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Senate | May 20, 2013 | Committee Room | Budget Press Conference

Full MP3 Audio File

Well good morning. We’re going to go ahead and take a few minutes up front to outline some of what we see the major portions of the budget to be. Then we are going to go ahead after that and take some of your questions. If you can, if you will hold your questions until we get to the end of the overview, I think that will make it a lot more free flowing. 2013 Senate budget proposal. The North Carolina Senate has followed Governor Pat McCrory’s lead in crafting a balanced and fiscal responsible budget that continues to invest in core priorities, streamline state government, reform public education, grow North Carolina’s economy. Like the Governor’s proposal, we are focused on continuing to heal the state’s balance sheet by providing safeguards for our long-term fiscal health through investing in infrastructure improvements and shoring up our reserves and rainy day funds. This is a $20.58B plan which comes within less than 1/10 of one percent of the Governor’s proposals. Obviously it differs in a few details here and there, but very very close. There is a 2.3% increase in overall spending, and yet the budget also lays the groundwork for the largest tax cut state history. The senate budget accomplishes this while dealing with over $1.2B in additional Medicaid requirements. Medicaid continues to be the primary driver in our budget. It is a problem that is affecting every other single spending priority we have in state government. Moving into health and human services, obviously with Medicaid there has been the need to make some very very serious changes and decisions to go ahead and bring that budget in at some manageable level. The fact that this is an entitlement program, the fact that we have to go ahead and fund whatever the bill is, and the fact that we continue to have issues with the federal government tying our hands when we want to make changes, only aggravates the problem that we have here. The $1.2B of additional state money to fund Medicaid includes not only the rebased numbers that we have for this year, but it includes $49M in the first year and $114M in the second year of the biennium from the woodworking effect of the affordable care act. We are pleased that Governor McCrory is leading the effort to reform Medicaid. Basically, we’re going to have problems in every other single area of our budget until we get Medicaid reformed. There is a provision in the budget that allows the Governor some time to go ahead and convene stakeholders, interested parties from across the state, to develop his plan and ultimately bring it back to the general assembly. The general assembly deserves the right to vote on that plan at the end of his work, and we’re looking forward to seeing what ideas come forward from that. The rest of our healthcare budget’s focused on encouraging and rewarding health care providers for increased efficiencies and better healthcare outcomes. There is 4% that comes off of provider rates and goes into a shared savings plan that will target those who are selling in the area. We do fund additional beds at Broughton Hospital. One of the four regional psychiatric hospitals funded by the state. We also establish and fund a statewide telepsychiatry program to improve access to psychiatric care for patients in rural areas. The budget allows people with Alzheimer's disease and dementia to access additional hours within the Medicaid personal care services program, which helps fix a problem for special care unit residents created by compliance with federal eligibility standards PCS. We expand support services including respite care for families caring for a person with dementia at home, in order to go ahead and encourage individuals to be treated in a more familiar and love ?? environment. Many of the nonprofits that were funded through DHHS are now going to be put into a competitive grant process that will be managed by DHHS. This takes the legislature out of the business of picking winners and losers in funding community nonprofits. Finally, it also establishes regional rates for payment of hospital inpatient services. This is done to eliminate the wide disparities in how hospitals are paid for the same service. With that, I’d like to ask Senator Hunt to go over the education highlights. [SPEAKER CHANGES] I’m going to do education first, then I’m going to do transportation. I like to say despite a critical…

Use of the money for Medicaid. Our budget protects money from public education. The fully enrolls enrollment growth in k12, community colleges, and university assistance. It provides 53.6 million to continue confidence in education reform to strengthen student literacy. Improve graduation rates. Increase accountability in the classroom. It gives parents tools to make better informed decisions about their children's education. It emphasize the importance of literacy by strengthening the teacher education programs. Licenser requirements and professional development and special focus on improving students reading skills. It increases accountability in the classroom by employing teachers through contracts that are renewed based on their performance. It continues the senates commitment to implementing a pay for excellence plan by including 10.2 million in the second yea to front annual pay raises for the most effective teachers. It allows parents to identify high performing average and struggling schools and overall student achievement by clearly indicating the overall level of student achievement and measuring whether a school is exceeding or failing to meet standard appropriate goals. It eliminates the k12 flex cuts for the school districts. To make the education budget process fully transparent. Previous legislations are appropriated inflated amounts to education but required local LEH ?? to return the money back to the, back to the states. Our budget sends local school districts the exact amount they have to spend. Whether than using a budget gimmick to appear to be spending more. Well these changes remove unfilled teaching positions but does not eliminate any teachers from the pay roll. Students in school districts will receive the same amount of net of state funds as they would with a flex cut. And finally on education, k through 12 it expands teach for America across the state and encourages recruitment of North Carolina college students and military veterans to teach at risk students. On the community college system, it restores 20 million and recurring state funds. It provides 10 million for critical equipment needs across the community college system. It aligns enrollment funding model to a more personal affect actual enrollment growth. By providing 4 million in funding to aid the colleges most impacted by this transition. It invest an innovated technical education program to help business build new products and technologies that create and retain jobs. Like the manufacturing solution center. And the textural technology center. It increases opportunity to help students learn in demand vocational skills and authorizing community college system to admit high school freshmen and sophomores in career, technical, education and industrial engineering courses. On the university system it makes responsible budgeting changes and creates a funding reserve for need base financial aid. In order to provide universities with certainty that financial aid available in future school years. And finally it incorporates the administrative and operational savings instructional efficiencies, and program consolidation efforts identified by the university system and their strategic directions plan. On transportation. Our budget continues to maintain and invest in critical infrastructure. Remove political influence from project decision making. Reduce precocity and enhance customer service. Our transportations budget incorporates the governors vision for overhauling the North Carolina highway trust fund which consolidates various funding streams to prioritize and accelerate transportation infrastructure at the projects regional and local level by an estimated 35 percent over the next 10 years. It continues the senates efforts to remove politics from transportation decision making by eliminating main projects from the statue. Including previously mandating toll projects and the off the top gap funds and mandated a data driven prioritization process that includes local input to select future transportation investments. It provides funding for targeted maintenance needs focusing on improving, repairing, replacing, structural deficient bridges and other critical infrastructure. And it funds the replacement of information technology systems critical to DMV customer service improvements. Extending operating hours at driver license offices. And the acceptance of credit and debit card payments. Now senator Brown is gonna talk about, whatever you're going to talk about.

alright first I'll touch on the highlights of our economic development agriculture and natural resources part of the budget. Our budget provides approximately 7 million annually for the job of maintenance and capital development fund or JMAC that's been our budget for a while now it also allocates 1 million in 2013 14 budget for our base realignment enclosure initiatives to protect our bases as cuts continue in the military across the country we want to make sure we protect our bases moving forward. It continues to invest in proven economic development projects like the highpoint furniture market and the North Carolina Biotechnology Center and research strangle institute. It creates an economic development program to allow the department of transportation to more rapidly respond to the infrastructure needs of new and expanding industries in our state with protections to ensure those investments are justified and also because North Carolina's rural communities are a critical part of our state and our economy it launches a new new rural economic development division within the state department of commerce lead by new Assistant Secretary with a focus on improving rural services and addressing rural needs it also invests approximately 55 million over two years in a new rural infrastructure authority a streamlined and efficient program that will offer one stop shopping for our communities can get the support and resources they need. Our budget continues efforts to maintain our states strong commitment to agriculture water efficiency and domestic energy production as well. In our natural and economic resources budget it consolidates grant programs from public water and waste water infrastructure projects into a new streamlined and accountable division of water infrastructure. It provides resources totaling 92.7 million which is more money then last years budget and the first year to spur clean water initiatives and improve water and sewer infrastructure also creates a new water and land conservation trust fund it includes one and a half million expansion for strategic national and international marketing of North Carolina's world class agricultural products it supports farmers by investing 5 million to upgrade farming equipment and technology at research stations providing 2.4 million for bio energy program and including a 4 million expansion of the tobacco trust fund for displaced tobacco farmers. It allocates 1.25 million for an expansion of shale gas sector development as well. Under justice and public safety highlights our budget emphasizes a commitment to keeping North Carolina's North Carolinians safe by producing I'm sorry by providing funding for additional key public safety personnel investing in critical emergency response technology and connecting law enforcement agencies at the local and state level. Our justice and public safety budget also restores funding to 69 trooper positions within the state highway patrol and provides increased funding for needed fuel and equipment. It adds 39 magistrates and 175 probation and parole officers across the state to ensure cases are processed smoothly and criminal offenders are supervised and complying with the law. It funds laboratory equipment and 19 new positions for the North Carolina State crime laboratory to provide critical support for criminal investigations to law enforcement agencies across the state. It fully funds the upgrade and maintenance of Viper technology to enhance public safety and emergency response communication and it also moves the SBI to the department of public safety. The SBI is an investigative law enforcement arm much like the state highway patrol alcohol law enforcement and emergency management. In fact the SBI is the only law enforcement division housed outside of DPS. Were nation among law enforcement agencies is vital and housing them within one agency is common sense. It simply does not make sense for our states top attorney to supervise the SBI just like it wouldn't make sense for your local district attorney to supervise your sheriff's or police. Internal corruption investigation unit will remain within the attorney generals office to provide objective and fair oversight over different areas of state government. In other highlights our budget fully funds a state retirement system and it sets the framework for modernizing tough word for me the states outdated IT infrastructure a move that will strengthen protections for our citizens personal data and enable North Carolinians to have a more customer friendly interaction with state government and it adds funds and it funds an innovative

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That’s how we handle that issue. [SPEAKER CHANGES] And is there tuition? [SPEAKER CHANGES] I can’t remember, I don’t think there’s a tuition increase in this budget. No. There is a small one in community college by $2 an hour. [SPEAKER CHANGES] I think you’re referring to the out of state increase. [SPEAKER CHANGES] We did not adopt that, no. [SPEAKER CHANGES] State employees and teachers aren’t getting pay raises? What’s the justification for that? I know it’s going to cost money but they haven’t had one pay raise in 5 years. [SPEAKER CHANGES] Correct. And we helped get them that pay raise last time. We understand why folks want pay adjustments. One of the things that occurred again between the time that the Governor released his budget with 1% raise and the time that we got a hold of it was the Medicaid situation. It matured or came on us like a rush. I think that ultimately we feel like we’re better working on trying to get North Carolina competitive again, getting our economy moving again, so that we have more workers, more people paying taxes so we grow the pie for everybody and we’ll be in a position of instead of looking at 1% pay raises from year to year we’ll be able to look at better and more competitive pay wages to having the best workforce that we can have. [SPEAKER CHANGES] ?? for a moment. It looks like hospitals are going to take a hit here this is increasing rates, it looks like some declining reimbursement rates for some procedures, it says outpatient procedures. As you know hospitals are already on a tight, tight ?? some of the changes that are coming under the Affordable Care Act. Are you concerned about this, how is this going to impact especially rural hospitals? [SPEAKER CHANGES] Well I think first of all you’re going to see that one of the changes in the budget actually helps rural hospitals. It makes sure that they receive, this move towards reimbursement rates by region is going to help rural hospitals quite a bit. Another thing that you’ll notice is that yes there are some, really in essence rate reductions in the budget. But there’s $1.2 billion more going into the health care system than there was before. Probably the fairest thing to say is that most hospitals are going to come out ahead, financially. They may end up serving more patients to get there, but that they are not going to be taking a fiscal hit. [SPEAKER CHANGES] There’s only so many people that are given, providers. There comes a point where you can’t be accomodating more people. [SPEAKER CHANGES] We think there’s room for efficiencies in that system. We think that they can do this. [SPEAKER CHANGES] Also could you explain the regional payment structure, how would rural areas, are they going to get a higher reimbursement rate depending on their, I guess explain. [SPEAKER CHANGES] What it does is it makes the reimbursement rates more uniform. [SPEAKER CHANGES] Okay. [SPEAKER CHANGES] So that, often times what’s occurred is that the same service done in a rural hospital would get reimbursed less at a lesser rate. So I think what you would see is more movement towards the middle so that you can get your services done out in a rural hospital and the cost will be reimbursed fairly for that. [SPEAKER CHANGES] It’s just going to be geographic regions not urban verse rural. [SPEAKER CHANGES] They are geographic regions. [SPEAKER CHANGES] There’s a provision that relates to the Vosh federal case. Can you explain that and how you would change what the Supreme Court ruled? [SPEAKER CHANGES] You’re going to have to elaborate on that one a little bit more. [SPEAKER CHANGES] There was a Supreme Court case that said there was a limit on how much I believe it’s a state or a county government can get back from a Medicaid patient with the Medicaid patient wins a ??. [SPEAKER CHANGES] I know what you’re talking about but will l have to answer you later so I can catch up on that one. I know the provision you’re talking about. [SPEAKER CHANGES] How about another provision in JPS that would require I think it’s the state or maybe all law enforcement agencies to send up information by officer on traffic stops and then there’s another provision about officer involved shootings, what’s that all about? [SPEAKER CHANGES] It’s all accountability. [SPEAKER CHANGES] ?? or is that something new? [SPEAKER CHANGES] It’s the accountability side of the issue, honestly I can’t remember that provision that well just thinking through it so I may have to get back to you on that. [SPEAKER CHANGES] There’s a provision in here for a CCNC audit, and from what I understand CCNC might be going away in a few years. So why do the audit? [SPEAKER CHANGES] I don’t know that CCNC is going away in a few years I think that what we know is that there’s a number of proposals out there for how to reform our Medicaid system. Theres several efforts in here designed to make the activities occurring at CCNC.

A little more transparent and accountable, not because of concerns about CC&C, but just because we have to get our hands around this huge problem. We won't know what the governor's final recommendations on Medicaid reform are for a number of months now. The more information on the table, the better off we'll be. [SPEAKER CHANGES] The changes that you are making in Medicaid, are any of these gonna require federal waivers? [SPEAKER CHANGES] The federal waiver is likely to occur with the effort that the governor's doing. The 1115BC waiver. Most of the things that we're doing here are things that we can control without having to do a state plan amendment. I mean, one of the problems that we ran into last time was that we budgeted based on the state plan amendment and it sat up in Washington for nine months. We're at a crossroads on Medicaid. Everybody here can tell that we have 400 some odd million dollars more in spending this year in the entire state budget and oh by the way, that's about the size of the Medicaid rebase. And all these things that we talk about that we want to do in education and justice and public safety and the environment they are all running right into the Medicaid juggernaut and we have just got to get it fixed. [SPEAKER CHANGES] Overall, why do you feel that this is a strong budget proposal? [SPEAKER CHANGES] I think we believe that first of all, we live within our means. We've been through four extremely difficult years, with recession and post-recession, and yet we managed this budget not only without a tax increase, but we managed it with some tax reform accounted for and a tax cut accounted for. We're able to protect spending in critical areas, we're making the hard decisions to divert resources into critical programs, and sometimes that means tough decisions on those that are left behind. Bottom line is, we are doing what we can with the resources that we have available to perform the fundamental responsibilities the state government has. [SPEAKER CHANGES] Senator, there was a proposal in the last budget, in the second years, if it were merit pay for state employees that never came about. So you have it in this year for teachers. Why would this budget be different from last year. [SPEAKER CHANGES] As you know, the last budget has 127 million dollars for merit pay for all government - all state government employees. We've narrowed the scope here, we're just talking about teachers. Actually, the difficulty in doing merit pay across the board is how do you measure, you know it becomes very subjective. We think we have ways now that we can quantify teacher performance, so we can use this 10.7 million dollars to target the best teachers. [SPEAKER CHANGES] The other thing that's in there is there's a million dollars for the pay study that the state that the executive branch wants to cover. The results of that study will help inform what we're able to do on merit pay. We are little further along in our plans and efforts in education, so we were able to move on that part, but we have a ways to go and have to wait for the results of that study. [SPEAKER CHANGES] So, eventually we gonna get to merit pay for everybody? [SPEAKER CHANGES] I'll take that. We would like to do that once we can accomplish this with the teachers, I think we're in a position to do this with other state employees. [SPEAKER CHANGES] One more. Here's the Democrats are already saying they don't have enough time to read the budget, let alone figure out what's in there, it seems like a pretty short time frame. You've got 413 pages of special provisions, I think. How do you, I mean this is one week, it's supposed to be done by Thursday. What are your thoughts on kinda the timing. [SPEAKER CHANGES] My prediction is you will find they have plenty to talk about. I think they will get though it and they will find plenty to talk about. I think the three of us all remember actually having our budgets delivered paper hot in our hands as we walked into the appropriations base budget meeting. We have tried to get the budget out early enough for people to have time to have these questions. We're going to have subcommittee meetings this afternoon that we'll air it out. My suspicion is there's going to be plenty of discussion. [SPEAKER CHANGES] Are you allowing amendments in subcommittees? [SPEAKER CHANGES] No amendments in subcommittees, but there will be amendments in appropriations base budget, which is similar to what you've heard last time. [SPEAKER CHANGES] One quick question regarding the drug testing for workforce benefits, that's a provision that I know got a lot of attention from the committee. Why isn't that in the budget, and are you confident that it's actually going to end up saving the state money as opposed to costing the state money which it seems to have done in Florida? [SPEAKER CHANGES] Well, of course we've been all though that debate on the floor and I think what you found is that if it passed the Senate on the floor and

Essential fiscal impact. We're going to go ahead and put it in the budget so, no, no magic to it. [SPEAKER CHANGES] Thank you all very much.