House Bill 243: UNC Legislative Priorities/COVID-19 Impacts (March 18, 2021)

Summary

Legislative analysis of House Bill 243: UNC Legislative Priorities/COVID-19 Impacts, for the House Education - Universities committee, dated March 18, 2021, analyzing the PCS to First Edition (H243-CSBE-7). It states that HB 243 would allow The University of North Carolina (UNC) to address budgetary and other impacts of COVID-19 through temporary authority for salary reductions and flexible leave, an early retirement incentive program, statutory authority for the President of UNC to approve a reduction in force, State Health Plan premium payments for certain employees placed on emergency temporary furloughs, and expanded carryforward authority. It states that a salary reduction could not reduce an employee's annual salary to less than $45,000 or by greater than 20% of annual base salary.

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“House Bill 243: UNC Legislative Priorities/COVID-19 Impacts (March 18, 2021).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/undated-h243-smbe-18-csbe-7-v3-716fb49c26/, SHA-256 c0ea2f1ad3d2e3053482afbc1532954614c4d9d82a73325a571e3e9a74c520a4.

Full text

HOUSE BILL 243:
UNC Legislative Priorities/COVID-19 Impacts.
2021-2022 General Assembly
Committee: House Education - Universities. If favorable, Date: March 18, 2021
re-refer to Rules, Calendar, and Operations of
the House
Introduced by: Reps. Hardister, Hurley, Pickett, Terry Prepared by: Brian Gwyn
Analysis of: PCS to First Edition Committee Co-Counsel
H243-CSBE-7

OVERVIEW: HB 243 would allow The University of North Carolina (UNC) to address budgetary and
other impacts of COVID-19 by providing the following:
• Temporary authority to implement salary reductions and flexible leave.
• Temporary authority to implement an early retirement incentive program.
• Statutory authority for the President of UNC to approve a reduction in force without approval
of any other State agency.
• Temporary exception to leave rules to allow UNC employees to use accrued sick, vacation, and
bonus leave for any absence related to COVID-19.
• Temporary authority for Board of Governors of UNC to use non-State funds to provide State
Health Plan premium payments for certain employees placed on emergency temporary
furloughs.
• Statutory expansion of carryforward authority to allow for use on one-time expenditures.
• Retroactively extend waiver of student interest charges on past due accounts.
The PCS would remove the temporary exception to leave rules and retroactive student interest waiver
because those provisions were enacted in S.L. 2021-3.

PART I. AUTHORITY FOR TEMPORARY SALARY REDUCTIONS AND FLEXIBLE LEAVE
BILL ANALYSIS: Part I would authorize the President of UNC, or the chancellor of a constituent
institution if authority is delegated by the President, to implement a temporary salary reduction for
employees to offset budget reductions or other reductions in revenue. Such a salary reduction would be
required to be implemented across-the-board to an entire constituent institution or a major subdivision of
the constituent institution, such as a specific department or school. Other restrictions would apply to the
use of this authority, including a prohibition on:
• Reducing an employee's annual salary to less than $45,000.
• Reducing an employee's salary by greater than 20% of the employee's annual base salary.
• Using paid leave to offset all or a portion of the salary reduction.
Additionally, at the chancellor's discretion, the temporary salary reduction could be accompanied by the
granting of "flexible leave" equivalent to the forfeited salary. This flexible leave would be subject to
certain restrictions, including not being able to be cashed in upon separation from employment or
retirement.
Legislative Analysis
Jeffrey Hudson
Division
Director H243-SMBE-18(CSBE-7)-v-3 919-733-2578
This bill analysis was prepared by the nonpartisan legislative staff for the use of legislators in their deliberations and does not constitute an official statement of legislative intent.
House PCS 243
Page 2

The President would be required to report quarterly on information related to the use of this authority.
This authority would expire December 31, 2022.

PART II. EARLY RETIREMENT INCENTIVE PROGRAM FOR UNC
BILL ANALYSIS: Part II would allow the Board of Governors of UNC to authorize an early retirement
incentive program until December 31, 2022. The UNC System Office would be required to develop
policies and regulations for the program, including the following, at a minimum:
• To participate, an employee must be either (i) eligible for early or full service retirement, if
participating in the Teachers' and State Employees' Retirement System of North Carolina (TSERS)
or (ii) at least age 55 and vested, if participating in the Optional Retirement Program (ORP).
• Severance payments must be between one month and six months of an employee's annual base
salary.
• If an employee does not qualify for the full employer premium contribution for retiree health
coverage, then the constituent institution may provide the employee the amount equivalent to 12
months of the full employer contribution.
• The program can apply to employees both subject to and exempt from Human Resources Act, but
not to employees who receive disability or workers' compensation benefits.
If an early retirement incentive program is implemented, the UNC System Office must report on the
program by October 1, 2021 and December 1, 2022.

PART III. HUMAN RESOURCES POLICY FLEXIBILITY/REORGANIZATIONS FOR UNC
SYSTEM EMPLOYEES SUBJECT TO THE NORTH CAROLINA HUMAN RESOURCES ACT
CURRENT LAW: G.S. 126-4(7a) directs the State Human Resources Commission to establish policies
and rules governing the separation of employees covered by the North Carolina Human Resources Act.
Pursuant to this authority, the State Human Resources Commission adopted a reduction-in-force (RIF)
policy that authorizes an agency or university to separate an employee whenever it is necessary due to:
• Shortage or loss of funds
• Shortage or loss of work
• Abolishment of a position
• Other material changes in position duties or organization
Additionally, the RIF policy requires the agency head, department head, university chancellor, or their
designee to seek approval from the Office of State Human Resources (OSHR) at least one week prior to
notifying employees of RIF actions.
If a RIF will accomplish economies in the State Budget, G.S. 126-8.5 requires the Office of State Budget
and Management (OSBM), through the Director of the Budget, to pay either a discontinued service
retirement allowance or severance wages to affected State employees, provided reemployment is not
available. The Director of the Budget must consider the recommendation of the department head involved
and any recommendation of the Director of the OSHR when considering whether this requirement applies.
BILL ANALYSIS: Part III would provide the President of UNC, and the chancellor of a constitution
institution if authority is delegated by the President, with statutory authority to approve a RIF for positions
subject to the North Carolina Human Resources Act without further approval by any other State agency.
This authority would include reorganization and payment of severance with non-State funds. The
House PCS 243
Page 3

President or chancellor would be required to annually submit to OSHR information to on all approved
RIFs, reorganizations, and severance payments. State funds used for a severance using this authority
would still be subject to any required preapproval by OSBM.

PART IV. PROVIDE STATE HEALTH PLAN PREMIUM PAYMENTS FOR CERTAIN
EMPLOYEES PLACED ON EMERGENCY TEMPORARY FURLOUGHS
BILL ANALYSIS: Part IV would authorize the Board of Governors of UNC to use non-State funds to
pay the employee portion of the monthly premiums for participation in the State Health Plan for Teachers
and State Employees if the employee meets the following criteria:
• Currently on an emergency temporary furlough
• The emergency temporary furlough puts the employee below half-time employment for a calendar
month.
The Board of Governors could not provide more than 12 months of employee premium payments for
employees on furlough between June 1, 2020, and December 31, 2021. Additionally, the employees could
not be required to repay any of these premiums.

PART V. AMEND CARRYFORWARD AUTHORITY TO ALLOW FOR ONE-TIME
EXPENDITURES
CURRENT LAW: G.S. 116-30.3 authorizes up to 5% of the General Fund appropriation to each of the
following budget codes be carried forward into the next fiscal year:
• Each special responsibility constituent institution.
• The Area Health Education Centers of the University of North Carolina at Chapel Hill.
• University of North Carolina System Office Budget Code 16010.
These carryforward funds can only be used for repairs and renovations eligible under G.S. 143C-8-13(a).
Additionally, one-half of any amount exceeding 2.5% of the General Fund appropriation in each budget
code must be distributed to the UNC System Office to be disbursed to constituent institutions at the
discretion of the Board of Governors.
BILL ANALYSIS: Part V would authorize carryforward funds to be used for one-time expenditures
rather than being limited to eligible repairs and renovations projects. Additionally, it would eliminate the
requirement that one-half of the amount carried forward exceeding 2.5% of the General Fund
appropriation be distributed to the UNC System Office.

EFFECTIVE DATE: This PCS would be effective when it becomes law.

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