A BILL TO BE ENTITLED
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 2014."

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 adjusted for the fiscal year ending June 30, 2015, according to the schedule that follows. Amounts set out in parentheses are reductions from General Fund appropriations for the 2014‑2015 fiscal year.
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	2014‑2015

EDUCATION

Community Colleges System Office	16,866,780

Department of Public Instruction	46,358,028

University of North Carolina – Board of Governors
Appalachian State University	0
East Carolina University
Academic Affairs	(620,650)
Health Affairs	0
Elizabeth City State University	0
Fayetteville State University	0
North Carolina Agricultural and Technical State
University	0
North Carolina Central University	0
North Carolina State University
Academic Affairs	1,839,185
Agricultural Extension	0
Agricultural Research	0
University of North Carolina at Asheville	0
University of North Carolina at Chapel Hill
Academic Affairs	0
Health Affairs	0
Area Health Education Centers	0
University of North Carolina at Charlotte	0
University of North Carolina at Greensboro	0
University of North Carolina at Pembroke	0
University of North Carolina School of the Arts	0
University of North Carolina at Wilmington	0
Western Carolina University	259,124
Winston‑Salem State University	(220,272)
General Administration	0
University Institutional Programs	(50,655,484)
Related Educational Programs	0
North Carolina School of Science and Mathematics	0
Aid to Private Colleges	0

Total University of North Carolina – Board of Governors	(49,398,097)

HEALTH AND HUMAN SERVICES

Department of Health and Human Services
Central Management and Support	(2,642,150)
Division of Aging and Adult Services	28,890
Division of Blind Services/Deaf/Hard of Hearing	59,830
Division of Child Development and Early Education	(37,488,213)
Health Service Regulation	(61,000)
Division of Medical Assistance	(74,441,942)
Division of Mental Health, Developmental Disabilities,
 and Substance Abuse Services	3,828,910
NC Health Choice	(9,749,000)
Division of Public Health	(2,953,983)
Division of Social Services	1,104,174
Division of Vocation Rehabilitation	(278,376)

Total Health and Human Services	(122,592,860)

NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	(1,608,350)

Department of Commerce
Commerce	2,938,182
Commerce State‑Aid	0

Wildlife Resources Commission	(110,032)
Department of Environment and Natural Resources	3,420,059

Department of Labor	(78,620)

JUSTICE AND PUBLIC SAFETY

Department of Public Safety	12,527,186

Judicial Department	11,571,625

Judicial Department – Indigent Defense	4,453,250

Department of Justice	(118,949)

GENERAL GOVERNMENT

Department of Administration	(324,054)

Office of Administrative Hearings	(267,169)

Department of State Auditor	297,652

Office of State Controller	(122,859)

Department of Cultural Resources
Cultural Resources	757,664
Roanoke Island Commission	(9,000)

State Board of Elections	(66,415)

General Assembly	529,250

Office of the Governor	(51,742)

Office of State Budget and Management
Office of State Budget and Management	409,996
OSBM – Reserve for Special Appropriations	2,480,000

Housing Finance Agency		0

Department of Insurance		(1,146,045)

Office of Lieutenant Governor		(7,502)

Department of Revenue		(689,119)

Department of Secretary of State		73,750

Department of State Treasurer
State Treasurer	77,521
State Treasurer – Retirement for Fire and Rescue Squad
Workers	0

RESERVES, ADJUSTMENTS, AND DEBT SERVICE

Comprehensive Increase – Retirees	70,000,000

Salary Adjustment Reserve	0

State Health Plan Contribution	0

State Retirement System Contributions	7,210,000

Reserve for Future Benefit Needs	(56,400,000)

Judicial Retirement System Contributions	0

Severance Reserve	0

Statewide Compensation Study	0

Firemen's and Rescue Squad Workers' Pension Fund	0

Information Technology Fund	2,954,555

Information Technology Reserve Fund	(8,612,485)

Litigation Reserve	550,000

Medicaid Risk Reserve	50,000,000

NC Government Efficiency and Reform Project	0

One North Carolina Fund	0

Unemployment Insurance (UI) Reserve	0

Reserve for Escheat Fund Global TransPark Debt Repayment	0

Reserve for Voter ID	0

Reserve for Pending Legislation	0

Reserve for Eugenics Program	0

Contingency and Emergency Fund	0

Job Development Investment Grants (JDIG)	(14,000,000)

Debt Service
General Debt Service		(9,340,916)
Federal Reimbursement		0

TOTAL CURRENT OPERATIONS –
GENERAL FUND	(31,468,716)

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.  Section 2.2(a) of S.L. 2013‑360 is repealed. The General Fund availability used in adjusting the 2014‑2015 budget is shown below
FY 2014‑2015
Description	Beginning Availability
(In Millions)
Unappropriated Balance From Prior Fiscal Year	$	323,693,704
Anticipated Over (Under) Collections	(445,400,000)
Anticipated Reversions	290,000,000
Less: Credit to Savings Reserve Account	(42,073,426)
Less: Credit to Repairs and Renovations Reserve Account	(42,073,426)
Beginning Unreserved Credit Balance	$	84,146,852

Revenues Based on Existing Tax Structure	$	19,972,067,810

Nontax Revenues
Investment Income	$	11,300,000
Judicial Fees	244,500,000
Disproportionate Share	109,000,000
Insurance			100,000,000
Master Settlement Agreement	137,500,000
Other Nontax Revenues	195,500,000
Highway Trust Fund Transfer	0
Highway Fund Transfer	215,900,000
Subtotal Nontax Revenues	$	990,700,000

Total General Fund Availability	$	20,962,767,810

Adjustments to Availability: 2014 Session
Out‑of‑State Sales and Use Tax Collections	$	40,000,000
FICA Transfer	4,000,000
Subtotal Adjustments to Availability	$	44,000,000

Total Availability	$	21,090,914,663

Less: Total General Fund Appropriations for 2014‑2015
Fiscal Year	$	20,990,267,640

Unappropriated Balance Remaining	$	100,647,023

PART III. CURRENT OPERATIONS/HIGHWAY FUND

CURRENT OPERATIONS/HIGHWAY FUND
SECTION 3.1.  Appropriations from the State Highway Fund for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are adjusted for the fiscal year ending June 30, 2015, according to the following schedule. Amounts set out in parentheses are reductions from Highway Fund Appropriations for the 2014‑2015 fiscal year.
2014‑2015
Current Operations – Highway Fund	Adjustments

Department of Transportation
Administration	$	(1,705,907)

Division of Highways
Administration	0
Construction	(5,000,000)
Maintenance	25,998,594
Planning and Research	0
OSHA Program	(7,307)

State Aid to Municipalities	9,453,990

Intermodal Divisions
Ferry		(794,486)
Airports	(468,490)
Bicycle	0
Public Transportation	(1,704,879)
Railroads	(417,420)

Governor's Highway Safety Program	(5,699)

Division of Motor Vehicles	19,098,485

Other State Agencies, Reserves, and Transfers	12,992,619

Capital Improvements	0

Total Highway Fund Appropriations	$	57,439,500

HIGHWAY FUND AVAILABILITY STATEMENT
SECTION 3.2.  Section 3.2 of S.L. 2013‑360 is repealed. The Highway Fund availability used in adjusting the 2014‑2015 fiscal year budget is shown below:

2014‑2015
Highway Fund Availability Statement	Recommended

Beginning Credit Balance	$	0
Estimated Revenue	1,973,750,000
Estimated Reversions	0

Total Highway Fund Availability	$	1,973,750,000

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 adjusted for the fiscal year ending June 30, 2015, according to the following schedule. Amounts set out in parentheses are reductions from Highway Trust Fund Appropriations for the 2014‑2015 fiscal year.

2014‑2015
Highway Trust Fund	Adjustments

Department of Transportation
Program Administration	$	(911,818)
Strategic Prioritization	57,911,818

Bonds
Bond Redemption	0
Bond Interest	0

NC Turnpike Authority	0

Reserve for Visitor Centers	0

Total Highway Trust Fund Appropriations	$	57,000,000

HIGHWAY TRUST FUND AVAILABILITY STATEMENT
SECTION 4.2.  Section 4.2 of S.L. 2013‑360 is repealed.  The Highway Trust Fund availability used in developing the 2014‑2015 fiscal year budget is shown below:

2014‑2015
Highway Trust Fund Availability Statement	Recommended

Beginning Credit Balance	$	0
Estimated Revenue	1,162,400,000
Estimated Reversions	0

Total Highway Trust Fund Availability	$	1,162,400,000

PART VI. State Budget Act Revisions
SECTION 6.1.(a)  G.S. 143C‑1‑1(d) reads as rewritten:
"§ 143C‑1‑1.  Purpose and definitions.
…
(d)	Definitions. – The following definitions apply in this Chapter:
…
(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 or session laws.
…
(7a)	Base 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; and (iv) other changes deemed necessary by the Director.
…."
SECTION 6.1.(b)  G.S. 143C‑3‑5(b) 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 base budget 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 base budget, which shall be presented in the budget support document pursuant to subdivision (2) of this subsection.
(2)	A Budget Support Document showing, for each budget code and purpose or program in State government, accounting detail corresponding to the Recommended State Budget.
a.	The Budget Support Document shall employ the North Carolina Accounting System Uniform Chart of Accounts adopted by the State Controller to show both uses and sources of funds and shall display in separate parallel columns all of the following: (i) actual expenditures and receipts for the most recent fiscal year for which actual information is available, (ii) the certified budget for the preceding fiscal year, (iii) the currently authorized budget for the preceding fiscal year, (iv) program base budget requirements for each fiscal year of the biennium, (v) proposed expenditures and receipts for each fiscal year of the biennium, and (vi) proposed increases and decreases.
…
(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 base budget for the upcoming fiscal year."
SECTION 6.2.(a)  G.S. 143C‑6‑1 reads as rewritten:
"§ 143C‑6‑1.  Budget enacted by the General Assembly; certified budgets of State agencies.
…

(b1)	There is appropriated out of the cash balances, federal receipts, and departmental receipts available to each department sufficient amounts to carry on authorized activities included under each department's operations. All these cash balances, federal receipts, and departmental receipts shall be expended and reported in accordance with provisions of the State Budget Act, except as otherwise provided by statute, and shall be expended at the level of service authorized by the General Assembly. If the receipts, other than gifts and grants that are unanticipated and are for a specific purpose only, collected in a fiscal year by an institution, department, or agency exceed the receipts certified for it in General Fund Codes or Highway Fund Codes, then the Directors shall decrease the amount he allots to that institution, department, or agency from appropriations from that Fund by the amount of the excess, unless the Director finds that the appropriations from the Fund are necessary to maintain the function that generated the receipts at the level anticipated in the certified Budget Codes for that Fund.
(b2)	Funds that become available from overrealized receipts in General Fund Codes and Highway Fund Codes may be used for new permanent employee positions or to raise the salary of existing employees.
(b3)	The Office of State Budget and Management shall report to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division of the Legislative Services Office within 30 days after the end of each quarter the General Fund Codes or Highway Fund Codes that did not result in a corresponding reduced allotment from appropriations from that Fund.
…."
SECTION 6.2.(b)  G.S. 143C‑6‑4 reads as rewritten:
"§ 143C‑6‑4.  Budget Adjustments Authorized.
…
(b)	Budget Adjustments. – Notwithstanding any other provision of law, 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:
…
(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.
	
(b1)	If the overexpenditure would cause a department's total requirements to exceed the department's certified budget for a fiscal year by more than three percent (3%), the Director shall report to the Joint Legislative Commission on Governmental Operations within 30 days of 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 except as expressly authorized by the Governor.
…."	

EDUCATION LOTTERY
SECTION 6.3.(a)  Section 6.11(e) of S.L. 2013‑360 reads as rewritten:
"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	93,885,709
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
Career Pathways	9,777,150
NC SERV (Scholarships for the Education of
Returning Veterans)	5,000,000
Textbooks		23,171,192

TOTAL APPROPRIATION	$	481,832,724	$	
524,731,435"
SECTION 6.3.(b)  Section 6.11(f) of S.L. 2013‑360 reads as rewritten:
"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 and for the 2014‑2015 fiscal year."
SECTION 6.3.(c)  Section 6.11(g) of S.L. 2013‑360 reads as rewritten:
"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) for the 2013‑2015 fiscal biennium 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 6.3.(d)  Funds appropriated for Digital Learning shall not revert at the end of the fiscal year, but shall remain available until expended.
SECTION 6.3.(e)  Subsection (d) of this section becomes effective June 30, 2014.

STAFFING ANALYSIS OF STATE AGENCY BUSINESS FUNCTIONS AND REDEPLOYMENT OF RESOURCES FROM HR/PAYROLL MANAGEMENT
SECTION 6.4.  Section 6.7 of S.L. 2007‑323 is repealed.

LITIGATION RESERVE
SECTION 6.5.  A Special Litigation Reserve is established within the Office of State Budget and Management. In addition to appropriations or other funds the Governor may direct pursuant to G.S. 147‑17(c), funds from the Special Litigation Reserve may be expended or transferred at the direction of the Governor in order to employ special counsel or private counsel pursuant to G.S. 147‑17 or G.S. 114‑2.3.

OVERSIGHT AND ACCOUNTABILITY FOR STATE GRANTS TO NON‑STATE ENTITIES
SECTION 6.6.(a)  G.S. 143C‑6‑23 reads as rewritten:
"§ 143C‑6‑23.  State grant funds: administration; oversight and reporting requirements.
(a)	Definitions. – The following definitions apply in this section:
(1)	"Contractor/Vendor" means a non‑State entity that under the terms of its agreement with a funding agency:
a.	Provides the goods and services within normal business operations;
b.	Provides similar goods or services to many different purchasers;
c.	Normally operates in a competitive environment;
d.	Provides goods or services that are ancillary to the operation of the State program; and
e.	Is not subject to compliance requirements of the State program as a result of the award, though similar requirements may apply for other reasons.
(1a)	"Grant" and "grant funds" means State funds disbursed by a State agency to a grantee as defined in subdivision (2) of this section to carry out a program for a public purpose, as opposed to providing goods or services for the benefit of a State entity.
(2)	"Grantee" means a non‑State  entity, not subject to the audit and other reporting requirements of the Local Government Commission, that receives or holds State grant funds and does not meet the definition of "contractor/vendor" as defined in subdivision (1) of this section.
(3)	"Subgrantee" means a non‑State entity that meets the definition of a "grantee" as defined in subdivision (2) of this section that receives or holds State grant funds from a grantee or other subgrantee and not directly from the State.
(b)	Conflict of Interest Policy. – Every grantee shall file with the State agency disbursing funds to the grantee a copy of that grantee's policy addressing conflicts of interest that may arise involving the grantee's management employees and the members of its board of directors or other governing body. The policy shall address situations in which any of these individuals may directly or indirectly benefit, except as the grantee's employees or members of its board or other governing body, from the grantee's disbursing of State funds, and shall include actions to be taken by the grantee or the individual, or both, to avoid conflicts of interest and the appearance of impropriety. The policy shall be filed before the disbursing State agency may disburse the grant funds.
(c)	No Overdue Tax Debts. – Every grantee shall file with the State agency or department disbursing funds to the grantee a written statement completed by that grantee's board of directors or other governing body stating that the grantee does not have any overdue tax debts, as defined by G.S. 105‑243.1, at the federal, State, or local level. The writtenstatement shall be made under oath and shall be filed before the disbursing State agency or department may disburse the grant funds. A person who makes a false statement in violation of this subsection is guilty of a criminal offense punishable as provided by G.S. 143C‑10‑1.
(d)	Office of State Budget and Management. – The Office of State Budget and Management shall adopt policies and procedures to ensure the uniform administration of State grants by all grantor State agencies and grantees or subgrantees. The policies and procedures shall provide for disbursements of State grants and for State agency oversight, monitoring, and evaluation of grantees and subgrantees. The policies and procedures shall:
(1)	Ensure that the purpose and reporting requirements of each grant are specified to the grantee.
(2)	Ensure that grantees specify the purpose and reporting requirements for grants made to subgrantees.

	
(5a)	Require each contract that awards a grant to include all of the following:
a.	Concrete, measurable benchmarks against which to measure success. The benchmarks shall address the expected quantifiable outputs and outcomes.
b.	Identification of program performance measures that will be used to compare quantifiable outputs and outcomes against the benchmarks established in contracts pursuant to this subdivision.
For purposes of this subdivision, the term "output" means quantified activities performed by the grantee, and the term "outcome" means what happens as a result of the grantee's activities.
(5b)	Establish the criteria for grant programs from which oversight costs shall be withheld by a State agency pursuant to G.S. 143C‑6‑24.
(5c)	Provide procedures for making the determination that the amount required to be withheld under G.S. 143C‑6‑24 may be reduced.
(6)	Establish mandatory periodic reporting requirements for grantees and subgrantees, including methods of reporting, to provide separate accounting of all State funds, a separate accounting of funds used for administration, and other financial and program performance information.
(6a)	Establish mandatory periodic reporting requirements for grantees and subgrantees, including reporting on benchmarks set out in the contract awarding the grant pursuant to subdivision (2) of this subsection, by means of performance measures identified in the contract. The State agency overseeing the grant shall review performance reporting on an ongoing basis and shall submit an annual performance report to the Office of State Budget and Management.
(7)	Require grantees and subgrantees to maintain reports, records, and other information to properly account for the expenditure of all grant funds and to make such reports, records, and other information available to the grantor State agency for oversight, monitoring, and evaluation purposes.
	
(8a)	Require a State agency that oversees a grant program to develop a monitoring plan for that program and to submit the plan and any additional information regarding the plan to the Office of State Budget and Management for review and approval.
	
(9a)	Require grantees to submit cash receipts and disbursement reports in a format specified by the Office of State Budget and Management within 90 days of the end of the State fiscal year.
(10)	Provide procedures for the suspension of further disbursements or use of grant funds for noncompliance with these policies and procedures or other inappropriate use of the funds.
(11)	Provide procedures for use in appropriate circumstances for reinstatement of disbursements that have been suspended for noncompliance with these policies and procedures or other inappropriate use of grant funds.
(12)	Provide procedures for the recovery and return to the grantor State agency of unexpended grant funds from a grantee or subgrantee if the grantee or subgrantee is unable to fulfill the purposes of the grant.
(13)	Establish requirements for cash management, including interest earned on grant funds.
(14)	Require grantees and subgrantees to report on compensation of officers, directors, trustees, key employees, highest compensated employees, and independent contractors, regardless of funding source.
	
(f)	Suspension and Recovery of Funds to Grant Recipients for Noncompliance.  The Office of State Budget and Management may take the actions listed in this subsection for noncompliance with the policies and procedures adopted pursuant to subsection (d) of this section. If the grant funds are a pass‑through of funds granted by an agency of the United States, then the Office of State Budget and Management must consult with the granting agency of the United States and the State agency that is the recipient of the pass‑through funds prior to taking the actions authorized by this subsection. The authorized actions are as follows:
(1)	With respect to a grantee or a subgrantee, and after consultation with the administering State agency, suspend disbursement of grant funds, prevent further use of grant funds already disbursed, and recover grant funds already disbursed.
(2)	With respect to an administering state agency, and after 90 days notice to give the administering State agency an opportunity to correct the noncompliance, suspend disbursement of grant funds.
(g)	Audit Oversight. – The State Auditor has audit oversight, with respect to grant funds received by the grantee or subgrantee, pursuant to Article 5A of Chapter 147 of the General Statutes, of every grantee or subgrantee that receives, uses, or expends grant funds. A grantee or subgrantee must, upon request, furnish to the State Auditor for audit all books, records, and other information necessary for the State Auditor to account fully for the use and expenditure of grant funds received by the grantee or subgrantee. The grantee or subgrantee must furnish any additional financial or budgetary information requested by the State Auditor, including audit work papers in the possession of any auditor of a grantee or subgrantee directly related to the use and expenditure of grant funds.
(h)	Noncompliance Reports. – The Office of State Budget and Management shall maintain a list that is publicly available of all grantees or subgrantees that failed to comply with this section with respect to grant funds received.
	 
(j)	This section does not apply to financial assistance to students enrolled in a constituent institution of The University of North Carolina or institutions of the North Carolina Community College System or to public assistance payments to or on behalf of enrolled individuals.
(k)	Contractors are not subject to this section."
SECTION 6.6.(b)  Article 6 of Chapter 143C of the General Statutes is amended by adding a new section to read:
"§ 143C‑6‑24.  Withholding of grant program funds for oversight.
(a)	Mandatory Withholding. – A State agency that oversees a grant program shall withhold two percent (2%) of the amount awarded for the grant program each fiscal year to cover oversight costs for the grant program pursuant to this subsection if the grant program satisfies the criteria established by the Office of State Budget and Management. The administering State agency shall transfer twenty‑five percent (25%) of the amount withheld to the Office of State Budget and Management at the time the grant program funds are disbursed. The Office of State Budget and Management shall use the funds transferred from the administering State agency to cover costs related to statewide oversight of grants to non‑State entities.
(b)	Adjustment. – If an administering State agency or the Office of State Budget and Management believes that the amount withheld under subsection (a) of this section is in excess of the amount the administering State agency requires for oversight, the amount of the withholding may be reduced in accordance with this subsection. If the amount withheld is reduced, the amount transferred to the Office of State Budget and Management shall be reduced proportionately.
(1)	By request. – An administering State agency may submit a written request to the Office of State Budget and Management for a reduction of the amount withheld. The request must set out the oversight responsibilities of the agency with regard to the grant program and the amount by which the agency is requesting the withholding be reduced from the grant program for the fiscal year. The Office of State Budget and Management shall determine whether it is appropriate to allow a reduction of the withholding under this section and, if so, the amount by which the withholding shall be reduced. The Office of State Budget and Management shall notify the State agency in writing of the approval or disapproval of the request and, if approved, the amount by which the withholding shall be reduced.
(2)	Without request. – The Office of State Budget and Management may, without a request by an administering State agency, reduce the amount withheld from a grant program for oversight if it makes a determination that the amount required under subsection (a) of this section is in excess of the amount the administering State agency requires for oversight. The Office of State Budget and Management shall notify the administering State agency in writing of its determination.
(c)	Review. – The Office of State Budget and Management shall review the withholding amounts annually and may make adjustments to the withholding at any time in accordance with subdivision (2) of subsection (b) of this section.
(d)	Limitations. – Funds shall not be withheld under this section if a grant program is a pass‑through of funds granted by an agency of the United States and the terms of the federal grant prohibit the withholding of funds described by this section."
SECTION 6.6.(c)  Subsection (b) of this section becomes effective July 1, 2015, and applies to grants awarded on or after that date.

PART VII. PUBLIC SCHOOLS

FUNDS FOR CHILDREN WITH DISABILITIES
SECTION 7.1.  The State Board of Education shall allocate additional funds for children with disabilities on the basis of three thousand seven hundred sixty‑eight dollars and eleven cents ($3,768.11) per child. Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities or (ii) twelve and five‑tenths percent (12.5%) of its 2014‑2015 allocated average daily membership in the local school administrative unit. The dollar amounts allocated under this section for children with disabilities shall also adjust in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve children with disabilities.

FUNDS FOR ACADEMICALLY GIFTED CHILDREN
SECTION 7.2.  The State Board of Education shall allocate additional funds for academically or intellectually gifted children on the basis of one thousand two hundred thirty‑nine dollars and sixty‑five cents ($1,239.65) per child for fiscal year 2014‑2015. A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2014‑2015 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.

FUND OPT‑IN PORTION OF HOME BASE FOR LOCAL SCHOOL ADMINISTRATIVE UNITS AND CHARTER SCHOOLS
SECTION 7.3.(a)  Section 8.18 of S.L. 2013‑360 is repealed.
SECTION 7.3.(b)  Four million dollars ($4,000,000) is appropriated to fund the optional portions of the Home Base Instructional Improvement System (System) for all local school administrative units and charter schools for the 2014‑2015 fiscal year.
SECTION 7.3.(c)  If funds appropriated pursuant to subsection (b) 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 7.3.(d)  For each optional service within the System, the Department of Public Instruction shall report on the (1) usage, (2) client satisfaction, (3) system performance, (4) extent to which local school administrative units and charter schools are using other services in place of the System, and (5) information and analysis on why other services are being used in place of the System. This report shall be made to the Office of State Budget and Management, the Fiscal Research Division of the North Carolina General Assembly, the Joint Legislative Education Oversight Committee, and the State Board of Education by December 1, 2014.
SECTION 7.3.(e)  Subsection (a) of this section becomes effective June 30, 2014.

CERTAIN TEACHER SALARY SUPPLEMENTS
SECTION 7.4.  Section 8.22 of S.L. 2013‑360 reads as rewritten:
"SECTION 8.22.(a)  Notwithstanding Section 35.11 of this act, only the following teachers or instructional support personnel 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 and subsequent school years:
(1)	Certified school nurses and instructional support personnel in positions for which a master's degree is required for licensure.
(2)	Teachers and instructional support personnel who were paid on that salary schedule or received that salary supplement prior to the 2014‑2015 school year.
(3)	Teachers and instructional support personnel who complete a degree for which they completed at least one class prior to July 1, 2013.
(4)	Teachers and instructional personnel who do not qualify under subdivisions (1) through (3) of this subsection but who spend at least seventy percent (70%) of their work time in either of the following:
a.	Classroom instruction in the field and subject of their graduate academic preparation. Most of the teachers' remaining time shall be spent in one or more of the following: mentoring teachers, doing demonstration lessons for teachers, writing curricula, and developing and leading staff development programs for teachers.
b.	Work within the employee's area of graduate academic preparation.
"SECTION 8.22.(b)  For teachers who are paid on the "M" salary schedule under subdivision (a)(4) of this section, determination of whether teachers and instructional support personnel shall be paid on the "M" salary schedule or receive a salary supplement for academic preparation shall take place on an annual basis. Teachers and instructional support personnel may be moved off of the "M" salary schedule and/or discontinue receiving salary supplements if they are not instructing classes in field in that year. Teachers and instructional support personnel who earn an advanced degree in school administration shall not be paid on the "M" salary schedule or receive a salary supplement for academic preparation unless they serve as an assistant principal or principal."

TEACHER ASSISTANTS
SECTION 7.5.  Funds appropriated for the Teacher Assistant allotment shall be allocated in 2014‑2015 to each local school administrative unit in the same amount as was allocated to the local school administrative unit in 2013‑2014. The dollar amounts allocated shall also be adjusted in accordance with legislative salary increments and retirement rate adjustments in this act.

EDUCATION AND WORKFORCE INNOVATION PROGRAM
SECTION 7.6.(a)  G.S. 115C‑64.16(d) reads as rewritten:
"(d)	Matching Private and Local Funds. –   All grant applicants must match fifty percent (50%) of all State dollars. Matching funds shall not include other State funds. Matching funds may include in‑kind contributions."
SECTION 7.6.(b)  G.S. 115C‑64.15(e) reads as rewritten:
"(e)	The Commission shall publish a report on the Education and Workforce Innovation Program on or before October 1 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:"
SECTION 7.6.(c)  G.S. 115C‑64.16(f) reads as rewritten:
"(f)	Reporting Requirements. – No later than September 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 7.6.(d)  Funds appropriated for the Education and Workforce Innovation Program authorized by G.S. 115C‑64.16 shall not revert at the end of each fiscal year but shall remain available until expended.
SECTION 7.6.(e)  This section becomes effective June 30, 2014.

PAY FOR EXCELLENCE
SECTION 7.7.  Section 9.6(g) of S.L. 2013‑360 reads as rewritten:
"SECTION 9.6.(g) Beginning September 1, 2013, to June 30, 2014, all superintendents may 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 may identify and recommend to the local board twenty‑five percent (25%) of those teachers who have taught for at least three years to be awarded four‑year contracts beginning with the 2014‑2015 school year. The superintendent may 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 may 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."

COMPETITIVE GRANTS TO IMPROVE AFTER SCHOOL SERVICES
SECTION 7.8.(a)  Of the funds appropriated in this act for the 2014‑2015 fiscal year for the At‑Risk Student Services Alternative School Allotment, the State Board of Education shall use five million dollars ($5,000,000) for the After School Quality Improvement Grant Program administered by the North Carolina Department of Public Instruction. Of these funds, the Department of Public Instruction may use up to two hundred thousand dollars ($200,000) to administer the program. The General Assembly intends to appropriate five million dollars ($5,000,000) for this purpose in each year of the 2015‑2017 fiscal biennium.
The purpose of the program is to pilot after school learning programs for at‑risk students that raise standards for student academic outcomes and that:
(1)	Use an evidence‑based model with a proven track record of success.
(2)	Include rigorous, quantitative performance measures to confirm their effectiveness during the grant cycle and at the end‑of‑grant cycle.
(3)	Are fully integrated with State performance measures and student academic goals.
(4)	Can be expanded for wider use in North Carolina.
(5)	Prioritize science, technology, engineering, and mathematics (STEM) learning opportunities.
(6)	Expand student access to learning activities and academic support that strengthen student engagement and leverage community‑based resources, including private sector employer involvement.
Local school administrative units and nonprofits working in collaboration with local school administrative units are eligible to receive two‑year grants of up to five hundred thousand dollars ($500,000) a year, based on proposed number of students served, with an option for a third year of funding. At least seventy percent (70%) of students served by the program must qualify for free or reduced‑price meals.
Grants shall be matched on the basis of three dollars ($3.00) in grant funds for every one dollar ($1.00) in nongrant funds. Matching funds shall not include other State funds. Matching funds may include in‑kind contributions.
SECTION 7.8.(b)  Grant recipients shall report to the Department of Public Instruction after the first year of funding on the progress of the grant, including alignment with Common Core Standards, data collection for reporting student progress, and other measures, before receiving funding for the next fiscal year. Grant recipients shall report after the second year of funding on key performance data, including statewide test results, attendance rates, and promotion rates. Grant allocations for the third year shall be based on student performance.
SECTION 7.8.(c)  The Department of Public Instruction shall provide progress reports on the grant program to the Joint Legislative Education Oversight Committee by September 15, 2015, and September 15, 2016. The Department shall provide a final report on the program by September 15, 2017. The final report shall include the final results of the program and recommendations regarding effective after school program models, standards, and performance measures, based on the experience of the grant recipients.

WORKERS' COMPENSATION FOR SCHOOL EMPLOYEES
SECTION 7.9.(a)  G.S. 115C‑337 reads as rewritten:
"§ 115C‑337.  Workers' compensation for school employees.
	The provisions of the Workers' Compensation Act shall be applicable to all school employees. The local school administrative units shall be liable for workers' compensation claims for school employees. The local units may provide insurance to cover this compensation liability and may include the cost of this insurance in their annual budgets. All costs related to workers compensation claims for school employees, including the cost of insurance, shall be paid with non‑State funds.
The provisions of this subsection shall not apply to any person, firm, or corporation making voluntary contributions to schools for any purpose, and the person, firm, or corporation shall not be liable for the payment of any sum of money under this Chapter.
…."
SECTION 7.9.(b)  G.S. 115C‑337(b) is repealed.
SECTION 7.9.(c)  This section becomes effective July 1, 2014, and applies to workers' compensation claims arising from events occurring on or after that date.

TORT CLAIMS FOR SCHOOL EMPLOYEES
SECTION 7.10.(a)  G.S. 115C‑42 reads as rewritten:
"§ 115C‑42.  Liability insurance and immunity.
Any local board of education, by securing liability insurance as hereinafter provided, is hereby authorized and empowered to waive its governmental immunity from liability for damage by reason of death or injury to person or property caused by the negligence or tort of any agent or employee of such board of education when acting within the scope of his authority or within the course of his employment. Such immunity shall be deemed to have been waived by the act of obtaining such insurance, but such immunity is waived only to the extent that said board of education is indemnified by insurance for such negligence or tort. All costs related to any such claims, including the cost of insurance, shall be paid with non‑State funds.
Any contract of insurance purchased pursuant to this section shall be issued by a company or corporation duly licensed and authorized to execute insurance contracts in this State or by a qualified insurer as determined by the Department of Insurance and shall by its terms adequately insure the local board of education against liability for damages by reason of death or injury to person or property proximately caused by the negligent act or torts of the agents and employees of said board of education or the agents and employees of a particular school in a local administrative unit when acting within the scope of their authority. The local board of education shall determine what liabilities and what officers, agents and employees shall be covered by any insurance purchased pursuant to this section. Any company or corporation which enters into a contract of insurance as above described with a local board of education, by such act waives any defense based upon the governmental immunity of such local board of education.

Any person sustaining damages, or in case of death, his personal representative may sue a local board of education insured under this section for the recovery of such damages in any court of competent jurisdiction in this State, but only in the county of such board of education; and it shall be no defense to any such action that the negligence or tort complained of was in pursuance of governmental, municipal or discretionary function of such local board of education if, and to the extent, such local board of education has insurance coverage as provided by this section.
Except as hereinbefore expressly provided, nothing in this section shall be construed to deprive any local board of education of any defense whatsoever to any such action for damages or to restrict, limit, or otherwise affect any such defense which said board of education may have at common law or by virtue of any statute; and nothing in this section shall be construed to relieve any person sustaining damages or any personal representative of any decedent from any duty to give notice of such claim to said local board of education or to commence any civil action for the recovery of damages within the applicable period of time prescribed or limited by statute.

No part of the pleadings which relate to or allege facts as to a defendant's insurance against liability shall be read or mentioned in the presence of the trial jury in any action brought pursuant to this section. Such liability shall not attach unless the plaintiff shall waive the right to have all issues of law or fact relating to insurance in such an action determined by a jury and such issues shall be heard and determined by the judge without resort to a jury and the jury shall be absent during any motions, arguments, testimony or announcement of findings of fact or conclusions of law with respect thereto unless the defendant shall request a jury trial  thereon."
SECTION 7.10.(b)  G.S. 115C‑255 reads as rewritten:
"§ 115C‑255.  Liability insurance and waiver of immunity as to certain acts of bus drivers.
The securing of liability insurance and the waiver of immunity as to certain torts of school bus drivers, school transportation service vehicle drivers and school activity bus drivers, is subject to the provisions of G.S. 115C‑42."
SECTION 7.10.(c)  G.S. 115C‑257 reads as rewritten:
"§ 115C‑257.  Local board of education to pay claims.
A local board of education is hereby authorized to pay reasonable medical expenses, not to exceed three thousand dollars ($3,000), incurred within one year from the date of accident to or for each pupil who sustains bodily injury or death caused by accident, while boarding, riding on, or alighting from a school bus operated by any local school administrative unit."
SECTION 7.10.(d)  G.S. 115C‑258 reads as rewritten:
"§ 115C‑258.  Provisions regarding payment.
The claims authorized herein may be paid, regardless of whether the injury received by the pupil was due to negligence on the part of the school bus driver, the injured pupil, or any other person. To the extent of payments made under this Article, the applicable local board of education shall be subrogated to the right of the pupil against any third party legally responsible for the injury. Further, any amounts paid shall constitute a credit against any obligation of the local board of education arising as a result of the injury."
SECTION 7.10.(e)  G.S. 115C‑259 reads as rewritten:
"§ 115C‑259.  Claims must be filed within one year.
The right to payment as authorized herein shall be forever barred unless a claim be filed with the applicable local school board within one year after the accident."
SECTION 7.10.(f)  The following statutes are repealed: G.S. 115C‑318, G.S. 143‑300.1, and Article 31B of Chapter 143 of the General Statutes.
SECTION 7.10.(g)  G.S. 130A‑310.37(b) reads as rewritten:
"(b)	Notwithstanding the provisions of the Tort Claims Act, G.S. 143‑291 through G.S. 143‑300.1A, or any other provision of law waiving the sovereign immunity of the State of North Carolina, the State, its agencies, officers, employees, and agents shall be absolutely immune from any liability in any proceeding for any injury or claim arising from negotiating, entering, monitoring, or enforcing a brownfields agreement or a Notice of Brownfields Property under this Part or any other action implementing this Part."
SECTION 7.10.(h)  G.S. 143‑215.104T(b) reads as rewritten:
"(b)	Notwithstanding the provision of the Tort Claims Act, G.S. 143‑291 through G.S. 143‑300.1A, or any other provision of law waiving the sovereign immunity of the State of North Carolina, the State, its agencies, officers, employees, and agents shall be absolutely immune from any liability in any proceeding for any injury or claim arising from negotiating, entering into, implementing, monitoring, or enforcing a dry‑cleaning solvent assessment agreement, a dry‑cleaning solvent remediation agreement, or a Notice of Dry‑Cleaning Solvent Remediation under this Part or any other action implementing this Part."
SECTION 7.10.(i)  G.S. 143-299.2(a) reads as rewritten: 
(a)	The maximum amount that the State may pay cumulatively to all claimants on account of injury and damage to any one person arising out of any one occurrence, whether the claim or claims are brought under this Article or Article 31A of this Chapter, shall be one million dollars ($1,000,000), less any commercial liability insurance purchased by the State and applicable to the claim or claims under G.S. 143-291(b) or G.S. 143-300.6(c)."

NORTH CAROLINA CENTER FOR THE ADVANCEMENT OF TEACHING
SECTION 7.11.(a)  G.S. 115C‑296.5 and G.S. 115C‑296.6 are repealed.
SECTION 7.11.(b)  This section becomes effective June 30, 2014.

PANIC ALARMS FUNDS
SECTION 7.12.(a)  Section 8.37(b) of S.L. 2013‑360 reads as rewritten:
"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. Grants to local school administrative units, regional schools, and charter schools awarded in the 2013‑2014 fiscal year shall not revert at the end of the fiscal year but shall remain available until June 30, 2015.
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 7.12.(b)  This section becomes effective June 30, 2014.

NORTH CAROLINA VIRTUAL PUBLIC SCHOOL SALES
SECTION 7.13.(a)  Section 7.22(g) of S.L. 2011‑145 reads as rewritten:
"SECTION 7.22.(g)  The Board shall direct NCVPS to develop a plan to generate revenue by offering professional development courses to in‑state and out‑of‑state educators. Revenue generated by NCVPS shall be used to offset instructional costs to local school administrative units and charter schools. NCVPS shall submit its plan to the Board by September 15, 2014."

NORTH CAROLINA VIRTUAL PUBLIC SCHOOL COMPETE
SECTION 7.14.(a)  G.S. 66‑58(b) reads as rewritten:
"§ 66‑58.Sale of merchandise or services by governmental units.
…
(b)	The provisions of subsection (a) of this section shall not apply to:
…
(28)	The North Carolina Virtual Public School."
SECTION 7.14.(b)  G.S. 66‑58(c) reads as rewritten:
"(c)	The provisions of subsection (a) shall not prohibit:
…
	"
CHARTER APPLICATION FUNDS
SECTION 7.15.(a)  G.S. 115C‑238.29B(e) reads as rewritten:
"§ 115C‑238.29B.  Eligible applicants; contents of applications; submission of applications for approval.
…
(e)	The State Board shall establish reasonable fees of no less than five hundred dollars ($500.00) and no more than one thousand dollars ($1,000) for initial and renewal charter applications, in accordance with Article 2A of Chapter 150B of the General Statutes. No application fee shall be refunded in the event the application is rejected or the charter is revoked. Funds generated to the State Board through charter application fees shall not revert to the General Fund."
SECTION 7.15.(b)  This section becomes effective June 30, 2014.

CAREER PATHWAYS PILOT PROGRAM
SECTION 7.16.(a)  Purpose and policy. The Governor and the General Assembly find that it is essential to attract and retain the best people into the teaching profession. A system that is perceived to offer stagnant wages, lifetime contracts, few valuable and job‑embedded professional development opportunities, and no extra pay for outstanding performance cannot do that. Therefore, it is the policy of the State of North Carolina to provide an adequate base salary for and to encourage differentiation of teachers based on their contributions to the field; these contributions shall be focused on student achievement, continuous improvement, leadership, and the ability to lead peers to improve their practice.
SECTION 7.16.(b)  In furtherance of this policy, a career pathways pilot program is hereby established. Funds are appropriated in this act for the State Board of Education to begin implementation of a career pathways pilot program for one cohort of eight pilot school districts beginning in 2015‑2016 and continuing through 2017‑2018, and, subject to availability, a second cohort of eight pilot school districts shall be implemented beginning in 2016‑2017 and continuing through 2017‑2018. This pilot program shall remain in operation through the 2017‑2018 school year to enable the State Board and the General Assembly to analyze all facets of each pilot school district's career pathways plan prior to statewide implementation. Based on multiple measures of quality, the most effective pilots will be offered up as "proof points" that can be replicated. It is the intent that this pilot program act as a means of developing career pathways plans that can be implemented statewide in the future.
SECTION 7.16.(c)  (1) Development and implementation of Plan by State Board. — The State Board of Education shall develop, test, modify, and implement in a three‑year pilot program, a Career Pathways Plan (The Plan), which may include multiple career pathway options developed by pilot school districts as well as a State default career pathway program for pilot school districts to implement. The Plan shall be designed to improve the quality of classroom instruction, to increase the attractiveness of teaching, and to encourage the recognition, impact, and retention of high‑quality teachers. The Plan shall cover teachers and instructional support personnel who require certification by the State Board as a condition of employment.
(2)	The State Board of Education shall consult with local boards of various sizes throughout the State on a continuous and systematic basis on the continuing development, testing of pilot programs, modification, and implementation of the Plan. The State Board shall also consult with any other public and private agencies, organizations, and professional associations it deems necessary.
(3)	The Plan shall be based on the North Carolina Teacher Evaluation system—a continuous, comprehensive evaluation of teacher performance as indicated by multiple sources of information. Classroom performance shall be a significant part of the evaluation process and, evaluation shall be based on indicators associated with effective classroom practices and other criteria, including student achievement outcomes.
(4)	The Plan shall specify a process for administration, periodic review, and evaluation. The criteria and procedures for advancement under the Plan shall be made public, and information shall be provided for teachers about these criteria and procedures prior to the implementation of the Plan.
(5)	The career pathways pilot program shall specify a process under which each local school administrative unit may select a career pathways program for use in its schools. The career pathways pilot program will offer school districts a menu of options that include: (i) career pathways programs developed by the pilot school districts and approved by the State Board of Education; (ii) one or more State‑created career pathways programs developed based on the experience of pilot school districts; or (iii) a school district‑created plan that meets the principles of design set forth by the State Board of Education.
(6)	The State Board of Education may adopt rules necessary to carry out the provisions of this section. Notwithstanding Article 2A of Chapter 150B of the General Statutes, the State Board of Education shall be exempt from rulemaking in establishing rules to carry out the provisions of this section.
(7)	The State Board of Education, in partnership with the Office of the Governor, shall be responsible for administration of the career pathways pilot program and shall dedicate up to three full‑time staff persons in accordance with the following responsibilities:
a.	Career Pathways Administrator 1: Leads oversight of pilot district selection, oversight of career pathway development and piloting, and assessment of pilots for possible statewide implementation. This position keeps the Governor, State Board of Education, and the State Superintendent of Public Instruction informed about progress toward goals of this legislation and any activities that their entities must undertake to implement this legislation.
b.	Career Pathways Administrator 2: Assists with subdivision (1) of this subsection.
c.	Career Pathways Administrator 3: Assists with subdivision (1) of this subsection.
(7)	The State Board of Education will approve pilot school district plans. Each of the two pilot school district cohorts shall include two school districts with an average daily membership (ADM) of equal to or less than 4,000; two school districts with an ADM of 4,001 to 10,000; two school districts with an ADM of 10,001 to 30,000; and two school districts with an ADM of 30,001 or more.
SECTION 7.16.(d)  Principles to guide local development of career pathways programs. – Career pathways plans approved by the State Board of Education shall meet a set of principles to ensure that these programs advance the purposes of this act. Each district career pathways plan must:
(1)	Create career pathways that enable teachers to progress within their careers by taking on increasing responsibility for students and/or for the development and success of their peers.
(2)	Pay salary supplements of at least ten percent (10%) of the State teacher pay for teachers who have received highly effective ratings consistently and who assume advanced roles. Compensation received by a teacher as a result of the district's participation in the Plan shall be paid as a bonus or supplement to the teacher's regular salary and shall not be included in the average salary calculation used for budgeting State allotments.
(3)	Pay salary supplements of at least twenty‑five percent (25%) of the State teacher pay for teachers who have received highly effective ratings consistently and who lead teams of two or more other teachers and are the teachers of record for all students served by the teaching team. Compensation received by a teacher as a result of the school district's participation in the Plan shall be paid as a bonus or supplement to the teacher's regular salary and shall not be included in the average salary calculation used for budgeting State allotments.
(4)	Achieve financial sustainability for career pathways pay supplements of, at a minimum, the percentages specified above by reallocating local, private, State, and/or federal funds.
(5)	Increase the amount of time each teacher receiving payment from this fund has during the school day for planning, collaboration, and on‑the‑job development or leadership of others.
(6)	Increase the percentage of students who have a highly effective teacher as their teacher of record in at least English Language Arts, math, social studies, and science to a minimum of seventy‑five percent (75%) of students in that subject by the third year of implementation through the roles that constitute the career pathways program and reporting this percentage annually for English Language Arts, math, social studies, and science.
(7)	Establish eligibility requirements to remain in an advanced role no less stringent than those required to attain that role.
(8)	Ensure that teachers assuming advanced or leadership roles may move voluntarily out of these roles. A voluntary departure from a role may not be considered a demotion. If a teacher opts out of the career pathways plan, the teacher's salary shall be the salary applicable to him or her on the State salary schedule.
(9)	Require that if the North Carolina Teacher Evaluation instrument indicates a participating teacher is not maintaining the necessary highly effective ratings for their advanced or leadership role, the teacher's salary shall be the salary applicable to him or her on the State salary schedule.
For purposes of the pilots, receiving highly effective ratings "consistently" means in two out of the past three years, and, in the years after the pilot, "consistently" shall be defined by the State Board of Education in accordance with lessons of each pilot commensurate with the stated purposes of this legislation.
SECTION 7.16.(e)  Matching. – The career pathways pilot program provides one hundred dollars ($100.00) per ADM for teacher salary supplements for up to twenty‑five percent (25%) of ADM in each pilot school district. Funding from the career pathways pilot program must be matched with local funds, private funds, and/or reallocation of State and federal allotments to pay supplements to teachers in the career pathways program. Funding from the career pathways pilot program must be matched at a minimum of one dollar ($1.00) for every one dollar ($1.00) of State funds pursuant to Section 7.16(b) of this act provided for teacher salary supplements.
SECTION 7.16.(f)  Implementation of Pilot Programs. – By September 1, 2014, the State Board of Education shall release a Request for Proposal (RFP) to local school administrative units. By March 1, 2015, proposals shall be reviewed and voted on by the State Board of Education with eight pilot school districts selected as the first cohort for implementation beginning in July 2015. Between July 1, 2015, and July 1, 2018, the pilot school districts selected for the first cohort shall implement their approved career pathways plans. In 2015‑2016, subject to fund availability, the State Board of Education shall designate a panel of experts, which may include members of the State Board of Education, to select a second cohort of eight pilot school districts through an RFP process to participate in the pilot program in 2016‑2017 and 2017‑2018.
SECTION 7.16.(g)  Flexible Funding. – For fiscal years beginning with the 2015‑2016 fiscal year, notwithstanding G.S. 115C‑105.25(5b), the State Board of Education shall increase the flexibility in the use of State funds for pilot school districts by allowing positions allocated for classroom teachers and instructional support personnel to be converted to dollar equivalents for the purpose of increasing compensation for the following: (i) highly effective teachers who become accountable for a greater number of students; (ii) highly effective teachers who assume leadership roles that include accountability for student growth across a team of teachers; and/or (iii) effective or highly effective teachers who are members of teams led by highly effective teachers. These positions shall be converted at the first step of the "A" Teacher Salary Schedule. The dollar equivalents for the converted positions shall be treated as salary supplements and not included in the average salary calculation used for budgeting State allotments. Positions shall only convert under an approved career pathways plan under the policy established by the State Board of Education.
SECTION 7.16.(h)  Report to the General Assembly. — Beginning in 2015‑2016, the State Board shall report on February 1 of each year to the President of the Senate, the Speaker of the House of Representatives, and the Chairs of the Senate Appropriations/Base Budget Committee, the House Appropriations Committee, the Senate Appropriations/Base Budget Committee on Education, the House Appropriations Subcommittee on Education, and the Fiscal Research Division on the continuing development and the implementation of the Career Pathways Plan.

PART VIII. COMMUNITY COLLEGES

PROCESS FOR PERIODICALLY REVISING ENROLLMENT TIERS
SECTION 8.1.  The State Board of Community Colleges shall develop a process for periodically reviewing and revising how courses and programs are classified into tiers in the enrollment funding model. The process shall be developed by March 1, 2015, and reported to the Office of State Budget and Management and the Fiscal Research Division of the North Carolina General Assembly.
The State Board of Community Colleges shall identify those courses and programs in high‑need areas and may suggest any revisions to the model. These revisions shall be submitted as part of their budget requests for the 2017‑2019 fiscal biennium.

MILITARY VETERANS RESIDENT TUITION
SECTION 8.2.  G.S. 115D‑5 is amended by adding a new subsection to read:
"(b2)	The State Board of Community Colleges shall charge in‑State tuition and registration fees to military veterans, who otherwise would not meet the residency requirements set forth in G.S. 116‑143.1, if the veteran satisfies the following criteria:
(1)	The veteran was relieved or discharged from service in the Armed Forces, as defined in G.S. 116‑143.3(a)(2), under other than dishonorable conditions.
(2)	The veteran served for at least four years, some portion of the time while stationed in North Carolina.
(3)	The veteran has his or her official Home of Record address in North Carolina documented by the Armed Forces or resides in the State at the time of enrollment.
(4)	The veteran enrolls at a North Carolina community college within two years of exiting service from the Armed Forces of the United States."

WORKERS' COMPENSATION
SECTION 8.3.(a)  G.S. 115D‑23 reads as rewritten:
"§ 115D‑23.  Workers' Compensation Act applicable to institutional employees.
The provisions of Chapter 97 of the General Statutes of North Carolina, the Workers' Compensation Act, shall apply to all institutional employees. 
The board of trustees of each institution shall be liable for workers' compensation for employees. Each board of trustees is authorized to purchase insurance to cover workers' compensation liability and may include the cost of insurance in the annual budget of the institution.
The provisions of this section shall not apply to any person, firm or corporation making voluntary contributions to institutions for any purpose, and such a person, firm, or corporation shall not be liable for the payment of any sum of money under the provisions of this section."
SECTION 8.3.(b)  G.S. 115D‑58.12(a) reads as rewritten:
(a)	Boards of trustees may purchase liability insurance only from companies duly licensed and authorized to sell insurance in this State or from other qualified companies as determined by the Department of Insurance. Each contract of insurance must, by its terms, adequately insure the board of trustees against any and all liability for any damages by reason of death or injury to person or property proximately caused by the negligence or torts of the agents and employees of such board of trustees or institution when acting within the scope of their authority or the course of their employment. All costs related to any such claims, including the cost of insurance, shall be paid with non‑State funds. Any company which enters into such a contract of insurance with a board of trustees by such act waives any defense based upon the governmental immunity of such board."
SECTION 8.3.(c)  G.S. 143‑291(a) reads as rewritten:
"(a)	The North Carolina Industrial Commission is hereby constituted a court for the purpose of hearing and passing upon tort claims against the State Board of Education, the Board of Transportation, and all other departments, institutions and agencies of the State. The Industrial Commission shall determine whether or not each individual claim arose as a result of the negligence of any officer, employee, involuntary servant or agent of the State while acting within the scope of his office, employment, service, agency or authority, under circumstances where the State of North Carolina, if a private person, would be liable to the claimant in accordance with the laws of North Carolina. If the Commission finds that there was negligence on the part of an officer, employee, involuntary servant or agent of the State while acting within the scope of his office, employment, service, agency or authority that was the proximate cause of the injury and that there was no contributory negligence on the part of the claimant or the person in whose behalf the claim is asserted, the Commission shall determine the amount of damages that the claimant is entitled to be paid, including medical and other expenses, and by appropriate order direct the payment of damages as provided in subsection (a1) of this section, but in no event shall the amount of damages awarded exceed the amounts authorized in G.S. 143‑299.2 cumulatively to all claimants on account of injury and damage to any one person arising out of a single occurrence. The fact that a claim may be brought under more than one Article under this Chapter shall not increase the foregoing maximum liability of the State."
SECTION 8.3.(d)  G.S. 143‑300.2(4) reads as rewritten:
"(4)	"The State" includes all departments, agencies, boards, commissions, institutions, bureaus, and authorities of the State. Occupational licensing boards regulated by Chapter 93B of the General Statutes shall be deemed State agencies for purposes of this Article."
SECTION 8.3.(e)  This section becomes effective July 1, 2014, and applies to workers' compensation claims arising from events occurring on or after that date.

PERMIT NCCCS TO TRANSFER CUSTOMIZED INDUSTRY TRAINING (CIT) FUNDS TO DEPARTMENT OF COMMERCE TO OFFSET APPRENTICESHIP FEES
SECTION 8.4.(a)  Using funds appropriated in this act for the Customized Industry Training Program, and pursuant to G.S. 115D‑5.1, the State Board of Community Colleges shall transfer three hundred thousand dollars ($300,000) to the Department of Commerce to offset fee revenue lost when apprenticeship fees assessed under G.S. 94‑12 are waived.
SECTION 8.4.(b)  This section shall expire June 30, 2015.

MAINTAIN AUDIT SERVICES DIVISION
SECTION 8.5.  Section 10.15(a) of S.L. 2013‑360 is repealed.

FEES COLLECTED AND ASSESSED BY THE MANUFACTURING SOLUTIONS CENTER AND THE TEXTILE TECHNOLOGY CENTER
SECTION 8.6.  The State Board of Community Colleges shall report, no later than March 1, 2015, to the Joint Legislative Education Oversight Committee, the Fiscal Research Division, and the Office of State Budget and Management on the structure of the fees assessed and the total fees collected by the Manufacturing Solutions Center at Catawba Valley Community College and by the Textile Technology Center at Gaston College during the 2012‑2013 and 2013‑2014 fiscal years.

PART IX. UNIVERSITIES

NC SCHOLARSHIP FOR THE EDUCATION OF RETURNING VETERANS (NC SERV)
SECTION 9.1.(a)  North Carolina Scholarship for the Education of Returning Veterans Grants. – In addition to the funds appropriated in Section 6.11(e) of S.L. 2013‑360 for the 2013‑2015 fiscal biennium, that section, as amended by Section 6.3(a) of this act, appropriates an additional five million dollars ($5,000,000) to the Board of Governors for the 2014‑2015 fiscal year and allocated to the State Education Assistance Authority (SEAA) for grants to support the education of certain recent veterans who do not qualify for the in‑State tuition rate under G.S. 116‑143.3. The SEAA shall begin awarding grants no later than July 1, 2015, for enrollment at any constituent institution of The University of North Carolina beginning with the 2015‑2016 academic year.
SECTION 9.1.(b)  Grant Eligibility. – A recent veteran is eligible to receive a grant under this section if the veteran satisfies all of the following criteria:
(1)	The veteran was relieved or discharged from service in the Armed Forces, as defined in G.S. 116‑143.3(a)(2), under other than dishonorable conditions.
(2)	The veteran served in the Armed Forces the equivalent of at least four years, some portion of the time while stationed in North Carolina.
(3)	The veteran had a home of record address in North Carolina documented by the Armed Forces or resides within North Carolina at the time of enrollment.
(4)	The veteran enrolls or is accepted for enrollment at a constituent institution of The University of North Carolina as defined in G.S. 116‑2(4) within two years of exiting service in the Armed Forces.
(5)	The veteran is classified by the constituent institution as a first‑time candidate for a baccalaureate degree in a defined program of study on at least a half‑time basis.
(6)	The veteran does not otherwise qualify for the in‑State tuition rate at the constituent institution of The University of North Carolina at which the student is enrolled.
SECTION 9.1.(c)  Administration of Grants. – The grants provided for in this section shall be administered by the SEAA pursuant to guidelines and procedures established by the SEAA not inconsistent with this section, which guidelines and procedures may include an application deadline, a priority system for awarding grants based on enrollment status, disbursement procedures, and standards for refunding grants when a student withdraws. The minimum amount of the grant for full‑time enrollment in the 2015‑2016 academic year shall be seven thousand five hundred dollars ($7,500). The maximum amount of the grant may not exceed the difference between the in‑State tuition rate and the out‑of‑state tuition rate at the constituent institution. In no event, however, shall the amount of the grant, when accounted for in combination with all other grants, educational benefits, and any other financial aid available to the veteran, cause the total of all such assistance to exceed the total cost of attendance at the constituent institution as determined in accordance with Title IV of the Higher Education Act of 1965, as amended. The grant is limited to two semesters and shall not be used for any remedial or developmental coursework. In order for the veteran to remain eligible for the grant for the second semester, the veteran must maintain satisfactory academic progress as determined by the constituent institution.
Subject to the stipulations provided in this section, the SEAA shall have the power to determine the actual grant amounts disbursed and award grants first to eligible veterans enrolling on a full‑time basis who apply by the deadline established by the SEAA in the event that there are not sufficient funds to award each eligible veteran the maximum amount for the 2015‑2016 academic year. In addition, the SEAA may provide grants to any current member of the Armed Forces who has been charged the out‑of‑state tuition rate at a constituent institution for the 2015‑2016 academic year. Any unexpended grant funds shall not revert and remain available to the SEAA to be awarded for future grants under this section.
The SEAA may use one and one‑half percent (1.5%) of the funds appropriated for grants under this section for administrative purposes.
SECTION 9.1.(d)  A recent veteran who is eligible to receive a grant under this section shall be considered a resident of North Carolina for the purposes of determining eligibility for the Forgivable Education Loans for Service Program under G.S. 116‑209.45(e).
SECTION 9.1.(e)  The SEAA shall study the cost and impact of extending eligibility of recent veterans as defined in subsection (b) of this section to receive the Need‑Based Scholarships for Students Attending Private Institutions of Higher Education as governed by Article 34 of Chapter 116 of the General Statutes. The SEAA shall report its findings to the Office of State Budget and Management, the Fiscal Research Division of the North Carolina General Assembly, the Joint Legislative Education Oversight Committee, and the North Carolina Independent Colleges and Universities by October 1, 2014.

UNC TWO PERCENT MANAGEMENT FLEXIBILITY REDUCTION
SECTION 9.2.(a)  The management flexibility reduction for The University of North Carolina in the amount of forty‑four million thirty‑seven thousand two hundred ninety dollars ($44,037,290) shall not be allocated by the Board of Governors to the constituent institutions and affiliated entities using an across‑the‑board method but in a manner that recognizes the importance of the academic mission 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 9.2.(b)  In allocating this management flexibility reduction, no reduction in State funds shall be allocated to any of the following:
(1)	Need‑Based Financial Aid.
(2)	Aid to Private Colleges.
(3)	University of North Carolina at Asheville.
(4)	University of North Carolina School of the Arts.
(5)	North Carolina School of Science and Mathematics.
(6)	Elizabeth City State University.
(7)	Fayetteville State University.
(8)	Winston‑Salem State University.
SECTION 9.2(c)  The University of North Carolina shall report on the implementation of the management flexibility reduction as provided by Section 9.2(a) of this act to the Office of State Budget and Management and the Fiscal Research Division no later than October 1, 2014. This report shall identify the following by campus:
(1)	The total number of positions eliminated by type; and
(2)	Low‑performing, redundant, and low‑enrollment programs that were eliminated.

REPORT ON CFNC FINANCIAL SUSTAINABILITY
SECTION 9.3.  No later than December 1, 2014, the State Education Assistance Authority shall report to the Office of State Budget and Management and the Fiscal Research Division of the General Assembly on its progress toward funding operations of the College Foundation of North Carolina entirely from non‑General Fund sources. This report shall include:
(1)	The status of fundraising efforts to date.
(2)	A detailed plan and timeline for generating additional revenues.
(3)	Estimated expenditures and revenues by type for the next four fiscal years.
(4)	Potential reduction measures and alternative funding options should General Fund appropriations not be provided in the next biennium.

REPORT ON INSTITUTIONAL TRUST FUNDS
SECTION 9.4.  G.S. 116‑36.1(e) reads as rewritten:
"(e)	Each institution shall submit such reports or other information concerning its trust fund accounts as may be required by the Board and by the Director of the Budget."

UNC CAPITAL PROJECTS FUNDED FROM OPERATING FUNDS
SECTION 9.5.(a)  G.S. 143C‑8‑12 reads as rewritten:
"§ 143C‑8‑12.  University system capital improvement projects from sources that are not General Fund sources: approval of new project or change in scope of existing project.
(a)	Notwithstanding any other provision of this Chapter, the Board of Governors of The University of North Carolina may approve: (i) expenditures to plan a capital improvement project of The University of North Carolina the planning for which is to be funded entirely with non‑General Fund money, (ii) expenditures for a capital improvement project of The University of North Carolina that is to be funded and operated entirely with non‑General Fund money, or (iii) a change in the scope of any previously approved capital improvement project of The University of North Carolina provided that both the project and change in scope are funded entirely with non‑General Fund money. The Board of Governors shall report any expenditure made pursuant to this section to the Office of State Budget and Management and to the Joint Legislative Commission on Governmental Operations.
(b)	For the purposes of G.S. 143C‑8‑12(a), the term "non‑General Fund money" includes funds carried forward from one fiscal year to another pursuant to G.S. 116‑30.3 and G.S. 116‑30.3B. These funds shall only be used for projects listed in G.S. 143C‑4‑3(b)."
SECTION 9.5.(b)  G.S. 116‑13.1 reads as rewritten:
"§ 116‑13.1.  Capital facilities; reports.
…
	"

REPORT ON ACADEMIC SUMMER BRIDGE
SECTION 9.6.  No later than November 1, 2014, the Board of Governors of the University of North Carolina shall report to the Office of State Budget and Management and the Joint Education Legislative Oversight Committee on the impact of Academic Summer Bridge programs on student outcomes. At a minimum, the report shall include information by institution on graduation rates, average time to degree, and student academic performance at multiple intervals over a four‑year course of study.

ASSESS SAME TUITION RATE FOR ALL NONRESIDENT FULL‑SCHOLARSHIP STUDENTS
SECTION 9.7.(a)  G.S. 116‑143.6 is repealed.
SECTION 9.7.(b)  This section becomes effective June 30, 2014.

AMEND ENERGY CONSERVATION SAVINGS REQUIREMENTS
SECTION 9.8.  G.S. 116‑30.3B reads as rewritten:
"§ 116‑30.3B.  Energy conservation savings.
(a)	In addition to the funds carried forward under G.S. 116‑30.3, the General Fund current operations appropriations credit balance remaining at the end of each fiscal year for utilities of a constituent institution that is energy savings realized from implementing an energy conservation measure may be carried forward by the institution to the next fiscal year. Sixty percent (60%) of the energy savings realized shall be utilized for energy conservation measures by that institution. The use of funds under this section shall be limited to onetime capital and operating expenditures that will not impose additional financial obligations on the State. The Director of the Budget, under the authority set forth in G.S. 143C‑6‑2, shall establish the General Fund current operations credit balance remaining in each budget code of each institution.
(b)	It is the intent of the General Assembly that appropriations to the Board of Governors on behalf of a constituent institution not be reduced as a result of the institution's realization of energy savings. Instead, the General Assembly intends that the amount of appropriations be determined as if no energy savings had been realized. The Director of the Budget shall not decrease the recommended continuation budget requirements for utilities for constituent institutions by the amount of energy savings required to pay total costs associated with implementing  a guaranteed energy savings contract pursuant to Article 3B of Chapter 143 of the General Statutes.
…."

INTERNSHIPS AND CAREER‑BASED OPPORTUNITIES FOR HBCU STUDENTS
SECTION 9.9.(a)  The sum of three hundred seventeen thousand five hundred dollars ($317,500) for the 2014‑2015 fiscal year shall be used by the Board of Governors of the University of North Carolina to establish a pilot internship program to provide internships and career‑based opportunities for students attending Historically Black Colleges and Universities (HBCUs) in North Carolina.
SECTION 9.9.(b)  The pilot program shall include Elizabeth City State University and three HBCUs selected through a competitive application process. Of the three institutions selected through a competitive process, one shall be a constituent institution of the University of North Carolina and two shall be private colleges or universities located in North Carolina.
SECTION 9.9.(c)  Of the funds made available by this section, the University of North Carolina may use up to five percent (5%) for costs associated with administering this pilot program.
SECTION 9.9.(d)  No later than March 1, 2015, the University of North Carolina shall report to the Office of State Budget and Management and the Joint Education Legislative Oversight Committee on the implementation of this pilot program. The report shall include recommendations and a detailed estimate of costs associated with expanding the program to all constituent institutions of the University of North Carolina System designated an HBCU.

UNC BUDGET PREPARATION
SECTION 9.10.  G.S. 116‑30.7 reads as rewritten:
"§ 116‑30.7.  Biennial projection of enrollment growth for The University of North Carolina.
By October 15 of each even‑numbered year, the General Administration of The University of North Carolina shall provide to the Joint Education Legislative Oversight Committee and to the Office of State Budget and Management a projection of the total student enrollment in The University of North Carolina that is anticipated for the next biennium. The enrollment projection shall be divided into the following categories and shall include the projected growth for each year of the biennium in each category at each of the constituent institutions: undergraduate students, graduate students (students earning master's and doctoral degrees), first professional students, and any other categories deemed appropriate by General Administration. The projection shall also distinguish between on‑campus and distance education students. The projections shall be considered by the Director of the Budget when determining the amount the Director proposes to appropriate to the University of North Carolina in the Recommended State Budget submitted pursuant to G.S. 143C‑3‑5(b)."

UNC STRATEGIC PLAN FUNDS
SECTION 9.11.  Section 11.13 of S.L. 2013‑360 reads as rewritten:
"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) on a recurring basis 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 9.12.  Section 11.15(h) of S.L. 2013‑360 reads as rewritten:
"SECTION 11.15.(h)  The State Education Assistance Authority, in consultation with the University of North Carolina, the North Carolina Community College System, and the NC Independent Colleges and Universities, shall study ways to structure financial aid payment schedules 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 October 1, 2015, regarding the outcomes of this study."

SITE PLANNING FOR SCHOOL OF SCIENCE AND MATH EXPANSION
SECTION 9.13.(a)  If the Board of Governors of The University of North Carolina and the North Carolina School of Science and Mathematics (School of Science and Math) jointly determine that an additional School of Science and Math campus is needed, then the School for the Deaf campus in Morganton shall be considered as a potential site.
SECTION 9.13.(b)  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 and School of Science and Math, in consultation with the Department of Administration, may consider other sites in western North Carolina that are available as a site.

UNC GAME CHANGING RESEARCH
SECTION 9.14.  Two million dollars ($2,000,000) is appropriated in this act to implement game changing research investments as identified in 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."

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

FUNDS FOR REPLACEMENT MEDICAID MANAGEMENT INFORMATION SYSTEM/IMPLEMENTATION OF REPLACEMENT MMIS
SECTION 10.1.  Section 12A.4.(a) of S.L. 2013‑360 reads as rewritten:
"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 six million eight hundred ninety thousand six hundred dollars ($6,890,600) 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."

FUNDING FOR NORTH CAROLINA FAMILIES ACCESSING SERVICES THROUGH TECHNOLOGY (NC FAST); REPORT ON ELIGIBILITY DETERMINATIONS FOR THE EXCHANGE
SECTION 10.2.  Section 12A.6.(a) of S.L. 2013‑360 read as rewritten:
"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 prior year earned revenue in the amount of four million one hundred thirty‑eight thousand two dollars ($4,138,002) and 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 year 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."

NONPROFIT AND UNIVERSITY CONTRACT REDUCTION
SECTION 10.3.  The Department of Health and Human Services shall reduce the amount of funds allocated to nonprofit organizations and contracts with universities by three million dollars ($3,000,000) on a recurring basis. In achieving the reductions required by this section, the Department (i) shall minimize reductions to funds allocated to nonprofit organizations and universities for the provision of direct services, (ii) shall seek to achieve administrative efficiencies in contractual arrangements, (iii) shall maximize the use of other funds to the extent possible to support contracts to avoid service impacts, and (iv) shall not reduce programmatic funding to the NC Pre‑Kindergarten Program or funds used to provide subsidized child care services to children.

LOAN REPAYMENT FUND USAGE
SECTION 10.4.  The Department of Health and Human Services, Office of Rural Health and Community Care, shall use funds appropriated in this act for loan repayment to medical, dental, and psychiatric providers in communities and State hospitals to combine all loan repayment programs in order to achieve efficient and effective management of the programs. The loan repayment programs to be combined under this section are (i) the Physician Loan Repayment Program, (ii) the Psychiatric Loan Repayment Program, and (iii) the Loan Repayment Initiative at State Facilities. These funds shall be used for the following purposes:
(1)	Continue to fund the State Loan Repayment Program for primary care providers and expand State incentives to general surgeons practicing in Critical Access Hospitals (CAHs) located across the State; and
(2)	Expand the State Loan Repayment Program to include eligible providers residing in North Carolina who use telemedicine in rural and underserved areas.

CHILD CARE ALLOCATION FORMULA ADJUSTMENT
SECTION 10.5.  Section 12B.4.(a)(3) of S.L. 2013‑360 reads as rewritten:
(3)	For fiscal year 2014‑2015, the Division of Child Development and Early Education shall base the formula identified in subdivision (1) of this subsection on the most current available Census data. The resulting changes to allocations shall be implemented over a 4‑year period by applying twenty‑five percent (25%) of the change each year in order to mitigate significant increases and decreases in county allocations."

SMART START MAINTENANCE OF EFFORT AND MATCH REQUIREMENT
SECTION 10.6.  For fiscal year 2014‑2015, the local partnerships shall spend an amount for child care subsidies that provides at least fifty‑two million dollars ($52,000,000) for the TANF maintenance of effort requirement and the Child Care Development Fund and Block Grant match requirement.

SUBSIDIZED CHILD CARE MARKET RATE ADJUSTMENT
SECTION 10.7.  Not later than October 1, 2014, the Department may implement an adjustment to child care market rates for children through age two, based upon the 2013 Child Care Market Rate Study. Rate adjustments shall be implemented as follows:
(1)	For four‑ to five‑star child care center‑based rates, for Infants and Toddlers and Two‑Year‑Olds counties may receive up to fifty percent (50%) of the recommended rate adjustment as defined in the 2013 Child Care Market Rate Study.
(2)	For four‑ to five‑star child care home‑based rates, for Infants, One‑Year‑Olds and Two‑Year‑Olds, all counties may receive up to fifty percent (50%) of the recommended rate adjustment as defined in the 2013 Child Care Market Rate Study.
The Department shall ensure that market rate adjustments provide greater access to high‑quality care.

REDIRECT PORTION OF TRANSFER TO HOUSING FINANCE AGENCY TO INCREASE UTILIZATION OF KEY PROGRAM RENTAL ASSISTANCE UNITS
SECTION 10.8.  To help increase targeted housing placements, the Department of Health and Human Services may redirect up to two hundred fifty‑five thousand dollars ($255,000) in funding from the amount given the North Carolina Housing Finance Agency for the Key Program to establish and support three positions to assist in managing outreach, referral, and service linkage oversight activities for the Targeted Housing Program and the North Carolina's Section 811 Project Rental Assistance. The North Carolina Housing Finance Agency may use up to eighty‑five thousand dollars ($85,000) of the funds it receives from the Department of Health and Human Services for the Targeted Housing Program to provide administrative support for this program.

ALLOW COUNTIES TO USE HCCBG FUNDING TO SUPPORT VOLUNTEER SERVICE
SECTION  10.9.  The Department of Health and Human Services, Division of Aging and Adult Services, shall reinstate the Volunteer Development Program as a service under the Home and Community Care Block Grant. Of the funds received, local counties may elect to use the volunteer program to provide services to older adults.

WELL WATER SAMPLE FEES
SECTION 10.10.  G.S. 130A‑5(16) reads as rewritten:
"(16)	To charge a fee of seventy‑three dollars and ninety‑five cents ($73.95) for analyzing private well‑water samples sent to the State Laboratory of Public Health by local health departments. The fee shall be imposed for analyzing samples from newly constructed and existing wells. The fee shall be computed annually by the Director of the State Laboratory of Public Health by analyzing the previous year's testing at the State Laboratory of Public Health, and applying the amount of the fully allocated total cost of the private well‑water testing, minus State appropriations that support this effort. The fee includes the charge for the private well‑water panel test kit."

CHILDREN'S DEVELOPMENTAL SERVICE AGENCIES
SECTION 10.11.  Section 12E.4 of S.L. 2013‑360 reads as rewritten:
"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 not be required to eliminate 160 CDSA positions effective July 1, 2014, as referenced in the committee report referred in Section 38.4 of S.L. 2013‑360 as long as the budget savings are achieved and the scope of the budget is not increased. 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 (ADAP) INSURANCE COMPLETION PILOT AND MODIFIED ADJUSTED GROSS INCOME (MAGI)
SECTION 10.12.(a)  The Department of Health and Human Services, Division of Public Health, AIDS Drug Assistance Program (ADAP), shall conduct a two‑year pilot in calendar years 2015 and 2016 using State appropriations, to the extent that funding is available, to provide health insurance support for "Insurance Completion" services for eligible HIV‑positive clients. "Insurance Completion" may include medication co‑payments, medication coinsurance, medication payments toward deductibles, medication payments during coverage gaps, and the client's share of health insurance premiums for private insurance and Medicare (after federal subsidies are applied). The Department shall not implement the pilot program until it obtains actuarial services to ensure the cost‑neutrality or cost‑savings of providing health insurance support for "Insurance Completion" services. If the Secretary of the Department of Health and Human Services determines that implementation will be cost‑neutral or achieve savings, the pilot shall occur in two phases:
(1)	Phase 1. – Beginning during open enrollment for calendar year 2015, the Department may enroll up to 1,000 eligible ADAP clients in the federally‑facilitated health benefit exchange under the Affordable Care Act (ACA) using ADAP funds to cover the cost of medication cost‑sharing (client medication co‑payments, medication coinsurance, medication payments toward deductibles, and medication payments during coverage gaps). Prior to the start of Phase 1, the program shall enroll a small number of clients to test payment systems and projections.
(2)	Phase 2. – After actuarial analysis projects at least cost‑neutrality or cost‑savings to ADAP, and after payment structures are in place to provide both medication cost‑sharing and coverage for the cost of monthly insurance premiums for insurance using the health benefit exchange, the Department may enroll up to 2,000 eligible ADAP clients in the pilot and may cover the cost of medication cost‑sharing and health insurance premiums. The pilot shall incur a per‑client cost of no greater than the program's SFY 2013‑2014 annual cost per enrolled client.
SECTION 10.12.(b)  The Department may contract with a vendor to evaluate the results of the pilot program. By no later than April 1, 2017, the Department shall report to the Joint Legislative Oversight Committee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the House Appropriations Subcommittee on Health and Human Services on the results of the pilot. The report shall include information on number of pilot participants, participant satisfaction, and health outcome measures for pilot participants.
SECTION 10.12.(c)  If required to continue to receive federal funds, the Department may initiate use of the Modified Adjusted Gross Income (MAGI) formula in the calculation of income for the purpose of eligibility determination for ADAP benefits. Prior to implementation of any changes related to MAGI, a detailed analysis must be completed to determine the budgetary impact, including administrative costs, and the effect on ADAP clients.

SPECIAL ASSISTANCE PAYMENTS
SECTION 10.13  G.S. 143B‑139.5 reads as rewritten:
"§ 143B‑139.5.  Department of Health and Human Services; adult care State/county share of costs.
State funds available to the Department of Health and Human Services shall pay fifty percent (50%), and the counties shall pay fifty percent (50%) of the authorized rates for care in adult care homes including area mental health agency‑operated or contracted‑group homes. "

MEDICAL ASSISTANCE MEDICAID ESTATE RECOVERY PLAN
SECTION 10.14.  G.S.108A‑70.5 is amended by adding a new subsection to read:
"(f)	With regard to any recipient who has received compensation pursuant to Part 30 of Article 9 of Chapter 143B of the General Statutes, the Department shall reduce the amount of any recovery it seeks from the deceased recipient's estate under this section by the amount of the resource disregard provided for in G.S. 143B‑426.56(b)(1)."

MEDICAL ASSISTANCE DRUG REIMBURSEMENT AMOUNTS
SECTION 10.15.  Section 12H.13 of S.L. 2013‑360 reads as rewritten:
"…
"SECTION 12H.13.(f)  Effective January 1, 2014, the following changes are made to drug reimbursements:
(1)	Specialty drug prices based on the Wholesale Acquisition Cost (WAC)	shall be paid at one hundred one percent (101%) of WAC.
(2)	Non‑specialty drug prices based on WAC shall be paid at one hundred two and seven‑tenths percent (102.7%) of WAC.
(3)	Prices based on the State Medicaid Average Costs (SMAC) shall be paid at one hundred fifty percent (150%) of SMAC.
(4)	The rate for dispensing brand drugs is reduced by one dollar ($1.00).two dollars ($2.00).
(5)	The rates for dispensing generic drugs are as follows, based on the percentages of generic drugs dispensed by the pharmacy in the previous quarter:
Percentage Tier						Rate
Greater than or equal to 80%					$7.75
Greater than or equal to 75% and less than 80%		$5.50
Greater than or equal to 70% and less than 75%		$2.00
Less than 70%							$1.00
…
"SECTION 12H.13.(h)  Notwithstanding the provisions of subsection (f) of this section, and in the event of federal drug pricing changes, the Department of Health and Human Services shall adjust the rate for dispensing drugs to offset the impact to providers of any such changes. Any actions taken under this subsection shall be reported to the Joint Legislative Appropriation Chairs, the Joint Legislative Oversight Committee on Health and Human Services, and the Fiscal Research Division, along with the Office of State Budget and Management."

MEDICAL ASSISTANCE PRIOR AUTHORIZATION OF MENTAL HEALTH DRUGS
SECTION 10.16.  Section 12H.13(g) of S.L. 2013‑360, as amended by Section 4.4 of S.L. 2013‑363, reads as rewritten:
"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.

MEDICAL ASSISTANCE SHARED SAVINGS PLAN WITH PROVIDERS
SECTION 10.17.  Section 12H.18 of S.L. 2013‑360 reads as rewritten:
"
"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.

…
"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."

MEDICAL ASSISTANCE MODIFY HOSPITAL PROVIDER ASSESSMENTS BY CHANGING AMOUNT RETAINED BY STATE
SECTION 10.18.(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‑eight and eighty‑five hundredths percent (28.85%) of the total amount collected under the assessment."
SECTION 10.18.(b)  G.S. 108A‑124(b) reads as rewritten:
"(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)	Transfer to the State Controller twenty‑five percent (25%) of the State's annual Medicaid payment amount.
(2)	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 (3) of this subsection.
(3)	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.
(4)	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 10.18.(c)  G.S. 108A‑128 reads as rewritten:
"§ 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‑eight and eighty‑five hundredths percent (28.85%) 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."

STREAMLINE MEDICAID APPEALS
SECTION 10.19.(a)  The Department of Health and Human Services shall establish and administer a fair hearing procedure for the resolution of contested Medicaid cases, as defined by G.S. 108A‑70.9A(a)(2) and G.S. 108D‑1(10). The procedure shall comply with applicable federal law and State law, as modified by this section, and shall ensure Medicaid beneficiaries are afforded all rights to which they are entitled under the Constitution of the United States and the North Carolina Constitution. The procedure should allow for the speedy determination of these appeals, allowing Medicaid recipients to resolve their contested Medicaid cases more quickly than the present resolution forum will allow. The procedure shall make the Department the final agency decision maker for Medicaid recipient appeals. The Department shall memorialize the procedure in an amendment to the State Medical Assistance Plan and seek approval from the Centers for Medicare and Medicaid Services to implement the new procedure for adverse determinations and managed care actions made on or after July 1, 2015. The Department may move or reclassify any position in the Department for the purpose of implementing this section.
SECTION 10.19.(b)  G.S. 108A‑70.9A reads as rewritten:
"§ 108A‑70.9A.  Appeals by Medicaid recipients.
(a)	Definitions. – The following definitions apply in this Part, unless the context clearly requires otherwise.
(1)	Adverse determination. – A determination by the Department to deny, terminate, suspend, or reduce a Medicaid service or an authorization for a Medicaid service.
	
(2)	Contested Medicaid case. – A case initiated upon the filing of an appeal challenging an adverse determination as described in this section and G.S. 108A‑70.9B.
(3)	Recipient. – A recipient and the recipient's parent, guardian, or legal representative, unless otherwise specified.
(b)	General Rule. – Notwithstanding any provision of State law or rules to the contrary, this section shall govern the process used by a Medicaid recipient to appeal an adverse determination made by the Department.
(c)	Notice. – Except as otherwise provided by federal law or regulation, at least 10 days before the effective date of an adverse determination, the Department shall notify the recipient, and the provider, if applicable, in writing of the adverse determination and of the recipient's right to appeal the adverse determination. The Department shall not be required to notify a recipient's parent, guardian, or legal representative unless the recipient's parent, guardian, or legal representative has requested in writing to receive the notice. The notice shall be mailed on the date indicated on the notice as the date of the determination. The notice shall include:
(1)	An identification of the recipient whose services are being affected by the adverse determination, including the recipient's full name and Medicaid identification number.
(2)	An explanation of what service is being denied, terminated, suspended, or reduced and the reason for the determination.
(3)	The specific regulation, statute, or medical policy that supports or requires the adverse determination.
(4)	The effective date of the adverse determination.
(5)	An explanation of the recipient's right to appeal the Department's adverse determination in an evidentiary hearing before the Department.
(6)	An explanation of how the recipient can request a hearing and a statement that the recipient may represent himself or herself or use legal counsel, a relative, or other spokesperson.
(7)	A statement that the recipient may continue to receive Medicaid services at the level provided on the day immediately preceding the Department's adverse determination or the amount requested by the recipient, whichever is less, if the recipient requests a hearing before the effective date of the adverse determination. If the recipient so requests, the services shall continue until the hearing is completed and a final decision is rendered.
(8)	The name and telephone number of a contact person at the Department to respond in a timely fashion to the recipient's questions.
(9)	The telephone number by which the recipient may contact a Legal Aid/Legal Services office.
(10)	The appeal request form described in subsection (e) of this section that the recipient may use to request a hearing.
(d)	Appeals. – The recipient may request a hearing only within the time period beginning upon the mailing of the notice required by subsection (c) of this section and ending the tenth day after the date of the adverse determination, which shall be known as the period for appeal. The recipient must request a hearing by filing an appeal request form with the Department. If the recipient does not request a hearing during the period for appeal, the recipient shall be deemed to waive any right of appeal, and the Department shall deny any hearing request filed outside the period of appeal. Where a request for hearing concerns the reduction, modification, or termination of Medicaid services, including the failure to act upon a timely request for reauthorization with reasonable promptness, upon the filing of an appeal request during the period for appeal, the Department shall reinstate the services to the level or manner prior to action by the Department when required by federal law or regulation. The information contained in the notice is confidential unless the recipient appeals. The Department may dispose of the records after one year. The Department may not influence, limit, or interfere with the recipient's decision to request a hearing.
…
(f)	Final Decision. – After a hearing before the Department in accordance with this section and G.S. 108A‑70.9B, the Department shall notify the recipient of the final decision and of the right to judicial review of the decision pursuant to Article 4 of Chapter 150B of the General Statutes."
SECTION 10.19.(c)  G.S. 108A‑70.9B reads as rewritten:
"§ 108A‑70.9B.  Contested Medicaid cases.
(a)	Application. – This section applies only to contested Medicaid cases commenced by Medicaid recipients under G.S. 108A‑70.9A.
(b)	Simple Procedures. – Except as otherwise provided in G.S. 108A‑70.9A, the Department shall establish in the State Plan the procedures that apply to a contested Medicaid case involving a Medicaid recipient in order to complete the case as quickly as possible while also complying with federal law.
(1)	To the extent possible, the Department shall schedule and hear contested Medicaid cases within 30 days of submission of a request for appeal.
(2)	Hearings shall be conducted telephonically or by video technology with all parties, however the recipient may request that the hearing be conducted in person before the Department, which for good cause shown may be allowed by the Department. An in‑person hearing shall be conducted in Wake County, however, for good cause shown, the in‑person hearing may be conducted in the county of residence of the recipient or a nearby county. Good cause, which shall be determined by the Department, may include, but is not limited to, the recipient's impairments limiting travel or the unavailability of the recipient's treating professional witnesses. The Department shall provide written notice to the recipient of the use of telephonic hearings, hearings by video conference, and in‑person hearings before the Department, and how to request a hearing in the recipient's county of residence.
(3)	The simplified procedure may include requiring that all prehearing motions be considered and ruled on by the Department in the course of the hearing of the case on the merits. The Department shall make reasonable efforts in a case involving a Medicaid recipient who is not represented by an attorney to assure a fair hearing and to maintain a complete record of the hearing.
(4)	The Department may allow brief extensions of the time limits contained in this section for good cause and to ensure that the record is complete. Good cause may include, but is not limited to, delays resulting from untimely receipt of documentation needed to render a decision and other unavoidable and unforeseen circumstances. Continuances shall only be granted in accordance with the procedure adopted by the Department and shall not be granted on the day of the hearing, except for good cause shown. If a petitioner fails to make an appearance at a hearing that has been properly noticed via certified mail by the Department, the Department shall immediately dismiss the contested case, unless the recipient moves to show good cause within three business days of the date of dismissal.
(5)	The notice of hearing provided by the Department to the recipient shall include the following information:
a.	The recipient's right to examine at a reasonable time before the hearing and during the hearing the contents of the recipient's case file and documents to be used by the Department in the hearing.
b.	The recipient's right to an interpreter during the appeals process.
c.	Circumstances in which a medical assessment may be obtained at the Department's expense and be made part of the record. Qualifying circumstances include those in which (i) a hearing involves medical issues, such as a diagnosis, an examining physician's report, or a medical review team's decision; and (ii) the Department considers it necessary to have a medical assessment other than that performed by the individual involved in making the original decision.
(c)	Mediation. – Upon receipt of an appeal request form as provided by G.S. 108A‑70.9A(e), the Department shall offer mediation through a mediation process established by the Department. If the parties have resolved matters in the mediation, the Department shall dismiss the case. The Department shall not conduct a hearing of any contested Medicaid case until it has received notice that either: (i) the mediation was unsuccessful, or (ii) the petitioner has rejected the offer of mediation, or (iii) the petitioner has failed to appear at a scheduled mediation. If the recipient accepts an offer of mediation and then fails to meaningfully participate without good cause, the Department shall dismiss the case.
(d)	Burden of Proof. – The recipient has the burden of proof to show entitlement to a requested benefit or the impropriety of the agency determination, and the recipient has the burden of going forward. The Department shall not make any ruling on the preponderance of evidence until the close of all evidence.
(e)	New Evidence. – The recipient shall be permitted to submit evidence regardless of whether obtained prior to or subsequent to the adverse determination and regardless of whether the Department had an opportunity to consider the evidence in making its adverse determination. When the evidence is received, the Department may continue the hearing to review the evidence. Subsequent to review of the evidence, if the Department reverses its original decision, it shall immediately inform the recipient.
(f)	Issue for Hearing. – For each adverse determination, the hearing shall determine whether the Department substantially prejudiced the rights of the recipient and if the Department, based upon evidence at the hearing:
(1)	Exceeded its authority or jurisdiction.
(2)	Acted erroneously.
(3)	Failed to use proper procedure.
(4)	Acted arbitrarily or capriciously.
(5)	Failed to act as required by law or rule.
(g)	Decision. – The Department shall hear and decide the case without unnecessary delay. The Department's decision after hearing shall be considered a final decision in a contested case for the purpose of pursuing judicial review under Article 4 of Chapter 150B of the General Statutes."
SECTION 10.19.(d)  G.S. 108D‑1(3) reads as rewritten:
"§ 108D‑1.  Definitions.
The following definitions apply in this Chapter, unless the context clearly requires otherwise:
…
(3)	Contested Medicaid managed care case hearing. – The hearing or hearings conducted at the Department of Health and Human Services under G.S. 108D‑15 to resolve a dispute between an enrollee and a local management entity/managed care organization about a managed care action.
…."
SECTION 10.19.(e)  G.S. 108D‑11 reads as rewritten:
"§ 108D‑11.  LME/MCO grievance and appeal procedures, generally.
…
(c)	An LME/MCO shall not attempt to influence, limit, or interfere with an enrollee's right or decision to file a grievance, request for an LME/MCO level appeal, or a contested case Medicaid managed care hearing. However, nothing in this Chapter shall be construed to prevent an LME/MCO from doing any of the following:
(1)	Offering an enrollee alternative services.
(2)	Engaging in clinical or educational discussions with enrollees or providers.
(3)	Engaging in informal attempts to resolve enrollee concerns prior to the issuance of a notice of grievance disposition or notice of resolution.
(d)	An LME/MCO shall not take punitive action against a provider for any of the following:
(1)	Filing a grievance on behalf of an enrollee or supporting an enrollee's grievance.
(2)	Requesting an LME/MCO level appeal on behalf of an enrollee or supporting an enrollee's request for an LME/MCO level appeal.
(3)	Requesting an expedited LME/MCO level appeal on behalf of an enrollee or supporting an enrollee's request for an LME/MCO level expedited appeal.
(4)	Requesting a contested Medicaid managed care case hearing on behalf of an enrollee or supporting an enrollee's request for a contested Medicaid managed care case hearing."
SECTION 10.19.(f)  G.S. 108D‑12 reads as rewritten:
"§ 108D‑12.  LME/MCO grievances.
(a)	Filing of Grievance. – An enrollee, or a network provider authorized in writing to act on behalf of an enrollee, has the right to file a grievance with an LME/MCO at any time to express dissatisfaction about any matter other than a managed care action. Upon receipt of a grievance, an LME/MCO shall cause a written acknowledgment of receipt of the grievance to be sent by United States mail.
(b)	Notice of Grievance Disposition. – The LME/MCO shall resolve the grievance and cause a notice of grievance disposition to be sent by United States mail to the enrollee and all other affected parties as expeditiously as the enrollee's health condition requires, but no later than 90 days after receipt of the grievance.
(c)	Right to LME/MCO Level Appeal. – There is no right to appeal the resolution of a grievance to any forum."
SECTION 10.19.(g)  G.S. 108D‑13 reads as rewritten:
"§ 108D‑13.  Standard LME/MCO level appeals.
…
(e)	Right to Request Contested Medicaid Managed Care Case Hearing. – An enrollee, or a network provider authorized in writing to act on behalf of an enrollee, may file a request for a contested Medicaid managed care case hearing under G.S. 108D‑15 as long as the enrollee or network provider has exhausted the appeal procedures described in this section or G.S. 108D‑14.
(f)	Request Form for Contested Medicaid Managed Care Case Hearing. – In the same mailing as the notice of resolution, the LME/MCO shall also provide the enrollee with an appeal request form for a contested Medicaid managed care case hearing that meets the requirements of G.S. 108D‑15(f)."
SECTION 10.19.(h)  G.S. 108D‑14 reads as rewritten:
"§ 108D‑14.  Expedited LME/MCO level appeals.
…
(e)	Right to Request Contested Medicaid Managed Care Case Hearing. – An enrollee, or a network provider authorized in writing to act on behalf of an enrollee, may file a request for a contested Medicaid managed care case hearing under G.S. 108D‑15 as long as the enrollee or network provider has exhausted the appeal procedures described in G.S. 108D‑13 or this section.
…
(g)	Request Form for Contested Medicaid Managed Care Case Hearing. – In the same mailing as the notice of resolution, the LME/MCO shall also provide the enrollee with an appeal request form for a contested Medicaid managed care case hearing that meets the requirements of G.S. 108D‑15(f)."
SECTION 10.19.(i)  G.S. 108D‑15 reads as rewritten:
"§ 108D‑15.  Contested case hearings on disputed managed care actions.
(a)	Jurisdiction. – The Department of Health and Human Services has exclusive jurisdiction over a dispute concerning a managed care action after an enrollee has exhausted the appeal procedures described in G.S. 108D‑13 and G.S. 108D‑14. The Office of Administrative Hearings does not have jurisdiction over a dispute concerning a managed care action.
(b)	Exclusive Administrative Remedy. – Notwithstanding any provision of State law or rules to the contrary, this section is the exclusive method for an enrollee to contest a notice of resolution issued by an LME/MCO. G.S. 108A‑70.9A, 108A‑70.9B, and 108A‑70.9C do not apply to enrollees contesting a managed care action.
(c)	Request for Contested Medicaid Managed Care Case Hearing. – A request for an administrative hearing to appeal a notice of resolution issued by an LME/MCO is a contested Medicaid managed care case subject to the provisions of this section. An enrollee, or a network provider authorized in writing to act on behalf of an enrollee, has the right to file a request for appeal to contest a notice of resolution as long as the enrollee or network provider has exhausted the appeal procedures described in G.S. 108D‑13 or G.S. 108D‑14.
(d)	Filing Procedure. – An enrollee, or a network provider authorized in writing to act on behalf of an enrollee, may file a request for an appeal by sending an appeal request form that meets the requirements of subsection (e) of this section to the Department and the affected LME/MCO by no later than 30 days after the mailing date of the notice of resolution. A request for appeal is deemed filed when a completed and signed appeal request form has been both submitted into the care and custody of the Department and accepted by the Department. Upon receipt of a timely filed appeal request form, information contained in the notice of resolution is no longer confidential, and the LME/MCO shall immediately forward a copy of the notice of resolution to the Department electronically. The Department may dispose of these records after one year.
(e)	Parties. – The LME/MCO shall be the respondent for purposes of this appeal.
(f)	Appeal Request Form. – In the same mailing as the notice of resolution, the LME/MCO shall also provide the enrollee with an appeal request form for a contested Medicaid managed care case hearing which shall be no more than one side of one page. The form shall include at least all of the following:
(1)	A statement that in order to request an appeal, the enrollee must file the form in accordance with the Department's rules, by mail or fax to the address or fax number listed on the form, by no later than 30 days after the mailing date of the notice of resolution.
(2)	The enrollee's name, address, telephone number, and Medicaid identification number.
(3)	A preprinted statement that indicates that the enrollee would like to appeal a specific managed care action identified in the notice of resolution.
(4)	A statement informing the enrollee of the right to be represented at the contested Medicaid managed care case hearing by a lawyer, a relative, a friend, or other spokesperson.
(5)	A space for the enrollee's signature and date.
(g)	Continuation of Benefits. – An LME/MCO shall continue the enrollee's benefits during the pendency of an appeal to the same extent required under 42 C.F.R. § 438.420. Notwithstanding any other provision of State law, the Department does not have the power to order and shall not order an LME/MCO to continue benefits in excess of what is required by 42 C.F.R. § 438.420.
(h)	Simple Procedures. – Except as expressly provided in this section, the Department may limit and simplify the procedures that apply to contested Medicaid managed care case hearings conducted under this section in order to complete these cases as expeditiously as possible. Any simplified hearing procedures must comply with all of the following requirements:
(1)	The Department shall schedule and hear cases by no later than 55 days after receipt of a request for a contested Medicaid managed care case hearing.
(2)	The Department shall conduct all contested Medicaid managed care case hearings telephonically or by video technology with all parties, unless the enrollee requests that the hearing be conducted in person before the Department. An in‑person hearing shall be conducted in Wake County unless the enrollee's impairments limit travel. For enrollees with impairments that limit travel, an in‑person hearing shall be conducted in the enrollee's county of residence. The Department shall provide written notice to the enrollee of the use of telephonic hearings, hearings by video conference, and in‑person hearings as well as written instructions on how to request a hearing in the enrollee's county of residence.
(3)	The Department shall consider and rule on all prehearing motions prior to the scheduled date for a hearing on the merits.
(4)	The Department may allow brief extensions of the time limits imposed in this section only for good cause shown and to ensure that the record is complete. The Department shall only grant a continuance of a hearing in accordance with procedures adopted by the Department for good cause shown and shall not grant a continuance on the day of a hearing, except for good cause shown. If an enrollee fails to make an appearance at a hearing that has been properly noticed, the Department shall immediately dismiss the case, unless the enrollee moves to show good cause by no later than three business days after the date of dismissal. As used in this section, "good cause shown" includes delays resulting from untimely receipt of documentation needed to render a decision and other unavoidable and unforeseen circumstances.
(5)	The Department shall include information on at least all of the following in its notice of hearing to an enrollee:
a.	The enrollee's right to examine at a reasonable time before and during the hearing the contents of the enrollee's case file and any documents to be used by the LME/MCO in the hearing.
b.	The enrollee's right to an interpreter during the hearing process.
c.	The circumstances in which a medical assessment may be obtained at the LME/MCO's expense and made part of the record, including all of the following:
1.	A hearing involving medical issues, such as a diagnosis, an examining physician's report, or a decision by a medical review team.
2.	A hearing in which the Department considers it necessary to have a medical assessment other than the medical assessment performed by an individual involved in any previous level of review or decision making.
(i)	Mediation. – Upon receipt of an appeal request form as provided by G.S. 108D‑15(f), the Department shall offer mediation through a mediation process established by the Department. If the parties have resolved matters in the mediation, the Department shall dismiss the case. The Department shall not conduct a hearing of any contested Medicaid managed care case involving a dispute of a managed care action until it has received notice that either (i) the mediation was unsuccessful, (ii) the petitioner has rejected the offer of mediation, or (iii) the petitioner has failed to appear at a scheduled mediation. If the recipient accepts an offer of mediation and then fails to meaningfully participate without good cause, the Department shall dismiss the case.
(j)	Burden of Proof. – The enrollee has the burden of proof on all issues submitted to the Department for a contested Medicaid managed care case hearing under this section and has the burden of going forward. The Department shall not make any ruling on the preponderance of evidence until the close of all evidence in the case.
(k)	New Evidence. – The enrollee shall be permitted to submit evidence regardless of whether it was obtained before or after the LME/MCO's managed care action and regardless of whether the LME/MCO had an opportunity to consider the evidence in resolving the LME/MCO level appeal. Upon the receipt of new evidence and at the request of the LME/MCO, the Department shall continue the hearing for a minimum of 15 days and a maximum of 30 days in order to allow the LME/MCO to review the evidence. Upon reviewing the evidence, if the LME/MCO decides to reverse the managed care action taken against the enrollee, it shall immediately inform the Department of its decision.
(l)	Issue for Hearing. – For each managed care action, the Department shall determine whether the LME/MCO substantially prejudiced the rights of the enrollee and whether the LME/MCO, based upon evidence at the hearing:
(1)	Exceeded its authority or jurisdiction.
(2)	Acted erroneously.
(3)	Failed to use proper procedure.
(4)	Acted arbitrarily or capriciously.
(5)	Failed to act as required by law or rule.
(m)	To the extent that anything in this Part, or any rules or policies adopted under this Chapter is inconsistent with the Social Security Act or 42 C.F.R. Part 438, Subpart F, federal law prevails and applies to the extent of the conflict. All rules, rights, and procedures for contested Medicaid managed care case hearings concerning managed care actions shall be construed so as to be consistent with federal law and shall provide the enrollee with no lesser and no greater rights than those provided under federal law."
SECTION 10.19.(j)  G.S. 108D‑16 reads as rewritten:
"§ 108D‑16.  Notice of final decision and right to seek judicial review.
The Department shall hear and decide the case without unnecessary delay. The Department shall prepare a written decision that includes findings of fact and conclusions of law and send it to the parties in accordance with G.S. 150B‑37. The written decision shall notify the parties of the final decision and of the right of the enrollee and the LME/MCO to seek judicial review of the decision under Article 4 of Chapter 150B of the General Statutes."
SECTION 10.19.(k)  G.S. 150B‑1(e) is amended by adding a new subdivision to read:
"(e)	Exemptions From Contested Case Provisions. – The contested case provisions of this Chapter apply to all agencies and all proceedings not expressly exempted from the Chapter. The contested case provisions of this Chapter do not apply to the following:
…
(22)	The Department of Health and Human Services for appeals by Medicaid recipients as provided in Chapter 108A and Chapter 108D of the General Statutes."
SECTION 10.19.(l)  G.S. 122C‑151.4 and G.S. 143B‑147(a)(9) are repealed.
SECTION 10.19.(m)  Subsections (a) and (l) of this section are effective when they become law. The remaining subsections of this section become effective July 1, 2015, and apply to adverse determinations and managed care actions made on or after July 1, 2015.

PROVIDING ADDITIONAL SERVICES TO THE DEVELOPMENTALLY DISABLED
SECTION 10.20.(a)  The Department of Health and Human Services shall develop, in collaboration with LME/MCOs, providers, consumers, and families, a detailed plan for adding an additional 1,000 slots to the CAP DD Medicaid Waiver. The plan shall do all of the following:
(1)	Limit per slot expenditures to no more than twenty thousand dollars ($20,000) per year.
(2)	Limit access to the slots to Medicaid‑eligible adults.
(3)	Explain the method for allocating the slots statewide.
(4)	Contain a detailed fiscal analysis, describing any additional costs and identifying any potential sources of funding.
(5)	Any other information the Department deems appropriate.
SECTION 10.20.(b)  The Department shall submit the plan required by subsection (a) of this section to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division by no later than December 1, 2014.

NORTH CAROLINA GOVERNOR'S SUBSTANCE ABUSE PREVENTION INITIATIVE
SECTION 10.21.  The Department of Health and Human Services shall allocate funds from the Substance Abuse Prevention & Treatment Block Grant (SAPTBG) to six campuses in the UNC system to pilot the North Carolina Governor's Substance Abuse Prevention and Treatment Initiative to expand evidence‑based, on‑campus substance abuse treatment and recovery services and efforts to reduce risky behaviors related to drugs and alcohol.  Funds in the amount of one hundred twenty‑five thousand dollars ($125,000) each shall be allocated to North Carolina A&T State University, University of North Carolina at Charlotte, University of North Carolina at Chapel Hill, University of North Carolina at Greensboro, University of North Carolina at Wilmington, and East Carolina University. Each campus shall partner with community organizations, local and state law enforcement agencies, and local ABC Boards and the State ABC Commission. No later than August 1, 2015, the pilot campuses will report to the North Carolina Governor's Substance Abuse and Underage Drinking Prevention and Treatment Task Force on the use of SAPTBG funds and effectiveness of prevention efforts. The North Carolina Governor's Substance Abuse and Underage Drinking Prevention and Treatment Task Force will make recommendations for continuance of the Initiative to the Governor and the General Assembly by October 1, 2015.

DIRECT NET PROCEEDS OF DIX LAND SALE TO MENTAL HEALTH TRUST FUND; AMEND MENTAL HEALTH TRUST FUND STATUTE
SECTION 10.22.  G.S. 143C‑9‑2 reads as rewritten:
"§ 143C‑9‑2.  Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services.
(a)	The Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services is established as an interest‑bearing, nonreverting special trust fund in the Office of State Budget and Management. Moneys in the Trust Fund shall be held in trust and used solely to increase community‑based services for individuals with mental illness, developmental disabilities, substance use disorders, and traumatic brain injury, and to enhance the ability of the State to provide a continuum of high quality services for such individuals. The Trust Fund shall be used to supplement and not to supplant or replace existing federal, State, and local funding available to meet the mental health, developmental disabilities, and substance abuse services needs of the State.
…
(b)	The Department of Health and Human Services shall establish a process that ensures Trust Fund is allocated to provide the most benefit in the most efficient manner. Moneys in the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services shall be allocated to area programs to be used only for the following:
(1)	Provide start‑up funds and operating support for programs and services that provide more appropriate and cost‑effective community treatment alternatives for individuals  transitioning from institutional settings to community settings.
(2)	Repealed by Session Laws 2007‑323, s. 10.49(w1), effective July 1, 2007.
(3)	Community crisis services,  including responses to emergent behavioral health or developmental disability conditions. 
(4)	Integrated care models.
(5)	Repealed by Session Laws 2007‑323, s. 10.49(w1), effective July 1, 2007.
(6)	Use of technology in provision of consumer services and supports.
(7)	Supported employment services.
(8)	Repairs, renovations, and capital expenditures.
…
(c1)	Notwithstanding G.S. 146‑30(a)(1), the net proceeds of the lease or sale of part or all of the State‑owned property encompassing Dorothea Dix Hospital campus shall be placed in the Mental Health Trust Fund and shall be used for the purposes authorized in this section.
(d)	Beginning July 1, 2007, the Secretary of the Department of Health and Human Services shall report annually to the Fiscal Research Division on the expenditures made during the preceding fiscal year from the Trust Fund. "

CLARIFY SPECIAL CARE UNIT MORATORIUM
SECTION 10.23.  Section 12G.1.(a) of S.L. 2013‑360 reads as rewritten:
"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.
a.	As used in this section, "area" is the service area defined by the State Medical Facilities Plan defined in G.S. 131E‑176(25).
b.	For purposes of this section, increased access to special care units in skilled nursing facilities is necessary when the average occupancy of all special care unit beds in skilled nursing facilities in that area is equal to or greater than ninety percent (90%). Increased access to special care units in adult care homes is necessary when the average occupancy of all special care unit beds in adult care homes in that area is equal to or greater than eighty‑five percent (85%). In addition to any other information requested by the Department that may be necessary for its determination, a facility requesting licensure shall provide documentation that demonstrates that the current average occupancy in the area meets or exceeds these percentages. These percentages shall not apply to an area without any existing special care units. In addition to any other information requested by the Department that may be necessary for its determination, a facility requesting a license to operate in an area without any existing special care units shall demonstrate the need that the population in the area has for this type of care.
c.	No facility may request that the Department issue a license for a special care unit during this moratorium until the facility has met all other applicable licensure requirements for the type of facility making such a request.
(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.
(4)	Issuing a license to a facility that operates as a continuing care retirement community licensed under Article 64 of Chapter 58 of the General Statutes."

DHHS BLOCK GRANTS
SECTION 10.24.  Except as otherwise provided, appropriations from federal block grant funds are made for the fiscal period 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

07.	Foster Care Services	1,385,152

Division of Child Development

08.	Subsidized Child Care Program
($13,800,000 for Child Protective
Service/Child Welfare Service
Children)	57,172,097	
54,054,806

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

10.	Pre‑Kindergarten Program	7,195,807

Division of Public Health

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

DHHS Administration

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

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

Transfers to Other Block Grants

Division of Child Development

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

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

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

17.	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	
$	313,460,826

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	
			11,679,394

TOTAL TEMPORARY ASSISTANCE TO
NEEDY FAMILIES (TANF) EMERGENCY
CONTINGENCY FUNDS	$	12,156,086	$	
		17,286,011

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	$	
27,254,983

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

Division of Central Management and Support

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

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

14.	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

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

Division of Health Service Regulation

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

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

DHHS Administration

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

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

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

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

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

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

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 62,877,557	$ 
		59,325,251

LOW‑INCOME HOME ENERGY ASSISTANCE BLOCK GRANT

Local Program Expenditures

Division of Social Services

01.	Low‑Income Energy Assistance
Program (LIEAP)	$ 50,876,440	$
50,032,593

02.	Crisis Intervention Program (CIP)	33,866,195	
33,304,484

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	
			14,699,862
07.	Heating Air Repair and Replacement
	Program (HARRP)	7,193,873	
			7,074,554

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	$ 
		113,139,044

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	$ 
			168,536,136

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	
			24,168,551

DHHS Administration

Division of Child Development

05.	DCDEE Administrative Expenses	6,000,000	
			7,677,977

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

08.	Central Regional Maintenance		202,000

TOTAL CHILD CARE AND DEVELOPMENT
FUND BLOCK GRANT	$ 275,651,161	$ 
		289,407,078

MENTAL HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

			

01.	Mental Health Services – Adult/Child		12,398,643

02.	Crisis Services Initiative
	Walk‑In Crisis Centers		2,253,833
	Critical Time Intervention		750,000
	Peer Support Respite Centers		700,000
	Paramedic Mobile Crisis		60,000
	Mental Health First Aid		500,000
	Group Home Skills Training		65,000
	Innovative Technologies		41,000

03.	Administration	200,000	200,000

TOTAL MENTAL HEALTH SERVICES
BLOCK GRANT	$ 16,039,598	$ 
		16,968,476

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/Child		29,519,883

02.	Crisis Services Initiative
	Walk‑In Crisis Centers		420,000
	Substance Abuse Prevention Initiative/Addiction Recovery	1,085,000
	Paramedic Mobile Crisis		60,000
	Innovative Technologies		41,000
	Veterans Crisis		250,000

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

04.	Substance Abuse Prevention – Child	7,186,857	
			8,669,284

05.	Administration	454,000	454,000

Division of Public Health

			
06.	HIV Testing for Individuals in Substance Abuse		765,949

TOTAL SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT	$ 37,527,700	$ 
		45,184,839

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	$ 
			7,574,703

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	
			8,095,148

03.	Oral Health	44,901	44,901

DHHS Program Expenditures

Division of Public Health

04.	Children's Health Services	1,301,504	
			1,300,578

05.	Women's Health – Maternal Health	105,419	
			105,361

06.	State Center for Health Statistics	164,487	
			156,230

07.	Health Promotion – Injury and
	Violence Prevention	89,374	
			84,919

DHHS Administration

Division of Public Health

08.	Division of Public Health Administration	573,108	
			552,571

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 18,854,259	$ 
		17,914,411

PREVENTIVE HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Physical Activity and Prevention	$ 1,186,142	$ 
			2,079,945

02.	Injury and Violence Prevention
	(Services to Rape Victims – Set‑Aside)	169,730	
			173,476

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	
			83,760

05.	Laboratory Services – Testing,
	Training, and Consultation	10,980	
			21,012

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

07.	Heart Disease and Stroke Prevention	162,249	
			187,693

08.	Performance Improvement and Accountability	213,971	
			855,075

09.	Physical Activity and Nutrition	38,000	
68,073

10.	State Center for Health Statistics	61,406	
			107,291

TOTAL PREVENTIVE HEALTH
SERVICES BLOCK GRANT	$ 2,234,233	$ 
		3,921,778

COMMUNITY SERVICES BLOCK GRANT

Local Program Expenditures

Office of Economic Opportunity

01.	Community Action Agencies	$ 22,402,724	$ 
			24,168,417

02.	Limited Purpose Agencies	1,244,596	
			1,342,690

DHHS Administration

03.	Office of Economic Opportunity	1,244,596	
			1,342,690

TOTAL COMMUNITY SERVICES
BLOCK GRANT	$ 24,891,916	$ 
		26,853,797
SOCIAL SERVICES BLOCK GRANT
SECTION 10.25.  Section 12J.1.(k) of S.L. 2013‑360 is amended to read as rewritten:
"SECTION 12J.1.(k)  The sum of twenty‑seven million two hundred fifty‑four thousand nine hundred eight three dollars ($27,254,983) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2014‑2015 fiscal year 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."

LOW‑INCOME HOME ENERGY ASSISTANCE BLOCK GRANT
SECTION 10.26.  Section 12J.1.(t) of S.L. 2013‑360 is amended to read as rewritten:
"SECTION 12J.1.(t)  The sum of fifty million thirty‑two thousand five hundred ninety‑three dollars ($50,032,593) appropriated in this section in the Low‑Income Home Energy Assistance Block Grant for the 2014‑2015 fiscal year 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."

TANF CONTINGENCY BLOCK GRANT
SECTION 10.27.  During State fiscal year 2013‑2014, the Department of Health and Human Services received notification of seventeen million seven hundred seventy‑six thousand four hundred fifty‑two dollars ($17,776,452) beyond the amount appropriated in the Temporary Assistance for Needy Families Contingency Block Grant in 2013‑14 in S.L. 2013‑360. The additional available block grant funds are available for use through September 30, 2014. To the extent these funds are not used in 2013‑2014 and not appropriated in this act, the funds shall be used to increase the 2014‑2015 block grant plan.

PART XI. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

UNDER DOCK OYSTER CULTURE
SECTION 11.1.(a)  G.S. 113‑210(l) is repealed.
SECTION 11.1.(b)  G.S. 113‑210(m) is repealed.

SHALLOW DRAFT NAVIGATION CHANNEL AND LAKE DREDGING FUND
SECTION 11.2.  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.
…
(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 a quarterly basis."

COMMERCIAL FISHING LICENSE FEES
SECTION 11.3.(a)  Per Section 14.8(x) of S.L. 2013‑360, the Division of Marine Fisheries of the Department of Environment and Natural Resources was directed to 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.
The following changes in Sections 11.3(b) through 11.3(f) of this act are recommended to commercial fishing license fee increases enacted in S.L. 2013‑360 to provide additional support for the 2014‑2015 fiscal year for the Marine Fisheries At‑Sea‑Observer Program.
SECTION 11.3.(b)  G.S. 113‑168.2 reads as rewritten:
"§ 113‑168.2.  Standard Commercial Fishing License.
…
(e)	Fees. – The annual SCFL fee for a resident of this State shall be three hundred dollars ($300.00). 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 three hundred dollars ($300.00). 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.
…."
SECTION 11.3.(c)  G.S. 113‑169.2 reads as rewritten:
"§ 113‑169.2.  Shellfish license for North Carolina residents without a SCFL.
…
(c)	Fees. – Shellfish licenses issued under this section shall be issued annually upon payment of a fee of thirty‑seven dollars and fifty cents ($37.50) upon proof that the license applicant is a North Carolina resident.
…."
SECTION 11.3.(d)  G.S. 113‑169.3 reads as rewritten:
"§ 113‑169.3.  Licenses for fish dealers.
…
(e)	Application Fee for New Fish Dealers. – An applicant for a new fish dealer license shall pay a nonrefundable application fee of seventy‑five dollars ($75.00) in addition to the license category fees set forth in this section.
(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: seventy‑five dollars ($75.00).
(2)	Dealing in scallops: seventy‑five dollars ($75.00).
(3)	Dealing in clams: seventy‑five dollars ($75.00).
(4)	Dealing in hard or soft crabs: seventy‑five dollars ($75.00).
(5)	Dealing in shrimp, including bait: seventy‑five dollars ($75.00).
(6)	Dealing in finfish, including bait: seventy‑five dollars ($75.00).
(7)	Operating menhaden or other fish‑dehydrating or oil‑extracting processing plants: seventy‑five dollars ($75.00).
(8)	Consolidated license (all categories): four hundred fifty dollars ($450.00).
…."
SECTION 11.3.(e)  G.S. 113‑169.5 reads as rewritten:
"§ 113‑169.5.  Land or sell license; vessels fishing beyond territorial waters.
…
(b)	The fee for a land or sell license for a vessel not having its primary situs in North Carolina is three hundred dollars ($300.00), 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 11.3.(f)  G.S. 113‑173 reads as rewritten:
"§ 113‑173.  Recreational Commercial Gear License.
…
(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 fifty‑two dollars and fifty cents ($52.50). The fee for a RCGL for an individual who is not a North Carolina resident shall be  three hundred seventy‑five dollars ($375.00).
…."

RECLAIMED WATER PERMIT FEES
SECTION 11.4.(a)  G.S. 143‑215.3D(a) reads as rewritten:
"(a)	Annual fees for discharge and nondischarge permits under G.S. 143‑215.1. –
…
(4)	General Permits. – The annual fee for a certificate of coverage under a general permit for a point source discharge of stormwater or wastewater, for a non‑discharge of wastewater or residuals, or for a reclaimed water generator or user is one hundred dollars ($100.00).
…
(9)	Major Reclaimed Water Generator Permits – The annual fee for an individual reclaimed water generation permit of 10,000 or more gallons per day is one thousand three hundred ten dollars ($1,310).
(10)	Minor Reclaimed Water Generator Permits – The annual fee for an individual reclaimed water generation permit of less than 10,000 gallons per day is eight hundred ten dollars ($810.00).
(11)	Reclaimed Water User Permits – The annual fee of an individual permit for reclaimed water use is three hundred sixty dollars ($360.00)."
SECTION 11.4.(b)  G.S. 143‑215.3D(b) reads as rewritten:
"(b)	Application fee for new discharge, nondischarge, and reclaimed water permits. – An application for a new permit of the type set out in subsection (a) of this section shall be accompanied by an initial application fee equal to the annual fee for that permit. If a permit is issued, the application fee shall be applied as the annual fee for the first year that the permit is in effect. If the application is denied, the application fee shall not be refunded."

IMPROVED FINANCIAL MANAGEMENT OF ENVIRONMENTAL STEWARDSHIP FUNDS
SECTION 11.5.  G.S. 147‑69.2(d) reads as rewritten:
"(d)	The State Treasurer may invest funds deposited pursuant to subdivisions (a)(17i) and (a)(17j) of this section in any of the investments authorized under subdivisions (1) through (6) and subdivision (8) of subsection (b) of this section. The State Treasurer may require a minimum deposit, up to one hundred thousand dollars ($100,000), and may assess a reasonable fee, not to exceed 15 basis points, as a condition of participation pursuant to this subsection. Funds deposited pursuant to this subsection shall remain the funds of the North Carolina Conservation Easement Endowment Fund or the Conservation Grant Fund, and interest or other investment income earned thereon shall be prorated and credited to the North Carolina Conservation Easement Endowment Fund or the Conservation Grant Fund on the basis of the amounts thereof contributed, figured according to sound accounting principles."

BOAT WASHING FOR AQUATIC WEED PREVENTION
SECTION 11.6.  Subject to G.S. 113A‑227, the Secretary may adopt rules necessary to implement the provisions relative to boat washing for aquatic weed prevention measures, including rules relating to monitoring and enforcement.
Any funds appropriated to the Department of Environment and Natural Resources for the purposes of aquatic weed control statewide would be subject to the authority granted in G.S. 113A‑223(a)(6) and G.S. 113A‑223(b).

DIVISION OF MARINE FISHERIES JOINT ENFORCEMENT AGREEMENT
SECTION 11.7.  G.S. 113‑134.1 reads as rewritten:
"§ 113‑134.1.  Jurisdiction over marine fisheries resources in Atlantic Ocean.
(a)	The Marine Fisheries Commission is directed to exercise all regulatory authority over the conservation of marine fisheries resources in the Atlantic Ocean to the seaward extent of the State jurisdiction over the resources as now or hereafter defined. Marine fisheries inspectors may enforce these regulations and all other provisions of law applicable under the authority granted in this section in the same manner and with the same powers elsewhere granted them as enforcement officers.
(b)	If authorized by the Fisheries Director or a designee of the Fisheries Director, an inspector may accept delegation of law enforcement powers from the National Marine Fisheries Service of the United States Department of Commerce over matters within the jurisdiction of the Service. For purposes of this subsection, the office of inspector may be held concurrently with any other elected or appointed office, as authorized by Section 9 of Article VI of the North Carolina Constitution."

VENDOR SERVICES
SECTION 11.8.  Chapter 111 of the General Statutes is amended by adding a new section to read:
"§ 111‑47.3.  Food service at attractions operated by the Department of Environment and Natural Resources.
(a)	Notwithstanding Article 3 of Chapter 111 of the General Statutes, the North Carolina Department of Environment and Natural Resources may operate or contract for the operation of food or vending services at attractions operated by the Department, as defined in G.S. 105‑164.13(60)(e). Notwithstanding G.S. 111‑43, the net proceeds of revenue generated by food and vending services provided at attractions operated by the Department or a vendor with whom the Department has contracted shall be credited to the appropriate fund of the division where the funds were generated and shall be used for the operation of that division."
(b)	This section shall not be construed to alter any contract for food or vending services at any attraction operated by the Department that is in force at the time this section becomes law."

ELIMINATE WASTE MANAGEMENT FEE CAP
SECTION 11.9.  G.S. 130A‑294.1(c) is repealed.

WATER RESOURCES REVERSION OF LABORATORY CERTIFICATION FEE
SECTION 11.10.  G.S. 143‑215.3A(a) reads as rewritten:
"(a)	The Water and Air Quality Account is established as an account within the Department. Revenue in the Account shall be applied to the costs of administering the programs for which the fees were collected. Revenue credited to the Account pursuant to G.S. 105‑449.43, G.S. 105‑449.125, and G.S. 105‑449.136 shall be used to administer the air quality program. Any other funds credited to the Account that are not expended at the end of each fiscal year shall not revert. Except for the following fees, all application fees and permit administration fees collected by the State for permits issued under Articles 21, 21A, 21B, and 38 of this Chapter shall be credited to the Account."

STUDY OF MODERN SEVERANCE TAX ON LIQUID OR GAS HYDROCARBONS
SECTION 11.11.  Local governments, along with the State, bear the infrastructure costs associated with the extraction and production of energy resources and therefore should receive a distribution of the Severance Tax. Accordingly, DENR shall consult and receive advice from the public and report to the General Assembly by March 15, 2015, recommending the appropriate allocation of severance tax revenues between State general funds, special funds, and local governments.

NATURAL HERITAGE PROGRAM ACCESS ONLINE DATA FEES
SECTION 11.12.(a)  Chapter 113A of the General Statutes is amended by adding the following new section to read:
"§ 113A‑164.12  Access to information; fees.
(a)	The Secretary may establish fees to defray the costs associated with responding to inquiries requiring customized environmental review services or the costs associated with developing, improving, or maintaining technology that supports an online interface for external users to access Natural Heritage Program data. The Secretary may reduce or waive the fee established under this paragraph if the Secretary determines that a waiver or reduction of the fee is in the public interest.
(b)	Fees collected under this section are receipts of the Department of Environment and Natural Resources and shall be deposited in the Clean Water Management Trust Fund for the purpose of supporting the operations of the Natural Heritage Program."
SECTION 11.12.(b)  G.S. 113A‑253(8e) reads as rewritten:
"(8e)	To authorize expenditures from the Fund not to exceed seven hundred fifty thousand dollars ($750,000) plus any fees generated pursuant to G.S. 113A‑164.12 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."

PART XII. DEPARTMENT OF COMMERCE

INDUSTRIAL COMMISSION FEES/COMPUTER SYSTEM REPLACEMENT AND DIGITAL CONVERSION OF PAPER FILES
SECTION 12.1.(a)  Notwithstanding Section 15.2 of S.L. 2013‑360, the North Carolina Industrial Commission shall retain the additional revenue generated as a result of an increase in the fee charged to parties for the filing of compromised settlements.
SECTION 12.1.(b)  These funds shall be used to operate and maintain needed databases and case management systems, including two time‑limited positions for application support and mainframe support/migration.
SECTION 12.1.(c)  These funds shall also be used for the purpose of digitizing the Commission's archive of paper files not eligible for destruction and disposal. These funds may also be used for one time‑limited position for quality control and verification.
SECTION 12.1.(d)  These funds may also be used to replace existing computer hardware and software used for operations of the Commission.
SECTION 12.1.(e)  The Commission may not retain any fees under this section unless they are in excess of the former two hundred dollar ($200.00) fee charged by the Commission for filing a compromised settlement.

REIMBURSEMENT FOR PRESCRIPTION DRUGS AND PROFESSIONAL PHARMACEUTICAL SERVICES
SECTION 12.2.  Chapter 97 of the General Statutes is amended by adding a new section to read as follows:
"§ 97‑26.2.  Reimbursement for prescription drugs and professional pharmaceutical services.
The reimbursement for prescription drugs and professional pharmaceutical services shall be limited to one hundred five per centum (105%) of the average wholesale price (AWP) of the product, calculated on a per unit basis, as of the date of dispensing.
(1)	A medical provider or pharmacy seeking reimbursement for drugs dispensed by a physician shall include the original manufacturer's National Drug Code (NDC) number, as assigned by the Food and Drug Administration, on the bills and reports required under this section.
(2)	In no event may a physician seek reimbursement in excess of one hundred five percent (105%) of the AWP of the drugs dispensed by a physician as determined by reference to the original manufacturer's NDC number.
(3)	A repackaged NDC number may not be used and will not be considered the original manufacturer's NDC number. If a medical provider or pharmacy seeking reimbursement for drugs dispensed by a physician does not include the original manufacturer's NDC number on the bills and reports required by this section, reimbursement shall be limited to one hundred ten percent (110%) of the AWP of the least expensive clinically equivalent drug, calculated on a per‑unit basis.
(4)	No outpatient provider, other than a licensed pharmacy, may seek reimbursement for drugs dispensed in excess of an initial five‑day supply, commencing upon the employee's initial treatment following injury. Reimbursement shall be made for such five‑day supply at the rates set forth in this section.
(5)	For purposes of this subdivision, clinical equivalents, in reference to a drug, means the drug has chemical equivalents which, when administered in the same amounts, will provide essentially the same therapeutic effect as measured by the control of a symptom or a disease."

BASE REALIGNMENT AND CLOSURE (BRAC)
SECTION 12.3.(a)  Funds appropriated to the North Carolina Department of Commerce for the 2013‑2014 fiscal year that are unexpended and unencumbered as of June 30, 2014, shall not revert to the General Fund, but shall remain available to the Department until expended for use in the State's preparation for Department of Defense BRAC activities.
SECTION 12.3.(b)  This section becomes effective June 30, 2014.

EMPLOYMENT SECURITY RESERVE FUND
SECTION 12.4.  Section 15.4 of S.L. 2013‑360 is amended by adding a new subsection to read:
"SECTION 15.4.(c)  There is appropriated from the Employment Security Reserve Fund to the Department of Commerce, the Division of Employment Security, the sum of five hundred thousand dollars ($500,000) for the 2014‑2015 fiscal year to be used for the following purposes:
(1)	Two hundred thousand dollars ($200,000) to operate the system that tracks former participants in State education and training programs.
(2)	Three hundred thousand dollars ($300,000) to maintain compliance with Chapter 96 of the General Statutes, which directs the Department of Commerce, Division of Employment Security, to employ the Common Follow‑Up Management Information System to evaluate the effectiveness of the State's job training, education, and placement programs."

TVA SETTLEMENT RECEIPTS TRANSFER
SECTION 12.5.  Any TVA Settlement funds received by the Department of Commerce for FY 2013‑2014 shall be transferred to the Department of Agriculture to be used in accordance with the TVA Settlement Agreement.

UTILITIES COMMISSION REGULATORY FEE
SECTION 12.6.  The percentage rate to be used in calculating the public utility regulatory fee under G.S. 62‑302(b)(2) is fourteen hundredths of one percent (0.14%) for each public utility's North Carolina jurisdictional revenues earned during each quarter that begins on or after July 1, 2014.
The electric membership corporation regulatory fee imposed under G.S. 62‑302(b1) for the 2014‑2015 fiscal year is two hundred thousand dollars ($200,000).

CLARIFY THAT BUILDING REUSE GRANTS FROM THE RURAL INFRASTRUCTURE AUTHORITY MAY BE USED FOR OCCUPIED BUILDINGS
SECTION 12.7.  G.S. 143B‑472.127(a)(2) reads as rewritten:
"(2)	To provide matching grants or loans to local government units in an economically distressed county that will productively reuse 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."

REFORM PRODUCTION TAX CREDIT WITH A NEW TAX CREDIT PROPORTIONAL TO TAXES PAID BY PRODUCTION COMPANIES ON QUALIFYING EXPENDITURES
SECTION 12.8.(a)  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 47.
"Motion Picture Production Tax Credit.
"§ 105‑129.110.  Definitions.
The following definitions apply in this section:
(1)	Awards show. – Television programming involving the filming of a ceremony in which individuals, groups, or organizations are given an award of any type.
(2)	Department. – The Department of Revenue.
(3)	Eligible motion picture production company. – Defined in G.S. 105‑164.3.
(4)	Employee. – Defined in G.S. 105‑163.1.
(5)	Feature‑length film. – A production intended for commercial distribution to a motion picture theater or directly to the consumer viewing market that has a running time of at least 75 minutes.
(6)	Highly compensated individual. – An individual who directly or indirectly receives compensation in excess of one million dollars ($1,000,000) for personal services with respect to a single motion picture production. An individual receives compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual.
(7)	Live sporting event. – A scheduled sporting competition, game, or race that is not originated by a motion picture production company, but originated solely by an amateur, collegiate, or professional organization, institution, or association for live or tape‑delayed television or satellite broadcast. A live sporting event does not include commercial advertising, an episodic television series, a television pilot, a music video, a motion picture, or a documentary production in which sporting events are presented through archived historical footage or similar footage taken at least 30 days before it is used.
(8)	Motion picture production. – A feature‑length film, video, television series defined as a season not to exceed 27 episodes, or a commercial for theatrical or television viewing or a television pilot. The term shall not include a production featuring news, current events or pre‑ or post‑event coverage of live sporting events, weather and financial market reports; a talk show, game show, live sporting event or scripted sports entertainment event, awards show, or other gala event; a production whose primary purpose is fundraising; political advertising; a long‑form production that primarily markets a product or service; or a production containing material that is obscene, as defined in G.S. 14‑190.1.
(9)	Other qualifying expenditures. – The sum of the following amounts spent in this State by an eligible motion picture production company, excluding amounts spent on goods and services purchased from a relative or related member, on production‑related expenditures:
a.	Employee fringe contributions, including health, pension, and welfare contributions.
b.	Per diems, stipends, and living allowances paid for work being performed in this State.
c.	The cost of production‑related insurance coverage obtained on the production.
(10)	Production company. – Defined in G.S. 105‑164.3.
(11)	Production‑related expenditures. – Preproduction, production, and postproduction expenditures in this State directly relating to a qualifying motion picture production, including without limitation the following: set construction and operation; wardrobes, makeup, accessories, and related services; costs associated with photography and sound synchronization, lighting, and related services and materials; editing and related services; rental of facilities and equipment; leasing of vehicles; costs of food and lodging; digital or tape editing, film processing, transfer of film to tape or digital format, sound mixing, special and visual effects; and payroll. This term shall not include expenditures for marketing and distribution, nonproduction related overhead, amounts reimbursed by the State or any other governmental entity, or amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production.
(12)	Qualifying motion picture production. – A motion picture production made in this State, in whole or in part, with total qualifying expenditures of at least one million dollars ($1,000,000).
(13)	Related member. – Defined in G.S. 105‑130.7A.
(14)	Relative. – Defined in G.S. 105‑277.2.
(15)	Sales‑related qualifying expenditures. – The sum of the amount spent in this State by an eligible motion picture production company on production‑related expenditures on the following:
a.	Goods and services leased or purchased for which tax is due to this State under Article 5 of this Chapter.
b.	Motor fuels purchased for which tax is due to this State under Part 3 of Article 36C of this Chapter.
(16)	Secretary. – The Secretary of Revenue.
(17)	Talk show. – Television programming in which a host or hosts interviews or holds discussions with guests.
(18)	Total qualifying expenditures. – The sum of the amounts spent in this State by an eligible motion picture production company on withholding‑related qualifying expenditures, sales‑tax‑related qualifying expenditures, and other qualifying expenditures.
(19)	Withholding‑related qualifying expenditures. – The sum of the following amounts spent in this State by an eligible motion picture production company on production‑related expenditures, less the amount in excess of one million dollars ($1,000,000) paid to a highly compensated individual:
a.	Compensation and wages paid to employees of an eligible motion picture production company on which withholding payments are remitted to the Department under Article 4A of this Chapter. Compensation and wages paid to an employee who is a relative or related member are not qualifying expenditures.
b.	Services leased or purchased by an eligible motion picture production company from a person subject to tax under Article 4 of this Chapter for which no tax is due to the Department under Article 5 of this Chapter. Services leased or purchased from a relative or related member are not qualifying expenditures.
"§ 105‑129.111.  Credit for Tax Payments on Withholding‑ and Sales‑Related Qualifying Expenditures.
(a)	Credit. – A taxpayer that is an eligible motion picture production company is allowed a credit against the company's taxes imposed by Article 4 of this Chapter equal to the following amounts:
(1)	The amount of withholding payments, not to exceed five and three‑tenths percent (5.3%) of total direct and indirect wages paid to a single employee for services rendered on a single qualifying motion picture production, remitted to the Department on behalf of motion picture production company employees for withholding‑related qualifying expenditures.
(2)	Four percent (4.0%) of payments for services leased or purchased from a personal service company or an employee leasing company that is a nonresident entity, as defined in G.S. 105‑163.1.
(3)	Five percent (5.0%) of payments for services leased or purchased that meet the definition of withholding‑related qualifying expenditures from a business that does not meet the definition of a nonresident entity in G.S. 105‑163.1.
(4)	The amount of tax payable by the taxpayer under G.S. 105‑130.3 or G.S. 105‑153.7 for the taxable year.
(5)	Sales and use tax paid to this State for sales‑related qualifying expenditures, excluding local sales and use taxes authorized by Subchapter VIII of this Chapter.
(6)	For sales‑related qualifying expenditures that would otherwise be distributed to a taxing county that has agreed to forego its share of local sales and use tax for a qualifying motion picture production under the provisions of G.S. 105‑539.1, the local sales and use tax authorized by Subchapter VIII of this Chapter paid to this State for sales‑related qualifying expenditures.
(7)	Motor fuels excise taxes paid to this State for sales‑related qualifying expenditures.
(b)	Pass‑Through Entity. – Notwithstanding the provisions of G.S. 105‑131.8 and G.S. 105‑269.15, a pass‑through entity that qualifies for a credit provided in this section does not distribute the credit among any of its owners. The pass‑through entity is considered the taxpayer for purposes of claiming a credit allowed by this section. If a return filed by a pass‑through entity indicates that the entity is paying tax on behalf of the owners of the entity, a credit allowed under this section does not affect the entity's payment of tax on behalf of its owners.
(c)	Return. – A taxpayer may claim a credit allowed by this section on a return filed for the taxable year in which the motion picture production activities are completed. The return must state the name of the production, a description of the production, and a detailed accounting of the qualifying expenses with respect to which a credit is claimed. The return must include a copy of the motion picture production on DVD or in another form mutually agreed upon by the taxpayer and the Department. The qualifying expenses are subject to audit by the Secretary before the credit is allowed.
(d)	Credit Refundable. – If a credit allowed by this section exceeds the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary must refund the excess to the taxpayer. The refundable excess allowed under this section is not an overpayment of tax and does not accrue interest as provided in G.S. 105‑241.21. In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits.
(e)	Limitations. – The amount of credit allowed under this section with respect to a qualifying motion picture production may not exceed six million dollars ($6,000,000) nor may the amount of credit allowed exceed the total amount of taxes paid by the eligible motion picture production company, its employees, and persons from whom the eligible motion picture production has leased or purchased on withholding‑related qualifying expenditures and sales‑related qualifying expenditures. Only one motion picture production company is allowed to claim a credit under this section for each qualifying motion picture production.
(f)	Substantiation. – A taxpayer allowed a credit under this section must maintain and make available for inspection any information or records required by the Secretary, including a copy of the motion picture production in a form mutually agreed upon by the taxpayer and the Department. The taxpayer has the burden of proving eligibility for a credit and the amount of the credit. The Secretary may consult with the North Carolina Film Office of the Department of Commerce and the regional film commissions in order to determine the amount of total and withholding‑related qualifying expenditures.
(g)	Report. – The Department must include in the economic incentives report required by G.S. 105‑256 the following information, itemized by taxpayer:
(1)	The location of sites used in a motion picture production for which a credit was taken.
(2)	The total and withholding‑related qualifying expenditures for which a credit was taken.
(3)	The number of people employed in the State with respect to credits taken.
(4)	The total cost to the General Fund of the credits taken.
(h)	NC Film Office. – To claim a credit under this section, a taxpayer must first notify the Division of Tourism, Film, and Sports Development in the Department of Commerce of the taxpayer's intent to claim the motion picture production tax credit. A taxpayer who fails to first provide said notification is ineligible to claim a credit allowed under this Article. The notification must include the title of the production, the name of the production company, a financial contact for the motion picture production company, the proposed dates on which the motion picture production company plans to begin filming the production, and any other information required by the Division. For motion picture productions that have production credits, a taxpayer claiming a credit under this section must acknowledge in the production credits both the North Carolina Film Office and the regional film office responsible for the geographic area in which the filming of the motion picture production occurred.
"§ 105‑129.112.  Sunset.
This Article is repealed for qualifying expenditures occurring on or after January 1, 2018."
SECTION 12.8.(b)  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 48.
"Local Motion Picture Production Sales Tax Refund.
"§ 105‑539.1.  Foregoing local tax revenue for a qualifying motion picture production.
(a)	Resolution. – A taxing county may, by resolution of the board of county commissioners, authorize the State to retain the portion of the local sales and use tax for sales‑related qualifying expenditures of eligible motion picture production companies for the purpose of producing a qualifying motion picture production that would otherwise be distributed to the taxing county under Subchapter VIII of this Chapter. Adoption of said resolution does not affect a liability for a tax that was attached before the effective date or the resolution, nor does it affect a right to a refund of a tax that accrued before the effective date of the resolution.
(b)	Repeal. – By vote of the board of county commissioners, a taxing county may repeal a resolution adopted in accordance with subsection (a) of this section. The effective date of a vote to repeal a resolution adopted in accordance with subsection (a) of this section shall be no sooner than the end of the fiscal year in which the board of county commissioners votes to repeal said resolution."
SECTION 12.8.(c)  G.S. 153A‑155 reads as rewritten:
"§ 153A‑155.  Uniform provisions for room occupancy taxes.
…
(b1)	Exemption for a Qualifying Motion Picture Production. – A taxing county, by resolution of the governing body of the county, may allow a refund of occupancy taxes paid for the sales‑related qualifying expenditures of an eligible motion picture production, as defined in G.S. 105‑129.110. A refund allowed under this subsection shall become effective on the date specified in the resolution levying the tax for room occupancy taxes paid by an eligible motion picture production company after that date. That date must be the first day of a calendar month, however, and may not be earlier than the first day of the second month after the date the resolution is adopted.
…
(f)	Repeal or Reduction. – A room occupancy tax levied by a county or an exemption authorized under subsection (b1) of this section may be repealed or reduced by a resolution adopted by the governing body of the county. Repeal or reduction of a room occupancy tax or an exemption shall become effective on the first day of a month and may not become effective until the end of the fiscal year in which the resolution was adopted. Repeal or reduction of a room occupancy tax or an exemption does not affect a liability for a tax that was attached before the effective date of the repeal or reduction, nor does it affect a right to a refund of a tax that accrued before the effective date of the repeal or reduction.
…."
SECTION 12.8.(d)  G.S. 105‑164.3 reads as rewritten:
"§ 105‑164.3.  Definitions.
The following definitions apply in this Article:
…
(30)	Production company. – A person who is primarily engaged in the production of a motion picture production and controls the motion picture production during production. "Primarily engaged in the production of a motion picture production and controls the motion picture production during production" means the person or legal entity is responsible for payment of the direct production expenses, including preproduction and postproduction, and is a signatory to the motion picture production's contracts with its payroll company and facility operators.
…
(30c)	Eligible motion picture production company. – A person primarily engaged in the business of making or contracting with another person or persons in making a qualifying motion picture production, as defined in G.S. 105‑129.110.
…."
SECTION 12.8.(e)  G.S. 105‑259(b) is amended by adding a new subdivision to read:
"(b)	Disclosure Prohibited. – An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the information to any other person except as provided in this subsection. Standards used or to be used for the selection of returns for examination and data used or to be used for determining the standards may not be disclosed for any purpose. All other tax information may be disclosed only if the disclosure is made for one of the following purposes:
…
(46)	To comply with the reporting requirements under G.S. 105‑129.111(g)."
SECTION 12.8.(f)  This section is effective for qualifying expenditures incurred on or after January 1, 2015.

ESTABLISH A TAX CREDIT FOR INVESTING IN PRODUCTION/POSTPRODUCTION FACILITIES IN NORTH CAROLINA
SECTION 12.9.  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"Article 3L.
"Motion Picture Production/Postproduction Facility Tax Credit.
"§ 105‑129.100.  Definitions.
The following definitions apply in this section:
(1)	Eligible investment. – Cash or the fair market value of real property with any improvements thereon, or any combination of these. To qualify as eligible investment, cash must have been expended for real property and real property improvements in this State. Investments in the form of real property must be real property located in this State on which facilities are located.
(2)	Production facility. – A site in this State that contains soundstages designed for the express purpose of film and television production for both theatrical and video release. Production includes, but is not limited to, motion pictures, made‑for‑television movies, and episodic television to a national or regional audience. The production facility site must include production offices, construction shops/mills, prop and costume shops, storage areas, and parking for production vehicles, all of which complement the production needs and orientation of the overall facility purpose. The term does not include television stations, recording studios, or facilities predominately used to produce videos, commercials, training films, or advertising films.
(3)	Postproduction facility. – A site in this State designated for the express purpose of accomplishing the postproduction stage of film and television production for both theatrical and video release, including the creation of visual effects, editing, and sound mixing. A postproduction facility site is not required to contain a soundstage or be physically located at or near soundstages.
"§ 105‑129.101.  Credit for investment in a production or postproduction facility.
(a)	Credit. – A taxpayer may claim a credit in an amount equal to twenty percent (20%) of the amount of a taxpayer's eligible investment in a company that constructs or converts or equips, or any combination of these activities, a production facility or postproduction facility in this State. The credit may be claimed in the year in which the production or postproduction facility is placed into service.
(b)	Limitations. – No credit is allowed unless the total amount invested in the production facility is at least two million dollars ($2,000,000), exclusive of land costs, or the total amount invested in a postproduction facility is at least one million dollars ($1,000,000), exclusive of land costs. The total amount of credit that may be claimed by all taxpayers with respect to the construction or conversion or equipping, or any combination of these activities, of a single production facility or post‑production facility may not exceed five million dollars ($5,000,000), with credit amounts for a facility whose total credit would exceed the maximum amount reduced pro rata for each investor based on the investor's share of total eligible investment. A taxpayer may claim the credit allowed by this section only one time in connection with a single production or postproduction facility.
(c)	Notification. – Investors in a production or postproduction facility who intend to claim a credit allowed under this Article shall notify in writing the principal owner of the facility of the investor's intent to claim a credit. The principal owner of a facility or a designee of the principal owner must provide in writing the total amount of eligible investment in the production or postproduction facility to all investors who notify the owner of an intent to claim a credit if the total amount of eligible investment in a facility is below the minimum amounts for production and postproduction facilities in subsection (b) of this section or if the total amount of eligible investment exceeds twenty‑five million dollars ($25,000,000).
(d)	Change in Ownership of Facility. – The sale, merger, consolidation, conversion, acquisition, or bankruptcy of a production or postproduction facility, or any transaction by which the facility is reformulated as another business, does not create new eligibility in a succeeding owner with respect to a credit for which the predecessor was not eligible under this section. A successor business may, however, take any carried‑over portion of a credit that its predecessor could have taken if it had a tax liability.
(e)	Pass‑Through Entity Allocation. – Notwithstanding the provisions of G.S. 105‑131.8 and G.S. 105‑269.15, a pass‑through entity that qualifies for the credit provided in this section may allocate the credit among any of its owners in its discretion as long as an owner's adjusted basis in the pass‑through entity, as determined under the Code, at the end of the taxable year in which the eligible site is placed in service, is at least forty percent (40%) of the amount of credit allocated to that owner. Owners to whom a credit is allocated are allowed the credit as if they had qualified for the credit directly. A pass‑through entity and its owners must include with their tax returns for every taxable year in which an allocated credit is claimed a statement of the allocation made by the pass‑through entity and the allocation that would have been required under G.S. 105‑131.8 or G.S. 105‑269.15.
"§ 105‑129.102.  Tax election; cap; substantiation; no double credit.
(a)	Tax Election. – The credit allowed in this Article is allowed against the franchise tax levied in Article 3 of this Chapter or the income taxes levied in Article 4 of this Chapter. The taxpayer must elect the tax against which a credit will be claimed when filing the return on which the credit is first claimed. This election is binding. Any carryforwards of a credit must be claimed against the same tax.
(b)	Cap. – A credit allowed under this Article may not exceed the amount of the tax against which it is claimed for the taxable year reduced by the sum of all credits allowed, except payment of tax made by or on behalf of the taxpayer. Any unused portion of the credit may be carried forward for the succeeding nine years.
(c)	Substantiation. – A taxpayer allowed a credit under this section and the principal owner of a production or postproduction facility with eligible investments must maintain and make available for inspection any information or records required by the Secretary of Revenue. The taxpayer has the burden of proving eligibility for a credit and the amount of the credit.
(d)	No Double Credit. – A production or postproduction facility that is eligible for the credit allowed in this section is not allowed the credit for investing in business property provided in G.S. 105‑129.88.
"§ 105‑129.103.  Sunset.
This Article is repealed for taxable years beginning on or after January 1, 2018.
"§ 105‑129.104.  Report.
The Department must include in the economic incentives report required by G.S. 105‑256 the following information itemized by taxpayer:
(1)	The number of taxpayers that took the credits allowed in this Article.
(2)	The amount of eligible investment with respect to which credits were taken.
(3)	The total cost to the General Fund of the credits taken."

MODIFY ONE NORTH CAROLINA FUND AWARDS
SECTION 12.10.(a)  G.S. 143B‑437.71(b) reads as rewritten:
"(b1)	Awards. – The amounts committed in Governor's Letters issued in fiscal biennium 2013‑2015 may not exceed thirty‑eight million dollars ($38,000,000)."
SECTION 12.10.(b)  This section expires June 30, 2015.

FUNDS FOR SUPPORT CENTER
SECTION 12.11.  Of the funds appropriated from the General Fund to the North Carolina Department of Commerce for the 2014-2015 fiscal year to create a new competitive grant program for underserved and low-resource communities, one million dollars ($1,000,000) shall be allocated to The Support Center.

PART XIIA. DEPARTMENT OF PUBLIC SAFETY

Attorney General Changes
SECTION 12A.1.(a)  G.S. 114-2(2) reads as rewritten:
"§ 114‑2.  Duties.
It shall be the duty of the Attorney General:
…
(2)	To represent all State departments, agencies, institutions, commissions, bureaus or other organized activities of the State which receive support in whole or in part from the State. Where the Attorney General represents a State department, agency, institution, commission, bureau, or other organized activity of the State which receives support in whole or in part from the State, the Attorney General shall act in conformance with the current Rule 1.2 of the Rules of Professional Conduct of the North Carolina State Bar.
…."
SECTION 12A.1.(b)  G.S. 114-2.2 reads as rewritten:
"§ 114‑2.2.  Attorney General to approve consent judgments.
(a)	To be effective against the State, a consent judgment entered into by the State, a State department, State agency, State institution, or a State officer who is a party in his official capacity must be signed personally by the Attorney General. This power of approval may not be delegated to a deputy or assistant Attorney General or to any other subordinate. This subsection shall not apply to consent judgments that involve the interests of or name as a party a State cabinet department.
(a1)	Where a dispute, claim or controversy involves the interests of or names as a party a State cabinet department, a consent judgment shall be approved by the department head before the judgment may be entered, in conformance with Rule 1.2 of the Rules of Professional Conduct of the North Carolina State Bar.
(b)	The provisions of this section are supplemental to G.S. 114‑2.1.
(c)	Notwithstanding subsection (a) of this section, the Attorney General by rule may delegate to a deputy or assistant Attorney General or to another subordinate the power to sign consent judgments in condemnation or eminent domain actions brought under the provisions of Chapters 40A or 136 of the General Statutes and consent judgments under the provision of Article 31 of Chapter 143 (Tort Claims Act) and Chapter 97 (Workers' Compensation Act) of the General Statutes."
SECTION 12A.1.(c)  G.S. 114-2.4 reads as rewritten:
"§ 114‑2.4.  Settlement agreements.
(a)	The Attorney General shall review the terms of all proposed agreements entered into by the State or a State department, agency, institution, or officer to settle or resolve litigation or potential litigation, that involves the payment of public monies in the sum of seventy‑five thousand dollars ($75,000) or more. In order for such an agreement or contract to be effective against the State, the Attorney General shall submit to the State or the State department, agency, institution, or officer a written opinion regarding the terms of the proposed agreement and the advisability of entering into the agreement, prior to entering into the agreement. The written opinion required by this section shall be maintained in the official file of the final settlement agreement. The Attorney General by rule may delegate to a deputy or assistant Attorney General or to another subordinate the authority to approve settlement agreements. This subsection shall not apply to settlement agreements that involve the interests of or name as a party a State cabinet department.
(a1)	Where a dispute, claim or controversy involves the interests of or names as a party a State cabinet department, a settlement agreement shall be approved by the department head before the agreement may be entered into, in conformance with Rule 1.2 of the Rules of Professional Conduct of the North Carolina State Bar.
(b)	The Attorney General shall report to the Joint Legislative Commission on Governmental Operations on all agreements entered into by the State or a State department, agency, institution, or officer to settle or resolve litigation or potential litigation, that involves the payment of public monies in the sum of seventy‑five thousand dollars ($75,000) or more."

PART XIII. DEPARTMENT OF PUBLIC SAFETY

SUBPART XIII‑A. GENERAL PROVISIONS

LIMITED AUTHORITY TO RECLASSIFY AND ELIMINATE CERTAIN POSITIONS
SECTION 13A.1.  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.

USE OF CLOSED FACILITIES
SECTION 13A.2.  Section 16A.3 of S.L. 2013‑360 reads as rewritten:
"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.
In addition, the Division of Adult Correction and Juvenile Justice of the Department of Public Safety may, with prior approval of the Office of State Budget and Management, use available funds to reopen and convert closed facilities for use as treatment and behavior modification facilities for offenders serving a period of confinement in response to violation pursuant to G.S. 15A‑1344(d2)."

AMEND DEFINITION OF EMERGENCY
SECTION 13A.3.  G.S. 166A‑19.3(6) reads as rewritten:
"(6)	Emergency. – An occurrence or imminent threat of widespread or severe damage, injury, or loss of life or property that may result from, but is not limited to, any natural or man‑made accidental, military, paramilitary, weather‑related, public health, riot‑related, explosion, or terrorism‑related cause."

ESTABLISHMENT OF CHEMICAL ACCIDENT PREVENTION PROGRAM AND FEE
SECTION 13A.4.  Chapter 166A of the General Statutes is amending by adding a new Article to read:
"Article 6.
"Chemical Accident Prevention Program.

"§ 166A‑64.1.  Title; purpose.
(a)	This Article may be cited as "The North Carolina Chemical Accident Prevention Program."
(b)	The purposes of this Article are to set the programmatic needs for the Chemical Accident Prevention Program and to ensure local, regional, and State preparedness for chemical emergencies for the State of North Carolina.
"§ 166A‑64.2.  Definitions.
As used in this Article, the following definitions apply:
(1)	Department. – The term "Department" means the Department of Public Safety.
(2)	Division. – The term "Division" means the Division of Emergency Management in the Department of Public Safety.
(3)	SERC. – The term "SERC" means the State Emergency Response Commission established by an Executive Order by the Governor of North Carolina and supported by the Division of Emergency Management in the Department of Public Safety.
(4)	"EPCRA" or "SARA Title III" means the federal Emergency Planning and Community Right‑To‑Know Act, also known as the Superfund Amendments and Reauthorization Act of 1986, Title III, Pub. L. No. 99‑499 et. seq.
(5)	Facility. – The term "facility" means all buildings, equipment, structures, and other stationary items that are located on a single site or on contiguous or adjacent sites and which are owned or operated by the same person (or by any person which controls, is controlled by, or under common control with such person). "Facility" shall include man‑made structures as well as all natural structures in which chemicals are purposefully placed or removed through human means such that it functions as a containment structure for human use. For purposes of emergency release notification, the term includes motor vehicles, rolling stock, and aircraft.
(6)	Person. – The term "person" means any individual, trust, firm, joint stock company, corporation (including a government corporation), partnership, association, state, municipality, commission, political subdivision of a state, or interstate body.
(7)	Hazardous chemical – The term "Hazardous chemical" means that term defined by 29 C.F.R. 1910.1200(c), except that the term does not include the following:
a.	Any food, food additive, color additive, drug, or cosmetic regulated by the Food and Drug Administration;
b.	Any substance present as a solid in any manufactured item to the extent exposure to the substance does not occur under normal conditions of use;
c.	Any substance to the extent it is used for personal, family, or household purposes, or is present in the same form and concentration as a product packaged for distribution and use by the public;
d.	Any substance to the extent it is used in a research laboratory or a hospital or other medical facility under the direct supervision of a technically qualified individual; and
e.	Any substance to the extent it is used in routine agricultural operations or is a fertilizer held for sale by a retailer to the ultimate consumer.
(8)	Extremely Hazardous Substance – The term "Extremely Hazardous Substance (EHS)" means any substance in the form of a gas, liquid, solid, vapor, powder, aerosol, or any mixture of the aforementioned states which are defined by Section 302 of the federal Emergency Planning and Community Right to Know Act (EPCRA) and listed in 40 C.F.R. Appendix A and B to Part 355 – The List of Extremely Hazardous Substances and Their Threshold Planning Quantities.
(9)	"Tier two form" – The term "tier two form" means
a.	A form specified by the department for listing hazardous chemicals as required by EPCRA; or
b.	A form accepted by the EPA under EPCRA for listing hazardous chemicals together with additional information required by the department for administering its functions related to EPCRA.
"§ 166A‑64.3.  Reporting; rules; fees.
(1)	Any person, owner, or operator of a facility required, under section 302 and/or section 312 of the Superfund Amendment and Reauthorization Act of 1986, Emergency Planning and Community Right to Know (EPCRA), to submit a notification or an annual inventory form to the Department of Public Safety, Division of Emergency Management, and shall be required to pay an annual registration fee.
(2)	The Division shall collect these fees to carry out the reporting functions prescribed to the State in the Emergency Planning and Community Right‑to‑Know Act (EPCRA), 42 U.S.C. § 116.
(3)	The Division may adopt rules and administrative procedures reasonably necessary to carry out the purposes of this section.
(4)	The Division may authorize the collection of annual fees from facility owners or operators for the filing of tier two forms and Toxic Chemical Release Forms (Form R) required by EPCRA.
a.	Facilities exempted by the Energy Policy Act of 2005 are subject to the same reporting requirements and fee structure if they meet the EPCRA thresholds.
b.	These fees shall be used to fund the activities related to the storage and maintenance of any databases used to collect and store the forms and preparedness and mitigation activities required to ensure that local, regional, and State responders are capable of responding to chemical emergencies at these facilities.
(5)	The fees for facilities will be based upon the following filing requirements and must be paid annually:
a.	A fee of fifty dollars ($50.00) will be assessed for each substance reported by a facility that is classified as a hazardous chemical.
b.	A fee of ninety dollars ($90.00) will be assessed for each substance reported by a facility that is classified as an extremely hazardous substance.
(6)	The Division may impose a late fee for failure to submit a report or filing that substantially complies with the requirements of EPCRA by the federal filing deadline or for failure to pay any fee, including any late fee. This late fee shall be in addition to the fee otherwise imposed pursuant to this section. If the Division elects to impose a late fee, it shall provide the facility owner or operator with a written notice that identifies the specific requirements, which have not been met, and advice of its intent to assess a late fee. The Division may impose a late fee subject to the limitations below:
a.	If the report filing or fee is submitted within 30 days after receipt of the Division's notice, no late fee may be assessed.
b.	If the report filing or fee is not submitted within 30 days after receipt of the Division's notice, the Division may impose a late fee in an amount equal to the amount of the annual registration fee.
(7)	Exemptions to Fees. –
(a)	The owners or operators of family farm enterprises, facilities owned by State and local governments, and nonprofit organizations shall be exempt from payment of the required fees.
(b)	Motor vehicle fuels at facilities which offer such fuels for retail sale shall also be exempt from the reporting fees under this Chapter. However, hazardous chemicals or extremely hazardous substances at these facilities other than motor vehicle fuels for retail sale shall not be exempt from the reporting fees.
"§ 166A‑64.4.  Fee collection and management.
(a)	The fees herein authorized shall be assessed and collected annually based on information required to be submitted under this Article covering the previous calendar year.
(b)	The fees herein authorized shall be appropriated to the Division through the Department primarily for the purpose of funding data collection and management activities related to this Article. At the discretion of the Division, these fees may also be used to fund local emergency planning committees and emergency response vehicles (including their purchase, as well as maintenance and repairs) and related equipment and supplies and physical examinations and medical screenings for volunteer fire service members of decontamination teams. For the purposes of this section, the words "emergency response vehicles'' include, but are not limited to, vehicles such as decontamination units (both tow vehicle and trailer).
(c)	Fee monies obtained under this Chapter shall remain available for the purposes of this Article and shall not be subject to reversion.
(d)	All local emergency planning committees and State agencies to be funded under this Article shall submit to the Division for review and approval each year a budget worksheet for the next fiscal year."

CELL PHONES
SECTION 13A.5.  G.S. 14‑258.1 reads as rewritten:
"§ 14‑258.1.  Furnishing poison, controlled substances, deadly weapons, cartridges, ammunition or alcoholic beverages to inmates of charitable, mental or penal institutions or local confinement facilities; furnishing tobacco products or mobile phones to inmates.
(a)	If any person shall give or sell to any inmate of any charitable, mental or penal institution, or local confinement facility, or if any person shall combine, confederate, conspire, aid, abet, solicit, urge, investigate, counsel, advise, encourage, attempt to procure, or procure another or others to give or sell to any inmate of any charitable, mental or penal institution, or local confinement facility, any deadly weapon, or any cartridge or ammunition for firearms of any kind, or any controlled substances included in Schedules I through VI contained in Article 5 of Chapter 90 of the General Statutes except under the general supervision of a practitioner, poison or poisonous substance, except upon the prescription of a physician, he shall be punished as a Class H felon; and if he be an officer or employee of any institution of the State, or of any local confinement facility, he shall be dismissed from his position or office.
(b)	Any person who shall knowingly give or sell any alcoholic beverages to any inmate of any State mental or penal institution, or to any inmate of any local confinement facility, except for medical purposes as prescribed by a duly licensed physician and except for an ordained minister or rabbi who gives sacramental wine to an inmate as part of a religious service; or any person who shall combine, confederate, conspire, procure, or procure another or others to give or sell any alcoholic beverages to any inmate of any such State institution or local confinement facility, except for medical purposes as prescribed by a duly licensed physician and except for an ordained minister or rabbi who gives sacramental wine to an inmate as part of a religious service; or any person who shall bring into the buildings, grounds or other facilities of such institution any alcoholic beverages, except for medical purposes as prescribed by a duly licensed physician or sacramental wine brought by an ordained minister or rabbi for use as part of a religious service, shall be guilty of a Class 1 misdemeanor. If such person is an officer or employee of any institution of the State, such person shall be dismissed from office.
(c)	Any person who knowingly gives or sells any tobacco product, as defined in G.S. 148‑23.1, to an inmate in the custody of the Division of Adult Correction of the Department of Public Safety and on the premises of a correctional facility or to an inmate in the custody of a local confinement facility, or any person who knowingly gives or sells any tobacco product to a person who is not an inmate for delivery to an inmate in the custody of the Division of Adult Correction of the Department of Public Safety and on the premises of a correctional facility or to an inmate in the custody of a local confinement facility, other than for authorized religious purposes, is guilty of a Class 1 misdemeanor.
(d)	Any person who knowingly gives or sells a mobile telephone or other wireless communications device, or a component of one of those devices, to an inmate in the custody of the Division of Adult Correction of the Department of Public Safety or to an inmate in the custody of a local confinement facility, or any person who knowingly gives or sells any such device or component to a person who is not an inmate for delivery to an inmate, is guilty of a Class F felony.
(e)	Any inmate of a local confinement facility who possesses any tobacco product, as defined in G.S. 148‑23.1, other than for authorized religious purposes, is guilty of a Class 1 misdemeanor. Any inmate in the custody of the Division of Adult Correction of the Department of Public Safety or an inmate of a local confinement facility who possesses a mobile telephone or other wireless communication device or a component of one of those devices is guilty of a Class F felony."

ASSAULT ON A GOVERNMENT OFFICIAL
SECTION 13A.6.(a)  G.S. 14‑16.6 reads as rewritten:
"§ 14‑16.6  Assault on executive, legislative, or court officer.
(a)	Any person who assaults any legislative officer, executive officer, or court officer, or assaults another person as retaliation against any legislative officer, executive officer, or court officer because of the exercise of that officer's duties, or any person who makes a violent attack upon the residence, office, temporary accommodation or means of transport of any one of those officers in a manner likely to endanger the officer, shall be guilty of a Class E felony.
(b)	Any person who commits an offense under subsection (a) and uses a deadly weapon in the commission of that offense shall be guilty of a Class D felony.
(c)	Any person who commits an offense under subsection (a) and inflicts serious bodily injury to any legislative officer, executive officer, or court officer, shall be guilty of a Class C felony."
SECTION 13A.6.(b)  G.S. 14‑16.7 reads as rewritten:
"§ 14‑16.7.  Threats against executive, legislative, or court officers.
(a)	Any person who knowingly and willfully makes any threat to inflict serious bodily injury upon or to kill any legislative officer, executive officer, or court officer, or who knowingly and willfully makes any threat to inflict serious bodily injury upon or kill any other person as retaliation against any legislative officer, executive officer, or court officer because of the exercise of that officer's duties, shall be guilty of a Class F felony.
(b)	Any person who knowingly and willfully deposits for conveyance in the mail any letter, writing, or other document containing a threat as proscribed in subsection (a) of this section shall be guilty of a Class F felony."

ENHANCE PUBLIC SAFETY THROUGH INCREASED DETERRENCE OF INMATE ACCESS TO CELL PHONES
SECTION 13A.7.(a)  In an effort to deter illegal access of cell phones by inmates in the State's prison system, the Department of Public Safety is encouraged to identify non‑General Fund sources of funds, including federal and foundation grants and other receipts, to fund enhanced prison security technology.
SECTION 13A.7.(b)  Should funds as described in subsection (a) of this section be awarded, the Department of Public Safety shall be exempt from the legislative consultation requirement set forth in Section 5.2(a) of S.L. 2013‑360.

SUBPART XIII‑B. DIVISION OF LAW ENFORCEMENT

ALCOHOL LAW ENFORCEMENT/EXAMINE MISSION AND OPERATIONS
SECTION 13B.1.  The Department of Public Safety shall conduct a comprehensive review of the mission, statutory responsibilities, and operational activities of Alcohol Law Enforcement (ALE) and shall report its findings and recommendations to the House of Representatives Appropriations Subcommittee on Justice and Public Safety and the Senate Appropriations Committee on Justice and Public Safety no later than Feb. 15, 2015.
(a)	The written report shall include, but is not limited to, the following:
(1)	A description of the services provided by Alcohol Law Enforcement and its mission, goals, and objectives.
(2)	Staffing requirements at the ALE central office and district offices needed to carry out ALE's statutory responsibilities.
(3)	Functions or programs performed by ALE without specific statutory authority, and whether any of those activities are duplicative of any other law enforcement entity.
(4)	Performance measures and the process by which the performance measures determine efficiency and effectiveness.
(5)	Recommendations for statutory, budgetary, or administrative changes needed to improve efficiency and effectiveness of services delivered to the public.

SHP EXPERIENCE AND EDUCATION CREDIT
SECTION 13B.2.  G.S. 20‑187.3 reads as rewritten:
"§ 20‑187.3.  Quotas prohibited.
(a)	The Secretary of Public Safety shall not make or permit to be made any order, rule, or regulation requiring the issuance of any minimum number of traffic citations, or ticket quotas, by any member or members of the State Highway Patrol. Pay and promotions of members of the Highway Patrol shall be based on their overall job performance and not on the basis of the volume of citations issued or arrests made. Members of the Highway Patrol shall be subject to salary classes, ranges and longevity pay for service as are applicable to other State employees generally. Beginning July 1, 1985, and annually thereafter, each member of the Highway Patrol shall be granted a salary increase in an amount corresponding to the increments between steps within the salary range established for the class to which the member's position is assigned by the State Personnel Commission, not to exceed the maximum of each applicable salary range.
(b)	The Secretary of Public Safety, subject to the availability of funds as authorized by the Director of the Budget, may place a member of the State Highway Patrol in any step in the salary range for the class to which the member is assigned based on the member's rank so that no member is in a step lower than others of the same rank who have held that rank for less time than that member.
(c)	Notwithstanding any other provision of law, the Secretary of Public Safety is authorized to grant law enforcement experience and education credit for salary administration purposes for prospective members of the State Highway Patrol who have prior law enforcement or military experience."

STATE CAPITOL POLICE/RECEIPT‑SUPPORTED POSITIONS
SECTION 13B.3.  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.

ENACT NC GOVERNMENT EFFICIENCY AND REFORM (NC GEAR) RECOMMENDATION TO TRANSFER THE ANIMAL WELFARE SECTION AND THE SPAY/NEUTER PROGRAM FROM THE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES TO THE DEPARTMENT OF PUBLIC SAFETY; AND AMEND DEFINITION OF ANIMAL DEALER
SECTION 13B.4.(a)  The Animal Welfare Section, as established by G.S. 19A‑22 and other applicable laws of this State, is hereby transferred to the Department of Public Safety. This transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6.
SECTION 13B.4.(b)  The Spay/Neuter Program, as established in G.S. 19A‑61 and the Spay/Neuter Account, as established in G.S. 19A‑62, are transferred to the Department of Public Safety. Any unexpended funds in the Account at the end of the 2013‑2014 fiscal year shall be transferred to the Department of Public Safety.
SECTION 13B.4.(c)  The Animal Welfare Act, Article 3 of Chapter 19A of the General Statutes, is amended as follows:
"Article 3.
"Animal Welfare Act.
"§ 19A‑20.  Title of Article.
This Article may be cited as the Animal Welfare Act.
"§ 19A‑21.  Purposes.
The purposes of this Article are (i) to protect the owners of dogs and cats from the theft of such pets; (ii) to prevent the sale or use of stolen pets; (iii) to insure that animals, as items of commerce, are provided humane care and treatment by regulating the transportation, sale, purchase, housing, care, handling and treatment of such animals by persons or organizations engaged in transporting, buying, or selling them for such use; (iv) to insure that animals confined in pet shops, kennels, animal shelters and auction markets are provided humane care and treatment; (v) to prohibit the sale, trade or adoption of those animals which show physical signs of infection, communicable disease, or congenital abnormalities, unless veterinary care is assured subsequent to sale, trade or adoption.
"§ 19A‑22.  Animal Welfare Section in Law Enforcement Division of the Department of Public Safety created; Director.
There is hereby created within the Law Enforcement Division of the Department of Public Safety, a new section thereof, to be known as the Animal Welfare Section of said division.
The Secretary of the Department of Public Safety is hereby authorized to appoint a Director of said section whose duties and authority shall be determined by the Secretary.
"§ 19A‑23.  Definitions.
For the purposes of this Article, the following terms, when used in the Article or the rules or orders made pursuant thereto, shall be construed respectively to mean:
(1)	"Adequate feed" means the provision at suitable intervals, not to exceed 24 hours, of a quantity of wholesome foodstuff suitable for the species and age, sufficient to maintain a reasonable level of nutrition in each animal. Such foodstuff shall be served in a sanitized receptacle, dish, or container.
(2)	"Adequate water" means a constant access to a supply of clean, fresh, potable water provided in a sanitary manner or provided at suitable intervals for the species and not to exceed 24 hours at any interval.
(3)	"Ambient temperature" means the temperature surrounding the animal.
(4)	"Animal" means any domestic dog (Canis familiaris), or domestic cat (Felis domestica).
(5)	"Animal shelter" means a facility which is used to house or contain seized, stray, homeless, quarantined, abandoned or unwanted animals and which is under contract with, owned, operated, or maintained by a county, city, town, or other municipality, or by a duly incorporated humane society, animal welfare society, society for the prevention of cruelty to animals, or other nonprofit organization devoted to the welfare, protection, rehabilitation, or humane treatment of animals.
(5a)	"Approved foster care provider" means an individual, nonprofit corporation, or association that cares for stray animals that has been favorably assessed by the operator of the animal shelter through the application of written standards.
(5b)	"Approved rescue organization" means a nonprofit corporation or association that cares for stray animals that has been favorably assessed by the operator of the animal shelter through the application of written standards.
(5c)	"Boarding kennel" means a facility or establishment which regularly offers to the public the service of boarding dogs or cats or both for a fee. Such a facility or establishment may, in addition to providing shelter, food and water, offer grooming or other services for dogs and/or cats.
(6)	"Secretary" means the Secretary of the Department of Public Safety.
(7)	"Dealer" means any person who sells, exchanges, or donates, or offers to sell, exchange, or donate animals to another dealer, pet shop, or research facility or any person residing in a household that collectively maintains a total of more than nine mature intact female animals, regardless of ownership, or any person maintaining mature intact female animals on premises on which more than nine mature intact female animals are maintained, or any person acting in concert with others where they collectively maintain a total of more than nine mature intact female animals regardless of ownership. (Effective July 1, 2015)
(8)	"Director" means the Director of the Animal Welfare Section of the Law Enforcement Division of the Department of Public Safety.
(9)	"Euthanasia" means the humane destruction of an animal accomplished by a method that involves rapid unconsciousness and immediate death or by a method that involves anesthesia, produced by an agent which causes painless loss of consciousness, and death during such loss of consciousness.
(10)	"Housing facility" means any room, building, or area used to contain a primary enclosure or enclosures.
(11)	"Person" means any individual, partnership, firm, joint‑stock company, corporation, association, trust, estate, or other legal entity.
(12)	"Pet shop" means a person or establishment that acquires for the purposes of resale animals bred by others whether as owner, agent, or on consignment, and that sells, trades or offers to sell or trade such animals to the general public at retail or wholesale.
(13)	"Primary enclosure" means any structure used to immediately restrict an animal or animals to a limited amount of space, such as a room, pen, cage compartment or hutch.
(14)	"Public auction" means any place or location where dogs or cats are sold at auction to the highest bidder regardless of whether such dogs or cats are offered as individuals, as a group, or by weight.
(15)	"Research facility" means any place, laboratory, or institution at which scientific tests, experiments, or investigations involving the use of living animals are carried out, conducted, or attempted.
(16)	"Sanitize" means to make physically clean and to remove and destroy to a practical minimum, agents injurious to health.
"§ 19A‑24.  Powers of Department of Public Safety.
(a)	The Department of Public Safety shall:
(1)	Establish standards for the care of animals at animal shelters, boarding kennels, pet shops, and public auctions. A boarding kennel that offers dog day care services and has a ratio of dogs to employees or supervisors, or both employees and supervisors, of not more than 10 to one, shall not as to such services be subject to any regulations that restrict the number of dogs that are permitted within any primary enclosure.
(2)	Prescribe the manner in which animals may be transported to and from registered or licensed premises.
(3)	Require licensees and holders of certificates to keep records of the purchase and sale of animals and to identify animals at their establishments.
(4)	Adopt rules to implement this Article, including federal regulations promulgated under Title 7, Chapter 54, of the United States Code.
(5)	Adopt rules on the euthanasia of animals in the possession or custody of any person required to obtain a certificate of registration under this Article. An animal shall only be put to death by a method and delivery of method approved by the American Veterinary Medical Association, the Humane Society of the United States, or the American Humane Association. The Department shall establish rules for the euthanasia process using any one or combination of methods and standards prescribed by the three aforementioned organizations. The rules shall address the equipment, the process, and the separation of animals, in addition to the animals' age and condition. If the gas method of euthanasia is approved, rules shall require (i) that only commercially compressed carbon monoxide gas is approved for use, and (ii) that the gas must be delivered in a commercially manufactured chamber that allows for the individual separation of animals. Rules shall also mandate training for any person who participates in the euthanasia process.
(b)	In addition to rules on the euthanasia of animals adopted pursuant to subdivision (5) of subsection (a) of this section, the Department of Public Safety shall adopt rules for the certification of euthanasia technicians. The rules may provide for:
(1)	Written and practical examinations for persons who perform euthanasia.
(2)	Issuance of certification to persons who have successfully completed both training and examinations to become a euthanasia technician.
(3)	Recertification of euthanasia technicians on a periodic basis.
(4)	Standards and procedures for the approval of persons who conduct training of euthanasia technicians.
(5)	Approval of materials for use in euthanasia technician training.
(6)	Minimum certification criteria for persons seeking to become euthanasia technicians including, but not limited to: age; previous related experience; criminal record; and other qualifications that are related to an applicant's fitness to perform euthanasia.
(7)	Denial, suspension, or revocation of certification of euthanasia technicians who:
a.	Violate any provision of this Article or rules adopted pursuant to this Article;
b.	Have been convicted of or entered a plea of guilty or nolo contendere to:
1.	Any felony;
2.	Any misdemeanor or infraction involving animal abuse or neglect; or
3.	Any other offense related to animal euthanasia, the duties or responsibilities of a euthanasia technician, or a euthanasia technician's fitness for certification;
c.	Make any false statement, give false information, or omit material information in connection with an application for certification or for renewal or reinstatement of certification as a euthanasia technician; or
d.	Otherwise are or become ineligible for certification.
(8)	Provision of the names of persons who perform euthanasia at animal shelters and for the animal shelter to notify the Department when those persons are no longer affiliated, employed, or serving as a volunteer with the shelter.
(9)	Certified euthanasia technicians to notify the Department when they are no longer employed by or are serving as a volunteer at an animal shelter.
(10)	The duties, responsibilities, and standards of conduct for certified euthanasia technicians.
(c)	Regardless of the extent to which the Board exercises its authority under subsection (b) of this section, the Department may deny, revoke, or suspend the certification of a euthanasia technician who has been convicted of or entered a plea of guilty or nolo contendere to a felony involving the illegal use, possession, sale, manufacture, distribution, or transportation of a controlled substance, drug, or narcotic.
(d)	Persons seeking certification as euthanasia technicians, or a renewal of such certification, shall provide the Department a fingerprint card in a format acceptable to the Department, a form signed by the person consenting to a criminal record check and the use of the person's fingerprints, and such other identifying information as may be required by the State or national data banks. The Department may deny certification to persons who refuse to provide the fingerprint card or consent to the criminal background check. Fees required by the Department of Justice for conducting the criminal background check shall be collected by the Department and remitted to the Department of Justice along with the fingerprint card and consent form.
"§ 19A‑25.  Employees; investigations; right of entry.
For the enforcement of the provisions of this Article, the Director is authorized, subject to the approval of the Secretary to appoint employees as are necessary in order to carry out and enforce the provisions of this Article. The Director shall cause the investigation of all reports of violations of the provisions of this Article, and the rules adopted pursuant to the provisions hereof; provided further, that if any person shall deny the Director or his representative admittance to his property, either person shall be entitled to secure from any superior court judge a court order granting such admittance.
"§ 19A‑26.  Certificate of registration required for animal shelter.
No person shall operate an animal shelter unless a certificate of registration for such animal shelter shall have been granted by the Director. Application for such certificate shall be made in the manner provided by the Director. No fee shall be required for such application or certificate. Certificates of registration shall be valid for a period of one year or until suspended or revoked and may be renewed for like periods upon application in the manner provided.
"§ 19A‑27.  License required for operation of pet shop.
No person shall operate a pet shop unless a license to operate such establishment shall have been granted by the Director. Application for such license shall be made in the manner provided by the Director. The license shall be for the fiscal year and the license fee shall be seventy‑five dollars ($75.00) for each license period or part thereof beginning with the first day of the fiscal year.
"§ 19A‑28.  License required for public auction or boarding kennel.
No person shall operate a public auction or a boarding kennel unless a license to operate such establishment shall have been granted by the Director. Application for such license shall be made in the manner provided by the Director. The license period shall be the fiscal year and the license fee shall be seventy‑five dollars ($75.00) for each license period or part thereof beginning with the first day of the fiscal year.
"§ 19A‑29.  License required for dealer.
No person shall be a dealer unless a license to deal shall have been granted by the Director to such person. Application for such license shall be in the manner provided by the Director. The license period shall be the fiscal year and the license fee shall be seventy‑five dollars ($75.00) for each license period or part thereof, beginning with the first day of the fiscal year.
"§ 19A‑30.  Refusal, suspension or revocation of certificate or license.
The Director may refuse to issue or renew or may suspend or revoke a certificate of registration for any animal shelter or a license for any public auction, kennel, pet shop, or dealer, if after an impartial investigation as provided in this Article he determines that any one or more of the following grounds apply:
(1)	Material misstatement in the application for the original certificate of registration or license or in the application for any renewal under this Article;
(2)	Willful disregard or violation of this Article or any rules issued pursuant thereto;
(3)	Failure to provide adequate housing facilities and/or primary enclosures for the purposes of this Article, or if the feeding, watering, sanitizing and housing practices at the animal shelter, public auction, pet shop, or kennel are not consistent with the intent of this Article or the rules adopted under this Article;
(4)	Allowing one's license under this Article to be used by an unlicensed person;
(5)	Conviction of any crime an essential element of which is misstatement, fraud, or dishonesty, or conviction of any felony;
(6)	Making substantial misrepresentations or false promises of a character likely to influence, persuade, or induce in connection with the business of a public auction, commercial kennel, pet shop, or dealer;
(7)	Pursuing a continued course of misrepresentation of or making false promises through advertising, salesmen, agents, or otherwise in connection with the business to be licensed;
(8)	Failure to possess the necessary qualifications or to meet the requirements of this Article for the issuance or holding of a certificate of registration or license.
The Director shall, before refusing to issue or renew and before suspension or revocation of a certificate of registration or a license, give to the applicant or holder thereof a written notice containing a statement indicating in what respects the applicant or holder has failed to satisfy the requirements for the holding of a certificate of registration or a license. If a certificate of registration or a license is suspended or revoked under the provisions hereof, the holder shall have five days from such suspension or revocation to surrender all certificates of registration or licenses issued thereunder to the Director or his authorized representative.
A person to whom a certificate of registration or a license is denied, suspended, or revoked by the Director may contest the action by filing a petition under G.S. 150B‑23 within five days after the denial, suspension, or revocation.
Any licensee whose license is revoked under the provisions of this Article shall not be eligible to apply for a new license hereunder until one year has elapsed from the date of the order revoking said license or if an appeal is taken from said order of revocation, one year from the date of the order or final judgment sustaining said revocation. Any person who has been an officer, agent, or employee of a licensee whose license has been revoked or suspended and who is responsible for or participated in the violation upon which the order of suspension or revocation was based, shall not be licensed within the period during which the order of suspension or revocation is in effect.
"§ 19A‑31.  License not transferable; change in management, etc., of business or operation.
A license is not transferable. When there is a transfer of ownership, management, or operation of a business of a licensee hereunder, the new owner, manager, or operator, as the case may be, whether it be an individual, firm, partnership, corporation, or other entity shall have 10 days from such sale or transfer to secure a new license from the Director to operate said business. A licensee shall promptly notify the Director of any change in the name, address, management, or substantial control of his business or operation.
"§ 19A‑32.  Procedure for review of Director's decisions.
A denial, suspension, or revocation of a certificate or license under this Article shall be made in accordance with Chapter 150B of the General Statutes.
"§ 19A‑32.1.  Minimum holding period for animals in animal shelters; public viewing of animals in animal shelters; disposition of animals.
(a)	Except as otherwise provided in this section, all animals received by an animal shelter or by an agent of an animal shelter shall be held for a minimum holding period of 72 hours, or for any longer minimum period established by a board of county commissioners, prior to being euthanized or otherwise disposed of.
(b)	Before an animal may be euthanized or otherwise disposed of, it shall be made available for adoption under procedures that enable members of the public to inspect the animal, except in the following cases:
(1)	The animal has been found by the operator of the shelter to be unadoptable due to injury or defects of health or temperament.
(2)	The animal is seriously ill or injured, in which case the animal may be euthanized before the expiration of the minimum holding period if the manager of the animal shelter determines, in writing, that it is appropriate to do so. The writing shall include the reason for the determination.
(3)	The animal is being held as evidence in a pending criminal case.
(c)	Except as otherwise provided in this subsection, a person who comes to an animal shelter attempting to locate a lost pet is entitled to view every animal held at the shelter, subject to rules providing for such viewing during at least four hours a day, three days a week. If the shelter is housing animals that must be kept apart from the general public for health reasons, public safety concerns, or in order to preserve evidence for criminal proceedings, the shelter shall make reasonable arrangements that allow pet owners to determine whether their lost pets are among those animals.
(d)	During the minimum holding period, an animal shelter may place an animal it is holding into foster care by transferring possession of the animal to an approved foster care provider, an approved rescue organization, or the person who found the animal. If an animal shelter transfers possession of an animal under this subsection, at least one photograph depicting the head and face of the animal shall be displayed at the shelter in a conspicuous location that is available to the general public during hours of operation, and that photograph shall remain posted until the animal is disposed of as provided in subsection (f) of this section.
(e)	If a shelter places an animal in foster care, the shelter may, in writing, appoint the person or organization possessing the animal to be an agent of the shelter. After the expiration of the minimum holding period, the shelter may (i) direct the agent possessing the animal to return it to the shelter, (ii) allow the agent to adopt the animal consistent with the shelter's adoption policies, or (iii) extend the period of time that the agent holds the animal on behalf of the shelter. A shelter may terminate an agency created under this subsection at any time by directing the agent to deliver the animal to the shelter. The local government or organization operating the shelter, as principal in the agency relationship, shall not be liable to reimburse the agent for the costs of care of the animal and shall not be liable to the owner of the animal for harm to the animal caused by the agent, absent a written contract providing otherwise.
(f)	An animal that is surrendered to an animal shelter by the animal's owner and not reclaimed by that owner during the minimum holding period may be disposed of in one of the following manners:
(1)	Returned to the owner.
(2)	Adopted as a pet by a new owner.
(3)	Euthanized by a procedure approved by rules adopted by the Department of Public Safety or, in the absence of such rules, by a procedure approved by the American Veterinary Medical Association, the Humane Society of the United States, or the American Humane Association.
(g)	An animal that is surrendered to an animal shelter by the animal's owner may be disposed of before the expiration of the minimum holding period in a manner authorized under subsection (f) of this section if the owner provides to the shelter (i) some proof of ownership of the animal and (ii) a signed written consent to the disposition of the animal before the expiration of the minimum holding period.
(h)	If the owner of a dog surrenders the dog to an animal shelter, the owner shall state in writing whether the dog has bitten any individual within the 10 days preceding the date of surrender.
(i)	An animal shelter shall require every person to whom an animal is released to present one of the following valid forms of government‑issued photographic identification: (i) a drivers license, (ii) a special identification card issued under G.S. 20‑37.7, (iii) a military identification card, or (iv) a passport. Upon presentation of the required photographic identification, the shelter shall document the name of the person, the type of photographic identification presented by the person, and the photographic identification number.
(j)	Animal shelters shall maintain a record of all animals impounded at the shelter, shall retain those records for a period of at least three years from the date of impoundment, and shall make those records available for inspection during regular inspections pursuant to this Article or upon the request of a representative of the Animal Welfare Section. These records shall contain, at a minimum:
(1)	The date of impoundment.
(2)	The length of impoundment.
(3)	The disposition of each animal, including the name and address of any person to whom the animal is released, any institution that person represents, and the identifying information required under subsection (i) of this section.
(4)	Other information required by rules adopted by the Department of Public Safety.
"§ 19A‑33.  Penalty for operation of pet shop, kennel or auction without license.
Operation of a pet shop, kennel, or public auction without a currently valid license shall constitute a Class 3 misdemeanor subject only to a penalty of not less than five dollars ($5.00) nor more than twenty‑five dollars ($25.00), and each day of operation shall constitute a separate offense.
"§ 19A‑34.  Penalty for acting as dealer without license; disposition of animals in custody of unlicensed dealer.
Acting as a dealer in animals as defined in this Article without a currently valid dealer's license shall constitute a Class 2 misdemeanor. Continued illegal operation after conviction shall constitute a separate offense. Animals found in possession or custody of an unlicensed dealer shall be subject to immediate seizure and impoundment and upon conviction of such unlicensed dealer shall become subject to sale or euthanasia in the discretion of the Director.
"§ 19A‑35.  Penalty for failure to adequately care for animals; disposition of animals.
Failure of any person licensed or registered under this Article to adequately house, feed, and water animals in his possession or custody shall constitute a Class 3 misdemeanor, and such person shall be subject to a fine of not less than five dollars ($5.00) per animal or more than a total of one thousand dollars ($1,000). Such animals shall be subject to seizure and impoundment and upon conviction may be sold or euthanized at the discretion of the Director and such failure shall also constitute grounds for revocation of license after public hearing.
"§ 19A‑36.  Penalty for violation of Article by dog warden.
Violation of any provision of this Article which relates to the seizing, impoundment, and custody of an animal by a dog warden shall constitute a Class 3 misdemeanor and the person convicted thereof shall be subject to a fine of not less than fifty dollars ($50.00) and not more than one hundred dollars ($100.00), and each animal handled in violation shall constitute a separate offense.
"§ 19A‑37.  Application of Article.
This Article shall not apply to a place or establishment which is operated under the immediate supervision of a duly licensed veterinarian as a hospital where animals are harbored, boarded, and cared for incidental to the treatment, prevention, or alleviation of disease processes during the routine practice of the profession of veterinary medicine. This Article shall not apply to any dealer, pet shop, public auction, commercial kennel or research facility during the period such dealer or research facility is in the possession of a valid license or registration granted by the Secretary of Agriculture pursuant to Title 7, Chapter 54, of the United States Code. This Article shall not apply to any individual who occasionally boards an animal on a noncommercial basis, although such individual may receive nominal sums to cover the cost of such boarding.
"§ 19A‑38.  Use of license fees.
All license fees collected shall be used in enforcing and administering this Article.
"§ 19A‑39.  Article inapplicable to establishments for training hunting dogs.
Nothing in this Article shall apply to those kennels or establishments operated primarily for the purpose of boarding or training hunting dogs.
"§ 19A‑40.  Civil Penalties.
The Director may assess a civil penalty of not more than five thousand dollars ($5,000) against any person who violates a provision of this Article or any rule promulgated thereunder. In determining the amount of the penalty, the Director shall consider the degree and extent of harm caused by the violation. The clear proceeds of civil penalties assessed pursuant to this section shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C‑457.2.
"§ 19A‑41.  Legal representation by the Attorney General.
It shall be the duty of the Attorney General to represent the Secretary of the Department of Public Safety, or to designate some member of his staff to represent the Secretary and the Department, in all actions or proceedings in connection with this Article."
SECTION 13B.4.(d)  Article 5 of Chapter 19A of the General Statutes reads as rewritten:
"Article 5.
"Spay/Neuter Program.
"§ 19A‑60.  Legislative findings.
The General Assembly finds that the uncontrolled breeding of cats and dogs in the State has led to unacceptable numbers of unwanted dogs, puppies and cats and kittens. These unwanted animals become strays and constitute a public nuisance and a public health hazard. The animals themselves suffer privation and death, are impounded, and most are destroyed at great expense to local governments. It is the intention of the General Assembly to provide a voluntary means of funding a spay/neuter program to provide financial assistance to local governments offering low‑income persons reduced‑cost spay/neuter services for their dogs and cats and to provide a statewide education program on the benefits of spaying and neutering pets.
"§ 19A‑61.  Spay/Neuter Program established.
There is established in the Department of Public Safety a voluntary statewide program to foster the spaying and neutering of dogs and cats for the purpose of reducing the population of unwanted animals in the State. The program shall consist of the following components:
(1)	Education Program. – The Department shall establish a statewide program to educate the public about the benefits of having cats and dogs spayed and neutered. The Department may work cooperatively on the program with the North Carolina School of Veterinary Medicine, other State agencies and departments, county and city health departments and animal control agencies, and statewide and local humane organizations. The Department may employ outside consultants to assist with the education program.
(2)	Local Spay/Neuter Assistance Program. – The Department shall administer the Spay/Neuter Account established in G.S. 19A‑62. Monies deposited in the account shall be available to reimburse eligible counties and cities for the direct costs of spay/neuter surgeries for cats and dogs made available to low‑income persons.
"§ 19A‑62.  Spay/Neuter Account established.
(a)	Creation. – The Spay/Neuter Account is established as a nonreverting special revenue account in the Department of Public Safety. The Account consists of the following:
(1)	Repealed by Session Laws 2010‑31, s. 11.4(c), effective October 1, 2010.
(2)	Twenty dollars ($20.00) of the additional fee imposed by G.S. 20‑79.7 for an Animal Lovers special license plate.
(3)	Any other funds available from appropriations by the General Assembly or from contributions and grants from public or private sources.
(b)	Use. – The revenue in the Account shall be used by the Department of Public Safety as follows:
(1)	Repealed by Session Laws 2010‑31, s. 11.4(c), effective October 1, 2010.
(2)	Up to twenty percent (20%) may be used to develop and implement the statewide education program component of the Spay/Neuter Program established in G.S. 19A‑61(1).
(3)	Up to twenty percent (20%) of the money in the Account may be used to defray the costs of administering the Spay/Neuter Program established in this Article.
(4)	Funds remaining after deductions for the education program and administrative expenses shall be distributed quarterly to eligible counties and cities seeking reimbursement for reduced‑cost spay/neuter surgeries performed during the previous calendar year. A county or city is ineligible to receive funds under this subdivision unless it requires the owner to show proof of rabies vaccination at the time of the procedure or, if none, require vaccination at the time of the procedure.
(c)	Report. – In February of each year, the Department must report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division. The report must contain information regarding all revenues and expenditures of the Spay/Neuter Account.
"§ 19A‑63.  Eligibility for distributions from Spay/Neuter Account.
(a)	A county or city is eligible for reimbursement from the Spay/Neuter Account if it meets the following condition:
(1)	The county or city offers one or more of the following programs to low‑income persons on a year‑round basis for the purpose of reducing the cost of spaying and neutering procedures for dogs and cats:
a.	A spay/neuter clinic operated by the county or city.
b.	A spay/neuter clinic operated by a private organization under contract or other arrangement with the county or city.
c.	A contract or contracts with one or more veterinarians, whether or not located within the county, to provide reduced‑cost spaying and neutering procedures.
d.	Subvention of the spaying and neutering costs incurred by low‑income pet owners through the use of vouchers or other procedure that provides a discount of the cost of the spaying or neutering procedure fixed by a participating veterinarian or other provider.
e.	Subvention of the spaying and neutering costs incurred by persons who adopt a pet from an animal shelter operated by or under contract with the county or city.
(2)	Reserved for future codification purposes.
(b)	For purposes of this Article, the term "low‑income person" shall mean an individual who qualifies for one or more of the programs of public assistance administered by the Department of Health and Human Services pursuant to Chapter 108A of the General Statutes or whose annual household income is under three hundred percent (300%) of the federal poverty level guidelines published by the United States Department of Health and Human Services.
(c)	Each county shall make rules or publish guidelines that designate what proof a low‑income person must submit to establish that the person qualifies for public assistance under subsection (b) of this section or has an annual household income lower than three hundred percent (300%) of the federal poverty level guidelines published by the United States Department of Health and Human Services.(2000‑163, s. 1; 2010‑31, s. 11.4(d).)
"§ 19A‑64.  Distributions to counties and cities from Spay/Neuter Account.
(a)	Reimbursable Costs. – Counties and cities eligible for distributions from the Spay/Neuter Account may receive reimbursement for the direct costs of a spay/neuter surgical procedure for a dog or cat owned by a low‑income person as defined in G.S. 19A‑63(b). Reimbursable costs shall include anesthesia, medication, and veterinary services. Counties and cities shall not be reimbursed for the administrative costs of providing reduced‑cost spay/neuter services or capital expenditures for facilities and equipment associated with the provision of such services. The reimbursement amount for each surgical procedure for a female dog or cat shall be no more than one hundred fifty percent (150%) of the average reimbursement allowed for surgical procedures for female dogs and cats by the Spay/Neuter Program during the prior calendar year. The reimbursement amount for each surgical procedure for a male dog or cat shall be no more than one hundred fifty percent (150%) of the average reimbursement allowed for surgical procedures for male dogs and cats by the Spay/Neuter Program during the prior calendar year.
(b)	Application. – A county or city eligible for reimbursement of spaying and neutering costs from the Spay/Neuter Account shall apply to the Department of Public Safety by the last day of January, April, July, and October of each year to receive a distribution from the Account for that quarter. The application shall be submitted in the form required by the Department and shall include an itemized listing of the costs for which reimbursement is sought.
(c)	Distribution. – The Department shall make payments from the Spay/Neuter Account to eligible counties and cities who have made timely application for reimbursement within 30 days of the closing date for receipt of applications for that quarter. In the event that total requests for reimbursement exceed the amounts available in the Spay/neuter Account for distribution, the monies available will be distributed as follows:
(1)	Fifty percent (50%) of the monies available in the Spay/Neuter Account shall be reserved for reimbursement for eligible applicants within development tier one areas as defined in G.S. 143B‑437.08. The remaining fifty percent (50%) of the funds shall be used to fund reimbursement requests from eligible applicants in development tier two and three areas as defined in G.S. 143B‑437.08.
(2)	Among the eligible counties and cities in development tier one areas, reimbursement shall be made to each eligible county or city in the proportion that the rate of spays and neuters per one thousand persons in that city or county compares to the total rate of spays and neuters per one thousand persons within the total tier one area. Population data shall be obtained from the most recent decennial census.
(3)	Among the eligible counties and cities in development tier two and three areas, reimbursement shall be made to each eligible county or city in the proportion that the rate of spays and neuters per one thousand persons in that city or county compares to the total rate of spays and neuters per one thousand persons within the total tier two and three area. Population data shall be obtained from the most recent decennial census.
(4)	Should funds remain available from the fifty percent (50%) of the Spay/Neuter Account designated for development tier one areas after reimbursement of all claims by eligible applicants in those areas, the remaining funds shall be made available to reimburse eligible applicants in development tier two and three areas.
"§ 19A‑65.  Annual Report Required From Every Animal Shelter in Receipt of State or Local Funding.
Every county or city animal shelter, or animal shelter operated under contract with a county or city or otherwise in receipt of State or local funding shall prepare an annual report in the form required by the Department of Public Safety setting forth the numbers, by species, of animals received into the shelter, the number adopted out, the number returned to owner, and the number destroyed. The report shall also contain the total operating expenses of the shelter and the cost per animal handled. The report shall be filed with the Department of Public Safety by March 1 of each year. A city or county that does not timely file the report required by this section is not eligible to receive reimbursement payments under G.S. 19A‑64 during the calendar year in which the report was to be filed.
"§ 19A‑66.  Notification of available funding.
Prior to January 1 of each year, the Department of Public Safety shall notify counties and cities that have, prior to that notification deadline, established eligibility for distribution of funds from the Spay/Neuter Account pursuant to G.S. 19A‑63, of the following:
(1)	The amount of funding in the Spay/Neuter Account that the Department will have available for distribution to each county or city receiving notification to pay reimbursement requests submitted by the county or city during the calendar year following the notification deadline; and
(2)	The amount of additional funding, if any, the Department estimates, but does not guarantee, may be available to pay reimbursement requests submitted by the notified county or city to the Department during the calendar year following the notification deadline.
(3)	The maximum amount that may be reimbursed for each surgical procedure for a female dog or cat during the upcoming calendar year.
(4)	The maximum amount that may be reimbursed for each surgical procedure for a male dog or cat during the upcoming calendar year."
SECTION 13B.4.(e)  The Animal Feed and Pet Food Branch within the Food and Drug Protection Division of the Department of Agriculture and Consumer Services shall transfer annually two hundred fifty thousand dollars ($250,000) in receipts to the Spay/Neuter Account of the Department of Public Safety.
SECTION 13B.4.(f)  The Department of Agriculture and Consumer Services shall transfer annually sixty‑one thousand five hundred twenty‑five dollars ($61,525) in receipts collected in accordance with G.S. 106‑284.40(a) to the Spay/Neuter Account of the Department of Public Safety.

SUBPART XIII‑C. DIVISION OF ADULT CORRECTION and juvenile justice

JUSTICE REINVESTMENT ACT/LIMITED AUTHORITY TO RECLASSIFY VACANT POSITIONS
SECTION 13C.1.(a)  Section 16C.13 of S.L. 2013‑360 reads as rewritten:
"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, 2015, 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."

MODIFY CONFINEMENT IN RESPONSE TO VIOLATION
SECTION 13C.2.(a)  G.S. 15A‑1344(d2) reads as rewritten:
"(d2)	Confinement in Response to Violation. – When a defendant under supervision for a felony conviction has violated a condition of probation other than G.S. 15A‑1343(b)(1) or G.S. 15A‑1343(b)(3a), the court may impose a period of confinement of 90 consecutive days, to be served in the custody of the Division of Adult Correction of the Department of Public Safety. The court may not revoke probation unless the defendant has previously received a total of two periods of confinement under this subsection. A defendant may receive only two periods of confinement under this subsection. The 90 day term of confinement ordered under this subsection for a felony shall not be reduced by credit for time already served in the case. Any such credit shall instead be applied to the suspended sentence. However, if the time remaining on the maximum imposed sentence on a defendant under supervision for a felony conviction is 90 days or less, then the term of confinement is for the remaining period of the sentence. Confinement under this section shall be credited pursuant to G.S. 15‑196.1.
When a defendant under supervision for a misdemeanor conviction has violated a condition of probation other than G.S. 15A‑1343(b)(1) or G.S. 15A‑1343(b)(3a), the court may impose a period of confinement of up to 90 consecutive days, to be served where the defendant would have served an active sentence. The court may not revoke probation unless the defendant has previously received a total of two periods of confinement under this subsection. A defendant may receive only two periods of confinement under this subsection. Confinement under this section shall be credited pursuant to G.S. 15‑196.1.
The period of confinement imposed under this subsection on a defendant who is on probation for multiple offenses shall run concurrently on all cases related to the violation. Confinement shall be immediate unless otherwise specified by the court.
"
SECTION 13C.2.(b)  This section becomes effective October 1, 2014, and applies to persons placed on probation on or after that date.

HOUSING MISDEMEANANTS AND DRIVING WHILE IMPAIRED OFFENDERS IN COUNTY JAILS
SECTION 13C.3.(a)  G.S. 15A‑1344(e) reads as rewritten:
"(e)	Special Probation in Response to Violation. – When a defendant has violated a condition of probation, the court may modify the probation to place the defendant on special probation as provided in this subsection. In placing the defendant on special probation, the court may continue or modify the conditions of probation and in addition require that the defendant submit to a period or periods of imprisonment, either continuous or noncontinuous, at whatever time or intervals within the period of probation the court determines. In addition to any other conditions of probation which the court may impose, the court shall impose, when imposing a period or periods of imprisonment as a condition of special probation, the condition that the defendant obey the rules and regulations of the Division of Adult Correction of the Department of Public Safety governing conduct of inmates, and this condition shall apply to the defendant whether or not the court imposes it as a part of the written order. Except for probationary sentences for impaired driving under G.S. 20‑138.1, if imprisonment is for continuous periods, the confinement may be in either the custody of the Division of Adult Correction of the Department of Public Safety or a local confinement facility. Noncontinuous periods of imprisonment under special probation may only be served in a designated local confinement or treatment facility. The total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, may not exceed one‑fourth the maximum sentence of imprisonment imposed for the offense. For probationary sentences for impaired driving under G.S. 20‑138.1, all imprisonment imposed under this subsection shall be in a designated local confinement or treatment facility, and the total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, shall not exceed one‑fourth the maximum penalty allowed by law. No confinement other than an activated suspended sentence may be required beyond the period of probation or beyond two years of the time the special probation is imposed, whichever comes first."
SECTION 13C.3.(b)  G.S. 15A‑1351 reads as rewritten:
"§ 15A‑1351.  Sentence of imprisonment; incidents; special probation.
(a)	The judge may sentence to special probation a defendant convicted of a criminal offense other than impaired driving under G.S. 20‑138.1, if based on the defendant's prior record or conviction level as found pursuant to Article 81B of this Chapter, an intermediate punishment is authorized for the class of offense of which the defendant has been convicted. A defendant convicted of impaired driving under G.S. 20‑138.1 may also be sentenced to special probation. Under a sentence of special probation, the court may suspend the term of imprisonment and place the defendant on probation as provided in Article 82, Probation, and in addition require that the defendant submit to a period or periods of imprisonment in the custody of the Division of Adult Correction of the Department of Public Safety or a designated local confinement or treatment facility at whatever time or intervals within the period of probation, consecutive or nonconsecutive, the court determines, as provided in this subsection. For probationary sentences for impaired driving under G.S. 20‑138.1, all imprisonment imposed under this subsection shall be in a designated local confinement or treatment facility. In addition to any other conditions of probation which the court may impose, the court shall impose, when imposing a period or periods of imprisonment as a condition of special probation, the condition that the defendant obey the Rules and Regulations of the Division of Adult Correction of the Department of Public Safety governing conduct of inmates, and this condition shall apply to the defendant whether or not the court imposes it as a part of the written order. Except for probationary sentences for impaired driving under G.S. 20‑138.1, if imprisonment is for continuous periods, the confinement may be in the custody of either the Division of Adult Correction of the Department of Public Safety or a local confinement facility. Noncontinuous periods of imprisonment under special probation may only be served in a designated local confinement or treatment facility. Except for probationary sentences of impaired driving under G.S. 20‑138.1, the total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, may not exceed one‑fourth the maximum sentence of imprisonment imposed for the offense, and no confinement other than an activated suspended sentence may be required beyond two years of conviction. For probationary sentences for impaired driving under G.S. 20‑138.1, the total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, shall not exceed one‑fourth the maximum penalty allowed by law. In imposing a sentence of special probation, the judge may credit any time spent committed or confined, as a result of the charge, to either the suspended sentence or to the imprisonment required for special probation. The original period of probation, including the period of imprisonment required for special probation, shall be as specified in G.S. 15A‑1343.2(d), but may not exceed a maximum of five years, except as provided by G.S. 15A‑1342(a). The court may revoke, modify, or terminate special probation as otherwise provided for probationary sentences.
(b)	Sentencing of a person convicted of a felony or of a misdemeanor other than impaired driving under G.S. 20‑138.1 that occurred on or after the effective date of Article 81B is subject to that Article. For persons convicted of impaired driving under G.S. 20‑138.1, a sentence to imprisonment must impose a maximum term and may impose a minimum term. The impaired driving judgment may state the minimum term or may state that a term constitutes both the minimum and maximum terms. If the impaired driving judgment states no minimum term, the defendant becomes eligible for parole in accordance with G.S. 15A‑1371(a).
(c)	Repealed by Session Laws 1979, c. 749, s. 7.
(d),	(e) Repealed by Session Laws 1993, c. 538, s. 19.
(f)	Work Release. – When sentencing a person convicted of a felony, the sentencing court may recommend that the sentenced offender be granted work release as authorized in G.S. 148‑33.1. When sentencing a person convicted of a misdemeanor, the sentencing court may recommend or, with the consent of the person sentenced, order that the sentenced offender be granted work release as authorized in G.S. 148‑33.1.
(g)	Credit. – Credit towards a sentence to imprisonment is as provided in Article 19A of Chapter 15 of the General Statutes.
(h)	Repealed by Session Laws 2003‑141, s. 2, effective December 1, 2003."
SECTION 13C.3.(c)  G.S. 15A‑1352 reads as rewritten:
"§ 15A‑1352.  Commitment to Division of Adult Correction of the Department of Public Safety or local confinement facility.
(a)	Except for sentences for impaired driving under G.S. 20‑138.1, a person sentenced to imprisonment for a misdemeanor under this Article or for nonpayment of a fine under Article 84 of this Chapter shall be committed for the term designated by the court to the custody of a local confinement facility. A sentence imposed for a misdemeanor must be to a facility other than one maintained by the Division of Adult Correction of the Department of Public Safety, except as provided in G.S. 148‑32.1(b).
If a person is sentenced to imprisonment for a misdemeanor under this Article or for nonpayment of a fine under Article 84 of this Chapter, the sentencing judge shall make a finding of fact as to whether the person would be suitable for placement in a county satellite jail/work release unit operated pursuant to G.S. 153A‑230.3. If the sentencing judge makes a finding of fact that the person would be suitable for placement in a county satellite jail/work release unit and the person meets the requirements listed in G.S. 153A‑230.3(a)(1), then the custodian of the local confinement facility may transfer the misdemeanant to a county satellite jail/work release unit.
(b)	A person sentenced to imprisonment for a felony under this Article shall be committed for the term designated by the court to the custody of the Division of Adult Correction of the Department of Public Safety.
(c)	A person sentenced to imprisonment for nonpayment of a fine under Article 84, Fines, shall be committed for the term designated by the court:
(1)	To the custody of the Division of Adult Correction of the Department of Public Safety if the person was fined for conviction of a felony;
(2)	To the custody of a local confinement facility if the person was fined for conviction of a misdemeanor, the commitment shall be to a facility other than one maintained by the Division of Adult Correction of the Department of Public Safety, except as provided in G.S. 148‑32.1(b).
(d)	Notwithstanding any other provision of law, when the sentencing court, with the consent of the person sentenced, orders that a person convicted of a misdemeanor be granted work release, the court may commit the person to a specific prison facility or local confinement facility or satellite jail/work release unit within the county of the sentencing court in order to facilitate the work release arrangement. When appropriate to facilitate the work release arrangement, the sentencing court may, with the consent of the sheriff or board of commissioners, commit the person to a specific local confinement facility or satellite jail/work release unit in another county, The Division of Adult Correction of the Department of Public Safety may transfer a prisoner committed to a specific prison facility to a different facility when necessary to alleviate overcrowding or for other administrative purposes.
(e)	A person sentenced for a misdemeanor who has a sentence imposed that requires confinement for a period of more than 90 days and up to 180 days, except for those serving sentences for an impaired driving offense under G.S. 20‑138.1 under this Article or for nonpayment of a fine under Article 84 of this Chapter, shall be committed for the term designated by the court to confinement pursuant to the Statewide Misdemeanant Confinement Program established by G.S. 148‑32.1.
(f)	A person sentenced to imprisonment of any duration for impaired driving under G.S. 20‑138.1, other than imprisonment required as a condition of special probation under G.S. 15A‑1351(a) or G.S. 15A‑1344(e), shall be committed to the Statewide Misdemeanant Confinement Program as provided in G.S. 20‑176."
SECTION 13C.3.(d)  G.S. 20‑176(c1) reads as rewritten:
"(c1)	Notwithstanding any other provision of law, no person convicted of a misdemeanor for the violation of any provision of this Chapter shall be imprisoned in the State prison system. A person sentenced to imprisonment of any duration for impaired driving under G.S. 20‑138.1, other than imprisonment required as a condition of special probation under G.S. 15A‑1351(a) or G.S. 15A‑1344(e), shall be committed to the Statewide Misdemeanant Confinement Program established by G.S. 148‑32.1."
SECTION 13C.3.(e)  G.S. 148‑13 reads as rewritten:
"§ 148‑13.  Regulations as to custody grades, privileges, gain time credit, etc.
…
(b)	With respect to prisoners who are serving jail terms for impaired driving offenses under G.S. 20‑138.1, the Secretary of Public Safety may, in his discretion, issue regulations regarding deductions of time from the terms of such prisoners for good behavior, meritorious conduct, work or study, participation in rehabilitation programs, and the like.
(c),	(d) Repealed by Session Laws 1993, c. 538, s. 32, effective January 1, 1995.
(e)	The Secretary's regulations concerning earned time and good time credits authorized by this section shall be distributed to and followed by local jail administrators with regard to sentenced jail prisoners.
…."
SECTION 13C.3.(f)  G.S. 148‑32.1 reads as rewritten:
"§ 148‑32.1.  Local confinement, costs, alternate facilities, parole, work release.
…
(b1)	It is the intent of the General Assembly to authorize the Division of Adult Correction to enter into voluntary agreements with counties to provide housing for misdemeanants serving periods of confinement of more than 90 days and for all sentences imposed for impaired driving under G.S. 20‑138.1, regardless of length. It is further the intent of the General Assembly that the Division of Adult Correction, in conjunction with the North Carolina Sheriffs' Association, Inc., establish a program for housing misdemeanants serving periods of confinement of more than 90 days and for all sentences imposed for impaired driving under G.S. 20‑138.1, regardless of length. It is also the intent of the General Assembly that the Division of Adult Correction contract with the North Carolina Sheriffs' Association, Inc., to provide a service that identifies space in local confinement facilities that is available for housing these misdemeanants.
The General Assembly intends that the cost of housing and caring for these misdemeanants, including, but not limited to, care, supervision, transportation, medical, and any other related costs, be covered by State funds and not be imposed as a local cost. Therefore, the General Assembly intends that the funds in the Statewide Misdemeanant Confinement Fund established in G.S. 148‑10.4 be used to provide funding to cover the costs of managing a system for providing that housing of misdemeanants in local confinement facilities as well as reimbursing the counties for housing and related expenses for those misdemeanants.
(b2)	The Statewide Misdemeanant Confinement Program is established. The Program shall provide for the housing of misdemeanants from all counties serving sentences imposed for a period of more than 90 days and for all sentences imposed for impaired driving under G.S. 20‑138.1, regardless of length. Those misdemeanants shall be confined in local confinement facilities except as provided in subsections (b3) and (b4) of this section. The Program shall address methods for the placement and transportation of inmates and reimbursement to counties for the housing of those inmates. Any county that voluntarily agrees to house misdemeanants from that county or from other counties pursuant to the Program may enter into a written agreement with the Division of Adult Correction to do so.
This Program shall only operate as long as sufficient State funds are available through the Statewide Misdemeanant Confinement Fund established in G.S. 148‑10.4(c).
…."
SECTION 13C.3.(g)  G.S. 20‑179(f3) reads as rewritten:
"(f3)	Aggravated Level One Punishment. – A defendant subject to Aggravated Level One punishment may be fined up to ten thousand dollars ($10,000) and shall be sentenced to a term of imprisonment that includes a minimum term of not less than 12 months and a maximum term of not more than 36 months. Notwithstanding G.S. 15A‑1371, a defendant sentenced to a term of imprisonment pursuant to this subsection shall not be eligible for parole. However, the defendant shall be released from the Statewide Misdemeanant Confinement Program on the date equivalent to the defendant's maximum imposed term of imprisonment less four months and shall be supervised by the Section of Community Supervision of the Division of Adult Correction under and subject to the provisions of Article 84A of Chapter 15A of the General Statutes and shall also be required to abstain from alcohol consumption for the four‑month period of supervision as verified by a continuous alcohol monitoring system. For purposes of revocation, violation of the requirement to abstain from alcohol or comply with the use of a continuous alcohol monitoring system shall be deemed a controlling condition under G.S. 15A‑1368.4.
The term of imprisonment may be suspended only if a condition of special probation is imposed to require the defendant to serve a term of imprisonment of at least 120 days. If the defendant is placed on probation, the judge shall impose as requirements that the defendant (i) abstain from alcohol consumption for a minimum of 120 days to a maximum of the term of probation, as verified by a continuous alcohol monitoring system pursuant to subsections (h1) and (h3) of this section, and (ii) obtain a substance abuse assessment and the education or treatment required by G.S. 20‑17.6 for the restoration of a drivers license and as a condition of probation. The judge may impose any other lawful condition of probation."
SECTION 13C.3.(h)  This section becomes effective October 1, 2014, and is applicable to persons placed on probation or sentenced to imprisonment on or after January 1, 2015, for impaired driving under G.S. 20‑138.1 and is applicable to persons placed on probation or sentenced to imprisonment for all other misdemeanors other than impaired driving under G.S. 20‑138.1 on or after October 1, 2014.

HIV TESTING
SECTION 13C.4.  G.S. 148‑19.2 reads as rewritten:
"§ 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, except for those serving a period of confinement in an adult residential behavior modification center as defined in G.S. 15A‑1344.
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."

STATE COMMUNITY CORRECTIONS ADVISORY BOARD APPOINTMENT CLARIFICATION
SECTION 13C.5.  G.S. 143B‑1157(b)(1) reads as rewritten:
"(1)	The Governor shall appoint the following members: the county sheriff, the chief of a city police department, the member of the public who has been the victim of a crime, two rehabilitated ex‑offenders, and the members selected from each of the service areas.

JUVENILE FACILITIES PLAN
SECTION 13C.6.  Consistent with G.S. 143B‑806, the Department of Public Safety may use funds appropriated in the 2014‑2015 fiscal year to accomplish the operational components identified in its 2014 Juvenile Justice Facilities Strategic Plan.
Funds allocated to the Department of Public Safety from the 2013‑2014 Repairs and Renovation Reserves in the amount of one million seven hundred seventy‑four dollars ($1,774,000) for Dobbs Youth Development Center Kitchen Renovations may be used by the Department to support construction, expansions, renovations, and repairs necessary to implement the Department's 2014 Juvenile Justice Facilities Strategic Plan.

PART XIV. DEPARTMENT OF ADMINISTRATION

REVISIONS TO EUGENICS COMPENSATION PROGRAM
SECTION 14.1.(a)  G.S. 143B‑426.51 reads as rewritten:
"§ 143B‑426.51.  Compensation payments.
(a)	A claimant determined to be a qualified recipient under this Part shall receive compensation in the amount determined by this subsection from funds appropriated to the Department of State Treasurer for these purposes. A qualified recipient shall receive compensation in the form of two payments. The initial payment and largest payment shall be made on or after October 1, 2014, and prior to July 1, 2015. A second, smaller, and final payment shall be made after the exhaustion of all appeals arising from the denial of eligibility for compensation under this Part.
The initial payment to each qualified recipient will be calculated by adding together the number of qualified recipients as of the last business day prior to the initial payment and the number of claims outstanding that are pending in the appeal process, then dividing that total number into the sum of ten million dollars ($10,000,000).
The final payment calculation will be made by taking the balance of compensation funds remaining after the exhaustion of appeals and dividing that sum equally between the number of qualified recipients determined finally to be eligible to receive compensation. The final payment checks shall be remitted within 90 days of the exhaustion of the last appeal. Any qualified claimant who was successful on appeal and who did not receive an initial payment shall be paid an amount equal to the initial payment amount, plus the amount from the final payment calculation.
(b)	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.
(c)	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.
(d)	It is the public policy of this State that funds awarded for the compensation of sterilization victims under this Part may be used only for the purpose of benefiting victims and shall not be used to pay attorneys' fees arising from representation at the Office of Justice for Sterilization Victims, before the Industrial Commission, or on appeal. The General Assembly finds that qualified recipients have suffered a unique harm that calls for a unique remedy and that there are sufficient sources of assistance and pro bono legal representation available to protect their interests. Therefore, the acceptance of attorneys' fees from a qualified recipient is deemed to be an unfair trade practice under G.S. 75‑1.1."
SECTION 14.1.(b)  Section 6.18(f) reads as rewritten:
"SECTION 6.18.(f)  Of the funds appropriated to the Department of Administration, the sum of one hundred thirty thousand dollars ($130,000) is appropriated to the Office of Justice for Sterilization Victims for the 2013‑2014 fiscal year to pay the costs of administering the compensation program for sterilization victims."
SECTION 14.1.(c)  Effective July 1, 2014, there is appropriated from the General Fund to the Office of Justice for Victims Sterilization, Department of Administration, the sum of one hundred thirty thousand dollars ($130,000) for the 2014‑2015 fiscal year to pay the costs of administering the compensation program for sterilization victims.
SECTION 14.1.(d)  Section 6.18(g) of S.L. 2013‑360 reads as rewritten:
"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, and the Office of Justice for Sterilization Victims is abolished."
SECTION 14.1.(e)  This section is effective when it becomes law and applies to all claims and appeals made under Article 9 of Chapter 143B of the General Statutes.

PART XV. DEPARTMENT OF CULTURAL RESOURCES

CREATE NEW SPECIAL FUND FOR QUEEN ANNE'S REVENGE PROJECT
SECTION 15.1.  Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑53.3. Queen Anne's Revenge Project
(a)	Fund. – The Queen Anne's Revenge Project Special Fund is created as a special, interest‑bearing revenue fund within the Department of Cultural Resources, Office of Archives and History. The Fund shall consist of all receipts derived from private donations, grant funds, and earned revenue. The revenue in the Fund may be used only for contracted services, personal services and operations, conference and meeting expenses, travel, staff salaries, operations for laboratory needs, museum exhibits, and other administrative costs related to the Queen Anne's Revenge Project. The staff of the Office of Archives and History and the Department of Cultural Resources shall determine how the funds will be used for the purposes of the Queen Anne's Revenge Project and those funds are hereby appropriated for those purposes.
(b)	Application. – This section applies to the Queen Anne's Revenge, the historic shipwreck owned by the State and managed by the Department of Cultural Resources, Office of Archives and History.
(c)	Reports. – The Department of Cultural Resources shall submit a report by September 30 of each year to the Joint Legislative Commission on Governmental Operations, the House of Representatives Appropriations Subcommittee on General Government, the Senate Appropriations Committee on General Government and Information Technology, and the Fiscal Research Division. This report shall include the source and amount of all funds credited to the Fund and the purpose and amount of all expenditures from the Fund during the prior fiscal year."

HISTORIC REHABILITATION INVESTMENT PROGRAM
SECTION 15.2.  Article 3D of Chapter 105 of the General Statutes is rewritten to read:
"Article 3D.
"Historic Rehabilitation Investment Program.
"§ 105‑129.35.  Credit for rehabilitating income‑producing historic structure.
(a)	Credit. – A taxpayer who is allowed a federal income tax credit under section 47 of the Code for making qualified rehabilitation expenditures (QREs) for a certified historic structure located in this State is allowed a credit of the expenditures that qualify for the federal credit equal to the following percentages:
(1)	Base credit one: Fifteen percent (15%) of QREs up to but not exceeding ten million dollars ($10,000,000);
(2)	Base credit two: Ten percent (10%) of QREs between ten million dollars ($10,000,000) and twenty million dollars ($20,000,000);
(3)	An additional five percent (5%) of QREs up to a maximum of twenty million dollars ($20,000,000) for a certified historic structure located in a development tier one or tier two area; and
(4)	An additional five percent (5%) of QREs up to a maximum of twenty million dollars ($20,000,000) for a certified historic structure located in an eligible targeted investment site.
To claim the base credits one and/or two allowed by this subsection, the taxpayer must provide a copy of the certification obtained from the State Historic Preservation Officer verifying that the historic structure has been rehabilitated in accordance with this subsection. To claim the additional five percent (5%) credit for eligible targeted investment site allowed by this subsection, the taxpayer must provide to the Secretary a copy of the eligibility certification.
(b)	Notwithstanding the provisions of G.S. 105‑131.8 and G.S. 105‑269.15, a pass‑through entity that qualifies for the credit provided in this section may allocate the credit among any of its owners in its discretion. Owners to whom a credit is allocated are allowed the credit as if they had qualified for the credit directly. A pass‑through entity and its owners must include with their tax returns for every taxable year in which an allocated credit is claimed a statement of the allocation made by the pass‑through entity and the allocation that would have been required under G.S. 105‑131.8 or G.S. 105‑269.15.
(c)	Definitions. – The following definitions apply in this section:
(1)	Certified historic structure. – Defined in section 47 of the Code.
(1a)	Development tier area. – Defined in G.S. 143B‑437.08.
(1b)	Eligibility certification. – The certification obtained from the State Historic Preservation Officer that the site comprises an eligible targeted investment site.
(1c)	Eligible targeted investment site. – A site located in this State that satisfies all of the following conditions:
a.	It was used as a manufacturing facility or for purposes ancillary to manufacturing, as a warehouse for selling agricultural products, or as a public or private utility.
b.	It is a certified historic structure.
c.	It has been at least sixty‑five percent (65%) vacant for a period of at least two years immediately preceding the date the eligibility certification is made.
(2)	Pass‑through entity. – Defined in G.S. 105‑228.90.
(3)	Qualified rehabilitation expenditures. – Defined in section 47 of the Code.
(4)	State Historic Preservation Officer. – The Deputy Secretary of the Office of Archives and History of the North Carolina Department of Cultural Resources, or the Deputy Secretary's designee who acts to administer the historic preservation programs within the State.
"§ 105‑129.35A.  Rules; fees.
(a)	Rules. – The North Carolina Historical Commission, in consultation with the State Historic Preservation Officer, may adopt rules needed to administer the certification process required by this section.
(b)	Fees. – The North Carolina Historical Commission, in consultation with the State Historic Preservation Officer, may adopt a schedule of fees for providing certifications required by this Article. In establishing the fee schedule, the Commission shall consider the administrative and personnel costs incurred by the Department of Cultural Resources. An application fee may not exceed one percent (1%) of the completed qualifying rehabilitation expenditures. The proceeds of the fees are receipts of the Department of Cultural Resources and must be used for performing its duties under this Article.
"§ 105‑129.36.  Credit for rehabilitating nonincome‑producing historic structure.
(a)	Credit. – A taxpayer who is not allowed a federal income tax credit under section 47 of the Code and who makes rehabilitation expenses for a State‑certified historic structure located in this State is allowed a credit equal to the following percentages:
(1)	Base credit one: Twenty percent (20%) of the rehabilitation expenses incurred up to two hundred thousand dollars ($200,000) over any one 24‑month period per discrete property parcel with an assessed value equal to or less than the statewide median home value;
(2)	Base credit two: Fifteen percent (15%) of the rehabilitation expenses incurred up to two hundred thousand dollars ($200,000) over any one 24‑month period per discrete property parcel with an assessed value equal to or less than one‑hundred and fifty percent (150%) of the statewide median home value; To qualify for the credit, the taxpayer's rehabilitation expenses must exceed ten thousand dollars ($10,000) within a 24‑month period, and no credit shall be allowed for rehabilitation expenses incurred on a single State‑certified historic property in excess of two hundred thousand dollars ($200,000) over a period of five years. To claim the credit allowed by this subsection, the taxpayer must provide a copy of the certification obtained from the State Historic Preservation Officer verifying that the historic structure has been rehabilitated in accordance with this subsection.
(b)	Definitions. – The following definitions apply in this section:
(1)	Certified rehabilitation. – Repairs or alterations consistent with the Secretary of the Interior's Standards for Rehabilitation and certified as such by the State Historic Preservation Officer.
(2)	Rehabilitation expenses. – The following categories of expenses incurred in the certified rehabilitation of a certified historic structure and added to the property's basis:  the exterior of the historic structure; the interior of a window sash if work is done to the exterior of the window sash; structural elements of the historic structure; the heating or ventilating systems; electrical or plumbing systems, but not electrical or plumbing fixtures; and insulation. The term does not include the cost of acquiring the property, the cost attributable to the enlargement of an existing building, the cost of sitework expenditures, the cost of personal property, or any other interior expense.
(3)	State‑certified historic structure. – A structure that is individually listed in the National Register of Historic Places or is certified by the State Historic Preservation Officer as contributing to the historic significance of a National Register Historic District or a locally designated historic district certified by the United States Department of the Interior.
(4)	State Historic Preservation Officer. – The Deputy Secretary of Archives and History or the Deputy Secretary's designee who acts to administer the historic preservation programs within the State.
(5)	Assessed value. – The tax value of the property upon which the State‑certified historic structure is sited on the county listing as of the beginning of the year in which rehabilitation expenses on the State‑certified historic structure commence.
(6)	Statewide median home value. – The median value of owner‑occupied housing units for the state of North Carolina, as determined by the five‑year American Community Survey estimates published by the U.S. Census Bureau in the year prior to the year in which the State Historic Preservation Officer issues the certification verifying that the historic structure has been rehabilitated in accordance with this subsection.
"§ 105‑129.36A.  Rules; fees.
(a)	Rules. – The North Carolina Historical Commission, in consultation with the State Historic Preservation Officer, may adopt rules needed to administer the certification process required by this Section.
(b)	Fees. – The North Carolina Historical Commission, in consultation with the State Historic Preservation Officer, may adopt a schedule of fees for providing certifications required by this Article. In establishing the fee schedule, the Commission shall consider the administrative and personnel costs incurred by the Department of Cultural Resources. An application fee may not exceed one percent (1%) of the completed qualifying rehabilitation expenditures. The proceeds of the fees are receipts of the Department of Cultural Resources and must be used for performing its duties under this Article.
"§ 105‑129.37.  Tax credited; credit limitations.
(a)	Tax Credited. – The credits provided in this Article are allowed against the franchise tax imposed under Article 3 of this Chapter, the income taxes levied in Article 4 of this Chapter, or the gross premium tax imposed under Article 8B of this Chapter. The taxpayer may take the credits allowed by this Article against only one of the taxes against which it is allowed. The taxpayer must elect the tax against which a credit will be claimed when filing the return on which it is claimed, and this election is binding. The credit may be claimed in the year in which the certified historic structure is placed into service. When the certified historic structure is placed into service in two or more phases in different years, the amount of credit that may be claimed in a year is the amount based on the qualified rehabilitation expenditures associated with the phase placed into service during that year.
(b)	Credit Limitations. – The entire credit may be taken for the taxable year in which the property is placed in service; any unused portion of the credit may be carried forward for the succeeding nine years. A credit allowed under this Article may not exceed the amount of the tax against which it is claimed for the taxable year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer. Any carryforwards of the credit must be claimed against the same tax. 
(c)	Forfeiture for Disposition. – A taxpayer who is required under section 50 of the Code to recapture all or part of the federal credit for rehabilitating an income‑producing historic structure located in this State forfeits the corresponding part of the State credit allowed under G.S. 105‑129.35 with respect to that historic structure. If the credit was allocated among the owners of a pass‑through entity, the forfeiture applies to the owners in the same proportion that the credit was allocated.
(d)	Forfeiture for Change in Ownership. – If an owner of a pass‑through entity that has qualified for the credit allowed under G.S. 105‑129.35 disposes of all or a portion of the owner's interest in the pass‑through entity within five years from the date the rehabilitated historic structure is placed in service and the owner's interest in the pass‑through entity is reduced to less than two‑thirds of the owner's interest in the pass‑through entity at the time the historic structure was placed in service, the owner forfeits a portion of the credit. The amount forfeited is determined by multiplying the amount of credit by the percentage reduction in ownership and then multiplying that product by the forfeiture percentage. The forfeiture percentage equals the recapture percentage found in the table in section 50(a)(1)(B) of the Code. The remaining allowable credit is allocated equally among the five years in which the credit is claimed.
(e)	Exceptions to Forfeiture. – Forfeiture as provided in subsection (d) of this section is not required if the change in ownership is the result of any of the following:
(1)	The death of the owner.
(2)	A merger, consolidation, or similar transaction requiring approval by the shareholders, partners, or members of the taxpayer under applicable State law, to the extent the taxpayer does not receive cash or tangible property in the merger, consolidation, or other similar transaction.
(f)	Liability From Forfeiture. – A taxpayer or an owner of a pass‑through entity that forfeits a credit under this section is liable for all past taxes avoided as a result of the credit plus interest at the rate established under G.S. 105‑241.21, computed from the date the taxes would have been due if the credit had not been allowed. The past taxes and interest are due 30 days after the date the credit is forfeited. A taxpayer or owner of a pass‑through entity that fails to pay the taxes and interest by the due date is subject to the penalties provided in G.S. 105‑236.
"§ 105‑129.38.  Report; tracking.
(a)	The Department must include in the economic incentives report required by G.S. 105‑256 the following information itemized by taxpayer:
(1)	The number of taxpayers that took the credits allowed in this Article.
(2)	The amount of rehabilitation expenses and qualified rehabilitation expenditures with respect to which credits were taken.
(3)	The total cost to the General Fund of the credits taken per taxpayer per project.
(b)	The Department shall track the allowable credits, including credits carried forward, to each taxpayer by use of a project number generated by the State Historic Preservation Office, and shall develop a method for reporting said project number on North Carolina annual tax returns.
(c)	The Department must also include in the economic incentives report required by G.S. 105‑256 the following information:
(1)	The total amount of tax credits awarded and the total amount of tax credits claimed against current taxes, by type of tax, during the relevant tax year. 
(2)	The total amount of tax credits carried forward for future tax years, by type of tax.
"§ 105‑129.39.  Sunset.
This Article expires for qualified rehabilitation expenditures and rehabilitation expenses incurred on or after January 1, 2020."

Mill Rehabilitation Tax Credit
SECTION 15.3.(a)  G.S. 105‑129.75 reads as rewritten:
"§ 105‑129.75.  Sunset.
This Article expires January 1, 2015, for rehabilitation projects for which an application for an eligibility certification is submitted on or after that date. Eligibility certifications under this section will expire January 1, 2020."
SECTION 15.3.(b)  G.S. 105‑129.75A reads as rewritten:
"§ 105‑129.75A.  Report.
(a)	The Department must include in the economic incentives report required by G.S. 105‑256 the following information itemized by taxpayer:
(1)	The number of taxpayers that took the credits allowed in this Article.
(2)	The amount of rehabilitation expenses and qualified rehabilitation expenditures with respect to which credits were taken.
(3)	The total cost to the General Fund of the credits taken.
(b)	The Department shall track the allowable credits, including credits carried forward, to each taxpayer by use of a project number generated by the State Historic Preservation Office and shall develop a method for reporting said project number on North Carolina annual tax returns.
(c)	The Department must also include in the economic incentives report required by G.S. 105‑256 the following information:
(1)	The total amount of tax credits awarded and the total amount of tax credits claimed against current taxes, by type of tax, during the relevant tax year.
(2)	The total amount of tax credits carried forward for future tax years, by type of tax."
SECTION 15.3.(c)  Article 3H of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑129.75B.  No Double Benefit.
Eligible mill sites for which an application for an eligibility certification under Article 3H of Chapter 105 of the General Statutes is submitted prior to January 1, 2015, are not eligible for the credit allowed in Article 3D of Chapter 105 of the General Statutes, on or after January 1, 2015, unless the holder of the eligibility certification formally surrenders the certification by notarized letter submitted to the State Historic Preservation Officer."

MODIFY ROLES OF ROANOKE ISLAND COMMISSION AND DEPARTMENT OF CULTURAL RESOURCES IN MANAGING ROANOKE ISLAND FESTIVAL PARK
SECTION 15.4.(a)  G.S. 143B‑131.1 reads as rewritten:
§ 143B‑131.1.  Commission established.
There is established the Roanoke Island Commissionwithin the Department of Cultural Resources  to advise and assist the Secretary of the Department of Cultural Resources in the protection, preservation, development, and interpretation of the historical and cultural assets of Roanoke Island.
SECTION 15.4.(b)  G.S. 143B‑131.2 reads as rewritten:
§ 143B‑131.2.  Roanoke Island Commission – Purpose, powers, and duties.
(a)	The Roanoke Island Commission of the Department of Cultural Resources is created to fundraise for, and operate and administer the Roanoke Island Festival Park and other properties under the administration of the Department of Cultural Resources located on Roanoke Island having historical significance to the State of North Carolina, Dare County, or the Town of Manteo, except as otherwise determined by the Department of Cultural Resources.
(b)	The Commission shall have the following powers and duties:
(1)	To advise the Secretary of the Department of Transportation and adopt rules on matters pertaining to, affecting, and encouraging restoration, preservation, and enhancement of the appearance, maintenance, and aesthetic quality of U.S. Highway 64/264 and the U.S. 64/264 Bypass travel corridor on Roanoke Island and the grounds on Roanoke Island Festival Park. However, the local government that has jurisdiction over the affected portion of the travel corridor shall process the applications for and issue the certificates of appropriateness and shall be responsible for the enforcement of those certificates and any rules adopted pursuant to this subdivision that apply to the portion of the travel corridor within the jurisdiction of the local government. No reimbursement shall be made by the Commission to the local government for the processing of applications or issuance of certificates of appropriateness, or the enforcement of those certificates or the rules.
(2)	To operate Roanoke Island Festival Park, including the Elizabeth II State Historic Site and Visitor Center and the Elizabeth II as permanent memorials commemorating the Roanoke Voyages, 1584‑1587.
	
(3)	To advise the Secretary of the Department of Cultural Resources on matters pertinent to historical and cultural events on Roanoke Island.
(4)	With the assistance of the Department of Cultural Resources, to identify, preserve, and protect properties located on Roanoke Island having historical significance to the State of North Carolina, Dare County, or the Town of Manteo consistent with applicable State laws and rules.
(5)	With the approval of the Secretary of Cultural Resources, to establish and collect a charge for admission to any property or event operated by the Commission.
	
(6)	To cooperate with the Secretary and Department of Cultural Resources, the Secretary and Department of Transportation, the Secretary and Department of Environment and Natural Resources, and other governmental agencies, officials, and entities, and provide them with assistance and advice.
(7)	To adopt and enforce such rules, and guidelines, not inconsistent with the rules and guidelines of the Department of Cultural Resources, that the Commission deems to be reasonably necessary in order to carry out its powers and duties. Chapter 150B of the General Statutes does not apply to the adoption of rules by the Commission.
(8)	To fundraise, accept monies, gifts, donations, grants, or devises, which funds will be used by the Commission for purposes of carrying out its duties and purposes herein set forth. The Friends of Elizabeth II, Inc., shall use the balance of any unencumbered funds that were transferred to it pursuant to this subdivision only for expenses of the Commission or the properties operated by the Commission that are identified as operating or for maintenance costs by the Commission and that are requested by the Commission.
(9)	By cooperative arrangement with other agencies, groups, individuals, and other entities, to coordinate and schedule historical and cultural events on Roanoke Island.
(10)	Make recommendations to the Secretary of Cultural Resources concerning personnel and budgetary matters.

(11)	The provisions of G.S. 143‑129 and Article 3 of Chapter 143 of the General Statutes do not apply to purchases by the Roanoke Island Commission of equipment, supplies, and services. However, the Commission shall: (i) submit all proposed contracts for supplies, materials, printing, equipment, and contractual services that exceed one million dollars ($1,000,000) authorized by this subdivision to the Attorney General or the Attorney General's designee for review as provided in G.S. 114‑8.3; and (ii) include in all proposed contracts to be awarded by the Commission under this subdivision a standard clause which provides that the State Auditor and internal auditors of the Commission may audit the records of the contractor during and after the term of the contract to verify accounts and data affecting fees and performance. The Commission shall not award a cost plus percentage of cost agreement or contract for any purpose.
SECTION 15.4.(c)  G.S. 143B‑131.3 is repealed.
SECTION 15.4.(d)  G.S.143B‑131.4 reads as rewritten:
"§ 143B‑131.4.  Commission reports.
The Commission shall submit a quarterly report to the Chairs of the House Appropriations Subcommittee on General Government and the Chairs of the Senate Appropriations Committee on General Government and Information Technology and to the Fiscal Research Division of the General Assembly. The report shall include:
(1)	A summary of actions taken by the Commission consistent with the powers and duties of the Commission set forth in G.S. 143B‑131.2.
(2)	Recommendations for legislation and administrative action to promote and develop the Elizabeth II State Historic Site and Visitor Center.
(3)	An accounting of funds received and expended."
SECTION 15.4.(e)  G.S. 143B‑131.5 reads as rewritten:
"§ 143B‑131.5.  Roanoke Island Commission – Additional powers and duties; transfer of assets and liabilities.
(a)	To the extent that Chapter 1194, Session Laws of 1981, is inconsistent with this Part, the powers and duties in this Part shall control.
(b)	Effective October 1, 1994, all lawful standards, rules, regulations, guidelines, contracts, agreements, permits, bylaws, and certificates of appropriateness of or issued by the Roanoke Voyages Corridor Commission or the Roanoke Voyages and Elizabeth II Commission shall remain in effect until modified, amended, revoked, repealed, or changed (as appropriate) by the Roanoke Island Commission in accordance with law.
(c)	All the assets and liabilities of the Roanoke Voyages and Elizabeth II Commission are vested in the Roanoke Island Commission."
SECTION 15.4.(f)  G.S. 143B‑131.6 reads as rewritten:
"§ 143B‑131.6.  Roanoke Island Commission – Members; terms; vacancies; expenses; officers.
(a)	The Commission shall consist of 22 voting members appointed as follows:
(1)	Six members appointed by the Governor;
(2)	Six members appointed by the General Assembly upon the recommendation of the President Pro Tempore of the Senate, at least two of whom reside in Dare County;
(3)	Six members appointed by the General Assembly upon the recommendation of the Speaker of the House of Representatives, at least two of whom reside in Dare County; and
(4)	The following persons, or their designees, ex officio:
	
b.	The Attorney General;
	
d.	The Secretary of the Department of Transportation;
e.	The Chair of the Dare County Board of Commissioners; and
f.	The Mayor of Manteo.
(5)	The Secretary of the Department of Cultural Resources, or his/her designee, shall serve ex officio, nonvoting.
(b)	Members shall serve for two‑year terms, with no prohibition against being reappointed, except initial appointments shall be for terms as follows:
(1)	The Governor shall initially appoint three members for a term of two years and three members for a term of three years.
(2)	The General Assembly upon the recommendation of the President Pro Tempore of the Senate shall initially appoint three members for a term of two years and three members for a term of three years.
(3)	The General Assembly upon the recommendation of the Speaker of the House of Representatives shall initially appoint three members for a term of two years and three members for a term of three years.
Initial terms shall commence on October 1, 1994.
(c)	The Governor shall appoint a chair biennially from among the membership of the Commission. The initial term of the chair shall commence on October 1, 1994. The Commission shall elect from its membership a vice‑chair, a secretary, and treasurer to serve two‑year terms. 
(d)	A vacancy in the Commission resulting from the resignation of a member or otherwise, shall be filled in the same manner in which the original appointment was made, and the term 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.
(e)	The Commission members shall receive no salary as a result of serving on the Commission but shall receive per diem, subsistence, and travel expenses in accordance with the provisions of G.S. 138‑5 and G.S. 138‑6, as applicable. When approved by the Commission, members may be reimbursed for subsistence and travel expenses in excess of the statutory amount.
(f)	Members may be removed in accordance with G.S. 143B‑13 as if that section applied to this Part.
(g)	The chair shall convene the Commission. Meetings shall be held as often as necessary, but not less than four times a year.
(h)	A majority of the members of the Commission shall constitute a quorum for the transaction of business. The affirmative vote of a majority of the members present at meetings of the Commission shall be necessary for action to be taken by the Commission.
(i)	The Commission shall make its recommendations by March 15 of each year that terms expire for appointments for terms commencing July 1 of that year."
SECTION 15.4.(g)  G.S. 143B‑131.8A reads as rewritten:
"§ 143B‑131.8A.  Historic Roanoke Island Fund.
(a)	The Historic Roanoke Island Fund is established as a nonreverting enterprise fund and shall be administered by the Department of Cultural Resources. All operating revenues generated by the Roanoke Island Commission, including revenues collected from any property operated by the Roanoke Island Commission, together with all gifts, grants, donations, or other financial assets of whatever kind received or held by the Roanoke Island Commission shall be credited to the Historic Roanoke Island Fund and shall be used only (i) for the expenses of operating and maintaining the Roanoke Island Commission and the properties managed by the Roanoke Island Commission, including the salaries and benefits of Roanoke Island Festival Park staff, (ii) to carry out any of the other duties and purposes set out by this Part, or (iii) for capital expenditures for the properties operated by the Commission.
(b)	The Department of Cultural Resources shall  transfer to the Fund on a monthly basis a pro rata share of the utilities, maintenance, and operating expenses of the Outer Banks History Center, which is located in the facility owned by the Commission. The funds received pursuant to this subsection shall be credited to the Historic Roanoke Island Fund.
(c)	The Department of Cultural Resources shall credit to the Historic Roanoke Island Fund all rental proceeds received by the Department from the rental properties located near the Outer Banks Island Farm."
SECTION 15.4.(h)  G.S. 143B‑131.9 reads as rewritten:
"§ 143B‑131.9.  Roanoke Island Festival Park staff.
The Commission shall serve as a search committee to seek out, interview, and recommend to the Secretary of Cultural Resources an Executive Director of Roanoke Island Festival Park. The Executive Director, Assistant Directors, and Curators shall be exempt from: (i) the classification and compensation rules established by the State Human Resources Commission pursuant to G.S. 126‑4(1) through (4); (ii) G.S. 126‑4(5) only as it applies to hours and days of work, vacation, and sick leave; (iii) G.S. 126‑4(6) only as it applies to promotion and transfer; (iv) G.S. 126‑4(10) only as it applies to the prohibition of the establishment of incentive pay programs; and (v) Article 2 of Chapter 126 of the General Statutes, except for G.S. 126‑7.1.All employees of the Commission shall be transferred to the Department of Cultural Resources but shall be paid for by the Commission. Except as otherwise provided in this section, all employees who are transferred from the Commission to the Department of Cultural Resources shall retain the same designation under the North Carolina Human Resources Act, Chapter 126 of the General Statutes, as they had prior to the transfer."

EXEMPT THE DEPARTMENT OF CULTURAL RESOURCES FROM OPERATING RULES REQUIREMENTS RELATED TO HISTORIC SITES AND MUSEUMS
SECTION 15.5.(a)  G.S. 121‑7.3 reads as rewritten:
"§ 121‑7.3.  Admission and related activity fees and operating hours.
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 and G.S. 12‑3.1 when adopting, amending, or repealing rules for operating hours and 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 15.5.(b)  G.S. 143B‑71 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 and G.S. 12‑3.1 when adopting, amending, or repealing rules for operating hours and 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 15.5.(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 and section 12‑3.1 of the General Statutes when adopting, amending, or repealing rules for operating hours and 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."

PART XVA. Housing Finance agency

HOUSING FINANCE AGENCY LOW-INCOME HOUSING LOAN PROGRAM FOR QUALIFIED LOW-INCOME HOUSING DEVELOPMENT IN TIER ONE AND TIER TWO COUNTIES
SECTION 15A.(a)  There is appropriated from the General Fund to the North Carolina Housing Finance Agency (hereinafter "Housing Finance Agency") the sum of two million dollars ($2,000,000) in nonrecurring funds for the 2014‑2015 fiscal year for the purpose of making loans for qualified North Carolina low‑income housing development in development tier one and tier two areas.
SECTION 15A.(b)  the following definitions apply in this section:
(1)	Code. – As defined in G.S. 105‑228.90.
(2)	Development tier. – As defined in G.S. 143B‑437.08.
(3)	Qualified North Carolina low‑income housing development. – A qualified low‑income project or building that is allocated a federal tax credit under section 42(h)(1) of the Code.
(4)	Qualified residential unit. – A housing unit that meets the requirements of section 42 of the Code and is located in a development tier one or tier two areas.
SECTION 15A.(c)  The Housing Finance Agency shall make loans for funds appropriated in this section to a taxpayer who is allocated a federal low‑income housing tax credit under section 42 of the Code to construct or substantially rehabilitate a qualified North Carolina low‑income housing development if the development is located in a development tier one or tier two areas. The amount of the loan to the taxpayer shall equal the funds appropriated in this section divided by the number of qualified residential units constructed or substantially rehabilitated in the 2014‑2015 fiscal year and then multiplied by the number of qualified residential units constructed or substantially rehabilitated by the taxpayer in the 2014‑2015 fiscal year.
SECTION 15A.(d)  The Housing Finance Agency shall establish rules and regulations, including terms and conditions, for making loans under this section. By September 1, 2014, and more frequently as requested, the Housing Finance Agency shall report to the Joint Legislative Committee on Governmental Operations and the Fiscal Research Division regarding the rules and regulations established pursuant to this subsection.

PART XVI. OFFICE OF STATE BUDGET AND MANAGEMENT

USS NORTH CAROLINA BATTLESHIP CHALLENGE GRANT/OSBM‑SPECIAL APPROPRIATIONS
SECTION 16.1.(a)  Of the funds appropriated in this act to the Office of State Budget and Management‑Special Appropriations, the sum of three million dollars ($3,000,000) in nonrecurring funds for the 2014‑2015 fiscal year shall be allocated to the Office of State Budget and Management and transferred to the Department of Cultural Resources in order to establish a Capital Improvement Project for the North Carolina Battleship in accordance with this section. It is the intent of the General Assembly that the North Carolina Battleship Commission raise at least five million dollars ($5,000,000) in non‑State funds for the 2014‑2015 fiscal year. The North Carolina Battleship Commission cannot use funds transferred from the organization's endowment to its operating budget to achieve the fund‑raising targets set out in subsection (b) of this section.
SECTION 16.1.(b)  For the 2014‑2015 fiscal year, the Department of Cultural Resources will establish a Capital Improvement Project to construct a cofferdam for the North Carolina Battleship that will enable completion of major hull repairs. Funds will be transferred to the Department of Cultural Resources from the Office of State Budget and Management as follows:
(1)	Upon raising the initial sum of three million dollars ($3,000,000) in non‑State funding, the sum of one million dollars ($1,000,000) will be transferred.
(2)	Upon raising an additional sum of one million dollars ($1,000,000) in non‑State funding for a total amount of four million dollars ($4,000,000) in non‑State funds, the sum of one million dollars ($1,000,000) will be transferred.
(3)	Upon raising an additional sum of one million dollars ($1,000,000) in non‑State funding for a total sum of five million dollars ($5,000,000) in non‑State funds, the final sum of one million dollars ($1,000,000), for a total sum of three million dollars ($3,000,000) will be transferred to the Capital Improvement Project for the North Carolina Battleship in the 2014‑2015 fiscal year.

ECONOMIC DEVELOPMENT FUND/OSBM‑SPECIAL APPROPRIATIONS
SECTION 16.2.(a)  There is appropriated from the General Fund to the Office of State Budget and Management‑Special Appropriations the sum of one million dollars ($1,000,000) in nonrecurring funds for the 2014‑2015 fiscal year for a working group established by the Governor to develop actionable recommendations to enhance the number and business activities of venture capital firms operating in North Carolina. Recommendations may include, but are not limited to, establishing a clearinghouse of information and support for prospective companies seeking venture capital. Recommendations which facilitate collaboration and commercialization of university expertise, capabilities, and technologies are expected. The group may also provide legislative recommendations that promote long-term job creation over product licensing arrangements.
SECTION 16.2.(b)  Of the funds appropriated in this act to the Office of State Budget and Management‑Special Appropriations, grants shall be allocated to support pilot projects, implement programs, and fund recommendations of the working group. The State Budget Director must authorize each grant prior to allocation.

PART XVII. DEPARTMENT OF REVENUE

TAX INFORMATION MANAGEMENT SYSTEM
SECTION 17.1.  Section 7.17(e) of S.L. 2013‑360 reads as rewritten:
"SECTION 7.17.(e)  Internal Costs. – For the 2014‑2015 fiscal year the Department of Revenue may retain an additional sum of ten million two hundred five thousand nine hundred forty‑two dollars (10,205,942) 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 2014‑2015 fiscal year, and such funds are hereby appropriated for this purpose.

LOCATOR SERVICES
SECTION 17.2.  G.S. 105‑243.1(e)(3) reads as rewritten:
"(3)	To pay for taxpayer locator services, not to exceed five hundred thousand dollars ($500,000) a year."

ABC PERMIT/TAX COMPLIANCE PROGRAM
SECTION 17.3.(a)  G.S. 18B‑900 reads as rewritten:
"§ 18B‑900.  Qualifications for permit.
(a)	Requirements. – To be eligible to receive and to hold an ABC permit, a person shall satisfy all of the following requirements:
(1)	Be at least 21 years old, unless the person is a manager of a business selling only malt beverages and unfortified wine, in which case the person shall be at least 19 years old.
(2)	Be a resident of North Carolina unless:
a.	He is an officer, director or stockholder of a corporate applicant or permittee and is not a manager or otherwise responsible for the day‑to‑day operation of the business; or
b.	He has executed a power of attorney designating a qualified resident of this State to serve as attorney in fact for the purposes of receiving service of process and managing the business for which permits are sought; or
c.	He is applying for a nonresident malt beverage vendor permit, a nonresident wine vendor permit, or a vendor representative permit.
(3)	Not have been convicted of a felony within three years, and, if convicted of a felony before then, shall have had his citizenship restored.
(4)	Not have been convicted of an alcoholic beverage offense within two years.
(5)	Not have been convicted of a misdemeanor controlled substance offense within two years.
(6)	Not have had an alcoholic beverage permit revoked within three years, except where the revocation was based solely on a permittee's failure to pay the annual registration and inspection fee required in G.S. 18B‑903(b1).
(7)	Not have, whether as an individual or as an officer, director, shareholder or manager of a corporate permittee, an unsatisfied outstanding final judgment that was entered against him in an action under Article 1A of this Chapter.
(8)	Be current in filing all applicable tax returns to the State and in payment of all taxes, interest, and penalties that are collectible under G.S. 105‑241.22. The following ABC permits may be issued notwithstanding the requirements of subdivision (8) of this section:
a.	Special occasion permit under G.S. 18B‑1001(8).
b.	Limited special occasion permit under G.S. 18B‑1001(9).
c.	Special one‑time permit under G.S. 18B‑1002.
d.	Temporary permit under G.S. 18B‑905.
To avoid undue hardship, however, the Commission may decline to take action under G.S. 18B‑104 against a permittee who is in violation of subdivisions (3), (4), or (5).
…
(f)	Procedure to Confirm State Tax Compliance. – Upon request of the Commission, the Department of Revenue must provide information to the Commission to confirm a person's compliance with subdivision (a)(8) of this section. If the Department of Revenue notifies the Commission that a person is not in compliance, then the Commission may not issue or renew the person's permit until the Commission receives notice from the Department of Revenue that the person is in compliance. The requirement to pay all taxes, interest, and penalties may be satisfied by an operative agreement under G.S. 105‑237 covering any amounts that are collectible under G.S. 105‑241.22. Chapter 150B of the General Statutes does not apply to a Commission action on issuance, suspension, or revocation of an ABC permit under subdivision (a)(8) of this section."
SECTION 17.3.(b)  G.S. 18B‑906(a) reads as rewritten:
"(a)	Act Applies. – An ABC permit is a "license" within the meaning of G.S. 150B‑2, and, except for revocation pursuant to G.S. 18B‑904(e)(3) or G.S. 18B‑900(a)(8), a Commission action on issuance, suspension, or revocation of an ABC permit, other than a temporary permit issued under G.S. 18B‑905, is a "contested case" subject to the provisions of Chapter 150B except as provided in this section."
SECTION 17.3.(c)  G.S. 105‑259(b) is amended by adding a new subdivision to read:
"(b)	Disclosure Prohibited. – An officer, an employee, or an agent of the State who has access to tax information in the course of service to or employment by the State may not disclose the information to any other person except as provided in this subsection. Standards used or to be used for the selection of returns for examination and data used or to be used for determining the standards may not be disclosed for any purpose. All other tax information may be disclosed only if the disclosure is made for one of the following purposes:
…
(46)	To provide the Alcoholic Beverage Control Commission the information required under G.S. 18B‑900."
SECTION 17.3.(d)  This section is effective when it becomes law.

DEDUCTION FOR STATE NET LOSS
SECTION 17.4.(a)  G.S. 105‑130.5(b) reads as rewritten:
"(b)	The following deductions from federal taxable income shall be made in determining State net income:
…
(4)	Losses in the nature of net economic losses sustained by the corporation in any or all of the 15 preceding years pursuant to the provisions of G.S. 105‑130.8. A corporation required to allocate and apportion its net income under the provisions of G.S. 105‑130.4 shall deduct its allocable net economic loss only from total income allocable to this State pursuant to the provisions of G.S. 105‑130.8. This subdivision expires for taxable years beginning on or after January 1, 2030.
(4a)	A State net loss as allowed under G.S. 105‑130.8A. A corporation may deduct its allocable and apportionable State net loss only from total income allocable and apportionable to this State.
.…"
SECTION 17.4.(b)  G.S. 105‑130.8 is repealed.
SECTION 17.4.(c)  Part 1 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑130.8A.  Net loss provisions.
(a)	State Net Loss. – A taxpayer's State net loss for a taxable year is the amount by which allowable deductions for the year, other than prior year losses, exceed gross income under the Code for the year adjusted as provided in G.S. 105‑130.5. In the case of a corporation that has income from business activity within and without this State, the loss must be allocated and apportioned to this State in the year of the loss in accordance with G.S. 105‑130.4.
(b)	Deduction. – A taxpayer may carry forward a State net loss the taxpayer incurred in a prior taxable year and deduct it in the current taxable year, subject to the following limitations:
(1)	The loss was incurred in one of the preceding 15 taxable years.
(2)	Any loss carried forward is applied to the next succeeding taxable year before any portion of it is carried forward and applied to a subsequent taxable year.
(c)	Mergers and Acquisitions. – The Secretary must apply the standards contained in regulations adopted under sections 381 and 382 of the Code in determining the extent to which a loss survives a merger or an acquisition.
(d)	Administration. – A taxpayer claiming a deduction under this section must maintain and make available for inspection by the Secretary all records necessary to determine and verify the amount of the deduction. The Secretary or the taxpayer may redetermine a loss originating in a taxable year that is closed under the statute of limitations for the purpose of determining the amount of loss that can be carried forward to a taxable year that remains open under the statute of limitations.
(e)	Net Economic Loss Carryforward. – For taxable years beginning before January 1, 2015, a taxpayer is allowed a net economic loss as calculated under G.S. 105‑130.8. In determining and verifying the amount of a net economic loss incurred or carried forward for taxable years beginning before January 1, 2015, the provisions of G.S. 105‑130.8 apply. Any unused portion of a net economic loss carried forward to taxable years beginning on or after January 1, 2015, is administered in accordance with this section. This subsection expires for taxable years beginning on or after January 1, 2030."
SECTION 17.4.(d)  This section becomes effective for taxable years beginning on or after January 1, 2015.

PART XVIII. DEPARTMENT OF TRANSPORTATION

REDIRECT NONADMINISTRATIVE INSPECTION TAX PROCEEDS TO THE LEAKING UNDERGROUND STORAGE TANK FUND
SECTION 18.1.  G.S. 119‑18(b) reads as rewritten:
"(b)	Proceeds. – The proceeds of the inspection tax levied by this section shall be applied first to the costs of administering this Article and Subchapter V of Chapter 105 of the General Statutes. The remainder of the proceeds shall be credited on a monthly basis to the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund and the Noncommercial Leaking Petroleum Underground Storage Tank Cleanup Fund. If the amount of revenue in the Noncommercial Fund at the end of a month is at least five million dollars ($5,000,000), one‑half of the remainder of the proceeds shall be credited to the Noncommercial Fund, and one‑half of the remainder of the proceeds shall be credited to the Commercial Fund. If the amount of revenue in the Noncommercial Fund at the end of a month is less than this threshold amount, all of the remainder of the proceeds shall be credited to the Noncommercial Fund."

REQUIREMENT FOR THE DEPARTMENT OF TRANSPORTATION TO SELL THE SIKORSKY HELICOPTER
SECTION 18.2.(a)  The Department of Transportation shall sell the Sikorsky S‑76C+ helicopter as soon as practicable. Since the helicopter was originally purchased by the Department of Commerce from General Fund appropriations, the net proceeds from the sale shall be remitted to the State Treasurer for deposit into the General Fund.
SECTION 18.2.(b)  A recurring appropriation from the Highway Fund of one hundred fifty thousand dollars ($150,000) for the 2014‑2015 fiscal year is appropriated to the Division of Aeronautics to contract for helicopter services on an as‑needed basis for State business.
SECTION 18.2.(c)  This section is effective when it becomes law.

AMENDMENT ENABLING REMOTE DRIVERS LICENSE RENEWALS
SECTION 18.3.  G.S. 20‑7(f) is amended by adding a new subdivision to read:
"(f)	Duration and Renewal of Licenses. – Drivers licenses shall be issued and renewed pursuant to the provisions of this subsection:
…
(6)	Remote renewal of drivers license. –
a.	Notwithstanding any other requirements of this Article, the Division may offer remote renewal to a person residing in this State of a Class C drivers license previously issued under subdivision (f)(2a) of this section, provided that the license holder meets the following requirements:
1.	The license holder possesses a valid, unexpired Class C drivers license and is otherwise eligible for renewal;
2.	The license holder holds a license with no restrictions other than a restriction for corrective lenses;
3.	The license holder is able to attest to the following:
I.	The license holder is a resident of the State and currently resides at the address on the license to be renewed;
II.	The license holder's name as it appears on the license to be renewed has not changed;
III.	To all other information required by the Division for an in‑person renewal under this Article.
4.	The most recent renewal was not a renewal under this subsection.
b.	Waiver of requirements. – When renewing a drivers license pursuant to subdivision (f)(6), the Division may waive the examination and photograph that would otherwise be required for the renewal.
c.	Duration of remote renewal. – A renewed drivers license issued to a person by remote renewal under this subsection expires four years after the expiration date of the license that is renewed.
d.	Manner of remote renewal. – The Division is authorized to process remote renewals of drivers licenses by secure means approved by the Commissioner, including, but not limited to, mail, telephone, electronic or Internet, and automated self‑service kiosks.
e.	The Division may adopt rules to implement this section.
f.	The Division is authorized to charge a service fee for remote renewal of not more than five dollars ($5.00)."

DEPARTMENT OF TRANSPORTATION SUPPLEMENTAL APPROPRIATION
SECTION 18.4.  The North Carolina State Health Plan has chosen to forgo the premium increase scheduled for January 2015. Therefore, the corresponding employer contribution is reduced. The North Carolina Department of Transportation has an excess appropriation of one million fifty thousand dollars ($1,050,000) for the 2014‑2015 fiscal year which is no longer needed and shall be redirected and appropriated on a recurring basis to the Department of Transportation General Maintenance Reserve.

PART XIX. OFFICE OF STATE HUMAN RESOURCES

AMEND EFFECTIVE DATE FOR ORGANIZATIONAL AND ADMINISTRATIVE CHANGES RELATED TO THE OFFICE OF STATE HUMAN RESOURCES
SECTION 19.1.  Section 1.5 of S.L. 2013‑382 reads as rewritten:
"SECTION 1.5. This Part becomes effective July 1, 2015."

STREAMLINE HUMAN RESOURCES APPEALS PROCESS
SECTION 19.2.(a)  G.S. 126‑34.02 reads as rewritten:
"§ 126‑34.02.  Grievance appeal process; grounds
(a)	Once a final agency decision has been issued in accordance with G.S. 126‑34.01, an applicant for State employment, a State employee, or former State employee may file an appeal to the State Human Resources Commission. The Commission shall appoint a hearing officer to make a complete record in the appeal. The appeal to the State Human Resources Commission must be filed within 30 days of receipt of the final agency decision. Except for cases of extraordinary cause shown, the hearing officer shall hear and issue a final decision within 90 days from the commencement of the appeal. In deciding cases under this section, the State Human Resources Commission may grant the following relief:
(1)	Reinstate any employee to the position from which the employee has been removed.
(2)	Order the employment, promotion, transfer, or salary adjustment of any individual to whom it has been wrongfully denied.
(3)	Direct other suitable action to correct the abuse which may include the requirement of payment for any loss of salary which has resulted from the improper action of the appointing authority.
An aggrieved party in a contested case under this section shall be entitled to judicial review of a final decision by appeal to the Court of Appeals as provided in G.S. 7A‑29(a). The procedure for the appeal shall be as provided by the rules of appellate procedure. The appeal shall be taken within 30 days of receipt of the written notice of final decision. A notice of appeal shall be filed with the State Human Resources Commission and served on all parties to the appeal.
…
(c)	Any issue for which an appeal to the State Human Resources Commission has not been specifically authorized by this section shall not be grounds for an appeal.
(d)	In appeals conducted pursuant to this section, the burden of showing that a career State employee was discharged, demoted, or suspended for just cause rests with the employer. In all other contested cases, the burden of proof rests on the employee.
(e)	The State Human Resources Commission may award attorneys' fees to an employee where reinstatement or back pay is ordered or where an employee prevails in a whistleblower grievance. The remedies provided in this subsection in a whistleblower appeal shall be the same as those provided in G.S. 126‑87.
(f)	The Office of State Human Resources shall report to the Joint Legislative Administrative Procedure Oversight Committee on the number of cases filed under this section and on the number of days between filing and closing of each case. The report shall be filed on a semiannual basis."
SECTION 19.2.(b)  G.S. 126‑34.2 reads as rewritten:
"§ 126‑34.2.  Alternative dispute resolution.
In its discretion, the Commission may adopt alternative dispute resolution procedures for the resolution of matters constituting and not constituting grounds for a grievance under this Article. Any matters not constituting grounds for an appeal under G.S. 126‑34.02 shall not be heard by the State Human Resources Commission."
SECTION 19.2.(c)  G.S. 126‑34.3 reads as rewritten:
"§ 126‑34.3.  Judicial review of fee awards.
With respect to a decision of the State Human Resources Commission assessing or refusing to assess reasonable witness fees or a reasonable attorneys' fee, the decision shall be subject to judicial review in accordance with G.S. 126‑34.02(a). The reviewing court may reverse or modify the decision of the State Human Resources Commission if the decision is unreasonable or the award is inadequate. An employee who obtains a reversal or modification of the State Human Resources Commission's decision in an appeal under this section shall be entitled to recover court costs and a reasonable attorneys' fee for representation in connection with the appeal."
SECTION 19.2.(d)  G.S. 126‑35(a) reads as rewritten:
"§ 126‑35.  Just cause; disciplinary actions for State employees.
(a)	No career State employee subject to the North Carolina Human Resources Act shall be discharged, suspended, or demoted for disciplinary reasons, except for just cause. In cases of such disciplinary action, the employee shall, before the action is taken, be furnished with a statement in writing setting forth the specific acts or omissions that are the reasons for the disciplinary action and the employee's appeal rights. The employee shall be permitted 15 days from the date the statement is delivered to appeal to the head of the agency through the agency grievance procedure for a final agency decision. However, an employee may be suspended without warning for causes relating to personal conduct detrimental to State service, pending the giving of written reasons, in order to avoid undue disruption of work or to protect the safety of persons or property or for other serious reasons. If the employee is not satisfied with the final agency decision or is unable, within a reasonable period of time, to obtain a final agency decision, the employee may appeal to the State Human Resources Commission. Such appeal shall be filed not later than 30 days after receipt of notice of the final agency decision. The State Human Resources Commission may adopt, subject to the approval of the Governor, rules that define just cause."

NC OFFICE OF STATE HUMAN RESOURCES
SECTION 19.3.(a)  G.S. 150B‑2(8a) reads as rewritten:
"(8a)	"Rule" means any agency regulation, standard, or statement of general applicability that implements or interprets an enactment of the General Assembly or Congress or a regulation adopted by a federal agency or that describes the procedure or practice requirements of an agency. The term includes the establishment of a fee and the amendment or repeal of a prior rule. The term does not include the following:
a.	Statements concerning only the internal management of an agency or group of agencies within the same principal office or department enumerated in G.S. 143A‑11 or 143B‑6, including policies and procedures manuals, if the statement does not directly or substantially affect the procedural or substantive rights or duties of a person not employed by the agency or group of agencies, including job classification standards, job qualifications, and salaries established for positions under the jurisdiction of the State Human Resources Commission.
…
	
…."
SECTION 19.3.(b)  G.S. 126‑5(e) reads as rewritten:
"(e)	An exempt employee may be transferred, demoted, or separated from his or her position by the department head authorized to designate the exempt position except:
(1)	When an employee who has the minimum service requirements described in G.S. 126‑1.1 but less than 10 years of cumulative service, including the immediately preceding 12 months, in subject positions prior to placement in an exempt position is removed from an exempt position, for reasons other than just cause, the employee shall have priority to any position that becomes available for which the employee is qualified, according to rules and regulations regulating and defining priority as promulgated by the State Human Resources Commission; or
(2)	When an employee who has 10 years or more cumulative service, including the immediately preceding 12 months, in subject positions prior to placement in an exempt position is removed from an exempt position, for reasons other than just cause, the employee shall be reassigned to a subject position within the same department or agency, or if necessary within another agency, at the same grade and salary, including all across‑the‑board increases since placement in the position designated as exempt, as his most recent subject position.
(3)	When an employee who has 10 years or more cumulative service as a career State employee as defined in G.S. 126‑1.1, moves from one exempt position covered by this subsection to another exempt position covered by this subsection without a break in service, and that employee is later removed from the last exempt position, for reasons other than just cause, the employee shall be reassigned to a subject position within the same department or agency, or if necessary within another agency, at the same grade and salary as his most recent subject position, including all across‑the‑board increases since placement in the position designated as exempt."
SECTION 19.3.(c)  Section 8.3 of S.L. 2013‑382 is hereby amended to read as follows:
"SECTION 8.3. This Part is effective when it becomes law and expires June 30, 2015. The Office of State Personnel and the Office of State Budget and Management shall report to the Joint Legislative Commission on Governmental Operations on January 31, 2014, April 30, 2014, September 1, 2014, January 31, 2015, April 30, 2015, and September 1, 2015."

PART XX. INFORMATION TECHNOLOGY SERVICES

UNMANNED AIRCRAFT
SECTION 20.1.  Section 7.16(e) of S.L. 2013‑360 reads as rewritten:
"SECTION 7.16.(e)  Until December 31, 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."

STRATEGIC PLAN FOR A STATEWIDE ENTERPRISE RESOURCE PLANNING SYSTEM
SECTION 20.2.(a)  Of the nine million dollars ($9,000,000) in nonrecurring funds appropriated and placed in a special information technology fund in fiscal year 2013‑2014 to the Department of Public Safety for an Enterprise Resource Planning System, seven million dollars ($7,000,000) shall revert to the General Fund on June 30, 2014. The remaining two million dollars ($2,000,000) shall be transferred to the Information Technology Fund. These funds shall be used by the State Chief Information Officer, in conjunction with the NC Government Efficiency and Reform Initiative (NC GEAR), and the State Controller to develop a strategic implementation plan for a Statewide Enterprise Resource Planning System. The plan will be submitted to the Joint Legislative Oversight Committee on Information Technology by January 31, 2015.
SECTION 20.2.(b)  This section becomes effective June 30, 2014.

PART XXI. SALARIES AND BENEFITS

GOVERNOR AND COUNCIL OF STATE
SECTION 21.1.(a)  Effective for the 2014‑2015 fiscal year, the annual salary of the Governor set by G.S. 147‑11(a) shall be set at the amount of one hundred forty‑two thousand seventy‑four dollars ($142,074).
SECTION 21.1.(b)  Effective for the 2014‑2015 fiscal year, the annual salaries for members of the Council of State, payable monthly, shall be set as follows:
Council of State	Annual Salary
Lieutenant Governor	$	125,485
Attorney General	125,485
Secretary of State	125,485
State Treasurer	125,485
State Auditor	125,485
Superintendent of Public Instruction	125,485
Agriculture Commissioner	125,485
Insurance Commissioner	125,485
Labor Commissioner	125,485

CERTAIN EXECUTIVE BRANCH OFFICIALS
SECTION 21.2.  Effective for the 2014‑2015 fiscal year, the annual salaries, payable monthly, for the following executive branch officials shall be set as follows:
Executive Branch Officials	Annual Salary
Chairman, Alcoholic Beverage Control Commission	$	111,677
State Controller	155,968
Commissioner of Banks	125,485
Chair, Board of Review, Division of Employment Security	123,064
Members, Board of Review, Division of Employment Security	121,546
Chairman, Parole Commission	102,044
Members of the Parole Commission	94,273
Chairman, Utilities Commission	139,658
Members of the Utilities Commission	125,485
Executive Director, North Carolina
Agricultural Finance Authority	108,724

JUDICIAL BRANCH
SECTION 21.3.(a)  Effective for the 2014‑2015 fiscal year, the annual salaries, payable monthly, for specified judicial branch officials shall be set as follows:
Judicial Branch Officials	Annual Salary
Chief Justice, Supreme Court	$	143,432
Associate Justice, Supreme Court	139,705
Chief Judge, Court of Appeals	137,491
Judge, Court of Appeals	133,918
Judge, Senior Regular Resident Superior Court	130,301
Judge, Superior Court	126,684
Chief Judge, District Court	115,110
Judge, District Court	111,493
District Attorney	121,546
Administrative Officer of the Courts	129,068
Assistant Administrative Officer of the Courts	117,961
Public Defender	121,546
Director of Indigent Defense Services	125,307
SECTION 21.3.(b)  Effective for the 2014‑2015 fiscal year, the annual salaries of employees of the Judicial Department shall be set 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 be increased by eight hundred nine dollars ($809.00).
(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.
SECTION 21.3.(c)  Notwithstanding any other provision of law, magistrates and assistant and deputy clerks of courts under G.S. 7A‑171.1 and G.S. 7A‑102 shall receive the following salary increases, effective July 1, 2014:
(1)	Any magistrate or assistant or deputy clerk who is eligible to receive a step increase on June 30, 2014, shall receive a step increase effective July 1, 2014.
(2)	For any permanent full‑time magistrate or assistant or deputy clerk who is not eligible to receive a step increase on June 30, 2014, the salary in effect June 30, 2014, shall be increased by eight hundred nine dollars ($809.00), effective July 1, 2014.
(3)	For any part‑time magistrate or assistant or deputy clerk who is not eligible to receive a step increase on June 30, 2014, the salary in effect June 30, 2014, shall be increased by a proportionate amount of the eight hundred nine dollars ($809.00) based on the number of hours worked, effective July 1, 2014.
SECTION 21.3.(d)  G.S. 7A‑102(c1) reads as rewritten:
"(c1)	A full‑time assistant clerk or a full‑time deputy clerk, and up to one full‑time deputy clerk serving as head bookkeeper per county, shall be paid an annual salary subject to the following minimum and maximum rates:
Assistant Clerks and Head Bookkeeper	Annual Salary
Minimum	 $33,418
Maximum	 $56,233
Deputy Clerks	Annual Salary
Minimum	 $29,032
Maximum	 $43,916."
SECTION 21.3.(e)  G.S. 7A‑171.1(a)(1) reads as rewritten:
"(1)	A full‑time magistrate shall be paid the annual salary indicated in the table set out in this subdivision. A full‑time magistrate is a magistrate who is assigned to work an average of not less than 40 hours a week during the term of office. The Administrative Officer of the Courts shall designate whether a magistrate is full‑time. Initial appointment shall be at the entry rate. A magistrate's salary shall increase to the next step every two years on the anniversary of the date the magistrate was originally appointed for increases to Steps 1 through 3, and every four years on the anniversary of the date the magistrate was originally appointed for increases to Steps 4 through 6. 
Table of Salaries of Full‑Time Magistrates
Step Level	Annual Salary
Entry Rate	 $33,834
Step 1	35,951
Step 2	39,135
Step 3	42,640
Step 4	46,551
Step 5	50,959
Step 6	 55,901
Maximum Rate	56,710."

LEGISLATIVE BRANCH
SECTION 21.4.  Effective upon the convening of the 2015 General Assembly, the salaries of members and officers of the General Assembly shall be increased by eight hundred nine ($809.00), in addition to the amounts set under G.S. 120‑3, as provided in 1994 by the 1993 General Assembly.
Effective for the 2014‑2015 fiscal year, salaries in the legislative branch shall be set as follows:
(1)	The annual salaries set by G.S. 120‑37(c) for the principal clerks in each house shall be increased by eight hundred nine dollars ($809.00).
(2)	The annual salaries set by G.S. 120‑37(b) of the sergeant‑at‑arms and the reading clerk in each house shall be increased by eight hundred nine dollars ($809.00).
(3)	The annual salaries of the Legislative Services Officer and of nonelected employees of the General Assembly set under G.S. 120‑32 shall be increased by eight hundred nine dollars ($809.00).

COMMUNITY COLLEGES PERSONNEL
SECTION 21.5.(a)  The annual salaries of all community college nonfaculty and professional staff whose salaries are supported from the State's General Fund shall be increased by $809 for the 2014‑2015 fiscal year.
SECTION 21.5.(b)  For the 2014‑2015 fiscal year, the annual salaries of all community college faculty whose salaries are supported from the State's General Fund shall be increased by eight hundred nine dollars ($809.00). The minimum salaries for nine‑month, full‑time curriculum community college faculty shall be set as follows:
Education Level	Minimum Salary
Vocational Diploma/Certificate or Less	$35,123
Associate Degree or Equivalent	35,628
Bachelor's Degree	37,818
Masters Degree or Education Specialist	39,761
Doctoral Degree	42,562
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 21.6.(a)  The annual salaries 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 be increased by eight hundred nine dollars ($809.00) for the 2014‑2015 fiscal year.
SECTION 21.6.(b)  The annual salaries of all employees of the University of North Carolina Health Care System and the Medical Faculty Practice Plan at East Carolina University shall be increased by eight hundred nine dollars ($809.00) for the 2014‑2015 fiscal year.

MOST STATE EMPLOYEES
SECTION 21.7.(a)  For the 2014‑2015 fiscal year, unless otherwise specified in this act, the salaries in effect June 30, 2014, for the following employees shall be increased by eight hundred nine dollars ($809.00), effective July 1, 2014:
(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.
SECTION 21.7.(b)  For the 2014‑15 fiscal year, the rate of pay for temporary State employees and permanent hourly State employees may be increased on an equitable basis (i) subject to the availability of funds in the employing State agency, department, or institution and (ii) within regular State Budget Act procedures consistent with this act.

ALL STATE‑SUPPORTED PERSONNEL/SALARY INCREASES
SECTION 21.8.(a)  Increases to salaries and related benefits authorized under this act for the 2014‑2015 fiscal year are appropriated directly to the departments and agencies as herein described. Any unexpended salary and related benefits balances shall be returned to the Office of State Budget and Management by December 31, 2014, and transferred to a Statewide Reserve. The Director of the Budget shall transfer from the Statewide Reserve for the 2014‑2015 fiscal year any additional funds necessary for the salary increases provided by this Act, including funds for the employers' retirement and social security contributions.
SECTION 21.8.(b)  Salaries and related benefits for positions that are funded partially from the General Fund or Highway Fund and partially from sources other than the General Fund or Highway Fund shall be increased from the General Fund or Highway Fund appropriation only to the extent of the proportionate part of the salaries paid from the General Fund or Highway Fund. Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.
SECTION 21.8.(c)  The 2014‑2015 fiscal year salary increases provided in this act are to be effective July 1, 2014, and do not apply to persons separated from State service due to resignation, dismissal, reduction in force, death, or retirement or whose last workday is prior to July 1, 2014.
SECTION 21.8.(d)  The granting of the salary increases under this act does not affect the status of eligibility for salary increments for which employees may be eligible unless otherwise required by this act.
SECTION 21.8.(e)  Payroll for employees on or after July 1, 2014, which represent payment of services provided prior to these increases shall not be eligible for salary increases provided for in this act. This subsection shall apply to all employees, subject to or exempt from the State Personnel Act, paid from State funds, including public schools, community colleges, and The University of North Carolina.
SECTION 21.8.(f)  Except as otherwise provided by this act, for the 2014‑2015 fiscal year, permanent full‑time State agency employees and State‑funded public school employees who work a nine‑, 10‑, or 11‑month work year schedule shall receive the eight hundred nine dollar ($809.00) annual increase provided by this act.

SALARY ADJUSTMENTS FOR SPECIAL CIRCUMSTANCES/NO AUTOMATIC INCREASES/AUTHORIZED SALARY ADJUSTMENT FUND ACTIONS NOT PROHIBITED
SECTION 21.9.(a)  The annual salaries 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 2014‑2015 fiscal year shall be increased by eight hundred nine dollars ($809.00) from that authorized on June 30, 2014, or the last date in pay status during the 2013‑2014 fiscal year, if earlier.
SECTION 21.9.(b)  Section 35.8  of S.L. 2013‑360 reads as rewritten:
"SALARY ADJUSTMENTS FOR SPECIAL CIRCUMSTANCES/NO AUTOMATIC INCREASES/AUTHORIZED SALARY ADJUSTMENT FUND ACTIONS NOT PROHIBITED
…
"SECTION 35.8.(b)  Salary increases may be awarded during the 2013‑2014 fiscal year 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.

"SECTION 35.8.(b1)  Salary increases may be awarded during the 2014‑2015 fiscal year 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, labor market, or equity, career progression adjustments for increased demonstrated competencies, labor market, or retention, 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, labor market, 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; and (iii) faculty, nonfaculty, and other employees for the purposes of retention, labor market, or equity. 
(3)	For employees of the judicial branch, for local supplementation as authorized by G.S. 7A‑300.1. 
"SECTION 35.8.(b2)  The cumulative salary adjustment allowed under subsections (b) and (b1) of this section 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 21.9.(c)  G.S. 20‑187.3(a) reads as rewritten:
"(a)	The Secretary of Public Safety shall not make or permit to be made any order, rule, or regulation requiring the issuance of any minimum number of traffic citations, or ticket quotas, by any member or members of the State Highway Patrol. Pay and promotions of members of the Highway Patrol shall be based on their overall job performance and not on the basis of the volume of citations issued or arrests made. Members of the Highway Patrol shall be subject to salary classes, ranges and longevity pay for service as are applicable to other State employees generally.
Effective for the 2014‑2015 fiscal year, the annual salaries for members of the State Highway Patrol who are not at the top of their pay range shall receive the following percentage increase according to the date they received sworn law enforcement officer status with the Patrol:
Sworn Date	Percent Increase
11/9/12 to 6/30/14	5%
3/13/08 to 9/16/11	4.5%
Prior to 1/1/05 to 11/29/07	4%."

TEACHER SALARY SCHEDULES
SECTION 21.10.(a)  The following monthly salary schedules shall apply for the 2014‑2015 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.
2014‑2015 Monthly Salary Schedule
"A" Teachers
	Years of Experience	"A" Teachers	NBPTS Certification
0‑2	$3,300	N/A
3‑5	$3,300	$3,696
6	$3,300	$3,696
7	$3,300	$3,696
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	$3,891	$4,358
14	$3,940	$4,413
15	$3,991	$4,470
16	$4,041	$4,526
17	$4,093	$4,584
18	$4,145	$4,642
19	$4,199	$4,703
20	$4,254	$4,764
21	$4,310	$4,827
22	$4,366	$4,890
23	$4,426	$4,957
24	$4,485	$5,023
25	$4,545	$5,090
26	$4,607	$5,160
27	$4,670	$5,230
28	$4,737	$5,305
29	$4,802	$5,378
30	$4,868	$5,452
31	$4,935	$5,527
32	$5,005	$5,606
33	$5,077	$5,686
34	$5,150	$5,768
35	$5,215	$5,841
36+	$5,318	$5,956

2014‑2015 Monthly Salary Schedule
"M" Teachers
	Years of Experience	"M" Teachers	NBPTS Certification
0‑2	$3,630	N/A
3‑5	$3,630	$4,066
6	$6,630	$4,066
7	$3,630	$4,066
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	$4,280	$4,794
14	$4,334	$4,854
15	$4,390	$4,917
16	$4,445	$4,978
17	$4,502	$5,042
18	$4,560	$5,107
19	$4,619	$5,173
20	$4,679	$5,240
21	$4,741	$5,310
22	$4,803	$5,379
23	$4,869	$5,453
24	$4,934	$5,526
25	$5,000	$5,600
26	$5,068	$5,676
27	$5,137	$5,753
28	$5,211	$5,836
29	$5,282	$5,916
30	$5,355	$5,998
31	$5,429	$6,080
32	$5,506	$6,167
33	$5,585	$6,255
34	$5,665	$6,345
35	$5,737	$6,425
36+	$5,850	$6,552
SECTION 21.10.(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 21.10.(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 21.10.(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.
Effective July 1, 2014, any school psychologist paid on years 0‑4 on the State Salary Schedule in the 2013‑2014 school year and employed on July 1, 2014, shall receive a nonrecurring salary bonus of eight hundred nine dollars ($809.00). 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 21.10.(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 21.10.(f)  Certified school nurses who are employed in the public schools as nurses shall be paid on the "M" salary schedule.
SECTION 21.10.(g)  As used in this section, the term "teacher" shall also include instructional support personnel.

SCHOOL‑BASED ADMINISTRATOR SALARY SCHEDULE
SECTION 21.11.(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 2014‑2015 fiscal year commencing July 1, 2014.

2014‑2015 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	$4,323	$4,323	‑	‑	‑
14	$4,377	$4,377	‑	‑	‑
15	$4,434	$4,434	$4,489	‑	‑
16	$4,489	$4,489	$4,547	‑	‑
17	$4,547	$4,547	$4,606	$4,665	‑
18	$4,606	$4,606	$4,665	$4,726	$4,788
19	$4,665	$4,665	$4,726	$4,788	$4,851
20	$4,726	$4,726	$4,788	$4,851	$4,918
21	$4,788	$4,788	$4,851	$4,918	$4,983
22	$4,851	$4,851	$4,918	$4,983	$5,050
23	$4,918	$4,918	$4,983	$5,050	$5,119
24	$4,983	$4,983	$5,050	$5,119	$5,188
25	$5,050	$5,050	$5,119	$5,188	$5,263
26	$5,119	$5,119	$5,188	$5,263	$5,335
27	$5,188	$5,188	$5,263	$5,335	$5,409
28	$5,263	$5,263	$5,335	$5,409	$5,483
29	$5,335	$5,335	$5,409	$5,483	$5,561
30	$5,409	$5,409	$5,483	$5,561	$5,641
31	$5,483	$5,483	$5,561	$5,641	$5,722
32	$5,561	$5,561	$5,641	$5,722	$5,794
33	$5,641	$5,641	$5,722	$5,794	$5,909
34	$5,722	$5,722	$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

2014‑2015 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	$4,918	‑	‑	‑
20	$4,983	‑	‑	‑
21	$5,050	$5,119	‑	‑
22	$5,119	$5,188	$5,335	‑
23	$5,188	$5,263	$5,409	$5,483
24	$5,263	$5,335	$5,483	$5,561
25	$5,335	$5,409	$5,561	$5,641
26	$5,409	$5,483	$5,641	$5,722
27	$5,483	$5,561	$5,722	$5,794
28	$5,561	$5,641	$5,794	$5,909
29	$5,641	$5,722	$5,909	$6,027
30	$5,722	$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 21.11.(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:
Classification	Number of Teachers 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 21.11.(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. 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 21.11.(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 21.11.(e)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 21.11.(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 21.11.(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 21.11.(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 21.11.(i)  Effective July 1, 2014, any assistant principal paid on years 0‑8 on the State Salary Schedule in the 2013‑2014 school year and employed on July 1, 2014, shall receive a nonrecurring salary bonus of eight hundred nine dollars ($809.00).

CENTRAL OFFICE SALARIES
SECTION 21.12.(a)  The monthly salary ranges that follow, which apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers, shall be set as follows for the 2014‑2015 fiscal year, beginning July 1, 2014.
School Administrator I	$3,417	$6,349
School Administrator II	$3,618	$6,730
School Administrator III	$3,837	$7,136
School Administrator IV	$3,988	$7,417
School Administrator V	$4,146	$7,715
School Administrator VI	$4,394	$8,177
School Administrator VII	$4,568	$8,504
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 21.12.(b)  The monthly salary ranges that follow, which apply to public school superintendents, shall be set as follows for the 2014‑2015 fiscal year, beginning July 1, 2014.
Superintendent I	$4,845	$9,017
Superintendent II	$5,139	$9,558
Superintendent III	$5,448	$10,135
Superintendent IV	$5,778	$10,747
Superintendent V	$6,128	$11,398
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 21.12.(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 21.12.(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 21.12.(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 21.12.(f)  The salaries of all permanent, full‑time personnel paid from the Central Office Allotment shall be increased by eight hundred nine dollars ($809.00) for the 2014‑2015 fiscal year, effective July 1, 2014.

NONCERTIFIED PERSONNEL SALARIES
SECTION 21.13.  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 increased by eight hundred nine dollars ($809.00) for the 2014‑2015 fiscal year, effective July 1, 2014.

SALARY‑RELATED CONTRIBUTIONS
SECTION 21.14.(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 21.14.(b)  Effective July 1, 2014, the State's employer contribution rates budgeted for retirement and related benefits as a percentage of covered salaries for the 2014‑2015 fiscal year are (i) fourteen and seventy‑six hundredths percent (14.76%) – Teachers and State Employees; (ii) nineteen and seventy‑six hundredths percent (19.76%) – 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‑eight hundredths percent (33.48%) – 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 21.14.(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 21.14.(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 one hundred seventy‑nine dollars ($4,179) and (ii) non‑Medicare‑eligible employees and retirees – five thousand three hundred seventy‑eight dollars ($5,378).

PROVIDE COST‑OF‑LIVING INCREASES FOR RETIREES OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE JUDICIAL RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT SYSTEM
SECTION 21.15.(a)  G.S. 135‑5 is amended by adding a new subsection to read:
"(ttt)	From and after July 1, 2014, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2013, shall be increased by one and nine‑tenths percent (1.9%) of the allowance payable on June 1, 2014, in accordance with G.S. 135‑5(o). Furthermore, from and after July 1, 2014, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2013, but before June 30, 2014, shall be increased by a prorated amount of one and nine‑tenths percent (1.9%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2013, and June 30, 2014."
SECTION 21.15.(b)  G.S. 135‑65 is amended by adding a new subsection to read:
"(ee)	From and after July 1, 2014, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2013, shall be increased by one and nine‑tenths percent (1.9%) of the allowance payable on June 1, 2014. Furthermore, from and after July 1, 2014, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2013, but before June 30, 2014, shall be increased by a prorated amount of one and nine‑tenths percent (1.9%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2013, and June 30, 2014."
SECTION 21.15.(c)  G.S. 120‑4.22A is amended by adding a new subsection to read:
"(y)	In accordance with subsection (a) of this section, from and after July 1, 2014, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before January 1, 2014, shall be increased by one and nine‑tenths percent (1.9%) of the allowance payable on June 1, 2014. Furthermore, from and after July 1, 2014, the retirement allowance to or on account of beneficiaries whose retirement commenced after January 1, 2014, but before June 30, 2014, shall be increased by a prorated amount of one and nine‑tenths percent (1.9%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between January 1, 2014, and June 30, 2014."

SUPPLEMENTAL APPROPRIATIONS
SECTION 21.16.  The North Carolina State Health Plan has chosen to forgo the premium increase scheduled for January 2015. Therefore, the corresponding employer contribution is reduced. Of the eighty‑nine million dollars ($89,000,000) appropriated for the State Health Plan in S.L. 2013‑360 as contributions for the 2014‑2015 fiscal year, twenty‑two million dollars ($22,000,000) in recurring funds is no longer needed and shall be redirected and appropriated on a nonrecurring basis according to the following schedule:

	01.	One NC Fund investments in Job Creating Businesses	$10,000,000
	02.	Severance Reserve	2,000,000
	03.	Rural Infrastructure Grants	2,000,000
	04.	Research Triangle Institute Funding	500,000
	05.	UNC Game Changing Research	2,000,000
	06.	Medical Examiner Training & Certification	1,000,000
	07.	NC Symphony Challenge Grant	500,000
	08.	Distinguished Leadership in Practice	500,000
	09.	Housing Finance Agency Low-Income Housing Loan Program	2,000,000
	10.	Economic Development Fund/OSBM‑Special Appropriation	1,000,000
	11.	ABC Underage Drinking Program	500,000

		Total Supplemental Appropriations	$22,000,000

PART XXII. CAPITAL APPROPRIATIONS

GENERAL FUND CAPITAL APPROPRIATIONS/INTRODUCTION
SECTION 22.1.  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 22.2.(a)  Section 36.2 of S.L. 2013‑360 reads as rewritten:
"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	‑
	Oregon Inlet Task Force		500,000
	Project Phoenix		100,000

Department of Agriculture and Consumer Services
	Planning Funds – Plant Sciences			Research Complex – NCSU		

Department of Environment and Natural Resources
	Water Resources Development Projects	11,522,000	6,482,000

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$15,505,000."

WATER RESOURCES DEVELOPMENT PROJECTS
SECTION 22.3.(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 eight million sixty‑three thousand one hundred eight dollars ($8,063,108) in federal funds.

Name of Project	2014‑2015
(1)	B. Everett Jordan Lake Water Supply Storage	$	200,000
(2)	Morehead City Harbor Maintenance Dredging	0
(3)	Wilmington Harbor Improvements Feasibility	200,000
(4)	Wilmington Harbor Maintenance (Disposal Area 8 & 10)	4,000,000
(5)	Natural Resources Conservation Service EQIP Project	2,000,000
(6)	Hookerton NC – Stream Bank Erosion Repairs (Sec. 14)	410,000
(7)	State/Local Water Resources Development Grants	1,000,000
(8)	John H. Kerr Dam & Reservoir (Sec. 216)	50,000
(9)	Neuse River Basin Environmental Restoration – PED	157,000
(10)	Currituck Sound Environmental Restoration Feasibility Study	260,000
(11)	Princeville Flood Damage Reduction Feasibility Study	205,000
(12)	Wilmington Harbor Deepening Project	600,000
(13)	Planning Assistance to Community	25,000
TOTALS	$9,107,000
SECTION 22.3.(b)  It is the intent of the General Assembly that funds carried forward from previous fiscal years be used to supplement the six million four hundred eighty‑two thousand dollars ($6,482,000) 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)	$	2,000,000
(2)	Wilmington Harbor Deepening Project	600,000
(3)	Planning Assistance to Communities	25,000
TOTALS	$	2,625,000
SECTION 22.3.(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 2014‑2015 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 2014‑2015 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 22.3.(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 22.3.(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.

NON‑GENERAL FUND CAPITAL IMPROVEMENT AUTHORIZATIONS
SECTION 22.4.  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 2014‑2015
Department of Administration
Salisbury Veteran's Affairs Home – Renovations	$	3,715,000

Department of Agriculture and Consumer Services
Swain County Headquarters Site Development/Modular Placement	$	0
Alexander County Headquarters Site Development/Modular Placement	0
Tidewater Research Station – Deer Fence Installation	20,000
DuPont Recreational State Forest – Rocky Ridge & Stone Mountain Trail	100,000
Raleigh Farmer's Market – Parking Improvement & Expansion	200,000
Research Stations Division – Safety Improvement Statewide	80,000
Region 2 Jordan Lake – Classroom Site Development/Modular Placement	75,000
Western North Carolina Agriculture Center – Livestock Improvements	3,000,000
NC State Fairgrounds – HVAC Improvements – Campus Wide	1,500,000
Mountain Island Educational State Forest – Visitor and Interpretive Center	3,000,000
NC State Fairgrounds – Renovations to Existing Buildings	2,000,000
Raleigh Farmer's Market – Construct New Craft Shed	700,000
Western NC Farmer's Market – E & F Barns – Roof Replacement	500,000
Holmes Educational State Forest – Repairs and Renovations Projects	15,000
NC State Fairgrounds – Campus Infrastructure Repairs	1,550,000
Tuttle Educational State Forest – Repairs and Renovations Projects	15,000
NC State Fairgrounds – Horse Complex Site Repairs and Improvements	2,000,000
Piedmont Research Station – New Bridge	200,000
Western NC Farmer's Market – Paving Improvements	100,000
Rendezvous Mountain Educational State Forest – Repairs & Renovations	15,000

Department of Cultural Resources
NC Museum of Art East Building Technology Improvements	1,118,750

Department of Justice
Raleigh Crime Laboratory Renovation	807,000

Department of Public Safety
Caledonia Farms Grain	361,340
Maury Correctional Institution – Industrial Area Upfit	2,830,499
Raleigh Facilities Maintenance Latrine Renovations	165,000
Raleigh Troop Motor Pool Latrine Renovations	130,000
Camp Butner Training Site – West Perimeter Rd. – Phase II	780,000
Camp Butner Training Site – Range Control Building	738,000
Youngsville Field Maintenance Shop Lighting Upgrade	95,000
Camp Butner Training Site Engagement Skilled Trainer Building	495,000
Camp Butner Training Site Multi‑Purpose Building	800,000
Camp Butner Training Site Water Tower & System Improvements	494,000
High Point Field Maintenance Shop Office/Storage Building	525,000
High Point Field Maintenance Shop/Military Owned Vehicle Lot Paving	525,000
Morrisville Army Aviation Support Facility #1 Latrine Renovations	88,000
Morrisville Army Aviation Support Facility #1 Guard Shack & Access Imp.	525,000
Fort Bragg Regional Training Site Maintenance #2 Fire Alarm System	27,000
Red Springs Field Maintenance Shop Expansion	788,000
Fort Bragg Regional Training Site Maintenance #2 Wash Rack Addition	525,000
Winston Salem Field Maintenance Shop Addition/Alteration	775,000
Camp Butner Training Site Land Buffer Acquisitions	300,000

Wildlife Resources Commission
	Land Acquisitions	3,750,000
	New Construction FAAs (Fishing Access Areas)	200,000
	New Construction of BAAs (Boating Access Areas)	900,000
	Renovations to Existing BAA (Boating Access Areas)	900,000
	Balsom Depot Renovation	1,300,000

TOTAL AMOUNT OF NON‑GENERAL FUND CAPITAL
PROJECTS AUTHORIZED	$	37,727,589

PLANNING FUNDS FOR DEPARTMENT OF AGRICULTURE/NC STATE COLLABORATIVE EFFORT – CONSTRUCTION OF FACILITY ON NC STATE CAMPUS TO BE KNOWN AS THE PLANT SCIENCES RESEARCH COMPLEX
SECTION 22.5.  Of the funds appropriated to the Department of Agriculture for the 2013‑2014 fiscal year, one hundred thousand dollars ($100,000) in nonrecurring funds shall be carried forward and used in the 2014‑2015 fiscal year for planning funds for a joint effort between the NC Department of Agriculture and North Carolina State University. These funds will be transferred from the Department of Agriculture to North Carolina State University to be used to start the planning for construction of a facility for plant sciences research and innovation.
SECTION 22.5.(b)  This section becomes effective June 30, 2014.

PART XXIII. MISCELLANEOUS PROVISIONS

UPDATE THE NC INTERNSHIP COUNCIL ENABLING STATUTE TO INCORPORATE NEW STATE GOVERNMENT STRUCTURE
SECTION 23.1.  G.S. 143B‑417(1) is amended by adding a new sub-subdivision to read:
"ee.	Office of Information and Technology Services."

STATE BUDGET ACT APPLIES
SECTION 23.2.  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 2014‑2015 FISCAL YEAR
SECTION 23.3.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2014‑2015 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2014‑2015 fiscal year.

EFFECT OF HEADINGS
SECTION 23.4.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only. The headings do not expand, limit, or define the text of this act, except for effective dates referring to a Part.

APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY
SECTION 23.5.(a)  Except where expressly repealed or amended by this act, the provisions of S.L. 2013‑360 and S.L. 2013‑363 remain in effect.
SECTION 23.5.(b)  Notwithstanding any modifications by this act in the amounts appropriated, except where expressly repealed or amended, the limitations and directions for the 2014‑2015 fiscal year in S.L. 2013‑360 and S.L. 2013‑363 that applied to appropriations to particular agencies or for particular purposes apply to the newly enacted appropriations and budget reductions of this act for those same particular purposes.

SEVERABILITY CLAUSE
SECTION 23.6.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE
SECTION 23.7.  Except as otherwise provided, this act becomes effective July 1, 2014.