Yesterday, the NC Senate unanimously approved a bill (H.B. 791) that would address many of the issues that nonprofits have experienced with their grants and contracts with the NC Department of Health and Human Services (DHHS). Specifically, the bill would make four reforms to DHHS grants and contracts with nonprofits:

The House is scheduled to vote on the bill this morning; if approved, it would then go to Governor Roy Cooper for his consideration.

This bill is based input from dozens of nonprofits that have shared their stories about late payments, late contracts, underpayment for indirect costs, and red tape in their grants and contracts with DHHS. The Center has worked with Senator Jim Burgin (R-Harnett), DHHS, and a variety of nonprofit partners on this bill, and we are continuing to work on additional nonprofit contracting reforms.

The Center recognizes that the nonprofit-DHHS contracting reform bill mentioned in the first item is only a first step in nonprofit contracting reform in North Carolina. The Center is also working with our partners in state government to help identify potential solutions to concerns that nonprofits have expressed about their grants and contracts with state agencies. The input many nonprofits have shared with the Center has been helpful in starting that conversation (and in identifying which state agencies should be a part of that conversation).

As we continue that conversation, we encourage all nonprofits with contracts with state agencies to please let us know your experiences with your state grants and contracts. It would be helpful to hear about both challenges nonprofits have experienced and about examples of state agencies or programs that are particularly good partners with nonprofit grantees/contractors. It is especially helpful if you can let us know the state agency/division with which your nonprofit has a grant or contract and share as many specifics as possible. Thank you if you have already shared your nonprofits experience with the Center.

Yesterday, the NC Senate and NC House of Representatives both gave preliminary approval to the state budget for FY2022-23 (H.B. 103). Both chambers are planning a final vote on the budget this morning. The $27.9 billion budget includes more than $230 million in new funding for nonprofits, including $155 million in increased support for nonprofit programs and operations and $79 million in support for building projects at nonprofits. Some highlights of the budget include:

The Center has prepared a comprehensive analysis of the budget with more details about various nonprofit provisions and appropriations, including lists of all nonprofits receiving earmarks.

Legislators released the budget on Tuesday night and held committee meetings to inform legislators and the public about the budget details on Wednesday. Due to procedural rules, legislators were not able to offer any amendments to the budget. It is unclear whether Governor Roy Cooper will sign the budget into law, veto it, or allow it to become law without his signature.

On Tuesday, the NC House of Representatives passed a bill (S.408) that would create a new legislative study committee to consider expanding Medicaid coverage to adults with incomes up to 133% of the federal poverty level. Medicaid expansion would provide health coverage for about 600,000 North Carolinians whose incomes are too much to qualify for Medicaid currently but not enough to receive health care subsidies in the Affordable Care Act health marketplace. The bill would require the NC Department of Health and Human Services to make a recommendation to the study committee on:

The study committee would vote on DHHS’s recommendations by December 15, and the General Assembly could then consider Medicaid expansion by the end of 2022.

Last month, the NC Senate passed a bill (H.B. 149) that would enact Medicaid expansion in North Carolina, based partly on the recommendations of another study committee that had met this spring. That bill, which passed the Senate with broad bipartisan support, also includes several other major health care policy provisions, including changes to the state’s certificate of need laws and a version the SAVE Act, which would enable more nurses to provide services without supervision by a physician.

The Center strongly supports Medicaid expansion for two reasons. First, it would complement the work of many nonprofits that provide services to North Carolinians who don’t currently have adequate health coverage. Second, it would provide health coverage for some employees of nonprofits that don’t offer group health plans and whose salaries leave them in the health care coverage gap.

While both the House and Senate have now passed plans for Medicaid expansion with broad bipartisan support, neither chamber appears willing to negotiate on a compromise between the two plans. Consequently, it is unlikely that legislators will approve of Medicaid expansion before the end of the 2022 short session this week.

Last month, the NC State Board of Elections (NCSBE) began accepting written public comments on a requested declaratory ruling that would allow county boards of elections to use a signature matching process to determine whether to accept absentee ballots. If NCSBE issues the ruling, county boards of elections would be able to deny absentee ballots if they determined that the signature on the ballot’s envelope didn’t match the signature on a voter’s registration filing (which might have been submitted years or decades earlier). In its description of the requested ruling, NCSBE explains: “North Carolina law currently requires an absentee voter to confirm their identity by having two witnesses or a notary attest that the voter completed their ballot. This request seeks an additional layer of verification for absentee voters.”

Some organizations have expressed concerns that a signature match requirement could make it impossible for some people served by nonprofits – including seniors and people with disabilities – to vote by absentee ballot, particularly if their signatures have changed since they originally registered to vote. If your nonprofit is concerned about the potential impact of this ruling, you can submit comments to NCSBE by the July 5 deadline.

The U.S. Department of Labor (DOL) announced last week that it plans to release new proposed regulations on the salary threshold under the Fair Labor Standards Act (FLSA) in October. Currently, FLSA requires employers, including nonprofits, to pay their employees at least $7.25 per hour and to pay employees one-and-one-half time their regular rate of pay when they work more than 40 hours in a workweek. Employees are exempt from the FLSA overtime pay requirement if they:

In 2016, near the end of the Obama administration, DOL attempted to raise the salary threshold for exemption from overtime pay to $47,476 per year. Ultimately, federal courts stopped the implementation of the Obama-era overtime rule, and the Trump administration elected to use a lower salary threshold (the current level of $35,568) for exemption from overtime pay. It is likely that the forthcoming DOL regulations will set a salary threshold closer to that of the 2016 proposal. DOL also could make changes to the duties tests for administrative, executive, and professional employees.

Earlier this year, the Center urged DOL to take into account three nonprofit-specific considerations in the developing new overtime regulations:

These suggestions are based on input the Center received from dozens of North Carolina nonprofits in 2016 and 2019 when DOL revised its overtime regulations. When DOL releases its proposed regulations, it will provide an opportunity for public comments. The Center will share information on how and when your nonprofit can provide timely, substantive written comments to DOL. The Center also will provide comprehensive analysis of the regulations and compliance options for North Carolina nonprofits (similar to what we provided in 2016 and 2019).

On Wednesday, the NC House of Representatives unanimously approved a bill (S.593) that would create independent boards for three state schools for individuals with disabilities. One provision in the bill would enable the schools to create independent nonprofits to raise private funds to support their operations. Unfortunately, the bill would require that these nonprofits “shall not engage in partisan political activity or policy advocacy.” The Center explained to the bill’s sponsor and other legislators that the prohibition on partisan political activity makes sense and is the same limitation that is in place for any 501(c)(3), but that the limitation on “policy advocacy” may be problematic for nonprofits established to support these school. Because “policy advocacy” is a very broad term, this limitation could prevent nonprofits formed by these schools from engaging in many legal forms of legal and legitimate policy advocacy such as education of the public about policy issues and advocating with local governments on matters affecting their organizations’ operations or the people they serve.

The Senate hasn’t yet taken up the bill and could still make changes if it votes on the legislation today. The Center is continuing to work with legislators to educate them that 501(c)(3) nonprofits can – and often should – legally engage in policy advocacy and to correct this bill so that it doesn’t set a troublesome precedent that limits some nonprofits’ advocacy.

Second quarter lobbying expense reports are due to the NC Secretary of State by Friday, July 22. Nonprofits that are registered as lobbyist principals and nonprofit staff and contractors registered as lobbyists must submit their expense reports each quarter. For more information on lobbying registration and reporting requirements, check out the Center's summary of NC lobbying laws for nonprofits.

The Center provides Nonprofit Policy Update each week as a benefit to its nonprofit members. However, to help all North Carolina nonprofits respond to the COVID-19 pandemic, we're temporarily providing this newsletter to non-member nonprofits. Don’t miss out – become a member to ensure you continue receiving these updates along with many other valuable benefits.