2009 LEGISLATIVE SESSION MEMO #7

On Monday, Governor Perdue presented her State of the State address to both Chambers of the General Assembly. She focused on tough economic times and the deep cuts to the budget that will require “service, courage, and sacrifice”.  She offered no specifics on her budget plan scheduled to be released next week.  She pledged to continue spending on education, promising to increase public school per-pupil funding, and eliminate the duplication of standardized tests. However, the Republicans rolled out their own recommendations including increasing class size from 21 to 23 students. By adding two students to each class they have determined it would save the state about $300 million by cutting the number of teachers needed. House Minority Leader, Paul Stam, stated that by giving good incentive pay to teachers and having the best teachers rather than reducing class size would be a better use of state funds. Other cost-cutting proposals included consolidating the More at Four and Smart Start pre-kindergarten programs to eliminate duplication, using software to catch bogus Medicaid claims and suspending the state funding of the Clean Water Management Trust Fund. In addition, they proposed that the money from the national tobacco litigation settlement should revert to the state’s general fund. State agencies have been ordered to reduce their spending by another 9 percent in anticipation of the $3 billion shortfall for the upcoming fiscal year. Governor Perdue plans to release her budget on Tuesday, March 17 to the Joint Appropriations Committee of the General Assembly.

On Tuesday, the House Education Committee heard the “Healthy Youth Act”. This bill would require school systems to offer two courses in sex education, abstinence and a comprehensive program. Parents would be given the choice with a permission form and if no form is received they would be placed in the Comprehensive course. There was intense debate. Representative Stam questioned the fiscal note that said there would no cost to the state or the local school systems. The bill is effective with the start of the 2009-2010 school year, which is July 7, 2009 in year-round schools in Wake County. A representative from New Hanover County spoke on their implementation of both courses that allows parents to choose. The argument was very partisan with the Democrats supporting the legislation and the Republicans questioning the need for such a bill. The call for the ayes and no’s was sustained and after much debate the vote was 32-21 in favor. The bill received a Favorable Report and was sent to House Health Committee, where it will be debated again.

Also on Tuesday this week, the Health Plan legislation (SB 287) was heard in the Senate Committee on Health and Medical Benefits. The bill does several things, but the first one is to correct the funding shortfall ($250 million) for 2008-2009 by transferring $250 million from the “Rainy Day” fund to the General fund.  The legislation needs to pass by April 1, 2009 to appropriate the $250 million, which will be out of money by March 31, and give the Health Plan three months to prepare for the plan changes to take effect on July 1, 2009. The plan changes cover the $850 million costs for 2009-2010 and 2010-2011, with a combination of state funds, employee contributions and benefit cuts. The major issue that has developed in the latest version is the pharmacy changes. Legislators are being bombarded with calls from the pharmacists. The bill is trying to save $90 million in pharmacy costs. One way will be to set up an extended provider group (pharmacies who agree to participate by lowering the costs of their drugs) and by requiring mail order drugs (primarily for maintenance drugs required due to a chronic health condition). The independent pharmacies say the bill changes will drive them out of business. The State Employees Credit Union and Retired employees raised concerns about the increased co-pays and higher deductibles. An attempt to require all employees to pay a modest ($10/per month) fee for insurance, was opposed by the employees groups, so this change was not added to the bill. The proposed committee substitute received a Favorable Report, in spite of the issues raised by Senators, and was sent to Appropriations.

On Wednesday, Senate Appropriations heard the Health Bill (SB 287) again. Senator Rand emphasized the need to move this bill so it could get to the House. If they don’t pass it by April 1, it will add an additional 15% cost to the plan and the need for funds. Overall, the employees are expected in savings and higher co-pays etc. to cover $186 million and the State $218 million in each year of the biennium. Another key provision in the bill, eliminates the 90/10 plan and to qualify for the 80/20 plan you must be a non-smoker by July 1, 2010 and you cannot be obese according to their charts by July 1, 2011, otherwise you can only be enrolled in the 70/30 plan. The State Employees group had Senator Doug Berger (Franklin) run an amendment to allow the Health Plan contracts to be open to designated people. These contracts were made confidential a number of years ago. Senator Rand opposed the amendment saying it would jeopardize the plan savings they were getting by participating in the Blue Cross Blue Shield PPO. There were further discussions about the amendment and eventually the amendment was defeated by voice vote. The bill passed with a voice vote that lacked a clear “yes”, but was called by Chairman Garrou as favorable and will now go to the Senate floor. On Thursday, the Senate called another meeting (for two hours) to allow members to further discuss the changes to the Health Plan bill again. They asked questions regarding costs, services, benefits, and options provided in the Plan. The major topic for members, still involved the pharmacy changes, covering the cost of drugs, mail order options and the impact to independent pharmacies in the State.

Late Wednesday, Governor Perdue used her authority as Governor to take all the funding in the “Rainy Day” fund ($787 million and set it aside to cover the deepening budget shortfall in the Health Plan and the General Fund). The State also posted its unemployment numbers on Wednesday and they have increased to 9.7 percent the highest they have been since 1983.

In other news this week, Representative Glazier and Senator Boseman held a press conference to introduce their “Bullying Bill” The same bill that failed to pass at the end of last session, has been introduced again with the same language. It requires policy changes for school systems and sets out classes of individuals for protection.

The House and Senate Appropriations Chairs met with Governor Perdue, on Wednesday, separately to discuss the upcoming release of her budget.

At another press conference on Wednesday, Representative Gulley talked about his legislation to remove the cap on Charter Schools. Several bills have been introduced regarding charter schools and there may be more to come.

Next week Governor Perdue will begin releasing her budget, on Monday. Updates will be sent by e-mail as soon as information on Education funding for public schools is shared. Stay Tuned for e-mails next week as it will be busy.

 

Bills Introduced:

House:

HB 439 Tax on Lottery Winnings

HB 471 Pay Equity Study

HB 512 Incentives for Energy Conservation

HB 518 Lottery Name Change

HB 532 E-NC Connectivity/Economic Development Fund

HB 536 Task Force on Sport Injuries in Schools

HB 537 New Assistant Principals/No Pay Decrease

HB 539 Merger Smart Start and More-at-Four

HB 544 Economic Impact/Regulatory Legislation

HB 547 School Calendar Flexibility/3 LEAs

HB 548 School Violence Prevention Act

HB 555 Transparency in Recommendations

HB 558 Modernize Sales Tax Statute/Digital Products

HB 582 Special Education Changes

HB 583 Clarify Local School Board Sovereign Immunity

HB 584 School Funding Flexibility/Pilot Program

HB 585 Appropriate Funds to Enrollment Reserve for BRAC LEAs

HB 593 Change School Starting Date

HB 599 Model Program Children w/Disabilities

HB 601 Mental Health Services for Children/Kids Care

 

Senate:

SB 478 Modify School Calendar Law

SB 486 Change Corporate Income Tax

SB 487 Modernize Sale Tax Statute/Digital Products

SB 491 Expunge Nonviolent Crimes

SB 519 State Health Plan/First Day Coverage

SB 526 School Violence Prevention Act

SB 531 PTA Parental Involvement/Dropout Prevention Funds

SB 534 Healthy Families and Healthy Workplaces Act

SB 546 Calculation of the Dropout Rate

SB 554 School Calendar Flexibility/2 LEAs

SB 558 Retirement System COLAS

SB 567 Promote Electricity Demand Reduction

SB 573 Modify Charter School Law

SB 594 Study Existing Children/Youth Programs

SB 596 Filling Vacancies in Local Offices

 

 

House Committees:

Education

HB 88 Healthy Youth Act Favorable Report Lengthy Discussion Favorable Vote in the affirmative 32-21. Referred to Health.

HB 185 Communities in Schools Funds Favorable Report and re-referred to Appropriations.

HB 188 Study Raising Compulsory Attendance Age Pulled after brief discussion.

Subcommittee on Universities

HB 83 Modify Out-of-State Tuition Exemption-Favorable Report to Committee Substitute and re-referred to Appropriations.

HB 256 UNC/Calculation of In-State Students-Favorable Report to Committee Substitute and re-referred to Appropriations.

Health

HB 329 Retired Nurses Return to Work Pulled from the agenda, awaiting Fiscal Note.

Judiciary III

HB 417 Drivers License Changes/Young Drivers-Favorable Report to Proposed Committee Substitute (Changes effective date to April 2010) and re-referred to Transportation.

 

 

Local Government

HB 357 Conform County School Board Vacancy Statute Favorable Report and re-referred to Election Law and Campaign Finance Reform.

Ways and Means/Broadband

HB 9 No Texting While Driving Passed an Amendment and sent to subcommittee to be chaired by Representatives Tolson and Tillis.

 

Senate Committees:

Employee Health and Medical Benefits

SB 287 State Health Plan$/Good Health Initiatives Favorable Report to Committee Substitute and re-referred to Appropriations.

Appropriations/Base Budget

SB 287 State Health Plan $/Good Health Initiatives Favorable Report to the Committee Substitute.  Amendment Failed.

Pensions and Retirement Discussed option on impact of losses to Retirement Account as a result of the economy and investment losses. Senate Appropriations chairs quizzed Michael Williamson on saving funds by reducing the COLA paid to retirees or other benefits. The members were told they could not act to reduce the COLA in spite of repeated questioning to do so.

 

House Floor:

HB 94 Clarify Definition of Retirement Passed second and third reading and sent to the Senate.

 

Bills in Committee next week:

HB 218 Parents & Student Educational Involvement Act

HB 42 Science Safety in the Public Schools

HB 188 Study Raising the Compulsory Attendance Age

HB 209 Sex Offender Registry/Liberties w/Student

 

Jt. Appropriations Subcommittee Meeting on Education:

March 17 Joint Appropriations-Governors Budget

March 18 Joint Appropriations Education-Governor’s Education Budget

March 19 Joint Appropriations Education-Principals’ Executive Program

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