RALEIGH — House and Senate budget negotiators cleared a major obstacle Wednesday by compromising on the Medicaid component of a $21 billion 2014-15 General Fund spending plan, but still face potentially prickly deliberations on Medicaid reform, teacher pay, and teacher tenure.

The Wednesday session focused on a few items, with the Senate insisting that a Medicaid agreement would enable further talks. Most budget numbers still need to be hashed out, and subcommittees were expected to begin working on them immediately.

“Once we can get all these numbers resolved, we’ll begin talking about [teacher pay and tenure]. We have not begun that process,” Senate leader Phil Berger, R-Rockingham, said of the chambers’ differences over education policy.

The Senate budget funds an 11-percent average pay increase for teachers by cutting state funding for teacher assistants by $233 million; the House budget preserves the teacher assistant positions.

Berger would not say whether the Senate is rethinking teacher assistant reductions. Meanwhile, the House has backed off its plan to use lottery money to fund a 5 percent teacher pay raise. The House plan also leaves tenure in place, unlike the Senate measure, which ends tenure for teachers who accept the higher pay scale.

“All of those things are up to negotiation. I’m not prepared to talk about what our position might be or what our position might not be” on teacher assistants, Berger said, trying to stick with a one-step-at-a-time approach after Wednesday’s win on the Medicaid issue.

“I think today was a good day,” said Berger, who attended the session along with House Speaker Thom Tillis, numerous legislative conferees, and Art Pope, Gov. Pat McCrory’s budget director. Berger was pleased agreements were reached on Medicaid, the main sticking point for several weeks in budget talks.

He offered no timetable on when a final budget might be hammered out.

“I think the House moved significantly toward our number,” which projected both higher Medicaid costs for next year and shortfalls in revenue to cover all costs this year, Berger said. The Senate has maintained that the House Medicaid forecasts were too rosy, and pointed to almost $2 billion in cost overruns the past four years.

“Over the weekend, we received some information from the [North Carolina] Hospital Association that seemed to confirm the higher dollars needed to get them paid for the just now ended fiscal year,” Berger said.

The House and the Governor’s Office used significantly lower Medicaid estimates, though the amounts have been difficult to tabulate, due to computer problems at the state Department of Health and Human Services.

The hospital association forecast “might have helped us to move the numbers closer,” and reach agreement, Berger said. “I would say our numbers were right. I’m not saying anybody’s was wrong. I’m saying ours were numbers that were persuasive and tended to hold up. [But] in order to move the process along, we were willing to compromise, and go to the midpoint … that our fiscal staff had [calculated],” Berger said.

The give-and-take process occurred in a rare public budget conference committee, initiated at the insistence of the Senate leadership. Lobbyists, lawmakers, and media members crowded into the legislative hearing room. Many visitors were turned away due to crowding, and sent to a separate room with a live news feed of the proceedings.

There were questions about whether the House conferees would even show up because the Senate demanded public negotiations, and previous discussions involving the two chambers had become testy. When Senate negotiators returned from a 45-minute private conference to say they would accept the House’s Medicaid offer, gasps of surprise were heard in the room.

The conferees agreed to include nearly $137 million in the 2014-15 budget to cover an anticipated Medicaid shortfall still being calculated from the 2013-14 budget. The Senate clipped nearly $13.5 million from its earlier $150 million offer. The House added nearly $61.3 million to its earlier offer of $75.2 million.

On the Medicaid rebase — the adjusted number accounting for program growth and other costs in the second year of a two-year budget cycle — the two sides agreed on nearly $186.4 million.

To get there, the Senate cut almost $42 million from its $228.3 million projection. The House added nearly $68.6 million to its $117.8 million forecast.

Still looming is a battle on structural reforms to Medicaid. McCrory praised the House Wednesday for passing House Bill 1181, the North Carolina Medicaid Modernization Act, and urged the Senate to approve it as well.

The plan would be phased in using an Accountable Care Organization model. DHHS would lead the gradual switch from a fee-for-service system to a capitated plan making health care providers more responsible for cost overruns.

The Senate wants to carve Medicaid out of DHHS, and prefers a managed care system to fee-for-service.

“I have a strong appetite for moving forward” with the Senate reform plan, said Sen. Ralph Hise, R-Mitchell, co-chairman of the Senate Appropriations Committee on Health and Human Services.

“I think it’s one of the more important things we can do with Medicaid as a whole,” Hise said. “I think right now it’s our position.”

Sen. Louis Pate, R-Wayne, co-chairman of the Senate Health and Human Services Appropriations Subcommittee and a member of the joint Medicaid Reform Advisory Group, said that with the two chambers reaching some common ground on Medicaid, other negotiations can go forward.

He said it is important to push the Senate reform plan to end a series of huge budget overruns. Pate thinks the Medicaid projections agreed to Wednesday did not go far enough.

“There will be an overrun again this coming year, I believe,” Pate said.

On education, House Rules Committee Chairman Tim Moore, R-Cleveland, seemed confident money for teacher assistants would remain intact, and that the House would reject any attempt to link teacher tenure and teacher pay. Tenure is a policy matter and should be voted on separately, he said.

“I think everything will be closer in line with what the House proposed,” Moore said. “We’re going to do some raises. I don’t know how much exactly, but we’re going to do the right thing.”

He expects swift resolution on differences in lottery receipt projections for public education. The Senate is sticking with a $116.2 million number. The House is at $165.8 million. The House wants to increase lottery advertising to 2 percent of the lottery budget. The Senate wants to keep the cap at the current 1 percent.

Senate Majority Leader Harry Brown, R-Onslow, said the Senate was willing to split the difference on reversions — changes to the budget — with the House at $388 million.

There were moments of levity in the process. When pitching the Senate compromise, Brown, who owns several auto dealerships in Jacksonville, said the offer was “pretty simple. This kind of reminds me of selling a car.”

To which Rep. Nelson Dollar, R-Wake, responded, “Sen. Brown, you haven’t sold the car yet, but we do like some of the features.”

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.