AN ACT to permit opportunity scholarships to be AWARDED to students in home school, to phase in increased award amounts for home schoolers over time, and to appropriate funds for that purpose.

The General Assembly of North Carolina enacts:

SECTION 1.(a)  G.S. 115C‑562.1 reads as rewritten:

§ 115C‑562.1.  Definitions.

The following definitions apply in this Part:

(1)        Authority. – The State Education Assistance Authority.

(2)        Division. – The Division of Nonpublic Education, Department of Administration.

(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:

1.         Was a student (i) assigned to and attending a public school full time pursuant to G.S. 115C‑366 or (ii) enrolled full time in a Department of Defense Elementary and Secondary School, established pursuant to 10 U.S.C. § 2164 and located in North Carolina, during the spring semester prior to the school year for which the student is applying.

2.         Received a scholarship grant for the school year prior to the school year for which the student is applying.

3.         Is eligible to enter kindergarten, first grade, or second grade pursuant to Article 25 of this Chapter. A child who is the age of four on or before April 16 is eligible to attend the following school year if the principal, or equivalent, of the school in which the child seeks to enroll finds that the student meets the requirements established by the Authority pursuant to G.S. 115C‑562.2(d) and those findings are submitted to the Authority with the child's application.

4.         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 application.

6.         Is a child whose parent or legal guardian (i) 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., or (ii) receives an honorable discharge as an active duty member from the uniformed service of the United States within 12 months prior to application.

7.         Is a child who meets both of the following:

I.          Was enrolled in a nonpublic school that meets the requirements of Part 1 and Part 2 of this Article during the spring semester prior to the school year for which the student is applying.

II.        Was enrolled for the entire school year immediately prior to the school year in which the student enrolled in the nonpublic school in one of the following:

A.        A North Carolina public school.

B.        A Department of Defense Elementary and Secondary School established pursuant to 10 U.S.C. § 2164 and located in North Carolina.

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

b.         Meets one of the following criteria:

1.         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 sub‑sub‑subdivision.

2.         Is a child in foster care as defined in G.S. 131D‑10.2. The Authority shall not consider the household income of the foster parent, as defined in G.S. 131D‑10.2, in determining the eligibility of a foster care child.

(3c)      Full‑time student. – A student enrolled exclusively in a nonpublic private school for elementary or secondary education whose parents have released the local school administrative unit the student is eligible to attend under G.S. 115C‑366 of all obligations to educate the eligible student while the eligible student is receiving a scholarship grant under this Part.

(3d)     Home school. – A nonpublic school that meets the requirements of Part 3 of Article 39 of this Chapter, as identified by the Division.

(4)        Local school administrative unit. – A local school administrative unit, charter school, or regional school.

(5)        Nonpublic school. – A school that meets the requirements of Part 1 or Part 2 Part 1, Part 2, or Part 3 of this Article as identified by the Division.

(5c)      Part‑time student. – A student enrolled part time in a public school and part time in a nonpublic private school.

(5d)     Private school. – A school that meets the requirements of Part 1 or Part 2 of this Article as identified by the Division.

(5e)      Reserve. – The Opportunity Scholarship Grant Fund Reserve established under G.S. 115C‑562.8.

(6)        Scholarship grants. – Grants awarded annually by the Authority to eligible students.

SECTION 1.(b)  G.S. 115C‑562.2 reads as rewritten:

§ 115C‑562.2.  Scholarship grants.

…

(b)        Scholarship grants awarded to shall be awarded, as follows:

(1)        For eligible students in nonpublic schools residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program program, the award amounts shall be, per year per eligible student, as follows:

a.         For eligible students in private schools, in an amount of up to ninety percent (90%) as a full‑time student or up to forty‑five percent (45%) as a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year.

b.         For eligible students in home schools, in an amount of up to one thousand dollars ($1,000).

(2)        Scholarship grants awarded to eligible students in nonpublic schools residing in households with an income level in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program shall be for amounts of not more than ninety percent (90%) of the required tuition and fees as a full‑time student or forty‑five percent (45%) of the required tuition and fees as a part‑time student for the nonpublic school the eligible child will attend.

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

(4)        No scholarship grant shall exceed, per year per eligible student, any of the following:

a.         For students in private school, an amount equal to ninety percent (90%) for a full‑time student or forty‑five percent (45%) for a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year, and no year.

b.         For students in home school, an amount equal to one thousand dollars ($1,000).

(5)        No scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.

….

SECTION 1.(c)  G.S. 115C‑562.4 reads as rewritten:

§ 115C‑562.4.  Identification of nonpublic schools and distribution of scholarship grant information.

(a)        The Division shall provide annually by February 1 to the Authority a list of all nonpublic schools operating in the State that meet the requirements of Part 1 or Part 2 of this Article. State. The Division shall notify the Authority of any schools included in the list that the Division has determined to be ineligible within five business days of the determination of ineligibility.

(b)        The Authority shall provide information about the scholarship grant program to the Division, including applications and the obligations of nonpublic private schools accepting eligible students receiving scholarship grants. The Division shall ensure that information about the scholarship grant program is provided to all qualified nonpublic schools on an annual basis.

SECTION 1.(d)  G.S. 115C‑562.5 reads as rewritten:

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

(a)        A nonpublic private 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 private 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. Information provided to the Authority in accordance with this subdivision is privileged information and is not a public record but is for the exclusive use of the Authority.

(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 private school 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. For grades three through eight, the nationally standardized test or other equivalent measurement selected must measure achievement in the areas of English grammar, reading, spelling, and mathematics. For grades nine through 12, the nationally standardized test or other equivalent measurement selected must measure either (i) achievement in the areas of English grammar, reading, spelling, and mathematics or (ii) competencies in the verbal and quantitative areas. Test performance data shall be submitted to the Authority by July 15 of each year. Test performance data reported to the Authority under this subdivision is not a public record under Chapter 132 of the General Statutes.

(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 enrolls 70 or more students receiving scholarship grants or scholarship funds awarded by the Authority.

(b)        A nonpublic private 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 private 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 performance of eligible students. 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.

(c1)      A nonpublic private school shall not discriminate with respect to the categories listed in 42 U.S.C. § 2000d, as that statute read on January 1, 2014.

(d)       If the Authority determines that a nonpublic private school is not in compliance with the requirements of this section, the nonpublic private school shall be ineligible to receive future scholarship funds. The nonpublic private school shall notify the parent or guardian of any enrolled student receiving a scholarship grant that the nonpublic private school is no longer eligible to receive future scholarship grants. The Authority shall establish by rule a process for a nonpublic private school to appeal for reconsideration of eligibility after one year. To ensure compliance, the Board of Directors of the Authority shall review the criminal history provided under subdivision (2) of subsection (a) of this section to ensure that the person has not been convicted of any crime listed in G.S. 115C‑332. The Board shall determine through this review whether the nonpublic private school is noncompliant with this section. The Board shall make written findings with regard to how the criminal history information was used when making the compliance determination. The Board of Directors may delegate any of the duties in this subsection to the Executive Director of the Authority. As part of its review, the Board shall determine whether the results indicate that the staff member has any of the following disqualifying characteristics:

(1)        Poses a threat to the physical safety of students or personnel.

(2)        Demonstrates that he or she does not have the integrity or honesty to fulfill his or her duties in overseeing State funds and the requirements of the scholarship grant program.

(3)        Has not fully satisfied the criminal sentencing obligations imposed following his or her conviction by a court of competent jurisdiction.

SECTION 1.(e)  G.S. 115C‑562.6 reads as rewritten:

§ 115C‑562.6.  Scholarship endorsement.

The Authority shall remit, at least two times each school year, scholarship grant funds awarded to eligible students to the nonpublic school school. Scholarship grant funds awarded to eligible students to a private school shall be remitted for endorsement by at least one of the student's parents or guardians. The parent or guardian shall restrictively endorse the scholarship grant funds awarded to the eligible student for deposit into the account of the nonpublic private school to the credit of the eligible student. The parent or guardian shall not designate any entity or individual associated with the nonpublic private school as the parent's attorney‑in‑fact to endorse the scholarship grant funds. A parent's or guardian's failure to comply with this section shall result in forfeit of the scholarship grant. A scholarship grant forfeited for failure to comply with this section shall be returned to the Authority to be awarded to another student.

SECTION 1.(f)  G.S. 115C‑562.7 reads as rewritten:

§ 115C‑562.7.  Authority reporting requirements.

(a)        Repealed by Session Laws 2014‑100, s. 8.25(e), effective August 7, 2014.

(b)        The Authority shall report annually, no later than October 15, to the Joint Legislative Education Oversight Committee on the following information from the prior school year:

(1)        Total number, grade level, race, ethnicity, and sex of eligible students receiving scholarship grants.

(2)        Total amount of scholarship grant funding awarded.

(3)        Number of students previously enrolled in local school administrative units or charter schools in the prior semester by the previously attended local school administrative unit or charter school.

(4)        Nonpublic schools in which scholarship grant recipients are enrolled, including numbers of scholarship grant students at each nonpublic school.

(5)        Nonpublic Private schools deemed ineligible to receive scholarships.

(c)        The Authority shall report annually, no later than December 1, to the Department of Public Instruction and the Joint Legislative Education Oversight Committee on the following:

(1)        Learning gains or losses of students receiving scholarship grants. The report shall include learning gains of participating students on a statewide basis and shall compare, to the extent possible, the learning gains or losses of eligible students by nonpublic private school to the statewide learning gains or losses of public school students with similar socioeconomic backgrounds, using aggregate standardized test performance data provided to the Authority by nonpublic private schools and by the Department of Public Instruction.

(2)        Competitive effects on public school performance on standardized tests as a result of the scholarship grant program. The report shall analyze the impact of the availability of scholarship grants on public school performance on standardized tests by local school administrative units to the extent possible, and shall provide comparisons of the impact by geographic region and between rural and urban local school administrative units.

This report shall be conducted by an independent research organization to be selected by the Authority, which may be a public or private entity or university. The independent research organization shall report to the Authority on the results of its research. The Joint Legislative Education Oversight Committee shall review reports from the Authority and shall make ongoing recommendations to the General Assembly as needed regarding improving administration and accountability for nonpublic private schools accepting students receiving scholarship grants.

SECTION 2.  Effective July 1, 2024, G.S. 115C‑562.2(b), as amended by Section 1 of this act, reads as rewritten:

(b)      Scholarship grants shall be awarded, as follows:

(1)        For eligible students in nonpublic schools residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program, the award amounts shall be, per year per eligible student, as follows:

a.         For eligible students in private schools, in an amount of up to ninety percent (90%) as a full‑time student or up to forty‑five percent (45%) as a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year.

b.         For eligible students in home schools, in an amount of up to one thousand dollars ($1,000).two thousand dollars ($2,000).

(2)        Scholarship grants awarded to eligible students in nonpublic schools residing in households with an income level in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program shall be for amounts of not more than ninety percent (90%) of the required tuition and fees as a full‑time student or forty‑five percent (45%) of the required tuition and fees as a part‑time student for the nonpublic school the eligible child will attend.

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

(4)        No scholarship grant shall exceed, per year per eligible student, any of the following:

a.         For students in private school,  an amount equal to ninety percent (90%) for a full‑time student or forty‑five percent (45%) for a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year.

b.         For students in home school, an amount equal to one thousand dollars ($1,000).two thousand dollars ($2,000).

(5)        No scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.

SECTION 3.  Effective July 1, 2025, G.S. 115C‑562.2(b), as amended by Section 2 of this act, reads as rewritten:

(b)      Scholarship grants shall be awarded, as follows:

(1)        For eligible students in nonpublic schools residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program, the award amounts shall be, per year per eligible student, as follows:

a.         For eligible students in private schools, in an amount of up to ninety percent (90%) as a full‑time student or up to forty‑five percent (45%) as a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year.

b.         For eligible students in home schools, in an amount of up to two thousand dollars ($2,000).three thousand dollars ($3,000).

(2)        Scholarship grants awarded to eligible students in nonpublic schools residing in households with an income level in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program shall be for amounts of not more than ninety percent (90%) of the required tuition and fees as a full‑time student or forty‑five percent (45%) of the required tuition and fees as a part‑time student for the nonpublic school the eligible child will attend.

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

(4)        No scholarship grant shall exceed, per year per eligible student, any of the following:

a.         For students in private school,  an amount equal to ninety percent (90%) for a full‑time student or forty‑five percent (45%) for a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year.

b.         For students in home school, an amount equal to two thousand dollars ($2,000).three thousand dollars ($3,000).

(5)        No scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.

SECTION 4.  Effective July 1, 2026, G.S. 115C‑562.2(b), as amended by Section 3 of this act, reads as rewritten:

(b)      Scholarship grants shall be awarded, as follows:

(1)        For eligible students in nonpublic schools residing in households with an income level not in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program, the award amounts shall be, per year per eligible student, as follows:

a.         For eligible students in private schools, in an amount of up to ninety percent (90%) as a full‑time student or up to forty‑five percent (45%) as a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year.

b.         For eligible students in home schools, in an amount of up to three thousand dollars ($3,000).forty‑five percent (45%) of the average State per pupil allocation for average daily membership in the prior fiscal year.

(2)        Scholarship grants awarded to eligible students in nonpublic schools residing in households with an income level in excess of the amount required for the student to qualify for the federal free or reduced‑price lunch program shall be for amounts of not more than ninety percent (90%) of the required tuition and fees as a full‑time student or forty‑five percent (45%) of the required tuition and fees as a part‑time student for the nonpublic school the eligible child will attend.

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

(4)        No scholarship grant shall exceed, per year per eligible student, any of the following:

a.         For students in private school,  an amount equal to ninety percent (90%) for a full‑time student or forty‑five percent (45%) for a part‑time student of the average State per pupil allocation for average daily membership in the prior fiscal year.

b.         For students in home school, an amount equal to three thousand dollars ($3,000).forty‑five percent (45%) of the average State per pupil allocation for average daily membership in the prior fiscal year.

(5)        No scholarship grant shall exceed the required tuition and fees for the nonpublic school the eligible student will attend.

SECTION 5.(a)  There is appropriated the following amounts from the General Fund in the following years to be used for the purposes set forth in this act:

(1)        To the Board of Governors to be allocated to the State Education Assistance Authority, the sum of one hundred thirteen million dollars ($113,000,000) in nonrecurring funds for the 2023‑2024 fiscal year.

(2)        To the Opportunity Scholarship Grant Fund Reserve, the following amounts in additional recurring dollars for each of the following fiscal years:

Fiscal Year                                                                            Appropriation

2023‑2024                                                                                 $225,000,000

2024‑2025                                                                                 $337,000,000

SECTION 5.(b)  G.S. 115C‑562.8(b) reads as rewritten:

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

Fiscal Year                                                                            Appropriation

2017‑2018                                                                                   $44,840,000

2018‑2019                                                                                   $54,840,000

2019‑2020                                                                                   $64,840,000

2020‑2021                                                                                   $74,840,000

2021‑2022                                                                                   $84,840,000

2022‑2023                                                                                   $94,840,000

2023‑2024                                                                                 $176,540,000

2024‑2025                                                                                 $191,540,000

2025‑2026                                                           $206,540,000$572,540,000

2026‑2027                                                           $221,540,000$586,540,000

2027‑2028                                                           $236,540,000$601,540,000

2028‑2029                                                           $251,540,000$616,540,000

2029‑2030                                                           $266,540,000$631,540,000

2030‑2031                                                           $281,540,000$646,540,000

2031‑2032                                                           $296,540,000$661,540,000

For the 2032‑2033 fiscal year and each fiscal year thereafter, there is appropriated from the General Fund to the Reserve the sum of three hundred eleven million five hundred forty thousand dollars ($311,540,000) six hundred seventy‑six million five hundred forty thousand dollars ($676,540,000) to be used for the purposes set forth in this section. When developing the base budget, as defined by G.S. 143C‑1‑1, for each fiscal year specified in this subsection, the Director of the Budget shall include the appropriated amount specified in this subsection for that fiscal year.

SECTION 6.  Section 1 of this act becomes effective June 30, 2023, and applies to applications for scholarship grants beginning with the 2023‑2024 school year. Section 5 of this act becomes effective July 1, 2023. Except as otherwise provided, this act is effective when it becomes law.