Final 2012 Budget Summary

HB 950, Adjustments to the 2011 Budget

The budget was passed largely along party lines in June.  On June 29, the Governor vetoed the budget.  On July 2d, the Senate and House voted to override the Governor’s veto, with 6 House democrats joining Republican lawmakers for the override vote: Reps. Brandon, Crawford, Hill,  Brisson, Jackson and McLawhorn.  Several modifications to the budget were also passed in the Technical Corrections (SB 847) and Budget Technical Corrections (SB 187) bills.  The summary below reflects these modifications.

Education Budget

• ·         Raises the amount allocated per student with a disability to $3,709 per child (was $3,585.88/child).  Allotment cap of 12.5% of an LEA’s ADM remains in place.
• ·         LEA Adjustment Reduction - $143 mil to reduce cuts to LEAs, still leaves huge shortfall from expiring federal funds used to curb previous cuts.
• ·         Residential Schools - None will be closed.  Restores $4.7 mil of cuts. Section 7.3 discusses School Improvement Plans, Section 7.8 repeals consolidation.
• ·         Excellent Public Schools Act (Section 7A): $27 mil: developmental screening and Kindergarten entry assessment; elimination of social promotion; reading development for retained students; school performance grades; establishes NC Teacher Corps; allows for local plans for performance pay.

Health and Human Services Budget

Division of Medical Assistance

• ·         Makes several adjustments to savings to be achieved: $59 mil in additional CCNC savings; Reduced savings expected from 1915 b/c waiver transition by $1.7 mil due to delays in implementation; $3.8 mil savings from fraud, waste and abuse prevention; Restructure Fee for Service for $2 mil savings; $14 mil CHIPRA bonus; $15 mil for cost settlements with providers and fraud, waste and abuse initiatives; $6 mil reduction associated with changes to PCS program (see below); and Management flexibility reductions across other departments to achieve savings for Medicaid program.
• ·         Limits on Speech Therapy, Physical Therapy and Occupational Therapy for adults are repealed.
• ·         Cost of Living Adjustment (COLA) disregard (Section 10.6):  Income disregard for Medicaid effective January 1, 2013, with a sunset of December 31, 2017.
• ·         Medicaid Non-Emergency Medical Transportation: directs DMA, in consultation with DOT, to develop and issue a Request for Proposal (RFP) for the management of nonemergency medical transportation services for Medicaid recipients.
• ·         Pharmacy services (Section 10.8): $24 mil in projected savings from increased use of generics, and adds expanded prior authorization to save $5.3 mil; special pharmacy program for hemophilia drugs.
• ·         State Auditor Audit of DMA (Section 10.9A)
• ·         PED/FRD Study of Medicaid Organization (Section 10.9B): The Program Evaluation Division and the Fiscal Research Division of the General Assembly shall jointly study the feasibility of creating a separate Department of Medicaid and make a joint recommendation on this issue to the 2013 Regular Session of the General Assembly no later than February 15, 2013.
• ·         Removes DHHS authority to reduce provider rates or services.
• ·         Special Care and Memory Care Units: Directs DMA to submit to CMS by September 15 an application for a home- and community-based services program under 1915(i) for individuals who (i) are typically served in special care and memory care units that meet the criteria of the State-County Special Assistance Program  and (ii) have been diagnosed with a degenerative, irreversible disease that attacks  the brain and results in impaired memory, thinking, and behavior.
• ·         Changes to Personal Care Services: Directs implementation of PCS for recipients who have a medical condition, disability, or cognitive impairment and demonstrates unmet needs for, at a minimum, (i) three of the five qualifying activities of daily living (ADLs) with limited hands-on assistance; (ii) two ADLs, one of which requires extensive assistance; or (iii) two ADLs, one of which requires assistance at the full dependence level.   The five qualifying ADLs are eating, dressing, bathing, toileting, and mobility.  The recipient resides either in a private living arrangement, a residential facility licensed by the State of North Carolina as an adult care home, a combination home as defined in G.S. 131E-101(1a), a 122C group home, or supervised living facility for individuals with MH/DD/SA.
• ·         Appropriations Contingent upon adequacy of funding for Medicaid budget (Section 10.9G): DHHS shall not expend funds appropriated for the following purposes until January 1, 2013, pending a determination by the Office of State Budget and Management that there is adequate funding for the Medicaid budget for the 2012-2013 fiscal year: (1) Funds appropriated to DCDEE for the NC Partnership for Children; (2) DMH/DD/SAS funds for additional psychiatric care beds at Broughton Hospital and additional local inpatient psychiatric beds or bed days available to LMEs and MCOs under the State-administered three-way contracts ($9 mil additional); and (3) funds appropriated to DPH for local community health and wellness initiatives.
• ·         Examination of the state's delivery of MH Services (Section 10.11): Directs the HHS Oversight committee to appoint a subcommittee to examine the State's delivery of mental health services.
• ·         AIDS Drug Assistance Program Pilot (Section 10.16)
• ·         Special Assistance In-home (Section 10.23) - keeps 15% cap (although can be waived by the Secretary) but equalizes the amount, all counties shall participate, a formula will be established.

Division of Child Development and Early Education

• ·         PreK - NO increase in final budget.  Directs DCDEE to continue implementation of the NC Pre-K program.  Includes chronic health and developmental disabilities as factors for eligibility requirements along with 75% of the state median income

Division of Central Management

• ·         $2.7 mil reduction for administrative efficiencies
• ·         Non-state entity pass-through funds - makes NR and mandates a 10% match for entities like Arc, Autism Society, and Easter Seals.  There is also a $5 mil reduction to nonprofits (Section 10.18), with language directing to minimize reductions to funds allocated to nonprofit organizations for the provision of direct services and shall not reduce funds allocated to nonprofit organizations to pay for direct services to individuals with developmental disabilities.

Division of Aging and Adult Services

• ·         Transitions to Community Living Initiative (10.23A): Provides $10.3 mil to support DHHS in its plan for transitioning individuals with severe and persistent mental illness into community living arrangements, including establishing a rental assistance program.  It also states that if the State executes an agreement with the USDOJ these funds shall be used to implement the requirements of the first year of the agreement or the plan, with a recurring appropriation to fully implement it.
• ·         Creates a Blue Ribbon Commission on Transitions to Community Living.
• ·         $39.7 mil for Short Term Assistance to Adult Care Homes for residents who no longer qualify for Personal Care Services.  It will provide a monthly stipend amount that will be reduced after three months and then phased out by June 30, 2013.

Division of Mental Health

• ·         No restoration of MH community service funds - $20 mil cut
• ·         3 way contracts - $9 mil increase Jan 1, 2013 contingent upon Medicaid
• ·         LME Admin Funds reduced by $8.5 mil
• ·         Cherry Hospital - funding for increased bed capacity (124 beds) at the new Cherry hospital $3.5 mil
• ·         Broughton Hospital - 19 additional psych beds $3.5 mil after Jan 1, 2013 if money not needed for Medicaid
• ·         Drug Treatment Courts - $2.3 mil eliminated

Division of Public Health

• ·         Medication Assistance Program - $1.7 mil NR in House budget
• ·         $4.9 mil to county health departments for community health and wellness initiatives, contingent upon Medicaid

Justice and Public Safety Budget

• ·         Department of Public Safety Management Flexibility Reductions – $26.3 mil – In implementing, the department shall NOT close the Bladen Correctional Center, reduce community program funding in either the Division of Adult Correction or Juvenile Justice, or eliminate any district level state highway trooper position
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• Juvenile Justice
• ·         Close Edgecombe YDC Jan 1, 2013.  Transfer 10 youth counselor associate positions, 5 to Chatham and 5 to Lenoir to increase their bed capacity.  Also directs a study of the use of the facility.
• ·         Multipurpose Group Home Funds (Section 14.6) - $550,000 for a multipurpose group home in Craven county.

Justice

• ·         $1.8 mil reduction to eliminate state funding to Consumer Protection division.
• ·         AGs must begin doing itemized bills for their work for agencies, must also do biannual reports.

General Assembly

• ·         Program Evaluation Division shall study the duties and services of the NC Human Relations Commission (which now handles fair housing complaints, among other civil rights issues) and the Civil Rights Division of OAH to determine whether there is unnecessary overlap and duplication of services and recommend the placement of the Commission and Division in the appropriate agency or agencies.

State Board of Elections

• ·         HAVA Funds/Disability Access:  Directs the State Board of Elections to retain HAVA Title II funds until MOE funds are appropriated, EXCEPT for voting accessibility funds under Section 261 of HAVA.

Salaries and Benefits

• ·         State employee and public school employee 1.2% salary increases

Office of the Governor – Housing Finance Agency

• ·         Housing Trust Fund - eliminates General Fund appropriation and appropriates $7.9 mil from Mortgage Settlement Agreement

General Government

• ·         Nonrecurring funding appropriated for the continued operation of the NC Sterilization Victims Foundation.