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 OF ACT
SECTION 1.1.  This act shall be known as the "Current Operations and Capital Improvements Appropriations Act of 2017."

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's departments, institutions, and agencies and for other purposes as enumerated, are made for the fiscal biennium ending June 30, 2019, according to the following schedule:

Current Operations – General Fund	FY 2017‑2018	FY 2018‑2019

EDUCATION

Community Colleges System Office	$ 1,162,987,476	$ 1,159,445,175

Department of Public Instruction	9,267,081,888	9,587,001,103

University of North Carolina – Board of Governors
	Appalachian State University	134,672,993	138,880,976
	East Carolina University
		Academic Affairs	214,598,809	214,598,809
		Health Affairs	74,210,941	74,210,941	Elizabeth City State University	31,960,064	31,340,064
	Fayetteville State University	52,116,162	52,116,162
	NC A&T State University	92,203,482	92,203,482
	NC Central University	83,243,559	83,243,559
	NC State University
		Academic Affairs	409,648,050	409,648,050
		Agricultural Extension	38,395,231	38,395,231
		Agricultural Research	52,636,905	52,636,905
	UNC‑Asheville	38,750,625	38,750,625
	UNC‑Chapel Hill
		Academic Affairs	252,309,119	252,309,119
		Health Affairs	186,665,032	187,658,259
		AHEC	48,783,693	48,783,693
	UNC‑Charlotte	226,376,692	226,376,692
	UNC‑Greensboro	150,156,774	150,156,774
	UNC‑Pembroke	53,711,549	53,715,428
	UNC‑School of the Arts	30,424,499	30,424,499
	UNC‑Wilmington	120,327,946	120,327,946
	Western Carolina University 	89,729,461	89,730,641
	Winston‑Salem State University	64,717,512	64,717,512
	General Administration	42,172,369	42,172,369
	University Institutional Programs	198,469,043	280,955,678
	Related Educational Programs	64,747,218	64,747,218
	NC School of Science & Mathematics	21,271,260	21,585,709
	Aid to Private Institutions	141,469,754	137,019,754
Total University of North Carolina – 
Board of Governors	2,913,768,742	2,996,706,095

HEALTH AND HUMAN SERVICES

	Department of Health and Human Services
	Central Management and Support	133,055,474	147,700,477
	Division of Aging and Adult Services	50,085,295	50,085,295
	Division of Blind Services/Deaf/HH	8,333,453	8,333,453
	Division of Child Development and Early Education	286,443,810	292,643,810
	Health Service Regulation	18,606,701	22,975,875
	Division of Medical Assistance	3,735,442,930	3,860,291,362
	Division of Mental Health	714,714,598	696,291,911
	NC Health Choice	458,280	394,925
	Health Benefits	9,671,582	9,671,582
	Division of Public Health	153,598,499	157,681,288
	Division of Social Services	197,195,172	199,836,617
	Division of Vocation Rehabilitation	39,402,154	39,419,567
Total Health and Human Services	5,347,007,948	5,485,362,162

AGRICULTURE AND NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	126,879,391	122,962,880

Department of Commerce
	Commerce	135,005,300	134,964,406
	Commerce State‑Aid	15,955,810	15,955,810
	Commerce – Economic Development	122,945,000	4,945,000

Department of Natural and Cultural Resources
	Natural and Cultural Resources	194,772,620	187,041,054
	Roanoke Island Commission	555,571	555,571

Wildlife Resources Commission	11,627,174	11,595,898

Department of Environmental Quality	84,836,697	83,106,733

Department of Labor	17,593,752	17,553,391

JUSTICE AND PUBLIC SAFETY

Department of Public Safety	2,044,943,695	2,051,462,150

Judicial Department	534,486,438	533,864,659

Judicial Department – Indigent Defense	124,907,954	127,480,556

Department of Justice	58,927,361	58,308,801

GENERAL GOVERNMENT

Department of Administration	64,031,214	63,961,673

Office of Administrative Hearings	5,548,417	5,576,353

Department of State Auditor	14,211,124	13,938,126

Office of State Controller	23,745,527	23,895,805

State Board of Elections	6,794,931	6,780,924

General Assembly	65,548,408	65,401,840

Office of the Governor
	Office of the Governor	5,950,570	5,940,266
	Office of the Governor – Special Projects	2,002,037	2,001,995

Office of State Budget and Management	8,511,670	8,500,308
	OSBM – Reserve for Special Appropriations	4,500,000	2,000,000

Housing Finance Agency	33,000,000	13,000,000

Department of Insurance	41,851,683	41,776,469

Office of Lieutenant Governor	724,721	723,616

Department of Military and Veterans Affairs	11,154,510	9,235,078

Department of Revenue	90,306,095	90,353,308

Department of Secretary of State	13,512,076	13,454,614

Department of Information Technology	59,244,688	59,228,313

Department of State Treasurer
	State Treasurer	5,073,576	5,068,384
	State Treasurer – Retirement for
		Fire and Rescue Squad Workers	26,889,281	26,889,281

RESERVES, ADJUSTMENTS AND DEBT SERVICE

Contingency and Emergency Fund	5,000,000	5,000,000
Salary Adjustment Reserve 	5,000,000	5,000,000
OSHR Minimum of Market Adjustment	16,017,467	16,017,467
Financial System Replacement	40,000,000	0
Workers' Compensation Reserve	2,000,000	0
Reserve for Agency IT Rate Adjustments	4,000,000	4,000,000
25‑Year Law Enforcement Retirement	6,800,000	7,300,000
Limited Obligation Bonds Reserve	500,000	0

Debt Service
	General Debt Service	727,784,008	774,393,070
	Federal Reimbursement	1,616,380	1,616,380

TOTAL CURRENT OPERATIONS –
GENERAL FUND	$ 23,455,601,200	$ 23,849,328,714

GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a)  The General Fund availability used in developing the 2017‑2019 budget is shown below:

	FY 2017‑2018	FY 2018‑2019
Beginning Availability
	Unappropriated Balance from Prior Fiscal Year	$  108,607,042	$  0
	Anticipated Over (Under) Collections	552,600,000	0
	Anticipated Reversions	271,000,000	0
	Anticipated Carryforward Reserves Reversions	50,000,000	0
	Less: Credit to Savings Reserve Account	(312,721,303)	0
	Less: Credit to Retiree Healthcare Reserve
		Account	(150,000,000)	0
	Less: Credit to State Emergency Response &
		Disaster Relief Reserve Account	(100,000,000)	0
Less: Credit to Repairs and Renovations Reserve 	(100,000,000)	0

Beginning Unreserved Fund Balance	$  319,485,739	$  0

Revenues Based on Existing Tax Structure	$  22,316,700,000	 $  23,316,700,000

Nontax Revenues
	Investment Income	$  58,700,000	$  60,700,000
	Judicial Fees	239,400,000	239,400,000
	Disproportionate Share	164,700,000	149,600,000
	Insurance	79,500,000	79,500,000
	Master Settlement Agreement	127,200,000	127,200,000
	Other Nontax Revenues	180,500,000	182,300,000
Subtotal Nontax Revenue	$  850,000,000	$  838,700,000

Total General Fund Availability	$  23,486,185,739	$  24,155,400,000

Adjustments to Availability: 2017 Session
	Child & Dependent Care Tax Credit	$  0	$  (52,500,000)
	Film & Entertainment Tax Incentive	0	(20,000,000)
	Direct Additional Funds to Golden LEAF Foundation	(10,000,000)	(10,000,000)
	Treasurer and Insurance Nontax Transfers 	2,556,461	2,473,890
Subtotal Adjustments to Availability	$  (7,443,539)	$  (80,026,110)

Total Availability	$  23,478,742,200	$  24,075,373,890

Less: Total General Fund Appropriations	$  23,478,742,200	$  23,849,328,714

Unappropriated Balance Remaining	$  0	$  226,045,176

SECTION 2.2.(b)  Notwithstanding the provisions of G.S. 143C‑4‑3(a), the State Controller shall transfer a total of one hundred million dollars ($100,000,000) from the unreserved fund balance to the Repairs and Renovations Reserve on June 30, 2017. Funds transferred under this section to the Repairs and Renovations Reserve are hereby appropriated for the 2017‑18 fiscal year and shall be used in accordance with G.S. 143C‑4‑3. 
SECTION 2.2.(c)  Notwithstanding G.S. 143C‑4‑2, the State Controller shall transfer a total of three hundred twelve million seven hundred twenty one thousand three hundred and three dollars ($312,721,303) from the unreserved fund balance to the Savings Reserve Account on June 30, 2017. This transfer is not an "appropriation made by law," as that phrase is used in Section 7(1) of Article V of the North Carolina Constitution. 
SECTION 2.2.(d)  Subsections (a) and (b) of this section become effective June 30, 2017.

PART iii. Current Operations/Highway Fund

CURRENT OPERATIONS/HIGHWAY FUND
SECTION 3.1.  Appropriations from the Highway Fund of the State for the maintenance and operation of the Department of Transportation, and for other purposes as enumerated, are made for the biennium ending June 30, 2019, according to the following schedule:

Current Operations – Highway Fund	FY 2017‑2018	FY 2018‑2019
Department of Transportation
	General Administration	$      92,273,581	$     90,815,212

	Division of Highways
		Administration	34,032,224	34,032,224
		Construction	44,359,878	44,359,878
		Maintenance	1,366,344,150	1,403,744,560
		OSHA Program	358,030	358,030

Ferry Operations	52,525,375	46,733,375

State Aid to Municipalities	147,500,000	147,500,000

Intermodal Divisions
		Public Transportation	93,777,592	94,277,592
		Aviation	54,612,773	54,612,773
		Rail	46,269,662	47,050,462
		Bicycle and Pedestrian	724,032	724,032

Governor's Highway Safety	255,367	255,367
Division of Motor Vehicles	134,509,935	134,191,615

Other State Agencies, Reserves, Transfers	70,317,458	68,907,537

Capital Improvements	17,239,600	16,737,000

Total Highway Fund Appropriation	$ 2,155,099,657	$ 2,184,299,657

HIGHWAY FUND AVAILABILITY STATEMENT
SECTION 3.2.  The Highway Fund availability used in developing the 2017‑2019 biennial budget is shown below:

Highway Fund Availability Statement	2017‑2018	2018‑2019

Tax Revenue	$ 1,352,900,000	$ 1,377,900,000
Non‑Tax Revenue	795,100,000	799,100,000
Investment Income	1,500,000	1,500,000
DMV Hearing Fees	1,499,657	1,499,657
NC Railroad Company Dividend Payment	4,100,000	4,300,000

Total Highway Fund Availability	$ 2,155,099,657	$ 2,184,299,657

PART IV. Highway Trust Fund Appropriations

HIGHWAY TRUST FUND APPROPRIATIONS
SECTION 4.1.  Appropriations from the Highway Trust Fund are made for the biennium ending June 30, 2019, according to the following schedule:

Highway Trust Fund	FY 2017‑2018	FY 2018‑2019

Department of Transportation:
	Program Administration	$       35,623,780	$       35,538,310

Construction:
	Strategic Prioritization Program	1,379,402,158	1,407,012,044

Bonds:
	Bond Redemption	42,934,603	40,810,187
	Bond Interest	9,226,265	9,226,265
NC Turnpike Authority 	49,813,194	49,813,194
Reserve for Visitor Centers	400,000	400,000

Total Highway Trust Fund Appropriations	$ 1,517,400,000	$ 1,542,800,000

HIGHWAY TRUST FUND AVAILABILITY STATEMENT
SECTION 4.2.  The Highway Trust Fund availability used in developing the 2017‑2019 biennial budget is shown below:

Highway Trust Fund Availability Statement	FY 2017‑2018	FY 2018‑2019

Beginning Credit Balance	‑	‑
Tax Revenue	$ 1,364,700,000	$ 1,391,300,000
Non‑Tax Revenue	145,800,000	148,500,000
Investment Income	7,000,000	3,000,000

Total Highway Trust Fund Availability	$ 1,517,400,000	$ 1,542,800,000

PART V. OTHER APPROPRIATIONS

CASH BALANCES AND OTHER APPROPRIATIONS
SECTION 5.1.(a)  Cash balances, federal funds, departmental receipts, grants, and gifts from the General Fund, revenue funds, enterprise funds, and internal service funds are appropriated for the 2017‑2019 fiscal biennium as follows:
(1)	For all budget codes listed in "The Governor's Recommended Budget, the State of North Carolina 2017‑2019" and in the Budget Support Document, fund balances and receipts are appropriated up to the amounts specified, as adjusted by the General Assembly, for the 2017‑2018 fiscal year and the 2018‑2019 fiscal year. Funds may be expended only for the programs, purposes, objects, and line items or as otherwise authorized by the General Assembly.
(2)	Notwithstanding the provisions of subdivision (1) of this subsection:
a.	Any receipts that are required to be used to pay debt service requirements for various outstanding bond issues and certificates of participation are appropriated up to the actual amounts received for the 2017‑2018 fiscal year and the 2018‑2019 fiscal year and shall be used only to pay debt service requirements.
b.	Other funds, cash balances, and receipts of funds that meet the definition issued by the Governmental Accounting Standards Board of a trust or agency fund are appropriated for and in the amounts required to meet the legal requirements of the trust agreement for the 2017‑2018 fiscal year and the 2018‑2019 fiscal year.
SECTION 5.1.(b)  Receipts collected in a fiscal year in excess of the amounts appropriated by this section shall remain unexpended and unencumbered until appropriated by the General Assembly, unless the expenditure of overrealized receipts in the fiscal year in which the receipts were collected is authorized by the State Budget Act. Overrealized receipts are appropriated in the amounts necessary to implement this subsection.
SECTION 5.1.(c)  Notwithstanding subsections (a) and (b) of this section, there is appropriated from the Reserve for Reimbursements to Local Governments and Shared Tax Revenues for each fiscal year an amount equal to the amount of the distributions required by law to be made from that reserve for that fiscal year.

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

Oversight of state financial assistance to non‑state entities
SECTION 5.3.  G.S. 143C‑6‑23 reads as rewritten:
"§ 143C‑6‑23.  State assistance and grant funds: administration; oversight and reporting requirements.
(a)	Definitions. – The following definitions apply in this section:
(1)	Contractor. – An entity subject to the contractor requirements, as well as any entity that would be subject to the contractor requirements but for a specific statute or rule exempting that entity from the contractor requirements.
(1a)	Contractor requirements. – Article 3, 3C, 3D, 3E, 3G, or 8 of Chapter 143 of the General Statutes and related Administrative Code Rules.
(1b)	State financial assistance. – State funds disbursed as a grant, cooperative agreement, non‑cash contribution, food commodities, or direct appropriation to a recipient or subrecipient as defined in subdivision (2) and (4) of this subsection.
(2)	Recipient. – A non‑State entity that receives State financial assistance directly from a State agency to carry out part of a State program.
(3)	Encumbrance. – A financial obligation created by a purchase order, contract, salary commitment, unearned or prepaid collections for services provided, or other legally binding agreement. A financial obligation is not an encumbrance for purposes of this section unless it (i) is in writing and has been signed by a person or entity who has authority to legally bind the recipient or subrecipient to spend the funds or (ii) was created by the provision of goods or services to the recipient or subrecipient by a third party under circumstances that create a legally binding obligation to pay for the goods or services.
(4)	Subrecipient. – A non‑State entity that receives State financial assistance from a recipient to carry out part of a State program; but does not include an individual that is a beneficiary of such program.
(b)	Conflict of Interest Policy. – Every recipient shall file with the State agency disbursing funds to the recipient a copy of that recipient's policy addressing conflicts of interest that may arise involving the recipient'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 recipient's employees or members of its board or other governing body, from the recipient's disbursing of State funds, and shall include actions to be taken by the recipient 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 State assistance funds.
(c)	No Overdue Tax Debts. – Every recipient shall file with the State agency or department disbursing funds to the recipient a written statement completed by that recipient's board of directors or other governing body stating that the recipient does not have any overdue tax debts, as defined by G.S. 105‑243.1, at the federal, State, or local level. The written statement shall be made under oath and shall be filed before the disbursing State agency or department may disburse the State assistance 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 Rules Must Require Uniform Administration of State Grants. – The Office of State Budget and Management shall adopt rules to ensure the uniform administration of State assistance funds by all grantor State agencies and recipients or subrecipients. The Office of State Budget and Management shall consult with the Office of the State Auditor and the Attorney General in establishing the rules required by this subsection. The rules shall establish policies and procedures for disbursements of State assistance funds and for State agency oversight, monitoring, and evaluation of recipients and subrecipients. The policies and procedures shall:
(1)	Ensure that the purpose and reporting requirements of the State assistance funds are specified to the recipient.
(2)	Ensure that recipients specify the purpose and reporting requirements for State assistance funds made to subrecipients.

(5)	Require each recipient and subrecipient to ensure that, for accounting purposes, State funds and interest earned on those funds remain separate and apart from other funds in the possession or control of the recipient and subrecipient.
(6)	Establish minimum periodic reporting requirements to be established by State agencies for recipients and subrecipients, 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.
(7)	Require recipients and subrecipients to maintain reports, records, and other information to properly account for the expenditure of all State assistance funds and to make such reports, records, and other information available to the awarding State agency for oversight, monitoring, and evaluation purposes.
(8)	 Require a State agency that oversees a State assistance 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.
	
(10)	Provide procedures for the suspension of further disbursements or use of State assistance 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 State assistance funds.
(12)	Provide procedures for the recovery and return to the awarding State agency of unexpended State assistance funds from a recipient or subrecipient (i) in accordance with subsection (f1) of this section or (ii) in the event that the recipient or subrecipient is unable to fulfill the purposes of the State assistance for a reason not set forth in that subsection.
(d1)	Required State Assistance Terms. – The terms of each agreement governing the use of the State assistance shall include all of the following, which shall be deemed a part of the award of State assistance:
(1)	The limitation contained in G.S. 143C‑6‑8 concerning the availability of appropriated funds.
(2)	The relevant provisions of any legislation authorizing or governing the administration of the State assistance funds.
(3)	The terms of this section.
(e)	Rules Are Subject to the Administrative Procedure Act. – Notwithstanding the provisions of G.S. 150B‑2(8a)b. rules adopted pursuant to subsection (d) of this section are subject to the provisions of Chapter 150B of the General Statutes.
(f)	Suspension and Recovery of Funds to State Assistance Recipients for Noncompliance. – Where a recipient or subrecipient is noncompliant with this Part or the policies and procedures adopted pursuant to subsection (d) of this section, or where a recipient or subrecipient is unable to fulfill the obligations or purposes of the State assistance, has inappropriately used State assistance funds, or is non‑compliant with relevant reporting or other requirements, the Office of State Budget and Management may require State agencies to take the actions set forth below in this subsection. If the State assistance funds are a pass‑through of funds awarded by an agency of the United States, then the Office of State Budget and Management must consult with the awarding 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 with respect to a recipient or a subrecipient are as follows:
(1)	Suspend disbursement of all State assistance funds.
(2)	Prevent further use of State assistance funds already disbursed.
(3)	Recover State assistance funds already disbursed.
(f1)	Return of State Assistance Funds. – Except as otherwise required by federal law, a recipient or subrecipient shall return to the State all affected State assistance funds and interest earned on those funds if any of the following occurs:
(1)	The funds are in the possession or control of a recipient and are not expended, made subject to an encumbrance, or disbursed to a subrecipient by August 31 immediately following the fiscal year in which the funds are appropriated by the General Assembly, or a different period set forth in the terms of the applicable appropriation or federal grant.
(2)	The funds remain unexpended at the time that the recipient or subrecipient dissolves, ceases operations, or otherwise indicates that it does not intend to spend the funds.
(3)	The Office of State Budget and Management seeks to recover the funds pursuant to subsection (f) of this act.
(f2)	Use of Returned State Assistance Funds. – Encumbered funds returned to the State pursuant to subsection (f1) of this section by a recipient or subrecipient shall upon appropriation by the General Assembly be spent in accordance with the terms of the encumbrance. All other funds returned to the State by a recipient or subrecipient pursuant to subsection (f1) of this section shall be credited to the fund from which they were appropriated and shall remain unexpended and unencumbered until appropriated by the General Assembly. Nothing in this section shall be construed to authorize an expenditure pursuant to an unlawful encumbrance or in a manner that would violate the terms of the appropriation of the State assistance funds at issue.
(g)	Audit Oversight. – The State Auditor has audit oversight, with respect to State assistance funds received by the recipient or subrecipient, pursuant to Article 5A of Chapter 147 of the General Statutes, of every recipient or subrecipient that receives, uses, or expends State assistance funds. A recipient or subrecipient 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 State assistance funds received by the recipient or subrecipient. The recipient or subrecipient 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 recipient or subrecipient directly related to the use and expenditure of State assistance funds.
(h)	Noncompliance Reports. – The Office of State Budget and Management shall maintain a list that is publicly available of all recipients or subrecipients that failed to comply with this section with respect to State assistance funds received in the prior fiscal year.
	
(j)	Use of Interest Earned on State Assistance Funds. – Except as otherwise required by federal law or the terms of a federal grant, interest earned on State assistance funds after receipt of the funds by a recipient or subrecipient shall be credited to the recipient or subrecipient and shall be used for the same purposes for which the State assistance or sub‑award was made.
(k)	Reporting by Recipients or Subrecipients That Cease Operations. – A recipient or subrecipient that intends to dissolve or cease operations shall report that decision in writing to the Office of State Budget and Management and to the Fiscal Research Division at least 30 days prior to taking that action.
(l)	The reporting and audit requirements of this subchapter do not apply to:
(1)	Awards to non‑State entities subject to the audit and other reporting requirements of the Local Government Commission;
(2)	Tuition assistance to students;
(3)	Public assistance payments from Federal entitlement programs to or on behalf of enrolled individuals; or
(4)	State funds disbursed to a contractor as defined in this Subchapter."

EDUCATION LOTTERY FUNDS/NET REVENUE TRANSFERS
SECTION 5.4.(a)  The appropriations made from the Education Lottery Reserve Fund and Education Lottery Fund for the 2017‑2019 fiscal biennium are as follows:

	FY 2017‑2018	FY 2018‑2019
Noninstructional Support Personnel	$ 372,266,860	$ 372,266,860
Prekindergarten Program	78,252,110	78,252,110
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	30,966,016	30,966,016
Textbooks and Digital Resources	10,000,000	10,000,000
Educator Support Personnel – Student Outcomes	20,000,000	20,000,000
NCCCS Industry Credential Financial Assistance	2,500,000	5,000,000
NC GROW	‑	19,433,109
NC Best and Brightest	‑	5,000,000
NC Promise Tuition Plan	‑	11,000,000
Advanced Teaching Roles Pilot	9,800,000	‑
TOTAL	$ 654,234,986	$ 682,368,095

SECTION 5.4.(b)  There is allocated from the Education Lottery Reserve Fund (Budget Code 23004) nineteen million seven hundred eighty‑nine thousand eight hundred forty‑two dollars ($19,789,842) in the 2017‑2018 fiscal year and thirty million two hundred thirty‑two thousand four hundred eight dollars ($30,232,408) in the 2018‑2019 fiscal year in support of the activities in subsection (a) of this section.

SECTION 5.4.(c)  G.S. 18C‑162(a) reads as rewritten:
"(a)	The Commission shall allocate revenues to the North Carolina State Lottery Fund in order to increase and maximize the available revenues for education purposes, and to the extent practicable, shall adhere to the following guidelines:
(1)	At least fifty percent (50%) of the total annual revenues, as described in this Chapter, shall be returned to the public in the form of prizes.
(2)	At least thirty‑five percent (35%) of the total annual revenues, as described in this Chapter, shall be transferred as provided in G.S. 18C‑164.
(3)	No more than eight percent (8%) of the total annual revenues, as described in this Chapter, shall be allocated for payment of expenses of the Lottery. Advertising expenses shall not exceed one and one‑half percent (1.5%) of the total annual revenues."

CIVIL PENALTY AND FORFEITURE FUND
SECTION 5.5.(a)  Appropriations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2019, as follows:

	FY 2017‑2018	FY 2018‑2019
School Technology Fund	$18,000,000	$18,000,000
Drivers Education	27,700,000	27,700,000
State Public School Fund	130,841,640	130,841,640

Total Appropriation	$176,541,640	$176,541,640

SECTION 5.5.(b)  Excess receipts realized in the Civil Penalty and Forfeiture Fund in each year of the 2017‑2019 fiscal biennium shall be allocated to the School Technology Fund.

INDIAN GAMING EDUCATION REVENUE FUND
SECTION 5.6.  Notwithstanding G.S. 143C‑9‑7, the sum of nine million dollars ($9,000,000) in each year of the 2017‑2019 fiscal biennium is transferred from the Indian Gaming Education Revenue Fund to the Department of Public Instruction, Textbooks, and Digital Resources Allotment.

PART VI. GENERAL PROVISIONS

ESTABLISHING OR INCREASING FEES
SECTION 6.1.(a)  Notwithstanding G.S. 12‑3.1, an agency is not required to consult with the Joint Legislative Commission on Governmental Operations prior to establishing or increasing a fee to the level authorized or anticipated in this act.
SECTION 6.1.(b)  Notwithstanding G.S. 150B‑21.1A(a), an agency may adopt an emergency rule in accordance with G.S. 150B‑21.1A to establish or increase a fee as authorized by this act if the adoption of a rule would otherwise be required under Article 2A of Chapter 150B of the General Statutes.

EXPENDITURES OF FUNDS IN RESERVES LIMITED
SECTION 6.2.  All funds appropriated by this act into reserves may be expended only for the purposes for which the reserves were established.

MSA CHANGES
SECTION 6.3.  G.S. 143C‑9‑3(a1) reads as rewritten:
"(a1)	Each year, twenty million dollars ($20,000,000) from the Settlement Reserve Fund is appropriated to The Golden L.E.A.F. (Long‑Term Economic Advancement Foundation), Inc., a nonprofit corporation, and these funds shall not be subject to G.S. 143C‑6‑23. The remainder of the funds credited to the Settlement Reserve Fund each fiscal year shall be transferred to the General Fund and included in General Fund availability as nontax revenue."

CAP STATE FUNDED PORTION OF NONPROFIT SALARIES
SECTION 6.4.  No more than one hundred twenty thousand dollars ($120,000) in State funds may be used for the annual salary of any individual employee of a nonprofit organization receiving State funds. For the purposes of this section, the term "State funds" is as defined in G.S. 143C‑1‑1(d)(25) and includes any interest earnings that accrue from those funds.

occupational licensing board reporting due dates
SECTION 6.5.  G.S. 93B‑2 reads as rewritten:
"§ 93B‑2.  Annual reports required; contents; open to inspection; sanction for failure to report.
(a)	Each occupational licensing board shall no later than four months after the board's fiscal year end file electronically with the Secretary of State, the Attorney General, and the Joint Legislative Administrative Procedure Oversight Committee an annual report containing all of the following information:
(1)	The address of the board, and the names of its members and officers.
(1a)	The total number of licensees supervised by the board.
(2)	The number of persons who applied to the board for examination.
(3)	The number who were refused examination.
(4)	The number who took the examination.
(5)	The number to whom initial licenses were issued.
(5a)	The number who failed the examination.
(6)	The number who applied for license by reciprocity or comity.
(7)	The number who were granted licenses by reciprocity or comity.
(7a)	The number of official complaints received involving licensed and unlicensed activities.
(7b)	The number of disciplinary actions taken against licensees, or other actions taken against nonlicensees, including injunctive relief.
(8)	The number of licenses suspended or revoked.
(9)	The number of licenses terminated for any reason other than failure to pay the required renewal fee.
(10)	The substance of any anticipated request by the occupational licensing board to the General Assembly to amend statutes related to the occupational licensing board.
(11)	The substance of any anticipated change in rules adopted by the occupational licensing board or the substance of any anticipated adoption of new rules by the occupational licensing board.
(b)	Each occupational licensing board shall no later than four months after the board's fiscal year end file electronically with the Secretary of State, the Attorney General, the Office of State Budget and Management, and the Joint Legislative Administrative Procedure Oversight Committee a financial report that includes the source and amount of all funds credited to the occupational licensing board and the purpose and amount of all funds disbursed by the occupational licensing board during the previous fiscal year.
(c)	The reports required by this section shall be open to public inspection.
(d)	The Joint Legislative Administrative Procedure Oversight Committee shall notify any board that fails to file the reports required by this section. Failure of a board to comply with the reporting requirements of this section by the required deadline each year shall result in a suspension of the board's authority to expend any funds until such time as the board files the required reports. Suspension of a board's authority to expend funds under this subsection shall not affect the board's duty to issue and renew licenses or the validity of any application or license for which fees have been tendered in accordance with law. Each board shall adopt rules establishing a procedure for implementing this subsection and shall maintain an escrow account into which any fees tendered during a board's period of suspension under this subsection shall be deposited."

CONFORMING CHANGES TO BOARD OF BARBER EXAMINERS
SECTION 6.6.(a)  G.S. 86A‑6 reads as rewritten:
"§ 86A‑6.  Office; seal; officers and executive director; funds.
The Board shall maintain a suitable office in Raleigh, and shall adopt and use a common seal for the authentication of its orders and records. The Board shall annually elect its own officers, and in addition, may elect or appoint a full‑time executive director who shall not be a member of the Board, and whose salary shall be fixed by the Board."
SECTION 6.6.(b)  G.S. 86A‑7 reads as rewritten:
"§ 86A‑7.  Salary and expenses; employees; audits; annual reports to the Governor.
(a)	Each member of the Board of Barber Examiners shall be reimbursed for his actual expenses and shall receive compensation and travel allowance according to G.S. 93B‑5 for the distance traveled in performance of his duties. The expenses, compensation and all other salaries and expenses in connection with the administration of this Chapter, shall be paid solely from the funds derived from fees collected and received under this Chapter.
…."

CONFORMING CHANGES TO BOARD OF COSMETIC ARTS
SECTION 6.7.  G.S. 88B‑6 reads as rewritten:
"§ 88B‑6.  Board office, employees, funds, budget requirements.
…
(c)	The Board may employ as many inspectors, investigators, and other staff as necessary to perform inspections and other duties prescribed by the Board. Inspectors and investigators shall be experienced in all parts of cosmetic art and shall have authority to examine cosmetic art shops and cosmetic art schools during business hours to determine compliance with this Chapter.
(d)	The executive director shall serve at the pleasure of the Board.
	
	"

CONFORMING CHANGES TO BOARD OF OPTICIANS
SECTION 6.8.  G.S. 90‑245 reads as rewritten:
"§ 90‑245.  Collection of fees.
The secretary to the Board is hereby authorized and empowered to collect in the name and on behalf of this Board the fees prescribed by this Article. The funds shall be expended exclusively for the administration and enforcement of the provisions of this Article."

CONFORMING CHANGES TO Psychology BOARD
SECTION 6.9.  G.S. 90‑270.18(a) is repealed.

CONFORMING CHANGES TO BOARD OF AUCTIONEERS
SECTION 6.10.(a)  G.S. 85B‑4.1(b) reads as rewritten:
"(b)	The Commission shall maintain at least two hundred thousand dollars ($200,000) in the Fund for use as provided in this Chapter. The Fund may be invested in interest bearing accounts, and any interest accrued shall be added to the Fund. Sufficient liquidity shall be maintained to insure that funds will be available to satisfy claims processed through the Board."
SECTION 6.10.(b)  G.S. 85B‑6(a) reads as rewritten:
"(a)	The Commission shall collect fees in an amount not to exceed the following:
…."

CONFORMING CHANGES TO BOARD OF ELECTROLYSIS
SECTION 6.11.  G.S. 88A‑7 reads as rewritten:
"§ 88A‑7. Applicability of Executive Budget Act; audit oversight.
The provisions of the Executive Budget Act apply to this Chapter. The Board is subject to the oversight of the State Auditor under Article 5A of Chapter 147 of the General Statutes."

CONFORMING CHANGES TO BOARD OF PSYCHOLOGY
SECTION 6.12.  G.S. 90‑270.18(a) is repealed. 

Simplifying procurement through good government
SECTION 6.13.(a)  G.S. 116‑31.10 reads as rewritten:
"§ 116‑31.10.  Powers of Board regarding certain purchasing contracts.
	Notwithstanding G.S. 143‑53.1 or G.S. 143‑53(a)(2), the expenditure benchmark for the President of The University of North Carolina or a special responsibility constituent institution with regard to competitive bid procedures and the bid value benchmark shall be an amount not greater than one million dollars ($1,000,000). The Board shall set the benchmark for the President and each institution from time to time. In setting the President's or an institution's benchmark in accordance with this section, the Board shall consider the President's administrative staff's or the institution's overall capabilities including staff resources, purchasing compliance reviews, and audit reports. The Board shall also consult with the Director of the Division of Purchase and Contract and the Director of the Budget prior to setting the benchmark.
	"
SECTION 6.13.(b)  G.S. 143‑53(a) reads as rewritten:
"(a)	The Secretary of Administration may adopt rules governing the following:
(1)	Prescribing the routine and procedures to be followed in canvassing bids and awarding contracts, and for reviewing decisions made pursuant thereto, and the decision of the reviewing body shall be the final administrative review. The Division of Purchase and Contract shall review and decide a protest on a contract valued above the State agency's delegation level. The Secretary shall adopt rules or criteria governing the review of and decision on a protest on a contract of less than the State agency's delegation level for the agency that awarded the contract.
…
(5)	Prescribing conditions under which purchases and contracts for the purchase, installment or lease‑purchase, rental or lease of goods and services may be entered into by means other than competitive bidding, including, but not limited to, negotiation, reverse auctions, and acceptance of electronic bids. Notwithstanding the provisions of subsections (a) and (b) of this section, any waiver of competition for the purchase, rental, or lease of goods and services is subject to prior review by the Secretary, if the expenditure exceeds an Agency's delegation level. The Division may levy a fee, not to exceed one dollar ($1.00), for review of each waiver application.
…."
SECTION 6.13.(c)  G.S. 115D‑58.14(c) reads as rewritten:
"(c)	The State Board of Community Colleges, in consultation with the Department of Administration, shall review the purchasing process for community colleges and may increase or decrease the purchasing/delegation benchmark for each community college based on the college's overall capabilities, including staff resources, purchasing compliance reviews, and audit reports. The State Board may, in its discretion, reduce a community college's purchasing/delegation benchmark at anytime. The State Board shall not increase a community college's purchasing/delegation benchmark by more than fifteen percent (15%) in any calendar year without the concurrence of the Department of Administration within 60 days of submission. The maximum purchasing/delegation benchmark for a community college shall be two hundred thousand dollars ($200,000)."

PART VII. INFORMATION TECHNOLOGY
SECTION 7.1.  Reserved. 

INFORMATION TECHNOLOGY INTERNAL SERVICE FUND
SECTION 7.2.(a)  For each year of the 2017‑2019 fiscal biennium, receipts for the IT Internal Service Fund shall not exceed one hundred ninety million dollars ($190,000,000). For each year of the 2017‑2019 fiscal biennium, receipts may be increased for specific purposes to a maximum of one hundred ninety‑five million dollars ($195,000,000), following consultation with the Joint Legislative Commission on Governmental Operations each time a requirement for an increase is identified. Rates established by the Department of Information of Technology to support the IT Internal Service Fund shall not exceed this required fund limit. In the event that the Internal Service Fund days' cash on hand balance exceeds 60 days, the Department of Information Technology shall immediately work with the Office of State Budget and Management to adjust established rates appropriately to move the cash balance back within the prescribed limit. If new rates for a specific Department of Information Technology service are increased over the previous fiscal period, the Department should provide their client agencies with feasible alternative options to reduce annual cost increases.
SECTION 7.2.(b)  As a result of appropriating overhead subscription costs in Budget Code 14660, IT Internal Service Fund requirements are to be reduced by a commensurate amount in Budget Code 74660.
SECTION 7.2.(c)  For the 2017‑2018 fiscal year, receipts collected for IT Internal Service Fund services shall only be used for the specific purposes for which they were collected and are hereby appropriated for those purposes. Funds collected for information technology equipment and fixtures shall be separately maintained and accounted for by the Department of Information Technology, and such funds shall be used only for the replacement of the fixtures and equipment for which the funds were collected.
SECTION 7.2.(d)  The State Chief Information Officer shall ensure that bills from the Department of Information Technology are easily understandable and fully transparent.
SECTION 7.2.(e)  The appropriations set forth in Section 2.1. of this act include appropriations for an Information Technology Internal Services Fund Rates Reserve. The Office of State Budget and Management shall ensure that those funds are used only for the following purposes:
(1)	To offset agency budget shortfalls resulting from Department of Information Technology rate increases. 
(2)	To offset Department of Information Technology Internal Service Fund budget shortfalls, if approved by the Office of State Budget and Management.

SECTION 7.3.  Reserved. 

DATA CENTER CONSOLIDATION
SECTION 7.4.(a)  The State CIO shall update an inventory of data center operations in the executive branch and shall continue to consolidate agency data centers in the most efficient manner possible. 
SECTION 7.4.(b)  State agencies shall use the State infrastructure to host their projects, services, data, and applications. The State Chief Information Officer may grant an exception if the State agency can demonstrate any of the following:
(1)	The Department does not have the technical capabilities required to host the application.
(2)	Valid security requirements preclude the use of State infrastructure, and a vendor can provide a more secure environment. 
(3)	The State agency provides adequate documentation, that utilizing a non‑Department of Information Technology (DIT) hosting solution meets all state security requirements and will produce operational savings when compared to the DIT proposed solution. If a State agency finds a lower cost solution compared to the DIT hosted solution, requests an SCIO exemption, and no final action is provided within 30 business days of the exemption request, then the State agency proposed lower cost non‑DIT solution shall be considered approved for procurement and acquisition.

exempt NC health information exchange
SECTION 7.5.  G.S. 126‑5(c1)(32) is repealed. 

TECHNICAL CHANGES RELATING TO DEPARTMENT OF INFORMATION TECHNOLOGY
SECTION 7.6.(a)  All budgets and personnel transitioned to the Department of Information Technology under G.S. 143B‑1325 will be transferred back to the respective agency effective July 1, 2017.
SECTION 7.6.(b)  G.S. 143B‑1320(a)(14) is repealed.
SECTION 7.6.(c)  G.S. 143B‑1321(d) reads as rewritten:
"(d)	Budgetary Matters. – The Department's budget shall incorporate information technology costs and anticipated expenditures of all divisions, boards, commissions, or other State entities for which the principal departments have budgetary authority."
SECTION 7.6.(d)  G.S. 143B‑1325 is repealed.
SECTION 7.6.(e)  G.S. 143B‑1330(c) reads as rewritten:
"(c)	Agencies shall prepare biennial information technology plans, including the requirements listed in subsection (b) of this section, and transmit these plans to the Department by a date determined by the State CIO in each even‑numbered year. Agencies shall provide all financial information to the State CIO necessary to determine full costs and expenditures for information technology assets and resources provided by the agencies or through contracts or grants. The Department shall consult with and assist State agencies in the preparation of these plans; shall provide appropriate personnel or other resources to agencies upon request. Plans shall be submitted to the Department by a date determined by the State CIO in each even‑numbered year."
SECTION 7.6.(f)  G.S. 143B‑1332 reads as rewritten:
"§ 143B‑1332.  Information Technology Fund.
There is established a special revenue fund to be known as the Information Technology Fund, which may receive transfers or other credits as authorized by the General Assembly. Money may be appropriated from the Information Technology Fund to support the operation and administration that meet statewide requirements, including planning, project management, security, electronic mail, State portal operations, early adoption of enterprise efforts, and the administration of systemwide procurement procedures."
SECTION 7.6.(g)  G.S. 143B‑1335 reads as rewritten:
"§ 143B‑1335.  Financial reporting and accountability for information technology investments and expenditures.
The Department, along with the Office of State Budget and Management and the Office of the State Controller, shall develop processes for budgeting and accounting of expenditures for information technology operations, services, projects, infrastructure, and assets for State agencies, notwithstanding any exemptions or deviations permitted pursuant to G.S. 143B‑1320(b) or (c). The budgeting and accounting processes may include hardware, software, personnel, training, contractual services, and other items relevant to information technology and the sources of funding for each. Annual reports regarding information technology shall be coordinated by the Department with the Office of State Budget and Management and the Office of the State Controller and submitted to the Governor and the General Assembly on or before October 1 of each year.
The State CIO shall not enter into any information technology contracts requiring agency financial participation without obtaining written agreement from agencies regarding apportionment of the contract costs.
"
SECTION 7.6.(h)  G.S. 143B‑1336(b) is repealed.
SECTION 7.6.(i)  G.S. 143B‑1336(c) is repealed.
SECTION 7.6.(j)  G.S. 143B‑1336(e) is repealed.
SECTION 7.6.(k)  G.S. 143B‑1340 reads as rewritten:
"§ 143B‑1340.  Project management.
(a)	Overall Management. – All information technology projects shall be managed through a standardized, fully documented process established and overseen by the State CIO. The State CIO shall ensure that projects follow the Department's established process and shall monitor schedule, budget, and adherence to business requirements. For all projects, the State CIO shall establish procedures to limit the need for change requests and shall report on this process to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division by January 1, 2016.
The State CIO shall also ensure that agency information technology project requirements are documented in biennial information technology plans. If an agency updates a biennial information technology plan to add a new project, the State CIO shall immediately report to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the reasons for the new requirement, the costs, and the sources of funding.
An agency that utilizes the system or software shall be designated as the sponsor for the information technology project or program and shall be responsible for overseeing the planning, development, implementation, and operation of the project or program. The Department and the assigned project managers shall advise and assist the designated agency for the duration of the project.
(b)	Project Review and Approval. – The State CIO shall review, approve, and monitor all information technology projects for State .agencies. Project approval may be granted upon the State CIO's determination that (i) the project conforms to project management procedures and policies, (ii) the project does not duplicate a capability already existing in the State, (iii) the project conforms to procurement rules and policies, and (iv) sufficient funds are available.
.…"
SECTION 7.6.(l)  G.S. 143B‑1341 reads as rewritten:
"§ 143B‑1341.  Project management standards.
…
	
(c)	Agency Responsibilities. – Each agency shall provide for one or more project managers who meet the applicable quality assurance standards for each information technology project that is subject to approval by the State CIO. Each project manager shall be subject to the review and approval of the State CIO. Each agency project manager shall provide periodic reports to the project management assistant assigned to the project by the State CIO under this subsection. The reports shall include information regarding project costs; issues related to hardware, software, or training; projected and actual completion dates; and any other information related to the implementation of the information technology project.
…."
SECTION 7.6.(m)  G.S. 143B‑1344 is repealed.
SECTION 7.6.(n)  Reserved.
SECTION 7.6.(o)  G.S. 143B‑1372(a) reads as rewritten:
"(a)	The Department shall plan, develop, implement, and operate a statewide electronic web presence, to include mobile, in order to (i) increase the convenience of members of the public in conducting online transactions with, and obtaining information from, State government and (ii) facilitate the public's interactions and communications with government agencies. The State CIO shall have approval authority over all agency Web site funding, to include any agency contract decisions.."

Consolidate statewide Procurement Functions under the department of Administration
SECTION 7.7.(a)  The Statewide Information Technology Procurement Office is hereby transferred from the Department of Information Technology to the Department of Administration. This transfer shall have all of the elements of a Type I transfer, as defined in G.S. 143A‑6.
SECTION 7.7.(b)  G.S. 143B‑1320, as amended by Section 7.6(b) of this act, reads as rewritten:
"§ 143B‑1320.  Definitions; scope; exemptions.
(a)	Definitions. – The following definitions apply in this Article:
…
	
…
(b)	Exemptions. – Except as otherwise specifically provided by law, the provisions of this Chapter do not apply to the following entities: the General Assembly, the Judicial Department, and The University of North Carolina and its constituent institutions. These entities may elect to participate in the information technology programs and services offered by the Department in accordance with the statutes, policies, and rules of the Department. The election must be made in writing, as follows:
…."
SECTION 7.7.(c)  G.S. 143B‑1321(a) reads as rewritten:
"(a)	The Department shall have the following powers and duties:
…
(8)	Set technical standards for information technology, review and approve information technology projects and budgets, establish and enforce information technology security standards, establish and enforce standards for information technology resources to be obtained by State entities, and develop a schedule for the replacement or modification of information technology systems.
(9)	Implement enterprise procurement processes in conjunction with the Division of Purchase and Contract and develop metrics to support this process.
…."
SECTION 7.7.(d)  G.S. 143B‑1322(c)(14) reads as rewritten:
"(c)	Administration. – The Department shall be managed under the administration of the State CIO. The State CIO shall have the following powers and duty to do all of the following:
…
(14)	Set technical standards for information technology, review and approve information technology projects and budgets, establish information technology security standards, procure information technology resources in accordance with Article 3I of Chapter 143 of the General Statutes, and develop a schedule for the replacement or modification of information technology systems."
SECTION 7.7.(e)  Reserved.
SECTION 7.7.(f)  G.S. 143B‑1332, as amended by Section 7.6(f) of this act, reads as rewritten:
"§ 143B‑1332.  Information Technology Fund.
There is established a special revenue fund to be known as the Information Technology Fund, which may receive transfers or other credits as authorized by the General Assembly. Money may be appropriated from the Information Technology Fund to support the operation and administration that meet statewide requirements, including planning, project management, security, electronic mail, State portal operations, and the early adoption of enterprise efforts."
SECTION 7.7.(g)  G.S. 143B‑1336(d) reads as rewritten:
"(d)	The State CIO shall establish standard information technology career paths for both management and technical tracks, including defined qualifications, career progression, training requirements, and appropriate compensation. These career paths shall be documented by February 1, 2016, and shall be provided to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division by Feburary 1, 2016, but may be submitted incrementally to meet Department requirements. The career paths shall be updated on an annual basis."
SECTION 7.7.(h)  G.S. 143B‑1340, as amended by Section 7.6(k)of this act, reads as rewritten:
"§ 143B‑1340.  Project management.
…
(b)	Project Review and Approval. – The State CIO shall review, approve, and monitor all information technology projects for State agencies. Project approval may be granted upon the State CIO's determination that (i) the project conforms to project management procedures and policies, (ii) the project does not duplicate a capability already existing in the State, (iii) the project conforms to Departmental rules and policies, and (iv) sufficient funds are available.
…
(f)	Performance Contracting. – All contracts between the State and a private party for information technology projects shall include provisions for vendor performance review and accountability, contract suspension or termination, and termination of funding. The State CIO may require that these contract provisions include a performance bond, monetary penalties, or require other performance assurance measures for projects that are not completed within the specified time period or that involve costs in excess of those specified in the contract. The State CIO may specify that cost savings realized on government vendor partnerships be utilized as performance incentives for an information technology vendor.
(g)	Notwithstanding the provisions of G.S. 114‑2.3, any State agency developing and implementing an information technology project with a total cost of ownership in excess of five million dollars ($5,000,000) may be required by the State CIO to engage the services of private counsel or subject matter experts with the appropriate information technology expertise. The private counsel or subject matter expert may assist the agency and the Division of Purchase and Contract to review requests for proposals; to review and provide advice and assistance during the evaluation of proposals and selection of any vendors; and to review and negotiate contracts associated with the development, implementation, operation, and maintenance of the project. This requirement may also apply to information technology programs that are separated into individual projects if the total cost of ownership for the overall program exceeds five million dollars ($5,000,000)."
SECTION 7.7.(i)  G.S. 143B‑1341, as amended by Section 7.6(l) of this act, reads as rewritten:
"§ 143B‑1341.  Project management standards.
(a)	The State CIO shall establish standardized documentation requirements for agency projects. The State CIO shall establish standards for project managers and project management assistants. The State CIO shall develop performance measures for project reporting and shall make this reporting available through a publicly accessible Web site.
…
(d)	State CIO Responsibilities. – The State CIO shall provide a project management assistant from the Department for any approved separate agency project, whether the project is undertaken in single or multiple phases or components. The State CIO may designate a project management assistant for any other information technology project.
The project management assistant shall advise the agency with the initial planning of a project, and shall assist the agency and the Division of Purchase and Contract with the content and design of any request for proposals, contract development, procurement, and architectural and other technical reviews. The project management assistant shall also monitor progress in the development and implementation of the project and shall provide status reports to the agency and the State CIO, including recommendations regarding continued approval of the project.
The State CIO shall establish a clearly defined, standardized process for project management that includes time lines for completion of process requirements for both the Department and agencies. The State CIO shall also establish reporting requirements for information technology projects, both during the planning, development, and implementation process and following completion of the project. The State CIO shall continue to monitor system performance and financial aspects of each project after implementation. The State CIO shall also monitor any certification process required for State information technology projects and shall immediately report any issues associated with certification processes to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division."
SECTION 7.7.(j)  The title of Part 4 of Article 15 of Chapter 143B of the General Statues reads as rewritten:
"Part 4. Information Technology Planning, Programs and Contracts."
SECTION 7.7.(k)  G.S. 143B‑1350 reads as rewritten:
"§ 143B‑1350.  Procurement of information technology.

	

	

	

	
	
(d)	Each State agency shall furnish to the State CIO when requested, and on forms as prescribed, estimates of and budgets for all information technology goods and services needed and required by such department, institution, or agency for such periods in advance as may be designated by the State CIO. When requested, all State agencies shall provide to the State CIO on forms as prescribed, actual expenditures for all goods and services needed and required by the department, institution, or agency for such periods after the expenditures have been made as may be designated by the State CIO.

	

	

	

(j)	Information Technology Innovation Center. – The Department may operate a State Information Technology Innovation Center (iCenter) to develop and demonstrate technology solutions with potential benefit to the State and its citizens. The iCenter may facilitate the piloting of potential solutions to State technology requirements. In operating the iCenter, the State CIO shall ensure that all State laws, rules, and policies are followed.
Vendor participation in the iCenter shall not be construed to (i) create any type of preferred status for vendors or (ii) abrogate the requirement that agency and statewide requirements for information technology support, including those of the Department, are awarded based on a competitive process that follows information technology procurement guidelines.
	"
SECTION 7.7.(l)  G.S. 143B‑1351 reads as rewritten:
"§ 143B‑1351. Restriction on State agency contractual authority with regard to information technology.
(a)	All State agencies covered by this Article shall use contracts for information technology to include enterprise licensing agreements and convenience contracts established by the Division of Purchase and Contract. The State CIO shall consult the agency heads prior to the initiation of any enterprise project or contract. Notwithstanding any other statute, the authority of State agencies to procure or obtain information technology shall be subject to compliance with the provisions of this Article.
(b)	Notwithstanding any other provision of law, local governmental entities may use the information technology programs and services in accordance with the statutes, policies, and rules of the Department.
(c)	Any other State entities exempt from Part 3 or Part 5 of this Article may also use the information technology programs and services in accordance with the statutes, policies, and rules of the Department."
SECTION 7.7.(m)  G.S. 143B‑1352 is repealed.
SECTION 7.7.(n)  G.S. 143B‑1354 is repealed.
SECTION 7.7.(o)  G.S. 143B‑1355 is repealed.
SECTION 7.7.(p)  G.S. 143B‑1356 is repealed.
SECTION 7.7.(q)  Reserved.
SECTION 7.7.(r)  G.S. 143B‑1358 is repealed.
SECTION 7.7.(s)  G.S. 143B‑1359 is repealed.
SECTION 7.7.(t)  G.S. 143B‑1360 is repealed.
SECTION 7.7.(u)  G.S. 143B‑1361 is repealed.
SECTION 7.7.(v)  G.S. 143B‑1362(b) reads as rewritten:
"(b)	Certain Approvals Required. – Notwithstanding any provision of law to the contrary, no information technology personal services contract, nor any contract that provides personnel to perform information technology functions regardless of the cost of the contract, may be established or renewed without written approval from the Department of Information Technology and the Office of State Budget and Management prior to a solicitation being issued in accordance with the requirements of Articles 3 and 3I of Chapter 143 of the General Statutes. To facilitate compliance with this requirement, the Department of Information Technology shall develop and document the following:
…."
SECTION 7.7.(w)  G.S. 143B‑1385(b)(1) reads as rewritten:
"(1)	Purpose. – The purpose of the GDAC is to utilize public‑private partnerships as part of a statewide data integration and data‑sharing initiative and to identify data integration and business intelligence opportunities that will generate greater efficiencies in, and improved service delivery by, State agencies, departments, and institutions. The intent is not to replace transactional systems but to leverage the data from those systems for enterprise‑level State business intelligence. The GDAC shall continue the work, purpose, and resources of previous data integration efforts and shall otherwise advise and assist the State CIO in the management of the initiative. The State CIO shall make any organizational changes necessary to maximize the effectiveness and efficiency of the GDAC. Procurement of goods and services for the GDAC shall be in accordance with Article 3I of Chapter 143 of the General Statutes."
SECTION 7.7.(x)  G.S. 143B‑1402(a)(6) reads as rewritten:
"(6)	To make and enter into contracts and agreements necessary or incidental to the performance of its powers and duties under this Part and to use revenue available to the 911 Board under G.S. 143B‑1404 for administrative expenses to pay its obligations under the contracts and agreements. Contracts and agreements of the 911 Board shall be exempt from the requirements of Articles 3 and 3I of Chapter 143 of the General Statutes."
SECTION 7.7.(y)  Chapter 143 of the General Statutes is amended by adding a new Article to read:
"Article 3I.
"Information Technology Procurement.
"§ 143‑64.86.  Procurement of information technology.
(a)	Except as provided in this Article, the Division of Purchase and Contract is responsible for information technology procurement, in accordance with the provisions of Article 3 of this Chapter and the rules, policies, and procedures established thereunder.
Notwithstanding any other provision of law, the Division shall procure or approve the procurement of all information technology goods and services for all State departments, agencies, institutions, boards, commissions, or other State entity receiving State appropriations. The requirements of this Article shall not apply to the General Assembly, the Judicial Department, or the constituent institutions of The University of North Carolina.
(b)	The Department of Information Technology shall review all proposed procurements to ensure they meet current technology standards, are not duplicative, meet business objectives, are cost‑effective, and are adequately funded.
(c)	The Division shall, subject to the provisions of this Article, do all of the following with respect to State information technology procurement:
(1)	Purchase or contract for all information technology for State agencies using the evaluation methodology set out in G.S. 143‑135.9, unless the State Purchasing Officer shall approve another method for a particular procurement event.
(2)	In conjunction with the Department of Information Technology, establish standardized, consistent processes, specifications, and standards that shall apply to all information technology to be purchased, licensed, or leased by State agencies and relating to information technology personal services contract requirements for State agencies, including, but not limited to, requiring convenience contracts to be rebid prior to termination without extensions. The processes may include aggregation of hardware purchases, the use of formal bid procedures, restrictions on supplemental staffing, enterprise software licensing, hosting, and multiyear maintenance agreements.
(3)	Establish procedures to permit State agencies and local government entities to use the General Services Administration (GSA) Cooperative Purchasing Program to purchase information technology (i) awarded under GSA Supply Schedule 70 Information Technology and (ii) from contracts under the GSA's Consolidated Schedule containing information technology special item numbers.
(4)	Comply with the State government‑wide technical architecture, as required by the State CIO.
(5)	Coordinate with the State CIO to provide strategic sourcing resources and detailed, documented planning to procure aggregated estimates of information technology goods and services needed and required by State agencies, based on agency data compiled and consolidated by the Department of Information Technology.
(c)	All offers to contract, whether through competitive bidding or other procurement method, shall be subject to evaluation and selection by acceptance of the most advantageous offer to the State. Evaluation shall include best value, as the term is defined in G.S. 143‑135.9(a)(1), compliance with information technology project management policies, compliance with information technology security standards and policies, substantial conformity with the specifications, and other conditions set forth in the solicitation.
(d)	All contracts subject to the provisions of this Article shall include a limitation on the contractor's liability to the State for damages. Except as otherwise provided in this subsection, the limitation of liability shall be for damages arising from any cause whatsoever, regardless of the form of action. The amount of liability shall be determined based on the nature of the goods or services covered by the contract and the degree of risk of nonperformance; however, there shall be a presumptive limitation of no more than three times the value of the contract. Limitation of liability pursuant to this subsection shall specifically, include, but not be limited to, the contractor's liability for damages and any other losses relating to the loss of, unauthorized access to, or unauthorized disclosure of data.
The amount of liability for damages and any other losses relating to the loss of, unauthorized access to, or unauthorized disclosure of data may be raised to no more than three times the value of the contract if all of the following apply:
(1)	The State Purchasing Officer completes a risk assessment prior to the bid solicitation or request for proposal.
(2)	The risk assessment determines that an increase in the liability amount is necessary to protect the State's best interests.
(3)	The bid solicitation or request for proposal indicates that increased liability will be required for the resulting contract.
Prior to entering into any contract subject to the provisions of this Article, the Division or the agency, as applicable, shall reasonably determine that the contractor possesses sufficient financial resources, either independently or through third‑party sources, such as insurance, to satisfy the agreed upon limitation of liability. The limitation of liability required by this subsection shall not apply to liability of the contractor for intentional or willful misconduct, damage to tangible personal property, physical injuries to persons, any notification costs resulting from compliance with G.S. 132‑1.10(c1), or any statutory penalties, fees, charges, or other amounts that may be assessed against a State entity based on federal law and that are attributable to an act or failure to act of the contractor. Nothing in this subsection (i) limits the contractor's liability directly to third parties, (ii) alters any indemnity agreement by the contractor, or (iii) affects the rights and obligations related to contribution among joint tortfeasors established by Chapter 1B of the General Statutes and other applicable law.
(e)	In addition to permitted waivers of competition, the requirements of competitive bidding shall not apply to information technology contracts and procurements:
(1)	In cases of pressing need or emergency arising from a security incident.
(2)	In the use of master licensing or purchasing agreements governing the State's acquisition of proprietary intellectual property.
Any exceptions shall immediately be reported to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division.
"§ 143‑64.87.  Restriction on State agency contractual authority with regard to information technology.
(a)	All State agencies covered by this Article shall use contracts for information technology to include enterprise licensing agreements and convenience contracts established by the Division.
(b)	Notwithstanding any other statute, the authority of State agencies to procure or obtain information technology shall be subject to compliance with the provisions of this Article and the statutes, policies, and rules of the Division. State or local government entities otherwise exempt from the requirements of this Article may, but are not required to, use the information technology contracts and procurement services offered by the Division. Local governmental entities are not required to comply with otherwise applicable competitive bidding requirements when using contracts established by the Division.
"§ 143‑64.88.  Award review.
(a)	When the dollar value of a contract for the procurement of information technology equipment, materials, supplies, and service exceeds the amount of the agency's delegation or benchmark, an award recommendation shall be submitted to the Division of Purchase and Contract for approval or other action. The Division shall promptly notify the agency or institution making the recommendation, or for which the purchase is to be made, of the action taken.
(b)	Prior to submission for review pursuant to this section for any contract for information technology being acquired for the benefit of an agency authorized to deviate from this Article pursuant to G.S. 143B‑1320(c), the State CIO shall review and approve the procurement to ensure compliance with the established processes, specifications, and standards applicable to all information technology purchased, licensed, or leased in State government, including compliance with the State government‑wide technical architecture and standards established by the State CIO.
"§ 143‑64.89.  Multiyear contracts; Attorney General assistance.
(a)	Notwithstanding the cash management provisions of G.S. 147‑86.11, the Division may procure information technology goods and services for periods up to a total of three years where the terms of the procurement contracts require payment of all or a portion of the contract price at the beginning of the contract agreement. All of the following conditions shall be met before payment for these agreements may be disbursed:
(1)	Any advance payment can be accomplished within the appropriate agency budget.
(2)	The State Controller receives conclusive evidence from the purchasing agency that the proposed agreement would be more cost‑effective than a multiyear agreement that complies with G.S. 147‑86.11.
(3)	The procurement complies in all other aspects with applicable statutes and rules.
(4)	The proposed agreement contains contract terms that protect the financial interest of the State against contractor nonperformance or insolvency through the creation of escrow accounts for funds, source codes, or both, or by any other reasonable means that have legally binding effect.
The Office of State Budget and Management shall ensure the savings from any authorized agreement by the Division shall be included in the Department of Information Technology's IT Internal Service Fund rate calculations before approving annual proposed rates. Any savings resulting from the agreements shall be returned to agencies included in the contract in the form of reduced rates.
(b)	At the request of the State Purchasing Officer, the Attorney General shall provide legal advice and services necessary to implement this Article.
"§ 143‑64.90.  Refurbished computer equipment purchasing program.
(a)	The Department of Information Technology and the Department of Administration, with the administrative support of the Division of Purchase and Contract, shall offer State and local governmental entities the option of purchasing refurbished computer equipment from registered computer equipment refurbishers whenever most appropriate to meet the needs of State and local governmental entities.
(b)	State and local governmental entities shall document savings resulting from the purchase of the refurbished computer equipment, including, but not limited to, the initial acquisition cost as well as operations and maintenance costs. These savings shall be reported quarterly to the Division of Purchase and Contract.
(c)	The Division of Purchase and Contract shall administer the refurbished computer equipment program by establishing a competitive purchasing process to support this initiative that meets all State information technology procurement laws and procedures and ensures that agencies receive the best value.
(d)	Participating computer equipment refurbishers must meet all procurement requirements established by the Department of Information Technology and the Department of Administration.
"§ 143‑64.91.  Configuration and specification requirements same as for new computers.
Refurbished computer equipment purchased under this act must conform to the same standards as the State may establish as to the configuration and specification requirements for the purchase of new computers."

IT services provided by DIT
SECTION 7.8.(a)  Notwithstanding G.S. 143B‑1333, the State CIO, in collaboration with OSBM and State agencies, shall evaluate all information technology services currently provided by the Department of Information Technology (DIT) and determine whether they should continue to be offered by DIT. The evaluation may include services not currently offered by DIT.
SECTION 7.8.(b)  Factors to be considered in the evaluation, include, but are not limited to, the following:
(1)	The ability of DIT to provide the service.
(2)	The ability of State agencies to provide the service.
(3)	The cost of the service if DIT provides the service compared with the cost if the service is provided by others. Cost calculations shall include the requirements needed to comply with State and federal security requirements which are specific in scope and mandated by statute or administrative code or rule.
(4)	Investments already made and associated costs with discontinuing a service.
(5)	Administrative ease and efficiency.
SECTION 7.8.(c)  For any service where it is determined that DIT should be the service provider, DIT and OSBM must agree whether the service should be funded by rates charged to agencies, a general fund appropriation directly to DIT, or some other method. For any service where DIT will charge rates, the evaluation must include (i) the methodology DIT will use to develop rates, (ii) a plan for DIT to provide clear, understandable bills, and (iii) metrics for DIT to use to measure the cost and level of DIT services compared to other providers on an annual basis.
SECTION 7.8.(d)  The State CIO shall report on the results of this evaluation to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on or before December 1, 2017, along with any recommended legislation.

state construction office/electronic plan review and collaboration software project
SECTION 7.9.  Notwithstanding any provision of law to the contrary, remaining funds appropriated in the 2015‑2017 fiscal biennium for the Department of Administration's Maintenance Management System Replacement shall not revert and may be used by the State Construction Office to fund an electronic plan review and collaboration software project.

PART VIII. PUBLIC SCHOOLS

FUNDS FOR CHILDREN WITH DISABILITIES
SECTION 8.1.  The State Board of Education shall allocate additional funds for children with disabilities on the basis of four thousand one hundred twenty‑five dollars and twenty‑seven cents ($4,125.27) per child for fiscal years 2017‑2018 and 2018‑2019. Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities or (ii) twelve and one‑half percent (12.5%) of its 2017‑2018 allocated average daily membership in the local school administrative unit. The dollar amounts allocated under this section for children with disabilities shall also be adjusted in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve children with disabilities.

FUNDS FOR ACADEMICALLY GIFTED CHILDREN
SECTION 8.2.  The State Board of Education shall allocate additional funds for academically or intellectually gifted children on the basis of one thousand three hundred fourteen dollars and fifty‑six cents ($1,314.56) per child for fiscal years 2017‑2018 and 2018‑2019. A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2017‑2018 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 be adjusted in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve academically or intellectually gifted children.

SUPPLEMENTAL FUNDING IN LOW‑WEALTH COUNTIES
SECTION 8.3.(a)  Use of Funds for Supplemental Funding. – All funds received pursuant to this section shall be used only (i) to provide instructional positions, instructional support positions, teacher assistant positions, clerical positions, school computer technicians, instructional supplies and equipment, staff development, and textbooks and digital resources and (ii) for salary supplements for instructional personnel and instructional support personnel. Local boards of education are encouraged to use at least twenty‑five percent (25%) of the funds received pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end‑of‑grade tests in grades three through eight.
SECTION 8.3.(b)  Definitions. – As used in this section, the following definitions apply:
(1)	"Anticipated county property tax revenue availability" means the county‑adjusted property tax base multiplied by the effective State average tax rate.
(2)	"Anticipated total county revenue availability" means the sum of the following:
a.	Anticipated county property tax revenue availability.
b.	Local sales and use taxes received by the county that are levied under Chapter 1096 of the 1967 Session Laws or under Subchapter VIII of Chapter 105 of the General Statutes.
c.	Fines and forfeitures deposited in the county school fund for the most recent year for which data are available.
(3)	"Anticipated total county revenue availability per student" means the anticipated total county revenue availability for the county divided by the average daily membership of the county.
(4)	"Anticipated State average revenue availability per student" means the sum of all anticipated total county revenue availability divided by the average daily membership for the State.
(5)	"Average daily membership" means average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual adopted by the State Board of Education. If a county contains only part of a local school administrative unit, the average daily membership of that county includes all students who reside within the county and attend that local school administrative unit.
(6)	"County‑adjusted property tax base" shall be computed as follows:
a.	Subtract the present‑use value of agricultural land, horticultural land, and forestland in the county, as defined in G.S. 105‑277.2, from the total assessed real property valuation of the county.
b.	Adjust the resulting amount by multiplying by a weighted average of the three most recent annual sales assessment ratio studies.
c.	Add to the resulting amount the following:
1.	Present‑use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105‑277.2.
2.	Value of property of public service companies, determined in accordance with Article 23 of Chapter 105 of the General Statutes.
3.	Personal property value for the county.
(7)	"County‑adjusted property tax base per square mile" means the county‑adjusted property tax base divided by the number of square miles of land area in the county.
(8)	"County wealth as a percentage of State average wealth" shall be computed as follows:
a.	Compute the percentage that the county per capita income is of the State per capita income and weight the resulting percentage by a factor of five‑tenths.
b.	Compute the percentage that the anticipated total county revenue availability per student is of the anticipated State average revenue availability per student and weight the resulting percentage by a factor of four‑tenths.
c.	Compute the percentage that the county‑adjusted property tax base per square mile is of the State‑adjusted property tax base per square mile and weight the resulting percentage by a factor of one‑tenth.
d.	Add the three weighted percentages to derive the county wealth as a percentage of the State average wealth.
(9)	"Effective county tax rate" means the actual county tax rate multiplied by a weighted average of the three most recent annual sales assessment ratio studies.
(10)	"Effective State average tax rate" means the average of effective county tax rates for all counties.
(11)	"Local current expense funds" means the most recent county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C‑447.
(12)	"Per capita income" means the average for the most recent three years for which data are available of the per capita income according to the most recent report of the United States Department of Commerce, Bureau of Economic Analysis, including any reported modifications for prior years as outlined in the most recent report.
(13)	"Sales assessment ratio studies" means sales assessment ratio studies performed by the Department of Revenue under G.S. 105‑289(h).
(14)	"State average adjusted property tax base per square mile" means the sum of the county‑adjusted property tax bases for all counties divided by the number of square miles of land area in the State.
(15)	"State average current expense appropriations per student" means the most recent State total of county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C‑447.
(16)	"Supplant" means to decrease local per student current expense appropriations from one fiscal year to the next fiscal year.
(17)	"Weighted average of the three most recent annual sales assessment ratio studies" means the weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available. If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used. If property has been revalued the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used.
SECTION 8.3.(c)  Eligibility for Funds. – Except as provided in subsection (g) of this section, the State Board of Education shall allocate these funds to local school administrative units located in whole or in part in counties in which the county wealth as a percentage of the State average wealth is less than one hundred percent (100%).
SECTION 8.3.(d)  Allocation of Funds. – Except as provided in subsection (f) of this section, the amount received per average daily membership for a county shall be the difference between the State average current expense appropriations per student and the current expense appropriations per student that the county could provide given the county's wealth and an average effort to fund public schools. To derive the current expense appropriations per student that the county could be able to provide given the county's wealth and an average effort to fund public schools, multiply the county's wealth as a percentage of State average wealth by the State average current expense appropriations per student. The funds for the local school administrative units located in whole or in part in the county shall be allocated to each local school administrative unit located in whole or in part in the county based on the average daily membership of the county's students in the school units. If the funds appropriated for supplemental funding are not adequate to fund the formula fully, each local school administrative unit shall receive a pro rata share of the funds appropriated for supplemental funding.
SECTION 8.3.(e)  Formula for Distribution of Supplemental Funding Pursuant to This Section Only. – The formula in this section is solely a basis for distribution of supplemental funding for low‑wealth counties and is not intended to reflect any measure of the adequacy of the educational program or funding for public schools. The formula is also not intended to reflect any commitment by the General Assembly to appropriate any additional supplemental funds for low‑wealth counties.
SECTION 8.3.(f)  Minimum Effort Required. – A county that (i) maintains an effective county tax rate that is at least one hundred percent (100%) of the effective State average tax rate in the most recent year for which data are available or (ii) maintains a county appropriation per student to the school local current expense fund of at least one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools shall receive full funding under this section. A county that maintains a county appropriation per student to the school local current expense fund of less than one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools shall receive funding under this section at the same percentage that the county's appropriation per student to the school local current expense fund is of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools.
SECTION 8.3.(g)  Nonsupplant Requirement. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2017‑2019 fiscal biennium, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply:
(1)	The current expense appropriations per student of the county for the current year is less than ninety‑five percent (95%) of the average of local current expense appropriations per student for the three prior fiscal years.
(2)	The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section.
The State Board of Education shall adopt rules to implement the requirements of this subsection.
SECTION 8.3.(h)  Counties Containing a Base of the Armed Forces. – Notwithstanding any other provision of this section, for the 2017‑2019 fiscal biennium, counties containing a base of the Armed Forces of the United States that have an average daily membership of more than 23,000 students shall receive the same amount of supplemental funding for low‑wealth counties as received in the 2012‑2013 fiscal year.
SECTION 8.3.(i)  Funds for EVAAS Data. – Notwithstanding the requirements of subsection (a) of this section, local school administrative units may utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value‑Added Assessment System (EVAAS).
SECTION 8.3.(j)  Reports. – For the 2017‑2019 fiscal biennium, the State Board of Education shall report to the Fiscal Research Division prior to May 15 of each year if it determines that counties have supplanted funds.
SECTION 8.3.(k)  Department of Revenue Reports. – The Department of Revenue shall provide to the Department of Public Instruction a preliminary report for the current fiscal year of the assessed value of the property tax base for each county prior to March 1 of each year and a final report prior to May 1 of each year. The reports shall include for each county the annual sales assessment ratio and the taxable values of (i) total real property, (ii) the portion of total real property represented by the present‑use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105‑277.2, (iii) property of public service companies determined in accordance with Article 23 of Chapter 105 of the General Statutes, and (iv) personal property.

SMALL SCHOOL SYSTEM SUPPLEMENTAL FUNDING 
SECTION 8.4.(a)  Allotment Schedule for the 2017‑2019 Fiscal Biennium. – Except as otherwise provided in subsection (d) of this section, each eligible county school administrative unit shall receive a dollar allotment according to the following schedule:
Allotted ADM	Small County Allotment
	0‑600	$1,710,000
	601‑1,300	$1,820,000
	1,301‑1,700	$1,548,700
	1,701‑2,000	$1,600,000
	2,001‑2,300	$1,560,000
	2,301‑2,600	$1,470,000
	2,601‑2,800	$1,498,000
	2,801‑3,200	$1,548,000
SECTION 8.4.(b)  Phase‑Out Provision for the 2017‑2018 Fiscal Year. – If a local school administrative unit becomes ineligible for funding under the schedule in subsection (a) of this section in the 2017‑2018 fiscal year, funding for that unit shall be phased out over a five‑year period. Funding for such local school administrative units shall be reduced in equal increments in each of the five years after the unit becomes ineligible. Funding shall be eliminated in the fifth fiscal year after the local school administrative unit becomes ineligible.
Allotments for eligible local school administrative units under this subsection shall not be reduced by more than twenty percent (20%) of the amount received in fiscal year 2016‑2017 in any fiscal year. A local school administrative unit shall not become ineligible for funding if either the highest of the first two months total projected average daily membership for the current year or the higher of the first two months total prior year average daily membership would otherwise have made the unit eligible for funds under the schedule in subsection (a) of this section.
SECTION 8.4.(c)  Phase‑Out Provision for the 2018‑2019 Fiscal Year. – If a local school administrative unit becomes ineligible for funding under the schedule in subsection (a) of this section in the 2018‑2019 fiscal year, funding for that unit shall be phased out over a five‑year period. Funding for such local school administrative units shall be reduced in equal increments in each of the five years after the unit becomes ineligible. Funding shall be eliminated in the fifth fiscal year after the local administrative unit becomes ineligible.
Allotments for eligible local school administrative units under this subsection shall not be reduced by more than twenty percent (20%) of the amount received in fiscal year 2017‑2018 in any fiscal year. A local school administrative unit shall not become ineligible for funding if either the highest of the first two months total projected average daily membership for the current year or the higher of the first two months total prior year average daily membership would otherwise have made the unit eligible for funds under the schedule in subsection (a) of this section.
SECTION 8.4.(d)  Nonsupplant Requirement for the 2017‑2019 Fiscal Biennium. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2017‑2019 fiscal biennium, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply:
(1)	The current expense appropriation per student of the county for the current year is less than ninety‑five percent (95%) of the average of local current expense appropriation per student for the three prior fiscal years.
(2)	The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section.
The State Board of Education shall adopt rules to implement the requirements of this subsection.
SECTION 8.4.(e)  Reports. – For the 2017‑2019 fiscal biennium, the State Board of Education shall report to the Fiscal Research Division prior to May 15 of each fiscal year if it determines that counties have supplanted funds.
SECTION 8.4.(f)  Use of Funds. – Local boards of education are encouraged to use at least twenty percent (20%) of the funds they receive pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end‑of‑grade tests in grades three through eight.
Local school administrative units may also utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value‑Added Assessment System (EVAAS).

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

UNIFORM EDUCATION REPORTING SYSTEM (UERS) FUNDS
SECTION 8.6.  Funds appropriated in this act for the Uniform Education Reporting System (UERS) for the 2017‑2019 fiscal biennium shall not revert at the end of each fiscal year, but shall remain available until expended.

DIGITAL LEARNING PLAN FUNDS 
SECTION 8.7.(a)  Funds appropriated in Section 8.23 of S.L. 2016‑94 to continue the progress in implementing the Digital Learning Plan in North Carolina public schools shall not revert at the end of fiscal year 2016‑17 but shall remain available until expended. 
SECTION 8.7.(b)  This section becomes effective June 30, 2017.

SCHOOL‑BASED PERSONNEL TO IMPROVE STUDENT OUTCOMES ALLOTMENT
SECTION 8.8.  The State Board of Education shall allocate funds appropriated in this act for a new allotment for Local Education Agencies (LEAs) to hire additional school‑based personnel who will have a direct impact on improving student outcomes. Funding shall be allocated as a dollar allotment based on average daily membership. The Department of Public Instruction shall report to the State Board of Education on the use of these funds by LEAs.

WHOLE SCHOOL, WHOLE CHILD, WHOLE COMMUNITY PILOT
SECTION 8.9.(a)  The State Board of Education shall establish a three‑year pilot program (Pilot) to implement the Whole School, Whole Community, Whole Child model in at least five local education agencies (LEAs). This pilot authorized under subsection shall expire on June 30, 2020.
SECTION 8.9.(b)  The Office of State Budget and Management shall remove the two hundred fifty thousand dollar ($250,000) annual appropriation for this Pilot from the Department of Public Instruction's base budget at the conclusion of the three‑year Pilot.
SECTION 8.9.(c)  The State Board of Education shall provide interim reports on implementation of the Pilot to the Joint Legislative Education Oversight Committee no later than May 1, 2018 and May 1, 2019.  The State Board shall provide a final report on outcomes of the Pilot no later than September 1, 2020.

ADMINISTRATION OF EXCELLENT PUBLIC SCHOOLS ACT 
SECTION 8.10.  From the funds appropriated to implement Section 7A.1 of S.L. 2012‑142, as amended, the Department of Public Instruction may establish or support additional positions required to administer the program that are in addition to the eleven positions authorized by S.L. 2012‑142.

TEACHER COMPENSATION AND ADVANCED TEACHING ROLES PILOT
SECTION 8.11.(a) From the funds appropriated in this act to the Department of Public Instruction, the sum of nine million eight hundred thousand dollars ($9,800,000) for the 2017‑2018 fiscal year shall be used for the award of funds to selected local school administrative units the for the Teacher Compensation Models and Advanced Teaching Roles pilots, in accordance with Section 8.7 of S.L. 2016‑94. Funds awarded to the local school administrative units shall be awarded in proportion to the current expenditure of the pilot local school administrative unit on teacher salaries.
SECTION 8.11.(b) Funds subject to subsection (a) of this section shall not revert at the end of the fiscal year, but shall remain available until expended. 

PART IX. COMPENSATION OF PUBLIC SCHOOL EMPLOYEES

TEACHER SALARY SCHEDULE
SECTION 9.1.(a)  The following monthly teacher salary schedule shall apply for the 2017‑2018 fiscal year to licensed personnel of the public schools who are classified as teachers. The salary schedule is based on years of teaching experience.
2017‑2018 Teacher Monthly Salary Schedule
Years of Experience	"A" Teachers
0		$3,675
1	$3,760
2	$3,790
3	$3,825
4	$3,875
5	$3,925
6	$4,000
7	$4,050
8	$4,100
9	$4,160
10	$4,240
11	$4,310
12	$4,400
13	$4,475
14	$4,550
15	$4,720
16	$4,740
17	$4,760
18	$4,780
19	$4,800
20	$4,950
21	$5,000
22	$5,025
23	$5,050
24	$5,075
25	$5,275
26	$5,300
27	$5,310
28	$5,320
29	$5,330
30	$5,335
31	$5,340
32	$5,345
33	$5,350
34	$5,355
35	$5,360
36	$5,365
37+	$5,370
SECTION 9.1.(b)  The following monthly teacher salary schedule shall apply for the 2018‑2019 fiscal year to licensed personnel of the public schools who are classified as teachers. The salary schedule is based on years of teaching experience.

2018‑2019 Teacher Monthly Salary Schedule
Years of Experience	"A" Teachers
0		$3,800
1	$3,875
2	$3,910
3	$3,940
4	$3,990
5	$4,050
6	$4,120
7	$4,203
8	$4,303
9	$4,403
10	$4,503
11	$4,603
12	$4,703
13	$4,803
14	$4,903
15	$5,003
16	$5,018
17	$5,030
18	$5,043
19	$5,080
20	$5,140
21	$5,180
22	$5,210
23	$5,240
24	$5,260
25	$5,470
26	$5,480
27	$5,490
28	$5,500
29	$5,510
30	$5,520
31	$5,525
32	$5,530
33	$5,535
34	$5,540
35	$5,545
36	$5,550
37+	$5,555
SECTION 9.1.(c)  Salary Supplements for Teachers Paid on These Salary Schedules. –
(1)	Licensed teachers who have NBPTS certification shall receive a salary supplement each month of twelve percent (12%) of their monthly salary on the "A" salary schedule.
(2)	Licensed teachers who are classified as "M" teachers shall receive a salary supplement each month of ten percent (10%) of their monthly salary on the "A" salary schedule.
(3)	Licensed teachers with licensure 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 supplement provided to them as "M" teachers.
(4)	Licensed teachers with licensure 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 supplement provided to them as "M" teachers.
(5)	Certified school nurses shall receive a salary supplement each month of ten percent (10%) of their monthly salary on the "A" salary schedule.
SECTION 9.1.(d)  The first step of the salary schedule for (i) school psychologists, (ii) school speech pathologists who are licensed as speech pathologists at the master's degree level or higher, and (iii) school audiologists who are licensed as audiologists at the master's degree level or higher shall be equivalent to the sixth step of the "A" salary schedule. These employees shall receive a salary supplement each month of ten percent (10%) of their monthly salary and are eligible to receive salary supplements equivalent to those of teachers for academic preparation at the six‑year degree level or the doctoral degree level.
SECTION 9.1.(e)  The twenty‑sixth step of the salary schedule for (i) school psychologists, (ii) school speech pathologists who are licensed as speech pathologists at the master's degree level or higher, and (iii) school audiologists who are licensed as audiologists at the master's degree level or higher shall be seven and one‑half percent (7.5%) higher than the salary received by these same employees on the twenty‑fifth step of the salary schedule.
SECTION 9.1.(f)  Beginning with the 2014‑2015 fiscal year, in lieu of providing annual longevity payments to teachers paid on the teacher salary schedule, the amounts of those longevity payments are included in the monthly amounts under the teacher salary schedule.
SECTION 9.1.(g)  A teacher compensated in accordance with these salary schedules for the 2017‑2018 and 2018‑2019 school years shall receive an amount equal to the greater of the following:
(1)	The applicable amount on the salary schedule for the applicable school year.
(2)	For teachers who were eligible for longevity for the 2013‑2014 school year, the sum of the following:
a.	The teacher's salary provided in Section 35.11 of S.L. 2013‑360.
b.	The longevity that the teacher would have received under the longevity system in effect for the 2013‑2014 school year provided in Section 35.11 of S.L. 2013‑360 based on the teacher's current years of service.
c.	The annual bonus provided in Section 9.1(e) of S.L. 2014‑100.
(3)	For teachers who were not eligible for longevity for the 2013‑2014 school year, the sum of the teacher's salary and annual bonus provided in Section 9.1 of S.L. 2014‑100.
SECTION 9.1.(h)  As used in this section, the term "teacher" shall also include instructional support personnel.

SCHOOL‑BASED ADMINISTRATOR SALARY SCHEDULE
SECTION 9.2.(a)  The following base salary schedule for school‑based administrators applies only to principals and assistant principals. This base salary schedule applies for the 2017‑2018 fiscal year commencing July 1, 2017.
2017‑2018 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	$4,224	‑	‑	‑	‑
	10	$4,298	‑	‑	‑	‑
	11	$4,455	‑	‑	‑	‑
	12	$4,582	‑	‑	‑	‑
	13	$4,671	$4,671	‑	‑	‑
	14	$4,730	$4,730	‑	‑	‑
	15	$4,792	$4,792	$4,850	‑	‑
	16	$4,850	$4,850	$4,913	‑	‑
	17	$4,913	$4,913	$4,977	$5,041	‑
	18	$4,977	$4,977	$5,041	$5,107	$5,174
	19	$5,041	$5,041	$5,107	$5,174	$5,242
	20	$5,107	$5,107	$5,174	$5,242	$5,314
	21	$5,174	$5,174	$5,242	$5,314	$5,385
	22	$5,242	$5,242	$5,314	$5,385	$5,457
	23	$5,314	$5,314	$5,385	$5,457	$5,532
	24	$5,385	$5,385	$5,457	$5,532	$5,606
	25	$5,457	$5,457	$5,532	$5,606	$5,687
	26	$5,532	$5,532	$5,606	$5,687	$5,765
	27	$5,606	$5,606	$5,687	$5,765	$5,845
	28	$5,687	$5,687	$5,765	$5,845	$5,924
	29	$5,765	$5,765	$5,845	$5,924	$6,009
	30	$5,845	$5,845	$5,924	$6,009	$6,096
	31	$5,924	$5,924	$6,009	$6,096	$6,183
	32	$6,009	$6,009	$6,096	$6,183	$6,261
	33	$6,096	$6,096	$6,183	$6,261	$6,385
	34	$6,183	$6,183	$6,261	$6,385	$6,513
	35	$6,261	$6,261	$6,385	$6,513	$6,643
	36	$6,385	$6,385	$6,513	$6,643	$6,776
	37	‑	$6,513	$6,643	$6,776	$6,911
	38	‑	‑	$6,776	$6,911	$7,050
	39	‑	‑	$6,911	$7,050	$7,190
	40	‑	‑	‑	$7,190	$7,334
	41	‑	‑	‑	$7,334	$7,481
	42	‑	‑	‑	‑	$7,631

2017‑2018 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	$5,314	‑	‑	‑
	20	$5,385	‑	‑	‑
	21	$5,457	$5,532	‑	‑
	22	$5,532	$5,606	$5,765	‑
	23	$5,606	$5,687	$5,845	$5,924
	24	$5,687	$5,765	$5,924	$6,009
	25	$5,765	$5,845	$6,009	$6,096
	26	$5,845	$5,924	$6,096	$6,183
	27	$5,924	$6,009	$6,183	$6,261
	28	$6,009	$6,096	$6,261	$6,385
	29	$6,096	$6,183	$6,385	$6,513
	30	$6,183	$6,261	$6,513	$6,643
	31	$6,261	$6,385	$6,643	$6,776
	32	$6,385	$6,513	$6,776	$6,911
	33	$6,513	$6,643	$6,911	$7,050
	34	$6,643	$6,776	$7,050	$7,190
	35	$6,776	$6,911	$7,190	$7,334
	36	$6,911	$7,050	$7,334	$7,481
	37	$7,050	$7,190	$7,481	$7,631
	38	$7,190	$7,334	$7,631	$7,783
	39	$7,334	$7,481	$7,783	$7,939
	40	$7,481	$7,631	$7,939	$8,097
	41	$7,631	$7,783	$8,097	$8,259
	42	$7,783	$7,939	$8,259	$8,424
	43	$7,939	$8,097	$8,424	$8,592
	44	‑	$8,259	$8,592	$8,764
	45	‑	$8,424	$8,764	$8,939
	46+	‑	‑	$8,939	$9,118
SECTION 9.2.(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 9.2.(c)  A principal shall be placed on the step on the salary schedule that reflects the total number of years of experience as a certified employee of the public schools and an additional step for every three years of experience serving as a principal on or before June 30, 2009. 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 9.2.(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 9.2.(e)  Longevity pay for principals and assistant principals shall be as provided for State employees under the North Carolina Human Resources Act.
SECTION 9.2.(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 9.2.(g)  Participants in an approved full‑time master's in‑school administration program shall receive up to a 10‑month stipend at the beginning salary of an assistant principal during the internship period of the master's program. The stipend shall not exceed the difference between the beginning salary of an assistant principal plus the cost of tuition, fees, and books and any fellowship funds received by the intern as a full‑time student, including awards of the Principal Fellows Program. The Principal Fellows Program or the school of education where the intern participates in a full‑time master's in‑school administration program shall supply the Department of Public Instruction with certification of eligible full‑time interns.
SECTION 9.2.(h)  During the 2017‑2018 fiscal year, the placement on the salary schedule of an administrator with a one‑year provisional assistant principal's certificate shall be at the entry‑level salary for an assistant principal or the appropriate step on the teacher salary schedule, whichever is higher.

CENTRAL OFFICE SALARIES
SECTION 9.3.(a)  The monthly salary ranges that follow apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 2017‑2018 fiscal year, beginning July 1, 2017, and shall be increased by two percent (2.00%) annually as follows:
School Administrator I	$3,511	$6,547
School Administrator II	$3,719	$6,942
School Administrator III	$3,946	$7,362
School Administrator IV	$4,102	$7,653
School Administrator V	$4,266	$7,961
School Administrator VI	$4,523	$8,439
School Administrator VII	$4,703	$8,778
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 9.3.(b)  The monthly salary ranges that follow apply to public school superintendents for the 2017‑2018 fiscal year, beginning July 1, 2017, and shall be increased by two percent (2.00%) annually as follows:
Superintendent I	$4,989	$9,309
Superintendent II	$5,294	$9,869
Superintendent III	$5,614	$10,467
Superintendent IV	$5,955	$11,100
Superintendent V	$6,318	$11,774
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 9.3.(c)  Longevity pay for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers shall be as provided for State employees under the State Personnel Act.
SECTION 9.3.(d)  Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided pursuant to this section. Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for under this section.
SECTION 9.3.(e)  The State Board of Education shall not permit local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.

NONCERTIFIED PERSONNEL SALARIES
SECTION 9.4.(a)  The annual salary increase for permanent, full‑time noncertified public school employees whose salaries are supported from the State's General Fund shall be two percent (2%) or eight hundred dollars ($800.00) whichever is greater, commencing July 1, 2017.
SECTION 9.4.(b)  Local boards of education shall increase the rates of pay for such employees who were employed for all or part of fiscal year 2016‑2017 and who continue their employment for fiscal year 2017‑2018 by providing an annual salary increase for employees of two percent (2%) or eight hundred dollars ($800.00) whichever is greater.
For part‑time employees, the pay increase shall be pro rata based on the number of hours worked.
SECTION 9.4.(c)  The State Board of Education may adopt salary ranges for noncertified personnel to support increases of two percent (2%) or eight hundred dollars ($800.00), whichever is greater, for the 2017‑2018 fiscal year.

INSTRUCTIONAL SUPPLIES STIPEND
SECTION 9.5.(a)  Effective July 1, 2017, any person paid on the State Teacher Salary Schedule and considered a classroom teacher shall receive, at the beginning of each academic school year, an annual salary stipend of one hundred and fifty dollars ($150.00) to purchase classroom supplies. The stipend shall be paid to teachers qualifying under this section who begin employment part‑way through the academic year.
SECTION 9.5.(b)  Notwithstanding G.S. 135‑1(7a), the stipends paid under this section are not compensation under Article 1 of Chapter 135 of the General Statutes.
SECTION 9.5.(c)  Of the funds appropriated in this act to the Department of Public Instruction for the purpose of carrying out this section, the Department shall transfer the amount required to pay the instructional supplies stipend to classroom teachers at schools operated by the Department of Health and Human Services, the Department of Public Safety, the State Board of Education, and the School of Science and Mathematics of the University of North Carolina.

PART X. COMMUNITY COLLEGES

NORTH CAROLINA GETTING READY FOR OPPORTUNITIES IN THE WORKFORCE (NC GROW) SCHOLARSHIPS
SECTION 10.1.(a)  Funds appropriated in Section 5.4(a) of this act to the North Carolina Getting Ready for Opportunities in the Workforce (NC GROW) scholarship shall be allocated by the State Education Assistance Authority to establish a grant program to enable recent high school graduates to enroll in a community college free of tuition and fees in accordance with this section.
SECTION 10.1.(b)  Subject to the limitations set forth in this section, the State Education Assistance Authority is authorized to administer this grant program consistent with the manner in which it administers grants to community college students qualifying for the Scholarships for Needy Students under Article 35A of Chapter 115C of the General Statutes and the Need‑Based Assistance Program under G.S. 115D‑40.1, but utilizing criteria that will result in distributing the funds appropriated after July 1, 2018, and so that no qualifying North Carolina student incurs costs of tuition and selected fees to attend a community college. It is the intent of the General Assembly that the funds appropriated under this section be disbursed after grants are awarded under the Scholarships for Needy Students and the Need‑Based Assistance programs, for those students eligible for one or both of those programs, and to those students who do not demonstrate need sufficient to qualify for those other programs. The Authority shall establish criteria for determining eligibility for the grants authorized under this section which criteria shall include the following: (i) status as a legal resident of North Carolina for tuition purposes; (ii) graduation from a North Carolina high school or attainment of a high school equivalency certificate within eighteen (18) months of the first semester for which the grant is disbursed; (iii) minimum GPA of 2.0; and (iv) at least half‑time enrollment.  The Authority shall not disburse any grant until it receives confirmation from the enrolling community college that the student meets the high school graduation and GPA standards for the grant. A student may receive a grant under this section for subsequent terms of enrollment provided that the student maintains satisfactory academic progress, as determined by the community college, and has not received the grant for more than six consecutive semesters. The Authority may establish a minimum grant of not less than $50.00 per semester for full‑time enrollment.
SECTION 10.1.(c)  If the interest earnings on the funds appropriated under this section are not sufficient to cover the Authority's administrative costs, the State Education Assistance Authority may expend up to one and one‑half percent (1.5%) of funds described in subsection (a) of this section to support the costs of administering the program.

FINANCIAL ASSISTANCE FOR INDUSTRY CREDENTIALS
SECTION 10.2.(a)  From funds appropriated in this Act for financial assistance to students pursuing industry credentials, the State Board of Community Colleges shall determine the allocation of financial assistance to students pursuing short‑term noncredit State and industry workforce credentials, and shall use the funds to assist these students with any costs incurred while in pursuit of these credentials.
SECTION 10.2.(b)  From funds appropriated in this Act for financial assistance to students pursuing industry credentials, up to five hundred thousand dollars ($500,000) may be used to market the financial assistance and NC GROW to prospective recipients.

IMPLEMENT NEW PERFORMANCE MEASURE ON EARNINGS GAINS OF COMMUNITY COLLEGE GRADUATES
SECTION 10.3.  G.S. 115D‑31.3(e) reads as rewritten:
"(e)	Mandatory Performance Measures. – The State Board of Community Colleges shall evaluate each college on the following performance measures: 
…
(10)	Earnings gains for students enrolled in career and technical education courses.
The State Board may also evaluate each college on additional performance measures."

REPORT ON USE OF ADDITIONAL STUDENT SUPPORT FUNDS
SECTION 10.4.  The State Board of Community Colleges shall report by November 1, 2018 to the Joint Education Oversight Committee of the General Assembly on the use of funds appropriated in the Act for additional student services and support activities.

CARRYFORWARD OF COLLEGE INFORMATION SYSTEM FUNDS
SECTION 10.5.  Of the funds appropriated to the Community Colleges System Office for the 2015‑2017 fiscal biennium for the College Information System, up to one million two hundred fifty thousand dollars ($1,250,000) shall not revert at the end of each fiscal year, but shall remain available until expended. These funds may be used only to purchase periodic system upgrades and modernize the college's enterprise resource planning (ERP) system.

ERP PLANNING AND DESIGN FUNDING & REPORTING
SECTION 10.6.  Section 7.10A of S.L. 2016‑94 reads as rewritten:
"COMMUNITY COLLEGES SYSTEM ERP DESIGN AND IMPLEMENTATION
"SECTION 7.10A.(a)  The North Carolina Community Colleges System Office, in consultation with the Department of Information Technology, shall begin planning and design of a modernized ERP for the State's 58 community colleges. The ERP system shall address, at a minimum, student information system, core financial management, grants, human resource management, and payroll. The planning and design of the ERP system may include either a modernization of the current system or a replacement system. A request for proposal for a replacement system implementation shall be prepared for release no later than October 1, 2017. The North Carolina Community Colleges System Office may use funds from the North Carolina Community College IT Systems Budget Code 26802 to support planning, request for proposal development efforts, and implementation; and of the funds appropriated to the Community Colleges System Office for the 2017‑2019 fiscal biennium for the College Information System, up to five hundred thousand dollars ($500,000) may be transferred at the end of each fiscal year to Budget Code 26802 Fund 2307 to be used for the North Carolina Community College System enterprise resource planning (ERP) planning and implementation. To the extent that these funds have not been appropriated elsewhere, they are hereby appropriated.
"SECTION 7.10A.(b)  The North Carolina Community Colleges System Office shall submit a preliminary report to the Joint Legislative Oversight Committee on Information Technology on or before January 15, 2017. On or before October 1, 2017, the System Office shall report on the results of the planning and design effort, including at least all of the following information:
(1)	Proposed sequence of functional and site implementation.
(2)	A phased‑in contracting plan with checkpoints to facilitate budgeting and program management.
(3)	The feasibility of a cloud‑based component.
(4)	Cost estimate for full implementation."

ALLOW HIGH SCHOOL STUDENTS TO ENROLL IN COURSES LEADING TO A STATE OR INDUSTRY CREDENTIAL
SECTION 10.7.(a)  G.S. 115D‑20(4)a.2. reads as rewritten:
"2.	Academic transition pathways for qualified junior and senior high school students that lead to a career technical education certificate, diploma, or State or industry‑recognized credential, and academic transition pathways for qualified freshmen and sophomore high school students that lead to a career technical education certificate or diploma in (i) industrial and engineering technologies, (ii) agriculture and natural resources, or (iii) transportation technology."
SECTION 10.7.(b)  G.S. 115D‑5(b)(12) reads as rewritten:
"(12)	All courses taken by high school students at community colleges, in accordance with G.S. 115D‑20(4) and this section."

YOUTH APPRENTICESHIP TUITION WAIVER CLARIFICATION 
SECTION 10.8.(a)  G.S. 115D‑5(b)(16) reads as rewritten:
"(16)	Courses provided to students who are participating in a pre‑apprenticeship or apprenticeship program that meets all of the following criteria:
a.	Is a registered apprenticeship program recognized by the United States Department of Labor and approved by the North Carolina Department of Commerce, or is an approved pre‑apprenticeship program recognized by the North Carolina Department of Commerce.
b.	Has a documented plan of study with courses relating to a job‑specific occupational or technical skill.
c.	Requires the participants in the program to be high school students when entering the program."
SECTION 10.8.(b)  This section applies beginning with the 2016 fall academic term.

CONSECUTIVE AUDIT FINDINGS
SECTION 10.9.  G.S. 115D‑58.16(a) reads as rewritten:
 "(a)	Each community college shall be subject to a financial audit a minimum of once every two years. Community colleges may use State funds to contract with the State Auditor or with a certified public accountant to perform the audits. The colleges shall submit the results of the audits to the State Board of Community Colleges. The State Board of Community Colleges may require a community college which has had findings in two consecutive financial audits to be audited annually.
The State Board of Community Colleges shall ensure that all colleges are audited in accordance with this section."

INSTRUCTION IN JAILS
SECTION 10.10.(a)  Section 8.3(b) of S.L. 2010‑31 reads as rewritten:
"SECTION 8.3.(b)  Courses in federal prisons shall not earn regular budget full‑time equivalents, but may be offered on a self‑supporting basis."
SECTION 10.10.(b)  G.S. 115D‑5(c1) reads as rewritten:
"(c1)	No community college shall operate a multi‑entry/multi‑exit class or program in a prison facility, except for a literacy class or program.
The State Board shall work with the Division of Adult Correction of the Department of Public Safety on offering classes and programs that match the average length of stay of an inmate in a prison facility."

PART XI. UNIVERSITIES

USE OF ESCHEAT FUND FOR NEED‑BASED FINANCIAL AID PROGRAMS
SECTION 11.1.(a)  There is appropriated from the Escheat Fund income to the Board of Governors of The University of North Carolina the sum of sixty million seven hundred eighty‑seven thousand two hundred forty‑two dollars ($60,787,242) for each year of the 2017‑2019 fiscal biennium to be used for The University of North Carolina Need‑Based Financial Aid Program.
SECTION 11.1.(b)  There is appropriated from the Escheat Fund income to the State Board of Community Colleges the sum of sixteen million three hundred and thirty‑five thousand dollars ($16,335,000) for each year of the 2017‑2019 fiscal biennium to be used for community college grants.
SECTION 11.1.(c)  There is appropriated from the Escheat Fund income to the Department of Military and Veterans Affairs, the sum of eight million twenty thousand nine hundred sixty‑four dollars ($8,020,964) for each year of the 2017‑2019 fiscal biennium to be used for need‑based student financial aid.
SECTION 11.1.(d)  The funds appropriated by this section from the Escheats Fund for the 2017‑2019 fiscal biennium for student financial aid shall be allocated in accordance with G.S. 116B‑7. If the interest income generated from the Escheat Fund is less than the amounts referenced in this section, the difference may be taken from the Escheat Fund principal to reach the appropriations referenced in this section; however, under no circumstances shall the Escheat Fund principal be reduced below the sum required in G.S. 116B‑6(f). If any funds appropriated under this section remain uncommitted for need‑based financial aid as of the end of a fiscal year, the funds shall be returned to the Escheat Fund, but only to the extent the funds exceed the amount of the Escheat Fund income for that fiscal year.
SECTION 11.1.(e)  The State Education Assistance Authority (SEAA) shall conduct periodic evaluations of expenditures of the student financial aid programs administered by SEAA to determine if the allocations are utilized to ensure access to institutions of higher learning and to meet the goals of the respective programs. The SEAA may make recommendations for redistribution of funds to The University of North Carolina, and the President of the Community College System regarding their respective financial aid programs, who then may authorize redistribution of unutilized funds for a particular fiscal year.

COMPETITIVE GRANTS TO IMPROVE GRADUATION RATES
SECTION 11.2.(a)  The Board of Governors of the University of North Carolina shall create and administer a competitive grant program for higher education constituent institutions of the University of North Carolina to implement new programs designed to improve student graduation rates. Constituent institutions shall provide a twenty‑five percent (25%) match for funding awarded pursuant to this section.
SECTION 11.2.(b)  The Board of Governors shall contract with an independent, third party entity to assist constituent institutions with an evaluation plan prior to implementing a program for which funds are awarded pursuant to this section. The third‑party entity shall conduct evaluations of all programs receiving funds pursuant to this section on an annual basis. The Board of Governors shall use the evaluation results to identify highly successful student success initiatives and replicate those programs at other constituent institutions. No more than five hundred thousand dollars ($500,000) shall be used each year for evaluation and administration of this section.
SECTION 11.2.(c)  No later than August 1, 2018 and annually thereafter, The Board of Governors shall report on the expenditure of funds and evaluation results to the Office of State Budget and Management and Fiscal Research Division of the North Carolina General Assembly.

ENHANCE DATA SYSTEMS TO IMPROVE INSTITUTIONAL PERFORMANCE AND STUDENT SUCCESS
SECTION 11.3.(a)  The Board of Governors of the University of North Carolina shall use funds appropriated in this act to enhance data systems for the following purposes: integrating financial, human resource, and student account systems across the UNC System; developing new data collections systems that track faculty and staff retention rates and post‑graduation student outcomes; expanding "Know Before You Go" data reporting; and implementing a web‑based student advising tool as part of a pilot program to be known as "Finish in Four."
SECTION 11.3.(b)  The President of the University of North Carolina shall report on implementation of this section to the Joint Legislative Education Oversight Committee on or before March 1, each year of the 2017‑2019 fiscal biennium. The report shall identify specific improvements to data access, analytics, and transparency, available to the public and legislative and executive branch decision‑makers resulting from this project.

NCSU NATIONAL INSTITUTE FOR INNOVATION IN MANUFACTURING BIOPHARMACEUTICALS STATE MATCHING FUNDS/OSBM TO ADJUST UNC BASE BUDGET WHEN STATE MATCH PLEDGE IS FULFILLED
SECTION 11.4.(a)  By making the two million dollar ($2,000,000) appropriation in this act to North Carolina State University for the National Institute for Innovation in Manufacturing Biopharmaceuticals a recurring appropriation, it is the intent of the General Assembly (i) to provide funding of two million dollars ($2,000,000) per year for five years in order to provide a total of ten million dollars ($10,000,000) in State funds that shall be used as a match for federal National Institute for Innovation in Manufacturing Biopharmaceuticals funds and (ii) that thereafter no further funds shall be appropriated for this purpose. Accordingly, the Office of State Budget and Management shall remove this two‑million‑dollar ($2,000,000) annual appropriation from the UNC System base budget once this funding pledge has been fulfilled.
SECTION 11.4.(b)  The five‑year commitment in subsection (a) of this section shall extend from the 2017‑2018 fiscal year through the 2021‑2022 fiscal year. Subsection (a) of this section shall expire on June 29, 2022.

ELIZABETH CITY STATE UNIVERSITY BUDGET STABILIZATION FUNDS REPORT
SECTION 11.5.  The President of The University of North Carolina shall report each quarter of the 2017‑2019 fiscal biennium to the Office of State Budget and Management and the Fiscal Research Division of the General Assembly on the status of budget stabilization funds appropriated to Elizabeth City State University by this act. The reports shall provide detailed descriptions of the scope of work that has been completed to date, anticipated activities for the next quarter, and a plan with time lines to complete the full scope of work. The reports shall also include outcomes achieved from improvements implemented using these funds. The first quarterly report required by this section shall be made no later than January 1, 2018.

IMPROVE BUDGET ADMINISTRATION EFFICIENCIES FOR UNC SYSTEM
SECTION 11.6.(a)  G.S. 116‑14(b1) reads as rewritten:
"(b1)	The President shall receive General Fund appropriations made by the General Assembly for continuing operations of The University of North Carolina that are administered by the President and the President's staff complement established pursuant to G.S. 116‑14(b) in the form of a single sum to Budget Code 16010 of The University of North Carolina in the manner and under the conditions prescribed by G.S. 116‑30.2. The President, with respect to the foregoing appropriations, shall have the same duties and responsibilities that are prescribed by G.S. 116‑30.2 for the Chancellor of a special responsibility constituent institution. The President may transfer appropriations between Budget Code 16010 and General Fund budget codes of special constituent institutions. Transfers shall be considered certified even if as a result of agreements between the President or special responsibility constituent institutions or both. The President may identify funds for capital improvement projects from Budget Code 16010, and the capital improvement projects may be established following the procedures set out in G.S. 143C‑8‑8 and G.S. 143C‑8‑9."
SECTION 11.6.(b)  G.S. 116‑30.2(a) reads as rewritten:
"(a)	All General Fund appropriations made by the General Assembly for continuing operations of a special responsibility constituent institution of The University of North Carolina shall be made in the form of a single sum to each budget code of the institution for each year of the fiscal period for which the appropriations are being made. Notwithstanding G.S. 143C‑6‑4 and G.S.120‑76(8), each special responsibility constituent institution may expend monies from the overhead receipts special fund budget code and the General Fund monies so appropriated to it in the manner deemed by the Chancellor to be calculated to maintain and advance the programs and services of the institutions, consistent with the directives and policies of the Board of Governors. Special responsibility constituent institutions may transfer General Fund appropriations between budget codes, including transfers between budget codes within a single institution. These transfers shall be considered certified even if as a result of agreements between special responsibility constituent institutions. The preparation, presentation, and review of General Fund budget requests of special responsibility constituent institutions shall be conducted in the same manner as are requests of other constituent institutions. The quarterly allotment procedure established pursuant to G.S. 143C‑6‑3 shall apply to the General Fund appropriations made for the current operations of each special responsibility constituent institution. All General Fund monies so appropriated to each special responsibility constituent institution shall be recorded, reported, and audited in the same manner as are General Fund appropriations to other constituent institutions."

UNC SYSTEM ENROLLMENT GROWTH FUNDING FORMULA STUDY
SECTION 11.7.(a)  The Office of State Budget and Management, in collaboration with The University of North Carolina, shall study the UNC enrollment growth funding formula to (i) assess the accuracy of the current formula, (ii) identify best practices used by other states to fund enrollment growth, (iii) examine the feasibility of incorporating performance metrics into the enrollment funding model, and (iv) recommend alternative methods of funding enrollment growth that improve accuracy and transparency.
SECTION 11.7.(b)  The Office of State Budget and Management shall report its findings and recommendations to the Joint Legislative Education Oversight Committee no later than March 1, 2018.

SUBPART XI‑A. University/State Education Assistance Authority

NC BEST AND BRIGHTEST FORGIVABLE LOAN
SECTION 11A.1.(a)  Part 1 of Article 23 of Chapter 116 of the General Statutes is amended by adding a new section to read:
"§ 116‑209.28.  NC Best and Brightest Forgivable Loan Program.
(a)	Policy. – The General Assembly finds that it is in the public interest to target financial assistance in the form of forgivable loans for service to exemplary high school seniors who are committed to teaching in the North Carolina public schools.
(b)	Definitions. – The following definitions apply in this section:
(1)	Eligible institution. – Notwithstanding G.S. 116‑201(b)(5) and G.S. 116‑201(b)(6) and for purposes of this section only, an institution of higher education is either of the following:
a.	A postsecondary constituent institution of The University of North Carolina as defined in G.S. 116‑2(4).
b.	An eligible private postsecondary institution as defined in G.S. 116‑280(3).
(2)	Fund. – The NC Best and Brightest Fund.
(3)	Loan. – A forgivable loan made under the Program.
(4)	Program. – The NC Best and Brightest Program.
(c)	Establish the NC Best and Brightest Program. – There is established the NC Best and Brightest Program to be administered by the Authority. The purpose of the Program is to attract highly qualified high school seniors to the teaching profession by providing financial assistance in the form of forgivable loans to such students to enable them to attend accredited, undergraduate teacher preparation programs at eligible institutions in order to obtain the requisite postsecondary education to work in North Carolina as licensed teachers.
(d)	Establish the NC Best and Brightest Fund. – There is established the NC Best and Brightest Fund to be administered by the Authority consistent with this section. All funds appropriated to or otherwise received by the Authority to provide loans under the Program, all funds received as repayment of loans, and all interest earned on these funds shall be placed in the Fund. The Fund shall be used only for loans made pursuant to this section and the administrative costs of the Authority.
(e)	Eligibility for Loans. – The Authority shall establish the criteria for initial and continuing eligibility to participate in the Program. A loan recipient shall qualify as a resident of North Carolina for tuition purposes and attend an eligible institution. The Authority shall adopt very stringent standards, including a minimum grade point average of 3.5, for awarding loans to ensure that only highly qualified and committed high school seniors receive loans. A recipient of a loan shall not be eligible to receive concurrently a loan under the Forgivable Education Loans for Service Program pursuant to G.S. 116‑209.45(c).
(f)	Selection Process. – The Authority is authorized to consult with the Education Cabinet established under G.S. 116C‑1 to determine an appropriate process for selecting loan recipients which may include establishing committees of public school personnel to review applications and recommend qualified applicants to receive loans.
(g)	Loan Terms and Conditions. – The following terms and conditions shall apply to each loan made pursuant to this section:
(1)	Promissory note. – All loans shall be evidenced by promissory notes made payable to the Authority.
(2)	Interest. – All loans shall bear interest at a rate set by the Authority that does not exceed ten percent (10%) and is in relation to the current interest rate for nonneed‑based federal loans made pursuant to Title IV of the Higher Education Act of 1965, as amended. Interest shall accrue from the date of disbursement of the loan funds.
(3)	Loan amount. – The initial maximum loan amount shall be ten thousand dollars ($10,000). The maximum loan amount may be adjusted by the Authority for subsequent years of the Program based on funds available for the Program; however, in no event shall the loan amount exceed the total cost of attendance at the eligible institution in which the recipient enrolls.
(4)	Renewal limitations. – A loan is renewable up to a maximum of eight semesters, provided that the recipient maintains satisfactory academic progress towards acceptance in an accredited teacher education program at an eligible institution and then in the teacher education program for which a renewal loan is subsequently granted. The Authority may provide a recipient a loan for an additional semester upon determining that extenuating circumstances prevented the recipient from completing the teacher education program in eight semesters. 
(5)	Repayment. – The Authority shall forgive the loan if, within six years after graduation, the recipient teaches one academic year at a North Carolina public school or at a school operated by the United States government in North Carolina for each year of loan funding received. The Authority may provide an accelerated forgiveness option if, within six years after graduation, the recipient teaches for three consecutive years at a North Carolina public school that, at the time the recipient accepts employment with the local school administrative unit in which the school is located, is (i) low‑performing, as identified by the State Board of Education pursuant to G.S. 115C‑105.37 or (ii) low‑wealth, as defined by the North Carolina State Board of Education. The Authority may provide an accelerated forgiveness option if, within six years after graduation, the recipient teaches for three consecutive years in a hard to recruit subject area as defined by the Authority. The Authority, in exercise of its sole discretion, shall have the authority to extend the period of time in which repayment must be completed by one additional year due to extenuating circumstances.
(6)	Other. – The Authority may establish other terms and conditions that are necessary or convenient to effectuate the purpose of the Program and align the administration of the Program with that of the Forgivable Loans for Service Program.
(h)	Rule‑Making Authority. – The Authority may adopt rules necessary to implement, administer, and enforce the provisions of this section.
(i)	Report to the General Assembly. – The Authority shall report no later than December 1, 2018, and annually thereafter, to the Joint Legislative Education Oversight Committee regarding loans awarded from the Fund for the Program."

MODIFICATIONS TO OPPORTUNITY SCHOLARSHIP PROGRAM
SECTION 11A.2.(a)  G.S. 115C‑562.8(b) is repealed.
SECTION 11A.2.(b)  The State Education Assistance Authority shall not award scholarship funds to new recipients pursuant to Part 2A of Chapter 115C of the General Statutes after the 2016‑2017 academic year.

PART XII. DEPARTMENT OF HEALTH AND HUMAN SERVICES

subPART XII‑a. division of central administration

HEALTH INFORMATION TECHNOLOGY
SECTION 12A.1.(a)  The Department of Health and Human Services (Department), in cooperation with the State Chief Information Officer (State CIO), shall coordinate health information technology (HIT) policies and programs within the State of North Carolina. The goal of the DHHS CIO in coordinating State HIT policy and programs shall be to avoid duplication of efforts and to ensure that each State agency, public entity, and private entity that undertakes health information technology activities does so within the area of its greatest expertise and technical capability and in a manner that supports coordinated State and national goals, which shall include at least all of the following:
(1)	Ensuring that patient health information is secure and protected, in accordance with applicable law.
(2)	Improving health care quality, reducing medical errors, reducing health disparities, and advancing the delivery of patient‑centered medical care.
(3)	Providing appropriate information to guide medical decisions at the time and place of care.
(4)	Ensuring meaningful public input into HIT infrastructure development.
(5)	Improving the coordination of information among hospitals, laboratories, physicians' offices, and other entities through an effective infrastructure for the secure and authorized exchange of health care information.
(6)	Improving public health services and facilitating early identification and rapid response to public health threats and emergencies, including bioterrorist events and infectious disease outbreaks.
(7)	Facilitating health and clinical research.
(8)	Promoting early detection, prevention, and management of chronic diseases.
SECTION 12A.1.(b)  The Department, in cooperation with the Department of Information Technology, shall establish and direct an HIT management structure that is efficient and transparent and that is compatible with the Office of the National Health Coordinator for Information Technology (National Coordinator) governance mechanism. The HIT management structure shall be responsible for all of the following:
(1)	Developing a State plan for implementing and ensuring compliance with national HIT standards and for the most efficient, effective, and widespread adoption of HIT.
(2)	Ensuring that (i) specific populations are effectively integrated into the State plan, including aging populations, populations requiring mental health services, and populations utilizing the public health system, and (ii) unserved and underserved populations receive priority consideration for HIT support.
(3)	Identifying all HIT stakeholders and soliciting feedback and participation from each stakeholder in the development of the State plan.
(4)	Ensuring that existing HIT capabilities are considered and incorporated into the State plan.
(5)	Identifying and eliminating conflicting HIT efforts where necessary.
(6)	Identifying available resources for the implementation, operation, and maintenance of health information technology, including identifying resources and available opportunities for North Carolina institutions of higher education.
(7)	Ensuring that potential State plan participants are aware of HIT policies and programs and the opportunity for improved health information technology.
(8)	Monitoring HIT efforts and initiatives in other states and replicating successful efforts and initiatives in North Carolina.
(9)	Monitoring the development of the National Coordinator's strategic plan and ensuring that all stakeholders are aware of and in compliance with its requirements.
(10)	Monitoring the progress and recommendations of the HIT Policy and Standards Committee and ensuring that all stakeholders remain informed of the Committee's recommendations.
(11)	Monitoring all studies and reports provided to the United States Congress and reporting to the Joint Legislative Oversight Committee on Information Technology and the Fiscal Research Division on the impact of report recommendations on State efforts to implement coordinated HIT.

FUNDS FOR MEDICAID MANAGEMENT INFORMATION SYSTEM AND ANALYSTICS REPROCUREMENT
SECTION 12A.2.  The Department of Health and Human Services shall enhance the NC Medicaid Management Information System (MMIS) to align with federal Medicaid Information Technology Architecture (MITA) standards, system modularity, and reporting analytics as mandated by the Centers for Medicare and Medicaid Services (CMS). In addition, DHHS shall prepare for the procurement of a take‑over vendor for the MMIS and the Reporting and Analytics contract. The sum of one hundred forty‑two thousand and seven hundred dollars ($142,700) for fiscal year 2017‑2018 and the sum of two hundred forty‑three thousand nine hundred and sixty‑seven dollars ($243,967) for fiscal year 2018‑2019 in Departmental prior year earned revenues shall be used to match federal funds for this purpose. The project shall not proceed until the business case has been approved by the Office of State Budget and Management and the State Chief Information Officer in the Enterprise Project Management Office's Touchdown System. Upon approval, funds may be budgeted and up to 10 full‑time equivalent time‑limited positions may be created in fiscal year 2018‑2019.

FUNDS FOR NORTH CAROLINA FAMILIES ACCESSING SERVICES THROUGH TECHNOLOGY (NC FAST)
SECTION 12A.3.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of eight million nine hundred thousand dollars ($8,900,000) for the 2017‑2018 fiscal year and eleven million one hundred nine thousand dollars ($11,109,000) for the 2018‑2019 fiscal year, along with prior year earned revenue in the amount of eleven million nine hundred thousand dollars ($11,900,000) in each year of the biennium and the cash balance in Budget Code 24410 Fund 2411 shall be used for the North Carolina Families Accessing Services through Technology (NC FAST) project. To that extent, these funds shall be used to match federal funds in the 2017‑2018 and 2018‑2019 fiscal years to expedite the development and implementation of Child Services Case Management, additional Medicaid eligibility requirements, Enterprise Program Integrity, and Identity Proofing Feasibility components of the NC FAST Program. The Department shall report any changes in approved federal funding or federal match rates within 30 days after the change to the Joint Legislative Oversight Committees on Health and Human Services and Information Technology and the Fiscal Research Division. Departmental receipts appropriated in this act in the amount of one hundred sixteen million six hundred thousand dollars ($116,600,000) for the 2017‑2018 fiscal year and seventy‑five million five hundred ninety‑one thousand dollars ($75,591,000) for the 2018‑2019 fiscal year shall be used to implement the components of the NC FAST project described in this subsection.
SECTION 12A.3.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of one million nine hundred thousand dollars ($1,900,000) for the 2017‑2018 fiscal year and seven million seven hundred thousand dollars ($7,700,000) for the 2018‑2019 fiscal year shall be used to provide ongoing maintenance and operations for the NC FAST system, including the creation of thirty‑two full‑time equivalent positions for the 2017‑2018 fiscal year and fifty‑four full‑time equivalent positions for the 2018‑2019 fiscal year. Departmental receipts appropriated in this act in the amount of ten million five hundred thousand dollars ($10,500,000) for the 2017‑2018 fiscal year and fifteen million dollars ($15,000,000) for the 2018‑2019 fiscal year shall be used to implement the components of the NC FAST project described in this subsection.

RECEIPT‑SUPPORTED INFORMATION TECHNOLOGY PROJECTS
SECTION 12A.4.  Funds appropriated in this act to the Department of Health and Human Services for receipt‑supported IT projects shall be used as follows:
(1)	The amount of three million six hundred thousand dollars ($3,600,000) for the 2017‑2018 fiscal year and four million eight hundred thousand dollars ($4,800,000) for the 2018‑2019 fiscal shall be used to develop the Electronic Network Centered on Rehabilitation Effectiveness (ENCORE), a case management system for the Division of Vocational Rehabilitation and the Divisions of Services for the Blind, Deaf, and Hard of Hearing. These funds shall be transferred to Budget Code 24410 for the development of the project.
(2)	The amount of three million eight hundred sixty‑two thousand three hundred twenty‑one dollars ($3,862,321) for the 2017‑2018 fiscal year shall be used to develop an Electronic Benefit Transfer (EBT) system for the Women, Infants, and Children (WIC) Program in the Division of Public Health. These funds shall be transferred to Budget Code 24410 for the development of the project.
(3)	The amount of one hundred thousand nine hundred twenty‑two dollars ($100,922) for the 2017‑2018 fiscal year and one hundred fifty‑nine thousand seven hundred thirteen dollars ($159,713) shall be used for the operations and maintenance of the North Carolina County Reimbursement Ledger Suite (NC‑CoReLS), an electronic county reimbursement system for the Division of Social Services.

COMPETITIVE GRANTS/NONPROFIT ORGANIZATIONS
SECTION 12A.5.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, the sum of ten million six hundred fifty‑three thousand nine hundred eleven dollars ($10,653,911) for each year of the 2017‑2019 fiscal biennium and the sum of three million eight hundred fifty‑two thousand five hundred dollars ($3,852,500) appropriated in Section 12J.1 of this act in Social Services Block Grant funds for each year of the 2017‑2019 fiscal biennium shall be used to allocate funds for nonprofit organizations.
SECTION 12A.5.(b)  The Department shall continue administering a competitive grants process for nonprofit funding. The Department shall administer a plan that, at a minimum, includes each of the following:
(1)	A request for application (RFA) process to allow nonprofits to apply for and receive State funds on a competitive basis. The Department shall require nonprofits to include in the application a plan to evaluate the effectiveness, including measurable impact or outcomes, of the activities, services, and programs for which the funds are being requested.
(2)	A requirement that nonprofits match a minimum of fifteen percent (15%) of the total amount of the grant award.
(3)	A requirement that the Secretary prioritize grant awards to those nonprofits that are able to leverage non‑State funds in addition to the grant award.
(4)	A process that awards grants to nonprofits that have the capacity to provide services on a statewide basis and that support any of the following State health and wellness initiatives:
a.	A program targeting advocacy, support, education, or residential services for persons diagnosed with autism.
b.	A system of residential supports for those afflicted with substance abuse addiction.
c.	A program of advocacy and supports for individuals with intellectual and developmental disabilities or severe and persistent mental illness, the substance abusers, or the elderly.
d.	Supports and services to children and adults with developmental disabilities or mental health diagnoses.
e.	A food distribution system for needy individuals.
f.	The provision and coordination of services for the homeless.
g.	The provision of services for individuals aging out of foster care.
h.	Programs promoting wellness, physical activity, and health education programming for North Carolinians.
i.	The provision of services and screening for blindness.
j.	A provision for the delivery of after‑school services for apprenticeships or mentoring at‑risk youth.
k.	The provision of direct services for amyotrophic lateral sclerosis (ALS) and those diagnosed with the disease.
l.	A comprehensive smoking prevention and cessation program that screens and treats tobacco use in pregnant women and postpartum mothers.
m.	A program providing short‑ or long‑term residential substance abuse services. For purposes of this sub‑subdivision, "long‑term" means a minimum of 12 months.
n.	A program that provides year‑round sports training and athletic competition for children and adults
(5)	Ensures that funds received by the Department to implement the plan supplement and do not supplant existing funds for health and wellness programs and initiatives.
(6)	Allows grants to be awarded to nonprofits for up to two years.
(7)	With grants awarded beginning July 1, 2017, a requirement that of the funds provided for competitive grants pursuant to this section, a minimum of five percent (5%) of the grants be awarded to new grant recipients who did not receive grant awards during the previous competitive grants process.
(8)	A requirement that initial disbursement of the grants be awarded no later than 30 days after certification of the State budget for the respective fiscal year.
SECTION 12A.5.(c)  No later than July 1 of each year, as applicable, the Secretary shall announce the recipients of the competitive grant awards and allocate funds to the grant recipients for the respective grant period pursuant to the amounts designated under subsection (a) of this section. After awards have been granted, the Secretary shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services on the grant awards that includes at least all of the following:
(1)	The identity and a brief description of each grantee and each program or initiative offered by the grantee.
(2)	The amount of funding awarded to each grantee.
(3)	The number of persons served by each grantee, broken down by program or initiative.
SECTION 12A.5.(d)  No later than December 1 of each fiscal year, each nonprofit organization receiving funding pursuant to this subsection in the respective fiscal year shall submit to the Division of Central Management and Support a written report of all activities funded by State appropriations. The report shall include the following information about the fiscal year preceding the year in which the report is due:
(1)	The entity's mission, purpose, and governance structure.
(2)	A description of the types of programs, services, and activities funded by State appropriations.
(3)	Statistical and demographical information on the number of persons served by these programs, services, and activities, including the counties in which services are provided.
(4)	Outcome measures that demonstrate the impact and effectiveness of the programs, services, and activities.
(5)	A detailed program budget and list of expenditures, including all positions funded, matching expenditures, and funding sources.
SECTION 12A.6.  Reserved.
SECTION 12A.7.  Reserved.

GRADUATE MEDICAL EDUCATION FUNDING/CAPE FEAR VALLEY MEDICAL CENTER
SECTION 12A.8.(a)  Calculation of Recurring Payment of Funds. – Of the funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, for the 2017‑2018 fiscal year for Graduate Medical Education, the sum of up to seven million seven hundred thousand dollars ($7,700,000) in recurring funds shall be allocated to Cape Fear Valley Medical Center (the Center) to support the residency programs affiliated with Campbell University School of Medicine. In addition, any payment due under this section shall subject to fulfillment of the conditions specified in subsection (b) of this section. Furthermore, the amount of funds allocated to the Center pursuant to this section shall be calculated so as not to exceed the lesser of the following two amounts:
(1)	The total amount of actual lost Medicare payments attributed to the Center's reclassification by the federal Centers for Medicare and Medicaid Services (CMS) as a rural hospital minus three million dollars ($3,000,000) in private donations for the residency programs.
(2)	Seven million seven hundred thousand dollars ($7,700,000).
SECTION 12A.8.(b)  Conditions for Payment of Funds. – No funds shall be paid to the Center pursuant to the calculation specified in subsection (a) of this section until the Office of State Budget and Management (OSBM) certifies, in writing, that the Center has met the following criteria by June 30, 2018:
(1)	Received private donations for the residency programs in the amount of at least three million dollars ($3,000,000). No funds shall be allocated to the Center in any subsequent fiscal year pursuant to this section unless OSBM certifies, in writing, that the Center has received three million dollars ($3,000,000) in private donations for the residency programs by June 30th of that fiscal year.
(2)	Obtained approval from CMS for reclassification as a rural hospital.
(3)	Obtained approval from the Accreditation Council for Graduate Medical Education or the American Osteopathic Association for residency programs with a minimum of 130 additional residency slots.

COMMUNITY HEALTH GRANT PROGRAM CHANGES
SECTION 12A.9.(a)  The Department of Health and Human Services, Office of Rural Health, shall continue to administer the Community Health Grant Program. Of the funds appropriated in this act to the Department of Health and Human Services, the sum of seven million six hundred eighty‑seven thousand one hundred sixty‑nine dollars ($7,687,169) in recurring funds for the 2017‑2019 fiscal biennium shall be used to administer the Community Health Grant Program. The Community Health Grant Program is available to rural health centers, free and charitable clinics, public health departments, school based health centers, federally qualified health centers, and other nonprofit organizations that provide primary care and preventive health services to low income populations, including uninsured, underinsured, Medicaid, and Medicare residents across the State.
SECTION 12A.9.(b)  The Department of Health and Human Services, Office of Rural Health, shall repurpose up to one hundred fifty thousand ($150,000) of Community Health Grant Program appropriations to leverage federal funding for administration of activities that benefit the statewide safety net system eligible for Community Health Grant support.

RURAL HEALTH LOAN REPAYMENT PROGRAMS
SECTION 12A.10.(a)  The Department of Health and Human Services, Office of Rural Health, shall use funds appropriated in this act for loan repayment to medical, dental, and psychiatric providers practicing in State hospitals or in rural or medically underserved communities in this State to combine the following loan repayment programs in order to achieve efficient and effective management of these programs:
(1)	The Physician Loan Repayment Program.
(2)	The Psychiatric Loan Repayment Program.
(3)	The Loan Repayment Initiative at State Facilities.
SECTION 12A.10.(b)  The funds described in subsection (a) of this section may be used for the following additional purposes:
(1)	Continued funding of the State Loan Repayment Program for primary care providers and expansion of State incentives to general surgeons practicing in Critical Access Hospitals (CAHs) located across the State.
(2)	Expansion of the State Loan Repayment Program to include eligible providers residing in North Carolina who use telemedicine in rural and underserved areas.

DATA ANALYTICS AND PERFORMANCE ENHANCEMENT
SECTION 12A.11.  Any enhancement of the State's data analytics capabilities utilizing funds appropriated in this act to the Department of Health and Human Services, Division of Central Management and Support, for the 2017‑2019 fiscal biennium shall be subject to applicable State laws requiring that these analytics be developed and implemented in collaboration with the Government Data Analytics Center.

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

NC PRE‑K PROGRAM/STANDARDS FOR FOUR‑ AND FIVE‑STAR RATED FACILITIES
SECTION 12B.1.(a)  Eligibility. – The Department of Health and Human Services, Division of Child Development and Early Education, shall continue implementing the prekindergarten program (NC Pre‑K). The NC Pre‑K program shall serve children who are four years of age on or before August 31 of the program year. In determining eligibility, the Division shall establish income eligibility requirements for the program not to exceed seventy‑five percent (75%) of the State median income. Up to twenty percent (20%) of children enrolled may have family incomes in excess of seventy‑five percent (75%) of median income if those children have other designated risk factors. Furthermore, any age‑eligible child who is a child of either of the following shall be eligible for the program: (i) an active duty member of the Armed Forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the Armed Forces who was ordered to active duty by the proper authority within the last 18 months or is expected to be ordered within the next 18 months or (ii) a member of the Armed Forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the Armed Forces who was injured or killed while serving on active duty. Eligibility determinations for prekindergarten participants may continue through local education agencies and local North Carolina Partnership for Children, Inc., partnerships.
Other than developmental disabilities or other chronic health issues, the Division shall not consider the health of a child as a factor in determining eligibility for participation in the NC Pre‑K program.
SECTION 12B.1.(b)  Multiyear Contracts. – The Division of Child Development and Early Education shall require the NC Pre‑K contractor to issue multiyear contracts for licensed private child care centers providing NC Pre‑K classrooms.
SECTION 12B.1.(c)  Building Standards. – Notwithstanding G.S. 110‑91(4), private child care facilities and public schools operating prekindergarten classrooms shall meet the building standards for preschool students as provided in G.S. 115C‑521.1.
SECTION 12B.1.(d)  Programmatic Standards. – Except as provided in subsection (c) of this section, entities operating prekindergarten classrooms shall adhere to all of the policies prescribed by the Division of Child Development and Early Education regarding programmatic standards and classroom requirements.
SECTION 12B.1.(e)  NC Pre‑K Committees. – Local NC Pre‑K committees shall use the standard decision‑making process developed by the Division of Child Development and Early Education in awarding prekindergarten classroom slots and student selection.
SECTION 12B.1.(f)  Reporting. – The Division of Child Development and Early Education shall submit an annual report no later than March 15 of each year to the Joint Legislative Oversight Committee on Health and Human Services, the Office of State Budget and Management, and the Fiscal Research Division. The report shall include the following:
(1)	The number of children participating in the NC Pre‑K program by county.
(2)	The number of children participating in the NC Pre‑K program who have never been served in other early education programs such as child care, public or private preschool, Head Start, Early Head Start, or early intervention programs.
(3)	The expected NC Pre‑K expenditures for the programs and the source of the local contributions.
(4)	The results of an annual evaluation of the NC Pre‑K program.
SECTION 12B.1.(g)  Audits. – The administration of the NC Pre‑K program by local partnerships shall be subject to the financial and compliance audits authorized under G.S. 143B‑168.14(b).
SECTION 12B.1.(h)  Oral Health Screen and Health Assessment Transmittal Form. – G.S. 130A‑441(a)(5) reads as rewritten:
"(5)	A section that includes the following information, if applicable, supplied by a health care provider specified in G.S. 130A‑440(c):
…
g.	Information on whether the student passed a dental screening and any concerns related to the student's oral health.
h.	An opportunity to indicate whether there are recommendations, concerns, or needs related to the student's health and whether school follow‑up is needed.
i.	An opportunity to provide comments."

CHILD CARE SUBSIDY RATES
SECTION 12B.2.(a)  The maximum gross annual income for initial eligibility, adjusted annually, for subsidized child care services shall be determined based on a percentage of the federal poverty level as follows:
AGE	INCOME PERCENTAGE LEVEL
0 – 5	200%
6 – 12	133%
The eligibility for any child with special needs, including a child who is 13 years of age or older, shall be two hundred percent (200%) of the federal poverty level.
SECTION 12B.2.(b)  Effective September 1, 2017, the Department of Health and Human Services, Division of Child Development and Early Education, shall revise its child care subsidy policy to exclude from the policy's definition of "income unit" a nonparent relative caretaker, and the caretaker's spouse and child, if applicable, when the parent of the child receiving child care subsidy does not live in the home with the child.
SECTION 12B.2.(c)  Fees for families who are required to share in the cost of care are established based on ten percent (10%) of gross family income. When care is received at the blended rate, the co‑payment will be eighty‑three percent (83%). Co‑payments for part‑time care shall be seventy‑five percent (75%) of the full‑time co‑payment.
SECTION 12B.2.(d)  Payments for the purchase of child care services for low‑income children shall be in accordance with the following requirements:
(1)	Religious‑sponsored child care facilities operating pursuant to G.S. 110‑106 and licensed child care centers and homes that meet the minimum licensing standards that are participating in the subsidized child care program shall be paid the one‑star county market rate or the rate they charge privately paying parents, whichever is lower, unless prohibited by subsection (g) of this section.
(2)	Licensed child care centers and homes with two or more stars shall receive the market rate for that rated license level for that age group or the rate they charge privately paying parents, whichever is lower, unless prohibited by subsection (g) of this section.
(3)	Nonlicensed homes shall receive fifty percent (50%) of the county market rate or the rate they charge privately paying parents, whichever is lower.
(4)	No payments shall be made for transportation services or registration fees charged by child care facilities.
(5)	Payments for subsidized child care services for postsecondary education shall be limited to a maximum of 20 months of enrollment.
(6)	The Department of Health and Human Services shall implement necessary rule changes to restructure services, including, but not limited to, targeting benefits to employment.
SECTION 12B.2.(e)  Provisions of payment rates for child care providers in counties that do not have at least 50 children in each age group for center‑based and home‑based care are as follows:
(1)	Except as applicable in subdivision (2) of this subsection, payment rates shall be set at the statewide or regional market rate for licensed child care centers and homes.
(2)	If it can be demonstrated that the application of the statewide or regional market rate to a county with fewer than 50 children in each age group is lower than the county market rate and would inhibit the ability of the county to purchase child care for low‑income children, then the county market rate may be applied.
SECTION 12B.2.(f)  A market rate shall be calculated for child care centers and homes at each rated license level for each county and for each age group or age category of enrollees and shall be representative of fees charged to parents for each age group of enrollees within the county. The Division of Child Development and Early Education shall also calculate a statewide rate and regional market rate for each rated license level for each age category.
SECTION 12B.2.(g)  The Division of Child Development and Early Education shall continue implementing policies that improve the quality of child care for subsidized children, including a policy in which child care subsidies are paid, to the extent possible, for child care in the higher quality centers and homes only. The Division shall define higher‑quality, and subsidy funds shall not be paid for one‑ or two‑star‑rated facilities. For those counties with an inadequate number of four‑ and five‑star‑rated facilities, the Division shall continue a transition period that allows the facilities to continue to receive subsidy funds while the facilities work on the increased star ratings. The Division may allow exemptions in counties where there is an inadequate number of four‑ and five‑star‑rated facilities for nonstar‑rated programs, such as religious programs.
SECTION 12B.2.(h)  Facilities licensed pursuant to Article 7 of Chapter 110 of the General Statutes and facilities operated pursuant to G.S. 110‑106 may participate in the program that provides for the purchase of care in child care facilities for minor children of needy families. Except as authorized by subsection (g) of this section, no separate licensing requirements shall be used to select facilities to participate. In addition, child care facilities shall be required to meet any additional applicable requirements of federal law or regulations. Child care arrangements exempt from State regulation pursuant to Article 7 of Chapter 110 of the General Statutes shall meet the requirements established by other State law and by the Social Services Commission.
County departments of social services or other local contracting agencies shall not use a provider's failure to comply with requirements in addition to those specified in this subsection as a condition for reducing the provider's subsidized child care rate.
SECTION 12B.2.(i)  Payment for subsidized child care services provided with Temporary Assistance for Needy Families Block Grant funds shall comply with all regulations and policies issued by the Division of Child Development and Early Education for the subsidized child care program.
SECTION 12B.2.(j)  Noncitizen families who reside in this State legally shall be eligible for child care subsidies if all other conditions of eligibility are met. If all other conditions of eligibility are met, noncitizen families who reside in this State illegally shall be eligible for child care subsidies only if at least one of the following conditions is met:
(1)	The child for whom a child care subsidy is sought is receiving child protective services or foster care services.
(2)	The child for whom a child care subsidy is sought is developmentally delayed or at risk of being developmentally delayed.
(3)	The child for whom a child care subsidy is sought is a citizen of the United States.
SECTION 12B.2.(k)  The Department of Health and Human Services, Division of Child Development and Early Education, shall require all county departments of social services to include on any forms used to determine eligibility for child care subsidy whether the family waiting for subsidy is receiving assistance through the NC Pre‑K Program or Head Start.
SECTION 12B.2.(l)  Department of Defense certified child care facilities licensed pursuant to G.S. 110‑106.2 may participate in the State subsidized child care program that provides for the purchase of care in child care facilities for minor children in needy families; provided, that funds allocated from the State subsidized child care program to Department of Defense certified child care facilities shall supplement and not supplant funds allocated in accordance with G.S. 143B‑168.15(g). Payment rates and fees for military families who choose Department of Defense certified child care facilities and who are eligible to receive subsidized child care shall be as set forth in this Section.

CHILD CARE SUBSIDY MARKET RATE INCREASES
SECTION 12B.3.  Over the course of the fiscal biennium, the Department of Health and Human Services, Division of Child Development and Early Education, shall increase the child care subsidy market rates to twenty‑five percent (25%) of the rates recommended by the 2015 Child Care Market Rate Study from birth through five years of age in three‑, four‑, and five‑star‑rated child care centers and homes in development tier three areas, as defined in G.S. 143B‑437.08 for the 2017 calendar year.

CHILD CARE ALLOCATION FORMULA
SECTION 12B.4.(a)  The Department of Health and Human Services shall allocate child care subsidy voucher funds to pay the costs of necessary child care for minor children of needy families. The mandatory thirty‑percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation under G.S. 143B‑168.15(g) shall constitute the base amount for each county's child care subsidy allocation. The Department of Health and Human Services shall use the following method when allocating federal and State child care funds, not including the aggregate mandatory thirty‑percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation:
(1)	Funds shall be allocated to a county based upon the projected cost of serving children under age 11 in families with all parents working who earn less than the applicable federal poverty level percentage set forth in Section 12B.2 of this act.
(2)	The Department of Health and Human Services may withhold up to two percent (2%) of available funds from the allocation formula for preventing termination of services. The Division of Child Development will allocate any funds withheld that are not needed for this purpose to counties by September 30, 2017.
(3)	Each county's child care subsidy allocation shall include a four percent (4%) set‑aside for vulnerable populations, which include children identified as having special needs and for children whose applications for assistance indicate that they and their families are experiencing homeless or in a temporary living situation. These children shall be given priority for receiving services until such time as each county's set‑aside for vulnerable populations is exhausted.
SECTION 12B.4.(b)  The Department of Health and Human Services may reallocate unused child care subsidy voucher funds in order to meet the child care needs of low‑income families or for repayment of any federal funds that cannot be reobligated that are identified by counties as overpayments. Any reallocation of funds shall be based upon the expenditures of all child care subsidy voucher funding, including North Carolina Partnership for Children, Inc., funds within a county. Counties shall manage service levels within the funds allocated to them. Counties with a spending coefficient over one hundred percent (100%) must submit a plan for managing their allocations to the Division of Child Development and Early Education before receiving any reallocated funds.
SECTION 12B.4.(c)  When implementing the formula under subsection (a) of this section, the Department of Health and Human Services, Division of Child Development and Early Education, shall include the market rate increase in the formula process, rather than calculating the increases outside of the formula process. Moreover, based on the newest Census data release, the Department shall implement (i) one‑third of the change in a county's allocation in the year following the data release; (ii) an additional one‑third of the change in a county's allocation beginning two years after the initial change under this subdivision; and (iii) the final one‑third change in a county's allocation beginning the following two years thereafter.

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

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

ADMINISTRATIVE ALLOWANCE FOR COUNTY DEPARTMENTS OF SOCIAL SERVICES/USE OF SUBSIDY FUNDS FOR FRAUD DETECTION
SECTION 12B.7.(a)  The Department of Health and Human Services, Division of Child Development and Early Education, shall fund the allowance that county departments of social services may use for administrative costs at four percent (4%) of the county's total child care subsidy funds allocated in the Child Care and Development Fund Block Grant plan or eighty thousand dollars ($80,000), whichever is greater.
SECTION 12B.7.(b)  Each county department of social services may use up to two percent (2%) of child care subsidy funds allocated to the county for fraud detection and investigation initiatives.
SECTION 12B.7.(c)  The Division of Child Development and Early Education may adjust the allocations in the Child Care and Development Fund Block Grant under Section 12J.1 of this act according to (i) the final allocations for local departments of social services under subsection (a) of this section and (ii) the funds allocated for fraud detection and investigation initiatives under subsection (b) of this section. The Division shall submit a report on the final adjustments to the allocations of the four percent (4%) administrative costs to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division no later than September 30 of each year of the fiscal biennium.

EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES ENHANCEMENTS
SECTION 12B.8.(a)  Policies. – The North Carolina Partnership for Children, Inc., and its Board shall ensure policies focus on the North Carolina Partnership for Children, Inc.,'s mission of improving child care quality in North Carolina for children from birth to five years of age. North Carolina Partnership for Children, Inc.,‑funded activities shall include assisting child care facilities with (i) improving quality, including helping one‑, two‑, and three‑star‑rated facilities increase their star ratings and (ii) implementing prekindergarten programs. State funding for local partnerships shall also be used for evidence‑based or evidence‑informed programs for children from birth to five years of age that do the following:
(1)	Increase children's literacy.
(2)	Increase the parents' ability to raise healthy, successful children.
(3)	Improve children's health.
(4)	Assist four‑ and five‑star‑rated facilities in improving and maintaining quality.
SECTION 12B.8.(b)  Administration. – Administrative costs shall be equivalent to, on an average statewide basis for all local partnerships, not more than eight percent (8%) of the total statewide allocation to all local partnerships. For purposes of this subsection, administrative costs shall include costs associated with partnership oversight, business and financial management, general accounting, human resources, budgeting, purchasing, contracting, and information systems management. The North Carolina Partnership for Children, Inc., shall continue using a single statewide contract management system that incorporates features of the required standard fiscal accountability plan described in G.S. 143B‑168.12(a)(4). All local partnerships are required to participate in the contract management system and, directed by the North Carolina Partnership for Children, Inc., to collaborate, to the fullest extent possible, with other local partnerships to increase efficiency and effectiveness.
SECTION 12B.8.(c)  Salaries. – The salary schedule developed and implemented by the North Carolina Partnership for Children, Inc., shall set the maximum amount of State funds that may be used for the salary of the Executive Director of the North Carolina Partnership for Children, Inc., and the directors of the local partnerships. The North Carolina Partnership for Children, Inc., shall base the schedule on the following criteria:
(1)	The population of the area serviced by a local partnership.
(2)	The amount of State funds administered.
(3)	The amount of total funds administered.
(4)	The professional experience of the individual to be compensated.
(5)	Any other relevant factors pertaining to salary, as determined by the North Carolina Partnership for Children, Inc.
The salary schedule shall be used only to determine the maximum amount of State funds that may be used for compensation. Nothing in this subsection shall be construed to prohibit a local partnership from using non‑State funds to supplement an individual's salary in excess of the amount set by the salary schedule established under this subsection.
SECTION 12B.8.(d)  Match Requirements. – The North Carolina Partnership for Children, Inc., and all local partnerships shall, in the aggregate, be required to match one hundred percent (100%) of the total amount budgeted for the program in each fiscal year of the 2017‑2019 biennium. Of the funds the North Carolina Partnership for Children, Inc., and the local partnerships are required to match, contributions of cash shall be equal to at least thirteen percent (13%) and in kind donated resources shall be equal to no more than six percent (6%) for a total match requirement of nineteen percent (19%) for the 2017‑2018 fiscal year. The North Carolina Partnership for Children, Inc., may carry forward any amount in excess of the required match for a fiscal year in order to meet the match requirement of the succeeding fiscal year. Only in‑kind contributions that are quantifiable shall be applied to the in‑kind match requirement. Volunteer services may be treated as an in‑kind contribution for the purpose of the match requirement of this subsection. Volunteer services that qualify as professional services shall be valued at the fair market value of those services. All other volunteer service hours shall be valued at the statewide average wage rate as calculated from data compiled by the Division of Employment Security of the Department of Commerce in the Employment and Wages in North Carolina Annual Report for the most recent period for which data are available. Expenses, including both those paid by cash and in‑kind contributions, incurred by other participating non‑State entities contracting with the North Carolina Partnership for Children, Inc., or the local partnerships, also may be considered resources available to meet the required private match. In order to qualify to meet the required private match, the expenses shall:
(1)	Be verifiable from the contractor's records.
(2)	If in‑kind, other than volunteer services, be quantifiable in accordance with generally accepted accounting principles for nonprofit organizations.
(3)	Not include expenses funded by State funds.
(4)	Be supplemental to and not supplant preexisting resources for related program activities.
(5)	Be incurred as a direct result of the Early Childhood Initiatives Program and be necessary and reasonable for the proper and efficient accomplishment of the Program's objectives.
(6)	Be otherwise allowable under federal or State law.
(7)	Be required and described in the contractual agreements approved by the North Carolina Partnership for Children, Inc., or the local partnership.
(8)	Be reported to the North Carolina Partnership for Children, Inc., or the local partnership by the contractor in the same manner as reimbursable expenses.
Failure to obtain a nineteen percent (19%) match by June 30, 2018, shall result in a dollar‑for‑dollar reduction in the appropriation for the Program for a subsequent fiscal year. The North Carolina Partnership for Children, Inc., shall be responsible for compiling information on the private cash and in‑kind contributions into a report that is submitted to the Joint Legislative Oversight Committee on Health and Human Services in a format that allows verification by the Department of Revenue. The same match requirements shall apply to any expansion funds appropriated by the General Assembly.
SECTION 12B.8.(e)  Bidding. – The North Carolina Partnership for Children, Inc., and all local partnerships shall use competitive bidding practices in contracting for goods and services on contract amounts as follows:
(1)	For amounts of five thousand dollars ($5,000) or less, the procedures specified by a written policy as developed by the Board of Directors of the North Carolina Partnership for Children, Inc.
(2)	For amounts greater than five thousand dollars ($5,000), but less than fifteen thousand dollars ($15,000), three written quotes.
(3)	For amounts of fifteen thousand dollars ($15,000) or more, but less than forty thousand dollars ($40,000), a request for proposal process.
(4)	For amounts of forty thousand dollars ($40,000) or more, a request for proposal process and advertising in a major newspaper.
SECTION 12B.8.(f)  Allocations. – The North Carolina Partnership for Children, Inc., shall not reduce the allocation for counties with less than 35,000 in population below the 2012‑2013 funding level.
SECTION 12B.8.(g)  Performance‑Based Evaluation. – The Department of Health and Human Services shall continue to implement the performance‑based evaluation system.
SECTION 12B.8.(h)  Expenditure Restrictions. – The Department of Health and Human Services and the North Carolina Partnership for Children, Inc., shall ensure that the allocation of funds for Early Childhood Education and Development Initiatives for the 2017‑2019 fiscal biennium shall be administered and distributed in the following manner:
(1)	Capital expenditures are prohibited for the 2017‑2019 fiscal biennium. For the purposes of this section, "capital expenditures" means expenditures for capital improvements as defined in G.S. 143C‑1‑1(d)(5).
(2)	Expenditures of State funds for advertising and promotional activities are prohibited for the 2017‑2019 fiscal biennium.
For the 2017‑2019 fiscal biennium, local partnerships shall not spend any State funds on marketing campaigns, advertising, or any associated materials. Local partnerships may spend any private funds the local partnerships receive on those activities.

MANDATORY CHILD CARE PROVIDERS' CRIMINAL HISTORY CHECKS
SECTION 12B.9.  G.S. 110‑90.2 reads as rewritten:
"§ 110‑90.2.  Mandatory child care providers' criminal background checks.
(a)	For purposes of this section:
(1)	"Child care", notwithstanding the definition in G.S. 110‑86, means any child care provided in child care facilities required to be licensed or regulated under this Article and any other facility approved to receive or receiving State or federal funds for providing child care.
(2)	"Child care provider" means a person who:
a.	Is employed by or seeks to be employed by a child care facility providing child care as defined in subdivision (1) of this subsection, whether in temporary or permanent capacity, including substitute  providers.
b.	Owns or operates or seeks to own or operate a child care facility or nonlicensed child care home providing child care as defined in subdivision (1) of this  subsection.
c.	Is a member of the household in a family child care home, nonlicensed child care home, or child care center in a residence and who is over 15 years old, including family members and nonfamily members who use the home on a permanent or temporary basis as their place of residence.
d.	Is a substitute who temporarily assumes the duties of a staff person and may or may not be monetarily compensated by the facility.
e.	Works or volunteers in a child care facility and is counted in staff/child ratio or has unsupervised contact with children, but who is not monetarily compensated by the facility.
(3)	"Criminal history" means a county, state, or federal criminal history that bears upon an individual's fitness to have responsibility for the safety and well‑being of children.
a.	Criminal history shall include felony or misdemeanor convictions, as well as pending misdemeanor charges, pending felony charges, or pending felony indictments.
b.	Crimes that have a bearing on an individual's fitness to have responsibility for the safety and well‑being of children include, but are not limited to, the following North Carolina crimes contained in any of the following Articles of Chapter 14 of the General Statutes: Article 3A, Terrorism; Article 6, Homicide; Article 6A, Unborn Victims; Article 7B, Rape and Other Sex Offenses; Article 8, Assaults; Article 10, Kidnapping and Abduction; Article 13, Malicious Injury or Damage by Use of Explosive or Incendiary Device or Material; Article 14, Burglary and Other House Breakings; Article 15, Arson and Other Burnings; Article 16, Larceny; Article 17, Robbery; Article 18, Embezzlement; Article 19, False Pretenses and Cheats; Article 19A, Obtaining Property or Services by False or Fraudulent Use of Credit Device or Other Means; Article 19B, Financial Transaction Card Crime Act; Article 19C, Financial Identity Fraud; Article 21, Forgery; Article 26, Offenses Against Public Morality and Decency; Article 27, Prostitution; Article 27A, Sex Offender and Public Protection Registration Program; Article 29, Bribery; Article 35, Offenses Against the Public Peace; Article 36A, Riots, Civil Disorders, and Emergencies; Article 39, Protection of Minors; Article 40, Protection of the Family; Article 52, Miscellaneous Police Regulations; and Article 59, Public Intoxication. Such crimes also include cruelty to animals in violation of Article 3 of Chapter 19A of the General Statutes, possession or sale of drugs in violation of the North Carolina Controlled Substances Act, Article 5 of Chapter 90 of the General Statutes, and alcohol‑related offenses such as sale to underage persons in violation of G.S. 18B‑302 or driving while impaired in violation of G.S. 20‑138.1 through G.S. 20‑138.5. In addition to the North Carolina crimes listed in this subdivision, such crimes also include similar crimes under federal law or under the laws of other states.
c.	Nothing in this section shall be construed to prevent the Department from disqualifying child care providers based on their conviction for crimes not specifically listed in this section that bear upon the fitness of an individual to provide care for and have responsibility for the safety and well‑being of children.
(4)	"Substitute provider" means a person who temporarily assumes the duties of a staff person for a time period not to exceed two consecutive months and may or may not be monetarily compensated by the facility.
(5)	"Uncompensated provider" means a person who works in a child care facility and is counted in staff/child ratio or has unsupervised contact with children, but who is not monetarily compensated by the facility.
(a1)	No person shall ever be a child care provider who has been any of the following:
(1)	Convicted of a misdemeanor or a felony crime involving child neglect or child abuse.
(2)	Adjudicated a "responsible individual" under G.S. 7B‑311(b).
(3)	Convicted of a "reportable conviction" as defined under G.S. 14‑208.6(4).
(4)	Is registered, or is required to be registered, on any State sex offender registry.
(5)	Is registered, or is required to be registered on the National Sex Offender Registry established under the Adam Walsh Child Protection and Safety Act of 2006 (42 U.S.C. § 16901 et seq.).
(6)	Placed on the Child Maltreatment Registry in accordance with G.S. 110‑105.5.
(7)	Convicted of a felony consisting of:
a.	Murder, as described in section 1111 of title 18, United States Code.
b.	A crime against children, including child pornography.
c.	Spousal abuse.
d.	A crime involving rape or sexual assault.
e.	Kidnapping.
f.	Arson.
g.	Physical assault or battery.
h.	Has been convicted of a violent misdemeanor committed as an adult against a child, including the following crimes: child endangerment, sexual assault, or a misdemeanor involving child pornography.
(a2)	No person shall be a child care provider who has been convicted of a felony consisting of a drug‑related offense committed during the preceding five years; however, such person may reapply under this section, five years after disqualification, or five years after the last drug‑related felony offense, whichever is sooner.
(b)	The Department shall ensure that, prior to employment and every three years thereafter, the criminal history of all child care providers is checked and a determination is made of the child care provider's fitness to have responsibility for the safety and well‑being of children based on the criminal history. The Department shall ensure that all child care providers are checked for county, State, and federal criminal histories. The department shall further ensure that the State criminal sex offender registry or repository, abuse and neglect registries, and databases of any state where the child care provider resided during the preceding five years is checked and is part of the basis of the Department's determination of fitness.
(b1)	The Department may prevent an individual from being a child care provider if the Department determines that the individual meets any of the following:
(1)	Is a habitually excessive user of alcohol, as evidenced by, among other things:
a.	Two or more convictions of driving while intoxicated or driving under the influence within the three years immediately preceding the review of the criminal history 
b.	Alcohol‑related convictions, pending charges, or pending indictments of alcohol related offenses.
c.	Documentation or other evidence obtained by or provided to the Department related to the individual's alcohol use.
(2)	Illegally uses narcotic or other impairing drugs.
(3)	Is mentally or emotionally impaired to an extent that may be injurious to children, as evidenced by, among other things:
a.	An evaluation of an employee's emotional and physical fitness to care for children by a licensed mental health professional indicating that there has been deterioration in the person's emotional or physical fitness to care for children.
b.	A current civil no contact order, restraining order, or similar order from a court of competent jurisdiction entered against the employee.
(c)	The Department of Public Safety shall provide to the Division of Child Development and Early Education, Department of Health and Human Services, the criminal history from the State and National Repositories of Criminal Histories and the results of the State and national sex offender registries of any child care provider as requested by the Division.
The Division shall provide to the Department of Public Safety, along with the request, the fingerprint impressions of the provider to be checked. The Division of Child Development and Early Education shall maintain a form consenting to the check of the criminal record and to the use of fingerprints and other identifying information required by the repositories signed by the child care provider to be checked. The Department of Public Safety shall forward a set of fingerprints to the Federal Bureau of Investigation for a federal criminal history record check.
At the time of application, the child care provider whose criminal history is to be checked shall be furnished with a statement substantially similar to the following:
NOTICE

CHILD CARE PROVIDER
MANDATORY CRIMINAL BACKGROUND CHECK

NORTH CAROLINA LAW REQUIRES THAT A CRIMINAL BACKGROUND CHECK BE CONDUCTED ON ALL PERSONS WHO PROVIDE CHILD CARE IN A LICENSED OR REGULATED CHILD CARE FACILITY, AND ANY OTHER FACILITY THAT RECEIVES STATE OR FEDERAL FUNDS.
"Criminal history" means a county, state, or federal criminal history that bears on an individual's fitness to have responsibility for the safety and well‑being of children. Criminal history includes felony or misdemeanor convictions, as well as pending misdemeanor charges and pending felony charges and felony indictments. Relevant crimes include, but are not limited to, the following North Carolina crimes contained in any of the following Articles of Chapter 14 of the General Statutes: Article 3A, Terrorism; Article 6, Homicide; Article 6A, Unborn Victims; Article 7B, Rape and Other Sex Offenses; Article 8, Assaults; Article 10, Kidnapping and Abduction; Article 13, Malicious Injury or Damage by Use of Explosive or Incendiary Device or Material; Article 14, Burglary and Other House Breakings; Article 15, Arson and Other Burnings; Article 16, Larceny; Article 17, Robbery; Article 18, Embezzlement; Article 19, False Pretenses and Cheats; Article 19A, Obtaining Property or Services by False or Fraudulent Use of Credit Device or Other Means; Article 19B, Financial Transaction Card Crime Act; Article 19C, Financial Identity Fraud; Article 21, Forgery; Article 26, Offenses Against Public Morality and Decency; Article 27, Prostitution; Article 27A, Sex Offender and Public Protection Registration Program; Article 29, Bribery; Article 35, Offenses Against the Public Peace; Article 36A, Riots and Civil Disorders and Emergencies; Article 39, Protection of Minors; Article 40, Protection of the Family; Article 52, Miscellaneous Police Regulations; and Article 59, Public Intoxication. Such crimes also include cruelty to animals in violation of Article 3 of Chapter 19A of the General Statutes, possession or sale of drugs in violation of the North Carolina Controlled Substances Act, Article 5 of Chapter 90 of the General Statutes, and alcohol‑related offenses such as sale to underage persons in violation of G.S. 18B‑302 or driving while impaired in violation of G.S. 20‑138.1 through G.S. 20‑138.5. In addition to the North Carolina crimes listed in this subdivision, such crimes also include similar crimes under federal law or under the laws of other states.
In addition to the North Carolina crimes listed in this notice, such crimes also include similar crimes under federal law or under the laws of other states. Your fingerprints will be used to check the criminal history records of the State Bureau of Investigation (SBI) and the Federal Bureau of Investigation (FBI).
If the North Carolina Department of Health and Human Services determines that you are unfit to have responsibility for the safety and well‑being of children, you shall have the opportunity to complete, or challenge the accuracy of, the information contained in the SBI or FBI identification records.
If you disagree with the determination of the North Carolina Department of Health and Human Services on your fitness to provide child care, you may file a civil lawsuit in the district court in the county where you live within 60 days after the date of determination of disqualification. 
Any child care provider who intentionally falsifies any information required to be furnished to conduct the criminal history record check shall be guilty of a Class 2 misdemeanor.
Refusal to consent to a criminal history record check or intentional falsification of any information required to be furnished to conduct a criminal history record check is grounds for the Department to prohibit the child care provider from providing child care. Any child care provider who intentionally falsifies any information required to be furnished to conduct the criminal history shall be guilty of a Class 2 misdemeanor.
(d)	The Department shall notify in writing the child care provider, and the child care provider's employer, if any, or for other facilities receiving State of federal funds for providing child care, of the determination by the Department whether the child care provider is qualified to provide child care based on the child care provider's criminal history. In accordance with the law regulating the dissemination of the contents of the criminal history file furnished by the Federal Bureau of Investigation, the Department shall not release nor disclose any portion of the child care provider's criminal history to the child care provider or the child care provider's employer. The Department shall also notify the child care provider of the procedure for completing or challenging the accuracy of the criminal history and the child care provider's right to contest the Department's determination in court.
(e)	A child care provider who disagrees with the Department's decision may file a civil action in the district court of the county of residence of the child care provider within 60 days after the date of disqualification. Review of the Department's determination disqualifying a child care provider shall be de novo. No jury trial is available for appeals to district court under this section.
(f)	All the information that the Department receives through the checking of the criminal history is privileged information and is not a public record but is for the exclusive use of the Department and those persons authorized under this section to receive the information. The Department may destroy the information after it is used for the purposes authorized by this section after one calendar year.
(g)	There shall be no liability for negligence on the part of an employer of a child care provider, an owner or operator of a child care facility, a State or local agency, or the employees of a State or local agency, arising from any action taken or omission by any of them in carrying out the provisions of this section. The immunity established by this subsection shall not extend to gross negligence, wanton conduct, or intentional wrongdoing that would otherwise be actionable. The immunity established by this subsection is waived to the extent of indemnification by insurance, indemnification under Article 31A of Chapter 143 of the General Statutes, and to the extent sovereign immunity is waived under the Torts Claim Act, as set forth in Article 31 of Chapter 143 of the General Statutes.
(h)	The child care provider shall pay the cost of the fingerprinting and the federal criminal history record check in accordance with G.S. 143B‑934. The Department of Public Safety shall perform the State criminal history record check. The Department of Health and Human Services shall pay for and conduct the county criminal history record check. Child care providers who reside outside the State bear the cost of the county criminal history record check and shall provide the county criminal history record check to the Division of Child Development as required by this section.
(i)	A child care operator shall not knowingly permit an individual disqualified from being a child care provider pursuant to this section to be present on the premises of any child care facility or other regulated facility while children are in care.
(j)	Operators who fail to comply with the provisions of this section shall be subject to administrative penalties up to and including summary suspension, revocation, or order to cease operation of their child care facility or regulated facility."

SUBPART XII‑C. DIVISION OF SOCIAL SERVICES

UPDATE DATES/TANF BENEFIT IMPLEMENTATION PLAN
SECTION 12C.1.(a)  Beginning October 1, 2017, the General Assembly approves the plan titled "North Carolina Temporary Assistance for Needy Families State Plan fiscal biennium 2017‑2019," prepared by the Department of Health and Human Services and presented to the General Assembly. The North Carolina Temporary Assistance for Needy Families State Plan covers the period October 1, 2017, through September 30, 2019. The Department shall submit the State Plan, as revised in accordance with subsection (b) of this section, to the United States Department of Health and Human Services.
SECTION 12C.1.(b)  The counties approved as Electing Counties in the North Carolina Temporary Assistance for Needy Families State Plan fiscal biennium 2017‑2019, as approved by this section, are Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson Counties.
SECTION 12C.1.(c)  Counties that submitted the letter of intent to remain as an Electing County or to be redesignated as an Electing County and the accompanying county plan for the 2017‑2019 fiscal biennium, pursuant to G.S. 108A‑27(e), shall operate under the Electing County budget requirements effective July 1, 2017. For programmatic purposes, all counties referred to in this subsection shall remain under their current county designation through September 30, 2019.
SECTION 12C.1.(d)  For the 2017‑2018 fiscal year, Electing Counties shall be held harmless to their Work First Family Assistance allocations for the 2016‑2017 fiscal year, provided that remaining funds allocated for Work First Family Assistance and Work First Diversion Assistance are sufficient for payments made by the Department on behalf of Standard Counties pursuant to G.S. 108A‑27.11(b).
SECTION 12C.1.(e)  In the event that departmental projections of Work First Family Assistance and Work First Diversion Assistance for the 2017‑2018 fiscal year indicate that remaining funds are insufficient for Work First Family Assistance and Work First Diversion Assistance payments to be made on behalf of Standard Counties, the Department is authorized to deallocate funds, of those allocated to Electing Counties for Work First Family Assistance in excess of the sums set forth in G.S. 108A‑27.11, up to the requisite amount for payments in Standard Counties. Prior to deallocation, the Department shall obtain approval by the Office of State Budget and Management. If the Department adjusts the allocation set forth in subsection (d) of this section, then a report shall be made to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division.

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

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

USE OF FOSTER CARE BUDGET FOR GUARDIANSHIP ASSISTANCE PROGRAM
SECTION 12C.4.  Of the funds available for the provision of foster care services, the Department of Health and Human Services, Division of Social Services, may provide for the financial support of children who are deemed to be (i) in a permanent family placement setting, (ii) eligible for legal guardianship, and (iii) otherwise unlikely to receive permanency. No additional expenses shall be incurred beyond the funds budgeted for foster care for the Guardianship Assistance Program (GAP). The Division of Social Services shall design the GAP to include provisions for extending guardianship services for individuals who have attained the age of 18 years and opt to continue to receive guardianship services until reaching 21 years of age if the individual is (i) completing secondary education or a program leading to an equivalent credential, (ii) enrolled in an institution that provides postsecondary or vocational education, (iii) participating in a program or activity designed to promote or remove barriers to employment, (iv) employed for at least 80 hours per month, or (v) incapable of completing the educational or employment requirements of this section due to a medical condition or disability. The GAP rates shall reimburse the legal guardian for room and board and be set at the same rate as the foster care room and board rates in accordance with rates established under G.S. 108A‑49.1. The Social Services Board shall adopt rules establishing a GAP to implement this section, including defining the phrase "legal guardian" as used in this section.

CHILD WELFARE POSTSECONDARY SUPPORT PROGRAM (NC REACH)
SECTION 12C.5.(a)  The funds appropriated in this act to the Department of Health and Human Services for the child welfare postsecondary support program shall be used to continue providing assistance with the "cost of attendance" as that term is defined in 20 U.S.C. § 108711 for the educational needs of foster youth aging out of the foster care system and special needs children adopted from foster care after age 12. These funds shall be allocated by the State Education Assistance Authority.
SECTION 12C.5.(b)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of fifty thousand dollars ($50,000) for the 2017‑2018 fiscal year and the sum of fifty thousand dollars ($50,000) for the 2018‑2019 fiscal year shall be allocated to the North Carolina State Education Assistance Authority (SEAA). The SEAA shall use these funds only to perform administrative functions necessary to manage and distribute scholarship funds under the child welfare postsecondary support program.
SECTION 12C.5.(c)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of three hundred thirty‑nine thousand four hundred ninety‑three dollars ($339,493) for the 2017‑2018 fiscal year and the sum of three hundred thirty‑nine thousand four hundred ninety‑three dollars ($339,493) for the 2018‑2019 fiscal year shall be used to contract with an entity to administer the child welfare postsecondary support program described under subsection (a) of this section, which administration shall include the performance of case management services.
SECTION 12C.5.(d)  Funds appropriated to the Department of Health and Human Services for the child welfare postsecondary support program shall be used only for students attending public institutions of higher education in this State.

FEDERAL CHILD SUPPORT INCENTIVE PAYMENTS
SECTION 12C.6.(a)  Centralized Services. – The North Carolina Child Support Services Section (NCCSS) of the Department of Health and Human Services, Division of Social Services, shall retain up to fifteen percent (15%) of the annual federal incentive payments it receives from the federal government to enhance centralized child support services. To accomplish this requirement, NCCSS shall do the following:
(1)	In consultation with representatives from county child support services programs, identify how federal incentive funding could improve centralized services.
(2)	Use federal incentive funds to improve the effectiveness of the State's centralized child support services by supplementing and not supplanting State expenditures for those services.
(3)	Develop and implement rules that explain the State process for calculating and distributing federal incentive funding to county child support services programs.
SECTION 12C.6.(b)  County Child Support Services Programs. – NCCSS shall allocate no less than eighty‑five percent (85%) of the annual federal incentive payments it receives from the federal government to county child support services programs to improve effectiveness and efficiency using the federal performance measures. To that end, NCCSS shall do the following:
(1)	In consultation with representatives from county child support services programs, examine the current methodology for distributing federal incentive funding to the county programs and determine whether an alternative formula would be appropriate. NCCSS shall use its current formula for distributing federal incentive funding until an alternative formula is adopted.
(2)	Upon adopting an alternative formula, develop a process to phase‑in the alternative formula for distributing federal incentive funding over a four‑year period.
SECTION 12C.6.(c)  Reporting by County Child Support Services Programs. – NCCSS shall establish guidelines that identify appropriate uses for federal incentive funding. To ensure those guidelines are properly followed, NCCSS shall require county child support services programs to comply with each of the following:
(1)	Submit an annual plan describing how federal incentive funding would improve program effectiveness and efficiency as a condition of receiving federal incentive funding.
(2)	Report annually on (i) how federal incentive funding has improved program effectiveness and efficiency and been reinvested into their programs, (ii) provide documentation that the funds were spent according to their annual plans, and (iii) explain any deviations from their plans.
NCCSS shall submit a report on federal child support incentive funding to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division by November 1 of each year. The report shall describe how federal incentive funds enhanced centralized child support services to benefit county child support services programs and improved the effectiveness and efficiency of county child support services programs. The report shall further include any changes to the State process the NCCSS used in calculating and distributing federal incentive funding to county child support services programs and any recommendations for further changes

CHILD WELFARE SYSTEM CHANGES
SECTION 12C.7.(a)  Federal Improvement Plan Implementation. – The Department of Health and Human Services, Division of Social Services, shall implement the requirements of the federal Program Improvement Plan to bring the State into compliance with national standards for child welfare policy and practices. The Division shall collaborate with county departments of social services to develop a model of oversight that supports program outcomes and a county's ability to meet performance standards as outlined in the Program Improvement Plan. Oversight may include support for continuous quality improvement, staff training, and data analysis. During the first two years of implementing the Program Improvement Plan, the Division shall ensure the three new Human Services/Planner Evaluator positions funded by this act are used to carry out the activities detailed in the Plan. Upon complete implementation of the Plan, these positions shall be used in child welfare services to continually improve outcomes for children and families.
The Division shall report on the implementation and outcomes of the Program Improvement Plan to the Joint Legislative Oversight Committee on Health and Human Services. The report shall be submitted semiannually on February 1 and August 1 of each year, through February 1, 2019.
SECTION 12C.7.(b)  Child Welfare/NC FAST. – The Department of Health and Human Services, Division of Social Services, shall continue toward completion of the child welfare component of the North Carolina Families Accessing Services Through Technology (NC FAST) system to (i) bring the State into compliance with the Statewide Information System systematic factor of the Child and Family Services Review (CFSR) and (ii) ensure that data quality meets federal standards and adequate information is collected and available to counties to assist in tracking children and outcomes across counties.
It is the intent of the General Assembly that the child welfare component of the NC FAST system be operational by December 31, 2017. To that end, the Department of Health and Human Services, Division of Social Services, shall report quarterly on the development, implementation, and outcomes of the child welfare component of the NC FAST system to the Joint Legislative Oversight Committee on Health and Human Services from October 1, 2017, through February 1, 2018. The report shall include, at a minimum, each of the following:
(1)	The current time line for development and implementation of the child welfare component to NC FAST.
(2)	Any adjustments and justifications for adjustments to the time line.
(3)	Progress on the development and implementation of the system.
(4)	Address any identified issues in developing or implementing the child welfare component to NC FAST and solutions to address those issues.
(5)	The level of county participation and involvement in each phase of the project.
(6)	Any budget and expenditure reports, including overall project budget and expenditures, and current fiscal year budget and expenditures.

SUBPART XII‑D. DIVISION OF AGING AND ADULT SERVICES

STATE‑COUNTY SPECIAL ASSISTANCE RATES
SECTION 12D.1.(a)  For each fiscal year of the 2017‑2019 fiscal biennium, the maximum monthly rate for residents in adult care home facilities shall be one thousand one hundred eighty‑two dollars ($1,182) per month per resident.
SECTION 12D.1.(b)  For each fiscal year of the 2017‑2019 fiscal biennium, the maximum monthly rate for residents in Alzheimer's/Dementia special care units shall be one thousand five hundred fifteen dollars ($1,515) per month per resident.

ALIGNMENT OF STATE AGING PLAN DEADLINE
SECTION 12D.2.  G.S. 143B‑181.1A(a) reads as rewritten:
"(a)	The Division of Aging, Department of Health and Human Services shall submit a regularly updated plan to the General Assembly by July 1 of every other odd‑numbered year. This plan shall include:
(1)	A detailed analysis of the needs of older adults in North Carolina, based on existing available data, including demographic, geographic, health, social, economic, and other pertinent indicators;
(2)	A clear statement of the goals of the State's long‑term public policy on aging;
(3)	An analysis of services currently provided and an analysis of additional services needed; and
(4)	Specific implementation recommendations on expansion and funding of current and additional services and services levels."

SUBPART XII‑E. DIVISION OF PUBLIC HEALTH

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

USE OF AIDS DRUG ASSISTANCE PROGRAM (ADAP) FUNDS TO PURCHASE HEALTH INSURANCE
SECTION 12E.2.  The Department of Health and Human Services, Division of Public Health, shall create within the North Carolina AIDS Drug Assistance Program (ADAP) a health insurance premium assistance program that utilizes federal funds from Part B of the Ryan White HIV/AIDS Program and ADAP funds to provide eligible beneficiaries with premium and cost‑sharing assistance for the purchase or maintenance of private health insurance coverage, including premiums, co‑payments, and deductibles. In creating this program, the Department shall ensure full compliance with federal Health Resources and Services Administration (HRSA) guidance, including the methodology used to do all of the following:
(1)	Assess and compare the cost of providing prescription drugs to eligible beneficiaries through the health insurance premium assistance program created pursuant to this section versus the existing ADAP program.
(2)	Ensure that insurance premium assistance program funds are used solely to pay for premium and cost‑sharing assistance for the purchase or maintenance of private health insurance coverage that provides, at a minimum, prescription coverage equivalent to the formulary available under Part B of the Ryan White HIV/AIDS Program. 
(3)	Limit the total annual amount of funds expended for the health insurance premium assistance program authorized by this section to no more than the total annual cost of maintaining the same individuals on the existing ADAP Program.

AIDS DRUG ASSISTANCE PROGRAM (ADAP)
SECTION 12E.3.  The Department of Health and Human Services shall work with the Department of Public Safety (DPS) to use DPS funds to purchase pharmaceuticals for the treatment of individuals in the custody of DPS who have been diagnosed with Human Immunodeficiency Virus or Acquired Immune Deficiency Syndrome (HIV/AIDS) in a manner that allows these funds to be accounted for as State‑matching funds in the Department of Health and Human Services drawdown of federal Ryan White funds earmarked for the AIDS Drug Assistance Program (ADAP).

FUNDING FOR THE OFFICE OF MINORITY HEALTH 
SECTION 12E.4.  Funds appropriated in this act to the Department of Health and Human Services, Division of Public Health, Office of Minority Health for the 2017‑2019 fiscal biennium shall be used to establish and administer, in consultation with the Chronic Disease and Injury Prevention Section, an evidence‑based Diabetes Prevention Program (DPP) modeled after the program recommended by the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), targeting minority populations.

USE OF MODIFIED ADJUSTED GROSS INCOME (MAGI) FOR AIDS DRUG ASSISTANCE PROGRAM (ADAP) ELIGIBILITY DETERMINATION
SECTION 12E.5.  Effective January 1, 2018, the Department shall implement the use of the Modified Adjusted Gross Income (MAGI) formula in the calculation of income for the purpose of eligibility determination for the AIDS Drug Assistance Program (ADAP), to ensure consistency with the method of eligibility determination used by other benefit programs.

IMPLEMENT THE FEDERAL ELEVATED BLOOD LEAD LEVEL STANDARD IN NC
SECTION 12E.6.(a)  It is the intent of the State to protect young children from being exposed to high levels of lead where substantial harm to their normal neurological development may occur and to ensure important intervention services, including required remediation of lead hazards, will be provided to children whose health is threatened by lead exposure.
SECTION 12E.6.(b)  G.S. 130A‑131.7(3) reads as rewritten:
"(3)	"Confirmed lead poisoning" means a blood lead concentration of 10 micrograms per deciliter or greater determined by the lower of two consecutive blood tests within a 12‑month period."
SECTION 12E.6.(c)  G.S. 130A‑131.7(5) reads as rewritten:
"(5)	"Elevated blood lead level" means a blood lead concentration of five micrograms per deciliter or greater determined by the lower of two consecutive blood tests within a 12‑month period."
SECTION 12E.6.(d)  G.S. 130A‑131.9C(a) reads as rewritten:
"(a)	Upon determination that a child less than six years of age has a confirmed lead poisoning of 10 micrograms per deciliter or greater and that child resides in a residential housing unit containing lead poisoning hazards, the Department shall require remediation of the lead poisoning hazards. The Department shall also require remediation of the lead poisoning hazards identified at the supplemental addresses of a child less than six years of age with a confirmed lead poisoning of 10 micrograms per deciliter or greater."
SECTION 12E.6.(e)  G.S. 130A‑131.9G reads as rewritten:
"§ 130A‑131.9G.  Resident responsibilities.
In any residential housing unit occupied by a child less than six years of age who has an elevated blood lead level of five micrograms per deciliter or greater, the Department shall advise, in writing, the owner or managing agent and the child's parents or legal guardian of the importance of carrying out routine cleaning activities in the units they occupy, own, or manage. The cleaning activities shall include all of the following:
…."

SUBPART XII.F. DIVISION OF MH/DD/SAS AND STATE OPERATED HEALTH CARE FACILITIES

OPIOID ADVISORY GROUP AND FUNDING FOR THE OPIOID CRISIS
SECTION 12F.1.(a)  It is the intent of the State to develop and utilize comprehensive strategies and coordinated, multisystem approaches to address the crisis of prescription opioid and heroin overdose deaths associated with opioid use disorders and the absence of adequate publicly funded prevention strategies and accessible and effective opioid use disorder intervention and treatment services across the State. It is further the intent of the State to promote public health and prevention strategies to control disease transmission, to address pregnancy outcomes from opioid use, to support prevention and treatment programs among pregnant and parenting women, and to maintain adequate public health capacity to monitor and disseminate data on the health effects associated with the opioid epidemic. This crisis is detrimental to communities across the State in terms of the related economic, health, law enforcement, employment, and social costs to the State's residents related to untreated opioid use disorders.
SECTION 12F.1.(b)  The Department of Health and Human Services shall establish an Opioid Advisory Group to advise the Secretary of the Department of Health and Human Services on strategies to address the opioid crisis consistent with subsection (a) of this section, and including recommendations in the Statewide Strategic Plan to combat the problem of prescription drug abuse from the Prescription Drug Abuse Advisory Committee (PDAAC) created pursuant to S.L. 2015‑241. The Secretary of the Department of Health and Human Services shall determine the number, structure, and leadership composition of the advisory group. Recommendations from the advisory group shall be submitted to the Secretary of the Department of Health and Human Services no later than March 1, 2018. The Secretary shall have the authority to evaluate recommendations of the group and shall have the discretion to determine the recommended use of funds to be presented in the final plan.
SECTION 12F.1.(c)  Funds are appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, on a recurring basis to expand the implementation of medication‑assisted treatment using methadone, buprenorphine, buprenorphine combination products, or naltrexone, and to include the utilization of naloxone for the prevention of opioid overdoses and intensive individual and group therapy programs to increase availability and accessibility to treat opioid‑related drug abuse and overdoses. Program and practitioner sites may include licensed Opioid Treatment Programs (OTPs), DATA 2000 Physician Waiver Office Based Opioid Treatment (OBOT) buprenorphine practices, Federally Qualified Health Centers (FQHCs), and other promising sites in underserved areas of the State. Of the funds appropriated for the purpose set forth in this subsection, five hundred thousand dollars ($500,000) is recommended for TROSA, Inc., for the provision of residential treatment and other support services, including vocational training, education, and placement.

LME/MCO USE OF FUNDS TO PURCHASE INPATIENT ALCOHOL AND SUBSTANCE ABUSE TREATMENT SERVICES
SECTION 12F.2.(a)  It is the intent of the General Assembly to terminate all direct State appropriations for State‑operated alcohol and drug abuse treatment centers (ADATCs) beginning with the 2017‑2018 fiscal year and instead appropriate funds to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for community services in order to allow local management entities/managed care organizations (LME/MCOs) to assume responsibility for managing the full array of publicly funded substance abuse services, including inpatient services delivered through the ADATCs. To this end, and notwithstanding any other provision of law on the effective date of this section, all direct State appropriations for ADATCs are terminated and the ADATCs shall be one hundred percent (100%) receipt‑supported.
SECTION 12F.2.(b)  From funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, to be allocated to LME/MCOs for the purchase of inpatient alcohol and substance abuse treatment services, the LME/MCOs shall use their respective fund allocations for individuals within their respective catchment areas as follows:
(1)	During the 2017‑2018 fiscal year, a minimum of eighty‑six percent (86%) of the allocation shall be used exclusively to purchase inpatient alcohol and substance abuse treatment services from the ADATCs in order for the ADATCs to increase services available to individuals in need of inpatient opioid treatment. The LME/MCOs shall use the remaining fourteen percent (14%) of their respective allocations to purchase inpatient alcohol and substance abuse treatment services from any qualified provider.
(2)	In addition, the Department shall have the flexibility to proportion the amount of available allocation from the LME/MCOs equally among the ADATCs.
(3)	In subsequent fiscal years, the percentage of the allocation that shall be used exclusively to purchase inpatient alcohol and substance abuse treatment services from the ADATCs shall decrease by ten percentage (10%) points each fiscal year after the 2017‑2018 fiscal year.

USE OF DOROTHEA DIX HOSPITAL PROPERTY FUNDS
SECTION 12F.3.(a)  It is the intent of the State to further reform the mental health, developmental disabilities, and substance use services system to expand and improve access and availability of treatment and prevention services in these program areas to provide appropriate and safe services for clients. Therefore, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (DMHDDSAS), shall be the lead agency responsible for doing all of the following:
(1)	The Department shall establish a working group of consumers, family members, providers, and other stakeholders to develop a plan for utilizing up to eighteen million dollars ($18,000,000) of unexpended funds in the Dorothea Dix Trust Fund on a nonrecurring basis over the 2017‑2019 fiscal biennium. The Secretary of the Department of Health and Human Services shall determine the number, structure, and leadership composition of the workgroup. Recommendations from the workgroup shall be submitted to the Secretary of the Department of Health and Human Services by December 31, 2017.
(2)	The Secretary shall have the authority to evaluate recommendations of the group and shall have the discretion to determine the recommended use of funds to be presented in the final plan.
SECTION 12F.3.(b)  The Department shall submit the plan required by subsection (a) of this section to the Governor and Chairs of the House and Senate Appropriation Committees no later than March 1, 2018. The plan shall address one or more of the following areas:
(1)	Provide start‑up funds and operating support for programs and services that provide more appropriate and cost‑effective community treatment alternatives for individuals currently residing in the State's mental health, developmental disabilities, and substance use services institutions.
(2)	Facilitate reform of the mental health, developmental disabilities, and substance use services system and expand and enhance treatment and prevention services in these program areas to remove waiting lists and provide appropriate and safe services for clients.
(3)	Provide bridge funding to maintain appropriate client services during transitional periods from one service delivery system or service to community‑based mental health, developmental, or substance abuse services.
(4)	Proposals to address emerging or specific mental health, developmental disability, or substance use issues within the community using evidence‑based practices or that produce defined results or measurable outcomes.
SECTION 12F.3.(c)  Establishment of Competitive Grants Process to Address Community Mental Health and Substance Use Needs. – It is the intent of the State that the Department implement a competitive grants process for mental health and substance use providers to invest in evidence‑based programs to achieve the goals described in subdivisions (1) through (4) of subsection (b) of this section. To that end, the Division shall develop a plan to establish a competitive grants process that, at a minimum, includes each of the following components:
(1)	A request for application (RFA) process to allow providers to apply for and receive State funds on a competitive basis.
(2)	A requirement that the Division prioritize grant awards to those providers that are able to leverage non‑State funds in addition to the grant award.
(3)	A process that awards grants to providers dedicated to providing services that support the goals described in subdivision (1) through (4) of subsection (b) of this section.
(4)	Ensures that funds received by the Division to implement the plan supplement and do not supplant existing funds for mental health, developmental disabilities, and substance use treatment programs and initiatives.
SECTION 12F.3.(d)  Funds for Competitive Grants Process. – Up to five million five hundred thousand dollars ($5,500,000) in fiscal year 2017‑2018 and five million five hundred thousand dollars ($5,500,000) in fiscal year 2018‑2019 of the unobligated funds in the Dorothea Dix Property Fund shall be appropriated to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, in nonrecurring funds to establish the competitive grants process described in subsection (c) of this section. The Division shall not use more than five percent (5%) of these funds for administrative purposes.
SECTION 12F.3.(e)  No later than January 15, 2018, as applicable, the Secretary shall announce the recipients of the competitive grant awards and allocate funds to the grant recipients for the respective grant period pursuant to the amounts designated under subsection (d) of this section. After awards have been granted, the Secretary shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services on the grant awards that includes at least all of the following:
(1)	The identity and a brief description of each grantee and each program or initiative offered by the grantee.
(2)	The amount of funding awarded to each grantee.
(3)	The number of persons served by each grantee, broken down by program or initiative.
SECTION 12F.3.(f)  No later than October 1, 2018, each provider or organization receiving funding pursuant to this subsection shall submit to the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, a written report of all activities funded by State appropriations. The report shall include the following information about the fiscal year preceding the year in which the report is due:
(1)	The entity's mission, purpose, and governance structure.
(2)	A description of the types of programs, services, and activities funded by State appropriations.
(3)	Statistical and demographical information on the number of persons served by these programs, services, and activities, including the counties in which services are provided.
(4)	Outcome measures that demonstrate the impact and effectiveness of the programs, services, and activities.
(5)	A detailed program budget and list of expenditures, including all positions funded, matching expenditures, and funding sources.

USE OF FUNDS FOR INPATIENT PSYCHIATRIC BEDS OR BED DAYS
SECTION 12F.4.  Use of Funds. – Of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for crisis services, the sum of forty million six hundred twenty‑one thousand six hundred forty‑four dollars ($40,621,644) for the 2017‑2018 fiscal year and the sum of forty million six hundred twenty‑one thousand six hundred forty‑four dollars ($40,621,644) for the 2018‑2019 fiscal year shall be used to purchase additional new or existing local inpatient psychiatric beds or bed days not currently funded by or though LME/MCOs. The Department shall continue to implement a two‑tiered system of payment for purchasing these local inpatient psychiatric beds or bed days based on acuity level with an enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels, as defined by the Department. The enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels shall not exceed the lowest average cost per patient bed day among the State psychiatric hospitals. In addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated to LME/MCOs for community‑based mental health, developmental disabilities, and substance abuse services may be used to purchase additional local inpatient psychiatric beds or bed days. Funds designated in this subsection for the purchase of local inpatient psychiatric beds or bed days shall not be used to supplant other funds appropriated or otherwise available to the Department for the purchase of inpatient psychiatric services through contracts with local hospitals.
The Department may use up to ten percent (10%) of the funds allocated in this subsection for the 2017‑2019 fiscal biennium for the State's three‑way contracts to pay for facility‑based crisis services and nonhospital detoxification services for individuals in need of these services, regardless if the individuals are medically indigent, as defined in subsection (b) of this section.

SINGLE STREAM FUNDING FOR MH/DD/SAS COMMUNITY SERVICES
SECTION 12F.5.(a)  For the purpose of mitigating cash flow problems that many LME/MCOs experience at the beginning of each fiscal year relative to single‑stream funding, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services (DMH/DD/SAS), shall distribute not less than one‑twelfth of each LME/MCO's continuation allocation at the beginning of the fiscal year and subtract the amount of that distribution from the LME/MCO's total reimbursements for the fiscal year.
SECTION 12F.5.(b)  The DMH/DD/SAS is directed to reduce its allocation for single‑stream funding by forty‑seven million sixty thousand nine hundred forty‑one dollars ($47,060,941) in 2017‑2018 fiscal year and by sixty‑nine million three hundred fifty‑five thousand eight hundred ninety‑two dollars ($69,355,892) in recurring funds for the 2018‑2019 fiscal year. The DMH/DD/SAS is directed to allocate this reduction among the LME/MCOs based on the individual LME/MCO's percentage of the total cash on hand of all of the LME/MCOs in the State. Cash on hand means the sum of the "Total Cash and Investments" plus the "Short‑Term Investments" reported on Schedule "A" of the financial reporting package submitted by the LME/MCOs to the Division of Medical Assistance (DMA) on June 30, 2017. The individual LME/MCO's percentage of the total cash on hand equals the individual LME/MCO's cash on hand divided by the aggregate amount of cash on hand of all of the LME/MCOs in the State.
SECTION 12F.5.(c)  The Department shall modify the monthly reporting package submitted by the LME/MCOs to the Department to include revenues and expenditures for the State funding sources for single stream, intellectual and developmental disability, and substance abuse services on Schedule D2. Additionally, the Department shall modify appropriate schedules in the LME/MCO monthly reporting package to include unduplicated recipients and encounters in the same level of detail included in each Schedule D for each source of funding for the reporting for the current and previous year's month and year‑to‑date periods. The Department shall submit these reports biannually to the Joint Legislative Oversight Committee on Health and Human Services on May 1 and October 1 beginning in October 2017.
SECTION 12F.5.(d)  The Department of Health and Human Services shall develop a maintenance of effort (MOE) spending requirement for all mental health and substance abuse services which must be maintained using non‑federal, State appropriations on an annual basis in order to meet MOE requirements for federal block grant awards. LME/MCOs shall ensure the MOE spending requirement is met using State appropriations.

TRAUMATIC BRAIN INJURY FUNDING
SECTION 12F.6.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for each fiscal year of the 2017‑2019 fiscal biennium, the sum of two million three hundred seventy‑three thousand eighty‑six dollars ($2,373,086) shall be used exclusively to support traumatic brain injury (TBI) services as follows:
(1)	The sum of three hundred fifty‑nine thousand two hundred eighteen dollars ($359,218) shall be used to fund contracts with the Brain Injury Association of North Carolina, Carolinas Rehabilitation, or other appropriate service providers.
(2)	The sum of seven hundred ninety‑six thousand nine hundred thirty‑four dollars ($796,934) shall be used to support residential programs across the State that are specifically designed to serve individuals with TBI.
(3)	The sum of one million two hundred sixteen thousand nine hundred thirty‑four dollars ($1,216,934) shall be used to support requests submitted by individual consumers for assistance with residential support services, home modifications, transportation, and other requests deemed necessary by the consumer's local management entity and primary care physician.

PRESCRIPTION DRUG ABUSE ADVISORY COMMITTEE
SECTION 12F.7.  There is hereby created the Prescription Drug Abuse Advisory Committee, to be housed in and staffed by the Department of Health and Human Services (DHHS). The Committee shall develop and, through its members, implement a statewide strategic plan to combat the problem of prescription drug abuse. The Committee shall include representatives from the following, as well as any other persons designated by the Secretary of Health and Human Services:
(1)	The Division of Medical Assistance, DHHS.
(2)	The Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, DHHS.
(3)	The Division of Public Health, DHHS.
(4)	The Division of Adult Correction and Juvenile Justice, DPS.
(5)	The Rural Health Section of the Division of Public Health, DHHS.
(6)	The State Bureau of Investigation.
(7)	The Attorney General's Office.
(8)	The following health care regulatory boards with oversight of prescribers and dispensers of prescription drugs:
a.	North Carolina Board of Dental Examiners.
b.	North Carolina Board of Nursing.
c.	North Carolina Board of Podiatry Examiners.
d.	North Carolina Medical Board.
e.	North Carolina Board of Pharmacy.
(9)	The UNC Injury Prevention Research Center.
(10)	The substance abuse treatment community.
(11)	Governor's Institute on Substance Abuse, Inc.
(12)	The Department of Insurance's drug take‑back program.
After developing the strategic plan, the Committee shall be the State's steering committee to monitor achievement of strategic objectives and receive regular reports on progress made toward reducing prescription drug abuse in North Carolina.

SUBPART XII‑G. DIVISION OF HEALTH SERVICE REGULATION

MORATORIUM ON SPECIAL CARE UNIT LICENSES
SECTION 12G.1.(a)  Beginning July 31, 2017, and ending June 30, 2018, the Department of Health and Human Services, Division of Health Service Regulation, 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 moratorium imposed by this section.
(3)	Issuing a license to a facility that was in possession of a certificate of need as of July 31, 2017, that included authorization to operate special care unit beds.
SECTION 12G.1.(b)  The Department shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services by March 1, 2018, containing at least the following information:
(1)	The number of licensed special care units in the State.
(2)	The capacity of the currently licensed special care units to serve people in need of their services.
(3)	The anticipated growth in the number of people who will need the services of a licensed special care unit.
(4)	The number of applications received from special care units seeking licensure as permitted by this section and the number of those applications that were not approved.
SECTION 12G.1.(c)  This section is effective when this act becomes law.

SUBPART XII‑H. DIVISION OF MEDICAL ASSISTANCE

MEDICAID ANNUAL REPORT
SECTION 12H.1.  The Department of Health and Human Services, Division of Medical Assistance, shall continue the publication of the Medicaid Annual Report and accompanying tables. The Division shall publish the report and tables on its Web site by December 31 following each State fiscal year.

MEDICAID ELIGIBILITY
SECTION 12H.2.(a)  Families and children who are categorically and medically needy are eligible for Medicaid, subject to the following annual income levels:
		Categorically	Medically
	Family	Needy	Needy
	Size	Income Level	Income Level
	1	$ 5,208	$ 2,904
	2	6,828	3,804
	3	8,004	4,404
	4	8,928	4,800
	5	9,888	5,196
	6	10,812	5,604
	7	11,700	6,000
	8	12,432	6,300
The Department of Health and Human Services shall provide Medicaid coverage to 19‑ and 20‑year‑olds under this subsection in accordance with federal rules and regulations. Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.
SECTION 12H.2.(b)  For the following Medicaid eligibility classifications for which the federal poverty guidelines are used as income limits for eligibility determinations, the income limits will be updated each April 1 immediately following publication of federal poverty guidelines. The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to the following:
(1)	All elderly, blind, and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines.
(2)	Pregnant women with incomes equal to or less than one hundred ninety‑six percent (196%) of the federal poverty guidelines and without regard to resources. Services to pregnant women eligible under this subsection continue throughout the pregnancy but include only those related to pregnancy and to those other conditions determined by the Department as conditions that may complicate pregnancy.
(3)	Infants under the age of one with family incomes equal to or less than two hundred ten percent (210%) of the federal poverty guidelines and without regard to resources.
(4)	Children aged one through five with family incomes equal to or less than two hundred ten percent (210%) of the federal poverty guidelines and without regard to resources.
(5)	Children aged six through 18 with family incomes equal to or less than one hundred thirty‑three percent (133%) of the federal poverty guidelines and without regard to resources.
(6)	Workers with disabilities described in G.S. 108A‑66A with unearned income equal to or less than one hundred fifty percent (150%) of the federal poverty guidelines.
The Department of Health and Human Services, Division of Medical Assistance, shall also provide family planning services to men and women of childbearing age with family incomes equal to or less than one hundred ninety‑five percent (195%) of the federal poverty guidelines and without regard to resources.
SECTION 12H.2.(c)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to adoptive children with special or rehabilitative needs, regardless of the adoptive family's income.
SECTION 12H.2.(d)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to "independent foster care adolescents," ages 18, 19, and 20, as defined in section 1905(w)(1) of the Social Security Act (42 U.S.C. § 1396d(w)(1)), without regard to the adolescent's assets, resources, or income levels.
SECTION 12H.2.(e)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to women who need treatment for breast or cervical cancer and who are defined in 42 U.S.C. § 1396a(a)(10)(A)(ii)(XVIII).

LME/MCO OUT‑OF‑NETWORK AGREEMENTS
SECTION 12H.3.(a)  The Department of Health and Human Services (Department) shall ensure that local management entities/managed care organizations (LME/MCOs) utilize an out‑of‑network agreement that contains standardized elements developed in consultation with LME/MCOs. The out‑of‑network agreement shall be a streamlined agreement between a single provider of behavioral health or intellectual/developmental disability (IDD) services and an LME/MCO to ensure access to care in accordance with 42 C.F.R. § 438.206(b)(4), reduce administrative burden on the provider, and comply with all requirements of State and federal laws and regulations. LME/MCOs shall continue to use the out‑of‑network agreement in lieu of a comprehensive provider contract when all of the following conditions are met:
(1)	The services requested are medically necessary and cannot be provided by an in‑network provider.
(2)	The behavioral health or IDD provider's site of service delivery is located outside of the geographical catchment area of the LME/MCO, and the LME/MCO is not accepting applications, or the provider does not wish to apply for membership in the LME/MCO closed network.
(3)	The behavioral health or IDD provider is not excluded from participation in the Medicaid program, the NC Health Choice program, or other State or federal health care program.
(4)	The behavioral health or IDD provider is serving no more than two enrollees of the LME/MCO, unless the agreement is for inpatient hospitalization, in which case the LME/MCO may, but shall not be required to, enter into more than five such out‑of‑network agreements with a single hospital or health system in any 12‑month period.
SECTION 12H.3.(b)  Medicaid providers providing services pursuant to an out‑of‑network agreement shall be considered a network provider for purposes of Chapter 108D of the General Statutes only as it relates to enrollee grievances and appeals.

PROVIDER APPLICATION AND RECREDENTIALING FEE
SECTION 12H.4.  The Department of Health and Human Services, Division of Medical Assistance, shall charge an application fee of one hundred dollars ($100.00), and the amount federally required, to each provider enrolling in the Medicaid Program for the first time. The fee shall be charged to all providers at recredentialing every five years.

ADMINISTRATIVE HEARINGS FUNDING
SECTION 12H.5.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Medical Assistance, for administrative contracts and interagency transfers, the Department of Health and Human Services (Department) shall transfer the sum of one million dollars ($1,000,000) for the 2017‑2018 fiscal year and the sum of one million dollars ($1,000,000) for the 2018‑2019 fiscal year to the Office of Administrative Hearings (OAH). These funds shall be allocated by the OAH for mediation services provided for Medicaid applicant and recipient appeals and to contract for other services necessary to conduct the appeals process. The OAH shall continue the Memorandum of Agreement (MOA) with the Department for mediation services provided for Medicaid recipient appeals and contracted services necessary to conduct the appeals process. The MOA will facilitate the Department's ability to draw down federal Medicaid funds to support this administrative function. Upon receipt of invoices from OAH for covered services rendered in accordance with the MOA, the Department shall transfer the federal share of Medicaid funds drawn down for this purpose.

ACCOUNTING FOR MEDICAID RECEIVABLES AS NONTAX REVENUE
SECTION 12H.6.(a)  Receivables reserved at the end of the 2017‑2018 and 2018‑2019 fiscal years shall, when received, be accounted for as nontax revenue for each of those fiscal years.
SECTION 12H.6.(b)  For the 2017‑2018 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred sixty‑four million seven hundred thousand dollars ($164,700,000) with the Department of State Treasurer to be accounted for as nontax revenue. For the 2018‑2019 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred forty‑nine million six hundred thousand dollars ($149,600,000) with the Department of State Treasurer to be accounted for as nontax revenue. These deposits shall represent the return of General Fund appropriations, nonfederal revenue, fund balances, or other resources from State‑owned and State‑operated hospitals which are used to provide indigent and nonindigent care services. The return from State‑owned and State‑operated hospitals to DHHS will be made from nonfederal resources in an amount equal to the amount of the payments from the Division of Medical Assistance for uncompensated care. The treatment of any revenue derived from federal programs shall be in accordance with the requirements specified in the Code of Federal Regulations, Title 2, Part 225.

MEDICAID SPECIAL FUND TRANSFER
SECTION 12H.7.  Of the funds transferred to the Department of Health and Human Services for Medicaid programs pursuant to G.S. 143C‑9‑1, there is appropriated from the Medicaid Special Fund to the Department of Health and Human Services the sum of forty‑three million dollars ($43,000,000) for the 2017‑2018 fiscal year and the sum of forty‑three million dollars ($43,000,000) for the 2018‑2019 fiscal year. These funds shall be allocated as prescribed by G.S. 143C‑9‑1(b) for Medicaid programs. Notwithstanding the requirement in G.S. 143C‑9‑1(b) that these funds not reduce State general revenue funding, these funds shall replace the reduction in general revenue funding effected in this act.

MISCELLANEOUS MEDICAID PROVISIONS 
SECTION 12H.8.(a)  Volume Purchase Plans and Single Source Procurement. – The Department of Health and Human Services, Division of Medical Assistance, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single‑source procurement, or other contracting processes in order to improve cost containment.
SECTION 12H.8.(b)  Cost Containment Programs. – The Department of Health and Human Services, Division of Medical Assistance, may undertake cost containment programs, including contracting for services, preadmissions to hospitals, and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.
SECTION 12H.8.(c)  Medicaid Identification Cards. – The Department shall issue Medicaid identification cards to recipients on an annual basis with updates as needed.

MOBILE DENTAL PROVIDER ENROLLMENT
SECTION 12H.9.(a)  For mobile dental providers seeking enrollment as a Medicaid provider, and upon reenrollment of current Medicaid mobile dental providers, the Department of Health and Human Services, Division of Medicaid Assistance, shall require as a condition of enrollment or reenrollment that the mobile dental provider show proof of a contractual affiliation with a dental practice that is not mobile, and the Department shall require the mobile dental provider to use the National Provider Identifier (NPI) of the nonmobile dental practice for purposes of filing claims.
SECTION 12H.9.(b)  This section is effective when this act becomes law.

GRADUATE MEDICAL EDUCATION PAYMENTS
SECTION 12H.10.(a)  It is the intent of the Governor, as evidenced in the Governor's recommended budget, that the sum of thirty million dollars ($30,000,000) in the 2017‑2018 fiscal year and thirty million dollars ($30,000,000) in the 2018‑2019 fiscal year are provided State matching funds to support reimbursement to teaching hospitals for the costs associated with training North Carolina Medicaid residents.
SECTION 12H.10.(b)  The funds referenced in subsection (a) of this section are provided notwithstanding S.L. 2015‑241, as amended by S.L. 2015‑264 and S.L. 2016‑121.

MEDICAID CONTINGENCY RESERVE
SECTION 12H.11.(a)  Funds in the Medicaid Contingency Reserve shall be used only for budget shortfalls in the Medicaid Program that occur during the 2017‑2019 biennium. These funds shall be available for expenditure only upon an appropriation by act of the General Assembly.
SECTION 12H.11.(b)  It is the intent of the General Assembly to appropriate funds from the Medicaid Contingency Reserve only if:
(1)	The State Budget Director, after the State Controller has verified that receipts are being used appropriately, has found that additional funds are needed to cover a shortfall in the Medicaid budget for the State fiscal year.
(2)	The State Budget Director has reported immediately to the Fiscal Research Division on the amount of the shortfall found in accordance with subdivision (1) of this subsection. This report shall include an analysis of the causes of the shortfall, such as (i) unanticipated enrollment and mix of enrollment, (ii) unanticipated growth or utilization within particular service areas, (iii) errors in the data or analysis used to project the Medicaid budget, (iv) the failure of the program to achieve budgeted savings, (v) other factors and market trends that have impacted the price of or spending for services, (vi) variations in receipts from prior years or from assumptions used to prepare the Medicaid budget for the current fiscal year, or (vii) other factors. The report shall also include data in an electronic format that is adequate for the Fiscal Research Division to confirm the amount of the shortfall and its causes.
SECTION 12H.11.(c)  Nothing in this section shall be construed to limit the authority of the Governor to carry out his duties under the Constitution.

MEDICAID ELIGIBILITY DETERMINATION TIMELINESS
SECTION 12H.12.  The Department of Health and Human Services, Division of Medical Assistance (DHHS), shall submit a report annually for the 2017‑2018 and 2018‑2019 fiscal year to the Joint Legislative Oversight Committee on Medicaid and NC Health Choice, the Joint Legislative Oversight Committee on Health and Human Services, and the Fiscal Research Division containing the following information:
(1)	The annual statewide percentage of Medicaid applications processed in a timely manner for the fiscal year.
(2)	The statewide average number of days to process Medicaid applications for each month in the fiscal year.
(3)	The annual percentage of Medicaid applications processed in a timely manner by each county department of social services for the fiscal year.
(4)	The average number of days to process Medicaid applications for each month for each county department of social services.
(5)	The number of months during the fiscal year that each county department of social services met the timely processing standards in Part 10 of Article 2 of Chapter 108A of the General Statutes.
(6)	The number of months during the fiscal year that each county department of social services failed to meet the timely processing standards in Part 10 of Article 2 of Chapter 108A of the General Statutes.
(7)	A description of all corrective action activities conducted by DHHS and county departments of social services in accordance with G.S. 108A‑70.36.
(8)	A description of how DHHS plans to assist county departments of social services in meeting timely processing standards for Medicaid applications, for every county in which the performance metrics for processing Medicaid applications in a timely manner do not show significant improvement compared to the previous fiscal year.
The report for the 2017‑2018 fiscal year shall be submitted by November 1, 2017, and the report for the 2018‑2019 fiscal year shall be submitted by November 1, 2018.

EXPAND INNOVATIONS WAIVER SLOT AVAILABILITY
SECTION 12H.13.(a)  In order to achieve cost savings, improve health outcomes, and allow individuals who meet the requirements for an Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF‑IID) level of care to receive services in the least restrictive setting possible, the Department of Health and Human Services, Division of Medical Assistance, shall expand the Innovations Waiver by an additional 1,000 slots, effective January 1, 2018.
SECTION 12H.13.(b)  In addition to the Innovations Waiver slots created pursuant to subsection (a) of this section, the Department of Health and Human Services, Division of Medical Assistance, shall create an additional 1,000 Innovations Waiver slots to serve lower‑acuity individuals that could benefit from Innovations Waiver services, but do not need the full range or intensity of services offered under the current Innovations waiver, effective January 1, 2018.

NOTICE OF PROGRAM REIMBURSEMENT AS BASIS FOR RECOUPMENT OF OVERPAYMENTS
SECTION 12H.14.(a)  G.S. 108C‑2 is amended by adding a new subdivision to read:
"(12)	Notice of Program Reimbursement. – The written notice reflecting the Department's final determination of the total amount of reimbursement, if any, due to either the provider or the Department following receipt of a provider's annual Medicaid or Health Choice cost report, or amended Medicaid or Health Choice cost report where permitted or required."
SECTION 12H.14.(b)  Chapter 108C of the General Statutes is amended by adding a new section to read:
"§ 108C‑15. Recoupment.  
Notwithstanding any other provisions of law, upon issuance of the Notice of Program Reimbursement, the Department shall take immediate action to recoup the amount of reimbursement owed by the provider to the Department. Recoupment shall be made notwithstanding any request by the provider for a reconsideration review by the Division or a contested case hearing under Chapter 150B of the General Statutes."

PREPAYMENT CLAIMS REVIEW
SECTION 12H.15.  G.S. 108C‑7 reads as rewritten:
"§ 108C‑7.  Prepayment claims review.
(a)	In order to ensure that claims presented by a provider for payment by the Department meet the requirements of federal and State laws and regulations and medical necessity criteria, a provider may be required to undergo prepayment claims review by the Department. Grounds for being placed on prepayment claims review shall include, but shall not be limited to, receipt by the Department of credible allegations of fraud, identification of aberrant billing practices as a result of investigations, data analysis performed by the Department, the failure of the provider to timely respond to a request for records made by the Department or one of its contractors, or other grounds as defined by the Department in rule.
(b)	Providers shall not be entitled to payment prior to claims review by the Department. The Department shall notify the provider in writing of the decision and the process for submitting claims for prepayment claims review by the placing of the notice in an official depository of the United States Postal Service wrapped in a wrapper addressed to the provider at the latest address given by the provider to the Department. The prepayment claims review shall be instituted no less than 20 calendar days from the date of the written notification. The notice shall contain the following:
…
(4)	A specific list of all supporting documentation that the provider will need to submit to the prepayment review vendor for all claims that are subject to the prepayment claims review.
…
…
(d)	The Department shall process all clean claims submitted for prepayment review within 20 calendar days of receipt of the supporting documentation for each claim by the prepayment review vendor. If the provider failed to provide any of the specifically requested supporting documentation necessary to process a claim pursuant to this section, the Department shall send to the provider written notification of the lacking or deficient documentation within 15 calendar days the due date of requested supporting documentation. The Department shall have an additional 20 days to process a claim upon receipt of the documentation.
(e)	The provider shall remain subject to the prepayment claims review process until the provider achieves three consecutive months with a minimum seventy percent (70%) clean claims rate (claim accuracy rate) provided that the number of claims submitted per month is no less than fifty percent (50%) of the provider's average monthly submission of Medicaid claims for the three‑month period before being placed on prepayment review. A provider shall not withhold claims to avoid the claims review process. If the provider does not meet the seventy percent (70%) clean claims rate (claim accuracy rate) for three consecutive months within six months of being placed on prepayment claims review, the Department may implement sanctions, including termination of the applicable Medicaid Administrative Participation Agreement, or continuation of prepayment review The Department shall give adequate advance notice of any modification, suspension, or termination of the Medicaid Administrative Participation Agreement. Prepayment claims review shall not continue longer than 24 months continuously, unless the Department has initiated the termination or other sanction of the provider, which the provider has appealed. In that instance, the provider shall remain on prepayment review until a final disposition of the Department's termination or other sanction of said provider.
(f)	Failure of a provider to meet the requirement of at least seventy percent (70%) clean claims rate (claim accuracy rate) may result in a termination action and termination actions taken will be reflective of this status and shall result in the provider being listed on the Exclusions Listing from future participation. Should a provider fail prepayment claims review and subsequently request a voluntary termination, the termination will be reflective of this failure to pass prepayment claims review and will exclude the provider from future participation in the program.
(g)	In the event of a provider being taken off prepayment review for any reason, including, but not limited to, attaining a seventy percent (70%) clean claims rate for three consecutive months, the expiration of the 24‑month time limit, or the termination of said provider, any claims for services performed or incurred during the period of prepayment review may still be subject to review prior to payment no matter when said claims are submitted.
(h)	The decision to place or maintain a provider on prepayment claims review does not constitute a contested case under Chapter 150B of the General Statutes. A provider may not appeal or otherwise contest a decision of the Department to place or maintain a provider on prepayment review.
(i)	Should the provider elect to appeal the Department's decision to impose sanctions as a result of the prepayment review to the Office of Administrative Hearings, the provider shall have 45 days from the date that the appeal is filed to submit any documentation or records which address or challenge the findings of the prepayment review. Documentation which was not submitted at the time of the initial review shall not be considered for the purpose of overturning a prior denial, as the clean claims rate is calculated at the time of the review of said records. In order for a prior denial to be overturned, the provider must prove that the documentation was provided at the time the claim was submitted, was available for review by the prepayment review vendor, and demonstrates that the particular claim should have been passed. The Department shall not review, and the Office of Administrative Hearings shall not admit into evidence, any materials submitted after the 45‑day deadline.
(j)	Provider Participation Requirements for Prepayment Claims Review. –
(1)	Should a provider choose to not submit any bills following placement on Prepayment Claims Review, this will result in a claims accuracy rating of zero percent (0%) for each month where no billing occurs.
(2)	Documentation submitted to the Department as part of Prepayment Claims Review is required to be complete and legible and clearly identifiable to the applicable provider in order to be considered during the review process. Before presenting a claim for payment, a provider has an affirmative duty to supervise the provision of, be responsible for goods and services provided, supervise and be responsible for preparation and submission of the claim, and to present a true and accurate claim and supporting documentation for goods and services that have actually been furnished to the beneficiary by the provider prior to submitting the claim.
(3)	Providers are required to demonstrate competency compliance with clinical policy, rules, and guidelines while on Prepayment Claims Review through written documentation. Providers may receive education on clinical policy, rules, and guidelines by contacting the Department. It is not the responsibility of the Prepayment Review vendor to provide policy education to providers on Prepayment Review or advise providers how to obtain payment for services rendered."

EXEMPT SERVICES PROVIDED BY LEAs AND CDSAs
SECTION 12H.16.  Section 4 of S.L. 2015‑245, as amended by Section 2(b) of S.L. 2016‑121, reads as rewritten:
"SECTION 4. Structure of Delivery System. – The transformed Medicaid and NC Health Choice programs described in Section 1 of this act shall be organized according to the following principles and parameters:
…
(4)	Services covered by PHPs. – Capitated PHP contracts shall cover all Medicaid and NC Health Choice services, including physical health services, prescription drugs, long‑term services and supports, and behavioral health services for NC Health Choice recipients, except as otherwise provided in this subdivision. The capitated contracts required by this subdivision shall not cover:
…
d.	Services documented on an Individualized Education Program (IEP) and provided or billed by Local Education Agencies.
e.	Services provided and billed by a Children's Developmental Services Agency (CDSA) that are documented on the child's Individualized Family Service Plan.
f.	Services for Medicaid program applicants during the period of time prior to eligibility determination.
…."

ADDITIONAL FUNDING FOR MEDICAID FRAUD, WASTE, AND ABUSE REDUCTION THROUGH COST CONTAINMENT
SECTION 12H.17.(a)  The Department of Health and Human Services may use up to two million five hundred thousand dollars ($2,500,000) in the 2017‑2018 fiscal year and up to two million five hundred thousand dollars ($2,500,000) in the 2018‑2019 fiscal year in Medicaid funds budgeted for program services to support the cost of program integrity activities when cost‑effectiveness and documentable savings are demonstrated. The funds shall be used to support program integrity activities that contain the costs of the Medicaid Program through post payment recoveries and activities that prevent payments of fraudulent, wasteful, or abusive claiming. Program Integrity will reinvest funding to implement technology solutions and increase investigative and compliance monitoring staffing and throughput. Investments will also include funding to support enhanced case management and reporting capabilities to assist in reporting and targeting the most cost‑effective approaches in addressing fraud, waste, and abuse. Funds may also be used to add up to 24.00 time‑limited full‑time employees to expand prepayment and post‑payment solutions within existing Medicaid payment systems and through other prepayment reviews completed by contractors. Expenditures for these activities will be targeted to exceed a minimum return on investment of no less than 2:1 ratio when considering the increased recoupments and reductions in improper payments versus overall costs for the activities as defined in the section.
SECTION 12H.17.(b)  The Department shall report annually on the expenditures under this section. The report shall include the methods used to achieve savings and the amount saved by these methods. No later than October 1 of each year, the Department of Health and Human Services, Division of Medical Assistance, shall report to the Joint House Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division on the activities of the previous State fiscal year.

FOOD SERVICE WITHIN THE CAPIToL COMPLEX
SECTION 12H.18.(a)  Article 3 of Chapter 111 of the General Statutes is amended by adding a new section to read:
"§ 111‑47.4.  Food service within the Capitol complex.
Notwithstanding any other provision of this Article, the Department of Health and Human Services may operate or contract for the operation of food or vending services at State property or State facilities allocated to the Department of Administration. The net proceeds of revenue generated by food and vending services at the State property or State facilities by the agency or a vendor with whom the agency has contracted shall be credited to the Division of Services for the Blind of the Department of Health and Human Services for the purposes specified in G.S. 111‑43. Nothing in this section shall be construed to remove an exemption granted under State law for State property or State buildings, as defined in G.S. 111‑42(c)."
SECTION 12H.18.(b)  G.S. 66‑58(c)(4) reads as rewritten: 
"(4)	The operation of food and vending services pursuant to Article 3 of Chapter 111 of the General Statutes."
SECTION 12H.18.(c)  G.S. 146‑29.1 is amended by adding a new subsection to read:
"(i)	This section shall not apply to leases entered into by the Department of Health and Human Services entered into for food and vending services pursuant to Article 3 of Chapter 111 of the General Statutes."

SUBPART XII‑I. DIVISION OF HEALTH BENEFITS

DIVISION OF HEALTH BENEFITS FEDERAL FUNDS
SECTION 12I.  It is anticipated that the Division of Health Benefits will be eligible to draw down federal matching funds on any Medicaid transformation project expenditures. To the extent that federal funds are received as federal match on the Division's expenditures, those funds are hereby appropriated to the Division for Medicaid transformation project activities.

SUBPART XII‑J. DHHS BLOCK GRANTS

DHHS BLOCK GRANTS
SECTION 12J.1.(a)  Except as otherwise provided, appropriations from federal block grant funds are made for each year of the fiscal biennium ending June 30, 2019, according to the following schedule:

TEMPORARY ASSISTANCE FOR NEEDY	FY 2017‑2018	FY 2018‑2019
FAMILIES (TANF) FUNDS

Local Program Expenditures

	Division of Social Services

	01. Work First Family Assistance	$49,479,444	$49,479,444

	02. Work First County Block Grants	80,093,566	80,093,566

	03. Work First Electing Counties	2,378,213	2,378,213

	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 Program Improvement Plan
		Initiatives	775,176	775,176

	07. Child Welfare Collaborative	400,000	400,000

	08. Child Welfare Initiatives	1,400,000	1,400,000

DHHS Service Expenditures

Division of Child Development and Early Education

	09. Subsidized Child Care Program	53,605,680	58,112,735
	
	10. Pre‑K Services	6,000,000	12,200,000

Division of Public Health

	11. Teen Pregnancy Prevention Initiatives	2,950,000	2,950,000

DHHS Administration

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

	13. DSS‑ Child Welfare Business Processing
		Re‑engineering	392,420	294,697

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

	15. Eligibility Systems – Operations and			Maintenance	2,908,598	2,765,192

	16. NC FAST Development	48,495	875,264

Transfers to Other Block Grants

Division of Child Development and Early Education

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

Division of Social Services

	18. Transfer to Social Services Block
		Grant for Child Protective Services –
		Training	1,300,000	1,300,000

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

	20. Transfer to Social Services Block
		Grant for County Departments of
		Social Services for Children's Services	7,500,000	7,500,000

	21. Transfer to Social Services Block
		Grant – Foster Care Services	1,385,152	1,385,152

TOTAL TEMPORARY ASSISTANCE FOR
	NEEDY FAMILIES (TANF) FUNDS	$301,385,315	$312,678,010

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
EMERGENCY CONTINGENCY FUNDS

Local Program Expenditures

Division of Child Development and Early Education

	01. Subsidized Child Care	28,600,000	28,600,000
	
TOTAL TEMPORARY ASSISTANCE FOR
	NEEDY FAMILIES (TANF) EMERGENCY
	CONTINGENCY FUNDS	$28,600,000	$28,600,000

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 $7,500,000)	$30,215,583	$30,247,717

	02. EBCI Tribal Public Health and Human Services	244,740	244,740

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

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

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

	06. Adult Protective Services and	4,600,000	4,600,000

	07. State Adult Day Care Fund (DAAS)	1,994,084	1,994,084

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

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

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

	11. Child Protective Services‑Child Welfare Training
		for Counties/Mobile Training	737,067	737,067

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

	13. Child Advocacy Centers	375,000	375,000

	14. DAAS Guardianship	3,220,342	3,220,342

	15. DSS Guardianship	815,362	815,362

	16. Foster Care Services
		(Transfer from TANF 1,385,152)	1,385,152	1,385,152

Division of Central Management and Support

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

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

	18. 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

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

Division of Health Service Regulation

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

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

DHHS Administration

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

	23. Division of Social Services	634,680	634,680

	24. DSS‑Child Welfare Business Process
		Re‑engineering	129,040	96,906

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

	26. LI/Fringe Reserve	236,278	236,278

	27. Division of Child Development and
		Early Education	13,878	13,878

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

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

TOTAL SOCIAL SERVICES BLOCK GRANT	$69,521,667	$69,521,667
LOW‑INCOME ENERGY ASSISTANCE BLOCK GRANT

Local Program Expenditures

Division of Social Services

	01. Low‑Income Energy Assistance
	Program (LIEAP)	$36,402,610	$35,419,272

	02. Crisis Intervention Program (CIP)	36,402,610	35,419,272

Local Administration

Division of Social Services

	03. County DSS Administration	5,978,512	5,817,014

DHHS Service Expenditure	

Division of Central Management and Support

	04. NC FAST O&M	2,135,701	2,539,033

	05. NC FAST Development	139,991	2,468,390

DHHS Administration

	06. Division of Social Services	10,000	10,000

	07. Office of the Secretary/DIRM	252,603	128,954

	08. Office of the Secretary/Controller's Office	18,378	18,378
	
Transfers to Other State Agencies

Department of Environmental Quality (DEQ)

	09. Weatherization Program	10,716,043	10,426,573

	10. Heating Air Repair and Replacement
		Program (HARRP)	5,701,752	5,547,732	

	11. Local Residential Energy Efficiency Service
		Providers – Weatherization	439,982	428,097

	12. Local Residential Energy Efficiency Service
		Providers – HARRP	234,105	227,781

	13. DEQ – Weatherization Administration	439,982	428,097

	14. DEQ – HARRP Administration	234,105	227,781

Department of Administration

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

TOTAL LOW‑INCOME ENERGY
	ASSISTANCE BLOCK GRANT	$99,194,110	$99,194,110

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

Local Program Expenditures

Division of Child Development and Early Education

	01. Child Care Services 
		(Smart Start $7,000,000)	$152,323,849	$152,416,794

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

	03. Quality and Availability Initiatives
		(TEACH Program $3,800,000)	45,761,678	45,761,678

DHHS Administration

Division of Child Development and Early Education

	04. DCDEE Administrative Expenses
		Division of Social Services	9,042,159	9,042,159

	05. Local Subsidized Child Care
		Services Support	16,436,361	16,436,361

	06. Direct Deposit for Child Care Payments	
		Division of Central Administration	505,100	505,100

	07. NC FAST Development	24,237	427,865

	08. Eligibility Systems O&M (Including NC FAST)	2,758,389	2,468,390

	09. DHHS Central Administration – DIRM
		Technical Services	645,162	645,162

	10. Central Regional Maintenance	287,854	287,854

	11. DHHS Central Administration Indirect Cost	7,346	7,346

Division of Public Health

	12. Child Care Health Consultation Contracts	62,205	62,205

TOTAL CHILD CARE AND DEVELOPMENT
	FUND BLOCK GRANT	$299,627,341	$299,833,915

MENTAL HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

01.	Mental Health Services – Child	$3,619,833	$3,619,833

	02. Mental Health Services – Adult/ Child	10,967,792	10,967,792

	03. Crisis Solutions Initiative – Critical
		Time Intervention	750,000	750,000

	04. Mental Health Services – First
		Psychotic Symptom Treatment 	1,430,851	1,430,851

DHHS Administration

Division of Mental Health/DD/SAS

	05. Administration	200,000	200,000

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

SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANT

Local Program Expenditures

	01. Substance Abuse – HIV and IV Drugs	$3,919,723	$3,919,723

	02. Substance Abuse Prevention	8,998,382	8,998,382

	03. Substance Abuse Services – Treatment for
		Children and Adults	29,322,717	29,221,286

	04. Crisis Solutions Initiative – Walk‑in 
		Crisis Center	420,000	420,000

	05. Crisis Solutions Initiative – Collegiate
		Wellness/Addiction Recovery	1,085,000	1,085,000

	06. Crisis Solutions Initiative – Community
		Paramedic Mobile Crisis Management	60,000	60,000

	07. Crisis Solutions Initiative – Innovative
		Technologies	41,000	41,000

	08. Crisis Solutions Initiative – Veterans' Crisis	250,000	250,000

DHHS Administration

Division of Mental Health/DD/SAS

	09. DMHDDSAS Administration	454,000	454,000

	10. Controlled Substances Reporting System	326,224	427,655

Division of Public Health

	11. DPH HIV Testing for Individuals in Substance
		Abuse Treatment	965,949	965,949

TOTAL SUBSTANCE ABUSE PREVENTION 
	AND TREATMENT BLOCK GRANT	$45,842,995	$45,842,995

MATERNAL AND CHILD HEALTH BLOCK GRANT

Local Program Expenditures

Division of Public Health

	01.Women's and Children's Health Services
		(Safe Sleep Campaign $45,000; Prevent Blindness $560,837;
		Community‑Based Sickle Cell Centers $100,000; March of Dimes $350,000;
		Teen Pregnancy Initiatives $650,000; 17P Project $52,000;
		Nurse‑Family Partnership $509,018)	14,070,680	14,070,680

	02. Oral Health	48,227	48,227

	03. Evidence‑Based Programs in Counties
		With Highest Infant Mortality Rates	1,575,000	1,575,000

DHHS Program Expenditures

Division of Public Health

	04. Children's Health Services	1,427,323	1,427,323

	05. Women's Health – Maternal Health	169,864	169,864

	06. State Center for Health Statistics	158,583	158,583

	07. Health Promotion – Injury and
		Violence Prevention	87,271	87,271

DHHS Administration

Division of Public Health

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

TOTAL MATERNAL AND CHILD
	HEALTH BLOCK GRANT	$18,089,519	$18,089,519

PREVENTIVE HEALTH SERVICES BLOCK GRANT

Local Program Expenditures

	01. Physical Activity and Prevention	$3,545,093	$3,545,093

	02. Injury and Violence Prevention
		(Services to Rape Victims – Set‑Aside)	180,778	180,778

DHHS Program Expenditures

Division of Public Health

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

	04. Oral Health Preventive Services	451,809	451,809

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

	06. Injury and Violence Prevention
		(Services to Rape Victims – Set‑Aside)	192,315	192,315

	07. State Laboratory Services – Testing,
		Training, and Consultation	199,634	199,634

	08. Performance Improvement and
		Accountability	1,104,455	1,104,455

	09. State Center for Health Statistics	107,291	107,291

DHHS Administration

Division of Public Health

	10. Division of Public Health	172,820	172,820

TOTAL PREVENTIVE HEALTH
	SERVICES BLOCK GRANT	$6,121,026	$6,121,026

COMMUNITY SERVICES BLOCK GRANT

Local Program Expenditures

Office of Economic Opportunity

	01. Community Action Agencies	$24,187,142	$24,187,142

	02. Limited Purpose Agencies	1,343,730	1,343,730

DHHS Administration

	03. Office of Economic Opportunity	1,343,730	1,343,730

TOTAL COMMUNITY SERVICES
	BLOCK GRANT	$26,874,602	$26,874,602

GENERAL PROVISIONS
SECTION 12J.1.(b)  Information to Be Included in Block Grant Plans. – The Department of Health and Human Services shall submit a separate plan for each Block Grant received and administered by the Department, and each plan shall include the following:
(1)	A delineation of the proposed allocations by program or activity, including State and federal match requirements.
(2)	A delineation of the proposed State and local administrative expenditures.
(3)	An identification of all new positions to be established through the Block Grant, including permanent, temporary, and time‑limited positions.
(4)	A comparison of the proposed allocations by program or activity with two prior years' program and activity budgets and two prior years' actual program or activity expenditures.
(5)	A projection of current year expenditures by program or activity.
(6)	A projection of federal Block Grant funds available, including unspent federal funds from the current and prior fiscal years.
SECTION 12J.1.(c)  Changes in Federal Fund Availability. – If the Congress of the United States increases the federal fund availability for any of the Block Grants or contingency funds and other grants related to existing Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall allocate the increase proportionally across the program and activity appropriations identified for that Block Grant in this section. In allocating an increase in federal fund availability, the Office of State Budget and Management shall not approve funding for new programs or activities not appropriated in this section.
If the Congress of the United States decreases the federal fund availability for any of the Block Grants or contingency funds and other grants related to existing Block Grants administered by the Department of Health and Human Services from the amounts appropriated in this section, the Department shall develop a plan to adjust the Block Grants based on reduced federal funding.
Notwithstanding the provisions of this subsection, for fiscal years 2017‑2018 and 2018‑2019, increases in the federal fund availability for the Temporary Assistance to Needy Families (TANF) Block Grant shall be used only for the North Carolina Child Care Subsidy program to pay for child care in four‑ or five‑star‑rated facilities for four‑year‑old children and shall not be used to supplant State funds.
Prior to allocating the change in federal fund availability, the proposed allocation must be approved by the Office of State Budget and Management. If the Department adjusts the allocation of any Block Grant due to changes in federal fund availability, then a report shall be made to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division.
SECTION 12J.1.(d)  Except as otherwise provided, appropriations from federal Block Grant funds are made for each year of the fiscal biennium ending June 30, 2019, according to the schedule enacted for State fiscal years 2017‑2018 and 2018‑2019 or until a new schedule is enacted by the General Assembly.
SECTION 12J.1.(e)  All changes to the budgeted allocations to the Block Grants or contingency funds and other grants related to existing Block Grants administered by the Department of Health and Human Services that are not specifically addressed in this section shall be approved by the Office of State Budget and Management, and the Office of State Budget and Management shall consult with the Joint Legislative Oversight Committee on Health and Human Services for review prior to implementing the changes. The report shall include an itemized listing of affected programs, including associated changes in budgeted allocations. All changes to the budgeted allocations to the Block Grants shall be reported immediately to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division. This subsection does not apply to Block Grant changes caused by legislative salary increases and benefit adjustments.
SECTION 12J.1.(f)  Except as otherwise provided, the Department of Health and Human Services shall have flexibility to transfer funding between the Temporary Assistance for Needy Families (TANF) Block Grant and the TANF Emergency Contingency Funds Block Grant so long as the total allocation for the line items within those block grants remains the same.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) FUNDS
SECTION 12J.1.(g)  The sum of eighty million ninety‑three thousand five hundred sixty‑six dollars ($80,093,566) for the 2017‑2018 fiscal year and the sum of eighty million ninety‑three thousand five hundred sixty‑six dollars ($80,093,566) for the 2018‑2019 fiscal year appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, shall be used for Work First County Block Grants. The Division shall certify these funds in the appropriate State‑level services based on prior year actual expenditures. The Division has the authority to realign the authorized budget for these funds among the State‑level services based on current year actual expenditures. The Division shall also have the authority to realign appropriated funds from Work First Family Assistance for electing counties to the Work First County Block Grant for electing counties based on current year expenditures so long as the electing counties meet Maintenance of Effort requirements.
SECTION 12J.1.(h)  The sum of nine million four hundred twelve thousand three hundred ninety‑one dollars ($9,412,391) appropriated in this section to the Department of Health and Human Services, Division of Social Services, in TANF funds for each fiscal year of the 2017‑2019 fiscal biennium for child welfare improvements shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services cases; to provide foster care and support services; to recruit, train, license, and support prospective foster and adoptive families; and to provide interstate and post‑adoption services for eligible families.
Counties shall maintain their level of expenditures in local funds for Child Protective Services workers. Of the Block Grant funds appropriated for Child Protective Services workers, the total expenditures from State and local funds for fiscal years 2017‑2018 and 2018‑2019 shall not be less than the total expended from State and local funds for the 2015‑2016 fiscal year.
SECTION 12J.1.(i)  The sum of two million twenty‑six thousand eight hundred seventy‑seven dollars ($2,026,877) appropriated in this section in TANF funds to the Department of Health and Human Services, Special Children Adoption Fund, for each year of the 2017‑2019 fiscal biennium shall be used in accordance with G.S. 108A‑50.2. The Division of Social Services, in consultation with the North Carolina Association of County Directors of Social Services and representatives of licensed private adoption agencies, shall develop guidelines for the awarding of funds to licensed public and private adoption agencies upon the adoption of children described in G.S. 108A‑50 and in foster care. Payments received from the Special Children Adoption Fund by participating agencies shall be used exclusively to enhance the adoption services program. No local match shall be required as a condition for receipt of these funds.
SECTION 12J.1.(j)  The sum of one million four hundred thousand dollars ($1,400,000) appropriated in this section in TANF funds to the Department of Health and Human Services, Division of Social Services, for each fiscal year of the 2017‑2019 fiscal biennium shall be used for child welfare initiatives to (i) enhance the skills of social workers to improve the outcomes for families and children involved in child welfare and (ii) enhance the provision of services to families in their homes in the least restrictive setting.
SECTION 12J.1.(k)  The sum of seven hundred seventy‑five thousand one hundred seventy‑six dollars ($775,176) for each fiscal year of the 2017‑2019 fiscal biennium appropriated in this section to the Department of Health and Human Services, Division of Social Services, in TANF funds for Child Welfare Program Improvement Plan Initiatives shall be used to enhance the skills of social workers in order to improve the outcomes for families and children involved in child welfare services and to enhance the provision of services to families in their home in order to strengthen serving families in the least restrictive setting, supporting safety while keeping families together.

SOCIAL SERVICES BLOCK GRANT
SECTION 12J.1.(l)  The sum of thirty million two hundred fifteen thousand five hundred eighty‑three dollars ($30,215,583) for the 2017‑2018 fiscal year and the sum of thirty million two hundred forty‑seven thousand seven hundred seventeen dollars ($30,247,717) for the 2018‑2019 fiscal year appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, 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, as well as State Social Services Block Grant funds, among the State‑level services based on current year actual expenditures.
SECTION 12J.1.(m)  The sum of one million three hundred thousand dollars ($1,300,000) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, for each fiscal year of the 2017‑2019 fiscal biennium shall be used to support various child welfare training projects as follows:
(1)	Provide a regional training center in southeastern North Carolina.
(2)	Provide training for residential child caring facilities.
(3)	Provide for various other child welfare training initiatives.
SECTION 12J.1.(n)  The Department of Health and Human Services is authorized, subject to the approval of the Office of State Budget and Management, to transfer Social Services Block Grant funding allocated for departmental administration between divisions that have received administrative allocations from the Social Services Block Grant.
SECTION 12J.1.(o)  Social Services Block Grant funds appropriated for the Special Children Adoption Incentive Fund will require a fifty‑percent (50%) local match.
SECTION 12J.1.(p)  The sum of five million forty thousand dollars ($5,040,000) appropriated in this section in the Social Services Block Grant for each fiscal year of the 2017‑2019 fiscal biennium shall be allocated to the Department of Health and Human Services, Division of Social Services. The Division shall allocate these funds to local departments of social services to replace the loss of Child Protective Services State funds that are currently used by county governments to pay for Child Protective Services staff at the local level. These funds shall be used to maintain the number of Child Protective Services workers throughout the State. These Social Services Block Grant funds shall be used to pay for salaries and related expenses only and are exempt from 10A NCAC 71R .0201(3) requiring a local match of twenty‑five percent (25%).
SECTION 12J.1.(q)  The sum of three million eight hundred fifty‑two thousand five hundred dollars ($3,852,500) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Central Management and Support, shall be used for DHHS competitive block grants pursuant to Section 12A.8 of this act for each fiscal year of the 2017‑2019 fiscal biennium. These funds are exempt from the provisions of 10A NCAC 71R .0201(3).
SECTION 12J.1.(r)  The sum of three hundred seventy‑five thousand dollars ($375,000) appropriated in this section in the Social Services Block Grant for each year of the 2017‑2019 fiscal biennium to the Department of Health and Human Services, Division of Social Services, shall be used to continue support for the Child Advocacy Centers, and the funds are exempt from the provisions of 10A NCAC 71R .0201(3).
SECTION 12J.1.(s)  The sum of three million two hundred twenty thousand three hundred forty‑two dollars ($3,220,342) for the 2017‑2018 fiscal year and the sum of three million two hundred twenty thousand three hundred forty‑two dollars ($3,220,342) for the 2018‑2019 fiscal year appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Aging and Adult Services, and the sum of eight hundred fifteen thousand three hundred sixty‑two dollars ($815,362) for the 2017‑2018 fiscal year and the sum of eight hundred fifteen thousand three hundred sixty‑two dollars ($815,362) for the 2018‑2019 fiscal year appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Social Services, shall be used for guardianship services pursuant to Chapter 35A of the General Statutes. The Department may expend funds appropriated in this section to support (i) existing corporate guardianship contracts during the 2017‑2018 and 2018‑2019 fiscal years and (ii) guardianship contracts transferred to the State from local management entities or managed care organizations during the 2017‑2018 and 2018‑2019 fiscal years.
 SECTION 12J.1.(t)  The sum of seven hundred thirty‑seven thousand sixty‑seven dollars ($737,067) appropriated in this section in the Social Services Block Grant for each year of the 2017‑2019 fiscal biennium shall be allocated to the Department of Health and Human Services, Division of Social Services. These funds shall be used to assist with training needs for county child welfare training staff and shall not be used to supplant any other source of funding for staff. County departments of social services are exempt from 10A NCAC 71R .0201(3) requiring a local match of twenty‑five percent (25%).
SECTION 12J.1.(u)  The sum of four million six hundred thousand dollars ($4,600,000) for each fiscal year of the 2017‑2019 fiscal biennium is appropriated in this section of Social Services Block Grant funds to the Department of Health and Human Services. Of the four million six hundred thousand dollars ($4,600,000), the sum of eight hundred fifty‑four thousand forty‑three dollars ($854,043) shall be appropriated to the Division of Aging and Adult Services and the sum of three million seven hundred forty‑five thousand nine hundred fifty‑seven dollars ($3,745,957) shall be appropriated to the Division of Social Services. The Divisions of Aging and Adults Services and Social Services may expend funds appropriated in this section as follows: (i) for county departments of social services to employ additional staff needed to reduce workloads in Adult Protective Services and Guardianship, (ii) to increase the capacity of guardianship corporations contracts to help meet the growing need for publicly funded guardians, and (iii) to employ one additional full‑time, permanent position in the Division of Aging and Adult Services to implement the expansion of Adult Protective Services and Guardianship. The appropriated funds described in (i) and (ii) of this subsection shall be used for Adult Protective Services pursuant to Article 6 of Chapter 108A of the General Statutes and for Guardianship Services pursuant to Chapter 35A of the General Statutes.

LOW‑INCOME ENERGY ASSISTANCE BLOCK GRANT
SECTION 12J.1.(v)  Additional emergency contingency funds received may be allocated for Energy Assistance Payments or Crisis Intervention Payments without prior consultation with the Joint Legislative Oversight Committee on Health and Human Services. Additional funds received shall be reported to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division upon notification of the award. The Department of Health and Human Services shall not allocate funds for any activities, including increasing administration, other than assistance payments, without prior consultation with the Joint Legislative Oversight Committee on Health and Human Services.
SECTION 12J.1.(w)  The sum of thirty‑six million four hundred two thousand six hundred ten dollars ($36,402,610) for the 2017‑2018 fiscal year and the sum of thirty‑five million four hundred nineteen thousand two hundred seventy‑two dollars ($35,419,272) for the 2018‑2019 fiscal year appropriated in this section in the Low‑Income Energy Assistance Block Grant 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. The outreach plan shall comply with the following:
(1)	Ensure that eligible households are made aware of the available assistance, with particular attention paid to the elderly population age 60 and above and disabled persons receiving services through the Division of Aging and Adult Services.
(2)	Include efforts by the county department of social services to contact other State and local governmental entities and community‑based organizations to (i) offer the opportunity to provide outreach and (ii) receive applications for energy assistance.
(3)	Be approved by the local board of social services or human services board prior to submission.

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT
SECTION 12J.1.(x)  Payment for subsidized child care services provided with federal TANF funds shall comply with all regulations and policies issued by the Division of Child Development and Early Education for the subsidized child care program.
SECTION 12J.1.(y)  If funds appropriated through the Child Care and Development Fund Block Grant for any program cannot be obligated or spent in that program within the obligation or liquidation periods allowed by the federal grants, the Department may move funds to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order to use the federal funds fully.

MENTAL HEALTH SERVICES BLOCK GRANT
SECTION 12J.1.(z)  The sum of one million four hundred thirty thousand eight hundred fifty‑one dollars ($1,430,851) appropriated in this section in the Mental Health Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2017‑2019 fiscal biennium is allocated for Mental Health Services – First Psychotic Symptom Treatment.

SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANT
SECTION 12J.1.(aa)  The sum of two hundred fifty thousand dollars ($250,000) appropriated in this section in the Substance Abuse Prevention and Treatment Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for each fiscal year of the 2017‑2019 fiscal biennium shall be allocated to the Department of Military and Veterans Affairs to establish a call‑in center to assist veterans in locating service benefits and crisis services. The call‑in center shall be staffed by certified veteran peers within the Department of Military and Veterans Affairs and trained by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.

MATERNAL AND CHILD HEALTH BLOCK GRANT
SECTION 12J.1.(bb)  If federal funds are received under the Maternal and Child Health Block Grant for abstinence education, pursuant to section 912 of Public Law 104‑193 (42 U.S.C. § 710), for the 2017‑2018 fiscal year or the 2018‑2019 fiscal year, then those funds shall be transferred to the State Board of Education to be administered by the Department of Public Instruction. The Department of Public Instruction shall use the funds to establish an abstinence until marriage education program and shall delegate to one or more persons the responsibility of implementing the program and G.S. 115C‑81(e1)(4) and (4a). The Department of Public Instruction shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.
SECTION 12J.1.(cc)  The Department of Health and Human Services shall ensure that there will be follow‑up testing in the Newborn Screening Program.
SECTION 12J.1.(dd)  The sum of one million five hundred seventy‑five thousand dollars ($1,575,000) appropriated in this section in the Maternal and Child Health Block Grant to the Department of Health and Human Services, Division of Public Health, for each fiscal year of the 2017‑2019 fiscal biennium shall be used for evidence‑based programs in counties with the highest infant mortality rates. The Division shall report on (i) the counties selected to receive the allocation, (ii) the specific evidenced‑based services provided, (iii) the number of women served, and (iv) any impact on the counties' infant mortality rate. The Division shall report its findings to the House of Representatives Appropriations Committee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division no later than December 31, 2018.

PART XiiI. dEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES (reserved)

PART XIV. DEPARTMENT OF ENVIRONMENTAL QUALITY

NONREVERSION OF PUBLIC WATER SYSTEM OPERATING PERMIT FEES
SECTION 14.1.  G.S.  130A‑328(e) reads as rewritten:
"(e)	All fees collected under this section shall be applied as follows:
(1)	The Community Water System Permit Fees Fund is established as a special fund within the Department. Fees collected under subsection (b) of this section shall be credited to the Fund and applied to the costs of administering this Article.
(2)	The Public Water System Plan Review Fee Fund is established as a special fund within the Department. Fees collected under subsection (c) of this section shall be credited to the Fund and applied to the costs of administering this Article."

NONREVERSION OF WATER TREATMENT FACILITY OPERATOR FEES
SECTION 14.2.  G.S. 90A‑27 reads as rewritten:
"§ 90A‑27.  Application fee.
(a)	The Board may establish a schedule of fees for the issuance or renewal of a certificate to cover the costs of administering the certification programs. The fee for issuing or renewing a certificate may not exceed fifty dollars ($50.00). The Board may impose a penalty not to exceed thirty dollars ($30.00) for the late renewal of a certificate.
(b)	The Water Treatment Facility Operator Fund is established as a special fund within the Department. Fees collected under this section shall be credited to the Fund and applied to the costs of administering this Article."

clarify coastal recreational fishing license statute
SECTION 14.3.  Article 14C of Subchapter IV of Chapter 113 of the General Statutes is amended by adding a new section to read:
"§ 113‑176.  Assent to Federal Acts.
The State hereby assents to the provisions of the Dingell‑Johnson Sport Fish Restoration Act of 1950, 16 U.S.C. § 777 et seq., as amended. The State shall use revenues collected from fishing licenses in accordance with the provisions of G.S. 113‑175.1(c) and G.S. 113‑175.5(c) so funds shall not be diverted and shall be used solely for the administration of the State's fish programs which includes only the functions required to manage the agency and the fish‑related resources for which the agency has authority under State law."

MARINE PATROL/SHELLFISH SANITATION EQUIPMENT SALES
SECTION 14.4.  The Division of Marine Fisheries of the Department of Environmental Quality shall sell the following equipment and vessels as expeditiously as possible in order to modernize the fleet:
(1)	1991 Lull telehandler.
(2)	1984 LRT‑100 crane.
(3)	1999 Hudson Brothers low‑boy Trailer.
(4)	1992 25' Parker boat with trailer.
(5)	1970's era 135' M/V West Bay vessel.
Proceeds from these sales shall be credited to a special fund within Marine Fisheries to be used for future equipment acquisitions to support the Shellfish Rehabilitation and Habitat Enhancement Programs.

I & M AIR POLLUTION CONTROL ACCOUNT
SECTION 14.5.  G.S. 143‑215.3A(b1) reads as rewritten: 
"(b1)	The I & M Air Pollution Control Account is established as a nonreverting account within the Department. Fees transferred to the Division of Air Quality of the Department pursuant to G.S. 20‑183.7(c) shall be credited to the I & M Air Pollution Control Account and shall be applied to administering the air quality program."

COMBUSTION RESIDUALS SURFACE IMPOUNDMENTS REGULATORY FEE
SECTION 14.6.  G.S. 62‑302.1(b) reads as rewritten:
"(b)	Rate. – The combustion residuals surface impoundment fee shall be three hundredths of one percent (0.03%) of the North Carolina jurisdictional revenues of each public utility with a coal combustion residuals surface impoundment. For the purposes of this section, the term "North Carolina jurisdictional revenues" has the same meaning as in G.S. 62‑302."

PART XV. DEPARTMENT OF COMMERCE

COMMUNITY INNOVATION FUND
SECTION 15.1.(a)  Fund. – The North Carolina Community Innovation Fund (CIF) is established as a special revenue fund in the Department of Commerce (Department). The Office of Science, Technology & Innovation in the Department shall be responsible for administering the program.
SECTION 15.1.(b)  Purposes. – Moneys in the CIF shall be allocated pursuant to this subsection. The Department shall make grants from the CIF to "micropolitan" communities and majority‑minority communities within metro areas that have seen systemic under‑investment across North Carolina to stimulate small business growth, foster vibrant local innovation ecosystems, and help small‑ to medium‑sized communities across the State transition to a knowledge‑based economy. Moneys in the CIF shall be used for projects that will target, but not be limited to, the following outcomes:
(1)	Strengthening internal networks among local entrepreneurs and the broader business community, as well as the connection between the local micropolitan innovation ecosystem and proximate metro innovation ecosystems.
(2)	Attracting more capital investment into the local innovation ecosystem.
(3)	Growing the number of locally owned small businesses in the community.
(4)	Increasing employment opportunities within the knowledge‑based economy.
(5)	Fostering more enterprises led and owned by women and entrepreneurs of color.
(6)	Contributing to increased business activity and density in under‑developed commercial corridors.
(7)	Increasing media visibility for these efforts locally, statewide and, ultimately, nationally.
SECTION 15.1.(c)  Definitions. – For purposes of this section, the following definitions apply:
(1)	Innovation ecosystem – A collection of people, organizations, cultures, policies, and programs that creates innovative ideas and discoveries and translates those ideas into innovative products, services, and business models to improve economic well‑being and quality of life.
(2)	Micropolitan community. – One or more adjacent counties or county equivalents that have at least one urban core area with a population of at least 10,000 but less than 50,000, plus adjacent territory that has a high degree of social and economic integration with the core, as measured by commuting ties.
SECTION 15.1.(d)  Matching Funds. – The Department may require a participating community to provide matching funds for a grant from the CIF.
SECTION 15.1.(e)  Administrative Expenses. – Of the funds appropriated to the CIF, the Department may use up to sixty thousand dollars ($60,000), if necessary, to cover the Department's expenses in administering the CIF.
SECTION 15.1.(f)  CIF Advisory Committee. – The Department may establish an advisory committee to assist in the development of the specific selection criteria and the grant‑making process of the CIF.
SECTION 15.1.(g)  Agreements Required. – Funds may be disbursed from the CIF only in accordance with agreements entered into between the Department and an eligible grantee. Eligible grantees are nonprofit organizations and local governments.
SECTION 15.1.(h)  Program Guidelines. – The Department shall develop guidelines related to the administration of this program. At least 20 days before the effective date of any guidelines or nontechnical amendments to the guidelines, the Department shall publish the proposed guidelines on the Department's Web site and provide notice to persons who have requested notice of proposed guidelines. In addition, the Department must accept oral and written comments on the proposed guidelines during the 15 business days beginning on the first day that the Department has completed these notifications. Guidelines adopted under this section shall not be subject to the requirements of Article 2A of Chapter 150B of the General Statutes. The Department shall publish the proposed guidelines on the Department's Web site and provide notice to persons who have requested notice and to other stakeholder individuals and organizations.

NC INVENTS program
SECTION 15.2.(a)  Program. – The NC Invents Program Fund is established as a special revenue fund in the Department of Commerce (Department). The Office of Science, Technology & Innovation in the Department shall be responsible for administering the program.
SECTION 15.2.(b)  Purposes. – Moneys for the NC Invents Program shall be allocated pursuant to this subsection. In order for North Carolina to reap more economic impacts from its universities through creating more companies, licensing income, and employment from intellectual property resulting from university research, the NC Invents Program provides funds for expert commercialization consultants to help universities commercialize research.
SECTION 15.2.(c)  Challenges Addressed. – Technology validation is one of the top challenges investors and industry face in funding and acquiring university technologies. Most of these technologies are too new to be attractive to investors or companies, as they generally need additional proof‑of‑concept and testing, or the products that could develop or benefit from the technologies may need further definition. Furthermore, the realities of assessing and developing a strategy for introducing and expanding the technologies in the marketplace are best accomplished by people directly familiar with the relevant industries and with strong experience and expertise in technology commercialization.
SECTION 15.2.(d)  Details. – The NC Invents Program allows all public and private North Carolina universities to participate in a technology commercialization process that uses the State's experts to provide the universities with technology commercialization services, including, but not limited to, selecting university technologies based on commercial potential, creating a development plan of activities to make the technologies attractive to investors or companies, and guiding implementation of the activities to assure efficient deployment of funds and commercial‑quality results.
(1)	NC Invents Program shall be funded with a one‑time State appropriation of ten million dollars ($10,000,000), with invested income from the established fund available for the program. Up to five percent (5%) of the invested capital shall be released annually for program activities and administration.
(2)	The Office of Science, Technology & Innovation, through a competitive award process, shall select one or more nonprofit organizations to provide the technology commercialization services.
(3)	The selected nonprofit organizations must demonstrate expertise in life science technologies such as medical, biological, and agricultural technologies, or nonlife sciences technologies, such as information technology, materials technology, and cyber security, as well as the ability to work with universities throughout the State.
(4)	Universities shall originate the technology candidates, and the nonprofits shall select technologies and guide them through the commercialization process, with oversight from the NC Department of Commerce.
(5)	Development plans shall be stage‑gated, with smaller levels of funding provided initially. If technologies fail at any stage of a plan, no additional funding shall be allocated, thus minimizing the funding outlay by the State and participating university.
(6)	Universities shall match each respective project investment 1:1.
SECTION 15.2.(e)  Funding Cap. – The Department of Commerce may set a cap on funding allocations to the selected nonprofit organizations.
SECTION 15.2.(f)  Program Guidelines. – The Department of Commerce shall develop guidelines related to the administration of this program. At least 20 days before the effective date of any guidelines or nontechnical amendments to the guidelines, the Department of Commerce shall publish the proposed guidelines on the Department's Web site and provide notice to persons who have requested notice of proposed guidelines. In addition, the Department must accept oral and written comments on the proposed guidelines during the 15 business days beginning on the first day that the Department has completed these notifications. Guidelines adopted under this section shall not be subject to the requirements of Article 2A of Chapter 150B of the General Statutes.

INNOVATION FELLOWSHIP PROGRAM
SECTION 15.3.(a)  Program. – The Innovation Fellowship Program (IF Program) Fund is established as a special revenue fund in the Department of Commerce (Department), and the Office of Science, Technology & Innovation in the Department shall be responsible for administering the program.
SECTION 15.3.(b)  Purposes. – Moneys for the IF Program shall be allocated pursuant to this subsection. In order to build the technology management workforce necessary for the creation and growth of technology companies in fast‑growing, high‑paying industries, and to encourage employment within the State of university science and business graduates to benefit the State from its investment in higher education, all public and private North Carolina universities shall be eligible to participate in a statewide, competitive fellowship program enabling recent graduates or postdocs who are startup company founders or early stage hires to transition to a full‑time role in a startup.
SECTION 15.3.(c)  Challenges Addressed. – University spinout companies lack the resources to attract strong executive talent. For university‑owned innovations, the best candidate may be a graduate student or postdoc who worked on the technology and who wants to work in industry. For a product or service developed by an undergraduate, the startup is most likely to succeed with the innovator directly involved. In either case, the undergraduate, graduate, or postdoc typically does not have the financial resources to devote full‑time effort to the startup. As a result, startups are either abandoned when the student leaves the university, or the innovator gets a separate job and pursues the startup on the side. The result is fewer, slower‑growing startups and fewer entrepreneurs. Often, the most entrepreneurial graduates are drawn out‑of‑state, to regions where startup capital is more abundant. The IF Program builds on the successful "Innovation Fellowship" program at University of North Carolina at Chapel Hill that addresses these challenges.
SECTION 15.3.(d)  Details. – Graduating and recently graduated students and postdoctoral scholars from any participating North Carolina university shall be eligible to apply for a one‑year fellowship. Eligible applicants shall be a founder or a key early hire of an existing startup to which they shall commit full‑time effort upon award.
(1)	The IF Program shall provide a stipend of at least twenty‑five thousand dollars ($25,000) for a bachelor's level or fifty thousand dollars ($50,000) for a graduate level to the respective universities sponsoring the fellows. For each stipend, half shall be provided through State appropriations to the IF Program, the other shall be provided by the sponsoring university.
(2)	Solicitations and awards shall be made once per year, timed off the academic calendar.
(3)	Each cohort of fellows shall receive mentorship and startup training through existing mentorship programs, such as Groundwork Labs, Blackstone Entrepreneur's Network, or the Venture Mentoring Service of the Council for Entrepreneurial Development.
(4)	Awardees shall be required to remain in North Carolina for at least one year after completion of the fellowship.
(5)	An independent committee, composed of members from the community of North Carolina universities and selected by the Office of Science, Technology & Innovation, shall draft policies for long‑term program governance.
SECTION 15.3.(e)  Program Guidelines. – The Department of Commerce shall develop guidelines related to the administration of this program. At least 20 days before the effective date of any guidelines or nontechnical amendments to the guidelines, the Department of Commerce shall publish the proposed guidelines on the Department's Web site and provide notice to persons who have requested notice of proposed guidelines. In addition, the Department must accept oral and written comments on the proposed guidelines during the 15 business days beginning on the first day that the Department has completed these notifications. Guidelines adopted under this section shall not be subject to the requirements of Article 2A of Chapter 150B of the General Statutes.

NC READY SITES
SECTION 15.4.(a)  Program. – The NC Ready Sites Program Fund is established as a special revenue fund in the Department of Commerce (Department), and the Department shall be responsible for administering the Fund.
SECTION 15.4.(b)  Purposes. – Moneys in the NC Ready Sites Program shall assist local government units to fund construction or improvement of public infrastructure that serves publicly owned or publicly controlled industrial sites that have the potential to attract employers that can create jobs and have a significant positive effect on the local, regional, and State economy.
SECTION 15.4.(c)  Program Guidelines. – The Department of Commerce shall develop guidelines related to the administration of this program. At least 20 days before the effective date of any guidelines or nontechnical amendments to the guidelines, the Department of Commerce shall publish the proposed guidelines on the Department's Web site and provide notice to persons who have requested notice of proposed guidelines. In addition, the Department must accept oral and written comments on the proposed guidelines during the 15 business days beginning on the first day that the Department has completed these notifications. Guidelines adopted under this section shall not be subject to the requirements of Article 2A of Chapter 150B of the General Statutes. Those guidelines shall include, at a minimum, the following provisions:
(1)	The applicant must be a local unit of government
(2)	The site to be served by the public infrastructure must be publicly‑owned or publicly‑controlled
(3)	The site must have a minimum size of 50 contiguous acres
(4)	There must be evidence of appropriate local financial support for site development, which, include, but is not limited to, site acquisition, development costs, and/or infrastructure improvements
(5)	There must be evidence of recent private sector interest in developing an industrial project on the site
(6)	There must be evidence of a well‑researched strategy to identify and market the site to appropriate private sector businesses
(7)	Improvements that would be funded must result in a site that is ready for development; and, funds are to be used to eliminate or reduce the infrastructure gap and time needed to make the site development ready
(8)	Funds will only be utilized to construct public infrastructure including new or existing water, sewer, gas, telecommunications, high‑speed broadband, electrical utility distribution lines or equipment, or transportation infrastructure

EXTEND SUNSET DATE FOR JDIG PROGRAM
SECTION 15.5.  G.S. 143B‑437.62 reads as rewritten:
"§ 143B‑437.62.  Expiration.
The authority of the Committee to award new grants expires January 1, 2029."

ENHANCE STATEWIDE BROADBAND ACCESS
SECTION 15.6.(a)  Funds appropriated in this act for the enhancement of Statewide Broadband shall be allocated in the following manner:
(1)	Fourteen million five hundred thousand dollars ($14,500,000) to establish Broadband Deployment Grants for last‑mile or middle‑mile infrastructure projects. Grants are to be technology‑neutral. Projects must deploy technology with scalable speeds up to 100Mbps download for wireline and 25Mpbs download for fixed wireless. Applicants must have completed a community broadband plan. Eligible applicants include:
a.	1st Priority: A city, village, town, or county that has established a partnership or arrangement with a qualified organization or qualified Internet Service Provider (currently providing Internet service at the time of enactment).
b.	2nd Priority: A telephone (TMC) or electrical membership cooperative (EMC), Internet Service Provider (ISP), or Microelectronics Center of North Carolina (MCNC).
(2)	Four million dollars ($4,000,000) for Network Design and Planning Grants to allow the State to determine the specific location of existing broadband infrastructure through asset inventories and studies that determine the location of current fiber infrastructure, provider points of presence, middle‑mile assets, and build‑out needs. Eligible applicants include:
a.	Counties, local units of government, region councils of government, regional consortiums, or partnerships.
b.	MCNC or electrical membership cooperatives (EMCs).
(3)	One million dollars ($1,000,000) for the establishment of Community Planning Grants to identify existing infrastructure and gaps in coverage to assist the local government in fostering new broadband deployments, to produce plans that define local broadband needs and goals, and to encourage adoption of identified best practices by participating municipalities and organizations. Tiered match requirement, depending on level of distress using Department of Commerce's Economic Tiers. Match can be from public or private dollars. Eligible applicants include:
a.	North Carolina city, village, town, or county.
b.	A 501(c)(3) non‑profit organization, including a cooperative.
(4)	Five hundred thousand dollars ($500,000) to support the planning administration and management of broadband grant and loan programs.
SECTION 15.6.(b)  G.S. 153A‑349.60(a) reads as rewritten:
"(a)	A county may provide grants to unaffiliated qualified private providers of highspeed Internet access service, as that term is defined in G.S. 160A‑340(4), for the purpose of expanding service in the county. The grants shall be awarded on a technology neutral basis, shall be open to qualified applicants, and may require matching funds by the private provider. A county shall seek and consider request for proposals from qualified private providers within the county prior to awarding a broadband grant and shall use reasonable means to ensure that potential applicants are made aware of the grant, including, at a minimum, compliance with the notice procedures set forth in G.S. 160A‑340.6(c). The county shall use only unrestricted general fund revenue for the grants. For the purposes of this section, a qualified private provider is a private provider of high‑speed Internet access service in the State prior to the issuance of the grant proposal."

NER BLOCK GRANTS/2018 AND 2019 PROGRAM YEARS
SECTION 15.7.(a)  Appropriations from federal block grant funds are made for the fiscal years ending June 30, 2018, and June 30, 2019, according to the following schedule:

COMMUNITY DEVELOPMENT BLOCK GRANT
	01. State Administration	$ 1,037,500 
	02. Economic Development	$13,737,500
	03. Infrastructure	$18,725,000
	04. Scattered Site Housing	$10,000,000

TOTAL COMMUNITY DEVELOPMENT
	BLOCK GRANT –
		2018 Program Year	$ 43,500,000
		2019 Program Year	$ 43,500,000
SECTION 15.7.(b)  Decreases in Federal Fund Availability. – If federal funds are reduced below the amounts specified in this section after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
SECTION 15.7.(c)  Increases in Federal Fund Availability. – Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows: each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
SECTION 15.7.(d)  Limitations on Community Development Block Grant Funds. – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to one million thirty‑seven thousand five hundred dollars ($1,037,500) may be used for State Administration, up to thirteen million seven hundred thirty‑seven thousand five hundred dollars ($13,737,500) may be used for Economic Development, up to eighteen million seven hundred twenty‑five thousand dollars ($18,725,000) may be used for Infrastructure, and up to ten million dollars ($10,000,000) may be used for Scattered Site Housing. If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
SECTION 15.7.(e)  The Department of Commerce shall consult with the Joint Legislative Commission on Governmental Operations prior to reallocating Community Development Block Grant Funds. Notwithstanding the provisions of this subsection, whenever the Director of the Budget finds that:
(1)	A reallocation is required because of an emergency that poses an imminent threat to public health or public safety, the Director of the Budget may authorize the reallocation without consulting the Commission. The Department of Commerce shall report to the Commission on the reallocation no later than 30 days after it was authorized and shall identify in the report the emergency, the type of action taken, and how it was related to the emergency.
(2)	The State will lose federal block grant funds or receive less federal block grant funds in the next fiscal year unless a reallocation is made, the Department of Commerce shall provide a written report to the Commission on the proposed reallocation and shall identify the reason that failure to take action will result in the loss of federal funds. If the Commission does not hear the issue within 30 days of receipt of the report, the Department may take the action without consulting the Commission.

part xvi. department of natural and cultural resources

MODIFY ZOO AND AQUARIUM FUNDS
SECTION 16.1.(a)  G.S. 143B‑135.188 reads as rewritten:
"§ 143B‑135.188.  North Carolina Aquariums; fees; fund.
…
(b)	Fund. – The North Carolina Aquariums Fund is hereby created as a special fund. The North Carolina Aquariums Fund shall be used for the following purposes with respect to the aquariums and the pier operated by the Division of North Carolina Aquariums:
(1)	Repair, renovation, expansion, maintenance, and educational exhibit construction. Funds used for repair, renovation, and expansion projects may be transferred to a capital projects fund to account for use of the funds for each project.
…
(c)	Disposition of Receipts. – All receipts derived from the collection of admissions charges and other fees and the lease or rental of property or facilities shall be credited to the aquariums' General Fund operating budget. At the end of each fiscal year, the Secretary may transfer from the North Carolina aquariums' General Fund operating budget to the North Carolina Aquariums Fund an amount not to exceed the sum of the following:
…
(3)	Any donations, gifts, grants, and devises received by the North Carolina aquariums.
…."
SECTION 16.1.(b)  G.S. 143B‑135.209 reads as rewritten:
"§ 143B‑135.209.  North Carolina Zoo Fund.
(a)	Fund. – The North Carolina Zoo Fund is created as a special fund. The North Carolina Zoo Fund shall be used for the following types of projects at the North Carolina Zoological Park and to match private funds raised for these types of projects:
(1)	Repair, renovation, expansion, maintenance, and educational exhibit construction. Funds used for repair, renovation, and expansion projects may be transferred to a capital projects fund to account for use of the funds for each project.
…
(b)	Disposition of Receipts. – All receipts derived from the collection of admissions charges and other fees, the lease or rental of property or facilities, and the disposition of structures or products of the land shall be credited to the North Carolina Zoological Park's General Fund operating budget. At the end of each fiscal year, the Secretary may transfer from the North Carolina Zoological Park's General Fund operating budget to the North Carolina Zoo Fund an amount not to exceed the sum of one million five hundred thousand dollars ($1,500,000) and any donations, gifts, grants, and devises received by the North Carolina Zoological Park.
…."
SECTION 16.1.(c)  G.S. 143B‑135.213 is amended by adding a new subsection to read:
"(c)	Notwithstanding Article 3A of Chapter 143 of the General Statutes and G.S. 143‑49(4), the Council may dispose of any exhibit, exhibit component, or object from the collections of the North Carolina Zoological Park by sale, lease, or trade. A sale, lease, or trade under this subsection shall be conducted in accordance with generally accepted practices for zoos and aquariums that are accredited by the American Association of Zoos and Aquariums. After deducting the expenses attributable to the sale or lease, the net proceeds of any sale or lease shall be credited to the North Carolina Zoo Fund."

CLARIFYING CHANGES TO DEPARTMENT OF NATURAL AND CULTURAL RESOURCES FUNDS
SECTION 16.2.(a)  G.S. 121‑5(e) reads as rewritten:
"(e)	Archives and Records Management Fund. The Archives and Records Management Fund is established as a special revenue fund. The Fund consists of the fees credited to it under Chapter 161 of the General Statutes, donations, gifts, grants, and devises. Revenue in the Fund may be used only to offset the Department's costs in providing essential records management and archival services for public records pursuant to Chapter 121 and Chapter 132 of the General Statutes."
SECTION 16.2.(b)  G.S. 121‑7.6(a) reads as rewritten:
"(a)	Fund Established. – The North Carolina Transportation Museum Fund is created as a special interestbearing, nonreverting enterprise fund in the Department of Natural and Cultural Resources. The Fund shall be used to pay all costs associated with the  operation, interpretation, development, expansion, preservation, and maintenance of the North Carolina Transportation Museum."
SECTION 16.2.(c)  G.S. 121‑7.7(a) reads as rewritten:
"(a)	Fund. – The State Historic Sites and Museums Fund is created as a special, interest‑bearing revenue fund in the Division of State Historic Sites and the Division of State History Museums. The Fund consists of all receipts derived from the lease or rental of property or facilities, disposition of structures or products of the land, donations, gifts, grants, devises, and admissions and fees collected at the State Historic Sites, State History Museums, and Maritime Museums. The revenues in the Fund may be used only for the operation, interpretation, maintenance, preservation, development, and expansion of the individual State Historic Site, State History Museum, and Maritime Museum where the receipts are generated. The respective Division and the staff from each State Historic Site, State History Museum, and Maritime Museum will determine how the funds will be used at that Historic Site, State History Museum, and Maritime Museum."
SECTION 16.2.(d)  G.S. 143B‑53.3(a) reads as rewritten:
"(a)	Fund. – The Queen Anne's Revenge Project Special Fund is created as a special, interest‑bearing revenue fund within the Department of Natural and Cultural Resources, Office of Archives and History. The Fund shall consist of all receipts derived from donations, gifts, grants, devises, and earned revenue. The monies 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 Natural and 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."
SECTION 16.2.(e)  G.S. 143B‑79(7) reads as rewritten:
"(7)	The Committee may dispose of property held in the Executive Mansion after consultation with a review committee comprised of one person from the Executive Mansion Fine Arts Committee, appointed by its chairman; one person from the Department of Administration appointed by the Secretary of Administration; and two qualified professionals from the Department of Natural and Cultural Resources, Division of Archives and History, appointed by the Secretary of Natural and Cultural Resources. Upon request of the Executive Mansion Fine Arts Committee, the review committee will view proposed items for disposition and make a recommendation to the North Carolina Historical Commission who will make a final decision. The Historical Commission must consider whether the disposition is in the best interest of the State of North Carolina. If any property is sold, the net proceeds of each sale and any interest earned thereon shall be deposited in the State Treasury to the credit of the Executive Mansion, Special Fund, and shall be used only for the purchase, conservation, restoration or repair of other property for use in the Executive Mansion."
SECTION 16.2.(f)  G.S. 143B‑87.2(a) reads as rewritten:
"(a)	Fund. – The A+ Schools Special Fund is created as a special interest‑bearing revenue fund in the Department of Natural and Cultural Resources, North Carolina Arts Council. The Fund shall consist of all receipts derived from donations, gifts, grants, devises, and earned revenue. The revenue in the Fund may be used only for contracted services, conference and meeting expenses, travel, staff salaries, and other administrative costs related to the A+ Schools program. The staff of the North Carolina Arts Council and the Department shall determine how the funds will be used for the purposes of the A+ Schools program."
SECTION 16.2.(g)  G.S. 143B‑131.8A(c) reads as rewritten:
"(c)	The Department of Natural and Cultural Resources shall credit to the Historic Roanoke Island Fund all rental proceeds and other receipts received by the Department from the rental properties or vacant lands located near the Outer Banks Island Farm."
SECTION 16.2.(h)  G.S. 143B‑135.56(a) reads as rewritten:
"(a)	Fund Created. – There is established a Parks and Recreation Trust Fund in the State Treasurer's Office. The Trust Fund shall be a special revenue fund consisting of donations, gifts, grants, and devises to the Trust Fund and other monies appropriated to the Trust Fund by the General Assembly."

PARKS AND RECREATION TRUST FUND ELIGIBILITY
SECTION 16.3.  G.S. 143B‑135.56(b)(1) reads as rewritten:
"(1)	Sixty‑five percent (65%) for the State Parks System or DuPont State Recreational Forest for capital projects, repairs and renovations of park facilities, and land acquisition."

ESTABLISH STATE PARKS FUND AS A SPECIAL REVENUE FUND
SECTION 16.4.  Part 31 of Article 2 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑135.17.  The State Parks Fund.
(a)	Fund. – The State Parks Fund is created as a special revenue fund. The State Parks Fund shall be used for any of the following types of projects in the State Parks System:
(1)	Repair, renovation, maintenance, and educational exhibit construction. Funds used for repair, renovation, and expansion projects may be transferred to a capital projects fund to account for use of the funds for each project.
(2)	Preservation, development, and expansion of an individual park, State recreational area, State natural area, State lake, State river, or State trail.
(3)	The acquisition, maintenance, or replacement of vehicles and other transportation equipment as required to maintain adequate service to the public.
(4)	Matching of private funds that are raised for these purposes.
(b)	Disposition of Fees. – All receipts derived from the lease or rental of property or facilities, disposition of structures or products of the land, private donations, camping activities, and service fees collected shall be credited to the Division of Parks and Recreation's General Fund operating budget. At the end of each fiscal year, the Secretary may transfer from the Division of Parks and Recreation's General Fund operating budget to the State Parks Fund an amount not to exceed the sum of one million dollars five hundred thousand dollars ($1,500,000) and any donations, gifts, grants, and devises received by the Division of Parks and Recreation.
(c)	Approval. – The Secretary may approve the use of the State Parks Fund for repair and renovation projects at the Division of Parks and Recreation that comply with the following:
(1)	The total project cost is less than five hundred thousand dollars ($500,000).
(2)	The project meets the requirements of G.S. 143C‑4‑3(b).
(d)	Report. – The Department shall submit to the House and Senate appropriations committees with jurisdiction over natural and economic resources and the Fiscal Research Division by September 30 of each year a report on the State Parks Fund that shall include the source and amounts of all funds credited to the Fund and the purpose and amount of all expenditures from the Fund during the prior fiscal year."

CLARIFY VENDING FACILITIES EXEMPTION
SECTION 16.5.(a)  Article 3 of Chapter 111 of the General Statutes is amended by adding a new section to read:
"§ 111‑47.4.  Food service at North Carolina Zoological Park.
Notwithstanding any other provision of this Article, the North Carolina Zoological Park may operate or contract for the operation of food or vending services at the North Carolina Zoological Park. Notwithstanding G.S. 111‑43, the net proceeds of revenue generated by food and vending services operated by the North Carolina Zoological Park or a vendor with whom the North Carolina Zoological Park has contracted shall be credited to the North Carolina Zoo Fund."
SECTION 16.5.(b)  This section shall not apply to any existing contract for food or vending services at the North Carolina Zoological Park entered into prior to July 1, 2017.

PROMOTE ACCESS TO AND EXCHANGE OF LIBRARY MATERIALS
SECTION 16.6.  G.S. 125‑2(10) reads as rewritten:
"(10)	To plan and coordinate cooperative programs between the various types of libraries within the State of North Carolina, and to coordinate State development with regional and national cooperative library programs; to assist nonprofit corporations in organization and operation for the purposes of cooperative programs; and to enter into contracts and agreements for the purpose of coordinating programs, including, but not limited to, promoting the access and exchange of library materials under this subdivision."

CLARIFY AND EXTEND HISTORIC PRESERVATION TAX CREDIT
SECTION 16.7.(a)  G.S. 105‑129.106(b) reads as rewritten:
"(b)	Limitations. – The amount of credit allowed under this section with respect to rehabilitation expenses for a non‑income‑producing certified historic structure may not exceed twenty‑two thousand five hundred dollars ($22,500) per discrete property parcel. In the event that the taxpayer is the transferee of a State‑certified historic structure for which rehabilitation expenses were made, the taxpayer as transferee is allowed a credit under this section only if the transfer takes place before the structure is placed in service. In this event, no other taxpayer may claim such credit. A taxpayer may claim a credit per discrete property parcel under this section no more than once in any five‑year period, carryovers notwithstanding."
SECTION 16.7.(b)  G.S. 105‑129.110 reads as rewritten:
"§ 105‑129.110.  Sunset.
This Article expires for qualified rehabilitation expenditures and rehabilitation expenses incurred on or after January 1, 2030."

NATURAL HERITAGE PROGRAM ADMINISTRATION AND FUND CORRECTION
SECTION 16.8.(a)  Part 42 of Article 2 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B‑135.372.  Administration of the Conservation Tax Credit Program.
All authority, power, and responsibility related to Conservation Tax Credits, the Conservation Tax Credit Program, and properties for which tax credits were granted, for tax years beginning before January 1, 2014, previously given to the Department of Environmental Quality or its predecessors under G.S.§105‑130.34 and G.S. 105‑151.12, prior to the adoption of S.L. 2013‑316, and G.S. 113A‑231, prior to the adoption of S.L. 2014‑3, are given to the Department of Natural and Cultural Resources which may exercise the same through the Natural Heritage Program."
SECTION 16.8.(b)  G.S. 143B‑135.272(b) reads as rewritten:
"(b)	Fees collected under this section are receipts of the Department of Natural and Cultural Resources and shall be deposited in a special fund for the purpose of supporting the operations of the Natural Heritage Program."

NATURAL HERITAGE PROGRAM REDUCE OR WAIVE FEES FLEXIBILITY
SECTION 16.9.  G.S. 143B‑135.272 reads as rewritten:
"§ 143B‑135.272.  Access to information; fees.
(a)	The Secretary may establish fees to defray the costs associated with any of the following:
(1)	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.
…
…
(c)	The Secretary may reduce or waive fees established under this section if the Secretary determines that a reduction or waiver of the fees is in the public interest or serves the mission, policy, and purposes declared in the Nature Preserves Act, G.S. 143B‑135.252."

part xvii. department of public safety

GRANT REPORTING AND MATCHING FUNDS
SECTION 17.1.  Notwithstanding the provisions of G.S. 143C‑6‑9, the Department of Public Safety may use up to one million two hundred thousand dollars ($1,200,000) during the 2017‑2018 fiscal year and up to one million two hundred thousand dollars ($1,200,000) during the 2018‑2019 fiscal year from funds available to the Department to provide the State match needed in order to receive grant funds. Prior to using funds for this purpose, the Department shall report to the chairs of the House of Representatives and Senate Appropriations Committees on Justice and Public Safety on the grants to be matched using these funds.

USE OF SEIZED AND FORFEITED PROPERTY TRANSFERRED TO STATE LAW ENFORCEMENT AGENCIES BY THE FEDERAL GOVERNMENT
SECTION 17.2.(a)  Seized and forfeited assets transferred to the Department of Justice or to the Department of Public Safety during the 2017‑2019 fiscal biennium pursuant to applicable federal law shall be credited to the budget of the department and shall result in an increase of law enforcement resources for the department. The Department of Public Safety and the Department of Justice shall make the following reports to the chairs of the House of Representatives and Senate Appropriations Committees on Justice and Public Safety:
(1)	A report upon receipt of any assets.
(2)	A report that shall be made prior to use of the assets on their intended use and the departmental priorities on which the assets may be expended.
(3)	A report on receipts, expenditures, encumbrances, and availability of these assets for the previous fiscal year, which shall be made no later than September 1 of each year.
SECTION 17.2.(b)  The General Assembly finds that the use of seized and forfeited assets transferred pursuant to federal law for new personnel positions, new projects, acquisition of real property, repair of buildings where the repair includes structural change, and construction of, or additions to buildings, may result in additional expenses for the State in future fiscal periods. Therefore, the Department of Justice and Department of Public Safety are prohibited from using these assets for such purposes without the prior approval of the General Assembly.
SECTION 17.2.(c)  Nothing in this section prohibits North Carolina law enforcement agencies from receiving funds from the United States Department of Justice, the United States Department of the Treasury, and the United States Department of Health and Human Services.

REIMBURSE COUNTIES FOR HOUSING AND EXTRAORDINARY MEDICAL COSTS FOR INMATES, PAROLEES, AND POST‑RELEASE SUPERVISEES AWAITING TRANSFER TO STATE PRISON SYSTEM
SECTION 17.3.  Notwithstanding G.S. 143C‑6‑9, the Department of Public Safety may use funds available to the Department for the 2017‑2019 fiscal biennium to pay the sum of forty dollars ($40.00) per day as reimbursement to counties for the cost of housing convicted inmates, parolees, and post‑release supervisees awaiting transfer to the State prison system, as provided in G.S. 148‑29. The Department shall report annually by February 1 of each year to the chairs of the Joint Legislative Oversight Committee on Justice and Public Safety and the chairs of the House of Representatives and Senate Appropriations Committees on Justice and Public Safety on the expenditure of funds to reimburse counties for prisoners awaiting transfer.

CENTER FOR COMMUNITY TRANSITIONS/CONTRACT AND REPORT 
SECTION 17.4.  The Department of Public Safety may continue to contract with The Center for Community Transitions, Inc., a nonprofit corporation, for the purchase of prison beds for minimum security female inmates during the 2017‑2019 fiscal biennium. The Center for Community Transitions, Inc., shall report by February 1 of each year to the chairs of the House of Representatives and Senate Appropriations Committees on Justice and Public Safety on the annual cost per inmate and the average daily inmate population compared to bed capacity using the same methodology as that used by the Department of Public Safety.

USE OF CLOSED FACILITIES
SECTION 17.5.(a)  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 is authorized to 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, nonprofit organizations, or private firms wishing to convert them to other use. G.S. 146‑29.1(f) through (g) shall not apply to a transfer made pursuant to this section. 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.
SECTION 17.5.(b)  In addition to the provisions of subsection (a) of this section, the Department of Public Safety may 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 (CRV) pursuant to G.S. 15A‑1344(d2). Prior to opening a new CRV facility pursuant to this subsection, the Department of Public Safety shall consult with the Joint Legislative Oversight Committee on Justice and Public Safety on the location of the facility, the proposed staffing, estimated operational costs, opening dates, and estimated number of offenders to be served.

INMATE CONSTRUCTION PROGRAM 
SECTION 17.6.  Notwithstanding G.S. 66‑58 or any other provision of law, during the 2017‑2019 fiscal biennium, the State Construction Office may, wherever feasible, utilize inmates in the custody of the Division of Adult Correction of the Department of Public Safety through the Inmate Construction Program for repair and renovation projects on State‑owned facilities, with priority given to Department of Public Safety construction projects.

PRISON BEHAVIORAL HEALTH POSITIONS 
SECTION 17.7.  Notwithstanding any other provision of law, the Section of Prisons of the Division of Adult Correction may post, advertise, accept applications for, and interview for positions established or authorized by this act related to behavioral health treatment prior to the effective date of the establishment of those positions.

STATE FUNDS MAY BE USED AS FEDERAL MATCHING FUNDS 
SECTION 17.8.  Funds appropriated in this act to the Department of Public Safety for each fiscal year of the 2017‑2019 fiscal biennium may be used as matching funds for the Juvenile Accountability Incentive Block Grants. If North Carolina receives Juvenile Accountability Incentive Block Grants or a notice of funds to be awarded, the Office of State Budget and Management and the Governor's Crime Commission shall consult with the Department of Public Safety regarding the criteria for awarding federal funds. The Office of State Budget and Management, the Governor's Crime Commission, and the Department of Public Safety shall report to the chairs of the House of Representatives and Senate Appropriations Committees on Justice and Public Safety and the Joint Legislative Oversight Committee on Justice and Public Safety prior to allocation of the federal funds. The report shall identify the amount of funds to be received for the 2017‑2018 fiscal year, the amount of funds anticipated for the 2018‑2019 fiscal year, and the allocation of funds by program and purpose.

GRANTS FOR LAW ENFORCEMENT AGENCIES TO COMBAT OPIOID ABUSE
SECTION 17.9.  The sum of two million dollars ($2,000,000) in nonrecurring funds for the 2017‑2018 fiscal year and the sum of two million dollars ($2,000,000) in nonrecurring funds for the 2018‑2019 fiscal year appropriated in this act to the Department of Public Safety shall be used to provide grants to local law enforcement agencies to combat opioid abuse. These grant funds shall be administered by the Governor's Crime Commission, which shall develop guidelines and procedures for the administration and distribution of grants to those agencies. These funds shall not revert and remain available for this purpose until expended. The Governor's Crime Commission may retain up to five percent (5%) of the appropriations to cover the costs of administering the program.

CLARIFY SCOPE OF SEARCH AND RESCUE TEAMS
SECTION 17.10.  Article 6 of Chapter 166A of the General Statutes reads as rewritten:
"Article 6.
"North Carolina Search and Rescue.
"§ 166A‑65.  Definitions.
The following definitions apply in this Article:
(1)	Contract response team. – A search and rescue team, specialty rescue team, or incident support team.
(2)	Incident support team. – A team of trained emergency response personnel, organized to provide coordination between governmental agencies and nongovernmental organizations as well as technical and logistical support to search and rescue teams and specialty rescue teams.
…
(5)	Search and rescue team. – A specialized team or group of teams, organized with capabilities equivalent to search and rescue teams established under the Federal Emergency Management Agency in order to assist in the removal of trapped victims during emergencies, including, but not limited to, collapsed structures, trench excavations, elevated locations, and in other technical rescue situations.
"§ 166A‑66.  North Carolina Search and Rescue Program.
(a)	The Secretary shall adopt rules establishing a program for search and rescue that relies on contracts with contract response teams. The program shall be administered by the Division of Emergency Management. To the extent possible, the program shall be coordinated with other emergency planning activities of the State. The program shall include contract response teams located strategically across the State that are available to provide 24‑hour dispatch from the Division of Emergency Management Operations Center. The rules for the program shall include:
(1)	Standards, including training, equipment, and personnel standards required to operate a contract response team.
(2)	Guidelines for the dispatch of a contract response team to a search and rescue team or specialty rescue team mission.
(3)	Guidelines for the on‑site operations of a contract response team.
(4)	Standards for administration of a contract response team, including procedures for reimbursement of response costs.
(5)	Refresher and specialist training for members of contract response teams.
(6)	Procedures for recovering the costs of a search and rescue team or specialty rescue team mission.
(7)	Procedures for bidding and contracting for a search and rescue team and specialty rescue team missions.
(8)	Criteria for evaluating bids for a search and rescue team and specialty rescue team missions.
(9)	Delineation of the roles of the contract response team, local public safety personnel, the Division of Emergency Management's area coordinator, and other State agency personnel participating in a search and rescue team or specialty rescue team mission.
(10)	Procedures for the Division of Emergency Management to audit the contract response teams to ensure compliance with State and federal guidelines.
…
(c)	In developing the North Carolina Search and Rescue Program and adopting the rules required by this section, the Secretary shall consult with the North Carolina Search and Rescue Team Advisory Committee established pursuant to G.S. 166A‑69.
"§ 166A‑67.  Contracts; equipment loans.
(a)	The Secretary may contract with any unit or units of local government for the provision of a contract response team to implement the North Carolina Search and Rescue Program. Contracts are to be let consistent with the bidding and contract standards and procedures adopted pursuant to G.S. 166A‑66(a)(7) and G.S. 166A‑66(a)(8). In entering into contracts with units of local government, the Secretary may agree to provide any of the following:
(1)	A loan of equipment.
(2)	Reimbursement of personnel costs, including the cost of callback personnel, when a contract response team is authorized by the Department to respond to search and rescue team and specialty rescue team missions.
…
…
(d)	Contract response teams that have the use of a State vehicle may use the vehicle for local purposes. Where a State vehicle is used for purposes other than authorized contract response to a search and rescue team and specialty rescue team mission, the contract response team shall be liable for repairs or replacements directly attributable to that use.
"§ 166A‑68.  Immunity of contract response team personnel.
Members of a contract response team shall be protected from liability under the provisions of G.S. 166A‑19.60(a) while on a search and rescue team or specialty rescue team mission pursuant to authorization from the Division of Emergency Management.
"§ 166A‑69.  North Carolina Search and Rescue Team Advisory Committee.
(a)	The North Carolina Search and Rescue Team Advisory Committee is created. The Secretary shall appoint the members of the Committee and shall designate the Director or Deputy Director of the North Carolina Division of Emergency Management as the chair. In making appointments, the Secretary shall take into consideration the expertise of the appointees in the management of search and rescue or specialty response team missions. The Secretary shall appoint one representative from each of the following:
(1)	The Division of North Carolina Emergency Management, who shall be the Director or Deputy Director of the North Carolina Division of Emergency Management and who shall serve as the chair.
(2)	Each state regional contract response team's Chief or Deputy Chief.
…
(d)	The Contract Response Team Advisory Committee shall advise the Secretary on the establishment of the North Carolina Search and Rescue Program. The Committee shall also evaluate and advise the Secretary of the need for additional contract response teams to serve the State."

RECOVERY COSTS OF HAZARDOUS MATERIALS EMERGENCY RESPONSE
SECTION 17.11.  G.S. 166A‑27(a) reads as rewritten:
"(a)	A person who causes the release of a hazardous material requiring the activation of a regional response team shall be liable for all reasonable costs incurred by the regional response team in responding to and mitigating the incident, including, but not limited to, twenty‑five percent (25%) of the cost of personnel, equipment, and supplies utilized in response to the incident. The Secretary shall invoice the person liable for the hazardous materials release, and, in the event of nonpayment, may institute an action to recover those costs in the superior court of the county in which the release occurred."

REDIRECT VIPER TOWER CONSTRUCTION APPROPRIATIONS
SECTION 17.12.  The seven million dollars ($7,000,000) appropriated to the Department of Public Safety/State Highway Patrol for Voice Interoperability Plan for Emergency Responders (VIPER) tower construction shall not be used for that purpose in fiscal year 2017‑2018 to allow time for completion of a study of long‑term sustainability options. The study shall be managed by the Office of State Budget and Management. The Department of Public Safety may realign funds appropriated for VIPER tower construction for system maintenance and operations.

CREATE HAZARDOUS MATERIALS FACILITY FUND
SECTION 17.13.  G.S.166A‑29.1 reads as rewritten:
"§ 166A‑29.1.  Hazardous materials facility fee.
…
(b1)	The Hazardous Materials Facility Fund is established as a special fund within the Department. All fees collected under this section shall be credited to the fund and shall be used to support the hazardous materials response programs established pursuant to subsection (f) of this section.
…
(f)	Use of Fee Proceeds. – The proceeds of fees assessed pursuant to this section shall be used for the following:
…
(3)	To provide grants to counties for hazardous materials emergency response planning, training, equipment, and related exercises.
…."
Expand Crime Victims Services
SECTION 17.14.  G.S. 15B‑2 reads as rewritten:
"§ 15B‑2.  Definitions 
As used in this Article, the following definitions apply, unless the context requires otherwise:
(1)	Allowable expense. – Reasonable charges incurred for reasonably needed products, services, and accommodations, including those for medical care, rehabilitation, medically‑related property, and other remedial treatment and care.
Allowable expense includes a total charge not in excess of five thousand dollars ($ 5,000) for expenses related to funeral, cremation, and burial, including transportation of a body, but excluding expenses for flowers, gravestone, and other items not directly related to the funeral service.
Allowable expense for medical care, counseling, rehabilitation, medically‑related property, and other remedial treatment and care of a victim shall be limited to sixty‑six and two‑thirds percent (66 2/3%) of the amount usually charged by the provider for the treatment or care. By accepting the compensation paid as allowable expense pursuant to this subdivision, the provider agrees that the compensation is payment in full for the treatment or care and shall not charge or otherwise hold a claimant financially responsible for the cost of services in addition to the amount of allowable expense.
Allowable expense also includes:
a.	A charge not in excess of three thousand dollars ($3,000) for counseling for immediate family members of children under the age of 18 who are victims of rape, sexual assault, or domestic violence.
b.	A charge not in excess of three thousand dollars ($3,000) for family and/or grief counseling for immediate family members of homicide victims.
(2)	Claimant. – Any of the following persons who claims an award of compensation under this Article:
…
f.	An immediate family member applying for benefits for the purpose of obtaining family or grief counseling.
g.	An immediate family member of an adolescent rape, sexual assault, or domestic violence victim for the purpose of obtaining counseling. The claimant however, may not be the offender or an accomplice of the offender who committed the criminally injurious conduct, except as provided in sub‑subdivision e. of this subdivision.
The claimant, however, may not be the offender or an accomplice of the offender who committed the criminally injurious conduct, except as provided in sub‑subdivision e. of this subdivision.
…."

NCEM Clarifying Ridge Line Maps
SECTION 17.15.  G.S. 113A‑212(b) reads as rewritten:
"(b)	The Secretary of Environmental Quality shall identify the protected mountain ridge crests in each county by showing them on a map or drawing, describing them in a document, or any combination thereof. Such maps, drawings, or documents shall identify the protected mountain ridges as defined in G.S. 113A‑206 and such other mountain ridges as any county may request, and shall specify those protected mountain ridges that serve as all or part of the boundary line between two counties. By November 1, 1983, the map, drawing, or document tentatively identifying the protected mountain ridge crests of each county shall be filed with the board of county commissioners and with the city governing body of each city that requests it. By January 1, 1984, the map, drawing, or document identifying the protected mountain ridge crests shall be permanently filed by the Secretary with the register of deeds in the county where the land lies, and made available for inspection at the North Carolina Geodetic Survey's (NC Emergency Management/Risk Management) office in Raleigh. Copies of the maps, drawings, or documents certified by the register of deeds, shall be admitted in evidence in all courts and shall have the same force and effect as would the original."

clarify national guard tuition assistance funds
SECTION 17.16.  Notwithstanding any other provision of law, the sum of five hundred thousand dollars ($500,000) in recurring funds for National Guard tuition assistance shall be allocated to UNC System Budget Code 16012 rather than Budget Code 14550.

part xviii. department of justice [reserved]

part xix. judicial department

OFFICE OF INDIGENT DEFENSE SERVICES POSITIONS
SECTION 19.1.  The Judicial Department, Office of Indigent Defense Services, may use appropriated funds during the 2017‑2018 fiscal year for the expansion of existing offices currently providing legal services to the indigent population under the oversight of the Office of Indigent Defense Services, considering changing caseloads, cost‑effectiveness, implementation of new initiatives, response to statutory changes, and other needs. Funds may be used for the creation of new positions or offices within existing public defender programs, including satellite offices of the Office of Capital Defender, for the establishment of regional public defender programs, or for positions providing support to private assigned counsel. Notwithstanding the defender districts established by G.S. 7A‑498.7, the Office of Indigent Defense Services may use a portion of these funds to create positions within existing public defender programs to handle cases in adjacent counties or districts. These funds may be used for the salaries, benefits, equipment, and related expenses for up to 10 attorney positions and six nonattorney positions during the fiscal year with the total annualized cost of these positions no more than one million seven hundred thousand dollars ($1,700,000). Prior to using funds for this purpose, the Office of Indigent Defense Services shall report to the chairs of the House of Representatives and the Senate Appropriations Subcommittees on Justice and Public Safety on the proposed expansion.

OFFICE OF INDIGENT DEFENSE SERVICES/STATE MATCH FOR GRANTS 
SECTION 19.2.  Notwithstanding G.S. 143C‑6‑9, during the 2017‑2019 fiscal biennium, the Judicial Department, Office of Indigent Defense Services, may use the sum of up to fifty thousand dollars ($50,000) from funds available to provide the State matching funds needed to receive grant funds. Prior to using funds for this purpose, the Office shall report to the chairs of the House of Representatives and Senate Appropriations Committees on Justice and Public Safety on the grants to be matched using these funds.

part xx. department of military and veterans affairs [reserved]

part xxi. office of administrative hearings [reserved]

part xxii. treasurer

NORTH CAROLINA ACHIEVING A BETTER LIFE EXPERIENCE (ABLE) PROGRAM
SECTION 22.1.  Notwithstanding any other provision of law, all funds appropriated to the Achieving a Better Life Experience Program Trust established under Article 6F of Chapter 147 of the General Statutes during the 2015‑2019 fiscal biennia shall not revert at the end of the fiscal year.

part XXiii. department of insurance [reserved]

part xxiv. state board of elections [reserved]

part xxv. general assembly [reserved]

part xxvi. office of the governor [reserved]

part xxvii. office of state budget and management

MUSEUM OF NATURAL SCIENCES MATCH FUNDS – OSBM SPECIAL APPROPRIATIONS
SECTION 27.1.(a)  Of the funds appropriated in this act to the Office of State Budget and Management, Special Appropriations, the sum of two million dollars ($2,000,000) in nonrecurring funds for the 2017‑2018 fiscal year shall be allocated to the North Carolina Museum of Natural Sciences in accordance with this section. It is the intent of the General Assembly that the North Carolina Museum of Natural Sciences will raise at least six million dollars ($6,000,000) in non‑State funds for the 2017‑2018 fiscal year. The Museum of Natural Sciences shall use the funds to develop a new, innovative education and visitor experience.
SECTION 27.1.(b)  For the 2017‑2018 fiscal year, the Museum of Natural Sciences shall receive allocations from the Office of State Budget and Management as follows:
(1)	Upon raising the initial sum of one million five hundred thousand dollars ($1,500,000) in non‑State funding, the Museum of Natural Sciences shall receive the sum of five hundred thousand dollars ($500,000).
(2)	Upon raising an additional sum of one million five hundred thousand dollars ($1,500,000) in non‑State funding for a total amount of three million dollars ($3,000,000) in non‑State funds, the Museum of Natural Sciences shall receive the sum of five hundred thousand dollars ($500,000).
(3)	Upon raising an additional sum of one million five hundred thousand dollars ($1,500,000) in non‑State funding for a total sum of four million five hundred thousand dollars ($4,500,000) in non‑State funds, the Museum of Natural Sciences shall receive the sum of five hundred thousand dollars ($500,000).
(4)	Upon raising an additional sum of one million five hundred thousand dollars ($1,500,000) in non‑State funding for a total sum of six million dollars ($6,000,000) in non‑State funds, the Museum of Natural Sciences shall receive the final sum of five hundred thousand dollars ($500,000.

SYMPHONY CHALLENGE GRANT
SECTION 27.2.(a)  Of the funds appropriated in this act to the Office of State Budget and Management, Special Appropriations, the sum of two million dollars ($2,000,000) in recurring funds is allocated to the North Carolina Symphony. It is the intent of the General Assembly that the North Carolina Symphony raise at least nine million dollars ($9,000,000) in non‑State funds each fiscal year of the 2017‑2019 fiscal biennium. The North Carolina Symphony cannot use funds transferred from the organization's endowment to its operating budget to achieve the fund‑raising targets set out in subsections (b) and (c) of this section.
SECTION 27.2.(b)  For the 2017‑2018 fiscal year, the North Carolina Symphony shall receive allocations from the Office of State Budget and Management as follows: 
(1)	Upon raising the initial sum of four million dollars ($4,000,000) in non‑State funding, the North Carolina Symphony shall receive the sum of six hundred thousand dollars ($600,000).
(2)	Upon raising an additional sum of two million dollars ($2,000,000) in non‑State funding for a total amount of six million dollars ($6,000,000) in non‑State funds, the North Carolina Symphony shall receive the sum of seven hundred thousand dollars ($700,000).
(3)	Upon raising an additional sum of three million dollars ($3,000,000) in non‑State funding for a total amount of nine million dollars ($9,000,000) in non‑State funds, the North Carolina Symphony shall receive the final sum of seven hundred thousand dollars ($700,000).
SECTION 27.2.(c)  For the 2018‑2019 fiscal year, the North Carolina Symphony shall receive allocations from the Office of State Budget and Management as follows:
(1)	Upon raising the initial sum of four million dollars ($4,000,000) in non‑State funding, the North Carolina Symphony shall receive the sum of six hundred thousand dollars ($600,000).
(2) 	Upon raising an additional sum of two million dollars ($2,000,000) in non‑State funding for a total amount of six million dollars ($6,000,000) in non‑State funds, the North Carolina Symphony shall receive the sum of seven hundred thousand dollars ($700,000).
(3) 	Upon raising an additional sum of three million dollars ($3,000,000) in non‑State funding for a total amount of nine million dollars ($9,000,000) in non‑State funds, the North Carolina Symphony shall receive the final sum of seven hundred thousand dollars ($700,000).

Studies to enhance public safety
SECTION 27.3.(a)  Of the funds appropriated in this act to the Office of State Budget and Management, the sum of five hundred thousand dollars ($500,000) for the 2017‑2018 fiscal year shall be used to study sustainability options for the Voice Interoperability Plan for Emergency Responders (VIPER) and the security of the downtown Raleigh State Government complex. 
SECTION 27.3.(b)  The Office of State Budget and Management shall contract with an outside entity to perform an independent assessment of VIPER and FirstNet wireless data network. The assessment shall (i) examine the current state of VIPER and FirstNet technology and develop a long‑term plan for future equipment needs and upgrades, (ii) research efficiencies and cost‑sharing methods for ensuring sustainability of system operations and maintenance, (iii) ensuring system functions are not duplicated, and (iv) determine the most effective governance and operational financing structure to ensure equitable and reasonable cost‑sharing and optimal system adoption by public safety agency stakeholders.
SECTION 27.3.(c)  The Office of State Budget and Management shall contract with an outside entity to perform an independent assessment of current security measures for the downtown Raleigh State Government complex and develop a comprehensive security plan to ensure efficient use of State resources.
SECTION 27.3.(d)  These studies shall be completed no later than March 1, 2018. To facilitate timely completion of this study, the contract entered into pursuant to this section is exempt from Articles 3 and 3C of Chapter 143 of the General Statutes.

part xxviii. state auditor [reserved]

part xxix. housing finance agency [reserved]

part xxx. department of the secretary of state [reserved]

part xxxi. office of lt. governor [reserved]

part xxxii. deparment of administration [reserved]

part xxxiii. department of revenue

CRIMINAL RECORDS CHECK FOR DEPARTMENT OF REVENUE EMPLOYEES
SECTION 33.1.  Subpart D of Part 4 of Article 13 of Chapter 143B of the General Statues is amended by adding a new section to read:
"§ 143B‑967.  Criminal history record checks of current and prospective employees and contractors of the North Carolina Department of Revenue.
The Department of Public Safety shall provide to the North Carolina Department of Revenue a criminal history record from the State and National Repositories of Criminal Histories for current or prospective employees, temporaries, contractors, and contractor employees or agents with the North Carolina Department of Revenue, or for any other individual otherwise engaged by the Department of Revenue, who will have access to federal tax information. Along with a request for criminal history records, the Department of Revenue shall provide to the Department of Public Safety the fingerprints of the individual whose record is being sought, a form signed by the individual consenting to the criminal history record check and to use of the fingerprints and other identifying information required by the Repositories, and any additional information required by the Department of Revenue. The fingerprints shall be forwarded to the State Bureau of Investigation for a search of the State's criminal history record file, and the State Bureau of Investigation shall forward a set of fingerprints to the Federal Bureau of Investigation for a national criminal history record check. The Department of Revenue shall keep all information obtained pursuant to this section confidential. The Department of Public Safety may charge a fee to offset the cost incurred by the Department of Public Safety to conduct a criminal history record check under this section, but the fee shall not exceed the actual cost of locating, editing, researching, and retrieving the information."

DEPARTMENT OF REVENUE E‑SERVICES
SECTION 33.2.  The State Chief Information Officer (CIO) shall monitor the progress of the project management and procurement process for the E‑Services project with the Department of Revenue and shall ensure the project is completed on or before June 1, 2018.

FUEL TRACKING SYSTEM UPGRADE
SECTION 33.3.  The Department of Revenue is authorized to upgrade the Fuel Tracking System (System). The System is utilized by taxpayers to file motor fuel tax returns or claims for refund electronically. These taxpayers are able to file their returns and pay any monies due at the time of filing. The Department of Transportation will reimburse the Department of Revenue monthly for expenditures incurred for the upgrade of the System. The total amount to be reimbursed by the Department of Transportation shall not exceed two million two hundred fifty thousand dollars ($2,250,000). The State Chief Information Officer shall monitor the progress of the project management and procurement process for this project with the Department of Revenue and shall ensure the project is completed on or before December 31, 2018.

part xxxiv. office of state controller

CORE FINANCIAL SYSTEM
SECTION 34.  The Office of the State Controller (OSC), in coordination with the Department of Information Technology (DIT) and the Office of State Budget Management (OSBM), will initiate the design and implementation of the core financial components of a statewide Enterprise Resource Planning (ERP) system. For the 2017‑2018 fiscal year, up to nine hundred fifty thousand dollars ($950,000) can be used for up to eight staff members and other related administrative purposes for planning, designing, and developing the replacement of the State's financial system. For the 2018‑2019 fiscal year, up to four million four hundred thousand dollars ($4,400,000) can be used for hiring up to 36 staff members and other related administrative purposes for the ERP system.

part xxxv. department of transportation

CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATION
SECTION 35.1.(a)  The General Assembly authorizes and certifies anticipated revenues for the Highway Fund as follows:
For Fiscal Year 2019‑2020	$2,210 million
For Fiscal Year 2020‑2021	$2,307 million
For Fiscal Year 2021‑2022	$2,338 million
For Fiscal Year 2022‑2023	$2,371 million
SECTION 35.1.(b)  The General Assembly authorizes and certifies anticipated revenues for the Highway Trust Fund as follows:
For Fiscal Year 2019‑2020	$1,569 million
For Fiscal Year 2020‑2021	$1,602 million
For Fiscal Year 2021‑2022	$1,625 million
For Fiscal Year 2023‑2023	$1,655 million
SMALL CONSTRUCTION AND CONTINGENCY FUNDS FOR LIMITED RAILroad PURPOSES
SECTION 35.2.(a)  Section 34.4(a) of S.L. 2013‑360 reads as rewritten:
"SECTION 34.4.(a)  Of the funds appropriated in this act to the Department of Transportation:
…
(2)	Twelve million dollars ($12,000,000) shall be allocated statewide in each fiscal year for rural or small urban highway improvements and related transportation enhancements to public roads and public facilities, industrial access roads, railroad infrastructure, and spot safety projects, including pedestrian walkways that enhance highway safety. Projects funded pursuant to this subdivision shall be approved by the Secretary of Transportation.
None of these funds used for secondary road improvements during the 2013‑2014 fiscal year are subject to the county allocation formulas in G.S. 136‑44.5(b)."
SECTION 35.2.(b)  This section is effective when this act becomes law.

SALE OF THE PROPERTY BY THE NORTH CAROLINA DEPARTMENT OF TRANSPORTATION AND PLAN FOR USE OF FUNDS
SECTION 35.3.  The Reserve from Proceeds of Sale of the Raney Building and DMV New Bern Avenue Property is established within the Highway Fund as a non‑reverting reserve. Notwithstanding G.S. 146‑30, the net proceeds from the sale of the Raney Building and the DMV New Bern Avenue Property shall be deposited in the Highway Fund to be used to offset future cost of the Department of Motor Vehicles headquarters.

DISPOSITION OF FUNDS RECEIVED BY THE STATE OR A STATE AGENCY FROM A SETTLEMENT OR OTHER FINAL ORDER OR JUDGMENT OF THE COURT
SECTION 35.4.  G.S. 114‑2.4A(c) is amended by adding a new subdivision to read:
"(3)	Funds received by the Department of Transportation to the extent those funds represent the recovery of previously expended funds."

DMV HEARING FEE
SECTION 35.5.(a)  Section 34.9(c) of S.L. 2014‑100, as amended by Section 29.30A of S.L. 2015‑241, reads as rewritten:
"SECTION 34.9.(c)  From funds appropriated to the Department of Transportation, Information Technology Section for the 2014‑2015 fiscal year, the Department shall implement modifications to supporting information technology systems necessary to timely implement the hearing fee schedule required by subsection (a) of this section. The Department shall implement the hearing fee schedule required by subsection (a) of this section by no later than July 1, 2017."
SECTION 35.5.(b)  The Division shall assess a fee for administrative hearings in accordance with the schedule of fees required by law. No hearing fee shall be assessed to indigent persons, provided each hearing request by an indigent is accompanied with an affidavit of indigency that complies with all statutory and administrative requirements applicable to the filing of civil actions by indigents in the Superior Court Division of the General Court of Justice.

INMATE ROAD SQUADS AND LITTER CREWS
SECTION 35.6.  Of the funds appropriated in this act to the Department of Transportation maintenance budget, the sum of nine million forty thousand dollars ($9,040,000) per fiscal year shall be transferred by the Department of Transportation to the Department of Correction for the cost of operating medium custody inmate road squads, as authorized by G.S. 148‑26.5, and minimum custody inmate litter crews. The Department of Public Safety shall invoice the Department of Transportation for reimbursement of actual costs associated with the road squads and litter crews. The Department of Transportation may use funds appropriated in this act to pay an additional amount exceeding the nine million forty thousand dollars ($9,040,000), but those payments shall be subject to negotiations between the Department of Transportation and the Department of Public Safety.

FEES FOR SPECIAL REGISTRATION PLATES AND DISTRIBUTION OF THE FEES
SECTION 35.7.  G.S. 20‑79.7(a) is amended by adding two new subdivisions to read:
"(6)	Air Medal Recipient to a recipient of the Air Medal.
(7)	Distinguished Flying Cross to a recipient of the Distinguished Flying Cross."

part xxxvi. salaries and benefits

Governor and COuncil of state
SECTION 36.1.(a)  The salary of the Governor as provided by G.S. 147‑11(a) shall remain unchanged for the 2017‑2019 fiscal biennium.
SECTION 36.1.(b)  Effective July 1, 2017, the annual salaries for members of the Council of State, payable monthly, are increased by two percent (2%), for the 2017‑2019 fiscal biennium, as follows:
Council of State	Annual Salary
Lieutenant Governor	$130,112
Attorney General	130,112
Secretary of State	130,112
State Treasurer	130,112
State Auditor	130,112
Superintendent of Public Instruction	130,112
Agriculture Commissioner	130,112
Insurance Commissioner	130,112
Labor Commissioner	130,112

Certain Executive Branch Officials
SECTION 36.2.  The annual salaries, payable monthly, for the following executive branch officials for the 2017‑2019 fiscal biennium are increased by two percent (2%), as follows:
Executive Branch Officials	Annual Salary
Chairman, Alcoholic Beverage Control Commission	$115,817
State Controller	161,671
Commissioner of Banks	130,112
Chair, Board of Review, Division of Employment Security	127,606
Members, Board of Review, Division of Employment Security	126,034
Chairman, Parole Commission	127,606
Members of the Parole Commission	117,907
Chairman, Utilities Commission	144,786
Members of the Utilities Commission	130,112
Executive Director, North Carolina
Agricultural Finance Authority	112,760

judicial branch salaries
SECTION 36.3.(a)  Effective July 1, 2017, the annual salaries, payable monthly, for specified judicial branch officials for the 2017‑2019 fiscal biennium are increased by two percent (2%), as follows:
Judicial Branch Officials	Annual Salary
Chief Justice, Supreme Court	$153,088
Associate Justice, Supreme Court	149,115
Chief Judge, Court of Appeals	146,756
Judge, Court of Appeals	142,947
Judge, Senior Regular Resident Superior Court	139,091
Judge, Superior Court	135,236
Chief Judge, District Court	122,900
Judge, District Court	119,044
District Attorney	129,759
Assistant Administrative Officer of the Courts	125,938
Public Defender	129,759
Director of Indigent Defense Services	133,768
SECTION 36.3.(b)  For the 2017‑2019 fiscal biennium, the annual salaries of permanent full‑time employees of the Judicial Department whose salaries are not itemized in this act are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater.
SECTION 36.3.(c)  The district attorney or public defender of a judicial district, with the approval of the Administrative Officer of the Courts or the Commission on Indigent Defense Services, respectively, shall set the salaries of assistant district attorneys or assistant public defenders, respectively, in that district such that the average salaries of assistant district attorneys or assistant public defenders in that district do not exceed seventy‑seven thousand five hundred ninety‑four dollars ($77,594) annually and the minimum salary of any assistant district attorney or assistant public defender is at least forty‑one thousand one hundred seventy‑three dollars ($41,173) annually, effective July 1, 2017.

CLERK OF SUPERIOR COURT
SECTION 36.4.  Effective July 1, 2017, G.S. 7A‑101(a) reads as rewritten:
"§ 7A‑101.  Compensation.
(a)	The clerk of superior court is a full‑time employee of the State and shall receive an annual salary, payable in equal monthly installments, based on the population of the county as determined in subsection (a1) of this section, according to the following schedule:
Population	Annual Salary
Less than 100,000	$89,952
100,000 to 149,999	100,811
150,000 to 249,999	111,670
250,000 and above	122,534
When a county changes from one population group to another, the salary of the clerk shall be changed, on July 1 of the fiscal year for which the change is reported, to the salary appropriate for the new population group, except that the salary of an incumbent clerk shall not be decreased by any change in population group during his continuance in office."

ASSISTANT AND DEPUTY CLERKS OF COURT
SECTION 36.5.(a)  Effective July 1, 2017, 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	$33,898
Maximum	60,142
Deputy Clerks	Annual Salary
Minimum	29,446
Maximum	47,014."
SECTION 36.5.(b)  For the 2017‑2019 fiscal biennium, the annual salaries of step‑eligible employees are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater, in addition to the step change. The annual salaries of employees not eligible for a step increase are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater.

MAGISTRATES
SECTION 36.6.(a)  Effective July 1, 2017, G.S. 7A‑171.1 reads as rewritten:
"§ 7A‑171.1.  Duty hours, salary, and travel expenses within county.
(a)	The Administrative Officer of the Courts, after consultation with the chief district judge and pursuant to the following provisions, shall set an annual salary for each magistrate.
(1)	A full‑time magistrate shall be paid the annual salary indicated in the table set out in this subdivision. A full‑time magistrate is a magistrate who is assigned to work an average of not less than 40 hours a week during the term of office. The Administrative Officer of the Courts shall designate whether a magistrate is full‑time. Initial appointment shall be at the entry rate. A magistrate's salary shall increase to the next step every two years on the anniversary of the date the magistrate was originally appointed for increases to Steps 1 through 3, and every four years on the anniversary of the date the magistrate was originally appointed for increases to Steps 4 through 6.
	Table of Salaries of Full‑Time Magistrates
Step Level	Annual Salary
	Minimum	Maximum
Entry Rate	$37,662
Step 1	39,319	40,458
Step 2	42,277	43,526
Step 3	45,439	46,782
Step 4	49,228	50,684
Step 5	53,794	55,384
Step 6	58,909	60,650.
…
(a1)	Notwithstanding subsection (a) of this section, the following salary provisions apply to individuals who were serving as magistrates on June 30, 1994:
(1)	The minimum and maximum salaries of magistrates who, on June 30, 1994, were paid at a salary level of less than five years of service under the table in effect that date shall be as follows:
Minimum	Maximum
Less than 1 year of service	29,899
1 or more but less than 3 years of service	30,088	–	31,133
3 or more but less than 5 years of service	32,573	–	33,618
Upon completion of five years of service, those magistrates shall receive the salary set as the Entry Rate in the table in subsection (a).
…."
SECTION 36.6.(b)  Employees paid under this section, when first moving onto a step sytem, shall be paid at the minimum rate.

Legislative Branch Salaries
SECTION 36.7.(a)  For the 2017‑2019 fiscal biennium, the salaries of members and officers of the General Assembly shall remain unchanged at the amounts set under G.S. 120‑3, as provided in 1994 by the 1993 General Assembly.
SECTION 36.7.(b)  The annual salaries of the Legislative Services Officer and of nonelected employees of the General Assembly in effect on June 30, 2017, are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater, effective July 1, 2017, for the 2017‑2019 fiscal biennium.
SECTION 36.7.(c)  Legislative employees paid pursuant to subsection (b) of this section shall receive the compensation bonus awarded by this act.

GENERAL ASSEMBLY PRINCIPAL CLERKS
SECTION 36.8.  Effective July 1, 2017, G.S. 120‑37(c) reads as rewritten:
"(c)	The principal clerks shall be full‑time officers. Each principal clerk shall be entitled to other benefits available to permanent legislative employees and shall be paid an annual salary of one hundred ten thousand eighty‑seven dollars ($110,087), payable monthly. Each principal clerk shall also receive such additional compensation as approved by the Speaker of the House of Representatives or the President Pro Tempore of the Senate, respectively, for additional employment duties beyond those provided by the rules of their House. The Legislative Services Commission shall review the salary of the principal clerks prior to submission of the proposed operating budget of the General Assembly to the Governor and shall make appropriate recommendations for changes in those salaries. Any changes enacted by the General Assembly shall be by amendment to this paragraph."

SERGEANT‑AT‑ARMS AND READING CLERKS
SECTION 36.9.  Effective July 1, 2017, G.S. 120‑37(b) reads as rewritten:
"(b)	The sergeant‑at‑arms and the reading clerk in each house shall be paid a salary of four hundred twenty‑six dollars ($426.00) per week plus subsistence at the same daily rate provided for members of the General Assembly, plus mileage at the rate provided for members of the General Assembly for one round trip only from their homes to Raleigh and return. The sergeants‑at‑arms shall serve during sessions of the General Assembly and at such time prior to the convening of, and subsequent to adjournment or recess of, sessions as may be authorized by the Legislative Services Commission. The reading clerks shall serve during sessions only."

COMMUNITY COLLEGES PERSONNEL
SECTION 36.10.(a)  The minimum salaries for nine‑month, full‑time curriculum community college faculty for the 2017‑2019 fiscal biennium are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater, effective July 1, 2017, as follows:
Education Level	Minimum Salary
Vocational Diploma/Certificate or Less	$36,644
Associate Degree or Equivalent	37,156
Bachelor's Degree	39,379
Master's Degree or Education Specialist	41,362
Doctoral Degree	44,262
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.
SECTION 36.10.(b)  For the 2017‑2019 fiscal biennium, the community college boards of trustees may provide personnel a salary increase pursuant to the policies adopted by the State Board of Community Colleges.
SECTION 36.10.(c)  Funds for compensation increases may be used for any one or more of the following purposes: (i) merit pay, (ii) across‑the‑board increases, (iii) recruitment bonuses, (iv) retention increases, and (v) any other compensation increase pursuant to policies adopted by the State Board of Community Colleges. By March 1, 2018, the State Board of Community Colleges shall make a report on the use of these funds to the 2018 General Assembly.

UNIVERSITY OF NORTH CAROLINA SYSTEM
SECTION 36.11.  Effective for the 2017‑2019 fiscal biennium, the annual salaries of all full‑time University of North Carolina SHRA and EHRA employees are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater. These employees will also receive a one‑time, across‑the‑board bonus in the amount of five hundred dollars ($500.00) in the 2017‑2018 fiscal year.

STATE AGENCY TEACHERS
SECTION 36.12.  Employees of schools operated by the Department of Health and Human Services, the Department of Public Safety, the State Board of Education, and employees of the School of Science and Mathematics of the University of North Carolina who are paid on the Teacher Salary Schedule shall be paid as authorized by Section 9.1 of this act.

All State‑Supported Personnel
SECTION 36.13.(a)  For the 2017‑2019 fiscal biennium:
(1)	Unless otherwise specifically provided, the annual salaries of all employees subject to or exempt from the North Carolina Human Resources Act are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater.
(2)	All eligible State‑supported personnel shall receive a one‑time, across‑the‑board bonus in the amount of five hundred dollars ($500.00) in the 2017‑2018 fiscal year, as authorized by this part.
SECTION 36.13.(b)  Salaries and Related Benefits for Positions That Are Funded. –
(1)	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.
(2)	Fully from sources other than the General Fund or Highway Fund shall be increased as provided by this act. The Director of the Budget may increase expenditures of receipts from these sources by the amount necessary to provide the legislative increase to receipt‑supported personnel in the certified budget.
The Director of the Budget may increase expenditures of receipts from these sources in the certified budget by the amount necessary to provide the increases authorized by this part to receipt‑supported personnel.
SECTION 36.13.(c)  Except as otherwise provided, the annual salary increases and one‑time bonuses provided in this act 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, 2017.
SECTION 36.13.(d)  Employees shall receive the statutory increases provided by G.S. 20‑187.3, 7A‑102, and 7A‑171.1. Employees eligible for statutory increases under G.S. 20‑187.3, 7A‑102, and 7A‑171.1 also receive the increases and bonus authorized by this section.
SECTION 36.13.(e)  Payroll checks issued to employees after July 1, 2017, that represent payment of services provided prior to July 1, 2017, shall not be eligible for salary increases provided for in this act. This subsection applies to all employees paid from State funds, whether or not subject to or exempt from the North Carolina Human Resources Act, including employees of public schools, community colleges, and The University of North Carolina.
SECTION 36.13.(f)  Nothing in this act authorizes the transfer of funds between the General Fund and the Highway Fund for salary increases.

Most State Employees
SECTION 36.14.  For the 2017‑2019 fiscal biennium, except as otherwise provided by this part and Part 9 of this act, the annual salaries in effect on June 30, 2017, for the following persons are increased by two percent (2%) or eight hundred dollars ($800.00), whichever is greater, and these persons will also receive a one‑time, across‑the‑board bonus in the 2017‑2018 fiscal year in the amount of five hundred dollars ($500.00):
(1)	Permanent, full‑time State officials and persons whose salaries are set in accordance with the State Human Resources Act.
(2)	Permanent, full‑time State officials and persons in positions exempt from the State Human Resources Act.
(3)	Permanent, part‑time State employees.
(4)	Temporary and permanent hourly State employees.

COMPENSATION BONUS/ACROSS‑THE‑BOARD/AWARDED FOR FISCAL YEAR 2017‑2018
SECTION 36.15.(a)  Any person (i) whose salary is set by this part, pursuant to the North Carolina Human Resources Act, or as otherwise authorized in this act and (ii) who is employed in a State‑funded position on September 1, 2017, shall be awarded a one‑time, lump sum compensation bonus for the 2017‑2018 fiscal year in the amount of five hundred dollars ($500.00) during the month of October 2017, except as provided by subsection (b) of this section.
SECTION 36.15.(b)  Teachers paid on the Salary Schedule in Section 9.1 of this act are not eligible to receive the bonus awarded by subsection (a) of this section.
SECTION 36.15.(c)  Notwithstanding G.S. 135‑1(7a), the compensation bonus awarded by this section is not compensation under Article 1 of Chapter 135 of the General Statutes, the Teachers' and State Employees' Retirement System.
SECTION 36.15.(d)  The compensation bonus awarded by this section is not part of annual salary and shall be paid out separately. The compensation bonus shall be awarded to eligible permanent employees without regard to an employee's placement within the salary range, including employees at the top of the salary range. The compensation bonus shall be adjusted pro rata for permanent part‑time employees.
SECTION 36.15.(e)  Recipients of disability benefits under Article 6 of Chapter 135 of the General Statutes who have not terminated their employment and who otherwise meet the conditions of this section are eligible to receive the bonus, which shall be paid by the employing agency. The Disability Income Plan will neither pay the bonus nor reimburse the employer for payment.
SECTION 36.15.(f)  For part‑time employees, the bonus shall be pro rata based on the number of hours worked.

USE OF FUNDS APPROPRIATED FOR LEGISLATIVELY MANDATED SALARY INCREASES/COMPENSATION BONUSES/EMPLOYEE BENEFITS
SECTION 36.16.(a)  The appropriations set forth in Section 2.1 of this act include appropriations for legislatively mandated salary increases and compensation bonuses. The Office of State Budget and Management shall ensure that those funds are used only for the purposes of legislatively mandated salary increases, compensation bonuses, and employee benefits. Any recurring funds remaining in the compensation and benefits reserves shall be transferred to the Salary Adjustment Fund for the purposes described in this part. Any funds remaining following the adjustment to these positions shall revert in accordance with G.S. 143C‑1‑2(b), unless otherwise provided by law.
SECTION 36.16.(b)  If the Director of the Budget determines that funds appropriated to a State agency for legislatively mandated salary increases, compensation bonuses, and employee benefits exceed the amount required by that agency for those purposes, the Director may reallocate those funds to other State agencies that received insufficient funds for legislatively mandated salary increases, compensation bonuses, and employee benefits.

Salary Adjustment Fund
SECTION 36.17.(a)  Funds appropriated or otherwise transferred to the General Fund Salary Adjustment by this act or any other provision of law shall be used to fund agency requests to provide competitive salary rates for affected job classifications or groups in response to changes in labor market rates according to accepted human resource professional practices and standards. Funds shall only be used for salary adjustments that are in compliance with State Human Resources Commission policies.
SECTION 36.17.(b)  The Director of the Budget may transfer to General Fund budget codes from the General Fund Salary Adjustment Fund amounts required to support salary adjustments authorized by this section.
SECTION 36.17.(c)  The Judicial Department is eligible for the funding authorized in subsection (a) of this section.

EXTEND REORGANIZATION THROUGH REDUCTION AUTHORIZATION
SECTION 36.18.(a)  Section 8.3 of S.L. 2013‑382, as amended by Section 55.3(g) of S.L. 2014‑115, reads as rewritten:
"SECTION 8.3. This Part is effective when it becomes law and expires June 30, 2019."
SECTION 36.18.(b)  Payments under the Reorganization Through Reduction program shall be made from funds available within the reorganizing State agency.

SALARY DETERMINATIONS FOR CERTAIN LICENSED HEALTH PROFESSIONALS
SECTION 36.19.  State agencies, departments, and institutions shall have salary administration flexibility for licensed physicians, dentists, nurses, physicians assistants, pharmacists, and other allied health professionals and may exercise the flexibility within existing resources. No salary determination made under this section may exceed the maximum of the applicable salary range established by the Office of State Human Resources under Chapter 126 of the General Statutes. On or before September 1, annually, the Office of State Human Resources shall report to the Joint Legislative Commission on Governmental Operations and to the Fiscal Research Division on the salary actions taken under this section.

STATE WORKERS' COMPENSATION
SECTION 36.20.  For the 2017‑2018 fiscal year, the sum of two million dollars ($2,000,000) from funds appropriated in this acts to the Workers' Compensation Reserve hall be used for the closure of existing workers' compensation claims.

SALARY‑RELATED CONTRIBUTIONS
SECTION 36.21.(a)  Effective for the 2017‑2019 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.
SECTION 36.21.(b)  Effective July 1, 2017, the State's employer contribution rates budgeted for retirement and related benefits as a percentage of covered salaries for the 2017‑2018 fiscal year are:
(1)	Seventeen and thirty‑three hundredths percent (17.33%) – Teachers and State Employees;
(2)	Twenty‑one and sixty‑seven hundredths percent (21.67%) – State Law Enforcement Officers;
(3)	Thirteen and two hundredths percent (13.02%) – University Employees' Optional Retirement Program;
(4)	Thirteen and two hundredths percent (13.02%) – Community College Optional Retirement Program;
(5)	Thirty‑six and twenty‑seven hundredths percent (36.27%) – Consolidated Judicial Retirement System; and
(6)	Twenty‑four and thirty‑one hundredths percent (24.31%) – Legislative Retirement System.
Each of the foregoing contribution rates includes six and four hundredths percent (6.04%) 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 fourteen hundredths percent (0.14%) 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.
SECTION 36.21.(c)  Effective July 1, 2017, the maximum annual employer contributions, payable monthly, by the State for each covered employee or retiree for the 2017‑2018 fiscal year to the State Health Plan for Teachers and State Employees are (i) Medicare‑eligible employees and retirees – four thousand five hundred seventy‑three dollars ($4,573) and (ii) non‑Medicare‑eligible employees and retirees – five thousand eight hundred eighty dollars ($5,880).
SECTION 36.21.(d)  Effective July 1, 2018, the State's employer contribution rates budgeted for retirement and related benefits as a percentage of covered salaries for the 2018‑2019 fiscal year are:
(1)	Seventeen and fifty hundredths percent (17.50%) – Teachers and State Employees;
(2)	Twenty‑two and fifty hundredths percent (22.50%) – State Law Enforcement Officers;
(3)	Thirteen and twenty‑five hundredths percent (13.25%) – University Employees' Optional Retirement Program;
(4)	Thirteen and twenty‑five hundredths percent (13.25%) – Community College Optional Retirement Program;
(5)	Thirty‑six and fifty hundredths percent (36.50%) – Consolidated Judicial Retirement System; and
(6)	Twenty‑four and fifty‑four hundredths percent (24.54%) – Legislative Retirement System.
Each of the foregoing contribution rates includes six and twenty‑seven hundredths percent (6.27%) 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 fourteen hundredths percent (0.14%) 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.
SECTION 36.21.(e)  Effective July 1, 2018, the maximum annual employer contributions, payable monthly, by the State for each covered employee or retiree for the 2018‑2019 fiscal year to the State Health Plan for Teachers and State Employees are (i) Medicare‑eligible employees and retirees – four thousand seven hundred fifty‑six dollars ($4,756) and (ii) non‑Medicare‑eligible employees and retirees – six thousand one hundred dollars ($6,100).

PROVIDE ONE‑TIME COST‑OF‑LIVING SUPPLEMENT FOR RETIREES OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE CONSOLIDATED JUDICIAL RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT SYSTEM
SECTION 36.22.(a)  G.S. 135‑5 is amended by adding a new subsection to read:
"(vvv)	On or before October 31, 2017, a one‑time cost‑of‑living supplement payment shall be made to or on account of beneficiaries who are living as of September 1, 2017, and whose retirement commenced on or before September 1, 2017. The payment shall be one and five‑tenths percent (1.5%) of the beneficiary's annual retirement allowance payable as of September 1, 2017, and shall not be prorated for date of retirement commencement. If the beneficiary dies before the payment is made, then the payment shall be payable to the member's legal representative. No beneficiary shall be deemed to have acquired a vested right to any future supplemental payments."
SECTION 36.22.(b)  G.S. 135‑65 is amended by adding a new subsection to read:
"(gg)	On or before October 31, 2017, a one‑time cost‑of‑living supplement payment shall be made to or on account of beneficiaries who are living as of September 1, 2017, and whose retirement commenced on or before September 1, 2017. The payment shall be one and five‑tenths percent (1.5%) of the beneficiary's annual retirement allowance payable as of September 1, 2017, and shall not be prorated for date of retirement commencement. If the beneficiary dies before the payment is made, then the payment shall be payable to the member's legal representative. No beneficiary shall be deemed to have acquired a vested right to any future supplemental payments."
SECTION 36.22.(c)  G.S. 120‑4.22A is amended by adding a new subsection to read:
"(aa)	In accordance with subsection (a) of this section, on or before October 31, 2017, a one‑time cost‑of‑living supplement payment shall be made to or on account of beneficiaries who are living as of September 1, 2017, and whose retirement commenced on or before September 1, 2017. The payment shall be one and five‑tenths percent (1.5%) of the beneficiary's annual retirement allowance payable as of September 1, 2017, and shall not be prorated for date of retirement commencement. If the beneficiary dies before the payment is made, then the payment shall be payable to the member's legal representative. No beneficiary shall be deemed to have acquired a vested right to any future supplemental payments."
SECTION 36.22.(d)  Notwithstanding any other provision of law to the contrary, in order to administer the one‑time cost‑of‑living supplement for retirees provided for in this section, the Retirement Systems Division of the Department of State Treasurer may increase receipts from the retirement assets of the corresponding retirement system or pay costs associated with the administration of the payment directly from the retirement assets.

TWENTY‑FIVE YEAR LAW ENFORCEMENT RETIREMENT
SECTION 36.23.(a)  G.S. 135‑5(a)(4) reads as rewritten:
"(4)	Any member who is a law‑enforcement officer and who (i) attains age 50 and completes 15 or more years of creditable service in this capacity, (ii) attains age 55 and completes five or more years of creditable service in this capacity, or (iii) has completed 25 years of creditable service may retire upon electronic submission or written application to the Board of Trustees setting forth at what time, as of the first day of a calendar month, not less than one day nor more than 120 days subsequent to the execution and filing thereof, the member desires to be retired; Provided, also, any member who has met the conditions herein required but does not retire, and later becomes a teacher or an employee other than as a law‑enforcement officer shall continue to have the right to commence retirement."
SECTION 36.23.(b)  G.S. 135‑5(b19) reads as rewritten:
"(b19)	Service Retirement Allowance of Members Retiring on or After July 1, 2002, but Before January 1, 2018. – Upon retirement from service in accordance with subsection (a) or (a1) of this section, on or after July 1, 2002, but before January 1, 2018, a member shall receive the following service retirement allowance:
…."
SECTION 36.23.(c)  G.S. 135‑5 is amended by adding a new subsection to read:
"(b21)	Service Retirement Allowance of Members Retiring on or After January 1, 2018. – Upon retirement from service on or after January 1, 2018, in accordance with subsection (a) or (a1) of this section, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after the member's 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑two hundredths percent (1.82%) of the member's average final compensation, multiplied by the number of years of the member's creditable service.
b.	If the member's service retirement date occurs on or after the member's 50th birthday and before the member's 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 25 years of creditable service, the retirement allowance shall be equal to the greater of the following amounts:
1.	The service retirement allowance payable under G.S. 135‑5(b21)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55.
2.	The service retirement allowance as computed under G.S. 135‑5(b21)(1)a. reduced by five percent (5%) times the difference between 25 years and the amount of creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	 If the member's service retirement date occurs on or after the member's 65th birthday upon the completion of five years of membership service, or after the completion of 30 years of creditable service, or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑two hundredths percent (1.82%) of the member's average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after the member's 60th birthday and before the member's 65th birthday and prior to the completion of 25 years or more of creditable service, the retirement allowance shall be computed as in G.S. 135‑5(b21)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the member's 65th birthday.
c.	If the member's early service retirement date occurs on or after the member's 50th birthday and before the member's 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, the early service retirement allowance shall be equal to the greater of the following amounts:
1.	The service retirement allowance as computed under G.S. 135‑5(b21)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which the member's 60th birthday precedes the first day of the month coincident with or next following the member's 65th birthday.
2.	The service retirement allowance as computed under G.S. 135‑5(b21)(2)a. reduced by five percent (5%) times the difference between 30 years and the amount of creditable service at retirement.
3.	If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 135‑5(b21)(2)b.
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by subsection (b) of this section."
SECTION 36.23.(d)  G.S. 135‑5(m) reads as rewritten:
"(m)	Survivor's Alternate Benefit. – Upon the death of a member in service, the beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option 2 of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of the member's death, provided that all four of the following conditions apply:
…
a.	The member had attained such age and/or creditable service to be eligible to commence retirement with an early or service retirement allowance, or
b.	The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. 135‑5(b21)(1)b. or G.S. 135‑5(b21)(2)c., notwithstanding the requirement of obtaining age 50, or
b1.	The member was a law enforcement officer who had obtained 15 years of service as a law enforcement officer and was killed in the line of duty, in which case the retirement allowance shall be computed in accordance with G.S. 135‑5(b21)(1)b., notwithstanding the requirement of obtaining age 50.
c.	Repealed by Session Laws 2010‑72, s. 2(a), effective July 1, 2010.
…."
SECTION 36.23.(e)  G.S. 128‑27(a)(5) reads as rewritten:
"(5)	Any member who is a law enforcement officer and who (i) attains age 50 and completes 15 or more years of creditable service in this capacity, (ii) attains age 55 and completes five or more years of creditable service in this capacity, or (iii) has completed 25 years of creditable service may retire upon electronic submission or written application to the Board of Trustees setting forth at what time, as of the first day of a calendar month, not less than one day nor more than 120 days subsequent to the execution and filing thereof, the member desires to be retired; provided, also, any member who has met the conditions required by this subdivision but does not retire, and later becomes an employee other than as a law enforcement officer, continues to have the right to commence retirement."
SECTION 36.23.(f)  G.S. 128‑27(b21) reads as rewritten:
"(b21)	Service Retirement Allowance of Member Retiring on or After July 1, 2003, but Before January 1, 2018. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2003, but before January 1, 2018, a member shall receive the following service retirement allowance:
…."
SECTION 36.23.(g)  G.S. 128‑27 is amended by adding a new subsection to read:
"(b22)	Service Retirement Allowance of Member Retiring on or After January 1, 2018. – Upon retirement from service in accordance with subsection (a) or (a1) of this section, on or after January 1, 2018, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after the member's 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑five hundredths percent (1.85%) of the member's average final compensation, multiplied by the number of years of the member's creditable service.
b.	If the member's service retirement date occurs on or after the member's 50th birthday and before the member's 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 25 years of creditable service, the retirement allowance shall be equal to the greater of the following amounts:
1.	The service retirement allowance payable under G.S. 128‑27(b22)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55.
2	The service retirement allowance as computed under G.S. 128‑7(b22)(1)a. reduced by five percent (5%) times the difference between 25 years and the amount of creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after the member's 65th birthday upon the completion of five years of creditable service, or after the completion of 30 years of creditable service, or on or after the member's 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑five hundredths percent (1.85%) of the member's average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after the member's 60th birthday and before the member's 65th birthday and prior to the completion of 25 years or more of creditable service, the retirement allowance shall be computed as in G.S. 128‑27(b22)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the member's 65th birthday.
c.	If the member's early service retirement date occurs on or after the member's 50th birthday and before the member's 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, the early service retirement allowance shall be equal to the greater of the following amounts:
1.	The service retirement allowance as computed under G.S. 128‑27(b22)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which the retirement date precedes the first day of the month coincident with or next following the month the member would have attained the member's 60th birthday, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which the member's 60th birthday precedes the first day of the month coincident with or next following the member's 65th birthday.
2.	The service retirement allowance as computed under G.S. 128‑27(b22)(2)a. reduced by five percent (5%) times the difference between 30 years and the amount of creditable service at retirement.
3.	If the member's creditable service commenced prior to July 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128‑27(b22)(2)b.
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by subsection (b) of this section."
SECTION 36.23.(h)  G.S. 128‑27(m) reads as rewritten:
"(m)	Survivor's Alternate Benefit. – Upon the death of a member in service, the beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option two of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of the member's death, provided that all four of the following conditions apply:
…
…
b.	The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. 128‑27(b22)(1)b. or G.S. 128‑27(b22)(2)c., notwithstanding the requirement of obtaining age 50, or
b1.	The member was a law enforcement officer who had obtained 15 years of service as a law enforcement officer and was killed in the line of duty, or the member was a firefighter or a rescue squad worker who had obtained 15 years of service as a firefighter or a rescue squad worker and was killed in the line of duty, in which cases the retirement allowance shall be computed in accordance with G.S. 128‑72(b22)(1)b., notwithstanding the requirement of obtaining age 50.
…
…."
SECTION 36.23.(i)  G.S. 143‑166.41(a) reads as rewritten:
"(a)	Notwithstanding any other provision of law, every sworn law‑enforcement officer as defined by G.S. 135‑1(11c) or G.S. 143‑166.30(a)(4) employed by a State department, agency, or institution who qualifies under this section shall receive, beginning in the month in which the officer retires on a basic service retirement under the provisions of G.S. 135‑5(a), an annual separation allowance equal to eighty‑five hundredths percent (0.85%) of the annual equivalent of the base rate of compensation most recently applicable to the officer for each year of creditable service. The allowance shall be paid in equal installments on the payroll frequency used by the employer. To qualify for the allowance the officer shall meet all of the following criteria:
(1)	For officers retiring before January 1, 2018, the officer has either (i) completed 30 or more years of creditable service or, (ii) attained 55 years of age and completed five or more years of creditable service.
(2)	For officers retiring on or after January 1, 2018, the officer has either (i) completed 25 or more years of creditable services or (ii) attained 55 years of age and completed five or more years of creditable service.
(3)	The officer has not attained 62 years of age.
(4)	The officer has completed at least five years of continuous service as a law enforcement officer as herein defined immediately preceding a service retirement. Any break in the continuous service required by this subsection because of disability retirement or disability salary continuation benefits shall not adversely affect an officer's qualification to receive the allowance, provided the officer returns to service within 45 days after the disability benefits cease and is otherwise qualified to receive the allowance."
SECTION 36.23.(j)  G.S. 143‑166.42(a) reads as rewritten:
"(a)	On and after January 1, 1987, every sworn law enforcement officer as defined by G.S. 128‑21(11d) or G.S. 143‑166.50(a)(3) employed by a local government employer who qualifies under this section shall receive, beginning in the month in which the officer retires on a basic service retirement under the provisions of G.S. 128‑27(a), an annual separation allowance equal to eighty‑five hundredths percent (0.85%) of the annual equivalent of the base rate of compensation most recently applicable to the officer for each year of creditable service. The allowance shall be paid in equal installments on the payroll frequency used by the employer. To qualify for the allowance, the officer shall meet all of the following criteria:
(1)	For officers retiring before January 1, 2018, the officer has either (i) completed 30 or more years of creditable service or (ii) attained 55 years of age and completed five or more years of creditable service.
(2)	For officers retiring on or after January 1, 2018, the officer has either (i) completed 25 or more years of creditable services or (ii) attained 55 years of age and completed five or more years of creditable service.
(3)	The officer has not attained 62 years of age.
(4)	The officer has completed at least five years of continuous service as a law enforcement officer as herein defined immediately preceding a service retirement. Any break in the continuous service required by this subsection because of disability retirement or disability salary continuation benefits shall not adversely affect an officer's qualification to receive the allowance, provided the officer returns to service within 45 days after the disability benefits cease and is otherwise qualified to receive the allowance."
SECTION 36.23.(k)  This section becomes effective January 1, 2018.

part xxxvii. capital appropriations

GENERAL FUND CAPITAL APPROPRIATIONS/INTRODUCTION
SECTION 37.1.  The appropriations made by the 2017 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 37.2.  There is appropriated from the General Fund for the 2017‑2019 fiscal biennium the following amounts for capital improvements:

Capital Improvements General Fund	2017‑18

Department of Administration
	Green Square and Nature Research
		Center Canopy and Glass Replacement	$4,000,000
	Capital Master Plan Update	$1,500,000

Department of Agriculture and Consumer Services
	Eaddy Building Addition and Renovation	$731,000

Department of Environmental Quality
	Water Resources Development Projects	$9,105,000

Department of Natural and Cultural Resources
	State Historic Sites Maintenance and 
		Workshop Facility	$455,000

Department of Public Safety
	Supplement to Connect NC Morganton Project	$2,000,000
	North Carolina National Guard Joint Forces
		Headquarters Heli‑Pads	$1,000,000
	North Carolina National Guard Regional
		Readiness Center Master Plan Update	$150,000
	Confinement in Response to Violation Unit
		for Females	$2,200,000

University of North Carolina
	North Carolina Central University Connect
		NC Bond Supplement	$2,000,000

TOTAL CAPITAL IMPROVEMENTS GENERAL FUND	$23,141,000

WATER RESOURCES DEVELOPMENT PROJECTS
SECTION 37.3.(a)  The Department of Environmental Quality 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 nine million seven hundred eighty five thousand dollars ($9,785,000) in Federal funds.

Name of Project	FY 2017‑18
Morehead City Harbor Maintenance	$‑
Wilmington Harbor Maintenance	$‑
Princeville Flood Damage	$431,000
Carolina Beach Coastal Storm Damage Reduction	$300,000
Kure Beach Coastal Storm Damage Reduction	$300,000
Wrightsville Beach Coastal Storm Damage Reduction	$3,000,000
Wrightsville Beach Coastal Storm Damage Reduction
	– Post Authorization Change Report	$135,000
Planning Assistance to Communities	$25,000
Surf City/North Topsail Beach Coastal Storm
	Damage Reduction	$218,000
West Onslow Coastal Storm Damage Reduction	$218,000
Natural Resources Conservation Services –
	Environmental Quality Incentives Program
	(NRCS EQIP)	$2,000,000
State and Local Water Resources Development
	Program Grant Program	$1,500,000
Eastern North Carolina Stream Debris Removal	$1,000,000
Cape Fear Lock and Dam #2/#3 Fish Ramp Construction	$840,000
Kunz Farm Park Riverwalk	$250,000

TOTALS	$10,217,000

SECTION 37.3.(b)  It is the intent of the General Assembly that funds carried forward from previous fiscal years be used to supplement the nine million one hundred‑five thousand dollars ($9,105,000) appropriated for water resources development projects in Section 37.2 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) Carolina Beach Coastal Storm Damage Reduction	$50,000
Kure Beach Coastal Storm Damage Reduction	$50,000
Wrightsville Beach Coastal Storm Damage Reduction	$700,000
Wrightsville Beach Coastal Storm Damage Reduction	$22,000
	 – Post Authorization Change Report
Planning Assistance to Communities	$25,000
Surf City/North Topsail Beach Coastal Storm	$135,000
	Damage Reduction
West Onslow Coastal Storm Damage Reduction	130,000
TOTALS	$1,112,000

SECTION 37.3.(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 2017‑2018 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 2017‑2018 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 2018‑2019 fiscal year.
SECTION 37.3.(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 the project.
The semiannual reports also shall show those project advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.
SECTION 37.3.(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 2017‑2019 fiscal biennium that are unencumbered and proposed for reallocation to provide the nonfederal portion of funds for water resources development projects. The limitation on fund usage contained in this subsection applies only to projects in which a local government or local governments participate.
SECTION 37.3.(f)  Funds deposited with the State Treasurer in a Capital Account received pursuant to 33 U.S.C. § 701(c)(3) regarding leases related to lands acquired by the United States for flood control, navigation, and allied purposes are hereby appropriated to the relevant local governments for the benefit of public schools and public roads.

NON‑GENERAL FUND CAPITAL IMPROVEMENT AUTHORIZATIONS
SECTION 37.4.(a)  The General Assembly authorizes the following capital projects to be funded with receipts or from other non‑General Fund sources available to the appropriate department:

Name of Project	FY 2017‑18	FY 2018‑19
Department of Natural and Cultural Resources
	Museum of Art New Park and Pavilion Building	$915,300	‑
Department of Transportation
	Repairs and Renovation	5,112,700	5,350,000
	Greenville DMV/SHP Office and SHP Garage	5,344,700	2,190,000
	Camp Burton QMS/Resident Engineer's Office	1,254,000	‑
	Local Truck Storage Sheds Statewide	2,674,200	2,869,000
	Anson County Blacksmith Shop	195,000	‑
	Gaston County Equipment Sub‑Shop	2,409,000	‑
	Chatham County Eight‑Bay Truck Shed	‑	1,494,000
	Lee County Resident Engineer's Office	‑	1,198,000
	Watauga County District Engineer's Office	‑	1,165,000
	Surry County District Engineer's Office	‑	1,197,000
	Guilford County Bridge/Bridge Maintenance Assembly		1,024,000
	Asset Management Long Range Facility Planning	250,000	250,000

Wildlife Resources Commission
	Setzer Hatchery Building Replacement	750,000	‑
	Setzer Hatchery Raceways Replacements	4,500,000	‑
	Butner Lab and Storage Building	500,000	‑
	Burnsville Depot	500,000	‑
	Bolivia Depot	750,000	‑
	New Shooting Ranges	1,000,000	1,000,000
	Agency Land Acquisition	7,000,000	3,000,000
	Agency Infrastructure Repairs and Renovations	1,500,000	‑
	Boating Access Areas Repairs and Renovations	900,000	900,000
	Outer Banks Education Center Air Handlers	‑	300,000

TOTAL AMOUNT OF NON‑GENERAL	$35,554,900	21,937,000
FUND CAPITAL PROJECTS
AUTHORIZED

SECTION 37.4.(b)  From funds deposited with the State Treasurer in a capital improvement account to the credit of the Department of Agriculture and Consumer Services pursuant to G.S. 146‑30, the sum of seventy‑five thousand dollars ($75,000) for the 2017‑2018 fiscal year and the sum of seventy‑five thousand dollars ($75,000) for the 2018‑2019 fiscal year shall be transferred to the Department of Agriculture and Consumer Services to be used, notwithstanding G.S. 146‑30, by the Department for its plant conservation program under Article 19B of Chapter 106 of the General Statutes for costs incidental to the acquisition of land, such as land appraisals, land surveys, title searches, and environmental studies, and for the management of the plant conservation program preserves owned by the Department.

REPAIRS AND RENOVATIONS RESERVE ALLOCATION
SECTION 37.5.(a)  Of the funds in the Reserve for Repairs and Renovations for the 2017‑2018 fiscal year, the following allocations shall be made to the following agencies for repairs and renovations pursuant to G.S. 143C‑4‑3:
(1)	One‑Half of the funds shall be allocated to the Board of Governors of The University of North Carolina.
(2)	One Half of the funds shall be allocated to the Office of State Budget and Management.
The Office of State Budget and Management shall consult with or report to the Joint Legislative Commission on Governmental Operations, as appropriate, in accordance with G.S. 143C‑4‑3(d). The Board of Governors shall consult with or report to the Joint Legislative Commission on Governmental Operations in accordance with G.S. 143C‑4‑3(d).
SECTION 37.5.(b)  Notwithstanding G.S. 143C‑4‑3(d), of the funds allocated to the Board of Governors of The University of North Carolina in subsection (a) of this section, a portion shall be used each fiscal year by the Board of Governors for the installation of fire sprinklers in University residence halls. This portion shall be in addition to funds otherwise appropriated in this act for the same purpose. Such funds shall be allocated among the University's constituent institutions by the President of The University of North Carolina, who shall consider the following factors when allocating those funds:
(1)	The safety and well‑being of the residents of campus housing programs.
(2)	The current level of housing rents charged to students and how that compares to an institution's public peers and other UNC institutions.
(3)	The level of previous authorizations to constituent institutions for the construction or renovation of residence halls funded from the General Fund or from bonds or certificates of participation supported by the General Fund since 1996.
(4)	The financial status of each constituent institution's housing system, including debt capacity, debt coverage ratios, credit rankings, required reserves, the planned use of cash balances for other housing system improvements, and the constituent institution's ability to pay for the installation of fire sprinklers in all residence halls.
(5)	The total cost of each proposed project, including the cost of installing fire sprinklers and the cost of other construction, such as asbestos removal and additional water supply needs.
The Board of Governors shall submit progress reports to the Joint Legislative Commission on Governmental Operations. Reports shall include the status of completed, current, and planned projects. Reports also shall include information on the financial status of each constituent institution's housing system, the constituent institution's ability to pay for fire protection in residence halls, and the timing of installation of fire sprinklers. Reports shall be submitted on January 1 and July 1 until all residence halls have fire sprinklers.
SECTION 37.5.(c)  Notwithstanding G.S. 143C‑4‑3(d), of the funds allocated to the Board of Governors of The University of North Carolina in subsection (a) of this section, a portion shall be used each fiscal year by the Board of Governors for campus public safety improvements allowable under G.S. 143C‑4‑3(b).

PROCEDURES FOR DISBURSEMENT OF CAPITAL FUNDS 
SECTION 37.6.(a)  The appropriations made by the 2017 General Assembly for capital improvements shall be disbursed for the purposes provided by this act. Expenditure of funds shall not be made by any State department, institution, or agency until an allotment has been approved by the Governor as Director of the Budget. The allotment shall be approved only after full compliance with the State Budget Act, Chapter 143C of the General Statutes. Prior to the award of construction contracts for projects to be financed in whole or in part with self‑liquidating appropriations, the Director of the Budget shall approve the elements of the method of financing of those projects, including the source of funds, interest rate, and liquidation period. Provided, however, that if the Director of the Budget approves the method of financing a project, the Director shall report that action to the Joint Legislative Commission on Governmental Operations at its next meeting.
Where direct capital improvement appropriations include the purpose of furnishing fixed and movable equipment for any project, those funds for equipment shall not be subject to transfer into construction accounts except as authorized by the Director of the Budget. The expenditure of funds for fixed and movable equipment and furnishings shall be reviewed and approved by the Director of the Budget prior to commitment of funds.
Capital improvement projects authorized by the 2017 General Assembly shall be completed, including fixed and movable equipment and furnishings, within the limits of the amounts of the direct or self‑liquidating appropriations provided, except as otherwise provided in this act. Capital improvement projects authorized by the 2017 General Assembly for the design phase only shall be designed within the scope of the project as defined by the approved cost estimate filed with the Director of the Budget, including costs associated with site preparation, demolition, and movable and fixed equipment.
SECTION 37.6.(b)  Notwithstanding subsection (a) of this section, the Director may approve the award of contract for projects financed pursuant to Article 3 of Chapter 116D of the General Statutes prior to the Director's approval of finance.

STATE CAPITAL MASTER PLAN UPDATE
SECTION 37.7.(a)  In developing this master plan from the funds appropriated in Section 37.2 of this act to the Department of Administration, the Department shall address the following as it relates to State operations in Wake County:
(1)	Analyze the current amount of leased square footage and State owned square footage to make recommendations on the appropriate amount of each for State Government Operation.
(2)	Project the growth in personnel needed to support State operations in coordination with the State Government Six Year Capital Plan. 
(3)	Recommend State agency operations that should be relocated from the City of Raleigh to more efficiently meet the needs of relevant State agencies.
(4)	Recommend space needs for State functions.
(5)	Analyze underutilized and surplus property in the State Capital Area and make recommendations on whether it would be suitable to dispose of such property, and where to relocate any State operations impacted by such a sale.
SECTION 37.7.(b)  The Department of Administration shall also make recommendations on the future location of the Department of Health and Human Services functions to be relocated from the Dorothea Dix Campus and administrative functions in Wake County. The study shall analyze and make recommendations regarding the following:
(1)	Which Departmental functions should be collocated and which can remain separate.
(2)	An analysis of providing State‑owned space for all administrative functions in the Capital area, leased space for administrative functions, or a combination of State‑owned and leased space for administrative functions.
SECTION 37.7.(c)  The Department of Administration shall present the results of the Master Plan Update to the Joint Legislative Oversight Committee on Capital Improvements by October 1, 2018.

REALLIGNMENT OF DEPARTMENT OF HEALTH AND HUMAN SERVICES CAPITAL PROJECTS
SECTION 37.8.(a)  Section 23.12(e) of S.L. 2006‑66, as amended by Section 2(c) of S.L. 2009‑209, reads as rewritten:
"SECTION 23.12.(e)  In accordance with G.S. 142‑83, this subsection authorizes the issuance or incurrence of special indebtedness in the maximum aggregate principal amount of ninety‑one million two hundred eighty‑two thousand five hundred forty dollars ($91,282,540) to finance the capital facility costs of the Department of Health and Human Services Public Health Laboratory and Office of Chief Medical Examiner. The State, with the prior approval of the State Treasurer and the Council of State, as provided in Article 9 of Chapter 142 of the General Statutes, is authorized to issue or incur special indebtedness in order to provide funds to the State to be used, together with other available funds, to pay the capital facility costs of the project described in this subsection no more than a maximum aggregate principal amount of twenty million dollars ($20,000,000) of special indebtedness may be issued or incurred under this subsection prior to July 1, 2007."
SECTION 37.8.(b)  Section 23.12(f) of S.L. 2006‑66, as amended by Section 2(c) of S.L. 2009‑209, reads as rewritten:
"SECTION 23.12.(f)  In accordance with G.S. 142‑83, this subsection authorizes the issuance or incurrence of special indebtedness in the maximum aggregate principal amount of one hundred thirty‑nine million three hundred twenty‑five thousand eight hundred fourteen dollars ($139,325,814) to finance the capital facility costs of the Eastern Regional Psychiatric Hospital for the Department of Health and Human Services. The State, with the prior approval of the State Treasurer and the Council of State, as provided in Article 9 of Chapter 142 of the General Statutes, is authorized to issue or incur special indebtedness in order to provide funds to the State to be used, together with other available funds, to pay the capital facility costs of the project described in this subsection. No more than a maximum aggregate principal amount of twenty million dollars ($20,000,000) of special indebtedness may be issued or incurred under this subsection prior to July 1, 2007. No more than a maximum aggregate principal amount of one hundred million dollars ($100,000,000) of special indebtedness may be issued or incurred under this subsection prior to July 1, 2008."
SECTION 37.8.(c)  Section 23.12(h) of S.L. 2006‑66, as amended by Section 2(c) of S.L. 2009‑209, reads as rewritten:
"SECTION 23.12.(h)  In accordance with G.S. 142‑83, this subsection authorizes the issuance or incurrence of special indebtedness in the maximum aggregate principal amount of one hundred sixty‑one million two hundred seventy‑two thousand eight hundred one dollars ($161,272,801) to finance the capital facility costs of the Western Regional Psychiatric Hospital for the Department of Health and Human Services. The State, with the prior approval of the State Treasurer and the Council of State, as provided in Article 9 of Chapter 142 of the General Statutes, is authorized to issue or incur special indebtedness in order to provide funds to the State to be used, together with other available funds, to pay the capital facility costs of the project described in this subsection. No special indebtedness may be issued or incurred under this subsection prior to July 1, 2008. No more than a maximum aggregate principal amount of twenty million dollars ($20,000,000) of special indebtedness may be issued or incurred under this subsection prior to July 1, 2009. No more than a maximum aggregate principal amount of fifty‑four million dollars ($54,000,000) of special indebtedness may be issued or incurred under this subsection prior to July 1, 2011."

DEPARTMENT OF ADMINISTRATION OVERSIGHT OF CONNECT NC BOND PROJECTS
SECTION 37.9.  To the extent authorized by law, subdivision (2) of subsection (d) of Section 1 of S.L. 2015‑280 is amended by adding a new sub‑subdivision to read:
"SECTION 1.(d)  Definitions. – Unless the context otherwise requires, the following definitions apply in this section:
…
(2)	Cost. – Without intending thereby to limit or restrict any proper definition of this term in financing the cost of facilities or purposes authorized by this section, any of the following:
…
h.	The cost of providing funds for oversight and project management at the Department of Administration State Construction Office, not to exceed five hundred fifty thousand dollars ($550,000) per year.
Allocations in this section of proceeds of bonds to the costs of a project or undertaking in each case may include allocations to pay the costs set forth in sub‑subdivisions c. through g. of this subdivision in connection with the issuance of bonds for the project or undertaking."

AUTHORIZE STATE AGENCIES TO UNDERTAKE SMALL REPAIRS AND RENOVATIONS PROJECTS WITH FUNDS AVAILABLE 
SECTION 37.10.(a)  G.S. 143C‑8‑7 reads as rewritten:
"§ 143C‑8‑7.  When a State agency may begin a capital improvement project.
(a)	No State agency may expend funds for the construction or renovation of any capital improvement project except as needed to comply with this Article or otherwise authorized by the General Assembly. Funds that become available by gifts, excess patient receipts above those budgeted at the University of North Carolina Hospitals at Chapel Hill, federal or private grants, receipts becoming a part of special funds by act of the General Assembly, or any other funds available to a State agency or institution may be utilized for advanced planning through the working drawing phase of capital improvement projects, upon approval of the Director of the Budget.
(b)	A State agency may undertake repairs and renovations projects, upon approval of the Director of the Budget, so long as each project satisfies the following:
(1)	Total project costs do not exceed five hundred thousand dollars ($500,000).
(2)	The project is one of the types set forth in G.S. 143C‑4‑3(b)(1) through (13).
(3)	The project is paid for with funds available to the agency.
(c)	A constituent institution of The University of North Carolina, upon approval of the Director of the Budget, may undertake repairs and renovations projects so long as each project satisfies the following:
(1)	Total project costs do not exceed one million dollars ($1,000,000).
(2)	The project is one of the types set forth in G.S. 143C‑4‑3(b)(1) through (13).
(3)	The project is paid for with funds available to the constituent institution.
(d)	Projects undertaken pursuant to subsection (b) and (c) of this section shall be reported to the Joint Legislative Oversight Committee on Capital Improvements on a quarterly basis. A report under this subsection shall include information about all of the following for each project:
(1)	The facility at which the project is being undertaken.
(2)	The nature and scope of the project.
(3)	The source of funds for the project.
(4)	The category of projects set forth in G.S. 143C‑4‑3(b) that the project falls within."

SIX YEAR CAPITAL NEEDS ESTIMATE AND PLAN DATE CHANGES
SECTION 37.11.(a)  G.S. 143C‑8‑5(a) reads as rewritten:
"(a)	General. – The State capital improvement plan shall address the long‑term capital improvement needs of all State government agencies and shall incorporate all capital projects, however financed, proposed to meet those needs, except that transportation infrastructure projects shall be excluded. In addition to the requirements of G.S. 143C‑3(1a), the Director of the Budget shall prepare and transmit to the General Assembly a six‑year capital improvement plan. When preparing the plan, the Director of the Budget shall consider the capital improvement needs estimates submitted by State agencies as required in G.S. 143C‑8‑4. The plan shall be prepared in two parts."
SECTION 37.11.(b)  G.S. 143C‑8‑4(a) reads as rewritten:
"(a)	Needs Estimate Required. – Each even‑numbered year, each State agency shall submit to the Office of State Budget and Management and to the Division of Fiscal Research a six‑year capital improvement needs estimate. This estimate shall describe the agency's anticipated capital needs for each year of the six‑year planning period. Capital improvement needs estimates shall be shown in two parts."

REHABILITATION DEFINITION
SECTION 37.12.  G.S. 143C‑1‑1(d) is amended by adding a new subdivision to read:
"(23a)	Rehabilitation. – Comprehensive renovations to greatly increase the useful life of a State facility."

UNIVERSITY OF NORTH CAROLINA RECEIPT SUPPORTED PROEJCTS
SECTION 37.13.(a)  G.S. 143C‑8‑8 reads as rewritten:
"§ 143C‑8‑8.  When a State agency may increase the cost of a capital improvement project.
Upon the request of the administration of a State agency, the Director of the Budget may, when in the Director's opinion it is in the best interest of the State to do so, increase the cost of a capital improvement project. Provided, however, that if the Director of the Budget increases the cost of a project, the Director shall report that action to the Joint Legislative Commission on Governmental Operations at its next meeting. The increase may be funded from gifts, federal or private grants, special fund receipts, or direct capital improvement appropriations to that department or institution."
SECTION 37.13.(b)  G.S. 143C‑8‑12 (a) reads as rewritten:
"(a)	University Projects. – Notwithstanding any other provision of this Chapter, the Board of Governors of The University of North Carolina may approve any of the following: 
…
(3)	A change in the scope, or increase in cost, of any previously approved capital improvement project of The University of North Carolina provided that both the project, increase in cost, and change in scope are funded entirely with non‑General Fund money.
(4)	The President of the University of North Carolina may approve the following project cost increases:
a.	Increases to a project previously approved by the Board of Governors under this section not to exceed ten percent (10%) of the previously approved amount.
…."

DEFINE CAPITAL PROJECTS
SECTION 37.14.  G.S. 143C‑1‑1(d)(5) reads as rewritten:
"(5)	Capital improvement. – A term that includes real property acquisition, new construction or rehabilitation of existing facilities, and repairs and renovations over one hundred thousand dollars ($100,000) in value."

ELIMINATE NON‑STATE FUNDED ADVANCE PLANNING REQUIREMNT BEFORE REQUESTING LEGISLATIVE SUPPORTS
SECTION 37.15.  G.S. 143C‑3‑3(b)(2) is repealed.

SPECIAL INDEBTEDNESS PROJECTS
SECTION 37.16.(a)  The State, with the prior approval of the State Treasurer and the Council of State, as provided in Article 9 of Chapter 142 of the General Statutes, is authorized to issue or incur special indebtedness in order to provide funds to the State to be used, together with other available funds, to pay the capital facility costs of the projects described in this subsection. In accordance with G.S. 142‑83, this subsection authorizes the issuance or incurrence of special indebtedness:
(1)	In the maximum aggregate principal amount of twenty million dollars ($20,000,000) to finance the capital facility costs of renovating the Administration Building in Raleigh, NC.
(2)	In the maximum aggregate principal amount of thirteen million seven hundred five thousand dollars ($13,705,000) to finance the capital facility costs of constructing a third chiller plant for the Downtown Complex in Raleigh, NC.
(3)	In the maximum aggregate principal amount of four million nine hundred seventy eight thousand dollars ($4,978,000) to finance the capital facility costs of renovating the Brown Rogers Building in Raleigh, NC.
(4)	In the maximum aggregate principal amount of six million dollars ($6,000,000) to finance the capital facility costs of constructing the Forest Service Region Headquarters and Training Facility in Lenior County.
(5)	In the maximum aggregate principal amount of sixteen million five hundred fifty four thousand dollars ($16,554,000) to finance the capital facility costs of expanding and renovating the Morehead City Office Complex in Carteret County.
(6)	In the maximum aggregate principal amount of four million one hundred twenty five thousand dollars ($4,125,000) to finance the construction of a new maintenance facility at the Eastern Regional Psychiatric Hospital.
(7)	In the maximum aggregate principal amount of fourteen million two hundred one thousand dollars ($14,201,000) to finance the capital facility costs of constructing a Regional Medical Examiner's Office in Forsyth County.
(8)	In the maximum aggregate principal amount of thirteen million two hundred sixty eight thousand dollars ($13,268,000) to finance the capital facility costs of constructing a new Regional Medical Examiners Office in Pitt County.
(9)	In the maximum aggregate principal amount of five million sixty seven thousand dollars ($5,067,000) to finance the capital facility costs of constructing a new maintenance facility at Western Regional Psychiatric Hospital.
(10)	In maximum principal amount of three million four hundred ninety four thousand dollars ($3,494,000) to finance the capital facility costs of renovating Dormitory C at the Eastern Justice Academy.
(11)	In the maximum aggregate principal amount of four million seven hundred thirty five thousand dollars ($4,735,000) to finance the capital facility costs of constructing a dormitory at the Western Justice Academy.
(12)	In the maximum aggregate principal amount of four million eight hundred ninety thousand dollars ($4,890,000) to finance the capital facility costs of renovating Dormitory B at the Eastern Justice Academy.
(13)	In the maximum aggregate principal of twelve million five hundred thousand dollars ($12,500,000) to finance the capital facility costs of constructing a Visitor Center and Museum at the Fort Fisher Historic Site.
(14)	In the maximum aggregate principal amount of six million eight hundred thousand dollars ($6,800,000) to finance the capital facilities costs of renovating State Bureau of Investigation Building 16 at the Garner Road Campus in Raleigh, NC.
(15)	In the maximum aggregate principal amount six million one hundred thirty seven thousand dollars ($6,137,000) to finance the capital facility costs of site improvements at the State Highway Patrol Training Academy.
(16)	In the maximum aggregate principal amount of four million two hundred fifty thousand dollars ($4,250,000) to finance the capital facility costs of constructing a new armory building at the State Highway Patrol Training Academy.
(17)	In the maximum aggregate principal amount of thirteen million two hundred forty five thousand dollars ($13,245,000) to finance the capital facility costs of constructing a new Youth Development Center.
(18)	In the maximum aggregate principal amount of twenty one million eight hundred thousand dollars ($21,800,000) to finance the capital facility costs of renovating the Legislative Office Building.
(19)	In the maximum aggregate principal amount of twelve million twenty five thousand dollars ($12,025,000) to finance the capital facility costs of renovating Sanford Hall at Appalachian State University.
(20)	In the maximum aggregate principal amount of six million five hundred thirty eight thousand dollars ($6,538,000) to finance the capital facility costs of renovating the Whichard Building at East Carolina University.
(21)	In the maximum aggregate principal amount of three million sixty eight thousand dollars ($3,068,000) to finance the capital facility costs of renovating Lester Hall at East Carolina University. 
(22)	In the maximum aggregate principal amount of seven million nine hundred thirty eight thousand dollars ($7,938,000) to finance the capital facility costs of water, sewer, and storm water management improvements at Fayetteville State University.
(23)	In the maximum aggregate principal amount of fifteen million eight hundred sixteen thousand dollars ($15,816,000) to finance the capital facility costs of renovating Carver Hall at North Carolina Agricultural and Technical State University.
(24)	In the maximum aggregate principal amount of seven million one hundred eighty four thousand dollars ($7,184,000) to finance the capital facility costs of renovating the Lee Biology Building at North Carolina Central University.
(25)	In the maximum aggregate principal amount of three million one thousand dollars ($3,001,000) to finance the capital facility costs of renovating living space at the North Carolina School of Science and Mathematics. 
(26)	In the maximum aggregate principal amount of fifteen million forty three thousand dollars ($15,043,000) to finance the capital facility costs of renovating Page Hall at North Carolina State University.
(27)	In the maximum aggregate principal amount of six million seven hundred seventy thousand dollars ($6,770,000) to finance the capital facility costs of renovating Phillips Halls at the University of North Carolina – Asheville.
(28)	In the maximum aggregate principal amount of sixteen million eight hundred forty thousand dollars ($16,840,000) to finance the capital facility costs of renovating Gardner Hall and demolishing Phillips Annex at the University of North Carolina – Chapel Hill.
(29)	In the maximum aggregate principal amount of fifteen million five hundred thirty six thousand dollars ($15,536,000) to finance the capital facilities costs of renovating Colvard Hall at the University of North Carolina Charlotte.
(30)	In the maximum aggregate principal amount of twelve million twenty five thousand dollars ($12,025,000) to finance the capital facilities costs of renovating Moore Hall at the University of North Carolina – Greensboro.
(31)	In the maximum aggregate principal amount of ten million one hundred eighteen thousand dollars ($10,118,000) to finance the capital facilities costs of renovating West Hall at the University of North Carolina – Pembroke.
(32)	In the maximum aggregate principal amount of twelve million seven hundred seventy six thousand dollars ($12,776,000) to finance the capital facilities costs of renovating Alderman Hall at the University of North Carolina – Wilmington.
(33)	In the maximum aggregate principal amount of nine million three hundred two thousand dollars ($9,302,000) to finance the capital facilities costs of renovating the High Point Studio at the University of North Carolina School of the Arts.
(34)	In the maximum aggregate principal amount of fifteen million thirteen thousand dollars ($15,013,000) to finance the capital facility costs of constructing the Phase One Boiler Replacement at Western Carolina University.
(35)	In the maximum aggregate principal amount of six million seven thousand dollars ($6,007,000) to finance the capital facility costs of renovating Hauser Hall at Winston Salem State University.
SECTION 37.16.(b)  This section is effective when it becomes law

part xxxviii. finance provisions

ALLOW CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES
SECTION 38.1.(a)  Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑151.34.  Credit for qualified child and dependent care expenses.
(a)	Credit. – A person who is allowed a credit against federal income tax for a percentage of employment‑related expenses under section 21 of the Code shall be allowed as a credit against the tax imposed by this Part an amount equal to a percentage of the amount of the credit provided for in Section 21 of the Code which is claimed and allowed pursuant to the Internal Revenue Code. In order to claim the credit allowed by this section, the taxpayer must provide with the tax return the information required by the Secretary of Revenue.
(b)	Applicable Percentage. – For employment‑related expenses that are incurred only with respect to one or more dependents who are six years old or older and other dependents who are physically or mentally incapable of caring for themselves, the applicable percentage is thirty‑five percent (35%) of the credit provided for in Section 21 of the Code. For employment‑related expenses with respect to any other qualifying individual, the applicable percentage is fifty percent (50%) of the credit provided for in Section 21 of the Internal Revenue Code.
(c)	Phaseout. – The credit allowed by this section shall be reduced by a percentage listed below, rounded to the nearest percentage point, based on the taxpayer's adjusted gross income as calculated under the Code:
Filling Status	For AGI Exceeding	Percentage Reduction
Married, filing jointly	$150,000	The lesser of 100% or 
		[(Taxpayer's AGI – $150,000) / $50,000]
Head of Household	$120,000	The lesser of 100% or 
		[(Taxpayer's AGI – $120,000) / $40,000]
Single	$75,000	The lesser of 100% or
	[(Taxpayer's AGI – $75,000) / $25,000]
(d)	Limitations. – A nonresident or part‑year resident who claims the credit allowed by this section shall reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105‑153.4(b) or (c), as appropriate. The credit allowed by this section may not exceed the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, except for payments of tax made by or on behalf of the taxpayer."
SECTION 38.1.(b)  This section is effective for taxable years beginning on or before January 1, 2018.

FILM AND ENTERTAINMENT TAX INCENTIVE
SECTION 38.2.(a)  G.S. 143B‑437.02A is repealed.
SECTION 38.2.(b)  G.S. 150B‑1(d)(18a) is repealed.   
SECTION 38.2.(c)  G.S. 105‑130.47 is reenacted as it existed immediately before its repeal and reads as rewritten:
"§ 105‑130.47.  Credit for qualifying expenses of a production company.
(a)	Definitions. – The following definitions apply in this section:
(1)	Award show. – An awards show is television programming involving the filming of a ceremony in which individuals, groups, or organizations are given an award.
(2)	Employee. – A person who is employed for consideration and whose wages are subject to withholding under Article 4A of Chapter 105 of the General Statutes.
(3)	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 production. An individual receives compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual.
(4)	Live sporting event. – A scheduled sporting competition, game, or race that is not originated by a 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.
(5)	Loan‑out company. – A personal service corporation that employs an individual who is hired by a film or digital media production company.
(6)	Production. – Any of the following:
a.	A motion picture 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.
b.	A television series or a commercial for theatrical or television viewing, made‑for‑television movie, or production intended for on‑line distribution. For video and television series, one production is all of the episodes of the series produced for a single season.
(7)	Production company. – Defined in G.S. 105‑164.3.
(8)	Qualifying expenses. – The sum of the following amounts spent in this State by a production company in connection with a production, less the amount in excess of one million dollars ($1,000,000) paid to a highly compensated individual:
a.	Goods and services leased or purchased. For goods with a purchase price of twenty‑five thousand dollars ($25,000) or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed. Goods and services includes the costs of tangible and intangible property used for, and services performed primarily and customarily in, production, including preproduction and postproduction and other direct costs of producing the project in accordance with generally accepted entertainment industry practices. Goods and services exclude costs for development, marketing, and distribution; costs of financing for the production, of bonding related to the production, of production‑related insurance coverage obtained on the production; and expenses for insurance coverage purchased from a related member.
b.	Compensation and wages on which withholding payments are remitted to the Department of Revenue under Article 4A of this Chapter. Payments made to a loan‑out company for services provided in North Carolina shall be subject to gross income tax withholding at the applicable rate under the Article 4 of this Chapter.
	
c.	Employee fringe contributions, including health, pension, and welfare contributions.
d.	Per diems, stipends, and living allowances paid for work being performed in this State.
(9)	Related member. – Defined in G.S. 105‑130.7A.
(b)	Credit. – A taxpayer that is a production company and has qualifying expenses as set out in this subsection with respect to a production is allowed a credit against the taxes imposed by this Part equal to twenty‑five percent (25%) of the production company's qualifying expenses. The qualifying expenses are at least the following:
(1)	For a feature‑length film, five million dollars ($5,000,000).
(2)	For a television series, one million dollars ($1,000,000) per episode.
(3)	For a commercial for theatrical or television viewing or on‑line distribution, two hundred fifty thousand dollars ($250,000).
The credit is computed based on all of the taxpayer's qualifying expenses incurred with respect to the production, not just the qualifying expenses incurred during the taxable year.
(b1)	Repealed by Session Laws 2009‑529, s. 1, effective January 1, 2011.
(c)	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.
(d)	Return. – A taxpayer may claim a credit allowed by this section on a return filed for the taxable year in which the production activities are completed. The return must state the name of the production, and the taxpayer must provide a description of the production and a detailed accounting of the qualifying expenses with respect to which a credit is claimed. The qualifying expenses are subject to audit by the Secretary before the credit is allowed.
(e)	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 is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits.
(f)	Limitations. – The amount of credit allowed under this section per production shall not exceed the following amounts:
(1)	For a feature‑length film, twelve million dollars ($12,000,000).
(2)	For a television series, nine million dollars ($9,000,000) per season.
(3)	For a commercial for theatrical or television viewing or on‑line distribution, two hundred fifty thousand dollars ($250,000).
No credit is allowed under this section for any production that satisfies one or more of the following conditions:
(1)	It has the primary purpose of political advertising, fundraising, or marketing of a product or service other than by commercial.
(2)	It is a production of a news program, including weather, financial market, and current events reports.
(3)	It is a live sporting event, including pre‑event and post‑event coverage and scripted sports entertainment.
(4)	It is a talk, game, or awards show or a gala event.
(5)	It contains material that is "obscene," as defined in G.S. 14‑190.1, or that is "harmful to minors," as defined in G.S. 14‑190.13.
(6)	It is a radio production.
(7)	It fails to contain in the end credits of the production a statement that the production was "Filmed in North Carolina," a logo provided by the North Carolina Film Office, and an acknowledgement of the regional film office responsible for the geographic area in which the filming of the production occurred. 
(8)	It has received a grant from the Film and Entertainment Grant Fund set out in G.S. 143B‑437.02A.
(g)	Substantiation. – A taxpayer allowed a credit under this section 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. The Secretary may consult with the North Carolina Film Office and the regional film commissions in order to determine the amount of qualifying expenses.
(h)	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 production for which a credit was taken.
(2)	The qualifying expenses for which a credit was taken, classified by whether the expenses were for goods, services, or compensation paid by the production company.
(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.
(i)	Repealed by Session Laws 2006‑220, s. 2, effective for taxable years beginning on or after January 1, 2007.
(j)	Notification. – To claim a credit under this section, a taxpayer must notify the North Carolina Film Office of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Office. Additionally, the production company must offer marketing opportunities to be evaluated by the North Carolina Film Office to ensure that they offer promotional value to the State.
(k)	Sunset. – This section is repealed for qualifying expenses occurring on or after January 1, 2022."
SECTION 38.2.(d)  G.S. 105‑151.29 is reenacted as it existed immediately before its repeal and reads as rewritten:
"§ 105‑151.29. Credit for qualifying expenses of a production company.
(a)	Definitions. – The following definitions apply in this section:
(1)	Award show. – An awards show is television programming involving the filming of a ceremony in which individuals, groups, or organizations are given an award.
(2)	Employee. – A person who is employed for consideration and whose wages are subject to withholding under Article 4A of Chapter 105 of the General Statutes.
(3)	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 production. An individual receives compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual.
(4)	Live sporting event. – A scheduled sporting competition, game, or race that is not originated by a 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.
(5)	Loan‑out company. – A personal service corporation that employs an individual who is hired by a film or digital media production company.
(6)	Production. – Any of the following:
a.	A motion picture 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.
b.	A television series or a commercial for theatrical or television viewing, made‑for‑television movie, or production intended for on‑line distribution. For video and television series, one production is all of the episodes of the series produced for a single season.
(7)	Production company. – Defined in G.S. 105‑164.3.
(8)	Qualifying expenses. – The sum of the following amounts spent in this State by a production company in connection with a production, less the amount paid in excess of one million dollars ($1,000,000) to a highly compensated individual:
a.	Goods and services leased or purchased. For goods with a purchase price of twenty‑five thousand dollars ($25,000) or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed. Goods and services includes the costs of tangible and intangible property used for, and services performed primarily and customarily in, production, including preproduction and postproduction and other direct costs of producing the project in accordance with generally accepted entertainment industry practices. Goods and services exclude costs for development, marketing, and distribution; costs of financing for the production, of bonding related to the production, of production‑related insurance coverage obtained on the production; and expenses for insurance coverage purchased from a related member.
b.	Compensation and wages on which withholding payments are remitted to the Department of Revenue under Article 4A of this Chapter. Payments made to a loan‑out company for services provided in North Carolina shall be subject to gross income tax withholding at the applicable rate under the Article 4 of this Chapter.
	
c.	Employee fringe contributions, including health, pension, and welfare contributions.
d.	Per diems, stipends, and living allowances paid for work being performed in this State.
(9)	Related member. – Defined in G.S. 105‑130.7A.
(b)	Credit. – A taxpayer that is a production company and has qualifying expenses as set out in this subsection with respect to a production is allowed a credit against the taxes imposed by this Part equal to twenty‑five percent (25%) of the production company's qualifying expenses. The qualifying expenses are at least the following:
(1)	For a feature‑length film, five million dollars ($5,000,000).
(2)	For a television series, one million dollars ($1,000,000) per episode.
(3)	For a commercial for theatrical or television viewing or on‑line distribution, two hundred fifty thousand dollars ($250,000).
The credit is computed based on all of the taxpayer's qualifying expenses incurred with respect to the production, not just the qualifying expenses incurred during the taxable year.
(b1)	Repealed by Session Laws 2009‑529, s. 2, effective January 1, 2011.
(c)	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.
(d)	Return. – A taxpayer may claim a credit allowed by this section on a return filed for the taxable year in which the production activities are completed. The return must state the name of the production, and the taxpayer must provide a description of the production and a detailed accounting of the qualifying expenses with respect to which a credit is claimed. The qualifying expenses are subject to audit by the Secretary before the credit is allowed.
(e)	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 is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits.
(f)	Limitations. – The amount of credit allowed under this section per production shall not exceed the following amounts:
(1)	For a feature‑length film, twelve million dollars ($12,000,000).
(2)	For a television series, nine million dollars ($9,000,000) per season.
(3)	For a commercial for theatrical or television viewing or on‑line distribution, two hundred fifty thousand dollars ($250,000).
No credit is allowed under this section for any production that satisfies one or more of the following conditions:
(1)	It has the primary purpose of political advertising, fundraising, or marketing, other than by commercial, a product, or services.
(2)	It is a production of a news program, including weather, financial market, and current events reports.
(3)	It is a live sporting event, including pre‑event and post‑event coverage and scripted sports entertainment.
(4)	It is a talk, game, or awards show or a gala event.
(5)	It contains material that is "obscene," as defined in G.S. 14‑190.1, or that is "harmful to minors," as defined in G.S. 14‑190.13.
(6)	It is a radio production.
(7)	It fails to contain in the end credits of the production a statement that the production was "Filmed in North Carolina," a logo provided by the North Carolina Film Office, and an acknowledgement of the regional film office responsible for the geographic area in which the filming of the production occurred. 
(8)	It has received a grant from the Film and Entertainment Grant Fund set out in G.S. 143B‑437.02A.
(g)	Substantiation. – A taxpayer allowed a credit under this section 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. The Secretary may consult with the North Carolina Film Office and the regional film commissions in order to determine the amount of qualifying expenses.
(h)	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 production for which a credit was taken.
(2)	The qualifying expenses for which a credit was taken, classified by whether the expenses were for goods, services, or compensation paid by the production company.
(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.
(i)	Repealed by Session Laws 2006‑220, s. 4, effective for taxable years beginning on and after January 1, 2007.
(j)	Notification. – To claim a credit under this section, a taxpayer must notify the North Carolina Film Office of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Office. Additionally, the production company must offer marketing opportunities to be evaluated by the North Carolina Film Office to ensure that they offer promotional value to the State.
(k)	Sunset. – This section is repealed for qualifying expenses occurring on or after January 1, 2022."
SECTION 38.2.(e)  This section becomes effective January 1, 2018, and applies to productions with qualifying expenses occurring on or after January 1, 2018.

part xxxix. miscellaneous provisions

STATE BUDGET ACT APPLIES
SECTION 39.1.  The provisions of the State Budget Act, Chapter 143C of the General Statutes, are reenacted and shall remain in full force and effect and are incorporated in this act by reference.

MOST TEXT APPLIES TO THE 2017‑2019 FISCAL BIENNIUM
SECTION 39.2.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2017‑2019 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2017‑2019 fiscal biennium.

EFFECT OF HEADINGS
SECTION 39.3.  The headings to the parts, subparts, 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 or subpart.

SEVERABILITY
SECTION 39.4.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE
SECTION 39.5.  Except as otherwise provided, this act becomes effective July 1, 2017.