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

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 2023.

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 2023‑2025 fiscal biennium, according to the following schedule:

Current Operations – General Fund                                    FY 2023‑2024         FY 2024‑2025

EDUCATION

Community College System                                                    1,593,867,202          1,596,283,053

Public Instruction                                                                   13,413,370,088        14,284,695,040

Appalachian State University                                                     184,193,982             184,193,982

East Carolina University

Academic Affairs                                                                  266,602,993             266,607,048

Health Affairs                                                                         96,525,963             100,446,390

Elizabeth City State University                                                    46,160,370               46,160,370

Fayetteville State                                                                          78,937,840               78,937,840

NC A&T State University                                                          150,219,848             145,719,848

NC Central University                                                                  91,623,233               91,623,233

NC State University

Academic Affairs                                                                  499,416,715             499,416,715

Agricultural Extension                                                            44,109,008               44,109,008

Agricultural Research                                                             58,953,248               58,953,248

UNC‑Asheville                                                                             50,651,165               50,651,165

UNC‑Chapel Hill

Academic Affairs                                                                  329,373,589             329,373,589

Health Affairs                                                                       230,809,848             230,809,848

AHEC                                                                                     55,271,874               55,271,874

UNC‑Charlotte                                                                           301,689,831             301,689,831

UNC‑Greensboro                                                                        201,202,978             201,202,978

UNC‑Pembroke                                                                            99,181,856               99,181,856

UNC‑School of the Arts                                                               40,089,624               40,089,624

UNC‑Wilmington                                                                       190,447,266             190,447,266

Western Carolina University                                                      152,710,156             152,683,380

Winston‑Salem State University                                                  69,510,370               69,510,370

General Administration                                                                63,231,861               55,397,861

University Institutional Programs                                               484,246,765             554,790,360

Related Educational Programs                                                   468,464,708             505,664,708

NC School of Science and Math                                                  41,539,395               41,539,395

Aid to Private Institutions                                                             16,209,300                 6,209,300

Total – University of North Carolina                                      4,311,373,786          4,400,681,087

HEALTH AND HUMAN SERVICES

Department of Health and Human Services

Aging and Adult Services                                                        53,990,792               54,117,772

Central Management and Support                                         297,632,120             274,525,753

Child Development and Early Education                              661,823,553             888,953,961

Child and Family Well Being                                                  77,670,941               83,322,027

Health Benefits                                                                    5,637,108,251          5,973,987,872

Health Services Regulation                                                      27,338,777               28,058,476

Mental Hlth/Dev. Disabl./Subs. Abuse Serv.                        831,031,029             847,367,050

Public Health                                                                          123,381,254             124,804,544

Services for the Blind, Deaf and Hard of Hearing                     9,379,618                 9,560,820

Social Services                                                                       225,505,445             227,636,990

Vocational Rehabilitation                                                        43,225,441               43,960,547

Total Health and Human Services                                      7,988,087,221          8,556,295,812

AGRICULTURE, NATURAL, AND ECONOMIC RESOURCES

Agriculture and Consumer Services                                           208,991,963             180,456,953

Department of Commerce

Commerce                                                                                20,010,727               17,372,421

General State Aid                                                                     26,655,810               20,655,810

Economic Development                                                         187,000,660             187,000,660

Environmental Quality                                                               124,725,731             119,905,697

Labor                                                                                             27,288,827               28,003,313

Department of Natural and Cultural Resources

Natural and Cultural Resources                                             363,123,665             276,679,880

Roanoke Island                                                                                         0                               0

Wildlife Resources Commission                                                  20,234,536               21,042,374

JUSTICE AND PUBLIC SAFETY

Judicial Department                                                                    764,505,014             777,037,776

Judicial Department – Indigent Defense Services                      159,589,514             164,148,853

Department of Justice                                                                   71,629,203               73,099,975

Department of Public Safety                                                      726,436,123             711,487,513

Department of Adult Correction                                              2,110,762,409          2,107,009,313

GENERAL GOVERNMENT

Department of Administration                                                      68,522,026               69,034,955

Office of Administrative Hearings                                                 8,218,385                 8,386,295

State Board of Elections                                                               11,324,110               10,759,290

Office of State Auditor                                                                 19,865,249               20,400,899

Office of State Controller                                                             35,739,681               36,354,328

General Assembly                                                                        95,188,112               96,633,139

Office of the Governor                                                                   6,553,601                 6,685,016

Office of State Budget and Management

Office of State Budget and Management                                 12,946,174               13,054,490

OSBM – Reserve for Special Appropriations                          13,000,000               12,000,000

Housing Finance Agency                                                             40,660,000               40,660,000

Office of State Human Resource                                                  13,953,519               11,937,954

Department of Insurance

Insurance                                                                                  72,314,798               75,406,059

Insurance – Industrial Commission                                         13,033,752               13,298,365

Office of Lieutenant Governor                                                       1,348,734                 1,364,973

Department of Military and Veterans Affairs                              14,965,824               15,038,969

Department of Revenue                                                              131,569,639             130,873,680

Department of Secretary of State                                                 21,074,593               21,074,235

Department of State Treasurer

Treasurer                                                                                    7,538,138                 6,933,160

Treasurer – Retirement for Fire and

Rescue Squad Workers                                                      33,255,423               33,255,423

Information Technology                                                             125,327,503               87,433,005

RESERVES, DEBT, AND OTHER BUDGETS

Statewide Reserves                                                                       54,282,000                ‑2,934,000

Total Net Appropriation                                              32,950,036,207        34,233,756,565

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 2023‑2025 fiscal biennium is as follows:

                                                                                                  FY 2023‑2024         FY 2024‑2025

Unappropriated Balance from Prior Fiscal Year                  666,806,816          1,015,671,341

Projected Over Collections FY 2022‑23                           3,250,300,000                                ‑

Public Instruction Reversion FY 2021‐22 Funds                 151,524,307                                ‑

Anticipated Reversions FY 2022‑23                                    425,000,000                                ‑

Medicaid Expansion Bonus – assumes June 1 enrollment date

                                                                                              194,100,000                                ‑

Comprehensive Remedial Plan Court Order for Years 2 and 3

                                                                                                   (677,801,707)                              ‑

Total, Current Beginning Unreserved Balance                  4,009,929,416          1,015,671,341

Statutorily Required Reservations of Revenue

State Capital and Infrastructure Fund                              (1,412,592,500)       (1,461,333,238)

Unfunded Liability Solvency Reserve                                  (29,280,000)            (87,795,000)

Subtotal                                                                                  (1,441,872,500)       (1,549,128,238)

Investments to Reserves                                                                              

$1.25 Billion IHOPE Fund (Medicaid Expansion Bonus) (1,055,000,000)         (195,000,000)

Capital Improvements                                                      (1,415,000,000)          (405,000,000)

Medicaid Contingency Reserve                                          (391,217,272)                              –

Federal Infrastructure Match Reserve                                 (225,000,000)                              –

Economic Development Project Reserve                            (325,000,000)                              –

Information Technology Project Reserve                           (180,000,000)                              –

Housing Reserve                                                                 (160,000,000)                              –

Transportation Reserve                                                         (78,000,000)            (78,000,000)

Contingency and Emergency Fund                                         (5,000,000)              (5,000,000)

Child Care Stabilization Grants                                            200,000,000             300,000,000

Subtotal, Investments to Reserves                                      (3,634,217,272)          (383,000,000)

Tax Revenues                                                                                               

Personal Income                                                              16,610,100,000        16,818,000,000

Sales and Use                                                                   10,664,600,000        10,690,700,000

Corporate Income                                                              1,680,700,000          1,633,500,000

Franchise                                                                               726,500,000             738,600,000

Insurance                                                                            1,270,000,000          1,271,700,000

Alcoholic Beverage                                                              556,000,000             578,500,000

Tobacco Products                                                                 280,900,000             276,600,000

Other Tax Revenue                                                               158,100,000             165,200,000

Subtotal, Tax Revenues                                                       31,946,900,000        32,172,800,000

Non‑tax Revenues                                                                                        

Judicial Fees                                                                         220,800,000             219,800,000

Investment Income                                                               856,300,000             645,100,000

Disproportionate Share                                                         164,500,000               88,400,000

Master Settlement Agreement                                              150,200,000             149,100,000

Insurance                                                                               114,900,000             117,800,000

Other Non‑tax Revenues                                                      252,800,000             255,300,000

Subtotal, Non‑tax Revenue                                                   1,759,500,000          1,475,500,000

Total, Net Revenues                                                             33,706,400,000        33,648,300,000

Adjustments to Revenues:

Individual Income Tax Fairness, rate remains at 4.75% for income >$200K/100K (MFJ/single)                                                                                                      69,000,000             222,000,000

Maintain Lowest Corporate Tax Rate at 2.5%                                        ‑               65,000,000

Maintain General Fund Sales Tax Transfer to DOT at 2%  210,000,000             429,000,000

PHP New Revenue from HASP                                           162,400,000               84,800,000

Medicaid Expansion Bonus – assumes June 1 enrollment date

                                                                                              860,900,000             686,400,000

Subtotal, Adjustments to Tax Revenue                               1,302,300,000          1,487,200,000

Other Adjustments to Availability

Golden Leaf                                                                             (2,500,000)              (2,500,000)

Adjustment to Transfer from Department of Insurance         23,395,558               26,486,819

Adjustment to Transfer from State Treasurer                           2,272,346                 1,667,368

Subtotal, Other Adjustments                                                     23,167,904               25,654,187

Revised Total Net General Fund Availability                   33,965,707,548        34,244,697,290

Less General Fund Net Appropriations                                (32,950,036,207)     (34,233,756,565)

Unappropriated Balance Remaining                                   1,015,671,341               10,940,725

SECTION 2.2.(b)  In addition to the amount required under G.S. 143C‑4‑3.1 the State Controller shall transfer to the State Capital and Infrastructure Fund established under G.S. 143C43.1 the sum of one billion four hundred fifteen million dollars ($1,415,000,000) in nonrecurring funds in the 2023‑24 fiscal year and the sum of four hundred five million dollars ($405,000,000) in nonrecurring funds in the 2024‑25 fiscal year. Funds transferred under this subsection are appropriated for the fiscal year in which they were transferred and shall be used in accordance with Part 40 of this act.

SECTION 2.2(b1)  G.S. 143C‑4‑3‑1(b)(1)(e) and G.S. 143C‑4‑3‑1(b)(1)(f) are repealed.

SECTION 2.2.(c)  As required by G.S. 143‑4‑2 subsections (i) and (j), the State Controller shall reserve from funds available in the General Fund the sum of twenty‑nine million two hundred eighty thousand dollars ($29,280,000) in nonrecurring funds in the 2023‑24 fiscal year and eighty‑seven million seven hundred ninety‑five thousand dollars ($87,795,000) in nonrecurring funds in the 2024‑25 fiscal year to the Unfunded Liability Solvency Reserve. Of the funds reserved in the Unfunded Liability Solvency Reserve, the State Controller shall transfer the sum of ten million dollars ($10,000,000) in nonrecurring funds in the 2023‑24 fiscal year and the sum of twenty‑nine million two hundred eighty thousand ($29,280,000) in nonrecurring funds in the 2024‑25 fiscal year to the Health Benefit Fund and the Retirement System pursuant to G.S. 143C‑4‑10. The funds in this subsection are appropriated in the year in which they are transferred.

SECTION 2.2.(d)  There is established the Improving Health Outcomes for People Everywhere (IHOPE) Fund as a special fund at the Department of Health and Human Services. The State Controller shall transfer the sum of one billion fifty‑five million dollars ($1,055,000,000) in nonrecurring funds in the 2023‑24 fiscal year and one hundred ninety‑five million dollars ($195,000,000) from the unreserved fund balance in the General Fund to the IHOPE Fund. This section becomes effective June 30, 2023. Funds transferred under this section to the IHOPE Fund are appropriated in the fiscal year in which they are transferred and shall be used in accordance with this act.

SECTION 2.2.(e)  The State Controller shall transfer the sum of one hundred fifty‑five million six hundred forty‑two thousand one hundred seventy dollars ($155,642,170) for the 2023‑24 fiscal year from funds available in the Medicaid Transformation Reserve in the General Fund to the Medicaid Transformation Fund established under Section 12H.29 of S.L. 2015‑241. Funds transferred under this section to the Medicaid Transformation Fund are appropriated for the 2023‑24 fiscal year and shall be used in accordance with this act.

SECTION 2.2.(f)  The State Controller shall reserve to the Medicaid Contingency Reserve from funds available in the General Fund the sum of three hundred ninety‑one million two hundred seventeen thousand two hundred and seventy‑two dollars ($391,217,272) in nonrecurring funds for the 2023‑24 fiscal year. Funds reserved in the Medicaid Contingency Reserve 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.(g)  The State Controller shall reserve to the Federal Infrastructure Match Reserve from funds available in the General Fund the sum of two hundred twenty‑five million dollars ($225,000,000) in nonrecurring funds for the 2023‑2024 fiscal year. Except as otherwise provided in this act, federal funds received by the State under the Infrastructure Investment and Jobs Act (117‑58), the CHIPS and Science Act of 2022 (P.L. 117‑167), the Inflation Reduction Act of 2022 (117‑169), and any other federal legislation that makes significant funding available to states are appropriated upon transfer in the amounts provided in the notification of award from the federal government or any entity acting on behalf of the federal government to administer the federal funds. The State Controller with the approval of the Director of the Budget shall transfer state matching funds available in the Federal Infrastructure Match Reserve as needed to draw down federal funds in accordance with the notification of award from the federal government or any entity acting on behalf of the federal government to administer the federal funds, and the funds are appropriated in the year in which they are transferred. State agencies may, with approval of the Director of the Budget, spend these funds received from state matching funds, federal receipts, and federal grants.

SECTION 2.2.(g)(1)  Section 2.2(m) of S.L. 2022‑74 reads as rewritten: 

SECTION 2.2.(m)  There is established in the General Fund the Federal Infrastructure Match Reserve that shall make funds available to State agencies and departments to use for State match requirements when procuring federal aid made available under the federal Infrastructure Investment and Jobs Act (P.L. 117‑58). 117‑58), the CHIPS and Science Act of 2022 (P.L. 117‑167), the Inflation Reduction Act of 2022 (117‑169), and any other federal legislation that makes significant funding available to states. The State Controller with approval of the Director of the Budget shall transfer state matching funds available in the Federal Infrastructure Match Reserve as needed to draw down federal funds in accordance with the notification of award from the federal government or any entity acting on behalf of the federal government to administer the federal funds, and the funds are appropriated in the year in which they are transferred. State agencies may, with approval of the Director of the Budget, spend these funds received from state matching funds, federal receipts, and federal grants. The State Controller shall reserve to the Federal Infrastructure Match Reserve from funds available in the General Fund the sum of one hundred six million dollars ($106,000,000) in nonrecurring funds for the 2022‑23 fiscal year. The State Controller shall transfer funds available in the Federal Infrastructure Match Reserve to the Department of Environmental Quality (DEQ) and the Department of Information Technology (DIT) as needed to draw down federal funds in accordance with the following schedule, and the funds transferred are appropriated for the 2022‑23 fiscal year: 

…

SECTION 2.2.(h)  The State Controller shall reserve to the Economic Development Project Reserve from funds available in the General Fund the sum of three hundred twenty‑five million dollars ($325,000,000) in nonrecurring funds for the 2023‑24 fiscal year. Funds reserved in the Economic Development Project Reserve pursuant to this subsection may be used only for projects as specifically provided in this act notwithstanding whether such projects meet or exceed high‑yield project metrics, as defined in G.S. 143B‑437.51. The State Controller shall transfer three hundred fifteen million dollars ($315,000,000) in the 2023‑24 fiscal year and ten million dollars ($10,000,000) in 2024‑25 fiscal year from the Economic Development Project Reserve to the Department of Commerce. The funds transferred in this subsection to the Department of Commerce are appropriated in the fiscal year in which they are transferred.

SECTION 2.2.(i)  The State Controller shall transfer the sum of one hundred eighty million dollars ($180,000,000) from the unreserved fund balance in the General Fund to the Information Technology Project Reserve. The following information technology projects are funded from the Information Technology Project Reserve:

(1)               ERP 2.0 pursuant to Section 5.10 of this act.

(2)               The Integrated Tax Administration System pursuant to Section 5.11 of this act.

(3)               The State Board of Elections for system modernization planning.

(4)               IT Contingency and Planning Funds.

(5)               The Department of Health and Human Services' County Reimbursement System.

(6)               The Department of Health and Human Services' Automated Collection and Tracking System.

(7)               The Department of Public Instruction's Online Licensure System.

(8)               The Department of Environmental Quality's Permit Transformation Project.

(9)               The Department of Administration's Financial System Integration.

Funds appropriated to 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. Funds shall be allocated based on documented needs. Funds transferred under this section to Information Technology Reserve are appropriated in the year in which they are transferred and shall be used in accordance with this act.

SECTION 2.2.(j)  The State Controller shall reserve to the Housing Reserve from funds available in the General Fund the sum of one hundred sixty million dollars ($160,000,000) in nonrecurring funds for the 2023‑24 fiscal year. The State Controller shall transfer the sum of one hundred sixty million dollars ($160,000,000) from the Housing Reserve to the Housing Finance Agency in accordance with this act and the funds are appropriated in the 2023‑24 fiscal year.

SECTION 2.2(k)  There is established in the General Fund a Transportation Reserve which shall make finds available for expenditure only upon an act of appropriation by the General Assembly. The State Controller shall reserve to the Transportation Reserve the sum of seventy‑eight million dollars ($78,000,000) in nonrecurring funds for the 2023‑24 fiscal year and seventy‑eight million dollars ($78,000,000) in nonrecurring funds for the 2024‑25 fiscal year. The State Controller shall transfer the sum of seventy‑eight million dollars ($78,000,000) in the 2023‑24 fiscal year and the sum of seventy‑eight million dollars ($78,000,000) in the 2024‑25 fiscal year to the Department of Transportation. Funds transferred under this section to the Department of Transportation are appropriated in the year in which they are transferred and shall be used in accordance with this act.

SECTION 2.2.(l)  Notwithstanding G.S. 143C‑4‑2, the State Controller shall reserve from funds available in the General Fund the sum of five million dollars ($5,000,000) in nonrecurring funds for the 2023‑24 fiscal year and five million dollars ($5,000,000) in nonrecurring funds for the 2024‑25 fiscal year to Contingency and Emergency Fund in the General Fund. Funds under this section are appropriated in the year in which they are reserved.

 SECTION 2.2.(m)  Notwithstanding G.S. 143C‑4‑2, the State Controller shall transfer the sum of two hundred million dollars ($200,000,000) in nonrecurring funds for the 2023‑2024 fiscal year and the sum of three hundred million dollars ($300,000,000) in nonrecurring funds for the 2024‑25 fiscal year from the Savings Reserve to the Department of Health and Human Services. Funds transferred under this section to the Department of Health and Human Services are appropriated in the year in which they are transferred and shall be used in accordance with this act.

SECTION 2.2.(n)  The State Controller shall transfer the sum of two hundred nine million seven hundred two thousand five hundred dollars ($209,702,500) in nonrecurring funds for the 2023‑2024 fiscal year from funds available in the State Emergency Response and Disaster Relief Reserve, to be used in accordance with Sections 5.7, 5.8 and 5.9 of this act, and the funds transferred are appropriated for the fiscal year in which they are transferred.

SECTION 2.2.(o)  The State Controller shall transfer the sum of twenty‑five million dollars ($25,000,000) in nonrecurring funds from the funds available in the World University Games Reserve pursuant to S.L. 2022‑74 for the 2027 World University Games to the Department of Commerce (Budget Code: 24609) for the 2029 World University Games. Funds are appropriated upon transfer in the 2023‑24 fiscal year.

SECTION 2.2.(p)  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.(q)  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, 2025, according to the following schedule:

Current Operations – Highway Fund                                  FY 2023‑2024          FY 2024‑2025

Department of Transportation

Administration                                                                    $137,078,101           $130,238,637

Division of Highways

Administration                                                                        40,365,753               40,365,753

Construction                                                                           77,543,078               77,543,078

Maintenance                                                                      1,769,915,184          1,935,782,981

Governor's Highway Safety Program                                          324,111                    324,111

OSHA Program                                                                           358,030                    358,030

State Aid to Municipalities                                                         154,875,000             154,875,000

Intermodal Divisions

Ferry                                                                                       87,929,849               80,104,849

Public Transportation, Bicycle, and Pedestrian                      82,710,286               82,710,286

Aviation                                                                                185,977,023             197,677,023

Rail                                                                                         45,299,938               45,299,938

Division of Motor Vehicles                                                  176,706,651             173,583,074

Compensation, Benefits,

Reserves, Transfers, and Other                                               95,132,877               97,452,877

Capital Improvements                                                                  55,984,119               75,484,363

Total Highway Trust Fund Appropriations                       2,910,200,000          3,091,800,000

HIGHWAY FUND AVAILABILITY

SECTION 3.2.  The Highway Fund availability used in developing the 2023‑2025 fiscal biennial budget is shown below:

Highway Fund Availability                                                   FY 2023‑2024         FY 2024‑2025

Motor Fuels Tax                                                                    $1,791,900,000        $1,802,700,000

Highway Short Term Lease                                                        116,700,000             121,500,000

Licenses and Fees                                                                       895,100,000          1,053,300,000

Investment Income                                                                       40,700,000               35,700,000

Aviation Fuel Tax                                                                         13,300,000               25,000,000

Sales Tax                                                                                       52,500,000               53,600,000

Total Highway Fund Availability                                      $2,910,200,000        $3,091,800,000

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, 2025, according to the following schedule:

Current Operations – Highway Trust Fund                       FY 2023‑2024          FY 2024‑2025

Program Administration                                                             $42,602,398             $42,616,605

Bonds                                                                                          121,439,825               93,047,650

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

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

FHWA State Match                                                                        5,104,440                 6,176,440

Strategic Prioritization Funding Plan for

Transportation Investments                                               1,775,913,337          1,857,429,319

Transfer to Visitor Center                                                                  640,000                    640,000

Uncommitted Trust Fund                                                                             0               26,489,986

Total Highway Trust Fund Appropriations                     $2,039,700,000        $2,120,400,000

HIGHWAY TRUST FUND AVAILABILITY

SECTION 3.4.  The Highway Trust Fund availability used in developing the 2023‑25 fiscal biennial budget is shown below:

Highway Trust Fund Availability                                        FY 2023‑2024          FY 2024‑2025

Highway Use Tax                                                                   $1,112,400,000       $1,160,800,000

Motor Fuels Tax                                                                        598,900,000             602,500,000

Fees                                                                                             142,100,000             170,900,000

Sales Tax                                                                                    157,400,000             160,900,000

Investment Income                                                                       28,900,000               25,300,000

Total Highway Trust Fund Availability                            $2,039,700,000        $2,120,400,000

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 2023‑25 fiscal biennium as follows:

(1)        For all budget codes listed in the Governor's Recommended Budget for the 2023‑25 fiscal biennium, dated March 2023, 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 2023‑24 fiscal year and the 2024‑25 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 2023‑24 fiscal year and the 2024‑25 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 2023‑24 fiscal year and the 2024‑25 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.

OTHER RECEIPTS FROM PENDING GRANT AWARDS

SECTION 4.2.  G.S. 143C‑6‑4 is amended to add:

(b3)    State agencies may, with approval of the Director of the Budget, spend funds received from grants for grant awards that do not require State matching funds and will not be used for a capital project. No state agency may accept a grant that would obligate the State to make future expenditures relating to the program receiving the grant or would otherwise result in a financial obligation as a consequence of accepting the grants funds.

(b4)      The Office of State Budget and Management shall work with the recipient State agencies to budget grant awards according to the annual program needs and within the parameters of the respective granting entities. Depending on the nature of the award, additional State personnel may be employed on a time‑limited basis. Funds received from such grants are hereby appropriated and shall be incorporated into the authorized budget of the recipient State agency. OSBM shall report to the Fiscal Research Division within 30 days of grant funds being budgeted.

SECTION 4.2.(d)  G.S. 143C‑5‑4.(b)(9) reads as rewritten:

(9)      Grant funds. – Notwithstanding G.S. 143C‑6‑4, State agencies may, with approval of the Director of the Budget, spend funds received from grants awarded during the current fiscal year that are for less than two million five hundred thousand dollars ($2,500,000) do not require State matching funds, and will not be used for a capital project. State agencies shall report to the Joint Legislative Commission on Governmental Operations, the chairs of the Senate Committee on Appropriations/Base Budget, the chairs of the House Appropriations Committee, and the Fiscal Research Division within 30 days of receipt of such funds. State agencies may spend up to the greater of one percent (1%) or ten million dollars ($10,000,000) of the total amount of grants awarded during the current fiscal year to respond to an emergency with the approval of the Director of the Budget. State agencies shall report to the Joint Legislative Commission on Governmental Operations, the chairs of the Senate Committee on Appropriations/Base Budget, the chairs of the House Appropriations Committee, and the Fiscal Research Division within 30 days of receipt of such funds, including specifying the total amount of grants awarded to respond to the emergency. State agencies may spend all other funds from grants awarded during the current fiscal year only with approval of the Director of the Budget and after consultation with the Joint Legislative Commission on Governmental Operations. The Office of State Budget and Management shall work with the recipient State agencies to budget grant awards according to the annual program needs and within the parameters of the respective granting entities. Depending on the nature of the award, additional State personnel may be employed on a time‑limited basis. Funds received from such grants are hereby appropriated up to the applicable allowable amount set forth in this subdivision and shall be incorporated into the authorized budget of the recipient State agency. Notwithstanding the provisions of this subdivision, no State agency may accept a grant if acceptance of the grant would obligate the State to make future expenditures relating to the program receiving the grant or would otherwise result in a financial obligation as a consequence of accepting the grant funds. Nothing in this subdivision shall be construed to prohibit or limit expenditures that are authorized under subdivision (1) of this subsection. For purposes of this subdivision, the term (i) emergency is as defined in G.S. 166A‑19.3 and (ii) grant means funds received from a grant that was not included in the base budget for the fiscal year in which the grant was awarded.

EDUCATION LOTTERY ANd other wagering funds/CHANGES TO REVENUE ALLOCATIONS

SECTION 4.3.  The appropriations for the 2023‑25 fiscal biennium made from the Education Lottery Fund equal one billion, eight hundred sixty‑six million dollars ($1,866,000,000); from the North Carolina Video Lottery Fund equal two hundred forty‑three million dollars ($243,000,000); from E‑Instant Games equal one hundred eighty‑four million dollars ($184,000,000); and from Sports Wagering equal eighty‑five million dollars ($85,000,000) and are as follows:

FY 2023‑2024          FY 2024‑2025

Noninstructional Support Personnel                                         $429,614,455           $491,041,455

Prekindergarten Program                                                            186,552,110             277,752,110

Specialized Instructional Support Personnel                                                0             151,400,000

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

Needs‑Based Public School Capital Fund                                  208,253,512             208,253,512

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                                              $1,037,000,000        $1,341,000,000

INDIAN GAMING EDUCATION REVENUE FUND APPROPRIATION

SECTION 4.4.  Notwithstanding G.S. 143C‑9‑7, there is appropriated from the Indian Gaming Education Revenue Fund to the Department of Public Instruction, Textbooks, and Digital Resources Allotment, the sum of eleven million dollars ($11,000,000) in each year of the 2023‑25 biennium. These receipts are appropriated in the year in which they are received.

CIVIL PENALTY AND FORFEITURE FUND

SECTION 4.5.  Allocations are made from the Civil Penalty and Forfeiture Fund for the fiscal biennium ending June 30, 2025, as follows:

                                                                                                  FY 2023‑2024          FY 2024‑2025

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

Drivers Education                                                                         30,193,768               30,193,768

School Safety Grants                                                                    40,000,000                               0

State Public School Fund                                                           186,841,640             186,841,640

Total Appropriation                                                               $275,035,408           $235,035,408

CORONAVIRUS CAPITAL PROJECTS FUND RESERVE TRANSFER ADJUSTMENT

SECTION 4.6  Session Law 2021‑180 reads as rewritten:

TRANSFER OF FUNDS FROM CORONAVIRUS CAPITAL PROJECTS RESERVE TO CORONAVIRUS CAPITAL PROJECTS FUND

SECTION 4.12. The State Controller shall transfer the sum of two hundred seventy-seven million sixty thousand eight hundred fifty-five dollars ($277,060,855) two hundred seventy‑three million five hundred eighty‑three thousand one hundred and seventy‑nine dollars ($273,583,179) to align with the federal award letter received for the 2021‑2022 fiscal year from the Coronavirus Capital Projects Reserve, established in Section 2.3 of S.L. 2021‑25, to the Coronavirus Capital Projects Fund, established in Section 2.4 of S.L. 2021‑25.

Adjustments to General Provisions for American Rescue Plan Act of 2021 Funding / State FISCAL RECOVERY FUNDS TRANSFER

SECTION 4.7(a)  S.L. 2021‑180 reads as rewritten:

SECTION 4.9.(f)  Interest. – All interest earned on funds held in the State Fiscal Recovery Fund shall be transferred to the State Fiscal Recovery Reserve. shall remain in the State Fiscal Recovery Fund. The Office of State Budget and Management (OSBM) may allocate interest earnings to provide inflation adjustments to existing grants and projects funded through State Fiscal Recovery Funds by the North Carolina General Assembly.

SECTION 4.7.(b)  Reporting. – OSBM shall report on any allocations pursuant to Subsection 4.9(a) to the Senate Committee on Appropriations/Base Budget, the House Appropriations Committee, and the Fiscal Research Division within 90 days following the allocation.

SECTION 4.7.(c)  Transfer. – The State Controller shall transfer the sum of thirty million five hundred thousand dollars ($30,500,000) for the 2023‑24 fiscal year from the State Fiscal Recovery Reserve, established in Section 2.1 of S.L. 2021‑25, to the State Fiscal Recovery Fund, established in Section 2.2 of S.L. 2021‑25 and the funds are appropriated in the 2023‑24 fiscal year. The State Controller shall transfer any interest earned from State Fiscal Recovery Fund funds to the State Fiscal Recovery Fund, and interest earned is appropriated to the State Fiscal Recovery Fund in the year in which is earned.

SECTION 4.7.(d)  Reversion. – Interest funds appropriated in this act from the State Fiscal Recovery Fund shall not revert at the end of the 2023‑25 fiscal biennium. 

SECTION 4.7.(e)  Disbursement  – OSBM shall allocate State Fiscal Recovery Fund funds to State agencies and departments upon justification from the agency or department and only as needed to implement the provisions of this act. The following allocations are made from the State Fiscal Recovery Fund in this act and are subject to Section 4.9 of Session Law 2021‑180:  

State Agency or Department                                        2023‑2024                 2024‑2025

(1)       DIT – Awareness and Digital Literacy                                            

(Budget Code: 14660)                                                   $12,500,000             $12,500,000

(2)        DIT – Broadband Administration                                                    

(Budget Code: 14660)                                                       3,750,000                 3,750,000

(3)        DEQ – Viable Utility Reserve                                                         

(Budget Code: 24327)                                                     35,000,000                               0

(4)       DEQ – Local Assistance for Stormwater Infrastructure Investments Fund                           (Budget Code: 64311)                                                                               15,000,000                               0

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. 150B21.1A(a), an agency may adopt an emergency rule in accordance with G.S. 150B21.1A 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 twenty thousand dollars ($120,000) 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.

Elimination of Requirement of pen‑and‑ink signatures

SECTION 5.3.  The Revisor of Statutes shall eliminate any requirements in General Statutes that documents have pen‑and‑ink, or wet, signatures. This process should remove any references that mandate the signature of paper copies of forms and other documents, instead of allowing for both wet and digital signatures.

UNEXPENDED DIRECTED GRANTS APPROPRIATED IN 2022‑23 FISCAL YEAR DO NOT REVERT 

SECTION 5.4.(a)  Notwithstanding any provision of law to the contrary, any nonrecurring funds in directed grants appropriated in S.L. 2021‑180 for the 2022‑23 fiscal year that remain unexpended as of the effective date of this section and are subject to reversion at the end of the 2022‑23 fiscal year shall not revert at the end of the 2022‑23 fiscal year and shall remain available for expenditure for the purpose for which the funds were appropriated until the earlier of the date the funds are expended or the date the funds revert pursuant to subsection (b) of this section. 

SECTION 5.4.(b)  Any funds described in subsection (a) of this section that remain unexpended as of June 30, 2023, shall revert to the appropriate fund at the end of the 2023‑24 fiscal year. 

SECTION 5.4.(c)  This section becomes effective June 30, 2023. 

Federal Infrastructure Match Reserve ALLOCATION

SECTION 5.5.(a)  Support for Leveraging Federal Funds. – The State Controller shall transfer funds available in the Federal Infrastructure Match Reserve to the Office of State Budget and Management (OSBM) and the Department of Natural and Cultural Resources (DNCR) in the 2023‑24 fiscal year and the funds transferred are appropriated upon transfer:

(1)             $2,000,000 shall be allocated to state agencies for contracted support to assist in leveraging federal funds.

(2)             $1,650,000 shall be allocated to DNCR to support rural communities in competing for and applying federal grants.

(3)             $1,000,000 shall be allocated to OSBM to supplement local capacity across the state to pursue federal funding and support efforts to leverage those funds in local communities.

(4)             $750,000 shall be allocated to OSBM to establish two time‑limited positions that coordinate efforts to implement federal funding in new and existing programs and initiatives within state and local government.

SECTION 5.5.(b)  Allocation of Funds for State Match Requirements. – The State Controller shall transfer funds available in the Federal Infrastructure Match Reserve to the Department of Commerce (DOC), Department of Environmental Quality (DEQ), the Department of Transportation (DOT), Wildlife Resources Commission, and OSBM as needed to draw down federal funds. These state matching funds are appropriated in the year in which they are transferred, and their associated federal receipts and grants are appropriated in the year in which they are received. State agencies may, with approval of the Director of the Budget, spend these funds received from state matching funds, federal receipts, and federal grants.

(1)             The following amounts are allocated from the Federal Infrastructure Match Reserve in the 2023‑25 biennium:

State Agency or Department                                        2023‑2024                 2024‑2025

a.         OSBM – Clean Energy and Energy Efficiency Matching Grants   

(Budget Code: 23014)                                                   $25,000,000                             $0

b.         DEQ – Clean Water State Revolving Loan Fund                            

(Budget Code: 64311)                                                       3,975,123                 8,675,950

c.         DEQ – Drinking Water State Revolving Loan Fund                       

(Budget Code: 64320)                                                       6,605,875               14,417,727

d.         DEQ – Grid Resiliency                                                                                                           (Budget Code: 24300)                                                                                 1,384,547                 1,384,547

e.         DOC – Federal Energy Research Funding                                                                             (Budget Code: 14601)                                                                                    500,000                               0

(2)             The final amount of state matching funds required and federal funds awarded to Wildlife Resources Commission or DOT for wildlife crossing structures and other projects to reduce the number of wildlife‑vehicle collisions is not known but is hereby appropriated in the same manner as provided in this subsection. Both the state match needed to draw down the corresponding federal funds for this item and the associated federal receipts and grant award funds shall be transferred in the year in which the federal funds are awarded and are appropriated in the year in which they are transferred.

NCPRO/EXTENSION OF OPERATIONS

SECTION 5.6.(a)  Section 4.3 of S.L. 2020‑4, as amended by Section 3.5 of S.L. 2021‑1 and Section 23.2 of S.L. 2021‑180, reads as rewritten:

SECTION 4.3.(a)  OSBM shall establish a temporary North Carolina Pandemic Recovery Office (Office) to oversee and coordinate funds made available under COVID‑19 Recovery Legislation. This Office shall also provide technical assistance and ensure coordination of federal funds received by State agencies and local governments and ensure proper reporting and accounting of all funds. The authorization set forth in this section expires on June 30, 2023, 2027, and the Office shall cease to operate upon expiration of the authorization.

SECTION 5.6.(b)  As allowed per United States Treasury guidance, the interest earned from the Local Fiscal Recovery Funds is appropriated to the Office of State Budget and Management for North Carolina Pandemic Recovery Office operations.

2023 DISASTER RECOVERY

SECTION 5.7.(a)  State Emergency Response and Disaster Relief Fund. – Of the nonrecurring funds appropriated in this act for fiscal year 2023‑24, two hundred nine million seven hundred two thousand five hundred dollars ($209,702,500) shall be allocated as follows:

(1)        $44,950,000 to the Office of State Budget and Management to provide disaster recovery assistance to households and communities in response to Hurricane Matthew.

(2)        $30,000,000 to the Office of State Budget and Management to provide disaster recovery assistance to households and communities in response to Hurricane Florence.

(3)        $12,500,000 to the Office of State Budget and Management to provide disaster recovery assistance to households and communities in response to Tropical Storm Fred.

(4)        $10,000,000 to the Office of State Budget and Management to support the replacement of personal property items in households which suffered damages in previous hurricanes or other disasters.

(5)        $575,000 to the Office of State Budget and Management to provide disaster recovery assistance in response to the Sparta Earthquake.

(6)        $40,000,000 to the Department of Public Safety, Emergency Management Division, to support the Disaster Recovery and Mitigation Fund, which enhances flood mitigation and transportation resilience.

(7)        $5,000,000 to the Department of Public Safety, North Carolina Office of Recovery and Resiliency, to provide loans to households for their duplication of benefits payments.

(8)        $5,000,000 to the Department of Public Safety, Emergency Management Division, to provide grants that invest in local emergency management infrastructure.

(9)        $5,000,000 to the Department of Public Safety, Emergency Management Division, to provide grants that increase available capacity within local disaster shelters.

(10)      $3,327,500 to the Department of Public Safety, Emergency Management Division, to conduct flood studies and risk assessments for flood gauges in the Flood Inundation Mapping and Alert Network.

(11)      $3,200,000 to the Department of Public Safety, North Carolina Office of Recovery and Resiliency, to support the Resilient Communities Program, which offers training and portfolio development to guide and enhance local efforts to build resilience.

(12)      $20,000,000 to the Department of Agriculture and Consumer Services to support the Swine Floodplain Buyout Program, which purchases permanent conservation easements on properties currently used for swine production that are within the 100‑year floodplain.

(13)      $20,000,000 to the Department of Agriculture and Consumer Services to support the Streamflow Rehabilitation Assistance Program, which maintains and restores streams in flood mitigation efforts.

(14)      $1,000,000 to the Department of Agriculture and Consumer Services to support the Community Conservation Assistance Program, which provides cost‑share assistance to encourage the implementation of best land management practices.

(15)      $5,000,000 to the Department of Natural and Cultural Resources to support the North Carolina Land and Water Fund Flood Risk Reduction, which acquires land in flood‑prone areas, reduces stormwater impacts, and restores damaged streambanks and waterways.

(16)      $3,150,000 to the Department of Environmental Quality for dam‑overtopping studies of high‑hazard dams.

(17)      $1,000,000 to the Wildlife Resources Commission for equipment to control prescribed fire and contain wildfires.

SECTION 5.7.(b)  Implementation. – The following actions and policies shall be taken to implement subsection 5.7.(a)(1) and subsection 5.7.(a)(2) of this section:

(1)        If a person's home is relocated or purchased with funds from the Hazard Mitigation Grant Program or the State Acquisition and Relocation Fund, the State Emergency Response and Disaster Relief Fund is subrogated to the person's rights under any insurance coverage for the damage to the home and any monies received from the insurance coverage shall be paid to the State Emergency Response and Disaster Relief Fund. The Office of State Budget and Management shall ensure that those potentially affected by this section are notified of, and adhere to, its requirements.

(2)        No State funds appropriated in this section may be expended for the construction of any new residence within the 100‑year floodplain unless the construction is in an area regulated by a unit of local government pursuant to a floodplain management ordinance and the construction complies with the ordinance. As used in this section, 100‑year floodplain means any area subject to inundation by a 100‑year flood, as indicated on the most recent Flood Insurance Rate Map prepared by the Federal Emergency Management Agency under the National Flood Insurance Program.

(3)        Homeowners in the 100‑year floodplain who receive homeowner's housing assistance pursuant to this section shall have in effect federal flood insurance, if available, as a precondition to receipt of State homeowner's housing assistance for losses resulting from future flooding.

SECTION 5.7.(c)  Limitation. – The Governor shall ensure that funds allocated in this act are expended in a manner that does not adversely affect any person's or entity's eligibility for federal funds that are made available, or that are anticipated to be made available, as a result of Hurricanes Florence, Matthew, Michael, or Dorian, Tropical Storm Fred, or the Sparta Earthquake.  The Governor shall also, to the extent practicable, avoid using State funds to cover costs that will be, or likely will be, covered by federal funds.

SECTION 5.7.(d)  No Reversion of Funds. – Funds described in subsection 5.7.(a)(1), subsection 5.7.(a)(2), and subsection 5.7.(a)(3) shall remain available to implement the provisions of this section until the General Assembly directs the reversion of any unexpended and unencumbered funds and G.S. 143C‑6‑23(f1)(1) shall not apply to those funds.

SECTION 5.7.(e)  Reporting Requirements. – The Office of State Budget and Management shall provide periodic reports on the use of the funds allocated and appropriated in this Act in a manner which is consistent with Section 5.8 of Session Law 2019‑250.

SECTION 5.7.(f)  Programmatic Support – The Office of State Budget and Management may use up to five percent (5%) of the funds allocated for programmatic capacity and administrative expenses.

Flexibility for use of Unexpended Disaster Recovery Funds

SECTION 5.8.(a)  Section 5.9A(c)(1) of S.L. 2021‑180 reads as rewritten:

SECTION 5.9A.(c)  Allocations. – Of the funds appropriated in Section 2.2(j) of this act for disaster relief, recovery, mitigation, and resiliency, the sum of one hundred twenty‑four million four hundred thousand dollars ($124,400,000) shall be allocated for relief and recovery efforts from Tropical Storm Fred as follows:

(1)        $72,000,000 to the Department of Public Safety, Division of Emergency Management, for the following purposes:

a.         $20,000,000 for home reconstructions reconstructions, acquisitions, elevations, or relocations that are not eligible for federal assistance through the Hazard Mitigation Grant Program.Program (HMGP) or in counties not eligible for HMGP.

…

g.         $2,000,000 for property repairs for housing facilities owned by landlords who house families displaced by Tropical Storm Fred.Fred or families who will become displaced during the repair of damage to such housing facilities.

….

SECTION 5.8.(b)  Notwithstanding any other provision of law, any State agency that received Tropical Storm Fred recovery funds pursuant to this act or any of the following enactments may reallocate unexpended and unobligated program funds to any program or purpose stated in those appropriations:

(1)               S.L. 2021‑180.

(2)               S.L. 2021‑189.

(3)               S.L. 2022‑6.

(4)               S.L. 2022‑74.

SECTION 5.8.(c)  Any State agency that reallocates funds pursuant to subsection (b) of this section shall report, at least 30 days prior to the reallocation, to the chairs of the Senate Appropriations/Base Budget Committee, the chairs of the House of Representatives Appropriations Committee, and the Fiscal Research Division. The report shall identify all of the following:

(1)               The original funding authorization.

(2)               The original program or purpose for the use of the funds.

(3)               The amount of funds expended or obligated for the original program or purpose.

(4)               The amount of funds that remain unexpended or unencumbered.

(5)               The amount of funds to be reallocated.

Recovery and Mitigation Grants

SECTION 5.9.(a)  Section 5.9(g) of S.L. 2021‑180 reads as rewritten:

SECTION 5.9.(g)  Establishment of Transportation Infrastructure ResiliencyDisaster Recovery and Mitigation Fund. – There is established the Transportation Infrastructure Resiliency Fund Disaster Recovery and Mitigation (Fund) in the Department of Public Safety, Division of Emergency Management. Any funds appropriated to the Fund shall remain available for expenditure as provided in this section unless directed otherwise by the General Assembly.

The Division of Emergency Management shall administer a grant program using funds appropriated to the Disaster Recovery and Mitigation Fund that allows State agencies, units of local government, regional councils of government, and nonprofit corporations to apply for funds to ensure resilience against natural disasters. The Division of Emergency Management shall consult with relevant state agencies prior to awarding grants to State agencies, units of local government, regional councils of government, and nonprofit corporations. Funds may be used for any of, and activities consistent with, the following:

(1)        Projects that update and prepare transportation infrastructure for storms, mudslides, rockslides, and flooding events taking projections of future risk into consideration.

(2)        Risk assessments for critical transportation routes, building on existing and future reports such as the I‑95 and I‑40 Flood Resilience Feasibility Study.

(3)        Creating community‑informed flood risk and vulnerability assessments that identify resilience gaps and project opportunities for transportation routes in North Carolina to help maintain vital transportation functions following flooding events.

(4)        Flood mitigation efforts that stabilize areas and reduce future damage.

(5)        Predevelopment assistance to provide small and underserved communities with technical assistance to identify and design shovel‑ready projects related to disaster relief and flood mitigation.

(6)        Requirements for non‑federal match funds when incorporating flood resilience into federally funded hazard mitigation and transportation resilience projects.

SECTION 5.9.(b)  Section 5.9(f) and Section 5.9(h) are repealed.

ERP 2.0 OVERSIGHT 

SECTION 5.10.(a) There is established the ERP 2.0 Oversight Committee (Committee), which shall be located within the Office of State Budget and Management for organizational, budgetary, and administrative purposes.

SECTION 5.10.(b) ERP 2.0 shall include the following information technology projects funded from the Information Technology Projects Reserve:

(1)               The Human Capital Resource Management project

(2)               The Budget System Replacement project, and

(3)               The Grants Management System project.

SECTION 5.10.(c) The Committee consists of the following members:

(1)               The State Chief Information Officer (CIO), who shall serve as chair.

(2)               The State Budget Officer.

(3)               The State Controller.

(4)               The Director of State Human Resources.

SECTION 5.10.(d) The Committee shall have the following powers and duties: 

(1)                  To establish steering committees for each project funded as a part of ERP 2.0. The steering committees shall, at a minimum, consist of:

a.         The agency head, or agency head designees, of the agency or agencies responsible for the project,

b.         Key stakeholders impacted by the project,

c.         A representative from the Office of State Budget and Management,

d.         A representative from the Department of Information Technology.

(2)                  To review and approve the allocation of ERP 2.0 funds appropriated in Section 2.2.(i) of this act. The Committee shall establish standards and procedures for approval of funding allocations.

(3)                  To receive updates on project costs, schedule, and milestones ERP 2.0 projects. The Committee shall determine the monitoring schedule and procedures, except that each project receiving money for ERP 2.0 shall provide the Committee with quarterly reports and come before the Committee for review at least annually.

(4)                  To suspend funding for any ERP 2.0 project that has received funding from the Reserve. The suspension must be based on the Committee's finding that the project is not in compliance with the schedule, budget, and quality standards set forth when the project was approved for funding. The Committee shall report any suspension immediately to the State CIO, the Office of the State Controller, the Office of State Budget and Management, the Joint Legislative Oversight Committee on Information Technology, and the Fiscal Research Division. The Office of State Budget and Management shall not permit any additional expenditure of project that has been suspended by the Board.

SECTION 5.10.(e) The Committee shall meet at least quarterly and may hold additional meetings upon the call of the Chair.

SECTION 5.10.(f) The Office of State Budget and Management shall provide primary staff support to the Board with assistance from the Department of Information Technology as needed.

Integrated Tax Administration System Replacement OVERSIGHT 

SECTION 5.11.(a) There is established the Integrated Tax Administration System (ITAS) Replacement Oversight Committee (Committee), which shall be located within the Department of Revenue for organizational, budgetary, and administrative purposes.

SECTION 5.11.(b) The Committee consists of the following members:

(1)                  The Secretary of Revenue, who shall serve as chair.

(2)                  The State Budget Officer.

(3)                  The State Chief Information Officer.

SECTION 5.11.(c) The Committee shall have the following powers and duties: 

(1)               To establish steering committees for the ITAS replacement project. The steering committees shall, at a minimum, consist of:

a.         Designees from the Department of Revenue

b.         Key stakeholders impacted by the project,

c.         A representative from the Office of State Budget and Management.

d.         A representative from the Department of Information Technology.

(2)               To receive updates on project costs, schedule, and milestones of the ITAS replacement project appropriated in Section 2.2(i) of this Act. The Committee shall determine the monitoring schedule and procedures.

SECTION 5.11.(d) The Committee shall meet at least quarterly and may hold additional meetings upon the call of the Chair.

SECTION 5.11.(e) The Department of Revenue shall provide primary staff support to the Committee.

PART VI. COMMUNITY COLLEGE SYSTEM

Evaluation Funds for nursing preceptorships

SECTION 6.1.  The Community College System shall use a portion of funds provided for nursing preceptorships to conduct a program evaluation. The Community Colleges System Office may consult with the Office of State Budget and Management for assistance on how to develop a plan for evaluation, including how to register a pre‑analysis plan. The system office shall report annually to OSBM and the Fiscal Research Division at the General Assembly on the progress of the evaluation and, when completed, make the pre‑analysis plan and final evaluation report publicly available.

Evaluation Funds for child care programs in community colleges

SECTION 6.2.  The Community College System shall use a portion of funds provided for child care services to conduct a program evaluation. The Community Colleges System Office may consult with the Office of State Budget and Management for assistance on how to develop a plan for evaluation, including how to register a pre‑analysis plan. The system office shall report annually to OSBM and the Fiscal Research Division at the General Assembly on the progress of the evaluation and, when completed, make the pre‑analysis plan and final evaluation report publicly available.

PART VII. PUBLIC INSTRUCTION

FUNDS FOR ACADEMICALLY GIFTED CHILDREN

SECTION 7.1.  The State Board of Education shall allocate additional funds for academically or intellectually gifted children on the basis of one thousand four hundred twenty‑three dollars and fourteen cents ($1,423.14) per child for fiscal years 2023‑24 and 2024‑25. A local school administrative unit shall receive funds for a maximum of five percent (5%) of its allocated average daily membership, regardless of the number of children identified as academically or intellectually gifted in the unit. The dollar amounts allocated under this section for academically or intellectually gifted children shall also be adjusted in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve academically or intellectually gifted children. 

FUNDS FOR CHILDREN WITH DISABILITIES 

SECTION 7.2.  The State Board of Education shall allocate additional funds for children with disabilities on the basis of six thousand sixty dollars ($6,060) for fiscal year 2023‑24 and six thousand five hundred fifty dollars ($6,550) for fiscal year 2024‑25 per child. 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. The dollar amounts allocated under this section for children with disabilities shall also be adjusted in accordance with legislative salary increments, retirement rate adjustments, and health benefit adjustments for personnel who serve children with disabilities.

FUNDS FOR LIMITED ENGLISH PROFICIENCY    

SECTION 7.3.  The State Board of Education shall allocate additional funds for services to students with limited proficiency in the English language to local school administrative units and to charter schools based on the three‑year weighted headcount of students in the units or charter school with limited English proficiency. 

DISADVANTAGED STUDENT SUPPLEMENTAL FUNDING (DSSF)/AT‑RISK STUDENT SERVICES/ALTERNATIVE SCHOOLS

SECTION 7.4.(a)  Funds appropriated in this act for disadvantaged student supplemental funding shall be used, consistent with the policies and procedures adopted by the State Board of Education, only to do the following: 

(1)        Provide instructional positions or instructional support positions. 

(2)        Provide professional development. 

(3)        Provide intensive in‑school or afterschool remediation, or both. 

(4)        Purchase diagnostic software and progress‑monitoring tools. 

(5)        Provide funds for teacher bonuses and supplements.  

The State Board of Education may require local school administrative units receiving funding under the Disadvantaged Student Supplemental Fund to purchase the Education Value‑Added Assessment System (EVAAS) in order to provide in‑depth analysis of student performance and help identify strategies for improving student achievement. This data shall be used exclusively for instructional and curriculum decisions made in the best interest of children and for professional development for their teachers and administrators. 

SECTION 7.4.(b)  Disadvantaged student supplemental funding (DSSF) shall be allotted to a local school administrative unit based on (i) the unit's eligible DSSF population and (ii) the difference between a teacher‑to‑student ratio of 1:21 and the following teacher‑to‑student ratios: 

(1)        For counties with wealth greater than ninety percent (90%) of the statewide average, a ratio of 1:19.9. 

(2         For counties with wealth not less than eighty percent (80%) and not greater than ninety percent (90%) of the statewide average, a ratio of 1:19.4. 

(3)        For counties with wealth less than eighty percent (80%) of the statewide average, a ratio of 1:19.1. 

(4)        For local school administrative units that received DSSF funds in fiscal year 2005‑06, a ratio of 1:16. These local school administrative units shall receive no less than the DSSF amount allotted in fiscal year 2006‑07. 

For the purpose of this subsection, wealth shall be calculated under the low‑wealth supplemental formula as provided for in this act. 

SECTION 7.4.(c)  If a local school administrative unit's wealth increases to a level that adversely affects the unit's disadvantaged student supplemental funding (DSSF) allotment ratio, the DSSF allotment for that unit shall be maintained at the prior year level for one additional fiscal year. 

SECTION 7.4.(d)  For the 2024‑25 fiscal year the State Board of Education shall transfer the At‑Risk Student Services/Alternative Schools allotment into the DSSF allotment and allocate these funds to local school administrative units under a formula that: 

(1)        Expands the allowable uses of the DSSF allotment to incorporate activities allowed under the current At‑Risk allotment; and 

(2)        Provides that no local administrative unit receives a decrease in combined funding. 

Reallocated At‑Risk funding must be counted as an independent supplement to existing DSSF funds. 

SUPPLEMENTAL FUNDING IN LOW‑WEALTH COUNTIES    

SECTION 7.5.(a)  Use of Funds for Supplemental Funding. – All funds received pursuant to this section shall be used only (i) to provide instructional positions, instructional support positions, teacher assistant positions, clerical positions, school computer technicians, instructional supplies and equipment, staff development, and textbooks and digital resources and (ii) for salary supplements for instructional personnel and instructional support personnel. Local boards of education are encouraged to use at least twenty‑five percent (25%) of the funds received pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end‑of‑grade tests in grades three through eight. 

SECTION 7.5.(b)  Definitions.

As used in this section, the following definitions apply: 

(1)        Anticipated county property tax revenue availability. – The county‑adjusted property tax base multiplied by the effective State average tax rate. 

(2)        Anticipated total county revenue availability. – The sum of the following: 

a.         Anticipated county property tax revenue availability. 

b.         Local sales and use taxes received by the county that are levied under Chapter 1096 of the 1967 Session Laws or under Subchapter VIII of Chapter 105 of the General Statutes. 

c.         Fines and forfeitures deposited in the county school fund for the most recent year for which data are available. 

(3)        Anticipated total county revenue availability per student. – The anticipated total county revenue availability for the county divided by the average daily membership of the county. 

(4)        Anticipated State average revenue availability per student. – The sum of all anticipated total county revenue availability divided by the average daily membership for the State. 

(5)        Average daily membership. – Average daily membership as defined in the North Carolina Public Schools Allotment Policy Manual adopted by the State Board of Education. If a county contains only part of a local school administrative unit, the average daily membership of that county includes all students who reside within the county and attend that local school administrative unit. 

(6)        County‑adjusted property tax base. – Computed as follows: 

a.         Subtract the present‑use value of agricultural land, horticultural land, and forestland in the county, as defined in G.S. 105‑277.2, from the total assessed real property valuation of the county. 

b.         Adjust the resulting amount by multiplying by a weighted average of the three most recent annual sales assessment ratio studies. 

c.         Add to the resulting amount the following: 

1.         Present‑use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105‑277.2. 

2.         Value of property of public service companies, determined in accordance with Article 23 of Chapter 105 of the General Statutes. 

3.         Personal property value for the county. 

(7)        County‑adjusted property tax base per square mile. – The county‑adjusted property tax base divided by the number of square miles of land area in the county. 

(8)        County wealth as a percentage of State average wealth. – Computed as follows: 

a.         Compute the percentage that the county per capita income is of the State per capita income and weight the resulting percentage by a factor of five‑tenths. 

b.         Compute the percentage that the anticipated total county revenue availability per student is of the anticipated State average revenue availability per student and weight the resulting percentage by a factor of four‑tenths. 

c.         Compute the percentage that the county‑adjusted property tax base per square mile is of the State‑adjusted property tax base per square mile and weight the resulting percentage by a factor of one‑tenth. 

d.         Add the three weighted percentages to derive the county wealth as a percentage of the State average wealth. 

(9)        Effective county tax rate. – The actual county tax rate multiplied by a weighted average of the three most recent annual sales assessment ratio studies. 

(10)      Effective State average tax rate. – The average of effective county tax rates for all counties. 

(11)      Local current expense funds. – The most recent county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C‑447. 

(12)      Per capita income. – The average for the most recent three years for which data are available of the per capita income according to the most recent report of the United States Department of Commerce, Bureau of Economic Analysis, including any reported modifications for prior years as outlined in the most recent report. 

(13)      Sales assessment ratio studies. – Sales assessment ratio studies performed by the Department of Revenue under G.S. 105‑289(h). 

(14)      State average adjusted property tax base per square mile. – The sum of the county‑adjusted property tax bases for all counties divided by the number of square miles of land area in the State. 

(15)      State average current expense appropriations per student. – The most recent State total of county current expense appropriations to public schools, as reported by local boards of education in the audit report filed with the Secretary of the Local Government Commission pursuant to G.S. 115C‑447. 

(16)      Supplant. – To decrease local per student current expense appropriations from one fiscal year to the next fiscal year. 

(17)      Weighted average of the three most recent annual sales assessment ratio studies. – The weighted average of the three most recent annual sales assessment ratio studies in the most recent years for which county current expense appropriations and adjusted property tax valuations are available. If real property in a county has been revalued one year prior to the most recent sales assessment ratio study, a weighted average of the two most recent sales assessment ratios shall be used. If property has been revalued the year of the most recent sales assessment ratio study, the sales assessment ratio for the year of revaluation shall be used. 

SECTION 7.5.(c)  Eligibility for Funds. – Except as provided in subsection (g) of this section, the State Board of Education shall allocate these funds to local school administrative units located in whole or in part in counties in which the county wealth as a percentage of the State average wealth is less than one hundred percent (100%). 

SECTION 7.5.(d)  Allocation of Funds. – Except as provided in subsection (f) of this section, the amount received per average daily membership for a county shall be the difference between the State average current expense appropriations per student and the current expense appropriations per student that the county could provide given the county's wealth and an average effort to fund public schools. To derive the current expense appropriations per student that the county could be able to provide given the county's wealth and an average effort to fund public schools, multiply the county's wealth as a percentage of State average wealth by the State average current expense appropriations per student. The funds for the local school administrative units located in whole or in part in the county shall be allocated to each local school administrative unit located in whole or in part in the county based on the average daily membership of the county's students in the school units. If the funds appropriated for supplemental funding are not adequate to fund the formula fully, each local school administrative unit shall receive a pro rata share of the funds appropriated for supplemental funding. 

SECTION 7.5.(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 for low‑wealth counties. It is the intent of the General Assembly to incrementally increase appropriations for the low‑wealth allotment to provide eligible counties supplemental funding equal to one hundred ten percent (110%) of the statewide local revenue per student by fiscal year 2027‑28. The State Board of Education shall adjust the formula to ensure each local school administrative until receives a pro rata share of the additional funds appropriated for the low‑wealth allotment in this act for supplemental funding. 

SECTION 7.5.(f)  Minimum Effort Required. – A county shall receive full funding under this section if the county (i) maintains an effective county tax rate that is at least one hundred percent (100%) of the effective State average tax rate in the most recent year for which data are available or (ii) maintains a county appropriation per student to the school local current expense fund of at least one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools. A county that maintains a county appropriation per student to the school local current expense fund of less than one hundred percent (100%) of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools shall receive funding under this section at the same percentage that the county's appropriation per student to the school local current expense fund is of the current expense appropriations per student to the school local current expense fund that the county could provide given the county's wealth and an average effort to fund public schools. 

SECTION 7.5.(g)  Non‑supplant Requirement. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2023‑25 fiscal biennium, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year, or the year for which the most recent data are available, if all of the following criteria apply: 

(1)        The current expense appropriations per student of the county for the current year is less than ninety‑five percent (95%) of the average of local current expense appropriations per student for the three prior fiscal years. 

(2)        The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section. 

The State Board of Education shall adopt rules to implement the requirements of this subsection. 

SECTION 7.5.(h)  Counties Containing a Base of the Armed Forces. – Notwithstanding any other provision of this section, for the 2023‑25 fiscal biennium, counties containing a base of the Armed Forces of the United States that have an average daily membership of more than 17,000 students shall receive whichever is the higher amount in each fiscal year as follows: either the amount of supplemental funding the county received as a low‑wealth county in the 2012‑2013 fiscal year or the amount of supplemental funding the county is eligible to receive as a low‑wealth county pursuant to the formula for distribution of supplemental funding under the other provisions of this section. 

SECTION 7.5.(i)  Funds for EVAAS Data. – Notwithstanding the requirements of subsection (a) of this section, local school administrative units may utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value‑Added Assessment System (EVAAS). 

SECTION 7.5.(j)  Reports. – For the 2023‑25 fiscal biennium, the State Board of Education shall report to the Fiscal Research Division prior to May 15 of each year if it determines that counties have supplanted funds. 

SECTION 7.5.(k)  Department of Revenue Reports. – The Department of Revenue shall provide to the Department of Public Instruction a preliminary report for the current fiscal year of the assessed value of the property tax base for each county prior to March 1 of each year and a final report prior to May 1 of each year. The reports shall include for each county the annual sales assessment ratio and the taxable values of (i) total real property, (ii) the portion of total real property represented by the present‑use value of agricultural land, horticultural land, and forestland, as defined in G.S. 105‑277.2, (iii) property of public service companies determined in accordance with Article 23 of Chapter 105 of the General Statutes, and (iv) personal property. 

SMALL COUNTY SCHOOL SYSTEM SUPPLEMENTAL FUNDING 

SECTION 7.6.(a)  Allotment Schedule for the 2023‑25 Fiscal Biennium. – Except as otherwise provided in subsection (d) of this section, each eligible county school administrative unit shall receive a dollar allotment according to the following schedule: 

Allotted ADM      Small County Allotment

 0‑1,300                       $1,820,000 

1,301‑1,700                       $1,548,700 

1,701‑2,000                       $1,600,000 

2,001‑2,300                       $1,560,000 

2,301‑2,600                       $1,470,000 

2,601‑2,800                       $1,498,000 

2,801‑3,300                       $1,548,000

SECTION 7.6.(b)  Phase‑Out Provision for the 2023‑24 Fiscal Year. – If a local school administrative unit becomes ineligible for funding under the schedule in subsection (a) of this section in the 2023‑24 fiscal year, funding for that unit shall be phased out over a five‑year period. Funding for such local school administrative units shall be reduced in equal increments in each of the five years after the unit becomes ineligible. Funding shall be eliminated in the fifth fiscal year after the local school administrative unit becomes ineligible. 

Allotments for eligible local school administrative units under this subsection shall not be reduced by more than twenty percent (20%) of the amount received in fiscal year 2022‑23 in any fiscal year. A local school administrative unit shall not become ineligible for funding if either the highest of the first two months' total projected average daily membership for the current year or the higher of the first two months' total prior year average daily membership would otherwise have made the unit eligible for funds under the schedule in subsection (a) of this section. 

SECTION 7.6.(c)  Phase‑Out Provision for the 2024‑25 Fiscal Year. – If a local school administrative unit becomes ineligible for funding under the schedule in subsection (a) of this section in the 2024‑25 fiscal year, funding for that unit shall be phased out over a five‑year period. Funding for such local school administrative units shall be reduced in equal increments in each of the five years after the unit becomes ineligible. Funding shall be eliminated in the fifth fiscal year after the local administrative unit becomes ineligible. 

Allotments for eligible local school administrative units under this subsection shall not be reduced by more than twenty percent (20%) of the amount received in fiscal year 2023‑24 in any fiscal year. A local school administrative unit shall not become ineligible for funding if either the highest of the first two months' total projected average daily membership for the current year or the higher of the first two months' total prior year average daily membership would otherwise have made the unit eligible for funds under the schedule in subsection (a) of this section. 

SECTION 7.6.(d)  Non‑supplant Requirement for the 2023‑25 Fiscal Biennium. – A county in which a local school administrative unit receives funds under this section shall use the funds to supplement local current expense funds and shall not supplant local current expense funds. For the 2023‑25 fiscal biennium, the State Board of Education shall not allocate funds under this section to a county found to have used these funds to supplant local per student current expense funds. The State Board of Education shall make a finding that a county has used these funds to supplant local current expense funds in the prior year or the year for which the most recent data are available, if all of the following criteria apply: 

(1)        The current expense appropriation per student of the county for the current year is less than ninety‑five percent (95%) of the average of local current expense appropriation per student for the three prior fiscal years. 

(2)        The county cannot show (i) that it has remedied the deficiency in funding or (ii) that extraordinary circumstances caused the county to supplant local current expense funds with funds allocated under this section. 

The State Board of Education shall adopt rules to implement the requirements of this subsection. 

SECTION 7.6.(e)  Reports. – For the 2023‑25 fiscal biennium, the State Board of Education shall report to the Fiscal Research Division prior to May 15 of each fiscal year if it determines that counties have supplanted funds. 

SECTION 7.6.(f)  Use of Funds. – Local boards of education are encouraged to use at least twenty percent (20%) of the funds they receive pursuant to this section to improve the academic performance of children who are performing at Level I or II on either reading or mathematics end‑of‑grade tests in grades three through eight. 

Local school administrative units may also utilize funds allocated under this section to purchase services that allow for extraction of data from the Education Value‑Added Assessment System (EVAAS). 

RECRUITMENT BONUS PROGRAM FOR TEACHERS IN LOW WEALTH, LOW PERFORMING OR HIGH NEEDS SCHOOLS  

SECTION 7.7.(a)  Purpose. – The State Board of Education shall establish a grant program to assist local school administrative units in providing multi‑year recruitment bonuses to certified teachers who commit to teach multiple years in a low‑performing or high‑needs school.  Bonuses awarded as part of this grant program shall include, but are not limited to, the following components: 

(1)               Awarded over multiple years with a requirement that teachers remain in the school over multiple years to receive the bonus; 

(2)               Awarded to certified teachers who commit to teach in a school identified as low‑performing, as defined in GS 115C‑105.37, a school identified as continually low‑performing as defined in GS 115C‑105.37A, or a school where seventy‑five percent (75%) or greater of students qualify for free or reduced‑price lunch under the National School Lunch Program. 

SECTION 7.7.(b)  Request for Proposal. – By September 1, 2023, and on that date in subsequent years, the State Board of Education shall issue a Request for Proposal (RFP) for the grant program. Local boards of education shall submit their proposals by December 1, 2023. The RFP shall require that proposals include the following information at a minimum: 

(1)               Description of the proposal, including details on targeted schools for the bonuses and how the bonus program will be structured; 

(2)               Evidence‑based research that supports the proposal; 

(3)               Implementation plan; and 

(4)               Plans for financial sustainability once grant money is no longer available. 

SECTION 7.7.(c) Grant Awards. – By February 15, 2024, the State Board of Education shall review the proposals submitted by local boards of education and shall select local school administrative units for grant awards. The State Board of Education may make grant awards for up to three years. A local school administrative unit may not receive more than five hundred thousand dollars ($500,000) in a single fiscal year from this grant program. 

SECTION 7.7.(d)  Evaluation and Reporting. – Of the funds appropriated by this act, the State Board of Education may use up to three hundred thousand dollars ($300,000) 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, 2026. The Department of Public Instruction shall report annually on the implementation of this grant program beginning on March 1, 2024. 

SECTION 7.7.(e)  Carryforward. – Funds unspent in the 2023‑24 and 2024‑25 fiscal years shall not revert and shall be carried forward to implement this section. 

EDUCATOR PROFESSIONAL DEVELOPMENT ALLOTMENT

SECTION 7.8.  The State Board of Education shall establish an Educator Professional Development Allotment. Of the funds appropriated in this act to the Department of Public Instruction, the sum of at least ten million dollars ($10,000,000) in the 2023‑24 fiscal year and the sum of at least twenty million dollars ($20,000,000) in the 2024‑25 fiscal year shall be used to fund the Educator Professional Development Allotment. Funds shall be used by local administrative units and charter schools for educator professional development, to implement literacy training, and for mentoring programs for beginning educators. Funds shall be allotted to local administrative units based on average daily membership. The Department shall determine an appropriate minimum allotment.  

NATIONAL BOARD CERTIFICATION FEE SUPPORT     

SECTION 7.9.(a)  Of the funds appropriated to the Department of Public Instruction by this act, the Department shall transfer the sum of one million nine hundred thousand dollars ($1,900,000) each year of the biennium to the State Education Assistance Authority to pay the application fees for first time candidates applying for certification by the National Board for Professional Teaching Standards. Funds shall be available beginning with the 2023‑24 school year. 

SECTION 7.9.(b)  G.S. 115C‑296.2 reads as rewritten: 

§ 115C‑296.2.  National Board for Professional Teaching Standards Certification. 

(a)               State Policy. – It is the goal of the State to provide opportunities and incentives for good teachers to become excellent teachers and to retain them in the teaching profession; to attain this goal, the State shall support the efforts of teachers to achieve national certification by providing approved paid leave time for teachers participating in the process, lending teacherspaying the participation fee, and paying a significant salary differential to teachers who attain national certification from the National Board for Professional Teaching Standards (NBPTS).

… 

(c)        Payment of the NBPTS Participation Fee; Paid Leave. – The State shall lend provide teachers the participation fee and shall provide up to three days of approved paid leave to all teachers participating in the NBPTS program who: 

(1)        Have completed three full years of teaching in a North Carolina public school; and 

(2)        Have (i) not previously received State funds for participating in any certification area in the NBPTS program, (ii) repaid any State funds previously received for the NBPTS certification process, or (iii) received a waiver of repayment from the State Board of Education. 

Teachers participating in the program shall take paid leave only with the approval of their supervisors. 

….

TEACHER ASSISTANTS     

SECTION 7.10.  It is the intent of the General Assembly to incrementally increase funding for the Teacher Assistants allotment and to simplify the formula for allotting funding in order to provide funding for one teacher assistant for every 27 kindergarten year through third grade students by fiscal 2027‑28. Teacher Assistant funding shall be allotted to a local school administrative unit based on a teacher assistant‑to‑kindergarten through third grade student ratio of 1:31 in fiscal year 2023‑24 and a teacher assistant‑to‑kindergarten through third grade student ratio of 1:29 in fiscal year 2024‑25.  

SCHOOL NURSES AND SOCIAL WORKERS  

SECTION 7.11.(a) Definition of Terms: For the purposes of this section, the following definitions shall apply:

(1)       Community partner. – A public or private entity, including, but not limited to, a nonprofit corporation or a local management entity/managed care organization (LME/MCO), that partners with a public school unit to provide services or pay for the provision of services for the unit.

(2)       School Nurse – A registered and licensed individual with the state of North Carolina.

(3)       School Social Worker – A registered and K‑12 licensed individual with the North Carolina Department of Public Instruction.

(4)       Eligible public school – A school within a local school administrative unit or charter school that is located in a county that is a development tier one or two area, as defined in G.S. 143B‑437.08.

SECTION 7.11.(b)  Program; Purpose. – For the 2023‑25 fiscal biennium, the State Board of Education shall establish the School Nurse and Social Worker Program. The funds appropriated in this act to the Department of Public Instruction shall be used to ensure that every eligible public school has a full‑time equivalent (FTE) nurse or social worker. In each fiscal year of the 2023‑25 fiscal biennium, funds shall be used for (i) a nurse or social worker FTE, or (ii) contractual services for an individual.

SECTION 7.11.(c)  Criteria and Guidelines. – Within thirty (30) days of the budget being certified and funds becoming available, the State Board of Education shall release criteria and guidelines for the administration and use of the funds pursuant to this section. In the disbursement of funds, the State Board of Education shall consider at least all of the following factors:

(1)       The number of certified nurse and social worker FTEs and contractual services of nurses and social workers, according to the Department of Public Instruction's Financial and Business Services and Department of Health and Human Services, within the eligible public school for the 2022‑23 school year.

a.         Each charter board or charter school leader must submit documentation of their nurse and social worker staffing from the previous school year. If there was no nurse or social worker or contractual work, the charter board or charter school leader must certify that information.

(2)       The development tier of the county in which the eligible public school was located for the 2022‑23 school year.

a.         Eligible public schools in tier one and two development areas which were staffed by neither a school nurse nor a school social worker for the 2022‑23 school year should be given first priority.

b.         Eligible public schools in tier one and two development areas which were not staffed by a school nurse for the 2022‑23 school year should be given second priority.

c.         Eligible public schools in tier one and two development areas which were not staffed by a school social worker for the 2022‑23 should be given third priority.

d.         If there are remaining funds, all other public school units shall be considered.

(3)       Priority shall be given to eligible public schools that can show the ability to hire or contract services within sixty (60) days of receiving funds.

Based on the factors above, the State Board of Education shall notify eligible public schools of their eligibility for the program and the amount of funds to be awarded should the eligible public school participate in the program.

SECTION 7.11.(d)  Supplement Not Supplant. – Funds provided to eligible public schools pursuant to the Program shall be used to supplement and not to supplant State or non‑State funds already provided for these services.

SECTION 7.11.(e)  Administrative Costs. – Of the funds appropriated to the Department of Public Instruction by this act, the State Board of Education may retain a total of up to two hundred thousand dollars ($200,000) in each fiscal year of the 2023‑25 fiscal biennium for administrative costs associated with the Program.

SECTION 7.11.(f)  Report. – No later than April 1 of each fiscal year in which funds are awarded pursuant to this section, the State Board of Education shall report on the Program identified in this section to the Joint Legislative Education Oversight Committee, the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Commission on Governmental Operations, the Senate Appropriations/Base Budget Committee, the House Committee on Appropriations, the Fiscal Research Division, and the North Carolina Office of State Budget and Management. The report shall include at least the following information:

(1)       The identity of each eligible public school and community partner that received grant funds through the Program.

(2)       The amount of funding received by each entity identified pursuant to subdivision (1) of this subsection.

(3)       The specific position funded, whether a school nurse or social worker.

(4)       The nature of the position funded, whether a FTE or contractual services.

(5)       Recommendations for the implementation of additional funding to provide at least one full‑time school nurse or social worker for all public school units.

SCHOOL SAFETY GRANTS 

SECTION 7.12.(a)  Definitions. – For the purposes of this section, the following definitions shall apply: 

(1)        Community partner. – A public or private entity, including, but not limited to, a nonprofit corporation or a local management entity/managed care organization (LME/MCO), that partners with a public school unit to provide services or pay for the provision of services for the unit. 

(2)        School health support personnel. – School psychologists, school counselors, school nurses, and school social workers. 

SECTION 7.12.(b)  Program; Purpose. – For the 2023‑24 fiscal year, the State Board of Education shall establish the School Safety Grants Program (Program). The purpose of the Program shall be to improve safety in public school units by providing grants in fiscal year 2023‑24 for (i) services for students in crisis, (ii) school safety training, (iii) safety equipment in schools, and (iv) other initiatives to improve school safety. 

SECTION 7.12.(c)  Grant Applications. – A public school unit may submit an application to the State Board of Education for one or more grants pursuant to this section. The application shall include an assessment, to be performed in conjunction with a local law enforcement agency, of the need for improving school safety within the public school unit that would receive the funding or services. The application shall identify current and ongoing needs and estimated costs associated with those needs. 

SECTION 7.12.(c1)  Allocations based on Average Daily Membership (ADM) – Of the funds appropriated by this act, the Department of Public Instruction shall distribute at least forty million dollars ($40,000,000) in allocations to local school administrative units.  Each local school administrative unit shall receive a base allocation of at least ten thousand dollars ($10,000) per year. The remainder of the funds appropriated for this program shall be divided proportionally to local school administrative units based on their proportion of total state allotted ADM for the previous academic year. 

SECTION 7.12.(d)  Criteria and Guidelines. – By January 15, 2024, the State Board of Education shall develop criteria and guidelines for the administration and use of the funds pursuant to this section, including any documentation required to be submitted by public school units. In assessing grant applications, the State Board of Education shall consider at least all of the following factors:

(1)       The level of resources available to the public school unit that would receive the funding.

(2)       Whether the public school unit has received other grants for school safety.

(3)       The overall impact on student safety in the public school unit if the identified needs are funded.

SECTION 7.12.(e)  Grants for Students in Crisis. – Of the funds appropriated to the Department of Public Instruction by this act for the grants provided in this section, the Superintendent of Public Instruction, in consultation with the Department of Health and Human Services, shall award grants to public school units to contract with community partners to provide or pay for the provision of any of the following crisis services:

(1)       Crisis respite services for parents or guardians of an individual student to prevent more intensive or costly levels of care.

(2)       Training and expanded services for therapeutic foster care families and licensed child placement agencies that provide services to students who (i) need support to manage their health, welfare, and safety and (ii) have any of the following:

a.         Cognitive or behavioral problems.

b.         Developmental delays.

c.         Aggressive behavior.

(3)       Evidence‑based therapy services aligned with targeted training for students and their parents or guardians, including any of the following:

a.         Parent‑child interaction therapy.

b.         Trauma‑focused cognitive behavioral therapy.

c.         Dialectical behavior therapy.

d.         Child‑parent psychotherapy.

(4)       Any other crisis service, including peer‑to‑peer mentoring, that is likely to increase school safety.

SECTION 7.12.(f)  Grants for Training to Increase School Safety. – Of the funds appropriated to the Department of Public Instruction by this act for the grants provided in this section, the Superintendent of Public Instruction, in consultation with the Department of Health and Human Services, shall award grants to public school units to contract with community partners to address school safety by providing training to help students develop healthy responses to trauma and stress. The training shall be targeted and evidence‑based and shall include any of the following services:

(1)       Counseling on Access to Lethal Means (CALM) training for school health support personnel, local first responders, and teachers on the topics of suicide prevention and reducing access by students to lethal means.

(2)       Training for school health support personnel on comprehensive and evidence‑based clinical treatments for students and their parents or guardians, including any of the following:

a.         Parent‑child interaction therapy.

b.         Trauma‑focused cognitive behavioral therapy.

c.         Behavioral therapy.

d.         Dialectical behavior therapy.

e.         Child‑parent psychotherapy.

(3)       Training for students and school employees on community resilience models to improve understanding and responses to trauma and significant stress.

(4)       Training for school health support personnel on Modular Approach to Therapy for Children with Anxiety, Depression, Trauma, or Conduct problems (MATCH‑ADTC), including any of the following components:

a.         Trauma‑focused cognitive behavioral therapy.

b.         Parent and student coping skills.

c.         Problem solving.

d.         Safety planning.

(5) Any other training, including the training on the facilitation of peer‑to‑peer mentoring, that is likely to increase school safety.

SECTION 7.12.(g)  Grants for Safety Equipment. – Of the funds appropriated to the Department of Public Instruction by this act for the grants provided in this section, the Superintendent of Public Instruction shall award grants to public school units for (i) the purchase of safety equipment for school buildings and (ii) training associated with the use of safety equipment purchased pursuant to this subsection. Notwithstanding G.S. 115C‑218.105(b), charter schools may receive grants for school safety equipment pursuant to this subsection.

SECTION 7.12.(h)  Grants for other initiatives to improve school safety. –  Of the funds appropriated to the Department of Public Instruction by this act for the grants provided in this section, the Superintendent of Public Instruction shall award grants to public school units for other initiatives to improve school safety.

SECTION 7.12.(i)  Supplement Not Supplant. – Grants provided to public school units pursuant to the Program shall be used to supplement and not to supplant State or non‑State funds already provided for these services.

SECTION 7.12.(j) Administrative Costs. – Of the funds appropriated to the Department of Public Instruction by this act for the grants provided in this section, the Superintendent of Public Instruction may retain a total of up to one hundred thousand dollars ($100,000) in fiscal year 2023‑24 for administrative costs associated with the Program.

SECTION 7.12.(k) Nonrevert. – Any unencumbered, unspent balance shall not revert until the end of the 2024‑25 fiscal year.

SECTION 7.12.(l) Program Evaluation. – Of the funds appropriated to the Department of Public Instruction by this act for the grants provided in this section, the Superintendent of Public Instruction may use a total of up to five percent (5%) to evaluate the effectiveness of the School Safety Grant program.

SECTION 7.12.(m) Report. – No later than April 1 of each fiscal year in which funds are awarded pursuant to this section, the Superintendent of Public Instruction shall report on the Program to the Joint Legislative Education Oversight Committee, the Joint Legislative Oversight Committee on Health and Human Services, the Joint Legislative Oversight Committee on Justice and Public Safety, the Joint Legislative Commission on Governmental Operations, the Senate Appropriations/Base Budget Committee, the House Committee on Appropriations, the Fiscal Research Division, and the Office of State Management and Budget. The report shall include at least the following information:

(1)        The identity of each public school unit and community partner that received grant funds through the Program.

(2)        The amount of funding received by each entity identified pursuant to subdivision (1) of this subsection.

(3)        The services, training, and equipment purchased with grant funds by each entity that received a grant.

(4)        Recommendations for the implementation of additional effective school safety measures.

PROMISING PRACTICES GRANTS  

SECTION 7.13.(a)  Definition of Terms. – For purposes of this section, public school unit shall have the same meaning given to it under N.C.G.S. 115C‑5(7a).

SECTION 7.13.(b)  Program Establishment. – The State Board of Education shall establish a grant program for purposes of allocating funds to public school units for learning recovery and acceleration services through the 2023‑25 biennium. The grant program shall be administered by the North Carolina Department of Public Instruction. These grants shall be awarded during the 2023‑24 fiscal year and expended during the 2024‑25 fiscal year. Any unencumbered, unspent balance shall not revert until the end of the 2024‑25 fiscal year.

SECTION 7.13.(c)  Criteria and Guidelines. – By January 15, 2024, the State Board of Education shall release criteria and guidelines for the administration and use of the funds pursuant to this section, including any documentation required to be submitted by applicants. The application process shall be open for no more than 30 days, and public school units shall be notified no fewer than 90 days of the application process closing. The Office of Learning Recovery shall assist in soliciting and preparing proposals for public school units located in a county that is a development tier one area, as defined in G.S. 143B‑437.08, upon the public school unit's request. In assessing applications, the State Board of Education shall consider, at a minimum, the following factors:

(1)        The efficacy of the public school unit's proposed program or vendor. Public School units shall include any research or documentation that shows positive student learning gains using the proposed program or vendor within the last three years. Documentation can be from previous work inside the public school unit, from other districts, or from other states.

(2)        The development tier of the county in which the public school unit is located in the 2022‑23 fiscal year. Public school units in tier one and two development areas shall be given priority.

(3)        Priority shall be given to math interventions grounded in evidence‑based practices that have demonstrated effectiveness in learning recovery.

(4)        Any vendor or program that is considered shall use rigorous data assessment of student success.

(5)        Any vendor or program that is considered shall maintain a single sign‑on for every student that uses the services to ensure proper monitoring of student achievement and gains.

SECTION 7.13.(d)  Grant Applications. – A public school unit may submit an application to the State Board of Education for one or more grants pursuant to this section for the second year of the 2023‑25 fiscal biennium. The application shall include an assessment to determine the greatest impact on improving learning gains for students. Public school units may create a regional application to increase efficiency.

SECTION 7.13.(e)  Supplement Not Supplant. – Grants provided to public school units pursuant to this section shall be used to supplement and not to supplant State or non‑State funds already provided for learning recovery and acceleration or any other service.

SECTION 7.13.(f)  Administrative Costs. – Of the funds appropriated to the Department of Public Instruction by this act for the grants provided in this section, the Superintendent of Public Instruction may retain a total of up to one hundred fifty thousand dollars ($150,000) for administrative costs associated with the grant program identified in this section.

SECTION 7.13.(g)  Equitable Representation of Grantees. The Department of Public Instruction shall endeavor to ensure there is equitable representation of grantees across the State's eight (8) educational regions.

SECTION 7.13.(h)  Report. – No later than April 15, 2025, the State Board of Education shall provide an initial report on the grant program identified in this section to the Joint Legislative Education Oversight Committee, the Joint Legislative Commission on Governmental Operations, the Senate Appropriations/Base Budget Committee, the House Committee on Appropriations, the Fiscal Research Division, and the Office of State Budget and Management. The report shall include at least the following information:

(1)        The identity of each public school unit that received grant funds through the program identified in this section.

(2)        The amount of funding received by each entity identified pursuant to subdivision (1) of this subsection.

(3)        The purpose(s) for which grant funds provided pursuant to this section were used.

(4)        The number of teachers and/or students served by the grant funding.

(5)        Recommendations for the implementation of additional funding for public school units to continue services in the 2025‑27 biennium.

BUDGET FLEXIBILITY FOR LOCAL BOARDS OF EDUCATION

SECTION 7.14.(a) G.S. 115C‑105.25(b) reads as rewritten:

§ 115C‑105.25.  Budget flexibility.

(b) Subject to the following limitations, local boards of education may transfer and may approve transfers of funds between funding allotment categories:

…

(1b)      No funds shall be transferred out of the children with disabilities allotment  category.

…

(3a)      No funds shall be transferred out of the teacher assistants allotment category.

(3b)      No funds shall be transferred out of the academically or intellectually gifted children allotment category.

…

(5d)     No positions shall be transferred out of the allocation for program enhancement teachers for kindergarten through fifth grade except as provided in this subdivision. Positions allocated for program enhancement teachers for kindergarten through fifth grade may be converted into positions allocated for classroom teachers for kindergarten through twelfth grade. For the purposes of this subdivision, the term program enhancement is as defined in G.S. 115C-301(c2).

…

(10a)    No funds shall be transferred out of the limited English proficiency allotment category.

…

(12)      Funds allotted for textbooks and digital resources may only be used for the purchase of textbooks and digital resources. These funds shall not be transferred out of the allotment for any other purpose.

SECTION 7.14.(b)  Section 4(b) of S.L. 2018‑2 is repealed.

COMMUNITY ELIGIBILITY PROVISION 

SECTION 7.15.(a)  Purpose – The State Board of Education shall establish a four‑year pilot program (Program), beginning in the 2024‑25 school year, to assist public school units (PSUs) to expand participation in the federal Community Eligibility Provision (CEP) program and to increase the number of students with access to healthy, cost‑free school breakfast and lunch. A public school, cluster of public schools, or local school administrative unit that qualifies for the federal CEP program and did not participate in CEP during the 2023‑24 school year, is eligible for the Program.

SECTION 7.15.(b)  Request for Proposals – By January 15, 2024, the State Board of Education shall issue a Request for Proposal (RFP) for the grant program. Applicant public schools, clusters of public schools, or local school administrative units shall submit their proposals by March 1, 2024. The RFP shall require that proposals include the following information at a minimum:

(1)        The school or schools that will participate in the Program;

(2)        The Identified Student Percentage (ISP) for the school or schools for the 2024‑25 school year;

(3)        The number of students enrolled in the school or schools for the 2024‑25 school year;

(4)        Participation rates in the National School Breakfast and Lunch programs for the 2023‑24 school year.

SECTION 7.15.(c)  Selection – By April 30, 2024, the State Board of Education shall select qualifying public school units to participate in the Program.  The number of public school units selected shall be determined based on the amount of funds available for the Program. Priority shall be given to schools, clusters of schools, or local school administrative units with an Identified Student Percentage (ISP) of greater than or equal to forty‑seven percent (47%). Selected public school units participating in the Program shall offer breakfast after the bell and in the classroom.

SECTION 7.15.(d)  Grants – In order to assist local school nutrition authorities to cover costs associated with participation in the federal CEP program, public school units that have been accepted by the State Board of Education for the Program will receive reimbursements for school meals served to supplement federal reimbursements of school meals. State reimbursement will equal the difference between the federal free rate and the federal paid rate for the number of meals served at the school, school cluster, or local school administrative unit equal to a 0.2 multiplier of the ISP for the participating school, school cluster, or local school administrative unit. State and federal reimbursements shall not exceed 100% of the federal free rate of meals served.

SECTION 7.15.(e)  Nonsupplant Requirement – A public school unit which receives funds under this Program shall use the funds to supplement local current expense funds and shall not supplant local current expense funds.

SECTION 7.15.(f)  Evaluation – the State Board of Education shall evaluate the impact of this program and may use up to $100,000 of the funds appropriated by this act to contract with an independent research organization for this purpose. The evaluation shall include, at a minimum,

(1)        How many schools have participated in the program.

(2)        How many students receive free meals who have not before due to the program.

(3)        How much federal money participating nutrition authorities have received.

The State Board shall annually 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 beginning on January 1, 2025.

SECTION 7.15.(g)  Of the funds appropriated in this act, the Department of Public Instruction may use up to $500,000 for software updates in order to implement this pilot program.

SECTION 7.15.(h)  Carryforward – Funds unspent in the 2023‑24 and 2024‑25 fiscal years shall not revert to the General Fund but shall remain available for use until the end of the pilot program.

TRANSFER POSITIONS FROM HHS TO DPI 

SECTION 7.16.  As part of the certification of the budget for the 2023‑25 fiscal biennium, the Department of Health and Human Services, in consultation with the Office of State Budget and Management, shall transfer six (6) positions and associated operating costs to the Department of Public Instruction for the maintenance and upkeep of the Governor Morehead School.

STUDENT MEAL REDUCED‑PRICE LUNCH CO‑PAYS 

SECTION 7.17.  Funds appropriated from the General Fund to the Department of Public Instruction by this act for the 2023‑25 fiscal biennium for reduced‑price lunch copays shall be used to provide school lunches at no cost to students of all grade levels qualifying for reduced‑price meals in all schools participating in the National School Lunch Program in the 2023‑24 and 2024‑25 school years. If the funds are insufficient to provide school lunches at no cost to students qualifying for reduced‑price meals, the Department of Public Instruction shall also use any excess funds appropriated for the National School Breakfast Program for the purposes of this section. If the funds appropriated in this Act to pay reduced‑price school meals co‑pays are insufficient to provide school lunches at no cost to students qualifying for reduced‑price meals, the Department of Public Instruction may use any excess funds available to the department. If the cost to provide school lunches at no cost to students qualifying for reduced‑price meals is less than the amount appropriated in this Act, the Department of Public Instruction shall use the excess funds for the Community Eligibility Provision pilot program or to reduce student meal debt. 

TEACHER PREPARATION RESIDENCY FOR HIGH‑NEED DISTRICTS

SECTION 7.18.(a)  Purpose. – The State Board of Education shall establish a grant program to assist local school administrative units in the development of teacher preparation residency pilot programs. Teacher preparation residency programs provide the necessary preparation and induction supports to teacher preparation candidates pursuing a continuing professional license. Teacher preparation residency programs eligible to receive grant funding through this program shall include, at a minimum, the following components: 

(1)               Coursework in the candidate's area of licensure; 

(2)               Tuition and stipends; 

(3)               Faculty advising; 

(4)               Clinical training experiences; and 

(5)               Ongoing induction support. 

Residency programs eligible for this grant program may include partnerships between local school administrative units, educator preparation programs, local community college or universities, and other community organizations.  Grant funds awarded to local school administrative units under this program shall be matched by the local school administrative unit on the basis of one dollar ($1.00) in non‑grant funds for every one dollar ($1.00) in grant funds. 

Resident teachers shall be placed in schools identified as low‑performing, as defined in G.S. 115C‑105.37, schools identified as continually low‑performing as defined in G.S. 115C‑105.37A, or schools where seventy‑five percent (75%) or greater of students qualify for free or reduced‑price lunch under the National School Lunch Program.  

SECTION 7.18.(b)  Request for Proposal. – By October 1, 2023, the State Board of Education shall issue a Request for Proposal (RFP) for the grant program. Local boards of education shall submit their proposals by January 15, 2024. The RFP shall require that proposals include the following information at a minimum: 

(1)        Description of the proposal, including the number of teacher preparation candidates to be served;  

(2)        Evidence‑based research that supports the proposal; 

(3)        Implementation plan; and 

(4)        Plans for financial sustainability once grant money is no longer available. 

SECTION 7.18.(c)  Grant Awards. – By April 15, 2024, the State Board of Education shall review the proposals submitted by local boards of education and shall select up to 10 local school administrative units for grant awards. The State Board of Education may make grant awards for up to three years. A local school administrative unit may not receive more than five hundred thousand dollars ($500,000) in a single fiscal year from this grant program. 

SECTION 7.18.(d)  Evaluation and Reporting. – Of the funds appropriated by this act, the State Board of Education may use up to three hundred thousand dollars ($300,000) 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, 2026. The Department of Public Instruction shall report annually on the implementation of this grant program beginning on March 1, 2025. 

SECTION 7.18.(e)  Carryforward. –  Funds unspent in the 2023‑25 fiscal biennium shall not revert and shall be carried forward to implement this section. 

PART VII‑A. COMPENSATION OF PUBLIC SCHOOL EMPLOYEES

TEACHER SALARY SCHEDULE

SECTION 7A.1.(a)  The following monthly teacher salary schedule shall apply for the 2023‑24 fiscal year to licensed personnel of the public schools who are classified as teachers. The salary schedule is based on years of teaching experience.

2023‑24 Teacher Monthly Salary Schedule

Years of Experience                                                              A Teachers

0                                                                                          4,100

1                                                                                          4,200

2                                                                                          4,300

3                                                                                          4,400

4                                                                                          4,500

5                                                                                          4,600

6                                                                                          4,700

7                                                                                          4,800

8                                                                                          4,900

9                                                                                          5,000

10                                                                                        5,100

11                                                                                        5,200

12                                                                                        5,300

13                                                                                        5,400

14                                                                                        5,500

15                                                                                        5,610

16‑18                                                                                  5,720

19‑21                                                                                  5,790

22‑24                                                                                  5,850

25‑27                                                                                  5,940

28+                                                                                     6,000

SECTION 7A.1.(b)  The following monthly teacher salary schedule shall apply for the 2024‑25 fiscal year to licensed personnel of the public schools who are classified as teachers. The salary schedule is based on years of teaching experience.

2024‑25 Teacher Monthly Salary Schedule

Years of Experience                                                              A Teachers

0                                                                                          4,600

1                                                                                          4,685

2                                                                                          4,770

3                                                                                          4,855

4                                                                                          4,940

5                                                                                          5,025

6                                                                                          5,110

7                                                                                          5,195

8                                                                                          5,280

9                                                                                          5,365

10                                                                                        5,450

11                                                                                        5,535

12                                                                                        5,620

13                                                                                        5,705

14                                                                                        5,790

15                                                                                        5,875

16                                                                                        5.950

17‑19                                                                                  6,070

20‑22                                                                                  6,135

23‑25                                                                                  6,200

26‑28                                                                                  6,295

29+                                                                                     6,370

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)        Certified school counselors shall receive a salary supplement of eighty dollars ($80.00) per month.

(7)       School psychologists shall receive a salary supplement of five hundred ($500.00) per month.

SECTION 7A.1.(d)  The first step of the salary schedule for (i) school psychologists, (ii) school speech pathologists who are licensed as speech pathologists at the master's degree level or higher, and (iii) school audiologists who are licensed as audiologists at the master's degree level or higher shall be equivalent to the sixth step of the A salary schedule. These employees shall receive a salary supplement each month of ten percent (10%) of their monthly salary and 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.

SECTION 7A.1.(e)  The twenty‑sixth step of the salary schedule for (i) school psychologists, (ii) school speech pathologists who are licensed as speech pathologists at the master's degree level or higher, and (iii) school audiologists who are licensed as audiologists at the master's degree level or higher 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.(f)  Beginning with the 2014‑15 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.(g)  A teacher compensated in accordance with this salary schedule for the 2023‑24 and 2024‑25 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 2013‑14 school year, the sum of the following:

a.         The salary the teacher received in the 2013‑14 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 2013‑14 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 2013‑14 school year, the sum of the salary and annual bonus the teacher received in the 2014‑15 school year pursuant to Section 9.1 of S.L. 2014‑100.

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

restore MASTERS 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 2014‑2015 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 2023‑24 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.

PRINCIPAL SALARY SCHEDULE

SECTION 7A.3.(a)  The following annual salary schedule for principals shall apply for the 2023‑24 fiscal year, beginning July 1, 2023.

2023‑24 Principal Annual Salary Schedule

Avg. Daily Membership              Base                      Met Growth         Exceeded Growth

0‑200                                       $79,883                 $87,871                 $95,860

201‑400                                   $83,877                 $92,265                 $100,652

401‑700                                   $87,871                 $96,658                 $105,446

701‑1,000                                $91,865                 $101,052               $110,239

1,001‑1,600                             $95,860                 $105,446               $115,031

1,601+                                     $99,854                 $109,839               $119,824

SECTION 7A.3.(b)  The following annual salary schedule for principals shall apply for the 2024‑25 fiscal year, beginning July 1, 2024.

2024‑25 Principal Annual Salary Schedule

Avg. Daily Membership              Base                      Met Growth         Exceeded Growth

0‑200                                       84,676                   93,143                   101,612

201‑400                                   88,910                   97,801                   106,691

401‑700                                   93,143                   102,457                 111,773

701‑1000                                 97,377                   107,115                 116,853

1001‑1600                               101,612                 111,773                 121,933

1601+                                      105,845                 116,429                 127,013

SECTION 7A.3.(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. 115C83.15(c), for each school the principal supervised in at least two of the prior three 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 two of the prior three 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 school growth scores show the school or schools met expected growth in at least two of the prior three school years.

b.         The school growth scores show the school or schools met expected growth in at least one of the prior three school years and exceeded expected growth in one of the prior three school years.

c.         The principal supervised a school in at least two of the prior three 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 at least two of the prior three years.

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

SECTION 7A.3.(d)  For purposes of determining the average daily membership of a principal's school in the 2023‑24 and 2024‑25 school year, placement on the schedule related to average daily membership shall be based on the average daily membership for the school from the 2021‑22 school year. If the school did not have an average daily membership in the 2021‑22 school year, the average daily membership for the school for the 2022‑23 school year shall be used. If the school did not have an average daily membership in the 2022‑23 school year, the projected average daily membership for the school for the 2022‑23 or 2023‑24 school year shall be used.

SECTION 7A.3.(e)  For purposes of determining the school growth scores for each principal in the 2023‑24 and 2024‑25 school years, placement on the schedule related to school growth scores shall be based on the placement of the principal in the 2022‑23 school year.

SECTION 7A.3.(f)  Beginning with the 2017‑18 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.3.(g)  A principal compensated in accordance with this section for the 2023‑24 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 2016‑17 fiscal year, the sum of the following:

a.         The salary the principal received in the 2016‑17 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 2016‑17 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 2016‑17 fiscal year pursuant to Section 9.1 or Section 9.2 of S.L. 201694

ASSISTANT PRINCIPAL SALARIES

SECTION 7A.4.(a)  For the 2023‑25 fiscal biennium, assistant principals shall receive a monthly salary based on the relevant salary schedule for teachers shown in Section 7A.1(a) and 7A.1(b) 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.4.(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.4.(c)  Participants in an approved fulltime master's in‑school administration program shall receive up to a 10‑month stipend at the beginning salary of an assistant principal during the internship period of the master's program. The stipend shall not exceed the difference between the beginning salary of an assistant principal plus the cost of tuition, fees, and books and any fellowship funds received by the intern as a fulltime student, including awards of the Principal Fellows Program. The Principal Fellows Program or the school of education where the intern participates in a fulltime master's in‑school administration program shall supply the Department of Public Instruction with certification of eligible fulltime interns.

SECTION 7A.4.(d)  Beginning with the 2017‑18 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.4.(e)  An assistant principal compensated in accordance with this section for the 2021‑2023 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 2016‑17 fiscal year, the sum of the following:

a.         The salary the assistant principal received in the 2016‑17 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 2016‑17 fiscal year based on the assistant principal's current years of service.

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

CENTRAL OFFICE SALARIES

SECTION 7A.5.(a)  For the 2023‑24 fiscal year, beginning July 1, 2023, 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 six and one‑half percent (6.5%).

SECTION 7A.5.(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 2024‑25 fiscal year, beginning July 1, 2024, by three percent (3%).

SECTION 7A.5.(c)  The monthly salary maximums that follow apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 2023‑24 fiscal year, beginning July 1, 2023:

                                                                           2023‑24 Fiscal Year

                                                                                       Maximum

School Administrator I                                                    $7,528

School Administrator II                                                  $7,977

School Administrator III                                                 $8,453

School Administrator IV                                                 $8,783

School Administrator V                                                  $9,133

School Administrator VI                                                 $9,676

School Administrator VII                                               $10,061.

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.5.(d)  The monthly salary maximums that follow apply to public school superintendents for the 2023‑24 fiscal year, beginning July 1, 2023:

                                                                           2023‑24 Fiscal Year

                                                                                       Maximum

Superintendent I                                                              $10,665

Superintendent II                                                             $11,301

Superintendent III                                                           $11,979

Superintendent IV                                                           $12,699

Superintendent V                                                             $13,463.

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.5.(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.5.(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.5.(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.

SECTION 7A.5.(h)  It is the intent of the General Assembly that the monthly salary maximums that follow shall apply to assistant superintendents, associate superintendents, directors/coordinators, supervisors, and finance officers for the 2024‑25 fiscal year, beginning July 1, 2024:

                                                                           2024‑25 Fiscal Year

                                                                                       Maximum

School Administrator I                                                    $7,754

School Administrator II                                                  $8,216

School Administrator III                                                 $8,707

School Administrator IV                                                 $9,046

School Administrator V                                                  $9,407

School Administrator VI                                                 $9,966

School Administrator VII                                               $10,363

SECTION 7A.5.(i)  It is the intent of the General Assembly that the monthly salary maximums that follow shall apply to public school superintendents for the 2024‑25 fiscal year, beginning July 1, 2024:

                                                                           2024‑25 Fiscal Year

                                                                                       Maximum

Superintendent I                                                              $10,985

Superintendent II                                                             $11,640

Superintendent III                                                           $12,338

Superintendent IV                                                           $13,080

Superintendent V                                                             $13,867.

NONCERTIFIED PERSONNEL SALARIES

SECTION 7A.6.(a)  For the 2023‑24 fiscal year, beginning July 1, 2023, the annual salary for noncertified public school employees whose salaries are supported from State funds shall be increased as follows:

(1)        For permanent, fulltime employees on a 12‑month contract, by six and one‑half percent (6.5%).

(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.

SECTION 7A.6.(b)  It is the intent of the General Assembly to increase the annual salary for noncertified public school employees whose salaries are supported from State funds in the 2024‑25 fiscal year, beginning July 1, 2024, as follows:

(1)        For permanent, fulltime 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/ESCHEATS FUND FOR STUDENT FINANCIAL AID PROGRAMS

SECTION 8.1.(a)  The funds appropriated by this act from the Escheat Fund for the 2023‑25 fiscal biennium for student financial aid shall be allocated in accordance with G.S. 116B7. Notwithstanding any other provision of Chapter 116B of the General Statutes, if the interest income generated from the Escheat Fund is less than the amounts referenced in this act, the difference may be taken from the Escheat Fund principal to reach the appropriations referenced in this act; however, under no circumstances shall the Escheat Fund principal be reduced below the sum required in G.S. 116B6(f). If any funds appropriated from the Escheat Fund by this act for student financial aid remain uncommitted aid as of the end of a fiscal year, the funds shall be returned to the Escheat Fund, but only to the extent the funds exceed the amount of the Escheat Fund income for that fiscal year.

SECTION 8.1.(b)  The State Education Assistance Authority (SEAA) shall conduct periodic evaluations of expenditures of the student financial aid programs administered by SEAA to determine if allocations are utilized to ensure access to institutions of higher learning and to meet the goals of the respective programs. The SEAA may make recommendations for redistribution of funds to the President of The University of North Carolina and the President of the Community College System regarding their respective student financial aid programs, who then may authorize redistribution of unutilized funds for a particular fiscal year.

Growing the HEALTHCARE WORKFORCE 

SECTION 8.2(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 2023‑24 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, 2025. 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 8.2.(b)  Report. – The Board shall submit an initial report to the Joint Legislative Education Oversight Committee by December 1, 2024, 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 programs receiving funds. 

COLLEGE ADVISING CORPS

SECTION 8.3.(a)  Purpose of the College Advising Corps Program. – From the funds appropriated by this act for the 2023‑25 fiscal biennium to the Board of Governors of The University of North Carolina for the College Advising Corps program, the Board of Governors shall provide a directed grant to the National College Advising Corps, Inc. (CAC) to support an expansion of the placement of college advisers in North Carolina public schools through their program. CAC is a college access nonprofit organization with the mission to increase the number of underrepresented, low‑income, or first‑generation postsecondary degree or certificate students entering and completing their postsecondary education at community colleges and universities. In furthering this mission, CAC operates an innovative model of partnering with schools, communities, families, and postsecondary institutions, including providing for a two‑year service opportunity to recent college graduates as near‑peer college advisers working fulltime in the public schools, with an emphasis on engaging college advisers who have similar backgrounds to the students the program seeks to serve. Near‑peer college advisers perform various services for those students that are key components to the proven success of the program, including (i) attending postsecondary campus visits, fairs, and workshops with students, (ii) assisting with registering for college entrance exams, (iii) assisting with Free Application for Federal Student Aid (FAFSA) registrations and completions, (iv) identifying available scholarships, (v) assisting with postsecondary applications, and (vi) engaging with families.

SECTION 8.3.(b)  Matching Funds. – Funds made available to CAC pursuant to this section shall be matched by CAC on the basis of two dollars ($2.00) in non‑State funds for every one dollar ($1.00) in State funds. Availability of these matching funds shall not revert, but shall continue to be available for the purposes set forth in this section.

SECTION 8.3.(c)  Use of Funds. – CAC shall focus expansion of its program using the funds provided to it under this section to achieve placement of college advisers in all 100 counties of the State. In addition, CAC shall select at least three additional postsecondary institutions to partner with in order to increase the number of recent graduates working as near‑peer college advisers to meet the needs of the program expansion. Once CAC has reached the goal of placement of college advisers in 100 counties, the funds provided to it for the program shall be used to continue the mission of the program to increase access for North Carolina public school students to postsecondary degree or certificate attainment at community colleges and universities.

SECTION 8.3.(d)  Reporting Requirements. – CAC shall submit a report by June 1 of each year in which CAC spends State funds made available to it pursuant to this section to the Joint Legislative Education Oversight Committee, the Fiscal Research Division, and the Office of State Budget and Management on the progress of expanding the placement of college advisers, data on the effectiveness of the program in increasing access for students to postsecondary education, and the use of State funds.

PART VIII‑A. UNIVERSITY/State Education Assistance Authority

OPPORTUNITY SCHOLARSHIPS ACCOUNTABILITY 

SECTION 8A.1.(a)  G.S. 115C562.1 reads as rewritten:

§ 115C‑562.1.  Definitions.

The following definitions apply in this Part:

…

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

a.         Meets one of the following criteria:Received a scholarship grant during the previous school year.

1.         Was a full-time student (i) assigned to and attending a public school pursuant to G.S. 115C-366 or (ii) enrolled in a Department of Defense Elementary and Secondary School, established pursuant to 10 U.S.C. § 2164 and located in North Carolina, during the previous semester.2.  Received a scholarship grant during the previous school yeaIs entering either kindergarten or the first grad4.        Is a child in foster care as defined in G.S. 131D-10.2(9)5.    Is a child whose adoption decree was entered not more than one year prior to submission of the scholarship grant applicati6.    Is a child whose parent or legal guardian is on full-time duty status in the active uniformed service of the United States, including members of the National Guard and Reserve on active duty orders pursuant to 10 U.S.C. § 12301, et seq., and 10 U.S.C. § 12401, et seq.

a1.       Has not enrolled in a postsecondary institution in a matriculated status eligible for enrollment for 12 hours of academic credit.

b.         Resides in a household with an income level not in excess of two hundred percent (200%) of the amount required for the student to qualify for the federal free or reduced‑price lunch program. The Authority shall not count any distribution from the estate of a decedent in calculating the income level of the applicant's household for the purposes of determining eligibility for a scholarship under this subdivision.

SECTION 8A.1.(b)  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 invest in public schools to provide a sound basic education for all North Carolina students, it funds that imperative by phasing out the Opportunity Scholarships Program over the next 13 years, to redirect these funds to public schools. Therefore, 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

                                    2023‑2024                                                                   $176,540,000

                                    2024‑2025                                                                   $161,828,333

                                    2025‑2026                                                                   $147,116,667

                                    2026‑2027                                                                   $132,405,000

                                    2027‑2028                                                                   $117,693,333

                                    2028‑2029                                                                   $102,981,667

                                    2029‑2030                                                                   $88,270,000

                                    2030‑2031                                                                   $73,558,333

                                    2031‑2032                                                                   $58,846,667

                                    2032‑2033                                                                   $44,135,000

                                    2033‑2034                                                                   $29,423,333

                                    2034‑2035                                                                   $14,711,667

                                    2035‑2036                                                                   $0       

SECTION 8A.1.(c)  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 2024‑25 academic year.

SECTION 8A.1.(d)  G.S. 115C‑112.6 is amended by adding a new subsection to read: 

(c1)    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. 115C174.11(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. If an eligible student received an academic assessment pursuant to G.S. 115C593.5 for a school year, the academic assessment may be used to meet the requirements of this subsection. 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.1.(e)  G.S. 115C‑12.8(b) is amended by adding a new subdivision to read: 

(6)      Information on the compliance with the academic assessment requirement pursuant to G.S. 115C112.6(c1). 

SECTION 8A.1.(f)  G.S. 115C‑562.2 is amended by adding a new subsection to read: 

(c1)    An eligible student awarded a scholarship grant shall participate in administration of examinations required by G.S. 115C562.5 to maintain eligibility for receipt of the scholarship grant.

SECTION 8A.1.(g)  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 documentation for required tuition and fees charged to the student by the nonpublic school. 

(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, a nationally standardized test or other nationally standardized equivalent measurement selected by the chief administrative officer of the nonpublic schoolthe 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. 115C174.11(c)(1) to all eligible students whose tuition and fees are paid in whole or in part with a scholarship grant enrolled in grades three and higher. The nationally standardized test or other equivalent measurement selected must measure achievement in the areas of English grammar, reading, spelling, and mathematics. Test performance data shall be submitted to the Authority by July 15 of each yearyear 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 and for the purposes of the evaluation required by G.S. 115C562.7A. 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.

(5)        Provide to the Authority graduation rates of the students receiving scholarship grants in a manner consistent with nationally recognized standards. 

(6)        Contract with a certified public accountant to perform a financial review, consistent with generally accepted accounting principles, for each school year in which the school accepts students receiving more than three hundred thousand dollars ($300,000)one hundred thousand dollars ($100,000) in scholarship grants awarded under this Part. 

(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 whose tuition and fees are paid in whole or in part with a scholarship grant shall report to the Authority on the aggregate standardized test on individual student standardized test performance data performance of eligible studentsstudents 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. 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.

…. 

TEACHING FELLOWS EXPANSION 

SECTION 8A.2.(a)  G.S. 116‑209.60 reads as rewritten: 

§ 116‑209.60.  Definitions. 

The following definitions apply in this Part: 

(1)        Commission. – The North Carolina Teaching Fellows Commission. 

(2)        Director. – The Director of the North Carolina Teaching Fellows Program. 

(3)        Forgivable loan. – A forgivable loan made under the Program. 

(4)        Program. – The North Carolina Teaching Fellows Program. 

(5)        Public school. – An elementary or secondary school located in North Carolina that is governed by a local board of education, charter school board of directors, regional school board of directors, or University of North Carolina laboratory school board of trustees. 

(6)        STEM. – Science, technology, engineering, and mathematics.

(6)        Trust Fund. – The North Carolina Teaching Fellows Program Trust Fund. 

SECTION 8A.2.(b)  G.S. 116‑209.62 reads as rewritten: 

§ 116‑209.62.  North Carolina Teaching Fellows Program established; administration. 

(a)        Program. – There is established the North Carolina Teaching Fellows Program to be administered by the System Office of The University of North Carolina, in conjunction with the Authority and the Commission. The purpose of the Program is to recruit, prepare, and support students residing in or attending institutions of higher education located in North Carolina for preparation as highly effective STEM or special education teachers in the State's public schools. The Program shall be used to provide a forgivable loan to individuals interested in preparing to teach in the public schools of the State in STEM or special education licensure areas.State. 

(b)        Trust Fund. – There is established the North Carolina Teaching Fellows Program Trust Fund to be administered by the Authority, in conjunction with the System Office of The University of North Carolina. All funds (i) appropriated to, or otherwise received by, the Program for forgivable loans and other Program purposes, (ii) received as repayment of forgivable loans, and (iii) earned as interest on these funds shall be placed in the Trust Fund. The purpose of the Trust Fund is to provide financial assistance to qualified students for completion of teacher education and licensure programs to fill STEM or special education licensure areasteaching positions in the public schools of the State. 

… 

(d)       Director of the Program. – The Board of Governors of The University of North Carolina shall appoint a Director of the Program. The Director shall appoint staff to the Commission and shall be responsible for recruitment and coordination of the Program, including proactive, aggressive, and strategic recruitment of potential recipients. The Commission shall make an effort to identify and encourage students of color and students who may not otherwise consider a career in teaching to enter the program. Recruitment activities shall include a broad‑based effort (i) targeting regions of the State with the highest teacher attrition rates and teacher recruitment challenges,challenges and (ii) actively engaging with educators, business leaders, experts in human resources, elected officials, and other community leaders throughout the State, and (iii) attracting candidates in STEM and special education licensure areas to the Program.State to attract a diverse pool of applicants. The Director shall report to the President of The University of North Carolina. The Authority shall provide office space and clerical support staff, as necessary, to the Director for the Program. 

(e)        Student Selection Criteria for Forgivable Loans. – The Commission shall adopt stringent standards for awarding forgivable loans based on multiple measures to ensure that only the strongest applicants receive them, including the following: 

(1)        Grade point averages. 

(2)        Performance on relevant career and college readiness assessments. 

(3)        Experience, accomplishments, and other criteria demonstrating qualities positively correlated with highly effective teachers, including excellent verbal and communication skills. 

(4)        Demonstrated commitment to serve in a STEM or special education licensure area in North Carolina public schools. 

(f)        Program Selection Criteria. – The Authority shall administer the Program in cooperation with up to eight institutions any institution of higher education with approved a State Board of Education approved educator preparation programsprogram selected by the Commission that represent a diverse selection of both postsecondary constituent institutions of The University of North Carolina and private postsecondary institutions operating in the State. The Commission shall adopt stringent standards for selection of the most effective educator preparation programs, including the following:

(1)        Demonstrates high rates of educator effectiveness on valueadded models and teacher evaluations, including using performancebased, subjectspecific assessment and support systems, such as edTPA or other metrics of evaluating candidate effectiveness that have predictive validity.

(2)        Demonstrates measurable impact of prior graduates on student learning, including impact of graduates teaching in STEM or special education licensure areas.

(3)        Demonstrates high rates of graduates passing exams required for teacher licensure.

(4)        Provides curricular and cocurricular enhancements in leadership, facilitates learning for diverse learners, and promotes community engagement, classroom management, and reflection and assessment.

(5)        Requires at least a minor concentration of study in the subject area that the candidate may teach.

(6)        Provides early and frequent internship or practical experiences, including the opportunity for participants to perform practicums in diverse school environments.

(7)        Is approved by the State Board of Education as an educator preparation program.

(g)        Awards of Forgivable Loans. – The Program shall provide forgivable loans to selected students to be used at the up to eight selected institutions for completion of a program leading to initial teacher licensure as follows: 

… 

(h)        Identification of STEM and Special Education Licensure Areas. – The Superintendent of Public Instruction shall identify and provide to the Commission and the Authority a list of STEM and special education licensure areas and shall annually provide to the Commission the number of available positions in each licensure area relative to the number of current and anticipated teachers in that area of licensure. The Commission shall make the list of STEM and special education licensure areas readily available to applicants.

… 

(j)         Annual Report. – The Commission, in coordination with the Authority, the Department of Public Instruction, and the selectedparticipating educator education programs participating in the Program shall report no later than January 1, 2024 and annually thereafter, to the Joint Legislative Education Oversight Committee regarding the following: 

(1)        Forgivable loans awarded from the Trust Fund, including the following: 

a.         Demographic information regarding recipients. 

b.         Number of recipients by institution of higher education and program. 

c.         Information on number of recipients by anticipated STEM and special education licensure area. 

(2)        Placement and repayment rates, including the following: 

a.         Number of graduates who have been employed in a STEM or special educationNorth Carolina public school by licensure area within two years of program completion. 

b.         Number of graduates who accepted employment at a low‑performing school identified under G.S. 115C105.37 as part of their years of service. 

c.         Number of graduates who have elected to do loan repayment and their years of service, if any, prior to beginning loan repayment. 

d.         Number of graduates employed in a STEM or special education by licensure area who have received an overall rating of at least accomplished and have met expected growth on applicable standards of the teacher evaluation instrument. 

e.         Aggregate information on student growth and proficiency in courses taught by graduates who have fulfilled service requirements through employment in a STEM or special education licensure area.requirements. 

(2a)      Mentoring and coaching support through the North Carolina New Teacher Support Program, including the following: 

a.         Number of forgivable loan recipients who received mentoring and coaching support when employed at a low‑performing school identified under G.S. 115C‑105.37. 

b.         Number of forgivable loan recipients who received mentoring and coaching support when employed at a school not identified as low‑performing under G.S. 115C‑105.37. 

(3)        Selected school outcomes by program, including the following: 

a.         Turnover rate for forgivable loan graduates, including the turnover rate for graduates who also received mentoring and coaching support through the North Carolina New Teacher Support Program. 

b.         Aggregate information on student growth and proficiency as provided annually by the State Board of Education to the Commission in courses taught by forgivable loan graduates. 

c.         Fulfillment rate of forgivable loan graduates. 

SECTION 8A.2.(c)  G.S.116‑209.63(b) reads as rewritten: 

§ 116‑209.63.  Terms of forgivable loans; receipt and disbursement of funds.

…

(b)        Forgiveness. – The Authority shall forgive the loan and any interest accrued on the loan if, within 10 years after graduation from a program leading to teacher licensure, exclusive of any authorized deferment for extenuating circumstances, the recipient serves as a teacher in a STEM or special education licensure area, as provided in G.S. 116209.62(h),teacher for every year the teacher was awarded the forgivable loan, in any combination of the following: 

(1)        One year at a North Carolina public school identified as low‑performing under G.S. 115C105.37 at the time the teacher accepts employment at the school or, if the teacher changes employment during this period, at another school identified as low‑performing. 

(2)        Two years at a North Carolina public school not identified as low‑performing under G.S. 115C‑105.37.

…. 

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 2023‑25 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, afterhours 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 2023‑25 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 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.

SECTION 9B.1.(f)  By February 1, 2024, the Office of Rural Health shall report to the Joint Legislative Oversight Committee on Health and Human Services on the implementation status of the following Community Health Grant Program requirements enacted by Section 11A.8 of S.L. 2017‑57:

(1)        Establishment of a Primary Care Advisory Committee and that Committee's development of an objective and equitable process for grading applications for grants funded under the Community Health Grant Program.

(2)        Development of a standardized method for grant recipients to report objective, measurable quality health outcomes.

IMPROVING HEALTH OUTCOMES FOR PEOPLE EVERYWHERE FUND

SECTION 9B.2.  Any of the funds appropriated from the Improving Health Outcomes for People Everywhere (IHOPE) Fund within the North Carolina Department of Health and Human Services, Division of Central Management that remain unspent at the end of fiscal years 2023‑24 and 2024‑25 shall revert to the IHOPE Fund.

PART IX‑C. CHILD AND FAMILY WELL‑BEING

EARLY INTERVENTION

SECTION 9C.1.  When developing the base budget, as defined by G.S. 143C‑1‑1, beginning in the 2025‑27 fiscal biennium, the Director of the Budget shall include the full requirements specified in the committee report for this item, sixty‑four million two hundred and fifty thousand dollars ($64,250,000).

EVALUATION FUNDS FOR SCHOOL BEHAVIORAL HEALTH

SECTION 9C.2.  The Division of Child and Family Well Being shall use a portion of funds provided for the School Behavioral Health Package to conduct a program evaluation for Project AWARE/ACTIVATE and the telehealth technology pilot. The department may consult with the Office of State Budget and Management for assistance on how to develop a plan for evaluation, including how to register a pre‑analysis plan. The department shall report annually to the Office of State Budget and Management and the Fiscal Research Division on the progress of the evaluation and, when completed, make the pre‑analysis plan and final evaluation report publicly available.

PART IX‑D. CHILD DEVELOPMENT AND EARLY EDUCATION 

NC PREK PROGRAMS/STANDARDS FOR FOUR AND FIVESTAR 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  four 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.(b)  Multi‑year Contracts. – The Division of Child Development and Early Education shall require the NC PreK contractor to issue multiyear contracts for licensed private child care centers providing NC PreK classrooms.

SECTION 9D.1.(c)  Building Standards. – Notwithstanding G.S. 11091(4), private child care facilities and public schools operating NC PreK classrooms shall meet the building standards for preschool students as provided in G.S. 115C521.1.

SECTION 9D.1.(d)  Programmatic Standards. – Except as provided in subsection (c) of this section, entities operating NC PreK 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 PreK Committees. – Local NC PreK 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 PreK program by local partnerships shall be subject to the financial and compliance audits authorized under G.S. 143B168.14(b).

Expand and Sustain NC PRE‑K

SECTION 9D.2.  Of the funds appropriated in this act to the Department of Health and Human Services, Division of Child Development and Early Education, funds shall be allocated to raise the base slot reimbursement rates for the North Carolina Prekindergarten, increase the administration rate to ten percent (10%), and increase the number of slots available statewide. To support the slots increase, the Division of Child Development and Early Education may offer grants to facilities to undergo upgrades necessary to offer NC Pre‑K. It is the intent of the General Assembly that the reimbursement rate funds allocated pursuant to this section be used to increase the salaries of licensed B‑K teachers working in private or Head Start NC Pre‑K classrooms. These funds shall be used as a means to address disparities in teacher salaries among teachers working in child care centers versus those working in public schools.

CHILD CARE SUBSIDY RATES

SECTION 9D.3.(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.3.(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 fulltime copayment. Copayments for parttime care shall be seventy‑five percent (75%) of the fulltime copayment.

SECTION 9D.3.(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. 110106 and licensed child care centers 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, whichever is lower, unless prohibited by subsection (f) of this section.

(2)        Licensed child care centers and homes with three or more stars shall receive the market rate for that rated license level for that age group or the rate they charge privately paying parents, whichever is lower. Licensed child care centers and homes with three or more stars and serving children ages birth through five years shall receive the statewide floor rate, an average of rates across the state by age and star level, when the county market rate is lower than the statewide floor, unless prohibited by subsection (g) of this section.

(3)        Certified Developmental Day Centers shall receive the statewide average or county market rate, whichever is higher, plus a multiplier of 0.75 for children with special needs and multiplier of 0.5 for typically developing children.

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

(5)        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.

(6)        The Department of Health and Human Services shall implement necessary rule changes to restructure services.

SECTION 9D.3.(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.3.(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.3.(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.3.(g)  Facilities licensed pursuant to Article 7 of Chapter 110 of the General Statutes and facilities operated pursuant to G.S. 110106 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.3.(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.3.(i)  Noncitizen 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, noncitizen 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.3.(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.3.(k)  Department of Defense‑certified child care facilities licensed pursuant to G.S. 110106.2 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. 143B168.15(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.

SECTION 9D.3.(l)  Effective January 1, 2024, the Division shall increase the child care subsidy reimbursement rates to those recommended in the 2018 Child Care Market Rate Study. The Division may also use funds appropriated for Child Care Subsidy to serve more children and reduce the waitlist.

CHILD CARE ALLOCATION FORMULA

SECTION 9D.4.(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 2023‑25 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.4.(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.4.(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 calculating 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.5.(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.5.(b)  Administration. – Administrative costs shall be equivalent to, on an average statewide basis for all local partnerships, not more than eight percent (8%) 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.5.(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.5.(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 2023‑25 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 2023‑25 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 2023‑25 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 that is submitted to the Joint Legislative Oversight Committee on Health and Human Services 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.5.(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.5.(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 2012‑13 funding level.

SECTION 9D.5.(g)  Performance‑Based Evaluation. – The Department of Health and Human Services shall continue to implement the performance‑based evaluation system.

SECTION 9D.5.(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 2023‑25 fiscal biennium shall be administered and distributed in the following manner:

(1)        Capital expenditures are prohibited for the 2023‑25 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 2023‑25 fiscal biennium.

For the 2023‑25 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.5.(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. 143B168.12(d) a report on the use of State funds for fundraising. The report shall include the following:

(1)        The amount of funds expended on fund‑raising.

(2)        Any return on fund‑raising investments.

(3)        Any other information deemed relevant.

SECTION 9D.5.(j)  Notwithstanding other subsections of this section, and in recognition of both Smart Start's essential work and the statewide child care need, the Division shall set aside ninety million dollars ($90,000,000) in each year of the total funds appropriated to Smart Start in the 2023‑25 fiscal biennium to establish and fund a statewide rate floor for child care subsidy. This set‑aside shall expire at the end of this fiscal biennium.

EARLY LEARNING PROGRAMS FOR ELIGIBLE CHILDREN

SECTION 9D.6.(a)  Purpose – The Division of Child Development and Early Education shall establish a pilot program (Program) to implement the state model for high‑quality early learning programs for eligible children birth through age three. The pilot will target high‑poverty school districts.

SECTION 9D.6.(b)  Evaluation – The Division of Child Development and Early Evaluation shall use a portion of funds provided for Early Learning Programs for Eligible Children to conduct a program evaluation. The department may consult with the Office of State Budget and Management for assistance on how to develop a plan for evaluation, including how to register a pre‑analysis plan. The department shall report annually to OSBM and the Fiscal Research Division on the progress of the evaluation and, when completed, make the pre‑analysis plan and final evaluation report publicly available.  

CHILD CARE STABILIZATION GRANTS

SECTION 9D.7.  The Division of Child Development and Early Education shall reinstate Fixed Cost and Family Stabilization Grants to maintain the child care business sector, support families in programs experiencing financial hardship, and encourage program capacity growth.

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 2023‑24 fiscal year and the sum of one million dollars ($1,000,000) for the 2024‑25 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. The MOA will facilitate DHHS's ability to draw down federal Medicaid funds to support this administrative function. 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, receivables reserved at the end of the 2023‑24 and 2024‑25 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 2023‑24 fiscal year, the Department of Health and Human Services shall deposit from its revenues one hundred sixty‑four million five hundred thousand dollars ($164,500,000) with the Department of State Treasurer to be accounted for as nontax revenue. For the 2024‑25 fiscal year, the Department of Health and Human Services shall deposit from its revenues eighty‑eight million four hundred thousand dollars ($88,400,000) 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 2023‑24 fiscal year, the amount of thirty‑one million three hundred sixty‑five thousand three hundred five dollars ($31,365,305).  

b.         For the 2024‑25 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 the Department of Health and Human Services, Division of Health Benefits, for uncompensated care. 

DSH RECEIPTS FOR USE BY THE MEDICAID PROGRAM 

SECTION 9E.5.  Of the federal disproportionate share adjustment receipts arising from certified public expenditures for the 2023‑24 fiscal year and the 2024‑25 fiscal year, forty‑three million dollars ($43,000,000) in each fiscal year shall not be deposited into the Hospital Uncompensated Care Fund under G.S. 143C‑9‑9 but rather shall be available to the Department of Health and Human Services, Division of Health Benefits, to be used for the Medicaid program. 

Delay Tailored Plan Contracts

SECTION 9E.6  Section 9D.7.(a) of S.L. 2022‑74 reads as rewritten:

ADJUST IMPLEMENTATION DATE FOR BH IDD TAILORED PLANS

SECTION 9D.7.(a) The Division of Health Benefits, Department of Health and Human Services (DHHS), shall implement BH IDD tailored plans, as defined under G.S. 108D‑1, no later than December 1, 2022October 1, 2023. The initial term of the BH IDD tailored plan contracts is four years, ending December 1, 2026June 30, 2027. If DHHS extends the standard benefit plan contracts, as authorized by Section 7(b) of S.L. 2020‑88, then DHHS shall offer to extend the initial term of the BH IDD tailored plan contracts an equivalent amount of time.

ADJUST IMPLEMENTATION DATE FOR REQUIRING LME/MCOS TO PAY FOR BEHAVIORAL HEALTH SERVICES PROVIDED TO BENEFICIARIES AWAITING HOSPITAL DISCHARGE

Section 9E.7  Section 9D.22 of S.L. 2021‑180, as amended by Section 9D.9 of S.L. 2022‑74 reads as rewritten:

SECTION 9E.8.(f) CMS Approval. – The Department of Health and Human Services, Division of Health Benefits, shall submit to the Centers for Medicare and Medicaid Services (CMS) any State Plan amendments necessary to establish the new Medicaid coverage required by this section with a proposed effective date of March 1, 2023. The new Medicaid covered services and rates shall be implemented by December 31, 2022 as soon as operationally feasible after CMS approval. If approval from CMS is not granted by December 31, 2022, then DHB shall retroactively implement services and rates upon approval from CMS to December 31, 2022.to the effective date approved by CMS. The new Medicaid covered services and rates shall only be implemented to the extent allowable by CMS.

1115 WAIVER AMENDMENT AND AUTHORIZED CHILDREN AND FAMILIES SPECIALTY PLAN

SECTION 9E.8.(a)   The Department of Health and Human Services (DHHS) shall issue a request for proposals to procure a single statewide children and families specialty plan contract with a prepaid health plan, as defined in G.S. 58‑93‑5 or G.S. 108D‑1, with services to begin no later than December 31, 2024. Only entities operating a standard benefit plan or a BH IDD tailored plan contract with the Department at the time the request for proposals is issued may submit a proposal. Each entity may only submit one response to an RFP issued by the Department, and eligible entities under common control or ownership with one another may collectively submit only one response.

DHHS shall define the services available and the Medicaid beneficiaries who are eligible to enroll in the children and families specialty plan, except as otherwise specified in this act.

SECTION 9E.8.(b)  G.S. 108D‑1 reads as rewritten:

§ 108D‑1. Definitions.

The following definitions apply in this Chapter:

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(4)       Behavioral health and intellectual/developmental disabilities tailored plan or  BH IDD tailored plan. – A capitated prepaid health plan contract under the Medicaid transformation demonstration waiver that meets all of the requirements of Article 4 of this Chapter, including the requirements pertaining to BH IDD tailored plans.plans but excluding the requirements pertaining only to the CAF specialty plan.

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(5a)      Children and families specialty plan or CAF specialty plan. – A statewide capitated prepaid health plan contract under the Medicaid transformation demonstration waiver that meets all of the requirements of Article 4 of this Chapter, including the requirements pertaining to the CAF specialty plan, but excluding the requirements only pertaining to BH IDD tailored plans.

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(30)     Prepaid health plan or PHP. – A prepaid health plan, as defined in G.S. 58‑93‑5, that is under a capitated contract with the Department for the delivery of Medicaid services, or a local management entity/managed care organization that is under a capitated PHP contract with the Department to operate a BH IDD tailored plan.Department.

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(36)     Standard benefit plan. – A capitated prepaid health plan contract under the Medicaid transformation demonstration waiver that meets all of the requirements of Article 4 of this Chapter except for the requirements pertaining only to a BH IDD tailored planplan and only to the CAF specialty plan.

SECTION 9E.8.(c)  G.S. 108D‑5.3 reads as rewritten:

§ 108D‑5.3. Enrollee requests for disenrollment.

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(b)        Without Cause Enrollee Requests for Disenrollment. – An enrollee shall be allowed to requestdisenrolldisenrollment from the PHP without cause only during the times specified in 42 C.F.R. § 438.56(c)(2), 42C.F.R. § 438.56(c)(2).except that enrolleesHowever, enrollees who are in any of the following groups may request to disenroll at any time:

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(2)        Beneficiaries who are enrolled in the  foster care system.described in G.S. 108D‑40(a)(14).

(3)        Beneficiaries who are in the former foster care Medicaid eligibility.

 category.

(4)        Beneficiaries who receive Title IV-E adoption assistance.

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SECTION 9E.8.(d)  G.S. 108D‑22 reads as rewritten:

§ 108D‑22. PHP provider networks.

(a)            Except as provided in G.S. 108D-23,G.S. 108D‑23 and G.S. 108D‑24, each PHP shall develop and maintain a provider network that meets access to care requirements for its enrollees. A PHP may not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates. Notwithstanding the previous sentence, a PHP must include all providers in its geographical coverage area that are designated essential providers by the Department in accordance with subdivision (b) of this section, unless the Department approves an alternative arrangement for securing the types of services offered by the essential providers.

SECTION 9E.8.(e)  Article 3 of Chapter 108D of the General Statutes is amended by adding a new section to read:

§ 108D‑24. Children and families specialty plan networks.

The entity operating the CAF specialty plan shall develop and maintain a closed network of providers only for the provision of the following services:

(1)        Intensive in‑home services.

(2)        Multisystemic therapy.

(3)        Residential treatment services.

(4)        Services provided in psychiatric residential treatment facilities.

The closed network is the network of providers that have contracted with the entity operating the CAF specialty plan to furnish the services specified in this section to enrollees.

SECTION 9E.8.(f) G.S. 108D‑40(a) reads as rewritten:

§ 108D‑40. Populations covered by PHPs.

(a)        Capitated PHP contracts shall cover all Medicaid and NC Health Choice program aid categories except for the following categories:

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(12)      Recipients with a serious mental illness, a serious emotional disturbance, a severe substance use disorder, an intellectual/developmental disability, or who have survived a traumatic brain injury and who are receiving traumatic brain injury services, who are on the waiting list for the Traumatic Brain Injury waiver, or whose traumatic brain injury otherwise is a knowable fact, until BH IDD tailored plans become operational, at which time this population will be enrolled with a BH IDD tailored plan in accordance with G.S. 108D-60(a)(10).G.S. 108D‑60(a)(10), except as described in subdivision (14) of this subsection.

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(13)      Recipients in the following categories shall not be covered by PHPs for a period of time to be determined by the Department that shall not exceed five years after the date that capitated PHP contracts begin:

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c. Recipients who are (i) enrolled in the foster care system, (ii) receiving Title

IV-E adoption assistance, (iii) under the age of 26 and formerly were in the

foster care system, or (iv) under the age of 26 and formerly received adoption

assistance.

(14)      Until the CAF specialty plan becomes operational, recipients who are (i) children enrolled in foster care in this State, (ii) receiving adoption assistance, or (iii) former foster care youth until they reach the age of 26. When the CAF specialty plan becomes operational, recipients described in this subdivision will be enrolled in accordance with G.S. 108D‑62.

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SECTION 9E.8.(g)  G.S. 108D‑60 reads as rewritten:

§ 108D‑60. BH IDD tailored plans.

(a)               BH IDD tailored plans shall be defined as capitated PHP contracts that meet all requirements in this Article pertaining to capitated PHP contracts, except as specifically provided in this section. With regard to BH IDD tailored plans, the following shall occur:

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(10)      Recipients described in G.S. 108D‑40(a)(12) shall be automatically enrolled with an entity operating a BH IDD tailored plan and planplan,except that recipients who are also described in G.S. 108D‑40(a)(14) shall be enrolled in accordance with G.S. 108D‑62. Recipients shall have the option to enroll with a PHP operating a standard benefit plan, provided that a recipient electing to enroll with a PHP operating a standard benefit plan would only have access to the behavioral health services covered by the standard benefit plans and would no longer have access to the behavioral health services excluded from standard benefit plan coverage under G.S. 108D‑35(1) and provided that the recipient's informed consent shall be required prior to the recipient's enrollment with a PHP operating a standard benefit plan.

(11)      Recipients described in G.S. 108D‑40(a)(12) shall not have the option to voluntarily enroll with a PHP operating a standard plan or the CAF specialty plan, when it becomes operational, while receiving services offered by the programs or in the settings specified below:

a.         Recipients enrolled in the Innovations waiver.

b.         Recipients enrolled in the Traumatic Brain Injury waiver.

c.         Recipients residing in or receiving respite services at an intermediate care facility for individuals with intellectual/developmental disabilities (ICFs‑IIDs).

d.         Recipients enrolled in and being served under Transitions to Community Living.

e.         Recipients receiving State‑funded residential services including Group Living, Family Living, Supported Living, and Residential Supports.

(b)                        The Department may contract with entities operating BH IDD tailored plans under a capitated or other arrangement for the management of behavioral health, intellectual and developmental disability, and traumatic brain injury services for any recipients excluded from PHP coverage under G.S. 108D‑40(a)(4), (5), (7), (10), (11), (12), and (13).(13), and, until the CAF specialty plan becomes operational, any Medicaid recipients excluded from PHP coverage under G.S. 108D‑40(a)(14).

SECTION 9E.8.(h)  Article 4 of Chapter 108D of the General Statutes is amended by adding a new section to read:

§ 108D‑62. Children and families specialty plan.

(a)        The following definitions apply in this section:

(1)        Caretaker relative. – As defined in 42 C.F.R. § 435.4.

(2)        Child. – A person who is under the age of 18, is not married, and has not been legally emancipated.

(3)        Custodian. – As defined in G.S. 7B‑101.

(4)        Foster  care. –   The   placement   of   a   child   who   is   described   in   G.S. 108D‑40(a)(14) whose custody has been awarded by court order or pursuant to a voluntary placement agreement from the parent, custodian, or guardian (i) to the county department of social services or (ii) to the Eastern Band of Cherokee Indians' Department of Public Health and Human Services.

(5)        Guardian. – A guardian of the person as defined in G.S. 35A‑1202.

(6)        Minor. – A person who is under the age of 18.

(7)        Parent. – As defined in 42 C.F.R. § 435.603(b).

(8)        Reunification. – As defined in G.S. 7B‑101.

(9)        Sibling. – As defined in 42 C.F.R. § 435.603(b).

(b)        The CAF specialty plan is defined as one statewide capitated PHP contract that meets all the requirements in this Article pertaining to capitated PHP contracts, excluding the requirements that only apply to BH IDD tailored plan contracts, except as specifically provided in this section. With regard to the CAF specialty plan, all of the following shall occur:

(1)        The capitated contract for the CAF specialty plan shall be the result of a request for proposals issued by the Department.

(2)        An entity operating the CAF specialty plan shall authorize, pay for, and manage all Medicaid services covered under the plan.

(3)        An entity operating the CAF specialty plan shall operate care management functions and provide whole‑person, integrated care across healthcare and treatment settings and foster care placements for recipients enrolled in the plan to support family preservation, advance the reunification of families, support the permanency goals of children, and support the health of former foster youth.

(4)        An entity operating the CAF specialty plan shall be the single point of care management accountability.

(5)        The Department shall establish requirements for the effective operation of the CAF specialty plan that, at a minimum, shall address all of the following:

a.         Continuity of care and support across health care settings, changes in placement, and when the child transitions into the former foster youth Medicaid eligibility category.

b.         Managing care according to competencies specific to the recipients described in G.S. 108D‑40(a)(14) and to recipients receiving child protective services in‑home services, including medication management, utilization of trauma‑informed care, and any other areas determined appropriate by the Department.

c.         Coordination of activities with local governments, county departments of social services, the Division of Juvenile Justice of the Department of Public Safety, and other related agencies that support the child welfare system.

d.         Approaches to address unmet health‑related resource needs.

(c)        In addition to the services required to be covered by all PHPs under G.S. 108D‑35, the CAF specialty plan shall cover the behavioral health, intellectual and developmental disability, and traumatic brain injury services excluded from standard benefit plan coverage under G.S. 108D‑35(1), except that the CAF specialty plan shall not cover:

(1)        Innovations waiver services.

(2)        Traumatic Brain Injury waiver services.

(3)        Services provided to recipients residing in or receiving respite services at an intermediate care facility for individuals with intellectual/developmental disabilities.

(4)        Services provided to recipients determined eligible to participate in and be served under Transitions to Community Living.

(5)        Non‑Medicaid behavioral health services funded with federal, State, and local funding in accordance with Chapter 122C of the General Statutes and other applicable State and federal law, rules, and regulations.

(d)      Unless ineligible under subsection (e) of this section, the following Medicaid recipients shall be eligible to enroll in the CAF specialty plan:

(1)        Recipients described in G.S. 108D‑40(a)(14) and their children. The children shall be enrolled in the CAF specialty plan for as long as the parent remains enrolled, unless the parent elects to enroll the child in another plan in accordance with subsection (g) of this section.

(2)        Adults identified on an open child protective services in‑home family services agreement case and any minor children living in the same home.

(3)        Adults identified in an open Eastern Band of Cherokee Indians Department of Public Health and Human Services Family Safety program case and any children living in the same home.

(4)        The minor siblings of a child in foster care who lived in the same home as that child at the time of the child's removal and with whom household reunification efforts are ongoing.

(5)        Recipients who have a child temporarily in foster care if all of the following are met:

a.         A court of competent jurisdiction has not found that aggravated circumstances exist in accordance with G.S. 7B‑901(c) or comparable federally recognized tribal code.

b.         A court of competent jurisdiction has not found that a plan of reunification would be unsuccessful or would be inconsistent with the child's health or safety in accordance with G.S. 7B‑906.1(d) or comparable federally recognized tribal code.

c.         A court of competent jurisdiction has not found that custody or guardianship with the caretaker relative is an inappropriate permanent plan for the juvenile under G.S. 7B‑906.2(a)(3) or (a)(4), or comparable federally recognized tribal code.

d.         The recipient is any of the following:

1.         A parent.

2.         A caretaker relative.

3.         A custodian.

4.         A guardian.

(6)        Any other recipients who have had involvement with the child welfare system and whom the Department has determined would benefit from enrollment in the CAF specialty plan.

(e)        The following Medicaid recipients shall be not eligible to enroll in the CAF specialty plan:

(1)        Recipients who require services that are excluded from coverage by the CAF specialty plan under subsection (c) of this section.

(2)        Temporary safety provider caregivers identified on an open child protective services in‑home family services agreement case or an open Eastern Band of Cherokee Indians Department of Public Health and Human Services Family Safety program case.

(3)        Recipients who are excluded from PHP coverage under G.S. 108D‑40(a).

(f)        Recipients described in subdivision (d)(1) of this section shall be automatically enrolled in the CAF specialty plan, unless they are also described in G.S. 108D‑40(a)(5), in which case they may enroll voluntarily. All other recipients described under subsection (d) of this section may enroll voluntarily in the CAF specialty plan.

(g)        Recipients eligible to enroll in the CAF specialty plan under subsection (d) of this section shall have the option to enroll with a PHP operating a standard benefit plan or, if eligible under G.S. 108D‑40(a)(12), a BH IDD tailored plan. A recipient enrolled in the CAF specialty plan who elects to enroll with a PHP operating a standard benefit plan would only have access to the behavioral health services covered by the standard benefit plans and would no longer have access to the behavioral health  services  excluded from standard  benefit plan coverage under  G.S. 108D‑35(1). The recipient's informed consent, or, as applicable, the informed consent of the recipient's custodian or guardian, shall be required prior to the recipient's enrollment with a PHP operating a standard benefit plan.

(h)        Recipients described in G.S. 108D‑40(a)(14)(i) who exit the custody of the county department of social services may elect to remain enrolled in the CAF specialty plan for 12 months after the date the recipient exits custody. In the case of recipients who achieve reunification, any of the following individuals with whom the recipient reunifies may also elect to remain enrolled in the CAF specialty plan as long as the recipient remains enrolled:

(1)        A parent.

(2)        A caretaker relative.

(3)        A custodian.

(4)        A guardian.

(5)        A minor sibling.

SECTION 9E.8.(i)  G.S. 122C‑3  reads as rewritten:

§ 122C‑3. Definitions.

The following definitions apply in this Chapter:

…

(4a)      Children and families specialty plan or CAF specialty plan. – As defined in G.S. 108D‑1.

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(20c) Local management entity/managed care organization (LME/MCO). – A local management entity that is under contract with the Department under Article 4 of Chapter 108D of the General Statutes to operate one or more of the combined Medicaid Waiver program managed care programs authorized under Section 1915(b) and Section 1915(c), of the Social Security Act or by CMS to operate a BH IDD tailored plan.

….

SECTION 9E.8.(j)  G.S. 122C‑115 reads as rewritten:

§ 122C‑115. Duties of counties; appropriation and allocation of funds by counties and cities.

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(e)        Beginning on the date that capitated contracts under Article 4 of Chapter 108D of the General Statutes begin, LME/MCOs shall cease managing Medicaid services for all Medicaid recipients other than recipients described in G.S. 108D‑40(a)(1), (4), (5), (6), (7), (10), (11), (12), and (13).(13), and (14).

(e1)      Until BH IDD tailored plans become operational, all of the following shall occur:

(1)        LME/MCOs shall continue to manage the Medicaid services that are covered by the LME/MCOs under the combined 1915(b) and (c) waivers for Medicaid recipients described in G.S. 108D‑40(a)(1), (4), (5), (6), (7), (10), (11), (12), and (13).(13), and (14).

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(f)        Entities operating the BH IDD tailored plans under G.S. 108D‑60 may continue to managemanage under any contract with the Department in accordance with G.S. 108D‑60(b), the behavioral health, intellectual and developmental disability, and traumatic brain injury services for any Medicaid recipients described in G.S. 108D‑40(a)(4), (5), (7), (10), (11), (12), and (13) under any contract with the Department in accordance with G.S. 108D 60(b).(13), and, until the CAF specialty plan becomes operational, recipients excluded from PHP coverage under G.S. 108D‑40(a)(14).

SECTION 9E.8.(k)  Part 2 of Article 4 of Chapter 122C of the General Statutes is amended by adding a new section to read:

§ 122C‑115.5. Children and families specialty plan operation.

An area authority is authorized to operate the CAF specialty plan under a contract with the Department. For purposes of operating the CAF specialty plan only, all of the following apply:

(1)        The area authority shall have a statewide catchment area.

(2)        Counties are prohibited from withdrawing from or declining to participate in the statewide catchment area of the CAF specialty plan.

USE OF MEDICAID TRANSFORMATION FUND FOR MEDICAID TRANSFORMATION NEEDS

SECTION 9E.9.(a)  Claims Run Out. – Funds from the Medicaid Transformation Fund may be transferred to the Department of Health and Human Services, Division of Health Benefits (DHB), for the 2023‑25 fiscal biennium, as needed, for the purpose of paying claims related to services billed under the fee‑for‑service payment model for recipients who are being, or have been, transitioned to managed care, otherwise known as claims run out. Funds may be transferred to DHB as the need to pay claims run out arises and need not be transferred in one lump sum. To the extent that any funds are transferred under this subsection, the funds are appropriated for the purpose set forth in this subsection.

SECTION 9E.9.(b)  Non‑Claims Run Out Medicaid Transformation Needs. – Subject to the fulfillment of conditions specified in subsection (c) of this section, the sum of one hundred fifty‑eight million two hundred ninety‑six thousand three‑hundred twenty two dollars ($158,296,322) in nonrecurring funds for the 2023‑24 fiscal year and the sum of sixty seven million, eight hundred seventy‑seven thousand four hundred twenty‑seven dollars ($67,877,427) in nonrecurring funds for the 2024‑25 fiscal year from the Medicaid Transformation Fund may be transferred to DHB for the sole purpose of providing the State share for qualifying needs directly related to Medicaid transformation, as required by S.L. 2015‑245, as amended. Funds may be transferred to DHB as qualifying needs arise during the 2023‑25 fiscal biennium and need not be transferred in one lump sum.

For the purposes of this section, the term qualifying need shall be limited to the following Medicaid transformation needs and may include contracts and temporary staffing:

(1)        Program design.

(2)        Beneficiary and provider experience.

(3)        Information technology upgrades, operations, and maintenance.

(4)        Data management tools.

(5)        Program integrity.

(6)        Quality review.

(7)        Actuarial rate setting functions.