Why am I not prompted to 'Keep notes on iPhone' when I disable Notes in iCloud settings? Other things like Contacts, Reminders, Calendars, and Safari data all prompted me to 'keep data on iPhone' when I toggled them off in iCloud settings, but not Notes!

I want to keep my notes on my iPhone when iCloud is disabled.
It's either a bug or by design. My iDevices do the same. 

You could try moving them to a different account using the notes app on the Mac, if you have access to that. That wouldn't solve your problem completely though.