ABCs of Education
First implemented in 1997, the ABCs (Accountability, Basics, and Maximum Local Control) of Education represented a comprehensive restructuring of public education in North Carolina. The plan, developed by the State Board of Education, put forth a defined accountability framework and benchmarks to assess student progress. ABC rewards schools and teachers whose students make progress on state measures of student achievement. Schools who fail to meet standards are held accountable by formula. In addition, the ABC initiative also provides increased local control and budget flexibility.
A managed care Medicaid program administered by the Division of Medical Assistance. The Division of Medical Assistance uses Carolina ACCESS to buy preventive care and treatment from primary care physicians for Medicaid enrollees. The division also runs ACCESS II, a managed care program that provides treatment programs for such diseases as asthma and diabetes. More specifically, ACCESS links Medicaid patients with primary care providers. These providers are the gatekeepers of the Medicaid system. Under ACCESS, all Medicaid patients must see their primary care provider before they may see a specialist. It is incumbent upon the primary care provider to show fiscal restraint in deciding whether or not a patient should see a specialist. Another result of this gatekeeper system is that it prevents patients from seeing the specialist of their choice.
Adequate Yearly Progress (AYP)
Key federal measure of accountability included in the Elementary and Secondary Act (ESEA), as amended by the No Child Left Behind Act (2001). AYP is a measure of progress based pupil scores on state assessment tests. In order to be eligible for grants under ESEA- Title 1, Part A, “Education for Disadvantaged Pupils,” – schools must implement all AYP standards for all public schools and local education agencies (LEAs). Schools that fail to meet AYP standards for two or more consecutive years must have technical assistance supplied by LEAs and spend at least 10 percent of Title I-A grant money on professional development activities. Pupils attending schools that fail to meet AYP standards for two or more consecutive years must have the option to attend other public schools that meet AYP standards. Schools that do not receive Title 1 funds must also participate, but they face less severe sanctions if they do not meet AYP.
ADM (Average Daily Membership)
The sum of the number of students in each LEA, times the number of days each student is enrolled, divided by the number of days in the school year. (Thus a student enrolled for the entire year is counted as one student, and a student enrolled for only one semester is counted as half a student.)
Ad Valorem Tax
Tax based on the assessed value of real property, as opposed to personal property.
AFDC (Aid to Families with Dependent Children)
Welfare program for needy children and their caretakers. AFDC was the backbone of the federal welfare program that ended with the welfare reform of 1996. AFDC was prone to cost inflation because it did not provide adequate incentives for enrollees to obtain suitable employment. A work incentive law of 1968 even allowed AFDC enrollees to work and earn up to 150 percent of their AFDC basic benefits without losing such benefits. The 1996 welfare reform ended AFDC and replaced it with TANF, Temporary Assistance for Needy Families.
One of two forms of taxpayer supported debt issued by the state, the other being general obligation bonds. Unlike general obligation bonds, appropriation-supported debt is not technically guaranteed by the state, but by liens on property or equipment. Hence, such debt can be issued without voter approval. Certificates of Participation (COPs) are the most popular form of appropriation-supported debt. COPs are tax-exempt lease financing agreements that promise investors a share of whatever revenue is derived from the lease (or lease-purchase) of the property or equipment the COP is tied to. As of June 30, 2005, the state owed more than $740 million in COPs debt.
Although the certified budget specifies how much money can be spent on each line item in an agency’s budget, the actual expenditures of a fiscal year are documented upon completion of the year and captured on an ongoing basis in the authorized budget. Differences between the certified budget and the authorized budget arise because agencies are allowed to move money between certain line items as needed. For example, an agency can move money from “office supplies” to “office equipment.” Each transfer between line items requires authorization from the Governor’s Office of State Budget and Management (OSBM).
See Continuation Budget.
Baseline Revenue Growth
Increase in the state’s revenue, assuming no changes in the tax structure.
Basic Education Program (BEP)
The release in 1983 of the national report, "A Nation at Risk," sparked a host of school reform initiatives across the country. In 1985, the General Assembly passed legislation directing the State Board of Education to adopt a basic education program. The Basic Education Program defined a basic education to include; study in the arts; communications skills; physical education and personal health and safety; mathematics; media computer skills; science second languages, social studies and vocational and technical education. BEP was originally $800 million and included allocations for dropout prevention, additional teachers to lower class size, and funding for support staff and materials. The recession of the early 1990s, coupled with concerns about expense and accountability, cut into funding and ended the phase-in of BEP. Although funding for BEP ceased in 1994 providing resources that continue to this day, the program significantly expanded funding for public schools.
Money authorized by the Legislature to be spent on a particular program or line item; an unexpended appropriation is one that could have been spent, but was not; an unappropriated balance refers to cash reserves that have not been allocated for any purpose.
The session laws that appropriate funds for the next biennium (or fiscal year). In sections called special provisions, the budget bill enumerates the total budget appropriated to each agency, salaries of government officials and other public employees, and the legal language that specifies how agencies and other entities may or may not spend their money and report on their expenditures.
Bus Rapid Transit (BRT)
A general term given to various public transportation systems that, through both improvements in infrastructure (i.e. the buses themselves) and scheduling, provide higher quality services compared to ordinary bus lines. The aim of BRT systems is often to approximate the service quality of rail transit while enjoying the cost savings and flexibility of buses.
According to the OSBM, a “budget comprised of nonrecurring appropriations for capital improvement projects, such as new state buildings, repairs and renovations of facilities, walks and drives, land purchases, and civil works projects.” The capital budget frequently includes appropriations for new or renovated buildings in the UNC system, plus other miscellaneous projects and renovations. The state portion of the funds for water resources projects are contained in the capital budget as well.
As defined by the state’s Fiscal Research Division, carryforward funds consist of appropriated monies that were unused in the first fiscal year of a biennium with the result that they are “brought forward for expenditure in the second year of the same biennium.”
Certificates of Participation (COPs)
See Appropriation-Supported Debt.
The total state budget (including federal funds and special funds) as certified by the governor’s director of the budget. Although the General Fund budget receives the most attention, the certified budget encompasses the General Fund, special funds such as the Highway Fund, and other sources, including federal funds. As indicated above (see Authorized Budget), the certified budget does not necessarily reflect actual expenditures for each line item. Monies may be moved among line items within a specific department after the budget has been certified. But legislative permission – through the budget bill – is required before an agency can transfer money between personal services (salary and benefits) and other line items. Even when money is moved from one line item to another, however, total appropriations for each department must remain unchanged from the certified budget. Total expenditures are allowed to be changed only under certain circumstances, such as: a court or Industrial Commission order; exercise of the Emergency Management Act; extra expenditures required to call out the National Guard; or if an “overexpenditure is required to continue the purpose or programs due to complications or changes in circumstances that could not have been foreseen when the budget for the fiscal year was enacted.” See Authorized Budget
Charlotte Area Transit System (CATS)
This public transportation system is managed by the Charlotte-Mecklenburg Public Transit Department, which is responsible for public transportation issues in the greater Charlotte metropolitan area. Officials with CATS have succeeded in getting a light rail line built in Charlotte, despite increasing expenses and technical problems associated with the project. CATS is currently working with local government in Charlotte to plan additional light rail lines. The body’s agenda doesn’t end with light rail, however: “An integral element of [our] effort is proactive participation in virtually every facet of land use and development planning in Mecklenburg County.” See also Light Rail and TTA.
School designed and operated, not by public entities or individuals employed by the state, but by private individuals, local community leaders, entrepreneurs or organizations via private charter. Charter schools are public schools in North Carolina and therefore do not charge tuition. The state provides operating funds based on the number of students, but no money for capital is included. Students who wish to attend a charter school must apply – applicants are selected by lottery. Because the school receives state funding, the state’s accountability measures apply to charter schools in the same way as they do to traditional public schools. Schools that fail to meet state requirements may lose designation and be forced to close. North Carolina passed charter school legislation in 1996 [S.L. 1995-731] and capped the number of charter schools at 100. The cap was met in 2001; and as of 2006 there were 93 active charter schools.
Legally separate institutions and entities for which the state is financially responsible. Along with local governments, such “nonprimary government” units receive much of their funding from general bond issues. The largest component units funded by the state are: the University of North Carolina system, the community college system, the Golden LEAF Foundation, the State Education Assistance Authority, and the North Carolina Housing Finance Agency. Non-major component units are: the N.C. Ports Authority, the N.C. Agriculture Finance Authority, the N.C. Global TransPark Authority, N.C. Partnership for Children, Inc., Regional Economic Development Commissions, North Carolina Railroad Company, N.C. Phase II Tobacco Certification Entity, Inc., and the N.C.Turnpike Authority.
Comprehensive Annual Financial Report (CAFR)
By law (G.S. 143-20.1), every state agency is obligated to submit an annual financial statement to the state controller, who combines the statements to create the state’s Comprehensive Annual Financial Report (CAFR).The CAFR is generally divided into two sections: 1) financial statements and analysis; and 2) statistical data on financial, nonfinancial and demographic trends. The CAFR is used by bond rating agencies, such as Moody’s and Standard & Poor, to determine the credit risk, and thus interest rates, for bonds issued by the state.
Also known as the base budget, this is the budget required to continue existing programs at current levels. The continuation budget grows each year based on increases in inflation rates and population increases affecting institutional and entitlement programs, such as public schools or Medicaid. The budget also annualizes (i.e., provides full annual funding for) new programs and positions and includes new operational costs of facilities opened in the last year. It does not contain nonrecurring cuts or expansion from the previous year. The biennial continuation budget is organized by issue area and published in multiple volumes by the governor’s office.
Continuing Budget Resolution
Legislation passed to continue critical operations of the state during those sessions when debate over the budget bill extends beyond the end of the fiscal year. In even-numbered years, continuing resolutions are less important because the biennial budget that passed the prior year is still in effect. Resolutions are typically for a short period (one month or less), and more than one resolution may be passed if the budget process remains stalled. Not infrequently, the legislative leadership will use continuing budget resolutions to pass substantive legislation. In 2001, for instance, the Legislature used a continuing budget resolution (S.L. 2001-395) to increase spending for education, in particular, a $20 million initiative to reduce K-3 class sizes. Even more controversial was a 2005 resolution (S.L. 2005-144) that continued the half-cent increase in the sales tax and the half-percent increase in the highest income tax bracket, both of which were scheduled to sunset at the end of the fiscal year.
A coverage mandate is a legal requirement that dictates that all health insurance policies sold in North Carolina cover certain services, providers, and groups of people. Mandates are the result of laws passed by the General Assembly as a means of regulating the insurance market. North Carolina has 46 mandates, which together have increased the price of health insurance an estimated 41 percent.
Expenditures made for educational goods and services – excluding capital outlays and interest on school debt – incurred in the operation of a school. Current expenditures represent costs in a given year. Items may include: salaries for school personnel, fixed charges, student transportation, supplies, scholarships, energy costs, administration and minor capital repair. Current expenditures do not include capital expenditures which are typically incurred over the course of several years. Such costs include: costs associated with school construction, major renovation, school buses or large equipment items. According to the Digest of Education Statistics, current expenditures for elementary and secondary education in North Carolina increased from $2.6 billion in 1985 to $6.5 billion in 2003 (unadjusted dollars).
Deed Stamp Tax
Commonly referred to as the “transfer tax,” this is a statewide tax paid by the seller when any real interest in real property is conveyed to another person – i.e., when a home is sold by one person to another. The applied rate is 0.02 percent, or $1.00 for every $500.00 paid for the property. For a $200,000 home, for example, the transfer tax would amount to $400. The revenue from the tax is shared by North Carolina’s local and state governments, with one-half of the proceeds going to the respective county’s General Fund and the remaining half, less administrative expenses, going to the state Department of Revenue. Of the funds remitted to the state Department of Revenue, 75 percent is credited to the Parks and Recreation Trust Fund and 25 percent goes to the National Heritage Trust Fund.
Department of Health and Human Services (DHHS)
The department conceives of itself as being “responsible for ensuring the health, safety and well being of all North Carolinians.” This mission also entails providing human services for “fragile populations” and “helping poor North Carolinians achieve economic independence.” Given the ambitious goals of DHHS, it should come as no surprise that it is the single largest executive agency, with more than 19,000 employees. The department’s operating budget exceeds $14 billion. The majority of this spending is allocated to three divisions:
• Division of Medical Assistance ($9.7 billion)
• Division of Social Services ($1.2 billion)
• Division of Mental Health, Developmental Disabilities and Substance Abuse Services ($1.1 billion)
Disadvantaged Students Supplemental Fund (DSSF)
Began in FY2003-04 as a $23 million dollar appropriation to 16 pilot districts with high percentages of disadvantaged students who did not achieve grade proficiency. Funds have increased each year since then, reaching $50 million in 2006-07 when the program was expanded to all school districts. DSSF funds are distributed by local education agencies. In conjunction with local educational assistance teams, local administrative units are responsible for developing a plan to address the needs of students. The plan must then be approved by the State Board of Education. DSSF may be used in conjunction with other supplemental services such as low wealth, small county, and at risk student services/alternative schools. Funds may be used for instruction, instructional support personnel, or for teacher bonuses and supplements. All districts receive some funding. Program opponents believe DSSF replicates or piggybacks existing services.
Disproportionate Share Reserve
A reserve account established in 1993 (S.L. 1993-321) to hold excess payments dispersed by the Medicaid Disproportionate Share Hospital (DSH) program to hospitals that serve a “disproportionate number of low-income patients with special needs.” Throughout the 1990s, federal policymakers expressed concern that many states were taking advantage of the DSH program to decrease their own contributions to Medicaid and subsidize general spending initiatives.
Division of Highways
Charged with planning, designing and maintaining state roads, the Division of Highways within the NCDOT is responsible for the upkeep of one of the country’s largest intrastate systems.
Division of Motor Vehicles (DMV)
Perhaps the most visible division of the North Carolina Department of Transportation (NCDOT), the DMV is responsible for licensing motorists and registering vehicles. Fees from these activities are allocated to the Highway Fund and the Highway Trust Fund (HTF). The DMV takes in about $550 million per year in revenue, about $100 million of which goes back to the DMV. See also NCDOT, Highway Fund, and HTF.
DSH (Disproportionate Share Hospitals)
Hospitals with at least 25 percent low income patients and a higher-than-average rate of Medicaid patients. To qualify as DSH, Medicaid revenues, bad debt allowances, and charity care must comprise 20 percent or more of a hospital’s total revenues. Five percent of all Medicaid expenditures in North Carolina go to DSH. In 2003, the state auditor censured the Division of Medical Assistance, a branch of the DHHS, for misappropriating millions of dollars of DSH funds. The auditor found that the division had effectively ceded control over DSH payments to the largest Medicaid hospital provider in the state. The division also violated federal regulations by paying DSH compensation to an association of 41 public hospitals, instead of directly to the providers. In addition, the division channeled $240 million over six years to hospitals not eligible for DSH payments. In all, the state auditor found $660 million in questionable or wrongful spending: $414 million of that amount in federal funds; and $246 million in state funds.
A requirement that revenue be spent on a specific project or purpose, therefore intercepting the money before it is pooled with other revenue and appropriated as part of the General Fund. At the federal level, earmarking is often equated with pork spending.
Elementary and Secondary Education Act (ESEA)
United States federal statute signed into law in 1965 by President Lyndon B. Johnson (D). ESEA was the first comprehensive legislation to provide federal funds for primary and secondary education in the United States. The legislation authorized funds for educators’ professional development, instructional materials, resources to support educational programs, and parental involvement promotion. Title I of ESEA provided federal assistance to schools and school districts with a high percentage of students from low-income families. The act has been reauthorized every five years since the Johnson administration. ESEA has had two significant amendments: Improving America’s Schools Act (1994) and No Child Left Behind (2002).
English as a Second Language (ESL)
Language instruction program for non-native speakers wanting to learn English. Public schools in North Carolina must offer ESL programs. School system officials are responsible for identifying students as having limited proficiency in English and students are required to participate in intensive language instruction.
Environmental Impacts Assessment
An assessment of the likely ecological health effects, risk to human health, and reduction in nature’s benefits that may result from a transportation project. The purpose of the assessment is to ensure that decision-makers consider environmental impacts before deciding whether to proceed with a new project. The trouble with these assessments, however, is that they can add both costs and delays to projects, which affect the state’s ability to keep up with economic and population trends.
EOG/EOC (End of Grade/End of Course)
Refers to standardized state assessment tests administered in math, reading, science and writing. In North Carolina, EOG in grades 3-8; EOC in high school.
Or “equitability” formulas — uniform distribution measures set in statute that NCDOT uses to allocate resources for road construction projects around the state. The formulas are meant to ensure that all seven North Carolina super districts get fair and adequate funding for new projects, including the four-laning of highways in rural areas or loop construction in urban areas, depending on the super district. While population is factored into the main equity formulas, many analysts feel they should be updated to include dimensions such as congestion relief, or cost-effectiveness (as determined by cost per vehicle-mile served). At the time the formula was written, the option of using vehicle miles traveled was discussed but ultimately rejected in favor of population.
Term used for disabled students and academically gifted students. Special funding streams are available to serve these students.
Executive Budget Act
See G.S. §143-1. Until the passage of the State Budget Act (S.L. 2006-203; G.S.
§143c), the Executive Budget Act delineated the process by which the budget is made and the powers, duties, and authorities of the governor and other officials with respect to issues that affect the budget. The Executive Budget
Executive Organization Act(s)
The 1971 and 1973 statutes that created the Department of Human Resources (DHR) – now the Department of Health and Human Services (DHHS).
1971. The state Legislature passed the Executive Organization Act of 1971 to consolidate the state’s numerous executive agencies and departments under broad categories. At this time, the state created the Department of Human Resources (DHR), which combined several independent departments, such as mental health and human services, under DHR.
1973. The 1973 Executive Organization Act solidified the bureaucratic growth of the executive branch. This act restructured DHR by creating a Board of Human Resources to advise the DHR secretary on various matters. In 1989, DHR was restructured again by transferring several departments out of DHR to other agencies, such as the Department of Environment, Health and Natural Resources. In 1997, the Department of Human Resources was renamed the Department of Health and Human Services (DHHS).
Appropriations for new or expanded programs, new positions, increased expenditures above those allowed in the continuation budget, and salary increases.
Federal Highway Administration (FHWA)
The federal body that sets national transportation standards and directs federal transportation funding for every state. About one-third of the NCDOT budget — $1.1 billion — comes from the FHWA. In turn, North Carolina’s transportation policy, particularly with respect to interstate highways, is dictated by federal guidelines such as those pertaining to minimum safe speeds, controlled access, and shoulder/median widths. State taxpayers pay for this federal “assistance” primarily through an 18.4 cent per gallon federal gas tax (averaging around $25 billion per year), which is then redistributed back to each state.
Fiscal Year (FY)
The 12-month period covered by the state budget: July 1 to June 30.
FPL (Federal Poverty Level)
FPL is the income threshold below which an individual or a family is defined as poor. The federal and state governments use FPL to determine income thresholds for programs such as Medicaid – eligibility for which is capped by the federal government at 133 percent of FPL. North Carolina employs a higher income cap of 200 percent of FPL, which makes approximately 100,000 more children eligible for Medicaid SCHIP than under the federal cap. This extra enrollment costs taxpayers an estimated $144 million per year. North Carolina state taxes pay 25 percent of this cost; the rest is subsidized by federal taxes. A recent provision in the FY2007-2009 House budget would also expand taxpayer-funded health coverage to some 12,000 children from families with income between 200 percent and 300 percent of FPL. Currently, the FPL for a family of four is $20,650; 300 percent of FPL is $61,950, an income level that includes half of all families in North Carolina.
Grant Anticipation Revenue Vehicle, or GARVEE, bonds are bonds or notes repayable, either exclusively or primarily, with future federal-aid highway funds. These federal tax-exempt financing mechanisms are designed for funding state and municipal transportation projects. GARVEE bonds were authorized in the National Highway System Designation Act of 1995, which amended the Federal Aid Highway Act to expand the eligibility of bond and other debt instrument financing costs for federal-aid reimbursement. While GARVEE bonds represent a creative financing mechanism for cash-poor states that need immediate resources, they can tie up federal funding of future projects. See also SIBs and Tollways.
The Motor Fuels Excise Tax levied on all fuels (including alternative fuels) sold, distributed, or used in the state; the excise tax has a fixed rate of 17.5 cents per gallon plus a variable component rate that is 7 percent of the average wholesale price of motor fuels. The gas tax is computed twice a year in January and July and cannot fall below 3.5 cents per gallon. In January 2006, in the aftermath of Hurricane Katrina and the war in Iraq, the gas tax reached a high of 29.9 cents. The governor and the
Legislature capped the rate at this level for the 2006-07 fiscal year, thus preventing a further increase but providing no additional tax relief at the pump. North
Carolinians actually paid 30.15 cents per gallon in state taxes in 2006, with the additional one-quarter cent going to the Department of Agriculture.
Funds general needs, as opposed to specific or restricted purposes, such as those projects funded by the Highway Trust Fund. The General Fund is the central operating fund of the state and accounts for about half of the state’s total budgetary financing. The fund is supplied by revenue from a wide variety of taxes and fees, as well as money from judicial fees, disproportionate share receipts, investment earnings and bonds, the tobacco settlement, the Highway Fund, and the Highway Trust Fund.
General Obligation Bond
A debt, issued in the form of a tax-exempt bond, secured by the taxing power of the state, or what is referred to as “the full faith and credit of the State.” North Carolina’s
Constitution (Art.V, Sec. 3) requires that voters approve all general obligation bond issues. As of June 30, 2005, North Carolina’s tax-supported general obligation bond debt was more than $4.8 billion.
Governor’s Recommended Adjustments
After releasing the multivolume biennial continuation budget, the governor submits another document detailing recommendations for expansion and reductions to the continuation budget. These recommendations include funding for new programs and the expansion of existing programs, as well as the proposed reduction or elimination of existing line items or programs.
GPAC (Government Performance Audit Committee)
Legislative committee established by the General Assembly in 1991 in order to review the efficiency and efficacy of various state departments and programs. The 1991 GPAC audit resulted in more than 300 recommendations, ranging from broad initiatives, such as establishing a strategic planning process, to agency-specific recommendations, such as closing small, inefficient prisons. The committee was dissolved in 1993 following the final audit report. A new GPAC was established in the 2006 Studies Bill (S.L. 2006-248) and is expected to complete its work by February 1, 2008.
Services and products that provide medical examinations, treatment and preventive care. Healthcare includes services such as hospital care, physician and dental services, and nursery and home care. It also includes products like prescription drugs and medical equipment. Personal healthcare consists of the treatment of individuals with specific medical conditions. Public healthcare costs are driven by public health programs and program administration.
According to the Division of Medical Assistance, “Health Check is Medicaid for children. Health Check covers complete medical and dental check-ups, and provides vision and hearing screenings and referrals for treatment.” More specifically, Health Check is North Carolina’s Medicaid program for state residents aged 0 through 20. Health Check is for children in the poorest families in the state; as such, it requires no enrollment fees or copays. Primarily because of expanding eligibility, Health Check enrollment has grown steadily over the past 15 years. For FY2004-05, for example, the N.C. Department of Health and Human Services reports that 567,000 children were eligible for Medicaid, an increase of 161 percent in 10 years.2 In 2005, 257 per 1,000 children in North Carolina were Medicaid eligible. In 1995, only 140 per 1,000 children were Medicaid eligible.North Carolina has contributed to the growth of Health Check expenditures, in particular, by expanding the federal Early and Periodic Screening, Diagnosis and Treatment (EPSDT) program to all North Carolinians through age 20. Since EPSDT entitles enrollees to be treated for any health problem found during screening, the state has experienced cost containment problems with the program. Moreover, while NC Health Choice has an absolute enrollment cap, Health Check is open to all eligible enrollees. In an attempt to curb expenses, North Carolina has implemented managed care and also cut physician reimbursement rates. Managed care restricts patients’ rights to choose a health provider while reimbursement cuts discourage health providers from accepting Health Check patients. Neither measure focuses on eligibility, which is the primary driving force behind Health Check cost inflation.
A difference in health status between individuals or groups of individuals. The Office of Minority Health and Health Disparities devotes a large part of its budget to researching and attempting to reduce health disparities. In doing so, the office has adopted specific socioeconomic views regarding what a health disparity is and what causes such health disparities. In particular, the assumption is made that all people, regardless of specific lifestyle choices (for example, drug use or sodomy), ought to be equally healthy. This assumption is related to other socialist-style agendas that promise equal access to all resources (food, housing, transportation) for all people, regardless of individual choice.
The sum total of all healthcare outlays. There are two primary types of health expenditures:
Total Health Expenditures. The sum of personal health expenditures, plus government expenditures on public health programs and administration costs for health programs. In 2004, total health expenditures in the United States were $1.9 trillion. Taxpayers pay 45 percent – $847 billion – of that amount. In North Carolina, total health expenditures were $53.6 billion for 2004.
Personal Health Expenditures. Outlays for treatment of individuals with specific medical conditions. Personal health expenditures are 83 percent of total health expenditures. In 2004, personal health expenditures in North Carolina were $44.5 billion. The largest health expenditure items in North Carolina are hospital care (37 percent) and physician services (24 percent). Spending on prescription drugs is also rising fast, accounting for 15 percent of personal health expenditures by state residents.
Health Savings Account (HSA)
A tax-exempt account established through a qualified trustee (e.g., a bank or insurance company) that enables a consumer to purchase healthcare. An HSA is essentially a savings account that can be used to pay for health expenses using pretax dollars. In order to qualify, the consumer must enroll in a High Deductible Health Plan (HDHP). HDHPs cost less than traditional insurance plans but do not provide coverage until the consumer has spent at least $1,000 on health expenses (their deductible). Consumers can use pretax money deposited in an HSA to pay for HDHP and other medical expenses.
Healthy Start Foundation
A private, nonprofit contractor funded by the Division of Public Health. The Healthy Start Foundation runs the First Step Campaign which educates the public on parenting. Healthy Start was established in 1990 with $5 million in seed money from pharmaceutical giant, Glaxo, Inc. Healthy Start also coordinates the Medical Home Campaign, as well as several other initiatives related to reducing infant mortality and improving children’s health.
High-Occupancy Traffic Lanes (HOT lanes)
HOT lanes are pay-per-use lanes that include variable pricing according to traffic conditions. During high-traffic times, motorists can pay to ride in HOT lanes (often HOV lanes converted to accommodate paying users). Because the price is determined by the flow of traffic in the lane, motorists pay less if HOT lane traffic is moving slowly, more if it’s moving rapidly. See also HOV lanes.
High-Occupancy Vehicle Lanes (HOV Lanes)
Designed to relieve traffic congestion and encourage carpooling by providing a specially designated lane for cars with multiple passengers. Some states use mixed HOV/HOT lanes, allow single drivers of hybrid vehicles to use HOV lanes, or designate HOV lanes only during commute hours. The number of passengers required to qualify for travel in an HOV lane is generally two or three. In North Carolina, the first HOV lane opened on I-77 in the Charlotte area at the end of 2004. The I-77 HOV lanes operate 24 hours a day, seven days a week, do not allow single drivers of hybrid cars, and require two people per vehicle. See also HOT lanes and ITS.
Dedicated to supporting the operations and capital construction needs of the North Carolina Department of Transportation (NCDOT) and related services, the Highway Fund is derived from the following sources: 75 percent of fuel tax revenues, various fees collected by the Division of Motor Vehicles, and investment income from the existing Highway Fund. The Highway Fund pays for road maintenance and construction, the operations and capital needs of the Division of Motor Vehicles and the State Highway Patrol, and other transportation-related functions. While the Highway Trust Fund is focused on construction, the greatest expenditures from the Highway Fund are for road maintenance. The Highway Fund also pays for some non-DOT operations that were originally part of the DOT, such as highway patrol and motor carrier enforcement (now in the Department of Crime Control and Public Safety), and prison road crews. Under the auspices of the Highway Patrol, the Highway Fund was also used to pay for part of the development of the proposed 800 MHz statewide emergency communications network, VOICE. In addition to roadwork, the NCDOT is directly responsible for various matters related to aviation, ferries, bikeways and walkways, bridges, public transportation, and rail.
Highway Trust Fund (HTF)
Created in 1989 with the goal of rapidly expanding North Carolina’s highway/road system for economic development purposes, the HTF is supplied by the following taxes and fees, totaling $1 billion annually: 25 percent of motor fuel and related tax revenues; a 3 percent highway use tax levied on title transfers; various title and registration fees; and investment income from the existing trust fund. In 1996, voters approved an additional $950 million in general obligation bonds to support the HTF. By law, $170 million is transferred annually from the HTF to the General Fund, but between 2001 and 2005 the governor and the Legislature raided the fund to subsidize other projects (See Moving Ahead). The HTF was originally projected to be fully funded at $8.2 billion by 2003 — triggering the elimination of the tax increases that supply the fund. As of 2006, only half the original mileage had been funded, at a cost to taxpayers of $8 billion.
North Carolina law (G.S. § 115C-563[a]) defines a home school as “a non-public school in which one or more children of not more than two families or households receive academic instruction from parents or legal guardians, or a member of either household.” The North Carolina Division of Non-Public Education (DNPE), a part of the North Carolina Department of Administration, is responsible for administering home school programs and enforcing existing state requirements. Parents who wish to “home school” must submit to DNPE a notice of intent to operate a school; possess at least a high school diploma; operate the school on a regular schedule at least nine months of the calendar year; classify the school as either religious or non-religious; and maintain immunization and attendance records. In school year 2006-07, more than 68,700 students were enrolled in 36,000 home schools in North Carolina. If all home school students were combined into one school district, home schoolers would comprise the fourth-largest school district in North Carolina.
NCDOT’s public information program for road construction, IMPACT stands for Information Management Public Affairs, Construction and Traffic Control. The program has three primary goals according to NCDOT: 1) promote safety in the work zone; 2) inform the public of impacts from construction; and 3) provide exceptional customer service. IMPACT uses various communications strategies, including: news releases to media outlets and interested organizations; brochures, fliers, and posters distributed to communities; construction information meetings held in areas around the state; news stories or interviews highlighting work zone safety and specific project impacts.
Industrial Access/Road Access Fund
Administered by NCDOT, this program provides funds for the construction of roads to provide adequate access to new or expanding industrial sites. Adequate access – normally determined by the type and volume of traffic anticipated to be generated by a site – may require construction of new roadways or improvements to existing roadways.
Information Technology Budget
Refers to agency requests for expenditures exceeding $500,000 for the state’s technical infrastructure, generally included in the expansion budget for each agency. In some years, the General Assembly has appointed a separate Appropriations Information Technology Subcommittee to review large requests of this type. In other years, these requests have been reviewed by the appropriate subject area subcommittees (i.e., Health and Human
Services) or by the chairs of the full appropriations committee. All requests for technology expenditures over $500,000 must be approved by the Chief Information Officer (CIO). Passed in 2004, S.L. 2004-129 required a review and evaluation of all major technology projects proposed or being undertaken, gave the state CIO more authority, and created the Information Technology Advisory Board and the Information Technology Fund.
Institute for Transportation Research and Education (ITRE)
An academic nonprofit chartered by the General Assembly to research issues pertaining to transportation in North Carolina. In 2005, ITRE received nearly half its $10 million funding from state (31 percent) and federal (14 percent) contracts, with most of the remainder coming from individual “pass-through” projects. Housed at North Carolina State University, the ITRE’s research includes studies on bicyclers and pedestrians, environmental impacts, and public transportation. North Carolina and other states commission the ITRE to look into issues of interest to both leaders and concerned citizens.
The intangibles tax was enacted in 1937, but was repealed in 1995 after being challenged on the grounds that it violated the Interstate Commerce Clause of the U.S. Constitution. Along with taxing accounts receivable, notes and bonds, and beneficial interests in foreign trusts, the intangibles tax stipulated that all shares of stock owned by either a business or an individual taxpayer be taxed at a rate of 25 cents per $100 of total fair market value of stock, regardless of whether the stock earned a dividend or not (cf. G.S. §105-203). See Q & A: 12.
Intelligent Transportation Systems (ITS)
Intelligent transportation systems are primarily aimed at integrating the needs and movements of individual vehicles with a wider transportation infrastructure. For example, ITS technology can be used to link vehicles with GPS devices to a HOT lane highway network so as to automate the collection of user fees. Motorists enter and exit the HOT lanes at specific locations where electronic readers identify the vehicle from an onboard transponder and deduct charges from a prepaid account.
Interstate Highway System
The National Highway System includes a subset of approximately 160,000 miles of roadway comprising a network called the Interstate Highway System. Championed by the Eisenhower Administration, this freeway network was created for both civilian and military purposes. About 56 percent of the construction and maintenance costs are funded through fees such as titles and licenses, gasoline taxes (collected by states and the federal government), and tolls. The remainder of the cost is borne by the federal budget. While Interstate Highways usually receive substantial federal funding and must comply with federal standards, they are owned, built, and operated by the states in which they are located. Primary interstates are given one- or two-digit route numbers; auxiliary interstates have three-digit numbers. East-west highways are assigned even numbers (like I-40); north-south highways, odd (as in I-77).
Intrastate Highway System
In contrast to the federal interstate system, which is both more heavily funded and controlled by the federal government, the Intrastate Highway System is limited to a specific state. While intrastate projects sometimes receive federal subsidies, the system is primarily funded and regulated by each state. Although North Carolina ranks 11th in population and 28th in total area, it has the second largest state road system in the United States. (Only Texas, which is ranked second in population and second in total area, has a more extensive system.) Yet much of the 78,000 mile network is relatively underused, with just over 14,000 miles carrying 60 percent of vehicle miles traveled. See also TIP and Urban Loops.
Joint Conference Committee
This committee is comprised of legislative members appointed by the House speaker and the Senate president pro tempore. Typically, the committee is chaired by the Appropriations chairs and includes the Appropriations subcommittee chairs and some of the members of the Appropriations subcommittees. The conference committee is charged with reviewing the approved House and Senate budget proposals and reconciling differences between the two budgets. Conferees are supposed to follow certain self-imposed ground rules when they come together to craft a final budget:
1. Items that are the same in both budgets are no longer negotiable: they are to be included as is in the final budget.
2. Items in which the two chambers differ in terms of money may be negotiated to the Senate position, the House position, or any point in between. For example, if the Senate appropriated $200,000 for a certain item, and the House appropriated $400,000, the conference committee may appropriate $300,000 – but not $500,000.
3. Only items that are in either budget may be considered by the joint conference committee. No new items may be added to the reconciled budget.
The reconciled budget produced by the joint conference committee is presented to both chambers, each of which must vote for or against the “conference budget” without amendments. Once the conference budget is passed by both bodies, it goes to the governor who can either sign it into law or veto the budget – sending it back to the General Assembly.
Joint Conference Committee Report on the Continuation, Expansion and Capital Budgets
See Money Report.
Joint Legislative Transportation Oversight Committee (JTLOC)
Select members of both chambers of the N.C. General Assembly comprise this committee established to oversee major transportation projects. More recently, however, the JTLOC has studied issues related to HTF mismanagement at the executive level, as well as project delivery problems within NCDOT. The JTLOC meets during the interims between state legislative sessions.
Funds budgeted for positions that are temporarily vacant. Lapsed salary is sometimes used by an agency to hire contractual or temporary employees, but may also be used to fill a negative reserve, or with legislative permission through the budget bill, to pay for other line items. Lapsed salary that has not been obligated by the end of the fiscal year reverts to the General Fund and is carried forward into the next fiscal year. The spending of lapsed salary is one of the most common instances of spending reversions and reduces the General Fund cash balance available in the following year. See also Reversions.
LEA Assistance Program
State Board of Education initiative piloted in 2003 to help school districts that performed poorly on AYP (Adequate Yearly Progress) and ABC measures. The LEA Assistance Program targets school districts, rather than individual schools, and offers assistance to low-performing schools. Once a district has been identified, a team is assigned to the LEA. The team works full-time within the districts’ central office and with individual schools to improve student achievement and further continuous improvement. In 2003, $500,000 in LEA program funds was appropriated from the General Fund. The program has been renewed at similar level funding levels through 2005.
Leandro v. State (1997)
Unanimous North Carolina Supreme Court decision that all children have a constitutional right to a “sound, basic education,” as defined by the court. N.C. Superior Court Judge Howard Manning issued a series of opinions through 2004 to flesh out the details of this ruling. Key opinions included: (1) the current distribution of state money for education is fair, and (2) the current amount of money is inadequate to educate disadvantaged students. (See Leandro)
A form of urban rail transit that normally uses less massive equipment and infrastructure than other rapid transit systems like subways. Projects planned initially for Charlotte and Raleigh-Durham would offer light rail service with the intention of relieving traffic congestion. Charlotte’s $550 million, nine-mile project is largely completed, but has been dogged by technical and budgetary problems. After 11 years, Raleigh-Durham may be forced to abandon its quest to build an $810 million, 28-mile commuter line through Raleigh, Research Triangle Park and Durham. Federal officials refused to subsidize the project after feasibility studies demonstrated that the Triangle could not sustain light rail due to the area’s relatively low population density and low projected ridership.
Itemized appropriation that appears on its own line in the budget – i.e., office supplies or travel or aid to non-state entities, such as the John A. Hyman Memorial Youth Foundation.
Local Education Agency (LEA)
Local school system within the state. LEAs have their own public board of education or authority that maintains administrative control over the public schools for a specific city or county. Currently there are 115 LEAs in North Carolina.
With elections held in November of each even-numbered year, the General Assembly convenes from January to July (but often even longer) of each odd-numbered year for what is called the long session. The biennial budget is crafted and adopted during the long session.
Low Wealth Supplement Funds
Funds distributed to “enhance the instructional program and student achievement.” Low wealth funds are distributed to local school administrative units where the county wealth as a percentage of the state average wealth is less than 100 percent. The amount received is based on average daily membership (ADM) for the county and the difference between the state average current expense appropriations per student and the current expense appropriations per student that the county could provide given the county’s wealth and an average effort to fund public schools. Low wealth funds can be used for instructional positions, instructional support positions, supplies and equipment, or professional development. More than $171 million in low wealth supplement funds were distributed to local school administrative units in 2005.
A cost containment measure used by health insurance providers to restrict a patient’s right to choose a physician or caregiver. State Medicaid agencies use managed care to funnel their enrollees to a limited number of health providers. As a result, the unit cost for providing healthcare is lower and the Medicaid agencies can cut reimbursement rates. North Carolina DHHS credits managed care and reimbursement cuts for holding down Medicaid costs.
Management Flexibility Reserve
See Negative Reserve.
A national health insurance system funded jointly by the federal government and the states. Beyond certain basic thresholds, Medicaid eligibility differs from state to state. In some states, such as North Carolina, key terms counties also pay for a small fraction of the program. Medicaid was created in 1965 as a program for low income families, but has expanded considerably over the years. According to the Division of Medical Assistance, the program “is the largest source of funding for medical and health-related services for America’s poorest people.” In 1987 one out of twenty North Carolinians were enrolled in Medicaid; by 2004, this number had jumped to one in eight. As enrollment has increased, so have expenditures. In 1987, Medicaid personal health expenditures in North Carolina were $918 million. By 2004, this number had increased to $8 billion. The state pays 32 percent of that, or $2.56 billion. Counties pay 6 percent, or $480 million.
A national health insurance program that primarily covers the elderly and younger citizens with certain disabilities. Unlike Medicaid, Medicare is a strictly federal program. Medicare was founded in 1965 and opened for enrollment a year later. In 2005, total Medicare expenditures reached $336 billion. By 2015, Medicare costs are expected to more than double, reaching a record $792 billion.
Metropolitan Planning Organizations (MPOs)
MPOs are the urban counterpart to North Carolina’s rural planning organizations (RPOs). These localized committees were formulated to help the state’s major urban centers better plan, communicate and fund needs unique to their communities, such as loops, light rail, and public transportation. The MPOs may also contribute their own resources to certain local projects. See also RPOs, Light Rail.
Informal name for the Joint Conference Committee Report on the Continuation, Expansion and Capital Budgets. The Money Report contains an itemized account of changes – reductions and expansion – to the continuation budget. It is passed by the General Assembly along with the Budget Bill, and together these two documents direct the executive branch in spending appropriations.
A 2003 statewide initiative by Governor Easley — implemented by S.L. 2003-383 — that funded relatively small road construction, reconstruction, bridge repair, and public transportation projects with the goal of improving roads and public transit to keep pace with economic and population growth. At the administration’s urging, the General Assembly allocated $700 million for 2004 and 2005 to Moving Ahead. (Unspent portion could be rolled into 2006). The plan allowed for the $700 million to be spent from the cash balance in the HTF, which would then be replenished by issuing $700 million remaining in bonds from a $950 million transportation bond passed by voters in 1996. (The bond was issued to accelerate completion of urban loops and pave secondary roads.) Critics charge the bond sales were already earmarked for HTF coffers and so were not supposed to be used for Moving Ahead – a diversion that effectively negated $700 million of the voters’ intentions for the original bond.
National Assessment of Educational Progress (NAEP)
Federal testing program, also known as the nation’s report card. It is the only nationally representative and continuing assessment of American students in such areas as reading,
mathematics, science, writing, U.S. history, civics, geography and the arts. NAEP does not provide scores for individual students or schools.
National Board of Professional Teaching Standards Certification (NBPTSC)
The NBPTSC designation is awarded to teachers who meet specific standards of teaching practice and assessment. Teachers who earn national certification in North Carolina receive an automatic salary increase of 12 percent and are eligible to be reimbursed by the state for up to $2,500 in costs related to acquiring certification (cf. S.L. 1997-221). For 12 years in a row, North Carolina has led the nation in the number (12,770) of nationally certified teachers. Research on the impact of certification on student learning is far from conclusive. A recent study by Harris and Sass (2007) suggests that NBPTS certified teachers working with students of low socioeconomic status do not enhance student learning.
National School Lunch Program
Federal program administered by the Department of Agriculture that provides free and low-cost lunches to millions of children every school day. Children from families with income at or below 130 percent of the federal poverty level (FPL) − currently $26,485 for a family of four − are eligible for free meals. Those with income between 130 percent and 185 percent of FPL − $38,203 for a family of four − are eligible for reduced-price meals. Students can be charged no more than 40 cents for a reduced-price lunch. Children from families with incomes over 185 percent of FPL pay full price. The federal government spent $8.2 billion on the National School Lunch Program in 2006. Participation in the school lunch program has become a closely watched indicator of poverty in many states. Yet federal school lunch programs have been criticized over methods for calculating the federal poverty rate and for introducing an eligibility formula that has the effect of redefining and expanding the definition of poverty to 185 percent of the original threshold. According to Department of Public Instruction statistics, 48 percent of students in North Carolina schools were eligible for reduced-price or free lunch programs during the 2006-07 school year. This number includes illegal alien students, who are eligible for the school lunch program.
NC Health Choice for Children
An SCHIP program that provides health insurance for children of low income families. The program covers children in families that earn too much to qualify for Health Check/Medicaid, but whose income does not exceed 200 percent of the federal poverty level. Because the funds for NC Health Choice are set prospectively, i.e., prior to the start of each budget year, the number of children eligible for the program is capped for each fiscal year. When the number of eligible children exceeds the enrollment cap, children are put on a waiting list. Benefits provided under NC Health Choice are equivalent to those provided under the state employees and teachers’ health plan, except that NC Health Choice kids also get vision, hearing and dental coverage. NC Health Choice has been promoted as a tax-paid alternative for children without health insurance. The continued expansion of NC Health Choice, however, seems to have done little to reduce the rate of uninsured children in North Carolina. U.S. Census data, for example, shows that the number of uninsured children has risen since the inception of Health Choice, going from 242,000 in 1998 to 262,000 in 2005. See also SCHIP and Health Check.
NC WISE (North Carolina Window of Information on Student Education)
An electronic student accounting system that provides student, school data and information management capabilities via Internet-based software. Among other things, NC WISE will serve as an extensive statewide student data system that will allow schools to track individual students who leave one K-12 public school for another, thus providing better data on graduation and dropout rates. NC WISE replaces the Student Information Management System (SIMS). NC WISE collects data for education initiatives such as the ABCs of Public Education, Uniform Education Reporting System (UERS) and the No Child Left Behind Act. When fully operational, the system will provide information for managing student attendance, grades, test reports and class schedules. School districts are implementing NC WISE on a phased-in schedule. But thus far NC WISE has been plagued with glitches and cost overruns and is currently years behind schedule and millions over budget. By the end of 2008, NC WISE is projected to serve all 115 school districts and 100 charter schools.
NCLB (No Child Left Behind Act)
No Child Left Behind Act of 2001 (Public Law 107-110). Federal law signed on January 8, 2002. Reauthorized several federal programs aimed at improving the performance of U.S. primary and secondary schools. NCLB provided parents with greater flexibility in selecting where their children attend school. It also developed standards of accountability for states and school districts based on the belief that high standards and expectations will help students to succeed. NCLB continues to be controversial and its impact uncertain.
Also called a “management flexibility reserve,” a negative reserve is a one-time “hole” placed in an agency’s budget by the General Assembly in lieu of specific line item cuts. The deficit must be filled over the course of the fiscal year with budget cuts determined by the agency. Negative reserves are frequently filled with lapsed salaries generated by vacant positions (see Lapsed Salary). See also Q & A: 4.
Applies to revenue or changes to appropriations – increases and decreases – that are not continued beyond the biennium (and typically not beyond one fiscal year).When nonrecurring revenue or nonrecurring reductions in expenditures are used to fund recurring expenditures, other revenue sources must be found to pay for those expenditures in future years. For example, the 2006 General Assembly added to the FY2006-2007 budget more than $850,000 in new recurring expenditures, using $500,000 in new recurring revenue and $350,000 in new nonrecurring money.
Revenue from a source other than taxes, including Medicaid disproportionate share money, investment income, and fees collected by various state agencies that are deposited in the General Fund. These funds cannot be retained and used by the agencies without legislative approval. One of the largest sources of nontax revenue is judicial fees – court costs charged to individuals whose civil or criminal cases are not dismissed. In 2005, such fees brought in approximately $145 million.
The North Carolina Department of Public Instruction
State agency charged with implementing public school laws as well as the policies of the State Board of Education. The Department of Public Instruction provides staff leadership and service to public schools in the following areas: curriculum, instruction, finance, teacher and administrator licensure and preparation, professional development, and school business support and operations. The department employs between 500 and 600 full-time staff.
North Carolina Department of Transportation (NCDOT)
The primary executive agency responsible for implementing transportation measures, constructing and maintaining highways, licensing drivers, and registering vehicles. NCDOT is the state’s primary recipient of funds from the U.S. Department of Transportation (USDOT). NCDOT divisions include: Aviation, Bicycle & Pedestrian, DMV, Ferry, Highways, Public Transportation, and Rail. See also FHWA.
North Carolina Virtual Public School (NCVPS)
School established by the Business and Education Technology Alliance that provides courses to students that they are unable to take at their local schools. NCVPS is intended to augment a student’s local school’s program of study. All NCVPS courses are taught by a certified teacher and once the online course is completed the student receives credit on his or her school transcript. There is no cost to the local school or student’s family. NCVPS initial offerings are for high school students. In subsequent years, course offerings will be available for middle school and elementary school students and will include additional services, such as SAT or ACT test preparation and Advanced Placement exam reviews.
Office of Minority Health and Health Disparities (OMHHD)
A public health office within DHHS that researches and attempts to reduce real or perceived health disparities among minority groups. The OMHHD was established in 1992 by the North Carolina Legislature in order to eliminate health disparities, with the implication being that every racial (and socioeconomic) group should have equal health outcomes. The office defines leading health indicators that allegedly cause health disparities. Two of these indicators are poverty and median family income. Via the Minority Health Advisory Council, the OMHHD lobbies for initiatives, such as community-based syringe exchanges, that it believes will serve minority groups. The office also provides cultural diversity and interpreter training to health professionals. See also Health Disparity.
Performance Based Accountability (PBA)
In 1992, the original School Improvement and Accountability Act was amended to give teachers and parents greater input and responsibility over the school improvement planning process. In addition, school systems were also required to meet performance indicators as set by the State Board of Education. Standards were set for every elementary, middle and high school in the state. End-of-grade and end-of-course test results and selected components were developed to measure each school’s progress. Schools that achieve high marks were eligible for incentive awards. Schools where growth and performance fell below specific levels were designated as “low-performing" and eligible for mandated assistance from the State Board of Education.
A method of budgeting that ties funding to results by reporting on select outcome measures. For instance, the 1999-2001 Justice and Public Safety budget tied funding for district attorney positions to the ability to dispose of all superior court felony cases filed each year. During the 2001 budget crisis, Governor Easley abandoned performance-based budgeting and eliminated the performance planning division of his office. Easley resurrected performance-based budgeting as “Results- Based Budgeting” after the passage of the budget in 2006.
Public Health Expenditures
As opposed to paying for individual healthcare, public health expenditures are used on research and to provide the public with health information. For FY2006-07, the Legislature appropriated $177 million for public health activities. According to a 2005 Public Health Improvement Plan, one of the primary goals of the state’s public health policy is the elimination of health disparities. In order to implement this goal the report recommended significant spending increases for several programs, such as: increasing funding for school nurse services from $11.4 million to $48.7 million over a four-year period; expanding the state’s chronic disease prevention program to $27 million; and allocating $747,000 for interpreter, language and cultural competency training for medical professionals. The report also suggested that the state assume responsibility for all Medicaid expenditures not funded by the federal government. In return, North Carolina’s counties would be required to use their share of the Medicaid burden to fund public health programs.
Federal education program mandated under the No Child Left Behind Act (2002). Reading First requires schools to use scientifically based reading instruction to improve reading. The program is focused on ensuring all students can read at grade level by the end of grade three. Reading First funds can be used to purchase supplies and materials and hire coaches. In 2005, the North Carolina State Board of Education distributed $20.9 million dollars in Reading First grants.
Budget the governor submits to the legislature. Includes the continuation budget and the reductions and expansion – including capital – detailed in the Governor’s Recommended Adjustments to the Continuation Budget. By law, the governor is charged with preparing a budget that “will promote the more efficient and economical operation and management” of the state (G.S. §143-3).
Applies to revenue or changes to appropriations – increases and decreases – that will continue beyond the biennium. Recurring cuts or increases in the budget are built into the base (continuation) budget in the next biennium. If an agency is undertaking a project that will continue for several years, the money for the project is placed in the budget on a recurring basis, and then must be cut when the project is complete.
Unspent appropriations from previous years. Unless otherwise authorized, these funds generally return to the fund from which they came. Reversions to the General Fund are included as nonrecurring revenue in the following year’s budget. Reversions come from lapsed salary, other unspent funds, and any funds the governor may have held back over the course of the year in anticipation of a budget shortfall. See Lapsed Salary.
Rural Planning Organizations (RPOs)
Multicounty organizations, with both unique and overlapping functions, that promote comprehensive transportation planning, as well as increased local involvement regarding transportation decisions. The organizations are the result of a 2001 General Assembly mandate and are counterparts to Metropolitan Planning Organizations (MPOs), which focus on urban transportation needs. North Carolina currently has 20 RPOs, with Albemarle in eastern North Carolina being the largest and Isothermal in western North Carolina being the smallest. See also MPOs.
Savings Reserve Fund
Also called the “Rainy Day Fund,” the Savings Reserve Fund was established in 1991 as a means for setting aside General Fund monies in anticipation of economic fluctuations or fiscal crises (G.S. 143-15.3). Under the law, the Legislature is required to earmark 25 percent of the year-end credit balance for the Savings Reserve Fund until the account balance equals 5 percent of the prior year’s General Fund operating budget. The Fund reached its 5 percent cap in 1995-96 and remained fully funded through 1997-98. During the 1998- 99 and 2001-02 bienniums, however, the balance dropped to zero, thanks to withdrawals made for the intangible tax lawsuit settlement (1998-1999), the Hurricane Floyd recovery effort (1999- 2000), and a 2001-02 transfer to the General Fund to cover a revenue shortfall. Subsequently, the balance has inched back up, with 2006 funding reaching approximately $636 million, just short of the 5 percent cap of $795 million.
SCHIP (State Children’s Health Insurance Program)
Created by the U.S. Congress in 1997 as a supplement to traditional Medicaid (§ XXI of the Social Security Act), SCHIP is a health insurance program for children in low income families. The program is jointly funded by the federal government and the states. Each state is operationally responsible for the program and can set its own eligibility rules at or above federal minimums. North Carolina exceeds federal rules for SCHIP, allowing families who earn up to 200 percent of FPL to qualify. The federal cap is 133 percent. Over the past five years, enrollment in North Carolina’s SCHIP programs – NC Health Choice and Health Check – has rapidly expanded, going from 104,000 children in 2000 to 196,000 in 2005. The N.C. Department of Health and Human Services acknowledges, however, that the number of children on SCHIP is generally underestimated. Total 2005 SCHIP expenditures in North Carolina were $283 million, with the state paying 25 percent, or $70.8 million, of this amount. See also NC Health Choice for Children and Health Check.
School Report Cards
In 2004, Governor Mike Easley (D) announced a program to provide a report card for all public, charter and alternative schools in North Carolina. The purpose of the School Report Card is to furnish the public with helpful information concerning school and district demographics, student performance, school safety, and teacher and administrator quality. Information regarding student performance is some of the most publicized information from the annual School Report Cards. Each school receives a letter grade regarding student performance on the state’s End-of-Grade/End-of-Course tests. Letter grades are awarded based on: 1) performance: the percentage of students testing at or above grade level; and 2) growth: whether students have learned as much has they were expected to learn in one year. Critics of the program claim the tests used to gauge student progress lack rigor and do not provide a true measure of progress. To access additional information on North Carolina School Report Cards log onto: www.ncreportcards.org.
The legislative session that convenes in even-numbered years. The session meets from May to July (and often longer) in order to make adjustments to the biennial budget adopted during the long session.
Informal term for the text description that accompanies each budget change – i.e., increase or decrease to the continuation budget – in the Money Report.
Under a single-payer healthcare system, the government, rather than individual patients or insurance companies, pays all healthcare costs. The cost of such a program can be approximated by looking at total national health expenditures, which were $1.9 trillion in 2005, or a different year converted to 2005 dollars. The U.S. Department of Health and Human Services reports that taxpayers pay for 45 percent of these expenditures today. If Congress created a single-payer health insurance system the additional cost to taxpayers would thus be at least $1.05 trillion. A statewide universal healthcare program in North Carolina would cost taxpayers $53.6 billion. In many countries, such as Canada, Great Britain and Sweden, universal health insurance has resulted in a lower quality of care, as well as supply shortages. Under such a program, state authorities would decide what benefits the single-payer insurance plan would provide. To guarantee that the government has full control over health resources, universal health plans not only outlaw private health insurance, but also often ban the private practice of medicine. Such a ban was a controversial feature of the 1994 “HillaryCare” plan, which would have forced all employers to provide health insurance to their employees.
An urban planning model that aims to create communities that are more compact, transit-oriented and environmentally friendly. Advocates of smart growth wish to increase urban density as a means of minimizing the negative impact of “sprawl” on communities and the environment. The theory behind smart growth is that keeping populations concentrated in the center of a city prevents rapid outward growth and suburban development. Critics point out that smart growth policies often result in increased regulatory measures and higher prices that often hurt low-income families living in urban centers.
A social program whose stated goal is to “assist parents in their role as the primary caregivers and educators of young preschool children” by providing daycare services that help children enter school meeting minimum health and education preparedness standards. Unlike the federally funded Head Start program, which is open to low income 3- and 4-year-olds, Smart Start has broader eligibility and age requirements (up to age 6). While Smart Start explicitly claims it is not a childcare center, the program “helps make child care centers better through educational opportunities.” Smart Start is primarily funded by the state, but local public-private partnerships have been given operational responsibility. A statewide nonprofit organization, the North Carolina Partnership for Children, exercises oversight over 79 local Smart Start partnerships, which operate in all 100 of North Carolina’s counties. Under state law (cf. G.S. 143B-168.11-143.168.15), 70 percent of Smart Start funding must be used to provide direct childcare and educational services, with 30 to 50 percent being used for childcare subsidies. Each public/private partner is also required to raise at least 10 percent of its public funding. For FY2006 the state allocated $203.6 million for Smart Start.
See Appropriation-Supported Debt.
The provisions that comprise the actual budget bill containing the statutory changes and session laws that delineate how the budget should be implemented. “Substantive” special provisions are often not related to budgetary matters and may be inserted into the budget bill when a legislator wishes to avoid debating a bill on its own merits. The 2005 Budget Bill, for example, contained a substantive special provision (section 10.59F.(g)) mandating eye exams for all kindergartners.
Standard Course of Study
Developed by the Department of Public Instruction, standard course of study refers to the curriculum that is made available to every child attending public schools in North Carolina. First developed in 1898, the standard course of study provides a set of competencies for every content area in each grade and high school course. It is designed to ensure rigorous student academic performance standards that are uniform across the state. Standard course of study is based on a philosophy of teaching and learning and consistent with current research, exemplary practices and national standards. It is periodically altered to reflect changes in national, state and local communities.
State Assistance Teams
Created in 1995 as an essential component of the ABCs of Education, state assistance teams are assigned to schools designated by the State Board of Education, as low-performing. Assistance teams work to improve student achievement and to promote continuous improvement among faculty. Teams serve full-time within individual schools and work with both school executives and students. At the completion of the assignment, assistance teams share recommendations with the State Board of Education, school superintendent, and the local school board.
State Board of Education
State entity responsible for supervising and administering “the free public school system and the educational funds provided for its support.” The Board of Education is charged with setting and implementing policy impacting public education in North Carolina. The board consists of the lieutenant governor, the state treasurer and 11 members appointed by the governor. The governor’s appointments are subject to confirmation by the General Assembly in joint session. Eight of the appointed members represent the eight educational districts of the state. Three members are considered at-large appointments. Members are appointed for eight years and have staggered terms. The elected state superintendent of public instruction serves as secretary and chief administrative officer of the board.
State Budget Act
See G.S. §143c.The State Budget Act recodifies and amends the Executive Budget Act, but will not go into effect until July 1, 2007.The act will apply to the 2007- 2009 biennium and every biennium thereafter.
State Infrastructure Banks (SIBs)
Investment funds created at the state or multi-state level with funding from the federal government. Intended to provide states with new financing capabilities, SIBs (also known as capitalization grants) complement other programs offered by the USDOT, offering a range of loan and credit enhancement assistance options (like lines of credit), giving states and municipalities maximum flexibility regarding project selection and financial management.
Student Accountability Standards
The 1997 General Assembly instructed the State Board of Education to establish student accountability standards for North Carolina public school students in the 3rd, 5th, 8th and 12th grades. Standards were approved by the State Board of Education in 1999 and went into effect for the first time with the fifth grade in 2001. High school standards went into effect with the class of 2005. Student accountability standards require students to perform at grade level on end of grade (EOG) tests before they are automatically promoted to the next grade. Students not meeting this standard can be retested, receive academic intervention, or have their situation reviewed by a panel of educators. Student accountability standards are the first statewide promotion standards for elementary, middle and secondary schools in North Carolina.
TANF (Temporary Assistance to Needy Families)
TANF is a cash assistance and work opportunity program for low income families. Persons who qualify for TANF also qualify for Medicaid, although North Carolina has stricter eligibility rules for TANF than for Medicaid. Under the 1996 Welfare Reform Act, TANF replaced AFDC, the previous federal welfare program. TANF provides temporary cash assistance to needy families with children while encouraging adult providers to find employment. (TANF, for instance, imposes a five-year cap on welfare throughout a person’s lifetime; albeit states are allowed to exempt 20 percent of their caseload from this five-year cap.) Unlike AFDC, TANF also encourages couples with children to marry and stay married. Although TANF is federally funded, each state pays administration costs of the program. Each state is also able to set eligibility requirements for TANF. In 2005, TANF cost U.S. taxpayers $14 billion. Of this, $251 million went to North Carolina, which allocated an additional $19.3 million to administer the program for 2005. Congress reauthorized TANF with the Deficit Reduction Act of 2005 while also strengthening incentives for states to reduce TANF caseloads.
An employment arrangement in which employees enjoy limited flexibility in working location and hours. Since telecommuters are often able to work from home offices via the Internet, some traffic congestion is eliminated as those workers never get onto roads.
Title I of the Elementary and Secondary Education Act (ESEA) enacted April 11, 1965 (Pub. L. 89-10, 79, Stat.77 20 U.S.C. Ch.70) and amended by “Improving America’s Schools” (1994) and “No Child Left Behind” (2002). ESEA is an extensive act, which provides federal funds to elementary, and secondary schools in the United States. Title I refers to a set of programs administered by the U.S. Department of Education to distribute funding to schools and school districts with a high percentage of low income students. Title I schools typically have approximately 40 percent of students who qualify as “low-income” as defined by the U.S. Census definitions. The majority of Title I funds are used for grades 1 through 6.
Transportation Improvement Program (TIP)
A formal planning document that outlines the state’s major highway construction projects and balances anticipated construction costs against projected revenues. The TIP originated in a 1973 mandate by Governor Jim Holshouser that NCDOT develop a temporary “seven-year” transportation plan. Subsequently, plans of cost-to-revenues projections have become a fixture of transportation policy, especially as federal rules require all state transportation departments regularly to compile such documents for major projects. North Carolina’s document, the TIP, is updated every two years. Many projects in the TIP are unfunded. Calvin Leggett – NCDOT’s chief planner – said about the state’s TIP: “We have $2 in projects for every $1 we have coming in.”
Triangle Transit Authority (TTA)
Local government unit responsible for public transport issues in Durham, Orange, and Wake counties. It is governed by a 13-member Board of Trustees, of whom 10 members are appointed by local governments and three are appointed by the secretary of NCDOT. Specifically, the TTA was created in 1989 to “plan, finance, organize, and operate a public transportation system for the Research Triangle area.” The TTA has three primary program areas: bus service, rideshare service, and transit planning. TTA has legislative authority to levy a vehicle registration tax of up to $5 per registration and a tax on rental vehicles of up to 5 percent of gross receipts (the latter tax is to finance light rail).
Or “turnpikes” are pay-per-use roads, often administered by non-state entities in order more rapidly to raise revenue for a project, usually at the point of need. According to the N.C. Turnpike Authority, “a projected $65 billion gap between transportation needs and revenues during the next 25 years means we will be able to meet less than half of the state’s transportation needs.” So North Carolinians face a choice: “find new sources of funding that could speed the construction of some critical highway projects or wait years, perhaps even decades, until traditional funds are available to build free roads.”
Non-major component unit (a legally separate entity from the state of North Carolina) created in 2002 to manage the design, financing, operation and upkeep of turnpikes and tollways in the state. The General Assembly established the North Carolina Turnpike Authority to raise more private money for faster delivery and funding of transportation services and infrastructure. Integrating toll roads has become increasingly important to the North Carolina system, particularly as a means of serving hard to reach coastal areas like the Outer Banks.
Universal Health Coverage/Insurance
Universal health coverage, as opposed to universal healthcare, makes it illegal not to have health insurance coverage, much the same way as it is illegal not to have car insurance. Unlike car insurance, the government subsidizes healthcare coverage for anyone who can’t afford private insurance. Under such a program, the government would likely enjoy a monopoly as a health insurance provider. (In effect, then, universal health coverage ultimately leads to universal healthcare.) In April 2006, Massachusetts implemented a universal health coverage mandate that requires every person in the state to purchase health insurance by July 2007.
A curved roadway (loop) or series of loops that either encircle or bypass large urban centers, such as Charlotte (Outer Beltway), Raleigh-Durham (Beltline) and Wilmington (Wilmington Bypass). Also known as “beltways,” these urban loops are primarily funded by the HTF. Although loops can relieve traffic congestion, they are costly and can take a long time to build. The TIP currently includes planned or partially complete loops for Asheville, Charlotte, Durham, Fayetteville, Gastonia, Greensboro, Greenville, Raleigh, Wilmington and Winston-Salem. See also HTF, TIP and Moving Ahead.
Vehicle Miles Traveled (VMT)
The number of miles residential vehicles are driven in a specified length of time, generally a day or a year. VMT helps analysts determine road construction and maintenance needs, predict future surface demands, and estimate environmental costs.
Budgeting approach that advocates crafting the budget from the ground up – or a zero base – rather than using the previous year’s budget as a starting point. “Modified” zero-based budgeting entails “zeroing out” specific programs or agencies or line items, with the intention of inviting an agency to justify each expenditure. In 2001 and 2005, for example, the appropriations committees chose to examine line items such as travel, cell phone usage, and contracted miscellaneous and personal services across all agencies in an effort to find efficiencies. In previous years, the chairs of the appropriations committees have determined when and how to implement any form of zero-based budgeting.