OSBM Budget Manual - Office of State Budget and Management

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 1OFFICE OF STATE BUDGET AND MANAGEMENT(919) 733-7061 (phone)(919) 733-0640 (fax)http://www.osbm.state.nc.usINTRODUCTIONThe Office of State Budget and Management (OSBM) prepares the Budget Manual for the Stateof North Carolina for use by state departments, agencies and institutions in the preparation andadministration of their budgets. The Manual is a guide to state departments and agencies indischarging their duties under applicable laws and regulations. It is the responsibility ofdepartment heads and their fiscal staffs to acquaint themselves with the Manual.The Manual is divided into eight major sections:1. The Executive Budget Act2. Budget Development3. Budget Execution4. Fiscal Policies and Regulations5. Travel Policies and Regulations6. Personnel7. Reporting8. GlossaryThere are several features that should facilitate referencing and navigating throughout theManual. First, there is an index at the beginning of each section that will assist users with quickreferencing. Second, specific General Statute citations are referenced throughout the Manualand the online version includes direct links to the appropriate General Statute. A third feature,also in the online version, is the inclusion of direct links to other sites for useful information anddocuments. Finally, this Manual will include Budget Memorandums issued by OSBMsubsequent to this Manual’s most recent update.All revisions, supplements and deletions to the Manual will be issued through the State BudgetOfficer. Departmental officials and their staffs should maintain a current version of the Manualthat will be updated online periodically by OSBM. The header at the top of each page in theManual reflects the effective date of this version of the Manual and the date of the most recentupdates to this version. Users may refer to the “List of Budget Manual Revisions” below for alist of revisions issued subsequent to the Manual’s effective date.Any exceptions to the rules, regulations, or guidelines stated in the Budget Manual, except thoseexceptions expressly delegated, must be approved by OSBM. These policies may be superceded

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 2by OSBM directives or agency policies as long as they conform to the basic principles of theState Budget Manual.An OSBM staff directory is available at http://www.osbm.state.nc.us/osbm/osbmstaff.html.Questions, comments, or suggestions concerning the Budget Manual may be sent to Budget-Manual-OSBM@ncmail.net. Periodically, OSBM will revise the Budget Manual to reflectpolicy and procedure changes and to make the Budget Manual more user-friendly.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 3List of Budget Manual RevisionsDate of Revision Topic Section Page7/1/2003 Subsistence Rates Travel 141-142, 150-1511/12/2004 Misuse of State Property Personnel 1741/12/2004 Safety Shoe Allowance Personnel 161-1621/12/2004 Special Appropriations Budget Execution 1061/12/2004 Transp. By Personal Vehicle Travel 1466/28/2005 Subsistence Rate Revision Travel

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 4List of OSBM’s Budget MemorandumsBelow is a list of OSBM budget memorandums issued after the most recent update. A completelist of all OSBM budget memorandums may be found at the office’s websitehttp://www.osbm.state.nc.us/osbm/index.html.Date of Issuance Topic Time Limited

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 5TABLE OF CONTENTSOnline Start PageSection 1: Executive Budget Act 6Section 2: Budget Development 57Section 3: Budget Execution 68Section 4: Fiscal Policies and Regulations 127Section 5: Travel Policies and Regulations 140Section 6: Personnel 159Section 7: Reporting 175Section 8: Glossary 198

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 6EXECUTIVE BUDGET ACT INDEXSection Title Page143-1 Scope and definitions 9143-2 Purposes 9143-3 Examination of officers and agencies; disbursements 9143-3.1 Transfer of functions 10143-3.2 Issuance of warrants upon State Treasurer; delivery of warrants anddisbursements for non-State entities 11143-3.3 Assignments of claims against State 12143-3.4 Warrants for money paid into treasury by mistake 14143-3.5 Coordination of statistics; fiscal analysis required for any bill proposed bya State agency that affects the budget 14143-4 Advisory Budget Commission 15143-4.1 Biennial inspection 17143-5 Appropriation rules 17143-6 Information from departments and agencies asking State aid 17143-6.1 Reports on use of State funds by non-State entities 18143-7 Itemized statements and forms; exemptions from G.S. 143-64.6(c)(10) 19143-8 Reporting of legislative and judicial expenditures and financial needs 20143-9 Information to be furnished upon request 20143-10 Preparation of budget and public hearing 20143-10.1A Budget required to include State cost of local programs - Continuation andexpansion costs 21143-10.2 Limit on number of State employees 21143-10.7 Review of department forms and reports 21143-11 Survey of departments 21143-12 Bills containing proposed appropriations 24143-12.1 Vending facilities 25143-13 Printing copies of budget report and bills and rules for the introduction ofthe same 26143-14 Joint meetings of committees considering the budget report andappropriation bill 26143-15 Reduction and increase of items by General Assembly 27143-15.1 Current Operations Appropriations Act; General Fund Financial Model 28143-15.2 Use of General Fund credit balance; priority uses 28143-15.3 Savings Reserve Account 29143-15.3A Repairs and Renovations Reserve Account 29143-15.3B The Clean Water Management Trust Fund 30143-15.3C Work First Reserve Fund 31

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 7Section Title Page143-15.3D Trust Fund for Mental Health, Development Disabilities, and SubstanceAbuse Services and Bridge Funding Needs 31143-15.4 (Effective beginning with the 1993-94 General Fund Operating Budget)General Fund Operating Budget size limited 32143-16 Article governs all departmental, agency, etc., appropriations 32143-16.1 Federal funds 33143-16.2 Reports 33143-16.3 No expenditures for purposes for which the General Assembly hasconsidered but not enacted an appropriation 34143-16.4 Settlement Reserve Fund 34143-17 Requisition for allotment 34143-18 Unencumbered balances to revert to treasury; capital appropriations 35excepted143-18.1 Decrease of projects within capital improvement appropriations;requesting authorization of capital projects not specifically provided 35for143-19 Help for the Director 36143-20 Accounting records 37143-20.1 Annual financial statements 37143-21 Issuance of subpoenas 37143-22 Surveys, studies, and examinations of departments and institutions 38143-23 All maintenance funds for itemized purposes; transfers between objects orline items 38143-23.2 Transfers to Department of Health and Human Services 41143-23.3 Transfer of certain funds authorized 41143-24 Borrowing of money by State Treasurer 41143-25 Maintenance appropriations dependent upon adequacy of revenue tosupport them 41143-26 Director to have discretion as to manner of paying annual appropriations 43143-27 Appropriations to educational, charitable, and correctional institutions arein addition to receipts by them 43143-27.2 Discontinued service retirement allowance and severance wages for certainState employees 44143-28 All State agencies under provisions of this Article 45143-28.1 Highway Fund appropriation 45143-29 Delegation of power by Director 47143-30 Budget of State institutions 47143-31 Building and permanent improvement funds spent in accordance with 47budget143-31.1 Study and review of plans and specifications for building, improvement,etc., projects 48

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 8143-31.2 Appropriation, allotment, and expenditure of funds for historic andarcheological property 48Section Title Page143-31.3 Grants to nonstate health and welfare agencies 49143-31.4 Non-State match restrictions 49143-31.5 Repayment of certain unexpended and unencumbered sums; reports 49143-32 Person expending an appropriation wrongfully 49143-33 Intent 50143-34 Penalties and punishment for violations 50143-34.1 Positions included in the State's payroll must be approved by the Directorof Budget; payment of benefits and other salary-related items must bemade from same source as salary; dependent care assistance programauthorized; flexible compensation benefits authorized 51143-34.2 Information as to requests for nonstate funds for projects imposingobligation on State; statement of participation in contacts, etc., fornonstate funds; limiting clause required in certain contracts or grants 52143-34.6 Deposit of payroll deductions 53143-34.7 Participation by Legislative Officers 53Chapter 143Article 1BCapital Improvement Planning Act(G.S. 143-34.40 through 143-34.45)143-34.40 Definition 54143-34.41 Legislative intent, purpose 54143-34.42 Capital improvement facilities inventory 54143-34.43 Capital improvement needs criteria 54143-34.44 Agency capital improvement needs estimates 55143-34.45 Six year capital improvement plan 55

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 9§ 143-1. Scope and definitions.This Article shall be known, and may be cited, as "The Executive Budget Act." Whenever theword "Director" is used herein, it shall be construed to mean "Director of the Budget."Whenever the word "Commission" is used herein, it shall be construed to mean "AdvisoryBudget Commission," if the context shows that it is used with reference to any power or dutybelonging to the Office of State Budget and Management and to be performed by it, but it shallmean when used otherwise any State agency, and any other agency, person or commission bywhatever name called, that uses or expends or receives any State funds. "State funds" are herebydefined to mean any and all moneys appropriated by the General Assembly of North Carolina, ormoneys collected by or for the State, or any agency thereof, pursuant to the authority granted inany of its laws. (1925, c. 89, s. 1; 1929, c. 100, s. 1; 1957, c. 269, s. 2; 1979, 2 nd Sess., c. 1137, s.37; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-2. Purposes.It is the purpose of this Article to vest in the Governor of the State a direct and effectivesupervision of all agencies, institutions, departments, bureaus, boards, commissions, andevery State agency by whatsoever name now or hereafter called, including the same power andsupervision over such private corporations and persons and organizations of all kinds that mayreceive, pursuant to statute, any funds either appropriated by, or collected for, the State of NorthCarolina, or any of its departments, boards, divisions, agencies, institutions and commissions; forthe efficient and economical administration of all agencies, institutions, departments, bureaus,boards, commissions, persons or corporations that receive or use State funds; and for theinitiation and preparation of a balanced budget of any and all revenues and expenditures for eachsession of the General Assembly.The Governor shall be ex officio Director of the Budget. The purpose of this Article is to includewithin the powers of the Office of State Budget and Management all agencies, institutions,departments, bureaus, boards, and commissions of the State of North Carolina under whatevername now or hereafter known, and the change of the name of such agencies hereafter shall notaffect or lessen the powers and duties of the Office of State Budget and Management in respectthereto.The test as to whether an institution, department, agency, board, commission, or corporation orperson is included within the purpose and powers and duties of the Director of the Budget shallbe whether such agency or person receives for use, or expends, any of the funds of the State ofNorth Carolina, including funds appropriated by the General Assembly and funds arising fromthe collection of fees, taxes, donations appropriative, or otherwise. (1925, c. 89, s. 2; 1929, c.100, s. 2; 1955, c. 578, s. 1; c. 743; 1957, c. 269, ss. 1, 2; 1979, 2nd Sess., c. 1137, s. 37; 1981, c.859, s. 47.1; 1983 (Reg. Sess., 1984), c. 1109, s. 10; 1985, c. 290, s. 1; 2000-140, s. 93.1(a);2001-424, s. 12.2(b).)§ 143-3. Examination of officers and agencies; disbursements.The Director shall have power to examine under oath any officer or any head, any clerk oremployee, of any department, institution, bureau, division, board, commission, corporation,

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 10association, or any agency; to cause the attendance of all such persons, requiring such persons tofurnish any and all information desired relating to the affairs of such agency; to compel theproduction of books, papers, accounts, or other documents in the possession or under the controlof such person so required to attend. The Director or his authorized representative shall have theright and the power to examine any State institution or agency, board, bureau, division,commission, corporation, person, and to inspect its property, and inquire into the method ofoperation and management.The Director shall have power to have the books and accounts of any of such agencies or personsaudited, and supervise generally the budget accounts of such departments, institutions andagencies within the terms of this Article. The Director may require that the cost of making allaudits shall be paid from the regular maintenance appropriation made by the General Assemblyfor such department, institution or agency which may be thus audited.It shall be the duty of the Director to recommend to the General Assembly at each session suchchanges in the organization, management and general conduct of the various departments,institutions and other agencies of the State, and included within the terms of this Article, as in hisjudgment will promote the more efficient and economical operation and management thereof.The State Controller under the provisions of the Executive Budget Act shall prescribe themanner in which disbursements of the several institutions and departments shall be made andmayrequire that all warrants, vouchers or checks, except those drawn by the State Auditor, StateTreasurer, and Administrative Officer of the Courts shall bear two signatures of such officersas will be designated by the State Controller. (1925, c. 89, s. 3; 1929, c. 100, s. 3; c. 337, s. 4;1969, c. 458, s. 3; 1981, c. 859, s. 47.1; 1985 (Reg. Sess., 1986), c. 1024, s. 2.)§ 143-3.1. Transfers of functions.The functions of preaudit of State agency expenditures, issuance of warrants on the StateTreasurer for State agency expenditures, and maintenance of records pertaining to thesefunctions shall be transferred from the Director of the Budget to the Office of the StateController. All statutory authority, personnel, unexpended balances of appropriations or otherfunds, books, papers, reports, files and other records of the Office of State Budget andManagement pertaining to and used in the performance of these functions shall be transferred tothe Office of the State Controller; office machinery and equipment used primarily in theperformance of these functions shall also be transferred to the Office of the State Controller. TheGovernor is authorized to do all things necessary to effect an orderly and efficient transfer.The functions of accounting systems development, maintenance, and coordination shall betransferred from the Office of the State Auditor to the Office of the State Controller. All statutoryauthority, personnel, unexpended balances of appropriations or other funds, books, papers,reports, files, software, documentation, and other records of the Auditor's Office pertaining toand used in the performance of these functions shall be transferred to the Office of the StateController; office machinery, equipment, terminals and the like used primarily in theperformance of these functions shall also be transferred to the Office of the State Controller. The

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 11State Auditor, with the advice and consent of the Governor, is authorized to do all thingsnecessary to effect an orderly and efficient transfer. (1955, c. 578, s. 2; 1957, c. 269, s. 2; 1979,2nd Sess., c. 1137, s. 37; 1985 (Reg. Sess., 1986), c. 1024, s. 3; 2000-140, c. 93.1(i).)§ 143-3.2. Issuance of warrants upon State Treasurer; delivery of warrants anddisbursements for non-State entities.(a) The State Controller shall have the exclusive responsibility for the issuance of all warrantsfor the payment of money upon the State Treasurer. All warrants upon the State Treasurer shallbe signed by the State Controller, who before issuing them shall determine the legality ofpayment and the correctness of the accounts. All warrants issued for non-State entities shall bedelivered by the appropriate agency to the entity's legally designated recipient by United Statesmail or its equivalent, including electronic funds transfer.When the State Controller finds it expedient to do so because of a State agency's size andlocation, the State Controller may authorize a State agency to make expenditures through adisbursing account with the State Treasurer. The State Controller shall authorize the JudicialDepartment and the General Assembly to make expenditures through such disbursingaccounts. All disbursements made to non-State entities shall be delivered by the appropriateagency to the entity's legally designated recipient by United States mail or its equivalent,including electronic funds transfer. All deposits in these disbursing accounts shall be by the StateController's warrant. A copy of each voucher making withdrawals from these disbursingaccounts and any supporting data required by the State Controller shall be forwarded to theOffice of the State Controller monthly or as otherwise required by the State Controller.Supporting data for a voucher making a withdrawal from one of these disbursing accounts tomeet a payroll shall include the amount of the payroll and the employees whose compensation ispart of the payroll.A central payroll unit operating under the Office of the State Controller may make deposits andwithdrawals directly to and from a disbursing account. The disbursing account shall constitute arevolving fund for servicing payrolls passed through the central payroll unit.The State Controller may use a facsimile signature machine in affixing his signature to warrants.(b) The State Treasurer may impose on an agency a fee of fifteen dollars ($15.00) for each checkdrawn against the agency's disbursing account that causes the balance in the account to be inoverdraft or while the account is in overdraft. The financial officer shall pay the fee from non-State or personal funds to the General Fund to the credit of the miscellaneous non-tax revenueaccount by the agency. (1955, c. 578, s. 2; 1957, c. 269, s. 2; 1961, c. 1194; 1969, c. 844, s. 12;1979, 2nd Sess., c. 1137, s. 37; 1981, c. 859, s. 47.1; c. 884, s. 10; 1985, c. 290, s. 2; 1985 (Reg.Sess., 1986), c. 1024, s. 4; 1989 (Reg. Sess., 1990), c. 1074, s. 17; 1991, c. 542, s. 5; 1995, c.507, s. 27.4.)§ 143-3.3. Assignments of claims against State.(a) Definitions. - The following definitions apply in this section:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 12(1) Assignment. An assignment or transfer of a claim, or a power of attorney, an order, oranother authority for receiving payment of a claim.(2) Claim. A claim, a part or a share of a claim, or an interest in a claim, whether absoluteor conditional.(3) Qualified charitable organization. A charitable organization that is exempt from federalincome tax pursuant to section 501(c)(3) of the Internal Revenue Code.(4) State employee credit union. A credit union organized under Chapter 54 of the GeneralStatutes whose membership is at least one-half employees of the State.(5) The State. The State of North Carolina and any department, bureau, or institution of theState of North Carolina.(b) Assignments Prohibited. - Except as otherwise provided in this section, any assignment of aclaim against the State is void, regardless of the consideration given for the assignment, unlessthe claim has been duly audited and allowed by the State and the State has issued a warrant forpayment of the claim. Except as otherwise provided in this section, the State shall not issue awarrant to an assignee of a claim against the State.(c) Assignments in Favor of Certain Entities Allowed. – This section does not apply to anassignment in favor of:(1) A hospital.(2) A building and loan association.(3) A uniform rental firm in order to allow an employee of the Department ofTransportation to rent uniforms that include day-glo orange shirts or vests as requiredby federal and State law.(4) An insurance company for medical, hospital, disability, or life insurance.(d) Assignments to Meet Child Support Obligations Allowed. - This section does not apply toassignments made to meet child support obligations pursuant to G.S. 110-136.1.(e) Assignments for Prepaid Legal Services Allowed. – This section does not apply to anassignment for payment for prepaid legal services.(f) Payroll Deduction for State Employee Credit Union Accounts Allowed. - An employee of theState who is a member of a State employee credit union may authorize, in writing, the periodicdeduction from the employee's salary or wages paid for employment by the State of a designatedlump sum for deposit to any credit union accounts, purchase of any credit union shares, orpayment of any credit union obligations agreed to by the employee and the State employee creditunion.(g) Payroll Deduction for Payments to Certain Employees' Associations Allowed. - An employeeof the State or any of its institutions, departments, bureaus, agencies or commissions, or any ofits local boards of education or community colleges, who is a member of a domiciled employees'association that has at least 2,000 members, the majority of whom are employees of the State orpublic school employees, may authorize, in writing, the periodic deduction each payroll period

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 13from the employee's salary or wages a designated lump sum to be paid to the employees'association.An employee of any local board of education who is a member of a domiciled employees'association that has at least 40,000 members, the majority of whom are public school teachers,may authorize in writing the periodic deduction each payroll period from the employee's salaryor wages a designated lump sum or sums to be paid for dues and voluntary contributions for theemployees' association.An authorization under this subsection shall remain in effect until revoked by the employee. Aplan of payroll deductions pursuant to this subsection for employees of the State and otherassociation members shall become void if the employees' association engages in collectivebargaining with the State, any political subdivision of the State, or any local schooladministrative unit. This subsection does not apply to county or municipal governments or anylocal governmental unit, except for local boards of education.(h) Payroll Deduction for State Employees Combined Campaign Allowed. - Subject to rulesadopted by the State Controller, an employee of the State may authorize, in writing, the periodicdeduction from the employee's salary or wages paid for employment by the State of a designatedlump sum to be paid to satisfy the employee's pledge to the State Employees CombinedCampaign.(i) Payroll Deduction for Public School and Community College Employees' Contributions toCharitable Organizations Allowed. - Subject to rules adopted by the State Controller, anemployee of a local board of education or community college may authorize, in writing, theperiodic deduction from the employee's salary or wages paid for employment by the board ofeducation or community college of a designated lump sum to be contributed to a qualifiedcharitable organization that has first been approved by the employee's board of education orcommunity college board.(j) Payroll Deduction for University of North Carolina System Employees' Contributions toCertain Charitable Organizations Allowed. - Subject to rules adopted by the State Controller, ifa constituent institution of The University of North Carolina approves a payroll deduction planunder this subsection, an employee of the constituent institution may authorize, in writing, theperiodic deduction from the employee's salary or wages paid for employment by the constituentinstitution of a designated lump sum to be contributed to a qualified charitable organization thatexists to support athletic or charitable programs of the constituent institution and that has firstbeen approved by the President of The University of North Carolina as existing to supportathletic or charitable programs. If a payroll deduction plan under this subsection results inadditional costs to a constituent institution, these costs shall be paid by the qualified charitableorganizations receiving contributions under the plan.(k) Payroll Deduction for University of North Carolina System Employees to Pay forDiscretionary Privileges of University Service. - Subject to rules adopted by the State Controller,if a constituent institution of The University of North Carolina approves a payroll deduction plan

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 14under this subsection, an employee of the constituent institution may authorize, in writing, theperiodic deduction from the employee's salary or wages paid for employment by the constituentinstitution, of one or more designated lump sums to be applied to the cost of correspondingdiscretionary privileges available at employee expense from the employing institution.Discretionary privileges from the employing institution that may be paid for through thissubsection include parking privileges, athletic passes, use of recreational facilities, admission tocampus concert series, and access to other institutionally hosted or provided entertainments,events, and facilities.(l) Assignment of Payments From the Underground Storage Tank Cleanup Funds. - This sectiondoes not apply to an assignment of any claim for payment or reimbursement from theCommercial Leaking Petroleum Underground Storage Tank Cleanup Fund established by G.S.143-215.94B or the Noncommercial Leaking Petroleum Underground Storage Tank CleanupFund established by G.S. 143-215.94D. (1925, c. 249; 1935, c. 19; 1939, c. 61; 1941, c. 128;1965, c. 1179; 1969, c. 625; 1977, c. 88; 1981, c. 869; 1981 (Reg. Sess., 1982), c. 1282, ss. 14,15; 1983, c. 680; c. 913, s. 49; 1983 (Reg. Sess., 1984), c. 1034, s. 147; c. 1036, s. 1; 1985 (Reg.Sess., 1986), c. 1024, s. 5; 1987, c. 738, s. 223; 1989, c. 215; 1989 (Reg. Sess., 1990), c. 1066, s.82; 1991, c. 688, s. 1; 1993, c. 561, s. 63(a); 1997-412, s. 9; 1998-161, s. 7; 2002-126, s. 6.4(a).)§ 143-3.4. Warrants for money paid into treasury by mistake.(a) Whenever the Governor and Council of State are satisfied that moneys have been paid intothe treasury through mistake, they may direct a warrant be drawn therefor on the Treasurer, infavor of the person who made such payment; but this provision shall not extend to payments onaccount of taxes nor to payments on bonds and mortgages.(b) Whenever any real property mortgaged to the State, or bought in for the benefit of the State,of which a certificate shall have been given to a former purchaser, is sold by the AttorneyGeneral on a foreclosure by notice, or under a judgment, for a greater sum than the amount dueto the State, with costs and expenses, the surplus money received into the treasury, after aconveyance has been executed to the purchaser, shall be paid to the person legally entitled tosuch real property at the time of the foreclosure on the forfeiture of the original contract. Awarrant shall not be drawn for such surplus money but upon satisfactory proof, by affidavit orotherwise, of the legal rights of such person. (1868-9, c. 270, ss. 66, 68; Code, ss. 3351, 3352;Rev., ss. 5366, 5368; C.S., ss. 7676, 7678; 1983, c. 913, ss. 50, 51.)§ 143-3.5. Coordination of statistics; fiscal analysis required for any bill proposed by aState agency that affects the budget.(a) It shall be the duty of the Director, through the Office of State Budget and Management tocoordinate the efforts of governmental agencies in the collection, development, disseminationand analysis of official economic, demographic and social statistics pertinent to State budgeting.The Director shall:(1) Prepare and release the official demographic and economic estimates and projectionsfor the State;(2) Conduct special economic and demographic analyses and studies to support statewidebudgeting;

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 15(3) Develop and coordinate cooperative arrangements with federal, State and localgovernmental agencies to facilitate the exchange of data to support State budgeting;(4) Compile, maintain, and disseminate information about State programs which involvethe distribution of State aid funds to local governments including those variables usedin their allocation;(5) Develop and maintain in cooperation with other State and local governmental agencies,an information system providing comparative data on resources and expenditures oflocal governments; and(6) Report major trends that influence revenues and expenditures in the State budget in thecurrent fiscal year and that may influence revenues and expenditures over the next fivefiscal years.Every fiscal analysis prepared by the Director or the Office of State Budget and Managementaddressing the State budget outlook shall encompass the upcoming five-year period. Everyfiscal analysis prepared by the Director or the Office of State Budget and Managementaddressing the impact of proposed legislation on the State budget shall estimate the impact forthe first five fiscal years the legislation would be in effect. To minimize duplication of effort incollecting or developing new statistical series pertinent to State planning and budgeting,including contractual arrangements, State agencies must submit to the Director proposedprocedures and funding requirements.(b) Any bill proposed by an executive or judicial department, agency, institution, board, orcommission that affects the State budget shall be accompanied by a fiscal analysis. The fiscalanalysis shall estimate the impact of the legislation on the State budget for the first five fiscalyears the legislation would be in effect.(c) This section shall not apply to the General Assembly, any of its committees andsubcommittees, the Legislative Research Commission, the Legislative Services Commission, orany other committee or commission in the legislative branch. (1979, 2 nd Sess., c. 1137, s. 41;1991, c. 689, s. 341; 1993 (Reg. Sess., 1994), c. 769, s. 11.1(b); 2000-140, s. 93.1(f); 2001-424,s. 12.2(b).)§ 143-3.6: Expired.§ 143-3.7. Repealed by Session Laws 1997-443, s. 23(b).§ 143-4. Advisory Budget Commission.(a) Five Senators appointed by the President Pro Tempore of the Senate, five Representativesappointed by the Speaker of the House and five persons appointed by the Governor shallconstitute the Advisory Budget Commission. If the Governor appoints any members of theGeneral Assembly to the Advisory Budget Commission, he must appoint an equal number fromthe Senate and House of Representatives.(b) The Chairman of the Advisory Budget Commission shall also receive an additional twothousand five hundred dollars ($2,500) payable in quarterly installments, for expenses.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 16The members of the Advisory Budget Commission shall receive no per diem compensation fortheir services, but shall receive the same subsistence and travel allowance as are provided formembers of the General Assembly for services on interim legislative committees.(c) The Governor may call a meeting of the Commission during the period beginning with theconvening of each regular session and ending 30 days later. Otherwise, meetings of theCommission may be called by the Governor or by the chairman.Members of the Commission shall take the oath of office at or before the first meeting of theCommission they attend.The Office of State Budget and Management, under the direction of the State Budget Officer,may serve as staff to the Commission. The State Budget Officer shall designate a secretary to theCommission.(d) After the agenda for a meeting has been delivered to the members of the Commission, noother item shall be considered at that meeting except upon the approval of a majority of themembers present and voting.Except for the Governor, persons who are not members of the Commission may address theCommission only at the invitation of the Governor, the chairman, or a majority of the memberspresent and voting.A vacancy in one of the seats on the Commission shall be filled by appointment by the officerwho appointed the person causing the vacancy.(e) Before the end of each fiscal year or as soon thereafter as practicable, the Advisory BudgetCommission shall contract with a competent certified public accountant who is in no wayotherwise affiliated with the State or with any agency thereof to conduct a thorough andcomplete audit of the receipts and expenditures of the State Auditor's office during theimmediate fiscal year just ended, and to report to the Advisory Budget Commission on suchaudit not later than the following October first. A sufficient number of copies of such audit shallbe provided so that at least one copy is filed with the Governor's Office, one copy with theOffice of State Budget and Management and at least two copies filed with the Secretary of State.(f) In all matters where action on the part of the Advisory Budget Commission is required by thisArticle, 10 members of the Commission shall constitute a quorum for performing the duties oracts required by the Commission. (1925, c. 89, s. 4; 1929, c. 100, s. 4; 1931, c. 295; 1951, c. 768;1955, c. 578, s. 3; 1957, c. 269, s. 2; 1973, c. 820, ss. 1-3; 1979, 2nd Sess., c. 1137, ss. 25, 29.1,37; 1981, c. 859, s. 47.1; 1983, c. 48, ss. 1-3; 1983 (Reg. Sess., 1984), c. 1034, s. 148; 1985, c. 3,ss. 1-2.1; c. 290, s. 3; 1985 (Reg. Sess., 1986), c. 955, ss. 56, 57; 1989, c. 781, s. 41; 1991, c.739, s. 22; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-4.1. Biennial inspection.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 17The Commission shall make a biennial inspection of those physical facilities of the State itdeems necessary. The Governor may make a biennial inspection of those facilities of the State hedeems necessary. (1983, (Reg. Sess., 1984), c. 1034, s. 149; 1985 (Reg. Sess., 1986), c. 955, s.59.)§ 143-5. Appropriation rules.All moneys heretofore and hereafter appropriated shall be deemed and held to be within theterms of this Article and subject to its provisions unless it shall be otherwise provided in the actappropriating the same; and no money shall be disbursed from the State treasury except as hereinprovided. (1925, c. 89, s. 5; 1929, c. 100, s. 5.)§ 143-6. Information from departments and agencies asking State aid.(a) On or before the first day of September in the even-numbered years, each of the departments,bureaus, divisions, officers, boards, commissions, institutions, and other State agencies andundertakings receiving or asking financial aid from the State, or receiving or collecting fundsunder the authority of any general law of the State, shall furnish the Director all the information,data and estimates which he may request with reference to past, present and futureappropriations and expenditures, receipts, revenue, and income.(b) Any department, bureau, division, officer, board, commission, institution, or other Stateagency or undertaking desiring to request financial aid from the State for the purpose ofconstructing or renovating any State building, utility, or other property development (except arailroad, highway, or bridge structure) shall, before making any such request for State financialaid, submit to the Department of Administration a statement of its needs in terms of space andother physical requirements, and shall furnish the Department with such additional informationas it may request. The Department of Administration shall then review the statement of needssubmitted by the requesting department, bureau, division, officer, board, commission, institution,or other State agency or undertaking and perform additional analysis, as necessary, to complywith G.S. 143-341.(b1) All requests for financial aid for the purpose of constructing or renovating any Statebuilding, utility, or other property development (except a railroad, highway, or bridge structure)shall be accompanied by a certification from the Department of Administration as outlined inG.S. 143-341. The General Assembly may provide advanced planning funds but shall onlyprovide construction funds when the requirements of this subsection have been met. Thissubsection shall not apply to requests for appropriations of less than one hundred thousanddollars ($100,000).(b2) Any department, bureau, division, officer, board, commission, institution, or other Stateagency or undertaking desiring to request financial aid from the State for the purpose ofacquiring or maintaining information technology as defined by G.S. 147-33.81(2) shall, beforemaking the request for State financial aid, submit to the State Chief Information Officer (CIO) astatement of its needs in terms of information technology and other related requirements andshall furnish the

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 18CIO with any additional information requested by the CIO. The CIO shall then review thestatement of needs submitted by the requesting department, bureau, division, officer, board,commission, institution, or other State agency or undertaking and perform additional analysis, asnecessary, to comply with G.S. 147-33.82. All requests for financial aid for the purpose ofacquiring or maintaining information technology shall be accompanied by a certification fromthe CIO deeming the request for financial aid to be consistent with Article 3D of Chapter 147 ofthe General Statutes. The CIO shall make recommendations to the Governor regarding the meritsof requests for financial aid for the purpose of acquiring or maintaining information technology.This subsection shall not apply to requests for appropriations of less than one hundred thousanddollars ($100,000).(c) On or before the first day of September in the even-numbered years, each of the departments,bureaus, divisions, officers, boards, commissions, institutions, and other State agencies receivingor asking financial aid or support from the State, under the authority of any general law of theState, shall furnish the Director with the following information:(1) The amount of State funds disbursed in the immediately preceding two fiscal years andthe purpose for which the funds were disbursed and used, the amount being requestedas continuation funds for the upcoming fiscal year, and the justification for continuedState support; and(2) Justification for continued State support shall include information on the extent of thepublic benefit being derived from State support.(d) The Office of State Budget and Management and the Director of the Budget shall provide tothe General Assembly, on or before January 15 of each odd-numbered year, a report thatadequately and fairly presents the information required in this section. (1925, c. 89, s. 6; 1929, c.100, s. 6; 1957, c. 584, s. 4; 1965, c. 310, s. 4; 1991, c. 689, s. 190(b); 1998-45, s. 2; 2000-140, s.93.1(a); 2001-424, ss. 12.2(b), 15.3(a).)§ 143-6.1. Report on use of State funds by non-State entities.(a) Disbursement and Use of State Funds. – Every corporation, organization, and institution thatreceives, uses, or expends any State funds shall use or expend the funds only for the purposes forwhich they were appropriated by the General Assembly or collected by the State. State fundsinclude federal funds that flow through the State. For the purposes of this section, the term"grantee" means a corporation, organization, or institution that receives, uses, or expends anyState funds. The State may not disburse State funds appropriated by the General Assembly toany grantee or collected by the State for use by any grantee if that grantee has failed to provideany reports or financial information previously required by this section. In addition, beforedisbursing the funds, the Office of State Budget and Management may require the grantee tosupply information demonstrating that the grantee is capable of managing the funds inaccordance with law and has established adequate financial procedures and controls. Allfinancialstatements furnished to the State Auditor pursuant to this section, and any audits or other reportsprepared by the State Auditor, are public records.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 19(b) State Agency Reports. - A State agency that receives State funds and then disburses the Statefunds to a grantee must identify the grantee to the State Auditor, unless the funds were for thepurchase of goods and services. The State agency must submit documents to the State Auditor ina prescribed format describing standards of compliance and suggested audit proceduressufficient to give adequate direction to independent auditors performing audits.(c) Grantee Receipt and Expenditure Reports. - A grantee that receives, uses, or expendsbetween fifteen thousand dollars ($15,000) and three hundred thousand dollars ($300,000) inState funds annually, except when the funds are for the purchase of goods or services, must fileannually with the State agency that disbursed the funds a sworn accounting of receipts andexpenditures of the State funds. This accounting must be attested to by the treasurer of thegrantee and one otherauthorizing officer of the grantee. The accounting must be filed within six months after the endof the grantee's fiscal year in which the State funds were received. The accounting shall be inthe form required by the disbursing agency. Each State agency shall develop a format for theseaccountings and shall obtain the State Auditor's approval of the format.(d) Grantee Audit Reports. - A grantee that receives, uses, or expends State funds in the amountof three hundred thousand dollars ($300,000) or more annually, except when the funds are forthe purchase of goods or services, must file annually with the State Auditor a financial statementin the form and on the schedule prescribed by the State Auditor. The financial statement must beaudited in accordance with standards prescribed by the State Auditor to assure that State fundsare used for the purposes provided by law.(e) Federal Reporting Requirements. - Federal law may require a grantee to make additionalreports with respect to funds for which reports are required under this section. Notwithstandingthe provisions of this section, a grantee may satisfy the reporting requirements of subsection (c)of this section by submitting a copy of the report required under federal law with respect to thesame funds or by submitting a copy of the report described in subsection (d) of this section.(f) Audit Oversight. - The State Auditor has audit oversight, pursuant to Article 5A of Chapter147 of the General Statutes, of every grantee that receives, uses, or expends State funds. Such agrantee must, upon request, furnish to the State Auditor for audit all books, records, and otherinformation necessary for the State Auditor to account fully for the use and expenditure of Statefunds. The grantee must furnish any additional financial or budgetary information requested bythe State Auditor. (1989, c. 752, s. 54; 1991, c. 689, ss. 12, 190(a); 1993, c. 321, s. 45; 1995(Reg. Sess., 1996), c. 748, s. 2.1; 1997-443, s. 34.11; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-7. Itemized statements and forms.(a) The statements and estimates required under G.S. 143-6 shall be itemized in accordance withthe budget classification adopted by the State Controller, and upon forms prescribed by theDirector, and shall be approved and certified by the respective heads or responsible officer ofeach department, bureau, board, commission, institution, or agency submitting same. Officialestimate blanks which shall be used in making these reports shall be furnished by the Director ofthe Budget.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 20(b) The budget classification adopted by the State Controller and the forms prescribed by theDirector shall include budget account codes relating specifically to information technology toallow reliable and meaningful analysis of information technology funding and expendituresthroughout State government. (1925, c. 89, s. 7; 1929, c. 100, s. 7; 1957, c. 269, s. 2; 1983, c.761, s. 19; 1985 (Reg. Sess., 1986), c. 1024, ss. 6, 7; 2001-424, s. 15.3(b).)§ 143-8. Reporting of legislative and judicial expenditures and financial needs.On or before the first day of September, biennially, in the even-numbered years, the LegislativeServices Officer shall furnish the Director a detailed statement of expenditures of the GeneralAssembly for the current fiscal biennium, and an estimate of its financial needs, itemized inaccordance with the budget classification adopted by the Director and approved and certified bythe President Pro Tempore of the Senate and the Speaker of the House of Representatives foreach year of the ensuing biennium, beginning with the first day of July thereafter. TheAdministrative Officer of the Courts shall furnish the Director a detailed statement ofexpenditures of the judiciary, and for each year of the current fiscal biennium an estimate of itsfinancial needs as provided by law, itemized in accordance with the budget classificationadopted by the Director and approved and certified by the Chief Justice for each year of theensuing biennium, beginning with the first day of July thereafter. The Director shall includethese estimates and accompanying explanations in the budget submitted with suchrecommendations as the Director may desire to make in reference thereto. (1925, c. 89, s. 8;1929, c. 100, s. 8; 1961, c. 1181, s. 1; 1971, c. 1200, s. 7; 1985 (Reg. Sess., 1986), c. 1024, ss. 8,9; 1987, c. 738, s. 61; 1996, 2nd Ex. Sess., c. 18, s. 8(m).)§ 143-9. Information to be furnished upon request.The departments, bureaus, divisions, officers, commissions, institutions, or other State agenciesor undertakings of the State, upon request, shall furnish the Director, in such form and at suchtime as he may direct, any information desired by him in relation to their respective activities orfiscal affairs. The State Auditor and the State Controller shall also furnish the Director anyspecial, periodic, or other financial statements as the Director may request. (1925, c. 89, s. 10;1929, c. 100, s. 9; 1985 (Reg. Sess., 1986), c. 1024, s. 10.)§ 143-10. Preparation of budget and public hearing.The members of the Commission shall, at the request of the Director, attend such public hearingand other meeting as may be held in the preparation of the budget. Said Commission shall act atall times in an advisory capacity to the Director on matters relating to the plan of proposedexpenditures of the State government and the means of financing the same.The Director shall provide for public hearings on any and all estimates to be included in thebudget, which shall be held during the months of October and/or November and/or such othertimes as the Director may fix in the even-numbered years, and may require the attendance atthese hearings of the heads or responsible representatives of all State departments, bureaus,divisions, officers, boards, commissions, institutions, or other State agencies or undertakings,and such other persons, corporations and associations, using or receiving or asking for any Statefunds. Prior to taking any action under this subsection to provide for public hearings, the

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 21Governor may consult with the Advisory Budget Commission. (1925, c. 89, s. 11; 1929, c. 100,s. 10; 1985 (Reg. Sess., 1986), c. 955, ss. 60, 61.)§ 143-10.1. Repealed by Session Laws 1991, c. 689, s. 342.§ 143-10.1A. Budget required to include State cost of local programs - Continuation andexpansion costs.Effective July 1, 1991, the Office of State Budget and Management and the Director of theBudget, with the advice of the Advisory Budget Commission, shall prepare the State budgetin a format that adequately and fairly reflects the continuation costs for the State's share oflocally operated programs established by statute or State appropriation. These continuation costsshall be computed using the same budget preparation guidelines and rules prepared by the Officeof State Budget and Management for use in State agency and institution budgets. Furthermore,in the projections for the expansion costs related to employee compensation, the budget shallinclude the expansion costs necessary to cover the State's share of salary and salary-related itemsfor employees in locally operated State-funded programs. Local governments or organizationsspending State funds to operate local programs shall provide necessary information to the Officeof State Budget and Management to establish the necessary continuation and expansion costs.(1989 (Reg. Sess., 1990), c. 1066, s. 75; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-10.2. Limit on number of State employees.The total number of permanent State-funded employees, excluding employees in the State'spublic school system funded by way of State aid to local public school units, shall not beincreased by the end of any State fiscal year by a greater percentage than the percentage rate ofthe residential population growth for the State of North Carolina. The percentage rates shall becomputed by the Office of State Budget and Management. The population growth shall becomputed by averaging the rate of residential population growth in each of the preceding 10fiscal years as stated in the annual estimates of residential population in North Carolina made bythe United States Census Bureau. The growth rate of the number of employees shall becomputed by averaging the rate of growth of State employees in each of the preceding 10 fiscalyears as of July 1 of each fiscal year as stated in the State Budget. (1989, c. 752, s. 46(a); 1991,c. 689, s. 343; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§§ 143-10.3 through 143-10.6. Repealed by Session Laws 2001-424, s. 12.2(a), effective July 1,2001.§ 143-10.7. Review of department forms and reports.The Director, through the Office of State Budget and Management, shall review on three-yearcycles all internal and external forms and reports in use by State departments and institutions toconfirm whether these forms and reports continue to be needed. If, during the review process, itis determined that these forms and reports are no longer necessary, or that they duplicate otherforms or reports either in whole or in part, the Director shall have these forms and reportsmodified or eliminated. All departments shall provide the Director with copies of all forms andreports used, together with any additional information necessary for the review of these reports.(1995, c. 324, s. 10.2; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 22§ 143-11. Survey of departments.(a) On or before the fifteenth day of December, biennially in the even-numbered years, theDirector shall make a complete, careful survey of the operation and management of all thedepartments, bureaus, divisions, officers, boards, commissions, institutions, and agencies andundertakings of the State and all persons or corporations who use or expend State funds, in theinterest of economy and efficiency, and of obtaining a working knowledge upon which to baserecommendations to the General Assembly as to appropriations for maintenance and specialfunds and capital expenditures for the succeeding biennium. If the Director and the Commissionshall agree in their recommendations for the budget for the next biennial period, he shall preparetheir report in the form of a proposed budget, together with such comment and recommendationsas they may deem proper to make. If the Director and Commission shall not agree in substantialparticulars, the Director shall prepare the proposed budget based on his own conclusions andjudgment, and the Commission or any of its members retain the right to submit separately to theGeneral Assembly such statement of disagreement and the particulars thereof as representingtheir views. The budget report shall contain a complete and itemized plan of all proposedexpenditures for each State department, bureau, board, division, institution, commission, Stateagency or undertaking, person or corporation who receives or may receive for use andexpenditure any State funds, in accordance with the classification of funds and accounts adoptedby the State Controller, and of the estimated revenues and borrowings for each year in theensuing biennial period beginning with the first day of July thereafter. Opposite each line itemof the proposed expenditures, the budget shall show in separate parallel columns:(1) Proposed expenditures and receipts for each fiscal year of the biennium;(2) The certified budget for the preceding fiscal year;(3) The currently authorized budget for the preceding fiscal year;(4) Actual expenditures and receipts for the most recent fiscal year for which actualexpenditure information is available; and(5) Proposed increases and decreases.Revenue and expenditure information shall be no less specific than the two-digit level in theState Accounting System Chart of Accounts as prescribed by the State Controller. The budgetshall clearly differentiate between general fund expenditures for operating and maintenance,special fund expenditures for any purpose, and proposed capital improvements.(b) The Director shall accompany the budget with:(1) A budget message supporting his recommendations and outlining a financial policy andprogram for the ensuing biennium. The message will include an explanation of increaseor decrease over past expenditures, a discussion of proposed changes in existingrevenue laws and proposed bond issues, their purpose, the amount, rate of interest,term, the requirements to be attached to their issuance and the effect such issues willhave upon the redemption and annual interest charges of the State debt.(2) State Controller reports including:a. An itemized and complete financial statement for the State at the close of the lastpreceding fiscal year ending June 30.b. A statement of special funds.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 23(2a) A statement showing the itemized estimates of the condition of the State treasury as ofthe beginning and end of each of the next two fiscal years.(3) A report on the fees charged by each State department, bureau, division, board,commission, institution, and agency during the previous fiscal year, the statutory orregulatory authority for each fee, the amount of the fee, when the amount of the fee waslast changed, the number of times the fee was collected during the prior fiscal year, andthe total receipts from the fee during the prior fiscal year.(4) A statement showing the State Board of Education's request, in accordance with G.S.115C-96, for sufficient funds to provide textbooks to public school students.(5) A proposal for expenditure of the funds in the Repairs and Renovations ReserveAccount, which is established in G.S. 143-15.3A. The Director shall consider the datafrom the Facilities Condition and Assessment Program in the Office of StateConstruction when establishing priorities for the proposed expenditure of these funds.(6) Statements of the objections of members of the Council of State received pursuant toG.S. 143-10.3(b) to the performance measures, departmental operations plans, andindicators of program impact prepared in accordance with G.S. 143-10.3, 143-10.4, and143-10.5.(7) A list of the budget requests of members of the Council of State that are not included inthe proposed budget.(8) An estimate of the equipment replacement costs within the Judicial Department for theperiod covered by that budget.It shall be a compliance with this section by each incoming Governor, at the first session of theGeneral Assembly in his term, to submit the budget report with the message of the outgoingGovernor, if he shall deem it proper to prepare such message, together with any comments orrecommendations thereon that he may see fit to make, either at the time of the submission of thesaid report to the General Assembly, or at such other time, or times, as he may elect and fix.The function of the Advisory Budget Commission under this section applies only if the Directorof the Budget consults with the Commission in preparation of the budget. (1925, c. 89, s. 12;1929, c. 100, s. 11; 1983, c. 717, s. 54; 1985 (Reg. Sess., 1986), c. 955, s. 62; c. 1024, ss. 11-13;1989, c. 752, s. 49; 1991, c. 542, s. 6; 1991 (Reg. Sess., 1992), c. 900, s. 81(b); 1993, c. 321, s.17.1(d); 1993 (Reg. Sess., 1994), c. 769, s. 11.1(d); 1995, c. 324, s. 10(a); 2000-67, s. 15.7.)§ 143-11.1. Repealed by Session Laws 1983, c. 717, s. 55.§ 143-12. Bills containing proposed appropriations.(a) The Director shall cause to be prepared and submitted to the General Assembly the followingbills:(1) A bill containing all proposed current operations appropriations of the budget for eachyear in the ensuing biennium, which shall be known as the "Current OperationsAppropriations Bill", and a bill containing all proposed capital appropriations of thebudget for each year in the ensuing biennium, which shall be known as the "CapitalImprovement Appropriations Bill".

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 24(2) If necessary, a bill containing the Director of the Budget's views on revenue for theensuing biennium, which shall be known as the "Budget Revenue Bill", and shallprovide an amount of revenue for the ensuing biennium sufficient, in the opinion of theDirector and the Commission, to meet the appropriations contained in the CurrentOperations Appropriations Bill and the Capital Improvement Appropriations Bill.(3) Repealed by Session Laws 1983 (Regular Session, 1984), c. 1034, s. 153.(b) To the end that all expenses of the State may be brought and kept within the budget, theCurrent Operations Appropriations Bill shall contain a specific sum as a contingent oremergency appropriation, and shall allocate a specific portion of that sum to a special reserve tobe used solely for purposes as outlined in G.S. 143-23(a1)(2). Notwithstanding any otherprovision of law, the manner of the allocation of such contingent or emergency appropriationshall be as follows: Any institution, department, commission, or other agency or activity of theState, or other activity in which the State is interested, desiring an allotment out of suchcontingent oremergency appropriation, shall upon forms prescribed and furnished by the Director of theBudget, present such request in writing to the Director of the Budget, with such information ashe may require, and if the Director of the Budget shall approve such request, in whole or in part,and after consulting with the Joint Legislative Commission on Governmental Operations, heshall forthwith present the same to the Governor and Council of State, and upon their order onlyshall such allotment be made. If the Director shall disapprove the request of such an allotmentout of the emergency or contingent appropriation, he shall transmit his refusal and his reasontherefor to the Governor and Council of State for their information.Funds allocated from the contingent or emergency appropriation may be used only for thepurpose for which they were allocated and may not be reallocated for another purpose by theGovernor and the Council of State. If the funds are not spent or encumbered for the purpose forwhich they were allocated by the end of the fiscal biennium and if the Governor and the Councilof State do not reallocate them for that same purpose, the funds shall revert to the fund fromwhich the contingent or emergency appropriation was made. Also, if the funds are not neededfor the purpose for which they were allocated, the funds shall revert to the fund from which thecontingent or emergency appropriation was made.(c) The Director of the Budget may, in preparation of the Appropriations and Revenue Bills,seek the advice of the Advisory Budget Commission. If the Director and the Commission shallnot agree as to the Appropriations and Revenue Bills in substantial particulars, the Director shallprepare the same, based on his conclusions and judgment, and the Commission or any of itsmembers retain the right to submit separately to the General Assembly such statement ofdisagreement and the particulars thereof as they shall find proper to submit as representing theirown views. (1925, c. 89, s. 13; 1929, c. 100, ss. 12, 13, 14; 1957, c. 269, s. 2; 1983 (Reg. Sess.,1984), c. 1034, ss. 150, 151, 153, 154; 1985, c. 290, s. 7; 1985 (Reg. Sess., 1986), c. 955, ss. 63,64; c. 1014, s. 179; 1989, c. 752, s. 20; 1996, 2nd Ex. Sess., c. 18, s. 7.4(c).)§ 143-12.1. Vending facilities.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 25(a) The receipts from vending facilities operated by State agencies, institutions, departments,boards, and commissions are State funds. The payments received by a State agency, institution,department, board or commission by contract under which another party operates vendingfacilities and pays a sum to the State, whether computed as a percentage of gross or net receiptsor gross or net profits, or as a fixed or variable fee, are State funds.(b) The receipts or payments described in subsection (a) of this section from vending facilitiesshall be deposited as provided by law in the appropriate fund to be determined by the Office ofState Budget and Management.(c) The net proceeds from vending facilities are subject to appropriation by the GeneralAssembly.(d) The Office of State Budget and Management shall submit to the General Assembly alongwith or as a part of the biennial budget (and along with or as a part of any second-year budgetrequests) budgets for vending facilities operated by General Fund, Highway Fund, and WildlifeFund departments' and institutions' operating budgets.(e) Budgets for vending facilities prepared under subsection (d) of this section shall reflect totalreceipts from the facilities, and the total costs to staff, stock, and operate the vending facilities,shall set out the total net proceeds, and shall contain, in line-item detail, requests the departmentsand institutions have submitted to expend the net proceeds. If a State agency or institutionreceives payments on account of vending facilities but does not actually operate the facilities, thebudget shall contain a statement of the payments and shall contain, in line-item detail, requeststhe departments and institutions have submitted to expend the net proceeds.(f) The net proceeds that the General Assembly approves for expenditure by the department orinstitution shall be retained in the appropriate fund budget code for the purposes approved by theGeneral Assembly.(f1) The net proceeds of the vending operations at the University of North Carolina Hospitals atChapel Hill shall be used at the beginning of each fiscal year to cover any deficits incurred bythe Hospital's cafeteria operation during the prior fiscal year. The amount transferred from thenet proceeds of the vending operations may not be available for expenditure but shall revert tothe General Fund at the end of the fiscal year.(g) For the purposes of this section "vending facilities" has the same meaning as provided in G.S.111-42(d), but also means any mechanical or electronic device dispensing items or something ofvalue or entertainment or services for a fee, regardless of the method of activation, andregardless of the means of payment, whether by coin, currency, tokens, or other means.(h) The provisions of subsections (c) through (f1) of this section shall not supersede or apply tooperations under the provisions of Article 3 of Chapter 111 of the General Statutes, G.S. 127A-138(b), or G.S. 116-36.1 through G.S. 116-36.2, or to the operation of any vending facility by acommunity college or local school administrative unit, but they shall apply to the operations of

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 26the University of North Carolina Hospitals at Chapel Hill. (1983 (Reg. Sess., 1984), c. 1034, s.166; 1985, c. 479, s. 77; 1987, c. 564, s. 25; c. 738, s. 233(a); 1989, c. 141, s. 17; 2000-140, s.93.1(a); 2001-424, s. 12.2(b).)§ 143-13. Printing copies of budget report and bills and rules for the introduction of thesame.The Director shall cause to be printed one thousand copies each of the budget report, the CurrentOperations Appropriations Bill, Capital Improvement Appropriations Bill, and the BudgetRevenue Bill. The Governor shall present copies thereof to the General Assembly, together withthe biennial message, except incoming Governors may, at the first session of the GeneralAssembly in their respective terms, submit the same after the biennial message has beenpresented to the General Assembly. The Current Operations Appropriations Bill and the CapitalImprovement Appropriations Bill shall be introduced by the chairman of the committee onappropriations in each house of the General Assembly, and the Budget Revenue Bill shall beintroduced by the chairmen of the finance committees in each branch of the General Assembly:Provided, that for the years in which the Governor is elected, other than when a Governor iselected for a second successive term the Director shall deliver the budget report and the CurrentOperations Appropriations Bill and the Capital Improvement Appropriations Bill and the BudgetRevenue Bill to the Governor-elect, on or before the fifteenth day of December, and the saidbudget report, Appropriations, and Revenue Bills, shall be presented by the Governor to theGeneral Assembly with such recommendations in the way of amendments, or othermodifications, together with such criticism as he may determine. The provisions hereincontained as to the introduction of the bills mentioned in this section shall be considered andtreated as a rule of procedure in the Senate and House of Representatives until otherwiseexpressly provided for by a rule in either, or both, of said branches of the General Assembly.(1925, c. 89, s. 14; 1929, c. 100, s. 15; 1983 (Reg. Sess., 1984), c. 1034, ss. 152, 155-158; 1985,c. 61, s. 4; 1985 (Reg. Sess., 1986), c. 1010.)§ 143-14. Joint meetings of committees considering the budget report and appropriationbill.The appropriations committees of the House of Representatives and the Senate andsubcommittees thereof shall sit jointly in open sessions while considering the budget and suchconsideration shall embrace the entire budget plan, including appropriations for all purposes,revenue, borrowings and other means of financing expenditures. Such joint meetings shall beginwithin five days after the budget has been presented to the General Assembly by the Governor.This joint committee shall have power to examine under oath any officer or head of anydepartment or any clerk or employee thereof; and to compel the production of papers, books ofaccount, and other documents in the possession or under the control of such officer or headof department. This joint committee may also cause the attendance of heads or responsiblerepresentatives of a department, institution, division, board, commission, and agency of theState, to furnish such information and answer such questions as the joint committee shall require.To these sessions of the joint committee or subcommittees shall be admitted, with the right to beheard, all taxpayers or other persons interested in the estimates under consideration. TheDirector or a designated representative shall have the right to sit at these public hearings and tobe heard on all matters coming before the joint committee or subcommittees thereof. The said

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 27joint committee or any subcommittee thereof shall have full power and authority to punish fordisobedience of its writs or orders requiring persons to attend such hearings and to answer underoath such questions as may be put to them by such committee or anyone acting in its behalf; suchpunishment shall be as is now, or may hereafter be prescribed for direct contempt, but with theright of such offender to appeal from the judgment of such committee to the Superior Court ofWake County, upon the giving of such bond as may be required by such committee. Insofar asthis section prescribes the method and manner of hearings before such committees this sectionshall be considered and have the force of a rule of each branch of the General Assembly untiland unless a change has been made by an express rule of such branch thereof. (1925, c. 89, s. 15;1929, c. 100, s. 16; 1953, c. 501; 1955, c. 5.)§ 143-15. Reduction and increase of items by General Assembly.The provisions of this Article shall continue to be the legislative policy with reference to themaking of appropriations and shall be treated as rules of both branches of the General Assemblyuntil and unless the same may be changed by the General Assembly either by express enactmentor by rules adopted by either branch of the General Assembly.The General Assembly may reduce or strike out such item in the Current OperationsAppropriations Bill and the Capital Improvement Appropriations Bill as it may deem to be theinterest of the public service, but neither House shall consider further or special appropriationsuntil the Current Operations Appropriations Bill shall have been enacted in whole or part orrejected, unless the Governor shall submit and recommend an emergency appropriation bill oremergency appropriation bills, which may be amended in the manner set out herein, and suchemergency appropriation bill, or bills, when enacted, shall continue in force only until theCurrent Operations Appropriations Bill and the Capital Improvement Appropriations Bill shallbecome effective, unless otherwise provided by the General Assembly. Provided that the CapitalImprovement Appropriations Bill may be considered before the Current OperationsAppropriations Bill has been adopted in whole or part or rejected.The General Assembly may also increase any appropriation set out in the Current OperationsAppropriations Bill and the Capital Improvement Appropriations Bill and may provideadditional appropriations for other purposes if additional revenue or revenues, equal to theamount of such additional appropriations and increases, are provided for by correspondingamendment to the Budget Revenue Bill. No bill carrying an appropriation shall thereafter beenacted by the General Assembly, unless it be for an object or objects therein described and shallprovide an adequate source of revenue for defraying such appropriation, or unless it appearsfrom the budget report or the Budget Revenue Bill that there is sufficient revenue availabletherefor. The appropriation, or appropriations, in such bills shall be in accordance with theclassification used in the budget.Reports to or of the appropriations committees or their subcommittees indicate action by thegeneral Assembly when they are used in preparation of or amendment to appropriations acts.(1925, c. 89, s. 16; 1929, c. 100, s. 17; 1983 (Reg. Sess., 1984), c. 1034, ss. 159-161; 1987, c.876, s. 12.)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 28§ 143-15.1. Current Operations Appropriations Act; General Fund Financial Model.(a) The General Assembly shall enact the Current Operations Appropriations Act by June 15 ofodd-numbered years and by June 30 of even-numbered years in which a Current OperationsAppropriations Act is enacted. The Current Operations Appropriations Act shall state theamount of General Fund appropriations availability upon which the General Fund budgetis based. The statement of availability shall list separately the beginning General Fund creditbalance, General Fund revenues, and any other components of the availability amount.The General Fund operating budget appropriations, including appropriations for local taxreimbursements and local tax sharing, for the second year in a Current OperationsAppropriations Act that contains a biennial budget shall not be more than two percent (2%)greater than the General Fund operating budget appropriations for the first year of the biennialbudget.(b) The General Assembly shall review the results of the General Fund Financial model, acomputer-based financial model used to project long-term expenditure and revenue trends undervarious simulations, in its budget deliberations. The model shall be maintained and, from time totime, updated by the Fiscal Research Division of the General Assembly. (1991, c. 689, s. 346;1991 (Reg. Sess., 1992), c. 993, s. 11; 1993 (Reg. Sess., 1994), c. 769, s. 11.3.)§ 143-15.2. Use of General Fund credit balance; priority uses.(a) As used in G.S. 143-15.3, 143-15.3A, and 143-15.3B, the term "unreserved credit balance"means the credit balance amount, as determined on a cash basis, before funds are reserved by theState Controller to the Savings Reserve Account or the Repairs and Renovations ReserveAccount pursuant to G.S. 143-15.3 and G.S. 143-15.3A.(b) The State Controller shall transfer funds from the unreserved credit balance to the SavingsReserve Account in accordance with G.S. 143-15.3(a).(c) The State Controller shall transfer funds from the unreserved credit balance to the Repairsand Renovation Reserve Account in accordance with G.S. 143-15.3A(a).(d) Repealed by Session Laws 2000-67, s. 7.7(e).(e) The General Assembly may appropriate that part of the anticipated General Fund creditbalance not expected to be reserved only for capital improvements or other one-timeexpenditures. (1991, c. 689, s. 346; 1991 (Reg. Sess., 1992), c. 812, s. 7(a), (c); c. 993, s. 12;1993, c. 321, s. 17.1(a); 1993 (Reg. Sess., 1994), c. 591, s. 5(a); 1995, c. 324, s. 5.2(a); 1996, 2ndEx. Sess., c. 18, s. 7.1(a); 1997-443, s. 7.9(b); 2000-67, s. 7.7(e).)§ 143-15.3. Use of General Fund credit balance; priority uses.(a) There is established a Savings Reserve Account as a restricted reserve in the General Fund.The State Controller shall reserve to the Savings Reserve Account one-fourth of any unreservedcredit balance remaining in the General Fund at the end of each fiscal year until the accountcontains funds equal to five percent (5%) of the amount appropriated the preceding year for the

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 29General Fund operating budget, including local government tax-sharing funds, that were directlyappropriated. In the event that the one-fourth exceeds the amount necessary to reach the fivepercent (5%) level, only funds necessary to reach that level shall be reserved. If there areinsufficient funds in the unreserved credit balance for the Savings Reserve Account and theRepairs and Renovations Reserve Account, then the requirements of this section shall becomplied with first, and any remaining funds shall be reserved to the Repairs and RenovationsReserve Account, in accordance with G.S. 143-15.3A.(a1) If the balance in the Savings Reserve Account falls below the five percent (5%) level duringa fiscal year, the State Controller shall, in accordance with subsection (a) of this section, reserveto the Savings Reserve Account for the following fiscal years up to one-fourth of any unreservedcredit balance remaining in the General Fund at the end of each fiscal year until the accountagain equals the five percent (5%) level set out in subsection (a) of this section.(b) The Director may not use funds in the Savings Reserve Account unless the use has beenapproved by an act of the General Assembly. (1991, c. 689, s. 346; 1991 (Reg. Sess., 1992), c.812, s. 7(b), (c); c. 900, s. 11; c. 993, s. 13; 1993, c. 321, ss. 17.1(c), 21.2; 1993 (Reg. Sess.,1994), c. 591, s. 5(b); c. 769, s. 7.27(b); 1997-443, s. 7.9(c); 2000-67, s. 7.7(f).)§ 143-15.3A. Repairs and Renovations Reserve Account.(a) There is established a Repairs and Renovations Reserve Account as a restricted reserve in theGeneral Fund. The State Controller shall reserve to the Repairs and Renovations ReserveAccount three percent (3%) of the replacement value of all State buildings supported from theGeneral Fund, at the end of each fiscal year.(b) The funds in the Repairs and Renovations Reserve Account shall be used only for the repairand renovation of State facilities and related infrastructure that are supported from the GeneralFund. Funds from the Repairs and Renovations Reserve Account shall be used only for thefollowing types of projects:(1) Roof repairs and replacements;(2) Structural repairs;(3) Repairs and renovations to meet federal and State standards;(4) Repairs to electrical, plumbing, and heating, ventilating, and air-conditioning systems;(5) Improvements to meet the requirements of the Americans with Disabilities Act, 42U.S.C. § 12101 et seq., as amended;(6) Improvements to meet fire safety needs;(7) Improvements to existing facilities for energy efficiency;(8) Improvements to remove asbestos, lead paint, and other contaminants, including theremoval and replacement of underground storage tanks;(9) Improvements and renovations to improve use of existing space;(10) Historical restoration;(11) Improvements to roads, walks, drives, utilities infrastructure; and(12) Drainage and landscape improvements.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 30Funds from the Repairs and Renovations Reserve Account shall not be used for new constructionor the expansion of the footprint of an existing facility unless required in order to comply withfederal or State codes or standards.The Director of the Budget shall not use funds in the Repairs and Renovations Reserve Accountunless the use has been approved by an act of the General Assembly or, if the General Assemblyis not in session, the Director of the Budget has first consulted with the Joint LegislativeCommission on Governmental Operations under G.S. 143-15.3A(c).(c) The Governor shall consult with the Joint Legislative Commission on GovernmentalOperations before making allocations from the Repairs and Renovations Reserve Account.Notwithstanding this subsection, whenever an expenditure is required because of an emergencythat poses an imminent threat to public health or public safety, and is either the result of anatural event, such as a hurricane or a flood, or an accident, such as an explosion or a wreck, theGovernor may take action under this subsection without consulting the Commission if theaction is determined by the Governor to be related to the emergency. The Governor shall reportto the Commission on any expenditures made under this paragraph no later than 30 days aftermaking the expenditure and shall identify in the report the emergency, the type of action taken,and how it was related to the emergency. (1993, c. 321, s. 17.1(b); c. 561, s. 16; 1993 (Reg.Sess., 1994), c. 591, s. 5(c); 1995, c. 324, s. 5.2(b); 1996, 2nd Ex. Sess., c. 18, ss. 7.1(b), 7.4(b),(d); 1997-443, s. 7.9(d).)§ 143-15.3B. The Clean Water Management Trust Fund.(a)(Effective until July 1, 2003) The Clean Water Management Trust Fund is established in G.S.113-145.3. The General Assembly finds that, due to the critical need in this State to clean uppollution in the State's surface waters and to protect and conserve those waters that are not yetpolluted, it is imperative that the State provide a minimum of seventy million dollars($70,000,000) each calendar year to the Clean Water Management Trust Fund; therefore, there isannually appropriated from the General Fund to the Clean Water Management Trust Fund thesum of seventy million dollars ($70,000,000).(a) (Effective July 1, 2003) The Clean Water Management Trust Fund is established in G.S. 113-145.3. The General Assembly finds that, due to the critical need in this State to clean uppollution in the State's surface waters and to protect and conserve those waters that are not yetpolluted, it is imperative that the State provide a minimum of one hundred million dollars($100,000,000) each calendar year to the Clean Water Management Trust Fund; therefore, thereis annually appropriated from the General Fund to the Clean Water Management Trust Fund thesum of one hundred million dollars ($100,000,000).(b) The funds in the Clean Water Management Trust Fund shall be used only in accordance withArticle 13A of Chapter 113 of the General Statutes. (1996, 2nd Ex. Sess., c. 18, s. 27.6(b); 1997-443, s. 7.9(a); 2000-67, ss. 7.7(b)-(d); 2001-474, s. 26.)§ 143-15.3C. Work First Reserve Fund.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 31(a) The State Controller shall establish a restricted reserve in the General Fund to be known asthe Work First Reserve Fund. Funds from the Work First Reserve Fund shall not be expendeduntil appropriated by the General Assembly.(b),(c) Repealed by Session Laws 1999-237, s. 6. (1997-443, s. 12.12A; 1999-237, s. 6(g).)§ 143-15.3D. Trust Fund for Mental Health, Developmental Disabilities, and SubstanceAbuse Services and Bridge Funding Needs.(a) The Trust Fund for Mental Health, Developmental Disabilities, and Substance AbuseServices and Bridge Funding Needs is established as an interest-bearing, nonreverting specialtrust fund in the Office of State Budget and Management. Moneys in the Trust Fund shall beheld in trust and used solely to meet the mental health, developmental disabilities, and substanceabuse services needs of the State. The Trust Fund shall be used to supplement and not tosupplant or replace existing State and local funding available to meet the mental health,developmental disabilities, and substance abuse services needs of the State.The State Treasurer shall hold the Trust Fund separate and apart from all other moneys, funds,and accounts. The State Treasurer shall be the custodian of the Trust Fund and shall invest itsassets in accordance with G.S. 147-69.2 and G.S. 147-69.3. Investment earnings credited to theassets of the Trust Fund shall become part of the Trust Fund. Any balance remaining in theTrust Fund at the end of any fiscal year shall be carried forward in the Trust Fund for the nextsucceeding fiscal year.Moneys in the Trust Fund shall be expended only in accordance with subsection (b) of thissection and in accordance with limitations and directions enacted by the General Assembly.(b) Moneys in the Trust Fund for Mental Health, Developmental Disabilities, and SubstanceAbuse Services and Bridge Funding Needs shall be used only to:(1) Provide start-up funds and operating support for programs and services that providemore appropriate and cost-effective community treatment alternatives for individualscurrently residing in the State's mental health, developmental disabilities, and substanceabuse services institutions.(2) Facilitate the State's compliance with the United States Supreme Court decision inOlmstead v. L.C. and E.W.(3) Facilitate reform of the mental health, developmental disabilities, and substance abuseservices system and expand and enhance treatment and prevention services in theseprogram areas to remove waiting lists and provide appropriate and safe services forclients.(4) Provide bridge funding to maintain appropriate client services during transitionalperiods as a result of facility closings, including departmental restructuring of services.(5) Construct, repair, and renovate State mental health, developmental disabilities, andsubstance abuse services facilities. (2001-424, s. 21.58(a).)§ 143-15.4. General Fund operating budget size limited.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 32(a) Size Limitation. Except as otherwise provided in this section, the General Fund operatingbudget each fiscal year shall not be greater than seven percent (7%) of the projected total Statepersonal income for that fiscal year. For the purpose of this section, the General Fund operatingbudget includes any appropriations for local tax-sharing, but does not include appropriations for(i) capital expenditures or (ii) one-time expenditures due to natural disasters, federalmandates, or other emergencies.(b) Increase in Size Limitation. To the extent that any percent increase in appropriations for afiscal year for (i) Medicaid, (ii) operation of prisons, or (iii) the costs of providing healthinsurance for teachers and State employees, exceeds the percent increase in State personalincome growth for the same period, the limitation on the size of the General Fund operatingbudget provided in subsection (a) of this section for that fiscal year shall be increased by thedollar amount represented by the excess percentage. For all subsequent fiscal years, the percentlimitation contained in subsection (a) shall then be increased to reflect that dollar adjustment.(c) Fiscal Reports. The Office of State Budget and Management and the Fiscal ResearchDivision of the General Assembly shall each submit a tentative estimate of total State personalincome for the upcoming fiscal year to the General Assembly no later than February 1 of eachyear. The Office and the Fiscal Research Division shall each submit a final projection of totalState personal income for the upcoming fiscal year to the General Assembly no later than May 1of each year. The General Assembly shall use the lower of the two final projections to calculatethe limitation on the size of the General Fund operating budget provided in this section. (1991, c.689, s. 346; 1991 (Reg. Sess., 1992), c. 993, s. 14; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-16. Article governs all departmental, agency, etc., appropriations.Every State department, bureau, division, officer, board, commission, institution, State agency,or undertaking, shall operate under an appropriation made in accordance with the provisions ofthis Article; and no State department, bureau, division, officer, board, commission, institution, orother State agency or undertaking shall expend any money, except in pursuance of suchappropriation and the rules, requirement and regulations made pursuant to this Article. (1925, c.89, s. 17; 1929, c. 100, s. 18.)§ 143-16.1. Federal funds.(a) All federal funds shall be expended and reported in accordance with provisions of theExecutive Budget Act, except as otherwise provided by law. Proposed budgets recommended tothe General Assembly by the Governor and Advisory Budget Commission shall includeinformation concerning the federal expenditures in State agencies, departments and institutionsinthe same manner as State funds. Each budgetary category shall show the total received andanticipated State and federal expenditures, along with a description of the purpose for whichthe federal funds will be spent at the program level. All expenditures for the prior fiscal year andall expenditures anticipated in the proposed budget shall be reported by objects of expenditureby purpose and shall be identified by each federal grant. For the purpose of this section, "federalfunds" are any financial assistance made to a State agency by the United States government,whether a loan, grant, subsidy, augmentation, reimbursement, or any other form. The Director of

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 33the Budget may adopt rules and regulations establishing uniform planning, budgeting and fiscalprocedures, not inconsistent with federal law, that ensure that all federal funds shall be expendedin a standardized manner. The function of the Advisory Budget Commission under this sectionapplies only if the Director of the Budget consults with the Commission in preparation of thebudget.(b) The Secretary of each State agency that receives and administers federal Block Grant fundsshall prepare and submit the agency's Block Grant plans to the Fiscal Research Division of theGeneral Assembly not later than February 20 of each odd-numbered calendar year and not laterthan April 20 of each even-numbered calendar year. The agency shall submit a separate BlockGrant plan for each Block Grant received and administered by the agency, and each plan shallinclude, but not be limited to, the following:(1) A delineation of the proposed dollar amount allocations by activity and by category,including dollar amounts to be used for administrative costs; and(2) A comparison of the proposed funding with two prior years' program budgets.The Director of the Budget shall review for accuracy, consistency, and uniformity each Stateagency's Block Grant plans prior to submission of the plans to the General Assembly. (1977,2nd Sess., c. 1219, s. 45; 1983, c. 717, s. 56; c. 761, s. 57; 1985 (Reg. Sess., 1986), c. 955, s. 65;1991 (Reg. Sess., 1992), c. 900, s. 8; 1998-212, s. 7.2; 1999-237, s. 5(r).)§ 143-16.2. Reports.Whenever the Governor or any other executive officer, agency, board, or commission isauthorized by law to consult with the Advisory Budget Commission prior to taking some action,if there has been no consultation such action should be reported in writing to the Speaker of theHouse of Representatives, the President of the Senate, and the Director of the Fiscal ResearchDivision as soon as practicable after the action is taken. This section does not apply topreparation of the budget. (1985 (Reg. Sess., 1986), c. 955, s. 126.)§ 143-16.3. No expenditures for purposes for which the General Assembly has consideredbut not enacted an appropriation.Notwithstanding any other provision of law, no funds from any source, except for gifts, grants,funds allocated from the Repair and Renovations Account in accordance with G.S. 143-15.3A,and funds allocated from the Contingency and Emergency Fund in accordance with G.S. 143-12(b), may be expended for any new or expanded purpose, position, or other expenditure forwhich the General Assembly has considered but not enacted an appropriation of funds for thecurrent fiscal period; provided, however, that in the event the Director of the Budget declaresthat it is necessary to deviate from this provision, he may do so after prior consultation with theJointLegislative Commission on Governmental Operations. For the purpose of this section, theGeneral Assembly has considered a purpose, position, or other expenditure when that purpose isincluded in a bill, amendment, or petition and when any committee of the Senate or the House ofRepresentatives deliberates on that purpose. (1985 (Reg. Sess., 1986), c. 1014, s. 177; 1987(Reg. Sess., 1988), c. 1086, s. 50; 1989, c. 752, s. 47; 1991 (Reg. Sess., 1992), c. 812, s. 6(b);1996, 2nd Ex. Sess., c. 18, s. 7.4(j); 1997-443, s. 7.8(a).)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 34§ 143-16.4. Settlement Reserve Fund.(a) The "Settlement Reserve Fund" is established as a restricted reserve in the General Fund.Except as otherwise provided in this section, funds shall be expended from the SettlementReserve Fund only by specific appropriation by the General Assembly.(a1) A Health Trust Account is established in the Settlement Reserve Fund. The portion of eachMaster Settlement Agreement payment identified in Section 6(3) of S.L. 1999-2 shall becredited to the Health Trust Account. The State Controller shall transfer all funds in the HealthTrust Account to the Health and Wellness Trust Fund created in Article 6C of Chapter 147 of theGeneral Statutes.(a2) A Tobacco Trust Account is established in the Settlement Reserve Fund. The portion ofeach Master Settlement Agreement payment identified in Section 6(2) of S.L. 1999-2 shall becredited to the Tobacco Trust Account. The State Controller shall transfer all funds in theTobacco Trust Account to the Tobacco Trust Fund created in Article 75 of Chapter 143 of theGeneral Statutes.(b) Unless prohibited by federal law, federal funds provided to the State by block grant orotherwise as part of federal legislation implementing a settlement between United States tobaccocompanies and the states shall be credited to the Settlement Reserve Fund. Unless otherwiseencumbered or distributed under a settlement agreement or final order or judgment of the court,funds paid to the State or a State agency pursuant to a tobacco litigation settlement agreement, ora final order or judgment of a court in litigation between tobacco companies and the states, shallbe credited to the Settlement Reserve Fund. (1998-191, s. 2; 2000-147, s. 1.)§ 143-16.5: Repealed by Session Laws 1999-237, s. 19a, effective June 30, 1999, and applicableto agreements entered on or after November 15, 1998.§ 143-17. Requisition for allotment.Before an appropriation of any spending agency shall become available, such agency shallsubmit to the Director, not less than 20 days before the beginning of each quarter of each fiscalyear a requisition for an allotment of the amount estimated to be required to carry on the work ofthe agency during the ensuing quarter and such requisition shall contain such details of proposedexpenditures as may be required by the Director. The Director shall approve such allotments, ormodifications of them, as he may deem necessary to make, and he shall submit the same to theState Controller who in the course of his operations shall check for compliance with suchallotments. No allotment shall be changed nor shall transfers be made except upon the writtenrequest of the responsible head of the spending agency and by approval of the Director of theBudget in writing: Provided, that quarterly allotments made to the State Auditor's office, StateTreasurer's office, and Administrative Office of the Courts shall be in such amounts as may bedesignated by the Advisory Budget Commission, and shall be made available in accordance withprocedures determined by the Advisory Budget Commission. (1925, c. 89, s. 18; 1929, c. 100, s.19; 1955, c. 578, s. 4; 1981, c. 859, s. 47.1; 1985 (Reg. Sess., 1986), c. 1024, s. 14.)§ 143-18. Unencumbered balances to revert to treasury; capital appropriations excepted.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 35All unencumbered balances of maintenance appropriations shall revert to the State treasury tothe credit of the general fund or special funds from which the appropriation and/orappropriations, were made and/or expended, at the end of each fiscal year; except that capitalexpenditures for the purchase of land, the erection of buildings, new construction or renovationsin progress shall continue in force until the attainment of the object or the completion of thework for which the appropriations are made; except that maintenance appropriations to theGeneral Assembly shall remain available until expended, unless otherwise provided by theLegislative Services Commission.As used in this section, "unencumbered" means not obligated in the form of purchase orders,contracts, renovations in progress or salary commitments. No purchase orders, contracts,renovations in progress, or salary commitments shall be entered into during a fiscal year unlesssufficient funds are available within the purpose for which the funds were appropriated by theGeneral Assembly or as authorized by the Director of the Budget as allowed by law. (1925, c.18, s. 19; 1929, c. 100, s. 20; 1983 (Reg. Sess., 1984), c. 1034, s. 181; 1985, c. 479, s. 158; 1989(Reg. Sess., 1990), c. 1066, s. 26.)§ 143-18.1. Decrease of projects within capital improvement appropriations; requestingauthorization of capital projects not specifically provided for.(a) Upon the request of the administration of a State agency or institution, the Director of theBudget may decrease the scope of a capital improvement project. Prior to taking any actionunder this subsection, the Director of the Budget may consult with the Advisory BudgetCommission.(b) Upon the request of the administration of a State agency or institution, the Director of theBudget may when, in his opinion, it is in the best interest of the State to do so, increase the costof a capital improvement project within the appropriation made to that State agency or institutionwithin the capital improvement appropriation to that agency or institution for that biennium,provided that the project may not be increased in scope under the authority of this subsection.Prior to taking any action under this subsection, the Director of the Budget may consult with theAdvisory Budget Commission.(c) Upon the request of the administration of any State agency or institution, the Director of theBudget may accept funds by gift or grant for the construction of a capital improvement projectnot specifically provided for or authorized by the General Assembly. These funds shall beplaced in a special reserve account to be held by the State Treasurer until the end of the bienniumin which the account was established or until the capital improvement project is authorized bytheDirector of the Budget, whichever occurs first. These funds shall be invested and the interestthereon shall be added to the reserve. If the project is not authorized by the end of thatbiennium, the State Treasurer shall pay the funds accumulated in the special reserve account tothe grantor or donor. Upon the establishment of a special reserve account under this section, theDirector of the Budget shall notify the Speaker of the House and President of the Senate of thereceipt of the funds and the existence of the reserve account. Upon the request of theadministration of any State agency or institution, the Governor may, under G.S. 120-76(8),

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 36authorize the construction of a capital improvement project not specifically authorized by theGeneral Assembly if such project is to be fully funded by gifts, grants, receipts, special funds,self-liquidating indebtedness,other funds, or any combination of funds, but not including funds appropriated from the GeneralFund. All expenditures under this authorization shall be handled in full compliance with theprovisions of the Executive Budget Act.The agency shall support its request for such capital improvement project, or projects, with thefollowing information: the estimated annual operating costs for (i) utilities; (ii) maintenance; (iii)repairs; (iv) additional personnel; (v) any and all other expenses to the State resulting from theaddition of this facility to the plant of the institution. Prior to taking any action under thissection to authorize a project, the Governor or the Director of the Budget may consult with theAdvisory Budget Commission and the Capital Planning Commission. (1965, c. 841, s. 1; 1983, c.717, s. 57; 1985 (Reg. Sess., 1986), c. 955, ss. 66-71; 1987, c. 282, s. 26; 1996, 2nd Ex. Sess., c.18, s. 7.4(e).)§ 143-19. Help for Director.The Director is hereby authorized to secure such special help, expert accountants, draftsmen andclerical help as he may deem necessary to carry out his duties under this Article; and shall fix thecompensation of all persons employed under this Article; which shall be paid by the StateTreasurer upon the warrant of the State Controller. A statement in detail of all personsemployed, time employed, compensation paid, and itemized statement of all other expendituresmade under the terms of this Article, shall be reported to the General Assembly by the Director,and all payments made under this Article shall be charged against and paid out of the emergencycontingent fund and/or such appropriations as may be made for the use of the Office of StateBudget and Management. (1925, c. 89, s. 20; 1929, c. 100, s. 21; 1957, c. 269, s. 2; 1961, c.1181, s. 2; 1979, 2nd Sess., c. 1137, s. 37; 1985 (Reg. Sess., 1986), c. 1024, s. 15; 2000-140, s.93.1(a); 2001-424, s. 12.2(b).)§ 143-20. Accounting records.The State Controller shall be responsible for keeping a record of the appropriations, allotments,expenditures, and revenues of each State department, institution, board, commission, officer, orother agency in any manner handling State funds. These records shall be kept in summary form,or in as much detail as the State Controller may deem advisable. (1925, c. 89, s. 22; 1929, c.100, s. 22; 1955, c. 578, s. 5; 1957, c. 269, s. 2; 1979, 2nd Sess., c. 1137, s. 37; 1983, c. 913, s.31; 1985 (Reg. Sess., 1986), c. 1024, s. 16.)§ 143-20.1. Annual financial statements.Every fiscal year, all State agencies and component units of the State, as defined by generallyaccepted accounting principles, shall prepare annual financial statements on all fundsadministered by them no later than 60 days after the end of the State's fiscal year then ended inaccordance with generally accepted accounting principles as described in authoritativepronouncements and interpreted or prescribed by the State Controller, and in the form requiredby the State Controller. The State Controller shall publish guidelines specifying the procedures

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 37to implement the necessary records, procedures, and accounting systems to reflect thesestatements on the proper basis of accounting.Accordingly, the State Controller shall combine the financial statements for the various agenciesinto a Comprehensive Annual Financial Report for the State of North Carolina in accordancewith generally accepted accounting principles. These statements, along with the opinion of theState Auditor, shall be published as the official financial statements of the State and shall bedistributed to the Governor, the Office of State Budget and Management, members of theGeneral Assembly, heads of departments, agencies, and institutions of the State, and otherinterested parties. The State Controller shall notify the Director of the Budget of any Stateagencies and component units of the State, as defined by generally accepted accountingprinciples, that have not complied fully with the requirements of this section within the specifiedtime, and the Director of the Budget shall employ whatever means necessary, including thewithholding of allotments, to ensure immediate corrective actions. (1983, c. 913, s. 32; 1985(Reg. Sess., 1986), c. 1024, ss. 17-19; 2000-67, s. 7(a); 2000-140, s. 93.1(a); 2001-424, s.12.2(b).)§ 143-21. Issuance of subpoenas.The Director shall have and is hereby given full power and authority to issue the writ ofsubpoena for any and all persons who may be desired as witnesses concerning any matters beinginquired into by the Director or the Commission, and such writs when signed by the Directorshall run anywhere in this State and be served by any civil process officer without fees orcompensation. Any failure to serve writs promptly and with due diligence, shall subject suchofficer to the usual penalties and liabilities and punishment as are now provided in the cases oflike kind applying to sheriffs, and any persons who shall fail to obey said writ shall be subject topunishment for contempt in the discretion of the court and to be fined as witnesses summoned toattend the superior court, and such remedies shall be enforced against such offending witnessesupon motion and notice filed in the Superior Court of Wake County by the Attorney Generalunder the direction of the Director. Any and all persons who shall be subpoenaed and requiredto appearbefore the Director or the Commission as witnesses concerning any matters being inquired intoshall be compellable and required to testify, but such persons shall be immune from prosecutionand shall be forever pardoned for violation of law about which such person is so required totestify. (1925, c. 89, s. 25; 1929, c. 100, s. 23; 1953, c. 675, s. 18.)§ 143-22. Surveys, studies and examinations of departments and institutions.The Director is hereby given full power and authority to make such surveys, studies,examinations of departments, institutions and agencies of this State, as well as its problems, so asto determine whether there may be an overlapping in the performance of the duties of the severaldepartments and institutions and agencies of the State, and to make surveys, examinations andinquiries into the matter of the various activities of the State, and to survey, appraise, examineand inspect and determine the true condition of all property of the State, and what may benecessary to protect it against fire hazard, deterioration, and to conserve its use for Statepurposes, and to make and issue and to enforce all necessary, needful or convenient rules andregulations for the enforcement of this Article. (1925, c. 89, s. 26; 1929, c. 100, s. 23; 1969,

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 38c. 458, s. 2.)§ 143-23. All maintenance funds for itemized purposes; transfers between objects or lineitems.(a) All appropriations now or hereafter made for the maintenance of the various departments,institutions and other spending agencies of the State, are for the (i) purposes or programs and (ii)objects or line items enumerated in the itemized requirements of such departments, institutionsand other spending agencies submitted to the General Assembly by the Director of the Budgetand the Advisory Budget Commission, as amended by the General Assembly. The function ofthe Advisory Budget Commission under this subsection applies only if the Director of theBudget consults with the Commission in preparation of the budget.(a1) Notwithstanding the provisions of subsection (a) of this section, a department, institution, orother spending agency may, with approval of the Director of the Budget, spend more than wasappropriated for:(1) An object or line item within a purpose or program so long as the total amountexpended for the purpose or program is no more than was appropriated from all sourcesfor the purpose or program for the fiscal period;(2) A purpose or program, without consultation with the Joint Legislative Commission onGovernmental Operations, if the overexpenditure of the purpose or program is:a. Required by a court, Industrial Commission, or administrative hearing officer'sorder;b. Required to respond to an unanticipated disaster such as a fire, hurricane, ortornado; orc. Required to call out the National Guard.The Director of the Budget shall report on a quarterly basis to the Joint LegislativeCommission on Governmental Operations on any overexpenditures under thissubdivision; or(3) A purpose or program, after consultation with the Joint Legislative Commission onGovernmental Operations in accordance with G.S. 120-76(8), and only if: (i) theoverexpenditure is required to continue the purpose or programs due to complicationsor changes in circumstances that could not have been foreseen when the budget for thefiscal period was enacted and (ii) the scope of the purpose or program is not increased.The consultation is required as follows:a. For a purpose or program with a certified budget of up to five million dollars($5,000,000), consultation is required when the authorization for theoverexpenditure exceeds ten percent (10%) of the certified budget;b. For a purpose or program with a certified budget of from five million dollars($5,000,000) up to twenty million dollars ($20,000,000), consultation isrequired when the authorization for the overexpenditure exceeds five hundredthousand dollars ($500,000) or seven and one-half percent (7.5%) of thecertified budget, whichever is greater;c. For a purpose or program with a certified budget of twenty million dollars($20,000,000) or more, consultation is required when the authorization for the

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 39overexpenditure exceeds one million five hundred thousand dollars($1,500,000) or five percent (5%) of the certified budget, whichever isgreater;d. For a purpose or program supported by federal funds or when expendituresare required for the reasons set out in subdivision (2) of this subsection, noconsultation is required.If the Joint Legislative Commission on Governmental Operations does not meet for more than 30days, the Director of the Budget may satisfy the requirements of the subsection to report to orconsult with the Commission by reporting to or consulting with a joint meeting of the Chairs ofthe Appropriations Committees of the Senate and the House of Representatives.(a2) Funds appropriated for salaries and wages are also subject to the limitation that they mayonly be used for:(1) Salaries and wages or for premium pay, overtime pay, longevity, unemploymentcompensation, workers' compensation, temporary wages, moving expenses ofemployees, payment of accumulated annual leave, certain awards to employees, tortclaims, and employer's social security, retirement, and hospitalization payments;(2) Contracted personal services if (i) the contract is for temporary services or specialproject services, (ii) the term of the contract does not extend beyond the fiscal year,(iii) the contract does not impose obligations on the State after the end of the fiscalyear; and (iv) the total of all overexpenditures for contracted personal servicesapproved in a program for a fiscal year does not exceed the greater of five hundredthousand dollars ($500,000) or ten percent (10%) of the lapsed salary funds in theprogram for the fiscal year; and(3) Uses for which overexpenditures are permitted by subdivision (2) of subsection (a1) ofthis section but the Director of the Budget shall include such use and the reason for it inhis quarterly report to the Joint Legislative Commission on Governmental Operations.Lapsed salary funds shall not be used for new permanent employee positions or to raise thesalary of existing employees.(a3), (a4) Repealed by Session Laws 1996, Second Extra Session, c. 18, s. 7.4(f).(b) Repealed by Session Laws 1985, c. 290, s. 8.(c) Transfers or changes as between objects or line items in the budget of the Senate may bemade by the President Pro Tempore of the Senate.(d) Transfers or changes as between objects or line items in the budget of the House ofRepresentatives may be made by the Speaker of the House of Representatives.(e) Transfers or changes as between objects or line items in the budget of the General Assemblyother than of the Senate and House of Representatives may be made jointly by the President ProTempore of the Senate and the Speaker of the House of Representatives.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 40(e1) Transfers or changes as between objects or line items in the budget of the Office of theGovernor may be made by the Governor.(e2) Transfers or changes as between objects or line items in the Office of the LieutenantGovernor may be made by the Lieutenant Governor.(f) As used in this section:(1) "Object or line item" means a budgeted expenditure or receipt in the budget enacted bythe General Assembly that is designated by (i) a thirteen-digit code in the 1000-objectcode series or (ii) an eleven-digit code in all other object code series, in accordancewith the Budget Code Structure and the State Accounting System Uniform Chart ofAccounts set out in the Administrative Policies and Procedures Manual of the Office ofthe State Controller.(2) "Purpose or program" means a group of objects or line items for support of a specificactivity outlined in the budget adopted by the General Assembly that is designated by anine-digit fund code in accordance with the Budget Code Structure and the StateAccounting System Uniform Chart of Accounts set out in the Administrative Policiesand Procedures Manual of the Office of the State Controller.(1929, c. 100, s. 24; 1981, c. 1127, s. 82; 1985, c. 290, s. 8; c. 479, s. 159; c. 757, s. 183; 1985(Reg. Sess., 1986), c. 955, s. 72; 1989, c. 752, s. 44; 1991 (Reg. Sess., 1992), c. 812, s. 6(c); c.900, s. 9(a); 1994, Ex. Sess., c. 24, s. 9(a)-(c); 1993 (Reg. Sess., 1994), c. 769, s. 13; 1995, c.507, s. 6.3; c. 509, ss. 77, 78; 1996, 2ndEx. Sess., c. 18, s. 7.4(f); 1997-443, s. 7.8(c).)§ 143-23.1. Repealed by Session Laws 1985, c. 290, s. 4, effective July 1, 1985.§ 143-23.2. Transfers to Department of Health and Human Services.(a) Political subdivisions may appropriate funds directly to the Department of Health and HumanServices for Medicaid programs. Other public agencies and private sources may transfer fundsto the Department for Medicaid programs. The Department may accept unconditional andunrestricted donations of such funds. Notwithstanding the provisions of this Article whichmight forbid such transfer or donation, the University of North Carolina Hospitals at Chapel Hillmay transfer funds as provided by the previous sentence of this section.(b) Contributed funds shall be subject to the Department of Health and Human Servicesadministrative control and shall be allocated only as specifically provided in the currentoperations appropriations act, except such contributions shall not reduce State general revenuefunding. At the end of any fiscal year, the unobligated balance of any such funds shall notrevert to the General Fund, but shall be reappropriated for these purposes in the next fiscal year.(1987, c. 861, s. 1; 1989, c. 141, s. 18; c. 361; 1997-443, s. 11A.118(a); 1999-237, s. 11.10(b).)§ 143-23.3. Transfer of certain funds authorized.In order to assure maximum utilization of funds in county departments of social services, countyor district health agencies, and area mental health, developmental disabilities, and substance

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 41abuse services authorities, the Director of the Budget may transfer excess funds appropriated to aspecific service, program, or fund, whether specified service in a block grant plan or GeneralFund appropriation, into another service, program, or fund for local services within the budget ofthe respective State agency. (2001-424, s. 21.11.)§ 143-24. Borrowing of money by State Treasurer.The Director of the Budget, by and with the consent of the Governor and Council of State, shallhave authority to authorize and direct the State Treasurer to borrow in the name of the State, inanticipation of the collection of taxes, such sum or sums as may be necessary to make thepayments on the appropriations as even as possible and to preserve the best interest of the Statein the conduct of the various State institutions, departments, bureaus, and agencies during eachfiscal year. (1929, c. 100, s. 25.)§ 143-25. Maintenance appropriations dependent upon adequacy of revenues to supportthem.(a) All maintenance appropriations now or hereafter made are hereby declared to be maximum,conditional and proportionate appropriations, the purpose being to make the appropriationspayable in full in the amounts named herein if necessary and then only in the event the aggregaterevenues collected and available during each fiscal year of the biennium for which suchappropriations are made, are sufficient to pay all of the appropriations in full; otherwise, the saidappropriations shall be deemed to be payable in such proportion as the total sum of allappropriations bears to the total amount of revenue available in each of said fiscal years. Exceptas provided in subsection (b) of this section, the Director of the Budget is given full power andauthority to examine and survey the progress of the collection of the revenue out of which suchappropriations are to be made, and to declare and determine the amounts that can be, during eachquarter of each of the fiscal years of the biennium properly allocated to each respectiveappropriation. In making such examination and survey, the Director of the Budget shall receiveestimates of the prospective collection of revenues from the Secretary of Revenue and everyother revenue collecting agency of the State. The Director of the Budget may reduce all of saidappropriations pro rata when necessary to prevent an overdraft or deficit to the fiscal period forwhich such appropriations are made. The Governor may also reduce all of said appropriationspursuant to Article III, Section 5(3) of the Constitution in accordance with subsection (b) of thissection, after consulting with the Joint Legislative Commission on Governmental Operationsunder G.S. 120-76(8) if prior consultation is required by that section. The purpose and policy ofthis Article are to provide and insure that there shall be no overdraft or deficit in the general fundof the State at the end of the fiscal period, growing out of appropriations for maintenance and theDirector of the Budget is directed and required to so administer this Article as to prevent anysuch overdraft or deficit. Prior to taking any action under this section to reduce appropriationspro rata, the Governor may consult with the Advisory Budget Commission.(b) The General Assembly recognizes that it has required units of local government to adopt andmaintain annual balanced budgets and take other steps to assure financially sound operationsunder the Local Government Budget and Fiscal Control Act and other provisions of Chapter 159of the General Statutes. Accordingly, the General Assembly finds that in order to satisfy those

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 42statutory requirements and provide adequate services to their citizens, units of local governmentmust be able to rely on the funds and local revenue sources the General Assembly has provided.It is the intent of the General Assembly that funds that have been collected by the State on behalfof local governments and funds that the General Assembly has appropriated or otherwisecommitted to local governments shall not be reduced except as provided in this section. Inexercising the powers contained in Section 5(3) of Article III of the North Carolina Constitution,the Governor shall not withhold from distribution funds that have been collected by the State onbehalf of local governments or funds that the General Assembly has appropriated or otherwisecommitted to local governments unless, after making adequate provision for the prompt paymentof principal of and interest on bonds and notes of the State according to their terms, the Governorhas exhausted all other sources of revenue of the State including surplus remaining in thetreasury at the beginning of the fiscal period.This subsection does not authorize the Governor to withhold revenues from taxes levied by unitsof local governments and collected by the State. The General Assembly recognizes that underSection 19 of Article I of the North Carolina Constitution and under the Due Process Clause ofthe United States Constitution, the State is prohibited from taking local tax revenue. (1929, c.100, s. 26; 1955, c. 578, s. 7; 1973, c. 476, s. 193; 1981, c. 859, s. 47.1; 1983, c. 717, s. 58; 1985,c. 290, s. 5; 1985 (Reg. Sess., 1986), c. 955, ss. 73, 74; 1996, 2nd Ex. Sess., c. 18, s. 7.4(g);2002-120, s. 7.)§ 143-26. Director to have discretion as to manner of paying annual appropriations.(a) Except as provided in subsection (b) of this section or as otherwise provided by State orfederal law, it shall be discretionary with the Director of the Budget whether any annualappropriation shall be paid in monthly, quarterly or semiannual installments or in a singlepayment.(b) Except as otherwise provided by State or federal law, an annual appropriation of one hundredthousand dollars ($100,000) or less to or for the use of a nonprofit corporation shall be paid in asingle annual payment. An annual appropriation of more than one hundred thousand dollars($100,000) to or for the use of a nonprofit corporation shall be paid in quarterly or monthlyinstallments, in the discretion of the Director of the Budget. (1897, c. 368; Rev., s. 5372; C.S., s.7683; 1925, c. 275, s. 9; 1929, c. 100, s. 27; 2001-424, s. 6.7; 2001-513, s. 1(b).)§ 143-27. Appropriations to educational, charitable and correctional institutions are inaddition to receipts by them.All appropriations now or hereafter made to the educational institutions, and to the charitableand correctional institutions, and to such other departments and agencies of the State as receivemoneys available for expenditure by them are declared to be in addition to such receipts of saidinstitutions, departments or agencies, and are to be available as and to the extent that suchreceipts are insufficient to meet the costs anticipated in the budget authorized by the GeneralAssembly, of maintenance of such institutions, departments, and agencies; Provided, however,that if the receipts, other than gifts and grants that are unanticipated and are for a specific

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 43purpose only, collected in a fiscal year by an institution, department, or agency exceed thereceipts certified for it in General Fund Codes, Highway Fund Codes, or Wildlife Fund Codes,the Director of the Budget shall decrease the amount he allots to that institution, department, oragency from appropriations from that Fund by the amount of the excess, unless the Directorof the Budget has consulted with the Joint Legislative Commission on Governmental Operationsand unless the Director of the Budget finds that (i) the appropriations from that Fund arenecessary to maintain the function that generated the receipts at the level anticipated in thecertified Budget Codes for that Fund and (ii) the funds may be expended in accordance with G.S.143-23. Notwithstanding the foregoing provisions of this section, receipts within The Universityof North Carolina realized in excess of budgeted levels shall be available, up to a maximum often percent (10%) above budgeted levels, for each Budget Code, in addition to appropriations, tosupport the operations generating such receipts, as approved by the Director of the Budget.The Office of State Budget and Management shall report to the Joint Legislative Commission onGovernmental Operations and to the Fiscal Research Division of the Legislative Services Officewithin 30 days after the end of each quarter on expenditures of receipts in excess of the amountscertified in General Fund Codes, Highway Fund Codes, or Wildlife Fund Codes, that did notresult in a corresponding reduced allotment from appropriations from that Fund. (1929, c. 100, s.28; 1981 (Reg. Sess., 1982), c. 1282, s. 66; 1983, c. 761, s. 14; 1985, c. 479, ss. 156, 157; 1989(Reg. Sess., 1990), c. 936, s. 5(a); 1996, 2nd Ex. Sess., c. 18, s. 7.4(h)(1), (2); 1997-256, s. 11;1997-347, s. 7; 1997-401, s. 7; 1997-418, s. 6; 1997-443, s. 7.8(d); 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-27.1. Repealed by Session Laws 1979, 2nd Session, c. 1137, s. 43.§ 143-27.2. Discontinued service retirement allowance and severance wages for certainState employees.(a) When the Director of the Budget determines that the closing of a State institution or areduction in force will accomplish economies in the State Budget, he shall pay either adiscontinued service retirement allowance or severance wages to any affected State employee,provided reemployment is not available. As used in this section, "economies in the StateBudget" means economies resulting from elimination of a job and its responsibilities or from alack of funds to support the job. In determining whether to pay a discontinued service retirementallowance or severance wages, the Director of the Budget shall consider the recommendation ofthe department head involved and any recommendation of the State Personnel Director.Severance wages shall not be paid to an employee who chooses a discontinued serviceretirement. Severance wages shall not be subject to employer or employee retirementcontributions. Severance wages shall be paid according to the policies adoptedby the State Personnel Commission.Notwithstanding any other provisions of the State's retirement laws, any employee of the Statewho is a member of the Teachers' and State Employees' Retirement System or the Law-Enforcement Officers' Retirement System and who has his job involuntarily terminated as aresult of economies in the State Budget may be entitled to a discontinued service retirement

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 44allowance, subject to the approval of the employing agency and the availability of agency funds.An unreduced discontinued service retirement allowance, not otherwise allowed, may beapproved for employees with 20 or more years of creditable retirement service who are at least55 years of age; or a discontinued service retirement allowance, not otherwise allowed, may beapproved for employees with 20 or more years of creditable retirement service who are at least50 years of age, reduced by one-fourth of one percent (1/4 of 1%) for each month that retirementprecedes his fifty-fifth birthday. In cases where a discontinued service retirement allowance isapproved, the employing agency shall make a lump sum payment to the Administrator of theState Retirement Systems equal to the actuarial present value of the additional liabilities imposedupon the System, to be determined by the System's consulting actuary, as a result of thediscontinued service retirement, plus an administrative fee to be determined by theAdministrator.The salary used to determine severance wages under this section is the last annual salary exceptthat if the employee was promoted within the previous 12 months, the last annual salary is thatannual salary prior to the promotion. If the annual salary prior to the promotion is used, it shallbe adjusted to account for any across-the-board legislative salary increases. Excluded from anycalculation are any benefits such as, but not limited to, overtime pay, shift pay, holiday premium,or longevity pay.(b) Any employee separated from State government and paid severance wages under this sectionshall not be employed under a contractual arrangement by any State agency, other than theconstituent institutions of The University of North Carolina and the constituent institutions of theNorth Carolina Community College System, until 12 months have elapsed since the separation.This subsection does not affect any reduction in force rights that the employee may have. (1979,c. 838, s. 22; 1983, c. 761, s. 225; c. 923, s. 217(R); 1983 (Reg. Sess., 1984), c. 1034, s. 251;1985 (Reg. Sess., 1986), c. 981, s. 1; c. 1024, s. 20; 1987, c. 177, s. 2; 1989 (Reg. Sess., 1990), c.1066, s. 36(a); 1998-212, s. 28.28(a).)§ 143-28. All State agencies under provisions of this Article.It is the intent and purpose of this Article that every department, institution, bureau, division,board, commission, State agency, person, corporation, or undertaking, by whatsoever name nowor hereafter called, that expends money appropriated by the General Assembly or moneycollected by or for such departments, institutions, bureaus, boards, commissions, persons,corporations, or agencies, under any general law of this State, shall be subject to and under thecontrol of every provision of this Article. Any power expressed in this Article or necessarilyimplied from the language hereof or from the nature and character of the duties imposed, inaddition to the powers and duties heretofore expressly conferred herein, shall be held andconstrued to be given hereby to the end that any and all duties herein imposed and made and allpurposes herein expressed may be fully performed and completely accomplished, and to that endthis Article shall be liberally construed. (1925, c. 89, s. 28; 1929, c. 100, s. 29; 1955, c. 578, s. 8;1957, c. 269, s. 2; 1979, 2nd Sess., c. 1137, s. 37; 1981, c. 859, s. 47.1; 1985, c. 290, s. 6.)§ 143-28.1. Highway Fund appropriation.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 45Notwithstanding any other provisions of this Article, the appropriations made from the HighwayFund for highway construction and maintenance are subject to the following provisions.(1) Cash Flow Funding for Highway Construction and Maintenance. – Highwaymaintenance and construction funds shall be budgeted, expended and accounted for ona "cash flow" basis. Pursuant to this end, highway maintenance and constructioncontracts shall be planned and limited so payments due at any time will not exceed thecash available to pay them.(2) Appropriations are for Payments and Contract Commitments to be Made in theAppropriation Fiscal Year. - The appropriations provided for by the Appropriations Actfor highway maintenance and construction are for maximum payments estimated to bemade during the appropriation fiscal year and for maximum contracting authority forfuture years. Highway maintenance and construction contracts shall be scheduled sothat the total contract payments and other expenditures charged to projects in the fiscalyear for each highway maintenance and construction appropriation item will not exceedthe current appropriations provided by the General Assembly and unspent priorappropriations made by the General Assembly for the particular appropriation item.(3) Payments Subject to Availability of Funds - Retainage Fully Funded - 5% CashBalance Required. - The annual appropriations for highway maintenance andconstruction provided for by the Appropriations Act shall be expended only to theextent that sufficient funds are available in the Highway Fund. The Department ofTransportation shall fully fund retainage from maintenance and construction contractsin the year in which the work is performed, and in addition shall maintain an availablecash balance at the end of each month equal to at least five percent (5%) of the unpaidbalance of the total maintenance and construction contract obligations. In the eventthis cash position is not maintained, no further construction and maintenance contractcommitments shall be entered into until the cash balance has been regained. For thepurposes of awarding contracts involving federal-aid, any amount due from the federalgovernment and the Highway Bond Fund as a result of unreimbursed expenditures maybe considered as cash for the purposes of this provision.(4) Anticipation of Revenues. - In awarding State highway construction and maintenancecontracts requiring payments beyond a biennium, the Director of the Budget mayanticipate revenues as authorized and certified by the General Assembly, to continuecontract payments for up to seventy-five percent (75%) of the revenues which areestimated for the first fiscal year of the succeeding biennium and which are notrequired for other budget items. Up to fifty percent (50%) of the revenues not requiredfor other budget items may be anticipated for the second fiscal year of the succeedingbiennium's contract payments. Up to forty percent (40%) of the revenues not requiredfor other budget items may be anticipated for the first year of the second succeedingbiennium and up to twenty percent (20%) of the revenues not required for other budgetitems may be anticipated for the second year of the second succeeding biennium.(5) Amounts Obligated - Payments Subject to the Availability of Funds - Termination ofContracts. - Highway maintenance and construction appropriations may be obligated inthe amount of allotments made to the Department of Transportation by the Office ofState Budget and Management for the estimated payments for maintenance andconstruction contract work to be performed in the appropriation fiscal year. The

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 46allotments shall be multi-year allotments and shall be based on estimated revenues andshall be subject to the maximum contract authority contained in subdivision (2) above.Payment for highway maintenance and construction work performed pursuant tocontract in any fiscal year other than the current fiscal year will be subject toappropriations by the General Assembly. Highway maintenance and constructioncontracts shall contain a schedule of estimated completion progress and anyacceleration of this progress shall be subject to the approval of the Department ofTransportation provided funds are available. The State reserves the right to terminateor suspend any highway maintenance or construction contract and any highwaymaintenance or construction contract shall be so terminated or suspended if funds willnot be available for payment of the work to be performed during that fiscal yearpursuant to the contract. In the event of termination of any contract, the contractorshall be given a written notice of termination at least 60 days before completion ofscheduled work for which funds are available. In the event of termination, thecontractor shall be paid for the work already performed in accordance with the contractspecifications.(6) Provision Incorporated in Contracts. - The provisions of subdivision (5) of this sectionshall be incorporated verbatim in all highway construction and maintenance contracts.(7) Existing Contracts Are Not Affected. - The provisions of this section shall not apply tohighway construction and maintenance contracts awarded by the Department ofTransportation prior to July 15, 1980. (1979, 2nd Sess., c. 1137, s. 62; 1981, c. 859, s.9; 1996, 2nd Ex. Sess., c. 18, s. 19.4(b); 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-29. Delegation of power by Director.Any power or duty herein conferred on the Governor as Director may be exercised andperformed by such person or persons as may be designated or appointed by him from time totime in writing. (1925, c. 89, s. 29; 1929, c. 100, s. 30.)§ 143-30. Budget of State institutions.The several institutions of the State, boards, departments, commissions, agencies, persons orcorporations, included with the terms hereof to which appropriations are made now or hereafterfor permanent improvements or for maintenance, shall, before any of such appropriations,whether for permanent improvements or for maintenance, are available or paid to them or anyone of them, budget their requirements and present the same to the Director of the Budget on orbefore the first day of June of each odd-numbered year hereafter. There shall be a separatebudget presented for permanent improvements and for maintenance. Each of said budgets shallcontain the requirements of said institutions, boards, commissions, and agencies, persons andcorporations, and undertakings, as hereinbefore defined, for the succeeding two years. Eachinstitution, board, department, commission, agency, person or corporation, in the preparation ofsuch budget, shall follow as nearly as may be the itemized recommendations of the Director ofthe Budget and Advisory Budget Commission and/or as amended by the General Assembly. Theforms, except when modified and changed by authority of the Director of the Budget, shall bethe forms used in presenting the requests. The function of the Advisory Budget Commissionunder this section applies only if the Director of the Budget consults with the Commission in

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 47preparation of the budget. (1925, c. 230, s. 2; 1929, c. 100, s. 32; 1985 (Reg. Sess., 1986), c.955, s. 75.)§ 143-31. Building and permanent improvement funds spent in accordance with budget.All buildings and other permanent improvements, which shall be erected and/or constructed,shall be erected and/or constructed, and carried on and the money spent therefor in strictaccordance with the budget requests of such institution, board, commission, agency, person, orcorporation filed with the Director of the Budget. The expenditure of appropriations formaintenance shall be in strict accordance with the budget recommendations for such institution,board, commission, agency, person or corporation and/or as amended or changed by the GeneralAssembly. It shall be the duty of the Director of the Budget to see that all money appropriatedfor either permanent improvements or maintenance shall be expended in strict accordance withthe budget recommendations and/or as amended by the General Assembly, for each department,institution, board, commission, agency, person or corporation. If the Director of the Budget shallascertain that any department, institution, board, commission, agency, person or corporation hasused any of the moneys appropriated to it for any purpose other than that for which it wasappropriated and budgeted, as herein required, and not in strict accordance with the terms of thisArticle, the Director of the Budget shall have the power and he is hereby authorized to notifysuch institution, board, commission, agency, person or corporation that no further sums from anyappropriation made to it will be available to such department, institution, board, commission,agency, person or corporation until and after the persons responsible for the diversion of thesaid funds shall have replaced the same, and the Director of the Budget shall have the power andhe is hereby authorized to notify the State Controller not to approve or issue any further warrantsfor such department, institution, board, commission, agency, person or corporation for anyunexpended appropriation and the State Controller is hereby prohibited from approving orissuing any further warrants for such department, institution, board, commission, agency, personor corporation until he shall have been otherwise directed by the Director of the Budget. (1925,c. 230, s. 3; 1929, c. 100, s. 33; 1961, c. 1181, s. 3; 1985 (Reg. Sess., 1986), c. 1024, s. 21.)§ 143-31.1. Study and review of plans and specifications for building, improvement, etc.,projects.It shall be the duty and responsibility of the Director of the Budget to determine whetherbuildings, repairs, alterations, additions or improvements to physical properties for whichappropriations of State funds are made have been designed for the specific purpose for whichsuch appropriations are made, that such projects have been designed giving proper considerationto economy in first cost, in maintenance cost, in materials and type of construction.Architectural features shall be selected which give proper consideration to economy in design.The Director of the Budget shall have prepared a complete study and review of all plans andspecifications for such projects and bids on same will not be received until the results of suchstudy and review have been incorporated in such plans and specifications, and until economicconditions of the construction industry are considered by the Office of State Budget andManagement to be favorable to the letting of construction contracts. The Director of the Budgetmay, when he considers it in the best interest of the State to do so, terminate design contractswhen it is documented that the designer has failed to perform the conditions enumerated in thecontract.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 48Notwithstanding G.S. 143-135, the Director of the Budget may authorize the Department ofHealth and Human Services and the Department of Correction to use funds necessary forprojects that correct deficiencies, improve living conditions, or renovate unneeded patient spacefor State office space. (1953, c. 1090; 1963, c. 423; 1975, c. 879, s. 46; 1979, 2nd Sess., c. 1137,s. 37; 1981, c. 860, s. 12; 1983 (Reg. Sess., 1984), c. 1116, s. 95; 1997-443, s. 11A.118(a); 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-31.2. Appropriation, allotment, and expenditure of funds for historic andarcheological property.The Department of Cultural Resources may not expend any State funds for the acquisition,preservation, restoration, or operation of historic or archeological real and personal property, andthe Director of the Budget may not allot any appropriations to the Department of CulturalResources for a particular historic site until (i) the property or properties shall have beenapproved for such purpose by the Department of Cultural Resources according to criteriaadopted by the North Carolina Historical Commission, (ii) the report and recommendation of theNorth Carolina Historical Commission has been received and considered by the Department ofCultural Resources, and (iii) the Department of Cultural Resources has found that there is afeasible and practical method of providing funds for the acquisition, restoration and/or operationof such property. (1963, c. 210, s. 3; 1973, c. 476, s. 48; 1985 (Reg. Sess; 1986), c. 1014, s.171(e).)§ 143-31.3. Grants to nonstate health and welfare agencies.Nonstate health and welfare agencies shall submit their appropriation requests for grants-in-aidthrough the Secretary of the Department of Health and Human Services for recommendations tothe Director of the Budget and the Advisory Budget Commission and the General Assembly, andagencies receiving these grants, at the request of the Secretary of the Department of Health andHuman Services, shall provide a postaudit of their operations that has been done by a certifiedpublic accountant. The function of the Advisory Budget Commission under this section appliesonly if the Director of the Budget consults with the Commission in preparation of the budget.(1979, c. 838, s. 35; 1985 (Reg. Sess., 1986), c. 955, s. 76; 1997-443, s. 11A.118(a).)§ 143-31.4. Non-State match restrictions.Whenever money is required to match in appropriation made for a specific purpose by the Stateof North Carolina, the recipient of the appropriation shall actually receive as a gift, grant,earnings in actual money, or a pledge that can be used as collateral in any prudent loantransaction, the matching amount required. The recipient shall retain the matching amountreceived in its possession until spent for that purpose and shall spend an equal percentage of theappropriation and of the matching amount each time an expenditure is made, unless theindividual appropriation requires otherwise. (1985, c. 479, s. 155.)§ 143-31.5. Repayment of certain unexpended and unencumbered sums; reports.(a)Whenever funds have been appropriated by an act ratified before January 1, 1985, directly bythe provisions of that act to a specific non-state agency, but those funds are not expended orencumbered by that agency by June 30, 1988, the agency shall no later than July 31, 1988, repay

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 49to the State all sums not so expended or encumbered. For the purposes of this section, agencyincludes any corporation, association, board, commission, city, county, local schooladministrative unit or board of education, or local commission, but does not include acommunity college.(b) Any such agency so appropriated funds for fiscal year 1980-81, 1981-82, 1982-83, 1983-84or 1984-85 shall report to the State Budget Office no later than December 31, 1986, the amountof any such funds not yet expended or encumbered. The State Budget Office shall monthlytransmit a copy of such reports to the Joint Legislative Commission on Governmental Operationsand the Fiscal Research Division. (1985 (Reg. Sess., 1986), c. 1014, s. 180; 1987, c. 564, s. 26;c. 722; 2000-140, s. 93.1(l).)§ 143-32. Person expending an appropriation wrongfully.(a)Any trustee, director, manager, building committee or other officer or person connected withany institution, or other State agency as herein defined, to which an appropriation is made, whoshall expend any appropriation for any purpose other than that for which the money wasappropriated and budgeted or who shall consent thereto, shall be liable to the State of NorthCarolina for such sum so spent and the sum so spent, together with interest and costs, shall berecoverable in an action to be instituted by the Attorney General for the use of the State ofNorth Carolina, which action may be instituted in the Superior Court of Wake County, or anyother county, subject to the power of the court to remove such action for trial to any othercounty, as provided in G.S. 1-83, subdivision (2). Notwithstanding the provisions of Chapters120, 128, 135, and 143 of the General Statutes, the board of trustees of the State administeredretirement system may not pay any retirement benefits or allowances, except for withdrawncontributions, to any person found liable pursuant to this subsection until the person has paid tothe State the sum required by this subsection, together with interest and costs. The AttorneyGeneral shall notify the retirement system of any member's outstanding liability under thissubsection and shall also notify the retirement system when this liability has been removed.(b) Any member or members of any board of trustees, board of directors, or other controllingbody governing any of the institutions of the State, or any officer, employee of, or personholding any position with any of the institutions of the State, or other State agency as hereindefined, who willfully acts to divert, use, or expend any funds appropriated for the use of saidinstitution or agency, in a manner designed to circumvent the provisions of this section,including normal reversions of State funds, by failing to properly receive or deposit funds, or bythe improper expenditure or transfer of funds for any purpose other than that for which the fundswere appropriated and budgeted, shall be guilty of a Class 1 misdemeanor. All offenses againstthis section shall be held to have been committed in the County of Wake and shall be tried anddisposed of in the General Court of Justice for Wake County. If such offender be not an officerelected by vote of the people, conviction of such offense shall be sufficient cause for removalfrom office or dismissal from employment by the Governor upon 30 days' notice in writing tosuch offender. (1925, c. 230, s. 4; 1929, c. 100, s. 34; 1977, c. 930; 1985, c. 479, s. 195; 1993, c.539, s. 1002; 1994, Ex. Sess., c. 24, s. 14(c).)§ 143-33. Intent.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 50It is an intent and purpose of this Article that all departments, institutions, boards, commissions,agencies, persons or corporations to which appropriations for permanent improvements and/ormaintenance are made, shall submit to the Director of the Budget their requests for the paymentof such appropriations in the form of a budget, following the recommendations made by theDirector of the Budget and the Advisory Budget Commission and/or as amended by the GeneralAssembly. The function of the Advisory Budget Commission under this section applies only ifthe Director of the Budget consults with the Commission in preparation of the budget. (1925, c.230, s. 5; 1929, c. 100, s. 35; 1985 (Reg. Sess., 1986), c. 955, s. 77.)§ 143-34. Penalties and punishment for violations.A refusal to perform any of the requirements of this Article, and the refusal to perform any ruleor requirement or request of the Director of the Budget made pursuant to, or under authority of,the Executive Budget Act, shall subject the offender to penalty of two hundred fifty dollars($250.00), to be recovered in an action instituted either in Wake County Superior Court, or anyother county, by the Attorney General for the use of the State of North Carolina, and shall alsoconstitute a Class 1 misdemeanor. If such offender be not an officer elected by vote of thepeople, such offense shall be sufficient cause for removal from office or dismissal fromemployment by the Governor upon 30 days' notice in writing to such offender. (1929, c. 100, s.36; 1993, c. 539, s. 1003; 1994, Ex. Sess., c. 14, s. 61, c. 24, s. 14(c).)§ 143-34.1. Positions included in the State's payroll must be approved by the Director ofBudget; payment of benefits and other salary-related items must be made from samesource as salary; dependent care assistance program authorized; flexible compensationbenefits authorized.(a) Before a department, institution, or other agency of State government establishes a newposition or changes the funding of an existing position, the agency must submit the proposedaction to the Director for approval. The Director shall review the proposed action to ensure thatit is within the amount appropriated to the agency. If the Director approves the action, theDirector shall notify the agency and the State Controller of the approval. The State Controllermay not honor a voucher in payment of a payroll that includes a new position or a change in anexisting position that has not been approved by the Director.(a1) A department, institution, or other agency of State government may establish new receiptsupportedpositions only after prior consultation with the Joint Legislative Commission onGovernmental Operations. This subsection shall not apply to work-order funded positions in theDepartment of Transportation that are created for the purpose of highway construction, topositions at The University of North Carolina or its constituent institutions, or to positionsestablished by the Governor to expand the State's capabilities in dealing with the threat ofterrorism in the event of an emergency or other exigent circumstances.(b) Required employer salary-related contributions for retirement benefits, death benefits,disability salary continuation and Social Security for employees whose salaries are paid fromgeneral fund or highway fund revenues, or from department, office, institutional or agencyreceipts, or from nonstate funds, shall be paid from the same source as the source

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 51of the employees' salaries. In those instances in which an employee's salary is paid in part fromthe general fund, or the highway fund, and in part from the department, office, institutional oragency receipts, or from nonstate funds, the required salary-related contributions shall be paidfrom the general fund, or the highway fund, only to the extent of the proportionate part paid fromthe general fund, or highway fund, in support of the salary of such employee, and the remainderof the employer's contribution requirements shall be paid from the same source which suppliesthe remainder of such employee's salary. The requirements of this section as to the source ofpayment are also applicable to payments on behalf of the employee for hospital-medicalinsurance, longevity payments, salary increments, and legislative salary increases. The StateController shall approve the method of payment by State departments, offices, institutions andagencies for employer salary-related requirements of this section, and determine the applicabilityof the section to an employer's salary-related contribution or payment in behalf of an employee.(c) The Director of the Budget is authorized to provide eligible officers and employees of Statedepartments, institutions, and agencies not covered by the provisions of G.S. 116-17.2 a programof dependent care assistance as available under Section 129 and related sections of the InternalRevenue Code of 1986, as amended. The Director of the Budget may authorize Statedepartments, institutions, and agencies to enter into annual agreements with employees who electto participate in the program to provide for a reduction in salary. With the approval of theDirector of the Budget, savings in the employer's share of contributions under the FederalInsurance Contributions Act on account of the reduction in salary may be used to pay some or allof the administrative expenses of the program. Should the Director decide to contract with athird party to administer the terms and conditions of a program of dependent care assistance, hemay select a contractor only upon a thorough and completely competitive procurement process.(d) Notwithstanding any other provisions of law relating to the salaries of officers and employeesof departments, institutions, and agencies of State government, the Director of the Budget isauthorized to provide a plan of flexible compensation to eligible officers and employees of Statedepartments, institutions, and agencies not covered by the provisions of G.S. 116-17.2 forbenefits available under Section 125 and related sections of the Internal Revenue Code of 1986as amended. This plan shall not include those benefits provided to employees and officers underArticle 1A of Chapter 120 of the General Statutes and Articles 1, 3, 4, and 6 of Chapter 135 ofthe General Statutes nor any vacation leave, sick leave, or any other leave that may be carriedforward from year to year by employees as a form of deferred compensation. In providing aplan of flexible compensation, the Director of the Budget may authorize State departments,institutions, and agencies to enter into agreements with their employees for reductions in thesalaries of employees electing to participate in the plan of flexible compensation provided by thissection. With the approval of the Director of the Budget, savings in the employer's share ofcontributions under the Federal Insurance Contributions Act on account of the reduction insalary may be used to pay some or all of the administrative expenses of the program. Should theDirector of the Budget decide to contract with a third party to administer the terms andconditions of a plan of flexible compensation as provided by this section, it may select such acontractor only upon a thorough and completely advertised competitive procurement process.(1949, c. 718, s. 5; 1957, c. 269, s. 2; 1961, c. 1181, s. 4; 1979, 2nd Sess., c. 1137, s. 44; 1983(Reg. Sess., 1984), c. 1034, s. 162; 1985 (Reg. Sess., 1986), c. 1024, ss. 22, 23; 1989, c. 458, s.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 524; 1989 (Reg. Sess., 1990), c. 1059, s. 4; 1991, c. 542, s. 7; 1991 (Reg. Sess., 1992), c. 1044, ss.14(a), (e), (i); 1993, c. 561, s. 42; 1993 (Reg. Sess., 1994), c. 769, s. 7.28A; 1997-443, s.33.20(a); 1999-237, s. 28.27(a); 2001-424, s. 32.19A(a); 2001-470, s. 4.)§ 143-34.2. Information as to requests for nonstate funds for projects imposing obligationon State; statement of participation in contracts, etc., for nonstate funds; limiting clauserequired in certain contracts or grants.All State agencies, funds, or state-supported institutions shall submit to the Office of StateBudget and Management, as of the original date thereof, copies of all applications and requestsfor nonstate funds, (including federal funds), to be used for any purpose to which this section isapplicable. This section shall be applicable to all projects and programs which do or mayimpose upon the State of North Carolina any substantial financial obligation at the time of orsubsequent to the acceptance of any funds received upon any such application or request. EveryState agency, fund or state-supported institution seeking nonstate funds for any such project orprogram shall furnish to the Office of State Budget and Management and the Advisory BudgetCommission with each such copy of application or request, a statement of the purposes forwhich any such project or program is desired or advocated, the source and amount of funds to begranted or provided therefor, and a statement of the conditions, if any, upon which such fundsare to be provided. Prior to approval of any such project or program, the Office of State Budgetand Management shall furnish to the Fiscal Research Division of the General Assembly a listof the projects or purposes and the current and future financial impact of those projects orpurposes.It shall be required of all State agencies, funds, or state-supported institutions, commissions orregional planning and development bodies to submit to the Office of State Budget andManagement a statement of participation in any contract, agreement, plan or request for nonstatefunds (including federal funds).Any contract or grant entered into by a State board, commission, agency, department orinstitution for the operation of a new program by such State board, commission, agency,department or institution or for the enrichment of an ongoing program of such State board,commission, agency, department or institution shall include a limiting clause which specificallystates that continuation of the contract or grant program with State appropriations beyond thecurrent State fiscal year is subject to State funds being appropriated by the GeneralAssembly specifically for that program.The function of the Advisory Budget Commission under this section applies only if the Directorof the Budget consults with the Commission in preparation of the budget. (1965, c. 1181; 1969,c. 1210; 1977, c. 802, s. 15.25; 1979, 2nd Sess., c. 1137, ss. 37, 45; 1985 (Reg. Sess., 1986), c.955, s. 78; 1997-443, s. 7(c); 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-34.3. Repealed by Session Laws 1977, c. 802, s. 15.20.§ 143-34.4: Recodified as § 120-36.6 by Session Laws 1983 (Regular Session 1984), c. 1034,s. 177.1.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 53§ 143-34.5: Repealed by Sessions Laws 1985, c. 479, s. 160.§ 143-34.6. Deposit of payroll deductions.Employer and employee salary-related contributions and deductions for employees whosesalaries were paid from the general fund, Highway Fund, agency receipts, or any combinationthereof shall not be withdrawn or transferred except to an account whose cash balance earnsinterest for the general fund or Highway Fund, as provided in G.S. 147-69.1, until payment ismade directly to the ultimate agency or party to whom they are due. (1983, c. 761, s. 27.)§ 143-34.7. Participation by Legislative Officers.The Speaker and Speaker Pro Tempore of the House of Representatives and the President ProTempore and Majority Leader of the Senate may attend all meetings of the Advisory BudgetCommission. (1983 (Reg. Sess., 1984), c. 1034, s. 163.)ARTICLE 1BCapital Improvement Planning Act§ 143-34.40. Definitions.The following definitions apply in this Article:(1) Capital improvement. - The term includes land acquisition, new construction, orrehabilitation of existing facilities, and repairs and renovations.(2) State agency. - The term includes the Board of Governors of The University of NorthCarolina. (1997-443, s. 34.9.)§ 143-34.41. Legislative intent; purpose.(a) The General Assembly recognizes the need to establish a comprehensive process for capitalimprovement planning that is fully integrated with State financial planning and debtmanagement.(b) The capital improvement planning and budgeting process shall include the followingelements:(1) An inventory of facilities owned by State agencies.(2) Criteria used to evaluate capital improvement needs.(3) A six-year capital improvement needs inventory.(4) A six-year capital improvement plan.(c) The Office of State Budget and Management has responsibility for management of the capitalimprovement planning process. The Director of the Budget may assign to any State agency orinstitution such duties and responsibilities as may in the Director's judgment be necessary to thesuccessful administration of the capital improvement planning process. (1997-443, s. 34.9;2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-34.42. Capital improvement facilities inventory.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 54The Department of Administration shall develop and maintain an automated inventory of allfacilities owned by State agencies pursuant to G.S. 143-341(4). The inventory shall include thelocation, occupying agency, ownership, size, description, condition assessment, maintenancerecord, parking and employee facilities, and other information to determine maintenance needsand prepare life-cycle cost evaluations of each facility listed in the inventory. The Departmentof Administration shall update and publish the inventory at least once every three years. TheDepartment shall also record in the inventory acquisitions of new facilities and significantchanges in existing facilities as they occur. (1997-443, s. 34.9.)§ 143-34.43. Capital improvement needs criteria.The Office of State Budget and Management shall develop a weighted list of factors that may beused to evaluate the need for capital improvement projects. The list shall include all ofthe following:(1) Preservation of existing facilities.(2) Health and safety considerations.(3) Operational efficiencies.(4) Increased demand for governmental services.(1997-443, s. 34.9; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-34.44. Agency capital improvement needs estimates.(a) On or before September 1 of each even-numbered year, each State agency shall submit to theOffice of State Budget and Management and to the Division of Fiscal Research a six-yearcapital improvement needs estimate. This estimate shall describe the agency's anticipated capitalneeds for each year of the six-year planning period. Capital improvement needs estimatesshall be shown in two parts.(b) The first part of the capital improvement needs estimates shall include only requirements forrepairs and renovations necessary to maintain the existing use of existing facilities. Eachproposed repair and renovation expenditure shall be justified by reference to the FacilitiesCondition Assessment Program operated by the Office of State Construction.(c) The second part of the capital improvement needs estimates shall include only proposals forland acquisition and projects involving either construction of new facilities or rehabilitation ofexisting facilities to accommodate uses for which the existing facilities were not originallydesigned. Each project included in this part shall be justified by reference to the needsevaluation criteria established by the Office of State Budget and Management pursuant to G.S.143-34.43. (1997-443, s. 34.9; 2000-140, s. 93.1(a); 2001-424, s. 12.2(b).)§ 143-34.45. Six-year capital improvement plan.(a) The State capital improvement plan shall address the long-term capital improvement needs ofall State government agencies and shall incorporate all capital projects, however financed,proposed to meet those needs, except that transportation infrastructure projects shall beexcluded. On or before December 31 of each even-numbered year, the Director of the Budgetshall prepare and transmit to the General Assembly a six-year capital improvement plan. Whenpreparing the plan, the Director of the Budget shall consider the capital improvement needs

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 55estimates submitted by State agencies as required in G.S. 143-34.44. The plan shall be preparedin two parts.(b) The first part of the capital improvement plan shall set forth repair and renovationsrequirements that, in the judgment of the Director of the Budget, must be met to protect andpreserve existing capital improvement facilities. General Fund expenditure levels anticipated inthis part of the plan shall be consistent with the formula establishing the repair and renovationreserve in G.S. 143-15.3A.(c) The second part of the capital improvement plan shall set forth an integrated schedule forland acquisition, new construction, or rehabilitation of existing facilities that, in the judgment ofthe Director of the Budget, should be initiated within each year of the six-year planning period.The plan shall contain an estimated schedule for each project, along with estimates of planning,design, and construction cost. (1997-443, s. 34.9.)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 56BUDGET DEVELOPMENT INDEXAdvisory Budget Commission 63 Budget Preparation System manual 66BudgetBudget requestbiennial development 58 capital improvement 62capital improvement 60 Continuation 60certified 65 Expansion 62continuationcycle chart6058Constitutional authority for budgetpreparation 57establishing 65 Departmental budget review 60expansion 60 Executive review 63instructions 59 Legislative review 64information technologypreliminary activities6059North Carolina Accounting System(NCAS) 66preparation 60 Revenue estimates 63recommendations report 64 Short session budget development 65Budget Preparation System 65 Systems supporting a budget 65Constitutional Authority for Budget PreparationsThe North Carolina Constitution (Article III, Sec. 5(3)) requires the Governor to “prepare andrecommend to the General Assembly a comprehensive budget of anticipated revenues andproposed expenditures of the State for the ensuing fiscal period.” The Constitution also statesthat “[t]he budget as enacted by the General Assembly shall be administered by the Governor.The total expenditures of the State for the fiscal period covered by the budget shall not exceedthe total of receipts during that fiscal period and the surplus remaining in the State Treasury atthe beginning of the period."North Carolina's Constitution (Article II, Sec. 11(1)) requires a session of the General Assemblyin odd-numbered years. In 1973, the General Assembly began having annual sessions, meetingin short (reconvened) sessions in even-numbered years in order to adjust the biennial budgetenacted during the previous year’s long session.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 57Budget CycleSchedule of Biennial Budget Preparation ProcessEven-Numbered YearsJanuary-MarchAprilMayJuneJulySeptemberAugust-NovemberDecemberBudget Instructions Initiate Biennial Budget Process – Office ofState Budget and Management (OSBM)Develop Short Session Budget Adjustments (Agency)Biennial Budget Narratives/Statistics Submitted (Agency)Review of Short Session Budget Requests (OSBM)Prepare Short Session Budget Recommendations (OSBM)Short Session (General Assembly)• Consideration of Governor’s recommended budget bysubcommittees• Special Appropriation Bills• Consideration by Appropriation Committees• Floor Approval, Ratification of billsRevised Certification for Second Year of Current Budget (OSBM)Biennial Continuation, Expansion and Capital Budget RequestsSubmitted (Agency)Review of Continuation & Expansion Budget Requests (OSBM)Biennial Tours (ABC, OSBM, Agency)Budget Hearings (ABC, OSBM, Agency)Biennial Budget Recommendations Finalized (Governor, ABC,OSBM)Odd-Numbered YearsJanuary or FebruaryJanuary-JuneJulyBudget Message (Governor)Regular Session (General Assembly)• Consideration of Governor’s recommended budget bysubcommittees• Special Appropriation Bills Introduced• Consideration by Appropriation committees Floor Approval,ratification of BillsCertification of Biennial Budget (OSBM)Biennial Budget DevelopmentAll departments, bureaus, divisions, boards, commissions, institutions, agencies of the staterequesting state funds, are required to submit budget requests for appropriations for both currentoperations and capital improvements using such forms, and at such times, as the Director of theBudget shall direct (G.S. 143-6). Budget requests are submitted in accordance with detailedbudget instructions that are issued by OSBM approximately 12 months prior to the convening ofeach new General Assembly (in the spring of even-numbered years). See the above chart fortraditional schedule for submission of requests.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 58The first step in the budget preparation process is OSBM’s review of the budget instructions andthe schedule of completion dates for each component of the process. Budget instructions detailthe concepts of the continuation, expansion, and capital budgets as they apply to the biennialbudget under preparation.Budget Instructions and Preliminary ActivitiesApproximately 12 months before a legislative session, between January and March of evennumberedyears, OSBM issues instructions to state departments and institutions for makingbiennial budget requests for all three components of the budget - continuation, expansion, andcapital.These instructions include:• Schedules for submission• Forms to be used• Allowable price and inflationary rate increases• Requirements for supporting schedules• Statistics• Narrative justifications• Priority listingsOSBM also distributes information on:• Demographic trends• Economic trends• Inflationary trends• Implications of relevant administrative rulings, court decisions, and federal legislationthat may need to be considered in preparing the budget requests.OSBM staff study and analyze matters that are not exclusively related to the budgets ofparticular departments (salaries, retirement, tax changes, etc.) and budget analysts negotiate withdepartmental budget officers regarding acceptable levels for continuation budgets.Administrative policies and procedures may vary from one biennium to the next, so newinstructions are issued for each budget. Some guidelines remain relatively constant, and areoutlined below to provide a “rule of thumb” for what ordinarily constitutes “continuation” and“expansion.” These guidelines may change as the budget process changes.Budget InstructionsThe most recent version of Instructions for Preparation of the Recommended State Budget andthe Biennial State Plan can be obtained by contacting OSBM or by visiting the website athttp://www.osbm.state.nc.us.Departmental Budget Review

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 59Departments are encouraged to have each division or unit prepare the initial division-levelbudget for programs they are responsible for operating. This will provide for significant input inthe budget process and for justification of each program's requests. Departments shouldemphasize:• Identifying areas of potential cost savings through productivity increases or programmodifications;• Identifying realignments of existing resources;• Identifying alternative levels of improved or increased program services; andDepartments are encouraged to conduct their own internal budget hearings.Budget PreparationThe preparation of the requested/recommended budget has four major components:• Continuation Budget: that provides for the continuing level of service of existingprograms;• Expansion Budget: that provides for expansion of existing programs, new programs,and salary increases and/or benefits for teachers and stateemployees;• Capital Improvement Budget: that provides for construction of new facilities, repairand renovations to existing facilities, major equipmentpurchases, land purchases and improvements toinfrastructure.• Information Technology Budget: that provides for the request of informationtechnology of $100,000 or greater, and a descriptionof the request and its relationship to the agency’spresent or future Technical Infrastructure.Continuation Budget RequestThe continuation budget is prepared jointly by the budget analyst and appropriate agencypersonnel. A printout called the “Worksheet I” is the starting point for the development process.This worksheet is generated from the Budget Preparation System (BPS). Worksheet I providescolumns for the actual year just ended, the certified and authorized for the current year, and thenext two years for which budget requests are being prepared. This worksheet includes allpermanent budget revisions changing the current year's budget. The first column, actualexpenditures, is generated from the North Carolina Accounting System (NCAS) files as of June30. The analyst and agency personnel build on this base of information to prepare theappropriate increases and decreases which make up the two continuation columns of theworksheet, the continuation budget.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 60Increases in the continuation budget over actual expenditures of the last fiscal year and/or theauthorized or current year’s budget are generally restricted to:• Increases to reflect changes in the enrollment or population currently served by publicschools, prisons, and entitlement programs.• Increases and adjustments required by law, such as Social Security or retirement rateincrease, longevity costs, and premium pay amounts.• Allowable inflationary cost increases are determined by OSBM each budget cycle andcommunicated to agencies for application.• Annualization of programs begun by legislative action within the current year.• Minimum operating costs for the opening of new facilities previously authorized by thelegislature. These costs and positions generally are budgeted as a single line reservesupported by documentation.• Documented rate increases in rental contracts for such items as computers, copiers andcommunications equipment, or service and maintenance contracts.• Replacement of worn out or damaged equipment with comparable equipment.(Equipment with new and/or expanded capabilities would be requested in the expansion).• Adjustments to departmental and federal receipts to more realistic levels. Significantsupplanting of receipts is normally an expansion budget item.• The continued payments for the purchase of computer or communication equipmentbought on an installment basis. (The first appropriation of this kind would be budgetedto expansion).• Items budgeted on an irregular basis, such as periodic painting and periodic accreditationstudies, for which funds were not provided in the authorized year, but for which funds areneeded in the continuation year. (Irregularly budgeted or nonrecurring items for whichfunds were provided in the authorized year, but are not necessary for the continuationyear, should not be continued).• Replacement of motor vehicles owned by a department. (New purchases, that is, thosethat would add to the department’s fleet and not simply replace existing motor vehicles,would be requested in expansion.)Decreases should be shown in requirements, receipts, and appropriations in the continuationbudget where cost and receipts associated with caseloads, enrollments, etc. are expected todecline.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 61Any increase in other line items, such as supplies and materials, printing, or travel, is not allowedin the continuation budget except through an approved realignment in the current year.Carryforwards (money carried forward from one budget year to the next, with approval ofOSBM) are reflected as expenditures in the actual year, represented in the appropriate line itemfor the budget document presentation, and are not reflected in the current year in the continuationbudget.“Nonrecurring” expenditures approved for the current year are not included in the continuationrequest as in the case of special bills not intended to be of a continuing nature.The agency’s requests should be submitted to OSBM in accordance with the schedule includedin the budget instructions.Expansion Budget RequestGenerally, the expansion budget refers to the establishment of new and/or pilot programs and theexpansion of existing programs and salary increases and/or benefits for teachers and stateemployees. The expansion request also may include:• State funding of programs previously supported by nonstate funds (such as expiredfederal grants).• Increases to support additional persons being served by a state program and/or higher percapita cost to provide that service.• Major (nonrecurring) equipment (other than replacement).The expansion budget is prepared by the agency on a form called the “Worksheet II.”Capital Improvement RequestCapital budget requests (Worksheet III) are for:• Renovations• Major repairs and maintenance to existing facilities• Walks and road improvements• New construction• Land purchases• Americans With Disabilities Act (ADA) improvements• Life safety code compliance• Asbestos and lead paint removalOne-time major equipment purchases are to be requested in the expansion operating budget(Worksheet II). Any renovations or repairs in excess of $100,000, and all new construction,should be requested through the Capital Improvement budget.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 62Requests for capital improvements are to be submitted to OSBM using such forms, and at suchtimes, as the Director of the Budget shall direct. General Statute 143-6(b) specifies: “[a]nydepartment, bureau, division, officer, board, commission, institution, or other State agency orundertaking desiring to request financial aid from the State for the purpose of constructing orrenovating any State building, utility, or other property development (except a railroad, highway,or bridge structure) shall, before making any such request for State financial aid, submit to theDepartment of Administration a statement of its needs in terms of space and other physicalrequirements, and shall furnish the Department with such additional information as it mayrequest. The Department of Administration shall then review the statement of needs submittedby the requesting department, bureau, division, officer, board, commission, institution, or otherState agency or undertaking and perform additional analysis, as necessary, to comply with G.S.143-341.”Advisory Budget Commission Tours and ReviewThe Advisory Budget Commission is a fifteen-member commission consisting of:• Five appointees of the Governor.• Five appointees of the President of the Senate.• Five appointees of the Speaker of the House, including the Appropriation and FinanceChairpersons.The Governor may consult with the Advisory Budget Commission on various budget-relatedmatters including the preparation of the biennial state budget. In the fall of the even-numberedyears, the Advisory Budget Commission may tour state facilities to inspect specific capitalneeds. Also, the Governor may hold a public hearing for department heads and other interestedpersons to present and justify their biennial budget requests to the Governor and theCommission.Revenue EstimatesBefore making final budget recommendations, OSBM prepares a forecast of state tax and nontaxrevenues on the basis of varying economic assumptions and submits these to the Governor.These revenue figures determine the amount of funds available for state programs, salaryincreases, capital improvements, tax reductions, etc. The economic forecast and revenueestimates are reviewed quarterly. A consensus forecast with the General Assembly’s FiscalResearch Division is done in December on the even-numbered years and in April on the oddnumberedyears.Executive ReviewExecutive review of the budget begins after a department/agency or institution submits itscontinuation, expansion and capital improvement budget requests to OSBM in the early fall ofthe even-numbered years. OSBM staff studies the requests, raises questions or concerns withagencies, and then makes the necessary changes. Budget requests are then forwarded to theGovernor for review. The Governor may meet with senior departmental managers, OSBM staff,and the Advisory Budget Commission during this process. At these meetings, economic and

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 63revenue forecasts are finalized and the Governor makes final decisions as to all four componentsof the budget (continuation, expansion, and capital improvement, and IT).Budget Recommendations ReportIf the Governor chooses to consult with the Advisory Budget Commission, there are twopossible, but separate, ways the budget recommendations may be reported (G.S. 143-11). If thetwo agree with each other on budget recommendations, the Governor has the budget printed,includes a unified report as part of the budget document, and submits the budget to the GeneralAssembly. If the two disagree, the Governor prepares the proposed budget on the basis of hisown conclusions. The Executive Budget Act allows any statements of disagreement by theCommission, or any of its members, to be submitted to the General Assembly. (G.S. 143.12)Legislative ReviewThe legislative review of the Governor’s Recommended Budget does not begin until it has beenformally presented along with the budget message during the opening days of the GeneralAssembly’s session in the winter of the odd-numbered years. The Recommended Budgetdocument is available to the public at that time. Once the budget is presented, it is traditionallysubdivided according to the General Assembly’s appropriations committee structure for bothHouse and Senate. Each subcommittee reviews its appropriate a portion of the budget. Houseand Senate committees may meet separately or jointly during the appropriation process.Committees commenced during previous sessions include:• Education• Natural and Economic Resources• Justice and Public Safety• General Government• Capital Improvements• Transportation• Health and Human Services• Information TechnologyThere is also a Finance Committee responsible for developing the financing for the state’sprograms.The Finance Committees and Appropriations Committees work together to come up with thefinal appropriations package. Traditionally the legislature reviews the portions of the budgetseparately in the following order: Continuation, Expansion, Capital Improvement, IT, and ifnecessary, there will be a “Clean-up Bill.” The final appropriation package is based on therecommended budget plus adjustments (increases or decreases) approved by the GeneralAssembly. The appropriation package is presented in appropriation bill(s) to the House andSenate. If the House and Senate adopt different versions of the appropriation bill a conferencecommittee is appointed to negotiate the differences. The revised appropriation bill is thenpresented to the House and Senate for ratification. The ratified bill is forwarded to the Governorwho may sign or veto the bill.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 64Certified BudgetThe ratified budget is certified to each agency by OSBM. The Certified Budget is prepared onthe Budget Preparation System (BPS) and will be issued to the agency for the operating budget,a Certified Budget (BD 307), or for the capital budget, a Capital Improvement Certified Budget(BD 306). Information from the Budget Preparation System is transferred automatically to theNorth Carolina Accounting System (NCAS). OSBM will provide information to the Office ofthe State Controller and the Department of the State Treasurer to establish appropriationaccounts.Establishing a BudgetA budget is established by authorization of:• General Assembly• OSBM• And/or by grant awards from federal, local, state or private agenciesBefore a budget is established, OSBM, in conjunction with the Office of the State Controller,must authorize and validate both the budget code and/or the center(s). For additionalinformation see the information regarding the Establishment of a Budget Code/Center in theBudget Execution Section.Short Session Budget DevelopmentThe General Assembly has a short session prior to the beginning of the second year of thebiennium. The Short Session Budget adjustments are generally, but not always, limited toadjustments of the biennial budget for operating requirements of programs such as increases toreflect changes in the enrollment or population currently served by public schools, prisons andentitlement programs. Adjustments are made to program requirements and financial supportbased on a new economic and inflationary analysis.Administrative policies and procedures for operating, capital, and IT requests may vary from onefiscal year to the next, therefore, new instructions are issued for each short session. Forms andprocedures for the short session request may also vary.Systems Supporting the BudgetBudget Preparation SystemThe Budget Preparation System (BPS) has been designed to provide the various userdepartments with computerized procedures to develop their budget requests for the Legislature.There are several purposes for the system:• Assist the various state departments, institutions, agencies, and OSBM in eliminatingmost of the clerical effort of typing, proofing, summarizing, etc.• Provide total and summary information for each department.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 65• Create an automated file for certification once the budget is approved.BPS includes financial, narrative, and statistical data. BPS uses a concept of developing amaster file of budget request data and summarizing and reporting the data according to thevarious requirements of the agencies and OSBM. Narrative and statistical data are contained inseparate files for use in printing the recommended budgets.“The Executive Budget Act” (Chapter 143, Article 1 of North Carolina General Statutes) vestscertain powers and responsibilities in the Governor (as Director of the Budget), the AdvisoryBudget Commission, the General Assembly, and state agencies concerning the budget process,the Act describes in detail the functions to be performed by each authority. This delegation ofauthority provides the procedure for budget preparation and certification.Detailed budget instructions are provided to agencies by OSBM for each biennium and include:• Formulas to be used• Economic assumptions• Budget guidelines• Other data for program plans and budget requests.Agencies must follow the budget instructions and seek guidance from OSBM in the budgetpreparation. The BPS has been designed to computerize the budget process in accordance withOSBM's detailed instructions.Budget Preparation System ManualThis link (http://www.osbm.state.nc.us/files/pdf_files/bps_manual.pdf) has the most recentversion of the manual or it can be obtained by contacting OSBM.North Carolina Accounting System (NCAS)General Statute 143B-426.39 assigns the responsibility for approving both new accountingsystems and changes in existing systems to the Office of State Controller. The North CarolinaAccounting System (NCAS) is an accounting system that facilitates internal control over fiscaloperations and provides a structure for recording accounting data for the purpose of preparingstandardized and meaningful financial statements and reports. NCAS accommodates variousmanagement reporting requirements, including budget requirements.NCAS is a comprehensive accounting system having many types of accounting classificationsfor various financial reporting requirements. The diversity of the accounting functions withinthe department dictates how many classifications are used. These various classifications are theheart of the system and allow for the posting of accounting transactions for later retrieval andreporting.The use of a uniform chart of accounts makes it possible to summarize budget and expendituredata and determine the total dollars budgeted and expended in the North Carolina state budget.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 66Equally as important as the actual accumulation of dollar amounts is the common terminologythat the chart produces. By defining the various expenditure and revenue objects, it is easier toresove questions that may arise regarding what an object includes. Thus it is easier and moremeaningful to make comparisons between agencies.The Office of the State Controller has prepared the North Carolina Accounting InformationGuide that describes how to record transactions and develop reports.The NCAS Information Guide is available on-line.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 67BUDGET EXECUTION INDEXAdministrative Procedures Act 106 Contingency and Emergency Fund 100Agency procedures transferring clearproceeds of fines, forfeitures, andpenalties to OSBM 125Cost allocation/indirect cost policyDisbursing accounts with StateTreasurer101125Agency submission to OSBM:annual reportguidelines for preparing fiscal notes114108Establishing a positionEstablishment of a center (fund)Expenditure accounts808271procedures for: Federal fund budgeting 100responding to agency submissionsstate and local fiscal notes112108Fund typesInstitutional budgeting-University69120substantial economic impact fiscalnotesIntrastate fundsLapsed salary revisionsMerit salary increment funds109Allotments122Authorization for budget adjustments 72 Monthly budget reports124Authorized budget - defined69 Non-state funds103Budget codes69 OAH-fiscal notes114Budget code center82 Position control80Budget execution68 Receipts budgeting80Budget procedures for handling Refund of expenditure81transfers between block grants 102 Refund of receipts82Budget revisions 72 Requisition for funds 125Budget structure:Revenue accounts71accounts 71 Salary Control System79funds69 Salary fund changes requiringCalendar for reporting requirements 119 OSBM approval 78Capital improvement budget 60 Salary reserve revisions 79Certified budget - defined69 Schedule of anticipated rule actions 117Change to an existing center (fund) 87 Special appropriation103Community Resource InformationSpecial fund budget codes124System (CRIS) 118 Summary report114Budget ExecutionAfter the Office of State Budget and Management issues a certified budget at the beginning ofeach fiscal year, OSBM and departments begin adjusting the budget for changes that haveoccurred during the development of the budget, changes authorized by the General Assembly,and changes delegated to the Governor under his authority as Director of the Budget.G.S. 143-23 outlines the appropriate circumstances and methods by which a department oragency may, upon approval of the Director of the Budget, exceed the appropriated amount for aline item. Additionally, this statute details the limits placed on how an agency or departmentmay use funds appropriated for salaries and wages.1037880

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 68Definitions of BudgetsCertified BudgetThe budget prepared by OSBM is based on the Governor’s recommended budget plusadjustments approved by the General Assembly. Issuance of the certified budget to each agencyconstitutes the official budget for that agency.Authorized BudgetThe authorized budget is composed of the certified budget plus adjustments approved by OSBM.This is the working budget and is reflected on the Monthly Budget Report (BD 701).The Total State Budget Consists of the Following:General FundsThe general fund is made up of tax revenues (non-transportation) such as sales tax, individualincome tax, corporate tax, insurance premium tax, and franchise tax. In addition, the generalfund includes non-tax revenues such as income from the treasurer’s investments, fees receivedfrom the court system, miscellaneous fees charged for state services, and transfers from thehighway fund and the highway trust fund.Highway FundsThe highway fund/highway trust fund is comprised of revenues from transportation-relatedactivities. Generally, these revenues do not respond to inflationary changes as do the generalfund revenues. Highway fund revenues include the highway related motor fuel tax, motorvehicle tax, motor vehicle registration fees, driver’s license fees, and non-tax revenues such asincome from the treasurer’s investments.Federal FundsFederal funds received directly by the state support programs such as: Medicaid, TemporaryAssistance to Needy Families, Elementary and Secondary Education, highway construction, LowIncome Energy Assistance Block Grant, Community Development Block Grant, Social ServicesBlock Grant, Child Nutrition in Public Schools, Child Care and Development Fund (CCDF),Public Health block grants, and WIC (Women, Infants and Children) Nutrition Program.Other FundsOther funds come from a variety of activities and sources such as the wildlife fund, universitytuition and fees, motor pools and general services, state fair, prison enterprises, regulatoryagencies, patient fees, gifts, and grants.Structure of the BudgetBudget CodesOSBM assigns a five-digit number (budget code) for budgetary reporting. This budget codeidentifies major fund types and the responsible entity for reporting. The Office of State Budgetand Management may consult with the Office of the State Controller to determine the properfund type for compliance with accounting practices. OSBM will notify the Office of the State

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 69Controller, the Department of the State Treasurer, and the Department of the State Auditor whena new budget code is authorized.Budget Codes are established for the following fund types:0XXXX Institutional Funds RevenueTo account for those funds maintained outside the State Budgetary system, either in a specialtrust funds with the State Treasurer or in a private bank.1XXXX General FundTo account for all financial transactions appropriated by the General Assembly from Tax andNon-tax Revenue (non-transportation) and all financial transactions not properly accounted forin another fund.2XXXX Special FundsTo account for the proceeds of specific revenue sources or finance specific activities as requiredby law or administration regulation. The code may be established as an interest bearing code ornon-interest bearing code.3XXXX Federal FundsTo account for all monies received directly from federal sources, except certain federal purchaseorders. Funds are first deposited to the federal fund code then transferred to the appropriateoperating code.4XXXX Capital Project FundsTo account for the receipt and disbursement of monies used for the acquisition of capitalfacilities.5XXXX Enterprise FundsTo account for the financing of services to the general public where all or most of the costinvolved is paid in the form of charges by the users of such services.6XXXX Trust and Agency FundsTo account for assets held by a governmental unit as trustees or agent for individuals, privateorganizations, and other governmental units. The code may be established as an interest bearingcode or non-interest bearing code.7XXXX Service FundsTo account for the administration and financing of goods and services furnished by a designatedagency of a governmental unit to other departments, generally of the same governmental unit.8XXXX Highway FundsTo account for the proceeds of highway fuel taxes and highway use taxes and the disbursementin accordance with the applicable law.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 709XXXX Debt Service FundTo account for the payment of principal and interest currently due on bonds.Fund (Purpose) NumberThe fund/purpose is the first four positions of the center number. The fund/purpose describes anorganizational or operating unit for budget presentation and reporting.Accounts NumbersThe account number describes the purpose of an expenditure, the type of revenues received, andthe balance sheet accounts required for Generally Accepted Accounting Practices (GAAP).Expenditure AccountsThe following major account groups for expenditure/object of expenditure/line item (53 XXXX)are recognized:• 1XXX - 21XX: personal services (salaries and benefits), contracted services• 22XX - 29XX: purchased services• 3XXX: current obligations, services (travel, repairs and maintenance), and supplies• 4XXX: fixed charges and other expenses (service and maintenance contracts) property,plant, and equipment• 5XXX: other expenses and adjustments• 6XXX: contracts, grants, subsidies, state aid and allocations, aid and public assistance• 7XXX: reserves• 8XXX: transfers (intra and inter), refunds, and non-operating intra-governmentaltransactionsRevenue AccountsThe following major accounts for revenue/object of receipt/line item (43 XXXX) are recognized:• 1XXX: tax revenues• 2XXX: grants (federal grants/appropriations, county, state provider match)• 3XXX: investment income (interest)• 4XXX: sales, service and rentals

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 71• 5XXX: fees, licenses, and fines• 6XXX: contributions and donations• 7XXX: miscellaneous• 8XXX: intra-governmental transactionsAuthorizations for Budget AdjustmentsGeneral Statute 143 places legal restrictions on the revision of departmental budgets. When thebudget is certified on Form BD 307, the agency must set up a certified and an identicalauthorized budget.Budget Revision ProcessBudget revisions (BD 606) are submitted to OSBM through the automated Budget RevisionSystem (BRS) developed by OSBM. Agencies must use this system to process any revisions totheir certified or authorized budgets. Any agency that does not have access to the automatedsystem must consult with the OSBM budget analyst assigned to their agency. The process andprocedures necessary to utilize the budget revision system have been incorporated into anoperator’s manual developed by OSBM and is available online at the OSBM website. Anyquestions regarding this manual should be addressed to OSBM’s Applications Analyst ProgramSpecialist at (919) 733-7061. OSBM reviews and approves budget revisions that require anapproval level outside the agency.Requests by agencies to OSBM for budget revision approval must include at a minimum thefollowing items:• The effective date, budget revision number, subject of the revision request, budget codenumber, date submitted, fiscal adjustment requested, and a short concise explanationand/or justification. All amounts must be rounded to the next whole dollar.• Sequential numbering, by budget code and biennium, in three series: one beginning110001 for revisions to the certified budget; one beginning 120001 for revisions to theauthorized budget; and one beginning 140001 for budget revisions that can be approvedinternally by the agency. The numbered revisions continue consecutively through thebiennium.• A fund and title for both requirements and receipts.• Be arranged in fund order for requirements and receipts. Within each fund the objects ofexpenditure and object of receipts must be in account number order.• Be able to pass a common-sense test by combining several small changes into a singlerequest.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 72• Adjust requirements, receipts, and appropriations for both years of the biennium whenappropriate.• Provide full and complete explanations and justifications as appropriate.An example of a budget revision (BD 606) is in the “Revising the Authorized Budget” sectionbelow.Changes to Expend All Available FundsBudget revisions are not allowed for the sole purpose of making it possible to expend all receiptsand appropriations.Timeline for Budget Revision ApprovalBudget revisions must be requested and approved prior to any commitment being made thatwould exceed the amount budgeted. OSBM will not consider any commitments as a determinantin the review of budget revisions.Two-Year RevisionsBudget revisions, of a continuing nature, in the first year of a biennium should be prepared forboth years. The two-year revision procedure applies to most position actions, adjustment ofsalary funds (excluding lapsed salaries), and some non-salary revisions.Repeat RevisionsBudget revisions that continue actions from the first year to the second year of a biennium, orcontinuation actions from the second year to a new biennium, are called repeat revisions. Repeatrevisions are of a continuing nature and apply to most position actions, permanent salaryadjustments, and several other expenditure or receipt accounts.NOTE: Departments and agencies should review all revisions annually to insure that revisionsare repeated or included in the development of the continuation budget as needed. See theBudget Revision Manual, the Budget Preparation Manual and Budget Instructions for additionalinformation or for assistance provided through the Budget Preparation System.Revisions for Budgeted CodesBudget revisions must be submitted for all “budgeted codes” and approved by OSBM unlessauthorized under “internal budget revision” procedures. A “budgeted” code is defined as a codethat is presented to the General Assembly in the Governor’s Recommended Budget and certifiedby OSBM.Revisions for “Unbudgeted” CodesBudget requests for “unbudgeted” special fund codes generally do not require OSBM’s approval(excluding establishment of positions). However, departments must continue to:• Maintain budgets.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 73• Process internal BD 606s (type “14”).• Use the monthly report on the budget (BD 701) showing the certified, authorized, andactual expenditure columns.• Submit requests to establish new positions to the Office of State Budget and Managementfor approval.Note: State funds appropriated for continuing grant-in-aid programs may not be changed tooperating line items unless allowed by the law controlling the grant.Revising the Certified BudgetIn order that it reflect the actions of the General Assembly, revisions may be made in thecertified budget of a budget code for the following reasons only:• Distribution to agencies from statewide reserves appropriated by the General Assembly;• Distribution of reserves appropriated to a specific agency by the General Assembly;• Organizational or budget changes directed by the General Assembly but left to theExecutive Branch to carry out;• Budgeting of unanticipated gifts or grants, as these are excluded from the restrictions ofthe law;• Adjustments to existing federal grant programs.Request for revision in the certified budget for any of these reasons must be submitted to OSBMthrough the Budget Revision System. All revisions to the certified budget are identified by thesix-digit budget revision number beginning with “11” and numbered consecutively for eachbudget code beginning July 1 of the first year of each biennium (as 110001, 110002, etc.). Allbudget revisions changing the certified budget also change the authorized budget.Revising the Authorized BudgetThe General Statutes allows the certified budget to be over-expended in some circumstances. Inthese cases, the certified budget is not changed, but the authorized budget is revised through thebudget revision process. Budget revisions are processed to adjust the authorized budget to meetchanging requirements that cannot be shown in the certified budget.Some of the changes in the authorized budget must be approved by OSBM. Those revisions (BD606) are identified with a six-digit number beginning with “12.” Other revisions may be madeby a revision (BD 606) processed internally by the department; these are numbered beginningwith “14.” The distinction between these will be outlined below. Type “12” and “14” revisionschange the authorized budget, but do not change the certified budget.Revision in the authorized budget is permitted when it is:• In a purpose or program (fund) in which the total amount spent is no more than wasappropriated (certified) from all sources for the purpose or program for the fiscal year;

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 74• In a purpose or program, without consultation with the Joint Legislative Commission onGovernmental Operations; and if the over-expenditure of the purpose or program is:• Required by a court, Industrial Commission, or administrative hearing officer’sorder.• Required to respond to an unanticipated disaster such as a fire, hurricane, ortornado.• Required to call out the National Guard.• In a purpose or program, after consultation with the Joint Legislative Commission onGovernmental Operations in accordance with G.S. 120-76(8), and only if:• the over-expenditure is required to continue the purpose or program due tocomplications or changes in circumstances that could not have been foreseenwhen the budget for the fiscal period was enacted.• the scope of the purpose or program is not increased.The consultation is required as follows:• For a purpose or program with a certified budget of up to five million dollars($5,000,000), consultation is required when the authorization of the over-expenditureexceeds ten percent (10%) of the certified budget.• For a purpose or program with a certified budget of from five million dollars up to twentymillion dollars ($5,000,000 - $20,000,000), consultation is required when theauthorization for over-expenditure exceeds five hundred thousand dollars ($500,000) orseven and one-half percent (7.5%) of the certified budget, whichever is greater.• For a purpose or program with a certified budget of twenty million dollars ($20,000,000)or more, consultation is required when the authorization of the over-expenditure exceeds$1,500,000 or five percent (5%) of the certified budget, whichever is greater.• For a purpose or program supported by federal funds or when expenditures are requiredby a court, Industrial Commission, or administrative hearing officer’s order; to respond toan unanticipated disaster such as a fire, hurricane, or tornado; or to call out the NationalGuard.If the Joint Legislative Commission on Governmental Operations does not meet for more thanthirty (30) days, the Director of the Budget may satisfy the requirements to report to or consultwith the Commission by reporting to or consulting with a joint meeting of the Chairs of theAppropriation Committees of the Senate and the House of Representatives.Some situations in which the authorized budget would be revised, with a type “12” budgetrevision (BD 606), would be:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 75• Repeating a prior year revision in the authorized budget.• Budgeting additional receipts (other than unanticipated gifts and grants) to continue thesame level of service but not to increase the scope of a program.• Other changes between and within funds approved by the Office of State Budget andManagement.An example of an adjustment between funds which must meet one of the criteria listed above toreceive approval is as follows:State of North CarolinaDENRBD 606 NO. 12 XXXXTITLE Code 14200Submitted: 7/24/02 Approved: 7/26/02 Fiscal Year 2002-03StatusREQUIREMENTS Increase DecreaseGeological Survey1620-3110 General Office Supplies $500Land Quality1630-3720 Educational Supplies $500 ____TOTAL REQUIREMENTS $ 0 $ 0Internal budget revisionsAgencies may make changes within the authorized budget of each fund/purpose between andamong expenditure account object classes 22XX to 5XXX without approval of OSBM. Theserevisions are assigned to a series beginning 140001 and continue sequentially through thebiennium. This authorization does not include changes between appropriation supported andreceipt supported line items or increases in budgeted receipts in the general fund or “budgeted”codes. All internal adjustments must be made by an internal authorization document (type “14”BD 606) maintained for accounting and auditing purposes. The Budget Revision System mustbe used for internal revisions. Revisions must be made prior to line items going into overdraft.Actual expenditures are to be recorded and reported according to account numbers designated inthe North Carolina Accounting System at the appropriate expenditure account number level.Actual receipts are to be recorded and reported according to account numbers designated in theNorth Carolina Accounting System at the appropriate receipt account number level.An example of a revision within a fund that may be processed internally is as follows:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 76State of North CarolinaDENRBD 606 NO. 14 XXXXTITLE Code 14200Submitted: 7/24/02 Approved: 7/26/02 Fiscal Year 2002-03StatusREQUIREMENTS Increase DecreaseGeological Survey1620-53 2840 Postage, Freight and Deliveries $5001620-53 3190 Other Administrative Supplies ____ $500TOTAL REQUIREMENTS $-0- $-0-Internal Budget Revisions within Expenditure Account Numbers 1XXX, 522X and 524XIn addition, within the 1XXX, 522X, and 524X expenditure account number classification,agencies are authorized within a fund/purpose to over-expend the certified line items listedbelow without prior approval of OSBM (type “14” BD 606) provided:1) sufficient funds are available on an annual basis in these object classifications in theentire budget code; and2) general or highway funds are not directly or indirectly used to pay for receipt-supportedactivity requirements. Agencies are also authorized to move lapsed salary funds into thefollowing line items through a type “14” BD 606.The certified line items are:o Longevity Payo Social Security Contributionso Retirement Contributionso Medical Insurance Contributionso Worker’s Compensation Paymentso Unemployment Compensation Paymentso Overtime Payo Shift Premium Payo Employee Awardso Medical Claims Paymento Holiday Premium Payo Call Back/Standby Premiumso Long Term Disability Paymentso Accumulated Annual LeaveLapsed Salary Revisions

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 77Lapsed salary is the dollar amount not expended during the period in which a position is vacant.While internal budget revisions are authorized for those uses of lapsed salary funds listed above,others require the prior approval of OSBM (type “12” BD 606). Provided that the scope of theprogram is not increased, and subject to the same conditions as above, a type “12” BD 606 maybe used to move lapsed salary within a budget code:• salary-related expenditures not listed above, including temporary salaries• board per diem• employee moving expenses• tort claims• contracted personal services• expenditures necessary to continue a program because of unforeseen eventsWhere lapsed salary funds are budgeted for contractual services, the following restrictions apply:• The contract is for temporary services or special project services.• The term of the contract does not extend beyond the fiscal year.• The contract does not impose obligations on the State after the end of the fiscal year.• The total of all expenditures for contracted personal services approved in a fund/purposefor a fiscal year does not exceed the greater of $500,000 or 10% of the lapsed salaryfunds in the fund/purpose for the fiscal year.Lapsed salaries, fringe benefits, and other non-salary funds in the 1XXX expenditure accountnumber class may not be used for the following:• establishing new positions.• providing salary increases.• increasing the 2170 expenditure account number (administrative services) other than fortemporary employment agencies.• increasing line items in the 218X expenditure account number classification.• supporting any expenditures outside of the 1XXX-21XX expenditure account numbers.Except as:• required by a court, Industrial Commission, or administrative hearings officer’s order oraward.• necessary to respond to an unanticipated disaster such as a fire, hurricane, or tornado.• required to call out the National Guard.• allowed by Session Law 2002-126, section 2.2(q) for FY 2002-2003.An example of a revision using lapsed salary funds is as follows:State of North CarolinaDENRBD 606 NO. 12 XXXX

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 78TITLE Code 14200Submitted: 7/24/02 Approved: 7/26/02 Fiscal Year 2002-03REQUIREMENTS: Increase DecreaseForestry1250-53 1631 Workers’ Compensation “Medical Payments” $51,803North Carolina Zoo1760-53 1211 SPA Regular Salaries & Wages-Appropriated _______ $51,803TOTAL REQUIREMENTS $ -0- $ -0-Salary Reserve RevisionsSalary Reserve is the dollar amount created when a position is downgraded or filled at a salaryamount less than the amount at which it was previously budgeted (exclusive of hiring rate).Salary reserve can be used to increase the salary of other positions due to promotion and/orreclassification or filling a position at a salary higher than that at which the position was vacated.In certain cases, and with the approval of the OSBM, it can also be used to create new positions.Salary reserve may be budgeted for on-going salary requirements, those of a recurring nature,such as increasing the salary of other positions due to promotion/or reclassification or filling aposition at a salary step higher than that at which the position was vacated.OSBM has delegated the authority to state agencies to use salary reserve, for the purposesoutlined above, within a given fund/purpose without prior approval by State Budget. Salaryreserve may be transferred from one fund/purpose to another only with prior approval of OSBM(Type 12 BD 606).Transfer of salary reserve is allowed only to permanent salary lines of like funding source (i.e.general fund, receipts or highway fund).Salary Control SystemThe Salary Control System is an on-line system with all data maintained on the state mainframeand available to all state departments. Each department enters the personnel and budgetinformation needed by OSBM according to the procedures listed in the Salary Control Systemmanual. The system has two functions: to prevent overspending salary line items on an annualbasis and to show the detail transactions necessary to balance one Recommended Budget withthe previous one. The transactions start in July and continue through June. There is a separateaccount for each fund/object/year and optionally for sub-accounts such as RCC’s.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 79Systems support and training are provided by the applications analyst, and policy questions areanswered by the salary control analyst. The Salary Control System manual is available on theOSBM website and is updated as procedures and/or programs change.Merit Salary Increment FundsUse of merit salary increment funds is restricted to salary line items to fund authorized meritincreases only.Establishing a PositionWhen a budget revision includes the request to establish a new position, the identifyinginformation for positions on the budget revision must be entered by each position and in thespecial field set up for this purpose on the Budget Revision System (BRS). This information isthe fund number, expenditure account number, classification, 15-digit position number, annualsalary, grade number, scheme number, and full time equivalent. See the Budget RevisionSystem manual.Position ControlMaintaining position control over salaries and salary reserve and maintaining an accuratenumber of positions is the responsibility of each individual agency. It is the responsibility ofOSBM to monitor fiscal control over salaries and wages throughout state government, to monitorthe Salary Control System (SCS) and Personnel Management Information System (PMIS),record the establishment of new positions, reconcile certifications and assist agencies and OSBManalysts in reconciling position counts and budgeted salaries, and to insure that each positionestablished has sufficient funds budgeted to support it on an annual basis.Over-Realized ReceiptsDepartments and institutions may submit to OSBM a request (type “12” BD 606) to useadditional receipts above those certified in general and highway fund codes if they are necessaryto maintain the anticipated level of services approved by the General Assembly. If the additionalreceipts are not for the above purpose, the general or highway fund appropriation must bereduced through the allotment process. Unanticipated gifts and grants for specific purposes areexcluded from this provision and should be budgeted by use of a type “11” budget revision.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 80Here is an example of a revision to budget over-realized receipts:State of North CarolinaBD 606 NO. 12 XXXXDENRTITLE Code 14200Submitted: 7/24/02 Approved: 7/26/02 Fiscal Year 2002-03REQUIREMENTS Increase DecreaseWater Quality Control1340-53 8101 Inter-Departmental Transfer $6,651TOTAL REQUIREMENTS $6,651Water Quality Control1340-43 5500046 Fish Restock Fee $6,651TOTAL RECEIPTS $6,651Receipts of Departments and InstitutionsReceipts of departments and institutions, collected by and spent by agencies, are included in thecertified and/or authorized budgets of the agencies.The total requirements of each budget code are composed of receipts and state appropriationsfrom the general fund or the highway fund.When it is realized that receipts are declining, state departments and institutions must consultwith OSBM to revise the total requirements of the budget before making commitments thatcould exceed the availability of funds.After making any necessary adjustments, the “adjusted” budget becomes the base budget fromwhich quarterly allotments of funds to departments and institutions are made.Agencies should transfer receipts from civil fines, penalties and forfeitures collected by stateagencies to OSBM.Refund of ExpendituresA refund of an expenditure is any funds returned to the state in the same year as the originalpayment was made due to an overpayment or because goods were returned to the vendor.Refunds of expenditures are not receipts, but are a decrease of expenditures and should behandled in accordance with policies established by the Office of the State Controller.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 81Sales to students, employees, or patients are not considered refunds of expenditures, but areshown as receipts.It may be necessary to revise the budget, both in requirements and estimated receipts, to properlyreflect these transactions.Refund of ReceiptsA refund of receipt occurs when the state disburses funds to an entity from which the funds wereoriginally received and both transactions occur in the same state fiscal year. Refunds of receiptsshould not be handled as expenditures but rather as a decrease of receipts in accordance withpolicies established by the Office of the State Controller.Establishment of a Budget Code/CenterEstablishment of a Budget CodeA budget is established by authorization of the General Assembly, authorization of OSBMand/or by grant awards from federal, local, state, or private agencies. If a new budget code or acenter number within an existing budget code is required to establish a budget, the OSBM inconjunction with the Office of the State Controller (OSC) and the Department of the StateTreasurer must authorize and validate the budget code, center (fund) numbers and titles.ProceduresThe department, institution, or agency should submit a letter and supporting documentation torequest a new budget code to the OSBM prior to/or in conjunction with the establishment of theCenter and Title Form. OSBM will review the request for the code and supportingdocumentation and may consult with the OSC to determine the proper fund type for compliancewith budgetary and accounting practices. A letter of authorization will be issued by the OSBMto notify the OSC, the Department of the State Treasurer, and the Department of the StateAuditor when a new budget code is authorized.The request for a new code and supporting documentation should be submitted directly to thebudget analyst assigned to your agency. A copy of the General Statute requirements, AttorneyGeneral opinion, court directive, federal guidelines for accounting documentation for interestbearing, or other requirements of the code should be attached. The agency should also includethe proposed budget code number in the request.OSBM will establish the budget codes with the following designations:Budgeted or UnbudgetedThe "budgeted" designation requires the agency to submit all budget forms and documentationunder policies established by the OSBM. The budget must be submitted to the GeneralAssembly for approval as part of the Governors’ Recommended Budget. A certified budget (BD307) will be issued as authorized by the General Assembly.Interest Bearing or Non-interest Bearing

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 82The supporting documentation will be reviewed to determine if the code will be established as aninterest bearing code.Policy - Establishment of a Center (Fund) and TitleThe Establishment of a Center (Fund) and Title Form must be used for the official establishmentof any new or transferred centers in a new code or in an existing budget code. This requirescompletion of the form for all budget codes and centers including capital improvement budgetcodes and federal fund budget codes. The request must be submitted by all departments,institutions, or agencies and approved under policies established by both the OSBM and theOSC. The request to establish a new center or transfer a center should be submitted to theOSBM prior to the submission of the budget revision to establish the budget or transfer thebudget of a center. Authorization of the center number or the transfer of a center on this formdoes NOT imply approval of the budget revision (BD 606).Procedures:Instructions for the FormThis form should be used by all departments, institutions, or agencies to establish the following:• centers for a new code.• new centers for an existing code.• new centers for funds in a center of another code to be transferred to an existing or newcode.The form is to be completed for all codes and centers, including capital improvement and federalfund codes in accordance with this policy.Complete all information outlined in the procedures on the Establish a New Center (Fund)Number and Title Form. The request should be emailed directly to the OSBM budget analystassigned to your department prior to the submission of the budget revision that will establishfunds or transfers funds. Authorization of the center number does not imply approval of thebudget revision. The budget analyst will review the request. OSBM will either email the centerrequest to OSC for review and approval or deny the request and return it to the department,institution, or agency. The department should allow a minimum of two weeks for an averageapproval process.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 83Establish a New Center (Fund) and Title1 Department Name Request Number F2 Effective Date3Budget Code InformationComplete Title of Code4 Number BPS/NCAS Title5 NCAS Region Department/Division Number Budgeted Code Yes No New Code Yes NoCenter (Fund) Information -This page may be repeated for additional Center Numbers6 Center Number Center Title7 Company Number GASB NumberCenter Number Center TitleCompany NumberGASB NumberCenter Number Center TitleCompany NumberGASB NumberCenter Number Center TitleCompany NumberGASB Number8 /Department Signature/DateOSBM Budget Analyst Signature/Date9 Agency ContactNameE-mail address/ for notification of approvalPhoneOSBM/DateOSC/DateEntered in NCAS By/Date

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 84Page 2 Code Request Number 0 0 F 000010 Justification for Code and/or Center:11 Revenue Source: (Provide a complete description for code and/or each center).12 Expenditure/Accounting Activity: (Provide complete description for code and/or each center)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 85Budget Code InformationLine 1: Indicate the department name.Request number - The first two positions represent the agency number in theNCAS, the third position is “F”, positions four through seven are the sequentialnumber of all requests by agency for the biennium. For example agency number16 has two requests: a new center for code 17001 and a change for 27002. Therequest numbers would be 16F0001 and 16F0002, respectively. (Note:Universities will use the 2nd and 3rd position of the NCAS agency number as thefirst two positions in the request number)Line 2:Line 3:Line 4:Line 5:Indicate the effective date for authorization.Provide the complete descriptive title of the budget code for the request.Provide the five-digit budget code number and the authorized code title. Theofficial title is limited to 30 digits and should be established in a similar format tothe other official code titles as authorized by the OSBM and as validated on theNCAS.Indicate the department’s regional number in NCAS, the department/divisionnumbers and the "budgeted" status of the code. OSBM will designate the"budgeted" status for a new code. Indicate "yes" if this request is for a new codethat has been requested or "no" if the request is for an existing code.Center (Fund) InformationThe Center (Fund) Information section provides a complete list of all new center numbers to beassigned to the requested code or to establish or transfer a center number for an existing code.Line 6:Line 7:Center (Fund) Number: Indicate the first four positions of the requested newcenter.Title: Indicate the title for the new center. Abbreviate as needed, as the title islimited to 24 digits.The title will be validated to both the budget and accounting systems asauthorized.Company Number: Identify the company number in NCAS for the budget code.If a new company numbers is to be assigned by OSC leave this blank and OSCwill assign a new company number.GASB Number: To be completed by OSCLine 8:Signatures by the department. These names are the individuals authorized toapprove center request.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 86Line 9: Agency Contact: Indicate the name, phone number and e-mail address of theindividual at the agency for notification of the approval of the center by the OSC.This box must be completed with email address in order to receive notificationand the approved center request.Line 10:Line 11:Line 12:Line 13:Justification for the center authorization. If this request is for several centernumbers, justifications should be completed for each center requested. Agencymust give a brief and concise justification for each center request. Include theGeneral Statute reference or other authoritative references such as an AttorneyGeneral opinion, court directive, or federal guideline references for accounting inthe justification.Revenue source for the budget center: All revenue sources should be identifiedand described for full evaluation of the type of budget and accounting activity ofthe center. Revenue sources include, but are not limited to, general fundappropriation, highway fund appropriation, transfer from general fund orhighway fund, dedicated revenue, court settlements etc.Indicate the expenditure and accounting activity, which will be authorized for therequested center. Provide a complete description of any expenditure restrictionsor special accounting requirements.Indicate the purpose statement for the requested center (fund) to be established.The purpose statement should include the program impact or result of the center(fund) and those major activities contributing to that impact.If Lines 10 through 13 are not completed with adequate information the requestcannot be processed. This information is pertinent for OSBM and OSC toestablish the new center.Policy - Change in an Existing Center (Fund) and/or TitleThis form should be used by all departments, institutions, or agencies to change a center numberand/or title. The form is to be completed for all centers.Procedures:Instructions for the FormComplete all information outlined in the procedures on the Change in an Existing Fund(Center) Number and/or Titles Form. The request should be emailed directly to the budgetanalyst assigned to your department prior to the submission of the budget revision.Authorization of the center number does not imply approval of the budget revision. The budgetanalyst will review the request. OSMB will either email the request to OSC for review andapproval or deny the request and return it to the department, institution, or agency. Thedepartment should allow a minimum of two weeks for an average approval process.Budget Code Information

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 87Line 1: Indicate the department name.Request number - The first two positions represent the agency number in theNCAS, the third position is “F”, positions four through seven are the sequentialnumber of all requests by agency for the biennium. For example, agency number16 has two requests a new center for code 17001 and a change of center for code27002. The request numbers would be 16F0001 and 16F0002, respectively.(Note: Universities will use the 2nd and 3rd position of the NCAS agencynumber as the first two positions in the request number).Line 2:Line 3:Line 4:Line 5:Indicate the effective date for authorization.Provide the complete descriptive title of the budget code for the request.Provide the five digit budget code number and the authorized code title. Theofficial title is limited to 30 digits.Indicate the department's regional number in NCAS, the department/divisionnumber and the "budgeted" status of the code.Current Authorized Title/NumberLine 6:Line 7:Center (Fund) Number: Indicate the first four positions of the current center.Title: Indicate the title for the current center.Company Number: Identify the company number in NCAS for the budget code.GASB Number: Identify the current GASB number.New Title/Number RequestedLine 8:Line 9:Line 10:Center (Fund) Number: Indicate the first four positions of the requested newcenter.Title: Indicate the title for the new center. Abbreviate as needed, as the title islimited to 24 digits. The title will be validated to both the budget and accountingsystem as authorized.Company Number: Identify the company number in NCAS for the budget code.If a new company number is to be assigned by OSC leave this blank and OSCwill assign a new company number.GASB Number: To be completed by OSC.Justification for the code/center authorization. If this request is for several centernumbers, justifications should be completed for each center requested. Agencymust give a brief and concise justification for center request. Include the GeneralStatute reference or other authoritative references such as, an Attorney General

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 88opinion, court directive, or federal guideline references for accounting in thejustification.Line 11:Line 12:Signatures by the department: These names are the individuals authorized toapprove center request.Agency Contact: Indicate the name, phone number, and e-mail address of theindividual at the agency for notification of the authorization of the center by theOSC. This box must be completed with email address in order to receivenotification and the approved center request.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 891 Department Name Request Number F2 Effective DateBudget Code Information3 Complete Title of Code4 Number BPS/NCAS TitleChange in an Existing Fund (Center) and/or Title5 NCAS Region Department/Division Number Budgeted Code Yes NoCurrent Authorized Title/Number:Center (Fund) Information - This page may be repeated for additional Center Number Changes.6 Center Number Title7 Company Number GASB NumberNew Title/Number Requested:8 Center Number Title9 Company Number GASB Number10 Justification for change:11 / 12Department Signature/DateOBSM Budget Analyst Signature/Date/Agency ContactNameE-mail addressfor notification of approval.PhoneOSBM/DateOSC/DateEntered in NCAS By/Date

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 90Notification of ApprovalThe Office of State Controller will email the OSBM and the individual indicated in the agencycontact area the approved form. This will be the only notification sent by the OSC.Copies of the form will be distributed as follows:Request forms delegated for direct approval by the OSC: The OSC will keep the original requestform and forward copies to the department, institution, agency, and OSBM.All other request forms: Upon approval by OSBM and subsequent approval by OSC, the originalform will be returned to OSBM and a copy of the form will be mailed by OSBM to thedepartment, institution, or agency.Capital Improvement Budget Policies and ProceduresCapital Defined“Capital improvement projects” are defined as renovations, repairs, and major maintenance toexisting facilities, major landscape improvements, new construction, land purchases, one-timemajor equipment purchases, and utility modifications.These projects are accounted for in the capital improvement budget code of a department orinstitution. The establishment of a capital improvement project requires approval of the GeneralAssembly or the Director of the Budget. Sources of funds to support such projects are restricted.It is the policy of OSBM to have requests for capital funds in excess of $100,000 submittedthrough the capital improvement budget process when the Governor (Director of the Budget) ispreparing the biennial budget requests recommended to the General Assembly.The transfer of funds between capital and operating budgets is statutorily prohibited. However,departments are allowed to make expenditures in their operating budget that exceed $100,000 forrepairs, maintenance, equipment purchases, etc., provided proper budget approval has beenobtained. The expenditure of funds from the operating or the capital budget for capitalimprovement projects is subject to laws governing review of plans and specifications, selectionof architects, and public bid for construction projects. Contact the Office of State Constructionfor a copy of the North Carolina Construction Manual.As provided by the General Statutes, specific procedures have been established for requesting,establishing, and otherwise implementing the university system’s capital improvement program.In recognition of these circumstances, the attached instructions accommodate establisheduniversity system procedures and represent a change with regards only to the allotmentprocedures for current operations. Capital improvement projects for the university systems arerequested through the Board of Governors, and capital improvement appropriations are made bythe General Assembly to the Board for allocation to the institutions.Establishment of Capital Improvement ProjectsCapital improvement projects can be funded from several different sources:• The General Fund.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 91• The Highway Fund.• The Reserve for Repairs and Renovations.• Gifts or grants, including federal funds.• Income from the provision of services, such as dormitory receipts, parking receipts,health services receipts, recreation fees, and other sources of income.• Overhead receipts and trust funds.• Insurance Proceeds.• Revenue bonds approved by the General Assembly, with debt service provided fromincome such as dormitory receipts, parking receipts, and other sources of income.• General obligation bonds approved by the General Assembly and a vote of the people,with debt service provided from the General Fund and secured by the full faith and creditof the taxing authority of the State.• Legislative bonds approved by the General Assembly and limited to an amount not toexceed two-thirds of the amount of debt retired during the previous biennium, with debtservice provided from the General Fund and secured by the full faith and credit of thetaxing authority of the State.• Limited obligation bonds approved by the General Assembly without a vote of thepeople, with debt service provided from the General Fund and secured by a securityinterest in the facility financed or other, similar real property.Capital improvement projects are established by:• Direct authorization from the General Assembly.• Action of the Governor as Director of the Budget.Funding of capital improvement projects authorized by the Governor is limited to:• Receipts.• Special funds.• Self-liquidating indebtedness.• Other funds.• Any combination of funds, but not including funds appropriated from the General Fund.These sources of funding are identified in G.S. 143-18.1(c).Budget requests to either the General Assembly, by way of the Governor's recommended budget,or to the Governor between budget preparation periods for authorizing new capital improvementprojects should include:• Description of the project.• Detailed justification of the need.• Explanation of the funding source.• Impact on future operating costs.• Other pertinent data relating to the project.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 92Procedures for requesting a capital improvement project as a part of the Governor'srecommended budget to the General Assembly are outlined in the biennial budget instructions.Prior to the submission of a capital improvement budget request, the agency should secure acompleted approved Cost Estimate (OC 25) form from the State Construction Office. Theapproved Cost Estimate (OC 25) should be submitted with the Capital Improvement request.For university projects, capital improvement requests are submitted, in accordance with biennialbudget instructions from the University Board of Governors, when the project is requested as apart of the Governor's budget recommendation to the General Assembly. The instructions willset forth procedures for submitting a Cost Estimate (OC-25), categorizing projects, and all otherdata pertinent to the needs of the Board, OSBM, and the Office of State Construction inpreparing the Governor's budget recommendations to the General Assembly.The approved Cost Estimate (OC-25) is the project cost estimate as provided by the Office ofState Construction. It details the estimated cost of the design fee, the estimated cost of theindividual construction contracts, the recommended construction contingency, the proposed costof equipment, and the allowance for inflationary increases. The agency completes the CostEstimate (OC-25) and submits it to the Office of State Construction for any adjustments that maybe required to the various elements of the estimated costs. An agency should also attach to theCost Estimate (OC-25) a detailed list of movable equipment that the agency needs to furnish theproposed facility.The list of moveable equipment should contain an estimate of the unit cost of the equipment andthe number of units required. Agencies should use this list in purchasing equipment uponcompletion of the project. Only equipment necessary to make the facility functional should beincluded in this list. This does not include office equipment that should be included in theoperating budget. It is not the intent of a capital improvement appropriation to fund a newprogram, but rather to provide a facility to house an existing program. After the Office of StateConstruction revises the construction estimates and movable equipment list as necessary, anapproved Cost Estimate (OC 25) will be returned to the agency with the final estimated cost ofthe project noted on the form. The approved Cost Estimate (OC 25) and cost estimates should beused when budget requests are made to the OSBM, for submission to the Governor for budgetpreparation and recommendation to the General Assembly, or for the Governor's approval, ifallowed by law.It is important that the approved Cost Estimate (OC 25) be properly documented since the firstallotment will be based on the design fee and any recommended construction contingency asreflected on that form. In some cases, the capital project will not involve a construction contractbut will consist of a one-time major equipment or land purchase. These projects should have asmall miscellaneous contingency to pay for closing costs, recording fees, or any othermiscellaneous charges relating to the project.An agency may desire to use its own personnel for labor in the capital project of someconstruction projects. This process is termed "force account construction" and OSBM has

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 93statutory authority to approve this procedure up to $125,000. The agency must secure a letter ofapproval prior to initiating construction with force account labor. The maximum expenditure of$125,000 includes either the cost of materials and labor or $50,000 for the total cost of labor.Detailed records must be maintained accordingly by the agency.Establishment of Capital Improvement Funds (Forms BD 306 and BD 606)After either the General Assembly or the Governor authorizes a new capital improvementproject, OSBM will notify the department either with:• A Capital Improvement Certification (BD 306).• A letter (Governor’s Authorization)The Capital Improvement Certification (BD 306) is used when a new project is authorized by theGeneral Assembly, and will identify the project, the fiscal scope, and the capital improvementcode. Departments will use the Capital Improvement Certification (BD 306) to enter the projectinto the NCAS with all funds budgeted under Contingency Reserve.For capital projects that have been authorized by the Governor, OSBM will notify the agency byletter.This letter will identify:• Name of the project.• Fiscal scope of the project.• Capital improvement code where the project is to be established.Upon receipt of this notification, the agency is to immediately submit a budget revision (BD606) to establish a budget, as instructed in the letter, with all funds budgeted under ContingencyReserve. The fund or item number will be assigned by the department or by UNC-GeneralAdministration for the member institutions. When the approved budget revision is received bythe department or institution, the project is then entered into the North Carolina AccountingSystem or the institutions accounting records. A budget revision (BD 606) is not required todistribute funds from the Contingency Reserve into proper expenditure lines after design andconstruction contracts have been awarded. This distribution is to be made internally by theagency upon approval of the allotment, but the total is not to exceed the authorized budget asreflected on the approved budget revision (BD 606).Capital Improvement Allotments (BD-303)Capital improvement allotments refer to specific projects that are permanent and do not revert atthe end of a quarter or fiscal year as do current operations allotments. No funds may beexpended for a capital project without an approved allotment. No more than three allotments arerequired for a capital improvement project and these allotments should be submitted inaccordance with the following procedures:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 94• After a budget has been established for a capital project the agency should take thenecessary steps to select a designer. This selection is coordinated with the Office of StateConstruction and the State Building Commission. Once the designer has been approved,the agency should then submit the first allotment for the project. This allotment shouldrequest the entire design fee for the project as approved by the Office of StateConstruction.• Unless the authority to do so has been delegated by law to an agency, after constructionbids are received on a project, the Office of State Construction will review the bids andcertify the low bids of qualified contractors. The Office of State Construction will thenissue a letter to the agency head approving the award of construction contracts. Thisaward letter also details the approved design fee, the construction contingency andavailable funds for movable equipment. Before the letter of award is released, it ispresented to the State Budget Officer for approval of the availability of funds. At thispoint, the agency will initiate the second allotment for the project. This allotment willdistribute into object lines the funds for all construction contracts, the balance of theconstruction contingency and the movable equipment as reflected on the award letter. Acopy of the approved allotment will be returned to the agency. At this point, funds willbe available for expenditure on the construction contracts and movable equipment.Closing-Out Capital Improvement ProjectsAfter final payments have been made for construction, design contracts, and all movableequipment purchases have been completed, the project is ready to be closed. It is theresponsibility of the agency budget officer to review all active capital projects periodically andimmediately close those that are complete. The procedures to be followed in closing a projectare outlined as follows:• Projects funded via direct appropriation from the General Assembly.• The agency will move any remaining balances to a line item entitled “Transfer toGeneral Fund.”• Once the funds have been moved to the transfer line, the agency is to submit anallotment for the Transfer to General Fund. Upon receipt of the approvedallotment, a check is issued payable to the State Treasurer and submitted to theState Controller.• Projects funded via transfer from the Reserve for Repairs and Renovations:• If a balance is shown on the monthly report in the unexpended balance ofallotments account for the completed project, the agency will submit an allotmentthat will revert the whole dollars of any remaining balance to an unallotted status.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 95• Once the whole dollars have been unallotted, a BD-606 is submitted by theagency reducing the budget by an amount equal to the whole dollars by Transferto the Reserve for Repairs and Renovations (Code 4XX02).• The agency will transfer the remaining cents to a line item entitled “Transfer toState Treasurer” where the funds will be allotted and a check will be issuedpayable to the State Treasurer and submitted to the State Controller.• Projects funded via self-liquidating sources:• If a balance is shown on the monthly report in the unexpended balance ofallotments account for the completed project, an allotment should be submittedreverting the balance to an unallotted status.• After the project balance is reverted to the unallotted status, a BD-606 is to besubmitted reducing the budget to an amount equal to actual expenditures with acorresponding reduction in the receipt line-item.• If the receipts have previously been deposited, a refund of receipts should becompleted transferring the receipt back to its original source.Authorization of Code/Center Number and TitleThe State Controller will validate the authorized code/center(s) numbers to the North CarolinaAccounting system (NCAS). The request to establish a new center number or transfer a centernumber should be submitted to the Office of the State Controller prior to the submission of thebudget revision in order to establish the budget of a center or transfer the budget of a center. Theauthorization of the center number or a center number for a transfer does not imply approval ofthe budget revision (BD 606); the request will require a minimum of two weeks for an averageapproval.Allocation from the Reserve for Repairs and RenovationsG.S. 143-15.3A establishes the Repairs and Renovations Reserve with a continuing source offunding. As required by law, OSBM will present to the Joint Legislative Commission onGovernmental Operations a list for the proposed allocation of these funds. To assist in thiseffort, departments and institutions submit a list of current priorities for repairs and renovationsprojects.The following types of projects are eligible for funding from the Reserve:• Roof repairs and replacements.• Structural repairs.• Repairs and renovations to meet federal and state standards.• Repairs to electrical, plumbing, heating, ventilating and air-conditioning systems.• Improvements to meet requirements of the Americans with Disabilities Act.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 96• Improvements to meet fire safety needs.• Improvements to existing facilities for energy efficiency.• Improvements to remove asbestos, lead paint, and other contaminants, including theremoval and replacement of underground storage tanks.• Improvements and renovations to improve use of existing space.• Historical restoration.• Improvements to roads, walks, drives, and utilities infrastructure.• Drainage and landscape improvements.Departments are required to submit a list of the projects requested by August 1 of each fiscalyear. The projects requested should be listed in priority order. For each project, complete theproject worksheet form and attach a copy of an approved Cost Estimate (OC-25). Copies of costestimates (OC-25) previously prepared during the budget preparation process may be submittedif the estimated cost is still accurate. Projects without an approved cost estimate will not beeligible for funding. Only projects supported from general fund appropriations are eligible forfunding from the Reserve.NOTE: Information concerning (F-CAP) reports, energy efficiency improvements, and impactto the operating budget must be provided on the worksheet before a project can be considered forfunding.The following is an example of the title page for an agency’s submission of projects to be fundedby the Reserve for Repairs and Renovations and the worksheet that needs to be completed foreach individual project.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 97Reserve for Repairs and RenovationsPriority Listing of Requested ProjectsDepartment___________________________Division/Institution___________________PriorityNumber Project Title Amount1 John Q. Public Memorial Building Roof Repairs $500,0002 Street Repair Reserve $250,000Reserve for Repairs and RenovationsWorksheet for Each Project RequestedDepartment____________________________Division/Institution________________________ProjectTitle____________________________________________________________________County of Project Location____________________Total Estimated Project Cost_____________Priority: _____of _____ total projectsContact name/phone number ________________________________________Type of Project: ___Utilities (electrical, plumbing, water, wastewater, telecommunications)___ Asbestos ___ Roof(Check All ___ Structural ___ Roads, Walks, Parking, Drainage, LandscapeThat Apply) ___ Renovation ___ Removal UST or Other Contaminants___ HVAC ___ Energy Efficiency___ Fire Safety ___ OtherWas the allocation mandated by the General Assembly? ( ) YES ( ) NODescription of Project (include short description of type, nature, and extent of work required, theneed for the project, and the expected impact):__________________________________________________________________________________________________________________________________________________________Give the percentage of total project expenditure related to energy efficiency improvements foreach request: _____%Has this facility been inspected by the Office of State Construction’s F-CAP team and was therequested project included in their review? ( ) YES ( ) NO **If yes, please attach aseparate sheet with a summary statement or pertinent pages from the F-CAP team’s report.Has this project been previously planned? ( ) YES ( ) NOGive the estimated completion date of this project, assuming funds will be allocated October 1:______

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 98Impact on OPERATING BUDGET (Please identify, on an annualized basis, any additional costsor savings (reductions) that will result from the completion of this project). Do not includeconstruction costs.Estimated Cost (Savings)First Full Year of OperationStaff (include number)$_______________________Maintenance_______________________Other Operating Costs_______________________Special Equipment/Furnishings not included on OC-25 _______________________Total Requirements$_______________________Less Receipts_______________________Appropriation_______________________Attach a copy of the approved OC-25 (cost estimate), and the certification form, if required, forthis project.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 99Contingency and Emergency Fund Expenditure RequestProcedures Relating to Requests for Contingency and Emergency FundsAll requests from state agencies for funds from the Contingency and Emergency Fund must besubmitted to OSBM. The request, in letter-form, should include pertinent information, i.e.,circumstances that require this expenditure and why current budgeted funds cannot pay for thisexpenditure (G. S. 143-12).Method of Allocation from the Contingency and Emergency FundIf a request needs the approval of the Council of State, then it will be presented by OSBM. Uponreceiving the Council of State’s approval of a request for funds, OSBM notifies the agency. Theagency should submit a budget revision to OSBM for approval showing an increase in totalrequirements and a corresponding increase in appropriation by transfer from the Contingencyand Emergency Fund (Budget Code 19001) in the approved amount.OSBM processes a journal entry and submits it to the Office of State Controller and the StateTreasurer. The entry will be entered into their record detailing the amount to be credited to theagency receiving the allocation and a corresponding decrease in the availability of theContingency and Emergency Fund.Federal Fund Budget Policies and ProceduresAll federal funds received directly from the federal government by any department subject toprovision of the North Carolina Executive Budget Act, shall be initially accounted for in afederal funds budget code (3XXXX) established as part of the uniform chart of accounts of thestate accounting and budgeting system. The funds in the federal fund budget code will betransferred to the appropriate general, special, or other budget codes. All recurring or otherwiseanticipated federal funding shall be fully reflected in these operating codes for the regularbiennial budget request. Any changes or receipts of unanticipated funds during the bienniumshall be processed under policies established by OSBM. All federal funds shall be budgeted andaccounted for in a manner that provides clear and complete information and accountability forboth state and federal fiscal years.Each department receiving federal funds must develop procedures for the internal coordinationand fiscal review of all federal grant applications and formula grant plans. Procedures mustcomply with special provisions or statutes applicable to federal funds.The regulations apply to all those federal funds that must be budgeted by state departments,except for university institutions.Applications for Federal FundsA state department must notify the Governor, through OSBM, when submitting grant requests tofederal organizations when such grants may impose upon the State substantial obligation now orin the future. This notification is not required for continuation project grants and formula grantsthat are included in the department’s certified budget, or for interdepartmental grants involvingthe transfer of funds between agencies within the same department.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 100Requisition and Disbursement of Federal FundsFederal funds received directly from a federal agency shall be initially deposited in a federalfund budget code (3XXXX), either through deposit of a federal check or through the letter orcredit voucher and deposit procedure. Disbursements from a federal fund budget (depository)code may be made only to a general, special, or other operating fund budget code. This may bedone through a check/deposit procedure or through the cash management system electronicfunds transfer system. The program/purpose and account should be noted in the transferdocuments. Regular cash requisitions and disbursement procedures would apply to subsequentoperating fund transfers. Departments should comply with the policies and proceduresestablished for the Cash Management Plan by the Office of the State Controller.Special Reports on Federal FundsOSBM may require information on federal fund grants, expenditures, indirect cost collections,and other areas relative to federal funds. Agencies should maintain records indicating federalcatalog numbers and titles, types or categories of grants, indirect cost rates and budget andexpenditures by state and federal fiscal years, and any other information that would be helpful inmaking requested periodic special reports on federal funds.Cost Allocation/Indirect Cost PolicyIt is the policy of the State of North Carolina to maximize the recovery of direct and indirectcosts for administering and implementing federal grants. All state agencies use a statewideindirect cost plan (SWCAP) and a state information processing services indirect cost plan (SIPS-CAP) to recover the State’s central service costs as allowable per the U.S. Office of Management& Budget (OMB) Circular A-87.The Office of the State Controller prepares and gains approval from the federal government, anddistributes the central service cost plans. Each agency is responsible for integrating these centralservices costs into their costs plans in order that they recover the optimum allowable indirectcosts from their federal grants.Individual cost plans are the responsibility of the agency.An indirect cost proposal(s) must be prepared at least annually in all departments to cover alldivisions and institutions that receive federal funds. All proposals should be reviewed by thechief fiscal officer and agency head to assure that:1. The correct amount of state government’s central services costs is included in theproposal.2. All allowable cost items are included.3. The indirect cost rates are within appropriate ranges and are at a maximum level.Exceptions to the development of a proposal will be granted by OSBM to any department thatcan demonstrate in writing that the costs and procedures required to develop and implement

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 101indirect cost recovery are greater than the benefits derived. Factors that need to be consideredinclude the amount and type of federal grants received, an estimate of the indirect cost rate, andan evaluation of the costs of any necessary accounting changes.A cost allocation plan that directly accounts for overhead costs in recovering administrative costsfrom federal grants may be used instead of an indirect cost rate.Indirect Cost ProposalsEach department or agency should prepare annually an indirect cost proposal unless thecognizant federal agency specifies another time interval. This proposal should be prepared inaccordance with OMB Circular A-21.A copy of the final negotiation agreement between the cognizant federal agency and theinstitution should be available for inspection. A summary explanation of any differencesbetween the proposal and approved rates should accompany the agreement copy.Indirect Cost To Be Included In Federal Grant RequestsThe chief fiscal officer will be responsible for assuring that full indirect costs are claimed oneach federal grant or contract application, except those specifically excluded by the Office ofState Budget and Management. Requests for exemptions should be communicated in writingthrough department fiscal officers. Exemptions to claiming indirect costs in grant applicationswill be considered and granted by OSBM on a case-by-case basis if either of the followingcircumstances can be demonstrated in writing by an agency:• Federal statutory or administrative restrictions or prohibitions of indirect costs claims.• Extraordinary circumstances exist that may jeopardize the institutions' best interest innegotiating for and receiving a federal grant.All exemptions granted will be available for inspection including those cases where indirectcosts are formally foregone in the grant or contract application as a means of meeting costsharing or matching requirements.Budgeting Indirect CostsAll indirect costs (or overhead receipts) should be deposited in an appropriate state budget code,and will be reverted to the general or highway fund unless OSBM grants the spending approval.Budget Procedures for Handling Transfers Between Block GrantsWhere federal block grants allow for the transfer of funds to other block grants, the proceduresfor transferring funds will be as follows:• The need for additional funds must be established by the appropriate departmentsecretary, supported by an analysis of that need and the additional cost associated with it.Based upon the need for additional funds, the secretary will request of the Governor, asDirector of the Budget, the transfer of funds from other block grants.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 102• Department secretaries will determine and report to the Governor if excess funds areavailable for transfer to other block grants. An analysis should accompany the reportexplaining why excess funds are available and why other related programs within theblock grant do no require additional funds.• The Governor will determine the need for the transfer of funds between block grantsbased on reports of additional needs and reports of excess funds.Appropriate budget procedures will be used to transfer the funds within a department or betweendepartments.Intra State and Non-state FundsAny department subject to the provisions of the North Carolina Executive Budget Act receivingfunds directly from a state grant from another division or department or from non-state fundingwill budget those funds to the appropriate general, special, or other funds budget code. Allrecurring or otherwise anticipated funding shall be fully reflected in these operating codes for theregular biennial budget. Any changes or receipts of unanticipated funds during the bienniumshall be processed through the budget revision (BD 606) process and comply with applicablelaws pertaining to the budgeting of unanticipated receipts. All funds shall be budgeted andaccounted for in a manner that will provide clear and complete information and accountability ona state fiscal year basis.Applications for Intrastate and Non-state FundsState departments must notify the Governor, through OSBM, when submitting grant requests tofederal organizations when such grants may impose upon the State a substantial obligation nowor in the future. This notification is not required for continuation project grants and formulagrants that are included in the department’s certified budget, or for interdepartmental grantsinvolving the transfer of funds between agencies within the same department.Indirect CostsProcedures described for federal funds are applicable for intrastate and non-state funds that areeligible for indirect cost.Disbursement of Special AppropriationsSpecial Appropriation DefinitionSpecial appropriations are funds appropriated from the General Fund by the General Assemblyto supplement the budgets of local governments and nonprofit corporations for regional andstatewide programs in the areas of human services, education, cultural activities, fire protection,community development, and economic development. Funds are either appropriated from thestate’s General Fund directly to the non-state agency for the purpose of transfers to the non-stateagency or appropriated to a state agency for transfer to a non-state agency. If the appropriationis a direct appropriation, the funds are budgeted as (certified) in the Special AppropriationsReserve in the Office of State Budget and Management. If the appropriation is made to a stateagency, funds are budgeted (certified) in that agency’s operating budget code.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 103Special Appropriations Letter to RecipientAfter the appropriation is made, a letter should be sent by the agency in which funds arebudgeted to the recipient organization stating that the General Assembly has appropriated fundsto the organization and the purpose for which the funds are to be expended. Specialappropriations can only be expended for the authorized projects and purposes specified in theappropriating legislation.Request of Payment of Appropriation FormIncluded with the letter to the recipient organizations should be a “Request for Payment ofAppropriation” form which must be filled out completely and notarized by the recipientorganization (see example). The form should specify the recipient, amount, and purpose of theappropriation. Any matching requirements or other restrictions imposed by the GeneralAssembly should also be specified. The following additional information should be attached tothe “Request for Payment of Appropriations” form:• Charter• By-laws• List of board members and• Tax-exemption letters.Upon return of the requested information and successful review by the appropriate stateagencies, disbursements can be made. Before disbursement is made, OSBM may requirerecipients of special appropriations to supply information demonstrating that the recipient iscapable of managing funds in accordance with law and has established adequate financialprocedures and controls. If, during an agency’s review of a recipient, the agency needsassistance in procuring additional information from the recipient, the state agency shouldimmediately contact their OSBM budget analyst.Below is an example of this form:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 104OSBM – 7/03REQUEST FOR PAYMENT OF APPROPRIATION(S) FROM NORTH CAROLINAGENERAL FUNDAllocation $Purpose:Part A. TO BE COMPLETED BY ALL RECIPIENTS1. Contact’s Name _____________________________ Telephone____________________2. Contact’s Position in Organization ______________________________________________3. Federal Identification Number __________________4. Kind of Organization: Corporation ____ Trust ____ Partnership ____ Government ____Unincorporated Association _____ Other _____5. Match Required: NO On a _____ to _____ basis.If matching is required, is cash match in hand? Yes _____ No _____If the required match is not in hand, by what date and from what source does theorganization expect to have the cash match?Part B. TO BE COMPLETED BY ALL NON-GOVERNMENTAL RECIPIENTS1. Please enclose the following:a. Articles of Incorporation and by-laws, trust indenture, partnership agreement, etc.b. List of Board of Directors/Trustees.c. Letters of tax exempt status from the Internal Revenue Service.d. Notarized Policy addressing conflicts of interest.Part C. TO BE COMPLETED BY ALL RECIPIENTS. FORM MUST BE NOTARIZED____________________________________Signature of individual making request_________________________________Notary Public (official seal)_________________________________Date Notarized

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 105Conflict of Interest Statement RequirementsSpecial appropriations recipients must file a notarized copy of the organization’s policyaddressing conflicts of interest when requesting funds. For additional information see 1999Session Laws, Chapter 237, Section 7.5.Special Appropriations - DisbursementsPursuant to G.S. 143-26(b) and the State’s Cash Management Plan, the Director of the Budgethas discretion to disburse annual special appropriations totaling more than $100,000 on aquarterly or monthly basis. Annual special appropriations of $100,000 or less shall be paid in asingle payment unless provided otherwise by State or federal law.Special Appropriations Reporting to the State AuditorPursuant to G.S. 143-6.1, a state agency that disburses a special appropriation to a non-stateagency must identify the recipient to the State Auditor. Recipient organizations that receive, use,or expend between $15,000 and $300,000 in state funds annually must file annually a swornaccounting of receipts and expenditures with the state agency that disbursed the funds. Eachstate agency should develop a format for these accountings and obtain the State Auditor’sapproval of the format. Recipient organizations that receive, use, or expend $300,000 or more inState funds annually must file annually a financial statement in the form and in the scheduleprescribed by the State Auditor with the State Auditor.Special Appropriations Subject to Matching RequirementsSpecial appropriations subject to a matching requirement should be disbursed and expended inaccordance with G.S. 143-31.4, non-state match restrictions.Letter of DisbursementA letter of disbursement should accompany each check sent to a recipient organization. Theletter of disbursement should outline all reporting and spending requirements associated with thespecial appropriation.Issuance of Warrants RequirementsPursuant to G.S. 143-3.2(a), all warrants issued for non-state entities shall be delivered by theappropriate agency to the entity’s legally designated recipient by United States mail or itsequivalent, including electronic funds transfer.Administrative Procedure ActProcedures for Fiscal NotesAdministrative Procedure Act--Permanent Rule Providing for the Expenditure or Distribution ofState Funds and Local Funds and Substantial Economic Impact.Note: Copies of these procedures and fiscal note form (OSBM 4 Revised) can be downloadedfrom the Internet at the following address: http://www.osbm.state.nc.us/osbm/econ.html.Purpose

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 106The Administrative Procedure Act, Chapter 150B of the General Statutes, establishes basicprocedural requirements for the adoption, amendment, or repeal of permanent administrativerules. Compliance with the following procedures will satisfy the minimum requirements ofChapter 150B and the policies of the Director of the Budget.When developing fiscal notes, keep in mind that the Governor’s Office, the General Assembly,and affected public and private parties are the intended audiences for this information. Fiscalnotes need to be concise, clear, and should explain any technical jargon in layman’s terms.DefinitionsThe following definitions apply to rules contained in this section:• “Agency" means any institution, board, commission, bureau, department, division,council, or officer of the state, but does not include any agency in the legislature orjudicial branch of state or local government. (See G.S. 150B-2(1a)) for furtherdescription).• "Rule" means each agency regulation, standard, or statement of general applicability thatimplements or interprets laws enacted by the General Assembly or Congress, or amendsor repeals a prior rule. Agencies administering federal grants or other programsinvolving regulations or requirements established by agencies other than the expendingdepartment are advised to consider adoption by reference, in establishing agencyadministrative procedures. (See G. S. 150B-2(8a) for further clarification).• "State funds" are any and all moneys appropriated by the General Assembly of NorthCarolina, or moneys collected by or for the State, or any agency thereof, pursuant to theauthority granted in any of its laws (G. S. 143-1).• "Local funds" are receipts from nonfederal and non-state governmental units and publicinterest organizations including county and city funds, third party matching funds, and inkindcontributions.• "Fiscal note" means a realistic five-year estimate of a proposed rule change’s impact onthe following:• The expenditures or distribution of state funds subject to the Executive BudgetAct.• The expenditures or revenues of a unit of local government.• All persons affected within the state totaling at least $5,000,000 over a 12-monthperiod (substantial economic impact).• "Responsible agency fiscal officer" is the person designated by the department to certifythat the agency has prepared an accurate impact certification or fiscal note.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 107• "Substantial Economic Impact" means an aggregate financial impact on all personsaffected of at least five million dollars ($5,000,000) in a 12-month period.• "Person" means any natural person, partnership, corporation, body politic,unincorporated association, organization, or society that may sue or be sued under acommon name.Agency Submission to the Office of State Budget and ManagementProcedures - State and Local Fiscal Notes, Substantial Economic Impact Fiscal NotesBefore publishing the text of a permanent rule change that affects state funds, local funds, or theprivate sector (See G.S. 150B-21.4 for further clarification), an agency should submit thefollowing items to the Economic Analysis Section in OSBM:• A copy of the proposed rule.• A fiscal note.• Any spreadsheets or formulas used in calculations.• A citation to the federal law requiring or pertaining to the proposed rule, if applicable.General Guidelines to Follow in Preparing Fiscal Notes• Include estimates of additional costs related to the change (increase or decrease) in thenumber of state, local government, and private sector parties that will be affected orserved.• Include inflationary increases as allowed in the preparation of the biennial state budget(see the current Budget Preparation Instructions).• Include additional capital costs (including leases) along with costs of special equipmentand related costs.• Include operating costs of new facilities to be completed in the five-year period.• Include the phase-in costs of new programs. Specifically include all ongoing rulecompliance and enforcement costs incurred by state or local government organizationsover a five-year period.• Include adjustments for one-time costs in one specific year. Specifically include anyone-time expenditures for rule implementation including staff time, expenditures relatedto educate and inform persons affected by the rule change, development of a database,computers, etc..• Include known rate increases in Social Security, retirement, postage, etc.• Exclude anticipated salary increases.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 108Substantial Economic Impact Fiscal NotesIf an agency has determined that a proposed permanent administrative rule change has asubstantial economic impact, it can choose to submit a fiscal note prepared internally to theEconomic Analysis Section in OSBM for review. Alternatively, the agency may request thatOSBM prepare a fiscal note for the proposed permanent rule. If the agency is not sure whether aproposed rule will have a substantial economic impact when implemented, the agency mayrequest that OSBM prepare the fiscal note.OSBM must review a substantial economic impact fiscal note prepared by an agency within 14days and either approve the note or inform the agency in writing of the reasons why the note isbeing denied. After addressing OSBM’s concerns, the agency must re-submit the revised fiscalnote to OSBM. After receiving a written request from an agency, OSBM has 90 days to preparethe substantial economic impact fiscal note. (See G.S. 150B-21.4(b1) for further clarification).Preparing the Fiscal Note form (OSBM 4 Revised)The fiscal note form (OSBM 4 Revised) accompanies the Office of Administrative Hearings’(OAH) “Notice of Text” form when an agency publishes the text of a proposed rule change. Ifthe agency submits more than one rule on the Notice of Text form, the fiscal note must containthe estimated combined fiscal impact of all rules. Following are directions to complete the fiscalnote form.Item I:Item II:Item III:Item IV:Item V:Item VI:Record the name of the agency or division promulgating the rule change(s).Record the general topic or subject area the rule change(s) covers.Identify whether the rule(s) being submitted affects state funds, local funds, theprivate sector, has a substantial economic impact, or has no fiscal impact.If the rule(s) being submitted does not require a fiscal note as outlined in G.S.150B-21.4 (i.e., does not affect state or local funds or does not have a substantialimpact), the agency should attach a brief explanation of how this conclusion wasreached. The agency fiscal officer must then sign Item XII A to certify that nofiscal note is required. No signature from OSBM is needed.Record the increase or decrease in the amount of state funds to be expended or thechange in the distribution of funds by fiscal year and by funding source (state,federal, and other). Any savings to the state should be enclosed in parentheses ( ).Record the increase or decrease in local government expenditures or revenues byfiscal year and source (local, federal, other). Local government revenue decreasesshould be treated as expenditures. Any savings to local governments should beenclosed in parentheses ( ).

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 109Item VII: Record the increase in expenditures or savings that the private sector will realizewhen the rule change(s) is implemented.Item VIII:Item IX:Record the total impact of the rule on state agencies, local governments, and theprivate sector. The totals should represent the absolute value of all fiscal impacts.For instance, the total impact of a rule change(s) that saves the private sector $5million and costs the state $5 million would be $10 million not zero.Complete the following information if the rule change(s) affects state or localfunds:• Methodology. Explain how the amounts are calculated. Cite any datasources that are used in the calculations. Describe any assumptions thatare made in estimating the impact of the rule change. Describe both theunit cost and statewide cost. One example of unit and statewideexpenditures follows:• The statewide cost can be calculated by multiplying the unit costby the number of persons affected – average inspection costs of$500 x 1,000 expected inspection equals a $500,000 totalstatewide cost.• Program Impacts. Explain how the rule change(s) impacts the programfrom a fiscal perspective, such as an increase or decrease in personsserved, duration of service, etc.• Explain if funds are currently budgeted by fund and code number or if abudget revision is needed.Item X:Complete the following information if the rule change(s) has a substantialeconomic impact:• Describe and estimate the number of persons affected by the proposed rulechange. Specifically describe the state agencies, local government units,and private sector parties affected by the rule change. Specify who willbear the costs or expenditures of rule compliance and who will benefitfrom the rule change. Describe the overall number of and types of partiesaffected, and include significant or distinguishing characteristics about theaffected parties (i.e., Does the rule change impact urban or ruralpopulations, coastal or mountain regions, individuals who possess certainsocioeconomic characteristics, elderly or young?). When exact numbers ofthose affected are difficult to determine, high and low ranges areacceptable.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 110• Describe and estimate the type of expenditures/savings that personsaffected by the proposed rule change would have to make to comply withthe rule change. Concentrate on estimating direct expenditures/savingsrealized by affected parties as a result of the rule change over five years.Examples of direct costs include: increases/decreases in license/permitting/user fees and charges, increases/decreases in paperwork costs,additional staff, etc. Indirect impacts are not required in the analysis.Indirect impacts include effects on employment, effects on competition,and other less tangible costs. Agencies should estimate averagecompliance costs. If it is difficult to pinpoint the average compliance cost,agencies should include a high and low range of direct expenditures. Theagency should include both the unit cost and statewide cost in the numberof persons who will be affected as a result of the rule change (e.g., thestatewide cost can be calculated by multiplying the unit cost by thenumber of persons affected---$1,000 inspection fee x 5,500 affectedbusinesses equals a $5,500,000 total statewide cost).• Describe the purpose and benefits of the proposed rule. Describe why therule change is being proposed, the intended effects, and anticipatedchanges in behavior by affected parties. Clearly describe the expectedimprovement in public health, safety, or welfare expected by the rulechange as compared to the status quo.• Methodology. Explain how the amounts are calculated if not previouslydescribed in Item IX. Cite any data sources that are used in thecalculations. Describe any assumptions that are made in estimating theimpact of the rule change. Describe both the unit cost and statewide cost.Item XI:Item XIICheck one of the three boxes listed to identify whether the impact certification orfiscal note have been prepared by the agency, OSBM, or jointly.Required Signatures.• The agency’s fiscal officer signs in box one if the rule change(s) does notrequire a fiscal note as outlined in G.S. 150B-21.4. The agency fiscalofficer also signs in box one if the rule change(s) affects state or localfunds or has a substantial economic impact. The fiscal officer’s signaturecertifies that he believes the estimate is accurate. If the rule change affectsstate funds, the fiscal officer’s signature certifies that state funds are, orwill be, available to cover the cost of implementing the rule(s). If the rulechange(s) affects local funds, the fiscal officer’s signature also certifiesthat local government representatives have been contacted about the fiscalimpact of the proposed rule (See G.S. 150B-21c for further clarification).

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 111• The Director of the Budget signs in the second box if the rule change(s)affects state or local funds. His signature certifies that he believes theestimate is accurate and that state funds are, or will be, available to coverthe cost of implementing the proposed rule change(s). His signature alsocertifies that he has reviewed the rule change(s) impact on localgovernments.• If the rule change has a substantial economic impact, the Director of theBudget signs in the third box once he has reviewed the estimate andbelieves it to be accurate.Procedures for Responding to Agency SubmissionsOSBM shall review all materials received.• If the fiscal note is complete, the Economic Analysis Section will notify the departmentby sending the signed copy of the form to the designated agency contact. The departmentis responsible for submitting the approved fiscal note to OAH for publication in TheNorth Carolina Register.• If additional information is required to evaluate the proposed rule change, OSBM willcontact the agency.• If the estimate on the fiscal note is revised prior to submission to OAH, or if the proposedrule is denied and additional or revised data are requested and prepared for presentation,the fiscal note must be reviewed again by OSBM and a new signature obtained.Summary Procedures For Submitting Fiscal Notes To OSBMThe following procedures are established to submit fiscal notes to OSBM. They correspond withthe revised State Budget Manual guidelines that comply with Executive Order No. 49 and adhereto the policies established in G.S. 150B-21.4.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 112ResponsibilityAgency Fiscal Officer and/orDesignated Agency ContactEconomic Analysis Section inOSBMAgency Fiscal Officer and/orDesignated Agency ContactActionCompletes fiscal note form (OSBM 4 Revised)and attachments needed to support the rule andthe fiscal note. Signs the fiscal note form andforwards to the Economic Analysis Section ofOSBM.Receives signed form (OSBM 4 Revised) andattachments. Reviews and determines ifadditional information is needed. Requestsmore documentation if needed. Approves orrejects the fiscal note. If approved, signs theform, makes a copy of the form, and returns theoriginal and attachments to the agency fiscalofficer or designated contact.Receives approved form (OSBM 4 Revised)and attachments from OSBM. Reviews andforwards to the Office of AdministrativeHearings for publication in The North CarolinaRegister. If requested, prepares additionaldocumentation for OSBM.Office of Administrative Hearings Reviews paperwork and approves forpublication if information is in order and meetsthe requirements of the Office ofAdministrative Hearings. Publishes rule(s).Final fiscal note and documentation forwardedto OSBM for filing.Economic Analysis Section inOSBMMaintains a file series of fiscal notes bydepartment/division/rule citation number.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 113Procedures for Annual ReportDuties of OSBM: Compiling an “Annual Summary of Projected Fiscal impact on LocalGovernments” of rules adopted during the preceding fiscal year according to G.S. 150B-21.28.Note: Copies of these procedures and forms can be downloaded from the Internet at thefollowing address: http://www.osbm.state.nc.us/osbm/econ.html.PurposeG.S. 150B-21.28 directs OSBM to compile an annual summary of the projected fiscal impact onlocal governments of state administrative rules adopted during the preceding fiscal year. OSBMprovides a copy of this report to the Governor, the General Assembly, the North CarolinaAssociation of County Commissioners, and the North Carolina League of Municipalities byMarch 1 of each year.Office of Administrative Hearings Sends Fiscal Notes and Notice of Text forms to OSBMThe Office of Administrative Hearings (OAH) submits agency fiscal notes and theaccompanying Notice of Text forms (OAH-0305) to OSBM after the permanent rules arepublished in The North Carolina Register.Draft Summary Report Preparation by the Office of State Budget and ManagementEach month, a state budget economist will take relevant information from the fiscal notes and“Notice of Text” forms and enter it into a database. During November of each year, the staffeconomist will use the database to prepare a draft summary report that lists all rules agenciesadopted during the preceding fiscal year and the anticipated costs/savings associated with localgovernments’ implementation of the rules.OSBM will send a draft of the summary report to the designated agency rule-making coordinatorfor review and verification by December 1 of each year. If the agency adopted a rule that is notlisted in OSBM’s draft summary report, the rule-making coordinator will need to complete theOSBM 2 form “Annual Summary Report of the Projected Fiscal Impact on Local Governments.”The rule-making coordinator must submit the revised summary report to OSBM no later thanFebruary 1 of each year. If no revisions are needed, the rule-making coordinator must note thison the summary report and return it to OSBM.Procedures for completing OSBM 2 are as follows:Record the name of the department. Record the date that the form was submitted to OSBM.Column 1.Column 2.Column 3.Column 4.Record the name of the division adopting the rule.Record the rule citation number(s) that impact local governments.Briefly describe the rule, in particular the reason it will impact local governments.Record the date the rule was adopted, i.e., the date the agency “took final action”on the rule and submitted it to the Rules Review Commission.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 114Column 5.Column 6.Column 7.Column 8.Column 9.Column 10.Column 11.Column 12.Record the effective date of the rule, i.e., either proposed date or actual.Record the projected total cost/savings to local governments in the first fiscal yearof the rule.Record the projected total cost/savings to local governments in the second fiscalyear of the rule.Record the projected total cost/savings to local governments in the third fiscalyear of the rule.Record the projected total cost/savings to local governments in the fourth fiscalyear of the rule.Record the projected total cost/savings to local governments in the fifth fiscalyear of the rule.Record whether the rule is required by federal law (simply record the federal lawcitation).Record the agency contact that is responsible for the rule and his phone number.NOTE: The projected cost/savings should be taken from Section 4 of OAH-0305 fiscal noteform. All local funds projections represent the agency’s and local government’s best estimate ofthe projected costs/savings to the local units.Final Summary Report Preparation by the Office of State Budget and ManagementOSBM will then revise the information in the database as needed and prepare a final report"Annual Summary of the Projected Fiscal Impact on Local Governments of Rules Adoptedduring the Preceding Fiscal Year." OSBM will provide a copy of the final report to theGovernor, the General Assembly, the North Carolina League of Municipalities, and the NorthCarolina Association of County Commissioners by March 1 of each year. Each department willreceive a copy of the report.Summary Procedures For Preparing The Annual ReportThe following procedures are established to prepare the “Annual Summary Report” incompliance with G.S. 150B-21.28. The form can be found here.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 115ResponsibilityActionOAHOSBMOSBMDepartment/DivisionOSBMOSBMOSBMSends fiscal notes and “Notice of Text” forms to OSBMafter the text of permanent rules are published in the NorthCarolina Register.Inputs relevant information from the fiscal notes and“Notice of Text” forms into a database.Prepares a draft summary report of rules impacting localgovernment budgets and sends to the designated agencyrule-making coordinator for review and edit by December 1of each year.Agency rule-making coordinator reviews summary andnotes corrections. Completes OSBPM 2 for rules notrecorded on summary. Returns edited summary to OSBMby February 1 of each year.Receives report from the department/division and, ifnecessary, revises information in database.Prepares the final report "Annual Summary of the ProjectedImpact on Local Governments of Rules Adopted Duringthe Preceding Fiscal Year.”Submits the final report to the Governor, the GeneralAssembly, the North Carolina League of Municipalities,and the North Carolina Association of CountyCommissioners by March 1 of each year. Submits a copyof the report to the department.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 116Schedule for Anticipated Rule ActionsPurposeG.S. 150B-21.28 directs the Office of State Budget and Management to compile a schedule ofstate administrative rule actions to be proposed in the upcoming fiscal year that will have a fiscalimpact on local government budgets. OSBM is to provide a copy of the schedule to theGovernor, the General Assembly, the North Carolina Association of County Commissioners, andthe North Carolina League of Municipalities by March 1 of each year.Note: Copies of these procedures and forms can be downloaded from the Internet at thefollowing address: http://www.osbm.state.nc.us/osbm/econ.html.Survey of Anticipated Rule ActionsOSBM will send the “Schedule of Anticipated Rule Actions” form (OSBM 3) to eachdepartment’s designated rule-making coordinator by December 1 of each year. The rule-makingcoordinator must list all the rule actions that the agency anticipates proposing in the upcomingfiscal year that will have a fiscal impact on local government budgets. The rule-makingcoordinator must submit completed forms to OSBM no later than February 1 of each year.Agencies that do not plan to propose any rules in the upcoming fiscal year that will impact localgovernment must note this on the form and return it to OSBM.Procedures for completing OSBM 3 form are as follows:• Record the name of the department.• Record the date that the form was submitted to OSBM.Column 1.Column 2.Column 3.Column 4.Column 5.Column 6.Record the name of the division adopting the rule.Record the proposed rule citation number(s) (if known) impacting localgovernments.Briefly describe the rule, in particular the reason it will impact localgovernments.Record the proposed reason for adopting the rule. The reason for theaction can be summarized by recording an AD for a new rule, an A for anexisting rule that is amended, and an R for a rule to be repealed.Record whether the rule is required by federal law (simply record thefederal law citation).Record the name of the contact person who is responsible for the rule andhis phone number.Summary of Anticipated Rule Actions

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 117OSBM will use information from the OSBM 3 forms to compile a list of rules that agenciesanticipate proposing in the upcoming fiscal year that will impact local government budgets.OSBM will send copies of the report to the Governor, the General Assembly, the North CarolinaAssociation of County Commissioners, and the North Carolina League of Municipalities byMarch 1 of each year.Summary Procedures For Preparing The Schedule of Anticipated Rule Actions ProposedIn The Upcoming Fiscal Year That Will Impact Local GovernmentsThe following procedures are established to prepare the “Schedule of Anticipated Rule Actions”in compliance with G.S. 150B-21.28. This form can be found here.ResponsibilityOSBMDepartment/DivisionOSBMActionSends a copy of the “Schedule of Anticipated RuleActions” form (OSBM 3) to the designated agency rulemakingcoordinator by December 1 of each year. Includesinstructions and examples of how to complete the form.The agency rule-making coordinator completes the“Schedule of Anticipated Rule Actions” form (OSBM 3)and submits it to OSBM no later than February 1 of eachyear. The form may be submitted in hard copy orcomputer disk format.Prepares a final report. Submits the final report to theGovernor, the General Assembly, the North CarolinaLeague of Municipalities, and the North CarolinaAssociation of County Commissioners by March 1 ofeach year. Submits a copy of the report to the department.Community Resource Information System (CRIS)An on-line system has been developed for collecting and indexing the information needed topublish this catalog. OSBM maintains this system, known as the Community ResourceInformation System (CRIS). State agencies must provide information about their grant-in-aidprograms for a grant-in-aid catalog that will be compiled and published annually by OSBM(N.C. Session Laws, 1994, Chapter 769, Sec. 8.4).For the purposes of the grant-in-aid catalog, grant-in-aid programs are defined as funds providedby the State of North Carolina in the form of grants, loans, or subsidies to local governments,non-state organizations, or directly to individual recipients for the conduct and administration ofprograms at the local level and for individuals as end-recipient users or beneficiaries. To beincluded in this catalog, the funds identified must be budgeted at the same level, including taxand non-tax revenues, agency receipts, and federal funds.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 118All agencies must submit grant-in-aid program information to CRIS no later than December 31of each fiscal year. If the agency does not administer grant-in-aid programs required under thisproject, please contact OSBM with that information by December 31.Information about CRIS and assistance with the on-line system may be obtained from the CRISCoordinator, in OSBM including registration of contacts, demonstrations, training, andpasswords required for entering data into CRIS. Contacts may be registered on-line bycompleting the registration form available on the Internet athttp://www.cris.state.nc.us/register.html.Calendar of Reporting RequirementsReport Title Submitted by Due Date/Frequency ReferenceMonthly Budget ReportChief FiscalOfficer/ BudgetOfficerTenth working day ofeach monthG. S. 143-6Quarterly AllotmentChief FiscalOfficer/ BudgetOfficerTwenty days beforethe beginning of thequarter under requestG. S. 143-17Any InformationRequested by the Directorof the Budget.All agencies eitherreceiving or askingfor financial aidfrom the state; orreceiving orcollecting fundsunder the authorityof any general lawof the state.On or by Sept 1 ofeven-numbered yearsG. S. 143-6Certification of MailingLists of Each PublicDocumentDepartment Heads On or by July 1 G. S. 143-169.1Survey of FeesChief Fiscal OfficerBudget OfficerSeptember 30, of yearpreceding long sessionG. S. 143-11Duty Station Designation Department Head By second week ofDecemberG. S. 138.6(a)(3)Annual Report ListingCommittees or CouncilsCommittee/Counciland DepartmentHeadsBy March 31

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 119Review of DepartmentForms and ReportsReport on AdministrativeRules that Affect LocalGovernmentAgency OrganizationalChartCommunity ResourceInformation SystemRequest for Repair andRenovations ProjectsDepartment Head Three year cycle G. S. 143-10.7Department Head By March 1 G. S. 150B-21.28Department Head By August 1Department Head By December 31 Session Laws,1994 Ch. 769,s. 8.4Chief Fiscal Officer August 1 G. S. 143-15.3ASummer School Accounting and Reporting Guidelines - HigherEducational InstitutionsAdaptation of Academic Calendar to Fiscal Year For Budget ReportingBecause of the variability in the number, length, and scheduling of individual summer sessions,all of the various summer sessions within a fiscal year, will be determined by the date a sessionends, and will comprise a Summer School for budgetary and reporting purposes.All Full Time Equivalent students for a summer session and all expenditures and revenue for thatsession must be accounted for and reported in the fiscal year in which the session is completed.Under the academic calendar currently in effect at most institutions, the traditional first sessionof a Summer School is completed in the fiscal year just closing and the traditional second sessionof a Summer School is completed shortly after the beginning of a new fiscal year. Using the datea session is completed to determine the fiscal year in which the actual expenditures, receipts andstatistical data are accounted for and reported will result in "split session" accounting andreporting for the traditional Summer School.Budget reports for a fiscal year will reflect the second session of one traditional Summer School(to be completed shortly after a new fiscal year begins) and the first session of the next SummerSchool (to be completed at the close of a fiscal year).Transfer of Advances (Revenue Collections)Any revenue collected at the close of a fiscal year as advanced payment of tuition and fees forthe summer session that begins in a succeeding fiscal year and encumbered expenses to includepayroll must be transferred to the new fiscal year. Institutions must request authority for thetransfer from OSBM on budget revision (BD 606).

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 120UNC Chart of Accounts Memorandum No. 5 and No. 18 contains additional information aboutaccounting for and reporting statistical data, expenditures, and revenue for Summer School.Regulations Regarding Indirect Costs Reimbursement From Federal GrantsMost federal grants allow for reimbursement of administrative overhead costs relative to themanagement and execution of the grant. This allowance is referred to as indirect cost. Stateagencies are responsible for acquiring approved indirect cost proposals, including the approvedrates in their grant applications, and budgeting the indirect cost receipts.Regulations are to cover four stages of the reimbursement process:• The preparation of indirect cost proposals.• The inclusion of indirect costs in application for federal grants.• The budgeting of indirect cost receipts.• The reporting of reimbursements actually received from indirect costs.Indirect Cost ProposalsAn indirect cost proposal should be prepared annually by each constituent institution unless thecognizant federal agency specifies another time interval. This proposal should be prepared inaccordance with OMB Circular A-21.A copy of the final negotiation agreement between the cognizant federal agency and theinstitution should be available for inspection at the institution. A summary explanation of anydifferences between the proposal and approved rates should accompany the agreement copy.Indirect Cost To Be Included In Federal Grant RequestsThe chief fiscal officer will be responsible for assuring that full indirect costs are claimed oneach federal grant or contract application, except those specifically excluded by OSBM.Requests for exemptions should be communicated in writing through department fiscal officers.Exemptions to claiming indirect costs in grant applications will be considered and granted byOSBM on a program-by-program basis if either of the following circumstances can bedemonstrated in writing by the agency:• Federal statutory or administrative restrictions or prohibitions of indirect costs claims.• Extraordinary circumstances exist which may jeopardize the institutions' best interest innegotiating for and receiving a federal grant.All exemptions granted will be available for inspection at the institution including those caseswhere indirect costs are formally foregone in the grant or contract application as a means ofmeeting cost sharing or institutional matching requirements.Reporting RequirementsOSBM may need information on federal fund expenditures, indirect cost collections, and otherareas relative to federal funds. Agencies should maintain records indicating federal catalog

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 121numbers and titles, types or categories of grants, indirect cost rates, budget and expenditureamounts by state and federal fiscal years, and any other information which would be helpful inmaking requested special reports on federal funds.Students Accounts ReceivableInstitutions of higher learning should comply with the policy established by the Office of theState Controller as it related to Student Account Receivable.Maintenance of a Balanced BudgetQuarterly Allotment ProcessDepartments and institution must submit to OSBM each quarter a request for an allotment of theamount estimated to carry on the agency during the ensuing quarter. Allotments may be madeon a more frequent basis as determined by the Director of the Budget.Requests for a quarterly allotment should be made for the general fund and highway fund asdirected by OSBM and submitted to the OSBM not less than twenty (20) days before thebeginning of the quarter covered by the request.An allotment account for each code is set up quarterly on the books of the Office of the StateController. The allotment account serves as the control for the requisition of funds andrepresents the maximum available for the quarter.The current process of monthly allotments will continue until OSBM directs otherwise.Quarterly Allotment Request FormatAllotmentsAllotments are to be submitted reflecting only the Department, Fiscal Period, Budget Code,Estimated Total Requirements, Estimated Receipts, and Appropriation.Revisions to AllotmentDepartments and institutions may submit a request to change the authorized quarterly allotmentto OSBM for approval. All information shown below in the example must be included.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 122ALLOTMENT REVISION REQUESTDEPARTMENTCode:Fiscal Year:Subject:We respecfully request that our Quarterly Allotment for the X Quarter, FY 200X-0X berevised as follows:RevisedPreviousQuarterlyAllotment Revisions AllotmentTotal Requirements $XXX,XXX $ XX,XXX $XXX,XXXLess: Estimated Receipts XX,XXX -0- XX,XXXAllotment (Out of Appropriations) $XXX,XXX XX,XXX $XXX,XXXJustification:ALLOTMENTS - CAPITAL IMPROVEMENT PROJECTSCapital Improvement allotments are for specific projects and do not revert at the end of a quarteror fiscal year as do current operations allotments. No funds may be expended for a capitalproject without an approved allotment. No more than three allotments are required for a capitalimprovement project and these allotments should be submitted in accordance with the followingprocedures:• After a budget has been established for a capital project, the agency should then take thenecessary steps to select a designer. This selection is coordinated with the Office of StateConstruction and the State Building Commission. Once the designer has been approved,the agency should then submit the first allotment for the project. This allotment shouldrequest the entire design fee for the project as approved by the Office of StateConstruction.• Unless the authority to do so has been delegated by law to an agency, after constructionbids are received on a project, the Office of State Construction will review the bids andcertify the low bids of qualified contractors. The Office of State Construction will thenissue a letter to the agency head approving the award of construction contracts. Theaward-letter also details the approved design fee, the construction contingency, andavailable funds for movable equipment. Before the letter of award is released, it ispresented to the State Budget Officer for approval of the availability of funds. At thispoint, the agency will initiate the second allotment for the project. This allotment willdistribute into object lines the funds for all construction contracts, the balance of theconstruction contingency, and the movable equipment as reflected on the award letter. A

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 123copy of the approved allotment will be returned to the agency. Finally, funds will beavailable for expenditure on the construction contracts and movable equipment.Special Fund Budget CodesThe following are policies regarding Special Fund Budget Codes for budget presentationpurposes. Variances from policies may be allowed when, in the opinion of the agency and/orOSBM, it is in the best interest of the Executive and Legislative Branches that a budget code beprinted in the Recommended State Budget.• No Trust Fund Codes (6XXXX) will be printed in the Recommended State Budget.• No Federal Depository Fund Budget Codes (3XXXX) will be printed in theRecommended State Budget.• Special Fund Budget Codes (2XXXX) which are established only to account for moniesappropriated through a general fund or highway fund budget code will not be printed inthe Recommended State Budget.• Any Special Fund Budget Code (2XXXX) that is required by state or federal law, orwhen some special situation dictates, WILL be printed in the Recommended StateBudget.• Internal Service (5XXXX) and Auxiliary Fund Budget Codes (7XXXX) WILL be printedin the Recommended State Budget.• Allotments are not required for Special Fund Budget Codes regardless of how they aretreated for budget presentation purposes. (See Allotment section.)• Type 12XXX budget revisions (and 11XXX if necessary) are required only for thosebudget codes that are certified “budgeted.” Generally, this means only those codesprinted in the Recommended State Budget.• Budget transfers necessary for budget codes not printed in the Recommended StateBudget (“off budget”) will be accomplished by Type 14XXX budget revisions at theagency level.NOTE: The delegation of budget transfers or other fiscal controls under this section by OSBMdoes not provide relief from fiscal responsibilities of the agency dictated under the NorthCarolina Constitution, the Executive Budget Act, or special legislation enacted by the GeneralAssembly. Variances from policies may be allowed when, in the opinion of the agency and/orOSBM, it is in the best interest of the Executive and Legislative Branches that a budget code beprinted in the Recommended State Budget.Monthly Budget Reports

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 124Two complete copies of the June 30 monthly budget reports (see Section 7 – Reporting) arerequired to be submitted to OSBM each fiscal year. OSBM will access budget dataelectronically from the North Carolina Accounting System for review of expenditure andrevenue data as needed. For all budget codes as indicated earlier, some exceptions may benecessary due to individual analyst and agency needs.Monthly Report ReviewsAgencies are expected to balance both the certified and the authorized budget for revenues,appropriations, and cash levels for all reporting periods. Budget analysts will monitor thecomplete Monthly Budget Report to insure compliance with the Executive Budget Act andpolicies of OSBM. Agencies will be notified if differences are found and will be advised ofcorrective action to be taken.Disbursing Accounts with State TreasurerDisbursing accounts are available with the State Treasurer as determined by OSC for institutions,public schools, and certain designated departments.Disbursing accounts have funds credited to them only by the Office of State Controller whenrequested through the Cash Management Control System (refer to Cash Management Manual -Office of the State Controller.)Requisitions for FundsDepartments and institutions on a disbursing account with the State Treasurer have funds madeavailable to them for expenditures by means of requisition of funds through the CashManagement Control System. After the quarterly allotment is received, a requisition for funds issubmitted to OSC (refer to Cash Management Manual - Office of the State Controller.)Agency Procedures for Transferring the Clear Proceeds of Fines, Forfeitures and Penaltiesto the Office of State Budget and ManagementG.S. 115C-457.2: Remittance of moneys to the Fund.“The clear proceeds of all civil penalties and civil forfeitures that are collected by a State agencyand are payable to the County School Fund pursuant to Article IX, Section 7 of the Constitutionshall be remitted to the Office of State Budget and Management by the officer having custody ofthe funds within 10 days after the close of the calendar month in which the revenues werereceived or collected. Notwithstanding any other law, all funds which are civil penalties or civilforfeitures within the meaning of Article IX, Section 7 of the Constitution shall be deposited inthe Civil Penalty and Forfeiture Fund. The clear proceeds of such funds include the full amountof all such penalties and forfeitures collected under authority conferred by the State, diminishedonly by the actual costs of collection, not to exceed ten percent (10%) of the amount collected.”G.S. 115C-457.3: Transfer of funds to the State School Technology Fund.“The Office of State Budget and Management shall transfer funds accruing to the Civil Penaltyand Forfeiture Fund to the State School Technology Fund. These funds shall be allocated tolocal school administrative units on the basis of average daily membership.”

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 125The Cash TransferOn or before 11:00 a.m. on the tenth calendar day of each month, initiate a “Request for Transferof Funds Between Budget Codes” (AK22) to department code 3005 (Budget Code 23005)through the Cash Management Control System (CMCS) in the amount of the clear proceedscertified during the prior month. (Example: During August 1998, your agency certifiescollection of $1,000. Your agency claims $10 to cover the collection cost. On or prior to 11:00a.m. on September 10 th your agency initiates a transfer to OSBM in the amount of $990. Thetransfer is recorded in CMCS as September activity.)NOTE: Fax the “Fines, Penalties, and Forfeitures Deposit Documentation” form to OSBM (919-733-0640) documenting the transfer.The Accounting EntryFor all transfer of fines, forfeitures, and penalties to OSBM, record an operating transfer outusing account number 538030 Fines/Penalties/Forfeitures Transfers in the North CarolinaAccounting System (NCAS).

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 126FISCAL POLICIES AND REGULATIONS INDEXAlcoholic beverages-setups 139 Payment of awards to employees forBudgetary classification of tax onpurchases 131employee suggestion systemPayments of obligations128127Certificate of fees-academicassistance 136Payments of sales tax owed toDepartment of Revenue 131Closing accountsCollection of outstanding debts128134Proceeds from sale of equipmentRefund of local sales and use tax133133DiscountsEncumbering funds127128Repayment of money owed to stateReport on committees and councils134136Establishment of committees 135 Sales and use tax 130Expenditure of funds 139 Separation of sales and tax required 132Imprest cash funds 129 Set-off Debt Collection Act 135Intradepartmental salesLicense fees—academic assistance131136Tax on sales by the State of NorthCarolina 131Membership dues 136 Vending machines 137Net proceeds from sale, lease orrental of land 133Payment of ObligationsThe State of North Carolina operates on a cash basis. State agencies should pay all bills whendue so as to take advantage of discounts offered and so as not to endanger the credit of the state.When bills are not paid within the time specified in the contracts made by the Division ofPurchase and Contract, it becomes increasingly difficult to make favorable contracts for thestate's needs. Early payments should not be made because it is an added cost to the state throughloss of interest on deposited funds. (For additional information refer to the Cash ManagementManual, Office of the State Controller.)DiscountsDiscounts are due to be taken by a certain number of days after goods or materials are receivedin good and proper condition or by a certain number of days after invoices are received ifdetermined to be in the best interest of the state. The level of interest rates should be a majorconsideration. Discounts, if taken, should be taken within the discount period. If discounts aretaken, vendors are entitled to payment within this period. Most state contracts and purchaseinvoices provide for the discount period. These provisions are generally known to the stateagencies.The following will be used as the basis for determining time in connection with discountsoffered:• When final inspection and acceptance of supplies and materials are at the point of origin,time is computed from the date of delivery to the common carrier; or,

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 127• When final inspection and acceptance of supplies and materials are at the destination,time is computed either from date of delivery to the destination, or from date the correctinvoice is received, if such date is later than the date of delivery.Payment of Awards to Employees for Employee Suggestion SystemWhile G.S. 143-340(1) establishes the State Employee Incentive Bonus Program, the programregulations have been developed by the Employee Suggestion System Advisory Committee andare presented in the Suggestion System Policy Manual (Office of State Personnel). The manualcontains the procedures for computation of the employee awards and for the payment of theawards. The agency implementing a suggestion shall be responsible for payment of cash awards.The amount of the award is subject to Social Security tax and federal and state income tax but isnot subject to retirement withholdings.Encumbering FundsPurpose and PolicyAll unencumbered balances of maintenance appropriations shall revert to the State Treasury tothe credit of the general fund or special funds from which the appropriation and/orappropriations were made and/or expended, at the end of each fiscal year; except that capitalexpenditures for the purchase of land, the erection of buildings, new construction or renovationsin progress shall continue in force until the attainment of the object or the completion of thework for which the appropriations are made; except that maintenance appropriations to theGeneral Assembly shall remain available until expended, unless otherwise provided by theLegislative Services Commission.As used in this section, "unencumbered" means not obligated in the form of purchase orders,contracts, renovations in progress or salary commitments.Encumbering Funds for Next Fiscal YearWhere an obligation or commitment has been made in one fiscal year which cannot be concludedor liquidated in that year and funds have been set up in the budget for the succeeding fiscal yearfor expenditures relating to the same class of obligations or commitments, the obligations orcommitments must be paid out of funds budgeted for the succeeding fiscal year; and fundscannot be encumbered in the prior fiscal year to meet any such obligation or commitment.However, where no funds, or insufficient funds, have been set up in the budget for thesucceeding fiscal year for expenditures relating to the same class of obligations or commitments,the Director of the Budget may, in justified cases, permit funds to be encumbered in the year inwhich the obligation originates and the encumbered funds will be transferred into the succeedingfiscal year or biennium for use in liquidating the obligation or commitment.Closing Accounts at End of Fiscal YearLiquidation of ObligationsThe fiscal year ends on June 30th and all obligations should be liquidated by the end of the fiscalyear. State agencies and institutions for the most part maintain their records on a budgetreporting basis. At year end the required adjustments are made to various accounts in order to

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 128accurately state accrued revenues and expenditures. OSBM will issue special memorandumannually designating the specific closing dates.Quarterly allotments provide funds for the payment of salaries and other operating expenses asdue. No commitments can be made that will overdraw the allotment for the quarter or that willoverdraw the budget subhead against which the commitment is made.All state contracts for supplies and materials and equipment are made with definite times forpayments. All invoices must be settled in accordance with the provisions of the contract underwhich the purchases were made.Voucher registers for June should cover payments for all invoices for which the goods have beenreceived, all payrolls and all other obligations that are in order for liquidation during the fiscalyear being closed. Warrants must not be drawn for invoices unless materials/services haveactually been received. Memorandum invoices will not be accepted.ReceiptsAll expendable or on hand receipts will be credited in the State Controller's Cash Managementaccounts and in the State Treasurer's accounts to the allotment account of the fourth quarter forall deposits made up to and including June 30. All amounts due the state and its departments andinstitutions, applicable to the current fiscal year, should be collected by the end of June anddeposited to the credit of the State Treasurer.Deposits of receipts made after June 30 applicable to the fiscal year just closed should berecorded in the accounts to indicate receipt as of June 30.• Mark deposit tickets appropriately to show that they belong to the period ending June 30.• Show on receipts register as of June 30 th (last work day).• Do not record any receipts back into the previous (old) year that do not belong to thatyear.• No receipts that belong to the year just closed should be held out and deposited to thecredit of the new year. The Cash Management Act requires revenues to be depositedimmediately, (the only difference is which day is recorded as the day of receipt - old yearor new year).Imprest Cash FundsDefinitionAn imprest cash fund is a fixed sum of money used for making change in a cash receivingfunction. It is also used to meet emergency payments such as freight and express bills, with laterreimbursement. An imprest cash fund, using budgeted funds, may be established by request ofOSBM. Increases to existing imprest cash funds must also be approved in advance by OSBM.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 129Process of RequestThe request to establish an imprest cash fund should be submitted on a budget revision (BD 606)in the following manner (using line item numbers appropriate to the agency's budget):Requirements Increase Decrease1230-53 5950 Petty/Imprest Cash $100 -0-Estimated Receipts1230-43 7992 Imprest Cash Redeposit $100 -0-After approval by OSBM, a warrant (or check) would be drawn payable to Imprest/Petty Cashand the custodian of the fund and charged to the expenditure line item Imprest/Petty Cash Fund.The warrant would be cashed and the proceeds placed in a drawer (or box appropriate forsafekeeping and use.)In a cashier receipting operation, the fund would be used to make change. Receipts would bestored with the cash funds during the business day. At the end of the day, the receipts would beremoved from the drawer and deposited in the appropriate bank account. The amount remainingin the drawer should be the full amount of the fund (i.e., imprest amount such as $100 inexample).In a petty disbursing operation, due bills are paid from the fund with the paid invoices (withcustomary number of copies) remaining with the fund until reimbursed. At periodic intervals,the fund should be replenished by a warrant (or check) drawn to Imprest/Petty Cash Fund in theamount of specific invoices. The warrant would be charged to appropriate line items determinedby the nature of the invoices. Invoices covered by the warrant would be attached to the file copyof the warrant. The full amount of the fund must at all times remain constant and will thereforeconsist of cash and/or paid invoices for which cash was spent.At the end of the fiscal year, the full cash amount of the fund should be restored to the preestablishedlevel and redeposited to the allotment account by June 30th closing.Reporting on and accounting for imprest cash funds is similar to handling of other items ofexpenditures and receipts.Sales and Use TaxPurposeReference should be made to the General Statutes and the Department of Revenue to determinethe effect of this tax on each agency.Tax on property purchased or used by the stateAll retail purchases of taxable tangible personal property by the State of North Carolina, exceptpurchases by the North Carolina Department of Transportation, are subject to sales and use tax.Purchases of tangible personal property by the Department of Transportation are exempt fromsales and use tax.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 130Tax paid to the vendorThe sales tax is to be paid to the vendor in addition to the purchase price of property when thevendor has a place of business in this state and/or is registered with the Department of Revenuefor sales tax purposes.Tax paid to the Department of RevenueWhen taxable tangible personal property is purchased, used, or consumed by the State, and ifsales tax was not paid to the vendor at time of the purchase of the property, the tax must be paidto the Department of Revenue in accordance with regulations of the Commissioner.Vendors failure to show sales taxIn-State VendorsWhen an in-state vendor fails to show sales tax on his invoice, the tax should be added to amountbilled and included in the payment to the vendor. On the voucher portion of the check orwarrant, the invoice should be listed for the amount billed and the "Sales Tax Added" listed as aseparate item showing the amount of tax added to the payment. The vendor should be informed(by memo attached to check, or otherwise) of the provisions of G.S. 105-164.7.Out-of-State VendorsSales tax on purchases from out-of-state, non-registered vendors must be paid to the Departmentof Revenue by the purchasing agency.Budgetary classification of tax on purchasesSales and use tax is a part of the cost of the property. The tax should be charged to the budgetsubhead to which the cost of the property purchased was charged. This is true whether the tax ispaid to the vendor or to the Department of Revenue.Tax on sales by the State of North CarolinaSales tax is to be added to the sale price of taxable tangible personal property sold at retail by thestate, and the tax is to be collected from the purchaser and remitted to the Department ofRevenue in accordance with regulations of the Commissioner.Intradepartmental SalesA sale by one state department to another department or area, under the same administrativehead as the seller, is not subject to sales tax. These transactions are considered transfers ratherthan sales. However, if sales tax was not paid on the original purchase of the property, theproperty may be subject to use tax as described earlier in the “use tax” section.Sales tax added to the purchase priceG.S. 105-164.7 states that the sales tax is assessed on the consumer and shall be added to the saleprice when sold at retail. In every instance where an agency of the state makes a sale that issubject to the tax, the tax shall be shown separately and added to the sale price of the article.Separation of sales required

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 131General Statute 105-164.24 provides that: "Every retailer shall keep separate records disclosingsales of tangible personal property taxable under this article and sales transactions not taxablebecause exempt under G.S. 105-164.13 or elsewhere excluded from taxation."It is essential that the accounting records show separately taxable sales and exempt sales in orderto facilitate sales tax reporting and providing audible records of transactions.Separation of tax requiredGeneral Statute 105-164.11 provides that: "When the tax collected for any period is in excess ofthe total amount which should have been collected, the total amount collected must be paid overto the Secretary less the compensation to be allowed the retailer as hereinafter set forth."Sales tax collections are to be recorded in a separate receipts line item entitled "Sales Tax--Net."Payment of sales tax collections to the Department of RevenueSales tax collections paid to the Department of Revenue are to be charged (as a refund ofreceipts) to the receipts line item "Sales Tax-Net" and recorded as a disbursement before theclose of the disbursement records for the month in which tax is collected.The Secretary of Revenue's regulations specify that, for most merchants, taxes are due monthlyby the 15th of each month on sales that took place the previous month. Retail merchants withaverage state and local tax remittance of $20,000 or more are required to remit sales taxescollected during the first 15 days of the month by the 25th, and taxes collected during the lasthalf of the month by the 10th of the following month. A late payment penalty and interest isimposed if the tax is paid after the due date.Sales Tax on MealsG.S. 105-164.4 levies and imposes a sales tax upon every person or group, whether public orprivate, who engages in the business of selling tangible personal property at retail. Sales ofmeals or other prepared foods to employees, guests, etc., by state hospitals and other institutionsare subject to retail sales taxes, and such taxes must be collected.However, meals sold or served in dining rooms regularly operated by state educationalinstitutions or student organizations when such meals are served exclusively for students of thatinstitution are not subject to sales taxes. Institutions to which this regulation applies should notassume liability for or pay any sales taxes without first collecting such tax as an addition to theestablished price of the article sold.Sales Tax ExemptionsThe General Statutes provide that sales for resale, and for manufacture and resale, are not subjectto sales tax. Reference should be made to the General Statutes or the Department of Revenue asto exemptions.Refund of Local Sales and Use Tax

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 132G.S. 105-164.14(e) allows a quarterly refund of local sales and use taxes paid by a state agencyon direct purchases of tangible personal property and local sales and use taxes paid indirectly bythe state agencies on building materials, supplies, fixtures, and equipment…subject to theprovisions of the General Statutes. Reference should be made to the General Statutes and theDepartment of Revenue procedures to obtain this refund.Proceeds from the Sale of EquipmentThe following are guidelines and procedures as to the budgeting and handling of receipts fromsale of equipment (office equipment, automobiles, trucks, tractors, etc.). Special procedures aredelineated in G.S. 143-63.1 for the sale of state-owned firearms. G.S. 20-187.2 also prescribeslaws that apply in dealing with disposal of firearms.Proceeds from the sale of equipment that was originally purchased through a general fund budgetcode (including capital improvement codes) are subject to this provision. Special funds,including the Department of Transportation, public schools, and Community College institutionsare not subject to these regulations.Receipts from the sale of surplus equipment that are not budgeted may be recorded in a separatereceipts line item.These receipts that are in excess of amounts estimated in a certified general fund budget must bedeposited as non-tax revenue as directed by the Office of the State Controller.Net Proceeds from Sale, Lease or Rental of LandG.S. 146-30 defines the term "net proceeds" as “the gross amount received from the sale, lease,rental, or other disposition of any state lands, less:• Such expenses incurred incident to that sale, lease, rental, or other disposition as may beallowed under rules and regulations adopted by the Governor and approved by theCouncil of State; and• A service charge to be paid into the State Land Fund.”G.S. 146-30 provides that the net proceeds from the sale, lease, rental or other disposition oflands by a state agency be deposited with the State Treasurer to be credited to the general fund.The Wildlife Resources Commission, the Department of Agriculture and Consumer Services, theDepartment of Natural and Economic Resources (State Parks), and the Department of Health andHuman Resources (Butner) are exempt from this provision. Any department having fundsderived from the sale, lease, rental or other disposition of lands should draw a check or preparean electronic fund transfer for the total of the net proceeds made payable to the State Treasurerand mail to the Office of State Controller. The Office of State Controller should receive thesefunds within 5 days of receipt of the net proceeds by the department.Repayment of Money Owed to the StateState Employees and Certain Local Educational Entity Employees

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 133G.S. 143-553(a) states that "All persons employed by an employing entity . . . [see definitioncontained in G.S. 143-552, as enumerated in G.S. 143B-3 of the “Executive Organization Act"]who owe money to the state and whose salaries are paid in whole or in part by State funds mustmake full restitution of the amount owed as a condition of continuing employment." Theemployee is allowed a reasonable period of time to make the repayment. Employment shall beterminated if the employee ceases to make payments or discontinues a good faith effort to makerepayment.G.S. 143-554 gives an employee the right to appeal the termination to the State PersonnelCommission according to the normal appeal and hearing procedures provided by Chapter 126 ofthe General Statutes.Public OfficialsAs stated in G.S. 143-557, “If after investigation under terms of this Part an appointing authorityhas determined the existence of a delinquent monetary obligation owed to the State by a publicofficial, he shall notify the public official that his appointment will be terminated 60 days fromthe date of notification unless repayment in full is made within that period.”The appointing authority shall allow the public official, if he/she is financially unable to makepayment in full, to continue his/her appointment as long as an attempt to repay the obligation ismade in good faith.LegislatorsG.S. 143-559 states "Whenever a representative of any employing entity... has knowledge that alegislator owes money to the State and is delinquent in satisfying this obligation, this informationshall be reported to the Legislative Ethics Committee... for disposition."Collection of Outstanding DebtsFollow these procedures for the collection of outstanding debts:• Send OSBM a list of names and Social Security numbers of individuals with past dueaccounts owed to the state. Do not include names of individuals with past due accountswhen satisfactory provisions have been made for repayment.• OSBM will compare the lists with lists of employees who are members of the Teachersand State Employees Retirement System or who are on a central payroll.• OSBM will provide notice if any of the individuals on the lists are employed by a statedepartment, agency or institution, Community College system, or by a city or countyBoard of Education.• Write the agency or department employing the individual having a past due account andstate: (a) the individual's name, amount of money owed, and for what reason the moneyis owed; (b) that a written notice has been sent to the employee stating that full restitutionof the amount owed is a condition of continued employment (Chapter 143, Article 59 of

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 134the North Carolina General Statutes); (c) that the employee obtain and provide writtenevidence from the department owed that a satisfactory arrangement for payment has beenagreed upon; and (d) that the employee be given a reasonable time period to accomplish(c) above. If the employee does not provide this evidence, steps must be taken toterminate employment unless the employee is pursuing administrative or judicialremedies.Set-off Debt Collection ActChapter 105A of the General Statutes authorizes the Department of Revenue to assist claimantstate agencies, per request, in the collection of qualifying delinquent accounts. The departmentwill identify those entitled to individual income tax refunds of at least $50, and upon receipt of afinal certification of the debt from respective claimant agency, set-off the applicable amount.Periodically, the department will remit to the respective claimant agencies the net proceedscollected that shall be the gross proceeds collected, less the 15 percent (15%) collectionassistance fee. A transmittal statement will be included reconciling the amount of the remittancewith the gross proceeds collected per individual set-off, so that the claimant agency can creditthe debtor's obligation with gross proceeds collected as required by G.S. 105A-14(b).Claims for set-off must be filed with the Department of Revenue in accordance with theprovisions of Article 1 of Chapter 105A and the rules and procedures set by the Department ofRevenue as authorized under G.S. 105A-16.Legislation on the Establishment of CommitteesEstablishment of CommitteesThe head of each principal department may create and appoint committees or councils to consultwith and advise the department. The General Assembly declares its policy that insofar asfeasible, such committees or councils shall consist of no more than 11 members, with not morethan one from each congressional district. If any department head desires to vary this policy, hemust make a request in writing to the Governor, stating the reasons for the request. TheGovernor may approve the request, but may only do so in writing. Copies of the request andapproval shall be transmitted to the Advisory Budget Commission and to the Joint LegislativeCommission on Government Operations. The members of any committee or council created bythe head of a principal department shall serve at the pleasure of the head of the principaldepartment. (G.S. 143B-10)Per Diem: Travel and SubsistenceCommittee and Council members may be paid per diem and necessary travel and subsistenceexpenses, within the limits of appropriations and in accordance with the provisions of G.S. 138-5. Per diem, travel, and subsistence payments to members of the committees or councils createdin connection with federal programs shall be paid from federal funds unless otherwise providedby law.Report on Committees and CouncilsAn annual report listing committees or councils, the total membership of each, the cost in the lastfiscal year and the source of funding, and the title of the person(s) who made the appointments is

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 135to be submitted to OSBM for presentation to the Advisory Budget Commission or the JointLegislative Commission on Governmental Operations by March 31 of each year.Membership DuesMembership dues paid from state funds for state departments, institutions and agencies toorganizations shall be kept to a minimum. Department heads or his/her designee must reviewand approve all memberships to determine that the benefits accruing to the state from suchmemberships will exceed the costs. Membership dues shall not be paid from state funds forindividual state employees or for the benefit of an individual state employee unless the benefit ofthe membership is for the state and the individual.Membership dues paid from state funds should be for the benefit of the state and not for anindividual. If the state is to benefit from an individual's membership in an organization, thatbenefit should derive not because of the individual, but because of the individual's position withstate government regardless of who is in the position.Additionally, although the membership may be in the name of the individual, this membershipterminates when the individual terminates his employment with the state or moves to anotherdepartment.Academic Assistance - License and Certificate FeesThe academic assistance program provides reimbursement of academic costs if funds areavailable at the agency level, and/or time off the job if the course is available only duringworking hours and the employee completes the course in good standing, as defined in theEducation Assistance Program policy in the State Personnel Manual. Academic courses/degreesfrom accredited community colleges/colleges/universities via traditional classroom, video-based,distance learning, web-based, e-learning and certain correspondence courses are eligible.Exceptions to policy may be approved by the department head. Academic courses are definedby the Office of State Personnel (OSP) as a course/degree provided by an accredited communitycollege/college/university. The course must provide academic credit (as opposed to CEU’s), belisted in the college/university course catalog and charge tuition in the traditional meaning oftuition (as opposed to only registration fees). Accreditation must be via an accrediting agencyauthorized by the US Department of Education.Completion of the course, workshop, or seminar should have a direct benefit to the organization.The improved knowledge, skills and abilities gained by the employee should benefit theindividual in completion of his/her current and/or potential job duties. Management shouldconsider workforce planning, succession planning and career development in approvingemployees to receive academic assistance.Incumbent employees who meet minimum academic requirements for employment and forwhom certification/licensing is required after employment or is deemed desirable bymanagement and approval by the agency head or designee are eligible for academic assistance(reimbursement) under the following conditions specified by OSP:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 136• Certification/licensing is mandatedor• Certification/licensing is a policy requirement of the employing agency.If the state requires the employee to have and maintain a professional license or certificate as acondition of employment, then fees directly associated with obtaining that license or certificateare not reimbursable. Costs associated with maintaining a professional license or certificate as acondition of employment are reimbursable.Courses, workshops, or seminars not involving academic credit, which may grant CEU’s orCPE’s or other completion recognition and where instruction is usually in modules, 2-3 days induration, and which charge a registration fee (although sometimes referred to as tuition) may bepaid for by the agency in advance of the training directly to the provider rather than as areimbursement to the employee. Approval is by the department head or his/her designee andcontingent on the same restrictions as academic assistance outlined in the State PersonnelManual.Tuition fees (associated with academic credit) are charged to budget code 532941, AcademicAssistance Program. Course registration fees (associated with training) are charged to budgetcode 532930, Registration Fees, or to budget code 532942, Other Employee EducationalExpense. For more information on tuition and registration fee eligibility, please consult theAcademic Assistance Program policy in the State Personnel Manual.Vending MachinesVending machine facilities and operations are subject to the provisions of G.S. 143-12.1. Thefollowing definitions apply to those operations and are used in the related regulations.Vending FacilityA vending facility includes a snack bar, cafeteria, restaurant, cafe, concession stand,vending stand, cart service, or other facilities at which food, drinks, novelties,newspapers, periodicals, confections, souvenirs, tobacco products or related items areregularly sold.State property or state buildingState property or state building means a building and/or land owned, leased, or otherwisecontrolled by the state, exclusive of schools, colleges and universities, the North CarolinaState Fair, and the State Legislative Building.The vending facilities operated by state departments, institutions, boards, and commissions oroperated on state property are subject to the control of the state. The payments received, whetherby contract, fixed or variable rate, a percentage basis, or gross or net profit, are state funds andthe net proceeds are subject to appropriation by the General Assembly.Receipts or payments from vending operations shall be deposited as provided by law (G.S. 143-12.1) and in the appropriate fund as determined by OSBM.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 137Operation of Vending Facilities Supported from State General or HighwayFundsLocationVending facilities operated on state property supported from the general or highway funds areconsidered General or Highway Fund operations. Proceeds from vending facilities are to bedeposited in departments' and institutions' general or highway fund operating codes as a receipt.All expenditures of profits must be authorized by OSBM by a budget revision (BD 606).Operation of Vending Facilities Supported from Other FundsInstitutional Trust Funds as Defined by G.S. 116-36.1Universities that have facilities supported from institutional trust funds and which have vendingoperations in those facilities may retain proceeds from such operations in their trust funds. TheBoard of Governors is required, no later than October 1 of each year, to make an itemized reportto the Joint Legislative Commission on Governmental Operations concerning the use of netproceeds of vending facilities for the previous year under G.S. 116-36.1.Institutional Student Auxiliary EnterprisesProceeds from vending operations located in university facilities supported from institutionalstudent auxiliary enterprises (housing, food, health and laundry), are to be deposited into theappropriate special fund operating budget.ExceptionsAid to the BlindArticle 3 of Chapter 111 of the North Carolina General Statutes - Operation ofVending Facilities on State Property requires that state agencies upon request of theDepartment of Human Resources give preference to visually handicapped persons in theoperation of vending facilities on state property. It is the responsibility of eachdepartment and institution to inform the Department of Human Resources of existing orprospective locations for vending facilities or coin-operated vending machines.National Guard FacilitiesG.S. 127A-138(b) states that funds earned from vending machine commissions shallremain with National Guard units and the expenditure of these funds shall be inaccordance with rules prescribed by the Secretary of Crime Control and Public Safety.The provisions of G.S. 143-12.1 do not apply to the operation of any vending facility by acommunity college, technical institute, technical college, or local school administrativeunit.Expenditures of FundsExpenditures of profits may be authorized by the Office of State Budget and Management for thesame type of expenditures as currently permitted by law from general and highway funds.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 138Expenditures of profits should be as closely associated to the population or program surroundingthe vending facilities as possible. Examples:• Recreational equipment for inmates.• Field trips for patients.• Costs associated with operating the vending facility such as rental of space,utilities and equipment.Alcoholic Beverages and "Set-ups"Payment or reimbursement for alcoholic beverages or "set-ups" can not be made from statefunds. Individuals must bear these costs. They can not be included in registration fees or paidfrom state funds. Law enforcement personnel in the pursuit of their duties and industrialdevelopment personnel are exempt from this provision.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 139TRAVEL POLICIES & REGULATIONS INDEXAircraft owned by state employee 146 Per diem compensation (con’t)Airport, travel to/from 147 members of licensing boards 152AttendantsBus153145members of state boards,commissions, and councils 150CancellationsCharter aircraft flights143146state employeesPersonal vehicle use141146Commissions, committees, councils 150 Political functions and travel 149Common carrier 145 Prospective employee travel 153Commuting 147 Reduced air fare certificates 146Conferences, external 154 ReimbursementsConferences, internal 155 lodging and meals 142Convention registrationlegislators 153telephone callsRental vehicle guidelines157146licensing boardsstate employees152145Required staff and mealsShuttle services144147Coupons, reduced air fareDestination, use of state vehicle at146147State employee as a boardmember 151Employee responsibilityExceptions141158State vehicle usageStudent travel policies146154Expert witness feesFrequent flyer miles154145Subsistence ratesSuper-saver rates141145Informal meetingsLicensing boardsLodgingManagement retreatMeals156152142156143Telephone callsTollsTraining sessionTransportation carriersTransportation reimbursement157146156145Mobile telephonesNon-state employeesriderstravel policiesOut-of-country travelOut-of state travelat airportstolls and storagePassport157147153148142147146145Per diem compensationlegislators 152legislatorsmembers of licensing boardsmembers of state boards,commissions, and councilsstate employeesTravel agent feesTravel by state officialsTravel advancesTravel authorizations153152148146146149149142Travel period 142Travel Policies and RegulationsPurposeStatutory regulations for per diem, transportation, and subsistence allowances for statedepartments, agencies, boards, commissions, committees, and councils are contained in G.S.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 140138-5, 138-6, and 138-7. It is the intent of this section to provide statements of policy to enablestate departments and agencies a comprehensive reference for uniform interpretation to pay orreimburse allowable state travel expenses pertaining to official travel and subsistence.Employee ResponsibilityAn employee traveling on official state business is expected to exercise the same care inincurring expenses that a prudent person would exercise if traveling on personal business andexpending personal funds. Excess costs, circuitous routes, delays, or luxury accommodationsand services unnecessary, unjustified, or for the convenience or personal preference of theemployee in the performance of official state business are prohibited. The State has authorizedthe use of credit cards (American Express and Diner’s Club) for employees during travel onofficial state business. These cards are distributed at the discretion of the department head.Employees will be responsible for unauthorized costs and any additional expenses incurred forpersonal preference or convenience. Employee misuse of state-issued credit cards is grounds fortermination.Travel Policies for State EmployeesPer Diem CompensationPer diem compensation is not applicable for state employees, only to members of State Boards,Commissions, Committees and Councils who do not receive any salary from state funds for theirservices.Subsistence RatesSubsistence is an allowance related to lodging and meal costs (including gratuities) (G. S. 138-6).For the purposes of determining eligibility for allowances, travel status means being away fromthe employee's normal duty station or home and, while traveling, the employee must be acting inhis/her official capacity as required by his/her work activities.The maximum allowable statutory rate for meals and lodging (subsistence) is $91.75 for in-statetravel and $105.00 for out-of-state travel. The Director of the Budget revises the subsistence rateperiodically based on the percentage change in the Consumer Price Index for All UrbanConsumers (G.S. 138-6(a)(5)). The payment of sales tax, lodging tax, local tax, or service feesapplied to the cost of lodging is allowed in addition to the lodging rate and is to be paid as alodging expense (G.S. 138-6(a)(3)).The employee may exceed the part of the ceiling allocated for lodging without approval for overexpenditureprovided that the total lodging and food reimbursement that the employee is entitledto for that day does not exceed the maximum allowed daily subsistence (G.S. 138-6(a)(3)).The following schedule shall be used for reporting allowable subsistence expenses incurredwhile traveling on official state business:In-StateOut of State

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 141Breakfast $ 7.00 $ 7.00Lunch $ 9.25 $ 9.25Dinner $15.75 $17.75Lodging (actual, up to) $59.75 (actual, up to) $71.00 (actual, up to)Total $91.75 $105.00Out-of-State TravelOut-of-state travel status begins when the employee leaves the state and remains in effect untilthe employee returns to the state. However, in-state allowances and reimbursement rates applywhen employees and other qualified official travelers use hotel and meal facilities located inNorth Carolina immediately prior to and returning from out-of-state travel during the same travelperiod.Authorization for LodgingPrior written approval by the department head or his or her designee must be obtained in order toqualify for reimbursement for overnight stays. Supervisory personnel certifying thereimbursement request as necessary and proper must require documentation from the traveler tosubstantiate that the overnight lodging was necessary and accomplished. The travel mustinvolve a travel destination located at least 35 miles from the employee's regularly assigned dutystation or home whichever is less to receive approved reimbursement. "Duty station" is definedas the location where the employee is assigned. The designation of an employee's home as theduty station by a department head requires prior approval by the Office of State Budget andManagement (OSBM) on an annual basis.Reimbursement for LodgingEach employee is responsible for his or her own request for reimbursement. The travel mustinvolve a travel destination located at least 35 miles from the employee's regularly assigned dutystation or home, whichever is less. Requests for reimbursement shall be filed within 30 daysafter the travel period ends for which the reimbursement is being requested. G.S. 138-6(c).Specific dates of lodging must be listed on the reimbursement request, and substantiated by areceipt from a commercial lodging establishment, not to exceed $59.75 per night for in-statelodging or $71 per night for out-of-state lodging. Reimbursement for lodging in anestablishment that is being rented out by a third party or an establishment treated as an apartmentbuilding by state or local law or regulation is not allowed unless approved by OSBM in advance.Telephone access fees for business calls are considered a miscellaneous expense. Telephoneaccess fees for personal calls are not reimbursable. Baggage handling tips may be claimed as"Miscellaneous." Excessive tips must be documented with a receipt.Excess LodgingExcess lodging authorization for in-state, out-of-state, and out-of-country travel must beobtained in advance from the department head or his or her designee. Excess lodging is allowedwhen the employee is in a high cost area and unable to secure lodging within the current

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 142allowance, or when the employee submits in writing an opinion that his/her personal safety orsecurity is unattainable within the current allowance. Excess lodging authorization is notallowed for reason of convenience or personal preference for the employee. The employee mayexceed the part of the ceiling allocated for lodging without approval from department head of hisor her designee provided that the total lodging and food reimbursement does not exceed themaximum daily subsistence.Penalties and Charges Resulting from CancellationsPenalties and charges resulting from the cancellation of travel reservations (including airline,hotel, or other travel reservations and conference registration) shall be the department'sobligation if the employee's travel has been approved in advance and the cancellation or changeis made at the direction of and/or for the convenience of the department. If the cancellation orchange is made for the personal benefit of the employee, it shall be the employee's obligation topay the penalties and charges. However, in the event of accidents, serious illness, or deathwithin the employee's immediate family or other critical circumstances beyond the control of theemployee, the department may pay the penalties and charges.Authorization for MealsPrior written approval by the department head or his or her designee must be obtained in order toqualify for reimbursement for meals. Supervisory personnel certifying the reimbursementrequest as necessary and proper must require documentation from the traveler to substantiate thatthe payment for meals was necessary and accomplished.Reimbursement for MealsEach employee is responsible for his or her own request for reimbursement. Tips for meals areincluded in the meal allowance. Each meal reimbursement rate must be listed on thereimbursement request. Departure and arrival times must also be listed on the reimbursementrequest. The costs of meals included in other related activities (registration fees, conferencecosts, hotel registration, etc.) may not be duplicated in reimbursement requests. An employeemay be reimbursed, if requested, for breakfast even if their lodging establishment offers a freecontinental breakfast.Meals during Overnight TravelA state employee may be reimbursed for meals, including lunches, while on official statebusiness when the employee is in overnight travel status. The destination must be located atleast 35 miles from the employee's regularly assigned duty station (vicinity) or home whicheveris less to receive approved reimbursement.Meals during Daily TravelEmployees may be reimbursed for meals for partial days of travel when in overnight travel statusand the partial day is the day of departure or the day of return. The following applies:• Breakfast: depart duty station prior to 6:00 a.m and extend the workday by 2 hours.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 143• Lunch: depart duty station prior to Noon (day of departure) or return to duty station after2:00 p.m. (day of return).• Dinner: depart duty station prior to 5:00 p.m. (day of departure) or return to duty stationafter 8:00 p.m. (day of return) and extend the workday by 3 hours.• The travel must involve a travel destination located at least 35 miles from the employee'sregularly assigned duty station (vicinity) or home, whichever is less.Allowances cannot be paid to employees for lunches if travel does not involve an overnight stay;however, employees can be eligible for allowances for the breakfast and evening meals when thefollowing applies:• Breakfast (morning): depart duty station prior to 6:00 a.m and extend the workday by 2hours.• Dinner (evening): return to duty station after 8:00 p.m and extend the workday by 3hours.• The travel must involve a travel destination located at least 35 miles from the employee'sregularly assigned duty station (vicinity) or home, whichever is less.• Allowances for the breakfast and evening meals for employees working nontraditionalshifts must have prior approval of OSBM.Meals and Day-to-Day ActivitiesState employees may not be reimbursed for meals in conjunction with a congress, conference,assembly, convocation or meeting, or by whatever name called, of employees within a singlestate department, institution or agency, or between the employees of two or more statedepartments, institutions or agencies to discuss issues relating to the employee's normal day-todaybusiness activities.Meals for Required Employee AttendanceA state employee may be reimbursed for meals, including lunches, when the employee's jobrequires his attendance at the meeting of a board, commission, committee, or council in hisofficial capacity and the meal is preplanned as part of the meeting for the entire board,commission, committee or council. Such board, commission, committee, or council must includepersons other than the employees of a single state department, institution, or agency.Meals and Commercial Air TravelEmployees are allowed to claim reimbursement for meals even though they are shown andoffered as a part of one's flight schedule on a commercial airline.Excess Meals

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 144No excess reimbursement will be allowed for meals unless there are predetermined charges, orthe meals were for out-of-country travel. The department head or his or her designee may grantexcess subsistence for meals for out-of-country travel.Convention RegistrationState law allows reimbursement of the actual amount of convention registration fees as shown bya valid receipt or invoice [G.S. 138-6(a)(4)].PassportsReimbursement for cost incurred in obtaining or renewing a passport may be made to anemployee who, in the regular course of his duties, is required to travel overseas in thefurtherance of official state business. Passport expenses are chargeable to the same fund thatsupports the employee's trip.Transportation by Common CarrierReimbursement for air, rail, or bus fare is limited to actual coach fare, substantiated by receipt.Transportation by International FlightsEmployees traveling internationally on overseas flights may be reimbursed actual business classfare (substantiated by receipt) with prior approval of the department head or his or her designee.Super Saver RatesWhen traveling by common carrier to conduct official state business, employees traveling totheir destination earlier than necessary and/or delaying their return to avail the state of reducedtransportation rates may be reimbursed subsistence for additional travel days if, in the opinion ofthe department head or his or her designee, the amount saved due to the early and/or delayedtravel is greater than the amount expended in additional subsistence. When the reduced airfarerates require staying overnight one Saturday night, to be eligible for reimbursement, the stateemployee must stay overnight on the Saturday closest to the first or last day of official statebusiness to which the employee is attending.With sufficient justification, the department head or his or her designee can make an exception tothis requirement prior to travel commencing.Frequent Flyer MilesFrequent flyer miles earned by a state employee while traveling on state business at stateexpense are the property of the state. Frequent flyer miles accumulated by an individual stateemployee during previous state business trips should, to the extent possible, be used by the stateemployee accumulating the frequent flyer miles while traveling on future state business trips.Coupons or Certificates for Reduced Air FareCoupons or certificates for reduced air fare if acquired by a state employee while traveling onstate business at state expense are the property of the State and should be used, to the extentpossible, by the state employee on future state business trips.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 145Fees and Service ChargesWith sufficient justification and documentation and with approval of the department head or hisor her designee, state employees can be reimbursed for usual, customary, and reasonable feesand services charges imposed by travel agents for assistance in making travel arrangements.Transportation by Personal VehicleActual mileage is reimbursable. Mileage is measured from the closer of duty station or point ofdeparture to destination (and return). The business standard mileage rate set by the InternalRevenue Service (40.5 cents per mile effective January 1, 2005) will be paid. Parking fees,tolls, and storage fees are reimbursable when the require receipts are obtained. However, if astate employee chooses to use a personal vehicle when a state-owned vehicle is available, alldepartments and agencies will reimburse the employee at the motor fleet rate for mileage (23cents per mile effective July 1, 2004).Transportation by a Rental VehicleRental vehicles may be used, however, rental vehicles are not to be used at state expense solelyfor the convenience or personal preference of the employee. A receipt is necessary forreimbursement.Transportation by State VehicleProcedures for obtaining and using state vehicles owned by the Division of Motor FleetManagement (Department of Administration) are set out in the Rules and Regulations providedby that division. Every individual who uses a permanently assigned state-owned passengermotor vehicle, pickup truck, or van to drive between his official workstation and his home, shallreimburse the state for these trips at a rate computed by the Department of Administration.Transportation by Chartered AircraftThe use of charter aircraft must be approved by the department head or his or her designee,provided the following is substantiated and put in writing:• A state aircraft is not available or not appropriate for the size of the party traveling or thedestination airport.• The use of a charter flight is more economical than a commercial flight.• The use of a charter flight is necessary because of unusual travel circumstances.Transportation by Use of Aircraft Owned by a State EmployeeReimbursement for costs incurred in the use of aircraft, owned by a state employee, on officialstate business may be approved by the department head or his or her designee, provided thefollowing is substantiated and put in writing:• The use of the aircraft owned by a state employee is necessary because of unusual travelcircumstances and is not for the sole convenience of the employee who owns the plane.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 146• The use of the aircraft, owned by a state employee, at the rates published below ischeaper than any other method of air travel.• The allowable reimbursement rate for aircraft owned by a state employee is $.68 per mileper passenger.Non-state Employee RidersNon-state employees may accompany state employees in state-owned vehicles when they have abusiness interest in the purpose of the trip and their presence is related to state business .Students of state universities, colleges, and institutions may be passengers in state-ownedvehicles to attend athletic events and other activities officially sanctioned by the institution,provided the proper account is reimbursed at the standard mileage cost rate by the studentactivity fund involved. Spouses and children of state employees may accompany them in stateownedvehicles, if space is available and all travel is strictly for official state business [G.S. 143-341(8)(i)(7) grants Department of Administration rule-making authority in this area].Hitchhikers are not permitted to ride in state-owned vehicles.Transportation by State Vehicle at DestinationAt the employee's destination, state-owned vehicles may be used prudently for travel to obtainmeals, but not for private purposes or for entertainment while off duty. No common carrier orpublic transportation fares are reimbursable on a trip on which an employee uses a state-ownedvehicle, unless it is shown that such transportation was more economical in a particular situation.CommutingNo reimbursement shall be made for the use of a personal vehicle in commuting from anemployee's home to his duty station. (No mileage reimbursement is allowed to employees on"call back" status.) For the state's policy on compensation to employees on "call back" status,see the State Personnel Manual.Travel to/from Airport at Employee's Duty StationReimbursement for travel between the employee's duty station or home (whichever is less) andthe nearest airline terminal (or train/bus station if applicable) and for parking may be made underthe following circumstances.For travel by:• Taxi or Airport Shuttle - Actual costs with receipts.• Private car - the business standard mileage rate set by the Internal Revenue Services for amaximum of two round trips with no parking charge, or for one round trip with parkingcharges. Receipts are required for airport parking claims.• Use of Public Transportation – In lieu of using a taxi or airport shuttle, employees can bereimbursed without receipts $5 for each one-way trip either from the airport tohotel/meeting or from the hotel/meeting to the airport.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 147Travel to/from Airport at Employee's DestinationReimbursement for travel to and from the airline terminal (or train/bus station if applicable) atthe employee's destination may be made where travel is via most economical mode available aslisted below:• Taxi or Airport Shuttle service – Actual costs with receipts.• Rental vehicles - may be used with the prior approval of the department head or his orher designee; however, rental vehicles may not be used for the sole convenience of theemployee (receipt required).• Use of Public Transportation – In lieu of using a taxi or airport shuttle, employees can bereimbursed without receipts $5 for each one-way trip either from the airport tohotel/meeting or from the hotel/meeting to the airport.Travel Involving Trips Other than to and from the AirportThe actual cost of taxi and shuttle service fares are reimbursable when required for travel onofficial state business. The request must be documented with a receipt. The use of publictransportation is reimbursable up to $5 per one way trip.Authorization for Out-of-Country TravelAll out-of-country travel must be authorized by the department head or such department officialdesignated by him or her.Out-of-country travel status begins when the employee leaves the country and remains in effectuntil the employee returns to the country. If the employee and other qualified official travelersuse hotel and meal facilities located outside North Carolina, but within the continental UnitedStates, immediately prior to and upon returning from out-of-country travel but during the sametravel period, out-of-state subsistence rates shall apply.Travel AdvancesAll employees who travel on state business may be issued advances when authorized by thedepartment head or his or her designee in order that personal funds will not be required. Fiscalrecords must be maintained by the department for proper control.Eligibility for advances and reporting requirements are as follows:• State Employees who have been issued state credit cards for travel purposes shouldnot be issued travel advances, unless there is substantiated justification.• Travel advances for occasional travel must not exceed the estimated cost of the trip andmay not be issued more than five working days prior to the date of departure. Advancesmust be deducted from the reimbursement request on the travel expense report which

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 148shall be submitted within 30 days after the travel period or June 30, whichever comesfirst.• Travel advances for regularly scheduled travel for employees who travel each month,an annual advance of funds equal to the average monthly expense may be made. Allreimbursement requests shall be filed and paid monthly for incurred expenses and theadvance must be repaid as of June 30 annually or earlier if required by the agency. If it isdetermined that the monthly reimbursement has averaged less than the annualadvancement, the advance must be reduced to the newly established amount.Travel Policies for State OfficialsPolitical FunctionsState officials, both elected and appointed, sometimes attend political functions or meetings.The following policies are intended to be guidelines for the payment from state funds for traveland subsistence costs surrounding the attendance of state public officials at political functions ormeetings.Travel Related to a Political FunctionNo state funds may be used to pay travel and/or subsistence costs for a state official whileattending a political function or meeting. In the event a state-owned aircraft is used, thereimbursement rate will be the actual operating cost rate per flight hour. If a state-owned vehicleis used, the reimbursement rate to the state will be the motor pool rate.Travel Related to Official State Business that includes Political FunctionsIf a trip includes both official state business and political functions or meetings, state funds maybe used to pay up to one-half of the travel and/or subsistence costs. In the event that a stateownedaircraft is used, the cost to the state will be charged at the regular rate per flight hour andthe charge to a non-state source will be at the actual operating cost rate per flight hour. If a stateownedvehicle is used, the reimbursement rate to the state will be the motor pool rate.All Other TravelTravel reimbursement policies and regulations for all other travel for state officials is the same asfor state employees.Travel Policies for Members of State Boards, Commissions, Committees, andCouncils (Other than Licensing Boards and Members of the GeneralAssembly)Per Diem CompensationPursuant to G.S. 138-5(a)(1), non-state employees who are members of state boards,commissions, committees, and councils shall receive $15 per day of official service. Stateemployees and members of all state boards, commissions, and councils whose salaries or anyportion of whose salaries are paid from state funds shall receive no per diem compensation fromstate funds for their services. It is the responsibility of the fiscal officer of the Board,

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 149Commission, Committee, or Council to insure that such per diem compensation is not paid tostate employees.SubsistenceMeal subsistence for non-state employee members of state boards, councils, commissions, orcommittees is a daily, lump-sum allowance payable per day of official service. Meals andlodging are to be reimbursed as follows:In-State Travel:• $32.00 for meals.• Actual expenses up to $59.75 lodging documented by a receipt of actual lodgingexpenses for a commercial lodging establishment.Out-of-State Travel:• $34.00 for meals.• Actual expenses up to $71 lodging documented by a receipt of actual lodgingexpenses for a commercial lodging establishment.Excess SubsistenceAuthorization for excess expenses for in-state or out-of-state travel may be granted by thedepartment head or the board chairperson head or his/her designee when such costs are includedin registration fees and/or there are predetermined charges.Authorization for Out-of-state travelExpenses for out-of-state travel on official business shall be reimbursed only upon authorizationobtained in the manner prescribed by regulations governing out-of-state travel for stateemployees.TransportationTransportation policies and regulations are the same as for those for state employees, except thata mileage reimbursement rate set by any other law by reference to G. S. 138-6(a)(1) isestablished at 25 cents a mile, not the IRS rate.Subsistence of State Employees serving as Board MembersAs allowed under G.S. 138-6, a state employee who is a member of a state board, commission,committee or council that operates from funds deposited with the State Treasurer, may bereimbursed for actual cost of any meal (including lunch) eaten while on official state business ifthe meal is preplanned as part of the meeting for the entire board, commission, committee, orcouncil. However, when an overnight stay is required, the state employee is limited to a dailyreimbursement as follows:SubsistenceIn-State Travel

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 150• $32.00 for meals.• Actual expenses up to $59.75 lodging documented by a receipt of actuallodging expenses for a commercial lodging establishment.Out-of-State• $34.00 for meals.• Actual expenses up to $71 lodging documented by a receipt of actuallodging expenses for a commercial lodging establishment.No Overnight StayWhen an overnight stay is not required, the state employee is allowed actual cost of anymeal (including lunch) eaten while on official state business if the meal is preplanned aspart of the meeting for the entire board, commission, committee or council.Other MealsIf the employee is eligible for reimbursement for any other meal, that reimbursement islimited by the same reimbursement amounts and regulations as those allowed for in-stateand out-of-state travel by a state employee who is not a member of a state board,commission, committee, or council.MeetingsRefreshments, i.e., coffee, soft drinks, cookies, doughnuts, may be served at officialboard meetings. Reimbursement may be paid from state funds for actual cost not toexceed $4.00 per member and required staff, per meeting per day. "Required Staff" shallbe defined as an employee who, in the regular course of his duties, is expected to attendthe meeting and any other employee whose presence is necessary to accomplish apurpose of the meeting.Travel Policies for Licensing Boards (Other than State Employees)Per Diem CompensationPursuant to G.S. 93B-5, non-state employee members of licensing boards shall receive$100.00 per day of official service. State employees and members of all licensing boardswhose salaries or any portion of whose salaries are paid from state funds shall receive noper diem compensation from state funds for their services. It is the responsibility of thebudget officer of the licensing board to insure that such per diem compensation is notpaid to state employees.SubsistenceSubsistence policies and regulations are the same as for those for state employees.Convention RegistrationConvention registration policies and regulations are the same as for those for stateemployees.Transportation

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 151Transportation policies and regulations are the same as for those for state employees,except that a mileage reimbursement rate set by any other law by reference to G. S. 138-6(a)(1) is established at 25 cents a mile, not the IRS rate.MeetingsRefreshments, i.e., coffee, soft drinks, cookies, doughnuts, may be served at officialboard meetings. Reimbursement may be paid from state funds for actual cost not toexceed $4.00 per member and required staff, per meeting per day. "Required Staff" shallbe defined as an employee who, in the regular course of his duties, is expected to attendthe meeting and any other employee whose presence is necessary to accomplish apurpose of the meeting.Travel Policies for Members of the General Assembly Serving on State Boards,Commissions, Committees, and CouncilsPer Diem CompensationPursuant to G.S. 120-3.1, per diem compensation is not applicable.SubsistenceA member of the General Assembly shall receive a subsistence allowance for meals andlodging at a daily rate (which is currently $104) equal to the maximum per diem rate forfederal employees traveling to Raleigh, N.C., as set out at 58 Federal Register 67959(December 22, 1993), while the General Assembly remains in session, and, except asotherwise provided in this subsection when, with the approval of the Speaker of theHouse in the case of Representatives or the President Pro Tempore of the Senate in caseof Senators, the member is:• Traveling as a representative of the General Assembly or of its committeesor commissions.• Otherwise in the service of the state.Excess SubsistenceA member who is authorized to travel, whether in or out of session, within the UnitedStates but outside of North Carolina may elect to receive, in lieu of the amount providedin the preceding paragraph, a subsistence allowance of twenty-six dollars ($26.00) a dayfor meals, plus actual expenses for lodging when evidenced by a receipt satisfactory tothe Legislative Services Officer, not to exceed the maximum per diem rate for federalemployees traveling to the same place, as set out at 58 Federal Register 67950-67964(December 22, 1993) and at 59 Federal Register 23702-23709 (May 6, 1996).TransportationA member will receive a travel allowance at the rate equal to the business standardmileage rate set by the Internal Revenue Service whenever the member travels, whetherin or out of session, as a representative of the General Assembly or of its committees orcommissions, with the approval of the Legislative Services Commission.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 152Convention RegistrationConvention registration policies and regulations are the same as for those for stateemployees.Travel Policies for Non-State EmployeesNon-state EmployeesNon-state employees traveling on official state business whose expenses are paid by thestate are subject to these regulations, including statutory subsistence allowances, to thesame extent as are state employees. Travel expenses for members of a non-employee'sfamily are not eligible to be paid by the state. No travel advances will be made to nonstateemployees.Prospective Professional EmployeesA department head or his or her designee is authorized to approve reimbursement oftransportation expenses of prospective professional employees visiting state departmentsfor employment interviews. These expenses are limited to transportation and subsistencefor 3 days (5 days if one is a Saturday) at the in-state rate. The department head or his orher designee may approve excess lodging expenses.StudentsStudents at state institutions who travel on official state business other than for athleticevents or student organizations and whose expenses are paid or reimbursed by the stateare subject to these regulations, including statutory subsistence allowances, to the sameextent as are state employees. Travel by students for the purpose of participating inathletic contests and activities of student organizations must be paid from fundssupporting the particular organization or activity.AttendantsPayment of travel and subsistence expenses (motel and meal costs) for attendants forhandicapped employees while traveling on official state business may be reimbursed tothe same extent as are state employees if advance approval is obtained from thedepartment head or his or her designee.Expert Witness FeesA person used by any state department, agency, commission, committee, licensing board,or council as an expert witness may be reimbursed an agreed upon fee by said group. Alltravel costs will be reimbursed the same as for state employees. The source of funds usedfor such expenditures should comply with G.S. 143-23(a2)(2), unless otherwise directedby the General Assembly.Conferences, Seminars, Workshops, Training Sessions and RetreatsExternal Conference DefinitionExternal conferences are those that involve the attendance of persons other than theemployees of a single state department, institution or agency. Payment for meals is

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 153allowable if included in the registration fee, but such fee must not consist exclusively ofmeal or it will not be allowable unless meeting overnight travel criteria. The registrationfee is typically made for defraying the cost of speakers, building (room) use, handoutmaterials, breaks and lunches at conferences and conventions. These fees are charged toother services "Registration Fees." The agency may require itemization and/ordocumentation of expenses. Conferences sponsored or co-sponsored by a statedepartment are authorized when they meet the limitations and requirements listed below.Requirements and Limitations for External ConferencesThe conference is planned in detail in advance, with a formal agenda or curriculum.There is a written invitation to participants, setting forth the calendar of events, the socialactivities, if any, and the detailed schedule of costs.Assemblies should be held in state facilities; however, non-state facilities can be rentedand the cost charged to a state agency without allocation to participants' daily subsistenceallowances.The sponsoring department may charge registration fees to participants for costs ofexternal conferences.Registration fees may not include costs of entertainment, alcoholic beverages, setups, orflowers. Registration fees collected and not used to defray expenses of the particularconference may not be used for other programs and must revert to the general or highwayfund as applicable (G.S. 138-6(a)(4)).Sponsoring departments may provide refreshments for “coffee breaks” provided there aretwenty or more participants and the costs do not exceed four dollars ($4.00) perparticipant per day.When assemblies are to be held under the sponsorship of a state department in which thefunding for all participants is budgeted, lump-sum payments to a conference center or anorganization may be made upon written authorization from the department head or his orher designee. The authorization must provide the following:• The number of persons expected to attend.• The purpose and duration of the conference.• The specific meals to be served at the conference (law prohibits lunchesbeing provided to state employees unless registration fees are charged toall attendees).• The approximate daily subsistence cost per person.• The name of the conference center, hotel, caterer, or other organizationproviding the service.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 154It is the responsibility of the departments to ensure that reimbursement for mealsincluded in the lump-sum payment is not also included in reimbursement payments madeto state employees who are conference participants.Internal Conference DefinitionInternal conferences are those that involve the attendance of employees within thatparticular department, institution or agency only. No payment for meals is allowableunless overnight travel criteria are met. A routine staff meeting is not an internalconference.Requirements and Limitations for Internal Conferences• The conference is planned in detail in advance, with a formal agenda orcurriculum.• There is a written invitation to participants, setting forth the calendar of eventsand the detailed schedule of costs.• No excess travel subsistence may be granted for internal departmental meetings,conferences, seminars, etc., and such meetings must be held in state facilitieswhen available. No registration fee may be charged.• Sponsoring departments may provide refreshments for "coffee breaks" providedthere are twenty or more participants and costs do not exceed four dollars ($4.00)per participant per day.• A department cannot use state funds to support or underwrite a meeting,assembly, conference, seminar, rally, celebration, or similar function by whatevername called that promotes any cause or purpose other that the mission andobjective of the department.Training Session DefinitionEmployee training involves courses that further develop an employee’s knowledge, skill,and ability to perform the duties of his/her present job, such as, courses on computerusage or management skills development. These courses generally have a set fee, are ofrelatively short duration, and are not part of a curriculum the employee is participating inleading to an educational degree.Requirements and Limitations for Training Sessions• Fees for training courses that provide training in specific areas are charged in theAccounting system to “Employee Training” under “Other Services.”• Departments sponsoring training sessions may provide refreshments for “coffeebreaks” provided there are twenty or more participants and costs do not exceedfour dollars ($4) per participant per day.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 155Management Retreat DefinitionA management retreat is a meeting or series of meetings consisting of a department ordivision head and his or her top assistants and coworkers. Retreats are sometimes held ata site other that the usual workplace and are held no greater that once a year.Requirements and Limitations for Management RetreatsState employees who are elected by a vote of the people or appointed by the governor,the president of The University of North Carolina, the chancellors of the constituentinstitutions of the university, the executive director of University of North CarolinaHospitals at Chapel Hill, chairman of the State Board of Education, and the president ofthe Community College System may authorize an annual management retreat.Expenditures are permissible in a manner as if it were an internal conference.Informal Meetings with Guests of Department HeadsInformal Meeting DefinitionAn informal meeting is a meeting consisting of a department head or his/her designee andnon-state employees during which official state business is discussed for the majority ofthe meeting. Informal meetings are one-time occurrences and are not held on a recurringor routine basis.Requirements and Limitations for informal meetingsState employees who are elected by a vote of the people or appointed by the governor,the president of The University of North Carolina, the chancellors of the constituentinstitutions of the university, the executive director of University of North CarolinaHospitals at Chapel Hill, chairman of the State Board of Education, and the President ofthe Community College System, or their designee when given prior written approval bythe department head for a specific event, may be reimbursed from state funds for actualcosts of meals for themselves and individuals who are not state employees who are theirguests, when accompanying them in the course of conducting official state business.Cost of meals and other expenses for family members of the above referenced stateofficials are not reimbursable.Telephone CallsLong DistanceEmployees are not allowed to charge long distance phone calls to the state for calls madeof a personal nature, except as stated below. All long distance calls that are to be paid bythe state are those made pursuant to the employee conducting official state business.ReimbursementOfficial phone calls are reimbursable under "Miscellaneous." Individual calls over $5.00must be identified as to point of origin and destination.Allowable Personal Calls

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 156An employee who is in travel status for two or more consecutive nights in a week isallowed one personal long distance telephone call for each two nights for whichreimbursement to the employee may not exceed $3.00 for each in-state call or $5.00 foreach out-of-state call.Employee emergency callsEmployees may use the state network system, state credit card, or may be reimbursed fora personal long distance call(s) if such call(s) is/are of an emergency nature asdetermined by the department. An example is a call made when an employee calls hometo inform someone that the travel period has been extended beyond original plans due tounforeseen reasons.Mobile TelephonesBecause mobile telephone charges (cellular and digital) are based on measured use, nopersonal calls should be made on mobile telephones except in case of emergency asdetermined by the department. Mobile telephone calls to conduct official state businessshould only be used when more economical means of telephoning are not reasonablyavailable.If an employee uses his/her personal mobile telephone in conducting state business, theemployee can be eligible for reimbursement. In order for the agency to reimburse theemployee, the employee must indicate on his/her telephone bill the reimbursable calls,individuals called, and nature of calls and submit the telephone bill to their supervisor forapproval. If the supervisor approves the calls as state business related, the agency willreimburse the actual billed cost of the call.Use of Telephone with Computer Hook-upsEmployees traveling on state business who need to transmit data electronically (includingemail) or use the Internet for state business purposes should use the most cost-efficientmanner available, including services available through the State's InformationTechnology Services (ITS) access.ExceptionsAny exception to the rules and regulations as herein stated in the State Budget Manual, exceptthose expressly delegated, must be approved in advance by OSBM.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 157PERSONNEL POLICIES AND REGULATIONS INDEXContracts between state agencies, departments, institutions 169Contractual services 168Dual employment 162Employee training fees 167Employee tuition fees 167Exceptions 158Executive development fees 168Honoraria 173Moving and relocating 170Salary control 159Salary reserve 159Unemployment compensation 159Workers’ compensation 160Fiscal Policies and Regulations Related to PersonnelSalary ControlThe Salary Control Unit in the Office of State Budget and Management serves as a control pointfor all matters regarding salary. Its functions include:• The establishment and maintenance of records necessary to prevent the overcommitmentof budgeted salaries.• The processing and approval of all budget revisions involving salary reserve transfers.• The compilation of data on position counts and vacancies.Unless authority has been delegated to an agency, all budget revisions (BD-606) related to salarygo through this unit for approval. Although this unit maintains records on salary reservebalances for control purposes, each departmental budget officer is charged with maintainingsalary control records (salary reserve).Salary ReserveAdditional information can be found in Section 3, Budget Execution.Unemployment CompensationChapter 96 of the General Statutes of North Carolina provides for full unemployment insurancefor all North Carolina employees, both private and public.Fiscal management of all state agencies should be knowledgeable of its requirements andprovisions. The state personnel manual provides information relating to claims and services foremployees.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 158Under the provisions of G.S. 96.9(d), the State of North Carolina elected in lieu of payingpremiums, to become liable for unemployment compensation payments made on its behalf by theEmployment Security Commission. Among the requirements is the provision that remittancesshall be paid by each employing unit (department) within 25 days of invoicing (G.S. 96.9(f)(1)).Late payments are subject to a 10% penalty.Each agency must give the highest priority to verifying the statement and remitting payment infull to the Employment Security Commission, within the 25-day limit. Questionable items, forwhich agreement cannot be obtained immediately, should be paid. The Employment SecurityCommission will give credit on questionable items decided in favor of the agency, and this creditwill be applied on the next statement.Each agency must provide a line item from which this staff benefit will be paid (see chart ofaccounts). When funding is already budgeted, immediate disbursement should be made. Ininstances where insufficient or no funding is budgeted, agencies must locate funds within theirdepartments to meet this obligation. Budget requests to transfer funds into the proper line itemfor disbursement should be made to OSBM. Payments to cover employees not supported fromappropriated funds should be paid from the same source that supported their base salaries orfrom reserves set up for that purpose. OSBM establishes the requirements for the reserve fundsbased on employment levels and trends. Notification of rate changes will be provided asnecessary.The Employment Security Commission sends detailed statements to the agencies for each fiscalperiod. Agency identity and budget codes are provided within the account number on theheading of the statement. General fund codes and special fund codes will carry differentnumbers.Workers' CompensationThe North Carolina Workers' Compensation Act, Chapter 97 of the General Statutes, asamended, covers all officers and employees of the state, including those who are elected by thepublic or by the General Assembly, or appointed by the Governor to serve on a per diem, parttime or fee basis, with or without the confirmation of the General Assembly.When an employee of the State of North Carolina is injured on the job, responsibility forclaiming Workers' Compensation benefits begins with the injured employee. The injuredemployee should file the claim with his/her supervisor, personnel officer, or workers'compensation administrator. Each department, institution, or agency should report each accidentor injury to the Industrial Commission on forms provided. The provisions of the Workers'Compensation Act and the requirements of the Industrial Commission should be followed inpreparing this report.Each department, institution, or agency is responsible for properly investigating a Workers'Compensation claim before accepting liability for the injury on behalf of the state. Departments

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 159needing assistance in this matter should contact their department's legal staff or the AttorneyGeneral's Office.The State of North Carolina is self-insured for the payment of Workers' Compensation claims.As there are generally no appropriations to cover Workers' Compensation claims, eachdepartment, institution, or agency is required to pay its own claims out of its own appropriation.When necessary, each department should submit a budget revision (BD 606) to OSBM totransfer funds to account number 53 163X.Workers' Compensation Benefits as follows:• 53 1630 Workers' Compensation Summary: General category for summation ofall expenditures that are paid under the workers' compensation program.Budget revisions should reflect the detail level listed below.• 53 1631 Medical Benefits: This includes medical, surgical, hospital, nursingservices, medicines, sick travel, rehabilitation services, and medical andsurgical supplies.• 53 1632 Temporary Disability Payments: This includes any expenditures paidunder an agreement to pay compensation for time lost from work.• 53 1633 Permanent Disability Payments: This includes payment fordisfigurement and permanent full and partial disability ratings given at the endof the healing period.• 53 1634 Death Benefits: This includes compensation paid to a surviving spouse ordependent child and allowance for funeral expense.Unless otherwise approved by OSBM, the use of state appropriated funds, or other public funds,to purchase worker's compensation insurance from private insurance carriers is an inappropriateuse of these funds and is not an authorized expenditure.The State Employee's Disability Salary Continuation Plan includes a provision for coordinationof benefits among various insurance plans through a reduction formula.When an injured worker receives Workers' Compensation benefits, Disability SalaryContinuation Plan benefits are reduced accordingly.Safety Shoe Allowance for State EmployeesIn compliance with Occupational Safety and Health Administration (OSHA) and Office of StatePersonnel policy provisions related to personal protective equipment, and to ensure that Stateemployees are provided ample opportunity to purchase the proper and necessary safety shoesrequired by the job for adequate foot protection, the annual reimbursement allowance for the

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 160purchase of safety shoes is set at $80 per year. The Office of State Budget and Management andthe Office of State Personnel shall review the safety shoe reimbursement practice each bienniumin order to adjust the allowance to reflect inflationary changes. Any exception to this policymust be approved in advance by the Office of State Budget and Management.Dual EmploymentPurposeThe dual employment policy is a statewide uniform policy to be followed when one statedepartment secures the services of an employee of another state department on a parttime,consulting, or contractual basis. It is recognized that conditions vary widely fromdepartment to department, however this policy will attempt to cover as many differentsituations as possible and to strike a sound balance between the interests of the state, thedepartment, the employee and the public. For employees engaged on a full time basis,any additional work for other than a state department is termed secondary employmentand is covered in the State Personnel Manual (Section 1-5.2). Form CP-30 should beused for reporting purposes involving dual employment.Applications and ExclusionsThe policy applies to all state employees both subject to and exempt from the provisionsof the State Personnel Act and to all state departments.It does not apply to employees in the public school system nor to employees ofinstitutions in the community college system. Employees in these systems are not stateemployees (for the purposes of Dual Employment regulations); they are employed bylocal boards of education and local boards of trustees.This policy applies only in situations involving one employee and two agencies. Forsituations involving one employee assuming dual roles within the same agency, see theState Personnel Manual, Section 7, "Occasional or Sporadic Employment in a DifferentCapacity."DefinitionsParent departmentThe state department, agency, or institution having control over the services of theemployee, and from which the employee receives his or her regular paycheck.Borrowing departmentThe state department, agency, or institution seeking, on a temporary or part-time basis,the services of an employee of another state department.Straight-time employeeGenerally, an employee with a 40-hour per week work schedule, including employees onrotating shifts and those with split shifts. Permanent employees filling positions subjectto the State Personnel Act, with perhaps extremely rare exceptions, are straight-timeemployees for the purposes of this policy statement. Such persons, except when working

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 161odd or split shifts, are considered to be on their own time between 5:00 p.m. and 8:00a.m. and on Saturdays, Sundays, holidays, and while on annual leave.Variable-time employeeAn employee, though considered to be the incumbent in a full-time budgeted position,may be required to maintain on-duty status (normally, at a fixed work station) for only alimited number of hours per week. An example of a variable-time employee is a teacherin an institution of higher education who for one semester might be scheduled to teachclasses for fifteen hours a week, and for the next semester only ten hours but with theadded duty of advising students. The hours during which the employee advises might befixed, or the employee might have the option of scheduling his/her own appointments.Variable-time employees are considered to be on their own time except at those hourswhen they are required to be in scheduled on-duty status.Instructional Contractual ServicesThe employment by one higher education institution of a teacher under contract to anotherinstitution: An example of this practice is the exchange of teachers between two proximateinstitutions, such as the North Carolina School of the Arts and Winston-Salem State University.HonorariaNotwithstanding any definitions previously given or henceforth to be given to the word"honorarium," any payment by one agency to an employee of another agency for any type ofservices is subject to the procedures of the Uniform Statewide Policy on Dual Employment.GuidelinesPermission of parent departmentThe administrative head of the parent department must give approval in writing in each instanceof an employee's performing services for pay for another state department.Approval should be granted or withheld after a careful weighing of the circumstances,considering such factors as the character of the services to be performed, the effect on the moraleof other state employees, the ethical considerations involved, the temporary loss of the servicesof the individual to the parent department, the possibly reduced efficiency of the individual as aresult of fatigue or inattention to primary responsibilities, the urgency of the situation, possiblealternative arrangements, and other pertinent factors. If the administrative head of thedepartment is to perform services for pay for another state department, the Office of StateBudget and Management must approve the arrangements.Statement of employee's immediate supervisorIn any case of services performed for pay for a borrowing department during an employee's"own time", the employee's immediate supervisor must certify in writing that (a) the actual workand any related travel time will be performed outside of regularly scheduled working hours, and(b) the employee will not use "company time" to prepare for the services to the borrowingdepartment.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 162Payment for servicesIt is assumed that certain officials will make outside appearances and speeches, which are in facta part of their normal duties, and such officials should not expect to be paid for these occasions.If payment is to be made for services, the rate must be agreed upon in advance and may not beincreased merely because additional funds become available. Neither are retroactive paymentspermissible to persons who have already performed services without compensation. Commutingexpenses are not reimbursable.An employee under contract to an educational institution for an academic year (normally, ninemonths) is ordinarily considered to be a free agent during the summer notwithstanding that suchemployee may be paid on a twelve month basis.Professional Service ContractThe state or one of its departments may contract with a professional corporation for the deliveryof professional services by one or more of its employees who are also state employees as long asthey are in compliance with all other regulations of the Dual Employment Policy. (Historically,this situation has occurred most frequently in agencies/institutions employing physicians who,through their private practice, are also working for another agency/institution throughcontractual arrangement). Strict adherence to these policies must ensure that employers willknow if the same person is working at more than one state job and will be able to see that timewhich is supposed to be spent at one job is in fact spent at that job and not at another job.Procedures for PaymentAll payments for services must be made by the borrowing department directly to the parentdepartment of the employee borrowed, and not to the employee.All payments for services of borrowed employees must be made by the borrowing departmentfrom dual employment line items. They may not be made from salaries and wages line items. Iffunds for part-time services are presently budgeted in salaries and wages line items, the Office ofState Budget and Management will give favorable consideration to requests to transfer thesebudgeted amounts to dual employment lines if needed. The same would apply to transfer offunds budgeted for temporary wages.Employee's travel and/or subsistence expenses, if any, incurred in the performance of servicesfor the borrowing department, will be paid directly to the employee by the borrowingdepartment. (Commuting expenses are excluded.)All payments to the parent department must include the following:• Payment for employee's services.• Employer's Social Security contributions computed on the payment for services.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 163• Employer's retirement contribution computed on the amount of payment from above, ifapplicable (applicable when the borrowing agency is merely supporting a portion of theemployee’s regular salary; not applicable for additional compensation beyond theemployee’s regular salary).Subject to negotiation between the two departments, payments may include an amount for theoverhead expenses of the lending department to cover administrative and other indirect costs;payments may also include amounts for direct costs incurred by the parent department, agency,such as identifiable related expenses for clerical and duplicating services.If the work (including preparation) is performed during the employee's regular work schedule(normally 8:00 to 5:00, Monday through Friday), and the employee is not on leave, the employeemay not under any circumstances receive additional pay.Compensation must be in accordance with the minimum wage and overtime pay provisions,which require overtime payments of time and one-half the employee's regular rate of pay for thehours worked in excess of 40 in the week. However, if during any given workweek theemployee does not perform any work for the parent department, no overtime payment will berequired unless the employee works more than 40 hours for the borrowing department.If a straight-time employee is on authorized leave from regular duties with the parentdepartment, the employee may be paid for the extra work on the same basis as in the paragraphabove.In all cases of additional payment to an employee, the parent (lending) department must makethe payment to the employee as an addition to the employee's regular pay. This is necessary tomaintain the integrity of the retirement, social security, and federal and state income tax records.The parent department will budget and receive all payments from the borrowing agency asagency receipts, in an account titled "Reimbursement-Dual Employment." It is not permissibleto handle such payments as refunds of expenditures. If the conditions above (no additional pay)apply, any receipt from the borrowing agency will be handled by the lending department as anover-realization of the receipts line item.Maintaining RecordsThe extent of the practice of cross-hiring in state government must be periodically assessed.Borrowing departments must, therefore, maintain the following information for each instance:• Employee Information• Name of employee borrowed• Classification, rank, or title• Parent agency of employee• Character of services performed (lecture, consultation, etc.)• Time (hours and days) employed by borrowing department:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 164• During employee's regularly scheduled working hours• During employee's own time• Amount of payment to parent department:• For services• For employer's retirement and social security contributions• For indirect expenses of parent department• For related direct costs of parent department.Copies of the parent department head's approval must be attached. If applicable, the statement ofthe employee's immediate supervisor, referred to under the Guidelines section above, must alsobe attached.Instructional ServicesFor this type of regular-session dual employment, (and not applicable to summer school), thefollowing procedures for payment will apply where the teaching covers one or more courses foran entire academic period (quarter or semester):• The permission of the administrative head of the parent institution and/or the teacher'simmediate supervisor is implied and need not be documented.• The rate of pay and the amount of any related expenses must be agreed upon in writing inadvance.• Any additional salary payment made to the on-loan teacher for these outside services maybe included on the parent institution's regular payroll and may be paid out of the salariesline item carrying the teacher's regular contract salary. In these cases it is not necessaryto make payments from "Dual Employment Wages", and no budget revision is necessaryunless the over-realized receipts from the borrowing agency are required for a substituteteacher.• Ordinarily, any supplemental pay to the teacher for outside teaching would be handled onthe parent institution's payroll as in the following example, where the regular contractpay is $1,500 per month and the pay for outside services is $200:Rate of Pay Gross Pay$1,500 $1,700• If the parent institution suffers a loss as a result of the loan of the teacher, the teacher'stotal compensation should be adjusted. Example: There is a teacher whose nine-monthsalary for teaching four classes per semester is $9,000. By arrangement, the teachingassignment at the parent institution for the year is reduced to two classes per semester,but the teacher will teach two classes at another institution. The teacher's regular salarywould ordinarily remain the same (the teacher on loan would not receive $13,500) [9,000

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 165+ 4,500] and the borrowing institution would provide one-half of the $9,000 to be paid.The remaining $4,500 is available to the parent institution for a substitute teacher.• The teacher may not be paid for work not yet performed. This means that for each payperiod the borrowing institution must send a transmittal (which may be a form letter) anda check to the parent institution. Form CP-30 will be required for these additionalpayments where the affected payroll is prepared by Central Payroll.• The borrowing institution will make payments for services from a line item titled"Employee on Loan Payments", transferring funds, upon Office of State Budget andManagement approval, from salaries line items as required.Joint AppointmentsIt shall be mutually agreed between departments as to which department will be the parentdepartment. Normally, it will be the department who first employed the employee.In cases of Joint Appointment (involving base pay) the borrowing department will reimburse theparent department for matching social security and retirement contributions. The employerportion of hospital medical insurance will be borne by the parent department and not prorated tothe borrowing department.Fees for Employee Training, Tuition, and Executive DevelopmentEmployee Training FeesFees for courses that provide training in specific areas are charged in the Accounting System to"Employee Training" under "Other Services." Employee training involves courses that developan employee's knowledge, skill, and ability to perform the duties of his/her present job, such ascourses on computer usage or management skills development. These courses generally have aset fee, are of relatively short duration, and are not part of a curriculum the employee isparticipating in leading to some educational degree.Tuition FeesTuition fees are those costs for courses included in an academic program directly related to theemployee's job or field of work and which are necessary to complete a degree program from anaccredited educational institution. These expenses are charged to "Employee EducationalExpense" under "Other Services". Please consult the State Personnel Manual for additionalinformation on the State's Educational Assistance Program.Executive Development FeesExecutive development fees are expenses incurred when an employee participates in theGovernor's Executive Management Program administered by the Department of Administrationor in other executive development opportunities that would not fit the definition of EmployeeTraining or Tuition fees. Executive development fees are charged to "Other Employee TrainingExpenses" under "Other Services".

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 166Contractual ServicesPolicy for Contractual ServicesIt is the policy of the state that State agencies shall acquire contractual services only after it isdetermined that the services cannot be reasonably accomplished by employees of the agencyseeking such services. General Statute 143, Articles 3 and 3C and the rules, regulations, andprocedures of the Division of Purchase and Contract provide the reference for the procurementof services.** NOTE** OSBM coordinates the efforts of governmental agencies in the collection,development, dissemination, and analysis of official economic, demographic, and social statisticspertinent to state budgeting. To minimize duplication of effort in collecting or developing newstatistical series, including contractual arrangements, state agencies must submit to OSBMproposed procedures and funding requirements. (G.S. 143-3.5)Types of Contractual ServicesConsultant ServicesNo state agency shall contract to obtain services of a consultant or advisory nature unless theproposed contract has been justified to and approved in writing by the Division of Purchase andContract in the Department of Administration.Services of a consultant or advisory nature shall mean work or task performed by independentcontractors possessing specialized qualifications to investigate assigned problems or projects andto provide counsel, review, analysis or advice in formulating or implementing improvements inprograms or services. These are service contracts of a consultant or advisory nature. It is thepolicy of the state that whenever possible consultant services shall be obtained from other stateagencies when the services available from other state agencies substantially meet the reasonablespecifications of the requesting agency.Service ContractsA service contract is any agreement in which an independent contractor performs routine orrecurrent services requiring specialized knowledge, experience, expertise, or similar capabilitiesfor a state agency for compensation from state funds (i.e. maintenance of building or equipment,food services, audits). The service is not primarily for review, analysis or advice in formulatingor implementing improvement in programs or services.Personal Service ContractA personal service contract is an agreement for services provided by a professional individual ona temporary or occasional basis (i.e. an engineer or artist). This may also be a consulting serviceif it is of an advisory nature.Contracts with RetireesIf an agreement is made with a retired state employee to provide services of a consultant oradvisory nature, the proposed contract must be approved pursuant to the requirement of"Consultant Services" above.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 167An agreement to employ a retired state employee on a contract basis must be made pursuant tothe requirements of G.S. 135-3(8)c.Any employee separated from State government and paid severance wages pursuant to G.S. 143-27.2(b) shall not be employed under a contractual arrangement by any State agency, other thanthe constituent institutions of the University of North Carolina and the constituent institutions ofthe North Carolina Community College System, until 12 months have elapsed since theseparation. This subsection does not affect any reduction in force right that the employee mayhave.Contracts Between State Departments, Agencies and InstitutionsThe department budget offices of contracting departments, agencies and institutions must revieweach contract, prior to its execution, to be sure the terms of the contract are consistent with thebudget policies and regulations of the State Budget Manual. If any terms are found to beinconsistent with budget regulations, including travel and subsistence regulations, those termsmust be amended to conform to the State Budget Manual or be deleted from the contract. Afterthis departmental review, if the department budget division feels an exception to budget policy iswarranted and the need for an exception can be documented, a request for an exception may bemade to OSBM prior to execution of the contract.All payments for services should be made after the service has been satisfactorily performed.Payments shall be made on a quarterly reimbursable basis for an amount equivalent to thepercentage of the contract performed and services rendered. If a cash flow problem exists,departments, agencies, and institutions may advance one month's estimated expenses, or onequarter's estimated expenses if the contract is six months or longer duration, to the provider ofthe services. Such advances must be reported to OSBM immediately.Certain interdepartmental contracts may involve "dual employment" considerations that areaddressed in the Dual Employment section.Moving and RelocationConditions and LimitationsAn employee's moving expenses may be paid by the state only when:• A change of residence is deemed to be in the best interest of the state when such a changeis required as a result of a promotion within the department or by a change in assignmentinvolving a transfer of the employee for the advantage and convenience of the employingagency. Moving expenses are not allowable for initial employment or if the employeerequests the change. Transfer within or between departments if the employee is heavilyrecruited is termed for the best interest of the state. Exceptions may be made in extraordinarycircumstances if advance written approval is obtained from OSBM. Requestsmust be supported by complete details and justification.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 168• Move is accomplished within 90 days. The department head or designee may approve anextension of an additional 90 days. Any extension in excess of the 180 days must beobtained in writing from OSBM.• The new duty station is 50 miles or more from the existing (or prior) duty station.Every effort should be made to expedite the movement of the employee's household goods.However, the time allowed for the employee's locating a new residence and moving is theresponsibility of the individual department and should be granted as leave-with-pay, for up to atotal of 16 hours, which is accounted for as normal workday activities.Expenses PaidMaximum payment for various categories of costs is enumerated in this section. Any additionalcosts must be borne fully by the employee.Moving of household and personal goodsPayment for movement of household and personal goods includes items such as furniture,clothing, and personal effects. Any items that require special handling and/or packing, such asan animal, a boat, airplane, antiques, satellite dish, campers, woodworking equipment, workshopitems, heavy machine equipment, and building materials are not considered as household orpersonal goods. Payment includes, and is limited to, the cost of actual packing, transporting, andunpacking of a maximum of 15,000 pounds. If the move is on a weight basis (50 miles or more),the maximum cost to be paid can be no more than the lowest available regulated tariff rates. Ifadditional storage is required for any such items, it is the responsibility of the employee and isnot reimbursable.Total transportation charge on any shipment shall be no more than the charge that would applyon the same shipment under the next greater unit of weight at a rate applicable to such nextgreater unit of weight.When a shipment exceeds 15,000 pounds, reimbursement shall be based upon the tariff rate of15,000 pounds, provided reimbursement does not exceed actual poundage costs.Excess weight authorizationWhen due to extraordinary circumstances the total weight exceeds the maximum weightallowable, (15,000 pounds) a request, for payment for this excess, which sets forth in detail thenature of such extraordinary circumstances may be submitted for consideration to OSBM.Except as otherwise provided specifically herein, payment may be made only for basic servicesperformed by the carrier. No payment may be made for expedited service, space reservation, orother special or non-routine services by the carrier.InsurancePayment of transit insurance costs, in addition to that included in the carrier's required basecoverage of 60 cents per pound per article, is limited to $1.25 per pound per article, and coverage

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 169for up to 15,000 pounds. Additional coverage is the responsibility of the employee and is notreimbursable.Appliance ConnectionsThe reasonable costs of disconnection of appliances, as defined in this section, at the oldresidence and reconnection or reinstallation of the same appliances at the new residence, by thecarrier or by a service company may be allowed up to a maximum of $200. This would includeitems typically found in performing household operations such as electrical, water, gas hook-up,household appliances, and connection of a single telephone. This would not include itemsconsidered unnecessary to household operations such as television antennas, cablevisionconnection, satellite dish, nor any type of power tools or other equipment associated with homeworkshops, hobbies, or other activities. Also, utility deposits or the running of utility lines arenot a reimbursable expense by the employing agency.Mobile HomesIn lieu of an allowance for loading and unloading, and insurance coverage, charges not to exceeda total of $500 are allowable for the following costs associated with the movement of mobilehomes utilized as the employee's residence:• Blocking and unblocking.• Anchoring and skirting.• Movement of air conditioners and utility buildings.• Wheel rental.Claims for payment for such services, whether performed by the carrier or a service company,must be supported by itemization on the bill of lading or on paid receipts, as applicable, detailingin either case the appliances serviced, the work done, and the individual cost of each suchservice. Such services performed by the carrier, and for which he assumes completeresponsibility, may be invoiced at the applicable tariff rates, and must be further supported by anaffidavit signed by the employee verifying that the carrier performed the services.Employee Travel and SubsistencePayment for travel expenses incurred in moving the employee and his family from the oldresidence to the new residence is authorized as follows:• For locating new residenceTransportation, mileage calculated at the statutory rate for a maximum of three roundtrips by automobile with each trip not to exceed two days (2 days, 1 night) for total househunting trips not to exceed 6 days (6 days, 3 nights). Subsistence for meal costs asshown in the State Budget Manual travel section for each member of the family per trip.If overnight lodging is necessary, subsistence for the following day is allowable.Lodging is limited to one double room.• For day of moving

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 170Mileage calculated at the statutory rate for a one-way automobile trip (a maximum of twocars). Subsistence for meal costs as shown in the State Budget Manual travel section(Section 5) for each member of the family. Employees have two days to complete themove. If overnight lodging is necessary, subsistence for the following day is allowable.Lodging is limited to one double room. The department head or his/her designee canapprove any additional time needed.• New duty stationSubsistence at the new duty station is not to exceed five days a week (Monday-Friday ora consecutive five day period, if working a nontraditional schedule). Mileage is limitedfor one-round trip per week from the employee’s current residence to the new dutystation, subject to state travel laws and regulations, from the time he begins work until hemoves into his new residence, not to exceed a total of 40 consecutive working days,excluding leave off.Procedure for Moving and PaymentArranging the MovePrior to the actual move, the employee will submit a request for the department head or his/herdesignee. The request shall include bids from three movers and an estimate of other allowableexpenses. These regulations require competitive bids that do not exceed the tariff rates andcharges as published and filed with the North Carolina Utilities Commission. Bidders must haveall required state and federal licenses and insurance.Bids included in the request should include:• Shipment weight.• Number of cartons.• Charges for loading and unloading.• Cost of transit insurance coverage.Transportation and loading shall be governed by the rules and regulations as contained in tariffson file with the North Carolina Utilities Commission.The department head or his/her designee will notify the employee in writing as to the moverreceiving the contract. The department head of designee should accept the low bid unless judgednot to be the state's advantage and interest. An advancement not to exceed 75% of the estimatedmoving costs may be made to the employee, but not more than 5 working days before thescheduled move. Reimbursement to the employee will be on the basis of the total bid price ofthe successful bidder.Procedure for PaymentUpon the completion of the move, the employee may pay the carrier and/or submit to thedepartment's budget officer vouchers consisting of:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 171• A bill of lading from the carrier which shows the actual rates and charges fortransporting, loading and insurance, itemized by miles, loading charges with numbers andsizes of cartons, insurance coverage, and appliance disconnections and connections, asspelled out in this section.• For moves over 50 miles, a certified weight ticket obtained by the mover and certifyingthe actual gross, tare, and net weights. This can be obtained from platform scales at truckstops, weight stations, etc.• A copy of the letter authorizing the transfer at state expense. The agency shall reimbursethe employee or pay the carrier upon receipt of proper documentation.The expenditure should be charged to an account designated. "Employee Moving Expense" andsummarized as an Other Services Account. Reimbursement for appliance connections by aservice company may be handled as a separate transaction.Alternate ProcedureDepartment heads or his/her designees are authorized to approve moving by an alternateprocedure provided proper documentation and receipts supports the move. The agency mayreimburse the actual cash expenditure made by an eligible employee in moving his householdgoods by another method, provided such reimbursement does not exceed that which would havebeen made if a regulated common carrier had been used. This alternative may be applicable formovement of an employee's goods contained in a house trailer or by a rental trailer or truck or bya nonlicensed mover. It is the responsibility of the department head or designee to determine ifthis method is cost effective before approval is granted.HonorariaState EmployeesA state employee shall not accept an honorarium for an activity where state-reimbursed travel,work time, or resources are used or where the activity can be construed as having a relationshipto the employee's state position; such activity would be considered official duty on behalf of thestate. A relationship exists between the activity and the employee's state position if "but for" thatemployee's state position, the employee would not participate in the activity in the same manneror capacity. The employee should make every attempt to avoid the appearance of impropriety.An employee may receive an honorarium for activities performed during regular non-workinghours or while on annual leave if the following conditions are met:• All expenses are the total responsibility of the employee or the non-state sponsor of theactivity in which the employee is participating.• The activity has no relationship to the employee's state duties.Nothing in this policy shall be interpreted as preventing the payment to the state by an outsidesource for actual expenses incurred by an employee in an activity, or the payment of a fee to the

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 172state (in lieu of an honorarium to the individual) for the services of an employee. Any suchpayments made to the state should be deposited to the departmental account and an appropriateentry should be made to the appropriate revenue line.Non State EmployeesHonoraria are the responsibility of each department, institution, or agency contracting for thepersonal services of a nonstate employee. Each department shall develop a form letter for suchinvitations and it shall include the amount of the honorarium offered. This amount shall coverany expenses incurred by the nonstate employee in lieu of a per diem.ExceptionsAny exceptions to these rules and regulations, except those expressly delegated, must beapproved in advance by OSBM.Severance PolicyG.S. 143-27.2 governs the policies and procedures applicable to severance.Reporting Misuse of State PropertyPursuant to G.S. 114-15.1, any state employee is required to report any possible misuse of stateproperty to his or her immediate supervisor, who is then required to report this information to thehead of the respective department, agency, or institution. The agency, department, or institutionhead is required to report this information in writing to the State Bureau of Investigation (SBI)within 10 days.Notification of the SBI within the 10 day period is required even if the agency, department, orinstitution head is unable to determine whether the allegation is credible (1998 Advisory Opinionof the North Carolina Attorney General, #373).

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 173REPORTING POLICIES AND GUIDELINES INDEXAgency organizational charts 196Certification letters 190Committee and council report 193Designation of duty station 192Mail list survey 190Monthly budget report 175Monthly report on the appropriations and allotment 184Monthly report on budget – general fund 175Monthly report on budget – capital improvement funds 188Monthly report on budget – special fund, trust fund, enterprise services,intergovernmental service, and institutional fund 179Report on department forms and reports 195Statement of cash receipts, disbursements and balances 186Survey of fees charged by department 191Monthly Budget ReportIt is necessary for state departments to report on transactions from appropriations and/or receiptseach month. The reports are made on forms prescribed by OSBM. Completeness and accuracyin reporting are essential and, when necessary, reports may be returned to the department forcorrection.Report PeriodThe reporting period is each calendar month of the fiscal period.Report Due DateReports must be available electronically in OSBM and the Office of the State Controller no laterthan the tenth working day of the following month.Report InformationAll reports are cash based reports unless authorizaed by OSBM. Additional documentation,exceptions, or alternatives should be submitted as directed by OSBM.• Electronic reports: July – May• June: Two complete assembled sets of each report separated with the pages bursted andin order as listed in the reporting requirements by budget code.Report OrderGeneral Fund (Type 10000)• Monthly Budget Report (BD 701)• Budget Code Recap• Summary by Purpose• Summary by Account

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 174• Detail Reports (Account Summarization for each purpose)• Monthly Report on the Appropriations and Allotment (BD 702)Special Fund (Type 20000)Trust Fund (Type 60000)Enterprise Services (Type 50000)Intergovernmental Service (Type 70000)Institutional fund (Type 00000)• Monthly Budget Report (BD 701)• Budget Code Recap• Summary by Purpose• Summary by Account• Detail Reports (Account Summarization for each purpose)• Monthly Report on the Appropriations and Allotment (BD 702)• Statement of Cash Receipts, Disbursements, and BalancesCapital Improvements (Type 40000)• Monthly Report on Capital Improvements (BD 725)Budget Code RecapDetail Report(s)Report FormatMonthly Report on the Budget (BD 701) - General FundThe fiscal information on the Monthly Report should appear at the certification level (BD-307).Budget Code Recap (Section 1 of the BD 701)The budget code recap (Example 1) provides a code level summarization for total expenditures,revenues, and appropriation.Summary by Purpose (Section 2 of the BD 701)The summary by purpose/fund (Example 2) provides a summarization for the total expenditures,and revenues of the code by the fund code (first four positions of center).Summary by Account (Section 3 of the BD 701)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 175The summary by account (Example 3) provides a summarization for the total expenditures andrevenues of the code by the account number as defined in the Chart of Accounts (COA) of theNorth Carolina Accounting System (NCAS).Detail Report by Fund (Section 4 of the BD 701)The detail report by fund (Example 4) provides a summarization for the expenditures andrevenues of the purpose (fund) by the account number as defined in the COA. A separate detailreport is prepared for each purpose (fund) listed on the Summary by Purpose section of the BD701.Information on the BD 701Each report section listed above will have the following information:BudgetedCertified (Column C)The certified budget lists the appropriation amounts as shown on the BudgetCertification (BD 307) with any type 11XXXX revisions (BD 606).Authorized (Column D)The authorized budget lists the appropriation amounts as shown on BudgetCertification form BD 307 with any type 11XXXX, 12XXXX and 14XXXXrevisions (BD 606).ActualCurrent-Month (Column E)The current-month lists the disbursements and deposits and the impact onappropriation for the current reporting period.Year-to-Date (Column F)The year-to-date lists the disbursements and deposits and the impact onappropriation for the year-to-date.Unexpended/UnrealizedCertified (Column G)The unexpended/unrealized certified lists the difference between the certifiedbudget and the year-to-date column.Authorized (Column H)The unexpended/unrealized authorized lists the difference between the authorizedbudget and the year-to-date column.Encumbrance (Column I)The encumbrance records the obligations from purchase orders, contracts or otherencumbrance documents.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 176Rate (Column J)The rate is the annual projected rate of expenditures or revenue based on the year-to-datefiscal activity.Line 1 This line is for the report title.Line 2 This line is the title of the 701 report.Line 3 This line identifies the reporting period for which the 701 isprepared.Line 4 This line indicates the budget code number and title.Line 5 This line describes the section of the report:• Budget Code Recap• Summary by Purpose• Summary by Account• Detail Report by FundLine 6 This line defines the heading of the columns of information on the701.Line 7 This section of the report provides information on expenditures for thecurrent reporting period. Information is reported on the certified budget,authorized budget, current month actual expenditures, year-to-date actualexpenditures, the unexpended balance for both the certified andauthorized budget, the encumbrances and the rate of expenditure.Section 1: The information for expenditures in Section 1 is summarized asa total for the code.Section 2: The information for expenditures in Section 2 is summarized asa total for each purpose (fund) within the code.Section 3: The information for expenditures in Section 3 is summarized asa total for each account number (object of expenditure). Theaccount numbers are reported at the level of the certified budgetor as directed by the Office of State Budget and Management.Section 4: The information for expenditures in Section 4 is summarized asa total for each account number (object of expenditure) withinthe purpose (fund). The account numbers are reported at thelevel of the certified budget or as directed by the Office of StateBudget and Management. The Detail Report by Fund (Section4) will be prepared for each purpose (fund) listed on the

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 177Summary by Purpose (fund) Report.Line 8 This section of the report provides information on revenues for the currentreporting period. Information is reported on the certified budget,authorized budget, current month actual receipts, year-to- date actualreceipts, the unrealized balance for both the certified and authorizedbudget and the rate of receipt.Section 1: The information for revenues in Section 1 is summarized as atotal for the code.Section 2: The information for revenues in Section 2 is summarized as atotal for each purpose (fund) within the code.Section 3: The information for revenues in Section 3 is summarized as atotal for each account number (object of receipt). The accountnumbers are reported at the level of the certified budget or asdirected by OSBM.Section 4: The information for revenues in Section 4 is summarized as atotal for each account number (object of receipt) within thepurpose (fund). The account numbers are reported at the levelof the certified budget or as directed by OSBM. The DetailReport by Fund (Section 4) will be prepared for each purpose(fund) listed on the Summary by Purpose (fund) Report.Line 8A This adjustment to cash section of the report is provided to adjust themonthly accounting activity for certain accrual actions to therequirement of cash based reporting.Line 9 This section of the report provides information on appropriation for thecurrent reporting period. Information is reported on the certified budget,authorized budget, current month actual, year- to-date actual, theunexpended balance for both the certified and authorized budget and therate of expenditure.Monthly Report on the Budget (BD 701): Special Fund, Trust Fund,Enterprise Services, Intergovernmental Service, and Institutional FundReport FormatBudget Code Recap (Section 1 of the BD 701)The budget code recap (Example 5) provides a code level summarization for total expenditures,revenues, and cash balance.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 178Summary by Purpose (Section 2 of the BD 701)The summary by purpose/fund (Example 6) provides a summarization for the total expendituresand revenues of the code by the code (first four positions of center).Summary by Account (Section 3 of the BD 701)The summary by account (Examples 7 & 8) provides a summarization for the total expendituresand revenues of the code by the account number as defined in the Chart of Accounts (COA) ofthe North Carolina Accounting System (NCAS).Detail Report by Fund (Section 4 of the BD 701)The detail report by fund (Examples 9 & 10) provides a summarization for the expenditures andrevenues of the fund by the account number as defined in the COA. A separate detail report isprepared for each purpose (fund) listed on the Summary by Purpose section of the BD 701.Information on the BD 701Each report section listed above will have the following information:BudgetedCertified (Column C)The certified budget lists the appropriation amounts as shown on the BudgetCertification (BD 307) with any type 11XXXX revisions (BD 606).Authorized (Column D)The authorized budget lists the appropriation amounts as shown on BudgetCertification form BD 307 with any type 11XXXX, 12XXXX and 14XXXXrevisions (BD 606).ActualCurrent-Month (Column E)The current-month lists the disbursements, deposits, and the impact onappropriation for the current reporting period.Year-to-Date (Column F)The year-to-date lists the disbursements, deposits, and the impact onappropriation for the year-to-date.Unexpended/UnrealizedCertified (Column G)The unexpended/unrealized certified lists the difference between the certifiedbudget and the year-to-date column.Authorized (Column H)The unexpended/unrealized authorized lists the difference between the authorizedbudget and the year-to-date column.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 179Encumbrance (Column I)The encumbrance records the obligations from purchase orders, contracts, or otherencumbrance documents.Rate (Column J)The rate is the annual projected rate of expenditures or revenue based on the year-to-datefiscal activity.Line 1 This line is the report title.Line 2 This line is the title of the 701 report.Line 3 This line identifies the reporting period for which the 701 is prepared.Line 4 This line indicates the budget code number and title.Line 5 This describes the section of the report:• Budget Code Recap• Summary by Purpose• Summary by Account• Detail Report by FundLine 6 This line defines the heading of the columns of information on the 701.Line 7 This section of the report provides information on expenditures for thecurrent reporting period. Information is reported on the certified budget,authorized budget, current month actual expenditures, year-to-date actualexpenditures, the unexpended balance for both the certified andauthorized budget, the encumbrances, and the rate of expenditure.Section 1: The information for expenditures in Section 1 is summarized asa total for the code.Section 2: The information for expenditures in Section 2 is summarized asa total for each purpose (fund) within the code.Section 3: The information for expenditures in Section 3 is summarized asa total for each account number (object of expenditure). Theaccount numbers are reported at the level of the certified budgetor as directed by OSBM.Section 4: The information for expenditures in Section 4 is summarized asa total for each account number (object of expenditure) withinthe purpose (fund). The account numbers are reported at thelevel of the certified budget or as directed by OSBM. The

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 180Detail Report by Fund (Section 4) will be prepared for eachpurpose (fund) listed on the Summary by Purpose (fund)Report.Line 8 This section of the report provides information on revenues for the currentreporting period. Information is reported on the certified budget,authorized budget, current month actual receipts, year-to-date actualreceipts, the unrealized balance for both the certified and authorizedbudget, and the rate of receipt.Section 1: The information for revenues in Section 1 is summarized as atotal for the code.Section 2: The information for revenues in Section 2 is summarized as atotal for each purpose (fund) within the code.Section 3: The information for revenues in Section 3 is summarized as atotal for each account number (object of receipt). The accountnumbers are reported at the level of the certified budget or asdirected by OSBM.Section 4: The information for revenues in Section 4 is summarized as atotal for each account number (object of receipt) within the purpose(fund). The account numbers are reported at the level of the certifiedbudget or as directed by OSBM. The Detail Report by Fund (Section 4)will be prepared for each purpose (fund) listed on the Summary byPurpose (fund) Report.Line 8A This adjustment to cash section of the report is provided to adjust themonthly accounting activity for certain accrual actions to therequirement of cash based reporting.Line 9 This section of the report provides information on appropriationfor thecurrent reporting period. Information is reported on thecertified budget,authorized budget, current month actual, year-to-date actual, theunexpended balance for both the certified and authorized budget and therate of expenditure.Cash Balance InformationSection 1: The information for Lines 10-17 in Section 1 is summarized asa total for the code.Section 2: The information for Lines 10-17 in Section 2 is summarized asa total for the code.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 181Section 3: The information for Lines 10-17 in Section 3 is summarized asa total for the code.Section 4: The information for Lines 10-17 in Section 4 is summarized asa total for the purpose (fund).Line 10 Information for this line is recorded in the Year-to-Date column(Column F) only. The Beginning Cash Balance is the cash balanceavailable of the first day of this fiscal period and should be the same asthe last day of the last fiscal period.Line 11 Information for this line is recorded in the Year-to-Date column(Column F) only. The Cash Receipts total reflects the total cashdeposits for this fiscal period to date.Line 12 Information for this line is recorded in the Year-to-Date column(Column F) only. The Cash Disbursements total reflects the total cashdisbursements for this fiscal period to date.Line 13 Information for this line is in the Year-to-Date column (Column F) only.The "Assets" information is an adjustment to the Ending Balance notrelated to deposits or disbursements.Line 14 Information for this line is in the Year-to-Date column (Column F) only.The "Liability" information is an adjustment to the Cash Balance notrelated to deposits or disbursements.Line 15 Information for this line is in the Year-to-Date column (Column F) only.The "Equity" information is an adjustment to the Ending Balance notrelated to deposits or disbursements.Line 16 Information for this line is recorded in the Year-to-Date column(Column F) only. The Ending Balance total reflects the cash balance atthe end of the current reporting period. It is a calculation of theBeginning Balance plus deposits, minus disbursements, plus assets,liability and equity.Line 17 Information for this line is in the Year-to-Date column (Column F) only.The "Total Availability" calculation includes assets which may beconverted to cash.Monthly Report on the Appropriations and Allotment (BD702)There are three separate components to this report.Report Format

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 182Appropriation (Per BD 702) - (Lines 6-9)Appropriation (per BD 701) provides information on the total budget, the allotment for the yearto-datefiscal period, the unallotted balance, the quarter-to-date activity, the year-to-date activityand the balance. All activity shown represents the total budget code activity in Expenditures,Revenues and either Appropriation or Cash.TotalUnallottedAllottedThe total (Authorized Budget-Column C) lists the appropriation amountsas shown on Budget Certification form BD 307 with any type 11XXXX,12XXXX and 14XXXX revisions (BD 606).The Unallotted (Column D) lists the balance of the authorized budget thathas not been allotted or expended for the fiscal period to date.The Allotted (Column E) lists the allotments to date for the currentfiscal period. The totals shown in this column reflect the reversion ofquarterly allotments which are unexpended. (Example: Allotted in thethird quarter would include the actual allotment expended in the first andsecond quarter plus the actual allotments for the third quarter.)Current MonthThe Current Month (Column F) lists the activity for the currentmonth. Actual fiscal activity as recorded for the BD 701.Q-T-DY-T-DThe Quarter-to-Date (Column G) lists the activity for the currentfiscal quarter. Actual fiscal activity as recorded for the BD 701.(Example: If in the second month of a Quarter, the Quarter-to-Dateactivity would include disbursements, deposits and the impact toappropriation or cash for both the first month and the second month of thefiscal period.)The Year-to-Date (Column H) lists the activity for the current fiscalperiod to date and should equal the actual fiscal activity as shown for theyear-to-date on the BD 701.Unexpended The Unexpended (Column I) lists the difference of the Total (AuthorizedBudget) and the Year-to-Date column. These numbers should be the sameas shown on the Budget Code Recap for the Unexpended/UnrealizedAuthorized Column.Line 6 Indicates the column headings for the information to be provided.Line 7 This section of the report provides information on expenditures for thecurrent reporting period. Information is reported on the total (authorized)budget, unallotted, allotted, current month, quarter-to-date, year-to-date,and unexpended.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 183Line 8 This section of the report provides information on revenues for the currentreporting period. Information is reported on the total (authorized) budget,unallotted, allotted, current month, quarter-to-date, year-to-date, andunexpended.Line 9 This section of the report provides information on the excess ofexpenditures over (under) revenues (appropriation or cash) for the currentreporting period. Information is reported on the total (authorized) budget,unallotted, allotted, current month, quarter-to-date, year-to-date, andunexpended.Analysis of Cash (Lines 10-18)Analysis of Cash provides information for the Current Month (Column F) Quarter-to-Date(Column G) and the Year-to-Date (Column H) cash activity of the code. The monthly, quarterly,and year-to-date information must balance with the cash records of the Office of the StateController. Information in this component of the report includes:Line 10 Analysis of Cash (title only)Line 11 Beginning Cash in Allotment AccountLine 12 Allotment/ReversionsLine 13 Reversions - 9002XLine 14 Excess per BD 701Line 15 Increase/Decrease in Assets/Liability/EquityLine 16 Net Assets/Liability/EquityLine 17 Ending Cash in Allotment AccountLine 18 Unexpended AppropriationThe department should follow Cash Management procedures for balancing this component of thereport.Quarterly Allotment (Lines 19-22)The Quarterly Allotment component provides information about the activity on allotment, actualcurrent month, actual quarter-to-date, unexpended, encumbrances, and unencumbered (Line 19).All activity shown represents the total budget code activity in Expenditures, Revenues, and NetAllotment (Appropriation or Cash).Allotment (Column C)The Allotment column lists the total authorized allotment(s) for the current quarter. Informationis shown for expenditures, revenues, and the net allotment (appropriation or cash).Current Month (Column D)The Current Month column list the actual expenditures, revenues, and impact to eitherappropriation or cash for the current month.Q-T-D (Column E)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 184The Quarter-to-Date column lists the actual expenditures, revenues, and impact to eitherappropriation or cash for the current quarter-to-date.Unexpended (Column F)The Unexpended column reflects the difference of the allotment column and the quarter-to-datecolumn.Encumbrances (Column G)The encumbrance column records the obligations from purchase orders, contracts, or otherencumbrance documents for the current quarter.Unencumbered (Column H)The unencumbered column records the difference in the unexpended column and theencumbrance column.Line 20Line 21Line 22Expenditure activity for the allotment, current month, quarter-todate,unexpended quarter-to-date, encumbrance, andunencumbered columns are shown on this line.Revenue activity for the allotment, current month, quarter-to-date,unexpended quarter-to-date, encumbrance, and unencumberedcolumns are shown on this line.Net Allotment (appropriation and cash) activity for the allotment, currentmonth, quarter-to-date, unexpended quarter-to-date, encumbrance, andunencumbered columns are shown on this line.Statement of Cash Receipts, Disbursements and BalancesThis is a summary report of cash transactions for the budget code each line provides a summaryby purpose (fund) within the code.Report FormatBeginning Cash (Column D)Beginning Cash is the beginning cash balance for the current month and for the year-todatefor each fund within the code and for the total code.Additions (Column F)Additions is the total of actual cash deposits (increases) for the current month and for theyear-to-date for each fund within the code and for the total code.Deductions (Column G)Deductions is the total of actual cash disbursements (decreases) for the current month andfor the year-to-date for each fund within the code and for the total code.ASS/LIB/EQU (Column H)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 185ASS/LIB/EQU is the total adjustments for assets, liability, and equity for the currentmonth and the year-to-date for each fund within the code and for the total code.Ending Cash (Column I)Ending Cash is the sum of the beginning cash plus or minus the additions and deductionscolumn. This is a calculation of Column D plus Column E and minus Column F plusColumn H.Line 1 This is the report title.Line 2 This identifies the reporting period for which the statement is prepared.Line 3 This indicates the budget code number of title.Line 4 This defines the headings of the columns A and B of the statement.Line 5 This defines the fund (first four positions of the center number), the title ofthe fund, and includes the cash activity for the current month. Informationis reported on the beginning cash balance, additions, deductions,assets/liability/equity, and ending cash balance.Line 6 This provides the year-to-date cash activity for the fund shown on line 5.Information is reported on the beginning cash balance, additions,deductions, asset/liability/equity, and ending cash balance.Line 7 This indicates the total cash activity for the budget code for the currentmonth. Information includes the beginning cash balance, additions, anddeductions.Line 8 This indicates the total cash activity for the budget codes for the year-todate.Information includes the beginning cash balance, additions,deductions, assets/liability/equity, and ending cash balance.Note: Beginning cash balances should balance to the ending cash balance as of the June 30 fromthe prior fiscal year.Monthly Report on Capital Improvement Funds (BD 725)The Monthly Report should appear at the certification level (BD 306)Report FormatBudget Code RecapThe budget code recap (Example 11) provides a code level summarization for total expenditure,revenues, and appropriations.Detail Report by Fund

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 186The detail report by fund (Example 12) provides a summarization for the expenditures andrevenues of the fund by the account number as defined in the chart of accounts. A separate detailreport is prepared for each purpose (fund).Information on the BD 725Each report section listed above will have the following information:Total Budget (Column C)The total budget lists the appropriation amounts as shown on Budget Certification for BC306 with any budget revisions (BD 606).Unallotted (Column D)The unallotted lists the difference between the total budget and the total allotmentscolumns.Total Allotments (Column E)Total allotments records obligations from contracts or other expenditures approved byOSBM on form BD 303.Actual - Current Month (Column F)The current month lists the disbursements and deposits and the impact on appropriationfor the current reporting period.Actual - Year-to-Date (Column G)The year-to-date lists the disbursements and deposits and the impact on appropriationsfor the fiscal year-to-date.Actual - Project-to-Date (Column H)The project-to-date lists the disbursements and deposits and the impact on appropriationsince the establishment of the project.Allotment Balance (Column I)The allotment balance lists the difference between total allotments (Column E) andproject-to-date (Column H).Line 1 This line is the report title.Line 2 This line identifies the reporting period for which the BD 725 is prepared.Line 3 This line identifies the department.Line 4 This line indicates the budget code number and title.Line 5 This line defines the heading of the columns of information on the BD725.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 187Line 6 This section of the report provides information on expenditures for thecurrent reporting period. Information is reported on the total budget,unallotted and allotted amounts, current month actual expenditures, yearto-dateactual expenditures, project-to-date actual expenditures, and theactual allotment balance.Section 1: The information for expenditures in Section 1 is summarizedas a total for each account number (object of expenditure)within the purpose (fund).Section 2: The information for expenditure in Section 2 is summarized asa total for the code.Line 7 This section of the report provides information on revenue for the currentreporting period. Information is reported on the total budget, unallottedand allotted amounts, current month actual receipts, year-to-date actualreceipts, project-to-date actual receipts and the actual allotment balance.Section 1: The information for expenditures in Section 1 is summarized asa total for each account number (object of expenditure) withinthe purpose (fund).Section 2: The information for expenditure in Section 2 is summarized asa total for the code.Line 7AThis adjustment to cash section of the report is provided to adjust themonthly accounting activity for certain accrual action to therequirement of cash based reporting.Line 8 This section of the report provides information on appropriation for thecurrent reporting period. Information is reported on the total budget,unallotted and allotted amounts, current month actual, year-to-date actual,project-to-date actual, and the actual allotment balance.Mail List SurveyGeneral Statute 143-169.1 requires that the head of every agency of this state shall certify to theDirector of the Budget that the mailing list for each public document issued by his agency hasbeen carefully reviewed, updated and corrected within the previous 12 months. The reviewed,updated, and corrected mailing lists shall be comprised only of those persons and organizationswho, within the previous 23 months, have either requested that they be included in such amailing list, or have renewed a request that they be so included, or are recipients contemplatedfor receipt of the pertinent public document by expression provision of statute or judicial order.Reporting Period

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 188The reporting period consists of a review of the public document mailing list is use the priortwelve months. For example, the report for July 1, 1995 would consist of the fiscal period July1, 1994 through June 30, 1995.Report Due Date: On or by July 1 of each fiscal year.Reports should be submitted to the appropriate OSBM analyst.Reported Information:• Department Name: Department for which report is prepared.• Public Document Title: Title of Public Document.• Statutory Requirement: Identifies the legal reference which requires the publicdocument.• List Description: Describes the mailing list recipients.• Number of Addresses on List: Number of individual addresses on the list.• Frequency of Mailing: The number of times the document was mailed in theprevious 12 months.• Frequency of Update: The number of times the mail list is reviewed andupdated in the 12 month period.• Contact Name, Number/Email Address: Individual responsible for the list.Certification LetterA cover letter under the signature of the department head shall be submitted with the mail listreport that certifies the department has complied with the legal requirements for state agencypublic document mailing list update. (Example below)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 189MemorandumTO:FROM:SUBJECT:Director of the BudgetDepartment HeadMailing List Update CertificationIn accordance with G. S. 143-169.1 (State agency public document mailing list tobe updated), this correspondence certifies that the mailing list maintained by theDepartment of ______________ have been carefully reviewed, updated and correctedwithin the past 12 months.The mailing list are comprised only of the persons and organizations who, withinthe previous twelve months, have either requested that they be included in suchmailing list or have renewed a request that they be so included, or are recipientscontemplated for receipt of the pertinent public document by express provision ofstatute or judicial order.Attached is the Mailing Lists Report which provides complete information asrequired for compliance with OSBM reporting as outlined in section 7 of the StateBudget Manual.Survey of Fees Charged by State DepartmentsGeneral Statute 143-11 requires that the Director of the Budget accompany the recommendedbiennial budget with a report on the fees charged by each state agency or institution, the statutoryor regulatory authority for each fee, the amount of the fee, when the amount of the fee was lastchanged, the number of times the fee was collected during the reporting period and the totalreceipts from the fee during the reporting period.Reporting PeriodThe reporting period is the fiscal year immediately preceding the biennial budget. For example,the reporting period for the 2003-05 budget would be fiscal year 2001-2002.Report Due Date: September 30 of the even numbered years or as directed.Report Information: (Prepare a separate report for each budget code.)• Department Name: Department for which report is prepared.• Budget Code: Budget Code number and title where receipts are recorded.• Fiscal Year: The fiscal year for which the report is prepared.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 190• Fund Code: Chart of Accounts center number (first four positions only) wherereceipts are recorded.• Account Number: Chart of Accounts account number where receipts arerecorded.• Fee Title/Description: Description or title of the individual fee which is beingreported.• Statutory/G. S. Reference: The legal authority for collection of the fee.• Fee Amount: The actual rate established for the fee in the report period. If morethan one fee rate is established for the fee title, use the highest rateand the lowest rate of the fee rates set. Attach a copy of the rateschedule that supports the range of fees. Do not use the word"Various" to indicate more than one rate. List all rates ifappropriate.• Date of Last Change in the Fee Amount: The last date the rate of the fee waschanged. The date should be the numerical equivalent of the date(For example November 1, 2001 would be reflected as 11/01/01).• Frequency of Collections: This is the number of collection within the reportingperiod. If the frequency is quarterly, use the number four (4);monthly would be reflected as twelve (12), etc. Do not use thewords "quarterly, annually, monthly" or other descriptions toindicate the frequency of collections.• Number of Times Fee Collected During Report Period: This is the totalnumber of times the fee was collected during the reporting period.• Total Collections: This is the total collections for the referenced fee during thereporting period. The total collections should be rounded to thenearest dollar.Designation of Duty Station ReportPursuant to G.S. 138(6)(a)(1) any designation of an employee's home as his duty station by adepartment head shall require prior approval by the Office of State Budget and Management onan annual basis.Departments, institutions, and agencies must make one submission for the entire department,institution or agency by the second week in December of each preceding calendar year of allemployees whose home is also their duty station. For example, reports submitted in the secondweek of December 2002 would reflect approval for calendar year 2003. If there are no

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 191employees whose home is also their duty station, a report must still be submitted stating this fact.When hiring new employees or designating the home as the duty station of current employeesduring the calendar year, a revision to the annual report must be submitted to OSBM for its priorapproval. Employees assigned to regional offices or who are living in state-owned facilitiesshould not be listed on the report.Report Information:• Department Name: Department for which report is prepared.• Division Name: Division of department for which report is prepared.• Calendar Year: Calendar year for the duty station designation approval.• Employee Name: Complete name of employee for the duty station designationapproval.• Employee Title: Official title of the employee for the duty station designationapproval.• Duty Station: Location of employee duty station.• Number of Trips to Raleigh: Projected number of trips from employee dutystation.• Weekly: Projected number of weekly trips.• Monthly: Projected number of monthly trips.• Yearly: Projected number of yearly trips.• Job Duties: Brief statement of job duties.Committees and Councils ReportPursuant to G.S. 143B-10(d) the Office of State Budget and Management must annually compilea report on committees and councils which includes a complete list of committees or councils,the total membership of each, the cost in the last 12 months, the source of funding, and the titleof the person who made the appointments.Reporting PeriodThe reporting period is the fiscal year immediately proceeding the reporting period. Forexample, if the report is due February 2001 the reporting period is July 1, 2001 to June 30, 2002.Report Due Date: Annually by February 1.Reported Information:

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 192• Name of Board, Committee or Commission: This should reflect the officialname of the board, committee, or commission.• Number of Members: The total number of members that serve on the board,committee, or commission.• Date Established: The official date the board, committee, or commissionwas established.• Established by: Specify who (Governor, Department Head, Legislature etc.)established the board, committee, or commission.• Date of Last Formal Meeting: Provide the date (month, day and year) of thelast formal meeting held by the board, committee or commission.• Number of Formal Meetings Held in 12 months: The number of formalmeetings held in 12 months would be the count of meetings held during thereporting period (fiscal year).• Cost: The actual cost of the board, committee, or commission for thereporting period.• Cost Per Meeting: This would be the total cost for the meetingsdivided by the number of meetings for which thecost was incurred.• Annual Cost: This would be the total cost of meetings for thereporting period.• Funding Source: Indicate the type of funds supporting the requirementsof the costs for the board, committee, or commission bychecking one or more of the following funding sources:• Appropriation (General Fund or Highway Fund)• Federal• Other• Indirect Cost: This is the cost of related staff time, if available, which isnot included in the actual cost of the board, committee, orcommission.• Cost per Meeting: The total annual cost for the reporting perioddivided by the number of meetings for which the cost wasincurred.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 193• Annual Cost: The total annual cost for the reporting period.Report on Department Forms and ReportsG.S. 143-10.7 provides that OSBM will review “all internal and external forms and reports inuse by State departments and institutions to confirm whether these forms and reports continue tobe needed."It is essential that each state department and institution adopt standard procedures to enableOSBM to carry out this mandate in an effective and cost efficient manner.DefinitionsThe following definitions apply to procedures contained in this item:• Form: means a fixed-length document, either pre-printed or stored as a computertemplate/screen, containing spaces for the insertion of information.Exceptions are "utility forms" such as phone message slips, routing slips,"from the desk of" note pads, and the like.• Report:means a variable length document prepared in a standard format,including computer template/screen, by one party to provide narrativeand/or statistical information to one or more users. A report may or maynot be prepared on a form. Exceptions are booklets, pamphlets, etc., of apromotional nature that are produced for general distribution.General GuidelinesPrinted Forms (Recurring)Each state agency must keep a central file containing a current copy of each printed form that isissued within or by the agency.Within the central file of current forms, the name of the position that has the authority to changeor eliminate each form must be stated.Each recurring printed form issued by each agency must contain the following:• A unique identification code clearly printed on each page of the form.**NOTE**: The identification coding scheme adopted by the agency is at the discretionof the agency.• A unique title for the form must be printed on the first page of each form.Near the form number must be printed the date that the current version of the form is/was to beused.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 194Reports (Recurring)Each state agency must keep a central file containing a current copy of the format of each printedreport that is issued within or by the agency. At the agency's discretion, a current copy of theguidelines and schedules for producing these reports would be acceptable.Within the central file of current report formats, the name of the position that has the authority toissue, change, or eliminate each report must be stated. Each recurring printed report issued byeach agency must contain the following:• A unique identification code clearly printed on the first page of the report.**NOTE**: The identification coding scheme adopted by the agency is at the discretionof the agency.• A unique title for the report must be printed on the first page of the report.On the first page of each report must appear the issue date of the report and the dates that thereport covers.Agency Organizational Charts (reporting)Principal DepartmentsThe naming of subunits within a department is prescribed by G.S. 143B-11 and is explainedbelow:• The principal subunit of a department is a division. Each division shall beheaded by a director.• The principal subunit of a division is a section. Each section shall beheaded by a chief.• If further subdivision is necessary, sections may be divided into subunits whichshall be known as branches and which shall be headed by heads, and branchesmay be divided into subunits which shall be known as units and which shall beheaded by supervisors.All Other State Agencies and the University of North Carolina and its constituent institutionsshall approximate the nomenclature specified in G.S. 143B-11 as closely as practicable.Reporting of Criminal Misuse of State PropertyG.S. 114-15.1 instructs state employees on how to report information on criminal misuse of stateproperty. State employees who receive information or evidence of any damage, misuse, or theftof state property shall report, as soon as possible but no later than three days from receiving theinformation or evidence, this information to their immediate supervisor. The immediatesupervisor shall then report the information or evidence to the head of the department, agency, orinstitution who will then report, within a reasonable time but no later than 10 days after receipt,this information in writing to the Director of the State Bureau of Investigation.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 195GLOSSARYState BudgetThe total requirements for North Carolina state government departments and institutions consistsof approximately 54% General Fund dollars, 5% Highway Fund dollars, 32% federal funds, and9% various other receipts and funds. The state budget includes state aid funding for local publicschool units and local community colleges and institutions.General FundThe tax and nontax revenue collected by the State of North Carolina and deposited with the StateTreasurer for appropriation by the General Assembly to support the operations and capitalconstruction needs of state departments and institutions. General Fund tax revenue includessales and use tax, individual income tax, corporate income tax, and franchise tax. General Fundnontax revenue includes court fees and income from the State Treasurer's investment of excessGeneral Fund dollars belonging to the state.Highway FundThe tax and nontax revenue collected by the State of North Carolina and deposited with the StateTreasurer for appropriation by the General Assembly to support the operations and capitalconstruction needs of the Department of Transportation, including the Division of MotorVehicles, and the Highway Patrol Division of the Department of Crime Control and PublicSafety. Highway Fund tax revenue includes licenses and fees relating to the operation of motorvehicles and the motor fuel tax. Highway Fund nontax revenue includes income from the StateTreasurer's investments of Highway Fund dollars.Highway Trust FundThe tax revenue on motor fuels, special fuels, and road taxes deposited with the State Treasurerwhich is earmarked for appropriation for the construction of state-funded roads and bridges.Federal FundsThe funds received from federal government agencies for support of programs on the state level.Federal funds are received through block grants, entitlement programs, and specific grants.Other ReceiptsThe funds received by state departments and institutions for services performed, such as patientreceipts in hospitals, tuition fees in the universities and community colleges, or as fines forviolations of state regulations. These funds comprise approximately 9% of the total state budget.Nontax RevenueConsists of funds received from returns from the investments by the State Treasurer, court fees,and other sources.State Employees Subject to the Personnel Act (SPA)

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 196Positions in the state budget funded from various state revenue and receipts which are subject tothe terms and conditions of the State Personnel Act.State Employees Exempt from the Personnel Act (EPA)Positions in the state budget funded from various state revenue and receipts which are exemptfrom the terms and conditions of the State Personnel Act.Tax RevenueThe contributions from persons, groups, or businesses within the state for the support ofgovernment.Public School EmployeesPositions funded in the state budget for support of local public school units, including publicschool teachers. Driver education teachers are funded from the highway fund.University Faculty and AdministratorsPositions funded in the state budget for employment of teaching faculty and administrators in thestate's universities. These positions are not subject to the State Personnel Act.Community Colleges Faculty and AdministratorsPositions funded in the state budget on a per unit allocation for employment of faculty andadministrators in the state's Community College System.Judicial EmployeesPositions funded in the state budget for Judicial Branch officials, ranging from the Chief Justiceto the clerks of court. These positions are not subject to the State Personnel Act.Salary ReserveSalary funds remaining on an annual basis when positions are filled at lower levels thanbudgeted are considered salary reserve. These funds may be used for salary range revisions andreclassifications of positions, subject to approval of the Office of State Personnel and OSBM.Lapsed SalariesThese are nonrecurring salary funds not spent during the fiscal year. The transfer and use oflapsedsalaries are restricted by state law. These funds may not be used to establish newpositions or for other recurring obligations.Salary AdjustmentSubject to approval of the Office of State Personnel, departments are allowed to give increases toemployees who are promoted or to others in response to private or government competition.Legislative Salary IncreaseThis is a salary increase given to teachers and state employees by the General Assembly. Theincrease may be a percentage increase of the base pay, a flat dollar amount per employee, or a

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 197combination of both. These types of increase are reflected in new salary schedules for stateemployees and for public school personnel.Longevity PayLongevity pay is the salary compensation paid to state employees who have been employed bythe state for a certain number of years. The payment is made on the anniversary date when theemployee began his or her employment with the state. The amount of payment for nonteachingpublic school personnel, community college personnel, and state employees subject to the StatePersonnel Act begins with year ten at 1.5% of the annual salary, then increases to 2.25%beginning with year fifteen, to 3.25% with year twenty, and to 4.5% beginning with year twentyfive.The longevity schedule for employees of the Judicial System is the same as that providedfor state employees except for judges, district attorneys, public defenders, and elected clerks ofcourts. Longevity pay for these positions begins with year five at 4.8% of the annual salary andincreases to 9.6% with year ten, to 14.4% with year fifteen and to 19.2% with year twenty. Forassistant district attorneys and public defenders, the longevity schedule caps at 14.4% withfifteen years of service. Longevity pay for teachers begins with year ten at 1% of base pay, thenincreases to 1.5% with year fifteen, to 2% with year twenty and to 2.5% beginning with yeartwenty-five.Certified BudgetThe budget as enacted by the General Assembly.Authorized BudgetThe budget as enacted by the General Assembly with changes approved by OSBM.Continuation BudgetThe part of the state budget necessary to continue the current level of services when adjusted forinflation, mandated rate increases such as Social Security, annualization of programs, andoperation of new facilities.Expansion BudgetThe part of the budget which provides for new programs, expansion of existing programs, andsalary and benefit increases.Capital Improvement BudgetThe part of the state budget which provides for new construction, repairs and renovations offacilities, walks and drives, land purchases, and civil works projects.Budget Transaction (BD 606)The process by which funds may be transferred, receipts budgeted, and positions established, allwith approval of OSBM. The Executive Budget Act has certain restrictions on these budgettransactions; however, the Director of the budget may declare a deviation from the restrictionsand then report the transaction to the Legislative Commission on Government Operations.Excess Receipts

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 198These are receipts received for services performed, fines received for violation of stateregulations, or federal grants and funds received for specific purposes which exceed the amountsanticipated and budgeted by the General Assembly. When such excess receipts occur in theGeneral Fund or Highway Fund budgets and the receipts are not authorized by OSBM to be usedby the agency, they revert to the appropriate fund at the end of the fiscal year.General Fund Budget CodesThose budgets for each department and institution which are supported from state General Fundrevenue and from receipts considered to be general rather than specific in nature.Highway Fund Budget CodesThose budgets for each department which are supported from state Highway Fund revenue andfrom receipts considered to be general rather than specific in nature.Special Fund Budget CodesThose budgets for each department which are supported entirely from receipts collected for thespecific purposes or services performed by the department.Fund (Program) CodesPrograms (also called purposes) in each department's budget which have a separate budget oftheir own.Object Line-ItemsThe individual objects of expenditure in each fund (program) in a departmental operating budgetsuch as salaries, supplies, equipment, and travel. This is referred to as an account number in thenew Chart of Accounts.Executive Budget ActThe Act which governs the budgetary process in North Carolina. It provides the statutorylanguage for development, presentation, authorization, and control of the budget. (G.S. 143-1through G. S. 143-34.7)Repair and Renovations ReserveThis account is a restricted reserve from which funds are authorized by the General Assembly forthe repair and renovation of state buildings and related infrastructure that are General Fundsupported. The funding is the greater of (1) one fourth of any credit balance, as determined on acash basis, or (2) 3% of the replacement value of all state buildings supported from the GeneralFund, at the end of each fiscal year.Budget Stabilization ReserveThis account is a restricted reserve from which funds are authorized by the General Assembly foremergencies or budget stabilization efforts. Funding is based on 25% of the credit balance, asdetermined on a cash basis, until the account contains funds equal to 5% of the amountappropriated the preceding year for the General Fund operating budget.

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 199Legislative BondsThis consists of appropriations authorized by the General Assembly from bonds which pledgethe full faith and credit of the state for capital improvements. The authorization is limited to anamount not to exceed two-thirds of the amount by which the state's indebtedness has beenreduced during the previous biennium.Vote of the People BondsThis consists of appropriations authorized by the General Assembly from bonds which require anaffirmative vote of the people to authorize the issuance of bonds pledging the full faith and creditof the state for specific purposes, chiefly capital improvements and highway construction.Debt ServiceDebt Services consists of payments for interest on and redemption of outstanding bonds forwhich the full faith and credit of the state are pledged.Treasurer's Investment IncomeThe State Treasurer administers the Cash Management and Trust Funds Investments Programs.The yield from the investment programs is credited to nontax revenue accounts for the GeneralFund and Highway Funds which are called "Investment Income" accounts.Performance Pay PlanThe compensation policy which encourages excellence of performance and provides salaryincreases to state employees based on annual performance appraisal.MedicaidThe assistance program which provides for medical care for public assistance recipients, for theelderly, and for the disabled.ProbationA nonincarceration program operated by the Department of Correction primarily to superviseoffenders who are convicted of less serious crimes.ParoleA program operated by the Department of Correction primarily to assist inmates in pre-releaseadjustment and to provide supervision, surveillance, and treatment to inmates when they arereleased from prison.Local Government Tax Shared RevenueRevenues collected by the state and shared with local governments - intangibles, beverages, andfranchise taxes. The 1992 Session of the General Assembly authorized a change fromappropriated funds to an earmarked revenue as was the case prior to 1990-91.Local Government Tax ReimbursementsReimbursements for "holding harmless" local governments due to the Tax Reduction Act of1985. These measures include (1) property tax on business inventories; (2) property tax

BUDGET MANUALSTATE OF NORTH CAROLINAOFFICE OF STATE BUDGET AND MANAGEMENTEFFECTIVE DATE: July 1, 2005RECENT UPDATE: June 28, 2005 Page 200homestead exemption; (3) sales tax on food stamp purchases, and (3) intangibles on tax onmoney on deposit and certain accounts receivable. The funding was returned to earmarkedrevenue in 1995-96 as was the case prior to 1990-91.Temporary Assistance for Needy Families (TANF)TANF is a federally supported Block Grant that supports programs providing assistance to needyfamilies.