May 5, 1998
MEMORANDUM
TO:
Members of SBCC
Presidents
NCCC System Office Employees
FROM: H. Martin Lancaster
SUBJECT: Legislative Update
S.5002 CHIP/RITE CARE (RAND-D)
Into the sixth week of stalemate on child health insurance, state lawmakers reached a
compromise bill which will significantly expand the number of North Carolina children receiving
government subsidized health care and provide tax breaks for an estimated 405,000 families now
paying for their children's insurance.
As soon as this fall an estimated 60,000 children in families with incomes of up to twice
the federal poverty level ($32,900 for a family of four), but with incomes too high to qualify for
Medicaid, will be eligible for the new coverage which will include dental, vision and hearing care.
The new coverage costing roughly $108 million annually, with about $80 million coming
from North Carolina's share of federal funds earmarked last year by Congress for improvement of
children's health care, will cost the state treasury an estimated annual $64.5 million.
The size of a tax credit (cost to the state) has been the significant obstacle in late rounds of
debate between the House and Senate. Under the legislation, the credit will be limited to families
making $100,000 or less. The credit would be worth $300.00 annually for a family making less
than 225 percent of the federal poverty level—about $37,015 for a family of four. Other families
making less than $100,000 could claim up to a $100.00 credit.
Governor Hunt is expected to sign the bill this week.
LEGISLATIVE RESEARCH
COMMISSIONS/COMMITTEES
HOSPITAL, MEDICAL AND DENTAL SERVICE CORPORATION (BLUE
CROSS/BLUE SHIELD) CHARTER STUDY COMMISSION
On May 1, a bipartisan commission created to formulate rules to govern a potential
conversion of Blue Cross from a non-profit to a for-profit enterprise finalized recommendations to
the General Assembly.
Consensus to transfer 100 percent of its fair market value to a charitable foundation if the
company converts was reached in February. Recent arguments have centered around what might
define the initiation of a conversion.
The State Department of Insurance estimates current Blue Cross assets at about $850
million. Under the adopted rules, Blue Cross is capped at 10 percent if it purchases out-of-state,
for-profit enterprises. The company is free to buy in-state insurers as long as the revenue
generated does not exceed a 40 percent cap imposed by the Commission. In either instance, if the
company exceeds the caps, at 10 or 40 percent this will "trigger" conversion, forcing Blue Cross
to be defined as profit-making.
Blue Cross officials maintain they have no plans to convert, contending these rules have
made this Blue Cross plan the most restricted in the nation.
The System contacted Blue Cross officials and the Commission Chairs concerning a
request for charitable funding to assist our allied health programs should a conversion occur.
JOINT LEGISLATIVE ADMINISTRATIVE PROCEDURE OVERSIGHT
COMMITTEE
Of interest to community colleges is a report from the Child Day Care Commission, April
17, 1998. The following reports can be obtained from our office:
# Report on Playground Rule (10 NCAC 3U.0605-Condition of Outdoor Play Equipment)
# Report on Rules Objected to, or for which the Period of Review was Extended by RRC
(10 NCAC 3U.0302-Application for license; 0704 - Preservice Requirements for Administrators,
0710-Preservice Requirements for Lead Teachers).
# JOB TRAINING STUDY COMMISSION (LRC)
On April 17, at a fourth meeting, Commission members heard from Labor Commissioner
Harry Payne concerning job training consolidation. Comparisons of the Texas and Michigan
models to North Carolina were discussed by Wayne Daves, Executive Director of the
Commission on Workforce Preparedness. He also reviewed Congressional action on S.R. 1186,
Workforce Investment Partnership Act.
The Chairs released Draft Proposed Findings which included preliminary
recommendations for further consolidation of workforce development programs within the
Department of Commerce, with suggested future transfer of Apprenticeship programs from the
Department of Labor and the Native American Job Training Program from the Department of
Administration to Commerce. The preliminary findings also suggested that Workforce
Development Zones for Service Delivery Areas be redrawn so that their boundaries are
coterminous with the seven Economic Development Zones. Included in the preliminary draft
findings was the statement "that, while the Department of Commerce will be the principal agency
involved in the administration of programs, the delivery of job training is best suited to the
community college campuses." After discussion of the preliminary findings, members of the
Study Commission recommended that the Commission be continued with the date for final
recommendations pushed back to January prior to the long session.
JOINT APPROPRIATIONS SUBCOMMITTEE ON EDUCATION
The committee received the North Carolina Community Colleges Formula Study Report,
addressing occupational extension and budget stability (2/3 rule). Use of the sliding scale in the
Legislative Update occupational extension formula was addressed comprehensively in an effort to
advance state appropriation parity to that of curriculum instruction.
The focus on funding stability stems from a special provision enacted in the 1997 session.
LEGISLATIVE STUDY COMMISSION ON PUBLIC SCHOOLS
Proposing legislation on allocation of additional funds for limited English proficiency
(LEP) students, Members of the Commission sought to include the community colleges in their
directives related to assessment of programs for the blind or deaf students and technology.
Components of the draft are:
# Appropriate additional funds for LEP students.
# Direct State Board of Education to evaluate ESL certification, allowing LEA's
flexibility in hiring when certified personnel are unavailable to teach children with
limited English proficiency.
# Direct the Board of Governors to increase access to programs needed for ESL
certification by using community colleges and distance learning.
A copy of the draft is available from our office.
HOUSE APPROPRIATIONS SUBCOMMITTEE ON EDUCATION
The Office of State Budget and Management received the Governor's Recommended Base
Budget Reductions for Education. No unanticipated changes were included for community
colleges.
Expansion budget requests were addressed by the Fiscal Research Staff.
Copies of the Community College "Operating Efficiencies" as approved are available from
this office.
OTHER LEGISLATIVE ITEMS OF INTEREST
Governor Hunt announced his proposed budget on May 4 with overall additional spending
at $12.9 billion or a 12 percent increase for fiscal year 98-99, clearly earmarking his priority to
expand Smart Start into all 100 counties.
Lawmakers in the Senate will first consider the Governor's recommendations. Upon their
endorsement, the budget will go to the House.
A basic breakdown of percentages in new funding areas is as follows:
Education $735 million (53.6%)
Jobs/Economic Development $180.1 million (13.1%)
Children $ 90.7 million (6.6%)
State Employee Salary Increase $ 90.5 million (6.6%)
Environment $ 80.6 million (5.9%)
Public Health $ 59.4 million (4.3%)
General Government $ 52.9 million (3.9%)
Crime/Public Safety $ 50.2 million (3.7%)
Elderly/Social Services $ 32.8 million (2.4%)
Community colleges' share of the proposed budget:
Recurring Non-Recurring Requested
Enrollment Fund Increase $1,371,444 $ 1,371,441
Technology - Instructional, $ 846,000 $ 9,154,000 $ 20,634,500
NC LIVE, Support
Continue 97-98 Non-recurring $ 4,175,000 $ 4,000,000
for New & Expanding Industry
Continue Educational, Training $17,000,000 $132,000,000
Equipment and library books
Excellence in Teaching $ 6,749,208
4% increase for community college $19,522,048 $ 1,505,908
employees; 1% bonus
President Lancaster expressed disappointment in the level of funding, that most of the
funding was non-recurring, and there was no recommendation for the second year parity funding
for occupational extension.
Basically, community colleges received a recommended 11.4% growth compared to the
universities (7.8%) and public schools (9.6%), however we remain as follows in the total
education budget:
Public Schools 69.9%
Universities 22.3%
Community Colleges 7.8%
N.C. Economic Development Board
President Lancaster participated in this forum which addressed biotechnology industry
status, rural entrepreneurial and possible legislative proposals. The board addressed incentives of
tax credits and exemptions just days after landing the $300 million Fed Ex Hub. Likely incentives
might include making credits for manufacturing companies available to emerging high-technology
business. Specific proposals will be made in fall 1998 for the 1999 legislative session.
NC LIVE
April 23, 1998, marked the beginning of unprecedented access to electronic information
through N.C. LIVE -- North Carolina Libraries for Virtual Education. Thanks to a special
Internet connection, library computer users may browse through dozens of electronic databases
and in some instances, download complete articles. Forty databases are offered at public libraries,
community colleges, public universities and some private colleges. The resources include such
items as 80 million phone numbers from National White Pages; papers presented at worldwide
conferences; 900,000 records on all U. S. books in print; information on at least 11,000 U. S.
Companies; thousands of historic documents and entire articles from the past 90 days of the New
York Times. NC LIVE is funded by the state, private colleges and federal grants. The
Governor's budget recommended $500,000 (recurring) for Community Colleges.
Banner Day for Karin Pettit
Executive liaison to the president at Guilford Technical Community College (GTCC) in
Jamestown was named president of Lenoir Community College in Kinston. Pettit has been a
leader in Guilford County for her work with local business, government and industry leaders. She
is credited with identifying the importance of high-tech training, resulting in GTCC's national
reputation in workforce preparedness. She will become one of three female presidents in the
59-campus system when she assumes the presidency of Lenoir Community College on July 1.
Redistricting
On April 21, a three-judge panel rejected a state proposal to allow some congressional
primaries on May 5 and ordered all primaries to be held September 15. The court gives the
General Assembly until May 22 to submit a new congressional redistricting plan. The 1998
election process, whether conducted under a legislative plan or a court-ordered plan, must begin
July 6 with filing on that date through July 20.
Appropriations request
President Lancaster continues to meet with Members, addressing our consensus budget
request for the short session.
CC-98-147
____________________________________
Suzanne E. Williams, Governmental Relations, 200 W. Jones Street, Caswell Building,
Raleigh, NC 27603-1379 919-733-7051 FAX: 919-733-0680
E-Mail: williamss@ncccs.cc.nc.us