GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 490

Short Title:  Smart Start Fund/AB.	(Public)

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Sponsors: Representatives Easterling, Watson (Cosponsors); Baddour, Boyd-McIntyre, Goodwin, Hightower, Jarrell, Jeffus, Miller, and Wainwright.

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Referred to:  Appropriations.

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March 10, 1997

A BILL TO BE ENTITLED
AN ACT TO ESTABLISH A TRUST FUND TO PROVIDE FUNDING FOR THE EARLY CHILDHOOD INITIATIVES PROGRAM.
The General Assembly of North Carolina enacts:
Section 1. (a) G.S. 143B-168.12(a) reads as rewritten:
"(a)	In order to receive State funds, the following conditions shall be met:
(1)	The North Carolina Partnership shall have a Board of Directors consisting of the following 39 members:
a.	The Secretary of Human Resources, ex officio;
b.	The Secretary of Environment, Health, and Natural Resources, ex officio;
c.	The Superintendent of Public Instruction, ex officio;
d.	The President of the Department of Community Colleges, ex officio;
e.	One resident from each of the 1st, 3rd, 5th, 7th, 9th, and 11th Congressional Districts, appointed by the President Pro Tempore of the Senate;
f.	One resident from each of the 2nd, 4th, 6th, 8th, 10th, and 12th Congressional Districts, appointed by the Speaker of the House of Representatives;
g.	Seventeen members, of whom four shall be members of the party other than the Governor's party, appointed by the Governor;
h.	The President Pro Tempore of the Senate, or a designee;
i.	The Speaker of the House of Representatives, or a designee;
j.	The Majority Leader of the Senate, or a designee;
k.	The Majority Leader of the House of Representatives, or a designee;
l.	The Minority Leader of the Senate, or a designee; and
m.	The Minority Leader of the House of Representatives, or a designee.
(2)	The North Carolina Partnership shall agree to adopt procedures for its operations that are comparable to those of Article 33C of Chapter 143 of the General Statutes, the Open Meetings Law, and Chapter 132 of the General Statutes, the Public Records Law, and provide for enforcement by the Department.
(3)	The North Carolina Partnership shall oversee the development and implementation of the local demonstration projects as they are selected.
(4)	The North Carolina Partnership shall develop and implement a comprehensive standard fiscal accountability plan to ensure the fiscal integrity and accountability of State funds appropriated to it and to the local partnerships. The standard fiscal accountability plan shall, at a minimum, include a uniform, standardized system of accounting, internal controls, payroll, fidelity bonding, chart of accounts, and contract management and monitoring. The North Carolina Partnership may contract with outside firms to develop and implement the standard fiscal accountability plan. All local partnerships shall be required to participate in the standard fiscal accountability plan developed and adopted by the North Carolina Partnership pursuant to this subdivision.
(5)	The North Carolina Partnership shall develop and implement a centralized accounting and contract management system which incorporates features of the required standard fiscal accountability plan described in subdivision (4) of subsection (a) of this section.  The following local partnerships shall be required to participate in the centralized accountability system developed by the North Carolina Partnership pursuant to this subdivision:
a.	Local partnerships which have significant deficiencies in their accounting systems, internal controls, and contract management systems, as determined by the North Carolina Partnership based on the annual financial audits of the local partnerships conducted by the Office of the State Auditor; and
b.	Local partnerships which are in the first two years of operation following their selection.  At the end of this two-year period, local partnerships shall continue to participate in the centralized accounting and contract management system.  With the approval of the North Carolina Partnership, local partnerships may perform accounting and contract management functions at the local level using the standardized and uniform accounting system, internal controls, and contract management systems developed by the North Carolina Partnership.
	Local partnerships which otherwise would not be required to participate in the centralized accounting and contract management system pursuant to this subdivision may voluntarily choose to participate in the system. Participation or nonparticipation shall be for a minimum of two years, unless, in the event of nonparticipation, the North Carolina Partnership determines that any partnership's annual financial audit reveals serious deficiencies in accounting or contract management.
(5.1)	The North Carolina Partnership shall establish a special trust account to be known as the Early Childhood Initiatives Trust Fund.  Contributions and earnings transferred to the North Carolina Partnership pursuant to G.S. 105-269.7 shall be placed in the Trust Fund.  The North Carolina Partnership shall invest monies in the Trust Fund only in the investments described in G.S. 147-69.2(b).  The North Carolina Partnership may not use funds in the Trust Fund until the balance of the Trust Fund reaches one million dollars ($1,000,000).  When the balance of the Trust Fund reaches one million dollars ($1,000,000), and until the balance reaches ten million dollars ($10,000,000), the North Carolina Partnership may use up to fifty percent (50%) of the balance.  If the balance of the Trust Fund reaches ten million dollars ($10,000,000), the North Carolina Partnership may use all credited earnings and future annual deposits to the Trust Fund above the balance of ten million dollars ($10,000,000).  Monies from the Trust Fund shall be used only for the purposes enumerated in G.S. 143B-168.15.
(6)	The North Carolina Partnership shall develop a formula for allocating direct services funds appropriated for this purpose to local partnerships.
(7)	The North Carolina Partnership may adjust its allocations on the basis of local partnerships' performance assessments.  In determining whether to adjust its allocations to local partnerships, the North Carolina Partnership shall consider whether the local partnerships are meeting the outcome goals and objectives of the North Carolina Partnership and the goals and objectives set forth by the local partnerships in their approved annual program plans.
		The North Carolina Partnership may use additional factors to determine whether to adjust the local partnerships' allocations. These additional factors shall be developed with input from the local partnerships and shall be communicated to the local partnerships when the additional factors are selected. These additional factors may include board involvement, family and community outreach, collaboration among public and private service agencies, and family involvement.
		On the basis of performance assessments, local partnerships annually shall be rated ‘superior', ‘satisfactory', or ‘needs improvement'.  Local partnerships rated ‘superior' shall receive, to the extent that funds are available, a ten percent (10%) increase in their annual funding allocation.  Local partnerships rated ‘satisfactory' shall receive their annual funding allocation.  Local partnerships rated ‘needs improvement' shall receive ninety percent (90%) of their annual funding allocation.
		The North Carolina Partnership may contract with outside firms to conduct the performance assessments of local partnerships.
(8)	The North Carolina Partnership shall establish a local partnership advisory committee comprised of 15 members.  Eight of the members shall be chairs of local partnerships' board of directors, and seven shall be staff of local partnerships.  Members shall be chosen by the Chair of the North Carolina Partnership from a pool of candidates nominated by their respective boards of directors. The local partnership advisory committee shall serve in an advisory capacity to the North Carolina Partnership and shall establish a schedule of regular meetings.  Members shall serve two-year terms and may not serve more than two consecutive terms. Members shall be chosen from local partnerships on a rotating basis.  The advisory committee shall annually elect a chair from among its members.
(9)	The North Carolina Partnership shall report (i) quarterly to the Joint Legislative Commission on Governmental Operations and (ii) to the General Assembly and the Governor on the use of the funds from the Trust Fund established pursuant to subdivision (5.1) of this subsection, and the ongoing progress of all the local partnerships' work, including all details of the use to which the allocations were put, and on the continuing plans of the North Carolina Partnership and of the Department, together with legislative proposals, including proposals to implement the program statewide."
(b)	All contributions and earnings transferred to the Early Childhood Initiatives Trust Fund established by the North Carolina Partnership pursuant to G.S. 143B-168.12(a)(5.1) and any earnings from the balance of the Trust Fund shall be considered a part of any private cash match requirement mandated by the General Assembly in the same State fiscal year as the transfer.
Section 2.  Article 9 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-269.7.  Contribution by individual to Early Childhood Initiatives Trust Fund.
An individual entitled to a refund of income taxes under Division II of Article 4 of this Chapter may elect to contribute all or part of the refund to the Early Childhood Initiatives Trust Fund created pursuant to G.S. 143B-168.15(a)(5.1) to be used to provide high-quality early childhood education and development services for children and families.  The minimum contribution is five dollars ($5.00) for a joint return and three dollars ($3.00) for any other return.  In addition, an individual who is not entitled to a refund may make a contribution to the Early Childhood Initiatives Trust Fund when filing the return; payment may be made in any form allowed for payment of taxes.  The Secretary shall provide appropriate language and space on the individual income tax form in which to make the election, including a statement that contributions are deductible to the extent allowed under federal tax law.  The election becomes irrevocable upon filing the individual's income tax return for the taxable year.  The Secretary shall, on a quarterly basis, retain five percent (5%) of the contributions made pursuant to this section for the costs of implementing this section and shall transmit the remainder of the contributions to the State Treasurer for credit to the Early Childhood Initiatives Trust Fund.  If there is no Early Childhood Initiatives Trust Fund, the State Treasurer shall credit the funds to the Department of Human Resources to be used only to provide high-quality early childhood education and development services for children and families.  The Secretary shall draw from collections under Division II of Article 4 of this Chapter each fiscal year an amount equal to the remainder of its costs not reimbursed by the percentage retained above, including costs of redesigning and expanding the tax forms and instructions, computer reprogramming, and accounting and administration."
Section 3.  G.S. 105-269.7, as enacted by this act, is effective for taxable years beginning on or after January 1, 1997.  The remainder of this act is effective when it becomes law.