AN ACT TO MAKE BASE BUDGET APPROPRIATIONS FOR CURRENT OPERATIONS OF STATE DEPARTMENTS, INSTITUTIONS, AND AGENCIES, AND FOR OTHER PURPOSES.

The General Assembly of North Carolina enacts:

PART I. TITLE AND INTRODUCTION

TITLE OF ACT

SECTION 1.1.  This act shall be known as the Current Operations Appropriations Act of 2025.

INTRODUCTION

SECTION 1.2.  The appropriations made in this act are for maximum amounts necessary to provide the services and accomplish the purposes described in the budget in accordance with the State Budget Act. Savings shall be effected where the total amounts appropriated are not required to perform these services and accomplish these purposes, and the savings shall revert to the appropriate fund at the end of each fiscal year, except as otherwise provided by law.

PART II. CURRENT OPERATIONS AND EXPANSION/GENERAL FUND

GENERAL FUND APPROPRIATIONS

SECTION 2.1.(a)  Appropriations from the General Fund for the budgets of the State departments, institutions, and agencies, and for other purposes as enumerated, are made for each year of the 2025‑2027 fiscal biennium, according to the following schedule:

Current Operations – General Fund                                    FY 2025‑2026         FY 2026‑2027

EDUCATION

Community College System                                                    1,835,773,238          1,817,233,999

Public Instruction                                                                   12,940,561,945        13,312,131,679

Appalachian State University                                                     209,862,595             209,862,595

East Carolina University

Academic Affairs                                                                  274,127,761             274,127,761

Health Affairs                                                                       107,144,915             107,144,915

Elizabeth City State University                                                    48,513,547               48,513,547

Fayetteville State                                                                          87,586,990               87,586,990

NC A&T State University                                                          162,728,474             162,743,010

NC Central University                                                                  98,572,636               98,572,636

NC State University

Academic Affairs                                                                  564,312,136             564,676,069

Agricultural Extension                                                            46,543,237               46,543,237

Agricultural Research                                                             63,465,016               63,465,016

UNC‑Asheville                                                                             51,101,094               51,101,094

UNC‑Chapel Hill

Academic Affairs                                                                  385,597,924             385,597,924

Health Affairs                                                                       249,399,553             249,399,553

AHEC                                                                                     57,855,450               57,855,450

UNC‑Charlotte                                                                           331,584,743             331,584,743

UNC‑Greensboro                                                                        204,987,083             204,987,083

UNC‑Pembroke                                                                            95,473,853               95,473,853

UNC‑School of the Arts                                                               42,015,189               42,015,189

UNC‑Wilmington                                                                       217,239,729             217,239,729

Western Carolina University                                                      164,563,738             164,589,450

Winston‑Salem State University                                                  68,743,773               68,743,773

General Administration                                                                50,098,094               50,098,094

University Institutional Programs                                               445,200,342             418,908,192

Related Educational Programs                                                   155,756,139             494,956,139

NC School of Science and Math                                                  47,142,167               46,042,167

Aid to Private Institutions                                                             11,209,300                 1,209,300

Total University of North Carolina                                      4,240,825,478          4,543,037,509

HEALTH AND HUMAN SERVICES

Department of Health and Human Services

Aging and Adult Services                                                        52,921,202               52,835,960

Central Management and Support                                         264,668,458             280,846,739

Child Development and Early Education                              382,372,308             402,337,850

Child and Family Well Being                                                  67,730,469               66,899,077

Health Benefits                                                                    6,713,749,640          6,915,372,354

Health Services Regulation                                                      28,910,644               27,684,055

Mental Hlth/Dev. Disabl./Subs. Abuse Serv.                        872,910,215             861,901,094

Public Health                                                                          145,202,462             141,115,801

Services for the Blind, Deaf and Hard of Hearing                   10,914,745               10,582,156

Social Services                                                                       237,776,745             237,389,031

Vocational Rehabilitation                                                        49,986,020               48,988,234

Total Health and Human Services                                       8,827,142,908          9,045,952,351

AGRICULTURE, NATURAL, AND ECONOMIC RESOURCES

Agriculture and Consumer Services                                           212,663,368             187,645,965

Department of Commerce

Commerce                                                                                32,609,149               32,416,005

General State Aid                                                                     19,655,810               19,655,810

Economic Development                                                         166,248,245             161,248,245

Environmental Quality                                                               140,680,891             128,482,814

Labor                                                                                             28,121,857               27,647,075

Department of Natural and Cultural Resources                         307,296,564             300,576,669

Wildlife Resources Commission                                                  18,351,461               17,633,011

JUSTICE AND PUBLIC SAFETY

Judicial Department                                                                    827,773,076             820,165,360

Judicial Department – Indigent Defense Services                      185,962,469             175,026,742

Department of Justice                                                                   90,804,406               89,863,913

Department of Public Safety                                                      702,776,742             686,556,053

Department of Adult Correction                                              2,177,127,587          2,157,937,189

State Bureau of Investigation                                                       75,468,655               64,814,302

GENERAL GOVERNMENT

Department of Administration                                                      74,678,938               74,260,897

Office of Administrative Hearings                                                 8,898,948                 8,839,511

State Board of Elections                                                               11,759,995               11,682,822

Office of State Auditor                                                                 20,631,544               20,427,667

Office of State Controller                                                             37,735,638               37,484,996

General Assembly                                                                      106,202,329             103,830,055

Office of the Governor                                                                 12,123,401               12,059,283

Office of State Budget and Management

Office of State Budget and Management                                 13,505,238               13,404,735

OSBM – Reserve for Special Appropriations                          35,300,000               15,300,000

Housing Finance Agency                                                             70,660,000               60,660,000

Office of State Human Resource                                                  13,247,160               15,358,377  

Department of Insurance

Insurance                                                                                109,006,753               84,282,862

Insurance – Industrial Commission                                         16,099,148               14,739,941

Office of Lieutenant Governor                                                       1,417,641                 1,405,203

Department of Military and Veterans Affairs                              10,522,771               10,436,405

Department of Revenue                                                              135,835,446             135,281,182

Department of Secretary of State                                                 21,063,124               20,875,289

Department of State Treasurer

Treasurer                                                                                       622,074                    209,074

Treasurer – Retirement System                                                24,044,657               24,044,657

Information Technology                                                               95,908,367               97,150,367  

RESERVES, DEBT, AND OTHER BUDGETS

Statewide Reserves                                                                                       0                               0

Total Net Appropriation                                                     33,649,107,021        34,349,758,014

SECTION 2.1.(b)  For purposes of this act, the requirements set forth in this section represent the total amount of funds, including agency receipts, appropriated to an agency, department, or institution.

GENERAL FUND AVAILABILITY

SECTION 2.2.(a)  The General Fund availability derived from State tax revenue, nontax revenue, and other adjustments used in developing the budget for each year of the 2025‑2027 fiscal biennium is as follows:

                                                                                                  FY 2025‑2026         FY 2026‑2027

Unappropriated Balance from Prior Fiscal Year                    48,073,341             364,074,833

Projected Over Collections FY 2024‑25                              543,900,000                                ‑

Anticipated Reversions FY 2024‑25                                    300,000,000                                ‑

Total, Current Beginning Unreserved Balance                     891,973,341             364,074,833

Statutorily Required Reservations of Revenue

State Capital and Infrastructure Fund                              (1,120,000,000)       (1,159,200,000)

Unfunded Liability Solvency Reserve                                  (38,514,750)          (117,406,800)

Subtotal                                                                                  (1,158,514,750)       (1,276,606,800)

Investments to Reserves                                                                              

State Emergency Response and Disaster Relief Fund          500,000,000                               0

Subtotal, Investments to Reserves                                         (500,000,000)                              0

Tax Revenues                                                                                               

Individual Income                                                            16,980,000,000        16,114,000,000

Sales and Use                                                                   11,582,500,000        11,895,200,000

Corporate Income                                                              1,483,600,000          1,340,100,000

Franchise                                                                               785,800,000             809,700,000

Insurance                                                                            1,503,300,000          1,415,600,000

Alcoholic Beverage                                                              560,000,000             572,700,000

Tobacco Products                                                                 245,400,000             240,900,000

Other Tax Revenue                                                               248,200,000             268,900,000

Subtotal, Tax Revenues                                                       33,388,800,000        32,657,100,000

Non‑tax Revenues                                                                                        

Judicial Fees                                                                         207,400,000             204,600,000

Investment Income                                                               681,900,000             594,100,000

Disproportionate Share                                                         107,700,000             109,000,000

Master Settlement Agreement                                              105,100,000             102,000,000

Insurance                                                                               124,000,000             126,900,000

Other Non‑tax Revenues                                                      274,800,000             273,400,000

Subtotal, Non‑tax Revenue                                                   1,500,900,000          1,410,000,000

Total, Net Revenues                                                             34,889,700,000        34,067,100,000

Adjustments to Revenues:                                                                          

Maintain Individual Income Tax at 4.25%                           386,300,000          1,801,800,000

Maintain Lowest Corporate Tax Rate at 2.25%                     68,400,000             166,200,000

Working Families Tax Credit – 20% of federal

Earned Income Tax Credit                                                  (426,800,000)          (425,800,000)

Child and Dependent Care Tax Credit                                  (59,000,000)            (60,300,000)

Child Deduction to Refundable Child Tax Credit                 (23,000,000)            (23,000,000)

Sales Tax Back‑to‑School Holiday                                       (29,000,000)            (30,000,000)

PHP Gross Tax Revenue Offset                                            (78,035,000)            (75,623,000)

Subtotal, Adjustments to Tax Revenue                                 (161,135,000)         1,353,277,000

Adjustments to Availability

      Insurance Non‑Tax Transfer                                                   51,158,263               25,646,165

Revised Total Net General Fund Availability                   34,013,181,854        34,533,491,198

Less General Fund Net Appropriations                           (33,649,107,021)     (34,349,758,014)

Unappropriated Balance Remaining                                      364,074,833             183,733,184

SECTION 2.2.(b)  IT Reserve – The State Controller shall transfer the sum of one hundred seventeen million eight hundred ninety‑five thousand five hundred ninety dollars ($117,895,590) from the unreserved fund balance in the Information Technology Project Reserve to the Office of State Budget and Management. Funds appropriated from the Information Technology Project Reserve shall be allocated by the Director of the State Budget in consultation with the State Chief Information Officer and the head of the department with primary ownership over the information technology project based on documented project needs. Funds transferred under this section are appropriated in the year in which they are transferred and shall be used for the following information technology projects:

(1)        The Office of State Budget and Management's replacement for the integrated budget information system (IBIS).

(2)        The Department of Information Technology's cybersecurity tools continuation of protection offerings, and constituent portal and citizen identity software.

(3)        The Department of Adult Correction's rounds tracking software.

(4)        The Office of the State Auditor's modernization of audit IT infrastructure.

(5)        The Department of Public Instruction's PSU school business system modernization.

(6)        The Office of State Human Resources' human capital management (HCM) vendor integration and HARP data analytics improvements (GDAC).

(7)        The Department of Revenue's DataPower end of life replacement, datacenter hardware replacement, and replacement of OFP and RCA desktop clients.

(8)        The State Board of Elections' election modernization.

(9)        The State Bureau of Investigation's headquarters data center and investigative case management system.

(10)      The Office of Administrative Hearings' database development system.

(11)      The Department of Commerce's new career information system.

(12)      The Department of Environmental Quality's completion of the permit transformation project.

(13)      The Department of Health and Human Services, Division of State Operated Health Facilities' electronic health records.

(14)      The Department of Health and Human Services, Division of Health Benefits' Medicaid enterprise system and other technology.

(15)      The Department of Justice's legal case management system.

SECTION 2.2.(c)  SERDRF – The State Controller shall reserve to the State Emergency Response and Disaster Relief Reserve established in G.S. 166A‑19.42 from funds available in the General Fund the sum of five hundred million dollars ($500,000,000) in nonrecurring funds for the 2025‑2026 fiscal year. The State Controller shall transfer funds available in the State Emergency Response and Disaster Relief Reserve the sum of one hundred fourteen million dollars ($114,000,000) to the Department of Public Safety, Emergency Management Division, to be used as state matching funds to draw down remaining federal funding for storms that occurred prior to 2024. The funds are appropriated for the five‑year period ending June 30, 2030.

SECTION 2.2.(d)  Federal Infrastructure Match Reserve. – The State Controller shall transfer funds available in the Federal Infrastructure Match Reserve to agencies and departments as needed to draw down federal funds in accordance with the following schedule, and the funds transferred are appropriated for the 2025‑2027 fiscal biennium:

(1)        Five million dollars ($5,000,000) to the Department of Agriculture and Consumer Services for Farmland Preservation Agricultural Military Buffer Conservation Easements;

(2)        Ten million five hundred thousand dollars ($10,500,000) to the Department of Commerce, Office of Science, Technology, and Innovation, for the NC Coalition Strategic Support Fund to leverage federal funding and grow the semiconductor and chip industries in the state; and

(3)        Twenty‑two million six hundred fourteen thousand one hundred dollars ($22,614,100) to the Department for Environmental Quality for Drinking Water and Clean Water State Revolving Funds match funds.

SECTION 2.2.(e)  Except as otherwise specifically provided, nothing in this section shall be construed as appropriating funds reserved pursuant to this section. Funds reserved pursuant to this section do not constitute an appropriation made by law, as that phrase is used in Section 7(1) of Article V of the North Carolina Constitution.

SECTION 2.2.(f)  The State Controller shall ensure that the transfers required under this section are completed as soon as practicable but no later than the end of the fiscal year in which they are directed. In making the transfers required under this section, the State Controller shall prioritize transfers to Reserves that support expenditures.

PART III. HIGHWAY FUND AND HIGHWAY TRUST FUND

CURRENT OPERATIONS AND EXPANSION/HIGHWAY FUND

SECTION 3.1.  Appropriations from the State Highway Fund for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are made for the fiscal biennium ending June 30, 2027, according to the following schedule:

Current Operations – Highway Fund                                  FY 2025‑2026          FY 2026‑2027

Department of Transportation

Administration                                                                    $143,308,209           $143,308,209

Division of Highways

Administration                                                                        38,487,904               38,412,904

Construction                                                                           77,543,078               77,543,078

Maintenance                                                                      2,231,198,332          2,248,723,293

Governor's Highway Safety Program                                          601,695                    601,695

OSHA Program                                                                           358,030                    358,030

State Aid to Municipalities                                                         185,875,000             185,875,000

Intermodal Divisions

Ferry                                                                                       92,551,173               84,147,728

Public Transportation, Bicycle, and Pedestrian                      70,570,554               70,570,554

Aviation                                                                                158,376,982             159,889,238

Rail                                                                                         49,367,607               50,367,607

Division of Motor Vehicles                                                  173,788,575             166,853,269

Compensation, Benefits,

Reserves, Transfers, and Other                                               76,660,123               69,756,123

Capital Improvements                                                                    6,712,738               47,793,272

Total Highway Fund Appropriations                                  3,305,400,000          3,344,200,000

HIGHWAY FUND AVAILABILITY

SECTION 3.2.  The Highway Fund availability used in developing the 2025‑2027 fiscal biennial budget is shown below:

Highway Fund Availability                                                   FY 2025‑2026         FY 2026‑2027

Motor Fuels Tax                                                                    $1,853,000,000        $1,878,100,000

Highway Short Term Lease                                                        113,100,000             114,900,000

Licenses and Fees                                                                    1,104,500,000          1,123,300,000

Investment Income                                                                       50,200,000               37,600,000

Aviation Fuel Tax                                                                         13,100,000               13,400,000

Sales Tax                                                                                     171,500,000             176,900,000

Total Highway Fund Availability                                      $3,305,400,000        $3,344,200,000

HIGHWAY TRUST FUND APPROPRIATIONS

SECTION 3.3.  Appropriations from the State Highway Trust Fund for the maintenance and operation of the Department of Transportation and for other purposes as enumerated are made for the fiscal biennium ending June 30, 2027, according to the following schedule:

Current Operations – Highway Trust Fund                       FY 2025‑2026          FY 2026‑2027

Program Administration                                                             $44,621,733             $44,621,733

Bonds                                                                                          121,440,275             121,436,275

Turnpike Authority                                                                       49,000,000               49,000,000

State Ports Authority                                                                    45,000,000               45,000,000

FHWA State Match                                                                        6,048,440                 6,048,440

Strategic Prioritization Funding Plan for

Transportation Investments                                               2,222,253,974          2,280,386,974

Transfer to Visitor Center                                                                  640,000                    640,000

Transfer to Department of Revenue                                                             0                    371,000

Uncommitted Trust Fund                                                                  495,578                    495,578

Total Highway Trust Fund Appropriations                     $2,489,500,000        $2,548,000,000

HIGHWAY TRUST FUND AVAILABILITY

SECTION 3.4.  The Highway Trust Fund availability used in developing the 2025‑2027 fiscal biennial budget is shown below:

Highway Trust Fund Availability                                        FY 2025‑2026          FY 2026‑2027

Highway Use Tax                                                                  $1,150,500,000         $1,179,800,000

Motor Fuels Tax                                                                         619,500,000             627,900,000

Fees                                                                                             172,100,000             172,500,000

Sales Tax                                                                                    514,400,000             530,600,000

Investment Income                                                                       33,000,000               37,200,000

Total Highway Trust Fund Availability                            $2,489,500,000        $2,548,000,000

PART IV. OTHER AVAILABILITY AND APPROPRIATIONS

CASH BALANCES AND OTHER APPROPRIATIONS

SECTION 4.1.(a)  Cash balances, federal funds, departmental receipts, grants, and gifts from the General Fund, revenue funds, enterprise funds, and internal service funds are appropriated for the 2025‑2027 fiscal biennium as follows:

(1)        For all budget codes listed in the Governor's Recommended Budget for the 2025‑2027 fiscal biennium, dated March 2025, and in the Budget Support Document, fund balances and receipts are appropriated up to the amounts specified, as adjusted by the General Assembly, for the 2025‑2026 fiscal year and the 2026‑2027 fiscal year. Funds may be expended only for the programs, purposes, objects, and line items or as otherwise authorized by the General Assembly. Expansion budget funds listed in those documents are appropriated only as otherwise provided in this act.

(2)        Notwithstanding the provisions of subdivision (1) of this subsection:

a.         Any receipts that are required to be used to pay debt service requirements for various outstanding bond issues and certificates of participation are appropriated up to the actual amounts received for the 2025‑2026 fiscal year and the 2026‑2027 fiscal year and shall be used only to pay debt service requirements.

b.         Other funds, cash balances, and receipts of funds that meet the definition issued by the Governmental Accounting Standards Board of a trust or agency fund are appropriated for and in the amounts required to meet the legal requirements of the trust agreement for the 2025‑2026 fiscal year and the 2026‑2027 fiscal year.

SECTION 4.1.(b)  Receipts collected in a fiscal year in excess of the amounts appropriated by this section shall remain unexpended and unencumbered until appropriated by the General Assembly, unless the expenditure of over‑realized receipts in the fiscal year in which the receipts were collected is authorized by the State Budget Act. Over‑realized receipts are appropriated in the amounts necessary to implement this subsection.

SECTION 4.1.(c)  Notwithstanding subsections (a) and (b) of this section, there is appropriated from the Reserve for Reimbursements to Local Governments and Shared Tax Revenues for each fiscal year an amount equal to the amount of the distributions required by law to be made from that reserve for that fiscal year.

EDUCATION LOTTERY ANd other wagering funds/CHANGES TO REVENUE ALLOCATIONS

SECTION 4.2.  The appropriations for the 2025‑2027 fiscal biennium made from the Education Lottery Fund equal one billion, eight hundred and four million seven hundred thousand dollars ($1,804,700,000); and from E‑Instant Games equal four hundred fifty‑two million three hundred thousand dollars ($452,300,000) and are as follows:

FY 2025‑2026          FY 2026‑2027

Noninstructional Support Personnel                                         $385,914,455           $385,914,455

Prekindergarten Program                                                            105,002,110             111,402,110

NC Pre‑K Wrap‑Around Summer Child Care                              10,000,000               10,000,000

Universal School Breakfast                                                          85,300,000               85,300,000

1‑1 Device Refresh                                                                       68,250,000               68,250,000

Public School Building Capital Fund                                         100,000,000             100,000,000

Needs‑Based Public School Capital Fund                                  258,252,612             258,252,612

Public School Repairs and Renovations                                       50,000,000               50,000,000

Scholarship Reserve Fund for Public Colleges and Universities 41,194,733               41,194,733

LEA Transportation                                                                      21,386,090               21,386,090

TOTAL APPROPRIATION                                              $1,125,300,000        $1,131,700,000

INDIAN GAMING EDUCATION REVENUE FUND APPROPRIATION

SECTION 4.3.  Notwithstanding G.S. 143C‑9‑7, the appropriations from the Indian Gaming Education Revenue Fund to the Department of Public Instruction, Textbooks, and Digital Resources Allotment, are as follows. These receipts are appropriated in the year in which they are received.

FY 2025‑2026          FY 2026‑2027

Textbooks and Digital Resources Allotment                              $22,700,000             $13,700,000

Classroom Materials                                                                       1,000,000                 1,000,000

TOTAL APPROPRIATION                                                   $23,700,000             $14,700,000

CIVIL PENALTY AND FORFEITURE FUND

SECTION 4.4.  Allocations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2027, as follows:

                                                                                                  FY 2025‑2026          FY 2026‑2027

School Technology Fund                                                            $18,000,000             $18,000,000

Drivers Education                                                                         31,493,768               31,493,768

State Public School Fund                                                           166,041,640             166,041,640

1‑1 Device Refresh                                                                       11,300,000               11,300,000

TOTAL APPROPRIATION                                                 $226,835,408           $226,835,408

PART V. GENERAL PROVISIONS

ESTABLISHING OR INCREASING FEES

SECTION 5.1.(a)  Notwithstanding G.S. 123.1, an agency is not required to consult with the Joint Legislative Commission on Governmental Operations prior to establishing or increasing a fee to the level authorized or anticipated in this act.

SECTION 5.1.(b)  Notwithstanding G.S. 150B‑21.1A(a), an agency may adopt an emergency rule in accordance with G.S. 150B‑21.1A to establish or increase a fee as authorized by this act if the adoption of a rule would otherwise be required under Article 2A of Chapter 150B of the General Statutes.

CAP STATE FUNDED PORTION OF NONPROFIT SALARIES

SECTION 5.2.  No more than one hundred forty thousand dollars ($140,000) in State funds, including any interest earnings accruing from those funds, may be used for the annual salary of any individual employee of a nonprofit organization.

Part vi. Community college system

Propel NC Funding Model Adjustment

SECTION 6.1.(a)  The funds appropriated in this act for Propel NC shall be used to shift North Carolina Community College System's enrollment formula from the current tier‑based allocation model to a labor‑market driven model. This new model shall link courses to workforce sectors that are ranked and valued by statewide salary job demand data.

SECTION 6.1.(b)  The State Board of Community Colleges in consultation with the Department of Commerce shall identify the workforce sectors aligned with the State's high‑demand, high‑salary jobs and allocate the funds appropriated in this act to those workforce sectors. Appropriated funds may also be used for customized training and Small Business Centers at the individual colleges.

Propel NC eNROLLMENT gROWTH rESERVE

SECTION 6.2.  G.S. 115D‑31 reads as rewritten:

§ 115D‑31.  State financial support of institutions.

…

(e)        If receipts for community college tuition and fees exceed the amount certified in General Fund Codes at the end of a fiscal year, the State Board of Community Colleges shall transfer retain the amount of receipts and fees above those budgeted to the Enrollment Growth Reserve. . Funds in the Enrollment Growth Reserve shall not revert to the General Fund and shall remain available to the State Board until expended. The State Board may allocate these funds in this reserve to colleges experiencing an enrollment increase greater than five percent (5%) of budgeted enrollment levels.proportionally to colleges based on actual receipt collections from the prior fiscal year.

(f)        The Enrollment Growth Reserve shall be established as a recurring, nonreverting reserve under the direction of the State Board of Community Colleges. Funds appropriated by the North Carolina General Assembly shall be allocated based on actual fall semester FTE. The method of allocation shall be as follows: at one‑half the average FTE value per FTE for the greater of FTE increases in excess of 5% for each category of instruction, or for increases in total FTE greater than 325. If enrollment growth exceeds the funds appropriated in a given year, the value per FTE would be reduced proportionally.

Authorize use of Motorcycle Safety Education Program Funds for a capital project

SECTION 6.3.(a)  Notwithstanding G.S. 115D‑72, of the funds received for the North Carolina Motorcycle Safety Education Program (NCMSEP), the State Board of Community Colleges may award up to five‑hundred thousand dollars ($500,000) to Lenoir Community College for use in constructing or renovating a facility used for this program.

SECTION 6.3.(b)  This authorization is for the fiscal year ending on June 29, 2026, and funds transferred under Section (a) above, shall not revert and shall remain available until expended.

Increase customized training support for regional community college personnel

SECTION 6.4.  G.S. 115D‑5.1(f3) reads as rewritten:

§ 115D‑5.1.  Workforce Development Programs.

…

(f3)      Of the funds appropriated in a fiscal year for the Customized Training Programs, the State Board of Community Colleges may approve the use of up to eight percent (8%)fifteen percent (15%) for the training and support of regional community college personnel to deliver Customized Training Program services to business and industry.

….

add success rate of science courses to performance measures

SECTION 6.5.  G.S. 115D‑31.3(e) reads as rewritten:

§ 115D‑31.3.  Institutional performance accountability.

…

(e)        Mandatory Performance Measures. – The State Board of Community Colleges shall evaluate each college on the following performance measures:

(1)        Progress of basic skills students.

(2)        Repealed by Session Laws 2016‑94, s. 10.1, effective July 1, 2016.

(3)        Performance of students who transfer to a four‑year institution.

(3a)      Success rate of students in credit‑bearing English courses.

(3b)      Success rate of students in credit‑bearing Math courses.or Science courses.

(4), (5) Repealed by Session Laws 2016‑94, s. 10.1, effective July 1, 2016.

(5a)      Progress of first‑year curriculum students.

(6)        Repealed by Session Laws 2012‑142, s. 8.5, effective July 1, 2012.

(7)        Curriculum student retention and graduation.

(8)        Repealed by Session Laws 2012‑142, s. 8.5, effective July 1, 2012.

(9)        Attainment of licensure and certifications by students.

The State Board may also evaluate each college on additional performance measures.

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permit system office to retain administrative costs from nc career coach program

SECTION 6.6.  G.S. 115D‑21.5 reads as rewritten:

§ 115D‑21.5.  NC Career Coach Program.

…

(e)     Administrative Costs. – In alignment with the goals, objectives, and requirements of the North Carolina Career Coach Program, the Community College System Office may allocate up to 4% of the program's annual appropriation for administrative costs. Such administrative costs may include professional development, program management, and evaluation. These funds shall be utilized to enhance the effectiveness and sustainability of the program, ensuring its continued support for students within the community college system.

Free Community College tuition for high demand skills training

SECTION 6.7.  G.S. 115D‑5.1A reads as rewritten:

§ 115D‑5.1A.  Short‑Term Workforce Development Grant Program.

(a)        Program Established. – There is established the North Carolina Community College Short‑Term Workforce Development Grant Program (Program) to be administered by the State Board of Community Colleges. The State Board shall adopt rules for the disbursement of the grants pursuant to this section.

(b)        Programs of Study. – The State Board of Community Colleges, in collaboration with the Department of Commerce, shall determine the eligible programs of study for the Program, according to the occupations that are in the highest demand in the State. The eligible programs of study shall include programs such as architecture and construction, health sciences, information technology, electrical line worker, and manufacturing programs and may include other programs to meet local workforce needs.

(c)        Award Amounts. – To the extent funds are made available for the Program, the State Board of Community Colleges shall award grants in an amount of up to seven hundred fifty dollars ($750.00) to students pursuing short‑term, noncredit State and industry workforce credentials. The State Board of Community Colleges shall establish criteria for initial and continuing eligibility for students. The criteria shall include a requirement that eligible students be a resident of North Carolina pursuant to G.S. 116‑143.1(a)(1). At a minimum, students shall be required to qualify as a resident for tuition purposes under the criteria set forth in G.S. 116‑143.1 and in accordance with the coordinated and centralized residency determination process administered by the State Education Assistance Authority.

(d)       Report. – The State Board shall submit a report by April 1, 2024, and annually thereafter,an initial report by April 1, 2024, and annually thereafter by December 1, on the Program to the Joint Legislative Education Oversight Committee and the Fiscal Research Division. The report shall contain, for each academic year and by programs of study, the amount of grant funds disbursed and the number of eligible students receiving funds. (2023‑134, s. 6.5.)

PART VII. PUBLIC INSTRUCTION

PILOT PROGRAM TO LIMIT STUDENT CELL PHONE USE IN SCHOOLS

SECTION 7.1.(a)  Purpose. – The State Board of Education shall establish a grant program to be administered by the Department of Public instruction to support public school units' implementation of policies to limit student cell phone use during instructional time.

SECTION 7.1.(b)  Application, Criteria and Guidelines. – By August 1, 2025, the Department of Public Instruction shall develop and publish criteria and guidelines for the application process. Public school units shall submit applications by September 1, 2025. The application shall require that submissions include the following information at a minimum:

1.         Description of the school or schools included in the proposal, including the number of students and classrooms by grade level who will be subject to the policy;

2.         Description of the proposed policy;

3.         Justification of the proposed policy, including evidence‑based research to the extent possible;

4.         Implementation plan;

5.         Description of how grant funds will be used;

6.         Plans for financial sustainability once grant money is no longer available;

7.         A letter of endorsement from the governing board.

SECTION 7.1.(c)  Grant Awards. – By October 1, 2025, the Department of Public Instruction shall review the applications and select public school units for grant awards, ensuring that the following are represented to the extent possible:

1.         All eight regions of the state;

2.         Urban and rural areas of the state; and

3.         Schools from Tier I, II, and III counties.

SECTION 7.1.(d)  Qualifying Expenses. – If a public school unit is awarded a grant, it may request reimbursement for qualifying expenditures for the 2025‑26 school year that were made prior to the October 1 award notification date.

SECTION 7.1.(e)  Evaluation and Reporting. – Of the funds appropriated by this act, the State Board of Education may use up to one hundred thousand dollars ($100,000) to contract with an independent research organization to evaluate the impact of this grant program. The independent research organization shall report the results of this evaluation to the Joint Legislative Education Oversight Committee, the Fiscal Research Division of the General Assembly, and the Office of State Budget and Management by September 1, 2027. The Department of Public Instruction shall report annually to the same entities listed above on the implementation of this grant program beginning on March 1, 2026. 

SECTION 7.1.(f)  Administration. – The Department of Public Instruction may retain up to two percent (2%) of grant funds to cover administrative costs.

SECTION 7.1.(g)  Carryforward. – Funds unspent in the 2025‑26 fiscal year shall not revert and shall be carried forward to FY 2026‑27 to implement this section.

ELIMINATE THE CAP FOR FUNDS FOR CHILDREN WITH DISABILITIES

SECTION 7.2.  G.S. 115C‑111.05 reads as rewritten:

§ 115C‑111.05.  Funding for children with disabilities.

To the extent funds are made available for this purpose, the State Board shall allocate funds for children with disabilities to each local school administrative unit on a per child basis. Each local school administrative unit shall receive funds for the lesser of (i) all children who are identified as children with disabilities or (ii) thirteen percent (13%) of its allocated average daily membership in the local school administrative unit for the current school year. Each local school administrative unit shall receive funds for the total number of children who are identified as children with disabilities in the local school administrative unit.

SCHOOL SAFETY ALLOTMENT FOR MIDDLE AND ELEMENTARY SCHOOLS

SECTION 7.3.(a)  G.S. 143B‑1209.60 is repealed.

SECTION 7.3.(b)  Purpose. – The State Board of Education shall allocate funds to the School Safety Allotment to provide for the safety of students on school grounds. Elementary and middle schools across the state can use allotted funds to hire and train School Resource Officers (SROs).

SECTION 7.3.(c)  Allotment. – Of the funds appropriated through this act to the Department of Public Instruction, the State Board shall allocate funding to each local school administrative unit for hiring school resource officers.  Each local school administrative unit shall receive allotted dollars for each non‑virtual school serving students in elementary and middle schools with an allotted average daily membership of greater than 300.

SECTION 7.3.(d)  Consolidation. –Effective July 1, 2025, G.S. 143B‑1209.60 is repealed and all funds for elementary and middle school SROs shall be administered through the School Safety Allotment by the Department of Public Instruction. At the discretion of the State Board of Education, the funds provided for high school SROs through the At Risk Student Allotment may also be consolidated into this allotment.

SECTION 7.3.(e)  Training. – The Center for Safer Schools and the Department of Public Instruction shall work with the NC Criminal Justice Education and Training Standards Commission to establish initial training and continuing education standards for SROs. Those standards shall include pre‑service training and modules on the social and cognitive development of elementary school and middle school children, behavioral health, and trauma‑informed practices in schools. All SROs must receive training through a community college, a local law enforcement agency, or the North Carolina Justice Academy prior to placement in a school.

EXPAND LITERACY PROFESSIONAL DEVELOPMENT AND SUPPORT TO GRADEs 6‑8

SECTION 7.4.(a)  G.S. 115C‑83.6A reads as rewritten:

§ 115C‑83.6A.  Approval of literacy intervention plans.

(a)        Each local school administrative unit shall submit to the Department of Public Instruction a plan for the literacy interventions interventions for kindergarten through eighth grade it will offer, including reading camps, in the following school year no later than October 1. The plan shall include information about the local school administrative unit's efforts to staff reading camps with the most qualified teachers possible, including the unit's efforts to attract teachers associated with high growth in reading based on EVAAS data and teachers who have earned a reading bonus. The plan shall incorporate any feedback received from the Department on the previous year's plan. As part of their plans, local school administrative units are encouraged to partner with other local school administrative units and with community organizations to enhance literacy interventions.

SECTION 7.4.(b)  Allotment. – To the extent funds are made available for this purpose, the Department of Public Instruction shall use funds appropriated in this act to contract with Lexia Learning to provide Lexia Aspire® Professional Learning to all English‑Language Arts, Math, Science and Social Studies teachers in sixth, seventh, and eighth grades.

EXPAND USE OF DIAGNOSTIC READING ASSESSMENTS TO GRADES 4‑5

SECTION 7.5.(a)  G.S. 115C‑83.3 reads as rewritten:

§ 115C‑83.3.  Definitions.

The following definitions apply in this Part:

(1)        Accelerated reading class means a class where focused literacy interventions are provided to increase a student's reading level at least two grades in one school year.

(2)        Alternative assessment means a valid and reliable standardized assessment of reading comprehension, approved by the State Board of Education, that is not the same test as the State‑approved standardized test of reading comprehension administered to third grade students. The State Board of Education shall provide the valid and reliable alternative assessment to local school administrative units public school units upon request and establish achievement level ranges for the approved alternative assessment. The State Board of Education shall annually review the alternative assessment to ensure ongoing relevance, validity, and reliability.

SECTION 7.5.(b)  G.S. 115C‑83.6 reads as rewritten:

§ 115C‑83.6.  Facilitating early grade reading proficiency.

(a)        Kindergarten, first, second, and third  through fifth grade students shall be assessed with valid, reliable, formative, and diagnostic reading assessments made available to local school administrative units public school units by the State Board of Education pursuant to G.S. 115C‑174.11(a). Difficulty with reading development identified through administration of formative and diagnostic assessments shall be addressed with literacy interventions outlined in the student's Individual Reading Plan. Parents or guardians of first and second grade students offered a reading camp as a literacy intervention shall be encouraged to enroll their student in the reading camp provided by the local school administrative unit. Parents or guardians of a student identified as demonstrating reading comprehension below grade level shall make the final decision regarding a student's reading camp attendance.

…

(a2)      The Department of Public Instruction shall provide for EVAAS analysis all formative and diagnostic assessment data collected pursuant to this section for kindergarten through third  fifth grade. The Department shall use a uniform template for all data collected, and the template shall be used each time data is provided. The template shall include clear designations for each data component reported.

SECTION 7.5.(c)  G.S. 115C‑83.6B reads as rewritten:

§ 115C‑83.6B.  Individual Reading Plans.

(a)        An Individual Reading Plan (IRP) shall be developed for any student in kindergarten through third eighth grade demonstrating difficulty with reading development based on the results of either (i) the first diagnostic or formative assessment of the school year or (ii) the first diagnostic or formative assessment of the second semester of the school year. The IRP shall be continually adjusted based on multiple data sources as prescribed by the Department of Public Instruction, indicating that the student is not progressing toward grade‑level standards in one or more major reading areas. Based on the most recently collected data, the IRP shall include the following information, specific to the identified student:

(1)        The specific reading skill deficiencies identified by assessment data.

(2)        Goals and benchmarks for growth.

(3)        The means by which progress will be monitored and evaluated.

(4)        The specific additional literacy interventions the student will receive.

(5)        The Science of Reading‑based instructional programming the teacher will implement.

(6)        Any additional services the teacher deems appropriate to accelerate the student's reading skill and development.

SCHOOL PERFORMANCE GRADE REDESIGN

SECTION 7.6.(a)  Program Established; Purpose. – There is established the School Performance Grade Redesign Pilot Program (Program) for the 2025‑2027 biennium. The Program shall be composed of a small group of school units and expanded to all K‑12 schools receiving public funds in the 2027‑28 school year. The purpose of the Program is to improve the school performance grade process to provide more transparent and comprehensive information about school performance to parents, students, and administrators. School performance grades will continue to be issued pursuant to G.S. 115C‑83.15 during the pilot program.

SECTION 7.6.(b)  School Performance Grade Criteria. – The Department of Public Instruction shall develop and publish criteria to be used for school performance grades in the Program.

SECTION 7.6.(c)  Application for Program. – Public school units interested in participating in the Program shall notify the Department, and the Department shall establish a process for selecting schools to participate. The Department shall select one charter school, one local school administrative unit, and one private school that receives state funds to participate in the Program from each State Board of Education region, balancing characteristics of the school units to represent the diversity of the State.

SECTION 7.6.(d)  Interim Reporting. – Each school unit participating in the Program shall report to the Department on the criteria developed pursuant to subsection (b) of this section by the deadline established by the Department.

SECTION 7.6.(e)  Department Reporting. – The Department shall report to the Joint Legislative Oversight Committee and the Office of State Budget and Management by November 1, 2026, on the status and progress of the Program. A copy of the report shall be distributed to all local superintendents and principals in public school units participating in the Program. The report shall include at least the following:

(1)        Any difficulties in collecting data or information required by the Program.

(2)        Any recommended changes to the Program.

(1)   Any other information the Department deems relevant to the performance of the Program.

(2)   Any other information requested by the committee.

SECTION 7.6.(f)  Statewide Expansion of the Program. – Beginning with the 2027‑28 school year, the Program shall be expanded to all K‑12 schools in the State that receive public funds. All participating schools shall provide the information required by the Program.

SECTION 7.6.(g)  Final Reporting. – Each participating school unit, as part of the Program, shall report to the Department on the criteria developed pursuant to subsection (a) of Section 2 of this act by the deadline established by the Department.

SECTION 7.6.(h)  Final Department Reporting. – The Department shall submit a final report to the Joint Legislative Oversight Committee by June 30, 2027, on the outcomes of the Program. A copy of the report shall be distributed to local superintendents and principals in all participating schools. The report shall include at least the following:

(1)    Any continued difficulties in collecting data or information required by the Program.

(2)    Any recommended changes to the criteria developed by the Program.

(3)    Any other information the Department deems relevant to the performance of the Program.

(4)    The model and scale that the Department would use to assign school performance grades from the criteria developed for the Program.

(5)    Any recommended legislation for implementing the Program permanently to replace the existing school performance grade system.

(6)    Any other information requested by the committee.

SECTION 7.6.(i)  Intention of General Assembly. – It is the intention of the General Assembly that after any statutory changes made pursuant to subsection (h) of this section, school performance measures be issued that are based on the results of the pilot, that more heavily weight growth than the current score, and that comply with federal requirements, including those in the Every Student Succeeds Act.

PART VIIA. COMPENSATION OF PUBLIC SCHOOL EMPLOYEES

TEACHER SALARY SCHEDULE

SECTION 7A.1.(a)  The following monthly teacher salary schedule shall apply for the 2025‑26 fiscal year to licensed personnel of the public schools who are classified as teachers. The salary schedule is based on years of teaching experience.

2025‑2026 Teacher Monthly Salary Schedule

Years of Experience                                                              A Teachers

0                                                                                          4,450

1                                                                                          4,530

2                                                                                          4,610

3                                                                                          4,690

4                                                                                          4,770

5                                                                                          4,850

6                                                                                          4,930

7                                                                                          5,010

8                                                                                          5,090

9                                                                                          5,170

10                                                                                        5,250

11                                                                                        5,330

12                                                                                        5,410

13                                                                                        5,490

14                                                                                        5,570

15‑24                                                                                  5,588

25+                                                                                     5,795

SECTION 7A.1.(b)  The following monthly teacher salary schedule shall apply for the 2026‑2027 fiscal year to licensed personnel of the public schools who are classified as teachers. The salary schedule is based on years of teaching experience.

2026‑2027 Teacher Monthly Salary Schedule

Years of Experience                                                              A Teachers

0                                                                                          5,120

1                                                                                          5,160

2                                                                                          5,200

3                                                                                          5,240

4                                                                                          5,280

5                                                                                          5,320

6                                                                                          5,360

7                                                                                          5,400

8                                                                                          5,440

9                                                                                          5,480

10                                                                                        5,520

11                                                                                        5,560

12                                                                                        5,600

13                                                                                        5,640

14                                                                                        5,680

15‑24                                                                                  5,720

25+                                                                                     5,920

SECTION 7A.1.(c)  Salary Supplements for Teachers Paid on This Salary Schedule.

(1)        Licensed teachers who have NBPTS certification shall receive a salary supplement each month of twelve percent (12%) of their monthly salary on the A salary schedule.

(2)        Licensed teachers who are classified as M teachers shall receive a salary supplement each month of ten percent (10%) of their monthly salary on the A salary schedule.

(3)        Licensed teachers with licensure based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the supplement provided to them as M teachers.

(4)        Licensed teachers with licensure based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the supplement provided to them as M teachers.

(5)        Certified school nurses shall receive a salary supplement each month of ten percent (10%) of their monthly salary on the A salary schedule.

(6)        School counselors who are licensed as counselors at the master's degree level or higher shall receive a salary supplement each month of one hundred dollars ($100.00).

SECTION 7A.1.(d)  For school psychologists, school speech pathologists who are licensed as speech pathologists at the master's degree level or higher, and school audiologists who are licensed as audiologists at the master's degree level or higher, the following shall apply:

(1)        The first step of the salary schedule shall be equivalent to the sixth step of the A salary schedule.

(2)        These employees shall receive the following salary supplements each month:

a.         Ten percent (10%) of their monthly salary, excluding the supplement provided pursuant to sub‑subdivision b. of this subdivision.

b.         Three hundred fifty dollars ($350.00).

(3)        These employees are eligible to receive salary supplements equivalent to those of teachers for academic preparation at the six‑year degree level or the doctoral degree level.

(4)        The twenty‑sixth step of the salary schedule shall be seven and one‑half percent (7.5%) higher than the salary received by these same employees on the twenty‑fifth step of the salary schedule.

SECTION 7A.1.(e)  Beginning with the 2014‑2015 fiscal year, in lieu of providing annual longevity payments to teachers paid on the teacher salary schedule, the amounts of those longevity payments are included in the monthly amounts under the teacher salary schedule.

SECTION 7A.1.(f)  A teacher compensated in accordance with this salary schedule for the 2025‑26 and 2026‑27 school year shall receive an amount equal to the greater of the following:

(1)        The applicable amount on the salary schedule for the applicable school year.

(2)        For teachers who were eligible for longevity for the 2013‑2014 school year, the sum of the following:

a.         The salary the teacher received in the 2013‑2014 school year pursuant to Section 35.11 of S.L. 2013‑360.

b.         The longevity that the teacher would have received under the longevity system in effect for the 2013‑2014 school year provided in Section 35.11 of S.L. 2013‑360 based on the teacher's current years of service.

c.         The annual bonus provided in Section 9.1(e) of S.L. 2014‑100.

(3)        For teachers who were not eligible for longevity for the 2013‑2014 school year, the sum of the salary and annual bonus the teacher received in the 2014‑2015 school year pursuant to Section 9.1 of S.L. 2014‑100.

SECTION 7A.1.(g)  As used in this section, the term teacher shall also include instructional support personnel.

RESTORE MASTER'S PAY

SECTION 7A.2.(a)  The following session laws are repealed:

(1)        Section 8.22 of S.L. 2013‑360.

(2)        Section 8.3 of S.L. 2014‑100.

SECTION 7A.2.(b)  G.S. 115C‑302.10 reads as rewritten:

§ 115C‑302.10.  Qualifications for certain education‑based salary supplements.

(a)        Notwithstanding any other provision of law, only the following teachers and instructional support personnel shall be paid on the M salary schedule or receive a salary supplement for academic preparation at the six‑year degree level or at the doctoral degree level:

(1)        Certified school nurses and instructional support personnel in positions for which a master's degree is required for licensure.

(2)        Teachers and instructional support personnel who were paid on the M salary schedule or received that salary supplement prior to the 2014‑15 school year.

(3)        Teachers and instructional support personnel who (i) complete a degree at the master's, six‑year, or doctoral degree level for which they completed at least one course prior to August 1, 2013, and (ii) would have qualified for the salary supplement pursuant to State Board of Education policy, TCPA006, as it was in effect on June 30, 2013.

(4)        Teachers who do not qualify under subdivisions (1), (2), and (3) of this section but who spend at least seventy percent (70%) of their time as follows:

a.         For teachers, in classroom instruction related to their graduate academic preparation in their field or subject area within their area of licensure. Most of the teachers' remaining time shall be spent in one or more of the following:

1.         Mentoring teachers.

2.         Performing demonstration lessons for teachers.

3.         Writing curricula.

4.         Developing and leading staff development programs for teachers

b.         For instructional support personnel, performing work within the employee's area of graduate academic preparation.

(b)        Beginning with the 2025‑2026 fiscal year and in subsequent fiscal years, for teachers who are paid on the M salary schedule under subdivision (4) of subsection (a) of this act, determination of whether teachers shall be paid on the M salary schedule or receive a salary supplement for academic preparation shall take place on an annual basis. Teachers may be moved off the M salary schedule or discontinue receiving salary supplements if they are not meeting the requirements of subdivision (4) of subsection (a) of this act in that year.

(c)        Unless an individual otherwise qualifies under subdivision (2) or (3) of subsection (a) of this section, teachers and instructional support personnel who earn an advanced degree in school administration shall not be paid on the M salary schedule or receive a salary supplement for academic preparation.

CONSOLIDATED TEACHER BONUS PROGRAM

SECTION 7A.3.(a)  Establish Consolidated Bonus Program. – The State Board of Education shall establish a consolidated teacher bonus program for the 2025‑2027 fiscal biennium to reward teacher performance and encourage student learning and improvement. To attain this goal, the Department of Public Instruction shall administer bonus pay to qualifying teachers whose salaries are supported from State funds in January of 2026 and 2027, based on data from the 2024‑2025 and 2025‑2026 school years, respectively, in accordance with this section.

SECTION 7A.3.(b)  Definitions. – For purposes of this section, the following definitions shall apply:

(1)        Eligible advanced course teacher. – A teacher of Advanced Placement courses, International Baccalaureate Diploma Programme courses, or the Cambridge Advanced International Certificate of Education (AICE) program who meets the following criteria:

a.         Is employed by, or retired having last held a position at, one or more of the following:

1.         A qualifying public school unit.

2.         The North Carolina Virtual Public School program.

b.         Taught one or more students who received a score listed in subsection (c) of this section.

(2)        Eligible career and technical education (CTE) teacher. – A teacher who meets the following criteria:

a.         Is employed by, or retired having last held a position at, a qualifying public school unit.

b.         Taught one or more students who attained approved industry certifications or credentials consistent with G.S. 115C‑156.2.

(3)        Eligible growth teacher. – A teacher who meets at least one of the following criteria:

a.         Is employed by, or retired having last held a position at, a qualifying public school unit and meets one of the following criteria:

1.         Is in the top twenty‑five percent (25%) of teachers in the State according to the EVAAS student growth index score for third grade reading from the previous school year.

2.         Is in the top twenty‑five percent (25%) of teachers in the State according to the EVAAS student growth index score for fourth or fifth grade reading from the previous school year.

3.         Is in the top twenty‑five percent (25%) of teachers in the State according to the EVAAS student growth index score for fourth, fifth, sixth, seventh, or eighth grade mathematics from the previous school year.

b.         Is employed by, or retired having last held a position at, a local school administrative unit and meets one of the following criteria:

1.         Is in the top twenty‑five percent (25%) of teachers in the teacher's respective local school administrative unit according to the EVAAS student growth index score for third grade reading from the previous school year.

2.         Is in the top twenty‑five percent (25%) of teachers in the teacher's respective local school administrative unit according to the EVAAS student growth index score for fourth or fifth grade reading from the previous school year.

3.         Is in the top twenty‑five percent (25%) of teachers in the teacher's respective local school administrative unit according to the EVAAS student growth index score for fourth, fifth, sixth, seventh, or eighth grade mathematics from the previous school year.

c.         Was employed by a local school administrative unit that employed in the previous school year three or fewer total teachers in that teacher's grade level as long as the teacher has an EVAAS student growth index score from the previous school year of exceeded expected growth in one of the following subject areas:

1.         Third grade reading.

2.         Fourth or fifth grade reading.

3.         Fourth, fifth, sixth, seventh, or eighth grade mathematics.

(4)        EVAAS. – The Education Value‑Added Assessment System.

(5)        Qualifying public school unit. – Any of the following:

a.         A local school administrative unit.

b.         A charter school.

c.         A regional school.

d.         A school providing elementary or secondary instruction operated by The University of North Carolina under Article 29A of Chapter 116 of the General Statutes.

(6)        Qualifying teacher. – An eligible teacher who meets one of the following criteria:

a.         Remains employed teaching in the same qualifying public school unit, or, if an eligible advanced course teacher is only employed by the North Carolina Virtual Public School program, remains employed teaching in that program, at least from the school year the data is collected until January 1 of the corresponding school year that the bonus is paid.

b.         Retired, between the last day of the school year in which the data is collected and January 1 of the corresponding school year in which the bonus is paid, after attaining one of the following:

1.         The age of at least 65 with five years of creditable service.

2.         The age of at least 60 with 25 years of creditable service.

3.         Thirty years of creditable service.

SECTION 7A.3.(c)  Advanced Course Bonuses. – A bonus in the amount of fifty dollars ($50.00) shall be provided to qualifying advanced course teachers for each student taught in each advanced course who receives the following score:

(1)        For Advanced Placement courses, a score of three or higher on the College Board Advanced Placement Examination.

(2)        For International Baccalaureate Diploma Programme courses, a score of four or higher on the International Baccalaureate course examination.

(3)        For the Cambridge AICE program, a score of E or higher on the Cambridge AICE program examinations.

SECTION 7A.3.(d)  CTE Bonuses. – For qualifying career and technical education teachers, bonuses shall be provided in the following amounts:

(1)        A bonus in the amount of twenty‑five dollars ($25.00) for each student taught by a teacher who provided instruction in a course that led to the attainment of an industry certification or credential with a twenty‑five dollar ($25.00) value ranking as determined under subsection (e) of this section.

(2)        A bonus in the amount of fifty dollars ($50.00) for each student taught by a teacher who provided instruction in a course that led to the attainment of an industry certification or credential with a fifty dollar ($50.00) value ranking as determined under subsection (e) of this section.

SECTION 7A.3.(e)  CTE Course Value Ranking. – The Department of Commerce, in consultation with the State Board, shall assign a value ranking for each industry certification and credential based on academic rigor and employment value in accordance with this subsection. Fifty percent (50%) of the ranking shall be based on academic rigor and the remaining fifty percent (50%) on employment value. Academic rigor and employment value shall be based on the following elements:

(1)        Academic rigor shall be based on the number of instructional hours, including work experience or internship hours, required to earn the industry certification or credential, with extra weight given for coursework that also provides community college credit.

(2)        Employment value shall be based on the entry wage, growth rate in employment for each occupational category, and average annual openings for the primary occupation linked with the industry certification or credential.

SECTION 7A.3.(f)  Statewide Growth Bonuses. – Of the funds appropriated in this act for the program, bonuses shall be provided to qualifying teachers who are eligible teachers under sub‑subdivision a. of subdivision (3) of subsection (b) of this section, as follows:

(1)        The sum of five million dollars ($5,000,000) shall be allocated for bonuses to eligible teachers under sub‑sub‑subdivision a.1. of subdivision (3) of subsection (b) of this section. These funds shall be distributed equally among qualifying teachers.

(2)        A bonus in the amount of two thousand dollars ($2,000) shall be awarded to each qualifying teacher who is an eligible teacher under sub‑sub‑subdivision a.2. of subdivision (3) of subsection (b) of this section.

(3)        A bonus in the amount of two thousand dollars ($2,000) shall be awarded to each qualifying teacher who is an eligible teacher under sub‑sub‑subdivision a.3. of subdivision (3) of subsection (b) of this section.

SECTION 7A.3.(g)  Local Growth Bonuses. – Of the funds appropriated in this act for the program, bonuses shall be provided to eligible teachers under sub‑subdivisions b. and c. of subdivision (3) of subsection (b) of this section, as follows:

(1)        The sum of five million dollars ($5,000,000) shall be allocated for bonuses to eligible EVAAS teachers under sub‑sub‑subdivisions b.1. and c.1. of subdivision (3) of subsection (b) of this section. These funds shall be divided proportionally based on average daily membership in third grade for each local school administrative unit and then distributed equally among qualifying third grade reading teachers in each local school administrative unit.

(2)        A bonus in the amount of two thousand dollars ($2,000) shall be awarded to each qualifying teacher who is an eligible teacher under sub‑sub‑subdivision b.2. or c.2. of subdivision (3) of subsection (b) of this section.

(3)        A bonus in the amount of two thousand dollars ($2,000) shall be awarded to each qualifying teacher who is an eligible teacher under sub‑sub‑subdivision b.3. or c.3. of subdivision (3) of subsection (b) of this section.

SECTION 7A.3.(h)  Limitations and Other Criteria. – The following additional limitations and other criteria shall apply to the program:

(1)        Bonus funds awarded to a teacher pursuant to subsection (c), subsection (d), subdivision (1) of subsection (f), and subdivision (1) of subsection (g) of this section shall not exceed three thousand five hundred dollars ($3,500) per subsection or subdivision in any given school year.

(2)        A qualifying teacher who is an eligible teacher under sub‑sub‑subdivision a.1., b.1., or c.1. of subdivision (3) of subsection (b) of this section may receive a bonus under both subdivision (1) of subsection (f) and subdivision (1) of subsection (g) of this section but shall not receive more than seven thousand dollars ($7,000) pursuant to subdivision (1) of subsection (f) and subdivision (1) of subsection (g) of this section in any given school year.

(3)        A qualifying teacher who is an eligible teacher under sub‑sub‑subdivision a.2., b.2., or c.2. of subdivision (3) of subsection (b) of this section may receive a bonus under both subdivision (2) of subsection (f) and subdivision (2) of subsection (g) of this section but shall not receive more than two bonuses pursuant to subdivision (2) of subsection (f) and subdivision (2) of subsection (g) of this section in any given school year.

(4)        A qualifying teacher who is an eligible teacher under sub‑sub‑subdivision a.3., b.3., or c.3. of subdivision (3) of subsection (b) of this section may receive a bonus under both subdivision (3) of subsection (f) and subdivision (3) of subsection (g) of this section but shall not receive more than two bonuses pursuant to subdivision (3) of subsection (f) and subdivision (3) of subsection (g) of this section in any given school year.

SECTION 7A.3.(i)  Bonuses Not Compensation. – Bonuses awarded to a teacher pursuant to this section shall be in addition to any regular wage or other bonus the teacher receives or is scheduled to receive. Notwithstanding G.S. 135‑1(7a), the bonuses awarded under this section are not compensation under Article 1 of Chapter 135 of the General Statutes, Retirement System for Teachers and State Employees.

SECTION 7A.3.(j)  Study and Report. – The State Board of Education shall study the effect of the program on teacher performance and retention. The State Board shall report the results of its findings and the amount of bonuses awarded to the President Pro Tempore of the Senate, the Speaker of the House of Representatives, the Joint Legislative Education Oversight Committee, the Office of State Budget and Management, and the Fiscal Research Division by March 15 of each year of the 2025‑2027 fiscal biennium. The report shall include, at a minimum, the following information:

(1)        Number of students enrolled and taking examinations in each of the following categories of courses:

a.         Advanced Placement.

b.         International Baccalaureate Diploma Programme.

c.         Cambridge AICE program.

d.         Courses needed for the attainment of an industry certification or credential.

(2)        Number of students receiving outcomes on examinations resulting in the award of a bonus for a teacher in each category of courses identified in sub‑subdivision a. of subdivision (1) of this subsection.

(3)        Number of teachers receiving a bonus in each category of courses identified in sub‑subdivision a. of subdivision (1) of this subsection.

(4)        The amounts awarded to teachers for each category of courses identified in sub‑subdivision a. of subdivision (1) of this subsection.

(5)        The type of industry certifications and credentials earned by the students, the value ranking for each certification and credential, the number of bonuses earned for each certification or credential, and the total bonus amount awarded for each certification or credential.

(6)        Average bonus amount awarded to each qualifying teacher who is an eligible teacher under sub‑sub‑subdivision a.1., b.1., or c.1. of subdivision (3) of subsection (b) of this section.

(7)        The percentage of teachers who received a bonus pursuant to this section and were eligible to receive a bonus for teaching in the same grade level or course in January 2024 or January 2025, or both, where applicable, pursuant to one of the following programs:

a.         The Advanced Course and CTE Bonus Program provided in Section 7A.4 of S.L. 2021‑180.

b.         The Growth‑Based Teacher Bonus Program provided in Section 7A.2 of S.L. of 2022‑74.

(8)        The percentage of teachers who received a bonus pursuant to this section and received a bonus for teaching in the same grade level or course in either January 2024 or January 2025 pursuant to one of the programs listed in subdivision (7) of this subsection.

(9)        The percentage of teachers who received a bonus pursuant to this section and received a bonus for teaching in the same grade level or course in January 2024 or January 2025, or both, where applicable, pursuant to one of the programs listed subdivision (7) of this subsection.

(10)      The statistical relationship between a teacher receiving a bonus in January 2024 or 2025 pursuant to this section and receiving a bonus pursuant to a predecessor bonus program. For purposes of this subdivision, the following are predecessor programs:

a.         Bonuses awarded pursuant to Section 7A.4(c) of S.L. 2021‑180 are predecessors to bonuses awarded pursuant to subsection (c) of this section.

b.         Bonuses awarded pursuant to Section 7A.4(d) of S.L. 2021‑180 are predecessors to bonuses awarded pursuant to subsection (d) of this section.

c.         Bonuses awarded pursuant to subdivision (1) of subsection (c) and subdivision (1) of subsection (d) of Section 7A.2 of S.L. 2022‑74 are predecessors to bonuses awarded pursuant to subdivision (1) of subsection (f) and subdivision (1) of subsection (g) of this section.

d.         Bonuses awarded pursuant to subdivision (2) of subsection (c) and subdivision (2) of subsection (d) of Section 7A.2 of S.L. 2022‑74 are predecessors to bonuses awarded pursuant to subdivision (2) of subsection (f) and subdivision (2) of subsection (g) of this section.

e.         Bonuses awarded pursuant to subdivision (c)(3) and subdivision (d)(3) of Section 7A.2 of S.L. 2022‑74 are predecessors to bonuses awarded pursuant to subdivision (3) of subsection (f) and subdivision (3) of subsection (g) of this section.

(11)      The distribution of statewide and local growth bonuses awarded pursuant to this section as among qualifying public school units and, where applicable, schools within those units.

SUPPLEMENTAL FUNDS FOR TEACHER COMPENSATION

SECTION 7A.4.(a)  Use of Funds. – For each year of the 2025‑2027 fiscal biennium, except as provided in subsection (f1) of this section, the State Board of Education shall allocate funds pursuant to this section to eligible local school administrative units to provide salary supplements to teachers and qualifying school administrators in those units. Allocation of salary supplements among teachers and qualifying school administrators within each eligible local school administrative unit, including whether a teacher or qualifying school administrator receives a salary supplement and the amount of the supplement provided to that person, shall be determined in the discretion of the local board of education of the eligible unit, except that no individual salary supplement shall exceed the per teacher funding amount awarded to that unit pursuant to subdivision (4) of subsection (c) of this section.

SECTION 7A.4.(b)  Definitions. – As used in this section, the following definitions shall apply:

(1)        Adjusted market value of taxable real property. – A county's assessed taxable real property value, using the latest available data published by the Department of Revenue, divided by the county's sales assessment ratio determined under G.S. 105‑289(h).

(2)        Composite value. – For each eligible county, the sum of the following:

a.         The taxable real property factor multiplied by sixty‑five percent (65%).

b.         The median household income factor multiplied by twenty‑five percent (25%).

c.         The effective tax rate factor multiplied by ten percent (10%).

(3)        County allocation factor. – For each eligible county, the supplement factor for that county divided by the sum of all supplement factors for the State.

(4)        Effective tax rate. – The actual county tax rate multiplied by the most recent annual sales assessment ratio for that county.

(5)        Effective tax rate factor. – For each eligible county, the effective tax rate for that county divided by the median effective tax rate in the State.

(6)        Eligible county. – A county that has an adjusted market value of taxable real property of less than fifty billion nine hundred million dollars ($50,900,000,000).

(7)        Eligible local school administrative unit. – A local school administrative unit located in whole or in part in an eligible county.

(8)        Eligible school. – A public school that is located in an eligible county and governed by a local school administrative unit.

(9)        Maintenance of effort amount. – For each local school administrative unit in each fiscal year, the supplant factor multiplied by the total State and non‑State funds expended for salaries for teachers from the fiscal year for which the most recent salary data are available.

(10)      Median household income. – A county's median household income for the most recent 12 months for which data are available, as that term is used in G.S. 143B‑437.08.

(11)      Median household income factor. – For each eligible county, the median household income in the State divided by the median household income for that county.

(12)      Non‑State funds. – Any funds held by a local school administrative unit, other than nonrecurring federal funds received as a result of legislation enacted by Congress in response to COVID19, that are not State funds.

(13)      Qualifying school administrator. – Any of the following:

a.         Assistant principals paid pursuant to G.S. 115C‑285(a)(8).

b.         Principals paid pursuant to G.S. 115C‑285(a)(8a).

(14)      Supplant factor. – For each local school administrative unit in each fiscal year of the fiscal biennium, the total non‑State funds expended for salary supplements for teachers in the 2020‑2021 fiscal year divided by the total State and non‑State funds expended for salaries for teachers in the 2020‑2021 fiscal year.

(15)      Supplement factor. – For each eligible county, the composite value multiplied by the number of State‑funded teachers employed in a school in the county that is governed by a local school administrative unit.

(16)      Taxable real property factor. – For each eligible county, the median adjusted market value of taxable real property in the State divided by the adjusted market value of taxable real property for that county.

(17)      Teacher. – Teachers and instructional support personnel.

SECTION 7A.4.(c)  Allocation of Funds. – The State Board of Education shall allocate funds for salary supplements to eligible local school administrative units according to the following procedure:

(1)        County allocation. – For each eligible county, the State Board shall determine a county allocation by multiplying the county allocation factor for that county by the funding amount appropriated pursuant to this section for the applicable fiscal year.

(2)        Per teacher funding amount. – For each eligible county, the State Board shall determine a per teacher funding amount by dividing the county allocation amounts determined pursuant to subdivision (1) of this subsection by the total number of State‑funded teachers employed in all eligible schools in that county.

(3)        Unit funding amount. – For each eligible local school administrative unit, the State Board shall determine the funding amount for that unit based on the per teacher funding amount or amounts for the eligible county or counties where the unit is located. For each county with an eligible school governed by the unit, the State Board shall multiply the applicable per teacher funding amount for that county determined pursuant to subdivision (2) of this subsection by the number of State‑funded teachers employed in the eligible school in that county. If the unit is located in multiple eligible counties, the State Board shall aggregate those amounts.

(4)        Allocation and funding cap. – The State Board shall allocate the amount determined pursuant to subdivision (3) of this subsection to each eligible local school administrative unit for each applicable fiscal year, up to a maximum of five thousand dollars ($5,000) per State‑funded teacher.

SECTION 7A.4.(d)  Charter Schools. – Funds appropriated to the Department of Public Instruction pursuant to this section shall be subject to the allocation of funds for charter schools described in G.S. 115C‑218.105. The General Assembly encourages charter schools receiving funds pursuant to this section to provide salary supplements to teachers and qualifying school administrators in the charter school in accordance with the requirements of this section.

SECTION 7A.4.(e)  Formula for Distribution of Supplemental Funding Pursuant to this Section Only. – The formula in this section is solely a basis for distribution of supplemental funding to eligible local school administrative units and is not intended to reflect any measure of the adequacy of the educational program or funding for public schools. The formula is also not intended to reflect any commitment by the General Assembly to appropriate any additional supplemental funds for eligible local school administrative units.

SECTION 7A.4.(f)  Non‑supplant Requirement. – A local school administrative unit that receives funds under this section shall use those funds to supplement non‑State funds provided for salary supplements for teachers and qualifying school administrators and shall not use any State funds, including funds received under this section or Section 7A.12 of S.L. 2021‑180, to supplant non‑State funds provided for salary supplements for teachers and qualifying school administrators. For purposes of this section, a local school administrative unit has supplanted non‑State funds if the State Board finds that the amount of non‑State funds expended by the unit for salary supplements was less than ninety‑five percent (95%) of the maintenance of effort amount for the local school administrative unit.

SECTION 7A.4.(f1)  Non‑supplant Enforcement. – If the State Board of Education determines that a local school administrative unit has supplanted non‑State funds in violation of subsection (f) of this section, the State Board of Education shall not allocate any funds under this section to the unit.

SECTION 7A.4.(f2)  Additional Penalty for Consecutive Supplanting. – It is the intent of the General Assembly that the State Board of Education will not allocate supplemental funds for teacher compensation to a local school administrative unit in the 2025‑2026 fiscal year if the State Board of Education determines that the local school administrative unit supplanted non‑State funds provided for salary supplements for teachers and qualifying school administrators with State funds in the 2021‑2022 fiscal year and the 2022‑2023 fiscal year. For the 2021‑2022 fiscal year, the State Board shall not deem a local school administrative unit to have supplanted non‑State funds for purposes of this subsection if the State Board determines that the unit supplanted non‑State funds solely with any State funds for which the allowable uses include salary supplements for teachers or qualifying school administrators.

SECTION 7A.4.(g)  Reports. – No later than April 15 of each year of the 2025‑2027 fiscal biennium, the State Board of Education shall report the following information for the applicable fiscal year to the Joint Legislative Education Oversight Committee and the Fiscal Research Division:

(1)        A list of all eligible counties and eligible local school administrative units.

(2)        Funds allocated to each eligible local school administrative unit.

(3)        The percentage and amount of teachers and qualifying school administrators in each eligible local school administrative unit receiving salary supplements.

(4)        The average salary supplement amount in each eligible local school administrative unit.

(5)        The range of salary supplement amounts in each eligible local school administrative unit.

(6)        The effect of the salary supplements on the retention of teachers and qualifying school administrators in eligible local school administrative units.

(7)        The identity of any local school administrative unit that the State Board determines has supplanted funds.

PRINCIPAL SALARY SCHEDULE

SECTION 7A.5.(a)  The following annual salary schedule for principals shall apply for the 2025‑2026 fiscal year, beginning July 1, 2025.

2025‑2026 Principal Annual Salary Schedule

Avg. Daily Membership              Base                      Met Growth         Exceeded Growth

0‑200                                       $80,126                 $88,137                 $96,151

201‑400                                   $84,131                 $92,544                 $100,958

401‑700                                   $88,137                 $96,952                 $105,766

701‑1,000                                $92,145                 $101,358               $110,574

1,001‑1,600                             $96,151                 $105,766               $115,381

1,601+                                     $100,156               $110,172               $120,188

SECTION 7A.5.(b)  The following annual salary schedule for principals shall apply for the 2026‑2027 fiscal year, beginning July 1, 2026.

2026‑2027 Principal Annual Salary Schedule

Avg. Daily Membership              Base                      Met Growth         Exceeded Growth

0‑200                                       $84,934                 $93,425                 $101,920

201‑400                                   $89,179                 $98,097                 $107,015

401‑700                                   $93,425                 $102,769               $112,112

701‑1,000                                $97,674                 $107,439               $117,208

1,001‑1,600                             $101,920               $112,112               $122,304

1,601+                                     $106,165               $116,782               $127,399

SECTION 7A.5.(c)  A principal's placement on the salary schedule shall be determined according to the average daily membership of the school supervised by the principal, as described in subsection (b) of this section, and the school growth scores, calculated pursuant to G.S. 115C‑83.15(c), for each school the principal supervised in at least one of the prior two school years, as described in subsection (c) of this section, regardless of a break in service, and provided the principal supervised each school as a principal for at least a majority of the school year, as follows:

(1)        A principal shall be paid according to the Exceeded Growth column of the schedule if the school growth scores show the school or schools exceeded expected growth in at least one of the prior two school years.

(2)        A principal shall be paid according to the Met Growth column of the schedule if any of the following apply:

a.         The higher school growth score in one of the two prior school years shows that the school met expected growth.

b.         The principal supervised a school in the two prior school years that was not eligible to receive a school growth score.

(3)        A principal shall be paid according to the Base column if either of the following apply:

a.         The school growth scores show the school or schools did not meet expected growth in either of the two prior years.

b.         The principal has not supervised any school as a principal for a majority of the school year in at least the two prior school years.

SECTION 7A.5.(d)  For purposes of determining the average daily membership of a principal's school, the following amounts shall be used during the following time periods:

(1)   For the 2025‑2026 school year, placement on the schedule related to average daily membership shall be based on the average daily membership for the school from the 2024‑2025 school year. If the school did not have an average daily membership in the 2024‑2025 school year, the projected average daily membership for the school for the 2025‑2026 school year shall be used between July 1, 2025, and December 31, 2025, and the average daily membership for the school shall be used between January 1, 2026 and June 30, 2026.

(2)   For the 2026‑2027 school year, placement on the schedule related to average daily membership shall be based on the average daily membership for the school from the 2025‑2026 school year. If the school did not have an average daily membership in the 2025‑2026 school year, the projected average daily membership for the school for the 2026‑2027 school year shall be used between July 1, 2026 and December 31, 2026, and the average daily membership for the school shall be used between January 1, 2027 and June 30, 2027.

SECTION 7A.5.(e)  For purposes of determining the school growth scores for each school the principal supervised in one or more prior school years, the following school growth scores shall be used during the following time periods:

(1)   For purposes of determining the school growth scores for each principal in the 2025‑2026 school year, school growth scores from the two most recent available school years, up to the 2024‑2025 school year, shall be used.

(2)   For purposes of determining the school growth scores for each principal in the 2026‑2027 school year, school growth scores from the two most recent available school years, up to the 2025‑2026 school year, shall be used.

SECTION 7A.5.(f)  Beginning with the 2017‑2018 fiscal year, in lieu of providing annual longevity payments to principals paid on the principal salary schedule, the amounts of those longevity payments are included in the annual amounts under the principal salary schedule.

SECTION 7A.5.(g)  A principal compensated in accordance with this section for the 2025‑2026 and 2026‑27 fiscal year shall receive an amount equal to the greater of the following:

(1)        The applicable amount determined pursuant to subsections (a) through (d) of this section.

(2)        For principals who were eligible for longevity in the 2016‑2017 fiscal year, the sum of the following:

a.         The salary the principal received in the 2016‑2017 fiscal year pursuant to Section 9.1 or Section 9.2 of S.L. 2016‑94.

b.         The longevity that the principal would have received as provided for State employees under the North Carolina Human Resources Act for the 2016‑2017 fiscal year based on the principal's current years of service.

(3)        For principals who were not eligible for longevity in the 2016‑17 fiscal year, the salary the principal received in the 2016‑2017 fiscal year pursuant to Section 9.1 or Section 9.2 of S.L. 2016‑94.

BONUSES FOR PRINCIPALS

SECTION 7A.6.(a)  The Department of Public Instruction shall administer a bonus in the 2025‑2026 fiscal year to any principal who supervised a school as a principal for a majority of the previous school year if that school was in the top fifty percent (50%) of school growth in the State during the previous school year, calculated by the State Board pursuant to G.S. 115C‑83.15(c), as follows:

2025‑2026 Principal Bonus Schedule

Statewide Growth Percentage                                             Bonus

Top 5%                                                                      $15,000

Top 10%                                                                    $10,000

Top 15%                                                                      $5,000

Top 20%                                                                      $2,500

Top 50%                                                                      $1,000

A principal shall receive no more than one bonus pursuant to this subsection. The bonus shall be paid at the highest amount for which the principal qualifies.

SECTION 7A.6.(b)  The bonus awarded pursuant to this section shall be in addition to any regular wage or other bonus the principal receives or is scheduled to receive.

SECTION 7A.6.(c)  Notwithstanding G.S. 135‑1(7a), the bonuses awarded pursuant to this section are not compensation under Article 1 of Chapter 135 of the General Statutes, Retirement System for Teachers and State Employees.

SECTION 7A.6.(d)  It is the intent of the General Assembly that funds provided pursuant to this section will supplement principal compensation and not supplant local funds.

SECTION 7A.6.(e)  The bonus provided pursuant to this section shall be paid no later than October 31, 2025, to qualifying principals employed as of October 1, 2025.

ASSISTANT PRINCIPAL SALARIES

SECTION 7A.7.(a)  For the 2025‑2026 and 2026‑2027 fiscal years, assistant principals shall receive a monthly salary based on the relevant salary schedule for teachers shown in Section 7A.1(a) who are classified as A teachers plus nineteen percent (19%). An assistant principal shall be placed on the step on the salary schedule that reflects the total number of years of experience as a certified employee of the public schools. For purposes of this section, an administrator with a one‑year provisional assistant principal's certificate shall be considered equivalent to an assistant principal.

SECTION 7A.7.(b)  Assistant principals with certification based on academic preparation at the six‑year degree level shall be paid a salary supplement of one hundred twenty‑six dollars ($126.00) per month and at the doctoral degree level shall be paid a salary supplement of two hundred fifty‑three dollars ($253.00) per month.

SECTION 7A.7.(c)  Participants in an approved full‑time master's in school administration program shall receive up to a 10‑month stipend during the internship period of the master's program. The stipend shall be at the beginning salary of an assistant principal or, for a teacher who becomes an intern, at least as much as that person would earn as a teacher on the teacher salary schedule. The North Carolina Principal Fellows Program or the school of education where the intern participates in a full‑time master's in school administration program shall supply the Department of Public Instruction with certification of eligible fulltime interns.

SECTION 7A.7.(d)  Beginning with the 2017‑2018 fiscal year, in lieu of providing annual longevity payments to assistant principals on the assistant principal salary schedule, the amounts of those longevity payments are included in the monthly amounts provided to assistant principals pursuant to subsection (a) of this section.

SECTION 7A.7.(e)  An assistant principal compensated in accordance with this section for the 2025‑2027 fiscal biennium shall receive an amount equal to the greater of the following:

(1)        The applicable amount determined pursuant to subsections (a) through (d) of this section.

(2)        For assistant principals who were eligible for longevity in the 2016‑2017 fiscal year, the sum of the following:

a.         The salary the assistant principal received in the 2016‑2017 fiscal year pursuant to Section 9.1 or Section 9.2 of S.L. 2016‑94.

b.         The longevity that the assistant principal would have received as provided for State employees under the North Carolina Human Resources Act for the 2016‑2017 fiscal year based on the assistant principal's current years of service.

(3)        For assistant principals who were not eligible for longevity in the 2016‑2017 fiscal year, the salary the assistant principal received in the 2016‑2017 fiscal year pursuant to Section 9.1 or Section 9.2 of S.L. 2016‑94.

CENTRAL OFFICE SALARIES

SECTION 7A.8.(a)  For the 2025‑2026 fiscal year, beginning July 1, 2025, the annual salary for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers, whose salaries are supported from State funds, shall be increased by three percent (3%).

SECTION 7A.8.(b)  It is the intent of the General Assembly to increase the annual salary for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers, whose salaries are supported from State funds, in the 2026‑27 fiscal year, beginning July 1, 2026, by three percent (3%).

SECTION 7A.8.(c)  The monthly salary maximums that follow apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 2025‑2026 fiscal year, beginning July 1, 2025:

                                                                           2025‑2026 Fiscal Year

                                                                                       Maximum

School Administrator I                                                    $7,800

School Administrator II                                                  $8,265

School Administrator III                                                 $8,757

School Administrator IV                                                 $9,099

School Administrator V                                                  $9,463

School Administrator VI                                                 $10,023

School Administrator VII                                               $10,424

The local board of education shall determine the appropriate category and placement for each assistant superintendent, associate superintendent, director/coordinator, supervisor, or finance officer within the maximums and within funds appropriated by the General Assembly for central office administrators and superintendents. The category in which an employee is placed shall be included in the contract of any employee.

SECTION 7A.8.(d)  The monthly salary maximums that follow apply to public school superintendents for the 2025‑2026 fiscal year, beginning July 1, 2025:

                                                                           2025‑2026 Fiscal Year

                                                                                       Maximum

Superintendent I                                                              $11,049

Superintendent II                                                             $11,707

Superintendent III                                                           $12,410

Superintendent IV                                                           $13,156

Superintendent V                                                             $13,947

The local board of education shall determine the appropriate category and placement for the superintendent based on the average daily membership of the local school administrative unit and within funds appropriated by the General Assembly for central office administrators and superintendents.

SECTION 7A.8.(e)  Longevity pay for superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers shall be as provided for State employees under the North Carolina Human Resources Act.

SECTION 7A.8.(f)  Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the six‑year degree level shall receive a salary supplement of one hundred twenty‑six dollars ($126.00) per month in addition to the compensation provided pursuant to this section. Superintendents, assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers with certification based on academic preparation at the doctoral degree level shall receive a salary supplement of two hundred fifty‑three dollars ($253.00) per month in addition to the compensation provided for under this section.

SECTION 7A.8.(g)  The State Board of Education shall not permit local school administrative units to transfer State funds from other funding categories for salaries for public school central office administrators.

NON‑CERTIFIED PERSONNEL SALARIES

SECTION 7A.9.(a)  For the 2025‑2026 fiscal year, beginning July 1, 2025, the annual salary for non‑certified public school employees whose salaries are supported from State funds shall be increased as follows:

(1)        For permanent, full‑time employees on a 12‑month contract, by three percent (3%).

(2)        For the following employees, by a prorated and equitable amount based on the amount specified in subdivision (1) of this subsection:

a.         Permanent, full‑time employees on a contract for fewer than 12 months.

b.         Permanent, part‑time employees.

c.         Temporary and permanent hourly employees.

PART VIII. the UNIVERSITY OF NORTH CAROLINA system

UNC PERFORMANCE FUNDING

SECTION 8.1.(a)  Part 1 of Article 1 of Chapter 116 of the General Statutes is amended by adding a new section to read:

§ 116‐11.5.  Institutional performance accountability.

(a)        Implementation of Accountability Measures and Performance Standards. ‐ The UNC Board of Governors shall adopt and implement a system of accountability measures and performance standards for the constituent institutions. At least once every three years, the Board shall review, and revise, as necessary, the accountability measures and performance standards to ensure that they are appropriate for use in recognition of successful institutional performance.

(b)        Recognition of Successful Institutional Performance. ‐ Subject to the availability of funds, the Board of Governors may allocate funds among constituent institutions based on the evaluation of each institution's performance, including at least the following components:

(1)        Performance change evaluated by determining a college's rate of student success on each measure as compared to an institution‐specific baseline and goal.

(2)        Institutional impact based on the number of degree completers.

The Board may also allocate funds to specific institutions warranting targeted support to increase institutional performance or adapt to significant enrollment changes. Institutions shall use funds allocated to it pursuant to this subsection to support strategies to improve institutional performance.

(c)        Reporting Requirement. – The UNC Board of Governors shall report annually on the implementation of this section consistent with G.S. 116‐11(9b).

SECTION 8.1.(b)  G.S. 116‐11 reads as rewritten:

§ 116‐11.  Powers and duties generally.

(9b)      The Board of Governors shall report by February March 1 of each year to the Joint Legislative Education Oversight Committee, the Senate Appropriations Committee on Education/Higher Education, the House of Representatives Appropriations Subcommittee on Education, and the Fiscal Research Division on the actions and adjustments necessary to its budgetary policies, regulations, and standards resulting from the Current Operations Appropriations Act for the administration and operation of The University of North Carolina and the distribution of State and federal funds to constituent institutions. The report shall include at least the following information for each constituent institution:

a.       Guidelines related to State salaries of University of North Carolina employees, including range, median, and mean of faculty salaries at the institution.

b.      Budget allocations and reductions, including for operating expenses and specific programs.

c.       Distribution of additional State allocations for enrollment funding.

d.      Use of State funds and budget flexibility.

e.       Availability of federal funds.

f.        Tuition and fees.

g.      Composition of the student population at the institution, including headcount enrollment and full‑time student enrollment for both undergraduate and graduate students, and aggregate data on residency status, median household income, gender, race, and ethnicity.

h.      Student retention and graduation rates.

i.        Postsecondary educational attainment rate at the institution, including comparison to statewide data.

j.        A comparison to prior fiscal year expenditures and appropriations.

k.      The total amount of mandatory student fee revenue collected by institution and fee type.

l.        Any source of student auxiliary revenue that represents greater than ten percent (10%) of the overall student auxiliary revenue by institution and revenue type.

m.    Any source of sales revenue that represents greater than ten percent (10%) of the overall student auxiliary revenue by institution and revenue type.

n.      Institutional performance on accountability measures adopted by the Board of Governors pursuant to G.S. 116‑11.5.

COMPLETION ASSISTANCE PROGRAMS

SECTION 8.2.(a)  For purposes of this section, the term eligible constituent institutions refers to the following constituent institutions of The University of North Carolina:

(1)               Elizabeth City State University

(2)               Fayetteville State University

(3)               NC Central University

(4)               University of North Carolina at Pembroke

(5)               Winston‑Salem State University

SECTION 8.2.(b)  The Board of Governors of The University of North Carolina shall establish a Completion Assistance Program (Program) at each eligible constituent institution. At a minimum, each Program shall meet the following criteria:

(1)               A student enrolled in a Program established by this section may receive up to one thousand dollars ($1,000) per academic semester under the Program to pay for the costs of continuing attendance and earning necessary credit hours at the eligible constituent institution.

(2)               A student shall be eligible to receive funds under a Program if the student meets at least the following requirements:

a.       Needs financial assistance to remain enrolled at the eligible constituent institution and earn credits necessary to graduate on time.

b.      Is a resident for tuition purposes, as provided in G.S. 116‐143.1.

c.       Meets satisfactory academic progress, as determined by the Board.

d.      Has completed or is on track to complete at least 60 academic credit hours by the end of the semester in which the funds are provided.

e.       Has completed the Free Application for Federal Student Aid (FAFSA) for the academic year in which the funds are provided.

f.        Has an unpaid balance with the eligible constituent institution. This may include an unpaid balance for tuition, fees, room, board, or other expenses of attendance.

SECTION 8.2.(c)  The Board of Governors of The University of North Carolina shall report on each Completion Assistance Program established pursuant to this section to the Joint Legislative Education Oversight Committee no later than March 15, 2027. The report shall include, at a minimum, an analysis of the impact of each Program on the following:

(1)        On‐time graduation rates.

(2)        Student debt at graduation.

SECTION 8.2.(d)  Of the funds appropriated in this act to the Board of Governors of The University of North Carolina for Completion Assistance Programs, the Board shall allocate funds to each eligible constituent institution of The University of North Carolina proportional to the number of undergraduate students enrolled at each eligible constituent institution who are residents of North Carolina and recipients of a federal Pell Grant.

EXPAND CHEATHAM‐WHITE SCHOLARSHIP PROGRAM

SECTION 8.3.(a)  G.S. 116‐290 reads as rewritten:

§ 116‐290.  Cheatham‑White Scholarships; establishment and purpose; benefits.

(a)        Scholarships Established; Purpose. – The Cheatham‐White Scholarships are established as a merit scholarship program at North Carolina Agricultural and Technical State University, and at North Carolina Central University, and Winston‐Salem State University. The purpose of the scholarships is to provide an outstanding educational experience for students who are exceptional scholars, versatile and well‐ rounded individuals with a broad range of interests, and who are accomplished and proficient in areas of both the arts and the sciences. They must also demonstrate leadership potential and a strong commitment to service.

(b)        Scholarship Benefits. – Each scholarship is a fully funded four‐year scholarship that covers the cost of all of the following: full tuition, student fees, housing, meals, textbooks, a laptop, supplies, travel, and personal expenses. Each scholarship also provides four summers of fully funded enrichment and networking opportunities that may include international travel and study.

(c)        Number of Scholarships Awarded. – Up to 50 150 scholarships, 40 120 for resident students and 10 30 for nonresident students, may be awarded each academic year to students admitted to North Carolina Agricultural and Technical State University. Up to 50 100 scholarships, 40 80 for resident students and 10 20 for nonresident students, may be awarded each academic year to students admitted to North Carolina Central University. Up to 50 scholarships, 40 for resident students and 10 for nonresident students, may be awarded each academic year to students admitted to Winston‐Salem State University.

SECTION 8.3.(b)  G.S. 116‐292(a) reads as rewritten:

§ 116‑292.  Cheatham‑White Scholarships; eligibility and selection criteria.

(a)        Eligibility. – To be eligible to be nominated as a potential candidate for a Cheatham‐White Scholarship, a person must satisfy all of the following criteria:

(1)        Be a competitive applicant for admission as a freshman in the fall semester into a baccalaureate program at either North Carolina Agricultural and Technical State University, or North Carolina Central University, or Winston‑Salem State University.

(2)        Be a United States citizen or permanent resident.

(3)        Be on course to graduate from high school in the spring semester prior to college admission.

SECTION 8.3.(c)  G.S. 116‐294 reads as rewritten:

§ 116‑294.  Cheatham‑White Scholarships; administration of scholarships.

The University of North Carolina System Office shall administer the Cheatham‐White Scholarships, in consultation and collaboration with North Carolina Agricultural and Technical State University, and North Carolina Central University, and Winston‐Salem State University, pursuant to policies adopted by the Board of Trustees of both constituent institutions. As part of its administrative responsibilities, The University of North Carolina System Office, in consultation and collaboration with North Carolina Agricultural and Technical State University, and North Carolina Central University, and Winston‐Salem State University, shall do all of the following:

(1)        Design and implement an application and school nomination process to be used to identify potential scholarship candidates and a process for awarding the scholarships.

…

(9)        Any other function necessary for the successful implementation of the Cheatham‐White Scholarships program and administration of the Cheatham‐White Scholarships Fund. (2016‐94, s.11.4(e); 2018‐12, s. 12.)

NORTH CAROLINA SCHOOL OF SCIENCE AND MATH RECEIPT FLEXIBILITY

SECTION 8.4.  G.S. 116‑30.3A reads as rewritten:

§ 116‑30.3A.  Availability of excess receipts.

Notwithstanding the provisions of Chapter 143C of the General Statutes, receipts within The University of North Carolina realized in excess of budgeted levels shall be available, up to a maximum of ten percent (10%) above budgeted levels, for each Budget Code, in addition to appropriations to support the operations generating the receipts as approved by the Director of the Budget. This section shall not apply to the North Carolina School of Science and Mathematics. The North Carolina School of Science and Mathematics shall be subject to subsections b1 and b2 of G.S. 143C‑6‑4.

PART VIIIA. NORTH CAROLINA STATE EDUCATION ASSISTANCE AUTHORITY

GROWING THE HEALTHCARE WORKFORCE

SECTION 8A.1.(a)  Establishment of the Fund. – Of the funds appropriated to the Board of Governors of the University of North Carolina by this act for the 2025‑26 fiscal year, the Board shall use ten million ($10,000,000) to establish the Fund for Growing the Health Care Workforce (Fund). Any unexpended funds remaining in the Fund at the end of the fiscal year shall not revert to the General Fund but shall remain available for the purposes set forth in this section through June 30, 2026. The Fund shall be used to assist independent college and universities who participate in the State Need Based Grant in starting or expanding programs that will grow the health care workforce, including through providing greater facility capacity for trainees; increasing the numbers of health faculty and staff; and providing student support, equipment and lab space.

SECTION 8A.1.(b)  Report. – The Board shall submit an initial report to the Joint Legislative Education Oversight Committee by December 1, 2026, and an annual report thereafter for each year the Board provides funds, on the programs receiving the funds, which shall include at least the following information:

(1)               The institutions that received funds, the amount of funds, and the types of programs started.

(2)               The use of funds by each institution receiving awards, including costs associated with student instruction, faculty salaries, instructional supplies, related instructional equipment, and accreditation costs.

(3)               Evaluation of the success of the new program receiving funds.

LONGLEAF COMMITMENT COMMUNITY COLLEGE GRANT CONSOLIDATION

SECTION 8A.2.(a)  The recurring funds appropriated in S.L. 2023‑134 to the Board of Governors of The University of North Carolina for each year of the 2023‑2025 fiscal biennium to be allocated to the State Education Assistance Authority for the Longleaf Commitment Community College Grant Program shall from the 2025‑2026 fiscal year instead be allocated for the North Carolina Need‑Based Scholarship Program for Public Colleges and Universities for eligible students enrolled in the North Carolina Community College System.

SECTION 8A.2.(b)  G.S. 116‑209.85(b) reads as rewritten:

§ 116‑209.85.  Scholarship Reserve Fund for Public Colleges and Universities.

…

(b)        The Authority shall create two reserves within the Reserve Fund as follows: The University of North Carolina (UNC Reserve) and the North Carolina Community College System (CC Reserve) from monies in the Reserve Fund. The funds in the reserves shall be used for scholarships for the academic year that begins in the fiscal year following the fiscal year in which the allocations are made to the reserves. Allocations shall be made from the reserves for the amounts determined for the payment schedules for eligible postsecondary institutions pursuant to G.S. 116‑209.83.

Beginning with the 2023‑2024 fiscal year and for each subsequent fiscal year, within the funds available, the Authority shall allocate an amount equal to the amount from the prior fiscal year for the UNC Reserve and the CC Reserve to each reserve, respectively, unless otherwise agreed to by the President of The University of North Carolina and the President of the North Carolina Community College System. Additional funds may be directed to the reserves from a Current Operations Appropriations Act in a fiscal year. The reserves established for the 2022‑2023 fiscal year shall consist of the following funds:

(1)        For the UNC Reserve, the monies shall consist of the following:

a.         An amount equal to the amount appropriated to the Board of Governors of The University of North Carolina for The University of North Carolina Need‑Based Financial Aid Program for the 2021‑2022 fiscal year.

b.         An amount equal to the proportionate share of the appropriation for the Education Lottery Scholarship Program based on awards of financial assistance to students enrolled in The University of North Carolina from the Education Lottery Scholarship Program for the 2017‑2018, 2018‑2019, and 2019‑2020 fiscal years.

(2)        For the CC Reserve, the monies shall consist of the following:

a.         An amount equal to the amount appropriated to the Community Colleges System Office for the North Carolina Community College Grant Program, except for funds set aside for the targeted assistance program pursuant to G.S. 115D‑40.1, for the 2021‑2022 fiscal year.

b.         An amount equal to the proportionate share of the appropriation for the Education Lottery Scholarship based on awards of financial assistance to students enrolled in North Carolina community colleges from the Education Lottery Scholarship Program for the 2017‑2018, 2018‑2019, and 2019‑2020 fiscal years.

c.         Beginning with the 2025‑2026 fiscal year and thereafter an amount equal to the amount appropriated to the Board of Governors of The University of North Carolina for the Longleaf Commitment Community College Grant Program for each year of the 2023‑2025 fiscal biennium.

….

OPPORTUNITY SCHOLARSHIPS ACCOUNTABILITY

SECTION 8A.3.(a)  G.S. 115C‑562.1 reads as rewritten:

§ 115C‑562.1.  Definitions.

The following definitions apply in this Part:

…

(3a)      Eligible student. – A student residing in North Carolina who has not yet received a high school diploma and who meets all of the following requirements:

a.       Is eligible to attend a North Carolina public school pursuant to Article 25 of this Chapter. A child who is the age of 4 on or before April 16 is eligible to attend the following school year if the principal, or equivalent, of the school in which the child seeks to enroll finds that the student meets the requirements established by the Authority pursuant to G.S. 115C562.2(d) and those findings are submitted to the Authority.

b.      Has not been enrolled in a postsecondary institution as a full‑time student taking at least 12 hours of academic credit.

c.       Has not been placed in a nonpublic school or facility by a public agency at public expense.

d.      Received a scholarship grant during the previous school year.

SECTION 8A.3.(b)  G.S. 115C‑562.2 reads as rewritten:

§ 115C‑562.2.  Scholarship grants.

(a)        The Authority shall make available no later than February 1 annually applications to eligible students for the award of scholarship grants to attend any nonpublic school on a full or part‑time basis. Information about scholarship grants and the application process shall be made available on the Authority's Web site. Beginning March 15, the Authority shall begin awarding scholarship grants to students who have applied by March 1 in the following order: according to the following criteria:

(1)        Eligible students who received a scholarship grant for the school year prior to the school year for which the students are applying.

(2)        Eligible students qualifying for a scholarship grant in the amount provided under subdivision (1) of subsection (b2) of this section.

(3)        Eligible students qualifying for a scholarship grant in the amount provided under subdivision (2) of subsection (b2) of this section.

(4)        Eligible students qualifying for a scholarship grant in the amount provided under subdivision (3) of subsection (b2) of this section.

(5)        All other students.

(b)        Repealed by Session Laws 2023‑134, s. 8A.6(c), effective July 1, 2023.

(b1)      Repealed by Session Laws 2021‑180, s. 8A.3(e), effective July 1, 2021.

(b2)      Scholarship grants shall be awarded to eligible students as follows:

(1)        For students residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program, per year per eligible student, an amount of up to one hundred percent (100%) of the average State per pupil allocation for average daily membership in the prior fiscal year.

(2)        For students residing in households with an income level between the amount required for the student to qualify for the federal free or reduced‑price lunch program and not in excess of two hundred percent (200%) of that amount, per year per eligible student, an amount of up to ninety percent (90%) of the average State per pupil allocation for average daily membership in the prior fiscal year.

(3)        For students residing in households with an income level of between two hundred percent (200%) of the amount required for the student to qualify for the federal free or reducedprice lunch program and not in excess of four hundred fifty percent (450%) of that amount, per year per eligible student, an amount of up to sixty percent (60%) of the average State per pupil allocation for average daily membership in the prior fiscal year.

(4)        For all students, per year per eligible student, an amount of up to fortyfive percent (45%) of the average State per pupil allocation for average daily membership in the prior fiscal year, unless the student qualifies for a higher amount under this subsection.

(b3)      Tuition and fees for a nonpublic school may include tuition and fees for books, transportation, equipment, or other items required by the nonpublic school.

(b4)      No scholarship grant shall exceed, per year per eligible student, an amount equal to one hundred percent (100%) of the average State per pupil allocation for average daily membership in the prior fiscal year, and no scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.

(b5)      In addition to the amount of the scholarship grant, for any student receiving a scholarship grant in grades three, eight, or 11, the Authority shall provide to the nonpublic school an amount equal to the cost of the nationally standardized test required to be administered as provided in G.S. 115C562.5.

SECTION 8A.3.(c)  G.S. 115C‑562.8(b) reads as rewritten:

§ 115C‑562.8.  The Opportunity Scholarship Grant Fund Reserve.

(b)        The General Assembly finds that, due to the critical need in this State to provide opportunity for school choice for North Carolina students, it is imperative that the State provide an increase of funds for 15 years to the Opportunity Scholarship Grant Fund Reserve. Therefore, there There is appropriated from the General Fund to the Reserve the following amounts for each fiscal year to be used for the purposes set forth in this section:

Fiscal Year                              Appropriation

2017‑2018                               $44,840,000

2018‑2019                               $54,840,000

2019‑2020                               $64,840,000

2020‑2021                               $74,840,000

2021‑2022                               $84,840,000

2022‑2023                               $94,840,000

2023‑2024                               $176,540,000

2024‑2025                               $191,540,000

2025‑2026                               $625,000,000

2026‑2027                               $675,000,000

2027‑2028                               $700,000,000$194,124,036

2028‑2029                               $725,000,000$176,276,589

2029‑2030                               $750,000,000$156,209,738

2030‑2031                               $775,000,000$135,285,250

2031‑2032                               $800,000,000$114,800,340

2032‑2033                               $93,233,393

2033‑2034                               $70,197,091

2034‑2035                               $46,300,078

2035‑2036                               $22,046,485

For the 2032-2033 2036‑2037 fiscal year and each fiscal year thereafter, there is appropriated from the General Fund to the Reserve the sum of eight hundred twenty-five million dollars ($825,000,000) zero dollars ($0) to be used for the purposes set forth in this section. When developing the base budget, as defined by G.S. 143C‑11, for each fiscal year specified in this subsection, the Director of the Budget shall include the appropriated amount specified in this subsection for that fiscal year.

SECTION 8A.3.(d)  The State Education Assistance Authority shall not award scholarship funds to new recipients pursuant to Part 2A of Article 39 of Subchapter X of Chapter 115C of the General Statutes after the 2024‑2025 academic year.

SECTION 8A.3.(e)   G.S. 115C‑562.5(a) is amended by adding a new subdivision to read: 

§ 115C‑562.5.  Obligations of nonpublic schools accepting eligible students receiving scholarship grants.

(3a)      Academic Assessment. – A nonpublic school that accepts eligible students receiving scholarship funds shall academically assess students on an annual basis for each school year at the same grade levels as required by the State Board of Education for students in the public schools pursuant to G.S. 115C‑174.11(c)(1). An eligible student awarded scholarship funds who is enrolled in a nonpublic school shall participate in the academic assessments to maintain eligibility for receipt of the scholarship funds. 

Assessment data shall be retained by the nonpublic school for a five‑year period and shall be subject to audit by the Authority to ensure compliance with this subsection. Assessment data shall be provided to the parent or guardian of an eligible student, whose tuition and fees are paid in whole or in part with scholarship funds, with an annual written explanation of the student's progress, including the results of the student's academic assessment. Nothing in this subsection shall be deemed to prohibit a nonpublic school from administering assessments at other grade levels for its own purposes. 

SECTION 8A.3.(f)   G.S. 115C‑562.7(b) is amended by adding a new subdivision to read: 

§ 115C‑562.7.  Reporting requirements.

(6)        Information on the compliance with the academic assessment requirement pursuant to G.S. 115C‑562.5(3a).

SECTION 8A.3.(g)   G.S. 115C‑562.2 is amended by adding a new subsection to read: 

§ 115C‑562.2.  Scholarship grants.

(c1)      An eligible student awarded a scholarship grant shall participate in administration of examinations required by G.S. 115C‑562.5 to maintain eligibility for receipt of the scholarship grant. 

SECTION 8A.3.(h)   G.S. 115C‑562.5 reads as rewritten: 

§ 115C‑562.5.   Obligations of nonpublic schools accepting eligible students receiving scholarship grants. 

(a)  A nonpublic school that accepts eligible students receiving scholarship grants shall comply with the following: 

(1)        Provide to the Authority annually documentation for required tuition and fees charged to the student by the nonpublic school. A nonpublic school that accepts eligible students receiving scholarship grants shall not increase tuition each year by more than the Consumer Price Index as calculated by the United States Bureau of Labor Statistics and reported on January 1 of the year in which the school is increasing tuition. 

(2)        Provide to the Authority a criminal background check conducted for the staff member with the highest decision‑making authority, as defined by the bylaws, articles of incorporation, or other governing document, to ensure that person has not been convicted of any crime listed in G.S. 115C332. 

(3)        Provide to the parent or guardian of an eligible student, whose tuition and fees are paid in whole or in part with a scholarship grant, an annual written explanation of the student's progress, including the student's scores on standardized achievement tests. 

(4)        Administer, at least once in each school year (or more as required by State or Federal Requirements), tests as provided in this subdivision. Student‑level test performance data shall be submitted to the Authority by July 15 of each year and retained by the nonpublic school for a five‑year period and shall be subject to audit by the Authority to ensure compliance with this subdivision.year. Test Personally identifiable individual test performance data reported to the Authority or audited or collected for evaluation purposes by the Authority under this subdivision is not a public record under Chapter 132 of the General Statutes. Nothing in this subdivision shall be deemed to prohibit a nonpublic school from administering other standardized tests or tests at other grade levels for its own purposes. Tests shall be administered to all eligible students enrolled in grades three and higher whose tuition and fees are paid in whole or in part with a scholarship grant as follows: 

a.         The nationally standardized test designated by the Authority in grades three and eight. 

b.         The ACT in grade 11. 

c.         A nationally standardized test or other nationally standardized equivalent measurement selected by the chief administrative officer of the nonpublic school in all other grades four and higher. For grades four through seven, the nationally standardized test or other equivalent measurement selected must measure achievement in the areas of English grammar, reading, spelling, and mathematics. For grades nine, 10, and 12, the nationally standardized test or other equivalent measurement selected must measure either (i) achievement in the areas of English grammar, reading, spelling, and mathematics or (ii) competencies in the verbal and quantitative areas.

d.         The assessments and tests required by the State Board of Education for public schools to comply with federal law according to grade level pursuant to G.S. 115C‑174.11(c)(1).

(4b)      Pursuant to G.S. 115C‑107.6, educate each child with a disability awarded scholarship funds in accordance with that child's Individualized Education Plan (IEP) and in compliance with the Individuals with Disabilities Act (IDEA) and State Board of Education policies.

(5)        Provide to the Authority four‑year cohort graduation rates of the students receiving scholarship grants in a manner consistent with requirements of Title I, Part A of ESEA and 34 C.F.R. § 200.19. nationally recognized standards. 

(5b)      Provide to the Authority by August 1 of each year attendance records of students receiving scholarship grants during the previous school year including the name of any schools attended during that time.

(6)        Contract with a certified public accountant to perform a financial reviewaudit, consistent with generally accepted methods of accounting or any other comprehensive basis of accounting recognized by the American Institute of Certified Public Accountants (AICPA) a minimum of once every two years for each school year in which the school enrolls 70 or more students receiving scholarship grants or scholarship funds awarded by the Authority. students who collectively receive more than one hundred thousand dollars ($100,000) in scholarship grants awarded under this Part. If a nonpublic school accepts students receiving less than one hundred thousand dollars ($100,000) in scholarship grants, the school shall contract with a certified public accountant to perform a financial audit once every three years. The nonpublic school shall submit the audit report to the Authority by December 31 of each year an audit is conducted. The Authority may require a school to be audited annually after the school has two consecutive financial audits with findings.

The Authority shall ensure that all schools are audited in accordance with this section.

(7)        Maintain a school facility within the State where in‑person instruction is provided. This subdivision does not prohibit a school from offering remote‑only courses of instruction in addition to in‑person instruction.

(8)        Provide the following information annually to the Division:

a.         Name and address of the school, including physical location address. A school with more than one physical location shall establish a separate notice of intent for each physical location and shall provide all information required by this subdivision for each physical location.

b.         The name of the owners and chief administrator, as well as their contact information.

c.         Number of students in attendance at the school as of October 1.

d.         Total number of students enrolled in the school as of the last day of the previous school year.

e.         Documentation of a completed fire inspection within the previous 365 days.

(9)        In coordination with local law enforcement agencies, adopt a School Risk Management Plan (SRMP) relating to incidents of school violence as detailed in G.S. 115C‑47 (40). In constructing and maintaining these plans, the school shall utilize the School Risk and Response Management System (SRRMS) established pursuant to G.S. 115C‑105.49A. These plans are not considered a public record as the term public record is defined under G.S. 132‑1.

(10)      Pursuant to G.S. 115C‑105.53, provide schematic diagrams and keys to the main entrance of school facilities to local law enforcement agencies. These diagrams are not considered a public record as the term public record is defined under G.S. 132‑1.

(11)      Pursuant to G.S. 115C‑105.49, at least once a year, hold a full school‑wide lockdown exercise with local law enforcement and emergency management agencies that are part of the qualified nonpublic school's SRMP.

(12)      Provide the following: (i) schematic diagrams, including digital schematic diagrams, and (ii) emergency response information requested by the Department of Public Safety, Division of Emergency Management for the SRMP. These diagrams and emergency response information are not considered a public record as the term public record is defined under G.S. 132‑1.

(b)        A nonpublic school that accepts students receiving scholarship grants shall not require any additional fees based on the status of the student as a scholarship grant recipient. 

(c)        A nonpublic school enrolling more than 25 students in any grade whose tuition and fees are paid in whole or in part with a scholarship grant shall provide and retain information on student test performance in each grade with more than 25 students, as follows:

(1)        Report to the Authority on the aggregate standardized test performance of the individual student standardized test performance of eligible students in grades three, eight, and 11 under subsection (4) of this section. Aggregate test performance data reported to the Authority which does not contain personally identifiable student data shall be a public record under Chapter 132 of the General Statutes. The Authority shall make these reports of aggregate student standardized test performance publicly available. Test performance data may be shared with public or private institutions of higher education located in North Carolina and shall be provided to an independent research organization selected by the Authority for research purposes as permitted by the Federal Education Rights and Privacy Act, 20 U.S.C. § 1232g.

(2)        Retain standardized test performance data for eligible students in all other grades and annually certify to the Authority compliance with the requirements of subdivision (4) of subsection (a) of this section.

(c1)      A nonpublic school shall not discriminate with respect to the categories listed in 42 U.S.C. § 2000d, as that statute read on January 1, 2014, and with respect to the definitions of an individual with a disability as defined in the Americans With Disabilities Act of 1990, 42 U.S.C. § 12101 as that statute read on January 1, 2024.

SECTION 8A.3.(i)  G.S. 115C‑112.7 is amended by adding a new subsection to read:

(c)      The State Education Assistance Authority, in coordination with the Department of Public Instruction, shall make publicly available by September 30 of each year school achievement, growth, and performance scores and associated performance grades pursuant to G.S. 115C‑83.15 for nonpublic schools that enroll more than 25 students whose tuition and fees are paid in whole or in part with a scholarship grant.  This section is effective with the 2025‑26 school year.  The first school achievement, growth, and performance scores and associated performance grades shall be made publicly available by September 30, 2026.

SECTION 8A.3.(j)  Section 8A.6(i) and Section 8A.6(j) of Session Law 2023‑134 are repealed.

SECTION 8A.3.(k)  This provision is effective when it becomes law and applies beginning with the 2025‑26 school year.

PART IX. health and human services

PART IX‑A. AGING AND ADULT SERVICES [RESERVED]

PART IX‑B. CENTRAL MANAGEMENT AND SUPPORT

COMMUNITY HEALTH GRANT PROGRAM

SECTION 9B.1.(a)  Funds appropriated in this act to the Department of Health and Human Services, Division of Central Management, Office of Rural Health, for each year of the 2025‑2027 fiscal biennium for the Community Health Grant Program shall be used to continue to administer the Community Health Grant Program as modified by Section 11A.8 of S.L. 2017‑57.

SECTION 9B.1.(b)  The Office of Rural Health shall make the final decision about awarding grants under this Program, but no single grant award shall exceed one hundred fifty thousand dollars ($150,000) during the fiscal year. In awarding grants, the Office of Rural Health shall consider the availability of other funds for the applicant; the incidence of poverty in the area served by the applicant or the number of indigent clients served by the applicant; the availability of, or arrangements for, after‑hours care; and collaboration between the applicant and a community hospital or other safety net organizations.

SECTION 9B.1.(c)  Grant recipients shall not use these funds to do any of the following:

(1)        Enhance or increase compensation or other benefits of personnel, administrators, directors, consultants, or any other persons receiving funds for program administration; provided, however, funds may be used to hire or retain health care providers. The use of grant funds for this purpose does not obligate the Department of Health and Human Services to continue to fund compensation beyond the grant period.

(2)        Supplant existing funds, including federal funds traditionally received by federally qualified community health centers. However, grant funds may be used to supplement existing programs that serve the purposes described in subsection (a) of this section.

(3)        Finance or satisfy any existing debt.

SECTION 9B.1.(d)  The Office of Rural Health may use up to two hundred thousand dollars ($200,000) in recurring funds for each fiscal year of the 2025‑2027 fiscal biennium for administrative purposes.

SECTION 9B.1.(e)  By September 1 of each year, the Office of Rural Health shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services on community health grants that includes at least all of the following information:

(1)        The identity and a brief description of each grantee and each program or service offered by the grantee.

(2)        The amount of funding awarded to each grantee.

(3)        The number of individuals served by each grantee and, for the individuals served, the types of services provided to each.

(4)        Any other information requested by the Office of Rural Health as necessary for evaluating the success of the Community Health Grant Program.

REPLACEMENT FOR CRITICAL IT SYSTEMS THAT SUPPORT SUBSTANCE USE DISORDER PREVENTION AND TREATMENT

SECTION 9B.2.  The Department of Health and Human Services shall develop and implement a replacement for outdated data systems supporting substance use prevention and treatment goals, specifically concerning the Driving While Impaired Services, the Drug Education School, and the Drug Control Unit programs designed to prevent progression of misuse of substances through education and regulatory supports. The project shall not proceed until the business case has been approved by the Office of State Budget and Management and the State Chief Information Officer in the Enterprise Project Management Office's Touchdown System. Upon approval, Mixed Use Beverage tax receipts available in Budget Code 14460, Budget Fund 134603, may be budgeted for transfer to Budget Code 24410 for information technology projects in an amount not to exceed two million dollars ($2,000,000). Following project completion, the Division of Mental Health, Developmental Disabilities, and Substance Use Services may use Mixed Use Beverage Tax receipts to cover operations and maintenance costs for the new IT system.

USE OF TALC SETTLEMENT FUNDS

SECTION 9B.3.(a)  The Ovarian Cancer Mitigation Fund (Fund) is created within the Department of Health and Human Services, Division of Central Management and Support, as a nonreverting special fund. The Fund shall consist of (i) monies received by the State as a beneficiary of the final consent judgment resolving the case, State of North Carolina, ex rel. Joshua H. Stein, Attorney General v. Johnson & Johnson (J&J Case), and (ii) all interest and investment earnings received on monies in the Fund. Monies in the Fund shall be expended only by an act of appropriation by the General Assembly and in accordance with the final consent judgment resolving the J&J Case.

SECTION 9B.3.(b)  There is appropriated from the Ovarian Cancer Mitigation Fund created in subsection (a) of this section to the Department of Health and Human Services, Division of Central Management and Support, the sum of four million dollars ($4,000,000) in nonrecurring funds for the 2024‑2025 fiscal year and the sum of four million dollars ($4,000,000) in nonrecurring funds for the 2025‑2026 fiscal year to be allocated and used as follows:

(1)        Up to two million dollars ($2,000,000) in nonrecurring funds for each year of the 2025‑2027 fiscal biennium shall be used to support a public‑private partnership consisting of community‑based organizations, medical providers, and others to develop, strengthen, and promote improved access to ovarian cancer educational materials, screenings, and care providers. Funds may be used to contract with a lead community‑based organization with statewide reach to implement related initiatives, including technical assistance and subgrants to other community‑based organizations for these purposes.

(2)        Up to seven hundred and fifty thousand dollars ($750,000) in nonrecurring funds for each year of the 2025‑2027 fiscal biennium shall be used to invest in data collection and analysis infrastructure to support timely and accurate cancer surveillance and improved capacity to address emerging threats.

(3)        Up to one million two hundred fifty thousand dollars ($1,250,000) in nonrecurring funds for each year of the 2025‑2027 fiscal biennium shall be used to design and implement communication and education strategies designed to raise awareness of ovarian cancer and promote preventive measures, screening, and treatment.

In addition to these uses, the Department of Health and Human Services may use up to two hundred thousand dollars ($200,000) of funds allocated by this subdivision for each year of the fiscal biennium for administrative purposes.

SECTION 9B.3.(c)  Funds allocated under subsection (b) of this section shall remain available for expenditure in the amounts and for the purposes specified in subsection (a) of this section until expended.

SECTION 9B.3.(d)  Annually, beginning November 1, 2026, the Department of Health and Human Services shall report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on the expenditures made from the Ovarian Cancer Mitigation Fund during the preceding fiscal year.

PART IX‑C. CHILD AND FAMILY WELL‑BEING [Reserved]

PART IX‑D. CHILD DEVELOPMENT AND EARLY EDUCATION 

NC PRE‑K PROGRAMS/STANDARDS FOR FOUR AND FIVE‑STAR RATED FACILITIES

SECTION 9D.1.(a)  Eligibility. – The Department of Health and Human Services, Division of Child Development and Early Education, shall continue implementing the prekindergarten program (NC Pre‑K). The NC Pre‑K program shall serve children who are 4 years of age on or before August 31 of the program year. In determining eligibility, the Division shall establish income eligibility requirements for the program not to exceed seventy‑five percent (75%) of the State median income. Up to twenty percent (20%) of children enrolled may have family incomes in excess of seventy‑five percent (75%) of median income if those children have other designated risk factors. Furthermore, any age‑eligible child who is a child of either of the following shall be eligible for the program: (i) an active duty member of the Armed Forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the Armed Forces who was ordered to active duty by the proper authority within the last 18 months or is expected to be ordered within the next 18 months, or (ii) a member of the Armed Forces of the United States, including the North Carolina National Guard, State military forces, or a reserve component of the Armed Forces who was injured or killed while serving on active duty. Eligibility determinations for NC Pre‑K participants may continue through local education agencies and local North Carolina Partnership for Children, Inc., partnerships.

Other than developmental disabilities or other chronic health issues, the Division shall not consider the health of a child as a factor in determining eligibility for participation in the NC Pre‑K program.

SECTION 9D.1.(a1)  Staff‑To‑Child Ratio and Class Size. – The classroom shall not exceed a maximum staff‑to‑child ratio of one to 10 with a maximum class size of 20 children, with at least one teacher and one teacher assistant per classroom. A classroom of 10 children or less shall have at least one teacher. The Child Care Commission shall adopt any rules and the Division of Child Development and Early Education shall revise any rules or policies necessary to implement the provisions of this subsection.

SECTION 9D.1.(b)  Multi‑year Contracts. – The Division of Child Development and Early Education shall require the NC Pre‑K contractor to issue multi‑year contracts for licensed private child care centers providing NC Pre‑K classrooms.

SECTION 9D.1.(c)  Building Standards. – Notwithstanding G.S. 110‑91(4), private child care facilities and public schools operating NC Pre‑K classrooms shall meet the building standards for preschool students as provided in G.S. 115C‑521.1.

SECTION 9D.1.(d)  Programmatic Standards. – Except as provided in subsection (c) of this section, entities operating NC Pre‑K classrooms shall adhere to all of the policies prescribed by the Division of Child Development and Early Education regarding programmatic standards and classroom requirements.

SECTION 9D.1.(e)  NC Pre‑K Committees. – Local NC Pre‑K committees shall use the standard decision‑making process developed by the Division of Child Development and Early Education in awarding NC PreK classroom slots and student selection.

SECTION 9D.1.(f)  Reporting. – The Division of Child Development and Early Education shall submit an annual report no later than March 15 of each year to the Joint Legislative Oversight Committee on Health and Human Services, the Office of State Budget and Management, and the Fiscal Research Division. The report shall include the following:

(1)        The number of children participating in the NC Pre‑K program by county.

(2)        The number of children participating in the NC Pre‑K program who have never been served in other early education programs such as child care, public or private preschool, Head Start, Early Head Start, or early intervention programs.

(3)        The expected NC Pre‑K expenditures for the programs and the source of the local contributions.

(4)        The results of an annual evaluation of the NC Pre‑K program.

SECTION 9D.1.(g)  Audits. – The administration of the NC Pre‑K program by local partnerships shall be subject to the financial and compliance audits authorized under G.S. 143B‑168.14(b).

CHILD CARE SUBSIDY RATES

SECTION 9D.2.(a)  The maximum gross annual income for initial eligibility, adjusted annually, for subsidized child care services shall be determined based on a percentage of the federal poverty level as follows:

AGE                                                               INCOME PERCENTAGE LEVEL

0 – 5                                                                                        200%

6 – 12                                                                                      133%

The eligibility for any child with special needs, including a child who is 13 years of age or older, shall be two hundred percent (200%) of the federal poverty level.

SECTION 9D.2.(b)  Fees for families who are required to share in the cost of care are established based on ten percent (10%) of gross family income. When care is received at the blended rate, the copayment shall be eighty‑three percent (83%) of the full‑time copayment. Copayments for part‑time care shall be seventy‑five percent (75%) of the full‑time copayment.

SECTION 9D.2.(c)  Payments for the purchase of child care services for low‑income children shall be in accordance with the following requirements:

(1)        Religious sponsored child care facilities operating pursuant to G.S. 110‑106 and licensed child care centers and homes that meet the minimum licensing standards that are participating in the subsidized child care program shall be paid the one‑star county market rate or the rate they charge privately paying parents unless prohibited by subsection (f) of this section.

(2)        Licensed child care centers and homes with two or more stars shall receive the market rate for that rated license level for that age group unless prohibited by subsection (g) of this section.

(3)        No payments shall be made for transportation services charged by child care facilities.

(4)        Payments for subsidized child care services for postsecondary education shall be limited to a maximum of 20 months of enrollment. This shall not be determined before a family's annual recertification period.

(5)        The Department of Health and Human Services shall implement necessary rule changes to restructure services, including, but not limited to, targeting benefits to employment.

SECTION 9D.2.(d)  Provisions of payment rates for child care providers in counties that do not have at least 50 children in each age group for center‑based and homebased care are as follows:

(1)        Except as applicable in subdivision (2) of this subsection, payment rates shall be set at the statewide or regional market rate for licensed child care centers and homes.

(2)        If it can be demonstrated that the application of the statewide or regional market rate to a county with fewer than 50 children in each age group is lower than the county market rate and would inhibit the ability of the county to purchase child care for low‑income children, then the county market rate may be applied.

SECTION 9D.2.(e)  A market rate shall be calculated for child care centers and homes at each rated license level for each county and for each age group or age category of enrollees and shall be representative of fees charged to parents for each age group of enrollees within the county. The Division of Child Development and Early Education shall also calculate a statewide rate and regional market rate for each rated license level for each age category.

SECTION 9D.2.(f)  The Division of Child Development and Early Education shall continue implementing policies that improve the quality of child care for subsidized children, including a policy in which child care subsidies are paid, to the extent possible, for child care in the higher quality centers and homes only. The Division shall define higher quality, and subsidy funds shall not be paid for one or two‑star‑rated facilities. For those counties with an inadequate number of four and five‑star‑rated facilities, the Division shall continue a transition period that allows the facilities to continue to receive subsidy funds while the facilities work on the increased star ratings. The Division may allow exemptions in counties where there is an inadequate number of four and five‑star‑rated facilities for non‑star‑rated programs, such as religious programs.

SECTION 9D.2.(g)  Facilities licensed pursuant to Article 7 of Chapter 110 of the General Statutes and facilities operated pursuant to G.S. 110‑106 may participate in the program that provides for the purchase of care in child care facilities for minor children of needy families. Except as authorized by subsection (f) of this section, no separate licensing requirements shall be used to select facilities to participate. In addition, child care facilities shall be required to meet any additional applicable requirements of federal law or regulations. Child care arrangements exempt from State regulation pursuant to Article 7 of Chapter 110 of the General Statutes shall meet the requirements established by other State law and by the Social Services Commission.

County departments of social services or other local contracting agencies shall not use a provider's failure to comply with requirements in addition to those specified in this subsection as a condition for reducing the provider's subsidized child care rate.

SECTION 9D.2.(h)  Payment for subsidized child care services provided with Temporary Assistance for Needy Families Block Grant funds shall comply with all regulations and policies issued by the Division of Child Development and Early Education for the subsidized child care program.

SECTION 9D.2.(i)  Non‑citizen families who reside in this State legally shall be eligible for child care subsidies if all other conditions of eligibility are met. If all other conditions of eligibility are met, non‑citizen families who reside in this State illegally shall be eligible for child care subsidies only if at least one of the following conditions is met:

(1)        The child for whom a child care subsidy is sought is receiving child protective services or foster care services.

(2)        The child for whom a child care subsidy is sought is developmentally delayed or at risk of being developmentally delayed.

(3)        The child for whom a child care subsidy is sought is a citizen of the United States.

SECTION 9D.2.(j)  The Department of Health and Human Services, Division of Child Development and Early Education, shall require all county departments of social services to include on any forms used to determine eligibility for child care subsidy whether the family waiting for subsidy is receiving assistance through the NC PreK Program or Head Start.

SECTION 9D.2.(k)  Department of Defense‑certified child care facilities licensed pursuant to G.S. 110‑106.2 may participate in the State‑subsidized child care program that provides for the purchase of care in child care facilities for minor children in needy families, provided that funds allocated from the State‑subsidized child care program to Department of Defense‑certified child care facilities shall supplement and not supplant funds allocated in accordance with G.S. 143B‑168.15(g). Payment rates and fees for military families who choose Department of Defense‑certified child care facilities and who are eligible to receive subsidized child care shall be as set forth in this section.

CHILD CARE ALLOCATION FORMULA

SECTION 9D.3.(a)  The Department of Health and Human Services, Division of Child Development and Early Education (Division), shall allocate child care subsidy voucher funds to pay the costs of necessary child care for minor children of needy families. The mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation under G.S. 143B‑168.15(g) shall constitute the base amount for each county's child care subsidy allocation. The Department of Health and Human Services shall use the following method when allocating federal and State child care funds, not including the aggregate mandatory thirty percent (30%) North Carolina Partnership for Children, Inc., subsidy allocation:

(1)        Funds shall be allocated to a county based upon the projected cost of serving children under age 11 in families with all parents working who earn less than the applicable federal poverty level percentage set forth in Section 9D.3(a) of this act.

(2)        The Division may withhold up to two percent (2%) of available funds from the allocation formula for (i) preventing termination of services throughout the fiscal year and (ii) repayment of any federal funds identified by counties as overpayments, including overpayments due to fraud. The Division shall allocate to counties any funds withheld before the end of the fiscal year when the Division determines the funds are not needed for the purposes described in this subdivision. The Division shall submit a report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division, which report shall include each of the following:

a.         The amount of funds used for preventing termination of services and the repayment of any federal funds.

b.         The date the remaining funds were distributed to counties.

c.         As a result of funds withheld under this subdivision and after funds have been distributed, any counties that did not receive at least the amount the counties received the previous year and the amount by which funds were decreased.

The Division shall submit a report in each year of the 2025‑2027 fiscal biennium 30 days after the funds withheld pursuant to this subdivision are distributed but no later than April 1 of each respective year.

(3)        The Division shall set aside four percent (4%) of child care subsidy allocations for vulnerable populations, which include a child identified as having special needs and a child whose application for assistance indicates that the child and the child's family is experiencing homelessness or is in a temporary living situation. A child identified by this subdivision shall be given priority for receiving services until such time as set‑aside allocations for vulnerable populations are exhausted.

SECTION 9D.3.(b)  The Division may reallocate unused child care subsidy voucher funds in order to meet the child care needs of low‑income families. Any reallocation of funds shall be based upon the expenditures of all child care subsidy voucher funding, including North Carolina Partnership for Children, Inc., funds within a county. Counties shall manage service levels within the funds allocated to the counties. A county with a spending coefficient over one hundred percent (100%) shall submit a plan to the Division for managing the county's allocation before receiving any reallocated funds.

SECTION 9D.3.(c)  When implementing the formula under subsection (a) of this section, the Division shall include the market rate increase in the formula process rather than calculate the increases outside of the formula process. Additionally, the Department shall do the following:

(1)        Deem a county's initial allocation as the county's expenditure in the previous fiscal year or a prorated share of the county's previous fiscal year expenditures if sufficient funds are not available.

(2)        Effective immediately following the next new decennial census data release, implement (i) one‑third of the change in a county's allocation in the year following the data release, (ii) an additional one‑third of the change in a county's allocation beginning two years after the initial change under this subdivision, and (iii) the final one‑third change in a county's allocation beginning the following two years thereafter.

SMART START INITIATIVES

SECTION 9D.4.(a)  Policies. – The North Carolina Partnership for Children, Inc., and its Board shall ensure policies focus on the North Carolina Partnership for Children, Inc.'s mission of improving child care quality in North Carolina for children from birth to five years of age. North Carolina Partnership for Children, Inc., funded activities shall include assisting child care facilities with (i) improving quality, including helping one, two, and three‑star‑rated facilities increase their star ratings, and (ii) implementing prekindergarten programs. State funding for local partnerships shall also be used for evidence‑based or evidence‑informed programs for children from birth to five years of age that do the following:

(1)        Increase children's literacy.

(2)        Increase the parents' ability to raise healthy, successful children.

(3)        Improve children's health.

(4)        Assist four and five‑star‑rated facilities in improving and maintaining quality.

SECTION 9D.4.(b)  Administration. – Administrative costs shall be equivalent to, on an average statewide basis for all local partnerships, not more than ten percent (10%) of the total statewide allocation to all local partnerships. For purposes of this subsection, administrative costs shall include costs associated with partnership oversight, business and financial management, general accounting, human resources, budgeting, purchasing, contracting, and information systems management. The North Carolina Partnership for Children, Inc., shall continue using a single statewide contract management system that incorporates features of the required standard fiscal accountability plan described in G.S. 143B‑168.12(a)(4). All local partnerships are required to participate in the contract management system and, directed by the North Carolina Partnership for Children, Inc., to collaborate, to the fullest extent possible, with other local partnerships to increase efficiency and effectiveness.

SECTION 9D.4.(c)  Salaries. – The salary schedule developed and implemented by the North Carolina Partnership for Children, Inc., shall set the maximum amount of State funds that may be used for the salary of the Executive Director of the North Carolina Partnership for Children, Inc., and the directors of the local partnerships. The North Carolina Partnership for Children, Inc., shall base the schedule on the following criteria:

(1)        The population of the area serviced by a local partnership.

(2)        The amount of State funds administered.

(3)        The amount of total funds administered.

(4)        The professional experience of the individual to be compensated.

(5)        Any other relevant factors pertaining to salary, as determined by the North Carolina Partnership for Children, Inc.

The salary schedule shall be used only to determine the maximum amount of State funds that may be used for compensation. Nothing in this subsection shall be construed to prohibit a local partnership from using non‑State funds to supplement an individual's salary in excess of the amount set by the salary schedule established under this subsection.

SECTION 9D.4.(d)  Match Requirements. – The North Carolina Partnership for Children, Inc., and all local partnerships shall, in the aggregate, be required to match one hundred percent (100%) of the total amount budgeted for the program in each fiscal year of the 2025‑2027 biennium. Of the funds that the North Carolina Partnership for Children, Inc., and the local partnerships are required to match, contributions of cash shall be equal to at least thirteen percent (13%) and in‑kind donated resources shall be equal to no more than six percent (6%) for a total match requirement of nineteen percent (19%) for each year of the 2025‑2027 fiscal biennium. The North Carolina Partnership for Children, Inc., may carry forward any amount in excess of the required match for a fiscal year in order to meet the match requirement of the succeeding fiscal year. Only in‑kind contributions that are quantifiable shall be applied to the in‑kind match requirement. Volunteer services may be treated as an in‑kind contribution for the purpose of the match requirement of this subsection. Volunteer services that qualify as professional services shall be valued at the fair market value of those services. All other volunteer service hours shall be valued at the statewide average wage rate as calculated from data compiled by the Division of Employment Security of the Department of Commerce in the Employment and Wages in North Carolina Annual Report for the most recent period for which data are available. Expenses, including both those paid by cash and in‑kind contributions, incurred by other participating non‑State entities contracting with the North Carolina Partnership for Children, Inc., or the local partnerships also may be considered resources available to meet the required private match. In order to qualify to meet the required private match, the expenses shall:

(1)        Be verifiable from the contractor's records.

(2)        If in‑kind, other than volunteer services, be quantifiable in accordance with generally accepted accounting principles for nonprofit organizations.

(3)        Not include expenses funded by State funds.

(4)        Be supplemental to and not supplant preexisting resources for related program activities.

(5)        Be incurred as a direct result of the Early Childhood Initiatives Program and be necessary and reasonable for the proper and efficient accomplishment of the Program's objectives.

(6)        Be otherwise allowable under federal or State law.

(7)        Be required and described in the contractual agreements approved by the North Carolina Partnership for Children, Inc., or the local partnership.

(8)        Be reported to the North Carolina Partnership for Children, Inc., or the local partnership by the contractor in the same manner as reimbursable expenses.

Failure to obtain a nineteen percent (19%) match by June 30 of each year of the 2025‑2027 fiscal biennium shall result in a dollar‑for‑dollar reduction in the appropriation for the Program for a subsequent fiscal year. The North Carolina Partnership for Children, Inc., shall be responsible for compiling information on the private cash and in‑kind contributions into a report, to be included in its annual report as required under G.S. 143B‑168.12(d), in a format that allows verification by the Department of Revenue. The same match requirements shall apply to any expansion funds appropriated by the General Assembly.

SECTION 9D.4.(e)  Bidding. – The North Carolina Partnership for Children, Inc., and all local partnerships shall use competitive bidding practices in contracting for goods and services on contract amounts as follows:

(1)        For amounts of five thousand dollars ($5,000) or less, the procedures specified by a written policy as developed by the Board of Directors of the North Carolina Partnership for Children, Inc.

(2)        For amounts greater than five thousand dollars ($5,000) but less than fifteen thousand dollars ($15,000), three written quotes.

(3)        For amounts of fifteen thousand dollars ($15,000) or more but less than forty thousand dollars ($40,000), a request for proposal process.

(4)        For amounts of forty thousand dollars ($40,000) or more, a request for proposal process and advertising in a major newspaper.

SECTION 9D.4.(f)  Allocations. – The North Carolina Partnership for Children, Inc., shall not reduce the allocation for counties with less than 35,000 in population below the 2012‑2013 funding level.

SECTION 9D.4.(g)  Performance‑Based Evaluation. – The Department of Health and Human Services shall continue to implement the performance‑based evaluation system.

SECTION 9D.4.(h)  Expenditure Restrictions. – Except as provided in subsection (i) of this section, the Department of Health and Human Services and the North Carolina Partnership for Children, Inc., shall ensure that the allocation of funds for Early Childhood Education and Development Initiatives for the 2025‑2027 fiscal biennium shall be administered and distributed in the following manner:

(1)        Capital expenditures are prohibited for the 2025‑2027 fiscal biennium. For the purposes of this section, capital expenditures means expenditures for capital improvements as defined in G.S. 143C‑1‑1(d)(5).

(2)        Expenditures of State funds for advertising and promotional activities are prohibited for the 2025‑2027 fiscal biennium.

For the 2025‑2027 fiscal biennium, local partnerships shall not spend any State funds on marketing campaigns, advertising, or any associated materials. Local partnerships may spend any private funds the local partnerships receive on those activities.

SECTION 9D.4.(i)  Notwithstanding subsection (h) of this section, the North Carolina Partnership for Children, Inc., and local partnerships may use up to one percent (1%) of State funds for fundraising activities. The North Carolina Partnership for Children, Inc., shall include in its annual report required under G.S. 143B‑168.12(d) a report on the use of State funds for fundraising. The report shall include the following:

(1)        The amount of funds expended on fundraising.

(2)        Any return on fundraising investments.

(3)        Any other information deemed relevant.

PART IX‑E. HEALTH BENEFITS

CONTINUE MEDICAID ANNUAL REPORT

SECTION 9E.1.  The Department of Health and Human Services, Division of Health Benefits (DHB), shall continue the publication of the Medicaid Annual Report and accompanying tables. DHB shall publish the report and tables on its website no later than December 31 following each State fiscal year.

VOLUME PURCHASE PLANS AND SINGLE SOURCE PROCUREMENT

SECTION 9E.2.  The Department of Health and Human Services, Division of Health Benefits, may, subject to the approval of a change in the State Medicaid Plan, contract for services, medical equipment, supplies, and appliances by implementation of volume purchase plans, single source procurement, or other contracting processes in order to improve cost containment.

ADMINISTRATIVE HEARINGS FUNDING

SECTION 9E.3.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Health Benefits, for administrative contracts and interagency transfers, the Department of Health and Human Services (DHHS) shall transfer the sum of one million dollars ($1,000,000) for the 2025‑2026 fiscal year and the sum of one million dollars ($1,000,000) for the 2026‑2027 fiscal year to the Office of Administrative Hearings (OAH). These funds shall be allocated by OAH for mediation services provided for Medicaid applicant and recipient appeals and to contract for other services necessary to conduct the appeals process. OAH shall continue the Memorandum of Agreement (MOA) with DHHS for mediation services provided for Medicaid recipient appeals and contracted services necessary to conduct the appeals process. Upon receipt of invoices from OAH for covered services rendered in accordance with the MOA, DHHS shall transfer the federal share of Medicaid funds drawn down for this purpose.

ACCOUNTING FOR MEDICAID RECEIVABLES AS NONTAX REVENUE

SECTION 9E.4.(a)  The Department of Health and Human Services, Division of Health Benefits (DHB), receivables reserved at the end of the 2025‑2026 and 2026‑2027 fiscal years shall, when received, be accounted for as nontax revenue for each of those fiscal years. The treatment under this section of any revenue derived from federal programs shall be in accordance with the requirements specified in the Code of Federal Regulations, Title 2, Part 225.

SECTION 9E.4.(b)  For the 2025‑2026 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred seven million seven hundred thousand dollars ($107,700,000) with the Department of State Treasurer to be accounted for as nontax revenue. For the 2026‑2027 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred nine million dollars ($109,000,000) with the Department of State Treasurer to be accounted for as nontax revenue. These deposits shall represent the return of advanced General Fund appropriations, nonfederal revenue, fund balances, or other resources from State‑owned and State operated hospitals that are used to provide indigent and nonindigent care services. The return from State‑owned and State operated hospitals to the Department of Health and Human Services shall be made from nonfederal resources in the following manner:

(1)        The University of North Carolina Hospitals at Chapel Hill shall make the following deposits:

a.         For the 2025‑2026 fiscal year, the amount of thirty‑one million three hundred sixty‑five thousand three hundred five dollars ($31,365,305).

b.         For the 2026‑2027 fiscal year, the amount of thirty‑one million three hundred sixty‑five thousand three hundred five dollars ($31,365,305).

(2)        All State‑owned and State operated hospitals, other than the University of North Carolina Hospitals at Chapel Hill, that specialize in psychiatric care shall annually deposit an amount equal to the amount of the payments from DHB for uncompensated care.

LME/MCO INTERGOVERNMENTAL TRANSFERS

SECTION 9E.5.(a)  The local management entities/managed care organizations (LME/MCOs) shall make intergovernmental transfers to the Department of Health and Human Services, Division of Health Benefits (DHB), in an aggregate amount of eighteen million twenty‑eight thousand two hundred seventeen dollars ($18,028,217) in the 2025‑2026 fiscal year and in an aggregate amount of eighteen million twenty‑eight thousand two hundred seventeen dollars ($18,028,217) for the 2026‑2027 fiscal year. The due date and frequency of the intergovernmental transfer required by this section shall be determined by DHB. The amount of the intergovernmental transfer that each individual LME/MCO is required to make in each fiscal year shall be as follows:

      2024‑2025                   2026‑2027

Alliance Behavioral Healthcare                            $4,508,857                  $4,508,857

Partners Health Management                                $3,544,348                  $3,544,348

Trillium Health Resources                                    $6,448,693                  $6,448,693

Vaya Health                                                          $3,526,319                  $3,526,319

SECTION 9E.5.(b)  In the event that a county disengages from an LME/MCO and realigns with another LME/MCO during the 2025‑2027 fiscal biennium, DHB shall have the authority to reallocate the amount of the intergovernmental transfer that each affected LME/MCO is required to make under subsection (a) of this section, taking into consideration the change in catchment area and covered population, provided that the aggregate amount of the transfers received from all LME/MCOs in each year of the fiscal biennium is achieved.

CHILDREN AND FAMILIES SPECIALTY PLAN

SECTION 9E.6.(a)  Section 9E.22(a) of S.L. 2023‑134 reads as rewritten:

SECTION 9E.22.(a)  The Department of Health and Human Services (DHHS) shall issue an initial request for proposals (RFP) to procure a single statewide children and families (CAF) specialty plan contract with services to begin no later than December 1, 2024 December 1, 2025. The RFP shall be subject to the requirements in G.S. 108D‑62, as enacted by subsection (k) of this section. DHHS shall define the services available under the CAF specialty plan and the Medicaid beneficiaries who are eligible to enroll in the CAF specialty plan, except as otherwise specified in this act or in law. For the purposes of this section, the CAF specialty plan shall be as defined under G.S. 108D‑1, as amended by subsection (c) of this section.

CONTINUE MEDICAID COVERAGE FOR PREGNANT WOMEN FOR TWELVE MONTHS POSTPARTUM

SECTION 9E.7.(a)  Section 9D.13(c) of S.L. 2021‑180 is repealed.

SECTION 9E.7.(b)  G.S. 108A‑146.5 reads as rewritten:

§ 108A‑146.5.  Aggregate modernized assessment collection amount.

(a)        The aggregate modernized assessment collection amount is an amount of money that is calculated by subtracting the modernized intergovernmental transfer adjustment component under G.S. 108A‑146.13 from the total modernized nonfederal receipts under subsection (b) of this section and then adding the positive or negative amount of the modernized IGT actual receipts adjustment component under G.S. 108A‑146.14.

(b)        The total modernized nonfederal receipts is the sum of all of the following:

(1)        One‑fourth of the State's annual Medicaid payment.

(2)        The managed care component under G.S. 108A‑146.7.

(3)        The fee‑for‑service component under G.S. 108A‑146.9.

(3a)      The modernized HASP component under G.S. 108A‑146.10.

(4)        The GME component under G.S. 108A‑146.11.

(5)        Beginning April 1, 2022, and ending March 31, 2027, the postpartum coverage component under G.S. 108A‑146.12.

(6)        Beginning April 1, 2024, the home and community‑based services component under G.S. 108A‑146.12A. (2021‑61, s. 2; 2021‑180, s. 9D.13A(b); 2023‑7, s. 1.7(c).)

GROSS PREMIUM TAX OFFSET CHANGES

SECTION 9E.8.(a)  Article 8B of Chapter 105 of the General Statutes is amended by adding a new section to read:

§ 105‑228.11.  Transfer to Health Advancement Receipts Special Fund.

Each fiscal year, the Secretary of Revenue shall transfer at the beginning of each quarter from the State insurance tax net collections received by the Department of Revenue under Article 8B of Chapter 105 of the General Statutes to the State Treasurer for the Health Advancement Receipts Special Fund, the gross premiums tax offset amount, as defined in G.S. 108A‑147.12. The Office of State Budget and Management shall calculate the amount of the gross premiums tax offset as defined in G.S. 108A‑147.12 and certify the amount for the Secretary of Revenue that is required to be transferred using data in the North Carolina Financial System.

SECTION 9E.8.(b)  G.S. 108A‑147.11 reads as rewritten:

§ 108A‑147.11.  Health advancement reconciliation adjustment component.

(a)        The health advancement reconciliation adjustment component is a positive or negative dollar amount equal to the actual nonfederal expenditures for the quarter that is two quarters prior to the current quarter minus the sum of the following specified amounts:

(1)        The presumptive service cost component calculated under G.S. 108A‑147.5 for the quarter that is two quarters prior to the current quarter.

(2)        The positive or negative gross premiums tax offset amount calculated under G.S. 105-228.11108A-147.12(b) amount transferred during the current quarter by the Department of Revenue to the State Treasurer for the Health Advancement Receipts Special Fund under G.S. 105‑228.11.

(3)        The HASP health advancement component calculated under G.S. 108A‑147.6 for the quarter that is two quarters prior to the current quarter.

(b)        The IGT share of the reconciliation adjustment component is a positive or negative dollar amount that is calculated by multiplying the health advancement reconciliation adjustment component calculated under subsection (a) of this section by the share of public hospital costs calculated under subsection (c) of this section.

(c)        The share of public hospital costs is calculated by adding total hospital costs for the UNC Health Care System, total hospital costs for the primary affiliated teaching hospital for the East Carolina University Brody School of Medicine, and sixty percent (60%) of the total hospital costs for all public acute care hospitals and dividing that sum by the total hospital costs for all acute care hospitals except for critical access hospitals and rural emergency hospitals.

SECTION 9E.8.(c)  G.S. 143C‑9‑10 reads as rewritten:

§ 143C‑9‑10.  Health Advancement Receipts Special Fund.

(a)        Creation. – The Health Advancement Receipts Special Fund is established as a nonreverting special fund in the Department of Health and Human Services.

(b)        Source of Funds. – Each State fiscal quarter, the Department of Health and Human Services shall deposit in the Health Advancement Receipts Special Fund an amount of funds equal to the total nonfederal receipts for health advancement calculated under G.S. 108A‑147.3(b) for that quarter, minus the State retention component under G.S. 108A‑147.8 for that quarter, and plus the positive or negative gross premiums tax offset amount transferred by the Department of Revenue to the State Treasurer for the Health Advancement Receipts Special Fund under G.S. 105-228.11 transferred by the Department of Revenue to the State Treasurer for the Health Advancement Receipts Special Fund under G.S. 105‑228.11 calculated under G.S. 108A-147.12(b) for that quarter.

(c)        Use of Funds. – The Department of Health and Human Services shall use funds in the Health Advancement Receipts Special Fund only for the purposes described in G.S. 108A‑147.13.

AMERICAN RESCUE PLAN ACT TEMPORARY SAVINGS FUND BALANCE

SECTION 9E.9.(a)  The unappropriated balance in the ARPA Temporary Savings Fund after all appropriated transfers have been made shall be transferred to the Division of Health Benefits Budget Code 14445 to offset funds appropriated for the 2025‑2026 fiscal year.

CREATE DESIGNATED STATE HEALTH PROGRAM SAVINGS BUDGET FUND

SECTION 9E.10.(a)  Fund created. – The Designated State Health Programs budget fund is created as a nonreverting budget fund within the Department of Health and Human Services (DHHS), Division of Health Benefits (DHB) 24445 budget code. The Division of Central Management Services, Division of Child and Family Well‑Being, Division of Mental Health, Developmental Disabilities, and Substance Use Services, and Division of Public Health shall transfer and deposit all freed‑up state funds that result from additional receipts realized through Designated State Health Programs authority in the North Carolina Medicaid Reform Section 1115 Demonstration approved by the Centers for Medicare and Medicaid Services in December 2024 to this budget fund.

SECTION 9E.10.(b)  Funds shall only be re‑invested in new Healthy Opportunities capacity building efforts and services, or Justice Involved Re‑Entry Initiative capacity building and services authorized in the 1115 Demonstration approved in December 2024.

SECTION 9E.10.(c)  It is the intent of the Governor to fully fund statewide expansion of the Healthy Opportunities program when it is financially feasible to do so given recurring costs. The sum of forty‑six million, seventy‑four thousand, three hundred and forty‑nine dollars ($46,074,349) in nonrecurring funds for the 2025‑2026 fiscal year and the sum of eleven million, eight hundred and twelve thousand, five hundred and nineteen dollars ($11,812,519) in nonrecurring funds for the 2026‑2027 fiscal year from the special fund created in Section 9E.10.(a) may be transferred to DHB for the sole purpose of providing the State share for capacity building or service provision of the expanded Healthy Opportunities program in the western region of the state.

SECTION 9E.10.(d)  DHB shall work collaboratively with the Office of State Budget and Management on the implementation of new Healthy Opportunities capacity building efforts and services to ensure the program stays within budget.  DHB shall provide OSBM with a monthly report of expenditures for Healthy Opportunities for both existing and expanding programs. The report shall also detail the savings created by the Healthy Opportunities program and provide a five‑year forecast of recurring and nonrecurring needs for the program.

SECTION 9E.10.(e)  This section expires December 31, 2031.

PART IX‑F. HEALTH SERVICES REGULATION

INCREASE X‑RAY FEE CAP

SECTION 9.F.1.  G.S. 104E‑19 reads as rewritten:

§ 104E‑19.  Fees.

(a)        An annual fee in the amount set by the Department is imposed on a person who is required to be registered or licensed under this Chapter. The Department must set the fees at amounts that provide revenue to offset its costs in performing its duties under this Chapter.

(b)        Repealed by Session Laws 1987, c. 850, s. 13.

(c)        The annual fees under subsection (a) of this section shall not exceed the maximum amounts as follows:

(1)        For tanning facilities: two hundred dollars ($200.00) for the first piece of tanning equipment and thirty dollars ($30.00) for each additional piece of tanning equipment.

(2)        For the following categories of facilities registered to use X‑ray tubes or X‑ray equipment: clinics, chiropractors, dentists, educational, government, podiatrists, industrial, physicians, veterinarians, and other; two hundred dollars ($200.00) four hundred dollars ($400.00) for the first X‑ray tube or piece of X‑ray equipment and thirty dollars ($30.00) sixty dollars ($60.00) for each additional X‑ray tube or piece of X‑ray equipment.

(3)        For the following categories of facilities registered to use X‑ray tubes or X‑ray equipment: industrial medical, health departments, and service; three hundred dollars ($300.00)six hundred dollars (600.00) for the first X‑ray tube or piece of X‑ray equipment and forty dollars ($40.00)eighty dollars (80.00)  for each additional X‑ray tube or piece of X‑ray equipment.

(4)        For the following categories of facilities registered to use X‑ray tubes or X‑ray equipment: hospitals and industrial radiography; four hundred dollars ($400.00)eight hundred dollars ($800.00)  for the first X‑ray tube or piece of X‑ray equipment and fifty dollars ($50.00)one hundred dollars ($100.00) for each additional X‑ray tube or piece of X‑ray equipment.

PART IX‑G. MENTAL HEALTH/DEVELOPMENTAL DISABILITIES/SUBSTANCE USE SERVICES

SINGLE STREAM FUNDING FOR DMH/DD/SUS COMMUNITY SERVICES

SECTION 9G.1.(a)  For the purpose of mitigating cash flow problems that many local management entities/managed care organizations (LME/MCOs) experience at the beginning of each fiscal year relative to single stream funding, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Use Services (DMH/DD/SUS), shall distribute not less than one‑twelfth of each LME/MCO's base budget allocation at the beginning of the fiscal year and subtract the amount of that distribution from the LME/MCO's total reimbursements for the fiscal year. For each month of the fiscal year after July, DMH/DD/SUS shall distribute, on the third working day of the month, one eleventh of the amount of each LME/MCO's single stream allocation that remains after subtracting the amount of the distribution that was made to the LME/MCO in July of the fiscal year.

SECTION 9G.1.(b)  If, on or after June 1, 2025, the Office of State Budget Management (OSBM) certifies a Medicaid budget surplus and sufficient cash in Budget Code 14445 to meet total obligations for the 2024‑2025 fiscal year, then DHB shall transfer to DMH/DD/SUS funds not to exceed the amount of the certified surplus or thirty million dollars ($30,000,000), whichever is less, to be used for single stream funding.

SECTION 9G.1.(c)  If, on or after June 1, 2026, the Office of State Budget Management (OSBM) certifies a Medicaid budget surplus and sufficient case in Budget Code 14445 to meet total obligations for the 2025‑2026 fiscal year, then DHB shall transfer to DMH/DD/SUS funds not to exceed the amount of the certified surplus or thirty million dollars ($30,000,000), whichever is less, to be used for single stream funding.

SECTION 9G.1.(d)  If, on or after June 1, 2027, the Office of State Budget Management (OSBM) certifies a Medicaid budget surplus and sufficient case in Budget Code 14445 to meet total obligations for the 2026‑2027 fiscal year, then DHB shall transfer to DMH/DD/SUS funds not to exceed the amount of the certified surplus or thirty million dollars ($30,000,000), whichever is less, to be used for single stream funding.

LOCAL INPATIENT PSYCHIATRIC BEDS OR BED DAYS

SECTION 9G.2.(a)  Use of Funds. – Funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Use Services, shall continue to be used for the purchase of local inpatient psychiatric beds or bed days. The Department of Health and Human Services (DHHS) shall continue to implement a two‑tiered system of payment for purchasing these local inpatient psychiatric beds or bed days based on acuity level with an enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels, as defined by DHHS. The enhanced rate of payment for inpatient psychiatric beds or bed days for individuals with higher acuity levels shall not exceed the lowest average cost per patient bed day among the State psychiatric hospitals. In addition, at the discretion of the Secretary of Health and Human Services, existing funds allocated to LME/MCOs for community‑based mental health, developmental disabilities, and substance use disorder services may be used to purchase additional local inpatient psychiatric beds or bed days. DHHS may allocate funding to the LME/MCOs for the purchase of facility‑based crisis, nonhospital detoxification services and peer respite services to support individuals that do not meet the medical necessity for inpatient treatment and can be diverted from an inpatient hospital stay.

SECTION 9G.2.(b)  Distribution and Management of Beds or Bed Days. DHHS shall work to ensure that any local inpatient psychiatric beds or bed days purchased in accordance with this section are utilized solely for individuals who are medically indigent, except that DHHS may use up to forty percent (40%) of the funds appropriated in this act to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Use Services, for the purchase of local inpatient psychiatric beds, bed days to pay for facility‑based crisis services, non‑hospital detoxification services, and peer respite services for individuals in need of these services, regardless of whether the individuals are medically indigent. For the purposes of this subsection, medically indigent shall mean uninsured persons who (i) are financially unable to obtain private insurance coverage, as determined by DHHS and (ii) are not eligible for government‑funded health coverage such as Medicare or Medicaid.

In addition, DHHS shall work to ensure that any local inpatient psychiatric beds or bed days purchased in accordance with this section are distributed across the State and according to need, as determined by DHHS. DHHS shall ensure that beds or bed days for individuals with higher acuity levels are distributed across the State and according to greatest need based on hospital bed utilization data. DHHS shall enter into contracts with LME/MCOs and local hospitals for the purchase and management of the local inpatient psychiatric beds or days and allocate up to forty percent (40%) of the total funding to the LME/MCO's for the purpose of facility‑based crisis services, nonhospital detoxification services, and peer respite services. DHHS shall work to ensure that these contracts are awarded equitably around all regions of the State. LME/MCOs shall manage and control these local inpatient psychiatric beds or bed days, including the determination of the specific local hospital or State psychiatric hospital to which an individual should be admitted pursuant to an involuntary commitment order.

SECTION 9G.2.(c)  Funds to be Held in Statewide Reserve. Funds appropriated in this act to DHHS for the purchase of local inpatient psychiatric beds or bed days shall not be allocated to LME/MCOs but shall be held in a statewide reserve at the Division of Mental Health, Developmental Disabilities, and Substance Use Services to pay for services authorized by the LME/MCOs and billed by the hospitals through the LME/MCOs. LME/MCOs shall remit claims for payment to DHHS within 15 working days after receipt of a clean claim from the hospital and shall pay the hospital within 30 working days after receipt of payment from DHHS.

SECTION 9G.2.(d)  Ineffective LME/MCO Management of Beds or Bed Days. – If DHHS determines that (i) an LME/MCO is not effectively managing the beds or bed days for which it has responsibility, as evidenced by beds or bed days in the local hospital not being utilized while demand for services at the State psychiatric hospitals has not decreased, or (ii) the LME/MCO has failed to comply with the prompt payment provisions of this section, DHHS may contract with another LME/MCO to manage the beds or bed days or, notwithstanding any other provision of law to the contrary, may pay the hospital directly.

SECTION 9G.2.(e)  Reporting by LME/MCOs. LME/MCOs shall be required to report to DHHS regarding the utilization of these beds or bed days.

SECTION 9G.2.(f)  Reporting by DHHS.  By no later than December 1, 2025, and by no later than December 1, 2026, DHHS shall report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on all of the following:

(1)        A uniform system for beds or bed days purchased during the preceding fiscal year from (i) existing State appropriations and (ii) local funds.

(2)        An explanation of the process used by DHHS to ensure that, except as otherwise provided in subsection (a) of this section, local inpatient psychiatric beds or bed days purchased in accordance with this section are utilized solely for individuals who are medically indigent, along with the number of medically indigent individuals served by the purchase of these beds or bed days.

(3)        The amount of funds used to pay for facility‑based crisis services, along with the number of individuals who received these services and the outcomes for each individual.

(4)        The amount of funds used to pay for nonhospital detoxification services, along with the number of individuals who received these services and the outcomes for each individual.

(5)        Other DHHS initiatives funded by State appropriations to reduce State psychiatric hospital use.

USE OF OPIOID SETTLEMENT FUNDS

SECTION 9G.3.(a)  The State Controller shall transfer the sum of fifty‑seven million  seventy‑six thousand seven hundred seventy‑three dollars ($60,858,049) for the 2025‑2026 fiscal year and the sum of fourteen million dollars ($13,511,210) for the 2026‑2027 fiscal year from funds available in the Opioid Abatement Reserve in the General Fund to the Opioid Abatement Fund established under Section 9F.1 of S.L. 2021‑180. These funds are appropriated to the Department of Health and Human Services to be used as set forth in subsection (b) of this section. In addition to these uses, the Department of Health and Human Services may use up to one million fifty thousand dollars ($1,050,000) of funds allocated by this subdivision for each year of the fiscal biennium for administrative purposes to facilitate timely deployment and accounting of funds, for provision of training and technical assistance to community providers and to conduct required monitoring and oversight.

SECTION 9G.3.(b)  During the 2025‑2027 fiscal biennium, the funds appropriated to the Department of Health and Human Service by subsection (a) of this section shall be used to respond to the negative impacts of the opioid epidemic within the State of North Carolina, as follows:

(1)        To expand employment and transportation supports through innovative pilot programs in industries in North Carolina that suffered the greatest job losses as a result of Hurricane Helene and are most relied upon by individuals recovering from opioid use disorders to reenter the workforce, such as the food service industry, the hotel and lodging industry, and the entertainment industry. These funds may be used to support all of the following:

a.         Employment support services for individuals in recovery from opioid use disorder, such as job application support and placement with partnering employers, with emphasis on supporting innovative pilot programs to develop a more robust workforce in rural areas of the State.

b.         Training and development funding to encourage a consortium of public and private employers, workforce development boards, and vocational services providers to develop workplace recovery friendly ecosystems.

c.         Transportation support services to enable individuals recovering from opioid use disorder to travel to their places of treatment and their places of employment.

(2)        To support individuals with opioid use disorder who are involved in the criminal justice system through programs and initiatives designed to accomplish any one or more of the following:

a.         Establishment or expansion of existing prearrest and post‑arrest diversion programs. This includes prearrest diversion, post‑arrest diversion, and court‑based diversion through treatment or recovery courts.

b.         Establishment, expansion, or sustainment of medication‑assisted treatment programs that provide to individuals who are incarcerated any medication approved by the United States Food and Drug Administration for opioid use disorder. Programs authorized under this sub‑subdivision that are funded in whole or in part by the Opioid Abatement Fund shall be made available to individuals who were already participating in a medication‑assisted treatment program prior to being incarcerated, as well as to individuals who initiate medication‑assisted treatment during their incarceration to address an opioid use disorder.

c.         Creation or expansion of reentry programs to connect individuals exiting incarceration with harm reduction, treatment, and recovery supports.

(3)        To expand evidence‑based treatment supports and to improve connections to care, especially for individuals hospitalized for overdose who are uninsured or underinsured, through the following activities or initiatives:

a.         Evidence‑based addiction treatment, including medication‑assisted treatment provided by inpatient or outpatient opioid treatment programs.

b.         Expanded access to cost‑effective, low‑cost, or no‑cost medication‑assisted treatment in community‑based settings.

c.         Expanded care management services, including the use of peer support specialists and care navigators in local health departments, detention facilities, local departments of social services, and community‑based settings. Any funding provided pursuant to this sub‑subdivision shall be used to provide care management services involving outreach to, engagement with, and coordination for individuals to assist them with accessing opioid use disorder treatment.

d.         Improve access to medications for opioid use disorder and other clinical and recovery services through deployment of mobile opioid treatment program units.

(4)        To develop evidence‑based supportive housing services, such as Housing First, that are inclusive of individuals with substance use disorders. Qualifying services that may be funded under this subdivision include the following:

a.         Providing a move‑in deposit, rental or utility assistance, or all of these for individuals with substance use disorders who are in recovery or transitioning from residential treatment or incarceration.

b.         Providing community training sessions on tenancy rights and responsibilities.

c.         Establishing relationships with landlords to encourage the elimination of preconditions for housing and to reduce potential incidences of evictions due to substance misuse.

d.         Providing other housing‑related supports such as tents, sleeping bags, or other supplies for outdoor living.

e.         Funding or otherwise supporting recovery supported housing that accepts individuals who are utilizing any medication approved by the United States Food and Drug Administration for the treatment of opioid use disorder.

(5)        To expand community based, peer, and collegiate recovery programs providing recovery support services to individuals who have achieved or are aiming to achieve recovery from opioid or other substance use disorders.

(6)        To reduce opioid overdose deaths and improve overall health through the following:

            a.   Increase overdose education and provide equitable access to opioid overdose reversal medications.

            b.   Support evidence‑based strategies to reduce overdose deaths through expansion of syringe services programs.

(7)        To expand workforce development activities aimed at increasing the number of practitioners available to treat opioid and other substance use disorders. These activities include, but are not limited to:

a.         Addiction medicine fellowships;

b.         Scholarships for students studying addiction and committed to practicing the treatment of opioid use disorder upon completion of study; and

c.         Support for universities, colleges, and healthcare practitioner training programs to embed addiction training into the general curriculum in fields of primary care, nursing, healthcare administration, social work, counseling, psychology, medicine, and other affiliated healthcare disciplines.

(8)        To provide technical assistance to community organizations who have received grant funding from the Opioid Abatement Fund to develop and implement community programs and to the LME/MCOs that maximize funding and achieve the best outcomes in their communities. Technical assistance will include support in utilizing evidence‑based practices, budgeting, data collection and overall capacity building to ensure ongoing viability of needed community programs. 

(9)        To collect data and evaluate programs to inform program planning and quality improvement, and create data dashboards.

STATUTORILY APPROPRIATE OPIOID SETTLEMENT FUNDS TO THE DIVISION OF MENTAL HEALTH, DEVELOPMENTAL DISABILITIES AND SUBSTANCE USE

SECTION 9G.4.(a)  Section 9F.1(a) of S.L. 2021‑180 is rewritten:

The Opioid Abatement Reserve (Reserve) is established in the General Fund to maintain funds Starting in the 2026‑27 fiscal year, funds received by the State as a beneficiary of the final consent judgment resolving the case, State of North Carolina, ex rel. Joshua H. Stein, Plaintiff v. McKinsey and Company, Inc., in the General Court of Justice, Superior Court Division, Wake County and County, (ii) any other funds received by the State as a result of a settlement, as defined in G.S. 114‑2.4A, relating to claims regarding the manufacturing, marketing, distribution, dispensing, or sale of opioids, and (iii) funds received by the State as a beneficiary of a confirmation order by a bankruptcy court relating to claims regarding the manufacturing, marketing, distribution, dispensing, or sale of opioids. shall be appropriated directly to the Opioid Abatement Fund, established in Section 9F.1.(a) of S.L. 2021‑180.

Part IX‑H. public health

LOCAL HEALTH DEPARTMENTS/COMPETITIVE GRANT PROCESS TO IMPROVE MATERNAL AND CHILD HEALTH

SECTION 9H.1.  Section 9H.1(b) of S.L. 2023‑134 reads as rewritten:

SECTION 9H.1.(b)  The plan for administering the competitive grant process shall include at least all of the following components:

(1)        A request for application (RFA) process to allow local health departments to apply for and receive State funds on a competitive basis. The Department shall require local health departments to include in the application a plan to evaluate the effectiveness, including measurable impact or outcomes, of the activities, services, and programs for which the funds are being requested.

(2)        A requirement that the Secretary prioritize grant awards to those local health departments that are able to leverage non‑State funds in addition to the grant award.

(3)        Ensures that funds received by the Department to implement the plan supplement and do not supplant existing funds for maternal and child health initiatives.

(4)        Allows grants to be awarded to local health departments for up to twothree years.

USE OF JUUL SETTLEMENT FUNDS

SECTION 9H.2.(a)   There is appropriated from the Youth Electronic Nicotine Dependence Abatement Fund created in Section 9G.10(a) of S.L. 2021‑180 to the Department of Health and Human Services, Division of Public Health (DPH), three million two hundred fifty thousand dollars ($3,250,000) in nonrecurring funds for the 2025‑2026 fiscal year and the sum of two million seven hundred fifty thousand dollars ($2,750,000) in nonrecurring funds for the 2026‑2027 fiscal year to be allocated and used as follows:

(1)        Up to seven hundred fifty thousand dollars ($750,000) in nonrecurring funds for each year of the 2025‑2027 fiscal biennium shall be used to support data monitoring to track tobacco/nicotine use and exposure among youth and young adults and populations at risk; for independent evaluation of the reach, effectiveness, and outcomes of the State's evidence based programs designed to help youth addicted to nicotine through electronic cigarettes and other new and emerging tobacco and nicotine products quit; and to prepare the report required by subsection (c) of this section.

(2)        The remainder of these allocated funds for each year of the 2025‑2027 fiscal biennium shall be used to fund evidence‑based electronic cigarette and nicotine dependence prevention and cessation activities targeting children, youth, and young adults.

SECTION 9H.3.(b)   Funds allocated under subsection (a) of this section shall remain available for expenditure in the amounts and for the purposes specified in subsection (a) of this section until expended.

SECTION 9H.4.(c)   Annually, beginning November 1, 2025, the Department of Health and Human Services shall report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division on the expenditures made from the Youth Electronic Nicotine Dependence Abatement Fund during the preceding fiscal year. The report shall include at least all of the following:

(1)        An itemized list of expenditures and for each expenditure, an indication of the authority under this section for the expenditure.

(2)        An evaluation of the reach, effectiveness, and outcomes of each activity funded pursuant to subdivision (a)(2) of this section.

(3)        An evaluation of the reach, effectiveness, and outcomes of each activity funded by Section 9G.10 of S.L. 2021‑180, as amended by Section 9G.3 of S.L. 2022‑74.

LOCAL MEDICAL EXAMINER FEES

SECTION 9H.3.   G.S. 130A‑387 reads as rewritten:

§ 130A‑387.  Fees.

For each investigation and prompt filing of the required report, the medical examiner shall receive a fee paid by the State. However, if the deceased is a resident of the county in which the death or fatal injury occurred, that county shall pay the fee. The fee shall be two hundred dollars ($200.00) four hundred dollars ($400.00).

PART IX‑I. SERVICES FOR THE BLIND/DEAF/HARD OF HEARING [RESERVED]

PART IX‑J. SOCIAL SERVICES

TANF BENEFIT IMPLEMENTATION

SECTION 9J.1.(a)  Beginning October 1, 2025, the General Assembly approves the plan titled North Carolina Temporary Assistance for Needy Families State Plan FFY 2026‑2028, prepared by the Department of Health and Human Services and presented to the General Assembly. The North Carolina Temporary Assistance for Needy Families State Plan covers the period of October 1, 2025, through September 30, 2028. The Department shall submit the State Plan, as revised in accordance with subsection (b) of this section, to the United States Department of Health and Human Services.

SECTION 9J.1.(b)  The counties approved as Electing Counties in the North Carolina Temporary Assistance for Needy Families State Plan FFY 2026‑2028, as approved by this section, are Beaufort, Caldwell, Catawba, Lenoir, Lincoln, Macon, and Wilson.

SECTION 9J.1.(c)  Counties that submitted the letter of intent to remain as an Electing County or to be redesignated as an Electing County and the accompanying county plan for years 2026 through 2028, pursuant to G.S. 108A‑27(e), shall operate under the Electing County budget requirements effective July 1, 2025. For programmatic purposes, all counties referred to in this subsection shall remain under their current county designation through September 30, 2028.

SECTION 9J.1.(d)  For each year of the 2025‑2027 fiscal biennium, Electing Counties shall be held harmless to their Work First Family Assistance allocations for the 2024‑2025 fiscal year, provided that remaining funds allocated for Work First Family Assistance and Work First Diversion Assistance are sufficient for payments made by the Department on behalf of Standard Counties pursuant to G.S. 108A27.11(b).

SECTION 9J.1.(e)  In the event that departmental projections of Work First Family Assistance and Work First Diversion Assistance for the 2025‑2026 fiscal year or the 2026‑2027 fiscal year indicate that remaining funds are insufficient for Work First Family Assistance and Work First Diversion Assistance payments to be made on behalf of Standard Counties, the Department is authorized to deallocate funds, of those allocated to Electing Counties for Work First Family Assistance in excess of the sums set forth in G.S. 108A‑27.11, up to the requisite amount for payments in Standard Counties. Prior to deallocation, the Department shall obtain approval by the Office of State Budget and Management. If the Department adjusts the allocation set forth in subsection (d) of this section, then a report shall be made to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division.

INTENSIVE FAMILY PRESERVATION SERVICES FUNDING, PERFORMANCE ENHANCEMENTS, AND REPORT

SECTION 9J.2.(a)  Notwithstanding the provisions of G.S. 143B‑150.6, the Intensive Family Preservation Services (IFPS) Program shall provide intensive services to children and families in cases of abuse, neglect, and dependency where a child is at imminent risk of removal from the home and to children and families in cases of abuse where a child is not at imminent risk of removal. The Program shall be implemented statewide on a regional basis. The IFPS shall ensure the application of standardized assessment criteria for determining imminent risk and clear criteria for determining out‑of‑home placement.

SECTION 9J.2.(b)The Department of Health and Human Services shall require that any program or entity that receives State, federal, or other funding for the purpose of IFPS shall provide information and data that allows for the following:

(1)        An established follow‑up system with a minimum of six months of follow‑up services.

(2)        Detailed information on the specific interventions applied, including utilization indicators and performance measurement.

(3)        Cost‑benefit data.

(4)        Data on long‑term benefits associated with IFPS. This data shall be obtained by tracking families through the intervention process.

(5)        The number of families remaining intact and the associated interventions while in IFPS and 12 months thereafter.

(6)        The number and percentage, by race, of children who received IFPS compared to the ratio of their distribution in the general population involved with Child Protective Services.

SECTION 9J.2.(c)  The Department shall continue implementing a performance‑based funding protocol and shall only provide funding to those programs and entities providing the required information specified in subsection (b) of this section. The amount of funding shall be based on the individual performance of each program.

SECTION 9J.2.(d)  The Department shall submit an annual report to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division by December 1 of each year that provides the information and data collected pursuant to subsection (b) of this section.

CHILD CARING INSTITUTIONS

SECTION 9J.3.  Until the Social Services Commission adopts rules setting standardized rates for child caring institutions as authorized under G.S. 143B‑153(8), the maximum reimbursement for child caring institutions shall not exceed the rate established for the specific child caring institution by the Department of Health and Human Services, Office of the Controller. In determining the maximum reimbursement, the State shall include county and IV‑E reimbursements.

USE FOSTER CARE BUDGET FOR GUARDIANSHIP ASSISTANCE PROGRAM

SECTION 9J.4.  Of the funds available for the provision of foster care services, the Department of Health and Human Services, Division of Social Services, may continue to provide for the financial support of children who are deemed to be (i) in a permanent family placement setting, (ii) eligible for legal guardianship, and (iii) otherwise unlikely to receive permanency. No additional expenses shall be incurred beyond the funds budgeted for foster care for the Guardianship Assistance Program (GAP). The Guardianship Assistance Program shall include provisions for extending guardianship services for individuals and youth who exited foster care through the Guardianship Assistance Program after 14 years of age or who have attained the age of 18 years and opt to continue to receive guardianship services until reaching 21 years of age if the individual is (i) completing secondary education or a program leading to an equivalent credential, (ii) enrolled in an institution that provides postsecondary or vocational education, (iii) participating in a program or activity designed to promote, or remove barriers to, employment, (iv) employed for at least 80 hours per month, or (v) incapable of completing the educational or employment requirements of this section due to a medical condition or disability. The Guardianship Assistance Program rates shall reimburse the legal guardian for room and board and be set at the same rate as the foster care room and board rates in accordance with rates established under G.S. 108A‑49.1.

CHILD WELFARE POSTSECONDARY SUPPORT PROGRAM (NC REACH)

SECTION 9J.5.(a)  Funds appropriated in this act from the General Fund to the Department of Health and Human Services for the child welfare postsecondary support program shall be used to continue providing assistance with the cost of attendance as that term is defined in 20 U.S.C. § 1087ll for the educational needs of foster youth aging out of the foster care system, youth who exit foster care to a permanent home through the Guardianship Assistance Program (GAP), or special needs children adopted from foster care after age 12. These funds shall be allocated by the State Education Assistance Authority.

SECTION 9J.5.(b)  Of the funds appropriated in this act from the General Fund to the Department of Health and Human Services, the sum of fifty thousand dollars ($50,000) for each year of the 2025‑2027 fiscal biennium shall be allocated to the North Carolina State Education Assistance Authority (SEAA). The SEAA shall use these funds only to perform administrative functions necessary to manage and distribute scholarship funds under the child welfare postsecondary support program.

SECTION 9J.5.(c)  Of the funds appropriated in this act from the General Fund to the Department of Health and Human Services, the sum of three hundred thirty‑nine thousand four hundred ninety‑three dollars ($339,493) for each year of the 2025‑2027 fiscal biennium shall be used to contract with an entity to administer the child welfare postsecondary support program described under subsection (a) of this section, which administration shall include the performance of case management services.

SECTION 9J.5.(d)  Funds appropriated in this act to the Department of Health and Human Services for the child welfare postsecondary support program shall be used only for students attending public institutions of higher education in this State.

FEDERAL CHILD SUPPORT INCENTIVE PAYMENTS

SECTION 9J.6.(a)  Centralized Services.  The North Carolina Child Support Services Section (NCCSS) of the Department of Health and Human Services, Division of Social Services, shall retain up to fifteen percent (15%) of the annual federal incentive payments it receives from the federal government to enhance centralized child support services. To accomplish this requirement, NCCSS shall do the following:

(1)        In consultation with representatives from county child support services programs, identify how federal incentive funding could improve centralized services.

(2)        Use federal incentive funds to improve the effectiveness of the State's centralized child support services by supplementing and not supplanting State expenditures for those services.

(3)        Continue to develop and implement rules that explain the State process for calculating and distributing federal incentive funding to county child support services programs.

SECTION 9J.6.(b)  County Child Support Services Programs.  NCCSS shall allocate no less than eighty‑five percent (85%) of the annual federal incentive payments it receives from the federal government to county child support services programs to improve effectiveness and efficiency using the federal performance measures. To that end, NCCSS shall do the following:

(1)        In consultation with representatives from county child support services programs, examine the current methodology for distributing federal incentive funding to the county programs and determine whether an alternative formula would be appropriate. NCCSS shall use its current formula for distributing federal incentive funding until an alternative formula is adopted.

(2)        Upon adopting an alternative formula, develop a process to phase in the alternative formula for distributing federal incentive funding over a four‑year period.

SECTION 9J.6.(c)  Reporting by County Child Support Services Programs. – NCCSS shall continue implementing guidelines that identify appropriate uses for federal incentive funding. To ensure those guidelines are properly followed, NCCSS shall require county child support services programs to comply with each of the following:

(1)        Submit an annual plan describing how federal incentive funding would improve program effectiveness and efficiency as a condition of receiving federal incentive funding.

(2)        Report annually on the following: (i) how federal incentive funding has improved program effectiveness and efficiency and been reinvested into their programs, (ii) provide documentation that the funds were spent according to their annual plans, and (iii) explain any deviations from their plans.

SECTION 9J.6.(d)  Reporting by NCCSS. – NCCSS shall submit a report on federal child support incentive funding to the Joint Legislative Oversight Committee on Health and Human Services and the Fiscal Research Division by November 1 of each year. The report shall describe how federal incentive funds enhanced centralized child support services to benefit county child support services programs and improved the effectiveness and efficiency of county child support services programs. The report shall further include any changes to the State process that NCCSS used in calculating and distributing federal incentive funding to county child support services programs and any recommendations for further changes.

SUCCESSFUL TRANSITION/FOSTER CARE YOUTH

SECTION 9J.7.  The Foster Care Transitional Living Initiative Fund shall continue to fund and support transitional living services that demonstrate positive outcomes for youth, attract significant private sector funding, and lead to the development of evidence‑based programs to serve the at‑risk population described in this section. The Fund shall continue to support a demonstration project with services provided by Youth Villages to (i) improve outcomes for youth ages 17‑21 years who transition from foster care through implementation of outcome‑based Transitional Living Services, (ii) identify cost‑savings in social services and juvenile and adult correction services associated with the provision of Transitional Living Services to youth aging out of foster care, and (iii) take necessary steps to establish an evidence‑based transitional living program available to all youth aging out of foster care. In continuing to implement these goals, the Foster Care Transitional Living Initiative Fund shall support the following strategies:

(1)        Transitional Living Services, which is an outcome‑based program that follows the Youth Villages Transitional Living Model. Outcomes on more than 7,000 participants have been tracked since the program's inception. The program has been evaluated through an independent randomized controlled trial. Results indicate that the Youth Villages Transitional Living Model had positive impacts in a variety of areas, including housing stability, earnings, economic hardship, mental health, and intimate partner violence in comparison to the control population.

(2)        Public‑Private Partnership, which is a commitment by private‑sector funding partners to match at least twenty‑five percent (25%) of the funds appropriated to the Foster Care Transitional Living Initiative Fund for the 2025‑2027 fiscal biennium for the purposes of providing Transitional Living Services through the Youth Villages Transitional Living Model to youth aging out of foster care.

(3)        Impact Measurement and Evaluation, which are services funded through private partners to provide independent measurement and evaluation of the impact the Youth Villages Transitional Living Model has on the youth served, the foster care system, and on other programs and services provided by the State which are utilized by former foster care youth.

(4)        Advancement of Evidence‑Based Process, which is the implementation and ongoing evaluation of the Youth Villages Transitional Living Model for the purposes of establishing the first evidence‑based transitional living program in the nation. To establish the evidence‑based program, additional randomized controlled trials may be conducted to advance the model.

PART IX‑K. DIVISION OF EMPLOYMENT AND INDEPeDENCE FOR PEOPLE WITH DISABILITIES [RESERVED]

PART IX‑L. DHHS Block Grants

DHHS BLOCK GRANTS

SECTION 9L.1.(a)  Except as otherwise provided, appropriations from federal Block Grant funds are made for each year of the fiscal biennium ending June 30, 2027, according to the following schedule:

TEMPORARY ASSISTANCE FOR NEEDY                   FY 2025‑2026                   FY 2026‑2027

FAMILIES (TANF) FUNDS

Local Program Expenditures

Division of Social Services

      01. Work First Family Assistance                                        $31,259,794             $31,259,794

      02. Work First County Block Grants                                      80,093,566               80,093,566

      03. Work First Electing Counties                                             2,378,213                 2,378,213

      04. Adoption Services – Special Children

      Adoption Fund                                                                          4,001,676                 4,001,676

      05. Child Protective Services – Child Welfare

      Workers for Local DSS                                                          11,387,190               11,387,190

      06. Child Welfare Program Improvement Plan                           775,176                    775,176

      07. Child Welfare Collaborative                                                 400,000                    400,000

      08. Child Welfare Initiatives                                                    2,900,000                 2,900,000

Division of Child Development and Early Education

      09. Subsidized Child Care Program                                       45,813,694               45,813,694

      10. Swap‑Child Care Subsidy                                                 12,600,000               12,600,000

      11. NC Pre‑K Services                                                           68,300,000               68,300,000

Division of Public Health

      12. Teen Pregnancy Prevention Initiatives                               3,538,541                 3,538,541

DHHS Administration

      13. Division of Social Services                                                2,478,284                 2,478,284

      14. Division of Child and Family Well Being                                 3,976                        3,976

      15. Office of the Secretary                                                             34,042                      34,042

      16. Eligibility Systems – Operations and

            Maintenance                                                                          431,733                    431,733

      17. NC FAST Implementation                                                    428,239                    428,239

      18. Division of Social Services – Workforce

            Innovation & Opportunity Act (WIOA)                                  93,216                      93,216

      19. Division of Social Services TANF Modernization            2,000,000                 2,000,000

Transfers to Other Block Grants

Division of Child Development and Early Education

      20. Transfer to the Child Care and Development Fund         21,773,001               21,773,001

Division of Social Services

      21. Transfer to Social Services Block

            Grant for Child Protective Services – Training                     285,612                    285,612

      22. Transfer to Social Services Block

            Grant for Child Protective Services                                    5,040,000                 5,040,000

      23. Transfer to Social Services Block

            Grant for County Departments of

            Social Services for Children's Services                            13,166,244               13,166,244

      24. Transfer to Social Services Block

            Grant – Foster Care Services                                              3,422,219                 3,422,219

      25. Transfer to Social Services Block                                      1,582,000                 1,582,000

            Grant – Child Advocacy Centers

TOTAL TEMPORARY ASSISTANCE FOR

NEEDY FAMILIES (TANF) FUNDS                                  $314,186,416         $314,186,416

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)

EMERGENCY CONTINGENCY FUNDS

Local Program Expenditures

Division of Child Development and Early Education

      01. Subsidized Child Care                                                    $34,337,395             $34,337,395

TOTAL TEMPORARY ASSISTANCE FOR

NEEDY FAMILIES (TANF) EMERGENCY

CONTINGENCY FUNDS                                                       $34,337,395             $34,337,395

SOCIAL SERVICES BLOCK GRANT

Local Program Expenditures

Divisions of Social Services and Aging and Adult Services

      01. County Departments of Social Services                         $19,837,388             $19,837,388

      02. County Departments of Social Services

            (Transfer From TANF)                                                     13,166,244               13,166,244

      03. EBCI Tribal Public Health and Human Services                  244,740                    244,740

      04. Child Protective Services

            (Transfer From TANF)                                                       5,040,000                 5,040,000

      05. State In‑Home Services Fund                                             1,943,950                 1,943,950