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A Closer Look at North Carolina’s 2015-17 Budget

GA Front

This article was contributed by Jennifer Mahan, Director of Advocacy and Public Policy at ASNC.

The new state budget for budget years 2015-17, which began on July 1, 2015, sits at $21.7 billion. It includes several important policy initiatives for people with disabilities, but it also makes changes that could keep people with autism, intellectual and developmental disabilities, and other conditions from gaining access to health care and supportive services.

Note that where two numbers are listed for funding amounts, the first number is for fiscal year 2015-16 and the second is for fiscal year 2016-17. Recurring funds mean that the program will be funded in an ongoing way (at least for the next two years), and nonrecurring indicates that funds are one-time and only for a particular year.


This year’s budget funded increases in the Medicaid rebase, which is the funding it will take to continue serving the eligible population with current services. No cuts were made to Medicaid eligibility or to optional Medicaid services. This is a big win; previous budgets have included one if not both of these cuts.

In addition, Medicaid reform legislation was taken out of the original budget bill and passed as separate legislation. The changes to North Carolina’s Medicaid health care and disability services program will create a new Medicaid managed care system and change the state agency that operates the Medicaid programs. Medicaid services will be contracted out to private managed care companies and regional provider (hospital) led health systems. ASNC staff are reviewing the final Medicaid bill and will post more information in the future.

The Medicaid rebase was funded at $299,358,485 recurring and $496,326,936 recurring.

Medicaid reform was funded at $5,000,000 recurring and $5,000,000 recurring.

Vocational Rehabilitation

No cuts were made to Vocational Rehabilitation funding. Again, previous budgets have included cuts.

Early Intervention

No cuts were made to early intervention services, and Children’s Developmental Service Agencies (CDSAs) were not consolidated further.

State-Funded Services

Cross Area Service Program (CASP) funding did see an increase of $800,000 recurring in the first year of the budget and $1.6 million recurring in the second year. CASP funds services such as employment and vocational supports for people with IDD.

“Single-stream funding,” which provides some state funds for people without health care (non-Medicaid populations) was removed from the budget, and the General Assembly required LME/MCOs to use their fund balances to make up the difference. Single-stream funding pays for services such as developmental therapies, respite, employment support, residential supports, and other services. This swap removes state funds and replaces them with LME/MCO cash fund balance money for two years at the following amounts: $110,808,752 and $152,850,133. This is a nonrecurring adjustment, and the special provision language sets up the expectation that no service will be reduced or cut. Special provision language also states that the LME/MCO system must use fund reserves to fill the state dollar reductions.

Advocates have several concerns:

  • LME/MCOs have varying fund balances, and at this time, it is not clear what formula will be used to determine where funds are reduced.
  • Fund balances are intended to be used to expand services, so this “swap” that removes recurring state funds and replaces them with onetime LME/MCO funds from savings eliminates the possibility that funds can be used to expand services. The funds instead will be used simply to maintain existing services.
  • House Bill 916, which created the current public managed-care system, promised that savings would be retained and used to expand services to the thousands waiting for help.
  • It’s not clear that there are enough funds to take the *second round of cuts* in 2016-17, leaving the real possibility that services for people with autism and IDD without Medicaid or other health care will continue to shrink. ASNC will be working with other advocacy groups to prevent further cuts and services reductions.

Crisis Services

New NC START funding for crisis prevention and intervention was included in the budget with $1,544,000 in recurring funding to support children and adolescents with intellectual or developmental disabilities for both years of the budget. While this is not enough funding to support the significant need for crisis services, it is a first step for children and youth who have very limited options.

ABLE Act Funds

The NC Office of the Treasurer will oversee the new ABLE Act 529 savings accounts. The budget includes $215,000 in recurring funds and $250,000 in nonrecurring funds for 2015-16, and $540,000 in recurring funds and $55,000 in nonrecurring funds to administer the new savings plans, provide information to financial experts, and promote the plans to people with disabilities and their families. The IRS is expected to publish their final rules on how the plans will operate by the end of 2015, and NC hopes to have the ABLE savings plans available by the summer of 2016.


The budget fully funds teacher assistants, lowers class size for K-3 grades, and fully funds the current exceptional children’s head count. Reading camps have been expanded to include first- and second-grade students who are at risk for not reaching third-grade reading proficiency. The program also will continue to support at-risk students who reach reading proficiency to ensure they stay on track.

No new funds are included to increase per-pupil spending for exceptional children (special education) or to alter the 12.5% cap on special education funds. ASNC continues to discuss with Education Committee members the ways to improve special education and funding.

Significant sections of House Bill 921, Educational Opportunities for People with Disabilities, also were included in the budget in two separate sections on elementary and post-secondary education. Section 8.30.(a) states that North Carolina will study and develop policy changes for improving outcomes for K-12 students with disabilities including ways to:

  • Raise graduation rates
  • Provide more outcomes-based goals
  • Ensure access to career-ready diplomas
  • Integrate accessible digital learning options
  • Provide earlier and improved transition planning

State agencies are expected to reform the IEP process to focus on outcomes-based goals, bring together stakeholders to improve transition services plans, create ways for students with IEPs to access Future Ready Core Courses of Study (technical and vocational education) as a viable alternative to Occupational Course of Study diplomas, and look at model programs for increasing school performance and graduation rates. The NC Department of Public Instruction is required to report to the General Assembly’s Joint legislative Oversight Committee on Education on the above activities by November 15 and annually thereafter.

Section 11.19.(a) requites state agencies to collaborate to support educational opportunities for students and young adults with intellectual and developmental disabilities, particularly in transitioning to adulthood, post-secondary education, and employment. It requires the NC Department of Health and Human Services; the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services; the University of North Carolina system; and the community college system in consultation with the NC Postsecondary Education Alliance and other stakeholders to:

  • Assess system gaps and needs for supporting students/people with disabilities transitioning into adulthood
  • Develop policies and programs to expand post-secondary educational options and employment
  • Implement more public awareness of post-secondary education and employment of people with disabilities
  • Develop joint policies and common data indicators for tracking outcomes of people with disabilities leaving high school
  • Consider options for technology to link agency databases

ASNC advocated for funding to support technical assistance centers to support the above activities, but these were not funded in the budget. We will be going back to the legislature during the short session to continue to work on additional funding.

Students with Disabilities Scholarships

The Students with Disabilities Scholarship for students with IEPs who opt for non-public education was increased from $3,000 to $4,000 per semester ($8,000 per year), and policy changes allow funds to be dispersed to families and schools prior to the school year. Due to increased demand, there is a waiting list for the scholarships. ASNC will continue to advocate for additional funds to serve those waiting.

In addition, House Bill 334, passed at the end of session, will change the re-assessment process for students in receiving the scholarship: students must either be “assessed for continued eligibility” by a) the local Education Authority to determine if the child is still a child with a disability under IDEA, OR b) by a licensed psychologist with a school psychology focus who shall assess whether the non-public school has improved the student’s educational performance and the student would benefit from continuing to attend the non-public school.

Additional Provisions of Interest

Medical Tax Deduction: This budget fully restores the Medical Tax Deduction that existed prior to the Tax Simplification Laws of 2013. Individuals and families who lack insurance coverage or whose autism therapy and related medical costs are not entirely covered by insurance may benefit from this state tax deduction. (See your tax professional for more information about tax deductions.)

Single-Case Agreements: LME/MCOS can contract with out-of-network providers of developmental disability, mental health, or addiction services. This provision allows for a more simplified contracting process for providers outside the catchment area for up to two cases per provider. (Inpatient providers are allowed up to five cases). Advocates hope that the expansion of out-of-network agreements will allow people to move from one LME/MCO catchment areas to another without a break in needed services as well as ensure access to specialty providers in areas where they are limited.

Overnight Respite: A pilot program will expand statewide so that adult day-care and adult day health-care facilities can provide overnight respite under new licensure rules. The new rules should allow overnight respite to be incorporated into Innovations/CAP waiver amendments and will not require additional legislative approval before submission to the federal government for approval.

What’s missing from the budget?

The biggest gaps in the system for people with autism and other intellectual and developmental disabilities were not addressed. There are 12,000 people on waiting lists for services and supports, including Innovations waivers through our LME/MCO system. This budget does not address funding for the 3,000 slots for support waivers that were to be created for those waiting for help. While the Centers for Medicare & Medicaid Services now require states to provide behavioral services to children with autism under Early and Periodic Screening, Diagnostic, and Treatment (EPSDT), no new funds were added to the Medicaid budget to address this need. With LME/MCOs capitation rates remaining the same, it’s not clear how they will pay for an increase in services such as adaptive behavior treatment to address core autism behavior challenges.

Earlier versions of the budget included a proposal for a case-management pilot program, which was not included in the final budget. Case management is critical for people dealing with complex medical, developmental, and disability issues.

As mentioned above, there are no increases in special education funding or plans for alternatives to the 12.5% cap on funding. Students with disabilities who want to access the non-public school scholarships will wait for more funds to be put into the scholarship program.

The legislature is requiring LME/MCOs to swap state funds for their fund balances for two years in a row. This removes savings intended to expand services and could cut services in the second year.

The 2016 short session, which begins at the end of April, is the next opportunity to make adjustments to the state budget. ASNC will continue working with legislators to address gaps in services.

If you have questions about the North Carolina state budget or other policy issues, please contact Jennifer Mahan, ASNC Director of Advocacy and Public Policy at jmahan@autismsociety-nc.org or 919-865-5068.

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