HomeMy WebLinkAboutAgenda - 09-20-2007-2bMessage
Donna Coffey
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~~ac~n me.n ~- ~ - ~
From: Rebecca Troutman.[rebecca.troutman@ncacc.org]
Sent: Tuesday, August 21, 2007 12:23 PM
To: County-Managers; County Finance Officers
Cc: NCACC-Legislative
Subject: NCACC 2008 State Budget Analysis
Dear Managers, Finance Officers, and Budget Officers,
Please find following the Association's synopsis of the 2008 state budget, highlighting county impacts.
Rebecca Troutman, Intergovernmental Relations Director
NCACC
919.715.4360
After 8 weeks of continuous negotiation largely centered on county Medicaid relief and additional county revenue
authority, the House and Senate agreed to the budget conference report on H1473, adopting the state's 2007-08
$20.7 billion budget on July 30, 2007, with a signing by Governor Easley the following day.
The budget provides for athree-year phase-out of county Medicaid expenses in exchange for a gradual
assumption of a half-cent local sales tax. In the first year alone, counties will enjoy more than $86 million in
Medicaid relief, with $19 million in additional state aid to guarantee that all counties receive at least $500,000 in
benefits under the plan. To help offset some of these new state costs in the first year, the General Assembly is
withholding roughly 50 percent of the Public School Building Capital Fund (ADM Fund).for 2007-08 only. Counties
will make up the difference through their Medicaid savings (Secs. 10.36 (a); 31.16).
When fully implemented in 2010-11, counties will be relieved of $671 million in Medicaid costs by foregoing $410
million in revenues. Any county in which the sales tax revenue stream exceeds its Medicaid expense would be
held harmless in perpetuity based on actual Medicaid expenses and actual foregone revenues, with a guaranteed
benefit of at least $500,000, providing an additional $42 million in state funding to counties. Counties would hold
cities harmless - $153 million in 2010-11, with growth included in their hold harmless payments mirroring that of
the remaining local sales taxes.
The General Assembly and the Governor's Office also recognized the need for additional revenue authority for
counties to meet their growing infrastructure demands for schools, courthouses, jails and other critical capital
investments. To manage the expected influx of newcomers and to renovate and restore existing infrastructure, the
budget includes authority for counties to levy either a 0.4 percent land transfer tax, estimated to generate $310
million annually, or a quarter-cent sales tax, estimated to generate $250 million annually, subject to voter
referendum (Sec. 31.17).
The 2007 legislative session is truly a banner year for counties! In one fell swoop, the three priority goals adopted
by our membership in January -permanent Medicaid relief, additional infrastructure funding, and additional
revenue authority -were made available to all 100 counties. Now onto other budget news.
8/28/2007
County Medicaid Relief, Additional Revenue Authority Drive Budget Discussion,
Adoption
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The' budget appropriates $350 million of anticipated lottery proceeds to education, with 40% or $140 million set
aside for school construction (no change in allocation to school construction or formula for allocation to school
districts). A slight wording change in the lottery legislation allows additional monies to be provided in prizes,
thereby generating greater sales (Sec. 5.2). (The actual 2006-07 lottery proceeds for school construction totaled
$130 million.)
The budget makes permanent the'/4 state sales tax which was set to expire this fiscal .year but sunsets the upper
income tax bracket as scheduled. To provide tax relief for the working poor, the budget authorizes a 3.5%
refundable earned income tax credit in the 2008 tax year. Additional tax credits are provided for long-term care
insurance, adoption, and a number of economic development tax adjustments.
In compiling the budget plan, the House and Senate contemplated eliminating state positions vacant 6 months or
more to free up recurring dollars through lapsed salaries. As adopted, the state's budget office must eliminate
enough vacant positions to save $10 million, excluding UNC; community college, and school positions from
consideration. Sec. 6.18 does require a study of the uses of lapsed salaries.
Teachers receive salary increases averaging five percent, with a step increase plus a flat $1,240, to bring their
salaries above the national average by 2008-09. New teachers paid at step 0 are eligible for $250 bonus, an
additional step is added to the teacher salary schedule, and teacher assistants must be paid at salary grade 56.
School administrators receive ah average 4.44 percent increase. UNC and Community college faculty and
professional staff receive 5 percent. State employees see a 4 percent increase in their salaries. All told, state
salary enhancements consume $500 million in recurring expenses.
State retirees were bumped up to a 2.2 percent COLA, requiring a $35.7 million appropriation. No mention is
made to the local retiree's 2.2 percent increase, since this is an action of the board of trustees absent action by
the General Assembly. State employer contributions for employee and retiree health costs would cost $233
million, including hefty co-payments and deductible increases. Employer contribution rates for retirement and
other benefits are set at 7.83 percent, while annual contributions for health coverage are $4,183 for indemnity and
$4,052 for ppo. The budget eliminates the state's health indemnity plan in 2008-09.
The General Assembly agrees to a capital appropriation of $231 million with an additional $436 million in COPS,
principally for prisons and university facilities.
The following highlights those budget items of interest to counties.
Education
Much of the new funding is targeted to education initiatives and increased enrollment in public schools,
community colleges and universities.
Additional moneys are provided for More at Four, the Governor's educational initiative, drop out prevention grants,
the House's educational initiative, and a focused education reform pilot program, the Senate's educational
initiative. The budget also contains greater public school allotment funding in the academically gifted and talented,
children with disabilities, instructional supplies, and small LEA allotments, with additional non-recurring funding for
low wealth. No additional funding is provided for school resource officers.
The governor's plans for Learn and Earn expansion moves forward with the budget providing $4,000 in college
tuition grants to eligible students. General funds for the scholarship program of $27.6 million in 2007-08 and $60
million in 2008-09 is supplemented by $40 million from the Escheats Fund in 2008-09.
Sec. 7.16 in the special provisions sets forth six objectives by which the state board of education is to evaluate
charter schools and Sec. 7.31 creates the Joint Legislative Study Committee on Public School Funding Formulas.
Public Schools 2007-08
• Fully fund enrollment increase of 26,265 additional students or 1.83
ercent increase in enrollment • Continuation
• Full fund ABC teacher bonuses at current incentive levels $70 million nr
• Maintain k at 18:1 teacher/student ratio; replaces lottery funds not
realized in 2006-07 • $37.5 million nr
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• Increase disadvanta ed student su lemental fundin $17.6 million
• Double literac coaches in 100 additional middle schools 200 total $5.7 million
• Learn and Earn high school initiative to 9 additional high schools; 15
planning grants
• $2.4 for 9 schools ready to
implement
$700k nr
• Implement Learn and Earn online tuition, fees, technology for
12,000 community college classes & 8,000 UNC classes by high
school students $6.5 million
$5 million nr
• Enhance school connectivi fundin with riori to Learn & Earn $12 million
• Add 10,000 More at Four slats & increase $400 per slot funding;
28,653 total slots $56 million
• Increase instructional su lies allotment to $50.44 ADM $2.8 million
• Increase AIG fundin to $1,042.53/student 4% of ADM $1.8 million
• Increase children with disabilities allotment to $3,199.57/student
171,617 students $5 million
•
• Increase small county supplemental funding by $48,715 per LEA
Additional $784,703 for declinin coup LEAs Sec. 7.7 $2.1 million
• Establish dro out revention com etitive grants ro ram $7 million nr
• Create focused education ilot ro ram $4.4 million
• Increase low wealth to restore 75% of each LEA's decrease • $5.4 million nr
• Reduce re lacement school buses b 170 $4.5 million nr
• Reduce teacher assistants' fundin • $5.5 million
*nr =non-recurring
Communit Cotle es 2007-08
• Fully fund enrollment growth (NCACC goal for enhanced funding)
• Set aside enrollment rowth reserve for hi h rowth cam uses Increased by $3.3 million far
new enrollment estimates
$2 million nr
• Raise tuition b 6.3% $7.5 million)
• Increase data connectivit & fund connectivi consultant $3.8 million
• Increase fundin fore ui ment needs $10 million nr
• Provide advanced capital planning funds in anticipation of statewide
bond $8 million nr
• Provide funds for com etitive rants for facilities & e ui ment • $15 million nr
Sec. 8.6 calls for a study of community college access to determine if the current structure provides geographic
access while minimizing overhead costs. Sec. 8.8 elaborates study components to the community colleges' FTE
funding formula, including equipment funding per FTE.
Human Services
The budget delays implementation of the governor's plan to cover the working poor and directs the N.C.
Department of Health and Human Services to study how best to expand health insurance coverage to children
whose family incomes are between 200 percent and 300 percent of federal poverty standards. NC Kids' Care
would provide a limited benefit medical assistance program, upon federal approval of Medicaid waivers (Sec.
10.48 outlines DHHS areas of study for the new program).
Mental health dollars are realigned in keeping with the new cost model. Reductions in the Dix and Umstead
hospitals budgets are offset by the opening of the Central Regional Hospital in late Fall 2007.
The budget sets aside millions for preventive health care, screening and monitoring-many of these programs
provide additional funding to county health departments.
Human Services 2007-08
• County Medicaid Relief (Sec. 10.36 (a)):
o State assumes 25 percent of county costs, beginning $86.2 million
with claims paid on or after Oct. 1, by reducing county
gizs~zoo~
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share to 11.25 percent
o States assumes 50 percent of county costs, beginning $271.2 million 2008-09
Jul 1, 2008, b reducin coun share to 7.5%
• Study how best to expand health coverage to children between 200 $368k
percent & 300 percent poverty $7 mil in 2008-09
• Ex and Medicaid to cover foster children 18-20 ear olds $216k
• Increase Health choice fundin to cover ro'ected shortfall $7.5 million
• Increase child-care subsid NCACC le islative oal • $8.4 million
• Purchase 634k treatment courses for andemic influenza $8.3 million nr
• Ex and Child Welfare Oversi ht of coun DSS CWS ro rams $132k
• Provide state funding for health information system development • $5.1 million, most nr
NCACC le islative oal
• Increase recruitment of doctors and dentists in rural areas $349k
• Fund community health-care competitive grants program for $5 million nr
reventive care
• Assist rural hos itals with o erations and infrastructure maintenance $2 million nr
• Increase Area Agencies on Aging funds (NCACC legislative goal) • $536k for block grant
• Set aside funding for senior center general purposes $300 k
• $200k nr
• Fund ilot for adult care home uali im rovement $264k nr
Increase Smart Start local initiatives fundin $1.3 million
• Increase health de artment fundin NCACC le islative oal $2 million
• Establish Health Carolinians for local health de ts. • $1 million nr
• Fund additional school nurse positions (NCACC legislative goal) • $2.7 million
• 54 nurses
• Increase state/county special assistance rate from $1,148 to $1,173 • $1.9 million
(NCACC legislative goal to phase out county participation) • Coun cost = $1.9 million
• Reduce Medicaid provider inflation increase ~ ($35.4 million)
• Implement further Medicaid cost containment activities • ($25.2 million)
• Coun $8.9 million
• Increase Medicaid in-home services rate • $1.9 million
• Increase CAP-MR/DD slots b 300 reali ned dollars $4.5 million
• Mental Health realignment & funding increases
• LME administrative cost model (most from realigned) $500k & $4.9 million in 2~d year
• Regional purchase, local-host SA programs (realigned) • $6 million
• Drug treatment court $2 million
• Crisis services per LME 2007 crisis plans (realigned) $13.7 million
• Supported employment (realigned)
• .
$2.5 million
• Housing people with disabilities $7.5 million nr
• Housing operating cost subsidy $3.5 million
• Hospital utilization pilot (realigned) $2.5 million
• TASC • $2 million
• Earl autism intervention ilot reali ned $2 million nr
A special provision calls for an inventory of state and local health department activities that address health
promotion and disease prevention with an eye to combining these functions into a single funding stream allocation
to local health departments (Sec. 10.25). Sec. 10.28 calls on DHHS to develop child support performance
measures for state and county child support offices. Sec. 10.45 directs that families pay part of CAP-MR/DD
services.
A general special provision regarding mental health authorities clarifies terms and conditions of a LME director
(Sec. 6.20). Other mental health programs and LME administration are covered in numerous special provisions-
each looking to build community infrastructure (Sec. 10.49). Sec. 10.49 (d) allows a LME to use up to 1 percent of
its substance abuse treatment funds to provide nominal incentives for consumers who achieve treatment
benchmarks, while (f) requires LMEs to work with county health departments and sheriffs to provide medical
8/28/2007
Message Page 5 of 7
assessments and medication for inmates housed in county jails who are suicidal, hallucinating, or delusional. A
designated LME employee is to be responsible for screening the daily jail log. Sec. 10.49 (i) requires DHHS to
develop a transitional residential treatment service to provide 24-hour residential treatment and rehabilitation.
Sec. 10.49 (I) clarifies LME primary functions.
LMEs must report monthly on remaining gaps in crisis services and reductions in acute admissions to state.
psychiatric hospitals (o). DHHS must develop a reporting system to provide LMEs information on all visits to
community hospital emergency departments by crisis individuals (r). Sec. 10.49 (s) requires the department to set
up a pilot program to test whether holding a LME clinically and financially responsible for psychiatric hospital use,
coupled with greater resources to build community capacity, will reduce hospital use.
The Mental Health Trust Fund is limited to increasing community-based services and can only be allocated to
area programs (w) after 2007-08. Any additional savings from consolidating state. psychiatric hospital beds can be
used to fund LME administration (w2). Sec. 10.49 (y) requires DHHS to designate 4 additional LMEs to receive all
state allocations through a single funding stream, while (z1) calls on the Joint Legislative Oversight Committee to
study the appropriateness of LMEs acting as service providers. Sec. 10.49 (bb) appropriates mental health
services and supported employment funds based on a LME's percentage of population below the federal poverty
level to the state's total.
Sec. 10.49 (ee) attempts to reign in community support services by requiring DHHS to immediately conduct an in-
depth evaluation of the use and cost of community support and implement management practices to increase
oversight, monitoring, and prior authorization. DHHS is also directed to include standards for determining LME
capability to perform utilization review and must adopt by Jan. 1, 2008, statewide standardized authorization
procedures and processes for Medicaid utilization review. Before July 1, 2008, up to six LMEs that meet these
standards may, under contract with the outside vendor, complete the utilization review.
Finding that counties budget nearly $121 million to LMEs, LMEs must report annually to the Division on all county
fund expenditures and collect income data for all individuals receiving services (ff). Sec. 10.49 (gg) states that the
General Assembly intends to eliminate the LME administrative deficit through hospital downsizing and that the full
funding should be available by the 2009-2011 biennium, while (hh) prevents the DHHS secretary from designating
another entity to perform LME activities. Sec. 10.49 ((kk) requires DHHS to ensure that each LME receives no
fewer service dollars than it expended in 2006-07, when allocating administrative funding .
DHHS must also rework the revised system of allocating state and federal funds to area authorities to better
reflect projected needs rather than historical allocation practices and spending patterns (Sec. 10.51 (b)). Sec.
10.52 requires pre-authorization for.all multiply-diagnosed adult services except emergency services.
Justice aid Public Safety
The Senate increases court fees by $36 million to fund 540+ new court positions and recurring dollars for court
technology. Counties are required to fund courthouse telephone systems meeting AOC specifications out of
facilities fees (Sec. 14.16). Traditionally, state appropriations funded telephone systems and state coordination.
and funding grow increasingly important as telephone systems merge with computer networking infrastructure. To
free up recurring dollars and to ensure greater program oversight, the budget substitutes non-recurring dollars for
recurring in a number of programs, and requires a "continuation review," to be led by the Appropriations
Committee meeting off-session (Sec. 6.21). Of concern to counties are the Criminal Justice Partnership and
Juvenile Crime Prevention Programs.
2007-08
8/28/2007
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Justice and Public Safet Ex ansion
• Continue statewide warrant repository (NCAWARE), Casewise $7.9 million
and other court technology initiatives • $1.9 million nr
• Add new deputy clerks of courts: • $4.2 million
0 150 10/1/07 $330k nr
0 147 7/1/08
• Add new district court judges & new support staff • $634k
0 6 judges 1/1/08; 3 judges 1/15/09 • $87k nr
0 9 support 1/1/08; 1 1/15/09
• Add new superior court judges & new support staff $221 k
0 2 judges 1/1/08 • $20k nr
0 2 support 1/1/08; 3 7/1/08
• Add new magistrates $683k
0 21 10/1!07 $85k nr
0 21 711 /08
• Establish 2 new family courts in additional districts $522k
• $47k nr
• Add new assistant district attorneys, investigators & new $3.9 million
victim/legal assistants $243k nr
0 30 ADA 10/1 /07; 28 ADA 7/1 /08 '
0 40 asst 10/1 /07; 40 asst. 7/1 /08
0 7 invest. 10/1/07; 7 invest. 7/1/08
• Add 3 new DNA processors $280k
• $133k nr
• Creates Piedmont Triad Regional Crime Lab • $432k
• $156k nr
• Add 5 new Medicaid fraud investi ators • $85k
• Continue replacement of statewide automated fingerprint ID $2.7 million
s stem
• Continue implementation ofVIPER-statewide 800 megahertz $2.3 million
voice system • HP can spend up to $10 mil
• A ro riation throw h Hi hwa Fund im lementation
• Shift Juvenile Crime Prevention Council funding to nr Shifts $22.7 million to nr
• Sub'ect to continuation
• Shift CJPP.funding to nr • -Shifts $9.2 million to nr
• Sub'ect to continuation
• Increase Hazmat res onse team a ui ment $250k nr '
• Continue floodplain mapping project $1.7 million
• $2.4 million nr
• Fund ille al immi ration ro'ect thru rant to Sheriff's Assn. $750k nr
• Support gang intervention & suppression grants (NCACC $4.8 million nr
le islative oal
Special provisions call for study of available prosecutorial resources and the use of those resources, including
caseload management, adequacy of space and equipment, geographical equity, criminal prosecution,
automation, cost management practices and how current use impacts access to justice, accountability, timely
resolution, complexity, and reduction in backlogs (Sec. 14.15). Further, AOC must measure the impacts of the
state's additional funding, including performance measurements and caseload standards (Sec. 14.18).
Natural and Economic Resources
Funds are provided for the Agricultural Development and Farmland Preservation Trust Fund to preserue the
state's farmland and to protect natural resources, wildlife habitat and water resources. The budget establishes a
UNC cancer research fund, funded in part from an increase in the tobacco products (10% of the cost price,
excluding cigarettes) and eight million in Tobacco Trust Funds (Sec. 6.23). In lieu of a transfer of all research
stations to the university system for oversight and consolidation, a special provision calls for a study of a transfer
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(Sec. 11.4). The budget contains level funding for fhe Clean Water Management Trust Fund at $100 million.
A general special provision, effective October 1, 2008, limits any new parking lot surface to 80% impervious (Sec.
6.22).
The budget extends and establishes some economic development activities such as film industry recruitment,
viticulture promotion, home furnishing marketing, and the NC Green Business. The One NC Fund -for economic
development incentives -would receive $14 million, and $4.8 million is set aside for matching federal program
funds for small business development. The Rural Center receives an additional $19 million to establish and
implement the rural economic transition program, a grants program to "carry out transformative economic
development and agricultural enhancement projects...with priority to applicants in tier one areas" (Sec. 13.14).
One hundred million is made available to the Rural Center to distribute grants for water ($50 million) and
wastewater ($50 million) improvements (Sec. 13.13). Sec. 13.17 directs the state's regional economic
development authorities to seek supplemental funding from local governments.
Natural and Economic Resources Ex ansion 2007-OS
• Levy $2 per ton tipping fee to assess & correct unlined landfills &
inactive hazardous waste sites via H1492
• Continue private well water safety program's incentive grants to
counties $300k nr
• Expand state enforcement of sediment and erosion control and
rovide local overnment incentives to artici ate in ro ram $473k supported by fees
• Improve municipal wastewater compliance and review and update
of water standards • Increases water quality fees by 20
ercent
• Fund 20 percent state match for federal wastewater and drinking
water rant match re uirements • $9.4 million nr
• Increase A . Devel. & Farmland Preservation Trust $8 million nr
• Fund biofuels center • $5 million nr
•
• Provide recurring funding for One NC fund
Match federal small business innovation ro rams $14 million nr
$4.8 million nr
• Ex and Rural Center's economic infrastructure fund • $19 million nr
• Increase council of governments funding by $10,000 per COG
NCACC le islative oal • $170k nr
• Land for Tomorrow; waterfront access $120 million via COPS nr
• Fund water & wastewater capital improvements through Rural
Center $100 million nr
General Government 2007-08
• Fund the NC Housing Trust Fund (NCACC goal) $5 million
• Fund the home rotection ilot ro ram •. $1.5 million nr
•. Expand arts funding $1 million basic
• $1 million grassroots
• $1 million Garin & sharing nr
• Increase aid to public libraries (NCACC legislative goal to make $475k nr
new funds recurrin
• Rea last installment to retirements stem $45 million nr
The budget allocates an additional $200,000 or $425,000 from each disposal tax program -scrap tire and white
goods - to the Department of Revenue for administrative expenses (Secs. 24.1 and 24.2). It also changes the
allocation of the "Grassroots Arts Program," distributing 20 percent of the total equally among counties, with the
remaining 80 percent allocated based on county population (Sec. 21.1). Section 22.1 directs the NC Housing
Finance Agency to continue its development of a pilot "Home Protection" program, directed at residents in
counties with greater than 7% unemployment, same as the House provision. Once a homeowner qualifies under
the program, the mortgage holder cannot begin foreclosure or other legal action. A special provision in the
transportation category, Section 27.12, states the General Assembly's intent to phase out general fund transfers
from the Highway Fund and the Highway Trust Fund, 2009 - 2013.
8/28/2007