GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	1 

SENATE BILL 352

Short Title: Current Operations Appropriations Act. 	(Public)

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Sponsors: Senators Plyler, Perdue, and Odom.

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Referred to:  Appropriations.

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March 10, 1997

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:

INTRODUCTION

Section 1.  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 Executive Budget Act, or this act, the savings shall revert to the appropriate fund at the end of each fiscal year.

TITLE OF ACT

Section 2.  This act shall be known as "The Current Operations Appropriations Act of 1997."

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An outline of the provisions of the act follows this section.  The outline shows the heading "––-CONTENTS/INDEX––-" and it lists by general category the descriptive captions for the various sections and groups of sections that make up the act.

––-CONTENTS/INDEX––-

(This outline is designed for reference only, and the outline and the corresponding entries throughout the act in no way limit, define, or prescribe the scope or application of the text of the act.)

********INSERT TABLE OF CONTENTS HERE********

TITLE I. - CURRENT OPERATIONS

PART I.  CURRENT OPERATIONS/GENERAL FUND

Section 3.  Appropriations from the General Fund of the State for the maintenance of the State departments, institutions, and agencies, and for other purposes as enumerated are made for the biennium ending June 30, 1999, according to the following schedule:

Current Operations - General Fund	1997-98	1998-99

General Assembly	$   30,816,313	$ 34,232,634
Judicial Department 	308,641,585	309,348,068
Office of the Governor
01.	Office of the Governor	5,134,780 	5,150,508
02.	Office of State Budget and Management 	3,737,672	3,820,492
03.	Office of State Planning 	1,782,935 	1,796,335
04.	Housing Finance	6,300,000	2,300,000
Office of the Lieutenant Governor 	589,248	589,408
Department of Secretary of State	5,209,851	5,072,519
Department of State Auditor 	9,350,417	9,358,616
Department of State Treasurer
01.	State Treasurer	6,581,006	6,563,463
02.	Special Contributions	11,925,187	11,925,187
Department of Public Education	4,295,139,114	4,364,889,546
Department of Justice	61,323,739	61,391,369
Department of Agriculture	48,439,112	48,586,209

Current Operations - General Fund	1997-98	1998-99

Department of Labor 	$15,613,078	$15,525,907
Department of Insurance	20,298,117	19,326,764
Department of Administration	57,846,262	59,533,868
Office of the State Controller	20,837,226	15,840,550
Department of Transportation
01.	Aeronautics	10,609,854	11,246,445
Department of Environment, Health,
  and Natural Resources	274,050,483	253,581,019
Office of Administrative Hearings	2,138,525	2,138,525
Rules Review Commission	276,929	268,478
Department of Human Resources
01.	DHR - Central Management	33,290,431	33,056,171
02.	Division of Aging 	21,066,584	23,708,560
03.	Division of Child Development	140,486,351	182,771,241
04.	Division of Services for the Deaf
and Hard of Hearing 	27,217,870	27,171,699
05.	Division of Social Services	178,768,870	186,996,943
06.	Division of Medical Assistance	1,212,062,966	1,333,239,992
07.	Division of Services for
the Blind	14,840,486	14,858,468
08.	Division of Mental Health, Developmental
Disabilities, and Substance
Abuse Services	521,422,373	536,489,524
09.	Division of Facility Services	9,738,289	8,839,621
10.	Division of Vocational Rehabilitation
Services	30,032,174	30,332,295
11.	Division of Youth Services	85,774,437	87,687,301
Total Department of Human Resources	2,274,700,831	2,465,151,815
Department of Correction	822,414,124	873,282,471
Department of Commerce
01.	Commerce 	43,318,550	39,432,511
02.	State Aid to Non-State Entities	3,775,000	1,475,000
03.	North Carolina Biotechnology Center	7,664,396	7,664,396
04.	MCNC 	4,500,000	2,500,000
05.	Rural Economic Development Center 	5,870,000	5,870,000
Department of Revenue	66,270,492	67,348,493
Department of Cultural Resources	50,204,878	50,277,399
01.	Roanoke Island Commission	1,614,716	1,856,053

Current Operations - General Fund	1997-98	1998-99

Department of Crime Control and
  Public Safety	$  34,534,872	$  34,433,941
University of North Carolina - Board of Governors
01.	General Administration	36,863,335	36,937,950
02.	University Institutional Programs	42,868,676	44,908,470
03.	Related Educational Programs	68,982,002	69,365,778
04.	University of North Carolina at Chapel Hill
a.	Academic Affairs	160,055,071	161,865,368
b.	Health Affairs	130,650,674	131,311,241
c.	Area Health Education Centers	38,251,900	38,233,662
05.	North Carolina State University at Raleigh
a.	Academic Affairs	208,719,610	209,178,440
b.	Agricultural Research Service	39,988,056	40,011,523
c.	Agricultural Extension Service	31,949,476	31,942,119
06.	University of North Carolina at Greensboro	61,773,943 62,410,850
07.	University of North Carolina at Charlotte	68,021,913	68,221,202
08.	University of North Carolina at Asheville	19,800,517	19,854,581
09.	University of North Carolina at Wilmington	38,431,107 38,824,326
10.	East Carolina University
a.	Academic Affairs	84,054,565	84,685,209
b.	Division of Health Affairs	40,703,897	40,746,861
11.	North Carolina Agricultural and
Technical State University	48,873,818	49,236,938
12.	Western Carolina University	42,892,344	42,950,249
13.	Appalachian State University	61,302,860	61,602,707
14.	University of North Carolina at
Pembroke	18,359,420	18,234,804
15.	Winston-Salem State University	19,777,347	19,791,424
16.	Elizabeth City State University	17,755,507	17,772,455
17.	Fayetteville State University	23,263,896	23,430,722
18.	North Carolina Central University	35,287,564	35,975,545
19.	North Carolina School of the Arts	11,644,804	11,691,444
20.	North Carolina School of Science
and Mathematics	9,413,145	9,476,495
21.	UNC Hospitals at Chapel Hill	41,337,439	41,337,439
Total University of North Carolina	1,401,022,886	1,409,997,802
Department of Community Colleges	488,052,434	469,847,860
State Board of Elections 	2,935,922	2,929,516
Contingency and Emergency	1,125,000	1,125,000
Reserve for Compensation Increase 	659,418,662	665,570,764
Reserve for Salary Adjustments 	2,641,506	3,141,506
Reserve for Postage Reduction	(300,000)	(300,000)

Current Operations - General Fund	1997-98	1998-99

Reserve for Criminal Justice
Information System	$   400,000	$  400,000
Reserve for Salary Reductions/
Span of Control Study 	(16,671,086)	(16,671,086)
Debt Service	128,424,462 206,873,699
01.	Federal	1,155,948	1,155,948
Reserve for Capital Improvement	62,560,300	    -    

GRAND TOTAL CURRENT OPERATIONS–
GENERAL FUND	$ 11,242,275,326	$  11,535,848,998

PART II.  CURRENT OPERATIONS/HIGHWAY FUND

Section 4.  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, 1999, according to the following schedule:

Current Operations - Highway Fund	1997-98	1998-99

Department of Transportation
01.	Administration	$  58,431,964	$  58,597,068
02.	Division of Highways
a.	Administration and Operations	35,233,998	35,290,290
b.	State Construction
(01)	Primary Construction	   -    	    -    
(02)	Secondary Construction	80,656,000	83,283,000
(03)	Urban Construction	14,000,000	14,000,000
(04)	Access and Public
Service Roads	2,000,000	2,000,000
(05)	Discretionary Fund	6,000,000	6,000,000
(06)	Spot Safety Improvements	9,100,000	9,100,000
c.	State Funds to Match Federal
Highway Aid
(01)	Construction	33,153,153	17,947,202
(02)	Planning Survey and Highway
Planning Research	2,959,649	2,959,649
d.	State Maintenance
(01)	Primary	111,035,113	111,035,113
(02)	Secondary	187,394,152	187,394,152
(03)	Urban	36,414,035	36,414,035
(04)	Contract Resurfacing	121,599,511	100,543,283
e.	Ferry Operations	18,098,290	18,098,290
03.	Division of Motor Vehicles	85,358,288	83,589,568
04.	Governor's Highway Safety Program	311,609	312,080
05.	State Aid to Municipalities	80,656,000	83,283,000
06.	State Aid for Public Transportation	42,046,921	42,046,921
07.	Salary Adjustments for Highway
Fund Employees	200,000	200,000

Current Operations - Highway Fund	1997-98	1998-99

Department of Transportation - Continued
08.	Reserve to Correct Occupational Safety
and Health Conditions	$  425,000	$  425,000
09.	State Aid to Railroads	800,000	800,000
10.	Asphalt Plant Cleanup	500,000	-   
11.	Reserve for Computer Replacement	1,000,000	1,000,000
12.	DMV Office Complex	1,000,000	14,698,021
13.	DMV Systems Reserve	3,045,100	3,824,000
14.	Reserve for Compensation Increases	27,545,260	27,545,260
15.	Transfer to Highway Trust Fund	38,000,000	38,000,000
16.	Capital	12,000,000	-   
Appropriations for Other State Agencies
01.	Department of Crime Control and
Public Safety 	$  116,689,046	$  111,927,823
02.	Department of Agriculture 	3,151,316	3,069,026
03.	Department of Revenue 	2,329,577	2,331,760
04.	Department of Environment, Health,
and Natural Resources:
LUST Trust Fund	6,921,107	7,298,214
Chemical Test Program	396,643	396,643
05.	Global TransPark	750,000	750,000
06.	Department of Public Education	21,452,268	21,633,186

GRAND TOTAL CURRENT OPERATIONS–
HIGHWAY FUND	$ 1,160,654,000	$ 1,125,792,584

PART III.  HIGHWAY TRUST FUND
Section 5.  Appropriations from the Highway Trust Fund are made for the fiscal biennium ending June 30, 1999, according to the following schedule:
Highway Trust Fund	1997-98 1998-99
01.	Intrastate System	$  352,109,370	$  366,483,841
02.	Secondary Roads Construction	68,373,343	70,447,275
03.	Urban Loops	142,378,365	148,190,802
04.	State Aid - Municipalities	36,944,486	38,452,703
05.	Program Administration	23,654,436	24,714,379
06.	Transfer to General Fund	170,000,000	170,000,000

GRAND TOTAL–HIGHWAY TRUST FUND	$  793,460,000	$  818,289,000

PART IV.  GENERAL FUND AVAILABILITY STATEMENT

BUDGET REFORM SETTLEMENTS

Section 5.1.  The General Fund and availability used in developing the 1997-99 budget is as shown below:

	1997-98	1998-99
	(In Millions)	(In Millions)

(1)	Composition of the 1997-98
beginning availability:
a.	Revenue collections left unaddressed	$  85.0	$  -  
b.	Revenue collections in 1996-97
in excess of authorized estimates	168.6	-  
c.	Unexpended appropriations during
1996-97	151.0   -  
   Subtotal	  404.6	  -  
d.	Transfer to Savings Reserve	$ 101.2	  -  
e.	Transfer to Reserve for Repair
and Renovations	130.0	  -  
f.	Transfer to Clean Water Management
Reserve	  26.3   -  
Ending Fund Balance	$ 147.4	  -  

(2)	Beginning Unrestricted Fund Balance	$  147.4	  -  

Revenues Existing Tax Structure	$10,438.3	 $11,079.1
Nontax Revenues	405.9	 426.8
Transfer from Highway Trust Fund	170.0	 170.0
Disproportionate Share Receipts	83.0	83.0

Changes:

(3)	Revenue Assessments from Additional
Interstate Auditors	$   2.6	$  7.9

Total Availability	$11,244.6 $11,758.9

PART V.  GENERAL PROVISIONS

SPECIAL FUNDS, FEDERAL FUNDS, AND  DEPARTMENTAL  RECEIPTS/AUTHORIZATION FOR EXPENDITURES

Section 6.  There is appropriated out of the cash balances, federal receipts, and departmental receipts available to each department, sufficient amounts to carry on authorized activities included under each department's operations.  All these cash balances, federal receipts, and departmental receipts shall be expended and reported in accordance with provisions of the Executive Budget Act, except as otherwise provided by statute.  The Director of the Budget shall develop necessary budget controls, regulations, and systems to ensure that these funds and other State funds subject to the Executive Budget Act, may not be spent in a manner which would cause a deficit in expenditures.
Pursuant to G.S. 143-34.2, State departments, agencies, institutions, boards, or commissions may make application for, receive, or disburse any form of non-State aid.  All non-State monies received shall be deposited with the State Treasurer unless otherwise provided by State law.  These funds shall be expended in accordance with the terms and conditions of the fund award that are not contrary to the laws of North Carolina.

INSURANCE AND FIDELITY BONDS

Section 7.  All insurance and all official fidelity and surety bonds authorized for the several departments, institutions, and agencies shall be effected and placed by the Insurance Department, and the cost of placement shall be paid by the affected department, institution, or agency with the approval of the Insurance Commissioner.

AUTHORIZED TRANSFERS

Section 8.  The Director of the Budget may transfer to General Fund budget codes from the General Fund Salary Adjustment Reserves appropriation, and may transfer to Highway Fund budget codes from the Highway Fund Salary Adjustment Reserve appropriation, amounts required to support approved salary adjustments made necessary by difficulties in recruiting and holding qualified employees in State government.
Any remaining appropriations for legislative salary increases not required for that purpose may be used to supplement the Salary Adjustment Fund.  These funds shall first be used to provide reclassifications of those positions already approved by the Office of State Personnel.

EXPENDITURES OF FUNDS IN RESERVES LIMITED

Section 9.  All funds appropriated by this act into reserves may be expended only for the purposes for which the reserves were established, except as otherwise provided.
Section 10.  Each private, nonprofit entity eligible to receive State funds, either by General Assembly appropriation, or by grant, loan, or other allocation from a State agency, before funds may be disbursed to the entity, shall file with the disbursing agency a notarized copy of that entity's policy addressing conflicts of interest that may arise involving the entity'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 entity's employees or members of the board or other governing body, from the entity's disbursing of State funds, and shall include actions to be taken by the entity or the individual, or both, to avoid conflicts of interest and the appearance of impropriety.

PART VI.  PUBLIC SCHOOLS

CAREER DEVELOPMENT

Section 11.  (a)	Funds appropriated to the State Board of Education for local school administrative units receiving career development funds for the 1997-98 and 1998-99 fiscal years shall be used only to ensure that individual employees do not receive less on a monthly basis in salary and State-funded bonuses during the 1997-98 fiscal year or during the 1998-99 fiscal year than they received on a monthly basis during the 1994-95 fiscal year, so long as the employees qualify for bonuses under the local differentiated pay plan.  The State Board of Education may also use funds appropriated to State Aid to Local School Administrative Units for the 1997-98 and 1998-99 fiscal years as is necessary to hold individual employees harmless as provided in this subsection.
(b)	Funds appropriated for local school administrative units receiving career development funds for the 1996-97 fiscal year that did not revert on June 30, 1997, shall not be used for expenses other than the costs of holding individual employees harmless as provided in subsection (a) of this section.

LITIGATION RESERVE

Section 12.  (a)	Funds available to the Department of Public Instruction for the 1996-97 fiscal year for the Litigation Reserve that are not expended or encumbered on June 30, 1997, shall not revert on July 1, 1997, but shall remain available for expenditure until June 30, 1998.
(b)	This section becomes effective June 30, 1997.

EXCEPTIONAL CHILDREN FUNDS

Section 13.  The funds appropriated for exceptional children in this act shall be allocated as follows:
(1)	Each local school administrative unit shall receive for academically gifted children the sum of $710.61 per child for four percent (4.0%) of the 1997-98 and 1998-99 actual average daily membership in the local school administrative unit, regardless of the number of children identified as academically gifted in the local school administrative unit.  The total number of children for which funds shall be allocated pursuant to this subdivision is 49,047 for the 1997-98 school year and 49,937 for the 1998-99 school year.
(2)	Each local school administrative unit shall receive for exceptional children other than academically gifted children the sum of $2,131.87 per child for the lesser of (i) all children who are identified as exceptional children other than academically gifted children or (ii) twelve and five-tenths percent (12.5%) of the 1996-97 actual average daily membership in the local school administrative unit.  The maximum number of children for which funds shall be allocated pursuant to this subdivision is 141,572 for the 1997-98 school year and 145,696 for the 1998-99 school year.
The dollar amounts allocated under this subsection for exceptional children shall also increase in accordance with legislative salary increments for personnel who serve exceptional children.

MINIMUM VACATION LEAVE FOR BUS DRIVERS

Section 14.  Notwithstanding any other provision of law, all school bus drivers, who have been employed for at least one academic year and who are not entitled to more than one day of paid vacation leave, are entitled to one day of paid vacation leave in each subsequent school year.

SCHOOL PAY DATE FLEXIBILITY PILOT PROGRAM

Section 15.  The State Board of Education may establish a pilot program to grant no more than four local boards of education additional flexibility in setting the pay dates for their 10-month employees.  Notwithstanding the provisions of G.S. 115C-302(a) and G.S. 115C-316(a), local school administrative units participating in the pilot may pay 10-month employees for a full month of employment when days employed are less than a full month at the beginning or the end of the teachers' contract.  No local school administrative unit shall be required to participate in the pilot.  A local board participating in the pilot shall bear all of the cost of recouping funds prepaid for work never done and the cost of these funds that cannot be recouped.
The State Board of Education shall report to the Joint Legislative Education Oversight Committee on the pilot program prior to September 1, 1998.

PUBLIC SCHOOL TEACHERS/LIABILITY PROTECTION

Section 16.  Of the funds appropriated to the Department of Public Instruction for the 1997-99 fiscal years, an amount equal to ten dollars ($10.00) for each teacher paid from the General Fund shall be allocated by the State Board of Education to each local school administrative unit to provide comprehensive general liability protection, including coverage for errors and omissions, for teachers employed by the local school administrative unit for the 1997-98 and 1998-99 school years.

ALTERNATIVE LEARNING PROGRAMS/GUIDELINES

Section 17.  The State Board of Education may use up to two hundred thousand dollars ($200,000) of the funds in the Alternative Schools/At-Risk Student allotment to implement G.S. 115C-12(24).

PUBLIC SCHOOL BUILDING CAPITAL FUND (PSBCF)

Section 18.  G.S. 115C-546.1(a) reads as rewritten:
"(a)	There is created the Public School Building Capital Fund.  The Fund shall be used to assist county governments in meeting their public school building capital needs and their equipment needs under their local school technology plans."
Section 19.  G.S. 115C-546.2 reads as rewritten:
"§ 115C-546.2.  Allocations from the Fund; uses; expenditures; reversion to General Fund; matching requirements.
(a)	Monies in the Fund shall be allocated to the counties on a per average daily membership basis according to the average daily membership for the budget year as determined and certified by the State Board of Education.  Interest earned on funds allocated to each county shall be allocated to that county.
(b)	Counties shall use monies in the Fund for capital outlay projects including the planning, construction, reconstruction, enlargement, improvement, repair, or renovation of public school buildings and for the purchase of land for public school buildings; for equipment to implement a local school technology plan that is approved pursuant to G.S. 115C-102.6C; or for both.  Monies used to implement a local school technology plan shall be transferred to the State School Technology Fund and allocated by that Fund to the local school administrative unit for equipment.
As used in this section, 'public school buildings' only includes facilities for individual schools that are used for instructional and related purposes and does not include centralized administration, maintenance, or other facilities.
In the event a county finds that it does not need all or part of the funds allocated to it for capital outlay projects including the planning, construction, reconstruction, enlargement, improvement, repair, or renovation of public school buildings, for the purchase of land for public school buildings, or for equipment to implement a local school technology plan, the unneeded funds allocated to that county may be used to retire any indebtedness incurred by the county for public school facilities.
In the event a county finds that its public school building needs and its school technology needs can be met in a more timely fashion through the allocation of financial resources previously allocated for purposes other than school building needs or school technology needs and not restricted for use in meeting public school building needs or school technology needs, the county commissioners may, with the concurrence of the affected local Board of Education, use those financial resources to meet school building needs and school technology needs and may allocate the funds it receives under this Article for purposes other than school building needs and school technology needs to the extent that financial resources were redirected from such purposes.  The concurrence described herein shall be secured in advance of the allocation of the previously unrestricted financial resources and shall be on a form prescribed by the Local Government Commission.
(c)	Monies in the Fund allocated for capital projects shall be matched on the basis of one dollar of local funds for every three dollars of State funds.  Monies in the Fund transferred to the State School Technology Fund do not require a local match.
Revenue received from local sales and use taxes that is restricted for public school capital outlay purposes pursuant to G.S. 105-502 or G.S. 105-487 may be used to meet the local matching requirement.  Funds expended by a county after July 1, 1986, for land acquisition, engineering fees, architectural fees, or other directly related costs for a public school building capital project that was not completed prior to July 1, 1987, may be used to meet the local match requirement."

N.C. CENTER FOR THE PREVENTION OF SCHOOL VIOLENCE

Section 20.  (a)	Effective July 1, 1997, The North Carolina Center for the Prevention of School Violence is transferred from the College of Education and Psychology at North Carolina State University to the North Carolina Department of Public Instruction.  The Center, which serves as a clearinghouse for information, provides technical assistance and training, and develops alternative programs for the prevention and elimination of school violence, shall operate under the direction and supervision of the Superintendent of Public Schools.  Funds in the amount of five hundred eighty thousand dollars ($580,000) are appropriated to the Department of Public Instruction for support of the Center.
(b)	Of the funds appropriated to the Department of Public Instruction for 1997-98 fiscal year and 1998-99 fiscal year, four million three hundred forty thousand dollars ($4,340,000) for each year of the biennium is to be allocated by the Department of Public Instruction through a grant application process administered by the Center for the Prevention of School Violence for the purpose of placing School Resource Officers in middle schools.  Preference will be given to those schools having the highest number of incidents of school violence.  A school resource officer (SRO) is a uniformed local law enforcement officer assigned on a permanent basis to a local school as (i) a peace officer, (ii) a counselor on legal issues, and (iii) a resource for teachers and students.
(c)	Of the funds appropriated in this act for the Department of Public Instruction, the sum of eighty thousand dollars ($80,000) shall be for additional staff support required to administer the State grant funds to local units for the middle school SROs.  Additional staff shall consist of two positions, one professional and one clerical.
(d)	Effective with the 1997-98 school year, ten million dollars ($10,000,000) of the fourteen million two hundred thousand dollars ($14,200,000) appropriated to the Alternative Schools/At-Risk Student allotment by the 1996 Session of the General Assembly, shall be allocated solely for the support of uniformed school resource officers in the schools.

PART VII.  COMMUNITY COLLEGES

FUNDS TO REWARD EXCELLENCE IN COMMUNITY COLLEGE TEACHING

Section 21.  The State Board of Community Colleges shall develop policies for the distribution of an average one-half percent (1/2%) salary increase for teaching faculty members to be given to those who have demonstrated excellence in teaching in 1997-98.

COMMUNITY COLLEGE FUNDING FLEXIBILITY

Section 22.  A local community college may use all State funds allocated to it, except for Literacy Funds and Funds for New and Expanding Industries, for any authorized purpose that is consistent with the college's Institutional Effectiveness Plan.  Each local community college shall submit an Institutional Effectiveness Plan that indicates to the State Board of Community Colleges how the college will use this funding flexibility to meet the demands of the local community and maintain a presence in all previously funded categorical programs.

COURSE REPETITION POLICY FOR FIRE, RESCUE, AND POLICE PERSONNEL

Section 23.  The course repetition policy adopted by the State Board of Community Colleges in accordance with Section 102(a) of Chapter 321 of the 1993 Session Laws does not apply to fire, rescue, or law enforcement training courses taken by fire, rescue, or law enforcement personnel.

MODIFY 1997-98 FACULTY SALARY LIMITATIONS

Section 24.  Funds appropriated by the General Assembly for the 1997-98 fiscal year for the purpose of community college faculty salary increases shall be used only to provide community college faculty with salary increases.

PART VIII.  COLLEGES AND UNIVERSITIES

AID TO STUDENTS ATTENDING PRIVATE COLLEGES

Section 25.  (a)	Funds appropriated in this act to the Board of Governors of The University of North Carolina for aid to private colleges shall be disbursed in accordance with the provisions of G.S. 116-19, 116-21, and 116-22.  These funds shall provide up to seven hundred fifty dollars ($750.00) per full-time equivalent North Carolina undergraduate student enrolled at a private institution as of October 1 each year.
These funds shall be placed in a separate, identifiable account in each eligible institution's budget or chart of accounts.  All funds in this account shall be provided as scholarship funds for needy North Carolina students during the fiscal year.  Each student awarded a scholarship from this account shall be notified of the source of the funds and of the amount of the award.  Funds not utilized under G.S. 116-19 shall be for the tuition grant program as defined in subsection (b) of this section.
(b)	In addition to any funds appropriated pursuant to G.S. 116-19 and in addition to all other financial assistance made available to private educational institutions located within the State, or to students attending these institutions, there is granted to each full-time North Carolina undergraduate student attending an approved institution as defined in G.S. 116-22, a sum, not to exceed one thousand four hundred fifty dollars ($1,450) per academic year, which shall be distributed to the student as hereinafter provided.
The tuition grants provided for in this section shall be administered by the State Education Assistance Authority pursuant to rules adopted by the State Education Assistance Authority not inconsistent with this section.  The State Education Assistance Authority shall not approve any grant until it receives proper certification from an approved institution that the student applying for the grant is an eligible student.  Upon receipt of the certification, the State Education Assistance Authority shall remit at such times as it shall prescribe the grant to the approved institution on behalf, and to the credit, of the student.
In the event a student on whose behalf a grant has been paid is not enrolled and carrying a minimum academic load as of the tenth classroom day following the beginning of the school term for which the grant was paid, the institution shall refund the full amount of the grant to the State Education Assistance Authority.  Each approved institution shall be subject to examination by the State Auditor for the purpose of determining whether the institution has properly certified eligibility and enrollment of students and credited grants paid on the behalf of the students.
In the event there are not sufficient funds to provide each eligible student with a full grant:
(1)	The Board of Governors of The University of North Carolina, with the approval of the Office of State Budget and Management, may transfer available funds to meet the needs of the programs provided by subsections (a) and (b) of this section; and
(2)	Each eligible student shall receive a pro rata share of funds then available for the remainder of the academic year within the fiscal period covered by the current appropriation.
Any remaining funds shall revert to the General Fund.
(c)	Expenditures made pursuant to this section may be used only for secular educational purposes at nonprofit institutions of higher learning.  Expenditures made pursuant to this section shall not be used for any student who:
(1)	Is incarcerated in a State or federal correctional facility for committing a Class A, B, B1, or B2 felony; or
(2)	Is incarcerated in a State or federal correctional facility for committing a Class C through I felony and is not eligible for parole or release within 10 years.
(d)	The State Education Assistance Authority shall document the number of full-time equivalent North Carolina undergraduate students that are enrolled in off-campus programs and the State funds collected by each institution pursuant to G.S. 116-19 for those students.  The State Education Assistance Authority shall also document the number of scholarships and the amount of the scholarships that are awarded under G.S. 116-19 to students enrolled in off-campus programs.  An 'off-campus program' is any program offered for degree credit away from the institution's main permanent campus.

AID TO PRIVATE COLLEGES/LEGISLATIVE TUITION GRANT LIMITATIONS

Section 26.  (a)	The amount of a tuition grant awarded to a student enrolled in a degree program at a site away from the main campus of the approved private institution, as defined in G.S. 116-22(1), may be no more than the result of the ratio of the cost per credit hour for off-campus instruction at that site to the cost per credit hour for regular, full-time on-campus instruction, multiplied by the maximum grant award, or the maximum grant award allowable under Section 3 of this Title, whichever is less.
(b)	No Legislative Tuition Grant funds may be expended for a program at an off-campus site of a private institution, as defined in G.S. 116-22(1), established after May 15, 1987, unless (i) the private institution offering the program has previously notified and secured agreement from other private institutions operating degree programs in the county in which the off-campus program is located or operating in the counties adjacent to that county or (ii) the degree program is neither available nor planned in the county with the off-campus site or in the counties adjacent to that county.
An "off-campus program" is any program offered for degree credit away from the institution's main permanent campus.
(c)	Any member of the armed services as defined in G.S. 116-143-3(a), abiding in this State incident to active military duty, who does not qualify as a resident for tuition purposes as defined under G.S. 116-143.1, is eligible for a Legislative Tuition Grant pursuant to this section if the member is enrolled as a full-time student.  The member's Legislative Tuition Grant may not exceed the cost of tuition less any tuition assistance paid by the member's employer.

WAKE FOREST AND DUKE MEDICAL SCHOOL ASSISTANCE/FUNDING FORMULA

Section 27.  Funds appropriated in this act to the Board of Governors of The University of North Carolina for continuation of financial assistance to the medical schools of Duke University and Wake Forest University shall be disbursed on certifications of the respective schools of medicine that show the number of North Carolina residents as first-year, second-year, third-year, and fourth-year students in the medical school as of November 1, 1997, and November 1, 1998.  Disbursement to Wake Forest University shall be made in the amount of eight thousand dollars ($8,000) for each medical student who is a North Carolina resident, one thousand dollars ($1,000) of which shall be placed by the school in a fund to be used to provide financial aid to needy North Carolina students who are enrolled in the medical school.  The maximum aid given to any student from this fund in a given year may not exceed the amount of the difference in tuition and academic fees charged by the school and those charged at the School of Medicine at The University of North Carolina at Chapel Hill.
Disbursement to Duke University shall be made in the amount of five thousand dollars ($5,000) for each medical student who is a North Carolina resident, five hundred dollars ($500.00) of which shall be placed by the school in a fund to be used to provide student financial aid to financially needy North Carolina students who are enrolled in the medical school.  No individual student may be awarded assistance from this fund in excess of two thousand dollars ($2,000) each year.  In addition to this basic disbursement for each year of the biennium, a disbursement of one thousand dollars ($1,000) shall be made for each medical student who is a North Carolina resident in the first-year, second-year, third-year, and fourth-year classes to the extent that enrollment of each of those classes exceeds 30 North Carolina students.
The Board of Governors shall establish the criteria for determining the eligibility for financial aid of needy North Carolina students who are enrolled in the medical schools and shall review the grants or awards to eligible students.  The Board of Governors shall adopt rules for determining which students are residents of North Carolina for the purposes of these programs.  The Board shall also make any regulations as necessary to ensure that these funds are used directly for instruction in the medical programs of the schools and not for religious or other nonpublic purposes.  The Board shall encourage the two schools to orient students towards primary care, consistent with the directives of G.S. 143-613(a).  The two schools shall supply information necessary for the Board to comply with G.S. 143-613(d).

TRANSFER OF OVERHEAD RECEIPTS TO TRUST FUNDS/UNC SYSTEM

Section 28.  Section 2 of Chapter 936 of the 1989 Session Laws (1990 Session) expressed the intent of the General Assembly  "that overhead receipts derived from reimbursement of indirect costs on contracts and grants shall not continue to be budgeted as offsets to General Fund appropriations for current operations of the constituent institutions of the University of North Carolina".  Therefore,  G.S. 116-36.1(g) reads as rewritten:
"(g)	As used in this section, 'trust funds' means:
(1)	Moneys, or the proceeds of other forms of property, received by an institution as gifts, devises, or bequests that are neither presumed nor designated to be gifts, devises or bequests to the endowment fund of the institution;
(2)	Moneys received by an institution pursuant to grants from, or contracts with, the United States government or any agency or instrumentality thereof;
(3)	Moneys received by an institution pursuant to grants from, or contracts with, any State agencies, any political subdivisions of the State, any other states or nations or political subdivisions therefore any private entities whereby the institution undertakes, subject to terms and conditions specified by the entity providing the moneys, to conduct research, training or public service programs, or to provide financial aid to students;
(4)	Moneys collected by an institution to support extracurricular activities of students of the institution;
(5)	Moneys received from or for the operation by an institution of activities established for the benefit of scholarship funds or student activity programs;
(6)	Moneys received from or for the operation by an institution of any of its self-supporting auxiliary enterprises, including institutional student auxiliary enterprise funds for the operation of housing, food, health and laundry services;
(7)	Moneys received by an institution in respect to fees and other payments for services rendered by medical, dental or other health care professionals under an organized practice plan approved by the institution or under a contractual agreement between the institution and a hospital or other health care provider;
(8)	The net proceeds from the disposition effected pursuant to Chapter 146, Article 7 of any interest in real property owned by or under the supervision and control of an institution if interest in real property had first been acquired by gift, devise, or bequest or through expenditure of moneys defined in this subsection (g) as 'trust funds', except the net proceeds from the disposition of an interest in real property first acquired by the institution through expenditure of moneys received as a grant from a State agency;
(9)	Moneys received from the operation and maintenance of institutional forests and forest farmlands, provided, that such moneys shall be used, when used, by the institution for support of forest-related research, teaching and public service programs; and
(10)	Moneys received by an institution as reimbursement of overhead and other indirect costs associated with contracts and grants."

PART IX.  DEPARTMENT OF ADMINISTRATION

DOMESTIC VIOLENCE CENTER FUNDS TRANSFERRED

Section 29.  The funds appropriated to the Department of Administration, the North Carolina Council for Women, for the domestic violence centers, shall be administered in accordance with G.S. 50B-9, except that the North Carolina Coalition Against Domestic Violence, Incorporated, shall not receive a grant from funds appropriated under this act that exceeds ten thousand dollars ($10,000).

PARKING REVENUES

Section 30.  The Secretary of Administration may use funds from parking revenues that are in excess of parking system expense requirements to fund the ten dollars ($10.00) per month subsidies for van pools and transit passes.

PART X.  OFFICE OF THE GOVERNOR

HOME PROGRAM MATCHING FUNDS

Section 31.  (a)	Funds appropriated in this act to the North Carolina Housing Finance Agency for the federal HOME Program shall be used to match federal funds appropriated for the HOME Program.  In allocating State funds appropriated to match federal HOME Program funds, the Agency shall give priority to HOME Program projects, as follows:
(1)	First priority to projects that are located in counties designated as severely distressed counties under G.S. 105-130.40(c) or G.S. 105-151.17(c); and
(2)	Second priority to projects that benefit persons and families whose incomes are fifty percent (50%) or less of the median family income for the local area, with adjustments for family size, according to the latest figures available from the U.S. Department of Housing and Urban Development.
The Housing Finance Agency shall report to the Joint Legislative Commission on Governmental Operations by April 1 of each year concerning the status of the HOME Program and shall include in the report information on priorities met, types of activities funded, and types of activities not funded.
(b)	If the United States Congress changes the HOME Program such that matching funds are not required for a given program year, then the Agency shall not spend the matching funds appropriated under this act for that program year.
(c)	Funds appropriated in this act to match federal HOME Program funds shall not revert to the General Fund on June 30, 1998, and on June 30, 1999.

PART XI.  DEPARTMENT OF TRANSPORTATION

GLOBAL TRANSPARK AUTHORITY TO REIMBURSE HIGHWAY FUND FROM FEDERAL SOURCES

Section 32.  When funds are provided from the Highway Fund to the Global TransPark Authority for environmental impact statements or assessments and the Global TransPark Authority applies for and receives reimbursement for those expenses from federal sources up to one million eight hundred thousand dollars ($1,800,000), the federal reimbursements shall be paid over by the Global TransPark Authority into the Highway Fund within 30 days of receipt.  These funds shall be allocated to State-funded maintenance appropriations in the manner approved by the Board of Transportation.

AIRCRAFT AND FERRY ACQUISITIONS

Section 33.  Before approving the purchase of an aircraft from the Equipment Fund or a ferry in a Transportation Improvement Program, the Board of Transportation shall prepare an estimate of the operational costs and capital costs associated with the addition of the aircraft or ferry and shall report those additional costs to the General Assembly pursuant to G.S. 136-12(b), and to the Joint Legislative Commission on Governmental Operations.

HIGHWAY FUND ALLOCATIONS BY CONTROLLER

Section 34.  The Controller of the Department of Transportation shall allocate at the beginning of each fiscal year from the various appropriations made to the Department of Transportation in this act, Titles:

State Construction
State Funds to Match Federal Highway Aid
State Maintenance
Ferry Operations,

sufficient funds to eliminate all overdrafts on State maintenance and construction projects, and these allocations may not be diverted to other purposes.

CASH FLOW HIGHWAY FUND AND HIGHWAY TRUST FUND APPROPRIATIONS

Section 35.  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
For Fiscal Year 1999-00	$1,172.1 Million
For Fiscal Year 2000-01	$1,200.2 Million
For Fiscal Year 2001-02	$1,229.8 Million
For Fiscal Year 2002-03	$1,260.2 Million

Section 36.  The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
For Fiscal Year 1999-00	$   807.4 Million
For Fiscal Year 2000-01	$   834.7 Million
For Fiscal Year 2001-02	$   863.2 Million
For Fiscal Year 2002-03	$   892.8 Million

HIGHWAY FUND LIMITATIONS ON OVEREXPENDITURES

Section 37.  (a)	Overexpenditures from Section 4 of this act may be made by authorization of the Director of the Budget, Titles:
State Construction Primary Construction 
State Construction Urban Construction
Spot Safety Construction
State Construction Access and Public Service Roads
State Funds to Match Federal Highway Aid
State Maintenance
Ferry Operations,
provided that there are corresponding underexpenditures from these same Titles.  Overexpenditures or underexpenditures in any Titles may not vary by more than ten percent (10%) without prior consultation with the Advisory Budget Commission.  Written reports covering overexpenditures or underexpenditures of more than ten percent (10%) shall be made to the Joint Legislative Oversight Committee.  The reports shall be delivered to the Director of the Fiscal Research Division not less than 96 hours prior to the beginning of the Commission's full meeting.
(b)	Overexpenditures from Section 4 of this act, Titles:
State Construction Primary Construction
State Construction Urban Construction
Spot Safety Construction
State Construction Access and Public Service Roads
State Funds to Match Federal Highway Aid
State Maintenance
Ferry Operations,
for the purpose of providing additional positions shall be approved by the Director of the Budget and shall be reported on a quarterly basis to the Joint Legislative Highway Oversight Committee and to the Fiscal Research Division.

RESURFACED ROADS MAY BE WIDENED

Section 38.  Of the contract maintenance resurfacing program funds appropriated in this act to the Department of Transportation, an amount not to exceed fifteen percent (15%) of the Board of Transportation's allocation of these funds may be used for widening existing narrow pavements that are scheduled for resurfacing.

HIGHWAY FUND ADJUSTMENTS TO REFLECT ACTUAL REVENUE

Section 39.  Any unreserved credit balance in the Highway Fund on June 30 of each of the fiscal years of this biennium shall support appropriations in the succeeding fiscal year.  If all of the balance is not needed for these appropriations, the Director of the Budget may use the remaining excess to establish a reserve for access and public roads, a reserve for unforeseen happening of a state of affairs requiring prompt action as provided by G.S. 136-44.1, and other required reserves.  If all of the remaining excess is not used to establish these reserves, the remainder shall be allocated to the State-funded maintenance appropriations in the manner approved by the Board of Transportation.  The Board of Transportation shall report monthly to the Joint Legislative Highway Oversight Committee and the Fiscal Research Division about the use of the reserve for highway and maintenance.

DEPARTMENT OF TRANSPORTATION EXEMPTION FROM GENERAL STATUTES FOR EXPERIMENTAL PROJECT–CONGESTION MANAGEMENT

Section 40.  The Department of Transportation may enter into a design-build-warrant contract to develop, with Federal Highway Administration participation under The 1991 Intermodal Surface Transportation Efficiency Act, Title VI, Part B, Sections 6051-6059, a "Congestion Avoidance and Reduction for Autos and Trucks (CARAT)" system of traffic management for the greater Charlotte-Mecklenburg urban areas.  Notwithstanding any other provision of law, contractors, contractors' employees, and Department of Transportation employees involved in this project only do not have to be licensed by occupational licensing boards as "license" and "occupational licensing board" are defined in G.S. 93B-1 and for the purpose of entering into contracts, the Department of Transportation is exempted from the provisions of the following General Statutes:  G.S. 136-28.1, 143-52, 143-53, 143-58, 143-128, and 143-129.  These statutory exemptions are limited and available only to the extent necessary to comply with federal rules, regulations, and policies for completion of this project.
The Department of Transportation shall report quarterly to the Joint Legislative Highway Oversight Committee on its efforts to enter into a design-build-warrant contract and to award and construct the project.  The report shall include, but not be limited to, the number of types of firms bidding on the project, special qualifications of the firms bidding, and the effect statutory exemptions might have had on the award and construction of the project and the receipt of federal discretionary funding for the project.

ALLOCATION OF FUNDS FOR DRIVER TRAINING

Section 41.  In allocating funds for driver training, the State Board of Education shall consider the needs of small and low-wealth local school administrative units.

PART XII.  DEPARTMENT OF HUMAN RESOURCES

WILLIE M.

Section 42.  (a)	Legislative Findings.  The General Assembly finds:
(1)	That there is a need in North Carolina to provide appropriate treatment and education programs to children under the age of 18 who suffer from emotional, mental, or neurological handicaps accompanied by violent or assaultive behavior.
(2)	That children meeting these criteria have been identified as a class in the case of Willie M., et al. v. Hunt, et al. [Willie M., 3:79 CV 294-MU (Western District)]; and as defined in N.C.G.S. 122C-3 (13a) as Eligible Assaultive and Violent Children; and
(3)	That these children have a need for a variety of services, in addition to those normally provided, that may include, but are not limited to, residential treatment services, educational services, and independent living arrangements.
(b)	Funds appropriated by the General Assembly to the Department of Human Resources for serving members of the Willie M. Class shall be expended only for programs serving members of the Willie M. Class identified in Willie M., et al. v. Hunt, et al., or as Eligible Assaultive and Violent Children including evaluations of potential class members.  The Department shall reallocate these funds among services to Willie M. Class members during the year as it deems advisable in order to use the funds efficiently in providing appropriate services to Willie M. Class children.
(c)	Funds for the Department of Public Education.  Funds appropriated to the Department of Public Education in this act for members of the Willie M. Class, are to establish a supplemental reserve fund to serve only members of the class identified in Willie M., et al. v. Hunt, et al., or Eligible Assaultive and Violent Children.  These funds shall be allocated by the State Board of Education to the local education agencies to serve those class members who were not included in the regular average daily membership and the census of children with special needs, and to provide the additional program costs which exceed the per pupil allocation from the State Public School Fund and other State and federal funds for children with special needs.
(d)	The Department of Human Resources shall continue to implement its prospective unit cost reimbursement system and shall ensure that unit cost rates reflect reasonable costs by conducting cost center service type rate comparisons and cost center line item budget reviews as may be necessary, and based upon these reviews and comparisons, the Department shall reduce and/or cap rates to programs which are significantly higher than those rates paid to other programs for the same service.  Any exception to this requirement shall be approved by the Director of the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.
(e)  The Department of Human Resources shall implement a process to review those cases for whom treatment has been recommended whose annual cost is anticipated to be in excess of one hundred fifty percent (150%) of the average annual per client expenditure of the previous fiscal year and shall take actions to reduce these treatment costs where appropriate.
(f)  From existing funds available to it, the Department of Human Resources shall continue its process to document and assess individual class members' progress through the continuum of services.  Standardized measures of functioning shall be administered periodically to each member of the class, and the information generated from these measures shall be used to assess client progress and program effectiveness.
(g)  In fulfilling the responsibilities vested in it by the Constitution of North Carolina, the General Assembly finds:
(1)	That the General Assembly has evaluated the known needs of the State and has endeavored to satisfy those needs in comparison to their social and economic priorities; and 
(2)	The funds appropriated will enable the development and implementation of placement and services for the class members in Willie M., et al. v. Hunt, et al., or Eligible Assaultive and Violent Children within a reasonable period of time considered within the context of the needs of the class members, the other needs of the State and the resources available to the State.
(h)  The General Assembly supports the efforts of the responsible officials and agencies of the State to meet the requirements of the court order in Willie M., et al. v. Hunt, et al. [Willie M., 3:79 CV 294-MU (Western District)].  To ensure that Willie M. Class members are appropriately served, no State funds shall be expended on placement and services for Willie M. Class members except:
(1)	Funds specifically appropriated by the General Assembly for the placement and services of Willie M. Class members; and
(2)	Funds for placement and services for which Willie M. Class members are otherwise eligible.
This limitation shall not preclude the use of unexpended Willie M. funds from prior fiscal years to cover current or future needs of the Willie M. program subject to approval by the Director of the Budget.  These Willie M. expenditures shall not be subject to the requirements of G.S. 143-18.
(i)  Notwithstanding any other provision of law, if the Department of Human Resources determines that a local program is not providing appropriate services to members of the class identified in Willie M., et al. v. Hunt, et al., or Eligible Assaultive and Violent Children the Department may ensure the provision of these services through contracts with public or private agencies or by direct operation by the Department of such programs.
(j)  The Secretary of the Department of Human Resources shall adopt rules to be followed in the provision of services for disabled, violent, and assaultive children who have not reached their eighteenth birthday.  These rules shall allow for the continuation of services to any child the Secretary determines is being appropriately served until the end of the fiscal year in which the child reaches the age of 18 or until six months after the child reaches the age of 18, whichever period is longer.

THOMAS S.

Section 43.  (a)	Funds appropriated to the Department of Human Resources in this act for the 1997-98 and the 1998-99 fiscal years for members of the Thomas S. Class as identified in Thomas S., et al., vs. Bruton, [Thomas S., C-C-82-0418M (Western District)], shall be expended only for programs serving Thomas S. Class members or for services for those clients who are:
(1)	Adults with mental retardation, or who have been treated as if they had mental retardation, who were admitted to a State psychiatric hospital on or after March 22, 1984, and who are included on the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services' official list of prospective Class members;
(2)	Adults with mental retardation who have a documented history of State psychiatric hospital admissions regardless of admission date and who, without funding support, have a good probability of being readmitted to a State psychiatric hospital;
(3)	Adults with mental retardation who have never been admitted to a State psychiatric hospital but who have a documented history of behavior determined to be of danger to self or others that results in referrals for inpatient psychiatric treatment and who, without funding support, have a good probability of being admitted to a State psychiatric hospital; or
(4)	Adults who are included on the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services' official list of prospective class members and have yet to be confirmed as class members, who currently reside in the community, and who have a good probability of being admitted to a facility licensed as 'home for the aged and disabled'.
No more than five percent (5%) of the funds appropriated in this act for the Thomas S. program shall be used for clients meeting subdivisions (2), (3), or (4) of this subsection.
(b)	To ensure that Thomas S. Class members are appropriately served, no State funds shall be expended on placement and services for Thomas S. Class members except:
(1)	Funds specifically appropriated by the General Assembly for the placement and services of Thomas S. Class members; and
(2)	Funds for placement and services for which Thomas S. Class members are otherwise eligible.
(b1)  Thomas S. Funds may be expended to support services for Thomas S. Class members in adult care homes when the service needs of individual Class members in these homes cannot be met via the established maximum adult care home rate.
(c)	The Department of Human Resources shall continue to implement a prospective unit cost reimbursement system and shall ensure that unit cost rates reflect reasonable costs by conducting cost center service type rate comparisons and cost center line item budget reviews as may be necessary.
(d)	Reporting requirements.  The Department of Human Resources shall submit by April 1 of each fiscal year a report to the General Assembly on the progress achieved in serving members and prospective members of the Thomas S. Class.  The report shall include the following:
(1)	The number of Thomas S. clients confirmed as class members;
(2)	The number of individuals identified as prospective class members;
(3)	The number of class members or prospective class members added in the preceding 12 months due to their admission to a State psychiatric hospital;
(4)	A description of the types of treatment services provided to class members; and 
(5)	An analysis of the use of funds appropriated for the class.
(e)  Notwithstanding any other provision of law, if the Department of Human Resources determines that a local program is not providing minimally adequate services to members of the class identified in Thomas S., et al., vs. Bruton, [Thomas S., C-C-82-0418M (Western District)], or does not show a willingness to do so, the Department may ensure the provision of these services through contracts with public or private agencies or by direct operation by the Department of such programs.

MIXED BEVERAGE TAX FOR AREA MENTAL HEALTH PROGRAMS

Section 44.  Funds received by the Department of Human Resources from the tax levied on mixed beverages under G.S. 18B-804(b)(8) shall be expended by the Department of Human Resources as prescribed by G.S. 18B-805(h).  These funds shall be allocated to the area mental health programs for substance abuse services based on need and in accordance with an area program's annual Memorandum of Agreement.

CLINICAL SOCIAL WORKER EXEMPTION

Section 45.  Section 8 of Chapter 732 of the 1991 Session Laws reads as rewritten:
"Sec. 8.  This act becomes effective January 1, 1992.  G.S. 90B-10(b)(3)a. is repealed effective January 1, 1999.  The term of the additional Board position for clinical social worker created by this act shall commence upon the expiration of the term of the public member whose term expires first."

PHYSICIAN SERVICES

Section 46.  With the approval of the Office of State Budget and Management, the Department of Human Resources may use funds appropriated in this act for across-the-board salary increases and performance pay to offset similar increases in the costs of contracting with private and independent universities for the provision of physician services to clients in facilities operated by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.  This offsetting shall be done in the same manner as is currently done with constituent institutions of The University of North Carolina.

PRIVATE AGENCY UNIFORM COST FINDING REQUIREMENT

Section 47.  To ensure uniformity in rates charged to area programs and funded with State-allocated resources, the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services of the Department of Human Resources may require a private agency that provides services under contract with two or more area programs, except for hospital services that have an established Medicaid rate, to complete an agency-wide uniform cost finding in accordance with G.S. 122C-143.2(a) and G.S. 122C-147.2.  The resulting cost shall be the maximum included for the private agency in the contracting area program's unit cost finding.

NONSUPPLANTING OF MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE FUNDS

Section 48.  The Department of Human Resources shall ensure that counties do not reduce county appropriations and expenditures for area mental health, developmental disabilities, and substance abuse authorities because the authorities have received additional State appropriations for services.

CLIENT SERVICES MONITORING

Section 49.  The Department of Human Resources, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall utilize a system of monitoring and control for client services.  This system shall ascertain whether services are provided in a timely manner.  Notwithstanding any other provisions of law, the Division shall withhold area mental health agencies' administrative funds until services are provided in a timely manner.

TRANSFERS OF CERTAIN FUNDS AUTHORIZED

Section 50.  In order to assure maximum utilization of funds in county departments of social services, county or district health agencies, and area mental health, developmental disabilities and substance abuse authorities, the Director of the Budget is authorized to transfer excess funds appropriated to a specific service, program, or fund whether specified service in a block grant plan or General Fund appropriation, into another service, program, or fund for local services within the budget of the respective State agency.

LIABILITY INSURANCE

Section 51.  The Department of Human Resources, the Secretary of the Department of Environment, Health and Natural Resources, and the Department of Correction may provide medical liability coverage not to exceed one million dollars ($1,000,000) on behalf of employees of the Departments licensed to practice medicine or dentistry and on behalf of physicians in all residency training programs from The University of North Carolina who are in training at institutions operated by the Department of Human Resources.  This coverage may include commercial insurance or self-insurance and shall cover these individuals for their acts or omissions only while they are engaged in providing medical and dental services pursuant to their State employment or training.
The coverage provided under this section shall not cover any individual for any act or omission that the individual knows or reasonably should know constitutes a violation of the applicable criminal laws of any state or the United States, or that arises out of any sexual, fraudulent, criminal or malicious act, or out of any act amounting to willful or wanton negligence.
The coverage provided pursuant to this section shall not require any additional appropriations and shall not apply to any individual providing contractual service to the Department of Human Resources, the Department of Environment, Health, and Natural Resources, or the Department of Correction, with the exception that coverage may include physicians in all residency training programs from The University of North Carolina who are in training at institutions operated by the Department of Human Resources.

LIMITATION ON USE OF SPECIAL ALZHEIMER'S UNIT IN WILSON

Section 52.  The Special Alzheimer's Unit established in Wilson by funds appropriated in this act shall serve only those clients who cannot be served by any similar private facility.

THOMAS S. LAWSUIT COMPLIANCE

Section 53.  The Department of Justice and the Department of Human Resources shall pursue all administrative and legal options necessary to enable the State to resolve the Thomas S. Lawsuit in the most expeditious and cost-effective manner possible and to seek elimination of the necessity for oversight by a special master.

MEDICAID

Section 54.  (a)	Funds appropriated in this Title for services provided in accordance with Title XIX of the Social Security Act (Medicaid) are for both the categorically needy and the medically needy.  Funds appropriated for these services shall be expended in accordance with the following schedule of services and payment bases.  All services and payments are subject to the language at the end of this subsection.
Services and payment bases:
(1)	Hospital-Inpatient - Payment for hospital inpatient services will be prescribed in the State Plan as established by the Department of Human Resources.  Administrative days for any period of hospitalization shall be limited to a maximum of three days.
(2)	Hospital-Outpatient - Eighty percent (80%) of allowable costs or a prospective reimbursement plan as established by the Department of Human Resources.
(3)	Nursing Facilities - Payment for nursing facility services will be prescribed in the State Plan as established by the Department of Human Resources.  Nursing facilities providing services to Medicaid recipients who also qualify for Medicare, must be enrolled in the Medicare program as a condition of participation in the Medicaid program.  State facilities are not subject to the requirement to enroll in the Medicare Program.
(4)	Intermediate Care Facilities for the Mentally Retarded - As prescribed in the State Plan as established by the Department of Human Resources.
(5)	Drugs - Drug costs as allowed by federal regulations plus a  professional services fee per month excluding refills for the same drug or generic equivalent during the same month.  Reimbursement shall be available for up to six prescriptions per recipient, per month, including refills.  Payments for drugs are subject to the provisions of subsection (f) of this section and to the provisions at the end of subsection (a) of this section, or in accordance with the State Plan adopted by the Department of Human Resources consistent with federal reimbursement regulations.  Payment of the professional services fee shall be made in accordance with the plan adopted by the Department of Human Resources, consistent with federal reimbursement regulations.  The professional services fee shall be five dollars and sixty cents ($5.60) per prescription.  Adjustments to the professional services fee shall be established by the General Assembly.
(6)	Physicians, Chiropractors, Podiatrists, Optometrists, Dentists, Certified Nurse Midwife Services - Fee schedules as developed by the Department of Human Resources.  Payments for dental services are subject to the provisions of subsection (g) of this section.
(7)	Community Alternative Program, EPSDT Screens - Payment to be made in accordance with rate schedule developed by the Department of Human Resources.
(8)	Home Health and Related Services, Private Duty Nursing, Clinic Services, Prepaid Health Plans, Durable Medical Equipment - Payment to be made according to reimbursement plans developed by the Department of Human Resources.
(9)	Medicare Buy-In - Social Security Administration premium.
(10)	Ambulance Services - Uniform fee schedules as developed by the Department of Human Resources.
(11)	Hearing Aids - Actual cost plus a dispensing fee.
(12)	Rural Health Clinic Services - Provider based - reasonable cost; nonprovider based - single cost reimbursement rate per clinic visit.
(13)	Family Planning - Negotiated rate for local health departments.  For other providers - see specific services, for instance, hospitals, physicians.
(14)	Independent Laboratory and X-Ray Services - Uniform fee schedules as developed by the Department of Human Resources.
(15)	Optical Supplies - One hundred percent (100%) of reasonable wholesale cost of materials.
(16)	Ambulatory Surgical Centers - Payment as prescribed in the reimbursement plan established by the Department of Human Resources.
(17)	Medicare Crossover Claims - An amount up to the actual coinsurance or deductible or both, in accordance with the Plan, as approved by the Department of Human Resources.
(18)	Physical Therapy and Speech Therapy - Services limited to EPSDT eligible children.  Payments are to be made only to qualified providers at rates negotiated by the Department of Human Resources.
(19)	Personal Care Services - Payment in accordance with Plan approved by the Department of Human Resources.
(20)	Case Management Services - Reimbursement in accordance with the availability of funds to be transferred within the Department of Human Resources.
(21)	Hospice - Services may be provided in accordance with Plan developed by the Department of Human Resources.
(22)	Other Mental Health Services - Unless otherwise covered by this section, coverage is limited to agencies meeting the requirements of the rules established by the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services, and reimbursement is made in accordance with a Plan developed by the Department of Human Resources not to exceed the upper limits established in federal regulations.
(23)	Medically Necessary Prosthetics or Orthotics for EPSDT Eligible Children - Reimbursement in accordance with Plan approved by the Department of Human Resources.
(24)	Health Insurance Premiums - Payments to be made in accordance with the Plan adopted by the Department of Human Resources consistent with federal regulations.
(25)	Medical Care/Other Remedial Care - Services not covered elsewhere in this section include related services in schools; health professional services provided outside the clinic setting to meet maternal and infant health goals; and services to meet federal EPSDT mandates.  Services addressed by this paragraph are limited to those prescribed in the State Plan as established by the Department of Human Resources.  Providers of these services must be certified as meeting program standards of the Department of Environment, Health, and Natural Resources.
(26)	Pregnancy Related Services - Covered Services for pregnant women shall include nutritional counseling, psychosocial counseling, and predelivery and postpartum home visits by maternity care coordinators and public health nurses.
Services and payment bases may be changed with the approval of the Director of the Budget.
Reimbursement is available for up to 24 visits per recipient per year to any one or combination of the following:  physicians, clinics, hospital outpatient, optometrists, chiropractors, and podiatrists.  Prenatal services, all EPSDT children, and emergency rooms are exempt from the visit limitations contained in this paragraph.  Exceptions may be authorized by the Department of Human Resources where the life of the patient would be threatened without such additional care.  Any person who is determined by the Department to be exempt from the 24-visit limitation may also be exempt from the six-prescription limitation.
(b)	Allocation of Nonfederal Cost of Medicaid.  The State shall pay eighty-five percent (85%); the county shall pay fifteen percent (15%) of the nonfederal costs of all applicable services listed in this section.
(c)	Co-payment for Medicaid Services.  The Department of Human Resources may establish co-payment up to the maximum permitted by federal law and regulation.
(d)	Medicaid and Aid to Families with Dependent Children Income Eligibility Standards.  The maximum net family annual income eligibility standards for Medicaid and Aid to Families with Dependent Children, and the Standard of Need for Aid to Families with Dependent Children shall be as follows:
Categorically Needy	Medically Needy
Family	Standard	AFDC
Size	Of Need	Payment	AA, AB, AD*
Level*
	1	$ 4,344	$ 2,172	$2,900
	2	5,664	2,832	3,800
	3	6,528	3,264	4,400
	4	7,128	3,564	4,800
	5	7,776	3,888	5,200
	6	8,376	4,188	5,600
	7	8,952	4,476	6,000
	8	9,256	4,680	6,300
*Aid to Families with Dependent Children (AFDC); Aid to the Aged (AA); Aid to the Blind (AB); and Aid to the Disabled (AD).
The payment level for Aid to Families with Dependent Children shall be fifty percent (50%) of the standard of need.
These standards may be changed with the approval of the Director of the Budget with the advice of the Advisory Budget Commission.
(e)  All Elderly Blind and Disabled Persons who receive Supplemental Security Income are eligible for Medicaid coverage.
(f)  ICF and ICF/MR Work Incentive Allowances.  The Department of Human Resources may provide an incentive allowance to Medicaid eligible recipients of ICF and ICF/MR facilities who are regularly engaged in work activities as part of their developmental plan and for whom retention of additional income contributes to their achievement of independence.  The State funds required to match the federal funds that are required by these allowances shall be provided from savings within the Medicaid budget or from other unbudgeted funds available to the Department.  The incentive allowances may be as follows:

Monthly Net Wages	Monthly Incentive Allowance
$1.00 to $100.99	Up to $50.00
$101.00 to $200.99	$80.00
$201.00 to $300.99	$130.00
$301.00 and greater	$212.00.

(g)  Dental Coverage Limits.  Dental services shall be provided on a restricted basis in accordance with rules adopted by the Department to implement this subsection.
(h)  Dispensing of Generic Drugs.  Notwithstanding G.S. 90-85.27 through G.S. 90-85.31, under the Medical Assistance Program (Title XIX of the Social Security Act) a prescription order for a drug designated by a trade or brand name shall be considered to be an order for the drug by its established or generic name, except when the prescriber personally indicates, either orally or in his own handwriting on the prescription order, "dispense as written" or words of similar meaning.  Generic drugs, when available in the pharmacy, shall be dispensed at a lower cost to the Medical Assistance Program rather than trade or brand name drugs, subject to the prescriber's "dispense as written" order as noted above.
As used in this subsection "brand name" means the proprietary name the manufacturer places upon a drug product or on its container, label, or wrapping at the time of packaging; and "established name" has the same meaning as in section 502(e)(3) of the Federal Food, Drug and Cosmetic Act as amended, 21 U.S.C. § 352(e)(3).
(i)  Exceptions to Service Limitations, Eligibility Requirements, and Payments.  Service limitations, eligibility requirements, and payments, and payments bases in this section may be waived by the Department of Human Resources, with the approval of the Director of the Budget, to allow the Department to carry out pilot programs for prepaid health plans, managed care plans, or community-based services programs in accordance with plans approved by the United States Department of Health and Human Services, or when the Department determines that such a waiver will result in a reduction in the total Medicaid costs for the recipient.
(j)  Volume Purchase Plans and Single Source Procurement.  The Department of Human Resources, 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 similar processes in order to improve cost containment.
(k)  Cost Containment Programs.  The Department of Human Resources, Division of Medical Assistance, may undertake cost containment programs including preadmissions to hospitals and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.
(l)  For all Medicaid eligibility classifications for which the federal poverty level is used as an income limit for eligibility determination, the income limits will be updated each April 1 immediately following publication of federal poverty guidelines.
(m)  The Department of Human Resources shall provide Medicaid to 19-, 20-, and 21-year-olds in accordance with federal rules and regulations.
(n)  The Department of Human Resources shall provide coverage to pregnant women and children according to the following schedule:
(1)	Pregnant women with incomes equal to or less than one hundred eighty-five percent (185%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
(2)	Infants under the age of 1 with family incomes equal to or less than one hundred eighty-five percent (185%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
(3)	Children aged 1 through 5 with family incomes equal to or less than one hundred thirty-three percent (133%) of the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
(4)	Children aged 6 through 18 with family incomes equal to or less than the federal poverty guidelines as revised each April 1 shall be covered for Medicaid benefits.
(5)	The Department of Human Resources shall provide Medicaid coverage for adoptive children with special or rehabilitative needs regardless of the adoptive family's income.
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.  In order to reduce county administrative costs and to expedite the provision of medical services to pregnant women, to infants, and to children described in subdivisions (3) and (4) of this subsection, no resources test shall be applied.
(o)  The Department of Human Resources may use Medicaid funds budgeted from program services to support the cost of administrative activities to the extent that these administrative activities produce a net savings in services requirements.  Administrative initiatives funded by this section shall be first approved by the Office of State Budget and Management.
(p)  The Department of Human Resources shall submit a monthly status report on expenditures for acute care and long-term care services to the Fiscal Research Division and to the Office of State Budget and Management.  This report shall include an analysis of budgeted versus actual experience for eligibles by category and for long-term care beds.  In addition, the Department shall revise the program's projected spending for the current fiscal year and the estimated spending for the subsequent fiscal year on a quarterly basis.  Reports for the preceding month shall be forwarded to the Fiscal Research Division and to the Office of State Budget and Management no later than the third Thursday of the month.
(q)  The Division of Medical Assistance, Department of Human Resources, may provide incentives to counties that successfully recover fraudulently spent Medicaid funds by sharing State savings with counties responsible for the recovery of the fraudulently spent funds.
(r)  If first approved by the Office of State Budget and Management, the Division of Medical Assistance, Department of Human Resources, may use funds that are identified to support the cost of development and acquisition of equipment and software through contractual means to improve and enhance information systems that provide management information and claims processing.
(s)  The Division of Medical Assistance, Department of Human Resources, may administer Medicaid estate recovery mandated by the Omnibus Budget Reconciliation Act of 1993, (OBRA 1993), 42 U.S.C. § 1396p(b), and G.S. 108-70.5 using temporary rules pending approval of final rules promulgated pursuant to Chapter 150B of the General Statutes.
(t)  The Department of Human Resources may adopt temporary rules according to the procedures established in G.S. 150B-21.1 when it finds that such rules are necessary to maximize receipt of federal funds, to reduce Medicaid expenditures, and to reduce fraud and abuse.  Prior to the filing of these temporary rules with the Office of Administrative Hearings, the Department shall consult with the Office of State Budget and Management on the possible fiscal impact of the temporary rule and its effect on State appropriations and local governments.

NONMEDICAID REIMBURSEMENT

Section 55.  Providers of medical services under the various State programs, other than Medicaid, offering medical care to citizens of the State shall be reimbursed at rates no more than those under the North Carolina Medical Assistance Program.  Hospitals that provide psychiatric inpatient care for Thomas S. Class members or adults with mental retardation and mental illness may be paid an additional incentive payment not to exceed fifteen percent (15%) of their regular daily per diem reimbursement.
The Department of Human Resources may reimburse hospitals at the full prospective per diem rates without regard to the Medical Assistance Program's annual limits on hospital days.  When the Medical Assistance Program's per diem rates for inpatient services and its interim rates for outpatient services are used to reimburse providers in non-Medicaid medical service programs, retroactive adjustments to claims already paid shall not be required.
Notwithstanding the provisions of paragraph one, the Department of Human Resources may negotiate with providers of medical services under the various Department of Human Resources programs, other than Medicaid, for rates as close as possible to Medicaid rates for the following purposes:  contracts or agreements for medical services and purchases of medical equipment and other medical supplies.  These negotiated rates are allowable only to meet the medical needs of its non-Medicaid eligible patients, residents, and clients who require such services which cannot be provided when limited to the Medicaid rate.
Maximum net family annual income eligibility standards for services in these programs shall be as follows:

	Medical Eye	All
	Family Size	Care Adults	Rehabilitation	Other
	1	$4,860	$  8,364	 $ 4,200
	2	       5,940	10,944	5,300
	3	6,204	13,500	6,400
	4	       7,284	16,092	7,500
	5	7,824	18,648	7,900
	6	8,220	21,228	8,300
	7	8,772	21,708	8,800
	8	9,312	22,220	9,300.

The eligibility level for children in the Medical Eye Care Program in the Division of Services for the Blind and for adults in the Atypical Antipsychotic Medication Program in the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services shall be one hundred percent (100%) of the federal poverty guidelines, as revised annually by the United States Department of Health and Human Services and in effect on July 1 of each fiscal year.  Additionally, those adults enrolled in the Atypical Antipsychotic Medication Program who become gainfully employed may continue to be eligible to receive State support, in decreasing amounts, for the purchase of atypical antipsychotic medication and related services up to three hundred percent (300%) of the poverty level.  State financial participation  in the Atypical Antipsychotic Medication Program for these enrollees who become gainfully employed is as follows:

	Income	State Participation	Client Participation
	(% of poverty)
	0-100%	100%	0%
	101-120%	95%	5%
	121-140%	85%	15%
	141-160%	75%	25%
	161-180%	65%	35%
	181-200%	55%	45%
	201-220%	45%	55%
	221-240%	35%	65%
	241-260%	25%	75%
	261-280%	15%	85%
	281-300%	5%	95%
	301%-over	0%	100%.

The Department of Human Resources shall contract at, or as close as possible to, Medicaid rates for medical services provided to residents of State facilities of the Department.

REVIEW OF AUTOMATED COLLECTION AND TRACKING SYSTEM

Section 56.  The Information Resource Management Commission shall conduct a quarterly review of the Automated Collection and Tracking System (ACTS) project being developed by the Department of Human Resources.  The review shall include an analysis of the problems encountered and progress achieved, identify critical issues to be resolved, and estimate the final cost and date of completion.  The review shall be submitted through the Office of the State Controller to the chairs of the House and Senate Appropriations committees, the chairs of the House and Senate Human Resources Appropriations subcommittees, the State Budget Director, and to the Director of the Fiscal Research Division of the Legislative Services Office of the General Assembly no later than the last day of each quarter.

ADULT CARE HOME REIMBURSEMENTS

Section 57.  (a)	The eligibility of Special Assistance recipients residing in adult care homes on August 1, 1995, shall not be affected by an income reduction in the Special Assistance eligibility criteria resulting from adoption of the Rate Setting Methodology Report and Related Services, providing these recipients are otherwise eligible.  The maximum monthly rate for these residents in adult care home facilities shall be nine hundred seventy-five dollars ($975.00) per month for ambulatory residents and one thousand seventeen dollars ($1,017) per month for semiambulatory residents.
(b)	The State shall pay fifty percent (50%) and the county shall pay fifty percent (50%) of the nonfederal costs of Medicaid services paid to adult care home facilities.  As Medicaid personal care requirements increase, the county matching share shall be capped until it equals fifteen percent (15%) of the nonfederal Medicaid personal care requirements. 
(c)	Effective July 1, 1997, the maximum monthly rate for residents in adult care home facilities shall be eight hundred ninety-three dollars ($893.00) per month per resident 
(d)	Effective July 1, 1998, the maximum monthly rate for residents in adult care home facilities shall be nine hundred fifteen dollars ($915.00) per month per resident.

ADOPTION SUBSIDY

Section 58.  The maximum rates for state participation in the adoption assistance program are established on a graduated scale as follows:
(1)	$315.00 per child per month for children aged birth through 5;
(2)	$365.00 per child per month for children aged 6 through 12; and
(3)	$415.00 per child per month for children aged 13 through 18.

FOSTER CARE

Section 59.  The maximum rates for State participation in the foster care assistance program are established on a graduated scale as follows:
(1)	$315.00 per child per month for children aged birth through 5;
(2)	$365.00 per child per month for children aged 6 through 12; and
(3)	$415.00 per child per month for children aged 13 through 18.
Of these amounts, fifteen dollars ($15.00) is a special needs allowance for the child.

CHILD SUPPORT RESERVE SHALL NOT REVERT

Section 60.  (a)	Any funds appropriated to the Reserve for Child Support Legislation for the 1995-96 fiscal year but not expended as of June 30, 1997, shall not revert but shall remain available for the 1997-98 fiscal year to implement the provisions contained in Chapter 538 of the 1995 Session Laws.
(b)	This section becomes effective June 30, 1996.

CLARIFICATION OF AUTHORIZED ADDITIONAL USE OF HIV FOSTER CARE AND ADOPTIVE FAMILY FUNDS

Section 61.  In addition to providing board payments to foster and adoptive families of HIV-infected children as prescribed in Chapter 324 of the 1995 Session Laws, any additional funds remaining that were appropriated in Chapter 324 of the 1995 Session Laws for this purpose shall be used as follows:
(1)	To provide medical training in avoiding HIV transmission in the home; and
(2)	To transfer funds to the Department of Environment, Health, and Natural Resources to create three social work positions within the Department of Environment, Health, and Natural Resources, for the eastern part of North Carolina to enable the case-managing of families with HIV-infected children so that the children and the parents get access to medical care and so that child protective services issues are addressed rapidly and effectively.  The three positions shall be medically based and located:
a.	One in the northeast, covering Northampton, Hertford, Halifax, Gates, Chowan, Perquimans, Pasquotank, Camden, Currituck, Bertie, Wilson, Edgecombe, and Nash Counties;
b.	One in the central east, covering Martin, Pitt, Washington, Tyrrell, Dare, Hyde, Beaufort, Jones, Greene, Craven, and Pamlico Counties; and
c.	One in the southeast, covering New Hanover, Robeson, Brunswick, Carteret, Onslow, Lenoir, Pender, Duplin, Bladen, and Columbus Counties.

EXTEND CABARRUS COUNTY WORK FIRST AND FOOD STAMP WORKFARE PILOT PROGRAM

Section 62.  Notwithstanding any law to the contrary, the Department of Human Resources shall designate Cabarrus County as a pilot county for the purpose of conducting a demonstration Workfare Program for certain WORK FIRST and Food Stamp recipients.  Immediately upon the ratification of this act, the Department shall seek all federal waivers necessary to allow this demonstration program.  To the extent that this act or the program established pursuant to it conflicts with any State law, the program supersedes that law.           
(a)	The Cabarrus County demonstration Workfare Program for certain WORK FIRST and Food Stamp recipients shall:
(1)	Provide job opportunities to all able-bodied WORK FIRST and Food Stamp recipients who:
a.	Are not eligible for the JOBS program;
b.	Are between the ages of 18 and 64;   
c.	Are not caring for a child under one year of age;
d.	Are working less than 30 hours per week; and  
e.	Are not full-time high school students or the equivalent;                  
(2)	Create job opportunities in the public, the private, nonprofit, and the private, for-profit sector, primarily in the human services areas by allowing Cabarrus County to use grant diversions, consisting of the WORK FIRST benefits and the cash value of Food Stamps that would be paid to otherwise eligible recipients to match employer funds to subsidize the employment of these recipients.  Human service area jobs will meet such socially necessary needs as day care work, nursing home aide work, and in-home aide work; 
(3)	Allow wages paid to these recipients, which contain grant-diverted funds, to be exempt from income for purposes of determining eligibility for assistance; 
(4) 	Structure payment of wages to these recipients such that they will be considered income, in order to make recipients eligible for the federal earned income tax credit;
(5)	Create work experience opportunities in the private sector more realistically to reflect the world of work;
(6)	Require these recipients to participate in the development of an opportunity contract, outlining the responsibilities of the recipient and agency, as well as the incentives for compliance and the sanctions for noncompliance; 
(7) 	Require all these recipients who participate in the program to pursue and accept employment, full or part time, subsidized or unsubsidized, as a condition for continued eligibility for WORK FIRST and Food Stamp assistance; 
(8) 	Require job search training of all participants;
(9) 	Require monitored job search of all participants until employment is found or until other work activities of up to 40 hours per week are in place;
(10) 	Provide child care by allowing Cabarrus County to use grant diversions, consisting of the Family Support Act child day care subsidies that would be paid to otherwise eligible recipients, and transportation as required;
(11)	Create a positive work incentive by providing wage incentives to participants who are in compliance with the program, equal to the first thirty dollars ($30.00) and one-third of the remainder of monthly gross income for a period of up to two years; 
(12)	Provide enhanced Food Stamp benefits after participants are employed and are in program compliance by using the thirty dollars ($30.00) and one-third of the remainder wage incentive as an income exemption;                  
(13)	Provide time-limited sanctions, or withholding of benefits for the adult members of the household of all WORK FIRST and Food Stamp benefits for noncompliance, beginning with the first sanction period equal to the time necessary to come into compliance, second sanction period – four months, third and subsequent sanctions – eight months; and
(14)	Provide automatic Medicaid coverage for children and pregnant adults of sanctioned families by transferring the children administratively to the Medicaid for Indigent Children (MIC) Program and by transferring the pregnant adults administratively to the Medicaid for Pregnant Women (MPW) Program.
(b)	An adjunct program to the demonstration program prescribed in subsection (a) of this section shall:  
(1) 	Require WORK FIRST recipients who are mandated JOBS participants to pursue and accept employment, full or part time, subsidized or unsubsidized, as part of their job plan.  The maximum number of hours delegated to job activities, including employment, shall be 40 hours per week.  WORK FIRST recipients who are JOBS eligible and who are caring for children under 5 years of age shall, in this program, not be limited to 20 hours per week; 
(2) 	Require WORK FIRST recipients who are potential JOBS participants to engage in job search until either employment is found or they become JOBS eligible; and 
(3) 	Ensure that sanctions for noncompliance and provision of Medicaid coverage shall be as provided in subdivisions (13) and (14) of subsection (a) of this section. 
(c)	This act shall be funded by Cabarrus County using the grant diversions and administrative transfers prescribed in Section 2 of this act, together with federal and State administrative funding allocated to Cabarrus County for the public assistance and JOBS programs.
(d)	The Department of Human Resources shall evaluate the Cabarrus County Demonstration Project and report to the General Assembly on or before May 1, 1998.
(e)  This act becomes effective July 1, 1995, and shall expire on January 1, 1999.

SENIOR CENTER OUTREACH

Section 63.  (a)	Funds appropriated to the Department of Human Resources, Division of Aging, for the 1997-99 fiscal biennium, shall be used by the Division of Aging to enhance senior center programs as follows:
(1)	To test "satellite" services provided by existing senior centers to unserved or underserved areas; or
(2)	To provide start-up funds for new senior centers.
All of these funds shall be allocated by October 1 of each fiscal year.
(b)	Prior to funds being allocated pursuant to this section for start-up funds for a new senior center, the county commissioners of the county in which the new center will be located shall:
(1)	Formally endorse the need for such a center;
(2)	Formally agree on the sponsoring agency for the center; and
(3)	Make a formal commitment to use local funds to support the ongoing operation of the center.
(c)	State funding shall not exceed ninety percent (90%) of reimbursable costs.

DAY CARE ALLOCATION FORMULA

Section 64.  (a)	To simplify current day care allocation methodology and more equitably distribute State day care funds, the Department of Human Resources shall apply the following allocation formula to all noncategorical federal and State day care funds used to pay the costs of necessary day care for minor children of needy families:
(1)	One-third of budgeted funds shall be distributed according to the county's population in relation to the total population of the State;
(2)	One-third of the budgeted funds shall be distributed according to the number of children under 6 years of age in a county who are living in families whose income is below the State poverty level in relation to the total number of children under 6 in the State in families whose income is below the poverty level; and
(3)	One-third of budgeted funds shall be distributed according to the number of working mothers with children under 6 years of age in a county in relation to the total number of working mothers with children under 6 in the State.
(b)	A county's initial allocation shall not be less than that county's total expenditures for child care in fiscal year 1995-96.

DAY CARE FUNDS MATCHING REQUIREMENT

Section 65.  No local matching funds may be required by the Department of Human Resources as a condition of any locality's receiving any State day care funds appropriated by this act unless federal law requires such a match.

CHILD DAY CARE REVOLVING LOAN FUND

Section 66.  Notwithstanding any law to the contrary, funds budgeted for the Child Day 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 to pay the Department's cost of administering the program.

EARLY CHILDHOOD EDUCATION AND DEVELOPMENT INITIATIVES QUALITY ASSURANCE/ACCOUNTABILITY

Section 67.  (a)	The General Assembly finds, in consultation with the Governor, that it is essential to continue developing comprehensive programs that provide high quality early childhood education and development services locally for children and their families.  The General Assembly also finds that it is equally essential that these programs be developed in a manner that will provide both quality assurance and performance-based accountability to the children, their families, their communities, and the State.
(b)	The Department of Human Resources shall develop and implement a performance-based evaluation system to evaluate the Early Childhood Education and Development Initiatives authorized by Part 10B of Article 3 of Chapter 143B of the General Statutes, as enacted.  The Department shall design this system:
(1)	To incorporate the elements of a formative evaluation, including process and efficiency studies, and of a summative evaluation, including outcome and effectiveness studies, in order to:
a.	Provide information to the Department and to the General Assembly on how to improve and refine the Programs; and
b.	Enable the Department and the General Assembly to assess the overall quality and impact of the exiting Programs and any future ones; and
(2)	To focus the Programs, as they develop and continue, on quality assurance, by making quality a central and ongoing priority and to ensure that quality improvement efforts address outcomes, such as functions and processes, rather than persons, specific details, or paperwork;
(3)	To use reliable statistical methods to measure performance of processes, functions, efforts, and outcomes, which methods shall allow adequate tracking of children and families through the program and into the school system, in order to provide a real, objective measure of the outcome of the Programs; and
(4)	To provide a detailed fiscal analysis of the use to which State funds for these Programs are put.

COMMUNITY-BASED ALTERNATIVES PARTICIPATION

Section 68.  County governments participating in the Community-Based Alternatives Program shall certify annually to the Division of Youth Services, Department of Human Resources, that Community-Based Alternatives Aid to Counties shall not be used to duplicate or supplant other programs within the county.

DYS CONTINGENCY FOR OVER ENROLLMENT PERIODS IN STATE-OPERATED DETENTION CENTERS

Section 69.  Notwithstanding the provisions of G.S. 143-23, the Department of Human Resources, Division of Youth Services, with the approval of the Office of State Budget and Management, may use whatever resources that are available to fund extra direct care staff, teaching staff, and other direct care costs in a State-operated detention center when its population exceeds one hundred twenty percent (120%) of its stated bed capacity for 30 days or more.  When the population of a State-operated detention center falls below one hundred twenty percent (120%) of its capacity for more than a 30-day period, the extra staffing shall be discontinued.

OWNERSHIP, CUSTODY, OR CONTROL OF VEHICLES PURCHASED BY THE DIVISION OF VOCATIONAL REHABILITATION SERVICES

Section 70.  The Division of Vocational Rehabilitation Services, Department of Human Resources, may use funds made available to it to purchase vehicles to be used primarily to transport clients being served pursuant to the Rehabilitation Act of 1973, 42 U.S.C. § 701, et seq., as amended.  Notwithstanding the provisions of G.S. 143-341(8)i.3., the Division of Vocational Rehabilitation Services shall not be required to transfer ownership, custody, or control of any vehicle purchased pursuant to this section to the Department of Administration.

DHR EMPLOYEES/IN-KIND MATCH

Section 71.  Notwithstanding the limitation of G.S. 143B-139.4, the Secretary of the Department of Human Resources may assign employees of the Office of Rural Health and Resource Development to serve as in-kind match to nonprofit corporations working to establish health care programs that will improve health care access while controlling costs.

PRIMARY CARE FUNDS

Section 72.  The Department of Human Resources may combine and allocate funds appropriated for the Office of Rural Health and Resource Development for recruitment and retention of primary care providers in medically underserved areas into one Provider Incentive Fund.  Funds in the Provider Incentive Fund may be allocated for purposes of enhancing recruitment and retention of primary care providers in medically underserved areas and for other purposes related to the enhancement of health services to medically underserved communities.

MODIFIED WILDERNESS EDUCATION CAMP PROGRAM

Section 73.  Of the three million thirty-six thousand three hundred fifty-two dollars ($3,036,352) appropriated in Chapter 324 of the 1995 Session Laws for two additional Wilderness Camps approved by the 1993 General Assembly, Extra Session 1994, one million five hundred eighteen thousand one hundred seventy-six dollars ($1,518,176) shall be used to fund a Modified Wilderness Education Camp Program in the Department of Human Resources that shall emphasize education for juveniles under the age of 16 referred by the public schools.  If the Modified Wilderness Education Camp is discontinued, funds for this purpose shall be directed to operate a traditional Wilderness Camp Program.

S.O.S. AND FAMILY RESOURCE CENTER GRANT PROGRAMS ADMINISTRATIVE COST LIMITS

Section 74.  (a)	Of the funds appropriated to the Department of Human Resources in this act, the Department may use up to a total of three hundred fifty thousand dollars ($350,000) each fiscal year of the 1997-99 biennium to administer the S.O.S. programs, and to evaluate the local S.O.S. programs.  The Department may contract with appropriate public or nonprofit agencies to provide the technical assistance, including training and related services.
(b)	Of the funds appropriated in this act to the Department of Human Resources for the Family Resource Center Grant Program, the Department may use up to two hundred fifty thousand dollars ($250,000) for each fiscal year of the 1997-99 biennium to administer the Program.

CONSIDERATION OF PRIVATIZATION OF RICHMOND COUNTY BOUNDOVER DETENTION FACILITY

Section 75.  The Department of Human Resources may solicit bids to determine whether privatization of the operation of the Richmond County Boundover Unit, designed to serve a small but special population of juveniles being held for trial in superior court as adults, would result in savings to the State.  If the Department considers that it is in the best interest of the State to do so, the Department may proceed with the privatization.
If the Department does proceed with the privatization, the Department shall request that the contractor give priority employment opportunity to the State employees in the current filled 15 positions scheduled to be reassigned to the Richmond County Boundover Unit from the Pitt Detention Center.

FOOD STAMP ELECTRONIC BENEFITS TRANSFER FUNDS SPECIFICATION

Section 76.  Funds appropriated to the Controller's Office, Department of Human Resources, for the Food Stamp Electronic Benefits Transfer Program (EBT) shall remain in the Controller's Office and shall not be transferred to any other office or division within the Department.
The Controller's Office, Department of Human Resources, may proceed with statewide implementation of the Food Stamp EBT Program.

IN-HOME AIDE FUNDS

Section 77.  Of the funds appropriated to the Division of Aging, Department of Human Resources, in this act, the sum of two million six hundred forty-one thousand six hundred ninety-five dollars ($2,641,695) for the 1997-98 fiscal year and the sum of five million two hundred eighty-three thousand three hundred ninety dollars ($5,283,390) for the 1998-99 fiscal year shall be allocated via the Home and Community Care Block Grant for home and community care services for older persons who are not eligible for Medicaid and who are on the waiting list for these services.  Service recipients shall pay for services based on their income in accordance with G.S. 143B-181.1(a)(10).

CHILD DAY CARE SUBSIDIES

Section 78.  (a)	The maximum gross annual income for initial eligibility, adjusted biennially, for subsidized child care services shall be seventy-five percent (75%) of the State median income, adjusted for family size.
(b)	Parents who receive child care subsidy to work, look for work, attend work-related training or education activities, or meet the special developmental needs of their child, shall share in the cost of child care.  No fees shall be charged to the client when child day care services are provided to the individuals in the following circumstances:
(1)	When children are receiving day care services in conjunction with protective services as described in 10 NCAC35E.0106, up to a maximum of 12 months from the time protective services are initiated;
(2)	When day care services are provided as a support to a child receiving Child Welfare Services as described in the North Carolina Division of Social Services Family Services Manual, Volume 1, Chapter II; or
(3)	When a child with no income is living with someone other than the child's biological or adoptive parent or is living with someone who does not have court-ordered responsibility.
(c)	Fees shall be established based on a percent of gross family income and adjusted for family size.  Fees shall be determined as follows:

FAMILY SIZE	PERCENT OF GROSS FAMILY INCOME
1 - 3	9%
4 - 5	8%
6 or more	7%

Local departments of social services shall apply this new fee schedule to recipients at the next eligibility review on or after the effective date of this section.
(d)	Rules for the monthly schedule of payments for the purchase of day care services for low-income children shall be established by the Social Services Commission pursuant to G.S. § 143-153(8)a., in accordance with the following requirements:
(1)	For day care facilities, as defined in G.S. 110-86(3), in which fewer than fifty percent (50%) of the enrollees are subsidized by State or federal funds, the State shall continue to pay the same fee paid by private paying parents for a child in the same age group in the same facility.
(2)	The monthly schedule of payments for the purchase of child day care services for low-income children from providers who have fifty percent (50%) or more children receiving child care subsidized with State or federal funds include:
a. 	Provision of payment rates for child care that are tied to the providers regulatory status as follows:
1.	Registered homes and "A"licensed centers receive the market rate or the rate they charge their private paying parents, whichever is lower;
2.	"AA"licensed centers receive one hundred ten percent (110%) of the market rate or the rate they charge private paying parents, whichever is lower; and
3.	Unregistered providers receive fifty percent (50%) of the market rate or the rate they charge their private paying parents, whichever is lower.
b. 	Provision of payment rates for child care providers in counties who do not have at least 75 children in each age group for center-based and home-based care as follows:
1.	Payment rates shall be set at the statewide market rate for registered homes and "A"licensed centers.
2.	If it can be demonstrated that the application of the statewide market rate to a county with fewer than 75 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.
(e)  Payment rates described in subdivision (d)(2) of this section shall be applied to all licensed child care centers, including Head Start Wrap Around, that have fifty percent (50%) or more of enrolled children receiving child care subsidies, and to registered family child care homes and unregulated providers that enroll subsidized children.
(f)  A market rate shall be calculated for facilities and homes for each county and for each age group or age category of enrollees and shall be representative of fees charged to private paying parents for each age group of enrollees within the county.  The Division shall also calculate a statewide market rate for each age category.  The Division may also calculate regional market rates for each age group and age category.
(g)  Facilities licensed pursuant to Article 7 of Chapter 110 of the General Statutes may participate in the program that provides for the purchase of care in day care facilities for minor children of needy families.  No separate licensing requirements shall be used to select facilities to participate.  In addition, day care facilities shall be required to meet any additional applicable requirements of federal law or regulations.
Day care homes as defined in G.S. 110-86(4) from which the State purchases day care services shall meet the standards established by the Child Day Care Commission pursuant to G.S. 110-101 and G.S. 110-105.1 and any additional requirements of State law or 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(s) 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 day care rate.

SALARIES, FEES, AND ALLOWANCES

Section 79.  Notwithstanding G.S. 138-5(a)(1), those members of the North Carolina Vocational Rehabilitation Advisory Council, the Statewide Independent Living Council, and the Commission for the Blind, who are unemployed or who must forfeit wages from other employment to attend council or commission meetings or to perform related duties, may receive compensation not to exceed fifty dollars ($50.00) a day for attending these meetings or for performing related duties, as authorized in Sections 105 and 705 of P. L. 102-569, the Rehabilitation Act of 1973, 42 U.S.C. § 701, et seq., as amended.  This compensation is instead of the compensation specified in G.S. 138-5(a)(1).  Reimbursement for subsistence and travel expenses is as specified in G.S. 138-5.

ADULT CARE HOME STAFFING REQUIREMENTS

Section 80.  (a)	Funds in the amount of one million three hundred thousand dollars ($1,300,000) are appropriated for the 1997-98 fiscal year and two million six hundred thousand dollars ($2,600,000) in the 1998-99 fiscal year to allow the Department of Human Resources to make staffing grants effective January 1, 1998, to those Adult Care Homes licensed under Chapter 131D of the General Statutes or Combination Homes licensed under Chapter 131E of the General Statutes that are required to add staff on the night shift to increase the staffing ratio from 1:50 to 1:30 through an equivalency formula developed by the Department.  These State funds shall pay fifty percent (50%), and the counties shall pay fifty percent (50%) of the staffing grants.  Eligibility for these grants will be determined by the Department using criteria including licensed capacity as of May 1, 1997, occupancy rate and percentage of residents receiving State/County Special Assistance.   Adult Care Homes or Combination Homes that receive these grants will be required to document that these funds were expended for additional staff to meet the new staff ratio, and any funds not expended for this purpose shall be refunded.  The Department will study the options available to incorporate these staffing grants into the existing payment methodology for State and County Special Assistance and report back to the General Assembly by March 1, 1999.  These staffing grants will continue until such time as the General Assembly has acted on the report.
(b)	Effective January 1, 1998, G.S. 131D-4.3(a) reads as rewritten:
"(a)	Pursuant to G.S. 143B-153, the Social Services Commission shall adopt rules to ensure at a minimum, but shall not be limited to, the provision of the following by adult care homes:
(1)	Client assessment and independent case management;
(2)	A minimum of 75 hours of training for personal care aides performing heavy care tasks and a minimum of 40 hours of training for all personal care aides. The training for aides providing heavy care tasks shall be comparable to State-approved Certified Nurse Aide I training. For those aides meeting the 40-hour requirement, at least 20 hours shall be classroom training to include at a minimum:
a.	Basic nursing skills;
b.	Personal care skills;
c.	Cognitive, behavioral, and social care;
d.	Basic restorative services; and
e.	Residents' rights.
	A minimum of 20 hours of training shall be provided for aides in family care homes that do not have heavy care residents. Persons who either pass a competency examination developed by the Department of Human Resources, have been employed as personal care aides for a period of time as established by the Department, or meet minimum requirements of a combination of training, testing, and experience as established by the Department shall be exempt from the training requirements of this subdivision;
(3)	Monitoring and supervision of residents; 
(4)	Oversight and quality of care as stated in G.S. 131D-4.1; and
(5)	At least one aide shall be on duty for every 30 residents during the third (night) shift."

CHILD PROTECTIVE SERVICES

Section 81.  (a)	The funds appropriated in this act to the Department of Human Resources, Division of Social Services, for the 1997-99 biennium for Child Protective Services shall be allocated to county departments of social services based upon a formula which takes into consideration the number of Child Protective Services cases in the county and the number of Child Protective Services workers necessary to meet recommended standards adopted by the North Carolina Association of County Directors of Social Services.
(b)	Funds allocated under subsection (a) of this section shall be used by county departments for carrying out investigations of reports of child abuse or neglect or for providing protective or preventive services in which the department confirms abuse, neglect, or dependency.
(c)	The Division of Social Services, Department of Human Resources, shall establish criteria and guidelines to ensure that the allocations to county departments of social services are used in accordance with this section and that available Federal Emergency Assistance funds for Child Protective Services are maximized.
(d)	As long as federal Emergency Assistance funds are available, counties shall use these federal funds, State Child Protective Services appropriations, and county funds to provide Child Protective Services.

ADOLESCENT PARENTING PROGRAM EXPANSION

Section 82.  (a)	Funds appropriated in this act to the Department of Human Resources, Division of Social Services, shall be used to expand State appropriations to the existing 26 Adolescent Parenting Programs and to add 37 new programs during the 1997-99 biennium.  The Division of Social Services shall select the agencies to provide the new programs based upon proposals submitted.
(b)	Funds allocated in this act shall be used for (i) start-up costs and operation of the new programs; (ii)  a State program consultant, a consultant/trainer, and a clerk-typist to provide State level support for the program; and (iii) biennial evaluation of the Adolescent Parenting Program.
(c)	Funds appropriated in this act shall be used to draw down available Medicaid funds for this purpose.

FIRE PROTECTION REVOLVING LOAN FUND

Section 83.  Of the funds appropriated to the Department of Human Resources in this act, the sum of one million dollars ($1,000,000) shall be transferred to the North Carolina Housing Finance Agency to fund the Fire Protection Fund.

MEDICAL DATA PROCESSING FUNDS

Section 84.  The sum of one hundred fifty thousand dollars ($150,000) for the 1997-98 and 1998-99 fiscal years is transferred from the Insurance Regulatory Fund established pursuant to G.S. 58-6-25 to the Division of Facility Services, Department of Human Resources, to certify statewide data processors pursuant to Article 11A of Chapter 131E of the General Statutes, to purchase data from statewide data processors, and to process and analyze the data.

PART XIII.  DEPARTMENT OF AGRICULTURE

AUTHORIZE THE AGRICULTURAL FINANCE AUTHORITY TO USE THE INTEREST FROM THE RESERVE FOR FARM LOANS FOR ADMINISTRATIVE EXPENSES

Section 85.  Funds in the Reserve for Farm Loans shall be used for the purposes set out in Chapter 122D of the General Statutes, but shall not be used for the administration of that Chapter.  Interest on funds in the Reserve for Farm Loans and interest from agricultural loans, as defined in G.S. 122D-3, may be used for any of the purposes set out in Chapter 122D of the General Statutes and for the administration of that Chapter.

TIMBER SALES FOR MAINTENANCE OF STATE FARMS FORESTLAND

Section 86.  The Department of Agriculture is authorized to expend up to one hundred thousand dollars ($100,000) each year for forestry management from funds received from the sale of timber that are deposited with the State Treasurer in a capital improvement account pursuant to G.S. 146-30.  The Director of the Budget is authorized to transfer up to one hundred thousand dollars ($100,000) from the capital improvement account to the Reserve for Forestry Management in the Department of Agriculture's operating budget and to prepare succeeding continuation budget documents to include one hundred thousand dollars ($100,000) in the Reserve for Forestry Management.

MOUNTAIN STATE FAIR TO BECOME ENTERPRISE FUND

Section 87.  The activities of the Western North Carolina Agricultural Center and the Mountain State Fair shall be combined and operated in an enterprise fund.  Current appropriated support to the Western North Carolina Agricultural Center shall be transferred on a quarterly basis with the anticipation that appropriated support will only be necessary until the combined operation develops sufficient revenue and operating reserves to become totally self-supporting.

PART XIV.  DEPARTMENT OF COMMERCE

COUNCILS OF GOVERNMENT FUNDS

Section 88.  (a)	Of the funds appropriated in this act to the Department of Commerce, eight hundred sixty-four thousand two hundred seventy dollars ($864,270) for the 1997-98 fiscal year and eight hundred sixty-four thousand two hundred seventy dollars ($864,270) for the 1998-99 fiscal year shall only be used as provided by this section.  Each regional council of government or lead regional organization is allocated up to forty-eight thousand fifteen dollars ($48,015) each fiscal year, with the actual amount calculated as provided in subsection (b) of this section.
(b)	The funds shall be allocated as follows:  A share of the maximum forty-eight thousand fifteen dollars ($48,015) each fiscal year shall be allocated to each county and smaller city based on the most recent annual estimate of the Office of State Planning of the population of that county (less the population of any larger city within that county) or smaller city, divided by the sum of the total population of the region (less the population of larger cities within that region) and the total population of the region living in smaller cities.  Those funds shall be paid to the regional council of government for the region in which that city or county is located upon receipt by the Department of Commerce of a resolution of the governing board of the county or city requesting release of the funds.  If any city or county does not so request payment of funds by June 30 of a fiscal year, that share of the allocation for that fiscal year shall revert to the General Fund.
(c)	A regional council of government may use funds appropriated by this section only to assist local governments in grant applications, economic development, community development, support of local industrial development activities, and other activities as deemed appropriate by the member governments.
(d)	Funds appropriated by this section may not be used for payment of dues or assessments by the member governments, and may not supplant funds appropriated by the member governments.
(e)  As used in this section, "Larger City" means an incorporated city with a population of 50,000 or over.  "Smaller City" means any other incorporated city.

WORKER TRAINING TRUST FUND

Section 89.  (a)	There is appropriated from the Worker Training Trust Fund to the Employment Security Commission of North Carolina the sum of six million sixty-four thousand nine hundred sixty-four dollars ($6,064,964) for the 1997-98 fiscal year and the sum of six million sixty-four thousand nine hundred forty-six dollars ($6,064,964) in the 1998-99 fiscal year for the operation of local offices and the Common Follow-up tracking system.  An additional one hundred forty-five thousand dollars ($145,000) is appropriated for the 1997-98 fiscal year and one hundred forty-five thousand dollars ($145,000) for the 1998-99 fiscal year to the Employment Security Commission of North Carolina for the Common Follow-up tracking system.
(b)	Notwithstanding G.S. 96-5(c), there is appropriated from the Special Employment Security Administration Fund to the Employment Security Commission of North Carolina the sum of two million dollars ($2,000,000) for the 1997-98 fiscal year and the sum of two million dollars ($2,000,000) for the 1998-99 fiscal year for administration of the Veterans Employment Program, Employment Services Program, and Unemployment Insurance Program.
(c)	Supplemental federal funds or other additional funds received by the Employment Security Commission for similar purposes shall be expended prior to the expenditure of funds appropriated by this section.
(d)	Notwithstanding the provisions of G.S. 96-5(f), there is appropriated from the Worker Training Trust Fund to the following agencies the following sums for the 1997-98 and the 1998-99 fiscal years for the following purposes:
(1)	Two million four hundred thousand dollars ($2,400,000) for the 1997-98 fiscal year and two million four hundred thousand dollars ($2,400,000) for the 1998-99 fiscal year to the Department of Commerce, Division of Employment and Training, for the Employment and Training Grant Program.
(2)	One million dollars ($1,000,000) for the 1997-98 fiscal year and one million ($1,000,000) for the 1998-99 fiscal year to the North Carolina Department of Labor for customized training of the unemployed and the working poor for specific jobs needed by employers through the Department's Pre-Apprentice Division.
(3)	One million five hundred twenty-eight thousand sixty-seven dollars ($1,528,067) for the 1997-98 fiscal year and one million five hundred twenty-eight thousand sixty-seven dollars ($1,528,067) for the 1998-99 fiscal year to the North Carolina Department of Human Resources to assist welfare recipients in gaining employment through the federally funded Job Opportunities and Basic Skills Program in such a way as to gain the maximum match of federal funds for the State dollars appropriated.
(4)	One million seven hundred forty-six thousand dollars ($1,746,000) for the fiscal year 1997-98 and one million seven hundred forty-six thousand dollars ($1,746,000) for 1998-99 to the North Carolina Department of Community Colleges to continue the Focused Industrial Training Program.
(5)	Three hundred thousand dollars ($300,000) for the fiscal year 1997-98 and three hundred thousand dollars ($300,000 for the fiscal year 1998-99 to the North Carolina Department of Community Colleges for the N.C. Real Enterprises Program.

PETROLEUM OVERCHARGE FUNDS ALLOCATION

Section 90.  (a)	The funds and interest thereon received from the case of the United States vs. Exxon are deposited in the Special Reserve for Oil Overcharge Funds.  There is appropriated from the Special Reserve to the Department of Commerce the sum of one million six hundred fifty thousand dollars ($1,650,000) for the 1997-98 fiscal year and the sum of one million two hundred thousand dollars ($1,200,000) for the 1998-99 fiscal year to be used for projects under the State Energy Plan.
(b)	There is appropriated from funds and interest thereon received from the United States Department of Energy's Stripper Well Litigation (MDL378) which remain in the Special Reserve for Oil Overcharge Funds to the Department of Commerce the sum of one million dollars ($1,000,000) for the 1997-98 fiscal year and the sum of one million eight hundred thousand dollars ($1,800,000) for the 1998-99 fiscal year to be allocated for the Low Income Weatherization Program.
(c)	Any funds remaining in the Special Reserve for Oil Overcharge Funds after the allocations made pursuant to subsections (a) and (b) of this section may be expended only as authorized by the General Assembly.  All interest or income accruing from all deposits or investments of cash balances shall be credited to the Special Reserve for Oil Overcharge Funds.
(d)	The funds and interest thereon received from the Diamond Shamrock Settlement which remain in a reserve in the Office of State Budget and Management for the Department of Commerce to administer the petroleum overcharge funds pursuant to Section 112 of Chapter 830 of the 1987 Session Laws shall continue to be available to the Department of Commerce on an as-needed basis.
(e)  The Department of Commerce shall submit comprehensive annual reports to the General Assembly by May 15, 1998, and January 31, 1999, which detail the use of all Petroleum Overcharge Funds.  Any State department or agency that has received petroleum overcharge funds shall provide all information requested by the Department of Commerce for the purpose of preparing these reports.

UTILITIES REGULATORY FEE

Section 91.  The percentage rate for the Utilities Regulatory Fee under G.S. 62-302(b)(2) shall be reduced to one-ninth of one percent (0.09%) effective July 1, 1997.

PETROLEUM OVERCHARGE ATTORNEYS' FEES

Section 92.  (a)	Unless prohibited by federal law, rule, or regulation or preexisting settlement agreement, no later than October 1, 1989, the North Carolina Attorney General shall direct the withdrawal of all funds received in the cases of United States v. Exxon and Stripper Well that are held in accounts or reserves located out-of-state for payment of attorneys' fees and reasonable expenses incurred in connection with oil overcharge litigation authorized by the Attorney General.  The Attorney General shall deposit these funds, and all funds to be received from petroleum overcharge funds in the future for attorneys' fees and reasonable expenses, into the Special Reserve for Oil Overcharge Funds.
(b)	All attorneys' fees and reasonable expenses incurred in connection with oil overcharge litigation shall be paid by the State Treasurer from petroleum overcharge funds that have been received by this State and deposited into the Special Reserve for Oil Overcharge Funds.
(c)	Notwithstanding any other provision of law, the Attorney General may authorize the payment of attorneys' fees and reasonable expenses from the Special Reserve for Oil Overcharge Funds without further action of the General Assembly, and funds are hereby appropriated from the Special Reserve for Oil Overcharge Funds for the 1997-98 fiscal year and for the 1998-99 fiscal year for that purpose.

INDUSTRIAL DEVELOPMENT FUND/LOCAL MATCH

Section 93.  Local governments requesting financial assistance from the Industrial Development Fund shall demonstrate to the satisfaction of the Department that it would be an economic hardship for the local government to match State assistance from the Fund with local funds.  The Department shall develop guidelines for determining hardship.

INDUSTRIAL RECRUITMENT COMPETITIVE FUND

Section 94.  Of the funds appropriated in this act to the Department of Commerce, the sum of one million dollars ($1,000,000) for the 1997-98 fiscal year shall be used to continue within the Department of Commerce the Industrial Recruitment Competitive Fund.  The purpose of the Fund is to provide financial assistance to those businesses or industries deemed by the Governor to be vital to a healthy and growing State economy and that are making significant efforts to establish or expand in North Carolina.  Monies allocated from the Fund shall be used for the following purposes:
(1)	Installation or purchase of equipment;
(2)	Structural repairs, improvements, or renovations of existing buildings to be used for expansion; and
(3)	Construction of or improvements to new or existing water, sewer, gas or electric utility distribution lines or equipment for existing buildings.
Monies may also be used for construction of or improvements to new or existing water, sewer, gas or electric utility distribution lines or equipment to serve new or proposed industrial buildings used for manufacturing and industrial operations.  The Governor may adopt guidelines and procedures for the commitment of monies from the Fund.

PART XV.  DEPARTMENT OF LABOR

OSHA POSITIONS

Section 95.  (a)	The Department of Labor may use funds appropriated to the Department of Labor for the Occupational Safety and Health Act of North Carolina (OSHANC) program to fully fund enforcement personnel in the Compliance Bureau of the OSHANC program, provided the Department of Labor certifies to the Office of State Budget and Management that no federal match is available for the 1997-98 fiscal year and for the 1998-99 fiscal year.
(b)	If federal Occupational Safety and Health Administration funds are granted to match all or part of the funds for enforcement positions and support that are one hundred percent (100%) State-funded, then State funds equivalent to the federal match shall revert to the General Fund at the end of the fiscal year for which the federal match was received.

PART XVI.  DEPARTMENT OF ENVIRONMENT, HEALTH, AND NATURAL RESOURCES

IMMUNIZATION PROGRAM FUNDING

Section 96.  (a)	Of the funds appropriated to the Department of Environment, Health, and Natural Resources for the 1997-99 fiscal biennium for childhood immunization programs for positions, operating support, equipment, and pharmaceuticals, the sum of up to one million dollars ($1,000,000) each fiscal year may be used for projects and activities that are also designed to increase childhood immunization rates in North Carolina.  These projects and activities shall include the following:
(1)	Outreach efforts at the State and local levels to improve service delivery of vaccines.  Outreach efforts may include educational seminars, media advertising, support services to parents to enable children to be transported to clinics, longer operating hours for clinics, and mobile vaccine units; and
(2)	Continued development of an automated immunization registry.
(b)	Funds authorized to be used for immunization efforts under subsection (a) of this section shall not be used to fund additional State positions in the Department of Environment, Health, and Natural Resources.

FUNDS FOR VOLUNTARY REMEDIAL ACTIONS

Section 97.  (a)	During the 1997-99 fiscal biennium, the Secretary of the Department of Environment, Health, and Natural Resources may contribute from the Inactive Hazardous Sites Cleanup Fund up to ten percent (10%) of the cost each fiscal year, not to exceed fifty thousand dollars ($50,000) per site, of implementing a voluntary remedial action program at up to three high priority sites that substantially endanger public health or the environment.
(b)	No later than April 1 of each year of the 1997-99 fiscal biennium, the Department of Environment, Health, and Natural Resources shall report to the General Assembly.  Each report shall contain the location of the sites for which a voluntary remedial action program was implemented under subsection (a) of this section, the rationale for the State contributing to the cost of that remedial action, and the amount of the contribution made from the Inactive Hazardous Sites Cleanup Fund.

SUPERFUND PROGRAM FUNDS

Section 98.  The Department of Environment, Health, and Natural Resources may use available funds, with the approval of the Office of State Budget and Management, in order to provide the ten percent (10%) cost share required for Superfund cleanups on the National Priority List sites.  These funds may be in addition to those appropriated for this purpose.

LIABILITY INSURANCE PREMIUMS

Section 99.  The Department of Environment, Health, and Natural Resources may use funds available from lapsed salaries to pay premiums for liability coverage for medical personnel as authorized in this act.

WASTE REDUCTION ASSISTANCE TO SMALL BUSINESSES WITH NEED

Section 100.  The Office of Waste Reduction shall, to the extent feasible, give greatest priority to small businesses that can demonstrate financial need when the Office of Waste Reduction awards grants or otherwise provides technical or financial assistance.

COMMUNICABLE DISEASE CONTROL AID TO COUNTIES FLEXIBILITY

Section 101.  (a)	For the 1997-98 and 1998-99 fiscal years, the Department of Environment, Health, and Natural Resources may combine and allocate funds appropriated for Aid to Counties in the Acute Communicable Disease Control Fund, the Tuberculosis Control Fund, and the Sexually Transmitted Disease Control Fund into one Acute Communicable Disease Control Aid to Counties Grant.  Communicable Disease Aid to Counties funding to local health departments and other authorized recipients will be based on a general communicable disease formula to be developed by the Department of Environment, Health, and Natural Resources.
(b)	The Department of Environment, Health, and Natural Resources, in conjunction with local health departments, will maintain a system to monitor and identify Aid to Counties communicable disease expenditures by each communicable disease group.  The Department shall report to the Joint Legislative Commission on Governmental Operations not later than October 1, 1997, and annually thereafter, on Aid to Counties expenditures by county for each communicable disease group and the purpose of the expenditures for the fiscal year.  The report shall also include an evaluation of the effectiveness of combining Aid to Counties funding into one grant fund and the effectiveness of the formula used to allocate funds.

PUBLIC HEALTH NUTRITION INTERN PROGRAM

Section 102.  Of the funds appropriated to the Department of Environment, Health, and Natural Resources for the Special Supplemental Food Program for Women, Infants, and Children (WIC), the sum of up to one hundred seventy thousand dollars ($170,000) for the 1997-98 fiscal year and the sum of up to one hundred seventy thousand dollars ($170,000) for the 1998-99 fiscal year may be used for the purpose of establishing and maintaining a Public Health Nutritionist Internship Program.

GRASSROOTS SCIENCE PROGRAM

Section 103.  Of the funds appropriated in this act to the Department of Environment, Health, and Natural Resources for the Grassroots Science Program, the sum of five hundred thousand dollars ($500,000) for fiscal year 1997-98 and the sum of five hundred thousand dollars ($500,000) for fiscal year 1998-99 are allocated as grants-in-aid for each fiscal year as follows:

	1997-98	1998-99
Catawba Science Center	$50,000	$50,000
Discovery Place	$50,000	$50,000
Imagination Station	$50,000	$50,000
North Carolina Museum of Life
  and Science	$50,000	$50,000
Rocky Mount Children's Museum	$50,000	$50,000
Schiele Museum of Natural History	$50,000	$50,000
Sci Works Science Center
and Environmental Park of
  Forsyth County	$50,000	$50,000
Natural Science Center of Greensboro	$50,000	$50,000
Western North Carolina Nature Center	$15,000	$15,000
The Health Adventure Museum of Pack Place
  Education, Arts and Science Center, Inc.	$35,000	$35,000
Cape Fear Museum	$50,000	$50,000

PART XVII.  DEPARTMENT OF CULTURAL RESOURCES

DEPARTMENT OF CULTURAL RESOURCES RETAIN HISTORICAL PUBLICATIONS RECEIPTS

Section 104.  The Historical Publications Section, Division of Archives and History, Department of Cultural Resources, may retain the receipts, including overrealized receipts, from the sale of its publications.  The receipts from the sale of those publications retained by the Historical Publications Section, Division of Archives and History, Department of Cultural Resources, shall not revert, but shall be used to reprint the publications.

PART XVIII.  OFFICE OF THE STATE CONTROLLER

RESERVE FOR THE YEAR 2000 CONVERSION OF THE STATE'S COMPUTER SYSTEM

Section 105.  The Office of the State Controller shall include in its charges for data processing services costs of converting computer applications to operate properly at the turn of the century.  The Office of the State Controller shall develop procedures for managing the year 2000 conversion.

PART XIX.  DEPARTMENT OF CORRECTION

REIMBURSE COUNTIES FOR EXTRAORDINARY MEDICAL COSTS FOR INMATES AWAITING TRANSFER TO STATE PRISON SYSTEM

Section 106.  G.S. 148-29 reads as rewritten:
"§ 148-29.  Transportation of convicts to prison; reimbursement to counties; sheriff's expense affidavit.
The sheriff having in charge any prisoner to be taken to the State prison system shall send the prisoner to the custody of the Department of Correction within five days after sentencing and the disposal of all pending charges against the prisoner, if no appeal has been taken.  Beginning on the sixth day after sentencing and disposal of all pending charges against the prisoner and continuing through the day the prisoner is received by the Division of Prisons, the Department of Correction shall pay the county:
(1)	A standard sum set by the General Assembly in its appropriations acts for the cost of providing food, clothing, personal items, supervision, and necessary ordinary medical services to the prisoner awaiting transfer to the State prison system; and
(2)	Extraordinary medical costs, as defined in G.S. 148-32.1(a), incurred by prisoners awaiting transfer to the State prison system.
The sheriff shall file with the board of commissioners of his county a copy of his affidavit as to necessary guard, together with a copy of his itemized account of expenses, both certified to by him as true copies of those on file in his office.  This provision is effective on July 1, 1997."

REIMBURSEMENT TO COUNTIES FOR HOUSING AND EXTRAORDINARY MEDICAL COSTS OF INMATES AWAITING TRANSFER TO STATE PRISON SYSTEM

Section 107.  (a)	Of the funds appropriated to the Department of Correction for the 1997-98 and 1998-99 fiscal years, the Department may use up to fourteen million six hundred thousand dollars ($14,600,000) each fiscal year to pay the sum of forty dollars ($40.00) per day for the cost of housing for inmates convicted and awaiting transfer to the State prison system, as provided in G.S. 148-29.
(b)	The Department may also use these funds to pay the sum of forty dollars ($40.00) per day to the counties for the cost of providing food, clothing, personal items, supervision, and necessary ordinary medical services to parolees or post-release supervisees awaiting transfer to the State prison system beginning on the sixth day after preliminary hearings held pursuant to G.S. 15A-1368.6(b) and G.S. 15A-1376(b).
(c)	The Department may use these funds to pay for extraordinary medical costs as defined in G.S. 148-32.1(a) incurred by prisoners, parolees, and post-release supervisees awaiting transfer to the State prison system.
(d)	This provision is effective on July 1, 1997.

EXEMPTION FROM LICENSURE AND CERTIFICATE OF NEED

Section 108.  (a)	Inpatient chemical dependency or substance abuse facilities that provide services exclusively to inmates of the Department of Correction shall be exempt from licensure by the Department of Human Resources under Chapter 122C of the General Statutes.  If an inpatient chemical dependency or substance abuse facility provides services both to inmates of the Department of Correction and to members of the general public, the portion of the facility that serves inmates shall be exempt from licensure.
(b)	Any person who contracts to provide inpatient chemical dependency or substance abuse services to inmates of the Department of Correction may construct and operate a new chemical dependency or substance abuse facility for that purpose without first obtaining a certificate of need from the Department of Human Resources pursuant to Article 9 of Chapter 131E of the General Statutes.  However, a new facility or addition developed for that purpose without a certificate of need shall not be licensed pursuant to Chapter 122C of the General Statutes and shall not admit anyone other than inmates unless the owner or operator first obtains a certificate of need.
(c)	This section applies to existing facilities, as well as future facilities contracting with the Department of Correction.

MODIFICATION OF FUNDING FORMULA FROM THE NORTH CAROLINA STATE-COUNTY CRIMINAL JUSTICE PARTNERSHIP ACT

Section 109.  Notwithstanding the funding formula set forth in G.S. 143B-273.15, grants made through the North Carolina State-County Criminal Justice Partnership Act for the 1997-98 and 1998-99 fiscal years shall be distributed to the counties as specified in G.S. 143B-273.15(2) only and not as discretionary funds.  Further, the Department may use funds available to augment appropriations in order to maintain the counties allocations of nine million six hundred thousand dollars ($9,600,000) as provided in previous fiscal years.  Also, appropriations not claimed or expended by the counties during the 1997-99 fiscal biennium are to be distributed as per G.S. 143B-273.15(1).

LEASED BEDS FOR INMATES

Section 110.  Of the funds appropriated to the Department of Correction for the 1997-98 and 1998-99 fiscal years, the Department may use up to fifteen million dollars ($15,000,000) each fiscal year to contract to house prisoners in leased beds.

PART XX.  SALARIES AND BENEFITS

SALARY INCREASES/SALARY-RELATED CONTRIBUTIONS

Section 111.  (a)	The Director of the Budget may budget funds appropriated in Sections 3 and 4 of this act for the purpose of providing compensation increases to public school employees, community college institutional personnel, and all other permanent State employees.  Increases shall be granted equating to three percent (3%) funding of current salaries.
(b)	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 employees' 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.
(c)	The State's employer contribution rates budgeted for retirement and related benefits as percentage of covered salaries for the 1997-98 and 1998-99 fiscal years are (i) ten and eighty-three hundredths percent (10.83%) - Teachers and State Employees; (ii) fifteen and ninety-six hundredths percent (15.96%) - State Law Enforcement Officers; (iii) nine percent (9.0%) - University Employees' Optional Retirement System; (iv) twenty-two and sixty-five hundredths percent (22.65%) - Consolidated Judicial Retirement System; and (v) thirty-six and seven hundredths percent (36.07%) - Legislative Retirement System.  Each of the foregoing contribution rates includes two percent (2.0%) for hospital and medical benefits.  The rate for State Law Enforcement Officers and for the University Employees' Optional Retirement Program includes forty-two hundredths percent (0.42%) for the Disability Income Plan.  The rates for Teachers and State Employees and Law Enforcement Officers includes sixteen hundredths percent (0.16%) for the Death Benefits Plan.

GOVERNOR AND COUNCIL OF STATE

Section 112.  (a)	Effective July 1, 1997, G.S. 147-11(a) reads as rewritten:
"(a)	The salary of the Governor shall be one hundred six thousand one hundred three dollars ($106,103) annually, payable monthly."
(b)	Effective July 1, 1997, the annual salaries for the members of the Council of State, payable monthly, for the 1997-98 and 1998-99 fiscal years are:

Council of State	Annual Salary

Lieutenant Governor	$93,643
Attorney General	93,643
Secretary of State	93,643
State Treasurer	93,643
State Auditor	93,643
Superintendent of Public Instruction	93,643
Agriculture Commissioner	93,643
Insurance Commissioner	93,643
Labor Commissioner	93,643.

NONELECTED DEPARTMENT HEAD/SALARY INCREASES

Section 113.  In accordance with G.S. 143B-9, the maximum annual salaries, payable monthly, for the nonelected heads of the principal State departments for the 1997-98 and 1998-99 fiscal years are:

Nonelected Department Heads	Annual Salary

Secretary of Administration	$91,490
Secretary of Correction	91,490
Secretary of Crime Control and Public Safety	91,490
Secretary of Cultural Resources	91,490
Secretary of Commerce	91,490
Secretary of Environment, Health,
and Natural Resources	91,490
Secretary of Human Resources	91,490
Secretary of Revenue	91,490
Secretary of Transportation	91,490.

CERTAIN EXECUTIVE BRANCH OFFICIALS/SALARY INCREASES

Section 114.  The annual salaries, payable monthly, for the 1997-98 and 1998-99 fiscal years for the following executive branch officials are:

Executive Branch Officials	Annual Salary

Chairman, Alcoholic Beverage Control
Commission	$  83,272
State Controller	116,538
Commissioner of Motor Vehicles	83,272
Commissioner of Banks	83,272
State Personnel Director	91,490
Chairman, Parole Commission	76,037
Members of the Parole Commission	70,200
Chairman, Industrial Commission	74,817
Members of the Industrial Commission	72,996
Executive Director, Agency for Public
Telecommunications	70,200
General Manager, Ports Railway Commission	63,390
Director, Museum of Art	85,327
Executive Director, Wildlife Resources
Commission	71,872
Executive Director, North Carolina
Housing Finance Agency 	103,057
Executive Director, North Carolina
Agricultural Finance Authority	81,052
Director, Office of Administrative Hearings	82,342.

JUDICIAL BRANCH OFFICIALS/SALARY INCREASE

Section 115.  (a)	The annual salaries, payable monthly, for specified judicial branch officials for the 1997-98 and 1998-99 fiscal years are:

Judicial Branch Officials	Annual Salary

Chief Justice, Supreme Court	$106,103
Associate Justice, Supreme Court	103,330
Chief Judge, Court of Appeals	100,747
Judge, Court of Appeals	99,025
Judge, Senior Regular Resident Superior Court	96,334
Judge, Superior Court	93,643
Chief Judge, District Court	85,032
Judge, District Court	82,342
District Attorney	86,754
Administrative Officer of the Courts	96,334
Assistant Administrative Officer of the Courts	80,899
Public Defender	86,754.

(b)	The district attorney or public defender of a judicial district, with the approval of the Administrative Officer of the Courts, 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 fifty-three thousand three hundred sixty-six dollars ($53,366), and the minimum salary of any assistant district attorney or assistant public defender is at least twenty-seven thousand two hundred forty-five dollars ($27,245) effective July 1, 1997.
(c)	The salaries in effect for fiscal year 1996-97 for permanent, full-time employees of the Judicial Department, except for those whose salaries are itemized in this Part, shall be increased by three percent (3%), commencing July 1, 1997.
(d)	The salaries in effect for fiscal year 1996-97 for all permanent, part-time employees of the Judicial Department shall be increased on and after July 1, 1997, by pro rata amounts of the three percent (3%).

CLERK OF SUPERIOR COURT SALARY DETERMINATION/INCREASE

Section 116.  Effective July 1, 1997, G.S. 7A-101(a) reads as rewritten:
"(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		$62,073
100,000 to 149,999		69,726
150,000 to 249,999		77,379
250,000 and above		85,032.
The salary schedule in this subsection is intended to represent the following percentage of the salary of the Chief District Court Judge:
Less than 100,000	73%
100,000 to 149,999	82%
150,000 to 249,999	91%
250,000 and above	100%.
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 the incumbent clerk shall not be decreased by any change in population group during his continuance in office."

ASSISTANT AND DEPUTY CLERKS OF COURT/SALARY INCREASE

Section 117.  Effective July 1, 1997, 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		$23,195
Maximum		41,067

Deputy Clerks	Annual Salary
Minimum		$18,544
Maximum		31,633.

MAGISTRATES' PAY PLAN

Section 118.  (a)	Effective July 1, 1997, G.S. 7A-171.1(a)(1) reads as rewritten:
"(1)	A full-time magistrate shall be paid the annual salary indicated in the table set out in this subdivision.  A full-time magistrate is a magistrate who is assigned to work an average of not less than 40 hours a week during the term of office.  The Administrative Officer of the Courts shall designate whether a magistrate is full-time.  Initial appointment shall be at the entry rate.  A magistrate's salary shall increase to the next step every two years on the anniversary of the date the magistrate was originally appointed for increases to Steps 1 through 3, and every four years on the anniversary of the date the magistrate was originally appointed for increases to Steps 4 through 6.

Table of Salaries of Full-time Magistrates
Step Level	Annual Salary
Entry Rate			$25,206
Step 1			27,735
Step 2			30,488
Step 3			33,492
Step 4			36,783
Step 5			40,399
Step 6			44,376."
(b)	Effective July 1, 1997, G.S. 7A-171.1(a1)(1) reads as rewritten:
"(1)	The salaries of magistrates who on June 30, 1996, were paid at a salary level of less than five years of service under the table in effect that date shall be as follows:
	1 or more but less than
	3 years of service		$20,888
	3 or more but less than
	5 years of service		22,942."

GENERAL ASSEMBLY PRINCIPAL CLERKS

Section 119.  Effective July 1, 1997, 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 fifty-nine thousand two hundred eighty-six dollars ($59,286) payable monthly.  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 Advisory Budget Commission 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 120.  Effective July 1, 1997, 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 two hundred fifty-six dollars ($256.00) 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 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."

LEGISLATIVE EMPLOYEES

Section 121.  The Legislative Administrative Officer shall increase the salaries of nonelected employees of the General Assembly in effect for fiscal year 1996-97 by three percent (3%).  Nothing in this act limits any of the provisions of G.S. 120-32.

TEACHER SALARY SCHEDULES

Section 122.  Funds are appropriated in the Reserve for Compensation Increase to provide eight percent (8%) funding to increase compensation for education personnel paid from the teacher salary schedule.

SCHOOL-BASED ADMINISTRATOR SALARIES

Section 123.  Funds appropriated to the Reserve for Compensation Increases shall be used in conjunction with the teacher salary schedule for school-based administrators.

SCHOOL CENTRAL OFFICE SALARIES

Section 124.  (a)	The following monthly salary ranges apply to public school superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 1997-98 fiscal year, beginning July 1, 1997:
(1)	School Administrator I:	$2,903 - $4,669
(2)	School Administrator II:	$3,081 - $4,956
(3)	School Administrator III:	$3,270 - $5,260
(4)	School Administrator IV:	$3,402 - $5,473
(5)	School Administrator V:	$3,539 - $5,694
(6)	School Administrator VI:	$3,755 - $6,044
(7)	School Administrator VII:	$3,906 - $6,288.
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 hired on or after July 1, 1997.
(b)	The following monthly salary ranges apply to public school superintendents for the 1997-98 fiscal year, beginning July 1, 1997:
(1)	Superintendent I
(Up to 2,500 ADM):	$4,146 - $6,673
(2)	Superintendent II
(2,501 - 5,000 ADM):	$4,401 - $7,081
(3)	Superintendent III
(5,001 - 10,000 ADM):	$4,669 - $7,514
(4)	Superintendent IV
(10,001 - 25,000 ADM):	$4,956 - $7,974
(5)	Superintendent V
(Over 25,000 ADM):	$5,260 - $8,462.
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.
Notwithstanding the provisions of this subsection, a local board of education may pay an amount in excess of the applicable range to a superintendent who is entitled to receive the higher amount under Section 123 of this act.
(c)	Longevity pay for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers shall be as provided for State employees.
(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 for 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.
(e)  The State Board shall not permit local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.
(f)  The Director of the Budget shall transfer from the Reserve for Compensation Increases created in this act for fiscal year 1997-98, beginning July 1, 1997, funds necessary to provide an average annual salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, commencing July 1, 1997, for all permanent full-time personnel paid from the Central Office Allotment.  The State Board of Education shall allocate these funds to local school administrative units.  The local boards of education shall establish guidelines for providing their salary increases to these personnel.

NONCERTIFIED PUBLIC SCHOOL EMPLOYEES' SALARY INCREASE

Section 125.  (a)	The Director of the Budget may transfer from the Reserve for Compensation Increases created in this act for fiscal year 1997-98, commencing July 1, 1997, funds necessary to provide a salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, for all noncertified public school employees, except school bus drivers, whose salaries are supported from the General Fund.  These funds shall not be used for any purpose other than for the salary increases and necessary employer contributions provided by this subsection.
(b)	The fiscal year 1997-98 pay rates adopted by local boards of education for school bus drivers shall be increased by at least three percent (3%), to the extent that such rates of pay are supported by the allocation of State funds from the State Board of Education.  Local boards of education shall increase the rates of pay for all school bus drivers who were employed during fiscal year 1996-97 and who continue their employment for fiscal year 1997-98 by at least three percent (3%).  The Director of the Budget may transfer from the compensation increase reserve fund created in this act for fiscal year beginning July 1, 1997, funds necessary to provide the salary increases for school bus drivers whose salaries are supported from the General Fund in accordance with the provisions of this subsection.

COMMUNITY COLLEGES PERSONNEL/SALARY INCREASES

Section 126.  The Director of the Budget shall transfer from the Reserve for Compensation Increases created in this act for fiscal years 1997-98 and 1998-99 funds to the Department of Community Colleges necessary to provide an average annual salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, commencing July 1, 1997, for all permanent full-time community college institutional personnel supported by State funds.  The State Board of Community Colleges shall establish guidelines for providing their salary increases to community college institutional personnel.  Salary funds shall be used to provide an average annual salary increase of three percent (3%) to all full-time employees and part-time employees on a pro rata basis.

UNIVERSITY OF NORTH CAROLINA SYSTEM/EPA SALARY INCREASES

Section 127.  (a)	The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases created in this act for fiscal year 1997-98 to provide an annual average salary increase of three percent (3%), including funds for the employer's retirement and social security contributions, commencing July 1, 1997, for all employees of The University of North Carolina, as well as employees other than teachers of the North Carolina School of Science and Mathematics, supported by State funds and whose salaries are exempt from the State Personnel Act (EPA).  These funds shall be allocated to individuals according to the rules adopted by the Board of Governors, or the Board of Trustees of the North Carolina School of Science and Mathematics, as appropriate, and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.
(b)	The Director of the Budget shall transfer to the Board of Governors of The University of North Carolina sufficient funds from the Reserve for Compensation Increases created in this act for 1997-99 fiscal biennium to provide an annual average salary increase of eight percent (8%), including funds for the employer's retirement and social security contributions, commencing July 1, 1997, for all teaching employees of the North Carolina School of Science and Mathematics supported by State funds and whose salaries are exempt from the State Personnel Act (EPA).  These funds shall be allocated to individuals according to the rules adopted by the Board of Trustees of the North Carolina School of Science and Mathematics and may not be used for any purpose other than for salary increases and necessary employer contributions provided by this section.

MOST STATE EMPLOYEES

Section 128.  (a)	The salaries in effect July 30, 1997, of all permanent full-time State employees whose salaries are set in accordance with the State Personnel Act, and who are paid from the General Fund or the Highway Fund shall be increased, on or after July 1, 1997, unless otherwise provided by this act, by three percent (3%) pursuant to the Comprehensive Compensation System set forth in G.S. 126-7 and rules adopted by the State Personnel Commission.
(b)	Except as otherwise provided in this act, salaries in effect June 30, 1997, for permanent full-time State officials and persons in exempt positions that are recommended by the Governor or the Governor and the Advisory Budget Commission and set by the General Assembly shall be increased by three percent (3%) commencing July 1, 1997.
(c)	The salaries in effect June 30, 1997, for all permanent part-time State employees shall be increased on and after July 1, 1997, by pro rata amounts of the salary increases provided for permanent full-time employees covered under subsection (a) of this section.
(d)	The Director of the Budget may allocate out of special operating funds or from other sources of the employing agency, except tax revenues, sufficient funds to allow a salary increase on and after July 1, 1997, in accordance with subsections (a), (b), or (c) of this section, including funds for the employer's retirement and social security contributions, of the permanent full-time and part-time employees of the agency.
(e)  Within regular Executive Budget Act procedures as limited by this act, all State agencies and departments may increase on an equitable basis the rate of pay of temporary and permanent hourly State employees, subject to availability of funds in the particular agency or department, by pro rata amounts of the three percent (3%) salary increase provided for permanent full-time employees covered by the provisions of subsection (a) of this section, commencing July 1, 1997.

PART XXI.  MISCELLANEOUS PROVISIONS

TRAVEL ALLOWANCES OF STATE OFFICERS AND EMPLOYEES

Section 129.  G.S. 138-6(4) reads as rewritten:
"(4)	For convention registration fees not to exceed two hundred dollars ($200.00) per convention."

EFFECT OF HEADINGS

Section 130.  The headings to the Parts and sections of this act are a convenience to the reader and are for reference only.  The headings do not expand, limit, or define the text of this act.

MOST TEXT APPLIES ONLY TO 1997-99

Section 131.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 1997-99 biennium, the textual provisions of this act shall apply only to funds appropriated for and activities occurring during the 1997-99 biennium.

SEVERABILITY CLAUSE

Section 132.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of the act as a whole or any part other than the part so declared to be unconstitutional or invalid.

EFFECTIVE DATE

Section 133.  Except as otherwise provided, this act becomes effective July 1, 1997.