A BILL TO BE ENTITLED
AN ACT to MODIFY THE CURRENT OPERATIONS APPROPRIATIONS ACT OF 2001 AND TO MAKE OTHER CHANGES IN THE BUDGET OPERATION OF THE STATE.
The General Assembly of North Carolina enacts:

PART i. INtroduction and title of act

INTRODUCTION
SECTION 1.1.  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 1.2.  This act shall be known as "The Current Operations and Capital Improvements Appropriations Act of 2002."

PART iI. current operations and expansion/general fund

SECTION 2.1.  Appropriations from the General Fund of the State for the maintenance of the State departments, institutions, and agencies, and for other purposes as enumerated are made for the fiscal year ending June 30, 2003, according to the schedule that follows.  Amounts set out in brackets are reductions from General Fund appropriations for the 2002‑2003 fiscal year.

Current Operations ‑ General Fund	2002‑2003

EDUCATION
Community Colleges System Office	24,994,200
	Department of Public Instruction	(69,395,534)
	University of North Carolina ‑ Board of Governors
	Appalachian State University	(2,176,609)
	East Carolina University
		Academic Affairs	(3,183,549)
		Health Affairs	(1,100,928)
	Elizabeth City State University	(530,995)
	Fayetteville State University	(753,395)
	NC Agricultural and Technical University	(1,503,208)
	North Carolina Central University	(1,155,082)
	North Carolina School of the Arts	(782,673)
	North Carolina State University
		Academic Affairs	(6,998,183)
		Agricultural Extension	(894,718)
		Agricultural Research	(1,129,999)
	University of North Carolina at Asheville	(686,125)
	University of North Carolina at Chapel Hill
		Academic Affairs	(5,089,577)
		Health Affairs	(3,802,211)
		Area Health Education Centers	(1,101,173)
	University of North Carolina at Charlotte	(2,727,423)
	University of North Carolina at Greensboro	(2,333,865)
	University of North Carolina at Pembroke	(593,820)
	University of North Carolina at Wilmington	(1,623,313)
	Western Carolina University	(1,489,649)
	Winston‑Salem State University	(937,810)
	General Administration	(2,063,801)
	University Institutional Programs	29,317,706
	Related Educational Programs	(2,165,941)
	North Carolina School of Science and Mathematics	(434,306)
	UNC Hospitals at Chapel Hill	(970,076)
Total			(16,910,721)

HEALTH AND HUMAN SERVICES

Department of Health and Human Services
	Office of the Secretary	(9,319,271)
	Division of Aging	(1,069,750)
	Division of Blind Services/Deaf/HH	(643,013)
	Division of  Child Development	(26,738,752)
	Division of Education Services	(4,024,077)
	Division of Facility Services	(782,705)
	Division of Medical Assistance	(27,736,891)
	Division of Mental Health	(35,600,524)
	NC Health Choice	(9,202,161)
	Division of Public Health	(15,591,367)
	Division of Social Services	(16,073,873)
	Division of Vocation Rehabilitation	(5,599,676)
Total			(152,382,060)

NATURAL AND ECONOMIC RESOURCES

Department of Agriculture and Consumer Services	(4,819,849)

Department of Commerce
	Commerce	(10,349,674)
	Commerce State‑Aid	4,930,500
	NC Biotechnology Center	(627,047)
	Rural Economic Development Center	(423,851)

Department of Environment and Natural Resources
	Environment and Natural Resources	(9,369,803)
	Clean Water Management Trust Fund	0

Office of the Governor ‑ Housing Finance Agency	(540,600)

Department of Labor	(1,021,674)

JUSTICE AND PUBLIC SAFETY

Department of Correction	(56,505,511)

Department of Crime Control and Public Safety	(3,638,383)

Judicial Department	(13,874,980)
Judicial Department ‑ Indigent Defense	2,255,611

Department of Justice	(4,586,092)

Department of Juvenile Justice and Delinquency Prevention	(16,254,846)

GENERAL GOVERNMENT

Department of Administration	(5,658,873)

Office of Administrative Hearings	(222,519)

Department of State Auditor	(947,714)

Office of State Controller	(919,891)

Department of Cultural Resources
	Cultural Resources	(4,794,666)
	Roanoke Island Commission	(151,222)

State Board of Elections	209,622

General Assembly	(3,810,151)

Office of the Governor
	Office of the Governor	(504,595)
	Office of State Budget and Management	(342,836)
	OSBM – Reserve for Special Appropriations	0

Department of Insurance
	Insurance	(1,451,366)
	Insurance – Volunteer Safety Workers' Compensation	(2,500,000)

Office of Lieutenant Governor	(53,280)

Department of Revenue	(4,972,725)

Rules Review Commission	(25,981)

Department of Secretary of State	(721,855)

Department of State Treasurer
	State Treasurer	(461,870)
	State Treasurer – Retirement for Fire and Rescue Squad Workers	(5,248,601)

TRANSPORTATION
Department of Transportation	(2,490,841)

RESERVES, ADJUSTMENTS AND DEBT SERVICE
Reserve for Compensation Increases	(4,247,868)

Reserve for State Health Plan	(12,621,872)

Reserve for Teachers' and State Employees' Retirement
	Rate Adjustment	(142,000,000)

Merge Judicial, Legislative and Teachers' &
	State Employees' Retirement Systems	(7,575,940)

Payroll Adjustment Reserve	(36,500,000)

Reserve for Employee Severance Compensation	20,000,000

Contingency and Emergency	5,000,000

Reserve for Salary Adjustments	0

Implementation of Recommendations of
	Governor's Efficiency Commission	(25,000,000)

Reserve for Information Technology Rate Adjustment	(3,414,318)

Mental Health, Developmental Disabilities and
	Substance Abuse Services Trust Fund	50,000,000

Reserve to Implement HIPPA	2,000,000

Debt Service
	General Debt Service	(98,105,542)
	Federal Reimbursement	0

TOTAL CURRENT OPERATIONS ‑ GENERAL FUND	(616,055,218)

Requested by:	Senators Plyler, Odom, Lee
GENERAL FUND AVAILABILITY STATEMENT
SECTION 2.2.(a)  Section 2.2(a) of S.L. 2001‑424 is repealed.  The General Fund availability used in developing the 2002‑2003 fiscal year budget is shown below:

	2002‑2003
	
Revenues Based on Existing Tax Structure	12,738,200,000

Nontax Revenues	
	Investment Income	115,300,000
	Judicial Fees	111,300,000
	Disproportionate Share	107,000,000
	Insurance	46,600,000
	Other Nontax Revenues	98,900,000
	Highway Trust Fund Transfer	172,400,000
	Highway Fund Transfer	   15,300,000
Subtotal Nontax Revenues	666,800,000
	
Subtotal General Fund Availability	13,405,000,000
	
Other Adjustments to Availability:  2002 Session	
	IRC Conformity (SB 1292 – Includes Pensions
		And Education Changes, Estate Tax Credit,
		Accelerated Depreciation)	15,800,000
	Delay 2001 Tax Breaks (SB 1292 ‑ Standard
		Deduction/Marriage Penalty, Child Tax Credit)	51,700,000
	Suspend Reimbursements to Local Governments with
		Hold Harmless Provision (SB 1292)	270,000,000
	Project Tax Collect	10,000,000
	Highway Trust Fund – recurring inflationary adjustment	80,000,000
	Highway Trust Fund Transfer – one‑time transfer	125,000,000
	Tobacco Settlement Trust Funds – divert Master 
		Settlement Agreement receipts for one year
		($40 million from each fund)	120,000,000
	Hurricane Floyd Disaster Reserve	100,000,000
	Credit to Savings Reserve Account	(14,896,335)
	Transfer of Cash from Trust and Special Funds	8,534,164
	Adjustment to Transfer from Insurance Regulatory Fund	(851,366)
	Increase Collection Rates for Offender Fees	1,160,000
	Reimbursement for Unauthorized Substance Tax Division,
		Department of Revenue (SB 1292)	886,683
	Fee Increases (SB 1292)	25,434,311
Subtotal Other Adjustments to Availability:  2002 Session	792,767,457

Total General Fund Availability	14,197,767,457

SECTION 2.2.(b)  Effective July 1, 2002, cash balances remaining in special funds on June 30, 2002, shall be transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) according to the schedule that follows.  These funds shall be used to support General Fund appropriations for the 2002‑2003 fiscal year.

Fund	Amount Transferred

Department of Agriculture and Consumer Services
	Budget Code 23700, Fund Code 2103 (Livestock
		Acquisition Fund)	300,000
	Budget Code 23701, Fund Code 2201 (Warehouse 
		Investment Fund)	225,000
	Budget Code 53750, Fund Code 5190 (State Fair
		Reserves and Transfers)	250,000
	Budget Code 63700, Fund Code 6902 (Reforestation Fund)	23,915
	Budget Code 63700, Fund Code 6105 (Forest Management
		Reserve)	50,000

Department of Environment and Natural Resources
	Budget Code 64302, Fund Code 6710 (Natural Heritage
		Trust Fund)	3,287,582
	Budget Code 24308, Fund Code 2525 (Neuse Animal Waste
		Cost Share)	366,335
Department of Labor
	Budget Code 23800, Fund Code 2422 (Pre‑Apprenticeship‑PBC)	491,332

Department of Correction
	Budget Code 24502 (Inmate Canteen/Welfare Fund)	500,000

Office of the State Controller
	Budget Code 24172 (Special Reserve Account)	1,300,000
SECTION 2.2.(c)  Notwithstanding G.S. 113‑36(d), two hundred twenty thousand dollars ($220,000) of the cash balance remaining in the Bladen Lakes State Forest Fund (Budget Code 24300, Fund Code 2221) on July 1, 2002, shall be transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers).  An additional two hundred twenty thousand dollars ($220,000) shall be transferred on April 1, 2003.  These funds shall be used to support General Fund appropriations for the 2002‑2003 fiscal year.
SECTION 2.2.(d)  Section 2.2(f) of S.L. 2001‑424 reads as rewritten:
"SECTION 2.2.(f)  The transfer of cash from Department of Correction, Budget Code 74500, Fund Code 7100 (Prison Enterprises) to Nontax Budget Code 19978 (Intra State Transfers) shall be increased by one million dollars ($1,000,000), effective July 1, 2001, for the 2001‑2002 fiscal year. 
The transfer of cash from Department of Correction, Budget Code 74500, Fund Code 7100 (Prison Enterprises) to Nontax Budget Code 19978 (Intra State Transfers) shall be increased by  one million five hundred thousand dollars ($1,500,000), effective July 1, 2002, for the 2002-2003 fiscal year. Of the one million five hundred thousand dollar ($1,500,000) increase for the 2002-2003 fiscal year, five hundred thousand dollars ($500,000) is recurring. "
SECTION 2.2.(e)  The State Controller shall credit the sum of fourteen million eight hundred ninety‑six thousand three hundred thirty‑five dollars ($14,896,335) from the General Fund to the Savings Reserve Account on July 1, 2002.  This is not "in consequence of appropriations made by law" as that phrase is used in Article V, Section 7(1) of the North Carolina Constitution.
SECTION 2.2.(f)  The General Assembly finds that, as anticipated in the legislation that created the Hurricane Floyd Reserve Fund, S.L. 1999‑463, savings were effected where the total amounts appropriated in that act were not required to provide the necessary and appropriate relief and assistance from the effects of Hurricane Floyd.  Therefore, effective July 1, 2002, the sum of one hundred million dollars ($100,000,000) shall be transferred from the Reserve for Disaster Relief, Budget Code 13017, a restricted reserve, to the General Fund.  The Director of the Budget may use any funds available for expenditure for the 2002‑2003 fiscal year to ensure that sufficient funds are available to meet all outstanding obligations associated with disaster relief and recovery from Hurricane Floyd.
SECTION 2.2.(g)  When the Highway Trust Fund was created in 1989, the revenue from the sales tax on motor vehicles was transferred from the General Fund to the Highway Trust Fund.  To offset this loss of revenue from the General Fund, the Highway Trust Fund was required to transfer one hundred seventy million dollars ($170,000,000) to the General Fund each year, an amount equal to the revenue in 1989 from the sales tax on motor vehicles.  This transfer did not, however, make the General Fund whole after the transfer of the sales tax revenue because no provision has been made to adjust the amount for the increased volume of transactions and increased vehicle prices.  The additional eighty million dollars ($80,000,000) transferred from the Highway Trust Fund to the General Fund by this act is an effort to recover a portion of the sales tax revenues that would have gone to the General Fund over the last 13 years.
SECTION 2.2.(h)  Notwithstanding G.S. 105‑187.9(b)(1), the sum to be transferred under that subdivision for the 2002‑2003 fiscal year and for the 2003‑2004 fiscal year is two hundred fifty million dollars ($250,000,000).
SECTION 2.2.(i)  There is transferred from the Highway Trust Fund to the General Fund the sum of one hundred twenty‑five million dollars ($125,000,000) for the 2002‑2003 fiscal year.  It is the intent of the General Assembly that these funds be transferred from the General Fund back to the Highway Trust Fund during the next five years including interest at the net rate of return generated by the State Treasurer's Short Term Investment Fund.
SECTION 2.2.(j)  The General Assembly finds that over the last two fiscal years, the cost of the Medicaid program has increased over a billion dollars.  The downturn in the economy has caused an unforeseeable increase in the number of persons eligible for the program.  Even with the significant expansion funds appropriated for the increased costs, transfers of funds to meet obligations for the 2001‑2002 fiscal year, and significant cost‑savings measures imposed by the General Assembly and the Department of Health and Human Services, Medicaid will still need an additional one hundred nine million dollars ($109,000,000) next year to cover increased costs.
The General Assembly further finds that due to the downturn in the economy and the loss of jobs in various sectors of the economy, the State must undertake various economic initiatives.
Funds transferred pursuant to this section shall be used only for Medicaid and for economic initiatives.
Notwithstanding G.S. 143‑16.4(a2), of the funds credited to the Tobacco Trust Account from the Master Settlement Agreement pursuant to Section 6(2) of S.L. 1999‑2 during the 2002‑2003 fiscal year, the sum of forty million dollars ($40,000,000) shall be transferred from the Department of Agriculture and Consumer Services, Budget Code 23703 (Tobacco Trust Fund) to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2002‑2003 fiscal year.
Notwithstanding G.S. 143‑16.4(a1), of the funds credited to the Health Trust Account from the Master Settlement Agreement pursuant to Section 6(2) of S.L. 1999‑2 during the 2002‑2003 fiscal year, the sum of forty million dollars ($40,000,000) shall be transferred from the Department of State Treasurer, Budget Code 23460 (Health and Wellness Trust Fund) to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2002‑2003 fiscal year.
Notwithstanding G.S. 143‑86.30(c), the Health and Wellness Trust Fund Commission may transfer up to eighteen million dollars ($18,000,000) from the Fund Reserve created in G.S. 143‑86.30 to the Health and Wellness Trust Fund nonreserved funds to be expended in accordance with G.S. 143‑86.30(d) during the 2002‑2003 fiscal year.
Pursuant to Section 2(b) of S.L. 1999‑2, forty million dollars ($40,000,000) of the fifty percent (50%) of the annual installment payment to the North Carolina State Specific Account otherwise transferred and assigned to The Golden L.E.A.F. (Long‑Term Economic Advancement Foundation), Inc., during the 2002‑2003 fiscal year is transferred to the State Controller to be deposited in Nontax Budget Code 19978 (Intra State Transfers) to support General Fund appropriations for the 2002‑2003 fiscal year. The Attorney General shall take all necessary actions to notify the court in the action entitled State of North Carolina v. Philip Morris Incorporated, et. al., 98 CVS 14377, in the General Court of Justice, Superior Court Division, Wake County, North Carolina, and the administrators of the State Specific Account established under the Master Settlement Agreement of this action by the General Assembly redirecting this payment.
SECTION 2.2.(k)  The funds appropriated in this act from the Insurance Regulatory Fund include an increase of six hundred thousand dollars ($600,000) in recurring funds from the amount appropriated in S.L. 2001‑424.  These funds shall be used to pay for the costs and expenses incurred by the Department of Justice in the 2002‑2003 fiscal year and subsequent fiscal years in representing the Department of Insurance in its regulation of the insurance industry and other related programs and industries in this State that fall under the jurisdiction of the Department of Insurance.
SECTION 2.2.(l)   G.S. 7A‑11 reads as rewritten:
"§ 7A‑11.  Clerk of the Supreme Court; salary; bond; fees; oath.
The clerk of the Supreme Court shall be appointed by the Supreme Court to serve at its pleasure. The annual salary of the clerk shall be fixed by the Administrative Officer of the Courts, subject to the approval of the Supreme Court. The clerk may appoint assistants in the number and at the salaries fixed by the Administrative Officer of the Courts. The clerk shall perform such duties as the Supreme Court may assign, and shall be bonded to the State, for faithful performance of duty, in the same manner as the clerk of the superior court, and in such amount as the Administrative Officer of the Courts shall determine. He shall adopt a seal of office, to be approved by the Supreme Court. A fee bill for services rendered by the clerk shall be fixed by rules of the Supreme Court, and all such fees shall be remitted to the State  treasury. The operations of the Clerk of the Supreme Court shall be subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes. Before entering upon the duties of his office, the clerk shall take the oath of office prescribed by law."
SECTION 2.2.(m) G.S.  7A‑20(b) reads as rewritten:
"(b)	Subject to approval of the Supreme Court, the Court of Appeals shall promulgate from time to time a fee bill for services rendered by the clerk, and such fees shall be remitted to the State Treasurer. The operations of the Court of Appeals shall be subject to the oversight of the State Auditor pursuant to Article 5A of Chapter 147 of the General Statutes."
SECTION 2.2.(n)  Of the cash balance of any funds not remitted to the State Treasurer pursuant to G.S. 7A‑11 and GS 7A‑20(b) prior to the effective date of this act, only funds necessary for payroll and existing contractual obligations may be expended. The cash balance of these funds shall be transferred to the General Fund on July 1, 2002.

PART iII. current operations and expansion/highway fund

highway fund appropriations
SECTION 3.1.  Appropriations from the Highway Fund of the State for the maintenance and operation of the Department of Transportation, and for other purposes as enumerated are made for the fiscal year ending June 30, 2003, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Fund appropriations for the 2002‑2003 fiscal year.

Current Operations ‑ Highway Fund	2002‑2003

Administration	(362,232)
Operations	–
Construction and Maintenance	
a.	Construction
(01)	Primary Construction	–
(02)	Secondary Construction	(1,887,000)
(03)	Urban Construction	–
(04)	Access and Public Service Roads	–
(05)	Contingency Construction	5,000,000
(06)	Spot Safety Construction	–
b.	State Funds to Match Federal Highway Aid	–
c.	State Maintenance	17,823,411
d.	Ferry Operations	–
e.	Capital Improvements	–
f.	State Aid to Municipalities	(1,887,000)
g.	State Aid for Public Transportation and Railroads	17,350,000
h.	OSHA – State	–
Governor's Highway Safety Program	–
Division of Motor Vehicles	–
Reserves and Transfers	(6,039,551)
GRAND TOTAL HIGHWAY FUND 	$ 29,997,628

highway fund availability statement
SECTION 3.2.  The Highway Fund appropriations availability used in developing modifications to the 2002‑2003 Highway Fund budget contained in this act is shown below:
	2002‑2003

Beginning Credit Balance 	$41,300,000
Estimated Revenue	1,276,600,000

TOTAL HIGHWAY FUND AVAILABILITY	$1,317,900,000

PART iv. highway trust fund appropriations

highway trust fund appropriations
SECTION 4.1.  Appropriations from the Highway Trust Fund of the State for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are made for the fiscal year ending June 30, 2003, according to the schedule that follows. Amounts set out in brackets are reductions from Highway Trust Fund appropriations for the 2002‑2003 fiscal year.

Current Operations and Expansion ‑ Highway Trust Fund	2002‑2003

Intrastate System	(156,082,527)
Secondary Roads	(17,736,555)
Urban Loops	(63,113,273)
Aid to Municipalities	(16,376,698)
Program Administration	(11,534,947)
Transfer to General Fund	207,400,000

Grand Total/Highway Trust Fund	(57,444,000)

PART V. BLOCK GRANTS

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
DHHS Block Grants
SECTION 5.1.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2003, according to the following schedule:

COMMUNITY SERVICES BLOCK GRANT

01.	Community Action Agencies	$ 15,266,973

02.	Limited Purpose Agencies	848,165

03.	Department of Health and Human Services
to administer and monitor
the activities of the
Community Services Block Grant	848,165

TOTAL COMMUNITY SERVICES BLOCK GRANT	$ 16,963,303

SOCIAL SERVICES BLOCK GRANT

01.	County departments of social services	$ 27,095,289
(Transfer from TANF ‑ $4,500,000)

02.	Allocation for in‑home services provided
by county departments of
social services	2,101,113

03.	Division of Mental Health, Developmental
Disabilities, and Substance Abuse Services	3,234,601

04.	Division of Services for the Blind	3,105,711

05.	Division of Facility Services	426,836

06.	Division of Aging ‑ Home and Community
Care Block Grant	1,840,234

07.	Child Care Subsidies	3,000,000

08.	Division of Vocational Rehabilitation ‑ 
United Cerebral Palsy	71,484

09.	State administration	1,693,368

10.	Child Medical Evaluation Program	238,321

11.	Adult day care services	2,155,301

12.	Comprehensive Treatment Services
Program	422,003

13.	Department of Administration
for the N.C. State Commission of Indian Affairs
In‑Home Services Program for the Elderly	203,198

14.	Division of Vocational Rehabilitation ‑
Easter Seals Society	116,779

15.	UNC‑CH CARES Program for training and
consultation services	247,920

16.	Office of the Secretary ‑ Office of Economic
Opportunity for N.C. Senior Citizens'
Federation for outreach services to
low‑income elderly persons	41,302

17.	Division of Social Services ‑ Child 
Caring Agencies	1,500,000

18.	Division of Mental Health,
Developmental Disabilities, and 
Substance Abuse Services ‑ Developmentally
Disabled Waiting List for services	5,000,000

19.	Transfer to Preventive Health Services Block
Grant for HIV/AIDS education, counseling, and
testing		145,819

20.	Division of Facility Services –
Mental Health Licensure	213,128

TOTAL SOCIAL SERVICES BLOCK GRANT	$ 52,852,407

LOW‑INCOME ENERGY BLOCK GRANT

01.	Energy Assistance Programs	$ 11,395,026

02.	Crisis Intervention	6,598,934

03.	Administration	2,459,510

04.	Weatherization Program	3,457,189

05.	Department of Administration ‑ 
N.C. State Commission of Indian Affairs	45,189

06.	Heating Air Repair and Replacement Program	1,613,355

TOTAL LOW‑INCOME ENERGY BLOCK GRANT	$ 25,569,203

MENTAL HEALTH SERVICES BLOCK GRANT

01.	Provision of community‑based
services for severe and persistently
mentally ill adults	$ 5,442,798

02.	Provision of community‑based
services to children	2,513,141

03.	Comprehensive Treatment Services
Program for Children	1,500,000

04.	Administration	783,911

TOTAL MENTAL HEALTH SERVICES BLOCK GRANT	$ 10,239,850

SUBSTANCE ABUSE PREVENTION
AND TREATMENT BLOCK GRANT

01.	Provision of community‑based
alcohol and drug abuse services,
tuberculosis services, and services
provided by the Alcohol and Drug Abuse
Treatment Centers	$ 15,401,711

02.	Continuation of services for
pregnant women and women
with dependent children	8,069,524

03.	Continuation of services to 
IV drug abusers and others at risk 
for HIV diseases	4,616,378

04.	Provision of services to children
 and adolescents	7,740,611

05.	Juvenile Services ‑ Family Focus	851,156

06.	Allocation to the Division of Public Health
for HIV/STD Risk Reduction Projects	383,980

07.	Allocation to the Division of Public Health
for HIV/STD Prevention by County Health
Departments	209,576

08.	Allocation to the Division of Public Health 
for the Maternal and Child Health Hotline	37,779

09.	Administration	2,596,307

TOTAL SUBSTANCE ABUSE PREVENTION 
AND TREATMENT BLOCK GRANT	$ 39,907,022

CHILD CARE AND DEVELOPMENT FUND BLOCK GRANT

01.	Child care subsidies	$149,801,334

02.	Quality and availability initiatives	16,496,620

03.	Administrative expenses	6,929,081

04.	Transfer from TANF Block Grant for 
child care subsidies	72,812,189

TOTAL CHILD CARE AND DEVELOPMENT FUND
BLOCK GRANT	$246,039,224

TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT 

01.	Work First Cash Assistance	$129,396,275

02.	Work First County Block Grants	92,018,855

03.	Transfer to the Child Care and 
Development Fund Block Grant
for child care subsidies	72,812,189

04.	Allocation to the Division of Mental
Health, Developmental Disabilities, and
Substance Abuse Services for Work First
substance abuse screening, diagnostic, and
support treatment services and drug testing 	400,000

05.	Allocation to the Division of Social
Services for staff development	75,000

06.	Reduction of out‑of‑wedlock births	1,000,000

07.	Business Process Reengineering
Project Reserve	325,000

08.	Allocation to the Division of Public Health
for teen pregnancy prevention	600,000

09.	Child Care Subsidies for TANF Recipients	26,621,241

10.	County Child Protective Services,
Foster Care, and Adoption Workers	2,727,550

11.	Transfer to Social Services Block Grant for
County Departments of Social Services for
Children's Services	4,500,000

12.	Residential Substance Abuse Services
for Women With Children	1,475,142

13.	Division of Social Services ‑
Administration	500,000

14.	Child Welfare workers and services for 
local departments of social services	7,654,841

15.	Child Welfare Training	2,000,000

16.	DSS Evaluation	500,000

17.	SACWIS Payback	4,643,454

TOTAL TEMPORARY ASSISTANCE TO NEEDY FAMILIES
(TANF) BLOCK GRANT	$347,249,547

MATERNAL AND CHILD HEALTH BLOCK GRANT

01.	Healthy Mothers/Healthy Children
Block Grants to Local Health
Departments	9,838,074

02.	High‑Risk Maternity Clinic Services,
Perinatal Education and Training, 
Childhood Injury Prevention,
Public Information and Education, and
Technical Assistance to Local Health
Departments	2,012,102

03.	Services to Children With Special Health
Care Needs	5,078,647

TOTAL MATERNAL AND CHILD
HEALTH BLOCK GRANT	$ 16,928,823

PREVENTIVE HEALTH SERVICES BLOCK GRANT

01.	Statewide Health Promotion Programs	$3,282,810

02.	Rape Crisis/Victims' Services
Program ‑ Council for Women	197,112

03.	Transfer from Social Services
Block Grant – 
HIV/AIDS education, counseling, and
testing		145,819

04.	Office of Minority Health	159,459

05.	Administrative Costs	108,546

TOTAL PREVENTIVE HEALTH SERVICES BLOCK GRANT	$3,893,746

SECTION 5.1.(b)  Decreases in Federal Fund Availability. – If the United States Congress reduces federal fund availability in the Social Services Block Grant below the amounts appropriated in this section, then the Department of Health and Human Services shall allocate these decreases giving priority first to those direct services mandated by State or federal law, then to those programs providing direct services that have demonstrated effectiveness in meeting the federally and State‑mandated services goals established for the Social Services Block Grant.  The Department shall not include transfers from TANF for specified purposes in any calculations of reductions to the Social Services Block Grant.
If the United States Congress reduces the amount of TANF funds below the amounts appropriated in this section after the effective date of this act, then the Department shall allocate the decrease in funds after considering any underutilization of the budget and the effectiveness of the current level of services. Any TANF Block Grant fund changes shall be reported to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.
Decreases in federal fund availability shall be allocated for the Maternal and Child Health and Preventive Health Services federal block grants by the Department of Health and Human Services after considering the effectiveness of the current level of services.
SECTION 5.1.(c)  Increases in Federal Fund Availability. – Any block grant funds appropriated by the United States Congress in addition to the funds specified in this act shall be expended by the Department of Health and Human Services, with the approval of the Office of State Budget and Management, provided the resultant increases are in accordance with federal block grant requirements and are within the scope of the block grant plan approved by the General Assembly.
SECTION 5.1.(d)  Changes to the budgeted allocations to the block grants appropriated in this act and new allocations from the block grants not specified in this act shall be submitted to the Joint Legislative Commission on Governmental Operations  for review prior to the change and shall be reported immediately to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.
SECTION 5.1.(e)  The Department of Health and Human Services may allow no‑cost contract extensions for up to six months for nongovernmental grant recipients under the TANF Block Grant.
SECTION 5.1.(f)  Limitations on Preventive Health Services Block Grant Funds. – Twenty‑five percent (25%) of funds allocated for Rape Prevention and Rape Education shall be allocated as grants to nonprofit organizations to provide rape prevention and education programs targeted for middle, junior high, and high school students.
If federal funds are received under the Maternal and Child Health Block Grant for abstinence education, pursuant to section 912 of Public Law 104‑193 (42 U.S.C. § 710), for the 2002‑2003 fiscal year, then those funds shall be transferred to the State Board of Education to be administered by the Department of Public Instruction. The Department of Public Instruction shall use the funds to establish an Abstinence Until Marriage Education Program and shall delegate to one or more persons the responsibility of implementing the program and G.S. 115C‑81(e1)(4). The Department of Public Instruction shall carefully and strictly follow federal guidelines in implementing and administering the abstinence education grant funds.
The Department of Health and Human Services shall contract for the follow‑up testing involved with the Newborn Screening Program. The Department may contract for these services with an entity within or outside of the State; however, the Department may only contract with an out‑of‑state entity if it can be demonstrated that there is a cost‑savings associated with contracting with the out‑of‑state entity. The contract amount shall not exceed twenty‑five thousand dollars ($25,000). The amount of the contract shall be covered by funds in the Maternal and Child Grant Block Grant.
SECTION 5.1.(g)  The Department of Health and Human Services shall not use any funds appropriated in this section to develop or implement a Medical Child Care Pilot.
SECTION 5.1.(h)  Payment for subsidized child care services provided with federal TANF funds shall comply with all regulations and policies issued by the Division of Child Development for the subsidized child care program.
SECTION 5.1.(i)  The sum of five hundred thousand dollars ($500,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2002‑2003 fiscal year shall be used to support administration of TANF‑funded programs.
SECTION 5.1.(j)  The sum of one million four hundred seventy‑five thousand one hundred forty‑two dollars ($1,475,142) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2002‑2003 fiscal year shall be used to provide regional residential substance abuse treatment and services for women with children.  The Department of Health and Human Services, the Division of Social Services, and the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, in consultation with local departments of social services, area mental health programs, and other State and local agencies or organizations, shall coordinate this effort in order to facilitate the expansion of regionally based substance abuse services for women with children.  These services shall be culturally appropriate and designed for the unique needs of TANF women with children.
In order to expedite the expansion of these services, the Secretary of the Department of Health and Human Services may enter into contracts with service providers.
The Department of Health and Human Services, the Division of Social Services, and the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall report on their progress in complying with this subsection no later than October 1, 2002, and March 1, 2003, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division. These reports shall include all of the following:
(1)	The number and location of additional beds created.
(2)	The types of facilities established.
(3)	The delineation of roles and responsibilities at the State and local levels.
(4)	Demographics of the women served, the number of women served, and the cost per client.
(5)	Demographics of the children served, the number of children served, and the services provided.
(6)	Job placement services provided to women.
(7)	A plan for follow‑up and evaluation of services provided with an emphasis on outcomes.
(8)	Barriers identified to the successful implementation of the expansion.
(9)	Identification of other resources needed to appropriately and efficiently provide services to Work First recipients.
(10)	Other information as requested.
SECTION 5.1.(k)  The sum of seven million six hundred fifty‑four thousand eight hundred forty‑one dollars ($7,654,841) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for the 2002‑2003 fiscal year for Child Welfare Improvements shall be allocated to the county departments of social services for hiring or contracting staff to investigate and provide services in Child Protective Services cases; to provide foster care and support services; to recruit, train, license, and support prospective foster and adoptive families; and to provide interstate and post‑adoption services for eligible families.
SECTION 5.1.(l)  The sum of one million five hundred thousand dollars ($1,500,000) appropriated in this section in the Mental Health Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2002‑2003 fiscal year and the sum of four hundred twenty‑two thousand three dollars ($422,003) appropriated in this section in the Social Services Block Grant to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, for the 2002‑2003 fiscal year shall be used to continue a Comprehensive Treatment Services Program for Children in accordance with Section 21.60 of S.L. 2001‑424, as amended.
SECTION 5.1.(m)  The sum of two million dollars ($2,000,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services, Division of Social Services, for fiscal year 2002‑2003 shall be used to support various child welfare training projects as follows:
(1)	Provide a regional training center in southeastern North Carolina.
(2)	Support the Masters Degree in Social Work/Baccalaureate Degree in Social Work Collaborative.
(3)	Provide training for residential child care facilities.
(4)	Provide for various other child welfare training initiatives.
SECTION 5.1.(n)  The sum of three hundred twenty‑five thousand dollars ($325,000) appropriated in this section in the TANF Block Grant to the Department of Health and Human Services for a Business Process Reengineering Project Reserve may only be used for the project if funds appropriated in this act for Business Process Reengineering are not sufficient to continue the project through the 2002‑2003 fiscal year. Prior to the use of these funds, the Office of State Budget and Management shall review all proposals for expenditure of these funds in order to ensure compliance with this subsection.
SECTION 5.1.(o)  If funds appropriated through the Child Care and Development Fund Block Grant for any program cannot be obligated or spent in that program within the obligation or liquidation periods allowed by the federal grants, the Department may move funds to child care subsidies, unless otherwise prohibited by federal requirements of the grant, in order to use the federal funds fully.

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Ner Block Grant Funds
SECTION 5.2.(a)  Appropriations from federal block grant funds are made for the fiscal year ending June 30, 2003, according to the following schedule:

COMMUNITY DEVELOPMENT BLOCK GRANT

01.	State Administration	$1,000,000

02.	Urgent Needs and Contingency	1,000,000

03.	Scattered Site Housing	13,100,000

04.	Economic Development	8,710,000

05.	Community Revitalization	13,500,000

06.	State Technical Assistance	450,000

07.	Housing Development	2,100,000

08.	Infrastructure	5,140,000

TOTAL COMMUNITY DEVELOPMENT
BLOCK GRANT ‑ 2002 Program Year	$45,000,000

SECTION 5.2.(b)  Decreases in Federal Fund Availability. – If federal funds are reduced below the amounts specified above after the effective date of this act, then every program in each of these federal block grants shall be reduced by the same percentage as the reduction in federal funds.
SECTION 5.2.(c)  Increases in Federal Fund Availability for Community Development Block Grant. – Any block grant funds appropriated by the Congress of the United States in addition to the funds specified in this section shall be expended as follows:  Each program category under the Community Development Block Grant shall be increased by the same percentage as the increase in federal funds.
SECTION 5.2.(d)  Limitations on Community Development Block Grant Funds. – Of the funds appropriated in this section for the Community Development Block Grant, the following shall be allocated in each category for each program year: up to one million dollars ($1,000,000) may be used for State administration; up to one million dollars ($1,000,000) may be used for Urgent Needs and Contingency; up to thirteen million one hundred thousand dollars ($13,100,000) may be used for Scattered Site Housing; up to eight million seven hundred ten thousand dollars ($8,710,000) may be used for Economic Development; not less than thirteen million five hundred thousand dollars ($13,500,000) shall be used for Community Revitalization; up to four hundred fifty thousand dollars ($450,000) may be used for State Technical Assistance; up to two million one hundred thousand dollars ($2,100,000) may be used for Housing Development; up to five million one hundred forty thousand dollars ($5,140,000) may be used for Infrastructure.  If federal block grant funds are reduced or increased by the Congress of the United States after the effective date of this act, then these reductions or increases shall be allocated in accordance with subsection (b) or (c) of this section, as applicable.
SECTION 5.2.(e)  Increase Capacity for Nonprofit Organizations. –  Assistance to nonprofit organizations to increase their capacity to carry out CDBG‑eligible activities in partnership with units of local government is an eligible activity under any program category in accordance with federal regulations.  Capacity building grants may be made from funds available within program categories, program income, or unobligated funds.

PART VI. general provisions

Requested by:	Senators Plyler, Odom, Lee
contingency and emergency fund allocations
SECTION 6.1.  Section 6.3(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 6.3.(a)  Funds in the amount of five million dollars ($5,000,000) for the 2001‑2002 fiscal year and ten million dollars ($10,000,000) for the 2002‑2003 fiscal year are appropriated to the Contingency and Emergency Fund. Of the funds:
(1)	The sum of three million eight hundred seventy‑five thousand dollars ($3,875,000) for the 2001‑2002 fiscal year and the sum of three million eight hundred seventy‑five thousand dollars ($3,875,000) for the 2002‑2003 fiscal year shall be used only to respond to an unanticipated disaster such as a fire, hurricane, or tornado;
(2)	The sum of nine hundred thousand dollars ($900,000) for the 2001‑2002 fiscal year and the sum of nine hundred thousand dollars (900,000) for the 2002‑2003 fiscal year shall be used only (i) for the purposes set out in subdivision (1) of this subsection, (ii) as required by a court, Industrial Commission, or administrative hearing officer's order or award, or (iii) to match unanticipated federal funds (3)	The sum of two hundred twenty‑five thousand dollars ($225,000) for the 2001‑2002 fiscal year and the sum of two hundred twenty‑five thousand dollars ($225,000) for the 2002‑2003 fiscal year shall be used for the purposes set out in subdivisions (1) and (2) of this subsection or for other allocations from the Contingency and Emergency Fund; and
(4)	The sum of five million dollars ($5,000,000) shall be used for the purposes set out in subdivisions (1) and (2) of this subsection or to settle legal disputes."

Requested by:	Senators Plyler, Odom, Lee
use of overrealized general fund availability
SECTION 6.2.  The Director of the Budget shall review General Fund availability at the end of each month for the 2002‑2003 fiscal year.  If the actual availability for a month exceeds the availability anticipated by the General Assembly in this act for that month, the excess amount shall be credited to the Savings Reserve Account.
The Director of the Budget may use funds credited to the Savings Reserve Account pursuant to this section only to offset a decrease in availability during a month in which the actual availability is less that the availability anticipated by the General Assembly in this act for that month.

Requested by:	Senators Plyler, Odom, Lee
Use of Savings Reserve to Balance Budget
SECTION 6.3.(a)  G.S. 143‑15.3(b) prohibits the Director of the Budget from using funds in the Savings Reserve Account unless the use has been approved by an act of the General Assembly. The General Assembly hereby authorizes the Director of the Budget to use funds that were credited to the Savings Reserve Account on or before June 30, 2002, to the extent necessary to balance the State budget for the 2001‑2002 fiscal year and funds are hereby appropriated from the Savings Reserve Account for this purpose.
SECTION 6.3.(b)  This section becomes effective June 30, 2002.

Requested by:	Senators Plyler, Odom, Lee, Dalton, Lucas, Garrou, Rand
Deduction Flexibility
SECTION 6.4.(a)  G.S. 143‑3.3(g) reads as rewritten:
"(g)	Payroll Deduction for Payments to Certain Employees' Associations Allowed. – An employee of the State or any of its institutions, departments, bureaus, agencies or commissions, or any of its local boards of education or community colleges, who is a member of a domiciled employees' association that has at least 2,000 members, the majority of whom are employees of the State or public school employees, may authorize, in writing, the periodic deduction each payroll period from the employee's salary or wages a designated lump sum to be paid to the employees' association.
An employee of any local board of education who is a member of a domiciled employees' association that has at least 40,000 members, the majority of whom are public school teachers, may authorize in writing the periodic deduction each payroll period from the employee's salary or wages a designated lump sum or sums to be paid for dues and voluntary contributions for the employees' association.
An authorization under this subsection shall remain in effect until revoked by the employee. A plan of payroll deductions pursuant to this subsection for employees of the State and other association members shall become void if the employees' association engages in collective bargaining with the State, any political subdivision of the State, or any local school administrative unit. This subsection does not apply to county or municipal governments or any local governmental unit, except for local boards of education."
SECTION 6.4.(b)  G.S. 135‑18.8 reads as rewritten:
"§ 135‑18.8.  Deduction for payments to certain employees' or retirees' associations allowed.
Any member who is a member of a domiciled employees' or retirees' association that has at least 2,000 members, the majority of whom are active or retired employees of the State or public school employees, may authorize, in writing, the periodic deduction from the member's retirement benefits a designated lump sum to be paid to the employees' or retirees' association. The authorization shall remain in effect until revoked by the member. A plan of deductions pursuant to this section shall become void if the employees' or retirees' association engages in collective bargaining with the State, any political subdivision of the State, or any local school administrative unit.
Any member who is a member of a domiciled employees' or retirees' association that has at least 40,000 members, the majority of whom are active or retired public school teachers, may authorize, in writing, the periodic deduction from the member's retirement benefits a designated lump sum or sums to be paid for dues and voluntary contributions for the employees' or retirees' association. The authorization shall remain in effect until revoked by the member. A plan of deductions pursuant to this section shall become void if the employees' or retirees' association engages in collective bargaining with the State, any political subdivision of the State, or any local school administrative unit."

PART VII. PUBLIC SCHOOLS

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
TEACHER SALARY SCHEDULES
SECTION 7.1.(a)  Effective for the 2002‑2003 school year, the annual longevity payments for teachers whose salaries are supported from the State's General Fund are one and one‑half percent (1.5%) of base salary for 10 to 14 years of State service, two and twenty‑five hundredths percent (2.25%) of base salary for 15 to 19 years of State service, three and twenty‑five hundredths percent (3.25%) of base salary for 20 to 24 years of State service, and four and one‑half percent (4.5%) of base salary for 25 or more years of State service.  These funds shall be allocated to individuals according to rules adopted by the State Board of Education.  The longevity payment shall be paid in a lump sum once a year.
SECTION 7.1.(b)  For the 2002‑2003 school year, the following monthly salary schedules shall apply to certified personnel of the public schools who are classified as teachers.  The schedule contains 30 steps with each step corresponding to one year of teaching experience.

2002‑2003 Monthly Salary Schedule
"A" Teachers

	Years of	"A"	NBPTS
	Experience	Teachers	Certification

	0	$2,525	N/A
	1	$2,525	N/A
	2	$2,567	N/A
	3	$2,611	$2,924
	4	$2,764	$3,096
	5	$2,904	$3,252
	6	$3,036	$3,400
	7	$3,164	$3,544
	8	$3,266	$3,658
	9	$3,314	$3,712
	10	$3,362	$3,765
	11	$3,412	$3,821
	12	$3,461	$3,876
	13	$3,511	$3,932
	14	$3,561	$3,988
	15	$3,614	$4,048
	16	$3,667	$4,107
	17	$3,722	$4,169
	18	$3,777	$4,230
	19	$3,834	$4,294
	20	$3,892	$4,359
	21	$3,950	$4,424
	22	$4,011	$4,492
	23	$4,072	$4,561
	24	$4,136	$4,632
	25	$4,200	$4,704
	26	$4,264	$4,776
	27	$4,330	$4,850
	28	$4,398	$4,926
	29	$4,467	$5,003

2002‑2003 Monthly Salary Schedule
"M" Teachers

	Years of	"M"	NBPTS
	Experience	Teachers	Certification

	0	$2,778	N/A
	1	$2,778	N/A
	2	$2,824	N/A
	3	$2,872	$3,217
	4	$3,040	$3,405
	5	$3,194	$3,577
	6	$3,340	$3,741
	7	$3,480	$3,898
	8	$3,593	$4,024
	9	$3,645	$4,082
	10	$3,698	$4,142
	11	$3,753	$4,203
	12	$3,807	$4,264
	13	$3,862	$4,325
	14	$3,917	$4,387
	15	$3,975	$4,452
	16	$4,034	$4,518
	17	$4,094	$4,585
	18	$4,155	$4,654
	19	$4,217	$4,723
	20	$4,281	$4,795
	21	$4,345	$4,866
	22	$4,412	$4,941
	23	$4,479	$5,016
	24	$4,550	$5,096
	25	$4,620	$5,174
	26	$4,690	$5,253
	27	$4,763	$5,335
	28	$4,838	$5,419
	29	$4,914	$5,504
SECTION 7.1.(c)  Notwithstanding the salary schedules set out in subsection (b) of this subsection:
(1)	Certified personnel of the public schools who are classified as "A" teachers for 2002‑2003 fiscal year and who had 30 or more years of experience during the 2001‑2002 fiscal year shall receive a monthly salary of four thousand five hundred thirty‑eight dollars ($4,538);
(2)	Certified personnel of the public schools who are classified as "A" teachers for 2002‑2003 fiscal year who had 30 or more years of experience during the 2001‑2002 fiscal year and have a NBPTS Certification shall receive a monthly salary of five thousand eighty‑three dollars ($5,083);
(3)	Certified personnel of the public schools who are classified as "M" teachers for 2002‑2003 fiscal year and who had 30 or more years of experience during the 2001‑2002 fiscal year shall receive a monthly salary of four thousand nine hundred ninety‑two dollars ($4,992); and
(4)	Certified personnel of the public schools who are classified as "M" teachers for 2002‑2003 fiscal year who had 30 or more years of experience during the 2001‑2002 fiscal year and have a NBPTS Certification shall receive a monthly salary of five thousand five hundred ninety‑one dollars ($5,591).
SECTION 7.1.(d)  Certified public school teachers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers.  Certified public school teachers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for certified personnel of the public schools who are classified as "M" teachers.
SECTION 7.1.(e)  Effective for the 2002‑2003 school year, the first step of the salary schedule for school psychologists shall be equivalent to Step 5, corresponding to five years of experience, on the salary schedule established in this section for certified personnel of the public schools who are classified as "M" teachers.  Certified psychologists shall be placed on the salary schedule at an appropriate step based on their years of experience.  Certified psychologists shall receive longevity payments based on years of State service in the same manner as teachers.
Certified psychologists with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for certified psychologists. Certified psychologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for certified psychologists.
SECTION 7.1.(f)  Effective for the 2002‑2003 school year, speech pathologists who are certified as speech pathologists at the masters degree level and audiologists who are certified as audiologists at the masters degree level and who are employed in the public schools as speech and language specialists and audiologists shall be paid on the school psychologist salary schedule.
Speech pathologists and audiologists with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided for speech pathologists and audiologists. Speech pathologists and audiologists with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for speech pathologists and audiologists.
SECTION 7.1.(g)  Certified school nurses who are employed in the public schools as nurses shall be paid on the "M" salary schedule.
SECTION 7.1.(h)  As used in this section, the term "teacher" shall also include instructional support personnel.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
school‑based administrator salary schedule
SECTION 7.2.(a)  The base salary schedule for school‑based administrators shall apply only to principals and assistant principals.  The base salary schedule for the 2002‑2003 fiscal year, commencing July 1, 2002, is as follows:

2002‑2003
Principal and Assistant Principal Salary Schedules

CLASSIFICATION

Yrs of	Assistant	Prin I	Prin II	Prin III	Prin IV
Exp	Principal	(0‑10)	(11‑21)	(22‑32)	(33‑43)

0‑4	$3,226				
5	$3,226				
6	$3,373				
7	$3,515				
8	$3,629				
9	$3,681	$3,681			
10	$3,735	$3,735			
11	$3,791	$3,791	$3,845		
12	$3,845	$3,845	$3,901		
13	$3,901	$3,901	$3,956	$4,015	
14	$3,956	$3,956	$4,015	$4,074	$4,135
15	$4,015	$4,015	$4,074	$4,135	$4,197
16	$4,074	$4,074	$4,135	$4,197	$4,259
17	$4,135	$4,135	$4,197	$4,259	$4,324
18	$4,197	$4,197	$4,259	$4,324	$4,388
19	$4,259	$4,259	$4,324	$4,388	$4,456
20	$4,324	$4,324	$4,388	$4,456	$4,524
21	$4,388	$4,388	$4,456	$4,524	$4,596
22	$4,456	$4,456	$4,524	$4,596	$4,666
23	$4,524	$4,524	$4,596	$4,666	$4,737
24	$4,596	$4,596	$4,666	$4,737	$4,811
25	$4,666	$4,666	$4,737	$4,811	$4,886
26	$4,737	$4,737	$4,811	$4,886	$4,963
27	$4,811	$4,811	$4,886	$4,963	$5,042
28	$4,886	$4,886	$4,963	$5,042	$5,143
29	$4,963	$4,963	$5,042	$5,143	$5,246
30	$5,042	$5,042	$5,143	$5,246	$5,351
31	$5,143	$5,143	$5,246	$5,351	$5,458
32	$5,246	$5,246	$5,351	$5,458	$5,567
33		$5,351	$5,458	$5,567	$5,678
34			$5,567	$5,678	$5,792
35			$5,678	$5,792	$5,908
36				$5,908	$6,026
37				$6,026	$6,147
38					$6,270

2002‑2003
Principal and Assistant Principal Salary Schedules

Classification

Yrs of	Prin V	Prin VI	Prin VII	Prin VIII
Exp	(44‑54)	(55‑65)	(66‑100)	(101+)

0‑4				
5				
6				
7				
8				
9				
10				
11				
12				
13				
14				
15	$4,259			
16	$4,324			
17	$4,388	$4,456		
18	$4,456	$4,524	$4,666	
19	$4,524	$4,596	$4,737	$4,811
20	$4,596	$4,666	$4,811	$4,886
21	$4,666	$4,737	$4,886	$4,963
22	$4,737	$4,811	$4,963	$5,042
23	$4,811	$4,886	$5,042	$5,143
24	$4,886	$4,963	$5,143	$5,246
25	$4,963	$5,042	$5,246	$5,351
26	$5,042	$5,143	$5,351	$5,458
27	$5,143	$5,246	$5,458	$5,567
28	$5,246	$5,351	$5,567	$5,678
29	$5,351	$5,458	$5,678	$5,792
30	$5,458	$5,567	$5,792	$5,908
31	$5,567	$5,678	$5,908	$6,026
32	$5,678	$5,792	$6,026	$6,147
33	$5,792	$5,908	$6,147	$6,270
34	$5,908	$6,026	$6,270	$6,395
35	$6,026	$6,147	$6,395	$6,523
36	$6,147	$6,270	$6,523	$6,653
37	$6,270	$6,395	$6,653	$6,786
38	$6,395	$6,523	$6,786	$6,922
39	$6,523	$6,653	$6,922	$7,060
40		$6,786	$7,060	$7,201
41		$6,922	$7,201	$7,345
42			$7,345	$7,492

SECTION 7.2.(b)  The appropriate classification for placement of principals and assistant principals on the salary schedule, except for principals in alternative schools, shall be determined in accordance with the following schedule:
Number of Teachers
Classification	Supervised
Assistant Principal
Principal I	Fewer than 11 Teachers
Principal II	11‑21 Teachers
Principal III	22‑32 Teachers
Principal IV	33‑43 Teachers
Principal V	44‑54 Teachers
Principal VI	55‑65 Teachers
Principal VII	66‑100 Teachers
Principal VIII	More than 100 Teachers
The number of teachers supervised includes teachers and assistant principals paid from State funds only; it does not include teachers or assistant principals paid from non‑State funds or the principal or teacher assistants.
The beginning classification for principals in alternative schools shall be the Principal III level. Principals in alternative schools who supervise 33 or more teachers shall be classified according to the number of teachers supervised.
SECTION 7.2.(c)  A principal shall be placed on the step on the salary schedule that reflects:
(1)	The total number of years of experience as a certificated employee of the public schools and
(2)	An additional step for every three years of experience as a principal prior to the 2001‑2002 school year.
SECTION 7.2.(d)  A principal or assistant principal shall continue to receive any additional State‑funded percentage increases earned for the 1997‑1998, 1998‑1999, and 1999‑2000 school years for improvement in student performance or maintaining a safe and orderly school.
SECTION 7.2.(e)  Principals and assistant principals with certification based on academic preparation at the six‑year degree level shall be paid a salary supplement of one hundred twenty‑six dollars ($126.00) per month and at the doctoral degree level shall be paid a salary supplement of two hundred fifty‑three dollars ($253.00) per month.
SECTION 7.2.(f)  There shall be no State requirement that superintendents in each local school unit shall receive in State‑paid salary at least one percent (1%) more than the highest paid principal receives in State salary in that school unit:  Provided, however, the additional State‑paid salary a superintendent who was employed by a local school administrative unit for the 1992‑93 fiscal year received because of that requirement shall not be reduced because of this subsection for subsequent fiscal years that the superintendent is employed by that local school administrative unit so long as the superintendent is entitled to at least that amount of additional State‑paid salary under the rules in effect for the 1992‑93 fiscal year.
SECTION 7.2.(g)  Longevity pay for principals and assistant principals shall be as provided for State employees under the State Personnel Act.
SECTION 7.2.(h)  
(1)	If a principal is reassigned to a higher job classification because the principal is transferred to a school within a local school administrative unit with a larger number of State‑allotted teachers, the principal shall be placed on the salary schedule as if the principal had served the principal's entire career as a principal at the higher job classification.
(2)	If a principal is reassigned to a lower job classification because the principal is transferred to a school within a local school administrative unit with a smaller number of State‑allotted teachers, the principal shall be placed on the salary schedule as if the principal had served the principal's entire career as a principal at the lower job classification.
This subsection applies to all transfers on or after the effective date of this section, except transfers in school systems that have been created, or will be created, by merging two or more school systems. Transfers in these merged systems are exempt from the provisions of this subsection for one calendar year following the date of the merger.
SECTION 7.2.(i)  Participants in an approved full‑time Masters in School Administration program shall receive up to a 10‑month stipend at the beginning salary of an assistant principal during the internship period of the masters program.  Certification of eligible full‑time interns shall be supplied to the Department of Public Instruction by the Principal Fellows Program or a school of education where the intern participates in a full‑time Masters in School Administration.
SECTION 7.2.(j)  During the 2002‑2003 fiscal year, the placement on the salary schedule of an administrator with a one‑year provisional assistant principal's certificate shall be at the entry‑level salary for an assistant principal or the appropriate step on the teacher salary schedule, whichever is higher.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
litigation reserve funds
SECTION 7.3.  The State Board of Education may expend up to five hundred thousand dollars ($500,000) for the 2002‑2003 fiscal year from unexpended funds for certified employees' salaries to pay expenses related to pending litigation.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
children with disabilities
SECTION 7.4.  The State Board of Education shall allocate funds for children with disabilities on the basis of two thousand six hundred eighty‑six dollars and fifty cents ($2,686.50) per child for a maximum of 161,845 children for the 2002‑2003 school year.  Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities or (ii) twelve and five‑tenths percent (12.5%) of the 2002‑2003 allocated average daily membership in the local school administrative unit.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
funds for academically gifted children
SECTION 7.5.  The State Board of Education shall allocate funds for academically or intellectually gifted children on the basis of eight hundred eighty‑eight dollars ($888.00) per child.  A local school administrative unit shall receive funds for a maximum of four percent (4%) of its 2002‑2003 allocated average daily membership, regardless of the number of children identified as academically or intellectually gifted in the unit. The State Board shall allocate funds for no more than 53,075 children for the 2002‑2003 school year.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
FUNDS FOR THE TESTING AND IMPLEMENTATION OF THE NEW STUDENT INFORMATION SYSTEM
SECTION 7.6.  Section 28.32 of S.L. 2001‑424 reads as rewritten:
"SECTION 28.32. The State Board of Education may transfer up to one million dollars ($1,000,000) in funds appropriated for the Uniform Education Reporting System for the 2001‑2002 fiscal year and up to one million dollars ($1,000,000) in funds appropriated for the Uniform Education Reporting System for the 2002‑2003 fiscal year to the Department of Public Instruction to lease or purchase equipment necessary for the testing and implementation of NC WISE, the new student information system in the public schools."

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
FUNDS TO IMPLEMENT THE ABCs OF PUBLIC EDucation
SECTION 7.7.(a)  The State Board of Education shall use funds appropriated for State  Aid to Local School Administrative Units for the 2002‑2003 fiscal year to provide incentive funding for schools that met or exceeded the projected levels of improvement in student performance during the 2001‑2002 school year, in accordance with the ABCs of Public Education Program.  In accordance with State Board of Education policy:
(1)	Incentive awards in schools that achieve higher than expected improvements may be up to:
a.	One thousand five hundred dollars ($1,500) for each teacher and for certified personnel; and
b.	Five hundred dollars ($500.00) for each teacher assistant.
(2)	Incentive awards in schools that meet the expected improvements may be up to:
a.	Seven hundred fifty dollars ($750.00) for each teacher and for certified personnel; and
b.	Three hundred seventy‑five dollars ($375.00) for each teacher assistant.
SECTION 7.7.(b)  The State Board of Education may use funds appropriated to State Aid to Local School Administrative Units for assistance teams to low‑performing schools.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
revision of reading and writing assessments
SECTION 7.8.  Of the funds appropriated to State Aid to Local School Administrative Units, the State Board of Education may use up to one million dollars ($1,000,000) for the 2002‑2003 fiscal year to revise the reading and writing assessments.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
FUNDS FOR INSTRUCTIONAL SUPPLIES
SECTION 7.9.(a)  Section 28.39(a) of S.L. 2001‑424 applies only to funds appropriated for the 2001‑2002 fiscal year.
SECTION 7.9.(b)  The Joint Legislative Education Oversight Committee shall study the viability of the State contracting with on‑line school supply vendors to allow teachers free access to a specific amount of school supplies, textbooks, test, and other classroom related materials.  The Committee shall determine if the establishment of an on‑line debit account for each teacher is cost effective and an efficient way to meet the supply needs of teachers.  The Committee shall report to the General Assembly its findings and any recommended action by January 15, 2003.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
Funds for Mentor Pay
SECTION 7.10.  State funds appropriated for mentor pay shall be used only to provide mentors for employees who are in State‑funded positions and who are either (i) newly certified teachers in their first two years of employment as teachers or (ii) entry‑level instructional support personnel who have not previously been teachers and who are in their first year of employment as instructional support personnel.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
conversion of accumulated leave time
SECTION 7.11.(a)  G.S. 115C‑302.1 reads as rewritten:
"115C‑302.1.  Salary.
…
						
(c3)	Teachers may accumulate annual vacation leave days without any applicable maximum until June 30 of each year. In order that only 30 days of annual vacation leave carry forward to July 1, on June 30 of each year any teacher or other personnel paid on the teacher salary schedule who has accumulated more than 30 days of annual vacation leave shall convert to sick leave the remaining excess accumulation.
Upon separation from service due to service retirement, resignation, dismissal, reduction in force, or death, an employee shall be paid in a lump sum for accumulated annual leave not to exceed a maximum of 30 days. In addition to the maximum of 30 days pay for accumulated annual leave, upon separation from service due to service retirement, any teacher or other personnel paid on the teacher salary schedule with more than 30 days of accumulated annual vacation leave may convert some or all of the excess accumulation to sick leave for creditable service towards retirement. Employees going onto term disability may exhaust annual leave rather than be paid in a lump sum.
.…"
SECTION 7.11.(b)  This section applies only to leave days accruing after the date this act becomes law.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
RESA FUNDS SHALL BE USED FOR STAFF DEVELOPMENT
SECTION 7.12.(a)  Funds allocated to local school administrative units for Regional Education and Technical Assistance Centers and not expended prior to July 1, 2002, shall remain available to local school administrative units for the 2002‑2003 fiscal year.  These funds shall be transferred to the staff development funding allotment and shall be used only for staff development.
SECTION 7.12.(b)  This section becomes effective June 30, 2002.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
BASE BUDGET REDUCTION to DEPARTMENT of public instruction
SECTION 7.13.(a)  Notwithstanding any other provision of law, the Department of Public Instruction may use salary reserve funds and other funds in the Department's continuation budget to transfer and reclassify positions as necessary to implement the reduction in force for the 2002‑2003 fiscal year. The Department of Public Instruction shall transfer personnel operations to the Office of State Personnel, thereby eliminating four personnel positions.
The State Board of Education shall study the appropriate management structure and budget size of the Department of Public Instruction. The Board shall report the results of this study to the Joint Legislative Education Oversight Committee.
SECTION 7.13.(b)  The Office of State Budget and Management shall issue a Request for Proposals for an analysis of the structure and operation of the Department of Public Instruction that identifies potential efficiencies and savings in the operations of the Department.  The analysis may consider consolidation of functions with other agencies and automation of functions.
The Request for Proposals may include contingency proposals based on potential savings.
The Office of State Budget and Management shall consult with the Joint Legislative Oversight Committee prior to the award of the contract.

Requested by:	Senators Dalton, Lucas, Garrou , Plyler, Odom, Lee
REPLACEMENT School Buses FUNDS
SECTION 7.14.(a) Of the funds appropriated to the State Board of Education for the 2002‑2003 fiscal year, the Board may use up to ten million dollars ($10,000,000) for grants to local boards of education for replacement school buses under G.S. 115C‑249(c) and (d). In making these grants, the State Board of Education may impose any of the following conditions:
(1)	The local board of education must use the funds only to make the first year's payment on a financing contract entered into pursuant to G.S. 115C‑528.
(2)	The term of a financing contract entered into under this section shall not exceed three years.
(3)	The local board of education must purchase the buses only from vendors selected by the State Board of Education and on terms approved by the State Board of Education.
(4)	The State Board of Education shall solicit bids for the direct purchase of buses and for the purchasing of buses through financing. The State Board of Education may solicit separate bids for financing if the Board determines that multiple financing options are more cost‑efficient.
(5)	A bus financed pursuant to this section must meet all federal motor vehicle safety regulations for school buses.
(6)	Any other condition the State Board of Education considers appropriate.
SECTION 7.14.(b)  It is the intent of the General Assembly to continue its annual appropriations to the State Board of Education for replacement school buses.
SECTION 7.14.(c)  Any term contract for the purchase or lease‑purchase of school buses or school activity buses shall not require vendor payment of the electronic procurement transaction fee of the North Carolina E‑Procurement Service.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
curriculum review required on a regular basis
SECTION 7.15.  G.S. 115C‑12(9a) reads as rewritten:
"(9a)	Power to Develop Content Standards. – The Board shall develop a comprehensive plan to revise content standards and the standard course of study in the core academic areas of reading, writing, mathematics, science, history, geography, and civics. The Board shall involve and survey a representative sample of parents, teachers, and the public to help determine academic content standard priorities and usefulness of the content standards. A full review of available and relevant academic content standards that are rigorous, specific, sequenced, clear, focused, and measurable, whenever possible, shall be a part of the process of the development of content standards. The revised content standards developed in the core academic areas shall (i) reflect high expectations for students and an in‑depth mastery of the content; (ii) be clearly grounded in the content of each academic area; (iii) be defined grade‑by‑grade and course‑by‑course; (iv) be understandable to parents and teachers; (v) be developed in full recognition of the time available to teach the core academic areas at each grade level; and (vi) be measurable, whenever possible, in a reliable, valid, and efficient manner for accountability purposes.
High school course content standards shall include the knowledge and skills necessary to enter the workforce and also shall be aligned with the coursework required for admission to the constituent institutions of The University of North Carolina. The Board shall develop and implement a plan for end‑of‑course tests for the minimum courses required for admission to the constituent institutions. All end‑of‑course tests shall be aligned with the content standards.
The Board also shall develop and implement an ongoing process to align State programs and support materials with the revised academic content standards for each core academic area on a regular basis. Alignment shall include revising textbook criteria, support materials, State tests, teacher and school administrator preparation, and ongoing professional development programs to be compatible with content standards. The Board shall develop and make available to teachers and parents support materials, including teacher and parent guides, for academic content standards. The State Board of Education shall work in collaboration with the Board of Governors of The University of North Carolina to ensure that teacher and school administrator degree programs, ongoing professional development and other university activity in the State's public schools align with the State Board's priorities."

Requested by:	Senators Dalton, Lucas, Garrou , Plyler, Odom, Lee
Corporate Tax Transfer Moratorium
SECTION 7.16.(a)  Notwithstanding the provisions of G.S. 115C‑489.1(b), the Secretary of Revenue shall not deposit any funds in the Critical School Facility Needs Fund during the 2002‑2003 fiscal year but shall deposit in the State Public School Fund the funds that would have otherwise been deposited in the Critical School Facility Needs Fund pursuant to G.S. 115C‑489.1(b).
SECTION 7.16.(b)  Notwithstanding the provisions of G.S. 115C‑546.1(b), the Secretary of Revenue shall not remit any funds for credit to the Public School Building Capital Fund during the 2002‑2003 fiscal year but shall deposit in the State Public School Fund the funds that would have otherwise been deposited in the Public School Building Capital Fund pursuant to G.S. 115C‑546.1(b).

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
study modifications
SECTION 7.17.(a)  Supplemental Funding in Low‑Wealth Counties (Compliance with the Nonsupplant Requirement). – Section 28.6(i) of S.L. 2001‑424 reads as rewritten:
"SECTION 28.6.(i)  Reports. – The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to May 1, 2002, and May 1, 2003, if it determines that counties have supplanted funds."
SECTION 7.17.(b)  Small School System Supplemental Funding (Compliance with the Nonsupplant Requirement). – Section 28.7(e) of S.L. 2001‑424 reads as rewritten:
"SECTION 28.7.(e)  Reports. – The State Board of Education shall report to the Joint Legislative Education Oversight Committee prior to May 1, 2002, and May 1, 2003, if it determines that counties have supplanted funds."
SECTION 7.17.(c)  Study of the Textbook Distribution System. – Section 28.24 of S.L. 2001‑424 reads as rewritten:
"SECTION 28.24. The State Board of Education shall contract for an analysis of the best and most efficient method to manage textbook distribution to the local schools. The Board shall prepare a Request for Proposals (RFP) outlining the scope of the analysis required and select a private consultant to perform the analysis. The analysis shall include such issues as timely delivery, total costs to the local school systems in providing textbooks to school buildings, use of currently available technology in the process, pricing practices among the textbook publishing industry, and other issues the Board considers relevant to a comprehensive review of the system.
Prior to award of a contract, the State Board shall present the Request for Proposals to the Joint Legislative Education Oversight Committee for comment. The State Board shall report to the Joint Legislative Education Oversight Committee on the results of the consultant’s analysis, including the Board’s recommendations for changes in the current system. The Board shall make its final report to the Committee by February 1, 2003."
SECTION 7.17.(d)  Study of the Salaries of School Food Service Workers and Custodians. – Section 28.34 of S.L. 2001‑424 reads as rewritten:
"SECTION 28.34. The Joint Legislative Education Oversight Committee shall study the salaries of food service workers and custodians employed by the public schools. The Committee shall report its findings to the 2003 General Assembly."
SECTION 7.17.(e)  Study of Salary Differentials for Instructional Support Personnel. – Section 28.37(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 28.37.(b)  The Joint Legislative Education Oversight Committee shall study salary differentials for instructional support personnel. In the course of the study, the Committee shall consider salary differentials based on degrees and other educational credentials, licensure or certification by State agencies, licensure or certification by private entities, and other factors. The Committee shall report its findings and recommendations to the 2003 General Assembly."
SECTION 7.17.(f)  Fairness in Testing (Study of the State's Testing Program). –  Section 28.17(i) of S.L. 2001‑424 reads as rewritten:
"SECTION 28.17.(i)  The Joint Legislative Education Oversight Committee shall study the State's testing program. As part of this study, the Committee shall consider:
(1)	The number of tests currently mandated at the State level and the process and cost of developing, validating, and scoring them.
(2)	Whether the State should consider the use of nationally developed tests as a substitute to State‑developed testing. In particular, the Committee shall determine whether this use would (i) affect the ABCs Program, (ii) adequately measure student achievement and performance, (iii) provide more than minimum levels of achievement, (iv) provide a better comparison to student achievement and performance in other states, (v) be practical for high school courses or higher level courses, (vi) reduce the need for field testing, and (vii) offer any cost savings to the State.
(3)	The number of grades in which State tests are given. The Committee shall determine the necessity for testing all grades in third through eighth grades, whether a reduction in the grades tested would affect the receipt of federal money, and the extent to which a reduction would impair the State's ability to identify schools under the ABCs Program.
(4)	The high school courses for which State tests are given and whether there is an appropriate distribution of tests across grades nine through 12 and that test an appropriate array of the minimum courses required for admission to the constituent institutions of The University of North Carolina. In addition, the Committee shall examine whether students who take higher level courses and students in 12th grade are held accountable for their academic growth and performance.
(5)	The advantages and disadvantages of using a composite of end‑of‑course tests or other tests such as the SAT, AP tests, or other nationally standardized tests in high school rather than developing a high school exit exam. If the Committee finds a high school exit exam is preferable, then it shall determine whether it must be administered to all students or limited to certain students, for example, those who do not take the SAT or a certain number of courses for which there are end‑of‑course tests.
(6)	The extent to which additional testing, including field testing, practice testing, and locally mandated testing, is occurring and whether this should be limited or prohibited.
(7)	Evaluate alternative schools to determine how educational achievement is being advanced in these alternative school programs and that placement in these programs is to improve student performance rather than improve the performance of the school in which the student originally was assigned.
(8)	Any other issue the Committee considers relevant.
The Committee shall report its findings and any recommendations, including recommended legislation, to the 2003 General Assembly."
SECTION 7.17.(g)  Noncitizen Tuition Rates. –  Section 8.9 of S.L. 2001‑491 is repealed.
SECTION 7.17.(h)  Study of Professional Development for School Personnel. – Section 31.4(d) of S.L. 2001‑424 reads as rewritten:
"SECTION 31.4.(d)  The Joint Legislative Education Oversight Committee shall review the consultant's findings and recommendations and shall submit to the2003 General Assembly recommendations to streamline, reorganize, and improve the delivery of professional development for public school professionals. The recommendations may address revisions to program governance and mission, reallocation of funds, methods of program delivery, and methods to institute ongoing program evaluation."

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
performance‑based licensure program
SECTION 7.18.(a)  G.S. 115C‑296(b) reads as rewritten:
"(b)	(See Note) It is the policy of the State of North Carolina to maintain the highest quality teacher education programs and school administrator programs in order to enhance the competence of professional personnel certified in North Carolina. To the end that teacher preparation programs are upgraded to reflect a more rigorous course of study, the State Board of Education, as lead agency in coordination and cooperation with the University Board of Governors, the Board of Community Colleges and such other public and private agencies as are necessary, shall continue to refine the several certification requirements, standards for approval of institutions of teacher education, standards for institution‑based innovative and experimental programs, standards for implementing consortium‑based teacher education, and standards for improved efficiencies in the administration of the approved programs. The certification program shall provide for initial certification after completion of preservice training, continuing certification after three years of teaching experience, and certificate renewal every five years thereafter.
The State Board of Education, as lead agency in coordination with the Board of Governors of The University of North Carolina and any other public and private agencies as necessary, shall continue to raise standards for entry into teacher education programs.
The State Board of Education, in consultation with the Board of Governors of The University of North Carolina, shall evaluate and develop enhanced requirements for continuing certification. The new requirements shall reflect more rigorous standards for continuing certification and to the extent possible shall be aligned with quality professional development programs that reflect State priorities for improving student achievement. These rigorous standards shall not include a portfolio requirement for teachers.
The State Board of Education, in consultation with local boards of education and the Board of Governors of The University of North Carolina, shall reevaluate and enhance the requirements for renewal of teacher certificates. The State Board shall consider modifications in the certificate renewal achievement and to make it a mechanism for teachers to renew continually their knowledge and professional skills. The State Board shall adopt new standards for the renewal of teacher certificates by May 15, 1998.
The standards for approval of institutions of teacher education shall require that teacher education programs for students who do not major in special education include demonstrated competencies in the identification and education of children with learning disabilities. The State Board of Education shall incorporate the criteria developed in accordance with G.S. 116‑74.21 for assessing proposals under the School Administrator Training Program into its school administrator program approval standards.
All North Carolina institutions of higher education that offer teacher education programs, masters degree programs in education, or masters degree programs in school administration shall provide performance reports to the State Board of Education. The performance reports shall follow a common format, shall be submitted according to a plan developed by the State Board, and shall include the information required under the plan developed by the State Board."
SECTION 7.18.(b)  The State Board, in consultation with the Board of Governors of The University of North Carolina, shall revise the standards for continuing certification so that the portfolio requirement for teachers is no longer required. The standards shall continue to be rigorous and aligned with the State's priorities for improving student achievement.
SECTION 7.18.(c)  Section 28.19(b) of S.L. 2001‑424 is repealed.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
study of coordination of central office duties
SECTION 7.19.  The State Board of Education shall study whether local school administrative units can effectively and efficiently coordinate central office operations and functions between systems. The State Board shall report to the Senate Appropriations Committee on Education/Higher Education and the House Appropriations Subcommittee on Education prior to March 1, 2003, on how base funding formulas for central office administrations can be reduced based on the coordination of duties.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
discrepancies between anticipated and actual adm
SECTION 7.20.(a)  If the State Board of Education does not have sufficient resources in the ADM Contingency Reserve line item to make allotment adjustments in accordance with the Allotment Adjustments for ADM Growth provisions of the North Carolina Public Schools Allotment Policy Manual, the State Board of Education may use funds appropriated to State Aid for Public Schools for this purpose.
SECTION 7.20.(b)  If the first‑month average daily membership in a local school administrative unit is at least two percent (2%) or 100 students lower than the anticipated average daily membership used for allotments for the unit, the State Board of Education shall reduce allotments for the unit.  The reduced allotments shall be based on the first‑month average daily membership plus one‑half of the number of students overestimated in the anticipated average daily membership.
The allotments reduced pursuant to this subsection shall include only those allotments that may be increased pursuant to the Allotment Adjustments for ADM Growth provisions of the North Carolina Public Schools Allotment Policy Manual.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
high school exit examination
SECTION 7.21.  Notwithstanding Section 8.27(f) of S.L. 1997‑443, the State Board of Education shall review the requirements of the federal "No Child Left Behind Act of 2001." (20 USCS §§ 6301 et seq.) and any regulations adopted to implement this legislation before the Board completes the development of the high school exit examinations and implements the high school exit examinations. The Board shall consider whether revisions to the State testing program and School‑Based Management and Accountability Program are necessary to comply with federal requirements.  The Board shall not adopt any revisions prior to reporting them and a proposed timetable for their implementation to the Joint Legislative Education Oversight Committee.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
clarification to provision on addressing teacher shortage
SECTION 7.22.  Section 29.2(a)(2) of S.L. 2001‑424 reads as rewritten:
"(2)	The sum of $1,500,000 for the 2001‑2002 fiscal year and the sum of $1,500,000 for the 2002‑2003 fiscal year shall be used to provide annual bonuses of one thousand eight hundred dollars ($1,800) to teachers certified in and teaching in the fields of mathematics, science, or special education in grades 6 through 12 at middle and high schools with eighty percent (80%) or more of the students eligible for free or reduced lunch or with fifty percent (50%) or more of students performing below grade level in Algebra I and Biology. The bonus shall be paid monthly with matching benefits. Teachers shall remain eligible for the bonuses so long as they continue to teach in one of these disciplines at a school that was eligible for the bonus program when the teacher first received the bonus."

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
support for the Business Systems Improvement Project (BSIP)
SECTION 7.23.  The State Board of Education may use up to one hundred twenty thousand dollars ($120,000) of driver education funds for the 2002‑2003 fiscal year for software maintenance and other support for the Business Systems Improvement Project (BSIP), a new school bus transportation system operated by the Department of Transportation.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
extend alternative lateral entry program
SECTION 7.24.  Section 2 of S.L. 1998‑226 reads as rewritten:
"Section 2. This act is effective when it becomes law and expires September 1, 2006, except that it remains effective for any teacher employed under this act before September 1, 2006."

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
use of funds for kindergarten
SECTION 7.25. The maximum class size limits for kindergarten for the 2002‑2003 school year shall be the same as the class size limits established by the State Board of Education for the 2001‑2002 school year.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
local education agency flexibility 
SECTION 7.26.  Within seven days of the date this act becomes law, the State Board of Education shall notify each local school administrative unit of the amount the unit must reduce from State General Fund appropriations.  The State Board shall determine the amount of the reduction for each unit on the basis of average daily membership.
Each unit shall report to the Department of Public Instruction on the discretionary budget reductions it has identified for the unit within 30 days of the date this act becomes law.
The General Assembly urges local school administrative units to make every effort not to reduce either direct classroom services or services directly targeted to at‑risk students and children with special needs. If reductions to these allotment categories are necessary in order to meet the reduction target, the local board of education shall submit an explanation of the anticipated impact of the reduction to student services along with the budget reductions to the Department of Public Instruction.

Requested by:	Senators Dalton, Reeves, Lee, Plyler, Odom
Business and Education Technology Alliance
SECTION 7.27.(a)  There is created the State Board of Education's Business and Education Technology Alliance.
SECTION 7.27.(b)  The Business and Education Technology Alliance shall be composed of 25 members who have knowledge and interest in ensuring that the effective use of technology is built into the North Carolina School System for the purpose of preparing a globally competitive workforce and citizenry for the 21st Century. These members shall be appointed as follows:
(1)	The Superintendent of Public Instruction or his or her designee;
(2)	One member of the State Board of Education appointed by the State Board of Education;
(3)	One parent of a public school child appointed by the State Board of Education after receiving recommendations from the North Carolina State Parent Teacher Association;
(4)	Two members of the Senate;
(5)	Two members of the House of Representatives;
(6)	One member of a local board of education who represents a local education agency (LEA) that has successfully incorporated technology into its schools, who is appointed by the Governor, after receiving recommendations from the North Carolina School Boards Association;
(7)	One member of a local board of education who represents a local education agency (LEA) that has limited access to technology, who is appointed by the Governor, after receiving recommendations from the North Carolina School Boards Association;
(8)	Two at‑large members appointed by the Governor;
(9)	One representative of business and industry appointed by the State Board of Education after receiving recommendations from the North Carolina Citizens for Business and Industry;
(10)	Three members appointed by the President Pro Tempore of the Senate. In making these appointments the President Pro Tempore is encouraged to consider appointing a local school superintendent who represents a local education agency that has limited access to technology, a school principal who works in a school that successfully incorporates technology into its instructional program, and a school teacher who works in a school with limited access to technology. Professional associations representing school administrators and professional associations representing teachers may recommend appointees to the President Pro Tempore;
(11)	Three members appointed by the Speaker of the House of Representatives. In making these appointments the Speaker of the House of Representatives is encouraged to consider appointing a local school superintendent from a local education agency that has successfully incorporated the use of technology into its instructional programs, a school principal working in a school with limited access to technology, and a school teacher who has successfully incorporated the use of technology into classroom instruction. Professional associations representing school administrators and professional associations representing teachers may recommend appointees to the Speaker of the House of Representatives;
(12)	One chancellor or his or her designee of institutions of higher education who has demonstrated effective and innovative use of technology for education, appointed by the Board of Governors of The University of North Carolina;
(13)	One president or his or her designee of the Community College System who has demonstrated effective and innovative use of technology for education, appointed by the Community College Board of Trustees;
(14)	Two county commissioners, one of whom represents a county that has successfully incorporated technology into its schools and community, who are appointed by the State Board of Education, after receiving recommendations from the North Carolina Association of County Commissioners;
(15)	Two representatives of technology businesses who have either successfully developed innovative technology programs for education or have partnered with a local education agency (LEA) to develop a technology‑based education environment in that LEA, who are appointed by the State Board of Education, after receiving recommendations from North Carolina Electronics and Information Technologies Association and the North Carolina Citizens for Business and Industry; and
(16)	One representative of the Information Resource Management Commission appointed by the Commission's Chair.
SECTION 7.27.(c)  Each of the following organizations or agencies shall select a representative from its organization or agency to serve as a nonvoting member to the Alliance.  These members shall provide information to the Alliance about technology in North Carolina: Rural Internet Access Authority; Information and Technology Services, North Carolina Department of Public Instruction; Office of State Information Technology Services, Office of the Governor.
SECTION 7.27.(d)  Members of the Business and Education Technology Alliance shall serve for two‑year terms. All members of the Alliance shall be voting members unless they are designated as ex officio members. The officer who made the initial appointment shall fill vacancies in the appointed membership. The Business and Education Technology Alliance shall select a member of the Alliance to serve as chairperson of the Alliance.
SECTION 7.27.(e)  Members of the Business and Education Technology Alliance shall receive travel and subsistence expenses in accordance with the provisions of G.S. 120‑3.1, 138‑5, and 138‑6.
SECTION 7.27.(f)  The Business and Education Technology Alliance shall:
(1)	Advise the State Board of Education on the development of a vision for a technologically literate citizen in 2025. This vision should contain the educational standards needed to accomplish that vision, the educational uses of technology to accomplish that vision, and a plan for educating the community, educators, and business people about the vision and educational uses of technology. Incorporated within the vision and the plan for educating the public about the vision may include:
a.	Various models and frameworks of the high quality and effective use of technology for education purposes including those students who have not learned with traditional approaches. The models may include the Cumberland County Schools Web Academy, the Virtual High School, and Nova Net.
b.	Opportunities for teachers to experience the uses of technology in work and business settings, which is the world for which they are preparing students to work.
c.	Production of multimedia presentations such as videos, commercials, and publications that help citizens, students, and educators see and understand the current and future power of technology for educating our children and impacting our lives.
(2)	Advise the State Board of Education on the development of a technology infrastructure, delivery, and support system that provides equity and access to all publics in North Carolina. The infrastructure, delivery, and support system may include:
a.	Opportunities for access to high‑speed connectivity to the Internet which impacts on the quality of instruction that can be provided for students at school and in the community.
b.	Technology networks that enable communities to encompass the student and his/her family while maintaining the rights to privacy for all citizens, i.e., a social service, health, education, and mental health network. This network will increase collaboration among agencies and provide a coordinated, systemic service approach.
c.	Continue to evaluate the status of current technology systems and structures from the State to local level as it relates to employing technology for improving instruction.
d.	Continue to provide access to technology equipment and infrastructure at home, school and in the community such as extended hours of operation for schools and other community facilities and on‑loan laptop computers for student and parent use.
e.	Continue to develop surveys that provide information about the types and results of technological tools utilized by teachers, students, and others at school, in the community and home.
f.	Sufficient personnel to maintain the operation of information technology systems.
g.	Coordination with regional economic development planners to position local education agencies as an integral part of economic development.
(3)	Advise the State Board of Education on the development of professional development programs for teachers to successfully implement and use technology in public schools for all students. These programs should also develop their leadership skills so that they can use technology as a tool to support the rethinking of the core business of schools: student learning. The professional development programs may include:
a.	Models of staff development from the State that are considered state of the art, support the vision for technology, and that could be used by local districts to train their staffs.
b.	Designated time for professional development for using technology as well as skills for using technology as a delivery for curriculum and instructional programs.
c.	Collegial planning time so that colleagues can coach and support each other in learning new ways in which to think about instruction.
d.	Teacher and administrator preparation and other programs that ensure the Department of Public Instruction's Technology Foundation Standards for Teachers and Administrators in higher education are incorporated into classroom instruction.
e.	Training teachers with skill sets to teach technical courses that are in growing demand to function at home and work.
f.	Increase opportunities for sharing best practices in all areas of instruction.
g.	Increase opportunities for learning how to use technology to customize instruction for all students.
h.	Increase opportunities for learning how to use technology to diagnose student learning.
(4)	Advise the State Board of Education on the development of a Funding and Accountability system to ensure statewide access and equity. The Funding and Accountability system may include:
a.	Public‑private partnerships.
b.	Identification of resources and the cost of those resources.
c.	Funding to keep hardware/software current.
d.	Evaluating progress toward realizing the technology vision.
e.	Evaluating the impact of various technology initiatives on alleviating some of the State's education and economic development problems.
f.	Incentives to encourage risk taking and innovative uses of technology.
g.	Funding for only those initiatives that are well‑planned, demonstrate high commitment, and have a solid evaluation component.
(5)	Report annually to the State Board of Education on the progress of the Alliance's recommendations for education technology in the public schools on the first Friday in December. This report may contain a summary of recommendations for changes to any law, rule, and policy that would improve implementing education technology in the public schools.
(6)	Report annually to the Joint Legislative Education Oversight Committee in the General Assembly on the recommendations for education technology in the public schools on the first Friday in January. This report may contain a summary of recommendations for changes to any law, rule, and policy that would improve implementing education technology in the public schools.
SECTION 7.27.(g)  The State Board of Education is encouraged to use private partnerships to fund this initiative.

PART VIII. COMMUNITY COLLEGES

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
community college funding flexibility
SECTION 8.1.  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 include in its Institutional Effectiveness Plan a section on how funding flexibility allows the college to meet the demands of the local community and to maintain a presence in all previously funded categorical programs.
No more than two percent (2%) systemwide shall be transferred from faculty salaries without the approval of the State Board of Community Colleges. The State Board shall report on any such transfers above two percent (2%) systemwide to the Joint Legislative Commission on Governmental Operations at its next meeting.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
regional programs
SECTION 8.2.  G.S. 115D‑5(f) reads as rewritten:
"(f)	A community college may not offer a new program without the approval of the State Board of Community Colleges except that approval shall not be required if the tuition for the program will fully cover the cost of the program. If at any time tuition fails to fully cover the cost of a program that falls under the exception, the program shall be discontinued unless approved by the State Board of Community Colleges.  
The State Board of Community Colleges shall require that all new programs it approves be developed using a regional approach unless there are extreme extenuating circumstances documented by the college detailing reasons a regional program is not feasible. The college shall demonstrate that it has attempted to develop a regional program and explain what barriers were in existence.
It is the intent of the General Assembly to increase the number of regional program offerings in community colleges and to reduce duplication of programs by colleges that are within reasonably close proximity to each other; therefore, the State Board of Community Colleges shall review existing programs to determine which of the existing programs can be offered regionally. 
The State Board of Community Colleges shall report on an annual basis to the Governor, Lieutenant Governor, the Speaker of the House of Representatives, and the Joint Legislative Education Oversight Committee on all new programs it approved and on the progress made on regional programs during the year. The report shall include the specific reasons for which each new program was approved, a progress report on regionalization of programs, a list of all programs approved by the State Board that are not regional and the reasons for their approval, and a list of program terminations approved by the State Board."

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
regional economic development vision plans
SECTION 8.3.  The State Board of Community Colleges and the Department of Commerce, in conjunction with the North Carolina Board of Economic Development and the seven regional economic development commissions, shall adopt a joint policy that requires the development of a five‑year vision plan for each of the economic development regions in the State.  The joint policy shall establish a task force for each economic development region. Each task force shall consist of at least one representative from each of the following:  the regional economic development commission, the president, and board of trustees of the community colleges located in that region, and any additional persons as may be designated by the policy.  The task force may appoint an executive committee and any subcommittees it deems appropriate.
The policy shall direct each task force to develop a five‑year vision plan for its economic development region. At a minimum, each vision plan shall determine the realistic economic development goals and the future job market in that region and shall identify community college courses currently offered or needed to effectuate the vision plan. The policy shall require the task forces to review and update their respective vision plans every five years.
If the service area of any community college is in more than one economic development region, then the State Board of Community Colleges shall determine how the participation in the various task forces will be addressed.

Requested by:	Senators Dalton, Lucas, Garrou, Robinson, Plyler, Odom, Lee
haywood regional high technology center
SECTION 8.4.  The Office of State Budget and Management shall transfer funding for Haywood Regional High Technology Center from the special allotments line item to a new line item entitled "Haywood Regional High Technology Center".

Requested by:	Senators Dalton, Lucas, Garrou, Rand, Plyler, Odom, Lee
realignment of funding
SECTION 8.5.(a)  Academic Support Supplement. – Effective July 1, 2002, funding for the Academic Support Supplement shall no longer be included as part of the curriculum instruction formula but shall be allocated from a separate line item in State Aid fund code 1600. The State Board of Community Colleges shall allocate these funds to the colleges on the basis of the budgeted FTE curriculum student enrollment for the current fiscal year.
Nothing in this section shall be construed to provide or to indicate the intent of the General Assembly to provide additional funding for the Academic Support Supplement.
SECTION 8.5.(b)  Formula Modification Restrictions. – The State Board of Community Colleges may examine and recommend to the General Assembly new State Aid allocation options that more closely align the allocation and expenditure of State‑appropriated resources.  The State Board shall report any recommendations regarding modifications to the formula to the Senate Appropriations Committee on Education/Higher Education, the House Appropriations Subcommittee on Education, the President Pro Tempore of the Senate, the Speaker of the House of Representatives, and the Fiscal Research Division.
SECTION 8.5.(c)  Effective July 1, 2002, the State Board of Community Colleges shall no longer allocate funds for the Botanical Laboratory from General Fund appropriations.  Instead, no more than two hundred thousand dollars ($200,000) from excess overrealized receipts shall be used for this purpose.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
temporary rules on fte for training provided to law enforcement PERSONNEL
SECTION 8.6.(a)  The State Board of Community Colleges may adopt temporary rules clarifying the conditions under which community colleges may earn budgeted FTE for training provided to personnel in law enforcement, fire and rescue services, and emergency medical service agencies.
SECTION 8.6.(b)  This section becomes effective when this act becomes law and expires six months after that date.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
community college system study
SECTION 8.7.  The State Board of Community Colleges shall hire an outside consultant to consider:
(1)	The organization and structure of the Community College System, the number of colleges within the System, the location and size of the colleges, and whether the State could realize any administrative savings from the consolidation of some colleges or programs, and
(2)	The formula used to fund administration at the colleges, appropriate funding levels for administration of the various colleges, and the appropriate number of administrative staff members for colleges of different sizes.
The State Board of Community Colleges shall report the results of the study to the Joint Legislative Education Oversight Committee and the Fiscal Research Division no later than February 1, 2003.

PART IX. UniversitIes

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
Elizabeth City State University Pharmacy School
SECTION 9.1.  The Board of Governors of The University of North Carolina shall establish an accredited and fully staffed stand‑alone school of pharmacy at Elizabeth City State University no later than the 2004‑2005 academic year.  The Board of Governors shall immediately begin to implement the proposals regarding establishment of a fully staffed stand‑alone school of pharmacy at Elizabeth City State University as set out in the feasibility study conducted in compliance with Section 31.10(c) of S.L. 2001‑424.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
TRANSFER collection responsibilities for certain SCHOLARSHIP PROGRAMS TO STATE EDUCATION ASSISTANCE AUTHORITY
SECTION 9.2.(a) The statutory authority, powers, duties, and functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds of the North Carolina Teaching Fellows Commission relating to the collection of loans awarded under G.S. 115C‑363.23A when the loan repayments are outstanding for more than 30 days are transferred from the North Carolina Teaching Fellows Commission to the State Education Assistance Authority.  This transfer has all of the elements of a Type II transfer as defined by G.S. 143A‑6.
SECTION 9.2.(b) The statutory authority, powers, duties, and functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds of the Department of Public Instruction relating to the collection of loan repayments for loans awarded under Article 32A of Chapter 115C of the General Statutes when the loans are outstanding for more than 30 days are transferred from the Department of Public Instruction to the State Education Assistance Authority. This transfer has all of the elements of a Type II transfer as defined by G.S. 143A‑6.
SECTION 9.2.(c) G.S. 115C‑363.23A is amended by adding a new subsection to read:
"(g)	The State Education Assistance Authority is responsible for the collection of a loan awarded under this section if the loan repayment is outstanding for more than 30 days."
SECTION 9.2.(d) G.S. 115C‑363.23A(f) reads as rewritten:
"(f)	All funds appropriated to or otherwise received by the Teaching Fellows Program for scholarships, all funds received as repayment of scholarship loans, and all interest earned on these funds, shall be placed in a revolving fund. This revolving fund shall be used for scholarship loans granted under the Teaching Fellows Program. With the prior approval of the General Assembly in the Current Operations Appropriations Act, the revolving fund may also be used for campus and summer program support, and costs related to disbursement of awards and collection of loan repayments.
The Public School Forum, as administrator for the Teaching Fellows Program, may use up to one hundred fifty thousand dollars ($150,000) annually from the fund balance for costs associated with administration of the Teaching Fellows Program. "
SECTION 9.2.(e) Article 32A of Chapter 115C of the General Statutes is amended by adding a new section to read:
"§ 115C-472.1.  State Education Assistance Authority collect loan repayments.
The State Education Assistance Authority is responsible for the collection of a loan awarded under this Article if the loan repayment is outstanding for more than 30 days."
SECTION 9.2.(f) G.S. 116‑204 is amended by adding the following new subdivisions to read:
"(9)	To collect loan repayments for loans awarded under the Teaching Fellows Program pursuant to G.S. 115C-363.23A if the loan repayment is outstanding for more than 30 days.
(10)	To collect loan repayments for loans awarded from the Scholarship Loan Fund for Prospective Teachers pursuant to Article 32A of Chapter 115C of the General Statutes if the loan repayment is outstanding for more than 30 days."

Requested by:	Senators Dalton, Garrou, Lucas , Plyler, Odom, Lee
Substitution of UNC Bond Projects
SECTION 9.3.(a)  Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interest of the State to respond to current educational and research program requirements at North Carolina State University by substituting a project entitled Animal and Food Science Facilities for the Meat Processing Laboratory, as contained in Section 2(a) of S.L. 2000‑3, and by transferring a portion of the funds from the project entitled Main Campus – Infrastructure (Including Water System), as contained in Section 2(a) of S.L. 2000‑3, to this substitute project. Section 2(a) of S.L. 2000‑3 is therefore amended as follows:
(1)	In the portion under Projects Whose Funding Was Transferred to Disaster Recovery Fund – North Carolina State University, by deleting "Meat Processing Laboratory….$4,853,755".
(2)	In the portion under North Carolina State University, by adding "Animal and Food Science Facilities….$6,460,980" and by decreasing by $1,607,225 the $9,330,700 for Main Campus – Infrastructure (Including Water System) so that it reads “Main Campus ‑ Infrastructure (Including Water System)….$7,723,475".
SECTION 9.3.(b) Pursuant to Section 2(b) of S.L. 2000‑3, the General Assembly finds that it is in the best interest of the State to respond to current educational requirements at the North Carolina School of the Arts by substituting a project entitled High School Student Residential Facility for the Residential Facility as contained in Section 2(a) of S.L. 2000‑3, which was anticipated to be built for college students. Section 2(a) of S.L. 2000‑3 is therefore amended in the portion under North Carolina School of the Arts, by deleting "Residence Hall…$1,832,100" and by adding "High School Student Residential Facility…$1,832,100".
SECTION 9.3.(c) Nothing in this section is intended to supersede any other requirement of law or policy for approval of the substituted capital improvement projects.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
UNC Scholarship Programs Consolidated
SECTION 9.4.(a)  Effective July 1, 2003, all funds in the continuation budget for the following scholarship programs shall be combined into one scholarship fund to be known as the "UNC Campus Scholarships":
(1)	Minority Presence Grants for undergraduate and doctoral, law and veterinary medicine students as described in the 1979 Consent Decree between the University of North Carolina and the United States Department of Health Education and Welfare at § VI, paragraphs 6.a. and 6.b.
(2)	Minority Presence Grants‑II as established in Section 17.3A of S.L. 1994‑769.
(3)	Incentive Scholarship Program for Native Americans as established in Section 17.3 of S.L. 1994‑769.
(4)	Elizabeth City State University Incentive Program as established by Chapter 738 of the 1987 of the Session Laws.
(5)	Incentive Grants for Certain Constituent Institutions as established by S.L. 1991‑689.
(6)	Freshman Scholars Programs as established by Section 46 of S.L. 1993‑ 561.
(7)	Legislative College Opportunity Program as established by Section 17.14 of S.L. 1994‑769.
SECTION 9.4.(b)  All obligations to students for uses of the funds set out in subsection (a) of this section that were made prior to the effective date of this act shall be fulfilled as to students who remain eligible under the provisions of the respective programs.
SECTION 9.4.(c)  Except as provided in subsection (d) of this section, funds in the UNC Campus Scholarships shall be distributed among the constituent institutions of The University of North Carolina in the same amounts as previous to the effective date of this act.
SECTION 9.4.(d)  Funds in the UNC Campus Scholarships allocated for doctoral study shall be reallocated based on the proportion of doctoral students enrolled at each of the campuses that have doctoral students.  These funds shall continue to be committed only to doctoral students who are North Carolina residents and shall be allocated based on need.  The funds previously in the Incentive Scholarship Program for Native Americans at the doctoral level shall be distributed evenly among the campuses with doctoral programs.
SECTION 9.4.(e)  The Board of Trustees of each constituent institution shall define its particular campus goals and guidelines for the use of the UNC Campus Scholarships for undergraduates.  The chancellor of each constituent institution shall submit its proposed guidelines to the President of The University of North Carolina for approval before implementing them.  Only residents of North Carolina shall be eligible to receive grants from the UNC Campus Scholarships.  Unless a campus has determined that it has sufficient diversity in its undergraduate student population to provide the educational benefits of diversity, the campus shall use at least the portion of these funds that previously provided Minority Presence Grants for undergraduates to promote diversity within the undergraduate student body of the campus to the extent permitted by the constitution and laws of the State of North Carolina and of the United States.  
SECTION 9.4.(f)  No constituent institution is required to have a community service requirement for receipt of grants from the UNC Campus Scholarships.
SECTION 9.4.(g)  The State Education Assistance Authority shall administer the UNC Campus Scholarships. Upon the naming of recipients of grants from the UNC Campus Scholarships, each constituent institution shall inform the State Education Assistance Authority (SEAA) of its decisions. The SEAA shall perform all of the administrative functions necessary to implement this program. The North Carolina State Education Assistance Authority shall conduct periodic evaluations of expenditures of the UNC Campus Scholarships to determine if allocations are being utilized, are addressing the financial needs of students or other needs identified by the constituent institutions, and are improving diversity on the campuses.  SEAA may make recommendation for redistribution of funds to the President of The University of North Carolina who may authorize redistribution of unutilized funds for a particular fiscal year among the constituent institutions.
SECTION 9.4.(h)  Each constituent institution shall maintain the current proportion of allocation of these funds for undergraduate Native American students.  To be eligible for such a grant, a student must be a resident of North Carolina and must be a Native American, defined as an individual who maintains cultural and political identification as a Native American through membership in an Indian tribe recognized by the State of North Carolina or by the United States. The North Carolina State Education Assistance Authority may redistribute to another constituent institution funds for Native Americans which are uncommitted by January 5 of each fiscal year.

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
Eliminate UNC Mailing List Duplication
SECTION 9.5.  Section 10.11 of S.L. 1999‑237 reads as rewritten:
"Section 10.11. Each constituent institution of The University of North Carolina and each community college shall provide to students and their families a brief, clear explanation of federal tax credits (the HOPE and Lifetime Learning Credits) that are available for educational purposes. The explanation shall include the limitations of the credits as well as examples of the potential benefits under certain tax situations. The constituent institution shall provide the tax credit information to the student  or the student's parents when the institution notifies each of the amount of tuition and fees paid for a calendar year."

Requested by:	Senators Dalton, Garrou, Lucas, Plyler, Odom, Lee
aid to private colleges technical corrections
SECTION 9.6.  G.S. 116‑21.4(a) reads as rewritten:
"(a)	Expenditures made pursuant to G.S. 116‑19, 116‑20, 116‑21.1, or 116‑21.2 may be used only for secular educational purposes at nonprofit institutions of higher learning that meet the qualifications set out in G.S. 116-22."

Requested by:	Senators Dalton, Lucas, Garrou, Plyler, Odom, Lee
UNC flexibility Guidelines
SECTION 9.7.  The chancellor of each constituent institution shall report to the Board of Governors of The University of North Carolina on the reductions made to the General Fund budget codes in order to meet the reduction reserve amounts for that institution. The director of the North Carolina School of Science and Mathematics shall report to the Board of Governors of The University of North Carolina on the reductions made in its General Fund budget code in order to meet the reduction reserve amounts for that institution. The President of The University of North Carolina shall report to the Board of Governors of The University of North Carolina on the reductions made to the General Fund budget codes controlled by the Board in order to meet the reduction reserve amounts for those entities.  The Board of Governors shall make a summary report to the Fiscal Research Division by October 31, 2002, on all reductions made by these entities and constituent institutions in order to reduce the budgets by the targeted amounts.

Requested by:	Senators Dalton, Lucas, Garrou, Clodfelter, Dannelly, Hoyle, Odom, Plyler, Lee
Out‑of‑State Institutions with NC campuses 
SECTION 9.8.  G. S. 116‑22 reads as rewritten:
"§ 116‑22.  Definitions applicable to §§ 116‑19 to 116‑22.
As used in G.S. 116‑19 through 116‑22:
(1)	"Institution" shall mean an educational institution with a main permanent campus located in this State that is not owned or operated by the State of North Carolina or by an agency or political subdivision of the State or by any combination thereof, and that satisfies all of the following:
a.	Is accredited by the Southern Association of Colleges and Schools under the standards of the College Delegate Assembly of the Association or by the New England Association of Schools and Colleges through its Commissions on Institutions of Higher Education.
b.	Awards a postsecondary degree as defined in G.S. 116-15. 
c.	Is not a seminary, Bible school, Bible college or similar religious institution.
(1a)	"Main permanent campus" shall mean a campus owned by the institution that provides permanent on-premises housing, food services, and classrooms with full-time faculty members and administration that engages in postsecondary degree activity as defined in G.S. 116-15.
(2)	"Student" shall mean a person enrolled in an institution that is located in the State who qualifies as a resident of North Carolina in accordance with definitions of residency that may from time to time be adopted by the Board of Governors of the University of North Carolina and published in the residency manual of said Board; and a person who has not received a bachelor's degree, or qualified therefore, and who is otherwise classified as an undergraduate under such regulations as the Board of Governors of the University of North Carolina may promulgate. The enrollment figures required by G.S. 116‑19 through 116‑22 shall be the number of full‑time equivalent students as computed under regulations prescribed by the Board of Governors of the University of North Carolina. Qualification for in‑State tuition under G.S. 116‑143.3 makes a person a "student" as defined in this subdivision."

Requested by:	Senators Robinson, Plyler, Odom, Lee
Focused Growth Pilot ProGram
SECTION 9.9.  The Board of Governors of The University of North Carolina may allow Elizabeth City State University, the University of North Carolina at Pembroke, and Western Carolina University each to allocate up to one hundred seventy‑eight thousand three hundred eighty dollars ($178,380) of the funds allocated to them for focused enrollment growth for a maximum of 20 Prospective Teacher Scholars. These funds may be used to recruit new nonresident students to enter into agreements to:  (i) pursue a full‑time course of study that will lead to teacher certification in North Carolina and (ii) teach in a North Carolina public school or a school operated by the United States government in North Carolina for one year for each year that they receive this benefit.  The Board of Governors shall establish guidelines and regulations for this pilot program, including methodology for determining its success in increasing the supply of qualified teachers for North Carolina public schools.  The Board shall report its guidelines and regulations to guide these pilot programs to the Joint Legislative Education Oversight Committee by September 15, 2002. The Board shall report annually to the Committee on the progress of the pilot programs and their costs.

PART X. DEPARTMENT OF HEALTH AND HUMAN SERVICES

SUBPART 1. ADMINISTRATION

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee 
INFORMATION TECHNOLOGY PROJECT CONTRACTS
SECTION 10.1.  Section 21.17 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.17.(a)  Notwithstanding any other provision of law to the contrary, the Department of Health and Human Services may establish special time‑limited positions for implementation of federal requirements under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Positions established are not permanent positions, not subject to the State Personnel Act under G.S. 126‑1.1, and not subject to the State salary schedule.
SECTION 21.17.(b)  Positions established pursuant to this section may commence no earlier than July 1, 2001, and shall expire June 30, 2005."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
consolidation of divisions of services for the Deaf and the hard of hearing, services for the blind, and vocational rehabilitation
SECTION 10.2.(a)  There is created within the Department of Health and Human Services a new division.  The following three divisions, including all positions and corresponding State appropriations, federal funds, and other funds, shall be consolidated within this new division:
(1)	Division of Services for the Deaf and the Hard of Hearing.
(2)	Division of Services for the Blind.
(3)	Division of Vocational Rehabilitation Services.
The new division shall retain all the duties, responsibilities, and powers of these three divisions. The name of the new division shall be determined by the Department of Health and Human Services.
SECTION 10.2.(b)  The Department shall report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on activities carried out under this section not later than October 1, 2002.  This report shall include the following:
(1)	The name of the new division.
(2)	An organizational chart showing the organizational structure of the new division.
(3)	A plan for reducing the budget of the consolidated division by seven hundred fifty thousand dollars ($750,000).
(4)	A list of all statutory references that need to be changed as a result of the consolidation.
SECTION 10.2.(c)  In developing a plan to reduce State appropriations to the new division, the Department shall do the following:
(1)	Consolidate the administration of the three existing divisions.
(2)	Consolidate all district offices in cities where there is currently more than one office.
(3)	Streamline the provision of direct client services provided by the three existing divisions.
(4)	Maintain services unique to persons who are blind, deaf, or blind and deaf.
(5)	Develop a plan for using existing resources to expand services for deaf and hard‑of‑hearing persons to areas of the State where services are currently not provided.
(6)	Maintain or increase current funding levels for all programs and services currently provided by the Division of Services for the Deaf and Hard of Hearing.
SECTION 10.2.(d)  Any additional savings beyond the seven hundred fifty thousand dollars ($750,000) achieved through the consolidation of the three divisions shall be reallocated to direct services with first priority being given to serving the unmet needs of deaf and hard‑of‑hearing persons.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Staffing Requirements in Long‑Term Care facilities
SECTION 10.3.(a)  The Department of Health and Human Services, Office of Long‑Term Care, shall review staffing requirements of Adult Day Care Programs and Adult Day Health Programs.  
SECTION 10.3.(b)  The Department shall report the results of its review to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than December 1, 2002.  The report shall include staffing requirements for adult day care and adult day health programs as compared to adult care homes, assisted living facilities, and nursing homes in the State.  The report shall also compare staffing ratios in North Carolina to those of other states, including those states that border North Carolina.  The report shall be conducted by the Department, Office of Long‑Term Care, or by an independent contractor and shall contain all of the following specific information:
(1)	Number of staff required per resident.
(2)	Education/work experience required and preferred as a basis for hire.
(3)	Specific job duties outlined in job descriptions.
(4)	Rationale and justification for establishing the existing staff ratios in the Division of Aging's policy for adult day care and adult day health care.
(5)	An analysis of the variance in staffing requirements among adult day care and adult day health programs, adult care homes, assisted living facilities, and nursing homes.
(6)	Identification of the entities responsible for licensing and monitoring quality for all providers of long‑term care in the State.
(7)	Recommendations for changes to existing policies based on findings of the Department's review.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Report on Services Provided to Older Adults
SECTION 10.4.  The Department of Health and Human Services, Office of Long‑Term Care shall report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on services provided to older adults.  The report shall provide information as follows:
(1)	Identify all State agencies that provide services to adults age 60 and older throughout the State.
(2)	All resources available from all sources, including federal, State, and local funds and personnel, for providing services to this population.
(3)	Plans for reducing administration through the consolidation of functions throughout Divisions of the Department.
The Office of Long‑Term Care shall consult with experts in long‑term care and other relevant information sources to develop a plan to streamline services for older adults at the local level. The Department shall submit its report not later than February 1, 2003.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
RURAL HEALTH LOAN REPAYMENT INCENTIVE PROGRAM
SECTION 10.5.  The Department of Health and Human Services, Office of Rural Health, shall conduct an assessment of the Rural Health Loan Repayment Incentive Program.  The assessment shall consider whether the Program should be continued and shall identify ways to recruit additional providers to rural areas within existing funds.  The Department shall report on its activities and progress of the assessment to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division no later than December 1, 2002.  The report shall provide detailed information on the number of providers recruited, identification of the counties in which the providers are recruited, and the amount of loan repayment and length of service to a community for each provider.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
ACCESS TO PHARMACEUTICAL COMPANY PRESCRIPTION DRUg programs
SECTION 10.6.  Section 21.6(a) of S.L. 2001‑424, as amended by S.L. 2001‑513, reads as rewritten:
"SECTION 21.6.(a)  Of the funds appropriated in this act to the Department of Health and Human Services, the sum of two hundred thousand dollars ($200,000) for the 2001‑2002 fiscal year shall be used to initiate the development of a system to assist eligible individuals in obtaining prescription drugs at no cost through pharmaceutical company programs. The system will be designed to minimize the efforts of patients and their health care providers in securing needed drugs. The required patient and health care provider data will be maintained and orders tracked in order to initiate timely reorders of needed drugs to assure continuity of medication intake. The Department may contract with a private nonprofit organization to assist in the development of the system as provided under this section."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
use of funds for the child advocacy institute
SECTION 10.7.  State funds appropriated for the Child Advocacy Institute shall be used only for administration of the Child Advocacy Institute or for research and other services provided by the Institute.  These funds shall not be used or replaced by other funds for (i) lobbying or other governmental affairs activities or (ii) direct contributions to other nongovernmental entities.
This section shall not be construed to prohibit the Institute from using State funds to contract with other nongovernmental entities for the purchase of goods or services.

Requested by:	Senators Martin of Guilford, Purcell, Hoyle, Plyler, Lee
Consolidation of Maintenance Activities
SECTION 10.8.(a)  The Department of Health and Human Services shall develop a plan to consolidate building maintenance activities at the North Carolina School for the Deaf at Morganton, the Western Carolina Center, and Broughton Hospital.  The plan shall assess the needs for maintenance at all three centers, determine the level of staff necessary to carry out all of the current activities with fewer managers, supervisors, and other staff, and develop a new single budget for the maintenance activities.
SECTION 10.8.(b)  The Department of Health and Human Services shall identify other facilities throughout the State that are in close proximity to one another and assess the feasibility of consolidating the building maintenance activities at those facilities.
SECTION 10.8.(c)  The Department of Health and Human Services shall report on activities carried out under this section to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division no later than December 1, 2002.

Requested by:	Senators Martin of Guilford, Purcell, Hoyle, Plyler, Lee
AREA AUTHORITY/COUNTY PROGRAM PROMPT PAY
SECTION 10.9.  Part 4 of Article 4 of Chapter 122C of the General Statutes is amended by adding the following new section to read:
"§ 122C-141.1. Area authority and county program prompt payment of invoices from service providers.
(a)	As used in this section, 'provider' means any qualified public or private provider, agency, institution, or resource that contracts with an area authority or county program for the provision of services pursuant to G.S. 122C-141(a).
(b)	An area authority or county program shall, within 30 calendar days after receipt of an invoice from a provider for services rendered, send to the provider:
(1)	Payment of the invoice,
(2)	Notice of denial of payment of the invoice, or
(3)	Notice that additional information is necessary for payment of the invoice.
An area authority or county program is presumed to have received a written invoice five business days after the invoice has been placed first-class postage prepaid in the United States mail addressed to the area authority or county program or an electronic invoice transmitted to the area authority, the county program, or a designated clearinghouse on the day the invoice is electronically transmitted.
(c)	If payment of the invoice is denied, the notice of denial shall include all of the specific good-faith reasons for the denial. If payment of the invoice is denied only in part, the area authority or county program shall pay the undisputed portion of the invoice within 30 calendar days after receipt of the invoice and send the notice of denial within 30 calendar days after receipt of the invoice. If notice is given that additional information is necessary for payment of the invoice, the notice shall contain the specific good-faith reasons why the invoice has not been paid and a complete itemization or description of all of the information needed by the area authority or county program to complete the processing of the invoice. Upon receipt of the additional information, the area authority or county program shall continue processing the invoice and shall pay or deny the invoice within 30 calendar days after receiving the additional information.
(d)	An area authority and county program may not limit the time in which providers may submit invoices to fewer than 180 days after the services were rendered.
(e)	Payments on invoices that are not made within the time period required by this section shall bear interest at the annual percentage rate of eighteen percent (18%) beginning on the date following the day on which the invoice should have been paid. A payment is considered made on the date upon which a check, draft, or other valid negotiable instrument is placed in the United States Postal Service in a properly addressed, postpaid envelope, or, if not mailed, on the date of the electronic transfer or other delivery of the payment to the provider."

Requested by:	Senators Plyler, Lee
UNIFORM PROVIDER CREDENTIALING BY HEALTH INSURANCE PLANS
SECTION 10.10.  G.S. 58‑3‑230(a) reads as rewritten:
"(a)	An insurer that provides a health benefit plan and that credentials providers for its networks shall maintain a process to assess and verify the qualifications of a licensed health care practitioner, or applicant for licensure as a health care practitioner, within 60 days of receipt of a completed provider credentialing application form approved by the Commissioner. If an application submitted under this section is approved, and the health care practitioner is subsequently contracted to participate in the health benefit plan's network, the date on which the credentialing application was approved by the health benefit plan shall be the effective date of the network participation contract."

subpart 2. division of medical assistance

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
MEDICAID PROGRAM
SECTION 10.11.(a)  Section 21.19 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.19.(a)  Funds appropriated in this act 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 Health and Human Services.
(2)	Hospital‑Outpatient – Eighty percent (80%) of allowable costs or a prospective reimbursement plan as established by the Department of Health and Human Services.
(3)	Nursing Facilities – Payment for nursing facility services will be prescribed in the State Plan as established by the Department of Health and Human Services. 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. Residents of nursing facilities who are eligible for Medicare coverage of nursing facility services must be placed in a Medicare certified bed. Medicaid shall cover facility services only after payments have been made by Medicare.
(4)	Intermediate Care Facilities for the Mentally Retarded – As prescribed in the State Plan as established by the Department of Health and Human Services.
(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 (h) 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 Health and Human Services consistent with federal reimbursement regulations. Payment of the professional services fee shall be made in accordance with the State Plan adopted by the Department of Health and Human Services, consistent with federal reimbursement regulations. The professional services fee shall be five dollars and sixty cents ($5.60) per prescription for generic drugs and four dollars ($4.00) per prescription for brand name drugs. Adjustments to the professional services fee shall be established by the General Assembly.
(6)	Physicians, Chiropractors, Podiatrists, Optometrists, Dentists, Certified Nurse Midwife Services, Nurse Practitioners – Fee schedules as developed by the Department of Health and Human Services. 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 Health and Human Services.
(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 Health and Human Services.
(9)	Medicare Buy‑In – Social Security Administration premium.
(10)	Ambulance Services – Uniform fee schedules as developed by the Department of Health and Human Services. Public ambulance providers will be reimbursed at cost.
(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 Health and Human Services.
(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 Health and Human Services.
(17)	Medicare Crossover Claims – An amount up to the actual coinsurance or deductible or both, in accordance with the State Plan, as approved by the Department of Health and Human Services.
(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 Health and Human Services. Physical therapy (including occupational therapy) and speech therapy services are subject to prior approval and utilization review.
(19)	Personal Care Services – Payment in accordance with the State Plan approved by the Department of Health and Human Services.
(20)	Case Management Services – Reimbursement in accordance with the availability of funds to be transferred within the Department of Health and Human Services.
(21)	Hospice – Services may be provided in accordance with the State Plan developed by the Department of Health and Human Services.
(22)	Other Mental Health Services – Unless otherwise covered by this section, coverage is limited to:
a.	Services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) when provided in 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 State Plan developed by the Department of Health and Human Services not to exceed the upper limits established in federal regulations, and
b.	For children eligible for EPSDT services:
1.	Licensed or certified psychologists, licensed clinical social workers, certified clinical nurse specialists in psychiatric mental health advanced practice, and nurse practitioners certified as clinical nurse specialists in psychiatric mental health advanced practice, when Medicaid‑eligible children are referred by the Carolina ACCESS primary care physician or the area mental health program, and
2.	Institutional providers of residential services as defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and approved by the Centers for Medicare and Medicaid Services (CMS) for children and Psychiatric Residential Treatment Facility services that meet federal and State requirements as defined by the Department.
Notwithstanding G.S. 150B‑121.1(a), the Department of Health and Human Services may adopt temporary rules in accordance with Chapter 150B of the General Statutes further defining the qualifications of providers and referral procedures in order to implement this subdivision. Coverage policy for services defined by the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services under paragraphs a. and b.2 of this subdivision shall be established by the Division of Medical Assistance.
(23)	Medically Necessary Prosthetics or Orthotics for EPSDT Eligible Children – Reimbursement in accordance with the State Plan approved by the Department of Health and Human Services.
(24)	Health Insurance Premiums – Payments to be made in accordance with the State Plan adopted by the Department of Health and Human Services 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 Health and Human Services.
(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. Payment is limited to Medicaid enrolled providers that provide evidence of medical malpractice insurance coverage or that purchase a performance bond in the amount of fifty thousand dollars ($50,000) naming as beneficiary the Department of Health and Human Services, Division of Medical Assistance.
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, emergency rooms, and mental health services subject to independent utilization review are exempt from the visit limitations contained in this paragraph. Exceptions may be authorized by the Department of Health and Human Services 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.
SECTION 21.19.(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.
SECTION 21.19.(c)  Copayment for Medicaid Services. – The Department of Health and Human Services may establish copayment up to the maximum permitted by federal law and regulation.
SECTION 21.19.(d)  Medicaid and Work First Family Assistance, Income Eligibility Standards. – The maximum net family annual income eligibility standards for Medicaid and Work First Family Assistance and the Standard of Need for Work First Family Assistance shall be as follows:

	Categorically Needy	Medically Needy
	WFFA*
	Family	Standard	Families and
	Size	of Need	Children Income
	Level	AA, AB, AD*
	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
*Work First Family Assistance (WFFA); Aid to the Aged (AA); Aid to the Blind (AB); and Aid to the Disabled (AD).

The payment level for Work First Family Assistance 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.
SECTION 21.19.(e)  The Department of Health and Human Services, Division of Medical Assistance, shall provide Medicaid coverage to all elderly, blind, and disabled people who have incomes equal to or less than one hundred percent (100%) of the federal poverty guidelines, as revised each April 1.
SECTION 21.19.(f)  ICF and ICF/MR Work Incentive Allowances. – The Department of Health and Human Services 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.
SECTION 21.19.(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.
SECTION 21.19.(h)  Dispensing of Generic Drugs. – Notwithstanding G.S. 90‑85.27 through G.S. 90‑85.31, or any other law to the contrary, under the Medical Assistance Program (Title XIX of the Social Security Act), and except as otherwise provided in this subsection for atypical antipsychotic drugs and drugs listed in the narrow therapeutic index, 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 has determined, at the time the drug is prescribed, that the brand name drug is medically necessary and has written on the prescription order the phrase "medically necessary". An initial prescription order for an atypical antipsychotic drug or a drug listed in the narrow therapeutic drug index that does not contain the phrase "medically necessary" shall be considered an order for the drug by its established or generic name, except that a pharmacy shall not substitute a generic or established name prescription drug for subsequent brand or trade name prescription orders of the same prescription drug without explicit oral or written approval of the prescriber given at the time the order is filled. Generic drugs shall be dispensed at a lower cost to the Medical Assistance Program rather than trade or brand name drugs. 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).
SECTION 21.19.(i)  Exceptions to Service Limitations, Eligibility Requirements, and Payments. – Service limitations, eligibility requirements, and payments bases in this section may be waived by the Department of Health and Human Services, with the approval of the Director of the Budget, to allow the Department to carry out pilot programs for prepaid health plans, contracting for services, 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. The Department of Health and Human Services may proceed with planning and development work on the Program of All‑Inclusive Care for the Elderly. 
SECTION 21.19.(j)  Volume Purchase Plans and Single Source Procurement. – The Department of Health and Human Services, Division of Medical Assistance, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single source procurement, or other contracting processes in order to improve cost containment.
SECTION 21.19.(k)  Cost‑Containment Programs. – The Department of Health and Human Services, Division of Medical Assistance, may undertake cost containment programs in accordance with Section 3 of S.L. 2001‑395, including contracting for services, preadmissions to hospitals and prior approval for certain outpatient surgeries before they may be performed in an inpatient setting.
SECTION 21.19.(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.
SECTION 21.19.(m)  The Department of Health and Human Services shall provide Medicaid to 19‑, 20‑, and 21‑year‑olds in accordance with federal rules and regulations. 
SECTION 21.19.(n)  The Department of Health and Human Services shall provide coverage to pregnant women and to 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. In determining income eligibility under this subdivision, the income of a minor's parents shall be counted.
(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 Health and Human Services 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.
SECTION 21.19.(o)  Medicaid enrollment of categorically needy families with children shall be continuous for one year without regard to changes in income or assets.
SECTION 21.19.(p)  The Department shall disregard earned income for recipients who would otherwise lose Medicaid eligibility under section 1931 of Title XIX of the Social Security Act due to earnings. This disregard shall be applied for a maximum of 12 consecutive months.
SECTION 21.19.(q)  The Department of Health and Human Services shall submit a quarterly 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 expenditures 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. The quarterly expenditure report and the revised forecast 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 following the end of each quarter.
SECTION 21.19.(r)  The Division of Medical Assistance, Department of Health and Human Services, 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.
SECTION 21.19.(s)  If first approved by the Office of State Budget and Management, the Division of Medical Assistance, Department of Health and Human Services, 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. The Department of Health and Human Services shall identify adequate funds to support the implementation and first year's operational costs that exceed the currently allocated funds for the new contract for the fiscal agent for the Medicaid Management Information System.
SECTION 21.19.(t)  The Department of Health and Human Services may adopt temporary rules according to the procedures established in G.S. 150B‑21.1 when it finds that these rules are necessary to maximize receipt of federal funds within existing State appropriations, 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.
SECTION 21.19.(u)  The Department shall report to the Fiscal Research Division of the Legislative Services Office and to the House of Representatives Appropriations Subcommittee on Health and Human Services and the Senate Appropriations Committee on Health and Human Services or the Joint Legislative Health Care Oversight Committee on any change it anticipates making in the Medicaid program that impacts the type or level of service, reimbursement methods, or waivers, any of which require a change in the State Plan or other approval by the Centers for Medicare and Medicaid Services (CMS). The reports shall be provided at the same time they are submitted to CMS for approval.
SECTION 21.19.(v)  Upon approval of a demonstration waiver by the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services may provide Medicaid coverage for family planning services to men and women of child‑bearing age with family incomes equal to or less than one hundred eighty‑five percent (185%) of the federal poverty level. Coverage shall be contingent upon federal approval of the waiver and shall begin no earlier than January 1, 2001.
SECTION 21.19.(w)  The Department of Health and Human Services, Division of Medical Assistance, shall use the latest audited cost reporting data available when establishing Medicaid provider rates or when making changes to the reimbursement methodology.
SECTION 21.19.(x)  The Department of Health and Human Services, Division of Medical Assistance, shall implement a new coding system for therapeutic mental health services as required by the Health Insurance Portability and Accountability Act of 1996. In implementing the new coding system, the Division shall ensure that the new coding system does not discriminate between providers of therapeutic mental health services with similar qualifications and training. In meeting the requirements of this subsection, the Division shall consult with the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services and the professional licensing boards responsible for licensing the affected professionals.
SECTION 21.19.(y)  The Department of Health and Human Services may apply federal transfer of assets policies, as described in Title XIX, Section 1917(c) of the Social Security Act to real property excluded as  "income producing", tenancy-in-common, or as nonhomesite property made "income producing" under Title XIX, Section 1902(r)(2) of the Social Security Act. The transfer of assets policy shall apply only to an institutionalized individual or the individual's spouse as defined in Title XIX, Section 1917(c) of the Social Security Act. This subsection becomes effective no earlier than October 1, 2001. Federal transfer of asset policies to properties excluded as tenancy-in-common or as nonhomesite property made "income producing" in accordance with this subsection shall become effective no earlier than October 1, 2002."
SECTION 10.11.(b)  Effective October 1, 2002, G.S. 108A‑70.5(b) reads as rewritten:
"(b)	As used in this section:
(1)	"Medical assistance" means medical care services paid for by the North Carolina Medicaid Program on behalf of the recipient:
a.	If the recipient is receiving these medical care services as an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution, and cannot reasonably be expected to be discharged to return home; or
b.	If the recipient is 55 years of age or older and is receiving these medical care services, including related hospital care and prescription drugs, for nursing facility services, personal care services, or home‑ and community‑based services.
(2)	"Estate" means all the real and personal property considered assets of the estate available for the discharge of debt pursuant to G.S. 28A‑15‑1."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
CAROLINA ACCESS PROGRAM IMPROVEMENTS
SECTION 10.12.(a)  In its effort to achieve anticipated savings in the Medicaid Program of nine million four hundred twenty‑five thousand dollars ($9,425,000) for the 2002‑2003 fiscal year through expansion of the Carolina ACCESS II and Carolina ACCESS III programs, the Department of Health and Human Services shall monitor cost‑savings activities of these programs.  Carolina ACCESS II and Carolina ACCESS III programs shall provide the Department detailed information on savings realized from the following cost‑savings activities:
(1)	Reductions in hospital admissions;
(2)	Reductions in emergency room visits;
(3)	Use of best‑prescribing practices;
(4)	Increased prescriptions of generic drugs;
(5)	Implementation of polypharmacy review;
(6)	Reductions in therapy visits;
(7)	Improved management of high risk/high cost patients; and
(8)	Other strategies implemented by the programs to achieve anticipated savings.
SECTION 10.12.(b)  The Department of Health and Human Services shall implement a process for the assessment and review of cost‑effectiveness of the Carolina ACCESS II and Carolina ACCESS III programs. The Division of Medical Assistance shall confirm actual savings realized from the use of case management strategies of the Carolina ACCESS II and Carolina ACCESS III demonstration sites.  The Department shall report quarterly the cost‑effectiveness of these programs based on actual savings achieved.  The Department shall submit the report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Office of State Budget and Management, and the Fiscal Research Division.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
REPEAL CIRCUMCISION FUNDS
SECTION 10.13.  Section 19 of S.L. 2001‑513 reads as rewritten:
"SECTION 19. Notwithstanding any other provision of law to the contrary, from funds available in the General Fund, there is appropriated to the Department of Health and Human Services, Division of Medical Assistance, the sum of two hundred forty‑six thousand, seven hundred sixty‑two dollars ($246,762) for the 2001‑2002 fiscal year. These funds shall be used to provide optional circumcision procedures for newborns eligible for Medicaid."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
MEDICAID CASE MANAGEMENT SERVICES
SECTION 10.14.(a)   The Department of Health and Human Services shall reduce Medicaid Program expenditures for case management services for adults and children by thirty‑three percent (33%) for the 2002‑2003 State fiscal year.  In determining how to allocate this reduction, the Department shall include all State programs currently providing case management services reimbursed by the Medicaid Program, and shall consider the following issues:
(1)	Elimination of all duplicative case management services.
(2)	Consolidation of similar case management services.
(3)	Provision of only one case manager per family reimbursed through the Medicaid Program, when feasible.
(4)	Equitable allocation of reductions in case management services reimbursed by Medicaid among the different programs that provide case management services.
(5)	Identification of the children and adults with the greatest case management needs to determine how to allocate reductions and remaining resources.
(6)	Reductions in administrative costs associated with providing case management services reimbursed by Medicaid.
SECTION 10.14.(b)  Not later than October 1, 2002, the Department shall report on its plan for the reductions required in this section. The Department shall submit the report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
FEDERAL WAIVERS TO ASSIST IN MEDICAID COST CONTAINMENT
SECTION 10.15.(a) The Department of Health and Human Services shall develop a plan for using federal waivers to assist in long‑term cost containment for the State's Medicaid program.  In developing the plan, the Department shall determine whether single or multiple federal waivers will help the State achieve its goal of long‑term cost containment for the State's Medicaid program, and shall also determine which type of waiver is likely to be most helpful.  The Department shall consider all of the following for development of the plan:
(1)	Which optional categories of persons eligible for Medicaid will be covered by the waiver.
(2)	What optional Medicaid services will be included in the service package covered by the waiver.
(3)	What types of cost‑sharing will be required under the waiver.
(4)	Will the waiver use Carolina ACCESS, other types of managed care, or will a fee‑for‑service system for providing health care services be used.
(5)	Will private insurance coverage options be incorporated into the waiver.
(6)	Should the NC Health Choice Program be included in the waiver.
SECTION 10.15.(b)  On or before February 1, 2003, the Department shall report on its plan for seeking federal waivers to achieve long‑term cost containment in the State's Medicaid program.  The report shall be made to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division, and shall include the following:
(1)	Copy of the application for the waiver.
(2)	Description of how the waiver will help achieve long‑term cost containment in the State's Medicaid program.
(3)	Description of legislation necessary to implement the proposed waiver.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
COMMUNITY ALTERNATIVES PROGRAMS
SECTION 10.16.(a)  The Department of Health and Human Services shall administer all Community Alternative Program (CAP) waivers in the most economical and efficient manner possible to support within funds appropriated the maximum number of persons meeting participation requirements under the waiver. The Department shall amend the waivers, as necessary, to ensure that participation requirements and payment and service limits are in accordance with those reported to the General Assembly.  Not later than October 1, 2002, the Department shall submit a report that outlines efficient use of funds appropriated and that demonstrates the participation requirements, payment and service limits, and other administrative actions to support the maximum number of persons to be served in the applicable State fiscal year. The report shall be submitted to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.
SECTION 10.16.(b)  CAP‑DA services shall be provided for the 2002‑2003 fiscal year to any eligible person who entered a nursing facility on or before June 1, 2002, notwithstanding that the availability of CAP‑DA services may be suspended for that fiscal year.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
DISPOSITION OF DISPROPORTIONATE SHARE RECEIPT CHANGE
SECTION 10.17.(a)  Disproportionate share receipts reserved at the end of the 2002‑2003 fiscal year shall be deposited with the Department of State Treasurer as nontax revenue for the 2002‑2003 fiscal year.
SECTION 10.17.(b)  For the 2002‑2003 fiscal year, as it receives funds associated with Disproportionate Share Payments from State hospitals, the Department of Health and Human Services, Division of Medical Assistance, shall deposit up to one hundred seven million dollars ($107,000,000) of these Disproportionate Share Payments to the Department of State Treasurer for deposit as nontax revenue.  Any Disproportionate Share Payments collected in excess of the one hundred seven million dollars ($107,000,000) shall be reserved by the State Treasurer for future appropriations.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
MEDICAID HOSPITAL PAYMENTS
SECTION 10.18.  The Department of Health and Human Services shall reduce Medicaid payments to hospitals by one‑half of one percent (.5%) for the 2002‑2003 State fiscal year.  The Department shall evaluate all medical payment programs and policies administered by the Department that may affect the future viability and sustainability of financially vulnerable hospitals.  Based on the evaluation of the medical payments programs and policies affecting hospitals, the Department shall implement the one half of one percent (.5%) reduction for the 2002‑2003 State fiscal year such that the reduction has the least impact on the future viability and sustainability of financially vulnerable hospitals.  The Department shall also review the status of financially vulnerable hospitals to determine whether additional State actions are appropriate to ensure that communities served by these hospitals continue to receive essential medical services.  The Department shall consult with the North Carolina Hospital Association while conducting the evaluation of medical payment programs and policies and determining how to implement the one‑half of one percent (.5%) reduction.  The Department shall report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on its activities under this section not later than October 1, 2002.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
MEDICAID PROGRAM MANAGEMENT
SECTION 10.19.  Section 21.26(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.26.(b)  The Department shall implement a pharmacy management plan considering the recommendations of the "North Carolina Medicaid Benefit Study" to achieve anticipated cost savings. The pharmacy management plan may include the following activities:
(1)	Establishing a prior authorization program to manage utilization of high‑cost, brand name drugs. In determining drugs to be included in the prior authorization program, the Department shall consider whether inclusion of these drugs is likely to:
a.	Increase utilization of more expensive services;
b.	Reduce quality of treatment;
c.	Result in a lower level of compliance with appropriate drug therapy; and
d.	Have a differential impact upon racial and ethnic minorities and the elderly.
The Department shall conduct a review at least annually of the drugs included in the prior authorization program to determine whether any of the factors listed in this subdivision or other factors with similar results have occurred.
(2)	Limiting prescription drugs to a 34‑day supply for some or all drugs.
(3)	Developing physician prescribing practice profiles and other educational tools to enable physicians to better manage their prescriptions. 
(4)	Establishing therapeutic limits based on appropriate dosage or usage standards.
(5)	Encouraging use of generic drugs.
(6)	Using maximum allowable pricing.
(7)	Contracting with a pharmacy benefits manager to implement more extensive drug utilization review.
(8)	Studying the impact of eliminating the six prescription drug monthly limit combined with a more rigorous prior authorization program to ensure cost decisions are made based on evidence‑based clinical guidelines.
(9)	Expanding disease management initiatives.
(10)	Working with ACCESS physicians to develop and implement drug utilization management initiatives.
(11)	If cost‑effective, expanding Medicaid drug coverage to include selected over‑the‑counter medications.
The Department may adopt temporary rules in accordance with G.S. 150B‑21.1 when it finds these rules are necessary to clarify recipient appeal rights related to the pharmacy management plan."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
NC HEALTH CHOICE
SECTION 10.20.  G.S. 108A‑70.21 reads as rewritten:
"§ 108A‑70.21.  Program eligibility; benefits; enrollment fee and other cost‑sharing; coverage from private plans; purchase of extended coverage.
(a)	Eligibility. – The Department may enroll eligible children based on availability of funds. Following are eligibility and other requirements for participation in the Program:
(1)	Children must:
a.	Be under the age of 19;
b.	Be ineligible for Medicaid, Medicare, or other federal government‑sponsored health insurance;
c.	Be uninsured;
d.	Be in a family that meets the following family income requirements:
1.	Infants under the age of one year whose family income is from one hundred eighty‑five percent (185%) through two hundred percent (200%) of the federal poverty level;
2.	Children age one year through five years whose family income is above one hundred thirty‑three percent (133%) through two hundred percent (200%) of the federal poverty level; and
3.	Children age six years through eighteen years whose family income is above one hundred percent (100%) through two hundred percent (200%) of the federal poverty level;
e.	Be a resident of this State and eligible under federal law; and
f.	Have paid the Program enrollment fee required under this Part.
(2)	Proof of family income and residency and declaration of uninsured status shall be provided by the applicant at the time of application for Program coverage. The family member who is legally responsible for the children enrolled in the Program has a duty to report any change in the enrollee's status within 60 days of the change of status.
(3)	If a responsible parent is under a court order to provide or maintain health insurance for a child and has failed to comply with the court order, then the child is deemed uninsured for purposes of determining eligibility for Program benefits if at the time of application the custodial parent shows proof of agreement to notify and cooperate with the child support enforcement agency in enforcing the order.
If health insurance other than under the Program is provided to the child after enrollment and prior to the expiration of the eligibility period for which the child is enrolled in the Program, then the child is deemed to be insured and ineligible for continued coverage under the Program. The custodial parent has a duty to notify the Department within 10 days of receipt of the other health insurance, and the Department, upon receipt of notice, shall disenroll the child from the Program. As used in this paragraph, the term "responsible parent" means a person who is under a court order to pay child support.
(4)	Except as otherwise provided in this section, enrollment shall be continuous for one year. At the end of each year, applicants may reapply for Program benefits.
(b)	Benefits. – Except as otherwise provided for eligibility, fees, deductibles, copayments, and other cost‑sharing charges, health benefits coverage provided to children eligible under the Program shall be equivalent to coverage provided for dependents under the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan, including optional prepaid plans. Prescription drug providers shall accept as payment in full, for outpatient prescriptions filled, ninety percent (90%) of the average wholesale price for the prescription drug or the amounts published by the Centers for Medicare and Medicaid Services plus a dispensing fee of five dollars and sixty cents ($5.60) per prescription for generic drugs and four dollars ($4.00) per prescription for brand name drugs. All other health care providers providing services to Program enrollees shall accept as payment in full for services rendered the maximum allowable charges under the Medicaid Program for services less any copayments assessed to enrollees under this Part. No child enrolled in the Plan's self‑insured indemnity program shall be required by the Plan to change health care providers as a result of being enrolled in the Program.
In addition to the benefits provided under the Plan, the following services and supplies are covered under the Health Insurance Program for Children established under this Part:
(1)	Dental: Oral examinations, teeth cleaning, and scaling twice during a 12‑month period, full mouth X rays once every 60 months, supplemental bitewing X rays showing the back of the teeth once during a 12‑month period, fluoride applications twice during a 12‑month period, sealants, simple extractions, therapeutic pulpotomies, prefabricated stainless steel crowns, and routine fillings of amalgam or other tooth‑colored filling material to restore diseased teeth. No benefits are to be provided for services under this subsection that are not performed by or upon the direction of a dentist, doctor, or other professional provider approved by the Plan nor for services and materials that do not meet the standards accepted by the American Dental Association.
(2)	Vision: Scheduled routine eye examinations once every 12 months, eyeglass lenses or contact lenses once every 12 months, routine replacement of eyeglass frames once every 24 months, and optical supplies and solutions when needed. Optical services, supplies, and solutions must be obtained from licensed or certified opthamologists, optometrists, or optical dispensing laboratories. Eyeglass lenses are limited to single vision, bifocal, trifocal, or other complex lenses necessary for a Plan enrollee's visual welfare. Coverage for oversized lenses and frames, designer frames, photosensitive lenses, tinted contact lenses, blended lenses, progressive multifocal lenses, coated lenses, and laminated lenses is limited to the coverage for single vision, bifocal, trifocal, or other complex lenses provided by this subsection. Eyeglass frames are limited to those made of zylonite, metal, or a combination of zylonite and metal. All visual aids covered by this subsection require prior approval of the Plan. Upon prior approval by the Plan, refractions may be covered more often than once every 12 months.
(3)	Hearing: Auditory diagnostic testing services and hearing aids and accessories when provided by a licensed or certified audiologist, otolaryngologist, or other hearing aid specialist approved by the Plan. Prior approval of the Plan is required for hearing aids, accessories, earmolds, repairs, loaners, and rental aids.
(c)	Annual Enrollment Fee. – There shall be no enrollment fee for Program coverage for enrollees whose family income is at or below one hundred fifty percent (150%) of the federal poverty level. The enrollment fee for Program coverage for enrollees whose family income is above one hundred fifty percent (150%) of the federal poverty level shall be fifty dollars ($50.00) per year per child with a maximum annual enrollment fee of one hundred dollars ($100.00) for two or more children. The enrollment fee shall be collected by the county department of social services and retained to cover the cost of determining eligibility for services under the Program. County departments of social services shall establish procedures for the collection of enrollment fees.
(d)	Cost‑Sharing. – 
(1)	Families covered under the Program whose family income is at or below one hundred fifty percent (150%) of the federal poverty level shall be responsible for copayments to providers as follows:
a.	Two dollars ($2.00) per child for each visit to a provider, except that there shall be no copayment required for well-baby, well-child, or age-appropriate immunization services;
b.	One dollar ($1.00) for each outpatient generic prescription drug purchased;
c.	Three dollars ($3.00) for each outpatient brand-name prescription drug purchased;
d.	Ten dollars ($10.00) for each emergency room visit unless:
1.	The child is admitted to the hospital, or
2.	No other reasonable care was available as determined by the Claims Processing Contractor of the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan.
(2)	Families covered under the Program whose family income is above one hundred fifty percent (150%) of the federal poverty level shall be responsible for copayments to providers as follows:
a.	Seven dollars ($7.00) per child for each visit to a provider, except that there shall be no copayment required for well‑baby, well‑child, or age‑appropriate immunization services;
b.	Seven dollars ($7.00) per child for each outpatient hospital visit;
c.	A five-dollar ($5.00) fee for each outpatient generic prescription drug purchased;
d.	A ten-dollar ($10.00) fee for each outpatient brand-name prescription drug purchased;
e.	Thirty dollars ($30.00) for each emergency room visit unless:
1.	The child is admitted to the hospital, or
2.	No other reasonable care was available as determined by the Claims Processing Contractor of the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan.
Copayments required under this subsection for prescription drugs apply only to prescription drugs prescribed on an outpatient basis.
(e)	Cost‑Sharing Limitations. – The total annual aggregate cost‑sharing, including fees, with respect to all children in a family receiving Program benefits under this Part shall not exceed five percent (5%) of the family's income for the year involved. To assist the Department in monitoring and ensuring that the limitations of this subsection are not exceeded, the Executive Administrator and Board of Trustees of the North Carolina Teachers' and State Employees' Comprehensive Major Medical Plan shall provide data to the Department showing cost‑sharing paid by Program enrollees.
(f)	Coverage From Private Plans. – The Department shall, from funds available for the Program, pay the cost for dependent coverage provided under a private insurance plan for persons eligible for coverage under the Program if all of the following conditions are met:
(1)	The person eligible for Program coverage requests to obtain dependent coverage from a private insurer in lieu of coverage under the Program and shows proof that coverage under the private plan selected meets the requirements of this subsection;
(2)	The dependent coverage under the private plan is actuarially equivalent to the coverage provided under the Program and the private plan does not engage in the exclusive enrollment of children with favorable health care risks;
(3)	The cost of dependent coverage under the private plan is the same as or less than the cost of coverage under the Program; and
(4)	The total annual aggregate cost‑sharing, including fees, paid by the enrollee under the private plan for all dependents covered by the plan, do not exceed five percent (5%) of the enrollee's family income for the year involved.
The Department may reimburse an enrollee for private coverage under this subsection upon a showing of proof that the dependent coverage is in effect for the period for which the enrollee is eligible for the Program.
(g)	Purchase of Extended Coverage. – An enrollee in the Program who loses eligibility due to an increase in family income above two hundred percent (200%) of the federal poverty level and up to and including two hundred twenty‑five percent (225%) of the federal poverty level may purchase at full premium cost continued coverage under the Program for a period not to exceed one year beginning on the date the enrollee becomes ineligible under the income requirements for the Program. The same benefits, copayments, and other conditions of enrollment under the Program shall apply to extended coverage purchased under this subsection.
(h)	No State Funds for Voluntary Participation. – No State or federal funds shall be used to cover, subsidize, or otherwise offset the cost of coverage obtained under subsection (g) of this section."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee 
NC HEALTH CHOICE STATE PLAN technical amendments
SECTION 10.21.  The Department of Health and Human Services may rewrite and submit to the federal government the State Plan for the North Carolina Health Choice Program solely for the purpose of incorporating amendments enacted by the 1997 General Assembly, Regular Session 1998, the 1999 General Assembly, and the 2001 General Assembly, and to otherwise comply with applicable federal requirements. Nothing in this section authorizes the Department to make amendments to the State Plan for the North Carolina Health Choice Program not otherwise authorized by the General Assembly.   Amendments to the State Plan required by the federal government to be implemented after the effective date of this section, other than those authorized by this section, shall comply with G.S. 108A‑70.25.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Medicaid Contracting for Services
SECTION 10.22.  When developing contracts for services, the Department of Health and Human Services, Division of Medical Assistance, shall ensure that Medicaid recipients have appropriate access to durable medical equipment, home health supplies, and home infusion therapy. The Division may subcontract for services provided that the subcontract ensures appropriate access to durable medical equipment, home health supplies, and home infusion therapy.

subpart 3.	division of mental health, developmental disabilities, and substance abuse services

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
ALLOCATION OF REDUCTIONS IN FUNDS FOR AREA MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE PROGRAMS
SECTION 10.23.(a)  The Department of Health and Human Services shall allocate reductions in funding to area mental health, developmental disabilities, and substance abuse services in the amount of twenty‑nine million two hundred forty‑six thousand nine hundred seven dollars ($29,246,907) for the 2002‑2003 fiscal year.  In allocating the reductions, the Department shall do the following:
(1)	Allocate reductions within the implementation scope of the State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services and in accordance with the intent of S.L. 2001‑437, as follows:
a.	Priority given to reducing or terminating services to persons with lower service needs;
b.	Persons with highest need levels shall be impacted least by reductions in services;
c.	Administrative costs shall be reduced concurrently with reductions in services; and
d.	To the maximum extent possible no reductions, or minimal reductions, shall be allocated to activities associated with critical functions and federal and State requirements.
(2)	Require area authorities and county programs to submit plans for prior approval by the Department describing how the local program will meet its reduction target within the requirements of subdivision (1) of this subsection.
SECTION 10.23.(b)  The Division of Mental Health, Developmental Disabilities, and Substance Abuse Services shall allocate reductions to Division central administration to items of expenditures which have the least impact on:
(1)	The support of direct services to individuals served in State facilities and local programs;
(2)	The Division's ability to reorganize and continue implementation of the State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services; and
(3)	The Division's ability to meet State and federal requirements such as monitoring, program oversight, and reporting.
SECTION 10.23.(c)   All reductions designated for Division‑operated State facilities shall be allocated as follows:
(1)	In a manner that has the least impact possible on the State's ability to comply with Olmstead v. L.C. & E.W. and The Civil Rights of Institutionalized Persons Act (CRIPA);
(2)	Maximum resources shall be retained for the purpose of transfer to local programs for community capacity building as the population in State facilities decreases and the principal focus of services transitions to community‑based programs;
(3)	As deemed essential by the Secretary of the Department of Health and Human Services for compliance with implementation of the State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services, and with Olmstead v. L.C. & E.W. and CRIPA, reduction amounts and total number of positions reduced may be shifted among facilities so long as the aggregate reduction in State appropriations is achieved.
SECTION 10.23.(d)  The Department shall report not later than October 1, 2002, on a plan for allocating the reductions required under this section.  The plan shall describe each reduction allocation demonstrating compliance with this section. The Department shall submit the report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
SUBSTANCE ABUSE PREVENTION SERVICES
SECTION 10.24.(a)  In order to ensure that individuals receive effective substance abuse prevention services, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall do the following with respect to services provided to these individuals:
(1)	Designate an Office of Substance Abuse Prevention within the Department as outlined in the North Carolina Comprehensive Strategic Plan for Substance Abuse Prevention. This Office shall be responsible for the implementation of the goals in the Comprehensive Strategic Plan for Substance Abuse Prevention. The Office shall also maintain the Interagency Agreement for Substance Abuse Prevention Services and ensure continuing collaboration between agencies that are parties to the Agreement.
(2)	Provide only those prevention services that are evidence‑based and have been determined to be effective in preventing alcohol and other drug problems.
(3)	Propose rules for the licensure of prevention programs to ensure quality of service delivery in local communities. Rules shall be subject to review and adoption by the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services.
(4)	Ensure that services are provided by qualified prevention professionals. 
(5)	Implement an outcome‑based system utilizing standard risk assessments and data elements consistent with appropriate evaluation of prevention programs.
SECTION 10.24.(b)  The Department shall report on its activities under this section to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than December 1, 2002.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
PRIVATE AGENCY UNIFORM COST‑FINDING REQUIREMENT
SECTION 10.25.  Section 21.56 of S.L. 2001‑424, as amended by S.L. 2001‑513, reads as rewritten:
"SECTION 21.56.(a)  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 Health and Human Services may require a private agency that provides services under contract with an area program or county program, except for hospital services that have an established Medicaid rate, to complete an agency‑wide uniform cost finding. The resulting cost shall be the maximum included for the private agency in the contracting area program's unit cost finding.
SECTION 21.56.(b)  If a private agency fails to timely and accurately complete the required agency-wide uniform cost finding in a manner acceptable to the Department's controller's office, the Department may suspend all Department funding and payment to the private agency until such time as an acceptable cost finding has been completed by the private agency and approved by the Department's controller's office."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
WHITAKER SCHOOL
SECTION 10.26.  Section 21.61(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.61.(a)  The Department of Health and Human Services shall work with families and guardians, the Department of Public Instruction, the Department of Juvenile Justice and Delinquency Prevention, and appropriate local education agencies, area mental health, developmental disabilities, and substance abuse programs, and local departments of social services to develop a plan for the transition of children from the Whitaker School to their homes or alternative facilities. The Plan shall ensure appropriate and safe placement for those children who, in accordance with the assessment, need an institutional setting. The Plan shall also include transition plans that facilitate and support children living in their natural environments and utilizing existing resources and natural supports. Assessments and service planning alternatives shall also be undertaken for children on the waiting list for placement at Whitaker School to ensure appropriate and safe placement for those children. The Department shall report on the status of its compliance with this section on April 1, 2002 and again on  January 1, 2003. The report shall be submitted to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
AREA MENTAL HEALTH ADMINISTRATIVE COSTS
SECTION 10.27.  Section 21.65 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.65.(a)  Area mental health, developmental disabilities, and substance abuse authorities or counties administering mental health, developmental disabilities, and substance abuse services shall develop and implement plans to reduce local administrative costs. The plans shall be developed in accordance with guidelines adopted by the Secretary, in consultation with the Local Government Commission and the North Carolina Association of County Commissioners, and in accordance with the following:
(1)	For the 2001‑2002 fiscal year, administrative costs for:
a.	Area mental health, developmental disabilities, and substance abuse services programs shall not exceed fifteen percent (15%).
b.	Counties administering mental health, developmental disabilities, and substance abuse services through a county program shall not exceed fifteen percent (15%).
(2)	For the 2002‑2003 fiscal year, administrative costs for: 
a.	Area mental health, developmental disabilities, and substance abuse services programs shall not exceed thirteen percent (13%).
b.	Counties administering mental health, developmental disabilities, and substance abuse services through a county program shall not exceed thirteen percent (13%).
SECTION 21.65.(b)  The Department of Health and Human Services shall report its progress in complying with this section not later than January 1, 2002, and April 15, 2002. The reports shall be submitted to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division and shall include:
(1)	A description of the process used and the participants involved in complying with subsection (a) of this section.
(2)	The guidelines developed under subsection (a) of this section.
(3)	A description of local compliance initiatives and efforts including program or function consolidation.
(4)	A list of area programs at or below the targeted thirteen percent (13%) for the 2000‑2001 fiscal year.
(5)	Projected savings in administrative costs as a result of implementation of the targeted limits required under this section.
SECTION 21.65.(c)  Beginning in the 2002-2003 fiscal year, the Department may implement alternative approaches to establish reasonable administrative cost limitations for Local Management Entities (LMEs), including both county programs and area authority models, and service providers in accordance with system reform and changes in system funding structures."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
MENTAL RETARDATION CENTER DOWNSIZING
SECTION 10.28.  Section 21.67 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.67.(a)  In accordance with the Department of Health and Human Services' plan for downsizing the State's regional mental retardation facilities by four percent (4%) each year, the Department shall implement cost‑containment and reduction strategies to ensure the corresponding financial and staff downsizing of each facility. The Department shall manage the client population of the mental retardation centers in order to ensure that placements for ICF/MR level of care shall be made in non‑State facilities. Admissions to State ICF/MR facilities are permitted only as a last resort and only upon approval of the Department. The corresponding budgets for each of the State mental retardation centers shall be reduced, and positions shall be eliminated as the census of each facility decreases. At no time shall mental retardation center positions be transferred to other units within a facility or assigned nondirect care activities such as outreach.
SECTION 21.67.(a1)  Any savings in State appropriations in excess of two million nine hundred thousand dollars ($2,900,000) in each year of the 2001‑2003 fiscal biennium that result from reductions in beds or services shall be applied as follows:
(1)	Nonrecurring savings shall be placed in the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding Needs and shall be used to facilitate the transition of clients into appropriate community‑based services and support in accordance with Section 21.58 of this act, and
(2)	Recurring savings realized through implementation of this section shall be retained by the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to support the recurring costs of additional community‑based placements from Division facilities in accordance with Olmstead vs. L.C. & E.W. In determining the savings in this section, savings shall include all savings realized from the downsizing of the State mental retardation centers including both the savings in direct State appropriations in the budgets of the State mental retardation centers as well as the savings in the State matching portion of reduced Medicaid payments associated with downsizing.
SECTION 21.67.(b)  The Department of Health and Human Services shall report on its progress in complying with this section to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division. The progress report shall be submitted not later than January 15, 2002, and a final report submitted not later than October 1, 2002.
SECTION 21.67.(c)  Downsizing of mental retardation centers which occurs in the 2002 fiscal year shall be maintained for the 2003 fiscal year. Effective July 1, 2002, downsizing shall be accomplished in accordance with the State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services. All savings resulting from downsizing occurring on and after July 1, 2002, shall be utilized as set forth in subsection (a1) of this section."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
STATE PSYCHIATRIC HOSPITAL BED DAY ALLOCATION PLAN
SECTION 10.29.  Section 21.68A of S.L. 2001‑424 reads as rewritten:
"SECTION 21.68A. The Department of Health and Human Services shall develop and implement a plan that provides for the allocation of State psychiatric hospital bed days among counties served by the State's regional psychiatric hospitals. The Plan shall incorporate policies that take into consideration State and county fiscal responsibilities and capacity, cost efficiency, and the principles and guidance embodied in the Olmstead vs. L.C. & E.W. decision. The Department shall report on the implementation of this section to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division, on November 1, 2002."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
EXTEND CONSUMER ADVOCACY PROGRAM CONTINGENT UPON FUNDS APPROPRIATED BY the 2003 GENERAL ASSEMBLY
SECTION 10.30.  Section 4 of S.L. 2001‑437 reads as rewritten:
"SECTION 4. Sections 1.1 through 1.21(b) of this act become effective July 1, 2002. Section 2 of this act becomes effective only if funds are appropriated by the 2003 General Assembly for that purpose. Section 2 of this act becomes effective July 1 of the fiscal year for which funds are appropriated by the 2003 General Assembly for that purpose. The remainder of this act is effective when it becomes law."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
DHHS COORDINATION OF RULES
SECTION 10.31.(a)  The Secretary of the Department of Health and Human Services and the Chairs of the Commissions listed in this section shall collaborate in the development of a process for identifying and resolving issues pertaining to duplication and conflict of rules adopted by the Secretary and each Commission that affect the area of mental health, developmental disabilities, and substance abuse services. The process shall address the following:
(1)	How to identify on a routine basis proposed rules that duplicate in whole or in part other rules proposed or adopted and ways of avoiding the duplication without interfering with the agency's statutory duty to adopt the rule and without impairing the effectiveness of the rule in carrying out the statutory mandate.
(2)	How to identify on a routine basis adopted rules that are in conflict, proposed rules that conflict with other proposed or adopted rules, and ways of addressing the conflict without interfering with the agency's statutory duty to adopt the rule and without impairing the effectiveness of the rule in carrying out the statutory mandate. 
The following Commissions shall collaborate with the Secretary on the development of this process: the Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services, the Social Services Commission, the Commission for Health Services, the Medical Care Commission, and other Commissions that adopt rules affecting the area of mental health, developmental disabilities, and substance abuse services that the Secretary has a duty to implement. The Secretary shall also involve a representative of the Division of Medical Assistance in this effort.
SECTION 10.31.(b)  The Secretary and the Commissions shall implement the process required by Section 1 of this act not later than October 1, 2002.  Not later than October 15, 2002, the Secretary shall report to the Joint Legislative Commission on Mental Health, Developmental Disabilities, and Substance Abuse Services the following:
(1)	The status of the review of rules conducted by the Department for determining the existence of ambiguity, duplication, or conflict.
(2)	Specific rules identified that are in conflict and the recommended action for resolving the conflict.
(3)	Statutory changes necessary to accomplish the purposes of the rules review process required by Section 1 of this act.

subpart 4. division of social services

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Special Needs Adoption Incentive Fund Reporting Date
SECTION 10.32.  Section 21.42(d) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.42.(d)  The Department of Health and Human Services shall report on the use of these funds no later than April 1, 2003, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Child Welfare Systems Pilots Reports
SECTION 10.33.(a)  Section 21.46(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.46.(a)  The Department of Health and Human Services, Division of Social Services, shall develop a plan, working with local departments of social services, to implement an alternative response system of child protection in no fewer than two and no more than 10 demonstration areas in this State. The plan should provide for the pilots to implement an alternative response system in which local departments of social services utilize family assessment tools and family support principles when responding to selected reports of suspected child neglect and dependency."
SECTION 10.33.(b)  The Department of Health and Human Services shall report on any activities conducted under Section 21.46 of S.L. 2001‑424 to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than April 1, 2003.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Family Resource Centers – Reporting requirement
SECTION 10.34.  Section 21.48(e) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.48.(e)  The Department shall report on activities under this section. This report is due to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on May 1, 2003."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
eliminate Additional Funds for Child Support Services
SECTION 10.35.  Section 21.54A of S.L. 2001‑424 reads as rewritten:
"SECTION 21.54A. Of the funds appropriated in this act to the Department of Health and Human Services, Division of Social Services, the sum of one million five hundred thousand dollars ($1,500,000) for the 2001‑2002 fiscal year shall be used to contract for additional child support services in urban counties demonstrating significant caseload backlogs. The additional support to urban counties shall address the backlog of cases and emphasize the establishment of paternities and the location of absent parents."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
STATE/COUNTY SPECIAL ASSISTANCE 
SECTION 10.36.  Section 21.44(d) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.44.(d)  Effective October 1, 2002, the maximum monthly rate for residents in adult care home facilities shall be one thousand ninety-one dollars ($1,091) per month per resident."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
ELECTING COUNTY TANF FUNDS REVERT
SECTION 10.37.  G.S. 108A‑27.11(c) reads as rewritten:
"(c)	Each Electing County's allocation for Work First Family Assistance shall be computed based on the percentage of each Electing County's total expenditures for cash assistance to statewide actual expenditures for cash assistance in 1995‑96. The resulting percentage shall be applied to the federal TANF block grant funds appropriated for cash assistance by the General Assembly each fiscal year. The Department shall transmit the federal funds contained in the county block grants to Electing Counties as soon as practicable after they become available to the State and in accordance with federal cash management laws and regulations. The Department shall transmit one‑fourth of the State funds contained in county block grants to Electing Counties at the beginning of each quarter. "

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
ADULT CARE HOME MODEL FOR COMMUNITY‑BASED SERVICES
SECTION 10.38.  Section 21.54(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.54.(b)  The Department shall submit a progress report on the development of the model to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on or before January 1, 2002, and  a final report on March 1, 2003. The report shall address the following:
(1)	The proposed time and location for implementation of the pilot.
(2)	Proposed number of residents to be placed and services to be provided directly by the facility or under contract with the facility.
(3)	Method for evaluating the pilot, including services provided, on a regular basis.
(4)	A description of the living environment for each resident and a comparison of how the living environment compares to that of other residents in the adult care home.
(5)	Changes to State law necessary to implement the pilot.
(6)	Projected cost to the State for pilot and statewide implementation."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
ADULT CARE HOME RESIDENT ASSESSMENT SERVICES program repealed
SECTION 10.39.  Section 21.35 of S.L. 2001‑424 is repealed.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
State/County Special Assistance Rate Methodology
SECTION 10.40.(a) The Department of Health and Human Services shall develop a plan to address the short‑term and long‑term recommendations of the report titled "Reimbursement of Adult Care Homes in North Carolina: A Study of the Special Assistance Rate Methodology, May, 2002."  The plan shall include: 
(1)	Setting the rate at the median plus a percentage;
(2)	Excluding low‑occupancy facilities from the rate‑setting methodology; and
(3)	Adjusting fixed costs for inflation.
SECTION 10.40.(b) The Department shall implement the following changes to the adult care home cost reports:
(1)	Revise the Direct Cost category to include: housekeeping/laundry, health services, dietary services, recreational activities, and initial orientation/aide training;
(2)	Revise the Indirect Cost category to include: administration/general and operation/maintenance;
(3)	Revise the category of other Cost centers to include: personal care, medically related transportation, and mental health services;
(4)	Create a capital cost center category to include property/ownership/use;
(5)	Create a nonreimbursable cost category; and
(6)	Define allowable and nonallowable expenditures.
The Department of Health and Human Services shall make the new cost report format available to each facility 90 days prior to implementation.
SECTION 10.40.(c)  The Department shall expand current audit policies and procedures for auditing provider costs.  The Department shall create an audit function that is directly answerable to the State and involves fewer but more detailed audits.  All providers of services to State County Special Assistance recipients shall be subject to a State audit if selected.  The specific audit requirements shall be based on auditing requirements of governmental programs providing similar services.  The Department of Health and Human Services shall expand current audit procedures for State County Special Assistance to include auditing of costs associated with personal care services reimbursed by Medicaid.
SECTION 10.40.(d)  The Department shall apply for federal waiver to pay facilities directly for residential services for State County Special Assistance Residents. 
SECTION 10.40.(e)  The Department shall report on the progress of the implementations of the requirements of this section no later than December 1, 2002, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Special Children Adoption Fund
SECTION 10.41.  Section 21.40(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.40.(b)  Of the total funds appropriated for the Special Children Adoption Fund, each year twenty percent (20%) of the total funds available shall be reserved for payment to participating private adoption agencies. If the funds reserved in this subsection for payments to private adoption agencies have not been spent on or before March 31, 2003, the Division of Social Services may reallocate those funds, in accordance with this section, to other participating adoption agencies."

subpart 5. division of aging

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
ALZHEIMER'S ASSOCIATION FUNDS FY 2001‑2002
SECTION 10.42.  Section 21.31 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.31. Of the funds appropriated in this act to the Department of Health and Human Services, Division of Aging, the sum of one hundred fifty thousand dollars ($150,000) for the 2001‑2002 fiscal year shall be allocated as follows:
(1)	$75,000 for the Western Carolina Alzheimer's Chapter; and
(2)	$75,000 for the Eastern NC Alzheimer's Chapter.
Before funds may be allocated to any chapter under this section, the Chapter shall submit to the Division of Aging, for its approval, a plan for the use of the funds."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
GOVERNOR'S ADVISORY COUNCIL ON AGING 
SECTION 10.43.  G.S. 143B‑181 reads as rewritten:
"§ 143B‑181.  Governor's Advisory Council on Aging – members; selection; quorum; compensation.
The Governor's Advisory Council on Aging of the Department of Health and Human Services shall consist of 33 members, 29 members to be appointed by the Governor, two members to be appointed by the President Pro Tempore of the Senate, and two members to be appointed by the Speaker of the House of Representatives. The composition of the Council shall be as follows: one representative of the Department of Administration; one representative of the Department of Cultural Resources; one representative of the Employment Security Commission; one representative of the Teachers' and State Employees' Retirement System; one representative of the Commissioner of Labor; one representative of the Department of Public Instruction; one representative of the Department of Environment and Natural Resources; one representative of the Department of Insurance; one representative of the Department of Crime Control and Public Safety; one representative of the Department of Community Colleges; one representative of the School of Public Health of The University of North Carolina; one representative of the School of Social Work of The University of North Carolina; one representative of the Agricultural Extension Service of North Carolina State University; one representative of the collective body of the Medical Society of North Carolina; and 19 members at large. The at large members shall be citizens who are knowledgeable about services supported through the Older Americans Act of 1965, as amended, and shall include persons with greatest economic or social need, minority older persons, and participants in programs under the Older Americans Act of 1965, as amended. The Governor shall appoint 15 members at large who meet these qualifications and are 60 years of age or older. The four remaining members at large, two of whom shall be appointed by the President Pro Tempore of the Senate and two of whom shall be appointed by the Speaker of the House of Representatives, shall be broadly representative of the major private agencies and organizations in the State who are experienced in or have demonstrated particular interest in the special concerns of older persons. At least one of each of the at‑large appointments of the President Pro Tempore of the Senate and the Speaker of the House of Representatives shall be persons 60 years of age or older. The Council shall meet biannually.Members at large shall be appointed for four‑year terms and until their successors are appointed and qualify. Ad interim appointments shall be for the balance of the unexpired term.
The Governor shall have the power to remove any member of the Council from office in accordance with the provisions of G.S. 143B‑16 of the Executive Organization Act of 1973.
The Governor shall designate one member of the Council as chair to serve in such capacity at his pleasure.
Members of the Council shall receive per diem and necessary travel and subsistence expenses in accordance with the provisions of G.S. 138‑5.
A majority of the Council shall constitute a quorum for the transaction of business.
All clerical and other services required by the Council shall be supplied by the Secretary of Health and Human Services."

subpart 6. office of educational services

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Residential Schools Reporting
SECTION 10.44.  The Office of Education Services shall report not later than December 1, 2002, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division on the activities of the Eastern North Carolina School for the Deaf at Wilson, the North Carolina School for the Deaf at Morganton, and the Governor Morehead School for the Blind.  The report shall include enrollment numbers at the schools, the budgets, and the academic status of the schools as defined under the ABC’s program.

subpart 7. division of public health

Requested by:	Senators Martin of Guilford, Purcell, Warren, Plyler, Lee
HEART DISEASE AND STROKE PREVENTION TASK FORCE
SECTION 10.45.  Section 21.95 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.95. The Heart Disease and Stroke Prevention Task Force, created in subsection (l) of Section 26.9 of Chapter 507 of the 1995 Session Laws, as amended, shall submit to the Governor and the General Assembly a sixth interim report within the first week of the convening of the 2001 General Assembly, 2002 Regular Session, and a seventh interim report within the first week of the convening of the 2003 General Assembly. Notwithstanding Section 11.57 of S.L. 1999‑237, the Task Force shall submit a final report to the Governor and the General Assembly by June 30, 2003. "

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
NEWBORN HEARING SCREENING PROGRAM REPORT
SECTION 10.46.  Section 21.96 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.96. The Department of Health and Human Services shall report the following information on the newborn hearing screening program:
(1)	Unduplicated number of infants screened.
(2)	Number of infants who failed the second hearing screening.
(3)	Number of infants receiving the diagnostic evaluation.
(4)	Number and types of services provided.
(5)	Number and types of follow‑up services provided to children.
The Department shall submit the report not later than May 1, 2002, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division. The Department shall report not later than January 1, 2003, on its activities to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
INTENSIVE HOME VISITING
SECTION 10.47.  Section 21.97(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.97.(b)  The Division shall require in‑home visitors to collect data on program participants as a condition of participation. This requirement shall include six‑month periodic assessments and completion of the questionnaires. The Department shall ensure that the collection, maintenance, use, and disclosure of data complies with applicable State and federal law protecting privacy of health and other individual information. By April 1, 2003, the Division shall report to the Senate Appropriations Committee on Health and Human Services and the House of Representatives Appropriations Subcommittee on Health and Human Services on the following items:
(1)	Number of clients/families enrolled per county.
(2)	Attrition and reasons why families leave the program.
(3)	Average number of home visits per month.
(4)	Average time involved per home visit.
(5)	Baseline family characteristics.
(6)	Health behaviors.
(7)	Perinatal and birth outcomes.
(8)	Other relevant outcome information.
All program information shall include the identification of the model used in order to compare these models in the future."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
AIDS Drug Assistance Program (ADAP)
SECTION 10.48.(a)  Section 21.90(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.90.(b)  For the 2001‑2002 fiscal year and for the 2002‑2003 fiscal year, HIV‑positive individuals with incomes at or below one hundred twenty‑five percent (125%) of the federal poverty level are eligible for participation in ADAP. Eligibility for participation in ADAP during the 2001‑2003 fiscal biennium shall not be extended to individuals with incomes above one hundred twenty‑five percent (125%) of the federal poverty level. "
SECTION 10.48.(b)  The Department of Health and Human Services shall develop a plan to manage costs in ADAP and to serve additional participants within additional resources.  The plan shall include an assessment of the following, including, where applicable, a review of other states' actions in these areas:
(1)	Limiting the drug formulary.
(2)	Capping expenditures on a per participant/per month basis.
(3)	Providing financial assistance to participants for health care program premiums.
SECTION 10.48.(c)  The Department shall report on activities conducted under this section and under Section 21.90 of S.L. 2001‑424 to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Subcommittee on Health and Human Services, and the Fiscal Research Division.  The Department shall submit an interim report not later than December 1, 2002, and a final report not later than May 1, 2003.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
PRESCRIPTION DRUG ASSISTANCE PROGRAM
SECTION 10.49.(a)  Section 21.88 of S.L. 2001‑424 reads as rewritten:
"SECTION 21.88. Of the funds appropriated in this act to the Department of Health and Human Services, the sum of five hundred thousand dollars ($500,000) for the 2001‑2002 fiscal year shall be used to pay the cost of outpatient prescription drugs for persons:
(1)	Over the age of 65 years and not eligible for full Medicaid benefits;
(2)	Whose income is not more than one hundred fifty percent (150%) of the federal poverty level; and
(3)	Who have been diagnosed with cardiovascular disease or diabetes.
These funds shall be used to pay the cost of outpatient prescription drugs for the treatment of cardiovascular disease or diabetes. Payment shall be not more than the Medicaid cost including rebates. The Department shall develop criteria to maximize the efficient and effective distribution of these drugs."
SECTION 10.49.(b)  It is the intent of the General Assembly that funding for prescription drug assistance provided by the Health and Wellness Trust Fund shall include funds for the transition of benefits formerly provided under the Prescription Drug Assistance Program.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
REPEAL DENTAL HEALTH PROGRAM IN THE Department of Health and Human Services
SECTION 10.50.   Article 14 of Chapter 130A of the General Statutes is repealed.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
RESTRUCTURE ORAL HEALTH SECTION
SECTION 10.51.  The Department of Health and Human Services, Division of Public Health, shall restructure the Division's Oral Health Section within the Women's and Children's Health Section.  The restructuring shall result in broadening the scope of the Oral Health Section responsibilities to begin to address a more comprehensive school health program throughout the State. The Division shall ensure that positions and resources within the Oral Health Section are also transferred to meet the requirements of a comprehensive school health program.  The Division of Public Health shall report not later than December 1, 2002, on the Division's reorganization, including restructuring of the Oral Health Section.  The Division shall submit the report to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Early Intervention Program ‑ Reporting Requirement
SECTION 10.52.  The Department of Health and Human Services shall report on the activities conducted under Section 21.79 of S.L. 2001‑424 to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than December 1, 2002.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
DEVELOPMENTAL EVALUATION CENTERS
SECTION 10.53.(a)   The Department of Health and Human Services, Division of Public Health, shall administer the reduction in funds for the 2002‑2003 fiscal year of two million seventy‑six thousand four hundred twenty‑six dollars $2,076,426 to all Developmental Evaluation Centers (DEC's) based upon the following:
(1)	Prior years' expenditures of the DEC,
(2)	Elimination of vacant positions, and
(3)	Overall needs of the DEC.
The reduction shall not result in the entire closure of an individual DEC and the implementation of the reduction should seek to minimize the loss of direct services to children, looking first at administrative reductions.
SECTION 10.53.(b)   The Division of Public Health shall prepare a plan for the future of Developmental Evaluation Centers that will involve a needs‑assessment of services and geographical needs.  The plan shall also include an assessment of the number of DECs needed and recommendations for future downsizing or growth. The plan will augment the Early Intervention Services Plan submitted to the General Assembly.  The Division shall report on its plan not later than December 1, 2002, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.

Requested by:	Senators Martin of Guilford, Purcell, Cunningham, Plyler, Lee
WORKERS' COMPENSATION FOR dusty trades
SECTION 10.54.(a) G.S. 97‑61.1 reads as rewritten:
"§ 97‑61.1.  First examination of and report on employee having asbestosis or silicosis.
When an employee and the Industrial Commission are advised  that an employee has asbestosis or silicosis, the employer shall be notified by the Industrial Commission, and the employee, when ordered by the Industrial Commission, shall go to a place designated by the Industrial Commission and submit to X rays and a physical examination by the advisory medical committee, at least one of whom shall conduct the examination, and the member or members of the advisory medical committee conducting the examination shall forward the X rays and findings to the member or members of the committee not present for the physical examination. The employer shall pay the expenses connected with the examination in such amounts as shall be directed by the Industrial Commission. Within 30 days after the completion of the examination, the advisory medical committee shall make a written report signed by all of its members setting forth:
(1)	The X rays and clinical procedures used by the committee in arriving at its findings.
(2)	Whether or not the claimant has contracted asbestosis or silicosis.
(3)	The committee's opinion expressed in percentages of the impairment of the employee's ability to perform normal labor in the same or any other employment.
(4)	Any other matter deemed pertinent by the committee.
When a competent physician certifies to the Industrial Commission that the employee's physical condition is such that his movement to the place of examination ordered by the Industrial Commission as herein provided in G.S. 97‑61.1, 97‑61.3 and 97‑61.4 would be harmful or injurious to the health of the employee, the Industrial Commission shall cause the examination of the employee to be made by the advisory medical committee as herein provided at some place in the vicinity of the residence of the employee suitable for the purposes of making such examination."
SECTION 10.54.(b)  G.S. 97‑72(b) reads as rewritten:
"(b)	The members of the advisory medical committee shall be paid one hundred dollars ($100.00) per month plus not more than forty dollars ($40.00) per film examined. The fee per film shall be established by the Industrial Commission, as guided by the current Medicaid/Medicare reimbursement schedules for North Carolina."
SECTION 10.54.(c)  G.S. 97‑73(b) reads as rewritten:
"(b)	The Industrial Commission shall establish a schedule of fees for examinations directed by the Industrial Commission pursuant to G.S. 97‑60. The fees shall be collected in accordance with rules adopted by the Industrial Commission."

subpart 8. division of child development

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Early Childhood Education and Development INITIATIVES enhancements
SECTION 10.55.(a)  Section 21.75.(d) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.75.(d)  The Department of Health and Human Services and the North Carolina Partnership for Children, Inc., shall ensure that the allocation of funds for Early Childhood Education and Development Initiatives for State fiscal years 2001‑2002 and 2002-2003 shall be administered and distributed in the following manner:
(1)	The North Carolina Partnership for Children, Inc., shall develop a policy to allocate the reduction of funds for Early Childhood Education and Development Initiatives for the 2001‑2002 and 2002-2003 fiscal years.
(2)	The North Carolina Partnership for Children, Inc., administration shall be reduced by ten percent (10%) from the 2000‑2001 fiscal year level.
(3)	The Department of Health and Human Services Smart Start administration shall be reduced by ten percent (10%) from the 2000‑2001 fiscal year level.
(4)	Capital expenditures and playground equipment expenditures are prohibited for fiscal years 2001-2002 and 2002-2003. For the purposes of this section, "capital expenditures" means expenditures for capital improvements as defined in G.S. 143‑34.40.
(5)	Expenditures for advertising and promotional activities are prohibited for fiscal year 2002-2003."
SECTION 10.55.(b)  Section 21.75(f) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.75.(f)  For the 2001‑2002 and 2002-2003 fiscal years, the North Carolina Partnership for Children, Inc., shall not approve local partnership plans that allocate State funds to child care providers for one‑time quality improvement initiatives in the following circumstances:
(1)	Child care facilities with licensure of four or five stars, unless the expenditure of funds is to expand capacity for low‑income children.
(2)	Child care facilities that do not accept child care subsidy funds.
(3)	Child care facilities that previously received quality improvement grants whose quality initiatives failed to increase licensure."
SECTION 10.55.(c)  For the 2002‑2003 fiscal year, the local partnerships shall spend an amount for child care subsidies that provides at least fifty‑two million dollars ($52,000,000) for the TANF maintenance of effort requirement and the Child Care Development Fund and Block Grant match requirement.
SECTION 10.55.(d)  Of the funds appropriated in this act, the North Carolina Partnership for Children, Inc., shall transfer one million dollars ($1,000,000) to the Department of Health and Human Services, Division of Public Health, to contract with the National Society to Prevent Blindness – North Carolina Affiliate, Inc., to maximize vision screenings of children in child care settings.  The National Society to Prevent Blindness – North Carolina Affiliate, Inc., shall report on the use of the funds transferred under this section no later than March 1, 2003, to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division.  This report shall included the following:
(1)	The number of screenings conducted.
(2)	The number of previously undetected vision problems discovered in the screenings.
(3)	The number of child care facilities in which screenings are conducted.
(4)	A listing of the counties in which screenings are conducted.
SECTION 10.55.(e)  Notwithstanding any other provision of law, for the 2002‑2003 fiscal year, the North Carolina Partnership for Children, Inc., may not contract with any outside entity to conduct performance assessments of local partnerships.
SECTION 10.55.(f)  G.S. 143B‑168.12 is amended by adding a new subsection to read:
"(e)	The North Carolina Partnership shall develop guidelines for local partnerships to follow in selecting capital projects to fund. The guidelines shall include assessing the community needs in relation to the quantity of child care centers, assessing the cost of purchasing or constructing new facilities as opposed to renovating existing facilities, and prioritizing capital needs such as construction, renovations, and playground equipment and other amenities."
SECTION 10.55.(g)  G.S. 143B‑168.13(a)(1a) reads as rewritten:
"(1a)	Develop and conduct a statewide needs and resource assessment every third year, beginning in the 1997‑98 fiscal year. This needs assessment shall be conducted in cooperation with the North Carolina Partnership and with the local partnerships. This needs assessment shall include a statewide assessment of capital needs. The data and findings of this needs assessment shall form the basis for annual program plans developed by local partnerships and approved by the North Carolina Partnership."
SECTION 10.55.(h)  Of the funds appropriated in this act, the North Carolina Partnership for Children, Inc., shall transfer the sum of four hundred thousand dollars ($400,000) to the Department of Health and Human Services, Division of Public Health, for the purpose of providing a statewide folic acid campaign.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
More at Four Program
SECTION 10.56.(a)  Section 21.76B(c)(2) of S.L. 2001‑424 is repealed.
SECTION 10.56.(b)  Section 21.76B(d) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.76B.(d)  In development of the "More At Four" pilot, the Department of Health and Human Services, in consultation with the Department of Public Instruction and the Task Force, shall:
(1)	Contract with an independent research organization, outside the Department of Health and Human Services and the Department of Public Instruction, with proven expertise in evaluation of prekindergarten programs, for pre- and post-assessments of children participating in the More At Four program. Of the funds appropriated in this act, the Department shall not spend more than two hundred thousand dollars ($200,000) on this contract.
(2)	Collaborate in the development of a system to collect and maintain child‑specific information to provide for the long‑term evaluation of the pilot. The system shall be developed in a manner which utilizes existing State and local systems and the N.C. Student Information Management System."
SECTION 10.56.(c)  Section 21.76B(f) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.76B.(f)  In order to maximize and coordinate funding for prekindergarten programs for four‑year‑olds with demonstrated educational needs, the Department of Health and Human Services, the Department of Public Instruction, the Task Force, and the North Carolina Partnership for Children, Inc., shall identify and make recommendations on the reallocation of funds from existing State and local programs providing prekindergarten related care and services, including child care subsidies. All potential funding sources, including federal as well as State‑funded efforts, shall be identified. The report required under subsection (g) of this section shall include recommendations on strategies to ensure coordination between the Partnership, More At Four, and other prekindergarten programs in addressing the academic and cognitive needs of young children. The report shall include recommendations on structural changes to Smart Start, More At Four, and other related programs, including consolidation, that may be beneficial in encouraging this coordination. The report shall include a plan and a timetable for implementation of the recommendations."
SECTION 10.56.(d)  Section 21.76B(g) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.76B.(g)  The Department of Health and Human Services, the Department of Public Instruction, and the Task Force shall report by January 1, 2002, and May 1, 2002, to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Education Oversight Committee, the Senate Appropriations Committee on Health and Human Services, and the House of Representatives Appropriations Subcommittee on Health and Human Services on the progress in complying with this section. A final report along with recommendations for changes or expansion of the program shall be presented to the  Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division no later than December 1, 2002. This final report shall include the following:
(1)	The number of children participating in the program.
(2)	The number of children participating in the program who have never been served in other early education programs such as child care, public or private preschool, Head Start, Early Head Start, or early intervention programs.
(3)	The expected expenditures for the fiscal year.
(4)	The location of program sites and the corresponding number of children participating in the program at each site.
(5)	Recommendations regarding reallocation of State, local, and federal funds to maximize the provision of services to at‑risk four‑year‑olds and to eliminate duplication of efforts."
SECTION 10.56.(e)  Effective June 30, 2002, Section 21.76B of S.L. 2001‑424 is amended by adding a new subsection to read:
"SECTION 21.76B.(h)  The Department of Health and Human Services may carry over any unspent funds allocated to the More At Four program to the subsequent fiscal year."
SECTION 10.56.(f)  It is the intent of the General Assembly to identify and recognize existing programs that excel at meeting the educational needs of at‑risk four‑year‑olds and to provide guidance and technical assistance to programs so that they may become better at meeting the needs of these children.  It is the intent of the General Assembly to maximize the provision of services to at‑risk four‑year‑olds and to eliminate duplication of efforts.
SECTION 10.56.(g)  Not later than December 1, 2002, the Department of Health and Human Services, in consultation with the More at Four Pre‑Kindergarten Program, shall establish More At Four accreditation criteria for child care centers, Head Start programs, prekindergarten programs administered by local educational agencies, and other educational prekindergarten programs, including centers and programs funded by Smart Start.  These accreditation criteria shall include, at a minimum, the guidelines established by the "More At Four" Pre‑K Task Force pursuant to Section 21.76B of S.L. 2001‑424.  These accreditation criteria shall also include a criterion related to the number or percentage of at‑risk children that must be served by a child care center, Head Start program, prekindergarten program administered by a local educational agency, or other educational prekindergarten program, including centers and programs funded by Smart Start, before it may become an accredited More At Four program.
SECTION 10.56.(h)  Beginning January 1, 2003, the Department of Health and Human Services, Division of Child Development, shall initiate an accreditation program based on the criteria developed pursuant to subsection (g) of this section.  The Department shall evaluate programs on the accreditation criteria as part of the three‑year rated license assessment currently conducted by the Department.  Any child care center, Head Start program, prekindergarten program administered by a local educational agency, or other educational prekindergarten program, including centers and programs funded by Smart Start, that satisfies the accreditation criteria shall be designated as a More At Four accredited program.  This designation shall take effect once the Department finds that the accreditation criteria have been met.  The Department shall periodically reevaluate accredited programs to ensure that the program continues to satisfy the accreditation criteria.  A child care center, Head Start program, prekindergarten program administered by a local educational agency, or other educational prekindergarten program, including centers and programs funded by Smart Start, may petition the Department to evaluate the program on the accreditation criteria in advance of the next regularly scheduled rated license assessment.
SECTION 10.56.(i)  The Department of Health and Human Services shall conduct a county‑by‑county needs and resources assessment to determine what additional resources are necessary, if any, to meet the needs of at‑risk four‑year‑olds in each county in the State.  This assessment shall take into consideration that different counties may require different resources or programs to adequately meet the needs of at‑risk four‑year‑olds.  The Department shall report on the results of this assessment to the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division no later than April 1, 2003.
SECTION 10.56.(j)  The Department of Health and Human Services shall make a report to the 2003 General Assembly with recommendations for appropriate incentives to encourage child care centers, Smart Start programs, Head Start programs, prekindergarten programs administered by local educational agencies, and other educational prekindergarten programs to achieve and maintain More at Four accredited status.

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Child Care Subsidy Rates
SECTION 10.57.  Section 21.73(f) of S.L. 2001‑424 reads as rewritten:
"SECTION 21.73.(f)  Provision of payment rates for child care providers in counties that do not have at least 50 children in each age group for center‑based and home‑based care are as follows:
(1)	Payment rates shall be set at the regional market rate for licensed child care centers and homes.
(2)	If it can be demonstrated that the application of the regional market rate to a county with fewer than 50 children in each age group is lower than the county market rate and would inhibit the ability of the county to purchase child care for low‑income children, then the county market rate may be applied."

Requested by:	Senators Martin of Guilford, Purcell, Plyler, Lee
Repeal Child Care Fraud Provision Due to Federal Repayment requirements
SECTION 10.58.  G.S. 110‑108 is repealed.

PART XI.	DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES

Requested by:	Senators Martin of Pitt, Weinstein, Odom, Lee
CLOSE ROBBINS DIAGNOSTIC LABORATORY 
SECTION 11.1.  The Department of Agriculture and Consumer Services shall close the Poultry Disease Diagnostic Laboratory located in the Town of Robbins in Moore County and reassign one veterinarian position and one medical laboratory technician position to the Rollins Animal Disease Diagnostic Laboratory located in Raleigh.  In order to preserve current laboratory capability, poultry diagnostic services currently performed at the Poultry Disease Diagnostic Laboratory located in the Town of Robbins shall be performed at the Rollins Animal Disease Diagnostic Laboratory located in Raleigh or at other animal disease diagnostic laboratories of the Department of Agriculture and Consumer Services.

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
ADJUST METHOD OF BUDGETING RECEIPTS AND LIMIT SPENDING
SECTION 11.2.(a) The Office of State Budget and Management shall, in accordance with G.S. 143‑25, adjust its current method of budgeting receipt revenues within the Department of Agriculture and Consumer Services to more accurately reflect actual revenues.
SECTION 11.2.(b)  Notwithstanding G.S. 143‑23, the Division of Research Stations of the Department of Agriculture and Consumer Services shall not spend more during the 2002‑2003 fiscal year than is appropriated under this act for the Division of Research Stations of the Department of Agriculture and Consumer Services for the 2002‑2003 fiscal year.

Requested by:	Senators Martin of Pitt, Weinstein, Metcalf, Carter, Plyler, Odom, Lee
TRANSFER MOUNTAIN STATE FAIR RECEIPTS
SECTION 11.3.  The Department of Agriculture and Consumer Services shall transfer the sum of seventy thousand dollars ($70,000) from the Mountain State Fair receipts for the 2002‑2003 fiscal year to the Western North Carolina Development Association, Inc., to be used to promote agricultural development in the western part of the State.

PART XIi.	DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
GRASSROOTS SCIENCE PROGRAM
SECTION 12.1.  Section 19.2 of S.L. 2001‑424 reads as rewritten:
"SECTION 19.2. Of the funds appropriated in this act to the Department of Environment and Natural Resources for the Grassroots Science Program, the sum of three million one hundred twenty thousand dollars ($3,120,000) for fiscal year 2001‑2002 and the sum of two million eight hundred one thousand seven hundred sixty dollars ($2,801,760) for fiscal year 2002‑2003 are allocated as grants‑in‑aid for each fiscal year as follows:

	2001‑2002	2002‑2003

Aurora Fossil Museum	$58,733		$57,535
Cape Fear Museum	$209,018		$187,205
Catawba Science Center	$167,833		$151,669
Colburn Gem and Mineral Museum, Inc.	$71,336		$68,409
Discovery Place	$699,985		$610,826
Granville County Museum Commission,
Inc. ‑ Harris Gallery	$61,553		$59,968
The Health Adventure Museum of Pack
Place Education, Arts and
Science Center, Inc.	$157,305		$142,585
Imagination Station	$94,815		$88,668
Iredell County Children's Museum	$58,342		$57,198
Museum of Coastal Carolina	$64,141		$62,201
Natural Science Center of Greensboro	$250,850		$223,299
North Carolina Museum of Life
and Science	$445,843		$391,545
Rocky Mount Children's Museum	$88,855		$83,525
Schiele Museum of Natural History	$348,433		$307,496
Sci Works Science Center and
Environmental Park of Forsyth County	$178,947		$161,259
Western North Carolina Nature Center	$164,011		$148,372

Total	$3,120,000		$2,801,760"

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
STATEWIDE BEAVER DAMAGE CONTROL PROGRAM FUNDS
SECTION 12.2.  Section 19.1 of S.L. 2001‑424 reads as rewritten:
"SECTION 19.1. Of the funds appropriated in this act to the Wildlife Resources Commission, the sum of five hundred thousand dollars ($500,000) for the 2001‑2002 fiscal year and the sum of four hundred forty-nine thousand dollars ($449,000) for the 2002‑2003 fiscal year shall be used to provide the State share necessary to support the beaver damage control program established in G.S. 113‑291.10, provided the sum of at least twenty‑five thousand dollars ($25,000) in federal funds is available each fiscal year of the biennium to provide the federal share."

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
REORGANIZATION OF DENR/CONFORMING CHANGES
SECTION 12.3.(a)  The positions of Division Director and of Administrative Assistant I within the Division of Radiation Protection of the Department of Environment and Natural Resources are eliminated. All other positions within the Division of Radiation Protection of the Department of Environment and Natural Resources are reassigned to the Division of Environmental Health of the Department of Environment and Natural Resources. All functions, powers, duties, and obligations of the Division of Radiation Protection of the Department of Environment and Natural Resources shall be performed by the Division of Environmental Health of the Department of Environment and Natural Resources. The Division of Radiation Protection of the Department of Environment and Natural Resources is abolished.
SECTION 12.3.(b)  G.S. 104E‑8(c) reads as rewritten:
"(c)	The 10 ex officio members shall be appointed by the Governor, shall be members or employees of the following State agencies or their successors, and shall serve at the Governor's pleasure:
(1)	The Utilities Commission;
(2)	The Commission for Health Services;
(3)	The Environmental Management Commission;
(4)	The Board of Transportation;
(5)	The Division of Emergency Management of the Department of Crime Control and Public Safety;
(6)	The Division of Environmental Health of the Department;
(7)	The Department of Labor;
(8)	The Industrial Commission;
(9)	The Department of Insurance;
(10)	The Medical Care Commission."
SECTION 12.3.(c)  G.S. 104E‑9(b) reads as rewritten:
"(b)	The  Division of Environmental Health of the Department of Environment and Natural Resources shall develop a training program for tanning equipment operators that meets the training rules adopted by the North Carolina Radiation Protection Commission. If the training program is provided by the Department, the Department may charge each person trained a reasonable fee to recover the actual cost of the training program."
SECTION 12.3.(d)  G.S. 120‑70.33 reads as rewritten:
"§ 120‑70.33.  Powers and duties.
The Joint Select Committee shall have the following powers and duties:
(1)	To study alternatives available to the State for dealing with low‑level radioactive waste and the ramifications of each of those alternatives;
(2)	Repealed by Session Laws 2001‑474, s. 12, effective November 29, 2001.
(3)	To evaluate actions of the Radiation Protection Commission, the Division of Environmental Health of the Department of Environment and Natural Resources, and of any other board, commission, department, or agency of the State or local government as such actions relate to low‑level radioactive waste management;
(4)	Repealed by Session Laws 2001‑474, s. 12, effective November 29, 2001.
(5)	To review and evaluate changes in federal law and regulations, relevant court decisions, and changes in technology affecting low‑level radioactive waste management;
(6)	To review existing and proposed State law and rules affecting low‑level radioactive waste management and to determine whether any modification of law or rules is in the public interest;
(7)	To make reports and recommendations, including draft legislation, to the General Assembly from time to time as to any matter relating to the powers and duties set out in this section; and
(8)	To undertake such additional studies as it deems appropriate or as may from time to time be requested by the President Pro Tempore of the Senate, the Speaker of the House of Representatives, either house of the General Assembly, the Legislative Research Commission, the Joint Legislative Commission on Governmental Operations, the Environmental Review Commission, or the Joint Legislative Utility Review Committee, and to make such reports and recommendations to the General Assembly regarding such studies as it deems appropriate."
SECTION 12.3.(e)  G.S. 143B‑279.3(c)(1) is repealed.
SECTION 12.3.(f)  G.S. 166A‑6.1(b) reads as rewritten:
"(b)	Every person, firm, corporation or municipality who is licensed to construct or who is operating a fixed nuclear facility for the production of electricity shall pay to the Department of Crime Control and Public Safety, for the use of the Division of Environmental Health of the Department of Environment and Natural Resources, an annual fee of thirty‑six thousand dollars ($36,000) for each fixed nuclear facility that is located within this State or has a Plume Exposure Pathway Emergency Planning Zone of which any part is located within this State. This fee shall be applied to the costs of planning and implementing emergency response activities as are required by the Federal Emergency Management Agency for the operation of nuclear facilities. This fee is to be paid no later than July 31 of each year."

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Relocate division of Coastal Management to Coastal Counties
SECTION 12.4.  The Division of Coastal Management, Department of Environment and Natural Resources, shall relocate its offices and staff from Raleigh to one or more of the State's 20 coastal counties by June 30, 2003.  The Secretary of Environment and Natural Resources is responsible for implementing this section and ensuring that the relocation is completed by June 30, 2003.

Requested by:	Senators Martin of Pitt, Weinstein, Odom, Plyler, Lee
DENR POSITION FOR SCRAP TIRE PROGRAM
SECTION 12.5.(a)  Section 19.14 of S.L. 2001‑424 reads as rewritten:
"SECTION 19.14. Notwithstanding the provisions of G.S. 130A‑309.63, the Department of Environment and Natural Resources may use funds in the Scrap Tire Disposal Account that, pursuant to G.S. 130A‑309.63(d), are to be used for the cleanup of scrap tire collection sites, to maintain and support a position for the 2001‑2002 fiscal year to provide regulatory assistance to local governments to develop programs to prevent scrap tires from outside the State from being presented for free disposal and to complete the cleanup of nuisance tire collection sites."
SECTION 12.5.(b)  G.S. 130A‑309.63 reads as rewritten:
"§ 130A‑309.63.  Scrap Tire Disposal Account.
(a)	Creation. – The Scrap Tire Disposal Account is established as a nonreverting account within the Department. The Account consists of revenue credited to the Account from the proceeds of the scrap tire disposal tax imposed by Article 5B of Chapter 105 of the General Statutes. The Department may use revenue in the Account only as authorized by this section.
(b)	Use. – The Department may use revenue in the Account only as authorized by this section.
(1)	The Department may use up to fifty percent (50%) of the revenue in the Account to make grants to units of local government to assist them in disposing of scrap tires. To administer the grants, the Department shall establish procedures for applying for a grant and the criteria for selecting among grant applicants. The criteria shall include the financial ability of a unit of local government to provide for scrap tire disposal, the severity of a unit of local government's scrap tire disposal problem, the effort made by a unit of local government to ensure that only tires generated in the normal course of business in this State are provided free disposal, and the effort made by a unit of local government to provide for scrap tire disposal within the resources available to it. 
(2)	The Department may use up to forty percent (40%) of the revenue in the Account to make grants to encourage the use of processed scrap tire materials. These grants may be made to encourage the use of tire‑derived fuel, crumb rubber, carbon black, or other components of tires for use in products such as fuel, tires, mats, auto parts, gaskets, flooring material, or other applications of processed tire materials. These grants shall be made in consultation with the Department of Commerce, the Division of Pollution Prevention and Environmental Assistance of the Department, and, where appropriate, the Department of Transportation. Grants to encourage the use of processed scrap tire materials shall not be used to process tires.
(3)	The Department may use revenue in the Account to support a position to provide local governments with assistance in developing and implementing scrap tire management programs designed to complete the cleanup of nuisance tire collection sites and prevent scrap tires generated from outside of the State from being presented for free disposal in the State.
(4)	The Department may use the remaining revenue in the Account only to clean up scrap tire collection sites that the Department has determined are a nuisance. The Department may use funds in the Account to clean up a nuisance tire collection site only if no other funds are available for that purpose.
(c)	Eligibility. – A unit of local government is not eligible for a grant for scrap tire disposal unless its costs for disposing of scrap tires for the six‑month period preceding the date the unit of local government files an application for a grant exceeded the amount the unit of local government received during that period from the proceeds of the scrap tire tax under G.S. 105‑187.19. A grant to a unit of local government for scrap tire disposal may not exceed the unit of local government's unreimbursed cost for the six‑month period.
	(e)	Reporting. – The Department shall include in the report to be delivered to the Environmental Review Commission on or before 15 January of each year pursuant to G.S. 130A‑309.06(c) a description of the implementation of the North Carolina Scrap Tire Disposal Act for the fiscal year ending the preceding 30 June. The description of the implementation of the North Carolina Scrap Tire Disposal Act shall include the beginning and ending balances in the Account for the reporting period, the amount credited to the Account during the reporting period, and the amount of revenue used for grants and to clean up nuisance tire collection sites."

PART Xiii. DEPARTMENT OF COMMERCE

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Oregon Inlet Funds
SECTION 13.1.  Funds appropriated to the Department of Commerce for the 2001‑2002 fiscal year for the Oregon Inlet Project that are unexpended and unencumbered as of June 30, 2002, shall not revert to the General Fund on June 30, 2002, but shall remain available to the Department for legal costs associated with the Project.  This section becomes effective June 30, 2002.

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Council of Government Funds
SECTION 13.2.(a)  Section 20.12(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 20.12.(a)  Of the funds appropriated in this act to the Department of Commerce, nine hundred thirty‑five thousand dollars ($935,000) for the 2001‑2002 fiscal year and eight hundred thirty-two thousand one hundred fifty dollars ($832,150) for the 2002‑2003 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 nine hundred fifty dollars ($48,950) for the 2002-2003 fiscal year, with the actual amount calculated as provided in subsection (b) of this section."
SECTION 13.2.(b)  Section 20.12(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 20.12.(b)  The funds shall be allocated as follows:  A share of the maximum forty-eight thousand nine hundred fifty dollars ($48,950) for the 2002-2003 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 the State fiscal year,  the allocation  shall revert to the General Fund."

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Worker Training Trust Fund Appropriations
SECTION 13.3.(a)  There is appropriated from the Worker Training Trust Fund to the Employment Security Commission of North Carolina the sum of six million three hundred thousand dollars ($6,300,000) for the 2002‑2003 fiscal year for the operation of local offices.
SECTION 13.3.(b)  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 2002‑2003 fiscal year for the following purposes:
(1)	One million two hundred eighty‑three thousand five hundred eleven dollars ($1,283,511) for the 2002‑2003 fiscal year to the Department of Commerce, Division of Employment and Training, for the Employment and Training Grant Program;
(2)	Eight hundred ninety‑seven thousand five hundred eighty‑seven dollars ($897,587) for the 2002‑2003 fiscal year to the Community Colleges System Office for customized training of the unemployed and the working poor for specific jobs needed by employers through the Training Initiatives Program;
(3)	One million seven hundred thousand dollars ($1,700,000) for the 2002‑2003 fiscal year to the Community Colleges System Office to continue the Focused Industrial Training Program;
(4)	Two hundred one thousand nine hundred fifty‑seven dollars ($201,957) for the 2002‑2003 fiscal year to the Employment Security Commission for the State Occupational Information Coordinating Committee to develop and operate an interagency system to track former participants in State education and training programs;
(5)	Three hundred fifty‑nine thousand thirty‑five dollars ($359,035) for the 2002‑2003 fiscal year to the Community Colleges System Office for a training program in entrepreneurial skills to be operated by North Carolina REAL Enterprises;
(6)	Fifty‑three thousand eight hundred fifty‑six dollars ($53,856) for the 2002‑2003 fiscal year to the Employment Security Commission to maintain compliance with Chapter 96 of the General Statutes, which directs the Commission to employ the Common Follow‑Up Management Information System to evaluate the effectiveness of the State's job training, education, and placement programs; and
(7)	Eight hundred ninety‑seven thousand five hundred eighty‑seven dollars ($897,587) for the 2002‑2003 fiscal year to the Department of Labor to continue the Apprenticeship Program.
SECTION 13.3.(c)  North Carolina REAL Enterprises and the other agencies listed in subsections (a) and (b) of this section shall do the following for the programs for which funds are appropriated in this section:
	By January 15, 2003, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 2002‑2003 program activities, objectives, and accomplishments;
b.	State fiscal year 2002‑2003 itemized expenditures and fund sources;
c.	State fiscal year 2003‑2004 planned activities, objectives, and accomplishments including actual results through December 31, 2002; and
d.	State fiscal year 2003‑2004 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 2002.
SECTION 13.3.(d)  North Carolina REAL Enterprises shall, in addition to satisfying the reporting requirements in subsection (c) of this section, provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
NER INTERIM STUDY/small business development functions
SECTION 13.4.(a)  During the interim between the end of the 2002 Regular Session of the 2001 General Assembly and the beginning of the 2003 General Assembly, the Senate and House of Representatives Appropriations Subcommittees on Natural and Economic Resources may study the feasibility and desirability of designating the Small Business and Technology Development Center (SBTDC) as the State's presumptive provider of small business development assistance, including: (i) promoting the development of small business incubators; and (ii) investing in early‑stage technology‑based businesses.
SECTION 13.4.(b)  The subcommittees shall report their recommendations, including any proposed changes to the General Statutes, to the 2003 General Assembly no later than January 15, 2003.  The subcommittees may seek and obtain assistance from any agencies and resources outside the General Assembly that the subcommittees determine are needed to adequately perform the study.

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Regional Economic Development Commission Allocations
SECTION 13.6.  Section 20.10 of S.L. 2001‑424 reads as rewritten:
"SECTION 20.10.(a)  Funds appropriated in this act to the Department of Commerce for regional economic development commissions shall be allocated to the following Commissions in accordance with subsection (b) of this section: Western North Carolina Regional Economic Development Commission, Research Triangle Regional Commission, Southeastern North Carolina Regional Economic Development Commission, Piedmont Triad Partnership, Northeastern North Carolina Regional Economic Development Commission, Global TransPark Development Commission, and Carolinas Partnership, Inc.
SECTION 20.10.(b)  Funds appropriated pursuant to subsection (a) of this section shall be allocated to each Regional Economic Development Commission as follows:
(1)	First, the Department shall establish each Commission's allocation by determining the sum of allocations to each county that is a member of that Commission. Each county's allocation shall be determined by dividing the county's enterprise factor by the sum of the enterprise factors for eligible counties and multiplying the resulting percentage by the amount of the appropriation. As used in this subdivision, the term "enterprise factor" means a county's enterprise factor as calculated under  G.S. 105-129.3.
(2)	Next, the Department shall subtract from funds allocated to the Global TransPark Development Commission the sum of two hundred four thousand four hundred thirty‑three dollars ($204,433) in the 2001-2002 fiscal year and the sum of one hundred seventy-one thousand nine hundred seventy-nine dollars ($171,979) in the 2002-2003 fiscal year which sum represents the interest earnings in each fiscal year on the estimated balance of seven million five hundred thousand dollars ($7,500,000) appropriated to the Global TransPark Development Zone in Section 6 of Chapter 561 of the 1993 Session  Laws.(3)	Next, the Department shall redistribute the sum of two hundred four thousand four hundred thirty‑three dollars ($204,433) in the 2001-2002 fiscal year and the sum of one hundred thousand seventy-one thousand nine hundred seventy-nine dollars ($171,979) in the 2002-2003 fiscal year to the seven Regional Economic Development Commissions named in subsection (a) of this section. Each Commission's share of this redistribution shall be determined according to the enterprise factor formula set out in subdivision (1) of this subsection. This redistribution shall be in addition to each Commission's allocation determined under subdivision (1) of this subsection.
(4)	For the 2002-2003 fiscal year, funds allocated pursuant to subdivisions (1), (2), and (3) of this subsection shall be reduced by the sum of one hundred thousand dollars ($100,000) for each of the Regional Economic Development Commissions listed in subsection (a) of this section.
(5)	Funds appropriated in this act to the Department of Commerce for the Regional Economic Development Commissions shall be budgeted in Budget Code 14601 (Commerce-State Aid)."

Requested by:	Senators Martin of Pitt and Weinstein, Plyler, Odom, Lee
REGIONAL COMMISSION REPORTS
SECTION 13.7.  Section 20.11(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 20.11.(a)  Each Regional Economic Development Commission receiving a grant‑in‑aid from the Department of Commerce shall:
(1)	By January 15, 2002, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Department of Commerce the following information:
a.	State fiscal year 2000‑2001 program activities, objectives, and accomplishments;
b.	State fiscal year 2000‑2001 itemized expenditures and fund sources;
c.	State fiscal year 2001‑2002 planned activities, objectives, and accomplishments as specified in subdivisions (b)(1) through (b)(6) of this section including actual results through December 31, 2001;
d.	State fiscal year 2001‑2002 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 2001.
					
(2)	Report by January 15, 2003, on the first and second quarters of the 2002-2003 fiscal year, and by July 15, 2003, on the third and fourth quarters of the 2002-2003 fiscal year, regarding the following:
a.	Program activities, objectives, and accomplishments for its region, to include:
1.	Specific businesses and/or industries that have been recruited.
2.	Businesses and/or industries that have located as a result of recruitment efforts, and number of new jobs created as a result of that location decision.
3.	Existing businesses and/or industries that have expanded as a result of assistance, and number of new jobs created as a result of that expansion.
4.	Existing businesses and/or industries that have remained as a result of retention efforts, and number of jobs saved as a result of that retention.
5.	For sub-sub-subdivisions 1 through 4 of this sub-subdivision, each Commission shall describe its role in the activities and identify the relative contributions of the Commission and the Department of Commerce to the activities.
6.	Number and description of marketing outreach events, including trade shows, recruitment missions, and related activities.
7.	Initiatives undertaken to establish certified sites and shell buildings.
8.	Number of referrals or leads handled that were generated by the Department of Commerce, and number that were generated by the Commission.
b.	Total itemized actual revenues and expenditures, by fund source.
The report required by this subsection shall be made to the Department of Commerce, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division.
(3)	Report by January 15, 2003, to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Department of Commerce on the following:
a.	State fiscal year 2001-2002 program activities, objectives, and accomplishments.
b.	State fiscal year 2001-2002 itemized expenditures, including salary and benefits for all employees regardless of funding sources, and fund sources.
(4)	Report by January 15, 2003, to the Department of Commerce on the number and listing of available sites and buildings within the region.
(5)	Provide to the Fiscal Research Division and the Department of Commerce a copy of its annual audited financial statement within 30 days of issuance of the statement."

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
plan for consolidating CERTAIN REGIONAL ECONOMIC DEVELOPMENT COMMISSIONS
SECTION 13.8.  The Southeastern North Carolina Regional Economic Development Commission, Northeastern North Carolina Regional Economic Development Commission, and the Global TransPark Development Commission shall jointly develop a plan for consolidating the three separate Commissions into two Commissions.  The plan shall provide for the consolidation to take place no later than June 30, 2003.  The Commissions shall report their plan to the Joint Appropriations Subcommittee on Natural and Economic Resources by January 1, 2003.

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
 STUDY EFFECTIVENESS OF ECONOMIC DEVELOPMENT AGENCIES
SECTION 13.9.  The Kenan‑Flagler Business School ("Business School") of the University of North Carolina at Chapel Hill shall study the effectiveness of the economic development activities of the North Carolina Department of Commerce ("Commerce") and the Regional Economic Development Commissions ("Commissions").  In conducting its study the Business School shall work with Commerce and the Commissions to do the following:
(1)	Identify how Commerce and the Commissions can improve communication, implement a more coordinated and efficient recruitment and retention effort throughout the State, and avoid duplication of effort,
(2)	Establish specific performance measures and outcomes relevant to the mission, goals, and objectives of Commerce and the Commissions,
(3)	Develop a "scorecard" that can be used to measure the extent to which Commerce and the Commissions have achieved their goals, objectives, and outcomes, and
(4)	Recommend a performance‑based funding mechanism that will inform the General Assembly’s decisions regarding appropriations to Commerce and the Commissions.
The Business School also may include in its study and recommendations any other information it deems relevant to the study and its intent. 
The Business School shall report its findings and recommendations to the Senate Appropriations Subcommittee on Natural and Economic Resources, the Senate Full Appropriations Chairs, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division by January 15, 2003.

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Nonprofit Reporting Requirements
SECTION 13.10.  Section 20.14 of S.L. 2001‑424 reads as rewritten:
"SECTION 20.14.(a)  The N.C. Institute for Minority Economic Development, Inc., Land Loss Prevention Project,  North Carolina Minority Support Center, North Carolina Community Development Initiative, Inc., North Carolina Association of Community Development Corporations, Inc., and Partnership for the Sounds, Inc., shall do the following:
(1)	By January 15, 2002, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 2000‑2001 program activities, objectives, and accomplishments;
b.	State fiscal year 2000‑2001 itemized expenditures and fund sources;
c.	State fiscal year 2001‑2002 planned activities, objectives, and accomplishments including actual results through December 31, 2001; and
d.	State fiscal year 2001‑2002 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 2001;
(2)	By January 15, 2003, and more frequently as requested, report to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division the following information:
a.	State fiscal year 2001‑2002 program activities, objectives, and accomplishments;
b.	State fiscal year 2001‑2002 itemized expenditures and fund sources;
c.	State fiscal year 2002‑2003 planned activities, objectives, and accomplishments including actual results through December 31, 2002; and
d.	State fiscal year 2002‑2003 estimated itemized expenditures and fund sources including actual expenditures and fund sources through December 31, 2002; and
(3)	Provide to the Fiscal Research Division a copy of the organization's annual audited financial statement within 30 days of issuance of the statement.
SECTION 20.14.(b)  No funds appropriated under this act shall be released to a nonprofit organization listed in subsection (a) of this section until the organization has satisfied the reporting requirement for January 15, 2001. Fourth quarter allotments shall not be released to any nonprofit organization that does not satisfy the reporting requirements by January 15, 2002, or January 15, 2003."

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
Rural Economic Development Center
SECTION 13.11.(a)  Section 20.15(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 20.15.(a)  Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of one million seven hundred eighty‑eight thousand seven hundred forty‑nine dollars ($1,788,749) for the 2001‑2002 fiscal year and the sum of one million seven hundred forty-four thousand seven hundred forty-nine dollars ($1,744,749) for the 2002‑2003 fiscal year shall be allocated as follows:
	2001‑2002 FY	2002‑2003 FY

	Research and Demonstration Grants	$444,000	$400,000
	Technical Assistance and Center
	Administration of Research
	and Demonstration Grants	444,471	444,471
	Center Administration, Oversight,
	and Other Programs	437,278	437,278
	Administration of Clean Water/
	Natural Gas Critical Needs
	Bond Act of 1998	199,722	199,722
	Additional Administration of Supplemental
	Funding Program	138,278	138,278
	Administration of Capacity Building
	Assistance Program (1998 Bond Act)	125,000	125,000."
SECTION 13.11.(b)  Section 20.15(e) of S.L. 2001‑424 reads as rewritten:
"SECTION 20.15.(e)  Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of two million nine hundred two thousand dollars ($2,902,000) for the 2001‑2002 fiscal year and the sum of two million five hundred forty-two thousand one hundred forty-nine dollars ($2,542,149) for the 2002‑2003 fiscal year shall be allocated as follows:
(1)	$1,124,000 for the 2001-2002 fiscal year and $1,067,800 for the 2002-2003 fiscal year for community development grants to support development projects and activities within the State's minority communities. Any community development corporation as defined in this section is eligible to apply for funds. The Rural Economic Development Center, Inc., shall establish performance‑based criteria for determining which community development corporation will receive a grant and the grant amount. The Rural Economic Development Center, Inc., shall allocate these funds as follows:
a.	$837,720 for the 2001-2002 fiscal year and $810,000 for the 2002-2003 fiscal year for direct grants to the local community development corporations that have previously received State funds for this purpose to support operations and project activities;
b.	$236,280 for the 2001-2002 fiscal year and $207,800 for the 2002-2003 fiscal year for direct grants to local community development corporations that have not previously received State funds; and
c.	$50,000 in each fiscal year to the Rural Economic Development Center, Inc., to be used to cover expenses in administering this section.
(2)	$234,000 for the 2001-2002 fiscal year and $210,600 for the 2002-2003 fiscal year to the Microenterprise Loan Program to support the loan fund and operations of the Program; and
(3)	$1,344,000 for the 2001-2002 fiscal year and $1,063,749 for the 2002-2003 fiscal year shall be used for a program to provide supplemental funding for matching requirements for projects and activities authorized under this subdivision. The Center shall allocate these funds as follows:
a.	$1,094,000 for the 2001-2002 fiscal year and $838,749 for the 2002-2003 fiscal year to make grants to local governments and nonprofit corporations to provide funds necessary to match federal grants or other grants for:
1.	Necessary economic development projects and activities in economically distressed areas;
2.	Necessary water and sewer projects and activities in economically distressed communities to address health or environmental quality problems except that funds shall not be expended for the repair or replacement of low‑pressure pipe wastewater systems. If a grant is awarded under this sub‑subdivision, then the grant shall be matched on a dollar‑for‑dollar basis in the amount of the grant awarded; or
3.	Projects that demonstrate alternative water and waste management processes for local governments. Special consideration should be given to cost‑effectiveness, efficacy, management efficiency, and the ability of the demonstration project to be replicated.
b.	$250,000 for the 2001-2002 fiscal year and $225,000 for the 2002-2003 fiscal year to make grants to local governments and nonprofit corporations to provide funds necessary to match federal grants or other grants related to water, sewer, or business development projects.
(4)	$200,000 in each fiscal year for the Agricultural Advancement Consortium. These funds shall be placed in a reserve and allocated as follows:
a.	$75,000 in each fiscal year for operating expenses associated with the Consortium; and 
b.	$125,000 in each fiscal year for research initiatives funded by the Consortium. 
The Consortium shall facilitate discussions among interested parties and shall develop recommendations to improve the State's economic development through farming and agricultural interests.
The grant recipients in this subsection shall be selected on the basis of need."

Requested by:	Senators Martin of Pitt, Weinstein, Plyler, Odom, Lee
opportunities industrialization center funds
SECTION 13.12.  Section 20.16(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 20.16.(a)  Of the funds appropriated in this act to the Rural Economic Development Center, Inc., the sum of four hundred thousand dollars ($400,000) for the 2001‑2002 fiscal year and the sum of three hundred eighty thousand dollars ($380,000) for the 2002‑2003 fiscal year shall be allocated as follows:
(1)	$100,000 for the 2001-2002 fiscal year and $95,000 for the 2002-2003 fiscal year to the Opportunities Industrialization Center of Wilson, Inc., for its ongoing job training programs;
(2)	$100,000 for the 2001-2002 fiscal year and $95,000 for the 2002-2003 fiscal year to the Opportunities Industrialization Center, Inc., in Rocky Mount, for its ongoing job training programs;
(3)	$100,000 for the 2001-2002 fiscal year and $95,000 for the 2002-2003 fiscal year to the Opportunities Industrialization Centers Kinston and Lenoir County, North Carolina, Inc.; and
(4)	$100,000 for the 2001-2002 fiscal year and $95,000 for the 2002-2003 fiscal year to the Opportunities Industrialization Center of Elizabeth City, Inc."

PART Xiv. JUDICIAL DEPARTMENT

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
REAPPOINTMENT OF SPECIAL SUPERIOR COURT JUDGES
SECTION 14.1.  G.S. 7A‑45.1(a2) reads as rewritten:
"(a2)	Effective December 15, 1996, the Governor may appoint four special superior court judges to serve terms expiring five years from the date that each judge takes office. Successors to the special superior court judges appointed pursuant to this subsection shall be appointed to five‑year terms. However, the terms of two of the initial successors to the special superior court judges appointed pursuant to this subsection shall not commence until January 1, 2003, and the terms of the other two initial successors shall not commence until July 1, 2003. A special judge takes the same oath of office and is subject to the same requirements and disabilities as are or may be prescribed by law for regular judges of the superior court, save the requirement of residence in a particular district."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
SUCCESSORS TO JUDGES AT MANDATORY RETIREMENT AGE
SECTION 14.2.  Upon the mandatory retirement of any sitting district court judge or superior court judge after January 1, 2003, the Governor shall appoint a successor who shall take office on or after July 1, 2003.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
RESTRICT DISTRICT COURT MANDATORY ARBITRATION
SECTION 14.3.(a)  G.S. 7A‑37.1(c) reads as rewritten:
"(c)	This procedure may be employed in civil actions where claims do not exceed fifteen thousand dollars  ($15,000), except that it shall not be employed in actions on an account and appeals from magistrates only involving monies owed."
SECTION 14.3.(b)  The Judicial Department shall study the feasibility of charging the costs of arbitration to the parties to civil actions in district court, with the intent of making the program self‑supporting. The Department shall report by March 1, 2003 to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on their findings and any recommendations for modification of the existing program.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
FEDERAL GRANT FUNDS
SECTION 14.4.  The Judicial Department shall use up to the sum of eight hundred seventy‑five thousand dollars ($875,000) from funds available to the Department to provide the State match needed in order to receive federal grant funds. Prior to using funds for this purpose, the Department shall report to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Commission on Governmental Operations on the grants to be matched using these funds. The Judicial Department shall also use proceeds from the Court Information Technology Fund to fulfill prior obligations to criminal justice information projects receiving federal funds.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
ASSISTANT DISTRICT ATTORNEY positionS
SECTION 14.5.  G.S. 7A‑60(a1) reads as rewritten:
"(a1)	The counties of the State are organized into prosecutorial districts, and each district has the counties and the number of full‑time assistant district attorneys set forth in the following table:

		No. of Full‑Time
		Prosecutorial		Asst. District
		District	Counties	Attorneys
	1	Camden, Chowan, Currituck,	 8
			Dare, Gates, Pasquotank,
	Perquimans
	2	Beaufort, Hyde, Martin,	5
			Tyrrell, Washington
	3A	Pitt	9
	3B	Carteret, Craven, Pamlico	10	4	Duplin, Jones, Onslow,	14
		Sampson
	5	New Hanover, Pender	14
	6A	Halifax	4
	6B	Bertie, Hertford,	4
		Northampton
	7	Edgecombe, Nash, Wilson	15
	8	Greene, Lenoir, Wayne	11
	9	Franklin, Granville,	10
		Vance, Warren
	9A	Person, Caswell	3
	10	Wake	30
	11	Harnett, Johnston, Lee	14
	12	Cumberland	 17
	13	Bladen, Brunswick, Columbus	10
	14	Durham	13
	15A	Alamance	8
	15B	Orange, Chatham	7
	16A	Scotland, Hoke	5
	16B	Robeson	9
	17A	Rockingham	 4
	17B	Stokes, Surry	5
	18	Guilford	26
	19A	Cabarrus	6
	19B	Montgomery, Moore, Randolph	11
	19C	Rowan	5
	20	Anson, Richmond,	15
		Stanly, Union
	21	Forsyth	 16
	22	Alexander, Davidson, Davie,	16
		Iredell
	23	Alleghany, Ashe, Wilkes,	5
		Yadkin
	24	Avery, Madison, Mitchell,	4
		Watauga, Yancey
	25	Burke, Caldwell, Catawba	14
	26	Mecklenburg	33
	27A	Gaston	12
	27B	Cleveland,	 7
		Lincoln
	28	Buncombe	10
	29	Henderson, McDowell, Polk,	11
		Rutherford, Transylvania
	30	Cherokee, Clay, Graham,	 7
		Haywood, Jackson, Macon,
		Swain."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
MAGISTRATE POSITIONS
SECTION 14.6.(a)  Notwithstanding the provisions of G.S. 7A‑133(c) establishing minimum numbers of magistrate provisions in each county, the Administrative Office of the Courts shall identify and eliminate 15 magistrate positions across the State in a manner that minimizes the impact on access to court resources. Positions may be eliminated only in counties that currently have at least five magistrate positions, and no more than one position per judicial district may be eliminated.
In identifying the 15 positions, the Administrative Office of the Courts shall:
(1)	Identify counties with a disproportionate number of magistrate positions, based upon caseload;
(2)	Consider more cost‑effective methods of providing access to magistrates in rural areas;
(3)	Determine the optimal mix of part‑time and full‑time magistrate positions; and
(4)	Consider ongoing discussions before the Courts Commission and the Judicial Counsel on magistrate staffing and jurisdiction.
SECTION 14.6.(b)  The Administrative Office of the Courts shall report by December 1, 2002, to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the positions to be eliminated and the methodology used to identify those positions.

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
transfer sentencing services program to office of indigent defense services
SECTION 14.7.(a)  The statutory authority, powers, duties, and functions, records, personnel, property, unexpended balances of appropriations, allocations or other funds, including the functions of budgeting and purchasing, of the Administrative Office of the Courts to conduct the Sentencing Services Program, as provided by Article 61 of Chapter 7A of the General Statutes, are transferred to the Office of Indigent Defense Services.
SECTION 14.7.(b)  G.S. 7A‑498.2(a) reads as rewritten:
 "(a)	The Office of Indigent Defense Services, which is administered by the Director of Indigent Defense Services and includes the Commission on Indigent Defense Services and the Sentencing Services Program established in Article 61 of this Chapter, is created within the Judicial Department. As used in this Article, "Office" means the Office of Indigent Defense Services, "Director" means the Director of Indigent Defense Services, and "Commission" means the Commission on Indigent Defense Services."
SECTION 14.7.(c)  G.S. 7A‑498.6(b) reads as rewritten:
"(b)	The Director shall:
(1)	Prepare and submit to the Commission a proposed budget for the Office of Indigent Defense Services, an annual report containing pertinent data on the operations, costs, and needs of the Office, and such other information as the Commission may require;
(2)	Assist the Commission in developing rules and standards for the delivery of services under this Article;
(3)	Administer and coordinate the operations of the Office and supervise compliance with standards adopted by the Commission;
(4)	Subject to policies and procedures established by the Commission, hire such professional, technical, and support personnel as deemed reasonably necessary for the efficient operation of the Office of Indigent Defense Services;
(5)	Keep and maintain proper financial records for use in calculating the costs of the operations of the Office of Indigent Defense Services;
(6)	Apply for and accept on behalf of the Office of Indigent Defense Services any funds that may become available from government grants, private gifts, donations, or bequests from any source;
(7)	Coordinate the services of the Office of Indigent Defense Services with any federal, county, or private programs established to provide assistance to indigent persons in cases subject to this Article and consult with professional bodies concerning improving the administration of indigent services;
(8)	Conduct training programs for attorneys and others involved in the legal representation of persons subject to this Article; (8a)	Administer the Sentencing Services Program established in Article 61 of this Chapter; and
(9)	Perform other duties as the Commission may assign."
SECTION 14.7.(d)  G.S. 7A‑771(2a) reads as rewritten:
 "(2a)	"Director" means the Director of  Indigent Defense Services."
SECTION 14.7.(e)  G.S. 7A‑772(b) reads as rewritten:
"(b)	The Director may establish local sentencing services programs and appoint those staff as the Director deems necessary. These personnel may serve as full‑time or part‑time State employees or may be hired on a contractual basis when determined appropriate by the director. Contracts entered under the authority of this subsection shall be exempt from the competitive bidding procedures under Chapter 143 of the General Statutes. The  Office of Indigent Defense Services shall adopt rules necessary and appropriate for the administration of the program. Funds appropriated by the General Assembly for the establishment and maintenance of sentencing services programs under this Article shall be administered by the  Office of Indigent Defense Services."
SECTION 14.7.(f)  The Sentencing Services Program shall not use State funds to prepare sentencing plans for sentenced offenders who are returning to court because of potential probation violations. In addition, each sentencing services program shall review its procedures and implement methods of minimizing the frequency with which plans are prepared but not presented to the court.
SECTION 14.7.(g)  As of July 1, 2002, the number of State positions assigned as administrative staff is reduced from 11 to two and the number of State positions authorized to work in local programs is reduced from 23 to 19. Notwithstanding the provisions of G.S. 7A‑772(b), the number of State positions shall not exceed 21. The Office of Indigent Defense Services may reallocate the remaining State employee positions in order to provide sentencing services in any of the districts formerly served by non‑State agencies. The Office of Indigent Defense Services shall renegotiate contractual arrangements with some of the highest performing nonprofits that have administered sentencing services program to date. Within existing funding, the Office of Indigent Defense Services may also contract with individuals or organizations to provide additional sentencing services.
SECTION 14.7.(h)  The Office of Indigent Defense Services shall report by November 1, 2002 to the Chairs of the Senate and House Appropriations Committees and the Senate and House Appropriations Subcommittees on Justice and Public Safety on the reorganization of the Sentencing Services Program pursuant to this section. The report shall include the specific assignments for the 21 remaining State positions, the districts in which sentencing services will be available, the means by which those services will be provided, and an estimated number of plans and cost per plan for the 2002‑2003 fiscal year.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
DRUG TREATMENT COURT PROGRAM
SECTION 14.8.(a)  The Drug Treatment Court Program shall maintain the existing State‑funded programs in Districts 5, 9, 9A, 10, 14, 21, and 26 during the 2002‑2003 fiscal year.
SECTION 14.8.(b)  It is the intent of the General Assembly that State Drug Treatment Court funds not be used to fund case manager positions when those services can be reasonably provided by the Treatment Alternatives to Street Crime (TASC) program in the Department of Health and Human Services or by other existing resources. The Drug Treatment Court Program shall identify areas of potential cost savings in the local programs that would result from reducing the number of case manager positions. The Program shall also identify areas in which federal funding might absorb administrative costs.
The Drug Treatment Court Program shall report by February 1, 2003, to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the savings identified.
SECTION 14.8.(c)  Prior to the establishment of any new local drug treatment court programs, the local drug treatment court management committee shall consult with the TASC program as to the availability of case management services in that community.

Requested by:	Senators Rand, Plyler, Odom, Lee
INCREASE JUDICIAL EFFICIENCIES
SECTION 14.9.(a)  Funding for the appellate courts is reduced in this act to reflect the elimination of the use of emergency judges at the Court of Appeals and the reduction in library expenses to eliminate unnecessary duplication of library resources between the Court of Appeals and the Supreme Court. In addition, the Supreme Court marshal, seven research assistant positions, and one vacant Supreme Court editorial assistant position are eliminated, in order to bring the staff‑to‑judge ratio at the appellate courts more in line with the relative workloads.
SECTION 14.9.(b)  All training conferences for judges and other court personnel held during the 2002‑2003 fiscal year shall be held in State‑owned facilities and, to the extent possible, shall make use of employees of the Institute of Government or other State agencies as instructors.
SECTION 14.9.(c)  No State funds may be used for out‑of‑state travel by employees or officials of the Judicial Department during the 2002‑2003 fiscal year.
SECTION 14.9.(d)  G.S. 7A‑12 is repealed.
SECTION 14.9.(e)  G.S. 7A‑41(a) reads as rewritten:
"(a)	The counties of the State are organized into judicial divisions and superior court districts, and each superior court district has the counties, and the number of regular resident superior court judges set forth in the following table, and for districts of less than a whole county, as set out in subsection (b) of this section:
	Superior		
Judicial	Court		No. of Resident
Division	District	Counties	Judges	
First	1	Camden, Chowan, Currituck, Dare,
		Gates, Pasquotank,  Perquimans 	2
First	2	Beaufort, Hyde, Martin, Tyrrell,
		Washington	1
First	3A	Pitt	2
Second	3B	Carteret, Craven, Pamlico	2
Second	4	Duplin, Jones, Sampson	1
Second	4B	Onslow	1
Second	5	New Hanover, Pender	3
First	6A	Halifax	1
First	6B	Bertie, Hertford, Northampton	1
First	7A	Nash	1
First	7B	(part of Wilson, part of Edgecombe,
		see subsection (b))	1
First	7C	(part of Wilson, part of Edgecombe,
		see subsection (b))	1
Second	8A	Lenoir and Greene	1
Second	8B	Wayne	1
Third 		9	Franklin, Granville, Vance, Warren	2
Third	9A	Person, Caswell	1
Third	10A	(part of Wake, see subsection (b))	2
Third	10B	(part of Wake, see subsection (b))	2
Third	10C	(part of Wake, see subsection (b))	1
Third	10D	(part of Wake, see subsection (b))	1
Fourth	 11	Harnett, Lee, Johnston	 2
			Fourth	12A	(part of Cumberland, see subsection (b))	1
Fourth	12B	(part of Cumberland, see subsection (b))	1
Fourth	12C	(part of Cumberland, see subsection (b))	2
Fourth	13	Bladen, Brunswick, Columbus	2
Third	14A	(part of Durham, see subsection (b))	1
Third	14B	(part of Durham, see subsection (b))	3
Third	15A	Alamance	2
Third	15B	Orange, Chatham	1
Fourth	16A	Scotland, Hoke	1
Fourth	16B	Robeson	2
Fifth	17A	Rockingham	2
Fifth	17B	Stokes, Surry	2
Fifth	18A	(part of Guilford, see subsection (b))	1
Fifth	18B	(part of Guilford, see subsection (b))	1
Fifth	18C	(part of Guilford, see subsection (b))	1
Fifth	18D	(part of Guilford, see subsection (b))	1
Fifth	18E	(part of Guilford, see subsection (b))	1
Sixth	19A	Cabarrus	1
Fifth	19B1	(part of Montgomery, part of Moore,
		part of Randolph see subsection (b))	1
	19B2	(part of Montgomery, part of Moore,
		part of Randolph see subsection (b))	1
Sixth	19C	Rowan	1
Sixth	20A	Anson, Richmond	1
Sixth	20B	Stanly, Union	2
Fifth	21A	(part of Forsyth, see subsection (b))	1
Fifth	21B	(part of Forsyth, see subsection (b))	1
Fifth	21C	(part of Forsyth, see subsection (b))	1
Fifth	21D	(part of Forsyth, see subsection (b))	1
Sixth	22	Alexander, Davidson, Davie, Iredell	3
Fifth	23	Alleghany, Ashe, Wilkes, Yadkin	1
Eighth	24	Avery, Madison, Mitchell, Watauga,
		Yancey	2
Seventh	 25	Burke, Caldwell, Catawba	 4
			Seventh	26A	(part of Mecklenburg, see subsection (b))	2
Seventh	26B	(part of Mecklenburg, see subsection (b))	3
Seventh	26C	(part of Mecklenburg, see subsection (b))	2
Seventh	27A	Gaston	2
Seventh	27B	Cleveland, Lincoln	2
Eighth	28	Buncombe	2
Eighth	29	Henderson, McDowell, Polk,
		Rutherford, Transylvania	2
Eighth	 30	Cherokee, Clay, Graham, Macon,
		 Swain, Haywood, Jackson	 2.
			"
SECTION 14.9.(f)  The Administrative Office of the Courts shall study the possible cost savings and court workload efficiencies from consolidating remaining superior court districts. The Administrative Office of the Courts shall report their findings to the Chairs of the Senate and House Appropriations Committees and the Senate and House Appropriations Subcommittees on Justice and Public Safety by March 1, 2003.
SECTION 14.9.(g)  Subsection (g) of this section becomes effective the later of January 15, 2003, or the date upon which that subsection is approved under section 5 of the Voting Rights Act of 1965.

PART Xv. DEPARTMENT OF JUSTICE

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
Restitution for sbi drug lab analyses
SECTION 15.1.(a)  G.S. 90‑95.3(b) reads as rewritten:
"(b)	When any person is convicted of an offense under this Article, the court shall order him to make restitution in the sum of one hundred dollars ($100.00) to the State of North Carolina for the expense of analyzing any controlled substance possessed by him or his agent as part of an investigation leading to his conviction, unless the court finds just cause for waiving the restitution required by this subsection. Any funds received under this subsection shall be deposited in the General Fund."
SECTION 15.1.(b)  Part 10 of Article 3 of Chapter 20 is amended by adding a new section to read:
"§ 20-138.6.  Restitution for drug lab analysis.
(a)	This section applies to a person who has been convicted of any of the following offenses:
(1)	G.S. 20-138.1, driving while impaired (DWI).
(2)	G.S. 20-138.2, commercial DWI.
(3)	G.S. 20-138.3, driving while less than 21 years old after consuming alcohol or drugs.
(4)	G.S. 20-138.2A, driving a commercial motor vehicle with an alcohol concentration of greater than 0.00 and less than 0.04, if the person's drivers license was revoked under G.S. 20-17(a)(13).
(5)	G.S. 20-138.2B, driving a school bus, a school activity bus, or a child care vehicle with an alcohol concentration of greater than 0.00, if the person's drivers license was revoked under G.S. 20-17(a)(14).
(b)	When any person is convicted of an offense listed in subsection (a) of this section, the court shall order that person to make restitution in the sum of one hundred dollars ($100.00) to the State of North Carolina for the expense of analyzing any blood or bodily fluid samples as part of the investigation leading to that person's conviction, unless the court finds just cause for waiving the restitution required by this section."
SECTION 15.1.(c)  This section becomes effective January 1, 2003.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
NO‑CALL REGISTRY AUTHORIZATION
SECTION 15.2.(a)  The Department of Justice may use funds available to the Department up to one million dollars ($1,000,000) during the 2002‑2003 fiscal year to establish and implement a no‑call registry to stop unwanted telemarketing calls and to increase protections for consumers in transactions initiated by telemarketers.  These funds shall also be used to develop programs to protect citizens from improper electronic invasions of privacy.
SECTION 15.2.(b)  This section becomes effective only when legislation authorizing the Department of Justice to establish and implement a no‑call registry becomes law.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
REMOVE EXEMPTIONS FROM FINGERPRINT CHARGE
SECTION 15.3.  G.S. 114‑19.1 reads as rewritten:
"§ 114‑19.1.  Criminal history background investigations; fees.
(a)	When the Department of Justice determines that any person is entitled by law to receive information, including criminal records, from the State Bureau of Investigation, for any purpose other than the administration of criminal justice, the State Bureau of Investigation shall charge the recipient of such information a reasonable fee for retrieving such information. The fee authorized by this section shall not exceed the actual cost of locating, editing, researching and retrieving the information, and may be budgeted for the support of the State Bureau of Investigation.
(b)	As used in this section, "administration of criminal justice" means the performance of any of the following activities: the detection, apprehension, detention, pretrial release, post‑trial release, prosecution, adjudication, correctional supervision, or rehabilitation of persons suspected of, accused of or convicted of a criminal offense. The term also includes screening for suitability for employment, appointment or retention of a person as a law enforcement or criminal justice officer, or for suitability for appointment of a person who must be appointed or confirmed by the General Assembly, the Senate, or the House of Representatives.
(c)	In providing criminal history record checks, the Department of Justice shall process requests in the following priority order:
(1)	Administration of criminal justice record checks,
(2)	Mandatory noncriminal justice criminal history record checks,
(3)	Voluntary noncriminal justice criminal history record checks.
(d)	Nothing in this section shall be construed as enlarging any right to receive any record of the State Bureau of Investigation. Such rights are and shall be controlled by G.S. 114‑15, G.S. 114‑19, G.S. 120‑19.4A, and other applicable statutes."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
DENR REIMBURSE DEPARTMENT OF JUSTICE
SECTION 15.4.  From funds available to the Department of Environment and Natural Resources, the sum of two hundred fifty thousand dollars ($250,000) for the 2002‑2003 fiscal year shall be transferred to the Department of Justice for the costs of legal services performed by attorneys and support staff during the 2001‑2003 biennium.  This transfer shall be made quarterly in the amount of sixty‑two thousand five hundred dollars ($62,500) per quarter.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
INSURANCE REGULATORY FUND REIMBURSEMENT
SECTION 15.5.  G.S. 58‑6‑25(d) reads as rewritten:
"(d)	Use of Proceeds. – The Insurance Regulatory Fund is created in the State treasury, under the control of the Office of State Budget and Management. The proceeds of the charge levied in this section and all fees collected under Articles 69 through 71 of this Chapter and under Articles 9 and 9C of Chapter 143 of the General Statutes shall be credited to the Fund. The Fund shall be placed in an interest‑bearing account and any interest or other income derived from the Fund shall be credited to the Fund. Moneys in the Fund may be spent only pursuant to appropriation by the General Assembly and in accordance with the line item budget enacted by the General Assembly. The Fund is subject to the provisions of the Executive Budget Act, except that no unexpended surplus of the Fund shall revert to the General Fund. All money credited to the Fund shall be used to reimburse the General Fund for the following:
(1)	Money appropriated to the Department of Insurance to pay its expenses incurred in regulating the insurance industry and other industries in this State.
(2)	Money appropriated to State agencies to pay the expenses incurred in regulating the insurance industry, in certifying statewide data processors under Article 11A of Chapter 131E of the General Statutes, and in purchasing reports of patient data from statewide data processors certified under that Article.
(3)	Money appropriated to the Department of Revenue to pay the expenses incurred in collecting and administering the taxes on insurance companies levied in Article 8B of Chapter 105 of the General Statutes.
(4)	Money appropriated for the office of Managed Care Patient Assistance Program established under G.S. 143‑730 to pay the actual costs of administering the program.
(5)	Money appropriated to the Department of Insurance for the implementation and administration of independent external review procedures required by Part 4 of Article 50 of this Chapter.
(6)	Money appropriated to the Department of Justice to pay its expenses incurred in representing the Department of Insurance in its regulation of the insurance industry and other related programs and industries in this State that fall under the jurisdiction of the Department of Insurance."

PART Xvi.	DEPARTMENT OF JUVENILE JUSTICE AND DELINQUENCY PREVENTION

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
Use of Funds for Youth Development Center Beds
SECTION 16.1.(a)  The Department of Juvenile Justice and Delinquency Prevention may use funds available during the 2002‑2003 fiscal year to establish new Youth Development Center beds and may convert one of the 50‑bed modular camps in the Eckerd Wilderness Camp Program for use as a Youth Development Center, as defined in G.S. 7B‑1501.  Any conversion shall be effectuated with existing contract funds.
SECTION 16.1.(b)   The Department shall consult with the Joint Legislative Commission on Governmental Operations and the Corrections, Crime Control, and Juvenile Justice Oversight Committee prior to:
(1)	Converting any Eckerd Wilderness Camp beds to secure confinement beds during the 2002‑2003 fiscal year; or
(2)	Establishing bed capacity greater than 730 beds, including beds converted at Eckerd Wilderness Camps, during the 2002‑2003 fiscal year.
The report shall include the sources of funding for any additional beds.

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
Funding of Teen Court Programs
SECTION 16.2.(a)  Teen court programs may apply for and receive grants from local Juvenile Crime Prevention Councils pursuant to Article 12 of Chapter 143B of the General Statutes.
SECTION 16.2.(b)  G.S. 143B‑520(b) reads as rewritten:
"(b)	Every teen court program that receives funds from Juvenile Crime Prevention Councils shall comply with rules and reporting requirements of the Department of Juvenile Justice and Delinquency Prevention. "

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
COMMUNITIES IN SCHOOLS REDUCTIONS
SECTION 16.3.  The General Fund appropriation to the Department of Juvenile Justice and Delinquency Prevention for Communities in Schools of North Carolina, Inc., is reduced by the sum of ninety thousand dollars ($90,000) for each year of the 2002‑2003 fiscal year. This reduction in funding shall be accomplished by reducing expenditures at the State office and not through reductions in funding to individual sites.

Requested by:	Senators Thomas, Wellons, Ballance
FUNDING OF ECKERD WILDERNESS CAMP
SECTION 16.4.  For each youth admitted to the Eckerd Wilderness Camp program from an area mental health authority or a local education agency, the admitting authority or agency shall pay the costs associated with the support and treatment of that youth in the program.

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
STATE FUNDS MAY BE USED AS FEDERAL MATCHING FUNDS
SECTION 16.5.  Section 24.4 of S.L. 2001‑424 reads as rewritten:
"SECTION 24.4. Funds appropriated in this act to the Department of Juvenile Justice and Delinquency Prevention for the 2002-2003 fiscal year may be used as matching funds for the Juvenile Accountability Incentive Block Grants. If North Carolina receives Juvenile Accountability Incentive Block Grants, or a notice of funds to be awarded, the Office of State Budget and Management and the Governor's Crime Commission shall consult with the Department of Juvenile Justice and Delinquency Prevention regarding the criteria for awarding federal funds. The Office of State Budget and Management, the Governor's Crime Commission, and the Department of Juvenile Justice and Delinquency Prevention shall report to the Appropriations Committees of the Senate and House of Representatives and the Joint Legislative Commission on Governmental Operations prior to allocation of the federal funds. The report shall identify the amount of funds to be received for the  2002-2003 fiscal year, the amount of funds anticipated for the 2003-2004 fiscal year, and the allocation of funds by program and purpose."

PART Xvii. DEPARTMENT OF CORRECTION

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
aLL countIES transferrING SAFEKEEPERS to The department of correction TO REIMBURSE DEPARTMENT REGARDLESS OF SAFEKEEPERS' RESIDENCY
SECTION 17.1.  G.S. 162‑39(c) reads as rewritten:
"(c)	The sheriff of the county from which the prisoner is removed shall be responsible for conveying the prisoner to the jail or prison unit where he is to be held, and for returning him to the common jail of the county from which he was transferred. The return shall be made at the expiration of the time designated in the court order directing the transfer unless the judge, by appropriate order, shall direct otherwise. The sheriff or keeper of the jail of the county designated in the court order, or the officer in charge of the prison unit designated by the Secretary of Correction, shall receive and release custody of the prisoner in accordance with the terms of the court order. If a prisoner is transferred to a unit of the State prison system, the county from which the prisoner is transferred shall pay the Department of Correction for maintaining the prisoner for the time designated by the court at the per day, per inmate rate at which the Department of Correction pays a local jail for maintaining a prisoner. The county shall also pay the Department of Correction for the costs of extraordinary medical care incurred while the prisoner was in the custody of the Department of Correction, defined as follows:
(1)	Medical expenses incurred as a result of providing health care to a prisoner as an inpatient (hospitalized);
(2)	Other medical expenses when the total cost exceeds thirty‑five dollars ($35.00) per occurrence or illness as a result of providing health care to a prisoner as an outpatient (nonhospitalized); and
(3)	Cost of replacement of eyeglasses and dental prosthetic devices if those eyeglasses or devices are broken while the prisoner is incarcerated, provided the prisoner was using the eyeglasses or devices at the time of his commitment and then only if prior written consent of the county is obtained by the Department.
 If the prisoner is transferred to a jail in some other county, the county from which the prisoner is transferred shall pay to the county receiving the prisoner in its jail the actual cost of maintaining the prisoner for the time designated by the court. Counties are hereby authorized to enter into contractual agreements with other counties to provide jail facilities to which prisoners may be transferred as deemed necessary under this section.
Whenever prisoners are arrested in such numbers that county jail facilities are insufficient and inadequate for the safekeeping of such prisoners, the resident judge of the superior court or any superior or district court judge holding court in the district may order the prisoners transferred to a unit of the State Department of Correction designated by the Secretary of Correction or his authorized representative, where the prisoners may be held for such length of time as the judge may direct, such detention to be in cell separate from that used for imprisonment of persons already convicted of crimes, except when admission to an inpatient prison medical or mental health unit is required to provide services deemed necessary by a prison health care clinician. The sheriff of the county from which the prisoners are removed shall be responsible for conveying the prisoners to the prison unit or units where they are to be held, and for returning them to the common jail of the county from which they were transferred. However, if due to the number of prisoners to be conveyed the sheriff is unable to provide adequate transportation, he may request the assistance of the Department of Correction, and the Department of Correction is hereby authorized and directed to cooperate with the sheriff and provide whatever assistance is available, both in vehicles and manpower, to accomplish the conveying of the prisoners to and from the county to the designated prison unit or units. The officer in charge of the prison unit designated by the Secretary of Correction or his authorized representative shall receive and release the custody of the prisoners in accordance with the terms of the court order. The county from which the prisoners are transferred shall pay to the Department of Correction the actual cost of transporting the prisoners and the cost of maintaining the prisoners at the per day, per inmate rate at which the Department of Correction pays a local jail for maintaining a prisoner, provided, however, that a county is not required to reimburse the State for transporting or maintaining a prisoner who was a resident of another state or county at the time he was arrested. However, if the county commissioners shall certify to the Governor that the county is unable to pay the bill submitted by the State Department of Correction to the county for the services rendered, either in whole or in part, the Governor may recommend to the Council of State that the State of North Carolina assume and pay, in whole or in part, the obligation of the county to the Department of Correction, and upon approval of the Council of State the amount so approved shall be paid from Contingency and Emergency Fund to the Department of Correction.
When, due to an emergency, it is not feasible to obtain from a judge of the superior or district court a prior order of transfer, the sheriff of the county and the Department of Correction may exercise the authority hereinafter conferred; provided, however, that the sheriff shall, as soon as possible after the emergency, obtain an order from the judge authorizing the prisoners to be held in the designated place of confinement for such period as the judge may direct. All provisions of this subsection shall be applicable to municipalities whenever prisoners are arrested in such numbers that the municipal jail facilities and the county jail facilities are insufficient and inadequate for the safekeeping of the prisoners. The chief of police is hereby authorized to exercise the authority herein conferred upon the sheriff, and the municipality shall be liable for the cost of transporting and maintaining the prisoners to the same extent as a county would be unless action is taken by the Governor and Council of State as herein provided for counties which are unable to pay such costs."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
REIMBURSE COUNTIES FOR HOUSING AND EXTRAORDINARY MEDICAL COSTS FOR INMATES, PAROLEES, AND POST‑RELEASE SUPERVISEES AWAITING TRANSFER TO STATE PRISON SYSTEM
SECTION 17.2.  Section 25.4 of S.L. 2001‑424 reads as rewritten:
"SECTION 25.4. The Department of Correction may use funds appropriated to the Department for the  2001-2003 biennium to pay the sum of forty dollars ($40.00) per day as reimbursement to counties for the cost of housing convicted inmates, parolees, and post‑release supervisees awaiting transfer to the State prison system, as provided in G.S. 148‑29. The Department shall report by December 1 and May 1 of each year to the Joint Legislative Commission on Governmental Operations, the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee, the Chairs of the Senate and House of Representatives Appropriations Committees, and the Chairs of the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety on the expenditure of funds to reimburse counties for prisoners awaiting transfer and on its progress in reducing the jail backlog."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
REPORT ON INMATES ELIGIBLE FOR PAROLE
SECTION 17.3.  Section 25.21 of S.L. 2001‑424 reads as rewritten:
"SECTION 25.21. The Post‑Release Supervision and Parole Commission shall  report by January 15 and July 15 of each year to the Senate and House of Representatives Appropriations Subcommittees on Justice and Public Safety and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on inmates eligible for parole. These reports shall include at least the following:
(1)	The total number of Fair Sentencing and Pre‑Fair Sentencing inmates that were parole‑eligible during the previous quarter and the total number of those inmates that were paroled. The report should group these inmates by offense  type, custody classification, and type of parole;
	(2)	The average time served, by offense class, of Fair Sentencing and Pre‑Fair Sentencing inmates compared to inmates sentenced under Structured Sentencing; and
(3)	The projected number of parole‑eligible inmates to be paroled or released by the end of the  2002-2003 fiscal year and by the end of the  2003-2004 fiscal year."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
USE OF LAPSED SALARIES for shift pay for security staff
SECTION 17.4.  During the 2002‑2003 fiscal year only, the Department of Correction shall not use lapsed salaries for the payment to security staff of (i) special premium holiday pay that exceeds standard holiday pay or (ii) special supplemental weekend shift premium pay that exceeds standard weekend shift pay. The Department shall also continue to take steps to hold down the cost of shift pay by converting prisons from three eight‑hour shifts to two twelve‑hour shifts whenever practical.
The Department of Correction shall report to the Senate and House Appropriations Subcommittees on Justice and Public Safety by April 1, 2003, on its progress in converting prison work shifts from eight hours to twelve hours. The report shall include information on savings generated to date and potential future savings, as well as any changes in employee morale and leave usage, as a result of converting to twelve‑hour shifts.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
DEPARTMENT OF CORRECTION SECURITY STAFFING FORMULAS
SECTION 17.5.(a)  The Department of Correction shall conduct security staffing post‑audits of each prison at least biannually, the first such audit to be completed during the 2002‑2003 fiscal year. The initial post‑audit shall be conducted jointly by Department staff and a consultant, external to the Department, and shall include analysis of the staffing levels assigned for supervision of correctional officers.
SECTION 17.5.(b)  The Department of Correction shall update the security staffing relief formula biannually, the first update to be completed during the 2002‑2003 fiscal year. Each update shall include a review of all annual training requirements for security staff to determine which of these requirements should be mandatory and the appropriate frequency of the training.
SECTION 17.5.(c)  The Department of Correction shall report the results of the initial security staffing post‑audits and relief formula update to the Senate and House Appropriations Subcommittees on Justice and Public Safety by April 1, 2003.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
COMMUNITY WORK CREWS
SECTION 17.6.(a)  The Department of Correction shall implement a reduction in inmate community work crews systemwide, but work crews shall not be reduced at any locations that have fewer than three work crews. 
The Department of Correction may use up to 39 work crews for Department of Transportation litter control projects. The Department of Transportation shall transfer at least one million three hundred thousand dollars ($1,300,000) from the Highway Fund to the Department of Correction during the 2002‑2003 fiscal year to cover the cost of those work crews. Should the two departments determine that the actual cost of operating 39 work crews exceeds that amount, the Department of Transportation shall transfer an additional amount as agreed upon by the two departments and the Office of State Budget and Management.
SECTION 17.6.(b)  The Department of Correction shall identify locations where the number of inmate work crews is being reduced or diverted to perform litter control for the Department of Transportation and, to the extent possible, arrange for community service work program placements so that the affected work projects for State and local government can be maintained. The Department shall report by March 1, 2003, to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on all projects formerly performed by inmate work crews that have been continued through the community service work program.
SECTION 17.6.(c)  The Department of Correction shall identify all inmate labor supplied to public agencies for which the Department does not receive reimbursement for the costs of the labor and the supervision of the labor. The Department shall report by March 1, 2003, to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the type of labor provided, the number of security positions assigned for that labor, and the actual costs of providing the labor and supervision. The report shall also identify alternative methods for charging public agencies for the costs of inmate labor and the supervision of that labor.

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
SUBSTANCE ABUSE PROGRAMS
SECTION 17.7.  G.S. 143B‑262.1 reads as rewritten:
"§ 143B‑262.1.  Department of Correction – Substance Abuse Program.
(a)	The Substance Abuse Program established by subsection (d) of § 143B‑262 shall be offered in a  correctional facility, or a portion of a  correctional facility that is self‑contained, so that the residential and program space is separate from any other programs or inmate housing, and shall be operational by January 1, 1988, at such unit as the Secretary may designate.
(b)	An Assistant Secretary for Substance Abuse shall be employed and shall report directly to the Office of the Secretary of Correction.  The duties of the Assistant Secretary shall include the following:
(1)	Administer and coordinate all substance abuse programs, grants, contracts, and related functions in the Department of Correction;
(2)	Develop and maintain working relationships and agreements with agencies and organizations that will assist in developing and operating a Substance Abuse Program in the Department of Correction;
(3)	Develop and coordinate the use of volunteers in the Substance Abuse Program;
(4)	Develop and present training programs related to substance abuse for employees and others at all levels in the agency;
(5)	Develop programs that provide effective treatment for inmates, probationers, and parolees with substance abuse problems;
(6)	Maintain contact with key leaders in the substance abuse field and active supporters of the Correction Program;
(7)	Supervise directly the directors of treatment units, specialized personnel, and programs that exist or may be developed in the Department of Correction; and
(8)	Develop employee assistance programs for employees with substance abuse problems.
										(e)	In the unit there shall be a unit superintendent under the Division of Prisons and other custodial, administrative, and support staff as required for a medium custody facility for approximately 100 inmates. The unit superintendent shall be responsible for all matters pertaining to custody and administration of the unit. The Assistant Secretary shall designate an employee to administer the inpatient treatment program under the direction of the Assistant Secretary for Substance Abuse.
(f)	Extensive use may be made of inmates working in the role of ancillary staff, peer counselors, role models, or group leaders as the program manager determines. Additional resource people who may be required for specialized treatment activities, presentations, or group work may be employed on a fee or contractual basis.
	(h)	Admission priorities shall be established as follows:
(1)	Court recommendation.
(2)	Evaluation and referral from reception and diagnostic centers.
(3)	General staff referral.
(4)	Self‑referral.
The Program shall include extensive follow‑up after the period of intensive treatment. There will be specific plans for each departing inmate for follow‑up, including active involvement with Alcoholics Anonymous, community resources, and personal sponsorship."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
USE OF CLOSED PRISON FACILITIES
SECTION 17.8.  Section 25.5 of S.L. 2001‑424 reads as rewritten:
"SECTION 25.5. In conjunction with the closing of prison facilities, including small expensive prison units recommended for consolidation by the Government Performance Audit Committee, the Department of Correction shall consult with the county or municipality in which the unit is located, with the elected State and local officials, and with State agencies about the possibility of converting that unit to other use. The Department may also consult with any private for‑profit or nonprofit firm about the possibility of converting the unit to other use. In developing a proposal for future use of each unit, the Department shall give priority to converting the unit to other criminal justice use. Consistent with existing law and the future needs of the Department of Correction, the State may provide for the transfer or the lease of any of these units to counties, municipalities, State agencies, or private firms wishing to convert them to other use. The Department of Correction may also consider converting some of the units recommended for closing from one security custody level to another, where that conversion would be cost‑effective. A prison unit under lease to a county pursuant to the provisions of this section for use as a jail is exempt for the period of the lease from any of the minimum standards adopted by the Secretary of Health and Human Services pursuant to G.S. 153A‑221 for the housing of adult prisoners that would subject the unit to greater standards than those required of a unit of the State prison system.
Prior to any transfer or lease of these units, the Department of Correction shall report on the terms of the proposed transfer or lease to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee. The Department of Correction shall also provide annual summary reports to the Joint Legislative Commission on Governmental Operations and the Joint Legislative Corrections, Crime Control, and Juvenile Justice Oversight Committee on the conversion of these units to other use and on all leases or transfers entered into pursuant to this section."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
MEDICAL BUDGET FOR PRESCRIPTION DRUGS
SECTION 17.9.  Section 25.6(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 25.6.(b)  Notwithstanding the provisions of G.S. 143‑23(a2), the Department of Correction may use funds available during the 2001-2003 biennium for the purchase of prescription drugs for inmates if expenditures are projected to exceed the Department's inmate medical continuation budget for prescription drugs. The Department shall consult with the Joint Legislative Commission on Governmental Operations prior to exceeding the continuation budget amount.
The Department of Administration, Purchase and Contract Division, and the Department of Correction shall review the current statewide contract for purchase of prescription drugs as it applies to the Department of Correction's purchases for inmates to determine if the Department is receiving the lowest rate available and to determine whether the Department should be authorized to issue a request for proposals for a separate vendor or purchasing consortium for the provision of prescription drugs for inmates. The Departments shall report on their findings to the Joint Legislative Commission on Governmental Operations by February 1, 2002."

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
ELECTRONIC MONITORING COSTS
SECTION 17.10.(a)  Article 1 of Chapter 148 of the General Statutes is amended by adding a new section to read:
"§ 148-10.3. Electronic monitoring costs.
Personnel, equipment, and other costs of providing electronic monitoring of pretrial or sentenced offenders shall be reimbursed on a cost basis to the Department of Correction by the State or local agency requesting the service."
SECTION 17.10.(b)  The Department of Correction shall report by March 1, 2003, to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on efforts to increase the use of electronic monitoring of sentenced offenders in the community.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
COLLECTION OF OFFENDER FEES
SECTION 17.11.  The Department of Correction and the Judicial Department shall jointly develop a plan to improve the collection rate of offender fees for probationers and for nonprobationers sentenced to community service. The plan should address improving both the rate at which offenders are levied fees and the rate at which those offenders satisfy their obligations. The plan shall address steps to improve the overall collection rate from thirty‑seven percent (37%) to forty percent (40%) during the 2002‑2003 fiscal year and to forty‑five percent (45%) during the 2003‑2004 fiscal year.
The two departments shall report by February 1, 2003 to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the success of their efforts to improve these collection rates. The report shall also include any recommendations for statutory changes aimed at improving the collection rates.

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
MOBILE MEDICAL OPERATING ROOM
SECTION 17.12.  The Department of Correction shall continue the contract for a mobile medical operating room at Central Prison for the 2002‑2003 fiscal year at a reduced fixed rate that more clearly reflects the usage. However, the Department shall use the mobile unit for additional procedures, as authorized by the terms of the agreement, whenever the Department's Utilization Review Team determines that (i) a specific procedure can be performed at a cost below that charged by a public or private hospital; and (ii) there is no compelling medical reason for performing the procedure in a hospital instead of using the mobile medical unit.
The Department shall also study the use of this mobile operating room and report by March 1, 2003, to the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety. The report shall recommend whether the mobile unit should be continued, eliminated, or expanded in terms of capacity of the current unit and the potential for establishing an additional mobile unit. The report shall also include information on the number and type of procedures performed over and above the fixed rate contract and the savings generated.

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
CRIMINAL JUSTICE PARTNERSHIP PROGRAM
SECTION 17.13.(a)  Notwithstanding the provisions of G.S. 143B‑273.16, Caswell, Person, and Union Counties shall not receive implementation funding for the Criminal Justice Partnership Program for the 2002‑2003 fiscal year. However, those counties will be eligible to reapply for funding in future years.
SECTION 17.13.(b)  It is the intent of the General Assembly that State Criminal Justice Partnership Program funds not be used to fund case manager positions when those services can be reasonably provided by Division of Community Corrections personnel or by the Treatment Alternatives to Street Crime (TASC) program in the Department of Health and Human Services. The Division of Community Corrections shall identify at least the sum of eight hundred fifty‑two thousand dollars ($852,000) in cost savings by eliminating funding for personnel in these cases and shall reduce the amount of implementation grant funding for those affected counties. These recommended modifications shall be first approved by the State Criminal Justice Partnership Advisory Board. The Division of Community Corrections shall report to the Chairs of the Senate and House Appropriations Committees and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on the specific adjustments within 45 days of the enactment of the budget for the 2002‑2003 fiscal year.
SECTION 17.13.(c)  Funding for implementation grants shall be reduced an additional sum of seven hundred five thousand eight hundred seventy dollars ($705,870) by reducing funding for contractual services evenly in all participating counties.
SECTION 17.13.(d)  For the 2002‑2003 fiscal year only, funds provided to the Criminal Justice Partnership Program for distribution as implementation grants are reduced by an additional sum of one million three hundred fifty thousand dollars 
($1, 350,000).

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
CONVERSION OF CONTRACTED MEDICAL POSITIONS
SECTION 17.14.(a)  The Department of Correction may convert contract medical positions to permanent State medical positions at individual correctional facilities if the Department can document that the total savings generated will exceed the total cost of the new positions for each facility. Where practical, the Department shall convert contract positions to permanent positions by using existing vacancies in medical positions.
SECTION 17.14.(b)  The Department of Correction shall report by October 1, 2002, to the Joint Legislative Commission on Governmental Operations and the Chairs of the Senate and House Appropriations Subcommittees on Justice and Public Safety on all conversions made pursuant to this section, by type of position and location, and on the savings generated at each correctional facility.

Requested by:	Senators Thomas, Wellons, Ballance, Plyler, Odom, Lee
REDUCE SUMMIT HOUSE APPROPRIATION
SECTION 17.15.  Subsection (a) of Section 25.14 of S.L. 2001‑424 reads as rewritten:
"SECTION 25.14.(a)  The General Fund appropriation to the Department of Correction for Summit House, Inc., is reduced by the sum of one hundred thirty‑nine thousand six hundred fifty dollars ($139,650) for  the 2001-2002 fiscal year and by the sum of two hundred sixty-three thousand three hundred dollars ($263,300) for the 2002-2003 fiscal year. The ten percent (10%) reduction in funding for the 2001-2002 fiscal year shall be accomplished by reducing expenditures at the State office and not through reductions in funding to individual sites. The additional ten percent (10%) reduction for the 2002-2003 fiscal year shall be accomplished by reducing State funding for the State office by at least sixteen and seven-tenths percent (16.7%) in order to minimize the impact on the individual sites.
The Summit House Management Team shall continue to explore ways to reduce the use of State funds at the State office, including consideration of co-locating the State office with one of the local programs and contracting for financial services in lieu of a full-time staff. As of May 1, 2003, no State funds shall be used to support the State office."

PART XViii. DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
ELIMINATE STATE BOXING COMMISSION
SECTION 18.1.(a)  Article 68 of Chapter 143 of the General Statutes is repealed.
SECTION 18.1.(b)  G.S. 90‑18.3 reads as rewritten:
"§ 90‑18.3.  Physical examination by nurse practitioners and physician assistants.
(a)	Whenever a statute or State agency rule requires that a physical examination shall be conducted by a physician, the examination may be conducted and the form signed by a nurse practitioner or a physician's assistant, and a physician need not be present. Nothing in this section shall otherwise change the scope of practice of a nurse practitioner or a physician's assistant, as defined by G.S. 90‑18.1 and G.S. 90‑18.2, respectively.
(b)	This section shall not apply to physical examinations conducted pursuant to G.S. 1A‑1, Rule 35; G.S. 15B‑12; or G.S. 90‑14; unless those statutes or rules are amended to make the provisions of this section applicable."

Requested by:	Senators Thomas, Wellons, Ballance, Albertson, Plyler, Odom, Lee 
TARHEEL CHALLENGE matching funds
SECTION 18.2.  The North Carolina National Guard shall identify alternative sources of funding, including local and private funds, to be used to meet the forty percent (40%) match requirement for federal funds. 

Requested by:	Senators Thomas, Wellons, Plyler, Odom, Lee
PLAN OF REORGANIZATION FOR CAMP BUTNER
SECTION 18.3.  It is the intent of the General Assembly to transfer the State's obligation of providing public safety services to Camp Butner, including the State and federal institutions and entities located at Camp Butner, and to transfer funds sufficient to provide fire and safety protection to the State institutions at Camp Butner, effective June 30, 2003.  The Office of the Governor shall consult with the Department of Crime Control and Public Safety, the Department of Health and Human Services, the Department of Correction, the Department of Juvenile Justice and Delinquency Prevention, the Department of Agriculture and Consumer Services, North Carolina State University, the Department of Public Instruction, and the Community Colleges System to develop a plan of reorganization to transfer the State's authority, powers, duties, and contractual obligations of providing public safety services, including fire and police or safety protection, to Camp Butner and to the State and federal institutions and entities located at Camp Butner to either the county in which the real property is located or an incorporated municipality.  In developing the plan of reorganization, the Office of the Governor shall also consider how fire and safety protections for the institutions located in Morganton, Burke County, and in Goldsboro, Wayne County, are funded.
On or before October 1, 2002, the Governor shall submit the plan of reorganization, including any legislative proposals and funding requirements that are required to implement the plan of reorganization, to the Chairs of the Senate Appropriations Committee on Justice and Public Safety, the Chairs of the House of Representatives Appropriations Subcommittee on Justice and Public Safety, the Fiscal Research Division, and the Corrections, Crime Control, and Juvenile Justice Oversight Committee. The plan of reorganization shall become effective June 30, 2003, unless the General Assembly disapproves of the plan.

PART xix. DEPARTMENT OF ADMINISTRATION

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
Expand definition of HUB Business
SECTION 19.1.  G.S. 143‑128.2(g) reads as rewritten:
"(g)	As used in this section:
(1)	The term 'minority business' means a  business which either meets the tests of subparagraphs a. and b. of this subdivision, or meets the test of subparagraph c. of this subdivision:
a.	In which at least fifty‑one percent (51%) is owned by one or more minority persons or socially and economically disadvantaged individuals, or in the case of a corporation, in which at least fifty‑one percent (51%) of the stock is owned by one or more minority persons or socially and economically disadvantaged individuals.b.	Of which the management and daily business operations are controlled by one or more of the minority persons or socially and economically disadvantaged individuals who own it.
c.	Which is a 'HUBZone small business concern' as defined by the Small Business Administration.
(2)	The term 'minority person' means a person who is a citizen or lawful permanent resident of the United States and who is:
a.	Black, that is, a person having origins in any of the black racial groups in Africa;
b.	Hispanic, that is, a person of Spanish or Portuguese culture with origins in Mexico, South or Central America, or the Caribbean Islands, regardless of race;
c.	Asian American, that is, a person having origins in any of the original peoples of the Far East, Southeast Asia and Asia, the Indian subcontinent, or the Pacific Islands;
d.	American Indian, that is, a person having origins in any of the original Indian peoples of North America; or
e.	Female.
(3)	The term 'socially and economically disadvantaged individual' means the same as defined in 15 U.S.C. 637."

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
increase efficiency of Mail Service Center
SECTION 19.2.  G.S. 143‑341(8)g. reads as rewritten:
"g.	To establish and operate a central mailing system for all State agencies, and in connection therewith and in the discretion of the Secretary, to make application for and procure a post‑office substation for that purpose, and to do all things necessary in connection with the maintenance of the central mailing system. The Secretary may allocate and charge against the respective departments and agencies their proportionate parts of the cost of the maintenance of the central mailing system. The Secretary shall develop a plan for the efficient operation of the center that meets the needs of State agencies and ensures timely delivery of mail, and shall present that plan to the Office of State Budget and Management and the General Assembly no later than the convening date of the 2003 General Assembly."

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
Scholarships for Children of War Veterans AmendmenTS
SECTION 19.3.  Article 4 of Chapter 165 of the General Statutes reads as rewritten:
"Article 4.
"Scholarships for Children of War Veterans.
"§ 165‑19.  Purpose.
In appreciation for the service and sacrifices of North Carolina's war veterans and as evidence of this State's concern for their children, there is hereby continued a revised program of scholarships for said children as set forth in this Article.
"§ 165‑20.  Definitions.
As used in this Article the terms defined in this section shall have the following meaning:
(1)	"Active federal service" means full‑time duty in the armed forces other than active duty for training; however, if disability or death occurs while on active duty for training (i) as a direct result of armed conflict or (ii) while engaged in extra‑hazardous service, including such service under conditions simulating war, such active duty for training shall be considered as active federal service.
(2)	"Armed forces" means the army, navy, marine corps, air force and coast guard, including their reserve components.
(3)	"Child" means a person: (i) under 26 years of age at the time of application for such scholarship,  (ii) who is a domiciliary of North Carolina and is a resident of North Carolina when applying for a scholarship, and  (iii)  who has completed high school or its equivalent, prior to receipt of a scholarship as may be awarded under this Article, and (iv) who has complied with the requirements of the Selective Service System, if applicable, and (v) who further meets one of the following requirements:
a.	A person whose veteran parent was a legal resident of North Carolina at the time of said veteran's entrance into that period of service in the armed forces during which eligibility is established under G.S. 165‑22.
b.	A veteran's child who was born in North Carolina and has  been a resident of North Carolina continuously since birth.  
c.	A person meeting either of the requirements set forth in subdivision (3)a or b above, and who was legally adopted by the veteran prior to said person's reaching the age of 15 years.
(4)	"Period of war" and "wartime" shall mean any of the periods or circumstances as defined below:
a.	World War I, meaning (i) the period beginning on April 6, 1917 and ending on November 11, 1918, and (ii) in the case of a veteran who served with the United States armed forces in Russia, the period beginning on April 6, 1917 and ending on April 1, 1920.
b.	World War II, meaning the period beginning on December 7, 1941 and ending on December 31, 1946.
c.	Korean Conflict, meaning the period beginning on June 27, 1950 and ending on January 31, 1955.
d.	Vietnam era, meaning the period beginning on August 5, 1964, and ending on May 7, 1975.
d1.	Persian Gulf War, meaning the period beginning on August 2, 1990, and ending on the date prescribed by Presidential proclamation or concurrent resolution of the United States Congress.
e.	Any period of service in the armed forces during which the veteran parent of an applicant for a scholarship under this Article suffered death or disability (i) as a direct result of armed conflict or (ii) while engaged in extra‑hazardous service, including such service under conditions simulating war.
(5)	"Private educational institution" means any junior college, senior college or university which is operated and governed by private interests not under the control of the federal, State or any local government, which is located within the State of North Carolina, which does not operate for profit, whose curriculum is primarily directed toward the awarding of associate, baccalaureate or graduate degrees, which agrees to the applicable administration and funding provisions of G.S. 165‑22.1, of this Article, and which is otherwise approved by the State Board of Veterans Affairs.
(6)	"State educational institution" means any educational institution of higher learning which is owned and operated by the State of North Carolina, or any community college operated under the provisions of Chapter 115A and Article 3 of Chapter 116 of the General Statutes of North Carolina, or the college program of the North Carolina School of the Arts, or any technical institute operated under the provisions of Chapter 115A of the General Statutes of North Carolina.
(7)	"Veteran" means a person who served as a member of the armed forces of the United States in active federal service during a period of war and who was separated from the armed forces under conditions other than dishonorable. A person who was separated from the armed forces under conditions other than dishonorable and whose death or disability was incurred (i) as a direct result of armed conflict or (ii) while engaged in extra‑hazardous service, including such service under conditions simulating war, shall also be deemed a "veteran" and such death or disability shall be considered wartime service‑connected.
"§ 165‑21.  Scholarship.
	A scholarship granted pursuant to this Article shall consist of the following benefits in either a State or private educational institution:
(1)	With respect to State educational institutions, unless expressly limited elsewhere in this Article, a scholarship shall consist of:
a.	Tuition,
b.	A reasonable board allowance,
c.	A reasonable room allowance,
d.	Matriculation and other institutional fees required to be paid as a condition to remaining in said institution and pursuing the course of study selected, excluding charges or fees for books, supplies, tools and clothing.
(2)	With respect to private educational institutions, a scholarship shall consist of a monetary allowance as prescribed in G.S. 165‑22.1(d).
(3)	Only one scholarship may be granted pursuant to this Article with respect to each child and it shall not extend for a longer period than four academic years, which years, however, need not be consecutive.
(4)	No educational assistance shall be afforded a child under this Article after the end of an eight-year period beginning on the date the scholarship is first awarded. Those persons who have been granted a scholarship under this Article prior to the effective date of this act shall be entitled to the remainder of their period of scholarship eligibility if used prior to August 1, 2010. Whenever a child is enrolled in an educational institution and the period of entitlement ends while enrolled in a term, quarter or semester, such period shall be extended to the end of such term, quarter or semester, but not beyond the entitlement limitation of four academic years.
	
"§ 165‑22.  Classes or categories of eligibility under which scholarships may be awarded.
A child, as defined in this Article, who falls within the provisions of any eligibility class described below shall, upon proper application be considered for a scholarship, subject to the provisions and limitations set forth for the class under which he is considered:
(1)	Class I‑A: Under this class a scholarship shall be awarded to any child whose veteran parent
a.	Was killed in action or died from wounds or other causes not due to his own willful misconduct while a member of the armed forces during a period of war, or
b.	Has died of service‑connected injuries, wounds, illness or other causes incurred or aggravated during wartime service in the armed forces, as rated by the United States Department of Veterans Affairs.
(2)	Class I‑B: Under this class a limited scholarship providing only those benefits set forth in G.S. 165‑21(1)a and d and 165‑21(2) of this Article, shall be awarded to any child whose veteran parent, at the time the benefits pursuant to this Article are sought to be availed of, is or was at the time of his death receiving compensation for a wartime service‑connected disability of one hundred percent (100%) as rated by the United States Department of Veterans Affairs. Provided, that if the veteran parent of a recipient under this class should die of his wartime service‑connected condition before the recipient shall have utilized all of his scholarship eligibility time, then the North Carolina Department of Administration shall amend the recipient's award from Class I‑B to Class I‑A for the remainder of the recipient's eligibility time. The effective date of such an amended award shall be determined by the Department of Administration, but, in no event shall it predate the date of the veteran parent's death.
(3)	Class II: Under this class a scholarship may be awarded to not more than 100 children yearly, each of whose veteran parent, at the time the benefits pursuant to this Article are sought to be availed of:
a.	Is or was at the time of his death receiving compensation for a wartime service‑connected disability of twenty percent (20%) or more, but less than one hundred percent (100%), as rated by the United States Department of Veterans Affairs, or
	 
b.	Was awarded the Purple Heart for wounds received as a result of an act of any opposing armed force, as a result of an international terrorist attack, or as a result of military operations while serving as part of a peacekeeping force.
(4)	Class III: Under this class a scholarship may be awarded to not more than 100 children yearly, each of whose veteran parent  served in the United States armed forces during a period of war, as specified by G.S. 165-20(4) of this Article, and who does not fall within the provisions of any other eligibility class described in G.S. 165-22(1), (2), (3), nor (5).
		 
(5)	Class IV: Under this class a scholarship as defined in G.S. 165‑21 shall be awarded to any child whose parent, while serving honorably as a member of the armed forces of the United States in active federal service during a period of war, as defined in G.S. 165‑20(4), was listed by the United States government as (i) missing in action, (ii) captured in line of duty by a hostile force, or (iii) forcibly detained or interned in line of duty by a foreign government or power.
"§ 165‑22.1.  Administration and funding.
(a)	The administration of the scholarship program shall be vested in the Department of Administration, and the disbursing and accounting activities required shall be a responsibility of the Department of Administration. The Veterans Affairs Commission shall determine the eligibility of applicants, select the scholarship recipients, establish the effective date of scholarships, and may suspend or revoke scholarships if the said Veterans Affairs Commission finds that the recipient does not comply with the registration requirements of the Selective Service System or does not maintain an adequate academic status, or if the recipient engages in riots, unlawful demonstrations, the seizure of educational buildings, or otherwise engages in disorderly conduct, breaches of the peace or unlawful assemblies. The Department of Administration shall maintain the primary and necessary records, and the Veterans Affairs Commission shall promulgate such rules and regulations not inconsistent with the other provisions of this Article as it deems necessary for the orderly administration of the program. It may require of State or private educational institutions, as defined in this Article, such reports and other information as it may need to carry out the provisions of this Article. The Department of Administration shall disburse scholarship payments for recipients certified eligible by the Department of Administration upon certification of enrollment by the enrolling institution.
(b)	Funds for the support of this program shall be appropriated to the Department of Administration as a reserve for payment of the allocable costs for room, board, tuition, and other charges, and shall be placed in a separate budget code from which disbursements shall be made. In the event the said appropriation for any year is insufficient to pay the full amounts allocable under the provisions of this Article, such supplemental sums as may be necessary shall be allocated from the Contingency and Emergency Fund. The method of disbursing and accounting for funds allocated for payments under the provisions of this section shall be in accordance with those standards and procedures prescribed by the Director of the Budget, pursuant to the Executive Budget Act.
(c)	Allowances for room and board in State educational institutions shall be at such rate as  established by the Secretary of the Department of Administration.
(d)	Scholarship recipients electing to attend a private educational institution shall be granted a monetary allowance for each term or other academic period attended under their respective scholarship awards. All recipients under Class I‑B scholarship shall receive an allowance at one rate, irrespective of course or institution; all recipients under Classes I‑A, II, III and IV shall receive a uniform allowance at a rate higher than for Class I‑B, irrespective of course or institution. The amount of said allowances shall be determined by the Director of the Budget and made known prior to the beginning of each fall quarter or semester; provided that the Director of the Budget may change the allowances at intermediate periods when in his judgment such changes are necessary. Disbursements by the State shall be to the private institution concerned, for credit to the account of each recipient attending said institution. The manner of payment to any private institution shall be as prescribed by the Department of Administration. The participation by any private institution in the program shall be subject to the applicable provisions of this Article and to examination by State auditors of the accounts of scholarship recipients attending or having attended private institutions. The Veterans Affairs Commission may defer making an award or may suspend an award in any private institution which does not comply with the provisions of this Article relating to said institutions.
(e)	Irrespective of other provisions of this Article, the Veterans Affairs Commission may prescribe special procedures for adjusting the accounts of scholarship recipients who for reasons of illness, physical inability to attend class or for other valid reason satisfactory to the Veterans Affairs Commission may withdraw from State or private educational institutions prior to the completion of the term, semester, quarter or other academic period being attended at the time of withdrawal. Such procedures may include, but shall not be limited to, paying the recipient the dollar value of his unused entitlements for the academic period being attended, with a corresponding deduction of this period from his remaining scholarship eligibility time."

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
Regional Office Consolidation Plan
SECTION 19.4.  The Department of Administration, State Property Office, shall identify regional offices established throughout the State in all State agencies and shall develop a plan that provides for the consolidation of the individual regional offices into a central facility in each region, giving consideration to sharing space and utilizing vacant space, and to availability of space in all agencies, including university and community college campuses. The Department shall report its findings and recommendations to the Chairs of the Appropriations Committees of the Senate and House of Representatives and to the Fiscal Research Division by November 1, 2002.

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
Repeal North Carolina Agency for Public Telecommunications
SECTION 19.5.(a)  Part 22 of Article 9 of Chapter 143B of the General Statutes is repealed.
SECTION 19.5.(b)  G.S. 147‑33.91(13) is repealed.

PART xX. OFFICE OF THE STATE AUDITOR

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
audit of smart start partnerships
SECTION 20.1.  G.S. 143B‑168.14(b) reads as rewritten:
"(b)	Each local partnership shall be subject to audit and review by the State Auditor under Article 5A of Chapter 147 of the General Statutes. The State Auditor shall conduct financial and compliance audits of the local partnerships every two years and more frequently as the State Auditor deems appropriate."

PART XxI. DEPARTMENT OF CULTURAL RESOURCES

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
NC Arts Council Limit Use of Consultants
SECTION 21.1.  The North Carolina Arts Council shall limit the use of consultants to evaluate and approve applications for arts and cultural grants for individuals and organizations and shall conduct the grants process with the Division of Arts Council staff.

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
Museum Admission Fee Study
SECTION 21.2.  The Office of State Budget and Management shall study the feasibility of charging an admission fee to the State's museums and other similar facilities open to the public. The Office of State Budget and Management shall conduct the study in consultation with the Fiscal Research Division of the Legislative Services Office. The Office of State Budget and Management shall complete this study and report to the Chairs of the Senate and House of Representatives Appropriations Committees by November 1, 2002.

PART Xxii. DEPARTMENT OF REVENUE

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
Local Sales Tax Administrative Costs
SECTION 22.1.  To the extent the Department of Revenue's nonrecurring costs of implementing and administering Article 44 of Chapter 105 of the General Statutes, as amended, exceed funds available in its budget for the 2002‑2003 fiscal year, the Department may pay the excess cost by withholding funds from collections under Subchapter VIII of Chapter 105 of the General Statutes.

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
DOR Reports on Debt Collection
SECTION 22.2.  G.S. 105‑243.1(f) reads as rewritten:
"(f)	Reports. – The Department must report to the Joint Legislative Commission on Governmental Operations and to the Revenue Laws Study Committee on its efforts to collect tax debts. Reports must be submitted quarterly beginning November 1, 2001, through  June 30, 2005, and semiannually thereafter. Each report must include a breakdown of the amount and age of tax debts collected by collection agencies on contract, the amount and age of tax debts collected by the Department through warning letters, and the amount and age of tax debts otherwise collected by Department personnel. The report must itemize collections by type of tax. Each report must also include a long‑term collection plan, a timeline for implementing each step of the plan, a summary of steps taken since the last report and their results, and any other data requested by the Commission or the Committee."

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
DOR Vacant Positions
SECTION 22.3. The Department of Revenue shall reclassify vacant positions and allocate up to eight hundred fifty‑five thousand forty‑seven dollars ($855,047) in recurring funds for the 2002‑2003 fiscal year, and up to two hundred thousand one hundred dollars ($200,100) in nonrecurring funds for the 2002‑2003 fiscal year as follows:
(1)	To increase staff and provide operating costs in the Criminal Investigations Division to expand fraud investigations. 
(2)	To support the Department of Justice's personnel and operating expenses for legal services related to the expansion of fraud investigations.

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
DOR Debt Collection Funds
SECTION 22.4.  The Department of Revenue may use up to six hundred thousand dollars ($600,000) each fiscal year from the collection assistance fee account created in G.S. 105‑243.1 to be allocated as follows:
(1)	Two hundred thousand dollars ($200,000) for contractual services related to system changes for managing and filing bankruptcies.
(2)	Four hundred thousand dollars ($400,000) for identifying delinquent taxpayers.

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
DOR Report on Local Tax Administration Expenses
SECTION 22.5.  G.S. 105‑256 is amended by adding a new subsection to read:
"(e)	Local Tax Administration Expenses. – The Secretary must report quarterly to the chairs of the Appropriations Committees and Finance Committees of each house of the General Assembly and to the Fiscal Research Division on its expenditures of funds withheld from distributions to local governments to cover its costs of administering local taxes and local programs. The report must itemize expenditures for personnel, operating expenses, and nonrecurring expenses by division and must specify the source of the withheld funds in each case. The report is due 15 days after the end of each quarter."

PART XxIIi. RULES REVIEW COMMISSION

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
RULES REVIEW COMMISSION meeting schedule
SECTION 23.1.  G.S. 143B‑30.1 reads as rewritten:
"§ 143B‑30.1.  Rules Review Commission created.
(a)	The Rules Review Commission is created. The Commission shall consist of 10 members to be appointed by the General Assembly, five upon the recommendation of the President Pro Tempore of the Senate, and five upon the recommendation of the Speaker of the House of Representatives. These appointments shall be made in accordance with G.S. 120‑121, and vacancies in these appointments shall be filled in accordance with G.S. 120‑122. Except as provided in subsection (b) of this section, all appointees shall serve two‑year terms.
(b)	In 1990, two of the appointments made by the General Assembly upon the recommendation of the President of the Senate shall expire June 30, 1991, and two shall expire June 30, 1992. In 1990, two of the appointments made by the General Assembly upon the recommendation of the Speaker of the House of Representatives shall expire June 30, 1992, and two shall expire June 30, 1993. Subsequent terms shall be for two years.
(c)	Any appointment to fill a vacancy on the Commission created by the resignation, dismissal, ineligibility, death, or disability of any member shall be for the balance of the unexpired term. The chairman shall be elected by the Commission, and he shall designate the times and places at which the Commission shall meet. A quorum of the Commission shall consist of six members of the Commission. The Commission is an independent agency under Article III, Section 11 of the Constitution.
(d)	Members of the Commission who are not officers or employees of the State shall receive compensation of two hundred dollars ($200.00) for each day or part of a day of service plus reimbursement for travel and subsistence expenses at the rates specified in G.S. 138‑5. Members of the Commission who are officers or employees of the State shall receive reimbursement for travel and subsistence at the rate set out in G.S. 138‑6.
(e)	Any other provision of the General Statutes notwithstanding, the appointment of employees of the Commission shall be made by the Commission. Nothing in this Article shall be construed to exempt employees of the Commission from the State Personnel Act.
(f)	The Commission may make rules concerning its meeting schedule, filing procedures, and review schedule and procedures. The Commission may have computer access to the North Carolina Administrative Code to enable the Commission and its staff to view and copy rules in the Code."

PART XxIV. SECRETARY OF STATE

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
Eliminate the business license information office
SECTION 24.1.(a)  Article 4B of Chapter 147 of the General Statutes is repealed.
SECTION 24.1.(b)  G.S. 105‑259(b)(17) is repealed.

PART XxV. office of the state controller

Requested by:	Senators Warren, Harris, Plyler, Odom, Lee
OVERPAYMENTS AUDIT
SECTION 25.1.(a)  During the 2002‑2003 fiscal year, receipts generated by the collection of inadvertent overpayments by State agencies to vendors as a result of pricing errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds, erroneously paid excise taxes, and related errors as required by G.S.147‑86.22(c) are to be deposited in the Special Reserve Account 24172.
SECTION 25.1.(b)  For the 2002‑2003 fiscal year, two hundred thousand dollars ($200,000) of the funds transferred from the Special Reserve Account 24172 shall be used by the Office of the State Controller for data processing, debt collection, or other information technology initiatives.
SECTION 25.1.(c)  All funds available in the Special Reserve Account 24172 on July 1, 2002, are transferred to the General Fund on that date.
SECTION 25.1.(d)  Any unobligated funds in the Special Reserve Account 24172 that are realized above the allowance in subsection (b) of this section are subject to appropriation by the General Assembly in the 2003 Regular Session of the General Assembly.
SECTION 25.1.(e)  The State Controller shall report quarterly to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division on the revenue deposited into the Special Reserve Account and the disbursement of that revenue.

PART XXvi. DEPARTMENT OF TRANSPORTATION

Requested by:	Senators Gulley, Plyler, Odom, Lee
Cash‑Flow Highway Fund and Highway Trust Fund Appropriations
SECTION 26.1.  Section 27.4(a) of S.L. 2001‑424 reads as rewritten:
"SECTION 27.4.(a)  The General Assembly authorizes and certifies anticipated revenues of the Highway Fund as follows:
FY 2003‑2004		$1,328.9 million
FY 2004‑2005		$1,374.0 million
FY 2005‑2006		$1,422.4 million
FY 2006‑2007		$1,472.6 million
The General Assembly authorizes and certifies anticipated revenues of the Highway Trust Fund as follows:
FY 2003‑2004		$1,019.4 million
FY 2004‑2005		$1,058.5 million
FY 2005‑2006		$1,110.2 million
FY 2006‑2007		$1,162.5 million"

Requested by:	Senators Gulley, Garrou, Plyler, Odom, Lee
Highway Trust Fund Study Committee Continued
SECTION 26.2.(a) Section 27.6(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 27.6. (b)  Membership. – The Study Committee shall be composed of 18 members as follows:
(1)	The Chairs of the Joint Legislative Transportation Oversight Committee.
(2)	Four Representatives and four public members appointed by the Speaker of the House of Representatives.
(3)	Four Senators and four public members appointed by the President Pro Tempore of the Senate. 
The appointing authorities shall make their appointments to reflect the urban‑rural diversity of the population of the State."
SECTION 26.2.(b)  Section 27.6(c) of S.L. 2001‑424 reads as rewritten:
"SECTION 27.6.(c)  Duties of the Study Committee. – The Committee may study all aspects of the Highway Trust Fund. The study shall include the examination of all the following:
(1)	The current status, cost estimates, and feasibility of Highway Trust Fund projects currently listed in Article 14 of Chapter 136 of the General Statutes.
(2)	Unanticipated problems with the structure of the Highway Trust Fund.
(3)	The gap between transportation funding structures and the actual transportation needs of the State.
(4)	Allocation issues raised by the structure of the transportation funding equity distribution formula in G.S. 136‑17.2A.
(5)	The feasibility of altering the project eligibility requirements of the Highway Trust Fund, including permitting the Department of Transportation to add projects as long as adding those projects does not delay projects already to be funded by the Highway Trust Fund, projects scheduled under the 2002-2008 Transportation Improvement Program, and does not impair the cash-flow provisions of G.S. 136‑176(a1).
(6)	The feasibility of altering the funding allocation structure of the Highway Trust Fund, including the possible use of the Highway Trust Fund to provide the State match for available federal aid highway funds as long as using the funds in this manner does not delay projects already funded by the Highway Trust Fund, projects scheduled under the 2002-2008 Transportation Improvement Program, and does not impair the cash-flow provisions of G.S. 136-176(a1).
(7)	Any other issue related to the Highway Trust Fund or transportation funding."
SECTION 26.2.(c)  Section 27.6(k) of S.L. 2001‑424 reads as rewritten:
"SECTION 27.6.(k)  Report. – The report of the study shall be made to the Joint Legislative Transportation Oversight Committee no later than the first day of the 2003 Session of the General Assembly. Upon the filing of its final report, the Study Committee shall terminate."

Requested by:	Senators Gulley, Metcalf, Carter, Plyler, Odom, Lee
Biltmore Avenue Airspace Encroachment
SECTION 26.3.  The Department of Transportation shall permit private use of and encroachment upon the airspace above Biltmore Avenue located inside the corporate limits of the City of Asheville for the purpose of construction and maintenance of a pedestrian bridge to connect the campuses of Mission St. Joseph's Health System unless, in the opinion of the Department, the bridge will unreasonably interfere with and impair the property rights and easement of abutting owner or unreasonably interfere with or obstruct the public use of Biltmore Avenue.

Requested by:	Senators Gulley, Plyler, Odom, Lee
Proportional Reduction of use of Highway Trust Fund Cash Balances
SECTION 26.4. G.S. 136‑176(a2) reads as rewritten:
"(a2)	The Department shall certify to the Joint Legislative Transportation Oversight Committee each year, on or before November 1, that use of the Highway Trust Fund cash balances for these purposes will not adversely affect the delivery schedule of Highway Trust Fund projects in the 2002‑2008 Transportation Improvement Program. If the Department cannot certify that the full cash balances authorized in subsection (a1) of this section are available and can be used without adversely affecting the delivery schedule, then if any cash balances are available for the purposes set forth in subdivisions (1) through (4) of subsection (a1) of this section, the Department shall report to the Joint Legislative Transportation Oversight Committee on the actual amounts and proportionally reduce the use of the cash balances for all of these purposes."

Requested by:	Senators Rand, Plyler, Odom, Lee
Division of Motor Vehicles Printing Efficiency
SECTION 26.5.  The Department of Transportation is directed to implement a more cost effective method of providing printing services for the Division of Motor Vehicles.

Requested by:	Senators Gulley, Plyler, Odom, Lee
DMV drivers license Examiner dress code
SECTION 26.6.  The Secretary of Transportation shall eliminate the requirement that Division Of Motor Vehicle Drivers License examiners wear uniforms.  The Secretary shall develop a new dress code for examiners that includes a requirement that examiners wear khaki‑type slacks and wear polo‑type shirts bearing the Division's logo.

Requested by:	Senators Gulley, Plyler, Odom, Lee
Division of Motor vehicles to implement multiyear registrations and TEN‑YEAR drivers licenses
SECTION 26.7.  The Division of Motor Vehicles shall develop and implement a system of issuing multiyear motor vehicle registrations and ten‑year drivers licenses.  The Division of Motor Vehicles shall report to the General Assembly on the first day of the 2003 Regular Session on any statutory changes required to implement the multiyear registrations and ten‑year licenses.

PART XxVII. INFORMATION TECHNOLOGY

Requested by:	Senators Reeves, Plyler, Odom, Lee
electronic Procurement and state information technology procurement by secretary of administration
SECTION 27.1.(a)  G.S. 143‑48.3(a) reads as rewritten:
"(a)	The Department of Administration shall develop and maintain electronic or digital standards for procurement. The Department of Administration shall consult with the Office of the State Controller, the Office of Information Technology Services (ITS), the Department of State Auditor, the Department of State Treasurer, The University of North Carolina General Administration, the Community Colleges System Office, and the Department of Public Instruction."
SECTION 27.1.(b)  G.S. 143‑48.3(c) reads as rewritten:
"(c)	The Department of Administration shall utilize the Office of Information Technology Services as an Application Service Provider for an electronic procurement system. The Office of Information Technology Services shall operate this electronic procurement system, through State ownership or commercial leasing, in accordance with the requirements and operating standards developed by the Department of Administration and the financial reporting and accounting procedures of the Office of the State Controller."
SECTION 27.1.(c)  G.S. 143‑48.3 is amended by adding a new subsection to read:
"(a1)	The Department of Administration shall comply with the State government-wide technical architecture for information technology, as required by the Information Resources Management Commission."
SECTION 27.1.(d)  G.S. 143‑129(e)(7) reads as rewritten:
"(e)	Exceptions. ‑ The requirements of this Article do not apply to:
(7)	Purchases of information technology through contracts offered by the State Office of Information Technology Services as provided in G.S. 147‑33.82(b) and G.S. 147‑33.92(b)."
SECTION 27.1.(e)  Part 4 of Article 3D of Chapter 147 of the General Statutes, being G.S. 147‑33.95 through G.S. 147‑33.103, is repealed.
SECTION 27.1.(f)  G.S. 143‑33.82(a) reads as rewritten:
"§ 147‑33.82.  Powers and duties of the State Chief Information Officer and the Office of Information Technology Services.
(a)	The Office of Information Technology Services shall:
	(1a)	Assist the Department of Administration specifically, and State agencies generally, with technological review and cost analysis relative to the State's information technology needs.
(1b)	Establish processes, specifications, and standards relating to information technology that assist the Department of Administration to purchase, license, or lease information technology for State agencies.
(2)	Submit for approval of the Information Resources Management Commission all rates and fees for common, shared State government‑wide technology services provided by the Office.
(3)	Submit for approval of the Information Resources Management Commission recommended State government‑wide, enterprise‑level policies for information technology.
(4)	Develop standards, procedures, and processes to implement policies approved by the Information Resources Management Commission.
(5)	Assure that State agencies implement and manage information technology portfolio‑based management of State information technology resources, in accordance with the direction set by the State Chief Information Officer.
(6)	Assure that State agencies implement and manage information technology enterprise management efforts of State government, in accordance with the direction set by the State Chief Information Officer.
(7)	Provide recommendations to the Information Resources Management Commission for its biennial technology strategy and to develop State government‑wide technology initiatives to be approved by the Information Resources Management Commission.
(8)	Develop a project management, quality assurance, and architectural review process that adheres to the Information Resources Management Commission's certification program and portfolio‑based management initiative.
(9)	Establish and utilize the Information Technology Management Advisory Council to consist of representatives from other State agencies to advise the Office on information technology business management and technology matters.
(10)	Maintain the confidentiality of trade secrets, test data, similar proprietary information, and security information protected under G.S. 132-6.1(c)."
SECTION 27.1.(g)  G.S. 147‑33.82(b) reads as rewritten:
"(b)	Notwithstanding any other provision of law, local governmental entities may use the information technology programs, services, or contracts offered by the Office, including information technology procurement, in accordance with the statutes, policies, and rules of the Office. For purposes of this subsection, "local governmental entities" includes local school administrative units, as defined in G.S. 115C‑5, and community colleges. Local governmental entities are not required to comply with otherwise applicable competitive bidding requirements when using contracts offered by the Office. Any other State entities may also use the information technology services and programs offered by the Office in accordance with the statutes, policies, and rules of the Office."
SECTION 27.1.(h)  G.S. 147‑33.82(e) reads as rewritten:
"(e)	The State Chief Information Officer shall submit the enterprise‑wide set of standards for the State's information technology security to the Information Resources Management Commission for approval. The Information Resources Management Commission shall report approval of the standards to the Department of Administration and to the Joint Legislative Commission on Governmental Operations prior to implementation of the standards. The State Chief Information Officer shall review and revise the standards at least annually, and the revisions shall be subject to approval by the Information Resources Management Commission, with the Commission reporting to the Joint Legislative Commission on Governmental Operations on the revisions."
SECTION 27.1.(i)  Beginning October 15, 2002, and quarterly thereafter, the Department of Administration shall report to the Chairs of the Senate Appropriations Committee on Information Technology and the House of Representatives Appropriations Subcommittee on Information Technology, to the Chairs of the Joint Select Committee on Information Technology, and to the Fiscal Research Division on the status of electronic procurement.

PART XXviII. SALARIES AND EMPLOYEE BENEFITS

Requested by:	Senators Odom, Lee
No Automatic Step increases for Certain Employees
SECTION 28.1.  State employees subject to G.S. 7A‑102(c), 7A‑171.1, or 20‑187.3 shall not move up on salary schedules or receive automatic step increases for the 2002‑2003 fiscal year.

Requested by:	Senators Plyler, Odom, Lee
fund PAYROLL and related employment contributions at ninety‑eight percent of budgeted requirements
SECTION 28.2.  The purpose of the payroll turnover adjustment set out in Section 2.1. of this act is to adjust the amount of funds appropriated to the General Fund for State‑paid salaries and wages to more accurately reflect actual salary and wage requirements for full‑time and part‑time State‑paid personnel.  The Office of State Budget and Management shall allocate to State departments and agencies funds necessary to support salaries and wages and related employer contributions for social security and retirement at an average rate of ninety‑eight percent (98%) of budgeted requirements for salaries and related employer contributions. The provisions of this section shall not apply to salary and related employer contributions funded by the State for The University of North Carolina, the community colleges, and the public school system.

Requested by:	Senators Plyler, Odom, Lee
Establish Severance Expenditure Reserve
SECTION 28.3.(a)  Section 32.19 of S.L. 2001‑424 is repealed.
SECTION 28.3.(b)  There is established in the Office of State Budget and Management a General Fund reserve budget code for the purpose of funding severance‑ related obligations to employees subject to the State Personnel Act, and to exempt State employees, who are separated from State service due to a reduction‑in‑force action. Severance‑related expenditures from this reserve shall include obligations to fund (i) an employee's severance salary continuation with an age adjustment factor as defined by the State Personnel Commission in State Personnel Manual Section 11, Revision No. 7, 9/22/2000, (ii) noncontributory health premiums for up to 12 months, (iii) employer‑related contributions for social security, and (iv) payment of an employee's unused vacation leave not to exceed 240 hours.
SECTION 28.3.(c)  The Director of the Budget shall allocate funds appropriated in Section 2.1. of this act to the Reserve for Severance Benefits to State agencies to fund severance‑related obligations incurred by the agencies as a result of reduction‑in‑force actions taken by the Director of the Budget that cause State employees to be terminated from State employment. Funds appropriated to the Reserve for Severance Benefits shall be expended in their entirety before funds appropriated to a State agency for personal services expenditures may be used to fund any severance‑related obligations.
SECTION 28.3.(d)  The provisions of this section shall not apply to local school administrative units, to community colleges, or to The University of North Carolina.

Requested by:	Senators Plyler, Lee 
DHHS Exempt Policymaking Positions
SECTION 28.4.  G.S. 126‑5(d)(1) reads as rewritten:
"(d)	(1)	Exempt Positions in Cabinet Department. – The Governor may designate a total of 100 exempt policymaking positions throughout the following departments:
a.	Department of Administration;
b.	Department of Commerce;
c.	Department of Correction;
d.	Department of Crime Control and Public Safety;
e.	Department of Cultural Resources;
f.	Department of Health and Human Services;
g.	Department of Environment and Natural Resources;
h.	Department of Revenue;
i.	Department of Transportation; and
j.	Department of Juvenile Justice and Delinquency Prevention.
The Governor may designate exempt managerial positions in a number up to one percent (1%) of the total number of full‑time positions in each cabinet department listed above in this sub‑subdivision, not to exceed 30 positions in each department. Notwithstanding the provisions of this subdivision, or the other requirements of this subsection, the Governor may at any time increase by five the number of exempt policymaking positions at the Department of Health and Human Services. The Governor shall notify the General Assembly and the State Personnel Director of the additional positions designated hereunder."

Requested by:	Senators Plyler, Odom, Lee
SALARY‑RELATED CONTRIBUTIONS/EMPLOYERS
SECTION 28.5.  Section 32.21(b) of S.L. 2001‑424 reads as rewritten:
"SECTION 32.21.(b)  The State’s employer contribution rates budgeted for retirement and related benefits as percentage of covered salaries for  the 2002‑2003 fiscal year are (i)  three and three one-hundredths percent (3.03%) ‑ Teachers and State Employees; (ii)  eight and three one-hundredths percent (8.03%) ‑ State Law Enforcement Officers; (iii) nine and seventy‑one hundredths percent (9.71%) ‑ University Employees’ Optional Retirement System; (iv) nine and seventy‑one hundredths percent (9.71%) –Community College Optional Retirement Program;  Each of the foregoing contribution rates includes two and thirty‑five hundredths percent (2.35%) for hospital and medical benefits. The rate for Teachers and State Employees, State Law Enforcement Officers, Community College Optional Retirement Program, and for the University Employees’ Optional Retirement Program includes fifty‑two hundredths percent (0.52%) for the Disability Income Plan. The rates for Teachers and State Employees and State Law Enforcement Officers include sixteen‑hundredths percent (0.16%) for the Death Benefits Plan. The rate for State Law Enforcement Officers includes five percent (5%) for Supplemental Retirement Income."

Requested by:	Senators Plyler, Odom, Lee, Rand
PUBLIC EMPLOYEE SPECIAL PAY PLAN
SECTION 28.6.  Article 9 of Chapter 143B of the General Statutes is amended by adding a new Part to read:
"Part 29. Board of Trustees of the North Carolina
Public Employee Special Pay Plan.
"§ 143B-426.41. Board of Trustees of the North Carolina Public Employee Special Pay Plan.
(a)	The Governor shall, by Executive Order, establish a Board of Trustees of the North Carolina Public Employee Special Pay Plan, which when established shall be constituted as an agency of the State of North Carolina within the Department of Administration. The Board shall create, establish, implement, coordinate, and administer a Special Pay Plan for State employees, which shall enhance, and not diminish, existing Special Pay benefits. A Special Pay Plan is a qualified retirement plan, approved by the Internal Revenue Service, that reduces the federal tax burden on special compensation paid to State employees, including bonuses, accumulated sick leave, accumulated vacation leave, and any other payment or benefit designated as special pay by the Internal Revenue Code.
(b)	The Board shall consist of five voting members, as follows:
(1)	The State Controller;
(2)	The State Budget Officer, who shall serve as chair;
(3)	The State Treasurer;
(4)	A representative of a public school system administrative unit who is knowledgeable about payroll and benefit matters, appointed by the Governor; and
(5)	A representative of the University of North Carolina system who is knowledgeable about payroll and benefit matters, appointed by the Governor.
Any member may designate in writing, filed with the Board, any employee of his department to act at any meeting of the Board from which the member is absent, to the same extent that the member could act if present at that meeting. The initial term of the member appointed pursuant to subdivision (4) of this subsection shall end July 1, 2004, and, thereafter, the member shall serve terms of four years. The initial term of the member appointed pursuant to subdivision (5) of this subsection shall end July 1, 2006, and, thereafter, the member shall serve terms of four years.
(c)	The Board may delegate the performance of such of its administrative duties as it deems appropriate, including coordination and administration of the Plan.
(d)	The Board shall devise a uniform Special Pay Plan for State employees for the investment of special pay funds. The Plan shall be limited to employees age 55 or older whose special pay totals five thousand dollars ($5,000) or more per year. The Board may designate appropriate investment vehicles from any company duly authorized to conduct business in this State, or may establish, alter, amend, and modify, to the extent it deems necessary or desirable, a trust for the purpose of facilitating the administration, investment, and maintenance of assets acquired by the investment of Special Pay Plan funds.
(e)	A majority of the Board shall constitute a quorum for the transaction of business."

Requested by:	Senators Plyler, Odom, Lee, Harris, Warren, Kerr
INCREASE FIRE AND RESCUE PENSION BENEFITS
SECTION 28.7.  G.S. 58‑86‑55 reads as rewritten:
"§ 58‑86‑55.  Monthly pensions upon retirement.
Any member who has served 20 years as an "eligible fireman" or "eligible rescue squad worker" in the State of North Carolina, as provided in G.S. 58‑86‑25 and G.S. 58‑86‑30, and who has attained the age of 55 years is entitled to be paid a monthly pension from this fund. The monthly pension shall be in the amount of  one hundred fifty-six dollars ($156.00) per month. Any retired fireman receiving a pension shall, effective  July 1, 2002, receive a pension of  one hundred fifty-six dollars ($156.00) per month.
Members shall pay ten dollars ($10.00) per month as required by G.S. 58‑86‑35 and G.S. 58‑86‑40 for a period of no longer than 20 years. No "eligible rescue squad member" shall receive a pension prior to July 1, 1983. No member shall be entitled to a pension hereunder until the member's official duties as a fireman or rescue squad worker for which the member is paid compensation shall have been terminated and the member shall have retired as such according to standards or rules fixed by the board of trustees.
A member who is totally and permanently disabled while in the discharge of the member's official duties as a result of bodily injuries sustained or as a result of extreme exercise or extreme activity experienced in the course and scope of those official duties and who leaves the fire or rescue squad service because of this disability shall be entitled to be paid from the fund a monthly benefit in an amount of  one hundred fifty-six dollars ($156.00) per month beginning the first month after the member's fifty‑fifth birthday. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application, and annually thereafter. Any disabled member shall not be required to make the monthly payment of ten dollars ($10.00) as required by G.S. 58‑86‑35 and G.S. 58‑86‑40.
A member who is totally and permanently disabled for any cause, other than line of duty, who leaves the fire or rescue squad service because of this disability and who has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member shall upon attaining the age of 55 years be entitled to receive a pension as provided by this section. All applications for disability are subject to the approval of the board who may appoint physicians to examine and evaluate the disabled member prior to approval of the application and annually thereafter.
A member who, because his residence is annexed by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, or whose department is closed because of an annexation by a city under Part 2 or Part 3 of Article 4 of Chapter 160A of the General Statutes, and because of such annexation is unable to perform as a fireman of any status, and if the member has at least 10 years of service with the pension fund, may be permitted to continue making a monthly contribution of ten dollars ($10.00) to the fund until the member has made contributions for a total of 240 months. The member upon attaining the age of 55 years and completion of such contributions shall be entitled to receive a pension as provided by this section. Any application to make monthly contributions under this section shall be subject to a finding of eligibility by the Board of Trustees upon application of the member.
The pensions provided shall be in addition to all other pensions or benefits under any other statutes of the State of North Carolina or the United States, notwithstanding any exclusionary provisions of other pensions or retirement systems provided by law."

Requested by:	Senators Plyler, Odom, Lee
PROVIDE COST‑OF‑LIVING INCREASES FOR RETIREES OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM and the local governmental employees' retirement system
SECTION 28.8.(a)  G.S. 135‑5 is amended by adding a new subsection to read:
"(jjj)	From and after July 1, 2002, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2001, shall be increased by one and one-tenth percent (1.10%) of the allowance payable on June 1, 2002, in accordance with G.S. 135-5(o). Furthermore, from and after July 1, 2002, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2001, but before June 30, 2002, shall be increased by a prorated amount of one and one-tenth percent (1.10%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2001, and June 30, 2002."
SECTION 28.8.(b)  G.S. 128‑27 is amended by adding a new subsection to read:
"(bbb)	From and after July 1, 2002, the retirement allowance to or on account of beneficiaries whose retirement commenced on or before July 1, 2001, shall be increased by one and one-tenth percent (1.10%) of the allowance payable on June 1, 2002, in accordance with subsection (k) of this section. Furthermore, from and after July 1, 2002, the retirement allowance to or on account of beneficiaries whose retirement commenced after July 1, 2001, but before June 30, 2002, shall be increased by a prorated amount of one and one-tenth percent (1.10%) of the allowance payable as determined by the Board of Trustees based upon the number of months that a retirement allowance was paid between July 1, 2001, and June 30, 2002."

Requested by:	Senators Plyler, Odom, Lee, Harris
ENHANCE benefits payable from the teachers' and state employees' retirement system and the local governmental employees' retirement system
SECTION 28.9.(a)  G.S. 135‑5(b18) reads as rewritten:
"(b18)	Service Retirement Allowance of Members Retiring on or After July 1, 2000, but Before July 1, 2002. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2000, but before July 1, 2002, a member shall receive the following service retirement allowance.
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: 
a.	If the member's service retirement date occurs on or after his 55th birthday, and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty‑one hundredths percent (1.81%) of his average final compensation, multiplied by the number of years of his creditable service. 
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 135‑5(b18)(1)a. reduced by one‑third of one percent ( 1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; or
2.	The service retirement allowance as computed under G.S. 135‑5(b18)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of membership service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑one hundredths percent (1.81%) of his average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 135‑5(b18)(2)a. but shall be reduced by one‑quarter of one percent ( 1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 135‑5(b18)(2)a. but reduced by the sum of five‑twelfths of one percent ( 5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one‑quarter of one percent ( 1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement  allowance as computed under G.S. 135‑5(b18)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at  the age of 60 years as computed in G.S. 135‑5(b18)b. 
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by G.S. 135‑5(b)."
SECTION 28.9.(b)  G.S. 135‑5 is amended by adding a new subsection to read:
"(b19)	Service Retirement Allowance of Members Retiring on or After July 1, 2002. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2002, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: 
a.	If the member's service retirement date occurs on or after his 55th birthday, and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of his average final compensation, multiplied by the number of years of his creditable service. 
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 135-5(b19)(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; or
2.	The service retirement allowance as computed under G.S. 135-5(b19)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of membership service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of his average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 135-5(b19)(2)a. but shall be reduced by one-quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 135-5(b19)(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one-quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement  allowance as computed under G.S. 135-5(b19)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at  the age of 60 years as computed in G.S. 135-5(b19)b. 
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by G.S. 135-5(b)."
SECTION 28.9.(c)  G.S. 135‑5 is amended by adding a new subsection to read:
"(kkk)	Increase in Allowance as to Persons on Retirement Rolls as of June 1, 2002. – From and after July 1, 2002, the retirement allowance to or on account of beneficiaries on the retirement rolls as of June 1, 2002, shall be increased by six-tenths of one percent (0.6%) of the allowance payable on June 1, 2002. This allowance shall be calculated on the allowance payable and in effect on June 30, 2002, so as not to be compounded on any other increase granted by act of the 2002 Regular Session of the 2001 General Assembly."
SECTION 28.9.(d)  G.S. 135‑5(m) reads as rewritten:
"(m)	Survivor's Alternate Benefit. – Upon the death of a member in service, the principal beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option 2 of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of his death, provided that the following conditions apply:
(1)	a.	The member had attained such age and/or creditable service to 
be eligible to commence retirement with an early or service 
 retirement allowance, or
b.	The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. 135-5(b19)(1)b. or G.S. 135-5(b19)(2)c., notwithstanding the requirement of obtaining age 50.
(2)	The member had designated as the principal beneficiary to receive a return of his accumulated contributions one and only one person who was living at the time of his death.
(3)	The member had not instructed the Board of Trustees in writing that he did not wish the provisions of this subsection to apply.
For the purpose of this benefit, a member is considered to be in service at the date of his death if his death occurs within 180 days from the last day of his actual service. The last day of actual service shall be determined as provided in subsection (l) of this section. Upon the death of a member in service, the surviving spouse may make all purchases for creditable service as provided for under this Chapter for which the member had made application in writing prior to the date of death, provided that the date of death occurred prior to or within 60 days after notification of the cost to make the purchase. The term "in service" as used in this subsection includes a member in receipt of a benefit under the Disability Income Plan as provided in Article 6 of this Chapter."
SECTION 28.9.(e)  G.S. 128‑27(b19) reads as rewritten:
"(b19)	Service Retirement Allowance of Member Retiring on or After July 1,  2001, But Before July 1, 2002. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2001, but before July 1, 2002, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty‑one hundredths percent (1.81%) of his average final compensation, multiplied by the number of years of his creditable service.
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 128‑27(b19)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; 
2.	The service retirement allowance as computed under G.S. 128‑27(b19)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of creditable service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑one hundredths percent (1.81%) of average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 128‑27(b19)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 128‑27(b19)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement allowance as computed under G.S. 128‑27(b19)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128‑27(b19)(2)b. 
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by G.S. 128‑27(b)."
SECTION 28.9.(f)  G.S. 128‑27 is amended by adding a new subsection to read:
"(b20)	Service Retirement Allowance of Member Retiring on or After July 1, 2002. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2002, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of his average final compensation, multiplied by the number of years of his creditable service.
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 128-27(b20)(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; 
2.	The service retirement allowance as computed under G.S. 128-27(b20)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of creditable service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty-two hundredths percent (1.82%) of average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 128-27(b20)(2)a. but shall be reduced by one-quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 128-27(b20)(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one-quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement allowance as computed under G.S. 128-27(b20)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128-27(b20)(2)b. 
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by G.S. 128-27(b)."
SECTION 28.9.(g)  G.S. 128‑27 is amended by adding a new subsection to read:
"(ccc)	Increase in Allowance as to Persons on Retirement Rolls as of June 1, 2002. – From and after July 1, 2002, the retirement allowance to or on account of beneficiaries on the retirement rolls as of June 1, 2002, shall be increased by six-tenths of one percent (0.6%) of the allowance payable on June 1, 2002. This allowance shall be calculated on the allowance payable and in effect on June 30, 2002, so as not to be compounded on any other increase payable under subsection (k) of this section or otherwise granted by act of the 2002 Regular Session of the 2001 General Assembly."
SECTION 28.9.(h)  G.S. 128‑27(m) reads as rewritten:
"(m)	Survivor's Alternate Benefit. – Upon the death of a member in service, the principal beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option two of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of his death, provided that all three of the following conditions apply:
(1)	a.	      The member had attained such age and/or creditable service to 
                        be eligible to commence retirement with an early or service 
                        retirement allowance, or
b.	The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with  G.S. 128-27(b20)(1)b. or G.S. 128-27(b20)(2)c., notwithstanding the requirement of obtaining age 50.
(2)	The member had designated as the principal beneficiary to receive a return of his accumulated contributions one and only one person who is living at the time of his death.
(3)	The member had not instructed the Board of Trustees in writing that he did not wish the provisions of this subsection apply.
For the purpose of this benefit, a member is considered to be in service at the date of his death if his death occurs within 180 days from the last day of his actual service. The last day of actual service shall be determined as provided in subsection (l) of this section. Upon the death of a member in service, the surviving spouse may make all purchases for creditable service as provided for under this Chapter for which the member had made application in writing prior to the date of death, provided that the date of death occurred prior to or within 60 days after notification of the cost to make the purchase."
SECTION 28.9.(i)  This section becomes effective July 1, 2002.

Requested by:	Senators Plyler, Odom, Lee
Retired Teachers Returning to the Classroom without loss of Retirement Benefits/option Extended
SECTION 28.10.(a)  Subsection (d) of Section 28.24 of S.L. 1998‑212 reads as rewritten:
"(d)	This section becomes effective January 1, 1999, and expires  June 30, 2004."
SECTION 28.10.(b)  The catch line to Section 67 of S.L. 1998‑217 reads as rewritten:
"SECTION 67. Effective January 1, 1999, through  June 30, 2004, G.S. 135‑3(8)c., as rewritten by Section 28.24(a) of S.L. 1998-212 reads as rewritten:"
SECTION 28.10.(c)  Subsection (b) of Section 67.1 of S.L. 1998‑217 reads as rewritten:
"(b)	This section becomes effective January 1, 1999, and expires  June 30, 2004."
SECTION 28.10.(d)  Subsection (c) of Section 32.25 of S.L. 2001‑424 reads as rewritten:
"SECTION 32.25.(c)  This section becomes effective July 1, 2001, and expires 
 June 30, 2004."

Requested by:	Senators Plyler, Odom, Lee
ABOLISH JUDICIAL/LEGISLATIVE RETIREMENT SYSTEMS
SECTION 28.11.(a)  Article 4 of Chapter 135 of the General Statutes is repealed.
SECTION 28.11.(b)  Article 1A of Chapter 120 of the General Statutes is repealed.
SECTION 28.11.(c)  G.S. 135‑1(10) reads as rewritten:
"(10)	"Employee" shall mean all full‑time employees, agents or officers of the State of North Carolina or any of its departments, bureaus and institutions other than educational, whether such employees are elected, appointed or employed: Provided that the term "employee" shall not include  any part‑time or temporary employee. Notwithstanding any other provision of law, "employee" shall include all employees of the General Assembly except participants in the Legislative Intern Program, pages, and reemployed beneficiaries in receipt of a monthly retirement allowance under this Chapter. In all cases of doubt, the Board of Trustees shall determine whether any person is an employee as defined in this Chapter. "Employee" shall also mean every full‑time civilian employee of the army national guard and air national guard of this State who is employed pursuant to section 709 of Title 32 of the United States Code and paid from federal appropriated funds, but held by the federal authorities not to be a federal employee: Provided, however, that the authority or agency paying the salaries of such employees shall deduct or cause to be deducted from each employee's salary the employee's contribution in accordance with applicable provisions of G.S. 135‑8 and remit the same, either directly or indirectly, to the Retirement System; coverage of employees described in this sentence shall commence upon the first day of the calendar year or fiscal year, whichever is earlier, next following the date of execution of an agreement between the Secretary of Defense of the United States and the Adjutant General of the State acting for the Governor in behalf of the State, but no credit shall be allowed pursuant to this sentence for any service previously rendered in the above‑described capacity as a civilian employee of the national guard: Provided, further, that the Adjutant General, in his discretion, may terminate the Retirement System coverage of the above‑described national guard employees if a federal retirement system is established for such employees and the Adjutant General elects to secure coverage of such employees under such federal retirement system. Any full‑time civilian employee of the national guard described above who is now or hereafter may become a member of the Retirement System may secure Retirement System credit for such service as a national guard civilian employee for the period preceding the time when such employees became eligible for Retirement System coverage by paying to the Retirement System an amount equal to that which would have constituted employee contributions if he had been a member during the years of ineligibility, plus interest. Employees of State agencies, departments, institutions, boards, and commissions who are employed in permanent job positions on a recurring basis and who work 30 or more hours per week for nine or more months per calendar year are covered by the provisions of this subdivision."
SECTION 28.11.(d)  Any member of the Consolidated Judicial Retirement System with five or more years of membership service on June 30, 2002, is entitled to any inchoate rights and benefits provided under Article 4 of Chapter 135 of the General Statutes prior to its repeal pursuant to subsection (a) of this section.
SECTION 28.11.(e)  Any member of the Legislative Retirement System with five or more years of membership service on June 30, 2002, is entitled to any inchoate rights and benefits provided under Article 1A of Chapter 120 of the General Statutes prior to its repeal pursuant to subsection (a) of this section.
SECTION 28.11.(f)  This section becomes effective June 30, 2002.

Requested by:	Senators Plyler, Odom, Lee
CONFORM TREATMENT OF RETIRED LEGISLATIVE EMPLOYEES WHO RETURN TO EMPLOYMENT IN A FULL‑TIME PERMANENT POSITION WITH THAT OF OTHER STATE EMPLOYEES
SECTION 28.12.(a) G.S. 135‑1(10) reads as rewritten:
"(10)	"Employee" shall mean all full‑time employees, agents or officers of the State of North Carolina or any of its departments, bureaus and institutions other than educational, whether such employees are elected, appointed or employed: Provided that the term "employee" shall not include any person who is a member of the Consolidated Judicial Retirement System, any member of the General Assembly or any part‑time or temporary employee. Notwithstanding any other provision of law, "employee" shall include all employees of the General Assembly except participants in the Legislative Intern Program, pages, and beneficiaries in receipt of a monthly retirement allowance under this Chapter who are reemployed on a temporary basis. In all cases of doubt, the Board of Trustees shall determine whether any person is an employee as defined in this Chapter. "Employee shall also mean every full‑time civilian employee of the army national guard and air national guard of this State who is employed pursuant to section 709 of Title 32 of the United States Code and paid from federal appropriated funds, but held by the federal authorities not to be a federal employee: Provided, however, that the authority or agency paying the salaries of such employees shall deduct or cause to be deducted from each employee's salary the employee's contribution in accordance with applicable provisions of G.S. 135‑8 and remit the same, either directly or indirectly, to the Retirement System; coverage of employees described in this sentence shall commence upon the first day of the calendar year or fiscal year, whichever is earlier, next following the date of execution of an agreement between the Secretary of Defense of the United States and the Adjutant General of the State acting for the Governor in behalf of the State, but no credit shall be allowed pursuant to this sentence for any service previously rendered in the above‑described capacity as a civilian employee of the national guard: Provided, further, that the Adjutant General, in his discretion, may terminate the Retirement System coverage of the above‑ described national guard employees if a federal retirement system is established for such employees and the Adjutant General elects to secure coverage of such employees under such federal retirement system. Any full‑time civilian employee of the national guard described above who is now or hereafter may become a member of the Retirement System may secure Retirement System credit for such service as a national guard civilian employee for the period preceding the time when such employees became eligible for Retirement System coverage by paying to the Retirement System an amount equal to that which would have constituted employee contributions if he had been a member during the years of ineligibility, plus interest. Employees of State agencies, departments, institutions, boards, and commissions who are employed in permanent job positions on a recurring basis and who work 30 or more hours per week for nine or more months per calendar year are covered by the provisions of this subdivision. On and after August 1, 2001, a person who is a nonimmigrant alien and who otherwise meets the requirements of this subdivision shall not be excluded from the definition of "employee" solely because the person holds a temporary or time‑limited visa."
SECTION 28.12.(b)  This section is effective when it becomes law, provided any person who has been reemployed by the General Assembly on a permanent full‑time basis prior to the effective date of this section may purchase credit for that service by returning any retirement allowance received as well as the employee contributions attributable to the service plus interest as determined by the Board of Trustees of the Retirement System.  In addition, the employer must pay the employer contributions attributable to the service.

Requested by:	Senators Plyler, Odom, Lee
MODIFY BENEFIT RESTRICTIONS FOR REEMPLOYED RETIREES IN THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM AND IN THE LOCAL GOVERNMENTAL EMPLOYEES RETIREMENT SYSTEM
SECTION 28.13.(a)  G.S. 135‑3(8)c. reads as rewritten:
"c.	Should a beneficiary who retired on an early or service retirement allowance under this Chapter be reemployed, or otherwise engaged to perform services, by an employer participating in the Retirement System on a part‑time, temporary, interim, or on a fee‑for‑service basis, whether contractual or otherwise, and if such beneficiary earns an amount during the 12-month period immediately following the effective date of retirement or in any calendar year which exceeds fifty percent (50%) of the reported compensation, excluding terminal payments, during the 12 months of service preceding the effective date of retirement, or twenty thousand dollars ($20,000), whichever is greater, as hereinafter indexed, then the retirement allowance shall be suspended as of the first day of the month following the month in which the reemployment earnings exceed the amount above, for the balance of the calendar year. The retirement allowance of the beneficiary shall be reinstated as of January 1 of each year following suspension. The amount that may be earned before suspension shall be increased on January 1 of each year by the ratio of the Consumer Price Index to the Index one year earlier, calculated to the nearest tenth of a percent (1/10 of 1%).
The computation of postretirement earnings of a beneficiary under this sub‑subdivision, G.S. 135‑3(8)c., who has been retired at least six months and has not been employed in any capacity, except as a substitute teacher or a part‑time tutor, with a public school for at least six months immediately preceding the effective date of reemployment, shall not include earnings while the beneficiary is employed to teach on a substitute, interim, or permanent basis in a public school. The Department of Public Instruction shall certify to the Retirement System that a beneficiary is employed to teach by a local school administrative unit under the provisions of this sub‑subdivision and as a retired teacher as the term is defined under the provisions of G.S. 115C‑325(a)(5a).
Beneficiaries employed under this sub‑subdivision are not entitled to any benefits otherwise provided under this Chapter as a result of this period of employment."
SECTION 28.13.(b)  G.S. 128‑24(5)c. reads as rewritten:
"c.	Should a beneficiary who retired on an early or service retirement allowance be reemployed, or otherwise engaged to perform services, by an employer participating in the Retirement System on a part‑time, temporary, interim, or on fee‑for‑service basis, whether contractual or otherwise, and if such beneficiary earns an amount during the 12-month period immediately following the effective date of retirement or in any calendar year which exceeds fifty percent (50%) of the reported compensation, excluding terminal payments, during the 12 months of service preceding the effective date of retirement, or twenty thousand dollars ($20,000), whichever is greater, as hereinafter indexed, then the retirement allowance shall be suspended as of the first day of the month following the month in which the reemployment earnings exceed the amount above, for the balance of the calendar year. The retirement allowance of the beneficiary shall be reinstated as of January 1 of each year following suspension. The amount that may be earned before suspension shall be increased on January 1 of each year by the ratio of the Consumer Price Index to the Index one year earlier, calculated to the nearest tenth of a percent (1/10 of 1%)."

Requested by:	Senators Plyler, Odom, Lee, Rand
 Expand Separation Allowance for Law EnforcemeNT OFFICERS
SECTION 28.14.  G.S. 143‑166.41(c) reads as rewritten:
"(c)	Payment to a retired officer under the provisions of this section shall cease at the death of the individual or on the last day of the month in which he attains 62 years of age or upon the first day of reemployment by any State department, agency, or institution. This subsection does not apply to a person returning to State employment in a position exempt from the State Personnel Act in an agency other than the agency from which that person retired."

PART XXIX. CAPITAL APPROPRIATIONS

SECTION 29.1.  Appropriations are made from the General Fund of the State for the 2002‑2003 fiscal year for use by the State departments, institutions, and agencies to provide for capital improvement projects according to the following schedule:

Capital Improvements ‑General Fund	2002‑2003

Department of Environment and Natural Resources	31,248,000

Requested by:	Senators Plyler, Odom, Lee, Robinson, Thomas
Water Resources Development Projects/Use Dredge Spoils to Nourish Beach
SECTION 29.2.(a)  The General Assembly finds that North Carolina is the tenth largest exporting state in the nation and that water resources development projects are vital to the economy of the State.  North Carolina State Ports facilities, notably those in Wilmington, provide gateways to the global marketplace for North Carolina's importers and exporters.  The State's ports annually generate thousands of jobs and millions of dollars in State and local taxes.
The General Assembly further finds that the ports are also invaluable assets to the communities that each serves. For example, according to the North Carolina State Ports Authority, nearly seven billion dollars ($7,000,000,000) worth of goods, or nineteen million dollars ($19,000,000) a day, were handled at the Port of Wilmington in 1997. The harbor improvements in Wilmington, provided for in subsection (b) of this section, are projected to add thirty‑four million dollars ($34,000,000) in annual regional benefits.
The General Assembly also finds that particularly in times of heightened national and local security, the water resources projects provide strategic mobilization benefits to the Port of Wilmington and to the Military Ocean Terminal at Sunny Point.
SECTION 29.2.(b)  The Department of Environment and Natural Resources shall allocate the funds appropriated in this act for water resources development projects to the following projects whose costs are as indicated:

	Name of Project	2002‑2003

	(1)	Wilmington Harbor Deepening	$20,100,000
	(2)	Manteo (Shallowbag) Bay Channel Maintenance	3,100,000
	(3)	Wilmington Harbor Maintenance	500,000
	(4)	B. Everett Jordan Lake Water Supply	90,000
	(5)	John H. Kerr Reservoir Operations Evaluation	800,000
	(6)	Oregon Inlet Jetties	70,000
	(7)	Silver Lake Harbor Maintenance	600,000
	(8)	West Onslow Beach (Topsail Beach) Nourishment	203,000
	(9)	Wanchese Marsh Creation	180,000
	(10)	Bogue Banks Shore Protection Study	315,000
	(11)	Surf City/North Topsail Beach Protection Study	200,000
	(12)	Walter Slough Maintenance Dredging	58,000
	(13)	Currituck Sound Water Management Study	400,000
	(14)	Deep Creek (Yadkin County) Watershed Management	500,000
	(15)	State Local Projects	2,900,000
	(16)	Aquatic Weed Control, Lake Gaston and Statewide	300,000
	(17)	Swan Quarter (Hyde County) Flood Control Dikes	100,000
	(18)	North Topsail Beach Feasibility Study (nonfederal)	250,000
	(19)	Neuse River Basin Feasibility Study	100,000
	(20)	Edgewater Canal (Camden County) Drainage	25,000
	(21)	Emergency Flood Control Projects	187,000
	(22)	Projected Feasibility Studies	120,000
	(23)	Planning Assistance to Communities	      150,000

TOTAL	$31,248,000

SECTION 29.2.(c)  Where the actual costs are different from the estimated costs under subsection (a) of this section, the Department may adjust the allocations among projects as needed.  If any projects listed in subsection (a) of this section are delayed and the budgeted State funds cannot be used during the 2002‑2003 fiscal year, or if the projects listed in subsection (a) of this section are accomplished at a lower cost, the Department may use the resulting fund availability to fund any of the following:
(1)	Corps of Engineers project feasibility studies.
(2)	Corps of Engineers projects whose schedules have advanced and require State‑matching funds in fiscal year 2002‑2003.
(3)	State‑local water resources development projects.
Funds not expended or encumbered for these purposes shall revert to the General Fund at the end of the 2003‑2004 fiscal year.
SECTION 29.2.(d)  The Department shall make quarterly reports on the use of these funds to the Joint Legislative Commission on Governmental Operations, the Fiscal Research Division, and the Office of State Budget and Management.  Each report shall include all of the following:
(1)	All projects that receive funding.
(2)	The estimated cost of each project.
(3)	The date that work on each project began or is expected to begin.
(4)	The date that work on each project was completed or is expected to be completed.
(5)	The actual cost of each project.
The quarterly reports shall also show those projects advanced in schedule, those projects delayed in schedule, and an estimate of the amount of funds expected to revert to the General Fund.
SECTION 29.2.(e)  Notwithstanding G.S. 143‑23, if additional federal funds that require a State match are received for water resources projects or for beach nourishment projects for the 2002‑2003 fiscal year, the Director of the Budget may, after consultation with the Joint Legislative Commission on Governmental Operations, transfer funds from General Fund appropriations to match the federal funds.
SECTION 29.2.(f)  G.S. 113A‑118.1 is amended by adding a new subsection to read:
(e)	The Commission shall allow the use of riprap in the construction of groins in estuarine and public trust waters on the same basis as the Commission allows the use of wood."
SECTION 29.2.(g)  The Coastal Resources Commission shall not enforce any provision of any rule that is inconsistent with G.S. 113A‑118.1(e), as enacted by this act, and the Commission shall amend its rules as may be required to conform with G.S. 113A‑118.1(e), as enacted by this act.
SECTION 29.2.(h)  G.S. 113‑229(h1) reads as rewritten:
"(h1)	Except as provided in subsection (h2) of this section, all construction and maintenance dredgings of beach‑quality sand may be placed on the affected downdrift ocean beaches or, if placed elsewhere, an equivalent quality and quantity of sand from another location shall be placed on the downdrift ocean beaches."
SECTION 29.2.(i)  G.S. 113‑229 is amended by adding a new section to read:
"(h2)	Clean, beach quality material dredged from navigational channels within the active nearshore, beach or inlet shoal systems shall not be removed permanently from the active nearshore, beach or inlet shoal system. This dredged material shall be disposed of on the ocean beach or shallow active nearshore area where it is environmentally acceptable and compatible with other uses of the beach."
SECTION 29.2.(j)  G.S. 113‑229(i) reads as rewritten:
"(i)	Subject to subsections (h1) and (h2) of this section, all materials excavated pursuant to such permit, regardless of where placed, shall be encased or entrapped in such a manner as to minimize their moving back into the affected water."

PART XXX. MISCELLANEOUS PROVISIONS

Requested by:  Senators Plyler, Odom, Lee
EXECUTIVE BUDGET ACT APPLIES
SECTION 30.1.  The provisions of the Executive Budget Act, Chapter 143, Article 1 of the General Statutes, are reenacted and shall remain in full force and effect and are incorporated in this act by reference.

Requested by:  Senators Plyler, Odom, Lee
COMMITTEE REPORT
SECTION 30.2.(a)  The Senate Appropriations/Base Budget Committee Report on the Continuation, Expansion and Capital Budgets, dated June 18, 2002, which was distributed in the Senate and used to explain this act, shall indicate action by the General Assembly on this act and shall therefore be used to construe this act, as provided in G.S. 143‑15 of the Executive Budget Act, and for these purposes shall be considered a part of this act and as such shall be printed as a part of the Session Laws.
SECTION 30.2.(b) The budget enacted by the General Assembly for the maintenance of the various departments, institutions, and other spending agencies of the State for the 2002‑2003 fiscal year is a line item budget, in accordance with the Budget Code Structure and the State Accounting System Uniform Chart of Accounts set out in the Administrative Policies and Procedures Manual of the Office of the State Controller.  This budget includes the appropriations made from all sources including the General Fund, Highway Fund, special funds, cash balances, federal receipts, and departmental receipts.
The General Assembly amended the requested adjustments to the budgets submitted to the General Assembly by the Director of the Budget and the Advisory Budget Commission, in accordance with the steps that follow and the line item detail in the budget enacted by the General Assembly may be derived accordingly:
(1)	The base budget was adjusted in accordance with the base budget cuts and additions that were set out in the Senate Appropriations/Base Budget Committee Report on the Continuation, Expansion and Capital Budgets.
(2)	Transfers of funds supporting programs were made in accordance with the Senate Appropriations/Base Budget Committee Report on the Continuation, Expansion and Capital Budgets.
SECTION 30.2.(c)  The budget enacted by the General Assembly shall also be interpreted in accordance with the special provisions in this act and in accordance with other appropriate legislation.
In the event that there is a conflict between the line item budget certified by the Director of the Budget and the budget enacted by the General Assembly, the budget enacted by the General Assembly shall prevail.

Requested by:  Senators Plyler, Odom, Lee
MOST TEXT APPLIES ONLY TO 2002‑2003
SECTION 30.3.  Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2002‑2003 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2002‑2003 fiscal year.

Requested by:  Senators Plyler, Odom, Lee
APPROPRIATIONS LIMITATIONS AND DIRECTIONS APPLY
SECTION 30.4.(a)	Except where expressly repealed or amended by this act, the provisions of S.L. 2001‑424, S.L. 2001‑457, S.L. 2001‑514, S.L. 2001‑513, S.L. 2001‑496, and S.L. 2001‑487 remain in effect.
SECTION 30.4.(b)	Notwithstanding any modifications by this act in the amounts appropriated, except where expressly repealed or amended, the limitations and directions for the 2002‑2003 fiscal year in S.L. 2001‑424, S.L. 2001‑457, S.L. 2001‑514, S.L. 2001‑513, S.L. 2001‑496, and S.L. 2001‑487 that applied to appropriations to particular agencies or for particular purposes apply to the newly enacted appropriations and budget reductions of this act for those same particular purposes.

Requested by:  Senators Plyler, Odom, Lee
EFFECT OF HEADINGS
SECTION 30.5.  The headings to the parts and sections of this act are a convenience to the reader and are for reference only.  The headings do not expand, limit, or define the text of this act, except for effective dates referring to a Part.

Requested by:  Senators Plyler, Odom, Lee
SEVERABILITY CLAUSE
SECTION 30.6.  If any section or provision of this act is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part so declared to be unconstitutional or invalid.

Requested by:  Senators Plyler, Odom, Lee
EFFECTIVE DATE
SECTION 30.7.  Except as otherwise provided, this act becomes effective July 1, 2002.