Ways and Means

Representative Henry E. Brown, Jr.
Chairman

Frank W. Fusco
Director of Research

Pamela P. Roberts
Executive Secretary

Jeannie R. Potter
Secretary

Research Analysts:

Virgie R. Chambers
David L. Crouch
David S. Hegler
J. Carl Jordan
R. Derrick Meggie
Timothy M. Rogers

WAYS AND MEANS
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HIGHLIGHTS OF FISCAL YEAR APPROPRIATION PACKAGES

Property tax reform, education funding, extension of the Barnwell low-level radioactive waste facility, and state agency base reductions dominated the General Assembly's fiscal year budget debate.

Allocations were made from four appropriation acts totalling $4.4 billion after Governor Beasley's vetoes of $29.8 million. These acts included the FY 1996 General Appropriation Act, which totalled $4.1 billion (with a 4.4 percent increase over FY 1995 appropriated general funds); the FY 1995 Capital Reserve Fund of $67 million; the FY 1995 Projected Surplus of $180.5 million; and the FY 1995 Carnell-Felder set-aside which totalled $54.6 million. The bulk of the new funds were appropriated to provide tax relief.

Property Tax Relief

The General Appropriation Act (H. 3362) includes a $117.5 million special line item for the "State Property Tax Relief Fund". Also, $54.6 million is provided through H. 3647, which allows the State to utilize funds set aside by the Carnell-Felder Act to increase funds earmarked for property tax relief. This revenue set-aside can be used for property tax relief after the close of the fiscal year. After the first year that the property tax relief fund is fully funded, this set-aside reverts to its original purpose as stated in law. In addition, $22.9 million is provided through the Supplemental Appropriation Act (H. 3690) for property tax relief.

In total, $195 million is spent to provide tax relief for South Carolina homeowners. Part II, Section 119 of the General Appropriation Act provides for the allocation of these funds by providing a homestead exemption of approximately $100,000 for public school operating costs for all owner-occupied residential property in the state.

The relief package exempts about 89 percent of all homes from school operating property taxes. A homeowner with a house valued at $100,000 and with a school operating millage of 113 mills (this is the statewide average) currently pays $452 in property taxes for schools. Under this proposal, this homeowner will not pay any property taxes for school operating purposes.

Other Tax Relief Provisions

A $6.2 million increase is appropriated to maintain full state funding of $47.5 million for the $20,000 homestead exemption for persons age 65 and older. This homestead exemption is in addition to the exemption provided under the property tax relief package.

$8.9 million is allocated to complete the phase-in of the capital gains rate reduction for taxpayers. This provision reduces the marginal rate on net capital gains to 3.9 percent for the 1995 tax year.

$10 million is allocated for the second year of a four year phase-in which, when completed, will double the tax exemption for families with children under six years of age. This allocation increases the exemption for each child to approximately $3,775.

Other General Fund Revenue Adjustments

Highway fund interest credited to the Highway Fund rather than to the General Fund, resulting in an $11.4 million General Fund decrease.

General Fund increase of $5.3 million resulting from the loss of individual income tax deductions from the lower property taxes.

$1.6 million decrease in General Fund revenue due to the repeal of the Vehicle Inspection Law.

Barnwell Waste Facility

South Carolina ended its relationship with the Southeast Compact and now allows the Barnwell low-level radioactive waste facility to accept waste from all states except for North Carolina. (During the previous fiscal year, Barnwell accepted waste only from states belonging to the Southeast Compact.) The $137 million in projected revenue will be deposited in the Educational Assistance Endowment Fund, with 70 percent earmarked for public school facilities and 30 percent for higher education scholarship grants. The mechanism for allocation of the Fund will be defined during the next legislative session. For the first year, $17.2 million has been appropriated for education-related capital projects (University of Charleston Acquisition, Greenville Higher Education Consortium, Archives and History Center, School for the Deaf and Blind, and Wil Lou Gray Opportunity School).

Statewide Appropriations

In an effort to reduce the size of government, most state agency General Fund base appropriations were reduced by 5 percent, totalling $55 million. However, reductions were not made in appropriations to the state's public schools, higher education institutions, and Corrections.

Appropriation increases to fund the statutorily and constitutionally mandated General Reserve Fund, Capital Reserve Fund, Debt Service, Local Government Fund, and Homestead Exemption account totalled $48.1 million.

$500,000 was appropriated for the 1996 State Primary Elections.

$12.5 million was allocated for Federal Retirees and $2.5 million for the Catawba Indian lawsuit settlements.

Employee Benefits

$47.2 million was appropriated for state employee pay raises, averaging 3.5 percent. State employees received a 2.5 percent cost-of-living adjustment effective July 1. An average 1 percent increase also is provided to employees according to the length of service in their current positions.

Public Education

$90 million in additional funds is appropriated for Public Education (this includes $34.7 million of new Education Improvement Act, or EIA, funds). The EFA (Education Finance Act) is fully funded at 4 percent inflation. The teachers' average salary is fully funded at $31,749 (a 4.2 percent increase). Unexpended prior year funds of $7 million will be used to purchase approximately 125 new buses.

The House maintained its position on reducing low priority EIA programs and sending that money back to the school districts with fewer strings attached. Thus, $16.3 million is provided in EIA funds helping to relieve districts of their need for more local property taxes and giving them spending flexibility.

Higher Education

Department of Corrections

$22.7 million is appropriated. Half of these funds will enable the Ridgeland prison to open, and half is to annualize the operating budget for five other prisons.

Health and Human Services

$52.5 million is provided to maintain the existing Medicaid program.

Welfare Reform

$3.1 million of new funds is allocated to implement new welfare reform and child support provisions as outlined in the S.C. Family Independence Act (H. 3613).

Legislative and Executive

The General Assembly appropriates $814,332 for the Senate. This amount includes $341,170 to annualize the In-District Expense increase approved in the FY 1994-95 Appropriations Act, $530,000 for Gressette Building rent, $26,135 for increased dues to the National Conference of State Legislatures and Council of State Governments, and a transfer of $146,725 from the House of Representatives. This transfer was necessary because two joint committees, Energy and Disabled, are now chaired by Senators. The Sen ate also absorbed a base reduction of $183,698 and transferred $46,000 to the Lieutenant Governor's Office. The Governor vetoed $814,332 of the funds appropriated.

The General Assembly appropriates a net increase in the House of Representatives budget of $1,182,789. An increase of $912,547 was appropriated to annualize the In-District Expense increase approved in the FY 1994-95 Appropriation Act. This amount includes $391,747 for employer contributions for retirement and FICA. The appropriation for Blatt building rent was increased by $125,790 and the appropriation for member subsistence was increased by $216,177. These two accounts have been underfunded for sev eral years and House carry forwards have been largely depleted to cover the shortfall. House joint committees are funded as follows: JARC (Joint Appropriations Review Committee) at $250,000, $64,325 for Joint Bond Review, Cultural Affairs at $73,538, Tourism and Trade at $33,000, and Mental Health/Mental Retardation at $90,000. Funding for two other joint committees, Children and Textile Apparel, will be determined by the Speaker. The House absorbed a base reduction of $15,000; appropriations of $7,50 0 each for the Majority and Minority Offices of the House were deleted. Also, $146,725 was transferred to Senate for the operations of the Energy Committee and the Disabled Committee. The Governor vetoed $623,454 of the funds appropriated.

The Legislative Council budget was reduced by five percent, $100,499. The reduction will be accomplished by reducing the line item for Printing Code Supplement from $160,775 to $60,276.

The Legislative Printing budget was reduced by five percent, $123,212. The budget reduction was accomplished by reducing appropriations for equipment.

The Legislative Audit Council budget was reduced by the five percent base reduction, $52,435. The council will accomplish the base reduction by not filling vacant positions.

The Legislative Information Systems budget was reduced by five percent, $42,520. Legislative Information Systems will accomplish the reduction by reducing operating expenses for rent, contractual services and supplies.

The budget of the State Reorganization Commission was reduced by five percent, $49,937. The commission will accomplish the base reduction by reducing expenditures for temporary employees, project travel and production of reports.

The budget of the Advisory Commission on Intergovernmental Relations (ACIR) was reduced by five percent, $12,080. ACIR will reduce expenditures to hire interns and outside professional assistance to accomplish the reduction.

The Administrative Law Judges received a net appropriation increase of $525,338 to annualize the operating budget of this agency, which was created in the State Government Restructuring Act. Of this amount, $158,593 was transferred from the Department of Revenue, because the duties of the three tax commissioners will be transferred to the Administrative Law Judges and $10,775 was recommended as a one-time special item for judicial training. However, the funds appropriated for judicial training were ve toed by the Governor.

The Governor's Office received a net appropriation reduction of $568,072. The five percent base reduction, $735,572, will be accomplished by reducing expenditures in all programs, with two exceptions: children's programs and crime/victim services. An appropriation increase of $67,500 was provided to the Division of Veteran's Affairs to provide maintenance and support at the proposed Veteran's Cemetery in Horry County, but this item was vetoed by the Governor. Also, $100,000 was appropriated to the Division on Aging for Alzheimer's Support Services.

The Lieutenant Governor's Office received a five percent base reduction, $13,119. The base reduction will be accomplished by not filling a vacant administrative position. $46,000 was transferred from the Senate for the expenses of a staff person.

The Secretary of State received a five percent base reduction, $65,796. The Secretary of State will accomplish the reduction by eliminating 2.5 state-funded positions in the Business Filing section. The budget of the Secretary of State was also reduced by $41,462 due to the elimination of a Communications Officer position.

The General Assembly reduced the Comptroller General's budget by $86,720. This reduction will be accomplished by reducing expenditures for personal services in the Central State Finance, Central State Audit, and Data Processing sections. The Governor vetoed $153,840 of the funds appropriated.

The General Assembly appropriates a net reduction of $120,483 for the State Treasurer. The five percent base reduction, $186,433, will be accomplished by reducing expenditures for travel, supplies, equipment, rent and contractual services. A non-recurring appropriation of $65,950 was provided to further automate cash and investment management function, but this item was vetoed by the Governor.

The Adjutant General will receive a net appropriation increase of $296,359. The base reduction of $203,641 will be accomplished by eliminating the Scholarship program, which amounts to $180,195, and by reducing $23,446 in administrative costs. $500,000 was appropriated for Armory maintenance and repairs.

The General Assembly recommends an increase of $220,800 recurring and $915,000 non-recurring for the Election Commission. $220,800 is appropriated for Aid to Counties - Board of Registration to restore a Governor's veto in the FY 1994-95 Appropriation Act. $500,000 is provided from supplemental funds (The Capital Reserve Fund) for the FY 1996 statewide primaries and $415,000 is provided for automated voting systems in Abbeville, Darlington, Dillon, and McCormick Counties. These funds complete the final phase of the process to eliminate paper ballots statewide. The Governor vetoed $70,219 of the funds appropriated.

The Budget and Control Board received a five percent base reduction, $2,163,128. The Board plans to reduce expenditures by $110,825 from travel, supplies, contractual services and equipment in all divisions. A reduction of $2,052,303 in the Employee Benefits section is from two areas: $503,566 is from appropriations for the FY 1994-95 Pay Plan which exceeded the amount actually distributed, and $1,548,737 is from Retirement Supplements which have been appropriated but are not longer needed because the r etirees are deceased. A non-recurring appropriation of $330,000 was provided to the Office of Local Government for infrastructure grants. The Governor vetoed $6,689,644 of the funds appropriated.

The State Auditor received a five percent base reduction, which amounts to $197,753. The reduction will be accomplished by reducing expenditures for personal service, operating expenses and employer contributions. The General Assembly modified a proviso, 17P.2, which would authorize the State Auditor to examine state agencies less often than annually, but no less often than three years. Audits would be prioritized each year based on analysis of risk and the lowest risk agencies would remain unaudited f or that year.

The Department of Revenue budget was reduced by a net of $3,023,429. The five percent base reduction is $3,235,003 and will be accomplished by reducing personal service and operating expenses throughout the agency. These reductions could have an adverse impact on taxpayer and constituent assistance, but should only have a minimal impact on revenue production. Also, $158,593 will be transferred to the Administrative Law Judges budget due to restructuring. $190,000 is appropriated for deferred maintenan ce of DMV (Division of Motor Vehicles) buildings and $180,167 is transferred from PSC due to a shift in agency responsibilities for the Single State Registration Program.

The Ethics Commission budget will be reduced by five percent, $21,735. The Commission will accomplish the reduction by reducing expenses for contractual services, supplies, travel, and equipment. The reduction in General Fund appropriations can be partially offset by a $10,000 increase in other funds the Commission retains from lobbyist filing fees.

The budget of the Procurement Review Panel was reduced by five percent, which amounts to $5,789. This reduction will be accomplished by reducing expenditures for contractual services.

The General Assembly reduced the appropriation for Debt Service by $6,457,900. The State Treasurer will accomplish the reduction by delaying the issuance of bonds and implementing tighter controls over draw schedules.

The General Assembly appropriates $15,013,046 from the General Fund and $15,717,734 from Supplemental Funds for the Local Government Fund. This complies with the statutory requirement of 4.5 percent of the FY 1993-94 actual revenue. The General Assembly also appropriates $6,224,898 for the Homestead Exemption.

State Employee Pay Plan

The General Assembly appropriates a total of $47,224,965 to provide an average 3.5 percent pay increase for state employees. $33,896,625 is appropriated to provide a 2.5 percent Base Pay Increase, which became effective July 1, 1995. $13,328,340 will be used to provide an average 1 percent compression increase to classified employees, also effective July 1, 1995. The compression increase is distributed based on the length of employee service in the same job or paygrade as follows: 0 to 1 year - 0.5 perc ent; 1 to 3 years - 1 percent; 3 to 5 years - 1.25 percent; over 5 years - 1.5 percent. Unclassified employees received an average 3.5 percent pay increase, effective July 1, 1995.

Commission on Higher Education

The agency's recurring base budget was reduced $36,720 and the following programs received additional funding: $104,395 is provided for the Southern Regional Education Board (SREB), which administers a program among institutions in the South for degree programs in veterinary, optometry and the arts. South Carolina students at these programs include: at Tuskegee University (Alabama) and the University of Georgia for veterinary medicine (80 students), and at the Southern College of Optometry (Tennessee) a nd the University of Alabama-Birmingham for optometry (23 students). These funds pay the difference between in-state and out-of-state tuition.

$330,000 is provided for the African-American Student Loan Program. This program serves South Carolina State University, Voorhees and Benedict Colleges. Funding was provided in non-recurring funds during the current year. The funds are used for loans which are forgivable if graduating students teach in South Carolina. The program is for degrees in critical needs areas such as science and math. About 26 students are participating in this program.

$200,000 is provided to the Higher Education Consortium, which was established a number of years ago to bring educational programs to the Greenville area. The consortium utilizes the resources of the higher education institutions in the area.

$200,000 is provided to start a new degree program and $4,000,000 in Barnwell funds is provided for building renovations for the consortium located at Greenville TEC.

$2,000,000 is provided for EPSCOR as matching funds to assist higher education compete for federal research funds. EPSCOR stands for Experimental Program to Stimulate Competitive Research. It is designed to assist scientists and engineers in the poorer-funded states to improve their research competitiveness by enabling them to receive a significantly larger amount of federal funding from the National Science Foundation and other Federal agencies. The state has received funding from the NSF in the amoun t of $1.1 million per year for the next three years. The major objectives are faculty development, human resource development and bridging of State/Industry/University science and engineering interests. Strategies include the addition of the new faculty, six classified support staff, and support for 40 graduate students per year. The State has appropriated $2 million in non-recurring funds during the current year. This $2 million in State Funds will match $2 million in Federal funds to be used by USC, Clemson, and MUSC (Medical University of South Carolina).

$600,000 is provided for the South Carolina Alliance for Minority Participation (SCAMP), which is designed to increase the number of African-American undergraduate students who pursue Ph.D. opportunities in science, engineering, and mathematics. Examples of projects are financial and mentor support, summer workshops, research programs, and detailed evaluation and assessment programs. The National Science Foundation stipulated that states receiving funds should provide matching funds for five years. Most of these funds will be distributed equitably among the SCAMP institutions on a competitive basis. SCAMP received non-recurring funds this year of $600,000. School officials indicate the program will need funding for the next four fiscal years.

The Governor vetoed a total of $165,570 in funding for the Commission in the General Appropriations Act and a total of $98,220 in supplemental funds for a total of $263,790.

Higher Education Study by the Commission on Higher Education

Proviso 18A.23 requires the Commission on Higher Education to study and make recommendations to the General Assembly by December 31, 1995, regarding whether changes in the funding formula for higher education could be made to encourage greater efficiency and economy in the operations of the institutions. In addition, the study calls for the elimination of duplicate degree programs at various institutions; the merger and/or consolidation of institutions; the development of guidelines for faculty productiv ity; a limitation on state funding for credit hours earned by undergraduate degree-seeking students and graduate degree-seeking students; a determination as to whether institutional procurement practices are exercised in a sound manner; whether institutions are properly protecting and maintaining institutional and state resources; and whether institutions have in place an adequate system for measuring and reporting performance on economy and efficiency. The proviso also calls for an assessment of the ade quacy of institutional management systems for measuring and reporting efficiency in providing quality education relative to the tuition and fees charged by the institution. The Governor vetoed this proviso.

Restructuring of Commission on Higher Education

Separate legislation (S. 365) was passed on June 14, 1995 which restructures the Commission on Higher Education and provides for 14 members appointed by the Governor, including three representatives of public colleges and universities and one representative of independent colleges and universities. It also provides for the current members' terms to expire July 1, 1996. (See pages 17-19 of the Post Session Report, under "Education and Public Works", for more information on this restructuring act .)

Joint Legislative Study of Higher Education

Included in S. 365 is a committee of four House members, four Senate members and four Gubernatorial appointees who are charged with studying the governance of higher education. Recommendations are to be made to the General Assembly by February 1, 1996.

Tuition Grants

The South Carolina Tuition Grants program receives $2,218,736. This is a needs-based grants program for students attending independent colleges. In 1994, the average tuition grant is $2,000 and covers about 23 percent of the $8,440 average tuition and fee charge. A resolution by the CHE and the S.C. Tuition Grants Commission provides that if the public colleges receive a funding increase, then the grants program should be advanced by the same percentage.

Colleges and Universities

The colleges and universities were allocated $53,200,000 through the formula. This is $8.4 million over FY 1994-95 funding. Proviso 18A.22 limits in-state tuition and fee increases at colleges and universities, including two-year institutions and technical colleges, to no more than the current year's Higher Education Price Index.

Additional programs funded directly to the institutions include:

The Citadel

The Women's Leadership Program is provided $1.4 million recurring (General Appropriation Act) and $2 million nonrecurring (Supplemental Act).

Two provisos relate to the Converse Women's Leadership Institute. One states that $1.4 million is provided to The Citadel for the Women's Leadership Institute at Spartanburg's Converse College when a female leadership program has been approved as in compliance with the federal district court order. This contract will in no way make Converse College subject to the purview of the Commission on Higher Education. Funds shall be transferred to Converse College for students enrolled in Women's Leadership cont ract program on the same per student basis as the per student state appropriation for cadets at The Citadel as determined under the higher education formula of the Commission on Higher Education. Funds remaining after per student reimbursements, up to a total of one million four hundred thousand dollars, shall be used to establish and support the Leadership Institute at Converse College.

A second proviso states that any funds appropriated for the Women's Leadership Program must be used exclusively for the support of the Women's Leadership Program. It also prohibits funds from being expended if the U.S. Fourth Circuit Court of Appeals renders a decision which would prevent the establishment of the Women's Leadership Program as established in Part II of this act and the appropriation authorization shall revert to the General Fund.

University of South Carolina

$200,000 in projected surplus funds is provided to support faculty and programs of the African-American Studies. The Governor vetoed this line item.

$330,000 in projected surplus funds is provided for the Law Library for pre-payment of license fees for computer database suppliers, purchase of additional computers and other technology-based legal research resources, and purchase a of number of academic treatises that the Library cannot afford with their current book budget. USC officials say that the Law Library ranks 104th out of 166 accredited law schools. The ABA (American Bar Association) visited the school in March and told USC of their concerns about the law library. The Governor vetoed this line item. $500,000 in excess surplus funds (#7) is provided for the Institute of Public Affairs. The program's current operating base is $831,314. The proposals for this funding include: Greenville's Youth-in-Government Program; a Legislative College internship program; a Congressional internship program; a summer course for public school teachers; a "school for newly elected public officials"; a Center for Bioethics; and studies related to alternatives for delivering health care services, a project in the SC Center for Health Policy.

$500,000 in excess surplus funds (#11) is provided for the Center for Electrochemical Engineering. This program conducts research on power sources for electric vehicles, new batteries for hand-held tools, etc., and is to be a catalyst to bring research divisions of companies into the state and to support state industry with research and development as well as well-educated graduates. Clemson will participate in this project. The CHE approved the creation of the Center for Electrochemical Engineering in the College of Engineering at USC effective July 1, 1995. USC has verbal commitments with NASA, DuPont and the CIA.

$150,000 in excess surplus funds (#12) is provided for the Small Business Development Center for matching funds related to the base closure.

$7 million in Barnwell funds is provided for purchase of adjoining property.

Coastal Carolina University

$600,000 in excess surplus funds (#3) is provided for A&E services and $250,000 (#32) is provided for a community fitness center.

State Board for Technical and Comprehensive Education

Receives $5 million for Special Schools.

Total additional funding for Higher Education is $76,546,411, of which $53,712,776 is replacement of nonrecurring funds appropriated in FY 1994-95. Items funding in non-recurring funds this year include:

Clemson PSA

In recurring funds, Clemson PSA was allocated $500,000 for the ornamental plants and turf grass program, $230,000 for pest control, and $300,000 for meat inspection. Camp Hope received $672,000 for renovations in the Capital Reserve Fund. In addition supplemental funds of $5,097,060 (#6) are provided for the construction of a new Animal Diagnostic Lab. According to the PSA, the current facility, housing the diagnostic laboratory, and the offices of state meat inspection and the state veterinarian, is i nadequate in office space, ill-designed for maximum efficiency of work space, costly to maintain, and is in need of substantive repairs. Funding will provide for a 28,000 square foot lab, office complex and equipment. The Governor vetoed a total of $3,383,973 in the General Appropriations Act.

Educational Assistance Endowment Fund

A Part II, permanent provision, Section 82, provides for the establishment of this fund from the Low Level Nuclear Waste fees and requires 70 percent of the funds are to be used for school facilities, with the remaining 30 percent used for tuition assistance.

Proviso 72.71 provides that the revenue credited to the Educational Assistance Endowment Fund pursuant to Section (C) shall be used as follows: $7,000,000 for University of Charleston -- Acquisition of Adjoining Property, $4,000,000 for Greenville Higher Education Consortium, $5,400,000 for Archives and History -- History Center, $600,000 for the School for the Deaf and Blind -- Maintenance and Equipment, and $185,000 for the Wil Lou Gray Opportunity School -- Building Maintenance with the remai ning funds to be distributed on a 70 percent-30 percent basis to Public School Facilities Assistance and Higher Educational Scholarship Grants, respectively; however no less than $39,400,000 shall go to Scholarship Grants.

For FY 1995-96, the General Assembly appropriated an additional $92.1 million for public education. Of this amount, $28.7 million is for the Education Finance Act (EFA) and $34.7 million is for the Education Improvement Act (EIA). In addition to the $92.1 million, an estimated $80.4 million from the Barnwell Restricted Fund will be allocated to the Public School Facility Assistance Program.

Legislators funded the EFA for FY 1995-96 on a Base Student Cost of $1,684, up from $1,619 in FY 1994-95. This includes an estimated inflationary growth of 4 percent. The total number of Weighted Pupil Units estimated for FY 1995-96 is 760,000, a decrease of 4,300.

The average teacher salary is increased by 4.2 percent ($1,292) in order to meet the estimated Southeastern average of $31,749. The associated employer contributions are increased by $8.5 million, of which $4.7 million is funded by General Funds and $3.8 million with EIA funds. Only $5.9 million is required to fund the 4 percent EFA inflation factor for employer contributions, but the General Assembly provided an additional $2.6 million to assist the local districts with their employer contributions. < P>

Funding from the projected FY 1994-95 surplus includes $8.5 millon to "hold harmless" wealthier school districts as the allocation of fringe benefits is weighted more on the EFA formula. A FY 1994-95 permanent provision in the budget phases-in the allocation of employer contributions by 10 percent each year to 100 percent EFA formula. For FY 1995-96, the allocation will be based on a 30 percent weighted pupil method and 70 percent EFA formula.

Also, funded from the FY 94-95 projected surplus is:

School Bus Drivers- $1.5 million for a 3 percent bonus

Textbooks and Instructional Materials- $10 million

Library Materials- $1 million

Darlington Desegregation Lawsuit- $500,000

Equity Lawsuit (funded in the Budget & Control Board)-$100,000

Governor's School for Science and Math (architectural and engineering fees) - $2 million

Tugaloo Environmental Education- $150,000

Unexpended prior year funds of $7 million will be used to purchase over 125 new buses and the Capital Reserve Fund provides $1 million for School bus parts and fuel. The Governor's School for Science and Math is funded with $75,000 for a personal services annualization and $25,000 for the contract with Coker College from the General Fund. The State Department of Education's base budget is reduced by $828,902.

Education Improvement Act

Some programs in the Education Improvement Act are increased, while others are reduced or eliminated. A total of $9.2 million in programs is eliminated, $2.5 million reduced, $28.9 million increased, and $17.5 million for two new line items are added. The reduction of program funds helps make available $16.3 million of the $17.5 million in the two new line items to give districts greater flexibility. The $13.7 million in funds for Teacher Salaries-Special and $2.6 million of the $3.8 million of the Empl oyer Contributions-Special provides more dollars than the State needs to provide for the funding of teacher salaries and employer contributions. Funds could be used by districts to reduce the level of required matching funds in order to minimize property tax increases or to provide for other programs. The next page shows a detailed list of EIA program changes. Pending Vetoes: the Governor vetoed $207,784 of the State Department of Education's administrative funds.

Wil Lou Gray Opportunity School and School for the Deaf and Blind

The General Assembly appropriated Wil Lou Gray Opportunity School $185,000 in Barnwell Restricted Funds for building repairs. The school is also provided with $15,000 in FY 1994-95 projected surplus funds for the food service program. The School for the Deaf and Blind is appropriated $600,000 in Barnwell Restricted Funds for dormitory refurbishments and $50,000 in FY 1994-95 projected surplus funds for a campus security contract.

Department of Social Services

The General Assembly provides $3.1 million state ($10.5 million total) for Welfare Reform. These funds will be used to implement statewide work support services for AFDC recipients. While the federal government has approved the Welfare Reform pilot for 4 Low Country counties, the agency first will focus its efforts on building an appropriate training and employment infrastructure. This training and employment development is consistent with the provisions of The S.C. Family Independence Act of 1995 ( H. 3613).

A proviso change gives the agency flexibility to use child support collections to enhance self-sufficiency and family preservation efforts as well as child support efforts.

Also, $7.5 million of DSS-earmarked funds is transferred to the Department of Health and Human Services. These funds are presently used by DSS for Medicaid eligibility determination. With this transfer, all administrative funds related to Medicaid eligibility are the responsibility of the Department of Health and Human Services. Likewise, $4.3 million is transferred from DSS to the Department of Health and Human Services for the Services for Emotionally Disturbed Children's Fund.

The Department of Social Services, with the agreement of its Director, sustains a five percent reduction. This reduction will result in the elimination of 35 FTE positions from the Director's office and 4 FTE positions from State Office-Economic Services made possible through automation of Food Stamp issuance. In addition, the agency will reduce state-funded temporary positions by 10 percent. This reduction equates to $6.4 million state.

Overall, the Department of Social Services' base budget is reduced by $15.1 million.

Department of Health and Environmental Control

The General Assembly provides $2.2 million recurring and $5,477,000 non-recurring for the agency. $650,000 recurring is recommended for other health services, including clinic services, and $500,000 is recommended for long-term family planning methods.

Also, an additional $141,804 is provided to the 17 Rape Crisis Centers across the state, $100,000 is provided for two FTE's and other costs associated with investigations of nursing home complaints, and $40,000 is provided for a waste minimization center.

Also, $763,691 is appropriated to the agency to prevent service reductions in the Maternal and Child Health and Long-term Care programs. This appropriation is necessary given DHEC's increased indirect cost remittance ($1.2 million) to the General Fund.

With regard to non-recurring funds, $277,000 is recommended for automation to establish DHEC's one-stop permitting process and $5,200,000 is provided for beach renourishment.

In addition, the agency must reduce its health administrative budget by $1.5 million and its environmental budget by $928,000 for a total of $2.4 million in budget cuts. The Governor vetoed $2,189,345 of the funds appropriated.

Department of Health and Human Services

The General Assembly provides $52.4 million ($27.6 million recurring and $24.8 million non-recurring) to maintain the existing Medicaid program. Current Medicaid programs, including the drug program and the community long term care program, will not be reduced or eliminated.

In November 1994, South Carolina obtained federal approval for the Palmetto Health Initiative (PHI) waiver. PHI converts the current Medicaid delivery system, which is based on fee-for-service reimbursement, to a managed care delivery system. Managed care is defined as a broad range of health care delivery systems which feature mechanisms to provide coordination of benefits, prior approval and authorization of non-primary care services, and negotiated payment terms to decrease inappropriate access and u tilization. The primary care physician serves as the entry point for the health care system. Such systems fall along a continuum of payment and delivery arrangements from fully capitated to fee-for-service case management models.

Primarily, PHI consists of five components: (1) managed care for the existing population of Medicaid eligibles; (2) managed care for the uninsured of this state under 100 percent of the Federal Poverty Level (expanded eligibility group); (3) managed care reimbursement based on capitated and partially capitated plans-the Capitated Access Program (CAP) and the Physician Enhanced Program (PEP); (4) streamlined eligibility, education, assignment and enrollment of clients; and (5) a 500 person long term care waiver whereby a capitated rate is paid for all basic Medicaid services and home and community based services. A capitated rate is defined as the amount paid monthly to a managed care provider for each enrolled member.

In April 1995, the Legislative Medicaid Waiver Task Force recommended that PHI be delayed and that managed care be incorporated into the Medicaid program on a voluntary basis. Specifically, the task force recommends that:

-- 4-to-5 pilot projects for the Physician Enhanced Program (PEP) are to be established on a voluntary basis;

-- the Medicaid program will allow HMO participation beginning in January 1996. Individuals could select an HMO on a voluntary basis.

-- affected agencies must continue to work to streamline eligibility for Medicaid.

The General Assembly therefore provides the following for the Medicaid program:

$11.2 million ($4.9 million non-recurring) to annualize current year non-recurring funds used to provide recurring program services such as hospital, physician, drug and nursing home services;

$8.9 million ($6.9 million non-recurring) to maintain the existing Medicaid program given client annualizations and increased growth of eligibles based on existing eligibility criteria. This amount is necessary regardless of whether or not managed care is implemented;

$5 million to provide nursing home cost report adjustments;

$5 million to provide hospital rebasing as mandated by Section ;

$ 1 million non-recurring to provide 500 additional Community Long-Term Care slots.

$100,000 to establish the Adolescent Pregnancy Prevention Program. The Governor vetoed this item.

Also, hospice care is added as a Medicaid reimbursable service. The costs associated with this program -- $537,451 -- are to be funded one-half by hospitals and one-half through internal shifting of agency funds.

In addition, $7.5 million of DSS-earmarked funds is transferred to the Department of Health and Human Services for contracting of Medicaid eligibility determination. Also, $12 million is appropriated from excess surplus funds for the Services for Emotionally Disturbed Children's Fund and $4.3 million existing state funds are transferred from DSS to the Department for this fund.

In addition, the Department must reduce its administrative budget by $2.6 million state ($3.8 million in total funds).

Department of Disabilities and Special Needs

The agency's administration budget is reduced by $500,000. Additionally, the Budget Conferees recommended an increase in recurring funds of $3,750,000 (which will match a total of $4 million in Medicaid funds).

1. $1,400,000 for individual and family support services;

2. $1,250,000 for services for persons with head or spinal cord injuries;

3. $600,000 for prevention programs including education and research

4. $500,000 to reduce the residential waiting list (60 clients).

The Governor vetoed a total of $4,271,216 in the General Appropriations Act.

The budget of the central office is reduced by $157,989 and one position (a five percent agency budget reduction). $204,240 in supplemental funds is provided for roof repairs.

Department of Alcohol and Other Drug Abuse Services

The central office budget is reduced by $499,282 and 14 positions (a five percent agency budget reduction).

The base budget of this agency is reduced $2,150, percent), in personnel and other operating expenditures in administration. $2,200,000 is provided for community based programs to assist in the transition of patients from the institutions to the community. The Governor vetoed a total of $2,321,843 in the General Appropriations Act.

Vocational Rehabilitation Department

The agency's base budget is not cut, and $950,000 is provided in supplemental funds to maintain state funding for basic services. This will keep funding at a level to meet maintenance of effort requirements and avoid loss of federal matching funds. The Governor vetoed a total of $325,990 in the General Appropriations Act.

Department of Natural Resources

The Department of Natural Resources is appropriated an additional $3,870,825 from all sources for FY 1995-96. Of this amount, $1,800,000 is dedicated for the replacement of vehicles with excessive mileage, wear, and tear. Funds also are appropriated to provide for general maintenance of facilities, communication equipment, and dredging of the boat slip at the Charleston Marine Center for the research vessel. These monies totalled $1,345,000. The balance of funds, $725,825, is to annualize personal ser vice and operating costs. The Governor vetoed $2,504,858 of the funds appropriated.

State Library

The General Assembly appropriates $700,000 recurring and $276,000 non-recurring for the State Library.

$700,000 is provided to increase per capita aid to county libraries from $1.05 to $1.25. Also, $276,000 is provided to acquire equipment for use by the visually handicapped. Each county library will receive funds sufficient to purchase (1) a reading machine that has the ability to convert typed print into audio; and (2) a closed circuit TV system which has the ability to enlarge written images up to 60 times larger than the original size. The Governor vetoed $333,795 of the funds appropriated.

Museum Commission

The General Assembly appropriates $168,000 in other operating funds for the Museum as hold harmless for rent paid to Heritage Associates. In addition, the Museum must sustain a five percent reduction, which equates to $262,078. Therefore, the net reduction to the agency is $94,078. The Governor vetoed $166,816 of the funds appropriated.

Archives and History

The General Assembly reduces the Archives and History general fund appropriations by five percent, $206,805. This reduction will result in the elimination of 6.5 state-funded FTE positions. In addition, $5.4 million is allocated via proviso 72.71 (The Educational Assistance Endowment Fund) as the first installment toward construction of the $18 million new Archives building.

The General Assembly provides $25,000 non-recurring for the Arts Commission to develop S.C. ArtsNet which assists arts organizations in obtaining communications hardware and software so as to have on-line access to information about the Arts Commission, its programs and services. In addition, a proviso granting the Commission a waiver on indirect cost recoveries was eliminated per recommendation of the Joint Appropriations Review Committee. The Governor vetoed $182,098 of the funds appropriated.

Confederate Relic Room

The General Assembly provides $62,000 non-recurring for the Relic Room's share of the expense to renovate its facilities. The University of South Carolina has also set-aside an additional $100,000 for this renovation project.

Department of Transportation

The Department of Transportation's State Highway Fund will earn over $11 million in interest income in this year alone with a change in the interest earnings provision (Part II, Section 49).

The Department also will realize an annual $20 to $30 million increase in revenue due to increased compliance, as well as a one-time $11 million windfall of converting gasoline and special fuel inventories to taxable inventory (Part II, Section 66).

This act also allows for the erection of bus shelters, with or without commercial advertisements, within public roads right-of-ways. The $25 permit fee revenue is directed to the Department of Transportation's trust fund and dedicated to public transportation (Part II, Section 93).

Federal law now prohibits the P.S.C. from regulating most trucking; consequently, this act includes provisions which:

1. directs Single State Registration Program fees from the P.S.C. to the General Fund;

2. transfers the Single State Registration Program from the P.S.C. to the Department of Revenue to complete the "One Stop Shop" approach;

3. creates an Office of Compliance at the P.S.C. to regulate Household Goods and Hazardous Waste.

Other Regulatory Agency Funding :

Department of Commerce

This act expands the Enterprise Zone Act's (H.3534) coverage to include census tracts containing research parks owned or controlled by the S.C. Research Authority. (Part II Section 89).

The Corporate Jobs Tax Credit is now extended to a sole proprietor, partnership, limited liability company, corporation of any classification, or association. Provisions once limiting the eligibility for the credit for shareholders of a Sub S corporation to a corporation eligible to use the Fee-in-Lieu of tax are eliminated (Section 62).

Department of Corrections

$20.5 million is recommended for the Department of Corrections for the operation of a new correctional institution and also to annualize the costs associated with facilities that opened during this fiscal year. Beginning on the next page is an itemization of these costs:

(1) Annualizations:
         Turbeville                  $4,836,626
         Lee County                     278,669
         Trenton Youth Facility       1,269,176
         Dutchman                       512,015
         Coastal                      1,170,613

(2) Ridgeland Institution            11,828,074

(3) Inmate Medical Cost                 603,000

TOTAL:                              $20,498,173

Judicial

The Judicial Department received an additional appropriation for FY year 1995-96 of $1,759,628 from all sources of funds. Of this amount, $250,000 is appropriated for judicial rotation, $409,628 for contractual automation of the court system, $100,000 for a pilot arbitration program and $1,000,000 for partial funding for nine additional judges.

Part II, Section 85 of the General Appropriation Act provides for nine new judges during FY 1995-96 by increasing the number of Appellate Court Associate Judges from five to eight, adding three at-large Circuit Court Judges and three additional Family Court Judges. These additional judges begin their service on February 1, 1996. The Governor vetoed $1,389,628 of the funds appropriated.

Department of Probation, Parole, and Pardon Services

The Department received a net increase of $1,857,557 for FY 1995-96. $1,658,116 was appropriated to annualize the Comprehensive Community Control System, as well as an additional $1,000,000 to expand electronic monitoring. Also, due to the elimination of pre-sentence investigations, the Department received a base reduction of $1,000,559 associated with that program. The Governor vetoed $1,000,000 of the funds appropriated.

INDEX OF PERMANENT PROVISIONS
BY SECTION NUMBER AND SUBJECT

Listed below is an index of permanent provisions as adopted in the Fiscal Year 1996 state budget. To make it easier to locate certain subjects, some topics are listed more than once.

SUMMARY OF PERMANENT PROVISIONS (PART II)
AS ADOPTED BY THE HOUSE/SENATE BUDGET CONFERENCE COMMITTEE
FY 1995-96 APPROPRIATIONS ACT--H. 3362

SECTIONS ADDED BY GOVERNOR CAMPBELL (IN HIS FINAL, PROPOSED EXECUTIVE BUDGET PRIOR TO LEAVING OFFICE IN JANUARY 1995):

SECTIONS ADDED BY THE WAYS & MEANS COMMITTEE:

SECTIONS ADDED BY THE HOUSE OF REPRESENTATIVES:

SECTIONS ADDED BY THE SENATE FINANCE COMMITTEE:

SECTIONS ADDED BY THE SENATE:

APPROPRIATIONS BY AGENCY

Below can be found a breakdown of appropriations by agency for Fiscal Year 1996, as developed by the Budget Conference Committee and approved by the General Assembly on June 13, 1995. Note that these figures do not include the Governor's vetoes; instead, a separate appendix is provided later in this report which lists those vetoes.