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Legislative Update–7/1/16

The legislature is barreling ahead towards adjournment. The budget has been finalized, policy committees are wrapping up their work, and there are very few big ticket items left on the docket. We should be all wrapped up by tomorrow.

HB2 “Fix”?

In the final week of session, there was lots of speculation about potential revisions to HB2, including an ill-advised draft that was leaked to the press that would have created state-issued gender reassignment IDs. At this point, it looks less and less likely that any revisions to the anti-LGBT law will be made before adjournment.

The Final Budget

The final budget bill appeared online on Monday evening and was given final passage by the House today. The money report can be found here and the special provisions can be found here. Generally speaking, the final budget is a blend of both House and Senate priorities with compromises from each chamber. Below is a quick rundown of items in contention between the House and Senate proposals and how they ended up in the final budget.

NC Pre-K—The final budget includes $1.325 M for 260 new NC Pre-K slots. The House budget included $4M for this item, while the Senate budget included nothing.

Child Care Subsidies—The final budget includes $1.325 M for 260 new subsidy slots. Neither the House nor the Senate included this funding.

Child Care Subsidy Market Rates—The final budget includes a market rate increase for Tier 1 and Tier 2 counties for children ages 3-5. This was in the House budget, but not in the Senate proposal.

Children’s Developmental Service Agencies (CDSA’s)—The final budget includes a nonrecurring allocation of $1.25M to help offset an anticipated decrease in Medicaid receipts. This was included in the House budget, but not the Senate budget.

Funding for Local Health Departments—The budget includes $14.8M in nonrecurring funds to help offset an anticipated decrease in Medicaid receipts. This was included in the House budget, but not the Senate budget.

You Quit, Two Quit—The final budget allocates $250K in nonrecurring funds for You Quit, Two Quit, a smoking cessation program for pregnant women. This funding level is consistent with the House proposal.

Funding for LMEs / Mental Health Treatment—There was no additional allocation to restore last year’s cut, but last year’s budget includes a provision that allows up to $30M in unspent Medicaid dollars to be shifted to LME / MCOs. Since there was a significant amount of unspent Medicaid funding last year, the LME/MCOs will receive this money for FY2016.

Governor’s Task Force on Mental Health—The final budget includes a $10M recurring allocation and $10M nonrecurring allocation to fund the recommendations coming from the Governor’s Task Force on Mental Health.

Child Facility-Based Crisis Centers—The final budget includes $2M in nonrecurring funds for start-up and construction costs for two new child facility-based crisis centers.

Inpatient Capacity in Rural Areas—There is $18M in one-time funds allocated to expand inpatient capacity in rural areas.

Controlled Substance Reporting System—The final budget includes additional funding $375 K recurring and $1.3 M non-recurring for the maintenance and operations of the state’s controlled substance reporting system. This funding was included in the Senate budget but not in the House budget.

Wright School—The final budget maintains funding for the Wright School, which was eliminated in the Senate budget.

Teacher Pay—The final teacher pay package includes an average 4.7 percent increase in teacher compensation.

Class Size—The final budget makes no changes to class size despite competing proposals from the Senate and House. The Senate budget would have allocated an additional $27 M to reduce class size in second grade, while the House eliminated a scheduled decrease in 1st grade class size.

School Vouchers—The final budget includes the Senate proposal to allocate $34.5 M to the “Opportunity Scholarship Grant Fund Reserve” to be used for private school vouchers in the upcoming school year.


Early Childhood Education—The final budget includes a special provision directing HHS and DPI to work together to develop and implement a statewide vision for early education and the transition from Pre-K to Kindergarten. The provision directs HHS and DPI to develop data indicators informed by the NC Pathways project to measure progress in this area. This provision was in the Senate budget but not the House budget.

School Performance Grades—There was a provision in the House budget that would change the school performance grading system so that student growth and performance would be considered equally in the formula. The current formula is weighted heavily towards performance, which doesn’t accurately measure a school’s effectiveness and often punishes schools in poor communities. This was not included in the final budget.

Year-Round Schools—The Senate budget included a new statutory definition for year-round schools, which states that year-round schools are “multi-track” and must meet at least one of three scheduling criteria. This language would have forced 88 schools across the state to change their schedule at the last minute. This provision was not included in the final budget.

Pilot Program for Raising the Dropout Age—The final budget includes a provision that would establish a pilot program for raising the age of compulsory school attendance to 18 for Hickory Public Schools, Newton-Conover City Schools, and Rutherford County Schools. This pilot was included in the House budget but not the Senate budget.

Bills on the Move

HB424, Unlawful Transfer of Custody—This bill addresses situations where a parent or guardian feels unable or unwilling to care for his or her child and locates a stranger who takes physical custody of the child. Such unlawful transfers can result in children ending up in abusive or neglectful homes or in human trafficking rings. The bill was approved by the House and Senate this week and has been sent to the Governor for his signature.

HB3, Omnibus Constitutional Amendment—This bill includes three amendments: one on eminent domain, one affirming the right to fish and hunt, and one capping the state income tax at 5.5 percent. NC Child opposes the amendment to cap the income tax because it will permanently undermine our state’s ability to invest in children. The bill passed the Senate, but has been relegated to the House Rules Committee, where we hope it stays until the legislature adjourns.

HB1080, Achievement School District—This bill establishes an “Achievement School District” (ASD) under the State Board of Education that can take over five low-performing schools from local school districts and turn them over to private entities, like non-profit and for-profit charter school operators. This bill has passed both chambers and is now off the Governor for his signature.

HB1021, Amend Sex Offender Certain Premises—This bill is an update to a bill passed in 2008 that barred convicted sex offenders from a variety of settings where children live and play. Parts of that bill were overly broad and ruled unconstitutional by a federal judge in 2015. HB1021 adds more specificity to the list of settings from which sex offenders are barred in order to bring the law within the confines of the constitution. This bill was given final approval by the House this week.

HB1074, Schools / CC Facilities—Test Water for Lead—This bill would require every public schools and child care centers that were permitted for construction before 1987 to test their drinking water for the presence of lead. The bill appropriates $2.4 M to implement the testing. This bill was approved by the House this week, but it’s fate in the Senate is unclear.

HB972, Law Enforcement Recordings/No Public Record–The controversial body camera bill includes a provision to allow needle exchanges for IV drug users, which is an important public health victory. The bill passed this week.

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