be adjusted within 30 days. In the event that an increase in receipts for the IT Internal Service Fund is required, the Office of Information Technology services may only implement the increase after consultation with the Joint Legislative Commission on Governmental Operations.
SECTION 7.2.(c)  Rate Setting. – By October 31, 2013, the State Chief Information Officer shall establish consistent, fully transparent, easily understandable rates that reflect industry standards for each service for which any agency is charged. A report explaining the rate structure shall be submitted to the Joint Legislative Commission on Governmental Operations, the Chairs of the Joint Legislative Oversight Committee on Information Technology, the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division. An interim report shall be submitted by July 30, 2013. Overhead charges to agencies shall be consistently applied and shall reflect industry standards for the particular service. Rate increases shall require the approval of OSBM and consultation with the Joint Legislative Commission on Governmental Operations. Rate reductions may be implemented following notification of OSBM.
SECTION 7.2.(d)  Agency Billing and Payments. – The State Chief Information Officer shall ensure that bills from the Office of Information Technology Services are easily understandable and fully transparent. If a State agency fails to pay its IT Internal Service Fund bill within 30 days of receipt, the Office of State Budget and Management may transfer funds from the agency to fully or partially cover the cost of the bill from that agency to the IT Internal Service Fund, following notification of the affected agency.
SECTION 7.2.(e)  Unspecified Uses. – Any uses of the IT Internal Service Fund not specifically related to the operation of the Office of Information Technology Services, to include any transfers to other State agencies, shall immediately be reported to the Office of State Budget and Management and the Fiscal Research Division with a detailed explanation as to why it was necessary to use the Fund. The State Chief Information Officer may use the IT Internal Service Fund, and any other available resources, to accelerate desktop remediation and associated software upgrades, if it is in the State's best interest.

INFORMATION TECHNOLOGY RESERVE FUND
SECTION 7.3.(a)  Funds in the Reserve for Information Technology for the 2013‑2014 fiscal year consist of the sum of twenty‑eight million dollars ($28,000,000) appropriated from the General Fund. Funds in the Reserve for Information Technology for the 2014‑2015 fiscal year consist of the sum of thirty‑one million five hundred eighty‑two thousand four hundred eighty‑five dollars ($31,582,485) appropriated from the General Fund.
SECTION 7.3.(b)  The Information Technology Reserve Fund shall be established in the Office of the State Chief Information Officer (CIO). It shall be interest‑bearing and nonreverting. The State CIO shall follow established procedures for project approval. Appropriations are made from the Information Technology Reserve Fund for the 2013‑2015 fiscal biennium as follows:
	FY 2013‑2014	FY 2014‑2015
Prepare/Focus	$	250,000	$	0
Plan			1,570,806	2,239,512
Build			1,507,353	2,882,254
Remediation	1,100,000	600,000
Security		1,571,394	392,788
Network Simplification	0	4,832,485
Desktop Remediation	17,000,000	13,300,000
Desktop Software Licenses	4,015,000	2,300,000
Operate		985,447	685,446
Customer Data	0	1,000,000
Secure Sign‑On	0	3,350,000
Innovation Center	0	0
SECTION 7.3.(c)  By September 15, 2013, the State Chief Information Officer shall provide a time line for completing initiatives included in the IT Reserve Fund to the Joint Legislative Oversight Committee on Information Technology, the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division. The time line shall include the dates for completion of a strategic plan, an enterprise architecture, a new business case methodology, and implementation of a new project management process. Not later than the dates specified in the time line, each of these documents shall be submitted to the Joint Legislative Oversight Committee on Information Technology, the House Appropriations Subcommittee on Information Technology, and the Fiscal Research Division.

INFORMATION TECHNOLOGY OPERATIONS
SECTION 7.4.(a)  Server Inventory. – The State Chief Information Officer (State CIO) shall develop an inventory of servers and server locations in State agencies. Based on this inventory, the State CIO shall develop a plan to consolidate agency servers in State‑owned data centers. By November 1, 2013, the State CIO shall provide a written plan for accomplishing this to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
SECTION 7.4.(b)  Hosting/Backups. – The State CIO shall identify information technology applications that are hosted by vendors that are not backed up on State‑owned infrastructure. The State CIO shall work with impacted State agencies to develop a plan to ensure that any State agency application hosted by a vendor is backed up on State‑owned infrastructure. By January 1, 2014, the State CIO shall provide a plan for accomplishing this to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
SECTION 7.4.(c)  Restructuring Plan. – The State CIO shall conduct a comprehensive review of the State's overall information technology operations, including the efficacy of existing exemptions and exceptions from unified State IT governance. Based upon this analysis, the State CIO shall develop a plan to restructure the State's IT operations for the most effective and efficient utilization of resources and capabilities. The plan shall include identifying, documenting, and providing a framework for developing and implementing the education and training required for all State information technology personnel, including information technology contracting professionals. Each State agency, department, and institution, and The University of North Carolina, shall (i) cooperate fully with the Office of the State CIO during the review and assessment phase of restructuring plan development and (ii) provide to the State CIO all information needed to carry out the purposes of this subsection. By May 1, 2014, the State CIO shall present the plan to the Joint Legislative Oversight Committee on Information Technology, along with any recommended legislative proposals for implementation to be considered for introduction during the 2014 Regular Session of the 2013 General Assembly.
SECTION 7.4.(e)  Telecommunications Service Clarification. – G.S. 105‑164.13(54) reads as rewritten:
"The sale at retail and the use, storage, or consumption in this State of the following tangible personal property, digital property, and services are specifically exempted from the tax imposed by this Article:
…
(54)	The following telecommunications services and charges:
a.	Telecommunications service that is a component part of or is integrated into a telecommunications service that is resold. This exemption does not apply to service purchased by a pay telephone provider who uses the service to provide pay telephone service. Examples of services that are resold include carrier charges for access to an intrastate or interstate interexchange network, interconnection charges paid by a provider of mobile telecommunications service, and charges for the sale of unbundled network elements. An unbundled network element is a network element, as defined in 47 U.S.C. § 153(29), to which access is provided on an unbundled basis pursuant to 47 U.S.C. § 251(c)(3).
b.	Pay telephone service.
c.	911 charges imposed under G.S. 62A‑43 and remitted to the 911 Fund under that section.
d.	Charges for telecommunications service made by a hotel, motel, or another entity whose gross receipts are taxable under G.S. 105‑164.4(a)(3) when the charges are incidental to the occupancy of the entity's accommodations.
e.	Telecommunications service purchased or provided by a State agency or a unit of local government for the State Network or another data network owned or leased by the State or unit of local government."

STATEWIDE INFORMATION TECHNOLOGY PROCUREMENT
SECTION 7.5.  Statewide information technology procurement shall be funded through fees charged to agencies using the services of the Statewide Information Technology Procurement Office. The Office of the State Chief Information Officer (CIO) shall provide to the Office of State Budget and Management (OSBM) a fee schedule to allow cost recovery. If an agency fails to pay for services within 30 days of billing, OSBM shall transfer the unpaid amount to the State Information Technology Procurement Office, following notification of the affected agency.

PUBLIC SCHOOL PROCUREMENT OF INFORMATION TECHNOLOGY
SECTION 7.6.(a)  The State Chief Information Officer (CIO) shall work with the North Carolina Department of Public Instruction (DPI) and the Governor's Education Council to implement public school cooperative purchasing agreements for the procurement of information technology (IT) goods and services to support public schools. For purposes of this section, the phrase "public school cooperative purchasing agreement" means an agreement implemented pursuant to this section and available for local school administrative units, regional schools, charter schools, or some combination thereof, providing for collaborative or collective purchases of information technology goods and services in order to leverage economies of scale and to reduce costs.
SECTION 7.6.(b)  Each public school cooperative purchasing agreement shall be based on a defined statewide information technology need to support education in the public schools. Each public school cooperative purchasing agreement shall allow for equal access to technology tools and services and shall provide a standard competitive cost throughout North Carolina for each tool or service. Public school cooperative purchasing agreements shall follow State information technology procurement laws, rules, and procedures.
SECTION 7.6.(c)  By October 1, 2013, and quarterly thereafter, the Office of the State CIO and DPI shall report on the establishment of public school cooperative purchasing agreements, savings resulting from the establishment of the agreements, and any issues impacting the establishment of the agreements. The reports shall be made to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Education Oversight Committee, and the Fiscal Research Division.

INFORMATION TECHNOLOGY CONTRACTS
SECTION 7.7.(a)  SCIO Review. – The State Chief Information Officer (State CIO) shall review all State information technology (IT) contracts and shall develop a plan to consolidate duplicate IT contracts and multiple IT contracts with the same vendor.
SECTION 7.7.(b)  Bulk Purchasing. – The State CIO shall develop a plan to modify bulk purchasing contracts, while maintaining economies of scale, to provide agencies with the option of purchasing equipment on an "as‑needed" basis. By December 15, 2013, the State CIO shall provide the plan to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division. The State CIO may modify the plan based upon input from the Joint Legislative Oversight Committee on Information Technology and, following the review, shall begin implementation of the plan.
SECTION 7.7.(c)  Sole Sourcing, Extensions, and Expansions Limited. – State IT contracts, including sole sourcing, extensions of the period of performance, or expansion of the scope of existing contracts, must receive the prior approval of the State CIO who may grant a specific exception. The State CIO shall immediately report any exceptions granted to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division. The report shall explain the reasons why the exception was deemed to be appropriate.
SECTION 7.7.(d)  G.S. 147‑33.72C(e) reads as rewritten:
"(e)	Performance Contracting. – All contracts between a State agency and a private party for information technology projects shall include provisions for vendor performance review and accountability. The State CIO may require that these contract provisions require a performance bond, include monetary penalties, or require other performance assurance measures for projects that are not completed or performed within the specified time period or that involve costs in excess of those specified in the contract. The State CIO may utilize cost‑savings realized on government vendor partnerships, as defined in G.S. 143‑135.9, as performance incentives for an information technology project vendor."
SECTION 7.7.(e)  Enterprise Contracts. – The State CIO shall consult participating agency chief information officers and obtain approval from the Office of State Budget and Management prior to the initiation of any enterprise project or contract and shall ensure that enterprise project and contract costs are allocated to participating agencies in an equitable manner. Enterprise agreements shall not exceed the participating State agencies' ability to financially support the contracts.
The State CIO shall not enter into any enterprise information technology contracts without obtaining written agreements from participating State agencies regarding the apportionment of the contract cost. State agencies agreeing to participate in a contract shall:
(1)	Ensure that sufficient funds are budgeted to support their agreed shares of enterprise contracts throughout the life of the contract.
(2)	Transfer the required funding to the Information Technology Internal Service Fund in sufficient time for the Office of Information Technology Services to meet vendor contract requirements.
SECTION 7.7.(f)  Three‑Year Contracts. – 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 up to a total of three years where the terms of the procurement contracts require payment of all or a portion of the contract price at the beginning of the contract agreement. All of the following conditions shall be met before payment for these agreements may be disbursed:
(1)	Any advance payment can be accomplished within the IT Internal Service Fund 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 interest 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 IT Internal Service Fund rate calculations before approving annual proposed rates. Any savings resulting from the agreements shall be returned to agencies included in the contract in the form of reduced rates. Beginning October 1, 2013, ITS shall submit a quarterly written report of any authorizations granted under this section to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

INFORMATION TECHNOLOGY PERSONAL SERVICES CONTRACT REQUIREMENTS
SECTION 7.8.  Notwithstanding any provision of law to the contrary, no contract for information technology personal services, or that provides personnel to perform information technology functions, may be established or renewed without written approval from the Statewide Information Technology Procurement Office and the Office of State Budget and Management. To facilitate compliance with this requirement, the Statewide Information Technology Procurement Office shall develop and document the following:
(1)	Standards for determining whether it is more appropriate for an agency to hire an employee or use the services of a vendor.
(2)	A process to monitor all State agency personal services contracts, as well as any other State contracts providing personnel to perform information technology functions.
(3)	A process for obtaining approval of contractor positions.
The Statewide Information Technology Procurement Office shall review current personal services contracts and determine if each contractor is performing a function that could more appropriately be performed by a State employee. Where the determination is made that a State employee should be performing the function, the Statewide Information Technology Procurement Office shall work with the impacted agency and the Office of State Personnel to identify or create the position.
Beginning October 1, 2013, the Statewide Information Technology Procurement Office shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on its progress toward standardizing information technology personal services contracts. In addition, the report shall include detailed information on the number of personal service contractors in each State agency, the cost for each, and the comparable cost (including benefits) of a State employee serving in that capacity rather than a contractor.

PREVENT DUPLICATION OF INFORMATION TECHNOLOGY CAPABILITIES
SECTION 7.9.(a)  The Office of the State Chief Information Officer (CIO) shall develop a plan and adopt measures to prevent the duplication of information technology capabilities and resources across State agencies. When multiple agencies require the same, or substantially similar, information technology capabilities, the State CIO shall designate one State agency as the lead to coordinate and manage the capability for all State agencies, with the State CIO maintaining oversight of the effort. By October 1, 2013, the State CIO shall provide this plan to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
SECTION 7.9.(b)  The Office of the State Chief Information Officer shall do all of the following to carry out the purposes of this section:
(1)	Review all current and future information technology projects to determine whether the capabilities required for each project already exist in a planned, ongoing, or completed information technology project developed by another State agency. For projects where the capability already exists, the Office of the State CIO shall assist the agency with implementing the existing capability.
(2)	Identify existing projects that can best support a specific information technology capability for multiple agencies and work to transition all agencies requiring the specific capability to the identified projects.
(3)	When State agencies request approval for new projects, determine if the information technology project can be implemented using an existing application, or if the new project has the potential to support multiple agencies' requirements.
(4)	Provide quarterly reports on progress toward eliminating duplication to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
(5)	Ensure that contracts for information technology allow the addition of other agencies' requirements within the terms of the existing contracts.
SECTION 7.9.(c)  All State agencies shall coordinate any Geographic Information System (GIS) initiatives through the Center for Geographic Information and Analysis (CGIA) in the Office of Information Technology Services, as well as the Office of the State CIO, to ensure that existing capabilities are not being duplicated. The CGIA shall monitor and approve all new GIS‑related information technology projects and expansion budget requests. By January 1 of each year, the CGIA shall submit a written report on GIS duplication to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
The CGIA shall conduct a review of all GIS applications in State agencies, identify instances of duplication for existing applications, and develop a plan for consolidating duplicative projects. By November 1, 2013, the CGIA shall provide a report on the review to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

GOVERNMENT DATA ANALYTICS/DATA SHARING
SECTION 7.10.(a)  G.S. 20‑7(b2) reads as rewritten:
"(b2)	Disclosure of Social Security Number. – The social security number of an applicant is not a public record. The Division may not disclose an applicant's social security number except as allowed under federal law. A violation of the disclosure restrictions is punishable as provided in 42 U.S.C. § 408, as amended.
In accordance with 42 U.S.C. 405 and 42 U.S.C. 666, as amended, the Division may disclose a social security number obtained under subsection (b1) of this section only as follows:
(1)	For the purpose of administering the driver's license laws.
(2)	To the Department of Health and Human Services, Child Support Enforcement Program for the purpose of establishing paternity or child support or enforcing a child support order.
(3)	To the Department of Revenue for the purpose of verifying taxpayer identity.
(4)	To the Office of Indigent Defense Services of the Judicial Department for the purpose of verifying the identity of a represented client and enforcing a court order to pay for the legal services rendered.
(5)	To each county jury commission for the purpose of verifying the identity of deceased persons whose names should be removed from jury lists.
(6)	To the Office of the State Controller for the purposes of G.S. 143B‑426.38A."
SECTION 7.10.(b)  G.S. 20‑43(a) reads as rewritten:
"(a)	All records of the Division, other than those declared by law to be confidential for the use of the Division, shall be open to public inspection during office hours in accordance with G.S. 20‑43.1. A signature recorded in any format by the Division for a drivers license or a special identification card is confidential and shall not be released except for law enforcement purposes. A photographic image recorded in any format by the Division for a drivers license or a special identification card is confidential and shall not be released except for law enforcement purposes or to the Office of the State Controller for the purposes of G.S. 143B‑426.38A."
SECTION 7.10.(c)  G.S. 105‑259(b) is amended by adding a new subdivision to read:
"(44)	To furnish tax information to the Office of the State Controller under G.S. 143B‑426.38A. The use and reporting of individual data may be restricted to only those activities specifically allowed by law when potential fraud or other illegal activity is indicated."
SECTION 7.10.(d)  Part 28 of Article 9 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑426.38A.  Government Data Analytics Center; State data‑sharing requirements.(a)	State Government Data Analytics. – The State shall initiate across State agencies, departments, and institutions a data integration and data‑sharing initiative that is not intended to replace transactional systems but is instead intended to leverage the data from those systems for enterprise‑level State business intelligence.
(1)	Creation of initiative. – In carrying out the purposes of this section, the Office of the State Controller shall conduct an ongoing, comprehensive evaluation of State data analytics projects and plans in order to identify data integration and business intelligence opportunities that will generate greater efficiencies in, and improved service delivery by, State agencies, departments, and institutions. The State Controller and State CIO shall continue to utilize public‑private partnerships and existing data integration and analytics contracts and licenses as appropriate to continue the implementation of the initiative.
(2)	Application to State government. – The initiative shall include all State agencies, departments, and institutions, including The University of North Carolina.
(3)	Governance. – The State Controller shall lead the initiative established pursuant to this section. The Chief Justice of the North Carolina Supreme Court and the Legislative Services Commission each shall designate an officer or agency to advise and assist the State Controller with respect to implementation of the initiative in their respective branches of government. The judicial and legislative branches shall fully cooperate in the initiative mandated by this section in the same manner as is required of State agencies.
(b)	Government Data Analytics Center. –
(1)	GDAC established. – There is established in the Office of the State Controller the Government Data Analytics Center (GDAC). GDAC shall assume the work, purpose, and resources of the current data integration effort in the Office of the State Controller and shall otherwise advise and assist the State Controller in the management of the initiative. The State Controller shall make any organizational changes necessary to maximize the effectiveness and efficiency of GDAC.
(2)	Powers and duties of the GDAC. – The State Controller shall, through the GDAC, do all of the following:
a.	Continue and coordinate ongoing enterprise data integration efforts, including:
1.	The deployment, support, technology improvements, and expansion for the Criminal Justice Law Enforcement Automated Data System (CJLEADS).
2.	The pilot and subsequent phase initiative for the North Carolina Financial Accountability and Compliance Technology System (NCFACTS).
3.	Individual‑level student data and workforce data from all levels of education and the State workforce.
4.	Other capabilities developed as part of the initiative.
b.	Identify technologies currently used in North Carolina that have the capability to support the initiative.
c.	Identify other technologies, especially those with unique capabilities, that could support the State's business intelligence effort.
d.	Compare capabilities and costs across State agencies.
e.	Ensure implementation is properly supported across State agencies.
f.	Ensure that data integration and sharing is performed in a manner that preserves data privacy and security in transferring, storing, and accessing data, as appropriate.
g.	Immediately seek any waivers and enter into any written agreements that may be required by State or federal law to effectuate data sharing and to carry out the purposes of this section.
h.	Coordinate data requirements and usage for State business intelligence applications in a manner that (i) limits impacts on participating State agencies as those agencies provide data and business knowledge expertise and (ii) assists in defining business rules so the data can be properly used.
i.	Recommend the most cost‑effective and reliable long‑term hosting solution for enterprise‑level State business intelligence as well as data integration, notwithstanding Section 6A.2(f) of S.L. 2011‑145.
(c)	Implementation of the Enterprise‑Level Business Intelligence Initiative. –
(1)	Phases of the initiative. – The initiative shall cycle through these phases on an ongoing basis:
a.	Phase I requirements. – In the first phase, the State Controller through GDAC shall:
1.	Inventory existing State agency business intelligence projects, both completed and under development.
2.	Develop a plan of action that does all of the following:
I.	Defines the program requirements, objectives, and end state of the initiative.
II.	Prioritizes projects and stages of implementation in a detailed plan and benchmarked time line.
III.	Includes the effective coordination of all of the State's current data integration initiatives.
IV.	Utilizes a common approach that establishes standards for business intelligence initiatives for all State agencies and prevents the development of projects that do not meet the established standards.
V.	Determines costs associated with the development efforts and identifies potential sources of funding.
VI.	Includes a privacy framework for business intelligence consisting of adequate access controls and end user security requirements.
VII.	Estimates expected savings.
3.	Inventory existing external data sources that are purchased by State agencies to determine whether consolidation of licenses is appropriate for the enterprise.
4.	Determine whether current, ongoing projects support the enterprise‑level objectives.
5.	Determine whether current applications are scalable or are applicable for multiple State agencies or both.
b.	Phase II requirements. – In the second phase, the State Controller through the GDAC shall:
1.	Identify redundancies and recommend to the State CIO any projects that should be discontinued.
2.	Determine where gaps exist in current or potential capabilities.
c.	Phase III requirements. – In the third phase:
1.	The State Controller through GDAC shall incorporate or consolidate existing projects, as appropriate.
2.	The State Controller shall, notwithstanding G.S. 147‑33.76 or any rules adopted pursuant thereto, eliminate redundant business intelligence projects, applications, software, and licensing.
3.	The State Controller through GDAC shall complete all necessary steps to ensure data integration in a manner that adequately protects privacy.
(2)	Project management. – The State CIO shall ensure that all current and new business intelligence/data analytics projects are in compliance with all State laws, policies, and rules pertaining to information technology procurement, project management, and project funding and that they include quantifiable and verifiable savings to the State. The State CIO shall report to the Joint Legislative Oversight Committee on Information Technology on projects that are not achieving projected savings. The report shall include a proposed corrective action plan for the project.
		The Office of the State CIO, with the assistance of the Office of State Budget and Management, shall identify potential funding sources for expansion of existing projects or development of new projects. No GDAC project shall be initiated, extended, or expanded:
a.	Without the specific approval of the General Assembly unless the project can be implemented within funds appropriated for GDAC projects.
b.	Without prior consultation to the Joint Legislative Commission on Governmental Operations and a report to the Joint Legislative Oversight Committee on Information Technology if the project can be implemented within funds appropriated for GDAC projects.(d)	Funding. – The Office of the State Controller, with the support of the Office of State Budget and Management, shall identify and make all efforts to secure any matching funds or other resources to assist in funding this initiative. Savings resulting from the cancellation of projects, software, and licensing, as well as any other savings from the initiative, shall be returned to the General Fund and shall remain unexpended and unencumbered until appropriated by the General Assembly in a subsequent fiscal year. It is the intent of the General Assembly that expansion of the initiative in subsequent fiscal years be funded with these savings and that the General Assembly appropriate funds for projects in accordance with the priorities identified by the Office of the State Controller in Phase I of the initiative.
(d1)	Appropriations. – Of the funds appropriated to the Information Technology Fund, the sum of three million dollars ($3,000,000) for the 2013‑2014 fiscal year and the sum of four million four hundred seventeen thousand five hundred fifteen dollars ($4,417,515) for the 2014‑2015 fiscal year shall be used to support the GDAC and NCFACTS. Of these funds, the sum of one million four hundred seventeen thousand five hundred fifteen dollars ($1,417,515) shall be used in each fiscal year of the 2013‑2015 biennium for OSC internal costs. For fiscal year 2014‑2015, of the funds generated by GDAC and NCFACTS projects and returned to the General Fund, the sum of up to five million dollars ($5,000,000) is appropriated to fund GDAC and NCFACTS, to include vendor payments. Prioritization for the expenditure of these funds shall be for State costs associated with GDAC first, then vendor costs second. Funds in the 2013‑2015 fiscal year budgets for GDAC and NCFACTS shall be used solely to support the continuation for these priority project areas.
(e)	Reporting. – The Office of the State Controller shall:
(1)	Submit and present quarterly reports on the implementation of Phase I of the initiative and the plan developed as part of that phase to the Chairs of the House of Representatives Appropriations and Senate Base Budget/Appropriations Committees, to the Joint Legislative Oversight Committee on Information Technology, and to the Fiscal Research Division of the General Assembly. The State Controller shall submit a report prior to implementing any improvements, expending funding for expansion of existing business intelligence efforts, or establishing other projects as a result of its evaluations, and quarterly thereafter, a written report detailing progress on, and identifying any issues associated with, State business intelligence efforts.
(2)	Report the following information as needed:
a.	Any failure of a State agency to provide information requested pursuant to this section. The failure shall be reported to the Joint Legislative Oversight Committee on Information Technology and to the Chairs of the House of Representatives Appropriations and Senate Base Budget/Appropriations Committees.
b.	Any additional information to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Oversight Committee on Information Technology that is requested by those entities.
(f)	Data Sharing. –
(1)	General duties of all State agencies. – The head of each State agency, department, and institution shall do all of the following:
a.	Grant the Office of the State Controller access to all information required to develop and support State business intelligence applications pursuant to this section. The State Controller and the GDAC shall take all necessary actions and precautions, including training, certifications, background checks, and governance policy and procedure, to ensure the security, integrity, and privacy of the data in accordance with State and federal law and as may be required by contract.
b.	Provide complete information on the State agency's information technology, operational, and security requirements.
c.	Provide information on all of the State agency's information technology activities relevant to the State business intelligence effort.
d.	Forecast the State agency's projected future business intelligence information technology needs and capabilities.
e.	Ensure that the State agency's future information technology initiatives coordinate efforts with the GDAC to include planning and development of data interfaces to incorporate data into the initiative and to ensure the ability to leverage analytics capabilities.
f.	Provide technical and business resources to participate in the initiative by providing, upon request and in a timely and responsive manner, complete and accurate data, business rules and policies, and support.
g.	Identify potential resources for deploying business intelligence in their respective State agencies and as part of the enterprise‑level effort.
h.	Immediately seek any waivers and enter into any written agreements that may be required by State or federal law to effectuate data sharing and to carry out the purposes of this section, as appropriate.
(2)	Specific requirements. – The State Controller and the GDAC shall enhance the State's business intelligence through the collection and analysis of data relating to workers' compensation claims for the purpose of preventing and detecting fraud, as follows:
a.	The North Carolina Industrial Commission shall release to GDAC, or otherwise provide electronic access to, all data requested by GDAC relating to workers' compensation insurance coverage, claims, appeals, compliance, and enforcement under Chapter 97 of the General Statutes.
b.	The North Carolina Rate Bureau (Bureau) shall release to GDAC, or otherwise provide electronic access to, all data requested by GDAC relating to workers' compensation insurance coverage, claims, business ratings, and premiums under Chapter 58 of the General Statutes. The Bureau shall be immune from civil liability for releasing information pursuant to this subsection, even if the information is erroneous, provided the Bureau acted in good faith and without malicious or willful intent to harm in releasing the information.
c.	The Department of Commerce, Division of Employment Security (DES), shall release to GDAC, or otherwise provide access to, all data requested by GDAC relating to unemployment insurance coverage, claims, and business reporting under Chapter 96 of the General Statutes.
d.	The Department of Labor shall release to GDAC, or otherwise provide access to, all data requested by GDAC relating to safety inspections, wage and hour complaints, and enforcement activities under Chapter 95 of the General Statutes.
e.	The Department of Revenue shall release to GDAC, or otherwise provide access to, all data requested by GDAC relating to the registration and address information of active businesses, business tax reporting, and aggregate federal tax Form 1099 data for comparison with information from DES, the Rate Bureau, and the Department of the Secretary of State for the evaluation of business reporting. Additionally, the Department of Revenue shall furnish to the GDAC, upon request, other tax information, provided that the information furnished does not impair or violate any information‑sharing agreements between the Department and the United States Internal Revenue Service. Notwithstanding any other provision of law, a determination of whether furnishing the information requested by GDAC would impair or violate any information‑sharing agreements between the Department of Revenue and the United States Internal Revenue Service shall be within the sole discretion of the State Chief Information Officer. The Department of Revenue and the Office of the State Controller shall work jointly to assure that the evaluation of tax information pursuant to this subdivision is performed in accordance with applicable federal law.
(3)	All information shared with GDAC and the State Controller under this subdivision is protected from release and disclosure in the same manner as any other information is protected under this section.
(g)	Provisions on Privacy and Confidentiality of Information. –
(1)	Status with respect to certain information. – The State Controller and the GDAC shall be deemed to be all of the following for the purposes of this section:
a.	With respect to criminal information, and to the extent allowed by federal law, a criminal justice agency (CJA), as defined under Criminal Justice Information Services (CJIS) Security Policy. The State CJIS Systems Agency (CSA) shall ensure that CJLEADS receives access to federal criminal information deemed to be essential in managing CJLEADS to support criminal justice professionals.
b.	With respect to health information covered under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended, and to the extent allowed by federal law:
1.	A business associate with access to protected health information acting on behalf of the State's covered entities in support of data integration, analysis, and business intelligence.
2.	Authorized to access and view individually identifiable health information, provided that the access is essential to the enterprise fraud, waste, and improper payment detection program or required for future initiatives having specific definable need for the data.
c.	Authorized to access all State and federal data, including revenue and labor information, deemed to be essential to the enterprise fraud, waste, and improper payment detection program or future initiatives having specific definable need for the data.
d.	Authorized to develop agreements with the federal government to access data deemed to be essential to the enterprise fraud, waste, and improper payment detection program or future initiatives having specific definable need for such data.
(2)	Release of information. – The following limitations apply to (i) the release of information compiled as part of the initiative, (ii) data from State agencies that is incorporated into the initiative, and (iii) data released as part of the implementation of the initiative:
a.	Information compiled as part of the initiative. – Notwithstanding the provisions of Chapter 132 of the General Statutes, information compiled by the State Controller and the GDAC related to the initiative may be released as a public record only if the State Controller, in that officer's sole discretion, finds that the release of information is in the best interest of the general public and is not in violation of law or contract.
b.	Data from State agencies. – Any data that is not classified as a public record under G.S. 132‑1 shall not be deemed a public record when incorporated into the data resources comprising the initiative. To maintain confidentiality requirements attached to the information provided to the State Controller and GDAC, each source agency providing data shall be the sole custodian of the data for the purpose of any request for inspection or copies of the data under Chapter 132 of the General Statutes.
c.	Data released as part of implementation. – Information released to persons engaged in implementing the State's business intelligence strategy under this section that is used for purposes other than official State business is not a public record pursuant to Chapter 132 of the General Statutes.
d.	Data from North Carolina Rate Bureau. – Notwithstanding any other provision of this section, any data released by or obtained from the North Carolina Rate Bureau under this initiative relating to workers' compensation insurance claims, business ratings, or premiums are not public records and public disclosure of such data, in whole or in part, by the GDAC or State Controller, or by any State agency, is prohibited."
SECTION 7.10.(e)  G.S. 143B‑426.39 is amended by adding a new subdivision to read:
"(17)	Coordinate data integration and data sharing pursuant to G.S. 143B‑426.38A across State agencies, departments, and institutions to support the State's enterprise‑level business intelligence initiative."
SECTION 7.10.(f)  The Office of State Controller, in consultation with the State CIO, shall continue the management and implementation of the GDAC and shall continue to manage the ongoing enterprise data integration efforts under the GDAC, including CJLEADS and NC FACTS. The Office of the State CIO, in consultation with OSC, shall develop a plan for a cooperative transition of the GDAC and all of its programs to the Office of the SCIO, effective July 1, 2014. The plan shall include provisions for a governance structure for GDAC that includes participation by the State Controller. The plan shall also include milestones for the transition. The State CIO shall report the plan details and any associated costs to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division by no later than October 1, 2013. The State CIO shall also report on a quarterly basis to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on progress toward achieving milestones set out in the plan.
SECTION 7.10.(g)  Effective July 1, 2014, the GDAC and all of its programs are hereby transferred to the Office of the SCIO. This transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6. The Office of State Budget and Management shall determine the personnel, property, unexpended balances of appropriations, allocations, or other funds, including the functions of budgeting and purchasing, to be included in the transfer.
SECTION 7.10.(h)  The purpose of this section is to codify provisions of Section 6A.7A of S.L. 2012‑142, and to the extent that any provision of that section conflicts with G.S. 143B‑426.38A, as enacted by this act, the provisions of the statute shall be construed to prevail over any conflicting uncodified provisions.
SECTION 7.10.(i)  This section is effective when it becomes law.

STATE INFORMATION TECHNOLOGY DATA ARCHIVING
SECTION 7.11.(a)  The State Chief Information Officer (CIO) shall investigate the feasibility of creating an enterprise data archiving system for State agencies that will (i) allow for the effective management of data from multiple sources; (ii) provide for efficient, timely responses to discovery requests and investigations; and (iii) ensure real-time State agency access to and use of archived files. The system shall be financed only by savings accrued as a result of the project.
SECTION 7.11.(b)  By December 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the results of the feasibility assessment.
SECTION 7.11.(c)  Subsequent to making the report required by this section, and only if the State CIO has developed a business case that is validated by the Office of State Budget and Management, then the State CIO may initiate the development of an enterprise data archiving system.

INFORMATION TECHNOLOGY/PRIVACY PROTECTION OF CITIZEN DATA
SECTION 7.12.  The Joint Legislative Oversight Committee on Information Technology (the Committee), in collaboration with the State Chief Information Officer (CIO), shall study establishing State requirements to safeguard the personal data of individuals collected and managed by all branches of State government. The study shall be conducted with the participation and assistance of agency CIOs selected jointly by the Committee and State CIO. The Committee may report any legislative proposals to the 2014 Regular Session of the 2013 General Assembly.

STATE INFORMATION TECHNOLOGY INNOVATION CENTER
SECTION 7.13.  The State Chief Information Officer (CIO) may operate a State Information Technology Innovation Center (Center) to develop and demonstrate technology solutions with potential benefit to the State and its citizens. The Center may facilitate the piloting of potential solutions to State technology requirements. In operating the Center, the State CIO shall ensure that all State laws, rules, and policies are followed. Vendor participation in the Center shall not be construed to (i) create any type of preferred status for vendors or (ii) abrogate the requirement that the State CIO ensure that agency and statewide requirements for information technology support (including those for the Office of the State CIO and the Office of Information Technology Services) are awarded based on a competitive process that follows information technology procurement guidelines. Beginning July 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology on a quarterly basis on initiatives being developed and implemented within the Center, as well as on the sources and amounts of resources used to support the Center.

ENTERPRISE GRANTS MANAGEMENT
SECTION 7.14.(a)  Effective August 1, 2013, the State Chief Information Officer (CIO) shall oversee the development and implementation of the enterprise grants management system. The State CIO shall review progress on the implementation of the enterprise grants management system and update the plan for its development and implementation. This plan shall include an updated inventory of current agency grants management systems and a detailed process for consolidating grants management within the State, to include a time line for implementation. By October 1, 2013, the State CIO shall provide the updated plan to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
SECTION 7.14.(b)  There is established a Grants Management Oversight Committee to coordinate the development of an enterprise grants management system. The Committee shall be chaired by the State Chief Information Officer. Committee membership shall include the Director of the Office of State Budget and Management, the State Auditor, the Department of Transportation Chief Information Officer, and the State Controller. The State Auditor shall serve as a nonvoting member. The Committee shall:
(1)	Establish priorities for moving agencies to the enterprise system.
(2)	Establish priorities for development and implementation of system capabilities.
(3)	Define system requirements.
(4)	Approve plans associated with system development and implementation.
(5)	Review costs and approve funding sources for system development and implementation.
(6)	Ensure any system benefits are realistic and realized.
SECTION 7.14.(c)  Beginning September 1, 2013, the Office of the State CIO shall report quarterly to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the status of the system, including the following information:
(1)	Agencies currently participating in the system.
(2)	Specific requirements for each agency project included in the system development.
(3)	Cost and funding sources for each agency participating in the system.
(4)	Status of each agency project included in the system.
(5)	Comparison of the status of each project to the project's time line, with an explanation of any differences.
(6)	Detailed descriptions of milestones completed that quarter and to be completed the next quarter.
(7)	Any changes in project cost for any participating agency, the reason for the change, and the source of funding, if there is a cost increase.
(8)	Actual project expenditures by agency, to date, and during that quarter.
(9)	Any potential funding shortfalls, and their impact.
(10)	Any issues identified during the quarter, with a corrective action plan and a time line for resolving each issue.
(11)	Impact of any issues on schedule or cost.
(12)	Any changes to agency projects, or the system as a whole.
(13)	Any change requests and their costs.

ENTERPRISE ELECTRONIC FORMS AND DIGITAL SIGNATURES
SECTION 7.15.(a)  The State's enterprise electronic forms and digital signatures project shall be transferred from the Office of the State Controller to the Office of the State Chief Information Officer (CIO) as a Type I transfer, as defined in G.S. 143A‑6. The State CIO shall continue the planning, development, and implementation of a coordinated enterprise electronic forms and digital signatures capability, as well as the use of digital certificates. As part of the process, the Office of the State CIO shall include the capability to allow one‑time data entry for multiple applications.
SECTION 7.15.(b)  The State CIO shall continue to integrate executive branch agencies developing, or identifying the need to develop, electronic forms or digital signatures projects, or both. The State CIO shall also review existing electronic forms and digital signatures capabilities and develop a plan to consolidate them. The State CIO may consolidate current agency electronic forms and digital signature capabilities, and cancel ongoing projects, and may redirect the resources associated with the capabilities and projects to the enterprise electronic forms and digital signatures project. Beginning November 1, 2013, the State CIO shall submit quarterly reports on the status of the project to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.

VEHICLE MANAGEMENT
SECTION 7.16.(a)  The Office of the State Chief Information Officer (CIO) shall develop an implementation plan for establishing a statewide motor fleet management system. The plan shall consider consolidating individual agency and institution motor fleet management systems and include an implementation time line, a cost estimate, and a continuing funding strategy to create and operate a statewide fleet management information system to which all State agencies and institutions would be required to provide vehicle identification, utilization, and direct cost data. In formulating an implementation plan, the Office of the State Chief Information Officer shall do the following:
(1)	Consult with State agencies that own vehicles.
(2)	Review the existing fleet management information systems used by State agencies.
(3)	Examine fleet management information systems used by other state governments.
(4)	Determine whether the State should (i) expand a fleet management information system currently used by a State agency for statewide use, (ii) develop a new in‑house system, or (iii) purchase a new system from an outside vendor.
(5)	Determine fees or other methods to pay the initial and ongoing costs for the system.
SECTION 7.16.(b)  The Office of State Budget and Management shall assist and advise the Office of the State Chief Information Officer in developing the implementation plan and work with State agencies and institutions to identify funding from current and proposed projects and applications that could be used to support the development and implementation of the statewide motor fleet management system. The Office of State Controller shall assist and advise the Office of the State Chief Information Officer in developing the implementation plan for the statewide motor fleet management information system, including how the system interfaces with the statewide accounting system.
SECTION 7.16.(c)  Beginning October 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the implementation plan for the statewide motor fleet management information system including progress toward the development of the enterprise system, the associated costs, identified sources of funding, and any issues associated with the project.
SECTION 7.16.(d)  The State CIO shall also study the feasibility of implementing a tracking system for State vehicles, based on recommendations from the Program Evaluation Division, and report the results of the study to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Program Evaluation Oversight Committee, and the Fiscal Research Division by November 15, 2013.
SECTION 7.16.(e)  Until July 1, 2015, no State or local governmental entity or officer may procure or operate an unmanned aircraft system or disclose personal information about any person acquired through the operation of an unmanned aircraft system unless the State CIO approves an exception specifically granting disclosure, use, or purchase. Any exceptions to the prohibition in this subsection shall be reported immediately to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division. The following definitions apply in this section:
(1)	"Unmanned aircraft" means an aircraft that is operated without the possibility of human intervention from within or on the aircraft.
(2)	"Unmanned aircraft system" means an unmanned aircraft and associated elements, including communication links and components that control the unmanned aircraft that are required for the pilot in command to operate safely and efficiently in the national airspace system.
SECTION 7.16.(f)  If the State Chief Information Officer determines that there is a requirement for unmanned aircraft systems for use by State or local agencies, planning may begin for the possible development, implementation, and operation of an unmanned aircraft system program within the State of North Carolina. This planning effort shall be accomplished in coordination with the Chief Information Officer for the Department of Transportation and the DOT Aviation Division Director. If the State CIO decides to plan for an unmanned aircraft system program, a proposal for the implementation of the program shall be provided by March 1, 2014, to the Joint Legislative Oversight Committee on Information Technology, the Joint Transportation Legislative Oversight Committee, and the Fiscal Research Division. At a minimum, the proposal shall include the following:
(1)	Governance structure to include the appropriate use at each level of government.
(2)	Guidelines for program implementation to include limitations on unmanned aircraft system use.
(3)	Potential participants.
(4)	Costs associated with establishing a program.
(5)	Potential sources of funding.
(6)	Issues associated with establishing a program to include limitations on entities that may already have purchased unmanned aircraft systems.
(7)	Recommendations for legislative proposals.

TAX INFORMATION MANAGEMENT SYSTEM/ADDITIONAL PUBLIC‑PRIVATE PARTNERSHIP AUTHORIZED
SECTION 7.17.(a)  Additional Public‑Private Partnership. – The Secretary of Revenue may enter into an additional public‑private arrangement in order to expand the implementation of the Tax Information Management System (TIMS). All such arrangements will terminate June 30, 2018. The public‑private arrangement may include terms necessary to implement additional revenue‑increasing or cost‑savings components if all of the following conditions are met:
(1)	The funding of the project under the arrangement comes from revenue generated by or cost-savings resulting from the project.
(2)	The funding of the project is dependent on increased revenue or cost‑savings streams that are different from the existing benefits stream for the implementation of TIMS.
(3)	The project involves additional identified initiatives that will be integrated into the TIMS solution.
SECTION 7.17.(b)  Contracts. – Work under an additional public‑private arrangement that is authorized by this section may be contracted by requests for proposals, modifications to the existing contracts, purchases using existing contracts, or other related contract vehicles.
SECTION 7.17.(c)  Management/Performance Measurement. – The Secretary of Revenue shall follow the existing model for public‑private arrangement oversight and shall establish a measurement process to determine the increased revenue or cost-savings attributed to the additional public‑private arrangement authorized by this section. To accomplish this, the Secretary shall consult subject matter experts in the Department of Revenue, in other governmental units, and in the private sector, as necessary. At a minimum, the measurement process shall include all of the following:
(1)	Calculation of a revenue baseline against which the increased revenue attributable to the project is measured and a cost‑basis baseline against which the cost-savings resulting from the project are measured.
(2)	Periodic evaluation to determine whether the baselines need to be modified based on significant measurable changes in the economic environment.
(3)	Monthly calculation of increased revenue and cost-savings attributable to contracts executed under this section.
SECTION 7.17.(d)  Funding. – Of funds generated from increased revenues or cost-savings, as compared to the baselines established by subdivision (1) of subsection (c) of this section, in the General Fund, the Highway Fund, and that State portion of the Unauthorized Substance Tax collections of the Special Revenue Fund, the sum of up to a total of sixteen million dollars ($16,000,000) may be authorized by the Office of State Budget and Management to make purchases related to the implementation of the additional public‑private arrangement authorized by this section, including payments for services from non‑State entities.
SECTION 7.17.(e)  Internal Costs. – For the 2013‑2015 fiscal biennium the Department of Revenue may retain an additional sum of eight million eight hundred seventy‑four thousand three hundred nineteen dollars ($8,874,319) from benefits generated for the General Fund since the beginning of the public‑private partnership described under Section 6A.5(a) of S.L. 2011‑145. These funds shall be used as payment of internal costs for the fiscal biennium, and such funds are hereby appropriated for this purpose.
SECTION 7.17.(f)  Expert Counsel Required. – 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 negotiate and review contracts associated with an additional public‑private arrangement authorized under this section.
SECTION 7.17.(g)  Oversight Committee. – The Oversight Committee established under Section 6A.5(c) of S.L. 2011‑145 shall have the same responsibilities and duties with respect to an additional public‑private arrangement authorized by this section as it does with respect to public‑private arrangements to implement TIMS and the additional Planning and Design Project (PDP) components.
SECTION 7.17.(h)  Reporting. – Beginning August 1, 2013, and quarterly thereafter, the Department of Revenue shall submit detailed written reports to the Chairs of the House of Representatives Appropriations Committee, to the Chairs of the Senate Committee on Appropriations/Base Budget, to the Joint Legislative Oversight Committee on Information Technology, and to the Fiscal Research Division of the General Assembly. The report shall include an explanation of all of the following:
(1)	Details of each public‑private contract.
(2)	The benefits from each contract.
(3)	A comprehensive forecast of the benefits of using public‑private agreements to implement TIMS, the additional PDP components, and additional components authorized by this section, including cost-savings and the acceleration of the project time line.
(4)	Any issues associated with the operation of the public‑private partnership.
SECTION 7.17.(i)  Information Technology Project Oversight. – In addition to the oversight provided by the Oversight Committee established in Section 6A.5(c) of S.L. 2011‑145, the additional public‑private arrangement authorized by this section shall be subject to existing State information technology project oversight laws and statutes, and the project management shall comply with all statutory requirements and other criteria established by the State Chief Information Officer and the Office of State Budget and Management for information technology projects. The State Chief Information Officer and the Office of State Budget and Management shall immediately report any failure to do so to the Joint Legislative Oversight Committee on Information Technology, the Chairs of the House of Representatives and Senate Committees on Appropriations, and the Fiscal Research Division.
SECTION 7.17.(j)  Section 6A.5(c) of S.L. 2011‑145, as amended by Section 6A.3(j) of S.L. 2012‑142, reads as rewritten:
"SECTION 6A.5.(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 in writing all contracts, including change orders, amendments to contracts, and addendums to contracts, before they are 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. Within five days of entering into a contract, the Department shall provide copies of each contract and all associated information to the Joint Legislative Oversight Committee on Information Technology, the Chairs of the House of Representatives and Senate Committees on Appropriations, and the Fiscal Research Division.
The members of the Committee shall include the following:
(1)	The Director of the Office of State Budget and Management;
(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, 2018.
The Department shall provide copies of the minutes of each meeting and all associated information to the Joint Legislative Oversight Committee on Information Technology, the Chairs of the House of Representatives Appropriations Committee, the Chairs of the Senate Committee on Appropriations/Base Budget, and the Fiscal Research Division."

USE OF MOBILE COMMUNICATIONS DEVICES
SECTION 7.18.(a)  By October 1, 2013, every State agency shall submit to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division a copy of the agency policy on the use of mobile communications devices. This reporting requirement is continuous such that any time a change is made to an existing policy, the agency shall submit an update immediately.
SECTION 7.18.(b)  Beginning October 1, 2013, each State agency shall submit a quarterly report to the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of the State Chief Information Officer (CIO) on the use of mobile electronic communications devices within the agency. The report shall include the following information:
(1)	The total number of devices issued by the agency.
(2)	The total cost of mobile devices issued by the agency.
(3)	The number and cost of new devices issued since the last report.
(4)	The contracts used to obtain the devices.
SECTION 7.18.(c)  The Office of the State Chief Information Officer shall review current enterprise, and any individual agency mobile electronic communications contracts, to develop a plan to consolidate the contracts. By October 1, 2013, the Office of the State CIO shall submit a report on progress toward consolidating State agency mobile communications device contracts to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
SECTION 7.18.(d)  The Office of the State CIO shall develop a policy for implementing a "bring your own device" plan for State employees. By September 1, 2013, the State CIO shall report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on how the plan is to be implemented, as well as on potential issues and costs. Following consultation with the Joint Legislative Oversight Committee on Information Technology, the State CIO may implement the "bring your own device" plan.

NEXT GENERATION SECURE DRIVER LICENSE SYSTEM
SECTION 7.19.(a)  By August 1, 2013, the Chief Information Officer of the Department of Transportation shall provide a detailed report on the status of the Next Generation Secure Driver License System (NGSDLS) to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division. At a minimum, the report on the NGSDLS shall include the following information:
(1)	Original project scope, deliverables, and milestones, including descriptions of any subsequent modifications and basis for each.
(2)	Contractual status and amendments.
(3)	Initial and current estimated costs for system development, implementation, and maintenance.
(4)	Remaining deliverables and cost to complete by phase.
(5)	Any issues, including vendor performance, identified during project development and implementation and planned corrective actions for each issue.
(6)	Programmatic impacts for Division of Motor Vehicles driver license services.
(7)	Requirements and costs to implement a process to allow persons who are homebound to apply for or renew a special photo identification card, with a color photo, and similar in size, shape, design, and background to a drivers license, by means other than personal appearance.
SECTION 7.19.(b)  In the event of any changes in the NGSDLS project status occurring after submission of the report required by subsection (a) of this section, the Chief Information Officer of the Department of Transportation shall ensure that the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division are notified immediately of the changes.

STATE TITLING AND REGISTRATION SYSTEM/STATE AUTOMATED DRIVER LICENSE SYSTEM/LIABILITY INSURANCE TRACKING AND ENFORCEMENT SYSTEM
SECTION 7.20.(a)  The Chief Information Officer of the Department of Transportation shall continue the replacement of the State Titling and Registration System (STARS), the State Automated Driver License System (SADLS), and the Liability Insurance Tracking and Enforcement System (LITES).
SECTION 7.20.(b)  By August 1, 2013, and quarterly thereafter, the Chief Information Officer of the Department of Transportation shall report to the Joint Legislative Oversight Committee on Information Technology, the Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division on the status of each of the projects listed in subsection (a) of this section. At a minimum, the report shall include the following information for each project:
(1)	Project scope, milestones, and anticipated business process improvements.
(2)	Estimated development, implementation, and maintenance costs.
(3)	Project status, including any modifications to the project scope or revisions to baseline cost estimates.
(4)	Project accomplishments and changes in status for the previous quarter.
(5)	Actual costs incurred, by purpose and funding source, for the previous quarter.
(6)	Remaining cost to complete by project phase for the next two fiscal years.
(7)	Any issues, including vendor performance, identified during project development and implementation and planned corrective actions.

GDAC/LOCAL GOVERNMENTS/OPTIONAL COLLECTION AGREEMENTS
SECTION 7.21.(a)  A city or county may enter into an interagency agreement with the Department of Revenue and the Government Data Analytics Center (GDAC) to manage the collection of outstanding unpaid parking fines and penalties. The scope and manner of such collections services shall be determined by the agreement. A county or city that exercises the option to enter into such an arrangement may agree to the following, which are required terms in the agreement with the Department of Revenue and the GDAC:
(1)	That the city or county agrees to:
a.	Comply with State and federal law regarding data sharing, as appropriate.
b.	Provide for technical and business resources to support the analytics development.
c.	Provide for timely and responsive access to complete and accurate data, business rules, policies, and technical support.
(2)	That the GDAC be given access to all required information necessary to develop and support analytics allowing the identification of the owners of vehicles with associated unpaid parking fines and penalties.
SECTION 7.21.(b)  In carrying out the purposes of this section and the agreements made under its provisions, the State Controller and the GDAC shall:
(1)	Ensure the security, integrity, and privacy of the data in accordance with State and federal law and as may be required by contract.
(2)	Leverage enterprise data sources, as allowed by State and federal law, and GDAC governance agreements, to provide analytics to integrate and match data to identify owner information associated with vehicles with unpaid parking fines and penalties.
(3)	Provide access to analytics reporting and information to the participating city or municipality and the Department of Revenue.
(4)	Provide data to the Department of Revenue for use in the withholding of tax refunds of persons that have unpaid parking fines and penalties.
SECTION 7.21.(c)  The Department of Transportation, Division of Motor Vehicles, shall provide the GDAC with access to historical and current information required to identify owners associated with vehicles with unpaid parking fines and penalties.
SECTION 7.21.(d)  The Department of Revenue shall (i) receive data from the GDAC associated with persons that have unpaid parking fines and penalties; (ii) withhold tax refunds for the purpose of the collection of those fines and penalties as allowed by law; and (iii) from the withholdings, pay to the appropriate city or county the amounts due.
SECTION 7.21.(e)  Any fee imposed by the Department of Revenue or the GDAC to cover the administrative costs of withholding for the collection of unpaid parking fines and penalties shall be borne by the city or county and shall be negotiated as part of the agreements authorized by this section.

STATE PORTAL
SECTION 7.22.  The State Chief Information Officer (SCIO) shall develop a plan to implement an electronic portal that makes obtaining information, conducting online transactions, and communicating with State agencies more convenient for members of the public. The SCIO shall report to the Joint Legislative Oversight Committee on Information Technology on the details of the plan prior to implementation. The plan shall contain all of the following:
(1)	A detailed description for development and implementation of the portal, to include a list of anticipated applications to be implemented during the State fiscal years of 2013‑2017.
(2)	A description of how the portal will be implemented, including the use of outside vendors, detailed information on vendor participation, and potential costs.
(3)	Detailed information on the anticipated total cost of ownership of the portal and any applications proposed for implementation during the State fiscal years of 2013‑2017, including the amount of any payments to be made to any vendors supporting the project for each application and the portal as a whole.
(4)	A funding model that limits the costs to the State.
(5)	If outsourced, a detailed, fully executable plan to return portal operations to the State, with associated costs and a detailed analysis that demonstrates that it is more cost‑effective to use a vendor than to develop an application internally.
(6)	A provision requiring that any fees to support the operation of the portal must be authorized by the General Assembly.

PART VIII. PUBLIC SCHOOLS

FUNDS FOR CHILDREN WITH DISABILITIES
SECTION 8.1.  The State Board of Education shall allocate additional funds for children with disabilities on the basis of three thousand seven hundred forty‑three dollars and forty‑eight cents ($3,743.48) 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 one‑half percent (12.5%) of its 2013‑2014 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 8.2.  The State Board of Education shall allocate additional funds for academically or intellectually gifted children on the basis of one thousand two hundred thirty‑three dollars and one cent ($1,233.01) per child for fiscal year 2013‑2014 and 2014‑2015. A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2013‑2014 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.

USE OF SUPPLEMENTAL FUNDING IN LOW‑WEALTH COUNTIES
SECTION 8.3.(a)  Use of Funds for Supplemental Funding. – All funds received pursuant to this section shall be used only (i) to provide instructional positions, instructional support positions, teacher assistant positions, clerical positions, school computer technicians, instructional supplies and equipment, staff development, and textbooks and (ii) for salary supplements for instructional personnel and instructional support personnel. Local boards of education are encouraged to use at least twenty‑five percent (25%) of the funds received pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end‑of‑grade tests in grades three through eight.
SECTION 8.3.(b)  Definitions. – As used in this section, the following definitions apply:
(1)	"Anticipated county property tax revenue availability" means the county‑adjusted property tax base multiplied by the effective State average tax rate.
(2)	"Anticipated total county revenue availability" means the sum of the following:
a.	Anticipated county property tax revenue availability.
b.	Local sales and use taxes received by the county that are levied under Chapter 1096 of the 1967 Session Laws or under Subchapter VIII of Chapter 105 of the General Statutes.
c.	Sales tax hold harmless reimbursement received by the county under G.S. 105‑521.
d.	Fines and forfeitures deposited in the county school fund for the most recent year for which data are available.
(3)	"Anticipated total county revenue availability per student" means the anticipated total county revenue availability for the county divided by the average daily membership of the county.
(4)	"Anticipated State average revenue availability per student" means the sum of all anticipated total county revenue availability divided by the average daily membership for the State.
(5)	"Average daily membership" means average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual, adopted by the State Board of Education. If a county contains only part of a local school administrative unit, the average daily membership of that county includes all students who reside within the county and attend that local school administrative unit.
(6)	"County‑adjusted property tax base" shall be computed as follows:
a.	Subtract the present‑use value of agricultural land, horticultural land, and forestland in the county, as defined in G.S. 105‑277.2, from the total assessed real property valuation of the county.
b.	Adjust the resulting amount by multiplying by a weighted average of the three most recent annual sales assessment ratio studies.
c.	Add to the resulting amount the following:
1.	Present‑use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105‑277.2.
2.	Value of property of public service companies, determined in accordance with Article 23 of Chapter 105 of the General Statutes.
3.	Personal property value for the county.
(7)	"County‑adjusted property tax base per square mile" means the county‑adjusted property tax base divided by the number of square miles of land area in the county.
(8)	"County wealth as a percentage of State average wealth" shall be computed as follows:
a.	Compute the percentage that the county per capita income is of the State per capita income and weight the resulting percentage by a factor of five‑tenths.
b.	Compute the percentage that the anticipated total county revenue availability per student is of the anticipated State average revenue availability per student and weight the resulting percentage by a factor of four‑tenths.
c.	Compute the percentage that the county‑adjusted property tax base per square mile is of the State‑adjusted property tax base per square mile and weight the resulting percentage by a factor of one‑tenth.
d.	Add the three weighted percentages to derive the county wealth as a percentage of the State average wealth.
(9)	"Effective county tax rate" means the actual county tax rate multiplied by a weighted average of the three most recent annual sales assessment ratio studies.
(10)	"Effective State average tax rate" means the average of effective county tax rates for all counties.
(11)	"Local current expense funds" means the most recent county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C‑447.
(12)	"Per capita income" means the average for the most recent three years for which data are available of the per capita income according to the most recent report of the United States Department of Commerce, Bureau of Economic Analysis, including any reported modifications for prior years as outlined in the most recent report.
(13)	"Sales assessment ratio studies" means sales assessment ratio studies performed by the Department of Revenue under G.S. 105‑289(h).
(14)	"State average current expense appropriations per student" means the most recent State total of county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C‑447.
(15)	"State average adjusted property tax base per square mile" means the sum of the county‑adjusted property tax bases for all counties divided by the number of square miles of land area in the State.
(16)	"Supplant" means to decrease local per student current expense appropriations from one fiscal year to the next fiscal year.
(17)	"Weighted average of the three most recent annual sales assessment ratio studies" means the weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available. If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used. If property has been revalued the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used.
SECTION 8.3.(c)  Eligibility for Funds. – Except as provided in subsection (g) of this section, the State Board of Education shall allocate these funds to local school administrative units located in whole or in part in counties in which the county wealth as a percentage of the State average wealth is less than one hundred percent (100%).
SECTION 8.3.(d)  Allocation of Funds. – Except as provided in subsection (f) of this section, the amount received per average daily membership for a county shall be the difference between the State average current expense appropriations per student and the current expense appropriations per student that the county could provide given the county's wealth and an average effort to fund public schools. (To derive the current expense appropriations per student that the county could be able to provide given the county's wealth and an average effort to fund public schools, multiply the county's wealth as a percentage of State average wealth by the State average current expense appropriations per student.) The funds for the local school administrative units located in whole or in part in the county shall be allocated to each local school administrative unit located in whole or in part in the county based on the average daily membership of the county's students in the school units. If the funds appropriated for supplemental funding are not adequate to fund the formula fully, each local school administrative unit shall receive a pro rata share of the funds appropriated for supplemental funding.
SECTION 8.3.(e)  Formula for Distribution of Supplemental Funding Pursuant to This Section Only. – The formula in this section is solely a basis for distribution of supplemental funding for low‑wealth counties and is not intended to reflect any measure of the adequacy of the educational program or funding for public schools. The formula is also not intended to reflect any commitment by the General Assembly to appropriate any additional supplemental funds for low‑wealth counties.
SECTION 8.3.(f)  Minimum Effort Required. – A county that (i) maintains an effective county tax rate that is at least one hundred percent (100%) of the effective State average tax rate in the most recent year for which data are available or (ii) maintains a county appropriation per student to the school local current expense fund of at least one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools shall receive full funding under this section. A county that maintains a county appropriation per student to the school local current expense fund of less than one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools shall receive funding under this section at the same percentage that the county's appropriation per student to the school local current expense fund is of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools.
SECTION 8.3.(g)  Nonsupplant Requirement. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2013‑2015 fiscal biennium, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply:
(1)	The current expense appropriation per student of the county for the current year is less than ninety‑five percent (95%) of the average of local expenditures per student for the three prior fiscal years.
(2)	The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section.
The State Board of Education shall adopt rules to implement the requirements of this subsection.
SECTION 8.3.(h)  Counties Containing a Base of the Armed Forces. – Notwithstanding any other provision of this section, for the 2013‑2015 fiscal biennium, counties containing a base of the Armed Forces of the United States that have an average daily membership of more than 23,000 students shall receive the same amount of supplemental funding for low-wealth counties as received in the 2012‑2013 fiscal year.
SECTION 8.3.(i)  Funds for EVAAS Data. – Notwithstanding the requirements of subsection (a) of this section, local school administrative units may utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value‑Added Assessment System (EVAAS).
SECTION 8.3.(j)  Reports. – For the 2013‑2015 fiscal biennium, the State Board of Education shall report to the Fiscal Research Division prior to May 1 of each year if it determines that counties have supplanted funds.
SECTION 8.3.(k)  Department of Revenue Reports. – The Department of Revenue shall provide to the Department of Public Instruction a preliminary report for the current fiscal year of the assessed value of the property tax base for each county prior to March 1 of each year and a final report prior to May 1 of each year. The reports shall include for each county the annual sales assessment ratio and the taxable values of (i) total real property, (ii) the portion of total real property represented by the present‑use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105‑277.2, (iii) property of public service companies determined in accordance with Article 23 of Chapter 105 of the General Statutes, and (iv) personal property.

SMALL SCHOOL SYSTEM SUPPLEMENTAL FUNDING
SECTION 8.4.(a)  Funds for Small School Systems for the 2013-2014 Fiscal Year. – Except as provided in subsection (g) of this section, the State Board of Education shall allocate funds appropriated for small school system supplemental funding for the 2013‑2014 fiscal year (i) to each county school administrative unit with an average daily membership of fewer than 3,175 students and (ii) to each county school administrative unit with an average daily membership from 3,175 to 4,000 students if the county in which the local school administrative unit is located has a county‑adjusted property tax base per student that is below the State‑adjusted property tax base per student and if the total average daily membership of all local school administrative units located within the county is from 3,239 to 4,080 students. The allocation formula shall do all of the following:
(1)	Round all fractions of positions to the next whole position.
(2)	Provide five and one‑half additional regular classroom teachers in counties in which the average daily membership per square mile is greater than four and provide seven additional regular classroom teachers in counties in which the average daily membership per square mile is four or fewer.
(3)	Provide additional program enhancement teachers adequate to offer the standard course of study.
(4)	Change the duty‑free period allocation to one teacher assistant per 400 average daily membership.
(5)	Provide a base for the consolidated funds allotment of at least seven hundred seventeen thousand three hundred sixty dollars ($717,360), excluding textbooks, for the 2013‑2014 fiscal year.
(6)	Allot vocational education funds for grade six as well as for grades seven through 12. If funds appropriated for each fiscal year for small school system supplemental funding are not adequate to fully fund the program, the State Board of Education shall reduce the amount allocated to each county school administrative unit on a pro rata basis. This formula is solely a basis for distribution of supplemental funding for certain county school administrative units and is not intended to reflect any measure of the adequacy of the educational program or funding for public schools. The formula also is not intended to reflect any commitment by the General Assembly to appropriate any additional supplemental funds for such county administrative units.
SECTION 8.4.(b)  Phase‑Out Provisions for the 2013-2014 Fiscal Year. – If a local school administrative unit becomes ineligible for funding under the formula in subsection (a) of this section in the 2013-2014 fiscal year because of (i) an increase in the population of the county in which the local school administrative unit is located or (ii) an increase in the county‑adjusted property tax base per student of the county in which the local school administrative unit is located, funding for that unit shall be continued for the 2013-2014 fiscal year.
SECTION 8.4.(c)  Eligibility for Funds for Small School Systems for the 2014‑2015 Fiscal Year. – For the 2014-2015 fiscal year, if the total average daily membership of all local school administrative units located in the county is less than 3,200, the county school administrative unit within that county shall be eligible for small school system supplemental funding.
SECTION 8.4.(d)  Allotment Formula for the 2014-2015 Fiscal Year. – Except as otherwise provided in subsection (g) of this section, for the 2014-2015 fiscal year, each eligible county school administrative unit shall receive a dollar allotment equal to the product of the following:
(1)	A per student funding factor, equal to the product of the following:
a.	One, minus the local school administrative unit's average daily membership divided by the maximum small school system average daily membership.
b.	The maximum small school system dollars per student.
(2)	The average daily membership of the eligible county school administrative unit.
SECTION 8.4.(e)  Phase‑Out Provisions for the 2014-2015 Fiscal Year. – If a local school administrative unit becomes ineligible for funding under the formula in subsection (d) of this section in the 2014-2015 fiscal year, funding for that unit shall be phased out over a five‑year period. Funding for such local administrative units shall be reduced in equal increments in each of the five years after the local administrative unit becomes ineligible. Funding shall be eliminated in the fifth fiscal year after the local administrative unit becomes ineligible.
Allotments for eligible local school administrative units shall not be reduced by more than twenty percent (20%) of the amount received in fiscal year 2013‑2014 in any fiscal year.
SECTION 8.4.(f)  Maximum Allotments for the 2014-2015 Fiscal Year. – For the 2014‑2015 fiscal year, the maximum small school system dollars per student shall be two thousand ninety‑four dollars ($2,094).
SECTION 8.4.(g)  Nonsupplant Requirement for the 2013-2015 Fiscal Biennium. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2013‑2015 fiscal biennium, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply:
(1)	The current expense appropriation per student of the county for the current year is less than ninety‑five percent (95%) of the average of local expenditures per student for the three prior fiscal years.
(2)	The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section.
The State Board of Education shall adopt rules to implement the requirements of this subsection.
SECTION 8.4.(h)  Definitions. – As used in this section, the following definitions apply for the 2013-2014 fiscal year:
(1)	"Average daily membership" means within two percent (2%) of the average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual adopted by the State Board of Education.
(2)	"County‑adjusted property tax base per student" means the total assessed property valuation for each county, adjusted using a weighted average of the three most recent annual sales assessment ratio studies, divided by the total number of students in average daily membership who reside within the county.
(3)	"Sales assessment ratio studies" means sales assessment ratio studies performed by the Department of Revenue under G.S. 105‑289(h).
(4)	"State‑adjusted property tax base per student" means the sum of all county‑adjusted property tax bases divided by the total number of students in average daily membership who reside within the State.
(5)	"Weighted average of the three most recent annual sales assessment ratio studies" means the weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available. If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used. If property has been revalued during the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used.
SECTION 8.4.(i)  Reports. – For the 2013‑2015 fiscal biennium, the State Board of Education shall report to the Fiscal Research Division prior to May 1 of each fiscal year if it determines that counties have supplanted funds.
SECTION 8.4.(j)  Use of Funds. – Local boards of education are encouraged to use at least twenty percent (20%) of the funds they receive pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end‑of‑grade tests in grades three through eight.
Local school administrative units may also utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value‑Added Assessment System (EVAAS).

DISADVANTAGED STUDENT SUPPLEMENTAL FUNDING (DSSF)
SECTION 8.5.(a)  Funds appropriated for disadvantaged student supplemental funding shall be used, consistent with the policies and procedures adopted by the State Board of Education, only to:
(1)	Provide instructional positions or instructional support positions and/or professional development;
(2)	Provide intensive in‑school and/or after‑school remediation;
(3)	Purchase diagnostic software and progress‑monitoring tools; and
(4)	Provide funds for teacher bonuses and supplements. The State Board of Education shall set a maximum percentage of the funds that may be used for this purpose.
The State Board of Education may require local school administrative units receiving funding under the Disadvantaged Student Supplemental Fund to purchase the Education Value‑Added Assessment System (EVAAS) in order to provide in‑depth analysis of student performance and help identify strategies for improving student achievement. This data shall be used exclusively for instructional and curriculum decisions made in the best interest of children and for professional development for their teachers and administrators.
SECTION 8.5.(b)  Funds appropriated to a local school administrative unit for disadvantaged student supplemental funding (DSSF) shall be allotted based on (i) the unit's eligible DSSF population and (ii) the difference between a teacher‑to‑student ratio of 1:21 and the following teacher‑to‑student ratios:
(1)	For counties with wealth greater than ninety percent (90%) of the statewide average, a ratio of 1:19.9.
(2)	For counties with wealth not less than eighty percent (80%) and not greater than ninety percent (90%) of the statewide average, a ratio of 1:19.4.
(3)	For counties with wealth less than eighty percent (80%) of the statewide average, a ratio of 1:19.1.
(4)	For local school administrative units receiving DSSF funds in fiscal year 2005‑2006, a ratio of 1:16. These local school administrative units shall receive no less than the DSSF amount allotted in fiscal year 2006‑2007.
For the purpose of this subsection, wealth shall be calculated under the low‑wealth supplemental formula as provided for in this act.
SECTION 8.5.(c)  If a local school administrative unit's wealth increases to a level that adversely affects the unit's disadvantaged student supplemental funding (DSSF) allotment ratio, the DSSF allotment for that unit shall be maintained at the prior year level for one additional fiscal year.

BUDGET REDUCTIONS/DEPARTMENT OF PUBLIC INSTRUCTION
SECTION 8.6.  Notwithstanding G.S. 143C‑6‑4, the Department of Public Instruction may, after consultation with the Office of State Budget and Management and the Fiscal Research Division, reorganize, if necessary, to implement the budget reductions set out in this act. Consultation shall occur prior to requesting budgetary and personnel changes through the budget revision process. The Department shall provide a current organization chart in the consultation process and shall report to the Joint Legislative Commission on Governmental Operations on any reorganization.

LITIGATION RESERVE FUNDS
SECTION 8.7.  The State Board of Education may expend up to five hundred thousand dollars ($500,000) each year for the 2013‑2014 and 2014‑2015 fiscal years from unexpended funds for licensed employees' salaries to pay expenses related to litigation.

UNIFORM EDUCATION REPORTING SYSTEM (UERS) FUNDS
SECTION 8.8.(a)  Funds appropriated for the Uniform Education Reporting System (UERS) shall not revert at the end of the 2012‑2013 fiscal year. Funds appropriated for UERS for the 2013‑2015 fiscal biennium shall not revert at the end of each fiscal year but shall remain available until expended.
SECTION 8.8.(b)  This section becomes effective June 30, 2013.

REVISE NC VIRTUAL PUBLIC SCHOOLS (NCVPS) COST CALCULATION DATE
SECTION 8.9.(a)  Section 7.22(d)(6) of S.L. 2011‑145 is repealed.
SECTION 8.9.(b)  In implementing the allotment formula for the North Carolina Virtual Public Schools (NCVPS) program, the State Board of Education shall calculate, no later than February 28 of each year, the actual instructional cost for each local school administrative unit and charter school based upon actual NCVPS enrollment as of that date.

NC CENTER FOR THE ADVANCEMENT OF TEACHING
SECTION 8.10.  It is the intent of the General Assembly to systematically review the North Carolina Center for the Advancement of Teaching (NCCAT). This review is intended to assist the General Assembly in determining whether to continue, reduce, or eliminate funding for the program. NCCAT shall report the following information to the Fiscal Research Division no later than February 1, 2014:
(1)	A description of the program's mission, goals, and objectives.
(2)	An examination of the program's governance structure and an assessment of whether the existing governance structure adequately supports the program's mission, goals, and objectives.
(3)	The extent to which NCCAT's fund, agency, division, and program objectives complement General Assembly policies in the areas of digital learning and early grades literacy.
(4)	Performance measures for determining whether the program is meeting its mission, goals, and objectives.
(5)	Recommendations for statutory, budgetary, or administrative changes needed to improve the efficiency and effectiveness of the program.

SCHOOL BUS REPLACEMENT
SECTION 8.11.(a)  G.S. 115C‑249 reads as rewritten:
"§ 115C‑249.  Purchase and maintenance of school buses, materials and supplies.
(a)	To the extent that the funds shall be made available to it for such purpose, a local board of education is authorized to purchase from time to time such additional school buses and service vehicles or replacements for school buses and service vehicles, as may be deemed by such board to be necessary for the safe and efficient transportation of pupils enrolled in the schools within such local school administrative unit. Any school bus so purchased shall be constructed and equipped as prescribed by the provisions of this Article and by the regulations of the State Board of Education issued pursuant thereto. Any school bus so purchased that is capable of operating on diesel fuel shall be capable of operating on diesel fuel with a minimum biodiesel concentration of B‑20, as defined in G.S. 143‑58.4. At least two percent (2%) of the total volume of fuel purchased annually by local school districts statewide for use in school bus diesel engine motor vehicles shall be biodiesel fuel of a minimum blend of B‑20, to the extent that biodiesel blend is available and compatible with the technology of the vehicles or equipment used.
(b)	The tax‑levying authorities of any county are hereby authorized to make provision from time to time in the capital outlay budget of the county for the purchase of such school buses or service vehicles.
(c)	Any funds appropriated from time to time by the General Assembly for the purchase of school buses or service vehicles shall be allocated by the State Board of Education to the respective local boards of education in accordance with the requirements of such boards as determined by the State Board of Education, and thereupon shall be paid over to the respective local boards of education in accordance with such allocation.
(c1)	In determining which school buses in the statewide fleet are to be replaced with State funds in a given year, the State Board of Education shall give highest priority to safety concerns.
A bus is eligible for replacement with State funds based on its age and mileage when it is either 20 years old by model year or has been operated for 250,000 miles, except as follows:
(1)	A bus that has been operated for less than 150,000 miles is not eligible for replacement regardless of its model year.
(2)	A bus that is less than 15 years old by model year is not eligible for replacement until the bus has been operated for 300,000 miles.
(c2)	The State Board of Education may authorize the replacement of up to 30 buses each year due to safety concerns regarding the bus or mechanical or structural problems that would place an undue burden on a local school administrative unit.
(c3)	A local school administrative unit shall receive an incentive payment of two thousand dollars ($2,000) at the beginning of each school year for each bus that it continues to operate although the bus is eligible for replacement, until the bus is 23 years old by model year. The local school administrative unit may use these bonus funds for the additional maintenance costs of operating buses with higher mileage or for any other school purpose.
(d)	The title to any additional or replacement school bus or service vehicle purchased pursuant to the provisions of this section, shall be taken in the name of the board of education of such local school administrative unit, and such bus shall in all respects be maintained and operated pursuant to the provisions of this Article in the same manner as any other public school bus.
(e)	It shall be the duty of the county board of education to provide adequate buildings and equipment for the storage and maintenance of all school buses and service vehicles owned or operated by the board of education of any local school administrative unit in such county. It shall be the duty of the tax‑levying authorities of such county to provide in its capital outlay budget for the construction or acquisition of such buildings and equipment as may be required for this purpose.
(f)	In the event of the damage or destruction of any school bus or service vehicle by fire, collision, or otherwise, the board of education of the local school administrative unit which shall own or operate such bus or service vehicle may apply to the State Board of Education for funds with which to replace it. If the State Board of Education finds that such bus or service vehicle has been destroyed or damaged to the extent that it cannot be made suitable for further use, and if the State Board of Education finds that the replacement of such bus or service vehicle is necessary in order to enable such local school administrative unit to operate properly its school bus transportation system, the State Board of Education shall allot to the board of education of such local school administrative unit from the funds now held by the State Board of Education for the replacement of school buses or service vehicles, or from funds hereafter appropriated by the General Assembly for that purpose, a sum sufficient to purchase a new school bus or service vehicle to be used as a replacement for such damaged or destroyed bus or service vehicle and upon such allocation such sum shall be paid over to or for the account of the board of education of such local school administrative unit for such purpose.
(g)	Repealed by Session Laws 2003‑147, s. 3, effective for a local school administrative unit when the unit is certified as being E‑Procurement compliant, or April 1, 2004, whichever occurs first.
(h)	Appropriations by the General Assembly for the purchase of public school buses shall not revert to the General Fund. Any unexpended portion of those appropriations shall at the end of each fiscal year be transferred to a reserve account and be held, together with any other funds appropriated for the purpose, for the purchase of public school buses."
SECTION 8.11.(b)  For the 2013‑2015 fiscal biennium only, State funds shall be used, at the request of the local school administrative unit, to replace (i) all buses that are 20 years old by model year and (ii) all other buses eligible for replacement under G.S. 115C‑249, as rewritten by subsection (a) of this section.

EVAAS SCHOOL PERFORMANCE GRADES
SECTION 8.13.  The State Board of Education shall not be subject to the requirements of Section 7.7(c) of this act for the development of school performance scores and grades in accordance with G.S. 115C‑12(9)c1.

LEA BUDGETARY FLEXIBILITY
SECTION 8.14.  G.S. 115C‑105.25 reads as rewritten:
"§ 115C‑105.25.  Budget flexibility.
(a)	Consistent with improving student performance, a local board shall provide maximum flexibility to schools in the use of funds to enable the schools to accomplish their goals.
(b)	Subject to the following limitations, local boards of education may transfer and may approve transfers of funds between funding allotment categories:
	(1a)	Funds for children with disabilities, career and technical education, and other purposes may be transferred only as permitted by federal law and the conditions of federal grants or as provided through any rules that the State Board of Education adopts to ensure compliance with federal regulations.
		(3)	No funds shall be transferred into the central office administration allotment category.
		(5a)	Positions allocated for classroom teachers may be converted to dollar equivalents to contract for visiting international exchange teachers. These positions shall be converted at the statewide average salary for classroom teachers, including benefits. The converted funds shall be used only to cover the costs associated with bringing visiting international exchange teachers to the local school administrative unit through a State‑approved visiting international exchange teacher program and supporting the visiting exchange teachers.
(5b)	Except as provided in subdivision (5a) of this subsection, positions allocated for classroom teachers and instructional support personnel may be converted to dollar equivalents for any purpose authorized by the policies of the State Board of Education. These positions shall be converted at the salary on the first step of the "A" Teachers Salary Schedule. Certified position allotments shall not be transferred to dollars to hire the same type of position.(5c)	Funds allocated for school building administration may be converted for any purpose authorized by the policies of the State Board of Education. For funds related to principal positions, the salary transferred shall be based on the first step of the Principal III Salary Schedule. For funds related to assistant principal months of employment, the salary transferred shall be based on the first step of the Assistant Principal Salary Schedule. Certified position allotments shall not be transferred to dollars to hire the same type of position.				
(10)	Funds to carry out the elements of the Excellent Public Schools Act that are contained in Section 7A.1 of S.L. 2012‑142 shall not be transferred.
(c)	To ensure that parents, educators, and the general public are informed on how State funds have been used to address local educational priorities, each local school administrative unit shall publish the following information on its Web site by October 15 of each year:
(1)	A description of each program report code, written in plain English, and a summary of the prior fiscal year's expenditure of State funds within each program report code.
(2)	A description of each object code within a program report code, written in plain English, and a summary of the prior fiscal year's expenditure of State funds for each object code.
(3)	A description of each allotment transfer that increased or decreased the initial allotment amount by more than five percent (5%) and the educational priorities that necessitated the transfer."

RESIDENTIAL SCHOOLS
SECTION 8.15.(a)  The Department of Public Instruction shall not transfer any school‑based personnel from the State's residential schools to central office administrative positions.
SECTION 8.15.(b)  Notwithstanding G.S. 146‑30 or any other provision of law, the Department of Public Instruction shall retain all proceeds generated from the rental of building space on the residential school campuses. The Department of Public Instruction shall use all receipts generated from these leases to staff and operate the North Carolina School for the Deaf, the Eastern North Carolina School for the Deaf, and the Governor Morehead School. These receipts shall not be used to support administrative functions within the Department.

EXCELLENT PUBLIC SCHOOLS ACT/SUMMER READING CAMPS
SECTION 8.16.  Funds appropriated for the 2013‑2015 fiscal biennium for summer reading camps as defined in G.S. 115C‑83.3(9) shall not revert at the end of each fiscal year but shall remain available until expended.

PARTICIPATION IN COMMUNITIES IN SCHOOLS LEARNING INITIATIVE
SECTION 8.17.(a)  The purpose of the Harvard University Reads for Summer Learning Initiative, which is conducted in concert with Communities In Schools of North Carolina, Inc. (CISNC), is to help at‑risk children in grades two through four read at grade level by the fourth grade and to maintain their reading competency. Students who are enrolled in this initiative shall be exempt from mandatory retention requirements set out in G.S. 115C‑83.7 and G.S. 115C‑238.29F. Any student participating in this initiative and in need of more intensive intervention shall, however, be placed in a summer reading program as determined by the local school administrative unit and as approved by the child's parent or guardian.
SECTION 8.17.(b)  CISNC shall report to the Joint Legislative Education Oversight Committee on the initiative by November 1, 2015. This report shall include reading competency outcome data for all participating students.
SECTION 8.17.(c)  Subsection (a) of this section expires at the end of the 2014‑2015 school year.

INSTRUCTIONAL IMPROVEMENT SYSTEM
SECTION 8.18.(a)  It is the intent of the General Assembly that the optional portions of the Home Base Instructional Improvement System (System) shall be receipt‑supported. The State Board of Education shall establish a cost not to exceed four dollars ($4.00) per average daily membership for local school administrative units and charter schools that elect to participate in the optional portions of the System. A local school administrative unit or charter school may identify budget reductions to State Public School Fund allotments to cover the required payment.
SECTION 8.18.(b)  If funds collected pursuant to subsection (a) of this section are not sufficient to cover the cost of the optional portions of the System, the State Board of Education may use funds appropriated to the Department of Public Instruction or State Aid for Public Schools for this purpose.
SECTION 8.18.(c)  If funds collected pursuant to subsection (a) of this section exceed the cost of the optional portions of the System, such funds shall not revert and shall be used to reduce the per‑student cost in the subsequent fiscal years.
SECTION 8.18.(d)  This section becomes effective July 1, 2014.

STUDY OF GPA CALCULATIONS
SECTION 8.19.  The Joint Legislative Education Oversight Committee shall study the State Board of Education's policy on calculating the weighted grade point average and class rank on high school transcripts, especially the proper weights for courses taken through community colleges, independent colleges, and universities. The Committee shall report the results of its study to the General Assembly prior to the convening of the 2014 Regular Session of the 2013 General Assembly.

REGIONAL SCHOOL BOARDS
SECTION 8.20.  G.S. 115C‑238.63(a) reads as rewritten:
"(a)	Appointment. – A board of directors for a regional school shall consist of the following members. Appointed members of the board of directors shall be selected for their interest in and commitment to the importance of public education to regional economic development and to the purposes of the regional school.
(1)	Local boards of education. – Each participating unit shall appoint one member to the board of directors from among the membership of the local board of education. Members appointed by local boards of education shall serve terms of four years.
(2)	Local superintendents. – The local superintendent of the local school administrative unit identified as the finance agent for the regional school shall serve as an ex officio member of the board of directors. One additional superintendent shall be selected from among the superintendents of the participating units by those superintendents. The additional superintendent shall serve an initial term of two years. Subsequent appointees shall serve a term of four years.
(3)	Business community. – The board of directors for the chamber of commerce of the county in which the regional school is  located, in consultation with the North Carolina Economic Developers Association, shall appoint at least three members as representatives of the business community. At least fifty percent (50%) of the members of the board of directors for the regional school shall be representatives of the business community appointed in accordance with this subdivision. At least one of the appointees shall be a resident of the county in which the regional school is located. The appointees shall serve an initial term of two years. Subsequent appointees shall serve a term of four years.
(4)	Parent Advisory Council. – The Parent Advisory Council established by G.S. 115C‑238.69 shall appoint a member to the board of directors from among the Council membership. The member appointed by the Council shall serve a term of four years or until the child of the parent no longer attends the regional school.
(5)	Higher education partners. – Any institution of higher education partner may appoint a representative of the institution of higher education to serve as an ex officio member of the board of directors."

TEACH FOR AMERICA EXPANSION AND NC TEACHER CORPS
SECTION 8.21.(a)  Teach for America, Inc. (TFA), shall use a portion of the funds available to it for the 2013‑2015 fiscal biennium to recruit, train, support, and retain teachers to work in the North Carolina public schools. TFA shall leverage State funds to raise additional funding to achieve the purposes set out in this section and shall expand its current programs and initiate new programs as follows:
(1)	TFA shall establish a program in the Piedmont Triad region (the area within and surrounding the three major cities of Greensboro, Winston‑Salem, and High Point) and expand its current program in the southeast region of the State. TFA shall establish the following goals for the number of teacher candidates accepted to these programs:
a.	In the Piedmont Triad region, at least 50 candidates who will be recruited in the 2013‑2014 school year to begin teaching in the 2014‑2015 school year.
b.	In the southeast region of the State, at least 50 candidates to begin teaching in the 2013‑2014 school year.
c.	Combined for the southeast and northeast regions of the State, a total of at least 175 candidates beginning with the 2013‑2014 school year.
(2)	TFA shall develop and establish a new program, Teach Back Home, to increase the recruitment of candidates who are residents of North Carolina.
(3)	TFA shall develop and establish two new programs, Teach Beyond Two and Make it Home, to increase the number of candidates who remain working in North Carolina public schools beyond their initial two‑year TFA commitment by developing innovative strategies to work with both TFA participants and local school administrators and board of education members to extend the service commitment of TFA participants.
(4)	TFA shall increase targeted recruitment efforts of candidates who are (i) working in areas related to STEM education, (ii) mid‑career level and lateral entry industry professionals, and (iii) veterans of the United States Armed Forces.
SECTION 8.21.(b)  By March 1, 2014, and by January 1, 2015, and annually thereafter, TFA shall report to the Joint Legislative Education Oversight Committee on the operation of its programs under subsection (a) of this section, including at least all of the following information:
(1)	The total number of applications received nationally from candidates seeking participation in the program.
(2)	The total number of applications received from candidates who are residents of North Carolina and information on the source of these candidates, including the number of (i) recent college graduates and the higher institution the candidates attended, (ii) mid‑career level and lateral entry industry professionals, and (iii) veterans of the United States Armed Forces.
(3)	The total number of North Carolina candidates accepted by TFA.
(4)	The total number of accepted candidates placed in North Carolina, including the number of accepted candidates who are residents of North Carolina.
(5)	The regions in which accepted candidates have been placed, the number of candidates in each region, and the number of students impacted by placement in those regions.
(6)	Success of recruitment efforts, including the Teach Back Home program and targeting of candidates who are (i) working in areas related to STEM education, (ii) mid‑career level and lateral entry industry professionals, and (iii) veterans of the United States Armed Forces.
(7)	Success of retention efforts, including the Teach Beyond Two and Make it Home programs, and the percentage of accepted candidates working in their placement communities beyond the initial TFA two‑year commitment period and the number of years those candidates teach beyond the initial commitment.
(8)	A financial accounting of how the State funds appropriated to TFA were expended in the previous year, including at least the following information:
a.	Funds expended by region of the State.
b.	Details on program costs, including at least the following:
1.	Recruitment, candidate selection, and placement.
2.	Preservice training and preparation costs.
3.	Operational and administrative costs, including development and fundraising, alumni support, management costs, and marketing and outreach.
c.	Funds received through private fundraising, specifically by sources in each region of the State.
SECTION 8.21.(c)  Effective July 1, 2014, G.S. 115C-296.7 is amended by adding a new subsection to read:
"(h)	The State Board of Education is authorized to contract for the administration of the NC Teacher Corps."
SECTION 8.21.(c1)  The State Board of Education shall enter into a contract, effective July 1, 2014, with Teach for America, Inc., (TFA) to administer provisions of G.S. 115C-296.7. The contract shall require that TFA make publicly available all documents related to the execution of this program and the expenditure of State funds.
SECTION 8.21.(d)  Beginning with the 2014‑2015 fiscal year, TFA shall use a portion of the funds available to it to administer the NC Teacher Corps program in accordance with subsection (c1) of this section. TFA may also use a portion of the funds available to it for the 2013‑2014 fiscal year to recruit a cohort of NC Teacher Corps members for the 2014‑2015 school year. TFA shall include information regarding the operation of the NC Teacher Corps in its annual report to the Joint Legislative Education Oversight Committee by January 1, 2015, and annually thereafter, as required under subsection (b) of this section.
SECTION 8.21.(e)  TFA shall submit quarterly updates on the information contained in the annual report required by this section to the offices of the President Pro Tempore of the Senate and the Speaker of the House of Representatives, the Chairs of the Senate Appropriations/Base Budget Committee, the House Appropriations Committee, the Senate Appropriations Committee on Education/Higher Education, the House Appropriations Subcommittee on Education, and the Fiscal Research Division.
SECTION 8.21.(f)  The State Board of Education shall provide ongoing support through coaching, mentoring, and continued professional development to NC Teacher Corps members who were placed in North Carolina public schools in accordance with G.S. 115C‑296.7 for the 2012‑2013 and 2013‑2014 school years.

PHASE OUT CERTAIN TEACHER SALARY SUPPLEMENTS
SECTION 8.22.  Notwithstanding Section 35.11 of this act, no teachers or instructional support personnel, except for certified school nurses and instructional support personnel in positions for which a master's degree is required for licensure, shall be paid on the "M" salary schedule or receive a salary supplement for academic preparation at the six‑year degree level or at the doctoral degree level for the 2014‑2015 school year, unless they were paid on that salary schedule or received that salary supplement prior to the 2014‑2015 school year.

PUBLIC‑PRIVATE PARTNERSHIPS FOR THE READ TO ACHIEVE PROGRAM
SECTION 8.23.  Local school administrative units shall consider the utilization of public‑private partnerships in implementing the requirements of the North Carolina Read to Achieve Program. The Department of Public Instruction may recommend nonprofit organizations with expertise in literacy training in low‑performing schools and the ability to leverage private resources to partner with the local school administrative units in implementing the program.

INVESTING IN INNOVATION GRANT
SECTION 8.25.(a)  Section 7.17 of S.L. 2012‑142 is repealed.
SECTION 8.25.(b)  The federal Investing in Innovation Fund Grant: Validating Early College Strategies for Traditional Comprehensive High Schools awarded to the North Carolina New Schools Project for 2012‑2017 requires students to enroll in a community college course in the 10th grade. Notwithstanding any other provision of law, specified local school administrative units may offer one community college course to participating sophomore (10th grade) students. Participating local school administrative units are Alleghany, Beaufort, Hertford, Jones, Madison, Richmond, Rutherford, Surry, Warren, Wilkes, and Yancey County Schools.
SECTION 8.25.(c)  Grant funds shall be used to pay for all costs incurred by the local school administrative units and the community college partners to implement the grant, including community college FTE. Community colleges shall not earn budget FTE for student course enrollments supported with this grant.
SECTION 8.25.(d)  Research for the project shall address the effects of early college strategies in preparing students for college completion. The North Carolina New Schools Project shall report on the implementation of the grant to the State Board of Education, State Board of Community Colleges, Office of the Governor, and the Joint Legislative Education Oversight Committee no later than March 15, 2014, and annually thereafter until the end of the grant period.

BROADEN SUCCESSFUL PARTICIPATION IN ADVANCED COURSES
SECTION 8.27.(a)  G.S. 115C‑12(9)c1. reads as rewritten:
"c1.	To issue an annual "report card" for the State and for each local school administrative unit, assessing each unit's efforts to improve student performance based on the growth in performance of the students in each school and taking into account progress over the previous years' level of performance and the State's performance in comparison with other states. This assessment shall take into account factors that have been shown to affect student performance and that the State Board considers relevant to assess the State's efforts to improve student performance. As a part of the annual "report card" for each local school administrative unit, the State Board shall award an overall numerical school performance score on a scale of zero to 100 and a corresponding letter grade of A, B, C, D, or F earned by each school within the local school administrative unit. The school performance score and grade shall reflect student performance on annual subject‑specific assessments, college and workplace readiness measures, and graduation rates. For schools serving students in any grade from kindergarten to eighth grade, separate performance scores and grades shall also be awarded based on the school performance in reading and mathematics respectively. The annual "report card" for schools serving students in third grade also shall include the number and percentage of third grade students who (i) take and pass the alternative assessment of reading comprehension; (ii) were retained in third grade for not demonstrating reading proficiency as indicated in G.S. 115C‑83.7(a); and (iii) were exempt from mandatory third grade retention by category of exemption as listed in G.S. 115C‑83.7(b). The annual "report card" for high schools shall also include measures of Advanced Placement course participation and International Baccalaureate Diploma Programme participation and Advanced Placement and International Baccalaureate examination participation and performance."
SECTION 8.27.(b)  Article 8 of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑83.4A.  Advanced courses.
(a)	It is the intent of the State to enhance accessibility and encourage students to enroll in and successfully complete more rigorous advanced courses to enable success in postsecondary education for all students. For the purposes of this section, an advanced course is an Advanced Placement or International Baccalaureate Diploma Programme course. To attain this goal, to the extent funds are made available for this purpose, students enrolled in public schools shall be exempt from paying any fees for administration of examinations for advanced courses and registration fees for advanced courses in which the student is enrolled regardless of the score the student achieves on an examination.
(b)	Eligible secondary students shall be encouraged to enroll in advanced courses to expose them to more rigorous coursework while still in secondary school. Successfully completing advanced courses will increase the quality and level of students' preparation for postsecondary career paths and their pursuit of higher education.
(c)	The results of student diagnostic tests administered pursuant to G.S. 115C‑174.18 and G.S. 115C‑174.22, such as the Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQT) and ACT, shall be used to identify students who are prepared or who need additional work to be prepared to enroll and be successful in advanced courses. Students may also be identified for potential enrollment in advanced courses based on other criteria established by schools to increase access to those courses for their students.
(d)	Local boards of education shall provide information to students and parents on available opportunities and the enrollment process for students to take advanced courses. The information shall explain the value of advanced courses in preparing students for postsecondary level coursework, enabling students to gain access to postsecondary opportunities, and qualifying for scholarships and other financial aid opportunities.
(e)	Local boards of education shall ensure that all high school students have access to advanced courses in language arts, mathematics, science, and social studies. Such access may be provided through enrollment in courses offered through or approved by the North Carolina Virtual Public School.
(f)	The State Board of Education shall seek a partner, such as the College Board, to form the North Carolina Advanced Placement Partnership, hereinafter referred to as Partnership, to assist in improving college readiness of secondary students and to assist secondary schools to ensure that students have access to high‑quality, rigorous academics with a focus on access to Advanced Placement courses.
In order to implement its responsibilities under this section, the partner selected by the State Board of Education shall provide staff to do the following:
(1)	Provide professional development in the form of support and training to enable teachers of Advanced Placement courses to have the necessary content knowledge, instructional skills, and materials to prepare students for success in Advanced Placement courses and examinations and mastery of postsecondary course content.
(2)	Provide administrators, including principals and counselors, with professional development that will enable them to create strong and effective Advanced Placement courses in their schools.
(3)	Provide teachers of students in grades seven through 12 with preadvanced course professional development and materials that prepare students for success in Advanced Placement courses.
(4)	Provide consulting expertise and technical assistance to support implementation.
(5)	Prioritize assistance to schools designated as low‑performing by the State Board of Education and provide for frequent visits to the schools targeted by the Partnership.
(g)	The Partnership shall report annually to the Department of Public Instruction on the Partnership's implementation of its responsibilities under subsection (f) of this section.(h)	Beginning October 1, 2014, the State Board of Education shall report annually to the Joint Legislative Education Oversight Committee on advanced courses in North Carolina. The report shall include, at a minimum, the following information:
(1)	The North Carolina Advanced Placement Partnership's report to the Department of Public Instruction as required by subsection (g) of this section and the State Board's assessment of that report.
(2)	Number of students enrolled in advanced courses and participating in advanced course examinations, including demographic information by gender, race, and free and reduced‑price lunch status.
(3)	Student performance on advanced course examinations, including information by course, local school administrative unit, and school.
(4)	Number of students participating in 10th grade PSAT/NMSQT testing.
(5)	Number of teachers attending summer institutes offered by the North Carolina Advanced Placement Partnership.
(6)	Distribution of funding appropriated for advanced course testing fees and professional development by local school administrative unit and school.
(7)	Status and efforts of the North Carolina Advanced Placement Partnership.
(8)	Other trends in advanced courses and examinations."
SECTION 8.27.(c)  G.S. 115C‑174.18 reads as rewritten:
"§ 115C‑174.18.  Opportunity to take Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQT).
Every student in the eighth through tenth grades who has completed Algebra I or who is in the last month of Algebra I shall be given an opportunity to take a version of either the Preliminary SAT/National Merit Scholarship Qualifying Test (PSAT/NMSQT) or the ACT, at the discretion of the local school administrative unit, one time at no cost to the student. The maximum amount of State funds used for this purpose shall be the cost of the PSAT/NMSQT."
SECTION 8.27.(d)  Of the funds appropriated to the Department of Public Instruction to implement the requirements of this section, ten million eight hundred thirty‑one thousand one hundred eighty‑four dollars ($10,831,184) for the 2014‑2015 fiscal year shall be used to fund fees for testing in advanced courses and one million five hundred thousand dollars ($1,500,000) for each fiscal year shall be used by the North Carolina Advanced Placement Partnership to carry out its responsibilities as set forth in this section. Funding appropriated for professional development may be used by the State Board of Education to contract with an independent evaluator to assess the implementation and impact of advanced course programs in North Carolina. For the purposes of this section, the term "advanced courses" means an Advanced Placement or International Baccalaureate Diploma Programme course.
SECTION 8.27.(e)  Beginning with the 2014‑2015 school year, the State Board of Education shall use funds allocated in subsection (d) of this section to do all of the following:
(1)	Provide funds to local school administrative units to pay testing fees for advanced courses for all students.
(2)	Provide funds to the North Carolina Advanced Placement Partnership for professional development for teachers of Advanced Placement courses.
SECTION 8.27.(f)  Except as otherwise provided in this section, this section applies beginning with the 2013‑2014 school year.

INCREASE SUCCESSFUL CAREER AND TECHNICAL EDUCATION (CTE) PARTICIPATION
SECTION 8.28.(a)  G.S. 115C‑12 is amended by adding a new subdivision to read:
"(41)	To Establish Career and Technical Education Incentives. – The State Board of Education shall establish, implement, and determine the impact of a career and technical education incentive program as provided under G.S. 115C‑156.2."
SECTION 8.28.(b)  Article 10 of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑156.2.  Industry certifications and credentials program.
(a)	It is the intent of the State to encourage students to enroll in and successfully complete rigorous coursework and credentialing processes in career and technical education to enable success in the workplace. To attain this goal, to the extent funds are made available for this purpose, students shall be supported to earn approved industry certifications and credentials.
(1)	Students enrolled in public schools and in career and technical education courses shall be exempt from paying any fees for one administration of examinations leading to industry certifications and credentials pursuant to rules adopted by the State Board of Education.
(2)	Each school year, at such time as agreed to by the Department of Commerce and the State Board of Education, the Department of Commerce shall provide the State Board of Education with a list of those occupations in high need of additional skilled employees. If the occupations identified in such list are not substantially the same as those occupations identified in the list from the prior year, reasonable notice of such changes shall be provided to local school administrative units.
(3)	Local school administrative units shall consult with their local industries, employers, and workforce development boards to identify industry certification and credentials that the local school administrative unit may offer to best meet State and local workforce needs.
(b)	Beginning in 2014, the State Board of Education shall report to the Joint Legislative Education Oversight Committee by September 1 of each year on the number of students in career and technical education courses who earned (i) community college credit and (ii) related industry certifications and credentials."
SECTION 8.28.(c)  This section applies beginning with the 2013‑2014 school year.

OPPORTUNITY SCHOLARSHIPS
SECTION 8.29.(a)  Article 39 of Chapter 115C of the General Statutes is amended by adding a new Part to read:
"Part 2A. Scholarship Grants.
"§ 115C‑562.1.  Definitions.
The following definitions apply in this Part:
(1)	Authority. – The State Education Assistance Authority.
(2)	Eligible students. – A student who has not yet received a high school diploma and who meets all of the following requirements:
a.	Meets one of the following criteria:
1.	Was a full‑time student assigned to and attending a public school pursuant to G.S. 115C‑366 during the previous semester.
2.	Received a scholarship grant during the previous school year.
3.	Is entering either kindergarten or the first grade.
4.	Is a child in foster care as defined in G.S. 131D‑10.2(9).
5.	Is a child whose adoption decree was entered not more than one year prior to submission of the scholarship grant application.
b.	Resides in a household with an income level not in excess of one hundred thirty‑three percent (133%) of the amount required for the student to qualify for the federal free or reduced‑price lunch program.
(3)	Division. – The Division of Nonpublic Education, Department of Administration.
(4)	Local school administrative unit. – A local school administrative unit, charter school, or regional school.
(5)	Nonpublic school. – A school that meets the requirements of Part 1 or Part 2 of this Article as identified by the Division.
(6)	Scholarship grants. – Grants awarded annually by the Authority to eligible students.
"§ 115C‑562.2.  Scholarship grants.
(a)	The Authority shall make available no later than February 1 annually applications to eligible students for the award of scholarship grants to attend any nonpublic school. Information about scholarship grants and the application process shall be made available on the Authority's Web site. Beginning March 1, the Authority shall begin awarding scholarship grants according to the following criteria:
(1)	First priority shall be given to eligible students who received a scholarship grant during the previous school year if those students have applied by March 1.
(2)	After scholarship grants have been awarded to prior recipients as provided in subdivision (1) of this subsection, scholarships shall be awarded with remaining funds as follows:
a.	At least fifty percent (50%) of the remaining funds shall be used to award scholarship grants to eligible students residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program.
b.	No more than thirty‑five percent (35%) of the remaining funds shall be used to award scholarship grants to eligible students entering either kindergarten or first grade.
c.	Any remaining funds shall be used to award scholarship grants to all other eligible students.
(b)	Scholarship grants awarded to eligible students residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program shall be for amounts of up to four thousand two hundred dollars ($4,200) per year. Scholarship grants awarded to eligible students residing in households with an income level in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program shall be for amounts of not more than ninety percent (90%) of the required tuition and fees for the nonpublic school the eligible child will attend. Tuition and fees for a nonpublic school may include tuition and fees for books, transportation, equipment, or other items required by the nonpublic school. No scholarship grant shall exceed four thousand two hundred dollars ($4,200) per year per eligible student, and no scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.
(c)	The Authority shall permit an eligible student receiving a scholarship grant to enroll in a different nonpublic school and remain eligible. An eligible student receiving a scholarship grant who transfers to another nonpublic school during the year may be eligible to receive a pro rata share of any unexpended portion of the scholarship grant for tuition and fees at the nonpublic school to which the student transfers.
(d)	The Authority shall establish rules and regulations for the administration and awarding of scholarship grants and may include in those rules a lottery process for selection of scholarship grant recipients within the criteria established by this section.
"§ 115C‑562.3.  Verification of eligibility.
(a)	The Authority may seek verification of information on any application for scholarship grants from eligible students. The Authority shall select and verify a random sample of no less than six percent (6%) of applications annually. The Authority shall establish rules for the verification process and may use the federal verification requirements process for free and reduced‑price lunch applications as guidance for those rules. If a household fails to cooperate with verification efforts, the Authority shall revoke the award of the scholarship grant to the eligible student.
(b)	Household members of applicants for scholarship grants shall authorize the Authority to access information needed for verification efforts held by other State agencies, including the Department of Revenue, the Department of Health and Human Services, and the Department of Public Instruction.
"§ 115C‑562.4.  Identification of nonpublic schools and distribution of scholarship grant information.
(a)	The Division shall provide annually by February 1 to the Authority a list of all nonpublic schools operating in the State that meet the requirements of Part 1 or Part 2 of this Article. The Division shall notify the Authority of any schools included in the list that the Division has determined to be ineligible within five business days of the determination of ineligibility.
(b)	The Authority shall provide information about the scholarship grant program to the Division, including applications and the obligations of nonpublic schools accepting eligible students receiving scholarship grants. The Division shall ensure that information about the scholarship grant program is provided to all qualified nonpublic schools on an annual basis.
"§ 115C‑562.5.  Obligations of nonpublic schools accepting eligible students receiving scholarship grants.
(a)	A nonpublic school that accepts eligible students receiving scholarship grants shall comply with the following:
(1)	Provide to the Authority documentation for required tuition and fees charged to the student by the nonpublic school.
(2)	Conduct a criminal background check for the staff member with the highest decision‑making authority, as defined by the bylaws, articles of incorporation, or other governing document, to ensure that person has not been convicted of any crime listed in G.S. 115C‑332.
(3)	Provide to the parent or guardian of an eligible student, whose tuition and fees are paid in whole or in part with a scholarship grant, an annual written explanation of the student's progress, including the student's scores on standardized achievement tests.
(4)	Administer, at least once in each school year, a nationally standardized test or other nationally standardized equivalent measurement selected by the chief administrative officer of the nonpublic school to all eligible students whose tuition and fees are paid in whole or in part with a scholarship grant enrolled in grades three and higher. The nationally standardized test or other equivalent measurement selected must measure achievement in the areas of English grammar, reading, spelling, and mathematics. Test performance data shall be submitted to the Authority by July 15 of each year. Test performance data reported to the Authority under this subdivision is not a public record under Chapter 132 of the General Statutes.
(5)	Provide to the Authority graduation rates of the students receiving scholarship grants in a manner consistent with nationally recognized standards.
(6)	Contract with a certified public accountant to perform a financial review, consistent with generally accepted accounting principles, for each school year in which the school accepts students receiving more than three hundred thousand dollars ($300,000) in scholarship grants awarded under this Part.
(b)	A nonpublic school that accepts students receiving scholarship grants shall not require any additional fees based on the status of the student as a scholarship grant recipient.
(c)	A nonpublic school enrolling more than 25 students whose tuition and fees are paid in whole or in part with a scholarship grant shall report to the Authority on the aggregate standardized test performance of eligible students. Aggregate test performance data reported to the Authority which does not contain personally identifiable student data shall be a public record under Chapter 132 of the General Statutes. Test performance data may be shared with public or private institutions of higher education located in North Carolina and shall be provided to an independent research organization selected by the Authority for research purposes as permitted by the Federal Education Rights and Privacy Act, 20 U.S.C. § 1232g.
(d)	A nonpublic school accepting students receiving scholarship grants that fails to comply with the requirements of this section shall be ineligible to receive future scholarship grants if the Authority determines that the nonpublic school is not in compliance with the requirements of this section. The nonpublic school shall notify the parent or guardian of any enrolled student receiving a scholarship grant that the nonpublic school is no longer eligible to receive future scholarship grants. A nonpublic school may appeal for reconsideration of eligibility after one year.
"§ 115C‑562.6.  Scholarship endorsement.
The Authority shall remit, at least two times each school year, scholarship grant funds awarded to eligible students to the nonpublic school for endorsement by at least one of the student's parents or guardians. The parent or guardian shall restrictively endorse the scholarship grant funds awarded to the eligible student to the nonpublic school for deposit into the account of the nonpublic school. The parent or guardian shall not designate any entity or individual associated with the nonpublic school as the parent's attorney‑in‑fact to endorse the scholarship grant funds but shall endorse the scholarship grant funds in person at the site of the nonpublic school. A parent's or guardian's failure to comply with this section shall result in forfeit of the scholarship grant. A scholarship grant forfeited for failure to comply with this section shall be returned to the Authority to be awarded to another student.
"§ 115C‑562.7.  Authority reporting requirements.
(a)	The Authority shall report to the Department of Public Instruction annually, no later than September 1, the number and names of students who have received scholarship grants for the current school year and who were enrolled the prior semester in a local school administrative unit by the previously attended local school administrative unit. By September 15 of each year, the State Board of Education shall determine the amount of the reduction for each local school administrative unit by multiplying the students who have received scholarship grants for the current school year and who were enrolled the prior semester in a local school administrative unit by the per pupil allocation for average daily membership from the local school administrative unit. Local school administrative units shall identify to the Department of Public Instruction the reductions to State General Fund appropriations for Opportunity Scholarships by October 1 of each year.
(b)	The Authority shall report annually, no later than March 1, to the Joint Legislative Education Oversight Committee on the following:
(1)	Total number, grade level, race, ethnicity, and sex of eligible students receiving scholarship grants.
(2)	Total amount of scholarship grant funding awarded.
(3)	Number of students previously enrolled in local school administrative units or charter schools in the prior semester by the previously attended local school administrative unit or charter school.
(4)	Nonpublic schools in which scholarship grant recipients are enrolled, including numbers of scholarship grant students at each nonpublic school.
(5)	Nonpublic schools deemed ineligible to receive scholarships.
(c)	The Authority shall report annually, no later than December 1, to the Department of Public Instruction and the Joint Legislative Education Oversight Committee on the following:
(1)	Learning gains or losses of students receiving scholarship grants. The report shall include learning gains of participating students on a statewide basis and shall compare, to the extent possible, the learning gains or losses of eligible students by nonpublic school to the statewide learning gains or losses of public school students with similar socioeconomic backgrounds, using aggregate standardized test performance data provided to the Authority by nonpublic schools and by the Department of Public Instruction.
(2)	Competitive effects on public school performance on standardized tests as a result of the scholarship grant program. The report shall analyze the impact of the availability of scholarship grants on public school performance on standardized tests by local school administrative units to the extent possible, and shall provide comparisons of the impact by geographic region and between rural and urban local school administrative units.
This report shall be conducted by an independent research organization to be selected by the Authority, which may be a public or private entity or university. The independent research organization shall report to the Authority on the results of its research. The Joint Legislative Education Oversight Committee shall review reports from the Authority and shall make ongoing recommendations to the General Assembly as needed regarding improving administration and accountability for nonpublic schools accepting students receiving scholarship grants."
SECTION 8.29.(b)  G.S. 110‑86(2) reads as rewritten:
"(2)	Child care. – A program or arrangement where three or more children less than 13 years old, who do not reside where the care is provided, receive care on a regular basis of at least once per week for more than four hours but less than 24 hours per day from persons other than their guardians or full‑time custodians, or from persons not related to them by birth, marriage, or adoption. Child care does not include the following:
…
f.	Nonpublic schools described in Part 2 of Article 39 of Chapter 115C of the General Statutes that are accredited by national or regional accrediting agencies with early childhood standards and that operate a child care facility as defined in subdivision (3) of this section for less than six and one‑half hours per day either on or off the school site;
…."
SECTION 8.29.(c)  G.S. 115C‑555 reads as rewritten:
"§ 115C‑555.  Qualification of nonpublic schools.
The provisions of this Part shall apply to any nonpublic school which has one or more of the following characteristics:
(1)	It is accredited by the State Board of Education.
(2)	It is accredited by a national or regional accrediting agency.
(3)	It is an active member of the North Carolina Association of Independent Schools.
(4)	It receives no funding from the State of North Carolina. For the purposes of this Article, scholarship grant funds awarded pursuant to Part 2A of this Article to eligible students attending a nonpublic school shall not be considered funding from the State of North Carolina."
SECTION 8.29.(d)  G.S. 116‑204 reads as rewritten:
"§ 116‑204.  Powers of Authority.
The Authority is hereby authorized and empowered:
…
(11)	To administer the awarding of scholarship grants to students attending nonpublic schools as provided in Part 2A of Article 39 of Chapter 115C of the General Statutes."
SECTION 8.29.(e)  Notwithstanding the awards criteria in G.S. 115C‑562.2(a)(1) and (2), as enacted by this section, and the definition of eligible student in G.S. 115C‑562.1(2), as enacted by this section, for the 2014‑2015 school year, to be eligible to receive a scholarship grant, a student shall meet both of the following criteria:
(1)	Reside in a household with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program.
(2)	Be a full‑time student who has not yet received a high school diploma and is assigned to and attending a public school pursuant to G.S. 115C‑366 during the 2014 spring semester.
The Authority shall establish temporary rules and regulations for the administration and awarding of scholarship grants in 2014‑2015, which may include a process for awarding grants using a random lottery system.
SECTION 8.29.(f)  The Authority may retain up to four hundred thousand dollars ($400,000) annually for administrative costs associated with the scholarship grant program.
SECTION 8.29.(g)  The Authority shall select an independent research organization, as required by G.S. 115C‑562.7, as enacted by this section, beginning with the 2017‑2018 school year. The first learning gains report required by G.S. 115C‑562.7, as enacted by this section, shall not be due until December 1, 2018. The first financial review for a nonpublic school that accepts scholarship grant funds, as required by G.S. 115C‑562.5(a)(6), as enacted by this section, shall not be required until the 2015‑2016 school year.
SECTION 8.29.(h)  This section applies beginning with the 2014‑2015 school year. In accordance with G.S. 115C‑562.2, as enacted by this section, the Authority shall make applications available for the 2014‑2015 school year no later than February 1, 2014, and shall begin awarding grants no later than March 1, 2014. Information about scholarship grants and the application process shall be made available on the Authority's Web site. In accordance with G.S. 115C‑562.4, as enacted by this section, the Division of Nonpublic Education, Department of Administration, shall make available to the Authority a list of all nonpublic schools operating in the State that meet the requirements of Part 1 or Part 2 of Article 39 of Chapter 115C of the General Statutes no later than February 1, 2014.

REPEAL REQUIREMENT THAT SCHOOLS PROVIDE READING WORKSHOPS FOR PARENTS OF STUDENTS WHO HAVE BEEN RETAINED
SECTION 8.30.  G.S. 115C‑83.8(d) is repealed.

TASK FORCE TO STUDY TEACHER AND SCHOOL ADMINISTRATOR EFFECTIVENESS AND COMPENSATION
SECTION 8.31.(a)  Establishment. – The North Carolina Educator Effectiveness and Compensation Task Force is established.
SECTION 8.31.(b)  Membership. – The Task Force shall be composed of 18 members as follows:
(1)	Nine members appointed by the Speaker of the House of Representatives as follows:
a.	Four persons who are members of the House of Representatives at the time of appointment, at least two of whom represent the minority party.
b.	A representative of the Department of Public Instruction.
c.	A classroom teacher, as recommended by the North Carolina Association of Educators.
d.	A school principal, as recommended by the North Carolina Association of School Administrators.
e.	A representative of a North Carolina institution of higher education that offers a teacher education program and a master's degree program in education or school administration.
f.	A representative from the Professional Educators of North Carolina.
(2)	Nine members appointed by the President Pro Tempore of the Senate as follows:
a.	Four persons who are members of the Senate at the time of appointment, at least two of whom represent the minority party.
b.	A parent of a public school student.
c.	Two classroom teachers.
d.	A school system superintendent or public school principal.
e.	A local school board member.
The Task Force shall have two cochairs, one designated by the President Pro Tempore of the Senate and one designated by the Speaker of the House of Representatives from among their appointees. The Task Force shall meet upon the call of the cochairs. Vacancies shall be filled by the appointing authority. A quorum of the Task Force shall be a majority of the members.
SECTION 8.31.(c)  Duties. – The Task Force shall make recommendations on whether to create a statewide model of incentives to encourage the recruitment and retention of highly effective educators and to consider the transition to an alternative compensation system for educators. In developing recommendations, the Task Force shall consider at least the following factors:
(1)	Alternatives to or simplification of the current teacher and school principal salary schedules, including the need for "hold harmless" options or a choice in compensation structure to avoid reduction in pay for current educators.
(2)	Incorporating the feedback of educators in order to maximize buy‑in.
(3)	The integration of school‑level performance measures in an alternative compensation system.
(4)	Whether local school administrative units may create their own customized alternative compensation systems in lieu of or in addition to a statewide system, including necessary parameters such as funding flexibility and guidelines for local boards of education.
(5)	The use of incentive pay to recruit and retain educators to teach in hard to staff areas.
(6)	The recognition of educator responsibilities and leadership roles such as mentoring of beginning teachers and instructional coaching.
(7)	Methods for identifying effective teaching and its relationship to an alternative compensation system, including:
a.	The correlation of student outcomes with effective teaching.
b.	The use of multiple teacher evaluation measures and feedback methods to recognize effective teaching such as classroom observations, student surveys, video training for teachers, and standard measures of student achievement.
c.	The use of multiple teacher observations, including at least one observer from outside of the teacher's school.
d.	The correlation to annual student growth and performance data, evaluations, effectiveness levels, and a three‑year average of student growth.
(8)	Barriers to the implementation of alternative compensation systems.
(9)	Educator compensation reform in other states and North Carolina pilot programs currently utilizing alternative compensation.
(10)	Effective strategies for retaining effective teachers.
SECTION 8.31.(d)  Compensation; Administration. – Members of the Task Force shall receive subsistence and travel allowances at the rates set forth in G.S. 120‑3.1, 138‑5, or 138‑6, as appropriate. With the prior 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. With the prior approval of the Legislative Services Commission, the Task Force may hold its meetings in the State Legislative Building or the Legislative Office Building. The Task Force may also meet at various locations around the State in order to promote greater public participation in its deliberations. 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 and G.S. 120‑19.1 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.
SECTION 8.31.(e)  Transfer of Funds. – The Department of Public Instruction shall transfer all funds appropriated in this act for the Task Force to Budget Code 11000 in the General Assembly to support its operations in accordance with the requirements of this section.
SECTION 8.31.(f)  Report. – The Task Force shall report its findings and recommendations to the 2014 Regular Session of the 2013 General Assembly no later than April 15, 2014. The Task Force shall terminate on April 15, 2014, or upon the filing of its final report, whichever occurs first.

EDUCATION AND WORKFORCE INNOVATION PROGRAM
SECTION 8.34.(a)  Chapter 115C of the General Statutes is amended by adding a new Article to read:
"Article 6C.
"Education and Workforce Innovation Program.
"§ 115C‑64.10.  North Carolina Education and Workforce Innovation Commission.
(a)	There is created the North Carolina Education and Workforce Innovation Commission (Commission). The Commission shall be located administratively in the Department of Public Instruction but shall exercise all its prescribed powers independently of the Department of Public Instruction. Of the funds appropriated for the Education and Workforce Innovation Program established under G.S. 115C‑64.11, up to two hundred thousand dollars ($200,000) each fiscal year may be used by the Department of Public Instruction to provide technical assistance and administrative assistance, including staff, to the Commission and reimbursements and expenses for the Commission.
(b)	The Commission shall consist of the following 11 members:
(1)	The Secretary of Commerce.
(2)	The State Superintendent of Public Instruction.
(3)	The Chair of the State Board of Education.
(4)	The President of The University of North Carolina.
(5)	The President of the North Carolina Community College System.
(6)	Two members appointed by the Governor who have experience in education.
(7)	Two members appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives, as provided in G.S. 120‑121, who have experience in businesses operating in North Carolina.
(8)	Two members appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, as provided in G.S. 120‑121, who have experience in businesses operating in North Carolina.
(c)	The Commission members shall elect a chair from the membership of the Commission. The Commission shall meet at least three times annually on the call of the Chair or as additionally provided by the Commission. A quorum is six members of the Commission. Members may not send designees to Commission meetings nor may they vote by proxy.
(d)	The Commission shall develop and administer the Education and Workforce Innovation Program, as established under G.S. 115C‑64.11, and make awards of grants under the Program. The Commission shall work closely with the North Carolina New Schools in administering the program.
(e)	The Commission shall publish a report on the Education and Workforce Innovation Program on or before April 30 of each year. The report shall be submitted to the Joint Legislative Education Oversight Committee, the State Board of Education, the State Board of Community Colleges, and the Board of Governors of The University of North Carolina. The report shall include at least all of the following information:
(1)	An accounting of how funds and personnel resources were utilized and their impact on student achievement, retention, and employability.
(2)	Recommended statutory and policy changes.
(3)	Recommendations for improvement of the program.
"§ 115C‑64.11.  The Education and Workforce Innovation Program.
(a)	Program Establishment. – There is established the Education and Workforce Innovation Program (Program) to foster innovation in education that will lead to more students graduating career and college ready. Funds appropriated to the Program shall be used to award competitive grants to an individual school, a local school administrative unit, or a regional partnership of more than one local school administrative unit to advance comprehensive, high‑quality education that equips teachers with the knowledge and skill required to succeed with all students. Before receiving a grant, applicants must meet all of the following conditions:
(1)	Form a partnership, for the purposes of the grant, with either a public or private university or a community college.
(2)	Form a partnership, for the purposes of the grant, with regional businesses and business leaders.
(3)	Demonstrate the ability to sustain innovation once grant funding ends.
(b)	Applicant Categories and Specific Requirements. –
(1)	Individual schools. – Individual public schools must demonstrate all of the following in their applications:
a.	Partnerships with business and industry to determine the skills and competencies needed for students' transition into growth sectors of the regional economy.
b.	Aligned pathways to employment, including students' acquisition of college credit or industry recognized credentials.
c.	Development of systems, infrastructure, capacity, and culture to enable teachers and school leaders to continuously focus on improving individual student achievement.
(2)	Local school administrative units. – Local school administrative units must demonstrate all of the following in their applications:
a.	Implementation of comprehensive reform and innovation.
b.	Appointment of a senior leader to manage and sustain the change process with a specific focus on providing parents with a portfolio of meaningful options among schools.
(3)	Regional partnerships of two or more local school administrative units. – Partnerships of two or more local school administrative units must demonstrate all of the following in their applications:
a.	Implementation of resources of partnered local school administrative units in creating a tailored workforce development system for the regional economy and fostering innovation in each of the partnered local school administrative units.
b.	Promotion of the development of knowledge and skills in career clusters of critical importance to the region.
c.	Benefits of the shared strengths of local businesses and higher education.
d.	Usage of technology to deliver instruction over large geographic regions and build networks with industry.
e.	Implementation of comprehensive reform and innovation that can be replicated in other local school administrative units.
(c)	Consideration of Factors in Awarding of Grants. – All applications must include information on at least the following in order to be considered for a grant:
(1)	Describe the aligned pathways from school to high‑growth careers in regional economies.
(2)	Leverage technology to efficiently and effectively drive teacher and principal development, connect students and teachers to online courses and resources, and foster virtual learning communities among faculty, higher education partners, and business partners.
(3)	Establish a comprehensive approach to enhancing the knowledge and skills of teachers and administrators to successfully implement the proposed innovative program and to graduate all students ready for work and college.
(4)	Link to a proven provider of professional development services for teachers and administrators capable of providing evidence‑based training and tools aligned with the goals of the proposed innovative program.
(5)	Form explicit partnerships with businesses and industry, which may include business advisory councils, internship programs, and other customized projects aligned with relevant workforce skills.
(6)	Partner with community colleges or public or private universities to enable communities to challenge every student to graduate with workplace credentials or college credit.
(7)	Align K‑12 and postsecondary instruction and performance expectations to reduce the need for college remediation courses.
(8)	Secure input from parents to foster broad ownership for school choice options and to foster greater understanding of the need for continued education beyond high school.
(9)	Provide a description of the funds that will be used and a proposed budget for five years.
(10)	Describe the source of matching funds required in subsection (d) of this section.
(11)	Establish a strategy to achieve meaningful analysis of program outcomes due to the receipt of grant funds under this section.
(d)	Matching Private and Local Funds. – All funds appropriated by the State must be matched by a combination of private and local funds. All grant applicants must fund twenty‑five percent (25%) of program costs through local funds. An additional twenty‑five percent (25%) of program costs must be raised by private funds.
(e)	Grants. – Any grants awarded by the Commission may be spent over a five‑year period from the initial award.
(f)	Reporting Requirements. – No later than March 1 of each year, a grant recipient shall submit to the Commission an annual report for the preceding grant year that describes the academic progress made by the students and the implementation of program initiatives."
SECTION 8.34.(b)  The North Carolina Education and Workforce Innovation Commission (Commission), as established by G.S. 115C‑64.10, as enacted by this section, shall conduct a study to determine the most efficient way to fund dual enrollment for high school students in college coursework. The Commission shall report the results of this study to the Joint Legislative Education Oversight Committee by October 1, 2014.
SECTION 8.34.(c)  The appointments to the Commission as set forth in G.S. 115C‑64.10, as enacted by this section, shall be made by the appointing entities no later than September 1, 2013. The Commission shall hold its first meeting no later than October 1, 2013.

SCHOOL PSYCHOLOGISTS, SCHOOL COUNSELORS, AND SCHOOL SOCIAL WORKERS
SECTION 8.35.(a)  Article 21 of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑316.1.  Duties of school counselors.
(a)	School counselors shall implement a comprehensive developmental school counseling program in their schools. Counselors shall spend at least eighty percent (80%) of their work time providing direct services to students. Direct services do not include the coordination of standardized testing. Direct services shall consist of:
(1)	Delivering the school guidance curriculum through large group guidance, interdisciplinary curriculum development, group activities, and parent workshops.
(2)	Guiding individual student planning through individual or small group assistance and individual or small group advisement.
(3)	Providing responsive services through consultation with students, families, and staff; individual and small group counseling; crisis counseling; referrals; and peer facilitation.
(4)	Performing other student services listed in the Department of Public Instruction school counselor job description that has been approved by the State Board of Education.
(b)	During the remainder of their work time, counselors shall spend adequate time on school counseling program support activities that consist of professional development; consultation, collaboration, and training; and program management and operations. School counseling program support activities do not include the coordination of standardized testing. However, school counselors may assist other staff with the coordination of standardized testing."
SECTION 8.35.(b)  Each local board of education shall develop a transition plan for implementing subsection (a) of this section within existing resources by reassigning duties within its schools.
The State Board of Education shall develop and distribute guidelines to all local school administrative units to assist with the implementation of subsection (a) of this section.

GRANTS FOR SCHOOL RESOURCE OFFICERS IN ELEMENTARY AND MIDDLE SCHOOLS
SECTION 8.36.  Grants to local school administrative units, regional schools, and charter schools for school resource officers in elementary and middle schools shall be matched on the basis of two dollars ($2.00) in State funds for every one dollar ($1.00) in local funds and shall be used to supplement and not to supplant State, local, and federal funds for school resource officers.
The State Board of Education shall include need‑based considerations in its criteria for awarding these grants to local school administrative units, regional schools, and charter schools.
Local school administrative units, regional schools, and charter schools may use these funds to employ school resource officers in elementary and middle schools, to train them, or both. Any such training shall include instruction on research into the social and cognitive development of elementary school and middle school children.

PANIC ALARM SYSTEMS
SECTION 8.37.(a)  G.S. 115C‑47(40) reads as rewritten:
"(40)	To adopt emergency response plans. – Local boards of education shall, in coordination with local law enforcement agencies, adopt emergency response plans relating to incidents of school violence. These plans are not a public record as the term "public record" is defined under G.S. 132‑1 and shall not be subject to inspection and examination under G.S. 132‑6."
SECTION 8.37.(b)  Grants to local school administrative units, regional schools, and charter schools for panic alarm systems in schools shall be matched on the basis of one dollar ($1.00) in State funds for every one dollar ($1.00) in local funds and shall be used to supplement and not to supplant State, local, and federal funds for panic alarm systems.
The State Board of Education shall include need‑based considerations in its criteria for awarding these grants to local school administrative units, regional schools, and charter schools.
SECTION 8.37.(c)  Effective July 1, 2015, every public school shall have a panic alarm system that connects with the nearest local law enforcement agency in the local board of education's emergency response plan.

SCHOOL SAFETY EXERCISES
SECTION 8.38.  Article 8C of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑105.49.  School safety exercises.
(a)	At least every two years, each local school administrative unit is encouraged to hold a full systemwide school safety and school lockdown exercise with the local law enforcement agencies that are part of the local board of education's emergency response plan. The purpose of the exercise shall be to permit participants to (i) discuss simulated emergency situations in a low‑stress environment, (ii) clarify their roles and responsibilities and the overall logistics of dealing with an emergency, and (iii) identify areas in which the emergency response plan needs to be modified.
(b)	As part of a local board of education's emergency response plan, at least once a year, each school is encouraged to hold a full schoolwide school safety and lockdown exercise with local law enforcement agencies."

SCHEMATIC DIAGRAMS OF SCHOOL FACILITIES
SECTION 8.39.(a)  Beginning with the 2013‑2014 school year, each local school administrative unit that currently maintains schematic diagrams of its school facilities shall provide those schematic diagrams to local law enforcement agencies. The local school administrative unit shall provide updates of the schematic diagrams to local law enforcement agencies when substantial modifications such as new facilities or modifications to doors and windows are made to school facilities. The local school administrative unit shall also provide keys to the main entrance of all school facilities to local law enforcement agencies.
SECTION 8.39.(b)  Each local school administrative unit that does not currently maintain schematic diagrams of its school facilities as of the effective date of this act shall report to the Department of Public Instruction by March 1, 2014, on whether it intends to prepare schematic diagrams of its school facilities to provide to local law enforcement agencies and if any obstacles exist in preparing such schematic diagrams. Local school administrative units are encouraged to prepare schematic diagrams and provide keys to the main entrance of all school facilities to local law enforcement agencies prior to the beginning of the 2014‑2015 school year.
SECTION 8.39.(c)  The Department of Public Instruction, in consultation with the Department of Public Safety, may develop standards and guidelines to assist local school administrative units in developing and providing schematic diagrams to local law enforcement agencies.
SECTION 8.39.(d)  Schematic diagrams are not considered a public record as the term "public record" is defined under G.S. 132‑1 and shall not be subject to inspection and examination under G.S. 132‑6.

ANONYMOUS TIP LINE
SECTION 8.40.  Article 8C of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑105.51.  Anonymous tip lines.
(a)	Each local school administrative unit is encouraged to develop and operate an anonymous tip line, in coordination with local law enforcement and social services agencies, to receive anonymous information on internal or external risks to school buildings and school‑related activities.
(b)	The Department of Public Instruction, in consultation with the Department of Public Safety, may develop standards and guidelines for the development, operation, and staffing of tip lines.
(c)	The Department of Public Instruction may provide information to local school administrative units on federal, State, local, and private grants available for this purpose."

SCHOOL SAFETY COMPONENT OF SCHOOL IMPROVEMENT PLANS
SECTION 8.41.(a)  G.S. 115C‑105.27, as rewritten by Section 11(a) of S.L. 2013‑226, reads as rewritten:
"§ 115C‑105.27.  Development and approval of school improvement plans.
(a)	School Improvement Team. – The principal of each school, representatives of the assistant principals, instructional personnel, instructional support personnel, and teacher assistants assigned to the school building, and parents of children enrolled in the school shall constitute a school improvement team. The team shall develop a school improvement plan to improve student performance.
Representatives of the assistant principals, instructional personnel, instructional support personnel, and teacher assistants shall be elected by their respective groups by secret ballot.
Unless the local board of education has adopted an election policy, parents shall be elected by parents of children enrolled in the school in an election conducted by the parent and teacher organization of the school or, if none exists, by the largest organization of parents formed for this purpose. Parents serving on school improvement teams shall reflect the racial and socioeconomic composition of the students enrolled in that school and shall not be members of the building‑level staff.
Parental involvement is a critical component of school success and positive student achievement; therefore, it is the intent of the General Assembly that parents, along with teachers, have a substantial role in developing school improvement plans. To this end, school improvement team meetings shall be held at a convenient time to assure substantial parent participation.
(a1)	Open Meetings. – School improvement team meetings are subject to the open meetings requirements of Article 33C of Chapter 143 of the General Statutes. Deliberations on the school safety components of the plan shall be in closed session in accordance with G.S. 143‑318.11(a)(8). The principal shall ensure that these requirements are met.
(a2)	Public Records. – The school improvement plan, except for the school safety components of the plan, is a public record subject to Chapter 132 of the General Statutes and shall be posted on the school Web site. The names of the members of the school improvement team, their positions, and the date of their election to the school improvement team shall also be posted on the Web site.
The school safety components of the plan are not public records subject to Chapter 132 of the General Statutes.
(b)	School Improvement Plan. – In order to improve student performance, the school improvement team at each school shall develop a school improvement plan that takes into consideration the annual performance goal for that school that is set by the State Board under G.S. 115C‑105.35 and the goals set out in the mission statement for the public schools adopted by the State Board of Education. All school improvement plans shall be, to the greatest extent possible, data‑driven. School improvement teams shall use the Education Value‑Added Assessment System (EVAAS) or a compatible and comparable system approved by the State Board of Education to (i) analyze student data and identify root causes for problems, (ii) determine actions to address them, and (iii) appropriately place students in courses such as Algebra I. School improvement plans shall contain clear, unambiguous targets, explicit indicators and actual measures, and expeditious time frames for meeting the measurement standards.
The strategies for improving student performance:
(1)	Shall include a plan for the use of staff development funds that may be made available to the school by the local board of education to implement the school improvement plan. The plan may provide that a portion of these funds is used for mentor training and for release time and substitute teachers while mentors and teachers mentored are meeting;
(1a)	Repealed by Session Laws 2012‑142, s. 7A.1(c), effective July 2, 2012.
(2)	Shall include a plan to address school safety and discipline concerns;
(3)	May include a decision to use State funds in accordance with G.S. 115C‑105.25;
(4)	Shall include a plan that specifies the effective instructional practices and methods to be used to improve the academic performance of students identified as at risk of academic failure or at risk of dropping out of school;
(5)	May include requests for waivers of State laws, rules, or policies for that school. A request for a waiver shall meet the requirements of G.S. 115C‑105.26;
(6)	Shall include a plan to provide a duty‑free lunch period for every teacher on a daily basis or as otherwise approved by the school improvement team; and
(7)	Shall include a plan to provide duty‑free instructional planning time for every teacher under G.S. 115C‑301.1, with the goal of providing an average of at least five hours of planning time per week.
(8) 	Shall include a plan to identify and eliminate unnecessary and redundant reporting requirements for teachers and, to the extent practicable, streamline the school's reporting system and procedures, including requiring forms and reports to be in electronic form when possible and incorporating relevant documents into the student accessible components of the Instructional Improvement System.
(c)	School Vote on the Plan. – Support among affected staff members is essential to successful implementation of a school improvement plan to address improved student performance at that school. The principal of the school shall present the proposed school improvement plan to all of the principals, assistant principals, instructional personnel, instructional support personnel, and teacher assistants assigned to the school building for their review and vote. The vote shall be by secret ballot. The principal shall submit the school improvement plan to the local board of education only if the proposed school improvement plan has the approval of a majority of the staff who voted on the plan.
(c1)	Consideration of the School Safety Components of the Plan. – The superintendent shall review the school safety components of the school improvement plans and make written recommendations on them to the local board of education. Prior to a vote to accept a school's improvement plan in accordance with G.S. 115C‑105.27(d), the local board of education shall review the school safety components of the plan for that school in closed session. The board shall make findings on the safety components of the plan. Neither the safety components of the plan nor the board's findings on the safety components of the plan shall be set out in the minutes of the board.
(d)	Adoption of the Plan. – The local board of education shall accept or reject the school improvement plan. The local board shall not make any substantive changes in any school improvement plan that it accepts. If the local board rejects a school improvement plan, the local board shall state with specificity its reasons for rejecting the plan; the school improvement team may then prepare another plan, present it to the principals, assistant principals, instructional personnel, instructional support personnel, and teacher assistants assigned to the school building for a vote, and submit it to the local board to accept or reject. If no school improvement plan is accepted for a school within 60 days after its initial submission to the local board, the school or the local board may ask to use the process to resolve disagreements recommended in the guidelines developed by the State Board under G.S. 115C‑105.20(b)(5). If this request is made, both the school and local board shall participate in the process to resolve disagreements. If there is no request to use that process, then the local board may develop a school improvement plan for the school. The General Assembly urges the local board to utilize the school's proposed school improvement plan to the maximum extent possible when developing such a plan.
(e)	Effective Period of the Plan. – A school improvement plan shall remain in effect for no more than two years; however, the school improvement team may amend the plan as often as is necessary or appropriate. If, at any time, any part of a school improvement plan becomes unlawful or the local board finds that a school improvement plan is impeding student performance at a school, the local board may vacate the relevant portion of the plan and may direct the school to revise that portion. The procedures set out in this subsection shall apply to amendments and revisions to school improvement plans.
(f)	Elimination of Other Unnecessary Plans. – If a local board of education finds that a school improvement plan adequately covers another plan that the local school administrative unit is otherwise required to prepare, the local school administrative unit shall not be required to prepare an additional plan on the matter.
(g)	Compliance With Requirements. – Any employee, parent, or other interested individual or organization is encouraged to notify the principal of any concerns regarding compliance with this section. In addition, any employee, parent, or other interested individual or organization may submit in writing to the superintendent concerns regarding compliance with this section. The superintendent shall make a good‑faith effort to investigate the concern. The superintendent shall upon request provide a written response to the concern."
SECTION 8.41.(b)  G.S. 143‑318.11(a)(8) reads as rewritten:
"(a)	Permitted Purposes. – It is the policy of this State that closed sessions shall be held only when required to permit a public body to act in the public interest as permitted in this section. A public body may hold a closed session and exclude the public only when a closed session is required:
…
(8)	To formulate plans by a local board of education relating to emergency response to incidents of school violence or to formulate and adopt the school safety components of school improvement plans by a local board of education or a school improvement team."
SECTION 8.41.(c)  This section applies beginning with the 2013‑2014 school year.

CRISIS KITS
SECTION 8.42.  Article 8C of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑105.52.  School crisis kits.
The Department of Public Instruction, in consultation with the Department of Public Safety through the North Carolina Center for Safer Schools, may develop and adopt policies on the placement of school crisis kits in schools and on the contents of those kits. The kits should include, at a minimum, basic first‑aid supplies, communications devices, and other items recommended by the International Association of Chiefs of Police.
The principal of each school, in coordination with the law enforcement agencies that are part of the local board of education's emergency response plan, may place one or more crisis kits at appropriate locations in the school."

SCHOOL SAFETY FOR CHARTER SCHOOLS AND REGIONAL SCHOOLS
SECTION 8.43.(a)  G.S. 115C‑238.29F is amended by adding a new subsection to read:
"(a1)	Emergency Response Plan. – A charter school, in coordination with local law enforcement agencies, is encouraged to adopt an emergency response plan relating to incidents of school violence. These plans are not considered a public record as the term "public record" is defined under G.S. 132‑1 and shall not be subject to inspection and examination under G.S. 132‑6.
Charter schools are encouraged to provide schematic diagrams and keys to the main entrance of school facilities to local law enforcement agencies, in addition to implementing the provisions in G.S. 115C‑105.49(b) and G.S. 115C‑105.52."
SECTION 8.43.(b)  G.S. 115C‑238.66 is amended by adding a new subdivision to read:
"(7a)	Emergency Response Plan. – A regional school, in coordination with local law enforcement agencies, is encouraged to adopt an emergency response plan relating to incidents of school violence. These plans are not considered a public record as the term "public record" is defined under G.S. 132‑1 and shall not be subject to inspection and examination under G.S. 132‑6. Regional schools are encouraged to provide schematic diagrams and keys to the main entrance of school facilities to local law enforcement agencies, in addition to implementing the provisions in G.S. 115C‑105.49(b) and G.S. 115C‑105.52."

EMERGENCY AND CRISIS TRAINING
SECTION 8.44.  The Department of Public Safety, through the North Carolina Center for Safer Schools and in conjunction with the Department of Justice and the Department of Public Instruction, is encouraged to develop school emergency and crisis training modules for school employees and provide them to schools as soon as practicable.

VOLUNTEER SCHOOL SAFETY RESOURCE OFFICER PROGRAM
SECTION 8.45.(a)  G.S. 14‑269.2(a) is amended by adding a new subdivision to read:
"(3a)	Volunteer school safety resource officer. – A person who volunteers as a school safety resource officer as provided by G.S. 162‑26 or G.S. 160A‑288.4."
SECTION 8.45.(b)  G.S. 14‑269.2(g) is amended by adding a new subdivision to read:
"(g)	This section shall not apply to any of the following:
…
(7)	A volunteer school safety resource officer providing security at a school pursuant to an agreement as provided in G.S. 115C‑47(61) and either G.S. 162‑26 or G.S. 160A‑288.4, provided that the volunteer school safety resource officer is acting in the discharge of the person's official duties and is on the educational property of the school that the officer was assigned to by the head of the appropriate local law enforcement agency."
SECTION 8.45.(c)  G.S. 115C‑47 is amended by adding a new subdivision to read:
"§ 115C‑47.  Powers and duties generally.
In addition to the powers and duties designated in G.S. 115C‑36, local boards of education shall have the power or duty:
…
(61)	To Provide a Safe School Environment. – Local boards of education may enter into an agreement with the sheriff, chief of police of a local police department, or chief of police of a county police department to provide security at the schools by assigning volunteer school safety resource officers who meet the selection standards and criteria developed by the head of the appropriate local law enforcement agency and the criteria set out in G.S. 162‑26 or G.S. 160A‑288.4, as appropriate."
SECTION 8.45.(d)  G.S. 160A‑282(c) reads as rewritten:
"(c)	The board of commissioners of any county may provide that persons who are deputized by the sheriff of the county as special deputy sheriffs or persons who are serving as volunteer law‑enforcement officers at the request of the sheriff and under his authority, while undergoing official training and while performing duties on behalf of the county pursuant to orders or instructions of the sheriff, shall be entitled to benefits under the North Carolina Workers' Compensation Act and to any fringe benefits for which such persons qualify.
This subsection shall not apply to volunteer school safety resource officers as described in G.S. 162‑26."
SECTION 8.45.(e)  Article 3 of Chapter 162 of the General Statutes is amended by adding a new section to read:
"§ 162‑26.  Sheriff may establish volunteer school safety resource officer program.
(a)	The sheriff may establish a volunteer school safety resource officer program to provide nonsalaried special deputies to serve as school safety resource officers in public schools. To be a volunteer in the program, a person must have prior experience as either (i) a sworn law enforcement officer or (ii) a military police officer with a minimum of two years' service. If a person with experience as a military police officer is no longer in the armed services, the person must also have an honorable discharge. A program volunteer must receive training on research into the social and cognitive development of elementary, middle, and high school children and must also meet the selection standards and any additional criteria established by the sheriff.
(b)	Each volunteer shall report to the sheriff and shall work under the direction and supervision of the sheriff or the sheriff's designee when carrying out the volunteer's duties as a school safety resource officer. No volunteer may be assigned to a school as a school safety resource officer until the volunteer has updated or renewed the volunteer's law enforcement training and has been certified by the North Carolina Sheriff's Education and Training Standards Commission as meeting the educational and firearms proficiency standards required of persons serving as special deputy sheriffs. A volunteer is not required to meet the physical standards required by the North Carolina Sheriff's Education and Training Standards Commission but must have a standard medical exam to ensure the volunteer is in good health. A person selected by the sheriff to serve as a volunteer under this section shall have the power of arrest while performing official duties as a volunteer school safety resource officer.
(c)	The sheriff may enter into an agreement with the local board of education to provide volunteer school safety resource officers who meet both the criteria established by this section and the selection and training requirements set by the sheriff of the county for the schools. The sheriff shall be responsible for the assignment of any volunteer school safety resource officer assigned to a public school and for the supervision of the officer.(d)	There shall be no liability on the part of and no cause of action shall arise against a volunteer school safety resource officer, the Sheriff or employees of the sheriff supervising a volunteer school safety officer, or the public school system or its employees for any good‑faith action taken by them in the performance of their duties with regard to the volunteer school safety resource officer program established pursuant to this section."
SECTION 8.45.(f)  Article 13 of Chapter 160A of the General Statutes is amended by adding a new section to read:
"§ 160A‑288.4.  Police chief may establish volunteer school safety resource officer program.
(a)	The chief of police of a local police department or of a county police department may establish a volunteer school safety resource officer program to provide nonsalaried special law enforcement officers to serve as school safety resource officers in public schools. To be a volunteer in the program, a person must have prior experience as either (i) a sworn law enforcement officer or (ii) a military police officer with a minimum of two years' service. If a person with experience as a military police officer is no longer in the armed services, the person must also have an honorable discharge. A program volunteer must receive training on research into the social and cognitive development of elementary, middle, and high school children and must also meet the selection standards and any additional criteria established by the chief of police.
(b)	Each volunteer shall report to the chief of police and shall work under the direction and supervision of the chief of police or the chief's designee when carrying out the volunteer's duties as a school safety resource officer. No volunteer may be assigned to a school as a school safety resource officer until the volunteer has updated or renewed the volunteer's law enforcement training and has been certified by the North Carolina Criminal Justice Education and Training Standards Commission as meeting the educational and firearms proficiency standards required of persons serving as criminal justice officers. A volunteer is not required to meet the physical standards required by the North Carolina Criminal Justice Education and Training Standards Commission but must have a standard medical exam to ensure the volunteer is in good health. A person selected by the chief of police to serve as a volunteer under this section shall have the power of arrest while performing official duties as a volunteer school safety resource officer.
(c)	The chief of police may enter into an agreement with the local board of education to provide volunteer school safety resource officers who meet both the criteria established by this section and the selection and training requirements set by the chief of police of the municipality or county in which the schools are located. The chief of police shall be responsible for the assignment of any volunteer school safety resource officer assigned to a public school and for the supervision of the officer.(d)	There shall be no liability on the part of and no cause of action shall arise against a volunteer school safety resource officer, the chief of police or employees of the local law enforcement agency supervising a volunteer school safety officer, or the public school system or its employees for any good‑faith action taken by them in the performance of their duties with regard to the volunteer school safety resource officer program established pursuant to this section."
SECTION 8.45.(g)  This section becomes effective December 1, 2013.

INFORMATION TECHNOLOGY OVERSIGHT CAPACITY
SECTION 8.46.  Notwithstanding G.S. 143C‑6‑4 and subject to the direction, control, and approval of the State Board of Education, the State Superintendent of Public Instruction shall realign existing resources within the Department of Public Instruction to increase the information technology oversight capacity of the Department. The Superintendent shall identify two positions for this purpose in order to establish a Chief Information Officer and a Project Management Officer. The realignment of the positions and resources is subject to the approval of the Office of State Budget and Management.

STUDY VIRTUAL CHARTER SCHOOLS
SECTION 8.48.  The State Board of Education shall study and determine needed modifications for authorization and oversight of virtual charter schools, including application requirements, enrollment growth, and funding allocations, and shall prepare these recommendations in the form of draft rules and proposed statutory changes. The State Board shall present the draft rules and the proposed statutory changes to the Joint Legislative Education Oversight Committee by February 1, 2014.
This section shall not be construed to affect litigation pending as of the date of the enactment of this section.

PILOT PROGRAM TO RAISE THE HIGH SCHOOL DROPOUT AGE FROM SIXTEEN TO EIGHTEEN
SECTION 8.49.(a)  Notwithstanding G.S. 7B‑1501(27), 115C‑378, 115C‑238.66(3), 116‑235(b)(2), and 143B‑805(20), the State Board of Education shall authorize the Hickory Public Schools and the Newton‑Conover City Schools to establish and implement a pilot program to increase the high school dropout age from 16 years of age to the completion of the school year coinciding with the calendar year in which a student reaches 18 years of age, unless the student has previously graduated from high school.
SECTION 8.49.(b)  Each local school administrative unit may use any funds available to it to implement the pilot program in accordance with this section to (i) employ up to three additional teachers and (ii) fund additional student‑related costs, such as transportation and technology costs, including additional computers, to serve a greater number of students as a result of the pilot program. Each local school administrative unit may also use any funds available to it to operate a night school program for students at risk of dropping out of high school. To the extent possible, the local school administrative units shall partner with Catawba Valley Community College in administering the pilot program.
SECTION 8.49.(c)  The local school administrative units, in collaboration with the State Board of Education, shall report to the Joint Legislative Education Oversight Committee, the House Appropriations Subcommittee on Education, and the Senate Appropriations Committee on Education/Higher Education on or before January 1, 2016. The report shall include at least all of the following information:
(1)	An analysis of the graduation rate in each local school administrative unit and the impact of the pilot program on the graduation rate.
(2)	The teen crime statistics for Catawba County.
(3)	The number of reported cases of violations of compulsory attendance laws in Catawba County and the disposition of those cases.
(4)	The number of at‑risk students served in any night programs established as part of the pilot program and student graduation and performance outcomes for those students.
(5)	All relevant data to assist in determining the effectiveness of the program and specific legislative recommendations, including the continuation, modification, or expansion of the program statewide.
SECTION 8.49.(d)  The State Board of Education shall not authorize a pilot program under subsection (a) of this section except upon receipt of a copy of a joint resolution adopted by the boards of education for the Hickory Public Schools and the Newton‑Conover City Schools setting forth a date to begin establishment and implementation of the pilot program.

PART IX. THE EXCELLENT PUBLIC SCHOOLS ACT OF 2013

STATE EMPLOYEE LITERACY VOLUNTEER LEAVE TIME
SECTION 9.1. G.S. 126‑4 reads as rewritten:
"§ 126‑4.  Powers and duties of State Personnel Commission.
Subject to the approval of the Governor, the State Personnel Commission shall establish policies and rules governing each of the following:
…
(5b)	A leave program that allows employees to volunteer in a literacy program in a public school for up to five hours each month.
…."

MAXIMIZE INSTRUCTIONAL TIME
SECTION 9.2.(a)  G.S. 115C‑174.12(a) reads as rewritten:
"(a)	The State Board of Education shall establish policies and guidelines necessary for minimizing the time students spend taking tests administered through State and local testing programs, for minimizing the frequency of field testing at any one school, and for otherwise carrying out the provisions of this Article. These policies and guidelines shall include the following:
(1)	Schools shall devote no more than two days of instructional time per year to the taking of practice tests that do not have the primary purpose of assessing current student learning;
(2)	Students in a school shall not be subject to field tests or national tests during the two‑week period preceding the administration of end‑of‑grade tests, end‑of‑course tests, or the school's regularly scheduled final exams; and
(3)	No school shall participate in more than two field tests at any one grade level during a school year.
(4)	All annual assessments of student achievement adopted by the State Board of Education pursuant to G.S. 115C‑174.11(c)(1) and (3) and all final exams for courses shall be administered within the final 10 instructional days of the school year for year‑long courses and within the final five instructional days of the semester for semester courses. Exceptions shall be permitted to accommodate a student's individualized education program and section 504 (29 U.S.C. § 794) plans and for the administration of final exams for courses with national or international curricula required to be held at designated times.
These policies shall reflect standard testing practices to insure reliability and validity of the sample testing. The results of the field tests shall be used in the final design of each test. The State Board of Education's policies regarding the testing of children with disabilities shall (i) provide broad accommodations and alternate methods of assessment that are consistent with a student's individualized education program and section 504 (29 U.S.C. § 794) plans, (ii) prohibit the use of statewide tests as the sole determinant of decisions about a student's graduation or promotion, and (iii) provide parents with information about the Statewide Testing Program and options for children with disabilities. The State Board shall report its proposed policies and proposed changes in policies to the Joint Legislative Education Oversight Committee prior to adoption.
The State Board of Education may appoint an Advisory Council on Testing to assist in carrying out its responsibilities under this Article."
SECTION 9.2.(b)  Notwithstanding the provisions of G.S. 115C‑174.11(c), the State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to the purchase and implementation of a new assessment instrument to assess student achievement on the Common Core State Standards, including the Common Core Smarter Balance Consortium Assessments. The State Board shall not purchase such an assessment instrument without the enactment of legislation by the General Assembly authorizing the purchase.
SECTION 9.2.(c)  This section applies beginning with the 2013‑2014 school year.

STRENGTHEN TEACHER LICENSURE AND MODIFY LICENSURE FEES
SECTION 9.3.(a)  G.S. 115C‑296, as amended by Section 5(b) of S.L. 2013‑226, reads as rewritten:
"§ 115C‑296.  Board sets licensure requirements; reports; lateral entry and mentor programs.
…
(a2)	The State Board of Education shall establish a schedule of fees for teacher licensure and administrative changes. The fees established under this subsection shall not exceed the actual cost of providing the service. The schedule may include fees for any of the following services:
(1)	Application for demographic or administrative changes to a license.
(2)	Application for a duplicate license or for copies of documents in the licensure files.
(3)	Application for a renewal, extension, addition, upgrade, reinstatement, and variation to a license.
(4)	Initial application for a New, In‑State Approved Program Graduate.
(5)	Initial application for an Out‑of‑State license.
(6)	All other applications.
An applicant must pay any nonrefundable service fees at the time an application is submitted.
(a3)	The State Board of Education shall report to the Joint Legislative Education Oversight Committee by March 15 in any year that the amount of fees in the fee schedule established under subsection (a2) of this section has been modified during the previous 12 months. The report shall include the number of personnel paid from licensure receipts, any change in personnel paid from receipts, other related costs covered by the receipts, and the estimated unexpended receipts as of June 30 of the year reported.
…."
SECTION 9.3.(b)  G.S. 115C‑296, as amended by Section 5(b) of S.L. 2013‑226, reads as rewritten:
"§ 115C‑296.  Board sets licensure requirements; reports; lateral entry and mentor programs.
…
(b)	It is the policy of the State of North Carolina to maintain the highest quality teacher education programs and school administrator programs in order to enhance the competence of professional personnel licensed in North Carolina. To the end that teacher preparation programs are upgraded to reflect a more rigorous course of study, the State Board of Education, as lead agency in coordination and cooperation with the University Board of Governors, the Board of Community Colleges and such other public and private agencies as are necessary, shall continue to refine the several licensure requirements, standards for approval of institutions of teacher education, standards for institution‑based innovative and experimental programs, standards for implementing consortium‑based teacher education, and standards for improved efficiencies in the administration of the approved programs.
(1)	Licensure Standards. –
a.	The licensure program shall provide for initial licensure after completion of preservice training, continuing licensure after three years of teaching experience, and license renewal every five years thereafter, until the retirement of the teacher. The last license renewal received prior to retirement shall remain in effect for five years after retirement. The licensure program shall also provide for lifetime licensure after 50 years of teaching.
b.	The State Board of Education, in consultation with the Board of Governors of The University of North Carolina, shall evaluate and develop enhanced requirements for continuing licensure. The new requirements shall reflect more rigorous standards for continuing licensure and shall be aligned with high‑quality professional development programs that reflect State priorities for improving student achievement. Standards for continuing licensure shall include at least eight continuing education credits with at least three credits required in a teacher's academic subject area.
…
(b2)	An undergraduate student seeking a degree in teacher education must attain passing scores on a preprofessional skills test prior to admission to an approved teacher education program in a North Carolina college or university. The State Board of Education shall permit students to fulfill this requirement by achieving the prescribed minimum scores set by the State Board of Education for the Praxis I tests or by achieving the appropriate required score, as determined by the State Board of Education, on the verbal and mathematics portions of the SAT or ACT. The minimum combined verbal and mathematics score set by the State Board of Education for the SAT shall be 1,100 or greater. The minimum composite score set by the State Board of Education for the ACT shall be 24 or greater.
(c)	It is the policy of the State of North Carolina to encourage lateral entry into the profession of teaching by skilled individuals from the private sector. To this end, before the 1985‑86 school year begins, the State Board of Education shall develop criteria and procedures to accomplish the employment of such individuals as classroom teachers. Beginning with the 2006‑2007 school year, the criteria and procedures shall include preservice training in (i) the identification and education of children with disabilities and (ii) positive management of student behavior, effective communication for defusing and deescalating disruptive or dangerous behavior, and safe and appropriate use of seclusion and restraint. Skilled individuals who choose to enter the profession of teaching laterally may be granted a lateral entry teaching license for no more than three years and shall be required to obtain licensure before contracting for a fourth year of service with any local administrative unit in this State.
.…"
SECTION 9.3.(c)  G.S. 115C‑296, as amended by Section 5(b) of S.L. 2013‑226, and as rewritten by subsections (a) and (b) of this section, reads as rewritten:
"§ 115C‑296.  Board sets licensure requirements; reports; lateral entry and mentor programs.
(a)	The State Board of Education shall have entire control of licensing all applicants for teaching positions in all public schools of North Carolina; and it shall prescribe the rules and regulations for the renewal and extension of all licenses and shall determine and fix the salary for each grade and type of license which it authorizes.
The State Board of Education shall require an applicant for an initial bachelors degree license or graduate degree license to demonstrate the applicant's academic and professional preparation by achieving a prescribed minimum score on a standard examination appropriate and adequate for that purpose. Elementary Education (K‑6) and special education general curriculum teachers shall also achieve a prescribed minimum score on subtests or standard examinations specific to teaching reading and mathematics. The State Board of Education shall permit an applicant to fulfill any such testing requirement before or during the applicant's second year of teaching provided the applicant took the examination at least once during the first year of teaching. The State Board of Education shall make any required standard initial licensure exam rigorous and raise the prescribed minimum score as necessary to ensure that each applicant has received high-quality academic and professional preparation to teach effectively.
(a1)	The State Board shall adopt policies that establish the minimum scores for any required standard examinations and other measures necessary to assess the qualifications of professional personnel as required under subsection (a) of this section. For purposes of this subsection, the State Board shall not be subject to Article 2A of Chapter 150B of the General Statutes. At least 30 days prior to changing any policy adopted under this subsection, the State Board shall provide written notice to all North Carolina schools of education and to all local boards of education. The written notice shall include the proposed revised policy.
(a2)	The State Board of Education shall establish a schedule of fees for teacher licensure and administrative changes. The fees established under this subsection shall not exceed the actual cost of providing the service. The schedule may include fees for any of the following services:
(1)	Application for demographic or administrative changes to a license.
(2)	Application for a duplicate license or for copies of documents in the licensure files.
(3)	Application for a renewal, extension, addition, upgrade, reinstatement, and variation to a license.
(4)	Initial application for a New, In‑State Approved Program Graduate.
(5)	Initial application for an Out‑of‑State license.
(6)	All other applications.
An applicant must pay any nonrefundable service fees at the time an application is submitted.
(a3)	The State Board of Education shall report to the Joint Legislative Education Oversight Committee by March 15 in any year that the amount of fees in the fee schedule established under subsection (a2) of this section has been modified during the previous 12 months. The report shall include the number of personnel paid from licensure receipts, any change in personnel paid from receipts, other related costs covered by the receipts, and the estimated unexpended receipts as of June 30 of the year reported.
(b)	It is the policy of the State of North Carolina to maintain the highest quality teacher education programs and school administrator programs in order to enhance the competence of professional personnel licensed in North Carolina. To the end that teacher preparation programs are upgraded to reflect a more rigorous course of study, the State Board of Education, as lead agency in coordination and cooperation with the University Board of Governors, the Board of Community Colleges and such other public and private agencies as are necessary, shall continue to refine the several licensure requirements, standards for approval of institutions of teacher education, standards for institution‑based innovative and experimental programs, standards for implementing consortium‑based teacher education, and standards for improved efficiencies in the administration of the approved programs.
(1)	Licensure standards. – 
a.	The licensure program shall provide for initial licensure after completion of preservice training, continuing licensure after three years of teaching experience, and license renewal every five years thereafter, until the retirement of the teacher. The last license renewal received prior to retirement shall remain in effect for five years after retirement. The licensure program shall also provide for lifetime licensure after 50 years of teaching.
b.	The State Board of Education, in consultation with the Board of Governors of The University of North Carolina, shall evaluate and develop enhanced requirements for continuing licensure. The new requirements shall reflect more rigorous standards for continuing licensure and shall be aligned with high‑quality professional development programs that reflect State priorities for improving student achievement. Standards for continuing licensure shall include at least eight continuing education credits, with at least three credits required in the teacher's academic subject areas. Standards for continuing licensure for elementary and middle school teachers shall include at least three continuing education credits related to literacy. Literacy renewal credits shall include evidence‑based assessment, diagnosis, and intervention strategies for students not demonstrating reading proficiency. Oral language, phonemic and phonological awareness, phonics, vocabulary, fluency, and comprehension shall be addressed in literacy‑related activities leading to license renewal for elementary school teachers.
c.	The State Board of Education, in consultation with local boards of education and the Board of Governors of The University of North Carolina, shall (i) reevaluate and enhance the requirements for renewal of teacher licenses and (ii) consider modifications in the license renewal achievement and to make it a mechanism for teachers to renew continually their knowledge and professional skills.
(2)	Teacher education programs. –
a.	The State Board of Education, as lead agency in coordination with the Board of Governors of The University of North Carolina, the North Carolina Independent Colleges and Universities, and any other public and private agencies as necessary, shall continue to raise standards for entry into teacher education programs.
b.	Reserved for future codification.
c.	To further ensure that teacher preparation programs remain current and reflect a rigorous course of study that is aligned to State and national standards, the State Board of Education, in consultation with the Board of Governors of The University of North Carolina, shall do all of the following to ensure that students are prepared to teach in elementary schools:
1.	Provide students with adequate coursework in the teaching of reading and mathematics.
2.	Assess students prior to licensure to determine that they possess the requisite knowledge in scientifically based reading and mathematics instruction that is aligned with the State Board's expectations.
3.	Continue to provide students with preparation in applying formative and summative assessments within the school and classroom setting through technology‑based assessment systems available in North Carolina schools that measure and predict expected student improvement.
4.	Prepare students to integrate arts across the curriculum.
d.	The State Board of Education, in consultation with local boards of education and the Board of Governors of The University of North Carolina, shall evaluate and modify, as necessary, the academic requirements of teacher preparation programs for students preparing to teach science in middle and high schools to ensure that there is adequate preparation in issues related to science laboratory safety.
e.	The standards for approval of institutions of teacher education shall require that teacher education programs for all students include the following demonstrated competencies:
1.	All teacher education programs. –
I.	The identification and education of children with disabilities.
II.	Positive management of student behavior and effective communication techniques for defusing and deescalating disruptive or dangerous behavior.
2.	Elementary and special education general curriculum teacher education programs. –
I.	Teaching of reading, including a substantive understanding of reading as a process involving oral language, phonological and phonemic awareness, phonics, fluency, vocabulary, and comprehension.
II.	Evidence‑based assessment and diagnosis of specific areas of difficulty with reading development and of reading deficiencies.
III.	Appropriate application of instructional supports and services and reading interventions to ensure reading proficiency for all students.
f.	The State Board of Education shall incorporate the criteria developed in accordance with G.S. 116‑74.21 for assessing proposals under the School Administrator Training Program into its school administrator program approval standards.
...."
SECTION 9.3.(d)  For the 2013‑2014 fiscal year only and notwithstanding Article 2A of Chapter 150B of the General Statutes, the State Board of Education shall be exempt from rulemaking in establishing a schedule of fees for teacher licensure and administrative changes pursuant to G.S. 115C‑296(a2), as amended by this section.
SECTION 9.3.(e)  The State Board of Education shall develop a plan to require the schools of education to measure performance and provide an annual report on the demonstrated competencies included in their elementary and special education general curriculum teacher education programs on (i) teaching of reading, including a substantive understanding of reading as a process involving oral language, phonological and phonemic awareness, phonics, fluency, vocabulary, and comprehension; (ii) evidence‑based assessment and diagnosis of specific areas of difficulty with reading development and of reading deficiencies; and (iii) appropriate application of instructional supports and services and reading interventions to ensure reading proficiency for all students. The plan shall address requiring this information to be included in the annual performance reports to the State Board and the higher education educator preparation program report cards required by G.S. 115C‑296, as enacted by this section. The State Board shall report to the Joint Legislative Education Oversight Committee on or before March 15, 2014, on the plan to include this information in the performance reports required for the 2014‑2015 school year.
SECTION 9.3.(f)  Subsection (b) of this section applies beginning with the 2013‑2014 school year. Subsection (c) of this section applies beginning with the 2014‑2015 school year.
For teachers who are in their fourth or fifth year of their current five‑year license renewal cycle, the changes required by G.S. 115C‑296(b)(1)b., as enacted by subsections (b) and (c) of this section, shall apply beginning with the first year of their next five‑year license renewal cycle.

SCHOOL PERFORMANCE GRADES
SECTION 9.4.(a)  Section 7A.3(e) of S.L. 2012‑142 is repealed.
SECTION 9.4.(b)  Article 8 of Chapter 115C of the General Statutes is amended by adding a new Part to read:
"Part 1B. School Performance.
"§ 115C‑83.11.  School achievement, growth, performance scores, and grades.
(a)	School Scores and Grades. – The State Board of Education shall award school achievement, growth, and performance scores and an associated performance grade as required by G.S. 115C‑12(9)c1., and calculated as provided in this section. The State Board of Education shall enter all necessary data into the Education Value‑Added Assessment System (EVAAS) in order to calculate school performance scores and grades.
(b)	Calculation of the School Achievement Score. – In calculating the overall school achievement score earned by schools, the State Board of Education shall total the sum of points earned by a school on all of the following indicators that are measured for that school:
(1)	One point for each percent of students who score at or above proficient on annual assessments for mathematics in grades three through eight.
(2)	One point for each percent of students who score at or above proficient on annual assessments for reading in grades three through eight.
(3)	One point for each percent of students who score at or above proficient on annual assessments for science in grades five and eight.
(4)	One point for each percent of students who score at or above proficient on the Algebra I or Integrated Math I end‑of‑course test.
(5)	One point for each percent of students who score at or above proficient on the English II end‑of‑course test.(6)	One point for each percent of students who score at or above proficient on the Biology end‑of‑course test.
(7)	One point for each percent of students who complete the Algebra II or Integrated Math III end‑of‑course test with a passing grade.
(8)	One point for each percent of students who achieve the minimum score required for admission into a constituent institution of The University of North Carolina on a nationally normed test of college readiness.
(9)	One point for each percent of students enrolled in Career and Technical Education courses who meet the standard when scoring at Silver, Gold, or Platinum levels on a nationally normed test of workplace readiness.
(10)	One point for each percent of students who graduate within four years of entering high school.
Each school achievement indicator shall be of equal value when used to determine the overall school achievement score. The overall school achievement score shall be translated to a 100‑point scale and used for school reporting purposes as provided in G.S. 115C‑12(9)c1., 115C‑238.29F, and 115C‑238.66.
(c)	Calculation of the School Growth Score. – Using EVAAS, the State Board shall calculate the overall growth score earned by schools. In calculating the total growth score earned by schools, the State Board of Education shall weight student growth on the achievement indicators as provided in subsection (b) of this section that have available growth values. The numerical values used to determine whether a school has met, exceeded, or has not met expected growth shall be translated to a 100‑point scale and used for school reporting purposes as provided in G.S. 115C‑12(9)c1., 115C‑238.29F, and 115C‑238.66.
(d)	Calculation of the School Performance Scores and Grades. – For schools exceeding or not meeting expected school growth, the State Board of Education shall use EVAAS to calculate the school performance score by adding the school achievement score, as provided in subsection (b) of this section, and the school growth score, as provided in subsection (c) of this section, earned by a school. The school achievement score shall account for eighty percent (80%), and the school growth score shall account for (20%) of the total sum. For schools meeting expected growth, and with a school achievement score of eighty percent (80%) or higher, the school performance score shall solely reflect the achievement score. For schools meeting expected growth, and with a school achievement score below eighty percent (80%), the school achievement score shall account for eighty percent (80%), and the school growth score shall account for twenty percent (20%) of the total sum. For all schools, the total school performance score shall be converted to a 100‑point scale and used to determine a school performance grade based on the following scale:
(1)	A school performance score of at least 90 is equivalent to an overall school performance grade of A.
(2)	A school performance score of at least 80 is equivalent to an overall school performance grade of B.
(3)	A school performance score of at least 70 is equivalent to an overall school performance grade of C.
(4)	A school performance score of at least 60 is equivalent to an overall school performance grade of D.
(5)	A school performance score of less than 60 points is equivalent to an overall school performance grade of F.
(e)	Elementary and Middle School Reading and Math Achievement Scores. – For schools serving students in kindergarten through eighth grade, the school achievement scores in reading and mathematics, respectively, shall be reported separately on the annual school report card provided under G.S. 115C‑12(9)c1., 115C‑238.29F, and 115C‑238.66.
(f)	Indication of Growth. – In addition to awarding the overall school scores for achievement, growth, and performance and the performance grade, using EVAAS, the State Board shall designate that a school has met, exceeded, or has not met expected growth. The designation of student growth shall be clearly displayed in the annual school report card provided under G.S. 115C‑12(9)c1., 115C‑238.29F, and 115C‑238.66."
SECTION 9.4.(c)  G.S. 115C‑12(9)c1. reads as rewritten:
"c1.	To issue an annual "report card" for the State and for each local school administrative unit, assessing each unit's efforts to improve student performance based on the growth in performance of the students in each school and taking into account progress over the previous years' level of performance and the State's performance in comparison with other states. This assessment shall take into account factors that have been shown to affect student performance and that the State Board considers relevant to assess the State's efforts to improve student performance. As a part of the annual "report card" for each local school administrative unit, the State Board shall award, in accordance with G.S. 115C‑83.11, an overall numerical school achievement, growth, and performance score on a scale of zero to 100 and a corresponding performance letter grade of A, B, C, D, or F earned by each school within the local school administrative unit. The school performance score and grade shall reflect student performance on annual subject‑specific assessments, college and workplace readiness measures, and graduation rates. For schools serving students in any grade from kindergarten to eighth grade, separate performance scores and grades shall also be awarded based on the school performance in reading and mathematics respectively. The annual "report card" for schools serving students in third grade also shall include the number and percentage of third grade students who (i) take and pass the alternative assessment of reading comprehension; (ii) were retained in third grade for not demonstrating reading proficiency as indicated in G.S. 115C‑83.7(a); and (iii) were exempt from mandatory third grade retention by category of exemption as listed in G.S. 115C‑83.7(b)."
SECTION 9.4.(d)  G.S. 115C‑12(24) reads as rewritten:
"(24)	Duty to Develop Standards for Alternative Learning Programs, Provide Technical Assistance on Implementation of Programs, and Evaluate Programs. – The State Board of Education shall adopt standards for assigning students to alternative learning programs. These standards shall include (i) a description of the programs and services that are recommended to be provided in alternative learning programs and (ii) a process for ensuring that an assignment is appropriate for the student and that the student's parents are involved in the decision. The State Board also shall adopt policies that define what constitutes an alternative school and an alternative learning program.
The State Board of Education shall also adopt standards to require that local school administrative units shall use (i) the teachers allocated for students assigned to alternative learning programs pursuant to the regular teacher allotment and (ii) the teachers allocated for students assigned to alternative learning programs only to serve the needs of these students.
The State Board of Education shall provide technical support to local school administrative units to assist them in developing and implementing plans and proposals for alternative learning programs.
The State Board shall evaluate the effectiveness of alternative learning programs and, in its discretion, of any other programs funded from the Alternative Schools/At‑Risk Student allotment. Local school administrative units shall report to the State Board of Education on how funds in the Alternative Schools/At‑Risk Student allotment are spent and shall otherwise cooperate with the State Board of Education in evaluating the alternative learning programs. As part of its evaluation of the effectiveness of these programs, the State Board shall, through the application of the accountability system developed under G.S. 115C‑83.11 and G.S. 115C‑105.35, measure the educational performance and growth of students placed in alternative schools and alternative programs. If appropriate, the Board may modify this system to adapt to the specific characteristics of these schools. Also as part of its evaluation, the State Board shall evaluate its standards adopted under this subdivision and make any necessary changes to those standards based on strategies that have been proven successful in improving student achievement and shall report to the Joint Legislative Education Oversight Committee by April 15, 2006 to determine if any changes are necessary to improve the implementation of successful alternative learning programs and alternative schools."
SECTION 9.4.(e)  It is the intent of the General Assembly to provide clear information to the public regarding school performance. To this end, the State Board of Education shall do the following when providing information on school report cards as required by G.S. 115C‑12(9)c1.:
(1)	Solely use the school performance grade calculation method and resulting scores and grades as provided under G.S. 115C‑83.11, as enacted by this section.
(2) 	Include a description understandable by members of the general public of the school performance grade calculation method and resulting scores and grades.
SECTION 9.4.(f)  The State Board of Education shall issue the first annual report cards under G.S. 115C‑12(9)c1., as amended by this section, no earlier than August 1, 2014.
SECTION 9.4.(g)  This section applies beginning with the 2013‑2014 school year.

PAY FOR EXCELLENCE
SECTION 9.5.  When a robust evaluation instrument and process that accurately assesses and evaluates the effectiveness of teachers, especially in the area of student growth, is wholly implemented in North Carolina, it is the intent of the General Assembly that the evaluation instrument and process be utilized in the implementation of a plan of performance pay for teachers in this State.

TEACHER CONTRACTS
SECTION 9.6.(a)  G.S. 115C‑325 is repealed.
SECTION 9.6.(b)  Part 3 of Article 22 of Chapter 115C of the General Statutes is amended by adding new sections to read:
"§ 115C‑325.1.  Definitions.
As used in this Part, the following definitions apply:
(1)	"Day" means calendar day. In computing any period of time, Rule 6 of the North Carolina Rules of Civil Procedure shall apply.
(2)	"Demote" means to reduce the salary of a person who is classified or paid by the State Board of Education as a classroom teacher or as a school administrator during the time of the contract. The word "demote" does not include (i) a suspension without pay pursuant to G.S. 115C‑325.5(a); (ii) the elimination or reduction of bonus payments, including merit‑based supplements or a systemwide modification in the amount of any applicable local supplement; (iii) any reduction in salary that results from the elimination of a special duty, such as the duty of an athletic coach or a choral director; or (iv) any reduction of pay as compared to a prior term of contract.
(3)	"Disciplinary suspension" means a final decision to suspend a teacher or school administrator without pay for no more than 60 days under G.S. 115C‑325.5(b).
(4)	"Residential school" means a school operated by the Department of Health and Human Services that provides residential services to students pursuant to Part 3A of Article 3 of Chapter 143B of the General Statutes or a school operated pursuant to Article 9C of Chapter 115C of the General Statutes.
(5)	"School administrator" means a principal, assistant principal, supervisor, or director whose major function includes the direct or indirect supervision of teaching or any other part of the instructional program, as provided in G.S. 115C‑287.1(a)(3).
(6)	"Teacher" means a person meeting each of the following requirements:
a.	Who holds at least one of the following licenses issued by the State Board of Education:
1.	A current standard professional educator's license.
2.	A current lateral entry teaching license.
3.	A regular, not expired, vocational license.
b.	Whose major responsibility is to teach or directly supervise teaching or who is classified by the State Board of Education or is paid either as a classroom teacher or instructional support personnel.
c.	Who is employed to fill a full‑time, permanent position.
(7)	"Year" means a calendar year beginning July 1 and ending June 30.
"§ 115C‑325.2.  Personnel files.
(a)	Maintenance of Personnel File. – The superintendent shall maintain in his or her office a personnel file for each teacher that contains any complaint, commendation, or suggestion for correction or improvement about the teacher's professional conduct, except that the superintendent may elect not to place in a teacher's file (i) a letter of complaint that contains invalid, irrelevant, outdated, or false information or (ii) a letter of complaint when there is no documentation of an attempt to resolve the issue. The complaint, commendation, or suggestion shall be signed by the person who makes it and shall be placed in the teacher's file only after five days' notice to the teacher. Any denial or explanation relating to such complaint, commendation, or suggestion that the teacher desires to make shall be placed in the file. Any teacher may petition the local board of education to remove any information from the teacher's personnel file that the teacher deems invalid, irrelevant, or outdated. The board may order the superintendent to remove said information if it finds the information is invalid, irrelevant, or outdated.
(b)	Inspection of Personnel Files. – The personnel file shall be open for the teacher's inspection at all reasonable times but shall be open to other persons only in accordance with such rules and regulations as the board adopts. Any preemployment data or other information obtained about a teacher before the teacher's employment by the board may be kept in a file separate from the teacher's personnel file and need not be made available to the teacher. No data placed in the preemployment file may be introduced as evidence at a hearing on the dismissal or demotion of a teacher, except the data may be used to substantiate G.S. 115C‑325.4(a)(7) or G.S. 115C‑325.4(a)(14) as grounds for dismissal or demotion.
"§ 115C‑325.3.  Teacher contracts.
(a)	Length of Contract. – A contract between the local board of education and a teacher who has been employed by the local board of education for less than three years shall be for a term of one school year. A contract or renewal of contract between the local board of education and a teacher who has been employed by the local board of education for three years or more shall be for a term of one, two, or four school years.
(b)	Superintendent Recommendation to Local Board. – Local boards of education shall employ teachers upon the recommendation of the superintendent. If a superintendent intends to recommend to the local board of education that a teacher be offered a new or renewed contract, the superintendent shall submit the recommendation to the local board for action and shall include in the recommendation the length of the term of contract. A superintendent shall only recommend a teacher for a contract of a term longer than one school year if the teacher has shown effectiveness as demonstrated by proficiency on the evaluation instrument. The local board may approve the superintendent's recommendation, may decide not to offer the teacher a new or renewed contract, or may decide to offer the teacher a renewed contract for a different term than recommended by the superintendent.
(c)	Dismissal During Term of Contract. – A teacher shall not be dismissed or demoted during the term of the contract except for the grounds and by the procedure set forth in G.S. 115C‑325.4.
(d)	Recommendation on Nonrenewal. – If a superintendent decides not to recommend that the local board of education offer a renewed contract to a teacher, the superintendent shall give the teacher written notice of the decision no later than June 1.(e)	Right to Petition for Hearing. – A teacher shall have the right to petition the local board of education for a hearing no later than 10 days after receiving written notice. The local board may, in its discretion, grant a hearing regarding the superintendent's recommendation for nonrenewal. The local board of education shall notify the teacher making the petition of its decision whether to grant a hearing. If the request for a hearing is granted, the local board shall conduct a hearing pursuant to the provisions of G.S. 115C‑45(c) and make a final decision on whether to offer the teacher a renewed contract. The board shall notify a teacher whose contract will not be renewed for the next school year of its decision by June 15; provided, however, if a teacher submits a request for a hearing, the board shall provide the nonrenewal notification within 10 days of the hearing or such later date upon the written consent of the superintendent and teacher. A decision not to offer a teacher a renewed contract shall not be arbitrary, capricious, discriminatory, for personal or political reasons, or on any basis prohibited by State or federal law.
(f)	Failure to Offer Contract or Notify on Nonrenewal of Contract. – If a teacher fails to receive a contract offer but does not receive written notification from the superintendent of a recommendation of nonrenewal, and the teacher continues to teach in the local school administrative unit without entering into a contract with the local board, upon discovery of the absence of contract, the board by majority vote shall do one of the following:
(1)	Offer the teacher a one-year contract expiring no later than June 30 of the current school year.
(2)	Dismiss the teacher and provide the teacher with the equivalent of one additional month's pay. A teacher dismissed as provided in this section shall be considered an at‑will employee and shall not be entitled to a hearing or appeal of the dismissal.
(g)	Local boards of education and teachers employed by the local board may mutually modify the terms of the contract to permit part‑time employment. An individual that mutually modifies a full‑time contract to permit part‑time employment or enters into a part‑time contract is not a teacher as defined in G.S. 115C‑325.1(6).
"§ 115C‑325.4.  Dismissal or demotion for cause.
(a)	Grounds. – No teacher shall be dismissed, demoted, or reduced to employment on a part‑time basis for disciplinary reasons during the term of the contract except for one or more of the following:
(1)	Inadequate performance. In determining whether the professional performance of a teacher is adequate, consideration shall be given to regular and special evaluation reports prepared in accordance with the published policy of the employing local school administrative unit and to any published standards of performance which shall have been adopted by the board. Inadequate performance for a teacher shall mean (i) the failure to perform at a proficient level on any standard of the evaluation instrument or (ii) otherwise performing in a manner that is below standard.
(2)	Immorality.
(3)	Insubordination.
(4)	Neglect of duty.
(5)	Physical or mental incapacity.
(6)	Habitual or excessive use of alcohol or nonmedical use of a controlled substance as defined in Article 5 of Chapter 90 of the General Statutes.
(7)	Conviction of a felony or a crime involving moral turpitude.
(8)	Advocating the overthrow of the government of the United States or of the State of North Carolina by force, violence, or other unlawful means.
(9)	Failure to fulfill the duties and responsibilities imposed upon teachers or school administrators by the General Statutes of this State.
(10)	Failure to comply with such reasonable requirements as the board may prescribe.
(11)	Any cause which constitutes grounds for the revocation of the teacher's teaching license or the school administrator's administrator license.
(12)	Failure to maintain his or her license in a current status.
(13)	Failure to repay money owed to the State in accordance with the provisions of Article 60 of Chapter 143 of the General Statutes.
(14)	Providing false information or knowingly omitting a material fact on an application for employment or in response to a preemployment inquiry.
(15)	A justifiable decrease in the number of positions due to district reorganization, decreased enrollment, or decreased funding.
(b)	Dismissal Procedure. – The procedures provided in G.S. 115C‑325.6 shall be followed for dismissals, demotions, or reductions to part‑time employment for disciplinary reasons for any reason specified in subsection (a) of this section.
"§ 115C‑325.5.  Teacher suspension.
(a)	Immediate Suspension Without Pay. – If a superintendent believes that cause exists for dismissing a teacher for any reason specified in G.S. 115C‑325.4 and that immediate suspension of the teacher is necessary, the superintendent may suspend the teacher without pay. Before suspending a teacher without pay, the superintendent shall meet with the teacher and give him or her written notice of the charges against the teacher, an explanation of the basis for the charges, and an opportunity to respond. Within five days after a suspension under this subsection, the superintendent shall initiate a dismissal, demotion, or disciplinary suspension without pay as provided in this section. If it is finally determined that no grounds for dismissal, demotion, or disciplinary suspension without pay exist, the teacher shall be reinstated immediately, shall be paid for the period of suspension, and all records of the suspension shall be removed from the teacher's personnel file.
(b)	Disciplinary Suspension Without Pay. – A teacher recommended for disciplinary suspension without pay may request a hearing before the board. The hearing shall be conducted as provided in G.S. 115C‑325.7. If no request is made within 15 days, the superintendent may file his or her recommendation with the board. If, after considering the recommendation of the superintendent and the evidence adduced at the hearing if one is held, the board concludes that the grounds for the recommendation are true and substantiated by a preponderance of the evidence, the board, if it sees fit, may by resolution order such suspension.
(c)	Suspension With Pay. – If a superintendent believes that cause may exist for dismissing or demoting a teacher for any reasons specified in G.S. 115C‑325.4 but that additional investigation of the facts is necessary and circumstances are such that the teacher should be removed immediately from the teacher's duties, the superintendent may suspend the teacher with pay for a reasonable period of time, not to exceed 90 days. The superintendent shall notify the board of education within two days of the superintendent's action and shall notify the teacher within two days of the action and the reasons for it. If the superintendent has not initiated dismissal or demotion proceedings against the teacher within the 90‑day period, the teacher shall be reinstated to the teacher's duties immediately, and all records of the suspension with pay shall be removed from the teacher's personnel file at the teacher's request. However, if the superintendent and the teacher agree to extend the 90‑day period, the superintendent may initiate dismissal or demotion proceedings against the teacher at any time during the period of the extension."§ 115C‑325.6.  Procedure for dismissal or demotion of a teacher for cause.
(a)	Recommendation of Dismissal or Demotion. – A teacher may not be dismissed, demoted, or reduced to part‑time employment for disciplinary reasons during the term of the contract except upon the superintendent's recommendation based on one or more of the grounds in G.S. 115C‑325.4.
(b)	Notice of Recommendation. – Before recommending to a board the dismissal or demotion of a teacher, the superintendent shall give written notice to the teacher by certified mail or personal delivery of the superintendent's intention to make such recommendation and shall set forth as part of the superintendent's recommendation the grounds upon which he or she believes such dismissal or demotion is justified. The superintendent also shall meet with the teacher and provide written notice of the charges against the teacher, an explanation of the basis for the charges, and an opportunity to respond if the teacher has not done so under G.S. 115C‑325.5(a). The notice shall include a statement to the effect that the teacher, within 14 days after the date of receipt of the notice, may request a hearing before the board on the superintendent's recommendation. A copy of Part 3 of Article 22 of Chapter 115C of the General Statutes shall also be sent to the teacher.
(c)	Request for Hearing. – Within 14 days after receipt of the notice of recommendation, the teacher may file with the superintendent a written request for a hearing before the board on the superintendent's recommendation. The superintendent shall submit his or her recommendation to the board. Within five days after receiving the superintendent's recommendation and before taking any formal action, the board shall set a time and place for the hearing and shall notify the teacher by certified mail or personal delivery of the date, time, and place of the hearing. The time specified shall not be less than 10 nor more than 30 days after the board has notified the teacher, unless both parties agree to an extension. The hearing shall be conducted as provided in G.S. 115C‑325.7.
(d)	No Request for Hearing. – If the teacher does not request a hearing before the board within the 14 days provided, the superintendent may submit his or her recommendation to the board. The board, if it sees fit, may by resolution (i) reject the superintendent's recommendation or (ii) accept or modify the superintendent's recommendation and dismiss, demote, reinstate, or suspend the teacher without pay.
"§ 115C‑325.7.  Hearing before board.
(a)	The following procedures shall apply for a board hearing for dismissal, demotion, reduction to part‑time employment for disciplinary reasons, or disciplinary suspension without pay:
(1)	The hearing shall be private.
(2)	The hearing shall be conducted in accordance with reasonable rules adopted by the State Board of Education to govern such hearings.
(3)	At the hearing, the teacher and the superintendent shall have the right to be present and to be heard, to be represented by counsel, and to present through witnesses any competent testimony relevant to the issue of whether grounds exist for a dismissal, demotion, reduction to part‑time employment for disciplinary reasons, or disciplinary suspension without pay.
(4)	Rules of evidence shall not apply to a hearing under this subsection, and the board may give probative effect to evidence that is of a kind commonly relied on by reasonably prudent persons in the conduct of serious affairs.
(5)	At least five days before the hearing, the superintendent shall provide to the teacher a list of witnesses the superintendent intends to present, a brief statement of the nature of the testimony of each witness, and a copy of any documentary evidence the superintendent intends to present.
(6)	At least three days before the hearing, the teacher shall provide the superintendent a list of witnesses the teacher intends to present, a brief statement of the nature of the testimony of each witness, and a copy of any documentary evidence the teacher intends to present.
(7)	No new evidence may be presented at the hearing except upon a finding by the board that the new evidence is critical to the matter at issue and the party making the request could not, with reasonable diligence, have discovered and produced the evidence according to the schedule provided in this section.
(8)	The board may subpoena and swear witnesses and may require them to give testimony and to produce records and documents relevant to the grounds for dismissal, demotion, reduction to part‑time employment for disciplinary reasons, or disciplinary suspension without pay.
(9)	The board shall decide all procedural issues, including limiting cumulative evidence, necessary for a fair and efficient hearing.
(10)	The superintendent shall provide for making a transcript of the hearing. The teacher may request and shall receive at no charge a transcript of the proceedings."§ 115C‑325.8.  Right of appeal.
(a)	A teacher who (i) has been dismissed, demoted, or reduced to employment on a part‑time basis for disciplinary reasons during the term of the contract as provided in G.S. 115C‑325.4, or has received a disciplinary suspension without pay as provided in G.S. 115C‑325.5, and (ii) requested and participated in a hearing before the local board of education, shall have a further right of appeal from the final decision of the local board of education to the superior court of the State on one or more of the following grounds that the decision:
(1)	Is in violation of constitutional provisions.
(2)	Is in excess of the statutory authority or jurisdiction of the board.
(3)	Was made upon unlawful procedure.
(4)	Is affected by other error of law.
(5)	Is unsupported by substantial evidence in view of the entire record as submitted.
(6)	Is arbitrary or capricious.
(b)	An appeal pursuant to this section must be filed within 30 days of notification of the final decision of the local board of education and shall be decided on the administrative record. The superior court shall have authority to affirm or reverse the local board's decision or remand the matter to the local board of education. The superior court shall not have authority to award monetary damages or to direct the local board of education to enter into an employment contract of more than one year, ending June 30.
"§ 115C‑325.9.  Teacher resignation.
(a)	Teacher Resignation Following Recommendation for Dismissal. – If a teacher has been recommended for dismissal under G.S. 115C‑325.4 and the teacher chooses to resign without the written agreement of the superintendent, then:
(1)	The superintendent shall report the matter to the State Board of Education.
(2)	The teacher shall be deemed to have consented to (i) the placement in the teacher's personnel file of the written notice of the superintendent's intention to recommend dismissal and (ii) the release of the fact that the superintendent has reported this teacher to the State Board of Education to prospective employers, upon request. The provisions of G.S. 115C‑321 shall not apply to the release of this particular information.
(3)	The teacher shall be deemed to have voluntarily surrendered his or her license pending an investigation by the State Board of Education in a determination whether or not to seek action against the teacher's license. This license surrender shall not exceed 45 days from the date of resignation. Provided further that the cessation of the license surrender shall not prevent the State Board of Education from taking any further action it deems appropriate. The State Board of Education shall initiate investigation within five working days of the written notice from the superintendent and shall make a final decision as to whether to revoke or suspend the teacher's license within 45 days from the date of resignation.
(b)	Thirty Days' Notice Resignation Requirement. – A teacher who is not recommended for dismissal should not resign during the term of the contract without the consent of the superintendent unless he or she has given at least 30 days' notice. If a teacher who is not recommended for dismissal does resign during the term of the contract without giving at least 30 days' notice, the board may request that the State Board of Education revoke the teacher's license for the remainder of that school year. A copy of the request shall be placed in the teacher's personnel file.
"§ 115C‑325.10.  Application to certain institutions.
Notwithstanding any law or regulation to the contrary, this Part shall apply to all persons employed in teaching and related educational classes in the schools and institutions of the Departments of Health and Human Services and Public Instruction and the Divisions of Juvenile Justice and Adult Correction of the Department of Public Safety, regardless of the age of the students.
"§ 115C‑325.11.  Dismissal of school administrators and teachers employed in low‑performing residential schools.
(a)	Notwithstanding any other provision of this section or any other law, this section shall govern the dismissal by the State Board of Education of teachers, principals, assistant principals, directors, supervisors, and other licensed personnel assigned to a residential school that the State Board has identified as low‑performing and to which the State Board has assigned an assistance team. The State Board shall dismiss a teacher, principal, assistant principal, director, supervisor, or other licensed personnel when the State Board receives two consecutive evaluations that include written findings and recommendations regarding that person's inadequate performance from the assistance team. These findings and recommendations shall be substantial evidence of the inadequate performance of the teacher or school administrator.
(b)	The State Board may dismiss a teacher, principal, assistant principal, director, supervisor, or other licensed personnel when:
(1)	The State Board determines that the school has failed to make satisfactory improvement after the State Board assigned an assistance team to that school.
(2)	That assistance team makes the recommendation to dismiss the teacher, principal, assistant principal, director, supervisor, or other licensed personnel for one or more grounds established in G.S. 115C‑325.4 for dismissal or demotion of a teacher.
Within 30 days of any dismissal under this subsection, a teacher, principal, assistant principal, director, supervisor, or other licensed personnel may request a hearing before a panel of three members designated by the State Board. The State Board shall adopt procedures to ensure that due process rights are afforded to persons recommended for dismissal under this subsection. Decisions of the panel may be appealed on the record to the State Board.
(c)	Notwithstanding any other provision of this section or any other law, this subsection shall govern the dismissal by the State Board of licensed staff members who have engaged in a remediation plan under G.S. 115C‑105.38A(c) but who, after one retest, fail to meet the general knowledge standard set by the State Board. The failure to meet the general knowledge standard after one retest shall be substantial evidence of the inadequate performance of the licensed staff member.
Within 30 days of any dismissal under this subsection, a licensed staff member may request a hearing before a panel of three members designated by the State Board. The State Board shall adopt procedures to ensure that due process rights are afforded to licensed staff members recommended for dismissal under this subsection. Decisions of the panel may be appealed on the record to the State Board.
(d)	The State Board or the superintendent of a residential school may terminate the contract of a school administrator dismissed under this section. Nothing in this section shall prevent the State Board from refusing to renew the contract of any person employed in a school identified as low‑performing.
(e)	Neither party to a school administrator or teacher contract is entitled to damages under this section.
(f)	The State Board shall have the right to subpoena witnesses and documents on behalf of any party to the proceedings under this section.
"§ 115C‑325.12.  Procedure for dismissal of principals employed in low‑performing schools.
(a)	Dismissal of Principals Assigned to Low‑Performing Schools With Assistance Teams. – Notwithstanding any other provision of this Part or any other law, this section governs the State Board's dismissal of principals assigned to low‑performing schools to which the State Board has assigned an assistance team.
(b)	Authority of State Board to Dismiss Principal. – The State Board through its designee may, at any time, recommend the dismissal of any principal who is assigned to a low‑performing school to which an assistance team has been assigned. The State Board through its designee shall recommend the dismissal of any principal when the State Board receives from the assistance team assigned to that principal's school two consecutive evaluations that include written findings and recommendations regarding the principal's inadequate performance.
(c)	Procedures for Dismissal of Principal. –
(1)	If the State Board through its designee recommends the dismissal of a principal under this section, the principal shall be suspended with pay pending a hearing before a panel of three members of the State Board. The purpose of this hearing, which shall be held within 60 days after the principal is suspended, is to determine whether the principal shall be dismissed.
(2)	The panel shall order the dismissal of the principal if it determines from available information, including the findings of the assistance team, that the low performance of the school is due to the principal's inadequate performance.
(3)	The panel may order the dismissal of the principal if (i) it determines that the school has not made satisfactory improvement after the State Board assigned an assistance team to that school and (ii) the assistance team makes the recommendation to dismiss the principal for one or more grounds established in G.S. 115C‑325.4 for dismissal or demotion of a teacher.
(4)	If the State Board or its designee recommends the dismissal of a principal before the assistance team assigned to the principal's school has evaluated that principal, the panel may order the dismissal of the principal if the panel determines from other available information that the low performance of the school is due to the principal's inadequate performance.
(5)	In all hearings under this section, the burden of proof is on the principal to establish that the factors leading to the school's low performance were not due to the principal's inadequate performance. In all hearings under this section, the burden of proof is on the State Board to establish that the school failed to make satisfactory improvement after an assistance team was assigned to the school and to establish one or more of the grounds established for dismissal or demotion of a teacher under G.S. 115C‑325.4.
(6)	In all hearings under this section, two consecutive evaluations that include written findings and recommendations regarding that principal's inadequate performance from the assistance team are substantial evidence of the inadequate performance of the principal.
(7)	The State Board shall adopt procedures to ensure that due process rights are afforded to principals under this section. Decisions of the panel may be appealed on the record to the State Board.
(d)	The State Board of Education or a local board may terminate the contract of a principal dismissed under this section.
(e)	Neither party to a school administrator contract is entitled to damages under this section.
(f)	The State Board shall have the right to subpoena witnesses and documents on behalf of any party to the proceedings under this section.
"§ 115C‑325.13.  Procedure for dismissal of teachers employed in low‑performing schools.
(a)	Notwithstanding any other provision of this Part or any other law, this section shall govern the State Board's dismissal of teachers, assistant principals, directors, and supervisors assigned to schools that the State Board has identified as low‑performing and to which the State Board has assigned an assistance team under Article 8B of this Chapter. The State Board shall dismiss a teacher, assistant principal, director, or supervisor when the State Board receives two consecutive evaluations that include written findings and recommendations regarding that person's inadequate performance from the assistance team. These findings and recommendations shall be substantial evidence of the inadequate performance of the teacher, assistant principal, director, or supervisor.
(b)	The State Board may dismiss a teacher, assistant principal, director, or supervisor when:
(1)	The State Board determines that the school has failed to make satisfactory improvement after the State Board assigned an assistance team to that school under G.S. 115C‑105.38; and
(2)	That assistance team makes the recommendation to dismiss the teacher, assistant principal, director, or supervisor for one or more grounds established in G.S. 115C‑325.4 for dismissal or demotion for cause.
A teacher, assistant principal, director, or supervisor may request a hearing before a panel of three members of the State Board within 30 days of any dismissal under this section. The State Board shall adopt procedures to ensure that due process rights are afforded to persons recommended for dismissal under this section. Decisions of the panel may be appealed on the record to the State Board.
(c)	Notwithstanding any other provision of this Part or any other law, this section shall govern the State Board's dismissal of licensed staff members who have engaged in a remediation plan under G.S. 115C‑105.38A(c) but who, after one retest, fail to meet the general knowledge standard set by the State Board. The failure to meet the general knowledge standard after one retest shall be substantial evidence of the inadequate performance of the licensed staff member.
(d)	A licensed staff member may request a hearing before a panel of three members of the State Board within 30 days of any dismissal under this section. The State Board shall adopt procedures to ensure that due process rights are afforded to licensed staff members recommended for dismissal under this section. Decisions of the panel may be appealed on the record to the State Board.
(e)	The State Board of Education or a local board may terminate the contract of a teacher, assistant principal, director, or supervisor dismissed under this section.
(f)	Neither party to a school administrator or teacher contract is entitled to damages under this section.
(g)	The State Board shall have the right to subpoena witnesses and documents on behalf of any party to the proceedings under this section."
SECTION 9.6.(c)  G.S. 115C‑45(c) reads as rewritten:
"(c)	Appeals to Board of Education and to Superior Court. – An appeal shall lie to the local board of education from any final administrative decision in the following matters:
(1)	The discipline of a student under G.S. 115C‑390.7, 115C‑390.10, or 115C‑390.11;
(2)	An alleged violation of a specified federal law, State law, State Board of Education policy, State rule, or local board policy, including policies regarding grade retention of students;
(3)	The terms or conditions of employment or employment status of a school employee; and
(4)	Any other decision that by statute specifically provides for a right of appeal to the local board of education and for which there is no other statutory appeal procedure.
As used in this subsection, the term "final administrative decision" means a decision of a school employee from which no further appeal to a school administrator is available.
Any person aggrieved by a decision not covered under subdivisions (1) through (4) of this subsection shall have the right to appeal to the superintendent and thereafter shall have the right to petition the local board of education for a hearing, and the local board may grant a hearing regarding any final decision of school personnel within the local school administrative unit. The local board of education shall notify the person making the petition of its decision whether to grant a hearing.
In all appeals to the board it is the duty of the board of education to see that a proper notice is given to all parties concerned and that a record of the hearing is properly entered in the records of the board conducting the hearing.
The board of education may designate hearing panels composed of not less than two members of the board to hear and act upon such appeals in the name and on behalf of the board of education.
An appeal of right brought before a local board of education under subdivision (1), (2), or (4) of this subsection may be further appealed to the superior court of the State on the grounds that the local board's decision is in violation of constitutional provisions, is in excess of the statutory authority or jurisdiction of the board, is made upon unlawful procedure, is affected by other error of law, is unsupported by substantial evidence in view of the entire record as submitted, or is arbitrary or capricious."
SECTION 9.6.(d)  G.S. 115C‑287.1 reads as rewritten:
"§ 115C‑287.1.  Method of employment of principals, assistant principals, supervisors, and directors.
(a)	(1)	All persons employed as school administrators shall be employed pursuant to this section.
				(3)	For purposes of this section, school administrator means a:
a.	Principal;
b.	Assistant principal;
c.	Supervisor; or
d.	Director,
	whose major function includes the direct or indirect supervision of teaching or of any other part of the instructional program.
	(b)	Local boards of education shall employ school administrators upon the recommendation of the superintendent. The initial contract between a school administrator and a local board of education shall be for two to four years, ending on June 30 of the final 12 months of the contract. In the case of a subsequent contract between a principal or assistant principal and a local board of education, the contract shall be for a term of four years. In the case of an initial contract between a school administrator and a local board of education, the first year of the contract may be for a period of less than 12 months provided the contract becomes effective on or before September 1. A local board of education may, with the written consent of the school administrator, extend, renew, or offer a new school administrator's contract at any time after the first 12 months of the contract so long as the term of the new, renewed, or extended contract does not exceed four years. Rolling annual contract renewals are not allowed. Nothing in this section shall be construed to prohibit the filling of an administrative position on an interim or temporary basis.
(c)	The term of employment shall be stated in a written contract that shall be entered into between the local board of education and the school administrator. The school administrator shall not be dismissed or demoted during the term of the contract except for the grounds and by the procedure by which a teacher may be dismissed or demoted for cause as set forth in G.S. 115C‑325.4.
(d)	If a superintendent intends to recommend to the local board of education that the school administrator be offered a new, renewed, or extended contract, the superintendent shall submit the recommendation to the local board for action. The local board may approve the superintendent's recommendation or decide not to offer the school administrator a new, renewed, or extended school administrator's contract.
If a superintendent decides not to recommend that the local board of education offer a new, renewed, or extended school administrator's contract to the school administrator, the superintendent shall give the school administrator written notice of his or her decision no later than May 1 of the final year of the contract. The superintendent's reasons may not be arbitrary, capricious, discriminatory, personal, political, or prohibited by State or federal law. No action by the local board or further notice to the school administrator shall be necessary unless the school administrator files with the superintendent a written request, within 10 days of receipt of the superintendent's decision, for a hearing before the local board. Failure to file a timely request for a hearing shall result in a waiver of the right to appeal the superintendent's decision. If a school administrator files a timely request for a hearing, the local board shall conduct a hearing pursuant to the provisions of G.S. 115C‑45(c) and make a final decision on whether to offer the school administrator a new, renewed, or extended school administrator's contract.
If the local board decides not to offer the school administrator a new, renewed, or extended school administrator's contract, the local board shall notify the school administrator of its decision by June 1 of the final year of the contract. A decision not to offer the school administrator a new, renewed, or extended contract may be for any cause that is not arbitrary, capricious, discriminatory, personal, political, or prohibited by State or federal law. (e)	Repealed by Session Laws 1995, c. 369, s. 1.
(f)	If the superintendent or the local board of education fails to notify a school administrator by June 1 of the final year of the contract that the school administrator will not be offered a new school administrator's contract, the school administrator shall be entitled to 30 days of additional employment or severance pay beyond the date the school administrator receives written notice that a new contract will not be offered.
	(h)	An individual who holds a provisional assistant principal's license and who is employed as an assistant principal under G.S. 115C‑284(c) shall be considered a school administrator for purposes of this section. Notwithstanding subsection (b) of this section, a local board may enter into one‑year contracts with a school administrator who holds a provisional assistant principal's license. Nothing in this subsection or G.S. 115C‑284(c) shall be construed to require a local board to extend or renew the contract of a school administrator who holds a provisional assistant principal's license."
SECTION 9.6.(e)  The State Board of Education shall develop by rule as provided in Article 2A of Chapter 150B of the General Statutes a model contract for use by local boards of education in awarding teacher contracts. The State Board may adopt a temporary rule for a model contract as provided in G.S. 150B‑21.1 to provide a contract to local boards of education no later than January 1, 2014, but shall replace the temporary rule with a permanent rule as soon as practicable.
SECTION 9.6.(f)  G.S. 115C‑325(c)(1) through (c)(3) and G.S. 115‑325(c)(5) and (c)(6) are repealed effective August 1, 2013. Individuals who have not received career status prior to the 2013‑2014 school year shall not be granted career status during the 2013‑2014 school year. All teachers who have not been granted career status prior to the 2013‑2014 school year shall be offered only one‑year contracts, except for qualifying teachers offered a four‑year contract as provided in subsection (g) of this section, until the 2018‑2019 school year.
SECTION 9.6.(g)  Beginning September 1, 2013, to June 30, 2014, all superintendents shall review the performance and evaluations of all teachers who have been employed by the local board for at least three consecutive years. Based on these reviews, the superintendent shall identify and recommend to the local board twenty‑five percent (25%) of those teachers employed by the local board for at least three consecutive years to be awarded four‑year contracts beginning with the 2014‑2015 school year. The superintendent shall not recommend to the local board any teacher for a four‑year contract unless that teacher has shown effectiveness as demonstrated by proficiency on the teacher evaluation instrument. The local board of education shall review the superintendent's recommendation and may approve that recommendation or may select other teachers as part of the twenty‑five percent (25%) to offer four‑year contracts, but the local board shall not offer any teacher a four‑year contract unless that teacher has shown effectiveness as demonstrated by proficiency on the teacher evaluation instrument. Contract offers shall be made and accepted no later than June 30, 2014. A teacher shall cease to be employed pursuant to G.S. 115C‑325 and voluntarily relinquishes career status or any claim of career status by acceptance of a four‑year contract as provided in this section.
SECTION 9.6.(h)  Teachers employed by a local board of education on a four‑year contract beginning with the 2014‑2015 school year shall receive a five hundred dollar ($500.00) annual pay raise for each year of the four‑year contract.
SECTION 9.6.(i)  Subsection (a) of this section becomes effective June 30, 2018, and no teacher employed by a local board of education on or after that date shall have career status. G.S. 115C‑325 applies only to teachers with career status after June 30, 2014.
SECTION 9.6.(j)  Subsection (b) of this section becomes effective July 1, 2014. G.S. 115C‑325.1 through G.S. 115C‑325.13, as enacted by this section, shall apply to all teachers on one‑ or four‑year contracts beginning July 1, 2014. G.S. 115C‑325.1 through G.S. 115C‑325.13, as enacted by this section, shall apply to all teachers employed by local boards of education or the State on or after July 1, 2018.
SECTION 9.6.(k)  Subsections (c) and (d) of this section become effective July 1, 2014, and apply to all employees employed on or after that date.
SECTION 9.6.(l)  Except as otherwise provided in this section, this section is effective when this act becomes law.

TEACHER CONTRACT CONFORMING CHANGES
SECTION 9.7.(a)  G.S. 115C‑105.26(b)(2) reads as rewritten:
"(2)	State rules and policies, except those pertaining to public school State salary schedules and employee benefits for school employees, the instructional program that must be offered under the Basic Education Program, the system of employment for public school teachers and administrators set out in G.S. 115C‑287.1 and in Part 3 of Article 22 of this Chapter, health and safety codes, compulsory attendance, the minimum lengths of the school day and year, and the Uniform Education Reporting System."
SECTION 9.7.(b)  G.S. 115C‑105.37B(a)(2) reads as rewritten:
"(2)	Restart model, in which the State Board of Education would authorize the local board of education to operate the school with the same exemptions from statutes and rules as a charter school authorized under Part 6A of Article 16 of this Chapter, or under the management of an educational management organization that has been selected through a rigorous review process. A school operated under this subdivision remains under the control of the local board of education, and employees assigned to the school are employees of the local school administrative unit with the protections provided by Part 3 of Article 22 of this Chapter."
SECTION 9.7.(c)  G.S. 115C‑105.38A reads as rewritten:
"§ 115C‑105.38A.  Teacher competency assurance.
…
(d)	Retesting; Dismissal. – Upon completion of the remediation plan required under subsection (c) of this section, the licensed staff member shall take the general knowledge test a second time. If the licensed staff member fails to acquire a passing score on the second test, the State Board shall begin a dismissal proceeding under G.S. 115C‑325(q)(2a) or G.S. 115C‑325.13.
…
(f)	Other Actions Not Precluded. – Nothing in this section shall be construed to restrict or postpone the following actions:
(1)	The dismissal of a principal under G.S. 115C‑325.12.
(2)	The dismissal of a teacher, assistant principal, director, or supervisor under G.S. 115C‑325(q)(2) or G.S. 115C‑325.13.
(3)	The dismissal or demotion of an employee for any of the grounds listed under G.S. 115C‑325(e) or G.S. 115C‑325.4.
(4)	The nonrenewal of a school administrator's or teacher's contract of employment.
	
…."
SECTION 9.7.(d)  G.S. 115C‑105.39 reads as rewritten:
"§ 115C‑105.39.  Dismissal or removal of personnel; appointment of interim superintendent.
(a)	Within 30 days of the initial identification of a school as low‑performing, whether by the local school administrative unit under G.S. 115C‑105.37(a1) or by the State Board under G.S. 115C‑105.37(a), the superintendent shall take one of the following actions concerning the school's principal: (i) recommend to the local board that the principal be retained in the same position, (ii) recommend to the local board that the principal be retained in the same position and a plan of remediation should be developed, (iii) recommend to the local board that the principal be transferred, or (iv) proceed under G.S. 115C‑325.4 to dismiss or demote the principal. The principal may be retained in the same position without a plan for remediation only if the principal was in that position for no more than two years before the school is identified as low‑performing. The principal shall not be transferred to another principal position unless (i) it is in a school classification in which the principal previously demonstrated at least 2 years of success, (ii) there is a plan to evaluate and provide remediation to the principal for at least one year following the transfer to assure the principal does not impede student performance at the school to which the principal is being transferred; and (iii) the parents of the students at the school to which the principal is being transferred are notified. The principal shall not be transferred to another low‑performing school in the local school administrative unit. If the superintendent intends to recommend demotion or dismissal, the superintendent shall notify the local board. Within 15 days of (i) receiving notification that the superintendent intends to proceed under G.S. 115C‑325.4 or (ii) its decision concerning the superintendent's recommendation, but no later than September 30, the local board shall submit to the State Board a written notice of the action taken and the basis for that action. If the State Board does not assign an assistance team to that school or if the State Board assigns an assistance team to that school and the superintendent proceeds under G.S. 115C‑325.4 to dismiss or demote the principal, then the State Board shall take no further action. If the State Board assigns an assistance team to the school and the superintendent is not proceeding under G.S. 115C‑325.4 to dismiss or demote the principal, then the State Board shall vote to accept, reject, or modify the local board's recommendations. The State Board shall notify the local board of its action within five days. If the State Board rejects or modifies the local board's recommendations and does not recommend dismissal of the principal, the State Board's notification shall include recommended action concerning the principal's assignment or terms of employment. Upon receipt of the State Board's notification, the local board shall implement the State Board's recommended action concerning the principal's assignment or terms of employment unless the local board asks the State Board to reconsider that recommendation. The State Board shall provide an opportunity for the local board to be heard before the State Board acts on the local board's request for a reconsideration. The State Board shall vote to affirm or modify its original recommended action and shall notify the local board of its action within five days. Upon receipt of the State Board's notification, the local board shall implement the State Board's final recommended action concerning the principal's assignment or terms of employment. If the State Board rejects or modifies the local board's action and recommends dismissal of the principal, the State Board shall proceed under G.S. 115C‑325.12.
(b)	The State Board shall proceed under G.S. 115C‑325(q)(2) or G.S. 115C‑325.13 for the dismissal of teachers, assistant principals, directors, and supervisors assigned to a school identified as low‑performing in accordance with G.S. 115C‑325(q)(2) or G.S. 115C‑325.13.
…."
SECTION 9.7.(e)  G.S. 115C‑238.68(3) reads as rewritten:
"(3)	Leave of absence from local school administrative unit. –If a teacher employed by a local school administrative unit makes a written request for a leave of absence to teach at the regional school, the local school administrative unit shall grant the leave for one year. For the initial year of the regional school's operation, the local school administrative unit may require that the request for a leave of absence be made up to 45 days before the teacher would otherwise have to report for duty. After the initial year of the regional school's operation, the local school administrative unit may require that the request for a leave of absence be made up to 90 days before the teacher would otherwise have to report for duty. A local board of education is not required to grant a request for a leave of absence or a request to extend or renew a leave of absence for a teacher who previously has received a leave of absence from that school board under this subdivision. A teacher who has career status under G.S. 115C‑325 prior to receiving a leave of absence to teach at the regional school may return to a public school in the local school administrative unit with career status at the end of the leave of absence or upon the end of employment at the regional school if an appropriate position is available. If an appropriate position is unavailable, the teacher's name shall be placed on a list of available teachers in accordance with G.S. 115C‑325(e)(2)."
SECTION 9.7.(f)  G.S. 115C‑276(l) reads as rewritten:
"(l)	To Maintain Personnel Files and to Participate in Firing and Demoting of Staff. – The superintendent shall maintain in his or her office a personnel file for each teacher that contains complaints, commendations, or suggestions for correction or improvement about the teacher and shall participate in the firing and demoting of staff, as provided in Part 3 of Article 22 of this Chapter."
SECTION 9.7.(g)  G.S. 115C‑285(a)(7) reads as rewritten:
"(7)	All persons employed as principals in the schools and institutions listed in G.S. 115C‑325.10 shall be compensated at the same rate as are teachers in the public schools in accordance with the salary schedule adopted by the State Board of Education."
SECTION 9.7.(h)  G.S. 115C‑304 is repealed.
SECTION 9.7.(i)  G.S. 115C‑333 reads as rewritten:
"§ 115C‑333.  Evaluation of licensed employees including certain superintendents; mandatory improvement plans; State board notification upon dismissal of employees.
(a)	Annual Evaluations; Low‑Performing Schools. – Local school administrative units shall evaluate at least once each year all licensed employees assigned to a school that has been identified as low‑performing. The evaluation shall occur early enough during the school year to provide adequate time for the development and implementation of a mandatory improvement plan if one is recommended under subsection (b) of this section. If the employee is a teacher with career status as defined under G.S. 115C‑325(a)(6), or a teacher as defined under G.S. 115C‑325.1(6), either the principal, the assistant principal who supervises the teacher, or an assistance team assigned under G.S. 115C‑105.38 shall conduct the evaluation. If the employee is a school administrator as defined under G.S. 115C‑287.1(a)(3), either the superintendent or the superintendent's designee shall conduct the evaluation.
All teachers in low‑performing schools who have been employed for less than three consecutive years shall be observed at least three times annually by the principal or the principal's designee and at least once annually by a teacher and shall be evaluated at least once annually by a principal. This section shall not be construed to limit the duties and authority of an assistance team assigned to a low‑performing school under G.S. 115C‑105.38.
A local board shall use the performance standards and criteria adopted by the State Board and may adopt additional evaluation criteria and standards. All other provisions of this section shall apply if a local board uses an evaluation other than one adopted by the State Board.
(b)	Mandatory Improvement Plans. –
…
(2a)	If a licensed employee in a low‑performing school receives a rating on any standard on an evaluation that is below proficient or otherwise represents unsatisfactory or below standard performance in an area that the licensed employee was expected to demonstrate, the individual or team that conducted the evaluation shall recommend to the superintendent that (i) the employee receive a mandatory improvement plan designed to improve the employee's performance, (ii) the superintendent recommend to the local board that if the employee is a career status teacher the employee be dismissed or demoted and if the employee is a teacher on contract the teacher's contract not be recommended for renewal, or (iii) if the employee engaged in inappropriate conduct or performed inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment that a proceeding for immediate dismissal or demotion be instituted. If the individual or team that conducted the evaluation elects not to make any of the above recommendations, the said individual or team shall notify the superintendent of this decision. The superintendent shall determine whether to develop a mandatory improvement plan, to not recommend renewal of the employee's contract, or to recommend a dismissal proceeding.
…
(c)	Reassessment of Employee in a Low‑Performing School. – After the expiration of the time period for the mandatory improvement plan under subdivision (2a) of subsection (b) of this section, the superintendent, the superintendent's designee, or the assistance team shall assess the performance of the employee of the low‑performing school a second time. If the superintendent, superintendent's designee, or assistance team determines that the employee has failed to become proficient in any of the performance standards articulated in the mandatory improvement plan or demonstrate sufficient improvement toward such standards, the superintendent shall recommend that if the employee is a teacher with career status the teacher be dismissed or demoted under G.S. 115C‑325, or if the employee is a teacher on contractthe employee's contract not be renewed or if the employee has engaged in inappropriate conduct or performed inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment, that the employee be immediately dismissed or demoted under G.S. 115C‑325.4. The results of the second assessment shall constitute substantial evidence of the employee's inadequate performance.
(d)	State Board Notification. – If a local board dismisses an employee of a low‑performing school who is a teacher with career status for any reason except a reduction in force under G.S. 115C‑325(e)(1)l., or dismisses an employee who is a teacher on contract for cause or elects to not renew an employee's contract as a result of a superintendent's recommendation under subsection (b) or (c) of this section, it shall notify the State Board of the action, and the State Board annually shall provide to all local boards the names of those individuals. If a local board hires one of these individuals, within 60 days the superintendent or the superintendent's designee shall observe the employee, develop a mandatory improvement plan to assist the employee, and submit the plan to the State Board. The State Board shall review the mandatory improvement plan and may provide comments and suggestions to the superintendent. If on the next evaluation the employee receives a rating on any standard that was identified as an area of concern on the mandatory improvement plan that is again below proficient or otherwise represents unsatisfactory or below standard performance, the local board shall notify the State Board and the State Board shall initiate a proceeding to revoke the employee's license under G.S. 115C‑296(d). If on this next evaluation the employee receives at least a proficient rating on all of the performance standards that were identified as areas of concern on the mandatory improvement plan, the local board shall notify the State Board that the employee is in good standing and the State Board shall not continue to provide the individual's name to local boards under this subsection unless the employee is a teacher with career status and is subsequently dismissed under G.S. 115C‑325 except for a reduction in force, or the employee is a teacher on contract subsequently dismissed under G.S. 115C‑325.4.…."
SECTION 9.7.(j)  G.S. 115C‑333.1 reads as rewritten:
"§ 115C‑333.1.  Evaluation of teachers in schools not identified as low‑performing; mandatory improvement plans; State Board notification upon dismissal of teachers.
(a)	Annual Evaluations. – All teachers who are assigned to schools that are not designated as low‑performing and who have not been employed for at least three consecutive years shall be observed at least three times annually by the principal or the principal's designee and at least once annually by a teacher and shall be evaluated at least once annually by a principal. All teachers with career status or on a four‑year contract who are assigned to schools that are not designated as low‑performing shall be evaluated annually unless a local board adopts rules that allow teachers with career status or on a four‑year contract to be evaluated more or less frequently, provided that such rules are not inconsistent with State or federal requirements. Local boards also may adopt rules requiring the annual evaluation of nonlicensed employees. A local board shall use the performance standards and criteria adopted by the State Board and may adopt additional evaluation criteria and standards. All other provisions of this section shall apply if a local board uses an evaluation other than one adopted by the State Board.
…
(d)	Reassessment of the Teacher. – Upon completion of a mandatory improvement plan under subsection (b) of this section, the principal shall assess the performance of the teacher a second time. The principal shall also review and consider any report provided by the qualified observer under subsection (c) of this section if one has been submitted before the end of the mandatory improvement plan period. If, after the second assessment of the teacher and consideration of any report from the qualified observer, the superintendent or superintendent's designee determines that the teacher has failed to become proficient in any of the performance standards identified as deficient in the mandatory improvement plan or demonstrate sufficient improvement toward such standards, the superintendent may recommend that a teacher with career status be dismissed or demoted under G.S. 115C‑325, or if the teacher is on contract that the teacher's contract not be renewed or if the teacher has engaged in inappropriate conduct or performed inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment, that the teacher be immediately dismissed or demoted under G.S. 115C‑325.4. The results of the second assessment produced pursuant to the terms of this subsection shall constitute substantial evidence of the teacher's inadequate performance.
(e)	Dismissal Proceedings Without a Mandatory Improvement Plan. – The absence of a mandatory improvement plan as described in this section shall not prohibit a superintendent from initiating a dismissal proceeding against a teacher under the provisions of  G.S. 115C‑325 or G.S. 115C‑325.4. However, the superintendent shall not be entitled to the substantial evidence provision in subsection (d) of this section if such mandatory improvement plan is not utilized.
(f)	State Board Notification. – If a local board dismisses a teacher with career status for any reason except a reduction in force under G.S. 115C‑325(e)(1)l., or dismisses a teacher on contract for cause or elects to not renew a teacher's contract as a result of a superintendent's recommendation under subsection (d) of this section, it shall notify the State Board of the action, and the State Board annually shall provide to all local boards the names of those teachers. If a local board hires one of these teachers, within 60 days the superintendent or the superintendent's designee shall observe the teacher, develop a mandatory improvement plan to assist the teacher, and submit the plan to the State Board. The State Board shall review the mandatory improvement plan and may provide comments and suggestions to the superintendent. If on the next evaluation the teacher receives a rating on any standard that was an area of concern on the mandatory improvement plan that is again below proficient or a rating that otherwise represents unsatisfactory or below standard performance, the local board shall notify the State Board, and the State Board shall initiate a proceeding to revoke the teacher's license under G.S. 115C‑296(d). If on the next evaluation the teacher receives at least a proficient rating on all of the overall performance standards that were areas of concern on the mandatory improvement plan, the local board shall notify the State Board that the teacher is in good standing, and the State Board shall not continue to provide the teacher's name to local boards under this subsection unless the teacher has career status and is subsequently dismissed under G.S. 115C‑325 except for a reduction in force or is a teacher on contract who is subsequently dismissed under G.S. 115C‑325.4. If, however, on this next evaluation the teacher receives a developing rating on any standards that were areas of concern on the mandatory improvement plan, the teacher shall have one more year to bring the rating to proficient if the local board elects to renew the teacher's contract. If by the end of this second year the teacher is not proficient in all standards that were areas of concern on the mandatory improvement plan, the local board shall notify the State Board, and the State Board shall initiate a proceeding to revoke the teacher's license under G.S. 115C‑296(d).
…."
SECTION 9.7.(k)  G.S. 115C‑335(b) reads as rewritten:
"(b)	Training. – The State Board, in collaboration with the Board of Governors of The University of North Carolina, shall develop programs designed to train principals and superintendents in the proper administration of the employee evaluations developed by the State Board. The Board of Governors shall use the professional development programs for public school employees that are under its authority to make this training available to all principals and superintendents at locations that are geographically convenient to local school administrative units. The programs shall include methods to determine whether an employee's performance has improved student learning, the development and implementation of appropriate professional growth and mandatory improvement plans, the process for contract nonrenewal, and the dismissal process under Part 3 of Article 22 of this Chapter. The Board of Governors shall ensure that the subject matter of the training programs is incorporated into the masters in school administration programs offered by the constituent institutions. The State Board, in collaboration with the Board of Governors, also shall develop in‑service programs for licensed public school employees that may be included in a mandatory improvement plan created under G.S. 115C‑333(b) or G.S. 115C‑333.1(b). The Board of Governors shall use the professional development programs for public school employees that are under its authority to make this training available at locations that are geographically convenient to local school administrative units."
SECTION 9.7.(l)  G.S. 115C‑404(b) reads as rewritten:
"(b)	Documents received under this section shall be used only to protect the safety of or to improve the education opportunities for the student or others. Information gained in accordance with G.S. 7B‑3100 shall not be the sole basis for a decision to suspend or expel a student. Upon receipt of each document, the principal shall share the document with those individuals who have (i) direct guidance, teaching, or supervisory responsibility for the student, and (ii) a specific need to know in order to protect the safety of the student or others. Those individuals shall indicate in writing that they have read the document and that they agree to maintain its confidentiality. Failure to maintain the confidentiality of these documents as required by this section is grounds for the dismissal of an employee who is not employed on contract, grounds for dismissal of an employee on contract in accordance with G.S. 115C‑325.4(a)(9), and grounds for dismissal of an employee who is a career teacher in accordance with G.S. 115C‑325(e)(1)i."
SECTION 9.7.(m)  G.S. 143B‑146.7(b) reads as rewritten:
"(b)	At any time after the State Board identifies a school as low‑performing under this Part, the State Board shall proceed under G.S. 115C‑325(p1) or G.S. 115C‑325.11 for the dismissal of licensed instructional personnel assigned to that school."
SECTION 9.7.(n)  G.S. 143B‑146.8 reads as rewritten:
"§ 143B‑146.8.  Evaluation of licensed personnel and principals; action plans; State Board notification.
(a)	Annual Evaluations; Low‑Performing Schools. – The principal shall evaluate at least once each year all licensed personnel assigned to a participating school that has been identified as low‑performing but has not received an assistance team. The evaluation shall occur early enough during the school year to provide adequate time for the development and implementation of an action plan if one is recommended under subsection (b) of this section. If the employee is a teacher as defined under  G.S. 115C‑325(a)(6) with career status or a teacher as defined in G.S. 115C‑325.1(6) on contract, either the principal or an assessment team assigned under G.S. 143B‑146.9 shall conduct the evaluation. If the employee is a school administrator as defined under G.S. 115C‑287.1(a)(3), the Superintendent shall conduct the evaluation.
Notwithstanding this subsection or any other law, the principal shall observe at least three times annually, a teacher shall observe at least once annually, and the principal shall evaluate at least once annually, all teachers who have been employed for less than three consecutive years. All other employees defined as teachers under G.S. 115C‑325(a)(6) with career status or teachers as defined in G.S. 115C‑325.1(6) on a four‑year contract who are assigned to participating schools that are not designated as low‑performing shall be evaluated annually unless the State Board adopts rules that allow specified categories of teachers with career status or on four‑year contracts to be evaluated more or less frequently. The State Board also may adopt rules requiring the annual evaluation of nonlicensed personnel. This section shall not be construed to limit the duties and authority of an assistance team assigned to a low‑performing school.
(b)	Action Plans. – If a licensed employee in a participating school that has been identified as low‑performing receives an unsatisfactory or below standard rating on any function of the evaluation that is related to the employee's instructional duties, the individual or team that conducted the evaluation shall recommend to the principal that: (i) the employee receive an action plan designed to improve the employee's performance; or (ii) the principal recommend that the employee who is a career teacher be dismissed or demoted as provided in G.S. 115C‑325 or the employee who is a teacher on contract not be recommended for renewal; or (iii) if the employee who is a teacher on contract engages in inappropriate conduct or performs inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment that a proceeding for immediate dismissal or demotion under G.S. 115C‑325.4 be instituted. The principal shall determine whether to develop an action plan, to not recommend renewal of the employee's contract, or to recommend a dismissal proceeding. The person who evaluated the employee or the employee's supervisor shall develop the action plan unless an assistance team or assessment team conducted the evaluation. If an assistance team or assessment team conducted the evaluation, that team shall develop the action plan in collaboration with the employee's supervisor. Action plans shall be designed to be completed within 90 instructional days or before the beginning of the next school year. The State Board shall develop guidelines that include strategies to assist in evaluating licensed personnel and developing effective action plans within the time allotted under this section. The State Board may adopt policies for the development and implementation of action plans or professional development plans for personnel who do not require action plans under this section.
(c)	Reevaluation. – Upon completion of an action plan under subsection (b) of this section, the principal or the assessment team shall evaluate the employee a second time. If on the second evaluation the employee receives one unsatisfactory or more than one below standard rating on any function that is related to the employee's instructional duties, the principal shall recommend that the employee with career status be dismissed or demoted under G.S. 115C‑325, or that an employee's contract not be renewed or if the employee engages in inappropriate conduct or performs inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment, that the employee be dismissed or demoted under G.S. 115C‑325.4. The results of the second evaluation shall constitute substantial evidence of the employee's inadequate performance.
(d)	State Board Notification. – If  an employee is dismissed for cause or an employee's contract is not renewed as a result of a superintendent's recommendation under subsection (b) or (c) of this section, the State Board shall be notified of the action, and the State Board annually shall provide to all local boards of education the names of those individuals. If a local board hires one of these individuals, that local board shall proceed under G.S. 115C‑333(d).
…."
SECTION 9.7.(o)  G.S. 115C‑105.38A, as amended by subsection (c) of this section, reads as rewritten:
"§ 115C‑105.38A.  Teacher competency assurance.
…
(d)	Retesting; Dismissal. – Upon completion of the remediation plan required under subsection (c) of this section, the licensed staff member shall take the general knowledge test a second time. If the licensed staff member fails to acquire a passing score on the second test, the State Board shall begin a dismissal proceeding under G.S. 115C‑325.13.
…
(f)	Other Actions Not Precluded. – Nothing in this section shall be construed to restrict or postpone the following actions:
(1)	The dismissal of a principal under G.S. 115C‑325.12.
(2)	The dismissal of a teacher, assistant principal, director, or supervisor under G.S. 115C‑325.13.
(3)	The dismissal or demotion of an employee for any of the grounds listed under G.S. 115C‑325.4.
(4)	The nonrenewal of a school administrator's or teacher's contract of employment.
…."
SECTION 9.7.(p)  G.S. 115C‑105.39(b), as amended by subsection (d) of this section, reads as rewritten:
"(b)	The State Board shall proceed under G.S. 115C‑325.13 for the dismissal of teachers, assistant principals, directors, and supervisors assigned to a school identified as low‑performing in accordance with G.S. 115C‑325.13.
…."
SECTION 9.7.(q)  G.S. 115C‑238.29F(e)(3) reads as rewritten:
"(3)	If a teacher employed by a local school administrative unit makes a written request for a leave of absence to teach at a charter school, the local school administrative unit shall grant the leave for one year. For the initial year of a charter school's operation, the local school administrative unit may require that the request for a leave of absence be made up to 45 days before the teacher would otherwise have to report for duty. After the initial year of a charter school's operation, the local school administrative unit may require that the request for a leave of absence be made up to 90 days before the teacher would otherwise have to report for duty. A local board of education is not required to grant a request for a leave of absence or a request to extend or renew a leave of absence for a teacher who previously has received a leave of absence from that school board under this subdivision. A teacher who has received a leave of absence to teach at a charter school may return to a public school in the local school administrative unit at the end of the leave of absence or upon the end of employment at the charter school if an appropriate position is available."
SECTION 9.7.(r)  G.S. 115C‑238.68(3), as amended by subsection (e) of this section, reads as rewritten:
"(3)	Leave of absence from local school administrative unit. – If a teacher employed by a local school administrative unit makes a written request for a leave of absence to teach at the regional school, the local school administrative unit shall grant the leave for one year. For the initial year of the regional school's operation, the local school administrative unit may require that the request for a leave of absence be made up to 45 days before the teacher would otherwise have to report for duty. After the initial year of the regional school's operation, the local school administrative unit may require that the request for a leave of absence be made up to 90 days before the teacher would otherwise have to report for duty. A local board of education is not required to grant a request for a leave of absence or a request to extend or renew a leave of absence for a teacher who previously has received a leave of absence from that school board under this subdivision. A teacher who has received a leave of absence to teach at the regional school may return to a public school in the local school administrative unit at the end of the leave of absence or upon the end of employment at the regional school if an appropriate position is available."
SECTION 9.7.(s)  G.S. 115C‑333, as amended by subsection (i) of this section, reads as rewritten:
"§ 115C‑333.  Evaluation of licensed employees including certain superintendents; mandatory improvement plans; State board notification upon dismissal of employees.
(a)	Annual Evaluations; Low‑Performing Schools. – Local school administrative units shall evaluate at least once each year all licensed employees assigned to a school that has been identified as low‑performing. The evaluation shall occur early enough during the school year to provide adequate time for the development and implementation of a mandatory improvement plan if one is recommended under subsection (b) of this section. If the employee is a teacher as defined under G.S. 115C‑325.1(6) either the principal, the assistant principal who supervises the teacher, or an assistance team assigned under G.S. 115C‑105.38 shall conduct the evaluation. If the employee is a school administrator as defined under G.S. 115C‑287.1(a)(3), either the superintendent or the superintendent's designee shall conduct the evaluation.
All teachers in low‑performing schools who have been employed for less than three consecutive years shall be observed at least three times annually by the principal or the principal's designee and at least once annually by a teacher and shall be evaluated at least once annually by a principal. This section shall not be construed to limit the duties and authority of an assistance team assigned to a low‑performing school under G.S. 115C‑105.38.
A local board shall use the performance standards and criteria adopted by the State Board and may adopt additional evaluation criteria and standards. All other provisions of this section shall apply if a local board uses an evaluation other than one adopted by the State Board.
(b)	Mandatory Improvement Plans. –
…
(2a)	If a licensed employee in a low‑performing school receives a rating on any standard on an evaluation that is below proficient or otherwise represents unsatisfactory or below standard performance in an area that the licensed employee was expected to demonstrate, the individual or team that conducted the evaluation shall recommend to the superintendent that (i) the employee receive a mandatory improvement plan designed to improve the employee's performance, (ii) the superintendent recommend to the local board that employee's contract not be recommended for renewal, or (iii) if the employee engaged in inappropriate conduct or performed inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment that a proceeding for immediate dismissal or demotion be instituted. If the individual or team that conducted the evaluation elects not to make any of the above recommendations, the said individual or team shall notify the superintendent of this decision. The superintendent shall determine whether to develop a mandatory improvement plan, to not recommend renewal of the employee's contract, or to recommend a dismissal proceeding.
…
(c)	Reassessment of Employee in a Low‑Performing School. – After the expiration of the time period for the mandatory improvement plan under subdivision (2a) of subsection (b) of this section, the superintendent, the superintendent's designee, or the assistance team shall assess the performance of the employee of the low‑performing school a second time. If the superintendent, superintendent's designee, or assistance team determines that the employee has failed to become proficient in any of the performance standards articulated in the mandatory improvement plan or demonstrate sufficient improvement toward such standards, the superintendent shall recommend that the employee's contract not be renewed or if the employee has engaged in inappropriate conduct or performed inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment, that the employee be immediately dismissed or demoted under G.S. 115C‑325.4. The results of the second assessment shall constitute substantial evidence of the employee's inadequate performance.
(d)	State Board Notification. – If a local board dismisses an employee of a low‑performing school for cause or elects to not renew an employee's contract as a result of a superintendent's recommendation under subsection (b) or (c) of this section, it shall notify the State Board of the action, and the State Board annually shall provide to all local boards the names of those individuals. If a local board hires one of these individuals, within 60 days the superintendent or the superintendent's designee shall observe the employee, develop a mandatory improvement plan to assist the employee, and submit the plan to the State Board. The State Board shall review the mandatory improvement plan and may provide comments and suggestions to the superintendent. If on the next evaluation the employee receives a rating on any standard that was identified as an area of concern on the mandatory improvement plan that is again below proficient or otherwise represents unsatisfactory or below standard performance, the local board shall notify the State Board and the State Board shall initiate a proceeding to revoke the employee's license under G.S. 115C‑296(d). If on this next evaluation the employee receives at least a proficient rating on all of the performance standards that were identified as areas of concern on the mandatory improvement plan, the local board shall notify the State Board that the employee is in good standing and the State Board shall not continue to provide the individual's name to local boards under this subsection unless the employee is subsequently dismissed under G.S. 115C‑325.4.
…."
SECTION 9.7.(t)  G.S. 115C‑333.1, as amended by subsection (j) of this section, reads as rewritten:
"§ 115C‑333.1.  Evaluation of teachers in schools not identified as low‑performing; mandatory improvement plans; State Board notification upon dismissal of teachers.
(a)	Annual Evaluations. – All teachers who are assigned to schools that are not designated as low‑performing and who have not been employed for at least three consecutive years shall be observed at least three times annually by the principal or the principal's designee and at least once annually by a teacher and shall be evaluated at least once annually by a principal. All teachers who have been employed for three or more years who are assigned to schools that are not designated as low‑performing shall be evaluated annually unless a local board adopts rules that allow teachers employed for three or more years to be evaluated more or less frequently, provided that such rules are not inconsistent with State or federal requirements. Local boards also may adopt rules requiring the annual evaluation of nonlicensed employees. A local board shall use the performance standards and criteria adopted by the State Board and may adopt additional evaluation criteria and standards. All other provisions of this section shall apply if a local board uses an evaluation other than one adopted by the State Board.
…
(d)	Reassessment of the Teacher. – Upon completion of a mandatory improvement plan under subsection (b) of this section, the principal shall assess the performance of the teacher a second time. The principal shall also review and consider any report provided by the qualified observer under subsection (c) of this section if one has been submitted before the end of the mandatory improvement plan period. If, after the second assessment of the teacher and consideration of any report from the qualified observer, the superintendent or superintendent's designee determines that the teacher has failed to become proficient in any of the performance standards identified as deficient in the mandatory improvement plan or demonstrate sufficient improvement toward such standards, the superintendent may recommend that the teacher's contract not be renewed, or if the teacher has engaged in inappropriate conduct or performed inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment, that the teacher be immediately dismissed or demoted under G.S. 115C‑325.4. The results of the second assessment produced pursuant to the terms of this subsection shall constitute substantial evidence of the teacher's inadequate performance.
(e)	Dismissal Proceedings Without a Mandatory Improvement Plan. – The absence of a mandatory improvement plan as described in this section shall not prohibit a superintendent from initiating a dismissal proceeding against a teacher under the provisions of G.S. 115C‑325.4. However, the superintendent shall not be entitled to the substantial evidence provision in subsection (d) of this section if such mandatory improvement plan is not utilized.
(f)	State Board Notification. – If a local board dismisses a teacher for cause or elects to not renew a teacher's contract as a result of a superintendent's recommendation under subsection (d) of this section, it shall notify the State Board of the action, and the State Board annually shall provide to all local boards the names of those teachers. If a local board hires one of these teachers, within 60 days the superintendent or the superintendent's designee shall observe the teacher, develop a mandatory improvement plan to assist the teacher, and submit the plan to the State Board. The State Board shall review the mandatory improvement plan and may provide comments and suggestions to the superintendent. If on the next evaluation the teacher receives a rating on any standard that was an area of concern on the mandatory improvement plan that is again below proficient or a rating that otherwise represents unsatisfactory or below standard performance, the local board shall notify the State Board, and the State Board shall initiate a proceeding to revoke the teacher's license under G.S. 115C‑296(d). If on the next evaluation the teacher receives at least a proficient rating on all of the overall performance standards that were areas of concern on the mandatory improvement plan, the local board shall notify the State Board that the teacher is in good standing, and the State Board shall not continue to provide the teacher's name to local boards under this subsection unless the teacher has career status and is subsequently dismissed under G.S. 115C‑325.4. If, however, on this next evaluation the teacher receives a developing rating on any standards that were areas of concern on the mandatory improvement plan, if the local board elects to renew the teacher's contract. If by the end of this second year the teacher is not proficient in all standards that were areas of concern on the mandatory improvement plan, the local board shall notify the State Board, and the State Board shall initiate a proceeding to revoke the teacher's license under G.S. 115C‑296(d).
…."
SECTION 9.7.(u)  Article 23 of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑344.  Employment benefits for exchange teachers.
An exchange teacher is a nonimmigrant alien teacher participating in an exchange visitor program designated by the United States Department of State pursuant to 22 C.F.R. Part 62 or by the United States Department of Homeland Security pursuant to 8 C.F.R. Part 214.2(q). For purposes of determining eligibility to receive employment benefits under this Chapter, including personal leave, annual vacation leave, and sick leave, an exchange teacher shall be considered a permanent teacher if employed with the expectation of at least six full consecutive monthly pay periods of employment and if employed at least 20 hours per week. An exchange teacher is not a teacher for purposes of the Teachers' and State Employees' Retirement System of North Carolina as provided in G.S. 135‑1(25)."
SECTION 9.7.(v)  G.S. 115C‑404(b), as amended by subsection (n) of this section, reads as rewritten:
"(b)	Documents received under this section shall be used only to protect the safety of or to improve the education opportunities for the student or others. Information gained in accordance with G.S. 7B‑3100 shall not be the sole basis for a decision to suspend or expel a student. Upon receipt of each document, the principal shall share the document with those individuals who have (i) direct guidance, teaching, or supervisory responsibility for the student, and (ii) a specific need to know in order to protect the safety of the student or others. Those individuals shall indicate in writing that they have read the document and that they agree to maintain its confidentiality. Failure to maintain the confidentiality of these documents as required by this section is grounds for the dismissal of an employee who is not employed on contract and grounds for dismissal of an employee on contract in accordance with G.S. 115C‑325.4(a)(9)."
SECTION 9.7.(w)  G.S. 143B‑146.7(b), as amended by subsection (m) of this section, reads as rewritten:
"(b)	At any time after the State Board identifies a school as low‑performing under this Part, the State Board shall proceed under G.S. 115C‑325.11 for the dismissal of licensed instructional personnel assigned to that school."
SECTION 9.7.(x)  G.S. 143B‑146.8, as amended by subsection (n) of this section, reads as rewritten:
"§ 143B‑146.8.  Evaluation of licensed personnel and principals; action plans; State Board notification.
(a)	Annual Evaluations; Low‑Performing Schools. – The principal shall evaluate at least once each year all licensed personnel assigned to a participating school that has been identified as low‑performing but has not received an assistance team. The evaluation shall occur early enough during the school year to provide adequate time for the development and implementation of an action plan if one is recommended under subsection (b) of this section. If the employee is a teacher as defined in G.S. 115C‑325.1(6), either the principal or an assessment team assigned under G.S. 143B‑146.9 shall conduct the evaluation. If the employee is a school administrator as defined under G.S. 115C‑287.1(a)(3), the Superintendent shall conduct the evaluation.
Notwithstanding this subsection or any other law, the principal shall observe at least three times annually, a teacher shall observe at least once annually, and the principal shall evaluate at least once annually, all teachers who have been employed for less than three consecutive years. All other employees who have been employed for three or more years and are defined as teachers under G.S. 115C‑325.1(6) who are assigned to participating schools that are not designated as low‑performing shall be evaluated annually unless the State Board adopts rules that allow specified categories of teachers with three or more years employment to be evaluated more or less frequently. The State Board also may adopt rules requiring the annual evaluation of nonlicensed personnel. This section shall not be construed to limit the duties and authority of an assistance team assigned to a low‑performing school.
(b)	Action Plans. – If a licensed employee in a participating school that has been identified as low‑performing receives an unsatisfactory or below standard rating on any function of the evaluation that is related to the employee's instructional duties, the individual or team that conducted the evaluation shall recommend to the principal that: (i) the employee receive an action plan designed to improve the employee's performance; or (ii) the employee's contract not be recommended for renewal; or (iii) if the employee who is a teacher on contract engages in inappropriate conduct or performs inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment that a proceeding for immediate dismissal or demotion under G.S. 115C‑325.4 be instituted. The principal shall determine whether to develop an action plan, to not recommend renewal of the employee's contract, or to recommend a dismissal proceeding. The person who evaluated the employee or the employee's supervisor shall develop the action plan unless an assistance team or assessment team conducted the evaluation. If an assistance team or assessment team conducted the evaluation, that team shall develop the action plan in collaboration with the employee's supervisor. Action plans shall be designed to be completed within 90 instructional days or before the beginning of the next school year. The State Board shall develop guidelines that include strategies to assist in evaluating licensed personnel and developing effective action plans within the time allotted under this section. The State Board may adopt policies for the development and implementation of action plans or professional development plans for personnel who do not require action plans under this section.
(c)	Reevaluation. – Upon completion of an action plan under subsection (b) of this section, the principal or the assessment team shall evaluate the employee a second time. If on the second evaluation the employee receives one unsatisfactory or more than one below standard rating on any function that is related to the employee's instructional duties, the principal shall recommend that the employee's contract not be renewed, or if the employee engages in inappropriate conduct or performs inadequately to such a degree that such conduct or performance causes substantial harm to the educational environment, that the employee be dismissed or demoted under G.S. 115C‑325.4. The results of the second evaluation shall constitute substantial evidence of the employee's inadequate performance.
…."
SECTION 9.7.(y)  Subsection (u) of this section becomes effective August 1, 2013. Subsections (a) through (n) of this section become effective July 1, 2014. Subsections (o) through (t) and (v) through (x) become effective June 30, 2018.

PART X. COMMUNITY COLLEGES

REORGANIZATION OF THE COMMUNITY COLLEGES SYSTEM OFFICE
SECTION 10.1.(a)  Notwithstanding any other provision of law, and consistent with the authority established in G.S. 115D‑3, the President of the North Carolina Community College System may reorganize the System Office in accordance with recommendations and plans submitted to and approved by the State Board of Community Colleges.
SECTION 10.1.(b)  This section expires June 30, 2014.

CARRYFORWARD OF COLLEGE INFORMATION SYSTEM FUNDS
SECTION 10.2.  Of the funds appropriated to the Community Colleges System Office for the 2013‑2015 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 be used only to purchase periodic system upgrades.

BASIC SKILLS PLUS
SECTION 10.3.(a)  Notwithstanding any other provision of law, the State Board of Community Colleges may 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 10.3.(b)  Notwithstanding any other provision of law, if a community college is authorized by the State Board to provide 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.

ENROLLMENT FUNDING
SECTION 10.4.(a)  Beginning with the 2013‑2015 fiscal biennium, community colleges shall receive funding based on the number of full‑time equivalent (FTE) students enrolled in curriculum, continuing education, and Basic Skills courses, by tiered funding level. Community colleges shall calculate this enrollment as the higher of the current year's total enrollment or the average enrollment of the last two academic years.
The State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee by February 1, 2014, on the use of nonrecurring funds appropriated to it to phase in this new enrollment funding model.
SECTION 10.4.(b)  G.S. 115D‑5 is amended by adding a new subsection to read:
"(v)	Community colleges may teach technical education, health care, developmental education, and STEM‑related courses at any time during the year, including the summer term. Student membership hours from these courses shall be counted when computing full‑time equivalent students (FTE) for use in budget funding formulas at the State level."
SECTION 10.4.(c)  The State Board of Community Colleges shall report to the Joint Legislative Education Oversight Committee by October 1, 2014, on FTE for the 2014 summer term.
SECTION 10.4.(d)  Subsection (b) of this section is effective when it becomes law and applies beginning with the summer 2014 term.

TIERED ENROLLMENT FUNDING
SECTION 10.4A.(a)  It is the intent of the General Assembly that, beginning with the 2014‑2015 fiscal year, the State Board of Community Colleges shall implement a fourth tier in the Tiered Funding Formula adopted by the State Board to allocate funds to community colleges based on the number of full‑time equivalent (FTE) students enrolled in curriculum, continuing education, and Basic Skills courses in order to fund curriculum programs leading to immediate employment at the highest available funding level.
SECTION 10.4A.(b)  By March 15, 2014, the State Board of Community Colleges shall report to the House Appropriations Committee, the Senate Appropriations/Base Budget Committee, the House Appropriations Subcommittee on Education, and the Senate Appropriations Committee on Education/Higher Education on a plan for implementation of the additional funding level for curriculum programs leading to immediate employment and the feasibility of beginning implementation of an additional funding level for these programs in the 2014‑2015 fiscal year. The State Board shall also include in its report the specific curriculum programs that would be eligible for the additional funding level, the types of immediate employment available for graduates of these programs, and the funding necessary or recommended to adequately implement the programs.

PERFORMANCE FUNDING
SECTION 10.5.(a)  G.S. 115D‑31.3 reads as rewritten:
"§ 115D‑31.3.  Institutional performance accountability.
(a)	Implementation of Accountability Measures and Performance Standards. – The State Board of Community Colleges shall adopt and implement a system of accountability measures and performance standards for the Community College System. At least once every three years, the State Board of Community Colleges shall review, and revise if necessary, the accountability measures and performance standards to ensure that they are appropriate for use in recognition of successful institutional performance. If the State Board determines that accountability measures and performance standards must be revised following a review required by this subsection, the State Board shall report to the Joint Legislative Education Oversight Committee prior to the implementation of any proposed revisions.
(b) through (d) Repealed by Session Laws 2000‑67, s. 9.7, effective July 1, 2000.
(e)	Mandatory Performance Measures. – The State Board of Community Colleges shall evaluate each college on the following eight performance measures:
(1)	Progress of basic skills students.
(2)	Attainment of General Educational Development (GED) diplomas by students.
(3)	Performance of students who transfer to a four‑year institution.
(4)	Success of developmental students in subsequent college‑level English courses.
(5)	Success of developmental students in subsequent college‑level math courses.
(5a)	Progress of first‑year curriculum students.
(6)	Repealed by Session Laws 2012‑142, s. 8.5, effective July 1, 2012.
(7)	Curriculum student retention and graduation.
(8)	Repealed by Session Laws 2012‑142, s. 8.5, effective July 1, 2012.
(9)	Attainment of licensure and certifications by students.
The State Board may also evaluate each college on additional performance measures.
(f)	Publication of Performance Ratings. – Each college shall publish its performance on the eight measures set out in subsection (e) of this section (i) annually in its electronic catalog or on the Internet and (ii) in its printed catalog each time the catalog is reprinted.
The Community Colleges System Office shall publish the performance of all colleges on all eight measures.
(g)	Recognition of Successful Institutional Performance. – For the purpose of recognition of successful institutional performance, the State Board of Community Colleges shall evaluate each college on the eight performance measures set out in subsection (e) of this section. Subject to the availability of funds, the State Board may allocate funds among colleges based on the evaluation of each institution's performance, including at least the following components:
(1)	Program quality evaluated by determining a college's rate of student success on each measure as compared to a systemwide performance baseline and goal.
(2)	Program impact on student outcomes evaluated by the number of students succeeding on each measure.
(g1)	Carryforward of Funds Allocated Based on Performance. – A college that receives funds under subsection (g) of this section may retain and carry forward an amount up to or equal to its performance‑based funding allocation for that year into the next fiscal year.
						"
SECTION 10.5.(b)  Section 9.2(b) of S.L. 1999‑237 is repealed.
SECTION 10.5.(c)  Section 8.6 of S.L. 2012‑142 is repealed.
SECTION 10.5.(d)  Effective only for the 2011‑2012 reporting year, and notwithstanding G.S. 115D‑31.3, the State Board of Community Colleges shall not require a college to report its performance on the progress of basic skills students as part of the mandatory performance standards prescribed by G.S. 115D‑31.3(e), as amended by this section. In distributing performance‑based funding allocations for the 2013‑2014 fiscal year, notwithstanding G.S. 115D‑31.3, the State Board of Community Colleges shall not consider the progress of basic skills students or the attainment of GED diplomas for the purpose of recognizing successful institutional performance. However, the State Board of Community Colleges shall distribute a portion of the Basic Skills block grant appropriated under this act for the 2013‑2014 fiscal year based on the number of GED diplomas awarded by each college.
SECTION 10.5.(e)  Beginning with the 2012‑2013 reporting year, the State Board of Community Colleges shall require a college to report its performance on all eight of the mandatory performance standards prescribed by G.S. 115D‑31.3(e), as amended by this section.

REPEAL OF SENIOR CITIZEN TUITION WAIVER
SECTION 10.6.  G.S. 115D‑5(b)(11) is repealed.

STUDY OF THE APPROVAL PROCESS FOR MULTICAMPUS CENTERS
SECTION 10.7.  The State Board of Community Colleges shall develop a process for approval of community college multicampus centers. The Board shall report to the Joint Legislative Education Oversight Committee by January 1, 2014, on its plan for a multicampus approval process and any statutory changes necessary to implement the plan.

COOPERATION BY THE MANUFACTURING SOLUTIONS CENTER AND THE TEXTILE TECHNOLOGY CENTER
SECTION 10.8.(a)  The General Assembly finds that the missions of both the Manufacturing Solutions Center at Catawba Valley Community College and the Textile Technology Center at Gaston College are to help North Carolina manufacturers create and maintain jobs and increase sales.
The Manufacturing Solutions Center accomplishes this mission by (i) enhancing and improving products through research and development; (ii) creating prototypes for new products; (iii) analyzing new materials to enhance structure; (iv) testing products for reliability and quality; (v) training personnel in Lean Manufacturing and Supply Chain strategies; (vi) providing a forum for rollout of new technologies; (vii) providing hands‑on assistance to companies in the areas of international sales and government procurement; and (viii) advocating for industry.
The Textile Technology Center accomplishes this mission by (i) developing a world‑class workforce for the textile industry in North Carolina; (ii) identifying and solving problems confronting the textile industry; and (iii) serving as a statewide center of excellence that serves all components of the textile industry.
SECTION 10.8.(b)  The General Assembly further finds that the strategies of the Manufacturing Solutions Center and the Textile Technology Center are complementary and that cooperation by the Centers is in the best interest of the State; therefore, the General Assembly directs the Centers to work cooperatively whenever possible to maximize the State's ability to help North Carolina manufacturers create and maintain jobs and increase sales.

EXPAND INDUSTRIAL AND ENGINEERING TECHNOLOGIES EDUCATION TO FRESHMAN AND SOPHOMORE HIGH SCHOOL STUDENTS
SECTION 10.9.(a)  G.S. 115D‑20(4)a.2. reads as rewritten:
"§ 115D‑20.  Powers and duties of trustees.
The trustees of each institution shall constitute the local administrative board of such institution, with such powers and duties as are provided in this Chapter and as are delegated to it by the State Board of Community Colleges. The powers and duties of trustees shall include the following:
...
(4)	To apply the standards and requirements for admission and graduation of students and other standards established by the State Board of Community Colleges. Notwithstanding any law or administrative rule to the contrary, local community colleges are permitted to offer the following programs:
a.	Subject to the approval of the State Board of Community Colleges, local community colleges may collaborate with local school administrative units to offer courses through the following programs:
...
2.	Academic transition pathways for qualified junior and senior high school students that lead to a career technical education certificate or diploma and academic transition pathways for qualified freshmen and sophomore high school students that lead to a career technical education certificate or diploma in industrial and engineering technologies."
SECTION 10.9.(b)  The Community Colleges System Office shall report to the Joint Legislative Education Oversight Committee by October 1, 2014, and October 1, 2015, on freshmen and sophomore students served under G.S. 115D‑20(4)a.2., as amended by subsection (a) of this section. The report shall include the number of and budget FTE for freshmen students and the number of and budget FTE for sophomore students.

CLARIFY EMPLOYEE ACADEMIC ASSISTANCE
SECTION 10.12.  G.S. 115D‑5(b1) reads as rewritten:
"(b1)	The State Board of Community Colleges shall not waive tuition and registration fees for community college faculty or staff members. Community colleges may, however, use State or local funds to pay tuition and registration fees for one course per semester for full‑time community college faculty or staff members employed for a nine‑, ten‑, eleven‑, or twelve‑month term. Community colleges may also use State and local funds to pay tuition and registration fees for professional development courses and for other courses consistent with the academic assistance program authorized by the State Personnel Commission."

REVISE TARGETED ASSISTANCE CRITERIA
SECTION 10.13.  G.S. 115D‑40.1(b) reads as rewritten:
"(b)	Targeted Assistance. – Notwithstanding subsection (a) of this section, the State Board may allocate up to ten percent (10%) of the funds appropriated for Financial Assistance for Community College Students to the following students:
(1)	Students who enroll in low‑enrollment programs that prepare students for high‑demand occupations.
(2)	Students with disabilities who have been referred by the Department of Health and Human Services, Division of Vocational Rehabilitation, and are enrolled in a community college."

REPURPOSE OF FUNDS
SECTION 10.14.(a)  Of the funds appropriated to Forsyth Technical Community College in fiscal year 2005‑2006 for the construction of the Center for Emerging Technologies at Forsyth Technical Community College, the sum of three million dollars ($3,000,000) for fiscal year 2013‑2014 shall be transferred by the Office of State Budget and Management to Budget Code 26800 to be administered by the North Carolina Community Colleges System Office. The Community Colleges System Office shall allocate up to three hundred thousand dollars ($300,000) of these funds each fiscal year to Forsyth Technical Community College for the operating costs and lease expenses for the community college's biotechnology, nanotechnology, design, and advanced information technology programs; Small Business Center; and Corporate and Industrial Training programs. The Community Colleges System Office shall continue to allocate these funds to Forsyth Technical Community College for this purpose until those funds are expended. No additional State funds shall be made available to Forsyth Technical Community College to be used for the purposes described in this section.
SECTION 10.14.(b)  The Office of State Budget and Management shall transfer all funds in Budget Codes 40520 and 40620 that are unencumbered as of July 1, 2013, except those funds to be transferred in accordance with subsection (a) of this section, to Budget Code 16800. Of the funds transferred to Budget Code 16800 under this subsection, the State Board of Community Colleges shall allocate those funds to the community colleges to which the funds were appropriated. These funds shall be used for community college equipment.

CLARIFY COMMUNITY COLLEGE AUDITS
SECTION 10.15.(a)  Effective July 1, 2015, G.S. 115D‑5(m) is repealed.
SECTION 10.15.(b)  G.S. 115D‑58.16 reads as rewritten:
"§ 115D‑58.16.  Audits.
(a)	Each community college shall be subject to a financial audit a minimum of once every two years. Community colleges may use State funds to contract with the State Auditor or with a certified public accountant to perform the audits. The colleges shall submit the results of the audits to the State Board of Community Colleges.
The State Board of Community Colleges shall ensure that all colleges are audited in accordance with this section.
(b)	Notwithstanding the provisions of Chapter 143D of the General Statutes, a community college shall not be subject to the EAGLE program administered by the Office of the State Controller unless (i) there is a finding of internal control problems in the most recent financial audit of the college or (ii) the State Board of Community Colleges determines that a college should be subject to the program."
SECTION 10.15.(c)  A study of the program audit function under G.S. 115D‑5(m) shall be conducted by a committee, located administratively in the Community Colleges System Office, composed of the following 12 members:
(1)	The Community Colleges System Office Chief Financial Officer.
(2)	Three State Board of Community College members appointed by the chair of the State Board of Community Colleges.
(3)	Three college presidents appointed by the North Carolina Association of Community College Presidents.
(4)	Three college board of trustee members appointed by the chair of the North Carolina Association of Community College Trustees.
(5)	The State Chief Information Officer or designee.
(6)	The State Auditor or designee shall serve as a nonvoting member.
The Community Colleges System Office Chief Financial Officer shall chair the committee. The committee shall meet upon the call of the chair. A quorum of the committee shall be a majority of the members.
The committee shall determine how program audit procedures may be streamlined to minimize the administrative burden on the institutions being audited and how funding mechanisms may be changed to reduce reliance on contact hours. The committee shall seek input from community college staff members who are responsible for assistance with the program audits to study the problems associated with the program audit function and potential resolutions for those issues. The committee shall report the results of its study and recommendations to the Joint Legislative Education Oversight Committee by January 1, 2015.

NC Back‑to‑Work Funds
SECTION 10.16.(a)  Of the funds appropriated in this act to the Community Colleges System Office for the 2013‑2014 fiscal year, the sum of four million eight hundred eight thousand dollars ($4,808,000) shall be used for the North Carolina Back‑to‑Work Program, a retraining program focused on unemployed and underemployed North Carolinians, military veterans, and North Carolina National Guard members. The program shall provide students with occupational skills, employability skills, including a Career Readiness Certificate, and opportunities to earn third‑party, industry recognized credentials. Funds may only be allocated to community colleges whose training plans include support for one or more of the following: (i) employers who have committed to assist colleges with the design and implementation of their training plans and to interview program completers for available jobs; (ii) companies with registered apprenticeship programs with the North Carolina Department of Labor; (iii) coordinated projects among two or more colleges that focus on serving the needs of an industry cluster; or (iv) programs developed in collaboration with the North Carolina National Guard or veterans' organizations. Funds may only be used for the following activities: student instruction, student support and coaching, and targeted financial assistance for students, including assistance with tuition, registration fees, books, and certification costs.
SECTION 10.16.(b)  Funds appropriated for the North Carolina Back‑to‑Work Program for the 2012‑2013 fiscal year shall not revert at the end of the fiscal year but shall remain available for the Program.
SECTION 10.16.(c)  Subsection (b) of this section becomes effective June 30, 2013.

PART XI. UNIVERSITIES

USE OF ESCHEAT FUND FOR NEED‑BASED FINANCIAL AID PROGRAMS/STUDY SCHOLARSHIPS FOR CHILDREN OF WAR VETERANS PROGRAM
SECTION 11.1.(a)  There is appropriated from the Escheat Fund income to the Board of Governors of The University of North Carolina the sum of sixty‑four million two hundred eighty‑seven thousand two hundred forty‑two dollars ($64,287,242) for the 2013‑2014 fiscal year and the sum of thirty‑seven million two hundred eighty‑seven thousand two hundred forty‑two dollars ($37,287,242) for the 2014‑2015 fiscal year to be used for The University of North Carolina Need‑Based Financial Aid Program.
SECTION 11.1.(b)  There is appropriated from the Escheat Fund income to the State Board of Community Colleges the sum of fifteen million two hundred forty‑six thousand three hundred seventy‑three dollars ($15,246,373) for the 2013‑2014 fiscal year and the sum of sixteen million three hundred thirty‑five thousand dollars ($16,335,000) for the 2014‑2015 fiscal year to be used for community college grants.
SECTION 11.1.(c)  There is appropriated from the Escheat Fund income to the Department of Administration, Division of Veterans Affairs, the sum of seven million six hundred nine thousand five hundred ninety‑one dollars ($7,609,591) for the 2013‑2014 fiscal year and the sum of six million five hundred twenty thousand nine hundred sixty‑four dollars ($6,520,964) for the 2014‑2015 fiscal year to be used for need‑based student financial aid.
SECTION 11.1.(d)  The funds appropriated by this section shall be allocated by the State Education Assistance Authority (SEAA) for need‑based student financial aid in accordance with G.S. 116B‑7. 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). If any funds appropriated under this section remain uncommitted for need‑based financial aid as of the end of a fiscal year, the funds shall be returned to the Escheat Fund, but only to the extent the funds exceed the amount of the Escheat Fund income for that fiscal year.
SECTION 11.1.(e)  The State Education Assistance Authority shall perform all of the administrative functions necessary to implement this program of financial aid. The SEAA shall conduct periodic evaluations of expenditures of the scholarship programs to determine if allocations are utilized to ensure access to institutions of higher learning and to meet the goals of the respective programs. SEAA may make recommendations for redistribution of funds to The University of North Carolina, Department of Administration, and the President of the Community College System regarding their respective scholarship programs, who then may authorize redistribution of unutilized funds for a particular fiscal year.
SECTION 11.1.(f)  G.S. 116B‑7(a) reads as rewritten:
"(a)	The income derived from the investment or deposit of the Escheat Fund shall be distributed annually on or before August 15 to the State Education Assistance Authority for grants and loans to aid worthy and needy students who are residents of this State and are enrolled in public institutions of higher education in this State. Such grants and loans shall be made upon terms, consistent with the provisions of this Chapter, pursuant to which the State Education Assistance Authority makes grants and loans to other students under G.S. 116‑201 to 116‑209.23, Article 23 of Chapter 116 of the General Statutes, policies of the Board of Governors of The University of North Carolina regarding need‑based grants for students of The University of North Carolina, and policies of the State Board of Community Colleges regarding need‑based grants for students of the community colleges."
SECTION 11.1.(g)  The Joint Legislative Education Oversight Committee shall study the Scholarships for Children of War Veterans Program in the Department of Administration and no later than March 1, 2014, shall report its findings to the Chairs of the House of Representatives Appropriations Subcommittee on General Government, to the Chairs of the Senate Appropriations Committee on General Government and Information Technology, and to the General Assembly. The report shall include findings and recommendations regarding all of the following:
(1)	Which State agency is the appropriate entity to administer the program.
(2)	Ways in which the Program could be redesigned so as to increase cost predictability. This part of the report shall specifically include recommendations regarding the desirability of imposing time limits and scholarship award maximums on scholarships made available under the Program.
(3)	Methods of coordinating with other scholarship programs so as to ensure that non‑State resources are maximized before Program resources are used.
(4)	Feasibility of setting a lower tuition rate for recipients of the scholarships who attend a constituent institution of The University of North Carolina or a community college in the North Carolina Community College System.

UNC NEED‑BASED FINANCIAL AID FORWARD FUNDING RESERVE/PROVIDE FUNDS FOR UNC NEED‑BASED GRANTS
SECTION 11.2.(a)  It is the intent of the General Assembly to move the UNC Need‑Based Financial Aid Program grant funding into a reserve in the North Carolina Student Loan Fund designated for that purpose so that funds appropriated for grants in a fiscal year are awarded to students for the following academic year. This change will provide additional program stability.
SECTION 11.2.(b)  The UNC Need‑Based Financial Aid Forward Funding Reserve (Reserve) is established as a reserve in the North Carolina Student Loan Fund. The funds in the UNC Need‑Based Financial Aid Forward Funding Reserve shall be held in reserve for the 2013‑2014 fiscal year and for the 2014‑2015 fiscal year. Beginning with the 2015‑2016 fiscal year, the funds in the Reserve shall be used to fund grants from the UNC Need‑Based Financial Aid Program for the 2015‑2016 program year and each subsequent program year.
SECTION 11.2.(c)  Section 6.11(e) of this act appropriates funds from the Education Lottery Fund in the amount of thirty‑two million five hundred thirty thousand three hundred fifty‑nine dollars ($32,530,359) for the 2013‑2014 fiscal year and in the amount of nineteen million one hundred thirty thousand seven hundred twenty‑eight dollars ($19,130,728) for the 2014‑2015 fiscal year to the Reserve. The following funds shall also be transferred to the Reserve:
(1)	The sum of fifty‑nine million eight hundred fifty‑nine thousand five hundred sixty‑two dollars ($59,859,562) shall be transferred from the North Carolina Student Loan Fund to the Reserve.
(2)	Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2013‑2015 fiscal biennium, the sum of three million four hundred seventy‑five thousand five hundred thirty‑eight dollars ($3,475,538) for the 2013‑2014 fiscal year and the sum of three million four hundred fifty‑four thousand six hundred fifty‑six dollars ($3,454,656) for the 2014‑2015 fiscal year shall be transferred to the Reserve.
(3)	Notwithstanding G.S. 115C‑296.2, the sum of three million five hundred twenty‑five thousand dollars ($3,525,000) shall be transferred from the fund balance of the National Board Certification Loan program to the Reserve.
(4)	The sum of five hundred thousand dollars ($500,000) shall be transferred from the John B. McLendon Scholarship Fund established in G.S. 116‑209.40 to the Reserve.
SECTION 11.2.(d)  G.S. 116‑209.40 is repealed.

COORDINATED RESIDENCY DETERMINATION PROCESS
SECTION 11.3.(a)  The General Assembly finds that it is in the best interest of the State for the University System, the Community College System, and the State Education Assistance Authority to apply the criteria in G.S. 116‑143.1 to determine residency for tuition purposes in a coordinated and similar manner. Therefore, The University of North Carolina, the North Carolina Community College System, and the State Education Assistance Authority shall jointly develop and implement a coordinated and centralized process to be used by those three entities when determining the residency for tuition purposes of students who apply for admission and are admitted to a constituent institution of The University of North Carolina or a community college under the jurisdiction of the State Board of Community Colleges and for private college students receiving State‑funded financial aid. In developing a centralized residency determination process, The University of North Carolina General Administration, the North Carolina Community College System, and the State Education Assistance Authority shall consult with the North Carolina Independent Colleges and Universities.
SECTION 11.3.(b)  No later than January 1, 2014, The University of North Carolina, the North Carolina Community College System, and the State Education Assistance Authority shall report to the Joint Legislative Education Oversight Committee regarding the progress in developing and implementing a coordinated and centralized process and any necessary statutory changes.

UNC MANAGEMENT FLEXIBILITY REDUCTION
SECTION 11.5.(a)  The management flexibility reduction for The University of North Carolina shall not be allocated by the Board of Governors to the constituent institutions and affiliated entities using an across‑the‑board method but shall be done in a manner that recognizes the importance of the academic missions and differences among The University of North Carolina entities.
Before taking reductions in instructional budgets, the Board of Governors and the campuses of the constituent institutions shall consider all of the following:
(1)	Reducing State funding for centers and institutes, speaker series, and other nonacademic activities.
(2)	Faculty workload adjustments.
(3)	Restructuring of research activities.
(4)	Implementing cost‑saving span of control measures.
(5)	Reducing the number of senior and middle management positions.
(6)	Eliminating low‑performing, redundant, or low‑enrollment programs.
(7)	Using alternative funding sources.
(8)	Protecting direct classroom services.
The Board of Governors and the campuses of the constituent institutions also shall review the institutional trust funds and the special funds held by or on behalf of The University of North Carolina and its constituent institutions to determine whether there are monies available in those funds that can be used to assist with operating costs. In addition, the campuses of the constituent institutions also shall require their faculty to have a teaching workload equal to the national average in their Carnegie classification.
SECTION 11.5.(b)  In allocating the management flexibility reduction, no reduction in State funds shall be allocated in either fiscal year of the 2013‑2015 biennium to any of the following:
(1)	UNC Need‑Based Financial Aid.
(2)	North Carolina Need‑Based Scholarship.
(3)	Any special responsibility constituent institution which has been granted a basic type designation of "Special Focus Institution" under the Carnegie Classification of Institutions of Higher Education.
(4)	Any special responsibility constituent institution which has been granted a basic type designation of "Baccalaureate Colleges–Arts & Sciences" under the Carnegie Classification of Institutions of Higher Education.
(5)	Any constituent high school of The University of North Carolina.
SECTION 11.5.(c)  The University of North Carolina shall report on the implementation of the management flexibility reduction in subsection (a) of this section to the Office of State Budget and Management and the Fiscal Research Division no later than October 1, 2013. This report shall identify both of the following by campus:
(1)	The total number of positions eliminated by type (faculty/nonfaculty).
(2)	The low‑performing, redundant, and low‑enrollment programs that were eliminated.

UNC BOARD OF GOVERNORS REPORT ON OVERHEAD RECEIPTS
SECTION 11.6.(a)  G.S. 116‑11 is amended by adding a new subdivision to read:
"(9a)	The Board of Governors shall report to the Joint Legislative Education Oversight Committee and the Office of State Budget and Management by March 1 of each year regarding the sum of facilities and administrative fees and overhead receipts for The University of North Carolina that are collected and expended by each constituent institution. The report shall include all of the following information:
a.	The collection of facilities and administrative fees and overhead receipts by grant or program.
b.	The use of facilities and administrative fees and overhead receipts showing expenditures by grant or program.
c.	The sum of facilities and administrative fees and overhead receipts collected or expended by each constituent institution for maintenance and operation of facilities that were constructed with or at any time operated by funds from the General Fund."
SECTION 11.6.(b)  Section 31.14 of S.L. 2001‑424 is repealed.

STUDENT CHARGES AT THE NORTH CAROLINA SCHOOL OF SCIENCE AND MATH
SECTION 11.7.(a)  G.S. 116‑40.22 reads as rewritten:
"§ 116‑40.22.  Management flexibility.
…
(c)	Tuition and Fees. – Notwithstanding any provision in Chapter 116 of the General Statutes to the contrary, in addition to any tuition and fees set by the Board of Governors pursuant to G.S. 116‑11(7), the Board of Trustees of the institution may recommend to the Board of Governors tuition and fees for program‑specific and institution‑specific needs at that institution without regard to whether an emergency situation exists and not inconsistent with the actions of the General Assembly. Any tuition and fees set pursuant to this subsection are appropriated for use by the institution. Notwithstanding this subsection, neither the Board of Governors of The University of North Carolina nor its Board of Trustees shall impose any tuition or mandatory fee at the North Carolina School of Science and Mathematics without the approval of the General Assembly, except as provided in subsection (f) of this section.
…
(f)	The Board of Governors of The University of North Carolina may approve, upon the recommendation of the Board of Trustees of the North Carolina School of Science and Mathematics, the imposition of fees not inconsistent with actions of the General Assembly for distance education services provided by the North Carolina School of Science and Mathematics to nonresidents and for students participating in extracurricular enrichment programs sponsored by the School."
SECTION 11.7.(b)  G.S. 116‑143 reads as rewritten:
"§ 116‑143.  State‑supported institutions of higher education required to charge tuition and fees.
…
(b)	In the event that said students are unable to pay the cost of tuition and required academic fees as the same may become due, in cash, the said several boards of trustees are hereby authorized and empowered, in their discretion, to accept the obligation of the student or students together with such collateral or security as they may deem necessary and proper, it being the purpose of this Article that all students in State institutions of higher learning shall be required to pay tuition, and that free tuition is hereby abolished. Notwithstanding this section, neither the Board of Governors of The University of North Carolina nor its Board of Trustees shall impose any tuition or mandatory fee at the North Carolina School of Science and Mathematics without the approval of the General Assembly, except as provided in subsection (e) of this section.
…
(e)	The Board of Governors of The University of North Carolina may approve, upon the recommendation of the Board of Trustees of the North Carolina School of Science and Mathematics, the imposition of fees not inconsistent with actions of the General Assembly for distance education services provided by the North Carolina School of Science and Mathematics to nonresidents and for students participating in extracurricular enrichment programs sponsored by the School."
SECTION 11.7.(c)  This section applies to the 2013‑2014 spring academic semester and each subsequent academic semester.

STUDENT CHARGES AT THE UNC SCHOOL OF THE ARTS
SECTION 11.8.(a)  Article 4 of Chapter 116 of the General Statutes is amended by adding a new section to read:
"§ 116‑68.1.  Fees.
The Board of Governors of The University of North Carolina may set fees, not inconsistent with the actions of the General Assembly, to be paid by in‑State high school students enrolled at the University of North Carolina School of the Arts to assist with expenses of the institution. The Board of Trustees may recommend to the Board of Governors of The University of North Carolina that fees be set, not inconsistent with actions of the General Assembly, to be paid by in‑State high school students enrolled at the University of North Carolina School of the Arts to assist with expenses of the institution. The University of North Carolina School of the Arts may charge and collect fees established as provided by this section from in‑State high school students enrolled at the University of North Carolina School of the Arts."
SECTION 11.8.(b)  This section applies to the 2014‑2015 academic year and each subsequent academic year.

AUTHORIZE STATE EDUCATION ASSISTANCE AUTHORITY TO CONTINUE TO COLLECT NORTH CAROLINA TEACHING FELLOWS REPAYMENTS
SECTION 11.9.  Subsection (b) of Section 1.38 of S.L. 2011‑266 is repealed.

UNC DISPOSITION AND ACQUISITION OF REAL PROPERTY
SECTION 11.10.(a)  G.S. 116‑198.34(5) reads as rewritten:
"§ 116‑198.34.  General powers of Board of Governors.
The Board may exercise any one or more of the following powers:
…
(5)	To acquire, hold, lease, and dispose of real and personal property in the exercise of its powers and the performance of its duties hereunder and to lease all or any part of any project or projects and any existing facilities upon such terms and conditions as the Board determines, subject to the provisions of G.S. 143‑341 and Chapter 146 of the General Statutes.
		Notwithstanding G.S. 143‑341 and Chapter 146 of the General Statutes, an acquisition for a period of 10 years or less or a disposition of 65 years or less by easement, lease, or rental agreement of real property or space in any building on the Centennial Campus, on the Horace Williams Campus, on a Millennial Campus, or on a Kannapolis Research Campus shall not require the approval of the Governor and the Council of State. The Board shall report the acquisitions or dispositions described in this paragraph of this subdivision to the Department of Administration for inclusion in the inventory maintained by Department pursuant to G.S. 143‑341(4)a. and b. and the information regarding those transactions that is required by G.S. 143‑341(4)a. and b. All other acquisitions and dispositions made under this subdivision for a period in excess of the terms described in this paragraph of this subdivision are subject to the provisions of G.S. 143‑341 and Chapter 146 of the General Statutes.
…."
SECTION 11.10.(b)  Subsection (d) of Section 9.10 of S.L. 2012‑142 is repealed.

UNC/WAKE FOREST INSTITUTE FOR REGENERATIVE MEDICINE/PROFIT SHARING WITH STATE
SECTION 11.12.(a)  Of the funds appropriated by this act for the 2013‑2015 fiscal biennium to the Board of Governors of The University of North Carolina the sum of seven million dollars ($7,000,000) for the 2013‑2014 fiscal year and the sum of seven million dollars ($7,000,000) for the 2014‑2015 fiscal year shall be allocated to Wake Forest University Health Sciences (hereinafter "Wake Forest") in support of the Wake Forest Institute for Regenerative Medicine (hereinafter "Institute") and its Department of Defense Armed Forces Institute for Regenerative Medicine and current good manufacturing practices (cGMP) facility.
SECTION 11.12.(b)  Wake Forest shall reimburse the State for State funds appropriated for the Institute under subsection (a) of this section and in prior fiscal years by returning to the State five percent (5%) of the royalty revenue received by the Institute from commercialized projects arising under those research projects supported by the State funds, either through direct research support or through substantial utilization of the cGMP facility not reimbursed through other funds ("Subject Projects"). Royalty revenue reimbursed to the State shall be subject to all of the following:
(1)	The total amount to be reimbursed to the State shall be limited to the aggregate amount of State funds allocated to Wake Forest for the Institute plus simple interest at the rate of four percent (4%) annually from the time of disbursement until reimbursement commences.
(2)	Wake Forest shall be entitled to deduct the expenses reasonably incurred in prosecuting, defending, and enforcing patent rights for the Subject Projects, except to the extent the expenses are recovered from a third party, before calculating the amount to be paid to the State.
(3)	Calculation of the payments to the State shall be based upon the formula provided in subsection (c) of this section.
(4)	Payments shall be made to the State and used by the State in a manner consistent with federal law.
SECTION 11.12.(c)  Wake Forest on behalf of the Institute shall annually calculate and remit reimbursement payments to the State based upon the following formula:
(1)	Payments to the State shall be based on that share of royalty revenue proportional to the State funds used for the Subject Project, which shall be calculated as the ratio of State funds to total funds used to support the Subject Project, based on budgets developed consistent with federal research funding accounting guidelines and including the fair market value of unreimbursed cGMP facility utilization.
(2)	Wake Forest shall calculate net royalty revenue on a Subject Project‑by‑Subject‑Project basis by deducting any expenses authorized under subsection (b)(2) of this section from the total royalty revenue received from the Subject Project.
(3)	Wake Forest shall multiply net royalty revenue by the support ratio calculated in subsection (c)(1) of this section and then multiply the product by five percent (5%) to determine the State royalty share ("State Royalty Share").
(4)	The State Royalty Share shall be remitted to the State unless the cumulative State Royalty Share payments have satisfied the total aggregate amount to be reimbursed as provided in subsection (b)(1) of this section.
SECTION 11.12.(d)  Wake Forest on behalf of the Institute shall comply with the following reporting requirements:
(1)	By September 1 of each year, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Board of Governors of The University of North Carolina on prior State fiscal year program activities, objectives, and accomplishments and prior State fiscal year itemized expenditures and fund sources. The annual report shall include a report of royalty revenues generated from the Subject Projects.
(2)	Provide to the Fiscal Research Division a copy of the Institute's annual audited financial statement within 30 days of issuance of the statement.
SECTION 11.12.(e)  Remaining allotments after September 1 shall not be released to the Institute if the reporting requirements provided in subsection (d) of this section are not satisfied.
SECTION 11.12.(f)  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 the Institute. For purposes of this subsection, the term "State funds" means funds appropriated by the State to the Institute and interest earned on those funds.
SECTION 11.12.(g)  No State funds shall be used by the Institute (i) to hire or facilitate the hiring of a lobbyist or any person performing the duties or activities of a lobbyist, without regard to the person's title; or (ii) to facilitate any lobbying efforts.

UNC/STRATEGIC PLAN FUNDS
SECTION 11.13.  Of the funds appropriated by this act to the Board of Governors of The University of North Carolina for the 2013‑2015 fiscal biennium, the Board of Governors may spend a sum of up to fifteen million dollars ($15,000,000) for the 2013‑2014 fiscal year and a sum of up to fifteen million dollars ($15,000,000) for the 2014‑2015 fiscal year to implement provisions of The University of North Carolina Strategic Plan as set out in the report "Our Time, Our Future: The University of North Carolina Compact with North Carolina."

STUDENT FINANCIAL AID/SEMESTER LIMIT
SECTION 11.15.(a)  G.S. 115C‑499.2(6) is repealed.
SECTION 11.15.(b)  Article 35A of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C‑499.2A.  Semester limitation on eligibility for scholarship.
(a)	Except as otherwise provided by subsection (c) of this section, a student with a matriculated status at a constituent institution of The University of North Carolina shall not receive a scholarship for more than 10 full‑time academic semesters, or its equivalent if enrolled part‑time, unless the student is enrolled in a program officially designated by the Board of Governors as a five‑year degree program. If a student is enrolled in such a five‑year degree program, then the student shall not receive a scholarship for more than 12 full‑time academic semesters or the equivalent if enrolled part‑time.
(b)	Except as otherwise provided by subsection (c) of this section, a student with a matriculated status at a community college shall not receive a scholarship for more than six full‑time academic semesters, or the equivalent if enrolled part‑time.
(c)	Upon application by a student, the appropriate postsecondary institution may grant a waiver to the student who may then receive a scholarship for the equivalent of one additional full‑time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a degree, diploma, or certificate: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short‑term or long‑term disability, or (iv) other extraordinary hardship. The Board of Governors or the State Board of Community Colleges, as appropriate, shall establish policies and procedures to implement the waiver provided by this subsection."
SECTION 11.15.(c)  Article 3 of Chapter 115D of the General Statutes is amended by adding a new section to read:
"§ 115D‑40.2.  Semester limitation on eligibility for North Carolina Community College grants.
(a)	Except as otherwise provided by this section, a student shall not receive a need‑based grant from the North Carolina Community College Grant Program for more than six full‑time academic semesters, or the equivalent if enrolled part‑time.
(b)	Upon application by a student, the community college may grant a waiver to the student who may then receive a grant from the North Carolina Community College Grant Program for the equivalent of one additional full‑time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a degree, diploma, or certificate: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short‑term or long‑term disability, or (iv) other extraordinary hardship. The State Board shall establish policies and procedures to implement the waiver provided by this subsection."
SECTION 11.15.(d)  G.S. 116‑25.1 reads as rewritten:
"§ 116‑25.1.  Semester limitation on eligibility for The University of North Carolina need‑based financial aid grants.
(a)	Except as otherwise provided by this section, a student shall not receive a grant from The University of North Carolina Need‑Based Financial Aid Program for more than 10 full‑time academic semesters, or its equivalent if enrolled part‑time, unless the student is enrolled in a program officially designated by the Board of Governors as a five‑year degree program. If a student is enrolled in such a five‑year degree program, then the student shall not receive a need‑based grant from The University of North Carolina Need‑Based Financial Aid Program for more than 12 full‑time academic semesters or its equivalent if enrolled part‑time.
(b)	Upon application by a student, the constituent institution may grant a waiver to the student who may then receive a grant for the equivalent of one additional full‑time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a degree: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short‑term or long‑term disability, or (iv) other extraordinary hardship. The Board of Governors shall establish policies and procedures to implement the waiver provided by this subsection."
SECTION 11.15.(e)  G.S. 116‑281(6) is repealed.
SECTION 11.15.(f)  Article 34 of Chapter 116 of the General Statutes is amended by adding a new section to read:
"§ 116‑281.1.  Semester limitation on eligibility for scholarship.
(a)	A student shall not receive a scholarship under this Article for more than 10 full‑time academic semesters, or the equivalent if enrolled part‑time, unless the student is enrolled in a program officially designated by the eligible private postsecondary institution as a five‑year degree program. If a student is enrolled in such a five‑year degree program, then the student shall not receive a scholarship under this Article for more than 12 full‑time academic semesters or the equivalent if enrolled part‑time.
(b)	Upon application by a student, the eligible private postsecondary institution may grant a waiver to the student who may then receive a scholarship for the equivalent of one additional full‑time academic semester if the student demonstrates that any of the following have substantially disrupted or interrupted the student's pursuit of a baccalaureate degree: (i) a military service obligation, (ii) serious medical debilitation, (iii) a short‑term or long‑term disability, or (iv) other extraordinary hardship. The eligible private postsecondary institution shall establish policies and procedures to implement the waiver provided by this subsection."
SECTION 11.15.(g)  Article 23 of Chapter 116 of the General Statutes is amended by adding a new section to read:
"§ 116‑209.19A.  Limit semesters eligible for need‑based grants and scholarships.
The Authority administers the following need‑based grant and scholarship programs: the Education Lottery Scholarships, North Carolina Community College Grant Program, The University of North Carolina Need‑Based Financial Aid Program, and Need‑Based Scholarships for Students Attending Private Institutions of Higher Education. G.S. 115C‑499.2A, 115D‑40.2, 116‑25.1, and 116‑281.1 limit the number of semesters that a student may receive a grant or scholarship from any of those programs and also provide the circumstances in which a waiver to those limits may be granted by the appropriate postsecondary institution. The Authority shall enforce these limitations in administering these programs so that unless a waiver is granted by the appropriate postsecondary institution, no student shall receive a grant or scholarship from any of those programs or any combination of those financial aid programs while pursuing a degree, diploma, or certificate for more than any of the following time periods: (i) 10 full‑time academic semesters or its equivalent if enrolled part‑time or (ii) 12 full‑time academic semesters or its equivalent if the student is enrolled in a program officially designated as a five‑year degree program.
A postsecondary institution that grants a waiver under G.S. 115C‑499.2A, 115D‑40.2, 116‑25.1, or 116‑281.1 shall certify the granting of the waiver in a manner acceptable to the Authority and shall also maintain documentation substantiating the reason for the waiver."
SECTION 11.15.(h)  The State Education Assistance Authority shall structure its payment schedule to encourage students to complete an average of 30 credit hours per academic year. The State Education Assistance Authority shall report to the Joint Legislative Education Oversight Committee by March 1, 2014, regarding the measures implemented by the Authority pursuant to this subsection.
SECTION 11.15.(i)  This section applies to the 2014‑2015 academic year and each subsequent academic year.

STUDY SCHOOL OF SCIENCE AND MATHEMATICS/MORGANTON CAMPUS
SECTION 11.16.(a)  The Board of Governors of The University of North Carolina, the North Carolina School of Science and Mathematics (School of Science and Math), and the Department of Public Instruction shall jointly study the feasibility of establishing a western campus for the School of Science and Math at the School for the Deaf in Morganton. In its study, the Board of Governors, the School of Science and Math, and the Department of Public Instruction shall consider the number of students with excellent academic records who apply to the School of Science and Math but are not accepted because of the School's lack of physical space to accommodate additional students. They may also consult with the Department of Administration regarding what, if any, renovations would be required at the School for the Deaf if a western campus for the School of Science and Math were located at that facility.
If it is determined that the School for the Deaf is not a suitable site for the location of a western campus, the Board of Governors, School of Science and Math, and the Department of Public Instruction in consultation with the Department of Administration may consider other sites in western North Carolina that are available as a site.
SECTION 11.16.(b)  The Department of Administration shall, upon request by the Board of Governors, the North Carolina School of Science and Math, and the Department of Public Instruction, provide information regarding renovations that may be required to locate a western campus for the School of Science and Math at the School for the Deaf and shall also provide, upon request, information regarding other State‑owned real property that may be available for such a purpose.
SECTION 11.16.(c)  The Board of Governors, the School of Science and Math, and the Department of Public Instruction shall report their findings and recommendations to the House of Representatives and Senate Appropriations Subcommittees on Education by February 1, 2014.

STUDY NC GUARANTEED ADMISSION PROGRAM
SECTION 11.17.(a)  The Board of Governors of The University of North Carolina and the State Board of Community Colleges shall jointly study the feasibility of establishing an alternative undergraduate admission program to be known as the North Carolina Guaranteed Admission Program (NC GAP). The goals of NC GAP shall be to encourage and assist more students to obtain a baccalaureate degree within a shorter time period; to provide students with a college education at significantly lower costs for both the student and the State; to help decrease the amount of debt resulting from loans that a student may owe upon graduation; to provide a student with an interim degree that may increase a student's job opportunities if the student chooses not to continue postsecondary education; and to provide easier access to academic counseling that will assist a student in selecting coursework that reflects the student's educational and career goals and helps the student succeed academically.
NC GAP shall be designed as an alternative admission program for students who apply for admission to a constituent institution and satisfy the admission criteria but whose academic credentials are not as competitive as other students admitted to the institution. A student admitted to a constituent institution through NC GAP must agree to defer enrollment at the institution until the student earns an associate degree from one of the State's community colleges. Counseling and assistance shall be provided by the community college to any student in NC GAP to help the student in selecting coursework that reflects the student's educational and career goals and that provides a smooth transition from the community college to the constituent institution.
Once awarded the associate degree from the community college, the student is entitled to admission as a junior at the constituent institution.
Each constituent institution of higher education would be directed to establish NC GAP as part of its undergraduate admission program.
SECTION 11.17.(b)  The Board of Governors of The University of North Carolina and the State Board of Community Colleges shall report their findings and recommendations regarding NC GAP to the Joint Legislative Education Oversight Committee by March 1, 2014. The report shall include a comprehensive description of the proposed program, including the criteria that would be used to determine which students would be required to participate in the program as a condition of enrollment and the academic counseling that would need to be available to help students in NC GAP succeed academically.

UNC ISCHOOL/CAREER AND COLLEGE PROMISE PROGRAM
SECTION 11.18.  The University of North Carolina at Greensboro and the Department of Public Instruction shall jointly study the feasibility of restarting the UNC‑G iSchool by incorporating it as a part of the Career and College Promise Program. As part of the study, the University of North Carolina at Greensboro and the Department of Public Instruction shall consider the cost of incorporating the iSchool within the existing structure of the Career and College Promise Program. The University of North Carolina at Greensboro and the Department of Public Instruction shall report to the Joint Legislative Education Oversight Committee by March 1, 2014, regarding their findings and recommendations.

PART XII. DEPARTMENT OF HEALTH AND HUMAN SERVICES

SUBPART XII‑A. CENTRAL MANAGEMENT AND SUPPORT

DEPARTMENT FLEXIBILITY TO ACHIEVE DEPARTMENTAL PRIORITIES AND ENHANCE FISCAL OVERSIGHT AND ACCOUNTABILITY
SECTION 12A.1.(a)  Notwithstanding any other provision of law to the contrary and consistent with G.S. 143B‑10, the Secretary of the Department of Health and Human Services may reorganize positions and related operational costs within the Department (i) upon a demonstration by the Department of cost‑effectiveness and (ii) after approval by the Office of State Budget and Management (OSBM) of a written proposal submitted by the Department to OSBM. Proposals submitted to OSBM under this section shall, at a minimum, identify the positions involved and the strategies to be implemented in order to achieve efficiencies.
SECTION 12A.1.(b)  In order to enhance fiscal oversight and accountability, the Secretary of the Department of Health and Human Services may realign existing resources to expand its internal audit capacity. The Secretary may identify up to 32 existing positions for this purpose. Any realignment of resources and positions pursuant to this subsection is subject to the prior approval of OSBM. Notwithstanding any provision of law to the contrary, these realignments shall be reflected in the authorized budget. The expanded Office of Internal Audit shall provide the Department's management personnel with independent reviews and analyses of various functions and services within the Department, including operational audits, performance audits, compliance audits, financial audits, and other special reviews.
SECTION 12A.1.(c)  By no later than June 30, 2014, the Department shall report any actions undertaken pursuant to this section to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The report shall, at a minimum, identify the positions involved and the strategies implemented to achieve efficiencies, to expand internal audit capacity, or both.

FUNDING FOR NONPROFIT ORGANIZATIONS/ESTABLISH COMPETITIVE GRANTS PROCESS
SECTION 12A.2.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, the sum of nine million five hundred twenty‑nine thousand one hundred thirty‑four dollars ($9,529,134) in recurring funds for each year of the 2013‑2015 fiscal biennium, the sum of three hundred seventeen thousand four hundred dollars ($317,400) in nonrecurring funds for each year of the 2013‑2015 fiscal biennium, and the sum of three million eight hundred fifty‑two thousand five hundred dollars ($3,852,500) appropriated in Section 12J.1 of this act for each year of the 2013‑2015 fiscal biennium shall be used to allocate funds for nonprofit organizations.
SECTION 12A.2.(b)  For fiscal year 2013‑2014 only, from funds appropriated under subsection (a) of this section, the Department shall allocate the designated amounts to the following nonprofit organizations:
(1)	North Carolina Senior Games, Inc.	$	121,481
(2)	ARC of North Carolina		305,598
(3)	ARC of North Carolina – Wilmington	51,048
(4)	Autism Society of North Carolina	2,941,818
(5)	The Mariposa School for Children with Autism	339,879
(6)	Easter Seals UCP of North Carolina	1,619,439
(7)	ABC of North Carolina Child Development Center	366,703
(8)	Residential Services, Inc.	246,424
(9)	Oxford House, Inc.	200,000
(10)	Brain Injury Association of North Carolina	225,223
(11)	Food Bank of Central and Eastern North Carolina, Inc.	500,001
(12)	Food Bank of the Albemarle	500,001
(13)	Manna Food Bank	500,001
(14)	Second Harvest Food Bank of Metrolina, Inc.	500,001
(15)	Second Harvest Food Bank of Northwest North Carolina, Inc.	500,001
(16)	Second Harvest Food Bank of Southeast North Carolina	499,999
(17)	Prevent Blindness NC	458,163
(18)	Maternity Homes	375,000
(19)	NC High School Athletic Association (NCHSAA)	332,491
(20)	Work First – Boys & Girls Clubs	2,452,500
(21)	Vocational Rehabilitation Services – Easter Seal Society/UCP North Carolina	188,263
(22)	ALS Jim "Catfish" Hunter	400,000
(23)	Accessible Electronic Information for Blind and
	Disabled Persons	75,000
SECTION 12A.2.(c)  No later than December 1, 2013, each nonprofit organization receiving funding pursuant to subsection (b) of this section shall submit to the Division of Central Management and Support a written report of all activities funded by State appropriations. The report shall include the following information about the fiscal year preceding the year in which the report is due:
(1)	The entity's mission, purpose, and governance structure.
(2)	A description of the types of programs, services, and activities funded by State appropriations.
(3)	Statistical and demographical information on the number of persons served by these programs, services, and activities, including the counties in which services are provided.
(4)	Outcome measures that demonstrate the impact and effectiveness of the programs, services, and activities.
(5)	A detailed program budget and list of expenditures, including all positions funded and funding sources.
(6)	The source and amount of any matching funds received by the entity.
SECTION 12A.2.(d)  It is the intent of the General Assembly that, beginning fiscal year 2014‑2015, the Department implement a competitive grants process for nonprofit funding. To that end, the Department shall develop a plan that establishes a competitive grants process to be administered by the Division of Central Management and Support. The Department shall develop a plan that, at a minimum, includes each of the following:
(1)	A request for application (RFA) process to allow nonprofits to apply for and receive State funds on a competitive basis.
(2)	A requirement that nonprofits match a minimum of ten percent (10%) of the total amount of the grant award.
(3)	A requirement that the Secretary prioritize grant awards to those nonprofits that are able to leverage non‑State funds in addition to the grant award.
(4)	A process that awards grants to nonprofits dedicated to providing services on a statewide basis and that support any of the following State health and wellness initiatives:
a.	A program targeting advocacy, support, education, or residential services for persons diagnosed with autism.
b.	A comprehensive program of education, advocacy, and support related to brain injury and those affected by brain injury.
c.	A system of residential supports for those afflicted with substance abuse addiction.
d.	A program of advocacy and supports for individuals with intellectual and developmental disabilities or severe and persistent mental illness, substance abusers, or the elderly.
e.	Supports and services to children and adults with developmental disabilities or mental health diagnoses.
f.	A food distribution system for needy individuals.
g.	The provision and coordination of services for the homeless.
h.	The provision of services for individuals aging out of foster care.
i.	Programs promoting wellness, physical activity, and health education programming for North Carolinians.
j.	A program focused on enhancing vision screening through the State's public school system.
k.	Provision for the delivery of after‑school services for at‑risk youth.
l.	The provision of direct services for amyotrophic lateral sclerosis (ALS) and those diagnosed with the disease.
m.	The provision of assistive information technology services for blind and disabled persons.
(5)	Ensures that funds received by the Department to implement the plan supplement and do not supplant existing funds for health and wellness programs and initiatives.
SECTION 12A.2.(e)  No later than February 1, 2014, the Secretary of Health and Human Services shall develop a plan for the implementation of the competitive grants process for nonprofit funding and shall report to the Joint Legislative Oversight Committee on Health and Human Services on the plan.
SECTION 12A.2.(f)  No later than March 1, 2014, the Secretary of Health and Human Services shall implement the plan for the competitive grants process.
SECTION 12A.2.(g)  No later than July 1, 2014, the Secretary shall announce the recipients of the competitive grant awards and allocate funds to the grant recipients for the 2014‑2015 fiscal year pursuant to the amounts designated under subsection (a) of this section. After awards have been granted, the Secretary shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services on the grant awards that includes at least all of the following:
(1)	The identity and a brief description of each grantee and each program or initiative offered by the grantee.
(2)	The amount of funding awarded to each grantee.
(3)	The number of persons served by each grantee, broken down by program or initiative.

SUPPLEMENTAL SHORT‑TERM ASSISTANCE FOR GROUP HOMES
SECTION 12A.2A.(a)  As used in this act, "group home" means any facility that (i) is licensed under Chapter 122C of the General Statutes, (ii) meets the definition of a supervised living facility under 10A NCAC 27G .5601(c)(1) or 10A NCAC 27G .5601(c)(3), and (iii) serves adults whose primary diagnosis is mental illness or a developmental disability but may also have other diagnoses.
SECTION 12A.2A.(b)  From the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, the sum of four million six hundred thousand dollars ($4,600,000) in nonrecurring funds shall be used to provide temporary, short‑term financial assistance in the form of a monthly payment to group homes on behalf of each resident who meets all of the following criteria:
(1)	Was eligible for Medicaid‑covered personal care services (PCS) prior to January 1, 2013, but was determined to be ineligible for PCS on or after January 1, 2013, due to Medicaid State Plan changes in PCS eligibility criteria specified in Section 10.9F of S.L. 2012‑142, as amended by Section 3.7 of S.L. 2012‑145 and Section 70 of S.L. 2012‑194.
(2)	Has continuously resided in a group home since December 31, 2012.
SECTION 12A.2A.(c)  These monthly payments shall be subject to all of the following requirements and limitations:
(1)	The amount of the monthly payments authorized by this section shall not exceed four hundred sixty‑four dollars and thirty cents ($464.30) per month for each resident who meets all criteria specified in subsection (b) of this section.
(2)	A group home that receives the monthly payments authorized by this section shall not, under any circumstances, use these payments for any purpose other than providing, as necessary, supervision and medication management for a resident who meets all criteria specified in subsection (b) of this section.
(3)	The Department shall make monthly payments authorized by this section to a group home on behalf of each resident who meets all criteria specified in subsection (b) of this section only for the period commencing July 1, 2013, and ending June 30, 2014, or upon depletion of the four million six hundred thousand dollars ($4,600,000) in nonrecurring funds appropriated in this act to the Division of Central Management and Support for the 2013‑2014 fiscal year for the purpose of this section, whichever is earlier.
(4)	The Department shall make monthly payments authorized by this section only to the extent sufficient funds are available from the four million six hundred thousand dollars ($4,600,000) in nonrecurring funds appropriated in this act to the Division of Central Management and Support for the 2013‑2014 fiscal year for the purpose of this section.
(5)	The Department shall not make monthly payments authorized by this section to a group home on behalf of a resident during the pendency of an appeal by or on behalf of the resident under G.S. 108A‑70.9A.
(6)	The Department shall terminate all monthly payments pursuant to this section on June 30, 2014, or upon depletion of the funds appropriated in this act to the Division of Central Management and Support for the 2013‑2014 fiscal year for the purpose of this section, whichever is earlier.
(7)	Each group home that receives the monthly payments authorized by this section shall submit to the Department a list of all funding sources for the operational costs of the group home for the preceding two years, in accordance with the schedule and format prescribed by the Department.
SECTION 12A.2A.(d)  The Department shall use an existing mechanism to administer these funds in the least restrictive manner that ensures compliance with this section and timely and accurate payments to group homes. The Department shall not, under any circumstances, use any portion of the four million six hundred thousand dollars ($4,600,000) appropriated in this act to the Division of Central Management and Support for the purpose of this section for any other purpose.
SECTION 12A.2A.(e)  By no later than April 1, 2014, the Department of Health and Human Services shall submit to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division:
(1)	A plan for a long‑term solution for individuals residing in group homes who would like to continue residing in this setting and, as a result of an independent assessment, have been determined to need only supervision, medication management, or both.
(2)	A list of funding sources for each group home that receives assistance authorized by this section, based on the information provided to the Department pursuant to Section 12A.2A(c)(7).
SECTION 12A.2A.(f)  Nothing in this section shall be construed as an obligation by the General Assembly to appropriate funds for the purpose of this section, or as an entitlement by any group home, resident of a group home, or other person to receive temporary, short‑term financial assistance under this section.
SECTION 12A.2A.(g)  This section expires June 30, 2014.

Establish Statewide Telepsychiatry Program
SECTION 12A.2B.(a)  By no later than August 15, 2013, the Office of Rural Health and Community Care of the Department of Health and Human Services shall develop and submit to the Senate Appropriations Committee on Health and Human Services, the House Appropriations Subcommittee on Health and Human Services, the Joint Legislative Oversight Committee on Health and Human Services, and the Fiscal Research Division a plan to implement a statewide telepsychiatry program to be administered by East Carolina University Center for Telepsychiatry and e‑Behavioral Health (ECU Center for Telepsychiatry) pursuant to a contract between the Department and ECU Center for Telepsychiatry. The plan shall be substantially similar to the Albemarle Hospital Foundation telepsychiatry project currently operating in 14 hospitals in eastern North Carolina and shall allow all hospitals licensed to operate in the State under Chapter 131E or Chapter 122C of the General Statutes to participate in the telepsychiatry program, either as a consultant site or as a referring site. As used in this section, the terms "consultant site" and "referring site" are as defined in G.S. 143B‑139.4B(a). In addition, the plan shall include at least all of the following:
(1)	Specific steps to be taken by ECU Center for Telepsychiatry, within specified time periods, to work toward implementation of the telepsychiatry program on a statewide basis.
(2)	Specific steps to be taken by the Department to oversee and monitor establishment and administration of the program.
(3)	Estimated program costs and rates of payment for telepsychiatry services.
(4)	Requirements for liability coverage related to participation in telepsychiatry.
SECTION 12A.2B.(b)  Article 3 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑139.4B.  Office of Rural Health and Community Care to oversee and monitor establishment and administration of statewide telepsychiatry program.
(a)	The following definitions apply in this section:
(1)	Consultant site. – The hospital or other site at which the consulting provider is physically located at the time the consulting provider delivers the acute mental health or substance abuse care by means of telepsychiatry.
(2)	Hospital. – A facility licensed under Chapter 131E or Chapter 122C of the General Statutes, or a State facility listed in G.S. 122C‑181.
(3)	Referring site. – The hospital at which the patient is physically located.
(4)	Telepsychiatry. – The delivery of acute mental health or substance abuse care, including diagnosis or treatment, by means of two‑way real‑time interactive audio and video by a consulting provider at a consultant site to an individual patient at a referring site. The term does not include the standard use of telephones, facsimile transmissions, unsecured electronic mail, or a combination of these in the course of care.
(5)	Consulting provider. – A physician or other health care provider licensed in this State to provide acute mental health or substance abuse care.
(b)	The North Carolina Office of Rural Health and Community Care shall oversee the establishment and administration of a statewide telepsychiatry program that allows referring sites to utilize consulting providers at a consultant site to provide timely psychiatric assessment and rapid initiation of treatment for patients at the referring site experiencing an acute mental health or substance abuse crisis. Notwithstanding the provisions of Article 3 of Chapter 143 of the General Statutes or any other provision of law, the Office of Rural Health and Community Care shall contract with East Carolina University Center for Telepsychiatry and e‑Behavioral Health to administer the telepsychiatry program. The contract shall include a provision requiring East Carolina University Center for Telepsychiatry and e‑Behavioral Health to work toward implementing this program on a statewide basis by no later than January 1, 2014, and to report annually to the Office of Rural Health and Community Care on the following performance measures:
(1)	Number of consultant sites and referring sites participating in the program.
(2)	Number of psychiatric assessments conducted under the program, reported by site or region.
(3)	Length of stay of patients receiving telepsychiatry services in the emergency departments of hospitals participating in the program, reported by disposition.
(4)	Number of involuntary commitments recommended as a result of psychiatric assessments conducted by consulting providers under the program, reported by site or region and by year, and compared to the number of involuntary commitments recommended prior to implementation of this program.
(c)	The Office of Rural Health and Community Care shall have all of the following powers and duties relative to the statewide telepsychiatry program:
(1)	Ongoing oversight and monitoring of the program.
(2)	Ongoing monitoring of the performance of East Carolina University Center for Telepsychiatry and e‑Behavioral Health under its contract with the Department, including all of the following:
a.	Review of the performance measures described in subsection (b) of this section.
b.	Annual site visits to East Carolina University Center for Telepsychiatry and e‑Behavioral Health.
(3)	Facilitation of program linkages with critical access hospitals and small rural hospitals.
(4)	Conducting visits to referring sites and consultant sites to monitor implementation of the program; and upon implementation, conducting these site visits at least once annually.
(5)	Addressing barriers and concerns identified by consulting providers, consultant sites, and referring sites participating in the program.
(6)	Encouraging participation in the program by all potential consultant sites, consulting providers, and referring sites throughout the State and promoting continued participation in the program by consultant sites, consulting providers, and referring sites throughout the State.
(7)	Compiling a list of recommendations for future tele‑health initiatives, based on operation of the statewide telepsychiatry program.
(8)	Reviewing on a quarterly basis the financial statements of East Carolina University Center for Telepsychiatry and e‑Behavioral Health related to the telepsychiatry program in order to compare and monitor projected and actual program costs.
(9)	Annually reporting to the Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on or before November 1 on the operation and effectiveness of the program. The report shall include information on each of the performance measures described in subsection (b) of this section.
(d)	The Department shall adopt rules necessary to ensure the health and safety of patients who receive care, diagnosis, or treatment under the telepsychiatry program authorized by this section."
SECTION 12A.2B.(c)  From the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, Office of Rural Health and Community Care, the sum of two million dollars ($2,000,000) for the 2013‑2014 fiscal year and the sum of two million dollars ($2,000,000) for the 2014‑2015 fiscal year shall be used for the following purposes:
(1)	To enter into a contract with East Carolina University Center for Telepsychiatry and e‑Behavioral Health for statewide implementation and administration of the telepsychiatry program authorized in G.S. 143B‑139.4B of the General Statutes.
(2)	To purchase needed telepsychiatry equipment for the State facilities listed in G.S. 122C‑181 that participate in the statewide telepsychiatry program.

HEALTH INFORMATION TECHNOLOGY
SECTION 12A.3.(a)  The Department of Health and Human Services, in cooperation with the State Chief Information Officer, shall coordinate health information technology (HIT) policies and programs within the State of North Carolina. The Department's goal in coordinating State HIT policy and programs shall be to avoid duplication of efforts and to ensure that each State agency, public entity, and private entity that undertakes health information technology activities does so within the area of its greatest expertise and technical capability and in a manner that supports coordinated State and national goals, which shall include at least all of the following:
(1)	Ensuring that patient health information is secure and protected, in accordance with applicable law.
(2)	Improving health care quality, reducing medical errors, reducing health disparities, and advancing the delivery of patient‑centered medical care.
(3)	Providing appropriate information to guide medical decisions at the time and place of care.
(4)	Ensuring meaningful public input into HIT infrastructure development.
(5)	Improving the coordination of information among hospitals, laboratories, physicians' offices, and other entities through an effective infrastructure for the secure and authorized exchange of health care information.
(6)	Improving public health services and facilitating early identification and rapid response to public health threats and emergencies, including bioterrorist events and infectious disease outbreaks.
(7)	Facilitating health and clinical research.
(8)	Promoting early detection, prevention, and management of chronic diseases.
SECTION 12A.3.(b)  The Department of Health and Human Services shall establish and direct an HIT management structure that is efficient and transparent and that is compatible with the Office of the National Health Coordinator for Information Technology (National Coordinator) governance mechanism. The HIT management structure shall be responsible for all of the following:
(1)	Developing a State plan for implementing and ensuring compliance with national HIT standards and for the most efficient, effective, and widespread adoption of HIT.
(2)	Ensuring that (i) specific populations are effectively integrated into the State plan, including aging populations, populations requiring mental health services, and populations utilizing the public health system, and (ii) unserved and underserved populations receive priority consideration for HIT support.
(3)	Identifying all HIT stakeholders and soliciting feedback and participation from each stakeholder in the development of the State plan.
(4)	Ensuring that existing HIT capabilities are considered and incorporated into the State plan.
(5)	Identifying and eliminating conflicting HIT efforts where necessary.
(6)	Identifying available resources for the implementation, operation, and maintenance of health information technology, including identifying resources and available opportunities for North Carolina institutions of higher education.
(7)	Ensuring that potential State plan participants are aware of HIT policies and programs and the opportunity for improved health information technology.
(8)	Monitoring HIT efforts and initiatives in other states and replicating successful efforts and initiatives in North Carolina.
(9)	Monitoring the development of the National Coordinator's strategic plan and ensuring that all stakeholders are aware of and in compliance with its requirements.
(10)	Monitoring the progress and recommendations of the HIT Policy and Standards Committee and ensuring that all stakeholders remain informed of the Committee's recommendations.
(11)	Monitoring all studies and reports provided to the United States Congress and reporting to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the impact of report recommendations on State efforts to implement coordinated HIT.
SECTION 12A.3.(c)  Section 10.24(c) of S.L. 2011‑145 reads as rewritten:
"SECTION 10.24.(c)  By no later than January 15, 2015, the Department of Health and Human Services shall provide a written report on the status of HIT efforts to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The report shall be comprehensive and shall include all of the following:
(1)	Current status of federal HIT initiatives.
(2)	Current status of State HIT efforts and initiatives among both public and private entities.
(3)	A breakdown of current public and private funding sources and dollar amounts for State HIT initiatives.
(4)	Department efforts to coordinate HIT initiatives within the State and any obstacles or impediments to coordination.
(5)	HIT research efforts being conducted within the State and sources of funding for research efforts.
(6)	Opportunities for stakeholders to participate in HIT funding and other efforts and initiatives during the next quarter.
(7)	Issues associated with the implementation of HIT in North Carolina and recommended solutions to these issues."

FUNDS FOR REPLACEMENT MEDICAID MANAGEMENT INFORMATION SYSTEM/IMPLEMENTATION OF REPLACEMENT MMIS
SECTION 12A.4.(a)  The Secretary of the Department of Health and Human Services may utilize prior year earned revenue received for the replacement MMIS in the amount of nine million six hundred fifty‑eight thousand one hundred fifty‑two dollars ($9,658,152) for the 2013‑2014 fiscal year and in the amount of one million six hundred sixty‑six thousand six hundred twenty‑five dollars ($1,666,625) for the 2014‑2015 fiscal year. In the event the Department does not receive prior year earned revenues in the amounts authorized by this section, or funds are insufficient to advance the project, the Department may, with prior approval from the Office of State Budget and Management (OSBM), utilize overrealized receipts and funds appropriated to the Department to achieve the level of funding specified in this section for the replacement MMIS.
SECTION 12A.4.(b)  The Department shall make full development of the replacement MMIS a top priority. During development and implementation of the replacement MMIS, the Department shall develop plans to ensure the timely and effective implementation of enhancements to the system to provide the following capabilities:
(1)	Receiving and tracking premiums or other payments required by law.
(2)	Compatibility with the Health Information System.
SECTION 12A.4.(c)  The Department shall make every effort to expedite the implementation of the enhancements. The replacement MMIS shall have the capability to fully implement the administration of NC Health Choice, Ticket to Work, CAP Children's Program, all relevant Medicaid waivers, and the Medicare 646 waiver as it applies to Medicaid eligibles.
SECTION 12A.4.(d)  The Office of the State Chief Information Officer (SCIO) and the Office of Information Technology Services (ITS) shall work in cooperation with the Department to ensure the timely and effective implementation of the replacement MMIS and any enhancements. The SCIO shall ensure that the replacement MMIS meets all State requirements for project management and shall immediately report any failure to meet these requirements to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of State Budget and Management. The SCIO shall also immediately report if any replacement MMIS project, or portion of a project, is listed as red in the project portfolio management tool.
SECTION 12A.4.(e)  Notwithstanding G.S. 114‑2.3, the Department shall consult with the Office of the SCIO concerning the retention of private counsel for the replacement MMIS, and as directed by the Office of the SCIO, retain private counsel with expertise in pertinent information technology and computer law to negotiate and review contract amendments associated with the replacement MMIS. The private counsel engaged by the Department shall review the replacement MMIS contract amendments between the Department and the vendors to ensure that the requirements of subsection (c) of this section are met in their entirety and that the terms of the contract amendments are in the State's best interest.
SECTION 12A.4.(f)  The Department shall immediately report any changes to the replacement MMIS implementation schedules to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of State Budget and Management, with a full explanation of the reason for the change and any associated costs.
SECTION 12A.4.(g)  The Department shall provide the following reports on the replacement MMIS by the dates specified in this subsection to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, the Fiscal Research Division, and the Office of State Budget and Management:
(1)	By no later than September 1, 2013, a progress report on full implementation of the replacement MMIS, which shall include at least all of the following:
a.	Any issues encountered following the "go‑live" date of July 1, 2013, and how each issue was resolved.
b.	Any system requirements for manual workarounds and the time line for implementing an automated solution for each manual workaround.
c.	Required capabilities that are not available in the replacement MMIS on the "go‑live" date of July 1, 2013, with a date for the implementation of each.
(2)	By no later than November 1, 2013, a progress report on full implementation of the replacement MMIS, which shall include at least all of the following:
a.	An updated estimate of the costs associated with operating and maintaining the system during the 2013‑2014 and 2014‑2015 fiscal years, with an explanation for any changes from previous submissions.
b.	The cost, if any, associated with the resolution of each issue encountered following the "go‑live" date of July 1, 2013, and the source of funding for the associated cost.
c.	The cost, if any, associated with any system requirements for manual workarounds, the source of funding used to pay for the associated cost, the cost associated with transitioning to each automated solution, and the source of funding for each identified cost.
d.	A comparison of timeliness and accuracy of payments for legacy system and replacement system transactions, using the same criteria for both.
e.	The cost, if any, associated with implementation of any required capabilities that are not available in the replacement MMIS on the "go‑live" date of July 1, 2013.
(3)	By no later than December 1, 2013, a plan for the elimination of the Office of Medicaid Management Information System Services (OMMISS) and the transfer of its remaining operations to other Divisions within the Department of Health and Human Services. This plan shall include at least all of the following:
a.	The specific operations to be transferred to other Divisions within the Department, the specific Division to which each operation will be transferred, the State personnel that will be impacted by each transfer, costs associated with each transfer, and sources of funding to enable the identified Divisions to assume these transferred operations.
b.	Any State personnel costs that will result from the dissolution of OMMISS, including the costs of any severance payments and any compensatory time earned during the course of the project, broken down by employee; and any identified sources of funding to pay for these personnel costs.
c.	A plan for transitioning out of the space currently leased by the State for OMMISS, costs associated with this transition, and any savings that will result from the transition.
(4)	By no later than January 15, 2014, a preliminary report on the Department's plan for achieving system certification, which shall include at least all of the following:
a.	A description of the process.
b.	A detailed time line.
c.	Any issues that could impact the timing of system certification and plans to mitigate identified issues.
d.	Any costs associated with system certification.
e.	Any identified funding sources to pay for costs associated with system certification.
SECTION 12A.4.(h)  The Department shall complete the Reporting and Analytics Project solution simultaneously with the implementation of the replacement MMIS.
SECTION 12A.4.(i)  Notwithstanding any other provision of law and to the extent permitted by federal law, the Department shall not approve any overtime or compensatory time related to the replacement MMIS after August 1, 2013, without the prior written approval of the Office of State Personnel for each specific instance of overtime or compensatory time. Beginning August 1, 2013, the Department shall submit a monthly report to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division on the total amount of approved overtime and compensatory time related to the replacement MMIS for the preceding calendar month.
SECTION 12A.4.(j)  The Department shall plan and implement system modifications necessary to enable entities under contract with the Department to perform Medicaid claim adjudication in the replacement MMIS. The Department shall implement these system modifications by the earlier of January 1, 2015, or prior to renewing any contract currently in effect with an entity required to perform Medicaid claim adjudication in the replacement MMIS pursuant to this section. Upon implementation of these system modifications, the Department shall require all Medicaid claim adjudication to be performed by the replacement MMIS, including all Medicaid claim adjudication performed by entities under contract with the Department. The Department may require entities under contract with the Department to contract directly with the State's Medicaid fiscal agent to provide technical support for Medicaid claim adjudication performed by the replacement MMIS for these entities, subject to prior approval of contract terms by the Department. The Department may charge entities under contract with the Department a fee not to exceed the amount necessary to cover the full operating cost of Medicaid claim adjudication performed by the replacement MMIS for these entities.
SECTION 12A.4.(k)  Subsection (j) of this section becomes effective July 1, 2014.

FRAUD DETECTION THROUGH NORTH CAROLINA ACCOUNTABILITY AND COMPLIANCE TECHNOLOGY SYSTEM
SECTION 12A.5.  The Department of Health and Human Services shall work with the Governmental Data Analytics Center (GDAC) to develop an integration plan to leverage the North Carolina Financial Accountability and Compliance Technology System (NC FACTS), which is the State's enterprise‑level fraud detection system operated by GDAC, in an effort to detect and prevent potential fraud, waste, and improper payments.
The integration plan shall include a feasibility analysis, a proposed integration time line, and a cost estimate to integrate the following systems with NC FACTS:
(1)	NCTracks, the replacement Medicaid Management Information System (MMIS).
(2)	North Carolina Child Treatment Program (NC CTP) State‑funded secure database.
(3)	North Carolina Families Accessing Services through Technology (NC FAST).
The integration plan shall include opportunities to leverage existing data integration and analytics contracts and licenses for the purposes of optimizing cost effectiveness and generating greater efficiencies. The integration plan shall also include proposals for how to protect medical and other private information stored in the NCTracks, NC CTP, and NC FAST.
No later than April 1, 2014, the Department shall report a plan to integrate the systems listed in this section to the Joint Legislative Oversight Committee on Information Technology and the Joint Legislative Oversight Committee on Health and Human Services.

FUNDING FOR NORTH CAROLINA FAMILIES ACCESSING SERVICES THROUGH TECHNOLOGY (NC FAST); REPORT ON ELIGIBILITY DETERMINATIONS FOR THE EXCHANGE
SECTION 12A.6.(a)  Funds appropriated in this act in the amount of eight hundred sixty‑four thousand six hundred fifty‑five dollars ($864,655) for State fiscal year 2014‑2015 along with the cash balance in Budget Code 24410 Fund 2411 for the North Carolina Families Accessing Services through Technology (NC FAST) project shall be used to match federal funds in fiscal years 2013‑2014 and 2014‑2015 to expedite the development and implementation of the Eligibility Information System (EIS), Child Care, Low Income Energy Assistance, and Crisis Intervention Programs, and Child Service components of the NC FAST project.
SECTION 12A.6.(b)  The Department of Health and Human Services shall report on NC FAST's performance in providing eligibility determinations for Medicaid applicants on the federally facilitated Health Benefit Exchange, a required function of NC FAST directed by Section 2 of S.L. 2013‑5. The report shall contain a description of the following:
(1)	Funding sources, funding amounts, and expenditures for the project beginning in fiscal year 2012‑2013 through the time of the report.
(2)	Any challenges with the eligibility determination project and how NC FAST solved those challenges.
(3)	The number of eligibility determinations performed for applicants on the federally facilitated Health Benefit Exchange, including an analysis of on what days and for how many persons eligibility determinations were performed as well as how many applicants were determined to be eligible.
The Department shall submit a report to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Oversight Committee on Health and Human Services, and the Joint Legislative Oversight Committee on Information Technology three months after open enrollment begins for the federally facilitated Health Benefit Exchange.

LIABILITY INSURANCE
SECTION 12A.7.  Article 31 of Chapter 58 of the General Statutes is amended by adding a new section to read:
"§ 58‑31‑26.  Medical liability insurance for certain physicians and dentists.
(a)	The Secretary of the Department of Health and Human Services and the Secretary of the Department of Public Safety may provide medical liability insurance not to exceed one million dollars ($1,000,000) per incident on behalf of employees of these Departments who are licensed to practice medicine or dentistry; on behalf of all licensed physicians who are faculty members of The University of North Carolina who perform work on a contractual basis for the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services for incidents that occur in Division programs; and on behalf of physicians in all residency training programs from The University of North Carolina who are in training at institutions operated by the Department of Health and Human Services. This coverage may include commercial insurance or self‑insurance and shall cover these individuals for their acts or omissions only while they are engaged in providing medical and dental services pursuant to their State employment or training.
(b)	The coverage provided pursuant to this section shall not cover any individual for any act or omission that the individual knows or reasonably should know constitutes a violation of the applicable criminal laws of any state or the United States, or that arises out of any sexual, fraudulent, criminal, or malicious act or out of any act amounting to willful or wanton negligence.
(c)	The coverage provided pursuant to this section shall not require any additional appropriations and, except as provided in subsection (a) of this section, shall not apply to any individual providing contractual service to the Department of Health and Human Services or the Department of Public Safety."

ELIMINATION OF UNNECESSARY AND REDUNDANT REPORTS
SECTION 12A.8.(a)  Eliminate Outcomes Evaluation Study on the Effectiveness of Substance Abuse Services Provided to Person Convicted of DWI. – G.S. 122C‑142.1(j) is repealed.
SECTION 12A.8.(b)  Eliminate Evaluation of Efficiency and Effectiveness of Family Resource Center Grant Program. – G.S. 143B‑152.15(b) is repealed.
SECTION 12A.8.(c)  Eliminate Annual Report on Progress of MH/DD/SAS State Plan. – G.S. 122C‑102(c) is repealed.
SECTION 12A.8.(d)  Eliminate Annual Report on North Carolina State Plan on Healthcare Associated Infections. – G.S. 130A‑150(e) is repealed.
SECTION 12A.8.(e)  Eliminate Annual Report on The Health Insurance Program for Children. – G.S. 108A‑70.27(b) is repealed.
SECTION 12A.8.(f)  Eliminate Annual Report by State Child Fatality Review Team. – G.S. 143B‑150.20(h) is repealed.

CANCER COORDINATION REPORTING
SECTION 12A.9.  G.S. 130A‑33.51(b) reads as rewritten:
"(b)	The Committee shall submit a written report not later than May 1, 1994, and not later than October 1 of each subsequent year, to the Secretary. The report shall address the progress in implementation of a cancer control program. The report shall include an accounting of funds expended and anticipated funding needs for full implementation of recommended programs."

MEETINGS OF CANCER COORDINATION COMMITTEE
SECTION 12A.10.  G.S. 130A‑33.50(b) reads as rewritten:
"(b)	The Committee shall have up to 34 members, including the Secretary of the Department or the Secretary's designee. The members of the Committee shall elect a chair and vice‑chair from among the Committee membership. The Committee shall meet not more than twice a year at the call of the chair. Six of the members shall be legislators, three of whom shall be appointed by the Speaker of the House of Representatives, and three of whom shall be appointed by the President Pro Tempore of the Senate. Four of the members shall be cancer survivors, two of whom shall be appointed by the Speaker of the House of Representatives, and two of whom shall be appointed by the President Pro Tempore of the Senate. The remainder of the members shall be appointed by the Governor as follows:
(1)	One member from the Department of Environment and Natural Resources;
(2)	Three members, one from each of the following: the Department, the Department of Public Instruction, and the North Carolina Community College System;
(3)	Four members representing the cancer control programs at North Carolina medical schools, one from each of the following: the University of North Carolina at Chapel Hill School of Medicine, the Bowman Gray School of Medicine, the Duke University School of Medicine, and the East Carolina University School of Medicine;
(4)	One member who is an oncology nurse representing the North Carolina Nurses Association;
(5)	One member representing the Cancer Committee of the North Carolina Medical Society;
(6)	One member representing the Old North State Medical Society;
(7)	One member representing the American Cancer Society, North Carolina Division, Inc.;
(8)	One member representing the North Carolina Hospital Association;
(9)	One member representing the North Carolina Association of Local Health Directors;
(10)	One member who is a primary care physician licensed to practice medicine in North Carolina;
(11)	One member representing the American College of Surgeons;
(12)	One member representing the North Carolina Oncology Society;
(13)	One member representing the Association of North Carolina Cancer Registrars;
(14)	One member representing the Medical Directors of the North Carolina Association of Health Plans; and
(15)	Up to four additional members at large.
Except for the Secretary, the members shall be appointed for staggered four‑year terms and until their successors are appointed and qualify. The Governor may remove any member of the Committee from office in accordance with the provisions of G.S. 143B‑13. Members may succeed themselves for one term and may be appointed again after being off the Committee for one term."

ANNUAL REPORT OF LAPSED SALARY FUNDS
SECTION 12A.11.  Section 10.20 of S.L. 2012‑142 reads as rewritten:
"SECTION 10.20.  Beginning no later than November 1, 2012, and annually thereafter, the Department of Health and Human Services shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on the use of lapsed salary funds by each Division within the Department. For each Division, the report shall include the following information about the preceding State fiscal year:
(1)	The total amount of lapsed salary funds.
(2)	The number of full‑time equivalent positions comprising the lapsed salary funds.
(3)	The Fund Code for each full‑time equivalent position included in the number reported pursuant to subdivision (2) of this section.
(4)	The purposes for which the Department expended lapsed salary funds."

PRISON REPORT
SECTION 12A.12.  G.S. 148‑19(d) reads as rewritten:
"(d)	The Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services shall adopt standards for the delivery of mental health and mental retardation services to inmates in the custody of the Division of Adult Correction of the Department of Public Safety. The Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services shall give the Secretary of Public Safety an opportunity to review and comment on proposed standards prior to promulgation of such standards; however, final authority to determine such standards remains with the Commission. The Secretary of the Department of Health and Human Services shall designate an agency or agencies within the Department of Health and Human Services to monitor the implementation by the Division of Adult Correction of the Department of Public Safety of these standards and of substance abuse standards adopted by the Division of Adult Correction of the Department of Public Safety."

MODIFICATIONS TO JUSTUS‑WARREN TASK FORCE
SECTION 12A.13.  G.S. 143B‑216.60 reads as rewritten:
"§ 143B‑216.60.  The Justus‑Warren Heart Disease and Stroke Prevention Task Force.
…
(e)	The Task Force shall meet not more than twice annually at the call of the Chair.
	
…."

MODIFICATIONS TO COMMISSION FOR THE BLIND
SECTION 12A.14.(a)  Eliminate Professional Advisory Committee. – Part 8 of Article 3 of Chapter 143B of the General Statutes is repealed.
SECTION 12A.14.(b)  G.S. 143B‑158 reads as rewritten:
"§ 143B‑158.  Commission for the Blind.
(a)	The Commission for the Blind of the Department of Health and Human Services shall consist of 19 members as follows:
(1)	One representative of the Statewide Independent Living Council.
(2)	One representative of a parent training and information center established pursuant to section 631(c) of the Individuals with Disabilities Education Act, 20 U.S.C. § 1431(c).
(3)	One representative of the State's Client Assistance Program.
(4)	One vocational rehabilitation counselor who has knowledge of and experience in vocational rehabilitation services for the blind. A vocational rehabilitation counselor appointed pursuant to this subdivision shall serve as a nonvoting member of the Commission if the counselor is an employee of the Department of Health and Human Services.
(5)	One representative of community rehabilitation program services providers.
(6)	One current or former applicant for, or recipient of, vocational rehabilitation services.
(7)	One representative of a disability advocacy group representing individuals who are blind.
(8)	One parent, family member, guardian, advocate, or authorized representative of an individual who is blind, has multiple disabilities, and either has difficulty representing himself or herself or who is unable, due to disabilities, to represent himself or herself.
(9)	One representative of business, industry, and labor.
(10)	One representative of the directors of projects carried out under section 121 of the Rehabilitation Act of 1973, 29 U.S.C. § 741, as amended, if there are any of these projects in the State.
(11)	One representative of the Department of Public Instruction.
(12)	One representative of the Commission on Workforce Development.
(12a)	Two licensed physicians nominated by the North Carolina Medical Society whose practice is limited to ophthalmology.
(12b)	Two optometrists nominated by the North Carolina State Optometric Society.
(12c)	Two opticians nominated by the North Carolina Opticians Association.
(13)	The Director of the Division of Services for the Blind shall serve as an ex officio, nonvoting member.
(b)	The members of the Commission for the Blind shall be appointed by the Governor. The Governor shall appoint members after soliciting recommendations from representatives of organizations representing a broad range of individuals who have disabilities and organizations interested in those individuals. In making appointments to the Commission, the Governor shall consider, to the greatest extent practicable, the extent to which minority populations are represented on the Commission.
(c)	Except for individuals appointed to the Commission under subdivisions (12a), (12b), and (12c) of subsection (a) of this section, a majority of Commission members shall be persons who are blind, as defined in G.S. 111‑11 and who are not employed by the Division of Services for the Blind.
(d)	The Commission for the Blind shall select a Chairperson from among its members.
(e)	The term of office of members of the Commission is three years. The term of members appointed under subdivisions (1), (2), (3), (4), and (12a) of subsection (a) of this section shall expire on June 30 of years evenly divisible by three. The term of members appointed under subdivisions (5), (6), (7), (8), and (12b) of subsection (a) of this section shall expire on June 30 of years that follow by one year those years that are evenly divisible by three. The term of members appointed under subdivisions (9), (10), (11), (12), and (12c) of subsection (a) of this section shall expire on June 30 of years that precede by one year those years that are evenly divisible by three.
(f)	No individual may be appointed to more than two consecutive three‑year terms. Upon the expiration of a term, a member shall continue to serve until a successor is appointed, as provided by G.S. 128‑7. An appointment to fill a vacancy shall be for the unexpired balance of the term.
(g)	A member of the Commission shall not vote on any issue before the Commission that would have a significant and predictable effect on the member's financial interest. The Governor shall have the power to remove any member of the Commission from office for misfeasance, malfeasance, or nonfeasance in accordance with the provisions of G.S. 143B‑13 of the Executive Organization Act of 1973.
(h)	The members of the Commission shall receive per diem and necessary travel and subsistence expenses in accordance with the provisions of G.S. 138‑5.
(i)	A majority of the Commission shall constitute a quorum for the transaction of business.
(j)	All clerical and other services required by the Commission shall be supplied by the Secretary of Health and Human Services."
SECTION 12A.14.(c)  Subsection (b) of this section becomes effective August 1, 2013.

SUBPART XII‑B. DIVISION OF CHILD DEVELOPMENT AND EARLY EDUCATION

NC PRE‑K
SECTION 12B.1.(a)  Eligibility. – The Department of Health and Human Services, Division of Child Development and Early Education, shall continue implementing the prekindergarten program (NC Pre‑K). The NC Pre‑K program shall serve children who are four years of age on or before August 31 of the program year. In determining eligibility, the Division 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 those children have other designated risk factors. Furthermore, any age‑eligible child who is a child of either of the following shall be eligible for the program: (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 was ordered to active duty by the proper authority within the last 18 months or is 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. Eligibility determinations for prekindergarten participants may continue through local education agencies and local North Carolina Partnership for Children, Inc., partnerships.
Other than developmental disabilities or other chronic health issues, the Division shall not consider the health of a child as a factor in determining eligibility for participation in the NC Pre‑K program.
SECTION 12B.1.(b)  Multiyear Contracts. – The Division of Child Development and Early Education shall require the NC Pre‑K contractor to issue multiyear contracts for licensed private child care centers providing NC Pre‑K classrooms.
SECTION 12B.1.(c)  Programmatic Standards. – All entities operating prekindergarten classrooms shall adhere to all of the policies prescribed by the Division of Child Development and Early Education regarding programmatic standards and classroom requirements.
SECTION 12B.1.(d)  NC Pre‑K Committees. – The Division of Child Development and Early Education shall establish a standard decision‑making process to be used by local NC Pre‑K committees in awarding prekindergarten classroom slots and student selection.
SECTION 12B.1.(e)  SEEK. – All prekindergarten classrooms shall be required to participate in the Subsidized Early Education for Kids (SEEK) accounting system to streamline the payment function for these classrooms with a goal of eliminating duplicative systems and streamlining the accounting and payment processes among the subsidy reimbursement systems. Prekindergarten funds transferred may be used to add these programs to SEEK.
SECTION 12B.1.(f)  Pilot Program. – The Division of Child Development and Early Education shall create a pilot program that provides funding for NC Pre‑K classrooms on a per classroom basis. The pilot program shall include three different NC Pre‑K contractual regions that are geographically diverse. The local NC Pre‑K administrator shall contract with the provider for operation of a classroom established pursuant to the pilot program. The Division shall provide a report on the status of the pilot program to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division no later than January 31, 2014. The report shall include the following:
(1)	The number of students served.
(2)	The amount of funds paid for each classroom.
(3)	The amount of funds paid per student.
(4)	The attendance information on students in the pilot program as compared to those students in a classroom having a traditional funding structure.
(5)	Information on the number of students and students' families using the Subsidized Early Education for Kids (SEEK) system.
(6)	A cost comparison of the classroom pilots to the average cost per student through the per student funding methodology.
SECTION 12B.1.(g)  Reporting. – The Division of Child Development and Early 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 Oversight Committee on Health and Human Services, 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 the NC Pre‑K program by county.
(2)	The number of children participating in the NC Pre‑K program who have never been served in other early education programs such as child care, public or private preschool, Head Start, Early Head Start, or early intervention programs.
(3)	The expected NC Pre‑K expenditures for the programs and the source of the local contributions.
(4)	The results of an annual evaluation of the NC Pre‑K program.
SECTION 12B.1.(h)  Child Care Commission. – G.S.  143B‑168.4(b) reads as rewritten:
"(b)	Members shall be appointed as follows:
(1)	Of the Governor's initial appointees, four shall be appointed for terms expiring June 30, 2015, and three shall be appointed for terms expiring June 30, 2016;
(2)	Of the General Assembly's initial appointees appointed upon recommendation of the President of the Senate, two shall be appointed for terms expiring June 30, 2015, and two shall be appointed for terms expiring June 30, 2016;
(3)	Of the General Assembly's initial appointees appointed upon recommendation of the Speaker of the House of Representatives, two shall be appointed for terms expiring June 30, 2015, and two shall be appointed for terms expiring June 30, 2016.
Appointments by the General Assembly shall be made in accordance with G.S. 120‑121. After the initial appointees' terms have expired, all members shall be appointed to serve two‑year terms. Any appointment to fill a vacancy on the Commission created by the resignation, dismissal, death, or disability of a member shall be for the balance of the unexpired term."
SECTION 12B.1.(i)  The terms of all members currently serving on the Child Care Commission shall expire on the effective date of this act. A new Commission of 17 members shall be appointed in the manner provided by G.S. 143B‑168.4(a) and (b), as amended in subsection (h) of this section. Members appointed pursuant to subsection (h) of this section shall be appointed no later than October 1, 2013.

CHILD CARE SUBSIDY RATES
SECTION 12B.3.(a)  The maximum gross annual income for initial eligibility, adjusted biennially, for subsidized child care services shall be seventy‑five percent (75%) of the State median income, adjusted for family size.
SECTION 12B.3.(b)  Fees for families who are required to share in the cost of care shall be established based on a percent of gross family income and adjusted for family size. Fees shall be determined as follows:
		PERCENT OF GROSS
	FAMILY SIZE	FAMILY INCOME
	1‑3	10%
	4‑5	9%
	6 or more	8%
SECTION 12B.3.(c)  Payments for the purchase of child care services for low‑income children shall be in accordance with the following requirements:
(1)	Religious‑sponsored child care facilities operating pursuant to G.S. 110‑106 and licensed child care centers and homes that meet the minimum licensing standards that are participating in the subsidized child care program shall be paid the one‑star county market rate or the rate they charge privately paying parents, whichever is lower, unless prohibited by subsection (f) of this section.
(2)	Licensed child care centers and homes with two or more stars shall receive the market rate for that rated license level for that age group or the rate they charge privately paying parents, whichever is lower, unless prohibited by subsection (f) of this section.
(3)	Nonlicensed homes shall receive fifty percent (50%) of the county market rate or the rate they charge privately paying parents, whichever is lower.
(4)	No payments shall be made for transportation services or registration fees charged by child care facilities.
(5)	Payments for subsidized child care services for postsecondary education shall be limited to a maximum of 20 months of enrollment.
(6)	The Department of Health and Human Services shall implement necessary rule changes to restructure services, including, but not limited to, targeting benefits to employment.
SECTION 12B.3.(d)  Provisions of payment rates for child care providers in counties that do not have at least 50 children in each age group for center‑based and home‑based care are as follows:
(1)	Except as applicable in subdivision (2) of this subsection, payment rates shall be set at the statewide or regional market rate for licensed child care centers and homes.
(2)	If it can be demonstrated that the application of the statewide or regional market rate to a county with fewer than 50 children in each age group is lower than the county market rate and would inhibit the ability of the county to purchase child care for low‑income children, then the county market rate may be applied.
SECTION 12B.3.(e)  A market rate shall be calculated for child care centers and homes at each rated license level for each county and for each age group or age category of enrollees and shall be representative of fees charged to parents for each age group of enrollees within the county. The Division of Child Development and Early Education shall also calculate a statewide rate and regional market rate for each rated license level for each age category.
SECTION 12B.3.(f)  The Division of Child Development and Early Education shall continue implementing policies that improve the quality of child care for subsidized children, including a policy in which child care subsidies are paid, to the extent possible, for child care in the higher quality centers and homes only. The Division shall define higher quality, and subsidy funds shall not be paid for one‑ or two‑star rated facilities. For those counties with an inadequate number of four‑ and five‑star rated facilities, the Division shall continue a transition period that allows the facilities to continue to receive subsidy funds while the facilities work on the increased star ratings. The Division may allow exemptions in counties where there is an inadequate number of four‑ and five‑star rated facilities for nonstar rated programs, such as religious programs.
SECTION 12B.3.(g)  Facilities licensed pursuant to Article 7 of Chapter 110 of the General Statutes and facilities operated pursuant to G.S. 110‑106 may participate in the program that provides for the purchase of care in child care facilities for minor children of needy families. Except as authorized by subsection (f) of this section, no separate licensing requirements shall be used to select facilities to participate. In addition, child care facilities shall be required to meet any additional applicable requirements of federal law or regulations. Child care arrangements exempt from State regulation pursuant to Article 7 of Chapter 110 of the General Statutes shall meet the requirements established by other State law and by the Social Services Commission.
County departments of social services or other local contracting agencies shall not use a provider's failure to comply with requirements in addition to those specified in this subsection as a condition for reducing the provider's subsidized child care rate.
SECTION 12B.3.(h)  Payment for subsidized child care services provided with Work First Block Grant funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.
SECTION 12B.3.(i)  Noncitizen families who reside in this State legally shall be eligible for child care subsidies if all other conditions of eligibility are met. If all other conditions of eligibility are met, noncitizen families who reside in this State illegally shall be eligible for child care subsidies only if at least one of the following conditions is met:
(1)	The child for whom a child care subsidy is sought is receiving child protective services or foster care services.
(2)	The child for whom a child care subsidy is sought is developmentally delayed or at risk of being developmentally delayed.
(3)	The child for whom a child care subsidy is sought is a citizen of the United States.
SECTION 12B.3.(j)  Department of Health and Human Services, Division of Child Development and Early Education, shall require all county departments of social services to include on any forms used to determine eligibility for child care subsidy whether the family waiting for subsidy is receiving assistance through the NC Pre‑K Program or Head Start.

CHILD CARE ALLOCATION FORMULA
SECTION 12B.4.(a)  The Department of Health and Human Services shall allocate child care subsidy voucher funds to pay the costs of necessary child care for minor children of needy families. The mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation under G.S. 143B‑168.15(g) shall constitute the base amount for each county's child care subsidy allocation. The Department of Health and Human Services shall use the following method when allocating federal and State child care funds, not including the aggregate mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation:
(1)	Funds shall be allocated to a county based upon the projected cost of serving children under age 11 in families with all parents working who earn less than seventy‑five percent (75%) of the State median income.
(2)	No county's allocation shall be less than ninety percent (90%) of its State fiscal year 2001‑2002 initial child care subsidy allocation.
(3)	For fiscal years 2013‑2014 and 2014‑2015, the Division of Child Development and Early Education shall base the formula identified in subdivision (1) of this subsection on the same data source used for the 2012‑2013 fiscal year.
(4)	The Department of Health and Human Services shall allocate to counties all State funds appropriated for child care subsidy and shall not withhold funds during the 2013‑2014 and 2014‑2015 fiscal years.
SECTION 12B.4.(b)  The Department of Health and Human Services may reallocate unused child care subsidy voucher funds in order to meet the child care needs of low‑income families. Any reallocation of funds shall be based upon the expenditures of all child care subsidy voucher funding, including North Carolina Partnership for Children, Inc., funds within a county.

CHILD CARE FUNDS MATCHING REQUIREMENTS
SECTION 12B.5.  No local matching funds may be required by the Department of Health and Human Services as a condition of any locality's receiving its initial allocation of child care funds appropriated by this act unless federal law requires a match. If the Department reallocates additional funds above twenty‑five thousand dollars ($25,000) to local purchasing agencies beyond their initial allocation, local purchasing agencies must provide a twenty percent (20%) local match to receive the reallocated funds. Matching requirements shall not apply when funds are allocated because of a disaster as defined in G.S. 166A‑19.3(6).

CHILD CARE REVOLVING LOAN
SECTION 12B.6.  Notwithstanding any law to the contrary, funds budgeted for the Child Care Revolving Loan Fund may be transferred to and invested by the financial institution contracted to operate the Fund. The principal and any income to the Fund may be used to make loans, reduce loan interest to borrowers, serve as collateral for borrowers, pay the contractor's cost of operating the Fund, or pay the Department's cost of administering the program.

ADMINISTRATIVE ALLOWANCE FOR COUNTY DEPARTMENTS OF SOCIAL SERVICES/USE OF SUBSIDY FUNDS FOR FRAUD DETECTION
SECTION 12B.7.(a)  The Department of Health and Human Services, Division of Child Development and Early Education, shall fund the allowance that county departments of social services may use for administrative costs at four percent (4%) of the county's total child care subsidy funds allocated in the Child Care Development Fund Block Grant plan or eighty thousand dollars ($80,000), whichever is greater.
SECTION 12B.7.(b)  Each county department of social services may use up to two percent (2%) of child care subsidy funds allocated to the county for fraud detection and investigation initiatives.
SECTION 12B.7.(c)  The Department of Health and Human Services, Division of Child Development and Early Education, shall submit a progress report on the use of child care subsidy funds under subsection (b) of this section to the Joint Legislative Committee on Health and Human Services and the Fiscal Research Division no later than May 1, 2014, and submit a follow-up report on the use of those funds no later than January 1, 2015.

STUDY USE OF UNIQUE STUDENT IDENTIFIER/CHILD CARE SUBSIDY
SECTION 12B.8.(a)  In coordination with the Department of Public Instruction (DPI), the Department of Health and Human Services, Division of Child Development and Early Education (DCDEE), shall study assigning a unique student identifier to monitor, throughout their education, the performance levels of children receiving child care subsidies. The study shall be designed to provide data on the efficacy of child care facilities participating in the child care subsidy program or the North Carolina Partnership for Children, Inc. The study shall define the requirements for the following:
(1)	Establishing the unique identifier.
(2)	Collecting, maintaining, and analyzing data.
(3)	Recommending a solution that will allow for the cost‑effective acquisition and maintenance of data from child care facilities.
(4)	Recommending an interface with DPI applications that monitors and analyzes student performance.
(5)	Estimating the cost for developing an interface and implementing the requirements identified in the study.
SECTION 12B.8.(b)  DCDEE shall report the results of the study to the Joint Legislative Committee on Health and Human Services, the Joint Legislative Education Oversight Committee, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division no later than April 1, 2014.

EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES ENHANCEMENTS/SALARY SCHEDULE/MATCH REQUIREMENT ADJUSTMENTS
SECTION 12B.9.(a)  Policies. – The North Carolina Partnership for Children, Inc., and its Board shall establish policies that focus the North Carolina Partnership for Children, Inc.'s mission on improving child care quality in North Carolina for children from birth to five years of age. North Carolina Partnership for Children, Inc.‑funded activities shall include assisting child care facilities with (i) improving quality, including helping one‑, two‑, and three‑star rated facilities increase their star ratings and (ii) implementing prekindergarten programs. State funding for local partnerships shall also be used for evidence‑based or evidence‑informed programs for children from birth to five years of age that do the following:
(1)	Increase children's literacy.
(2)	Increase the parents' ability to raise healthy, successful children.
(3)	Improve children's health.
(4)	Assist four‑ and five‑star rated facilities in improving and maintaining quality.
SECTION 12B.9.(b)  Administration. – Administrative costs shall be equivalent to, on an average statewide basis for all local partnerships, not more than eight percent (8%) of the total statewide allocation to all local partnerships. For purposes of this subsection, administrative costs shall include costs associated with partnership oversight, business and financial management, general accounting, human resources, budgeting, purchasing, contracting, and information systems management. The North Carolina Partnership for Children, Inc., shall develop a single statewide contract management system that incorporates features of the required standard fiscal accountability plan described in G.S. 143B‑168.12(a)(4). All local partnerships shall be required to participate in the contract management system and shall be directed by the North Carolina Partnership for Children, Inc., to collaborate, to the fullest extent possible, with other local partnerships to increase efficiency and effectiveness.
SECTION 12B.9.(c)  Salaries. – The salary schedule developed and implemented by the North Carolina Partnership for Children, Inc., shall set the maximum amount of State funds that may be used for the salary of the Executive Director of the North Carolina Partnership for Children, Inc., and the directors of the local partnerships. The North Carolina Partnership for Children, Inc., shall base the schedule on the following criteria:
(1)	The population of the area serviced by a local partnership.
(2)	The amount of State funds administered.
(3)	The amount of total funds administered.
(4)	The professional experience of the individual to be compensated.
(5)	Any other relevant factors pertaining to salary, as determined by the North Carolina Partnership for Children, Inc.
The salary schedule shall be used only to determine the maximum amount of State funds that may be used for compensation. Nothing in this subsection shall be construed to prohibit a local partnership from using non‑State funds to supplement an individual's salary in excess of the amount set by the salary schedule established under this subsection.
SECTION 12B.9.(d)  Match Requirements. – It is the intent of the General Assembly to continue to increase the percentage of the match of cash and in‑kind contributions required of the North Carolina Partnership for Children, Inc., and the local partnerships. The North Carolina Partnership for Children, Inc., and all local partnerships shall, in the aggregate, be required to match one hundred percent (100%) of the total amount budgeted for the program in each fiscal year of the biennium. Of the funds the North Carolina Partnership for Children, Inc., and the local partnerships are required to match, contributions of cash shall be equal to at least eleven percent (11%), and in‑kind donated resources shall be equal to no more than three percent (3%) for a total match requirement of fourteen percent (14%) for the 2013‑2014 fiscal year; and contributions of cash shall be equal to at least eleven percent (11%), and in‑kind donated resources shall be equal to no more than four percent (4%) for a total match requirement of fifteen percent (15%) for the 2014‑2015 fiscal year. The North Carolina Partnership for Children, Inc., may carry forward any amount in excess of the required match for a fiscal year in order to meet the match requirement of the succeeding fiscal year. Only in‑kind contributions that are quantifiable shall be applied to the in‑kind match requirement. Volunteer services may be treated as an in‑kind contribution for the purpose of the match requirement of this subsection. Volunteer services that qualify as professional services shall be valued at the fair market value of those services. All other volunteer service hours shall be valued at the statewide average wage rate as calculated from data compiled by the Employment Security Commission in the Employment and Wages in North Carolina Annual Report for the most recent period for which data are available. Expenses, including both those paid by cash and in‑kind contributions, incurred by other participating non‑State entities contracting with the North Carolina Partnership for Children, Inc., or the local partnerships, also may be considered resources available to meet the required private match. In order to qualify to meet the required private match, the expenses shall:
(1)	Be verifiable from the contractor's records.
(2)	If in‑kind, other than volunteer services, be quantifiable in accordance with generally accepted accounting principles for nonprofit organizations.
(3)	Not include expenses funded by State funds.
(4)	Be supplemental to and not supplant preexisting resources for related program activities.
(5)	Be incurred as a direct result of the Early Childhood Initiatives Program and be necessary and reasonable for the proper and efficient accomplishment of the Program's objectives.
(6)	Be otherwise allowable under federal or State law.
(7)	Be required and described in the contractual agreements approved by the North Carolina Partnership for Children, Inc., or the local partnership.
(8)	Be reported to the North Carolina Partnership for Children, Inc., or the local partnership by the contractor in the same manner as reimbursable expenses.
Failure to obtain a fourteen percent (14%) match by June 30 of the 2013‑2014 fiscal year and a fifteen percent (15%) match by June 30 of the 2014‑2015 fiscal year shall result in a dollar‑for‑dollar reduction in the appropriation for the Program for a subsequent fiscal year. The North Carolina Partnership for Children, Inc., shall be responsible for compiling information on the private cash and in‑kind contributions into a report that is submitted to the Joint Legislative Commission on Governmental Operations in a format that allows verification by the Department of Revenue. The same match requirements shall apply to any expansion funds appropriated by the General Assembly.
SECTION 12B.9.(e)  Bidding. – The North Carolina Partnership for Children, Inc., and all local partnerships shall use competitive bidding practices in contracting for goods and services on contract amounts as follows:
(1)	For amounts of five thousand dollars ($5,000) or less, the procedures specified by a written policy to be developed by the Board of Directors of the North Carolina Partnership for Children, Inc.
(2)	For amounts greater than five thousand dollars ($5,000), but less than fifteen thousand dollars ($15,000), three written quotes.
(3)	For amounts of fifteen thousand dollars ($15,000) or more, but less than forty thousand dollars ($40,000), a request for proposal process.
(4)	For amounts of forty thousand dollars ($40,000) or more, a request for proposal process and advertising in a major newspaper.
SECTION 12B.9.(f)  Allocations. – The North Carolina Partnership for Children, Inc., shall not reduce the allocation for counties with less than 35,000 in population below the 2012‑2013 funding level.
SECTION 12B.9.(g)  Performance‑Based Evaluation. – The Department of Health and Human Services shall continue to implement the performance‑based evaluation system.
SECTION 12B.9.(h)  Expenditure Restrictions. – The Department of Health and Human Services and the North Carolina Partnership for Children, Inc., shall ensure that the allocation of funds for Early Childhood Education and Development Initiatives for State fiscal years 2013‑2014 and 2014‑2015 shall be administered and distributed in the following manner:
(1)	Capital expenditures are prohibited for fiscal years 2013‑2014 and 2014‑2015. For the purposes of this section, "capital expenditures" means expenditures for capital improvements as defined in G.S. 143C‑1‑1(d)(5).
(2)	Expenditures of State funds for advertising and promotional activities are prohibited for fiscal years 2013‑2014 and 2014‑2015.
For fiscal years 2013‑2014 and 2014‑2015, local partnerships shall not spend any State funds on marketing campaigns, advertising, or any associated materials. Local partnerships may spend any private funds the local partnerships receive on those activities.

SUBPART XII‑C. DIVISION OF SOCIAL SERVICES

REVISE DATES/TANF BENEFIT IMPLEMENTATION
SECTION 12C.1.(a)  The General Assembly approves the plan titled "North Carolina Temporary Assistance for Needy Families State Plan 2012‑2015," 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, 2012, through September 30, 2015. The Department shall submit the State Plan, as revised in accordance with subsection (b) of this section and as amended by this act or any other act of the 2013 General Assembly, to the United States Department of Health and Human Services.
SECTION 12C.1.(b)  The counties approved as Electing Counties in the North Carolina Temporary Assistance for Needy Families State Plan 2012‑2015, as approved by this section are Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson.
SECTION 12C.1.(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 years 2012 through 2015 pursuant to G.S. 108A‑27(e) shall operate under the Electing County budget requirements effective July 1, 2012. For programmatic purposes, all counties referred to in this subsection shall remain under their current county designation through September 30, 2015.
SECTION 12C.1.(d)  For each year of the 2013‑2015 fiscal biennium, Electing Counties shall be held harmless to their Work First Family Assistance allocations for the 2012‑2013 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 12C.1.(e)  In the event that departmental projections of Work First Family Assistance and Work First Diversion Assistance for the 2013‑2014 fiscal year or the 2014‑2015 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.

INTENSIVE FAMILY PRESERVATION SERVICES FUNDING AND PERFORMANCE ENHANCEMENTS
SECTION 12C.2.(a)  Notwithstanding the provisions of G.S. 143B‑150.6, the Intensive Family Preservation Services (IFPS) Program shall provide intensive services to children and families in cases of abuse, neglect, and dependency where a child is at imminent risk of removal from the home and to children and families in cases of abuse where a child is not at imminent risk of removal. The Program shall be developed and implemented statewide on a regional basis. The IFPS shall ensure the application of standardized assessment criteria for determining imminent risk and clear criteria for determining out‑of‑home placement.
SECTION 12C.2.(b)  The Department of Health and Human Services shall require that any program or entity that receives State, federal, or other funding for the purpose of IFPS shall provide information and data that allows for the following:
(1)	An established follow‑up system with a minimum of six months of follow‑up services.
(2)	Detailed information on the specific interventions applied, including utilization indicators and performance measurement.
(3)	Cost‑benefit data.
(4)	Data on long‑term benefits associated with IFPS. This data shall be obtained by tracking families through the intervention process.
(5)	The number of families remaining intact and the associated interventions while in IFPS and 12 months thereafter.
(6)	The number and percentage, by race, of children who received IFPS compared to the ratio of their distribution in the general population involved with Child Protective Services.
SECTION 12C.2.(c)  The Department shall establish a performance‑based funding protocol and shall only provide funding to those programs and entities providing the required information specified in subsection (b) of this section. The amount of funding shall be based on the individual performance of each program.

CHILD CARING INSTITUTIONS
SECTION 12C.3.  Until the Social Services Commission adopts rules setting standardized rates for child caring institutions as authorized under G.S. 143B‑153(8), the maximum reimbursement for child caring institutions shall not exceed the rate established for the specific child caring institution by the Department of Health and Human Services, Office of the Controller. In determining the maximum reimbursement, the State shall include county and IV‑E reimbursements.

USE OF FOSTER CARE BUDGET FOR GUARDIANSHIP ASSISTANCE PROGRAM
SECTION 12C.4.  Of the funds available for the provision of foster care services, the Department of Health and Human Services, Division of Social Services, may provide for the financial support of children who are deemed to be (i) in a permanent family placement setting, (ii) eligible for legal guardianship, and (iii) otherwise unlikely to receive permanency. The Division of Social Services shall design the Guardianship Assistance Program (GAP) in such a manner that no additional expenses are incurred beyond the funds budgeted for foster care. The Guardianship Assistance Program rates shall reimburse the legal guardian for room and board and be set at the same rate as the foster care room and board rates in accordance with rates established under G.S. 108A‑49.1. The Social Services Board shall adopt rules establishing a Guardianship Assistance Program to implement this section, including defining the phrase "legal guardian" as used in this section.

CHILD WELFARE POSTSECONDARY SUPPORT PROGRAM (NC REACH)
SECTION 12C.5.(a)  Additional funds appropriated from the General Fund to the Department of Health and Human Services for the child welfare postsecondary support program in the amount of two hundred thousand dollars ($200,000) for the 2013‑2014 fiscal year and four hundred thousand dollars ($400,000) for the 2014‑2015 fiscal year shall be used for the expansion of the child welfare postsecondary support program. The funds shall be used to continue providing assistance with the "cost of attendance" as that term is defined in 20 U.S.C. § 108711 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. These funds shall be allocated by the State Education Assistance Authority.
SECTION 12C.5.(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 2013‑2014 fiscal year and the sum of fifty thousand dollars ($50,000) for the 2014‑2015 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 12C.5.(c)  Of the funds appropriated from the General Fund to the Department of Health and Human Services, the sum of three hundred thirty‑nine thousand four hundred ninety‑three dollars ($339,493) for the 2013‑2014 fiscal year and the sum of three hundred thirty‑nine thousand four hundred ninety‑three dollars ($339,493) for the 2014‑2015 fiscal year shall be used to contract with an entity to administer the child welfare postsecondary support program described under subsection (a) of this section, which administration shall include the performance of case management services.
SECTION 12C.5.(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.

DSS STUDY/PROCEDURES FOR REPORTING CHILD ABUSE
SECTION 12C.7.(a)  The Department of Health and Human Services, Division of Social Services, shall study the policies and procedures in place for reporting child abuse. In conducting the study, the Division shall review the following:
(1)	Reports of child abuse in child care facilities.
(2)	How reports of child abuse are received.
(3)	The number of inaccurate reports of child abuse the Division receives annually.
(4)	The number of children the Division has placed in child protective services pursuant to a report of child abuse.
(5)	The reasons a child is placed in child protective services pursuant to a report of child abuse.
(6)	The procedures the Division follows after determining child abuse has occurred as well as the procedures the Division follows after determining child abuse has not occurred.
(7)	The number of reports the Division has determined to be false and a summary of actions taken in response to false reports.
(8)	Procedures and actions the Division follows in removing or redacting reports or other information made available to the public regarding an individual accused of child abuse or a child care facility where the alleged abuse occurred when there is a determination that no abuse has occurred.
(9)	Any recommendations the Division has for improving the process for reporting instances of child abuse.
SECTION 12C.7.(b)  The Division of Social Services shall report the results of the study and any recommendations to the Joint Legislative Committee on Health and Human Services and the Fiscal Research Division no later than April 1, 2014.

CODIFY WORK FIRST FAMILY ASSISTANCE ELIGIBILITY AND PAYMENT LEVELS
SECTION 12C.8.  Part 2 of Article 2 of Chapter 108A of the General Statutes is amended by adding a new section to read as follows:
"§ 108A‑27A.  Income eligibility and payment level for Work First Family Assistance.
The maximum net family annual income eligibility standards for Work First Family Assistance are the same standards of need for eligibility for the categorically needy under the Medicaid Program. The payment level for Work First Family Assistance shall be fifty percent (50%) of the standard of need."

A FAMILY FOR EVERY CHILD/PROVISION OF FOSTER CARE
SECTION 12C.10.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, the sum of one million five hundred thousand dollars ($1,500,000) for the 2013‑2014 fiscal year and the sum of one million five hundred thousand dollars ($1,500,000) for the 2014‑2015 fiscal year shall be used to restore funding to the Adoption Promotion Fund to (i) reimburse private nonprofit organizations pursuant to performance‑based contracts to support adoption programs and (ii) provide a financial incentive to public county departments of social services to complete adoptions above an established baseline.
SECTION 12C.10.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, the sum of one million dollars ($1,000,000) for the 2013‑2014 fiscal year and the sum of two million seven hundred fifty thousand dollars ($2,750,000) for the 2014‑2015 fiscal year shall be used solely for the Permanency Innovation Initiative Fund for services provided by the Children's Home Society of North Carolina as established by G.S. 131D‑10.9B, enacted in subsection (e) of this section.
SECTION 12C.10.(c)  G.S. 108A‑50.2 reads as rewritten:
"§ 108A‑50.2.  Adoption Promotion Fund.
(a)	Funds appropriated by the General Assembly to the Department of Health and Human Services, Division of Social Services, for the Adoption Promotion Fund shall be used as provided in this section. The Division of Social Services of the Department of Health and Human 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 Adoption Promotion Fund by participating agencies shall be used exclusively to enhance the adoption services. No local match shall be required as a condition for receipt of these funds. In accordance with State rules for allowable costs, the Adoption Promotion Fund may be used for post‑adoption services for families whose income exceeds two hundred percent (200%) of the federal poverty level.
(b)	Of the total funds appropriated for the Adoption Promotion Fund each year, twenty percent (20%) of the total funds available shall be reserved for payment to participating private adoption agencies. If the funds reserved in this subsection for payments to private agencies have not been spent on or before March 31 of each State fiscal year, the Division of Social Services may reallocate those funds, in accordance with this section, to other participating adoption agencies.
(c)	The Division of Social Services shall monitor the total expenditures in the Adoption Promotion Fund and redistribute unspent funds to ensure that the funds are used in accordance with the guidelines established in subsection (a) of this section."
SECTION 12C.10.(d)  G.S. 131D‑10.1 through G.S. 131D‑10.9 are recodified as Part 1 of Article 1A of Chapter 131D of the General Statutes.
SECTION 12C.10.(e)  Article 1A of Chapter 131D of the General Statutes is amended by adding the following new Part to read:
"Part 2. A Family for Every Child Initiative.
"§ 131D‑10.9A.  Permanency Innovation Initiative Oversight Committee created.
(a)	Creation and Membership. – The Permanency Innovation Initiative Oversight Committee is established. The Committee shall be located administratively in the General Assembly. The Committee shall consist of 11 members serving staggered terms. In making appointments, each appointing authority shall select members who have appropriate experience and knowledge of the issues to be examined by the Committee and shall strive to ensure racial, gender, and geographical diversity among the membership. The initial Committee members shall be appointed on or after July 1, 2013, as follows:
(1)	Four members shall be appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives. Of the members appointed under this subdivision, at least one shall be a member of the judiciary who shall serve for a term of two years and at least one shall be a representative from the Children's Home Society of North Carolina who shall serve for a term of three years. One member of the House shall be appointed for a one‑year term. The remaining appointee shall serve a one‑year term.
(2)	Four members shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate. Of the members appointed under this subdivision, at least one shall be a representative from the Department of Health and Human Services, Division of Social Services, who shall serve for a term of two years and at least one shall be a representative from The Duke Endowment who shall serve for a term of three years. One member of the Senate shall be appointed for a one‑year term. The remaining appointee shall serve a one‑year term.
(3)	Three members shall be appointed by the Governor. Of the members appointed under this subdivision, at least one shall be a representative from a county department of social services who shall serve for a term of three years and at least one shall be a representative from the University of North Carolina at Chapel Hill who shall serve for a term of two years. The remaining member shall serve a one‑year term.
(b)	Terms. – Upon the expiration of the terms of the initial Committee members, each member shall be appointed for a term of three years and shall serve until a successor is appointed. No member may serve more than two consecutive full terms. A vacancy shall be filled within 30 days by the authority making the initial appointment.
(c)	Purpose and Powers. – The Committee shall:
(1)	Design and implement a data tracking methodology to collect and analyze information to gauge the success of the initiative.
(2)	Develop a methodology to identify short‑ and long‑term cost‑savings in the provision of foster care and any potential reinvestment strategies.
(3)	Oversee program implementation to ensure fidelity to the program models identified under subdivisions (1) and (2) of G.S. 131D‑10.9B(a).
(4)	Study, review, and recommend other policies and services that may positively impact permanency and well‑being outcomes.
(d)	Reports. – The Committee shall report its analysis and any findings and recommendations to the General Assembly by September 15 of each year.
(e)	Organization. – The President Pro Tempore of the Senate and the Speaker of the House of Representatives shall each designate a cochair of the Committee. The Committee shall meet at least once a quarter upon the joint call of the cochairs. A quorum of the Committee is seven members. No action may be taken except by a majority vote at a meeting at which a quorum is present.
(f)	Funding. – From funds available to the General Assembly, the Legislative Services Commission shall allocate monies to fund the work of the Committee. Members of the Committee shall receive subsistence and travel expenses as provided in G.S. 120‑3.1 and G.S. 138‑5.
(g)	Staff. – The Legislative Services Commission, through the Legislative Services Officer, shall assign professional staff to assist the Committee in its work. Upon the direction of the Legislative Services Commission, the Director of Legislative Assistants of the Senate and of the House of Representatives shall assign clerical staff to the Committee. The expenses for clerical employees shall be borne by the Committee.
"§ 131D‑10.9B.  Permanency Innovation Initiative Fund.
(a)	There is created the Permanency Innovation Initiative Fund that will support a demonstration project with services provided by Children's Home Society of North Carolina to (i) improve permanency outcomes for children living in foster care through reunification with parents, providing placement or guardianship with other relatives, or adoption, (ii) improve engagement with biological relatives of children in or at risk of entering foster care, and (iii) reduce costs associated with maintaining children in foster care. In implementing these goals, the Permanency Innovation Initiative Fund shall support the following strategies:
(1)	Family Finding, which is a program that uses intensive biological family engagement services to discover and engage biological relatives of children living in public foster care to provide permanent emotional and relational support, including adoption, legal guardianship, or legal custody.
(2)	Child Specific Adoption Recruitment Services, which is a program that follows the Wendy's Wonderful Kids Model as developed by The Dave Thomas Foundation for Adoption and works with children in public foster care to develop and execute adoption recruitment plans tailored to the needs of the individual child.
(3)	Permanency Training Services, which are services delivered by Children's Home Society of North Carolina to assess the readiness of county departments of social services to implement the permanency strategies under subdivisions (1) and (2) of this subsection and provide training services to support the delivery of the services.
(b)	This program shall not constitute an entitlement and is subject to the availability of funds.
(c)	The Social Services Commission shall adopt rules to implement the provisions of this section."

SUBPART XII‑D. DIVISION OF AGING AND ADULT SERVICES

TIERED STATE‑COUNTY SPECIAL ASSISTANCE PILOT
SECTION 12D.2.(a)  As used in this section, the term "group home" means any facility that (i) is licensed under Chapter 122C of the General Statutes, (ii) meets the definition of a supervised living facility under 10A NCAC 27G .5601(c)(1) or 10A NCAC 27G .5601(c)(3), and (iii) serves adults whose primary diagnosis is mental illness or a developmental disability but may also have other diagnoses.
SECTION 12D.2.(b)  It is the intent of the General Assembly to create a State‑County Special Assistance program that allows counties greater flexibility in serving individual needs within their communities and greater control over how county funds are used to support this program in light of the fact that counties are required to pay for fifty percent (50%) of the costs of this program. To that end, the General Assembly directs the Department of Health and Human Services to establish a pilot program in accordance with subsection (c) of this section.
SECTION 12D.2.(c)  The Department of Health and Human Services, Division of Aging and Adult Services (Department), shall establish a pilot program to implement a tiered rate structure within the State‑County Special Assistance program for individuals residing in group homes, in‑home living arrangements, and assisted living residences as defined in G.S. 131D‑2.1. The purposes of the pilot program are to (i) determine the best way to implement a block grant for this program statewide and (ii) test the feasibility and effectiveness of implementing a tiered rate structure to address program participants' intensity of need, including medication management. The Department shall select a minimum of four and a maximum of six counties to participate in the pilot program, at least two of which shall be rural counties and at least two of which shall be urban counties. The pilot program shall (i) be implemented during the 2013‑2014 fiscal year, (ii) operate for at least a 12‑month period, and (iii) comply with any agreements in effect between the State of North Carolina and the United States government.
SECTION 12D.2.(d)  The Department shall implement the pilot program in collaboration with the local departments of social services in the counties selected for participation. As part of the pilot program, the selected counties shall receive a State General Fund allocation as a block grant to be equally matched with county general funds. The General Fund allocation provided to each county participating in the pilot program shall be calculated based upon the average annual Special Assistance expenditures for that county during the 2011‑2013 fiscal biennium, adjusted for the amount of projected annual growth in the number of Special Assistance recipients in that county during the 2013‑2015 fiscal biennium. These funds may be used to pay for room, board, and personal care services, including medication management, for individuals eligible to receive State‑County Special Assistance, subject to the following limitations and requirements:
(1)	These funds shall not be used to cover any portion of the cost of providing services for which an individual receives Medicaid coverage.
(2)	The pilot program shall comply with all federal and State requirements governing the existing State‑County Special Assistance program, except that Section 12D.3 does not apply to the pilot program.
(3)	The tiered rate structure shall be based upon intensity of need, and an individual's placement within a tier shall be based upon an independent assessment of the individual's need for room, board, and assistance with activities of daily living, including medication management.
SECTION 12D.2.(e)  By February 1, 2014, the Department shall submit a progress report on the implementation and operation of the pilot program, including any obstacles to implementation; and by February 1, 2015, the Department shall submit a final report on the results of the pilot program, along with any recommendations based on these results, to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The report due by February 1, 2015, shall include information from all participating counties on at least all of the following:
(1)	The amount of the tiered rates implemented as part of the pilot program.
(2)	The cost methodology for determining these tiered rates.
(3)	The number of individuals participating in the pilot program while residing in a group home.
(4)	The number of individuals participating in the pilot program while residing in an in‑home living arrangement.
(5)	The number of individuals participating in the pilot program while residing in an assisted living residence as defined by G.S. 131D‑2.1, broken down by facility type.
(6)	A comparison of the number of recipients of State‑County Special Assistance prior to and during the pilot program, broken down by county and living arrangement.
(7)	Any other information the Department deems relevant for determining the best way to implement a block grant statewide for the State‑County Special Assistance program.

STATE‑COUNTY SPECIAL ASSISTANCE
SECTION 12D.3.(a)  For each year of the 2013‑2015 fiscal biennium, the maximum monthly rate for residents in adult care home facilities shall be one thousand one hundred eighty‑two dollars ($1,182) per month per resident.
SECTION 12D.3.(b)  For each year of the 2013‑2015 fiscal biennium, the maximum monthly rate for residents in Alzheimer's/Dementia special care units shall be one thousand five hundred fifteen dollars ($1,515) per month per resident.

SUBPART XII‑E. DIVISION OF PUBLIC HEALTH

INCREASE PERMIT FEES FOR CERTAIN FOOD AND LODGING ESTABLISHMENTS
SECTION 12E.1.(a)  G.S. 130A‑247 is amended by adding a new subdivision to read:
"(8)	"Temporary food establishment" means an establishment not otherwise exempted from this part pursuant to G.S. 130A‑250 that (i) prepares or serves food, (ii) operates for a period of time not to exceed 21 days in one location, and (iii) is affiliated with and endorsed by a transitory fair, carnival, circus, festival, or public exhibition."
SECTION 12E.1.(b)  G.S. 130A‑248(d) reads as rewritten:
"(d)	The Department shall charge each establishment subject to this section, except nutrition programs for the elderly administered by the Division of Aging and Adult Services of the Department of Health and Human Services, establishments that prepare and sell meat food products or poultry products, temporary food establishments, limited food services establishments, and public school cafeterias, a fee of one hundred twenty dollars ($120.00) for each permit issued. This fee shall be reassessed annually for permits that do not expire. The Commission shall adopt rules to implement this subsection. Fees collected under this subsection shall be used for State and local food, lodging, and institution sanitation programs and activities. No more than fifty dollars ($50.00) of each fee collected under this subsection may be used to support State health programs and activities."
SECTION 12E.1.(c)  G.S. 130A‑248(d1) reads as rewritten:
"(d1)	The Department shall charge a twenty‑five dollar ($25.00) late payment fee to any establishment subject to this section, except nutrition programs for the elderly administered by the Division of Aging of the Department of Health and Human Services, establishments that prepare and sell meat food products or poultry products, temporary food establishments, limited food services establishments, and public school cafeterias, that fails to pay the fee required by subsection (d) of this section within 45 days after billing by the Department. The Department may, in accordance with G.S. 130A‑23, suspend the permit of an establishment that fails to pay the required fee within 60 days after billing by the Department. The Department shall charge a reinstatement fee of one hundred fifty dollars ($150.00) to any establishment that requests reinstatement of its permit after the permit has been suspended. The Commission shall adopt rules to implement this subsection.
The clear proceeds of civil penalties collected pursuant to this subsection shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C‑457.2."
SECTION 12E.1.(d)  G.S. 130A‑248 is amended by adding a new subsection to read:
"(d2)	A local health department shall charge each temporary food establishment and each limited food services establishment a fee of seventy‑five dollars ($75.00) for each permit issued. A local health department shall use all fees collected under this subsection for local food, lodging, and institution sanitation programs and activities."
SECTION 12E.1.(e)  Subsections (a) through (d) of this section become effective on August 1, 2013, and apply to food and lodging permits effective or reassessed on or after August 1, 2013.
SECTION 12E.1.(f)  Section 31.11A of S.L. 2011‑145, as amended by Section 61A of S.L. 2011‑391 and Section 10.15 of S.L. 2012‑142, is repealed.

MODIFICATIONS TO ORAL HEALTH STRATEGY
SECTION 12E.2.(a)  The General Assembly encourages local health departments to increase access to direct clinical care and preventive oral health services in the dental clinics operated or sponsored by local health departments.
SECTION 12E.2.(b)  Effective October 1, 2013, the Secretary of Health and Human Services shall eliminate at least 15 full‑time equivalent positions within the Oral Health Section of the Division of Public Health in order to achieve a savings of at least six hundred thirty‑seven five hundred thousand dollars ($637,500) during the 2013‑2014 fiscal year and at least eight hundred fifty thousand dollars ($850,000) during the 2014‑2015 fiscal year.
SECTION 12E.2.(c)  By no later than February 1, 2014, the Department shall submit a revised statewide oral health strategic plan to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The plan shall include at least all of the following:
(1)	Recommendations for reorganizing the Department's Oral Health Section.
(2)	Strategies for reducing oral diseases through prevention, education, and health promotion services.
(3)	Strategies for monitoring public oral health.
(4)	Strategies for increasing access to dental care.

FUNDS FOR SCHOOL NURSES
SECTION 12E.3.(a)  All funds appropriated in this act for the School Nurse Funding Initiative shall be used to supplement and not supplant other State, local, or federal funds appropriated or allocated for this purpose. Communities shall maintain their current level of effort and funding for school nurses. These funds shall not be used to fund nurses for State agencies. These funds shall be distributed to local health departments according to a formula that includes all of the following:
(1)	School nurse‑to‑student ratio.
(2)	Percentage of students eligible for free or reduced meals.
(3)	Percentage of children in poverty.
(4)	Per capita income.
(5)	Eligibility as a low‑wealth county.
(6)	Mortality rates for children between one and 19 years of age.
(7)	Percentage of students with chronic illnesses.
(8)	Percentage of county population consisting of minority persons.
SECTION 12E.3.(b)  The Division of Public Health shall ensure that school nurses funded with State funds (i) do not assist in any instructional or administrative duties associated with a school's curriculum and (ii) perform all of the following with respect to school health programs:
(1)	Serve as the coordinator of the health services program and provide nursing care.
(2)	Provide health education to students, staff, and parents.
(3)	Identify health and safety concerns in the school environment and promote a nurturing school environment.
(4)	Support healthy food services programs.
(5)	Promote healthy physical education, sports policies, and practices.
(6)	Provide health counseling, assess mental health needs, provide interventions, and refer students to appropriate school staff or community agencies.
(7)	Promote community involvement in assuring a healthy school and serve as school liaison to a health advisory committee.
(8)	Provide health education and counseling and promote healthy activities and a healthy environment for school staff.
(9)	Be available to assist the county health department during a public health emergency.
SECTION 12E.3.(c)  Section 6.9(b) of S.L. 2011‑145, as amended by Section 6.2 of S.L. 2012‑142, is repealed.

CHILDREN'S DEVELOPMENTAL SERVICE AGENCIES
SECTION 12E.4.  In order to achieve the reduced amount of State funds appropriated in this act for the Children's Developmental Service Agencies (CDSAs) program, the Department of Health and Human Services, Division of Public Health, may close up to four CDSAs, effective July 1, 2014. The Department shall retain the CDSA located in the City of Morganton and the CDSAs with the highest caseloads of children residing in rural and medically underserved areas. If the Department elects to close one or more CDSAs pursuant to this section, it shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division no later than March 1, 2014, identifying the CDSAs selected for closure.

AIDS DRUG ASSISTANCE PROGRAM
SECTION 12E.5.(a)  The Department of Health and Human Services shall work with the Department of Public Safety (DPS) to use DPS funds to purchase pharmaceuticals for the treatment of individuals in the custody of DPS who have been diagnosed with Human Immunodeficiency Virus or Acquired Immune Deficiency Syndrome (HIV/AIDS) in a manner that allows these funds to be accounted for as State matching funds in the Department of Health and Human Services drawdown of federal Ryan White funds earmarked for the AIDS Drug Assistance Program (ADAP).
SECTION 12E.5.(b)  By no later than April 1, 2014, and by no later than April 1, 2015, the Department of Health and Human Services, Division of Public Health, shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on alternative options for serving individuals diagnosed with HIV/AIDS who are eligible to receive services under ADAP, including the State Medicaid program and the federally facilitated Health Benefit Exchange that will operate in this State.

COMMUNITY‑FOCUSED ELIMINATING HEALTH DISPARITIES INITIATIVE
SECTION 12E.6.(a)  Funds appropriated in this act to the Department of Health and Human Services, Division of Public Health, for the Community‑Focused Eliminating Health Disparities Initiative (CFEHDI) shall be used to provide a maximum of 12 grants‑in‑aid to close the gap in the health status of African‑Americans, Hispanics/Latinos, and American Indians as compared to the health status of white persons. These grants‑in‑aid shall focus on the use of measures to eliminate or reduce health disparities among minority populations in this State with respect to heart disease, stroke, diabetes, obesity, asthma, HIV/AIDS, and cancer. The Office of Minority Health shall coordinate and implement the grants‑in‑aid program authorized by this section.
SECTION 12E.6.(b)  In implementing the grants‑in‑aid program authorized by subsection (a) of this section, the Department shall ensure all of the following:
(1)	The amount of any grant‑in‑aid is limited to three hundred thousand dollars ($300,000).
(2)	Only community‑based organizations, faith‑based organizations, local health departments, hospitals, and CCNC networks located in urban and rural areas of the western, eastern, and Piedmont areas of this State are eligible to apply for these grants‑in‑aid. No more than four grants‑in‑aid shall be awarded to applicants located in any one of the three areas specified in this subdivision.
(3)	Each eligible applicant shall be required to demonstrate substantial participation and involvement with all other categories of eligible applicants, in order to ensure an evidence‑based medical home model that will affect change in health and geographic disparities.
(4)	Eligible applicants shall select one or more of the following chronic illnesses or conditions specific to the applicant's geographic area as the basis for applying for a grant‑in‑aid under this section to affect change in the health status of African‑Americans, Hispanics/Latinos, or American Indians:
a.	Heart Disease.
b.	Stroke.
c.	Diabetes.
d.	Obesity.
e.	Asthma.
f.	HIV/AIDS.
g.	Cancer.
(5)	The minimum duration of the grant period for any grant‑in‑aid is two years.
(6)	The maximum duration of the grant period for any grant‑in‑aid is three years.
(7)	If approved for a grant‑in‑aid, the grantee (i) shall not use more than eight percent (8%) of the grant funds for overhead costs and (ii) shall be required at the end of the grant period to demonstrate significant gains in addressing one or more of the health disparity focus areas identified in subsection (a) of this section.
(8)	An independent panel with expertise in the delivery of services to minority populations, health disparities, chronic illnesses and conditions, and HIV/AIDS shall conduct the review of applications for grants‑in‑aid. The Department shall establish the independent panel required by this section.
SECTION 12E.6.(c)  The grants‑in‑aid awarded under this section shall be awarded in honor of the memory of the following deceased members of the General Assembly: Bernard Allen, Pete Cunningham, John Hall, Robert Holloman, Howard Hunter, Ed Jones, Jeanne Lucas, Vernon Malone, William Martin, and William Wainwright. These funds shall be used for concerted efforts to address large gaps in health status among North Carolinians who are African‑American, as well as disparities among other minority populations in North Carolina.
SECTION 12E.6.(d)  Section 10.21(d) of S.L. 2011‑145 reads as rewritten:
"SECTION 10.21.(d)  By October 1, 2013, the Department shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on funds appropriated to the CFEHDI. The report shall 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, and shall also address all of the following:
(1)	Which community‑based organizations, faith‑based organizations, local health departments, hospitals, and CCNC networks received CFEHDI grants‑in‑aid.
(2)	The amount of funding awarded to each grantee.
(3)	Which of the minority populations were served by each grantee.
(4)	Which community‑based organizations, faith‑based organizations, local health departments, hospitals, and CCNC networks were involved in fulfilling the goals and activities of each grant‑in‑aid awarded under this section and what activities were planned and implemented by the grantee to fulfill the community focus of the CFEHDI program.
(5)	How the activities implemented by the grantee fulfilled the goal of reducing health disparities among minority populations, and the specific success in reducing particular incidences."

STRATEGIES FOR IMPROVING MEN'S HEALTH
SECTION 12E.7.  Article 7 of Chapter 130A of the General Statutes is amended by adding a new Part to read:
"Part 5A. Men's Health.
"§ 130A‑223.1.  Department to establish strategies for improving men's health.
The Department of Health and Human Services, Division of Public Health, Chronic Disease and Injury Prevention Section, shall work to expand the State's attention and focus on the prevention of disease and improvement in the quality of life for men over their entire lifespan. The Department shall develop strategies for achieving these goals, which shall include, but not be limited to, all of the following:
(1)	Developing a strategic plan to improve health care services.
(2)	Building public health awareness.
(3)	Developing initiatives within existing programs.
(4)	Pursuing federal and State funding for the screening, early detection, and treatment of prostate cancer and other diseases affecting men's health."

INCREASE NORTH CAROLINA MEDICAL EXAMINER AUTOPSY FEES
SECTION 12E.8.(a)  G.S. 130A‑389(a) reads as rewritten:
"(a)	If, in the opinion of the medical examiner investigating the case or of the Chief Medical Examiner, it is advisable and in the public interest that an autopsy or other study be made; or, if an autopsy or other study is requested by the district attorney of the county or by any superior court judge, an autopsy or other study shall be made by the Chief Medical Examiner or by a competent pathologist designated by the Chief Medical Examiner. A complete autopsy report of findings and interpretations, prepared on forms designated for the purpose, shall be submitted promptly to the Chief Medical Examiner. Subject to the limitations of G.S. 130A‑389.1 relating to photographs and video or audio recordings of an autopsy, a copy of the report shall be furnished to any person upon request. A fee for the autopsy or other study shall be paid by the State. However, if the deceased is a resident of the county in which the death or fatal injury occurred, that county shall pay the fee. The fee shall be one thousand two hundred fifty dollars ($1,250)."
SECTION 12E.8.(b)  This section becomes effective August 1, 2013, and applies to fees imposed for autopsies performed on or after that date.

SUBPART XII‑F. DIVISION OF MH/DD/SAS AND STATE OPERATED HEALTHCARE FACILITIES

FUNDS FOR LOCAL INPATIENT PSYCHIATRIC BEDS OR BED DAYS
SECTION 12F.2.(a)  Use of Funds. – Of the funds appropriated in Section 2.1 of this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for crisis services, the sum of thirty‑eight million one hundred twenty‑one thousand six hundred forty‑four dollars ($38,121,644) for the 2013‑2014 fiscal year and the sum of thirty‑eight million one hundred twenty‑one thousand six hundred forty‑four dollars ($38,121,644) for the 2014‑2015 fiscal year shall be used to purchase additional local inpatient psychiatric beds or bed days not currently funded by or though LME/MCOs. The Department shall develop and implement a two‑tiered system of payment for purchasing these local inpatient psychiatric beds or bed days based on acuity level, with an enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels, as defined by the Department. The enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels shall not exceed the lowest average cost per patient bed day among the State psychiatric hospitals. In addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated to LME/MCOs for community‑based mental health, developmental disabilities, and substance abuse services may be used to purchase additional local inpatient psychiatric beds or bed days. Funds designated in this subsection for the purchase of local inpatient psychiatric beds or bed days shall not be used to supplant other funds appropriated or otherwise available to the Department for the purchase of inpatient psychiatric services through contracts with local hospitals.
SECTION 12F.2.(b)  Distribution and Management of Beds or Bed Days. – The Department shall work to ensure that any local inpatient psychiatric beds or bed days purchased in accordance with this section are distributed across the State in LME/MCO catchment areas and according to need as determined by the Department. The Department shall ensure that beds or bed days for individuals with higher acuity levels are distributed across the State in LME catchment areas, including any catchment areas served by managed care organizations, and according to greatest need based on hospital bed utilization data. The Department shall enter into contracts with LME/MCOs and local hospitals for the management of these beds or bed days. The Department shall work to ensure that these contracts are awarded equitably around all regions of the State. LME/MCOs shall manage and control these local inpatient psychiatric beds or bed days, including the determination of the specific local hospital or State psychiatric hospital to which an individual should be admitted pursuant to an involuntary commitment order.
SECTION 12F.2.(c)  Funds to be Held in Statewide Reserve. – Funds appropriated to the Department for the purchase of local inpatient psychiatric beds or bed days shall not be allocated to LME/MCOs but shall be held in a statewide reserve at the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to pay for services authorized by the LME/MCOs and billed by the hospitals through the LME/MCOs. LME/MCOs shall remit claims for payment to the Department within 15 working days after receipt of a clean claim from the hospital and shall pay the hospital within 30 working days after receipt of payment from the Department.
SECTION 12F.2.(d)  Ineffective LME/MCO Management of Beds or Bed Days. – If the Department determines that (i) an LME/MCO is not effectively managing the beds or bed days for which it has responsibility, as evidenced by beds or bed days in the local hospital not being utilized while demand for services at the State psychiatric hospitals has not reduced, or (ii) the LME/MCO has failed to comply with the prompt payment provisions of subsection (c) of this section, the Department may contract with another LME/MCO to manage the beds or bed days or, notwithstanding any other provision of law to the contrary, may pay the hospital directly.
SECTION 12F.2.(e)  Reporting by LME/MCOs. – The Department shall establish reporting requirements for LME/MCOs regarding the utilization of these beds or bed days.
SECTION 12F.2.(f)  Reporting by Department. – By no later than March 1, 2014, the Department shall report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on all of the following:
(1)	A uniform system for beds or bed days purchased during the fiscal year ending June 30, 2013, from (i) funds appropriated in this act that are designated for this purpose in subsection (a) of this section, (ii) existing State appropriations, and (iii) local funds.
(2)	Other Department initiatives funded by State appropriations to reduce State psychiatric hospital use.
SECTION 12F.2.(g)  Repeal of Hospital Utilization Pilot. – Sections 10.49(s1) through 10.49(s5) of S.L. 2007‑323 are repealed.

FUNDS FOR THE NORTH CAROLINA CHILD TREATMENT PROGRAM
SECTION 12F.3.(a)  Recurring funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2013‑2015 fiscal biennium for the North Carolina Child Treatment Program (NC CTP) shall be used for the following purposes:
(1)	To provide clinical training and coaching to licensed Medicaid clinicians on an array of evidence‑based treatments and to provide a statewide platform to assure accountability and outcomes.
(2)	To maintain and manage a public roster of program graduates, linking high‑quality clinicians with children, families, and professionals.
(3)	To partner with State, LME/MCO, and private sector leadership to bring effective mental health treatment to children in juvenile justice and mental health facilities.
SECTION 12F.3.(b)  Nonrecurring funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2013‑2015 fiscal biennium for the North Carolina Child Treatment Program (NC CTP) shall be used to pay for the cost of developing a secure database for the NC CTP to track individual‑level and aggregate‑level data with interface capability to work with existing networks within State agencies. The data, including any entered or stored in the database, is and remains the sole property of the State.

SINGLE STREAM FUNDING FOR MH/DD/SAS COMMUNITY SERVICES
SECTION 12F.4.(a)  For the purpose of mitigating cash flow problems that many LME/MCOs experience at the beginning of each fiscal year relative to single stream funding, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall distribute not less than one‑twelfth of each LME/MCO's continuation allocation at the beginning of the fiscal year and subtract the amount of that distribution from the LME/MCO's total reimbursements for the fiscal year.
SECTION 12F.4.(b)  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall periodically review and, as deemed necessary by the Department, update the set of standardized covered benefits developed and implemented by the Department pursuant to Section 10.11(b) of S.L. 2011‑145 for recipients of LME/MCO community service funds; provided, however, the Department shall not implement any updates that increase the overall cost of these standardized covered benefits.

BEHAVIORAL HEALTH CLINICAL INTEGRATION AND PERFORMANCE MONITORING
SECTION 12F.4A.(a)  The Department of Health and Human Services shall require local management entities, including local management entities that have been approved to operate the 1915(b)/(c) Medicaid Waiver (LME/MCOs), to implement clinical integration activities with Community Care of North Carolina (CCNC) through Total Care, a collaborative initiative designed to improve and minimize the cost of care for patients who suffer from comorbid mental health or substance abuse and primary care or other chronic conditions.
SECTION 12F.4A.(b)  The Department shall ensure that, by no later than January 1, 2014, all LME/MCOs submit claims data, including to the extent practical, retrospective claims data and integrated payment and reporting system (IPRS) data, to the CCNC Informatics Center and to the Medicaid Management Information System. Upon receipt of this claims data, CCNC shall provide access to clinical data and care management information within the CCNC Informatics Center to LME/MCOs and authorized behavioral health providers to support (i) treatment, quality assessment, and improvement activities or (ii) coordination of appropriate and effective patient care, treatment, or habilitation.
SECTION 12F.4A.(c)  The Department, in consultation with CCNC and the LME/MCOs, shall develop quality and performance statistics on the status of mental health, developmental disabilities, and substance abuse services, including, but not limited to, variations in total cost of care, clinical outcomes, and access to and utilization of services.
SECTION 12F.4A.(d)  The Department shall, within available appropriations and as deemed necessary by the Department, expand or alter existing contracts by mutual agreement of all parties to the contract in order to implement the provisions of this section.
SECTION 12F.4A.(e)  By no later than March 1, 2014, and semiannually thereafter, the Department shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on the progress, outcomes, and savings associated with the implementation of clinical integration activities with CCNC pursuant to this section.

MH/DD/SAS HEALTH CARE INFORMATION SYSTEM PROJECT
SECTION 12F.5.  The Department of Health and Human Services shall not take any further action or expend any funds appropriated or available to the Department to develop and implement the health care information system for State facilities operated by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services until each of the following conditions has been met:
(1)	By no later than March 1, 2014, the Department shall submit a detailed plan of this system to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division. The plan shall include an explanation of at least all of the following:
a.	The process the Department used to select the Veterans Health Information Systems and Technology Architecture (VisTA), whether or not the selection process was competitive, and if not, why it was not.
b.	Requirements for vendor services to support system implementation and operation and the costs associated with this support.
c.	Governance structure for the system.
d.	Modules to be implemented in each facility and the reason for each.
e.	Assignment of responsibility for system maintenance, codes fixes, application upgrades, and hardware upgrades.
f.	Whether the application and database will be implemented at each facility or centrally managed by the Department and the reasons for the decision.
g.	Identification of additional hardware that will be required to support a statewide rollout and the location at which the Department plans to host it.
h.	Assignment of responsibility for backup and recovery.
i.	If there will be redundant failover between facilities.
j.	Plans, time lines, and costs for implementing any other modules currently offered by the United State Department of Veterans Affairs.
k.	A process for ensuring that the system software is upgraded whenever the United States Department of Veterans Affairs upgrades its system.
l.	Technology constraints for VisTA and State‑supported facilities and how they will be addressed, by facility.
m.	Facility on‑boarding plan for the State psychiatric hospitals and other State facilities operated by the Division.
n.	Costs and sources of funding for planning, development, and implementation at each facility and five years of costs and sources of funding for operations and maintenance at each facility.
o.	Any other costs associated with system planning, development, implementation, operation, and maintenance.
p.	Any issues associated with the planning, development, and implementation, identified by the Department, the Office of the State Chief Information Officer, the Office of Information Technology Services, or the Office of State Budget and Management, with a solution for each identified issue.
(2)	Upon submission of the plan required by subdivision (1) of this section, the Department shall obtain prior approval from the State Chief Information Officer in order to take any further action or expend any funds appropriated or available to the Department to develop and implement the health care information system for State facilities operated by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.

LME/MCO FUNDS FOR SUBSTANCE ABUSE SERVICES
SECTION 12F.6.(a)  LME/MCOs shall use a portion of their allocated funds for substance abuse treatment services to support prevention and education activities at a level at least equivalent to the 2012‑2013 fiscal year.
SECTION 12F.6.(b)  In providing treatment and services for adult offenders and increasing the number of Treatment Accountability for Safer Communities (TASC) case managers, local management entities shall consult with TASC to improve offender access to substance abuse treatment and match evidence‑based interventions to individual needs at each stage of substance abuse treatment. Special emphasis should be placed on intermediate punishment offenders, community punishment offenders at risk for revocation, and Department of Correction releases who have completed substance abuse treatment while in custody.
The Department shall allocate up to three hundred thousand dollars ($300,000) of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, to provide substance abuse services for adult offenders and to increase the number of TASC case managers. These funds shall be allocated to TASC before funds are allocated to LMEs for mental health services, substance abuse services, and crisis services.

STUDY WAYS TO IMPROVE OUTCOMES AND EFFICIENCIES IN ALCOHOL & DRUG ABUSE TREATMENT PROGRAMS
SECTION 12F.7.(a)  By no later than April 1, 2014, the Department of Health and Human Services shall study and report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on ways to improve outcomes and reduce operating costs associated with inpatient treatment at the alcohol and drug abuse treatment centers operated by the Division of State‑Operated Healthcare Facilities.
SECTION 12F.7.(b)  The Joint Legislative Program Evaluation Oversight Committee shall consider including in the 2014 Work Plan for the Program Evaluation Division of the General Assembly a study of the most effective and efficient ways to operate  inpatient alcohol and drug abuse treatment programs, including, but not limited to, (i) an examination and comparison of the practices, costs, and outcomes of private and State‑operated programs in North Carolina, (ii) an examination of the practices, costs, and outcomes of private and state‑operated programs in other states, and (iii) recommendations for best practices to achieve greater program efficiencies and outcomes in North Carolina.

SUBPART XII‑G. DIVISION OF HEALTH SERVICE REGULATION

THREE‑YEAR MORATORIUM ON SPECIAL CARE UNIT LICENSES AND REVIEW OF CURRENT SPECIAL CARE UNIT STAFFING REQUIREMENTS
SECTION 12G.1.(a)  For the period beginning July 31, 2013, and ending July 1, 2016, the Department of Health and Human Services, Division of Health Service Regulation (Department), shall not issue any licenses for special care units as defined in G.S. 131D‑4.6 and G.S. 131E‑114. This prohibition shall not restrict the Department from doing any of the following:
(1)	Issuing a license to a facility that is acquiring an existing special care unit.
(2)	Issuing a license for a special care unit in any area of the State upon a determination by the Secretary of the Department of Health and Human Services that increased access to this type of care is necessary in that area during the three‑year moratorium imposed by this section.
(3)	Processing all completed applications for special care unit licenses received by the Division of Health Service Regulation along with the applicable license fee prior to June 1, 2013.
SECTION 12G.1.(b)  By no later than April 1, 2014, the Department shall review the laws pertaining to staff ratios and other staffing requirements of special care units and report the results of its review to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. The report shall compare special care unit staff ratios and staffing requirements in North Carolina to those of other states, including those states that border North Carolina. The report shall contain all of the following specific information:
(1)	The rationale and justification for establishing the existing special care unit staff ratios and staffing requirements.
(2)	Recommendations for changes to existing staff ratios and staffing requirements based on findings of the Department's review.

ELIMINATE COMPREHENSIVE REPORT ON MEDICATION‑RELATED ERRORS IN NURSING HOMES
SECTION 12G.2.(a)  G.S. 131E‑128.1(e) reads as rewritten:
"(e)	Confidentiality. – The meetings or proceedings of the advisory committee, the records and materials it produces, and the materials it considers, including analyses and reports pertaining to medication‑related error reporting under G.S. 131E‑128.2 and pharmacy reports on drug defects and adverse reactions under G.S. 131E‑128.4, shall be confidential and not be considered public records within the meaning of G.S. 132‑1. The meetings or proceedings and records and materials also shall not be subject to discovery or introduction into evidence in any civil action against a nursing home or a provider of professional health services resulting from matters that are the subject of evaluation and review by the committee. No person who was in attendance at a meeting of the committee shall testify in any civil action as to any evidence or other matters produced or presented during the meetings or proceedings of the committee or as to any findings, recommendations, evaluations, opinions, or other actions of the committee or its members. Notwithstanding the foregoing:
(1)	Information, documents, or records otherwise available, including any deficiencies found in the course of an inspection conducted under G.S. 131E‑105, shall not be immune from discovery or use in a civil action merely because they were presented during meetings or proceedings of the advisory committee. A member of the advisory committee or a person who testifies before the committee may testify in a civil action but cannot be asked about that person's testimony before the committee or any opinion formed as a result of the committee meetings or proceedings.
(2)	Information that is confidential and not subject to discovery or use in civil actions under this subsection may be released to a professional standards review organization that performs any accreditation or certification function. Information released to the professional standards review organization shall be limited to information reasonably necessary and relevant to the standards review organization's determination to grant or continue accreditation or certification. Information released to the standards review organization retains its confidentiality and is not subject to discovery or use in any civil action as provided under this subsection. The standards review organization shall keep the information confidential subject to this subsection.
(3)	Information that is confidential and not subject to discovery or use in civil actions under this subsection may be released to the Department of Health and Human Services pursuant to its investigative authority under G.S. 131E‑105. Information released to the Department shall be limited to information reasonably necessary and relevant to the Department's investigation of compliance with Part 1 of Article 6 of this Chapter. Information released to the Department retains its confidentiality and is not subject to discovery or use in any civil action as provided in this subsection. The Department shall keep the information confidential subject to this subsection.
(4)	Information that is confidential and is not subject to discovery or use in civil actions under this subsection may be released to an occupational licensing board having jurisdiction over the license of an individual involved in an incident that is under review or investigation by the advisory committee. Information released to the occupational licensing board shall be limited to information reasonably necessary and relevant to an investigation being conducted by the licensing board pertaining to the individual's involvement in the incident under review by the advisory committee. Information released to an occupational licensing board retains its confidentiality and is not subject to discovery or use in any civil action as provided in this subsection. The occupational licensing board shall keep the information confidential subject to this subsection."
SECTION 12G.2.(b)  G.S. 131E‑128.1(g) reads as rewritten:
"(g)	Penalty. – The Department may take adverse action against the license of a nursing home upon a finding that the nursing home has failed to comply with this section, G.S. 131E‑128.2, 131E‑128.3, or 131E‑128.4."
SECTION 12G.2.(c)  G.S. 131E‑128.5 is repealed.

CERTIFICATE OF NEED EXEMPTION FOR REPLACEMENT OF PREVIOUSLY APPROVED EQUIPMENT & FACILITIES LOCATED ON THE MAIN CAMPUS OF A LICENSED HEALTH SERVICE FACILITY
SECTION 12G.3.(a)  G.S. 131E‑176 is amended by adding a new subdivision to read:
"(14n)	"Main campus" means all of the following for the purposes of G.S. 131E‑184(f) and (g) only:
a.	The site of the main building from which a licensed health service facility provides clinical patient services and exercises financial and administrative control over the entire facility, including the buildings and grounds adjacent to that main building.
b.	Other areas and structures that are not strictly contiguous to the main building but are located within 250 yards of the main building."
SECTION 12G.3.(b)  G.S. 131E‑184 is amended by adding new subsections to read:
"(f)	The Department shall exempt from certificate of need review the purchase of any replacement equipment that exceeds the two million dollar ($2,000,000) threshold set forth in G.S. 131E‑176(22) if all of the following conditions are met:
(1)	The equipment being replaced is located on the main campus.
(2)	The Department has previously issued a certificate of need for the equipment being replaced.
(3)	The licensed health service facility proposing to purchase the replacement equipment shall provide prior written notice to the Department, along with supporting documentation to demonstrate that it meets the exemption criteria of this subsection.
(g)	The Department shall exempt from certificate of need review any capital expenditure that exceeds the two million dollar ($2,000,000) threshold set forth in G.S. 131E‑176(16)b. if all of the following conditions are met:
(1)	The sole purpose of the capital expenditure is to renovate, replace on the same site, or expand the entirety or a portion of an existing health service facility that is located on the main campus.
(2)	The capital expenditure does not result in (i) a change in bed capacity as defined in G.S. 131E‑176(5) or (ii) the addition of a health service facility or any other new institutional health service other than that allowed in G.S. 131E‑176(16)b.
(3)	The licensed health service facility proposing to incur the capital expenditure shall provide prior written notice to the Department, along with supporting documentation to demonstrate that it meets the exemption criteria of this subsection."
SECTION 12G.3.(b)  This section applies to replacement equipment purchased, and capital expenditures for replacement facilities incurred, on or after the date this act becomes law.

SUBPART XII‑H. DIVISION OF MEDICAL ASSISTANCE (MEDICAID)

DETAILED MEDICAID REFORM PROPOSAL TO BE PREPARED BY DEPARTMENT OF HEALTH AND HUMAN SERVICES; MEDICAID REFORM ADVISORY GROUP ESTABLISHED
SECTION 12H.1.(a)  The Department of Health and Human Services, Division of Medical Assistance, (Department), in consultation with the Medicaid Reform Advisory Group created by subsection (e) of this section, shall create a detailed plan for, but not implement, significant reforms to the State's Medicaid Program that shall accomplish the following:
(1)	Create a predictable and sustainable Medicaid program for North Carolina taxpayers.
(2)	Increase administrative ease and efficiency for North Carolina Medicaid providers.
(3)	Provide care for the whole person by uniting physical and behavioral health care.
SECTION 12H.1.(b)  The Department shall submit its detailed proposal of how to reform the State's Medicaid Program to the General Assembly. The report shall contain the following:
(1)	The details of the reform plan, including how the plan would accomplish the goals set out in subsection (a) of this section.
(2)	The Department's methodology for selecting the reform plan over alternatives.
(3)	Forecasts of the reform plan's potential to slow the growth of the costs of the Medicaid Program, including the assumptions and methodology used for the forecast, as well as an explanation of how the Department's forecast methodology has been improved to produce more accurate forecasting than in prior years.
(4)	The reform plan's impact, as compared to the existing Medicaid Program, on both providers and recipients in areas such as enrollment within the Medicaid system, access to services, quality of care, and payment methodologies, and any other areas of comparison to help the General Assembly evaluate the reform plan.
(5)	If regional demonstration projects, pilot projects, or similar projects will be used to test a proposal, how the Department will ensure that the test methodology is scientifically valid and consistent with social science research methods.
(6)	How financial risks will be allocated under the reform plan.
(7)	The mechanisms through which the Department and any contractors under the reform plan would be held accountable for the implementation and performance of the plan.
(8)	Short‑term costs to implement the plan and expected long‑term savings in future years from slowing the growth of costs.
(9)	A realistic time line for implementation.
(10)	Draft Medicaid State Plan Amendments, Medicaid waivers, amendments to State law, or other changes necessary to legally allow the Department to implement its reform plan.
(11)	Any other detailed information that would assist the General Assembly in evaluating the strength of the reform plan and the plan's ability to accomplish the goals set out in subsection (a) of this section.
SECTION 12H.1.(c)  The Department is encouraged to and may submit draft Medicaid State Plan amendments, draft waiver applications, or other documents to the federal government to solicit feedback on the Department's proposal prior to reporting to the General Assembly. The Department shall not, however, submit any documents to the federal government to implement the reform plan without legislation authorizing the Department to implement the Department's reform plan.
SECTION 12H.1.(d)  The Department shall submit its reform plan to the General Assembly no later than March 17, 2014, but is encouraged to submit its plan as early as it responsibly can.
SECTION 12H.1.(e)  Advisory Group. – There is established the North Carolina Medicaid Reform Advisory Group (Advisory Group) in order to advise the Department of Health and Human Services in its development of its detailed plan to reform Medicaid. The Advisory Group shall meet in order to (i) provide stakeholder input in a public forum and (ii) ensure the transparency of the process of developing the reform proposal. The Advisory Group shall meet at the call of the chair.
The Advisory Group shall consist of the following five members, and the appointing officer shall fill vacancies:
(1)	A Representative appointed by the Speaker of the House of Representatives.
(2)	A Senator appointed by the President Pro Tempore of the Senate.
(3)	Three persons appointed by the Governor, one of whom shall be designated as the chair.
Legislative members of the Advisory Group shall receive per diem, subsistence, and travel expenses as provided in G.S. 120‑3.1. Non‑legislative members of the Advisory Group shall receive per diem, subsistence, and travel expenses as allowed under G.S. 138‑5 or, if the member is a State employee, lodging and travel expenses as allowed under G.S. 138‑6.
The Secretary of Health and Human Services shall ensure adequate staff representation and support from the Department of Health and Human Services.
The Advisory Group shall terminate on July 1, 2014.
SECTION 12H.1.(f)  Eligibility of Legislation. – Legislation based on the Department's reform proposal and recommended by the Advisory Group shall be eligible for consideration when the 2013 General Assembly reconvenes in 2014, and G.S. 143C‑5‑2 does not apply to such legislation.

CLARIFY STATE PLAN AMENDMENT PROCEDURES
SECTION 12H.2.(a)  Part 6 of Article 2 of Chapter 108A of the General Statutes is amended by adding a new section to read as follows:
"§ 108A‑54.1A.  Amendments to Medicaid State Plan and Medicaid Waivers.
(a)	No provision in the Medicaid State Plan or in a Medicaid Waiver may expand or otherwise alter the scope or purpose of the Medicaid program from that authorized by law enacted by the General Assembly. For purposes of this section, the term "amendments to the State Plan" includes State Plan amendments, Waivers, and Waiver amendments.
(b)	The Department may submit amendments to the State Plan only as required under any of the following circumstances:
(1)	A law enacted by the General Assembly directs the Department to submit an amendment to the State Plan.
(2)	A law enacted by the General Assembly makes a change to the Medicaid Program that requires approval by the federal government.
(3)	A change in federal law, including regulatory law, or a change in the interpretation of federal law by the federal government requires an amendment to the State Plan.
(4)	A change made by the Department to the Medicaid Program requires an amendment to the State Plan, if the change was within the authority granted to the Department by State law.
(5)	An amendment to the State Plan is required in response to an order of a court of competent jurisdiction.
(6)	An amendment to the State Plan is required to ensure continued federal financial participation.
(c)	Amendments to the State Plan submitted to the federal government for approval shall contain only those changes that are allowed by the authority for submitting an amendment to the State Plan in subsection (b) of this section.
(d)	No fewer than 10 days prior to submitting an amendment to the State Plan to the federal government, the Department shall post the amendment on its Web site and notify the members of the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division that the amendment has been posted. This requirement shall not apply to draft or proposed amendments submitted to the federal government for comments but not submitted for approval. If the authority for submitting the amendment to the State Plan is pursuant to subdivision (3), (4), (5), or (6) of subsection (b) of this section, then, prior to submitting an amendment to the federal government, the Department shall submit to the General Assembly members receiving notice under this subsection and to the Fiscal Research Division an explanation of the amendment, the need for the amendment, and the federal time limits required for implementation of the amendment.
(e)	The Department shall submit an amendment to the State Plan to the federal government by a date sufficient to provide the federal government adequate time to review and approve the amendment so the amendment may be effective by the date required by the directing authority in subsection (b) of this section."
SECTION 12H.2.(b)  G.S. 108A‑70.25 reads as rewritten:
"§ 108A‑70.25.  State Plan for Health Insurance Program for Children.

(a)	The NC Health Choice program shall be administered and operated in accordance with this Part and the NC Health Choice State Plan, as periodically amended by the Department of Health and Human Services and approved by the federal government.
(b)	The requirements in G.S. 108A‑54.1A shall apply to NC Health Choice State Plan amendments in the same manner in which they apply to Medicaid State Plan amendments."
SECTION 12H.2.(c)  The Department of Health and Human Services shall take any and all action necessary to amend the Medicaid State Plan, Attachment 4.19‑B, Section 5, Page 2, which pertains to supplemental payments that increase reimbursement to the average commercial rate for certain eligible medical professional providers, in order to limit the definition of eligible medical professional providers to only physicians employed by the East Carolina University School of Medicine or the University of North Carolina at Chapel Hill School of Medicine as academic faculty. The supplemental payments shall be made only for services provided at these schools of medicine.
SECTION 12H.2.(d)  This section is effective when it becomes law.

CODIFY GENERAL POLICIES
SECTION 12H.3.  G.S. 108A‑54 reads as rewritten:
"§ 108A‑54.  Authorization of Medical Assistance Program.
(a)	The Department is authorized to establish a Medicaid Program in accordance with Title XIX of the federal Social Security Act. The Department may adopt rules to implement the Program. The State is responsible for the nonfederal share of the costs of medical services provided under the Program. In addition, the State shall pay one hundred percent (100%) of the federal Medicare Part D clawback payments under the Medicare Modernization Act of 2004, P.L. 108‑173, as amended. A county is responsible for the county's cost of administering the Program in that county.
…
(c)	The Medicaid Program shall be administered and operated in accordance with this Part and the North Carolina Medicaid State Plan and Waivers, as periodically amended by the Department of Health and Human Services in accordance with G.S. 108A‑54.1A and approved by the federal government.
(d)	The Department shall not take any actions that the Department determines would jeopardize the State's qualification to receive federal funds through the Medicaid Program."

CODIFY MEDICAID AS SECONDARY PAYOR
SECTION 12H.4.  G.S. 108A‑55 is amended by adding a new subsection to read as follows:
"§ 108A‑55.  Payments.
…
(e)	Medicaid is a secondary payor of claims. The Department shall apply Medicaid medical policy to recipients who have primary insurance other than Medicare, Medicare Advantage, and Medicaid. For recipients who have primary insurance other than Medicare, Medicare Advantage, or Medicaid, the Department shall pay the lesser of the Medicaid Allowable Amount or an amount up to the actual coinsurance or deductible or both of the primary payor, 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."

CODIFY COUNTIES SHARING IN FRAUD RECOVERY
SECTION 12H.5.  Part 6 of Article 2 of Chapter 108A of the General Statutes is amended by adding a new section to read as follows:
"§ 108A‑64.1.  Incentives to counties to recover fraudulent Medicaid expenditures.
The Department of Health and Human Services, Division of Medical Assistance, shall provide incentives to counties that successfully recover fraudulently spent Medicaid funds by sharing State savings with counties responsible for the recovery of the fraudulently spent funds."

CODIFY CHANGES TO MEDICAL POLICY
SECTION 12H.6.(a)  G.S. 108A‑54.2 reads as rewritten:
"§ 108A‑54.2.  Procedures for changing medical policy.
(a)	The Department shall adopt rules to develop, amend, and adopt medical coverage policy for Medicaid and NC Health Choice in accordance with this section.
(b)	Medical coverage policy is defined as those policies, definitions, or guidelines utilized to evaluate, treat, or support the health or developmental conditions of a recipient so as to determine eligibility, authorization or continued authorization, medical necessity, course of treatment and supports, clinical outcomes, and clinical supports treatment practices for a covered procedure, product, or service. Medical coverage policy is subject to the following:
(1)	During the development of new medical coverage policy or amendment to existing medical coverage policy, the Department shall consult with and seek the advice of the Physician Advisory Group and other organizations the Secretary deems appropriate. The Secretary shall also consult with and seek the advice of officials of the professional societies or associations representing providers who are affected by the new medical coverage policy or amendments to existing medical coverage policy.
(2)	At least 45 days prior to the adoption of new or amended medical coverage policy, the Department shall:
a.	Publish the proposed new or amended medical coverage policy on the Department's Web site;
b.	Notify all Medicaid and NC Health Choice providers of the proposed, new, or amended policy; and
c.	Upon request, provide persons copies of the proposed medical coverage policy.
(3)	During the 45‑day period immediately following publication of the proposed new or amended medical coverage policy, the Department shall accept oral and written comments on the proposed new or amended policy.
(4)	If, following the comment period, the proposed new or amended medical coverage policy is modified, then the Department shall, at least 15 days prior to its adoption:
a.	Notify all Medicaid and NC Health Choice providers of the proposed policy;
b.	Upon request, provide persons notice of amendments to the proposed policy; and
c.	Accept additional oral or written comments during this 15‑day period.
(c)	If the adoption of new or amended medical coverage policies is necessitated by an act of the General Assembly or a change in federal law, then the 45‑ and 15‑day time periods specified in subsection (b) of this section shall instead be 30‑ and 10‑day time periods.
(d)	Unless directed to do so by the General Assembly, the Department shall not change medical policy affecting the amount, sufficiency, duration, and scope of health care services and who may provide services until the Division of Medical Assistance has prepared a five‑year fiscal analysis documenting the increased cost of the proposed change in medical policy and submitted it for departmental review. Changes to medical policy affecting the amount, sufficiency, duration, and scope of health care services and who may provide services are subject to the following:
(1)	If the fiscal impact indicated by the fiscal analysis for any proposed medical policy change exceeds five hundred thousand dollars ($500,000) in total requirements for Medicaid or fifty thousand dollars ($50,000) in total requirements for NC Health Choice for a given fiscal year, then the Department shall submit the proposed medical policy change to the fiscal analysis to the Office of State Budget and Management and the Fiscal Research Division. The Department shall not implement the proposed medical policy change unless the source of State funding is identified and approved by the Office of State Budget and Management.
(2)	If the medical policy change meets the requirement thresholds specified in subdivision (1) of this subsection but is required for compliance with federal law, then the Department shall submit the proposed medical policy or policy interpretation change with the five‑year fiscal analysis to the Office of State Budget and Management prior to implementing the change.
The Department shall annually report, by November 1 of each year, all medical policy changes with total requirements of less than the amount specified in subdivision (1) of this subsection to the Office of State Budget and Management and the Fiscal Research Division of the Legislative Services Commission."
SECTION 12H.6.(b)  G.S. 108A‑54.3 is repealed.
SECTION 12H.6.(c)  G.S. 150B‑1(d)(9) reads as rewritten:
"(9)	The Department of Health and Human Services in adopting new or amending existing medical coverage policies for the State Medicaid and NC Health Choice programs pursuant to G.S. 108A‑54.2."
SECTION 12H.6.(d)  This section is effective when it becomes law.

PROVIDER APPLICATION AND RECREDENTIALING FEE
SECTION 12H.7.  The Department of Health and Human Services, Division of Medical Assistance, shall charge an application fee of one hundred dollars ($100.00), and the amount federally required, to each provider enrolling in the Medicaid Program for the first time. The fee shall be charged to all providers at recredentialing every three years.

CODIFY ELECTRONIC TRANSACTION REQUIREMENTS FOR PROVIDERS
SECTION 12H.8.  Chapter 108C of the General Statutes is amended by adding a new section to read as follows:
"§ 108C‑13.  Electronic transactions.
(a)	Providers shall follow the Department's established procedures for securing electronic payments, and the Department shall not provide routine provider payments by check. Medicaid providers shall file claims electronically, except that nonelectronic claims submission may be required when it is in the best interest of the Department.
(b)	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.
(c)	Providers shall submit requests for prior authorizations electronically via Web site. Providers shall access their authorizations via online portals rather than receiving hard copies by mail. Providers shall receive copies of adverse decisions electronically, although recipients shall receive adverse decisions via certified mail.
(d)	Providers shall submit their provider enrollment applications online. The Department shall accept electronic signatures rather than require receipt of signed hard copies."

CLARIFY RULE MAKING
SECTION 12H.9.(a)  G.S. 108A‑54(b) is recodified as G.S. 108A‑54.1B(a).
SECTION 12H.9.(b)  G.S. 108A‑54.1B, as created by subsection (a) of this section, reads as rewritten:
"§ 108A‑54.1B.  Adoption of rules; State Plans, including amendments and waivers to State Plans, have effect of rules.
(a)	The Department is expressly authorized to adopt temporary and permanent rules to implement or define the federal laws and regulations, the North Carolina State Plan of Medical Assistance, and the North Carolina State Plan of the Health Insurance Program for Children, the terms and conditions of eligibility for applicants and recipients of the Medical Assistance Program and the Health Insurance Program for Children, audits and program integrity, the services, goods, supplies, or merchandise made available to recipients of the Medical Assistance Program and the Health Insurance Program for Children, and reimbursement for the services, goods, supplies, or merchandise made available to recipients of the Medical Assistance Program and the Health Insurance Program for Children.
(b)	Rule‑making authority granted under this section for particular circumstances or programs is in addition to any other rule‑making authority granted to the Department under Chapter 150B of the General Statutes.
(c)	Prior to filing a temporary rule authorized under G.S. 150B‑21.1(a)(17) with the Rules Review Commission and the Office of Administrative Hearings, the Department shall consult with the Office of State Budget and Management on the possible fiscal impact of the temporary rule and its effect on State appropriations and local governments.
(d)	State Plans, State Plan Amendments, and Waivers approved by the Centers for Medicare and Medicaid Services (CMS) for the North Carolina Medicaid Program and the NC Health Choice program shall have the force and effect of rules adopted pursuant to Article 2A of Chapter 150B of the General Statutes."
SECTION 12H.9.(c)  G.S. 150B‑1(d) is amended by adding a new subdivision to read as follows:
"(d)	Exemptions from Rule Making. – Article 2A of this Chapter does not apply to the following:
…
(22)	The Department of Health and Human Services with respect to the content of State Plans, State Plan Amendments, and Waivers approved by the Centers for Medicare and Medicaid Services (CMS) for the North Carolina Medicaid Program and the NC Health Choice program."
SECTION 12H.9.(d)  G.S. 150B‑21.1(a) is amended by adding a new subdivision to read as follows:
"(a)	Adoption. – An agency may adopt a temporary rule when it finds that adherence to the notice and hearing requirements of G.S. 150B‑21.2 would be contrary to the public interest and that the immediate adoption of the rule is required by one or more of the following:
…
(17)	To maximize receipt of federal funds for the Medicaid or NC Health Choice programs within existing State appropriations, to reduce Medicaid or NC Health Choice expenditures, and to reduce Medicaid and NC Health Choice fraud and abuse."

MEDICAID ELIGIBILITY; ADJUSTMENT TO HEALTH CHOICE ELIGIBILITY
SECTION 12H.10.(a)  Families and children who are categorically and medically needy are eligible for Medicaid, subject to the following annual income levels:
		Categorically	Medically
	Family	Needy	Needy
	Size	Income Level	Income Level
	1	$ 4,344	$ 2,900
	2	5,664	3,800
	3	6,528	4,400
	4	7,128	4,800
	5	7,776	5,200
	6	8,376	5,600
	7	8,952	6,000
	8	9,256	6,300
The Department of Health and Human Services shall provide Medicaid coverage to 19‑ and 20‑year‑olds under this subsection in accordance with federal rules and regulations. Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.
SECTION 12H.10.(b)  For the following Medicaid eligibility classifications for which the federal poverty guidelines are used as income limits for eligibility determinations, the income limits will be updated each April 1 immediately following publication of federal poverty guidelines. The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to the following:
(1)	All elderly, blind, and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines.
(2)	Pregnant women with incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty guidelines and without regard to resources. Services to pregnant women eligible under this subsection continue throughout the pregnancy but include only those related to pregnancy and to those other conditions determined by the Department as conditions that may complicate pregnancy.
(3)	Infants under the age of one with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines and without regard to resources.
(4)	Children aged one through five with family incomes equal to or less than two hundred percent (200%) of the federal poverty guidelines and without regard to resources.
(5)	Effective until January 1, 2014, children aged six through 18 with family incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines and without regard to resources.
(6)	Effective January 1, 2014, children aged six through 18 with family incomes equal to or less than one hundred thirty‑three percent (133%) of the federal poverty guidelines and without regard to resources.
(7)	Workers with disabilities described in G.S. 108A‑66A with unearned income equal to or less than one hundred fifty percent (150%) of the federal poverty guidelines.
The Department of Health and Human Services, Division of Medical Assistance, shall also provide family planning services to men and women of childbearing age with family incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty guidelines and without regard to resources.
SECTION 12H.10.(c)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to adoptive children with special or rehabilitative needs, regardless of the adoptive family's income.
SECTION 12H.10.(d)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to "independent foster care adolescents," ages 18, 19, and 20, as defined in section 1905(w)(1) of the Social Security Act (42 U.S.C. § 1396d(w)(1)), without regard to the adolescent's assets, resources, or income levels.
SECTION 12H.10.(e)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to women who need treatment for breast or cervical cancer and who are defined in 42 U.S.C. § 1396a(a)(10)(A)(ii)(XVIII).
SECTION 12H.10.(f)  G.S. 108A‑54.1 is recodified as G.S. 108A‑66.1. G.S. 108A‑66.1(a), as recodified by this subsection, reads as rewritten:
"(a)	Title. – This section may be cited as the Health Coverage for Workers With Disabilities Act. The Department shall implement a Medicaid buy‑in eligibility category as permitted under P.L. 106‑170, Ticket to Work and Work Incentives Improvement Act of 1999. The Department shall establish rules, policies, and procedures to implement this act in accordance with this section."
SECTION 12H.10.(g)  Effective January 1, 2014, G.S. 108A‑70.21(a)(1)d. reads as rewritten:
"§ 108A‑70.21.  Program eligibility; benefits; enrollment fee and other cost‑sharing; coverage from private plans; purchase of extended coverage.
(a)	Eligibility. – The Department may enroll eligible children based on availability of funds. Following are eligibility and other requirements for participation in the Program:
(1)	Children must:
a.	Be between the ages of 6 through 18;
b.	Be ineligible for Medicaid, Medicare, or other federal government‑sponsored health insurance;
c.	Be uninsured;
d.	Be in a family whose family income is above one hundred thirty‑three percent (133%) through two hundred percent (200%) of the federal poverty level;
e.	Be a resident of this State and eligible under federal law; and
f.	Have paid the Program enrollment fee required under this Part.
…."

NC HEALTH CHOICE TEMPORARY EXTENDED COVERAGE
SECTION 12H.11.  An enrollee in the NC Health Choice program who loses eligibility due to reaching the age of 19 on or after June 1, 2013, may purchase at full premium cost continued coverage under the NC Health Choice program until the end of the month following the date on which the Secretary of the United States Department of Health and Human Services determines that the North Carolina federally facilitated Health Benefits Exchange is fully operational. The benefits, co‑payments, and other conditions of enrollment under the NC Health Choice program applicable to extended coverage purchased in accordance with this section shall be the same as those applicable to an NC Health Choice enrollee who has not yet reached the age of 19.

Study Potential Savings through the Purchase of Insurance
SECTION 12H.12.  The Department of Health and Human Services shall study the opportunities for savings in overall State funding by purchasing health insurance for persons who are currently served by programs administered by the Department. The Department shall look broadly at all of its programs, including, but not limited to, Medicaid, AIDS Drug Assistance, and disability programs, for instances where purchasing private insurance for an individual may be less costly for the State than the current program serving the individual. The Department shall report on its findings to the Joint Legislative Oversight Committee on Health and Human Services no later than April 1, 2014.

MODIFICATIONS TO EXISTING COVERED SERVICES AND PAYMENT FOR SERVICES
SECTION 12H.13.(a)  Except as otherwise provided in this act, the allowable State plan services, co‑pays, reimbursement rates, and fees shall remain the same as those effective June 30, 2013. Except as otherwise provided in this act and to the extent allowable under federal law, the adjustments made in this section apply to both the Medicaid Program and the NC Health Choice program.
SECTION 12H.13.(b)  Effective July 1, 2013, any rate methodologies that contain an automatic inflationary or increase factor shall not increase above the rate in effect on June 30, 2013, unless the rate is otherwise increased by the General Assembly. Interim hospital outpatient services' percentage of cost used for payment shall be adjusted to compensate for expected inflation that hospitals would be eligible for, and cost settlement will only be up to the percentage in subsection (e) of this section. The following rates are excluded from this subsection: Federally Qualified Health Centers, Rural Health Centers, critical access hospitals, State‑Operated services, Hospice, Part B and D Premiums, third‑party and HMO premiums, drugs, MCO capitation payments, and nursing home direct care services case mix index increases.
SECTION 12H.13.(c)  Effective November 1, 2013, nominal co‑pays for Medicaid are increased to the maximum amount allowed by the Centers for Medicare and Medicaid Services (CMS) as of June 30, 2013.
SECTION 12H.13.(d)  Effective January 1, 2014, the following changes are made to allowable State plan services:
(1)	Of the 22 visits allowed per recipient per fiscal year for professional services provided by physicians, nurse practitioners, nurse‑midwives, physician assistants, clinics, and health departments, prior authorization is required for visits in excess of 10 within a year. This limitation and prior authorization requirement does not apply to chronic conditions.
(2)	Adult rehabilitation home visits for set‑up and training are limited to three within a 12‑month period.
SECTION 12H.13.(e)  Effective January 1, 2014, the percentage of allowable costs for hospital outpatients is reduced from eighty percent (80%) to seventy percent (70%).
SECTION 12H.13.(f)  Effective January 1, 2014, the following changes are made to drug reimbursements:
(1)	Prices based on the Wholesale Acquisition Cost (WAC) shall be paid at one hundred one percent (101%) of WAC.
(2)	Prices based on the State Medicaid Average Costs (SMAC) shall be paid at one hundred fifty percent (150%) of SMAC.
(3)	The rate for dispensing brand drugs is reduced by one dollar ($1.00).
SECTION 12H.13.(g)  In order to achieve cost‑savings and improve health outcomes, the Department of Health and Human Services, Division of Medical Assistance, may impose prior authorization requirements and other restrictions on medications prescribed to Medicaid and Health Choice recipients for the treatment of mental illness, including, but not limited to, prior authorization requirements and restrictions on (i) medications on the Preferred Drug List (PDL) that are prescribed for the treatment of mental illness and (ii) medications for attention deficit hyperactivity disorder (ADHD) or attention deficit disorder (ADD) that are prescribed to juveniles for off‑label uses.

ADDITIONAL MANAGEMENT OF DRUG UTILIZATION
SECTION 12H.13A.  The Department of Health and Human Services shall work with Community Care of North Carolina (CCNC) to do the following:
(1)	Ensure better pharmacy management, including compliance by Medicaid recipients with taking their prescription drugs and compliance by pharmacy providers with the CCNC protocols.
(2)	Identify Medicaid recipients who are frequent users of pharmacy services and coordinate with physicians and pharmacists to implement steps to enhance CCNC care management programs.

Administrative Hearings Funding; Contingency Fees To Audit Contractors
SECTION 12H.16.(a)  The Department of Health and Human Services (Department) shall transfer the sum of one million dollars ($1,000,000) for the 2013‑2014 fiscal year and the sum of one million dollars ($1,000,000) for the 2014‑2015 fiscal year to the Office of Administrative Hearings (OAH). These funds shall be allocated by the 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 for mediation services provided for Medicaid 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 12H.16.(b)  Chapter 108C of the General Statutes is amended by adding a new section to read as follows:
"§ 108C‑5.1.  Post‑payment review and recovery audit contracts.The Department shall not pay contingent fees pursuant to any contract with an entity conducting Medicaid post‑payment reviews or Recovery Audit Contractor (RAC) audits before all appeal rights have been exhausted. Any contingent fee for Medicaid post‑payment reviews or RAC audits shall be calculated as a percentage of the amount of the final overpayment, as defined in G.S. 108C‑2(5). The State share of the contingent fee paid for Medicaid post‑payment reviews or RAC audits shall not exceed the State share of the amount actually recovered by the Department and applied to the final overpayment."
SECTION 12H.16.(c)  Subsection (b) of this section applies only to contracts entered into or amended on or after the date this act becomes law.

CODIFY PROVIDER PERFORMANCE BONDS
SECTION 12H.17.(a)  Chapter 108C of the General Statutes is amended by adding a new section to read as follows:
"§ 108C‑14.  Provider performance bonds.
(a)	Subject to the provisions of this section, 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, recredentialing, or reinstatement if any of the following are true:
(1)	The provider fails to demonstrate financial viability.
(2)	The Department determines there is significant potential for fraud and abuse.
(3)	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.
(b)	The Department may waive or limit the requirements of subsection (a) of this section for individual Medicaid‑enrolled providers or for one or more classes of Medicaid‑enrolled providers based on the following:
(1)	The provider's or provider class's dollar amount of monthly billings to Medicaid.
(2)	The length of time an individual provider has been licensed, endorsed, certified, or accredited in this State to provide services.
(3)	The length of time an individual provider has been enrolled to provide Medicaid services in this State.
(4)	The provider's demonstrated ability to ensure adequate record keeping, staffing, and services.
(5)	The need to ensure adequate access to care.
In waiving or limiting requirements of this section, 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."
SECTION 12H.17.(b)  The Department may adopt temporary rules in accordance with G.S. 150B‑21.1 as necessary to implement G.S. 108C‑14, as enacted by this section.

SHARED SAVINGS PLAN WITH PROVIDERS
SECTION 12H.18.(a)  The Department of Health and Human Services shall consult with providers affected by subsection (b) of this section to develop a shared savings plan that the Department shall implement by July 1, 2014, with provider payments beginning January 1, 2015. The shared savings plan shall provide incentives to provide effective and efficient care that results in positive outcomes for Medicaid and NC Health Choice recipients. Payments under the shared savings plan shall be paid from funds withheld under subsection (b) of this section, and payments to members of a particular provider group shall come from the funds withheld from that group.
SECTION 12H.18.(b)  During the 2013‑2015 fiscal biennium, the Department of Health and Human Services shall withhold three percent (3%) of payments for the following services rendered to Medicaid and NC Health Choice recipients on or after January 1, 2014:
(1)	Inpatient hospital.
(2)	Physician, excluding primary care until January 1, 2015.
(3)	Dental.
(4)	Optical services and supplies.
(5)	Podiatry.
(6)	Chiropractors.
(7)	Hearing aids.
(8)	Personal care services.
(9)	Nursing homes.
(10)	Adult care homes.
(11)	Dispensing drugs.
Funds from payments withheld under this section that are budgeted to be shared with providers shall not revert to the General Fund.
SECTION 12H.18.(c)  The Department of Health and Human Services shall report to the Joint Legislative Oversight Committee on Health and Human Services on the development of the shared savings program established by this section no later than March 1, 2014.
SECTION 12H.18.(d)  The Department of Health and Human Services shall use funds withheld from payments for drugs to develop with Community Care of North Carolina (CCNC) a program for Medicaid and Health Choice recipients based on the ChecKmeds NC program. The program shall include the following:
(1)	At least 50 community pharmacies by June 30, 2015.
(2)	At least 500 community pharmacies in at least 70 counties by June 30, 2016.
(3)	A per member per month (PMPM) payment for care coordination and population health services provided in conjunction with CCNC.
(4)	A pay for performance payment.

MODIFY HOSPITAL PROVIDER ASSESSMENTS BY CHANGING AMOUNT RETAINED BY STATE TO A PERCENTAGE
SECTION 12H.19.(a)  G.S. 108A‑121(8) reads as rewritten:
"(8)	State's annual Medicaid payment. – For an assessment collected under this Article, an amount equal to twenty‑five and nine‑tenths percent (25.9%) of the total amount collected under the assessment."
SECTION 12H.19.(b)  G.S. 108A‑124 reads as rewritten:
"§ 108A‑124.  Use of assessment proceeds.
(a)	Use. – The proceeds of the assessments imposed under this Article and all corresponding matching federal funds must be used to make the State annual Medicaid payment to the State and the Medicaid equity payments and UPL payments to hospitals.
(b)	Quarterly Payments. – Within seven business days following the due date for each quarterly assessment imposed under G.S. 108A‑123, the Secretary must do the following:
	(1)	Pay to each hospital that has paid its equity assessment for the respective quarter twenty‑five percent (25%) of its Medicaid equity payment amount. A hospital's Medicaid equity payment amount is the sum of the hospital's Medicaid inpatient and outpatient deficits after calculating all other Medicaid payments, excluding disproportionate share hospital payments and the UPL payment remitted to the hospital under subdivision (2) of this subsection.
(2)	Pay to the primary affiliated teaching hospital for the East Carolina University Brody School of Medicine, to the critical access hospitals, and to each hospital that has paid its UPL assessment for the respective quarter twenty‑five percent (25%) of its UPL payment amount, as determined under subsection (c) of this section.
…."
SECTION 12H.19.(c)  Article 7 of Chapter 108A of the General Statutes is amended by adding a new section to read as follows:
"§ 108A‑128.  Payment for providers formerly subject to this Article.
If a hospital provider (i) is exempt from both the equity and UPL assessments under this Article, (ii) makes an intergovernmental transfer (IGT) to the Department of Health and Human Services to be used to draw down matching federal funds, and (iii) has acquired, merged, leased, or managed another provider on or after March 25, 2011, then the hospital provider shall transfer to the State an additional amount, which shall be retained by the State. The additional amount shall be twenty‑five and nine‑tenths percent (25.9%) of the amount of funds that (i) would be transferred to the State through such an IGT and (ii) are to be used to match additional federal funds that the hospital provider is able to receive because of the acquired, merged, leased, or managed provider."

MODIFY MEDICAID RATE METHODOLOGIES FOR RECENTLY ACQUIRED PROVIDERS; CREATE REGIONAL BASE RATES FOR HOSPITALS
SECTION 12H.20.(a)  The Department of Health and Human Services shall modify Medicaid rate methodologies to ensure that rates paid to hospital or physician providers that were acquired, merged, leased, or managed after December 31, 2011, do not exceed rates that would have been paid if the provider had not been acquired, merged, leased, or managed.
SECTION 12H.20.(b)  The Department of Health and Human Services, Division of Medical Assistance, shall replace the existing base rates for individual hospitals with new regional base rates for all hospitals within a given region. The Department shall consult with hospitals to define the regions and to identify appropriate regional differences in order to establish regional base rates. The new regional base rates shall do the following:
(1)	Maintain the same statewide total for the base rates for all hospitals as before the base rate revision, after first adjusting the statewide total based on the changes to rates made by subsection (a) of this section.
(2)	Ensure the sustainability of small rural hospitals, ensuring access to care.

COMMUNITY CARE OF NORTH CAROLINA COST‑EFFECTIVENESS AND OUTCOMES STUDY; CONTINUED REPORTING
SECTION 12H.21.(a)  The Office of the State Auditor shall, as recommended in its January 2013 performance audit of the Medicaid Program, engage nationally recognized medical researchers to perform a scientifically valid study based upon actual data to determine whether the Community Care of North Carolina (CCNC) model saves money and improves health outcomes. This study shall begin during fiscal year 2013‑2014 and shall, if possible, be completed by the end of that fiscal year. The Department of Health and Human Services shall, upon the direction of and in amounts specified by the Office of the State Auditor, make payments to the contractor hired by the Office of the State Auditor from the one hundred thousand dollars ($100,000) appropriated elsewhere in this budget for this study as well as from federal Medicaid matching funds available for this study.
SECTION 12H.21.(b)  North Carolina Community Care Networks, Inc. (NCCCN), 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 Case Management System and its defined goals and deliverables as agreed upon in the contract. NCCCN shall submit biannual reports 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 shall conduct its own analysis of the CCNC system to identify any variations from the development plan for the Enhanced Primary Care Case Management System and its defined goals and deliverables set out in the contract between the Department of Health and Human Services, Division of Medical Assistance (DMA), and NCCCN. Upon identifying any variations, NCCCN shall develop and implement a plan to address the variations. NCCCN shall report the plan to DMA within 30 days after taking any action to implement the plan.

COMMUNITY CARE OF NORTH CAROLINA TO SET AND PAY PER MEMBER PER MONTH PAYMENTS ON PERFORMANCE BASIS TO ENCOURAGE BETTER CARE MANAGEMENT
SECTION 12H.22.(a)  The Department of Health and Human Services shall contract with Community Care Networks, Inc. (NCCCN), to administer and distribute the funds currently allocated to per member per month (PMPM) payments for Community Care of North Carolina (CCNC) primary care providers. NCCCN shall distribute one hundred percent (100%) of the funds allocated to PMPM payments to primary care providers on a care management performance basis using criteria developed by NCCCN. In developing its pay for performance model, NCCCN shall (i) ensure an adequate statewide network of participating CCNC primary care providers and (ii) adopt a payment level of zero dollars ($0.00) for providers who do not satisfactorily participate in CCNC care management initiatives. Performance‑based payments shall begin on July 1, 2014.
SECTION 12H.22.(b)  PMPM payments from the Department to CCNC primary care providers shall continue until the implementation of the performance‑based payment system.
SECTION 12H.22.(c)  The Department shall consult with the Joint Legislative Oversight Committee on Health and Human Services on the performance‑based payment proposal from NCCCN to incentivize better care management from primary care providers. If the Department submits a report and requests a meeting for the consultation, but the Oversight Committee does not hear the consultation within 90 days of the request, then the consultation requirement shall be deemed waived by the Oversight Committee. The report submitted for consultation shall include the following:
(1)	Measureable elements that will be used to differentiate care management performance‑based payments from the existing PMPM payments.
(2)	A comparison of the performance plan to other measures such as the Healthcare Effectiveness Data and Information Set (HEDIS) or other national performance or quality measures.
(3)	The specific structure of when payments would be made.
(4)	An impact calculation of prospective payments under the performance‑based payment plan and the current PMPM rates.
SECTION 12H.22.(d)  Subsection (a) of this section is contingent upon both of the following:
(1)	The Department's successful renegotiation of and modification to the existing contract or entering into a new contract with NCCCN to administer and distribute performance‑based payments, as provided in subsection (a) of this section.
(2)	The consultation required under subsection (c) of this section or an implied waiver of the consultation requirement, as provided in subsection (c) of this section.

ACCOUNTING FOR MEDICAID RECEIVABLES AS NONTAX REVENUE
SECTION 12H.24.(a)  Receivables reserved at the end of the 2013‑2014 and 2014‑2015 fiscal years shall, when received, be accounted for as nontax revenue for each of those fiscal years.
SECTION 12H.24.(b)  For the 2013‑2014 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred ten million dollars ($110,000,000) with the Department of State Treasurer to be accounted for as nontax revenue. For the 2014‑2015 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred nine million dollars ($109,000,000) with the Department of State Treasurer to be accounted for as nontax revenue. These deposits shall represent the return of General Fund appropriations, nonfederal revenue, fund balances, or other resources from State‑owned and State‑operated hospitals which are used to provide indigent and non‑indigent care services. The return from State‑owned and State‑operated hospitals to DHHS will be made from nonfederal resources in an amount equal to the amount of the payments from the Division of Medical Assistance for uncompensated care. The treatment of any revenue derived from federal programs shall be in accordance with the requirements specified in the Code of Federal Regulations, Title 2, Part 225.

MEDICAID SPECIAL FUND TRANSFER
SECTION 12H.25.  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143C‑9‑1, there is appropriated from the Medicaid Special Fund to the Department of Health and Human Services the sum of forty‑three million dollars ($43,000,000) for the 2013‑2014 fiscal year and the sum of forty‑three million dollars ($43,000,000) for the 2014‑2015 fiscal year. These funds shall be allocated as prescribed by G.S. 143C‑9‑1(b) for Medicaid programs. Notwithstanding the prescription in G.S. 143C‑9‑1(b) that these funds not reduce State general revenue funding, these funds shall replace the reduction in general revenue funding effected in this act.

MEDICAID COST CONTAINMENT ACTIVITIES
SECTION 12H.26.(a)  The Department of Health and Human Services may use up to five million dollars ($5,000,000) in the 2013‑2014 fiscal year and up to five million dollars ($5,000,000) in the 2014‑2015 fiscal year in Medicaid funds budgeted for program services to support the cost of administrative activities when cost‑effectiveness and savings are demonstrated. The funds shall be used to support activities that will contain the cost of the Medicaid Program, including contracting for services, hiring additional staff, funding pilot programs, Health Information Exchange and Health Information Technology (HIE/HIT) administrative activities, or providing grants through the Office of Rural Health and Community Care to plan, develop, and implement cost containment programs.
Medicaid cost containment activities may include prospective reimbursement methods, incentive‑based reimbursement methods, service limits, prior authorization of services, periodic medical necessity reviews, revised medical necessity criteria, service provision in the least costly settings, plastic magnetic‑stripped Medicaid identification cards for issuance to Medicaid enrollees, fraud detection software or other fraud detection activities, technology that improves clinical decision making, credit balance recovery and data mining services, and other cost containment activities. Funds may be expended under this section only after the Office of State Budget and Management has approved a proposal for the expenditure submitted by the Department. Proposals for expenditure of funds under this section shall include the cost of implementing the cost containment activity and documentation of the amount of savings expected to be realized from the cost containment activity.
SECTION 12H.26.(b)  The Department shall report annually on the expenditures under this section 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. The report shall include the methods used to achieve savings and the amount saved by these methods. The report is due to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division not later than December 1 of each year for the activities of the previous State fiscal year.

MISCELLANEOUS MEDICAID PROVISIONS
SECTION 12H.27.(a)  Volume Purchase Plans and Single Source Procurement. – The Department of Health and Human Services, Division of Medical Assistance, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single source procurement, or other contracting processes in order to improve cost containment.
SECTION 12H.27.(b)  Cost Containment Programs. – The Department of Health and Human Services, Division of Medical Assistance, may undertake cost containment programs, including contracting for services, preadmissions to hospitals, and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.
SECTION 12H.27.(c)  Posting of Notices on Web Site. – For any public notice of change required pursuant to the provisions of 42 C.F.R. § 447.205, the Department shall, no later than seven business days after the date of publication, publish the same notice on its Web site on the same Web page as it publishes State Plan amendments, and the notice shall remain on the Web site continuously for 90 days.
SECTION 12H.27.(d)  Medicaid Identification Cards. – The Department shall issue Medicaid identification cards to recipients on an annual basis with updates as needed.

CONTINUE A+KIDS REGISTRY AND ASAP INITIATIVE
SECTION 12H.28.(a)  Community Care of North Carolina (CCNC) and the Department of Health and Human Services, Division of Medical Assistance, shall continue to do the following:
(1)	Monitor the prescription and administration of atypical antipsychotic medications to Medicaid recipients under the age of 18 through the About the Antipsychotics – Keeping It Documented for Safety (A+KIDS) Registry.
(2)	Utilize a prior authorization policy for off‑label antipsychotic medication prescribing with safety monitoring for Medicaid recipients 18 and older through the Adult Safety with Antipsychotic Prescribing (ASAP) Initiative.
SECTION 12H.28.(b)  No later than April 1, 2014, Community Care of North Carolina (CCNC) and the Department of Health and Human Services shall report to the Joint Legislative Oversight Committee on Health and Human Services on the effectiveness of the programs listed in subsection (a) of this section.

SUBPART XII‑I. MISCELLANEOUS

STUDY/ALLOW CERTIFIED NURSE‑MIDWIVES GREATER FLEXIBILITY IN PRACTICE OF MIDWIFERY
SECTION 12I.2.(a)  The Joint Legislative Oversight Committee on Health and Human Services shall appoint a subcommittee to study whether certified nurse‑midwives should be given more flexibility in the practice of midwifery. In conducting the study, the subcommittee shall consider whether a certified nurse‑midwife should be allowed to practice midwifery in collaboration with, rather than under the supervision of, a physician licensed to practice medicine under Article 1 of Chapter 90 of the General Statutes who is actively engaged in the practice of obstetrics.
SECTION 12I.2.(b)  The subcommittee shall report its findings and recommendations to the Joint Legislative Oversight Committee on Health and Human Services on or before April 1, 2014, at which time it shall terminate.

SUBPART XII‑J. DHHS BLOCK GRANTS

DHHS BLOCK GRANTS
SECTION 12J.1.(a)  Except as otherwise provided, appropriations from federal block grant funds are made for each year of the fiscal biennium ending June 30, 2015, according to the following schedule:

TEMPORARY ASSISTANCE TO NEEDY	FY2013‑2014	FY2014‑2015
FAMILIES (TANF) FUNDS

Local Program Expenditures

Division of Social Services

01.	Work First Family Assistance	$ 60,285,413	$ 60,285,413

02.	Work First County Block Grants	82,485,495	82,485,495

03.	Work First Electing Counties	2,352,521	2,352,521

04.	Adoption Services – Special Children
	Adoption Fund	2,026,877	2,026,877

05.	Child Protective Services – Child Welfare
	Workers for Local DSS	9,412,391	9,412,391

06.	Child Welfare Collaborative	632,416	632,416

Division of Child Development

07.	Subsidized Child Care Program	57,172,097	55,409,695

08.	Swap Child Care Subsidy	6,352,644	6,352,644

Division of Public Health

09.	Teen Pregnancy Initiatives	2,500,000	2,500,000

DHHS Administration

10.	Division of Social Services	2,482,260	2,482,260

11.	Office of the Secretary	34,042	34,042

Transfers to Other Block Grants

Division of Child Development

12.	Transfer to the Child Care and
	Development Fund	71,773,001	71,773,001

13.	Transfer to Social Services Block
	Grant for Child Protective Services – 
	Child Welfare Training in Counties	1,300,000	1,300,000

14.	Transfer to Social Services Block
	Grant for Child Protective Services	5,040,000	5,040,000

15.	Transfer to Social Services Block
	Grant for County Departments of
	Social Services for Children's Services	4,148,001	4,148,001

TOTAL TEMPORARY ASSISTANCE TO
NEEDY FAMILIES (TANF) FUNDS	$307,997,158	$306,234,756

TEMPORARY ASSISTANCE TO NEEDY FAMILIES (TANF)
EMERGENCY CONTINGENCY FUNDS

Local Program Expenditures

Division of Social Services

01.	Work First County Block Grants	$ 5,580,925	$ 5,580,925

02.	Work First Electing Counties	25,692	25,692

03.	Subsidized Child Care	6,549,469	6,549,469

TOTAL TEMPORARY ASSISTANCE TO
NEEDY FAMILIES (TANF) EMERGENCY
CONTINGENCY FUNDS	$12,156,086	$ 12,156,086

SOCIAL SERVICES BLOCK GRANT

Local Program Expenditures

Divisions of Social Services and Aging and Adult Services

01.	County Departments of Social Services
	(Transfer from TANF $4,148,001)	$ 29,422,137	$ 29,422,137

02.	Child Protective Services
	(Transfer from TANF)	5,040,000	5,040,000

03.	State In‑Home Services Fund	1,943,950	1,943,950

04.	Adult Protective Services	1,245,363	1,245,363

05.	State Adult Day Care Fund	1,994,084	1,994,084

06.	Child Protective Services/CPS
	Investigative Services – Child Medical
	Evaluation Program	563,868	563,868

07.	Special Children Adoption Incentive Fund	462,600	462,600

08.	Child Protective Services – Child
	Welfare Training for Counties
	(Transfer from TANF)	1,300,000	1,300,000

09.	Home and Community Care Block
	Grant (HCCBG)	1,696,888	1,696,888

10.	Child Advocacy Centers	375,000	375,000

11.	Guardianship	3,978,360	3,978,360

12.	UNC Cares Contract	229,376	229,376

13.	Foster Care Services	1,385,152	1,385,152

Division of Central Management and Support

14.	DHHS Competitive Block Grants
	for Nonprofits	3,852,500	3,852,500

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

15.	Mental Health Services – Adult and
	Child/Developmental Disabilities Program/
	Substance Abuse Services – Adult	4,030,730	4,030,730

DHHS Program Expenditures

Division of Services for the Blind

16.	Independent Living Program	3,361,323	3,361,323

Division of Health Service Regulation

17.	Adult Care Licensure Program	381,087	381,087

18.	Mental Health Licensure and
	Certification Program	190,284	190,284

DHHS Administration

19.	Division of Aging and Adult Services	577,745	577,745

20.	Division of Social Services	559,109	559,109

21.	Office of the Secretary/Controller's Office	127,731	127,731

22.	Division of Child Development	13,878	13,878

23.	Division of Mental Health, Developmental
	Disabilities, and Substance Abuse Services	27,446	27,446

24.	Division of Health Service Regulation	118,946	118,946

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 62,877,557	$ 62,877,557

LOW‑INCOME HOME ENERGY ASSISTANCE BLOCK GRANT

Local Program Expenditures

Division of Social Services

01.	Low‑Income Energy Assistance
	Program (LIEAP)	$ 50,876,440	$ 50,876,440

02.	Crisis Intervention Program (CIP)	33,866,195	33,866,195

Local Administration

Division of Social Services

03.	County DSS Administration	6,757,731	6,757,731

DHHS Administration

04.	Office of the Secretary/DIRM	412,488	412,488

05.	Office of the Secretary/Controller's Office	18,378	18,378

Transfers to Other State Agencies

Department of Environment and Natural 
	Resources (DENR)

06.	Weatherization Program	14,947,789	14,947,789

07.	Heating Air Repair and Replacement
	Program (HARRP)	7,193,873	7,193,873

08.	Local Residential Energy Efficiency Service
	Providers – Weatherization	37,257	37,257

09.	Local Residential Energy Efficiency Service
	Providers – HARRP	338,352	338,352

10.	DENR Administration – Weatherization	37,257	37,257

11.	DENR Administration – HARRP	338,352	338,352

Department of Administration

12.	N.C. Commission on Indian Affairs	87,736	87,736

TOTAL LOW‑INCOME HOME ENERGY
ASSISTANCE BLOCK GRANT	$ 114,911,848	$ 114,911,848

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

Local Program Expenditures

Division of Child Development

01.	Child Care Services
	(Smart Start $7,000,000)	$ 156,566,345	$ 158,328,747

02.	Electronic Tracking System	3,000,000	3,000,000

03.	Transfer from TANF Block Grant
	for Child Care Subsidies	71,773,001	71,773,001

04.	Quality and Availability Initiatives
	(TEACH Program $3,800,000)	24,262,402	22,500,000

DHHS Administration

Division of Child Development

05.	DCDEE Administrative Expenses	6,000,000	6,000,000

06.	Local Subsidized Child Care
	Services Support	13,274,413	13,274,413

Division of Central Administration

07.	DHHS Central Administration – DIRM
	Technical Services	775,000	775,000

TOTAL CHILD CARE AND DEVELOPMENT
FUND BLOCK GRANT	$ 275,651,161	$ 275,651,161

MENTAL HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Mental Health Services – Adult	$ 10,717,607	$ 10,717,607

02.	Mental Health Services – Child	5,121,991	5,121,991

03.	Administration	200,000	200,000

TOTAL MENTAL HEALTH SERVICES
BLOCK GRANT	$ 16,039,598	$ 16,039,598

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	$ 14,960,371	$ 14,960,371

02.	Substance Abuse Treatment Alternative
	for Women	6,050,300	6,050,300

03.	Substance Abuse – HIV and IV Drug	3,919,723	3,919,723

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

05.	Substance Abuse Services – Child	4,190,500	4,190,500

06.	Administration	454,000	454,000

Division of Public Health

07.	Risk Reduction Projects	575,654	575,654

08.	Aid‑to‑Counties	190,295	190,295

TOTAL SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT	$ 37,527,700	$ 37,527,700

MATERNAL AND CHILD HEALTH BLOCK GRANT

Local Program Expenditures

Division of Public Health

01.	Children's Health Services
	(Safe Sleep Campaign $45,000)	$ 8,042,531	$ 8,042,531

02.	Women's Health
	(March of Dimes $350,000; Teen Pregnancy
	Prevention Initiatives $650,000; Perinatal
	Quality Collaborative $350,000;
	17P Project $52,000; Carolina Pregnancy
	Care Fellowship $250,000;
	Nurse‑Family Partnership $509,018)	8,532,935	8,532,935

03.	Oral Health	44,901	44,901

DHHS Program Expenditures

Division of Public Health

04.	Children's Health Services	1,301,504	1,301,504

05.	Women's Health – Maternal Health	105,419	105,419

06.	State Center for Health Statistics	164,487	164,487

07.	Health Promotion – Injury and
	Violence Prevention	89,374	89,374

DHHS Administration

Division of Public Health

08.	Division of Public Health Administration	573,108	573,108

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 18,854,259	$ 18,854,259

PREVENTIVE HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Physical Activity and Prevention	$ 1,186,142	$ 1,186,142

02.	Injury and Violence Prevention
	(Services to Rape Victims – Set‑Aside)	169,730	169,730

DHHS Program Expenditures

Division of Public Health

03.	HIV/STD Prevention and
	Community Planning	145,819	145,819

04.	Oral Health Preventive Services	46,302	46,302

05.	Laboratory Services – Testing,
	Training, and Consultation	10,980	10,980

06.	Injury and Violence Prevention
	(Services to Rape Victims – Set‑Aside)	199,634	199,634

07.	Heart Disease and Stroke Prevention	162,249	162,249

08.	Performance Improvement and Accountability	213,971	213,971

09.	Physical Activity and Nutrition	38,000	38,000

10.	State Center for Health Statistics	61,406	61,406

TOTAL PREVENTIVE HEALTH
SERVICES BLOCK GRANT	$ 2,234,233	$ 2,234,233

COMMUNITY SERVICES BLOCK GRANT

Local Program Expenditures

Office of Economic Opportunity

01.	Community Action Agencies	$ 22,402,724	$ 22,402,724

02.	Limited Purpose Agencies	1,244,596	1,244,596

DHHS Administration

03.	Office of Economic Opportunity	1,244,596	1,244,596

TOTAL COMMUNITY SERVICES
BLOCK GRANT	$ 24,891,916	$ 24,891,916

GENERAL PROVISIONS
SECTION 12J.1.(b)  Information to Be Included in Block Grant Plans. – The Department of Health and Human Services shall submit a separate plan for each Block Grant received and administered by the Department, and each plan shall include the following:
(1)	A delineation of the proposed allocations by program or activity, including State and federal match requirements.
(2)	A delineation of the proposed State and local administrative expenditures.
(3)	An identification of all new positions to be established through the Block Grant, including permanent, temporary, and time‑limited positions.
(4)	A comparison of the proposed allocations by program or activity with two prior years' program and activity budgets and two prior years' actual program or activity expenditures.
(5)	A projection of current year expenditures by program or activity.
(6)	A projection of federal Block Grant funds available, including unspent federal funds from the current and prior fiscal years.
SECTION 12J.1.(c)  Changes in Federal Fund Availability. – If the Congress of the United States increases the federal fund availability for any of the Block Grants 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 develop a plan to adjust the block grants based on reduced federal funding.
Notwithstanding the provisions of this subsection, for fiscal years 2013‑2014 and 2014‑2015, increases in the federal fund availability for the Temporary Assistance to Needy Families (TANF) Block Grant shall be used for the North Carolina Child Care Subsidy program to pay for child care in four‑ or five‑star rated facilities for four‑year‑old children.
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 Oversight Committee on Health and Human Services, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division.
SECTION 12J.1.(d)  Except as otherwise provided, appropriations from federal Block Grant funds are made for each year of the fiscal biennium ending June 30, 2015, according to the schedule enacted for State fiscal years 2013‑2014 and 2014‑2015 or until a new schedule is enacted by the General Assembly.
SECTION 12J.1.(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 Joint Legislative Oversight 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 12J.1.(f)  The sum of eighty‑two million four hundred eighty‑five thousand four hundred ninety‑five dollars ($82,485,495) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for each year of the 2013‑2015 fiscal biennium shall be used for Work First County Block Grants. The Division shall certify these funds in the appropriate State‑level services based on prior year actual expenditures. The Division has the authority to realign the authorized budget for these funds among the State‑level services based on current year actual expenditures.
SECTION 12J.1.(g)  The sum of two million four hundred eighty‑two thousand two hundred sixty dollars ($2,482,260) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for each year of the 2013‑2015 fiscal biennium shall be used to support administration of TANF‑funded programs.
SECTION 12J.1.(h)  The sum of nine million four hundred twelve thousand three hundred ninety‑one dollars ($9,412,391) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in TANF funds for each year of the 2013‑2015 fiscal biennium for child welfare improvements shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services cases; to provide foster care and support services; to recruit, train, license, and support prospective foster and adoptive families; and to provide interstate and post‑adoption services for eligible families.
Counties shall maintain their level of expenditures in local funds for Child Protective Services workers. Of the Block Grant funds appropriated for Child Protective Services workers, the total expenditures from State and local funds for fiscal years 2013‑2014 and 2014‑2015 shall not be less than the total expended from State and local funds for the 2012‑2013 fiscal year.
SECTION 12J.1.(i)  The sum of two million twenty‑six thousand eight hundred seventy‑seven dollars ($2,026,877) appropriated in this section in TANF funds to the Department of Health and Human Services, Special Children Adoption Fund, for each year of the 2013‑2015 fiscal biennium shall be used in accordance with G.S. 108A‑50.2. 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 12J.1.(j)  The sum of six hundred thirty‑two thousand four hundred sixteen dollars ($632,416) appropriated in this section to the Department of Health and Human Services in TANF funds for each year of the 2013‑2015 fiscal biennium shall be used to continue support for the Child Welfare Collaborative.

SOCIAL SERVICES BLOCK GRANT
SECTION 12J.1.(k)  The sum of twenty‑nine million four hundred twenty‑two thousand one hundred thirty‑seven dollars ($29,422,137) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for each year of the 2013‑2015 fiscal biennium shall be used for county block grants. The Division shall certify these funds in the appropriate State‑level services based on prior year actual expenditures. The Division has the authority to realign the authorized budget for these funds among the State‑level services based on current year actual expenditures.
SECTION 12J.1.(l)  The sum of one million three hundred thousand dollars ($1,300,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for each year of the 2013‑2015 fiscal biennium 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 12J.1.(m)  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 12J.1.(n)  Social Services Block Grant funds appropriated for the Special Childrens Adoption Incentive Fund will require a fifty percent (50%) local match.
SECTION 12J.1.(o)  The sum of five million forty thousand dollars ($5,040,000) appropriated in this section in the Social Services Block Grant for each year of the 2013‑2015 fiscal biennium shall be allocated to the Department of Health and Human Services, Division of Social Services. The Division shall allocate these funds to local departments of social services to replace the loss of Child Protective Services State funds that are currently used by county government to pay for Child Protective Services staff at the local level. These funds shall be used to maintain the number of Child Protective Services workers throughout the State. These Social Services Block Grant funds shall be used to pay for salaries and related expenses only and are exempt from 10A NCAC 71R .0201(3) requiring a local match of twenty‑five percent (25%).
SECTION 12J.1.(p)  The sum of three million eight hundred fifty‑two thousand five hundred dollars ($3,852,500) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Central Management and Support, shall be used for DHHS competitive block grants pursuant to Section 12A.2 of this act for each year of the 2013‑2015 fiscal biennium. These funds are exempt from the provisions of 10A NCAC 71R .0201(3).
SECTION 12J.1.(q)  The sum of three hundred seventy‑five thousand dollars ($375,000) appropriated in this section in the Social Services Block Grant for each year of the 2013‑2015 fiscal biennium to the Department of Health and Human Services, Division of Social Services, shall be used to continue support for the Child Advocacy Centers and are exempt from the provisions of 10A NCAC 71R .0201(3).
SECTION 12J.1.(r)  The sum of three million nine hundred seventy‑eight thousand three hundred sixty dollars ($3,978,360) appropriated in this section in the Social Services Block Grant for each year of the 2013‑2015 fiscal biennium to the Department of Health and Human Services, Divisions of Social Services and Aging and Adult Services, shall be used for guardianship services pursuant to Chapter 35A of the General Statutes. The Department may expend funds appropriated in this section to support (i) existing corporate guardianship contracts during the 2013‑2014 and 2014‑2015 fiscal years and (ii) guardianship contracts transferred to the State from local management entities or managed care organizations during the 2013‑2014 and 2014‑2015 fiscal years.

LOW‑INCOME HOME ENERGY ASSISTANCE BLOCK GRANT
SECTION 12J.1.(s)  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.
SECTION 12J.1.(t)  The sum of fifty million eight hundred seventy‑six thousand four hundred forty dollars ($50,876,440) appropriated in this section in the Low‑Income Home Energy Assistance Block Grant for each year of the 2013‑2015 fiscal biennium to the Department of Health and Human Services, Division of Social Services, shall be used for energy assistance payments for the households of (i) elderly persons age 60 and above with income up to one hundred thirty percent (130%) of the federal poverty level and (ii) disabled persons eligible for services funded through the Division of Aging and Adult Services. County departments of social services shall submit to the Division of Social Services an outreach plan for targeting households with 60‑year‑old household members no later than August 1 of each year.

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT
SECTION 12J.1.(u)  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 12J.1.(v)  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.

MATERNAL AND CHILD HEALTH BLOCK GRANT
SECTION 12J.1.(w)  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 2013‑2014 fiscal year or the 2014‑2015 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 12J.1.(x)  The Department of Health and Human Services shall ensure that there will be follow‑up testing in the Newborn Screening Program.

PART XIII. DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES

INCREASE CERTAIN AGRONOMIC TESTING FEES
SECTION 13.1.(a)  G.S. 106‑22 reads as rewritten:
"§ 106‑22.  Joint duties of Commissioner and Board.
The Commissioner of Agriculture, by and with the consent and advice of the Board of Agriculture shall:
…
(17)	Agronomic Testing. – Provide agronomic testing services and charge reasonable fees for plant analysis, nematode testing, in‑State soil testing during peak season, out‑of‑state soil testing, and expedited soil testing. The Board shall charge at least four dollars ($4.00) for plant analysis, at least two dollars ($2.00) for nematode testing, at least four dollars ($4.00) for in‑State soil testing during peak season, at least five dollars ($5.00) for out‑of‑state soil testing, and at least two hundred dollars ($200.00) for expedited soil testing. As used in this subdivision, "peak season" includes at a minimum the four‑month period beginning no later than December 1 of any year and extending until at least March 31 of the following year. The Board may modify the meaning of peak season by starting a peak season earlier in any year or ending it later the following year or both.
…."
SECTION 13.1.(b)  It is the intent of the General Assembly that receipts generated from the new fee for in‑State soil testing during peak season under G.S. 106‑22(17), as amended by this section, are to be used to alleviate testing delays in the peak testing season. Any receipts generated as a result of the new fee for in‑State soil testing during peak season are appropriated to the Department of Agriculture and Consumer Services for the 2013‑2014 fiscal year and for the 2014‑2015 fiscal year and shall be available to the Department in addition to any other existing funding sources.
SECTION 13.1.(c)  This section becomes effective August 1, 2013, and applies to submissions received by the Department for testing or analysis on or after that date.

Agricultural Water Resources Assistance Program Funding
SECTION 13.2.  The Division of Soil and Water Conservation of the Department of Agriculture and Consumer Services may use up to fifteen percent (15%) of the funds appropriated for the Agriculture Water Resources Assistance program to provide engineering, technical, and administrative assistance.

TVA SETTLEMENT FUNDS
SECTION 13.3.(a)  In each fiscal year of the 2013‑2015 biennium, the Department of Agriculture and Consumer Services shall apply for two million two hundred forty thousand dollars ($2,240,000) from the Tennessee Valley Authority Settlement Agreement in compliance with the requirements of paragraphs 122 through 128 of the Consent Decree entered into by the State in State of Alabama et al. v. Tennessee Valley Authority, Civil Action 3:11‑cv‑00170 in the United States District Court for the Eastern District of Tennessee, and Appendix C to the Compliance Agreement. The funds received by the State under this section shall be allocated as follows:
(1)	Five hundred thousand dollars ($500,000) for each fiscal year of the 2013‑2015 biennium to award grants for "Environmental Mitigation Projects" of the types specified in paragraph 128 of the Consent Decree in the following counties: Avery, Buncombe, Burke, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Swain, Transylvania, Watauga, Yancey.
(2)	Five hundred thousand dollars ($500,000) for each fiscal year of the 2013‑2015 biennium to the North Carolina Agricultural Water Resources Assistance Program to fund projects in the following counties: Avery, Buncombe, Burke, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Swain, Transylvania, Watauga, Yancey.
(3)	One million dollars ($1,000,000) for each fiscal year of the 2013‑2015 biennium to North Carolina Agricultural Development and Farmland Preservation Trust Fund to be used, notwithstanding G.S. 106‑744, to award funds in the following counties: Avery, Buncombe, Burke, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Swain, Transylvania, Watauga, Yancey.
(4)	Two hundred forty thousand dollars ($240,000) for each fiscal year of the 2013‑2015 biennium to the Appalachian Energy Center at Appalachian State University.
SECTION 13.3(b)  Funds allocated under subdivision (1) of subsection (a) of this section shall not be used to acquire land.

SUSTAINABLE LOCAL FOOD ADVISORY COUNCIL SUNSET
SECTION 13.4.  Section 1 of S.L. 2012‑75 reads as rewritten:
"SECTION 1.  Section 4 of S.L. 2009‑530 reads as rewritten:
"SECTION 4.  This act is effective when it becomes law and shall expire on July 31, 2013."

TOBACCO TRUST FUND
SECTION 13.5.  Notwithstanding any other provisions of G.S. 143‑720 or the provisions of G.S. 143‑721, the funds appropriated from the General Fund to the Tobacco Trust Fund for the 2013‑2014 fiscal year and for the 2014‑2015 fiscal year shall be used as follows:
(1)	Up to three hundred fifty thousand dollars ($350,000) may be used for administrative expenses each fiscal year.
(2)	Of the remaining funds appropriated to the Tobacco Trust Fund, preference shall be given to provide direct financial assistance to tobacco producers as permitted under G.S. 143‑720.

State Fair Admission
SECTION 13.6.  Notwithstanding 02 NCAC 20B .0104, the Board of Agriculture may set admission fees for the 2013 State Fair without complying with the requirements of Article 2A of Chapter 150B of the General Statutes. When this act becomes law, the Board shall post the 2013 admission fee schedule on its Web site and provide notice of the fee schedule, along with a citation to this section, to all persons named on the mailing list maintained pursuant to G.S. 150B‑21.2(d).

FUTURE FARMERS OF AMERICA PROGRAM FUNDS/REPORTING REQUIREMENTS
SECTION 13.7.(a)  Up to forty thousand dollars ($40,000) of the funds appropriated to the Department of Agriculture and Consumer Services for the 2013‑2014 fiscal year and up to one hundred forty thousand dollars ($140,000) of the funds appropriated to the Department of Agriculture and Consumer Services for the 2014‑2015 fiscal year may be used as a grant‑in‑aid to the North Carolina Agricultural Foundation, Inc., for the Future Farmers of America program for each of these fiscal years.
SECTION 13.7.(b)  North Carolina Agricultural Foundation – FFA Foundation (hereinafter "FFA Foundation") shall do the following if the Department of Agriculture and Consumer Services allocates funds to the entity:
(1)	By September 1 of each year, and more frequently as requested, 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.
(2)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

ALLOW BOARD TO ESTABLISH EXAMINATION FEE/SOIL SCIENTISTS
SECTION 13.8.  G.S. 89F‑25 reads as rewritten:
"§ 89F‑25.  Fees.
(a)	The Board shall determine fees for the following services that shall not exceed the amounts specified in this section:
Application	$ 50.00
	
License	85.00
Renewal	85.00
Restoration	110.00
Replacement license	50.00
Seal	30.00.
(b)	The Board may charge the applicant the actual cost of preparation, administration, and grading of examinations for soil scientists, in addition to its other fees."

INCREASE CERTAIN COMMERCIAL FERTILIZER FEES FOR PACKAGES OF FIVE POUNDS OR LESS
SECTION 13.9.(a)  G.S. 106‑660(a) reads as rewritten:
"(a)	Each brand of commercial fertilizer for tobacco, specialty fertilizer, fertilizer materials, manipulated manure and fortified mulch shall be registered by the person whose name appears upon the label before being offered for sale, sold or distributed in this State, except those brands expressly produced for experimental and demonstration purposes only. Other fertilizers may be manufactured and sold without registration after obtaining a license as required in G.S. 106‑661(a). The application for registration shall be submitted in duplicate to the Commissioner for his approval on forms furnished by the Commissioner, and shall include a fee of five dollars ($5.00) per brand and grade for all packages greater than five pounds. The registration fee for packages of five pounds or less shall be fifty‑five dollars ($55.00). All approved registrations expire on June 30 of each year. The application shall include such information as deemed necessary by the Board of Agriculture."
SECTION 13.9.(b)  G.S. 106‑671(a) reads as rewritten:
"(a)	For the purpose of defraying expenses on the inspection and of otherwise determining the value of commercial fertilizers in this State, there shall be paid to the Department of Agriculture and Consumer Services a charge of fifty cents (50¢) per ton on all commercial fertilizers other than packages of five pounds or less. Inspection fees shall be paid on all tonnage distributed into North Carolina to any person not having a valid reporting permit. Individual packages of five pounds or less shall be exempt from the tonnage fee; provided that any per annum (fiscal) tonnage of any brand sold in excess of one hundred tons shall be subject to the charge of fifty cents (50¢) per ton on any amount in excess of one hundred tons as provided herein. Whenever any manufacturer of commercial fertilizer shall have paid the charges required by this section his goods shall not be liable to further tax, whether by city, town, or county; provided, this shall not exempt the commercial fertilizers from an ad valorem tax."
SECTION 13.9.(c)  This section becomes effective August 1, 2013.

DEPARTMENT OF LABOR CREATE AND CONDUCT SAFETY PROGRAM FOR HISTORICAL BOILER OPERATORS
SECTION 13.10.(a)  Chapter 95 of the General Statutes is amended by adding the following new Article to read:
"Article 7B.
"Historical Boilers.
"§ 95‑69.30.  Safety Program for Operators and Apprentices.
The Department of Labor shall create and conduct a safety program for the purpose of providing instruction on how to properly care, maintain, operate, and exhibit historical boilers. The program shall also include instruction on how to train an apprentice to properly care, maintain, operate, and exhibit historical boilers. For purposes of this section, the term "historical boiler" means a steam boiler of riveted construction that is preserved, restored, or maintained for hobby or demonstration."
SECTION 13.10.(b)  This section is effective when it becomes law.

PART XIV. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

DEVELOP PLAN FOR AQUARIUMS TO RAISE PRIVATE FUNDS FOR SUPPORT ASSISTANCE
SECTION 14.1.  No later than April 1, 2014, the Division of North Carolina Aquariums of the Department of Environment and Natural Resources shall develop a plan for the North Carolina Aquariums established under Article 5C of Chapter 143B of the General Statutes to increase the amount of private funds raised through the direct efforts of each North Carolina Aquarium in order to make the North Carolina Aquariums become more financially self‑sustaining. No later than April 1, 2014, the Division of North Carolina Aquariums of the Department of Environment and Natural Resources shall report its plan under this section to the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division.

EARLY SUNSET FOR NC SUSTAINABLE COMMUNITIES TASK FORCE
SECTION 14.2.  Section 13.5(e) of S.L. 2010‑31 reads as rewritten:
"SECTION 13.5.(e)  Sunset. – This section expires July 31, 2013."

CLEAN WATER MANAGEMENT TRUST FUND UNDER DENR; NHTF REPEALED; CWMTF CHANGES
SECTION 14.3.(a)  All staff that are supported by the Clean Water Management Trust Fund and employed by the Clean Water Management Trust Fund Board of Trustees are transferred to the Department of Environment and Natural Resources and shall continue to be supported by the Clean Water Management Trust Fund, established in G.S. 113A‑253, and shall be employed by the Department of Environment and Natural Resources. The Clean Water Management Trust Fund shall be administered by the Department of Environment and Natural Resources.
SECTION 14.3.(b)  Article 5A of Chapter 113 of the General Statutes is repealed.
SECTION 14.3.(c)  G.S. 20‑79.7(b) reads as rewritten:
"(b)	Distribution of Fees. – The Special Registration Plate Account and the Collegiate and Cultural Attraction Plate Account are established within the Highway Fund. The Division must credit the additional fee imposed for the special registration plates listed in subsection (a) of this section among the Special Registration Plate Account (SRPA), the Collegiate and Cultural Attraction Plate Account (CCAPA), the Clean Water Management Trust Fund (CWMTF), which is established under G.S. 113A‑253, and the Parks and Recreation Trust Fund, which is established under G.S. 113‑44.15, as follows:
Special Plate	SRPA	CCAPA	CWMTF	PRTF
	…."
SECTION 14.3.(d)  G.S. 113A‑253 reads as rewritten:
"§ 113A‑253.  Clean Water Management Trust Fund.
(a)	Fund Established. – The Clean Water Management Trust Fund is established as a special revenue fund to be administered by the Department of Environment and Natural Resources. The Fund receives revenue from the following sources and may receive revenue from other sources:
(1)	Annual appropriations.
(2)	Special registration plates under G.S. 20‑81.12.
(3)	Other special registration plates under G.S. 20‑79.7.
(b)	Fund Earnings, Assets, and Balances. – The State Treasurer shall hold the Fund separate and apart from all other moneys, funds, and accounts. Investment earnings credited to the assets of the Fund shall become part of the Fund. Any balance remaining in the Fund at the end of any fiscal year shall be carried forward in the Fund for the next succeeding fiscal year. Payments from the Fund shall be made on the warrant of the Chair of the Board of Trustees.
(c)	Fund Purposes. – Moneys from the Fund are appropriated annually to finance projects to clean up or prevent surface water pollution and for land preservation in accordance with this Article. Revenue in the Fund may be used for any of the following purposes:
(1)	To acquire land for riparian buffers for the purposes of providing environmental protection for surface waters and urban drinking water supplies and establishing a network of riparian greenways for environmental, educational, and recreational uses.
(2)	To acquire conservation easements or other interests in real property for the purpose of protecting and conserving surface waters and enhancing drinking water supplies, including the development of water supply reservoirs.
(3)	To coordinate with other public programs involved with lands adjoining water bodies to gain the most public benefit while protecting and improving water quality.
(4)	To restore previously degraded lands to reestablish their ability to protect water quality.
			(8)	To facilitate planning that targets reductions in surface water pollution.
(8a)	To finance innovative efforts, including pilot projects, to improve stormwater management, to reduce pollutants entering the State's waterways, to improve water quality, and to research alternative solutions to the State's water quality problems.
(8b)	To provide buffers around military bases or for State matching funds for the Readiness and Environmental Protection Initiative, a federal funding initiative that provides funds for military buffers.
(8c)	To acquire land that represents the ecological diversity of North Carolina, including natural features such as riverine, montane, coastal, and geologic systems and other natural areas to ensure their preservation and conservation for recreational, scientific, educational, cultural, and aesthetic purposes.
(8d)	To acquire land that contributes to the development of a balanced State program of historic properties.
(8e)	To authorize expenditures from the Fund not to exceed seven hundred fifty thousand dollars ($750,000) to pay for the inventory of natural areas conducted under the Natural Heritage Program established pursuant to the Nature Preserves Act, Article 9A of Chapter 113A of the General Statutes, and to pay for conservation and protection planning and for informational programs for owners of natural areas, as defined in G.S. 113A‑164.3.
(9)	To fund operating expenses of the Board of Trustees and its staff.
(d)	Limit on Operating and Administrative Expenses. –  For the fiscal year beginning July 1, 2013, the limit on operating and administrative expenses of the Board of Trustees and its staff is one million two hundred fifty thousand dollars ($1,250,000). For fiscal years beginning on or after July 1, 2014, the limit on operating and administrative expenses of the Board of Trustees and its staff is the amount for the preceding year, adjusted to include any change in the distribution of statewide salary and benefits reserves."
SECTION 14.3.(e)  G.S. 113A‑255 reads as rewritten:
"§ 113A‑255.  Clean Water Management Trust Fund: Board of Trustees established; membership qualifications; vacancies; meetings and meeting facilities.
(a)	Board of Trustees Established. – There is established the Clean Water Management Trust Fund Board of Trustees. The Clean Water Management Trust Fund Board of Trustees shall be administratively located within the Department of Environment and Natural Resources.
(b)	Membership. – The Clean Water Management Trust Fund Board of Trustees shall be composed of nine members appointed to three‑year terms as follows:																					
(1)	One member appointed by the Governor to a term that expires on July 1 of years that precede by one year those years that are evenly divisible by three.
(2)	One member appointed by the Governor to a term that expires on July 1 of years that follow by one year those years that are evenly divisible by three.
(3)	One member appointed by the Governor to a term that expires on July 1 of years that are evenly divisible by three.
(4)	One member appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate to a term that expires on July 1 of years that precede by one year those years that are evenly divisible by three.
(5)	One member appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate to a term that expires on July 1 of years that follow by one year those years that are evenly divisible by three.
(6)	One member appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate to a term that expires on July 1 of years that are evenly divisible by three.
(7)	One member appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives to a term that expires on July 1 of years that precede by one year those years that are evenly divisible by three.
(8)	One member appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives to a term that expires on July 1 of years that follow by one year those years that are evenly divisible by three.
(9)	One member appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives to a term that expires on July 1 of years that are evenly divisible by three.
(b1)	Qualifications. – The office of Trustee is declared to be an office that may be held concurrently with any other executive or appointive office, under the authority of Article VI, Section 9, of the North Carolina Constitution. When appointing members of the Authority, the Governor, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives shall give consideration to adequate representation from the various regions of the State and shall give consideration to the appointment of members who are knowledgeable in any of the following areas:
(1)	Acquisition and management of natural areas.
(2)	Conservation and restoration of water quality.
(3)	Wildlife and fisheries habitats and resources.
(4)	Environmental management.
(b2)	Limitation on Length of Service. – No member of the Board of Trustees shall serve more than two consecutive three‑year terms or a total of 10 years.
…
(f)	Per Diem and Expenses. – Each member of the Board of Trustees shall receive per diem and necessary travel and subsistence expenses in accordance with the provisions of G.S. 120‑3.1, 138‑5, and 138‑6, as applicable. Per diem, subsistence, and travel expenses of the Trustees shall be paid from the Fund.
	"
SECTION 14.3.(f)  G.S. 113A‑256 reads as rewritten:
"§ 113A‑256.  Clean Water Management Trust Fund Board of Trustees: powers and duties.
(a)	Allocate Grant Funds. – The Trustees shall allocate moneys from the Fund as grants. A grant may be awarded only for a project or activity that satisfies the criteria and furthers the purposes of this Article.
(b)	Develop Grant Criteria. – The Trustees shall develop criteria for awarding grants under this Article. The criteria developed shall include consideration of the following:
(1)	The significant enhancement and conservation of water quality in the State.
(2)	The objectives of the basinwide management plans for the State's river basins and watersheds.
(3)	The promotion of regional integrated ecological networks insofar as they affect water quality.
(4)	The specific areas targeted as being environmentally sensitive.
(5)	The geographic distribution of funds as appropriate.
(6)	The preservation of water resources with significant recreational or economic value and uses.
(7)	The development of a network of riparian buffer‑greenways bordering and connecting the State's waterways that will serve environmental, educational, and recreational uses.
(8)	Water supply availability and the public's need for resources adequate to meet demand for essential water uses. Criteria developed pursuant to this subdivision may include consideration of the likelihood of a proposed water supply project ultimately being permitted and built.
(9)	The protection or preservation of land with outstanding natural or cultural heritage values.
(10)	The protection or preservation of land that contains a relatively undisturbed and outstanding example of a native North Carolina ecological community that is now uncommon; contains a major river or tributary, watershed, wetland, significant littoral, estuarine, or aquatic site, or important geologic feature; or represents a type of landscape, natural feature, or natural area that is not currently in the State's inventory of parks and natural areas.
(11)	The protection or preservation of a site or structure that is of such historical significance as to be essential to the development of a balanced State program of historic properties.
(c)	Develop Additional Guidelines. – The Trustees may develop guidelines in addition to the grant criteria consistent with and as necessary to implement this Article.
(d)	Acquisition of Land. – The Trustees may acquire land by purchase, negotiation, gift, or devise. Any acquisition of land by the Trustees must be reviewed and approved by the Council of State and the deed for the land subject to approval of the Attorney General before the acquisition can become effective. In determining whether to acquire land as permitted by this Article, the Trustees shall consider whether the acquisition furthers the purposes of this Article and may also consider recommendations from the Council. Nothing in this section shall allow the Trustees to acquire land under the right of eminent domain.
(e)	Exchange of Land. – The Trustees may exchange any land they acquire in carrying out the powers conferred on the Trustees by this Article.
(f)	Land Management. – The Trustees may designate managers or managing agencies of the lands acquired under this Article.
(g)	Tax Credit Certification. – The Trustees shall develop guidelines to determine whether land donated for a tax credit under G.S. 105‑130.34 or G.S. 105‑151.12 are suitable for one of the purposes under this Article and may be certified for a tax credit.
(h)	Rule‑making Authority. – The Trustees may adopt rules to implement this Article. Chapter 150B of the General Statutes applies to the adoption of rules by the Trustees.
(i)	Repealed by Session Laws 1999‑237, s. 15.11, effective July 1, 1999.
	"
SECTION 14.3.(g)  G.S. 113A‑258 reads as rewritten:
"§ 113A‑258.  Clean Water Management Trust Fund: Executive Director and staff.
The Secretary of Environment and Natural Resources shall select and appoint a competent person in accordance with this section as Executive Director of the Clean Water Management Trust Fund Board of Trustees. The Executive Director shall be charged with the supervision of all activities under the jurisdiction of the Trustees and shall serve as the chief administrative officer of the Trustees. Subject to the approval of the Secretary of Environment and Natural Resources, the Executive Director may employ such clerical and other assistants as may be deemed necessary.
The person selected as Executive Director shall have had training and experience in conservation, protection, and management of surface water resources. The salary of the Executive Director shall be fixed by the Secretary of Environment and Natural Resources, and the Executive Director shall be allowed travel and subsistence expenses in accordance with G.S. 138 6. The Executive Director's salary and expenses shall be paid from the Fund. The term of office of the Executive Director shall be at the pleasure of the Secretary of Environment and Natural Resources.
These employees shall be exempt from the State Personnel Act, as provided in G.S. 126‑5(c1)."
SECTION 14.3.(h)  G.S. 106‑887(a) reads as rewritten:
"(a)	DuPont State Forest is designated as a State Recreational Forest. The Department shall manage DuPont State Recreational Forest: (i) primarily for natural resource preservation, scenic enjoyment and recreational purposes, including horseback riding, hiking, bicycling, hunting, and fishing; (ii) so as to provide an exemplary model of scientifically sound, ecologically based natural resource management for the social and economic benefit of the forest's diverse community of users; and (iii) consistent with the grant agreement that designates a portion of the forest as a North Carolina Nature Preserve. In addition, the Department may use the forest for the demonstration of different forest management and resource protection techniques for local landowners, natural resource professionals, students, and other forest visitors."
SECTION 14.3.(i)  G.S. 120‑123 reads as rewritten:
"§ 120‑123.  Service by members of the General Assembly on certain boards and commissions.
No member of the General Assembly may serve on any of the following boards or commissions:
…
	
…."
SECTION 14.3.(j)  G.S. 143B‑279.3(b)(18) and G.S. 143B‑344.38(a)(8)d. are repealed.
SECTION 14.3.(k)  The Natural Heritage Trust Fund shall be closed and the remaining fund balance in the Fund shall be transferred to the Clean Water Management Trust Fund established in G.S. 113A‑253 as provided in this subsection. It is the intent of the General Assembly to honor the obligations from the Natural Heritage Trust Fund that were authorized prior to the effective date of this section and to ensure that any tax proceeds credited to the Natural Heritage Trust Fund are used for the purposes for which they were collected. Any encumbered funds transferred from the Natural Heritage Trust Fund to the Clean Water Management Trust Fund shall be used for the purpose for which the grant was awarded. The funds transferred from the Natural Heritage Trust Fund to the Clean Water Management Trust Fund that are unencumbered and any funds transferred from the Natural Heritage Trust Fund to the Clean Water Management Trust Fund that were encumbered but become unencumbered after the effective date of this section shall be used to acquire land under G.S. 113A‑253(c)(8c) or G.S. 113A‑253(c)(8d), as amended by subsection (d) of this section, or shall be used for the continued payment of debt service authorized before the effective date of this section to reimburse the General Fund for debt service on special indebtedness issued or incurred under Article 9 of Chapter 142 of the General Statutes for a natural heritage purpose.
SECTION 14.3.(l)  The Revisor of Statutes may conform names and titles changed by this section, and may correct statutory references as required by this section, throughout the General Statutes. In making the changes authorized by this section, the Revisor may also adjust subject and verb agreement and the placement of conjunctions.
SECTION 14.3.(m)  This section becomes effective August 1, 2013.

Jordan Lake Water quality improvement Demonstration project
SECTION 14.3A.(a)  Jordan Lake Nutrient Mitigation Demonstration Project. – The Department of Environment and Natural Resources shall establish a twenty‑four‑month demonstration project for the management of nutrients in Jordan Lake. The demonstration project shall specifically focus on preventing and reducing harmful algal blooms and excessive chlorophyll as well providing other nutrient mitigation measures in the Haw River arm and the Morgan Creek arm of Jordan Lake. In conducting the demonstration project, the Department shall enter into a contract with a third party that can deploy floating arrays of in‑lake, long‑distance circulators to reduce or prevent the adverse impacts of excessive nutrient loads, such as algal blooms, taste and odor problems in drinking water, and low levels of dissolved oxygen. At a minimum, the in‑lake mechanical system chosen must meet the following criteria:
(1)	Floating equipment shall be capable of continuous operation on solar power only during day, night, and extended overcast conditions 365 days per year. Continuous operation shall be defined as operating a minimum of ninety‑seven percent (97%) of the total hours during the course of one year on solar power without reliance on any connection to the alternating current power grid.
(2)	Achieve a total flow rate through the impellers on a continuous basis for 24 hours per day of 72,000 gallons per minute in the Morgan Creek arm and 36,000 gallons per minute in the Haw River arm.
(3)	The circulation equipment shall be constructed primarily of Type 316 stainless steel metal for strength and superior corrosion resistance. Each machine shall also undergo a passivation bath, also known as stainless steel pickling, to restore corrosion resistance to the welds and other areas of imperfection.
(4)	The circulation equipment shall be mechanically operated by a motor that has the following characteristics:
a.	Is brushless (brush motors requiring brush replacement are not acceptable).
b.	Uses a direct drive with no gearbox to avoid lubrication maintenance.
c.	Contains stainless steel bearings requiring no scheduled lubrication with a rated bearing life expectancy greater than 100,000 hours of continuous operation.
d.	Is designed for a marine outdoor environment by having a sealed housing with polymeric encapsulated internal windings for superior corrosion resistance capable of withstanding environmental conditions of one hundred percent (100%) humidity, ‑40 degree to 140 degree Fahrenheit ambient temperature range, freeze resistance, condensation resistance, and splash resistance.
e.	Has a 10 year or greater replacement warranty.
(5)	The circulation equipment shall be supplied with a motor controller and power management with the following features:
a.	An anti‑jam reverse feature that is automated and self‑clearing for a locked rotor triggered by high current occurrences caused by a jammed impeller.
b.	Scheduled reverse cycles with daily reverse impeller cycling for self‑clearing of impeller to minimize fouling.
c.	Motor health status monitoring and recording that includes scheduled speed, commanded speed, actual speed, motor current, motor voltage, and motor controller errors.
d.	Temperature‑compensated charging so that battery charging parameters are automatically adjusted for optimum results based on battery temperature.
e.	Power conservation and continued operation mode managed by a programmed algorithm for reducing motor load and continuing operation by incremental speed reduction that is automatically enabled when extended low‑sunlight conditions occur or battery reserve power is reduced.
f.	A NEMA 4 enclosure for protection against condensation and moisture in a marine environment with internal circuit boards that are conformal coated for added protection against moisture.
(6)	The battery power storage shall be a single battery (unless multiple batteries are connected in series) to avoid charging problems and shall have the following characteristics:
a.	A battery rating capacity, at a 24‑hour discharge rate in watt hours, at least 50 times the motor load in watts during normal operation (full speed, peak load).
b.	Is a submergible battery to avoid temperature extremes and extend battery life.
c.	Complies with DOT HMR49 nonspillable battery requirements.
d.	Is UL listed and compliant to UL 1989.
e.	Is maintenance‑free and does not require rewatering.
f.	Has a temperature sensor that monitors battery housing temperature and not ambient temperature to optimize charging cycles and extend battery life.
g.	Is encased in double wall plastic and mounted in a stainless steel cage for safety and battery protection purposes.
(7)	The photovoltaic modules on the unit shall have the following characteristics:
a.	Have a nominal wattage rating that is five times the normal operating wattage of the motor to ensure continuous operation of the motor and impeller in all seasons.
b.	Are monocrystalline and not multicrystalline to ensure adequate power collection during low‑sunlight conditions.
c.	Are certified to UL 1703 Class C, IEC 61215, and IEC 60364 standards.
d.	Have 25‑year manufacturer performance warranties.
(8)	The digital controller of the machine shall have the following features:
a.	Flashing light‑emitting diodes in the control box readily accessible by service personnel and providing continuous electrical diagnostics so the state of the power system can easily be determined.
b.	Capability to store within controller memory a 30‑day rolling log of all primary machine operation parameters.
(9)	The machine shall have an adjustable horizontal water intake that is capable of being field adjusted to a set level below the water surface without requiring machine removal or reinstallation. The intake shall bring a one‑foot thick horizontal layer of water into the machine and include a singular hose of adequate length to reach the required intake depth setting. The flow through the hose and intake shall not exceed one foot per second.
(10)	The circulation equipment shall operate normally with the following maintenance features:
a.	No scheduled lubrication requirements for any system component, including motor and motor bearings.
b.	No brush replacement on motor, gearbox replacement, or motor replacement to be expected during a 25‑year expected life of the circulation equipment.
c.	No spare parts shall be required to be kept on hand.
d.	The impeller assembly shall be removable without the use of tools.
e.	The circulator equipment shall have a bird deterrent system to minimize bird roostings and droppings on photovoltaic modules.
(11)	The flotation equipment shall have the following features and characteristics:
a.	Adjustable float arms with a one‑inch diameter shaft and turnbuckle to achieve optimal performance setting. The arms shall be a closed frame to minimize torsion forces on the circulation equipment and provide balanced flotation.
b.	The flotation buoyancy shall be 1,350 pounds or more to support the weight of the assembled circulation equipment with a safety factor greater than 1.5. Each machine shall weigh approximately 850 pounds.
c.	Flotation shall contain expanded polystyrene foam beads that are steamed together to minimize water adsorption.
d.	The flotation shall not sink should the flotation encasement be punctured. Encasements shall be resistant to damage due to animals, ice, bumps by watercraft, and contact deterioration from petroleum products and should be suitable for marine use.
(12)	The circulation equipment shall be capable of being held in position by either attachment to mooring blocks at the bottom of the reservoir or tethering to the shore.
Any contract entered into under this subsection shall not be subject to Article 3 or Article 8 of Chapter 143 of the General Statutes. Once installed, the Department shall monitor and evaluate the performance of the circulators in reducing the adverse impacts of harmful algal blooms and excessive chlorophyll and in providing other nutrient mitigation measures in the Haw River arm and the Morgan Creek arm of Jordan Lake and report the results of the monitoring and evaluation as provided in subsection (b) of this section.
SECTION 14.3A.(b)  Report. – No later than October 1, 2015, the Department of Environment and Natural Resources shall submit an interim report on implementation of the demonstration project to the Environmental Review Commission and the Fiscal Research Division of the General Assembly. No later than April 1, 2016, the Department of Environment and Natural Resources shall submit a final report on implementation of the demonstration project to the Environmental Review Commission and the Fiscal Research Division of the General Assembly.
SECTION 14.3A.(c)  Funding. – Of the funds appropriated by this act to the Clean Water Management Trust Fund, a total of one million three hundred fifty thousand dollars ($1,350,000) for fiscal year 2013‑2014 and three hundred thousand dollars ($300,000) for fiscal year 2014‑2015 shall be transferred to the Department of Environment and Natural Resources to be used to implement the Jordan Lake Water Quality Improvement Demonstration Project. In addition, the Department of Environment and Natural Resources shall contribute one hundred fifty thousand dollars ($150,000) for fiscal year 2014‑2015 and one hundred fifty thousand dollars ($150,000) for fiscal year 2015‑2016 from available funds, including those appropriated by this act, to support the Department's Division of Water Resources activities to manage and carry out the project, including water sampling, water testing, and water analysis of samples in the lake and connecting creeks prior to and during the demonstration project defined in subsection (a) of this section.

SPECIAL LICENSE PLATE REVENUE FOR FRIENDS OF STATE PARKS, INC.
SECTION 14.3B.  G.S. 20‑81.12(b2)(5) reads as rewritten:
"(5)	North Carolina State Parks. – The revenue derived from the special plate shall be transferred quarterly to Friends of State Parks, Inc., for its educational, conservation, and other programs in support of the operations of the State Parks System established in Article 2C of Chapter 113 of the General Statutes."

DEED STAMP TAX PROCEEDS CREDITED TO GENERAL FUND
SECTION 14.4.(a)  G.S. 105‑228.30(b) reads as rewritten:
"(b)	The register of deeds of each county must remit the proceeds of the tax levied by this section to the county finance officer. The finance officer of each county must credit one‑half of the proceeds to the county's general fund and remit the remaining one‑half of the proceeds, less taxes refunded and the county's allowance for administrative expenses, to the Department of Revenue on a monthly basis. A county may retain two percent (2%) of the amount of tax proceeds allocated for remittance to the Department of Revenue as compensation for the county's cost in collecting and remitting the State's share of the tax. The Department of Revenue shall credit the funds remitted to the Department of Revenue under this subsection to the General Fund."
SECTION 14.4.(b)  G.S. 113‑44.15(a) reads as rewritten:
"(a)	Fund Created. – There is established a Parks and Recreation Trust Fund in the State Treasurer's Office. The Trust Fund shall be a special revenue fund consisting of gifts and grants to the Trust Fund 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."
SECTION 14.4.(c)  Money collected pursuant to Article 8E of Chapter 105 of the General Statutes between July 1, 2013, and the date this act becomes law shall be credited to the General Fund. The money shall be used for the purposes provided in G.S. 113-44.15 and G.S. 113-253(c)(8b)-(8d), as enacted by this act.

PARKS AND RECREATION AUTHORITY
SECTION 14.5.(a)  G.S. 143B‑313.2 reads as rewritten:
"§ 143B‑313.2.  North Carolina Parks and Recreation Authority; members; selection; compensation; meetings.
(a)	Membership. – The North Carolina Parks and Recreation Authority shall consist of nine members. The members shall include persons who are knowledgeable about park and recreation issues in North Carolina or with expertise in finance. In making appointments, each appointing authority shall specify under which subdivision of this subsection the person is appointed. Members shall be appointed as follows:
(1)	One member appointed by the Governor.
(2)	One member appointed by the Governor.
(3)	One member appointed by the Governor.
		
(4)	One member appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, as provided in G.S. 120‑121.
(5)	One member appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, as provided in G.S. 120‑121.
(6)	One member appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, as provided in G.S. 120‑121.
		
(8)	One member appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, as provided in G.S. 120‑121.
(9)	One member appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, as provided in G.S. 120‑121.
(10)	One member appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, as provided in G.S. 120‑121.
		
(b)	Terms. – Members shall serve staggered terms of office of three years. Members shall serve no more than two consecutive three‑year terms. After serving two consecutive three‑year terms, a member is not eligible for appointment to the Authority for at least one year after the expiration date of that member's most recent term. Upon the expiration of a three‑year term, a member may continue to serve until a successor is appointed and duly qualified as provided by G.S. 128‑7. The terms of members appointed under subdivision (1), (5),or (9) of subsection (a) of this section shall expire on July 1 of years that are evenly divisible by three. The terms of members appointed under subdivision (2), (4), or (8) of subsection (a) of this section shall expire on July 1 of years that follow by one year those years that are evenly divisible by three. The terms of members appointed under subdivision (3), (6), or (10) of subsection (a) of this section shall expire on July 1 of years that precede by one year those years that are evenly divisible by three.
(c)	Chair. – The Governor shall appoint one member of the North Carolina Parks and Recreation Authority to serve as Chair.
(d)	Vacancies. – A vacancy on the North Carolina Parks and Recreation Authority shall be filled by the appointing authority responsible for making the appointment to that position as provided in subsection (a) of this section. An appointment to fill a vacancy shall be for the unexpired balance of the term.
(e)	Removal. – The Governor may remove, as provided in Article 10 of Chapter 143C of the General Statutes any member of the North Carolina Parks and Recreation Authority appointed by the Governor for misfeasance, malfeasance, or nonfeasance. The General Assembly may remove any member of the North Carolina Parks and Recreation Authority appointed by the General Assembly for misfeasance, malfeasance, or nonfeasance.
(f)	Compensation. – The members of the North Carolina Parks and Recreation Authority shall receive per diem and necessary travel and subsistence expenses according to the provisions of G.S. 138‑5.
(g)	Meetings. – The North Carolina Parks and Recreation Authority shall meet at least quarterly at a time and place designated by the Chair.
(h)	Quorum. – A majority of the North Carolina Parks and Recreation Authority shall constitute a quorum for the transaction of business.
(i)	Staff. – All clerical and other services required by the North Carolina Parks and Recreation Authority shall be provided by the Secretary of Environment and Natural Resources."
SECTION 14.5.(b)  The terms of all members of the North Carolina Parks and Recreation Authority shall expire on July 31, 2013. A new Authority consisting of nine members shall be appointed as provided in G.S. 143B‑313.2, as amended by subsection (a) of this section. This subsection becomes effective on July 31, 2013.

FISHERY RESOURCE GRANT PROGRAM REPEAL
SECTION 14.7.(a)  G.S. 113‑200 is repealed.
SECTION 14.7.(b)  G.S. 143B‑289.54(c) reads as rewritten:
"(c)	Additional Considerations. – In making appointments to the Commission, the Governor shall provide for appropriate representation of women and minorities on the Commission."

MARINE FISHERIES LICENSE AND PERMIT FEES; LICENSE AND PERMIT REQUIREMENTS; FEE INCREASES FUND DMF AT‑SEA OBSERVER PROGRAM
SECTION 14.8.(a)  G.S. 113‑168.1(h) reads as rewritten:
"(h)	Replacement Licenses and Endorsements. – The Division shall issue a replacement license, including any endorsements, to a licensee for a license that has not been suspended or revoked. A licensee may apply for a replacement license for a license that has been lost, stolen, or destroyed and shall apply for a replacement license within 30 days of a change in the licensee's name or address. A licensee may apply for a replacement license in person at any office of the Division or by mail to the Morehead City office of the Division. A licensee may use a copy of the application for a replacement license that has been filed with the Division as a temporary license until the licensee receives the replacement license. The Commission may establish a fee for each type of replacement license, not to exceed twelve dollars and fifty cents ($12.50), that compensates the Division for the administrative costs associated with issuing the replacement license."
SECTION 14.8.(b)  G.S. 113‑168.2 reads as rewritten:
"§ 113‑168.2.  Standard Commercial Fishing License.
(a)	Requirement. – Except as otherwise provided in this Article, it is unlawful for any person to engage in a commercial fishing operation in the coastal fishing waters without holding a SCFL issued by the Division. A person who works as a member of the crew of a vessel engaged in a commercial fishing operation under the direction of a person who holds a valid SCFL is not required to hold a SCFL. A person who holds a SCFL is not authorized to take shellfish unless the SCFL is endorsed as provided in G.S. 113‑168.5.
(a1)	Use of Vessels. – The holder of a SCFL is authorized to use only one vessel in a commercial fishing operation at any given time. The Commission may adopt a rule to exempt from this requirement a person in command of a vessel that is auxiliary to a vessel engaged in a pound net operation, long‑haul operation, beach seine operation, or menhaden operation. A person who works as a member of the crew of a vessel engaged in a mechanical shellfish operation under the direction of a person who holds a valid SCFL with a shellfish endorsement is not required to hold a shellfish license.
(b)	through (d) Repealed by Session Laws 1998‑225, s. 4.11.
(e)	Fees. – The annual SCFL fee for a resident of this State shall be two hundred fifty dollars ($250.00). The annual SCFL fee for a person who is not a resident of this State shall be the amount charged to a resident of this State in the nonresident's state. In no event, however, may the fee be less than two hundred fifty dollars ($250.00). For purposes of this subsection, a "resident of this State" is a person who is a resident within the meaning of:
(1)	Sub‑subdivisions a. through d. of G.S. 113‑130(4) and who filed a State income tax return as a resident of North Carolina for the previous calendar or tax year, or
(2)	G.S. 113‑130(4)e.
(f)	Assignment. – The holder of a SCFL may assign the SCFL to any individual who is eligible to hold a SCFL under this Article. It is unlawful for the holder of an SCFL to assign a shellfish endorsement of an SCFL to any individual who is not a resident of this State. The assignment shall be in writing on a form provided by the Division and shall include the name of the licensee, the license number, any endorsements, the assignee's name, mailing address, physical or residence address, and the duration of the assignment. If a notarized copy of an assignment is not filed with the Morehead City office of the Division within five days of the date of the assignment, the assignment shall expire. It is unlawful for the assignee of a SCFL to assign the SCFL. The assignment shall terminate:
(1)	Upon written notification by the assignor to the assignee and the Division that the assignment has been terminated.
(2)	Upon written notification by the estate of the assignor to the assignee and the Division that the assignment has been terminated.
(3)	If the Division determines that the assignee is operating in violation of the terms and conditions applicable to the assignment.
(4)	If the assignee becomes ineligible to hold a license under this Article.
(5)	Upon the death of the assignee.
(6)	If the Division suspends or revokes the assigned SCFL.
(7)	At the end of the license year.
(g)	Transfer. – A SCFL may be transferred only by the Division. A SCFL may be transferred pursuant to rules adopted by the Commission or upon the request of:
(1)	A licensee, from the licensee to a member of the licensee's immediate family who is eligible to hold a SCFL under this Article.
(2)	The administrator or executor of the estate of a deceased licensee, to the administrator or executor of the estate if a surviving member of the deceased licensee's immediate family is eligible to hold a SCFL under this Article. The administrator or executor must request a transfer under this subdivision within six months after the administrator or executor qualifies under Chapter 28A of the General Statutes. An administrator or executor who holds a SCFL under this subdivision may, for the benefit of the estate of the deceased licensee:
a.	Engage in a commercial fishing operation under the SCFL if the administrator or executor is eligible to hold a SCFL under this Article.
b.	Assign the SCFL as provided in subsection (f) of this section.
c.	Renew the SCFL as provided in G.S. 113‑168.1.
(3)	An administrator or executor to whom a SCFL was transferred pursuant to subdivision (2) of this subsection, to a surviving member of the deceased licensee's immediate family who is eligible to hold a SCFL under this Article.
(4)	The surviving member of the deceased licensee's immediate family to whom a SCFL was transferred pursuant to subdivision (3) of this subsection, to a third‑party purchaser of the deceased licensee's fishing vessel.
(5)	A licensee who is retiring from commercial fishing, to a third‑party purchaser of the licensee's fishing vessel.
(h)	Identification as Commercial Fisherman. – The receipt of a current and valid SCFL or shellfish license issued by the Division shall serve as proper identification of the licensee as a commercial fisherman.
(i)	Record‑Keeping Requirements. – The fish dealer shall record each transaction at the time and place of landing on a form provided by the Division. The transaction form shall include the information on the SCFL or shellfish license, the quantity of the fish, the identity of the fish dealer, and other information as the Division deems necessary to accomplish the purposes of this Subchapter. The person who records the transaction shall provide a completed copy of the transaction form to the Division and to the other party of the transaction. The Division's copy of each transaction form shall be transmitted to the Division by the fish dealer on or before the tenth day of the month following the transaction."
SECTION 14.8.(c)  G.S. 113‑168.3(b) reads as rewritten:
"(b)	Eligibility; Fees. – Any individual who is 65 years of age or older and who is eligible for a SCFL under G.S. 113‑168.2 may apply for either a SCFL or RSCFL. An applicant for a RSCFL shall provide proof of age at the time the application is made. The annual fee for a RSCFL for a resident of this State shall be one hundred twenty‑five dollars ($125.00). The annual fee for a RSCFL for a person who is not a resident of this State shall be one hundred sixty‑two dollars and fifty cents ($162.50). For purposes of this subsection, a "resident of this State" is a person who is a resident within the meaning of:
(1)	Sub‑subdivisions a. through d. of G.S. 113‑130(4) and who filed a State income tax return as a resident of North Carolina for the previous calendar or tax year, or
(2)	G.S. 113‑130(4)e."
SECTION 14.8.(d)  G.S. 113‑168.4(c) reads as rewritten:
"(c)	A person who organizes a recreational fishing tournament may sell fish taken in connection with the tournament pursuant to a recreational fishing tournament license to sell fish. A person who organizes a recreational fishing tournament may obtain a recreational fishing tournament license to sell fish upon application to the Division and payment of a fee of one hundred twenty‑five dollars ($125.00). It is unlawful for any person licensed under this subsection to sell fish to any person other than a fish dealer licensed under G.S. 113‑169.3 unless the seller is also a licensed fish dealer. A recreational fishing tournament is an organized fishing competition occurring within a specified time period not to exceed one week and that is not a commercial fishing operation. Gross proceeds from the sale of fish may be used only for charitable, religious, educational, civic, or conservation purposes and shall not be used to pay tournament expenses."
SECTION 14.8.(e)  G.S. 113‑168.6 reads as rewritten:
"§ 113‑168.6.  Commercial fishing vessel registration.
(a)	As used in this subsection, a North Carolina vessel is a vessel that has its primary situs in the State. A vessel has its primary situs in the State if:
(1)	A certificate of number has been issued for the vessel under Article 1 of Chapter 75A of the General Statutes;
(2)	A certificate of title has been issued for the vessel under Article 4 of Chapter 75A of the General Statutes; or
(3)	A certification of documentation has been issued for the vessel that lists a home port in the State under 46 U.S.C. § 12101, et seq., as amended.
(b)	The owner of a vessel used in a commercial fishing operation in the coastal fishing waters of the State or a North Carolina vessel used to land or sell fish in the State shall register the vessel with the Division. It is unlawful to use a vessel that is not registered with the Division in a commercial fishing operation or a for‑hire operation in the coastal fishing waters of the State. It is unlawful to use a North Carolina vessel that is not registered with the Division to land or sell fish in the State. No registration is required for a vessel of any length that does not have a motor if the vessel is used only in connection with another vessel that is properly registered.
(b1)	The vessel owner at the time of application for registration under subsection (b) of this section shall obtain either a commercial vessel endorsement if the vessel is intended to be used primarily for the harvest of fish for sale, a for‑hire endorsement if the vessel is intended to be used primarily for for‑hire activities, or both endorsements if the vessel is intended to be engaged in both activities. The owner of a vessel applying for a commercial fishing vessel registration with a for‑hire endorsement must affirm liability coverage and knowledge of applicable United States Coast Guard safety requirements.
(c)	The annual fee for a commercial fishing vessel registration shall be determined by the length of the vessel and shall be in addition to the fee for other licenses issued under this Article. The length of a vessel shall be determined by measuring the distance between the ends of the vessel along the deck and through the cabin, excluding the sheer. The annual fee for a commercial fishing vessel registration is:
(1)	One dollar and twenty‑five cents ($1.25) per foot for a vessel not over 18 feet in length.
(2)	One dollar and ninety cents ($1.90) per foot for a vessel over 18 feet but not over 38 feet in length.
(3)	Three dollars and seventy‑five cents ($3.75) per foot for a vessel over 38 feet but not over 50 feet in length.
(4)	Seven dollars and fifty cents ($7.50) per foot for a vessel over 50 feet in length.
(d)	A vessel may be registered at any office of the Division. A commercial fishing vessel registration expires on the last day of the license year.
(e)	Within 30 days of the date on which the owner of a registered vessel transfers ownership of the vessel, the new owner of the vessel shall notify the Division of the change in ownership and apply for a replacement commercial fishing vessel registration. An application for a replacement commercial fishing vessel registration shall be accompanied by proof of the transfer of the vessel. The provisions of G.S. 113‑168.1(h) apply to a replacement commercial fishing vessel registration."
SECTION 14.8.(f)  G.S. 113‑169.1 reads as rewritten:
"§ 113‑169.1.  Permits for gear, equipment, and other specialized activities authorized.
(a)	The Commission may adopt rules to establish permits for gear, equipment, and specialized activities, including commercial fishing operations that do not involve the use of a vessel and transplanting oysters or clams. The Commission may establish a fee for each permit established pursuant to this subsection in an amount that compensates the Division for the administrative costs associated with the permit but that does not exceed one hundred dollars ($100.00) per permit.
(b)	The Commission may adopt rules to establish gear specific permits to take striped bass from the Atlantic Ocean and to limit the number and type of these permits that may be issued to a person. The Commission may establish a fee for each permit established pursuant to this subsection in an amount that compensates the Division for the administrative costs associated with the permit but that does not exceed thirty dollars ($30.00) per permit.
(c)	To ensure an orderly transition from one permit year to the next, the Division may issue a permit prior to July 1 of the permit year for which the permit is valid. Revenue that the Division receives for the issuance of a permit prior to the beginning of a permit year shall not revert at the end of the fiscal year in which the revenue is received and shall be credited and available to the Division for the permit year in which the permit is valid."
SECTION 14.8.(g)  G.S. 113‑169.2 reads as rewritten:
"§ 113‑169.2.  Shellfish license for North Carolina residents without a SCFL.
(a)	License or Endorsement Necessary to Take or Sell Shellfish Taken by Hand Methods. – It is unlawful for an individual to take shellfish from the public or private grounds of the State as part of a commercial fishing operation by hand methods without holding either a shellfish license or a shellfish endorsement of a SCFL. A North Carolina resident who seeks only to take shellfish by hand methods and sell such shellfish shall be eligible to obtain a shellfish license without holding a SCFL. The shellfish license authorizes the licensee to sell shellfish.
(a1)	License Necessary to Take or Sell Shellfish Taken by Mechanical Means. – Subject to subsection (i) of this section, an individual who takes shellfish from the public or private grounds of the State by mechanical means must obtain an SCFL under the provisions of G.S. 113‑168.2.
(b)	Repealed by Session Laws 1998‑225, s. 4.17, effective July 1, 1999.
(c)	Fees. – Shellfish licenses issued under this section shall be issued annually upon payment of a fee of thirty‑one dollars and twenty‑five cents ($31.25) upon proof that the license applicant is a North Carolina resident.
(d)	License Available for Inspection. – It is unlawful for any individual to take shellfish as part of a commercial fishing operation from the public or private grounds of the State without having ready at hand for inspection a current and valid shellfish license issued to the licensee personally and bearing the licensee's correct name and address. It is unlawful for any individual taking or possessing freshly taken shellfish to refuse to exhibit the individual's license upon the request of an officer authorized to enforce the fishing laws.
(e)	Repealed by Session Laws 1998‑225, s. 4.17, effective July 1, 1999.
(f)	Name or Address Change. – In the event of a change in name or address or upon receipt of an erroneous shellfish license, the licensee shall, within 30 days, apply for a replacement shellfish license bearing the correct name and address. Upon a showing by the individual that the name or address change occurred within the past 30 days, the trial court or prosecutor shall dismiss any charges brought pursuant to this subsection.
(g)	Transfer Prohibited. – It is unlawful for an individual issued a shellfish license to transfer or offer to transfer the license, either temporarily or permanently, to another. It is unlawful for an individual to secure or attempt to secure a shellfish license from a source not authorized by the Commission.
(h)	Exemption. – Persons under 16 years of age are exempt from the license requirements of this section if accompanied by a parent, grandparent, or guardian who is in compliance with the requirements of this section or if in possession of a parent's, grandparent's or guardian's shellfish license.
(i)	Taking Shellfish Without a License for Personal Use. – Shellfish may be taken without a license for personal use in quantities established by rules of the Marine Fisheries Commission."
SECTION 14.8.(h)  G.S. 113‑169.3(e) reads as rewritten:
"(e)	Application Fee for New Fish Dealers. – An applicant for a new fish dealer license shall pay a nonrefundable application fee of sixty‑two dollars and fifty cents ($62.50) in addition to the license category fees set forth in this section."
SECTION 14.8.(i)  G.S. 113‑169.3(f) reads as rewritten:
"(f)	License Category Fees. – Every fish dealer subject to licensing requirements shall secure an annual license at each established location for each of the following activities transacted there, upon payment of the fee set out:
(1)	Dealing in oysters: $62.50.
(2)	Dealing in scallops: $62.50.
(3)	Dealing in clams: $62.50.
(4)	Dealing in hard or soft crabs: $62.50.
(5)	Dealing in shrimp, including bait: $62.50.
(6)	Dealing in finfish, including bait: $62.50.
(7)	Operating menhaden or other fish‑dehydrating or oil‑extracting processing plants: $62.50.
(8)	Consolidated license (all categories): $375.00."
SECTION 14.8.(j)  G.S. 113‑169.4 reads as rewritten:
"§ 113‑169.4.  Licensing of ocean fishing piers; fees.
(a)	The owner or operator of an ocean fishing pier within the coastal fishing waters who charges the public a fee to fish in any manner from the pier shall secure a current and valid pier license from the Division. An application for a pier license shall disclose the names of all parties involved in the pier operations, including the owner of the property, owner of the pier if different, and all leasehold or other corporate arrangements, and all persons with a substantial financial interest in the pier.
(b)	Within 30 days following a change of ownership of a pier, or a change as to the manager, the manager or new manager shall secure a replacement pier license as provided in G.S. 113‑168.1(h).
(c)	Pier licenses are issued upon payment of four dollars and fifty cents ($4.50) per linear foot, to the nearest foot, that the pier extends into coastal fishing waters beyond the mean high waterline. The length of the pier shall be measured to include all extensions of the pier.
(d)	The manager who secures the pier license shall be the individual with the duty of executive‑level supervision of pier operations.
(e)	The pier license issued under this section authorizes any individual who does not hold a Coastal Recreational Fishing License under Article 14B or Article 25A of this Chapter to engage in recreational fishing while on the pier."
SECTION 14.8.(k)  G.S. 113‑169.5(b) reads as rewritten:
"(b)	The fee for a land or sell license for a vessel not having its primary situs in North Carolina is two hundred fifty dollars ($250.00), or an amount equal to the nonresident fee charged by the nonresident's state, whichever is greater. Persons aboard vessels having a primary situs in a jurisdiction that would allow North Carolina vessels without restriction to land or sell their catch, taken outside the jurisdiction, may land or sell their catch in the State without complying with this section if the persons are in possession of a valid license from their state of residence."
SECTION 14.8.(l)  G.S. 113‑171.1(b) reads as rewritten:
"(b)	License. – Before an aircraft is used as a spotter plane in a commercial fishing operation, the owner or operator of the aircraft must obtain a license for the aircraft from the Division. The fee for a license for a spotter plane is one hundred twenty‑five dollars ($125.00). An applicant for a license for a spotter plane shall include in the application the identity, either by boat or by company, of the specific commercial fishing operations in which the spotter plane will be used during the license year. If, during the course of the license year, the aircraft is used as a spotter plane in a commercial fishing operation that is not identified in the original license application, the owner or operator of the aircraft shall amend the license application to add the identity of the additional commercial fishing operation."
SECTION 14.8.(m)  G.S. 113‑173(f) reads as rewritten:
"(f)	Duration; Fees. – The RCGL shall be valid for a one‑year period from the date of purchase. The fee for a RCGL for a North Carolina resident shall be forty‑three dollars and seventy‑five cents ($43.75). The fee for a RCGL for an individual who is not a North Carolina resident shall be three hundred twelve dollars and fifty cents ($312.50)."
SECTION 14.8.(n)  G.S. 113‑174(2a) reads as rewritten:
"(2a)	"For Hire Vessel" means a charter boat, head boat, dive boat, or other vessel hired to allow individuals to engage in recreational fishing."
SECTION 14.8.(o)  G.S. 113‑174.3 reads as rewritten:
"§ 113‑174.3.  For‑Hire Licenses.
				
(c)	License. – It is unlawful for a person to engage in a for‑hire operation without having obtained one of the following licenses issued by the Division:
(1)	Blanket For‑Hire Captain's CRFL. – This license allows individuals properly licensed by the United States Coast Guard to carry passengers on any vessel with a commercial vessel registration with a for‑hire endorsement. A Blanket For‑Hire Captain's CRFL authorizes all individuals on the for‑hire vessel who do not hold a license issued under this Article or Article 25A of this Chapter to engage in recreational fishing in coastal fishing waters that are not joint fishing waters. The resident fees for a Blanket For‑Hire Captain's CRFL are two hundred fifty dollars ($250.00) for a vessel carrying six or fewer passengers and three hundred fifty dollars ($350.00) for a vessel carrying more than six passengers. The nonresident fees for a Blanket For‑Hire Captain's CRFL are three hundred twelve dollars and fifty cents ($312.50) for a vessel carrying six or fewer passengers and four hundred thirty‑seven dollars and fifty cents ($437.50) for a vessel carrying more than six passengers. Any vessel whose operator is licensed under this subdivision and that is engaged in for‑hire fishing must obtain a Commercial Fishing Vessel Registration with a for‑hire endorsement.
(2)	Blanket For‑Hire Vessel CRFL. – This license allows any United States Coast Guard licensed operator to carry passengers aboard the licensed vessel. A Blanket For‑Hire Vessel CRFL authorizes all individuals on the for‑hire vessel who do not hold a license issued under this Article or Article 25A of this Chapter to engage in recreational fishing in coastal fishing waters that are not joint fishing waters. The resident fees for a Blanket For‑Hire Vessel CRFL are two hundred fifty dollars ($250.00) for a vessel carrying six or fewer passengers and three hundred fifty dollars ($350.00) for a vessel carrying more than six passengers. The nonresident fees for a Blanket For‑Hire Vessel CRFL are three hundred twelve dollars and fifty cents ($312.50) for a vessel carrying six or fewer passengers and four hundred thirty‑seven dollars and fifty cents ($437.50) for a vessel carrying more than six passengers. Any vessel whose operator is licensed under this subdivision and that is engaged in for‑hire fishing is not required to obtain a Commercial Fishing Vessel Registration with a for‑hire endorsement.
(3)	Non‑Blanket For‑Hire Vessel License. – This license allows any United States Coast Guard licensed operator to carry passengers aboard the licensed vessel. This license does not authorize individuals aboard the vessel to engage in recreational fishing unless they hold an individual CRFL issued under this Article or Article 25A of this Chapter. The fee for the Non‑Blanket For‑Hire Vessel License is twenty‑five dollars ($25.00) for a vessel operated by a resident operator and thirty‑seven dollars and fifty cents ($37.50) for a vessel operated by a nonresident operator. Any vessel whose operator is licensed under this subdivision and that is engaged in for‑hire fishing is not required to obtain a Commercial Fishing Vessel Registration with a for‑hire endorsement.
(d)	A license issued under this section does not authorize individuals to engage in recreational fishing in joint fishing waters or inland fishing waters. All for‑hire licenses expire on the last day of the license year.
(e)	Each individual who obtains a for‑hire license shall submit to the Division logbooks summarizing catch and effort statistical data to the Division. The Commission may adopt rules that determine the means and methods to satisfy the requirements of this subsection."
SECTION 14.8.(p)  G.S. 113‑174.4 is repealed.
SECTION 14.8.(q)  G.S. 113–174.5(a) reads as rewritten:
"(a)	The owner of a vessel that is 23 feet or more in length and that is either documented with the United States Coast Guard or registered with the Wildlife Resources Commission pursuant to G.S. 75A‑4 may purchase a block of 10 Ten‑Day CRFLs issued by the Division. A vessel owner who wishes to obtain a block of 10 Ten‑Day CRFLs shall provide the Division with all information required by the Division, including information identifying the vessel on which the Ten‑Day CRFLs will be used. Each individual Ten‑Day CRFL shall identify the vessel for which the block of 10 Ten‑Day CRFLs is issued. An individual Ten‑Day CRFL issued as part of a block of 10 Ten‑Day CRFLs may only be used on the vessel for which it was issued. An individual Ten‑Day CRFL issued as part of a block of 10 Ten‑Day CRFLs may not be used on a for hire vessel. A block of 10 Ten‑Day CRFLs shall expire two years from the date of purchase."
SECTION 14.8.(r)  G.S. 113–182.1(b) reads as rewritten:
"(b)	The goal of the plans shall be to ensure the long‑term viability of the State's commercially and recreationally significant species or fisheries. Each plan shall be designed to reflect fishing practices so that one plan may apply to a specific fishery, while other plans may be based on gear or geographic areas. Each plan shall:
…
(5)	Specify a time period, not to exceed two years from the date of the adoption of the plan, to end overfishing. This subdivision shall not apply if the Fisheries Director determines that the biology of the fish, environmental conditions, or lack of sufficient data make implementing the requirements of this subdivision incompatible with professional standards for fisheries management.
…."
SECTION 14.8.(s)  G.S. 113‑203 is amended by adding two new subsections to read:
"(f)	The Commission may establish a fee for each permit established pursuant to this subsection in an amount that compensates the Division for the administrative costs associated with the permit but that does not exceed one hundred dollars ($100.00) per permit.
(g)	Advance Sale of Permits; Permit Revenue. – To ensure an orderly transition from one permit year to the next, the Division may issue a permit prior to July 1 of the permit year for which the permit is valid. Revenue that the Division receives for the issuance of a permit prior to the beginning of a permit year shall not revert at the end of the fiscal year in which the revenue is received and shall be credited and available to the Division for the permit year in which the permit is valid."
SECTION 14.8.(t)  G.S. 113–210 is amended by adding two new subsections to read:
"(l)	Fees. – Under Dock Oyster Culture Permit shall be issued annually upon payment of a fee of one hundred dollars ($100.00).
(m)	Advance Sale of Permits; Permit Revenue. – To ensure an orderly transition from one permit year to the next, the Division may issue a permit prior to July 1 of the permit year for which the permit is valid. Revenue that the Division receives for the issuance of a permit prior to the beginning of a permit year shall not revert at the end of the fiscal year in which the revenue is received and shall be credited and available to the Division for the permit year in which the permit is valid."
SECTION 14.8.(u)  G.S. 113–221.2 reads as rewritten:
"§ 113‑221.2.  Additional rules to establish sanitation requirements for scallops, shellfish, and crustacea; permits and permit fees authorized.
(a)	Authority to Adopt Certain Rules and Establish Permits. – For the protection of the public health, the Marine Fisheries Commission shall adopt rules establishing sanitation requirements for the harvesting, processing and handling of scallops, shellfish, and crustacea of in‑State origin. The rules of the Marine Fisheries Commission may also regulate scallops, shellfish, and crustacea shipped into North Carolina. The Department is authorized to enforce the rules and may issue and revoke permits according to the rules. The Department is authorized to establish a fee for each permit not to exceed one hundred dollars ($100.00).
(b)	Advance Sale of Permits; Permit Revenue. – To ensure an orderly transition from one permit year to the next, the Division may issue a permit prior to July 1 of the permit year for which the permit is valid. Revenue that the Division receives for the issuance of a permit prior to the beginning of a permit year shall not revert at the end of the fiscal year in which the revenue is received and shall be credited and available to the Division for the permit year in which the permit is valid."
SECTION 14.8.(v)  G.S. 143B‑289.52(d1) reads as rewritten:
"(d1)	The Commission may regulate participation in a fishery that is subject to a federal fishery management plan if that plan imposes a quota on the State for the harvest or landing of fish in the fishery.		The Commission may use any additional criteria aside from holding a Standard Commercial Fishing License to develop limited‑entry fisheries. The Commission may establish a fee for each license established pursuant to this subsection in an amount that does not exceed five hundred dollars ($500.00)."
SECTION 14.8.(w)  G.S. 143B‑289.52 is amended by adding a new subsection to read:
"(d2)	To ensure an orderly transition from one permit year to the next, the Division may issue a permit prior to July 1 of the permit year for which the permit is valid. Revenue that the Division receives for the issuance of a permit prior to the beginning of a permit year shall not revert at the end of the fiscal year in which the revenue is received and shall be credited and available to the Division for the permit year in which the permit is valid."
SECTION 14.8.(x)  The Division of Marine Fisheries of the Department of Environment and Natural Resources shall seek the involvement of the commercial fishing industry in North Carolina in the Division's development of a plan to determine a source of funding necessary to support the Marine Fisheries At‑Sea Observer Program that is in addition to the fee increases under this section. As part of this effort, the Division of Marine Fisheries shall conduct at least three public hearings in different coastal county locations to seek the input of, and receive comments of potential additional recurring funding sources from, the individuals involved in the commercial fishing industry. The Division shall receive written comments at the public hearings and take minutes of the public hearings. The minutes shall be made available to the public on the Department's Internet Web site.
SECTION 14.8.(y)  Following the public hearings under subsection (x) of this section and the Division's consideration of written and oral comments resulting from the public hearings, the Division of Marine Fisheries shall submit its plan for an additional recurring funding source to support the Marine Fisheries At‑Sea Observer Program to the Marine Fisheries Commission. The Marine Fisheries Commission shall vote on whether it endorses the plan.
SECTION 14.8.(z)  No later than March 1, 2014, the Marine Fisheries Commission shall submit a report to the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division. This report shall include the results of the Commission's vote under subsection (y) of this section and its findings and recommendations for an additional source of funding necessary to support the Marine Fisheries At‑Sea Observer Program in the event the Commission votes against endorsing the plan.
SECTION 14.8.(aa)  The Division of Marine Fisheries shall use the proceeds it receives as a result of the fee increases under this section to provide support for the 2014‑2015 fiscal year for the Marine Fisheries At‑Sea Observer Program. In addition, the Division of Marine Fisheries shall provide available funds for the 2014‑2015 fiscal year to provide any additional support that is needed to continue the Marine Fisheries At‑Sea Observer Program.
SECTION 14.8.(ab)  This section becomes effective August 1, 2013.

MARINE RESOURCES FUND AND MARINE RESOURCES ENDOWMENT FUND DISBURSEMENTS
SECTION 14.9.(a)  G.S. 113‑175.1(b) reads as rewritten:
"(b)	The State Treasurer shall hold the Marine Resources Fund separate and apart from all other moneys, funds, and accounts. The State Treasurer shall invest the assets of the Marine Resources Fund in accordance with the provisions of G.S. 147‑69.2 and G.S. 147‑69.3, and all marine resources investment income shall be deposited to the credit of the Marine Resources Fund. The State Treasurer shall disburse the principal of the Marine Resources Fund and marine resources investment income only upon the written direction of the Marine Fisheries Commission."
SECTION 14.9.(b)  G.S. 113‑175.1(c) reads as rewritten:
"(c)	The Marine Fisheries Commission may authorize the disbursement of the principal of the Marine Resources Fund and marine resources investment income only to manage, protect, restore, develop, cultivate, conserve, and enhance the marine resources of the State. The Marine Fisheries Commission is encouraged to consider supporting the Oyster Sanctuary Program managed by the Division of Marine Fisheries. The Marine Fisheries Commission may not authorize the disbursement of the principal of the Marine Resources Fund and marine resources investment income to establish positions without specific authorization from the General Assembly. All proposals to the Marine Fisheries Commission for the disbursement of funds from the Marine Resources Fund shall be made by and through the Fisheries Director. Prior to authorizing disbursements from the Marine Resources Fund, the Marine Fisheries Commission shall consult with the Wildlife Resources Commission about these proposals. Expenditure of the assets of the Marine Resources Fund shall be made through the State budget accounts of the Division of Marine Fisheries in accordance with the provisions of the Executive Budget Act. The Marine Resources Fund is subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes."
SECTION 14.9.(c)  G.S. 113‑175.5(b) reads as rewritten:
"(b)	The State Treasurer shall hold the Endowment Fund separate and apart from all other moneys, funds, and accounts. The State Treasurer shall invest the assets of the Endowment Fund in accordance with the provisions of G.S. 147‑69.2 and G.S. 147‑69.3. The State Treasurer shall disburse the endowment investment income only upon the written direction of both the Marine Fisheries Commission."
SECTION 14.9.(d)  G.S. 113‑175.5(c) reads as rewritten:
"(c)	Subject to the limitations set out in subsection (d) of this section, the Marine Fisheries Commission may authorize the disbursement of endowment investment income only to manage, protect, restore, develop, cultivate, conserve, and enhance the marine resources of the State. The Marine Fisheries Commission may not authorize the disbursement of endowment investment income to establish positions without specific authorization from the General Assembly. All proposals to the Marine Fisheries Commission for the disbursement of funds from the Endowment Fund shall be made by and through the Fisheries Director. Prior to authorizing disbursements from the Marine Resources Endowment Fund, the Marine Fisheries Commission shall consult with the Wildlife Resources Commission about these proposals."

MARINE FISHERIES ENDOWMENT FUND REPEALED
SECTION 14.10.  G.S. 143B‑289.58 is repealed.

BOATING SAFETY ENFORCEMENT AGREEMENT
SECTION 14.11.(a)  The Director of the Division of Marine Fisheries of the Department of Environment and Natural Resources and the Director of the Wildlife Resources Commission shall develop and implement an agreement that includes at least all of the following provisions:
(1)	Provisions to authorize the Division of Marine Fisheries marine patrol to perform any needed boating safety inspection.
(2)	To avoid the duplication of enforcement activities by the Division of Marine Fisheries marine patrol and the Wildlife Resources Commission law enforcement officers, a schedule for high‑volume areas that is developed to take into account that the Division of Marine Fisheries marine patrol must confine their enforcement activities to the coastal waters.
(3)	To further encourage more efficient management of the State's resources, a protocol that sets forth appropriate circumstances when the Division of Marine Fisheries marine patrol is authorized or required to investigate boating accidents in coastal waters and within the joint jurisdiction of the Division of Marine Fisheries and the Wildlife Resources Commission.
(4)	A provision to prohibit, except in the instances of investigations of boating accidents, the Division of Marine Fisheries from receiving any federal boating safety funds.
(5)	A provision to provide mutual aid that authorizes the Division of Marine Fisheries marine patrol to enter into inland waters in winter to conduct a normal investigation of suspected illegal netting activity.
SECTION 14.11.(b)  No later than April 1, 2014, the Division of Marine Fisheries of the Department of Environment and Natural Resources and the Wildlife Resources Commission shall submit a joint report to the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division. The report shall include any findings and recommendations, including any legislative proposals. The report shall include findings regarding at least the following issues:
(1)	Whether the agreement developed pursuant to subsection (a) of this section has been successful from the perspective of the Division of Marine Fisheries, the Wildlife Resources Commission and the public in clarifying enforcement activities and reducing the duplication of enforcement activities by the Division of Marine Fisheries marine patrol and the Wildlife Resources Commission law enforcement officers.
(2)	As an alternative to the agreement developed under the provisions of subsection (a) of this section, whether it would be preferable to confer law enforcement powers upon the Division of Marine Fisheries marine patrol to authorize the Division of Marine Fisheries marine patrol to engage in enforcement activity related to only fisheries under the jurisdiction of the Division of Marine Fisheries or subject to the management of the Division of Marine Fisheries.
(3)	Any other issue the Division of Marine Fisheries or the Wildlife Resources Commission deems pertinent to include in the report.

BERNARD ALLEN MEMORIAL EMERGENCY DRINKING WATER FUND
SECTION 14.14.  G.S. 87‑98 reads as rewritten:
"§ 87‑98.  Bernard Allen Memorial Emergency Drinking Water Fund.
(a)	The Bernard Allen Memorial Emergency Drinking Water Fund is established under the control and direction of the Department. The Fund shall be a nonreverting, interest‑bearing fund consisting of monies appropriated by the General Assembly or made available to the Fund from any other source and investment interest credited to the Fund.
(b)	The Fund may be used to pay for:
(1)	Notification, to the extent practicable, of persons aged 18 and older who reside in any dwelling unit, and the senior official in charge of any business, at which drinking water is supplied from a private drinking water well or improved spring that is located within 1,500 feet of, and at risk from, known groundwater contamination. The senior official in charge of the business shall take reasonable measures to notify all employees of the business of the groundwater contamination, including posting a notice of the contamination in a form and at a location that is readily accessible to the employees of the business.
(2)	The costs of testing of private drinking water wells and improved springs for suspected contamination up to once every three years upon request by a person who uses the  well, or more frequent testing if the concentration of one or more contaminants in a private drinking water well is increasing over time and there is a significant risk that the concentration of a contaminant will exceed the drinking water action levels set forth in subsection (c) of this section within a three‑year period.
(3)	Additional testing to confirm the results of a previous test.
(4)	The temporary or permanent provision of alternative drinking water supplies to persons whose drinking water well or improved spring is contaminated. Under this section, an alternative drinking water supply includes the repair, such as use of a filtration system, or replacement of a contaminated well or the connection to a public water supply.
(5)	Monitoring of filtration systems used in connection with temporary or permanent alternative drinking water supplies provided pursuant to this section.
(c)	The Department shall disburse monies from the Fund based on financial need and on the risk to public health posed by groundwater contamination and shall give priority to the provision of services under this section to instances when an alternative source of funds is not available. The Fund shall not be used to provide alternative water supply to households with incomes greater than three hundred percent (300%) of the current federal poverty level. The Fund may be used to provide alternative drinking water supplies if the Department determines that the concentration of one or more contaminants in the private drinking water well or improved spring exceeds the federal maximum contaminant level, or the federal drinking water action level as defined in 40 Code of Federal Regulations § 141.1 through § 141.571 (1 July 2007) and 40 Code of Federal Regulations § 143.3 (1 July 2007). For a contaminant for which a federal maximum contaminant level or drinking water action level has not been established, the State groundwater standard established by the Environmental Management Commission for the concentration of that contaminant shall be used to determine whether the Fund may be used to provide alternative drinking water supplies. The Fund may also be used to provide alternative drinking water supplies as provided in this section if the Department determines that the concentration of one or more contaminants in a private drinking water well is increasing over time and that there is a significant risk that the concentration of a contaminant will exceed the federal maximum contaminant level or drinking water action level, or the State groundwater standard. A determination of the concentration of a contaminant shall be based on a sample of water collected from the private drinking water well within the past 12 months.
(c1)	In disbursing monies from the Fund, the Department shall give preference to provision of permanent replacement water supplies by connection to public water supplies and repair or replacement of contaminated wells over the provision of temporary water supplies. In providing alternative drinking water supplies, the Department shall give preference to connection to a public water supply system or to construction of a new private drinking water well over the use of a filtration system if the Department determines that the costs of periodic required maintenance of the filtration system would be cost‑prohibitive for users of the alternative drinking water supply.
(c2)	If the Department provides an alternative drinking water supply by extension of a waterline, the Department may disburse from the Fund no more than fifty thousand dollars ($50,000) per household or other service connection. For projects where more than 10 residences are eligible for alternative water supplies under this section, no more than one‑third of the total cost of the project may be paid from the Fund. The Department may combine monies from the Fund with monies from other sources in order to pay the total cost of the project.
(c3)	The Fund shall be used to provide alternative drinking water supplies only if the Department determines that the person or persons who are responsible for the contamination of the private drinking water well is or are not financially viable or cannot be identified or located and if the Department determines that one of the following applies:
(1)	The contamination of the private drinking water well is naturally occurring.
(2)	The owner of the property on which the private drinking water well is located did not cause or contribute to the contamination or control the source of the contamination.
(3)	The source of the contamination is the application or disposal of a hazardous substance or pesticide that occurred without the consent of the owner of the property on which the private drinking water well is located.
(c4)	The Department may use up to one hundred thousand dollars ($100,000) annually of the monies in the Fund to pay the personnel and other direct costs associated with the implementation of this section.
(c5)	The Fund shall not be used for remediation of groundwater contamination.
(c6)	Nothing in this section expands, contracts, or modifies the obligation of responsible parties under Article 9 or 10 of Chapter 130A of the General Statutes, this Article, or Article 21A of this Chapter to assess contamination, identify receptors, or remediate groundwater or soil contamination.
(c7)	In disbursing monies from the Fund for replacement water supplies, the Department shall give priority to circumstances in which a well is contaminated as the result of nonnaturally occurring groundwater contamination in the area over circumstances in which a well has naturally occurring contamination.
(d)	The Department shall establish criteria by which the Department is to evaluate applications and disburse monies from this Fund and may adopt any rules necessary to implement this section.
(e)	The Department, in consultation with the Commission for Public Health and local health departments, shall report no later than October 1 of each year to the Environmental Review Commission, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, Senate Appropriations Committee on Natural and Economic Resources, and the Fiscal Research Division on the implementation of this section. The report shall include the purpose and amount of all expenditures from the Fund during the prior fiscal year, a discussion of the benefits and deficiencies realized as a result of the section, and may also include recommendations for any legislative action."

NONCOMMERCIAL LEAKING PETROLEUM UNDERGROUND STORAGE TANK CLEANUP FUND; DENR STUDY
SECTION 14.15.(a)  G.S. 143‑215.94D(b1) reads as rewritten:
"(b1)	The Noncommercial Fund shall be used for the payment of the costs of:
(1)	For releases discovered or reported to the Department prior to August 1, 2013, the cleanup of environmental damage as required by G.S. 143‑215.94E(a).
(1a)	For releases discovered or reported to the Department on or after August 1, 2013, the cleanup of environmental damage as required by G.S.143‑215.94E(a) in excess of two thousand dollars ($2,000) or the sum of the following amounts, whichever is less:
a.	A deductible of one thousand dollars ($1,000) per occurrence.
b.	A co‑payment equal to ten percent (10%) of the costs of the cleanup of environmental damage, per occurrence.
(2)	Compensation to third parties for bodily injury and property damage in excess of one hundred thousand dollars ($100,000) per occurrence.
(3)	Reimbursing the State for damages or other costs incurred as a result of a loan from the Loan Fund. The per occurrence limit does not apply to reimbursements to the State under this subdivision.
(4)	Recordation of residual petroleum as required by G.S. 143B‑279.11 if the Noncommercial Fund is responsible for the payment of costs under subdivisions (1) through (3) of this subsection and subsection (b) of this section."
SECTION 14.15.(b)  The Department of Environment and Natural Resources (Department) shall study the costs and benefits of the noncommercial underground storage tank program and explore options for continued use of the Noncommercial Leaking Petroleum Underground Storage Tank Cleanup Fund (Fund) and ways to improve the solvency of the Fund. The study shall consider all of the following:
(1)	The usual, average, historic costs of various phases of assessment and cleanup of noncommercial UST releases in order to determine areas of potential costs savings.
(2)	The feasibility of determining levels of soil and groundwater contamination at noncommercial UST releases earlier in the assessment and cleanup process in order to identify lower risks sites and limit reimbursement of costs of initial abatement actions.
(3)	The feasibility of assigning risk to noncommercial UST releases earlier in the assessment and cleanup process in order to limit reimbursement of costs of initial abatement actions.
(4)	The feasibility of partial cleanup at lower priority noncommercial UST releases.
(5)	The feasibility of issuing notices similar to the Notices of No Further Action for partially cleaned up, stabilized, lower priority noncommercial UST sites in order to facilitate property transfers.
(6)	Methods to strengthen liability protections for buyers and lenders of residential properties that have known noncommercial UST releases in order to facilitate property transfers.
(7)	Methods to employ land‑use restrictions on residential properties where petroleum contamination remains at lower risk sites in order to limit cleanup at these sites, while still informing the public of risk, and facilitating property transfers.
(8)	Methods to increase the participation of noncommercial UST owners in the costs of assessments and cleanups.
(9)	Any other matter the Department deems relevant to improve the solvency of the Fund.
SECTION 14.15.(c)  The Department shall report its findings and recommendations, including any legislative proposals, to the Environmental Review Commission, the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division no later than April 1, 2014.

PORTION OF SCRAP TIRE DISPOSAL TAX CREDITED TO GENERAL FUND; REPEAL SCRAP TIRE DISPOSAL ACCOUNT
SECTION 14.16.(a)  G.S. 105‑187.19(b) reads as rewritten:
"(b)	Each quarter, the Secretary shall credit thirty percent (30%) of the net tax proceeds to the General Fund. The Secretary shall distribute the remaining seventy percent (70%) of the net tax proceeds among the counties on a per capita basis according to the most recent annual population estimates certified to the Secretary by the State Budget Officer."
SECTION 14.16.(b)  G.S. 130A‑309.63 is repealed.
SECTION 14.16.(c)  Part 2B of Article 9 of Chapter 130A of the General Statutes is amended by adding a new section to read:
"§ 130A‑309.64.  Scrap Tire Disposal Program; other Department activities related to scrap tires.
(a)	The Department may make grants to units of local government to assist them in disposing of scrap tires. To administer the grants, the Department shall establish procedures for applying for a grant and the criteria for selecting among grant applicants. The criteria shall include the financial ability of a unit of local government to provide for scrap tire disposal, the severity of a unit of local government's scrap tire disposal problem, the effort made by a unit of local government to ensure that only tires generated in the normal course of business in this State are provided free disposal, and the effort made by a unit of local government to provide for scrap tire disposal within the resources available to it.
(b)	A unit of local government is not eligible for a grant under subsection (a) of this section unless its costs for disposing of scrap tires for the six‑month period preceding the date the unit of local government files an application for a grant exceeded the amount the unit of local government received during that period from the proceeds of the scrap tire tax under G.S. 105‑187.19. A grant to a unit of local government for scrap tire disposal may not exceed the unit of local government's unreimbursed cost for the six‑month period.
(c)	The Department may support a position to provide local governments with assistance in developing and implementing scrap tire management programs designed to complete the cleanup of nuisance tire collection sites and prevent scrap tires generated from outside of the State from being presented for free disposal in the State.
(d)	The Department may clean up scrap tire collection sites that the Department has determined are a nuisance. The Department may use funds to clean up a nuisance tire collection site only if no other funds are available for that purpose.
(e)	The Department shall include in the report to be delivered to the Environmental Review Commission on or before January 15 of each year pursuant to G.S. 130A‑309.06(c) a description of the implementation of the North Carolina Scrap Tire Disposal Act under this Part for the fiscal year ending the preceding June 30. The description of the implementation of the North Carolina Scrap Tire Disposal Act shall include a list of the recipients of grants under subsection (a) of this section and the amount of each grant for the previous 12‑month period. The report also shall include the amount of funds used to clean up nuisance sites under subsection (d) of this section.
(f)	It is the intent of the General Assembly to allow the Department to satisfy grant obligations that extend beyond the end of the fiscal year.
(g)	The Department may adopt any rules necessary to implement this section."
SECTION 14.16.(d)  G.S. 130A‑309.06(c) reads as rewritten:
"(c)	The Department shall report to the Environmental Review Commission on or before 15 January of each year on the status of solid waste management efforts in the State. The report shall include:
…
(10)	A description of the implementation of the North Carolina Scrap Tire Disposal Act that includes the amount of revenue used for grants and to clean up nuisance tire collection  under the provisions of G.S 130A‑309.64.
…."
SECTION 14.16.(e)  G.S. 130A‑309.09C(g) reads as rewritten:
"(g)	In addition to any other penalties provided by law, a unit of local government that does not comply with the requirements of G.S. 130A‑309.09A(b) and G.S. 130A‑309.09B(a) shall not be eligible for grants from the Solid Waste Management Trust Fund or the White Goods Management Account and shall not receive the proceeds of the scrap tire disposal tax imposed by Article 5B of Chapter 105 of the General Statutes or the proceeds of the white goods disposal tax imposed by Article 5C of Chapter 105 of the General Statutes to which the unit of local government would otherwise be entitled. The Secretary shall notify the Secretary of Revenue to withhold payment of these funds to any unit of local government that fails to comply with the requirements of G.S. 130A‑309.09A(b) and G.S. 130A‑309.09B(a). Proceeds of the scrap tire disposal tax that are withheld pursuant to this subsection shall be credited to the General Fund and may be used as provided in G.S. 130A‑309.64. Proceeds of the white goods disposal tax that are withheld pursuant to this subsection shall be credited to the White Goods Management Account and may be used as provided in G.S. 130A‑309.83."
SECTION 14.16.(f)  The funds appropriated to the Department of Environment and Natural Resources for the 2013‑2015 biennium for the Scrap Tire Disposal Program established under G.S. 130A‑309.64, as enacted by subsection (b) of this section, shall be allocated as follows:
(1)	Up to eighty thousand dollars ($80,000) shall be used by the Department of Environment and Natural Resources to support a position in the same manner as revenue in the Scrap Tire Disposal Account may be used under G.S. 130A‑309.63(b)(3), and
(2)	Four hundred twenty thousand dollars ($420,000) shall be used by the Department of Environment and Natural Resources in the same manner as revenue in the Scrap Tire Disposal Account may be used under G.S. 130A‑309.63, as amended by this section.
SECTION 14.16.(g)  Any tax proceeds remaining in the Scrap Tire Disposal Account, repealed under subsection (b) of this section, as of the effective date of this section shall continue to be used for the same purposes and in the same manner as the Scrap Tire Disposal Account, except the funds in the Scrap Tire Disposal Account shall not be used for grants to encourage the use of processed scrap tire materials.
SECTION 14.16.(h)  Money collected pursuant to Article 5B of Chapter 105 of the General Statutes between July 1, 2013, and the date this act becomes law shall be credited to the General Fund. The money shall be used for the purposes provided in this section.

PORTION OF WHITE GOODS DISPOSAL TAX CREDITED TO GENERAL FUND
SECTION 14.17.(a)  G.S. 105‑187.24 reads as rewritten:
"§ 105‑187.24.  Use of tax proceeds.
The Secretary shall distribute the taxes collected under this Article, less the Department of Revenue's allowance for administrative expenses, in accordance with this section. The Secretary may retain the Department's cost of collection, not to exceed four hundred twenty‑five thousand dollars ($425,000) a year, as reimbursement to the Department.
Each quarter, the Secretary shall credit twenty‑eight percent (28%) of the net tax proceeds to the General Fund. The Secretary shall distribute the remaining seventy‑two percent (72%) of the net tax proceeds among the counties on a per capita basis according to the most recent annual population estimates certified to the Secretary by the State Budget Officer. The Department shall not distribute the tax proceeds to a county when notified not to do so by the Department of Environment and Natural Resources under G.S. 130A‑309.87. If a county is not entitled to a distribution, the proceeds allocated for that county will be credited to the White Goods Management Account.
A county may use funds distributed to it under this section only as provided in G.S. 130A‑309.82. A county that receives funds under this section and that has an interlocal agreement with another unit of local government under which the other unit provides for the disposal of solid waste for the county must transfer the amount received under this section to that other unit. A unit to which funds are transferred is subject to the same restrictions on use of the funds as the county."
SECTION 14.17.(b)  G.S. 130A‑309.83(a) reads as rewritten:
"(a)	The White Goods Management Account is established within the Department."
SECTION 14.17.(c)  G.S. 130A‑309.87(a) reads as rewritten:
"(a)	Receipt of Funds. – A county may not receive a quarterly distribution of the white goods disposal tax proceeds under G.S. 105‑187.24 unless the undesignated balance in the county's white goods account at the end of its fiscal year is less than the threshold amount. Based upon the information in a county's Annual Financial Information Report, the Department must notify the Department of Revenue by March 1 of each year which counties may not receive a distribution of the white goods disposal tax for the current calendar year. The Department of Revenue will credit the undistributed tax proceeds to the General Fund."
SECTION 14.17.(d)  G.S. 130A‑309.09C(g) reads as rewritten:
"(g)	In addition to any other penalties provided by law, a unit of local government that does not comply with the requirements of G.S. 130A‑309.09A(b) and G.S. 130A‑309.09B(a) shall not be eligible for grants from the Solid Waste Management Trust Fund, the Scrap Tire Disposal Account, or the White Goods Management Account and shall not receive the proceeds of the scrap tire disposal tax imposed by Article 5B of Chapter 105 of the General Statutes or the proceeds of the white goods disposal tax imposed by Article 5C of Chapter 105 of the General Statutes to which the unit of local government would otherwise be entitled. The Secretary shall notify the Secretary of Revenue to withhold payment of these funds to any unit of local government that fails to comply with the requirements of G.S. 130A‑309.09A(b) and G.S. 130A‑309.09B(a). Proceeds of the scrap tire disposal tax that are withheld pursuant to this subsection shall be credited to the Scrap Tire Disposal Account and may be used as provided in G.S. 130A‑309.63. Proceeds of the white goods disposal tax that are withheld pursuant to this subsection shall be credited to the General Fund and may be used as provided in G.S. 130A‑309.83."
SECTION 14.17.(e)  G.S. 130A‑309.83 is repealed.
SECTION 14.17.(f)  G.S. 130A‑309.85(3) is repealed.
SECTION 14.17.(g)  G.S. 130A‑309.87, as amended by subsection (c) of this section, reads as rewritten:
"§ 130A‑309.87. Eligibility for disposal tax proceeds.
…
(b)	Annual Financial Information Report. – On or before November 1 of each year, a county must submit a copy of its Annual Financial Information Report, prepared in accordance with G.S. 159‑33.1, to the Department. The Secretary of the Local Government Commission must require the following information in that report:
…
(2)	The amount of revenue credited to its white goods account. This revenue should include all receipts derived from the white goods disposal tax, and the sale of white goods scrap metals and freon.
…."
SECTION 14.17.(h)  Subsection (e) through subsection (g) of this section become effective June 30, 2017.
SECTION 14.17.(i)  This section is effective August 1, 2013.

PORTION OF SOLID WASTE DISPOSAL TAX CREDITED TO GENERAL FUND; REPEAL SOLID WASTE MANAGEMENT TRUST FUND
SECTION 14.18.(a)  G.S. 105‑187.63 reads as rewritten:
"§ 105‑187.63.  Use of tax proceeds.
From the taxes received pursuant to this Article, the Secretary may retain the costs of collection, not to exceed two hundred twenty‑five thousand dollars ($225,000) a year, as reimbursement to the Department. The Secretary must credit or distribute taxes received pursuant to this Article, less the cost of collection, on a quarterly basis as follows:
(1)	Fifty percent (50%) to the Inactive Hazardous Sites Cleanup Fund established by G.S. 130A‑310.11.
(2)	Thirty‑seven and one‑half percent (37.5%) to cities and counties in the State on a per capita basis, using the most recent annual estimate of population certified by the State Budget Officer. One‑half of this amount must be distributed to cities, and one‑half of this amount must be distributed to counties. For purposes of this distribution, the population of a county does not include the population of a city located in the county.
A city or county is excluded from the distribution under this subdivision if it does not provide solid waste management programs and services and is not responsible by contract for payment for these programs and services. The Department of Environment and Natural Resources must provide the Secretary with a list of the cities and counties that are excluded under this subdivision. The list must be provided by May 15 of each year and applies to distributions made in the fiscal year that begins on July 1 of that year.
Funds distributed under this subdivision must be used by a city or county solely for solid waste management programs and services.
(3)	Twelve and one‑half percent (12.5%) to the General Fund."
SECTION 14.18.(b)  G.S. 130A‑309.12 is repealed.
SECTION 14.18.(c)  Part 2A of Article 9 of Chapter 130A of the General Statutes is amended by adding a new section to read:
"§ 130A‑309.13.  Solid Waste Management Outreach Program.
(a)	The Department shall develop an outreach program to promote waste reduction and recycling. From funds available to the Department for this program, the Department may engage in any of the following outreach activities:
(1)	Provide public education regarding waste reduction and recycling.
(2)	Provide technical assistance regarding waste reduction and recycling to units of local government.
(3)	Conduct research on the solid waste stream in North Carolina.
(4)	Develop secondary materials markets by providing technical and financial support, including providing technical and financial support to private recycling businesses, including use of processed scrap tire materials.
(5)	Provide funding for the activities of the Division of Environmental Assistance and Outreach.
(b)	It is the intent of the General Assembly to allow the Department to satisfy grant obligations that extend beyond the end of the fiscal year.
(c)	The Department shall include in the report required by G.S. 130A‑309.06(c) a description of the outreach program under this section. This report shall specify the type of outreach activity under each of subdivisions (1) through (5) under subsection (a) of this section and the amount of program funds the Department expended for each activity during the previous year."
SECTION 14.18.(d)  Of the funds appropriated to the Department of Environment and Natural Resources for the 2013‑2015 fiscal biennium for the Solid Waste Management Outreach Program, established under G.S. 130A‑309.13, as enacted by subsection (c) of this section, up to one million one hundred thousand dollars ($1,100,000) may be used by the Department of Environment and Natural Resources for recycling grants.
SECTION 14.18.(e)  Any tax proceeds remaining in the Solid Waste Management Trust Fund, repealed under subsection (b) of this section, as of the effective date of this section, shall be used only for one or more of the following purposes:
(1)	Funding activities of the Department to promote waste reduction and recycling, including, but not limited to, public education programs and technical assistance to units of local government.
(2)	Funding research on the solid waste stream in North Carolina.
(3)	Funding activities related to the development of secondary materials markets.
(4)	Providing funding for demonstration projects as provided by this Part.
(5)	Providing funding for research by The University of North Carolina and independent nonprofit colleges and universities within the State which are accredited by the Southern Association of Colleges and Schools as provided by this Part.
(6)	Providing funding for the activities of the Division of Environmental Assistance and Outreach.
SECTION 14.18.(f)  Money collected pursuant to Article 5G of Chapter 105 of the General Statutes between July 1, 2013, and the date this act becomes law shall be credited to the General Fund. The money shall be used for the purposes provided in this section.

DRINKING WATER STATE REVOLVING FUND
SECTION 14.20.  Notwithstanding G.S. 159G‑22, the Department of Environment and Natural Resources may transfer State funds from the Drinking Water Reserve to the Drinking Water State Revolving Fund for the 2013‑2014 fiscal year and shall use any such funds to match maximum available federal grant monies authorized by section 1453 of the federal Safe Drinking Water Act of 1996, 42 U.S.C. § 300j‑12, as amended.

CREATE NEW DIVISION OF WATER INFRASTRUCTURE IN DENR; NEW STATE WATER INFRASTRUCTURE AUTHORITY; TRANSFER WATER INFRASTRUCTURE FUND TO NEW DIVISION
SECTION 14.21.(a)  The Division of Water Infrastructure 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 Division of Water Quality of the Department of Environment and Natural Resources pertaining to the implementation and administration of Chapter 159G of the General Statutes are transferred to and vested in the Division of Water Infrastructure by a Type II transfer, as defined in G.S. 143A‑6. All functions, powers, duties, and obligations previously vested in the Division of Water Resources of the Department of Environment and Natural Resources pertaining to the implementation and administration of Chapter 159G of the General Statutes are transferred to and vested in the Division of Water Infrastructure by a Type II transfer, as defined in G.S. 143A‑6. The Water Infrastructure Fund established under G.S. 159G‑22 and all accounts within the Water Infrastructure Fund under G.S. 159G‑22 shall be transferred to and administered by the Division of Water Infrastructure. In addition to its other duties set forth in Chapter 159G, the Division of Water Infrastructure shall be responsible for administering the program whereby local government units are awarded funds by the State Water Infrastructure Authority created by this section for infrastructure projects from community development block grant funds.
SECTION 14.21.(b)  Chapter 159G of the General Statutes is amended by adding a new Article to read:
"Article 5.
"State Water Infrastructure Authority.
"§ 159G‑70.  State Water Infrastructure Authority created.
(a)	Authority Established. – The State Water Infrastructure Authority is created within the Department of Environment and Natural Resources.
(b)	Membership. – The Authority consists of nine members as follows:
(1)	The Director of the Division of Water Infrastructure of the Department or the Director's designee who is familiar with the water infrastructure financing, regulatory, and technical assistance programs of the Department.
(2)	The Secretary of Commerce or the Secretary's designee who is familiar with the State programs that fund water or other infrastructure improvements for the purpose of promoting economic development.
(3)	The Director of the Local Government Commission or the Director's designee who is familiar with the functions of the Commission.
(4)	One member who is a professional engineer in the private sector and is familiar with the development of infrastructure necessary for wastewater systems, to be appointed by the Governor to a term that expires on July 1 of even‑numbered years.
(5)	One member who is knowledgeable about, and has experience related to, direct federal funding programs for wastewater and public water systems, to be appointed by the Governor to a term that expires on July 1 of odd‑numbered years.
(6)	One member who is a representative of an urban local government wastewater system or public water system, to be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate to a term that expires on July 1 of even‑numbered years.
(7)	One member who is a representative of a rural local government wastewater system or public water system, to be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate to a term that expires on July 1 of odd‑numbered years.
(8)	One member who either (i) is a county commissioner of a rural county or (ii) resides in a rural county and is knowledgeable about, and has experience related to, public health services, to be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives to a term that expires on July 1 of even‑numbered years.
(9)	One member who is familiar with wastewater, drinking water, and stormwater issues and related State funding sources, to be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives to a term that expires on July 1 of odd‑numbered years.(c)	Terms. – The members appointed by the Governor, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives shall serve two‑year terms. The other members, who are ex officio members or designees of those members, shall serve until they are no longer in office or are replaced with another designee.
(d)	Chair. – The Director of the Division of Water Infrastructure, or the Director's designee, shall serve as Chair of the Authority. The Chair must call the first meeting. The Chair shall serve as a nonvoting member, provided, however, that the Chair shall vote to break a tie.
(e)	Meetings. – The Authority shall meet at least four times a year and may meet as often as needed. A majority of the members of the Authority constitutes a quorum for the transaction of business. The affirmative vote of a majority of the members present at a meeting of the Authority is required for action to be taken by the Authority.
(f)	Vacancies. – A vacancy in the Authority or as Chair of the Authority resulting from the resignation of a member or otherwise is filled in the same manner in which the original appointment was made. The term of an appointment to fill a vacancy is for the balance of the unexpired term.
(g)	Compensation. – Each member of the Authority shall receive no salary as a result of serving on the Authority but shall receive per diem, subsistence, and travel expenses in accordance with the provisions of G.S. 120‑3.1, 138‑5, and 138‑6, as applicable.
"§ 159G‑71.  State Water Infrastructure Authority; powers and duties.
The Authority has the following additional duties:
(1)	After reviewing the recommendations for grants and loans submitted to it by the Division, to determine the rank of applications and to select the applications that are eligible to receive grants and loans, consistent with federal law.(2)	To establish priorities for making loans and grants under this Chapter, consistent with federal law.
(3)	To review the criteria for making loans and grants under G.S. 159G‑23 and make recommendations, if any, to the Department for additional criteria or changes to the criteria, consistent with federal law.
(4)	To develop guidelines for making loans and grants under this Chapter, consistent with federal law.
(5)	To develop a master plan to meet the State's water infrastructure needs.
(6)	To assess and make recommendations on the role of the State in the development and funding of wastewater, drinking water, and stormwater infrastructure in the State.
(7)	To analyze the adequacy of projected funding to meet projected needs over the next five years.
(8)	To make recommendations on ways to maximize the use of current funding resources, whether federal, State, or local, and to ensure that funds are used in a coordinated manner.
(9)	To review the application of management practices in wastewater, drinking water, and stormwater utilities and to determine the best practices.
(10)	To assess the role of public‑private partnerships in the future provision of utility service.
(11)	To assess the application of the river basin approach to utility planning and management.
(12)	To assess the need for a "troubled system" protocol.
"§ 159G‑72.  State Water Infrastructure Authority; reports.
No later than November 1 of each year, the Authority shall submit a report of its activity and findings, including any recommendations or legislative proposals, to the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division of the Legislative Services Commission."
SECTION 14.21.(c)  Article 4 of Chapter 159G of the General Statutes is repealed.
SECTION 14.21.(d)  G.S. 159G‑20 reads as rewritten:
"§ 159G‑20.  Definitions.
The following definitions apply in this Chapter:
…
		(5b)	Division. – Division of Water Infrastructure.
…."
SECTION 14.21.(e)  G.S. 159G‑23 reads as rewritten:
"§ 159G‑23.  Common criteria for loan or grant from Wastewater Reserve or Drinking Water Reserve.
The criteria in this section apply to a loan or grant from the Wastewater Reserve or the Drinking Water Reserve. The Division of Water Infrastructure must each establish a system of assigning points to applications based on the following criteria:
(1)	Public necessity. – An applicant must explain how the project promotes public health and protects the environment. A project that improves a system that is not in compliance with permit requirements or is under orders from the Department, enables a moratorium to be lifted, or replaces failing septic tanks with a wastewater collection system has priority.
…."
SECTION 14.21.(f)  G.S. 159G‑26(a) reads as rewritten:
"(a)	Requirement. – The Department must publish a report each year on the accounts in the Water Infrastructure Fund that are administered by the Division of Water Infrastructure. The report must be published by 1 November of each year and cover the preceding fiscal year. The Department must make the report available to the public and must give a copy of the report to the Environmental Review Commission and the Fiscal Research Division of the Legislative Services Commission."
SECTION 14.21.(g)  G.S. 159G‑30 reads as rewritten:
"§ 159G‑30.  Department's responsibility.
The Department, through the Division of Water Infrastructure, administers loans and grants made from the CWSRF, the DWSRF, the Wastewater Reserve, and the Drinking Water Reserve."
SECTION 14.21.(h)  G.S. 159G‑32(b) reads as rewritten:
"(b)	Wastewater Reserve. – The Department is authorized to make loans and grants from the Wastewater Reserve for the following types of projects:
(1)	Wastewater collection system.
(2)	Wastewater treatment works.
(3)	Stormwater quality projects, including innovative stormwater management projects and pilot projects.
(4)	Nonpoint source pollution project."
SECTION 14.21.(i)  G.S. 159G‑37 reads as rewritten:
"§ 159G‑37.  Application to CWSRF, Wastewater Reserve, DWSRF, and Drinking Water Reserve.
An application for a loan or grant from the CWSRF, the DWSRF, the Wastewater Reserve, or the Drinking Water Reserve must be filed with the Division of Water Infrastructure of the Department. An application must be submitted on a form prescribed by the Division and must contain the information required by the Division. An applicant must submit to the Division any additional information requested by the Division to enable the Division to make a determination on the application. An application that does not contain information required on the application or requested by the Division is incomplete and is not eligible for consideration. An applicant may submit an application in as many categories as it is eligible for consideration under this Article."
SECTION 14.21.(j)  G.S. 159G‑38 reads as rewritten:
"§ 159G‑38.  Environmental assessment and public hearing.
(a)	Required Information. – An application submitted under this Article for a loan or grant for a project must state whether the project requires an environmental assessment. If the application indicates that an environmental assessment is not required, it must identify the exclusion in the North Carolina Environmental Policy Act, Article 1 of Chapter 113A of the General Statutes, that applies to the project. If the application does not identify an exclusion in the North Carolina Environmental Policy Act, it must include an environmental assessment of the project's probable impacts on the environment.
(b)	Division Review. – If, after reviewing an application, the Division of Water Infrastructure determines that a project requires an environmental assessment, the assessment must be submitted before the Division continues its review of the application. If, after reviewing an environmental assessment, the Division concludes that an environmental impact statement is required, the Division may not continue its review of the application until a final environmental impact statement has been completed and approved as provided in the North Carolina Environmental Policy Act.
(c)	Hearing. – The Division of Water Infrastructure may hold a public hearing on an application for a loan or grant under this Article if it determines that holding a hearing will serve the public interest. An individual who is a resident of any county in which a proposed project is located may submit a written request for a public hearing. The request must set forth each objection to the proposed project or other reason for requesting a hearing and must include the name and address of the individual making the request. The Division may consider all written objections to the proposed project, any statement submitted with the hearing request, and any significant adverse effects the proposed project may have on the environment. The Division's decision on whether to hold a hearing is conclusive. The Division must keep all written requests for a hearing on an application as part of the records pertaining to the application."
SECTION 14.21.(k)  G.S. 159G‑39 reads as rewritten:
"§ 159G‑39.  Review of applications and award of loan or grant.
(a)	Point Assignment. – The Division of Water Infrastructure must review all applications filed for a loan or grant under this Article for an application period. The Division must rank each application in accordance with the points assigned to the evaluation criteria. The Division must make a written determination of an application's rank and attach the determination to the application for the Authority's review. The Authority must consider the Division's determination of rank when the Authority determines an application's rank. The Authority's determination of rank is conclusive.
(b)	Initial Consideration. – The Division may consider an application for an emergency loan from the Wastewater Reserve or the Drinking Water Reserve at any time. The Division must consider all other loan applications and all grant applications filed during an application period at the same time in order to rank the applications. The Division shall forward all applications received for the application period to the State Water Infrastructure Authority.
(c)	Reconsideration. – When the Authority determines an application's rank is too low to receive an award of a loan or grant for an application period, the Division must include the application with those considered for the next application period. If the application's rank is again too low to receive an award, the application is not eligible for consideration in a subsequent application period. An applicant whose application does not receive an award after review in two application periods may file a new application.
(d)	Notification of Decision. – When the Authority determines that an application's rank makes it eligible for an award of a loan or grant, the Division must send the applicant a letter of intent to award the loan or grant. The notice must set out any conditions the applicant must meet to receive an award of a loan or grant. When the applicant satisfies the conditions set out in the letter of intent, the Division must send the applicant an offer to award a loan or grant. The applicant must give the Division written notice of whether it accepts or rejects the offer. A loan or grant is considered awarded when an offer to award the loan or grant is issued."
SECTION 14.21.(l)  G.S. 143‑355.4(b) reads as rewritten:
"(b)	To be eligible for State water infrastructure funds from the Drinking Water State Revolving Fund or the Drinking Water Reserve or any other grant or loan of funds allocated by the General Assembly whether the allocation of funds is to a State agency or to a nonprofit organization for the purpose of extending waterlines or expanding water treatment capacity, a local government or large community water system must demonstrate that the system:
(1)	Has established a water rate structure that is adequate to pay the cost of maintaining, repairing, and operating the system, including reserves for payment of principal and interest on indebtedness incurred for maintenance or improvement of the water system during periods of normal use and periods of reduced water use due to implementation of water conservation measures. The funding agency shall apply guidelines developed by the State Water Infrastructure Authority in determining the adequacy of the water rate structure to support operation and maintenance of the system.
…."
SECTION 14.21.(m)  Of the funds appropriated to the Department of Environment and Natural Resources in this act, at least three million two hundred thousand dollars ($3,500,000) for the 2013‑2014 fiscal year and at least five million dollars ($5,000,000) for the 2014‑2015 fiscal year shall be used for grants to local government units for public water system‑related projects and wastewater‑related projects. The State Water Infrastructure Authority established by G.S. 159G‑70, as enacted by subsection (b) of this section, shall determine the distribution of funds between public water system‑related projects and wastewater‑related projects, depending upon the number of applications for grants received and the priorities established by the State Water Infrastructure Authority. Grants awarded to local government units for public water system‑related projects shall be credited to the Drinking Water Reserve established in G.S. 159G‑22 to be used for grants to local government units in accordance with the provisions of Chapter 159G of the General Statutes, as amended by this section. Grants awarded to local government units for wastewater‑related projects shall be credited to the Wastewater Reserve established in G.S. 159G‑22 to be used for grants to local government units in accordance with the provisions of Chapter 159G of the General Statutes, as amended by this section. Funds allocated by this subsection are limited to projects in development tier one or two areas, as defined by G.S. 143B‑437.08. The State Water Infrastructure Authority shall report no later than May 1, 2014, to the Environmental Review Commission, the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division on the distribution of grant funds awarded under Chapter 159G of the General Statutes, as amended by the section, and whether changes are needed to the existing grant program under Chapter 159G of the General Statutes or other available grant programs to better facilitate the dissemination of funds and meet the project needs of rural, economically distressed local governments.
SECTION 14.21.(n)  The terms for the members who are appointed initially to the State Water Infrastructure Authority established by G.S. 159G‑70, as enacted by subsection (b) of this section, shall commence July 1, 2013. Notwithstanding the provisions of G.S. 159G‑70, as enacted by subsection (b) of this section, in order to establish staggered terms, the terms for the members who are appointed initially to the State Water Infrastructure Authority under G.S. 159G‑70(b)(4), (6), and (8) shall expire July 1, 2016.
SECTION 14.21.(o)  The Revisor of Statutes may conform names and titles changed by this section and may correct statutory references as required by this section throughout the General Statutes. In making the changes authorized by this section, the Revisor may also adjust subject and verb agreement and the placement of conjunctions.

INCREASE FUNDING FOR DREDGING
SECTION 14.22.(a)  G.S. 75A‑3 reads as rewritten:
"§ 75A‑3.  Wildlife Resources Commission to administer Chapter; Vessel Committee; funds for administration.
(a)	The Commission shall enforce and administer the provisions of this Chapter.
(b)	The chair of the Commission shall designate from among the members of the Commission three members who shall serve as the Vessel Committee of the Commission, and who shall, in their activities with the Commission, place special emphasis on the administration and enforcement of this Chapter.
(c)	The Boating Account is established within the Wildlife Resources Fund created under G.S. 143‑250. Interest and other investment income earned by the Account accrues to the Account. All moneys collected pursuant to the numbering and titling provisions of this Chapter shall be credited to this Account. Motor fuel excise tax revenue is credited to the Account under G.S. 105‑449.126. The Commission shall use revenue in the Account, subject to the Executive Budget Act and the Personnel Act, for the administration and enforcement of this Chapter; for activities relating to boating and water safety including education and waterway marking and improvement; and for boating access area acquisition, development, and maintenance. The Commission shall use at least three dollars ($3.00) of each one‑year certificate of number fee and at least nine dollars ($9.00) of each three‑year certificate of number fee collected under the numbering provisions of G.S. 75A‑5 for boating access area acquisition, development, and maintenance. The Commission shall transfer on a quarterly basis fifty percent (50%) of each one‑year certificate of number fee and fifty percent (50%) of each three‑year certificate of number fee collected under the numbering provisions of G.S. 75A‑5 to the Shallow Draft Navigation Channel and Lake Dredging Fund established by G.S. 143‑215.73F."
SECTION 14.22.(b)  G.S. 75A‑5 reads as rewritten:
"§ 75A‑5.  Application for certificate of number; fees; reciprocity; change of ownership; conformity with federal regulations; records; award of certificates; renewal of certificates; transfer of partial interest; destroyed or junked vessels; abandonment; change of address; duplicate certificates; display.
(a)	Application for Certificate of Number. – The owner of each vessel requiring numbering by this State shall file an application for a certificate of number with the Commission. The Commission shall furnish application forms and shall prescribe the information contained in the application form. The application shall be signed by the owner of the vessel or the owner's agent and shall be accompanied by a fee, as set out in subsection (a1) of this section. The fee does not apply to vessels owned and operated by nonprofit rescue squads if they are operated exclusively for rescue purposes, including rescue training. The owner shall have the option of selecting a one‑year numbering period or a three‑year numbering period. Upon receipt of the application in approved form, the Commission shall enter the application in its records and issue the owner a certificate of number stating the identification number awarded to the vessel and the name and address of the owner, and a validation decal indicating the expiration date of the certificate of number. The owner shall paint on or attach to each side of the bow of the vessel the identification number in such manner as may be prescribed by rules of the Commission in order that it may be clearly visible. The identification number shall be maintained in legible condition. The validation decal shall be displayed on the starboard bow of the vessel immediately following the number. The certificate of number shall be pocket size and shall be available for inspection on the vessel for which the certificate is issued at all times the vessel is in operation. Any person charged with failing to so carry a certificate of number shall not be convicted if the person produces in court a certificate of number previously issued to the owner that was valid at the time of the alleged violation.
(a1)	Fees. – The fees for certificates of number are as set out in this subsection:
(1)	The fee for a certificate of number for a one‑year period is:
a.	Thirty dollars ($30.00) for a vessel that is less than 26 feet in length.
b.	Fifty dollars ($50.00) for a vessel that is 26 feet or more in length.
(2)	The fee for a certificate of number for a three‑year period is:
a.	Ninety dollars ($90.00) for a vessel that is less than 26 feet in length.
b.	One hundred fifty dollars ($150.00) for a vessel that is 26 feet or more in length.
…
(h)	Renewal of Certificates. – An owner of a vessel awarded a certificate of number pursuant to this Chapter shall renew the certificate on or before the first day of the month after which the certificate expires; otherwise, the certificate shall lapse and be void until such time as it may thereafter be renewed. Application for renewal shall be submitted on a form approved by the Commission and shall be accompanied by a fee in the amount set in subsection (a1) of this section.…."
SECTION 14.22.(c)  G.S. 75A‑5.1 is repealed.
SECTION 14.22.(d)  G.S. 75A‑7 reads as rewritten:
"§ 75A‑7.  Exemption from numbering requirements.
(a)	A vessel shall not be required to be numbered under this Chapter if it is:
(1)	A vessel that is required to be awarded an identification number pursuant to federal law or a federally approved numbering system of another state, and for which an identification number has been so awarded: Provided, that any such vessel shall not have been within this State for a period in excess of 90 consecutive days.
(2)	A vessel from a country other than the United States temporarily using the waters of this State.
(3)	A vessel whose owner is the United States, a state or a subdivision thereof.
(4)	A ship's lifeboat.
	(6)	A sailboat of not more than 14 feet on the load water line (LWL).
(7)	A vessel with no means of propulsion other than drifting or manual paddling, poling, or rowing.
(b)	The Commission is hereby empowered to permit the voluntary numbering of vessels owned by the United States, a state or a subdivision thereof.
(c)	Those vessels owned by the United States, a state or a subdivision thereof and those owned by nonprofit rescue squads may be assigned a certificate of number bearing no expiration date but which shall be stamped with the word "permanent" and shall not be renewable so long as the vessel remains the property of the governmental entity or nonprofit rescue squad. If the ownership of any such vessel is transferred from one governmental entity to another or to a nonprofit rescue squad or if a vessel owned by a nonprofit rescue squad is transferred to another nonprofit rescue squad or governmental entity, the Commission shall issue a new permanent certificate of number, displaying the same identification number, without charge to the successor entity. When any such vessel is sold to a private owner or is otherwise transferred to private ownership, the applicable certificate of number shall be deemed to have expired immediately prior to the transfer. Prior to further use on the waters of this State, the new owner shall obtain a certificate of number pursuant to the provisions of this Chapter. The provisions of this subsection applicable to a vessel owned by a nonprofit rescue squad apply only to a vessel operated exclusively for rescue purposes, including rescue training."
SECTION 14.22.(e)  G.S. 75A‑34 reads as rewritten:
"§ 75A‑34.  Who may apply for certificate of title; authority of employees of Commission.
(a)	Any owner of a motorized vessel or sailboat 14 feet or longer or any personal watercraft, as defined in G.S. 75A‑13.3(a), that is applying for a certificate of number for the first time in this State pursuant to G.S. 75A‑5(a), and any new owner of a motorized vessel or sailboat 14 feet or longer or any personal watercraft to whom ownership is being transferred under G.S. 75A‑5(c) shall apply to the Commission for a certificate of title for that vessel. Any other vessel may be titled in this State at the owner's option. A vessel may not be titled in this State if it is titled in another state, unless the current title is surrendered along with the application for a certificate of title in this State. The Commission shall issue a certificate of title upon reasonable evidence of ownership, which may be established by affidavit, bill of sale, manufacturer's statement of origin, certificate of title in this State, certificate of number or title from another state, or other document satisfactory to the Commission. Only one certificate of title may be issued for any vessel in this State. A vessel may not be titled in this State if it is documented with the United States Coast Guard, unless the documentation has expired or been deleted by the United States Coast Guard. The Commission shall issue a certificate of title upon receipt of a completed application, along with the appropriate fee and reasonable evidence of ownership. The Commission shall require a manufacturer's statement of origin for all new vessels being issued a certificate of number and a certificate of title for the first time. The Commission may request a pencil tracing of the hull identification number (serial number) for vessels being transferred, in order to positively identify the vessel before issuance of a certificate of title for that vessel.
(b)	Employees of the Commission are vested with the power to administer oaths and to take acknowledgements and affidavits incidental to the administration and enforcement of this section. They shall receive no compensation for these services."
SECTION 14.22.(f)  G.S. 75A‑38 reads as rewritten:
"§ 75A‑38.  Commission's records; fees.
(a)	The Commission shall maintain a record of any title it issues.
(b)	The Commission shall charge a fee of thirty dollars ($30.00) to issue a new or transfer certificate of title. The Commission shall transfer on a quarterly basis at least ten dollars ($10.00) of each new or transfer certificate of title to the Shallow Draft Navigation Channel and Lake Dredging Fund established by G.S. 143‑215.73F. The Commission shall charge a fee of ten dollars ($10.00) for each duplicate title it issues and for the recording of a supplemental lien."
SECTION 14.22.(g)  G.S. 105‑449.126 reads as rewritten:
"§ 105‑449.126.  Distribution of part of Highway Fund allocation to Wildlife Resources Fund and Shallow Draft Navigation Channel and Lake Dredging Fund.
(a)	The Secretary shall credit to the Wildlife Resources Fund one‑sixth of one percent (1/6 of 1%) of the amount that is allocated to the Highway Fund under G.S. 105‑449.125 and is from the excise tax on motor fuel. Revenue credited to the Wildlife Resources Fund under this section may be used only for the boating and water safety activities described in G.S. 75A‑3(c). The Secretary must credit revenue to the Wildlife Resources Fund on an annual basis.
(b)	The Secretary shall credit to the Shallow Draft Navigation Channel and Lake Dredging Fund one‑sixth of one percent (1/6 of 1%) of the amount that is allocated to the Highway Fund under G.S. 105‑449.125 and is from the excise tax on motor fuel. Revenue credited to the Shallow Draft Navigation Channel and Lake Dredging Fund under this section may be used only for the dredging activities described in G.S. 143‑215.73F. The Secretary shall credit revenue to the Shallow Draft Navigation Channel and Lake Dredging Fund on an annual basis."
SECTION 14.22.(h)  Article 21 of Chapter 143 of the General Statutes is amended by adding a new Part to read:
"Part 8B. Shallow Draft Navigation Channel and Lake Dredging Fund.
"§ 143‑215.73F.  Shallow Draft Navigation Channel and Lake Dredging Fund.
The Shallow Draft Navigation Channel and Lake Dredging Fund is established as a special revenue fund. The Fund consists of fees credited to it under G.S. 75A‑3, 75A‑38, and 105‑449.126. Revenue in the Fund may only be used to provide the State's share of the costs associated with any dredging project designed to keep shallow draft navigation channels located in State waters or waters of the state located within lakes navigable and safe. Any project funded by revenue from the Fund must be cost‑shared with non‑State dollars on a one‑to‑one basis. For purposes of this section, "shallow draft navigation channel" means (i) a waterway connection with a maximum depth of 16 feet between the Atlantic Ocean and a bay or the Atlantic Intracoastal Waterway, (ii) a river entrance to the Atlantic Ocean through which tidal and other currents flow, or (iii) other interior coastal waterways. "Shallow draft navigation channel" includes the Atlantic Intracoastal Waterway and its side channels, Beaufort Harbor, Bogue Inlet, Carolina Beach Inlet, the channel from Back Sound to Lookout Back, channels connected to federal navigation channels, Lockwoods Folly River, Manteo/Shallowbag Bay, including Oregon Inlet, Masonboro Inlet, New River, New Topsail Inlet, Rodanthe, Rollinson, Shallotte River, Silver Lake Harbor, and the waterway connecting Pamlico Sound and Beaufort Harbor."
SECTION 14.22.(i)  Nothing in this section shall affect the validity, term, or cost of any certificate of number or certificate of title issued prior to October 1, 2013.
SECTION 14.22.(j)  This section authorizes a Long Term Dredging Memorandum of Agreement with the U.S. Army Corps of Engineers which may last beyond the current fiscal biennium and which shall provide for all of the following:
(1)	Prioritization of projects through joint consultation with the State, applicable units of local government, and the U.S. Army Corps of Engineers.
(2)	Compliance with G.S. 143‑215.73F. Funds in the Shallow Draft Navigation Channel Dredging Fund shall be used in accordance with that section.
(3)	Annual reporting by the Department on the use of funds provided to the U.S. Army Corps of Engineers under the Long Term Dredging Memorandum of Agreement. These reports shall be made to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Office of State Budget and Management and shall include all of the following:
a.	A list of all projects commenced.
b.	The estimated cost of each project.
c.	The date that work on each project commenced or is expected to commence.
d.	The date that work on each project was completed or is expected to be completed.
e.	The actual cost of each project.
SECTION 14.22.(k)  The Department of Environment and Natural Resources may use available funds for the 2013‑2014 fiscal year and the 2014‑2015 fiscal year in the Shallow Draft Navigation Channel and Lake Dredging Fund established in G.S. 143‑215.73F, as enacted by subsection (h) of this section, to provide the State's share of costs associated with projects that comply with that section. These funds are hereby appropriated for that purpose, but the Department of Environment and Natural Resources shall approve a project before it is eligible to receive any funds under this section.
SECTION 14.22.(l)  Subsection (b) of this section becomes effective October 1, 2013, and applies to applications submitted on or after that date. Subsection (f) of this section becomes effective October 1, 2013, and applies to new or transfer certificates of title issued on or after that date. The remainder of this section becomes effective October 1, 2013.

ENVIRONMENTAL MANAGEMENT COMMISSION
SECTION 14.23.(a)  G.S. 143B‑283 reads as rewritten:
"§ 143B‑283.  Environmental Management Commission – members; selection; removal; compensation; quorum; services.
												
(a1)	The Environmental Management Commission shall consist of 15 members as follows:
(1)	One appointed by the Governor who shall be a licensed physician.
(2)	One appointed by the Governor who shall at the time of appointment have special training or scientific expertise in hydrology, water pollution control, or the effects of water pollution.
(3)	One appointed by the Governor who shall at the time of appointment have special training or scientific expertise in hydrology, water pollution control, or the effects of water pollution.
(4)	One appointed by the Governor who shall at the time of appointment have special training or scientific expertise in air pollution control or the effects of air pollution.
(5)	One appointed by the Governor who shall at the time of appointment be actively connected with or have had experience in agriculture.
(6)	One appointed by the Governor who shall at the time of appointment have special training and scientific expertise in freshwater, estuarine, marine biological, or ecological sciences or be actively connected with or have had experience in the fish and wildlife conservation activities of the State.
(7)	One appointed by the Governor who shall at the time of appointment be actively employed by, or recently retired from, an industrial manufacturing facility and shall be knowledgeable in the field of industrial pollution control.
(8)	One appointed by the Governor who shall at the time of appointment be a licensed engineer with specialized training and experience in water supply or water or air pollution control.
(9)	One appointed by the Governor who shall serve at large.
(10)	One appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives in accordance with G.S. 120‑121 who shall serve at large.
(11)	One appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives in accordance with G.S. 120‑121 who shall serve at large.
(12)	One appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives in accordance with G.S. 120‑121 who shall serve at large.
(13)	One appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121 who shall serve at large.
(14)	One appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121 who shall serve at large.
(15)	One appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121 who shall serve at large.
(b)	Any appointment to fill a vacancy on the Commission created by the resignation, dismissal, death or disability of a member shall be for the balance of the unexpired term. The Governor may reappoint a member of the Commission to an additional term if, at the time of the reappointment, the member qualifies for membership on the Commission under subdivisions (1) through (9) of subsection (a1) of this section. Appointments by the General Assembly shall be made in accordance with G.S. 120‑121, and vacancies in those appointments shall be filled in accordance with G.S. 120‑122.
(b1)	The Governor shall have the power to remove any member of the Commission from office for misfeasance, malfeasance, or nonfeasance in accordance with the provisions of G.S. 143B‑13 of the Executive Organization Act of 1973.
(b2)	The members of the Commission shall receive per diem and necessary travel and subsistence expenses in accordance with the provisions of G.S. 138‑5.
(b3)	A majority of the Commission shall constitute a quorum for the transaction of business.
(b4)	All clerical and other services required by the Commission shall be supplied by the Secretary of Environment and Natural Resources.
(c)	The Governor shall require adequate disclosure of potential conflicts of interest by members. The Governor, by executive order, shall promulgate criteria regarding conflicts of interest and disclosure thereof for determining the eligibility of persons under this subsection, giving due regard to the requirements of federal legislation, and for this purpose may promulgate rules, regulations or guidelines in conformance with those established by any federal agency interpreting and applying provisions of federal law.
(c1)	All members of the Commission are covered persons for the purposes of Chapter 138A of the General Statutes, the State Government Ethics Act. As covered persons, members of the Commission shall comply with the applicable requirements of the State Government Ethics Act, including mandatory training, the public disclosure of economic interests, and ethical standards for covered persons. Members of the Commission shall comply with the provisions of the State Government Ethics Act to avoid conflicts of interest.
	
(e)	Members of the Commission shall serve terms of four years."
SECTION 14.23.(b)  Transition of Membership of the Environmental Management Commission. – 
(1)	The terms of all members of the Environmental Management Commission serving on January 1, 2013, shall expire on July 31, 2013. A new Commission of 15 members shall be appointed in the manner provided by G.S. 143B‑283(a1), as enacted by subsection (a) of this section.
(2)	Members of the Commission whose qualifications are described by subdivisions (3), (5), (7), (8), (9), (11), (13), and (15) of G.S. 143B‑283(a1), as enacted by subsection (a) of this section, shall, notwithstanding G.S. 143B‑283(e), as enacted by subsection (a) of this section, be appointed for an initial term of two years and subsequent appointments shall be for four‑year terms thereafter. Members of the Commission whose qualifications are described by subdivisions (1), (2), (4), (6), (10), (12), and (14) of G.S. 143B‑283(a1), as enacted by subsection (a) of this section, shall be appointed for an initial term of four years and subsequent appointments shall be for four‑year terms thereafter. Initial terms shall begin on August 1, 2013, and expire on June 30 of the year of expiration as set forth in this subsection.
(3)	Members of the Commission appointed to any other State board or commission as a representative of the Commission shall no longer serve as a member of those boards or commissions after this section becomes law, and a new Commission representative shall be appointed as provided by law.

COASTAL RESOURCES COMMISSION
SECTION 14.24.(a)  G.S. 113A‑104 reads as rewritten:
"§ 113A‑104.  Coastal Resources Commission.
(a)	Established. – The General Assembly hereby establishes within the Department of Environment and Natural Resources a commission to be designated the Coastal Resources Commission.
													
(b1)	Composition. – The Coastal Resources Commission shall consist of 13 members as follows:
(1)	One appointed by the Governor who shall at the time of appointment be a coastal property owner or experienced in land development.
(2)	One appointed by the Governor who shall at the time of appointment be a coastal property owner or experienced in land development.
(3)	One appointed by the Governor who shall at the time of appointment be actively connected with or have experience in engineering in the coastal area or a marine‑related science.
(4)	One appointed by the Governor who shall at the time of appointment be actively connected with or have experience in engineering in the coastal area or a marine‑related science.
(5)	One appointed by the Governor who shall at the time of appointment be actively connected with or have experience in coastal‑related business.
(6)	One appointed by the Governor who shall at the time of appointment be actively connected with or have experience in local government within the coastal area.
(7)	One appointed by the Governor who shall at the time of appointment be actively connected with or have experience in coastal agriculture.
(8)	One appointed by the Governor who shall at the time of appointment be actively connected with or have experience in commercial fishing.
(9)	One appointed by the Governor who shall at the time of appointment be actively connected with or have experience in coastal forestry.
(10)	One appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives in accordance with G.S. 120‑121 who shall at the time of appointment be actively connected with or have experience in sports fishing.
(11)	One appointed by the General Assembly upon recommendation of the Speaker of the House of Representatives in accordance with G.S. 120‑121 who shall serve at large.
(12)	One appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121 who shall at the time of appointment be actively connected with or have experience in wildlife.
(13)	One appointed by the General Assembly upon recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121 who shall serve at large.
(c)	Appointment of Members. – As used in this section, the term "appointing authority" means the Governor in the case of members appointed by the Governor and means the General Assembly in the case of members appointed by the General Assembly. Appointments to the Commission shall be made to provide knowledge and experience in a diverse range of coastal interests. The members of the Commission shall serve and act on the Commission solely for the best interests of the public and public trust, and shall bring their particular knowledge and experience to the Commission for that end alone. Counties and cities in the coastal area may designate and transmit to the appointing authorities no later than May 1 of each even‑numbered year qualified persons in the categories set out in subsection (b1) of this section corresponding to the Commission positions to be filled that year.

(c1)	The members of the Commission whose qualifications are described in subdivisions (3), (6), (7), (8), (9), (11), and (12) of subsection (b1) of this section shall be persons who do not derive any significant portion of their income from land development, construction, real estate sales, or lobbying and do not otherwise serve as agents for development‑related business activities. The Governor shall require adequate disclosure of potential conflicts of interest by these members. The Governor, by executive order, shall promulgate criteria regarding conflicts of interest and disclosure thereof for determining the eligibility of persons under this subsection.
(c2)	All members of the Commission are covered persons for the purposes of Chapter 138A of the General Statutes, the State Government Ethics Act. As covered persons, members of the Commission shall comply with the applicable requirements of the State Government Ethics Act, including mandatory training, the public disclosure of economic interests, and ethical standards for covered persons. Members of the Commission shall comply with the provisions of the State Government Ethics Act to avoid conflicts of interest.

(f)	Office May Be Held Concurrently with Others. – Membership on the Coastal Resources Commission is hereby declared to be an office that may be held concurrently with other elective or appointive offices in addition to the maximum number of offices permitted to be held by one person under G.S. 128‑1.1.
(g)	Terms. – The members shall serve staggered terms of office of four years. At the expiration of each member's term, the appointing authority shall reappoint or replace the member with a new member of like qualification as specified in subsection (b1) of this section.
(h)	Vacancies. – In the event of a vacancy arising otherwise than by expiration of term, the appointing authority shall appoint a successor of like qualification as specified in subsection (b1) of this section who shall then serve the remainder of his predecessor's term.
(i)	Officers. – The chairman shall be designated by the Governor from among the members of the Commission to serve as chairman at the pleasure of the Governor. The vice‑chairman shall be elected by and from the members of the Commission and shall serve for a term of two years or until the expiration of the vice‑chairman's regularly appointed term.(j)	Compensation. – The members of the Commission shall receive per diem and necessary travel and subsistence expenses in accordance with the provisions of G.S. 138‑5.
	
(l)	Attendance. – Regular attendance at Commission meetings is a duty of each member. The Commission shall develop procedures for declaring any seat on the Commission to be vacant upon failure by a member to perform this duty.
(m)	Quorum. – A majority of the Commission shall constitute a quorum."
SECTION 14.24.(b)  Transition of Membership of the Coastal Resources Commission. – Except as otherwise provided in this section, the terms of all members of the Coastal Resources Commission serving on January 1, 2013, shall expire July 31, 2013. A new Commission of 13 members shall be appointed in the manner provided by G.S. 113A‑104(b1), as enacted by subsection (a) of this section. Members appointed in the manner provided by G.S. 113A‑104(b1), as enacted by subsection (a) of this section, shall be appointed no later than August 1, 2013.
(1)	The member serving pursuant to G.S. 113A‑104(b)(1) on January 1, 2013, shall continue to serve pursuant to G.S. 113A‑104(b1)(8), as enacted by subsection (a) of this section, until June 30, 2014.
(2)	The member serving pursuant to G.S. 113A‑104(b)(2) on January 1, 2013, shall continue to serve pursuant to G.S. 113A‑104(b1)(10), as enacted by subsection (a) of this section, until June 30, 2014.
(3)	The member serving pursuant to G.S. 113A‑104(b)(11) on January 1, 2013, whose term would otherwise expire on June 30, 2014, shall continue to serve pursuant to G.S. 113A‑104(b1)(6), as enacted by subsection (a) of this section, until June 30, 2014.
(4)	The member serving pursuant to G.S. 113A‑104(b)(5) on January 1, 2013, whose term would otherwise expire on June 30, 2014, shall continue to serve pursuant to G.S. 113A‑104(b1)(9), as enacted by subsection (a) of this section, until June 30, 2014.
Members of the Commission whose qualifications are described by subdivisions (1), (3), (5), (7), (11), and (13) of G.S. 113A‑104(b1), as enacted by subsection (a) of this section, shall be appointed for an initial term expiring on June 30, 2015, and subsequent appointments shall be for four‑year terms thereafter. Members of the Commission whose qualifications are described by subdivisions (2), (4), (6), (8), (9), (10), and (12) of G.S. 113A‑104(b1), as enacted by subsection (a) of this section, shall be appointed for an initial term expiring on June 30, 2014, and subsequent appointments shall be for four‑year terms thereafter.

COASTAL RESOURCES ADVISORY COMMISSION
SECTION 14.25.  G.S. 113A‑105 reads as rewritten:
"§ 113A‑105.  Coastal Resources Advisory Council.
(a)	Creation. – There is hereby created and established a council to be known as the Coastal Resources Advisory Council.
(b)	Membership and Terms. – The Coastal Resources Advisory Council shall consist of not more than 20 members appointed or designated 												
by the Coastal Resources Commission. Counties and cities in the coastal area may nominate candidates for consideration by the Commission. The terms of all Council members serving on the Council on January 1, 2013, shall expire on July 31, 2013. A new Council shall be appointed in the manner provided by this subsection with terms beginning on August 1, 2013, and expiring on June 30, 2015. Members may be reappointed at the discretion of the Commission, provided that one‑half of the membership at the beginning of any two‑year term are residents of counties in the coastal area.
…."

PART XV. DEPARTMENT OF COMMERCE

SET REGULATORY FEE FOR UTILITIES COMMISSION
SECTION 15.1.(a)  The percentage rate to be used in calculating the public utility regulatory fee under G.S. 62‑302(b)(2) is thirteen one‑hundredths of one percent (0.13%) for each public utility's North Carolina jurisdictional revenues earned during each quarter that begins on or after July 1, 2013, and on or after July 1, 2014.
SECTION 15.1.(b)  The electric membership corporation regulatory fee imposed under G.S. 62‑302(b1) for the 2013‑2014 and the 2014‑2015 fiscal year is two hundred thousand dollars ($200,000).

REPEAL UWHARRIE REGIONAL RESOURCES ACT
SECTION 15.1A.  Chapter 153C of the General Statutes is repealed.

INDUSTRIAL COMMISSION FEES/COMPUTER SYSTEM REPLACEMENT
SECTION 15.2.  For the 2013‑2014 fiscal year and the 2014‑2015 fiscal year, the Industrial Commission may, in consultation with the State Chief Information Officer, use up to one million eight hundred thousand dollars ($1,800,000) of available funds in Budget Code 24611 to replace the Electronic Document Management System (EDMS).

UNEMPLOYMENT INSURANCE RESERVE
SECTION 15.3.(a)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Commerce, shall transfer to the Unemployment Insurance Reserve within the Office of State Budget and Management any unencumbered cash balance as of June 30, 2013, of each of the following special funds within the Department of Commerce and then close each of these special funds:
(1)	Worker Training Trust Fund (Special Fund Code 64654‑6400).
(2)	Training and Employment Account (Special Fund Code 64655‑6601).
SECTION 15.3.(b)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Commerce, shall transfer the sum of ten million dollars ($10,000,000) for the 2013‑2014 fiscal year from the Special Employment Security Administration Fund (Fund Code 64650‑6100) to the Unemployment Insurance Reserve within the Office of State Budget and Management.

EMPLOYMENT SECURITY RESERVE FUND
SECTION 15.4.(a)  There is appropriated from the Employment Security Reserve Fund to the Department of Commerce, Division of Employment Security, the amount needed for the 2013‑2014 fiscal year to fund the interest payment due to the federal government for the debt owed to the U.S. Treasury for unemployment benefits.
SECTION 15.4.(b)  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 Division B of P.L. 111‑5, the Assistance for Unemployed Workers and Struggling Families Act, the Department of Commerce, Division of Employment Security, 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 million dollars ($100,000,000) 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.

WORKFORCE INVESTMENT ACT FUNDS/TRANSFER OF FUNDS TO DEPARTMENT OF LABOR
SECTION 15.5.  Of the Workforce Investment Act funds awarded to the Department of Commerce by the United States Department of Labor, the sum of three hundred fifty thousand dollars ($350,000) shall be transferred to the Department of Labor for the Apprenticeship Program on a recurring basis for the 2013‑2015 biennium.

SPECIAL FUNDS TRANSFER/OFFSET COMMERCE ADMINISTRATION GENERAL FUND APPROPRIATION
SECTION 15.6.(a)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Commerce, shall transfer the unencumbered cash balances in the following funds as of June 30, 2013, to Commerce Administration (Budget Code 14600‑1111):
(1)	24609‑2537 – Energy Research Grants
(2)	24609‑2535 – NC Green Business Fund
SECTION 15.6.(b)  The Office of State Budget and Management, in conjunction with the Office of the State Controller and the Department of Commerce, shall transfer the unencumbered cash balance in the International Trade Show Special Fund (Budget Code 24610‑2431) as of June 30, 2013, to Commerce Administration (Budget Code 14600‑1111) and, upon the transfer, close the Fund.
SECTION 15.6.(c)  The transfers in subsections (a) and (b) of this section are to offset General Fund appropriations to the Department of Commerce for administration.

SECRETARY DESIGNATE SUPERVISOR OF BLNC EMPLOYEES
SECTION 15.7.  The Secretary of Commerce shall designate the person or persons who shall supervise the employees in Business Link North Carolina (BLNC). The person or persons designated under this section shall have the powers and duties authorized by the Secretary.

COMMERCE FLEXIBILITY TO REORGANIZE DEPARTMENT TO ESTABLISH PUBLIC‑PRIVATE PARTNERSHIP
SECTION 15.7A.(a)  Notwithstanding any other provision of law, and consistent with the authority granted in G.S. 143B‑10, the Secretary of the Department of Commerce may reorganize positions and related operational costs within the Department to establish a public‑private partnership which includes cost containment measures. Actions under this section may only be implemented after the Office of State Budget and Management has approved a proposal submitted by the Department. Proposals under this section shall include, at a minimum, the positions involved and strategies to achieve efficiencies. The Department of Commerce may use up to one million dollars ($1,000,000) in the 2013‑2014 fiscal year of the cost‑savings resulting from the establishment of the public‑private partnership to cover the costs of reorganizing positions as provided in this subsection.
SECTION 15.7A.(b)  Not later than April 1, 2014, the Department shall report on any actions under this section to 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.

COMMON FOLLOW‑UP/CONTINUATION REVIEW
SECTION 15.8.(a)  The Department of Commerce, Labor and Economic Analysis Division (LEAD), shall conduct a continuation review of the Common Follow‑Up Information Management System (hereinafter "Common Follow‑Up") created pursuant to G.S. 96‑32. LEAD shall report the preliminary findings of the continuation review to the Fiscal Research Division no later than December 1, 2013, and shall submit a final report to the Joint Legislative Commission on Governmental Operations, the Senate Appropriations Committee on Natural and Economic Resources, and the House Appropriations Subcommittee on Natural and Economic Resources no later than March 1, 2014.
SECTION 15.8.(b)  The continuation review report required by subsection (a) of this section shall include the following information:
(1)	A description of Common Follow‑Up and the goals of the program.
(2)	The statutory objectives for Common Follow‑Up and the problem or need addressed.
(3)	The extent to which the objectives of Common Follow‑Up have been achieved.
(4)	Any functions or programs of Common Follow‑Up performed without specific statutory authority.
(5)	The performance measures for Common Follow‑Up and the process by which the performance measures determine efficiency and effectiveness.
(6)	Recommendations for statutory, budgetary, or administrative changes needed to improve efficiency and effectiveness of services delivered to the public.
(7)	The consequences of discontinuing funding.
(8)	Recommendations for improving services or reducing costs or duplication.
(9)	The identification of policy issues that should be brought to the attention of the General Assembly.

RURAL ECONOMIC DEVELOPMENT DIVISION CREATED
SECTION 15.10.(a)  Article 10 of Chapter 143B of the General Statutes is amended by adding a new Part to read as follows:
"Part 22. Rural Economic Development Division.
"§ 143B‑472.126.  Rural Economic Development Division created.
There is hereby created in the Department of Commerce a division to be known as the Rural Economic Development Division. The Secretary shall appoint an Assistant Secretary to administer this Division, who shall be subject to the direction and supervision of the Secretary. The Assistant Secretary, subject to the approval of the Secretary, shall select a professional staff of qualified and competent employees to assist in the administration of the duties and responsibilities prescribed in this Part.
"§ 143B‑472.127.  Programs administered.
(a)	The Rural Economic Development Division shall be responsible for administering the program whereby economic development grants or loans are awarded by the Rural Infrastructure Authority as provided in G.S. 143B‑472.128 to local government units of the counties that have one of the 80 highest rankings under G.S. 143B‑437.08 after the adjustment of that section. The funds available for grants or loans under this program may be used as follows:
(1)	To construct critical water and wastewater facilities or to provide other infrastructure needs, including, but not limited to, natural gas, broadband, and rail to sites where these facilities will generate private job‑creating investment. The grants under this subdivision shall not be subject to the provisions of G.S. 143‑355.4.
(2)	To provide matching grants or loans to local government units in an economically distressed county that will productively reuse vacant buildings and properties or construct or expand rural health care facilities with priority given to towns or communities with populations of less than 5,000. For purposes of this section, the term "economically distressed county" has the same meaning as in G.S. 143B‑437.01.
(3)	Recipients of grant funds under this Part shall contribute a cash match for the grant that is equivalent to at least five percent (5%) of the grant amount. The cash match shall come from local resources and may not be derived from other State or federal grant funds.
(4)	In awarding grants under this Part, preference shall be given to a project involving a resident company. For purposes of this Part, the term "resident company" means a company that has paid unemployment taxes or income taxes in this State and whose principal place of business is located in this State. An application for a project that serves an economically distressed area shall have priority over a project that does not. A grant to assist with water infrastructure needs is not subject to the provisions of G.S. 143‑355.4.
(5)	Under no circumstances shall a grant for a project be awarded in excess of twelve thousand five hundred dollars ($12,500) per projected job created or saved.
(b)	In addition to the duties under subsection (a) of this section, the Rural Economic Development Division shall also be responsible for (i) administering the program whereby local government units are awarded funds by the Rural Infrastructure Authority from the Utility Account under G.S. 143B‑437.01 and (ii) administering the program whereby local government units are awarded funds by the Rural Infrastructure Authority for economic development projects from community development block grant funds.
(c)	The Rural Economic Development Division may make recommendations to the Rural Infrastructure Authority as to any matters related to the administration of the programs under subsections (a) and (b) of this section.
"§ 143B‑472.128.  Rural Infrastructure Authority created; powers.
(a)	Creation. – The Rural Infrastructure Authority is created within the Department of Commerce.
(b)	Membership. – The Authority shall consist of 16 members who shall be appointed as follows:
(1)	The Secretary of Commerce, who shall serve as a nonvoting ex officio member, except in the case of a tie.
(2)	Five members appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, and they shall each represent a Tier 1 or Tier 2 county.
(3)	Five members appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, and they shall each represent a Tier 1 or Tier 2 county.
(4)	Five members appointed by the Governor, and they shall each represent a Tier 1 or Tier 2 county.
(c)	Terms. – Members shall serve for a term of three years, except for initial terms as provided in this section. No member of the Authority shall serve for more than two consecutive terms, but a person who has been a member for two consecutive terms may be reappointed after being off the Authority for a period of at least three years. An initial term that is two years or less shall not be counted in determining the limitation on consecutive terms. Initial terms shall commence on July 1, 2013.
In order to provide for staggered terms, two persons appointed to the positions designated in subdivision (b)(2) of this section, one person appointed to the positions designated in subdivision (b)(3) of this section, and two persons appointed to the positions designated in subdivision (b)(4) of this section shall be appointed for initial terms ending on June 30, 2014. One person appointed to the positions designated in subdivision (b)(2) of this section, two persons appointed to the positions designated in subdivision (b)(3) of this section, and two persons appointed to the positions designated in subdivision (b)(4) of this section shall be appointed for initial terms ending on June 30, 2015. Two persons appointed to the positions designated in subdivision (b)(2) of this section, two persons appointed to the positions designated in subdivision (b)(3) of this section, and one person appointed to the positions designated in subdivision (b)(4) of this section shall be appointed for initial terms ending on June 30, 2016.
(d)	Officers. – The Authority members shall select from among the membership of the Authority a person to serve as chair and vice‑chair. The chair and vice‑chair shall each serve for a term of one year, but may be re‑elected to serve successive terms.
(e)	Compensation. – Authority members shall receive no salary as a result of serving on the Authority, but are entitled to per diem and allowances in accordance with G.S. 138‑5 and G.S. 138‑6, as appropriate.
(f)	Meetings. – The Secretary shall convene the first meeting of the Authority within 30 days after the appointment of Authority members under subsection (b) of this section. Meetings shall be held as necessary as determined by the Authority.
(g)	Quorum. – A majority of the members of the Authority constitutes a quorum for the transaction of business. A vacancy in the membership of the Authority does not impair the right of the quorum to exercise all rights and to perform all duties of the Authority.
(h)	Vacancies. – A vacancy on the Authority shall be filled in the same manner in which the original appointment was made, and the term of the member filling the vacancy shall be for the balance of the unexpired term. Vacancies in appointments made by the General Assembly shall be filled in accordance with G.S. 120‑122.
(i)	Removal. – Members may be removed in accordance with G.S. 143B‑13. A member who misses three consecutive meetings of the Authority may be removed for nonfeasance.
(j)	Powers and Duties. – The Authority has the following powers and duties:
(1)	To receive and review applications from local government units for grants or loans authorized under G.S. 143B‑472.127.
(2)	To award grants or loans as provided in G.S. 143B‑472.127.
(3)	To formulate policies and priorities for grant and loan making under G.S. 143B‑472.127, which shall include, among other things, providing for (i) at least four grant application cycles during each fiscal year, (ii) the timely distribution of grants and loans so as to allow local government units to undertake infrastructure and other projects authorized under this Part without undue delay, and (iii) the use of federal funds first instead of General Fund appropriations where the project meets federal requirements or guidelines.
(4)	To establish a threshold amount for emergency grants and loans that may be awarded by the Assistant Secretary without the prior approval of the Authority. Any emergency grants or loans awarded by the Assistant Secretary pursuant to this subdivision shall meet the requirements of G.S. 143B‑472.127(a) or (b), and shall comply with policies and procedures adopted by the Authority. The Assistant Secretary shall, as soon as practicable, inform the Authority of any emergency grants or loans made under this subdivision, including the name of the local government unit to which the grant or loan was made, the amount of the grant or loan, and the project for which the grant or loan was requested.
(5)	To determine ways in which the Rural Economic Development Division can aid local government units in meeting the costs for preliminary project planning needed for making an application for a grant or loan under G.S. 143B‑472.127.
(6)	To determine ways in which the Rural Economic Development Division can effectively disseminate information to local government units about the availability of grants or loans under G.S. 143B‑472.127, the application and review process, and any other information that may be deemed useful to local government units in obtaining grants or loans.
(7)	To review from time to time the effectiveness of the grant or loan programs under G.S. 143B‑472.127 and to determine ways in which the programs may be improved to better serve local government units.
(8)	No later than September 1 of each year, to submit a report to the Senate Appropriations Committee on Natural and Economic Resources, the House Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division that details all of the following:
a.	Total number of awards made in the previous fiscal year.
b.	Geographic display of awards made.
c.	Total number of jobs created in the previous fiscal year.
d.	Recommended policy changes that would benefit economic development in rural areas of the State."
SECTION 15.10.(b)  For the 2013‑2015 fiscal biennium, the Department of Commerce, Rural Economic Development Division, as established in subsection (a) of this section, may use up to five percent (5%) of the funds appropriated in this act to the programs to be administered by the Division, and described in subsection (a) of this section, to cover the Division's expenses in administering those programs.
SECTION 15.10.(c)  G.S. 120‑123 reads as rewritten:
"§ 120‑123.  Service by members of the General Assembly on certain boards and commissions.
No member of the General Assembly may serve on any of the following boards or commissions:
…
(80)	The Rural Infrastructure Authority, as created by G.S. 143B‑472.128."
SECTION 15.10.(d)  G.S. 126‑5 reads as rewritten:
"§ 126‑5.  Employees subject to Chapter; exemptions.
…
(c1)	Except as to the provisions of Articles 6 and 7 of this Chapter, the provisions of this Chapter shall not apply to:
…
(30)	Employees of the Department of Commerce employed in the Rural Economic Development Division.
…."
SECTION 15.10.(e)  G.S. 143B‑433 reads as rewritten:
"§ 143B‑433.  Department of Commerce – organization.
The Department of Commerce shall be organized to include:
(1)	The following agencies:
…
w.	The Rural Economic Development Division.
x.	The Rural Infrastructure Authority.
…."

GOLDEN LEAF FOUNDATION BOARD OF DIRECTORS/GOVERNOR'S APPOINTMENTS
SECTION 15.10A.(a)  Section 2(c) of S.L. 1999‑2 reads as rewritten:
"Section 2(c).  The General Assembly also approves the provisions in the Consent Decree concerning the governance of the nonprofit corporation by 15 directors holding staggered, four‑year terms, five directors to be appointed by the Governor of the State of North Carolina, one of whom shall be the chair of the Rural Infrastructure Authority created in G.S. 143B‑472.128, or the chair's designee, five by the President Pro Tempore of the North Carolina Senate, and five by the Speaker of the North Carolina House of Representatives; and that the Governor shall appoint the first Chair among his appointees, and the directors shall elect their own Chair from among their number for subsequent terms. Members of the General Assembly may not be appointed to serve on the board of directors while serving in the General Assembly."
SECTION 15.10A.(b)  Upon the next occurring vacancy in the office of a director of the board of directors of the Golden LEAF Foundation appointed by the Governor, the Governor shall appoint the chair of the Rural Infrastructure Authority created in G.S. 143B‑472.128, or the chair's designee, to the board of directors in accordance with subsection (a) of this section.
SECTION 15.10A.(c)  This section becomes effective upon the modification of the Consent Decree in the action entitled State of North Carolina v. Philip Morris Incorporated, et al., 98 CVS 14377, in the General Court of Justice, Superior Court Division, Wake County, North Carolina. The Attorney General shall file a motion in the cause of State of North Carolina v. Philip Morris Incorporated, et al., 98 CVS 14377, in the General Court of Justice, Superior Court Division, Wake County, North Carolina, seeking a modification of the Consent Decree to permit the General Assembly to direct one or more of the Governor's appointments to the board of directors of the Golden LEAF Foundation, a nonprofit corporation created pursuant to subparagraph VI.A.1 of the Consent Decree and the Final Judgment entered in the action of 98 CVS 14377 on December 21, 1998.

ECONOMIC DEVELOPMENT COMPETITIVE GRANT PROGRAM FOR UNDERSERVED AND LIMITED RESOURCE COMMUNITIES
SECTION 15.10B.(a)  Of the funds appropriated in this act to the Department of Commerce (Department), the sum of two million five hundred forty‑three thousand twenty‑one dollars ($2,543,021) for the 2014‑2015 fiscal year shall be allocated for the Economic Development Competitive Grant Program for Underserved and Limited Resource Communities. The Department shall establish and implement this Program to provide grants to local governments and/or nonprofit organizations to encourage the development of economic development activities, services, and projects that benefit underserved populations and limited resource communities across the State. 
SECTION 15.10B.(b)  The Department shall develop guidelines and procedures for the administration and distribution of funds allocated to the Economic Development Competitive Grant Program for Underserved and Limited Resource Communities that include, at a minimum, the following:
(1)	Eligible organizations shall be nonprofit organizations and local governments that target underserved populations and/or limited resource communities.
(2)	Eligible organizations shall make their application in accordance with procedures established by the Department.
(3)	Eligible organizations shall not use funds allocated in this section for renting or purchasing land or buildings or for financing debt.
(4)	Priority shall be given to eligible organizations that demonstrate established community partnerships and business involvement.
(5)	Priority shall be given to eligible organizations that match funds and/or have at least one other significant source of funding.
(6)	Priority shall be given to eligible organizations that prioritize independent fundraising to achieve financial sustainability apart from State‑funded appropriations.

LRC STUDY/EFFICIENT DISTRIBUTION OF FUNDS FOR WATER & SEWER PROJECTS AND ECONOMIC DEVELOPMENT PROJECTS
SECTION 15.10C.(a)  The Legislative Research Commission may study the ways in which the State currently distributes State and federal funds to local government units and other eligible entities for water, including public water systems, and wastewater projects and economic development projects to determine whether the distribution of these funds may be conducted in a more efficient manner. The Legislative Research Commission may study, among other issues, the following: (i) the current methods of distributing funds from the Clean Water State Revolving Fund, Drinking Water State Revolving Fund, Community Development Block Grant Funds, Industrial Development Fund Utility Account, and other similar funds; (ii) what, if any, changes can be made to the current distribution methods to shorten the period of time it takes to make these funds available to local government units through loans or grants; (iii) whether these funds are being distributed efficiently to local government units in rural areas of the State; (iv) the criteria used by the State to determine whether an area is rural, and whether that criteria should be revised; (v) whether contracting with a private entity or organization would make the distribution process more efficient; and (vi) whether any federal acts or regulations would prohibit or limit the use of a private entity or organization to distribute these funds.
SECTION 15.10C.(b)  The Legislative Research Commission shall report its findings, together with any recommended legislation, to the 2014 Regular Session of the 2013 General Assembly, upon its convening.

LEAD/DEVELOP STANDARDIZED PERFORMANCE METRIC FOR NONPROFITS
SECTION 15.12.  The Department of Commerce, Labor and Economic Analysis Division (LEAD), shall develop a standardized performance metric to evaluate whether a nonprofit allocated State funds by the Department in the 2013‑2015 biennium has achieved its own goals or performance standards. The metric shall include standards for determining whether jobs were actually created, grants were awarded, or loans were made. The information obtained as a result of the metric shall be used by the General Assembly in determining whether to fund the nonprofits in future fiscal years. In order to be eligible to receive State funds, each nonprofit surveyed shall provide to LEAD any information requested to help develop the metric provided for in this section.

NER BLOCK GRANTS/2014 AND 2015 PROGRAM YEARS
SECTION 15.14.(a)  Appropriations from federal block grant funds are made for the fiscal years ending June 30, 2014, and June 30, 2015, according to the following schedule:
COMMUNITY DEVELOPMENT BLOCK GRANT

01.	State Administration	$	1,375,000

02.	Economic Development	10,737,500

03.	Infrastructure	30,837,500

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT – 2014 Program Year	$	42,950,000
	2015 Program Year	$	42,950,000
SECTION 15.14.(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 15.14.(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 15.14.(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 three hundred seventy‑five thousand dollars ($1,375,000) may be used for State Administration; up to ten million seven hundred thirty‑seven thousand five hundred dollars ($10,737,500) may be used for Economic Development; and up to thirty million eight hundred thirty‑seven thousand five hundred dollars ($30,837,500) may be used for Infrastructure. If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
SECTION 15.14.(e)  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 15.14.(f)  By September 1, 2013, and September 1, 2014, 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. The report shall include the following:
(1)	A discussion of each of the categories of funding and how the categories were selected, including information on how a determination was made that there was a statewide need in each of the categories.
(2)	Information on the number of applications that were received in each category and the total dollar amount requested in each category.
(3)	A list of grantees, including the grantee's name, county, category under which the grant was funded, the amount awarded, and a narrative description of the project.
SECTION 15.14.(g)  For purposes of this section, eligible activities under the category of Infrastructure in subsection (a) of this section shall be defined as provided in the HUD State Administered Community Development Block Grant definition of the term "infrastructure." Notwithstanding the provisions of subsection (e) of this section, funds allocated to the Infrastructure category in subsection (a) of this section shall not be reallocated to any other category.

NER BLOCK GRANTS/2013 PROGRAM YEAR
SECTION 15.15.(a)  Section 14.1 of S.L. 2011‑145, as amended by Section 13.1 of S.L. 2012‑142, reads as rewritten:
"SECTION 14.1.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2013, according to the following schedule:

COMMUNITY DEVELOPMENT BLOCK GRANT

01.	State Administration		$1,375,000

04.	Economic Development		10,625,000

		

07.	Infrastructure		30,500,000

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT – 2013 Program Year		$42,500,000
"SECTION 14.1.(b)  Decreases in Federal Fund Availability. – If federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
"SECTION 14.1.(c)  Increases in Federal Fund Availability for Community Development Block Grant. – Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows: each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
"SECTION 14.1.(d)  Limitations on Community Development Block Grant Funds. – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to one million three hundred seventy‑five thousand dollars ($1,375,000) may be used for State Administration; up to  ten million six hundred twenty‑five thousand dollars ($10,625,000) may be used for Economic Development;  and up to thirty million five hundred thousand dollars ($30,500,000) may be used for Infrastructure. If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
"SECTION 14.1.(e)  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 14.1.(f)  By September 1, 2013, 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. The report shall include the following:
(1)	A discussion of each of the categories of funding and how the categories were selected, including information on how a determination was made that there was a statewide need in each of the categories.
(2)	Information on the number of applications that were received in each category and the total dollar amount requested in each category.
(3)	A list of grantees, including the grantee's name, county, category under which the grant was funded, the amount awarded, and a narrative description of the project.
"SECTION 14.1.(g)  For purposes of this section, eligible activities under the category of Infrastructure in subsection (a) of this section shall be defined as provided in the HUD State Administered Community Development Block Grant definition of the term "infrastructure." Notwithstanding the provisions of subsection (e) of this section, funds allocated to the Infrastructure category in subsection (a) of this section shall not be reallocated to any other category."
SECTION 15.15.(b)  This section becomes effective June 30, 2013.

ONE NORTH CAROLINA FUND
SECTION 15.16.  Of the funds appropriated in this act to the One North Carolina Fund for the 2013‑2015 biennium, the Department of Commerce may use up to two hundred fifty thousand dollars ($250,000) in each year of the biennium to cover its expenses in administering the One North Carolina Fund and other economic development incentive grant programs. The Department of Commerce shall not use more than two hundred fifty thousand dollars ($250,000) for administrative costs in any one fiscal year.

MODIFY ONE NC FUND AWARDS
SECTION 15.16A.  G.S. 143B‑437.71(b1) reads as rewritten:
"(b1)	Awards. – The amounts committed in Governor's Letters issued in a single fiscal biennium may not exceed twenty‑eight million dollars ($28,000,000)."

MODIFY INDUSTRIAL DEVELOPMENT FUND AND UTILITY ACCOUNT
SECTION 15.18.(a)  G.S. 143B‑437.01 reads as rewritten:
"§ 143B‑437.01.  Industrial Development Fund Utility Account.
(a)	Creation and Purpose of Fund. – There is created in the Department of Commerce a special account to be known as the Industrial Development Fund Utility Account ("Utility Account") to provide funds to assist the local government units of the most economically distressed counties in the State in creating jobs. The Department of Commerce shall adopt rules providing for the administration of the program. Those rules shall include the following provisions, which shall apply to each grant from the account:
(1)	The funds shall be used for construction of or improvements to new or existing water, sewer, gas, telecommunications, high‑speed broadband, electrical utility distribution lines or equipment, or transportation infrastructure for existing or new or proposed buildings. To be eligible for funding, the water, gas, telecommunications, high‑speed broadband, electrical utility lines or facilities, or transportation infrastructure shall be located on the site of the building or, if not located on the site, shall be directly related to the operation of the job creation activity. To be eligible for funding, the sewer infrastructure shall be located on the site of the building or, if not located on the site, shall be directly related to the operation of the job creation activity, even if the sewer infrastructure is located in a county other than the county in which the building is located.
(1a)	The funds shall be used for projects located in economically distressed counties except that the Secretary of Commerce may use up to one hundred thousand dollars ($100,000) to provide emergency economic development assistance in any county that is documented to be experiencing a major economic dislocation.
(2)	The funds shall be used by the city and county governments for projects that are reasonably anticipated to result in the creation of new jobs. There shall be no maximum funding amount per new job to be created or per project.(3)	There shall be no local match requirement if the project is located in a county that has one of the 25 highest rankings under G.S. 143B‑437.08.
(4)	The Department may authorize a local government that receives funds under this section to use up to two percent (2%) of the funds, if necessary, to verify that the funds are used only in accordance with law and to otherwise administer the grant or loan.
(5)	No project subject to the Environmental Policy Act, Article 1 of Chapter 113A of the General Statutes, shall be funded unless the Secretary of Commerce finds that the proposed project will not have a significant adverse effect on the environment. The Secretary of Commerce shall not make this finding unless the Secretary has first received a certification from the Department of Environment and Natural Resources that concludes, after consideration of avoidance and mitigation measures, that the proposed project will not have a significant adverse effect on the environment.
(6)	The funds shall not be used for any nonmanufacturing project that does not meet the wage standard set out in G.S. 105‑129.4(b) or for any retail, entertainment, or sports projects.
(7)	Priority for the use of funds shall be given to eligible industries.
(a1)	Definitions. – The following definitions apply in this section:
(1)	Air courier services. – The furnishing of air delivery of individually addressed letters and packages for compensation, in interstate commerce, except by the United States Postal Service.
(2)	Repealed by Session Laws 2006‑252, s. 2.4, effective January 1, 2007.
(2a)	Company headquarters. – A corporate, subsidiary, or regional managing office, as defined by NAICS in United States industry 551114, that is responsible for strategic or organizational planning and decision making for the business on an international, national, or multistate regional basis.
(3)	Repealed by Session Laws 2006‑252, s. 2.4, effective January 1, 2007.
(4)	Economically distressed county. – A county that is defined as a development tier one or two area under G.S. 143B‑437.08 after the adjustments of that section are applied.
(5)	Eligible industry. – A company headquarters or a person engaged in the business of air courier services, information technology and services, manufacturing, or warehousing and wholesale trade.
(6)	Information technology and services. – An industry in one of the following, as defined by NAICS:
a.	Data processing industry group 518.
b.	Software publishers industry group 5112.
c.	Computer systems design and related services industry group 5415.
d.	An Internet activity included in industry group 519130.
(7)	Major economic dislocation. – The actual or imminent loss of 500 or more manufacturing jobs in the county or of a number of manufacturing jobs equal to at least ten percent (10%) of the existing manufacturing workforce in the county.
(8)	Manufacturing. – An industry in manufacturing sectors 31 through 33, as defined by NAICS, but not including quick printing or retail bakeries.
(9)	Reserved.
(10)	Warehousing. – An industry in warehousing and storage subsector 493 as defined by NAICS.
(11)	Wholesale trade. – An industry in wholesale trade sector 42 as defined by NAICS.
(b)	Repealed by Session Laws 1996, Second Extra Session, c. 13, s. 3.5.
	(c),	(c1)  Repealed by Session Laws 2012‑142, s. 13.4(c), effective July 1, 2012.
(d)	Repealed by Session Laws 1996, Second Extra Session, c. 13, s. 3.5."
SECTION 15.18.(b)  G.S. 105‑129.81 reads as rewritten:
"§ 105‑129.81.  Definitions.
The following definitions apply in this Article:
…
(2)	Air courier services. – Defined in G.S. 143B‑437.01.…
(5)	Company headquarters. – Defined in G.S. 143B‑437.01.…
(13)	Information technology and services. – Defined in G.S. 143B‑437.01.
				…
(15)	Manufacturing. – Defined in G.S. 143B‑437.01.
…
(25)	Warehousing. – Defined in G.S. 143B‑437.01.
(26)	Wholesale trade. – Defined in G.S. 143B‑437.01."
SECTION 15.18.(c)  G.S. 143B‑437.012(d) reads as rewritten:
"(d)	Eligibility. – A business is eligible for consideration for a grant under this section if it satisfies the conditions of either subdivision (1) or (2) of this subsection and satisfies the conditions of both subdivisions (3) and (4) of this subsection:
…
(2)	The business is a large manufacturing employer. A business is a large manufacturing employer if the business meets the following requirements:
a.	The business is in manufacturing, as defined in G.S. 143B‑437.01, and is converting its manufacturing process to change the product it manufactures.
b.	The Department certifies that the business has invested or intends to invest at least sixty‑five million dollars ($65,000,000) of private funds in improvements to real property and additions to tangible personal property in the project within a three‑year period beginning with the time the investment commences.
c.	The business employs at least 320 full‑time employees at the project that is the subject of the grant at the time the application is made, and the business agrees to maintain at least 320 full‑time employees at the project for the full term of the grant.
…."
SECTION 15.18.(d)  G.S. 143B‑435.1(d) reads as rewritten:
"(d)	Report. – By April 1 and October 1 of each year, the Department of Commerce shall report to the Revenue Laws Study Committee, the Joint Legislative Commission on Governmental Operations, the Senate Appropriations Committee on Natural and Economic Resources, the House of Representatives Appropriations Subcommittee on Natural and Economic Resources, and the Fiscal Research Division of the Legislative Services Commission on (i) all clawbacks that have been triggered under the One North Carolina Fund established pursuant to G.S. 143B‑437.71, the Job Development Investment Grant Program established pursuant to G.S. 143B‑437.52, Job Maintenance and Capital Development Fund established pursuant to G.S. 143B‑437.012, the Utility Account established pursuant to G.S. 143B‑437.01, and the Site Infrastructure Fund established pursuant to G.S. 143B‑437.02 and (ii) its progress on obtaining repayments. The report must include the name of each business, the event that triggered the clawback, and the amount forfeited or to be repaid."
SECTION 15.18.(e)  G.S. 143B‑437.07(c) reads as rewritten:
"(c)	Economic Development Incentive. – An economic development incentive includes any grant from the following programs: Job Development Investment Grant Program; the Job Maintenance and Capital Development Fund; One North Carolina Fund; and the Utility Account. The State also incents economic development through the use of tax expenditures in the form of tax credits and refunds. The Department of Revenue must report annually on these statutory economic development incentives, as required under G.S. 105‑256."
SECTION 15.18.(f)  G.S. 143B‑437.55(c) reads as rewritten:
"(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:
…
(13)	The total amount transferred to the Utility Account under this Part during the preceding year."
SECTION 15.18.(g)  G.S. 143B‑437.61 reads as rewritten:
"§ 143B‑437.61.  Transfer to Industrial Development Fund Utility Account.
At the time the Department of Commerce remits a check to a business under G.S. 143B‑437.60, the Department of Commerce shall transfer to the Utility Account an amount equal to the amount certified by the Committee as the difference between the amount of the grant and the amount of the grant for which the business would be eligible without regard to G.S. 143B‑437.56(d)."
SECTION 15.18.(h)  The Department of Commerce, in conjunction with the Office of the State Controller, shall close the Industrial Development Fund and the Utility Account and shall transfer the remaining fund balances of each to the Industrial Development Fund Utility Account.
SECTION 15.18.(i)  This section becomes effective July 1, 2013, and applies to projects for which funds are initially provided on or after that date.

JOB DEVELOPMENT INVESTMENT GRANT PROGRAM MODIFICATIONS
SECTION 15.19.(a)  G.S. 143B‑437.52 reads as rewritten:
"§ 143B‑437.52.  Job Development Investment Grant Program.
…
(b)	Priority. – In selecting between applicants, a project that is located in an Eco‑Industrial Park certified under G.S. 143B‑437.08 has priority over a comparable project that is not located in a certified Eco‑Industrial Park.
(c)	Awards. – The maximum amount of total annual liability for grants awarded in any single calendar year under this Part, including amounts transferred to the Utility Account pursuant to G.S. 143B‑437.61, is fifteen million dollars ($15,000,000). No agreement may be entered into that, when considered together with other existing agreements governing grants awarded during a single calendar year, could cause the State's potential total annual liability for grants awarded in a single calendar year to exceed this amount. The Department shall make every effort to ensure that the average percentage of withholdings of eligible positions for grants awarded under this Part does not exceed the average of the range provided in G.S. 143B‑437.56(a).
…."
SECTION 15.19.(a1)  Notwithstanding G.S. 143B‑437.52(c), for the 2013‑2015 fiscal biennium, the maximum total liability for grants awarded, including amounts transferred to the Utility Account pursuant to G.S. 143B‑437.61, is twenty‑two million five hundred thousand dollars ($22,500,000) and, for the period from July 1, 2015, to December 31, 2015, the maximum total liability for grants awarded, including amounts transferred to the Utility Account pursuant to G.S. 143B‑437.61, is seven million five hundred thousand dollars ($7,500,000). No agreement may be entered into that, when considered together with other existing agreements governing grants awarded during an applicable time period provided in this subsection, could cause the State's potential total annual liability for grants awarded in that time period to exceed the designated maximum amount.
SECTION 15.19.(b)  G.S. 143B‑437.55(b) reads as rewritten:
"(b)	Application Fee. – When filing an application under this section, the business must pay the Committee a fee of five thousand dollars ($5,000). The fee is due at the time the application is filed. The Secretary of Commerce, the Secretary of Revenue, and the Director of the Office of State Budget and Management shall determine the allocation of the fee imposed by this section among their agencies. The proceeds of the fee are receipts of the agency to which they are credited. Within 30 days of receipt of an application under this section but prior to any award being made, the Department of Commerce shall notify each governing body of an area where a submitted application proposes locating a project of the information listed in this subsection, provided that the governing body agrees, in writing, to any confidentiality requirements imposed by the Department under G.S. 132‑6(d). The information required by this subsection includes all of the following:
(1)	The estimated amount of the grant anticipated to be awarded to the applicant for the project.
(2)	Any economic impact data submitted with the application or prepared by the Department.
(3)	Any economic impact estimated by the Department to result from the project."
SECTION 15.19.(c)  This section becomes effective July 1, 2013, and applies to applications and awards made on or after that date.

JOB DEVELOPMENT INVESTMENT GRANT PROGRAM APPLICATION FEE INCREASE
SECTION 15.20.(a)  G.S. 143B‑437.55(b) reads as rewritten:
"(b)	Application Fee. – When filing an application under this section, the business must pay the Committee a fee of ten thousand dollars ($10,000). The fee is due at the time the application is filed. The Secretary of Commerce, the Secretary of Revenue, and the Director of the Office of State Budget and Management shall determine the allocation of the fee imposed by this section among their agencies. The proceeds of the fee are receipts of the agency to which they are credited."
SECTION 15.20.(b)  This section becomes effective August 1, 2013, and applies to applications filed on or after that date.

JOB DEVELOPMENT INVESTMENT GRANT PROGRAM REPORTING FEE INCREASE
SECTION 15.21.(a)  G.S. 143B‑437.58(a) reads as rewritten:
"(a)	No later than March 1 of each year, for the preceding grant year, every business that is awarded a grant under this Part shall submit to the Committee an annual payroll report showing withholdings as a condition of its continuation in the grant program and identifying eligible positions that have been created during the base period that remain filled at the end of each year of the grant. Annual reports submitted to the Committee shall include social security numbers of individual employees identified in the reports. Upon request of the Committee, the business shall also submit a copy of its State and federal tax returns. Payroll and tax information, including social security numbers of individual employees and State and federal tax returns, submitted under this subsection is tax information subject to G.S. 105‑259. Aggregated payroll or withholding tax information submitted or derived under this subsection is not tax information subject to G.S. 105‑259. When making a submission under this section, the business must pay the Committee a fee of the greater of two thousand five hundred dollars ($2,500) or three one‑hundredths of one percent (.03%) of an amount equal to the grant less the maximum amount to be transferred pursuant to G.S. 143B‑437.61. The fee is due at the time the submission is made. The Secretary of Commerce, the Secretary of Revenue, and the Director of the Office of State Budget and Management shall determine the allocation of the fee imposed by this section among their agencies. The proceeds of the fee are receipts of the agency to which they are credited."
SECTION 15.21.(b)  This section becomes effective August 1, 2013, and applies to fees submitted for awards granted on or after that date.

TRANSFER STATE ENERGY OFFICE FROM COMMERCE TO DENR

GENERAL
SECTION 15.22.(a)  The State Energy Office is hereby transferred from the Department of Commerce to the Department of Environment and Natural Resources. This transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6.

ENERGY LOAN FUND
SECTION 15.22.(b)  Part 2C of Article 10 of Chapter 143B of the General Statutes, G.S. 143B‑437.14 through G.S. 143B‑437.16, is recodified as Part 32 of Article 7 of Chapter 143B of the General Statutes, G.S. 143B‑344.42 through G.S. 143B‑344.44.
SECTION 15.22.(c)  G.S. 143B‑437.16, recodified as G.S. 143B‑344.44 in subsection (b) of this section, reads as rewritten:
"§ 143B‑344.44.  Lead agency; powers and duties.
(a)	For the purposes of this Part, the Department of Environment and Natural Resources, State Energy Office, is designated as the lead State agency in matters pertaining to energy efficiency.
…."

GUARANTEED ENERGY SAVINGS CONTRACTS
SECTION 15.22.(d)  G.S. 143‑64.17F reads as rewritten:
"§ 143‑64.17F.  State agencies to use contracts when feasible; rules; recommendations.
…
(b)	The Department of Administration, in consultation with the Department of Environment and Natural Resources, through the State Energy Office, shall adopt rules for: (i) agency evaluation of guaranteed energy savings contracts; (ii) establishing time periods for consideration of guaranteed energy savings contracts by the Office of State Budget and Management, the Office of the State Treasurer, and the Council of State, and (iii) setting measurements and verification criteria, including review, audit, and precertification. Prior to adopting any rules pursuant to this section, the Department shall consult with and obtain approval of those rules from the State Treasurer. The rules adopted pursuant to this subsection shall not apply to energy conservation measures implemented pursuant to G.S. 143‑64.17L.
(c)	The Department of Administration, and the Department of Environment and Natural Resources through the State Energy Office, may provide to the Council of State its recommendations concerning any energy savings contracts being considered."
SECTION 15.22.(e)  G.S. 143‑64.17G reads as rewritten:
"§ 143‑64.17G.  Report on guaranteed energy savings contracts entered into by local governmental units.
A local governmental unit that enters into a guaranteed energy savings contract must report the contract and the terms of the contract to the Local Government Commission and the State Energy Office of the Department of Environment and Natural Resources. The Commission shall compile the information and report it biennially to the Joint Commission on Governmental Operations. In compiling the information, the Local Government Commission shall include information on the energy savings expected to be realized from a contract and, with the assistance of the Office of State Construction and the State Energy Office, shall evaluate whether expected savings have in fact been realized."
SECTION 15.22.(f)  G.S. 143‑64.17H reads as rewritten:
"§ 143‑64.17H.  Report on guaranteed energy savings contracts entered into by State governmental units.
A State governmental unit that enters into a guaranteed energy savings contract or implements an energy conservation measure pursuant to G.S. 143‑64.17L must report either (i) the contract and the terms of the contract or (ii) the implementation of the measure to the State Energy Office of the Department of Environment and Natural Resources within 30 days of the date the contract is entered into or the measure is implemented. In addition, within 60 days after each annual anniversary date of a guaranteed energy savings contract, the State governmental unit must report the status of the contract to the State Energy Office, including any details required by the State Energy Office. The State Energy Office shall compile the information for each fiscal year and report it to the Joint Legislative Commission on Governmental Operations and to the Local Government Commission annually by December 1. In compiling the information, the State Energy Office shall include information on the energy savings expected to be realized from a contract or implementation and shall evaluate whether expected savings have in fact been realized."

ENERGY ASSISTANCE FOR LOW‑INCOME PERSONS
SECTION 15.22.(g)  The programs administered under the North Carolina Energy Assistance Act for Low‑Income Persons, being the Weatherization Assistance Program for Low‑Income Families and the Heating/Air Repair and Replacement Program, and any other energy‑related assistance program for the benefit of low‑income persons in existing housing, are transferred from the Department of Commerce to the State Energy Office in the Department of Environment and Natural Resources. The transfer under this subsection shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6.
SECTION 15.22.(h)  Part 9 of Article 2 of Chapter 108A of the General Statutes, G.S. 108A‑70.30, is recodified as Part 33 of Article 7 of Chapter 143B of the General Statutes, G.S. 143B‑344.46.
SECTION 15.22.(i)  G.S. 108A‑70.30, recodified as G.S. 143B‑344.46 in subsection (h) of this section, reads as rewritten:
"§ 143B‑344.46.  Weatherization Assistance Program and Heating/Air Repair and Replacement Program.
The State Energy Office within the Department may administer the Weatherization Assistance Program for Low‑Income Families and the Heating/Air Repair and Replacement Program functions. Nothing in this Part shall be construed as obligating the General Assembly to appropriate funds for the Program or as entitling any person to services under the Program."
SECTION 15.22.(j)  Part 21 of Article 10 of Chapter 143B of the General Statutes, G.S. 143B‑472.121 through 143B‑472.123, is recodified as Part 34 of Article 7 of Chapter 143B of the General Statutes, G.S. 143B‑344.48 through G.S. 143B‑344.50.
SECTION 15.22.(k)  G.S. 143B‑472.122, recodified as G.S. 143B‑344.49 in subsection (j) of this section, and G.S. 143B‑472.123, recodified as G.S. 143B‑344.50 in subsection (j) of this section, read as rewritten:
"§ 143B‑344.49.  Definitions.
The following definitions apply to this Part:
…
(2)	Department. – The Department of Environment and Natural Resources.
(3)	Secretary. – The Secretary of the Department of Environment and Natural Resources.
….
"§ 143B‑344.50.  The State Energy Office designated agency; powers and duties.
(a)	The State Energy Office in the Department of Environment and Natural Resources shall administer the Weatherization Assistance Program for Low‑Income Families established by 42 U.S.C. § 6861, et seq., and 42 U.S.C. § 7101, et seq.; the Heating/Air Repair and Replacement Program established by the Secretary under G.S. 143B‑344.46; and any other energy‑related assistance program for the benefit of low‑income persons in existing housing. The State Energy Office shall exercise the following powers and duties:
…
(8)	Create a Policy Advisory Council within the State Energy Office that shall advise the State Energy Office with respect to the development and implementation of a Weatherization Program for Low‑Income Families, the Heating/Air Repair and Replacement Program, and any other energy‑related assistance program for the benefit of low‑income persons in existing housing.
…."

ENERGY POLICY COUNCIL
SECTION 15.22.(l)  G.S. 113B‑2 reads as rewritten:
"§ 113B‑2.  Creation of Energy Policy Council; purpose of Council.
(a)	There is hereby created a council to advise and make recommendations on energy policy to the Governor and the General Assembly to be known as the Energy Policy Council which shall be located within the Department of Environment and Natural Resources.
(b)	Except as otherwise provided in this Chapter, the powers, duties and functions of the Energy Policy Council shall be as prescribed by the Secretary of the Department of Environment and Natural Resources.
(c)	The Energy Policy Council shall serve as the central energy policy planning body of the State and shall communicate and cooperate with federal, State, regional and local bodies and agencies to the end of effecting a coordinated energy policy."
SECTION 15.22.(m)  G.S. 113B‑11 reads as rewritten:
"§ 113B‑11.  Powers and authority.
…
(c)	The Council shall have authority to apply for and utilize grants, contributions and appropriations in order to carry out its duties as defined in Articles 1 and 2 of this Chapter, provided, however, that all such applications and requests are made through and administered by the Department of Environment and Natural Resources.
…
(e)	The Department of Environment and Natural Resources shall provide the staffing capability to the Energy Policy Council so as to fully and effectively develop recommendations for a comprehensive State energy policy as contained in the provisions of this Article. The Utilities Commission is hereby authorized to make its staff available to the Council to assist in the development of a State energy policy."

PURCHASES AND CONTRACTS
SECTION 15.22.(n)  G.S. 143‑58.4 reads as rewritten:
"§ 143‑58.4.  Energy credit banking and selling program.
(a)	The following definitions apply in this section:
…
(4)	Department. – The Department of The Department of Environment and Natural Resources.
…
(c)	Adopt Rules. – The Secretary of Environment and Natural Resources shall adopt rules as necessary to implement this section."

ENERGY POLICY AND LIFE‑CYCLE COST ANALYSIS
SECTION 15.22.(o)  G.S. 143‑64.11 reads as rewritten:
"§ 143‑64.11.  Definitions.
For purposes of this Article:
…
(2a)	"Energy Office" means the State Energy Office of the Department of Environment and Natural Resources.
…."
SECTION 15.22.(p)  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 Environment and Natural Resources 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. Management plans submitted annually by State institutions of higher learning shall include all of the following:
…."
SECTION 15.22.(q)  The Revisor of Statutes may conform names and titles changed by this section, and may correct statutory references as required by this section, throughout the General Statutes. In making the changes authorized by this section, the Revisor may also adjust subject and verb agreement and the placement of conjunctions.

STAFF FOR RURAL ECONOMIC DEVELOPMENT DIVISION AND WATER INFRASTRUCTURE DIVISION
SECTION 15.23.  The Departments of Commerce and Environment and Natural Resources shall work together to determine a way in which to equitably distribute the employees within the Department of Commerce, Division of Community Assistance, responsible for the CDBG program between the Rural Economic Development Division, as established by this act, and the Water Infrastructure Division, as established by this act.

STATE MATCH FOR NATIONAL NETWORK FOR MANUFACTURING INNOVATION GRANT PROGRAM
SECTION 15.24.  If federal funds become available for the National Network for Manufacturing Innovation grant program, the Department of Commerce, North Carolina State University, and the University of North Carolina Charlotte may each use the funds available to them to meet the State match requirements.

COMMERCE NONPROFITS/REPORTING REQUIREMENTS
SECTION 15.25.  Ag in the Classroom, High Point Furniture Market Authority, Johnson & Wales University, North Carolina's Eastern Region, North Carolina's Northeast Commission, Southeastern North Carolina Regional Economic Development Commission, Western North Carolina Regional Economic Development Commission, Charlotte Regional Partnership, Inc., Piedmont Triad Partnership, RTI International, Research Triangle Regional Partnership, and The Support Center shall do the following:
(1)	By September 1 of each year, and more frequently as requested, 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.
(2)	Provide to the Fiscal Research Division a copy of the entity's annual audited financial statement within 30 days of issuance of the statement.

GRASSROOTS SCIENCE PROGRAM
SECTION 15.25A.(a)  Of the funds appropriated in this act to the Department of Commerce for State‑Aid, the sum of two million three hundred forty‑seven thousand seven hundred eighty‑two dollars ($2,347,782) for the 2013‑2014 fiscal year and the sum of two million three hundred forty‑seven thousand seven hundred eighty‑two dollars ($2,347,782) for the 2014‑2015 fiscal year are allocated as grants‑in‑aid for each fiscal year as follows:
	2013‑2014	2014‑2015
Aurora Fossil Museum	$61,821	$61,821
Cape Fear Museum	$85,248	$85,248
Carolina Raptor Center	$74,916	$74,916
Catawba Science Center	$93,041	$93,041
Colburn Earth Science Museum, Inc.	$62,547	$62,547
Core Sound Waterfowl Museum	$67,395	$67,395
Discovery Place	$261,617	$261,617
Eastern NC Regional Science Center	$59,587	$59,587
Fascinate‑U	$65,616	$65,616
Granville County Museum Commission,
Inc.–Harris Gallery	$60,651	$60,651
Greensboro Children's Museum	$83,575	$83,575
The Health Adventure Museum of Pack
Place Education, Arts and
Science Center, Inc.	$73,352	$73,352
Highlands Nature Center	$62,816	$62,816
Imagination Station	$67,588	$67,588
The Iredell Museums, Inc.	$61,013	$61,013
Kidsenses	$65,233	$65,233
Museum of Coastal Carolina	$65,454	$65,454
The Natural Science Center 
of Greensboro, Inc.	$116,532	$116,532
North Carolina Estuarium	$58,000	$58,000
North Carolina Museum of Life
and Science	$203,545	$203,545
Pisgah Astronomical Research Institute	$74,925	$74,925
Port Discover: Northeastern
North Carolina's Center for
Hands‑On Science, Inc.	$60,610	$60,610
Rocky Mount Children's Museum	$66,463	$66,463
Schiele Museum of Natural History
and Planetarium, Inc.	$100,990	$100,990
Sci Works Science Center and
Environmental Park of Forsyth County	$83,725	$83,725
Sylvan Heights Waterfowl Park
and Eco‑Center	$69,864	$69,864
Western North Carolina Nature Center	$74,973	$74,973
Wilmington Children's Museum	$66,684	$66,684
Total	$2,347,782	$2,347,782
SECTION 15.25A.(b)  No later than March 1, 2014, the Department of Commerce shall report to the Fiscal Research Division all of the following information for each museum that receives funds under this section:
(1)	The actual operating budget for the 2012‑2013 fiscal year.
(2)	The proposed operating budget for the 2013‑2014 fiscal year.
(3)	The total attendance at the museum during the 2013 calendar year.
SECTION 15.25A.(c)  No later than March 1, 2015, the Department of Commerce shall report to the Fiscal Research Division all of the following information for each museum that receives funds under this section:
(1)	The actual operating budget for the 2013‑2014 fiscal year.
(2)	The proposed operating budget for the 2014‑2015 fiscal year.
(3)	The total attendance at the museum during the 2014 calendar year.
SECTION 15.25A.(d)  As a condition for qualifying to receive funding under this section, all of the following documentation shall, no later than November 1 of each year of the 2013‑2015 fiscal biennium, be submitted for each museum under this section to the Department of Commerce for the fiscal year that most recently ended, and only those costs that are properly documented under this subsection are allowed by the Department in calculating the distribution of funds under this section:
(1)	Each museum under this section shall submit its IRS (Internal Revenue Service) Form 990 to show its annual operating expenses, its annual report, and a reconciliation that explains any differences between expenses as shown on the IRS Form 990 and the annual report.
(2)	Each friends association of a museum under this section shall submit its IRS Form 990 to show its reported expenses for the museum, its annual report, and a reconciliation that explains any differences between expenses as shown on the IRS Form 990 and the annual report, unless the association does not have both an IRS Form 990 and an annual report available; in which case, it shall submit either an IRS Form 990 or an annual report.
(3)	The chief financial officer of each county or municipal government that provides funds for the benefit of the museum shall submit a detailed signed statement of documented costs spent for the benefit of the museum that includes documentation of the name, address, title, and telephone number of the person making the assertion that the museum receives funds from the county or municipality for the benefit of the museum.
(4)	The chief financial officer of each county or municipal government or each friends association that provides indirect or allocable costs that are not directly charged to a museum under this section but that benefit the museum shall submit in the form of a detailed statement enumerating each cost by type and amount that is verified by the financial officer responsible for the completion of the documentation and that includes the name, address, title, and telephone number of the person making the assertion that the county, municipality, or association provides indirect or allocable costs to the museum.
SECTION 15.25A.(e)  As used in subsection (d) of this section, "friends association" means a nonprofit corporation established for the purpose of supporting and assisting a museum that receives funding under this section.
SECTION 15.25A.(f)  Each museum listed in subsection (a) of this section shall do the following:
(1)	By September 1 of each year, and more frequently as requested, 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.
(2)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

RURAL CENTER/REPEAL STATUTORY REFERENCES
SECTION 15.26.(a)  G.S. 106‑744 reads as rewritten:
"§ 106‑744.  Purchase of agricultural conservation easements; establishment of North Carolina Agricultural Development and Farmland Preservation Trust Fund and Advisory Committee.
…
(g)	There is established the Agricultural Development and Farmland Preservation Trust Fund Advisory Committee. The Advisory Committee shall be administratively located within the Department of Agriculture and Consumer Services and shall advise the Commissioner on the prioritization and allocation of funds, the development of criteria for awarding funds, program planning, and other areas where monies from the Trust Fund can be used to promote the growth and development of family farms in North Carolina. The Advisory Committee shall be composed of 19 members as follows:
…
	The chair of the Rural Infrastructure Authority within the Department of Commerce or the chair's designee.
…."
SECTION 15.26.(b)  The Revisor of Statutes may conform names and titles changed by this section, and may correct statutory references as required by this section, throughout the General Statutes. In making the changes authorized by this section, the Revisor may also adjust subject and verb agreement and the placement of conjunctions.

REGIONAL ECONOMIC DEVELOPMENT COMMISSIONS/STATUTES CREATING COMMISSIONS REPEALED EFFECTIVE JUNE 30, 2014
SECTION 15.28.(a)  Articles 2 and 4 of Chapter 158 of the General Statutes are repealed.
SECTION 15.28.(b)  Upon the dissolution of North Carolina's Eastern Region, the North Carolina's Eastern Region Development Commission, the governing body of North Carolina's Eastern Region, shall liquidate the assets of the Region to the extent possible and distribute all Region assets to the counties of the Region in proportion to the amount of the vehicle registration tax levied by the Commission and collected in each county. The assets of the Region that exceed the amount of the vehicle registration tax collected by the counties and are attributable to an appropriation made to the Region by the General Assembly shall revert to the General Fund and may not be distributed to the counties. A county may use funds distributed to it pursuant to this subsection only for economic development projects and infrastructure construction projects. In calculating the amount to be refunded to each county, the Region shall first allocate amounts loaned and not yet repaid as follows:
(1)	Amounts loaned for a project in a county will be allocated to that county to the extent of its beneficial ownership of the principal of the interest‑bearing trust account in which the proceeds of the vehicle registration tax levied by the Commission were placed, and the county will become the owner of the right to repayment of the amount loaned to the extent of its beneficial ownership of the principal of the trust account.
(2)	Amounts not allocated pursuant to subdivision (1) of this subsection shall be allocated among the remaining counties in proportion to the amount of the vehicle registration tax collected in each county, and the remaining counties shall become the owners of the right to repayment of the amounts loaned in proportion to the amount of the vehicle registration tax collected in each county.
Notes and other instruments representing the right to repayment shall, upon dissolution of the Region, be held and collected by the State Treasurer, who shall disburse the collections to the counties as provided in this subsection.
The Commission shall distribute those assets that it is unable to liquidate among the Region counties insofar as practical on an equitable basis, as determined by the Commission. Upon dissolution, the State of North Carolina shall succeed to any remaining rights, obligations, and liabilities of the Region not assigned to the Region counties.
SECTION 15.28.(c)  G.S. 120‑123 reads as rewritten:
"§ 120‑123.  Service by members of the General Assembly on certain boards and commissions.
No member of the General Assembly may serve on any of the following boards or commissions:
…
	
…."
SECTION 15.28.(d)  G.S. 143‑215.42 reads as rewritten:
"§ 143‑215.42.  Acquisition of lands.
…
(h)	This section shall not authorize acquisition by condemnation of interests in land within the boundaries of any project to be constructed by the Tennessee Valley Authority, its agents or subdivision or any project licensed by the Federal Power Commission or interests in land owned or held for use by a public utility, as defined in G.S. 62‑3."
SECTION 15.28.(e)  G.S. 153A‑398 reads as rewritten:
"§ 153A‑398.  Regional planning and economic development commissions.
Two or more counties, cities, or counties and cities may create a regional planning and economic development commission by adopting identical concurrent resolutions to that effect. Such a commission has the powers granted by this Article. If such a commission is created, it shall maintain separate books of account for appropriations and expenditures made pursuant to this Article."
SECTION 15.28.(f)  The Revisor of Statutes may conform names and titles changed by this section and may correct statutory references as required by this section throughout the General Statutes. In making the changes authorized by this section, the Revisor may also adjust subject and verb agreement and the placement of conjunctions.
SECTION 15.28.(g)  This section becomes effective June 30, 2014.

REGIONAL ECONOMIC DEVELOPMENT COMMISSIONS/FUNDS FOR 2013‑2014 FISCAL YEAR
SECTION 15.28A.(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: North Carolina's Eastern Region, North Carolina's Northeast Commission, Southeastern North Carolina Regional Economic Development Commission, Western North Carolina Regional Economic Development Commission, Charlotte Regional Partnership, Inc., Piedmont Triad Partnership, and Research Triangle Regional Partnership.
SECTION 15.28A.(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 North Carolina's Eastern Region the sum of one hundred thirty‑four thousand four hundred sixty‑six dollars ($134,466) in the 2013‑2014 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 one hundred thirty‑four thousand four hundred sixty‑six dollars ($134,466) in the 2013‑2014 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 15.28A.(c)  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.

SOUTHEASTERN NORTH CAROLINA REGIONAL ECONOMIC DEVELOPMENT COMMISSION/MEMBER COUNTIES AMENDED
SECTION 15.28B.  G.S. 158‑8.3(a) reads as rewritten:
"(a)	There is created the Southeastern North Carolina Regional Economic Development Commission to serve Anson, Bladen, Brunswick, Columbus, Cumberland, Hoke, Montgomery, New Hanover, Pender, Richmond, Robeson, Sampson, and Scotland Counties, and any other county assigned to the Commission by the Department of Commerce as authorized by law. The Commission shall be located administratively in the Department of Commerce but shall exercise its statutory powers and duties independently of the Department of Commerce. Funds appropriated for the Commission by the General Assembly shall be disbursed directly to the Commission at the beginning of each fiscal year."

HIGH POINT MARKET AUTHORITY/HOUSE COMMERCE ECONOMIC DEVELOPER POSITION
SECTION 15.29.  To receive State funds, the High Point Market Authority shall provide suitable work space for a Department of Commerce economic developer position.

NC BIOTECHNOLOGY CENTER
SECTION 15.30.(a)  Of the funds appropriated in this act to the North Carolina Biotechnology Center (hereinafter "Center"), the sum of twelve million six hundred thousand three hundred thirty‑eight dollars ($12,600,338) for each fiscal year in the 2013‑2015 biennium shall be allocated as follows:
(1)	Job Creation: Ag Biotech Initiative, Economic and Industrial Development, and related activities – $2,709,073;
(2)	Science and Commercialization: Science and Technology Development, Centers of Innovation, Business and Technology Development, Education and Training, and related activities – $8,165,019; and
(3)	Center Operations: Administration, Professional and Technical Assistance and Oversight, Corporate Communications, Human Resource Management, Financial and Grant Administration, Legal, and Accounting – $1,726,246.
SECTION 15.30.(b)  Except to provide administrative flexibility, up to ten percent (10%) of each of the allocations in subsection (a) of this section may be reallocated to one or more of the other allocations in subsection (a) of this section if, in the judgment of Center management, the reallocation will advance the mission of the Center.
SECTION 15.30.(c)  The Center shall comply with the following reporting requirements:
(1)	By September 1 of each year, and more frequently as requested, 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.
(2)	Provide to the Fiscal Research Division a copy of the Center's annual audited financial statement within 30 days of issuance of the statement.

NORTH CAROLINA BIOTECHNOLOGY CENTER/EXAMINE CENTER OPERATIONS
SECTION 15.32.(a)  The Board of Directors (hereinafter "Board") of the North Carolina Biotechnology Center (hereinafter "Center") shall review and examine each aspect of the Center's operations to determine ways in which efficiencies and cost-savings can be achieved. The review required by this section shall include evaluating:
(1)	The activities conducted at the Center's headquarters in Research Triangle Park to determine how each and every activity is necessary to achieve the goals for which State funds are appropriated. Any unnecessary or duplicative activities shall be reduced or eliminated.
(2)	The activities conducted at the Center's regional offices and how those activities can be consolidated and performed in fewer locations.
(3)	Staffing requirements at the Center's headquarters and at the regional offices to determine whether some staff positions are duplicated and, if so, whether those duplications can be reduced or eliminated.
(4)	Whether State funds would be better used to provide additional grants and loans rather than to support current staffing levels and whether reducing current staffing levels to increase the amount of funds available for grants and loans would provide a positive return on investment. The Center shall determine the appropriate percentage of State funds that should be disbursed for grants, loans, and staff to maximize the return on State funds appropriated to the Center.
(5)	The administration of grant and loan programs funded in any way with State funds to ensure that the programs are conducted in a cost‑efficient manner.
(6)	Any and all cash balances on hand to determine ways in which those cash balances can be used quickly to make grants and loans.
(7)	The size of the Board and the overall governance of the Center to determine whether changes in either or both can be made to make the Center more cost‑efficient and effective in providing grants or loans.
(8)	Whether it would be beneficial to the State if the funds appropriated in this act to the Center for the 2014‑2015 fiscal year, and any funds that might be appropriated to the Center in future fiscal years, were instead appropriated to the Department of Commerce for purposes of establishing and implementing a competitive grants process.
SECTION 15.32.(b)  By March 1, 2014, the Center shall report the findings of the review required by subsection (a) of this section to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division. The report shall include the steps taken by the Center to implement any changes made to the Center's operations as a result of the review and shall include the Center's anticipated funding requirements from the General Assembly.
SECTION 15.32.(c)  Remaining allotments after March 1, 2014, shall not be released to the Center if it does not conduct the review and report its findings as provided in this section.

PART XVI. DEPARTMENT OF PUBLIC SAFETY

SUBPART XVI‑A. GENERAL PROVISIONS

GRANT REPORTING AND MATCHING FUNDS
SECTION 16A.1.(a)  The Department of Public Safety, the Department of Justice, and the Judicial Department shall report by May 1 of each year to the Joint Legislative Commission on Governmental Operations, the Chairs of the House of Representatives Subcommittee on Justice and Public Safety, and the Chairs of the Senate Appropriations Committee on Justice and Public Safety on grant funds received or preapproved for receipt by those departments. The report shall include information on the amount of grant funds received or preapproved for receipt by each department, the use of the funds, the State match expended to receive the funds, and the period to be covered by each grant. If the department intends to continue the program beyond the end of the grant period, the department shall report on the proposed method for continuing the funding of the program at the end of the grant period. Each department shall also report on any information it may have indicating that the State will be requested to provide future funding for a program presently supported by a local grant.
SECTION 16A.1.(b)  Notwithstanding the provisions of G.S. 143C‑6‑9, the Department of Public Safety may use up to the sum of one million two hundred thousand dollars ($1,200,000) during the 2013‑2014 fiscal year and up to the sum of one million two hundred thousand dollars ($1,200,000) during the 2014‑2015 fiscal year from funds available to the Department to provide the State match needed in order to receive grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the House of Representatives Subcommittee on Justice and Public Safety, the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds.

USE OF CLOSED FACILITIES
SECTION 16A.3.  In conjunction with the closing of prison facilities, youth detention centers, and youth development centers, the Department of Public Safety shall consult with the county or municipality in which the facility is located, with the elected State and local officials, and with State and federal agencies about the possibility of converting that facility to other use. The Department may also consult with any private for‑profit or nonprofit firm about the possibility of converting the facility to other use. In developing a proposal for future use of each facility, the Department shall give priority to converting the facility to other criminal justice use. Consistent with existing law and the future needs of the Department of Public Safety, the State may provide for the transfer or the lease of any of these facilities to counties, municipalities, State agencies, federal agencies, or private firms wishing to convert them to other use. The Department of Public Safety may also consider converting some of the facilities recommended for closing from one security custody level to another, where that conversion would be cost‑effective. A prison unit under lease to a county pursuant to the provisions of this section for use as a jail is exempt for the period of the lease from any of the minimum standards adopted by the Secretary of Health and Human Services pursuant to G.S. 153A‑221 for the housing of adult prisoners that would subject the unit to greater standards than those required of a unit of the State prison system.

LIMITED AUTHORITY TO RECLASSIFY AND ELIMINATE CERTAIN POSITIONS
SECTION 16A.4.  Notwithstanding any other provision of law, subject to the approval of the Director of the Budget, the Secretary of the Department of Public Safety may reclassify or eliminate existing administrative positions that are not specifically addressed in this act as needed for the efficient operation of the Department. The Secretary of the Department of Public Safety shall report any position reclassification undertaken pursuant to this section to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and to the Fiscal Research Division, within 30 days of the reclassification. The report shall include the position number, original title, original fund code, original budgeted salary, new title, new fund code, and new budgeted salary for each reclassified position.

Reports on Department of Public Safety Training
SECTION 16A.5.  The Department of Public Safety shall report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on its training facilities and programs in accordance with the schedule that follows:
(1)	No later than October 1, 2013, the Department shall submit a report that includes an examination and analysis of all of the following:
a.	The current training practices of the Department in each of its divisions.
b.	A list of Department training facilities by division, including the location, capacity, purpose, and level of utilization of each facility.
c.	Efforts by the Department to consolidate its training facilities across and within divisions.
(2)	No later than February 1, 2014, the Department shall submit a report that includes all of the following:
a.	A plan for operating the Samarkand training facility.
b.	An estimate of the impact of the Samarkand facility on the use of other Department training facilities.
c.	An estimate of savings that could be achieved by consolidating training activities and facilities at the renovated Samarkand facility.
(3)	No later than March 1, 2014, the Department shall submit a report that includes an examination and analysis of all of the following:
a.	The feasibility of relocating the Highway Patrol training facility to the Samarkand facility.
b.	The cost, time line, and any logistical issues associated with upgrading the Samarkand facility for use by the State Highway Patrol as a training facility.

SUBPART XVI‑B. DIVISION OF LAW ENFORCEMENT

USE OF SEIZED AND FORFEITED PROPERTY TRANSFERRED TO STATE LAW ENFORCEMENT AGENCIES BY THE FEDERAL GOVERNMENT
SECTION 16B.1.(a)  Assets transferred to the Department of Justice or to the Department of Public Safety during the 2013‑2015 fiscal biennium pursuant to applicable federal law shall be credited to the budgets of the respective departments and shall result in an increase of law enforcement resources for those departments. The Departments of Justice and Public Safety shall report to the Joint Legislative Commission on Governmental Operations, the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, and the Chairs of the Senate Appropriations Committee on Justice and Public Safety upon receipt of the assets and, before using the assets, shall report on the intended use of the assets and the departmental priorities on which the assets may be expended.
SECTION 16B.1.(b)  The General Assembly finds that the use of assets transferred pursuant to federal law for new personnel positions, new projects, acquisition of real property, repair of buildings where the repair includes structural change, and construction of or additions to buildings may result in additional expenses for the State in future fiscal periods. Therefore, the Department of Justice and the Department of Public Safety are prohibited from using these assets for such purposes without the prior approval of the General Assembly.
SECTION 16B.1.(c)  Nothing in this section prohibits North Carolina law enforcement agencies from receiving funds from the United States Department of Justice, the United States Department of the Treasury, and the United States Department of Health and Human Services.

ELIMINATE BUTNER PUBLIC SAFETY AUTHORITY
SECTION 16B.4.(a)  The Butner Public Safety Authority is abolished effective 11:59:59 p.m. on July 31, 2013. All of the assets of the Authority, real, personal, and mixed, shall be distributed to and become vested in the Town of Butner. The town attorney for the Town of Butner shall file a notice of dissolution with the Secretary of State. Following the dissolution of the Authority, the chair of the Authority shall have such power and authority necessary to transfer any of the assets of the Authority to the Town of Butner and to otherwise wind up the affairs of the Authority.
SECTION 16B.4.(b)  G.S. 122C‑408 reads as rewritten:
"§ 122C‑408.  Former Butner Public Safety Authority; jurisdiction; fire and police  protection.
																				(a5)	Police and Fire Protection. – The Town of Butner may contract with the State of North Carolina or any state agency for the provision of special police officers or fire protection or both to any State or federal institution or lands within the territory of the Camp Butner Reservation. The territorial jurisdiction of these officers shall consist of the property shown on a map produced May 20, 2003, by the Information Systems Division of the North Carolina General Assembly and kept on file in the office of the Butner Town Manager and such additional areas which are within the incorporated limits of the Town of Butner as shown on a map to be kept in the office of the Butner Town Manager. (b)	Authority of Special Police Officers. – In order to assist the Town of Butner in providing contractual services to State agencies and facilities within the territorial jurisdiction set out in subsection (a5) of this section, the officers providing police services to the Town of Butner shall have the additional authority set out in this subsection. After taking the oath of office required for law‑enforcement officers, the special police officers authorized by this section shall have the authority of deputy sheriffs of Durham and Granville Counties in those counties respectively. Within the territorial jurisdiction stated in subsection (a5) of this section, the special police officers have the authority to enforce the laws of North Carolina, the ordinances of the Town of Butner, and any rule applicable to the Camp Butner Reservation adopted under authority of this Part or under G.S. 143‑116.6 or G.S. 143‑116.7 or under the authority granted any other agency of the State and also have the powers set forth for firemen in Articles 80, 82, and 83 of Chapter 58 of the General Statutes. Notwithstanding the foregoing, the Town of Butner has no obligation or responsibility to provide law enforcement or fire protection services outside of the corporate limits of the Town of Butner except pursuant to a contract with a State agency or facility, a federal entity, or a private person or entity. In the event that any State agency contracts with the Town of Butner for police services at any facility within the territorial jurisdiction described in subsection (a5) of this section, any civil or criminal process to be served on any individual confined at any such State facility may be forwarded by the sheriff of the county in which the process originated to the director or chief of the Town of Butner's law enforcement department or that officer's designee.
							"
SECTION 16B.4.(c)  G.S. 143‑341(8)(i)(3) reads as rewritten:
"§ 143‑341.  Powers and duties of Department.
The Department of Administration has the following powers and duties:
…
(8)	General Services:
…
i.	To establish and operate a central motor pool and such subsidiary related facilities as the Secretary may deem necessary, and to that end:
…
3.	To require on a schedule determined by the Department all State agencies to transfer ownership, custody or control of any or all passenger motor vehicles within the ownership, custody or control of that agency to the Department, except those motor vehicles under the ownership, custody or control of the Highway Patrol, the State Bureau of Investigation, or the constituent institutions of The University of North Carolina which are used primarily for law‑enforcement purposes."
SECTION 16B.4.(d)  G.S. 160A‑288(d) reads as rewritten:
"(d)	For purposes of this section, the following shall be considered the equivalent of a municipal police department:
(1)	Campus law‑enforcement agencies established pursuant to G.S. 115D‑21.1(a) or G.S. 116‑40.5(a).
(2)	Colleges or universities which are licensed, or exempted from licensure, by G.S. 116‑15 and which employ company police officers commissioned by the Attorney General pursuant to Chapter 74E or Chapter 74G of the General Statutes.
(3)	Law enforcement agencies operated or eligible to be operated by a municipality pursuant to G.S. 63‑53(2).
	(5)	A Company Police agency of the Department of Agriculture and Consumer Services commissioned by the Attorney General pursuant to Chapter 74E of the General Statutes."
SECTION 16B.4.(e)  G.S. 160A‑288.2(d) reads as rewritten:
"(d)	For the purposes of this section, the following shall be considered the equivalent of a municipal police department:
(1)	Campus law‑enforcement agencies established pursuant to G.S. 116‑40.5(a).
(2)	Colleges or universities which are licensed, or exempted from licensure, by G.S. 116‑15 and which employ company police officers commissioned by the Attorney General pursuant to Chapter 74E or Chapter 74G of the General Statutes.
	"

VOICE INTEROPERABILITY PLAN FOR EMERGENCY RESPONSE (VIPER) SYSTEM
SECTION 16B.5.(a)  It is the intent of the General Assembly to continue to support development and implementation of the State's Voice Interoperability Plan for Emergency Response (VIPER) system in subsequent fiscal years. The Department is hereby authorized to spend up to five million dollars ($5,000,000) during the 2013‑2014 fiscal year and ten million dollars ($10,000,000) during the 2014‑2015 fiscal year to continue development and implementation of the State's VIPER system by constructing towers that will facilitate system expansion. Notwithstanding any other provision of law, State agencies, offices, commissions, and non‑State entities shall not spend more than the amount of State funds authorized in this section for this purpose during the 2013‑2015 fiscal biennium. This prohibition shall not be construed to prevent the expenditure of federal funds. This section does not impair or authorize the breach of any contract and instead affects the availability of appropriated funds within the meaning of G.S. 143C‑6‑8 and the terms of the North Carolina Information Technology Procurement Office General Terms and Conditions for Goods and Related Services related to availability of funds as specified in the applicable contract or contract extension.
SECTION 16B.5.(b)  The Department of Public Safety shall report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on a quarterly basis on the progress of the State's VIPER system.

STATE CAPITOL POLICE/RECEIPT‑SUPPORTED POSITIONS
SECTION 16B.6.  The State Capitol Police may contract with State agencies for the creation of receipt‑supported positions to provide security services to the buildings occupied by those agencies.

alcohol law enforcement reportS
SECTION 16B.7.(a)  No later than October 1, 2013, the Department of Public Safety shall report to the Chairs of the Senate Appropriations Committee on Justice and Public Safety and to the Chairs of the House Appropriations Subcommittee on Justice and Public Safety on measures being taken, or that will be taken, to meet the recurring reduction in funding for the Alcohol Law Enforcement Section that is set forth in this act.
SECTION 16B.7.(b)  No later than October 1, 2013, the Department of Public Safety shall report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on the mission and organization of the Alcohol Law Enforcement Section, changes to the mission or organization of the Section being considered by the Department, and recommendations for any statutory changes that would be needed in order to implement any changes being considered.

SUBPART XVI‑C. DIVISION OF ADULT CORRECTION

LIMIT USE OF OPERATIONAL FUNDS
SECTION 16C.1.  Funds appropriated in this act to the Department of Public Safety for operational costs for additional facilities shall be used for personnel and operating expenses set forth in the budget approved by the General Assembly. These funds shall not be expended for any other purpose, except as provided for in this act, and shall not be expended for additional prison personnel positions until the new facilities are within 120 days of projected completion, except that the Department may establish critical positions prior to 120 days of completion representing no more than twenty percent (20%) of the total estimated number of positions.

REIMBURSE COUNTIES FOR HOUSING AND EXTRAORDINARY MEDICAL COSTS FOR INMATES, PAROLEES, AND POST‑RELEASE SUPERVISEES AWAITING TRANSFER TO STATE PRISON SYSTEM
SECTION 16C.2.  Notwithstanding G.S. 143C‑6‑9, the Department of Public Safety may use funds available to the Department for the 2013‑2015 fiscal biennium to pay the sum of forty dollars ($40.00) per day as reimbursement to counties for the cost of housing convicted inmates, parolees, and post‑release supervisees awaiting transfer to the State prison system, as provided in G.S. 148‑29. The Department shall report quarterly to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety and the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety and Senate Appropriations Committee on Justice and Public Safety on the expenditure of funds to reimburse counties for prisoners awaiting transfer and on its progress in reducing the jail backlog.

CENTER FOR COMMUNITY TRANSITIONS/CONTRACT AND REPORT
SECTION 16C.3.  The Department of Public Safety may continue to contract with The Center for Community Transitions, Inc., a nonprofit corporation, for the purchase of prison beds for minimum security female inmates during the 2013‑2015 fiscal biennium. The Center for Community Transitions, Inc., shall report by February 1 of each year to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety and the Senate Appropriations Committee on Justice and Public Safety on the annual cost per inmate and the average daily inmate population compared to bed capacity using the same methodology as that used by the Department of Public Safety.

INMATE MEDICAL COSTS
SECTION 16C.4.(a)  The Department of Public Safety shall reimburse those providers and facilities providing approved inmate medical services outside the correctional facility the lesser amount of either a rate of seventy percent (70%) of the provider's then‑current prevailing charge or two times the then‑current Medicaid rate for any given service. The Department shall have the right to audit any given provider to determine the actual prevailing charge to ensure compliance with this provision.
This section does apply to vendors providing services that are not billed on a fee‑for‑service basis, such as temporary staffing. Nothing in this section shall preclude the Department from contracting with a provider for services at rates that provide greater documentable cost avoidance for the State than do the rates contained in this section or at rates that are less favorable to the State but that will ensure the continued access to care.
SECTION 16C.4.(b)  The Department of Public Safety 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 Public Safety must utilize other facilities and services to provide health care services to inmates, the Department shall make reasonable efforts to make use of hospitals or other providers with which it has a contract or, if none is reasonably available, hospitals with available capacity or other health care facilities in a region to accomplish that goal. The Department shall make reasonable efforts to equitably distribute inmates among all hospitals or other appropriate health care facilities.
SECTION 16C.4.(c)  The Department of Public Safety shall report to the Joint Legislative Oversight Committee on Justice and Public Safety and the Chairs of the House of Representative Appropriations Subcommittee on Justice and Public Safety and the Senate Appropriations Committee on Justice and Public Safety no later than November 1, 2013, and quarterly thereafter on:
(1)	The percentage of the total inmates requiring hospitalization or hospital services who receive that treatment at each hospital.
(2)	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.
(3)	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.
(4)	The volume of services provided by community medical providers that are emergent cases requiring hospital admissions and emergent cases not requiring hospital admissions.
(5)	The volume of inpatient medical services provided to Medicaid‑eligible inmates, the cost of treatment, and the estimated savings of paying the nonfederal portion of Medicaid for the services.
(6)	The status of the Division's efforts to contract with hospitals to provide secure wards in each of the State's five prison regions.

ANNUAL REPORT ON SAFEKEEPERS
SECTION 16C.5.  The Department of Public Safety shall report by October 1 of each year to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on county prisoners housed in the State prison system pursuant to safekeeping orders under G.S. 162‑39(b) to avoid security risks in county jails or due to insufficient or inadequate county facilities. The report shall include:
(1)	The number of safekeepers currently housed by the Department.
(2)	A list of the facilities where safekeepers are housed and the population of safekeepers by facility.
(3)	The average length of stay by a safekeeper in one of those facilities.
(4)	The amount paid by counties for housing and extraordinary medical care of safekeepers.
(5)	A list of the counties in arrears for safekeeper payments owed to the Department at the end of the fiscal year.

STATEWIDE MISDEMEANANT CONFINEMENT PROGRAM
SECTION 16C.6.(a)  G.S. 148‑10.4(e) reads as rewritten:
"(e)	Operating and Administrative Expenses. – Five percent (5%) of the monthly receipts collected and credited to the Statewide Misdemeanant Confinement Fund, not to exceed the sum of one million dollars ($1,000,000) annually, shall be transferred on a monthly basis to the Sheriffs' Association to be used to support the Program and for administrative and operating expenses of the Association and its staff. One percent (1%) of the monthly receipts collected and credited to the Statewide Misdemeanant Confinement Fund shall be transferred on a monthly basis to the General Fund to be allocated to the Division of Adult Correction for its administrative and operating expenses for the Program."
SECTION 16C.6.(b)  The North Carolina Sheriffs' Association shall report by October 1 of each year to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and the Joint Legislative Oversight Committee on Justice and Public Safety on the Statewide Misdemeanant Confinement Program. The report shall include the following with respect to the prior fiscal year:
(1)	Revenue collected by the Statewide Misdemeanant Confinement Program.
(2)	The cost of housing prisoners by county under the Program.
(3)	The cost of transporting prisoners by county under the Program.
(4)	Personnel costs by county.
(5)	Inmate medical care costs by county.
(6)	The number of counties that volunteer to house inmates under the Program.
(7)	The administrative costs paid to the Sheriffs' Association and to the Department of Public Safety.

INMATE CONSTRUCTION PROGRAM
SECTION 16C.7.  Notwithstanding G.S. 66‑58 or any other provision of law, during the 2013‑2015 fiscal biennium, the State Construction Office may, wherever feasible, utilize inmates in the custody of the Division of Adult Correction of the Department of Public Safety through the Inmate Construction Program for repair and renovation projects on State‑owned facilities, with priority given to Department of Public Safety construction projects.

REPORT ON PROBATION AND PAROLE CASELOADS
SECTION 16C.10.  Article 13 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑707.1.  Report on probation and parole caseloads.
(a)	The Department of Public Safety shall report by March 1 of each year to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Oversight Committee on Justice and Public Safety on caseload averages for probation and parole officers. The report shall include:
(1)	Data on current caseload averages and district averages for probation/parole officer positions.
(2)	Data on current span of control for chief probation officers.
(3)	An analysis of the optimal caseloads for these officer classifications.
(4)	The number and role of paraprofessionals in supervising low‑risk caseloads.
(5)	The process of assigning offenders to an appropriate supervision level based on a risk/needs assessment.
(6)	Data on cases supervised solely for the collection of court‑ordered payments.
(b)	The Department of Public Safety shall report by March 1 of each year to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Oversight Committee on Justice and Public Safety on the following:
(1)	The number of sex offenders enrolled on active and passive GPS monitoring.
(2)	The caseloads of probation officers assigned to GPS‑monitored sex offenders.
(3)	The number of violations.
(4)	The number of absconders.
(5)	The projected number of offenders to be enrolled by the end of the fiscal year."

PAROLE ELIGIBILITY REPORT/MUTUAL AGREEMENT PAROLE PROGRAM/MEDICAL RELEASE PROGRAM
SECTION 16C.11.(a)  The Post‑Release Supervision and Parole Commission shall, with the assistance of the North Carolina Sentencing and Policy Advisory Commission and the Department of Public Safety, analyze the amount of time each inmate who is eligible for parole on or before July 1, 2014, has served compared to the time served by offenders under Structured Sentencing for comparable crimes. The Commission shall determine if the person has served more time in custody than the person would have served if sentenced to the maximum sentence under the provisions of Article 81B of Chapter 15A of the General Statutes. The "maximum sentence," for the purposes of this section, shall be calculated as set forth in subsection (b) of this section.
SECTION 16C.11.(b)  For the purposes of this section, the following rules apply for the calculation of the maximum sentence:
(1)	The offense upon which the person was convicted shall be classified as the same felony class as the offense would have been classified if committed after the effective date of Article 81B of Chapter 15A of the General Statutes.
(2)	The minimum sentence shall be the maximum number of months in the presumptive range of minimum durations in Prior Record Level VI of G.S. 15A‑1340.17(c) for the felony class determined under subdivision (1) of this subsection. The maximum sentence shall be calculated using G.S. 15A‑1340.17(d), (e), or (e1).
(3)	If a person is serving sentences for two or more offenses that are concurrent in any respect, then the offense with the greater classification shall be used to determine a single maximum sentence for the concurrent offenses. The fact that the person has been convicted of multiple offenses may be considered by the Commission in making its determinations under subsection (a) of this section.
SECTION 16C.11.(c)  The Post‑Release Supervision and Parole Commission shall report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety, the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, and the Chairs of the Senate Appropriations Committee on Justice and Public Safety by April 1, 2014. The report shall include the following: the class of the offense for which each parole‑eligible inmate was convicted and whether an inmate had multiple criminal convictions. The Commission shall reinitiate the parole review process for each offender who has served more time than that person would have under Structured Sentencing as provided by subsections (a) and (b) of this section.
The Commission shall also report on the number of parole‑eligible inmates reconsidered in compliance with this section and the number who were actually paroled.
SECTION 16C.11.(d)  Article 13 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑707.2.  Mutual agreement parole program report; medical release program report.
(a)	The Department of Public Safety and the Post‑Release Supervision and Parole Commission shall report by March 1 of each year to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety and to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on the number of inmates enrolled in the mutual agreement parole program, the number completing the program and being paroled, and the number who enrolled but were terminated from the program. The information should be based on the previous calendar year.
(b)	The Department of Public Safety and the Post‑Release Supervision and Parole Commission shall report by March 1 of each year to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, to the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on the number of inmates proposed for release, considered for release, and granted release under Chapter 84B of Chapter 15A of the General Statutes, providing for the medical release of inmates who are either permanently and totally disabled, terminally ill, or geriatric."

REPORT ON TREATMENT FOR EFFECTIVE COMMUNITY SUPERVISION
SECTION 16C.12.  The Division of Community Corrections shall report by March 1 of each year to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on the status of the Treatment for Effective Community Supervision (TECS) program. The report shall include the following information:
(1)	The amount of funds carried over from the prior fiscal year.
(2)	The dollar amount and purpose of contracts awarded to vendors for the current fiscal year.
(3)	An update on efforts to ensure that all counties make use of the electronic reporting system, including the number of counties submitting offender participation via the system.
(4)	An analysis of offender participation data received, including data on each program's utilization, capacity, and completion rates.
(5)	The number of offenders served by each contracted vendor.
(6)	The outcome measures for program participants, including the rates of recidivism, employment status, and educational progress of participants.

JUSTICE REINVESTMENT ACT/LIMITED AUTHORITY TO RECLASSIFY VACANT POSITIONS
SECTION 16C.13.(a)  Notwithstanding any other provision of law, subject to the approval of the Director of the Budget, the Secretary of Public Safety may reclassify vacant positions within the Department to create up to 30 new field services specialist or chief probation/parole officer positions in order to meet the increasing caseloads resulting from the implementation of the Justice Reinvestment Act of 2011, S.L. 2011‑192, as amended.
SECTION 16C.13.(b)  The Department of Public Safety shall report to the Chairs of the Senate Appropriations Committee on Justice and Public Safety and the House Appropriations Subcommittee on Justice and Public Safety by March 1, 2014, on the following:
(1)	The position number, position type, salary, and position location of each new position created under the authority of this section.
(2)	The position number, position type, fund code, and position location of each vacant position used to create new positions under the authority of this section.

REPORT ON USE OF BROADEN ACCESS FOR COMMUNITY TREATMENT PROGRAM FUNDS
SECTION 16C.14.  The Division of Community Corrections shall report by September 1, 2015, and September 1, 2016, to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety and to the Chairs of the Senate Appropriations Committee on Justice and Public Safety on the status of the Broaden Access for Community Treatment Program. The report shall include the following information:
(1)	The amount of funds carried over from the prior fiscal year.
(2)	The dollar amount and purpose of contracts awarded to vendors for the current fiscal year.
(3)	An analysis of offender participation data received, including data on each program's utilization, capacity, and completion rates.
(4)	The number of offenders served by each contracted vendor.
(5)	The outcome measures for program participants, including the rates of recidivism, employment status, and educational progress of participants.

REQUIRE THAT ALL INMATES IN THE CUSTODY OF THE DIVISION OF ADULT CORRECTION OF THE DEPARTMENT OF PUBLIC SAFETY BE TESTED FOR HIV INFECTION
SECTION 16C.15.(a)  Article 2 of Chapter 148 of the General Statutes is amended by adding a new section to read:
"§ 148‑19.2.  Mandatory HIV testing.
Each person sentenced to imprisonment and committed to the custody of the Division of Adult Correction of the Department of Public Safety shall be tested to determine whether the person is HIV positive.
Each inmate who has not previously tested positive for HIV shall also be tested:
(1)	Not less than once every four years from the date of that inmate's initial testing.
(2)	Prior to the inmate's release from the custody of the Division of Adult Correction, except that testing is not mandatory prior to the release of an inmate who has been tested within one year of the inmate's release date.
In each case, the results of the test shall be reported to the inmate. If an inmate tests positive for HIV, that inmate shall be referred to public health officials for counseling."
SECTION 16C.15.(b)  This section becomes effective July 1, 2013. All inmates in the custody of the Division of Adult Correction on July 1, 2013, who have not previously been tested for HIV shall be tested by October 1, 2013.

ELECTRONIC MONITORING FEE
SECTION 16C.16.(a)  G.S. 15A‑1343(c2) reads as rewritten:
"(c2)	Electronic Monitoring Device Fees. – Any person placed on house arrest with electronic monitoring under subsection (b1) of this section shall pay a fee of ninety dollars ($90.00) for the electronic monitoring device and a daily fee in an amount that reflects the actual cost of providing the electronic monitoring. The court may exempt a person from paying the fees only for good cause and upon motion of the person placed on house arrest with electronic monitoring. The court may require that the fees be paid in advance or in a lump sum or sums, and a probation officer may require payment by those methods if the officer is authorized by subsection (g) of this section to determine the payment schedule. The fees must be paid to the clerk of court for the county in which the judgment was entered or the deferred prosecution agreement was filed. Fees collected under this subsection for the electronic monitoring device shall be transmitted to the State for deposit into the State's General Fund. The daily fees collected under this subsection shall be remitted to the Department of Public Safety to cover the costs of providing the electronic monitoring."
SECTION 16C.16.(b)  This section becomes effective August 1, 2013, and applies to persons placed on house arrest with electronic monitoring on or after that date.

SUBPART XVI‑D. DIVISION OF JUVENILE JUSTICE

ANNUAL EVALUATION OF COMMUNITY PROGRAMS AND MULTIPLE PURPOSE GROUP HOMES
SECTION 16D.1.  Subpart B of Part 3 of Article 13 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑811.  Annual evaluation of community programs and multiple purpose group homes.
The Department of Public Safety shall conduct an annual evaluation of the community programs and of multipurpose group homes. In conducting the evaluation of each of these, the Department shall consider whether participation in each program results in a reduction of court involvement among juveniles. The Department shall also determine whether the programs are achieving the goals and objectives of the Juvenile Justice Reform Act, S.L. 1998‑202.
The Department shall report the results of the evaluation to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety by March 1 of each year."

JUVENILE CRIME PREVENTION COUNCIL FUNDS
SECTION 16D.2.(a)  Subpart F of Part 3 of Article 13 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑852.  Department of Public Safety to report on Juvenile Crime Prevention Council grants.
(a)	On or before February 1 of each year, the Department of Public Safety shall submit to the Chairs of the Joint Legislative Commission on Governmental Operations and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety a list of the recipients of the grants awarded, or preapproved for award, from funds appropriated to the Department for local Juvenile Crime Prevention Council (JCPC) grants, including the following information:
(1)	The amount of the grant awarded.
(2)	The membership of the local committee or council administering the award funds on the local level.
(3)	The type of program funded.
(4)	A short description of the local services, programs, or projects that will receive funds.
(5)	Identification of any programs that received grant funds at one time but for which funding has been eliminated by the Department.
(6)	The number of at‑risk, diverted, and adjudicated juveniles served by each county.
(7)	The Department's actions to ensure that county JCPCs prioritize funding for dispositions of intermediate and community‑level sanctions for court‑adjudicated juveniles under minimum standards adopted by the Department.
(8)	The total cost for each funded program, including the cost per juvenile and the essential elements of the program.
(b)	On or before February 1 of each year, the Department of Public Safety shall send to the Fiscal Research Division of the Legislative Services Commission an electronic copy of the list and information required under subsection (a) of this section."
SECTION 16D.2.(b)  Of the funds appropriated by this act for the 2013‑2015 fiscal biennium to the Department of Public Safety for Juvenile Crime Prevention Council grants, the sum of one hundred twenty‑one thousand six hundred dollars ($121,600) for the 2013‑2014 fiscal year and the sum of one hundred twenty‑one thousand six hundred dollars ($121,600) for the 2014‑2015 fiscal year shall be transferred to Project Challenge North Carolina, Inc., to be used for the continued support of Project Challenge programs throughout the State.

YOUTH DEVELOPMENT CENTER ANNUAL REPORT
SECTION 16D.3.  Subpart B of Part 3 of Article 13 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑810.  Youth Development Center annual report.
The Department of Public Safety shall report by October 1 of each year to the Chairs of the House of Representatives and Senate Appropriations Subcommittees on Justice and Public Safety, the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety, and the Fiscal Research Division of the Legislative Services Commission on the Youth Development Center (YDC) population, staffing, and capacity in the preceding fiscal year. Specifically, the report shall include all of the following:
(1)	The on‑campus population of each YDC, including the county the juveniles are from.
(2)	The housing capacity of each YDC.
(3)	A breakdown of staffing for each YDC, including number, type of position, position title, and position description.
(4)	The per‑bed and average daily population cost for each facility.
(5)	The operating cost for each facility, including personnel and nonpersonnel items.
(6)	A brief summary of the treatment model, education, services, and plans for reintegration into the community offered at each facility.
(7)	The average length of stay in the YDCs.
(8)	The number of incidents of assaults and attacks on staff at each facility."

JUVENILE FACILITY MONTHLY COMMITMENT REPORT
SECTION 16D.4.  Subpart C of Part 3 of Article 13 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑822.  Juvenile facility monthly commitment report.
The Department of Public Safety shall report electronically on the first day of each month to the Fiscal Research Division regarding each juvenile correctional facility and the average daily population for the previous month. The report shall include (i) the average daily population for each detention center and (ii) the monthly summary of the Committed Youth Report."

LIMIT USE OF COMMUNITY PROGRAM FUNDS
SECTION 16D.5.(a)  Funds appropriated in this act to the Department of Public Safety for the 2013‑2015 fiscal biennium for community program contracts that are not required for or used for community program contracts shall only be used for the following:
(1)	Other statewide residential programs that provide Level 2 intermediate dispositional alternatives for juveniles.
(2)	Statewide community programs that provide Level 2 intermediate dispositional alternatives for juveniles.
(3)	Regional programs that are collaboratives of two or more Juvenile Crime Prevention Councils which provide Level 2 intermediate dispositional alternatives for juveniles.
(4)	The Juvenile Crime Prevention Council grants fund to be used for the Level 2 intermediate dispositional alternatives for juveniles listed in G.S. 7B‑2506(13) through (23).
SECTION 16D.5.(b)  Under no circumstances shall funds appropriated by this act to the Department of Public Safety for the 2013‑2015 fiscal biennium for community programs be used for staffing, operations, maintenance, or any other expenses of youth development centers or detention facilities.
SECTION 16D.5.(c)  The Department of Public Safety shall submit an electronic report by October 1, 2013, and a second electronic report by October 1, 2014, on all expenditures made from the miscellaneous contract line in Fund Code 1230 to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and the Fiscal Research Division. The report shall include all of the following: an itemized list of the contracts that have been executed, the amount of each contract, the date the contract was executed, the purpose of the contract, the number of juveniles that will be served and the manner in which they will be served, the amount of money transferred to the Juvenile Crime Prevention Council fund, and an itemized list of grants allocated from the funds transferred to the Juvenile Crime Prevention Council fund.

MULTIPURPOSE GROUP HOME
SECTION 16D.6.  Of the funds appropriated in this act to the Department of Public Safety for the Division of Juvenile Justice for the 2013‑2015 fiscal biennium, the sum of five hundred fifty thousand dollars ($550,000) for the 2013‑2014 fiscal year and the sum of five hundred fifty thousand dollars ($550,000) for the 2014‑2015 fiscal year shall be used to continue operating a multipurpose group home in Craven County.

ADMINISTRATION OF JUVENILE JUSTICE DIVISION 
SECTION 16D.7.(a)  G.S. 143B‑600(b) reads as rewritten:
"(b)	The powers and duties of the deputy secretaries, commissioners, directors, and the divisions of the Department shall be subject to the direction and control of the Secretary of Public Safety."
SECTION 16D.7.(b)  G.S. 143B‑806(b), as amended by Section 5 of S.L. 2013‑289, reads as rewritten:
"(b)	The Secretary shall have the following powers and duties and may delegate those powers and duties to the appropriate deputy secretary, commissioner, or director within the Department of Public Safety:
…."
SECTION 16D.7.(c)  G.S. 153A‑221.1 reads as rewritten:
"§ 153A‑221.1.  Standards and inspections.
The legal responsibility of the Division of Juvenile Justice of the Department of Public Safety for State services to county juvenile detention homes under this Article is hereby confirmed and shall include the following: development of State standards under the prescribed procedures; inspection; consultation; technical assistance; and training.
The Secretary of Health and Human Services, in consultation with the  Secretary of Public Safety, shall also develop standards under which a local jail may be approved as a holdover facility for not more than five calendar days pending placement in a juvenile detention home which meets State standards, providing the local jail is so arranged that any child placed in the holdover facility cannot converse with, see, or be seen by the adult population of the jail while in the holdover facility. The personnel responsible for the administration of a jail with an approved holdover facility shall provide close supervision of any child placed in the holdover facility for the protection of the child."

STATE FUNDS MAY BE USED AS FEDERAL MATCHING FUNDS
SECTION 16D.8.  Funds appropriated in this act to the Department of Public Safety for each fiscal year of the 2013‑2015 fiscal biennium 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 Public Safety regarding the criteria for awarding federal funds. The Office of State Budget and Management, the Governor's Crime Commission, and the Department of Public Safety shall report to the Chairs of the Senate Appropriations Committee on Justice and Public Safety, the House of Representatives Appropriations Subcommittee on Justice and Public Safety, 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 2013‑2014 fiscal year, the amount of funds anticipated for the 2014‑2015 fiscal year, and the allocation of funds by program and purpose.

DOBBS YOUTH DEVELOPMENT CENTER KITCHEN REPAIRS
SECTION 16D.9.  The Department of Public Safety shall ensure that the kitchen facility at the Dobbs Youth Development Center is operational by October 1, 2013.

PART XVII. DEPARTMENT OF JUSTICE

ANNUAL REPORTING ON ATTORNEY ACTIVITY
SECTION 17.1.(a)  Beginning on August 1, 2014, and every year thereafter, the Attorney General shall report on the work of Department of Justice attorneys during the previous year. The reports required by this section shall be filed with the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, with the Chairs of the Senate Appropriations Committee on Justice and Public Safety, with the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety, and with the Fiscal Research Division as follows:
(1)	Litigation. – A report reflecting the amount of time spent by each attorney on litigation. The report shall include the following information:
a.	The amount of time spent working directly on civil litigation in a trial court, administrative forum, or appellate court for each specific State agency, board, commission, official, or other client.
b.	The amount of time spent working directly on civil litigation in a trial court, administrative forum, or appellate court involving cases in which there is not a specific State agency, board, commission, official, or other client named as a defendant.
c.	The amount of time spent working on criminal cases at the trial or appellate level.
(2)	Other work. – A report reflecting the amount of time spent by each attorney providing legal services that did not directly involve litigation. The report shall include the following information:
a.	The amount of time spent providing legal services not directly involving litigation for each specific State agency, board, commission, or other client.
b.	The amount of time spent providing legal services for local government bodies, officials, and citizens.
(3)	Billing. – A report reflecting the amount billed to each State agency, board, commission, or other client as required by G.S. 114‑8.2.
SECTION 17.1.(b)  Reports required by this section shall not include detailed information about the work of individual attorneys but shall instead include only summary information about Department of Justice attorney activity during the relevant period, which shall (i) be set forth using commonly employed measures of central tendency and (ii) which shall highlight and explain extreme deviations from applicable norms.

ANNUAL CRIME LAB REPORT
SECTION 17.2.  Beginning on October 1, 2013, and yearly thereafter, the Attorney General shall report on the work of the North Carolina State Crime Laboratory during the previous fiscal year. The reports required by this section shall be filed with the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety and with the Fiscal Research Division. Each report shall include at least the following:
(1)	Information about the workload of the Laboratory during the previous fiscal year, including the number of submissions, identified by forensic discipline, received at each location of the Laboratory.
(2)	Information about the number of cases completed in the previous fiscal year, identified by forensic discipline, at each location of the Laboratory.
(3)	A breakdown by county of the number of submissions received by the Laboratory in the previous fiscal year.
(4)	An average estimate of the dollar and time cost to perform each type of procedure and analysis performed by the Laboratory.

DEVELOPMENT OF TRAINING PROGRAM ON PROPER PROCEDURES FOR SUBMISSION OF EVIDENCE TO THE CRIME LAB
SECTION 17.3.(a)  The North Carolina State Crime Laboratory, in conjunction with the University of North Carolina School of Government and the Conference of District Attorneys, shall develop a training curriculum for district attorneys that shall include, but not be limited to, instruction on fundamentals of Laboratory forensic science disciplines, the Laboratory's electronic information system, and the Laboratory's case management guidelines. In order to ensure that it will be practicable to require all district attorneys in the State to receive the training in the future, the program shall be (i) designed with the time and resource constraints of district attorneys in mind and (ii) designed in a way that makes the program suitable for regional distribution and distribution through distance learning facilities at community colleges.
SECTION 17.3.(b)  No later than October 1, 2013, the North Carolina State Crime Laboratory shall report its progress on developing the training program to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, to the Chairs of the Senate Appropriations Committee on Justice and Public Safety, to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety, and to the Fiscal Research Division.

USE OF TOXICOLOGY ANALYSIS FUNDS
SECTION 17.4.  If the Attorney General determines that it is not appropriate to outsource toxicology cases due to legal or fiscal concerns involving analyst testimony, funds appropriated in this act for that purpose shall be reallocated to increase toxicology analysis capabilities within the North Carolina State Crime Laboratory.

NO HIRING OF SWORN STAFF POSITIONS FOR THE NORTH CAROLINA STATE CRIME LABORATORY
SECTION 17.5.  The Department of Justice shall not hire sworn personnel to fill vacant positions in the North Carolina State Crime Laboratory. Nothing in this section shall be construed to require the termination of sworn personnel, but as vacant positions in the State Laboratory are filled, they shall be filled only with nonsworn personnel. Nothing in this section shall be construed to affect North Carolina State Crime Laboratory personnel who are sworn and employed by the Laboratory as of the effective date of this section and who continue to meet the sworn status retention standards mandated by the NC Criminal Justice Education and Standards Commission.

REMOVE THE NORTH CAROLINA STATE CRIME LABORATORY FROM THE STATE BUREAU OF INVESTIGATION
SECTION 17.6.(a)  The North Carolina State Crime Laboratory and the State DNA Database and Databank are hereby transferred from the State Bureau of Investigation and shall be relocated elsewhere within the Department of Justice, as determined by the Attorney General.
SECTION 17.6.(b)  No later than July 1, 2014, the Department of Justice shall begin budgeting the North Carolina State Crime Laboratory in a fund code that is separate from the remainder of the Department of Justice.
SECTION 17.6.(c)  Chapter 114 of the General Statutes is amended by adding a new Article to read:
"Article 9.
North Carolina State Crime Laboratory."
SECTION 17.6.(d)  G.S. 114‑16 through G.S. 114‑16.2 are recodified as G.S. 114‑60 through G.S. 114‑62 under Article 9 of Chapter 114 of the General Statutes, as created by subsection (c) of this section.
SECTION 17.6.(e)  The following statutes are amended by deleting "SBI" wherever it appears and substituting "North Carolina State Crime Laboratory": G.S. 15A‑146 and G.S. 15A‑148.
SECTION 17.6.(f)  The following statutes are amended by deleting "SBI" wherever it appears and substituting "Crime Laboratory": G.S. 15A‑266.3, 15A‑266.3A, 15A‑266.5, 15A‑266.6, 15A‑266.7, 15A‑266.8, 15A‑266.9, 15A‑266.12, 15A‑267, and 15A‑268.
SECTION 17.6.(g)  G.S. 7A‑304(a) reads as rewritten:
"(a)	In every criminal case in the superior or district court, wherein the defendant is convicted, or enters a plea of guilty or nolo contendere, or when costs are assessed against the prosecuting witness, the following costs shall be assessed and collected. No costs may be assessed when a case is dismissed. Only upon entry of a written order, supported by findings of fact and conclusions of law, determining that there is just cause, the court may (i) waive costs assessed under this section or (ii) waive or reduce costs assessed under subdivisions (7) or (8) of this section.
…
(7)	For the services of the North Carolina State Crime Laboratory facilities, the district or superior court judge shall, upon conviction, order payment of the sum of six hundred dollars ($600.00) to be remitted to the Department of Justice for support of the Laboratory. This cost shall be assessed only in cases in which, as part of the investigation leading to the defendant's conviction, the laboratories have performed DNA analysis of the crime, tests of bodily fluids of the defendant for the presence of alcohol or controlled substances, or analysis of any controlled substance possessed by the defendant or the defendant's agent.
(8)	For the services of any crime laboratory facility operated by a local government or group of local governments, the district or superior court judge shall, upon conviction, order payment of the sum of six hundred dollars ($600.00) to be remitted to the general fund of the local governmental unit that operates the laboratory to be used for law enforcement purposes. The cost shall be assessed only in cases in which, as part of the investigation leading to the defendant's conviction, the laboratory has performed DNA analysis of the crime, test of bodily fluids of the defendant for the presence of alcohol or controlled substances, or analysis of any controlled substance possessed by the defendant or the defendant's agent. The costs shall be assessed only if the court finds that the work performed at the local government's laboratory is the equivalent of the same kind of work performed by the North Carolina State Crime Laboratory under subdivision (7) of this subsection.
(9)	For the support and services of the State DNA Database and DNA Databank, the sum of two dollars ($2.00). This amount is annually appropriated to the Department of Justice for this purpose. Notwithstanding the provisions of subsection (e) of this section, this cost does not apply to infractions.
…."
SECTION 17.6.(h)  G.S. 14‑269.1(5) reads as rewritten:
"(5)	By ordering such weapon turned over to the North Carolina State Crime Laboratory's weapons reference library for official use by that agency. The Laboratory shall maintain a record and inventory of all such weapons received."
SECTION 17.6.(i)  G.S. 15A‑266.2 reads as rewritten:
"§ 15A‑266.2.  Definitions.
As used in this Article, unless another meaning is specified or the context clearly requires otherwise, the following terms have the meanings specified:
…
(1e)	Crime Laboratory. – The North Carolina State Crime Laboratory of the Department of Justice.
…
	…
(8)	"State DNA Database" means the Crime Laboratory's DNA identification record system to support law enforcement. It is administered by the Crime Laboratory and provides DNA records to the FBI for storage and maintenance in CODIS. The Crime Laboratory's DNA Database system is the collective capability provided by computer software and procedures administered by the Crime Laboratory to store and maintain DNA records related to: forensic casework; convicted offenders and arrestees required to provide a DNA sample under this Article; persons required to register as sex offenders under G.S. 14‑208.7; unidentified persons or body parts; missing persons; relatives of missing persons; and anonymous DNA profiles used for forensic validation, forensic protocol development, or quality control purposes or establishment of a population statistics database for use by criminal justice agencies."
SECTION 17.6.(j)  G.S. 15A‑266.3A(h) reads as rewritten:
"(h)	The Crime Laboratory shall remove a person's DNA record, and destroy any DNA biological samples that may have been retained, from the State DNA Database and DNA Databank if both of the following are determined pursuant to subsection (i) of this section:
…."
SECTION 17.6.(k)  G.S. 15A‑269(b1) reads as rewritten:
"(b1)	If the court orders DNA testing, such testing shall be conducted by a Crime Laboratory‑approved testing facility, mutually agreed upon by the petitioner and the State and approved by the court. If the parties cannot agree, the court shall designate the testing facility and provide the parties with reasonable opportunity to be heard on the issue."
SECTION 17.6.(l)  G.S. 114‑12 reads as rewritten:
"§ 114‑12.  Bureau of Investigation created; powers and duties.
In order to secure a more effective administration of the criminal laws of the State, to prevent crime, and to procure the speedy apprehension of criminals, the Attorney General shall set up in the Department of Justice a division to be designated as the State Bureau of Investigation. The Division shall have charge of and administer the agencies and activities herein set up for the identification of criminals, for their apprehension, and investigation and preparation of evidence to be used in criminal courts; and the said Bureau shall have charge of investigation of criminal matters herein especially mentioned, and of such other crimes and criminal procedure as the Governor may direct.
In the personnel of the Bureau shall be included a sufficient number of persons of training and skill in the investigation of crime and in the preparation of evidence as to be of service to local enforcement officers, under the direction of the Governor, in criminal matters of major importance.
The State radio system shall be made available to the Bureau Laboratory for use in its work."
SECTION 17.6.(m)  G.S. 114‑16, as recodified by subsection (d) of this section, reads as rewritten:
"§ 114‑60.  Laboratory and clinical facilities; employment of criminologists; services of scientists, etc., employed by State; radio system.
In the Department of Justice there shall be provided laboratory facilities for the analysis of evidences of crime, including the determination of presence, quantity and character of poisons, the character of bloodstains, microscopic and other examination material associated with the commission of crime, examination and analysis of projectiles of ballistic imprints and records which might lead to the determination or identification of criminals, the examination and identification of fingerprints, and other evidence leading to the identification, apprehension, or conviction of criminals. A sufficient number of persons skilled in such matters shall be employed to render a reasonable service to the public through the criminal justice system and to the criminal justice system in the discharge of their duties.
The laboratory and clinical facilities of the institutions of the State, both educational and departmental, shall be made available to the Laboratory, and scientists and doctors now working for the State through its institutions and departments may be called upon by the Governor to aid the Laboratory in the evaluation, preparation, and preservation of evidence in which scientific methods are employed, and a reasonable fee may be allowed by the Governor for such service.
"
SECTION 17.6.(n)  G.S. 114‑16.2, as recodified by subsection (d) of this section, reads as rewritten:
"§ 114‑62.  North Carolina State Crime Laboratory Ombudsman.
The position of ombudsman is created in the North Carolina State Crime Laboratory within the North Carolina Department of Justice. The primary purpose of this position shall be to work with defense counsel, prosecutorial agencies, criminal justice system stakeholders, law enforcement officials, and the general public to ensure all processes, procedures, practices, and protocols at the State Crime Laboratory are consistent with State and federal law, best forensic law practices, and in the best interests of justice in this State. The ombudsman shall mediate complaints brought to the attention of the ombudsman between the Crime Laboratory and defense counsel, prosecutorial agencies, law enforcement agencies, and the general public. The ombudsman shall ensure all criminal justice stakeholders and the general public are aware of the availability, responsibilities, and role of the ombudsman and shall regularly attend meetings of the Conferences of the District Attorneys, District and Superior Court Judges, Public Defenders, the Advocates for Justice, and Bar Criminal Law Sections. The ombudsman shall make recommendations on a regular basis to the Director of the State Crime  Laboratory and the Attorney General of North Carolina as to policies, procedures, practices, and training of employees needed at the Laboratory to ensure compliance with State and federal law, best forensic law practices, and to resolve any meritorious systemic complaints received by the ombudsman."
SECTION 17.6.(o)  G.S. 132‑1.4(b)(1) reads as rewritten:
"(1)	"Records of criminal investigations" means all records or any information that pertains to a person or group of persons that is compiled by public law enforcement agencies for the purpose of attempting to prevent or solve violations of the law, including information derived from witnesses, laboratory tests, surveillance, investigators, confidential informants, photographs, and measurements. The term also includes any records, worksheets, reports, or analyses prepared or conducted by the North Carolina State Crime Laboratory at the request of any public law enforcement agency in connection with a criminal investigation."
SECTION 17.6.(p)  Article 1 of Chapter 114 of the General Statutes is amended by adding a new section to read:
"§ 114‑8.6.  Designation of State Crime Laboratory as Internet Crimes Against Children affiliated agency.
The Attorney General shall designate the North Carolina State Crime Laboratory as a North Carolina Internet Crimes Against Children (ICAC) affiliated agency."
SECTION 17.6.(q)  Article 9 of Chapter 114 of the General Statutes, as enacted by Section 17.6(c) of this section, is amended by adding a new section to read:
"§ 114‑63.  Transfer of personnel.
The Director of the North Carolina State Crime Laboratory shall have authority to transfer employees of the Crime Laboratory from one Crime Laboratory location in the State to another as the Director may deem necessary. When any member of the Crime Laboratory is transferred from one location to another for the convenience of the Crime Laboratory, or otherwise than upon the request of the employee, the Crime Laboratory shall be responsible for transporting the household goods, furniture, and personal effects of the employee and members of his or her household."

OPERATING EFFICIENCIES REDUCTION
SECTION 17.7.(a)  Funds appropriated or allocated to the North Carolina State Crime Laboratory shall not be reduced in order to meet any portion of the operating efficiencies reduction set forth in this act.
SECTION 17.7.(b)  No later than October 1, 2013, the Department of Justice shall report to the Fiscal Research Division on the reductions that were made to meet the operating efficiencies reduction to the Department of Justice set forth in this act. The report shall include an itemized list of any position eliminations, including the position numbers, titles, and budgeted salaries of each eliminated position.

PLAN FOR TRANSFERRING ASSISTANT ATTORNEY GENERAL POSITIONS TO THE DEPARTMENTS THEY SERVE
SECTION 17.8.  The Joint Legislative Oversight Committee on Justice and Public Safety shall develop a plan for transferring Assistant Attorney General positions and related staff to the State agencies they serve and shall report the plan, along with any other findings and recommendations, to the General Assembly prior to its reconvening for the 2014 Regular Session. The plan shall include an analysis of and recommendations concerning all of the following:
(1)	The Assistant Attorney General positions to be transferred and the State agencies to which each should be transferred.
(2)	Which duties should be performed by the transferred attorneys and which should continue to be performed by the Attorney General's office.
(3)	Methods for resolving conflicts between the Attorney General's office and transferred attorneys, where the opportunity for conflict exists.
(4)	Statutory changes that would be needed to accomplish the changes recommended in the report.
(5)	Costs or cost‑savings associated with each potential method of accomplishing the position transfers, including costs associated with any recommended reduction in force, with any fiscal consequences resulting from applicable provisions of the State Personnel Act, and with any new personnel needs that will arise as a result of the transfers.
(6)	Any additional matters that the Committee deems relevant.

PART XVIII. JUDICIAL DEPARTMENT

SUBPART XVIII‑A. OFFICE OF INDIGENT DEFENSE SERVICES

OFFICE OF INDIGENT DEFENSE SERVICES REPORT
SECTION 18A.1.  The Office of Indigent Defense Services shall report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety, the House of Representatives Appropriations Subcommittee on Justice and Public Safety, and the Senate Appropriations Committee on Justice and Public Safety by March 1 of each year on:
(1)	The volume and cost of cases handled in each district by assigned counsel or public defenders;
(2)	Actions taken by the Office to improve the cost‑effectiveness and quality of indigent defense, including the capital case program;
(3)	Plans for changes in rules, standards, or regulations in the upcoming year; and
(4)	Any recommended changes in law or funding procedures that would assist the Office in improving the management of funds expended for indigent defense services, including any recommendations concerning the feasibility and desirability of establishing regional public defender offices.

OFFICE OF INDIGENT DEFENSE SERVICES EXPANSION FUNDS
SECTION 18A.2.  The Judicial Department, Office of Indigent Defense Services, may use up to the sum of two million one hundred fifty thousand dollars ($2,150,000) in appropriated funds during the 2013‑2015 fiscal biennium for the expansion of existing offices currently providing legal services to the indigent population under the oversight of the Office of Indigent Defense Services, for the creation of new public defender offices within existing public defender programs, or for the establishment of regional public defender programs. Notwithstanding the defender districts established by G.S. 7A‑498.7, the Office of Indigent Defense Services may use a portion of these funds to create positions within existing public defender programs to handle cases in adjacent counties or districts. These funds may be used to create up to 50 new attorney positions and 25 new support staff positions during the 2013‑2015 fiscal biennium and for the salaries, benefits, equipment, and related expenses for these new positions in both years of the biennium. Positions creation will be staggered across the two years of the biennium. Prior to using funds for this purpose, the Office of Indigent Defense Services shall report to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety and the Senate Appropriations Committee on Justice and Public Safety on the proposed expansion.

OFFICE OF INDIGENT DEFENSE SERVICES/STATE MATCH FOR GRANTS
SECTION 18A.3.  Notwithstanding G.S. 143C‑6‑9, during the 2013‑2015 fiscal biennium, the Office of Indigent Defense Services may use the sum of up to fifty thousand dollars ($50,000) from funds available to provide the State matching funds needed to receive grant funds. Prior to using funds for this purpose, the Office shall report to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Senate Appropriations Committee on Justice and Public Safety, and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds.

PRIVATE ASSIGNED COUNSEL
SECTION 18A.4.  The Office of Indigent Defense Services shall issue a request for proposals from private law firms or not‑for‑profit legal representation organizations for the provision of all classes of legal cases for indigent clients in all judicial districts. The Office of Indigent Defense Services shall report on the issuance of this request for proposals to the Joint Legislative Commission on Governmental Operations by October 1, 2013. In cases where the proposed contract can provide representation services more efficiently than current costs and ensure that the quality of representation is sufficient to meet applicable constitutional and statutory standards, the Office of Indigent Defense Services shall use private assigned counsel funds to enter into contracts for this purpose. In selecting contracts, the Office of Indigent Defense Services shall consider the cost‑effectiveness of the proposed contract. Disputes regarding the ability of the potential contractor to provide effective representation for clients served by the contract shall be determined by the senior resident superior court judge for the district.

SENIOR RESIDENT SUPERIOR COURT JUDGES SHALL APPOINT PUBLIC DEFENDERS
SECTION 18A.5.(a)  G.S. 7A‑498.7(b) reads as rewritten:
"(b)	For each new term, and to fill any vacancy, public defenders shall be appointed from a list of not less than two and not more than three names nominated by written ballot of the attorneys resident in the defender district who are licensed to practice law in North Carolina. The balloting shall be conducted pursuant to rules adopted by the Commission on Indigent Defense Services. The appointment shall be made by the senior resident superior court judge of the superior court district or set of districts as defined in G.S. 7A‑41.1 that includes the county or counties of the defender district for which the public defender is being appointed."
SECTION 18A.5.(b)  This section becomes effective on August 1, 2013.

RESOLVING CONFLICTS OF INTEREST IN PUBLIC DEFENDER OFFICES
SECTION 18A.6.(a)  G.S. 7A‑498.7 is amended by adding a new subsection to read:
"(f1)	In cases in which a public defender determines that a conflict of interest exists in the office, whenever practical, rather than obtaining private assigned counsel to resolve the conflict, the public defender may request the appointment of an assistant public defender from another office of public defender in the region to resolve the conflict."
SECTION 18A.6.(b)  The Office of Indigent Defense Services shall report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety by October 1, 2013, and by October 1 of each year thereafter, on (i) the number of conflicts of interest that arose in public defender offices during the prior fiscal year and the cost to the State in private assigned counsel funds to resolve them and (ii) beginning with the October 1, 2014, report, the number of conflicts of interest resolved through the authorization in G.S. 7A‑498.7(f1) during the prior fiscal year and the savings to the State in private assigned counsel funds as a result.

SUBPART XVIII‑B. ADMINISTRATIVE OFFICE OF THE COURTS

GRANT FUNDS
SECTION 18B.1.  Notwithstanding G.S. 143C‑6‑9, the Administrative Office of the Courts may use up to the sum of one million five hundred thousand dollars ($1,500,000) from funds available to the Department to provide the State match needed in order to receive grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Senate Appropriations Committee on Justice and Public Safety, and to the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds.

COLLECTION OF WORTHLESS CHECK FUNDS
SECTION 18B.2.  Notwithstanding the provisions of G.S. 7A‑308(c), the Judicial Department may use any balance remaining in the Collection of Worthless Checks Fund on June 30, 2013, for the purchase or repair of office or information technology equipment during the 2013‑2014 fiscal year. Prior to using any funds under this section, the Judicial Department shall report to the Joint Legislative Commission on Governmental Operations, the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Chairs of the Senate Appropriations Committee on Justice and Public Safety, and the Office of State Budget and Management on the equipment to be purchased or repaired and the reasons for the purchases.

CONFERENCE OF DISTRICT ATTORNEYS GRANT FUND
SECTION 18B.4.  Of the funds appropriated in this act to the Judicial Department, the sum of five hundred thousand dollars ($500,000) in the 2013‑2014 fiscal year shall be allocated to the Conference of District Attorneys and shall be used to establish a grant fund to provide district attorneys across the State with the resources to obtain toxicology analysis from local hospitals on persons charged with driving while impaired whose conduct did not result in serious injury or death to others. The Conference of District Attorneys shall report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety by October 1, 2014, on the expenditure of these funds.

MODIFY LEGAL AID DOMESTIC VIOLENCE REPORT
SECTION 18B.5.  G.S. 7A‑474.20 reads as rewritten:
"§ 7A‑474.20.  Records and reports.
The established legal services programs shall keep appropriate records and make periodic reports, as requested, to the North Carolina State Bar. The North Carolina State Bar shall report annually to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety on the amount of the funds disbursed and the use of the funds by each legal services program receiving funds. The report to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety shall be made by January 15 of each year beginning January 15, 2006."

FAMILY COURT PROGRAMS
SECTION 18B.6.  The Administrative Office of the Courts shall provide direction and oversight to the existing family court programs in order to ensure that each district with a family court program is utilizing best practices and is working effectively and efficiently in the disposition of domestic and juvenile cases. The Administrative Office of the Courts shall report on its efforts in this regard and the results of those efforts to the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Senate Appropriations Committee on Justice and Public Safety, and the Joint Legislative Oversight Committee on Justice and Public Safety by March 1, 2014.

MAGISTRATE DISTRIBUTION FORMULA
SECTION 18B.7.  The Administrative Office of the Courts, in consultation with the National Center for State Courts, shall study its current formula for the distribution of magistrates across the State and consider revisions to that formula designed to take into account regional differences, travel considerations, and the potential for regionalizing magistrates. The Administrative Office of the Courts shall report its findings and recommendations to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety by February 1, 2014.

MINUTES MAINTAINED BY THE CLERK OF SUPERIOR COURT TO RECORD CONVENING AND ADJOURNMENT OR RECESS OF BOTH DISTRICT AND SUPERIOR COURT
SECTION 18B.8.(a)  G.S. 7A‑109(a1) reads as rewritten:
"(a1)	The minutes maintained by the clerk pursuant to this subsection shall record the date and time of each convening of district and superior court, as well as the date and time of each recess or adjournment of district and superior court with no further business before the court."
SECTION 18B.8.(b)  The Administrative Office of the Courts shall provide on a monthly basis the records of the dates and times of convening, recess, and adjournment of district and superior court collected by each clerk of superior court pursuant to G.S. 7A‑109, as amended by subsection (a) of this section, to the National Center for State Courts, the Fiscal Research Division, and the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety.
SECTION 18B.8.(c)  This section becomes effective January 1, 2014.

JUDICIAL FORMS SHALL CONFORM TO JUSTICE REINVESTMENT CHANGES
SECTION 18B.9.  The Administrative Office of the Courts shall ensure that all judicial forms being used in the General Court of Justice conform to all of the changes made in the law with the enactment of the Justice Reinvestment Act of 2011, S.L. 2011‑192, as amended.

CRIMINAL CASE INFORMATION SYSTEM FOR PUBLIC DEFENDERS
SECTION 18B.10.  The Administrative Office of the Courts, in consultation with the Office of Indigent Defense Services, shall use the sum of three hundred fifty thousand dollars ($350,000) in funds available to the Administrative Office of the Courts for the 2013‑2015 fiscal biennium and the sum of three hundred fifty thousand dollars ($350,000) in funds available to the Office of Indigent Defense Services for the 2013‑2015 fiscal biennium to develop or acquire and to implement a component of the Department's criminal case information system for use by public defenders no later than February 1, 2015. The Administrative Office of the Courts shall make an interim report on the development and implementation of this system by February 1, 2014, and a final report on the completed implementation of the system by March 1, 2015.

CLERKS' ACCEPTANCE OF CREDIT CARDS
SECTION 18B.11.  The Judicial Department shall begin implementation of a cost‑effective system for the acceptance of credit card payments for court costs to clerks of superior court as provided under this section. The Judicial Department shall select at least five counties that do not currently accept credit card payments, representing a balance of the urban and rural areas of the State, and shall implement the system in those counties by January 1, 2014. The Department shall report on this implementation and on its plans for implementing the system in the remaining counties of the State to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety by February 1, 2014. The Department shall implement the system in the remaining counties of the State by January 1, 2015, and shall report on this statewide implementation to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety by February 1, 2015.

AMEND CLASS 3 MISDEMEANOR SENTENCES
SECTION 18B.13.(a)  G.S. 15A‑1340.23 reads as rewritten:
"§ 15A‑1340.23.  Punishment limits for each class of offense and prior conviction level.
(a)	Offense Classification; Default Classifications. – The offense classification is as specified in the offense for which the sentence is being imposed. If the offense is a misdemeanor for which there is no classification, it is as classified in G.S. 14‑3.
(b)	Fines. – Any judgment that includes a sentence of imprisonment may also include a fine. Additionally, when the defendant is other than an individual, the judgment may consist of a fine only. If a community punishment is authorized, the judgment may consist of a fine only. Unless otherwise provided for a specific offense, the maximum fine that may be imposed is two hundred dollars ($200.00) for a Class 3 misdemeanor and one thousand dollars ($1,000) for a Class 2 misdemeanor. The amount of the fine for a Class 1 misdemeanor and a Class A1 misdemeanor is in the discretion of the court.
(c)	Punishment for Each Class of Offense and Prior Conviction Level; Punishment Chart Described. – Unless otherwise provided for a specific offense, the authorized punishment for each class of offense and prior conviction level is as specified in the chart below. Prior conviction levels are indicated by the Roman numerals placed horizontally on the top of the chart. Classes of offenses are indicated by the Arabic numbers placed vertically on the left side of the chart. Each grid on the chart contains the following components:
(1)	A sentence disposition or dispositions: "C" indicates that a community punishment is authorized; "I" indicates that an intermediate punishment is authorized; and "A" indicates that an active punishment is authorized; and
(2)	A range of durations for the sentence of imprisonment: any sentence within the duration specified is permitted.

PRIOR CONVICTION LEVELS
MISDEMEANOR
	OFFENSE		LEVEL I	LEVEL II	LEVEL III
	CLASS	No Prior	One to Four Prior	Five or More
		Convictions	Convictions	Prior Convictions

	A1	1‑60 days C/I/A	1‑75 days C/I/A	1‑150 days C/I/A
	1	1‑45 days C	1‑45 days C/I/A	1‑120 days C/I/A
	2	1‑30 days C	1‑45 days C/I	1‑60 days C/I/A
	3	1‑10 days C		1‑20 days C/I/A.
			1‑15 days C
			if one to three prior convictions
			1‑15 days C/I if four prior convictions
(d)	Fine Only for Certain Class 3 Misdemeanors. – Unless otherwise provided for a specific offense, the judgment for a person convicted of a Class 3 misdemeanor who has no more than three prior convictions shall consist only of a fine."
SECTION 18B.13.(b)  This section becomes effective December 1, 2013. Prosecutions for offenses committed before the effective date of this section are not abated or affected by this section, and the statutes that would be applicable but for this section remain applicable to those prosecutions.

RECLASSIFICATION OF CERTAIN CLASS 1 AND CLASS 2 MISDEMEANORS AS CLASS 3 MISDEMEANORS
SECTION 18B.14.(a)  G.S. 14‑106 reads as rewritten:
"§ 14‑106.  Obtaining property in return for worthless check, draft or order.
Every person who, with intent to cheat and defraud another, shall obtain money, credit, goods, wares or any other thing of value by means of a check, draft or order of any kind upon any bank, person, firm or corporation, not indebted to the drawer, or where he has not provided for the payment or acceptance of the same, and the same be not paid upon presentation, shall be guilty of a Class 3 misdemeanor. The giving of the aforesaid worthless check, draft, or order shall be prima facie evidence of an intent to cheat and defraud."
SECTION 18B.14.(b)  G.S. 14‑107(d) reads as rewritten:
"(d)	A violation of this section is a Class I felony if the amount of the check or draft is more than two thousand dollars ($2,000). If the amount of the check or draft is two thousand dollars ($2,000) or less, a violation of this section is a misdemeanor punishable as follows:
(1)	Except as provided in subdivision (3) or (4) of this subsection, the person is guilty of a Class 3 misdemeanor. Provided, however, if the person has been convicted three times of violating this section, the person shall on the fourth and all subsequent convictions (i) be punished as for a Class 1 misdemeanor and (ii) be ordered, as a condition of probation, to refrain from maintaining a checking account or making or uttering a check for three years.
(2)	Repealed by Session Laws 1999‑408, s. 1.
(3)	If the check or draft is drawn upon a nonexistent account, the person is guilty of a Class 1 misdemeanor.
(4)	If the check or draft is drawn upon an account that has been closed by the drawer, or that the drawer knows to have been closed by the bank or depository, prior to time the check is drawn, the person is guilty of a Class 1 misdemeanor."
SECTION 18B.14.(c)  G.S. 14‑167 reads as rewritten:
"§ 14‑167.  Failure to return hired property.
Any person who shall rent or hire, any horse, mule or other like animal, or any buggy, wagon, truck, automobile, or other vehicle, aircraft, motor, trailer, appliance, equipment, tool, or other thing of value, and who shall willfully fail to return the same to the possession of the person, firm or corporation from whom such property has been rented or hired at the expiration of the time for which such property has been rented or hired, shall be guilty of a Class 3 misdemeanor.
If the value at the time of the rental or hiring of the truck, automobile, or other motor vehicle that is not returned is in excess of four thousand dollars ($4,000), the person who rented or hired it and failed to return it shall be guilty of a Class H felony."
SECTION 18B.14.(d)  G.S. 14‑168.1 reads as rewritten:
"§ 14‑168.1.  Conversion by bailee, lessee, tenant or attorney‑in‑fact.
Every person entrusted with any property as bailee, lessee, tenant or lodger, or with any power of attorney for the sale or transfer thereof, who fraudulently converts the same, or the proceeds thereof, to his own use, or secretes it with a fraudulent intent to convert it to his own use, shall be guilty of a Class 3 misdemeanor.
If, however, the value of the property converted or secreted, or the proceeds thereof, is in excess of four hundred dollars ($400.00), every person so converting or secreting it is guilty of a Class H felony. In all cases of doubt the jury shall, in the verdict, fix the value of the property converted or secreted."
SECTION 18B.14.(e)  G.S. 14‑168.4(a) reads as rewritten:
"(a)	It shall be a Class 3 misdemeanor for any person to fail to return rented property with intent to defeat the rights of the owner, which is rented pursuant to a written rental agreement in which there is an option to purchase the property, after the date of termination provided in the agreement has occurred or, if the termination date is the occurrence of a specified event, then that such event has in fact occurred."
SECTION 18B.14.(f)  G.S. 20‑28(a) reads as rewritten:
"(a)	Driving While License Revoked. – Except as provided in subsection (a1) of this section, any person whose drivers license has been revoked who drives any motor vehicle upon the highways of the State while the license is revoked is guilty of a Class 3 misdemeanor unless the person's license was originally revoked for an impaired driving revocation, in which case the person is guilty of a Class 1 misdemeanor. Upon conviction, the person's license shall be revoked for an additional period of one year for the first offense, two years for the second offense, and permanently for a third or subsequent offense.
If the person's license was originally revoked for an impaired driving revocation, the court may order as a condition of probation that the offender abstain from alcohol consumption and verify compliance by use of a continuous alcohol monitoring system, of a type approved by the Division of Adult Correction of the Department of Public Safety, for a minimum period of 90 days.
The restoree of a revoked drivers license who operates a motor vehicle upon the highways of the State without maintaining financial responsibility as provided by law shall be punished as for driving without a license."
SECTION 18B.14.(g)  G.S. 20‑35 reads as rewritten:
"§ 20‑35.  Penalties for violating Article; defense to driving without a license.
(a)	Penalty. – Except as otherwise provided in subsection (a1) of this section, a violation of this Article is a Class 2 misdemeanor unless a statute in the Article sets a different punishment for the violation. If a statute in this Article sets a different punishment for a violation of the Article, the different punishment applies.
(a1)	The following offenses are Class 3 misdemeanors:
(1)	Failure to obtain a license before driving a motor vehicle, in violation of G.S. 20‑7(a).
(2)	Failure to carry a valid license while driving a motor vehicle, in violation of G.S. 20‑7(a).
(3)	Failure to comply with license restrictions, in violation of G.S. 20‑7(e).
(4)	Operation of a motor vehicle with an expired license, in violation of G.S. 20‑7(f).
(5)	Failure to notify the Division of Motor Vehicles of an address change for a drivers license within 60 days after the change occurs, in violation of G.S. 20‑7.1.
(6)	Permitting a motor vehicle owned by the person to be operated by an unlicensed person, in violation of G.S. 20‑34.
…."
SECTION 18B.14.(h)  G.S. 20‑176 reads as rewritten:
"§ 20‑176.  Penalty for misdemeanor or infraction.
(a)	Violation of a provision of Part 9, 10, 10A, or 11 of this Article is an infraction unless the violation is specifically declared by law to be a misdemeanor or felony. Violation of the remaining Parts of this Article is a misdemeanor unless the violation is specifically declared by law to be an infraction or a felony.
(b)	Unless a specific penalty is otherwise provided by law, a person found responsible for an infraction contained in this Article may be ordered to pay a penalty of not more than one hundred dollars ($100.00).
(c)	Except as otherwise provided in subsection (c2) of this section, and unless a specific penalty is otherwise provided by law, a person convicted of a misdemeanor contained in this Article is guilty of a Class 2 misdemeanor. A punishment is specific for purposes of this subsection if it contains a quantitative limit on the term of imprisonment or the amount of fine a judge can impose.
(c1)	Notwithstanding any other provision of law, no person convicted of a misdemeanor for the violation of any provision of this Chapter except G.S. 20‑28(a) and (b), G.S. 20‑141(j), G.S. 20‑141.3(b) and (c), G.S. 20‑141.4, or a second or subsequent conviction of G.S. 20‑138.1 shall be imprisoned in the State prison system unless the person previously has been imprisoned in a local confinement facility, as defined by G.S. 153A‑217(5), for a violation of this Chapter.
(c2)	A person who does any of the following is guilty of a Class 3 misdemeanor:
(1)	Fails to carry the registration card in the vehicle, in violation of G.S. 20‑57(c).
(2)	Fails to sign the vehicle registration card, in violation of G.S. 20‑57(c).
(3)	Fails to notify the Division of Motor Vehicles of an address change for a vehicle registration card within 60 days after the change occurs, in violation of G.S. 20‑67.
(d)	For purposes of determining whether a violation of an offense contained in this Chapter constitutes negligence per se, crimes and infractions shall be treated identically."
SECTION 18B.14.(i)  G.S. 20‑111 reads as rewritten:
"§ 20‑111.  Violation of registration provisions.
It shall be unlawful for any person to commit any of the following acts:
(1)	To drive a vehicle on a highway, or knowingly permit a vehicle owned by that person to be driven on a highway, when the vehicle is not registered with the Division in accordance with this Article or does not display a current registration plate. Violation of this subdivision is a Class 3 misdemeanor.
(2)	To display or cause or permit to be displayed or to have in possession any registration card, certificate of title or registration number plate knowing the same to be fictitious or to have been canceled, revoked, suspended or altered, or to willfully display an expired license or registration plate on a vehicle knowing the same to be expired. Violation of this subdivision is a Class 3 misdemeanor.(3)	The giving, lending, or borrowing of a license plate for the purpose of using same on some motor vehicle other than that for which issued shall make the giver, lender, or borrower guilty of a Class 3 misdemeanor. Where license plate is found being improperly used, such plate or plates shall be revoked or canceled, and new license plates must be purchased before further operation of the motor vehicle.
(4)	To fail or refuse to surrender to the Division, upon demand, any title certificate, registration card or registration number plate which has been suspended, canceled or revoked as in this Article provided. Service of the demand shall be in accordance with G.S. 20‑48.
(5)	To use a false or fictitious name or address in any application for the registration of any vehicle or for a certificate of title or for any renewal or duplicate thereof, or knowingly to make a false statement or knowingly to conceal a material fact or otherwise commit a fraud in any such application. A violation of this subdivision shall constitute a Class 1 misdemeanor.
(6)	To give, lend, sell or obtain a certificate of title for the purpose of such certificate being used for any purpose other than the registration, sale, or other use in connection with the vehicle for which the certificate was issued. Any person violating the provisions of this subdivision shall be guilty of a Class 2 misdemeanor."
SECTION 18B.14.(j)  G.S. 20‑127(d) reads as rewritten:
"(d)	Violations. – A person who does any of the following commits a Class 3 misdemeanor:
(1)	Applies tinting to the window of a vehicle that is subject to a safety inspection in this State and the resulting tinted window does not meet the window tinting restrictions set in this section.
(2)	Drives on a highway or a public vehicular area a vehicle that has a window that does not meet the window tinting restrictions set in this section."
SECTION 18B.14.(k)  G.S. 20‑141(j1) reads as rewritten:
"(j1)	A person who drives a vehicle on a highway at a speed that is either more than 15 miles per hour more than the speed limit established by law for the highway where the offense occurred or over 80 miles per hour is guilty of a Class 3 misdemeanor."
SECTION 18B.14.(l)  G.S. 20‑313(a) reads as rewritten:
"(a)	On or after July 1, 1963, any owner of a motor vehicle registered or required to be registered in this State who shall operate or permit such motor vehicle to be operated in this State without having in full force and effect the financial responsibility required by this Article shall be guilty of a Class 3 misdemeanor."
SECTION 18B.14.(m)  G.S. 113‑135(a) reads as rewritten:
"(a)	Any person who violates any provision of this Subchapter or any rule adopted by the Marine Fisheries Commission or the Wildlife Resources Commission, as appropriate, pursuant to the authority of this Subchapter, is guilty of a misdemeanor except that punishment for violation of the rules of the Wildlife Resources Commission is limited as set forth in G.S. 113‑135.1. Fishing without a license in violation of G.S. 113‑174.1(a) or G.S. 113‑270.1B(a) is punishable as a Class 3 misdemeanor. Otherwise, unless a different level of punishment is elsewhere set out, anyone convicted of a misdemeanor under this section is punishable as follows:
(1)	For a first conviction, as a Class 3 misdemeanor.
(2)	For a second or subsequent conviction within three years, as a Class 2 misdemeanor."
SECTION 18B.14.(n)  This section becomes effective December 1, 2013. Prosecutions for offenses committed before the effective date of this section are not abated or affected by this section, and the statutes that would be applicable but for this section remain applicable to those prosecutions.

RECLASSIFY CERTAIN VIOLATIONS OF THE BOATING SAFETY ACT FROM CLASS 3 MISDEMEANORS TO INFRACTIONS
SECTION 18B.15.(a)  G.S. 75A‑6.1(c) reads as rewritten:
"(c)	Violation of the navigation rules specified in subsection (a) of this section shall constitute an infraction as provided in G.S. 14‑3.1."
SECTION 18B.15.(b)  G.S. 75A‑13.1 reads as rewritten:
"§ 75A‑13.1.  Skin and scuba divers.
(a)	No person shall engage in skin diving or scuba diving in the waters of this State that are open to boating, or assist in such diving, without displaying a diver's flag from a mast, buoy, or other structure at the place of diving; and no person shall display such flag except when diving operations are under way or in preparation.
(b)	The diver's flag shall be square, not less than 12 inches on a side, and shall be of red background with a diagonal white stripe, of a width equal to one fifth of the flag's height, running from the upper corner adjacent to the mast downward to the opposite outside corner.
(c)	No operator of a vessel under way in the waters of this State shall permit the vessel to approach closer than 50 feet to any structure from which a diver's flag is then being displayed, except where the flag is so positioned as to constitute an unreasonable obstruction to navigation; and no person shall engage in skin diving or scuba diving or display a diver's flag in any locality that will unreasonably obstruct vessels from making legitimate navigational use of the water.
(d)	A person who violates a provision of this section is responsible for an infraction as provided in G.S. 14‑3.1."
SECTION 18B.15.(c)  G.S. 75A‑13.3(c3) reads as rewritten:
"(c3)	A vessel livery shall provide the operator of a leased personal watercraft with basic safety instruction prior to allowing the operation of the leased personal watercraft. "Basic safety instruction" shall include direction on how to safely operate the personal watercraft and a review of the safety provisions of this section. A vessel livery that fails to provide basic safety instruction is responsible for an infraction as provided in G.S. 14‑3.1."
SECTION 18B.15.(d)  G.S. 75A‑17(f) reads as rewritten:
"(f)	Vessels operated on the waters of this State shall slow to a no‑wake speed when passing within 100 feet of a law enforcement vessel that is displaying a flashing blue light unless the vessel is in a narrow channel. Vessels operated on the waters of this State in a narrow channel shall slow to a no‑wake speed when passing within 50 feet of a law enforcement vessel that is displaying a flashing blue light. A person who violates this subsection is responsible for an infraction as provided in G.S. 14‑3.1."
SECTION 18B.15.(e)  G.S. 75A‑18(a) reads as rewritten:
"(a)	Except as otherwise provided, a person who violates a provision of this Article or who violates a rule adopted under authority of this Chapter is responsible for an infraction as provided in G.S. 14‑3.1. This limitation shall not apply in a case where a more severe penalty is prescribed in this Chapter."
SECTION 18B.15.(f)  This section becomes effective December 1, 2013. Prosecutions for offenses committed before the effective date of this section are not abated or affected by this section, and the statutes that would be applicable but for this section remain applicable to those prosecutions.

EXPUNCTION FEES
SECTION 18B.16.(a)  G.S. 15A‑145(e) reads as rewritten:
"(e)	A person who files a petition for expunction of a criminal record under this section must pay the clerk of superior court a fee of one hundred seventy‑five dollars ($175.00) at the time the petition is filed. Fees collected under this subsection are payable to the Administrative Office of the Courts. The clerk of superior court shall remit one hundred twenty‑two dollars and fifty cents ($122.50) of each fee to the North Carolina Department of Justice for the costs of criminal record checks performed in connection with processing petitions for expunctions under this section. The remaining fifty‑two dollars and fifty cents ($52.50) of each fee shall be retained by the Administrative Office of the Courts and used to pay the costs of processing petitions for expunctions under this section. This subsection does not apply to petitions filed by an indigent."
SECTION 18B.16.(b)  G.S. 15A‑145.1 is amended by adding a new subsection to read:
"(d)	A person who files a petition for expunction of a criminal record under this section must pay the clerk of superior court a fee of one hundred seventy‑five dollars ($175.00) at the time the petition is filed. Fees collected under this subsection are payable to the Administrative Office of the Courts. The clerk of superior court shall remit one hundred twenty‑two dollars and fifty cents ($122.50) of each fee to the North Carolina Department of Justice for the costs of criminal record checks performed in connection with processing petitions for expunctions under this section. The remaining fifty‑two dollars and fifty cents ($52.50) of each fee shall be retained by the Administrative Office of the Courts and used to pay the costs of processing petitions for expunctions under this section. This subsection does not apply to petitions filed by an indigent."
SECTION 18B.16.(c)  G.S. 15A‑145.2(d) reads as rewritten:
"(d)	A person who files a petition for expunction of a criminal record under this section must pay the clerk of superior court a fee of one hundred seventy‑five dollars ($175.00) at the time the petition is filed. Fees collected under this subsection are payable to the Administrative Office of the Courts. The clerk of superior court shall remit one hundred twenty‑two dollars and fifty cents ($122.50) of each fee to the North Carolina Department of Justice for the costs of criminal record checks performed in connection with processing petitions for expunctions under this section. The remaining fifty‑two dollars and fifty cents ($52.50) of each fee shall be retained by the Administrative Office of the Courts and used to pay the costs of processing petitions for expunctions under this section. This subsection does not apply to petitions filed by an indigent."
SECTION 18B.16.(d)  G.S. 15A‑145.3 is amended by adding a new subsection to read:
"(d)	A person who files a petition for expunction of a criminal record under this section must pay the clerk of superior court a fee of one hundred seventy‑five dollars ($175.00) at the time the petition is filed. Fees collected under this subsection are payable to the Administrative Office of the Courts. The clerk of superior court shall remit one hundred twenty‑two dollars and fifty cents ($122.50) of each fee to the North Carolina Department of Justice for the costs of criminal record checks performed in connection with processing petitions for expunctions under this section. The remaining fifty‑two dollars and fifty cents ($52.50) of each fee shall be retained by the Administrative Office of the Courts and used to pay the costs of processing petitions for expunctions under this section. This subsection does not apply to petitions filed by an indigent."
SECTION 18B.16.(e)  G.S. 15A‑145.4 is amended by adding a new subsection to read:
"(j)	A person who files a petition for expunction of a criminal record under this section must pay the clerk of superior court a fee of one hundred seventy‑five dollars ($175.00) at the time the petition is filed. Fees collected under this subsection are payable to the Administrative Office of the Courts. The clerk of superior court shall remit one hundred twenty‑two dollars and fifty cents ($122.50) of each fee to the North Carolina Department of Justice for the costs of criminal record checks performed in connection with processing petitions for expunctions under this section. The remaining fifty‑two dollars and fifty cents ($52.50) of each fee shall be retained by the Administrative Office of the Courts and used to pay the costs of processing petitions for expunctions under this section. This subsection does not apply to petitions filed by an indigent."
SECTION 18B.16.(f)  G.S. 15A‑146 is amended by adding a new subsection to read:
"(d)	A person charged with a crime that is dismissed pursuant to compliance with a deferred prosecution agreement and who files a petition for expunction of a criminal record under this section must pay the clerk of superior court a fee of one hundred seventy‑five dollars ($175.00) at the time the petition is filed. Fees collected under this subsection are payable to the Administrative Office of the Courts. The clerk of superior court shall remit one hundred twenty‑two dollars and fifty cents ($122.50) of each fee to the North Carolina Department of Justice for the costs of criminal record checks performed in connection with processing petitions for expunctions under this section. The remaining fifty‑two dollars and fifty cents ($52.50) of each fee shall be retained by the Administrative Office of the Courts and used to pay the costs of processing petitions for expunctions under this section. This subsection does not apply to petitions filed by an indigent."
SECTION 18B.16.(g)  The receipts generated by the fees imposed under this section are appropriated to the Administrative Office of the Courts and the Department of Justice for the 2013‑2014 fiscal year and for the 2014‑2015 fiscal year and may be used to assist with the cost of processing petitions for expunctions and conducting the criminal background checks required for expunctions. The Department of Justice may also use up to one million four hundred thousand dollars ($1,400,000) of the revenue generated by the fees appropriated to the Department of Justice under this section to create and support up to five new staff positions to help process petitions for expunction and conduct criminal record checks required for those petitions.
SECTION 18B.16.(h)  Article 5 of Chapter 15A of the General Statutes is amended by adding a new section to read:
"§ 15A‑160.  Reporting requirement.
The Department of Justice and the Administrative Office of the Courts shall report jointly to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety Oversight by September 1 of each year regarding expunctions. The report shall include all of the following information:
(1)	The number and types of expunctions granted during the fiscal year in which the report is made.
(2)	The number and type of expunctions granted each fiscal year for the five fiscal years preceding the date of the report.
(3)	A full accounting of how the agencies have spent the receipts generated by the expunction fees received during the fiscal year in which the report is made and for the five preceding fiscal years."
SECTION 18B.16.(i)  Subsections (a) through (f) of this section become effective September 1, 2013, and apply to petitions for expunctions filed on or after that date.

AMEND MOTION FEES
SECTION 18B.17.(a)  G.S. 7A‑305(f), as amended by Section 4(a) of S.L. 2013‑225, reads as rewritten:
"(f)	For the support of the General Court of Justice, the sum of twenty dollars ($20.00) shall accompany any filing of a notice of hearing on a motion not listed in G.S. 7A‑308 that is filed with the clerk. No costs shall be assessed to a notice of hearing on a motion containing as a sole claim for relief the taxing of costs, including attorneys' fees, to a motion filed pursuant to G.S. 1C‑1602 or G.S. 1C‑1603, or to a motion filed by a child support enforcement agency established pursuant to Part D of Title IV of the Social Security Act. No more than one fee shall be assessed for any motion for which a notice of hearing is filed, regardless of whether the hearing is continued, rescheduled, or otherwise delayed."
SECTION 18B.17.(b)  G.S. 7A‑306(g), as amended by Section 4(b) of S.L. 2013‑225,  reads as rewritten:
"(g)	For the support of the General Court of Justice, the sum of twenty dollars ($20.00) shall accompany any filing of a notice of hearing on a motion not listed in G.S. 7A‑308 that is filed with the clerk. No costs shall be assessed to a notice of hearing on a motion containing as a sole claim for relief the taxing of costs, including attorneys'  fees, or to a motion filed pursuant to G.S. 1C‑1602 or G.S. 1C‑1603. No more than one fee shall be assessed for any motion for which a notice of hearing is filed, regardless of whether the hearing is continued, rescheduled, or otherwise delayed."
SECTION 18B.17.(c)  G.S. 7A‑307(a)(4), as amended by Section 4(c) of S.L. 2013‑225, reads as rewritten:
"(4)	For the support of the General Court of Justice, the sum of twenty dollars ($20.00) shall accompany any filing of a notice of hearing on a motion not listed in G.S. 7A‑308 that is filed with the clerk. No costs shall be assessed to a notice of hearing on a motion containing as a sole claim for relief the taxing of costs, including attorneys' fees, or to a motion filed pursuant to G.S. 1C‑1602 or G.S. 1C‑1603. No more than one fee shall be assessed for any motion for which a notice of hearing is filed, regardless of whether the hearing is continued, rescheduled, or otherwise delayed."
SECTION 18B.17.(d)  This section becomes effective August 1, 2013, and applies to notices of hearing on a motion not listed in G.S. 7A‑308 filed on or after that date.

CRIMINAL JUSTICE EDUCATION AND STANDARDS COMMISSION COURT FEE
SECTION 18B.18.(a)  G.S. 7A‑304(a) reads as rewritten:
"(a)	In every criminal case in the superior or district court, wherein the defendant is convicted, or enters a plea of guilty or nolo contendere, or when costs are assessed against the prosecuting witness, the following costs shall be assessed and collected. No costs may be assessed when a case is dismissed. Only upon entry of a written order, supported by findings of fact and conclusions of law, determining that there is just cause, the court may (i) waive costs assessed under this section or (ii) waive or reduce costs assessed under subdivisions (7) or (8) of this section.
…
(3b)	For the services, staffing, and operations of the Criminal Justice Education and Standards Commission, the sum of two dollars ($2.00) to be remitted to the Department of Justice.…."
SECTION 18B.18.(b)  This section becomes effective August 1, 2013, and applies to all costs assessed or collected on or after that date.

COURT COSTS FOR SERVICES OF EXPERT WITNESS PROVIDING TESTIMONY ABOUT A CHEMICAL OR FORENSIC ANALYSIS AT TRIAL
SECTION 18B.19.(a)  G.S. 7A‑304(a) reads as rewritten:
"(a)	In every criminal case in the superior or district court, wherein the defendant is convicted, or enters a plea of guilty or nolo contendere, or when costs are assessed against the prosecuting witness, the following costs shall be assessed and collected. No costs may be assessed when a case is dismissed. Only upon entry of a written order, supported by findings of fact and conclusions of law, determining that there is just cause, the court may (i) waive costs assessed under this section or (ii) waive or reduce costs assessed under subdivision (7), (8), (11), or (12) of this section.
…
(11)	For the services of an expert witness employed by the North Carolina State Crime Laboratory who completes a chemical analysis pursuant to G.S. 20‑139.1 or a forensic analysis pursuant to G.S. 8‑58.20 and provides testimony about that analysis in a defendant's trial, the district or superior court judge shall, upon conviction of the defendant, order payment of the sum of six hundred dollars ($600.00) to be remitted to the Department of Justice for support of the State Crime Laboratory. This cost shall be assessed only in cases in which the expert witness provides testimony about the chemical or forensic analysis in the defendant's trial and shall be in addition to any cost assessed under subdivision (7) of this subsection.
(12)	For the services of an expert witness employed by a crime laboratory operated by a local government or group of local governments who completes a chemical analysis pursuant to G.S. 20‑139.1 or a forensic analysis pursuant to G.S. 8‑58.20 and provides testimony about that analysis in a defendant's trial, the district or superior court judge shall, upon conviction of the defendant, order payment of the sum of six hundred dollars ($600.00) to be remitted to the general fund of the local governmental unit that operates the laboratory to be used for local law enforcement. This cost shall be assessed only in cases in which the expert witness provides testimony about the chemical or forensic analysis in the defendant's trial and shall be in addition to any cost assessed under subdivision (8) of this subsection."
SECTION 18B.19.(b)  This section becomes effective August 1, 2013, and applies to fees assessed or collected on or after that date.

REIMBURSEMENT FOR USE OF PERSONAL VEHICLES
SECTION 18B.20.  Notwithstanding the provisions of G.S. 138‑6(a)(1), the Judicial Department, during the 2013‑2015 fiscal biennium, may elect to establish a per‑mile reimbursement rate for transportation by privately owned vehicles at a rate less than the business standard mileage rate set by the Internal Revenue Service.

STUDY USE AND COMPENSATION OF COURT REPORTERS
SECTION 18B.21.  The Administrative Office of the Courts, in consultation with the National Center for State Courts, shall study the most effective and efficient deployment of court reporters to produce timely records of court proceedings and the most appropriate and effective compensation for court reporters. The Administrative Office of the Courts shall report its findings and recommendations to the Chairs of the Joint Legislative Oversight Committee on Justice and Public Safety by February 1, 2014.
COMPENSATION OF COURT REPORTERS
SECTION 18B.21A.  The Administrative Office of the Courts shall set the limits on compensation and allowances of court reporters provided for in G.S. 7A‑95(e) and G.S. 7A‑198(f) during the 2013‑2015 fiscal biennium so that (i) the Administrative Office of the Courts pays no more than fifty percent (50%) of the per‑transcript‑page rate paid by the Administrative Office of the Courts during the 2011‑2013 fiscal biennium and (ii) the Office of Indigent Defense Services pays no more than fifty percent (50%) of the per‑transcript‑page rate paid by the Office of Indigent Defense Services during the 2011‑2013 fiscal biennium.

CONSOLIDATE DISTRICT COURT AND PROSECUTORIAL DISTRICTS 6A AND 6B/RESTRUCTURE SUPERIOR COURT, DISTRICT COURT, AND PROSECUTORIAL DISTRICTS 16A, 19B, AND 20A/AUTHORIZE ADDITIONAL DISTRICT COURT JUDGE FOR DISTRICT COURT DISTRICT 21
SECTION 18B.22.(a)  G.S. 7A‑41(a) reads as rewritten:
"(a)	The counties of the State are organized into judicial divisions and superior court districts, and each superior court district has the counties, and the number of regular resident superior court judges set forth in the following table, and for districts of less than a whole county, as set out in subsection (b) of this section:
Superior
Judicial	Court		No. of Resident
Division	District	Counties	Judges

First	1	Camden, Chowan,	2
		Currituck,
		Dare, Gates,
		Pasquotank,
		Perquimans
First	2	Beaufort, Hyde,	1
		Martin,
		Tyrrell, Washington
First	3A	Pitt	2
Second	3B	Carteret, Craven,	3
		Pamlico
Second	4A	Duplin, Jones,	1
		Sampson
Second	4B	Onslow	1
Second	5A	(part of New Hanover,	1
		part of Pender
		see subsection (b))
	5B	(part of New Hanover,	1
		part of Pender
		see subsection (b))
	5C	(part of New Hanover,	1
		see subsection (b))
First	6A	Halifax	1
First	6B	Bertie, Hertford,	1
		Northampton
First	7A	Nash	1
First	7B	(part of Wilson,	1
		part of Edgecombe,
		see subsection (b))
First	7C	(part of Wilson,	1
		part of Edgecombe,
		see subsection (b))
Second	8A	Lenoir and Greene	1
Second	8B	Wayne	1
Third	9	Franklin, Granville,	2
		Vance, Warren
Third	9A	Person, Caswell	1
Third	10A	(part of Wake,	1
		see subsection (b))
Third	10B	(part of Wake,	1
		see subsection (b))
Third	10C	(part of Wake,	1
		see subsection (b))
Third	10D	(part of Wake,	1
		see subsection (b))
Third	10E	(part of Wake,	1
		see subsection (b))
Third	10F	(part of Wake,	1
		see subsection (b))
Fourth	11A	Harnett,	1
		Lee
Fourth	11B	Johnston	1
Fourth	12A	(part of Cumberland,	1
		see subsection (b))
Fourth	12B	(part of Cumberland,	1
		see subsection (b))
Fourth	12C	(part of Cumberland,	2
		see subsection (b))
Fourth	13A	Bladen, Columbus	1
Fourth	13B	Brunswick	1
Third	14A	(part of Durham,	1
		see subsection (b))
Third	14B	(part of Durham,	3
		see subsection (b))
Third	15A	Alamance	2
Third	15B	Orange, Chatham	2
Fourth	16A	Anson, Richmond,
		Scotland, Hoke	2
Fourth	16B	Robeson	2
Fifth	17A	Rockingham	2
Fifth	17B	Stokes, Surry	2
Fifth	18A	(part of Guilford,	1
		see subsection (b))
Fifth	18B	(part of Guilford,	1
		see subsection (b))
Fifth	18C	(part of Guilford,	1
		see subsection (b))
Fifth	18D	(part of Guilford,	1
		see subsection (b))
Fifth	18E	(part of Guilford,	1
		see subsection (b))
Sixth	19A	Cabarrus	1
Fifth	19B	Montgomery, Randolph	1
Sixth	19C	Rowan	1
Fourth	19D	Moore	1
Sixth	20A		1
		Stanly
Sixth	20B	Union	2
Fifth	21A	(part of Forsyth,	1
		see subsection (b))
Fifth	21B	(part of Forsyth,	1
		see subsection (b))
Fifth	21C	(part of Forsyth,	1
		see subsection (b))
Fifth	21D	(part of Forsyth,	1
		see subsection (b))
Sixth	22A	Alexander, Iredell	2
Sixth	22B	Davidson, Davie	2
Fifth	23	Alleghany, Ashe,	1
		Wilkes, Yadkin
Eighth	24	Avery, Madison,	2
		Mitchell,
		Watauga, Yancey
Seventh	25A	Burke, Caldwell	2
Seventh	25B	Catawba	2
Seventh	26A	(part of Mecklenburg,	2
		see subsection (b))
Seventh	26B	(part of Mecklenburg,	3
		see subsection (b))
Seventh	26C	(part of Mecklenburg,	2
		see subsection (b))
Seventh	27A	Gaston	2
Seventh	27B	Cleveland, Lincoln	2
Eighth	28	Buncombe	2
Eighth	29A	McDowell,	1
		Rutherford
Eighth	29B	Henderson, Polk,	1
		Transylvania
Eighth	30A	Cherokee, Clay,	1
		Graham, Macon,
		Swain
Eighth	30B	Haywood, Jackson	1."
SECTION 18B.22.(c)  The two superior court judgeships established for Superior Court District 16A by subsection (a) of this section shall be filled by the superior court judge currently serving Superior Court District 16A who resides in Scotland County and by the superior court judge currently serving Superior Court District 20A who resides in Richmond County. The terms of those judges expire December 31, 2016, and successors shall be elected in the 2016 general election for eight‑year terms commencing January 1, 2017.
SECTION 18B.22.(e)  The superior court judgeship established for Superior Court District 20A by subsection (a) of this section shall be filled by the superior court judge currently serving Superior Court District 20A who resides in Stanly County. The term of that judge expires December 31, 2016, and a successor shall be elected in the 2016 general election for an eight‑year term commencing January 1, 2017.
SECTION 18B.22.(f)  G.S. 7A‑133(a) reads as rewritten:
"(a)	Each district court district shall have the numbers of judges as set forth in the following table:
District	Judges	County
–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––‑
1	5	Camden
		Chowan
		Currituck
		Dare
		Gates
		Pasquotank
		Perquimans
2	4	Martin
		Beaufort
		Tyrrell
		Hyde
		Washington
3A	5	Pitt
3B	6	Craven
		Pamlico
		Carteret
4	8	Sampson
		Duplin
		Jones
		Onslow
5	9	New Hanover
		Pender
		
6	4	Northampton
		Bertie
		Hertford
		Halifax
7	7	Nash
		Edgecombe
		Wilson
8	6	Wayne
		Greene
		Lenoir
9	4	Granville
		(part of Vance
		see subsection (b))
		Franklin
9A	2	Person
		Caswell
9B	2	Warren
		(part of Vance
		see subsection (b))
10	19	Wake
11	11	Harnett
		Johnston
		Lee
12	10	Cumberland
13	6	Bladen
		Brunswick
		Columbus
14	7	Durham
15A	4	Alamance
15B	5	Orange
		Chatham
16A	6	Scotland
		Hoke
		Anson
		Richmond
16B	5	Robeson
17A	3	Rockingham
17B	4	Stokes
		Surry
18	14	Guilford
19A	4	Cabarrus
19B	7	Montgomery
		Moore
		Randolph
19C	5	Rowan
20A	2	Stanly
				
20B	1	(part of Union
		see subsection (b))
20C	2	(part of Union
		see subsection (b))
20D	1	Union
21	11	Forsyth
22A	5	Alexander
		Iredell
22B	6	Davidson
		Davie
23	4	Alleghany
		Ashe
		Wilkes
		Yadkin
24	4	Avery
		Madison
		Mitchell
		Watauga
		Yancey
25	9	Burke
		Caldwell
		Catawba
26	21	Mecklenburg
27A	7	Gaston
27B	5	Cleveland
		Lincoln
28	7	Buncombe
29A	3	McDowell
		Rutherford
29B	4	Henderson
		Polk
		Transylvania
30	6	Cherokee
		Clay
		Graham
		Haywood
		Jackson
		Macon
		Swain."
SECTION 18B.22.(g)  The four district judgeships established for District Court District 6 by subsection (f) of this section shall be filled by:
(1)	The three district court judges currently serving District Court District 6A who reside in Halifax County whose terms expire December 31, 2016. Successors shall be elected in the 2016 general election for four‑year terms commencing January 1, 2017.
(2)	The district court judge currently serving District Court District 6B who resides in Northampton County whose term expires December 31, 2016. A successor shall be elected in the 2016 general election for a four‑year term commencing January 1, 2017.
SECTION 18B.22.(h)  The six district court judgeships established for District Court District 16A by subsection (f) of this section shall be filled by:
(1)	The district court judge currently serving District Court District 16A who resides in Scotland County whose term expires December 31, 2016.
(2)	The district court judge currently serving District Court District 20A who resides in Richmond County whose term expires December 31, 2016.
(3)	The district court judge currently serving District Court District 20A who resides in Anson County whose term expires December 31, 2016.
(4)	Election of three judges in the 2014 general election for four‑year terms commencing January 1, 2015.
SECTION 18B.22.(i)  The additional district court judgeship authorized for District Court District 21 by subsection (f) of this section shall be filled by election of a district court judge in the 2014 general election for a four‑year term commencing January 1, 2015.
SECTION 18B.22.(j)  The two district court judgeships established for District Court District 20A by subsection (f) of this section shall be filled by election of two district court judges in the 2014 general election for four‑year terms commencing January 1, 2015.
SECTION 18B.22.(k)  G.S. 7A‑60 reads as rewritten:
"§ 7A‑60.  District attorneys and prosecutorial districts.
(a)	The State shall be divided into prosecutorial districts, as shown in subsection (a1) of this section. There shall be a district attorney for each prosecutorial district, as provided in subsections (b) and (c) of this section who shall be a resident of the prosecutorial district for which elected. A vacancy in the office of district attorney shall be filled as provided in Article IV, Sec. 19 of the Constitution.
(a1)	The counties of the State are organized into prosecutorial districts, and each district has the counties and the number of full‑time assistant district attorneys set forth in the following table:
No. of Full‑Time
Prosecutorial	Asst. District
District	Counties	Attorneys
1	Camden, Chowan, Currituck,	11
Dare, Gates, Pasquotank,
Perquimans
2	Beaufort, Hyde, Martin,	8
Tyrrell, Washington
3A	Pitt	11
3B	Carteret, Craven, Pamlico	12
4	Duplin, Jones, Onslow,	18
Sampson
5	New Hanover, Pender	18
		6	Bertie, Halifax, Hertford,	10
Northampton
7	Edgecombe, Nash, Wilson	18
8	Greene, Lenoir, Wayne	14
9	Franklin, Granville,	10
	Vance, Warren	
9A	Person, Caswell	6
10	Wake	41
11A	Harnett, Lee	9
11B	Johnston	10
12	Cumberland	23
13	Bladen, Brunswick, Columbus	13
14	Durham	18
15A	Alamance	11
15B	Orange, Chatham	10
16A	Scotland, Hoke	7
16B	Robeson	12
16C	Anson, Richmond	6
17A	Rockingham	7
17B	Stokes, Surry	8
18	Guilford	32
19A	Cabarrus	9
19B	Montgomery, Randolph	9
19C	Rowan	8
19D	Moore	5
20A		5
	Stanly
20B	Union	10
21	Forsyth	25
22A	Alexander, Iredell	11
22B	Davidson, Davie	11
23	Alleghany, Ashe, Wilkes,	8
	Yadkin
24	Avery, Madison, Mitchell,	7
	Watauga, Yancey
25	Burke, Caldwell, Catawba	18
26	Mecklenburg	58
27A	Gaston	14
27B	Cleveland,	11
	Lincoln
28	Buncombe	14
29A	McDowell, Rutherford	7
29B	Henderson, Polk, Transylvania	8
30	Cherokee, Clay, Graham,	10
	Haywood, Jackson, Macon,
	Swain.
…."
SECTION 18B.22.(l)  The district attorney position established for Prosecutorial District 6 by subsection (k) of this section shall be filled by election in the 2014 general election for a four‑year term commencing January 1, 2015. The district attorney positions for current Prosecutorial Districts 6A and 6B shall expire December 31, 2014.
SECTION 18B.22.(n)  The district attorney position established for Prosecutorial District 20A by subsection (k) of this section shall be filled by election in the 2014 general election for a four‑year term commencing January 1, 2015.
SECTION 18B.22.(p)  The district attorney position established for Prosecutorial District 16C by subsection (k) of this section shall be filled by election in the 2014 general election for a four‑year term commencing January 1, 2015.
SECTION 18B.22.(q)  This section becomes effective January 1, 2015, except that those provisions of this section requiring election in the 2014 general election are effective to provide for those elections when they become law.

PART XIX. DEPARTMENT OF CULTURAL RESOURCES

CULTURAL RESOURCES TO FIND ALTERNATIVE FUNDING FOR STATE HISTORIC SITES
SECTION 19.1.  In an effort to reduce funding of the State's 27 Historic Sites, the Department of Cultural Resources shall find alternative funding sources to support these sites by actively seeking support from the following: (i) the local governments where these Historic Sites are located, (ii) the nonprofit groups associated with these Historic Sites, and (iii) other private sources.

ALLOW EXEMPTION TO RULE‑MAKING PROCESS FOR ESTABLISHING AND CHANGING ADMISSION AND ACTIVITY FEES AT STATE HISTORIC SITES, MUSEUMS, TRYON PALACE HISTORIC SITES AND GARDENS, AND THE U.S.S. NORTH CAROLINA BATTLESHIP
SECTION 19.2.(a)  G.S. 121‑7.3, as amended by S.L. 2013‑297, reads as rewritten:
"§ 121‑7.3.  Admission and related activity fees.
The Department of Cultural Resources may charge a reasonable admission and related activity fee to any historic site or museum administered by the Department. Admission and related activity fees collected under this section are receipts of the Department and shall be deposited in the appropriate special fund. The revenue collected pursuant to this section shall be used only for the individual historic site or museum where the receipts were generated. The Secretary may adopt rules necessary to carry out the provisions of this section. The Department is exempt from the requirements of Chapter 150B of the General Statutes when adopting, amending, or repealing rules for admission fees or related activity fees at historic sites and museums. The Department shall submit a report to the Joint Legislative Commission on Governmental Operations on the amount and purpose of a fee change within 30 days following its effective date."
SECTION 19.2.(b)  G.S. 143B‑71, as amended by S.L. 2013‑297, reads as rewritten:
"§ 143B‑71.  Tryon Palace Commission – creation, powers and duties.
There is hereby created the Tryon Palace Commission of the Department of Cultural Resources with the power and duty to adopt, amend and rescind rules and regulations concerning the restoration and maintenance of the Tryon Palace complex, and other powers and duties as provided in Article 2 of Chapter 121 of the General Statutes of North Carolina, including the authority to charge reasonable admission and related activity fees. The Commission is exempt from the requirements of Chapter 150B of the General Statutes when adopting, amending, or repealing rules for admission fees or related activity fees at Tryon Palace Historic Sites and Gardens. The Commission shall submit a report to the Joint Legislative Commission on Governmental Operations on the amount and purpose of a fee change within 30 days following its effective date."
SECTION 19.2.(c)  G.S. 143B‑73 reads as rewritten:
"§ 143B‑73.  U.S.S. North Carolina Battleship Commission – creation, powers and duties.
There is hereby created the U.S.S. North Carolina Battleship Commission of the Department of Cultural Resources with the power and duty to adopt, amend, and rescind rules and regulations under and not inconsistent with the laws of this State necessary in carrying out the provisions and purposes of this Part.
…
(3)	The Commission shall adopt rules and regulations consistent with the provisions of this Chapter. The Commission is exempt from the requirements of Chapter 150B of the General Statutes when adopting, amending, or repealing rules for admission fees or related activity fees at the U.S.S. North Carolina Battleship. The Commission shall submit a report to the Joint Legislative Commission on Governmental Operations on the amount and purpose of a fee change within 30 days following its effective date."
SECTION 19.2.(d)  G.S. 150B‑1(d) is amended by adding the following new subdivisions to read:
"(23)	The Department of Cultural Resources with respect to admission fees or related activity fees at historic sites and museums pursuant to G.S. 121‑7.3.
(24)	Tryon Palace Commission with respect to admission fees or related activity fees pursuant to G.S. 143B‑71.
(25)	U.S.S. Battleship Commission with respect to admission fees or related activity fees pursuant to G.S. 143B‑73."

ALLOW MUSEUMS AND HISTORIC SITES TO GENERATE REVENUE FROM VENDOR SERVICES AND TO SELL CERTAIN MERCHANDISE
SECTION 19.3.(a)  Article 3 of Chapter 111 of the General Statutes is amended by adding a new section to read:
"§ 111‑47.2.  Food service at museums and historic sites operated by the Department of Cultural Resources.
Notwithstanding Article 3 of Chapter 111 of the General Statutes, the North Carolina Department of Cultural Resources may operate or contract for the operation of food or vending services at museums and historic sites operated by the Department. Notwithstanding G.S. 111‑43, the net proceeds of revenue generated by food and vending services provided at museums and historic sites operated by the Department or a vendor with whom the Department has contracted shall be credited to the appropriate fund of the museum or historic site where the funds were generated and shall be used for the operation of that museum or historic site."
SECTION 19.3.(b)  G.S. 111‑47.2, as enacted by subsection (a) of this section, shall not be construed to alter any contract for food or vending services at any museum or historic site operated by the Department that is in force at the time this section becomes law.
SECTION 19.3.(c)  G.S. 66‑58(b) is amended by adding a new subdivision to read:
"(b)	The provisions of subsection (a) of this section shall not apply to:
…
(9b)	The Department of Cultural Resources for the sale of food pursuant to G.S. 111‑47.2 and the sale of books, crafts, gifts, and other tourism‑related items at historic sites and museums administered by the Department.
…."

EXECUTIVE MANSION EXCESS PROPERTY
SECTION 19.8.(a)  G.S. 143B‑79 reads as rewritten:
"§ 143B‑79.  Executive Mansion Fine Arts Committee – creation, powers and duties.
There is hereby created the Executive Mansion Fine Arts Committee. The Executive Mansion Fine Arts Committee shall have the following functions and duties:
…
(7)	The Committee may dispose of property held in the Executive Mansion after consultation with a review committee comprised of one person from the Executive Mansion Fine Arts Committee, appointed by its chairman; one person from the Department of Administration appointed by the Secretary of Administration; and two qualified professionals from the Department of Cultural Resources, Division of Archives and History, appointed by the Secretary of Cultural Resources. Upon request of the Executive Mansion Fine Arts Committee, the review committee will view proposed items for disposition and make a recommendation to the North Carolina Historical Commission who will make a final decision. The Historical Commission must consider whether the disposition is in the best interest of the State of North Carolina. If any property is sold, the net proceeds of each sale shall be deposited in the State Treasury to the credit of the Executive Mansion, Special Fund, and shall be used only for the purchase, conservation, restoration or repair of other property for use in the Executive Mansion."
SECTION 19.8.(b)  Notwithstanding G.S. 143B‑79(7) or any other law pertaining to surplus State property, the Executive Mansion Fine Arts Committee shall obtain an appraisal of all items held in the Executive Mansion proposed for disposition. If House Bill 153 of the 2013 General Assembly becomes law, the Committee shall, prior to the sale of any item, report to the Joint Legislative Oversight Committee on General Government on the items inventoried and their value. If House Bill 153 of the 2013 General Assembly does not become law, the Committee shall, prior to the sale of any item, report to the Chairs of the House Appropriations Subcommittee on General Government, the Senate Appropriations Committee on General Government and Information Technology, and to the Fiscal Research Division.

ROANOKE ISLAND FUNDING/FRIENDS OF ELIZABETH II SUPPORT
SECTION 19.9.  The Roanoke Island Commission shall request financial support from the Friends of Elizabeth II, Inc., in the amount of three hundred twenty‑five thousand dollars ($325,000) or a sum equal to the average of the last three consecutive years of the Friends' investment earnings, whichever is greater, for each fiscal year of the 2013‑2015 biennium and for each subsequent fiscal year. These funds shall be used pursuant to G.S. 143B‑131.2.

PART XX. DEPARTMENT OF INSURANCE

CONSUMER PROTECTION FUND RETAINED AMOUNT
SECTION 20.1.  G.S. 58‑2‑215 reads as rewritten:
"§ 58‑2‑215.  Consumer Protection Fund.
…
(c)	Moneys appropriated by the General Assembly shall be deposited in the Fund and shall become a part of the continuation budget of the Department of Insurance. Such continuation budget amount shall equal the actual expenditures drawn from the Fund during the prior fiscal year plus the official inflation rate designated by the Director of the Budget in the preparation of the State Budget for each ensuing fiscal year; provided that if interest income on the Fund exceeds the amount yielded by the application of the official inflation rate, such continuation budget amount shall be the actual expenditures drawn from the Fund. In the event the amount in the Fund exceeds two hundred fifty thousand dollars ($250,000) at the end of any fiscal year, such excess shall revert to the General Fund."

WORKERS' COMPENSATION FUND/ALLOCATION FOR VOLUNTEER SAFETY WORKERS
SECTION 20.2.(a)  G.S. 105‑228.5(d)(3) reads as rewritten:
"(d)	Tax Rates; Disposition. –
…
(3)	Additional Rate on Property Coverage Contracts. – An additional tax at the rate of seventy‑four hundredths percent (0.74%) applies to gross premiums on insurance contracts for property coverage. The tax is imposed on ten percent (10%) of the gross premiums from insurance contracts for automobile physical damage coverage and on one hundred percent (100%) of the gross premiums from all other contracts for property coverage. Twenty‑five percent (25%) of the net proceeds of this additional tax must be credited to the Volunteer Fire Department Fund established in Article 87 of Chapter 58 of the General Statutes. Twenty percent (20%) of the net proceeds must be credited to the Department of Insurance for disbursement pursuant to G.S. 58‑84‑25. Up to twenty percent (20%), as determined in accordance with G.S. 58‑87‑10(f), must be credited to the Workers' Compensation Fund. The remaining net proceeds must be credited to the General Fund.
The following definitions apply in this subdivision:
a.	Automobile physical damage. – The following lines of business identified by the NAIC: private passenger automobile physical damage and commercial automobile physical damage.
b.	Property coverage. – The following lines of business identified by the NAIC: fire, farm owners multiple peril, homeowners multiple peril, nonliability portion of commercial multiple peril, ocean marine, inland marine, earthquake, private passenger automobile physical damage, commercial automobile physical damage, aircraft, and boiler and machinery. The term also includes insurance contracts for wind damage.
c.	NAIC. – National Association of Insurance Commissioners."
SECTION 20.2.(b)  G.S. 58‑87‑1 reads as rewritten:
"§ 58‑87‑1.  Volunteer Fire Department Fund.
(a)	Fund. – The Volunteer Fire Department Fund is created as an interest‑bearing, nonreverting fund in the Department to provide matching grants to volunteer fire departments to purchase equipment and make capital improvements. The Commissioner shall administer the Fund. Up to one percent (1%) of the Fund may be used for additional staff and resources to administer the Fund in each fiscal year.
…."
SECTION 20.2.(c)  G.S. 58‑84‑25 reads as rewritten:
"§ 58‑84‑25.  Disbursement of funds by Insurance Commissioner.
(a)	Distribution. – The Insurance Commissioner shall deduct the sum of three percent (3%) from the tax proceeds credited to the Department pursuant to G.S. 105‑228.5(d)(3) and pay the same over to the treasurer of the State Firemen's Association for general purposes. The Insurance Commissioner shall deduct the sum of one percent (1%) from the tax proceeds and retain the same in the budget of the Department of Insurance for the purpose of administering the disbursement of funds by the board of trustees in accordance with the provisions of G.S. 58‑84‑35. The Insurance Commissioner shall, pursuant to G.S. 58‑84‑50, credit the amount forfeited by nonmember fire districts to the North Carolina State Firemen's Association. The Insurance Commissioner shall distribute the remaining tax proceeds to the treasurer of each fire district as provided in subsections (b) and (c) of this section.
…."
SECTION 20.2.(d)  G.S. 58‑87‑10 reads as rewritten:
"§ 58‑87‑10.  Workers' Compensation Fund for the benefit of volunteer safety workers.
(a)	Definition. – As used in this section, the term "eligible unit" means a volunteer fire department or volunteer rescue/EMS unit that is not part of a unit of local government and is exempt from State income tax under G.S. 105‑130.11.
(b)	Creation. – The Workers' Compensation Fund is created in the Department of Insurance as an expendable trust fund. Accordingly, interest and other investment income earned by the Fund accrues to it, and revenue in the Fund at the end of a fiscal year remains in the Fund and does not revert.
(c)	Use. – Revenue in the Workers' Compensation Fund shall be used to provide workers' compensation benefits to members of eligible units. Chapter 97 of the General Statutes governs the payment of benefits from the Fund. Benefits are payable for compensable injuries or deaths that occur on or after July 1, 1996.
(d)	Administration. – The State Fire and Rescue Commission, established under G.S. 58‑78‑1, shall administer the Workers' Compensation Fund and shall perform this duty by contracting with a third‑party administrator. The contracting procedure is not subject to Article 3C of Chapter 143 of the General Statutes. The reasonable and necessary expenses incurred by the Commission in administering the Fund shall be paid out of the Fund by the State Treasurer. The Commission may adopt rules to implement this section.
(e)	Revenue Source. – Revenue is credited to the Workers' Compensation Fund from a portion of the proceeds of the tax levied under G.S. 105‑228.5(d)(3). In addition, every eligible unit that elects to participate shall pay into the Fund an amount set annually by the State Fire and Rescue Commission to ensure that the Fund will be able to meet its payment obligations under this section. The amount shall be set as a per capita fixed dollar amount for each member of the roster of the eligible unit.
The payment shall be made to the State Fire and Rescue Commission on or before July 1 of each year. The Commission shall remit the payments it receives to the State Treasurer, who shall credit the payments to the Fund.
(f)	The amount of the tax imposed by G.S. 105-228.5(d)(3) credited to the Workers' Compensation Fund shall be the maximum allowed under that statute."
SECTION 20.2.(e)  G.S. 58‑87‑10, as amended by subsection (d) of this section, reads as rewritten:
"§ 58‑87‑10.  Workers' Compensation Fund for the benefit of volunteer safety workers.
…
(f)	Funding Study. – The Department of Insurance shall conduct a periodic actuarial study to calculate the amount required to meet the needs of the Fund. The study shall be based on a revenue amount that is the greater of the amount paid by members of the Fund as determined under subsection (e) of this section for the fiscal year to which the study applies or the amount paid by members of the Fund as determined under subsection (e) of this section for fiscal year 2012‑2013. The study shall be reviewed by the Office of State Budget and Management. On or before March 1 of each year, the Office of State Budget and Management, in consultation with the Department of Insurance, must notify the Secretary of Revenue of the amount required to meet the needs of the Fund, as determined by the study, for the upcoming fiscal year. The Secretary of Revenue shall remit that amount, subject to the twenty percent (20%) limitation in G.S. 105‑228.5(d)(3), to the Fund."
SECTION 20.2.(f)  Subsection (e) of this section becomes effective April 1, 2016.

SET INSURANCE REGULATORY CHARGE
SECTION 20.3.(a)  The percentage rate to be used in calculating the insurance regulatory charge under G.S. 58‑6‑25 is six percent (6%) for the 2013 and 2014 calendar years.
SECTION 20.3.(b)  This section is effective when it becomes law.

PART XXI. STATE BOARD OF ELECTIONS

ELIMINATE NORTH CAROLINA PUBLIC CAMPAIGN FUND
SECTION 21.1.(a)  Article 22D of Chapter 163 of the General Statutes is repealed, except that G.S. 163‑278.69 is repealed effective upon exhaustion of the funds for publication of the Judicial Voter Guide.
SECTION 21.1.(b)  G.S. 84‑34 reads as rewritten:
"§ 84‑34.  Membership fees and list of members.
Every active member of the North Carolina State Bar shall, prior to the first day of July of each year, pay to the secretary‑treasurer an annual membership fee in an amount determined by the Council but not to exceed three hundred dollars ($300.00), and every member shall notify the secretary‑treasurer of the member's correct mailing address. Any member who fails to pay the required dues by the last day of June of each year shall be subject to a late fee in an amount determined by the Council but not to exceed thirty dollars ($30.00). All dues for prior years shall be as were set forth in the General Statutes then in effect. The membership fee shall be regarded as a service charge for the maintenance of the several services authorized by this Article, and shall be in addition to all fees required in connection with admissions to practice, and in addition to all license taxes required by law. The fee shall not be prorated: Provided, that no fee shall be required of an attorney licensed after this Article shall have gone into effect until the first day of January of the calendar year following that in which the attorney was licensed; but this proviso shall not apply to attorneys from other states admitted on certificate. The fees shall be disbursed by the secretary‑treasurer on the order of the Council. The secretary‑treasurer shall annually, at a time and in a law magazine or daily newspaper to be prescribed by the Council, publish an account of the financial transactions of the Council in a form to be prescribed by it. The secretary‑treasurer shall compile and keep currently correct from the names and mailing addresses forwarded to the secretary‑treasurer and from any other available sources of information a list of members of the North Carolina State Bar and furnish to the clerk of the superior court in each county, not later than the first day of October in each year, a list showing the name and address of each attorney for that county who has not complied with the provisions of this Article. The name of each of the active members who are in arrears in the payment of membership fees shall be furnished to the presiding judge at the next term of the superior court after the first day of October of each year, by the clerk of the superior court of each county wherein the member or members reside, and the court shall thereupon take action that is necessary and proper. The names and addresses of attorneys so certified shall be kept available to the public. The Secretary of Revenue is hereby directed to supply the secretary‑treasurer, from records of license tax payments, with any information for which the secretary‑treasurer may call in order to enable the secretary‑treasurer to comply with this requirement.
The list submitted to several clerks of the superior court shall also be submitted to the Council at its October meeting of each year and it shall take the action thereon that is necessary and proper."
SECTION 21.1.(c)  G.S. 105‑159.2 is repealed.
SECTION 21.1.(d)  G.S. 163‑278.5 reads as rewritten:
"§ 163‑278.5.  Scope of Article; severability.
The provisions of this Article apply to primaries and elections for North Carolina offices and to North Carolina referenda and do not apply to primaries and elections for federal offices or offices in other States or to non‑North Carolina referenda. Any provision in this Article that regulates a non‑North Carolina entity does so only to the extent that the entity's actions affect elections for North Carolina offices or North Carolina referenda.
The provisions of this Article are severable. If any provision is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions of the Article that can be given effect without the invalid provision.
This section applies to Articles 22B, 22G, 22H, 22J, and 22M of the General Statutes to the same extent that it applies to this Article."
SECTION 21.1.(e)  G.S. 163‑278.13(e) reads as rewritten:
"(e)	Except as provided in subsections (e3) and (e4) of this section, this section shall not apply to any national, State, district or county executive committee of any political party. For the purposes of this section only, the term "political party" means only those political parties officially recognized under G.S. 163‑96."
SECTION 21.1.(f)  G.S. 163‑278.13(e2) is repealed.
SECTION 21.1.(g)  G.S. 163‑278.23 reads as rewritten:
"§ 163‑278.23.  Duties of Executive Director of Board.
…
This section applies to Articles 22B, 22G, 22H, and 22M of the General Statutes to the same extent that it applies to this Article."
SECTION 21.1.(h)  G.S. 163‑278.97 reads as rewritten:
"§ 163‑278.97.  Voter‑Owned Elections Fund established; sources of funding.
…
(c)	Evaluation and Determination of Fund Amount. – By January 1, 2011, and every four years thereafter, the Board shall prepare and provide to the Joint Legislative Commission on Governmental Operations of the General Assembly a report documenting, evaluating, and making recommendations relating to the administration, implementation, and enforcement of this Article. In its report, the Board shall set out the funds received to date and the expected needs of the Fund during the next election cycle and make recommendations about the feasibility of expanding its provisions to include other candidates for State office based on the experience of this Article and the experience of similar programs in North Carolina and other states. The Board shall also evaluate and make recommendations regarding how to address activities that could undermine the purpose of this Article, including spending that appears to target candidates but is not reached by regulation."
SECTION 21.1.(i)  G.S. 163‑278.99E(d) is repealed effective upon exhaustion of the funds for publication of the Judicial Voter Guide in G.S. 163‑278.69.
SECTION 21.1.(j)  The State Board of Elections shall use the money in the North Carolina Public Campaign Fund to only publish Judicial Voter Guides as described in G.S. 163‑278.69 until the funds have been exhausted.
SECTION 21.1.(k)  The secretary‑treasurer of the North Carolina State Bar shall remit any payments of the fifty‑dollar ($50.00) surcharge payable for the taxable year January 1, 2013, to the State Board of Elections, and the State Board of Elections must credit the funds received to the North Carolina Public Campaign Fund.
SECTION 21.1.(l)  The State Board of Elections shall notify the Revisor of Statutes when the funds have been exhausted for publication of the Judicial Voter Guide.
SECTION 21.1.(m)  Subsection (c) of this section is effective for taxable years beginning on or after January 1, 2013. The remainder of this section becomes effective July 1, 2013.

PART XXII. GENERAL ASSEMBLY

LIMIT SELECT AND INTERIM STUDY COMMITTEES
SECTION 22.3.  During the 2013‑2015 biennium and pursuant to G.S. 120‑19.6(a) and (a1) of the General Statutes, the President Pro Tempore of the Senate and the Speaker of the House of Representatives may respectively authorize no more than a cumulative total of 13 select committees and interim study committees to meet in the interim period. This limitation does not apply to any select committee or interim study committee created by law, simple or joint resolution, or joint authorization of the Speaker of the House of Representatives and the President Pro Tempore of the Senate.

MEDICAID ADVISORY GROUP MATCHING FUNDS
SECTION 22.5.  Of the funds appropriated to Budget Code 21000 in the General Assembly, up to thirty‑seven thousand five hundred dollars ($37,500) for the 2013‑2014 fiscal year shall be transferred to the Department of Health and Human Services to provide matching funds for the activities of the Medicaid Advisory Group established in Section 12H.1(e) of this act.

PED/STUDY LICENSURE FEES
SECTION 22.6.(a)  The Joint Legislative Program Evaluation Oversight Committee shall include in the 2013‑2014 Work Plan for the Program Evaluation Division of the General Assembly a study to review the licensure fees for occupations regulated by the Department of Insurance which are not directly associated with the insurance industry. The Program Evaluation Division (PED) shall include the following within this study:
(1)	Determining the applicant's actual expenditure for licensure, excluding education, training, and certification costs.
(2)	Determining the advantages and disadvantages of the Department of Insurance using a vendor to process applications for licensure and renewals.
(3)	Determining the appropriate licensure fees an applicant should be assessed if the Department of Insurance determines the use of a vendor is the most cost‑efficient method for licensing applicants.
(4)	Determining the appropriate method for reimbursing a vendor of an amount greater than the licensure fees authorized by Chapter 58 of the General Statutes.
(5)	Determining whether any redundancy exists with a vendor and the Department of Insurance in processing applications for licensure or renewal.
(6)	Any other issues PED discovers while performing the study.
SECTION 22.6.(b)  The Program Evaluation Division shall submit its findings and recommendations from subsection (b) of this section to the Joint Legislative Program Evaluation Oversight Committee and to Chairs of the House of Representatives Appropriations Subcommittee on General Government and the Senate Appropriations Committee on General Government and Information Technology.

PART XXIV. OFFICE OF STATE BUDGET AND MANAGEMENT

SYMPHONY CHALLENGE GRANT/OSBM‑SPECIAL APPROPRIATIONS
SECTION 24.1.(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 2013‑2014 fiscal year and the sum of one million five hundred thousand dollars ($1,500,000) in nonrecurring funds for the 2014‑2015 fiscal year shall be allocated to the North Carolina Symphony in accordance with this section. It is the intent of the General Assembly that the North Carolina Symphony raise at least eight million dollars ($8,000,000) in non‑State funds for the 2013‑2014 fiscal year and at least eight million dollars ($8,000,000) in non‑State funds for the 2014‑2015 fiscal year. The NC Symphony cannot use funds transferred from the organization's endowment to its operating budget to achieve the fund‑raising targets set out in subsections (b) and (c) of this section.
SECTION 24.1.(b)  For the 2013‑2014 fiscal year, the North Carolina 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) in the 2013‑2014 fiscal year.
SECTION 24.1.(c)  For the 2014‑2015 fiscal year, the North Carolina 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) in the 2014‑2015 fiscal year.
SECTION 24.1.(d)  Of the funds appropriated in this act to the Office of State Budget and Management‑Special Appropriations, the sum of three hundred thousand dollars ($300,000) in nonrecurring funds for the 2013‑2014 fiscal year shall be allocated to The Bridge Downeast, Inc., a nonprofit organization, to purchase a facility to house activities for the youth and senior citizens on Harkers Island and surrounding areas. If these funds are not used for the purpose for which they were appropriated as of June 30, 2014, the funds shall revert to the General Fund.

PART XXVII. DEPARTMENT OF THE SECRETARY OF STATE

INCREASE REGISTRATION FEE FOR LOBBYIST & LOBBYIST PRINCIPAL/ELECTRONIC SUBMISSION OF ALL DOCUMENTS, REPORTS, AND PAYMENTS BY LOBBYISTS
SECTION 27.1.(a)  G.S. 120C‑201 reads as rewritten:
"§ 120C‑201.  Lobbyist's registration fee.
(a)	A fee of two hundred fifty dollars ($250.00) is due and payable to the Secretary of State at the time of each lobbyist registration. Fees so collected shall be deposited in the General Fund of the State. The Secretary of State shall allow fees required under this section to be paid electronically but shall not require the fees to be paid electronically.
	"
SECTION 27.1.(b)  G.S. 120C‑207 reads as rewritten:
"§ 120C‑207.  Lobbyist principal's fees.
(a)	A fee of two hundred fifty dollars ($250.00) is due and payable to the Secretary of State at the time the principal's first authorization statement is filed each calendar year for a lobbyist. Fees so collected shall be deposited in the General Fund of the State. The Secretary of State shall allow fees required under this section to be paid electronically but shall not require the fees to be paid electronically.
	"
SECTION 27.1.(c)  G.S. 120C‑200 reads as rewritten:
"§ 120C‑200.  Lobbyist registration procedure.
…
(b)	The form of the registration shall be prescribed by the Secretary of State, be filed electronically, and shall include the registrant's full name, firm, complete address, and telephone number; the registrant's place of business; the full name, complete address, and telephone number of each principal the lobbyist represents; and a general description of the matters on which the registrant expects to act as a lobbyist.
(c)	Each lobbyist shall electronically file an amended registration form with the Secretary of State no later than 10 business days after any change in the information supplied in the lobbyist's last registration under subsection (b) of this section. Each supplementary registration shall include a complete statement of the information that has changed.
…."
SECTION 27.1.(d)  G.S. 120C‑201(a), as amended by subsection (a) of this section, reads as rewritten:
"(a)	A fee of two hundred fifty dollars ($250.00) is due and payable to the Secretary of State at the time of each lobbyist registration. Fees so collected shall be deposited in the General Fund of the State. The fees required under this section shall be paid electronically."
SECTION 27.1.(e)  G.S. 120C‑206 reads as rewritten:
"§ 120C‑206.  Lobbyist principal's authorization.
…
(b)	The form of the written authorization shall be prescribed by the Secretary of State, be filed electronically, and shall include the lobbyist principal's full name, complete address, and telephone number, name and title of any official authorized to sign for the lobbyist principal, and the name of each lobbyist registered to represent that principal.
(c)	An amended authorization shall be electronically filed with the Secretary of State no later than 10 business days after any change in the information on the principal's authorization. Each supplementary authorization shall include a complete statement of the information that has changed."
SECTION 27.1.(f)  G.S. 120C‑207(a), as amended by subsection (b) of this section, reads as rewritten:
"(a)	A fee of two hundred fifty dollars ($250.00) is due and payable to the Secretary of State at the time the principal's first authorization statement is filed each calendar year for a lobbyist. Fees so collected shall be deposited in the General Fund of the State. The fees required under this section shall be paid electronically."
SECTION 27.1.(g)  G.S. 120C‑401(d) reads as rewritten:
"(d)	Each report required by this Article shall be in the form prescribed by the Secretary of State and filed electronically."
SECTION 27.1.(h)  G.S. 120C‑800(f) reads as rewritten:
"(f)	Within 15 business days after the end of the quarter in which the reportable expenditure was made, reports required by this section shall be filed electronically with the Secretary of State in a form prescribed by the Secretary of State. If the designated individual is required to file a statement of economic interest under G.S. 138A‑24, then that designated individual may opt to report any information required by this section in the statement of economic interest."
SECTION 27.1.(i)  Subsections (a) and (b) of this section become effective August 1, 2013. This remainder of this section becomes effective October 1, 2013, and applies to all filings, payments due, and registrations, on or after that date.

PART XXIX. OFFICE OF THE STATE CONTROLLER

OVERPAYMENTS AUDIT
SECTION 29.1.(a)  During the 2013‑2015 fiscal biennium, receipts generated by the collection of inadvertent overpayments by State agencies to vendors as a result of pricing errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds, erroneously paid excise taxes, and related errors are to be deposited in Special Reserve Account 24172 as required by G.S. 147‑86.22(c).
SECTION 29.1.(b)  For each year of the 2013‑2015 fiscal biennium, five hundred thousand dollars ($500,000) of the funds in the Special Reserve Account 24172 shall be used by the Office of the State Controller for data processing, debt collection, or e‑commerce costs and are hereby appropriated for that purpose.
SECTION 29.1.(c)  All funds available in Special Reserve Account 24172 on June 30 of each year of the 2013‑2015 fiscal biennium shall revert to the General Fund on that date.
SECTION 29.1.(d)  The State Controller shall report quarterly to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on the revenue deposited into Special Reserve Account 24172 and the disbursement of that revenue.

PART XXX. DEPARTMENT OF ADMINISTRATION

REQUIRE CONTINUATION REVIEW OF THE YOUTH ADVOCACY AND INVOLVEMENT OFFICE
SECTION 30.1.(a)  A continuation review of the Youth Advocacy and Involvement Office shall be prepared by the Department of Administration. The review shall be submitted to the House of Representatives Appropriations Subcommittee on General Government and the Senate Appropriations Committee on General Government and Information Technology no later than March 31, 2014. The written report shall include the information listed in subsection (b) of this section.
SECTION 30.1.(b)  The continuation review required by this section shall include all of the following information:
(1)	A description of the services provided by the Youth Advocacy and Involvement Office and its mission, goals, and objectives.
(2)	The statutory objectives of the Office and the problem or need addressed.
(3)	The extent to which the objectives of the Office have been achieved.
(4)	The functions or programs performed by the Office without specific statutory authority.
(5)	The performance measures and the process by which the performance measures determine efficiency and effectiveness.
(6)	Recommendations for statutory, budgetary, or administrative changes needed to improve efficiency and effectiveness of services delivered to the public.
(7)	The consequences of discontinuing funding.
(8)	Recommendations for improving services or reducing costs or duplication.
(9)	The identification of policy issues that should be brought to the attention of the General Assembly.
(10)	Any other information necessary to fully support this continuation review requirement.

ELIMINATE DISPLACED HOMEMAKERS PROGRAM/FUND
SECTION 30.2.(a)  G.S. 7A‑305(a2) reads as rewritten:
"(a2)	In every action for absolute divorce filed in the district court, a cost of seventy‑five dollars ($75.00) shall be assessed against the person filing the divorce action. Costs collected by the clerk pursuant to this subsection shall be remitted to the State Treasurer, who shall deposit thirty‑five dollars ($35.00) to the North Carolina Fund for Displaced Homemakers established under G.S. 143B‑394.10 and forty dollars ($40.00) to the Domestic Violence Center Fund established under G.S. 50B‑9. Costs assessed under this subsection shall be in addition to any other costs assessed under this section."
SECTION 30.2.(a1)  G.S. 7A‑305(a2), as amended by subsection (a) of this section, reads as rewritten:
"(a2)	In every action for absolute divorce filed in the district court, a cost of seventy‑five dollars ($75.00) shall be assessed against the person filing the divorce action. Costs collected by the clerk pursuant to this subsection shall be remitted to the State Treasurer, who shall deposit seventy‑five dollars ($75.00) to the Domestic Violence Center Fund established under G.S. 50B‑9. Costs assessed under this subsection shall be in addition to any other costs assessed under this section."
SECTION 30.2.(b)  G.S. 143B‑393 reads as rewritten:
"§ 143B‑393.  North Carolina Council for Women – creation; powers and duties.
There is hereby created the North Carolina Council for Women of the Department of Administration. The North Carolina Council for Women shall have the following functions and duties:
(1)	To advise the Governor, the principal State departments, and the State legislature concerning the education and employment of women in the State of North Carolina.
(2)	To advise the Secretary of Administration upon any matter the Secretary may refer to the Council.
	"
SECTION 30.2.(c)  Part 10B of Article 9 of Chapter 143B of the General Statutes is repealed.
SECTION 30.2.(d)  All unencumbered funds as of June 30, 2014, in the North Carolina Fund for Displaced Homemakers shall be transferred to the Domestic Violence Center Fund established under G.S. 50B‑9.
SECTION 30.2.(e)  Subsection (a1) of this section becomes effective July 1, 2014.

REPEAL STATEWIDE CAPITAL RESERVE
SECTION 30.3.  Section 20.4 of S.L. 2011‑145 is repealed. Any funds remaining in the reserve established pursuant to that section shall be transferred to the capital project account associated with the capital project for which they were initially appropriated.

BIENNIAL REVIEW OF STATEMENTS OF ECONOMIC INTEREST BY SEC
SECTION 30.4.(a)  G.S. 138A‑10(a)(4) reads as rewritten:
"§ 138A‑10.  Powers and duties.
(a)	In addition to other powers and duties specified in this Chapter, the Commission shall:
…
(4)	Receive and review all statements of economic interest filed with the Commission by prospective and actual covered persons as provided in G.S. 138A‑28. Pursuant to G.S. 138A‑24(e), this subdivision does not apply to statements of economic interest of legislators and judicial officers."
SECTION 30.4.(b)  Article 3 of Chapter 138A of the General Statutes is amended by adding a new section to read:
"§ 138A‑28.  Review and evaluation of statements of economic interest.
(a)	The Commission shall receive and review all statements of economic interest pursuant to G.S. 138A‑10(a)(4) and shall evaluate whether (i) the statements conform to the law and the rules of the Commission, and (ii) the financial interests and other information reported by prospective and actual covered persons reveal actual or potential conflicts of interest.
(b)	Beginning July 1, 2013, the Commission shall establish a biennial cycle for evaluating statements of economic interest. The Commission shall evaluate each initial filing as provided in subsection (a) of this section.
(c)	Notwithstanding subsection (b) of this section, statements filed by the following prospective and actual public servants shall be evaluated on an annual basis:
(1)	The University of North Carolina Board of Governors, subject to G.S. 138A‑24(f).
(2)	The State Board of Community Colleges, subject to G.S. 138A‑24(f).
(3)	The North Carolina Utilities Commission.
(4)	The North Carolina Industrial Commission.
(5)	Supplemental statements filed pursuant to Chapter 136 of the General Statutes.
(6)	Any other board or commission whose members are elected or confirmed by the General Assembly.
(d)	Notwithstanding subsections (a) and (b) of this section, statements of economic interest filed by Constitutional officers of the State and individuals elected or appointed as Constitutional officers of the State prior to taking office shall be evaluated every four years upon election or appointment to office.
(e)	A public servant who simultaneously serves on more than one covered board may file one statement of economic interest and that statement shall serve as disclosure for all the covered boards. If, during the biennial cycle, a public servant leaves one covered board and begins membership on another covered board, the public servant is not required to file another statement of economic interest, and the Commission is not required to evaluate the statement again in light of the subsequent appointment. The public servant must make subsequent filings pursuant to G.S. 138A‑22(a) upon the expiration of the biennial cycle.
(f)	Nothing in this section shall be construed to impair the Commission's duties and authority under G.S. 138A‑25 and G.S. 138A‑26."

USE OF E‑COMMERCE FUNDS FOR PURCHASE AND CONTRACT OPERATIONS
SECTION 30.5.  Notwithstanding the provisions of G.S. 66‑58.12(c), the sum of one million two hundred eighteen thousand six hundred fifty‑nine dollars ($1,218,659) for the 2013‑2014 fiscal year and the sum of one million four hundred seventy‑six thousand five hundred forty‑three dollars ($1,476,543) for the 2014‑2015 fiscal year shall be transferred from the E‑Commerce Fund in the Department of Administration Budget Code 24100, Fund 2514, to be used for each year of the 2013‑2015 biennium, on a recurring basis, to pay the operating expenses of the Division of Purchase and Contract.

STUDY/E‑PROCUREMENT FEE & VENDOR CONTRACT
SECTION 30.6.(a)  The Department of Administration shall study the feasibility of reducing or eliminating the e‑commerce fee authorized under G.S. 66‑58.12(b). The e‑commerce fee supports the E‑Procurement System operated by the Department. By February 1, 2014, the Department shall report its findings to the Senate Appropriations Committee on General Government and Information Technology, House of Representatives Appropriations Subcommittee on General Government, Joint Legislative Committee on Information Technology, and Office of State Budget and Management. The report shall include the following:
(1)	The current rate of the fee and how it was calculated.
(2)	The current revenue generated from the fee by departmental users.
(3)	The current breakeven point for the operation of the E‑Procurement System.
(4)	The requirements for the operation and administration of the E‑Procurement System, including the term of any contract with an outside vendor for the management of the E‑Procurement System.
(5)	Total payments to vendors since the initiation of the E‑Procurement System.
(6)	Total State receipts since the initiation of the E‑Procurement System.
(7)	Information on E‑Procurement Systems currently in operation in other states and within North Carolina, including an analysis of the advantages and disadvantages of each.
(8)	The feasibility and cost of utilizing E‑Procurement Systems under management by any State institution.
(9)	The feasibility of eliminating the fee supporting the E‑Procurement System, E‑Commerce Fund (2514), and moving the administration of the E‑Procurement System to General Fund Support, including any cost-savings to agencies as a result of vendors not assessing the fee on goods purchased through the System.
(10)	The feasibility of reducing the fee by assessing the fee on goods and services only.
(11)	The potential for savings from training State employees to operate and maintain the System.
SECTION 30.6.(b)  If the contract with an outside vendor operating the E‑Procurement System expires during the 2013‑2015 biennium, the Department of Administration, under the supervision of the Enterprise Project Management Office and the Statewide Information Technology Procurement Office, shall issue a request for proposals and select a vendor through open competition. Any new contract shall comply with all State information technology procurement requirements, including G.S. 143‑135.9, and shall include a requirement that the project be hosted on State infrastructure.

PART XXXIV. DEPARTMENT OF TRANSPORTATION

CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATION
SECTION 34.1.(a)  The General Assembly authorizes and certifies anticipated revenues for the Highway Fund as follows:
For Fiscal Year 2015‑2016	$1,946.7 million
For Fiscal Year 2016‑2017	$2,027.6 million
For Fiscal Year 2017‑2018	$2,103.3 million
For Fiscal Year 2018‑2019	$2,140.4 million
SECTION 34.1.(b)  The General Assembly authorizes and certifies anticipated revenues for the Highway Trust Fund as follows:
For Fiscal Year 2015‑2016	$1,160.3 million
For Fiscal Year 2016‑2017	$1,215.2 million
For Fiscal Year 2017‑2018	$1,256 million
For Fiscal Year 2018‑2019	$1,283.7 million

INCREASE DOT PRIVATIZATION
SECTION 34.2.(a)  The Department of Transportation shall seek to increase the use of contracts to further privatize preconstruction work where practical, economical, and likely to lead to increased efficiency. In doing so, the Department shall meet each of the following privatization requirements:
(1)	Increase the outsourcing of all activities performed by the Department's Preconstruction and Technical Services units to between sixty and sixty‑five percent (60%-65%) of the total cost of activities performed by those units by the end of the 2013‑2015 fiscal biennium, excluding the cost of activities performed by the Turnpike Authority, the Structures Design and Management unit, and the Bridge Program.
(2)	The Right‑of‑Way, Project Development and Environmental Analysis, and Roadway Design units shall increase the total cost of outsourced activity by five percent (5%) in fiscal year 2013‑2014 and by an additional five percent (5%) in fiscal year 2014‑2015 from a baseline of fiscal year 2012‑2013 actual expenditures for those units.
SECTION 34.2.(b)  The Department of Transportation shall increase contracts for construction of transportation projects on a design‑build basis awarded under the provisions of G.S. 136‑28.11.
SECTION 34.2.(c)  G.S. 136‑28.11(d) is repealed.
SECTION 34.2.(d)  Report. – The Department shall report to the Fiscal Research Division and the Joint Legislative Transportation Oversight Committee regarding its progress in implementing the requirements of this section before the convening of the 2014 Regular Session of the 2013 General Assembly.

SYSTEM PRESERVATION FUNDS PREFERENCE FOR DEFICIENT BRIDGES
SECTION 34.3.  The funds allocated to the system preservation program (fund center 1500/157839) for fiscal years 2013‑2014 and 2014‑2015 shall be used for improvements to structurally deficient and functionally obsolete bridges. All projects funded under this section, with the exception of inspection, pre‑engineering, contract preparation, contract administration and oversight, and planning activities, shall be outsourced to private contractors.

SMALL CONSTRUCTION AND CONTINGENCY FUNDS
SECTION 34.4.(a)  Of the funds appropriated in this act to the Department of Transportation:
(1)	Five million dollars ($5,000,000) in nonrecurring funds shall be allocated in each fiscal year for small construction projects recommended by the Chief Engineer in consultation with the Chief Operating Officer and approved by the Secretary of the Department of Transportation. These funds shall be allocated equally in each fiscal year of the biennium among the 14 Highway Divisions for small construction projects.
(2)	Twelve million dollars ($12,000,000) shall be allocated statewide in each fiscal year for rural or small urban highway improvements and related transportation enhancements to public roads and public facilities, industrial access roads, and spot safety projects, including pedestrian walkways that enhance highway safety. Projects funded pursuant to this subdivision shall be approved by the Secretary of Transportation.
None of these funds used for secondary road improvements during the 2013‑2014 fiscal year are subject to the county allocation formulas in G.S. 136‑44.5(b).
SECTION 34.4.(b)  The Department of Transportation shall report to the members of the General Assembly on projects funded pursuant to this section in each member's district prior to construction. The Department shall make a quarterly comprehensive report on the use of these funds to the Joint Legislative Transportation Oversight Committee and the Fiscal Research Division.
SECTION 34.4.(c)  The sum of twenty‑seven million sixty thousand eighty‑three dollars ($27,060,083) of the unallotted and unexpended balance of funds within the Contingency Fund (fund center 1500/157818) shall be transferred to the Highway Fund as appropriated and allocated by this act.
SECTION 34.4.(d)  The sum of twenty‑one million nine hundred fourteen thousand four hundred ten dollars ($21,914,410) of the unallotted and unexpended balance of funds within the Division Small Urban Construction Program (fund center 1500/157837) shall be transferred to the Highway Fund as appropriated and allocated by this act.

ACCESS AND PUBLIC SERVICE ROAD FUNDS
SECTION 34.6.  The sum of four million eight hundred forty‑three thousand four hundred forty‑one dollars ($4,843,441) of the unallotted and unexpended balance of funds within the Access and Public Service Road program (fund center 1500/157814) shall be transferred to the Highway Fund as appropriated and allocated by this act.

ECONOMIC DEVELOPMENT PROGRAM FUNDS
SECTION 34.7.(a)  The sum of three million three hundred forty‑six thousand two hundred fifteen dollars ($3,346,215) of the unallotted and unexpended balance of funds within the Economic Development fund (fund center 1500/157838) shall be transferred to the Highway Fund as appropriated and allocated by this act.
SECTION 34.7.(b)  Of the funds appropriated to the Economic Development fund, the sum of three million three hundred forty‑six thousand two hundred fifteen dollars ($3,346,215) in fiscal year 2013‑2014 and four million thirty‑six thousand one hundred seventy‑one dollars ($4,036,171) in fiscal year 2014‑2015 shall be used for prioritized transportation improvements and infrastructure that expedite commercial growth as well as either job creation or job retention. Projects funded under this section shall be jointly approved by the Secretary of Transportation and the Secretary of Commerce.

CONGESTION AND MOBILITY REPORTING
SECTION 34.8.  G.S. 136‑44.3 reads as rewritten:
"§ 136‑44.3.  Maintenance program.
The Department shall establish performance standards for the maintenance and operation of the State highway system. In each even‑numbered year, the Department of Transportation shall survey the condition of the State highway system and shall prepare a report of the findings of the survey. The report shall provide both quantitative and qualitative descriptions of the condition of the system and shall provide estimates of the following:
(1)	The annual cost to meet and sustain the established performance standards for the primary and secondary highway system, to include: (i) routine maintenance and operations, (ii) system preservation, and (iii) pavement and bridge rehabilitation.
(2)	Projected system condition and corresponding optimal funding requirements for a seven‑year plan to sustain established performance standards.
(3)	Any significant variations in system conditions among highway divisions.
(4)	An assessment of the level of congestion throughout the primary highway system based on traffic data, and a ranking of the most congested areas based on travel time reliability and the average number of congested hours, together with the Department's recommendations for congestion reduction and mobility improvement.
On the basis of the report and from funds available, the Department of Transportation shall develop a statewide annual maintenance program for the State highway system, which shall be subject to the approval of the Board of Transportation and is consistent with performance standards.
The report on the condition of the State highway system and maintenance funding needs shall be presented to the Joint Legislative Transportation Oversight Committee by December 31 of each even‑numbered year, and copies shall be made available to any member of the General Assembly upon request."

REPEAL INTERMODAL CONTINUING APPROPRIATIONS
SECTION 34.9.  The following statutes are repealed:
(1)	G.S. 136‑16.4.
(2)	G.S. 136‑16.5.
(3)	G.S. 136‑16.7.
(4)	G.S. 136‑16.8.
(5)	G.S. 136‑16.9.

FLEXIBLE USE OF FUNDS TO LEVERAGE FEDERAL FUNDS FOR RURAL AND HUMAN SERVICE PUBLIC TRANSPORTATION
SECTION 34.10.  In order to ensure maximum funding and to facilitate the use of funds available to the Department, the Department of Transportation, Public Transportation Division, shall have the flexibility to redistribute funding from the "rural capital" grant program and within the "urban technology, human service transportation management, and rural general public" grant program in order to leverage all eligible federal funds for operating assistance to rural and human service transportation systems. The distribution of funds to these systems shall be based on assessed system needs. This section applies only to the 2013‑2015 fiscal biennium.

MAXIMIZE LEVERAGE OF FEDERAL PUBLIC TRANSPORTATION OPERATING AND CAPITAL FUNDS FOR LOCAL PUBLIC TRANSPORTATION SYSTEMS
SECTION 34.11.  The Department of Transportation, Public Transportation Division, shall provide local public transportation systems with maximum flexibility to use State operating funds from the "urban and regional maintenance" and "urban technology, human service transportation management, and rural general public" grant programs to leverage all eligible federal transit operating assistance funds. This section applies only to the 2013‑2015 fiscal biennium.

GRANT FLEXIBILITY FOR BICYCLE AND PEDESTRIAN IMPROVEMENTS
SECTION 34.12.  The Department of Transportation, Division of Bicycle and Pedestrian Transportation, may redistribute funds appropriated to the Regional Bicycle Planning Grant program to the Municipal Planning Grant program to award grants to municipalities based on assessed need and the extent to which the Division finds that the municipality's application for grant funding fulfills applicable selection criteria.

FERRY TOLLING
SECTION 34.13.(a)  Notwithstanding the date set forth in Section 24.18(b) of S.L. 2012‑142, as rewritten by Section 6.2 of S.L 2012‑145, by which the Department of Transportation is required to collect tolls based on the proposed March 2012 amendment to 19 NCAC 02D .0532, the Department shall collect tolls as set forth in this section.SECTION 34.13.(b)  G.S. 136‑82 reads as rewritten:
"§ 136‑82.  Department of Transportation to establish and maintain ferries.
(a)	Powers of Department. – The Department of Transportation is vested with authority to provide for the establishment and maintenance of ferries connecting the parts of the State highway system, whenever in its discretion the public good may require, and shall prescribe and collect tolls on the ferry routes as established by the Board of Transportation following the procedures set forth in this section.
(b)	Establishment of Tolling. – The Board of Transportation may establish tolls on any untolled ferry route as set forth in this subsection. Prior to establishing tolls on an untolled ferry route, the Board of Transportation must receive a resolution approved by the Transportation Advisory Committee of each affected local transportation planning organization requesting tolls on that route. No later than March 1, 2014, the Department shall hold a separate public hearing in the geographic area of each untolled ferry route and invite each affected local transportation planning organization. At the public hearing, the Department shall present an explanation of the toll setting methodology, the impact of tolling on the availability of funding for other local transportation priorities, and the minimum and maximum toll rates. After the public hearing, an affected local transportation planning organization may consider and adopt a ferry tolling resolution. The Board of Transportation shall adopt the toll at its next regularly scheduled meeting after receipt of the ferry tolling resolutions required by this subsection. The Department shall collect the toll as soon as is feasible following its adoption, but in no case more than 180 days after adoption of the toll. The establishment of tolls by the Board of Transportation pursuant to the authority granted in this section shall be exempt from the provisions of Chapter 150B of the General Statutes. For purposes of this section, "affected local transportation planning organization" means any Metropolitan Planning Organization or Rural Transportation Planning Organization with geographic jurisdiction over any part of an untolled ferry route, and "untolled ferry route" means any ferry route for which no tolls were in effect as of June 30, 2013.
(c)	Revisions of Tolls. – The Department of Transportation shall report to the Fiscal Research Division, the Joint Legislative Transportation Oversight Committee, and all affected local transportation planning organizations 30 days prior to any change in toll rates or change in the toll setting methodology by the Board of Transportation.(d)	Use of Toll Proceeds. – The Department of Transportation shall credit the proceeds from tolls collected on North Carolina Ferry System routes and receipts generated under subsection (e) of this section to reserve accounts within the Highway Fund for each of the Highway Divisions in which system terminals are located and fares are earned. For the purposes of this subsection, fares are earned based on the terminals from which a passenger trip originates and terminates. Commuter pass receipts shall be credited proportionately to each reserve account based on the distribution of trips originating and terminating in each Highway Division. The proceeds credited to each reserve account shall be used exclusively for prioritized North Carolina Ferry System ferry passenger vessel replacement projects in the Division in which the proceeds are earned. Proceeds may be used to fund ferry passenger vessel replacement projects or supplement funds allocated for ferry passenger vessel replacement projects approved in the Transportation Improvement Program.
(e)	Powers of Department. – To accomplish the purpose of this section, the Department of Transportation is authorized to acquire, own, lease, charter or otherwise control all necessary vessels, boats, terminals or other facilities required for the proper operation of the ferries or to enter into contracts with persons, firms or corporations for the operation thereof and to pay the reasonable sums that in the opinion of the Department of Transportation represent the fair value of the public service rendered.
(f)	Authority to Generate Certain Receipts. – The Department of Transportation, notwithstanding any other provision of law, may operate or contract for the following receipt‑generating activities and use the proceeds for ferry passenger vessel replacement projects in the manner set forth in subsection (c) of this section:
(1)	Operation of, concessions on the ferries and at ferry facilities to provide to passengers on the ferries food, drink, and other refreshments, personal comfort items, Internet access, and souvenirs publicizing the ferry system.
(2)	The sale of naming rights to any ferry vessel, ferry route, or ferry facility.
(3)	Advertising on or within any ferry vessel, including display advertising and advertising delivered to passengers through the use of video monitors, public address systems installed in passenger areas, and other electronic media.
(4)	Any other receipt‑generating activity not otherwise forbidden by applicable law pertaining to public health or safety.
(g)	Confidentiality of Personal Information. – Identifying information obtained by the Department related to operation of the ferry system is not a public record under Chapter 132 of the General Statutes and is subject to the disclosure limitations in 18 U.S.C. § 2721 of the federal Driver's Privacy Protection Act. The Department shall maintain the confidentiality of all information required to be kept confidential under 18 U.S.C. § 2721(a), as well as any financial information, transaction history, and information related to the collection of a toll or user fee from a person, including, but not limited to, photographs or other recorded images or automatic vehicle identification or driver account information generated by radio‑frequency identification or other electronic means. The Department may use identifying information only for purposes of collecting and enforcing tolls. Nothing in this section is intended to limit the right of any person to examine that person's own account information, or the right of any party, by authority of a proper court order, to inspect and examine identifying information."
SECTION 34.13.(c)  No later than January 1, 2014, the Board shall adopt a methodology and expected minimum and maximum tolls for use in establishing tolls for ferry routes under G.S. 136‑82, as amended by this section. The Board of Transportation shall consider the needs of commuters and other frequent passengers in its adoption of toll rates and the toll rate methodology.
SECTION 34.13.(d)  The Department of Transportation shall continue to collect tolls on all ferry routes for which tolls were in effect as of June 30, 2013.

NORTH CAROLINA RAILROAD COMPANY REPORTING AND DIVIDENDS
SECTION 34.14.(a)  Reporting and Oversight. – G.S. 124‑1 reads as rewritten:
"§ 124‑1.  Control of internal improvements.
The Governor and Council of State shall have charge of all the State's interest in all railroads, canals and other works of internal improvements. The Board of Directors of a State‑owned railroad company shall be responsible for managing its affairs and for reporting as set forth in G.S. 124‑17."
SECTION 34.14.(b)  Article 2 of Chapter 124 of the General Statutes is amended by adding a new section, G.S. 124‑15. G.S. 124‑6(b), as amended by Section 3.3(a) of S.L. 1999‑431, is recodified as G.S. 124‑15(a). G.S. 124‑5(b) is recodified as G.S. 124‑15(b). G.S. 124‑15, as enacted and amended by this subsection, reads as rewritten:
"§ 124‑15.  Board of directors; appointment and approval of encumbrances.
(a)	Notwithstanding subsection (a) of G.S. 124‑6, for any State‑owned railroad company that has trackage in more than two counties, seven of the members of the Board of Directors shall be appointed by the Governor, three of the members of the Board of Directors shall be appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives in accordance with G.S. 120‑121, and three of the members of the Board of Directors shall be appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121. The Board of Directors shall consist of 13 members. Of the Governor's seven appointments, one shall be from the appointees to the Board of Transportation and one shall be the Secretary of Commerce or the Secretary's designee. Of the initial members appointed by the Governor, three shall be appointed for terms of four years and four shall be appointed for terms of two years. Of the initial members recommended to the General Assembly by the Speaker of the House of Representatives, two shall be appointed for terms of four years and one shall be appointed for a term of two years. Of the initial members recommended to the General Assembly by the President Pro Tempore of the Senate, two shall be appointed for terms of four years and one shall be appointed for a term of two years. Thereafter all Board members shall serve four‑year terms. The Board shall elect the chairman from among its membership.
(b)	No State‑owned railroad company shall sell, lease, mortgage, or otherwise encumber its franchise, right‑of‑way, or other property, except by and with the approval and consent of the Board of Directors of that corporation. The president or other chief officer of the State‑owned railroad company shall report any acquisitions and dispositions in accordance with G.S. 124‑3(10)."
SECTION 34.14.(c)  Article 2 of Chapter 124 of the General Statutes is amended by adding a new section to read as follows:
"§ 124‑16.  Strategic plan and capital investment plan required of State‑owned railroad company; performance management system.
(a)	Any State‑owned railroad company shall prepare and maintain a comprehensive strategic plan and a capital investment plan. The strategic plan shall include a mission statement describing the purpose of the company and clear goals that address the strategic issues facing the company.
(b)	Any State‑owned railroad company shall develop and implement a formalized performance management system based on its strategic plan. The performance management system shall measure and monitor progress toward achieving strategic objectives. When performance fails to achieve strategic objectives within the time period established in the plan, a State‑owned railroad company shall take corrective action."
SECTION 34.14.(d)  Article 2 of Chapter 124 of the General Statutes is amended by adding a new section, G.S. 124‑17. G.S. 124‑3(b) is recodified as G.S. 124‑17(b). G.S. 124‑3(c) is recodified as G.S. 124‑17(c). G.S. 124‑17, as enacted and amended by this subsection, reads as rewritten:
"§ 124‑17.  Enhanced annual report of State‑owned railroad company; additional reporting requirements to Governor and General Assembly.
(a)	A State‑owned railroad company shall submit an annual report to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Transportation Oversight Committee. The report shall include the following:
(1)	The information required under G.S. 124‑3.
(2)	A copy of the strategic plan and the capital investment plan required under G.S. 124‑16.
(3)	Any failures to meet strategic objectives and what corrective actions were taken under G.S. 124‑16(b).
(4)	Anticipated dividends for the next three fiscal years.
(5)	A description of the State‑owned railroad company's business, subsidiaries, and markets in which it operates.
(6)	A list of the properties owned by the State‑owned railroad company.
(7)	A list of the directors and executive officers of the State‑owned railroad company and a description of the background and experience of each.
(8)	A description of the State‑owned railroad company's code of ethics and conflicts of interest policy.
(9)	A summary of the fees paid to an accounting firm during the year.
(10)	A list of the compensation paid to directors and officers of the State‑owned railroad company.
(11)	A description of the State‑owned railroad company's disagreements with its accountants if there has been a change in accountants.
(12)	A description of any transactions between the State‑owned railroad company and its directors, officers, and their family members.(b)	Upon the request of the Governor or any committee of the General Assembly, a State‑owned railroad company shall provide all additional information and data within its possession or ascertainable from its records. The State‑owned railroad company shall not be deemed to have waived any attorney‑client privilege when complying with this subsection. At the time a State‑owned railroad company provides information under this section, it shall indicate whether the information is confidential. Confidential information shall be subject to subsection (c) of this section.
(c)	Confidential information includes (i) information related to a proposed specific business transaction where inspection, examination, or copying of the records would frustrate the purpose for which the records were created, or (ii) information that is subject to confidentiality obligations of a railroad company. Confidential information is exempt from Chapter 132 of the General Statutes and shall not be subject to a request under G.S. 132‑6(a)."
SECTION 34.14.(e)  The Freight Rail & Rail Crossing Safety Improvement Fund is established within the Highway Fund.
SECTION 34.14.(f)  One‑Time Cash Dividend. – Notwithstanding G.S. 124‑5.1, any State‑owned railroad company, as defined under G.S. 124‑11, that has trackage in more than two counties shall issue a cash dividend in the amount of fifteen million five hundred thousand dollars ($15,500,000), which shall be deposited into the Freight Rail & Rail Crossing Safety Improvement Fund no later than January 15, 2014.
SECTION 34.14.(g)  Annual Cash Dividend. – G.S. 124‑5.1 reads as rewritten:
"§ 124‑5.1.  North Carolina Railroad Company dividends deposited to Highway Fund.
(a)	Any dividends of the North Carolina Railroad Company received by the State shall be deposited into the Freight Rail & Rail Crossing Safety Improvement Fund within the Highway Fund and administered by the Rail Division of the Department of Transportation. The Fund shall be used for the enhancement of freight rail service and railroad‑roadway crossing safety, which may include the following project types:
(1)	Track and associated infrastructure improvements for freight service.(2)	Grade crossing protection, elimination, and hazard removal.(3)	Signalization improvements.(4)	Assistance for projects to improve rail access to industrial, port, and military facilities and for freight intermodal facility improvements, provided that funding assistance under this subdivision shall be subject to the same limits as that for short‑line railroads under G.S. 136‑44.39.	
The Fund may also be used to supplement funds allocated for freight rail or railroad‑roadway crossing safety projects approved as part of the Transportation Improvement Program.
	"
SECTION 34.14.(h)  Article 2 of Chapter 124 of the General Statutes is amended by adding the following new section:
"§ 124‑18.  Dividends required of State‑owned railroad company.
Any State‑owned railroad company that has trackage in more than two counties shall issue an annual cash dividend to the State. The amount of the annual dividend is twenty‑five percent (25%) of the company's income from the prior year's trackage rights agreements. The dividend is due by January 15 of each year, and interest shall accrue at the annual rate of prime plus one percent (1%) if the payment is not paid by the due date. The Directors of any State‑owned railroad company who vote for or assent to the dividend required under this section shall not be held liable under G.S. 55‑8‑33."
SECTION 34.14.(i)  G.S. 136‑16.6 is repealed.
SECTION 34.14.(j)  Assess Certain Real Properties. – Any State‑owned railroad company, as defined under G.S. 124‑11, that has trackage in more than two counties shall assess the company's noncorridor real property that is among the following parcels:
Property Description	County	Nearest Town	Parcel ID
Burke Street Lot	Alamance	Gibsonville	107493
Bridges Street Lot	Carteret	Morehead	638620911461000
Newport Lot	Carteret	Newport	634814246231000
Wye Property Extension	Carteret	Morehead	637616924807000
Wye Property	Carteret	Morehead	637620923019000
Clarks Lot	Craven	Clarks	8‑221‑035
Tiffany & Bright Sts. Property	Lenoir	Kinston	11185 & 26555
Morrisville Former Depot	Wake	Morrisville	0755‑14‑6475
Waynesboro Lot	Wayne	Goldsboro	2599119118
The assessment shall identify potential environmental issues; title, encroachment, and other legal property issues; and any other characteristic of the property that would significantly impact the value of the parcels to a prospective purchaser. Any State‑owned railroad company, as defined under G.S. 124‑11, that has trackage in more than two counties shall report no later than April 1, 2014, to the Joint Legislative Transportation Oversight Committee and the Fiscal Research Division. The report shall include the findings of the assessment required by this subsection, an estimate of the costs to mitigate any environmental issues to meet applicable federal or State standards, the estimated value of the parcels taking into account mitigation costs, and potential alternate State uses for the parcels.
SECTION 34.14.(j1)  One‑Time Real Property Dividend. – Any State‑owned railroad company, as defined under G.S. 124‑11, that has trackage in more than two counties shall issue a dividend consisting of any of the company's noncorridor real property that is among the following parcels:
Property Description	County	Nearest Town	Parcel ID
4th Street Lot	Carteret	Morehead	638620808907000
Station & Former Industrial Lot	Carteret	Morehead	638620718127000
Waterfront & Riparian Rights	Carteret	Morehead	638620708857000 &
	638620709868000
N. Craven St. Lot	Craven	New Bern	8‑003‑241‑A
The dividend required by this subsection shall be issued no later than June 30, 2014, except as to the N. Craven St. Lot no later than October 1, 2013, and shall be in the form of a transfer of the property to the Department of Administration. Any State‑owned railroad making a dividend under this subsection may deduct any tax liabilities under the Internal Revenue Code triggered by this dividend from the amount of the dividend required under subsection (f) of this section.
SECTION 34.14.(j2)  The Department of Administration, in collaboration with the Department of Transportation and the North Carolina State Ports Authority (NCSPA), will evaluate the value of the parcels listed in subsection (j1) of this section that are located in Carteret County. The evaluation shall compare the value of the parcels for alternate transportation uses by the Department of Transportation or the NCSPA to the potential proceeds from sale of these properties to a non‑State third party. The Departments of Administration and Transportation shall report the results of the evaluation, including recommended alternate uses, to the Joint Legislative Transportation Oversight Committee by April 1, 2014. The Department of Administration shall not sell or transfer the parcels described in this subsection until authorized to do so by an act of the General Assembly.
SECTION 34.14.(j3)  Notwithstanding Articles 2 and 7 of Chapter 146 of the General Statutes and G.S. 124‑5.1, the Department of Administration shall sell any parcels listed in subsection (j1) of this section that are located in Craven County and deposit the proceeds of the sales into the Freight Rail & Rail Crossing Safety Improvement Fund of the Highway Fund. Notwithstanding any other provision of law, the Department of Administration may deduct the costs of selling the property from the proceeds of the sales.
SECTION 34.14.(k)  Subsections (g), (h), and (i) of this section become effective January 1, 2014.

ELIMINATE TELECOMMUNICATIONS AND INSPECTIONS PROGRAM ACCOUNTS
SECTION 34.15.(a)  The sum of ten million five hundred thousand dollars ($10,500,000) of the unallotted and unexpended balance of funds within the Inspection Program Account shall be transferred to the Highway Fund as appropriated and allocated by this act. The Inspection Program Account shall be eliminated after all funds allotted as of June 30, 2013, have been expended. The remaining unallotted and unexpended balance of funds shall be transferred to the Reserve for General Maintenance (fund center 1500/150934).
SECTION 34.15.(b)  Effective June 30, 2014, G.S. 20‑183.7(d1) is repealed, and the unallotted and unexpended balance of funds in the Telecommunications Account on that date shall be transferred to the Reserve for General Maintenance (fund center 1500/150934).
SECTION 34.15.(c)  G.S. 20‑183.7 reads as rewritten:
"§ 20‑183.7.  Fees for performing an inspection and issuing an electronic inspection authorization to a vehicle; use of civil penalties.
…
(c)	Fee Distribution. – Fees collected for electronic inspection authorizations are payable to the Division of Motor Vehicles. The amount of each fee listed in the table below shall be credited to the Highway Fund, the Volunteer Rescue/EMS Fund established in G.S. 58‑87‑5, the Rescue Squad Workers' Relief Fund established in G.S. 58‑88‑5, and the Division of Air Quality of the Department of Environment and Natural Resources:
Recipient	Safety Only	Emissions and
	Electronic	Safety
	Authorization	Electronic
		Authorization
Highway Fund	.55	5.30
				Volunteer Rescue/EMS Fund	.18	.18
Rescue Squad Workers' Relief Fund	.12	.12
Division of Air Quality	.00	.65.
	…."

DIVISION OF MOTOR VEHICLES TECHNOLOGY IMPROVEMENT ACCOUNT
SECTION 34.16.(a)  The sum of four million five hundred fifty thousand dollars ($4,550,000) of the unallotted and unexpended balance of funds within the Division of Motor Vehicles Technology Improvement Account shall be transferred to the Highway Fund as appropriated and allocated by this act. The Account shall be eliminated after all funds allotted as of June 30, 2013, have been expended. The remaining unallotted and unexpended balance of funds in the Account shall be transferred to the Reserve for General Maintenance (fund center 1500/150934).
SECTION 34.16.(b)  G.S. 20‑85, as rewritten by S.L. 2013‑183, reads as rewritten:
"(a1)	One dollar ($1.00) of the fee imposed for any transaction assessed a fee under subdivision (a)(1), (a)(2), (a)(3), (a)(7), (a)(8), or (a)(9) of this section shall be credited to the North Carolina Highway Fund. The Division shall use the fees derived from transactions with commission contract agents for the payment of compensation to commission contract agents. An additional fifty cents (50¢) of the fee imposed for any transaction assessed a fee under subdivision (a)(1) of this section shall be credited to the Mercury Switch Removal Account in the Department of Environment and Natural Resources.
…."
DEPARTMENT OF TRANSPORTATION CONTRACTED SERVICES
SECTION 34.17.  The Department of Transportation, Business and Contractual Services Unit, shall, in collaboration with the Division of Motor Vehicles, evaluate current contractual models and compensation for the provision of registration, title, tax collection, and other vehicle service transactions by branch agents contracting with the Division of Motor Vehicles. As part of this evaluation, the Department shall conduct an analysis of transaction trends, completion and error rates, and service times by transaction type and branch agent type, and shall assess the appropriateness of the current basis for contractor compensation and rates relative to documented service requirements.
Based on its findings, the Department shall recommend alternatives to the current contractual models for branch agents to standardize contract types, enhance performance, and strengthen contract administration, taking into account citizen accessibility to service centers. In addition, the Department shall submit detailed proposals for alternate options for contractor compensation, including, at a minimum, competitive bidding of branch agent contracts. The Department shall identify anticipated programmatic and fiscal impacts, and include implementation plans for each alternative.
The Department shall report its findings and recommendations to the Joint Legislative Transportation Oversight Committee, Joint Legislative Program Evaluation Oversight Committee, and Fiscal Research Division no later than March 1, 2014.

DRIVER EDUCATION
SECTION 34.20.(a)  G.S. 115C‑216(g) reads as rewritten:
"(g)	Fee for Instruction. – The local boards of education may charge each student participating in a driver education course a fee of up to fifty‑five dollars ($55.00) to offset the costs of providing the training and instruction."
SECTION 34.20.(b)  The Division of Motor Vehicles and the Department of Public Instruction shall collaborate to revise the driver knowledge test and to create a process for administration of the test and certification of passage by public schools administering driver education programs. The Division and the Department shall report to the Joint Legislative Transportation Oversight Committee, the Joint Legislative Program Evaluation Oversight Committee, the Joint Legislative Education Oversight Committee, and the Fiscal Research Division no later than March 1, 2014, on their progress in meeting the requirements of this subsection.
SECTION 34.20.(c)  Subsection (a) of this section is effective when it becomes law and applies to driver education courses beginning on or after that date.

Additional Annual Fee For Electric Vehicles
SECTION 34.21.(a)  G.S. 20‑87 is amended by adding the following new subdivision to read:
"(13)	Additional fee for certain electric vehicles. – At the time of an initial registration or registration renewal, the owner of a plug‑in electric vehicle that is not a low‑speed vehicle and that does not rely on a nonelectric source of power shall pay a fee in the amount of one hundred dollars ($100.00) in addition to any other required registration fees."
SECTION 34.21.(b)  This section becomes effective January 1, 2014, and applies to initial or renewal motor vehicle registrations on or after that date.

VISITOR CENTERS FUNDING
SECTION 34.22.  G.S. 20‑79.7(c)(2) reads as rewritten:
"(c)	Use of Funds in Special Registration Plate Account. – 
…
(2)	From the funds remaining in the Special Registration Plate Account after the deductions in accordance with subdivision (1) of this subsection, there is annually appropriated from the Special Registration Plate Account the sum of one million three hundred thousand dollars ($1,300,000) to provide operating assistance for the Visitor Centers:
a.	on U.S. Highway 17 in Camden County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
b.	on U.S. Highway 17 in Brunswick County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);c.	on U.S. Highway 441 in Macon County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
d.	in the Town of Boone, Watauga County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
e.	on U.S. Highway 29 in Caswell County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
f.	on U.S. Highway 70 in Carteret County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
g.	on U.S. Highway 64 in Tyrrell County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
h.	at the intersection of U.S. Highway 701 and N.C. 904 in Columbus County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
i.	on U.S. Highway 221 in McDowell County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
j.	on Staton Road in Transylvania County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
k.	in the Town of Fair Bluff, Columbus County, near the intersection of U.S. Highway 76 and N.C. 904, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857);
l.	on U.S. Highway 421 in Wilkes County, ninety‑two thousand eight hundred fifty‑seven dollars ($92,857); and
m.	at the intersection of Interstate 73 and Interstate 74 in Randolph County, ninety‑two thousand eight hundred fifty‑eight dollars ($92,858) each, for two centers."

STUDY GLOBAL TRANSPARK INFRASTRUCTURE AND RAIL ACCESS
SECTION 34.23.  The Department of Transportation, in collaboration with the Department of Commerce and the Department of Agriculture and Consumer Services, shall study the feasibility of infrastructure and access improvements for the Global TransPark and the North Carolina State Port Authority. As part of its study, the Department shall undertake the following:
(1)	Evaluate infrastructure improvements which will promote job creation and commerce and advance development of the Global TransPark as an inland terminal, including, at a minimum, specialized transloading equipment, refrigerated and dry storage facilities, and site improvements in support of co‑located manufacturing facilities on property owned by the Global TransPark Authority.
(2)	Perform financial feasibility analyses for each infrastructure improvement evaluated under subdivision (1) of this section, including the following components:
a.	Project scope and development time line.
b.	Assessment of technical feasibility.
c.	Estimates of preconstruction, construction, maintenance, and operating costs.
d.	Market scenarios, including identification of target industries and commodities and assessments of market demand, impacts on cargo throughput, utilization of Authority facilities, and other associated outputs.
e.	Return on investment, including direct financial return to the Authority or State as well as local and regional economic impact attributable to each project.
f.	Alternatives for project financing.
(3)	Assess highway and rail infrastructure improvements or service scenarios that improve access and throughput to the Global TransPark and North Carolina State Port Authority Morehead City Terminal, addressing at a minimum, the relative benefits and costs of each highway or rail project, as well as the impacts on freight movements for the highway system and connecting rail corridors. As part of this assessment, the Department shall, in collaboration with the North Carolina Railroad Company, evaluate alternate routes to improve rail capacity and access to the Morehead City Terminal and Radio Island site.
(4)	In addition, the Department shall perform a financial feasibility analysis of the Wallace to Castle Hayne and Wilmington track restoration project that includes the following components:
a.	Project scope and development time line.
b.	Assessment of technical feasibility, including traffic flow analysis and railroad capacity modeling.
c.	Service models addressing operating scenarios over the line segment and connections to other rail lines, as well as rate implications.
d.	Preliminary engineering, construction, maintenance, and operating cost.
e.	Service and market demand for rail service, identifying projected utilization by industry and impacts to alternate rail routes.
f.	Strategic value assessment, including return on investment, direct financial return to the State, and State, regional, and local economic impact.
g.	Strategic value of the corridor to military installations and as a connection to national and regional railroad corridors.
h.	Inventory of commercial and industrial sites or terminals benefitting from restored rail service or improved connectivity.
i.	Alternatives for project financing.
The Department shall provide a preliminary report of its findings to the Joint Legislative Transportation Oversight Committee no later than March 1, 2014, and a final report, including any recommended legislation, no later than January 1, 2015.

Life Cycle Cost Analysis Report
SECTION 34.25.  The Department of Transportation shall report on its life cycle cost analysis (LCCA) methodology and component factors used to comply with federal requirements to the Fiscal Research Division and the Joint Legislative Transportation Oversight Committee no later than February 1, 2014. The report will also include, at a minimum, the following:
(1)	The proportion of the Department's highway projects, by project category, for which the Department has performed an LCCA.
(2)	Federal and other statutory or regulatory impediments to the use of LCCA.
(3)	A comparison between the Department's LCCA methodology and the LCCA methodology used by the U.S. Department of Transportation and by other states.
(4)	Information on the scope and nature of involvement of outside stakeholders in the Department's development and revisions to its LCCA methodology.

OUTSIDE LEGAL COUNSEL/DEPARTMENT OF TRANSPORTATION
SECTION 34.27.  The Department of Transportation may engage the services of private counsel with the pertinent expertise to timely defend or otherwise resolve legal challenges to transportation projects undertaken by the Department. The Department shall supervise and manage the private counsel engaged under this section and shall not be required to obtain written permission from the Attorney General under G.S. 114‑2.3. The Department shall report the engagement of private counsel authorized by this section within 30 days to the General Assembly, as follows:
(1)	If the General Assembly is in session, the Department shall report to the Chairs of the Appropriations Subcommittee on Transportation of the House of Representatives, the Chairs of the Appropriations Committee on Transportation of the Senate, and the Fiscal Research Division.
(2)	If the General Assembly is not in session, or adjourns sine die during the 30‑day period, the Department shall report to the Chairs of the Joint Legislative Transportation Oversight Committee and the Fiscal Research Division.

LEGISLATIVE OVERSIGHT/DMV LICENSE & THEFT TRANSFERS
SECTION 34.28.  The Department of Transportation and the Department of Public Safety shall not transfer any personnel or functions of the License & Theft Bureau of the Department of Transportation's Division of Motor Vehicles or enter into any agreement regarding transfer of personnel or functions of the License & Theft Bureau until passage of an act of the General Assembly authorizing the transfer.

Highway Use Tax Base
SECTION 34.29.(a)  G.S. 105‑187.3(a) reads as rewritten:
"§ 105‑187.3.  Rate of tax.
(a)	Amount. – The rate of the use tax imposed by this Article is three percent (3%) of the sum of the following:
(1)	The retail value of a motor vehicle for which a certificate of title is issued.
(2)	Any fee regulated by G.S. 20‑101.1.
The tax is payable as provided in G.S. 105‑187.4. The maximum tax is one thousand dollars ($1,000) for each certificate of title issued for a Class A or Class B motor vehicle that is a commercial motor vehicle, as defined in G.S. 20‑4.01. The maximum tax is one thousand five hundred dollars ($1,500) for each certificate of title issued for a recreational vehicle that is not subject to the one thousand dollar ($1,000) maximum tax."
SECTION 34.29.(b)  This section becomes effective January 1, 2014.

Transportation Investments Conforming Change
SECTION 34.30.  Section 7.1(b) of S.L. 2013‑183 is repealed.

PART XXXV. SALARIES AND BENEFITS

GOVERNOR AND COUNCIL OF STATE
SECTION 35.1.(a)  Effective for the 2013‑2015 fiscal biennium, the annual salary of the Governor set by G.S. 147‑11(a) shall remain unchanged at the amount of one hundred forty‑one thousand two hundred sixty‑five dollars ($141,265).
SECTION 35.1.(b)  Effective for the 2013‑2015 fiscal biennium, the annual salaries for members of the Council of State, payable monthly, shall remain unchanged as follows:
	Council of State	Annual Salary
	Lieutenant Governor	$124,676
	Attorney General	124,676
	Secretary of State	124,676
	State Treasurer	124,676
	State Auditor	124,676
	Superintendent of Public Instruction	124,676
	Agriculture Commissioner	124,676
	Insurance Commissioner	124,676	Labor Commissioner	124,676

CERTAIN EXECUTIVE BRANCH OFFICIALS
SECTION 35.2.  Effective for the 2013‑2015 fiscal biennium, the annual salaries, payable monthly, for the following executive branch officials shall remain unchanged as follows:
Executive Branch Officials	Annual Salary
	Chairman, Alcoholic Beverage Control Commission	$110,868
	State Controller	155,159
	Commissioner of Banks	124,676
	Chair, Board of Review, Division of Employment Security	122,255
	Members, Board of Review, Division of Employment Security	120,737
	Chairman, Parole Commission	101,235
	Members of the Parole Commission	93,464
	Chairman, Utilities Commission	138,849
	Members of the Utilities Commission	124,676
	Executive Director, North Carolina
Agricultural Finance Authority	107,915

JUDICIAL BRANCH
SECTION 35.3.(a)  Effective for the 2013‑2015 fiscal biennium, the annual salaries, payable monthly, for specified judicial branch officials shall remain unchanged as follows:
Judicial Branch Officials	Annual Salary
	Chief Justice, Supreme Court	$142,623
	Associate Justice, Supreme Court	138,896
	Chief Judge, Court of Appeals	136,682
	Judge, Court of Appeals	133,109
	Judge, Senior Regular Resident Superior Court	129,492
	Judge, Superior Court	125,875
	Chief Judge, District Court	114,301
	Judge, District Court	110,684
	District Attorney	120,737
	Administrative Officer of the Courts	128,259
	Assistant Administrative Officer of the Courts	117,152
	Public Defender	120,737
	Director of Indigent Defense Services	124,498
SECTION 35.3.(b)  Effective for the 2013‑2015 fiscal biennium, the annual salaries of employees of the Judicial Department shall remain unchanged as follows:
(1)	The annual salaries of permanent full‑time and part‑time employees of the Judicial Department whose salaries are not itemized in this act shall remain unchanged.
(2)	Notwithstanding anything to the contrary, the annual salaries of clerks of superior court under G.S. 7A‑101(a) shall not change when a county changes from one population group to another.
(3)	The annual salaries of assistant and deputy clerks of court set under G.S. 7A‑102(c1) shall remain unchanged.
(4)	The annual salaries of magistrates set under G.S. 7A‑171.1(a) or G.S. 7A‑171.1(a1)(1) shall remain unchanged.

LEGISLATIVE BRANCH
SECTION 35.4.  For the 2013‑2015 fiscal biennium, the salaries of members and officers of the General Assembly shall remain unchanged at the amounts set under G.S. 120‑3, as provided in 1994 by the 1993 General Assembly. Effective for the 2013‑2015 fiscal biennium, salaries in the legislative branch shall remain unchanged, as follows:
(1)	The annual salaries set by G.S. 120‑37(c) for the principal clerks in each house shall remain unchanged.
(2)	The annual salaries set by G.S. 120‑37(b) of the sergeant‑at‑arms and the reading clerk in each house shall remain unchanged.
(3)	The annual salaries of the Legislative Services Officer and of nonelected employees of the General Assembly set under G.S. 120‑32 shall remain unchanged.

COMMUNITY COLLEGES PERSONNEL
SECTION 35.5.(a)  The annual salaries of all community college nonfaculty and professional staff whose salaries are supported from the State's General Fund shall remain unchanged for the 2013‑2015 fiscal biennium.
SECTION 35.5.(b)  For the 2013‑2015 fiscal biennium, the annual salaries of all community college faculty whose salaries are supported from the State's General Fund shall remain unchanged. The minimum salaries for nine‑month, full‑time curriculum community college faculty shall also remain unchanged as follows:
Education Level	Minimum Salary
Vocational Diploma/Certificate or Less	$34,314
Associate Degree or Equivalent	34,819
Bachelor's Degree	37,009
Masters Degree or Education Specialist	38,952
Doctoral Degree	41,753
No full‑time faculty member shall earn less than the minimum salary for his or her education level.
The pro rata hourly rate of the minimum salary for each education level shall be used to determine the minimum salary for part‑time faculty members.

UNIVERSITY OF NORTH CAROLINA SYSTEM
SECTION 35.6.(a)  The annual compensation of all University of North Carolina EPA faculty, EPA nonfaculty, SPA employees, and teachers employed by the North Carolina School of Science and Mathematics shall remain unchanged for the 2013‑2015 fiscal biennium.
SECTION 35.6.(b)  The annual compensation of all employees of the University of North Carolina Health Care System and the Medical Faculty Practice Plan at East Carolina University shall remain unchanged for the 2013‑2015 fiscal biennium.

MOST STATE EMPLOYEES
SECTION 35.7.  For the 2013‑2015 fiscal biennium, the salaries in effect June 30, 2013, for the following employees shall remain unchanged, effective July 1, 2013:
(1)	Permanent full‑time State officials and persons whose salaries are set in accordance with the State Personnel Act.
(2)	Permanent full‑time State officials and persons in positions exempt from the State Personnel Act.
(3)	Permanent part‑time State employees.
(4)	Temporary and permanent hourly State employees.

SALARY ADJUSTMENTS FOR SPECIAL CIRCUMSTANCES/NO AUTOMATIC INCREASES/AUTHORIZED SALARY ADJUSTMENT FUND ACTIONS NOT PROHIBITED
SECTION 35.8.(a)  The annual compensation of all employees subject to or exempt from the State Personnel Act, including employees of local boards of education, community colleges, and The University of North Carolina, for the 2013‑2015 fiscal biennium shall remain unchanged from that authorized on June 30, 2013, or the last date in pay status during the 2011‑2013 fiscal biennium, if earlier, unless an increase is authorized by this section or under the Salary Adjustment Fund established by this act.
SECTION 35.8.(b)  Salary increases may be awarded during the 2013‑2015 fiscal biennium under this section only for the following special circumstances:
(1)	For all State employees regardless of funding source, and for employees of the North Carolina Community College System and local school boards who are paid from State funds, 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 Part. All other salary increases are prohibited.
(1a)	For employees of the North Carolina Community College System, notwithstanding subdivision (1) of this subsection, salaries may be increased if the increase is (i) funded from local funding sources or (ii) for the purposes of retention or equity.
(2)	For The University of North Carolina, (i) faculty using funds from the Faculty Recruiting and Retention Fund, the Distinguished Professors Endowment Fund, or the University Cancer Research Fund in the case of faculty involved in cancer research supported by that fund; (ii) faculty, nonfaculty, and other employee adjustments, including retention adjustments, funded from non‑State funding sources; (iii) faculty, nonfaculty, and other employees for the purposes of retention or equity.
(3)	For employees of the judicial branch, for local supplementation as authorized by G.S. 7A‑300.1.
The cumulative salary adjustment allowed under this subsection for each fiscal year during the 2013‑2015 fiscal biennium may exceed ten percent (10%) of annual salary only if the adjustment is approved in advance by the Office of State Budget and Management, The University of North Carolina Board of Governors, the Board of the North Carolina Community College System, the Legislative Services Commission, the local board of education, or other authorized body as appropriate.
SECTION 35.8.(c)  The automatic salary step increases for assistant and deputy clerks of superior court and magistrates are suspended for the 2013‑2015 fiscal biennium.
SECTION 35.8.(d)  The salary increase provisions of G.S. 20‑187.3 are suspended for the 2013‑2015 fiscal biennium.
SECTION 35.8.(e)  During the 2013‑2015 fiscal biennium, notwithstanding G.S. 53C‑2‑3(c), employees of the Office of the Commissioner of Banks shall not be awarded (i) compensation increases unless allowed under subdivision (1) of subsection (b) of this section or (ii) compensation bonuses.
SECTION 35.8.(f)  Employees of the Lottery Commission shall not receive compensation bonuses during the 2013‑2015 fiscal biennium.

MONITOR MOST SALARY INCREASES
SECTION 35.9.(a)  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 Section 35.8 of this act and shall submit quarterly reports of their monitoring activities to the President Pro Tempore of the Senate, the Speaker of the House of Representatives, and the Fiscal Research Division: (i) State agencies, departments, and institutions, including authorities, boards, and commissions; (ii) the judicial branch; and (iii) The University of North Carolina and its constituent institutions.
The quarterly reports required by this section shall include the following information:
(1)	For agencies reporting through the BEACON HR/Payroll system, (i) a breakdown by action type (including, but not limited to, promotion, reallocation, career progression, salary adjustment, and any similar actions increasing employee pay) of the number and annual amount of those increases and (ii) a breakdown by action reason (including in‑range higher level, acting pay, trainee adjustment, and other similar action reasons) of the number and annual amount of those action types coded as salary adjustment.
(2)	For The University of North Carolina and its constituent institutions, a breakdown of the number and annual amount of those increases categorized by the University as promotions, changes in job duties or responsibilities, Distinguished Professorships, retention pay, career progression, and any other similar actions increasing employee pay.
(3)	A summary of actions taken by the Office of State Budget and Management and the Office of State Personnel with respect to unauthorized salary increases.
SECTION 35.9.(b)  The Legislative Services Officer shall report quarterly to the President Pro Tempore of the Senate and the Speaker of the House of Representatives on compliance with Section 35.8 this act.

ESTABLISH SEVERANCE EXPENDITURE RESERVE
SECTION 35.10.(a)  There are established in the Office of State Budget and Management General Fund and Highway Fund reserve budget codes for the purpose of funding severance‑related obligations to State employees subject to the State Personnel Act, and employees exempt from the State Personnel Act, who are separated from service due to a reduction‑in‑force action. Severance‑related expenditures from these reserves shall include obligations to fund:
(1)	A State employee's severance salary continuation with an age adjustment factor as authorized by G.S. 126‑8.5, including employer‑related contributions for social security, and
(2)	Noncontributory health premiums for up to 12 months as authorized by G.S. 135‑48.40(b)(8) for employees of employing units as defined by G.S. 135‑48.1(11).
SECTION 35.10.(b)  The Director of the Budget shall allocate funds appropriated in Sections 2.1 and 3.1 of this act to the Severance Expenditure Reserve to public agencies to fund severance‑related obligations incurred by the agencies as a result of reduction‑in‑force actions that cause State‑supported public employees to be terminated from public employment. Funds appropriated to the Severance Expenditure Reserve shall be expended in their entirety before funds appropriated to a public agency for State‑supported personal services expenditures may be used to fund any severance‑related obligations.
Funds appropriated to the Severance Expenditure Reserve may be allocated to public agencies for positions that are funded by the General Fund or Highway Fund. Funds appropriated to the Severance Expenditure Reserve may also be allocated to public agencies for positions that are funded partially from the General Fund or Highway Fund and partially from sources other than the General Fund or Highway Fund but only to the extent of the proportionate part of the salaries paid from the General Fund or Highway Fund.
For the purposes of this subsection, the term "public employee" means an employee of a State agency, department, or institution; The University of North Carolina; the North Carolina Community College System; or a local school administrative unit.

FLEXIBILITY FOR SALARY DETERMINATIONS FOR CERTAIN LICENSED PROFESSIONAL EMPLOYEES
SECTION 35.10A.(a)  State agencies, departments, and institutions shall have salary administration flexibility for licensed physicians, dentists, nurses, physicians assistants, pharmacists, and other allied health professionals and may exercise the flexibility within existing resources. No salary determination made under this section may exceed the maximum of the applicable salary range established by the Office of State Personnel under Chapter 126 of the General Statutes.
SECTION 35.10A.(b)  Beginning September 1, 2013, and then quarterly thereafter, the Office of State Personnel shall report to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division on the salary actions taken under this section.

SALARY ADJUSTMENT FUND
SECTION 35.10B.(a)  The Salary Adjustment Fund is established to make funding available for salary increases in the executive, legislative, and judicial branches for specified purposes only as authorized in this section. Funds appropriated to the Salary Adjustment Fund by this act, or any other provision of law, shall only be used to fund agency requests for the following purposes in order to provide competitive salary rates:
(1)	Reallocation of positions to higher level job classifications.
(2)	In‑range adjustments for job change.
(3)	Career progression adjustments for demonstrated competencies.
(4)	Salary range revisions.
(5)	Geographic site differential adjustments.
(6)	In‑range adjustments for labor market.
(7)	In‑range adjustments for equity issues.
(8)	Any other adjustments related to an increase in job duties or responsibilities or labor market changes.
These adjustments must be documented through data collection and analysis according to accepted human resource professional practices and standards. Further, funds may only be used for salary adjustments for the stated purposes that are in compliance with State Personnel Commission policies and other provisions of the Act. For the executive branch, funding shall be approved by the State Personnel Commission or Office of State Personnel and shall not be used for any other purposes.
SECTION 35.10B.(b)  Employees subject to the State Personnel Act in The University of North Carolina System are eligible for funding authorized in this section. Employees of local school boards and community colleges are not eligible for funding authorized in this section. Funding shall be approved by the State Personnel Commission or Office of State Personnel and shall not be used for any other purposes.
SECTION 35.10B.(c)  The Director of the Budget may transfer to General Fund budget codes from the Salary Adjustment Fund amounts required to support salary adjustments authorized by this section. The Director of the Budget shall consult with the Joint Legislative Commission on Governmental Operations prior to transferring any salary adjustment funds pursuant to this section.
SECTION 35.10B.(d)  For employees of the Department of Transportation or whose salaries are funded by the Highway Fund, the sum of up to three million dollars ($3,000,000) of funds available to the Department of Transportation for the 2013‑2015 fiscal biennium may be used for salary increases consistent with this section. Salary increases awarded under this subsection are special circumstances adjustments under Section 35.8 of this act.

SPECIAL ANNUAL LEAVE BONUS
SECTION 35.10C.  Any person (i) who was on July 1, 2013, a full‑time permanent employee of the State, a community college institution, or a local board of education or was under contract on July 1, 2013, to be employed for the 2013‑2014 school year in such a position and (ii) who is eligible to earn annual leave shall have a one‑time additional five days of annual leave credited on July 1, 2013. The additional leave shall be accounted for separately from the annual leave bonus provided by Section 28.3A of S.L. 2002‑126, by Section 30.12B(a) of S.L. 2003‑284, and by Section 29.14A of S.L. 2005‑276, and must be used by June 30, 2014. Annual leave bonus not used during FY 2013‑2014 shall expire on June 30, 2014, and shall not be paid in a lump sum upon termination of employment unless the person effects a retirement from a State‑supported retirement system immediately upon termination of employment. Part‑time permanent employees shall receive a pro rata amount of the five days.

TEACHER SALARY SCHEDULES
SECTION 35.11.(a)  The following monthly salary schedules shall apply for the 2013‑2014 fiscal year to certified personnel of the public schools who are classified as teachers. The schedules contain 37 steps, with each step corresponding to one year of teaching experience. Public school employees paid according to this salary schedule and receiving NBPTS certification or obtaining a masters degree shall not be prohibited from receiving the appropriate increase in salary. Provided, however, teachers employed during the 2012‑2013 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.

2013‑2014 Monthly Salary Schedule
"A" Teachers
	Years of Experience	"A" Teachers	NBPTS Certification
	0‑2	$3,080	N/A
	3‑5	$3,080	$3,450
	6	$3,122	$3,497
	7	$3,167	$3,547
	8	$3,303	$3,699
	9	$3,445	$3,858
	10	$3,580	$4,010
	11	$3,711	$4,156
	12	$3,816	$4,274
	13	$3,865	$4,329
	14	$3,914	$4,384
	15	$3,965	$4,441
	16	$4,015	$4,497
	17	$4,066	$4,554
	18	$4,118	$4,612
	19	$4,171	$4,672
	20	$4,226	$4,733
	21	$4,282	$4,796
	22	$4,337	$4,857
	23	$4,397	$4,925
	24	$4,456	$4,991
	25	$4,515	$5,057
	26	$4,577	$5,126
	27	$4,639	$5,196
	28	$4,706	$5,271
	29	$4,771	$5,344
	30	$4,836	$5,416
	31	$4,903	$5,491
	32	$4,972	$5,569
	33	$5,044	$5,649
	34	$5,116	$5,730
	35	$5,215	$5,841
	36+	$5,318	$5,956

2013‑2014 Monthly Salary Schedule
"M" Teachers
	Years of Experience	"M" Teachers	NBPTS Certification
	0‑2	$3,388	N/A
	3‑5	$3,388	$3,795
	6	$3,434	$3,846
	7	$3,484	$3,902
	8	$3,633	$4,069
	9	$3,790	$4,245
	10	$3,938	$4,411
	11	$4,082	$4,572
	12	$4,198	$4,702
	13	$4,252	$4,762
	14	$4,305	$4,822
	15	$4,362	$4,885
	16	$4,417	$4,947
	17	$4,473	$5,010
	18	$4,530	$5,074
	19	$4,588	$5,139
	20	$4,649	$5,207
	21	$4,710	$5,275
	22	$4,771	$5,344
	23	$4,837	$5,417
	24	$4,902	$5,490
	25	$4,967	$5,563
	26	$5,035	$5,639
	27	$5,103	$5,715
	28	$5,177	$5,798
	29	$5,248	$5,878
	30	$5,320	$5,958
	31	$5,393	$6,040
	32	$5,469	$6,125
	33	$5,548	$6,214
	34	$5,628	$6,303
	35	$5,737	$6,425
	36+	$5,850	$6,552
SECTION 35.11.(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 35.11.(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 35.11.(d)  The first step of the salary schedule for school psychologists shall be equivalent to Step 10, corresponding to 10 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 35.11.(e)  Speech pathologists who are certified as speech pathologists at the masters degree level and audiologists who are certified as audiologists at the masters degree level and who are employed in the public schools as speech and language specialists and audiologists shall be paid on the school psychologist salary schedule.
Speech pathologists and audiologists with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for speech pathologists and audiologists. Speech pathologists and audiologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for speech pathologists and audiologists.
SECTION 35.11.(f)  Certified school nurses who are employed in the public schools as nurses shall be paid on the "M" salary schedule.
SECTION 35.11.(g)  As used in this section, the term "teacher" shall also include instructional support personnel.
SECTION 35.11.(h)  Public school employees and State agency employees paid on the teacher salary schedule shall not move up on salary schedules or receive automatic step increases, or other increments during the 2014‑2015 fiscal year unless authorized by the General Assembly.

SCHOOL‑BASED ADMINISTRATOR SALARY SCHEDULE
SECTION 35.12.(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 2013‑2014 fiscal year, commencing July 1, 2013. Provided, however, school‑based administrators (i) employed during the 2012‑2013 school year who did not work the required number of months to acquire an additional year of experience and (ii) employed during the 2013‑2014 school year in the same classification shall not receive a decrease in salary as otherwise would be required by the salary schedule below.

2013‑2014 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)
	0‑9	$3,828	‑	‑	‑	‑
	10	$3,977	‑	‑	‑	‑
	11	$4,123	‑	‑	‑	‑
	12	$4,240	‑	‑	‑	‑
	13	$4,295	$4,295	‑	‑	‑
	14	$4,348	$4,348	‑	‑	‑
	15	$4,406	$4,406	$4,461	‑	‑
	16	$4,461	$4,461	$4,518	‑	‑
	17	$4,518	$4,518	$4,575	$4,634	‑
	18	$4,575	$4,575	$4,634	$4,695	$4,757
	19	$4,634	$4,634	$4,695	$4,757	$4,819
	20	$4,695	$4,695	$4,757	$4,819	$4,885
	21	$4,757	$4,757	$4,819	$4,885	$4,951
	22	$4,819	$4,819	$4,885	$4,951	$5,017
	23	$4,885	$4,885	$4,951	$5,017	$5,085
	24	$4,951	$4,951	$5,017	$5,085	$5,154
	25	$5,017	$5,017	$5,085	$5,154	$5,229
	26	$5,085	$5,085	$5,154	$5,229	$5,300
	27	$5,154	$5,154	$5,229	$5,300	$5,373
	28	$5,229	$5,229	$5,300	$5,373	$5,447
	29	$5,300	$5,300	$5,373	$5,447	$5,524
	30	$5,373	$5,373	$5,447	$5,524	$5,603
	31	$5,447	$5,447	$5,524	$5,603	$5,684
	32	$5,524	$5,524	$5,603	$5,684	$5,794
	33	$5,603	$5,603	$5,684	$5,794	$5,909
	34	$5,684	$5,684	$5,794	$5,909	$6,027
	35	$5,794	$5,794	$5,909	$6,027	$6,148
	36	$5,909	$5,909	$6,027	$6,148	$6,271
	37	‑	$6,027	$6,148	$6,271	$6,396
	38	‑	‑	$6,271	$6,396	$6,524
	39	‑	‑	$6,396	$6,524	$6,654
	40	‑	‑	‑	$6,654	$6,787
	41	‑	‑	‑	$6,787	$6,923
	42	‑	‑	‑	‑	$7,061

2013‑2014 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+)
	0‑19	$4,885	‑	‑	‑
	20	$4,951	‑	‑	‑
	21	$5,017	$5,085	‑	‑
	22	$5,085	$5,154	$5,300	‑
	23	$5,154	$5,229	$5,373	$5,447
	24	$5,229	$5,300	$5,447	$5,524
	25	$5,300	$5,373	$5,524	$5,603
	26	$5,373	$5,447	$5,603	$5,684
	27	$5,447	$5,524	$5,684	$5,794
	28	$5,524	$5,603	$5,794	$5,909
	29	$5,603	$5,684	$5,909	$6,027
	30	$5,684	$5,794	$6,027	$6,148
	31	$5,794	$5,909	$6,148	$6,271
	32	$5,909	$6,027	$6,271	$6,396
	33	$6,027	$6,148	$6,396	$6,524
	34	$6,148	$6,271	$6,524	$6,654
	35	$6,271	$6,396	$6,654	$6,787
	36	$6,396	$6,524	$6,787	$6,923
	37	$6,524	$6,654	$6,923	$7,061
	38	$6,654	$6,787	$7,061	$7,202
	39	$6,787	$6,923	$7,202	$7,346
	40	$6,923	$7,061	$7,346	$7,493
	41	$7,061	$7,202	$7,493	$7,643
	42	$7,202	$7,346	$7,643	$7,796
	43	$7,346	$7,493	$7,796	$7,952
	44	‑	$7,643	$7,952	$8,111
	45	‑	$7,796	$8,111	$8,273
	46+	‑	‑	$8,273	$8,438
SECTION 35.12.(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 35.12.(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 2013‑2014 or 2014‑2015 fiscal years shall not receive a corresponding increase in salary during the 2013‑2015 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 35.12.(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 35.12.(e)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 35.12.(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 35.12.(g)  Participants in an approved full‑time masters in‑school administration program shall receive up to a 10‑month stipend at the beginning salary of an assistant principal during the internship period of the masters program. The stipend shall not exceed the difference between the beginning salary of an assistant principal 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 masters in‑school administration program shall supply the Department of Public Instruction with certification of eligible full‑time interns.
SECTION 35.12.(h)  During the 2013‑2015 fiscal biennium, the placement on the salary schedule of an administrator with a one‑year provisional assistant principal's certificate shall be at the entry‑level salary for an assistant principal or the appropriate step on the teacher salary schedule, whichever is higher.
SECTION 35.12.(i)  Public school employees and State agency employees paid on the school based administrator salary schedule shall not move up on salary schedules or receive automatic step increases, or other increments during the 2014‑2015 fiscal year unless authorized by the General Assembly.

CENTRAL OFFICE SALARIES
SECTION 35.13.(a)  The monthly salary ranges that follow, which apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers, shall remain unchanged for the 2013‑2015 fiscal biennium, beginning July 1, 2013.
School Administrator I	$3,349	$6,281
School Administrator II	$3,550	$6,662
School Administrator III	$3,769	$7,068
School Administrator IV	$3,920	$7,349
School Administrator V	$4,078	$7,647
School Administrator VI	$4,326	$8,109
School Administrator VII	$4,500	$8,436
The local board of education shall determine the appropriate category and placement for each assistant superintendent, associate superintendent, director/coordinator, supervisor, or finance officer within the salary ranges and within funds appropriated by the General Assembly for central office administrators and superintendents. The category in which an employee is placed shall be included in the contract of any employee.
SECTION 35.13.(b)  The monthly salary ranges that follow, which apply to public school superintendents, shall remain unchanged for the 2013‑2015 fiscal biennium, beginning July 1, 2013.
Superintendent I	$4,777	$8,949
Superintendent II	$5,071	$9,490
Superintendent III	$5,380	$10,067
Superintendent IV	$5,710	$10,679
Superintendent V	$6,060	$11,330
The local board of education shall determine the appropriate category and placement for the superintendent based on the average daily membership of the local school administrative unit and within funds appropriated by the General Assembly for central office administrators and superintendents.
SECTION 35.13.(c)  Longevity pay for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers shall be as provided for State employees under the State Personnel Act.
SECTION 35.13.(d)  Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided pursuant to this section. Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for under this section.
SECTION 35.13.(e)  The State Board of Education shall not permit local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.
SECTION 35.13.(f)  The salaries of all permanent, full‑time personnel paid from the Central Office Allotment shall remain unchanged for the 2013‑2015 fiscal biennium.

NONCERTIFIED PERSONNEL SALARIES
SECTION 35.14.  The annual salary for permanent, full‑time and part‑time noncertified public school employees whose salaries are supported from the State's General Fund shall be remain unchanged for the 2013‑2015 fiscal biennium.

SALARY‑RELATED CONTRIBUTIONS
SECTION 35.15.(a)  Effective for the 2013‑2015 fiscal biennium, required employer salary‑related contributions for employees whose salaries are paid from department, office, institution, or agency receipts shall be paid from the same source as the source of the employee's salary. If an employee's salary is paid in part from the General Fund or Highway Fund and in part from department, office, institution, or agency receipts, required employer salary‑related contributions may be paid from the General Fund or Highway Fund only to the extent of the proportionate part paid from the General Fund or Highway Fund in support of the salary of the employee, and the remainder of the employer's requirements shall be paid from the source that supplies the remainder of the employee's salary. The requirements of this section as to source of payment are also applicable to payments on behalf of the employee for hospital medical benefits, longevity pay, unemployment compensation, accumulated leave, workers' compensation, severance pay, separation allowances, and applicable disability income benefits.
Notwithstanding any other provision of law, an employing unit, as defined in G.S. 135‑48.1, that hires or has hired as an employee a retiree that is in receipt of monthly retirement benefits from any retirement system supported in whole or in part by contributions of the State shall enroll the retiree in the active group and pay the cost for the hospital medical benefits if that retiree is employed in a position that would require the employer to pay hospital medical benefits if the individual had not been retired.
SECTION 35.15.(b)  Effective July 1, 2013, the State's employer contribution rates budgeted for retirement and related benefits as a percentage of covered salaries for the 2013‑2015 fiscal biennium are (i) fourteen and sixty‑nine hundredths percent (14.69%) – Teachers and State Employees; (ii) nineteen and sixty‑nine hundredths percent (19.69%) – State Law Enforcement Officers; (iii) twelve and sixty‑eight hundredths percent (12.68%) – University Employees' Optional Retirement Program; (iv) twelve and sixty‑eight hundredths percent (12.68%) – Community College Optional Retirement Program; (v) thirty‑three and forty‑one hundredths percent (33.41%) – Consolidated Judicial Retirement System; and (vi) five and forty hundredths percent (5.40%) – Legislative Retirement System. Each of the foregoing contribution rates includes five and forty hundredths percent (5.40%) for hospital and medical benefits. The rate for the Teachers and State Employees, State Law Enforcement Officers, University Employees' Optional Retirement Program, and the Community College Optional Retirement Program includes forty‑four hundredths percent (0.44%) 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. The rate for Teachers and State Employees and State Law Enforcement Officers includes one hundredths percent (0.01%) for the Qualified Excess Benefit Arrangement.
SECTION 35.15.(c)  Effective July 1, 2013, the maximum annual employer contributions, payable monthly, by the State for each covered employee or retiree for the 2013‑2014 fiscal year to the State Health Plan for Teachers and State Employees are (i) Medicare eligible employees and retirees – four thousand one hundred seven dollars ($4,107) and (ii) non‑Medicare eligible employees and retirees – five thousand two hundred eighty‑five dollars ($5,285).
SECTION 35.15.(d)  Effective July 1, 2014, the maximum annual employer contributions, payable monthly, by the State for each covered employee or retiree for the 2014‑2015 fiscal year to the State Health Plan for Teachers and State Employees are (i) Medicare eligible employees and retirees – four thousand two hundred twenty‑four dollars ($4,224) and (ii) non‑Medicare eligible employees and retirees – five thousand four hundred thirty‑five dollars ($5,435).

SEPARATE INSURANCE BENEFITS PLAN ASSETS/PAYMENT OF HEALTH INSURANCE PREMIUMS FOR LAW ENFORCEMENT OFFICERS
SECTION 35.17.(a)  G.S. 143‑166.60 is amended by adding a new subsection to read:
"(d1)	In addition to the benefits provided under subsection (d) of this section, the assets of the Plan may be used to pay the employer health insurance contributions and contribution rates on behalf of law enforcement officers, as defined in G.S. 135‑1(11c), employed by the State and former law enforcement officers receiving a retirement allowance from the Teachers' and State Employees' Retirement System."
SECTION 35.17.(b)  During the 2013‑2015 fiscal biennium, the Department of Public Safety and the Department of Justice shall report monthly to the Department of State Treasurer a list of the sworn law enforcement officers on whose behalf the departments have paid employer premiums to the State Health Plan. After receiving the reports, the Department of State Treasurer shall review and approve the reports and execute periodic transfers to the General Fund in order to ensure that these State law enforcement employer premium costs are financially supported by the Separate Insurance Benefits Plan established under G.S. 143‑166.60.
SECTION 35.17.(c)  For each fiscal year of the 2013‑2015 fiscal biennium, the Department of State Treasurer shall calculate the total compensation for which the Department of Public Safety and Department of Justice have paid retirement contributions on behalf of sworn law enforcement officers. The Department of State Treasurer shall multiply this total compensation by five and forty hundredths percent (5.40%) for months during the 2013‑2014 fiscal year and by five and fifty‑five hundredths percent (5.55%) for months during the 2014‑2015 fiscal year and shall ensure that the General Fund is fully reimbursed for these costs by executing periodic transfers of the resulting amounts from the Separate Insurance Benefits Plan established under G.S. 143‑166.60 to the General Fund.

STATE HEALTH PLAN BOARD TO CONTROL GROWTH OF EMPLOYER PREMIUM
SECTION 35.18.  The Board of Trustees of the State Health Plan for Teachers and State Employees shall adopt new plan changes, beyond those already approved as of June 1, 2013, that are expected to reduce the average annual percentage increase in employer premiums needed over the next four years by at least one. The plan changes may include one or more of the following: changes to out‑of‑pocket requirements, changes to employee or retiree premiums, new plan options, changes in the services and products covered, changes to the provider network structure, changes to provider rates or payment methodology, incentives to Plan members to adopt or maintain healthy behaviors, incentives to Plan members to control utilization, any type of integrated health management program, fraud detection, utilization management, or changes in plan administration.

PART XXXVI. CAPITAL APPROPRIATIONS

GENERAL FUND CAPITAL APPROPRIATIONS/INTRODUCTION
SECTION 36.1.  The appropriations made by the 2013 General Assembly for capital improvements are for constructing, repairing, or renovating State buildings, utilities, and other capital facilities, for acquiring sites for them where necessary, and for acquiring buildings and land for State government purposes.

CAPITAL APPROPRIATIONS/GENERAL FUND
SECTION 36.2.(a)  There is appropriated from the General Fund for the 2013‑2015 fiscal biennium the following amounts for capital improvements:
Capital Improvements – General Fund	2013‑2014	2014‑2015

Department of Administration
	Sandhills State Veterans Facility – Committal
	Enclosure	$	125,000	‑
	Goldsboro State Veterans' Cemetery	600,000	‑

Department of Environment and Natural Resources
	Water Resources Development Projects	11,522,000	‑

Department of Justice
	Western Crime Lab Planning	1,442,000	‑

Department of Public Safety
	Samarkand Training Facility	5,250,000	5,173,000
	National Guard	5,000,000	3,250,000

The University of North Carolina System
	University of North Carolina Asheville – 
	Land Purchases	2,000,000	‑
	Appalachian State University – Health Sciences
	Building Advance Planning	2,000,000	‑

TOTAL CAPITAL IMPROVEMENTS – 
	GENERAL FUND	$ 27,939,000	$   8,423,000
SECTION 36.2.(b)  Funds appropriated in subsection (a) of this section for the Sandhills State Veterans Facility – Committal Enclosure shall be used to match non‑State funds. The total project cost authorized is three hundred thousand dollars ($300,000).
SECTION 36.2.(c)  Funds appropriated in subsection (a) of this section for the Goldsboro State Veterans' Cemetery shall be used to pay for environmental, architectural, and engineering costs associated with constructing a State Veterans' Cemetery in Goldsboro. The State shall establish, own, operate, maintain, expand, and improve a State Veterans' Cemetery in Goldsboro in accordance with 38 C.F.R. Part 39 unless subdivision (1) or (2) of subsection (d) of this section is true.
SECTION 36.2.(d)  Any unspent and unencumbered funds appropriated in subsection (a) of this section for the Goldsboro State Veterans' Cemetery shall revert to the General Fund three years after the effective date of this act if on that date any of the following are true:
(1)	The State has not received federal grant funds in an amount that, when added to the funds appropriated in subsection (a) of this section, is sufficient to pay for the cost of completing the State Veterans' Cemetery authorized in that subsection.
(2)	Land in Wayne County sufficient in size and quality to build the State Veterans' Cemetery described in subsection (a) of this section has not been conveyed to the State by the County or some other party.
(3)	Any of the funds are not required to complete the Goldsboro State Veterans' Cemetery.
SECTION 36.2.(e)  G.S. 65‑41 reads as rewritten:
"§ 65‑41.  Land acquisition.
The State may accept land for the establishment of not more than four veterans cemeteries."
SECTION 36.2.(f)  Funds appropriated in subsection (a) of this section for the Samarkand Training Facility shall be used to convert the former Samarkand Youth Development Center property and facilities into an overnight Department of Public Safety training facility that shall include a firing range.

WATER RESOURCES DEVELOPMENT PROJECTS
SECTION 36.3.(a)  The Department of Environment and Natural Resources shall allocate funds for water resources development projects in accordance with the schedule that follows. The amounts set forth in the schedule include funds appropriated in this act for water resources development projects and funds carried forward from previous fiscal years in accordance with subsection (b) of this section. These funds will provide a State match for an estimated thirty‑nine million five hundred forty‑eight thousand dollars ($39,548,000) in federal funds.

Name of Project	2013‑2014
(1)	B. Everett Jordan Lake Water Supply Storage A	$	200,000
(2)	Wilmington Harbor Deepening (75/25)	2,266,000
(3)	Morehead City Harbor Maintenance	‑
(4)	Wilmington Harbor Maintenance (Disposal Areas 8 & 10)	2,000,000
(5)	Wilmington Harbor Improvements Feasibility (50/50)	503,000
(6)	Planning Assistance to Communities (50/50)	25,000
(7)	Manteo Old House Channel Cap Sec. 204 (65/35)	2,219,000
(8)	Natural Resources Conservation Service EQIP Project (75/25)	1,500,000
(9)	Wrightsville Beach Coastal Storm Damage
		Reduction Project (65/35)(Full Project)	1,077,000
(10)	Ocean Isle Beach Coastal Storm Damage
		Reduction Project (65/35)(Full Project)	1,481,000
(11)	Carolina Beach Coastal Storm Damage
		Reduction Project (65/35)(40% project)	727,000
(12)	Kure Beach Coastal Storm Damage
		Reduction Project (65/35)(40% project)	808,000
(13)	Surf City/NTB Coastal Storm Damage
		Reduction Study‑PED (75/25)	37,000
(14)	Concord Streams, NC Sec 206 (65/35)	1,023,000
(15)	Aquatic Plant Control, Statewide and Lake Gaston (50/50)	200,000

TOTALS	$ 14,066,000
SECTION 36.3.(b)  It is the intent of the General Assembly that funds carried forward from previous fiscal years be used to supplement the thirteen million five hundred twenty‑two thousand dollars ($11,522,000) appropriated for water resources development projects in Section 36.2(a) of this act. Therefore, the following funds carried forward from previous fiscal years shall be used for the following projects:

Name of Project	Amount Carried Forward
(1)	Wilmington Harbor Maintenance (Disposal Areas 8 & 10)	$ 1,200,000
(2)	Wilmington Harbor Improvements Feasibility (50/50)	57,000
(3)	Manteo Old House Channel Cap Sec. 204 (65/35)	1,250,000
(4)	Surf City/NTB Coastal Storm Damage
		Reduction Study‑PED (75/25)	37,000

TOTALS	$ 2,544,000
SECTION 36.3.(c)  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 2013‑2014 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 the 2013‑2014 fiscal year.
(3)	State‑local water resources development projects.
Funds subject to this subsection that are not expended or encumbered for the purposes set forth in subdivisions (1) through (3) of this subsection shall revert to the General Fund at the end of the 2014‑2015 fiscal year.
SECTION 36.3.(d)  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 also shall show those projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.
SECTION 36.3.(e)  Notwithstanding any provision of law to the contrary, funds appropriated for a water resources development project shall be used to provide no more than fifty percent (50%) of the nonfederal portion of funds for the project. This subsection applies to funds appropriated in this act and to funds appropriated prior to the 2013‑2015 fiscal biennium that are unencumbered and proposed for reallocation to provide the nonfederal portion of funds for water resources development projects. The limitation on fund usage contained in this subsection applies only to projects in which a local government or local governments participate.
SECTION 36.3.(f)  Up to two hundred fifty thousand dollars ($250,000) of the funds appropriated to the Department of Environment and Natural Resources for the Parks and Recreation Trust Fund for the 2013‑2014 fiscal year may be transferred to the Division of Water Resources of the Department of Environment and Natural Resources to be used for the Lake Waccamaw Hydrilla Eradication Project. The funds transferred under this section shall be transferred to the Division of Water Resources on an as‑needed basis.

NON‑GENERAL FUND CAPITAL IMPROVEMENT AUTHORIZATIONS
SECTION 36.4.(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 2013‑2014

Department of Agriculture and Consumer Services
	Western North Carolina Agricultural Center – Midway Pavilion	$ 125,000
	Western North Carolina Agricultural Center – Fill Retention Ponds	250,000
	Piedmont Research Station – Calf Barn Construction	150,000
	Research Stations – Forest Road Construction	150,000
	Raleigh Farmers Market – Parking Improvement/Expansion	200,000

Department of Environment and Natural Resources
	Zoo Ocelot	642,000
	Zoo Storage Facility	490,000
	Aquariums – Exhibit Improvements & Interior Renovations 
		at Roanoke Island	5,000,000

Department of Public Safety
	Tabor Correctional Visitor Registration Center	121,754
	Correction Enterprise Storage Buildings	75,000
	NC National Guard
	Albemarle Readiness Center	410,000
	Fort Fisher Training Site	1,138,000
	Fort Bragg Regional Training Inst.	250,000
	USPFO Administration Building	350,000
	Camp Butner West Perimeter Road	495,000
	J4 Annex Motor Pool New Latrine	30,000
	High Point Readiness Center Maintenance Shop	70,000
	Camp Butner Classroom Building Phase 1 Design	50,000
	Fort Bragg MATES Lower Parking Lot Storm Water Management	499,000
	Fort Bragg MATES Lower Parking Lot Concrete Pavement`	740,000
	Kinston Field Maintenance Shop #18 Motor Pool Parking Lot Repair	225,000
	Electronic Simulation Training Building	750,000
	Fire Bucket Storage Building	500,000
	Camp Butner Big Top	475,000

Department of Transportation
	Lexington Equipment Shop	2,288,000
	Division 2 Equipment Shop	7,044,300
	Clay County Equipment Shop	1,210,000
	Halifax County Salt Storage Shed	186,000
	Lake Junaluska Salt Storage Shed	266,000
	Nantahala Salt Storage Shed	35,000
	Currituck Ferry Welcome Center	1,200,000
	McDowell County Maintenance/Bridge Maintenance Assembly Office	1,500,000
	Huntersville Satellite Maintenance Facility	96,300
	Elizabeth City District/Resident Engineers Office	1,000,000
	Southport Dormitory	862,000
	Asheboro Maintenance Warehouse and Sign Subshop	489,000
	Hatteras Toll Booth	76,000
	Graham County Maintenance Assembly	704,000
	Division 8 Office	141,000

Wildlife Resources Commission
	Land Purchases	3,750,000
	Table Rock Hatchery Building Replacement	500,000
	Construction of New Fishing Access Areas	240,000
	Construction of New Boating Access Areas	800,000
	Construction of New Shooting Ranges	1,500,000
	New Cold Water Hatchery – Advance Planning	100,000
	Holly Shelter Game Lands – Maintenance Building Replacement	250,000
	Sandhills Depot – Building Replacement	600,000
	Renovations to Existing BAAs	800,000
	ADA Initiative of Existing BAAs	280,000
	Infrastructure R&R	1,500,000
	Sandhills Depot Shop and Storage Building	435,000
	Holly Shelter Shop and Secure Storage Building	250,000
	Tiffany Depot Storage Shed and Shop	165,000
TOTAL AMOUNT OF NON‑GENERAL FUND CAPITAL
	PROJECTS AUTHORIZED	$41,453,354
SECTION 36.4.(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 2013‑2014 fiscal year and the sum of thirty thousand dollars ($30,000) for the 2014‑2015 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, and environmental studies, and for the management of the plant conservation program preserves owned by the Department.

REPAIRS AND RENOVATIONS RESERVE ALLOCATION
SECTION 36.5.(a)  Of the funds in the Reserve for Repairs and Renovations for the 2013‑2014 and the 2014‑2015 fiscal years, the following allocations shall be made to the following agencies for repairs and renovations pursuant to G.S. 143C‑4‑3:
(1)	Forty percent (40%) shall be allocated to the Board of Governors of The University of North Carolina.
(2)	Sixty percent (60%) shall be allocated to the Office of State Budget and Management.
The Office of State Budget and Management and the Board of Governors shall consult with or report to the Joint Legislative Commission on Governmental Operations, as appropriate, in accordance with G.S. 143C‑4‑3(d).
SECTION 36.5.(b)  Notwithstanding G.S. 143C‑4‑3(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 each fiscal year 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 36.5.(c)  Notwithstanding G.S. 143C‑4‑3(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 each fiscal year by the Board of Governors for campus public safety improvements allowable under G.S. 143C‑4‑3(b).
SECTION 36.5.(d)  G.S. 143C‑4‑3(b), as rewritten by Section 6.12(l) of this act, reads as rewritten:
"(b)	Use of Funds. – The funds in the Repairs and Renovations Reserve shall be used only for the repair and renovation of (i) State facilities and related infrastructure that are supported from the General Fund or (ii) State Information Technology Services facilities and related infrastructure. Funds from the Repairs and Renovations Reserve shall be used only for the following types of projects:
(1)	Roof repairs and replacements;
(2)	Structural repairs;
(3)	Repairs and renovations to meet federal and State standards;
(4)	Repairs to electrical, plumbing, and heating, ventilating, and air‑conditioning systems;
(5)	Improvements to meet the requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., as amended;
(6)	Improvements to meet fire safety needs;
(7)	Improvements to existing facilities for energy efficiency;
(8)	Improvements to remove asbestos, lead paint, and other contaminants, including the removal and replacement of underground storage tanks;
(9)	Improvements and renovations to improve use of existing space;
(10)	Historical restoration;
(11)	Improvements to roads, walks, drives, utilities infrastructure; and
(12)	Drainage and landscape improvements.
Funds from the Repairs and Renovations Reserve shall not be used for new construction or the expansion of the building area (sq. ft.) of an existing facility unless required in order to comply with federal or State codes or standards."

PROCEDURES FOR DISBURSEMENT OF CAPITAL FUNDS
SECTION 36.6.  The appropriations made by the 2013 General Assembly for capital improvements shall be disbursed for the purposes provided by this act. Expenditure of funds shall not be made by any State department, institution, or agency until an allotment has been approved by the Governor as Director of the Budget. The allotment shall be approved only after full compliance with the State Budget Act, Chapter 143C of the General Statutes. Prior to the award of construction contracts for projects to be financed in whole or in part with self‑liquidating appropriations, the Director of the Budget shall approve the elements of the method of financing of those projects, including the source of funds, interest rate, and liquidation period. Provided, however, that if the Director of the Budget approves the method of financing a project, the Director shall report that action to the Joint Legislative Commission on Governmental Operations at its next meeting.
Where direct capital improvement appropriations include the purpose of furnishing fixed and movable equipment for any project, those funds for equipment shall not be subject to transfer into construction accounts except as authorized by the Director of the Budget. The expenditure of funds for fixed and movable equipment and furnishings shall be reviewed and approved by the Director of the Budget prior to commitment of funds.
Capital improvement projects authorized by the 2013 General Assembly shall be completed, including fixed and movable equipment and furnishings, within the limits of the amounts of the direct or self‑liquidating appropriations provided, except as otherwise provided in this act. Capital improvement projects authorized by the 2013 General Assembly for the design phase only shall be designed within the scope of the project as defined by the approved cost estimate filed with the Director of the Budget, including costs associated with site preparation, demolition, and movable and fixed equipment.

REPORTING ON CAPITAL PROJECTS
SECTION 36.7.(a)  Definitions. – The following definitions apply in this section:
(1)	Capital project. – Any capital improvement, as that term is defined in G.S. 143C‑1‑1, that is not complete by the effective date of this section and that is funded in whole or in part with State funds, including receipts, non‑General Fund sources, or statutorily or constitutionally authorized indebtedness of any kind. This term includes only projects with a total cost of one hundred thousand dollars ($100,000) or more.
(2)	Construction phase. – The status of a particular capital project as described using the terms customarily employed in the design and construction industries.
(3)	New capital project. – A capital project that is authorized in this act or subsequent to the effective date of this act.
SECTION 36.7.(b)  Reporting. – The following reports are required:
(1)	By October 1, 2013, and every six months thereafter, each State agency shall report on the status of agency capital projects to the Joint Legislative Commission on Governmental Operations.
(2)	By October 1, 2013, and quarterly thereafter, each State agency shall report on the status of agency capital projects to the Fiscal Research Division and to the Office of State Budget and Management.
SECTION 36.7.(c)  The reports required by subsection (b) of this section shall include at least the following information about every agency capital project:
(1)	The current construction phase of the project.
(2)	The anticipated time line from the current construction phase to project completion.
(3)	Information about expenditures that have been made in connection with the project, regardless of source of the funds expended.
(4)	Information about the adequacy of funding to complete the project, including estimates of how final expenditures will relate to initial estimates of expenditures, and whether or not scope reductions will be necessary in order to complete the project within its budget.
(5)	For new capital projects only, an estimate of the operating costs for the project for the first five fiscal years of its operation.
SECTION 36.7.(d)  In addition to the other reports required by this section on October 1, 2013, and every six months thereafter, the Office of State Construction shall report on the status of the Facilities Condition Assessment Program (FCAP) to the Joint Legislative Commission on Governmental Operations. The report shall include (i) summary information about the average length of time that passes between FCAP assessments for an average State building; (ii) detailed information about when the last FCAP assessment was for each State building complex; and (iii) detailed information about the condition and repairs and renovations needs of each State building complex.
SECTION 36.7.(e)  In addition to the other reports required by this section on October 1, 2013, and quarterly thereafter, the State Construction Office shall report to the General Assembly on the status of plan review, approval, and permitting for each State capital improvement project and community college capital improvement project over which the Office exercises plan review, approval, and permitting authority. Each report shall include (i) summary information about the workload of the Office during the previous quarter, including information about the average length of time spent by the State Construction Office on each major function it performs that is related to capital project approval and (ii) detailed information about the amount of time spent engaged in those functions for each project that the State Construction Office worked on during the previous quarter.

REQUIRE PRIOR LEGISLATIVE AUTHORIZATION FOR SALES, LEASES, OR RENTALS OF CERTAIN PROPERTY BELOW FAIR MARKET VALUE
SECTION 36.8.(a)  G.S. 146‑29.1 is amended by adding the following new subsections to read:
"(f)	If the fair market value of State‑owned real property exceeds one million dollars ($1,000,000), a gift of any interest in the property or a sale, lease, or rental of any interest in the property for below fair market value shall not be effective until the later of the following:
(1)	If a bill that specifically disapproves the transaction is introduced in either house of the General Assembly before the 31st legislative day of the next regular session of the General Assembly that begins at least 25 days after the date that the agreement making the transfer is entered into, the earlier of (i) the day that an unfavorable final action is taken on the bill or (ii) the day that the General Assembly adjourns without ratifying the bill.
(2)	The 31st legislative day of the session of the General Assembly described in subdivision (1) of this section, if a bill disapproving the transaction is not introduced before that day.
(f1)	For the purpose of subsection (f) of this section:
(1)	"Next regular session" means:
a.	For odd‑numbered years its initial convening.
b.	For even‑numbered years the first reconvening of the regular session as provided in the joint resolution setting the date for reconvening.
(2)	"Adjourns" means:
a.	For odd‑numbered years the date the General Assembly adjourns by joint resolution for a period of more than 30 days.
b.	For even‑numbered years the date of sine die adjournment.
(f2)	If the transaction is approved under subsection (f) of this section, but the agreement provides a later effective date, then it takes effect on the date specified in the agreement.
(f3)	Nothing in subsection (f) of this section restricts the General Assembly from enacting a law specifically approving the transaction.
(g)	If the General Assembly ratifies a disapproving bill, the disapproved transaction shall not be effective unless it is vetoed by the Governor and the veto is not overridden, and in such case the transaction is effective upon sine die adjournment of that regular session.
The terms of any agreement to transfer an interest in real property under this section are deemed to incorporate the provisions of subsections (f) through (f2) of this section, and any transaction that does not comply with these subsections is void."
SECTION 36.8.(b)  This section becomes effective September 1, 2013.

AUTHORIZE UNC CARRYFORWARD FUNDS TO BE USED FOR REPAIRS AND RENOVATIONS
SECTION 36.9.  Notwithstanding any other provision of law, for purposes of G.S. 143C‑8‑12, the term "non‑General Fund money" includes funds carried forward from one fiscal year to another pursuant to G.S. 116‑30.3. However, these funds shall only be used for projects listed in G.S. 143C‑4‑3(b). This section shall expire on June 30, 2014.

LIMIT UNC REPAIRS AND MAINTENANCE EXEMPTION
SECTION 36.10.  G.S. 116‑13.1(c) reads as rewritten:
"(c)	Approval of Certain Repair and Maintenance Projects. – Notwithstanding G.S. 143C‑8‑7, the chancellor of a constituent institution may approve the expenditure of available operating funds in an amount not to exceed one million dollars ($1,000,000) per project for projects that are of a type listed in G.S. 143C‑4‑3(b) and that are for State facilities and related infrastructure that are supported from the General Fund. Funds contractually obligated to an approved project shall not revert at the end of the fiscal year and will remain available to fund the completion of the project. Projects approved pursuant to this subsection shall in all other respects accord with applicable laws governing capital improvement projects. The chancellor of a constituent institution shall report the approval of an expenditure under this subsection to the Office of State Budget and Management and to the Fiscal Research Division of the Legislative Services Commission within 60 days of the approval."

NATIONAL GUARD PROJECTS
SECTION 36.11.(a)  The Department of Public Safety shall allocate funds for National Guard capital projects during the 2013‑2015 fiscal biennium in accordance with the schedule that follows. These funds will provide a State match for an estimated twenty‑one million dollars ($21,000,000) in federal funds. The projects authorized, the allocation of State funds for each project, and the total project cost authorized for each project are as follows:
	Name of Project	State Fund Allocation	Total Project Cost
(1)	Wilmington Building Expansion/Rehab	$ 375,000	$ 1,125,000
(2)	Wilmington Site Expansion/Rehab	250,000	1,250,000
(3)	Nashville Building Expansion/Rehab	375,000	1,125,000
(4)	Nashville Site Expansion/Rehab	250,000	1,250,000
(5)	Clinton Building Expansion/Rehab	375,000	1,125,000
(6)	Clinton Site Expansion/Rehab	250,000	1,250,000
(7)	Salisbury Building Expansion/Rehab	375,000	1,125,000
(8)	Salisbury Site Expansion/Rehab	250,000	1,250,000
(9)	Parkton Building Expansion/Rehab	375,000	1,125,000
(10)	Parkton Site Expansion/Rehab	250,000	1,250,000
(11)	Benson Building Expansion/Rehab	375,000	1,125,000
(12)	Benson Site Expansion/Rehab	250,000	1,250,000
(13)	Charlotte Building Expansion/Rehab	375,000	1,125,000
(14)	Asheboro Site Expansion/Rehab	250,000	1,250,000
(15)	Winston‑Salem Building Expansion/Rehab	375,000	1,125,000
(16)	Winston‑Salem Site Expansion/Rehab	250,000	1,250,000
(17)	Concord Building Expansion/Rehab	375,000	1,125,000
(18)	Concord Site Expansion/Rehab	250,000	1,250,000
(19)	Burlington Site Expansion/Rehab	375,000	1,125,000
(20)	Albemarle Site Expansion/Rehab	375,000	1,125,000
(21)	Belmont Building Rehab	375,000	1,125,000
(22)	Beulaville Building Expansion/Rehab	375,000	1,125,000
(23)	Boone Building Expansion/Rehab	375,000	1,125,000
(24)	Dunn Building Expansion/Rehab	375,000	1,125,000
(25)	Durham Building Expansion/Rehab	375,000	1,125,000
TOTALS	$ 8,250,000	29,250,000
SECTION 36.11.(b)  Subject to the limitations imposed by Section 36.2(a) of this act, the Adjutant General of the National Guard may determine which projects listed in subsection (a) of this section shall receive an allocation of State funds in each fiscal year of the biennium.
SECTION 36.11.(c)  Where the actual costs are different from the estimated costs under subsection (a) of this section, the Adjutant General of the National Guard may adjust the allocations among projects as needed. However, State funds shall not be allocated to a project in excess of the maximum amount of State funds authorized to be allocated to the project under subsection (a) of this section. If any projects funded under subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 2013‑2015 fiscal biennium, 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) 	Future project feasibility studies.
(2)	Survey, testing, and permitting.
(3)	Planning and execution for reversion of facilities no longer in use.
SECTION 36.11.(d)  No later than June 1, 2015, and every two years thereafter, the Department shall report 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)	The status of all projects listed in this section.
(2)	The estimated total 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, including federal matching funds.
(6)	Facilities planned for closure or reversion.
(7)	A list of projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.
SECTION 36.11.(e)  Chapter 127A of the General Statutes is amended by adding a new Article to read:
"Article 17.
"Armory and Facility Development Projects and Plan.
"§ 127A‑210.  Armory and facility development project plan.
(a)	Plan Prepared. – No later than July 1 of each year, the Department of Public Safety shall prepare a statewide plan for armories for a period of seven years into the future. The plan shall be known as the Armory and Facilities Development Plan. If the plan differs from the Armory and Facilities Development Plan adopted for the preceding calendar year, the Department shall indicate the changes and the reasons for such changes. The Department shall submit the plan to the Director of the Budget for review.
(b)	Projects Listed. – The plan shall list the following armory and facilities projects based on their status as of May 1 of the year in which the plan is prepared:
(1)	Projects approved by the Congress of the United States but for which federal funds have not been appropriated.
(2)	Projects for which the Congress of the United States has appropriated funds.
(c)	Project Priorities and Funding Recommendations. – The Department shall assign a priority to each project within each of the two categories listed under subsection (b) of this section, either by giving the project a number with "1" assigned to the highest priority, or by recommending no funding. The Department shall state its reasons for recommending the funding, deferral, or elimination of a project. The Department shall determine the priority of a project based on the following criteria: federal requirements, a project's proximity to transportation infrastructure and other critical State and federal assets, and a project's ability to further the mission of the National Guard.
(d)	Distribution of the Plan. – The Director of the Budget shall provide copies of the plan to the General Assembly along with the recommended biennial budget and the recommended revised budget for the second year of the biennium.
(e)	Budget Recommendations. – The Director of the Budget shall determine which projects, if any, will be included in the recommended biennial budget and in the recommended revised budget for the second year of the biennium. The budget document transmitted to the General Assembly shall identify the projects or types of projects recommended for funding.
(f)	Definitions. – For purposes of this section, the terms "armory," "armory site," and "facilities" shall have the same meaning as in G.S. 127A‑161."
SECTION 36.11.(f)  G.S. 127A‑169 reads as rewritten:
"§ 127A‑169.  Unexpended portion of State appropriation.
The unexpended portion of any appropriation from the General Fund of the State for the purposes set out in this Article, or in Article 17 of this Chapter, remaining at the end of any biennium, shall not revert to the General Fund of the State, but shall constitute part of a permanent fund to be expended from time to time in the manner and for the purposes set out in this Article."

CLARIFY GENERAL ASSEMBLY'S AUTHORITY TO MAKE REPAIRS
SECTION 36.13.  G.S. 120‑32 reads as rewritten:
"§ 120‑32.  Commission duties.
The Legislative Services Commission is authorized to:
…
(11)	To specify the operating and capital uses within the General Assembly budget of funds appropriated to the General Assembly which remain available for expenditure after the end of the biennial fiscal period, and to revert funds under G.S. 143C‑1‑2.
…."

REPAIR, MAINTENANCE, AND SELF‑CONSTRUCTION TO STATE PROPERTY
SECTION 36.15.  Notwithstanding any other provision of the law, an employee of a State agency or institution may perform work involving the installation, construction, maintenance, or repair of any buildings, wiring, piping, devices, appliances, or equipment located in or constituting improvements located on State‑owned land without the requirement of licensure under Chapter 87 of the General Statutes if (i) the work performed is valued at less than one hundred thousand dollars ($100,000), (ii) all work is performed as force‑account work otherwise authorized by law up to the value authorized, and (iii) the work is performed by an employee who is employed by the State agency or institution. The Office of State Construction may regulate work performed pursuant to this section to ensure compliance with building and safety codes. Nothing in this section shall be construed to allow an employee of a State agency or institution to engage in any activities described in this section privately or outside the employee's scope of employment without meeting all licensure requirements otherwise required by law.

PART XXXVIII. MISCELLANEOUS PROVISIONS

STATE BUDGET ACT APPLIES
SECTION 38.1.  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.

MOST TEXT APPLIES ONLY TO THE 2013‑2015 FISCAL BIENNIUM
SECTION 38.2.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2013‑2015 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2013‑2015 fiscal biennium.

EFFECT OF HEADINGS
SECTION 38.3.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only. The headings do not expand, limit, or define the text of this act except for effective dates referring to a part.

COMMITTEE REPORT
SECTION 38.4.(a)  The Joint Conference Committee Report on the Continuation, Expansion, and Capital Budgets for Senate Bill 402, dated July 21, 2013, which was distributed in the Senate and 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, 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 38.4.(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 2013‑2015 biennial 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 a recommended continuation budget to the General Assembly on March 15 and 18, 2013, in the document "State of North Carolina Recommended Continuation Budget and Fund Purpose Statements, 2013‑2015" and in the Budget Support Document 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 38.4.(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.

Report by fiscal research division on changes to the budget/publication
SECTION 38.4A.(a)  The Fiscal Research Division of the Legislative Services Commission shall issue a report on budget actions taken by the 2013 Regular Session of the General Assembly. The report shall be in the form of a revision of the Committee Report adopted for Senate Bill 402 pursuant to G.S. 143C‑5‑5 and shall include all modifications made to the 2013‑2015 biennial budget prior to sine die adjournment of the 2013 Regular Session.
SECTION 38.4A.(b)  The Director of the Fiscal Research Division of the Legislative Services Commission shall send a copy of the report issued pursuant to this section to the Director of the Budget. The report shall be published on the General Assembly's Internet Web site for public access.

ADJUSTMENT OF ALLOCATIONS TO GIVE EFFECT TO THIS ACT FROM JULY 1, 2013
SECTION 38.4B.(a)  The appropriations and authorizations to allocate and spend funds set out in S.L. 2013‑184 expire when this act becomes law. At such time, this act governs appropriations and expenditures.
When this act becomes law, the Director of the Budget shall adjust allocations to give effect to this act from July 1, 2013.
SECTION 38.4B.(b)  Sections 4 and 7 of S.L. 2013‑184 are repealed.

SEVERABILITY CLAUSE
SECTION 38.5.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE
SECTION 38.6.  Except as otherwise provided, this act becomes effective July 1, 2013.
In the General Assembly read three times and ratified this the 25th day of July, 2013.

	s/	 Tom Apodaca
		 Presiding Officer of the Senate

	s/	 Thom Tillis
	 Speaker of the House of Representatives

	s/	 Pat McCrory
	 Governor

Approved 1:00 p.m. this 26th day of July, 2013