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The Capital Report

SENATE BUDGET OVERVIEW
 

June 1, 2016

2016 Senate Budget Recommendations  
 
Summary
Senate leaders unveiled Wednesday their $22.2 billion budget proposal for the upcoming fiscal year.
 
Increasing the average teacher pay to $55,000, increasing the state’s standard deduction, and putting $583 million in the state’s Rainy Day fund were among the highlights.
 
“I am proud of my Senate colleagues for crafting a balanced and fiscally responsible budget that includes a plan to raise average teacher pay to $55,000, allows the typical North Carolina family to keep an additional $110 by making the first $17,500 of their income tax-free, and reduces tuition at five public universities to $1,000 per year while ensuring tuition does not increase at any UNC system school during a student’s four years in college,” said Senate President Phil Berger, R-Rockingham, in a press release.
 
He continued: “That my Senate colleagues tackled these challenging issues while keeping the growth of government spending below 2.5 percent and filling our Rainy Day fund for the first time in state history shows tremendous discipline and a firm commitment to conservative budgeting principles.”
 
Senate lawmakers reviewed their chamber’s budget proposal in the Appropriations and Finance committees. They are expected to debate and vote on the budget in successive floor sessions on Thursday and Friday.
 
The budget will then be sent to the House, where it will be rejected, as customary. Chief budget writers and leaders from both chambers will meet to negotiate the differences.
 
Legislative leaders say they expect to finalize and approve a state budget for the 2016-2017 by July 1 or July 4, at the very latest.
 
Key Provisions
Below are key provisions and items by subject-area in the Senate budget.
 
Salaries and Benefits: 
  • Lays the foundation to increase average teacher pay from $47,783 to $54,224 over the next two years, which will provide North Carolina public school teachers an average $4,700 permanent pay raise over the same period. 
  • Offers experienced-based step increases to teachers, assistant principals, principals, State Highway Patrol troopers, clerks and magistrates and appropriates $16 million to boost pay for correctional officers.
  • Provides a one-time $2,000 bonus for school principals and a one-time $500 bonus for assistant principals. 
  • Earmarks $95 million for permanent merit-based pay raises for state employees and another $85 million for one-time performance-based bonuses. 
  • Includes $10 million for a pilot program to provide performance-based bonuses of up to $6,800 for third-grade reading teachers. $5 million would be available for the top 25 percent of teachers in each school district based on EVAAS growth scores, and an additional $5 million would be available to the top 25 percent of teachers on a statewide basis.
K-12 Public Education:
  • Funds K-12 enrollment growth, community college enrollment, and public university enrollment.
  • Provides funds to hire close to 1,000 additional first and second grade teachers.
  • Prevents the Read to Achieve, School Connectivity, Teach for America, and Communities in Schools programs from being cut by the Department of Public Instruction.
  • Establishes an opportunity scholarship grant fund reserve of $34.8 million to award more need-based scholarships to children from working families and provides forward funding to add 20,000 children to the program over the next ten years.
  • Creates a teacher assistant tuition reimbursement pilot program in Anson, Franklin, Moore, Richmond, and Scotland Counties, which will provide tuition reimbursement of up to $4,500 annually for 25 local teaching assistants to pursue a college degree leading to teacher licensure.
  • Fully funds teacher assistant positions at the 2014-2015 level.
  • Provides $50 million from the lottery reserve to fund future local school building needs.
UNC System:
  • Authorizes an increase in the base budget for the UNC system of up to $70 million to fund the Access to Affordable College Education Act.
  • Guarantees no in-state tuition increases for a standard undergraduate college term (usually 4 years) at all North Carolina public universities. This tuition guarantee would also apply to active members of the military based in North Carolina.
  • Reduces student fees – often used to fund non-academic expenses – at all North Carolina public universities by 5 percent and limit future increases to no more than 3 percent per academic year.
  • Lowers tuition at select universities to $1,000 per year for in-state students and $5,000 per year for out-of-state students. The reduced tuition would apply to the following schools beginning in the Fall of 2018: Elizabeth City State University, Fayetteville State University, University of North Carolina at Pembroke, Winston-Salem State University, and Western Carolina University.
  • Directs $300,000 on a recurring basis to administer the new Cheatham-White Merit Scholarship Program for students at North Carolina Central and N.C. A&T Universities. 
  • Earmarks $183,000 to expand an internship program for students at the state’s historically black colleges and universities.
  • Requires all public universities with educator preparation programs to open and operate a lab school for K-8th grade students in a school district where 25 percent or more schools are identified as “low performing.”
Taxes and Economic Development:
  • Increases the standard deduction by $2,000 over two years.
  • Increases the zero percent tax bracket over the next two years – ensuring all North Carolina taxpayers, regardless of income, pay no state income taxes on more of their earnings. 
Health and Human Services:  
  • Invests over $9 million to reform North Carolina’s child welfare program by requiring additional training, providing more positions, and expanding in-home services to support children’s safety while keeping families together.
  • Provides resources for the Controlled Substance Reporting System, which will use advanced analytics to detect and fight prescription drug abuse.  
  • Directs nearly $11 million to help establish new medical school programs in Fayetteville and Asheville.
  • Funds nearly $500,000 for Zika prevention and detection.
  • Directs proceeds from the sale of the Dorothea Dix property go toward behavioral health programs, including $2 million to establish child facility-based crisis centers and $12 million to expand inpatient behavioral health beds targeting rural areas.
  • Funds over 200 additional slots for Alzheimer’s patients and their families through the Community Alternative Program for Disabled Adults.
Transportation:
  • Increases funding for the Strategic Transportation Investment (STI) law by over $32 million, which will allow new highway projects to be added over a ten-year period.
  • Allocates nearly $3 million to improve customer service and decrease wait times in high-volume DMV office locations.
  • Increases state assistance for urban and rural transit systems by $4 million and state aid to general aviation airports by $15 million. 
  • Provides nearly $14 million in additional funding to improve freight rail tracks, crossing safety, and industrial, port, and military access. 
  • Repeals the $500,000 cap on state funding for light rail projects effective for the next round of project prioritization (P5.0).
 
Justice and Public Safety:
  • Provides $1.3 million to get the Western Crime Lab up and running and $640,000 for equipment upgrades in the other two crime labs.
  • Includes $2.1 million to help close out the backlog at the State Crime Lab.
  • Provides $250,000 to digitize mental health records to help streamline background checks for gun purchases.
  • Invests $500,000 for School Risk Management Plans to be developed in 835 public schools.
Agriculture and the Environment:
  • Allocates over half a million dollars for international marketing of North Carolina agricultural products.
  • Increases funding for the Clean Water Management Trust Fund by $5 million. 
Miscellaneous:
  • Directs federal funds to a broadband initiative and water and sewer projects in public schools.
  • Helps the Office of the State Auditor conduct more specialized audits of state agencies and by implementing a new filing system for Statements of Economic Interest.
  • Provides recurring funding for the Human Relations Commission.
  • Establishes a cyber-security program for disabled veterans to develop their skills while protecting the state against cyber-attacks. 
  • Adds $10 million to the Disaster Relief Fund.
  • Invests $12 million to implement state of the art software to ease tax filing for North Carolinians. 
Overall Differences with the House Budget
 
There are a number of policy differences in the Senate budget that put it in contention with the House version.
 
The following a description of those differences as sourced from the Insider, a state government news service and original budget documents.
 
Salaries and Benefits -- Unlike the House budget, for example, the Senate plan doesn't provide across-the-board raises for state employees. Instead it includes more than $180 million for performance-based raises or bonuses.
 
The Senate also doesn't offer cost-of-living adjustments for retirees, as chamber leaders said the long-term financial liabilities are too great. The House plan includes 1.6 percent COLAs, costing more than $700 million over time.
 
Tax changes – The Senate budget includes an increase in the standard deduction, bringing it to $17,500 in $1,000 increments over two years for married taxpayers filing jointly. The House plan would phase in the increases over four years.
 
Market-Based Sourcing -- The Senate plan also includes provisions of Senate Bill 869, but the House budget does not. That bill would enact "market-based sourcing" for determining taxes owed by multistate service corporations that do business in North Carolina.
 
In general, that strategy rewards companies with more employees and capital investment in North Carolina, while hurting out-of-state companies that use North Carolina as a market.
 
Broadcasters -- The budget proposal also includes a change in the way state taxes are determined for the nation's largest broadcasters, which could greatly increase their tax liability, senators confirmed. The broadcasters, represented by the Motion Picture Association of America, oppose the change and have floated a different plan.
 
Savings Reserve -- The Senate proposes adding $583 million, bringing it to the statutory goal of 8 percent of general fund spending for the first time ever. The House plan would put $300 million in savings.
 
Tolls -- The House plan would eliminate all ferry tolls; the Senate plan keeps the existing toll structure.
 
HBCU Tuition -- The Senate plan also includes the controversial proposal to dramatically decrease tuition to $1,000 per year for in-state students and $5,000 for out-of-state students at five universities – Elizabeth City State, Fayetteville State, UNC Pembroke, Winston-Salem State and Western Carolina – while covering the cost of lost tuition revenue.
 
The same proposal would guarantee no in-state tuition increases for undergraduate students who finish their degrees on time and reduce student fees by 5 percent at all North Carolina public universities. The House budget doesn't include those changes.
 
Senate Health and Human Services Budget  
The following is a description of select Senate Health and Human Services spending items. A comparison with the House budget proposal is included at the end of each description.
 
Division of Central Management and Support
County Department of Social Services to Improve Medicaid Timeliness -- Provides $143,215 in recurring funds for 3 Business System Analyst positions to interpret Medicaid data by combining and analyzing diverse types of data from several data warehouses to extract actionable data discoveries and new trend analytics. Senate budget item

These positions will develop performance standards for county departments of social services offices, monitor the data to measure performance, and provide better guidance to county DSS offices on how to improve the timeliness and accuracy of Medicaid eligibility determinations. These positions can also assist with training county DSS offices on how to effectively use NC FAST data to manage the Medicaid eligibility determination workload.  
 
NC FAST Next Phase -- Budgets federal receipts of $12,637,255 and prior year earned revenue of $1,589,017 for NC FAST to implement client self-service functionality, including secure inbox, document upload, renewals, online appeals, a Quality Assurance Manager, and increased reporting. The revised net appropriation remains unchanged at $13 million. Senate budget item.
 
Division of Mental Health, Developmental Disabilities and Substance Abuse Services
The Senate budget provides $14 million in state funds to implement some of the recommendations by the Governor’s Task Force on Mental Health and Substance Abuse.

Child Facility-Based Crisis Centers -- Provides $2 million in non-recurring funds to the Department of Health and Human Services for start-up costs (renovation or construction) to establish 1 or 2 child facility-based crisis centers, at least 1 of which will be in the south/east/central region. Funds will be awarded on a competitive basis, and will be available across 2 years [because construction and renovation tends to take longer than a year]. Senate budget item.
 
Inpatient Behavioral Health Beds -- Transfers $12 million in nonrecurring funds to the Department of Health and Human Services for the purpose of expanding inpatient capacity, especially in rural areas near counties with limited inpatient capacity relative to their needs through constructing new beds or renovating existing beds to form new inpatient psychiatric units or new facility-based crisis centers, prioritizing rural hospitals in the process. Senate budget item.
 
Cherry Hospital Operating Expenses -- Reduces funding by $3 million previously budgeted to meet Cherry Hospital's expanded bed capacity. S.L. 2012-142 appropriated $3.5 million in recurring funds for 373 additional positions to staff the expanded operating capacity at the Cherry Hospital replacement facility originally scheduled to open in April 2013. The FY 2013-14 base budget included $9.6 million recurring for the annualized General Fund cost of the new positions. Due to construction and other delays, the replacement facility is now scheduled to open in September 2016. Only 25 of the 100 additional beds will go online at that time. The revised net appropriation for Cherry Hospital is $73.7 million. New Senate budget item.

Wright School -- Eliminates funding ($2.1 million) for the Wright School and closes it effective October 1, 2016. The revised net appropriation for the Wright School is $0. Senate budget item.

The following items are NOT in the Senate budget, but are in the House plan:

Governor's Task Force Recommendations Reserve -- Reserves $30 million to implement the recommendations from the Governor's Task Force on Mental Health and Substance Use. The recommendations include money to improve transitional housing, case management, mental health first aid training, and child crisis centers, as well as creating tools to combat addiction. House budget only.

Dorothea Dix Property Reserve – Earmarks up to $25 million to assist rural hospitals in the construction and conversion of existing, unused acute care beds into licensed, short-term inpatient behavioral health beds. House budget only.

Single Stream Funding -- Provides $30 million to partially restore the S.L. 2015-241 reduction to the single stream funding allocated to the LME/MCOs. The revised net appropriation for single stream funding is $247.7 million. An additional $30 million could be allocated at the end of this and next fiscal year. House budget only.

New Broughton Hospital Staff -- Provides $1.9 million for additional staff needed for the transition to the new Broughton Hospital facility, which is scheduled to open in June 2017. The revised net appropriation for Broughton Hospital is $62.0 million. House budget only.
 
Division of MH/DD/SAS and State Operated Healthcare Facilities
Single-Stream Funding for MH/DD/SAS Community Services -- On or after June 1, 2016, the Office of State Budget and Management (OSBM) certifies a Medicaid budget surplus in funds 1310 and 1311 and sufficient cash in Budget Code 14445 to meet total obligations for fiscal year 2015-2016, then the DMA may transfer to the DMH/DD/SAS funds not to exceed the amount of the certified surplus $30 million, whichever is less, to offset the reduction in single stream funding required.
 
If, on or after June 1, 2017, (i) the OSBM certifies a Medicaid budget surplus in funds 1310 and 1311 and sufficient cash in Budget Code 14445 to meet total obligations for fiscal year 2016-2017, 2016-2017 and (ii) the LME/MCOs have met the milestones set by the Department of Health and Human Services for consolidation that are required by that date, then the DMA may transfer to the DMH/DD/SAS funds not to exceed the amount of the certified surplus or $30 million, whichever is less, to offset the reduction in single stream funding required by this section.
 
The DMH/DD/SAS shall allocate funds transferred pursuant to this subsection among the LME/MCOs based on the individual LME/MCO's percentage of the total cash on hand of all the LME/MCOs in the State, calculated in accordance with subsection (b) of this section. These funds would be allocated as prescribed by June 30 of each state fiscal year. Senate special provision.
 
Expanded Use of Funds for Inpatient Psychiatric Beds or Bed Days – Allows the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to use up to ten percent (10%) of the funds allocated for the state’s three-way contracts to pay for facility-based crisis services and non-hospital detoxification services for individuals in need of these services, regardless if the individuals are medically indigent. Senate special provision.
 
Strategic Plan for Improvement of Behavioral Health Services -- The General Assembly finds that behavioral health services within the state are fragmented and a statewide comprehensive plan is necessary to ensure that individuals with behavioral health needs are timely served in the most appropriate settings and with the most appropriate services in order to achieve the best possible outcomes.
 
By November 1, 2017, the Department of Health and Human Services will develop and submit to the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Medicaid and NC Health Choice, and the Fiscal Research Division a strategic statewide plan to improve the efficiency and effectiveness of state-funded behavioral health services. Senate budget provision.
 
Division of Medical Assistance (Medicaid)
Medicaid Rebase -- Reduces the Medicaid base budget by more than $318 million for the impact of enrollment, utilization and pricing based on the Division of Medical Assistance forecasting model and year to date trends in spending and enrollment. The reduction in the Medicaid rebase represents a 7.9 percent decrease from the enacted budget. The revised net appropriation for Medicaid is $3.6 billion. Same as House plan.

Federal Rural Hospital Designation – Graduate Medical Education -- Provides $759,008 for the impact of Cape Fear Valley Hospital being reclassified as a rural hospital by the Centers for Medicare and Medicaid Services as referenced in the Graduate Medical Education item in the Division of Central Management and Support. The reclassification results in access to federal funding for residency programs that will be affiliated with Campbell University Medical School. The reclassification will reduce the rate used to calculate the upper payment limit supplemental payment, and thus reduce the assessment collected. The reduced assessment will reduce the 28.85 percent state retention. Same as House plan.  

Accounting for Medicaid Receivables as Nontax Revenue -- For the 2015-2016 fiscal year, the Department of Health and Human Services will deposit from its revenues $147 million with the Department of State Treasurer to be accounted for as nontax revenue. These deposits will represent the return of General Fund appropriations, nonfederal revenue, fund balances, or other resources from state-owned and state-operated hospitals which are used to provide indigent and non-indigent care services.

The return from state-owned and state-operated hospitals to DHHS will be made from nonfederal resources in an amount equal to the amount of the payments from the Division of Medical Assistance for uncompensated care. Senate budget provision.

Contract to Recover Certain Overpayments -- No later than October 1, 2016, the Department of Health and Human Services, Division of Medical Assistance, shall issue a request for proposals (RFP) to recover Medicaid and NC Health Choice overpayments to providers when the total amount owed to the state by the provider is less than $150. The RFP shall specify that payment under the contract shall be made only in the form of a contingent fee. The contingent fee shall be set at a percentage of the state share of the final overpayment. Senate budget provision.

State-County Special Assistance Eligibility Adjustment -- Provides $4.1 million for Medicaid for the projected increase in the number of individuals receiving State-County Special Assistance due to the increase in the income eligibility level effective October 1, 2016. Individuals receiving State-County Special Assistance are automatically eligible for Medicaid. House budget only.

Division of Child Development & Early Education
NC Pre-K Federal Funding -- Budgets Temporary Assistance for Needy Families block grant receipts on a nonrecurring basis for NC Pre-K, and accordingly reduces the revised net appropriation by the same amount. The requirements for NC Pre-K remain unchanged at $144.2 million. The revised net appropriation for NC Pre-K is $46.5 million. Senate budget item.
 
Child Care Subsidy Federal Funds -- Budgets Temporary Assistance for Needy Families block grant receipts on a nonrecurring basis for the Child Care Subsidy program, and accordingly reduces the revised net appropriation by the same amount. The revised net appropriation from all actions in this report for the Child Care Subsidy Program is $44 million. Senate budget item.
 
Child Care Quality Improvement -- Invests in quality child care through additional Child Care Development Fund (CCDF) block grant requirements and receipts in the amount of $663,435 for criminal background checks, enhanced training, and improved fraud prevention and detection. Funds 10 receipt supported positions: 1 Human Services Planner/Evaluator III, 1 Child Day Care Program Manager, 1 Administrative Assistant I, 2 Processing Assistant V, 1 Human Services Planner/Evaluation IV, and 4 Administrative Officer II's.

The revised net appropriation remains unchanged for child care regulation at $0, criminal record checks at $614,637 and for child care capacity building at $36,979. The revised net appropriation for the Child Care Subsidy Program from all actions in this report for FY 2016-17 is $44 million, which is less than the House budget calculation of $51 million. Senate budget item.
 
Study Child Care Subsidy Rate Setting -- The Department of Health and Human Services, Division of Child Development and Early Education, shall study how rates are set for child care subsidy. In conducting the study, the Division will, at a minimum, review market rate studies and other methodologies for establishing rates, including any cost estimation models, along with the pros and cons of each method reviewed. The Division shall report to the House Appropriations Committee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, and the Fiscal Research Division by March 1, 2017, on any recommendations, including the suggested methodology to be used for setting rates, as well as time frames for implementing the methodology. Senate special provision.
 
The following items were NOT in the Senate budget, but in the House plan.
 
NC Pre-K Increase Children Served – Provides $4 million appropriation to serve an additional 800 children in NC Pre-K, bringing the total number of slots to 29,400. The revised net appropriation from all actions in this report for NC Pre-K is $52.6 million. House budget only.

Child Care Subsidy Market Rate Increase -- Increases the Child Care Subsidy market rate effective October 1, 2016 for children age 3-5 in Tier 1 and 2 counties to the recommended rate in the 2015 Market Rate Study. The annualized net appropriation is $4.6 million. The revised net appropriation for Child Care Subsidy from all actions in this report for FY 2016-17 is $51 million. House budget only.

Division of Social Services
State-County Special Assistance Caseload Adjustment -- Reduces by $1 million State-County Special Assistance due to a decline in the number of individuals participating in the program. The revised net appropriation from all actions in this report for State-County Special Assistance for FY 2016-17 is $61.1 million. Same as House plan.

Adoption Assistance -- Adjusts by a $1 million reduction the budget based on projected enrollment. The revised net appropriation for Adoption Services is $44.3 million. Same as House plan.

Child Welfare Federal Program Improvement Plan – Provides more than $8.5 million in additional resources to implement the Program Improvement Plan as a result of the recent Child and Family Services Review (CSFR).

Professional development opportunities and ongoing specific training regarding ever-evolving issues facing child welfare will be established. Specific training for supervisors and other leadership who support and coach the field social workers will be provided. Additionally, three positions are provided to analyze program performance data. Same as the House plan.

Food and Nutrition Services Outreach for Medicaid/Medicare Dual Eligibles -- Provides $600,000 for the Department to establish a pilot program to increase access to Food and Nutrition Services benefits for individuals who are dually eligible for Medicare and Medicaid through outreach and assistance with completion of the Food and Nutrition Services applications. Same as the House plan.

County Child Welfare Services Oversight and Accountability -- Provides more than $700,000 to enhance the state capacity to ensure a competent and well-trained county-based child welfare workforce by increasing the availability of localized, mobile training tailored to specific needs. Same as the House plan.

Child Fatality Reviews – Provides $59,900 to fund three additional positions to ensure timely review of child fatalities. These positions will also develop the system capacity to effectively utilize the results and implement the recommendations as a result of the reviews. Same as the House plan.

Child Advocacy Centers -- Provides $200,000 for Child Advocacy Centers to provide evidence-based services to sexually and physically abused children and their families. The revised net appropriation for Child Advocacy Centers is $593,000. New Senate budget item.
 
Completion of Performance Audit of County Departments of Social Services' Administration of Medicaid Program -- The State Auditor will submit a preliminary report on the performance audit to the Joint Legislative Oversight Committee on Health and Human Services and to the Fiscal Research Division by June 1, 2015, and will complete the performance audit by December 31, 2016. The Department of Health and Human Services and county departments of social services shall give the State Auditor full access to all data necessary to complete the audit and the report. Senate budget provision.
 
County Department of Social Services Improve Medicaid Timeliness -- Provides $156,785 for 4 Human Services Evaluator/Planner positions to assist county department of social services offices in using the Client Services Data Warehouse(CSDW) to analyze NC FAST eligibility data for Medicaid and other economic services programs. These staff will develop internal queries and reports to assist DHHS with monitoring county DSS office performance, and provide CSDW training to county DSS offices and develop NC FAST or other data queries for use by the counties. New Senate budget item.
 
Division of Public Health
Nurse Family Partnership Program -- Provides $400,000 to expand the Nurse Family Partnership Program home visiting services in the State. The revised net appropriation for the Nurse Family Partnership Program is $1.3 million. Same as the House plan.
 
Senate K-12 Education Budget
The following is a description of select Senate K-12 Public Education spending items. A comparison with the House budget proposal is included at the end of each description.
 
Teacher Pay – Provides more than $280 million in recurring money to fund salary increases for educators paid in accordance with the statewide teacher salary schedule as well as an experience-based step increase for educators earning a year of creditable experience.
 
Together, these increases provide, on average, a 6.5% increase for educators. The changes to the teacher salary schedule provide annual salary increases for educators earning a year of creditable service for the first 15 years of experience.
 
The salary schedule retains the tier-based system for educators with 16 or more years of creditable service. A corresponding special provision provides additional details on the changes to the teacher salary schedule. For all net appropriation supported State-funded positions, across all sections of the Committee Report, the approximate revised net appropriation for salaries is $11.4 billion, an increase of nearly $394 million for FY 2016-17. Senate budget item.
 
School-Based Administrators Pay -- Provides more than $10 million in recurring and nonrecurring money for an experience-based step increase for eligible School-based Administrators and a one-time bonus for all Assistant Principals and Principals regardless of funding source.
 
Assistant Principals would receive a $500 bonus and Principals shall receive a $2,000 bonus. The bonus shall not be considered compensation for retirement purposes. A corresponding special provision provides additional details on these compensation adjustments. For all net appropriation supported State-funded positions, across all sections of the Committee Report, the approximate revised net appropriation for salaries is $11.4 billion, an increase of nearly $394 million for FY 2016-17. Senate budget item.
 
Other LEA Personnel Pay -- Provides $15 million for salary increases for non-certified and central office school district employees. Each LEA shall develop policies for the allocation of these salary increases and merit-based bonuses. Corresponding special provisions provide additional details on these compensation adjustments. For all net appropriation supported State-funded positions, across all sections of the Committee Report, the approximate revised net appropriation for salaries is $11.4 billion, an increase of nearly $394 million for FY 2016-17. Senate budget item.
 
Third-Grade Reading Teacher Performance Pilot – Provides more than $10 million in recurring money to fund a new 3rd grade reading teacher performance pilot program. This 2-year pilot program will provide bonuses to the top 25% of 3rd grade reading teachers statewide and the top 25 percent of 3rd grade reading teachers within each LEA based on each teacher's Education Value-Added Assessment System (EVAAS) student growth index score for reading from the prior school year. A corresponding special provision provides additional program details. Senate budget item.
 
 
Increased Funding for Classroom Teachers -- Increases funding by $27.1 million to school districts for guaranteed classroom teachers positions in 2nd grade. In FY 2016-17, the teacher allotment ratio will be decreased by 1 student per teacher in 2nd grade to provide 1 teacher per 16 students. The revised net appropriation for the classroom teachers’ allotment is $4.2 billion. Senate budget item.

Textbooks and Digital Materials – Increases textbooks and digital materials allotment funding by $9,250,000 over the FY 2015-16 level. The FY 2015-17 Appropriations Act budgeted $9,210,837 in additional recurring funding in FY 2016-17 for this allotment; this action increases funding and changes it to nonrecurring. The revised net appropriation for the textbooks and digital materials allotment is $61.5 million. Senate budget item.
 
At-Risk Student Supplemental Funding -- Reduces funding by $4.7 million set aside to support grants to 17 after-school providers from the at-risk allotment. The revised net appropriation for the after-school provider grant program is $1.1 million. Base allotment funding to LEAs for the at-risk allotment remains unchanged with a net appropriation of $284.8 million. The revised net appropriation for the at-risk allotment is $285.9 million. Senate budget item.
 
Teacher Assistant Tuition Reimbursement Program -- Provides $112,500 for the Teacher Assistants Tuition Reimbursement program, an initiative to provide tuition reimbursement of up to $4,500 annually for 25 teacher assistants in Anson, Franklin, Moore, Richmond, and Scotland Counties that are employed by those LEAs and are pursuing a college degree that will result in teacher licensure. Senate budget item.
 
K-3 Class Size Allotment Ratios -- The average class size for kindergarten through third grade in a local school administrative unit shall at no time exceed the funded allotment ratio of teachers to students in kindergarten through third grade.
 
At the end of the second school month and for the remainder of the school year, the size of an individual class in kindergarten through third grade would not exceed the allotment ratio by more than three students. The funded class size allotment ratio for kindergarten through third grade shall be as follows: (1) For kindergarten, one teacher per 18 students. (2) For first grade, one teacher per 16 students. (3) For second grade, one teacher per 16 students. (4) For third grade, one teacher per 17 students.
 
The following items were NOT in the Senate budget but were in the House budget.

Modify Grading System --Modified the state’s A-F grading system to include both improved academic performance and growth as measures of student performance. House budget only.

Literacy Coach/1st Grade Teacher Swap -- Provides $25 million to create literacy coach positions to support Read to Achieve for schools identified by the State Board of Education (SBE) as the 20% lowest performing elementary schools. But cuts funding for hiring additional first-grade teachers, saving $26.8 million. House budget only.

Advanced Placement/International Baccalaureate Teacher Bonuses -- Provides $4.3 million to support a $50 bonus payment to teachers of record for students taking either AP or IB courses and achieving a certain grade on AP or IB exams.  Bonuses shall be awarded to teachers of AP courses for students who earn scores of 3 or higher on AP exams and to teachers of IB Diploma Program courses for students who score 4 or higher on IB exams.  Establishes a maximum award of $2,000 annually. House budget only.
 
Career and Technical Education (CTE) Teacher Bonuses -- Provides $600,000 to support a $25 or $50 bonus payment to teachers of record for students that complete a CTE class and pass a related exam leading to industry certifications and/or credentials.  The SBE shall rank each industry certification based on academic rigor and employment value in order to classify eligibility for $25 and $50 teacher bonuses. House budget only.
 
Advanced Placement Summer Professional Development Institutes -- Provides $126,000 to support the North Carolina Advanced Placement partnership to pay for at least 1 teacher from every LEA to participate in summer professional development institutes. The revised net appropriation for the AP partnership is $1.6 million. House budget only.
 
Digital Learning Plan -- Provides $9.4 million to accelerate implementation of several components of the State's Digital Learning Plan (DLP) for public schools. Funds will support DLP management, school and district leadership development, teacher professional development, mobile device management and digital literacy skills evaluation. House budget only.
 
 
 
 
 
 
 
 

 
 

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