Senatecommittee substitute makes the following changes to the3rd edition.

Makes technical and conforming changes to Section 1, GS 143C-6-23. Adds language to the definitions of "grantee" and "subgrantee," elaborating and establishing conditions that, upon meeting one of the conditions, qualifies an entity to be considered as such.

Amends GS 143C-6-23(d)(5a) and (5b), making clarifying and technical changes. Creates new GS 143C-23(d)(5c), requiring an administering State agency and the Office of Budget and Management (OSBM) to provide an accounting of withheld funds that is separate from other funds used for oversight and monitoring, and that the accounting be made available to a grantee or subgrantee upon request.

Amends subdivision (6) of GS 143C-6-23(d) to delete provisions that the mandatory periodic reporting requirements require grantees and subgrantees to filecopies of reports and statements filed with state agencies underwith theState Auditor,except for the information described in subsections (b) and (c) of this section.

Makes technical and clarifying changes to GS 143C-6-23(d)(6a) and (9a).

Amends GS 143C-6-23(f), providing the OSBM authority to take actions for noncompliance. Requiresconsultation with a granting agency of the US and the State Agency if the funds are pass-through funds from a US agency, before taking actions for noncompliance. Authorizes actions for noncompliance, including suspension of grant funds, after certain conditions are met.

Deletes GS 143C-6-23(f1), where the withholding of 2% for grant oversight costs was authorized, with the appropriate approval, and .5% withholding was authorized, for grant oversight costs,without any approval required.

Amends GS 143C-6-23(h), deleting the requirement to report noncompliance to the Joint Legislative Commission on Governmental Operations and the Fiscal Research Division, in lieu of maintaining a publicly available list of all grantees or subgrantees that are in noncompliance.

Amends GS 143C-6-23(i), to require that state agencies submit a list of every grantee to whom the state agency disbursed grant funds to the Office of State Budget and Management (OSBM) in the format prescribed by the OSBM (was, to the State Auditor in a format prescribed by the Auditor).

Amends GS Chapter 143C, enacting a new GS 143C-6-24 (Reserving of Grant Program Funds for Oversight), creating a mandatory requirement that state agencies that are overseeing grant programs must reserve 2% of the amount awarded to cover oversight costs. Requires 25% of that amount to be transferred to OSBMto cover costs of overseeing grants to non-state entities. If the amountreserved appears to be in excess of the amount required for oversight, theamount of thereserve can be reduced. Reductions can be approved by request from an administering state agency or without request and upon determination by the OSBM. Permits a grantee to recommend a reduction of the reserve amount to the administering state agency and to the OSBM; however, prohibits using an adverse determination by the OSBM as grounds for an appealby the grantee under GS Chapter 150B.

Reserveamounts will be reviewed annually by the OSBM, with adjustments tothe reserve amount possible at any time. Prohibits reserving funds under this section if a grant program is a pass-through of funds from the federal government and the terms prohibitthe reserving of fundsdescribed by this section.Makes technical and clarifying changes to GS 143C-6-23(d), requiring grantees to submit afinancial position report in a form specified by OSBM within 90 days of the end of the state fiscal year. Changes the effectivedate, with Sections 2 (enacting GS 143C-6-24)and 3 (amending GS 143C-6-23(d)) becoming effective July 1, 2014, and applying to grants awarded on or after that date. The remainder is effective July 1, 2013.